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GALAXY FUND II
LARGE COMPANY INDEX FUND
SMALL COMPANY INDEX FUND
UTILITY INDEX FUND
U.S. TREASURY INDEX FUND
SUPPLEMENT DATED DECEMBER 24, 1997 TO
PROSPECTUS DATED JULY 29, 1997
INVESTMENT OBJECTIVES AND POLICIES
The second and third paragraphs under the heading "Investment Objectives and
Policies--Small Company Index Fund" on pages 10 and 11 of the Prospectus are
amended and restated to read as follows:
"Normally, the Small Company Index Fund will hold all 600 stocks in the
S&P SmallCap 600 Index and will hold each stock in approximately the same
percentage as that stock represents in the S&P SmallCap 600 Index. From time
to time, however, when deemed advisable by Fleet, the Fund will not hold all
of the issues in the S&P SmallCap 600 Index but instead will use a
statistical technique known as "portfolio optimization". Through portfolio
optimization, each stock is considered for inclusion in the Fund based on
its contribution to the market capitalization, industry representation and
fundamental exposures of the Fund and their similarity to these financial
characteristics in the S&P SmallCap 600 Index. These fundamental exposures
include dividend yield, price-earnings multiples and average growth rates.
When utilized, the portfolio optimization program is expected to provide
an effective method of substantially duplicating the dividend income and
capital gains produced by the S&P SmallCap 600 Index. Since the Fund does
not hold every stock in the S&P SmallCap 600 Index when utilizing portfolio
optimization, it is not expected to track the S&P SmallCap 600 Index with
the same degree of accuracy as when it holds all 600 stocks in the Index,
although the Fund will seek a correlation of at least 0.95, before deduction
of operating expenses."
TAXES
The second paragraph under the heading "Taxes" on pages 15 and 16 of the
Prospectus is amended and restated to read as follows:
"Except as described in the following paragraph, dividends paid from
Fund income other than net capital gains will be taxable to you as ordinary
income. Distributions derived from net realized long-term or mid-term
capital gains will be taxable to you as long-term or mid-term capital gains,
as the case may be, regardless of how long you have held shares of a Fund.
As a general rule, your gain or loss on a sale or redemption of Fund shares
will be a long-term capital gain or loss if you have held your shares for
more than 18 months, a mid-term capital gain or loss if you have held your
shares for less than 18 months but more than 12 months, and a short-term
capital gain or loss if you have held your shares for one year or less. If
you hold shares for six months or less and during that time receive a
capital gain dividend on those shares, any loss recognized on the sale or
exchange of those shares will be treated as a long-term capital loss to the
extent of the capital gain dividend."
