[Front Cover]
[Galaxy Fund II logo]
[Photo: Business associates walking along sidewalk, as viewed from above]
Galaxy Fund II Report
Large Company Index Fund [bullet] Small Company Index Fund [bullet]
Utility Index Fund [bullet] U.S. Treasury Index Fund
[bullet] Municipal Bond Fund
ANNUAL
REPORT
FOR THE
YEAR ENDED
MARCH 31, 1998
<PAGE>
CHAIRMAN'S
MESSAGE
Dear Galaxy Fund II Shareholder:
It's been quite a year. Exceptional performances by stocks produced a
12-month total return that was more than four times the average annual market
return of the last 70 years. Meanwhile, bonds returned almost two and a half
times their historical average.
Although investors were nervous about inflation and the pace of economic
growth in the past 12 months, which made stock prices volatile at times,
inflation declined and the economy continued to grow. This proved a nurturing
climate for both stocks and bonds. The returns for stocks were particularly
surprising, given the remarkable gains of the previous two years. For the 12
months ended March 31, 1998, the Standard & Poor's(R) 500 Composite Stock Price
Index earned a total return of 47.97%. In the 53 years since the end of World
War II no three calendar years have achieved this level of return. From 1925
through 1995, Ibbotson Associates of Chicago has measured the average annual
total return for bonds at about 5%. During the 12 months ended March 31, 1998,
the U.S. Treasury Bond Index had a total return of 12.2%
With the strong gains of the past year, it helps to remember the
time-tested portfolio strategies of diversification and rebalancing.
Diversification among different asset classes is an important tool for
minimizing investment risk. Although U.S. economic fundamentals are sound, stock
valuations have exceeded their historical highs - increasing the chance for a
market correction. Investing in both stocks and bonds, as well as in different
market sectors, can help reduce the impact of such a correction on your
portfolio.
After significant gains for stocks and bonds, an investor's portfolio may
no longer reflect its original allocation strategy. In fact, the faster the
change in market values, the more often rebalancing may be needed. An investment
professional could help make adjustments to restore the allocations the investor
originally intended, if necessary.
The following report covers the performance of the Galaxy Fund II
portfolios for the fiscal year ended March 31, 1998. Besides an overview of
financial market activity during this time, there are individual investment
commentaries for each portfolio. At the end of the report, you will find lists
of the securities that each portfolio held when the reporting period ended, as
well as individual portfolio financial statements and financial highlights.
Should you have questions about this report, or want additional information
about any Galaxy funds or services, 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
[begin sidebar]
Mutual Funds:
[bullet] are not bank deposits
[bullet] are not FDIC insured
[bullet] are not obligations of Fleet Bank
[bullet] are not guaranteed by Fleet Bank
[bullet] are subject to investment risks
including possible loss of principal
amount invested
[end sidebar]
<PAGE>
MARKET OVERVIEW
MARKET OVERVIEW
By Fleet Investment Advisors Inc.
Stock and bond prices advanced briskly in the year ended March 31, 1998,
earning returns that were exceptional by historical standards. During that time
economic growth remained moderate, but inflation and interest rates fell. After
worrying that the economy might expand too quickly, bringing higher inflation
that could end the current expansion, investors became confident that the
expansion would continue. In this climate, stock prices continued to reach
record highs and bond yields fell to their lowest levels in twenty years.
A Perfect Investment Climate
In the second quarter of 1997, when the period began, growth in the Gross
Domestic Product ("GDP") that measures the output of U.S. goods and services had
fallen to an annual rate of 3.3% -- from 4.9% in the first quarter. This, plus
improved productivity, drove annual inflation from 3.0% to 2.2%.
In the first weeks of April, before investors knew that growth and
inflation would ease, stock prices dropped about 10%. Bond prices fell enough to
send the yield for 30-year Treasury issues to 7.17% -- a nine-month high. By the
end of the second quarter, however, signs of slower growth and lower inflation
had reduced long-term Treasury yields to 6.78%. With lower yields, and continued
strength in corporate earnings, stocks rebounded to new highs.
As GDP growth slowed to 3.1% in the third quarter, inflation neared 2%.
Because growth was stronger than analysts expected, however, investors remained
somewhat nervous. This pushed stock and bond prices lower in July and August.
Both markets then recovered and resumed their rallies. Although GDP growth
reached 3.9% in the fourth quarter of 1997, inflation eased to 1.9%. Meanwhile,
currency problems in Southeast Asia that had surfaced in the summer became a
full-blown economic crisis. The prospect that reduced trade with Asia would
cause U.S. growth to slow raised concern about corporate earnings, but eased
fears that higher wages would boost inflation. Bond prices ended the quarter
sharply higher. With relative weakness in stock prices in October and December,
stock market benchmarks showed more modest gains than they had earlier in the
year.
Although growth appeared to accelerate in the first quarter of 1998,
inflation fell to 1.4%. It soon became clear that Asia's troubles had trimmed
earnings for some firms. With low inflation and slower growth, the yield for
30-year Treasuries reached 5.69%, the lowest level since the bonds were
introduced in 1977. By February, however, intervention by the International
Monetary Fund had stabilized most Asian economies. These improved economic
conditions abroad, the continued prospect of slower economic growth at home,
plus news of a federal budget surplus, caused the Federal Reserve (the "Fed") to
leave interest rates unchanged. After seesawing in a narrow range, long-term
Treasury yields ended the period at 5.93%. This gave the Salomon Brothers U.S.
Treasury Index a 12-month total return of 12.20%.
With healthy consumer confidence and sound economic fundamentals, demand
for stocks soared. Meanwhile, corporate consolidations and stock buyback
programs kept trimming share supplies. After weakening briefly in January, when
the Asian crisis was at its peak, stock prices rocketed. By the end of the
fiscal year, the Standard & Poor's 500 Composite Index (the "S&P 500 Index") had
earned an extraordinary total return of 47.97%.
[begin sidebar]
"In this climate, stock prices continued to reach record highs and bond yields
fell to their lowest levels in twenty years."
[end sidebar]
1
<PAGE>
MARKET OVERVIEW
Growth Should Continue to Slow
In reaching these returns, stocks encountered significant volatility. Such
volatility could continue for the next 12 months. Despite recent stability in
Asia, we believe U.S. trade and growth could continue to slow and further reduce
corporate earnings. With stock prices historically high versus earnings, any
earnings disappointments could prompt new market weakness. We believe U.S.
economic fundamentals are solid, however, with further room for growth. If
investors continue to see market corrections as new investment opportunities,
stock prices could rally further. After three exceptional years, however,
prospective returns are unlikely to match those achieved during such periods.
Slower growth should also offset gains in wages, keeping a lid on
inflation. If growth slows enough, the Fed could cut interest rates. If growth
accelerates, however, rates could rise. We expect bonds to remain attractive in
this environment, with long-term Treasury yields ranging from 5.5% to 6.5%.
[begin sidebar]
"Slower growth should also offset gains in
wages, keeping a lid on inflation. If growth
slows enough, the Fed could cut interest rates.
If growth accelerates, however, rates could
rise."
[end sidebar]
Performance At-A-Glance
Average Annual Returns as of March 31, 1998
Large Company Index Fund (Inception Date 10/1/90)
<TABLE>
<S> <C>
1 Year 47.29%
3 Year 32.31%
5 Year 21.91%
Life of Fund 21.03%
</TABLE>
Small Company Index Fund (Inception Date 10/1/90)
<TABLE>
<S> <C>
1 Year 41.22%
3 Year 26.52%
5 Year 17.70%
Life of Fund 20.80%
</TABLE>
Utility Index Fund (Inception Date 1/5/93)
<TABLE>
<S> <C>
1 Year 39.07%
3 Year 22.13%
5 Year 12.65%
Life of Fund 14.09%
</TABLE>
U.S. Treasury Index Fund (Inception Date 6/4/91)
<TABLE>
<S> <C>
1 Year 11.72%
3 Year 8.52%
5 Year 6.32%
Life of Fund 7.93%
</TABLE>
Municipal Bond Fund (Inception Date 4/15/93)
<TABLE>
<S> <C>
1 Year 8.29%
3 Year 6.59%
Life of Fund 5.67%
</TABLE>
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. During the fiscal year ended March 31, 1998, certain
of the Funds' fees were reimbursed by First Data Investor Services Group, Inc.,
the sub-administrator of the Funds. If those expenses had not been reimbursed,
returns would have been lower. Please see Note 4 of Notes to Financial
Statements.
2
<PAGE>
PORTFOLIO REVIEWS
[Photo: Murphy van der Velde)
GALAXY FUND II
LARGE COMPANY INDEX FUND
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 Standard
& Poor's(R) 500 Composite Stock Price Index (the "S&P(R) 500 Index"). By
investing in publicly traded U.S. stocks in relation to their representation in
the S&P(R) 500 Index, the Fund is also subject to the same volatility and risk
as the Index.
Stocks of large companies led the market advance of the last fiscal year -
benefiting as investors favored stocks with good liquidity and dependable
earnings amidst ongoing economic uncertainty. The strength of large-cap stocks
was particularly noteworthy, given their higher valuations when the period
started and the belief that economic turmoil in Asia promised more harm to large
firms with multi-national operations than small firms focused on domestic sales.
Returns for large company stocks remained exceptional by all historical
standards in the fiscal year ended March 31, 1998. During that time the S&P(R)
500 Index had a total return of 47.97%, and the Galaxy II Large Company Index
Fund had a total return of 47.29% (after the deduction of operating expenses.)
The Fund's performance since inception represents a correlation coefficient of
99.98%. The correlation coefficient measures the degree to which the Fund's
performance since inception moves in line with its target index.
If the troubles in Asia continue to trim U.S. trade and growth, the
earnings disappointments that result could hit larger companies particularly
hard. Many companies are selling at two or three times their growth rates -
valuations that were unimaginable just a few years ago. Because U.S. economic
fundamentals are generally solid, we expect corrections in large-cap stocks, as
in other market sectors, to be temporary.
GALAXY FUND II
SMALL COMPANY INDEX FUND
By Murphy van der Velde
Portfolio Manager
The Galaxy Fund II Small Company Index Fund seeks to match, before the
deduction of operating expenses, the price and yield performance of smaller
capitalization stocks as represented by the Standard & Poor's(R) Small Cap 600
Stock Price Index (the "S&P(R) 600 Index"). The S&P(R) 600 Index is an unmanaged
index of small company stocks. By investing in smaller-capitalization
Galaxy II
Large Company Index Fund
Distribution of Total Net Assets
as of March 31, 1998
- ----------------------------------[Pie chart]-----------------------------------
<TABLE>
<S> <C>
Consumer Staples 23%
Finance 17%
Technology 16%
Consumer Cyclical 11%
Utilities 8%
Energy 8%
Capital Goods 7%
Basic Materials 5%
U.S. Government and Agency Obligations and
Net Other Assets and Liabilities 3%
Other Common Stocks 2%
</TABLE>
- --------------------------------------------------------------------------------
Galaxy II Large Company Index Fund
Growth of $10,000 investment*
- --------------------------- [Mountain chart]------------------------------------
<TABLE>
<CAPTION>
Galaxy II Large
Company Index Fund S&P(R) 500 Index
<S> <C> <C>
10/1/90 $10,000 $10,000
3/92
3/94
3/96
3/98 $41,805 $44,050
</TABLE>
* Since inception on 10/1/90. The S&P(R) Index is an unmanaged index which
does not reflect expenses and management fees. An investor cannot invest in
the index.
- --------------------------------------------------------------------------------
Galaxy II
Small Company Index Fund
Distribution of Total Net Assets
as of March 31, 1998
- ----------------------------------[Pie chart]-----------------------------------
<TABLE>
<S> <C>
Consumer Staples 20%
Consumer Cyclical 19%
Finance 16%
Technology 16%
Other Common Stocks 10%
Basic Materials 6%
Utilities 5%
Capital Goods 5%
U.S. Government and Agency Obligations and
Net Other Assets and Liabilities 3%
</TABLE>
- --------------------------------------------------------------------------------
3
<PAGE>
PORTFOLIO REVIEWS
stocks in relation to their representation in the S&P(R) 600 Index, the Fund is
also subject to the same volatility and risk as the S&P(R)600 Index.
After earning mediocre returns for the previous year, stocks of smaller
companies enjoyed outstanding gains in the 12 months ended March 31, 1998. As
large-cap stocks grew more expensive, and their earnings momentum slowed,
investors looked for value and earnings growth in the small-cap sector.
Small-cap stocks also benefited from growing confidence about the economy and
their added sensitivity to declining interest rates. Large-cap stocks
outperformed small cap stocks slightly for the year, however, as ongoing
economic uncertainty continued to favor firms with greater liquidity and
earnings reliability.
Galaxy II
Small Company
Index Fund
Growth of $10,000 investment*
- --------------------------- [Mountain chart]------------------------------------
<TABLE>
<CAPTION>
Galaxy II Small S&P(R) Russell Special Small
Company Index Fund 600 Index Company(TM) Index
<S> <C> <C> <C> <C>
10/1/90 $10,000 $10,000 $10,000
3/92
3/94
3/96
3/98 $41,220 $45,603 $42,132
</TABLE>
*Since inception on 10/1/90. The Russell Special Small Company(TM) Index and the
S&P(R) 600 Index are unmanaged indices which do not reflect expenses and
management fees. An investor cannot invest in these indices.
- --------------------------------------------------------------------------------
For the 12 months ended March 31, 1998, the S&P(R) 600 Index produced a
total return of 47.66%. Prior to May 9, 1997, the benchmark index for the Galaxy
Fund II Small Company Index Fund was the Russell Special Small Company Index
(the "Russell Index").
Over the same time the Galaxy Fund II Small Company Index Fund returned
41.22% (after the deduction of operating expenses). The Fund's performance in
comparison to the S&P 600 Index performance was impacted by the period the Fund
was aligned to the Russell Index and the cost of transitioning to the new
benchmark index. The Fund's performance since inception represents a correlation
coefficient of 99.40%. The correlation coefficient measures the degree to which
the Fund's performance since inception moved in line with the index.
By matching the Fund's investments to the S&P(R) 600 Index, we hope to
give greater emphasis to small company stocks with the broadest following.
With the prospect for further economic growth, but low inflation and
interest rates, we believe small-cap stocks could perform well in the coming
year. Small company stocks may even outperform large-cap shares. Because prices
for small-cap stocks have risen less than prices for large-cap stocks, while
small company earnings have been stronger, the valuations for small-cap stocks
have become more attractive versus valuations for large-cap shares.
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 in relation to
their representation in the Standard & Poor's(R) Utility Composite Stock Price
Index (the "S&P(R) Utility Index"). The S&P(R) Utility Index is an unmanaged
index of the common stocks of the utility companies included in the S&P(R) 500
Index.
As with other stocks, returns for utility shares were exceptional in the
last 12
Galaxy II
Utility Index Fund
Growth of $10,000 investment*
- --------------------------- [Mountain chart]------------------------------------
<TABLE>
<CAPTION>
Galaxy II S&P(R) Russell 1000(TM)
Utility Index Fund Utility Index Utility Index
<S> <C> <C> <C>
1/5/93 $10,000 $10,000 $10,000
3/94
3/96
3/98 $19,931 $20,931 $22,954
</TABLE>
*Since inception on 1/5/93. The Russell 1000(R) Utility Index and S&P(R) Utility
Index are unmanaged indices which do not reflect expenses and management fees.
An investor cannot invest in these indices.
- --------------------------------------------------------------------------------
4
<PAGE>
PORTFOLIO REVIEWS
Galaxy II
Utility Index Fund
Distribution of Total Net Assets
as of March 31, 1998
- ----------------------------------[Pie chart]-----------------------------------
Utilities 87%
Energy 12%
Net Other Assets and Liabilities 1%
- --------------------------------------------------------------------------------
months. Although utility stocks suffered more than other shares when investors
were concerned about inflation, they benefited from the generally downward
trends in inflation, interest rates and bond yields over the period. Utility
stocks also gained from further merger activity and deregulation in their
industry. Because investors were more interested in growth than income during
the period, utility stocks lagged the broader market slightly for the period.
For the 12 months ended March 31, 1998, the S&P(R) Utility Index
produced a total return of 36.31%. Prior to May 9, 1997, the benchmark index for
the Galaxy Fund II Small Company Index Fund was the Russell 1000 Utility Index
(the "Russell Utility Index").
For the same 12 month period, the Galaxy Fund II Utility Index Fund had a
total return of 39.07% (after the deduction of operating expenses). The Fund's
performance in comparison to the S&P Utility Index was impacted by the period
the Fund was aligned to the Russell Utility Index and the cost of transitioning
to the new benchmark index. The Fund's performance since inception represents a
correlation coefficient of 99.43%. The correlation coefficient measures the
degree to which the Fund's performance since inception moved in line with the
index.
By matching the Fund's investments with the S&P(R) Utility Index, we hope
to give greater attention to traditional utilities and higher yields.
Utility stocks could benefit in coming months if slower trade and growth
keep inflation under control and bond yields continue to ease. In the meantime,
the sector should enjoy further gains from industry consolidation and
deregulation. With valuations that are attractive versus those for other parts
of the market, utility stocks should hold up relatively well during any market
corrections.
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., he has managed equity
portfolios since 1993.
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 "Salomon Brothers U.S. Treasury Index"), an unmanaged index of corporate
and government bonds. The Fund attempts to meet this objective by
<PAGE>
Galaxy II
U.S. Treasury Index Fund
Growth of $10,000 investment*
- --------------------------- [Mountain chart]------------------------------------
The U.S. Treasury Component of
Galaxy II the Salomon Brothers Broad
U.S. Treasury Index Fund Investment Grade Bond Index
6/4/91 $10,000 $10,000
3/92
3/94
3/96
3/98 $16,831 $17,361
*Since inception on 6/4/91. The U.S. Treasury Component of the Salomon Brothers
Broad Investment Grade Bond Index is an unmanaged index which does not reflect
expenses and management fees. An investor cannot invest in the index.
- --------------------------------------------------------------------------------
5
<PAGE>
PORTFOLIO REVIEWS
[Photo: David Lindsay]
David Lindsay
investing in U.S. Treasury notes and bonds in relation to their representation
in the Salomon Brothers U.S. Treasury Index.
For the fiscal year ended March 31, 1998, the Salomon Brothers U.S.
Treasury Index posted a total return of 12.20%, and the Galaxy Fund II U.S.
Treasury Index Fund had a total return of 11.72% (after deduction of operating
expenses). The Fund's performance since inception represents a correlation
coefficient of 99.84%. The correlation coefficient measures the degree to which
the Fund's performance since inception moved in line with its target index
during the period.
For much of the year, Treasury prices outpaced prices for corporate bonds.
This was due largely to ongoing concern that the current expansion would end and
corporate earnings would weaken. Such fears became particularly strong as Asia's
economic problems emerged. At the same time, Asia's turmoil produced a "flight
to quality" that increased demand for Treasuries among foreign investors. This
added upward pressure to Treasury prices. Treasuries further benefited as a
future surplus in the federal budget appeared likely, suggesting a shrinkage in
Treasury supplies. Toward the end of the period, when less disruption in Asia
eased earnings concerns, prices for corporate securities rebounded. On a total
return basis, corporates outperformed Treasuries slightly for the year because
of their higher yields.
Galaxy II
U.S. Treasury
Index Fund
Distribution of Total Net Assets
as of March 31, 1998
- ----------------------------------[Pie chart]-----------------------------------
U.S. Treasury Notes 70%
U.S. Treasury Bonds 27%
Net Other Assets and Liabilities 2%
Federal Home Loan Mortgage
Corporation 1%
- --------------------------------------------------------------------------------
Unless foreign investors sell Treasuries to finance economic bailouts back
home, Treasuries should continue to benefit from a positive balance of demand
and supply. They should also remain attractive if slowing growth keeps a lid on
inflation. If slower growth renews concerns about earnings, Treasuries may again
outpace corporate bonds. With a further easing of Asia's problems, we would
expect Treasury yields to move closer to 6.5%. If the trouble in Asia worsens,
yields should move toward the 5.5% end of our estimated range.
David Lindsay has managed the Galaxy Fund II U.S. Treasury Index Fund since July
1994. He has managed fixed-income portfolios for Fleet Investment Advisors Inc.,
since 1986.
GALAXY FUND II MUNICIPAL BOND FUND
By Daniel Rabasco
Member, Tax-Exempt Investment Policy Committee
The Galaxy Fund II Municipal Bond Fund seeks to provide the highest level
of income exempt from regular federal income
Galaxy II
Municipal Bond Fund
Growth of $10,000 investment*
- --------------------------- [Mountain chart]------------------------------------
<TABLE>
<CAPTION>
Lehman Brothers
Galaxy II Seven-Year
Municipal Bond Fund Municipal Bond Index
<S> <C> <C>
4/15/93 $10,000 $10,000
3/94
3/96
3/98 $13,147 $13,103
</TABLE>
*Since inception on 4/15/93. The Lehman Brothers Seven-Year Municipal Bond Index
is an unmanaged index which does not reflect expenses and management fees. An
investor cannot invest in the index.
- --------------------------------------------------------------------------------
6
<PAGE>
PORTFOLIO REVIEWS
[Photo: Dan Rabasco]
Dan Rabasco
tax that is consistent with prudent investment management and preservation of
capital.
Typically, the Fund invests substantially all of its assets in debt
securities issued by state and local government and regional government
agencies, and maintains an average maturity for its investments of 7 to 12
years.
For the fiscal year ended March 31, 1998, the Galaxy Fund II Municipal
Bond Fund earned a total return of 8.29% (after deduction of operating
expenses). That compares to a return of 9.02% for its benchmark, the Lehman
Brothers Seven-Year Municipal Bond Index.
Municipal bonds outperformed Treasury bonds and other taxable issues early
in the period. Because interest rates were higher at that time, supplies of
municipals were relatively tight and demand was strong. When interest rates
fell, many issuers refunded their debt and municipal supplies ballooned. With
lower yields, however, demand declined. This caused municipals to underperform
Treasuries for the year as a whole.
In this environment, the Galaxy Fund II Municipal Bond Fund continued to
benefit from its focus on high quality securities with good call protection,
strong liquidity, and coupons near or above market levels. During the summer of
1997, when municipal prices and yields were more attractive, we added
investments in longer-term issues. This let us lock in the higher yields for
more time and enhanced the Fund's income when interest rates fell. In making
those purchases, we concentrated on issues that financed essential services,
which were available in good supply. These included water, hospital, and
electric utility bonds. We continued to add longer-term issues in the final
months of 1997. As we found investments that offered good value, we traded
municipals with lower coupons for issues with higher
Galaxy II
Municipal Bond Fund
Geographical Distribution of Total Net Assets
as of March 31, 1998
- ----------------------------------[Pie chart]-----------------------------------
<TABLE>
<S> <C>
South 37%
North Central 26%
East 19%
Mountain 10%
Pacific 7%
Cash Equivalents
and Net Other Assets and Liabilities 1%
</TABLE>
- --------------------------------------------------------------------------------
coupons. This strategy, which we continued in the first months of 1998, further
improved the Fund's income.
Municipal bonds may continue to underperform if economic growth slows
further and interest rates ease. Should this happen, we may find new investment
opportunities. Because we feel the Fund's current maturity structure represents
an appropriate balance of risk and potential reward, we do not expect to
increase investments in longer-term issues in the months ahead. We plan to
enhance yield instead with higher-coupon bonds that have good call protection.
Daniel Rabasco is a member of the Tax-Exempt Investment Policy Committee of
Fleet Investment Advisors Inc. which is responsible for managing the Galaxy Fund
II Municipal Bond Fund. Mr. Rabasco has managed portfolios at Fleet Investment
Advisors Inc. and other banks for 10 years.
7
<PAGE>
SHAREHOLDER
INFORMATION
[begin sidebar]
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
[end sidebar]
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 the investment policies and expenses of the Funds as well
as other pertinent information. Read the prospectus carefully before you invest.
Shares of the Funds are not bank 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, guaranteed by, obligations of or otherwise supported by
the U.S. Government, the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other governmental agency. 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 amount invested.
[Recycle symbol]
This report was printed on recycled paper.
8
<PAGE>
GALAXY
FUND II
Large Company Index Fund
PORTFOLIO OF INVESTMENTS
March 31, 1998
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
COMMON STOCKS - 96.84%
Consumer Staples - 22.61%
<S> <C> <C>
55,000 Abbott Laboratories ................ $ 4,142,188
3,958 Alberto-Culver Co.,Class B ......... 120,472
4,587 Allergan, Inc. ..................... 174,306
229 Allergan Specialty
Therapeutics, Inc., Class A ........ 2,777
5,791 ALZA Corp. ......................... 259,509
45,470 American Home Products Corp. ....... 4,336,701
18,448 Amgen, Inc. * ...................... 1,123,022
34,056 Anheuser-Busch Cos., Inc. .......... 1,577,219
38,945 Archer-Daniels-Midland Co. ......... 854,356
9,462 Avon Products, Inc. ................ 738,036
4,000 Bard (C.R.), Inc. .................. 147,000
3,822 Bausch & Lomb, Inc. ................ 174,618
19,894 Baxter International, Inc. ......... 1,096,657
8,442 Becton Dickinson & Co. ............. 574,584
9,965 Bestfoods .......................... 1,164,659
7,827 Biomet, Inc. ....................... 234,810
13,802 Boston Scientific Corp. * .......... 931,635
70,848 Bristol-Myers Squibb Co. ........... 7,390,332
4,711 Brown-Forman Corp., Class B ........ 259,105
32,440 Campbell Soup Co. .................. 1,840,970
7,800 Cardinal Health, Inc. .............. 687,863
7,406 Clorox Co. ......................... 634,602
176,804 Coca-Cola Co. ...................... 13,691,260
20,536 Colgate Palmolive Co. .............. 1,778,931
45,792 Columbia/HCA Healthcare Corp. ...... 1,476,792
33,344 ConAgra, Inc. ...................... 1,071,176
2,539 Coors (Adolph) Co.Class B .......... 88,865
15,112 Costco Cos., Inc. * ................ 808,492
12,093 CVS Corp. .......................... 913,022
15,000 Federated Department Stores, Inc. * 777,188
12,034 Fortune Brands, Inc. ............... 479,856
5,103 Fruit of The Loom, Inc., Class A * . 156,279
11,214 General Mills, Inc. ................ 852,264
40,154 Gillette Co. ....................... 4,765,778
10,800 Guident Corp. ...................... 792,450
27,400 HEALTHSOUTH Corp. * ................ 768,913
25,894 Heinz (H. J.) Co. .................. 1,511,562
9,972 Hershey Foods Corp. ................ 714,245
11,600 Humana, Inc. * ..................... 287,825
7,632 International Flavors &
Fragrances, Inc. ................... 359,658
93,002 Johnson & Johnson .................. 6,818,209
28,770 Kellogg Co. ........................ 1,240,706
38,494 Kimberly-Clark Corp. ............... 1,929,512
77,256 Lilly (Eli) & Co. .................. 4,606,389
19,082 Limited, Inc. ...................... 547,415
4,713 Liz Clairborne, Inc. ............... 235,061
4,524 Manor Care, Inc. ................... 167,388
32,584 Medtronic, Inc. .................... 1,690,295
85,205 Merk & Co., Inc. ................... 10,938,192
22,016 NIKE, Inc., Class B ................ 974,208
106,200 PepsiCo, Inc. ...................... 4,533,413
91,500 Pfizer, Inc. ....................... 9,121,406
34,945 Pharmacia & Upjohn Inc. ............ 1,528,844
168,151 Philip Morris Cos., Inc. ........... 7,009,795
4,615 Pioneer Hi-Bred international, Inc. 450,251
95,858 Procter & Gamble Co. ............... 8,088,019
Consumer Staples (continued)
9,851 Quaker Oats Co. .................... $ 563,970
7,513 Ralston Purina Co. ................. 796,378
4,086 Reebok International, Ltd. * ....... 124,623
10,276 Rubbermaid, Inc. ................... 292,866
2,653 Russell Corp. ...................... 71,134
33,174 Sara Lee Corp. ..................... 2,044,348
51,610 Schering-Plough Corp. .............. 4,215,892
24,825 Seagram Co., Ltd. .................. 948,005
5,800 Sealed Air Corp. ................... 379,900
28,066 Sears Roebuck & Co. ................ 1,612,041
1,779 Shared Medical Systems Corp. ....... 139,429
1,352 Springs Industries, Inc., Class A .. 74,276
6,264 St. Jude Medical, Inc. * ........... 209,453
6,226 Stanley Works ...................... 347,100
4,178 SuperValu, Inc. .................... 194,799
22,988 Sysco Corp. ........................ 589,068
4,133 Tupperware Corp. ................... 110,041
44,936 Unilever NV, New York Shares, ADR .. 3,083,733
13,736 United Healthcare Corp. ............ 889,406
5,178 U.S. Surgical Corp. ................ 170,874
12,688 UST, Inc. .......................... 409,188
8,950 VF Corp. ........................... 470,434
3,244 Vlasic Foods International, Inc. * . 82,925
18,314 Warner-Lambert Co. ................. 3,119,103
10,188 Winn-Dixie Stores, Inc. ............ 472,469
8,246 Wrigley (Wm.) Jr. Co. .............. 674,111
-----------
141,724,646
-----------
Finance - 16.98%
11,703 Aetna, Inc. ........................ 976,469
6,797 Ahmanson (H.F.) & Co. .............. 526,768
29,878 Allstate Corp. ..................... 2,746,909
32,507 American Express Co. ............... 2,984,549
17,344 American General Corp. ............. 1,121,940
48,737 American Internatoinal Group, Inc. . 6,137,816
11,600 Aon Corp. .......................... 751,100
45,354 Banc One Corp. ..................... 2,868,641
25,830 The Bank of New York Co., Inc. ..... 1,622,447
48,658 BankAmerica Corp. .................. 4,020,367
10,130 BankBoston Corp. ................... 1,116,833
7,006 Bankers Trust New York Corp. ....... 842,909
9,600 BB&T Corp. ......................... 649,800
3,781 Beneficial Corp. ................... 470,026
7,199 Block (H&R), Inc. .................. 342,402
30,174 Chase Manhattan Corp. .............. 4,069,718
11,840 Chubb Corp. ........................ 927,960
5,285 CIGNA Corp. * ...................... 1,083,425
4,000 Cincinnati Financial Corp. ......... 501,000
32,448 Citicorp ........................... 4,607,616
7,400 Comerica, Inc. ..................... 783,013
13,300 Conseco, Inc. ...................... 753,113
13,799 CoreStates Financial Corp. ......... 1,238,460
7,400 Countrywide Credit Industries, Inc. 393,588
10,600 Equifax, Inc. ...................... 386,900
72,412 Fannie Mae ......................... 4,580,059
10,900 Fifth Third Bancorp ................ 931,950
20,202 First Chicago NBD Corp. ............ 1,780,301
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
GALAXY
FUND II
Large Company Index Fund
PORTFOLIO OF INVESTMENTS (continued)
March 31, 1998
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
Finance (continued)
<S> <C> <C>
30,224 First Data Corp. ................... $ 982,280
43,844 First Union Corp. .................. 2,488,147
17,531 Fleet Financial Group, Inc. ........ 1,491,231
47,784 Freddie Mac ........................ 2,266,754
5,625 General Re Corp. ................... 1,241,016
3,932 Golden West Financial Corp. ........ 376,735
9,400 Green Tree Financial Corp. ......... 267,313
8,136 Hartford Financial Services
Group, Inc. ........................ 882,756
7,503 Household International, Inc. ...... 1,033,538
13,400 Huntington Bancshares, Inc. ........ 488,263
4,894 Jefferson-Pilot Corp. .............. 435,260
30,650 KeyCorp ............................ 1,158,953
7,200 Lehman Brothers Holdings, Inc. ..... 539,100
7,133 Lincoln National Corp., Ltd. ....... 605,413
7,960 Loews Corp. ........................ 829,830
12,054 Marsh & McLennan Cos., Inc. ........ 1,052,465
6,300 MBIA, INC. ......................... 488,250
36,156 MBNA Corp. ......................... 1,294,837
18,018 Mellon Bank Corp. .................. 1,144,143
9,100 Mercantile Bancorp, Inc. ........... 498,794
23,484 Merrill Lynch & Co., Inc. .......... 1,949,172
8,100 MGIC Investment Corp. .............. 532,069
12,807 Morgan (J.P.) & Co., Inc. .......... 1,720,140
42,556 Morgan Stanley, Dean Witter,
Discover & Co. ..................... 3,101,269
14,900 National City Corp. ................ 1,092,356
65,928 NationsBank Corp. .................. 4,808,624
7,800 Northern Trust Corp. ............... 583,050
53,080 Norwest Corp. ...................... 2,206,138
21,770 PNC Bank Corp. ..................... 1,304,839
5,100 Progressive Corp. .................. 686,906
6,755 Providian Financial Corp. .......... 387,990
1,494 Pulte Corp. ........................ 69,471
3,870 Republic New York Corp. ............ 516,161
9,978 Safeco Corp. ....................... 545,360
5,720 St. Paul Cos., Inc. ................ 509,795
19,200 Schwab (Charles) Corp. ............. 729,600
11,200 State Street Corp. ................. 762,300
12,400 Summit Bancorp ..................... 620,775
13,800 SunAmerica, Inc. ................... 660,675
14,720 Suntrust Banks, Inc. ............... 1,109,520
12,400 Synovus Financial Corp. ............ 460,350
10,072 Torchmark Corp. .................... 461,424
4,481 Transamerica Corp. ................. 522,037
81,083 Travelers Group, Inc. .............. 4,864,980
17,259 U.S. Bancorp ....................... 2,153,060
9,700 UNUM Corp. ......................... 535,319
8,003 USF & G Corp. ...................... 199,575
14,437 Wachovia Corp. ..................... 1,224,438
18,250 Washington Mutual, Inc. ............ 1,308,867
5,963 Wells Fargo & Co. .................. 1,975,242
-----------
106,382,659
-----------
Technology - 16.42%
5,100 Adobe Systems, Inc. ................ 230,456
10,238 Advanced Micro Devices, Inc. * ..... 297,542
Technology (continued)
33,247 AirTouch Communications, Inc. * .... $ 1,627,025
114,385 American Telephone & Telegraph Corp. 7,506,516
15,718 AMP, Inc. .......................... 688,645
8,953 Apple Computer, Inc. * ............. 246,208
25,244 Applied Materials, Inc. * .......... 891,429
3,484 Autodesk, Inc. ..................... 150,248
20,506 Automatic Data Processing, Inc. .... 1,395,690
14,800 Bay Networks, Inc. * ............... 401,450
11,290 Cabletron Systems, Inc. * .......... 164,411
49,095 CBS Corp. .......................... 1,666,162
5,466 Ceridian, Corp. * .................. 294,822
70,915 CISCO Systems, Inc. * .............. 4,848,813
11,376 Cognizant Corp. .................... 652,698
108,156 Compaq Computer Corp. .............. 2,798,536
39,268 Computer Associates
International, Inc. ................ 2,267,727
10,980 Computer Sciences Corp. * .......... 603,900
16,168 Corning, Inc. ...................... 715,434
3,421 Data General Corp. * ............... 60,509
47,800 Dell Computer Corp. * .............. 3,238,450
10,797 Digital Equipment Corp. * .......... 564,818
8,645 DSC Communications Corp. * ......... 157,231
3,212 EG&G, Inc. ......................... 93,349
37,100 EMC Corp. * ........................ 1,402,844
10,600 General Instrument Corp. * ......... 221,938
5,600 Harris Corp. ....................... 291,900
14,000 HBO & Co. .......................... 845,250
73,922 Hewlett-Packard Co. ................ 4,684,807
8,946 Honeywell, Inc. .................... 739,722
114,532 Intel Corp. ........................ 8,940,654
69,062 International Business Machines Corp. 7,173,815
8,236 ITT Industies, Inc. ................ 313,483
6,000 KLA-Tencor Corp. * ................. 229,500
10,100 LSI Logic Corp. * .................. 255,025
44,001 Lucent Technologies, Inc. .......... 5,626,628
48,560 MCI Communications Corp. ........... 2,403,720
14,163 Micron Technology, Inc. * .......... 411,612
169,864 Microsoft Corp. * .................. 15,202,828
40,371 Motorola, Inc. ..................... 2,447,492
11,622 National Semiconductor Corp. * ..... 243,336
36,874 Northern Telecom, Ltd. ............. 2,382,982
24,790 Novell, Inc. * ..................... 265,718
70,227 Oracle Corp. * ..................... 2,216,540
18,200 Parametric Technology Corp. * ...... 606,288
3,139 Perkin-Elmer Corp. ................. 226,989
20,572 Pitney Bowes, Inc. ................. 1,032,457
6,368 Scientific-Alatna, Inc. ............ 124,574
17,100 Seagate Technology, Inc. * ......... 431,775
13,980 Silicon Graphics, Inc. * ........... 194,846
30,389 Sprint Corp. ....................... 2,056,955
26,604 Sun Microsystems, Inc. * ........... 1,109,886
3,572 Tektronix, Inc. .................... 159,401
35,619 Tele-Communications, Inc.,
TCI Group, Series A ................ 1,107,528
12,834 Tellabs, Inc. * .................... 861,482
27,492 Texas Instruments, Inc. ............ 1,488,005
3,838 Thomas & Betts Corp. ............... 245,632
25,100 3Com Corp. * ....................... 902,031
13,021 Unisys Corp. * ..................... 247,399
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
GALAXY
FUND II
Large Company Index Fund
PORTFOLIO OF INVESTMENTS (continued)
March 31, 1998
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
Technology (continued)
<S> <C> <C>
42,894 U.S. West Media Group * ............ $ 1,490,567
3,886 Western Atlas, Inc. * .............. 300,679
23,307 Xerox Corp. ........................ 2,480,739
-----------
102,929,096
-----------
Consumer Cyclical - 11.35%
17,000 Albertson's, Inc. .................. 894,625
5,045 American Greetings Corp. Class A ... 232,070
2,841 Armstrong World Industries, Inc. ... 245,924
10,500 AutoZone, Inc. * ................... 355,688
6,669 Black & Decker Corp. ............... 353,874
1,710 Briggs & Stratton Corp. ............ 78,339
7,044 Brunswick Corp. .................... 245,660
54,044 Cendant Corp. * .................... 2,141,510
4,026 Centex Corp. ....................... 153,491
7,384 Charming Shoppes, Inc. * ........... 35,074
47,540 Chrysler Corp. ..................... 1,975,881
6,754 Circuit City Stores-Circuit
City Group ......................... 288,734
6,900 Clear Channel Communications, Inc. * 676,200
24,627 Comcast Corp. Special, Class A ..... 869,641
7,500 Consolidated Stores Corp. * ........ 322,031
5,413 Cooper Tire & Rubber Co. ........... 128,559
3,278 Crane Co. .......................... 173,734
7,338 Dana Corp. ......................... 426,980
10,918 Darden Restaurants, Inc. ........... 169,911
15,213 Dayton-Hudson Corp. ................ 1,338,744
5,819 Deluxe Corp. ....................... 191,663
7,809 Dillard's, Inc., Class A ........... 288,445
46,797 Disney (Walt) Co. .................. 4,995,580
10,287 Donnelley (R.R.) & Sons Co. ........ 422,410
6,677 Dow Jones & Co., Inc. .............. 353,464
11,776 Dun & Bradstreet Corp. ............. 402,592
22,057 Eastman Kodak Co. .................. 1,430,948
5,382 Eaton Corp. ........................ 512,299
4,418 Echlin, Inc. ....................... 231,669
2,471 Fleetwood Enterprises, Inc. ........ 115,056
86,321 Ford Motor Co. ..................... 5,594,680
20,452 Gannett Co., Inc. .................. 1,469,988
28,776 Gap, Inc. .......................... 1,294,920
12,498 Genuine Parts Co. .................. 476,486
4,227 Giant Food, Inc., Class A .......... 163,268
10,993 Goodyear Tire & Rubber Co. ......... 832,720
2,745 Great Atlantic & Pacific
Tea Co., Inc. ...................... 83,036
4,968 Harcourt General, Inc. ............. 275,103
7,436 Harrah's Entertainment, Inc. * ..... 182,647
9,220 Hasbro, Inc. ....................... 325,581
17,268 Hilton Hotels Corp. ................ 550,418
51,327 Home Depot, Inc. ................... 3,461,365
9,848 Ikon Office Solutions, Inc. ........ 340,372
8,909 Interpublic Group of Cos., Inc. .... 553,472
2,758 Jostens, Inc. ...................... 66,192
2,809 Kaufman & Broad Home Corp. ......... 91,468
5,084 King World Productions, Inc. ....... 148,707
36,304 Kmart Corp. * ...................... 605,823
5,978 Knight-Ridder, Inc. ................ 334,021
17,618 Kroger Co. * ....................... 813,731
2,916 Longs Drug Stores Corp. ............ 88,756
12,376 Lowe's Cos., Inc. .................. 868,641
Consumer Cyclical (continued)
8,994 Marriott International, Inc. * .... $ 334,464
8,994 Marriott International, Inc.,
Class A * ......................... 322,098
11,693 Masco Corp. ....................... 695,734
21,130 Mattel, Inc. ...................... 837,276
15,937 The May Department Stores Co. ..... 1,012,000
6,706 Maytag Corp. ...................... 320,631
48,305 McDonald's Corp. .................. 2,898,300
7,074 McGraw-Hill Cos., Inc. ............ 538,066
2,640 Mercantile Stores Co., Inc. ....... 177,375
3,756 Meridith Corp. .................... 158,222
12,100 Mirage Resorts, Inc. * ............ 294,181
6,467 Moore Corp., Ltd. ................. 107,514
3,086 National Services Industries, Inc. 181,495
6,922 New York Times Co., Class A ....... 484,540
11,404 Newell Co. ........................ 552,381
5,311 Nordstrom, Inc. ................... 338,908
11,400 Omnicom Group, Inc. ............... 536,513
3,768 Owens-Corning ..................... 135,413
17,888 Penny (J.C.) Co., Inc. ............ 1,353,898
4,420 Pep Boys-Manny, Moe & Jack ........ 102,489
3,089 Polaroid Corp. .................... 135,916
18,036 Rite Aid Corp. .................... 617,733
4,150 Safety-Kleen Corp. ................ 117,756
17,308 Service Corp. International ....... 734,508
13,252 Sherwin-Williams Co. .............. 470,446
4,332 Snap-On, Inc. ..................... 197,648
2,249 Sodexho Marriott Services, Inc. ... 59,726
7,482 Tandy Corp. ....................... 351,654
38,702 Time Warner, Inc. ................. 2,786,567
6,760 Times Mirror Co., Class A ......... 428,415
11,636 TJX Cos., Inc. .................... 526,529
20,590 Toys 'R' Us, Inc. * ............... 618,987
8,598 Tribune Co. ....................... 606,159
10,770 Tricon Global Restaurants, Inc. * . 323,773
36,424 Tyco International, Ltd. .......... 1,989,661
158,895 Wal-Mart Stores, Inc. ............. 8,073,852
35,472 Walgreen Co. ...................... 1,248,171
32,231 Waste Management, Inc. ............ 993,118
9,170 Wendy's International, Inc. ....... 204,606
5,371 Whirlpool Corp. ................... 368,249
9,898 Woolworth Corp. * ................. 247,450
----------
71,154,613
----------
Utilities - 7.76%
12,951 ALLTEL Corp. ...................... 565,797
9,600 Ameren Corp. ...................... 404,400
13,004 American Electric Power Co., Inc. . 653,451
73,872 Ameritech Corp. ................... 3,652,047
10,103 Baltimore Gas & Electric Co. ...... 330,242
54,292 Bell Atlantic Corp. ............... 5,564,930
67,304 BellSouth Corp. ................... 4,547,227
10,405 Carolina Power & Light Co. ........ 470,826
14,620 Central & South West Corp. ........ 391,085
10,788 CINergy Corp. ..................... 399,156
3,884 Columbia Energy Group ............. 301,981
16,375 Consolidated Edison Co. of
New York .......................... 765,531
6,737 Consolidated Natural Gas Co. ...... 388,641
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
GALAXY
FUND II
Large Company Index Fund
PORTFOLIO OF INVESTMENTS (continued)
March 31, 1998
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
Utilities (continued)
<S> <C> <C>
12,855 Dominion Resources, Inc. .......... $ 539,910
10,055 DTE Energy Co. .................... 395,287
24,912 Duke Energy Corp. ................. 1,483,821
26,475 Edison International .............. 777,703
16,902 Entergy Corp. ..................... 502,835
15,880 FirstEnergy Corp. ................. 489,303
12,483 FPL Group, Inc. ................... 802,033
11,500 Frontier Corp. .................... 374,469
8,458 GPU, Inc. ......................... 374,267
66,825 GTE Corp. ......................... 4,001,147
20,154 Houston Industries, Inc. .......... 579,427
18,400 NEXTEL Communications, Inc.,
Class A ........................... 621,000
10,129 Niagara Mohawk Power Corp. * ...... 131,677
3,412 NICOR, Inc. ....................... 144,157
5,144 Northern States Power Co. ......... 303,496
2,201 ONEOK, Inc. ....................... 89,691
5,781 Pacific Enterprises ............... 235,937
20,491 Pacificorp ........................ 504,591
15,321 PECO Energy Co. ................... 338,977
2,528 Peoples Energy Corp. .............. 91,956
30,613 PG & E Corp. ...................... 1,010,229
11,700 PP & L Resources, Inc. ............ 276,413
16,149 Public Service Enterprise
Group, Inc. ....................... 611,643
126,454 SBC Communications, Inc. .......... 5,516,551
47,951 Southern Co. ...................... 1,327,643
11,754 Tenneco, Inc. ..................... 501,749
17,281 Texas Utilities Co. (Holding Co.) . 679,359
15,509 Unicom Corp. ...................... 542,815
33,294 U.S. West, Inc., Communications
Group ............................. 1,822,847
25,205 Viacom Inc., Class B .............. 1,354,769
22,216 Williams Cos., Inc. ............... 710,912
71,200 WorldCom, Inc. * .................. 3,066,050
----------
48,637,978
----------
Energy - 7.70%
6,424 Amerada Hess Corp. ................ 374,600
33,918 Amoco Corp. ....................... 2,929,667
4,200 Anadarko Petroleum Corp. .......... 289,800
6,200 Apache Corp. ...................... 227,850
5,126 Ashland, Inc. ..................... 290,260
22,626 Atlantic Richfield Co. ............ 1,778,969
11,923 Baker Hughes, Inc. ................ 479,901
12,358 Burlington Resources, Inc. ........ 592,412
46,206 Chevron Corp. ..................... 3,710,919
7,385 Coastal Corp. ..................... 480,948
12,285 Dresser Industries, Inc. .......... 590,448
1,367 Eastern Enterprises ............... 58,781
22,139 Enron Corp. ....................... 1,026,696
174,722 Exxon Corp. ....................... 11,815,575
18,428 Halliburton Co. ................... 924,855
3,484 Helmerich & Payne, Inc. ........... 108,875
3,393 Kerr-McGee Corp. .................. 236,026
55,034 Mobil Corp. ....................... 4,216,980
23,753 Occidental Petroleum Corp. ........ 696,260
7,594 Oryx Energy Co. * ................. 197,444
3,262 Pennzoil Co. ...................... 210,807
18,359 Phillips Petroleum Co. ............ 916,803
6,288 Rowan Cos., Inc. * ................ 182,352
Energy (continued)
151,932 Royal Dutch Petroleum Co., ADR .... $ 8,631,637
34,922 Schlumberger, Ltd. ................ 2,645,342
6,027 Sonat, Inc. ....................... 262,175
5,061 Sun Co., Inc. ..................... 206,868
37,858 Texaco, Inc. ...................... 2,280,945
18,251 Union Pacific Resources Group, Inc. 435,743
17,403 Unocal Corp. ...................... 673,279
20,319 Usx-Marathon Group ................ 764,502
-----------
48,237,719
-----------
Capital Goods - 6.89%
19,074 American Stores Co. ............... 495,924
6,510 Andrew Corp. * .................... 128,979
70,678 Boeing Co. ........................ 3,684,091
13,859 Browning-Ferris Industries, Inc. .. 452,150
27,040 Caterpillar, Inc. ................. 1,488,890
2,814 Cincinnati Milacron, Inc. ......... 89,696
8,713 Cooper Industries, Inc. ........... 517,879
2,705 Cummins Engine Co., Inc. .......... 149,113
17,809 Deere & Co. ....................... 1,103,045
15,608 Dover Corp. ....................... 593,104
31,026 Emerson Electric Co. .............. 2,022,507
2,534 FMC Corp. * ....................... 198,919
5,811 Fluor Corp ........................ 289,097
2,835 Foster Wheeler Corp. .............. 86,645
4,489 General Dynamics Corp. ............ 386,615
232,190 General Electric Co. .............. 20,011,876
3,603 Grainger (W.W.), Inc. ............. 370,433
3,542 Harnischfeger Industries, Inc. .... 121,092
17,540 Illinois Tool Works, Inc. ......... 1,135,715
11,695 Ingersoll-Rand Co. ................ 560,629
5,904 Johnson Controls, Inc. ............ 358,299
13,749 Lockheed Martin Corp. ............. 1,546,763
3,881 McDermott International, Inc. ..... 160,334
565 NACCO Industries, Inc., Class A ... 75,710
5,197 Navistar International Corp. * .... 181,895
4,682 Northrop Grumman Corp. ............ 503,022
5,348 PACCAR, Inc. ...................... 318,540
7,943 Parker-Hannifin Corp. ............. 407,079
23,868 Raytheon Co., Class B ............. 1,393,295
14,680 Rockwell International Corp. ...... 842,265
11,656 Textron, Inc. ..................... 897,512
10,200 Thermo Electron Corp. * ........... 411,825
4,430 Timken Co. ........................ 149,789
8,974 TRW, Inc. ......................... 494,692
16,626 United Technologies Corp. ......... 1,534,788
----------
43,162,207
----------
Basic Materials - 4.89%
2,014 Aeroquip-Vickers, Inc. ............ 116,434
7,628 Air Products & Chemicals, Inc. .... 632,171
16,049 Alcan Aluminum, Ltd. .............. 501,531
39,724 AlliedSignal, Inc. ................ 1,668,408
12,265 Aluminum Co. of America ........... 843,985
7,661 Armco, Inc. * ..................... 45,008
7,262 Avery-Dennison Corp. .............. 387,609
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
GALAXY
FUND II
Large Company Index Fund
PORTFOLIO OF INVESTMENTS (continued)
March 31, 1998
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<S> <C> <C>
Basic Materials (continued)
2,094 Ball Corp. ........................ $ 68,579
26,284 Barrick Gold Corp. ................ 568,392
3,792 Bemis Co., Inc. ................... 171,114
7,937 Bethlehem Steel Corp. * ........... 107,646
4,057 Boise Cascade Corp. ............... 146,306
6,854 Champion International Corp. ...... 372,258
9,034 Crown Cork & Seal Co., Inc. ....... 483,319
6,682 Cyprus Amax Minerals Co. .......... 111,088
16,031 Dow Chemical Co. .................. 1,559,015
82,500 du Pont (E.I.) deNemours & Co. .... 5,610,000
5,435 Eastman Chemical Co. .............. 366,523
10,798 Engelhard Corp. ................... 205,162
13,684 Freeport-McMoran
Copper & Gold, Inc., Class B ...... 272,825
14,675 Fort James Corp. .................. 672,298
3,459 General Signal Corp. .............. 161,708
6,534 Georgia-Pacific Co. ............... 423,077
3,896 Goodrich (B.F.) Co. ............... 198,940
4,191 Great Lakes Chemical Corp. ........ 226,314
6,801 Hercules, Inc. .................... 335,799
10,630 Homestake Mining Co. .............. 115,601
11,914 Inco, Ltd., Class A ............... 222,643
3,438 Inland Steel Industries, Inc. ..... 94,975
21,964 International Paper Co. ........... 1,028,190
7,734 Louisiana-Pacific Corp. ........... 179,816
7,458 Mead Corp. ........................ 267,090
2,997 Millipore Corp. ................... 104,146
28,154 Minnesota Mining & Manufacturing Co. 2,567,293
41,745 Monsanto Co. ...................... 2,170,740
9,452 Morton International, Inc. ........ 310,144
4,662 Nalco Chemical Co. ................ 189,102
11,281 Newmont Mining Corp. .............. 344,775
6,228 Nucor Corp. ....................... 339,037
9,700 Owens-Illinois, Inc. .............. 419,525
8,874 Pall Corp. ........................ 190,791
4,263 Phelps Dodge Corp. ................ 275,230
2,110 Potlatch Corp. .................... 90,862
12,611 PPG Industries, Inc. .............. 856,760
11,040 Praxair, Inc. ..................... 567,870
6,494 Raychem Corp. ..................... 269,907
5,229 Reynolds Metals Co. ............... 321,257
4,355 Rohm & Haas Co. ................... 449,926
7,036 Sigma Aldrich Corp. ............... 262,091
7,114 Stone Container Corp. * ........... 88,925
4,011 Temple-Inland, Inc. ............... 249,183
5,064 Union Camp Corp. .................. 302,574
Basic Materials (continued)
8,738 Union Carbide Corp. ............... $ 437,992
6,175 USX-U.S. Steel Group, Inc. ........ 233,106
7,228 Westvaco Corp. .................... 222,261
14,082 Weyerhaeuser Co. .................. 795,633
7,900 Willamette Industries, Inc. ....... 296,744
6,917 Worthington Industries, Inc. ...... 125,371
----------
30,645,069
----------
Transportation - 1.89%
6,456 AMR Corp. * ....................... 924,419
10,860 Burlington Northern Santa Fe Corp. 1,129,440
5,300 Case Corp. ........................ 361,063
15,466 CSX Corp. ......................... 920,227
5,285 Delta Air Lines, Inc. ............. 624,951
9,002 Ecolab, Inc. ...................... 261,058
10,789 FDX Corp. * ....................... 767,368
49,785 General Motors Corp. .............. 3,357,376
23,176 Laidlaw, Inc. ..................... 367,919
27,125 Norfolk Southern Corp. ............ 1,013,797
5,289 Ryder Systems, Inc. ............... 200,982
15,494 Southwest Airlines Co. ............ 458,041
6,395 US Airways Group, Inc. * .......... 474,029
17,767 Union Pacific Corp. ............... 998,283
----------
11,858,953
----------
Chemicals and Drugs - 0.23%
5,135 Grace (W.R.) & Co. ................ 429,735
5,068 Mallinckrodt, Inc. ................ 200,186
21,959 Tenet Healthcare Corp. * .......... 797,386
-----------
1,427,307
-----------
Metal and Mining - 0.12%
12,282 Allegheny Teledyne, Inc. .......... 341,593
2,858 ASARCO, Inc. ...................... 76,273
16,400 Battle Mountain Gold Co. .......... 104,550
16,898 Placer Dome, Inc. ................. 222,842
-----------
745,258
-----------
Total Common Stocks 606,905,505
-----------
(Cost $332,594,292)
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
GALAXY
FUND II
Large Company Index Fund
PORTFOLIO OF INVESTMENTS (continued)
March 31, 1998
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS (A) - 3.29%
Federal Home Loan Mortgage Corporation (B) - 3.05%
$19,141,000 5.90%, 04/01/98 ................... $ 19,141,000
U.S. Treasury Bill (C) - 0.24%
1,500,000 4.95%, 06/18/98 ................... 1,483,680
--------------
Total U.S. Government
and Agency Obligations ............ 20,624,680
--------------
(Cost $20,624,978)
Total Investments - 100.13% ..................... 627,530,185
--------------
(Cost $353,219,270)
Net Other Assets and Liabilities - (0.13)% ...... (790,370)
--------------
Net Assets - 100.00% ............................ $ 626,739,815
==============
</TABLE>
- ---------------------------
* Non-income producing security.
ADR American Depositary Receipt.
(A) Discount yield at time of purchase.
(B) All or a portion of these securities are used as collateral on open
futures contracts.
(C) Security has been deposited as initial margin on open futures contracts
At March 31, 1998 the Fund's open futures contracts were as follows:
<TABLE>
<CAPTION>
Number of Contract Expiration Opening Current
Contracts Type Date Position Market Value
--------- ---- ---- -------- ------------
<S> <C> <C> <C> <C>
25 Russell 2000 Jun-98 $7,492,880 $7,773,500
========= =========
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
GALAXY
FUND II
Small Company Index Fund
PORTFOLIO OF INVESTMENTS
March 31, 1998
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
COMMON STOCK - 96.83%
Consumer Staples - 19.94%
<S> <C> <C>
27,000 AAR Corp. ......................... $ 735,750
17,900 ADAC Laboratories ................. 413,938
30,000 Alliance Pharmaceutical Corp. * ... 226,875
21,600 Alpharma, Inc., Class A ........... 468,450
9,100 Angelica Corp. .................... 209,869
25,000 AnnTaylor Stores Corp. ............ 410,938
27,200 Apogee Enterprises, Inc. .......... 360,400
31,000 Applebees International, Inc. ..... 716,875
44,600 Aztar Corp. * ..................... 384,675
28,000 Ballard Medical Products .......... 756,000
25,900 Belden, Inc. ...................... 1,084,563
46,200 Bio-Technology General Corp. * .... 392,700
17,300 Books-A-Million, Inc. * ........... 100,556
18,700 Canandaigua Wine Co., Inc.,
Class A * ......................... 1,068,238
24,700 Caraustar Industries, Inc. ........ 815,100
52,000 Casey's General Stores, Inc. ...... 832,000
28,200 Cato Corp., Class A ............... 334,875
9,700 Chemed Corp. ...................... 397,700
61,200 Chiquita Brands International, Inc. 837,675
16,000 Clarcor, Inc. ..................... 532,000
8,500 Coca-Cola Bottling Co. ............ 490,875
27,100 Cone Mills Corp. * ................ 242,206
14,300 Cooper Cos., Inc. ................. 606,856
19,800 Cor Therapeutics, Inc. * .......... 245,025
32,700 Coventry Corp. * .................. 525,244
16,300 Cross (A.T.) Co., Class A ......... 189,488
1 CVS Corp. ......................... 76
8,100 Damark International, Inc., Class A * 100,238
15,500 Datascope Corp. ................... 403,000
33,900 Dekalb Genetics Corp., Class B .... 2,267,063
37,200 Delta & Pine Land Co. . ........... 1,934,400
24,300 Delta Woodside Industries, Inc. ... 136,688
13,200 Diagnostic Products Corp. ......... 367,950
42,100 Dimon, Inc. ....................... 702,544
22,400 Dress Barn, Inc. * ................ 644,000
20,200 Earthgrains Co. ................... 892,588
24,045 Enzo Biochem, Inc. * .............. 378,709
20,500 Filene's Basement Corp. * ......... 110,188
36,900 Fleming Cos. ...................... 731,081
38,500 Foodmaker, Inc. * ................. 745,938
11,400 Galey & Lord, Inc. * .............. 262,200
20,300 G & K Services, Inc., Class A ..... 890,663
34,600 Genesis Health Ventures, Inc. * ... 973,125
16,100 Gibbson Greetings, Inc. ........... 444,763
7,300 Goodmark Foods, Inc. .............. 159,688
28,800 Griffon Corp. * ................... 457,200
24,900 Guilford Mills, Inc. .............. 734,550
24,900 Gymboree Corp. * .................. 644,288
8,500 Haggar Corp. ...................... 125,375
21,200 Hancock Fabrics, Inc. ............. 329,925
17,800 Harman International
Industries, Inc. .................. 783,200
32,900 Hartmarx Corp. * .................. 273,481
10,500 Hauser, Inc. * .................... 84,000
29,100 Invacare Corp. .................... 756,600
8,600 J & J Snack Foods Corp. * ......... 168,238
10,200 Johnston Industries, Inc. ......... 59,925
18,600 Kaman Corp., Class A .............. 341,775
Consumer Staples (continued)
20,900 Kellwood Co. ...................... $ 645,288
50,900 Komag, Inc. * ..................... 738,050
17,000 Lechters, Inc. * .................. 96,688
27,900 Lincare Holdings, Inc. * .......... 1,970,438
9,400 Lindsay Manufacturing Co. ......... 428,288
18,700 Linens'N Things, Inc. ............. 1,027,331
36,300 Liposome Co., Inc. * .............. 201,919
28,400 Magellan Health Services, Inc. * .. 738,400
28,700 Mariner Health Group, Inc. * ...... 491,488
25,100 Medimmune, Inc. * ................. 1,383,638
20,500 The Men's Wearhouse, Inc. ......... 758,500
24,700 Mentor Corp. ...................... 682,338
50,775 Mohawk Industries, Inc. * ......... 1,599,413
11,100 Nash Finch Co. .................... 220,613
7,200 National Presto Industries, Inc. .. 310,050
18,800 Nature's Sunshine Products, Inc. .. 504,075
39,700 Nautica Enterprises, Inc. * ....... 1,220,775
18,400 NBTY, Inc. * ...................... 1,117,800
31,000 North American Vaccine, Inc. * .... 542,500
19,600 Noven Pharmaceuticals, Inc. * ..... 128,625
45,500 Oakwood Homes Corp. ............... 1,666,438
12,000 Oshkosh B'Gosh, Inc., Class A ..... 479,250
31,600 Owens & Minor, Inc. ............... 570,775
8,600 Oxford Industries, Inc. ........... 269,825
19,700 PAREXEL International Corp. ....... 615,625
32,250 Patterson Dental Co. * ............ 999,750
6,800 Penford Corp. ..................... 236,300
13,100 Pharmaceutical Marketing
Services, Inc. * .................. 193,225
26,800 Phillips-Van Heusen Corp. ......... 329,975
61,500 PhyCor, Inc. * .................... 1,387,594
66,700 Pier 1 Imports, Inc. .............. 1,809,238
24,400 Polaris Industries, Inc. .......... 902,800
13,300 Pope & Talbot, Inc. ............... 201,994
8,500 Quaker Chemical Corp. ............. 161,500
22,400 Regis Corp. ....................... 672,000
21,500 Renal Care Group, Inc. * .......... 817,000
30,700 Respironics, Inc. * ............... 888,381
46,900 Richfood Holdings, Inc. ........... 1,500,800
27,000 Roberts Pharmaceutical Corp. * .... 384,750
23,800 Royal Appliance Manufacturing Co. * 142,800
15,200 Ryland Group, Inc. ................ 419,900
25,500 Safeskin Corp. * .................. 1,883,813
15,800 Schweitzer-Mauduit
International, Inc. ............... 545,100
29,400 SEQUUS Pharmaceuticals, Inc.* ..... 310,538
25,400 Shopko Stores, Inc. * ............. 804,863
16,100 Showboat, Inc. .................... 481,994
17,600 Sierra Health Services, Inc. * .... 701,800
35,600 Smithfield Foods, Inc. * .......... 1,228,200
13,300 Standex International Corp. ....... 407,313
33,900 STERIS Corp. * .................... 1,830,600
47,600 Stride Rite Corp. ................. 645,575
30,600 Summit Technology, Inc. * ......... 166,388
19,100 Sunrise Medical, Inc. * ........... 304,406
9,400 Syncor International Corp. * ...... 170,963
24,300 TCBY Enterprises, Inc. ............ 243,000
20,400 TheraTech, Inc. * ................. 201,450
11,000 Timberland Co., Class A * ......... 786,500
31,000 Triarc Cos., Inc. * ............... 813,750
22,600 United States Bioscience, Inc. .... 228,825
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
GALAXY
FUND II
Small Company Index Fund
PORTFOLIO OF INVESTMENTS (continued)
March 31, 1998
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
Consumer Staples (continued)
<S> <C> <C>
31,800 Universal Health Services, Inc.,
Class B * ....................... $ 1,836,450
13,600 USA Detergents, Inc. * .......... 186,150
28,800 UST, Inc. ....................... 928,800
41,700 Vicor Corp. * ................... 1,175,419
15,300 VISX, Inc. * .................... 382,500
15,300 WD-40 Co. ....................... 465,694
23,800 Whole Foods Market, Inc. * ...... 1,660,050
25,300 Williams-Sonoma, Inc. * ......... 1,464,238
----------
79,592,846
----------
Consumer Cyclical - 19.27%
19,700 ABM Industries, Inc. .............. 611,931
22,600 ADVO, Inc. * ...................... 624,325
8,500 Amcast Industrial Corp. ........... 183,813
28,200 American Oncology Resources, Inc. * 430,050
23,400 Applied Magnetics Corp. * ......... 270,563
58,050 Arbor Drugs, Inc. ................. 1,367,803
29,000 Arctic Cat, Inc. .................. 270,063
12,100 Ashworth, Inc. * .................. 207,213
11,600 Au Bon Pain Co., Inc., Class A * .. 97,875
22,200 Authentic Fitness Corp. ........... 441,225
13,800 Baker (J.), Inc. .................. 108,675
12,900 Bassett Furniture Industries, Inc. 395,869
8,860 Bell Industries, Inc. ............. 125,148
13,600 Bell Sports Corp. * ............... 116,450
8,600 Bertucci's, Inc. * ................ 66,113
36,637 Bombay Co.,Inc. ................... 183,185
17,800 Bowne & Co., Inc. ................. 736,475
31,400 Breed Technologies, Inc. .......... 732,013
17,800 Brown Group, Inc. ................. 255,875
11,800 Building Materials Holding Corp. * 160,775
7,600 Butler Manufacturing Co. .......... 273,600
43,670 CKE Restaurants, Inc. ............. 1,604,873
11,500 CPI Corp. ......................... 291,094
24,400 CapStar Hotel Co. ................. 846,375
11,100 Carmike Cinemas, Inc., Class A * .. 356,588
24,000 Cash America International, Inc. .. 390,000
47,200 Champion Enterprises, Inc. * ...... 1,259,650
10,800 The Cheesecake Factory, Inc. * .... 359,775
18,600 CIBER, Inc. * ..................... 1,300,838
174,600 Cineplex Odeon Corp. * ............ 294,638
8,700 Collagen Corp. .................... 192,488
12,400 Consolidated Graphics, Inc. ....... 717,650
20,250 Consolidated Products, Inc. * ..... 389,813
12,100 Curative Health Services, Inc. .... 403,081
10,700 Cyrk International, Inc. * ........ 165,850
17,900 Dames & Moore Group ............... 238,294
15,500 Designs, Inc. * ................... 31,000
33,100 DEVRY, Inc. * ..................... 1,131,606
16,400 Discount Auto Parts, Inc. * ....... 397,700
11,100 Dixie Group, Inc. * ............... 128,344
21,100 ETEC Systems, Inc. * .............. 1,244,900
28,600 Eagle Hardware & Garden, Inc. * ... 504,075
15,100 Envoy Corp. * ..................... 649,300
28,400 Ethan Allen Interiors, Inc. ....... 1,696,900
16,300 Express Scripts, Inc., Class A * .. 1,381,934
17,800 Fabri-Centers of America, Inc.,
Class A * ......................... 554,025
Consumer Cyclical (continued)
38,300 Fedders Corp. ..................... $ 220,225
24,000 Franklin Covey Co. * .............. 583,500
7,800 GC Cos., Inc. * ................... 408,038
17,800 Galoob Toys, Inc. * ............... 176,888
5,200 Global Motorsport Group, Inc. * ... 94,250
10,400 Gottschalks, Inc. * ............... 82,550
41,400 Grand Casinos, Inc. * ............. 706,388
20,000 Ha-Lo Industries Inc. * ........... 698,750
17,800 Henry (Jack) & Associates, Inc. ... 640,800
23,600 Hollywood Park, Inc. * ............ 277,300
13,300 Huffy Corp. ....................... 215,294
9,400 IHOP Corp. * ...................... 360,725
20,100 Immune Response Corp.* ............ 197,231
14,200 Innovex, Inc. ..................... 346,125
11,500 Integrated Circuit Systems, Inc. * 240,781
39,963 Integrated Health Services, Inc. .. 1,571,045
38,600 Interim Services, Inc. ............ 1,302,750
25,700 Jan Bell Marketing, Inc. * ........ 126,894
18,300 Juno Lighting, Inc. ............... 386,588
28,400 Just For Feet, Inc. * ............. 578,650
6,000 K-Swiss, Inc., Class A ............ 115,500
16,400 K2, Inc. .......................... 365,925
8,799 LCA-Vision, Inc. .................. 15,673
12,800 LSB Industries, Inc. .............. 56,000
17,800 La-Z-Boy, Inc. .................... 888,888
25,000 Landry's Seafood Restaurants, Inc. * 768,750
9,500 Lillian Vernon Corp. .............. 165,656
23,100 Luby's Cafeterias, Inc. ........... 438,900
28,800 Marcus Corp. ...................... 507,600
16,800 Medusa Corp. ...................... 1,026,900
15,800 Merrill Corp. ..................... 347,600
16,200 Metro Networks, Inc. * ............ 696,600
23,300 Michaels Stores, Inc. * ........... 870,838
18,350 Myers Industries, Inc. ............ 383,056
18,300 NCS Healthcare, Inc., Class A ..... 613,050
18,000 NFO Worldwide, Inc. ............... 378,000
3,785 NSC Corp. ......................... 7,570
32,700 National Data Corp. ............... 1,359,094
16,900 Thomas Nelson, Inc. ............... 232,375
23,800 Norrell Corp. ..................... 536,988
20,700 O'Reilly Automotive, Inc. * ....... 570,544
43,000 Orthodontic Centers of America, Inc. * 932,563
28,000 PSS World Medical, Inc. ........... 658,000
39,267 Paragon Health Network, Inc. ...... 780,432
11,100 Park Electrochemical Corp. ........ 286,519
14,400 Pediatrix Medical Group, Inc. ..... 669,600
23,600 Photronics, Inc. * ................ 660,800
13,021 Pillowtex Corp. ................... 630,705
31,000 Players International, Inc. * ..... 153,063
3,900 Plenum Publishing Corp. ........... 254,475
28,000 Primadonna Resorts, Inc. * ........ 441,000
26,800 Primark Corp. * ................... 1,145,700
39,400 Prime Hospitality Corp. * ......... 768,300
32,800 Regal Cinemas, Inc. * ............. 984,000
25,800 Regeneron Pharmaceuticals, Inc.* .. 190,275
11,500 Republic Group, Inc. .............. 234,313
9,600 Rival Co. ......................... 165,600
48,500 Ross Stores, Inc. ................. 2,140,063
17,500 Ruby Tuesday, Inc. * .............. 551,250
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
GALAXY
FUND II
Small Company Index Fund
PORTFOLIO OF INVESTMENTS (continued)
March 31, 1998
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
Consumer Cyclical (continued)
<S> <C> <C>
11,600 Rural/Metro Corp. * ............... $ 381,350
21,600 Russ Berrie & Co., Inc. ........... 654,750
47,100 Ryan's Family Steakhouses, Inc. * . 426,844
18,200 SEI Investments Co. ............... 1,242,150
11,600 SPX Corp. * ....................... 885,225
47,800 S3, Inc. * ........................ 337,588
16,400 St. John Knits, Inc. .............. 774,900
48,100 Shoney's, Inc. * .................. 249,519
18,200 ShowBiz Pizza Time, Inc. * ........ 606,288
18,500 Smith (A.O.) Corp. ................ 827,875
24,100 Sola International, Inc. * ........ 998,644
13,400 Sonic Corp. * ..................... 448,900
12,300 Spartan Motors, Inc. .............. 96,863
31,200 The Sports Authority, Inc. * ...... 510,900
13,000 Standard Motor Products, Inc. ..... 249,438
29,700 Standard Pacific Corp. ............ 451,069
22,700 Stein Mart, Inc. * ................ 808,688
26,600 Sturm Ruger & Co., Inc. ........... 548,625
8,100 Swiss Army Brands, Inc. * ......... 95,175
23,500 TBC Corp. * ....................... 235,000
20,900 TCSI Corp. * ...................... 148,913
15,500 Taco Cabana, Class A * ............ 106,563
15,750 Thomas Industries, Inc. ........... 350,438
8,100 Thor Industries, Inc. ............. 331,594
7,700 Three-Five Systems, Inc. * ........ 145,819
33,700 Toll Brothers, Inc. * ............. 947,813
12,000 Toro Co. .......................... 459,750
21,900 Trimble Navigation, Ltd. * ........ 390,094
43,600 True North Communications, Inc. ... 1,438,800
29,100 Tultex Corp. * .................... 110,944
20,100 Ultratech Stepper, Inc. * ......... 409,538
11,400 U.S. Home Corp. * ................. 522,263
23,900 Vertex Pharmaceuticals, Inc. * .... 763,306
12,800 Vital Signs, Inc. ................. 289,600
8,500 Walbro Corp. ...................... 104,125
9,100 Wall Data, Inc. * ................. 136,500
15,000 Watsco, Inc. ...................... 403,125
31,100 Westwood One, Inc. * .............. 964,100
25,100 Winnebago Industries, Inc. ........ 296,494
41,300 Wolverine World Wide, Inc. ........ 1,166,725
33,200 World Color Press, Inc. * ......... 1,153,700
6,100 Zoll Medical Corp. * .............. 34,313
----------
76,901,075
----------
Finance - 15.83%
17,600 Access Health, Inc. ............... 646,800
30,300 Allied Group, Inc. ................ 977,175
40,600 American Bankers Insurance Group,
Inc. .............................. 2,618,700
35,000 AMRESCO, Inc. * ................... 1,146,250
25,400 Astoria Financial Corp. ........... 1,570,038
15,700 Capital Re Corp. .................. 1,008,725
20,300 CCB Financial Corp. ............... 2,244,419
25,500 Centura Banks, Inc. ............... 1,816,875
2,955 Charter One Financial, Inc. ....... 197,800
22,200 CMAC Investment Corp. ............. 1,481,850
18,400 Coast Federal Litigation
Contingent Payment Rights
Trust ............................. 299,000
Finance (continued)
16,200 Commerce Bancorp, Inc. ............ $ 892,013
38,150 Commercial Federal Corp. .......... 1,387,706
9,900 CompDent Corp. * .................. 152,213
1 Crestar Financial Corp. ........... 30
22,200 Cullen/Frost Bankers, Inc. ........ 1,311,188
12,100 Dain Rauscher Corp. ............... 696,506
18,500 Delphi Financial Group, Class A ... 985,125
42,000 Deposit Guaranty Corp. ............ 2,378,250
26,400 Downey Financial Corp. ............ 854,700
18,400 Eaton Vance Corp. ................. 886,650
17,900 Enhance Financial Services Group, Inc. 1,242,931
9,400 Executive Risk, Inc. .............. 669,750
21,560 Fidelity National Financial, Inc. . 792,330
16,950 First American Financial Corp. .... 1,084,800
36,645 First Commercial Corp. ............ 2,562,860
15,000 FirstBank Puerto Rico ............. 690,938
32,200 Fremont General Corp. ............. 1,893,763
29,200 Frontier Insurance Group, Inc. .... 806,650
16,100 Gallagher (Arthur J.) & Co. ....... 697,331
21,900 HUBCO, Inc. ....................... 839,044
13,300 Hilb, Rogal & Hamilton Co. ........ 246,881
9,700 JSB Financial, Inc. ............... 542,594
52,600 Keystone Financial, Inc. .......... 2,156,600
26,500 Legg Mason, Inc. .................. 1,571,781
13,400 Life Re Corp. ..................... 988,250
32,800 Magna Group, Inc. ................. 1,904,450
18,000 MDC Holdings, Inc. ................ 319,500
37,000 Mutual Risk Management, Ltd. ...... 1,253,375
18,000 NAC Re Corp. ...................... 943,875
12,300 ONBANCorp, Inc. ................... 851,775
27,400 Orion Capital Corp. ............... 1,498,437
44,600 PMT Services, Inc. ................ 800,013
24,700 Pioneer Group, Inc. ............... 771,875
18,400 Piper Jaffray Cos., Inc. .......... 680,800
30,500 Protective Life Corp. ............. 2,226,500
39,300 Provident Financial Group ......... 2,073,075
31,300 Raymond James Financial, Inc. ..... 1,363,506
30,100 Riggs National Corp. .............. 850,325
29,000 Selective Insurance Group, Inc. ... 779,375
127,747 Sovereign Bancorp, Inc. ........... 2,323,402
33,700 St. Paul Bancorp, Inc. ............ 855,138
11,800 Trenwick Group, Inc. .............. 442,500
19,300 U.S. Trust Corp. .................. 1,268,975
18,900 Whitney Holding Corp. ............. 1,134,000
17,400 Zenith National Insurance Co. ..... 503,513
----------
63,182,925
----------
Technology - 15.76%
51,000 Acxiom Corp. * .................... 1,306,875
37,100 Advanced Tissue Sciences, Inc. * .. 346,653
26,500 Allen Telecom, Inc. * ............. 417,375
21,750 Analysts International Corp. ...... 636,188
47,500 Anixter International, Inc. * ..... 875,781
24,500 Auspex Systems, Inc. * ............ 214,375
24,900 BISYS Group, Inc. * ............... 877,725
27,100 BMC Industries, Inc. .............. 526,756
20,600 BancTec, Inc.* .................... 507,275
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
GALAXY
FUND II
Small Company Index Fund
PORTFOLIO OF INVESTMENTS (continued)
March 31, 1998
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
Technology (continued)
<S> <C> <C>
21,600 BE Aerospace, Inc. * .............. $ 607,500
11,400 Benchmark Electronics, Inc. * ..... 271,463
27,150 Boole & Babbage, Inc. ............. 665,175
13,200 BroadBand Technologies, Inc. * .... 102,300
20,500 Broderbund Software, Inc. * ....... 374,125
35,250 Burr-Brown Corp. .................. 881,250
9,600 C-Cor Electronics, Inc. * ......... 128,400
35,700 C-Cube Microsystems, Inc. * ....... 664,913
19,600 CDI Corp. * ....................... 844,025
22,050 Cable Design Technologies ......... 664,256
16,100 California Microwave, Inc. * ...... 344,138
19,400 Catalina Marketing Corp. * ........ 1,020,925
6,900 Centigram Communications Corp. * .. 91,425
24,300 Cephalon, Inc. * .................. 340,200
32,600 Cerner Corp. * .................... 698,863
40,400 Cognex Corp. * .................... 863,550
22,400 Coherent, Inc. * .................. 541,800
2,979 CommNet Cellular, Inc. * .......... 107,244
20,200 Computer Task Group, Inc. ......... 831,988
40,915 Comverse Technology, Inc. * ....... 1,999,721
18,500 Cygnus, Inc. * .................... 305,250
26,400 Dallas Semiconductor Corp. ........ 887,700
15,600 Dialogic Corp. * .................. 665,925
13,300 Digi International, Inc. * ........ 366,581
16,900 Dynatech Corp. * .................. 814,369
9,700 Electro Scientific Industries, Inc. 374,663
22,100 Exabyte Corp. ..................... 190,613
12,500 Fair Isaac & Co., Inc. ............ 471,875
15,000 FileNet Corp. * ................... 733,125
63,200 FirstMerit Corp. .................. 2,121,150
14,500 Flow International Corp. * ........ 147,719
35,600 General Semiconductor, Inc. ....... 424,975
23,000 Gerber Scientific, Inc. ........... 599,438
10,300 Hadco Corp. * ..................... 408,138
10,200 Harmon International Industries,
Inc. .............................. 207,825
19,300 Helix Technology Corp. ............ 386,000
37,400 IDEXX Laboratories, Inc. * ........ 673,200
42,800 Input/Output, Inc. * .............. 1,000,450
26,600 Insituform Technologies, Inc.,
Class A * ......................... 297,588
22,600 Interface, Inc. ................... 939,313
50,600 International Rectifier Corp. * ... 594,550
24,400 Inter-Tel, Inc. ................... 657,275
16,200 InterVoice, Inc. .................. 150,863
15,500 Ionics, Inc. * .................... 667,469
13,200 Itron, Inc. * ..................... 256,575
26,000 Kent Electronics Corp. * .......... 547,625
8,100 Kronos, Inc. * .................... 284,513
13,800 Kuhlman Corp. * ................... 671,888
12,600 Landstar System, Inc. * ........... 406,350
22,400 Lattice Semiconductor Corp. * ..... 1,152,200
16,700 Marshall Industries * ............. 557,363
15,300 Material Sciences Corp. * ......... 167,344
17,000 Marquette Medical Systems, Inc. ... 471,750
10,400 McWhorter Technologies, Inc. * .... 263,250
34,100 Methode Electronics, Inc., Class A 509,369
15,300 MicroAge, Inc. * .................. 193,163
52,600 Microchip Technology, Inc. * ...... 1,104,600
17,500 Molecular Biosystems, Inc. * ...... 161,875
6,600 Nashua Corp. * .................... 96,113
Technology (continued)
30,200 National Computer Systems, Inc. .. $ 679,500
20,700 Network Equipment Technologies, Inc. * 336,375
32,000 Novellus Systems, Inc. * ......... 1,384,000
18,100 Oak Industries, Inc. * ........... 588,250
40,600 P-COM, Inc. * .................... 812,000
47,200 Paxar Corp. * .................... 669,650
33,600 PictureTel Corp. * ............... 226,800
25,300 Pioneer Standard Electronics, Inc. 309,925
22,400 Platinum Software Corp. * ........ 520,800
60,700 PLATINUM Technology, Inc. * ...... 1,563,025
14,000 Plexus Corp. ..................... 278,250
12,400 Progress Software Corp. * ........ 372,000
17,800 Protein Design Laboratories, Inc. * 698,650
19,200 Resound Corp. * .................. 105,600
11,900 SPS Technologies, Inc. * ......... 641,856
20,000 Sanmina Corp. * .................. 1,398,750
9,800 Spacelabs Medical, Inc. * ........ 216,825
13,000 Speedfam International, Inc. * ... 335,563
13,900 Standard Microsystems Corp. * .... 135,525
11,900 Steel Technologies, Inc. ......... 142,428
15,500 Symmetricom, Inc. * .............. 110,438
42,200 System Software Associates, Inc. * 325,731
46,200 Tech Data Corp. * ................ 1,778,700
25,300 Technology Solutions Co. ......... 670,450
24,500 Tracor, Inc. * ................... 785,531
22,800 Unitrode Corp. * ................. 424,650
45,500 VLSI Technology, Inc. * .......... 853,125
21,500 Valence Technology, Inc. * ....... 106,156
42,500 Vanstar Corp. .................... 531,250
24,000 Vantive Corp. * .................. 877,500
34,100 Vitesse Semiconductor Corp. * .... 1,608,028
14,400 Volt Information Sciences, Inc. .. 802,800
23,900 WMS Industries, Inc. * ........... 748,369
8,200 Watkins-Johnson Co. .............. 221,913
11,000 Whittaker Corp. * ................ 153,313
20,800 X-Rite, Inc. ..................... 262,600
20,100 Xircom, Inc. * ................... 277,631
41,610 Xylan Corp. ...................... 1,014,244
23,900 Zebra Technologies Corp., Class A * 920,150
12,100 Zero Corp. ....................... 341,825
----------
62,912,472
----------
Basic Materials - 5.87%
11,500 Acme Metals, Inc. * ............... 105,656
28,500 Amcol International Corp. ......... 431,063
21,400 Applied Industrial Technologies,
Inc. .............................. 576,463
9,300 Astec Industries, Inc. * .......... 237,150
19,700 Barnes Group, Inc. ................ 656,256
29,300 Birmingham Steel Corp. ............ 479,788
21,600 Brady (W.H.) Co., Class A ......... 723,600
37,600 Buckeye Technologies, Inc. * ...... 799,000
15,300 CTS Corp. ......................... 519,244
11,500 Cambrex Corp. ..................... 579,313
13,900 Castle (A.M.) & Co. ............... 321,438
20,400 Chemfirst, Inc. ................... 540,600
10,100 Commonwealth Industries, Inc. ..... 176,119
35,000 Corn Products International, Inc. . 1,255,625
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
GALAXY
FUND II
Small Company Index Fund
PORTFOLIO OF INVESTMENTS (continued)
March 31, 1998
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
Basic Materials (continued)
<S> <C> <C>
14,700 Dravo Corp. * ..................... $ 158,944
23,600 Geon Co. .......................... 528,050
25,600 Getchell Gold Corp. * ............. 534,400
30,700 Glamis Gold, Ltd. ................. 128,556
11,900 Handy & Harman .................... 418,731
8,300 Insteel Industries, Inc. .......... 65,881
12,324 Intermagnetics General Corp. ...... 137,105
24,900 Intermet Corp. .................... 560,250
26,200 Justin Industries, Inc. ........... 368,438
10,800 Lawson Products, Inc. ............. 288,900
22,400 Lilly Industries, Inc., Class A ... 442,400
10,600 Lone Star Industries, Inc. ........ 736,038
14,600 Lukens, Inc. ...................... 477,238
16,900 Lydall, Inc. * .................... 305,256
24,600 MacDermid, Inc. ................... 707,250
27,700 Mississippi Chemical Corp. ........ 555,731
17,300 Mueller Industries, Inc. * ........ 1,095,306
30,500 Mycogen Corp. * ................... 554,719
24,300 Northwestern Steel & Wire Co. * ... 88,847
21,400 Om Group, Inc. .................... 901,475
15,800 O'Sullivan Corp. .................. 148,125
13,500 Quanex Corp. ...................... 405,844
18,400 Scotts Co., Class A * ............. 637,100
18,200 Shorewood Packaging Corp. * ....... 487,988
20,000 Stillwater Mining Co. * ........... 506,250
16,000 Telxon Corp. ...................... 424,000
21,500 Texas Industries, Inc. ............ 1,242,969
15,700 Technitrol, Inc. .................. 615,244
12,100 Tredegar Industries, Inc. ......... 876,494
16,800 Universal Forest Products, Inc. ... 285,600
24,000 WHX Corp. * ....................... 391,500
13,700 Wolverine Tube, Inc. * ............ 549,713
18,600 Wynn's International, Inc. ........ 423,150
----------
23,448,807
----------
Capital Goods - 5.49%
12,900 Alliant Techsystems, Inc. * ....... 809,475
40,500 American Management Systems, Inc. * 1,113,681
14,500 Amtech Corp. * .................... 57,094
27,200 Applied Power, Inc., Class A ...... 1,047,200
17,800 AptarGroup, Inc. .................. 1,069,113
34,533 Baldor Electric Co. ............... 930,233
38,000 Blount International, Inc., Class A 1,130,500
34,200 Checkpoint Systems, Inc. .......... 726,750
13,100 Circon Corp. * .................... 218,606
15,000 Commercial Metals Co. ............. 525,000
6,800 Continental Homes Holding Corp. ... 316,200
16,900 Daniel Industries, Inc. ........... 339,056
36,200 Digital Microwave Corp. * ......... 533,950
11,900 Dionex Corp. * .................... 663,425
18,900 Electroglas, Inc. * ............... 302,400
34,200 Gentex Corp. * .................... 1,160,663
22,400 Global Industrial Technologies,
Inc. * ............................ 369,600
975 Gradco Systems, Inc. .............. 6,947
30,300 Harland (John H.) Co. ............. 471,544
12,900 Hologic, Inc. ..................... 357,975
Capital Goods (continued)
15,700 Hughes Supply, Inc. ............... $ 568,144
12,400 IMCO Recycling, Inc. .............. 215,450
43,200 JLG Industries, Inc. .............. 718,200
38,400 KEMET Corp. * ..................... 712,800
22,000 Kulicke & Soffa Industries, Inc. * 478,500
17,100 Manitowoc Co., Inc. ............... 660,488
30,600 Orbital Sciences Corp. * .......... 1,373,175
12,100 Pacific Scientific Co. ............ 366,781
20,400 Regal Beloit Corp. ................ 647,700
10,800 Robbins & Myers, Inc. ............. 411,750
30,000 Roper Industries, Inc. ............ 890,625
17,900 Simpson Industries, Inc. .......... 250,600
9,900 Skyline Corp. ..................... 301,950
15,000 Southern Energy Homes, Inc. * ..... 181,875
12,700 Stone & Webster, Inc. ............. 593,725
12,700 TETRA Technologies, Inc. * ........ 314,325
21,500 Titan International, Inc. ......... 413,875
26,700 Valmont Industries, Inc. .......... 647,475
----------
21,896,850
----------
Utilities - 4.50%
16,400 ACC Corp.* ........................ 873,300
6,900 Aquarion Co. ...................... 223,819
48,200 Aspect Telecommunications Corp.* .. 1,292,363
29,000 Atmos Energy Corp. ................ 859,125
7,200 Bangor Hydro-Electric Co. ......... 56,700
10,700 Cascade Natural Gas Corp. ......... 176,550
17,400 Central Hudson Gas & Electric Corp. 759,075
11,400 Central Vermont Public Service Corp. 169,575
13,500 Cilcorp, Inc. ..................... 651,375
21,400 Commonwealth Energy System ........ 853,325
10,100 Connecticut Energy Corp. .......... 310,575
8,600 Consumers Water Co. ............... 177,375
20,300 Eastern Utilities Associates ...... 553,175
40,900 General Communication, Inc.,
Class A * ......................... 324,644
5,000 Green Mountain Power Corp. ........ 94,375
9,500 Interstate Power Co. .............. 340,219
17,900 New Jersey Resources Corp. ........ 701,456
22,200 Northwest Natural Gas Co. ......... 624,375
13,500 Orange & Rockland Utilities, Inc. . 605,813
9,500 Pennsylvania Enterprises, Inc. .... 239,875
25,200 Philadelphia Suburban Corp. ....... 543,375
29,300 Piedmont Natural Gas Co., Inc. .... 1,018,175
19,300 Public Service Co. of
North Carolina .................... 395,650
30,500 Sierra Pacific Resources .......... 1,145,656
8,800 Southern California Water Co. ..... 228,800
26,300 Southwest Gas Corp. ............... 549,013
24,500 Southwestern Energy Co. ........... 260,313
59,500 Tel-Save Holdings, Inc. * ......... 1,353,625
12,800 TNP Enterprises, Inc. ............. 423,200
13,900 United Illuminating Co. ........... 672,413
34,100 United Water Resources, Inc. ...... 615,931
18,200 Wicor, Inc. ....................... 880,425
----------
17,973,665
----------
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
GALAXY
FUND II
Small Company Index Fund
PORTFOLIO OF INVESTMENTS (continued)
March 31, 1998
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
Energy - 4.50%
<S> <C> <C>
31,100 Barrett Resources Corp. * ......... $ 1,086,556
28,200 Benton Oil & Gas Co. * ............ 311,963
22,500 Cabot Oil & Gas Corp., Class A .... 509,063
39,750 Cross Timbers Oil Co. ............. 799,969
31,800 Devon Energy Corp. ................ 1,236,225
25,800 Energen Corp. ..................... 567,600
16,800 HS Resources, Inc. * .............. 262,500
28,900 KCS Energy, Inc. .................. 462,400
41,200 KN Energy, Inc. ................... 2,433,375
34,800 Newfield Exploration Co. * ........ 906,975
44,330 Ocean Energy, Inc. ................ 1,044,526
23,600 Oceaneering International, Inc. * . 466,100
20,800 Offshore Logistics, Inc. * ........ 413,400
16,400 Plains Resources, Inc. * .......... 278,800
32,900 Pogo Producing Co. ................ 1,044,575
18,700 Pool Energy Services Co. * ........ 437,113
45,800 Pride International, Inc. * ....... 1,093,475
20,600 Remington Oil & Gas Corp. ......... 127,463
97,200 Santa Fe Energy Resources, Inc. * . 1,069,200
19,800 Seitel, Inc. ...................... 299,475
33,200 Snyder Oil Corp. .................. 676,450
10,700 St. Mary Land & Exploration Co. ... 408,941
43,500 Tuboscope Vetco International
Corp. * ........................... 826,500
50,800 Vintage Petroleum, Inc. ........... 1,066,800
8,800 Wiser Oil Co. ..................... 112,200
----------
17,941,644
----------
Transportation - 3.34%
33,850 Air Express International Corp. ... 899,141
30,900 American Freightways Corp. * ...... 339,900
19,300 Arkansas Best Corp. * ............. 211,094
25,950 Central Parking Corp. ............. 1,239,113
66,150 Comair Holdings, Inc. ............. 1,752,975
24,000 Expeditors International of
Washington, Inc. .................. 1,029,000
34,700 Fritz Cos., Inc. * ................ 550,863
16,400 Frozen Food Express Industries, Inc. 154,775
29,700 Heartland Express, Inc. * ......... 824,175
11,200 Insurance Auto Auctions, Inc. * ... 123,200
24,500 Kirby Corp. * ..................... 589,531
11,900 M.S. Carriers, Inc. * ............. 403,113
20,500 Pittston Burlington Group ......... 320,313
9,100 Railtex, Inc. ..................... 150,150
63,000 Rollins Truck Leasing Corp. ....... 870,188
10,000 Skywest, Inc. ..................... 365,000
16,600 Standard Products Co. ............. 546,763
25,100 USFreightways Corp. ............... 903,600
18,800 Wabash National Corp. ............. 545,200
37,700 Werner Enterprises, Inc. .......... 961,350
27,800 Yellow Corp. * .................... 531,675
----------
13,311,119
----------
Durable Goods - 0.95%
18,200 Figgie International, Inc.,
Class A * ........................ 252,525
27,300 Halter Marine Group, Inc. * ...... 433,388
17,000 Hyperion Software Corp. * ........ 752,250
46,500 Read-Rite Corp. * ................ 642,281
41,700 Valassis Communications, Inc. * .. 1,709,700
----------
3,790,144
----------
Building and Construction - 0.48%
36,600 D.R. Horton, Inc. ................ 777,750
53,200 Morrison Knudsen Corp. * ......... 595,175
17,300 TJ International, Inc. ........... 553,600
----------
1,926,525
----------
Business Services - 0.31%
30,800 Billing Information Concepts
Corp. * ........................... 798,875
13,000 New England Business Service, Inc. 445,250
----------
1,244,125
----------
Consumer Products - 0.27%
30,000 Footstar, Inc. * .................. 1,080,000
----------
Metals and Mining - 0.16%
21,700 Coeur d'Alene Mines Corp. * ....... 279,388
54,600 HECLA Mining Co. * ................ 361,725
-----------
641,113
-----------
Electronics - 0.10%
17,200 Fluke Corp. ....................... 410,650
-----------
Aerospace - Airlines - 0.06%
28,000 Mesa Air Group, Inc. * ............ 257,250
-----------
Total Common Stocks ............... 386,511,210
-----------
(Cost $305,286,524)
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
GALAXY
FUND II
Small Company Index Fund
PORTFOLIO OF INVESTMENTS (continued)
March 31, 1998
<TABLE>
<CAPTION>
Par Value
Value (Note 2)
----- --------
<S> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS (A) - 1.96%
Federal Home Loan Mortgage Corporation (B) - 1.59%
$6,347,000 5.90%, 04/01/98 ................... $ 6,347,000
-------------
U.S. Treasury Bill (C) - 0.37%
1,500,000 4.95%, 06/18/98 ................... 1,483,680
-------------
Total U.S. Government and
Agency Obligations ................ 7,830,680
-------------
(Cost $7,830,977)
Total Investments - 98.79% ...................... 394,341,890
(Cost $313,117,501) -------------
Net Other Assets and Liabilities - 1.21% ........ 4,819,699
-------------
Net Assets - 100.00% ............................ $ 399,161,589
=============
</TABLE>
- ----------------------------------
* Non-income producing security.
(A) Discounted yield at time of purchase.
(B) All or a portion of these securities are used as collateral on open
futures contracts.
(C) Security has been deposited as intial margin on open futures contracts.
At March 31, 1998 the Fund's open futures contracts were as follows:
<TABLE>
<CAPTION>
Number of Contract Expiration Opening Current
Contracts Type Date Position Market Value
--------- ---- ---- -------- ------------
<S> <C> <C> <C> <C>
25 Russell 2000 Jun-98 $5,873,575 $6,087,500
========== ==========
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
GALAXY
FUND II
Utility Index Fund
PORTFOLIO OF INVESTMENTS
March 31, 1998
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
COMMON STOCKS - 99.10%
Utilities - 86.72%
<S> <C> <C>
27,900 Ameren Corp. ...................... $ 1,175,288
38,500 American Electric Power Co., Inc. . 1,934,625
30,000 Baltimore Gas & Electric Co. ...... 980,625
30,500 Carolina Power & Light Co. ........ 1,380,125
43,100 Central & South West Corp. ........ 1,152,925
32,000 Cinergy Corp. ..................... 1,184,000
11,300 Columbia Energy Group ............. 878,575
47,700 Consolidated Edison Co. of New York 2,229,975
19,400 Consolidated Natural Gas Co. ...... 1,119,138
29,500 DTE Energy Co. .................... 1,159,719
39,300 Dominion Resources, Inc. .......... 1,650,600
73,000 Duke Energy Corp. ................. 4,348,063
77,400 Edison International .............. 2,273,622
49,500 Entergy Corp. ..................... 1,472,625
36,900 FPL Group, Inc. ................... 2,370,825
25,700 GPU, Inc. ......................... 1,137,225
57,400 Houston Industries, Inc. .......... 1,650,250
29,300 Niagara Mohawk Power Corp. * ...... 380,900
9,800 NICOR, Inc. ....................... 414,050
15,100 Northern States Power Co. ......... 890,900
6,300 Oneok, Inc. ....................... 256,725
16,900 Pacific Enterprises ............... 689,731
60,200 PacifiCorp ........................ 1,482,425
45,200 PECO Energy Co. ................... 1,000,050
7,100 Peoples Energy Corp. .............. 258,263
89,000 PG & E Corp. ...................... 2,937,000
33,700 PP & L Resources, Inc. ............ 796,163
47,100 Public Service Entreprise
Group, Inc. ....................... 1,783,913
140,100 Southern Co. ...................... 3,879,019
50,001 Texas Utilities Co. ............... 1,965,664
43,900 Unicom Corp. ...................... 1,536,500
64,900 Williams Cos., Inc. ............... 2,076,800
-------------
48,446,308
-------------
Energy - 12.38%
21,500 Coastal Corp. ..................... $ 1,400,188
4,100 Eastern Enterprises ............... 176,300
63,200 Enron Corp. ....................... 2,930,900
46,700 FirstEnergy Corp. ................. 1,438,944
22,300 Sonat, Inc. ....................... 970,050
-------------
6,916,382
-------------
Total Common Stocks ............... 55,362,690
-------------
(Cost $43,478,343)
Par Value
- ---------
U.S. AGENCY OBLIGATION (A) - 0.69%
Federal Home Loan Mortgage Corporation
$ 387,000 5.90%, 04/01/98 ................... 387,000
-------------
Total U.S. Agency Obligation ...... 387,000
-------------
(Cost $387,000)
Total Investments - 99.79% ...................... 55,749,690
(Cost $43,865,343) -------------
Net Other Assets and Liabilities - 0.21% ........ 114,608
-------------
Net Assets - 100.00% ............................ $ 55,864,298
=============
</TABLE>
- -----------------------------------------
* Non-income producing security.
(A) Discount yield at time of purchase.
See Notes to Financial Statements.
22
<PAGE>
GALAXY
FUND II
U.S. Treasury Index Fund
PORTFOLIO OF INVESTMENTS
March 31, 1998
<TABLE>
<CAPTION>
Par Value
Value (Note 2)
----- --------
<S> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 98.03%
U.S. Treasury Notes - 69.60%
$ 850,000 7.00%, 04/15/99 ................... $ 862,495
3,900,000 6.37%, 07/15/99 ................... 3,938,064
8,400,000 6.00%, 08/15/99 ................... 8,445,192
3,000,000 5.88%, 08/31/99 ................... 3,011,700
4,350,000 5.62%, 10/31/99 ................... 4,351,305
3,500,000 7.75%, 01/31/00 ................... 3,628,975
5,950,000 5.50%, 04/15/00 ................... 5,939,588
6,453,000 8.75%, 08/15/00 ................... 6,896,450
1,400,000 6.25%, 08/31/00 ................... 1,418,004
9,800,000 7.50%, 01/15/01 ................... 10,378,886
4,400,000 6.50%, 05/31/01 ................... 4,507,888
7,400,000 6.25%, 08/31/02 ................... 7,559,320
3,650,000 5.75%, 08/15/03 ................... 3,661,388
4,150,000 7.25%, 05/15/04 ................... 4,480,299
1,900,000 7.87%, 11/15/04 ................... 2,122,870
10,350,000 7.00%, 07/15/06 ................... 11,185,142
-------------
82,387,566
-------------
U.S. Treasury Bonds - 27.00%
200,000 10.75%, 08/15/05 .................. 259,236
3,430,000 11.75%, 11/15/14 .................. 5,096,363
1,550,000 7.50%, 11/15/16 ................... 1,808,447
2,764,000 8.87%, 08/15/17 ................... 3,666,695
2,971,000 8.50%, 02/15/20 ................... 3,860,072
1,000,000 7.87%, 02/15/21 ................... 1,227,220
10,700,000 7.50%, 11/15/24 ................... 12,803,085
3,150,000 6.12%, 11/15/27 ................... 3,230,514
-------------
31,951,632
-------------
Federal Home Loan Mortgage
Corporation (A) - 1.43%
1,694,000 5.90%, 04/01/98 ................... 1,694,000
------------
Total Investments - 98.03% ...................... 116,033,198
(Cost $112,800,264) ------------
Net Other Assets and Liabilities - 1.97% ........ 2,334,740
-------------
Net Assets - 100.00% ............................ $118,367,938
=============
</TABLE>
- --------------------------------------
(A) Discount yield at time of purchase.
See Notes to Financial Statements.
23
<PAGE>
GALAXY
FUND II
Municipal Bond Fund
PORTFOLIO OF INVESTMENTS
March 31, 1998
<TABLE>
<CAPTION>
Par Value
Value (Note 2)
----- --------
MUNICIPAL BONDS - 99.53%
Alabama - 4.63%
<S> <C> <C>
$ 800,000 Auburn University Athletics
5.20%, 04/01/04
Insured: MBIA ..................... $ 840,000
-------------
Colorado - 2.97%
500,000 Jefferson County School
District, GO 5.50%, 12/15/06
Insured: MBIA ..................... 538,125
-------------
Florida - 5.86%
1,000,000 Florida State Board of Education
Capital Outlay
Public Education, Series A, GO
5.70%, 06/01/08
Insured: AMBAC .................... 1,063,750
-------------
Illinois - 13.23%
500,000 Chicago Metropolitan
Water Reclamation District
Greater Chicago, GO
5.10%, 12/01/03 ................... 523,125
750,000 Illinois Health Facilities
Authority Revenue
University of Chicago Hospitals
Series A
5.25%, 08/15/03
Insured: MBIA ..................... 781,875
500,000 Illinois State Sales Tax Revenue,
Series V
6.00%, 06/15/08 ................... 547,500
500,000 Kane County Community School
District Number 304
Geneva, GO
6.00%, 06/01/04
Insured: FGIC ..................... 547,500
-------------
2,400,000
-------------
Massachusetts - 4.59%
800,000 Springfield, Series B, GO
5.05%, 01/15/04
Insured: MBIA ..................... 833,000
-------------
Michigan - 4.25%
750,000 Michigan State Building Authority
Revenue Facilities Program, Series II
5.05%, 10/15/14 ................... 770,625
-------------
Missouri - 10.26%
$1,000,000 Sikeston Electric Revenue
6.00%, 06/01/04
Insured: MBIA ..................... $ 1,096,250
750,000 St. Louis Water Revenue
5.30%, 07/01/99
Insured: FGIC ..................... 765,000
-------------
1,861,250
-------------
Nevada - 7.16%
750,000 Clark County School District Revenue
Series B, GO
5.00%, 05/01/02
Insured: FGIC ..................... 773,438
500,000 Las Vegas Valley
Water District Revenue, GO
5.40%, 09/01/04
Insured: AMBAC .................... 526,250
-------------
1,299,688
-------------
New Jersey - 4.38%
750,000 New Jersey Health Care Facilities
Financing Authority
Dover General Hospital and Medical Center
5.60%, 07/01/02
Insured: MBIA ..................... 794,062
-------------
New York - 5.90%
500,000 New York State Dormitory
Authority Revenues, City University System
Consolidated, Series A
5.50%, 07/01/02 ................... 521,875
500,000 New York State Environmental
Facilities Corp., PCR
5.75%, 06/15/09 ................... 548,750
-------------
1,070,625
-------------
Ohio - 2.78%
500,000 Franklin County Ohio
Convention Facilities Authority
Tax and Lease Revenue Anticipation Bonds
5.00%, 12/01/11
Insured: MBIA ..................... 505,000
-------------
Pennsylvania - 4.20%
750,000 Pennsylvania State IDA
Economic Development
5.00%, 01/01/00
Insured: AMBAC .................... 763,125
-------------
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
GALAXY
FUND II
Municipal Bond Fund
PORTFOLIO OF INVESTMENTS (continued)
March 31, 1998
<TABLE>
<CAPTION>
Par Value
Value (Note 2)
------ --------
Texas - 7.25%
<S> <C> <C>
$ 500,000 Carrollton Farmers Branch
Independent School District, GO
5.10%, 02/15/04 ................... $ 516,875
250,000 Harlingen Waterworks and Sewer
System Revenue 5.25%, 11/01/10
Insured: MBIA ..................... 257,500
500,000 Houston Water and Sewer System Revenue
Junior Lien, Series A
5.75%, 12/01/03
Insured: MBIA ..................... 540,625
-------------
1,315,000
-------------
Virginia - 4.37%
750,000 Virginia State Transportation Board
Transportation Contract Revenue
Route 28 Project
6.00%, 04/01/10 ................... 793,125
-------------
Washington - 7.34%
1,000,000 Seattle Municipal Light & Power Revenue
Series B
5.75%, 08/01/07 ................... 1,067,500
250,000 Seattle Water System
5.38%, 08/01/09 ................... 265,312
-------------
1,332,812
-------------
West Virginia - 4.64%
500,000 West Virginia School Building Authority
Refunding, Capital Improvement
5.30%, 07/01/09
Insured: AMBAC .................... 526,875
300,000 West Virginia State Housing Development
Fund Housing Finance, Series A
5.55%, 11/01/10 ................... 315,750
-------------
842,625
-------------
Wisconsin - 5.72%
1,000,000 Milwaukee Corporate Purpose
Series A, GO
5.50%, 06/15/08 ................... 1,038,750
-------------
Total Municipal Bonds ............. 18,061,562
(Cost $17,169,814) -------------
Shares
- ------
INVESTMENT COMPANY - 1.96%
$ 356,282 Federated Tax-Free Obligations Fund $ 356,282
-------------
Total Investment Company .......... 356,282
(Cost $356,282) -------------
Total Investments - 101.49% ..................... 18,417,844
(Cost $17,526,096) -------------
Net Other Assets and Liabilities - (1.49)% ...... (271,236)
-------------
Net Assets - 100.00% ............................ $ 18,146,608
=============
</TABLE>
- ----------------------------------------
AMBAC American Municipal Bond Assurance Corp.
FGIC Financial Guaranty Insurance Corp.
GO General Obligation
IDA Industrial Development Authority
MBIA Municipal Bond Insurance Association
PCR Pollution Control Revenue
See Notes to Financial Statements.
25
<PAGE>
GALAXY
FUND II
STATEMENTS OF ASSETS AND LIABILITIES
March 31, 1998
<TABLE>
<CAPTION>
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 ..................... $352,844,823 $313,117,501 $43,865,343 $112,800,264 $17,526,096
Net unrealized appreciation ............. 274,310,915 81,224,389 11,884,347 3,232,934 891,748
------------ ------------ ----------- ------------ -----------
Total investments at value .............. 627,530,185 394,341,890 55,749,690 116,033,198 18,417,844
Cash ...................................... 3,750 2,272 638 316 --
Receivable for investments sold ........... 615,852 7,451,028 -- 507,070 --
Receivable for shares sold ................ 586,365 186,647 17,791 626,679 --
Receivable for daily variation margin
on futures contracts .................... 33,600 79,440 -- -- --
Interest and dividend receivables ......... 653,264 144,979 125,123 1,958,131 269,571
------------ ------------ ----------- ------------ -----------
Total Assets .......................... 629,423,016 402,206,256 55,893,242 119,125,394 18,687,415
============ ============ =========== ============ ===========
LIABILITIES:
Payable for investments purchased ......... 1,542,535 2,696,938 -- 511,016 511,335
Payable for shares repurchased ............ 933,655 213,350 10,268 47,383 10,000
Distributions payable ..................... -- -- 175 158,662 9,937
Advisory fee payable (Note 4) ............. 51,750 33,595 4,626 10,100 3,975
Administration fee payable (Note 4) ....... 155,261 100,784 13,875 30,295 5,560
------------ ------------ ----------- ------------ -----------
Total Liabilities ..................... 2,683,201 3,044,667 28,944 757,456 540,807
------------ ------------ ----------- ------------ -----------
NET ASSETS .................................. $626,739,815 $399,161,589 $55,864,298 $118,367,938 $18,146,608
============ ============ =========== ============ ===========
NET ASSETS consist of:
Par value (Note 3) ........................ $ 19,633 $ 19,255 $ 3,939 $ 11,268 $ 1,727
Paid-in capital in excess of par value .... 343,289,306 305,825,798 44,250,062 119,400,845 18,091,516
Undistributed net
investment income ....................... 1,707,408 86,375 -- 441,464 21,436
Accumulated net realized gain (loss) on
investments sold and futures contracts .. 7,131,933 791,847 (274,056) (4,718,573) (859,819)
Unrealized appreciation of investments
and futures contracts ................... 274,965,982 81,438,314 11,884,347 3,232,934 891,748
------------ ------------ ----------- ------------ -----------
TOTAL NET ASSETS ............................. $626,739,815 $399,161,589 $55,864,298 $118,367,938 $18,146,608
============ ============ =========== ============ ===========
Shares of beneficial interest outstanding .... 19,633,491 19,255,133 3,938,664 11,267,944 1,726,710
NET ASSET VALUE,
offering and redemption price per share
(Net Assets / Shares Outstanding) ....... $ 31.92 $ 20.73 $ 14.18 $ 10.50 $ 10.51
============ ============ =========== ============ ===========
</TABLE>
See Notes to Financial Statements.
26
<PAGE>
GALAXY
FUND II
STATEMENTS OF OPERATIONS
For the year ended March 31, 1998
<TABLE>
<CAPTION>
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) ......................... $ 1,175,811 $ 2,129,893 $ 15,651 $ 7,415,610 $ 985,273
Dividend (Note 2) ......................... 8,442,392 2,877,233 2,255,435 -- --
------------ ------------ ----------- ----------- ------------
Total Investment Income ................. 9,618,203 5,007,126 2,271,086 7,415,610 985,273
------------ ------------ ----------- ----------- ------------
EXPENSES:
Investment advisory fee (Note 4) .......... 523,353 365,498 48,970 113,719 48,421
Administration fee (Note 4) ............... 1,570,060 1,096,493 146,908 341,158 67,789
Trustees' fees (Note 4) ................... 11,230 8,223 1,106 2,568 428
------------ ------------ ----------- ----------- ------------
Total expenses before reimbursement ..... 2,104,643 1,470,214 196,984 457,445 116,638
Less: reimbursement by sub-administrator
(Note 4) .............................. (11,230) (8,223) (1,106) (2,568) (428)
------------ ------------ ----------- ----------- ------------
Total expenses net of reimbursement ..... 2,093,413 1,461,991 195,878 454,877 116,210
------------ ------------ ----------- ----------- ------------
NET INVESTMENT INCOME ........................ 7,524,790 3,545,135 2,075,208 6,960,733 869,063
------------ ------------ ----------- ----------- ------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS (Note 2):
Net realized gain on investment sold ...... 6,884,425 114,523,086 2,929,533 784,427 133,115
Net realized gain on futures contracts .... 2,050,341 8,680,116 -- -- --
Net change in unrealized appreciation
(depreciation) on investments
and futures contracts ................... 183,848,113 (3,093,193) 11,329,523 4,886,494 552,377
------------ ------------ ----------- ----------- ------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS ............................... 192,782,879 120,110,009 14,259,056 5,670,921 685,492
------------ ------------ ----------- ----------- ------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS .................... $200,307,669 $123,655,144 $16,334,264 $12,631,654 $ 1,554,555
============ ============ =========== =========== ============
</TABLE>
See Notes to Financial Statements.
27
<PAGE>
GALAXY
FUND II
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Large Company Index Fund Small Company Index Fund
------------------------ ------------------------
Years ended March 31, Years ended March 31,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET ASSETS at beginning of
period ......................... $421,651,872 $240,689,326 $309,473,671 $291,724,251
------------ ------------ ------------ ------------
Increase (Decrease) in net assets
resulting from operations:
Net investment income ......... 7,524,790 7,101,571 3,545,135 4,957,269
Net realized gain on investments
sold and futures contracts .. 8,934,766 26,707,295 123,203,202 21,136,021
Net change in
unrealized appreciation
(depreciation) of
investments and
futures contracts ........... 183,848,113 20,512,222 (3,093,193) 1,822,970
------------ ------------ ------------ ------------
Net increase in net
assets resulting
from operations ........... 200,307,669 54,321,088 123,655,144 27,916,260
------------ ------------ ------------ ------------
Dividends to shareholders from:
Net investment income ......... (8,106,897) (5,762,133) (4,299,224) (4,406,973)
Net realized gain on
investments ................. (24,866,874) (6,412,382) (125,397,558) (18,978,395)
Return of capital ............. -- -- -- --
------------ ------------ ------------ ------------
Total Dividends ............. (32,973,771) (12,174,515) (129,696,782) (23,385,368)
------------ ------------ ------------ ------------
Share transactions:
Net proceeds from
sales of shares ............. 125,916,092 196,028,098 154,300,377 38,027,651
Issued to shareholders
in reinvestment
of dividends ................ 30,476,182 10,568,314 124,421,641 22,583,158
Costs of shares repurchased ... (118,638,229) (67,780,439) (182,992,462) (47,392,281)
------------ ------------ ------------ ------------
Net increase (decrease)
in net assets from
share transactions ......... 37,754,045 138,815,973 95,729,556 13,218,528
------------ ------------ ------------ ------------
Net increase (decrease)
in net assets ............. 205,087,943 180,962,546 89,687,918 17,749,420
------------ ------------ ------------ ------------
NET ASSETS at end of period
(including line A) ............. $626,739,815 $421,651,872 $399,161,589 $309,473,671
============ ============ ============ ============
(A) Accumulated undistributed
net investment income ....... $ 1,707,408 $ 2,289,515 $ 87,926 $ 842,015
============ ============ ============ ============
OTHER INFORMATION:
Share transactions:
Sold .......................... 4,489,641 8,814,388 6,733,472 1,624,791
Issued to shareholders
in reinvestment
of dividends ................ 1,105,389 477,342 6,874,116 990,057
Repurchased ................... (4,220,133) (3,031,843) (8,022,886) (2,027,836)
------------ ------------ ------------ ------------
Net increase (decrease)
in shares outstanding ..... 1,374,897 6,259,887 5,584,702 587,012
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
28
<PAGE>
GALAXY
FUND II
<TABLE>
<CAPTION>
Utility Index Fund U.S. Treasury Index Fund Municipal Bond Fund
------------------------ -------------------------- ------------------------
Years ended March 31, Years ended March 31, Years ended March 31,
1998 1997 1998 1997 1998 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
$45,582,419 $56,383,495 $111,312,677 $124,944,179 $19,921,203 $22,478,238
- ----------- ----------- ------------ ------------ ----------- -----------
2,075,208 2,036,839 6,960,733 7,384,687 869,063 943,900
2,929,533 3,706,859 784,427 186,629 133,115 117,357
11,329,523 (3,930,293) 4,886,494 (3,069,827) 552,377 (228,249)
- ----------- ----------- ------------ ------------ ----------- -----------
16,334,264 1,813,405 12,631,654 4,501,489 1,554,555 833,008
- ----------- ----------- ------------ ------------ ----------- -----------
(2,264,013) (1,928,333) (6,965,049) (7,380,371) (869,844) (943,276)
(3,048,725) (2,272,644) -- -- -- --
-- -- -- -- -- --
- ----------- ----------- ------------ ------------ ----------- -----------
(5,582,453) (4,200,977) (6,965,049) (7,380,371) (869,844) (943,276)
- ----------- ----------- ------------ ------------ ----------- -----------
5,123,255 2,858,430 23,508,142 16,091,716 1,759,683 4,660,657
5,236,180 3,936,226 5,296,251 5,812,718 762,023 822,158
(10,829,367) (15,208,160) (27,415,737) (32,657,054) (4,981,012) (7,929,582)
- ----------- ----------- ------------ ------------ ----------- -----------
(469,932) (8,413,504) 1,388,656 (10,752,620) (2,459,306) (2,446,767)
- ----------- ----------- ------------ ------------ ----------- -----------
10,281,879 (10,801,076) 7,055,261 (13,631,502) (1,774,595) (2,557,035)
- ----------- ----------- ------------ ------------ ----------- -----------
$55,864,298 $45,582,419 $118,637,938 $111,312,677 $18,146,608 $19,921,203
=========== =========== ============ ============ =========== ===========
$ -- $ 188,804 $ 441,464 $ 137,973 $ 21,436 $ 22,217
=========== =========== ============ ============ =========== ===========
391,273 241,502 2,296,503 1,594,728 168,434 455,952
406,414 341,447 469,557 573,428 73,153 80,682
(849,745) (1,278,619) (2,645,907) (3,218,983) (476,829) (777,546)
- ----------- ----------- ------------ ------------ ----------- -----------
(52,058) (695,670) 120,153 1,050,827 (235,242) (240,912)
=========== =========== ============ ============ =========== ===========
</TABLE>
See Notes to Financial Statements.
29
<PAGE>
GALAXY
FUND II
Large Company Index Fund
FINANCIAL HIGHLIGHTS
For a Share outstanding throughout each period
<TABLE>
<CAPTION>
Years ended March 31,
-------------------------------------------------------------
1998 1997 1996 1995 1994(1)
---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of period ................. $ 23.09 $ 20.06 $ 15.76 $ 14.36 $ 14.59
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income(2) .......................... 0.40 0.43 0.38 0.37 0.36
Net realized and unrealized gain (loss)
on investments and futures contracts ............ 10.23 3.41 4.57 1.73 (0.20)
-------- -------- -------- -------- --------
Total from Investment Operations .............. 10.63 3.84 4.95 2.10 0.16
-------- -------- -------- -------- --------
Less Dividends:
Dividends from net investment income .............. (0.44) (0.38) (0.31) (0.37) (0.36)
Dividends from net realized capital gains ......... (1.36) (0.43) (0.34) (0.33) (0.03)
-------- -------- -------- -------- --------
Total Dividends ............................... (1.80) (0.81) (0.65) (0.70) (0.39)
-------- -------- -------- -------- --------
Net Increase (decrease) in net asset value ........... 8.83 3.03 4.30 1.40 (0.23)
-------- -------- -------- -------- --------
Net Asset Value, End of period ....................... $31.92 $ 23.09 $ 20.06 $ 15.76 $ 14.36
======== ======== ======== ======== ========
Total Return ......................................... 47.29% 19.32% 31.80% 15.07% 1.02%
Ratios/Supplemental Data:
Net assets, End of period (in 000's) ................. $626,740 $421,652 $240,689 $147,597 $143,828
Ratios to average net assets:
Net investment income including reimbursement ..... 1.44% 2.19% 2.11% 2.48% 2.41%
Operating expenses including reimbursement ........ 0.40% 0.40% 0.40% 0.40% 0.40%
Operating expenses excluding reimbursement ........ 0.40% 0.40% 0.41% 0.41% 0.40%
Portfolio turnover rate .............................. 3% 11% 5% 7% 4%
Average Commission Rate Paid(3) ...................... $0.0354 $ 0.0387 $ 0.0203 N/A N/A
</TABLE>
- -----------------------------
(1) Audited by other auditors.
(2) Net investment income per share before reimbursement by the
sub-administrator for the fiscal years ended March 31, 1998, 1997, 1996 and
1995 was $0.40, $0.43, $0.38 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.
See Notes to Financial Statements.
30
<PAGE>
GALAXY
FUND II
Small Company Index Fund
FINANCIAL HIGHLIGHTS
For a Share outstanding throughout each period
<TABLE>
<CAPTION>
Years ended March 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994(1)
---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of period ...................... $ 22.64 $ 22.30 $ 17.62 $ 17.49 $ 17.42
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income(2) ............................. 0.27 0.38 0.32 0.32 0.26
Net realized and unrealized gain on investments
and futures contracts ............................. 7.64 1.76 5.07 0.91 0.39
-------- -------- -------- -------- --------
Total from Investment Operations .............. 7.91 2.14 5.39 1.23 0.65
-------- -------- -------- -------- --------
Less Dividends:
Dividends from net investment income ................. (0.33) (0.34) (0.38) (0.32) (0.25)
Dividends from net realized capital gains ............ (9.49) (1.46) (0.33) (0.78) (0.33)
-------- -------- -------- -------- --------
Total Dividends ............................... (9.82) (1.80) (0.71) (1.10) (0.58)
-------- -------- -------- -------- --------
Net Increase (decrease) in net asset value ................ (1.91) 0.34 4.68 0.13 0.07
-------- -------- -------- -------- --------
Net Asset Value, End of period ............................ $ 20.73 $ 22.64 $ 22.30 $ 17.62 $ 17.49
======== ======== ======== ======== ========
Total Return .............................................. 41.22% 9.60% 30.85% 7.60% 3.64%
Ratios/Supplemental Data:
Net assets, End of period (in 000's) ...................... $399,162 $309,474 $291,724 $235,295 $255,347
Ratios to average net assets:
Net investment income including reimbursement ........ 0.97% 1.59% 1.52% 1.72% 1.55%
Operating expenses including reimbursement ........... 0.40% 0.40% 0.40% 0.40% 0.40%
Operating expenses excluding reimbursement ........... 0.40% 0.40% 0.41% 0.40% 0.40%
Portfolio turnover rate ................................... 99% 8% 14% 10% 17%
Average Commission Rate Paid(3) ........................... $ 0.0293 $ 0.0480 $ 0.0225 N/A N/A
</TABLE>
- -----------------------------------------
(1) Audited by other auditors.
(2) Net investment income per share before reimbursement by the
sub-administrator for the fiscal years ended March 31, 1998, 1997, 1996 and
1995 was $0.27, $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.
31
<PAGE>
GALAXY
FUND II
Utility Index Fund
FINANCIAL HIGHLIGHTS
For a Share outstanding throughout each period
<TABLE>
<CAPTION>
Years ended March 31,
------------------------------------------------------------
1998 1997 1996 1995 1994(1)
---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of period ................... $ 11.42 $ 12.03 $ 9.88 $ 9.99 $10.93
------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income(2) ............................ 0.54 0.49 0.44 0.47 0.43
Net realized and unrealized gain (loss)
on investments .................................... 3.71 (0.09) 2.15 (0.03) (0.93)
------- ------- ------- ------- -------
Total from Investment Operations ................ 4.25 0.40 2.59 0.44 (0.50)
------- ------- ------- ------- -------
Less Dividends:
Dividends from net investment income ................ (0.60) (0.46) (0.44) (0.46) (0.43)
Dividends from net realized capital gains ........... (0.82) (0.55) -- (0.08) (0.01)
Dividends in excess of net realized capital gains ... -- -- -- (0.01) --
Return of capital ................................... (0.07) -- -- -- --
------- ------- ------- ------- -------
Total Dividends ................................. (1.49) (1.01) (0.44) (0.55) (0.44)
------- ------- ------- ------- -------
Net Increase (decrease) in net asset value ............. 2.76 (0.61) 2.15 (0.11) (0.94)
------- ------- ------- ------- -------
Net Asset Value, End of period ......................... $ 14.18 $ 11.42 $ 12.03 $ 9.88 $ 9.99
======= ======= ======= ======= =======
Total Return ........................................... 39.07% 3.46% 26.61% 4.67% 4.83%
Ratios/Supplemental Data:
Net assets, End of period (in 000's) ................... $55,864 $45,582 $56,383 $52,831 $68,445
Ratios to average net assets:
Net investment income ............................... 4.24% 3.96% 3.79% 4.62% 4.08%
Operating expenses including reimbursement .......... 0.40% 0.40% 0.40% 0.40% 0.40%
Operating expenses excluding reimbursement .......... 0.40% 0.40% 0.41% 0.41% 0.40%
Portfolio turnover rate ................................ 72% 170% 12% 5% 19%
Average Commission Rate Paid(3) ........................ $0.0497 $0.0572 $0.0230 N/A N/A
</TABLE>
- -----------------------------------------
(1) Audited by other auditors.
(2) Net investment income per share before reimbursement by the
sub-administrator for the fiscal years ended March 31, 1998, 1997, 1996 and
1995 was $0.54, $0.49, $0.44 and $0.47, 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.
32
<PAGE>
GALAXY
FUND II
U.S. Treasury Index Fund
FINANCIAL HIGHLIGHTS
For a Share outstanding throughout each period
<TABLE>
<CAPTION>
Years ended March 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994(1)
---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of period ...................... $ 9.99 $ 10.24 $ 9.91 $ 10.38 $ 11.01
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income(2) ............................... 0.63 0.64 0.66 0.65 0.58
Net realized and unrealized gain (loss)
on investments ........................................ 0.51 (0.25) 0.33 (0.29) (0.29)
-------- -------- -------- -------- --------
Total from Investment Operations .................... 1.14 0.39 0.99 0.36 0.29
-------- -------- -------- -------- --------
Less Dividends:
Dividends from net investment income ................... (0.63) (0.64) (0.65) (0.66) (0.58)
Dividends in excess of net investment income ........... -- -- (0.01) (0.01) --
Dividends from net realized capital gains .............. -- -- -- -- (0.34)
Dividends in excess of net realized capital gains ...... -- -- -- (0.16) --
-------- -------- -------- -------- --------
Total Dividends ..................................... (0.63) (0.64) (0.66) (0.83) (0.92)
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value ................ 0.51 (0.25) 0.33 (0.47) (0.63)
-------- -------- -------- -------- --------
Net Asset Value, End of period ............................ $ 10.50 $ 9.99 $ 10.24 $ 9.91 $ 10.38
======== ======== ======== ======== ========
Total Return .............................................. 11.72% 3.91% 10.09% 3.81% 2.40%
Ratios/Supplemental Data:
Net assets, End of period (in 000's) ...................... $118,368 $111,313 $124,944 $104,251 $138,225
Ratios to average net assets:
Net investment income including reimbursement .......... 6.12% 6.31% 6.35% 6.43% 5.21%
Operating expenses including reimbursement ............. 0.40% 0.40% 0.40% 0.40% 0.40%
Operating expenses excluding reimbursement ............. 0.40% 0.40% 0.41% 0.41% 0.40%
Portfolio turnover rate ................................... 79% 39% 35% 50% 75%
</TABLE>
- ------------------------------------------
(1) Audited by other auditors.
(2) Net investment income per share before reimbursement by the
sub-administrator for the fiscal years ended March 31, 1998, 1997, 1996 and
1995 was $0.63, $0.64, $0.66 and $0.65, respectively.
See Notes to Financial Statements.
33
<PAGE>
GALAXY
FUND II
Municipal Bond Fund
FINANCIAL HIGHLIGHTS
For a Share outstanding throughout each period
<TABLE>
<CAPTION>
Years ended March 31,
-----------------------------------------------------------------
1998 1997 1996 1995 1994(1)(2)
---- ---- ---- ---- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of period .................. $ 10.15 $ 10.20 $ 9.94 $ 9.89 $ 10.00
------- ------- ------ ------- -------
Income from Investment Operations:
Net investment income(3) ........................... 0.47 0.47 0.46 0.46 0.43
Net realized and unrealized gain (loss)
on investments ................................... 0.36 (0.05) 0.26 0.05 (0.11)
------- ------- ------ ------- -------
Total from Investment Operations ................ 0.83 0.42 0.72 0.51 0.32
------- ------- ------ ------- -------
Less Dividends:
Dividends from net investment income ............... (0.47) (0.47) (0.46) (0.46) (0.43)
Dividends from net realized capital gains ......... -- -- -- -- --
------- ------- ------ ------- -------
Total Dividends ................................ (0.47) (0.47) (0.46) (0.46) (0.43)
------- ------- ------ ------- -------
Net Increase (decrease) in net asset value ........... 0.36 (0.05) 0.26 0.05 (0.11)
------- ------- ------ ------- -------
Net Asset Value, End of period ....................... $ 10.51 $ 10.15 $10.20 $ 9.94 $ 9.89
======= ======= ====== ======= =======
Total Return ......................................... 8.29% 4.15% 7.36% 5.34% 3.10%**
Ratios/Supplemental Data:
Net assets, End of period (in 000's) ................. $18,147 $19,921 $22,478 $24,560 $33,352
Ratios to average net assets:
Net investment income including reimbursement ..... 4.49% 4.57% 4.54% 4.72% 4.35%*
Operating expenses including reimbursement ........ 0.60% 0.60% 0.60% 0.60% 0.60%*
Operating expenses excluding reimbursement ........ 0.60% 0.60% 0.61% 0.63% 0.60%*
Portfolio turnover rate .............................. 28% 7% 2% 47% 56%**
</TABLE>
- ----------------------------------------------
* 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, 1998, 1997, 1996 and
1995 was $0.47, $0.47, $0.46 and $0.46, respectively.
See Notes to Financial Statements.
34
<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: Each Fund, 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 tax provision is
recorded.
3. Shares of Beneficial Interest:
The Trust's Declaration of Trust authorizes the Trust to issue an unlimited
number of shares of beneficial interest, with $0.001 par value. The Trust's
shares are classified into five series.
35
<PAGE>
GALAXY
FUND II
NOTES TO FINANCIAL STATEMENTS (continued)
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 has entered into a sub-administration agreement with First
Data Investor Services Group, Inc. ("Investor Services Group"), a wholly-owned
subsidiary of First Data Corporation ("First Data"), under which Investor
Services Group provides administrative, accounting and transfer agent services
to the Trust. The Administrator bears the fees of Investor Services Group for
serving in this capacity.
First Data Distributors, Inc. ("FD Distributors"), a wholly-owned subsidiary of
Investor Services Group 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 Investor Services Group and/or
FD Distributors. 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.
Effective March 5, 1998, 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 $40,000 per annum plus certain other fees for attending or
participating in meetings as well as reimbursement for expenses incurred in
attending meetings. Prior to March 5, 1998, each Trustee was entitled to receive
for services as a Trustee of the Trust, Galaxy and 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. 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.
In addition, each Trustee is eligible to participate in the the Galaxy, VIP,
Galaxy Fund II 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.
Investor Services Group voluntarily agreed to reimburse the funds for Trustees'
fees. Investor Services Group at its discretion may revise or discontinue the
voluntary expense reimbursement at any time.
- --------------------------------------------------------------------------------
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, 1998
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........... $ -- $ -- $ 85,521,734 $ 14,038,300
Small Company Index........... -- -- 338,976,963 321,391,887
Utility Index................. -- -- 35,150,816 39,649,110
U.S. Treasury Index........... 88,021,695 86,976,577 -- --
Municipal Bond................ -- -- 5,285,745 7,402,026
</TABLE>
36
<PAGE>
GALAXY
FUND II
NOTES TO FINANCIAL STATEMENTS (continued)
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, 1998 for each Fund were as follows:
<TABLE>
<CAPTION>
Cost Appreciation (Depreciation) Net
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Large Company Index ..... $ 353,169,440 $ 322,109,229 $ (47,748,484) $274,360,745
Small Company Index ..... 313,117,800 99,120,052 (17,895,962) 81,224,090
Utility Index ........... 43,923,405 12,091,374 (265,089) 11,826,285
U.S. Treasury Index ..... 112,851,014 3,487,363 (305,179) 3,182,184
Municipal Bond .......... 17,526,096 891,748 -- 891,748
</TABLE>
During the fiscal year ended March 31, 1998, the Large Company Index Fund, the
Small Company Index Fund and the Utility Index Fund made distributions from
long-term capital gains of $21,098,391, $115,105,316 and $408,559, respectively.
At March 31, 1998, the following Funds had capital loss carryforwards:
<TABLE>
<CAPTION>
Capital loss Expiration
Carryforward Date
------------ ----------
<S> <C> <C>
U.S. Treasury Index...... $4,119,808 2003
548,015 2004
Municipal Bond........... 656,478 2003
203,341 2004
</TABLE>
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 bona fide 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 securities in the
underlying index. The Municipal Bond Fund may enter into interest rate futures
contracts and municipal bond index futures contracts only for bona fide 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. A 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.
37
<PAGE>
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, 1998, 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 herein. 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, presented therein, 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, 1998 by correspondence with the custodian and brokers and where replies were
not received, we performed other auditing procedures. 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, 1998, 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 8, 1998
<PAGE>
This page left blank intentionally..
<PAGE>
[Back Cover]
[Galaxy Fund II logo] 4400 Computer Drive
P.O. Box 5108
Westborough, MA 01581-5108
------------------
BULK RATE
U. S. POSTAGE PAID
PERMIT NO. 105
NORTH READING, MA
------------------
FN-347 (5/97) Date of first use: May 30, 1997
See Notes to Financial Statements.
39
