[graphic cover illustrations: acorn, top of ionic column, graduation mortar
board hat, hands clasped in handshake]
Semi-Annual Report
September 30, 1998
Galaxy II Funds
Galaxy Funds
Galaxy Fund II Large Company Index Fund
Galaxy Fund II Small Company Index Fund
Galaxy Fund II Utility Index Fund
Galaxy Fund II U.S. Treasury
Index Fund
Galaxy Fund II Municipal
Bond Fund
[Galaxy Funds logo]
<PAGE>
---------------
Market Overview
---------------
"In addition to a reduction in
exports, U.S. growth was
threatened by the weakening
of world financial systems."
MARKET OVERVIEW
By Fleet Investment Advisors Inc.
Bond prices headed higher and stock prices moved lower in the six months
ended September 30, 1998. U.S. economic growth slowed during this time, as
economic turmoil in Asia worsened and spread to the emerging markets of Russia
and Latin America. In addition to a reduction in exports, U.S. growth was
threatened by the weakening of world financial systems. With growth slowing and
inflation still quite low, the Federal Reserve (the "Fed") cut short-term
interest rates by 25 basis points at the end of September.
Economies Weaken Overseas
In the second quarter of 1998, when the period began, the Gross Domestic
Product ("GDP") which measures U.S. goods and services grew at a rate of 1.8%,
down from 5.5% in the first quarter. This slowdown in growth was due largely to
reduced trade with Asia, which had faced significant economic weakness for more
than a year.
Stock and bond prices advanced modestly in this environment. While
encouraged by low inflation and interest rates, stock investors became nervous
about future earnings. Although market indices representing large-company stocks
continued to break new highs, indices representing small-company shares suffered
losses. The prospect of weaker earnings allowed the Fed to leave interest rates
unchanged in the second quarter. However, bond investors remained concerned that
continued pressure from rising wages might eventually cause the Fed to raise
rates. This kept bond prices trading in a relatively narrow range.
Market environments changed dramatically in the third quarter of 1998, as
threats to U.S. growth increased. With little progress in Asia's troubles, which
included a recession in Japan, the Russian economy stumbled. As investors fled
in greater numbers from other emerging markets, prospects darkened for economies
in Latin America. When U.S. companies announced second-quarter earnings, it
became clear that the reduction in exports overseas was taking its toll. By
August, the S&P(R) 500 Index had fallen 19% from its high in July -- nearly
erasing its year-to-date gains. With hope for a cut in interest rates, and
bargain hunting by investors, stock prices rose in September. This left the S&P
500 Index with a total return of -6.93% for the six-month reporting period ended
September 30, 1998.
Bond prices rallied in the third quarter -- led by strong gains for U.S.
Treasury securities. As in previous months, Treasuries were the favorite haven
for both domestic and foreign investors fleeing weak stock markets. Long-term
Treasury yields set new lows throughout the quarter. By the end of September, as
the Fed cut short-term interest rates to bolster growth, 30-year Treasury yields
had fallen to 4.96% -- down from 5.93% six months earlier. The average yield for
municipal bonds in the Bond Buyer Index fell from 5.47% to 5.09% during this
time.
1
<PAGE>
---------------
Market Overview
---------------
"With U.S. trade,
manufacturing, employment,
and consumer confidence
now in decline, further
earnings disappointments
and additional cuts in
interest rates seem
likely."
Further Volatility Likely
With U.S. trade, manufacturing, employment, and consumer confidence now in
decline; further earnings disappointments and additional cuts in interest rates
seem likely. While lower U.S. rates may help economies abroad to stabilize, the
problems overseas may remain severe enough to stunt U.S. growth for months to
come. Although a recession is possible, we expect GDP growth to be near 2% in
the second half of 1998 and slow to 1% for the first three quarters of 1999.
In such an environment, bonds could rally further and the stock market
would probably remain volatile. In addition to economic uncertainty, political
turmoil at home should keep stock investors very nervous. However, the outlook
for stocks could brighten next year if lower interest rates sustain U.S. growth,
and foreign economies stabilize. Many shares are now much more reasonably priced
than six months ago -- especially those of smaller firms.
[bar charts]
Performance At-A-Glance
Average Annual Returns as of September 30, 1998
Large Company Index Fund (Inception Date 10/1/90)
6 Month -7.11%
1 Year 8.60%
3 Years 22.15%
5 Years 19.44%
Life of Fund 18.49%
Small Company Index Fund (Inception Date 10/1/90)
6 Month -24.36%
1 Year -18.90%
3 Years 8.42%
5 Years 9.83%
Life of Fund 15.28%
Utility Index Fund (Inception Date 1/5/93)
6 Month 5.82%
1 Year 29.64%
3 Years 17.00%
5 Years 11.92%
Life of Fund 13.90%
U.S. Treasury Index Fund (Inception Date 6/4/91)
6 Month 8.28%
1 Year 13.41%
3 Years 8.62%
5 Years 6.75%
Life of Fund 8.54%
Municipal Bond Fund (Inception Date 4/15/93)
6 Month 3.79%
1 Year 6.92%
3 Years 6.11%
5 Years 5.02%
Life of Fund 5.86%
[end bar charts]
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 six months ended September 30, 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
-----------------
Galaxy Fund II
Large Company Index Fund
[photo: G. Jay Evans]
By G. Jay Evans
Portfolio Manager
The Galaxy Fund II Large Company Index Fund seeks to match, before the
deduction of operating expenses, the price and yield performance of the S&P
500(R) Index. By investing in publicly traded U.S. stocks according to their
representation in the S&P 500(R) Index, the Fund is also structured to deliver
the same volatility and risk as the S&P 500(R) Index.
In the past six months stocks of large companies have outperformed in both
strong markets and weak -- even though they remained expensive relative to
small-cap issues. During periods of competitive pricing and slower demand,
investors often prize the greater liquidity and market dominance of large-cap
stocks. As economic troubles abroad threatened U.S. growth in recent months, and
stock prices became more volatile, investors again favored the greater earnings
stability and liquidity of large-cap shares.
For the six months ended September 30, 1998, the S&P 500 Index had a total
return of -6.93%, and the Galaxy II Large Company Index Fund had a total return
of -7.11% (after the deduction of operating expenses.)
The Fund's six-month performance represents a correlation coefficient of
99.9993%. The correlation coefficient measures the degree to which the Fund's
performance since inception moves in line with its target index.
Large cap issues could continue to outperform the market in coming months
- -- as economic uncertainty and market volatility favor stocks with reliable
earnings and strong liquidity. If further cuts in interest rates encourage U.S.
growth, economies stabilize overseas, and stock prices resume their advance;
large-cap stocks may start to lag. This is often the case in periods of
increased confidence and earnings acceleration, when investors seek higher
returns in the broader market. The fact that large-cap stocks have outperformed
small-cap stocks for many quarters increases the chance they could underperform
as the outlook for earnings brightens.
Galaxy Fund II
Small Company Index Fund
By G. Jay Evans
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 &
[pie charts]
Galaxy Fund II Large Company Index Fund
Distribution of Total Net Assets
as of September 30, 1998
U.S. Government Obligations,
Repurchase Agreement and Net Other
Assets and Liabilities 3%
Other Common Stocks 2%
Basic Materials 4%
Utilities 9%
Technology 18%
Consumer Staples 23%
Finance 16%
Energy 8%
Capital Goods 6%
Consumer Cyclical 11%
Galaxy Fund II Small Company Index Fund
Distribution of Total Net Assets
as of September 30, 1998
Other Common Stocks 9%
Consumer Staples 20%
Utilities 5%
Capital Goods 6%
Finance 17%
Consumer Cyclical 19%
Technology 15%
Basic Materials 6%
U.S. Government Obligations, Repurchase Agreement and Net
Other Assets and Liabilities 3%
[end pie charts]
[mountain chart]
Galaxy Fund II Large Company Index Fund
Growth of $10,000 investment*
<TABLE>
<CAPTION>
Galaxy Fund II S&P(R) 500 Index
Large Company
Index Fund
<S> <C> <C>
10/1/90 $10,000 $10,000
9/92
9/94
9/96
9/98 $38,833 $40,997
<INSERT PLOT POINTS>
</TABLE>
[end mountain chart]
*Since inception on 10/1/90. The S&P(R) 500 Index is an unmanaged index which
does not reflect expenses and management fees. An investor cannot invest in the
Index.
3
<PAGE>
-----------------
Portfolio Reviews
-----------------
[mountain chart]
Galaxy Fund II
Small Company
Index Fund
Growth of $10,000 investment*
<TABLE>
<CAPTION>
Galaxy Fund II Small S&P(R) 600 Index
Company Index Fund
<S> <C> <C>
10/1/90 $10,000 $10,000
9/92
9/94
9/96
9/98 $31,179 $34,325
</TABLE>
*Since inception on 10/1/90. The S&P(R) 600 Index is an unmanaged index which
does not reflect expenses and management fees. An investor cannot invest in the
Index.
[end mountain chart]
Poor's(R) Small Cap 600 Stock Price Index (the "S&P(R) 600 Index"). The S&P
600(R) Index is an unmanaged index of small-company stocks. By investing in
smaller-capitalization stocks according to their representation in the S&P
600(R) Index, the Fund is also structured to deliver the same volatility and
risk as the S&P 600(R) Index.
Stocks of smaller companies continued to underperform large-company stocks
over the past six months. During this time stocks with the very smallest
capitalizations remained the poorest performers. As economic uncertainty
deepened, investors again favored the greater liquidity and earnings reliability
of large-cap issues. In addition to slower U.S. growth, the small-cap sector
suffered from economic troubles overseas. Though generally oriented toward a
domestic economy, the sector has a sizable representation of technology issues
- -- which have been particularly vulnerable to economic problems abroad.
For the six months ended September 30, 1998, the S&P 600 Index produced a
total return of -24.73%. Over the same time the Galaxy Fund II Small Company
Index Fund returned -24.36% (after the deduction of operating expenses). This
performance represents a correlation coefficient of 99.9898%. The correlation
coefficient measures the degree to which the Fund's performance since inception
moved in line with its target index.
Having lagged large-company issues for two years, stocks of small
companies are now selling at sizeable discounts to large-company shares. If
further cuts in interest rates and greater economic stability overseas improve
the prospects for U.S. growth, small-cap stocks could start to outpace large-cap
issues. In past periods of improving confidence and earnings, investors have
favored smaller companies for their greater flexibility in responding to new
business opportunities.
Galaxy Fund II Utility Index Fund
By G. Jay Evans
Portfolio Manager
The Galaxy Fund II Utility Index Fund seeks to match, before the deduction
of operating expenses, the price and yield performance of utility stocks as
represented by the Standard & Poor's(R) Utilities Composite Stock Price Index
(the "S&P(R) Utilities Index"). The S&P(R) Utilities Index is an unmanaged index
of the common stocks of the utility companies included in the S & P(R) 500
Index.
Utilities historically have offered investors a haven in times of high
market volatility -- due to their strong yields and the more defensive nature of
their earnings. The sector also tends to perform well as short-term interest
rates decline before an economic expansion. With increasing volatility and
falling interest rates in the past six months, utility shares outperformed
stocks as a whole.
For the six months ended September 30, 1998, the S&P Utilities Index
produced a total return of 5.90%, and the Galaxy Fund II Utility Index Fund had
a total return of 5.82% (after the deduction of operating expenses). This
performance represents a correlation coefficient of 99.9789%. The correlation
coefficient measures the degree to which the Fund's performance since inception
moved in line with its target index.
[Mountain chart]
Galaxy Fund II
Utility Index Fund
Growth of $10,000 investment*
<TABLE>
<CAPTION>
Galaxy Fund II S&P(R) Utilities Index
Utility Index Fund
<S> <C> <C>
1/5/93 $10,000 $10,000
9/94
9/96
9/98 $21,096 $22,166
<INSERT PLOT POINTS>
</TABLE>
[end Mountain chart]
*Since inception on 1/5/93. The S&P(R) Utilities Index is an unmanaged index
which does not reflect expenses and management fees. An investor cannot invest
in the Index.
4
<PAGE>
-----------------
Portfolio Reviews
-----------------
Galaxy Fund II
Utility Index Fund
Distribution of Total Net Assets
as of September 30, 1998
Repurchase Agreement and Net
Other Assets and Liabilities 1%
Energy 14%
Utilities 85%
[end pie chart]
The utility industry is currently experiencing several significant
changes. As power generation undergoes further deregulation, several larger
companies will now sell electric power while other firms will focus on regulated
transmission and distribution. Deregulation will also affect the
telecommunications industry -- along with the industry's expansion into data
transmission, cellular telephones and the Internet. Despite these changes, we
believe utilities will remain a defensive income vehicle for investors. If the
Fed continues cutting interest rates to sustain U.S. growth, and stock prices
remain volatile, utility stocks could outperform again in the months ahead.
G. Jay Evans 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 July of 1998. He previously had managed these Funds from July 1994 until
March of 1996 and has managed the Equity Value Fund of The Galaxy Fund since
April 1992.
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 (the "Salomon Brothers U.S. Treasury Index"), of the Salomon
Brothers Broad Investment Grade Bond Index, an unmanaged index of corporate and
government bonds. The Fund attempts to meet this objective by investing in U.S.
Treasury notes and bonds according to their representation in the Salomon
Brothers U.S. Treasury Index.
Treasury securities continued to outperform other fixed-income investments
in the last six months. Treasuries remained the safe haven of choice for
investors as economies abroad deteriorated further and threatened U.S. growth.
At the same time, concerns about U.S. earnings dampened demand for corporate
bonds and asset-backed securities, while falling interest rates sustained high
levels of home loan prepayments and reduced demand for mortgage-backed
securities.
Intermediate-term Treasuries, which represent a large part of the Salomon
Brothers U.S. Treasury Index, underperformed long-term issues slightly in the
second quarter of 1998 -- when foreign investors favored
[mountain chart]
Galaxy Fund II
U.S. Treasury Index Fund
Growth of $10,000 investment*
<TABLE>
<CAPTION>
Galaxy Fund II U.S. The Salomon Brothers U.S.
Treasury Index Fund Treasury Index
<S> <C> <C>
6/4/91 $10,000 $10,000
9/92
9/94
9/96
9/98 $18,225 $18,838
</TABLE>
<INSERT PLOT POINTS>
[end mountain chart]
*Since inception on 6/4/91. The Salomon Brothers U.S. Treasury 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
longer maturities. Intermediate-term issues outperformed in the third quarter,
however, as foreign investors moved to shorter maturities and the Fed cut
short-term interest rates.
For the six months ended September 30, 1998, the Salomon Brothers U.S.
Treasury Index posted a total return of 8.51%, and the Galaxy II U.S. Treasury
Index Fund had a total return of 8.28% (after deduction of operating expenses).
This performance represents a correlation coefficient of 99.8715%. The
correlation coefficient measures the degree to which the Fund's performance
since inception moved in line with its target index.
If weak economies abroad remain a threat to U.S. growth, the recent
"flight to quality" will probably persist -- further slicing demand for
corporate securities. If the Fed continues cutting interest rates to stimulate
growth, interest in mortgage-backed securities should also remain weak. These
conditions, combined with a federal budget surplus that should reduce new
supplies of Treasuries, should help Treasuries outperform other sectors again in
coming months.
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.
[pie chart]
Galaxy Fund II
U.S. Treasury
Index Fund
Distribution of Total Net Assets
as of September 30, 1998
Net Other Assets and Liabilities 1%
Repurchase Agreement 2%
U.S. Treasury Bonds 28%
U.S. Treasury Notes 69%
[end pie chart]
Galaxy Fund II Municipal Bond Fund
By Glenn Migliozzi
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 tax that is consistent with preservation
of capital. Typically, the Fund invests substantially all of its assets in debt
securities issued by state, local, and regional government agencies; while
maintaining an average maturity for its investments of 7 to 12 years.
Municipal bond prices rose in the six months ended September 30, 1998 --
helped by a climate of low inflation, slowing growth, and falling interest
rates. However, municipal bonds continued to lag Treasury securities. While low
interest rates made supplies of municipal bonds more plentiful and depressed
demand, Treasuries benefited from increased demand and reduced supplies.
During this time we increased the portion of longer maturities in the
Galaxy Fund II Municipal Bond Fund. Because longer-
[mountain chart]
Galaxy Fund II
Municipal Bond Fund
Growth of $10,000 investment*
<TABLE>
<CAPTION>
Galaxy Fund II Lehman Brothers
Municipal Bond Fund Seven-Year Municipal Bond
Index
<S> <C> <C>
4/15/93 $10,000 $10,000
9/94
9/96
9/98 $13,645 $13,676
</TABLE>
<INSERT PLOT POINTS>
[end mountain chart]
*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: Glenn Migliozzi]
Glenn Migliozzi
term issues tend to be more sensitive to changing interest rates, these
additions provided extra price appreciation as interest rates fell. The longer
maturities also enhanced the Fund's income. To boost income further, we
continued to emphasize higher-coupon municipals that could not be called in by
their issuers. With investors seeking quality, we continued to focus on bonds
with high credit ratings -- which performed well in this environment.
These strategies helped the Galaxy Fund II Municipal Bond Fund earn a
total return of 3.79% (after deduction of operating expenses) for the six-month
reporting period. That compares to a return of 4.37% for its benchmark, the
Lehman Brothers Seven-Year Municipal Bond Index.
Because municipals have lagged Treasuries for some time, they could
outperform Treasuries in coming months -- even if interest rates decline
further. Municipals may also benefit from lower inventories, as low Treasury
yields make it harder to refinance existing higher-coupon debt. Given this
outlook, we plan to keep Fund maturities slightly longer than those of its
market benchmark. As before, we will focus on quality issues with good call
protection and high coupons.
Glenn Migliozzi is a member of the Tax-Exempt Investment Policy Committee of
Fleet Investment Advisors Inc., which has managed the Galaxy Fund II Municipal
Bond Fund since 1996.
[pie chart]
Galaxy Fund II
Municipal Bond Fund
Geographical Distribution of Total Net Assets
as of September 30, 1998
South 28%
East 23%
Mountain 10%
Cash Equivalents
and Net Other Assets and Liabilities 3%
Pacific 7%
North Central 29%
[end pie chart]
7
<PAGE>
-----------
Shareholder
Information
-----------
Trustees
and Officers
Dwight E. Vicks, Jr.
Chairman and Trustee
John T. O'Neill
President, Treasurer
and Trustee
Louis DeThomasis,
F.S.C., Ph.D.
Trustee
Donald B. Miller
Trustee
James M. Seed
Trustee
Bradford S. Wellman
Trustee
W. Bruce
McConnel, III, Esq.
Secretary
Jylanne Dunne
Vice President &
Assistant Treasurer
William Greilich
Vice President
Investment Advisor
Fleet Investment
Advisors Inc.
75 State Street
Boston, MA
02109
Distributor
First Data
Distributors, Inc.
4400 Computer Drive
Westborough,
Massachusetts 01581
Administrator
Fleet National Bank
50 Kennedy Plaza
Providence,
Rhode Island 02903-2305
For complete information, and before making an investment decision on any of the
Funds of Galaxy Fund II, you should request a prospectus from First Data
Distributors, Inc. by calling (800) 628-0414. This report is submitted for the
general information of shareholders of Galaxy Fund II. It is not authorized for
distribution to prospective investors unless accompanied or preceded by an
effective prospectus for each Fund of Galaxy Fund II, which contains more
information concerning 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 Large Company Index Fund
Fund II PORTFOLIO OF INVESTMENTS
------- September 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
COMMON STOCKS - 96.95%
Consumer Staples - 23.27%
<S> <C> <C>
114,500 Abbott Laboratories ............................ $ 4,973,594
4,158 Alberto-Culver Co.,Class B ..................... 97,193
4,787 Allergan, Inc. ................................. 279,441
5,991 ALZA Corp. * ................................... 259,860
94,740 American Home Products Corp. ................... 4,962,007
19,148 Amgen, Inc. * .................................. 1,446,871
35,456 Anheuser-Busch Cos., Inc. ...................... 1,914,624
42,572 Archer-Daniels-Midland Co. ..................... 713,081
19,724 Avon Products, Inc. ............................ 553,505
4,200 Bard (C.R.), Inc. .............................. 154,875
4,022 Bausch & Lomb, Inc. ............................ 158,366
20,694 Baxter International, Inc. ..................... 1,231,293
17,684 Becton Dickinson & Co. ......................... 727,254
20,730 Bestfoods ...................................... 1,004,109
8,127 Biomet, Inc. ................................... 281,905
14,402 Boston Scientific Corp. * ...................... 739,903
73,748 Bristol-Myers Squibb Co. ....................... 7,660,574
4,911 Brown-Forman Corp., Class B .................... 294,660
33,740 Campbell Soup Co. .............................. 1,693,326
8,200 Cardinal Health, Inc. .......................... 846,650
7,706 Clorox Co. ..................................... 635,745
179,404 Coca-Cola Co. .................................. 10,338,155
21,436 Colgate Palmolive Co. .......................... 1,468,366
47,692 Columbia/HCA Healthcare Corp. .................. 956,821
34,744 ConAgra, Inc. .................................. 935,917
2,639 Coors (Adolph) Co., Class B .................... 121,229
15,712 Costco Cos., Inc. * ............................ 744,356
25,286 CVS Corp. ...................................... 1,107,843
15,600 Federated Department Stores, Inc. * ............ 567,450
12,534 Fortune Brands, Inc. ........................... 371,320
5,303 Fruit of The Loom, Inc., Class A * ............. 79,876
11,714 General Mills, Inc. ............................ 819,980
83,508 Gillette Co. ................................... 3,194,181
11,200 Guident Corp. .................................. 831,600
28,600 HEALTHSOUTH Corp. * ............................ 302,087
26,994 Heinz (H. J.) Co. .............................. 1,380,068
10,372 Hershey Foods Corp. ............................ 709,834
12,100 Humana, Inc. * ................................. 198,137
11,876 IMS Health, Inc. ............................... 735,570
7,932 International Flavors & Fragrances, Inc. ....... 261,756
96,902 Johnson & Johnson .............................. 7,582,581
29,970 Kellogg Co. .................................... 987,137
40,094 Kimberly-Clark Corp. ........................... 1,623,807
80,456 Lilly (Eli) & Co. .............................. 6,300,710
19,782 Limited, Inc. .................................. 433,968
4,913 Liz Clairborne, Inc. ........................... 128,659
8,024 HCR Manor Care, Inc. ........................... 235,203
44,694 Mediaone Group, Inc. ........................... 1,986,090
33,984 Medtronic, Inc. ................................ 1,966,824
86,605 Merck & Co., Inc. .............................. 11,220,760
22,816 NIKE, Inc., Class B ............................ 839,914
110,500 PepsiCo, Inc. .................................. 3,252,844
95,300 Pfizer, Inc. ................................... 10,095,844
36,445 Pharmacia & Upjohn, Inc. ....................... 1,829,083
175,151 Philip Morris Cos., Inc. ....................... 8,067,893
14,545 Pioneer Hi-Bred International, Inc. ............ 381,806
Consumer Staples (continued)
97,158 Procter & Gamble Co. ........................... $ 6,892,146
10,251 Quaker Oats Co. ................................ 604,809
23,439 Ralston Purina Co. ............................. 685,591
4,286 Reebok International, Ltd. * ................... 58,129
24,200 RJR Nabisco Holdings Corp. ..................... 609,538
10,676 Rubbermaid, Inc. ............................... 255,557
2,753 Russell Corp. .................................. 72,266
34,574 Sara Lee Corp. ................................. 1,866,996
53,710 Schering-Plough Corp. .......................... 5,562,342
25,825 Seagram Co., Ltd. .............................. 740,855
8,752 Sealed Air Corp. * ............................. 278,970
29,166 Sears Roebuck & Co. ............................ 1,288,773
1,879 Shared Medical Systems Corp. ................... 99,939
1,452 Springs Industries, Inc., Class A .............. 50,457
6,464 St. Jude Medical, Inc. * ....................... 149,480
6,526 Stanley Works .................................. 194,149
8,756 SuperValu, Inc. ................................ 204,124
23,988 Sysco Corp. .................................... 565,217
4,333 Tupperware Corp. ............................... 50,913
46,836 Unilever NV, New York Shares, ADR .............. 2,868,705
14,336 United Healthcare Corp. ........................ 501,760
5,378 U.S. Surgical Corp. ............................ 224,195
13,188 UST, Inc. ...................................... 389,870
9,350 VF Corp. ....................................... 347,119
57,342 Warner-Lambert Co. ............................. 4,329,321
10,588 Winn-Dixie Stores, Inc. ........................ 393,741
8,546 Wrigley (Wm.) Jr. Co. .......................... 648,962
-----------
142,620,429
-----------
Technology - 18.32%
5,300 Adobe Systems, Inc. .............................. 183,844
10,638 Advanced Micro Devices, Inc. * ................... 197,468
41,347 AirTouch Communications, Inc. * .................. 2,356,779
131,785 American Telephone & Telegraph Corp. ............. 7,701,186
16,318 AMP, Inc. ........................................ 583,369
9,353 Apple Computer, Inc. * ........................... 356,583
26,344 Applied Materials, Inc. * ........................ 665,186
14,200 Ascend Communications, Inc. * .................... 646,100
3,584 Autodesk, Inc. ................................... 94,080
21,406 Automatic Data Processing, Inc. .................. 1,600,099
15,500 BMC Software * ................................... 930,969
11,790 Cabletron Systems, Inc. * ........................ 132,637
51,195 CBS Corp. ........................................ 1,241,479
5,666 Ceridian Corp. * ................................. 325,087
110,872 CISCO Systems, Inc. * ............................ 6,853,276
123,159 Compaq Computer Corp. ............................ 3,894,903
40,868 Computer Associates International, Inc. .......... 1,512,116
11,480 Computer Sciences Corp. * ........................ 625,660
16,868 Corning, Inc. .................................... 496,552
3,521 Data General Corp. * ............................. 38,291
93,400 Dell Computer Corp. * ............................ 6,141,050
3,312 EG&G, Inc. ....................................... 74,934
35,700 Electronic Data Systems Corp. .................... 1,184,794
38,500 EMC Corp. * ...................................... 2,201,719
11,500 Gateway 2000 * ................................... 599,437
11,000 General Instrument Corp. * ....................... 237,875
5,800 Harris Corp. ..................................... 185,600
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
-------
Galaxy Large Company Index Fund
Fund II PORTFOLIO OF INVESTMENTS (continued)
------- September 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<S> <C> <C>
Technology (continued)
29,200 HBO & Co. .................................... $ 843,150
76,922 Hewlett-Packard Co. .......................... 4,072,058
9,346 Honeywell, Inc. .............................. 598,728
123,532 Intel Corp. .................................. 10,592,869
68,662 International Business Machines Corp. ........ 8,788,736
8,536 ITT Industies, Inc. .......................... 289,157
6,300 KLA-Tencor Corp. * ........................... 156,713
10,500 LSI Logic Corp. * ............................ 132,562
95,302 Lucent Technologies, Inc. .................... 6,581,794
14,763 Micron Technology, Inc. * .................... 449,349
178,964 Microsoft Corp. * ............................ 19,697,225
42,071 Motorola, Inc. ............................... 1,795,906
12,122 National Semiconductor Corp. * ............... 117,432
47,614 Northern Telecom, Ltd. ....................... 1,523,648
25,790 Novell, Inc. * ............................... 315,928
73,027 Oracle Corp. * ............................... 2,126,911
19,000 Parametric Technology Corp. * ................ 191,188
3,239 Perkin-Elmer Corp. ........................... 222,479
10,800 PeopleSoft, Inc. * ........................... 352,350
21,372 Pitney Bowes, Inc. ........................... 1,166,110
6,568 Scientific-Atlanta, Inc. ..................... 138,749
17,800 Seagate Technology, Inc. * ................... 446,113
14,480 Silicon Graphics, Inc. * ..................... 135,750
31,589 Sprint Corp. ................................. 2,274,408
27,704 Sun Microsystems, Inc. * ..................... 1,380,006
3,672 Tektronix, Inc. .............................. 56,916
37,119 Tele-Communications, Inc.,
TCI Group, Series A * ........................ 1,452,281
13,434 Tellabs, Inc. * .............................. 534,841
28,592 Texas Instruments, Inc. ...................... 1,508,228
4,038 Thomas & Betts Corp. ......................... 153,696
26,100 3Com Corp. * ................................. 784,631
13,721 Unisys Corp. * ............................... 312,153
24,207 Xerox Corp. .................................. 2,051,543
-----------
112,304,681
-----------
Finance - 15.56%
12,103 Aetna, Inc. .................................... 841,158
7,097 Ahmanson (H.F.) & Co. .......................... 393,883
62,156 Allstate Corp. ................................. 2,591,128
33,807 American Express Co. ........................... 2,624,268
18,044 American General Corp. ......................... 1,152,560
76,105 American International Group, Inc. ............. 5,860,085
12,100 Aon Corp. ...................................... 780,450
25,123 Associates First Capital Corp. ................. 1,639,276
47,354 Banc One Corp. ................................. 2,018,464
53,860 The Bank of New York Co., Inc. ................. 1,474,418
50,658 BankAmerica Corp. .............................. 3,045,812
21,060 BankBoston Corp. ............................... 694,980
7,306 Bankers Trust New York Corp. ................... 431,054
20,000 BB&T Corp. ..................................... 598,750
8,300 Bear Stearns Cos, Inc. ......................... 256,781
7,499 Block (H&R), Inc. .............................. 310,271
4,800 Capital One Financial Corp. .................... 496,800
62,848 Chase Manhattan Corp. .......................... 2,718,176
12,340 Chubb Corp. .................................... 777,420
16,455 CIGNA Corp. .................................... 1,088,087
Finance (continued)
12,500 Cincinnati Financial Corp. ..................... $ 384,375
33,748 Citicorp ....................................... 3,136,455
11,600 Comerica, Inc. ................................. 635,825
22,815 Conseco, Inc. .................................. 697,283
7,700 Countrywide Credit Industries, Inc. ............ 320,512
11,000 Equifax, Inc. .................................. 392,562
75,412 Fannie Mae ..................................... 4,845,221
17,150 Fifth Third Bancorp ............................ 986,125
21,002 First Chicago NBD Corp. ........................ 1,438,637
31,524 First Data Corp. ............................... 740,814
68,998 First Union Corp. .............................. 3,531,835
18,331 Fleet Financial Group, Inc. .................... 1,346,183
18,500 Franklin Resources, Inc. ....................... 555,000
49,784 Freddie Mac .................................... 2,461,197
5,825 General Re Corp. ............................... 1,182,475
4,132 Golden West Financial Corp. .................... 338,049
16,972 Hartford Financial Services Group, Inc. ........ 805,109
35,503 Household International, Inc. .................. 1,331,363
15,340 Huntington Bancshares, Inc. .................... 385,417
7,641 Jefferson-Pilot Corp. .......................... 462,280
31,950 KeyCorp ........................................ 922,556
7,500 Lehman Brothers Holdings, Inc. ................. 211,875
7,433 Lincoln National Corp., Ltd. ................... 611,364
8,260 Loews Corp. .................................... 696,937
18,781 Marsh & McLennan Cos., Inc. .................... 934,355
6,600 MBIA, Inc. ..................................... 354,338
37,556 MBNA Corp. ..................................... 1,075,041
18,818 Mellon Bank Corp. .............................. 1,036,166
9,500 Mercantile Bancorp, Inc. ....................... 459,563
24,484 Merrill Lynch & Co., Inc. ...................... 1,159,930
8,400 MGIC Investment Corp. .......................... 309,750
13,307 Morgan (J.P.) & Co., Inc. ...................... 1,126,105
44,256 Morgan Stanley, Dean Witter,
Discover & Co. ................................. 1,905,774
23,800 National City Corp. ............................ 1,569,313
68,728 NationsBank Corp. .............................. 3,676,948
8,100 Northern Trust Corp. ........................... 552,825
55,280 Norwest Corp. .................................. 1,979,715
12,300 Paychex, Inc. .................................. 634,219
22,670 PNC Bank Corp. ................................. 1,020,150
5,300 Progressive Corp. .............................. 597,575
10,500 Provident Companies, Inc. ...................... 354,375
7,055 Providian Financial Corp. ...................... 598,352
3,088 Pulte Corp. .................................... 75,849
15,500 Regions Financial Corp. ........................ 561,875
8,040 Republic New York Corp. ........................ 317,580
10,378 Safeco Corp. ................................... 432,633
16,654 St. Paul Cos., Inc. ............................ 541,255
20,000 Schwab (Charles) Corp. ......................... 787,500
12,400 SLM Holding Corp. .............................. 402,225
11,700 State Street Corp. ............................. 638,381
12,900 Summit Bancorp ................................. 483,750
14,400 SunAmerica, Inc. ............................... 878,400
15,320 SunTrust Banks, Inc. ........................... 949,840
19,400 Synovus Financial Corp. ........................ 383,150
10,472 Torchmark Corp. ................................ 376,338
4,681 Transamerica Corp. ............................. 496,186
84,383 Travelers Group, Inc. .......................... 3,164,363
53,877 U.S. Bancorp ................................... 1,916,001
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
-------
Galaxy Large Company Index Fund
Fund II PORTFOLIO OF INVESTMENTS (continued)
------- September 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<S> <C> <C>
Finance (continued)
9,550 Union Planters Corp. ........................... $ 479,887
10,100 UNUM Corp. ..................................... 501,844
15,037 Wachovia Corp. ................................. 1,281,904
28,475 Washington Mutual, Inc. ........................ 961,031
6,163 Wells Fargo & Co. .............................. 2,187,865
----------
95,375,621
----------
Consumer Cyclical - 11.10%
17,700 Albertson's, Inc. .............................. 958,012
5,245 American Greetings Corp., Class A .............. 207,505
2,941 Armstrong World Industries, Inc. ............... 157,343
10,900 AutoZone, Inc. * ............................... 268,412
6,969 Black & Decker Corp. ........................... 290,085
1,810 Briggs & Stratton Corp. ........................ 74,436
7,344 Brunswick Corp. ................................ 95,013
56,544 Cendant Corp. * ................................ 657,324
4,226 Centex Corp. ................................... 145,797
49,440 Chrysler Corp. ................................. 2,366,940
7,054 Circuit City Stores-Circuit City Group ......... 234,986
17,900 Clear Channel Communications, Inc. * ........... 850,250
25,727 Comcast Corp. Special, Class A ................. 1,207,561
7,800 Consolidated Stores Corp. * .................... 153,075
5,613 Cooper Tire & Rubber Co. ....................... 101,034
5,067 Crane Co. ...................................... 119,074
11,943 Dana Corp. ..................................... 445,623
11,318 Darden Restaurants, Inc. ....................... 181,088
31,726 Dayton-Hudson Corp. ............................ 1,134,204
6,019 Deluxe Corp. ................................... 171,165
8,109 Dillard's, Inc., Class A ....................... 229,586
146,291 Disney (Walt) Co. .............................. 3,702,991
13,000 Dollar General Corp. ........................... 346,125
10,687 Donnelley (R.R.) & Sons Co. .................... 376,049
6,977 Dow Jones & Co., Inc. .......................... 324,430
12,276 Dun & Bradstreet Corp. ......................... 331,452
22,957 Eastman Kodak Co. .............................. 1,774,863
5,582 Eaton Corp. .................................... 349,922
2,571 Fleetwood Enterprises, Inc. .................... 77,612
89,821 Ford Motor Co. ................................. 4,215,973
11,100 Fred Meyer, Inc. * ............................. 431,512
21,252 Gannett Co., Inc. .............................. 1,138,310
29,876 Gap, Inc. ...................................... 1,575,959
12,998 Genuine Parts Co. .............................. 390,752
11,493 Goodyear Tire & Rubber Co. ..................... 590,453
2,845 Great Atlantic & Pacific Tea Co., Inc. ......... 68,991
5,168 Harcourt General, Inc. ......................... 250,002
7,736 Harrah's Entertainment, Inc. * ................. 102,985
9,620 Hasbro, Inc. ................................... 283,790
17,968 Hilton Hotels Corp. ............................ 306,579
106,854 Home Depot, Inc. ............................... 4,220,733
10,248 Ikon Office Solutions, Inc. .................... 73,657
9,309 Interpublic Group of Cos., Inc. ................ 502,104
2,858 Jostens, Inc. .................................. 59,304
2,909 Kaufman & Broad Home Corp. ..................... 68,180
5,284 King World Productions, Inc. * ................. 138,044
37,704 Kmart Corp. * .................................. 450,092
6,178 Knight-Ridder, Inc. ............................ 274,921
12,600 Kohl's Corp. * ................................. 491,400
Consumer Cylical (continued)
18,318 Kroger Co. * ................................... $ 915,900
3,016 Longs Drug Stores Corp. ........................ 121,205
25,752 Lowe's Cos., Inc. .............................. 819,236
18,594 Marriott International, Inc., Class A .......... 443,932
24,386 Masco Corp. .................................... 600,505
21,930 Mattel, Inc. ................................... 614,040
16,637 The May Department Stores Co. .................. 856,805
7,006 Maytag Corp. ................................... 334,537
50,305 McDonald's Corp. ............................... 3,002,580
7,374 McGraw-Hill Cos., Inc. ......................... 584,390
3,956 Meridith Corp. ................................. 126,592
12,600 Mirage Resorts, Inc. * ......................... 211,050
6,767 Moore Corp., Ltd. .............................. 71,476
3,186 National Services Industries, Inc. ............. 101,554
14,444 New York Times Co., Class A .................... 397,210
11,904 Newell Co. ..................................... 548,328
11,022 Nordstrom, Inc. ................................ 272,795
11,900 Omnicom Group, Inc. ............................ 535,500
3,968 Owens-Corning .................................. 129,208
18,588 Penny (J.C.) Co., Inc. ......................... 835,298
4,620 Pep Boys-Manny, Moe & Jack ..................... 61,793
3,189 Polaroid Corp. ................................. 78,330
18,736 Rite Aid Corp. ................................. 665,128
18,008 Service Corp. International .................... 574,005
13,752 Sherwin-Williams Co. ........................... 297,387
4,532 Snap-On, Inc. .................................. 139,642
7,782 Tandy Corp. .................................... 416,337
42,902 Time Warner, Inc. .............................. 3,756,606
7,060 Times Mirror Co., Class A ...................... 375,063
24,172 TJX Cos., Inc. ................................. 430,564
21,390 Toys `R' Us, Inc. * ............................ 346,251
8,998 Tribune Co. .................................... 452,712
11,170 Tricon Global Restaurants, Inc. * .............. 435,630
42,224 Tyco International, Ltd. ....................... 2,332,876
10,298 Venator Group, Inc. * .......................... 89,464
165,395 Wal-Mart Stores, Inc. .......................... 9,034,702
36,872 Walgreen Co. ................................... 1,624,673
40,967 Waste Management, Inc. ......................... 1,968,976
9,570 Wendy's International, Inc. .................... 212,334
5,571 Whirlpool Corp. ................................ 261,837
----------
68,042,149
-----------
Utilities - 8.90%
5,800 AES Corp. * .................................... 214,963
19,851 ALLTEL Corp. ................................... 940,441
10,000 Ameren Corp. ................................... 419,375
13,604 American Electric Power Co., Inc. .............. 664,045
77,072 Ameritech Corp. ................................ 3,651,286
10,503 Baltimore Gas & Electric Co. ................... 350,538
113,084 Bell Atlantic Corp. ............................ 5,477,506
70,204 BellSouth Corp. ................................ 5,282,851
10,805 Carolina Power & Light Co. ..................... 499,056
15,220 Central & South West Corp. ..................... 434,721
11,288 CINergy Corp. .................................. 431,766
6,026 Columbia Energy Group .......................... 353,274
17,075 Consolidated Edison Co. of New York ............ 890,034
7,037 Consolidated Natural Gas Co. ................... 383,517
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
-------
Galaxy Large Company Index Fund
Fund II PORTFOLIO OF INVESTMENTS (continued)
------- September 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<S> <C> <C>
Utilities (continued)
13,455 Dominion Resources, Inc. ....................... $ 600,429
10,455 DTE Energy Co. ................................. 472,435
25,913 Duke Power Corp. ............................... 1,715,117
27,475 Edison International ........................... 705,764
17,602 Entergy Corp. .................................. 541,261
16,580 FirstEnergy Corp. .............................. 515,016
12,983 FPL Group, Inc. ................................ 904,753
12,000 Frontier Corp. ................................. 328,500
8,858 GPU, Inc. ...................................... 376,465
69,625 GTE Corp. ...................................... 3,829,375
21,054 Houston Industries, Inc. ....................... 655,306
129,316 MCI WorldCom, Inc. ............................. 6,320,318
19,200 NEXTEL Communications, Inc., Class A * ......... 387,600
10,629 Niagara Mohawk Power Corp. * ................... 163,421
3,512 NICOR, Inc. .................................... 145,529
10,688 Northern States Power Co. ...................... 299,932
2,301 ONEOK, Inc. .................................... 78,234
21,391 PacifiCorp ..................................... 410,440
15,921 PECO Energy Co. ................................ 582,111
2,628 Peoples Energy Corp. ........................... 94,608
31,713 PG & E Corp. ................................... 1,012,834
11,000 PP & L Resources, Inc. ......................... 284,625
16,849 Public Service Enterprise Group, Inc. .......... 662,376
131,754 SBC Communications, Inc. ....................... 5,854,818
49,951 Southern Co. ................................... 1,470,433
12,254 Tenneco, Inc. .................................. 402,850
18,081 Texas Utilities Co. (Holding Co.) .............. 841,897
16,109 Unicom Corp. ................................... 602,074
35,965 U.S. West, Inc., Communications Group .......... 1,885,915
26,205 Viacom Inc., Class B * ......................... 1,519,890
30,716 Williams Cos., Inc. ............................ 883,085
----------
54,540,784
-----------
Energy - 7.73%
6,724 Amerada Hess Corp. ........................... 387,891
70,636 Amoco Corp. .................................. 3,805,514
8,700 Anadarko Petroleum Corp. ..................... 342,019
6,500 Apache Corp. ................................. 174,281
5,326 Ashland, Inc. ................................ 246,327
23,526 Atlantic Richfield Co. ....................... 1,668,876
23,315 Baker Hughes, Inc. ........................... 488,158
12,858 Burlington Resources, Inc. ................... 480,568
48,106 Chevron Corp. ................................ 4,043,911
15,370 Coastal Corp. ................................ 518,737
1,467 Eastern Enterprises .......................... 61,797
23,039 Enron Corp. .................................. 1,216,747
177,222 Exxon Corp. .................................. 12,438,769
32,013 Halliburton Co. .............................. 914,371
3,584 Helmerich & Payne, Inc. ...................... 75,264
3,493 Kerr-McGee Corp. ............................. 158,932
57,334 Mobil Corp. .................................. 4,353,801
24,853 Occidental Petroleum Corp. ................... 534,340
7,894 Oryx Energy Co. * ............................ 102,129
3,362 Pennzoil Co. ................................. 117,880
19,159 Phillips Petroleum Co. ....................... 864,550
6,588 Rowan Cos., Inc. * ........................... 73,703
158,132 Royal Dutch Petroleum Co., ADR ............... 7,531,037
36,322 Schlumberger, Ltd. ........................... 1,827,451
Energy (continued)
17,393 Sempra Energy ................................ $ 453,305
6,327 Sonat, Inc. .................................. 189,019
5,361 Sun Co., Inc. ................................ 171,552
39,458 Texaco, Inc. ................................. 2,473,523
18,951 Union Pacific Resources Group, Inc. .......... 233,334
18,103 Unocal Corp. ................................. 656,234
21,119 USX-Marathon Group ........................... 748,405
-----------
47,352,425
-----------
Capital Goods - 6.13%
19,874 American Stores Co. .......................... 639,694
6,810 Andrew Corp. * ............................... 90,232
73,578 Boeing Co. ................................... 2,524,645
14,359 Browning-Ferris Industries, Inc. ............. 434,360
28,140 Caterpillar, Inc. ............................ 1,253,989
2,914 Cincinnati Milacron, Inc. .................... 44,985
9,013 Cooper Industries, Inc. ...................... 367,280
2,805 Cummins Engine Co., Inc. ..................... 83,449
18,509 Deere & Co. .................................. 559,897
16,208 Dover Corp. .................................. 500,422
32,326 Emerson Electric Co. ......................... 2,012,293
2,634 FMC Corp. * .................................. 135,816
6,011 Fluor Corp ................................... 246,827
2,935 Foster Wheeler Corp. ......................... 40,356
9,378 General Dynamics Corp. ....................... 470,658
237,490 General Electric Co. ......................... 18,895,298
7,506 Grainger (W.W.), Inc. ........................ 316,190
3,642 Harnischfeger Industries, Inc. ............... 40,973
18,240 Illinois Tool Works, Inc. .................... 994,080
12,195 Ingersoll-Rand Co. ........................... 462,648
6,104 Johnson Controls, Inc. ....................... 283,836
14,349 Lockheed Martin Corp. ........................ 1,446,559
4,081 McDermott International, Inc. ................ 109,932
565 NACCO Industries, Inc., Class A .............. 56,500
5,397 Navistar International Corp. * ............... 122,107
4,882 Northrop Grumman Corp. ....................... 356,386
5,548 PACCAR, Inc. ................................. 228,508
8,243 Parker-Hannifin Corp. ........................ 244,714
24,868 Raytheon Co., Class B ........................ 1,341,318
15,280 Rockwell International Corp. ................. 551,990
12,156 Textron, Inc. ................................ 736,958
10,700 Thermo Electron Corp. * ...................... 161,169
4,630 Timken Co. ................................... 70,029
9,374 TRW, Inc. .................................... 415,971
17,326 United Technologies Corp. .................... 1,324,356
-----------
37,564,425
-----------
Basic Materials - 4.18%
2,114 Aeroquip-Vickers, Inc. ....................... 60,777
15,956 Air Products & Chemicals, Inc. ............... 474,691
16,749 Alcan Aluminum, Ltd. ......................... 392,555
41,324 AlliedSignal, Inc. ........................... 1,461,836
12,765 Aluminum Co. of America ...................... 906,315
7,961 Armco, Inc. * ................................ 39,805
7,562 Avery-Dennison Corp. ......................... 330,365
2,194 Ball Corp. ................................... 77,338
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
-------
Galaxy Large Company Index Fund
Fund II PORTFOLIO OF INVESTMENTS (continued)
------- September 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<S> <C> <C>
Basic Materials (continued)
27,384 Barrick Gold Corp. ........................... $ 547,680
3,992 Bemis Co., Inc. .............................. 139,970
8,337 Bethlehem Steel Corp. * ...................... 68,780
4,257 Boise Cascade Corp. .......................... 107,755
7,154 Champion International Corp. ................. 224,010
9,434 Crown Cork & Seal Co., Inc. .................. 252,360
6,982 Cyprus Amax Minerals Co. ..................... 92,511
16,731 Dow Chemical Co. ............................. 1,429,455
81,800 duPont (E.I.) deNemours & Co. ................ 4,591,025
5,635 Eastman Chemical Co. ......................... 284,215
11,198 Engelhard Corp. .............................. 198,065
14,184 Freeport-McMoran
Copper & Gold, Inc., Class B ................. 168,435
15,275 Fort James Corp. ............................. 501,211
3,559 General Signal Corp. ......................... 120,784
6,834 Georgia-Pacific Co. .......................... 311,801
4,096 Goodrich (B.F.) Co. .......................... 133,888
4,391 Great Lakes Chemical Corp. ................... 170,700
7,101 Hercules, Inc. ............................... 213,474
11,230 Homestake Mining Co. ......................... 136,164
12,414 Inco, Ltd., Class A .......................... 127,243
22,864 International Paper Co. ...................... 1,066,034
8,034 Louisiana-Pacific Corp. ...................... 163,693
7,758 Mead Corp. ................................... 228,376
3,097 Millipore Corp. .............................. 59,037
29,354 Minnesota Mining & Manufacturing Co. ......... 2,163,023
43,445 Monsanto Co. ................................. 2,449,212
9,852 Morton International, Inc. ................... 215,513
4,862 Nalco Chemical Co. ........................... 143,429
11,781 Newmont Mining Corp. ......................... 285,689
6,528 Nucor Corp. .................................. 265,200
10,100 Owens-Illinois, Inc.* ........................ 252,500
9,274 Pall Corp. ................................... 205,767
4,463 Phelps Dodge Corp. ........................... 232,913
2,210 Potlatch Corp. ............................... 75,278
13,111 PPG Industries, Inc. ......................... 715,369
11,540 Praxair, Inc. ................................ 377,214
6,694 Raychem Corp. ................................ 163,166
5,429 Reynolds Metals Co. .......................... 275,861
13,665 Rohm & Haas Co. .............................. 380,058
7,336 Sigma Aldrich Corp. .......................... 211,827
7,414 Stone Container Corp. * ...................... 63,946
4,211 Temple-Inland, Inc. .......................... 201,602
5,264 Union Camp Corp. ............................. 207,270
9,138 Union Carbide Corp. .......................... 394,076
6,475 USX-U.S. Steel Group, Inc. ................... 154,591
Basic Materials (continued)
7,528 Westvaco Corp. ............................... $ 180,672
14,682 Weyerhaeuser Co. ............................. 619,397
8,200 Willamette Industries, Inc. .................. 235,238
7,217 Worthington Industries, Inc. ................. 90,213
----------
25,639,372
-----------
Transportation - 1.53%
13,412 AMR Corp. * .................................. 743,528
34,080 Burlington Northern Santa Fe Corp. ........... 1,090,560
5,500 Case Corp. ................................... 119,625
16,066 CSX Corp. .................................... 675,776
5,485 Delta Air Lines, Inc. ........................ 533,416
9,402 Ecolab, Inc. ................................. 267,369
11,189 FDX Corp. * .................................. 504,904
48,385 General Motors Corp. ......................... 2,646,055
24,176 Laidlaw, Inc. ................................ 228,161
28,225 Norfolk Southern Corp. ....................... 820,289
5,489 Ryder Systems, Inc. .......................... 136,539
24,141 Southwest Airlines Co. ....................... 482,820
6,695 US Airways Group, Inc. * ..................... 338,934
18,467 Union Pacific Corp. .......................... 787,156
-----------
9,375,132
-----------
Chemicals and Drugs - 0.13%
5,335 Grace (W.R.) & Co. ........................... 66,354
5,268 Mallinckrodt, Inc. ........................... 107,006
22,859 Tenet Healthcare Corp. * ..................... 657,196
-----------
830,556
-----------
Metal and Mining - 0.10%
12,882 Allegheny Teledyne, Inc. ..................... 229,461
2,958 ASARCO, Inc. ................................. 56,572
17,100 Battle Mountain Gold Co. ..................... 103,669
17,598 Placer Dome, Inc. ............................ 243,071
-----------
632,773
-----------
Total Common Stocks .......................... 594,278,347
(Cost $372,553,294) -----------
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
-------
Galaxy Large Company Index Fund
Fund II PORTFOLIO OF INVESTMENTS (continued)
------- September 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
------ --------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATION (A) - 0.32%
U.S. Treasury Bill (B) - 0.32%
$2,000,000 4.41%, 06/24/99 ..................... $ 1,936,300
-------------
Total U.S. Government Obligation .... 1,936,300
(Cost $1,934,830) ................... -------------
Shares
------
REPURCHASE AGREEMENT (C) - 3.25%
19,916,826 Repurchase Agreement with:
HSBC Securities Inc. ................
5.25%, 10/01/98, dated 9/30/98
Repurchase Price $19,919,731
(Collateralized by U.S. Treasury Bond
8.00%, Due 2021;
Total Par $14,642,000
Market Value $20,755,035) ........... 19,916,826
-------------
Total Repurchase Agreement .......... 19,916,826
(Cost $19,916,826) .................. -------------
Total Investments - 100.52% ....................... 616,131,473
(Cost $ 394,404,950) -------------
Net Other Assets and Liabilities - (0.52)% ........ (3,177,665)
-------------
Net Assets - 100.00% .............................. $ 612,953,808
=============
</TABLE>
- ----------------------------------------
* Non-income producing security.
ADR American Depositary Receipt.
(A) Discount yield at time of purchase.
(B) Security has been deposited as initial margin on open futures contracts.
(C) All or a portion of these securities are used as collateral on open future
contracts.
At September 30, 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>
81 S&P 500 Stock Index Dec-98 $ 20,591,360 $ 20,776,500
============ ============
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
-------
Galaxy Small Company Index Fund
Fund II PORTFOLIO OF INVESTMENTS
------- September 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<S> <C> <C>
COMMON STOCKS - 97.45%
Consumer Staples - 20.35%
25,900 AAR Corp. ..................................... $ 508,288
17,100 ADAC Laboratories * ........................... 410,400
28,700 Alliance Pharmaceutical Corp. * ............... 87,894
23,400 Alpharma, Inc., Class A ....................... 614,250
8,800 Angelica Corp. ................................ 141,350
23,900 AnnTaylor Stores Corp. * ...................... 485,469
26,100 Apogee Enterprises, Inc. ...................... 319,725
29,700 Applebees International, Inc. ................. 619,987
42,700 Aztar Corp. * ................................. 165,463
26,700 Ballard Medical Products ...................... 535,669
24,800 Belden, Inc. .................................. 333,250
20,000 Bindley Western Industries .................... 660,000
44,100 Bio-Technology General Corp. * ................ 292,163
16,500 Books-A-Million, Inc. * ....................... 42,281
17,900 Canandaigua Wine Co., Inc., Class A * ......... 707,050
23,600 Caraustar Industries, Inc. .................... 536,900
49,800 Casey's General Stores, Inc. .................. 747,000
27,100 Cato Corp., Class A ........................... 315,038
17,400 CEC Entertainment, Inc. * ..................... 352,350
9,200 Chemed Corp. .................................. 258,175
58,500 Chiquita Brands International, Inc. ........... 617,906
23,000 Clarcor, Inc. ................................. 353,625
8,200 Coca-Cola Bottling Co. ........................ 492,000
26,000 Cone Mills Corp. * ............................ 130,000
13,700 Cooper Cos., Inc. * ........................... 241,463
18,800 Cor Therapeutics, Inc. * ...................... 145,700
55,000 Coventry Health Care, Inc. * .................. 364,375
15,600 Cross (A.T.) Co., Class A ..................... 111,150
7,800 Damark International, Inc., Class A * ......... 56,550
14,900 Datascope Corp. * ............................. 329,663
32,500 Dekalb Genetics Corp., Class B ................ 2,990,000
35,600 Delta & Pine Land Co. ......................... 1,566,400
23,300 Delta Woodside Industries, Inc. ............... 91,744
12,600 Diagnostic Products Corp. ..................... 336,263
40,200 Dimon, Inc. ................................... 424,613
21,400 Dress Barn, Inc. * ............................ 259,475
38,500 Earthgrains Co. ............................... 1,191,094
23,045 Enzo Biochem, Inc. * ............................. 161,315
19,600 Filene's Basement Corp. * ........................ 34,300
35,300 Fleming Cos ...................................... 432,425
36,900 Foodmaker, Inc. * ................................ 578,869
10,900 Galey & Lord, Inc. * ............................. 130,119
19,500 G & K Services, Inc., Class A .................... 914,063
33,100 Genesis Health Ventures, Inc. * .................. 405,475
15,400 Gibson Greetings, Inc. * ......................... 312,813
27,500 Griffon Corp. * .................................. 240,625
23,800 Guilford Mills, Inc. ............................. 354,025
23,800 Gymboree Corp. * ................................. 178,500
8,200 Haggar Corp. ..................................... 90,200
20,300 Hancock Fabrics, Inc. ............................ 195,388
17,000 Harman International Industries, Inc. ............ 623,688
31,500 Hartmarx Corp. * ................................. 206,719
10,000 Hauser, Inc. * ................................... 40,000
24,500 INCYTE Pharmaceuticals, Inc. * ................... 520,625
27,800 Invacare Corp. ................................... 653,300
8,300 J & J Snack Foods Corp. * ........................ 153,550
9,700 Johnston Industries, Inc. * ...................... 30,919
Consumer Staples (continued)
26,500 Jones Pharmaceuticals, Inc. ...................... $ 761,875
17,600 Kaman Corp., Class A ............................. 301,400
20,000 Kellwood Co. ..................................... 537,500
48,700 Komag, Inc. * .................................... 149,144
16,200 Lechters, Inc. * ................................. 55,688
13,500 Lindsay Manufacturing Co. ........................ 200,813
35,600 Linens'N Things, Inc. * .......................... 979,000
34,700 Liposome Co., Inc. * ............................. 197,356
27,100 Magellan Health Services, Inc. * ................. 293,019
64,967 Mariner Post-Acute Network ....................... 332,956
24,000 Medimmune, Inc. * ................................ 702,000
22,150 Medquist Inc.* ................................... 700,494
29,350 The Men's Wearhouse, Inc. * ...................... 506,288
23,600 Mentor Corp. ..................................... 268,450
48,575 Mohawk Industries, Inc. * ........................ 1,329,741
10,600 Nash Finch Co. ................................... 155,687
6,900 National Presto Industries, Inc. ................. 258,750
18,000 Nature's Sunshine Products, Inc. ................. 288,000
38,100 Nautica Enterprises, Inc. * ...................... 711,994
62,800 NBTY, Inc. * ..................................... 494,550
29,700 North American Vaccine, Inc. * ................... 326,700
18,800 Noven Pharmaceuticals, Inc. * .................... 84,600
43,600 Oakwood Homes Corp. .............................. 572,250
18,200 Oshkosh B'Gosh, Inc., Class A .................... 377,650
30,200 Owens & Minor, Inc. .............................. 351,075
8,300 Oxford Industries, Inc. .......................... 255,225
22,700 PAREXEL International Corp. * .................... 885,300
30,850 Patterson Dental Co. * ........................... 1,141,450
6,500 Penford Corp. .................................... 97,500
9,750 Penwest Pharmaceuticals Co. * .................... 59,719
12,600 Pharmaceutical Marketing Services, Inc. * ........ 113,400
21,600 Pharmaceutical Product Development, Inc. * ....... 604,800
25,700 Phillips-Van Heusen Corp. ........................ 244,150
58,600 PhyCor, Inc. * ................................... 293,000
95,750 Pier 1 Imports, Inc. ............................. 718,125
23,300 Polaris Industries, Inc. ......................... 722,300
12,700 Pope & Talbot, Inc. .............................. 123,825
8,200 Quaker Chemical Corp. ............................ 128,125
29,500 Ralcorp Holdings, Inc. * ......................... 413,000
21,400 Regis Corp. ...................................... 674,100
36,450 Renal Care Group, Inc. * ......................... 934,031
29,300 Respironics, Inc. * .............................. 329,625
44,800 Richfood Holdings, Inc. .......................... 688,800
25,700 Roberts Pharmaceutical Corp. * ................... 491,513
22,900 Royal Appliance Manufacturing Co. * .............. 88,738
14,600 Ryland Group, Inc. ............................... 355,875
48,700 Safeskin Corp. * ................................. 1,537,094
15,100 Schweitzer-Mauduit International, Inc. ........... 328,425
28,100 SEQUUS Pharmaceuticals, Inc.* .................... 272,219
24,300 Shopko Stores, Inc. * ............................ 789,750
25,300 Sierra Health Services, Inc. * ................... 498,094
34,000 Smithfield Foods, Inc. * ......................... 601,375
12,800 Standex International Corp. ...................... 305,600
45,500 Stride Rite Corp. ................................ 372,531
29,300 Summit Technology, Inc. .......................... 108,960
18,300 Sunrise Medical, Inc. * .......................... 183,000
8,900 Syncor International Corp. * ..................... 147,406
23,300 TCBY Enterprises, Inc. ........................... 142,713
19,500 TheraTech, Inc. * ................................ 177,938
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
-------
Galaxy Small Company Index Fund
Fund II PORTFOLIO OF INVESTMENTS (continued)
------- September 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<S> <C> <C>
Consumer Staples (continued)
10,500 Timberland Co., Class A * ........................ $ 383,250
29,700 Triarc Cos., Inc. * .............................. 462,206
21,600 United States Bioscience, Inc. * ................. 153,900
30,400 Universal Health Services, Inc., Class B * ....... 1,269,200
13,000 USA Detergents, Inc. * ........................... 104,000
36,200 UST, Inc. ........................................ 764,725
39,900 Vicor Corp. * .................................... 326,681
14,700 VISX, Inc. * ..................................... 984,900
14,700 WD-40 Co. ........................................ 351,881
22,700 Whole Foods Market, Inc. * ....................... 956,238
51,200 Williams-Sonoma, Inc. * .......................... 1,091,200
----------
56,704,508
----------
Consumer Cyclical - 18.82%
18,900 ABM Industries, Inc. ............................. 552,825
21,600 ADVO, Inc. * ..................................... 527,850
8,200 Amcast Industrial Corp. .......................... 120,438
26,800 American Oncology Resources, Inc. * .............. 271,350
22,400 Applied Magnetics Corp. * ........................ 95,200
27,700 Arctic Cat, Inc. ................................. 247,569
11,500 Ashworth, Inc. * ................................. 77,625
11,100 Au Bon Pain Co., Inc., Class A * ................. 67,641
21,200 Authentic Fitness Corp. .......................... 323,300
21,500 Avid Technology, Inc. * .......................... 511,969
13,200 Baker (J.), Inc. ................................. 59,400
12,400 Bassett Furniture Industries, Inc. ............... 362,700
8,560 Bell Industries, Inc. * .......................... 102,185
35,037 Bombay Co.,Inc. * ................................ 186,134
34,000 Bowne & Co., Inc. ................................ 575,875
29,800 Breed Technologies, Inc. * ....................... 182,525
46,300 Brightpoint, Inc. * .............................. 355,931
17,000 Brown Group, Inc. ................................ 261,375
11,300 Building Materials Holding Corp. * ............... 148,313
7,300 Butler Manufacturing Co. ......................... 168,813
41,770 CKE Restaurants, Inc. ............................ 1,242,658
11,000 CPI Corp. ........................................ 260,563
10,600 Carmike Cinemas, Inc., Class A * ................. 194,775
23,000 Cash America International, Inc. ................. 255,875
45,100 Champion Enterprises, Inc. * ..................... 1,048,575
15,400 The Cheesecake Factory, Inc. * ................... 238,700
41,600 CIBER, Inc. * .................................... 839,800
11,900 Consolidated Graphics, Inc. * .................... 452,200
19,350 Consolidated Products, Inc. * .................... 339,834
11,600 Curative Health Services, Inc. * ................. 355,250
10,100 Cyrk International, Inc. * ....................... 106,050
17,100 Dames & Moore Group .............................. 179,550
63,300 DEVRY, Inc. * .................................... 1,483,594
15,700 Discount Auto Parts, Inc. * ...................... 377,781
10,600 Dixie Group, Inc. ................................ 68,900
20,200 ETEC Systems, Inc. * ............................. 526,463
27,300 Eagle Hardware & Garden, Inc. * .................. 592,069
19,600 Envoy Corp. * .................................... 428,750
27,100 Ethan Allen Interiors, Inc. ...................... 982,375
15,600 Express Scripts, Inc., Class A * ................. 1,283,100
23,000 Family Golf Centers, Inc. ........................ 408,250
36,600 Fedders Corp. .................................... 187,575
23,000 Franklin Covey Co. * ............................. 449,938
Consumer Cyclical (continued)
7,500 GC Cos., Inc. * .................................. $ 289,688
17,000 Galoob Toys, Inc. * .............................. 193,375
38,800 General Communication, Class A * ................. 143,075
5,000 Global Motorsport Group, Inc. * .................. 75,938
30,500 Goody's Family Clothing, Inc. * .................. 366,000
9,900 Gottschalks, Inc. * .............................. 72,394
18,600 Graco, Inc. ...................................... 432,450
39,600 Grand Casinos, Inc. * ............................ 314,325
23,200 Ha-Lo Industries, Inc. * ......................... 678,600
17,000 Henry (Jack) & Associates, Inc. .................. 811,750
22,500 Hollywood Park, Inc. * ........................... 233,438
12,800 Huffy Corp. ...................................... 180,800
8,900 IHOP Corp. * ..................................... 328,188
19,100 Immune Response Corp.* ........................... 219,650
13,600 Innovex, Inc. .................................... 164,900
11,000 Integrated Circuit Systems, Inc. * ............... 109,656
49,663 Integrated Health Services, Inc. ................. 834,959
43,100 Interim Services, Inc. * ......................... 886,244
24,600 Jan Bell Marketing, Inc. * ....................... 159,900
17,000 Jo-Ann Stores Inc., Class A * .................... 378,250
17,500 Juno Lighting, Inc. .............................. 391,563
27,100 Just For Feet, Inc. * ............................ 345,525
5,800 K-Swiss, Inc., Class A ........................... 134,850
15,700 K2, Inc. ......................................... 277,694
1 LCA-Vision, Inc. ................................. 2
12,300 LSB Industries, Inc. ............................. 41,513
51,000 La-Z-Boy, Inc. ................................... 1,000,875
23,700 Landry's Seafood Restaurants, Inc. * ............. 159,975
9,200 Lillian Vernon Corp. ............................. 124,775
22,100 Luby's Cafeterias, Inc. .......................... 356,363
27,500 Marcus Corp. ..................................... 426,250
15,100 Merrill Corp. .................................... 236,881
15,500 Metro Networks, Inc. * ........................... 567,688
26,800 Michaels Stores, Inc. * .......................... 683,400
35,625 Midway Games, Inc. * ............................. 416,367
17,550 Myers Industries, Inc. ........................... 403,650
17,500 NCS Healthcare, Inc., Class A * .................. 308,438
17,100 NFO Worldwide, Inc. * ............................ 169,931
31,300 National Data Corp. .............................. 966,387
22,700 Norrell Corp. .................................... 340,500
19,800 O'Reilly Automotive, Inc. * ...................... 717,750
40,900 Orthodontic Centers of America, Inc. * ........... 682,519
10,600 Park Electrochemical Corp. ....................... 144,425
13,800 Pediatrix Medical Group, Inc. * .................. 619,275
22,600 Photronics, Inc. * ............................... 288,150
12,421 Pillowtex Corp. .................................. 364,869
29,700 Players International, Inc. * .................... 141,075
20,800 Pre-Paid Legal Services, Inc. * .................. 531,700
26,700 Primadonna Resorts, Inc. * ....................... 205,256
20,600 Primark Corp. * .................................. 628,300
49,900 Prime Hospitality Corp. * ........................ 349,300
24,500 Regeneron Pharmaceuticals, Inc.* ................. 188,344
11,000 Republic Group, Inc. ............................. 146,438
9,300 Rival Co. ........................................ 74,400
30,200 Ruby Tuesday, Inc. ............................... 456,775
11,000 Rural/Metro Corp. * .............................. 88,000
20,600 Russ Berrie & Co., Inc. .......................... 392,688
45,200 Ryan's Family Steakhouses, Inc. * ................ 539,575
17,400 SEI Investments Co. .............................. 1,209,300
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
-------
Galaxy Small Company Index Fund
Fund II PORTFOLIO OF INVESTMENTS (continued)
------- September 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<S> <C> <C>
Consumer Cyclical (continued)
11,100 SPX Corp. * ...................................... $ 458,569
45,700 S3, Inc. * ....................................... 131,388
15,700 St. John Knits, Inc. ............................. 253,163
46,000 Shoney's, Inc. * ................................. 86,250
22,250 Smith (A.O.) Corp. ............................... 436,656
23,100 Sola International, Inc. * ....................... 414,356
19,300 Sonic Corp. * .................................... 337,750
11,800 Spartan Motors, Inc. ............................. 58,262
29,900 The Sports Authority, Inc. * ..................... 227,987
12,500 Standard Motor Products, Inc. .................... 304,688
28,400 Standard Pacific Corp. ........................... 401,150
43,500 Stein Mart, Inc. * ............................... 348,000
25,500 Sturm Ruger & Co., Inc. .......................... 398,437
25,100 Superior Services, Inc. * ........................ 707,506
7,800 Swiss Army Brands, Inc. * ........................ 78,000
22,500 TBC Corp. * ...................................... 135,000
19,900 TCSI Corp. * ..................................... 57,834
14,900 Taco Cabana, Class A * ........................... 90,331
15,050 Thomas Industries, Inc. .......................... 322,634
16,100 Thomas Nelson Publisher .......................... 205,275
11,650 Thor Industries, Inc. ............................ 247,562
7,400 Three-Five Systems, Inc. * ....................... 53,188
32,100 Toll Brothers, Inc. * ............................ 736,294
11,500 Toro Co. ......................................... 237,906
20,900 Trimble Navigation, Ltd. * ....................... 210,306
41,700 True North Communications, Inc. .................. 925,219
27,800 Tultex Corp. * ................................... 48,650
19,200 Ultratech Stepper, Inc. * ........................ 291,600
10,900 U.S. Home Corp. * ................................ 320,188
22,800 Vertex Pharmaceuticals, Inc. * ................... 524,400
12,300 Vital Signs, Inc. ................................ 203,719
8,200 Walbro Corp. ..................................... 66,113
8,600 Wall Data, Inc. * ................................ 131,150
21,500 Watsco, Inc. ..................................... 322,500
29,800 Westwood One, Inc. * ............................. 532,675
24,100 Winnebago Industries, Inc. ....................... 271,125
39,500 Wolverine World Wide, Inc. ....................... 429,563
35,700 World Color Press, Inc. * ........................ 1,106,700
32,900 Zale Corp. * ..................................... 843,063
----------
52,451,146
----------
Finance - 16.69%
21,700 Access Health, Inc. * ............................ 800,187
29,000 Allied Group, Inc. ............................... 1,393,813
38,800 American Bankers Insurance Group, Inc. ........... 1,649,000
28,300 AmeriCredit Corp. * .............................. 689,813
38,000 AMRESCO, Inc. * .................................. 285,000
17,200 Anchor Bancorp Wisconsin, Inc. ................... 380,550
24,300 Astoria Financial Corp. .......................... 1,023,637
14,400 BankNorth Group, Inc. ............................ 421,200
30,100 Capital Re Corp. ................................. 823,988
16,200 Carolina First Corp. ............................. 358,425
19,500 CCB Financial Corp. .............................. 1,964,625
24,400 Centura Banks, Inc. .............................. 1,534,150
21,200 CMAC Investment Corp. ............................ 922,200
18,400 Coast Federal Litigation Contingent
Payment Rights Trust * ........................... 162,150
Finance (continued)
19,225 Commerce Bancorp, Inc. ........................... $ 760,589
53,650 Commercial Federal Corp. ......................... 1,264,128
9,400 CompDent Corp. * ................................. 128,075
1 Crestar Financial Corp. .......................... 28
21,200 Cullen/Frost Bankers, Inc. ....................... 1,022,900
11,600 Dain Rauscher Corp. .............................. 365,400
18,070 Delphi Financial Group, Class A * ................ 711,506
26,620 Downey Financial Corp. ........................... 633,889
51,000 E Trade Group, Inc. * ............................ 953,063
35,200 Eaton Vance Corp. ................................ 811,800
34,200 Enhance Financial Services Group, Inc. ........... 1,011,038
8,900 Executive Risk, Inc. ............................. 401,056
23,060 Fidelity National Financial, Inc. ................ 779,716
52,650 First American Financial Corp. ................... 1,684,800
28,700 FirstBank Puerto Rico ............................ 728,263
27,600 First Midwest Bancorp, Inc. ...................... 1,091,925
30,700 Fremont General Corp. ............................ 1,473,600
30,530 Frontier Insurance Group, Inc. ................... 404,523
15,400 Gallagher (Arthur J.) & Co. ...................... 635,250
40,237 HUBCO, Inc. ...................................... 1,021,014
12,800 Hilb, Rogal & Hamilton Co. ....................... 241,600
9,200 JSB Financial, Inc. .............................. 472,075
47,400 Keystone Financial, Inc. ......................... 1,404,225
50,800 Legg Mason, Inc. ................................. 1,336,675
16,000 Life Re Corp. .................................... 1,471,000
22,100 MAF Bancorp ...................................... 519,350
17,200 MDC Holdings, Inc. ............................... 317,125
35,400 Mutual Risk Management, Ltd. ..................... 1,252,275
17,200 NAC Re Corp. ..................................... 847,100
26,300 Orion Capital Corp. .............................. 938,581
23,600 Pioneer Group, Inc. .............................. 389,400
14,650 Premier Bancshares, Inc. ......................... 311,312
20,700 Queens County Bancorp, Inc. ...................... 553,725
44,850 Raymond James Financial, Inc. .................... 941,850
28,800 Riggs National Corp. ............................. 705,600
27,700 Selective Insurance Group, Inc. .................. 529,763
19,000 Silicon Valley Bancshares ........................ 304,000
1 Sovereign Bancorp, Inc. .......................... 13
37,400 St. Paul Bancorp, Inc. ........................... 815,788
31,300 Susquehanna Bancshares, Inc. ..................... 590,787
11,300 Trenwick Group, Inc. ............................. 329,113
21,600 Trustco Bank Corp. ............................... 579,150
36,300 United Bankshares, Inc. .......................... 936,994
17,400 U.S. Trust Corp. ................................. 1,154,925
20,800 Whitney Holding Corp. ............................ 868,400
16,600 Zenith National Insurance Co. .................... 416,038
----------
46,518,165
----------
Technology - 15.20%
67,800 Acxiom Corp. * ................................... 1,682,288
35,500 Advanced Tissue Sciences, Inc. * ................. 107,609
25,400 Allen Telecom, Inc. * ............................ 169,862
11,800 Analogic Corp. ................................... 407,100
20,750 Analysts International Corp. ..................... 622,500
45,400 Anixter International, Inc. * .................... 706,538
23,400 Auspex Systems, Inc. * ........................... 70,931
23,800 BISYS Group, Inc. * .............................. 1,050,175
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
-------
Galaxy Small Company Index Fund
Fund II PORTFOLIO OF INVESTMENTS (continued)
------- September 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<S> <C> <C>
Technology (continued)
26,000 BMC Industries, Inc. ............................. $ 156,000
19,700 BancTec, Inc.* ................................... 280,725
20,600 BE Aerospace, Inc. * ............................. 453,200
10,900 Benchmark Electronics, Inc. * .................... 248,656
26,050 Boole & Babbage, Inc. * .......................... 605,663
12,600 BroadBand Technologies, Inc. * ................... 35,437
33,650 Burr-Brown Corp. * ............................... 572,050
9,100 C-Cor Electronics, Inc. * ........................ 117,162
34,100 C-Cube Microsystems, Inc. * ...................... 596,750
18,800 CDI Corp. * ...................................... 427,700
26,850 Cable Design Technologies * ...................... 342,338
15,400 California Microwave, Inc. * ..................... 127,050
18,600 Catalina Marketing Corp. * ....................... 874,200
6,600 Centigram Communications Corp. * ................. 51,975
23,000 Cephalon, Inc. * ................................. 168,188
31,200 Cerner Corp. * ................................... 836,550
38,600 Cognex Corp. * ................................... 448,725
21,400 Coherent, Inc. * ................................. 199,956
19,400 Computer Task Group, Inc. ........................ 568,663
13,800 Customtracks Corp. * ............................. 71,588
17,700 Cygnus, Inc. * ................................... 61,950
25,300 Dallas Semiconductor Corp. ....................... 683,100
14,900 Dialogic Corp. * ................................. 415,337
12,700 Digi International, Inc. * ....................... 155,575
9,200 Electro Scientific Industries, Inc. * ............ 146,050
21,100 Exabyte Corp. * .................................. 137,150
11,900 Fair Isaac & Co., Inc. ........................... 397,162
28,700 FileNet Corp. * .................................. 401,800
60,500 FirstMerit Corp. ................................. 1,417,969
13,900 Flow International Corp. * ....................... 128,575
34,000 General Semiconductor, Inc. * .................... 204,000
22,000 Gerber Scientific, Inc. .......................... 594,000
9,800 Hadco Corp. * .................................... 237,650
38,550 Harbinger Corp. * ................................ 279,488
9,700 Harmon Industries, Inc. .......................... 213,400
18,300 Helix Technology Corp. ........................... 180,713
23,600 HNC Software * ................................... 958,750
18,400 Hutchinson Technology * .......................... 315,100
35,800 IDEXX Laboratories, Inc. * ....................... 854,725
40,900 Input/Output, Inc. * ............................. 324,644
25,500 Insituform Technologies, Inc., Class A * ......... 337,875
43,000 Interface, Inc. .................................. 516,000
48,400 International Rectifier Corp. * .................. 248,050
23,300 Inter-Tel, Inc. .................................. 301,444
15,600 InterVoice, Inc. * ............................... 357,825
14,800 Ionics, Inc. * ................................... 392,200
12,600 Itron, Inc. * .................................... 83,475
24,900 Kent Electronics Corp. * ......................... 249,000
7,800 Kronos, Inc. * ................................... 288,600
13,100 Kuhlman Corp. .................................... 424,931
12,100 Landstar System, Inc. * .......................... 341,069
21,400 Lattice Semiconductor Corp. * .................... 529,650
35,900 Macromedia, Inc. * ............................... 583,375
16,000 Marshall Industries * ............................ 353,000
14,700 Material Sciences Corp. * ........................ 128,625
16,200 Marquette Medical Systems, Inc. * ................ 703,688
16,400 Mercury Interactive Corp. * ...................... 650,875
9,900 McWhorter Technologies, Inc. * ................... 199,856
32,600 Methode Electronics, Inc., Class A ............... 489,000
Technology (continued)
14,500 MicroAge, Inc. * ................................. $ 159,500
15,000 MICROS Systems, Inc. * ........................... 450,000
16,700 Molecular Biosystems, Inc. * ..................... 70,975
6,300 Nashua Corp. * ................................... 92,925
28,900 National Computer Systems, Inc. .................. 852,550
31,300 National Instruments Corp. * ..................... 780,544
19,800 Network Equipment Technologies, Inc. * ........... 198,000
30,600 Novellus Systems, Inc. * ......................... 803,250
17,300 Oak Industries, Inc. * ........................... 467,100
38,800 P-COM, Inc. * .................................... 151,563
45,100 Paxar Corp. * .................................... 400,262
32,000 PictureTel Corp. * ............................... 206,000
24,200 Pioneer Standard Electronics, Inc. ............... 152,763
21,300 Platinum Software Corp. * ........................ 218,325
13,400 Plexus Corp. * ................................... 259,625
17,850 Progress Software Corp. * ........................ 461,869
17,000 Protein Design Laboratories, Inc. * .............. 408,000
18,400 Resound Corp. * .................................. 78,200
11,400 SPS Technologies, Inc. * ......................... 530,812
38,200 Sanmina Corp. * .................................. 1,074,375
9,300 Spacelabs Medical, Inc. * ........................ 144,150
12,300 Speedfam International, Inc. * ................... 132,225
13,200 Standard Microsystems Corp. * .................... 94,050
11,400 Steel Technologies, Inc. ......................... 82,650
14,800 Symmetricom, Inc. * .............................. 77,700
40,100 System Software Associates, Inc. * ............... 203,006
36,300 Technology Solutions Co. * ....................... 408,375
28,900 Unitrode Corp. * ................................. 307,062
43,600 VLSI Technology, Inc. * .......................... 332,450
20,500 Valence Technology, Inc. * ....................... 87,125
40,700 Vanstar Corp. * .................................. 401,912
22,900 Vantive Corp. * .................................. 137,400
65,100 Vitesse Semiconductor Corp. * .................... 1,537,988
13,800 Volt Information Sciences, Inc. * ................ 275,137
7,900 Watkins-Johnson Co. .............................. 147,137
10,500 Whittaker Corp. * ................................ 155,531
43,100 Whittman-Hart, Inc. * ............................ 791,963
19,900 X-Rite, Inc. ..................................... 199,000
19,100 Xircom, Inc. * ................................... 467,950
39,810 Xylan Corp. * .................................... 527,482
22,900 Zebra Technologies Corp., Class A * .............. 767,150
----------
42,379,336
-----------
Basic Materials - 6.07%
11,000 Acme Metals, Inc. * .............................. 26,812
27,200 AMCOL International Corp. ........................ 309,400
20,400 Applied Industrial Technologies, Inc. ............ 332,775
9,000 Astec Industries, Inc. * ......................... 383,625
18,900 Barnes Group, Inc. ............................... 543,375
28,000 Birmingham Steel Corp. ........................... 222,250
20,600 Brady (W.H.) Co., Class A ........................ 427,450
36,000 Buckeye Technologies, Inc. * ..................... 650,250
14,700 CTS Corp. ........................................ 433,650
22,000 Cambrex Corp. .................................... 518,375
13,300 Castle (A.M.) & Co. .............................. 200,331
19,600 Chem First, Inc. ................................. 345,450
9,400 Commonwealth Industries, Inc. .................... 76,375
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
-------
Galaxy Small Company Index Fund
Fund II PORTFOLIO OF INVESTMENTS (continued)
------- September 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<S> <C> <C>
Basic Materials (continued)
33,500 Corn Products International, Inc. * .............. $ 845,875
14,100 Dravo Corp. * .................................... 178,012
17,600 Florida Rock Industries .......................... 435,600
22,600 Geon Co. ......................................... 401,150
24,300 Getchell Gold Corp. * ............................ 511,819
29,400 Glamis Gold, Ltd. * .............................. 75,337
8,000 Insteel Industries, Inc. ......................... 38,500
12,064 Intermagnetics General Corp. * ................... 84,448
23,800 Intermet Corp. ................................... 301,963
25,100 Justin Industries, Inc. .......................... 385,913
10,300 Lawson Products, Inc. ............................ 226,600
21,400 Lilly Industries, Inc., Class A .................. 377,175
10,100 Lone Star Industries, Inc. ....................... 603,475
16,200 Lydall, Inc. * ................................... 166,050
23,500 MacDermid, Inc. .................................. 710,875
26,600 Mississippi Chemical Corp. ....................... 322,525
33,100 Mueller Industries, Inc. * ....................... 841,981
23,300 Northwestern Steel & Wire Co. * .................. 45,872
20,400 Om Group, Inc. ................................... 575,025
15,200 O'Sullivan Corp. ................................. 129,200
12,900 Quanex Corp. ..................................... 255,581
18,200 Reliance Steel & Aluminum Co. .................... 597,187
17,600 Scotts Co., Class A * ............................ 539,000
26,200 Shorewood Packaging Corp. * ...................... 353,700
19,200 Stillwater Mining Co. * .......................... 606,000
15,300 Telxon Corp. ..................................... 311,738
20,600 Texas Industries, Inc. ........................... 517,575
15,000 Technitrol, Inc. ................................. 300,000
34,800 Tredegar Industries, Inc. ........................ 637,275
16,000 Universal Forest Products, Inc. .................. 254,000
17,300 WHX Corp. * ...................................... 222,737
13,100 Wolverine Tube, Inc. * ........................... 275,919
17,800 Wynn's International, Inc. ....................... 332,637
----------
16,930,862
----------
Capital Goods - 5.71%
12,400 Alliant Techsystems, Inc. * ...................... 821,500
38,700 American Management Systems, Inc. * .............. 1,059,412
35,930 Applied Power, Inc., Class A ..................... 981,338
34,000 AptarGroup, Inc. ................................. 773,500
32,933 Baldor Electric Co. .............................. 720,409
36,400 Blount International, Inc., Class A .............. 864,500
32,800 Checkpoint Systems, Inc. * ....................... 284,950
12,500 Circon Corp. * ................................... 121,875
14,400 Commercial Metals Co. ............................ 331,200
45,600 Commscope, Inc. * ................................ 527,250
16,100 Daniel Industries, Inc. .......................... 220,369
34,300 Digital Microwave Corp. * ........................ 105,044
22,800 Dionex Corp. * ................................... 530,100
18,100 Electroglas, Inc. * .............................. 157,244
15,100 Gardner Denver, Inc. ............................. 213,288
65,400 Gentex Corp. * ................................... 981,000
21,500 Global Industrial Technologies, Inc. * ........... 150,500
29,000 Harland (John H.) Co. ............................ 393,312
12,300 Hologic, Inc. * .................................. 159,900
21,000 Hughes Supply, Inc. .............................. 598,500
Capital Goods (continued)
11,700 IMCO Recycling, Inc. ............................. $ 165,994
41,300 JLG Industries, Inc. ............................. 658,219
36,700 KEMET Corp. * .................................... 408,288
21,000 Kulicke & Soffa Industries, Inc. * ............... 286,125
16,300 Manitowoc Co., Inc. .............................. 491,038
33,600 Orbital Sciences Corp. * ......................... 942,900
19,500 Regal Beloit Corp. ............................... 433,875
10,300 Robbins & Myers, Inc. ............................ 218,231
28,700 Roper Industries, Inc. ........................... 498,663
17,400 Scott Technologies, Inc. Class A * ............... 193,575
17,100 Simpson Industries, Inc. ......................... 172,069
9,600 Skyline Corp. .................................... 278,400
14,400 Southern Energy Homes, Inc. * .................... 100,800
12,200 Stone & Webster, Inc. ............................ 387,350
12,100 TETRA Technologies, Inc. * ....................... 145,200
20,600 Titan International, Inc. ........................ 229,175
25,600 Valmont Industries, Inc. ......................... 313,600
----------
15,918,693
----------
Utilities - 5.39%
8,500 American States Water Co. ........................ 225,250
6,600 Aquarion Co. ..................................... 222,337
46,100 Aspect Telecommunications Corp.* ................. 1,106,400
27,700 Atmos Energy Corp. ............................... 791,181
6,900 Bangor Hydro-Electric Co. * ...................... 67,275
10,200 Cascade Natural Gas Corp. ........................ 168,300
16,600 Central Hudson Gas & Electric Corp. .............. 695,125
10,900 Central Vermont Public Service Corp. ............. 117,856
12,900 CILCORP, Inc. .................................... 676,444
20,500 Commonwealth Energy System ....................... 745,688
9,600 Connecticut Energy Corp. ......................... 259,200
8,300 Consumers Water Co. .............................. 236,550
19,500 Eastern Utilities Associates ..................... 509,437
4,800 Green Mountain Power Corp. ....................... 54,900
17,100 New Jersey Resources Corp. ....................... 609,187
21,100 Northwest Natural Gas Co. ........................ 583,547
12,900 Orange & Rockland Utilities, Inc. ................ 707,887
9,000 Pennsylvania Enterprises, Inc. ................... 225,000
24,100 Philadelphia Suburban Corp. ...................... 646,181
28,000 Piedmont Natural Gas Co., Inc. ................... 948,500
18,500 Public Service Co. of North Carolina ............. 427,812
29,200 Sierra Pacific Resources ......................... 1,133,325
25,100 Southwest Gas Corp. .............................. 512,981
23,400 Southwestern Energy Co. .......................... 198,900
56,800 Tel-Save Holdings, Inc. * ........................ 635,450
12,300 TNP Enterprises, Inc. ............................ 429,731
13,300 United Illuminating Co. .......................... 694,925
32,500 United Water Resources, Inc. ..................... 552,500
34,800 WICOR, Inc. ...................................... 830,850
----------
15,012,719
----------
Transportation - 3.45%
32,350 Air Express International Corp. .................. 517,600
29,600 American Freightways Corp. * ..................... 222,000
18,500 Arkansas Best Corp. * ............................ 106,375
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
-------
Galaxy Small Company Index Fund
Fund II PORTFOLIO OF INVESTMENTS (continued)
------- September 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<S> <C> <C>
Transportation (continued)
27,150 Central Parking Corp. ............................ $1,367,681
63,250 Comair Holdings, Inc. ............................ 1,818,438
22,900 Expeditors International of Washington, Inc. ..... 635,475
33,200 Fritz Cos., Inc. * ............................... 226,175
15,700 Frozen Food Express Industries, Inc. ............. 105,975
28,400 Heartland Express, Inc. * ........................ 468,600
10,700 Insurance Auto Auctions, Inc. * .................. 133,750
19,700 Kirby Corp. * .................................... 413,700
11,400 M.S. Carriers, Inc. * ............................ 226,575
19,700 Pittston Burlington Group ........................ 146,519
8,800 Railtex, Inc. * .................................. 103,400
60,400 Rollins Truck Leasing Corp. ...................... 675,725
19,000 Skywest, Inc. .................................... 363,375
15,900 Standard Products Co. ............................ 278,250
24,000 USFreightways Corp. .............................. 477,000
17,800 Wabash National Corp. ............................ 262,550
45,025 Werner Enterprises, Inc. ......................... 709,144
26,700 Yellow Corp. * ................................... 360,450
----------
9,618,757
----------
Energy - 3.29%
29,800 Barrett Resources Corp. * ........................ 601,588
26,900 Benton Oil & Gas Co. * ........................... 152,994
21,400 Cabot Oil & Gas Corp., Class A ................... 326,350
42,850 Cross Timbers Oil Co. ............................ 645,428
30,400 Devon Energy Corp. ............................... 1,001,300
24,500 Energen Corp. .................................... 465,500
16,000 HS Resources, Inc. * ............................. 183,000
27,600 KCS Energy, Inc. ................................. 141,450
33,200 Newfield Exploration Co. * ....................... 747,000
22,600 Oceaneering International, Inc. * ................ 322,050
19,900 Offshore Logistics, Inc. * ....................... 251,237
15,700 Plains Resources, Inc. * ......................... 264,937
37,000 Pogo Producing Co. ............................... 552,688
17,800 Pool Energy Services Co. * ....................... 162,425
43,700 Pride International, Inc. * ...................... 349,600
19,800 Remington Oil & Gas Corp. * ...................... 85,387
92,900 Santa Fe Energy Resources, Inc. * ................ 876,744
18,800 Seitel, Inc. * ................................... 203,275
31,800 Snyder Oil Corp. ................................. 506,813
10,200 St. Mary Land & Exploration Co. .................. 243,525
41,600 Tuboscope Vetco International Corp. * ............ 483,600
48,600 Vintage Petroleum, Inc. .......................... 558,900
8,500 Wiser Oil Co. .................................... 45,156
----------
9,170,947
----------
Durable Goods - 0.95%
26,000 Halter Marine Group, Inc. * ...................... $ 295,750
26,195 Hyperion Software Corp. * ........................ 568,104
44,400 Read-Rite Corp. * ................................ 346,875
35,900 Valassis Communications, Inc. * .................. 1,436,000
----------
2,646,729
----------
Building and Construction - 0.75%
49,700 D.R. Horton, Inc. ................................ 795,200
50,900 Morrison Knudsen Corp. * ......................... 547,175
16,500 TJ International, Inc. ........................... 309,375
15,900 Service Experts * ................................ 442,219
----------
2,093,969
----------
Business Services - 0.29%
29,400 Billing Information Concepts Corp. * ............. 411,600
12,400 New England Business Service, Inc. ............... 383,625
----------
795,225
----------
Metals and Mining - 0.23%
16,000 Brush Wellman, Inc. .............................. 222,000
20,800 Coeur d'Alene Mines Corp. * ...................... 152,100
52,200 HECLA Mining Co. * ............................... 264,261
----------
638,361
----------
Consumer Products - 0.21%
25,600 Footstar, Inc. * ................................. 580,800
----------
Aerospace - Airlines - 0.05%
26,900 Mesa Air Group, Inc. * ........................... 134,500
----------
Total Common Stocks 271,594,717
(Cost $298,163,987) -----------
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
-------
Galaxy Small Company Index Fund
Fund II PORTFOLIO OF INVESTMENTS (continued)
------- September 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- --------
<S> <C> <C>
U.S. GOVERNMENT Obligation (A) - 0.52%
U.S. Treasury Bill (B) - 0.52%
$1,500,000 4.41%, 06/24/99 $ 1,452,225
------------
Total U.S. Government Obligation 1,452,225
(Cost $1,451,123) ------------
Shares
------
REPURCHASE AGREEMENT (C) - 2.65%
7,386,373 Repurchase Agreement with:
HSBC Securities Inc.
5.25%, 10/01/98, dated 09/30/98
Repurchase Price $7,387,450
(Collateralized by U.S. Treasury Bond
8.13%, Due 2019;
Total Par $5,515,000
Market Value $7,590,880) 7,386,373
------------
Total Repurchase Agreement 7,386,373
(Cost $7,386,373) ------------
Total Investments - 100.62% 280,433,315
(Cost $307,001,483) ------------
Net Other Assets and Liabilities - (0.62)% (1,719,042)
------------
Net Assets - 100.00% $278,714,273
============
</TABLE>
- ------------------------------------------
* Non-income producing security.
(A) Discounted yield at time of purchase.
(B) Security has been deposited as intial margin on open futures contracts.
(C) All or a portion of these securities are used as collateral on open futures
contracts.
At September 30, 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 Midcap 400 Dec-98 $ 3,736,900 $ 3,890,000
21 Russell 2000 Dec-98 $ 3,648,285 $ 3,835,125
----------- -----------
$ 7,385,185 $ 7,725,125
=========== ===========
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
-------
Galaxy Utility Index Fund
Fund II PORTFOLIO OF INVESTMENTS
------- September 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
COMMON STOCKS - 98.90%
<S> <C> <C>
Utilities - 84.54%
27,000 Ameren Corp. .................................. $1,132,312
37,500 American Electric Power Co., Inc. ............. 1,830,469
29,100 Baltimore Gas & Electric Co. .................. 971,212
29,800 Carolina Power & Light Co. .................... 1,376,388
41,800 Central & South West Corp. .................... 1,193,913
31,000 Cinergy Corp. ................................. 1,185,750
16,400 Columbia Energy Group ......................... 961,450
46,300 Consolidated Edison Co. of New York ........... 2,413,387
18,900 Consolidated Natural Gas Co. .................. 1,030,050
28,500 DTE Energy Co. ................................ 1,287,844
38,500 Dominion Resources, Inc. ...................... 1,718,062
70,900 Duke Energy Corp. ............................. 4,692,694
69,600 Edison International .......................... 1,787,850
48,500 Entergy Corp. ................................. 1,491,375
35,700 FPL Group, Inc. ............................... 2,487,844
25,200 GPU, Inc. ..................................... 1,071,000
58,200 Houston Industries, Inc. ...................... 1,811,475
36,900 Niagara Mohawk Power Corp. * .................. 567,338
9,400 NICOR, Inc. ................................... 389,513
29,700 Northern States Power Co. ..................... 833,456
6,200 Oneok, Inc. ................................... 210,800
58,500 PacifiCorp .................................... 1,122,469
43,800 PECO Energy Co. ............................... 1,601,437
6,900 Peoples Energy Corp. .......................... 248,400
75,100 PG & E Corp. .................................. 2,398,506
29,700 PP & L Resources, Inc. ........................ 768,487
45,600 Public Service Enterprise Group, Inc. ......... 1,792,650
137,200 Southern Co. .................................. 4,038,825
55,000 Texas Utilities Co. ........................... 2,560,938
42,700 Unicom Corp. .................................. 1,595,913
83,400 Williams Cos., Inc. ........................... 2,397,750
----------
48,969,557
----------
Energy - 14.36%
41,800 Coastal Corp. ................................. $1,410,750
4,000 Eastern Enterprises ........................... 168,500
64,600 Enron Corp. ................................... 3,411,687
46,700 FirstEnergy Corp. ............................. 1,450,619
47,100 Sempra Energy ................................. 1,227,544
21,700 Sonat, Inc. ................................... 648,287
----------
8,317,387
----------
Total Common Stocks ........................... 57,286,944
(Cost $43,921,902)............................. -----------
REPURCHASE AGREEMENT - 0.81%
467,268 Repurchase Agreement with:
HSBC Securities Inc.
5.25%, 10/01/98, dated 9/30/98
Repurchase Price $467,336
(Collateralized by U.S. Treasury Bond
6.50%, Due 2026;
Total Par $398,000
Market Value $487,301) ....................... 467,268
------------
Total Repurchase Agreement ................... 467,268
(Cost $467,268) ------------
Total Investments - 99.71% .................................. 57,754,212
(Cost $44,389,170) ------------
Net Other Assets and Liabilities - 0.29% ................... 167,930
------------
Net Assets - 100.00% ........................................ $ 57,922,142
============
</TABLE>
- --------------------------------
* Non-income producing security.
See Notes to Financial Statements.
22
<PAGE>
-------
Galaxy U.S. Treasury Index Fund
Fund II PORTFOLIO OF INVESTMENTS (continued)
------- September 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Par Value
Value (Note 2)
----- --------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS - 96.97%
U.S. Treasury Notes - 68.96%
$1,400,000 5.63%, 11/30/99 ............................... $1,417,248
6,700,000 5.38%, 01/31/00 ............................... 6,777,050
3,600,000 7.75%, 01/31/00 ............................... 3,749,688
7,550,000 5.50%, 04/15/00 ............................... 7,667,553
4,000,000 6.25%, 05/31/00 ............................... 4,115,880
7,253,000 8.75%, 08/15/00 ............................... 7,816,123
5,150,000 6.25%, 08/31/00 ............................... 5,325,718
10,000,000 7.50%, 01/15/01 ............................... 10,903,500
14,200,000 6.50%, 05/31/01 ............................... 14,948,056
20,300,000 6.25%, 08/31/02 ............................... 21,643,454
4,150,000 7.25%, 05/15/04 ............................... 4,737,599
3,350,000 7.25%, 08/15/04 ............................... 3,842,852
2,400,000 7.88%, 11/15/04 ............................... 2,844,600
12,100,000 7.00%, 07/15/06 ............................... 14,093,596
2,250,000 6.50%, 10/15/06 ............................... 2,553,907
-----------
112,436,824
-----------
U.S. Treasury Bonds - 28.01%
300,000 10.75%, 08/15/05 .............................. 410,391
3,430,000 11.75%, 11/15/14 .............................. 5,469,547
3,850,000 7.50%, 11/15/16 ............................... 4,907,364
2,564,000 8.88%, 08/15/17 ............................... 3,707,903
2,971,000 8.50%, 02/15/20 ............................... 4,231,625
1,000,000 7.87%, 02/15/21 ............................... 1,351,190
10,700,000 7.50%, 11/15/24 ............................... 14,193,657
9,550,000 6.50%, 11/15/26 ............................... 11,389,139
----------
45,660,816
----------
Total U.S. Government Obligations ............. 158,097,640
(Cost $148,317,070) -----------
Shares
- ------
REPURCHASE AGREEMENT - 1.73%
2,813,287 Repurchase Agreement with:
HSBC Securities Inc.
5.25%, 10/01/98, dated 9/30/98
Repurchase Price $2,813,697
(Collateralized by U.S. Treasury Bond
10.375%, Due 2012;
Total Par $1,990,000
Market Value $2,947,998) ....................... $ 2,813,287
------------
Total Repurchase Agreement ..................... 2,813,287
(Cost $2,813,287) ------------
Total Investments - 98.70% ................................... 160,910,927
(Cost $151,130,357) ------------
Net Other Assets and Liabilities - 1.30% ..................... 2,123,010
------------
Net Assets - 100.00% ......................................... $163,033,937
============
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
-------
Galaxy Municipal Bond Fund
Fund II PORTFOLIO OF INVESTMENTS
------- September 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Par Value
Value (Note 2)
----- --------
MUNICIPAL BONDS - 97.38%
<S> <C> <C>
Alabama - 2.24%
$ 400,000 Auburn University Athletics
5.20%, 04/01/04
Insured: MBIA ..................................... $ 425,500
------------
Arizona - 1.53%
250,000 Maricopa County School District 1
Elementary Project of 1998, Series A
6.00%, 07/01/11
Insured: FSA ...................................... 290,000
------------
Colorado - 2.92%
500,000 Jefferson County School District, GO
5.50%, 12/15/06
Insured: MBIA ..................................... 553,750
------------
Connecticut - 2.35%
400,000 Connecticut State Special
Tax Obligation Revenue Transportation
Infrastructure, Series B
5.50%, 11/01/13
Insured: FSA ...................................... 445,500
------------
Florida - 8.71%
1,000,000 Florida State Board of Education
Capital Outlay
Public Education, Series A, GO
5.70%, 06/01/08
Insured: AMBAC .................................... 1,090,000
540,000 Tampa Bay Water Utility Systems,
Series B
5.13%, 10/01/13
Insured: FGIC ..................................... 562,950
------------
1,652,950
------------
Illinois - 12.86%
500,000 Chicago Metropolitan
Water Reclamation District
Greater Chicago, GO
5.10%, 12/01/03 ................................... 531,875
750,000 Illinois Health Facilities Authority Revenue
University of Chicago Hospitals
Series A
5.25%, 08/15/03
Insured: MBIA ..................................... 795,000
500,000 Illinois State Sales Tax Revenue,
Series V
6.00%, 06/15/08 ................................... 561,250
$ 500,000 Kane County Community School District
Number 304
Geneva, GO
6.00%, 06/01/04
Insured: FGIC ..................................... $ 551,875
------------
2,440,000
------------
Massachusetts - 4.21%
500,000 Springfield, Series B, GO
5.05%, 01/15/04
Insured: MBIA ..................................... 528,125
250,000 Massachusetts State Federal Highway
Grant Anticipation Note, Series A
5.25%, 12/15/12 ................................... 270,625
------------
798,750
------------
Michigan - 4.05%
750,000 Michigan State Building Authority Revenue
Facilities Program, Series II
5.05%, 10/15/14 ................................... 768,750
------------
Missouri - 5.84%
1,000,000 Sikeston Electric Revenue
6.00%, 06/01/04
Insured: MBIA ..................................... 1,108,750
------------
Nevada - 6.92%
750,000 Clark County School District Revenue
Series B, GO
5.00%, 05/01/02
Insured: FGIC ..................................... 781,875
500,000 Las Vegas Valley
Water District Revenue, GO
5.40%, 09/01/04
Insured: AMBAC .................................... 530,000
------------
1,311,875
------------
New Jersey - 4.20%
750,000 New Jersey Health Care Facilities
Financing Authority
Dover General Hospital and Medical Center
5.60%, 07/01/02
Insured: MBIA ..................................... 797,813
------------
New York - 8.63%
500,000 Nassau County IDA
Civic Facility
5.25%, 07/01/08 ................................... 543,750
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
-------
Galaxy Municipal Bond Fund
Fund II PORTFOLIO OF INVESTMENTS (continued)
------- September 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Par Value
Value (Note 2)
----- --------
<S> <C> <C>
New York (continued)
$ 500,000 New York State Dormitory
Authority Revenues, City University System
Consolidated, Series A
5.50%, 07/01/02 ................................... $ 527,500
500,000 New York State Environmental
Facilities Corp., PCR
5.75%, 06/15/09 ................................... 566,250
------------
1,637,500
------------
Ohio - 2.75%
500,000 Franklin County Ohio
Convention Facilities Authority
Tax and Lease Revenue Anticipation Bonds
5.00%, 12/01/11
Insured: MBIA ..................................... 522,500
------------
Oklahoma - 4.20%
750,000 Oklahoma State Capital Improvement
Authority Highway,
5.00%, 06/01/05
Insured: MBIA ..................................... 797,812
------------
Pennsylvania - 4.02%
750,000 Pennsylvania State IDA
Economic Development
5.00%, 01/01/00
Insured: AMBAC .................................... 762,188
------------
Texas - 2.77%
500,000 Carrollton Farmers Branch
Independent School District, GO
5.10%, 02/15/04 ................................... 525,625
------------
Virginia - 4.25%
750,000 Virginia State Transportation Board
Transportation Contract Revenue
Route 28 Project
6.00%, 04/01/10 ................................... 805,312
------------
Washington - 5.70%
750,000 Seattle Municipal Light & Power Revenue
Series B
5.75%, 08/01/07 ................................... 807,188
250,000 Seattle Water System
5.38%, 08/01/09 ................................... 273,437
------------
1,080,625
------------
West Virginia - 4.55%
$ 500,000 West Virginia School Building Authority
Refunding, Capital Improvement
5.30%, 07/01/09
Insured: AMBAC .................................... $ 541,875
300,000 West Virginia State Housing Development
Fund Housing Finance, Series A
5.55%, 11/01/10 ................................... 321,000
------------
862,875
------------
Wisconsin - 4.68%
850,000 Milwaukee Corporate Purpose
Series A, GO
5.50%, 06/15/08 ................................... 888,250
------------
Total Municipal Bonds ............................. 18,476,325
(Cost $17,400,171) ------------
Shares
- ------
INVESTMENT COMPANY - 1.36%
258,904 Federated Tax-Exempt Obligations Fund ............. 258,904
------------
Total Investment Company .......................... 258,904
(Cost $258,904) ------------
Total Investments - 98.74% ...................................... 18,735,229
(Cost $17,659,075) ------------
Net Other Assets and Liabilities - 1.26% ........................ 238,787
------------
Net Assets - 100.00% ............................................ $ 18,974,016
=============
</TABLE>
- ------------------------------------------------
AMBAC American Municipal Bond Assurance Corp.
FGIC Financial Guaranty Insurance Corp.
FSA Financial Security Assurance 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
-------- September 30, 1998 (unaudited)
<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.................... $ 374,488,124 $ 299,615,110 $ 43,921,902 $ 148,317,070 $ 17,659,075
Repurchase agreement................... 19,916,826 7,386,373 467,268 2,813,287 --
Net unrealized appreciation
(depreciation)........................ 221,726,523 (26,568,168) 13,365,042 9,780,570 1,076,154
------------- -------------- ------------- -------------- -------------
Total investments at value......... 616,131,473 280,433,315 57,754,212 160,910,927 18,735,229
Cash................................... 114,719 -- -- 367,281 84,841
Receivable for investments sold........ -- -- -- 1,031,169 --
Receivable for shares sold............. 23,402 -- 41,674 592,073 --
Interest and dividend receivables...... 766,838 158,908 144,930 2,558,542 271,502
------------- -------------- ------------- -------------- -------------
Total Assets...................... 617,036,432 280,592,223 57,940,816 165,459,992 19,091,572
------------- -------------- ------------- -------------- -------------
LIABILITIES:
Payable for investments purchased........ 2,832,159 1,554,488 -- 2,231,851 --
Payable for shares repurchased........... 367,468 51,952 -- 134,077 --
Payable for daily variation margin
on futures contracts................... 645,770 156,665 -- -- --
Due to custodian......................... -- 4,140 325 -- --
Distributions payable.................... -- 19,017 274 7,177 108,371
Advisory fee payable (Note 4)............ 50,115 22,905 4,517 12,803 3,829
Sub-account services fee payable (Note 4) 36,763 69 10 1,739 --
Administration fee payable (Note 4)...... 150,349 68,714 13,548 38,408 5,356
------------- -------------- ------------- -------------- -------------
Total Liabilities.................. 4,082,624 1,877,950 18,674 2,426,055 117,556
------------- -------------- ------------- -------------- -------------
NET ASSETS:................................. $ 612,953,808 $ 278,714,273 $ 57,922,142 $ 163,033,937 $ 18,974,016
============= ============== ============= ============== =============
NET ASSETS consist of:
Par value (Note 3)....................... $ 20,671 $ 17,826 $ 3,931 $ 14,764 $ 1,778
Paid-in capital in excess of par value... 377,641,483 279,642,769 44,165,391 156,814,190 18,635,164
Undistributed net
investment income...................... 5,712,358 1,082,141 78,714 441,464 21,436
Accumulated net realized gain (loss) on
investments sold and futures contracts. 7,667,633 24,199,765 309,064 (4,017,051) (760,516)
Unrealized appreciation (depreciation) of
investments and futures contracts...... 221,911,663 (26,228,228) 13,365,042 9,780,570 1,076,154
------------- -------------- ------------- -------------- -------------
TOTAL NET ASSETS............................ $ 612,953,808 $ 278,714,273 $ 57,922,142 $ 163,033,937 $ 18,974,016
============= ============== ============= ============== =============
Shares of beneficial interest outstanding 20,671,337 17,825,836 3,930,512 14,764,264 1,777,548
NET ASSET VALUE,
offering and redemption price per share
(Net Assets [divided sign]
Shares Outstanding) ....... $ 29.65 $ 15.64 $ 14.74 $ 11.04 $ 10.67
============= ============== ============= ============== =============
</TABLE>
See Notes to Financial Statements.
26
<PAGE>
-------
Galaxy
Fund II STATEMENTS OF OPERATIONS
------- For the six months ended September 30, 1998 (unaudited)
<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)........................ $ 818,806 $ 311,387 $ 10,374 $ 4,143,924 $ 448,274
Dividends (Note 2)....................... 4,713,023 1,402,018 1,155,915 -- --
------------- ------------- ----------- ------------ -----------
Total Investment Income................ 5,531,829 1,713,405 1,166,289 4,143,924 448,274
------------- ------------- ----------- ------------ -----------
EXPENSES:
Investment advisory fee (Note 4)......... 323,373 178,176 27,310 65,866 22,360
Sub-account services fee (Note 4)........ 233,388 4,936 62 8,340 --
Administration fee (Note 4).............. 970,118 534,527 81,929 197,599 31,304
Trustees' fees (Note 4).................. 8,627 4,753 729 1,757 239
------------- ------------- ----------- ------------ -----------
Total expenses before reimbursement.... 1,535,506 722,392 110,030 273,562 53,903
------------- ------------- ----------- ------------ -----------
Less: reimbursement by
sub-administrator (Note 4)........... (8,627) (4,753) (729) (1,757) (239)
------------- ------------- ----------- ------------ -----------
Total expenses net of reimbursement.... 1,526,879 717,639 109,301 271,805 53,664
------------- ------------- ----------- ------------ -----------
NET INVESTMENT INCOME....................... 4,004,950 995,766 1,056,988 3,872,119 394,610
------------- ------------- ----------- ------------ -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS (Note 2):
Net realized gain on investments sold.... 3,677,743 15,070,745 583,114 701,522 99,303
Net realized loss on futures contracts... (3,142,043) (2,662,827) -- -- --
Net change in unrealized appreciation
(depreciation) on investments
and futures contracts.................. (52,679,872) (107,666,542) 1,480,695 6,547,636 184,406
------------- ------------- ----------- ------------ -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS.................. (52,144,172) (95,258,624) 2,063,809 7,249,158 283,709
------------- ------------- ----------- ------------ -----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS........... $ (48,139,222) $ (94,262,858) $ 3,120,797 $ 11,121,277 $ 678,319
============= ============= =========== ============ ===========
</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
------------------------ ------------------------
Six months ended Year ended Six months ended Year ended
September 30, 1998 March 31, September 30, 1998 March 31,
(unaudited) 1998 (unaudited) 1998
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
NET ASSETS at beginning of period......................... $ 626,739,815 $ 421,651,872 $ 399,161,589 $ 309,473,671
------------- ------------- -------------- -------------
Increase (Decrease) in net assets
resulting from operations:
Net investment income.................................. 4,004,950 7,524,790 995,766 3,545,135
Net realized gain on investments sold
and futures contracts................................ 535,700 8,934,766 12,407,918 123,203,202
Net change in unrealized appreciation
(depreciation) of investments and futures contracts.. (52,679,872) 183,848,113 (107,666,542) (3,093,193)
------------- ------------- -------------- -------------
Net increase (decrease) in net assets
resulting from operations.......................... (48,139,222) 200,307,669 (94,262,858) 123,655,144
------------- ------------- -------------- -------------
Dividends to shareholders from:
Net investment income.................................. -- (8,106,897) -- (4,299,224)
Net realized gain on investments....................... -- (24,866,874) -- (125,397,558)
Return of capital...................................... -- -- -- --
------------- ------------- -------------- -------------
Total Dividends.................................... -- (32,973,771) -- (129,696,782)
------------- ------------- -------------- -------------
Share transactions:
Net proceeds from sales of shares...................... 121,133,697 125,916,092 151,641,486 154,300,377
Issued to shareholders in reinvestment
of dividends......................................... -- 30,476,182 -- 124,421,641
Costs of shares repurchased............................ (86,780,482) (118,638,229) (177,825,944) (182,992,462)
------------- ------------- -------------- -------------
Net increase (decrease) in net assets from share
transactions 34,353,215 37,754,045 (26,184,458) 95,729,556
------------- ------------- -------------- -------------
Net increase (decrease) in net assets.............. (13,786,007) 205,087,943 (120,447,316) 89,687,918
------------- ------------- -------------- -------------
NET ASSETS at end of period (including line A)..... $ 612,953,808 $ 626,739,815 $ 278,714,273 $ 399,161,589
============= ============= ============== =============
(A) Accumulated undistributed
net investment income.............................. $ 5,712,358 $ 1,707,408 $ 1,082,141 $ 86,375
============= ============= ============== =============
OTHER INFORMATION:
Share transactions:
Sold................................................... 3,773,250 4,489,641 7,847,707 6,733,472
Issued to shareholders in reinvestment
of dividends......................................... -- 1,105,389 -- 6,874,116
Repurchased............................................ (2,735,404) (4,220,133) (9,277,004) (8,022,886)
------------- ------------- -------------- -------------
Net increase (decrease) in shares outstanding.......... 1,037,846 1,374,897 (1,429,297) 5,584,702
============= ============= ============== =============
</TABLE>
See Notes to Financial Statements.
28
<PAGE>
<TABLE>
<CAPTION>
Utility Index Fund U.S. Treasury Index Fund Municipal Bond Fund
------------------ ------------------------ -------------------
Six months ended Year ended Six months ended Year ended Six months ended Year ended
September 30, 1998 March 31, September 30, 1998 March 31, September 30, 1998 March 31,
(unaudited) 1998 (unaudited) 1998 (unaudited) 1998
----------- ---------- ------------------ ---------- ------------------ ----------
<S> <C> <C> <C> <C> <C>
$ 55,864,298 $ 45,582,419 $ 118,637,938 $ 111,312,677 $ 18,146,608 $ 19,921,203
------------- -------------- -------------- ------------- ------------- --------------
1,056,988 2,075,208 3,872,119 6,960,733 394,610 869,063
583,114 2,929,533 701,522 784,427 99,303 133,115
1,480,695 11,329,523 6,547,636 4,886,494 184,406 552,377
------------- -------------- -------------- ------------- ------------- --------------
3,120,797 16,334,264 11,121,277 12,631,654 678,319 1,554,555
------------- -------------- -------------- ------------- ------------- --------------
(978,274) (2,264,013) (3,872,119) (6,965,049) (394,610) (869,844)
-- (3,048,725) -- -- -- --
-- (269,715) -- -- -- --
------------- -------------- -------------- ------------- ------------- --------------
(978,274) (5,582,453) (3,872,119) (6,965,049) (394,610) (869,844)
------------- -------------- -------------- ------------- ------------- --------------
2,576,844 5,123,255 48,626,696 23,508,142 2,705,066 1,759,683
886,153 5,236,180 2,912,204 5,296,251 345,859 762,023
(3,547,676) (10,829,367) (14,122,059) (27,415,737) (2,507,226) (4,981,012)
------------- -------------- -------------- ------------- ------------- --------------
(84,679) (469,932) 37,416,841 1,388,656 543,699 (2,459,306)
------------- -------------- -------------- ------------- ------------- --------------
2,057,844 10,281,879 44,665,999 7,055,261 827,408 (1,774,595)
------------- -------------- -------------- ------------- ------------- --------------
$ 57,922,142 $ 55,864,298 $ 163,303,937 $ 118,367,938 $ 18,974,016 $ 18,146,608
============= ============== ============== ============= ============= ==============
$ 78,714 $ -- $ 441,464 $ 441,464 $ 21,436 $ 21,436
============= ============== ============== ============= ============= ==============
184,516 391,273 4,546,297 2,296,503 256,470 168,434
63,083 406,414 261,279 469,557 32,827 73,153
(255,751) (849,745) (1,311,256) (2,645,907) (238,459) (476,829)
------------- -------------- -------------- ------------- ------------- --------------
(8,152) (52,058) 3,496,320 120,153 50,838 (235,242)
============= ============== ============== ============= ============= ==============
</TABLE>
29
<PAGE>
-------
Galaxy Large Company Index Fund
Fund II FINANCIAL HIGHLIGHTS
------- For a Share outstanding throughout each period
<TABLE>
<CAPTION>
Six months ended Years ended March 31,
September 30, 1998 --------------------------------------------------------------
(unaudited) 1998 1997 1996 1995 1994(1)
------------------- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of period...... $ 31.92 $ 23.09 $ 20.06 $ 15.76 $14.36 $ 14.59
--------- --------- -------- -------- ------ -------
Income from Investment Operations:
Net investment income(2)............... 0.19 0.40 0.43 0.38 0.37 0.36
Net realized and unrealized gain (loss)
on investments and futures contracts. (2.46) 10.23 3.41 4.57 1.73 (0.20)
--------- --------- -------- -------- ------ -------
Total from Investment Operations... (2.27) 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 .................... (2.27) 8.83 3.03 4.30 1.40 (0.23)
--------- --------- -------- -------- ------ -------
Net Asset Value, End of period..... $ 29.65 $ 31.92 $ 23.09 $ 20.06 $15.76 $ 14.36
========= ========= ======== ======== ===== =======
Total Return....................... (7.11)%** 47.29% 19.32% 31.80% 15.07% 1.02%
Ratios/Supplemental Data:
Net assets, End of period (in 000's)..... $ 612,954 $ 626,740 $421,652 $240,689 $147,597 $143,828
Ratios to average net assets:
Net investment income including
reimbursement........................ 1.24%* 1.44% 2.19% 2.11% 2.48% 2.41%
Operating expenses including
reimbursement........................ 0.47%* 0.40% 0.40% 0.40% 0.40% 0.40%
Operating expenses excluding
reimbursement........................ 0.47%* 0.40% 0.40% 0.41% 0.41% 0.40%
Portfolio turnover rate................... 1%** 3% 11% 5% 7% 4%
</TABLE>
- --------------------------------
* Annualized
** Not annualized
(1) Audited by other auditors.
(2) Net investment income per share before reimbursement by the
sub-administrator for the six months ended September 30, 1998 (unaudited)
and the fiscal years ended March 31, 1998, 1997, 1996 and 1995 was $0.19,
$0.40, $0.43, $0.38 and $0.37, respectively.
See Notes to Financial Statements.
30
<PAGE>
-------
Galaxy Small Company Index Fund
Fund II FINANCIAL HIGHLIGHTS
------- For a Share outstanding throughout each period
<TABLE>
<CAPTION>
Six months ended Years ended March 31,
September 30, 1998 ----------------------------------------------------------------
(unaudited) 1998* 1997 1996 1995 1994(1)
------------------ ----- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of period ..... $ 20.73 $ 22.64 $ 22.30 $ 17.62 $ 17.49 $ 17.42
-------- -------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income(2)............... 0.06 0.27 0.38 0.32 0.32 0.26
Net realized and unrealized gain (loss)
on investments and futures contracts. (5.15) 7.64 1.76 5.07 0.91 0.39
-------- -------- -------- -------- -------- --------
Total from Investment Operations.. (5.09) 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 (5.09) (1.91) 0.34 4.68 0.13 0.07
-------- -------- -------- -------- -------- --------
Net Asset Value, End of period............ $ 15.64 $ 20.73 $ 22.64 $ 22.30 $ 17.62 $ 17.49
======== ======== ======== ======== ======== ========
Total Return ............................. (24.36)%*** 41.22% 9.60% 30.85% 7.60% 3.64%
Ratios/Supplemental Data:
Net assets, End of period (in 000's)...... $278,714 $399,162 $309,474 $291,724 $235,295 $255,347
Ratios to average net assets:
Net investment income including
reimbursement........................ 0.56%** 0.97% 1.59% 1.52% 1.72% 1.55%
Operating expenses including
reimbursement........................ 0.40%** 0.40% 0.40% 0.40% 0.40% 0.40%
Operating expenses excluding
reimbursement........................ 0.41%** 0.40% 0.40% 0.41% 0.40% 0.40%
Portfolio turnover rate................... 12%*** 99% 8% 14% 10% 17%
</TABLE>
- ---------------------------------
* At a Special Meeting of Shareholders of the Small Company Index Fund held
on May 9, 1997, shareholders approved a change in the Fund's target index
from the Russell Special Small Company Index to the Standard & Poor's Small
Cap 600 Stock Price Index.
** Annualized
*** Not annualized
(1) Audited by other auditors.
(2) Net investment income per share before reimbursement by the
sub-administrator for the six months ended September 30, 1998 (unaudited)
and the fiscal years ended March 31, 1998, 1997, 1996 and 1995 was $0.06,
$0.27, $0.38, $0.31 and $0.31, respectively.
See Notes to Financial Statements.
31
<PAGE>
-------
Galaxy Utility Index Fund
Fund II FINANCIAL HIGHLIGHTS
------- For a Share outstanding throughout each period
<TABLE>
<CAPTION>
Six months ended Years ended March 31,
September 30, 1998 --------------------------------------------------------------
(unaudited) 1998* 1997 1996 1995 1994(1)
------------------ ------ ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of period...... $ 14.18 $ 11.42 $ 12.03 $ 9.88 $ 9.99 $ 10.93
------- ------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income(2)............... 0.27 0.54 0.49 0.44 0.47 0.43
Net realized and unrealized gain (loss)
on investments and futures contracts. 0.54 3.71 (0.09) 2.15 (0.03) (0.93)
------- ------- ------- ------- ------- -------
Total from Investment Operations.. 0.81 4.25 0.40 2.59 0.44 (0.50)
------- ------- ------- ------- ------- -------
Less Dividends:
Dividends from net investment income... (0.25) (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................... (0.25) (1.49) (1.01) (0.44) (0.55) (0.44)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value 0.56 2.76 (0.61) 2.15 (0.11) (0.94)
------- ------- ------- ------- ------- -------
Net Asset Value, End of period............ $ 14.74 $ 14.18 $ 11.42 $ 12.03 $ 9.88 $ 9.99
======= ======= ======= ======= ======= =======
Total Return.............................. 5.82%*** 39.07% 3.46% 26.61% 4.67% 4.83%
Ratios/Supplemental Data:
Net assets, End of period (in 000's)...... $57,922 $55,864 $45,582 $56,383 $52,831 $68,445
Ratios to average net assets:
Net investment income including
reimbursement........................ 3.87%** 4.24% 3.96% 3.79% 4.62% 4.08%
Operating expenses including
reimbursement........................ 0.40%** 0.40% 0.40% 0.40% 0.40% 0.40%
Operating expenses excluding
reimbursement........................ 0.40%** 0.40% 0.40% 0.41% 0.41% 0.40%
Portfolio turnover rate................... 4%*** 72% 170% 12% 5% 19%
</TABLE>
- ------------------------------
* At a Special Meeting of Shareholders of the Utility Index Fund held on May
9, 1997, shareholders approved a change in the Fund's target index from the
Russell 1000 Utility Index to the Standard & Poor's Utilities Composite
Stock Price Index.
** Annualized
*** Not annualized
(1) Audited by other auditors.
(2) Net investment income per share before reimbursement by the
sub-administrator for the six months ended September 30, 1998 (unaudited)
and the fiscal years ended March 31, 1998, 1997, 1996 and 1995 was $0.27,
$0.54, $0.49, $0.44 and $0.47, respectively.
See Notes to Financial Statements.
32
<PAGE>
-------
Galaxy U.S. Treasury Index Fund
Fund II FINANCIAL HIGHLIGHTS
------- For a Share outstanding throughout each period
<TABLE>
<CAPTION>
Six months ended Years ended March 31,
September 30, 1998 --------------------------------------------------------------
(unaudited) 1998 1997 1996 1995 1994(1)
------------------ ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of period...... $ 10.50 $ 9.99 $ 10.24 $ 9.91 $ 10.38 $ 11.01
-------- -------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income(2)............... 0.30 0.63 0.64 0.66 0.65 0.58
Net realized and unrealized gain (loss)
on investments and futures contracts. 0.55 0.51 (0.25) 0.33 (0.29) (0.29)
-------- -------- -------- -------- -------- --------
Total from Investment Operations.. 0.85 1.14 0.39 0.99 0.36 0.29
-------- -------- -------- -------- -------- --------
Less Dividends:
Dividends from net investment income... (0.31) (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................... (0.31) (0.63) (0.64) (0.66) (0.83) (0.92)
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net asset value 0.54 0.51 (0.25) 0.33 (0.47) (0.63)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of period............ $ 11.04 $ 10.50 $ 9.99 $ 10.24 $ 9.91 $ 10.38
======== ======== ======== ======== ======== ========
Total Return ............................. 8.28%** 11.72% 3.91% 10.09% 3.81% 2.40%
Ratios/Supplemental Data:
Net assets, End of period (in 000's)...... $163,034 $118,368 $111,313 $124,944 $104,251 $138,225
Ratios to average net assets:
Net investment income including
reimbursement........................ 5.88%* 6.12% 6.31% 6.35% 6.43% 5.21%
Operating expenses including
reimbursement........................ 0.41%* 0.40% 0.40% 0.40% 0.40% 0.40%
Operating expenses excluding
reimbursement........................ 0.42%* 0.40% 0.40% 0.41% 0.41% 0.40%
Portfolio turnover rate................... 47%** 79% 39% 35% 50% 75%
</TABLE>
- --------------------------------
* Annualized
** Not annualized
(1) Audited by other auditors.
(2) Net investment income per share before reimbursement by the
sub-administrator for the six months ended September 30, 1998 (unaudited)
and the fiscal years ended March 31, 1998, 1997, 1996 and 1995 was $0.30,
$0.63, $0.64, $0.66 and $0.65, respectively.
See Notes to Financial Statements.
33
<PAGE>
-------
Galaxy Municipal Bond Fund
Fund II FINANCIAL HIGHLIGHTS
------- For a Share outstanding throughout each period
<TABLE>
<CAPTION>
Six months ended Years ended March 31,
September 30, 1998 ---------------------------------------------------------------
(unaudited) 1998 1997 1996 1995 1994(1)(2)
------------------- ---- ---- ---- ---- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of period...... $ 10.51 $ 10.15 $ 10.20 $ 9.94 $ 9.89 $ 10.00
------- ------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income(3)............... 0.23 0.47 0.47 0.46 0.46 0.43
Net realized and unrealized gain (loss)
on investments and futures contracts. 0.16 0.36 (0.05) 0.26 0.05 (0.11)
------- ------- ------- ------- ------- -------
Total from Investment Operations... 0.39 0.83 0.42 0.72 0.51 0.32
------- ------- ------- ------- ------- -------
Less Dividends:
Dividends from net investment income... (0.23) (0.47) (0.47) (0.46) (0.46) (0.43)
Dividends from net realized
capital gains ....................... -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Total Dividends.................... (0.23) (0.47) (0.47) (0.46) (0.46) (0.43)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net
asset value .......,................. 0.16 0.36 (0.05) 0.26 0.05 (0.11)
------- ------- ------- ------- ------- -------
Net Asset Value, End of period......... $ 10.67 $ 10.51 $ 10.15 $ 10.20 $ 9.94 $ 9.89
======= ======= ======= ======= ======= =======
Total Return............................. 3.79%** 8.29% 4.15% 7.36% 5.34% 3.10%**
Ratios/Supplemental Data:
Net assets, End of period (in 000's)...... $18,974 $18,147 $19,921 $22,478 $24,560 $33,352
Ratios to average net assets:
Net investment income including
reimbursement........................ 4.41%* 4.49% 4.57% 4.54% 4.72% 4.35%*
Operating expenses including
reimbursement........................ 0.60%* 0.60% 0.60% 0.60% 0.60% 0.60%*
Operating expenses excluding
reimbursement........................ 0.60%* 0.60% 0.60% 0.61% 0.63% 0.60%*
Portfolio turnover rate................... 18%** 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 six months ended September 30, 1998 (unaudited)
and the fiscal years ended March 31, 1998, 1997, 1996 and 1995 was $0.23,
$0.47, $0.47, $0.46 and $0.46, respectively.
See Notes to Financial Statements.
34
<PAGE>
-------
Galaxy
Fund II
------- NOTES TO FINANCIAL STATEMENTS (unaudited)
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.
Repurchase Agreements: Each Fund may engage in repurchase agreement
transactions with institutions that the Trust's investment advisor has
determined are creditworthy pursuant to guidelines established by the Trust's
Board of Trustees. Each repurchase agreement transaction is recorded at cost
plus accrued interest. Each Fund requires that the securities collateralizing a
repurchase agreement transaction be transferred to the Trust's custodian in a
manner that is intended to enable the Fund to obtain those securities in the
35
<PAGE>
-------
Galaxy
Fund II
------- NOTES TO FINANCIAL STATEMENTS (continued) (unaudited)
event of a counterparty default. The value of the collateral securities is
monitored daily to ensure that the value of the collateral, including accrued
interest, equals or exceeds the repurchase price. Repurchase agreement
transactions involve certain risks in the event of default or insolvency of the
counterparty, including possible delays or restrictions upon a Fund's ability to
dispose of the underlying securities, and a possible decline in the value of the
underlying securities during the period while the Fund seeks to assert its
rights.
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.
4. Investment Advisory, Administration and Distribution Agreements:
The Trust and Fleet Investment Advisors Inc. (the "Investment Advisor"), an
indirect wholly-owned subsidiary of Fleet Financial Group, Inc., are parties to
an investment advisory agreement under which the Investment Advisor 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, annual sub-account fees payable with respect to shares of the
Funds held by defined contribution plans, 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.
The Trust and Investor Services Group may enter into agreements with one or more
entities, including the Administrator and other affiliates of the Investment
Advisor, pursuant to which such entities agree to perform certain sub-account
and administrative functions ("Sub-Account Services") on a per account basis
with respect to shares of the Funds held by defined contribution plans. Such
entities are compensated by Investor Services Group for the Sub-Account Services
and in connection therewith the transfer agency fees payable by the Funds to
Investor Services Group have been increased by an amount equal to these fees.
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 Advisor 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.
Each Trustee is eligible to participate in The Galaxy Fund/The Galaxy VIP
Fund/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.
36
<PAGE>
-------
Galaxy
Fund II
------- NOTES TO FINANCIAL STATEMENTS (continued) (unaudited)
5. Securities Transactions:
The cost of purchases and the proceeds from sales of securities (excluding
short-term investments and futures contracts) for the six months ended September
30, 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........... $ -- $ -- $ 42,941,373 $ 6,660,112
Small Company Index........... -- -- 39,987,850 61,181,189
Utility Index................. -- -- 2,321,156 2,460,712
U.S. Treasury Index........... 96,652,355 60,143,072 -- --
Municipal Bond................ -- -- 3,341,431 3,204,208
</TABLE>
The aggregate cost, gross unrealized appreciation and depreciation and net
unrealized appreciation (depreciation) for all securities as computed on a
federal income tax basis at September 30, 1998 for each Fund were as follows:
<TABLE>
<CAPTION>
Cost Appreciation (Depreciation) Net
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Large Company Index .......... $394,404,950 $243,178,916 $(21,452,393) $221,726,523
Small Company Index .......... 307,001,483 43,559,653 (70,127,821) (26,568,168)
Utility Index ............... 44,389,170 14,061,585 (696,543) 13,365,042
U.S. Treasury Index .......... 151,130,357 9,827,800 (47,230) 9,780,570
Municipal Bond .............. 17,659,075 1,076,154 -- 1,076,154
</TABLE>
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 invests in securities representing a broader range
of investment alternatives.
37
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[Galaxy funds logo] 4400 Computer Drive
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FN-347 (11/98) Date of first use: December 1, 1998
Bulk Rate
U. S. Postage Paid
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