GALAXY VIP FUND, 497, 1998-03-12

GALAXY VIP FUND
497, 1998-03-12

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<PAGE>
THE GALAXY VIP FUND
4400 COMPUTER DRIVE
WESTBORO, MASSACHUSETTS 01581

PROSPECTUS
FEBRUARY 4, 1998

The Galaxy VIP Fund ("GALAXY VIP") is an open-end, diversified series
investment company established exclusively for the purpose of providing an
investment vehicle for variable annuity contracts and variable life insurance
policies offered by the separate accounts of various life insurance companies
("Participating Insurance Companies"). Shares of GALAXY VIP are not offered to
the general public but solely to such separate accounts ("Separate Accounts").
Shares of GALAXY VIP may be sold to and held by Separate Accounts funding
variable annuity contracts and variable life insurance policies issued by both
affiliated and unaffiliated life insurance companies. As of the date of this
Prospectus, shares of GALAXY VIP are offered only to Separate Accounts funding
variable annuity contracts issued by American Skandia Life Assurance Corporation
and its affiliated life insurance companies. GALAXY VIP currently offers eight
portfolios -- the Money Market Fund, Equity Fund, Growth and Income Fund, Small
Company Growth Fund, Columbia Real Estate Equity Fund II, Asset Allocation Fund,
High Quality Bond Fund and Columbia High Yield Fund II (collectively, the
"Funds") with investment objectives as follows. There is, of course, no
assurance that a Fund will achieve its stated objective.

The investment objective of the MONEY MARKET FUND is to seek as high a level
of current income as is consistent with liquidity and stability of principal.
The Fund invests in "money market" instruments with remaining maturities of 397
days or less, such as domestic and foreign bank certificates of deposit,
bankers' acceptances and commercial paper (including variable and floating rate
obligations) in addition to obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, and repurchase agreements
relating to such obligations.

The investment objective of the EQUITY FUND is to seek long-term growth by
investing in companies that the Fund's investment adviser believes have
above-average earnings potential. Under normal market and economic conditions,
the Fund will invest at least 75% of its total assets in common stock, preferred
stock, common stock warrants and securities convertible into common stock of
such companies.

The investment objective of the GROWTH AND INCOME FUND is to seek a
relatively high total return through long-term capital appreciation and current
income. The Fund attempts to achieve this objective by investing primarily in
common stocks of companies believed to have prospects for above-average growth
and dividends or of companies where significant fundamental changes are taking
place. Under normal market and economic conditions, the Fund will invest at
least 65% of its total assets in common stock, preferred stock, common stock
warrants and securities convertible into common stock.

The investment objective of the SMALL COMPANY GROWTH FUND is to seek capital
appreciation. The Fund attempts to achieve this objective by investing primarily
in the securities of companies with market capitalizations of $750 million or
less that the Fund's investment adviser believes have the potential for
significant capital appreciation. Under normal market and economic conditions,
the Fund will invest at least 65% of its total assets in the equity securities
of companies with market capitalizations of $750 million or less.

The investment objective of the COLUMBIA REAL ESTATE EQUITY FUND II is to
seek, with equal emphasis, capital appreciation and above-average current income
by investing primarily in the equity securities of companies in the real estate
industry. With respect to current income, the Fund seeks to provide a yield that
exceeds the composite yield of the securities in the S&P 500. Under normal
market and economic conditions, the Fund will invest at least 65% of its total
assets in the equity securities of companies principally engaged in the real
estate industry, including real estate investment trusts ("REITs").

The investment objective of the ASSET ALLOCATION FUND is to seek a high
total return by providing both a current level of income that is greater than
that produced by the popular stock market averages as well as long-term growth
in the value of the Fund's assets. The Fund attempts to achieve this objective
and at the same time reduce volatility by allocating its assets in varying
amounts among short-term obligations, common stocks, preferred stocks and bonds.

The investment objective of the HIGH QUALITY BOND FUND is to seek a high
level of current income consistent with prudent risk of capital. Under normal
market and economic conditions, the Fund will invest at least 80% of its total
assets in high quality debt obligations that are rated at the time of purchase
within the three highest rating categories assigned by a nationally recognized
statistical rating organization (a "Rating Agency"), such as Standard & Poor's
Ratings Group ("S&P") or Moody's Investors Service, Inc. ("Moody's") (or which,
if unrated, are of comparable quality), and in obligations issued or guaranteed
by the U.S. Government, its agencies or instrumentalities and other "money
market" instruments.

The primary investment objective of the COLUMBIA HIGH YIELD FUND II is to
provide shareholders with a high level of current income by investing primarily
in lower-rated fixed income securities. Capital appreciation is a secondary
objective when consistent with the objective of high current income. In
attempting to achieve this objective, the Fund generally will invest at least
65% of its total assets in high yielding fixed income securities rated BB or
lower by S&P or Ba or lower by Moody's. Such lower-rated securities are commonly
referred to as "junk bonds." INVESTMENTS OF THIS TYPE ARE SUBJECT TO GREATER
RISK OF LOSS OF PRINCIPAL AND NONPAYMENT OF INTEREST THAN ARE HIGHER-RATED
INVESTMENTS. INVESTORS SHOULD CAREFULLY CONSIDER THESE RISKS BEFORE INVESTING.
SEE "INVESTMENT OBJECTIVES AND POLICIES -- SPECIAL RISK CONSIDERATION" BELOW.

--------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
The Money Market Fund, Equity Fund, Growth and Income Fund, Small Company
Growth Fund, Asset Allocation Fund and High Quality Bond Fund are advised by
Fleet Investment Advisors Inc. The Columbia Real Estate Equity Fund II and
Columbia High Yield Fund II are advised by Columbia Management Co., an affiliate
of Fleet Investment Advisors Inc. Each of the Funds is sponsored and distributed
by First Data Distributors, Inc., which is unaffiliated with Fleet Investment
Advisors Inc., Columbia Management Co. and their parent, Fleet Financial Group,
Inc., and affiliates.

Shares of the Funds may only be purchased by the Separate Accounts of
Participating Insurance Companies for the purpose of funding variable annuity
contracts and variable life insurance policies. A particular Fund may not be
available under the variable annuity contract or variable life insurance policy
which you have chosen. The prospectus of the specific insurance product you have
chosen will indicate which Funds are available and should be read in conjunction
with this Prospectus. Inclusion in this Prospectus of a Fund which is not
available under your contract or policy is not to be considered a solicitation.

This Prospectus sets forth concisely the information about GALAXY VIP that a
prospective investor ought to know before investing and should be retained for
future reference. Certain additional information about GALAXY VIP is contained
in a Statement of Additional Information dated the same date as this Prospectus
which has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. The Statement of Additional Information as it
may be amended from time to time is available upon request and without charge by
writing to GALAXY VIP or calling the Participating Insurance Company sponsoring
the variable annuity contract or variable life insurance policy.

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., COLUMBIA MANAGEMENT CO. 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, WITH RESPECT TO THE EQUITY FUND, GROWTH AND INCOME FUND,
SMALL COMPANY GROWTH FUND, COLUMBIA REAL ESTATE EQUITY FUND II, ASSET ALLOCATION
FUND, HIGH QUALITY BOND FUND AND COLUMBIA HIGH YIELD FUND II, 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 THE PRINCIPAL AMOUNT INVESTED. THE MONEY MARKET FUND SEEKS TO MAINTAIN ITS
NET ASSET VALUE PER SHARE AT $1.00 FOR PURPOSES OF PURCHASES AND REDEMPTIONS,
ALTHOUGH THERE IS NO ASSURANCE THAT IT WILL BE ABLE TO DO SO ON A CONTINUOUS
BASIS.

2
<PAGE>
FINANCIAL HIGHLIGHTS

Except as noted below, the following financial highlights have been audited
by Coopers & Lybrand L.L.P., GALAXY VIP's independent accountants, whose
unqualified report on the financial statements containing such information for
the years ended December 31, 1996, December 31, 1995 and December 31, 1994 and
the period ended December 31, 1993 is contained in GALAXY VIP's Annual Report to
Shareholders dated December 31, 1996 and incorporated by reference into the
Statement of Additional Information. Such financial highlights should be read in
conjunction with the Funds' financial statements and notes thereto contained in
GALAXY VIP's Annual and Semi-Annual Reports to Shareholders dated December 31,
1996 and June 30, 1997, respectively, and incorporated by reference into the
Statement of Additional Information. More information about the performance of
the Funds is also contained in the Annual and Semi-Annual Reports, which may be
obtained without charge by contacting GALAXY VIP at the address provided above.
During the periods shown, the Growth and Income Fund, Small Company Growth Fund,
Columbia Real Estate Equity Fund II and Columbia High Yield Fund II were not
operational.

MONEY MARKET FUND
(Selected per share data for a Fund share outstanding throughout each of the
periods indicated)

<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
JUNE 30, 1997 DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
(UNAUDITED) 1996 1995 1994 1993(1)
----------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period................................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------------- ------------- ------------- -------
Income from Investment Operations:
Net investment income(2).............. 0.02 0.05 0.05 0.04 0.03
Net realized and unrealized gain
(loss) on investments............... -- -- -- -- --
------- ------------- ------------- ------------- -------
Total from Investment Operations:... 0.02 0.05 0.05 0.04 0.03
------- ------------- ------------- ------------- -------
Less Dividends:
Dividends from net investment
income.............................. (0.02) (0.05) (0.05) (0.04) (0.03)
Dividends from net realized capital
gains............................... -- -- -- -- --
------- ------------- ------------- ------------- -------
Total Dividends:.................... (0.02) (0.05) (0.05) (0.04) (0.03)
------- ------------- ------------- ------------- -------
Net increase (decrease) in net asset
value................................. -- -- -- -- --
------- ------------- ------------- ------------- -------
Net Asset Value, End of Period.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------------- ------------- ------------- -------
------- ------------- ------------- ------------- -------
Total Return............................ 2.41%(3) 4.91% 5.38% 3.89% 2.74%(3)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)....... $14,867 $16,295 $17,925 $13,276 $10,864
Ratios to average net assets:
Net investment income................. 4.80%(4) 4.80% 5.25% 3.85% 3.00%(4)
Operating expenses(2)................. 0.68%(4) 0.60% 0.63% 0.42% 0.13%(4)
</TABLE>

- -------------

(1) The Fund commenced operations on February 2, 1993.

(2) Net investment income per share and annualized operating expense ratios
before waiver and reimbursement of fees by the investment adviser and/or
administrator for the six months ended June 30, 1997 (unaudited), for the
fiscal years ended December 31, 1996, 1995 and 1994 and for the period
ended December 31, 1993 were $0.02 and 1.12%, $0.05 and 1.02%, $0.05 and
1.11%, $0.03 and 1.21%, and $0.01 and 2.00%, respectively.

(3) Not annualized.

(4) Annualized.

3
<PAGE>
EQUITY FUND
(Selected per share data for a Fund share outstanding throughout each of the
periods indicated)

<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
JUNE 30, 1997 DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
(UNAUDITED) 1996 1995 1994 1993(1)
----------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.... $ 15.58 $ 12.99 $ 10.40 $ 10.25 $ 10.00
------- ------------- ------------- ------------- -------------
Income from Investment Operations:
Net investment income(2).............. 0.10 0.19 0.18 0.20 0.16
Net realized and unrealized gain
(loss) on investments............... 2.67 2.59 2.59 0.15 0.25
------- ------------- ------------- ------------- -------------
Total from Investment
Operations:..................... 2.77 2.78 2.77 0.35 0.41
------- ------------- ------------- ------------- -------------
Less Dividends:
Dividends from net investment
income.............................. (0.09) (0.19) (0.18) (0.20) (0.16)
Dividends from net realized capital
gains............................... -- -- -- -- --
------- ------------- ------------- ------------- -------------
Total Dividends:.................. (0.09) (0.19) (0.18) (0.20) (0.16)
------- ------------- ------------- ------------- -------------
Net increase (decrease) in net asset
value................................. 2.68 2.59 2.59 0.15 0.25
------- ------------- ------------- ------------- -------------
Net Asset Value, End of Period.......... $ 18.26 $ 15.58 $ 12.99 $ 10.40 $ 10.25
------- ------------- ------------- ------------- -------------
------- ------------- ------------- ------------- -------------
Total Return............................ 17.80%(3) 21.49% 26.76% 3.47% 4.15%(3)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)....... $59,062 $46,242 $30,826 $19,391 $12,909
Ratios to average net assets:
Net investment income................. 1.18%(4) 1.34% 1.55% 2.06% 2.23%(4)
Operating expenses(2)................. 1.12%(4) 1.10% 1.21% 0.71% 0.20%(4)
Portfolio Turnover Rate................. 0%(3) 8% 3% 2% 5%(3)
Average Commission Rate Paid(5)......... $0.0691 $0.0676 N/A N/A N/A
</TABLE>

- -------------

(1) The Fund commenced operations on January 11, 1993.

(2) Net investment income (loss) per share and annualized operating expense
ratios before waiver and reimbursement of fees by the investment adviser
and/or administrator for the fiscal years ended December 31, 1995 and 1994
and for the period ended December 31, 1993 were $0.18 and 1.24%, $0.13 and
1.42%, and ($0.02) and 2.60%, respectively.

(3) Not annualized.

(4) Annualized.

(5) Required disclosure for fiscal years beginning on or after September 1,
1995.

4
<PAGE>
ASSET ALLOCATION FUND
(Selected per share data for a Fund share outstanding throughout each of the
periods indicated)

<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
JUNE 30, 1997 DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
(UNAUDITED) 1996 1995 1994 1993(1)
----------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.... $ 13.37 $ 12.38 $ 9.80 $ 10.33 $ 10.00
------- ------------- ------------- ------------- -------------
Income from Investment Operations:
Net investment income(2).............. 0.20 0.30 0.28 0.31 0.18
Net realized and unrealized gain
(loss) on investments............... 1.19 1.53 2.58 (0.53) 0.35
------- ------------- ------------- ------------- -------------
Total from Investment
Operations:..................... 1.39 1.83 2.86 (0.22) 0.53
------- ------------- ------------- ------------- -------------
Less Dividends:
Dividends from net investment
income.............................. (0.17) (0.30) (0.28) (0.31) (0.18)
Dividends from net realized capital
gains............................... -- (0.54) -- -- (0.02)
------- ------------- ------------- ------------- -------------
Total Dividends:.................. (0.17) (0.84) (0.28) (0.31) (0.20)
------- ------------- ------------- ------------- -------------
Net increase (decrease) in net asset
value................................. 1.22 0.99 2.58 (0.53) 0.33
------- ------------- ------------- ------------- -------------
Net Asset Value, End of Period.......... $ 14.59 $ 13.37 $ 12.38 $ 9.80 $ 10.33
------- ------------- ------------- ------------- -------------
------- ------------- ------------- ------------- -------------
Total Return............................ 10.47%(3) 14.64% 29.42% (2.15)% 5.33%(3)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)....... $30,505 $24,114 $17,246 $10,572 $11,800
Ratios to average net assets:
Net investment income................. 2.94%(4) 2.31% 2.54% 3.02% 3.01%(4)
Operating expenses(2)................. 1.19%(4) 1.33% 1.37% 0.78% 0.26%(4)
Portfolio Turnover Rate................. 27%(3) 45% 46% 28% 10%(3)
Average Commission Rate Paid(5)......... $0.0672 $0.0693 N/A N/A N/A
</TABLE>

- -------------

(1) The Fund commenced operations on February 6, 1993.

(2) Net investment income per share and annualized operating expense ratios
before waiver and reimbursement of fees by the investment adviser and/or
administrator for the six months ended June 30, 1997 (unaudited), for the
fiscal years ended December 31, 1995 and 1994 and for the period ended
December 31, 1993 were $0.19 and 1.31%, $0.26 and 1.54%, $0.22 and 1.68%,
and $0.01 and 3.11%, respectively.

(3) Not annualized.

(4) Annualized.

(5) Required disclosure for fiscal years beginning on or after September 1,
1995.

5
<PAGE>
HIGH QUALITY BOND FUND
(Selected per share data for a Fund share outstanding throughout each of the
periods indicated)

<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
JUNE 30, 1997 DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
(UNAUDITED) 1996 1995 1994 1993(1)
----------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.... $ 9.99 $ 10.37 $ 8.97 $10.11 $10.00
------- ------------- ------------- ------ ------
Income from Investment Operations:
Net investment income(2).............. 0.29 0.58 0.57 0.56 0.47
Net realized and unrealized gain
(loss) on investments............... (0.04) (0.38) 1.40 (1.14) 0.12
------- ------------- ------------- ------ ------
Total from Investment Operations:... 0.25 0.20 1.97 (0.58) 0.59
------- ------------- ------------- ------ ------
Less Dividends:
Dividends from net investment
income.............................. (0.29) (0.58) (0.57) (0.56) (0.47)
Dividends from net realized capital
gains............................... -- -- -- -- (0.01)
------- ------------- ------------- ------ ------
Total Dividends:.................... (0.29) (0.58) (0.57) (0.56) (0.48)
------- ------------- ------------- ------ ------
Net increase (decrease) in net asset
value................................. (0.04) (0.38) 1.40 (1.14) 0.11
------- ------------- ------------- ------ ------
Net Asset Value, End of Period.......... $ 9.95 $ 9.99 $ 10.37 $ 8.97 $10.11
------- ------------- ------------- ------ ------
------- ------------- ------------- ------ ------
Total Return............................ 2.55%(3) 1.57% 22.55% (5.85)% 6.04%(3)
Ratios/Supplemental Data:
Net Assets, End of Period (000's)....... $11,482 $11,814 $11,067 $8,012 $9,802
Ratios to average net assets:
Net investment income................. 5.90%(4) 5.78% 5.86% 5.90% 5.30%(4)
Operating expenses(2)................. 0.82%(4) 0.72% 0.80% 0.57% 0.22%(4)
Portfolio Turnover Rate................. 74%(3) 132% 21% 32% 7%(3)
</TABLE>

- -------------

(1) The Fund commenced operations on January 21, 1993.

(2) Net investment income per share and annualized operating expense ratios
before waiver and reimbursement of fees by the investment adviser and/or
administrator for the six months ended June 30, 1997 (unaudited), for the
fiscal years ended December 31, 1996, 1995 and 1994 and for the period
ended December 31, 1993 were $0.26 and 1.51%, $0.51 and 1.38%, $0.50 and
1.57%, $0.46 and 1.63% and $0.23 and 2.92%, respectively.

(3) Not annualized.

(4) Annualized.

6
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES

IN GENERAL

Fleet Investment Advisors Inc. ("Fleet"), the investment adviser for the
Money Market Fund, Equity Fund, Growth and Income Fund, Small Company Growth
Fund, Asset Allocation Fund and High Quality Bond Fund, and Columbia Management
Co. ("Columbia"), the investment adviser for the Columbia Real Estate Equity
Fund II and Columbia High Yield Fund II, will use their best efforts to achieve
the investment objectives of the respective Funds, although such achievement
cannot be assured. The investment objective of a Fund may not be changed without
the approval of the holders of a majority of its outstanding shares (as defined
under "Miscellaneous"). Except as noted below under "Investment Limitations," a
Fund's investment policies may be changed without shareholder approval.

INVESTMENT OBJECTIVE AND POLICIES OF THE MONEY MARKET FUND

The investment objective of the Money Market Fund is to seek as high a level
of current income as is consistent with liquidity and stability of principal.
The Fund seeks to achieve its objective by investing in "money market"
instruments that are determined by Fleet to present minimal credit risk and meet
certain rating criteria. Instruments that may be purchased by the Money Market
Fund include obligations of domestic and foreign banks (including negotiable
certificates of deposit, non-negotiable time deposits, savings deposits and
bankers' acceptances); commercial paper; corporate bonds; obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities; and
repurchase agreements issued by financial institutions such as banks and
broker/dealers. These instruments have remaining maturities of 397 days or less
(except for certain variable and floating rate notes and securities underlying
certain repurchase agreements). See "Types of Obligations and Other Investment
Information" below for information regarding additional investment policies of
the Money Market Fund.

In accordance with a rule promulgated by the Securities and Exchange
Commission (the "SEC"), the Money Market Fund will purchase only those
instruments which meet the applicable quality requirements described below. The
Money Market Fund will not purchase a security (other than a U.S. Government
security) unless the security or the issuer with respect to comparable
securities (i) is rated by at least two Rating Agencies (such as S&P, Moody's or
Fitch IBCA, Inc. ("Fitch IBCA")) in the highest category for short-term debt
securities, (ii) is rated by the only Rating Agency that has issued a rating
with respect to such security or issuer in such Rating Agency's highest category
for short-term debt, or (iii) if not rated, the security is determined to be of
comparable quality. These rating categories are determined without regard to
sub-categories and gradations. Fleet will follow applicable regulations in
determining whether a security rated by more than one Rating Agency can be
treated as being in the highest short-term rating category. See "Investment
Limitations" below.

Determinations of comparable quality shall be made in accordance with
procedures established by the Board of Trustees. Generally, if a security has
not been rated by a Rating Agency, the Fund may acquire the security if Fleet
determines that the security is of comparable quality to securities that have
received the requisite ratings. Fleet also considers other relevant information
in its evaluation of unrated short-term securities. See Appendix A to the
Statement of Additional Information for a description of the rating categories
of S&P, Moody's, Fitch IBCA and certain other Rating Agencies.

The Fund will maintain a dollar-weighted average portfolio maturity of 90
days or less in an effort to maintain a stable net asset value per share of
$1.00. The value of the Fund's portfolio securities will generally vary
inversely with changes in prevailing interest rates.

INVESTMENT OBJECTIVE AND POLICIES OF THE EQUITY FUND

The investment objective of the Equity Fund is to seek long-term growth by
investing in companies that Fleet believes have above-average earnings
potential. The Fund seeks to achieve its investment objective by investing,
under normal market and economic conditions, at least 75% of its total assets in
a broadly diversified portfolio of equity securities such as common stock,
preferred stock, common stock warrants and securities convertible into common
stock of companies that Fleet believes will increase future earnings to a level
above the average earnings of similar issuers. Such companies often retain their
earnings to finance current and future

7
<PAGE>
growth and, for this reason, generally pay little or no dividends. Equity
securities in which the Fund invests are selected based on analyses of trends in
industries and companies, earning power, growth features, quality and depth of
management, marketing and manufacturing skills, financial conditions and other
investment criteria. By investing in convertible securities, the Fund will seek
the opportunity, through the conversion feature, to participate in the capital
appreciation of the common stock into which the securities are convertible.

All debt obligations, including convertible bonds, purchased by the Fund
will be rated at the time of purchase in one of the four highest rating
categories assigned by S&P ("AAA," "AA," "A" and "BBB") or Moody's ("Aaa," "Aa,"
"A" and "Baa") or, if not rated, will be determined to be of an equivalent
quality by Fleet. Debt securities rated BBB by S&P or Baa by Moody's are
generally considered to be investment grade securities although they may have
speculative characteristics and changes in economic conditions or circumstances
are more likely to lead to a weakened capacity to make principal and interest
payments than is the case for higher grade debt obligations. See Appendix A to
the Statement of Additional Information for a description of S&P's and Moody's
rating categories.

The Equity Fund may invest up to 20% of its total assets indirectly in
foreign securities through the purchase of American Depository Receipts ("ADRs")
and European Depository Receipts ("EDRs") as described below under "Types of
Obligations and Other Investment Information -- American, European and Global
Depository Receipts." In addition, the Fund may invest in securities issued by
foreign branches of U.S. banks and foreign banks, Canadian commercial paper and
Canadian securities listed on a national securities exchange, and Europaper
(U.S. dollar-denominated commercial paper of foreign issuers). The Fund may also
write covered call options. See "Types of Obligations and Other Investment
Information -- Options and Futures Contracts" below.

As a temporary defensive measure, the Fund may invest without limitation in
cash, "money market" instruments (such as those listed under "Types of
Obligations and Other Investment Information -- Money Market Instruments" below)
and obligations issued or guaranteed by the U.S. Government, its agencies and
instrumentalities at such times and in such proportions as, in the opinion of
Fleet, prevailing market or economic conditions warrant. See "Types of
Obligations and Other Investment Information" below for information regarding
additional investment policies of the Equity Fund.

INVESTMENT OBJECTIVE AND POLICIES OF THE GROWTH AND INCOME FUND

The investment objective of the Growth and Income Fund is to seek a
relatively high total return through long-term capital appreciation and current
income. The Fund attempts to achieve this objective by investing primarily in
common stocks of companies believed to have prospects for above-average growth
and dividends or of companies where significant fundamental changes are taking
place. Under normal market and economic conditions, the Fund will invest at
least 65% of its total assets in common stock, preferred stock, common stock
warrants and securities convertible into common stock.

Stocks acquired by the Fund may include those of issuers with smaller
capitalizations. See "Investment Objective and Policies of the Small Company
Growth Fund" below for a description of the risks associated with investments in
small capitalization stocks. Investors should expect that the Fund will be more
volatile than, and may fluctuate independently of, broad stock market indexes
such as the S&P 500.

The Fund may purchase convertible securities, including convertible
preferred stock, convertible bonds or debentures, units consisting of bonds and
warrants or a combination of the features of several of these securities.
Convertible bonds purchased by the Fund will be rated BB or higher by S&P or
Fitch IBCA or Ba or higher by Moody's at the time of investment. See "Types of
Obligations and Other Investment Information -- Convertible Securities" below
for a discussion of the risks of investing in convertible bonds rated "BB" or
"Ba." The Fund may also buy and sell options and futures contracts and utilize
stock index futures contracts, options, swap agreements, indexed securities and
options on futures contracts. See "Types of Obligations and Other Investment
Information -- Options and Futures Contracts" and "Types of Obligations and
Other Investment Information -- Derivative Securities" below.

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The Fund may invest up to 20% of its total assets in foreign securities,
either directly or indirectly through ADRs, EDRs and Global Depository Receipts
("GDRs"). See "Special Risk Considerations -- Foreign Securities" and "Types of
Obligations and Other Investment Information -- American, European and Global
Depository Receipts" below.

As a temporary defensive measure, in such proportions as, in the judgment of
Fleet, prevailing market conditions warrant, the Fund may invest in: (i)
short-term "money market" instruments (such as those listed below under "Types
of Obligations and Other Investment Information -- Money Market Instruments")
rated in one of the top two rating categories by a Rating Agency, such as S&P,
Moody's or Fitch IBCA; (ii) securities issued and/or guaranteed as to payment of
principal and interest by the U.S. Government, its agencies, or
instrumentalities; and (iii) repurchase agreements. Additional information about
the types of money market instruments and U.S. Government obligations in which
the Fund is permitted to invest is contained in the Statement of Additional
Information. See Appendix A to the Statement of Additional Information for a
description of the rating categories of S&P, Moody's, Fitch IBCA and certain
other Rating Agencies. See "Types of Obligations and Other Investment
Information" below for information regarding additional investment policies of
the Growth and Income Fund.

INVESTMENT OBJECTIVE AND POLICIES OF THE SMALL COMPANY GROWTH FUND

The investment objective of the Small Company Growth Fund is to seek capital
appreciation. The Fund attempts to achieve this objective by investing primarily
in the securities of companies with market capitalizations of $750 million or
less ("Small Capitalization Securities") which Fleet believes have the potential
for significant capital appreciation.

Small Capitalization Securities in which the Fund may invest include common
stock, preferred stock, securities convertible into common stock, rights and
warrants. Under normal market and economic conditions, at least 65% of the
Fund's total assets will be invested in the equity securities of companies with
market capitalizations of $750 million or less. For temporary defensive
purposes, the Fund may also invest in corporate debt obligations. All debt
obligations purchased by the Fund will be rated at the time of purchase in one
of the four highest rating categories assigned by S&P ("AAA," "AA," "A" and
"BBB") or Moody's ("Aaa," "Aa," "A" and "Baa") or, if not rated, will be
determined to be of an equivalent quality by Fleet. See "Investment Objective
and Policy of the Equity Fund" above for a description of the risks associated
with investments in securities rated BBB by S&P or Baa by Moody's. See Appendix
A to the Statement of Additional Information for a description of S&P's and
Moody's rating categories.

The issuers of Small Capitalization Securities tend to be companies which
are smaller or newer than those listed on the New York or American Stock
Exchanges. As a result, Small Capitalization Securities are primarily traded on
the over-the-counter market, although they may also be listed for trading on the
New York or American Stock Exchanges. Because the issuers of Small
Capitalization Securities tend to be smaller or less well-established companies,
they may have limited product lines, markets or financial resources. As a
result, Small Capitalization Securities are often less marketable and may
experience a higher level of price volatility than the securities of larger or
more well-established companies.

The Fund may invest up to 20% of its total assets in foreign securities,
either directly or indirectly through ADRs, EDRs and GDRs. See "Special Risk
Considerations -- Foreign Securities" and "Types of Obligations and Other
Investment Information -- American, European and Global Depository Receipts"
below.

The Fund may also buy and sell options and futures contracts and utilize
stock index futures contracts, options, swap agreements, indexed securities and
options on futures contracts. See "Types of Obligations and Other Investment
Information -- Options and Futures Contracts" and "Types of Obligations and
Other Investment Information -- Derivative Securities" below.

As a temporary defensive measure, the Fund may invest without limitation in
cash, "money market" instruments (such as those listed under "Types of
Obligations and Other Investment Information -- Money Market Instruments" below)
and U.S. Government obligations at such times and in such proportions as, in the
opinion of Fleet, prevailing market or economic conditions warrant. See "Types
of Obligations and Other

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Investment Information" below for information regarding additional investment
policies of the Small Company Growth Fund.

INVESTMENT OBJECTIVE AND POLICIES OF THE COLUMBIA REAL ESTATE EQUITY FUND II

The investment objective of the Columbia Real Estate Equity Fund II is to
seek, with equal emphasis, capital appreciation and above-average current income
by investing primarily in the equity securities of companies in the real estate
industry. With respect to current income, the Fund seeks to provide a yield that
exceeds the composite yield of the securities in the S&P 500.

Under normal market and economic conditions, the Fund will invest at least
65% of its total assets in the equity securities of companies "principally
engaged" in the real estate industry. A company is principally engaged in the
real estate industry if at least 50% of its gross income or net profits are
attributable to the ownership, construction, management, or sale of residential,
commercial, or industrial real estate. Equity securities include common stock,
preferred stock and debt or equity securities that are convertible into common
stock. The Fund may invest without limit in real estate investment trusts
("REITs") and may invest up to 20% of its total assets in foreign companies that
are principally engaged in the real estate industry. The Fund will not invest
directly in real estate but may be subject to risks similar to those associated
with the direct ownership of real estate because of its policy of concentration
in the securities of companies in the real estate industry. See "Special Risk
Considerations -- Real Estate Securities," "Special Risk Considerations --
Foreign Securities" and "Types of Obligations and Other Investment Information
- -- REITs" below.

The Fund may also invest up to 35% of its total assets in the equity
securities of companies that are not principally engaged in the real estate
industry and in non-convertible debt securities. Columbia anticipates that
investments in companies not principally engaged in the real estate industry
will be primarily in securities of companies some of whose products and services
are related to the real estate industry. They may include manufacturers and
distributors of building supplies, financial institutions that make or service
mortgages, or companies with substantial real estate assets relative to their
stock market valuations, such as certain retailers and railroads.

The types of non-convertible debt securities in which the Fund may invest
include corporate debt securities (bonds, debentures and notes), asset-backed
securities, bank obligations, collateralized bonds, loan and mortgage
obligations, commercial paper, repurchase agreements, savings and loan
obligations and U.S. Government and agency obligations. The Fund will only
invest in debt securities which are rated at the time of purchase in one of the
four highest rating categories assigned by S&P ("AAA," "AA," "A" and "BBB") or
Moody's ("Aaa," "Aa," "A" and "Baa") or, if not rated, are determined to be of
an equivalent quality by Columbia. See "Investment Objective and Policies of the
Equity Fund" above for a description of the risks associated with investments in
debt securities rated BBB by S&P or Baa by Moody's. See Appendix A to the
Statement of Additional Information for a description of S&P's and Moody's
rating categories.

As a temporary defensive measure, the Fund may invest without limitation in
cash, prime commercial paper, high grade debt securities, securities of the U.S.
Government, its agencies and instrumentalities, high quality "money market"
instruments (such as those listed under "Types of Obligations and Other
Investment Information -- Money Market Instruments" below) and repurchase
agreements at such times and in such proportions as, in the opinion of Columbia,
prevailing market or economic conditions warrant. See "Types of Obligations and
Other Investment Information" below for information regarding additional
investment policies of the Columbia Real Estate Equity Fund II.

INVESTMENT OBJECTIVE AND POLICIES OF THE ASSET ALLOCATION FUND

The investment objective of the Asset Allocation Fund is to seek a high
total return by providing both a current level of income that is greater than
that provided by the popular stock market averages as well as long-term growth
in the value of the Fund's assets. Fleet interprets the objective to refer to
the Dow Jones Industrial Averages (of 30 companies listed on the New York Stock
Exchange) and the S&P 500. Due to the Fund's expenses, net income distributed to
shareholders may be less than that of these averages.

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The Fund seeks to achieve its investment objective and at the same time
reduce volatility by allocating its assets among short-term obligations, common
stock, preferred stock and bonds. The proportion of the Fund's assets invested
in each type of security will vary from time to time as a result of Fleet's
interpretation of economic and market conditions. However, at least 25% of the
Fund's total assets will at all times be invested in fixed income senior
securities, including debt securities and preferred stock. In selecting common
stock for purchase by the Fund, Fleet will analyze the potential for changes in
earnings and dividends for a foreseeable period. Debt securities purchased by
the Fund will be rated at the time of purchase in one of the four highest rating
categories assigned by S&P ("AAA," "AA," "A" and "BBB") or Moody's ("Aaa," "Aa,"
"A" and "Baa") (or which, if unrated, are determined by Fleet to be of
comparable quality). See "Investment Objective and Policies of the Equity Fund"
above for a description of the risks associated with investments in debt
securities rated BBB by S&P or Baa by Moody's. See Appendix A to the Statement
of Additional Information for a description of S&P's and Moody's rating
categories.

The Fund may also invest up to 20% of its total assets in foreign
securities. Such foreign investments may be made directly, by purchasing
securities issued or guaranteed by foreign corporations, banks, or governments
or their political subdivisions or instrumentalities, or by supranational banks
or other organizations, or indirectly by purchasing ADRs and EDRs. Supranational
entities include international organizations designated or supported by
governmental entities to promote economic reconstruction and development and
international banking institutions and related governmental agencies. Examples
of these include the International Bank for Reconstruction and Development
("World Bank"), the Asia Development Bank and the InterAmerican Development
Bank. Obligations of supranational banks may be supported by appropriated but
unpaid commitments of their member countries and there is no assurance that
those commitments will be undertaken or met in the future. See "Special Risk
Considerations -- Foreign Securities" and "Types of Obligations and Other
Investment Information -- American, European and Global Depository Receipts"
below. The Fund may also invest in dollar-denominated high quality debt
obligations of U.S. corporations issued outside the United States. The Fund may
write covered call options, purchase asset-backed securities and mortgage-backed
securities and enter into foreign currency exchange transactions. See "Types of
Obligations and Other Investment Information -- Options and Futures Contracts",
"Types of Obligations and Other Investment Information -- Asset-Backed
Securities," "Types of Obligations and Other Investment Information --
Mortgage-Backed Securities" and "Types of Obligations and Other Investment
Information -- Foreign Currency Exchange Transactions" below.

As a temporary defensive measure, the Fund may invest without limitation in
cash, "money market" instruments (such as those listed under "Types of
Obligations and Other Investment Information -- Money Market Instruments" below)
and obligations issued or guaranteed by the U.S. Government, its agencies and
instrumentalities at such times and in such proportions as, in the opinion of
Fleet, prevailing market and economic conditions warrant. See "Types of
Obligations and Other Investment Information" below for information regarding
additional investment policies of the Asset Allocation Fund.

INVESTMENT OBJECTIVE AND POLICIES OF THE HIGH QUALITY BOND FUND

The investment objective of the High Quality Bond Fund is to seek a high
level of current income consistent with prudent risk of capital. The Fund
invests its assets in corporate debt obligations such as bonds and debentures,
obligations convertible into common stock, "money market" instruments such as
bank obligations and commercial paper, in obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities, and in asset-backed and
mortgage-backed securities.

Under normal market and economic conditions, the Fund will invest at least
80% of its assets in high quality debt obligations that are rated, at the time
of purchase, within the three highest rating categories assigned by S&P ("AAA,"
"AA" and "A") or Moody's ("Aaa," "Aa" and "A") (or which, if unrated, are
determined by Fleet to be of comparable quality) and in obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and other
"money market" instruments such as those listed below under "Types of
Obligations and Other Investment Information -- Money Market Instruments."
Unrated securities will be determined to be of comparable quality to high
quality debt obligations if, among other things, other outstanding obligations
of the issuers of such securities are rated A or better. When, in Fleet's
opinion, a defensive investment posture is warranted, the Fund may invest
temporarily and without limitation in high quality, short-term "money market"
instruments. See Appendix A to the Statement of Additional Information for a
description of S&P's and Moody's rating categories.

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The Fund may also invest, from time to time, in obligations issued by state
and local governmental issuers ("municipal securities"). The purchase of
municipal securities may be advantageous when, as a result of prevailing
economic, regulatory or other circumstances, the performance of such securities,
on a pretax basis, is comparable to that of corporate or U.S. debt obligations.
See "Types of Obligations and Other Investment Information -- Municipal
Securities" below. The High Quality Bond Fund may enter into interest rate
futures contracts to hedge against changes in market values of fixed income
instruments that the Fund holds or intends to purchase. See "Types of
Obligations and Other Investment Information -- Options and Futures Contracts"
below. At least 65% of the Fund's total assets will be invested in
non-convertible bonds. Any common stock received through the conversion of
convertible debt obligations will be sold in an orderly manner as soon as
possible.

In addition, the Fund may acquire high quality obligations issued by
Canadian Provincial Governments, which are similar to U.S. municipal securities
except that the income derived therefrom is fully subject to U.S. federal
taxation. These instruments are denominated in U.S. dollars and have an
established over-the-counter market in the United States. The Fund may also
invest in debt obligations of supranational entities. See "Investment Objective
and Policies of the Asset Allocation Fund" above. The Fund may also invest in
dollar-denominated high quality debt obligations of U.S. corporations issued
outside the United States.

The Fund seeks to provide a current yield greater than that generally
available from a portfolio of high quality short-term obligations. The Fund's
average weighted maturity will vary from time to time depending on, among other
things, current market and economic conditions and the comparative yields on
instruments with different maturities. The Fund adjusts its average weighted
maturity and its holdings of corporate and U.S. Government debt securities in a
manner consistent with Fleet's assessment of prospective changes in interest
rates. The success of this strategy depends upon Fleet's ability to predict
changes in interest rates.

The value of the Fund's portfolio securities will generally vary inversely
with changes in prevailing interest rates. The high quality credit criteria
applied to the selection of portfolio securities are intended to reduce adverse
price changes due to credit considerations. See "Types of Obligations and Other
Investment Information" below for information regarding additional investment
policies of the High Quality Bond Fund.

INVESTMENT OBJECTIVE AND POLICIES OF THE COLUMBIA HIGH YIELD FUND II

The primary investment objective of the Columbia High Yield Fund II is to
seek to provide shareholders with a high level of current income by investing
primarily in lower-rated fixed income securities. Capital appreciation is a
secondary objective when consistent with the objective of high current income.
The Fund may invest in a broad range of fixed income securities, consisting of
corporate debt securities (bonds, debentures and notes), asset-backed
securities, bank obligations, collateralized bonds, loan and mortgage
obligations, commercial paper, preferred stock, repurchase agreements, savings
and loan obligations, and U.S. Government and agency obligations.

In attempting to achieve its investment objective, the Fund generally will
invest at least 65% of its total assets in high yielding fixed income securities
rated BB or lower by S&P or Ba or lower by Moody's. The Fund intends to invest
primarily in "upper tier" noninvestment grade securities (that is, securities
rated BB/Ba or B) and no more than 10% of the Fund's total assets will be
invested in fixed income securities rated CCC or lower by S&P or Caa or lower by
Moody's. The Fund may also invest in unrated fixed income securities when
Columbia believes the security is of comparable quality to that of securities
eligible for purchase by the Fund. Securities rated BB or less by S&P or Ba or
less by Moody's are considered to be noninvestment grade. These types of bonds
are commonly referred to as "junk bonds." They are subject to a high degree of
risk and are considered speculative by the major Rating Agencies with respect to
the issuer's ability to meet principal and interest payments. The Fund is
designed for investors who are willing to assume substantial risks of
significant fluctuations in principal value in order to achieve a high level of
current income. The Fund should represent only a portion of a balanced
investment program. See "Special Risk Considerations -- Lower-Rated Securities"
for a description of the risks of investing in lower-rated securities. See
Appendix A to the Statement of Additional Information for a description of S&P's
and Moody's rating categories.

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There are no limitations on the average maturity of the Fund's portfolio.
Securities will be selected on the basis of Columbia's assessment of interest
rate trends and the liquidity of various instruments under prevailing market
conditions. Shifting the average maturity of the Fund's portfolio in response to
anticipated changes in interest rates generally will be carried out through the
sale of securities and the purchase of different securities within the desired
maturity range. This may result in greater realized gains and losses than if the
Fund held all securities to maturity.

The Fund may invest in corporate debt securities or preferred stocks that
are convertible into or exchangeable for common stock. The Fund may acquire
common stock in the following circumstances: (i) in connection with the purchase
of a unit of securities that includes both fixed income securities and common
stock; (ii) when fixed income securities held by the Fund are converted by the
issuer into common stock; (iii) upon the exercise of warrants attached to fixed
income securities held by the Fund; and (iv) when purchased as part of a
corporate transaction in which the holders of common stock will receive newly
issued fixed income securities. Common stock acquired by the Fund in these
circumstances may be held to permit orderly disposition or to establish
long-term holding periods for federal income tax purposes.

The Fund may invest up to 20% of its total assets in fixed income securities
of foreign issuers, including foreign governments, denominated in U.S. dollars.

Special tax considerations are associated with investing in lower-rated debt
securities structured as zero coupon or pay-in-kind securities. A zero coupon
security has no cash coupon payments. Instead, the issuer sells the security at
a substantial discount from its maturity value. The interest equivalent received
by the investor from holding this security to maturity is the difference between
the maturity value and the purchase price. Pay-in-kind securities are securities
that pay interest in either cash or additional securities, at the issuer's
option, for a specified period. The price of pay-in-kind securities is expected
to reflect the market value of the underlying debt plus an amount representing
accrued interest since the last payment. Zero coupon and pay-in-kind securities
are more volatile than cash pay securities. The Fund accrues income on these
securities prior to the receipt of cash payments. The Fund intends to distribute
substantially all of its income to its shareholders to qualify for pass-through
treatment under the tax laws and may, therefore, need to use its cash reserves
to satisfy distribution requirements.

The Fund generally will not trade in securities for short-term profits but,
when circumstances warrant, it may purchase and sell securities without regard
to the length of time held. A high portfolio turnover may increase transaction
costs and may affect taxes paid by shareholders to the extent short-term or
mid-term gains are distributed.

SPECIAL RISK CONSIDERATIONS

MARKET RISK

The Equity Fund, Growth and Income Fund, Small Company Growth Fund and
Columbia Real Estate Equity Fund II invest primarily, and the Asset Allocation
Fund invests to a significant degree, in equity securities. As with other mutual
funds that invest primarily or to a significant degree in equity securities, the
Funds are subject to market risk. That is, the possibility exists that common
stocks will decline over short or even extended periods of time and both the
U.S. and certain foreign equity markets tend to be cyclical, experiencing both
periods when stock prices generally increase and periods when stock prices
generally decrease.

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INTEREST RATE RISK

To the extent that the Funds invest in fixed income securities, including
municipal securities, their holdings of such securities are sensitive to changes
in interest rates and the interest rate environment. Generally, the prices of
bonds and debt securities fluctuate inversely with interest rate changes.

CREDIT RISK

Credit risk refers to the ability of a bond issuer to meet interest and
principal payments when due. Generally, lower-rated (but higher yielding) bonds,
such as those acquired by the Columbia High Yield Fund II, are subject to
greater credit risk than higher quality (but lower yielding) bonds, such as
those acquired by the High Quality Bond Fund. See "Lower-Rated Securities"
below. The ratings of fixed income securities by S&P, Moody's and other Rating
Agencies are a generally accepted barometer of credit risk. See Appendix A to
the Statement of Additional Information for a description of the rating
categories of S&P, Moody's and certain other Rating Agencies.

FOREIGN SECURITIES

Investments in foreign securities involve higher costs for the Growth and
Income Fund, Small Company Growth Fund, Columbia Real Estate Equity Fund II,
Asset Allocation Fund and Columbia High Yield Fund II than investments in U.S.
securities, including higher transaction costs as well as the imposition in some
cases of additional taxes by foreign governments. For example, fixed commissions
on foreign stock exchanges are generally higher than the negotiated commissions
on U.S. exchanges and the Funds may be subject in some cases to withholding
and/or transfer taxes. In addition, foreign investments may include additional
risks associated with currency exchange rates, less complete financial
information about the issuers, less market liquidity, and political instability.
Future political and economic developments, the possible seizure or
nationalization of foreign holdings, the possible establishment of exchange
controls, or the adoption of other governmental restrictions, might adversely
affect the payment of dividends or principal and interest on foreign
obligations.

Although the Growth and Income Fund, Small Company Growth Fund, Columbia
Real Estate Equity Fund II and Asset Allocation Fund may invest in securities
denominated in foreign currencies, the Funds value their securities and other
assets in U.S. dollars. As a result, the net asset value of the Funds' shares
may fluctuate with U.S. dollar exchange rates as well as with price changes of
the Funds' securities in the various local markets and currencies. Thus, an
increase in the value of the U.S. dollar compared to the currencies in which the
Funds make their investments could reduce the effect of increases and magnify
the effect of decreases in the price of the Funds' securities in their local
markets. Conversely, a decrease in the value of the U.S. dollar will have the
opposite effect of magnifying the effect of increases and reducing the effect of
decreases in the prices of the Funds' securities in their local markets. In
addition to favorable and unfavorable currency exchange-rate developments, the
Funds are subject to the possible imposition of exchange control regulations or
freezes on convertibility of currency.

REAL ESTATE SECURITIES

Although the Columbia Real Estate Equity Fund II will not invest in real
estate directly, it may be subject to risks similar to those associated with the
direct ownership of real estate because of its policy of concentration in the
securities of companies in the real estate industry. These risks include
declines in the value of real estate, risks related to general, local, and
regional economic conditions, dependence on management skills and heavy cash
flow, possible lack of availability of mortgage funds, overbuilding, extended
vacancies of properties, increased competition, increases in property taxes and
operating expenses, changes in zoning laws, losses due to costs resulting from
the clean-up of environmental problems, liability to third parties for damages
resulting from environmental problems, casualty or condemnation losses, natural
disasters, limitations on rents, changes in neighborhood values and the appeal
of properties to tenants, and changes in interest rates. These risks may be more
significant to the extent the Fund's investments are concentrated in a
particular geographic region.

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In addition to these risks, equity REITs may be affected by changes in the
value of the underlying property owned by the REIT, while mortgage REITs may be
affected by the quality of any credit extended. Further, REITs are dependent
upon management skills, may not be diversified, and are subject to heavy cash
flow dependency, defaults by borrowers, and self-liquidation. In addition, a
REIT could fail to qualify for pass-through of income under the Internal Revenue
Code of 1986, as amended, (the "Code"), or fail to maintain its exemption from
registration under the Investment Company Act of 1940, as amended, (the "1940
Act"). The above factors may also adversely affect a borrower's or a lessee's
ability to meet its obligations to the REIT. If a borrower or lessee defaults, a
REIT may experience delays in enforcing its rights as a mortgagee or lessor and
may incur substantial costs associated with protecting its investments.

LOWER-RATED SECURITIES

The lower-rated but higher yielding bonds purchased by the Columbia High
Yield Fund II may be issued in connection with corporate restructurings, such as
leveraged buyouts, mergers, acquisitions, debt recapitalizations, or similar
events. In addition, high yield bonds are often issued by smaller, less
creditworthy companies or by companies with substantial debt. The securities
ratings assigned by S&P, Moody's and other Rating Agencies are based largely on
the issuer's historical financial condition and the Rating Agency's investment
analysis at the time of the rating. As a result, the rating assigned to a
security does not necessarily reflect the issuer's current financial condition,
which may be better or worse than the rating indicates. Credit ratings are only
one factor Columbia relies on in evaluating lower-rated fixed income securities.
The analysis by Columbia of a lower-rated security may also include
consideration of the issuer's experience and managerial strength, changing
financial condition, borrowing requirements or debt maturity schedules,
regulatory concerns, and responsiveness to changes in business conditions and
interest rates. Columbia also may consider relative values based on anticipated
cash flow, interest or dividend coverage, balance sheet analysis, and earnings
prospects. Because of the number of investment considerations involved in
investing in lower-rated securities, achievement of the Fund's investment
objective may be more dependent upon Columbia's credit analysis than is the case
with investing in higher quality debt securities.

The recent growth in the market for lower-rated debt securities has
paralleled a long economic expansion. Past experience, therefore, may not
provide an accurate indication of future performance of this market,
particularly during a significant economic recession. An economic downturn or
increase in interest rates is likely to have a greater negative effect on the
ability of the issuers of the Fund's securities to pay principal and interest,
meet projected business goals, and obtain additional financing. These
circumstances also may result in a higher incidence of defaults compared to
higher-rated securities. As a result, adverse changes in economic conditions and
increases in interest rates may adversely affect the market for lower-rated debt
securities, the value of such securities in the Fund's portfolio, and,
therefore, the Fund's net asset value. As a result, investment in the Fund is
more speculative than investment in a fund that invests primarily in
higher-rated debt securities.

Although the Fund intends generally to purchase lower-rated securities that
have secondary markets, these markets may be less liquid and less active than
markets for higher-rated securities. These factors may limit the ability of the
Fund to sell lower-rated securities at their expected value. Adverse publicity
and investor perceptions, whether or not based on fundamental analysis, may
decrease the values and liquidity of lower-rated debt securities, especially in
a thinly traded market.

TYPES OF OBLIGATIONS AND OTHER INVESTMENT INFORMATION

The investment methods and techniques described in this Prospectus are among
those which one or more of the Funds have the ability to utilize. Some may be
employed on a regular basis; others may not be used at all. Accordingly,
reference to any particular method or technique carries no implication that it
will be utilized or, if it is, that it will be successful.

U.S. GOVERNMENT OBLIGATIONS

Each Fund may invest in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities to the extent described above
under "Investment Objectives and Policies." Such obligations

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include U.S. Treasury securities, which differ only in their interest rates,
maturities and times of issuance: Treasury bills have initial maturities of one
year or less; Treasury notes have initial maturities of one to ten years; and
Treasury bonds generally have initial maturities of more than ten years.
Obligations of certain agencies and instrumentalities of the U.S. Government,
such as the Government National Mortgage Association ("GNMA"), are supported by
the full faith and credit of the U.S. Treasury; others, such as those of Federal
Home Loan Banks, are supported by the right of the issuer to borrow from the
Treasury; others, such as those of the Federal National Mortgage Association
("FNMA"), are supported by the discretionary authority of the U.S. Government to
purchase the agency's obligations; still others, such as those of the Student
Loan Marketing Association, are supported only by the credit of the
instrumentality. No assurance can be given that the U.S. Government would
provide financial support to U.S. Government-sponsored instrumentalities if it
is not obligated to do so by law. Some U.S. Government obligations may be issued
as variable or floating rate instruments.

Securities issued or guaranteed by the U.S. Government, its agencies and
instrumentalities have historically involved little risk of loss of principal.
However, due to fluctuations in interest rates, the market value of such
securities may vary during the period a shareholder owns shares of the Funds.

MONEY MARKET INSTRUMENTS

"Money market" instruments include bank obligations and commercial paper.

Bank obligations include bankers' acceptances, negotiable certificates of
deposit and non-negotiable time deposits issued for a definite period of time
and earning a specified return by a U.S. bank that is a member of the Federal
Reserve System or is insured by the Federal Deposit Insurance Corporation
("FDIC"), or by a savings and loan association or savings bank that is insured
by the FDIC. Bank obligations also include U.S. dollar-denominated obligations
of foreign branches of U.S. banks or of U.S. branches of foreign banks, all of
the same type as domestic bank obligations. Investments in bank obligations are
limited to the obligations of financial institutions having more than $1 billion
in total assets at the time of purchase. Investments in non-negotiable time
deposits are limited to no more than 5% of the Money Market Fund's total assets
at the time of purchase.

Domestic and foreign banks are subject to extensive but different government
regulations which may limit the amount and types of their loans and the interest
rates that may be charged. In addition, the profitability of the banking
industry is largely dependent upon the availability and cost of funds to finance
lending operations and the quality of underlying bank assets.

Investments in obligations of foreign branches of U.S. banks and of U.S.
branches of foreign banks may subject a Fund to additional investment risks,
including future political and economic developments, possible seizure or
nationalization of foreign deposits, the possible establishment of exchange
controls, or the adoption of other foreign governmental restrictions which might
adversely affect the payment of principal and interest on such obligations. In
addition, foreign branches of U.S. banks and U.S. branches of foreign banks may
be subject to less stringent reserve requirements and to different accounting,
auditing, reporting, and recordkeeping standards than those applicable to
domestic branches of U.S. banks. Investments in the obligations of U.S. branches
of foreign banks or foreign branches of U.S. banks will be made only when Fleet
or Columbia, as the case may be, believes that the credit risk with respect to
the instrument is minimal.

Commercial paper may include variable and floating rate instruments, which
are unsecured instruments that permit the indebtedness thereunder to vary.
Variable rate instruments provide for periodic adjustments in the interest rate.
Floating rate instruments provide for automatic adjustment of the interest rate
whenever some other specified interest rate changes. Some variable and floating
rate obligations are direct lending arrangements between the purchaser and the
issuer and there may be no active secondary market. However, in the case of
variable and floating rate obligations with a demand feature, a Fund may demand
payment of principal and accrued interest at a time specified in the instrument
or may resell the instrument to a third party. In the event an issuer of a
variable or floating rate obligation defaulted on its payment obligation, a Fund
might be unable to dispose of the note because of the absence of a secondary
market and could, for this or other reasons, suffer a loss to the extent of the
default. Substantial holdings of variable and floating rate instruments could
reduce portfolio liquidity. Other corporate and government obligations purchased
by the Funds may also be issued as

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<PAGE>
variable or floating rate instruments. The Funds may also purchase Rule 144A
securities. See "Investment Limitations" below for a discussion of possible
consequences to the Funds as a result of investing in Rule 144A securities.

TYPES OF MUNICIPAL SECURITIES

The two principal classifications of municipal securities which may be held
by the High Quality Bond Fund are "general obligation" securities and "revenue"
securities. General obligation securities are secured by the issuer's pledge of
its full faith, credit and taxing power for the payment of principal and
interest. Revenue securities are payable only from the revenues derived from a
particular facility or class of facilities or, in some cases, from the proceeds
of a special excise tax or other specific revenue source such as the user of the
facility being financed. Private activity bonds held by the Fund are in most
cases revenue securities and are not payable from the unrestricted revenues of
the issuer. Consequently, the credit quality of such private activity bonds is
usually directly related to the credit standing of the corporate user of the
facility involved.

The High Quality Bond Fund's portfolio may also include "moral obligation"
securities, which are normally issued by special purpose public authorities. If
the issuer of moral obligation securities is unable to meet its debt service
obligations from current revenues, it may draw on a reserve fund, the
restoration of which is a moral commitment but not a legal obligation of the
state or municipality which created the issuer. The failure by a state or
municipality to restore such a reserve fund could adversely affect the ability
of an issuer of moral obligation securities to meet its payment obligations.

REPURCHASE AND REVERSE REPURCHASE AGREEMENTS

Each Fund may purchase portfolio securities subject to the seller's
agreement to repurchase them at a mutually specified date and price ("repurchase
agreements"). Repurchase agreements will be entered into only with financial
institutions such as banks and broker/dealers which are deemed to be
creditworthy by Fleet or Columbia, as the case may be, under guidelines approved
by GALAXY VIP's Board of Trustees. No Fund will enter into repurchase agreements
with Fleet, Columbia or any of their affiliates. Securities subject to
repurchase agreements may bear maturities exceeding thirteen months. Unless a
repurchase agreement has a remaining maturity of seven days or less or may be
terminated on demand by notice of seven days or less, the repurchase agreement
will be considered an illiquid security and will be subject to each Fund's 10%
limit (15% with respect to the Growth and Income Fund, Small Company Growth
Fund, Columbia Real Estate Equity Fund II and Columbia High Yield Fund II) on
such investments described under "Investment Limitations" below.

The seller under a repurchase agreement will be required to maintain the
value of the securities which are subject to the agreement and held by a Fund at
not less than the agreed upon repurchase price. If the seller defaulted on its
repurchase obligation the Fund holding such obligation would suffer a loss to
the extent that the proceeds from a sale of the underlying securities (including
accrued interest) were less than the repurchase price (including accrued
interest) under the agreement. In the event that such a defaulting seller filed
for bankruptcy or became insolvent, disposition of such securities by the Fund
might be delayed pending court action.

Each Fund may also borrow funds for temporary purposes by selling portfolio
securities to financial institutions such as banks and broker/dealers and
agreeing to repurchase them at a mutually specified date and price ("reverse
repurchase agreements"). Reverse repurchase agreements involve the risk that the
market value of the securities sold by a Fund may decline below the repurchase
price. The Funds would pay interest on amounts obtained pursuant to a reverse
repurchase agreement.

SECURITIES LENDING

Each Fund may lend its portfolio securities to financial institutions such
as banks and broker/dealers in accordance with the investment limitations
described below. Such loans would involve risks of delay in receiving additional
collateral or in recovering the securities loaned or even loss of rights in the
collateral, should the borrower of the securities fail financially. Any
portfolio securities purchased with cash collateral would also be subject to
possible depreciation. Loans will generally be short-term, will be made only to
borrowers deemed by Fleet or Columbia, as the case may be, to be of good
standing and only when, in Fleet's or Columbia's judgment,

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<PAGE>
the income to be earned from the loan justifies the attendant risks. The Funds
currently intend to limit the lending of their portfolio securities so that, at
any given time, securities loaned by a Fund represent not more than one-third of
the value of its total assets.

INVESTMENT COMPANY SECURITIES

Each Fund except the Money Market Fund may invest in securities issued by
other investment companies which invest in high quality, short-term debt
securities and which determine their net asset value per share based on the
amortized cost or penny-rounding method. Investments in other investment
companies will cause a Fund (and, indirectly, the Fund's shareholders) to bear
proportionately the costs incurred in connection with the investment companies'
operations. Securities of other investment companies will be acquired by a Fund
within the limits prescribed by the 1940 Act. Each Fund currently intends to
limit its investments so that, as determined immediately after a securities
purchase is made: (a) not more than 5% of the value of its total assets will be
invested in the securities of any one investment company; (b) not more than 10%
of the value of its total assets will be invested in the aggregate in securities
of other investment companies as a group; (c) not more than 3% of the
outstanding voting stock of any one investment company will be owned by the
Fund; and (d) not more than 10% of the outstanding voting stock of any one
closed-end investment company will be owned in the aggregate by the Funds or any
other investment companies advised by Fleet or Columbia. Any change by the Funds
in the future with respect to their policies concerning investments in
securities issued by other investment companies will be made only in accordance
with the requirements of the 1940 Act.

REITS

The Columbia Real Estate Equity Fund II may invest without limit in REITs.
The Equity Fund, Growth and Income Fund, Small Company Growth Fund and Asset
Allocation Fund may invest up to 10% of their respective net assets in REITs.
REITs pool investors' funds for investment primarily in income-producing real
estate or real-estated related loans or interests. A REIT is not taxed on income
distributed to shareholders if it complies with several requirements relating to
its organization, ownership, assets and income, and a requirement that it
distribute to its shareholders at least 95% of its taxable income (other than
net capital gains) for each taxable year.

REITs can generally be classified as equity REITs, mortgage REITs and hybrid
REITs. Equity REITs invest the majority of their assets directly in real
property and derive their income primarily from rental and lease payments.
Equity REITs can also realize capital gains by selling properties that have
appreciated in value. Mortgage REITs make loans to commercial real estate
developers and derive their income primarily from interest payments on such
loans. Hybrid REITs combine the characteristics of both equity and mortgage
REITs. REITs may be subject to certain risks associated with the direct
ownership of real estate, including declines in the value of real estate, risks
related to general and local economic conditions, overbuilding and increased
competition, increases in property taxes and operating expenses, and variations
in rental income. Generally, increases in interest rates will decrease the value
of high yielding securities and increase the costs of obtaining financing, which
could decrease the value of the REIT's investments. In addition, equity REITs
may be affected by changes in the value of the underlying property owned by the
REITs, while mortgage REITs may be affected by the quality of credit extended.
Equity and mortgage REITs are dependent upon management skill, are not
diversified and are subject to the risks of financing projects. REITs are also
subject to heavy cash flow dependency, defaults by borrowers, self liquidation
and the possibility of failing to qualify for pass-through of income under the
Code and to maintain exemption from the 1940 Act. See "Investment Objectives and
Policies -- Special Risk Considerations -- Real Estate Securities" above.

REITs pay dividends to their shareholders based upon available funds from
operations. It is quite common for these dividends to exceed a REIT's taxable
earnings and profits resulting in the excess portion of such dividends being
designated as a return of capital. Each Fund intends to include the gross
dividends from such REITs in its periodic distributions to its shareholders and,
accordingly, a portion of the Fund's distributions may also be designated as a
return of capital.

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GUARANTEED INVESTMENT CONTRACTS

The Money Market Fund and High Quality Bond Fund may invest in guaranteed
investment contracts ("GICs") issued or guaranteed by United States insurance
companies. The High Quality Bond Fund may also enter into GICs issued or
guaranteed by Canadian insurance companies. Pursuant to such contracts, the Fund
makes cash contributions to a deposit fund of the insurance company's general
account. The insurance company then credits to the Fund payments at negotiated,
floating or fixed interest rates. A GIC is a general obligation of the issuing
insurance company and not a separate account. The purchase price paid for a GIC
becomes part of the general assets of the insurance company, and the contract is
paid from the company's general assets. The Money Market Fund will only purchase
GICs that are issued or guaranteed by insurance companies that at the time of
purchase are rated in accordance with the Fund's quality requirements as
described above under "Investment Objectives and Policies -- Investment
Objectives and Policies of the Money Market Fund." The High Quality Bond Fund
will only purchase GICs that are issued or guaranteed by insurance companies
that at the time of purchase are rated at least AA by S&P or receive a similar
high rating from a nationally recognized service which provides ratings of
insurance companies. The Funds will not purchase GICs from Participating
Insurance Companies or their affiliated life insurance companies. GICs are
considered illiquid securities and will be subject to the Funds' 10% limitation
on illiquid investments, unless there is an active and substantial secondary
market for the particular instrument and market quotations are readily
available.

BANK INVESTMENT CONTRACTS

The High Quality Bond Fund may invest in bank investment contracts ("BICs")
issued by banks that meet the quality and asset size requirements for banks
described above under "Money Market Instruments." Pursuant to BICs, cash
contributions are made to a deposit account at the bank in exchange for payments
at negotiated, floating or fixed interest rates. A BIC is a general obligation
of the issuing bank. BICs are considered illiquid securities and will be subject
to the Fund's 10% limitation on such investments, unless there is an active and
substantial secondary market for the particular instrument and market quotations
are readily available.

ASSET-BACKED SECURITIES

The Money Market Fund, Columbia Real Estate Equity Fund II, Asset Allocation
Fund, High Quality Bond Fund and Columbia High Yield Fund II may purchase
asset-backed securities, which represent a participation in, or are secured by
and payable from, a stream of payments generated by particular assets, most
often a pool of assets similar to one another. Assets generating such payments
will consist of such instruments as motor vehicle installment purchase
obligations, credit card receivables and home equity loans. Payment of principal
and interest may be guaranteed up to certain amounts and for a certain time
period by a letter of credit issued by a financial institution unaffiliated with
entities issuing the securities. The estimated life of an asset-backed security
varies with the prepayment experience with respect to the underlying debt
instruments. The rate of such prepayments, and hence the life of the
asset-backed security, will be primarily a function of current market rates,
although other economic and demographic factors will be involved. The Money
Market Fund will invest not more than 10% of its total assets in asset-backed
securities and will only purchase asset-backed securities that meet the Fund's
applicable quality requirements as described above under "Investment Objectives
and Policies -- Investment Objective and Policies of the Money Market Fund." See
"Mortgage-Backed and Asset-Backed Securities" in the Statement of Additional
Information.

MORTGAGE-BACKED SECURITIES

The Asset Allocation Fund, High Quality Bond Fund and Columbia High Yield
Fund II may invest in mortgage-backed securities (including collateralized
mortgage obligations) that represent pools of mortgage loans assembled for sale
to investors by various governmental agencies and government-related
organizations, such as the GNMA, the FNMA, and the Federal Home Loan Mortgage
Corporation. Mortgage-backed securities provide a monthly payment consisting of
interest and principal payments. Additional payment may be made out of
unscheduled repayments of principal resulting from the sale of the underlying
residential property, refinancing or foreclosure, net of fees or costs that may
be incurred. Prepayments of principal on mortgage-backed securities may tend to
increase due to refinancing of mortgages as interest rates decline. To the
extent that a Fund purchases mortgage-backed securities at a premium, mortgage
foreclosures and prepayments of

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<PAGE>
principal by mortgagors (which may be made at any time without penalty) may
result in some loss of the Fund's principal investment to the extent of the
premium paid. The yield of a Fund, should it invest in mortgage-backed
securities, may be affected by reinvestment of prepayments at higher or lower
rates than the original investment. See "Mortgage-Backed and Asset-Backed
Securities" in the Statement of Additional Information.

Other mortgage-backed securities are issued by private issuers, generally
originators of and investors in mortgage loans, including savings associations,
mortgage bankers, commercial banks, investment bankers, and special purpose
entities. These private mortgage-backed securities may be supported by U.S.
Government mortgage-backed securities or some form of non-government credit
enhancement. Mortgage-backed securities have either fixed or adjustable interest
rates. The rate of return on mortgage-backed securities may be affected by
prepayments of principal on the underlying loans, which generally increase as
interest rates decline; as a result, when interest rates decline, holders of
these securities normally do not benefit from appreciation in market value to
the same extent as holders of other non-callable debt securities. In addition,
like other debt securities, the values of mortgage-related securities, including
government and government-related mortgage pools, generally will fluctuate in
response to market interest rates.

MORTGAGE DOLLAR ROLLS

The Asset Allocation Fund, High Quality Bond Fund and Columbia High Yield
Fund II may enter into mortgage "dollar rolls" in which a Fund sells securities
for delivery in the current month and simultaneously contracts with the same
counterparty to repurchase similar (same type, coupon and maturity) but not
identical securities on a specified future date not exceeding 120 days. During
the roll period, a Fund loses the right to receive principal and interest paid
on the securities sold. However, a Fund would benefit to the extent of any
difference between the price received for the securities sold and the lower
forward price for the future purchase (often referred to as the "drop") or fee
income plus the interest earned on the cash proceeds of the securities sold
until the settlement date of the forward purchase. Unless such benefits exceed
the income, capital appreciation and gain or loss due to mortgage prepayments
that would have been realized on the securities sold as part of the mortgage
dollar roll, the use of this technique will diminish the investment performance
of a Fund compared with what such performance would have been without the use of
mortgage dollar rolls. All cash proceeds will be invested in instruments that
are permissible investments for each Fund. The Funds will hold and maintain in a
segregated account until the settlement date, cash or liquid securities in an
amount equal to the forward purchase price.

For financial reporting and tax purposes, the Funds propose to treat
mortgage dollar rolls as two separate transactions, one involving the purchase
of a security and a separate transaction involving a sale. The Funds do not
currently intend to enter into mortgage dollar rolls that are accounted for as a
financing.

Mortgage dollar rolls involve certain risks. If the broker-dealer to whom a
Fund sells the security becomes insolvent, the Fund's right to purchase or
repurchase the mortgage-related securities may be restricted and the instrument
which the Fund is required to repurchase may be worth less than an instrument
which the Fund originally held. Successful use of mortgage dollar rolls may
depend upon Fleet's or Columbia's ability to predict correctly interest rates
and mortgage prepayments. For these reasons, there is no assurance that mortgage
dollar rolls can be successfully employed.

STRIPPED OBLIGATIONS

To the extent consistent with their investment objectives, the Asset
Allocation Fund, High Quality Bond Fund and Columbia High Yield Fund II may
purchase Treasury receipts and other "stripped" securities that evidence
ownership in either the future interest payments or the future principal
payments on U.S. Government and other obligations. These participations, which
may be issued by the U.S. Government or by private issuers, such as banks and
other institutions, are issued at their "face value," and may include stripped
mortgage-backed securities ("SMBS"), which are derivative multi-class mortgage
securities. Stripped securities, particularly SMBS, may exhibit greater price
volatility than ordinary debt securities because of the manner in which their
principal and interest are returned to investors.

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SMBS are usually structured with two or more classes that receive different
proportions of the interest and principal distributions from a pool of
mortgage-backed obligations. A common type of SMBS will have one class receiving
all of the interest, while the other class will receive all of the principal.
However, in some instances, one class will receive some of the interest and most
of the principal while the other class will receive most of the interest and the
remainder of the principal. If the underlying obligations experience greater
than anticipated prepayments of principal, the Funds may fail to fully recoup
their initial investments in these securities. The market value of the class
consisting entirely of principal payments generally is extremely volatile in
response to changes in interest rates. The yields on a class of SMBS that
receives all or most of the interest are generally higher than prevailing market
yields on other mortgage-backed obligations because their cash flow patterns are
more volatile and there is a greater risk that the initial investment will not
be fully recouped. SMBS which are not issued by the U.S. Government (or a U.S.
Government agency or instrumentality) are considered illiquid. Obligations
issued by the U.S. Government may be considered liquid under guidelines
established by GALAXY VIP's Board of Trustees if they can be disposed of
promptly in the ordinary course of business at a value reasonably close to that
used in the calculation of net asset value per share. Fleet or Columbia, as the
case may be, may determine that SMBS acquired by a Fund are liquid under
guidelines established by the Board of Trustees.

OPTIONS AND FUTURES CONTRACTS

OPTIONS. Each Fund other than the Money Market Fund and High Quality Bond
Fund may engage in writing covered call options. The Growth and Income Fund,
Small Company Growth Fund, Columbia Real Estate Equity Fund II and Columbia High
Yield Fund II may also buy put options, buy call options and sell, or "write,"
secured put options on particular securities or various securities indices or
foreign currencies. A call option for a particular security gives the purchaser
of the option the right to buy, and a writer the obligation to sell, the
underlying security at the stated exercise price at any time prior to the
expiration of the option, regardless of the market price of the security. The
premium paid to the writer is the consideration for undertaking the obligations
under the options contract. A put option for a particular security gives the
purchaser the right to sell the underlying security at the stated exercise price
at any time prior to the expiration date of the option, regardless of the market
price of the security. In contrast to an option on a particular security, an
option on a securities index provides the holder with the right to make or
receive a cash settlement upon exercise of the option.

Options purchased by a Fund will not exceed 5%, and options written by a
Fund will not exceed 25%, of its net assets. Options must be listed on a
national securities exchange and issued by the Options Clearing Corporation.

Options trading is a highly specialized activity and carries greater than
ordinary investment risk. Purchasing options may result in the complete loss of
the amounts paid as premiums to the writer of the option. In writing a covered
call option, a Fund gives up the opportunity to profit from an increase in the
market price of the underlying security above the exercise price (except to the
extent the premium represents such a profit). Moreover, it will not be able to
sell the underlying security until the covered call option expires or is
exercised or a Fund closes out the option. In writing a secured put option, a
Fund assumes the risk that the market value of the security will decline below
the exercise price of the option.

FUTURES AND RELATED OPTIONS. The Growth and Income Fund, Small Company
Growth Fund, Columbia Real Estate Equity Fund II, High Quality Bond Fund and
Columbia High Yield Fund II may invest to a limited extent in futures contracts,
and the Growth and Income Fund, Small Company Growth Fund, Columbia Real Estate
Equity Fund II and Columbia High Yield Fund II may invest in options on futures
contracts in order to gain fuller exposure to movements of securities prices
pending investment, for hedging purposes or to maintain liquidity. Futures
contracts obligate a Fund, at maturity, to take or make delivery of certain
securities or the cash value of a securities index. A Fund may not purchase or
sell a futures contract (or related option) unless immediately after any such
transaction the sum of the aggregate amount of margin deposits on its existing
futures positions and the amount of premiums paid for related options is 5% or
less of its total assets (after taking into account certain technical
adjustments).

The Growth and Income Fund, Small Company Growth Fund, Columbia Real Estate
Equity Fund II and Columbia High Yield Fund II may also purchase and sell call
and put options on futures contracts traded on an

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exchange or board of trade. When a Fund purchases an option on a futures
contract, it has the right to assume a position as a purchaser or seller of a
futures contract at a specified exercise price at any time during the option
period. When a Fund sells an option on a futures contract, it becomes obligated
to purchase or sell a futures contract if the option is exercised. In
anticipation of a market advance, a Fund may purchase call options on futures
contracts as a substitute for the purchase of futures contracts to hedge against
a possible increase in the price of securities which that Fund intends to
purchase. Similarly, if the value of a Fund's portfolio securities is expected
to decline, the Fund might purchase put options or sell call options on futures
contracts rather than sell futures contracts.

Transactions in futures as a hedging device may subject the Funds to a
number of risks. Successful use of futures by a Fund are subject to Fleet's or
Columbia's ability to predict correctly movements in the direction of the
market. In addition, there may be an imperfect correlation, or no correlation at
all, between movements in the price of futures contracts and movements in the
price of the instruments being hedged. There is no assurance that a liquid
market will exist for any particular futures contract at any particular time.
Consequently, a Fund may realize a loss on a futures transaction that is not
offset by a favorable movement in the price of securities which it holds or
intends to purchase or may be unable to close a futures position in the event of
adverse price movements.

More information regarding futures contracts and related options can be
found in Appendix B to the Statement of Additional Information.

CONVERTIBLE SECURITIES

Each Fund except the Money Market Fund may from time to time, in accordance
with its investment policies, invest in convertible securities. Convertible
securities are fixed income securities which may be exchanged or converted into
a predetermined number of shares of the issuer's underlying common stock at the
option of the holder during a specified time period. Convertible securities may
take the form of convertible preferred stock, convertible bonds or debentures,
units consisting of bonds and warrants or a combination of the features of
several of these securities.

Convertible bonds and convertible preferred stocks are fixed income
securities that generally retain the investment characteristics of fixed income
securities until they have been converted but also react to movements in the
underlying equity securities. The holder is entitled to receive the fixed income
of a bond or the dividend preference of a preferred stock until the holder
elects to exercise the conversion privilege. Usable bonds are corporate bonds
that can be used in whole or in part, customarily at full face value, in lieu of
cash to purchase the issuer's common stock. When owned as part of a unit along
with warrants, which are options to buy the common stock, they function as
convertible bonds, except that the warrants generally will expire before the
bond's maturity. Convertible securities are senior to equity securities, and
therefore, have a claim to the assets of the issuer prior to the holders of
common stock in the case of liquidation. However, convertible securities are
generally subordinated to similar nonconvertible securities of the same issuer.
The interest income and dividends from convertible bonds and preferred stocks
provide a stable stream of income with generally higher yields than common
stocks, but lower than non-convertible securities of similar quality. In
selecting convertible securities for the Funds, Fleet or Columbia, as the case
may be, evaluates the investment characteristics of the convertible security as
a fixed income instrument, and the investment potential of the underlying equity
security for capital appreciation. In evaluating these matters with respect to a
particular convertible security, Fleet and Columbia consider numerous factors,
including the economic and political outlook, the value of the security relative
to other investment alternatives, trends in the determinants of the issuer's
profits, and the issuer's management capability and practices.

The Growth and Income Fund may invest in convertible bonds rated BB or
higher by S&P or Fitch IBCA, or Ba or higher by Moody's at the time of
investment. Securities rated BB by S&P or Fitch IBCA or Ba by Moody's provide
questionable protection of principal and interest in that such securities either
have speculative characteristics or are predominantly speculative with respect
to capacity to pay interest and repay principal in accordance with the terms of
the obligation. Debt obligations that are not rated, or determined to be,
investment grade are high-yield, high-risk bonds, typically subject to greater
market fluctuations, and securities in the lowest rating category may be in
danger of loss of income and principal due to an issuer's default. To a greater
extent than investment-grade bonds, the value of lower-rated bonds tends to
reflect short-term corporate, economic,

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and market developments, as well as investor perceptions of the issuer's credit
quality. In addition, lower-rated bonds may be more difficult to dispose of or
to value than high-rated, lower-yielding bonds. Fleet will attempt to reduce the
risks described above through diversification of the Fund's portfolio and by
credit analysis of each issuer, as well as by monitoring broad economic trends
and corporate and legislative developments. If a convertible bond is rated below
BB or Ba after the Fund has purchased it, the Fund is not required to eliminate
the convertible bond from its portfolio, but will consider appropriate action.
The investment characteristics of each convertible security vary widely, which
allows convertible securities to be employed for different investment
objectives. The Fund does not intend to invest in such lower-rated bonds during
the current fiscal year.

Convertible bonds acquired by the Columbia High Yield Fund II will generally
be rated BB or lower by S&P or Ba or lower by Moody's. See "Investment
Objectives and Policies -- Special Risk Considerations -- Lower-Rated
Securities" above for a description of the risks associated with investments in
such lower-rated securities.

SWAP AGREEMENTS AND INDEXED SECURITIES

The Growth and Income Fund and Small Company Growth Fund may enter into
interest rate swaps, currency swaps and other types of swap agreements such as
caps, collars and floors as a way to manage their exposure to different types of
investments. These Funds may also invest in indexed securities. The value of
indexed securities is linked to foreign currencies, interest rates, commodities,
indices or other financial indicators. Neither Fund intends to invest more than
5% of its total assets in swap agreements or indexed securities.

DERIVATIVE SECURITIES

The Funds may from time to time, in accordance with their respective
investment policies, purchase certain "derivative" securities. Derivative
securities are instruments that derive their value from the performance of
underlying assets, interest or currency exchange rates, or indices, and include,
but are not limited to, options, futures, indexed securities, swap agreements
and foreign currency exchange transactions.

Derivative securities present, to varying degrees, market risk that the
performance of the underlying assets, interest rates or indices will decline;
credit risk that the dealer or other counterparty to the transaction will fail
to pay its obligations; volatility and leveraging risk that, if interest or
exchange rates change adversely, the value of the derivative security will
decline more than the assets, rates or indices on which it is based; liquidity
risk that a Fund will be unable to sell a derivative security when it wants
because of lack of market depth or market disruption; pricing risk that the
value of a derivative security will not correlate exactly to the value of the
underlying assets, rates or indices on which it is based; and operations risk
that loss will occur as a result of inadequate systems and controls, human error
or otherwise. Some derivative securities are more complex than others, and for
those instruments that have been developed recently, data are lacking regarding
their actual performance over complete market cycles.

Fleet or Columbia, as the case may be, will evaluate the risks presented by
the derivative securities purchased by the Funds, and will determine, in
connection with its day-to-day management of the Funds, how such securities will
be used in furtherance of the Funds' investment objectives. It is possible,
however, that Fleet's or Columbia's evaluations will prove to be inaccurate or
incomplete and, even when accurate and complete, it is possible that the Funds
will, because of the risks discussed above, incur loss as a result of their
investments in derivative securities. See "Investment Objectives and Policies --
Derivative Securities" in the Statement of Additional Information for additional
information.

AMERICAN, EUROPEAN AND GLOBAL DEPOSITORY RECEIPTS

The Equity Fund, Growth and Income Fund, Small Company Growth Fund and Asset
Allocation Fund may invest in ADRs and EDRs. The Growth and Income Fund and
Small Company Growth Fund may also invest in GDRs. ADRs are receipts issued in
registered form by a U.S. bank or trust company evidencing ownership of
underlying securities issued by a foreign issuer. EDRs are receipts issued in
Europe typically by non-U.S. banks or trust companies and foreign branches of
U.S. banks that evidence ownership of foreign or U.S. securities.

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GDRs are receipts structured similarly to EDRs and are marketed globally. ADRs
may be listed on a national securities exchange or may be traded in the
over-the-counter market. EDRs are designed for use in European exchange and
over-the-counter markets. GDRs are designed for trading in non-U.S. securities
markets. ADRs, EDRs and GDRs traded in the over-the-counter market which do not
have an active or substantial secondary market will be considered illiquid and
therefore will be subject to the Funds' respective limitations with respect to
such securities. ADR prices are denominated in U.S. dollars although the
underlying securities are denominated in a foreign currency. Investments in
ADRs, EDRs and GDRs involve risks similar to those accompanying direct
investments in foreign securities. Certain of these risks are described above
under "Investment Objectives and Policies -- Special Risk Considerations --
Foreign Securities."

FOREIGN CURRENCY EXCHANGE TRANSACTIONS

Because the Growth and Income Fund, Small Company Growth Fund, Columbia Real
Estate Equity Fund II and Asset Allocation Fund may buy and sell securities and
receive interest, dividends and sale proceeds in currencies other than the U.S.
dollar, the Funds from time to time may enter into foreign currency exchange
transactions to convert the U.S. dollar to foreign currencies, to convert
foreign currencies to the U.S. dollar and to convert foreign currencies to other
foreign currencies. The Funds either enter into these transactions on a spot
(i.e. cash) basis at the spot rate prevailing in the foreign currency exchange
market, or use forward contracts to purchase or sell foreign currencies. Forward
foreign currency exchange contracts are agreements to exchange one currency for
another -- for example, to exchange a certain amount of U.S. dollars for a
certain amount of Japanese yen -- at a future date and at a specified price.
Typically, the other party to a currency exchange contract will be a commercial
bank or other financial institution.

Forward foreign currency exchange contracts also allow the Funds to hedge
the currency risk of portfolio securities denominated in a foreign currency. By
separating the asset and the currency decision, this technique permits the
assessment of the merits of a security separately from the currency risk.
Although forward foreign currency exchange contracts are of short duration,
generally between one and twelve months, the forward foreign currency exchange
contracts are rolled over in a manner consistent with a more long-term currency
decision. Because there is a risk of loss to the Funds if the other party does
not complete the transaction, forward foreign currency exchange contracts will
be entered into only with parties approved by GALAXY VIP's Board of Trustees.

The Funds may maintain "short" positions in forward foreign currency
exchange transactions, which would involve a Fund's agreeing to exchange
currency that it currently does not own for another currency -- for example, to
exchange an amount of Japanese yen that it does not own for a certain amount of
U.S. dollars -- at a future date and at a specified price in anticipation of a
decline in the value of the currency sold short relative to the currency that
the Fund has contracted to receive in the exchange. In order to ensure that the
short position is not used to achieve leverage with respect to the Fund's
investments, the Fund would establish with its custodian a segregated account
consisting of cash or liquid securities equal in value to the fluctuating market
value of the currency as to which the short position is being maintained. The
value of the cash and securities in the segregated account will be adjusted at
least daily to reflect changes in the market value of the short position. See
the Statement of Additional Information for additional information regarding
foreign currency exchange transactions.

WHEN-ISSUED, FORWARD COMMITMENT AND DELAYED SETTLEMENT TRANSACTIONS

Each Fund may purchase eligible securities on a "when-issued" basis and may
purchase or sell eligible securities on a "forward commitment" basis. Each Fund
may also purchase and sell eligible securities on a "delayed settlement" basis.
When-issued and forward commitment transactions, which involve a commitment by a
Fund to purchase or sell particular securities with payment and delivery taking
place at a future date (perhaps one or two months later), permit the Fund to
lock in a price or yield on a security it owns or intends to purchase regardless
of future changes in interest rates. Delayed settlement describes settlement of
a securities transaction in the secondary market which will occur sometime in
the future. When-issued, forward commitment and delayed settlement transactions
involve the risk, however, that the yield or price obtained in a transaction may
be less favorable than the yield or price available in the market when the
securities delivery takes place. It is expected that forward commitments,
when-issued purchases and delayed settlements will not exceed 25% of a Fund's
total assets absent unusual market conditions. In the event a Fund's forward
commitments, when-issued

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purchases and delayed settlements ever exceeded 25% of the value of its total
assets, the Fund's liquidity and the ability of Fleet or Columbia, as the case
may be, to manage the Fund might be adversely affected. The Funds will not
engage in when-issued purchases, forward commitments and delayed settlements for
speculative purposes, but only in furtherance of their respective investment
objectives. See the Statement of Additional Information for additional
information regarding when-issued, forward commitment and delayed settlement
transactions.

STAND-BY COMMITMENTS

The High Quality Bond Fund may acquire "stand-by commitments" with respect
to municipal securities held by it. Under a stand-by commitment, a dealer agrees
to purchase, at the Fund's option, specified municipal securities at a specified
price. The Fund will acquire stand-by commitments solely to facilitate portfolio
liquidity and does not intend to exercise its rights thereunder for trading
purposes. The Fund expects that stand-by commitments will generally be available
without the payment of any direct or indirect consideration. However, if
necessary or advisable, the Fund may pay for a stand-by commitment either
separately in cash or by paying a higher price for portfolio securities which
are acquired subject to the commitment (thus reducing the yield otherwise
available for the same securities). Stand-by commitments acquired by the Fund
would be valued at zero in determining the Fund's net asset value.

PORTFOLIO TURNOVER

Each Fund may sell a portfolio investment soon after its acquisition if
Fleet or Columbia, as the case may be, believes that such a disposition is
consistent with the Fund's investment objective. Portfolio investments may be
sold for a variety of reasons, such as a more favorable investment opportunity
or other circumstances bearing on the desirability of continuing to hold such
investments. The rate of portfolio turnover will not be a limiting factor in
making portfolio decisions.

INVESTMENT LIMITATIONS

The following investment limitations are matters of fundamental policy and
may not be changed with respect to any Fund without the affirmative vote of the
holders of a majority of its outstanding shares (as defined under
"Miscellaneous"). Other investment limitations that also cannot be changed
without such a vote of shareholders are contained in the Statement of Additional
Information under "Investment Objectives and Policies."

No Fund may:

1. Make loans, except that (i) each Fund may purchase or hold debt
instruments in accordance with its investment objective and policies, and
may enter into repurchase agreements with respect to portfolio securities,
and (ii) each Fund may lend portfolio securities against collateral
consisting of cash or securities which are consistent with the Fund's
permitted investments, where the value of the collateral is equal at all
times to at least 100% of the value of the securities loaned.

2. Borrow money or issue senior securities, except that each Fund may
borrow from domestic banks for temporary purposes (such as to obtain cash to
meet redemption requests when the liquidation of portfolio securities is
deemed disadvantageous by Fleet or Columbia) and then in amounts not in
excess of 10% with respect to the Money Market Fund and High Quality Bond
Fund, or 33% with respect to the Equity Fund, Growth and Income Fund, Small
Company Growth Fund, Columbia Real Estate Equity Fund II, Asset Allocation
Fund and Columbia High Yield Fund II, of the value of its total assets at
the time of such borrowing (provided that each Fund may borrow pursuant to
reverse repurchase agreements in accordance with its investment policies and
in amounts not in excess of 10% with respect to the Money Market Fund and
High Quality Bond Fund, or 33% with respect to the Equity Fund, Growth and
Income Fund, Small Company Growth Fund, Columbia Real Estate Equity Fund II,
Asset Allocation Fund and Columbia High Yield Fund II, of the value of its
total assets at the time of such borrowing); or mortgage, pledge, or
hypothecate any assets except in connection with any such borrowing and in
amounts not in

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excess of the lesser of the dollar amounts borrowed or 10% with respect to
the Money Market Fund and High Quality Bond Fund, or 33% with respect to the
Equity Fund, Growth and Income Fund, Small Company Growth Fund, Columbia
Real Estate Equity Fund II, Asset Allocation Fund and Columbia High Yield
Fund II, of the value of the Fund's total assets at the time of such
borrowing. No Fund will purchase securities while borrowings (including
reverse repurchase agreements) in excess of 5% of its total assets are
outstanding. With respect to each Fund other than the Money Market Fund, if
the securities held by a Fund should decline in value while borrowings are
outstanding, the net asset value of the Fund's outstanding shares will
decline in value by more than the proportionate decline in value suffered by
the Fund's securities.

3. Invest more than 10% (15% with respect to the Growth and Income
Fund, Small Company Growth Fund, Columbia Real Estate Equity Fund II and
Columbia High Yield Fund II) of the value of its net assets in illiquid
securities, including repurchase agreements with remaining maturities in
excess of seven days, time deposits with maturities in excess of seven days,
restricted securities, non-negotiable time deposits and other securities
which are not readily marketable.

4. Purchase securities of any one issuer, other than obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, if immediately after such purchase more than 5% of the
value of its total assets would be invested in such issuer (the "5%
Limitation"), except that up to 25% of the value of the total assets of the
Equity Fund, Growth and Income Fund, Small Company Growth Fund, Columbia
Real Estate Equity Fund II, Asset Allocation Fund, High Quality Bond Fund
and Columbia High Yield Fund II may be invested without regard to such 5%
Limitation, provided that the Money Market Fund will be able to invest more
than 5% (but no more than 25%) of its total assets in the securities of a
single issuer for a period of up to three business days after the purchase
thereof, but the Fund may not hold more than one such investment at any one
time.

5. Purchase any securities which would cause 25% or more of the value
of its total assets at the time of purchase to be invested in the securities
of one or more issuers conducting their principal business activities in the
same industry; provided, however, that (a) there is no limitation with
respect to obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, (b) wholly-owned finance companies will be
considered to be in the industries of their parents if their activities are
primarily related to financing the activities of the parents, and (c)
utilities will be classified according to their services (for example, gas,
gas transmission, electric and gas, electric and telephone each will be
considered a separate industry); and further provided that the Columbia Real
Estate Equity Fund II will invest at least 65% of its total assets in the
equity securities of companies principally engaged in the real estate
industry.

With respect to Investment Limitation No. 4 above: (a) a security is
considered to be issued by the governmental entity or entities whose assets and
revenues back the security, or, with respect to a private activity bond that is
backed only by the assets and revenues of a non-governmental user, such
non-governmental user; (b) in certain circumstances, the guarantor of a
guaranteed security may also be considered to be an issuer in connection with
such guarantee; and (c) securities issued or guaranteed by the U.S. Government,
its agencies or instrumentalities (including securities backed by the full faith
and credit of the United States) are deemed to be U.S. Government obligations.

Rule 144A under the Securities Act of 1933, as amended, (the "1933 Act")
allows for a broader institutional trading market for securities otherwise
subject to restrictions on resale to the general public. Rule 144A establishes a
"safe harbor" from the registration requirements of the 1933 Act for resale of
certain securities to qualified institutional buyers. A Fund's investment in
Rule 144A securities could have the effect of increasing the level of
illiquidity of the Fund during any period that qualified institutional buyers
were no longer interested in purchasing these securities. For purposes of the
limitations on purchases of illiquid instruments described in Investment
Limitation No. 3 above, Rule 144A securities will not be considered to be
illiquid if Fleet or Columbia, as the case may be, has determined, in accordance
with guidelines established by the Board of Trustees, that an adequate trading
market exists for such securities.

In addition to the restrictions set forth above and those set forth in the
Statement of Additional Information, each Fund may be subject to investment
restrictions imposed under state insurance laws and regulations. These
restrictions are non-fundamental and, in the event of amendments to the
applicable statutes

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<PAGE>
or regulations, each Fund will comply, without the approval of its shareholders,
with the requirements as so modified.

If a percentage limitation is satisfied at the time of investment, a later
increase in such percentage resulting from a change in the value of a Fund's
portfolio securities will not constitute a violation of the limitation.

PRICING OF SHARES

Net asset value per share of each Fund is determined as of the close of
regular trading hours on the New York Stock Exchange (the "Exchange"), currently
4:00 p. m. (Eastern Time). Net asset value per share is determined on each day
on which the Exchange is open for trading. Currently, the holidays which GALAXY
VIP observes are New Year's Day, Martin Luther King, Jr. Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. Net asset value per share of a Fund for purposes of pricing sales
and redemptions is calculated by dividing the value of all securities and other
assets belonging to the Fund, less the liabilities charged to the Fund, by the
number of outstanding shares of the Fund.

VALUATION OF THE MONEY MARKET FUND

The Money Market Fund's assets are valued based upon the amortized cost
method. Pursuant to this method, a security is valued by reference to the Fund's
acquisition cost as adjusted for amortization of premium or accretion of
discount, regardless of the impact of fluctuating interest rates on the market
value of the security. Although GALAXY VIP seeks to maintain the net asset value
per share of the Fund at $1.00, there can be no assurance that the net asset
value per share will not vary.

VALUATION OF THE EQUITY FUND, GROWTH AND INCOME FUND, SMALL COMPANY GROWTH FUND,
COLUMBIA REAL ESTATE EQUITY FUND II, ASSET ALLOCATION FUND AND COLUMBIA HIGH
YIELD FUND II

The assets in the Equity Fund, Growth and Income Fund, Small Company Growth
Fund, Columbia Real Estate Equity Fund II, Asset Allocation Fund and Columbia
High Yield Fund II which are traded on a recognized stock exchange are valued at
the last sale price on the securities exchange on which such securities are
primarily traded or at the last sale price on the national securities market.
Securities quoted on the NASD National Market System are also valued at the last
sale price. Other securities traded on over-the-counter markets are valued on
the basis of their closing over-the-counter bid prices. Securities for which
there were no transactions are valued at the average of the most recent bid and
asked prices. Investments in debt securities with remaining maturities of 60
days or less are valued based upon the amortized cost method. Restricted
securities, securities for which market quotations are not readily available,
and other assets are valued at fair value by Fleet or Columbia, as the case may
be, under the supervision of GALAXY VIP's Board of Trustees. An option is
generally valued at the last sale price or, in the absence of a last sale price,
the last offer price.

VALUATION OF THE HIGH QUALITY BOND FUND

The assets in the High Quality Bond Fund are valued for purposes of pricing
sales and redemptions by an independent pricing service ("Service") approved by
GALAXY VIP's Board of Trustees. When, in the judgment of the Service, quoted bid
prices for portfolio securities are readily available and are representative of
the bid side of the market, these investments are valued at the mean between
quoted bid prices (as obtained by the Service from dealers in such securities)
and asked prices (as calculated by the Service based upon its evaluation of the
market for such securities). Other investments are carried at fair value as
determined by the Service, based on methods which include considerations of
yields or prices of bonds of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. The
Service may also employ electronic data processing techniques and matrix systems
to determine value. Short-term securities are valued at amortized cost, which
approximates market value.

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<PAGE>
PURCHASE AND REDEMPTION OF SHARES

DISTRIBUTOR

Shares in each Fund are sold on a continuous basis by GALAXY VIP's
distributor, First Data Distributors, Inc. ("FD Distributors"), a wholly-owned
subsidiary of First Data Investor Services Group, Inc. and an indirect
wholly-owned subsidiary of First Data Corporation. FD Distributors is a
registered broker/dealer with principal offices located at 4400 Computer Drive,
Westboro, Massachusetts 01581.

PURCHASE AND REDEMPTION OF SHARES

Investors may not purchase or redeem shares of the Funds directly, but only
through variable annuity contracts and variable life insurance policies offered
through the Separate Accounts of Participating Insurance Companies. You should
refer to the prospectus of the Participating Insurance Company's Separate
Account for information on how to purchase a variable annuity contract or
variable life insurance policy, how to select specific Funds of GALAXY VIP as
investment options for your contract or policy and how to redeem monies from
GALAXY VIP.

The Separate Accounts of the Participating Insurance Companies place orders
to purchase and redeem shares of the Funds based on, among other things, the
amount of premium payments to be invested and the amount of surrender and
transfer requests (as defined in the prospectus describing the variable annuity
contracts and variable life insurance policies issued by the Participating
Insurance Companies) to be effected on that day pursuant to variable annuity
contracts and variable life insurance policies. Orders received by GALAXY VIP
are effected on days on which the Exchange is open for trading. Orders for the
purchase of shares of a Fund are effected at the net asset value per share next
calculated after an order is received in good order by the Fund. Redemptions are
effected at the net asset value per share next calculated after receipt of a
redemption request in good order by a Fund. Payment for redemptions will be made
by the Funds within seven days after the request is received. GALAXY VIP may
suspend the right of redemption under certain extraordinary circumstances in
accordance with the rules of the SEC.

The Funds do not assess any fees, either when they sell or redeem their
shares. Surrender charges, mortality and expense risk fees and other charges may
be assessed by Participating Insurance Companies under the variable annuity
contracts or variable life insurance policies. These fees should be described in
the Participating Insurance Companies' prospectuses.

Shares of the Funds may be sold to and held by Separate Accounts that fund
variable annuity and variable life insurance contracts issued by both affiliated
and unaffiliated Participating Insurance Companies. As of the date of this
Prospectus, shares of GALAXY VIP are offered only to Separate Accounts funding
variable annuity contracts issued by American Skandia Life Assurance
Corporation, an indirect wholly-owned subsidiary of Skandia Insurance Company,
Ltd., and its affiliated life insurance companies. GALAXY VIP currently does not
foresee any disadvantages to the holders of variable annuity contracts and
variable life insurance policies of affiliated and unaffiliated Participating
Insurance Companies arising from the fact that interests of the holders of
variable annuity contracts and variable life insurance policies may differ due
to differences of tax treatment or other considerations or due to conflicts
between the affiliated or unaffiliated Participating Insurance Companies.
Nevertheless, the Trustees will monitor events to seek to identify any material
irreconcilable conflicts which may possibly arise and to determine what action,
if any, should be taken in response to such conflicts. Should a material
unreconcilable conflict arise between the holders of variable annuity contracts
and variable life insurance policies of affiliated or unaffiliated Participating
Insurance Companies, the Participating Insurance Companies may be required to
withdraw the assets allocable to some or all of the Separate Accounts from the
Funds. Any such withdrawal could disrupt orderly portfolio management to the
potential detriment of such holders. The variable annuity contracts and variable
life insurance policies are described in the separate prospectuses issued by the
Participating Insurance Companies. GALAXY VIP assumes no responsibility for such
prospectuses.

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DIVIDENDS AND DISTRIBUTIONS

Each Fund expects to distribute substantially all of its net investment
income and capital gains each year. Dividends for the Money Market Fund, High
Quality Bond Fund and Columbia High Yield Fund II are declared daily and paid
monthly. Dividends for the Equity Fund, Growth and Income Fund, Small Company
Growth Fund, Columbia Real Estate Equity Fund II and Asset Allocation Fund are
declared and paid quarterly. Net capital gains, if any, will be distributed at
least annually. All dividends and capital gain distributions will be
automatically reinvested in additional shares of a Fund at the net asset value
of such shares on the payment date.

TAXES

Each of the Money Market Fund, Equity Fund, Asset Allocation Fund and High
Quality Bond Fund qualified during its last taxable year and intends to continue
to qualify, and each of the Growth and Income Fund, Small Company Growth Fund,
Columbia Real Estate Equity Fund II and Columbia High Yield Fund II intends to
qualify, as a "regulated investment company" under the Code, which would
generally relieve a Fund of liability for federal income taxes to the extent the
Fund's earnings are distributed in accordance with the Code. In order to so
qualify, a Fund must comply with certain distribution, diversification, source
of income and other applicable requirements. If for any taxable year a Fund does
not qualify for the special federal tax treatment afforded regulated investment
companies, all of the Fund's taxable income would be subject to tax at regular
corporate rates without any deduction for distributions to shareholders. In such
event, a Fund's distributions to segregated asset accounts holding shares of the
Fund would be taxable as ordinary income to the extent of the Fund's current and
accumulated earnings and profits. A failure of a Fund to qualify as a regulated
investment company also could result in the loss of the tax favored status of
variable annuity contracts and variable life insurance policies based on a
segregated asset account which invests in the Fund.

Under Code Section 817(h), a segregated asset account upon which a variable
annuity contract or variable life insurance policy is based must be "adequately
diversified." A segregated asset account will be adequately diversified if it
complies with certain diversification tests set forth in Treasury regulations.
If a regulated investment company satisfies certain conditions relating to the
ownership of its shares, a segregated asset account investing in such investment
company will be entitled to treat its pro rata portion of each asset of the
investment company as an asset for purposes of these diversification tests. Each
Fund intends to meet these ownership conditions and to comply with the
diversification tests noted above. Accordingly, a segregated asset account
investing solely in shares of a Fund will be adequately diversified. However, a
failure of a Fund to meet such conditions and to comply with such tests could
cause the owners of variable annuity contracts and variable life insurance
policies based on such account to recognize ordinary income each year in the
amount of any net appreciation of such contract or policy during the year
(including the annual cost of life insurance, if any, provided under such
policy).

Provided that a Fund and a segregated asset account investing in the Fund
satisfy the above requirements, any distributions from the Fund to such account
will be exempt from current federal income taxation to the extent that such
distributions accumulate in a variable annuity contract or a variable life
insurance contract.

Persons investing in a variable annuity or variable life insurance contract
offered by a segregated asset account investing in a Fund should refer to the
prospectus with respect to such contract for further tax information.

The foregoing discussion of federal income tax consequences is based on tax
laws and regulations in effect on the date of this Prospectus and is subject to
change by legislative or administrative action. Each prospective investor should
consult his or her own tax adviser as to the tax consequences of investments in
the Funds.

MANAGEMENT OF GALAXY VIP

The business and affairs of GALAXY VIP are managed under the direction of
GALAXY VIP's Board of Trustees. The Board of Trustees approves all significant
agreements between GALAXY VIP and persons or

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<PAGE>
companies furnishing services to GALAXY VIP. The day-to-day operations of GALAXY
VIP are delegated to its elected officers, subject to the investment objectives
and policies of GALAXY VIP, the general supervision of the Board of Trustees and
applicable state law. GALAXY VIP's Statement of Additional Information contains
the names of and general background information concerning the Trustees.

INVESTMENT ADVISERS

Fleet, with principal offices at 75 State Street, Boston, Massachusetts
02109-1810, serves as the investment adviser to the Money Market Fund, Equity
Fund, Growth and Income Fund, Small Company Growth Fund, Asset Allocation Fund
and High Quality Bond Fund. Fleet, which commenced operations in 1984, also
provides investment management and advisory services to individual and
institutional clients and manages the investment portfolios of The Galaxy Fund
and Galaxy Fund II. Columbia, with principal offices at 1300 S.W. Sixth Avenue,
P.O. Box 1350, Portland, Oregon 97207-1350, serves as investment adviser to the
Columbia Real Estate Equity Fund II and Columbia High Yield Fund II. Columbia,
which commenced operations in 1969, also manages the investment portfolios of
Columbia Funds. Fleet and Columbia are indirect wholly-owned subsidiaries of
Fleet Financial Group, Inc., a registered bank holding company with total assets
of approximately $85 billion at December 31, 1996.

Subject to the general supervision of GALAXY VIP's Board of Trustees and in
accordance with the Funds' respective investment policies, Fleet and Columbia
manage the respective Funds, make decisions with respect to and place orders for
all purchases and sales of their portfolio securities and maintain related
records.

Harold A. Mackinney, Jr., Brendan Henebry, Stephen D. Barbaro, Donald Jones
and Marie M. Schofield are the portfolio managers of the Equity Fund, Growth and
Income Fund, Small Company Growth Fund, Asset Allocation Fund and High Quality
Bond Fund, respectively. Each portfolio manager is primarily responsible for the
day-to-day management of the respective Fund's investment portfolio. Messrs.
Mackinney and Jones have served as the respective portfolio managers of the
Equity Fund and Asset Allocation Fund since commencement of each Fund's
operations. Mr. Mackinney is Chairman of the Board of Fleet and has been engaged
in providing investment management services on behalf of Fleet and/or its
affiliates since 1962. Mr. Henebry has been associated with Fleet as a portfolio
manager since 1995 and currently serves as Vice President. Prior to joining
Fleet, Mr. Henebry was associated with Shawmut Bank where he served as Vice
President and managed the Growth and Income Equity Management Group. Mr.
Barbaro, a Vice President and Senior Portfolio Manager, has been with Fleet and
its predecessors since 1976. Mr. Jones has been associated with Fleet as a
portfolio manager since 1988 and currently serves as Vice President. Ms.
Schofield, who became the portfolio manager of the High Quality Bond Fund on
March 1, 1996, is a Vice President, has been with Fleet since 1991 and has been
engaged in providing investment management services for over 20 years.

David W. Jellison and Jeffrey L. Rippey are the portfolio managers of the
Columbia Real Estate Equity Fund II and Columbia High Yield Fund II,
respectively. Each portfolio manager is primarily responsible for the day-to-day
management of the respective Fund's investment portfolio. Mr. Jellison is a Vice
President of Columbia and a Chartered Financial Analyst. Prior to joining
Columbia in 1992, Mr. Jellison was a Senior Research Associate for RCM Capital
Management. Mr. Rippey has been associated with Columbia since 1981 and
currently serves as Vice President. Mr. Rippey is a Chartered Financial Analyst.

For the services provided and expenses assumed with respect to the Money
Market Fund, Equity Fund, Growth and Income Fund, Small Company Growth Fund,
Asset Allocation Fund and High Quality Bond Fund, Fleet is entitled to receive
advisory fees, computed daily and paid monthly, at the annual rate of .40% of
the average daily net assets of the Money Market Fund, at the annual rate of
.75% of the average daily net assets of the Equity Fund, Growth and Income Fund,
Small Company Growth Fund and Asset Allocation Fund, respectively, and at the
annual rate of .55% of the average daily net assets of the High Quality Bond
Fund. For the services provided and expenses assumed with respect to the
Columbia Real Estate Equity Fund II and Columbia High Yield Fund II, Columbia is
entitled to receive advisory fees, computed daily and paid monthly, at the
annual rate of .75% of the average daily net assets of the Columbia Real Estate
Equity Fund II and at the annual rate of .60% of the average daily net assets of
the Columbia High Yield Fund II.

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Fleet and Columbia may from time to time, in their discretion, waive
advisory fees payable by the Funds in order to help maintain a competitive
expense ratio and may from time to time allocate a portion of their advisory
fees to subsidiaries of Fleet Financial Group, Inc. in consideration for
administrative and other services which they provide to beneficial shareholders.
Fleet is currently waiving a portion of the advisory fees payable to it by the
Money Market Fund and High Quality Bond Fund, but Fleet may in its discretion
revise or discontinue this waiver at any time. For the fiscal year ended
December 31, 1996, Fleet received advisory fees (after fee waivers) at the
effective rates of 0.15% of the Money Market Fund's average daily net assets,
0.75% of the Equity Fund's average daily net assets, 0.75% of the Asset
Allocation Fund's average daily net assets and 0.15% of the High Quality Bond
Fund's average daily net assets, respectively.

Fleet and Columbia are authorized to allocate purchase and sale orders for
portfolio securities to certain financial institutions, including, to the extent
permitted by law or order of the SEC, financial institutions that are affiliated
with Fleet or Columbia or that have sold shares of the Funds, if Fleet or
Columbia, as the case may be, believes that the quality of the transaction and
the commission are comparable to what they would be with other qualified
brokerage firms.

AUTHORITY TO ACT AS INVESTMENT ADVISER

Banking laws and regulations currently prohibit a bank holding company
registered under the Bank Holding Company Act of 1956, as amended, or any bank
or non-bank affiliate thereof from sponsoring, organizing, controlling or
distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibit banks generally
from issuing, underwriting, selling or distributing securities such as shares of
the Funds, but do not prohibit such a bank holding company or its affiliates or
banks generally from acting as investment adviser, transfer agent or custodian
to such an investment company or from purchasing shares of such a company as
agent for and upon the order of customers. Fleet, Columbia and the Funds'
custodian are subject to such banking laws and regulations. Should legislative,
judicial, or administrative action prohibit or restrict the activities of such
companies in connection with their services to the Funds, GALAXY VIP might be
required to alter materially or discontinue its arrangements with such companies
and change its method of operation. It is anticipated, however, that any
resulting change in the Funds' method of operation would not affect a Fund's net
asset value per share or result in financial losses to any shareholder.

ADMINISTRATOR

First Data Investor Services Group, Inc. ("Investor Services Group"), a
wholly-owned subsidiary of First Data Corporation, is the Funds' administrator.
Investor Services Group's offices are located at 4400 Computer Drive, Westboro,
Massachusetts 01581.

Investor Services Group generally assists the Funds in their administration
and operation. Investor Services Group also serves as administrator to the
portfolios of The Galaxy Fund and Galaxy Fund II. For the services provided to
the Funds, Investor Services Group is entitled to receive administration fees,
computed daily and paid monthly, at the annual rate of .085% of the first $1
billion of the combined average daily net assets of the Funds, and declining
percentages of assets in excess of $1 billion. The minimum aggregate annual fee
payable for administration services is $100,000. In addition, Investor Services
Group also receives a separate annual fee from each Fund for certain fund
accounting services and is paid by each Fund for custody services provided by
The Chase Manhattan Bank. From time to time, Investor Services Group may waive
voluntarily all or a portion of the administration fee payable to it by the
Funds.

DESCRIPTION OF GALAXY VIP AND ITS SHARES

GALAXY VIP was organized as a Massachusetts business trust on May 27, 1992.
GALAXY VIP is a series fund authorized to issue the following eight classes of
units of beneficial interest: Class A shares, representing interests in the
Money Market Fund; Class B shares, representing interests in the Equity Fund;
Class C shares, representing interests in the Asset Allocation Fund; Class D
shares, representing interests in the High Quality Bond Fund; Class E shares,
representing interests in the Small Company Growth Fund; Class F shares,

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representing interests in the Growth and Income Fund; Class G shares,
representing interests in the Columbia Real Estate Equity Fund II; and Class H
shares, representing interests in the Columbia High Yield Fund II. Each share of
GALAXY VIP has a par value of $.001 per share, represents an equal proportionate
interest in the related Fund with other shares of the same class, and is
entitled to such dividends and distributions out of the income earned on the
assets belonging to such Fund as are declared in the discretion of the Board of
Trustees. GALAXY VIP's Agreement and Declaration of Trust authorizes the Board
of Trustees to classify or reclassify any class or series of shares into one or
more classes or series of shares.

Shareholders are entitled to one vote for each full share held, and a
proportionate fractional vote for each fractional share held, and will vote in
the aggregate and not by class, except as otherwise expressly required by law or
when the Board of Trustees determines that the matter to be voted on affects
only the interests of shareholders of a particular class. The rights
accompanying Fund shares are legally vested in the Separate Accounts. However,
Participating Insurance Companies will vote Fund shares held in their Separate
Accounts in a manner consistent with timely voting instructions received from
the holders of variable annuity contracts and variable life insurance policies.
Each Participating Insurance Company will vote Fund shares held in its Separate
Accounts for which no timely instructions are received from the holders of
variable annuity contracts and variable life insurance policies, as well as
shares it owns, in the same proportion as those shares for which voting
instructions are received. Additional information concerning voting rights of
the participants in the Separate Accounts are more fully set forth in the
prospectuses relating to those Accounts issued by the Participating Insurance
Companies.

GALAXY VIP is not required under Massachusetts law to hold annual
shareholder meetings and intends to do so only if required by the 1940 Act.
Shareholders have the right to call a meeting of shareholders to consider the
removal of one or more Trustees and such meeting will be called when requested
by the holders of record of 10% or more of GALAXY VIP's outstanding shares. To
the extent required by law, GALAXY VIP will assist in shareholder communications
in such matters.

CUSTODIAN

The Chase Manhattan Bank ("Chase"), located at One Chase Manhattan Plaza,
New York, New York 10081, a wholly-owned subsidiary of The Chase Manhattan
Corporation, serves as the custodian of the Funds' assets. Services performed by
Chase for the Funds are described in the Statement of Additional Information.

EXPENSES

GALAXY VIP bears the expenses in connection with the Funds' operations,
whether incurred directly or on its behalf by Fleet, Columbia, Investor Services
Group or the Participating Insurance Companies, including taxes; interest; fees
(including fees paid to its Trustees and officers who are not affiliated with
Investor Services Group); SEC fees; state securities fees; costs of preparing
and printing prospectuses for regulatory purposes and for distribution to
existing shareholders; advisory, administration, fund accounting and custody
fees; certain insurance premiums; outside auditing and legal expenses; costs of
shareholders' reports and meetings; and any extraordinary expenses. Otherwise,
Fleet, Columbia and Investor Services Group bear their own expenses incurred in
connection with performing services for the Funds. The Funds also pay for
brokerage fees and commissions in connection with the purchase of portfolio
securities.

PERFORMANCE AND YIELD INFORMATION

From time to time, in advertisements or in reports to shareholders, the
performance and yields of the Funds may be quoted and compared to those of other
mutual funds with similar investment objectives and to stock or other relevant
bond indexes or to rankings prepared by independent services or other financial
or industry publications that monitor the performance of mutual funds.

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Performance and yield data as reported in national financial publications
including, but not limited to, MONEY MAGAZINE, FORBES, BARRON'S, THE WALL STREET
JOURNAL and THE NEW YORK TIMES, as well as in publications of a local or
regional nature may be used in comparing the performance and yields of the
Funds.

The yield of the Money Market Fund will refer to the income generated over a
seven-day period identified in the advertisement. This income is annualized,
i.e. the income during a particular week is assumed to be generated each week
over a 52-week period, and is shown as a percentage of the investment. The Money
Market Fund may also advertise its effective yield which is calculated similarly
but, when annualized, the income from an investment in the Fund is assumed to be
reinvested. Consequently, the "effective yield" will be slightly higher because
of the compounding effect.

The standard yield is computed by dividing a Fund's average daily net
investment income per share during a 30-day (or one month) base period
identified in the advertisement by the net asset value per share on the last day
of the period, and annualizing the result on a semi-annual basis. The Funds may
also advertise their "effective yield" which is calculated similarly but, when
annualized, the income earned by an investment in a Fund is assumed to be
reinvested.

The Funds may also advertise their performance using "average annual total
return" figures over various periods of time. Such total return figures reflect
the average percentage change in the value of an investment in a Fund from the
beginning date of the measuring period to the end of the measuring period.
Average total return figures will be given for the most recent one-, five- and
ten-year periods (if applicable), and may be given for other periods as well,
such as from the commencement of a Fund's operations, or on a year-by-year
basis. Each Fund may also use "aggregate total return" figures for various
periods, representing the cumulative change in the value of an investment in a
Fund for the specified period. Both methods of calculating total return assume
that dividend and capital gains distributions made by a Fund during the period
are reinvested in Fund shares.

Performance and yields of the Funds will fluctuate and any quotation of
performance or yield should not be considered as representative of future
performance. Since yields fluctuate, yield data cannot necessarily be used to
compare an investment in a Fund's shares with bank deposits, savings accounts
and similar investment alternatives which often provide an agreed or guaranteed
fixed yield for a stated period of time. Performance and yield are generally
functions of the kind and quality of the instruments held in a portfolio,
portfolio maturity, operating expenses, and market conditions.

Yields and total returns quoted for the Funds include the effect of
deducting the Funds' expenses, but may not include charges and expenses
attributable to a particular variable annuity contract or variable life
insurance policy. Since shares of the Funds can be purchased only through a
variable annuity contract or variable life insurance policy, you should
carefully review the prospectus of the variable annuity contract or variable
life insurance policy you have chosen for information on relevant charges and
expenses. Including these charges in the quotations of the Funds' yield and
total return would have the effect of decreasing performance. Performance
information for the Funds must always be accompanied by, and be reviewed with,
performance information for the insurance product which invests in the Funds.

The portfolio managers of the Funds and other investment professionals may
from time to time discuss in advertising, sales literature or other material,
including periodic publications, various topics of interest to shareholders and
prospective investors. The topics may include but are not limited to the
advantages and disadvantages of investing in tax-deferred and taxable
investments; Fund performance and how such performance may compare to various
market indices; shareholder profiles and hypothetical investor scenarios; the
economy; the financial and capital markets; investment strategies and
techniques; investment products; and tax, retirement and investment planning.

MISCELLANEOUS

As used in this Prospectus, a "vote of the holders of a majority of the
outstanding shares" of GALAXY VIP or a particular Fund means, with respect to
the approval of an investment advisory agreement or a change in an investment
objective or fundamental investment policy, the affirmative vote of the holders
of the lesser of

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(a) more than 50% of the outstanding shares of GALAXY VIP or such Fund, or (b)
67% or more of the shares of GALAXY VIP or such Fund present at a meeting if
more than 50% of the outstanding shares of GALAXY VIP or such Fund are
represented at the meeting in person or by proxy.

Inquiries regarding GALAXY VIP should be made to GALAXY VIP's offices at
4400 Computer Drive, Westboro, Massachusetts 01581. Holders of variable annuity
contracts or variable life insurance policies issued by Participating Insurance
Companies for which shares of the Funds are the investment vehicle will receive
from the Participating Insurance Companies unaudited semi-annual financial
statements and year-end financial statements audited by the Funds' independent
certified public accountants. Each report will show the investments owned by the
Funds and the market values of the investments and will provide other
information about the Funds and their operations.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
PRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY GALAXY VIP.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY GALAXY VIP IN ANY
JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.

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TABLE OF CONTENTS

PAGE
----
FINANCIAL HIGHLIGHTS.................................................. 3
INVESTMENT OBJECTIVES AND POLICIES.................................... 7
TYPES OF OBLIGATIONS AND OTHER INVESTMENT INFORMATION................. 15
INVESTMENT LIMITATIONS................................................ 25
PRICING OF SHARES..................................................... 27
PURCHASE AND REDEMPTION OF SHARES..................................... 28
DIVIDENDS AND DISTRIBUTIONS........................................... 29
TAXES................................................................. 29
MANAGEMENT OF GALAXY VIP.............................................. 29
DESCRIPTION OF GALAXY VIP AND ITS SHARES.............................. 31
CUSTODIAN............................................................. 32
EXPENSES.............................................................. 32
PERFORMANCE AND YIELD INFORMATION..................................... 32
MISCELLANEOUS......................................................... 33

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THE GALAXY VIP FUND
STATEMENT OF ADDITIONAL INFORMATION

MONEY MARKET FUND

EQUITY FUND

GROWTH AND INCOME FUND

SMALL COMPANY GROWTH FUND

COLUMBIA REAL ESTATE EQUITY FUND II

ASSET ALLOCATION FUND

HIGH QUALITY BOND FUND

COLUMBIA HIGH YIELD FUND II

FEBRUARY 4, 1998

This Statement of Additional Information is not a prospectus and should be
read in conjunction with the current prospectus (the "Prospectus") for the
investment portfolios of The Galaxy VIP Fund ("GALAXY VIP") dated February 4,
1998 as it may from time to time be supplemented or revised. This Statement of
Additional Information is incorporated by reference in its entirety into such
Prospectus. No investment in shares of the Funds should be made without reading
the Prospectus. Copies of the Prospectus may be obtained by writing GALAXY VIP
c/o First Data Investor Services Group, Inc., 4400 Computer Drive, Westboro,
Massachusetts 01581 or by calling your Participating Insurance Company.
<PAGE>
TABLE OF CONTENTS

PAGE
----
INVESTMENT OBJECTIVES AND POLICIES.................................... 1
Variable and Floating Rate Obligations.............................. 1
Bank Obligations.................................................... 1
Mortgage-Backed and Asset-Backed Securities......................... 1
When-Issued, Forward Commitment and Delayed Settlement
Transactions....................................................... 2
Stand-By Commitments................................................ 3
Repurchase Agreements; Reverse Repurchase Agreements; Loans of
Portfolio Securities............................................... 3
U.S. Government Securities.......................................... 3
Derivative Securities............................................... 4
Portfolio Securities Generally -- Money Market Fund................. 7
Additional Investment Limitations................................... 7
NET ASSET VALUE -- MONEY MARKET FUND.................................. 8
DIVIDENDS -- MONEY MARKET FUND........................................ 9
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION........................ 9
DESCRIPTION OF SHARES................................................. 10
TRUSTEES AND OFFICERS................................................. 11
Shareholder and Trustee Liability................................... 13
ADVISORY, ADMINISTRATION AND CUSTODIAN AGREEMENTS..................... 13
Custodian........................................................... 14
PORTFOLIO TRANSACTIONS................................................ 15
DISTRIBUTOR........................................................... 16
AUDITORS.............................................................. 16
COUNSEL............................................................... 16
PERFORMANCE AND YIELD INFORMATION..................................... 16
Yield Quotations -- Money Market Fund............................... 16
Yield and Total Return Quotations -- Non-Money Market Funds......... 17
MISCELLANEOUS......................................................... 18
APPENDIX A............................................................ A-1
APPENDIX B............................................................ B-1
FINANCIAL STATEMENTS.................................................. FS-1

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INVESTMENT OBJECTIVES AND POLICIES

GALAXY VIP offers units of beneficial interest ("Shares") representing
interests in eight investment portfolios: the Money Market Fund, Equity Fund,
Growth and Income Fund, Small Company Growth Fund, Columbia Real Estate Equity
Fund II, Asset Allocation Fund, High Quality Bond Fund and Columbia High Yield
Fund II (collectively, the "Funds"). This Statement of Additional Information
provides additional investment information with respect to all Funds and should
be read in conjunction with the current Prospectus.

VARIABLE AND FLOATING RATE OBLIGATIONS

The Money Market Fund may purchase variable and floating rate instruments as
described in the Prospectus. If such an instrument is not rated, the investment
adviser to the Fund, Fleet Investment Advisors Inc. ("Fleet"), must determine
that such instrument is comparable to rated instruments eligible for purchase by
the Fund and will consider the earning power, cash flows and other liquidity
ratios of the issuers and guarantors of such notes and will continuously monitor
their financial status in order to meet payment on demand. In determining
average weighted portfolio maturity of the Fund, a variable or floating rate
instrument issued or guaranteed by the U.S. Government or an agency or
instrumentality thereof will be deemed to have a maturity equal to the period
remaining until the obligation's next interest rate adjustment.

Variable and floating rate obligations held by the Money Market Fund may
have maturities of more than thirteen months, provided the Fund is entitled to
payment of principal upon not more than 30 days' notice or at specified
intervals not exceeding one year (upon not more than 30 days' notice).

Variable and floating rate obligations with a demand feature held by the
Money Market Fund will be deemed to have a maturity equal to the longer of the
period remaining to the next interest rate adjustment or the demand notice
period.

The Equity Fund, Growth and Income Fund, Small Company Growth Fund, Columbia
Real Estate Equity Fund II, Asset Allocation Fund, High Quality Bond Fund and
Columbia High Yield Fund II may also purchase variable and floating rate
instruments in accordance with their investment objectives and policies as
described in the Prospectus.

BANK OBLIGATIONS

For purposes of the Money Market Fund's investment policy with respect to
bank obligations, the assets of a bank or savings institution will be deemed to
include the assets of its U.S. and foreign branches. Investments by the Equity
Fund, Small Company Growth Fund, Asset Allocation Fund and High Quality Bond
Fund in non-negotiable time deposits are limited to no more than 5% of each such
Fund's total assets at the time of purchase.

MORTGAGE-BACKED AND ASSET-BACKED SECURITIES

Mortgage-backed securities include fixed and adjustable Mortgage
Pass-Through Certificates, which provide the holder with a pro-rata share of
interest and principal payments on a pool of mortgages, ordinarily on
residential properties. There are a number of important differences among the
agencies and instrumentalities of the U.S. Government that issue mortgage-backed
securities and among the securities that they issue. Pass-Through Certificates
guaranteed by the Government National Mortgage Association ("GNMA") (also known
as "Ginnie Maes") are guaranteed as to the timely payment of principal and
interest by GNMA, whose guarantee is backed by the full faith and credit of the
United States. Mortgage-backed securities issued by the Federal National
Mortgage Association ("FNMA") include FNMA guaranteed Mortgage Pass-Through
Certificates (also known as "Fannie Maes") which are guaranteed as to timely
payment of principal and interest by FNMA. They are not backed by or entitled to
the full faith and credit of the United States, but are supported by the right
of the FNMA to borrow from the Treasury. Mortgage-backed securities issued by
the Federal Home Loan Mortgage Corporation ("FHLMC") include FHLMC Mortgage
Participation Certificates (also known as "Freddie Macs"). Freddie Macs are not
guaranteed by the United States or by any Federal Home Loan Bank and do not
constitute a debt or obligation of the United States or of any Federal Home Loan
Bank. Freddie Macs entitle the holder to timely payment of interest, which is
guaranteed by the FHLMC. FHLMC guarantees

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either ultimate collection or timely payment of all principal payments on the
underlying mortgage loans. When FHLMC does not guarantee timely payment of
principal, FHLMC is required to remit the amount due on account of its guarantee
of ultimate payment of principal no later than one year after it becomes
payable.

Mortgage-backed securities also include collateralized mortgage obligations
("CMOs"), which provide the holder with a specified interest in the cash flow of
a pool of underlying mortgages or other mortgage-backed securities. Issuers of
CMOs frequently elect to be taxed as pass-through entities known as real estate
mortgage investment conduits, or REMICs. CMOs are issued in multiple classes,
each with a specified fixed or floating interest rate and a final distribution
date. Although the relative payment rights of these classes can be structured in
a number of different ways, most often payments of principal are applied to the
CMO classes in order of respective stated maturities. CMOs can expose a Fund to
more volatility and interest rate risk than other types of mortgage-backed
securities.

Asset-backed securities are generally issued as pass-through certificates,
which represent undivided fractional ownership interests in an underlying pool
of assets, or as debt instruments, which are also known as collateralized
obligations, and are generally issued as the debt of a special purpose entity
organized solely for the purpose of owning such assets and issuing such debt.
Asset-backed securities are often backed by a pool of assets representing the
obligations of a number of different parties.

The yield characteristics of mortgage-backed and asset-backed securities
differ from traditional debt securities. A major difference is that the
principal amount of the obligations may be prepaid at any time because the
underlying assets (I.E., loans) generally may be prepaid at any time. As a
result, a decrease in interest rates in the market may result in increases in
the level of prepayments as borrowers, particularly mortgagors, refinance and
repay their loans. An increased prepayment rate will have the effect of
shortening the maturity of the security. If a Fund has purchased a
mortgage-backed or asset-backed security at a premium, a faster than anticipated
prepayment rate could result in a loss of principal to the extent of the premium
paid. Conversely, an increase in interest rates may result in lengthening the
anticipated maturity because expected prepayments are reduced. A prepayment rate
that is faster than expected will reduce yield to maturity, while a prepayment
rate that is slower than expected may have the opposite effect of increasing
yield to maturity.

In general, the assets supporting non-mortgage asset-backed securities are
of shorter maturity than the assets supporting mortgage-backed securities. Like
other fixed-income securities, when interest rates rise the value of an
asset-backed security generally will decline; however, when interest rates
decline, the value of an asset-backed security with prepayment features may not
increase as much as that of other fixed income securities, and, as noted above,
changes in market rates of interest may accelerate or retard prepayments and
thus affect maturities.

These characteristics may result in a higher level of price volatility for
these assets under certain market conditions. In addition, while the trading
market for short-term mortgages and asset-backed securities is ordinarily quite
liquid, in times of financial stress the trading market for these securities
sometimes becomes restricted.

WHEN-ISSUED, FORWARD COMMITMENT AND DELAYED SETTLEMENT TRANSACTIONS

When a Fund agrees to purchase securities on a "when-issued," "forward
commitment" or "delayed settlement" basis, the Fund's custodian will set aside
cash or liquid portfolio securities equal to the amount of the commitment in a
separate account. In the event of a decline in the value of the securities that
the custodian has set aside, a Fund may be required to place additional assets
in the separate account in order to ensure that the value of the account remains
equal to the amount of the Fund's commitment. A Fund's net assets may fluctuate
to a greater degree if it sets aside portfolio securities to cover such purchase
commitments than if it sets aside cash. Because a Fund sets aside liquid assets
to satisfy its purchase commitments in the manner described, the Fund's
liquidity and ability to manage its portfolio might be affected in the event its
commitments to purchase "forward commitments," commitments to purchase
"when-issued" securities or commitments to purchase securities on a "delayed
settlement" basis exceeds 25% of the value of its total assets.

When a Fund engages in "when-issued," "forward commitment" or "delayed
settlement" transactions, it relies on the seller to consummate the trade.
Failure of the seller to do so may result in the Fund's incurring a

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<PAGE>
loss or missing an opportunity to obtain a price considered to be advantageous
for a security. For purposes of determining the average weighted maturity of a
Fund's portfolio, the maturity of "when-issued" securities is calculated from
the date of settlement of the purchase to the maturity date.

STAND-BY COMMITMENTS

Under a "stand-by commitment," a dealer agrees to purchase from the High
Quality Bond Fund, at the Fund's option, specified securities at a specified
price. "Stand-by commitments" are exercisable by the Fund at any time before the
maturity of the underlying security, and may be sold, transferred or assigned by
the Fund only with respect to the underlying instruments.

Although "stand-by commitments" are often available without the payment of
any direct or indirect consideration, if necessary or advisable, the Fund may
pay for a "stand-by commitment" either separately in cash or by paying a higher
price for securities which are acquired subject to the commitment. Where the
Fund pays any consideration directly or indirectly for a "stand-by commitment,"
its cost will be reflected as unrealized depreciation for the period during
which the commitment is held by the Fund.

The Fund will enter into "stand-by commitments" only with banks and
broker/dealers which present minimal credit risks. In evaluating the
creditworthiness of the issuer of a "stand-by commitment," Fleet, as the Fund's
investment adviser, will review periodically the issuer's assets, liabilities,
contingent claims and other relevant financial information.

The Fund will acquire "stand-by commitments" solely to facilitate liquidity
and does not intend to exercise its rights thereunder for trading purposes.
"Stand-by commitments" will be valued at zero in determining the Fund's net
asset value.

REPURCHASE AGREEMENTS; REVERSE REPURCHASE AGREEMENTS; LOANS OF PORTFOLIO
SECURITIES

Each Fund may enter into repurchase agreements. The repurchase price under a
repurchase agreement generally equals the price paid by a Fund plus interest
negotiated on the basis of current short-term rates (which may be more or less
than the rate on the securities underlying the repurchase agreement). Securities
subject to repurchase agreements will be held by a Fund's custodian in a
segregated account or in the Federal Reserve/ Treasury book-entry system.
Repurchase agreements are considered to be loans by a Fund under the Investment
Company Act of 1940, as amended, (the "1940 Act").

Each Fund may enter into reverse repurchase agreements. Whenever a Fund
enters into a reverse repurchase agreement, it will place in a segregated
custodial account cash or other liquid portfolio securities equal to the
repurchase price (including accrued interest). The Fund will monitor the account
to ensure such equivalent value is maintained. Reverse repurchase agreements are
considered to be borrowings by a Fund under the 1940 Act.

A Fund that loans portfolio securities would continue to accrue interest on
the securities loaned and would also earn income on the loans. Any cash
collateral received by the Fund in connection with such loans would be invested
in high quality, short-term "money market" instruments.

U.S. GOVERNMENT SECURITIES

Examples of the types of obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities (hereinafter, "U.S. Government
obligations") that may be held by the Funds include, without limitation, direct
obligations of the U.S. Treasury, and securities issued or guaranteed by the
Federal Home Loan Banks, Federal Farm Credit Banks, Federal Land Banks, Federal
Housing Administration, Farmers Home Administration, Export-Import Bank of the
United States, Small Business Administration, GNMA, FNMA, General Services
Administration, Student Loan Marketing Association, Central Bank for
Cooperatives, FHLMC, Federal Intermediate Credit Banks, Resolution Trust
Corporation and Maritime Administration.

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DERIVATIVE SECURITIES

OPTIONS TRADING

As stated in the Prospectus, (i) each Fund other than the Money Market Fund
and High Quality Bond Fund may write covered call options on securities and (ii)
the Growth and Income Fund, Small Company Growth Fund, Columbia Real Estate
Equity Fund II and Columbia High Yield Fund II may purchase put and call options
based on any type of security, index or currency. Options trading is a highly
specialized activity which entails greater than ordinary investment risks.
Regardless of how much the market price of the underlying security, index or
currency increases or decreases, the option buyer's risk is limited to the
amount of the original investment for the purchase of the option. However,
options may be more volatile than the underlying instruments, and therefore, on
a percentage basis, an investment in options may be subject to greater
fluctuation than an investment in the underlying instruments themselves. Put and
call options purchased by a Fund will be valued at the last sale price each day
or, in the absence of such a price, at the mean between bid and asked prices.

A listed call option for a particular security gives the purchaser of the
option the right to buy from a clearing corporation, and a writer has the
obligation to sell to the clearing corporation, the underlying security at the
stated exercise price at any time prior to the expiration of the option,
regardless of the market price of the security. The premium paid to the writer
is in consideration for undertaking the obligations under the option contract. A
listed put option gives the purchaser the right to sell to a clearing
corporation the underlying security at the stated exercise price at any time
prior to the expiration date of the option, regardless of the market price of
the security. In contrast to an option on a particular security, an option on an
index provides the holder with the right to make or receive a cash settlement
upon exercise of the option. The amount of this settlement will be equal to the
difference between the closing price of the index at the time of exercise and
the exercise price of the option expressed in dollars, times a specified
multiple.

The call options written by a Fund will be "covered", which means that the
Fund writing the option owns the security underlying the call or has an absolute
and immediate right to acquire that security without additional cash
consideration (or, if additional cash consideration is required, liquid assets
in such amount as are held in a segregated account by its custodian) upon
conversion or exchange of other securities held by it. For a call option on an
index, the option is covered if the Fund involved owns securities whose price
changes, in the opinion of Fleet or Columbia Management Co., the investment
adviser for the Columbia Real Estate Equity Fund II and Columbia High Yield Fund
II, are expected to be substantially similar to those of the index or maintains
with its custodian liquid assets equal to the contract value. A call option is
also covered if the Fund involved holds a call on the same security or index as
the call written where the exercise price of the call held is (i) equal to or
less than the exercise price of the call written, or (ii) greater than the
exercise price of the call written provided the difference is maintained by the
Fund in liquid assets in a segregated account with its custodian. A secured put
option written by a Fund means that the Fund maintains in a segregated account
with the custodian cash or U.S. Government securities in an amount not less than
the exercise price of the option at all times during the option period.

The principal reason for writing call options on a securities portfolio is
the attempt to realize, through the receipt of premiums, a greater current
return than would be realized on the securities alone. In return for the
premium, the covered option writer gives up the opportunity for profit from a
price increase in the underlying security above the exercise price so long as
its obligation as a writer continues, but retains the risk of loss should the
price of the security decline. Unlike one who owns securities not subject to an
option, the covered option writer has no control over when it may be required to
sell its securities, since it may be assigned an exercise notice at any time
prior to the expiration of its obligation as a writer.

A Fund's obligation to sell a security subject to a covered call option
written by it, or to purchase a security subject to a secured put option written
by it, may be terminated prior to the expiration date of the option by the
Fund's executing a closing purchase transaction, which is effected by purchasing
on an exchange an option of the same series (I.E., same underlying security,
exercise price and expiration date) as the option previously written. Such a
purchase does not result in the ownership of an option. A closing purchase
transaction will ordinarily be effected to prevent the underlying security from
being called, to permit the sale of the underlying security, or to permit the
writing of a new option containing different terms on the underlying security.
The cost of such a

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liquidation purchase plus transaction costs may be greater than the premium
received upon the original option, in which event the Fund will have incurred a
loss in the transaction. An option position may be closed out only on an
exchange which provides a secondary market for an option of the same series.
There is no assurance that a liquid secondary market on an exchange will exist
for any particular option. A covered call option writer, unable to effect a
closing purchase transaction, would not be able to sell the underlying security
until the option expires or the underlying security is delivered upon exercise.
As a result, the writer in such circumstances would be subject to the risk of
market decline in the underlying security during such period. A Fund will write
an option on a particular security only if Fleet or Columbia believes that a
liquid secondary market will exist on an exchange for options of the same series
which will permit the Fund to make a closing purchase transaction in order to
close out its position.

When a Fund writes a covered call option, an amount equal to the net premium
(the premium less the commission) received by the Fund is included in the
liability section of the Fund's statement of assets and liabilities as a
deferred credit. The amount of the deferred credit will be subsequently
marked-to-market to reflect the current value of the option written. The current
value of the traded option is the last sale price or, in the absence of a sale,
the average of the closing bid and asked prices. If an option expires on the
stipulated expiration date or if the Fund enters into a closing purchase
transaction, it will realize a gain (or loss if the cost of a closing purchase
transaction exceeds the net premium received when the option is sold) and the
deferred credit related to such option will be eliminated. Any gain on a covered
call option may be offset by a decline in the market price of the underlying
security during the option period. If a covered call option is exercised, the
Fund involved may deliver the underlying security held by it or purchase the
underlying security in the open market. In either event, the proceeds of the
sale will be increased by the net premium originally received and the Fund will
realize a gain or loss. If a secured put option is exercised, the amount paid by
the Fund for the underlying security will be partially offset by the amount of
the premium previously paid to the Fund. Premiums from expired options written
by a Fund and net gains from closing purchase transactions are treated as short-
term capital gains for federal income tax purposes, and losses on closing
purchase transactions are short-term capital losses.

As noted previously, there are several risks associated with transactions in
options on securities and indices. For example, there are significant
differences between the securities and options markets that could result in an
imperfect correlation between these markets, causing a given transaction not to
achieve its objectives. In addition, a liquid secondary market for particular
options, whether traded over-the-counter or on a national securities exchange
may be absent for reasons which include the following: there may be insufficient
trading interest in certain options; restrictions may be imposed by an exchange
on opening transactions or closing transactions or both; trading halts,
suspensions or other restrictions may be imposed with respect to particular
classes or series of options or underlying securities; unusual or unforeseen
circumstances may interrupt normal operations on an exchange; the facilities of
an exchange or the Options Clearing Corporation may not at all times be adequate
to handle current trading volume; or one or more exchanges could, for economic
or other reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in which event
the secondary market on that exchange (or in that class or series of options)
would cease to exist, although outstanding options that had been issued by the
Options Clearing Corporation as a result of trades on that exchange would
continue to be exercisable in accordance with their terms.

A decision as to whether, when and how to use options involves the exercise
of skill and judgment, and even a well-conceived transaction may result in a
loss because of market behavior or unexpected events.

FUTURES CONTRACTS

The Growth and Income Fund, Small Company Growth Fund, Columbia Real Estate
Equity Fund II, High Quality Bond Fund and Columbia High Yield Fund II may enter
into financial futures contracts, which are commodity contracts that obligate
the holder to take or make delivery of a specified quantity of a financial
instrument, such as a security or a foreign currency, or the cash value of a
securities index, during a specified future period at a specified price. The
High Quality Bond Fund will only write contracts (both purchases and sales) for
the future delivery of fixed income securities (commonly known as interest rate
futures contracts). See Appendix B to this Statement of Additional Information
for additional information on futures contracts.

5
<PAGE>
INDEXED SECURITIES

The Growth and Income Fund and Small Company Growth Fund may invest in a
type of derivative security known as indexed securities. The value of these
securities is linked to foreign currencies, interest rates, commodities, indices
or other financial indicators. Most indexed securities are short- to
intermediate-term fixed income securities whose values at maturity or interest
rates rise or fall according to the change in one or more specified underlying
instruments. Indexed securities may be positively or negatively indexed (i.e.,
their value may increase or decrease if the underlying instrument appreciates),
and may have return characteristics similar to direct investments in the
underlying instrument or to one or more options on the underlying instrument.
Indexed securities may be more volatile than the underlying instrument itself.

SWAP AGREEMENTS

As one way of managing their exposure to different types of investments, the
Growth and Income Fund and Small Company Growth Fund may enter into interest
rate swaps, currency swaps and other types of swap agreements such as caps,
collars and floors. In a typical interest rate swap, one party agrees to make
regular payments equal to a floating interest rate times a "notional principal
amount," in return for payments equal to a fixed rate times the same amount, for
a specified period of time. If a swap agreement provides for payments in
different currencies, the parties might agree to exchange the notional principal
amount as well. Swaps may also depend on other prices or rates, such as the
value of an index or mortgage prepayment rates.

In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by the
other party. For example, the buyer of an interest rate cap obtains the right to
receive payments to the extent that a specified interest rate exceeds a
designated level, while the seller of an interest rate floor is obligated to
make payments to the extent that a specified interest rate falls below an agreed
upon level. An interest rate collar combines elements of buying a cap and
selling a floor.

Swap agreements will tend to shift a Fund's investment exposure from one
type of investment to another. For example, if a Fund agreed to exchange
payments in dollars for payments in foreign currency, the swap agreement would
tend to decrease the Fund's exposure to U.S. interest rates and increase its
exposure to foreign currency and interest rates. Caps and floors have an effect
similar to buying or writing options. Depending on how they are used, swap
agreements may increase or decrease the overall volatility of a Fund's
investments and its share price and yield.

Swap agreements are sophisticated hedging instruments that typically involve
a small investment of cash relative to the magnitude of risks assumed. As a
result, swaps can be highly volatile and may have a considerable impact on a
Fund's performance. Swap agreements are subject to risks related to the
counterparty's ability to perform, and may decline in value if the
counterparty's creditworthiness deteriorates. A Fund may also suffer losses if
it is unable to terminate outstanding swap agreements or reduce its exposure
through offsetting transactions.

FOREIGN CURRENCY EXCHANGE TRANSACTIONS

Because the Growth and Income Fund, Small Company Growth Fund, Columbia Real
Estate Equity Fund II and Asset Allocation Fund may buy and sell securities
denominated in currencies other than the U.S. dollar, and receive interest,
dividends and sale proceeds in currencies other than the U.S. dollar, the Funds
may enter into foreign currency exchange transactions to convert United States
currency to foreign currency and foreign currency to United States currency as
well as convert foreign currency to other foreign currencies. A Fund either
enters into these transactions on a spot (i.e., cash) basis at the spot rate
prevailing in the foreign currency exchange market, or uses forward contracts to
purchase or sell foreign currencies.

A forward foreign currency exchange contract is an obligation by a Fund to
purchase or sell a specific currency at a specified price and future date, which
may be any fixed number of days from the date of the contract. Forward foreign
currency exchange contracts establish an exchange rate at a future date. These
contracts are transferable in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A forward
foreign currency exchange contract generally has no deposit

6
<PAGE>
requirement, and is traded at a net price without commission. Neither spot
transactions nor forward foreign currency exchange contracts eliminate
fluctuations in the prices of a Fund's portfolio securities or in foreign
exchange rates, or prevent loss if the prices of these securities should
decline.

A Fund may enter into foreign currency hedging transactions in an attempt to
protect against changes in foreign currency exchange rates between the trade and
settlement dates of specific securities transactions or changes in foreign
currency exchange rates that would adversely affect a portfolio position or an
anticipated portfolio position. Since consideration of the prospect for currency
parities will be incorporated into a Fund's long-term investment decisions, a
Fund will not routinely enter into foreign currency hedging transactions with
respect to portfolio security transactions; however, it is important to have the
flexibility to enter into foreign currency hedging transactions when it is
determined that the transactions would be in a Fund's best interest. Although
these transactions tend to minimize the risk of loss due to a decline in the
value of the hedged currency, at the same time they tend to limit any potential
gain that might be realized should the value of the hedged currency increase.
The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible because the future value of
these securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the forward contract
is entered into and the date it matures. The projection of currency market
movements is extremely difficult, and the successful execution of a hedging
strategy is highly uncertain.

PORTFOLIO SECURITIES GENERALLY -- MONEY MARKET FUND

Subsequent to its purchase by the Money Market Fund, an issue of securities
may cease to be rated or its rating may be reduced below the minimum rating
required for purchase by the Fund. The Board of Trustees or Fleet, pursuant to
guidelines established by the Board, will promptly consider such an event in
determining whether the Fund should continue to hold the obligation. The Fund
may continue to hold the obligation if the Board of Trustees or Fleet determines
that retention is in accordance with the interests of the Fund and applicable
regulations of the Securities and Exchange Commission ("SEC").

ADDITIONAL INVESTMENT LIMITATIONS

In addition to the investment limitations disclosed in the Prospectus, the
Funds are subject to the following investment limitations which may be changed
with respect to a particular Fund only by a vote of the holders of a majority of
such Fund's outstanding Shares (as defined under "Miscellaneous" in the
Prospectus).

No Fund may:

1. Purchase securities on margin (except such short-term credits as
may be necessary for the clearance of purchases), make short sales of
securities, or maintain a short position.

2. Act as an underwriter within the meaning of the Securities Act of
1933, except insofar as a Fund might be deemed to be an underwriter upon
disposition of restricted portfolio securities, and except to the extent
that the purchase of securities directly from the issuer thereof in
accordance with a Fund's investment objective, policies and limitations may
be deemed to be underwriting.

3. Purchase or sell real estate, except that each Fund may purchase
securities which are secured by real estate and may purchase securities of
issuers which deal in real estate or interests therein; however, the Funds
other than the Columbia Real Estate Equity Fund II and the Columbia High
Yield Fund II will not purchase or sell interests in real estate limited
partnerships.

4. Purchase or sell commodities or commodity contracts, or invest in
oil, gas or other mineral exploration or development programs or mineral
leases; provided, however, that (i) the High Quality Bond Fund may enter
into interest rate futures contracts to the extent permitted under the
Commodity Exchange Act and the 1940 Act; (ii) the Growth and Income Fund,
Small Company Growth Fund, Columbia Real Estate Equity Fund II and Columbia
High Yield Fund II may enter into futures contracts and options on futures
contracts; and (iii) the Growth and Income Fund, Small Company Growth Fund,
Columbia Real Estate Equity Fund II and Asset Allocation Fund may enter into
forward currency contracts and foreign

7
<PAGE>
currency futures contracts and related options to the extent permitted by
their respective investment objectives and policies.

5. Invest in or sell put options, call options, straddles, spreads,
or any combination thereof; provided, however, that (i) the Equity Fund,
Growth and Income Fund, Small Company Growth Fund, Columbia Real Estate
Equity Fund II, Asset Allocation Fund and Columbia High Yield Fund II may
write covered call options with respect to their portfolio securities that
are traded on a national securities exchange, and may enter into closing
purchase transactions with respect to such options if, at the time of the
writing of such options, the aggregate value of the securities subject to
the options written by the Funds does not exceed 25% of the value of their
respective total assets; (ii) the Equity Fund and Asset Allocation Fund may
purchase put and call options to the extent permitted by their respective
investment objectives and policies; and (iii) the Growth and Income Fund,
Small Company Growth Fund, Columbia Real Estate Equity Fund II and Columbia
High Yield Fund II may purchase put and call options and sell or write
secured put options to the extent permitted by their respective investment
objectives and policies.

6. Invest in companies for the purpose of exercising management or
control.

7. Purchase securities of other investment companies except in
connection with a merger, consolidation, reorganization, or acquisition of
assets; provided, however, that each Fund other than the Money Market Fund
may acquire such securities in accordance with the 1940 Act.

In addition to the above limitations:

8. The Money Market Fund may not purchase any securities other than
money-market instruments, some of which may be subject to repurchase
agreements, but the Fund may make interest-bearing savings deposits not in
excess of 5% of the value of its total assets at the time of deposit and may
make time deposits.

9. The Money Market, Equity and High Quality Bond Funds may not
purchase foreign securities, except certificates of deposit, bankers'
acceptances, or other similar obligations issued by U.S. branches of foreign
banks or foreign branches of U.S. banks; provided, however, that (i) the
High Quality Bond Fund may also purchase obligations of Canadian Provincial
Governments in accordance with the Fund's investment objective and policies;
(ii) the Equity Fund may purchase securities issued by foreign banks,
commercial paper issued by Canadian issuers and other securities of Canadian
companies in accordance with its investment objective and policies; and
(iii) the Equity Fund may invest up to 20% of its total assets in American
Depository Receipts and European Depository Receipts.

NET ASSET VALUE -- MONEY MARKET FUND

GALAXY VIP uses the amortized cost method of valuation to value Shares of
the Money Market Fund. In order to use the amortized cost method, the Fund
complies with the various quality and maturity restrictions specified in Rule
2a-7 ("Rule 2a-7") promulgated under the 1940 Act. Pursuant to this method, a
security is valued at its initial acquisition cost, as adjusted for amortization
of premium or accretion of discount, regardless of the impact of fluctuating
interest rates on the market value of the security. Where it is not appropriate
to value a security by the amortized cost method, the security will be valued
either by market quotations or by fair value as determined by or under the
direction of GALAXY VIP's Board of Trustees. This method may result in periods
during which value, as determined by amortized cost, is higher or lower than the
price the Fund would receive if it sold the security. The value of securities in
the Fund can be expected to vary inversely with changes in prevailing interest
rates. Thus, if interest rates have increased from the time a security was
purchased, such security, if sold, might be sold at a price less than its cost.
Similarly, if interest rates have declined from the time a security was
purchased, such security, if sold, might be sold at a price greater than its
purchase cost. In either instance, if the security is held to maturity, no gain
or loss will be realized.

The Money Market Fund invests only in instruments which meet the applicable
quality requirements of Rule 2a-7 and maintains a dollar-weighted average
portfolio maturity appropriate to its objective of maintaining

8
<PAGE>
a stable net asset value per Share, provided that the Fund will not purchase any
security deemed to have a remaining maturity (as defined in the 1940 Act) of
more than thirteen months nor maintain a dollar-weighted average portfolio
maturity which exceeds 90 days. GALAXY VIP's Board of Trustees has established
procedures reasonably designed, taking into account current market conditions
and the Fund's investment objective, to stabilize the net asset value per Share
of the Fund for purposes of sales and redemptions at $1.00. These procedures
include review by the Board of Trustees, at such intervals as it deems
appropriate, to determine the extent, if any, to which the net asset value per
Share of the Fund, calculated by using available market quotations, deviates
from $1.00 per Share. In the event such deviation exceeds one-half of one
percent, the Board of Trustees will promptly consider what action, if any,
should be initiated. If the Board of Trustees believes that the extent of any
deviation from the Fund's $1.00 amortized cost price per Share may result in
material dilution or other unfair results to new or existing investors, it has
agreed to take such steps as it considers appropriate to eliminate or reduce, to
the extent reasonably practicable, any such dilution or unfair results. These
steps may include selling portfolio instruments prior to maturity; shortening
the average portfolio maturity; withholding or reducing dividends; redeeming
Shares in kind; reducing the number of the Fund's outstanding Shares without
monetary consideration; or utilizing a net asset value per Share determined by
using available market quotations.

DIVIDENDS -- MONEY MARKET FUND

As stated, GALAXY VIP uses its best efforts to maintain the net asset value
per Share of the Money Market Fund at $1.00. As a result of a significant
expense or realized or unrealized loss incurred by the Fund, it is possible that
the Fund's net asset value per Share may fall below $1.00. Should GALAXY VIP
incur or anticipate any unusual or unexpected significant expense or loss which
would affect disproportionately the income of the Fund for a particular period,
the Board of Trustees would at that time consider whether to adhere to the
present dividend policy with respect to the Fund or to revise it in order to
ameliorate to the extent possible the disproportionate effect of such expense or
loss on the income of the Fund. Such expense or loss may result in a
shareholder's receiving no dividends for the period in which it holds Shares of
the Fund and in its receiving upon redemption a price per Share lower than that
which it paid.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Shares of the Funds are sold on a continuous basis by First Data
Distributors, Inc. ("FD Distributors"). As described in the Prospectus, Shares
of the Funds are sold and redeemed at their net asset value as next determined
after receipt of the purchase or redemption order. Each purchase is confirmed to
the Separate Account in a written statement of the number of Shares purchased
and the aggregate number of Shares currently held.

Each Fund determines its net asset value per Share by subtracting the Fund's
liabilities (including accrued expenses and dividends payable) from its total
assets (the market value of the securities the Fund holds plus cash and other
assets, including income accrued and not yet received) and dividing the result
by the total number of Shares outstanding.

GALAXY VIP may suspend the right of redemption or postpone the date of
payment for Shares for more than seven days during any period when (a) trading
in the markets the Funds normally utilize is restricted, or an emergency, as
defined by the rules and regulations of the SEC, exists making disposal of a
Fund's investments or determination of its net asset value not reasonably
practicable; (b) the New York Stock Exchange is closed (other than customary
weekend and holiday closings); or (c) the SEC has by order permitted such
suspension.

9
<PAGE>
DESCRIPTION OF SHARES

GALAXY VIP is a Massachusetts business trust. GALAXY VIP's Declaration of
Trust authorizes the Board of Trustees to issue an unlimited number of Shares
and to classify or reclassify any unissued Shares into one or more additional
classes by setting or changing in any one or more respects their respective
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption. Pursuant to such authority, the Board of Trustees has authorized the
issuance of eight classes of Shares, each representing interests in one of eight
separate investment portfolios: Money Market Fund, Equity Fund, Growth and
Income Fund, Small Company Growth Fund, Columbia Real Estate Equity Fund II,
Asset Allocation Fund, High Quality Bond Fund and Columbia High Yield Fund II.

Shares have no preemptive rights and only such conversion or exchange rights
as the Board of Trustees may grant in its discretion. When issued for payment as
described in the Prospectus, Shares will be fully paid and non-assessable. In
the event of a liquidation or dissolution of GALAXY VIP or an individual Fund,
shareholders of a Fund are entitled to receive the assets available for
distribution belonging to the particular Fund, and a proportionate distribution,
based upon the relative asset values of the respective Funds, of any general
assets of GALAXY VIP not belonging to any particular Fund which are available
for distribution.

Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an investment
company such as GALAXY VIP shall not be deemed to have been effectively acted
upon unless approved by the holders of a majority of the outstanding Shares of
each Fund affected by the matter. A particular Fund is deemed to be affected by
a matter unless it is clear that the interests of each Fund in the matter are
substantially identical or that the matter does not affect any interest of the
Fund. Under the Rule, the approval of an investment advisory agreement or any
change in fundamental investment policy would be effectively acted upon with
respect to a Fund only if approved by a majority of the outstanding Shares of
such Fund. However, the Rule also provides that the ratification of the
appointment of independent public accountants, the approval of principal
underwriting contracts and the election of trustees may be effectively acted
upon by shareholders of GALAXY VIP voting without regard to class.

Shareholders are entitled to one vote for each full Share held and
fractional votes for fractional Shares held, and will vote in the aggregate, and
not by class, except as otherwise required by the 1940 Act or other applicable
law or when the matter to be voted upon affects only the interests of the
shareholders of a particular class. Voting rights are not cumulative and,
accordingly, the holders of more than 50% of the aggregate of GALAXY VIP's
outstanding Shares may elect all of the trustees, irrespective of the votes of
other shareholders.

GALAXY VIP does not intend to hold annual shareholder meetings except as may
be required by the 1940 Act. GALAXY VIP's Agreement and Declaration of Trust
provides that a meeting of shareholders shall be called by the Board of Trustees
upon the written request of shareholders owning at least 10% of the outstanding
Shares of GALAXY VIP entitled to vote.

GALAXY VIP's Agreement and Declaration of Trust authorizes the Board of
Trustees, without shareholder approval (unless otherwise required by applicable
law), to (a) sell and convey the assets of a class of Shares to another
management investment company for consideration which may include securities
issued by the purchaser and, in connection therewith, to cause all outstanding
Shares of such class to be redeemed at a price which is equal to their net asset
value and which may be paid in cash or by distribution of the securities or
other consideration received from the sale and conveyance; (b) sell and convert
the assets belonging to a class of Shares into money and, in connection
therewith, to cause all outstanding Shares of such class to be redeemed at their
net asset value; or (c) combine the assets belonging to a class of Shares with
the assets belonging to one or more other classes of Shares of GALAXY VIP if the
Board of Trustees reasonably determines that such combination will not have a
material adverse effect on the shareholders of any class participating in such
combination and, in connection therewith, to cause all outstanding Shares of any
such class to be redeemed at their net asset value or converted into Shares of
another class of GALAXY VIP's Shares at their net asset value. However, the
exercise of such authority by the Board of Trustees may be subject to certain
restrictions under the 1940 Act. The Board of Trustees may authorize the
termination of any class of Shares after the assets belonging to such class have
been distributed to its shareholders.

10
<PAGE>
TRUSTEES AND OFFICERS

The trustees and executive officers of GALAXY VIP, their addresses,
principal occupations during the past five years, and other affiliations are as
follows:

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
POSITIONS WITH DURING PAST 5 YEARS
NAME AND ADDRESS GALAXY VIP AND OTHER AFFILIATIONS
- --------------------------------------- --------------- -------------------------------------------------
<S> <C> <C>
Dwight E. Vicks, Jr. Chairman & President & Director, Vicks Lithograph & Printing
Vicks Lithograph & Trustee Corporation (book manufacturing and commercial
Printing Corporation printing); Director, Utica Fire Insurance
Commercial Drive Company; Trustee, Savings Bank of Utica;
P.O. Box 270 Director, Monitor Life Insurance Company;
Yorkville, NY 13495 Director, Commercial Travelers Mutual Insurance
Age 64 Company; Trustee, The Galaxy Fund; Trustee,
Galaxy Fund II.

John T. O'Neill1 President, Executive Vice President and CFO, Hasbro, Inc.
Hasbro, Inc. Treasurer & (toy and game manufacturer); Trustee, The Galaxy
200 Narragansett Park Drive Trustee Fund; Trustee, Galaxy Fund II.
Pawtucket, RI 02862
Age 53

Louis DeThomasis Trustee President, Saint Mary's College of Minnesota;
Saint Mary's College of Minnesota Director, Bright Day Travel, Inc.; Trustee,
Winona, MN 55987 Religious Communities Trust; Trustee, The Galaxy
Age 57 Fund; Trustee, Galaxy Fund II.

Donald B. Miller Trustee Chairman, Horizon Media, Inc. (broadcast
10725 Quail Covey Road services); Director/Trustee, Lexington Funds;
Boynton Beach, FL 33436 Chairman, Executive Committee, Compton
Age 72 International, Inc. (advertising agency);
Trustee, Keuka College; Trustee, The Galaxy
Fund; Trustee, Galaxy Fund II.

James M. Seed Trustee Chairman and President, The Astra Projects,
The Astra Ventures, Inc. Incorporated (land development); President, The
One Citizens Plaza Astra Ventures, Incorporated (previously,
Providence, RI 02903 Buffinton Box Company -- manufacturer of
Age 56 cardboard boxes); Commissioner, Rhode Island
Investment Commission; Trustee, The Galaxy Fund;
Trustee, Galaxy Fund II.

Bradford S. Wellman1 Trustee Private Investor; Vice President and Director,
P.O. Box 2099 Acadia Management Company (investment services);
Bangor, ME 04402 Director, Essex County Gas Company, until
Age 66 January 1994; Director, Maine Mutual Fire
Insurance Co.; Member, Maine Finance Authority
until September 1995; Trustee, The Galaxy Fund;
Trustee, Galaxy Fund II.

W. Bruce McConnel, III Secretary Partner of the law firm Drinker Biddle & Reath
1345 Chestnut Street LLP, Philadelphia, Pennsylvania.
Philadelphia, PA 19107
Age 54

Jylanne Dunne Vice President Vice President, First Data Investor Services
First Data Investor Services and Assistant Group, Inc., 1990 to present.
Group, Inc. Treasurer
4400 Computer Drive
Westboro, MA 01581-5108
Age 38
</TABLE>

- -------------

1 An interested person within the definition set forth in Section 2(a)(19) of
the 1940 Act.

11
<PAGE>
Effective November 1, 1996, each trustee receives an annual aggregate fee of
$29,000 for his services as a trustee of GALAXY VIP, The Galaxy Fund ("Galaxy")
and Galaxy Fund II ("Galaxy II") (collectively, the "Trusts"), plus an
additional $2,250 for each in-person Galaxy Board meeting attended and $1,500
for each in-person GALAXY VIP or Galaxy II Board meeting attended not held
concurrently with an in-person Galaxy meeting, and is reimbursed for expenses
incurred in attending all meetings. Each trustee also receives $500 for each
telephone Board meeting in which the trustee participates, $1,000 for each
in-person Board committee meeting attended and $500 for each telephone Board
committee meeting in which the trustee participates. The Chairman of the Boards
of the Trusts is entitled to an additional annual aggregate fee in the amount of
$4,000, and the President and Treasurer of the Trusts is entitled to an
additional annual aggregate fee of $2,500 for their services in these respective
capacities. The foregoing trustees' and officers' fees are allocated among the
portfolios of the Trusts based on their relative net assets.

For the fiscal year ended October 31, 1996, each trustee was authorized to
receive an annual aggregate fee of $18,000 for his services as a trustee of
GALAXY VIP and Galaxy plus a separate annual fee of $5,000 for his services as a
trustee of Galaxy II, in addition to meeting fees of $1,500 for each in-person
Galaxy Board meeting attended, $1,500 for each in-person GALAXY VIP Board
meeting attended not held concurrently with a Galaxy Board meeting, and $750 for
each Galaxy II Board meeting attended, and reimbursement for expenses incurred
in attending meetings. Annual fees to the Chairman of the Boards and the
President and Treasurer of the Trusts were the same as the current fees as were
the fees for telephone and Board committee meetings.

Beginning March 1, 1996, each trustee became entitled to participate in The
Galaxy Fund, The Galaxy VIP Fund and Galaxy Fund II Deferred Compensation Plans
(the "Original Plans"). Effective January 1, 1997, the Original Plans were
merged into The Galaxy Fund/The Galaxy VIP Fund/Galaxy Fund II Deferred
Compensation Plan (together with the Original Plans, the "Plan"). Under the
Plan, a trustee may elect to have his deferred fees treated as if they had been
invested by the Trusts in the Shares of one or more portfolios in the Trusts, or
other types of investment options, and the amount paid to the trustees under the
Plan will be determined based upon the performance of such investments. Deferral
of trustees' fees will have no effect on a Fund's assets, liabilities and net
income per share, and will not obligate the Trusts to retain the services of any
trustee or obligate a Fund to any level of compensation to the trustee. The
Trusts may invest in underlying securities without shareholder approval.

No employee of First Data Investor Services Group, Inc. receives any
compensation from GALAXY VIP for acting as an officer. No person who is an
officer, director or employee of Fleet, Columbia, or any of their affiliates,
serves as a trustee, officer or employee of GALAXY VIP. As of the date of this
Statement of Additional Information, the trustees and officers of GALAXY VIP own
less than 1% of its outstanding Shares.

The following chart provides certain information about the fees received by
GALAXY VIP's trustees in the most recently completed fiscal year.

<TABLE>
<CAPTION>
PENSION OR TOTAL
RETIREMENT COMPENSATION
BENEFITS FROM GALAXY
AGGREGATE ACCRUED AS VIP AND FUND
COMPENSATION FROM PART OF FUND COMPLEX* PAID TO
NAME OF PERSON/POSITION GALAXY VIP EXPENSES TRUSTEES
- ------------------------------------------------------- ------------------- ------------- -----------------
<S> <C> <C> <C>
Bradford S. Wellman.................................... $ 323.19 None $ 36,000
Dwight E. Vicks, Jr.................................... $ 349.94 None $ 38,500
Chairman
Donald B. Miller**..................................... $ 249.19 None $ 36,430
Brother Louis DeThomasis............................... $ 312.14 None $ 35,000
John T. O'Neill........................................ $ 322.64 None $ 35,250
President and Treasurer
James M. Seed**........................................ $ 312.14 None $ 35,725
</TABLE>

- -------------

* The "Fund Complex" consists of The Galaxy Fund, The Galaxy VIP Fund and
Galaxy Fund II. Each Trustee of Galaxy VIP also serves as a trustee of The
Galaxy Fund and Galaxy Fund II.

** Deferred compensation in the amounts of $0 and $211.26 accrued during GALAXY
VIP's fiscal year ended December 31, 1996 for Messrs. Miller and Seed,
respectively.

12
<PAGE>
SHAREHOLDER AND TRUSTEE LIABILITY

Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of the
trust. However, GALAXY VIP's Agreement and Declaration of Trust provides that
shareholders shall not be subject to any personal liability in connection with
the assets of GALAXY VIP for the acts or obligations of GALAXY VIP, and that
every note, bond, contract, order or other undertaking made by GALAXY VIP shall
contain a provision to the effect that the shareholders are not personally
liable thereunder. The Agreement and Declaration of Trust provides for
indemnification out of GALAXY VIP property of any shareholder held personally
liable solely by reason of his being or having been a shareholder and not
because of his acts or for some other reason. The Agreement and Declaration of
Trust also provides that GALAXY VIP shall, upon request, assume the defense of
any claim made against any shareholder for any act or obligation of GALAXY VIP,
and shall satisfy any judgment thereon. Thus, the risk of a shareholder's
incurring financial loss on account of shareholder liability is limited to
circumstances in which GALAXY VIP itself would be unable to meet its
obligations.

The Agreement and Declaration of Trust states further that no trustee,
officer or agent of GALAXY VIP shall be personally liable for or on account of
any contract, debt, tort, claim, damage, judgment or decree arising out of or
connected with the administration or preservation of GALAXY VIP property or the
conduct of any business of GALAXY VIP; nor shall any trustee be personally
liable to any person for any action or failure to act except by reason of his
own bad faith, willful misfeasance, gross negligence or reckless disregard of
his duties as trustee. The Agreement and Declaration of Trust also provides that
all persons having any claim against the trustees or GALAXY VIP shall look
solely to GALAXY VIP property for payment. With the exceptions stated, the
Agreement and Declaration of Trust provides that a trustee is entitled to be
indemnified against all liabilities and expenses reasonably incurred by him in
connection with the defense or disposition of any proceeding in which he may be
involved or with which he may be threatened by reason of his being or having
been a trustee, and that the Board of Trustees shall indemnify representatives
and employees of GALAXY VIP to the same extent to which they themselves are
entitled to indemnification.

ADVISORY, ADMINISTRATION AND CUSTODIAN AGREEMENTS

Fleet serves as investment adviser to the Money Market Fund, Equity Fund,
Growth and Income Fund, Small Company Growth Fund, Asset Allocation Fund and
High Quality Bond Fund. Columbia serves an investment adviser to the Columbia
Real Estate Equity Fund II and Columbia High Yield Fund II. In their respective
advisory agreements, Fleet and Columbia have agreed to provide investment
advisory services to the respective Funds as described in the Prospectus. Fleet
and Columbia have also agreed to pay all expenses incurred by them in connection
with their activities under the respective advisory agreements other than the
cost of securities (including brokerage commissions) purchased for the Funds.
See "Expenses" in the Prospectus. For the services provided and expenses assumed
pursuant to the advisory agreements, GALAXY VIP has agreed (i) to pay Fleet
advisory fees, accrued daily and paid monthly, at the annual rate of .40% of the
average daily net assets of the Money Market Fund, .75% of the average daily net
assets of the Equity Fund, Growth and Income Fund, Small Company Growth Fund and
Asset Allocation Fund, respectively, and .55% of the average daily net assets of
the High Quality Bond Fund, and (ii) to pay Columbia advisory fees, accrued
daily and paid monthly, at the annual rate of .75% of the average daily net
assets of the Columbia Real Estate Equity Fund II and .60% of the average daily
net assets of the Columbia High Yield Fund II. Fleet and Columbia may from time
to time, in their discretion, waive advisory fees payable by the respective
Funds in order to maintain competitive expense ratios.

For the fiscal year ended December 31, 1994, GALAXY VIP paid Fleet net
advisory fees of $2,899, $55,558, $32,641 and $3,966 for the Money Market Fund,
the Equity Fund, the Asset Allocation Fund and the High Quality Bond Fund,
respectively. For the fiscal year ended December 31, 1995, GALAXY VIP paid Fleet
net advisory fees of $20,155, $182,558, $77,415 and $11,048 for the Money Market
Fund, the Equity Fund, the Asset Allocation Fund and the High Quality Bond Fund,
respectively. For the fiscal year ended December 31, 1996, GALAXY VIP paid Fleet
net advisory fees of $26,160, $284,214, $152,669 and $16,778 for the Money
Market Fund, the Equity Fund, the Asset Allocation Fund and the High Quality
Bond Fund, respectively.

13
<PAGE>
Each advisory agreement provides that Fleet or Columbia, as the case may be,
shall not be liable for any error of judgment or mistake of law or for any loss
suffered by the Funds in connection with the performance of its duties under the
advisory agreement, except a loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services or a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of Fleet or
Columbia, as the case may be, in the performance of its duties or from reckless
disregard by it of its duties and obligations thereunder. Unless sooner
terminated, the advisory agreement for a particular Fund will continue in effect
from year to year as long as such continuance is approved at least annually (i)
by the vote of a majority of trustees who are not parties to such advisory
agreement or interested persons (as defined in the 1940 Act) of any such party,
cast in person at a meeting called for the purpose of voting on such approval;
and (ii) by GALAXY VIP's Board of Trustees, or by a vote of a majority of the
outstanding Shares of such Fund. Each advisory agreement may be terminated by
GALAXY VIP or by Fleet or Columbia, as the case may be, on sixty days' written
notice, and will terminate immediately in the event of its assignment.

First Data Investor Services Group, Inc. ("Investor Services Group") serves
as GALAXY VIP's administrator. Under the administration agreement, Investor
Services Group has agreed to maintain office facilities for GALAXY VIP, furnish
GALAXY VIP with statistical and research data, clerical, accounting, and
bookkeeping services, certain other services such as internal auditing services
required by GALAXY VIP, and compute the net asset value and net income of the
Funds. Investor Services Group prepares the Funds' annual and semi-annual
reports to the SEC, Federal and state tax returns, and filings with state
securities commissions, arranges for and bears the cost of processing Share
purchase and redemption orders, maintains the Funds' financial accounts and
records, and generally assists in all aspects of GALAXY VIP's operations. For
the services provided and expenses assumed pursuant to the Administration
Agreement, GALAXY VIP has agreed to pay Investor Services Group administration
fees, computed daily and paid monthly, at the annual rate of .085% of the first
$1 billion of the combined average daily net assets of the Funds, plus .078% of
the next $1.5 billion of the combined average daily net assets of the Funds,
plus .073% of the combined average daily net assets of the Funds in excess of
$2.5 billion. In the event that the combined average daily net assets of the
Funds exceed $5 billion, the parties intend to review the level of compensation
payable to Investor Services Group for its administration services. The minimum
aggregate annual fee payable for administration services is $100,000. In
addition, Investor Services Group receives a separate annual fee from each Fund
for certain fund accounting services and is paid by each Fund for custody
services provided by GALAXY VIP's custodian. From time to time, Investor
Services Group may waive all or a portion of the fees payable to it by the
Funds, either voluntarily or pursuant to applicable statutory expense
limitations.

For the fiscal year ended December 31, 1994, GALAXY VIP paid Investor
Services Group net administration, custody and fund accounting fees of $13,298,
$15,624, $14,314 and $11,024 for the Money Market Fund, the Equity Fund, the
Asset Allocation Fund and the High Quality Bond Fund, respectively. For the
fiscal year ended December 31, 1995, GALAXY VIP paid Investor Services Group net
administration, custody and fund accounting fees of $31,702, $63,860, $62,035
and $31,092 for the Money Market Fund, the Equity Fund, the Asset Allocation
Fund and the High Quality Bond Fund, respectively. For the fiscal year ended
December 31, 1996, GALAXY VIP paid Investor Services Group net administration,
custody and fund accounting fees of $41,131, $66,778, $70,758 and $36,993 for
the Money Market Fund, the Equity Fund, the Asset Allocation Fund and the High
Quality Bond Fund, respectively.

CUSTODIAN

The Chase Manhattan Bank ("Chase Manhattan") serves as custodian to the
Funds pursuant to a Global Custody Agreement. Chase Manhattan's custody fees are
paid by Investor Services Group. Under its custody agreement, Chase Manhattan
has agreed to: (i) maintain a separate account or accounts in the name of each
Fund; (ii) hold and disburse portfolio securities on account of each Fund; (iii)
collect and make disbursements of money on behalf of each Fund; (iv) collect and
receive all income and other payments and distributions on account of each
Fund's portfolio securities; (v) respond to correspondence from security brokers
and others relating to its duties; and (vi) make periodic reports to the Board
of Trustees concerning the Funds' operations. Chase Manhattan is authorized to
select one or more banks or trust companies to serve as sub-custodian for the
Funds, provided that Chase Manhattan shall remain responsible for the
performance of all of its duties under the custodian agreement and shall be
liable to the Funds for any loss which shall occur as a result of the failure of
a sub-custodian to exercise reasonable care with respect to the safekeeping of
the Funds' assets. In addition, Chase Manhattan may employ sub-custodians for
the Growth and Income Fund, Small Company Growth Fund,

14
<PAGE>
Columbia Real Estate Equity Fund II, Asset Allocation Fund and Columbia High
Yield Fund II upon prior approval by the Board of Trustees in accordance with
the regulations of the SEC, for the purpose of providing custodial services for
the foreign assets of those Funds held outside the United States. The assets of
the Funds are held under bank custodianship in compliance with the 1940 Act.

PORTFOLIO TRANSACTIONS

Debt securities purchased or sold by the Money Market Fund, Asset Allocation
Fund, High Quality Bond Fund and Columbia High Yield Fund II are generally
traded in the over-the-counter market on a net basis (I.E., without commission)
through dealers, or otherwise involve transactions directly with the issuer of
an instrument. The cost of securities purchased from underwriters includes an
underwriting commission or concession, and the prices at which securities are
purchased from and sold to dealers include a dealer's mark-up or mark-down.

Transactions in equity securities on U.S. stock exchanges for the Equity
Fund, Growth and Income Fund, Small Company Growth Fund, Columbia Real Estate
Equity Fund II and Asset Allocation Fund involve the payment of negotiated
brokerage commissions. On U.S. stock exchanges on which commissions are
negotiated, the cost of transactions may vary among different brokers.
Transactions in the over-the-counter market are generally principal transactions
with dealers and the costs of such transactions involve dealer spreads rather
than brokerage commissions. With respect to over-the-counter transactions, Fleet
or Columbia, as the case may be, will normally deal directly with the dealers
who make a market in the securities involved except in those circumstances where
better prices and execution are available elsewhere or as described below.

For the fiscal years ended December 31, 1996, 1995 and 1994, the Equity Fund
paid brokerage commissions aggregating $13,235, $9,625 and $9,446, respectively.
For the fiscal years ended December 31, 1996, 1995 and 1994, the Asset
Allocation Fund paid brokerage commissions aggregating $9,717, $8,136 and
$4,403, respectively.

The Equity Fund, Growth and Income Fund, Small Company Growth Fund, Columbia
Real Estate Equity Fund II, Asset Allocation Fund, High Quality Bond Fund and
Columbia High Yield Fund II may engage in short-term trading to achieve their
investment objectives. Portfolio turnover may vary greatly from year to year as
well as within a particular year. The Money Market Fund does not intend to seek
profits from short-term trading. Its annual portfolio turnover will be
relatively high, but since brokerage commissions are normally not paid on money
market instruments, it should not have a material effect on the net income of
the Fund. The portfolio turnover rates for the Equity Fund, Asset Allocation
Fund and High Quality Bond Fund for the six-month period ended June 30, 1997,
for each of the last three fiscal years and for the period from the commencement
of operations is disclosed in the Prospectus under "Financial Highlights."
Although the Growth and Income Fund, Small Company Growth Fund, Columbia Real
Estate Equity Fund II and Columbia High Yield Fund II cannot accurately predict
their respective annual portfolio turnover rates, it is not expected to exceed
100% for any of these Funds.

In purchasing or selling securities for the Funds, Fleet or Columbia, as the
case may be, will seek to obtain the best net price and the most favorable
execution of orders. To the extent that the execution and price offered by more
than one broker/dealer are comparable, Fleet or Columbia may effect transactions
in portfolio securities with broker/dealers who provide research, advice or
other services such as (1) advice as to the value of securities, the
advisability of investing in, purchasing or selling securities and the
availability of securities or purchasers or sellers of securities and (2)
analyses and reports concerning industries, securities, economic factors and
trends, portfolio strategy and the performance of accounts. It is possible that
certain of the research, advice or other services received will primarily
benefit one or more other investment companies or other accounts for which Fleet
or Columbia exercises investment discretion. Conversely, GALAXY VIP or any given
Fund may be the primary beneficiary of the research, advice or other services
received as a result of portfolio transactions effected for such other accounts
or investment companies.

Except as permitted by the SEC or applicable law, the Funds will not acquire
portfolio securities from, make savings deposits in, enter into repurchase or
reverse repurchase agreements with, or sell securities to,

15
<PAGE>
Fleet, Columbia, Investor Services Group or their affiliates, and will not give
preference to affiliates and correspondent banks of Fleet or Columbia with
respect to such transactions.

GALAXY VIP is required to identify any securities of its "regular brokers or
dealers" that GALAXY VIP has acquired during its most recent fiscal year. At
December 31, 1997, the Asset Allocation Fund held 2,000 shares of common stock
of Chase Manhattan Corp. valued at $219,000. The Chase Manhattan Bank (or
affiliates) is considered a "regular broker or dealer" of GALAXY VIP.

Investment decisions for each Fund are made independently from those for the
other Funds and for any other investment companies and accounts advised or
managed by Fleet or Columbia. When a purchase or sale of the same security is
made at substantially the same time on behalf of a Fund, another portfolio of
GALAXY VIP, and/or another investment company or account, the transaction will
be averaged as to price, and available investments allocated as to amount, in a
manner which Fleet or Columbia, as the case may be, believes to be equitable to
the Fund and such other portfolio, investment company or account. In some
instances, this investment procedure may adversely affect the price paid or
received by a Fund or the size of the position obtained or sold by such Fund. To
the extent permitted by law, Fleet or Columbia, as the case may be, may
aggregate the securities to be sold or purchased for a Fund with those to be
sold or purchased for its other portfolios, or other investment companies or
accounts in order to obtain best execution.

DISTRIBUTOR

Unless otherwise terminated, the Distribution Agreement between GALAXY VIP
and FD Distributors remains in effect until May 31, 1998, and thereafter will
continue from year to year upon annual approval by GALAXY VIP's Board of
Trustees, or by the vote of a majority of the outstanding Shares of GALAXY VIP
and by the vote of a majority of the Board of Trustees of GALAXY VIP who are not
parties to the Agreement or interested persons of any such party, cast in person
at a meeting called for the purpose of voting on such approval. The Agreement
will terminate in the event of its assignment, as defined in the 1940 Act.

AUDITORS

Coopers & Lybrand L.L.P., independent certified public accountants, with
offices at One Post Office Square, Boston, Massachusetts 02109, serve as
auditors to GALAXY VIP. Coopers & Lybrand L.L.P. performs an annual audit of the
Funds' financial statements and provides other services related to filings with
respect to securities regulations. Reports of its activities are provided to the
Board of Trustees.

COUNSEL

Drinker Biddle & Reath LLP (of which Mr. McConnel, Secretary of GALAXY VIP,
is a partner), Philadelphia National Bank Building, 1345 Chestnut Street,
Philadelphia, Pennsylvania 19107, are counsel to GALAXY VIP and will pass upon
certain legal matters pertaining to the Shares offered hereby.

PERFORMANCE AND YIELD INFORMATION

YIELD QUOTATIONS -- MONEY MARKET FUND

The standardized annualized seven-day yield for the Money Market Fund is
computed by: (1) determining the net change, exclusive of capital changes, in
the value of a hypothetical pre-existing account in the Fund having a balance of
one Share at the beginning of a seven-day period, for which the yield is to be
quoted, (2) dividing the net change in account value by the value of the account
at the beginning of the base period to obtain the base period return, and (3)
annualizing the results (I.E., multiplying the base period return by (365/7)).
The net change in the value of the account in the Fund includes the value of
additional Shares purchased with dividends from the original Share and dividends
declared on both the original Share and any such additional Shares, and all fees
that are charged by the Fund to all shareholder accounts in proportion to the
length of the

16
<PAGE>
base period, other than nonrecurring account and sales charges. For any account
fees that vary with the size of the account, the amount of fees charged is
computed with respect to the Fund's mean (or median) account size. The capital
changes to be excluded from the calculation of the net change in account value
are realized gains and losses from the sale of the securities and unrealized
appreciation and depreciation. The effective compound yield quotation for the
Fund is computed by adding 1 to the unannualized base period return (calculated
as described above), raising the sum to a power equal to 365 divided by 7, and
subtracting 1 from the result.

The current yield for the Money Market Fund may be obtained by calling
GALAXY VIP at 1-800-628-0414. For the seven-day period ended June 30, 1997, the
annualized yield of the Money Market Fund was 4.93% and the effective yield was
5.05%.

YIELD AND TOTAL RETURN QUOTATIONS -- NON-MONEY MARKET FUNDS

The Equity Fund's, Growth and Income Fund's, Small Company Growth Fund's,
Columbia Real Estate Equity Fund II's, Asset Allocation Fund's, High Quality
Bond Fund's or Columbia High Yield Fund II's 30-day (or one month) yield
described in the Prospectus is calculated for each Fund in accordance with the
method prescribed by the SEC for mutual funds:

a-b 6
YIELD = 2[(----+1)- 1]
cd

<TABLE>
<S> <C> <C>
Where: a = dividends and interest earned by a Fund during the period;
b = expenses accrued for the period (net of reimbursements);
c = average daily number of Shares outstanding during the period, entitled to receive
dividends;
and
d = maximum offering price per Share on the last day of the period.
</TABLE>

For the purpose of determining net investment income earned during the period
(variable "a" in the formula), dividend income on equity securities held by a
Fund is recognized by accruing 1/360 of the stated dividend rate of the security
each day that the security is in the Fund. Except as noted below, interest
earned on debt obligations held by a Fund is calculated by computing the yield
to maturity of each obligation based on the market value of the obligation
(including actual accrued interest) at the close of business on the last
business day of each month, or, with respect to obligations purchased during the
month, the purchase price (plus actual accrued interest) and dividing the result
by 360 and multiplying the quotient by the market value of the obligation
(including actual accrued interest) in order to determine the interest income on
the obligation for each day of the subsequent month that the obligation is held
by the Fund. For purposes of this calculation, it is assumed that each month
contains 30 days. The maturity of an obligation with a call provision is the
next call date on which the obligation reasonably may be expected to be called
or, if none, the maturity date. With respect to debt obligations purchased at a
discount or premium, the formula generally calls for amortization of the
discount or premium. The amortization schedule will be adjusted monthly to
reflect changes in the market value of such debt obligations. Expenses accrued
for the period (variable "b" in the formula) include all recurring fees charged
by a Fund to all shareholder accounts in proportion to the length of the base
period and the Fund's mean (or median) account size. Undeclared earned income
will be subtracted from the offering price per Share (variable "d" in the
formula).

With respect to mortgage or other receivables-backed obligations which are
expected to be subject to monthly payments of principal and interest
("pay-downs") (i) gain or loss attributable to actual monthly pay downs are
accounted for as an increase or decrease to interest income during the period
and (ii) each Fund may elect either (a) to amortize the discount and premium on
the remaining security, based on the cost of the security, to the weighted
average maturity date, if such information is available, or to the remaining
term of the security, if any, if the weighted average date is not available or
(b) not to amortize discount or premium on the remaining security.

Based on the foregoing calculation, the yields of the Equity Fund, Asset
Allocation Fund and High Quality Bond Fund for the 30-day period ended June 30,
1997 were (0.07)%, 1.65% and 5.13%, respectively.

17
<PAGE>
Each Fund that advertises its "average annual total return" computes such
return by determining the average annual compounded rate of return during
specified periods that equates the initial amount invested to the ending
redeemable value of such investment according to the following formula:

ERV 1/n
T = [(-----)- 1]
P

<TABLE>
<S> <C> <C>
Where: T = average annual total return;
ERV = ending redeemable value of a hypothetical $1,000 payment made at the beginning
of the 1, 5 or 10 year (or other) periods at the end of the applicable period
(or a fractional portion thereof);
P = hypothetical initial payment of $1,000; and
n = period covered by the computation, expressed in years.
</TABLE>

Each Fund that advertises its "aggregate total return" computes such returns
by determining the aggregate compounded rates of return during specified periods
that likewise equate the initial amount invested to the ending redeemable value
of such investment. The formula for calculating aggregate total return is as
follows:

ERV
Aggregate Total Return =[(-----) - 1]
P

The calculations are made assuming that (1) all dividends and capital gain
distributions are reinvested on the reinvestment dates at the price per Share
existing on the reinvestment date, (2) all recurring fees charged to all
shareholder accounts are included, and (3) for any account fees that vary with
the size of the account, a mean (or median) account size in the Fund during the
periods is reflected. The ending redeemable value (variable "ERV" in the
formula) is determined by assuming complete redemption of the hypothetical
investment after deduction of all nonrecurring charges at the end of the
measuring period. The annual total returns for the Equity Fund, Asset Allocation
Fund and High Quality Bond Fund for the one year period ended June 30, 1997 were
31.81%, 19.64% and 7.22%, respectively. The average annual total returns for the
Equity Fund, Asset Allocation Fund and High Quality Bond Fund for the period
from commencement of operations (January 11, 1993 with respect to the Equity
Fund, February 6, 1993 with respect to the Asset Allocation Fund and January 21,
1993 with respect to the High Quality Bond Fund) through June 30, 1997 were
16.20%, 12.73% and 5.73%, respectively.

MISCELLANEOUS

As used in the Prospectus, "assets belonging to a Fund" means the
consideration received by GALAXY VIP upon the issuance of Shares in that
particular Fund, together with all income, earnings, profits, and proceeds
derived from the investment thereof, including any proceeds from the sale of
such investments, any funds or payments derived from any reinvestment of such
proceeds and a portion of any general assets of GALAXY VIP not belonging to a
particular Fund. In determining a Fund's net asset value, assets belonging to
the particular Fund are charged with the direct liabilities in respect of that
Fund and with a share of the general liabilities of GALAXY VIP which are
allocated in proportion to the relative asset values of the respective Funds at
the time of allocation. Subject to the provisions of GALAXY VIP's Agreement and
Declaration of Trust, determinations by the Board of Trustees as to the direct
and allocable liabilities, and the allocable portion of any general assets with
respect to a particular Fund, are conclusive.

As of November 20, 1997, all of the issued and outstanding shares of each
Fund were owned by American Skandia Life Assurance Corporation and held in
Separate Accounts pursuant to variable annuity contracts.

18
<PAGE>
APPENDIX A

COMMERCIAL PAPER RATINGS

A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt considered short-term in the relevant
market. The following summarizes the rating categories used by Standard and
Poor's for commercial paper:

"A-1" Issue's degree of safety regarding timely payment is strong. Those
issues determined to possess extremely strong safety characteristics
are denoted "A-1+."

"A-2" Issue's capacity for timely payment is satisfactory. However, the
relative degree of safety is not as high as for issues designated
"A-1."

"A-3" Issue has an adequate capacity for timely payment. It is, however,
somewhat more vulnerable to the adverse effects of changes in
circumstances than an obligation carrying a higher designation.

"B" Issue has only a speculative capacity for timely payment.

"C" Issue has a doubtful capacity for payment.

"D" Issue is in payment default.

Moody's commercial paper ratings are opinions of the ability of issuers to
repay punctually promissory obligations not having an original maturity in
excess of 9 months. The following summarizes the rating categories used by
Moody's for commercial paper:

"Prime-1" Issuer or related supporting institutions are considered to have a
superior capacity for repayment of short-term promissory
obligations. Prime-1 repayment capacity will normally be evidenced
by the following characteristics: leading market positions in well
established industries; high rates of return on funds employed;
conservative capitalization structures with moderate reliance on
debt and ample asset protection; broad margins in earning coverage
of fixed financial charges and high internal cash generation; and
well established access to a range of financial markets and assured
sources of alternate liquidity.

"Prime-2" Issuer or related supporting institutions are considered to have a
strong capacity for repayment of short-term promissory obligations.
This will normally be evidenced by many of the characteristics cited
above but to a lesser degree. Earnings trends and coverage ratios,
while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by
external conditions. Ample alternative liquidity is maintained.

"Prime-3" Issuer or related supporting institutions have an acceptable
capacity for repayment of short-term promissory obligations. The
effects of industry characteristics and market composition may be
more pronounced. Variability in earnings and profitability may
result in changes in the level of debt protection measurements and
the requirement for relatively high financial leverage. Adequate
alternate liquidity is maintained.

"Not Prime" Issuer does not fall within any of the Prime rating categories.

The three rating categories of Duff & Phelps for investment grade commercial
paper and short-term debt are "D-1," "D-2" and "D-3." Duff & Phelps employs
three designations, "D-1+," "D-1" and "D-1-," within the highest rating
category. The following summarizes the rating categories used by Duff & Phelps
for commercial paper:

"D-1+" Debt possesses highest certainty of timely payment. Short-term
liquidity, including internal operating factors and/or access to
alternative sources of funds, is outstanding, and safety is just below
risk-free U.S. Treasury short-term obligations.

"D-1" Debt possesses very high certainty of timely payment. Liquidity
factors are excellent and supported by good fundamental protection
factors. Risk factors are minor.

"D-1-" Debt possesses high certainty of timely payment. Liquidity factors are
strong and supported by good fundamental protection factors. Risk
factors are very small.

A-1
<PAGE>
"D-2" Debt possesses good certainty of timely payment. Liquidity factors
and company fundamentals are sound. Although ongoing funding needs
may enlarge total financing requirements, access to capital markets
is good. Risk factors are small.

"D-3" Debt possesses satisfactory liquidity, and other protection factors
qualify issue as investment grade. Risk factors are larger and
subject to more variation. Nevertheless, timely payment is expected.

"D-4" Debt possesses speculative investment characteristics. Liquidity is
not sufficient to ensure against disruption in debt service.
Operating factors and market access may be subject to a high degree
of variation.

"D-5" Issuer has failed to meet scheduled principal and/or interest
payments.

Fitch IBCA short-term ratings apply to debt obligations that are payable on
demand or have original maturities of generally up to three years. The following
summarizes the rating categories used by Fitch IBCA for short-term obligations:

"F-1+" Securities possess exceptionally strong credit quality. Issues
assigned this rating are regarded as having the strongest degree of
assurance for timely payment.

"F-1" Securities possess very strong credit quality. Issues assigned this
rating reflect an assurance of timely payment only slightly less in
degree than issues rated "F-1+."

"F-2" Securities possess good credit quality. Issues assigned this rating
have a satisfactory degree of assurance for timely payment, but the
margin of safety is not as great as the "F-1+" and "F-1" categories.

"F-3" Securities possess fair credit quality. Issues assigned this rating
have characteristics suggesting that the degree of assurance for
timely payment is adequate; however, near-term adverse changes could
cause these securities to be rated below investment grade.

"B" Securities possess weak credit quality. Issues assigned this rating
have characteristics suggesting a minimal degree of assurance for
timely payment and are vulnerable to near-term adverse changes in
financial and economic conditions.

"C" Securities possess very weak credit quality. Issues assigned this
rating have a real possibility of default.

"D" Securities are in actual or imminent payment default.

Thomson BankWatch short-term ratings assess the likelihood of an untimely or
incomplete payment of principal or interest of unsubordinated instruments having
a maturity of one year or less which are issued by United States commercial
banks, thrifts and non-bank banks; non-United States banks; and broker-dealers.
The following summarizes the ratings used by Thomson BankWatch:

"TBW-1" This designation represents Thomson BankWatch's highest rating
category and indicates a very high degree of likelihood that principal
and interest will be paid on a timely basis.

"TBW-2" This designation indicates that while the degree of safety regarding
timely payment of principal and interest is strong, the relative
degree of safety is not as high as for issues rated "TBW-1."

"TBW-3" This designation represents the lowest investment grade category and
indicates that while the debt is more susceptible to adverse
developments (both internal and external) than obligations with higher
ratings, capacity to service principal and interest in a timely
fashion is considered adequate.

"TBW-4" This designation indicates that the debt is regarded as non-investment
grade and therefore speculative.

A-2
<PAGE>
CORPORATE AND MUNICIPAL LONG-TERM DEBT RATINGS

The following summarizes the ratings used by Standard & Poor's for corporate
and municipal debt:

"AAA" This designation represents the highest rating assigned by Standard &
Poor's to a debt obligation and indicates an extremely strong
capacity to pay interest and repay principal.

"AA" Debt is considered to have a very strong capacity to pay interest and
repay principal and differs from AAA issues only in small degree.

"A" Debt is considered to have a strong capacity to pay interest and
repay principal although such issues are somewhat more susceptible
to the adverse effects of changes in circumstances and economic
conditions than debt in higher-rated categories.

"BBB" Debt is regarded as having an adequate capacity to pay interest and
repay principal. Whereas such issues normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in
higher-rated categories.

"BB," "B," "CCC," "CC" and "C" -- Debt is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. "BB" indicates the
lowest degree of speculation and "C" the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.

"BB" Debt has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which
could lead to inadequate capacity to meet timely interest and
principal payments. The "BB" rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied
"BBB-" rating.

"B" Debt has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair
capacity or willingness to pay interest and repay principal. The "B"
rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied "BB" or "BB-" rating.

"CCC" Debt has a currently identifiable vulnerability to default, and is
dependent upon favorable business, financial and economic conditions
to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial or economic conditions, it is not
likely to have the capacity to pay interest and repay principal. The
CCC rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied "B" or "B-" rating.

"CC" This rating is typically applied to debt subordinated to senior debt
that is assigned an actual or implied "CCC" rating.

"C" This rating is typically applied to debt subordinated to senior debt
which is assigned an actual or implied "CCC-" debt rating. The "C"
rating may be used to cover a situation where a bankruptcy petition
has been filed, but debt service payments are continued.

"CI" This rating is reserved for income bonds on which no interest is
being paid.

"D" Debt is in payment default. This rating is used when interest
payments or principal payments are not made on the date due, even if
the applicable grace period has not expired, unless S & P believes
that such payments will be made during such grace period. "D" rating
is also used upon the filing of a bankruptcy petition if debt service
payments are jeopardized.

PLUS (+) OR MINUS (-) -- The ratings from "AA" through "CCC" may be modified
by the addition of a plus or minus sign to show relative standing within the
major rating categories.

"r" This rating is attached to highlight derivative, hybrid, and certain
other obligations that S & P believes may experience high volatility
or high variability in expected returns due to non-credit risks.
Examples of such obligations are: securities whose principal or
interest return is indexed to

A-3
<PAGE>
equities, commodities, or currencies; certain swaps and options; and
interest only and principal only mortgage securities.

The following summarizes the ratings used by Moody's for corporate and
municipal long-term debt:

"Aaa" Bonds are judged to be of the best quality. They carry the smallest
degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can
be visualized are most unlikely to impair the fundamentally strong
position of such issues.

"Aa" Bonds are judged to be of high quality by all standards. Together
with the "Aaa" group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in "Aaa" securities or
fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risks
appear somewhat larger than in "Aaa" securities.

"A" Bonds possess many favorable investment attributes and are to be
considered as upper medium-grade obligations. Factors giving
security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to impairment
sometime in the future.

"Baa" Bonds considered medium-grade obligations, i.e., they are neither
highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over
any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.

"Ba," "B," "Caa," "Ca," and "C" -- Bonds that possess one of these ratings
provide questionable protection of interest and principal ("Ba" indicates some
speculative elements; "B" indicates a general lack of characteristics of
desirable investment; "Caa" represents a poor standing; "Ca" represents
obligations which are speculative in a high degree; and "C" represents the
lowest rated class of bonds). "Caa," "Ca" and "C" bonds may be in default.

Con. (---) Bonds for which the security depends upon the completion of some
act or the fulfillment of some condition are rated conditionally.
These are bonds secured by (a) earnings of projects under
construction, (b) earnings of projects unseasoned in operation
experience, (c) rentals which begin when facilities are completed,
or (d) payments to which some other limiting condition attaches.
Parenthetical rating denotes probable credit stature upon
completion of construction or elimination of basis of condition.

(P)... When applied to forward delivery bonds, indicates that the rating
is provisional pending delivery of the bonds. The rating may be
revised prior to delivery if changes occur in the legal documents
or the underlying credit quality of the bonds.

The following summarizes the long-term debt ratings used by Duff & Phelps
for corporate and municipal long-term debt:

"AAA" Debt is considered to be of the highest credit quality. The risk
factors are negligible, being only slightly more than for risk-free
U.S. Treasury debt.

"AA" Debt is considered of high credit quality. Protection factors are
strong. Risk is modest but may vary slightly from time to time
because of economic conditions.

"A" Debt possesses protection factors which are average but adequate.
However, risk factors are more variable and greater in periods of
economic stress.

"BBB" Debt possesses below average protection factors but such protection
factors are still considered sufficient for prudent investment.
Considerable variability in risk is present during economic cycles.

A-4
<PAGE>
"BB," "B," "CCC," "DD," and "DP" -- Debt that possesses one of these ratings
is considered to be below investment grade. Although below investment grade,
debt rated "BB" is deemed likely to meet obligations when due. Debt rated "B"
possesses the risk that obligations will not be met when due. Debt rated "CCC"
is well below investment grade and has considerable uncertainty as to timely
payment of principal, interest or preferred dividends. Debt rated "DD" is a
defaulted debt obligation, and the rating "DP" represents preferred stock with
dividend arrearages.

To provide more detailed indications of credit quality, the "AA," "A,"
"BBB," "BB" and "B" ratings may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within these major categories.

The following summarizes the highest four ratings used by Fitch IBCA for
corporate and municipal bonds:

"AAA" Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.

"AA" Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated "AAA."
Because bonds rated in the "AAA" and "AA" categories are not
significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated "F-1+."

"A" Bonds considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse
changes in economic conditions and circumstances than bonds with
higher ratings.

"BBB" Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have an adverse impact on
these bonds, and therefore, impair timely payment. The likelihood that
the ratings of these bonds will fall below investment grade is higher
than for bonds with higher ratings.

"BB," "B," "CCC," "CC," "C," and "D" -- Bonds that possess one of these
ratings are considered by Fitch IBCA to be speculative investments. The ratings
BB to C represent Fitch IBCA's assessment of the likelihood of timely payment of
principal and interest in accordance with the terms of obligation for bond
issues not in default. For defaulted bonds, the rating "D" is an assessment of
the ultimate recovery value through reorganization or liquidation.

To provide more detailed indications of credit quality, the Fitch ratings
from and including "AA" to "C" may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within these major rating categories.

Thomson BankWatch assesses the likelihood of an untimely repayment of
principal or interest over the term to maturity of long term debt and preferred
stock which are issued by United States commercial banks, thrifts and non-bank
banks; non-United States banks; and broker-dealers. The following summarizes the
rating categories used by Thomson BankWatch for long-term debt ratings:

"AAA" This designation represents the highest category assigned by Thomson
BankWatch to long-term debt and indicates that the ability to repay
principal and interest on a timely basis is extremely high.

"AA" This designation indicates a very strong ability to repay principal
and interest on a timely basis with limited incremental risk compared
to issues rated in the highest category.

"A" This designation indicates that the ability to repay principal and
interest is strong. Issues rated "A" could be more vulnerable to
adverse developments (both internal and external) than obligations
with higher ratings.

"BBB" This designation represents Thomson BankWatch's lowest investment
grade category and indicates an acceptable capacity to repay principal
and interest. Issues rated "BBB" are, however,

A-5
<PAGE>
more vulnerable to adverse developments (both internal and external)
than obligations with higher ratings.

"BB," "B," "CCC," and "CC," -- These designations are assigned by Thomson
BankWatch to non-investment grade long-term debt. Such issues are regarded as
having speculative characteristics regarding the likelihood of timely payment of
principal and interest. "BB" indicates the lowest degree of speculation and "CC"
the highest degree of speculation.

"D" This designation indicates that the long-term debt is in default.

PLUS (+) OR MINUS (-) -- The ratings from "AAA" through "CC" may include a
plus or minus sign designation which indicates where within the respective
category the issue is placed.

MUNICIPAL NOTE RATINGS

A Standard and Poor's rating reflects the liquidity concerns and market
access risks unique to notes due in three years or less. The following
summarizes the ratings used by Standard & Poor's Ratings Group for municipal
notes:

"SP-1" The issuers of these municipal notes exhibit very strong or strong
capacity to pay principal and interest. Those issues determined to
possess overwhelming safety characteristics are given a plus (+)
designation.

"SP-2" The issuers of these municipal notes exhibit satisfactory capacity
to pay principal and interest.

"SP-3" The issuers of these municipal notes exhibit speculative capacity to
pay principal and interest.

Moody's ratings for state and municipal notes and other short-term loans are
designated Moody's Investment Grade ("MIG") and variable rate demand obligations
are designated Variable Moody's Investment Grade ("VMIG"). Such ratings
recognize the differences between short-term credit risk and long-term risk. The
following summarizes the ratings by Moody's Investors Service, Inc. for
short-term notes:

"MIG-1/VMIG-1" Loans bearing this designation are of the best quality, enjoying
strong protection by established cash flows, superior liquidity
support or demonstrated broad-based access to the market for
refinancing.

"MIG-2/VMIG-2" Loans bearing this designation are of high quality, with margins
of protection ample although not so large as in the preceding
group.

"MIG-3/VMIG-3" Loans bearing this designation are of favorable quality, with
all security elements accounted for but lacking the undeniable
strength of the preceding grades. Liquidity and cash flow
protection may be narrow and market access for refinancing is
likely to be less well established.

"MIG-4/VMIG-4" Loans bearing this designation are of adequate quality, carrying
specific risk but having protection commonly regarded as
required of an investment security and not distinctly or
predominantly speculative.

"SG" Loans bearing this designation are of speculative quality and
lack margins of protection.

Fitch IBCA and Duff & Phelps use the short-term ratings described under
Commercial Paper Ratings for municipal notes.

A-6
<PAGE>
APPENDIX B

As stated in the Prospectus and in this Statement of Additional Information,
certain of the Funds may enter into futures transactions and options thereon for
hedging purposes. Such transactions are described in this Appendix.

I. INTEREST RATE FUTURES CONTRACTS

USE OF INTEREST RATE FUTURES CONTRACTS. Bond prices are established in both
the cash market and the futures market. In the cash market, bonds are purchased
and sold with payment for the full purchase price of the bond being made in
cash, generally within five business days after the trade. In the futures
market, only a contract is made to purchase or sell a bond in the future for a
set price on a certain date. Historically, the prices for bonds established in
the futures markets have tended to move generally in the aggregate in concert
with the cash market prices and have maintained fairly predictable
relationships. Accordingly, a Fund may use interest rate futures contracts as a
defense, or hedge, against anticipated interest rate changes and not for
speculation. As described below, this would include the use of futures contract
sales to protect against expected increases in interest rates and futures
contract purchases to offset the impact of interest rate declines.

A Fund presently could accomplish a similar result to that which it hopes to
achieve through the use of futures contracts by selling bonds with long
maturities and investing in bonds with short maturities when interest rates are
expected to increase, or conversely, selling short-term bonds and investing in
long-term bonds when interest rates are expected to decline. However, because of
the liquidity that is often available in the futures market, the protection is
more likely to be achieved, perhaps at a lower cost and without changing the
rate of interest being earned by a Fund, through using futures contracts.

DESCRIPTION OF INTEREST RATE FUTURES CONTRACTS. An interest rate futures
contract sale would create an obligation by a Fund, as seller, to deliver the
specific type of financial instrument called for in the contract at a specific
future time for a specified price. A futures contract purchase would create an
obligation by a Fund, as purchaser, to take delivery of the specific type of
financial instrument at a specific future time at a specific price. The specific
securities delivered or taken, respectively, at settlement date, would not be
determined until at or near that date. The determination would be in accordance
with the rules of the exchange on which the futures contract sale or purchase
was made.

Although interest rate futures contracts by their terms call for actual
delivery or acceptance of securities, in most cases the contracts are closed out
before the settlement date without the making or taking of delivery of
securities. Closing out a futures contract sale is effected by a Fund's entering
into a futures contract purchase for the same aggregate amount of the specific
type of financial instrument and the same delivery date. If the price of the
sale exceeds the price of the offsetting purchase, a Fund immediately is paid
the difference and thus realizes a gain. If the offsetting purchase price
exceeds the sale price, a Fund pays the difference and realizes a loss.
Similarly, the closing out of a futures contract purchase is effected by a Fund
entering into a futures contract sale. If the offsetting sale price exceeds the
purchase price, a Fund realizes a gain, and if the purchase price exceeds the
offsetting sale price, a Fund realizes a loss.

Interest rate futures contracts are traded in an auction environment on the
floors of several exchanges -- principally, the Chicago Board of Trade, the
Chicago Mercantile Exchange and the New York Futures Exchange. A Fund would deal
only in standardized contracts on recognized exchanges. Each exchange guarantees
performance under contract provisions through a clearing corporation, a
nonprofit organization managed by the exchange membership.

A public market now exists in futures contracts covering various financial
instruments including long-term United States Treasury Bonds and Notes;
Government National Mortgage Association (GNMA) modified pass-through mortgage
backed securities; three-month United States Treasury Bills; and ninety-day
commercial paper. A Fund may trade in any interest rate futures contracts for
which there exists a public market, including, without limitation, the foregoing
instruments.

EXAMPLE OF FUTURES CONTRACT SALE. A Fund would engage in an interest rate
futures contract sale to maintain the income advantage from continued holding of
a long-term bond while endeavoring to avoid part or

B-1
<PAGE>
all of the loss in market value that would otherwise accompany a decline in
long-term securities prices. Assume that the market value of a certain security
held by a Fund tends to move in concert with the futures market prices of
long-term United States Treasury bonds ("Treasury bonds"). Fleet or Columbia, as
the case may be, wishes to fix the current market value of this portfolio
security until some point in the future. Assume the portfolio security has a
market value of 100, and Fleet or Columbia believes that, because of an
anticipated rise in interest rates, the value will decline to 95. A Fund might
enter into futures contract sales of Treasury bonds for an equivalent of 98. If
the market value of the portfolio security does indeed decline from 100 to 95,
the equivalent futures market price for the Treasury bonds might also decline
from 98 to 93.

In that case, the five point loss in the market value of the portfolio
security would be offset by the five point gain realized by closing out the
futures contract sale. Of course, the futures market price of Treasury bonds
might well decline to more than 93 or to less than 93 because of the imperfect
correlation between cash and futures prices mentioned below.

Fleet or Columbia could be wrong in its forecast of interest rates and the
equivalent futures market price could rise above 98. In this case, the market
value of the portfolio securities, including the portfolio security being
protected, would increase. The benefit of this increase would be reduced by the
loss realized on closing out the futures contract sale.

If interest rate levels did not change, a Fund in the above example might
incur a loss of 2 points (which might be reduced by an offsetting transaction
prior to the settlement date). In each transaction, transaction expenses would
also be incurred.

EXAMPLE OF FUTURES CONTRACT PURCHASE. A Fund would engage in an interest
rate futures contract purchase when it is not fully invested in long-term bonds
but wishes to defer for a time the purchase of long-term bonds in light of the
availability of advantageous interim investments, e.g., shorter term securities
whose yields are greater than those available on long-term bonds. A Fund's basic
motivation would be to maintain for a time the income advantage from investing
in the short-term securities; a Fund would be endeavoring at the same time to
eliminate the effect of all or part of an expected increase in market price of
the long-term bonds that a Fund may purchase.

For example, assume that the market price of a long-term bond that a Fund
may purchase, currently yielding 10%, tends to move in concert with futures
market prices of Treasury bonds. Fleet or Columbia, as the case may be, wishes
to fix the current market price (and thus 10% yield) of the long-term bond until
the time (four months away in this example) when it may purchase the bond.
Assume the long-term bond has a market price of 100, and Fleet or Columbia
believes that, because of an anticipated fall in interest rates, the price will
have risen to 105 (and the yield will have dropped to about 9 1/2%) in four
months. A Fund might enter into futures contracts purchases of Treasury bonds
for an equivalent price of 98. At the same time, a Fund would assign a pool of
investments in short-term securities that are either maturing in four months or
earmarked for sale in four months, for purchase of the long-term bond at an
assumed market price of 100. Assume these short-term securities are yielding
15%. If the market price of the long-term bond does indeed rise from 100 to 105,
the equivalent futures market price for Treasury bonds might also rise from 98
to 103. In that case, the 5 point increase in the price that a Fund pays for the
long-term bond would be offset by the 5 point gain realized by closing out the
futures contract purchase.

Fleet or Columbia could be wrong in its forecast of interest rates;
long-term interest rates might rise to above 10%; and the equivalent futures
market price could fall below 98. If short-term rates at the same time fall to
10% or below, it is possible that a Fund would continue with its purchase
program for long-term bonds. The market price of available long-term bonds would
have decreased. The benefit of this price decrease, and thus yield increase,
will be reduced by the loss realized on closing out the futures contract
purchase.

If, however, short-term rates remained above available long-term rates, it
is possible that a Fund would discontinue its purchase program for long-term
bonds. The yield on short-term securities in the portfolio, including those
originally in the pool assigned to the particular long-term bond, would remain
higher than yields on long-term bonds. The benefit of this continued incremental
income will be reduced by the loss realized on closing out the futures contract
purchase. In each transaction, expenses would also be incurred.

B-2
<PAGE>
II. INDEX FUTURES CONTRACTS

A stock or bond index assigns relative values to the stocks or bonds
included in the index and the index fluctuates with changes in the market values
of the stocks or bonds included. A stock or bond index futures contract is a
bilateral agreement pursuant to which two parties agree to take or make delivery
of an amount of cash equal to a specified dollar amount times the difference
between the stock index value (which assigns relative values to the common
stocks or bonds included in the index) at the close of the last trading day of
the contract and the price at which the futures contract is originally struck.
No physical delivery of the underlying stocks in the index is made. Some stock
index futures contracts are based on broad market indices, such as the Standard
& Poor's 500 or the New York Stock Exchange Composite Index. In contrast,
certain exchanges offer futures contracts on narrower market indices, such as
the Standard & Poor's 100 or indices based on an industry or market segment,
such as oil and gas stocks. Futures contracts are traded on organized exchanges
regulated by the Commodity Futures Trading Commission. Transactions on such
exchanges are cleared through a clearing corporation, which guarantees the
performance of the parties to each contract.

A Fund will sell index futures contracts in order to offset a decrease in
market value of its portfolio securities that might otherwise result from a
market decline. A Fund may do so either to hedge the value of its portfolio as a
whole, or to protect against declines, occurring prior to sales of securities,
in the value of the securities to be sold. Conversely, a Fund will purchase
index futures contracts in anticipation of purchases of securities. In a
substantial majority of these transactions, a Fund will purchase such securities
upon termination of the long futures position, but a long futures position may
be terminated without a corresponding purchase of securities.

In addition, a Fund may utilize index futures contracts in anticipation of
changes in the composition of its portfolio holdings. For example, in the event
that a Fund expects to narrow the range of industry groups represented in its
holdings it may, prior to making purchases of the actual securities, establish a
long futures position based on a more restricted index, such as an index
comprised of securities of a particular industry group. A Fund may also sell
futures contracts in connection with this strategy, in order to protect against
the possibility that the value of the securities to be sold as part of the
restructuring of their respective portfolios will decline prior to the time of
sale.

The following are examples of transactions in stock index futures (net of
commissions and premiums, if any).

ANTICIPATORY PURCHASE HEDGE: Buy the Future
Hedge Objective: Protect Against Increasing Price

<TABLE>
<CAPTION>
PORTFOLIO FUTURES
- ----------------------------------------------------- -----------------------------------------------------
<S> <C>
-Day Hedge is Placed-

Anticipate Buying $62,500 Buying 1 Index Futures at 125
Equity Portfolio Value of Futures = $62,500/Contract

-Day Hedge is Lifted-

Buy Equity Portfolio with Sell 1 Index Futures at 130
Actual Cost = $65,000 Value of Futures = $65,000/Contract
Increase in Purchase Price = $2,500 Gain on Futures = $2,500
</TABLE>

B-3
<PAGE>
HEDGING A STOCK PORTFOLIO: Sell the Future
Hedge Objective: Protect Against Declining
Value of the Fund

Factors:

Value of Stock Fund = $1,000,000
Value of Futures Contract = 125 x $500 = $62,500
Fund Beta Relative to the Index = 1.0

<TABLE>
<CAPTION>
PORTFOLIO FUTURES
- ----------------------------------------------------- -----------------------------------------------------
<S> <C>
-Day Hedge is Placed-

Anticipate Selling $1,000,000 Sell 16 Index Futures at 125
Equity Portfolio Value of Futures = $1,000,000

-Day Hedge is Lifted-

Equity Portfolio-Own Stock Buy 16 Index Futures at 120
with Value =$960,000 Value of Futures = $960,000
Loss in Fund Value = $40,000 Gain on Futures = $40,000
</TABLE>

If, however, the market moved in the opposite direction, that is, market
value decreased and a Fund had entered into an anticipatory purchase hedge, or
market value increased and a Fund had hedged its stock portfolio, the results of
the Fund's transactions in stock index futures would be as set forth below.

ANTICIPATORY PURCHASE HEDGE: Buy the Future
Hedge Objective: Protect Against Increasing Price

<TABLE>
<CAPTION>
PORTFOLIO FUTURES
- ----------------------------------------------------- -----------------------------------------------------
<S> <C>
-Day Hedge is Placed-

Anticipate Buying $62,500 Buying 1 Index Futures at 125
Equity Portfolio Value of Futures = $62,500/Contract

-Day Hedge is Lifted-

Buy Equity Portfolio with Sell 1 Index Futures at 120
Actual Cost - $60,000 Value of Futures = $60,000/Contract
Decrease in Purchase Price = $2,500 Loss on Futures = $2,500
</TABLE>

HEDGING A STOCK PORTFOLIO: Sell the Future
Hedge Objective: Protect Against Declining
Value of the Fund

Factors:

Value of Stock Fund = $1,000,000
Value of Futures Contract = 125 x $500 = $62,500
Fund Beta Relative to the Index = 1.0

<TABLE>
<CAPTION>
PORTFOLIO FUTURES
- ----------------------------------------------------- -----------------------------------------------------

<S> <C>
-Day Hedge is Placed-

Anticipate Selling $1,000,000 Sell 16 Index Futures at 125
Equity Portfolio Value of Futures = $1,000,000

-Day Hedge is Lifted-

Equity Portfolio-Own Stock Buy 16 Index Futures at 130
with Value = $1,040,000 Value of Futures = $1,040,000
Gain in Fund Value = $40,000 Loss of Futures = $40,000
</TABLE>

B-4
<PAGE>
III. FUTURES CONTRACTS ON FOREIGN CURRENCIES

A futures contract on foreign currency creates a binding obligation on one
party to deliver, and a corresponding obligation on another party to accept
delivery of, a stated quantity of a foreign currency, for an amount fixed in
U.S. dollars. Foreign currency futures may be used by a Fund to hedge against
exposure to fluctuations in exchange rates between the U.S. dollar and other
currencies arising from multinational transactions.

IV. MARGIN PAYMENTS

Unlike purchases or sales of portfolio securities, no price is paid or
received by a Fund upon the purchase or sale of a futures contract. Initially, a
Fund will be required to deposit with the broker or in a segregated account with
the Fund's custodian an amount of cash or liquid securities, known as initial
margin, based on the value of the contract. The nature of initial margin in
futures transactions is different from that of margin in security transactions
in that futures contract margin does not involve the borrowing of funds by the
customer to finance the transactions. Rather, the initial margin is in the
nature of a performance bond or good faith deposit on the contract which is
returned to a Fund upon termination of the futures contract assuming all
contractual obligations have been satisfied. Subsequent payments, called
variation margin, to and from the broker, will be made on a daily basis as the
price of the underlying instruments fluctuates making the long and short
positions in the futures contract more or less valuable, a process known as
marking-to-the-market. For example, when a Fund has purchased a futures contract
and the price of the contract has risen in response to a rise in the underlying
instruments, that position will have increased in value and a Fund will be
entitled to receive from the broker a variation margin payment equal to that
increase in value. Conversely, where a Fund has purchased a futures contract and
the price of the future contract has declined in response to a decrease in the
underlying instruments, the position would be less valuable and a Fund would be
required to make a variation margin payment to the broker. At any time prior to
expiration of the futures contract, Fleet or Columbia, as the case may be, may
elect to close the position by taking an opposite position, subject to the
availability of a secondary market, which will operate to terminate a Fund's
position in the futures contract. A final determination of variation margin is
then made, additional cash is required to be paid by or released to a Fund, and
a Fund realizes a loss or gain.

V. RISKS OF TRANSACTIONS IN FUTURES CONTRACTS

There are several risks in connection with the use of futures by a Fund as
hedging devices. One risk arises because of the imperfect correlation between
movements in the price of the futures and movements in the price of the
instruments which are the subject of the hedge. The price of the futures may
move more than or less than the price of the instruments being hedged. If the
price of the futures moves less than the price of the instruments which are the
subject of the hedge, the hedge will not be fully effective but, if the price of
the instruments being hedged has moved in an unfavorable direction, a Fund would
be in a better position than if it had not hedged at all. If the price of the
instruments being hedged has moved in a favorable direction, this advantage will
be partially offset by the loss on the futures. If the price of the futures
moves more than the price of the hedged instruments, a Fund will experience
either a loss or gain on the futures which will not be completely offset by
movements in the price of the instruments which are the subject of the hedge. To
compensate for the imperfect correlation of movements in the price of
instruments being hedged and movements in the price of futures contracts, a Fund
may buy or sell futures contracts in a greater dollar amount than the dollar
amount of instruments being hedged if the volatility over a particular time
period of the prices of such instruments has been greater than the volatility
over such time period of the futures, or if otherwise deemed to be appropriate
by Fleet or Columbia, as the case may be. Conversely, a Fund may buy or sell
fewer futures contracts if the volatility over a particular time period of the
prices of the instruments being hedged is less than the volatility over such
time period of the futures contract being used, or if otherwise deemed to be
appropriate by Fleet or Columbia. It is also possible that, where a Fund had
sold futures to hedge its portfolio against a decline in the market, the market
may advance and the value of instruments held in a Fund may decline. If this
occurred, a Fund would lose money on the futures and also experience a decline
in value in its portfolio securities.

Where futures are purchased to hedge against a possible increase in the
price of securities before a Fund is able to invest its cash (or cash
equivalents) in an orderly fashion, it is possible that the market may decline
instead; if a Fund then concludes not to invest its cash at that time because of
concern as to possible further

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<PAGE>
market decline or for other reasons, a Fund will realize a loss on the futures
contract that is not offset by a reduction in the price of the instruments that
were to be purchased.

In instances involving the purchase of futures contracts by a Fund, an
amount of liquid assets, equal to the market value of the futures contracts,
will be deposited in a segregated account with the Fund's custodian and/or in a
margin account with a broker to collateralize the position and thereby insure
that the use of such futures is unleveraged.

In addition to the possibility that there may be an imperfect correlation,
or no correlation at all, between movements in the futures and the instruments
being hedged, the price of futures may not correlate perfectly with movement in
the cash market due to certain market distortions. Rather than meeting
additional margin deposit requirements, investors may close futures contracts
through off-setting transactions which could distort the normal relationship
between the cash and futures markets. Second, with respect to financial futures
contracts, the liquidity of the futures market depends on participants entering
into off-setting transactions rather than making or taking delivery. To the
extent participants decide to make or take delivery, liquidity in the futures
market could be reduced thus producing distortions. Third, from the point of
view of speculators, the deposit requirements in the futures market are less
onerous than margin requirements in the securities market. Therefore, increased
participation by speculators in the futures market may also cause temporary
price distortions. Due to the possibility of price distortion in the futures
market, and because of the imperfect correlation between the movements in the
cash market and movements in the price of futures, a correct forecast of general
market trends or interest rate movements by Fleet or Columbia may still not
result in a successful hedging transaction over a short time frame.

Positions in futures may be closed out only on an exchange or board of trade
which provides a secondary market for such futures. Although the Funds intend to
purchase or sell futures only on exchanges or boards of trade where there appear
to be active secondary markets, there is no assurance that a liquid secondary
market on any exchange or board of trade will exist for any particular contract
or at any particular time. In such event, it may not be possible to close a
futures investment position, and in the event of adverse price movements, a Fund
would continue to be required to make daily cash payments of variation margin.
However, in the event futures contracts have been used to hedge portfolio
securities, such securities will not be sold until the futures contract can be
terminated. In such circumstances, an increase in the price of the securities,
if any, may partially or completely offset losses on the futures contract.
However, as described above, there is no guarantee that the price of the
securities will in fact correlate with the price movements in the futures
contract and thus provide an offset on a futures contract.

Further, it should be noted that the liquidity of a secondary market in a
futures contract may be adversely affected by "daily price fluctuation limits"
established by commodity exchanges which limit the amount of fluctuation in a
futures contract price during a single trading day. Once the daily limit has
been reached in the contract, no trades may be entered into at a price beyond
the limit, thus preventing the liquidation of open futures positions. The
trading of futures contracts is also subject to the risk of trading halts,
suspensions, exchange or clearing house equipment failures, government
intervention, insolvency of a brokerage firm or clearing house or other
disruptions of normal activity, which could at times make it difficult or
impossible to liquidate existing positions or to recover excess variation margin
payments.

Successful use of futures by a Fund is also subject to the ability of Fleet
or Columbia, as the case may be, to predict correctly movements in the direction
of the market. For example, if a Fund has hedged against the possibility of a
decline in the market adversely affecting securities held by it and securities
prices increase instead, a Fund will lose part or all of the benefit to the
increased value of its securities which it has hedged because it will have
offsetting losses in its futures positions. In addition, in such situations, if
a Fund has insufficient cash, it may have to sell securities to meet daily
variation margin requirements. Such sales of securities may be, but will not
necessarily be, at increased prices which reflect the rising market. A Fund may
have to sell securities at a time when it may be disadvantageous to do so.

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<PAGE>
FINANCIAL STATEMENTS

The audited financial statements for the Money Market Fund, Equity Fund,
Asset Allocation Fund and High Quality Bond Fund and notes thereto in GALAXY
VIP's Annual Report to Shareholders for the fiscal year ended December 31, 1996
and the unaudited financial statements for the Money Market Fund, Equity Fund,
Asset Allocation Fund and High Quality Bond Fund and notes thereto in GALAXY
VIP's Semi-Annual Report to Shareholders for the six-month period ended June 30,
1997 are incorporated into this Statement of Additional Information by
reference. No other parts of the Annual and Semi-Annual Reports are incorporated
by reference herein. The financial statements included in the Annual Report have
been audited by the Fund's independent accountants, Coopers & Lybrand L.L.P.,
whose report thereon is incorporated herein by reference. Such audited financial
statements have been incorporated herein in reliance upon such report given upon
their authority as experts in accounting and auditing. Additional copies of the
Annual and Semi-Annual Reports may be obtained free of charge by telephoning the
GALAXY VIP at 800-628-0414.

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