<PAGE>
GALAXY FUND II
LARGE COMPANY INDEX FUND
SMALL COMPANY INDEX FUND
UTILITY INDEX FUND
U.S. TREASURY INDEX FUND
SUPPLEMENT DATED DECEMBER 11, 1998
PROSPECTUS DATED JULY 29, 1998
CHANGES IN INVESTMENT LIMITATIONS--UTILITY INDEX FUND
At a Special Meeting of Shareholders of the Utility Index Fund held on
December 11, 1998, shareholders approved a change in the sub-classification of
the Fund from a diversified company to a non-diversified company and the
elimination of certain related investment limitations so that the Fund will not
be limited from making investments in a manner that will match the performance
of the Fund's benchmark, the S&P Utilities Index. As a result, the Prospectus is
amended in the following manner:
(1) By inserting the following two sentences at the end of the paragraph
under the section entitled "Utility Index Fund" on page 3 of the
Prospectus:
The Fund also bears the risks associated with being classified as a
non-diversified investment company. See "Investment Risks."
(2) By deleting the third and fourth sentences of the second paragraph of
the section entitled "The Utility Index Fund" on page 12 of the
Prospectus.
(3) By revising Investment Limitation No. 1 under the section entitled
"INVESTMENT LIMITATIONS" on page 15 of the Prospectus to read as follows:
With the exception of the Utility Index Fund, with respect to 75% of its
total assets, a Fund will not invest more than 5% of its total assets in
the securities of any one issuer;
(4) By revising Investment Limitation No. 3 under the section entitled
"INVESTMENT LIMITATIONS" on page 15 of the Prospectus to read as follows:
With the exception of the Utility Index Fund, a Fund will not purchase
more than 10% of the voting securities of any one issuer; and
(5) By inserting the following paragraph after the sixth paragraph under the
section entitled "INVESTMENT RISKS" on pages 15-16 of the Prospectus:
Because the Fund is non-diversified, its return will be dependent upon
the performance of a smaller number of securities relative to the number
held in a diversified investment company. Consequently, the change in
the value of any one security may affect the overall value of the Fund
more than it would a diversified investment company, and thereby subject
the market-based net asset value per share of the Fund to greater
fluctuations. In addition, the Fund may be more susceptible to economic,
political and regulatory developments than a diversified investment
company with similar objectives may be.
