<PAGE>
[Graphic Omitted]
GALAXY FUND II REPORT
Large Company Index Fund . Small Company Index Fund .
Utility Index Fund . U.S. Treasury Index Fund . Municipal Bond Fund
ANNUAL
REPORT
FOR THE
YEAR ENDED
MARCH 31, 1997
<PAGE>
CHAIRMAN'S
MESSAGE
Dear Galaxy Fund II Shareholder:
Enclosed is your report on the performance of the Galaxy Fund II
portfolios for the 12 months ended March 31, 1997. Inside, you'll find an
overview of financial market activity during this period -- as well as an
investment commentary for each portfolio. The report also lists the securities
contained in the individual portfolios when the reporting period ended and
provides portfolio financial statements for your review.
This past year has been both rewarding and challenging for investors.
Strong economic growth drove stock prices to new highs. However, these prices
became more volatile as investors grew worried about higher inflation and rising
interest rates. Fears of inflation also created volatility among bonds.
Such volatility can be unnerving, even for veteran investors. It's
important to remember, therefore, that the recent ups and downs in prices are
part of normal market behavior. Historically, the volatility of this past year
was unremarkable. Stock market rallies typically experience corrections of at
least 10% every couple of years. By the end of March 1997, however, the broad
stock market indices had rallied for more than six years without a correction of
any significance.
Most people invest for long-term goals, and short-term volatility tends to
smooth out over time. So by sticking to your investment strategy, you improve
the chance of reaping the long-term returns that you desire.
Keeping your portfolio well diversified can make it easier to weather
volatile times. Because individual asset classes and market sectors often move
in different directions, having a range of investments increases the likelihood
that some part of your portfolio will perform well in a given period. With
several choices of stock and bond investments, the Galaxy Fund II portfolios can
provide some of the diversification you might seek. Your investment professional
can help you choose a mix of funds that suits your particular needs.
If you would like additional information about any Galaxy funds or
services, or if you have questions about material in this report, please call
the Galaxy Information Center at 1-800-628-0414.
Sincerely,
/s/ Dwight E. Vicks, Jr.
Dwight E. Vicks, Jr.
Chairman of the Board of Trustees
Mutual Funds:
o are not bank deposits
o are not FDIC insured
o are not obligations of Fleet Bank
o are not guaranteed by Fleet Bank
o are subject to investment risks including possible loss of principal amount
invested
<PAGE>
MARKET OVERVIEW
MARKET OVERVIEW
By Fleet Investment Advisors Inc.
Over the past 12 months ended March 31, 1997, we have witnessed
significant divergence among various financial market sectors as well as
increased volatility within each sector. Although inflation remained moderate
during this time, accelerating economic strength made investors worry that the
Federal Reserve would stem future inflation by tightening the money supply with
higher interest rates. This dampened prices for both stocks and bonds. At times
when economic growth eased, fears of inflation faded, pushing stock and bond
prices higher.
MONITORING GROWTH
The volatility in stock and bond prices was evident throughout the
12-month period ended March 31, 1997. During the second quarter of 1996, the
Gross Domestic Product ("GDP"), which measures U.S. goods and services, grew at
an annual rate of 4.7%. This growth rate more than doubled that for the first
quarters of 1996 and 1995, thus the threat of inflation loomed large. In
addition, bond prices fell enough to push the yield for long-term Treasuries
above 7% for the first time since May of 1995.
During the period, stock prices benefited from continued growth in company
earnings, unprecedented flows of cash into stock mutual funds, and reduced
supply due to corporate share repurchase programs. At the same time, higher bond
yields made stock prices more volatile. News of further economic strength in the
third quarter of 1996 caused a short-term correction in stock prices and drove
the yield for long-term Treasury bonds to 7.2%. Stocks and bonds then rallied in
the fourth quarter, as annual inflation rates stayed near 3%, and fears of
higher interest rates eased. By the end of the fourth quarter, the Standard &
Poor's 500 Composite Stock Price Index(R) ("S&P Index") had earned an 8.34%
total return, and long-term Treasury yields had fallen to 6.6%.
Stock investors remained hopeful about inflation for most of 1997's first
quarter, even though economic growth continued to accelerate. Bond prices
seesawed, ending lower than when the quarter began. As the Federal Reserve
raised short-term interest rates by 25 basis points in the final weeks of the
quarter, and long-term Treasury yields rose above 7%, stock prices retreated
sharply. This reduced nearly a 10% advance by the S&P Index earlier in the
quarter to a gain of 2.7%.
"Although inflation remained moderate
during this time, accelerating economic
strength made investors worry that the
Federal Reserve would stem future
inflation by tightening the money supply
with higher interest rates."
<PAGE>
MARKET OVERVIEW
During the 12-month period ended March 31, 1997, investors generally
preferred large company stocks over small company stocks, due to the greater
earnings reliability of larger firms in an uncertain economy. Utility stocks
were frequently out of favor, given their heightened sensitivity to changes in
interest rates. A strong economy generally helped corporate bonds outperform
Treasury issues, while higher interest rates helped municipal bonds outpace
taxable securities.
SLOWER GROWTH AHEAD
We believe the economy will continue to vacillate between excessive
strength and weakness for the rest of 1997. If stronger growth threatens higher
inflation, the Federal Reserve may raise interest rates another 25 basis points.
Despite tight labor markets, however, we believe inflation will remain moderate.
As higher interest rates take their toll, economic growth should slow to a rate
of 2%. This should help interest rates and bond prices to stabilize.
With higher interest rates and slower growth, corporate earnings may come
under greater pressure --keeping stock prices vulnerable to further weakness. If
prices become more attractive, however, stocks should find new appeal among
investors in a climate of moderate economic growth and inflation.
"We believe the economy will continue to
vacillate between excessive strength and
weakness for the rest of 1997. If
stronger growth threatens higher
inflation, the Federal Reserve may raise
interest rates another 25 basis points."
Performance At-A-Glance
Average Annual Returns as of March 31, 1997
LARGE COMPANY INDEX FUND Inception Date 10/1/90
1 Year 19.32%
3 years 21.86%
5 Years 15.96%
Life of Fund 17.42%
SMALL COMPANY INDEX FUND Inception Date 10/1/90
1 Year 9.60%
3 years 15.56%
5 Years 13.01%
Life of Fund 17.93%
UTILITY INDEX FUND Inception Date 1/5/93
1 Year 3.46%
3 years 11.09%
Life of Fund 8.87%
U.S. TREASURY INDEX FUND Inception Date 6/4/91
1 Year 3.91%
3 years 5.90%
5 Years 6.69%
Life of Fund 7.29%
MUNICIPAL BOND FUND Inception Date 4/15/93
1 Year 4.15%
3 years 5.60%
Life of Fund 5.02%
The performance data quoted represents past performance and is no guarantee of
future results. The investment return and principal value of an investment will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost.
<PAGE>
PORTFOLIO REVIEWS
GALAXY FUND II LARGE COMPANY
INDEX FUND
- -----------------------------
Photo of Murphy van der Velde
- -----------------------------
By Murphy van der Velde
Portfolio Manager
The Galaxy Fund II Large Company Index Fund seeks to match, before the
deduction of operating expenses, the price and yield performance of the S&P
Index. By investing in publicly traded U.S. stocks according to their
representation in the S&P Index, the Fund is also structured to deliver the same
volatility and risk as the S&P Index.
Continued strength in stock prices, particularly for stocks of larger
companies, produced a total return of 19.82% for the S&P Index in the 12 months
ended March 31, 1997. Over the same time, the Fund had a total return of 19.32%
(after the deduction of operating expenses.)
This 12-month performance represents a correlation coefficient of 99.97%.
The correlation coefficient measures the degree to which a fund's performance
moves in line with its target index during specific periods.
If economic growth slows in the months ahead, creating disappointments in
earnings, large companies of high quality may be especially vulnerable to
further price correction. Investor preference for strong liquidity and reliable
earnings, plus the popularity of mutual funds that mirror the S&P Index, have
created valuations for the large company stocks in the S&P Index that are quite
high compared to the long-term earnings prospects of those firms.
If prices correct, however, investors should find a more favorable balance
of risk and reward among large company issues. If economic growth moderates and
investors see that inflation is still under control, the appeal of large company
stocks at attractive prices should expand.
Galaxy Fund II
Large Company
Index Fund
Distribution of Total Net Assets
as of March 31, 1997
Consumer Staples 21%
U.S. Government and Agency Obligations
and Net Other Assets and Liabilities 17%
Finance 13%
Technology 13%
Energy 8%
Other Common Stocks 8%
Consumer Cyclical 7%
Utilities 7%
Capital Goods 6%
Galaxy Fund II
Large Company Index Fund
Growth of $10,000 investment*
GALAXY FUND II
S&P LARGE COMPANY
INDEX INDEX FUND
- ----------------------------------------
10/1/90 10,000 10,000
3/91 12,525 12,260
3/92 13,897 13,539
3/93 16,017 15,526
3/94 16,253 15,683
3/95 18,808 18,048
3/96 24,840 23,787
3/97 29,763 28,383
* Since inception on 10/1/90. The S&P Index(R) is an unmanaged index which does
not reflect expenses and management fees.
GALAXY FUND II SMALL COMPANY
INDEX FUND
By Murphy van der Velde
Portfolio Manager
For much of the past year, continued economic growth and moderate
inflation helped stocks of small companies earn solid returns. As uncertainty
about future economic growth drove investors to large company issues, prices for
small company stocks retreated from the exceptional levels they had earned
earlier. Also bearing the brunt of a sharp price slide in technology issues, the
small company sector lagged stocks as a whole. Even so, sector returns were
positive for the 12 months ended March 31, 1997.
During that period, the Russell Special Small CompanyTM Index (the
"Russell Index") produced a total return of 6.85%. Over the same time, the
Galaxy Fund II Small Company Index Fund returned 9.60% (after the deduction of
operating expenses).
This 12-month performance represents a correlation coefficient of 98.74%.
The correlation coefficient measures the degree to which a fund's performance
moves in line with the target index during the period. The Fund's outperformance
of the Russell Index can be attributed primarily to our use of futures related
to mid-cap stocks in the Russell Index, which outperformed smaller-cap stocks in
the Russell Index over the past year. As a result of shareholders approving a
change in the Fund's target index on May 9, 1997, the S&P 600 Small Company
Index is now the Fund's target index.
During the same period, the Standard & Poor's(R) Small Cap 600 Index,
which tracks the price performance of a selection of 600 small company stocks,
produced a total return of 8.39%.
If higher interest rates slow economic growth in coming months, and
disappointments in corporate earnings make stocks vulnerable to further
correction, we believe there may be additional weakness for both large and small
company issues. A more complete correction in the broader market indices,
combined with the sizable decline small company stocks have already seen, should
produce a more favorable risk/reward balance for the sector. This may be
especially true for technology stocks, whose long-term prospects remain intact.
Galaxy Fund II
Small Company Index Fund
Distribution of Total Net Assets
as of March 31, 1997
Finance 19%
U.S. Government and Agency Obligations
and Net Other Assets and Liabilities 16%
Consumer Staples 14%
Technology 14%
Consumer Cyclical 10%
Utilities 8%
Other Common Stocks 6%
Energy 5%
Basic Materials 4%
Capital Goods 4%
GALAXY FUND II
SMALL COMPANY
INDEX FUND
Growth of $10,000 investment*
RUSSELL SPECIAL GALAXY FUND II
SMALL COMPANY(TM) S&P SMALL CAP SMALL COMPANY
INDEX 600 INDEX INDEX FUND
- --------------------------------------------------------------------------------
10/1/90 10,000 10,000 10,000
3/91 13,868 13,070 13,184
3/92 16,814 16,342 15,831
3/93 19,699 19,194 18,246
3/94 20,728 20,850 18,916
3/95 22,527 21,945 20,354
3/96 29,450 28,791 26,632
3/97 31,467 31,205 29,188
*Since inception on 10/1/90. The Russell Special Small Company(TM) Index and the
Standard & Poor's(R) Small Cap 600 Index are unmanaged indices which do not
reflect expenses and management fees.
GALAXY FUND II UTILITY INDEX FUND
By Murphy van der Velde
Portfolio Manager
The Galaxy Fund II Utility Index Fund seeks to match, before the
deduction of operating expenses, the price and yield performance of stocks in
the utility industry. To this end, the Fund invests in publicly traded stocks
according to their representation in the Russell 1000TM Utility Index (the
"Utility Index"), an unmanaged index of the common stocks of the utility
companies included in the Russell 1000.
Over the last 12 months utility stocks have endured a tug-of-war
involving many factors. In the first part of the period, rising prices for crude
oil, disappointing earnings, higher interest rates and the continued
consolidation of natural gas firms overcame investors' desire for
income-oriented stocks. Utility stocks then benefited as interest rates fell,
company earnings improved, and natural gas prices rose. The sector suffered
again later in the period, however, as a mild winter weakened energy prices and
strong economic growth sent interest rates higher.
Despite this volatility, utility stocks enjoyed a modest advance. For the
12 months ended March 31, 1997, the Utility Index produced a total return of
2.74%, and the Galaxy Fund II Utility Index Fund had a total return of 3.46%
(after the deduction of operating expenses).
This 12-month performance represents a correlation coefficient of 96.25%.
The correlation coefficient measures the degree to which a fund's performance
moves in line with its target index during the period. As a result of
shareholders approving a change in the Fund's target index on May 9, 1997, the
S&P Utility Index is now the Fund's target index. The Fund's outperformance of
the Utility Index was due primarily to our rebalancing of the Fund's portfolio
in accordance with this new target index before the necessary approvals had been
obtained. Once we became aware that these approvals had not yet been obtained,
we reversed these steps and brought the portfolio in line with the Utility
Index.
The Standard & Poor's(R) Utility Index, which reflects the performance of
a more yield oriented cross-section of utility stocks than the Russell 1000TM
Utility Index, returned 4.62% during the 12 months ended March 31, 1997.
Although interest rates may continue to rise if economic growth remains
strong, we believe slower economic growth and a greater stability in interest
rates later in 1997 will make utility stocks more attractive to investors.
Having already suffered significant weakness in prices, utility stocks are
nearing a more reasonable blend of risk and return.
Murphy van der Velde became manager of the Galaxy Fund II Large Company Index
Fund, the Galaxy Fund II Small Company Index Fund and the Galaxy Fund II Utility
Index Fund in March of 1996. The managing director of equity trading and
derivative products for Fleet Investment Advisors Inc., Mr. van der Velde has
managed equity portfolios since 1993.
Galaxy Fund II
Utility Index Fund
Distribution of Total Net Assets
as of March 31, 1997
Energy and Net Other Assets and Liabilities 1%
Technology 20%
Utilities 79%
Galaxy Fund II
Utility Index Fund
Growth of $10,000 investment*
RUSSELL 1000(R) GALAXY FUND II
UTILITY STANDARD & POOR'S(R) UTILITY
INDEX UTILITY INDEX INDEX FUND
- --------------------------------------------------------------------------------
1/5/93 10,000 10,000 10,000
3/93 10,870 10,950 10,985
3/94 10,342 10,498 10,454
3/95 10,913 11,261 10,941
3/96 13,928 14,160 13,853
3/97 14,310 14,814 14,332
*Since inception on 1/5/93. The Russell 1000(R) Utility Index and Standard &
Poor's(R) Utility Index are unmanaged indices which do not reflect expenses and
management fees.
GALAXY FUND II U.S. TREASURY INDEX FUND
By David Lindsay
Portfolio Manager
The Galaxy Fund II U.S. Treasury Index Fund seeks to match, before the
deduction of operating expenses, the price and yield performance of the U.S.
Treasury component of the Salomon Brothers Broad Investment Grade Bond Index
(the "U.S. Treasury Index"). The Fund attempts to meet this objective by
investing in U.S. Treasury notes and bonds according to their representation in
the U.S. Treasury Index.
Treasury bonds traded in a relatively narrow range over the past year,
with yields for 30-year issues ranging between 6.35% and 7.20%. Within that
range, however, Treasury prices were quite volatile as expectations for higher
interest rates ebbed and flowed. For much of the period, a strengthening economy
drew investors away from Treasuries to corporate bonds. This kept upward
relative pressure on corporate prices, and downward pressure on their yields,
intensifying an already narrow spread between yields for corporate and Treasury
issues.
- -----------------------------
Photo of David Lindsay
- -----------------------------
For the 12 months ended March 31, 1997, the U.S. Treasury Index posted a
total return of 4.21%, and the Galaxy Fund II U.S. Treasury Index Fund had a
total return of 3.91% (after deduction of operating expenses).
This 12-month performance represents a correlation coefficient of 99.39%.
The correlation coefficient measures the degree to which a fund's performance
moves in line with its target index during the period.
If economic growth slows later in 1997 and inflation remains moderate, we
believe Treasury bonds will be quite attractive to investors when long-term
yields exceed 7%. Under these conditions, we would expect long-term Treasury
bonds to enjoy a positive total return for the next 12 months, earning interest
income plus some capital appreciation.
David Lindsay has managed the Galaxy Fund II U.S. Treasury Index Fund since
July of 1994. He has managed fixed income portfolios for Fleet Investment
Advisors Inc. since 1986.
GALAXY FUND II
U.S. TREASURY
INDEX FUND
Distribution of Total Net Assets
as of March 31, 1997
U.S. Treasury Notes 72%
U.S. Treasury Bonds 25%
Other U.S. Government and Agency Obligations
and Net Other Assets and Liabilities 3%
GALAXY FUND II
U.S. TREASURY INDEX FUND
Growth of $10,000 investment*
SALOMON BROTHERS GALAXY FUND II
U.S. TREASURY U.S. TREASURY
INDEX INDEX FUND
- --------------------------------------------------------------------------------
6/4/91 10,000 10,000
3/92 10,941 10,899
3/93 12,486 12,390
3/94 12,821 12,687
3/95 13,439 13,171
3/96 14,849 14,500
3/97 15,474 15,066
*Since inception on 1/5/93. The Russell 1000(R) Utility Index and Standard &
Poor's(R) Utility Index are unmanaged indices which do not reflect expenses
and management fees.
GALAXY FUND II
MUNICIPAL BOND FUND
By Mary McGoldrick
Portfolio Manager
The Galaxy Fund II Municipal Bond Fund seeks to provide the highest level
of income exempt from regular federal tax that is consistent with preservation
of capital. Typically, the Fund invests substantially all of its assets in debt
securities issued by state, local and regional government agencies, and
maintains an average maturity for its investments of seven to 12 years.
In the past year, municipal bonds frequently outperformed taxable issues.
Hurt earlier by talk of legislation that would have ended many of their tax
advantages, long-term municipal bond prices strengthened when Congress failed to
act on these proposals. Shorter-term maturities' yields increased, thus
underperforming the longer maturities as stronger economic momentum eventually
resulted in a tightening of monetary policy by the Federal Reserve.
- -----------------------------
Photo of Mary McGoldrick
- -----------------------------
In this volatile interest rate environment, we emphasized investments with
features that investors tend to favor, including municipal bonds with good
credit quality and strong call protection. We strove to maintain a broad mix of
bonds across different maturities and market segments for defensive purposes.
When yields were especially attractive we gave greater attention to longer-term
issues that would lock in the higher yields for a longer period of time.
The Galaxy Fund II Municipal Bond Fund earn a total return of 4.15% (after
deduction of operating expenses) for the 12 months ended March 31, 1997. That
compares to a return of 4.61% for its benchmark, the Lehman Seven-Year Municipal
Bond Index.
If continued economic strength prompts additional hikes in interest rates,
we do not believe municipal bond yields will rise as much as yields for taxable
issues. With higher interest rates fewer municipal bonds will be issued for
refunding purposes resulting in a tighter supply situation. If higher rates slow
economic growth later in the year and bond prices become more stable, we may
give additional attention to longer-term investments.
Mary McGoldrick has managed the Galaxy Fund II Municipal Bond Fund since July
of 1994. She has managed portfolios at Fleet Investment Advisors Inc. and other
banks for 10 years.
GALAXY FUND II
MUNICIPAL BOND FUND
Geographical Distribution of Total Net Assets
as of March 31, 1997
Net Other Assets & Liabilities (1)%
Cash Equivalents 1%
Mountain 9%
Pacific 10%
North Central 17%
East 28%
South 36%
GALAXY II
MUNICIPAL BOND FUND
Growth of $10,000 investment*
LEHMAN BROTHERS GALAXY FUND II
SEVEN YEAR MUNICPAL MUNCIPAL
BOND INDEX BOND FUND
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4/15/93 10,000 10,000
3/94 10,298 10,310
3/95 10,398 10,857
3/96 11,236 11,657
3/97 12,018 12,141
<PAGE>
SHAREHOLDER INFORMATION
TRUSTEES
AND OFFICERS
Dwight E. Vicks, Jr.
Chairman and Trustee
John T. O'Neill
President, Treasurer
and Trustee
Louis DeThomasis,
F.S.C., Ph.D.
Trustee
Donald B. Miller
Trustee
James M. Seed
Trustee
Bradford S. Wellman
Trustee
W. Bruce
McConnel, III, Esq.
Secretary
Jylanne Dunne
Vice President &
Assistant Treasurer
INVESTMENT ADVISOR
Fleet Investment
Advisors Inc.
75 State Street
Boston, MA
02109
DISTRIBUTOR
First Data
Distributors, Inc.
4400 Computer Drive
Westborough,
Massachusetts 01581
ADMINISTRATOR
Fleet National Bank
50 Kennedy Plaza
Providence,
Rhode Island 02903-2305
For complete information, and before making an investment decision on any of the
Funds of Galaxy Fund II, you should request a prospectus from First Data
Distributors, Inc., by calling (800) 628-0414. This report is submitted for the
general information of shareholders of Galaxy Fund II. It is not authorized for
distribution to prospective investors unless accompanied or preceded by an
effective prospectus for each Fund of Galaxy Fund II, which contains more
information concerning investment policies, expenses of the Funds as well as
other pertinent information. Read the prospectus carefully before you invest.
Shares of the Funds are not deposits or obligations of, or guaranteed or
endorsed by Fleet Financial Group, Inc. or any of its affiliates, Fleet
Investment Advisors Inc., or any Fleet bank. Shares of the Funds are not
federally insured by the U.S. Government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other agency. The performance data
quoted represents past performance and the investment return and principal value
will vary as a result of market conditions or other factors so that shares of
the Funds, when redeemed, may be worth more or less than their original cost. An
investment in the Funds involves investment risks, including the possible loss
of principal.
[recycle symbol]
This report was printed on recycled paper.
<PAGE>
Galaxy
Fund II
Large Company Index Fund
PORTFOLIO OF INVESTMENTS
March 31, 1997
Value
Shares (Note 2)
- ------- --------
COMMON STOCKS - 83.15%
Consumer Staples - 20.45%
47,100 Abbott Laboratories ............................... $2,643,488
3,258 Alberto-Culver Co., Class B ....................... 85,115
3,787 Allergan, Inc. .................................... 110,296
4,891 ALZA Corp.* ....................................... 134,503
10,334 American Brands, Inc. ............................. 523,159
38,470 American Home Products Corp. ...................... 2,308,200
15,748 Amgen, Inc.* ...................................... 879,920
29,956 Anheuser-Busch Cos., Inc. ......................... 1,261,897
33,315 Archer-Daniels-Midland Co. ........................ 595,506
8,262 Avon Products, Inc. ............................... 433,755
3,400 Bard (C.R.), Inc. ................................. 96,900
3,422 Bausch & Lomb, Inc. ............................... 135,169
16,594 Baxter International, Inc. ........................ 715,616
7,642 Becton Dickinson & Co. ............................ 343,890
6,098 Beverly Enterprises, Inc.* ........................ 86,897
6,927 Biomet, Inc. ...................................... 116,893
60,448 Bristol-Myers Squibb Co. .......................... 3,566,432
4,011 Brown-Forman Corp., Class B ....................... 191,525
28,540 Campbell Soup Co. ................................. 1,323,543
3,203 Clorox Co. ........................................ 359,136
150,504 Coca-Cola Co. (C) ................................. 8,409,411
8,818 Colgate Palmolive Co. ............................. 878,493
40,492 Columbia/HCA Healthcare Corp. ..................... 1,361,544
14,472 ConAgra, Inc. ..................................... 785,106
2,439 Coors (Adolph) Co., Class B ....................... 51,829
11,812 Costco Cos., Inc.* ................................ 326,307
8,565 CPC International, Inc. ........................... 702,330
6,393 CVS Corp. ......................................... 294,877
9,718 Darden Restaurants, Inc. .......................... 76,529
12,400 Federated Department Stores, Inc.* ................ 407,650
2,425 Fleming Cos., Inc. ................................ 42,438
4,703 Fruit of The Loom, Inc., Class A* ................. 195,175
9,814 General Mills, Inc. ............................... 609,695
33,454 Gillette Co. ...................................... 2,429,597
19,200 HEALTHSOUTH Corp.* ................................ 367,200
22,394 Heinz (H. J.) Co. ................................. 884,563
9,472 Hershey Foods Corp. ............................... 473,600
7,400 HFS, Inc.* ........................................ 435,675
9,800 Humana, Inc.* ..................................... 215,600
6,732 International Flavors & Fragances, Inc. ........... 294,525
80,502 Johnson & Johnson ................................. 4,256,543
12,685 Kellogg Co. ....................................... 853,066
17,247 Kimberly-Clark Corp. .............................. 1,713,921
32,528 Lilly (Eli) & Co. ................................. 2,675,428
16,282 Limited, Inc. ..................................... 299,182
4,513 Liz Claiborne, Inc. ............................... 196,880
3,624 Manor Care, Inc. .................................. 88,335
42,105 McDonald's Corp. .................................. 1,989,461
14,492 Medtronic, Inc. ................................... 902,127
73,505 Merck & Co., Inc. ................................. 6,192,796
17,416 NIKE, Inc., Class B ............................... 1,079,792
94,600 PepsiCo, Inc. ..................................... 3,086,325
38,950 Pfizer, Inc. ...................................... 3,276,669
30,445 Pharmacia & Upjohn, Inc. .......................... 1,115,048
49,317 Philip Morris Cos., Inc. .......................... 5,628,303
5,115 Pioneer Hi-Bred International, Inc. ............... 321,606
41,429 Procter & Gamble Co. .............................. 4,764,335
8,051 Quaker Oats Co. ................................... 293,862
6,413 Ralston Purina Co. ................................ 501,016
3,386 Reebok International, Ltd. ........................ 151,947
7,418 Rite Aid Corp. .................................... 311,556
9,276 Rubbermaid, Inc. .................................. 230,741
2,553 Russell Corp. ..................................... 91,270
29,374 Sara Lee Corp. .................................... 1,189,647
22,505 Schering-Plough Corp. ............................. 1,637,239
22,525 Seagram Co., Ltd. ................................. 861,581
23,566 Sears Roebuck & Co. ............................... 1,184,192
1,179 Shared Medical Systems Corp. ...................... 54,824
1,052 Springs Industries, Inc., Class A ................. 47,077
4,864 St. Jude Medical, Inc.* ........................... 162,336
4,078 SuperValu, Inc. ................................... 121,321
10,994 Sysco Corp. ....................................... 375,170
3,633 Tupperware Corp. .................................. 121,706
9,809 Unilever NV, New York Shares, ADR ................. 1,826,926
10,836 United Healthcare Corp. ........................... 516,065
3,378 U.S. Surgical Corp. ............................... 103,029
11,288 UST, Inc. ......................................... 314,653
3,725 V.F. Corp. ........................................ 249,109
16,314 Warner-Lambert Co. ................................ 1,411,161
7,370 Wendy's International, Inc. ....................... 152,006
9,188 Winn-Dixie Stores, Inc. ........................... 303,204
6,946 Wrigley (William) Jr. Co. ......................... 405,473
-----------
86,210,912
-----------
TECHNOLOGY - 13.49%
97,585 American Telephone & Telegraph Corp. (C) .......... 3,391,079
8,138 Advanced Micro Devices, Inc.* ..................... 337,727
29,747 AirTouch Communications, Inc.* .................... 684,181
7,128 Amdahl Corp.* ..................................... 66,825
13,218 AMP, Inc. ......................................... 454,369
7,553 Apple Computer, Inc.* ............................. 137,842
11,022 Applied Materials, Inc.* .......................... 511,145
2,884 Autodesk, Inc. .................................... 89,404
17,306 Automatic Data Processing, Inc. ................... 724,689
11,300 Bay Networks, Inc.* ............................... 201,988
10,602 Boston Scientific Corp.* .......................... 654,674
9,390 Cabletron Systems, Inc.* .......................... 274,658
3,966 Ceridian Corp.* ................................... 142,280
39,210 CISCO Systems, Inc.* .............................. 1,886,981
10,076 Cognizant Corp. ................................... 293,464
16,426 Compaq Computer Corp.* ............................ 1,258,642
21,812 Computer Associates International, Inc ............ 847,942
4,490 Computer Sciences Corp.* .......................... 277,258
13,968 Corning, Inc. ..................................... 619,830
6,845 DSC Communications Corp.* ......................... 143,317
2,421 Data General Corp.* ............................... 41,157
10,700 Dell Computer Corp.* .............................. 723,588
9,197 Digital Equipment Corp.* .......................... 251,768
14,731 Dow Chemical Co. .................................. 1,178,480
3,212 EG & G, Inc. ...................................... 67,051
13,600 EMC Corp.* ........................................ 482,800
8,200 General Instrument Corp.* ......................... 187,575
2,959 General Signal Corp. .............................. 115,771
4,600 Guidant Corp. ..................................... 282,900
2,450 Harris Corp. ...................................... 188,344
61,722 Hewlett-Packard Co. ............................... 3,286,697
7,746 Honeywell, Inc. ................................... 525,760
49,716 Intel Corp. ....................................... 6,916,739
2,884 Intergraph Corp.* ................................. 22,351
31,381 International Business Machines Corp. ............. 4,310,965
7,800 LSI Logic Corp.* .................................. 271,050
38,601 Lucent Technologies, Inc. ......................... 2,036,203
41,460 MCI Communications Corp. .......................... 1,477,013
12,463 Micron Technology, Inc. ........................... 504,752
73,032 Microsoft Corp.* .................................. 6,696,122
35,771 Motorola, Inc. .................................... 2,159,674
8,222 National Semiconductor Corp.* ..................... 226,105
15,537 Northern Telecom, Ltd. ............................ 1,015,731
22,290 Novell, Inc.* ..................................... 211,755
41,018 Oracle Corp.* ..................................... 1,581,757
2,739 Perkin-Elmer Corp. ................................ 176,323
9,086 Pitney Bowes, Inc. ................................ 533,803
4,668 Scientific-Atlanta, Inc. .......................... 71,187
15,800 Seagate Technology, Inc.* ......................... 709,025
9,980 Silicon Graphics, Inc.* ........................... 194,610
26,289 Sprint Corp. ...................................... 1,196,150
22,504 Sun Microsystems, Inc.* ........................... 649,803
7,016 Tandem Computers, Inc.* ........................... 83,315
2,215 Tektronix, Inc. ................................... 111,858
39,428 Tele-Communications, Inc., TCI Group, Series A* ... 473,136
10,634 Tellabs, Inc.* .................................... 384,153
11,346 Texas Instruments, Inc. ........................... 849,532
2,438 Thomas & Betts Corp. .............................. 104,225
10,300 3Com Corp.* ....................................... 337,325
9,512 Tyco International, Ltd. .......................... 523,160
10,721 Unisys Corp.* ..................................... 68,346
37,594 U.S. West, Inc., Media Group* ..................... 700,188
3,186 Western Atlas, Inc.* .............................. 193,151
37,495 Westinghouse Electric Corp. ....................... 665,536
19,507 Xerox Corp. ....................................... 1,109,461
-----------
56,894,690
-----------
FINANCE - 13.06%
9,003 Aetna, Inc. ....................................... 773,133
6,897 Ahmanson (H.F.) & Co. ............................. 251,741
26,678 Allstate Corp. .................................... 1,584,006
28,707 American Express Co. .............................. 1,718,832
12,260 American General Corp. ............................ 499,595
28,358 American International Group, Inc. ................ 3,328,520
6,500 Aon Corp. ......................................... 398,125
26,231 Banc One Corp. .................................... 1,042,682
9,430 Bank of Boston Corp. .............................. 631,810
23,130 Bank of New York Co., Inc. ........................ 850,028
21,779 BankAmerica Corp. ................................. 2,194,234
4,806 Bankers Trust New York Corp. ...................... 394,092
11,668 Barnett Banks, Inc. ............................... 542,562
3,181 Beneficial Corp. .................................. 205,572
6,299 Block (H & R), Inc. ............................... 185,033
26,674 Chase Manhattan Corp. ............................. 2,497,353
10,640 Chubb Corp. ....................................... 573,230
4,485 CIGNA Corp. ....................................... 655,371
28,148 Citicorp .......................................... 3,047,021
6,800 Comerica, Inc. .................................... 383,350
9,900 Conseco, Inc. ..................................... 352,688
13,599 CoreStates Financial Corp. ........................ 645,953
20,006 Dean Witter Discover & Co. ........................ 697,709
66,012 Fannie Mae ........................................ 2,384,684
43,184 Federal Home Loan Mortgage Corp. .................. 1,176,764
6,400 Fifth Third Bancorp ............................... 496,000
8,400 First Bank System, Inc. ........................... 613,200
19,102 First Chicago NBD Corp. ........................... 1,033,896
26,224 First Data Corp. .................................. 888,338
17,122 First Union Corp. ................................. 1,389,022
15,431 Fleet Financial Group, Inc. ....................... 883,425
4,925 General Re Corp. .................................. 778,150
3,432 Golden West Financial Corp. ....................... 215,358
8,200 Great Western Financial Corp. ..................... 331,075
8,200 Green Tree Financial Corp. ........................ 276,750
6,103 Household International, Inc. ..................... 524,095
7,036 ITT Corp.* ........................................ 414,245
7,036 ITT Hartford Group, Inc. .......................... 507,472
7,036 ITT Industries, Inc. .............................. 157,431
4,194 Jefferson-Pilot Corp. ............................. 228,049
13,925 KeyCorp ........................................... 678,844
6,433 Lincoln National Corp. ............................ 344,166
7,060 Loews Corp. ....................................... 627,458
4,277 Marsh & Mclennan Cos., Inc. ....................... 484,370
2,800 MBIA, Inc. ........................................ 268,450
20,404 MBNA Corp. ........................................ 568,762
7,859 Mellon Bank Corp. ................................. 571,742
10,242 Merrill Lynch & Co., Inc. ......................... 879,532
3,500 MGIC Investment Corp. ............................. 247,625
11,307 Morgan (J.P.) & Co., Inc. ......................... 1,110,913
9,500 Morgan Stanley Group, Inc. ........................ 558,125
13,600 National City Corp. ............................... 634,100
47,016 NationsBank Corp. ................................. 2,603,511
22,440 Norwest Corp. ..................................... 1,037,850
20,370 PNC Bank Corp. .................................... 814,800
5,855 Providian Corp. ................................... 313,243
1,594 Pulte Corp. ....................................... 46,625
3,370 Republic New York Corp. ........................... 296,981
7,678 Safeco Corp. ...................................... 307,120
6,629 Salomon, Inc. ..................................... 330,621
5,120 St. Paul Cos., Inc. ............................... 332,160
13,820 Suntrust Banks, Inc. .............................. 640,903
4,186 Torchmark Corp. ................................... 231,800
3,981 Transamerica Corp. ................................ 356,300
38,722 Travelers Group, Inc. ............................. 1,853,816
4,200 UNUM Corp. ........................................ 306,600
6,803 USF & G Corp. ..................................... 146,265
2,396 USLife Corp. ...................................... 112,013
9,043 U.S. Bancorp ...................................... 483,801
10,237 Wachovia Corp. .................................... 557,917
5,563 Wells Fargo & Co. ................................. 1,580,587
-----------
55,077,594
-----------
ENERGY - 7.79%
5,724 Amerada Hess Corp. ................................ 303,372
30,118 Amoco Corp. ....................................... 2,608,972
3,726 Ashland, Inc. ..................................... 149,972
9,813 Atlantic Richfield Co. ............................ 1,324,755
8,223 Baker Hughes, Inc. ................................ 315,558
7,672 Burlington Resources, Inc. ........................ 327,978
39,306 Chevron Corp. ..................................... 2,736,680
10,985 Dresser Industries, Inc. .......................... 332,296
1,067 Eastern Enterprises ............................... 32,944
75,211 Exxon Corp. (C) ................................... 8,103,935
7,514 Halliburton Co. ................................... 509,074
1,492 Helmerich & Payne, Inc. ........................... 69,005
3,193 Kerr-McGee Corp. .................................. 197,567
2,314 Louisiana Land & Exploration Co. .................. 109,626
3,281 McDermott International, Inc. ..................... 70,131
23,917 Mobil Corp. ....................................... 3,124,158
19,153 Occidental Petroleum Corp. ........................ 471,643
6,494 Oryx Energy Co.* .................................. 125,010
9,020 Panenergy Corp. ................................... 388,988
2,862 Pennzoil Co. ...................................... 148,109
15,559 Phillips Petroleum Co. ............................ 635,974
5,088 Rowan Cos., Inc. * ................................ 115,116
32,533 Royal Dutch Petroleum Co., ADR .................... 5,693,275
5,310 Santa Fe Energy Resources, Inc.* .................. 73,676
14,711 Schlumberger, Ltd. ................................ 1,577,755
4,561 Sun Co., Inc. ..................................... 119,156
15,779 Texaco, Inc. ...................................... 1,727,801
15,051 Union Pacific Resources Group, Inc. ............... 402,614
14,903 Unocal Corp. ...................................... 568,177
17,519 USX-Marathon Group ................................ 488,342
-----------
32,851,659
-----------
CONSUMER CYCLICAL - 7.21%
15,300 Albertson's, Inc. ................................. 520,200
4,445 American Greetings Corp., Class A ................. 141,962
2,341 Armstrong World Industries, Inc. .................. 151,580
8,700 AutoZone, Inc.* ................................... 195,750
5,069 Black & Decker Corp. .............................. 162,842
1,710 Briggs & Stratton Corp. ........................... 76,736
5,944 Brunswick Corp. ................................... 159,745
1,713 Centex Corp. ...................................... 60,383
6,684 Charming Shoppes, Inc.* ........................... 35,927
5,954 Circuit City Stores, Inc. ......................... 198,715
19,627 Comcast Corp., Class A, Special ................... 331,206
5,013 Cooper Tire & Rubber Co. .......................... 92,741
3,078 Crane Co. ......................................... 96,572
23,570 CUC International, Inc.* .......................... 530,325
6,238 Dana Corp. ........................................ 205,074
12,813 Dayton-Hudson Corp. ............................... 534,943
5,019 Deluxe Corp. ...................................... 162,490
6,909 Dillard Department Stores, Inc., Class A .......... 217,634
40,997 Disney (Walt) Co. ................................. 2,992,781
9,287 Donnelley (R.R.) & Sons Co. ....................... 323,884
5,977 Dow Jones & Co., Inc. ............................. 242,816
10,076 Dun & Bradstreet Corp. ............................ 255,679
20,257 Eastman Kodak Co. ................................. 1,537,000
4,782 Eaton Corp. ....................................... 338,924
3,618 Echlin, Inc. ...................................... 123,012
8,376 Gannett Co., Inc. ................................. 719,289
17,484 Gap, Inc. ......................................... 585,714
7,399 Genuine Parts Co. ................................. 344,978
3,527 Giant Food, Inc., Class A ......................... 112,864
3,096 Goodrich (B.F.) Co. ............................... 113,391
9,493 Goodyear Tire & Rubber Co. ........................ 496,009
2,445 Great Atlantic & Pacific Tea Co., Inc. ............ 62,042
4,268 Harcourt General, Inc. ............................ 198,462
1,934 Harland (John H.) Co. ............................. 45,933
6,336 Harrah's Entertainment, Inc.* ..................... 108,504
7,920 Hasbro, Inc. ...................................... 216,810
14,568 Hilton Hotels Corp. ............................... 353,274
28,985 Home Depot, Inc. .................................. 1,550,698
7,848 Ikon Office Solutions, Inc. ....................... 262,908
4,806 Interpublic Group of Companies, Inc. .............. 253,517
2,358 Jostens, Inc. ..................................... 53,350
28,104 Kmart Corp.* ...................................... 340,761
2,109 Kaufman & Broad Home Corp. ........................ 27,944
2,442 King World Productions, Inc.* ..................... 89,133
6,078 Knight-Ridder, Inc. ............................... 242,360
7,559 Kroger Co.* ....................................... 383,619
2,516 Longs Drug Stores, Inc. ........................... 59,126
10,376 Lowe's Cos., Inc. ................................. 387,803
7,694 Marriott International, Inc. ...................... 382,777
9,893 Masco Corp. ....................................... 353,675
16,630 Mattel, Inc. ...................................... 399,120
15,137 May Department Stores Co. ......................... 688,734
6,506 Maytag Corp. ...................................... 134,186
6,174 McGraw-Hill Cos., Inc. ............................ 315,646
2,440 Mercantile Stores Co., Inc. ....................... 113,155
3,256 Meredith Corp. .................................... 75,295
6,267 Moore Corp., Ltd. ................................. 125,340
3,086 National Service Industries, Inc. ................. 120,740
6,022 New York Times Co., Class A ....................... 265,721
9,804 Newell Co. ........................................ 328,434
5,011 Nordstrom, Inc. ................................... 189,792
3,068 Owens-Corning Fiberglas Corp. ..................... 123,487
15,088 Penney (J.C.) Co., Inc. ........................... 718,566
3,620 Pep Boys-Manny, Moe & Jack ........................ 108,600
2,889 Polaroid Corp. .................................... 114,838
3,450 Safety-Kleen Corp. ................................ 50,888
14,308 Service Corp. International ....................... 425,663
10,252 Sherwin-Williams Co. .............................. 276,804
3,832 Snap-On, Inc. ..................................... 148,490
5,326 Stanley Works ..................................... 201,722
2,996 Stride Rite Corp. ................................. 44,940
3,591 Tandy Corp. ....................................... 179,999
34,102 Time Warner, Inc. ................................. 1,474,912
6,260 Times Mirror Co., Series A ........................ 341,953
4,368 TJX Cos., Inc. .................................... 186,732
16,790 Toys 'R' Us, Inc.* ................................ 470,120
7,598 Tribune Co. ....................................... 307,719
138,495 Wal-Mart Stores, Inc. ............................. 3,860,548
14,736 Walgreen Co. ...................................... 617,070
4,471 Whirlpool Corp. ................................... 212,931
6,392 Whitman Corp. ..................................... 156,604
7,998 Woolworth Corp.* .................................. 186,953
-----------
30,399,564
-----------
UTILITIES - 6.83%
11,251 ALLTEL Corp. ...................................... 365,658
11,304 American Electric Power Co., Inc. ................. 466,290
33,136 Ameritech Corp. ................................... 2,037,864
8,803 Baltimore Gas & Electric Co. ...................... 235,480
26,259 Bell Atlantic Corp. ............................... 1,598,517
59,604 BellSouth Corp. ................................... 2,518,269
9,305 Carolina Power & Light Co. ........................ 337,306
12,620 Central & South West Corp. ........................ 269,753
9,588 Cinergy Corp. ..................................... 327,191
6,485 Coastal Corp. ..................................... 311,280
3,284 Columbia Gas System, Inc. ......................... 190,062
14,475 Consolidated Edison Co. of New York ............... 434,250
5,937 Consolidated Natural Gas Co. ...................... 299,076
10,655 Dominion Resources, Inc. .......................... 387,576
8,655 DTE Energy Co. .................................... 232,603
12,426 Duke Power Co. .................................... 548,297
26,975 Edison International .............................. 606,938
15,439 Enron Corp. ....................................... 586,682
4,049 ENSERCH Corp. ..................................... 83,005
14,102 Entergy Corp. ..................................... 345,499
11,283 FPL Group, Inc. ................................... 497,862
9,600 Frontier Corp. .................................... 171,600
7,258 GPU, Inc. ......................................... 233,163
58,425 GTE Corp. ......................................... 2,724,066
14,974 Houston Industries, Inc. .......................... 312,582
8,529 Niagara Mohawk Power Corp.* ....................... 72,497
3,112 NICOR, Inc. ....................................... 99,584
7,480 Noram Energy Corp. ................................ 109,395
4,044 Northern States Power Co. ......................... 191,585
26,343 NYNEX Corp. ....................................... 1,201,899
9,480 Ohio Edison Co. ................................... 200,265
1,701 ONEOK, Inc. ....................................... 44,226
5,081 Pacific Enterprises ............................... 153,700
25,757 Pacific Telesis Group ............................. 972,327
17,291 Pacificorp ........................................ 369,595
13,621 PECO Energy Co. ................................... 277,528
2,328 Peoples Energy Corp. .............................. 77,115
25,113 PG & E Corp. ...................................... 590,156
9,700 PP & L Resources, Inc. ............................ 196,425
14,849 Public Service Enterprise Group, Inc. ............. 389,786
36,688 SBC Communications, Inc. .......................... 1,930,706
5,127 Sonat, Inc. ....................................... 279,422
41,551 Southern Co. ...................................... 877,765
10,354 Tenneco, Inc. ..................................... 403,806
13,581 Texas Utilities Co. ............................... 465,149
13,109 Unicom Corp. ...................................... 255,626
6,340 Union Electric Co. ................................ 233,788
28,594 U.S. West Communications Group .................... 972,196
21,605 Viacom, Inc., Class B* ............................ 715,666
9,458 Williams Cos., Inc. ............................... 420,881
52,500 WorldCom, Inc.* ................................... 1,155,000
-----------
28,776,957
-----------
CAPITAL GOODS - 6.04%
8,737 American Stores Co. ............................... 388,797
5,510 Andrew Corp.* ..................................... 199,049
21,679 Boeing Co. ........................................ 2,138,091
12,959 Browning-Ferris Industries, Inc. .................. 374,191
11,470 Caterpillar, Inc. ................................. 920,468
2,314 Cincinnati Milacron, Inc. ......................... 43,388
6,713 Cooper Industries, Inc. ........................... 291,176
2,505 Cummins Engine Co., Inc. .......................... 128,381
15,509 Deere & Co. ....................................... 674,642
6,854 Dover Corp. ....................................... 359,835
27,126 Emerson Electric Co. .............................. 1,220,670
2,371 Fleetwood Enterprises, Inc. ....................... 59,275
5,011 Fluor Corp. ....................................... 263,078
2,434 FMC Corp.* ........................................ 149,083
2,535 Foster Wheeler Corp. .............................. 89,676
3,689 General Dynamics Corp. ............................ 248,546
99,945 General Electric Co. (C) .......................... 9,919,541
2,347 Giddings & Lewis, Inc. ............................ 34,912
3,103 Grainger (W.W.), Inc. ............................. 229,622
3,042 Harnischfeger Industries, Inc. .................... 141,453
7,420 Illinois Tool Works, Inc. ......................... 605,658
6,697 Ingersoll-Rand Co. ................................ 292,157
2,552 Johnson Controls, Inc. ............................ 205,436
18,076 Laidlaw, Inc., Class B ............................ 248,545
12,762 McDonnell Douglas Corp. ........................... 778,482
465 NACCO Industries, Inc., Class A ................... 22,901
4,597 Navistar International Corp.* ..................... 43,097
3,482 Northrop Grumman Corp. ............................ 263,326
2,474 PACCAR, Inc. ...................................... 165,140
4,529 Parker-Hannifin Corp. ............................. 193,615
14,268 Raytheon Co. ...................................... 643,844
13,280 Rockwell International Corp. ...................... 861,540
4,828 Textron, Inc. ..................................... 506,940
8,500 Thermo Electron Corp.* ............................ 262,438
2,215 Timken Co. ........................................ 118,503
7,574 TRW, Inc. ......................................... 391,955
14,526 United Technologies Corp. ......................... 1,093,082
29,531 WMX Technologies, Inc. ............................ 904,387
-----------
25,474,920
-----------
BASIC MATERIALS - 5.01%
6,928 Air Products & Chemicals, Inc. .................... 470,238
13,749 Alcan Aluminum, Ltd. .............................. 465,747
17,262 AlliedSignal, Inc. ................................ 1,229,918
10,565 Aluminum Co. of America ........................... 718,420
6,261 Armco, Inc.* ...................................... 25,044
2,658 ASARCO, Inc. ...................................... 74,756
6,362 Avery-Dennison Corp. .............................. 244,937
1,894 Ball Corp. ........................................ 50,191
21,384 Barrick Gold Corp. ................................ 507,870
3,192 Bemis Co., Inc. ................................... 127,680
7,037 Bethlehem Steel Corp.* ............................ 58,055
3,057 Boise Cascade Corp. ............................... 93,239
6,054 Champion International Corp. ...................... 275,457
7,734 Crown Cork & Seal Co., Inc. ....................... 399,268
5,782 Cyprus Amax Minerals Co. .......................... 137,323
34,200 du Pont (E.I.) deNemours & Co. .................... 3,625,200
4,835 Eastman Chemical Co. .............................. 259,881
8,398 Engelhard Corp. ................................... 176,358
11,984 Freeport-McMoran Copper & Gold, Inc., Class B ..... 364,014
5,234 Georgia-Pacific Corp. ............................. 379,465
3,691 Great Lakes Chemical Corp. ........................ 169,786
6,701 Hercules, Inc. .................................... 283,117
8,330 Homestake Mining Co. .............................. 125,991
10,214 Inco, Ltd., Class A ............................... 333,232
3,038 Inland Steel Industries, Inc. ..................... 59,241
18,464 International Paper Co. ........................... 717,788
5,013 James River Corp. of Virginia ..................... 146,004
6,734 Louisiana-Pacific Corp. ........................... 139,731
3,229 Mead Corp. ........................................ 171,137
2,797 Millipore Corp. ................................... 118,523
25,354 Minnesota Mining & Manufacturing Co. .............. 2,142,413
35,145 Monsanto Co. ...................................... 1,344,296
8,452 Morton International, Inc. ........................ 357,097
3,962 Nalco Chemical Co. ................................ 148,080
5,969 Newmont Mining Corp. .............................. 231,299
5,128 Nucor Corp. ....................................... 234,606
6,974 Pall Corp. ........................................ 161,274
3,963 Phelps Dodge Corp. ................................ 289,794
14,598 Placer Dome, Inc. ................................. 264,589
1,710 Potlatch Corp. .................................... 70,324
11,311 PPG Industries, Inc. .............................. 610,794
9,540 Praxair, Inc. ..................................... 428,108
2,847 Raychem Corp. ..................................... 234,522
3,529 Reynolds Metals Co. ............................... 218,798
3,955 Rohm & Haas Co. ................................... 296,131
5,936 Sigma Aldrich Corp. ............................... 183,274
6,014 Stone Container Corp. ............................. 66,906
3,311 Temple-Inland, Inc. ............................... 173,828
1,714 TRINOVA Corp. ..................................... 57,419
4,064 Union Camp Corp. .................................. 191,516
7,738 Union Carbide Corp. ............................... 342,407
5,075 USX-U.S. Steel Group, Inc. ........................ 135,122
6,228 Westvaco Corp. .................................... 156,479
12,182 Weyerhaeuser Co. .................................. 543,622
3,300 Willamette Industries, Inc. ....................... 206,250
5,417 Worthington Industries, Inc. ...................... 103,600
-----------
21,140,159
-----------
TRANSPORTATION - 2.93%
5,256 AMR Corp.* ........................................ 433,620
9,460 Burlington Northern Santa Fe Corp. ................ 700,040
2,449 Caliber System, Inc. .............................. 64,899
4,200 Case Corp. ........................................ 213,150
42,640 Chrysler Corp. .................................... 1,279,200
4,808 Conrail, Inc. ..................................... 542,102
12,866 CSX Corp. ......................................... 598,269
4,685 Delta Air Lines, Inc. ............................. 394,126
3,801 Ecolab, Inc. ...................................... 144,438
6,910 Federal Express Corp.* ............................ 360,184
71,521 Ford Motor Co. .................................... 2,243,971
45,585 General Motors Corp. .............................. 2,524,269
11,649 Lockheed Martin Corp. ............................. 978,516
7,575 Norfolk Southern Corp. ............................ 645,769
4,689 Ryder System, Inc. ................................ 137,153
8,396 Southwest Airlines Co. ............................ 185,762
14,667 Union Pacific Corp. ............................... 832,352
3,695 US Air Group, Inc.* ............................... 90,528
-----------
12,368,348
-----------
CHEMICALS AND DRUGS - 0.21%
5,235 Grace (W.R.) & Co. ................................ 248,008
4,568 Mallinckrodt, Inc. ................................ 187,859
17,759 Tenet Healthcare Corp.* ........................... 437,315
-----------
873,182
-----------
METALS AND MINING - 0.13%
10,482 Allegheny Teledyne, Inc. .......................... 294,806
12,100 Battle Mountain Gold Co. .......................... 80,163
7,796 Echo Bay Mines, Ltd. .............................. 51,649
8,032 Santa Fe Pacific Gold Corp. ....................... 132,528
-----------
559,146
-----------
Total Common Stocks ............................... 350,627,131
(Cost $254,226,433) -----------
<PAGE>
Value
Par Value (Note 2)
- ------- --------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS (A) - 17.70%
FEDERAL HOME LOAN
MORTGAGE CORPORATION (C) - 16.64%
$70,159,000 6.50%, 04/01/97 ................................... $ 70,159,000
------------
U.S. TREASURY BILL (B) - 1.06%
4,500,000 5.05%, 06/19/97 ................................... 4,448,196
------------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS ...... 74,607,196
(Cost $74,608,572) ------------
TOTAL INVESTMENTS - 100.85% ................................... 425,234,327
(Cost $328,835,005) ------------
NET OTHER ASSETS AND LIABILITIES - (0.85)% .................... (3,582,455)
------------
NET ASSETS - 100.00% .......................................... $421,651,872
============
- ----------------------------------------
* Non-income producing security.
ADR American Depositary Receipt.
(A) Annualized yield at time of purchase.
(B) Security has been deposited as an initial margin on open
futures contracts.
At March 31, 1997, the Fund's open futures contracts were as follows:
NUMBER OF
CONTRACTS CONTRACT EXPIRATION OPENING CURRENT
PURCHASED (SOLD) TYPE DATE POSITION MARKET VALUE
- --------------------------------------------------------------------------------
S&P 500
191 Stock Index 6/97 $ 78,044,900 $ 72,389,000
============ ============
(C) All or a portion of these shares are used as collateral on open
futures contracts.
See Notes to Financial Statements.
<PAGE>
Galaxy
Fund II
Small Company Index Fund
PORTFOLIO OF INVESTMENTS
March 31, 1997
VALUE
SHARES (NOTE 2)
- ------ --------
COMMON STOCKS - 84.31%
FINANCE - 19.12%
6,600 Acordia, Inc. ...................................... $ 214,500
52,762 AFLAC, Inc. ........................................ 1,978,575
6,600 Alex Brown, Inc. ................................... 280,500
441 Alleghany Corp.* ................................... 91,873
9,800 AMBAC, Inc. ........................................ 632,100
7,700 American Annuity Group, Inc. ....................... 120,313
1,300 American Bankers Insurance Group, Inc. ............. 63,375
4,100 American Health Properties, Inc., REIT ............. 100,963
2,600 American National Insurance Co. .................... 203,450
6,600 AmeriCredit Corp.* ................................. 114,675
11,750 AmSouth Bancorp .................................... 566,938
2,400 Amvestors Financial Corp. .......................... 36,000
6,000 Argonaut Group, Inc. ............................... 168,000
9,450 Bancorp Hawaii, Inc. ............................... 405,169
5,980 BancorpSouth, Inc. ................................. 163,703
750 Bank of Granite Corp. .............................. 22,125
16,800 BanPonce Corp. ..................................... 596,400
40,728 Bear Stearns Cos., Inc. ............................ 1,069,110
4,400 Berkley (W.R.) Corp. ............................... 224,400
5,200 Berkshire Realty Co., REIT ......................... 56,550
1,126 California Federal Bancorp, Inc.* .................. 19,424
12,500 Capital One Financial Corp. ........................ 465,625
700 Capital Re Corp. ................................... 29,838
6,600 Capstead Mortgage Corp., REIT ...................... 134,475
300 CCB Financial Corp. ................................ 19,275
13,050 Central Fidelity Banks, Inc. ....................... 362,138
10,216 Charter One Financial, Inc. ........................ 448,227
14,553 Cincinnati Financial Corp. ......................... 1,022,348
8,400 City National Corp. ................................ 184,800
1,700 CNA Financial Corp.* ............................... 182,325
4,400 Coast Savings Financial, Inc.* ..................... 174,350
4,100 Collective Bancorp, Inc. ........................... 158,363
7,292 Commerce Bancshares, Inc. .......................... 332,698
9,000 Commercial Federal Corp. ........................... 303,750
9,050 Compass Bancshares, Inc. ........................... 402,725
12,800 Continental Airlines, Inc., Class B* ............... 401,600
19,577 Countrywide Credit Industries, Inc. ................ 484,531
5,850 Crawford & Co., Class B ............................ 85,556
19,635 Crestar Financial Corp. ............................ 679,845
11,200 CRIIMI MAE, Inc., REIT ............................. 165,200
4,000 Cullen/Frost Bankers, Inc. ......................... 142,500
4,600 CWM Mortgage Holdings, Inc., REIT .................. 89,125
5,600 Dauphin Deposit Corp. .............................. 232,400
3,200 Deposit Guaranty Corp. ............................. 96,000
32,818 Dime Bancorp, Inc.* ................................ 504,577
2,677 Downey Financial Corp. ............................. 54,209
1,000 Eaton Vance Corp. .................................. 44,250
14,083 Edwards (A.G.), Inc. ............................... 433,052
3,600 Enhance Financial Services Group, Inc. ............. 142,200
44,900 Equifax, Inc. ...................................... 1,223,525
19,000 Equitable Cos., Inc. ............................... 517,750
6,300 Equitable of Iowa Cos .............................. 315,000
307 F & M National Corp. ............................... 6,294
6,700 Federal Realty Investment Trust .................... 172,525
17,265 First America Bank Corp. ........................... 1,031,584
5,500 First American Corp. ............................... 349,938
400 First American Financial Corp. ..................... 14,900
2,500 First Citizens Bancshares, Inc., Class A ........... 213,750
7,187 First Commerce Corp. ............................... 291,074
1,415 First Commercial Corp. ............................. 54,301
1,200 First Empire State Corp. ........................... 384,000
2,200 First Financial Bancorp ............................ 74,800
6,375 First Financial Corp. .............................. 166,547
4,500 First Hawaiian, Inc. ............................... 140,063
2,672 First Michigan Bank Corp. .......................... 81,496
16,700 First Security Corp. ............................... 536,488
17,100 First Tennessee National Corp. ..................... 722,475
18,800 First USA, Inc. .................................... 796,650
11,850 First Virginia Banks, Inc. ......................... 607,313
36,400 Firstar Corp. ...................................... 1,001,000
4,500 FirstBank Puerto Rico .............................. 114,188
4,900 Foremost Corp. of America .......................... 284,200
22,200 Franklin Resources, Inc. ........................... 1,132,200
4,455 Fremont General Corp. .............................. 125,297
4,200 Fund American Enterprises Holdings, Inc. ........... 428,925
1,274 Gainsco, Inc. ...................................... 11,466
3,700 Gallagher (Arthur J.) & Co. ........................ 121,638
8,468 Glendale Federal Savings Bank* ..................... 194,764
1,035 Hancock Holding Co. ................................ 41,141
5,000 Hartford Steam Boiler Inspection & Insurance Co. ... 223,750
5,000 Health Care Property Investors, Inc., REIT* ........ 165,625
7,600 Health & Retirement Properties Trust, REIT ......... 136,800
26,400 Hibernia Corp., Class A ............................ 346,500
7,400 Horace Mann Educators Corp. ........................ 326,525
35,839 Huntington Bancshares, Inc. ........................ 940,774
11,140 Imperial Credit Industries, Inc.* .................. 224,193
53 Investors Financial Services Corp. ................. 1,623
5,300 John Alden Financial Corp. ......................... 88,775
3,100 John Nuveen Co., Class A ........................... 91,838
9,800 Kansas City Southern Industries, Inc. .............. 490,000
4,950 Keystone Financial, Inc. ........................... 124,988
4,500 Labone, Inc. ....................................... 74,250
5,250 Legg Mason, Inc. ................................... 221,813
21,300 Lehman Brothers Holdings, Inc. ..................... 620,363
300 Liberty Bancorp, Inc. .............................. 13,950
3,600 Liberty Corp. ...................................... 151,200
1,900 Life Re Corp. ...................................... 77,425
600 Magna Bancorp, Inc. ................................ 10,950
5,200 Magna Group, Inc. .................................. 148,200
800 Mark Twain Bancshares, Inc. ........................ 40,400
20,060 Marshall & Ilsley Corp. ............................ 732,190
8,700 Mercantile Bancorp, Inc. ........................... 461,100
10,300 Mercantile Bankshares Corp. ........................ 347,625
700 Mercer International, Inc. ......................... 6,738
26,799 Mercury Finance Co. ................................ 70,347
2,200 Mercury General Corp. .............................. 134,200
1,800 Merry Land & Investment Co., Inc., REIT ............ 36,900
4,591 Mid-Am, Inc. ....................................... 76,899
1,600 NAC Re Corp. ....................................... 57,000
2,090 National Auto Credit, Inc.* ........................ 19,333
1,050 National Commerce Bancorp .......................... 40,425
8,200 Nationwide Health Properties, Inc., REIT ........... 175,275
11,500 New Plan Realty Trust, REIT ........................ 260,188
2,000 North American Mortgage Co. ........................ 40,750
3,440 North Fork Bancorp., Inc. .......................... 124,270
50,900 Northern Trust Corp. ............................... 1,908,750
8,000 Ohio Casualty Corp. ................................ 329,000
12,953 Old Kent Financial Corp. ........................... 610,410
2,551 Old National Bancorp ............................... 95,981
21,300 Old Republic International Corp. ................... 545,813
2,600 ONBANCorp, Inc. .................................... 121,550
5,156 Orion Capital Corp. ................................ 318,383
16,650 Paine Webber Group, Inc. ........................... 470,363
1,100 PEC Israel Economic Corp.* ......................... 20,763
1,500 PennCorp Financial Group, Inc. ..................... 48,000
1,200 People's Bank ...................................... 39,000
3,000 Peoples Heritage Financial Group, Inc. ............. 92,250
1,200 Pioneer Group, Inc. ................................ 31,050
4,700 Price Enterprises, Inc. ............................ 86,363
6,600 Price (T. Rowe) Associates ......................... 245,025
18,500 Progressive Corp. of Ohio .......................... 1,181,688
3,600 Protective Life Corp. .............................. 151,200
2,205 Provident Bankshares Corp. ......................... 84,893
8,600 Provident Cos., Inc. ............................... 470,850
9,600 Public Storage, Inc., REIT ......................... 278,400
1,100 PXRE Corp. ......................................... 28,188
14,136 Quick & Reilly Group, Inc. ......................... 293,322
2,500 RCSB Financial, Inc. ............................... 75,000
12,976 Regions Financial Corp. ............................ 720,168
20,468 Resource Bancshares Mortgage Group, Inc. ........... 322,371
3,900 Resource Mortgage Capital, Inc., REIT .............. 100,913
12,300 Riggs National Corp. ............................... 247,538
3,816 Roosevelt Financial Group, Inc. .................... 82,998
13,800 Rouse Co. .......................................... 403,650
7,600 S & T Bancorp, Inc. ................................ 231,800
25,700 Schwab (Charles) Corp. ............................. 819,188
6,996 Security Capital Pacific Trust, REIT ............... 170,528
12,500 Signet Banking Corp. ............................... 368,750
19,220 Southern National Corp. ............................ 715,945
17,150 Southtrust Corp. ................................... 619,544
4,656 Sovereign Bancorp, Inc. ............................ 55,872
8,400 Standard Federal Bancorp., Inc. .................... 487,200
19,500 Star Banc Corp. .................................... 777,563
27,200 State Street Boston Corp. .......................... 1,887,000
22,600 Student Loan Marketing Association (C) ............. 2,152,650
5,500 St. Paul Bancorp, Inc. ............................. 150,563
21,227 Summit Bancorp ..................................... 928,681
20,700 SunAmerica, Inc. ................................... 778,838
625 Susquehanna Bancshares, Inc. ....................... 20,547
25,050 Synovus Financial Corp. ............................ 738,975
5,600 Taubman Centers, Inc., REIT ........................ 72,800
1,200 TCF Financial Corp. ................................ 47,550
800 Trans Financial, Inc. .............................. 18,000
1,600 Transatlantic Holdings, Inc. ....................... 134,400
13,600 Travelers Property Casualty Corp., Class A ......... 431,800
400 Trenwick Group, Inc. ............................... 19,800
6,000 Trust Co. of New Jersey ............................ 102,000
8,500 20th Century Industries ............................ 148,750
2,464 UMB Financial Corp. ................................ 97,328
7,387 Union Planters Corp. ............................... 300,097
8,600 United Asset Management Corp. ...................... 220,375
2,600 United Bankshares, Inc. ............................ 89,375
2,700 United Carolina Bancshares Corp. ................... 115,763
3,300 United Companies Financial Corp. ................... 68,063
7,600 United Dominion Realty Trust, Inc. ................. 111,150
7,200 United Insurance Cos., Inc.* ....................... 164,700
12,000 Unitrin, Inc. ...................................... 597,000
4,300 Universal Health Realty Income Trust, REIT ......... 86,000
2,000 UST Corp. .......................................... 40,250
9,883 Valley National Bancorp ............................ 268,076
2,900 Vornado Realty Trust, REIT ......................... 193,575
11,319 Washington Federal, Inc. ........................... 257,507
13,050 Washington Mutual, Inc. ............................ 630,478
6,200 Washington National Corp. .......................... 172,825
1,100 Washington Real Estate Investment Trust ............ 19,663
3,400 Weingarten Realty Investors, REIT .................. 144,075
3,400 Wellsford Residential Property Trust, REIT ......... 98,600
1,100 Whitney Holding Corp. .............................. 42,831
11,300 Wilmington Trust Corp. ............................. 480,250
4,400 Zions Bancorp ...................................... 522,500
-------------
59,165,704
-------------
CONSUMER STAPLES - 14.22%
7,300 AAR Corp. .......................................... 219,000
1,900 ADAC Laboratories .................................. 39,663
11,600 Airgas, Inc.* ...................................... 195,750
3,600 Alliance Pharmaceutical Corp.* ..................... 43,650
5,700 Amylin Pharmaceuticals, Inc.* ...................... 69,113
4,800 Apogee Enterprises, Inc. ........................... 94,800
450 Apple South, Inc. .................................. 5,906
21,240 Apria Healthcare Group, Inc.* ...................... 384,975
1,500 Aztar Corp.* ....................................... 10,687
6,666 Ballard Medical Products ........................... 139,152
5,700 Barr Laboratories, Inc.* ........................... 219,450
4,500 BBN Corp.* ......................................... 74,812
9,193 Bergen Brunswig Corp., Class A ..................... 273,492
1,300 Bindley Western Industries, Inc. ................... 24,375
15,000 Biogen, Inc.* ...................................... 560,625
71 Block Drug Co., Inc., Class A ...................... 3,124
12,466 Bob Evans Farms, Inc. .............................. 171,407
100 Books-A-Million, Inc.* ............................. 475
7,800 Borg-Warner Automotive, Inc. ....................... 332,475
9,700 Boston Chicken, Inc.* .............................. 295,850
15,650 Brinker International, Inc.* ....................... 197,581
2,100 Brown (Tom), Inc.* ................................. 38,850
12,148 Buffets, Inc.* ..................................... 87,314
9,800 Burlington Industries, Inc.* ....................... 112,700
12,100 Caraustar Industries, Inc. ......................... 300,987
18,256 Cardinal Health, Inc. .............................. 992,670
6,900 Carter-Wallace, Inc. ............................... 94,012
500 Cato Corp., Class A ................................ 2,875
16,900 Centocor, Inc.* .................................... 515,450
4,800 Champion Enterprises, Inc.* ........................ 71,400
4,200 Chemed Corp. ....................................... 151,725
9,400 Chiquita Brands International, Inc. ................ 146,875
35,200 Chiron Corp.* ...................................... 655,600
7,400 Chronimed, Inc.* ................................... 56,425
4,600 Church & Dwight Co., Inc. .......................... 132,250
5,200 Coca-Cola Bottling Co. ............................. 226,200
20,200 Coca-Cola Enterprises, Inc. ........................ 1,158,975
4,800 Coleman Co.* ....................................... 64,200
4,200 Coventry Corp.* .................................... 47,775
15,450 Cracker Barrel Old Country Store, Inc. ............. 403,630
4,000 Cytogen Corp.* ..................................... 23,250
11,400 Dean Foods Co. ..................................... 394,725
3,600 Dekalb Genetics Corp., Class B ..................... 191,700
700 Diagnostic Products Corp. .......................... 20,825
10,200 Dole Food Co., Inc. ................................ 385,050
19,753 Dollar General Corp. ............................... 617,281
5,300 Dreyer's Grand Ice Cream, Inc. ..................... 174,900
5,000 Duty Free International, Inc. ...................... 73,125
12,789 Enzo Biochem, Inc. * ............................... 175,849
8,800 First Brands Corp. ................................. 215,600
105,400 Food Lion, Inc., Class B ........................... 846,494
12,900 Foodmaker, Inc. * .................................. 130,613
23,600 Forest Laboratories, Inc.* ......................... 887,950
13,199 Foundation Health Corp.* ........................... 481,764
12,100 Furniture Brands International, Inc.* .............. 181,500
800 Furon Co. .......................................... 17,000
3,150 G & K Services, Inc., Class A ...................... 94,500
5,700 Geltex Pharmaceuticals, Inc.* ...................... 121,125
8,250 Genesis Health Ventures, Inc.* ..................... 257,812
5,100 Griffon Corp.* ..................................... 61,200
1,700 Guilford Mills, Inc. ............................... 51,212
3,800 Haemonetics Corp.* ................................. 67,450
1,000 Hancock Fabrics, Inc. .............................. 11,000
9,200 Hannaford Brothers Co. ............................. 305,900
26,550 Harte-Hanks Communications, Inc. ................... 773,269
18,920 HBO & Co. .......................................... 898,700
3,400 Health Care REIT, Inc. ............................. 80,750
7,050 Health Care & Retirement Corp.* .................... 202,687
15,693 Health Management Associates, Inc., Class A* ....... 372,709
12,100 Health Systems International, Inc., Class A* ....... 340,312
22,200 Healthsource, Inc.* ................................ 455,100
5,800 Herbalife International, Inc. ...................... 105,125
8,100 Hillenbrand Industries, Inc. ....................... 322,987
5,422 Horizon/CMS Healthcare Corp.* ...................... 84,041
8,900 Hormel Foods Corp. ................................. 228,062
25,300 Host Marriott Corp.* ............................... 430,100
1,260 Host Marriott Services Corp.* ...................... 11,182
2,550 Hudson Foods, Inc., Class A ........................ 39,844
28,900 IBP, Inc. .......................................... 711,663
9,240 ICN Pharmaceuticals, Inc. .......................... 205,590
11,000 ICOS Corp.* ........................................ 80,437
7,300 ImmuLogic Pharmaceutical Corp.* .................... 31,937
3,300 Immunex Corp.* ..................................... 87,450
7,400 International Dairy Queen, Inc., Class A* .......... 162,800
5,150 International Multifoods Corp. ..................... 105,575
9,800 Interneuron Pharmaceuticals, Inc. * ................ 172,725
8,300 Interstate Bakeries Corp. .......................... 392,175
4,200 Invacare Corp. ..................................... 98,700
14,890 IVAX Corp. ......................................... 147,039
500 Jacobs Engineering Group, Inc.* .................... 12,250
6,200 Jones Apparel Group, Inc.* ......................... 230,175
5,700 Kaydon Corp. ....................................... 238,687
6,900 Kellwood Co. ....................................... 172,500
19,800 Kinetic Concepts, Inc. ............................. 282,150
18,600 Kohl's Corp.* ...................................... 788,175
12,600 Komag, Inc.* ....................................... 382,725
16,200 La Quinta Inns, Inc. ............................... 332,100
8,121 Lancaster Colony Corp. ............................. 373,566
2,900 Lance, Inc. ........................................ 52,200
22,600 Leggett & Platt, Inc. .............................. 734,500
7,200 Lennar Corp. ....................................... 176,400
1,350 Life Technologies, Inc. ............................ 35,437
2,527 Ligand Pharmaceuticals, Inc., Class B* ............. 28,429
2,600 Lincare Holdings, Inc.* ............................ 107,250
6,675 Lindsay Manufacturing Co. .......................... 218,606
6,600 Liposome Co.* ...................................... 134,475
4,400 Lone Star Steakhouse & Saloon, Inc.* ............... 100,650
4,000 Magellan Health Services, Inc.* .................... 98,500
22,300 McCormick & Co., Inc. .............................. 546,350
6,400 Medimmune, Inc.* ................................... 88,000
7,200 Meditrust Corp., REIT .............................. 268,200
2,000 MGM Grand, Inc.* ................................... 72,500
1,700 Michael Foods, Inc. ................................ 17,637
3,800 Michaels Stores, Inc.* ............................. 69,825
5,400 Mid-Atlantic Medical Services, Inc.* ............... 72,900
32,300 Mirage Resorts, Inc.* .............................. 686,375
4,050 Mohawk Industries, Inc.* ........................... 84,544
9,750 Multicare Cos., Inc.* .............................. 184,031
31,000 Mylan Laboratories, Inc. ........................... 453,375
4,900 Myriad Genetics, Inc.* ............................. 169,050
1,800 National Presto Industries, Inc. ................... 64,575
1,200 Nautica Enterprises, Inc.* ......................... 30,150
3,500 Noven Pharmaceuticals, Inc.* ....................... 31,500
1,400 Nu-Kote Holding, Inc., Class A* .................... 3,850
4,000 Oakwood Homes Corp. ................................ 70,500
1,564 Omega Healthcare Investors, Inc., REIT ............. 48,875
5,350 Outback Steakhouse, Inc.* .......................... 107,000
3,450 Owens & Minor, Inc. ................................ 39,244
19,600 Oxford Health Plans, Inc.* ......................... 1,149,050
100 Park-Ohio Industries, Inc.* ........................ 1,325
11,200 Perrigo Co.* ....................................... 121,800
14,100 PETsMART, Inc.* .................................... 285,525
3,000 Phillips-Van Heusen Corp. .......................... 35,625
9,650 PhyCor, Inc.* ...................................... 262,963
5,100 Physicians Corp. of America* ....................... 23,587
300 Pope & Talbot, Inc. ................................ 4,125
5,700 Regis Corp. ........................................ 99,750
8,000 Renal Treatment Centers, Inc.* ..................... 180,000
15,500 Revco D. S., Inc.* ................................. 627,750
14,907 Richfood Holdings, Inc. ............................ 279,506
68,340 RJR Nabisco Holdings Corp. (C) ..................... 2,203,965
1,200 Roberts Pharmaceutical Corp.* ...................... 15,300
4,550 Ruby Tuesday, Inc.* ................................ 79,056
600 Ryland Group, Inc. ................................. 7,050
8,000 Savannah Foods & Industries, Inc. .................. 105,000
6,000 Scherer (R.P.) Corp.* .............................. 311,250
6,500 Scios, Inc.* ....................................... 44,281
2,700 SEQUUS Pharmaceuticals, Inc.* ...................... 20,587
30,050 Service Merchandise Co.* ........................... 101,419
500 Sierra Health Services, Inc.* ...................... 12,687
2,300 Smithfield Foods, Inc.* ............................ 97,175
8,600 Smith's Food & Drug Centers, Inc., Class B* ........ 294,550
5,900 Smucker (J.M.) Co., Class A ........................ 98,087
1,800 Sofamor/Danek Group, Inc.* ......................... 65,025
10,000 Southland Corp.* ................................... 31,562
38 Standard Commercial Corp.* ......................... 679
1,700 Standex International Corp. ........................ 44,412
4,600 Stanhome, Inc. ..................................... 114,425
23,600 Starbucks Corp.* ................................... 699,150
12,896 STERIS Corp.* ...................................... 314,340
21,000 Stryker Corp. ...................................... 522,375
18,700 Sunbeam Corp. ...................................... 561,000
5,100 Sunrise Medical, Inc.* ............................. 66,300
18,800 Sybron International Corp.* ........................ 521,700
11,900 Tambrands, Inc. .................................... 510,212
7,150 Tecnol Medical Products, Inc.* ..................... 112,612
1,650 TheraTech, Inc.* ................................... 17,738
8,400 Toll Brothers, Inc.* ............................... 153,300
4,254 Tootsie Roll Industries, Inc. ...................... 190,894
21,400 Topps Co.* ......................................... 85,600
3,100 Triarc Cos., Inc.* ................................. 54,250
40,749 Tyson Foods, Inc., Class A ......................... 789,512
17,375 Unifi, Inc. ........................................ 529,937
3 United Healthcare Corp.* ........................... 143
9,900 United States Filter Corp.* ........................ 305,662
10,700 Universal Corp. .................................... 308,962
7,900 Universal Foods Corp. .............................. 262,675
14,000 Universal Health Services, Inc., Class B* .......... 460,250
900 Valmont Industries, Inc. ........................... 35,100
12,127 Value Health, Inc.* ................................ 224,350
4,426 Vencor, Inc.* ...................................... 167,635
8,000 Ventritex, Inc.* ................................... 134,000
6,600 Vicor Corp.* ....................................... 88,275
1,400 VISX, Inc.* ........................................ 30,975
8,550 Vivra, Inc.* ....................................... 230,850
6,900 Vons Cos., Inc.* ................................... 446,775
8,600 Warnaco Group, Inc., Class A ....................... 255,850
9,422 Watson Pharmaceuticals, Inc.* ...................... 336,837
2,800 WD-40 Co. .......................................... 142,800
1,400 Webb (Del) Corp. ................................... 21,700
3,100 Whole Foods Market, Inc.* .......................... 64,325
1,700 Windmere-Durable Holdings .......................... 24,013
600 WLR Foods, Inc. .................................... 5,850
1,350 Wolverine World Wide, Inc. ......................... 49,275
-------------
43,995,053
-------------
TECHNOLOGY - 14.02%
29,600 Acxiom Corp.* ...................................... 425,500
29,800 Adaptec, Inc.* ..................................... 1,065,350
20,800 Adobe Systems, Inc. (C) ............................ 834,600
1,800 Adtran, Inc.* ...................................... 45,000
2,200 Advanced Technology Laboratories, Inc.* ............ 65,175
17,300 America Online, Inc.* .............................. 733,087
17,600 American Power Conversion Corp.* ................... 380,600
3,000 Amphenol Corp., Class A* ........................... 75,000
75,500 Analog Devices, Inc.* .............................. 1,698,750
11,000 Analysts International Corp. ....................... 242,000
5,600 Anixter International, Inc.* ....................... 69,300
11,500 ANTEC Corp.* ....................................... 90,562
7,000 Applix, Inc.* ...................................... 44,625
11,304 Arrow Electronics, Inc.* ........................... 637,262
9,700 Ascend Communications, Inc.* ....................... 395,275
25 Associated Group, Inc., Class A* ................... 944
8,686 AST Research, Inc.* ................................ 41,259
11,200 Atmel Corp.* ....................................... 268,100
3,100 Aura Systems, Inc.* ................................ 6,103
2,000 Avid Technology, Inc.* ............................. 26,375
10,600 Avnet, Inc. ........................................ 597,575
8,300 BE Aerospace, Inc.* ................................ 203,350
2,200 BHC Communications, Inc., Class A .................. 231,550
3,600 Black Box Corp.* ................................... 96,750
2,000 BMC Industries, Inc. ............................... 56,500
18,200 BMC Software, Inc.* ................................ 839,475
675 Boole & Babbage, Inc.* ............................. 16,031
6,410 Borland International, Inc.* ....................... 45,671
3,000 Boston Technology, Inc.* ........................... 56,625
6,400 Broderbund Software, Inc.* ......................... 140,000
6,500 BW/IP, Inc. ........................................ 98,313
4,100 BISYS Group, Inc.* ................................. 129,150
22,775 Cadence Design Systems, Inc.* ...................... 782,891
7,100 Calgene, Inc.* ..................................... 53,694
6,400 California Microwave, Inc.* ........................ 92,000
19,800 Cascade Communications Corp.* ...................... 522,225
800 Catalina Marketing Corp.* .......................... 32,500
8,300 Catellus Development Corp.* ........................ 126,575
11,800 C-Cube Microsystems, Inc.* ......................... 300,900
1,100 CDI Corp.* ......................................... 40,837
7,700 Century Telephone Enterprises, Inc. ................ 227,150
8,700 Cephalon, Inc.* .................................... 182,700
2,400 Cerner Corp.* ...................................... 31,500
7,700 Chips & Technologies, Inc.* ........................ 79,887
14,600 Cirrus Logic, Inc.* ................................ 177,025
1,300 Coherent, Inc.* .................................... 62,155
2,000 Computer Network Technology Corp.* ................. 10,750
9,100 Compuware Corp.* ................................... 571,025
4,300 Comverse Technology, Inc.* ......................... 169,850
1,900 Control Data Systems, Inc.* ........................ 28,737
3,800 CopyTele, Inc.* .................................... 20,663
36,700 Cox Communications, Inc., Class A* ................. 756,937
9,150 Credence Systems Corp.* ............................ 178,425
200 C-Tec Corp.* ....................................... 5,650
26,500 Cypress Semiconductor Corp.* ....................... 331,250
2,400 Cyrix Corp.* ....................................... 45,600
11,900 Dallas Semiconductor Corp. ......................... 315,350
4,000 Datascope Corp.* ................................... 73,000
700 Devon Group, Inc.* ................................. 20,650
300 Dialogic Corp.* .................................... 5,813
13,600 DSP Communications, Inc.* .......................... 130,900
4,400 Dynatech Corp.* .................................... 132,000
70,700 Electronic Data Systems Corp. ...................... 2,854,512
100 Ennis Business Forms, Inc. ......................... 1,100
2,800 ESS Technology, Inc.* .............................. 67,900
5,100 Exabyte Corp.* ..................................... 61,837
3,000 Fair Issac & Co., Inc. ............................. 108,375
11,366 Federal Signal Corp. ............................... 279,888
1,700 FileNet Corp. * .................................... 27,412
5,500 FirstMerit Corp. ................................... 228,938
10,300 Fiserv, Inc.* ...................................... 383,675
8,100 Fore Systems, Inc.* ................................ 121,500
300 Fusion Systems Corp.* .............................. 7,125
2,400 General Datacomm Industries, Inc.* ................. 15,900
13,000 Genzyme Corp.* ..................................... 292,500
1,700 Gerber Scientific, Inc. ............................ 26,350
1,680 Harman International Industries, Inc. .............. 56,280
198 Healthdyne Technologies, Inc.* ..................... 2,787
2,100 Heartland Wireless Communications, Inc.* ........... 5,512
4,000 HPR, Inc.* ......................................... 45,000
13,200 IDEXX Laboratories, Inc.* .......................... 184,800
5,100 Information Resources, Inc.* ....................... 68,850
32,400 Informix Corp.* .................................... 490,050
18,400 Input/Output, Inc.* ................................ 266,800
3,800 Insituform Technologies, Inc., Class A* ............ 22,800
16,600 Integrated Device Technology, Inc.* ................ 166,000
8,000 Interdigital Communications Corp.* ................. 42,000
9,300 Interface, Inc., Class A ........................... 233,080
28,500 International Game Technology ...................... 459,563
7,600 International Rectifier Corp.* ..................... 90,250
3,800 InterVoice, Inc.* .................................. 40,850
36,100 Iomega Corp.* ...................................... 586,625
4,400 Kimball International, Inc., Class B ............... 167,200
4,600 KLA Instruments Corp.* ............................. 167,900
1,400 Lam Research Corp.* ................................ 47,250
2,900 Landstar System, Inc.* ............................. 68,875
9,600 Lattice Semiconductor Corp.* ....................... 439,200
25,300 Linear Technology Corp. ............................ 1,119,525
1,800 Macromedia, Inc.* .................................. 16,312
8,000 MagneTek, Inc.* .................................... 129,000
5,038 Mark IV Industries, Inc. ........................... 118,392
4,000 Marshall Industries, Inc.* ......................... 126,000
1,500 Material Sciences Corp.* ........................... 25,312
19,000 Maxim Integrated Products, Inc.* ................... 919,125
4,350 McAfee Associates, Inc.* ........................... 192,487
500 McWhorter Technologies, Inc.* ...................... 10,437
1,400 Metricom, Inc.* .................................... 14,000
1,200 MicroAge, Inc.* .................................... 16,200
7,875 Microchip Technology, Inc.* ........................ 236,250
2,500 Micron Electronics, Inc.* .......................... 47,812
6,100 MicroTouch Systems, Inc.* .......................... 120,475
9,500 Mobile Telecommunications Technologies Corp.* ...... 59,375
18,008 Molex, Inc. ........................................ 639,284
100 MTS Systems Corp. .................................. 2,200
18,256 Nellcor Puritan Bennett, Inc.* ..................... 321,762
4,900 NETCOM On-Line Communication Services, Inc.* ....... 47,162
15,000 NetManage, Inc.* ................................... 42,656
11,600 Network General Corp.* ............................. 249,400
3,600 Oak Industries, Inc.* .............................. 71,100
11,200 Octel Communications Corp.* ........................ 177,800
1,300 OIS Optical Imaging Systems, Inc.* ................. 2,762
800 Optical Data Systems, Inc.* ........................ 10,000
5,600 PairGain Technologies, Inc.* ....................... 165,900
22,800 Parametric Technology Corp.* ....................... 1,028,850
1,463 Paxar Corp.* ....................................... 28,346
13,800 Paxson Communications Corp.* ....................... 148,350
14,775 Paychex, Inc. ...................................... 607,622
10,800 PeopleSoft, Inc.* .................................. 432,000
145 PerSeptive Biosystems, Inc.* ....................... 1,142
82 PerSeptive Biosystems, Inc., Warrants*
(Exp. 09/11/2003) ................................. 195
15,350 Pioneer Standard Electronics, Inc. ................. 195,713
7,400 Platinum Technology, Inc.* ......................... 87,875
3,100 Policy Management Systems Corp.* ................... 135,237
5,900 Premisys Communications, Inc.* ..................... 47,937
100 Presstek, Inc.* .................................... 4,950
100 Progress Software Corp.* ........................... 1,663
2,200 Protein Design Laboratories, Inc.* ................. 66,000
12,450 Quantum Corp.* ..................................... 480,881
25,600 Reynolds & Reynolds Co., Class A ................... 611,200
6,600 Robotic Vision Systems, Inc.* ...................... 75,075
10,000 Sanmina Corp.* ..................................... 447,500
6,500 SCI Systems, Inc.* ................................. 329,062
13,000 Sensormatic Electronics Corp. ...................... 219,375
22,700 Shiva Corp.* ....................................... 200,044
1,700 Standard Microsystems Corp.* ....................... 17,637
7,900 Standard Register Co. .............................. 258,725
7,746 Sterling Software, Inc.* ........................... 213,982
13,528 Storage Technology Corp.* .......................... 530,974
4,700 Stratus Computer, Inc.* ............................ 145,700
8,900 Structural Dynamics Research Corp.* ................ 184,675
6,150 Summit Technology, Inc.* ........................... 39,975
10,000 SunGard Data Systems, Inc.* ........................ 435,000
11,600 Sybase, Inc.* ...................................... 162,400
6,300 Symantec Corp.* .................................... 89,775
2,400 Symmetricom, Inc.* ................................. 34,200
4,000 Synopsys, Inc.* .................................... 100,000
11,925 System Software Associates, Inc.* .................. 69,314
700 Systems & Computer Technology Corp.* ............... 13,562
14,800 Systemsoft Corp.* .................................. 148,000
7,800 Tech Data Corp.* ................................... 188,175
48,450 Tele-Communications, Inc. Liberty
Media Group, Series A* ............................. 965,972
20,000 Teradyne, Inc.* .................................... 577,500
900 Thermo Cardiosystems, Inc.* ........................ 17,325
4,600 3D Systems Corp.* .................................. 41,400
6,400 3DO Co.* ........................................... 16,800
13,600 Total System Services, Inc. ........................ 380,800
200 Tseng Laboratories, Inc.* .......................... 600
200 Unitrode Corp.* .................................... 6,500
10,800 U.S. Robotics Corp. ................................ 598,050
6,650 Vanguard Cellular Systems, Inc., Class A* .......... 73,150
5,000 VeriFone, Inc.* .................................... 163,750
3,200 Viewlogic Systems, Inc.* ........................... 44,600
15,000 Viking Office Products, Inc.* ...................... 290,625
6,543 Vishay Intertechnology, Inc.* ...................... 144,764
6,500 VLSI Technology, Inc.* ............................. 112,530
19,200 Wallace Computer Services, Inc. .................... 636,000
10,700 Western Digital Corp.* ............................. 605,888
23,600 Wheelabrator Technologies, Inc. .................... 309,750
1,500 WMS Industries, Inc.* .............................. 28,125
6,500 Wyle Electronics ................................... 218,562
31,900 Xilinx, Inc.* ...................................... 1,555,125
5,300 Young Broadcasting, Inc., Class A* ................. 127,863
10,400 Zero Corp. ......................................... 195,000
6,600 Zilog, Inc.* ....................................... 138,600
11,600 Zoran Corp.* ....................................... 187,050
-------------
43,391,348
-------------
CONSUMER CYCLICAL - 9.98%
7,750 Acclaim Entertainment, Inc.* ....................... 36,812
13,750 Advanta Corp., Class A ............................. 369,530
11,846 AES Corp.* ......................................... 663,375
700 Alexander's, Inc.* ................................. 48,475
650 American Business Information, Inc.* ............... 12,675
4,300 AnnTaylor Stores Corp.* ............................ 87,613
900 Arbor Drugs, Inc. .................................. 15,750
4,500 Arctic Cat, Inc. ................................... 44,437
200 Argosy Gaming Corp.* ............................... 750
2,300 Arvin Industries, Inc. ............................. 53,763
5,300 Bandag, Inc. ....................................... 266,987
6,825 Banta Corp. ........................................ 174,037
7,700 Belo (A.H.) Corp., Class A ......................... 284,900
10,100 Best Buy Co., Inc.* ................................ 103,525
2,100 Billing Information Concepts* ...................... 50,400
137 Bombay Company* .................................... 565
17,700 Boyd Gaming Corp.* ................................. 99,562
6,200 Breed Technologies, Inc. ........................... 120,900
2,300 Burlington Coat Factory Warehouse Corp.* ........... 41,400
8,850 Butler Manufacturing Co. ........................... 314,175
10,200 Cablevision Systems Corp., Class A* ................ 303,450
13,300 Callaway Golf Co. .................................. 380,712
10,800 Carlisle Cos., Inc. ................................ 315,900
3,300 Carson Pirie Scott & Co.* .......................... 101,887
5,000 Casey's General Stores, Inc. ....................... 96,250
1,200 Casino America, Inc.* .............................. 3,000
3,100 Casino Magic Corp. * ............................... 5,618
7,800 CellStar Corp.* .................................... 165,750
2,800 Central Newspapers, Inc., Class A .................. 140,350
15,093 Century Communications Corp., Class A* ............. 69,805
4,821 Chris-Craft Industries, Inc.* ...................... 191,049
13,250 Circus Circus Enterprises, Inc.* ................... 344,500
10,350 Claire's Stores, Inc. .............................. 173,362
20,043 Clayton Homes, Inc. ................................ 255,548
15,200 Clear Channel Communications, Inc.* ................ 651,700
9,980 Comdisco, Inc. ..................................... 310,627
24,200 CompUSA, Inc.* ..................................... 381,150
13,750 Consolidated Stores Corp.* ......................... 484,687
100 CPI Corp. .......................................... 1,687
10,300 Danaher Corp. ...................................... 428,737
5,100 Donaldson Co., Inc. ................................ 177,225
100 Dress Barn, Inc.* .................................. 1,688
2,300 Eagle Hardware & Garden, Inc.* ..................... 41,400
1,000 Exide Corp. ........................................ 16,375
900 Express Scripts, Inc., Class A* .................... 32,175
10,800 Family Dollar Stores, Inc. ......................... 252,450
2,400 Fibreboard Corp.* .................................. 83,100
1,900 Fisher Scientific International, Inc. .............. 83,837
17,050 Flowers Industries, Inc. ........................... 390,019
1,100 Franklin Quest Co.* ................................ 23,237
9,200 Friedman's, Inc., Class A* ......................... 146,050
10,800 Gartner Group, Inc., Class A* ...................... 233,550
11,025 Gaylord Entertainment Co., Class A ................. 237,037
10,200 GenCorp, Inc. ...................................... 193,800
37,000 General Motors Corp., Class H ...................... 2,007,250
300 Gibson Greetings, Inc.* ............................ 6,225
6,000 Golden Books Family Entertainment, Inc.* ........... 55,500
5,115 Grand Casinos, Inc.* ............................... 47,953
8,200 GTECH Holdings Corp.* .............................. 247,025
4,800 Gymboree Corp.* .................................... 129,000
22,000 Harley-Davidson, Inc. .............................. 745,250
10,390 HealthCare COMPARE Corp.* .......................... 422,093
14,800 Hechinger Co., Class A* ............................ 26,363
13,200 Heilig-Meyers Co. .................................. 209,550
1,800 Hollywood Park, Inc.* .............................. 23,175
589 Homestead Village, Inc., Warrants*
(Exp. 10/29/97) ................................... 4,270
4,000 Houghton Mifflin Co. ............................... 216,000
100 Huffy Corp. ........................................ 1,375
1,800 In Focus Systems, Inc.* ............................ 31,050
1,900 Integrated Health Services, Inc. ................... 55,575
9,900 Intelligent Electronics, Inc.* ..................... 33,412
4,400 Juno Lighting, Inc. ................................ 69,850
8,150 Kelly Services, Inc., Class A ...................... 218,012
5,300 Lafarge Corp. ...................................... 120,575
3,900 La-Z-Boy Chair ..................................... 133,575
18,100 Lear Corp.* ........................................ 604,087
11,200 Lee Enterprises, Inc. .............................. 271,600
9,400 MacFrugal's Bargains-Close-Outs, Inc.* ............. 249,100
21,600 Manpower, Inc. ..................................... 777,600
7,526 Marvel Entertainment Group, Inc.* .................. 15,992
98 Mattel, Inc. ....................................... 2,345
4,400 Medaphis Corp.* .................................... 45,100
33,094 MedPartners, Inc.* ................................. 703,247
1,800 Medusa Corp. ....................................... 67,500
1,725 Men's Wearhouse, Inc.* ............................. 47,437
5,200 Meyer (Fred), Inc.* ................................ 214,500
7,500 Miller (Herman), Inc. .............................. 511,875
5,300 Modine Manufacturing Co. ........................... 129,850
133 Morrison Health Care, Inc. ......................... 1,861
9,593 Myers Industries, Inc. ............................. 159,483
6,500 National Computer Systems, Inc. .................... 164,125
8,600 Neiman-Marcus Group, Inc. * ........................ 221,450
15,140 NovaCare, Inc.* .................................... 183,572
20,086 Office Depot, Inc.* ................................ 409,252
13,775 Olsten Corp., Class B .............................. 222,121
16,200 Omnicom Group, Inc. ................................ 807,975
9,335 Pacificare Health Systems, Inc., Class B* .......... 805,144
7,800 PHH Corp. .......................................... 359,775
10,920 Pier 1 Imports, Inc. ............................... 192,465
1,500 Playboy Enterprises, Inc., Class B* ................ 23,063
6,900 Players International, Inc.* ....................... 33,637
3,700 Primadonna Resorts, Inc.* .......................... 73,537
9,800 QUALCOMM, Inc.* .................................... 552,475
1,100 Renters Choice, Inc.* .............................. 15,812
6,300 Rio Hotel & Casino, Inc.* .......................... 88,200
3,200 Robert Half International, Inc.* ................... 111,600
6,350 Rollins, Inc. ...................................... 119,063
13,200 Ross Stores, Inc. .................................. 334,950
14,600 Ruddick Corp. ...................................... 226,300
75,000 Safeway, Inc.* ..................................... 3,478,125
2,900 Scholastic Corp.* .................................. 81,925
8,962 Schulman (A.), Inc. ................................ 170,277
20,600 Shaw Industries, Inc. .............................. 262,650
6,100 Shopko Stores, Inc. ................................ 91,500
2,900 Showboat, Inc. ..................................... 57,275
1,000 Smith (A.O.) Corp. ................................. 34,875
9,800 Sodak Gaming, Inc.* ................................ 105,350
3,800 Sotheby's Holdings, Inc., Class A .................. 60,800
8,000 Southdown, Inc. .................................... 274,000
600 Spiegel, Inc., Class A* ............................ 4,125
5,700 Spelling Entertainment Group, Inc.* ................ 32,775
300 Standard Pacific Corp. ............................. 1,875
20,737 Staples, Inc.* ..................................... 417,332
6,800 Station Casinos, Inc.* ............................. 55,250
8,775 Stewart Enterprises, Inc., Class A ................. 320,287
4,695 Strawbridge & Clothier, Class A .................... 82,162
11,756 Sun Healthcare Group, Inc.* ........................ 168,992
4,900 Superior Industries International, Inc. ............ 110,862
6,400 Tiffany & Co. ...................................... 243,200
1,300 Timberland Co., Class A* ........................... 57,038
3,200 Urban Outfitters, Inc.* ............................ 37,200
9,900 USG Corp.* ......................................... 310,612
2,500 U.S. Home Corp.* ................................... 63,437
7,300 Waban, Inc.* ....................................... 203,488
1,700 Washington Post Co., Class B ....................... 584,800
4,600 Weis Markets, Inc. ................................. 127,650
2,601 Wellpoint Health Networks, Inc.* ................... 107,942
8,200 Westwood One, Inc.* ................................ 151,700
4,050 Williams-Sonoma, Inc.* ............................. 116,437
-------------
30,870,455
-------------
UTILITIES - 8.38%
11,100 AGL Resources, Inc. ................................ 203,963
34,600 Allegheny Power System, Inc. ....................... 1,025,025
14,400 American Water Works Co., Inc. ..................... 302,400
1,200 Aspect Telecommunications Corp.* ................... 23,400
2,500 Atlantic Energy, Inc. .............................. 41,875
15,200 Boston Edison Co. .................................. 399,000
10,250 Brooklyn Union Gas Co. ............................. 281,875
38,900 Centerior Energy Corp. ............................. 393,863
18,100 Cincinnati Bell, Inc. .............................. 1,022,650
9,900 CIPSCO, Inc. ....................................... 350,213
237 Citizens Utilities Co., Class B* ................... 2,811
23,900 CMS Energy Corp. ................................... 785,713
13,624 Comsat Corp. ....................................... 332,085
15,200 Delmarva Power & Light Co. ......................... 279,300
29,050 DPL, Inc. .......................................... 700,831
22,950 DQE, Inc. .......................................... 636,863
28,900 Enova Corp. ........................................ 635,800
7,200 Equitable Resources, Inc. .......................... 220,500
25,800 Florida Progress Corp. ............................. 783,675
9,500 Geotek Communications, Inc.* ....................... 47,500
9,450 Glenayre Technologies, Inc.* ....................... 93,319
5,600 Hawaiian Electric Industries, Inc. ................. 189,700
13,000 Idaho Power Co. .................................... 386,750
7,800 IES Industries, Inc. ............................... 225,225
24,700 Illinova Corp. ..................................... 565,013
600 IPALCO Enterprises, Inc. ........................... 18,225
18,300 Kansas City Power & Light Co. ...................... 512,400
11,700 KU Energy Corp. .................................... 349,538
12,700 LCI International, Inc.* ........................... 212,725
19,000 LG & E Energy Corp. ................................ 458,375
28,800 Long Island Lighting Co. ........................... 691,200
17,000 MAPCO, Inc. ........................................ 527,000
19,400 MCN Corp. .......................................... 545,625
23,814 MidAmerican Energy Co. ............................. 407,815
6,500 Minnesota Power & Light Co. ........................ 181,188
15,400 Montana Power Co. .................................. 331,100
7,200 National Fuel Gas Co. .............................. 307,800
11,200 Nevada Power Co. ................................... 222,600
16,100 New England Electric System ........................ 553,438
20,400 New York State Electric & Gas Corp. ................ 441,150
21,005 NEXTEL Communications, Inc., Class A* .............. 280,942
15,500 NIPSCO Industries, Inc. ............................ 608,375
35,900 Northeast Utilities ................................ 282,713
11,500 OGE Energy Corp. ................................... 481,563
2,500 Otter Tail Power Co. ............................... 84,375
10,900 Paging Network, Inc.* .............................. 88,563
2,300 PanAmSat Corp.* .................................... 66,125
900 People's Choice TV Corp.* .......................... 2,363
6,500 PictureTel Corp.* .................................. 77,188
22,100 Pinnacle West Capital Corp. ........................ 665,763
13,500 Portland General Corp. ............................. 470,813
31,400 Potomac Electric Power Co. ......................... 769,300
15,100 Public Service Co. of Colorado ..................... 585,125
25,700 SCANA Corp. ........................................ 652,138
18,300 Southern New England Telecommunication Corp. ....... 656,513
12,900 Southwestern Public Service Co. .................... 462,788
8,500 Symbol Technologies, Inc. .......................... 410,125
5,600 TCA Cable TV, Inc. ................................. 169,400
32,600 TECO Energy, Inc. .................................. 782,400
8,600 Telephone & Data Systems, Inc. ..................... 330,025
100 United Water Resources, Inc. ....................... 1,713
11,500 UtiliCorp United, Inc. ............................. 293,250
8,400 U.S. Cellular Corp.* ............................... 208,950
12,800 Valero Energy Corp. ................................ 465,600
400 Washington Gas Light Co. ........................... 9,000
11,500 Washington Water Power Co. ......................... 199,813
17,024 Western Resources, Inc. ............................ 510,720
25,850 Wisconsin Energy Corp. ............................. 633,325
-------------
25,938,496
-------------
ENERGY - 4.51%
4,500 Albemarle Corp. .................................... 80,438
20,800 Anadarko Petroleum Corp. ........................... 1,167,400
20,352 Apache Corp. ....................................... 681,792
17,300 ARCO Chemical Co. .................................. 752,550
300 Atmos Energy Corp. ................................. 7,613
2,800 Benton Oil & Gas Co.* .............................. 43,400
4,000 BJ Services Co.* ................................... 191,500
540 BJ Services Co., Warrants*
(Exp. 01/15/2015) ................................. 12,825
19,000 Cabot Corp. ........................................ 456,000
3,400 Cabot Oil & Gas Corp., Class A ..................... 59,000
9,960 CalEnergy, Inc.* ................................... 338,640
4,200 Cooper CameronCorp.* ............................... 287,700
10,300 Devon Energy Corp. ................................. 309,000
5,400 Diamond Offshore Drilling, Inc.* ................... 369,900
13,090 El Paso Natural Gas Co. ............................ 741,221
3,100 Energy Ventures, Inc.* ............................. 191,038
12,200 Enron Oil & Gas Co. ................................ 253,150
1,825 ENSCO International, Inc.* ......................... 89,881
200 FINA, Inc., Class A ................................ 12,700
9,000 FINOVA Group, Inc. ................................. 608,625
4,150 Fuller (H.B.) Co. .................................. 202,313
46,300 Global Marine, Inc.* ............................... 995,450
1,800 KCS Energy, Inc. ................................... 59,175
6,150 KN Energy, Inc. .................................... 242,925
1,200 Lone Star Technologies, Inc.* ...................... 22,800
1,000 Mine Safety Appliances Co. ......................... 63,500
7,050 Mitchell Energy & Development Corp.,
Class A .......................................... 142,763
10,715 Murphy Oil Corp. ................................... 503,605
36,251 NGC Corp. .......................................... 570,953
6,600 Noble Affiliates, Inc. ............................. 249,150
7,800 Noble Drilling Corp.* .............................. 134,550
900 Nuevo Energy Co.* .................................. 34,538
4,100 Oceaneering International, Inc.* ................... 64,063
21,500 Parker Drilling Co.* ............................... 180,063
6,600 Parker & Parsley Petroleum Co. ..................... 194,700
5,300 Pogo Producing Co. ................................. 190,800
10,300 Quaker State Corp. ................................. 158,363
11,600 Questar Corp. ...................................... 416,150
6,000 Reading & Bates Corp.* ............................. 135,750
100 RPC Energy Services, Inc.* ......................... 1,438
8,664 Seagull Energy Corp.* .............................. 155,952
8,500 Smith International, Inc.* ......................... 387,813
5,300 Snyder Oil Corp. ................................... 85,463
15,300 Tesoro Petroleum Corp.* ............................ 160,650
26,400 Tosco Corp. ........................................ 752,400
1,700 Tuboscope Vetco International Corp.* ............... 23,163
17,142 Ultramar Diamond Shamrock Corp. .................... 544,259
10,200 Union Texas Petroleum Holdings, Inc. ............... 187,425
6,000 Varco International, Inc.* ......................... 150,000
9,978 Weatherford Enterra, Inc.* ......................... 293,104
-------------
13,958,151
-------------
BASIC MATERIALS - 4.39%
3,600 Actel Corp.* ....................................... 78,300
300 Alpharma, Inc., Class A ............................ 4,125
1,900 Amcol International Corp. .......................... 34,438
300 Ashland Coal, Inc. ................................. 7,350
3,300 Birmingham Steel Corp. ............................. 57,750
10,600 Bowater, Inc. ...................................... 412,075
4,400 Brush Wellman, Inc. ................................ 79,750
6,100 Calgon Carbon Corp. ................................ 67,100
4,600 CalMat Co. ......................................... 81,075
8,812 Castle (A.M.) & Co. ................................ 153,109
1,200 Chesapeake Corp. ................................... 33,000
6,300 Consolidated Papers, Inc. .......................... 328,388
11,500 Crompton & Knowles Corp. ........................... 224,250
6,000 Dexter Corp. ....................................... 180,750
23,591 Ethyl Corp. ........................................ 203,472
2,500 Gaylord Container Corp., Class A* .................. 15,156
8,400 Georgia Gulf Corp. ................................. 212,100
6,600 Glatfelter (P.H.) Co. .............................. 108,900
5,500 Handy & Harman ..................................... 82,500
11,025 Hanna (M.A.) Co. ................................... 234,281
15,200 Harsco Corp. ....................................... 552,900
14,000 IMC Global, Inc. ................................... 505,750
12,500 Intermet Corp. ..................................... 164,063
8,700 Jefferson Smurfit Corp.* ........................... 103,313
7,800 Justin Industries, Inc. ............................ 86,775
4,000 Kennametal, Inc. ................................... 145,000
1,800 Lilly Industries, Inc., Class A .................... 32,625
11,400 Longview Fibre Co. ................................. 171,000
22,000 LTV Corp. .......................................... 277,750
2,200 Lukens, Inc. ....................................... 37,125
12,200 Lyondell Petrochemical Co. ......................... 279,075
2,900 MAXXAM, Inc.* ...................................... 131,225
7,700 Minerals Technologies, Inc. ........................ 256,025
3,600 Mississippi Chemical Corp. ......................... 85,950
2,400 Mueller Industries, Inc.* .......................... 93,900
6,000 Mycogen Corp.* ..................................... 139,500
9,000 Olin Corp. ......................................... 357,750
14,250 OM Group, Inc. ..................................... 400,781
5,900 Oregon Steel Mills, Inc. ........................... 102,513
100 O'Sullivan Corp. ................................... 838
34,100 Owens-Illinois, Inc.* .............................. 839,713
9,700 Pentair, Inc. ...................................... 280,088
6,300 Quanex Corp. ....................................... 158,288
3,300 Rayonier, Inc. ..................................... 122,925
11,900 Rhone-Poulenc Rorer, Inc. .......................... 880,600
16,643 RPM, Inc. .......................................... 276,690
6,000 Scotts Co., Class A* ............................... 138,000
9,600 Sealed Air Corp.* .................................. 394,800
1,000 Sequa Corp., Class A* .............................. 44,625
11,900 Shorewood Packaging Corp.* ......................... 221,638
9,300 Solectron Corp.* ................................... 466,163
27,470 Sonoco Products Co. ................................ 741,690
3,000 St. Joe Corp. ...................................... 221,625
4,900 Telxon Corp. ....................................... 74,725
1,300 Tencor Instruments* ................................ 46,963
23,400 Terra Industries, Inc. ............................. 327,600
1,000 Texas Industries, Inc. ............................. 27,500
8,300 Thiokol Corp. ...................................... 458,575
500 TriMas Corp. ....................................... 11,750
2,000 Valspar Corp. ...................................... 57,500
5,676 Wausau Paper Mills Co. ............................. 103,942
6,600 Wellman, Inc. ...................................... 115,500
6,500 WHX Corp.* ......................................... 43,875
10,500 Witco Corp. ........................................ 357,000
9,000 Wolverine Tube, Inc.* .............................. 234,000
17,300 Zeigler Coal Holding Co. ........................... 410,875
-------------
13,578,377
-------------
CAPITAL GOODS - 4.12%
35,000 ADC Telecommunications, Inc.* ...................... 940,625
6,900 AGCO Corp. ......................................... 190,613
100 Air & Water Technologies Corp., Class A* ........... 500
4,600 Alliant Techsystems, Inc.* ......................... 193,775
2,800 Allied Products Corp. .............................. 78,750
6,300 American Management Systems, Inc.* ................. 138,600
29,600 American Standard Cos., Inc.* ...................... 1,332,000
13,200 AMETEK, Inc. ....................................... 278,850
6,000 Applied Power, Inc., Class A ....................... 252,000
7,400 AptarGroup, Inc. ................................... 283,050
13,919 BancTec, Inc.* ..................................... 354,935
4,600 Checkpoint Systems, Inc. ........................... 78,775
4,100 Coltec Industries, Inc.* ........................... 75,850
8,550 Commercial Intertech Corp. ......................... 96,188
6,666 Commercial Metals Co. .............................. 190,814
7,400 Corrections Corp. Of America* ...................... 179,450
8,550 Cuno, Inc.* ........................................ 131,456
4,000 Dentsply International, Inc. ....................... 200,000
16,368 Diebold, Inc. ...................................... 615,846
1,900 Digital Microwave Corp.* ........................... 36,575
8,200 Dionex Corp.* ...................................... 373,100
7,500 Duriron Co., Inc. .................................. 165,000
7,100 Federal-Mogul Corp. ................................ 174,838
4,200 GATX Corp. ......................................... 205,275
17,000 Gentex Corp.* ...................................... 335,750
6,200 Goulds Pumps, Inc. ................................. 144,925
15,502 Hubbell, Inc., Class B ............................. 654,960
1,350 IDEX Corp. ......................................... 31,725
3,200 IMCO Recycling, Inc. ............................... 46,800
2,800 KEMET Corp.* ....................................... 52,500
6,500 Keystone International, Inc. ....................... 115,375
7,414 Litton Industries, Inc.* ........................... 298,414
7,000 Mascotech, Inc. .................................... 143,500
3,500 Molten Metal Technology, Inc.* ..................... 30,625
2,700 Nordson Corp. ...................................... 138,375
2,000 Orbital Sciences Corp.* ............................ 27,563
5,850 Pittway Corp., Class A ............................. 283,725
5,000 Regal Beloit Corp. ................................. 122,500
1,400 Roper Industries, Inc. ............................. 58,975
1,900 Silicon Valley Group, Inc.* ........................ 40,850
9,900 Simpson Industries, Inc. ........................... 97,763
8,100 Stewart & Stevenson Services, Inc. ................. 162,000
21,800 Sundstrand Corp. ................................... 945,575
600 Teleflex, Inc. ..................................... 31,725
8,100 Trinity Industries, Inc. ........................... 246,038
8,176 U.S.A. Waste Services, Inc.* ....................... 290,248
8,900 Varian Associates, Inc. ............................ 476,150
8,800 Vulcan Materials Co. ............................... 570,900
5,700 Watts Industries, Inc., Class A .................... 132,525
6,600 Wyman-Gordon Co.* .................................. 134,475
13,200 York International Corp. ........................... 552,750
-------------
12,733,576
-------------
TRANSPORTATION - 2.24%
4,400 Airborne Freight Corp. ............................. 132,000
13,900 Alexander & Baldwin, Inc. .......................... 359,663
16,908 America West Holdings Corp., Class B* .............. 264,188
3,100 American Freightways Corp.* ........................ 43,206
6,800 APL, Ltd. .......................................... 142,800
1,600 Arnold Industries, Inc. ............................ 22,600
9,300 ASA Holdings, Inc. ................................. 192,975
16,705 Comair Holdings, Inc. .............................. 363,334
7,738 Fritz Cos., Inc.* .................................. 74,962
2,100 Greyhound Lines, Inc.* ............................. 8,925
6,400 Hunt (J.B.) Transport Services, Inc. ............... 88,800
16,200 Illinois Central Corp., Series A ................... 510,300
5,200 Kirby Corp.* ....................................... 88,400
800 Lo-Jack Corp.* ..................................... 7,900
6,300 Mesa Air Group, Inc.* .............................. 38,489
900 M.S. Carriers, Inc.* ............................... 15,244
16,300 Northwest Airlines Corp., Class A* ................. 613,288
9,600 Offshore Logistics, Inc.* .......................... 153,600
7,200 Overseas Shipholding Group, Inc. ................... 123,300
23,100 Republic Industries, Inc.* ......................... 801,281
2,250 Rollins Truck Leasing Corp. ........................ 29,813
16,000 Rural/Metro Corp.* ................................. 488,000
2,600 Standard Products Co. .............................. 60,450
14,100 Tidewater, Inc. .................................... 648,600
3,300 Top Source Technologies, Inc.* ..................... 6,188
12,400 UAL Corp.* ......................................... 802,900
2,800 United Waste Systems, Inc.* ........................ 104,300
9,450 USFreightways Corp. ................................ 244,519
3,000 Wabash National Corp. .............................. 52,125
2,400 Werner Enterprises, Inc. ........................... 45,000
7,800 Wisconsin Central Transportation Corp.* ............ 274,950
3,200 XTRA Corp. ......................................... 132,400
-------------
6,934,500
-------------
DURABLE GOODS - 1.88%
5,200 Acuson Corp.* ...................................... 121,550
1,700 Albany International Corp., Class A ................ 35,062
1,700 Allen Group, Inc.* ................................. 29,750
17,400 Altera Corp.* ...................................... 748,200
1,200 AMISYS Managed Care Systems, Inc.* ................. 20,400
8,550 Applied Industrial Technology, Inc. ................ 299,250
6,800 Beckman Instruments, Inc. .......................... 285,600
100 Borg-Warner Security Corp.* ........................ 1,462
7,800 Cintas Corp. ....................................... 411,450
2,200 Citrix Systems, Inc.* .............................. 29,150
30,300 Elcom International, Inc.* ......................... 185,588
12,400 Electronic Arts, Inc.* ............................. 330,150
13,200 Fastenal Co. ....................................... 462,000
1,300 Figgie International, Inc., Class A* ............... 15,762
5,600 GT Interactive Software Corp.* ..................... 39,900
6,900 HON Industries, Inc. ............................... 256,162
1,400 Marquette Medical Systems, Inc., Class A* .......... 28,175
12,500 Mentor Graphics Corp.* ............................. 104,687
16,600 Nabors Industries, Inc.* ........................... 323,700
8,200 Netscape Communications Corp.* ..................... 246,512
2,166 NTL, Inc.* ......................................... 46,569
4,600 OEA, Inc. .......................................... 192,050
5,300 Precision Castparts Corp. .......................... 270,300
12,600 Read-Rite Corp.* ................................... 318,150
3,500 SanDisk Corp.* ..................................... 34,562
6,800 Semitool, Inc.* .................................... 74,800
6,800 Sequent Computer Systems, Inc.* .................... 102,000
11,200 SMART Modular Technologies, Inc.* .................. 266,000
8,400 Smith Micro Software, Inc.* ........................ 25,200
12,336 Sterling Commerce, Inc.* ........................... 357,744
6,171 The Learning Company, Inc.* ........................ 40,882
5,200 Valassis Communications, Inc.* ..................... 116,350
-------------
5,819,117
-------------
CHEMICALS AND DRUGS - 0.49%
8,400 Betzdearborn, Inc. ................................. 530,250
8,500 Ferro Corp. ........................................ 255,000
8,000 Keravision, Inc.* .................................. 81,000
20,400 Lubrizol Corp. ..................................... 663,000
-------------
1,529,250
-------------
CONSUMER PRODUCTS - 0.48%
5,875 HSN, Inc.* ......................................... 149,077
4,000 Intimate Brands, Inc., Class A ..................... 75,500
5,300 Ralcorp Holdings, Inc.* ............................ 54,325
28,200 Reader's Digest Association, Inc., Class A (C) ..... 810,750
12,200 Scripps (E.W.) Co., Class A ........................ 398,025
-------------
1,487,677
-------------
METALS AND MINING - 0.41%
2,100 Alumax, Inc.* ...................................... 72,712
13,300 Amax Gold, Inc.* ................................... 89,775
3,300 Carpenter Technology Corp. ......................... 126,225
8,071 Coeur d'Alene Mines Corp. .......................... 131,154
6,783 Freeport McMoRan, Inc. ............................. 198,402
13,300 Hecla Mining Co.* .................................. 78,137
14,400 Newmont Gold Co. ................................... 577,800
-------------
1,274,205
-------------
BUILDING AND CONSTRUCTION - 0.07%
1,875 Chittenden Corp. ................................... 50,625
6,600 Morrison Knudsen Corp.* ............................ 69,300
5,000 Schuller Corp. ..................................... 57,500
2,700 TJ International, Inc. ............................. 51,300
-------------
228,725
-------------
TOTAL COMMON STOCKS ................................ 260,904,634
(Cost $173,178,362) -------------
PAR
VALUE
- -----
U.S. GOVERNMENT AND AGENCY OBLIGATIONS (A) - 16.37%
FEDERAL HOME LOAN MORTGAGE (C) - 15.89%
$49,192,000 6.50%, 04/01/97 .................................... $ 49,192,000
-------------
U.S. TREASURY BILL (B) - 0.48%
1,500,000 5.05%, 06/19/97 .................................... 1,482,732
-------------
TOTAL U.S. GOVERNMENT AND
AGENCY OBLIGATIONS ................................. 50,674,732
(Cost $50,675,097) -------------
TOTAL INVESTMENTS - 100.68% .................................... 311,579,366
(Cost $223,853,459) -------------
NET OTHER ASSETS AND LIABILITIES - (0.68)% ..................... (2,105,695)
-------------
NET ASSETS - 100.00% ........................................... $ 309,473,671
=============
- -------------------------------------------
* Non-income producing security.
REIT Real Estate Investment Trust
(A) Annualized yield at time of purchase.
(B) Security has been depositied as an initial margin on open futures
contracts.
At March 31, 1997, the Fund's open futures contracts were as follows:
NUMBER OF
CONTRACTS CONTRACT EXPIRATION OPENING CURRENT
PURCHASED (SOLD) TYPE DATE POSITION MARKET VALUE
- --------------------------------------------------------------------------------
95 Russell 2000 6/97 $ 17,503,750 $ 16,382,750
263 Mid Cap 6/97 35,224,550 33,151,150
------------ ------------
$ 52,728,300 $ 49,533,900
============ ============
(C) All or a portion of these shares are used as collateral on open futures
contracts.
See Notes to Financial Statements.
<PAGE>
Galaxy
Fund II
Utility Index Fund
PORTFOLIO OF INVESTMENTS
March 31, 1997
VALUE
SHARES (NOTE 2)
- ------ --------
COMMON STOCKS - 100.04%
UTILITIES - 79.40%
9,000 Allegheny Power System, Inc. ....................... $ 266,625
14,100 ALLTEL Corp. ....................................... 458,250
13,900 American Electric Power Co., Inc. .................. 573,375
4,800 American Water Works Co., Inc. ..................... 100,800
34,700 Ameritech Corp. .................................... 2,134,050
31,100 Bell Atlantic Corp. ................................ 1,893,213
62,100 BellSouth Corp. .................................... 2,623,725
3,600 Boston Edison Co. .................................. 94,500
3,700 Brooklyn Union Gas Co. ............................. 101,750
10,700 Carolina Power & Light Co. ......................... 387,875
11,000 Centerior Energy Corp. ............................. 111,375
14,500 Central & South West Corp. ......................... 309,938
5,100 Cincinnati Bell, Inc. .............................. 288,150
9,800 Cinergy Corp. ...................................... 334,425
2,400 CIPSCO, Inc. ....................................... 84,900
6,800 CMS Energy Corp. ................................... 223,550
4,100 Columbia Gas System, Inc. .......................... 237,288
3,600 Comsat Corp., Series I ............................. 87,750
17,400 Consolidated Edison Co. of New York ................ 522,000
7,000 Consolidated Natural Gas Co. ....................... 352,625
4,500 Delmarva Power & Light Co. ......................... 82,688
13,100 Dominion Resources, Inc. ........................... 476,513
7,400 DPL, Inc. .......................................... 178,525
5,700 DQE, Inc. .......................................... 158,175
10,800 DTE Energy Co. ..................................... 290,250
15,100 Duke Power Co. ..................................... 666,288
32,400 Edison International ............................... 729,000
7,300 Enova Corp. ........................................ 160,600
17,000 Entergy Corp. ...................................... 416,500
7,200 Florida Progress Corp. ............................. 218,700
12,900 FPL Group, Inc. .................................... 569,213
12,200 Frontier Corp. ..................................... 218,075
9,000 GPU, Inc. .......................................... 289,125
60,200 GTE Corp. .......................................... 2,806,825
2,300 Hawaiian Electric Industries, Inc. ................. 77,913
17,800 Houston Industries, Inc. ........................... 371,575
2,800 Idaho Power Co. .................................... 83,300
5,600 Illinova Corp. ..................................... 128,100
4,200 IPALCO Enterprises, Inc. ........................... 127,575
4,600 Kansas City Power & Light Co. ...................... 128,800
2,800 KU Energy Corp. .................................... 83,650
6,500 LCI International, Inc.* ........................... 108,875
4,900 LG & E Energy Corp. ................................ 118,213
8,900 Long Island Lighting Co. ........................... 213,600
5,000 MCN Corp. .......................................... 140,625
7,500 MidAmerican Energy Holdings Co. .................... 128,438
4,100 Montana Power Co. .................................. 88,150
2,800 National Fuel Gas Co. .............................. 119,700
4,800 New England Electric System ........................ 165,000
4,900 New York State Electric & Gas Corp. ................ 105,963
10,500 Nextel Communications, Inc., Class A* .............. 140,438
10,700 Niagara Mohawk Power Corp.* ........................ 90,950
3,700 NICOR, Inc. ........................................ 118,400
4,500 NIPSCO Industries, Inc. ............................ 176,625
8,400 Northeast Utilities ................................ 66,150
5,100 Northern States Power Co. .......................... 241,613
31,100 NYNEX Corp. ........................................ 1,418,938
3,000 OGE Energy Corp. ................................... 125,625
10,700 Ohio Edison Co. .................................... 226,038
6,100 Pacific Enterprises ................................ 184,525
30,300 Pacific Telesis Group .............................. 1,143,825
21,800 PacifiCorp ......................................... 465,975
7,600 Paging Network, Inc.* .............................. 61,750
16,500 PECO Energy Co. .................................... 336,188
2,600 Peoples Energy Corp. ............................... 86,125
30,500 PG & E Corp. ....................................... 716,750
5,900 Pinnacle West Capital Corp. ........................ 177,738
8,800 Potomac Electric Power Co. ......................... 215,600
12,000 PP & L Resources, Inc. ............................. 243,000
4,700 Public Service Co. of Colorado ..................... 182,125
18,200 Public Service Enterprise Group, Inc. .............. 477,750
4,700 Puget Sound Energy, Inc. ........................... 118,675
38,100 SBC Communications, Inc. ........................... 2,005,013
7,800 SCANA Corp. ........................................ 197,925
6,400 Sonat, Inc. ........................................ 348,800
50,000 Southern Co. ....................................... 1,056,250
4,500 Southern New England Telecommunication Corp. ....... 161,438
3,000 Southwestern Public Service Co. .................... 107,625
8,200 TECO Energy, Inc. .................................. 196,800
4,000 Telephone & Data Systems, Inc. ..................... 153,500
16,700 Texas Utilities Co. ................................ 571,975
16,000 Unicom Corp. ....................................... 312,000
7,600 Union Electric Co. ................................. 280,250
3,500 UtiliCorp United, Inc. ............................. 89,250
800 U.S. Cellular Corp.* ............................... 19,900
33,700 U.S. West Communications Group ..................... 1,145,800
4,200 Washington Water Power Co. ......................... 72,975
4,700 Western Resources, Inc. ............................ 141,000
11,700 Williams Cos., Inc. ................................ 520,650
8,200 Wisconsin Energy Corp. ............................. 200,900
43,690 WorldCom, Inc.* .................................... 961,180
-----------
36,194,152
-----------
TECHNOLOGY - 20.08%
37,100 Airtouch Communications, Inc.* ..................... 853,289
101,400 American Telephone & Telegraph Corp. ............... 3,523,650
1,300 Cablevision Systems Corp., Class A* ................ 38,675
3,700 Century Telephone Enterprises, Inc. ................ 109,150
19,800 Comcast Corp., Class A, Special .................... 334,125
5,000 Cox Communications, Inc., Class A* ................. 103,125
48,900 MCI Communications Corp. ........................... 1,742,063
4,200 QUALCOMM, Inc.* .................................... 236,775
30,800 Sprint Corp. ....................................... 1,401,400
4,390 TCI Satellite Entertainment, Inc., Class A* ........ 34,023
1,300 Tele-Communications
International, Inc., Series A* ................... 16,738
48,400 Tele-Communications, Inc.,
TCI Group, Series A* ............................. 580,800
8,700 360 Communications Co.* ............................ 150,075
2,600 U.S. Satellite Broadcasting
Co., Inc., Class A* .............................. 27,950
-----------
9,151,838
-----------
ENERGY - 0.56%
10,100 NGC Corp. .......................................... 159,075
2,700 Questar Corp. ...................................... 96,863
-----------
255,938
-----------
Total Investments - 100.04% .................................... 45,601,928
(Cost $45,047,104) -----------
NET OTHER ASSETS AND LIABILITIES - (0.04)% ..................... (19,509)
-----------
NET ASSETS - 100.00% ........................................... $45,582,419
===========
- -------------------------------
* Non-income producing security.
<PAGE>
GALAXY
FUND II
U.S. TREASURY INDEX FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1997
PAR VALUE
VALUE (NOTE 2)
----- --------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 98.15%
U.S. TREASURY NOTES - 71.61%
$ 2,500,000 7.88%, 04/15/98 ......................... $ 2,544,398
5,800,000 6.00%, 05/31/98 ......................... 5,788,452
1,152,000 9.25%, 08/15/98 ......................... 1,196,616
2,200,000 6.13%, 08/31/98 ......................... 2,195,884
7,850,000 7.13%, 10/15/98 ......................... 7,940,982
3,000,000 5.13%, 12/31/98 ......................... 2,940,207
3,500,000 5.00%, 01/31/99 ......................... 3,418,520
1,550,000 5.50%, 02/28/99 ......................... 1,525,198
2,350,000 7.00%, 04/15/99 ......................... 2,375,119
4,900,000 6.38%, 07/15/99 ......................... 4,892,699
1,900,000 6.00%, 10/15/99 ......................... 1,878,889
4,400,000 7.75%, 01/31/00 ......................... 4,530,500
7,450,000 5.50%, 04/15/00 ......................... 7,233,354
5,550,000 6.25%, 05/31/00 ......................... 5,493,107
2,753,000 8.75%, 08/15/00 ......................... 2,925,555
4,250,000 7.50%, 11/15/01 ......................... 4,374,270
300,000 6.38%, 08/15/02 ......................... 294,837
2,450,000 6.25%, 02/15/03 ......................... 2,386,543
3,650,000 5.75%, 08/15/03 ......................... 3,450,491
5,000,000 7.25%, 05/15/04 ......................... 5,107,850
3,850,000 7.88%, 11/15/04 ......................... 4,069,138
3,250,000 6.50%, 10/15/06 ......................... 3,151,298
------------
79,713,907
------------
U.S. TREASURY BONDS - 25.08%
200,000 10.75%, 08/15/05 ........................ 247,885
3,430,000 11.75%, 11/15/14 ........................ 4,737,478
2,800,000 7.25%, 05/15/16 ......................... 2,816,965
5,364,000 8.88%, 08/15/17 ......................... 6,309,239
2,971,000 8.50%, 02/15/20 ......................... 3,389,614
10,050,000 7.50%, 11/15/24 ......................... 10,408,071
------------
27,909,252
------------
FEDERAL HOME LOAN BANK (A) - 1.46%
1,630,000 5.40%, 04/01/97 ......................... 1,630,000
TOTAL INVESTMENTS - 98.15% ..................... 109,253,159
(Cost $110,906,719) ------------
NET OTHER ASSETS AND LIABILITIES - 1.85% ....... 2,059,518
------------
NET ASSETS - 100.00% ........................... $111,312,677
============
- -----------------------------------------
(A) Annualized yield at time of purchase.
See Notes to Financial Statements.
<PAGE>
GALAXY
FUND II
MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1997
PAR VALUE
VALUE (NOTE 2)
----- --------
MUNICIPAL BONDS - 100.39%
ALABAMA - 4.91%
$ 980,000 Auburn University Revenues
Athletics
5.20%, 04/01/04
Insured: MBIA ............................. $ 978,775
-----------
FLORIDA - 5.18%
1,000,000 Florida State Board of Education
Capital Outlay
Public Education, Series A, GO
5.70%, 06/01/08
Insured: AMBAC............................. 1,032,497
-----------
HAWAII - 1.22%
250,000 Hawaii State
Series CN, GO
5.25%, 03/01/11
Insured: FGIC.............................. 242,500
-----------
ILLINOIS - 11.61%
500,000 Chicago Metropolitan
Water Reclamation District
Greater Chicago, GO
5.10%, 12/01/03 ........................... 505,000
750,000 Illinois Health Facilities Authority Revenue
University of Chicago Hospitals
Series A
5.25%, 08/15/03
Insured: MBIA ............................. 758,438
500,000 Illinois State Sales Tax Revenue, Series V
6.00%, 06/15/08 ........................... 520,625
500,000 Kane County Community School District
Number 304
Geneva, GO
6.00%, 06/01/04
Insured: FGIC ............................. 529,375
-----------
2,313,438
-----------
LOUISIANA - 2.49%
500,000 Jefferson Parish Hospital Revenue
Service District 1
4.80%, 01/01/02
Insured: FGIC ............................. 496,250
-----------
MASSACHUSETTS - 4.02%
800,000 Springfield, Series B, GO
5.05%, 01/15/04
Insured: MBIA ............................. 800,000
-----------
MISSOURI - 9.16%
750,000 St. Louis Water Revenue
5.30%, 07/01/99
Insured: FGIC ............................. 760,313
1,000,000 Sikeston Electric Revenue
6.00%, 06/01/04
Insured: MBIA ............................. 1,063,750
-----------
1,824,063
-----------
NEVADA - 6.33%
750,000 Clark County School District Revenue
Series B, GO
5.00%, 05/01/02
Insured: FGIC ............................. 751,875
500,000 Las Vegas Valley
Water District Revenue, GO
5.40%, 09/01/04
Insured: AMBAC ............................ 508,125
-----------
1,260,000
-----------
NEW HAMPSHIRE - 6.33%
750,000 New Hampshire HEFA
Mary Hitchcock Memorial Hospital
5.00%, 08/15/03
Insured: FGIC ............................. 750,938
500,000 New Hampshire Municipal Bond Bank
Series A
5.25%, 11/15/03 ........................... 509,375
-----------
1,260,313
-----------
NEW JERSEY - 3.89%
750,000 New Jersey Health Care Facilities
Financing Authority
Dover General Hospital and Medical Center
5.60%, 07/01/02
Insured: MBIA ............................. 775,313
-----------
NEW YORK - 7.61%
500,000 Battery Park City Authority Revenue
Junior Lien, Series B
4.70%, 11/01/00 ........................... 496,250
500,000 New York Municipal Water Finance Authority
Water and Sewer System Revenue, Series B
4.75%, 06/15/01 ........................... 501,875
500,000 New York State Environmental
Facilities Corp., PCR
5.75%, 06/15/09 ........................... 518,750
-----------
1,516,875
-----------
PENNSYLVANIA - 3.80%
750,000 Pennsylvania State IDA,
Economic Development
5.00%, 01/01/00
Insured: AMBAC ............................ 756,563
-----------
RHODE ISLAND - 2.51%
500,000 Rhode Island State
TAN, GO
4.50%, 06/30/97 ........................... 500,735
-----------
TEXAS - 6.39%
500,000 Carrollton Farmers Branch
Independent School District, GO
5.10%, 02/15/04 .......................... 497,500
250,000 Harlingen Waterworks and Sewer System Revenue
5.25%, 11/01/10
Insured: MBIA ............................. 245,625
500,000 Houston Water and Sewer System Revenue
Junior Lien, Series A
5.75%, 12/01/03
Insured: MBIA ............................. 528,750
-----------
1,271,875
-----------
UTAH - 3.07%
220,000 Intermountain Power Agency
Refunding, Series C
5.25%, 07/01/14 ........................... 207,350
-----------
400,000 Utah Associated
Municipal Power System Revenue,
St. George Project
5.15%, 12/01/03
Insured: AMBAC ............................ 405,000
-----------
612,350
-----------
VIRGINIA - 3.86%
750,000 Virginia State Transportation Board
Transportation Contract Revenue,
Route 28 Project
6.00%, 04/01/10 ........................... 769,688
-----------
WASHINGTON - 8.89%
1,000,000 Seattle Municipal Light & Power Revenue
Series B
5.75%, 08/01/07 ........................... 1,026,250
250,000 Seattle Water System
5.38%, 08/01/09 ........................... 248,438
500,000 Washington State Public Power
Supply System, Nuclear Project Number 1
Revenue, Series B
5.10%, 07/01/04
Insured: MBIA ............................. 496,875
-----------
1,771,563
-----------
WEST VIRGINIA - 3.98%
500,000 West Virginia School Building Authority
Refunding, Capital Improvement
5.30%, 07/01/09
Insured: AMBAC ............................ 494,375
300,000 West Virginia State Housing
Development
Fund Housing Finance, Series A
5.55%, 11/01/10 ........................... 298,125
-----------
792,500
-----------
WISCONSIN - 5.14%
1,000,000 Milwaukee Corporate Purpose,
Series A, GO
5.50%, 06/15/08 ........................... 1,023,750
-----------
TOTAL MUNICIPAL BONDS ..................... 19,999,048
(Cost $19,659,677) -----------
SHARES
------
INVESTMENT COMPANY - 0.68%
135,225 Federated Tax-Free Obligations Fund 135,225
-----------
TOTAL INVESTMENT COMPANY .................. 135,225
(Cost $135,225) -----------
TOTAL INVESTMENTS - 101.07% ............................... 20,134,273
(Cost $19,794,902) -----------
NET OTHER ASSETS AND LIABILITIES - (1.07)% (213,070)
-----------
NET ASSETS - 100.00% ...................................... $19,921,203
===========
- ----------------------------------------------------
AMBAC American Municipal Bond Assurance Corp.
FGIC Financial Guaranty Insurance Corp.
GO General Obligation
HEFA Health and Educational Facilities Authority
IDA Industrial Development Authority
MBIA Municipal Bond Insurance Association
PCR Pollution Control Revenue
TAN Tax Anticipation Note
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
GALAXY
FUND II
STATEMENTS OF ASSETS AND LIABILITIES
March 31, 1997
LARGE SMALL U.S.
COMPANY COMPANY UTILITY TREASURY MUNICIPAL
INDEX FUND INDEX FUND INDEX FUND INDEX FUND BOND FUND
---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments (Note 2):
Investments at cost ...................... $328,835,005 $223,853,459 $45,047,104 $110,906,719 $19,794,902
Net unrealized appreciation (depreciation) 96,399,322 87,725,907 554,824 (1,653,560) 339,371
------------ ------------ ----------- ------------ -----------
Total investments at value ............... 425,234,327 311,579,366 45,601,928 109,253,159 20,134,273
Cash ....................................... 2,168,957 747,917 -- 2,207 --
Receivable for investments sold ............ -- 253,500 -- -- --
Receivable for shares sold ................. 1,060,134 469,738 37,894 146,289 5,831
Interest and dividend receivables .......... 546,935 351,740 175,358 2,277,057 308,120
------------ ------------ ----------- ------------ -----------
Total Assets ........................... 429,010,353 313,402,261 45,815,180 111,678,712 20,448,224
------------ ------------ ----------- ------------ -----------
LIABILITIES:
Payable for investments purchased .......... -- -- -- -- 496,017
Payable for shares repurchased ............. 3,369,752 1,738,830 44,050 185,258 10,875
Payable to custodian ....................... -- -- 172,437 -- --
Distributions payable ...................... -- -- 165 141,997 9,694
Payable for daily variation margin
on futures contracts ..................... 3,838,150 2,078,400 -- -- --
Advisory fee payable (Note 4) .............. 37,644 27,840 4,028 9,695 4,350
Administration fee payable (Note 4) ........ 112,935 83,520 12,081 29,085 6,085
------------ ------------ ----------- ------------ -----------
Total Liabilities ...................... 7,358,481 3,928,590 232,761 366,035 527,021
------------ ------------ ----------- ------------ -----------
NET ASSETS .................................... $421,651,872 $309,473,671 $45,582,419 $111,312,677 $19,921,203
============ ============ =========== ============ ===========
NET ASSETS CONSIST OF:
Par value (Note 3) ......................... $ 18,259 $ 13,670 $ 3,991 $ 11,148 $ 1,962
Paid-in capital in excess of par value ..... 305,536,635 210,101,827 44,989,658 118,012,309 20,550,587
Undistributed net
investment income ........................ 2,289,515 842,015 188,804 137,973 22,217
Accumulated net realized gain (loss) on
investments sold and futures contracts ... 23,064,041 13,984,652 (154,858) (5,195,193) (992,934)
Unrealized appreciation (depreciation)
of investments and futures contracts ..... 90,743,422 84,531,507 554,824 (1,653,560) 339,371
------------ ------------ ----------- ------------ -----------
TOTAL NET ASSETS .............................. $421,651,872 $309,473,671 $45,582,419 $111,312,677 $19,921,203
============ ============ =========== ============ ===========
SHARES OF BENEFICIAL INTEREST OUTSTANDING ..... 18,258,594 13,670,431 3,990,722 11,147,791 1,961,952
NET ASSET VALUE,
offering and redemption price per share
(Net Assets / Shares Outstanding) ........ $ 23.09 $ 22.64 $ 11.42 $ 9.99 $ 10.15
============ ============ =========== ============ ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GALAXY
FUND II
STATEMENTS OF OPERATIONS
For the year ended March 31, 1997
LARGE SMALL U.S.
COMPANY COMPANY UTILITY TREASURY MUNICIPAL
INDEX FUND INDEX FUND INDEX FUND INDEX FUND BOND FUND
---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest (Note 2) .......................... $ 2,553,793 $ 1,848,969 $ 39,470 $ 7,852,462 $ 1,065,530
Dividend (Note 2) .......................... 5,847,208 4,355,040 2,203,157 -- 2,283
----------- ----------- ----------- ----------- -----------
Total Investment Income .................. 8,401,001 6,204,009 2,242,627 7,852,462 1,067,813
----------- ----------- ----------- ----------- -----------
EXPENSES:
Investment advisory fee (Note 4) ........... 324,858 311,685 51,447 116,944 51,631
Administration fee (Note 4) ................ 974,572 935,055 154,341 350,831 72,282
Trustees' fees (Note 4) .................... 13,688 13,134 2,168 4,928 870
----------- ----------- ----------- ----------- -----------
Total expenses before reimbursement ...... 1,313,118 1,259,874 207,956 472,703 124,783
Less: reimbursement by sub-administrator
(Note 4) ............................... (13,688) (13,134) (2,168) (4,928) (870)
----------- ----------- ----------- ----------- -----------
Total expenses net of reimbursement ...... 1,299,430 1,246,740 205,788 467,775 123,913
----------- ----------- ----------- ----------- -----------
NET INVESTMENT INCOME ......................... 7,101,571 4,957,269 2,036,839 7,384,687 943,900
----------- ----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS (NOTE 2):
Net realized gain on investment sold ....... 15,312,325 18,627,906 3,706,859 186,629 117,357
Net realized gain on futures contracts ..... 11,394,970 2,508,115 -- -- --
Net change in unrealized appreciation
(depreciation) on investments sold
and futures contracts .................... 20,512,222 1,822,970 (3,930,293) (3,069,827) (228,249)
----------- ----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS ....................... 47,219,517 22,958,991 (223,434) (2,883,198) (110,892)
----------- ----------- ----------- ----------- -----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ................... $54,321,088 $27,916,260 $ 1,813,405 $ 4,501,489 $ 833,008
=========== =========== =========== =========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GALAXY
FUND II
STATEMENTS OF CHANGES IN NET ASSETS
LARGE COMPANY INDEX FUND SMALL COMPANY INDEX FUND
------------------------ ------------------------
YEARS ENDED MARCH 31, YEARS ENDED MARCH 31,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET ASSETS AT BEGINNING OF PERIOD ...................... $240,689,326 $147,597,190 $291,724,251 $235,294,714
------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS:
Net investment income ............................... 7,101,571 4,087,540 4,957,269 3,980,746
Net realized gain (loss) on investments sold
and futures contracts ............................. 26,707,295 4,766,394 21,136,021 15,267,683
Net change in unrealized appreciation
(depreciation) of investments and futures contracts 20,512,222 43,100,141 1,822,970 50,356,620
------------ ------------ ------------ ------------
Net increase (decrease) in net assets resulting
from operations ................................. 54,321,088 51,954,075 27,916,260 69,605,049
------------ ------------ ------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income ............................... (5,762,133) (3,206,646) (4,406,973) (4,757,318)
Dividends in excess of net investment income ........ -- -- -- --
Net realized gain on investments .................... (6,412,382) (3,754,041) (18,978,395) (4,274,380)
------------ ------------ ------------ ------------
Total Dividends ................................... (12,174,515) (6,960,687) (23,385,368) (9,031,698)
------------ ------------ ------------ ------------
SHARE TRANSACTIONS:
Net proceeds from sales of shares ................... 196,028,098 78,100,033 38,027,651 40,205,781
Issued to shareholders in reinvestment
of dividends ...................................... 10,568,314 6,344,797 22,583,158 8,699,735
Costs of shares repurchased ......................... (67,780,439) (36,346,082) (47,392,281) (53,049,330)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets from share
transactions .................................... 138,815,973 48,098,748 13,218,528 (4,143,814)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets ............. 180,962,546 93,092,136 17,749,420 56,429,537
------------ ------------ ------------ ------------
NET ASSETS AT END OF PERIOD (INCLUDING LINE A) ......... $421,651,872 $240,689,326 $309,473,671 $291,724,251
============ ============ ============ ============
(A) Accumulated undistributed
net investment income ............................. $ 2,289,515 $ 950,077 $ 842,015 $ 291,719
============ ============ ============ ============
OTHER INFORMATION:
SHARE TRANSACTIONS:
Sold ................................................ 8,814,388 4,288,969 1,624,791 1,958,689
Issued to shareholders in reinvestment
of dividends ...................................... 477,342 341,875 990,057 418,056
Repurchased ......................................... (3,031,843) (1,995,829) (2,027,836) (2,647,174)
------------ ------------ ------------ ------------
Net increase (decrease) in shares outstanding ..... 6,259,887 2,635,015 587,012 (270,429)
============ ============ ============ ============
See Notes to Financial Statements.
<PAGE>
<CAPTION>
UTILITY INDEX FUND U.S. TREASURY INDEX FUND MUNICIPAL BOND FUND
------------------ ------------------------ -------------------
YEARS ENDED MARCH 31, YEARS ENDED MARCH 31, YEARS ENDED MARCH 31,
1997 1996 1997 1996 1997 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
NET ASSETS AT BEGINNING OF PERIOD ......... $56,383,495 $52,831,112 $124,944,179 $104,250,685 $22,478,238 $24,559,594
----------- ----------- ------------ ------------ ----------- -----------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS:
Net investment income .................. 2,036,839 2,084,926 7,384,687 7,453,794 943,900 1,061,460
Net realized gain (loss) on investments
sold and futures contracts ........... 3,706,859 (494,211) 186,629 489,553 117,357 24,569
Net change in unrealized appreciation
(depreciation) of investments and
futures contracts .................... (3,930,293) 11,134,521 (3,069,827) 2,627,125 (228,249) 609,928
----------- ----------- ------------ ------------ ----------- -----------
Net increase (decrease) in net assets
resulting from operations .......... 1,813,405 12,725,236 4,501,489 10,570,472 833,008 1,695,957
----------- ----------- ------------ ------------ ----------- -----------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income .................. (1,928,333) (2,114,529) (7,380,371) (7,385,819) (943,276) (1,061,460)
Dividends in excess of net investment
income ............................... -- -- -- (67,974) -- --
Net realized gain on investments ....... (2,272,644) -- -- -- -- --
----------- ----------- ------------ ------------ ----------- -----------
Total Dividends ...................... (4,200,977) (2,114,529) (7,380,371) (7,453,793) (943,276) (1,061,460)
----------- ----------- ------------ ------------ ----------- -----------
SHARE TRANSACTIONS:
Net proceeds from sales of shares ...... 2,858,430 6,908,802 16,091,716 38,639,829 4,660,657 2,239,987
Issued to shareholders in reinvestment
of dividends ......................... 3,936,226 1,935,740 5,812,718 6,197,486 822,158 953,563
Costs of shares repurchased ............ (15,208,160) (15,902,866) (32,657,054) (27,260,500) (7,929,582) (5,909,403)
----------- ----------- ------------ ------------ ----------- -----------
Net increase (decrease) in net assets
from share transactions ............ (8,413,504) (7,058,324) (10,752,620) 17,576,815 (2,446,767) (2,715,853)
----------- ----------- ------------ ------------ ----------- -----------
Net increase (decrease) in net assets (10,801,076) 3,552,383 (13,631,502) 20,693,494 (2,557,035) (2,081,356)
----------- ----------- ------------ ------------ ----------- -----------
NET ASSETS AT END OF PERIOD (INCLUDING
LINE A) ................................. $45,582,419 $56,383,495 $111,312,677 $124,944,179 $19,921,203 $22,478,238
=========== =========== ============ ============ =========== ===========
(A) Accumulated undistributed
net investment income ................ $ 188,804 $ 80,298 $ 137,973 $ 23,099 $ 22,217 $ 21,593
=========== =========== ============ ============ =========== ===========
OTHER INFORMATION:
SHARE TRANSACTIONS:
Sold ................................... 241,502 596,420 1,594,728 3,712,495 455,952 218,792
Issued to shareholders in reinvestment 341,447 171,694 573,428 596,650 80,682 93,310
of dividends ......................... (1,278,619) (1,430,584) (3,218,983) (2,628,230) (777,546) (579,680)
Repurchased ............................ ----------- ----------- ------------ ------------ ----------- -----------
Net increase (decrease) in shares
outstanding ....................... (695,670) (662,470) (1,050,827) 1,680,915 (240,912) (267,578)
=========== =========== ============ ============ =========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GALAXY
FUND II
LARGE COMPANY INDEX FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
YEARS ENDED MARCH 31,
---------------------------------------------------------------------
1997 1996 1995 1994(1) 1993(1)
---- ---- ---- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .................. $ 20.06 $ 15.76 $ 14.36 $ 14.59 $ 13.04
-------- -------- ------- -------- --------
Income from Investment Operations:
Net investment income(2) ........................... 0.43 0.38 0.37 0.36 0.34
Net realized and unrealized gain (loss)
on investments and futures contracts ............. 3.41 4.57 1.73 (0.20) 1.55
-------- -------- ------- -------- --------
Total from Investment Operations ............... 3.84 4.95 2.10 0.16 1.89
-------- -------- ------- -------- --------
Less Dividends:
Dividends from net investment income ............... (0.38) (0.31) (0.37) (0.36) (0.34)
Dividends from net realized capital gains .......... (0.43) (0.34) (0.33) (0.03) --
-------- -------- ------- -------- --------
Total Dividends ................................ (0.81) (0.65) (0.70) (0.39) (0.34)
-------- -------- ------- -------- --------
Net Increase (decrease) in net asset value ............ 3.03 4.30 1.40 (0.23) 1.55
-------- -------- ------- -------- --------
Net Asset Value, End of Period ........................ $ 23.09 $ 20.06 $ 15.76 $ 14.36 $ 14.59
======== ======== ======= ======== ========
Total Return .......................................... 19.32% 31.80% 15.07% 1.02% 14.68%
Ratios/Supplemental Data:
Net assets, End of Period (in 000's) .................. $421,652 $240,689 $147,597 $143,828 $133,426
Ratios to average net assets:
Net investment income including reimbursement ...... 2.19% 2.11% 2.48% 2.41% 2.57%
Operating expenses including reimbursement ......... 0.40% 0.40% 0.40% 0.40% 0.40%
Operating expenses excluding reimbursement ......... 0.40% 0.41% 0.41% 0.40% 0.40%
Portfolio turnover rate ............................... 11% 5% 7% 4% 0%
Average Commission Rate Paid(3) ....................... $ 0.0387 $ 0.0203 N/A N/A N/A
- -------------------------------
(1) Audited by other auditors
(2) Net investment income per share before reimbursement by the sub-administrator for the fiscal years ended March 31, 1997,
1996 and 1995 were $0.43, $0.38 and and $0.37, respectively.
(3) For fiscal years beginning on or after September 1, 1995, the Fund is required to disclose its average commission rate per
share for portfolio transactions for which commissions are charged.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GALAXY
FUND II
SMALL COMPANY INDEX FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
YEARS ENDED MARCH 31,
---------------------------------------------------------------------
1997 1996 1995 1994(1) 1993(1)
---- ---- ---- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .................. $ 22.30 $ 17.62 $ 17.49 $ 17.42 $ 15.39
-------- -------- -------- -------- -------
Income from Investment Operations:
Net investment income(2) ........................... 0.38 0.32 0.32 0.26 0.25
Net realized and unrealized gain
on investments and futures contracts ............. 1.76 5.07 0.91 0.39 2.07
-------- -------- -------- -------- -------
Total from Investment Operations ............... 2.14 5.39 1.23 0.65 2.32
-------- -------- -------- -------- -------
Less Dividends:
Dividends from net investment income ............... (0.34) (0.38) (0.32) (0.25) (0.24)
Dividends from net realized capital gains .......... (1.46) (0.33) (0.78) (0.33) (0.05)
-------- -------- -------- -------- -------
Total Dividends ................................ (1.80) (0.71) (1.10) (0.58) (0.29)
-------- -------- -------- -------- -------
Net Increase in net asset value ....................... 0.34 4.68 0.13 0.07 2.03
-------- -------- -------- -------- -------
Net Asset Value, End of Period ........................ $ 22.64 $ 22.30 $ 17.62 $ 17.49 $ 17.42
======== ======== ======== ======== ========
Total Return .......................................... 9.60% 30.85% 7.60% 3.64% 15.20%
Ratios/Supplemental Data:
Net assets, End of Period (in 000's) .................. $309,474 $291,724 $235,295 $255,347 $213,669
Ratios to average net assets:
Net investment income including reimbursement ...... 1.59% 1.52% 1.72% 1.55% 1.80%
Operating expenses including reimbursement ......... 0.40% 0.40% 0.40% 0.40% 0.40%
Operating expenses excluding reimbursement ......... 0.40% 0.41% 0.40% 0.40% 0.40%
Portfolio turnover rate ............................... 8% 14% 10% 17% 5%
Average Commission Rate Paid(3) ....................... $ 0.0480 $ 0.0225 N/A N/A N/A
- ------------------------------
(1) Audited by other auditors
(2) Net investment income per share before reimbursement by the sub-administrator for the fiscal years ended March 31, 1997,
1996 and 1995 were $0.38, $0.31 and $0.31, respectively.
(3) For fiscal years beginning on or after September 1, 1995, the Fund is required to disclose its average commission rate per
share for portfolio transactions for which commissions are charged.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GALAXY
FUND II
UTILITY INDEX FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
YEARS ENDED MARCH 31,
----------------------------------------------------------------------
1997 1996 1995 1994(1) 1993(1)(2)
---- ---- ---- ------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .................. $ 12.03 $ 9.88 $ 9.99 $ 10.93 $ 10.00
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income(3) ........................... 0.49 0.44 0.47 0.43 0.06
Net realized and unrealized gain (loss)
on investments ................................... (0.09) 2.15 (0.03) (0.93) 0.93
-------- -------- -------- -------- --------
Total from Investment Operations ............... 0.40 2.59 0.44 (0.50) 0.99
-------- -------- -------- -------- --------
Less Dividends:
Dividends from net investment income ............... (0.46) (0.44) (0.46) (0.43) (0.06)
Dividends from net realized capital gains .......... (0.55) -- (0.08) (0.01) --
Dividends in excess of net realized capital gains .. -- -- (0.01) -- --
-------- -------- -------- -------- --------
Total Dividends ................................ (1.01) (0.44) (0.55) (0.44) (0.06)
-------- -------- -------- -------- --------
Net Increase (decrease) in net asset value ............ (0.61) 2.15 (0.11) (0.94) 0.93
-------- -------- -------- -------- --------
Net Asset Value, End of Period ........................ $ 11.42 $ 12.03 $ 9.88 $ 9.99 $ 10.93
======== ======== ======== ======== ========
Total Return .......................................... 3.46% 26.61% 4.67% 4.83% 9.85%**
Ratios/Supplemental Data:
Net assets, End of Period (in 000's) .................. $ 45,582 $ 56,383 $ 52,831 $ 68,445 $ 38,151
Ratios to average net assets:
Net investment income including reimbursement ...... 3.96% 3.79% 4.62% 4.08% 4.66%*
Operating expenses including reimbursement ......... 0.40% 0.40% 0.40% 0.40% 0.40%*
Operating expenses excluding reimbursement ......... 0.40% 0.41% 0.41% 0.40% 0.40%*
Portfolio turnover rate ............................... 170% 12% 5% 19% 0%**
Average Commission Rate Paid(4) ....................... $ 0.0572 $ 0.0230 N/A N/A N/A
- -----------------------------
* Annualized.
** Not Annualized.
(1) Audited by other auditors
(2) The Fund commenced operations on January 5, 1993.
(3) Net investment income per share before reimbursement by the sub-administrator for the fiscal years ended March 31, 1997,
1996 and 1995 were $0.49, $0.44 and $0.47, respectively.
(4) For fiscal years beginning on or after September 1, 1995, the Fund is required to disclose its average commission rate per
share for portfolio transactions for which commissions are charged.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GALAXY
FUND II
U.S. TREASURY INDEX FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
YEARS ENDED MARCH 31,
----------------------------------------------------------------------
1997 1996 1995 1994(1) 1993(1)
---- ---- ---- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................... $ 10.24 $ 9.91 $ 10.38 $ 11.01 $ 10.39
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income(2)............................ 0.64 0.66 0.65 0.58 0.63
Net realized and unrealized gain (loss)
on investments.................................... (0.25) 0.33 (0.29) (0.29) 0.75
-------- -------- -------- -------- --------
Total from Investment Operations................ 0.39 0.99 0.36 0.29 1.38
-------- -------- -------- -------- --------
Less Dividends:
Dividends from net investment income................ (0.64) (0.65) (0.66) (0.58) (0.63)
Dividends in excess of net investment income........ -- (0.01) (0.01) -- --
Dividends from net realized capital gains........... -- -- -- (0.34) (0.13)
Dividends in excess of net realized capital gains... -- -- (0.16) -- --
-------- -------- -------- -------- --------
Total Dividends................................. (0.64) (0.66) (0.83) (0.92) (0.76)
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value............. (0.25) 0.33 (0.47) (0.63) 0.62
-------- -------- -------- -------- --------
Net Asset Value, End of Period......................... $ 9.99 $ 10.24 $ 9.91 $ 10.38 $ 11.01
======== ======== ======== ======== ========
Total Return .......................................... 3.91% 10.09% 3.81% 2.40% 13.69%
Ratios/Supplemental Data:
Net assets, End of Period (in 000's)................... $111,313 $124,944 $104,251 $138,225 $145,353
Ratios to average net assets:
Net investment income including reimbursement....... 6.31% 6.35% 6.43% 5.21% 5.87%
Operating expenses including reimbursement.......... 0.40% 0.40% 0.40% 0.40% 0.40%
Operating expenses excluding reimbursement.......... 0.40% 0.41% 0.41% 0.40% 0.40%
Portfolio turnover rate................................ 39% 35% 50% 75% 35%
- ------------------------------
(1) Audited by other auditors
(2) Net investment income per share before reimbursement by the sub-administrator for the fiscal years ended March 31, 1997,
1996 and 1995 were $0.64, $0.66 and $0.65, respectively.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GALAXY
FUND II
MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
YEARS ENDED MARCH 31,
-------------------------------------------------------
1997 1996 1995 1994(1)(2)
---- ---- ---- ----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .................. $ 10.20 $ 9.94 $ 9.89 $ 10.00
-------- -------- -------- --------
Income from Investment Operations:
Net investment income(3) ........................... 0.47 0.46 0.46 0.43
Net realized and unrealized gain (loss)
on investments ................................... (0.05) 0.26 0.05 (0.11)
-------- -------- -------- --------
Total from Investment Operations ................ 0.42 0.72 0.51 0.32
-------- -------- -------- --------
Less Dividends:
Dividends from net investment income ............... (0.47) (0.46) (0.46) (0.43)
Dividends from net realized capital gains .......... -- -- -- --
-------- -------- -------- --------
Total Dividends ................................. (0.47) (0.46) (0.46) (0.43)
-------- -------- -------- --------
Net increase (decrease) in net asset value ............ (0.05) 0.26 0.05 (0.11)
-------- -------- -------- --------
Net Asset Value, End of Period ........................ $ 10.15 $ 10.20 $ 9.94 $ 9.89
======== ======== ======== ========
Total Return .......................................... 4.15% 7.36% 5.34% 3.10%**
Ratios/Supplemental Data:
Net assets, End of Period (in 000's) .................. $ 19,921 $ 22,478 $ 24,560 $ 33,352
Ratios to average net assets:
Net investment income including reimbursement ...... 4.57% 4.54% 4.72% 4.35%*
Operating expenses including reimbursement ......... 0.60% 0.60% 0.60% 0.60%*
Operating expenses excluding reimbursement ......... 0.60% 0.61% 0.63% 0.60%*
Portfolio turnover rate ............................... 7% 2% 47% 56%**
- ----------------------
* Annualized
** Not Annualized
(1) Audited by other auditors
(2) The Fund commenced operations on April 15, 1993.
(3) Net investment income per share before reimbursement by the sub-administrator for the fiscal years ended March 31, 1997,
1996 and 1995 were $0.47, $0.46 and $0.46, respectively.
See Notes to Financial Statements.
</TABLE>
<PAGE>
GALAXY
FUND II
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION:
Galaxy Fund II ("Galaxy II" or the "Trust"), a Massachusetts business trust, is
registered under the Investment Company Act of 1940, as amended, as an open-end
investment company. As of the date of this report, the Trust offered five
managed investment portfolios. The accompanying financial statements and
financial highlights are those of the Large Company Index Fund, the Small
Company Index Fund, the Utility Index Fund, the U.S. Treasury Index Fund, and
the Municipal Bond Fund (individually a "Fund," collectively the "Funds").
2. SIGNIFICANT ACCOUNTING POLICIES:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Trust in the preparation of its
financial statements.
PORTFOLIO VALUATION: Listed investment securities are valued by an independent
pricing service approved by the Trust's Board of Trustees at the last quoted
sale price on the principal exchange where such securities are traded. Unlisted
securities or listed securities for which last sales prices are not available
are valued at the closing bid price in the principal market where such
securities trade. U.S. Government securities (other than short-term investments)
are valued at the mean of the quoted bid and asked prices in the
over-the-counter market. Debt securities of U.S. issuers (other than U.S.
Government securities and short-term securities), including municipal
securities, are valued at the mean between the quoted bid price and the asked
price. Short-term obligations that mature in 60 days or less are valued at
amortized cost, which approximates market value. Futures contracts are valued at
the settlement price established each day by the board of trade or exchange on
which they are traded.
Investments for which market quotations are not readily available are valued
based on fair value as determined in good faith under consistently applied
procedures established by and under the general supervision of the Board of
Trustees.
FUTURES CONTRACTS: All Funds, except the U.S. Treasury Index Fund, may enter
into futures contracts for the delayed delivery of securities at a fixed price
at some future date or the change in the value of a specified financial index
over a predetermined time period. Cash or securities are deposited with brokers
in order to establish and maintain a position. Subsequent payments made or
received by the Fund based on the daily change in the market value of the
position are recorded as unrealized gains or losses until the contract is closed
out, at which time the gains or losses are realized.
SECURITY TRANSACTIONS AND INVESTMENT INCOME: Security transactions are accounted
for on a trade date basis. Net realized gains or losses on sales of securities
are determined on the identified cost method. Interest income and expenses are
recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Dividends from net investment
income are declared daily and paid monthly for the U.S. Treasury Index Fund and
the Municipal Bond Fund, declared and paid quarterly for the Utility Index Fund
and declared and paid annually for the Small Company Index Fund and the Large
Company Index Fund. Net realized capital gains, if any, are distributed at least
annually. Income dividends and capital gain dividends are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles.
FEDERAL INCOME TAXES: The Trust treats each Fund as a separate entity for
federal income tax purposes. Each Fund intends to qualify each year as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended. By so qualifying, each Fund will not be subject to federal
income taxes to the extent that it distributes substantially all of its taxable
or tax-exempt income, if any, for its tax year ending March 31. In addition, by
distributing in each calendar year substantially all of its net investment
income, capital gains, and certain other amounts, if any, each Fund will not be
subject to a Federal excise tax. Therefore, no federal income tax provision is
recorded.
3. SHARES OF BENEFICIAL INTEREST:
The Trust's Declaration of Trust authorizes the Trustees to issue an unlimited
number of shares of beneficial interest, with $0.001 par value. The Trust's
shares are classified into five series.
4. INVESTMENT ADVISORY, ADMINISTRATION AND DISTRIBUTION AGREEMENTS:
The Trust and Fleet Investment Advisors Inc. (the "Investment Adviser"), an
indirect wholly-owned subsidiary of Fleet Financial Group, Inc., are parties to
an investment advisory agreement under which the Investment Adviser provides
advisory services for a fee, computed daily and paid monthly, at the annual rate
of 0.10% of the average daily net assets of the Large Company Index, Small
Company Index, Utility Index, and U.S. Treasury Index Funds, and 0.25% of the
average daily net assets of the Municipal Bond Fund.
The Trust and Fleet National Bank (the "Administrator") are parties to an
administration agreement. Under the agreement, the Administrator pays all
expenses of the Funds, except the fees and expenses of the Trustees who are not
interested persons of the Trust, brokerage fees and commissions, interest on
borrowings, taxes and such extraordinary, non-recurring expenses as may arise,
including litigation, to which the Trust may be a party. For its services as
administrator, the Administrator receives a fee at an annual rate of 0.30% of
the average daily net assets of each of the Large Company Index, Small Company
Index, Utility Index and U.S. Treasury Index Funds, and 0.35% of the average
daily net assets of the Municipal Bond Fund.
The Administrator entered into a sub-administration agreement with First Data
Investor Services Group, Inc. ("FDISG"), a wholly-owned subsidiary of First Data
Corporation ("First Data"), under which FDISG (the "Sub-Administrator") provides
administrative, accounting and transfer agent services to the Trust. The
Administrator bears the fees of the Sub-Administrator for serving in this
capacity.
First Data Distributors, Inc., a wholly-owned subsidiary of FDISG and an
indirect wholly-owned subsidiary of First Data, acts as the exclusive
distributor of the Trust's shares.
Certain officers of the Trust may be officers of the Sub-Administrator and/or
Distributor. Such officers receive no compensation from the Trust for serving in
their respective roles. No officer, director or employee of the Investment
Adviser serves as an officer, Trustee or employee of the Trust. Prior to October
31, 1996, each Trustee was entitled to receive for services as a Trustee of the
Trust a fee of $5,000 per annum plus certain other fees for attending or
participating in meetings as well as reimbursement for expenses incurred in
attending meetings. Effective November 1, 1996, each Trustee is entitled to
receive for services as a Trustee of the Trust, The Galaxy Fund ("Galaxy") and
The Galaxy VIP Fund ("VIP") an aggregate fee of $29,000 per annum plus certain
other fees for attending or participating in meetings as well as reimbursement
for expenses incurred in attending meetings. The Chairman of the Boards of
Trustees and the President and Treasurer of the Trust, Galaxy and VIP are also
entitled to additional fees for their services in these capacities. These fees
are allocated among the funds of the Trust, Galaxy and VIP based on their
relative net assets.
In addition, effective March 1, 1996, each Trustee became eligible to
participate in the Trust's Deferred Compensation Plan (the "Plan"), an unfunded,
nonqualified deferred compensation plan. The Plan allows each Trustee to defer
receipt of all or a percentage of fees that would otherwise be payable for
services performed.
The Sub-Administrator voluntarily agreed to reimburse the funds for Trustee fees
so that total expenses would not exceed certain expense limitations. The
Sub-Administrator at its discretion may revise or discontinue the voluntary
expense reimbursement at anytime.
5. SECURITIES TRANSACTIONS:
The cost of purchases and the proceeds from sales of securities (excluding
short-term investments and futures contracts) for the year ended March 31, 1997
for each Fund were as follows:
<TABLE>
<CAPTION>
U.S. Government Other Investment
Securities Securities
-------------------------- -------------------------------
Purchases Sales Purchases Sales
----------- --------- ------------ -------------
<S> <C> <C> <C> <C>
Large Company Index .......... $ -- $ -- $109,515,976 $30,387,446
Small Company Index .......... -- -- 22,652,275 59,462,069
Utility Index ................ -- -- 85,965,223 96,024,846
U.S. Treasury Index .......... 43,805,117 54,306,263 -- --
Municipal Bond ............... -- -- 1,505,281 4,160,399
</TABLE>
The aggregate cost, gross unrealized appreciation and depreciation and net
unrealized appreciation (depreciation) for all securities as computed on a
federal income tax basis at March 31, 1997 for each Fund were as follows:
<TABLE>
<CAPTION>
Cost Appreciation (Depreciation) Net
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Large Company Index .......... $329,173,872 $105,445,945 $ (9,385,490) $ 96,060,455
Small Company Index .......... 223,959,336 104,591,787 (16,971,757) 87,620,030
Utility Index ................ 45,146,149 2,135,352 (1,679,573) 455,779
U.S. Treasury Index .......... 110,952,821 878,744 (2,578,406) (1,699,662)
Municipal Bond ............... 19,794,902 368,775 (29,404) 339,371
</TABLE>
During the fiscal year ended March 31, 1997, the Large Company Index Fund, the
Small Company Index Fund, and the Utility Index Fund made distributions from
long-term capital gains of $4,930,176, $16,084,089, and $2,272,644,
respectively.
At March 31, 1997, the following Funds had capital loss carryforwards:
Capital loss Expiration
Carryforward Date
--------------- ----------
U.S. Treasury Index ..... $ 4,601,076 2003
548,015 2004
Municipal Bond .......... 789,593 2003
203,341 2004
6. FINANCIAL INSTRUMENTS:
The Large Company Index, Small Company Index and Utility Index Funds may enter
into stock index futures contracts that are traded on a national exchange. These
Funds will enter into stock index futures contracts only for bonafide hedging
purposes or as otherwise permitted by the Commodities Futures Trading Commission
("CFTC"). If permitted, these Funds may use stock index futures to maintain cash
reserves while remaining fully invested, to facilitate trading, to reduce
transaction costs or to seek higher investment returns when a stock index
futures contract is priced more attractively than the underlying index. The
Municipal Bond Fund may enter into interest rate futures contracts and municipal
bond index futures contracts only for bonafide hedging purposes or as otherwise
permitted by CFTC regulations. In addition, the Municipal Bond Fund may purchase
put or call options on interest rate and municipal bond index futures contracts,
which are traded on a United States exchange, as a hedge against changes in
interest rates, and may enter into closing transactions with respect to such
options to terminate existing positions. The Fund will segregate assets to cover
its commitments on purchased futures contracts.
Risks associated with using financial instruments such as futures as a hedge
include an imperfect correlation between the movements in the price of the
instruments and the price of the underlying securities and interest rates, an
illiquid secondary market for the instruments or the inability of counterparties
to perform under the terms of the contract.
7. CONCENTRATION OF CREDIT RISK:
The Utility Index Fund will concentrate its investments in the utility industry.
As a result, the Fund's investments may be subject to greater risk and market
fluctuation than a fund that has securities representing a broader range of
investment alternatives.
8. POST OCTOBER LOSSES:
Under current tax laws, certain capital losses realized after October 31 may be
deferred and treated as occuring on the first day of the following year. For the
fiscal year ended March 31, 1997, the Utility Index Fund elected to defer losses
occuring between November 1, 1996 and March 31, 1997 in the amount of $464,372.
9. SUBSEQUENT EVENT:
At a special meeting of shareholders of the Small Company Index Fund and Utility
Index Fund in May 1997, a change in the investment objective for each of these
funds was approved. Prospectively, each fund will seek to provide investment
results that, before the deduction of operating expenses, match the price and
yield performance of U.S. publicly-traded stocks (i) with smaller stock market
capitalizations (as represented by the S&P 600 Small Company Index) in the case
of the Small Company Index Fund, and (ii) of companies engaged in the utility
industry (as represented by the S&P Utility Index) in the case of the Utility
Index Fund. Capital gains resulting from changes in securities holdings will be
distributed to shareholders in 1997 to the extent not offset by other realized
losses.
<PAGE>
GALAXY
FUND II
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of
Galaxy Fund II:
We have audited the accompanying statements of assets and liabilities of
the Large Company Index Fund, Small Company Index Fund, Utility Index Fund, U.S.
Treasury Index Fund and Municipal Bond Fund (five series of Galaxy Fund II),
including the portfolios of investments, as of March 31, 1997, and the related
statements of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and financial
highlights for each of the periods referenced therein. These financial
statements and financial highlights are the responsibility of Galaxy Fund II's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits. The financial
highlights of the aforementioned series of Galaxy Fund II for periods prior to
the year ended March 31, 1995 were audited by other auditors whose report dated
May 16, 1994 expressed an unqualified opinion on such financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1997 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
aforementioned series of Galaxy Fund II as of March 31, 1997, the results of
their operations for the year then ended, and the changes in their net assets
for each of the two years in the period then ended, and their financial
highlights for each of the periods referenced therein, in conformity with
generally accepted accounting principles.
Boston, Massachusetts Coopers & Lybrand L.L.P.
May 6, 1997
<PAGE>
--------------------
BULK RATE
U. S. POSTAGE PAID
PERMIT NO. 105
4400 Computer Drive NORTH READING, MA
P.O. Box 5108 --------------------
Westborough, MA 01581-5108
FN-347 (5/97) Date of first use: May 30, 1997
