ANNUAL REPORT
December 31, 1999
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GALAXY VIP III FUNDS
GALAXY VARIABLE ANNUITY III
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GALAXY FUNDS
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CHAIRMAN'S MESSAGE
Dear Variable Annuity Policyholder:
Enclosed is the annual report for The Galaxy VIP Fund for the fiscal year
ended December 31, 1999. The report includes a Market Overview that describes
the different factors influencing investment returns during this period.
Following the Market Overview are individual portfolio reviews that describe how
Fleet Investment Advisors Inc. and Columbia Management Co. managed the
portfolios in this climate. Financial statements for each portfolio and a list
of each portfolio's holdings as of December 31, 1999 appear at the end of the
report.
Unexpected economic strength, prompted in part by recoveries abroad,
pushed major U.S. stock indices sharply higher in 1999. Stocks gained despite
concerns about inflation that caused the Federal Reserve (the "Fed") to boost
interest rates and bond yields to rise. As uncertainty increased about the
direction of interest rates and economic growth, however, stock prices became
more volatile. After rising sharply in the first and second quarters of the
year, major stock indices gave up a large part of those gains in the third
quarter. The indices then surged to new highs in the fourth quarter, as
investors saw that economic growth remained strong. Although returns for most
sectors were better than their historic averages, some outperformed by wide
margins. As higher interest rates eroded the prices for bonds, bond returns were
negative.
If you have any questions about the information in this report, please
contact the Galaxy Information Center toll-free at 1-877-BUY-GALAXY
(1-877-289-4252). You can also visit one of our investment professionals located
at Fleet branches.
Sincerely,
[/s] signature omitted]
Dwight E. Vicks, Jr.
Chairman of the Board of Trustees
THIS REPORT RELATES TO THE CLASS 3 SUB-ACCOUNTS OF AMERICAN SKANDIA LIFE
ASSURANCE CORPORATION VARIABLE ACCOUNT B. THESE SUB-ACCOUNTS ARE DISTRIBUTED
UNDER THE NAME GALAXY VARIABLE ANNUITY III. THE UNDERLYING MUTUAL FUND
PORTFOLIOS IN WHICH THE SUB-ACCOUNTS INVEST ARE (A) THE GALAXY VIP FUND
(PORTFOLIOS - MONEY MARKET, EQUITY, GROWTH AND INCOME, SMALL COMPANY GROWTH,
COLUMBIA REAL ESTATE EQUITY II, ASSET ALLOCATION, HIGH QUALITY BOND AND COLUMBIA
HIGH YIELD II FUNDS); AND (B) AMERICAN SKANDIA TRUST (PORTFOLIOS - T. ROWE PRICE
INTERNATIONAL BOND, FOUNDERS CAPITAL APPRECIATION, INVESCO EQUITY INCOME, AND T.
ROWE PRICE INTERNATIONAL EQUITY FUNDS). THE FIRST PART OF THIS REPORT, THROUGH
PAGE 52, RELATES TO THE GALAXY VIP FUND ONLY. THE SECOND PART OF THIS REPORT,
RELATES TO THE AMERICAN SKANDIA TRUST (AND INCLUDES FIVE ADDITIONAL MUTUAL FUNDS
THAT ARE OFFERED IN CONNECTION WITH THE SUB-ACCOUNTS).
THE GALAXY VIP FUND AND THE AMERICAN SKANDIA TRUST PORTFOLIOS OFFERED IN
CONNECTION WITH THE SUB-ACCOUNTS ARE SEPARATELY MANAGED AND HAVE DIFFERENT
BOARDS OF TRUSTEES.
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MUTUAL FUNDS:
[Bullet] ARE NOT BANK DEPOSITS
[Bullet] ARE NOT FDIC INSURED
[Bullet] ARE NOT OBLIGATIONS OF FLEETBANK
[Bullet] ARE NOT GUARANTEED BY FLEETBANK
[Bullet] ARE SUBJECT TO INVESTMENT RISK
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED
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MARKET OVERVIEW
"HEAVY CONSUMER SPENDING IN THE FIRST QUARTER OF 1999 SPARKED AN UNEXPECTEDLY
STRONG 4.3% INCREASE IN THE GROSS DOMESTIC PRODUCT ("GDP"), WHICH MEASURES THE
OUTPUT OF U.S. GOODS AND SERVICES."
MARKET OVERVIEW
BY FLEET INVESTMENT ADVISORS INC.
In 1999, improving economic conditions at home and abroad, combined with
moderate inflation, drove major stock market indices to double-digit returns for
a fifth straight year. These returns represented exceptional performance by an
ever-narrowing group of issues, however, with technology and communications
stocks increasingly dominating both the large- and small-capitalization sectors.
Although the Standard & Poor's 500 Index ("S&P 500 Index"), which represents
large-cap stocks, earned a total return of 21.03%, about half of the stocks in
the S&P 500 Index delivered negative returns. As a result, the average stock in
the S&P 500 Index had a return of 12.24% for the year. With sizable gains in the
second and fourth quarters of the year, small-cap issues represented in the
Russell 2000 Index ("Russell 2000") had a total return of 21.26%. In both the
large- and small-cap sectors, growth stocks outperformed value-oriented issues.
Bond prices fell sharply during the year, as the Fed sought to curb future
inflation by raising interest rates and investors shifted from bonds into
stocks. For just the second time in 26 years, the Lehman Brothers
Government/Corporate Bond Index had a negative total return, ending the year
down 2.15%.
STRONG GROWTH HELPS STOCKS, HURTS BONDS
Heavy consumer spending in the first quarter of 1999 sparked an
unexpectedly strong 4.3% increase in the Gross Domestic Product ("GDP"), which
measures the output of U.S. goods and services. In such a positive economic
climate, investors tended to ignore further weakness in corporate earnings. The
S&P 500 Index earned a total return of nearly 5% for the quarter. As in 1998,
small-company stocks remained out of favor, leaving the Russell 2000 with a
total return of -5.4%.
During the first quarter, bond investors worried that continued economic
strength would bring higher inflation and interest rates. Of particular concern
was a tight labor market that threatened to increase wages. With investors
believing that the Fed would probably raise interest rates to stem inflation,
bond prices fell enough to drive the yield for 30-year Treasury bonds from 5.09%
to 5.63%. An ease in the "flight to quality" of 1998 encouraged investors to
shift from Treasuries into better-yielding corporate bonds and mortgage-backed
securities. Corporates from economically sensitive "cyclical" industries
performed particularly well.
With continued gains in productivity and industrial production, further
growth in personal income and spending, and a 29-year low in unemployment,
economic optimism continued in the second quarter of 1999. Although the Commerce
Department would eventually report that GDP growth had slowed to 1.8% for the
quarter, the Fed remained concerned enough about future inflation to raise
short-term rates by 25 basis points (0.25%) on June 30.
Bond prices declined in anticipation of the rate hike, leaving long-term
Treasury yields at 5.95% by the end of June. With corporate supplies strong and
Treasury supplies shrinking, Treasuries outperformed corporates for the quarter.
Despite the threat of higher interest rates, stocks continued to rally. Hopeful
that the long-lived expansion would continue, investors shifted into small- and
mid-sized firms, as well as value-oriented stocks and cyclical sectors. The
Russell 2000 earned an exceptional total return of 15.6% for the quarter, versus
7.1% for the S&P 500 Index.
The broadening in stock market sentiment ended abruptly in the third
quarter, as anticipation of further interest rate increases sent investors back
to large-cap stocks. Although inflation was still moderate, the rate of GDP
growth improved to 5.5%. With accelerating growth and a weak dollar threatening
a future increase in inflation, the Fed raised rates another 25 basis points in
August.
The potential impact of higher interest rates on economic growth sent
stock prices lower, giving the S&P 500 Index a total return of -6.24% for the
quarter and the Russell 2000 a total return of -6.32%. Bond prices fell enough
to send 30-year Treasury yields to 6.05% by the end of September. In a renewed
flight to quality, Treasuries continued to outperform most other fixed-income
issues.
With economic growth still strong in the fourth quarter of 1999, the Fed
raised interest
2
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"WITH CONTINUED ECONOMIC OPTIMISM, CORPORATE BONDS OUTPERFORMED TREASURY BONDS
SLIGHTLY. STOCK INDICES REBOUNDED FROM THEIR THIRD-QUARTER WEAKNESS, AS
"MOMENTUM" INVESTING DROVE NARROW SEGMENTS OF THE MARKET TO STRATOSPHERIC
HIGHS."
rates another 25 basis points in November. Anticipation of this and future rate
hikes drove long-term Treasury yields to 6.48% by the end of the year, for a
total increase of about 140 basis points over the end of 1998.
With continued economic optimism, corporate bonds outperformed Treasury
bonds slightly. Stock indices rebounded from their third-quarter weakness, as
"momentum" investing drove narrow segments of the market to stratospheric highs.
For the quarter, the S&P 500 Index earned a total return of 14.88%, and the
Russell 2000 returned 18.45%.
PORTFOLIO STRATEGIES
Throughout the period, the Galaxy VIP equity portfolios traded holdings
that had performed well for investments with better performance potential. In
making these shifts, we continued to emphasize quality companies with proven
earnings, strong earnings outlooks, and reasonable prices. We remained firm in
the belief that it was more prudent to buy stocks with real earnings than to
speculate on stocks with no earnings that were currently in favor. This
attention to earnings and price served the portfolios well, as strong
performance by many individual issues added to returns.
With a positive economic climate helping corporates and other non-Treasury
issues outperform, we gave greater attention to these issues during the year. In
addition to better price performance, such investments enhanced returns of the
Galaxy VIP bond portfolios with higher yields.
HIGHER RATES, SLOWER GROWTH AHEAD
We believe the economic momentum that developed in 1999 will probably
carry over into 2000, with an average GDP growth rate of about 3.5%. Continued
growth could also push inflation higher and prompt the Fed to make further hikes
in interest rates. Later in the year, such rate hikes could slow growth,
allowing bond yields to stabilize or fall. With the incremental yields that
investors demand for investing in non-Treasury bonds still wide versus
historical standards, non-Treasury issues could outperform while growth remains
strong. Given the added attention to these investments in the Galaxy VIP bond
portfolios, the portfolios could perform well under such conditions.
Uncertainty about interest rates and economic growth could make stock
prices volatile in coming months and may even prompt a temporary market
correction. With a positive outlook for growth in years to come, such a
correction could lay the foundation for future gains from the many stocks that
have lagged the market averages in recent years.
Given this outlook, we plan to continue favoring stocks with real growth
prospects and reasonable prices over stocks with perceived growth opportunities
at exorbitant prices. We also expect to keep the Galaxy VIP equity portfolios
well diversified. We feel there is great risk in concentrating on a few stocks,
especially those with the most excessive market valuations. Given the historical
extreme in the difference between the 1999 performance of the "haves" and the
"have-nots," we believe that there are many attractive investment opportunities
in the market today.
3
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PERFORMANCE AT-A-GLANCE
GALAXY VIP FUNDS PERFORMANCE AT-A-GLANCE -- AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999 1 YEAR 3 YEARS 5 YEARS LIFE OF FUND
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Money Market Fund
(INCEPTION DATE 2/2/93) 4.86% 5.00% 5.06% 4.62%
............................................................................................................
Equity Fund
(INCEPTION DATE 1/11/93) 27.18 26.13 25.31 18.84
............................................................................................................
Growth and Income Fund
(INCEPTION DATE 3/4/98) 7.10 N/A N/A 6.07
............................................................................................................
Small Company Growth Fund
(INCEPTION DATE 4/17/98) 67.49 N/A N/A 26.61
............................................................................................................
Columbia Real Estate Equity Fund II
(INCEPTION DATE 3/3/98) -4.13 N/A N/A -7.51
............................................................................................................
Asset Allocation Fund
(INCEPTION DATE 2/6/93) 7.06 14.41 17.37 12.80
............................................................................................................
High Quality Bond Fund
(INCEPTION DATE 1/21/93) -3.78 4.90 7.62 5.41
............................................................................................................
Columbia High Yield Fund II
(INCEPTION DATE 3/3/98) 0.56 N/A N/A 5.46
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</TABLE>
<TABLE>
<CAPTION>
GALAXY VIP FUNDS PRODUCT PERFORMANCE AT-A-GLANCE -- AVERAGE ANNUAL TOTAL RETURNS
(VARIABLE ACCOUNT B, CLASS 3 INCEPTION 5/1/95)
AS OF DECEMBER 31, 1999 1 YEAR 3 YEARS 5 YEARS LIFE OF FUND
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Money Market Fund 3.80% 3.92% 3.98% 3.56%
............................................................................................................
Equity Fund 26.91 24.87 24.03 17.64
............................................................................................................
Growth and Income Fund 6.03 N/A N/A 4.98
............................................................................................................
Small Company Growth Fund 65.82 N/A N/A 23.29
............................................................................................................
Columbia Real Estate Equity Fund II -5.09 N/A N/A -8.41
............................................................................................................
Asset Allocation Fund 6.51 13.27 16.18 11.67
............................................................................................................
High Quality Bond Fund -4.75 3.85 6.53 4.35
............................................................................................................
Columbia High Yield Fund II -0.46 N/A N/A 4.38
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</TABLE>
THESE RESULTS REFLECT THE EXPERIENCE OF THE SUB-ACCOUNTS OF VARIABLE
ACCOUNT B, CLASS 3 OF AMERICAN SKANDIA LIFE ASSURANCE CORPORATION AND
INCLUDE ALL MANAGEMENT FEES AND EXPENSES AND INSURANCE COSTS AND
ACCORDINGLY WILL BE DIFFERENT FROM THE PERFORMANCE OF THE CORRESPONDING
GALAXY VIP FUND. THE VARIABLE ACCOUNT B, CLASS 3 SUB-ACCOUNTS PURCHASE
SHARES OF THE GALAXY VIP FUND. THE SUB-ACCOUNTS ARE GAL MONEY MARKET, GAL
EQUITY, GAL GROWTH AND INCOME, GAL SMALL COMPANY GROWTH, GAL COLUMBIA REAL
ESTATE EQUITY II, GAL ASSET ALLOCATION, GAL HIGH QUALITY BOND, AND
GAL COLUMBIA HIGH YIELD II. THE PERFORMANCE DATA QUOTED REPRESENTS PAST
PERFORMANCE AND THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT
WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST. THE ADVISOR AND THE ADMINISTRATOR
ARE PRESENTLY WAIVING OR REIMBURSING FEES FOR THE GALAXY VIP MONEY MARKET
FUND, GROWTH AND INCOME FUND, SMALL COMPANY GROWTH FUND, COLUMBIA REAL
ESTATE EQUITY FUND II, HIGH QUALITY BOND FUND AND COLUMBIA HIGH YIELD FUND
II. WITHOUT SUCH WAIVERS OR REIMBURSEMENTS, PERFORMANCE WOULD BE LOWER. AN
INVESTMENT IN THE GALAXY VIP MONEY MARKET FUND IS NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE
GALAXY VIP MONEY MARKET FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET
VALUE OF $1.00 PER SHARE.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURNS AND
PRINCIPAL VALUES WILL VARY WITH MARKET CONDITIONS SO THAT AN INVESTOR'S SHARES,
WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THE
INVESTMENT ADVISOR AND ADMINISTRATOR ARE PRESENTLY WAIVING FEES AND/OR
REIMBURSING EXPENSES AND MAY REVISE OR DISCONTINUE SUCH PRACTICE AT ANY TIME.
WITHOUT SUCH WAIVERS AND/OR REIMBURSEMENTS, PERFORMANCE WOULD BE LOWER. TOTAL
RETURN FIGURES IN THIS REPORT INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS AND INCLUDE THE DEDUCTION OF ANY SALES
CHARGES, WHERE APPLICABLE, UNLESS OTHERWISE INDICATED. AN INVESTMENT IN THE
GALAXY VIP MONEY MARKET FUND IS NEITHER INSURED NOR GUARANTEED BY THE FDIC OR
U.S. GOVERNMENT. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR
INVESTMENT AT $1.00 PER SHARE, YOU COULD LOSE MONEY BY INVESTING IN THIS FUND.
4
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PORTFOLIO REVIEWS
[PHOTO OMITTED]
KAREN ARNEIL HAS MANAGED THE GALAXY VIP MONEY MARKET FUND SINCE SEPTEMBER 1996.
SHE HAS MANAGED MONEY MARKET INVESTMENTS SINCE 1993.
GALAXY VIP MONEY MARKET FUND
PORTFOLIO MANAGER
KAREN ARNEIL
The Galaxy VIP Money Market Fund seeks as high a level of current income
as is consistent with liquidity and stability of principal.
Increases in interest rates by the Federal Reserve drove money market
yields higher in the past year. By positioning the Fund to take advantage of
these rate hikes, we helped the Fund earn a total return of 4.86% for the 12
months ended December 31, 1999. Over the same period, the average money market
fund tracked by Lipper Analytical Services ("Lipper") earned a total return of
4.49%. On December 31, 1999, the Fund had an average maturity of 30 days, a
7-day Securities and Exchange Commission ("SEC") effective yield of 5.85%, and a
30-day SEC effective yield of 5.78%.
ANTICIPATING FED RATE HIKES
At the start of the period, the Fund benefited from issues with high
yields that we'd purchased at the end of 1998. Because investors did not expect
the Fed to raise interest rates, the yield curve was flat for most of 1999's
first quarter. As a result, we focused on issues with shorter maturities.
Beginning in the second quarter, investors anticipated the Fed would have to
raise interest rates. The expectation of higher interest rates then persisted
for much of the rest of the year. In this environment, we clustered the maturity
dates of the Fund's investments around the dates of Fed meetings. This let us
get an immediate increase in the yield as the Fed raised rates on June 30,
August 24 and November 16.
As we approached year end, the market assumed that the Fed would not raise
rates again before its meeting in February 2000 due to Y2K liquidity concerns.
As yields increased for paper that matured into 2000, we added this paper to the
Fund's portfolio to enhance yield.
CONTINUED FOCUS ON FED MEETINGS
As long as investors expect the Fed to boost interest rates, money market
yields should continue to rise. To make the most of any rate hikes, we expect to
continue buying investments that mature near the dates of Fed meetings. As
always, we plan to make the most of special yield opportunities that arise from
market fluctuations and emphasize high-quality investments with strong
liquidity.
GALAXY VIP MONEY MARKET FUND
DISTRIBUTION OF TOTAL NET ASSETS AS OF DECEMBER 31, 1999
[GRAPH OMITTED]
REPURCHASE AGREEMENT &
NET OTHER ASSETS AND LIABILITIES 10%
U.S. AGENCY OBLIGATIONS 8%
COMMERCIAL PAPER AND
CORPORATE NOTE 82%
GALAXY VIP MONEY MARKET FUND
7-DAY AVERAGE YIELDS
[GRAPH OMITTED]
PLOT POINTS AS FOLLOWS
1/1/99 4.54
2/28/99 4.41
3/31/99 4.42
4/30/99 4.39
5/31/99 4.37
6/30/99 4.5
7/31/99 4.66
8/31/99 4.88
9/30/99 4.98
10/31/99 5.07
11/30/99 5.44
12/31/99 5.72
AN INVESTMENT IN THE GALAXY VIP MONEY MARKET FUND IS NEITHER INSURED NOR
GUARANTEED BY THE FDIC OR U.S. GOVERNMENT. ALTHOUGH THE FUND SEEKS TO PRESERVE
THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY
INVESTING IN THIS FUND.
5
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PORTFOLIO REVIEWS
[PHOTO OMITTED]
ROBERT G. ARMKNECHT HAS MANAGED THE GALAXY VIP EQUITY FUND SINCE JULY 1998. HE
HAS MANAGED EQUITY PORTFOLIOS FOR FLEET INVESTMENT ADVISORS INC. SINCE 1988.
GALAXY VIP EQUITY FUND
PORTFOLIO MANAGER
ROBERT G. ARMKNECHT
The Galaxy VIP Equity Fund seeks long-term growth by investing in stocks
of companies that Fleet Investment Advisors Inc. believes have the potential for
above-average earnings growth.
At a time when investors generally favored growth stocks, we focused
investments in the Fund on high-quality companies in industries with especially
strong growth prospects. This strategy helped the Fund outperform both its
market benchmark and other funds with similar investment objectives during the
12 months ended December 31, 1999. The Fund's total return for the reporting
period was 27.18%. That compares with returns of 21.03% for the S&P 500 Index
and 22.35% for the average large-cap core fund tracked by Lipper.
MIX OF GROWTH STOCKS WORKS WELL
In looking for high-quality companies with especially strong promise for
growth, we emphasized stocks in the technology, communications, energy, health
care, and consumer staples sectors. This mix worked quite well during the year.
After strong gains from energy, semiconductor, and health care stocks offset
disappointing returns from communications stocks in the first quarter of the
year, the outperformance of energy stocks and an overweighted capital goods
position offset the dampening effect on health care stocks of suggested Medicaid
reform in the second quarter. In the third quarter, an outperformance by energy
and communications stocks overcame weaker returns from financial stocks hurt by
rising interest rates. Exceptional gains by technology, communications, and
consumer stocks in the fourth quarter, along with solid gains by basic materials
stocks, offset weaker returns from energy, health care, financial, and retail
stocks. The Fund also benefited during the period from superior stock selection
within industry sectors.
Throughout the year, we traded holdings that had performed well for better
investment opportunities. Besides adding stocks in our five areas of emphasis,
we purchased stocks of capital goods, manufacturing, and consumer cyclical firms
that we thought were particularly attractive.
WELL-POSITIONED FOR A SLOWDOWN
As stocks adjust to higher interest rates and a possible slowdown in
growth, the Fund should continue to benefit from its emphasis on stocks with
above-average growth potential and attractive valuations. Because we believe
stocks in the fastest-growing industries will continue to lead the market, we
plan to take advantage of any new investment opportunities in those areas that a
correction might bring. By maintaining a diversified portfolio of stocks in
large companies that are leaders in their faster-growing industries, we believe
the Fund should have the resources to weather any market weakness relatively
well.
GALAXY VIP EQUITY FUND
DISTRIBUTION OF TOTAL NET ASSETS AS OF DECEMBER 31, 1999
[GRAPH OMITTED]
OTHER COMMON STOCKS & NET OTHER ASSETS AND LIABILITIES 5%
REPURCHASE AGREEMENT 2%
CONSUMER STAPLES 15%
TECHNOLOGY 34%
ENERGY 9%
FINANCE 10%
CAPITAL GOODS AND CONSTRUCTION 9%
CONSUMER CYCLICAL 16%
GALAXY VIP EQUITY FUND
GROWTH OF $10,000 INVESTMENT*
[GRAPH OMITTED]
PLOT POINTS AS FOLLOWS
S&P EQUITY
Inception 10,000 10,000
31-Dec-93 11,009 10,450
31-Dec-94 11,151 10,813
31-Dec-95 15,336 13,706
31-Dec-96 20,762 16,595
12/31/97 27,686 21,198
12/31/98 35,648 26,184
12/31/99 43,145 33,299
*SINCE INCEPTION ON 1/11/93. THE S&P 500 INDEX IS AN UNMANAGED INDEX OF 500
LEADING STOCKS. RESULTS FOR THE INDEX DO NOT REFLECT INVESTMENT MANAGEMENT FEES
AND OTHER EXPENSES INCURRED BY THE FUND.
6
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PORTFOLIO REVIEWS
[PHOTO OMITTED]
GREGORY M. MILLER HAS MANAGED THE GALAXY VIP GROWTH AND INCOME FUND SINCE JULY
1998. HE HAS MANAGED EQUITY PORTFOLIOS SINCE 1989.
GALAXY VIP GROWTH AND INCOME FUND
PORTFOLIO MANAGER
GREGORY M. MILLER
The Galaxy VIP Growth and Income Fund seeks a relatively high total return
through long-term capital appreciation and current income. The Fund invests in a
diversified portfolio consisting primarily of common stocks selected through
traditional research techniques. The Fund's modest income orientation is
intended to both enhance returns and dampen stock price volatility.
With investors favoring growth stocks over value-oriented stocks for most
of 1999, we tried to enhance the Fund's returns by taking advantage of the many
attractive investment opportunities that became available and reducing holdings
in stocks whose price gains had diminished their performance potential. As a
result of this approach, the Fund earned a total return of 7.10% for the 12
months ended December 31, 1999. Over the same period, the S&P 500 Index had a
total return of 21.03%, and the average multi-cap value fund tracked by Lipper
had a total return of 7.78%.
ENERGY STOCKS ENHANCE RETURNS
For most of the year, the Fund benefited from an overweighted energy
position that produced strong returns as oil prices rebounded. Although the Fund
was underweighted in technology and communications stocks, due to their very
high valuations, individual holdings in these sectors contributed positively to
performance, particularly in the second half of the year. Of further help were
gains by selected transportation, retail, and cyclical issues and
underweightings in the lesser-performing utility and consumer staples groups.
These positives helped offset lagging returns from technology and health care
stocks in the first half of the year and financial and cyclical stocks in the
second half.
During the first half of 1999, we used profits from health care, capital
goods, and consumer cyclical stocks to buy stocks of consumer staples firms and
other stocks with attractive price potential. In the third quarter, we continued
to take profits in health care stocks, while trimming banking and technology
stocks that had performed well. This let us increase other technology positions,
as well as selected energy holdings. With further profits from technology stocks
in the fourth quarter, we continued to add energy stocks, as well as stocks of
many individual issues that were particularly attractive.
VALUE OF HOLDINGS ESPECIALLY STRONG
It is difficult to know when value investing will again be in favor. If
the market experiences a correction before then, the Fund should benefit from
investments that are more attractive than they have been for some time.
Eventually, a strong long-term outlook for corporate earnings could lay the
foundation for better performance by attractively-priced investments. With its
emphasis on stocks whose prices are particularly appealing, the Fund should be
well positioned for such a turnaround.
GALAXY VIP GROWTH AND INCOME FUND
DISTRIBUTION OF TOTAL NET ASSETS AS OF DECEMBER 31, 1999
[GRAPH OMITTED]
REPURCHASE AGREEMENT 7%
CONSUMER CYCLICAL 8%
CONSUMER STAPLES 17%
OTHER COMMON STOCKS, CONVERTIBLE PREFERRED STOCKS & NET OTHER ASSETS AND
LIABILITIES 15%
FINANCE 15%
CAPITAL GOODS AND CONSTRUCTION 8%
TECHNOLOGY 22%
ENERGY 8%
GALAXY VIP GROWTH AND INCOME FUND
GROWTH OF $10,000 INVESTMENT*
[GRAPH OMITTED]
PLOT POINTS AS FOLLOWS
S&P G&I
Inception $10,000 $10,000
31-Dec-98 11,864 10,372
12/31/99 14,359 11,136
*SINCE INCEPTION ON 3/4/98. THE S&P 500 INDEX IS AN UNMANAGED INDEX OF 500
LEADING STOCKS. RESULTS FOR THE INDEX DO NOT REFLECT INVESTMENT MANAGEMENT FEES
AND OTHER EXPENSES INCURRED BY THE FUND.
7
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PORTFOLIO REVIEWS
[PHOTO OMITTED]
STEPHEN D. BARBARO HAS MANAGED THE GALAXY VIP SMALL COMPANY GROWTH FUND SINCE
ITS INCEPTION. HE HAS MANAGED SMALL COMPANY PORTFOLIOS FOR FLEET INVESTMENT
ADVISORS INC., AND ITS PREDECESSORS, SINCE 1976.
GALAXY VIP SMALL COMPANY
GROWTH FUND
PORTFOLIO MANAGER
STEPHEN D. BARBARO
The Galaxy VIP Small Company Growth Fund seeks to provide capital
appreciation by investing primarily in the securities of companies with market
capitalizations of $1.5 billion or less.
A heavy weighting in technology stocks, which dominated the gains for
small-company issues during the reporting period, helped the Fund far outpace
its market benchmarks during that time. Of particular benefit were sizable
investments in leading-edge technology firms, which outperformed technology
stocks as a whole.
For the 12 months ended December 31, 1999, the Fund earned a total return
of 67.49%. That compares to an average total return of 62.63% for small-cap
growth funds tracked by Lipper and a total return of 21.26% for the Russell
2000.
GREATER FOCUS ON TECHNOLOGY
Healthy returns from investments in semi-conductor and computer networking
stocks boosted Fund returns in the first half of the year. Of additional benefit
were overweightings in the robust capital goods and communication sectors, as
well as an increased investment in energy stocks, which rebounded as oil prices
rose.
While remaining focused on stocks with sound fundamentals, we adjusted the
Fund's technology holdings at this time to give less attention to computer
hardware, service, and general software firms and more attention to networking
and semi-conductor companies. Due to the rising cost for fuel, we traded some of
the Fund's trucking positions for stocks of consumer companies and other firms
that could benefit from an improving economic outlook.
Strong returns from technology stocks continued to boost returns in the
second half of the year. Of added benefit was an underweighting in the financial
sector, which underperformed as interest rates rose. As we continued to trade
technology stocks that had performed well for those with better potential, we
increased the Fund's total technology weighting. Due to their extra sensitivity
to economic worries and rising interest rates, we reduced positions in
consumer-oriented stocks.
VALUATIONS REMAIN APPEALING
Despite their strong gains at the end of 1999, the valuations for
small-company stocks remain attractive versus those for large-company issues.
While small-company stocks could be vulnerable to a temporary price correction
if growth should slow, we believe appealing valuations should help the sector
perform well over time. Because technology stocks may be one of the few groups
offering fast-paced growth if the economy cools, even those issues should have
further room to rise. As always we plan to emphasize companies with visible
earnings potential and take advantage of new investment opportunities that
near-term market fluctuations might bring.
GALAXY VIP SMALL COMPANY GROWTH FUND
DISTRIBUTION OF TOTAL NET ASSETS AS OF DECEMBER 31, 1999
[GRAPH OMITTED]
OTHER COMMON STOCKS & NET OTHER ASSETS AND LIABILITIES 8%
CAPITAL GOODS AND CONSTRUCTION 6%
CONSUMER STAPLES 6%
REPURCHASE AGREEMENT 7%
CONSUMER CYCLICAL 13%
ENERGY 6%
TECHNOLOGY 54%
GALAXY VIP SMALL COMPANY GROWTH FUND
GROWTH OF $10,000 INVESTMENT*
[GRAPH OMITTED]
PLOT POINTS AS FOLLOWS
Russel 2000 Small Company
Inception $10,000 $10,000
31-Dec-98 8,806 8,932
12/31/99 10,678 14,959
*SINCE INCEPTION ON 4/17/98. THE RUSSELL 2000 IS AN UNMANAGED INDEX OF 2000
SMALL COMPANY STOCKS. RESULTS FOR THE INDEX DO NOT REFLECT INVESTMENT
MANAGEMENT FEES AND OTHER EXPENSES INCURRED BY THE FUND.
8
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- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
[PHOTO OMITTED]
DAVID W. JELLISON HAS MANAGED THE GALAXY VIP COLUMBIA REAL ESTATE EQUITY FUND II
SINCE ITS INCEPTION IN MARCH 1998. A VICE PRESIDENT WITH COLUMBIA MANAGEMENT
CO., HE HAS SERVED AS A FINANCIAL ANALYST AND PORTFOLIO MANAGER THERE SINCE
1992.
GALAXY VIP COLUMBIA
REAL ESTATE EQUITY FUND II
PORTFOLIO MANAGER
DAVID W. JELLISON
The Galaxy VIP Columbia Real Estate Equity Fund II seeks, with equal
emphasis, capital appreciation and above-average current income. The Fund
invests primarily in the equity securities of real estate companies, including
real estate investment trusts ("REITs").
For the 12 months ended December 31, 1999, the Fund had a total return of
- -4.13%. Over the same period the National Association of Real Estate Investment
Trusts ("NAREIT") Index earned a total return of -4.62%, and the average real
estate stock fund tracked by Lipper earned a total return of -3.27%.
A STRUGGLING MARKET
The REIT market struggled throughout 1999. Early in the year, strong
levels of new construction raised concerns of an oversupply and a decline in the
growth of project cash flows. As new construction eased in the second quarter,
and investors shifted from larger-cap growth stocks to stocks with greater price
potential, the REIT market rebounded. Of further benefit were filings with the
Securities and Exchange Commission revealing that renowned financier Warren
Buffett owned two REIT stocks.
Concerns about overbuilding and falling growth rates resurfaced in the
third quarter, however, causing REIT stocks to give back most of the gains
they'd made. Ongoing growth rate concerns, exacerbated by tax-loss selling in
the fourth quarter, further eroded REIT returns.
In this environment, the Fund benefited from an emphasis on REITs with
larger market capitalizations, which found greater favor with investors. Of
further benefit was the strong performance by many individual issues, as well as
an emphasis on REITs in the better-performing industrial, residential, and
office sectors.
A FAVORABLE BALANCE OF RISK AND REWARD
Although year-over-year growth rates are slowing, we believe that the
fundamentals of the underlying properties in REITs are healthy and should remain
so in the foreseeable future. Also, the shrinking premiums paid for the best
REIT stocks indicate a favorable balance of risk and reward for these
securities. As before, we will focus on REITs with larger capitalizations,
strong management teams, and the best prospects for future growth. The heaviest
concentration of these companies currently appears to be in the office sector,
followed closely by the retail and residential areas.
GALAXY VIP COLUMBIA REAL ESTATE EQUITY FUND II
DISTRIBUTION OF TOTAL NET ASSETS AS OF DECEMBER 31, 1999
[GRAPH OMITTED]
INVESTMENT COMPANY & NET OTHER ASSETS AND LIABILITIES 2%
REAL ESTATE 98%
GALAXY VIP COLUMBIA REAL ESTATE EQUITY FUND II
GROWTH OF $10,000 INVESTMENT*
[GRAPH OMITTED]
PLOT POINTS AS FOLLOWS
NARIET REAL ESTATE
Inception $10,000 $10,000
31-Dec-98 8,482 9,043
12/31/99 8,090 8,669
*SINCE INCEPTION ON 3/3/98. THE NAREIT INDEX IS AN UNMANAGED INDEX OF ALL TAX
QUALIFIED REITS LISTED ON THE NEW YORK STOCK EXCHANGE, THE AMERICAN STOCK
EXCHANGE AND THE NASDAQ, WHICH HAVE 75% OR MORE OF THEIR GROSS INVESTED BOOK
ASSETS INVESTED DIRECTLY OR INDIRECTLY IN THE EQUITY OWNERSHIP OF REAL ESTATE.
ONLY COMMON SHARES ISSUED BY A REIT ARE INCLUDED IN THIS MARKET WEIGHTED INDEX,
WHICH INCLUDES DIVIDENDS IN THE MONTH BASED UPON THEIR PAYMENT DATE. RESULTS
FOR THE NAREIT INDEX DO NOT REFLECT THE INVESTMENT MANAGEMENT FEES AND OTHER
EXPENSES INCURRED BY THE FUND.
9
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- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
[PHOTO OMITTED]
DON JONES HAS MANAGED THE GALAXY VIP ASSET ALLOCATION FUND SINCE ITS INCEPTION.
HE HAS MANAGED INVESTMENT PORTFOLIOS FOR FLEET INVESTMENT ADVISORS INC., AND ITS
PREDECESSORS, SINCE 1987.
GALAXY VIP ASSET ALLOCATION FUND
PORTFOLIO MANAGER
DON JONES
The Galaxy VIP Asset Allocation Fund seeks a high total return by
providing both current income that is greater than the income for popular stock
market averages, and long-term growth in the value of its assets. The Fund
invests in a diversified portfolio of equity, bond, and short-term obligations.
Over the past year the Fund enjoyed strong performance from many equity
holdings. With stock valuations historically high, however, we kept about 37% of
the portfolio in bonds during the year. We expected bond prices to rally, as
rising interest rates slowed economic growth and bond yields declined. Because
the economy remained strong, however, bond prices kept falling. Although the
Fund had sizable investments in non-government bonds, whose higher yields and
better price performance enhanced returns, the large weighting in bonds
generally caused the Fund to underperform its market benchmarks.
For the 12 months ended December 31, 1999, the Fund earned a total return
of 7.06%. That compares to a total return of 12.55% for the average flexible
portfolio fund tracked by Lipper. The S&P 500 Index, which tracks the
performance of stocks only, earned a total return of 21.03% during the same
time.
FOCUS ON STRONG GROWTH POTENTIAL
Early in 1999, strong performance by overweighted positions in consumer
staples and technology stocks helped Fund returns, along with an underweighting
in the lesser-performing cyclical groups. As brighter economic prospects
broadened investor interests in the second quarter, the Fund benefited from
additions of capital goods stocks that outperformed. During this time, we also
increased positions in stocks of money-center banks and internet firms.
An overweighted position in the robust technology sector helped returns
later in the year, along with strong performance by many retail and oil-service
stocks. As interest rates continued to rise, returns were weakened from poor
performance by an overweighted position in financial firms, as well as the large
bond position. In this environment we took advantage of further opportunities in
money-center banks and technology firms, as well as in consumer and capital
goods stocks that looked attractive.
SLOWER GROWTH COULD BRING NEW OPPORTUNITIES
Given the positive long-term outlook for inflation and earnings, we would
see any temporary market correction as an opportunity to buy stocks of companies
with strong potential for earnings improvement. To take advantage of such
opportunities, we would probably reduce the Fund's cash reserves. If stock
prices became especially appealing, we might also trim the bond portfolio. If
slower growth helps bond prices rally in the meantime, the Fund would benefit
from its large bond position.
GALAXY VIP ASSET ALLOCATION FUND
DISTRIBUTION OF TOTAL NET ASSETS AS OF DECEMBER 31, 1999
[GRAPH OMITTED]
ASSET-BACKED SECURITIES 2%
CORPORATE NOTES AND BONDS 13%
COMMON STOCKS AND CONVERTIBLE PREFERRED STOCK 52%
REPURCHASE AGREEMENT & NET OTHER ASSETS AND LIABILITIES 11%
U.S. GOVERNMENT AND AGENCY OBLIGATIONS 22%
GALAXY VIP ASSET ALLOCATION FUND
GROWTH OF $10,000 INVESTMENT*
[GRAPH OMITTED]
PLOT POINTS AS FOLLOWS
S&P Asset Allocation
Inception $10,000 $10,000
12/31/93 $10,900 $10,530
12/31/94 $11,041 $10,304
12/31/95 $15,185 $13,367
12/31/96 $20,558 $15,328
12/31/97 $27,414 $18,245
12/31/98 $35,298 $21,440
12/31/99 $42,721 $22,955
*SINCE INCEPTION ON 2/6/93. THE S&P 500 INDEX IS AN UNMANAGED INDEX OF 500
LEADING STOCKS. RESULTS FOR THE INDEX DO NOT REFLECT INVESTMENT MANAGEMENT FEES
AND OTHER EXPENSES INCURRED BY THE FUND.
10
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PORTFOLIO REVIEWS
[PHOTO OMITTED]
MARIE SCHOFIELD HAS MANAGED THE GALAXY VIP HIGH QUALITY BOND FUND SINCE MARCH
1996. SHE HAS MANAGED FIXED-INCOME ASSETS SINCE 1975.
GALAXY VIP HIGH QUALITY
BOND FUND
PORTFOLIO MANAGER
MARIE SCHOFIELD
The Galaxy VIP High Quality Bond Fund seeks a high level of current income
consistent with the prudent risk of capital. The Fund invests primarily in U.S.
government securities and corporate issues rated in the four highest
credit-rating categories by Moody's Investors Service, Inc. ("Moody's") or
Standard & Poor's Ratings Group ("S&P"), with at least 65% of its total assets
invested in issues rated in the two highest credit-rating categories or unrated
issues of comparable quality.
For the 12 months ended December 31, 1999, the Fund returned -3.78%. That
compares to total returns of -2.15% for the Lehman Brothers Government/Corporate
Bond Index and -2.61% for the average A-rated corporate bond fund tracked by
Lipper. On December 31, 1999, the Fund had a 30-day SEC yield of 6.09%.
NON-TREASURY ISSUES AID RETURNS
As interest rates rose during the period, eroding the prices of bonds, we
used several strategies to enhance Fund returns. With an improving economic
outlook favoring corporate bonds, asset-backed securities, and mortgage-backed
securities, the Fund benefited from increased commitments to these issues and
reduced investments in Treasury bonds. Additions of U.S. government agency
issues also aided returns. Besides better price performance, the increase in
non-Treasury issues helped to boost the Fund's yield. Within the corporate
sector, we focused our purchases on higher-rated issues in the utility,
telecommunications, industrial, retail, drug, and yankee sectors, while avoiding
the interest-sensitive financial area.
During the period, we increased the Fund's duration when interest rates
spiked to historically attractive levels. This further enhanced the Fund's
yield, as well as the potential for price appreciation if bonds rallied. In the
second half of the year, we followed a "barbelled" maturity structure,
emphasizing issues with short and long maturities, and reducing exposure to
intermediate issues. However, the Fund's greater sensitivity to interest rates
in the face of a sustained rate rise had a dampening effect on returns.
POISED FOR A RALLY
With long bond yields at their most attractive levels in many years, we
believe their potential for price appreciation is great due to strong
fundamentals, including reduced Treasury supply and steady demand. Once the
economy begins to slow, corporate bonds could underperform as risk premiums
widen. In anticipation of this, we have reduced the Fund's exposure to corporate
bonds in favor of asset-backed securities and issues of U.S. government
agencies, especially mortgages. With the eventual slowdown of the economy, the
Fund will benefit from its emphasis on high credit quality and long maturity
structure.
GALAXY VIP HIGH QUALITY BOND FUND
DISTRIBUTION OF TOTAL NET ASSETS AS OF DECEMBER 31, 1999
[GRAPH OMITTED]
MORTGAGE-BACKED SECURITIES 15%
REPURCHASE AGREEMENT & NET OTHER ASSETS AND LIABILITIES 3%
ASSET-BACKED SECURITIES 9%
U.S. GOVERNMENT AND AGENCY OBLIGATIONS 39%
CORPORATE NOTES AND BONDS 34%
GALAXY VIP HIGH QUALITY BOND FUND
GROWTH OF $10,000 INVESTMENT*
[GRAPH OMITTED]
PLOT POINTS AS FOLLOWS
Lehman High Quality Bond
Inception $10,000 $10,000
12/31/93 10,604 10,867
12/31/94 9,984 10,486
12/31/95 12,294 12,094
12/31/96 12,443 12,487
12/31/97 13,657 13,656
12/31/98 14,950 14,981
12/31/99 14,629 14,415
*SINCE INCEPTION ON 1/21/93. THE LEHMAN BROTHERS GOVERNMENT/ CORPORATE BOND
INDEX IS AN UNMANAGED INDEX OF U.S. TREASURY OBLIGATIONS AND THE DEBT OF U.S.
GOVERNMENT AGENCIES AS WELL AS ALL PUBLICLY ISSUED, FIXED RATE, NON-CONVERTIBLE
INVESTMENT GRADE DOLLAR-DENOMINATED, SEC-REGISTERED CORPORATE DEBT. RESULTS FOR
THE INDEX DO NOT REFLECT INVESTMENT MANAGEMENT FEES AND OTHER EXPENSES INCURRED
BY THE FUND.
11
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- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
[PHOTO OMITTED]
JEFFREY L. RIPPEY HAS MANAGED THE GALAXY VIP COLUMBIA HIGH YIELD FUND II SINCE
1998. A VICE PRESIDENT OF COLUMBIA MANAGEMENT CO., MR. RIPPEY HAS MANAGED FIXED
INCOME PORTFOLIOS SINCE 1981.
GALAXY VIP
COLUMBIA HIGH YIELD FUND II
INVESTMENT MANAGER
JEFFREY L. RIPPEY
The Galaxy VIP Columbia High Yield Fund II seeks high current income with
a secondary objective of capital appreciation. The Fund invests primarily in
high-yielding corporate bonds rated Ba or lower by Moody's ("junk bonds"), with
no more than 10% of its assets in bonds rated below B.
During the 12 months ended December 31, 1999, the Fund had a total return
of 0.56%. That compares to a total return of -0.83% for the Lehman Brothers
Aggregate Bond Index. The Fund's focus on the upper quality tier of the
high-yield market caused it to lag the average high-yield fund tracked by
Lipper, which earned 4.53% during the reporting period. On December 31, 1999,
the Fund had a 30-day SEC yield of 7.31%.
STRONG ECONOMY HELPS HIGH-YIELD SECTOR
With general improvement in the economic outlook during 1999, there was
increased demand for the attractive prices and income offered by high-yielding
bonds. High-yield bonds outperformed investment-grade issues in the first and
second quarters, as investors shunned the safety of U.S. Treasury bonds for more
aggressive investments. The stock market volatility in the third quarter sent
investors back to investment-grade bonds. Renewed optimism about the economy
favored high-yield issues in the fourth quarter.
Throughout the period, we emphasized bonds from the telecommunication,
broad- casting, cable television, and energy sectors. In the first half of the
year, we added bonds issued by telecommunications firms and, with the rebound in
oil prices, increased the Fund's energy holdings. We continued to increase the
Fund's commitment to cable issues later in the year, while also adding
investments in the entertainment sector.
HIGH-YIELD ISSUES STILL ATTRACTIVE
High-yield bonds outperformed during 1999, and we think they remain
attractive versus Treasury securities by historical standards. Because we expect
healthy, if moderating economic growth in coming months, we believe that
high-yield bonds should continue to generate returns that compare favorably with
investment-grade issues.
GALAXY VIP COLUMBIA HIGH YIELD FUND II
DISTRIBUTION OF TOTAL NET ASSETS AS OF DECEMBER 31, 1999
[GRAPH OMITTED]
U.S. GOVERNMENT OBLIGATION & NET OTHER ASSETS AND LIABILITIES 8%
INVESTMENT COMPANY 2%
CORPORATE NOTES AND BONDS 90%
GALAXY VIP COLUMBIA HIGH YIELD FUND II
GROWTH OF $10,000 INVESTMENT*
[GRAPH OMITTED]
PLOT POINTS AS FOLLOWS
Lehman High Yield
Inception $10,000 $10,000
31-Dec-98 $10,739 $10,961
12/31/99 $10,651 $11,022
*SINCE INCEPTION ON 3/3/98. THE LEHMAN BROTHERS AGGREGATE BOND INDEX IS AN
INDEX COMPOSED OF TREASURY ISSUES, AGENCY ISSUES, CORPORATE BOND ISSUES AND
MORTGAGE-BACKED SECURITIES. RESULTS FOR THE INDEX DO NOT REFLECT INVESTMENT
MANAGEMENT FEES AND OTHER EXPENSES INCURRED BY THE FUND.
12
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MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
PAR VALUE VALUE
------------ ---------
COMMERCIAL PAPER (A) - 78.20%
FINANCE - 36.69%
$ 850,000 AIG Funding, Inc.
5.83%, 01/19/00.................. $ 847,522
850,000 American Express Credit Corp.
5.86%, 01/31/00.................. 845,849
900,000 BMW US Capital Corp.
6.55%, 01/12/00.................. 898,199
900,000 Ford Motor Credit Co.
5.95%, 01/26/00.................. 896,281
850,000 General Electric Capital Corp.
5.98%, 02/07/00.................. 844,776
800,000 General Motors Acceptance Corp.
5.85%, 02/01/00.................. 795,970
900,000 IBM Credit Corp.
5.97%, 02/02/00.................. 895,224
800,000 International Lease Finance Corp.
6.20%, 02/01/00.................. 795,729
300,000 Morgan (J.P.) & Co., Inc.
5.90%, 03/06/00.................. 296,804
900,000 National Rural Utilities Cooperative
Finance Corp.
5.90%, 03/24/00.................. 887,758
---------
8,004,112
---------
CONSUMER STAPLES - 22.36%
800,000 Cargill, Inc.
6.40%, 01/14/00.................. 798,151
900,000 Coca-Cola Co.
6.15%, 01/10/00.................. 898,616
600,000 DaimlerChrysler Corp. of North America
6.00%, 02/04/00.................. 596,600
850,000 Heinz (H.J.) Co.
5.87%, 02/07/00.................. 844,872
850,000 Merck & Co., Inc.
5.80%, 01/31/00.................. 845,892
900,000 Procter & Gamble Co.
6.02%, 02/11/00.................. 893,830
-------------
4,877,961
-------------
UTILITIES - 11.41%
850,000 AT&T Corp.
5.81%, 01/25/00.................. 846,708
850,000 Bellsouth Capital Funding
5.80%, 01/25/00 (B).............. 846,713
800,000 SBC Communications, Inc.
5.95%, 01/27/00 (B).............. 796,562
-------------
2,489,983
-------------
PAR VALUE VALUE
------------ ---------
ENERGY - 4.12%
$ 900,000 Exxon Corp.
6.50%, 01/11/00.................. $ 898,375
-------------
TECHNOLOGY - 3.62%
800,000 Motorola, Inc.
6.00%, 03/14/00.................. 790,267
-------------
TOTAL COMMERCIAL PAPER .......... 17,060,698
-------------
(Cost $17,060,698)
U.S. AGENCY OBLIGATIONS (A) - 8.19%
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 8.19%
1,000,000 5.53%, 01/20/00.................. 997,081
800,000 5.75%, 03/23/00.................. 789,522
-------------
1,786,603
-------------
TOTAL U.S. AGENCY OBLIGATIONS ... 1,786,603
-------------
(Cost $1,786,603)
CORPORATE NOTE - 4.12%
900,000 Fifth Third Bancorp
5.99%, 01/21/00.................. 900,000
-------------
TOTAL CORPORATE NOTE ............ 900,000
-------------
(Cost $900,000)
REPURCHASE AGREEMENT - 10.80%
2,356,000 State Street Bank 2.80%, 01/03/00,
dated 12/31/99 Repurchase Price
$2,356,550 (Collateralized by U.S.
Treasury Bond 8.88%, due 08/15/17;
Total Par $1,935,000
Market Value $2,406,656)......... 2,356,000
-------------
TOTAL REPURCHASE AGREEMENT ...... 2,356,000
-------------
(Cost $2,356,000)
TOTAL INVESTMENTS - 101.31%...................... 22,103,301
-------------
(Cost $22,103,301)
NET OTHER ASSETS AND LIABILITIES - (1.31)%....... (286,296)
-------------
NET ASSETS - 100.00%............................. $ 21,817,005
=============
- ------------------------------------------
(A) Discount yield at time of purchase.
(B) Securities exempt from registration under Section 4(2) of the Securities
Act of 1933, as amended. These securities may only be resold, in
transactions exempt from registration, to qualified buyers. At December
31, 1999, these securities amounted to $1,643,275 or 7.53% of net assets.
SEE NOTES TO FINANCIAL STATEMENTS.
13
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EQUITY FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
SHARES VALUE
--------- ---------
COMMON STOCKS - 97.95%
TECHNOLOGY - 33.95%
3,000 America Online, Inc.*............ $ 226,312
55,000 American Tower Corp., Class A.... 1,680,937
15,000 Applied Materials, Inc.*......... 1,900,312
42,500 Automatic Data Processing, Inc... 2,289,687
22,500 Cisco Systems, Inc............... 2,410,312
17,500 Dell Computer Corp.*............. 892,500
20,000 EchoStar Communications
Corp., Class A*.................. 1,950,000
27,500 EMC Corp.*....................... 3,004,375
17,500 Intel Corp....................... 1,440,469
17,000 International Business
Machines Corp.................... 1,836,000
45,000 Loral Space & Communications
Corp., Ltd.*..................... 1,094,063
15,000 Lucent Technologies, Inc......... 1,122,188
44,000 Maxim Integrated Products, Inc.*. 2,076,250
20,000 Microsoft Corp.*................. 2,335,000
13,000 Nokia Oyj, ADR................... 2,470,000
20,000 Nortel Networks Corp............. 2,020,000
10,000 Oracle Corp.*.................... 1,120,625
33,000 PeopleSoft, Inc.*................ 703,313
18,000 Sun Microsystems, Inc.*.......... 1,393,875
22,500 Tellabs, Inc.*................... 1,444,219
37,500 Teradyne, Inc.*.................. 2,475,000
17,500 Texas Instruments, Inc........... 1,695,313
45,000 Unisys Corp.*.................... 1,437,187
35,000 Xerox Corp....................... 794,063
2,000 Yahoo!, Inc.*.................... 865,375
-------------
40,677,375
-------------
CONSUMER CYCLICAL - 16.45%
17,500 AMFM, Inc.*...................... 1,369,375
30,000 AT&T Corp. - Liberty Media
Group, Class A*.................. 1,702,500
80,000 Cendant Corp.*................... 2,125,000
30,000 Comcast Corp., Class A........... 1,516,875
52,500 CVS Corp......................... 2,096,719
16,000 Dayton-Hudson Corp.*............. 1,175,000
10,000 Harley-Davidson, Inc............. 640,625
37,500 Home Depot, Inc.................. 2,571,094
40,000 Infinity Broadcasting Corp., Class A* 1,447,500
20,000 MediaOne Group, Inc.*............ 1,536,250
50,000 Staples, Inc.*................... 1,037,500
22,500 Tandy Corp....................... 1,106,719
67,500 TJX Cos., Inc.................... 1,379,531
-------------
19,704,688
-------------
CONSUMER STAPLES - 14.50%
30,000 American Home Products Corp...... 1,183,125
17,500 Baxter International, Inc........ 1,099,219
23,000 Bristol-Myers Squibb Co.......... 1,476,312
45,000 Elan Corp. Plc, ADR*............. 1,327,500
SHARES VALUE
--------- ---------
CONSUMER STAPLES - (CONTINUED)
22,500 Forest Laboratories, Inc.*....... $ 1,382,344
22,500 Guidant Corp.*................... 1,057,500
15,000 Johnson & Johnson................ 1,396,875
17,500 Lilly (Eli) & Co................. 1,163,750
35,000 McDonald's Corp.................. 1,410,938
15,000 Merck & Co., Inc................. 1,005,938
25,000 PepsiCo, Inc..................... 881,250
25,000 Pfizer, Inc...................... 810,938
14,000 Procter & Gamble Co.............. 1,533,875
20,000 Warner-Lambert Co................ 1,638,750
-------------
17,368,314
-------------
FINANCE - 9.80%
20,000 American International Group, Inc. 2,162,500
45,000 Associates First Capital Corp.,
Class A 1,234,687
25,000 Chase Manhattan Corp............. 1,942,187
40,000 Citigroup, Inc................... 2,222,500
25,000 Fannie Mae....................... 1,560,937
25,000 UNUM Corp........................ 801,563
45,000 Wells Fargo & Co................. 1,819,687
-------------
11,744,061
-------------
CAPITAL GOODS AND CONSTRUCTION - 9.07%
20,000 Ford Motor Co.................... 1,068,750
25,000 General Electric Co.............. 3,868,750
23,437 Honeywell, Inc................... 1,352,022
67,500 Tyco International, Ltd.......... 2,624,062
30,000 United Technologies Corp......... 1,950,000
-------------
10,863,584
-------------
ENERGY - 8.76%
60,000 Anadarko Petroleum Corp.......... 2,047,500
30,000 Cooper Cameron Corp.*............ 1,468,125
33,003 Exxon Mobil Corp................. 2,658,804
30,000 Halliburton Co................... 1,207,500
20,000 Schlumberger, Ltd................ 1,125,000
58,872 Transocean Sedco Forex, Inc...... 1,983,251
-------------
10,490,180
-------------
UTILITIES - 3.68%
37,500 MCI Worldcom, Inc.*.............. 1,989,844
20,000 SBC Communications, Inc.......... 975,000
20,000 US West, Inc..................... 1,440,000
-------------
4,404,844
-------------
BASIC MATERIALS - 1.74%
12,500 du Pont (E.I.) deNemours & Co.... 823,436
25,000 Georgia-Pacific Group............ 1,268,750
-------------
2,092,186
-------------
TOTAL COMMON STOCKS ............. 117,345,232
-------------
(Cost $79,804,765)
SEE NOTES TO FINANCIAL STATEMENTS.
14
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EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
PAR VALUE VALUE
----------- ---------
REPURCHASE AGREEMENT - 2.22%
$ 2,654,000 State Street Bank
2.80%, 01/03/00, dated 12/31/99
Repurchase Price $2,654,619
(Collateralized by U.S. Treasury
Bond 8.88%, due 08/15/17;
Total Par $2,180,000
Market Value $2,711,375)......... $ 2,654,000
-------------
TOTAL REPURCHASE AGREEMENT ...... 2,654,000
-------------
(Cost $2,654,000)
TOTAL INVESTMENTS - 100.17%...................... 119,999,232
-------------
(Cost $82,458,765)
NET OTHER ASSETS AND LIABILITIES - (0.17)%....... (200,346)
-------------
NET ASSETS - 100.00%............................. $ 119,798,886
=============
- -----------------------------------------------
* Non-income producing security.
ADR American Depositary Receipt
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
- --------------------------------------------------------------------------------
GROWTH AND INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
SHARES VALUE
--------- ---------
COMMON STOCKS - 92.59%
TECHNOLOGY - 21.58%
4,000 Avnet, Inc....................... $ 242,000
2,500 Cisco Systems, Inc.*............. 267,812
8,000 Compaq Computer Corp............. 216,500
2,500 Computer Sciences Corp.*......... 236,562
3,000 Electronic Data Systems Corp..... 200,812
8,000 Harris Corp...................... 213,500
2,800 Hewlett-Packard Co............... 319,025
2,500 International Business Machines Corp. 270,000
2,000 Motorola, Inc.................... 294,500
3,000 Texas Instruments, Inc........... 290,625
2,000 United Technologies Corp......... 130,000
-------------
2,681,336
-------------
CONSUMER STAPLES - 16.61%
3,800 American Home Products Corp...... 149,862
1,600 Anheuser-Busch Cos., Inc......... 113,400
2,500 Bestfoods........................ 131,406
8,800 Elan Corp. Plc, ADR*............. 259,600
2,500 Forest Laboratories, Inc.*....... 153,594
3,500 Genzyme Corp.*................... 157,500
30,000 HEALTHSOUTH Corp.*............... 161,250
2,700 International Flavors & Fragrances, Inc. 101,925
1,500 Johnson & Johnson Co............. 139,688
3,300 McDonald's Corp.................. 133,031
2,400 Merck & Co., Inc................. 160,950
3,500 PepsiCo, Inc..................... 123,375
3,000 Pharmacia & Upjohn, Inc.......... 135,000
2,700 United Healthcare Corp........... 143,438
-------------
2,064,019
-------------
FINANCE - 14.73%
3,500 Bank America Corp................ 175,656
5,500 Bank One Corp.................... 176,344
1,900 Chase Manhattan Corp............. 147,606
2,200 Chubb Corp....................... 123,888
4,000 Citigroup, Inc................... 222,250
5,000 Countrywide Credit Industries, Inc. 126,250
2,700 Hartford Financial Services Group, Inc. 127,913
3,000 Lincoln National Corp............ 120,000
900 Morgan (J.P.) & Co............... 113,963
2,000 Standard & Poor's Depository Receipts 293,750
5,000 Wells Fargo & Co................. 202,188
-------------
1,829,808
-------------
CONSUMER CYCLICAL - 8.37%
3,900 Circuit City Stores-Circuit City Group 175,744
8,600 Cooper Tire & Rubber Co.......... 133,837
1,600 Eastman Kodak Co................. 106,000
3,800 Lowe's Cos., Inc................. 227,050
SHARES VALUE
--------- ---------
CONSUMER CYCLICAL - (CONTINUED)
12,000 Office Depot, Inc.*.............. $ 131,250
6,700 Penny (J.C.) Co., Inc............ 133,581
6,300 Sherwin-Williams Co.............. 132,300
-------------
1,039,762
-------------
ENERGY - 8.26%
1,250 Atlantic Richfield Co............ 108,125
6,500 Baker Hughes, Inc................ 136,906
2,600 BP Amoco Plc, ADR................ 154,213
1,716 Exxon Mobil Corp................. 138,245
4,400 Halliburton Co................... 177,100
2,700 Kerr-McGee Corp.................. 167,400
2,300 Schlumberger, Ltd................ 129,375
445 Transocean Sedco Forex, Inc...... 15,000
-------------
1,026,364
-------------
CAPITAL GOODS AND CONSTRUCTION - 7.68%
3,000 Boeing Co........................ 124,688
1,000 General Electric Co.............. 154,750
2,437 Honeywell, Inc................... 140,584
3,400 Hubbell, Inc., Class A........... 95,625
700 Hubbell, Inc., Class B........... 19,075
5,500 Tyco International Ltd........... 213,813
12,000 Waste Management, Inc............ 206,250
-------------
954,785
-------------
BASIC MATERIALS - 6.79%
4,400 Crown Cork & Seal, Inc........... 98,450
5,000 Goodrich (B.F.) Co............... 137,500
1,900 Minnesota Mining & Manufacturing Co. 185,963
6,500 Pall Corp........................ 140,156
3,500 Praxair, Inc..................... 176,094
3,500 Sigma Aldrich Corp............... 105,219
-------------
843,382
-------------
UTILITIES - 6.33%
3,000 AT&T Corp........................ 152,250
3,500 CenturyTel, Inc.................. 165,812
1,700 GTE Corp......................... 119,956
4,350 MCI WorldCom, Inc.*.............. 230,822
2,400 SBC Communications, Inc.......... 117,000
-------------
785,840
-------------
TRANSPORTATION - 2.24%
2,400 British Airways Plc, ADR......... 154,500
5,100 Burlington Northern Santa Fe Corp. 123,675
-------------
278,175
-------------
TOTAL COMMON STOCKS ............. 11,503,471
-------------
(Cost $10,613,763)
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
- --------------------------------------------------------------------------------
GROWTH AND INCOME FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
SHARES VALUE
--------- ---------
CONVERTIBLE PREFERRED STOCK - 1.02%
2,000 Loral Space and
Communications, Ltd., 6.00% (A).. $ 126,260
-------------
TOTAL CONVERTIBLE PREFERRED STOCK 126,260
-------------
(Cost $123,318)
PAR VALUE
-----------
REPURCHASE AGREEMENT - 6.53%
$ 812,000 State Street Bank
2.80%, 01/03/00, dated 12/31/99
Repurchase Price $812,189
(Collateralized by U.S. Treasury
Note 8.88%, due 08/15/17;
Total Par $670,000
Market Value $833,313)........... 812,000
-------------
TOTAL REPURCHASE AGREEMENT ...... 812,000
-------------
(Cost $812,000)
TOTAL INVESTMENTS - 100.14%...................... 12,441,731
-------------
(Cost $11,549,081)
NET OTHER ASSETS AND LIABILITIES - (0.14)%....... (17,926)
-------------
NET ASSETS - 100.00%............................. $ 12,423,805
=============
- -----------------------------------------------
* Non-income producing security.
(A) Security exempt from registration pursuant to Rule 144A under the
Securities Act of 1933, as amended. This security may only be resold, in
a transaction exempt from registration, to qualified institutional
buyers. At December 31, 1999, this security amounted to $126,260 or 1.02%
of net assets.
ADR American Depositary Receipt
SEE NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
- --------------------------------------------------------------------------------
SMALL COMPANY GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
SHARES VALUE
--------- ---------
COMMON STOCKS - 92.99%
TECHNOLOGY - 54.28%
300 Accrue Software, Inc.*........... $ 16,237
620 Advanced Fibre Communications, Inc.* 27,706
600 Advanced Radio Telecom Corp.*.... 14,400
100 Aether Systems Inc.*............. 7,162
760 Amkor Technology, Inc.*.......... 21,470
200 Ancor Communications, Inc.*...... 13,575
110 AnswerThink Consulting Group, Inc.* 3,767
119 Ardent Software, Inc.*........... 4,641
100 Art Technology Group, Inc.*...... 12,812
400 Artesyn Technologies, Inc.*...... 8,400
370 Asyst Technologies, Inc.*........ 24,258
500 BEA Systems, Inc.*............... 34,969
330 Best Software, Inc.*............. 9,735
440 BindView Development Corp.*...... 21,862
80 BISYS Group, Inc.*............... 5,220
200 Bluestone Software, Inc.*........ 23,000
340 Brio Technology, Inc.*........... 14,280
100 Broadbase Software, Inc.*........ 11,250
140 Clarify, Inc.*................... 17,640
260 Cognex Corp.*.................... 10,140
260 Complete Business Solutions, Inc.* 6,533
300 Computer Network Technology Corp.* 6,881
220 Concord Communications, Inc.*.... 9,763
800 Concurrent Computer Corp.*....... 14,950
730 Condor Technology Solutions, Inc.* 1,004
220 Cree Research, Inc.*............. 18,782
100 Crossroads Systems, Inc.*........ 8,450
200 Cybex Computer Products Corp.*... 8,100
500 Datastream Systems, Inc.*........ 12,281
570 Deltek Systems, Inc.*............ 7,695
400 Documentum, Inc.*................ 23,950
100 Efficient Networks, Inc.*........ 6,800
440 Emulex Corp.*.................... 49,500
320 Etec Systems, Inc.*.............. 14,360
300 Exchange Applications, Inc.*..... 16,763
100 Finisar Corp.*................... 8,988
360 Forrester Research, Inc.*........ 24,795
240 Galileo Technology, Ltd.*........ 5,790
330 Genesys Telecommunications
Laboratories, Inc.*.............. 17,820
370 Gentex Corp.*.................... 10,267
100 Globecomm Systems, Inc.*......... 2,525
150 Great Plains Software, Inc.*..... 11,213
440 Helix Technology Corp............ 19,717
800 H.T.E., Inc.*.................... 4,800
470 Hyperion Solutions Corp.*........ 20,445
330 ICG Communications, Inc.*........ 6,188
200 Ibis Technology Corp.*........... 9,925
470 IMRglobal Corp.*................. 5,904
500 Inso Corp.*...................... 16,125
400 Interactive Pictures Corp.*...... 9,325
100 InterVU, Inc.*................... 10,500
880 IntraNet Solutions, Inc.*........ 32,560
100 JNI Corp.*....................... 6,600
560 Kopin Corp.*..................... 23,520
SHARES VALUE
--------- ---------
TECHNOLOGY - (CONTINUED)
240 Legato Systems, Inc.*............ 16,515
400 LTX Corp.*....................... 8,950
300 Marimba, Inc.*................... 13,819
110 Mercury Interactive Corp.*....... 11,873
760 META Group, Inc.*................ 14,440
280 Metro Information Services, Inc.* 6,720
480 Millipore Corp................... 18,540
220 MMC Networks, Inc.*.............. 7,563
500 National Instruments Corp.*...... 19,125
400 Netegrity, Inc.*................. 22,775
100 NetOptix Corp.*.................. 6,675
50 Optical Coating Laboratory, Inc.. 14,800
520 PairGain Technologies, Inc.*..... 7,377
426 Per-Se Technologies, Inc.*....... 3,581
390 Pervasive Software, Inc.*........ 6,606
260 PRI Automation, Inc.*............ 17,452
160 Qlogic Corp.*.................... 25,580
100 Quest Software, Inc.*............ 10,200
400 RSA Security, Inc.*.............. 31,000
300 Santa Cruz Operation (The), Inc.* 9,113
150 SeaChange International Inc.*.... 5,306
1,000 Secure Computing Corp.*.......... 12,562
340 SPSS, Inc.*...................... 8,585
560 Tekelec, Inc.*................... 12,600
600 TeleTech Holdings, Inc.*......... 20,222
300 Telxon Corp...................... 4,800
200 Terayon Communication Systems, Inc.* 12,563
720 Tier Technologies, Inc.*......... 6,075
390 Tollgrade Communications, Inc.*.. 13,455
165 TranSwitch Corp.*................ 11,973
1,090 TSI International Software, Ltd.* 61,721
420 Veeco Instruments, Inc.*......... 19,661
320 Whittman-Hart, Inc.*............. 17,160
810 Zygo Corp.*...................... 16,301
-------------
1,251,031
-------------
CONSUMER CYCLICAL - 13.11%
660 American Classic Voyages Co.*.... 23,100
510 ASI Solutions, Inc.*............. 2,168
720 Bally Total Fitness Holding Corp.* 19,215
980 Brass Eagle, Inc.*............... 4,900
440 Cash America International, Inc.. 4,290
600 Charles River Associates, Inc.*.. 20,100
310 Cheap Tickets, Inc.*............. 4,243
200 Consolidated Graphics, Inc. *.... 2,988
285 Cost Plus, Inc.*................. 10,153
850 Funco, Inc.*..................... 9,509
600 HeadHunter.NET, Inc.*............ 7,538
600 Hollywood Park, Inc.*............ 13,462
100 Jupiter Communications, Inc.*.... 3,025
240 Kroll-O'Gara Co.*................ 3,960
480 Labor Ready, Inc.*............... 5,820
100 Management Network Group, Inc.*.. 3,262
500 Men's Wearhouse (The), Inc.*..... 14,688
570 Metamor Worldwide, Inc.*......... 16,601
600 Modis Professional Services, Inc.* 8,550
SEE NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
- --------------------------------------------------------------------------------
SMALL COMPANY GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
SHARES VALUE
--------- ---------
CONSUMER CYCLICAL (CONTINUED)
350 On Assignment, Inc.*............. $ 10,456
495 Pacific Sunwear of California, Inc.* 15,778
330 Pegasus Systems Inc.*............ 19,903
200 Pinnacle Holdings, Inc.*......... 8,475
1,040 Players International, Inc.*..... 8,547
320 Pre-Paid Legal Services, Inc.*... 7,680
130 ProBusiness Services, Inc.*...... 4,680
100 Quanta Services, Inc.*........... 2,825
940 Romac International, Inc.*....... 12,631
300 Smarterkids.com, Inc.*........... 2,175
520 Source Information Management Co.* 8,710
550 Steiner Leisure, Ltd.*........... 9,178
500 Tower Automotive, Inc.*.......... 7,719
490 Travis Boats & Motors, Inc.*..... 5,880
-------------
302,209
-------------
CONSUMER STAPLES - 6.41%
500 ATS Medical, Inc.*............... 7,469
660 CEC Entertainment, Inc.*......... 18,728
210 Education Management Corp.*...... 2,940
370 FirstService Corp.*.............. 5,064
490 Isis Pharmaceuticals, Inc.*...... 3,063
562 King Pharmaceuticals, Inc.*...... 31,507
500 Natrol, Inc.*.................... 3,500
390 Ocular Sciences, Inc.*........... 7,361
660 Orthodontic Centers of America, Inc.* 7,879
300 Osteotech, Inc.*................. 4,013
300 Patterson Dental Co.*............ 12,788
920 ProsoftTraining.com*............. 9,545
300 Province Healthcare Co.*......... 5,700
475 Renal Care Group, Inc.*.......... 11,103
500 Thoratec Laboratories Corp.*..... 4,875
658 US Oncology, Inc.*............... 3,249
300 Varian Medical Systems, Inc.*.... 8,944
-------------
147,728
-------------
ENERGY - 5.97%
730 Cabot Oil & Gas Corp., Class A... 11,726
800 Callon Petroleum Co.*............ 11,850
330 Devon Energy Corp................ 10,849
300 Evergreen Resources, Inc.*....... 5,925
330 Global Industries, Ltd.*......... 2,846
760 Marine Drilling Cos., Inc.*...... 17,053
440 Newfield Exploration Co.*........ 11,770
980 Newpark Resources, Inc.*......... 6,002
430 Noble Affiliates, Inc............ 9,218
800 Pennaco Energy, Inc.*............ 6,400
600 Pride International, Inc.*....... 8,775
1,000 Santa Fe Snyder Corp.*........... 8,000
230 Stone Energy Corp.*.............. 8,194
800 Swift Energy Co.*................ 9,200
800 Vintage Petroleum, Inc.*......... 9,650
-------------
137,458
-------------
SHARES VALUE
--------- ---------
CAPITAL GOODS AND CONSTRUCTION - 5.58%
290 AAR Corp......................... $ 5,202
440 Aeroflex, Inc.*.................. 4,565
170 Astec Industries, Inc.*.......... 3,198
400 Aviation Sales Co.*.............. 6,600
400 Casella Waste Systems, Inc., Class A* 7,550
200 Cohu, Inc........................ 6,200
405 CUNO, Inc.*...................... 8,385
200 DuPont Photomasks, Inc.*......... 9,650
100 Dycom Industries, Inc.*.......... 4,406
140 HEICO Corp....................... 3,054
130 HEICO Corp., Class A............. 2,746
520 Hexcel Corp.*.................... 2,893
550 Maverick Tube Corp.*............. 13,578
300 Methode Electronics, Inc., Class A 9,637
950 NS Group, Inc.*.................. 7,244
1,040 PCD, Inc.*....................... 7,020
500 Presstek, Inc.*.................. 6,938
220 RTI International Metals, Inc.*.. 1,650
850 Titanium Metals Corp............. 3,825
440 Wabash National Corp............. 6,600
435 Westinghouse Air Brake Co........ 7,721
-------------
128,662
-------------
TRANSPORTATION - 2.71%
430 Atlas Air, Inc.*................. 11,798
695 Dynamex, Inc.*................... 695
495 Eagle USA Airfreight, Inc.*...... 21,347
220 Expeditores International of
Washington, Inc.................. 9,639
300 Tidewater, Inc................... 10,800
1,160 Trico Marine Services, Inc.*..... 8,193
-------------
62,472
-------------
UTILITIES - 2.59%
470 Davel Communications Corp........ 2,233
220 Intermedia Communications, Inc.*. 8,539
100 MasTec, Inc.*.................... 4,450
400 Price Communications Corp.*...... 11,125
100 Powertel, Inc.*.................. 10,037
310 WinStar Communications, Inc.*.... 23,328
-------------
59,712
-------------
COMMUNICATION SERVICES - 1.63%
120 Hispanic Broadcasting Corp.*..... 11,066
400 Radio Unica Communications Corp.* 11,550
300 SportLine USA, Inc.*............. 15,037
-------------
37,653
-------------
SEE NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
- --------------------------------------------------------------------------------
SMALL COMPANY GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
SHARES VALUE
--------- ---------
FINANCE - 0.71%
400 Fidelity National Financial, Inc $ 5,750
400 MFC Bancorp, Ltd.*............... 3,550
400 Riggs National Corp.............. 5,275
460 Towne Services, Inc.*............ 1,840
-------------
16,415
-------------
TOTAL COMMON STOCKS ............. 2,143,340
-------------
(Cost $1,467,230)
PAR VALUE
-----------
REPURCHASE AGREEMENT - 6.81%
$ 157,000 State Street Bank
2.80%, 01/03/00, dated 12/31/99
Repurchase Price $157,037
(Collateralized by U.S. Treasury
Note 8.88%, Due 08/15/17;
Total Par $130,000
Market Value $161,688)........... 157,000
-------------
TOTAL REPURCHASE AGREEMENT ...... 157,000
-------------
(Cost $157,000)
TOTAL INVESTMENTS - 99.80%....................... 2,300,340
-------------
(Cost $1,624,230)
NET OTHER ASSETS AND LIABILITIES - 0.20%......... 4,569
-------------
NET ASSETS - 100.00%............................. $ 2,304,909
=============
- -------------------------------------
* Non-income producing security.
SEE NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
- --------------------------------------------------------------------------------
COLUMBIA REAL ESTATE FUND II
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
SHARES VALUE
--------- ---------
COMMON STOCKS - 98.04%
REAL ESTATE - 98.04%
600 Alexandria Real Estate
Equities Inc. $ 19,088
1,100 AMB Property Corp................ 21,931
800 Apartment Investment &
Management Co.................... 31,850
1,400 Archstone Communities Trust...... 28,700
1,107 Avalon Bay Communities, Inc...... 37,984
600 Boston Properties, Inc........... 18,675
800 Cabot Industrial Trust........... 14,700
1,800 Catellus Development Corp.*...... 23,062
300 CenterPoint Properties Corp...... 10,762
1,300 Cousins Properties, Inc.......... 44,119
1,900 Equity Office Properties Trust... 46,788
1,000 Equity Residential Properties Trust 42,688
1,100 First Industrial Realty Trust.... 30,181
1,800 General Growth Properties........ 50,400
2,100 Host Marriott Corp............... 17,325
800 Kimco Realty Corp................ 27,100
1,400 Liberty Property Trust........... 33,950
800 Mack-Cali Realty Corp............ 20,850
700 Nationwide Health Properties, Inc. 9,625
600 Pan Pacific Retail Properties, Inc. 9,787
600 Post Properties, Inc............. 22,950
1,100 Prentiss Properties Trust........ 23,100
2,600 ProLogis Trust................... 50,050
2,600 Public Storage, Inc.............. 58,988
1,900 Reckson Associates Realty Corp... 38,950
1,600 Simon Property Group, Inc........ 36,700
1,200 Spieker Properties, Inc.......... 43,725
1,035 Starwood Financial, Inc.......... 17,530
800 Starwood Hotels & Resorts
Worldwide, Inc................... 18,800
600 The Macerich Co.................. 12,488
2,700 TrizecHahn Corp.................. 45,562
1,700 Vornado Realty Trust............. 55,250
-------------
TOTAL COMMON STOCKS ............. 963,658
-------------
(Cost $1,077,007)
SHARES VALUE
--------- ---------
INVESTMENT COMPANY - 2.37%
23,239 Vista U.S. Government Money Market $ 23,239
-------------
TOTAL INVESTMENT COMPANY ........ 23,239
-------------
(Cost $23,239)
TOTAL INVESTMENTS - 100.41%...................... 986,897
-------------
(Cost $1,100,246)
NET OTHER ASSETS AND LIABILITIES - (0.41)%....... (3,992)
-------------
NET ASSETS - 100.00%............................. $ 982,905
=============
- -------------------------------------
* Non-income producing security.
SEE NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
- --------------------------------------------------------------------------------
ASSET ALLOCATION FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
SHARES VALUE
--------- ---------
COMMON STOCKS - 52.38%
TECHNOLOGY - 14.22%
26,000 America On Line, Inc.*........... $ 1,961,375
21,000 Automatic Data Processing, Inc... 1,131,375
30,000 Cisco Systems, Inc............... 3,213,750
20,000 Dell Computer Corp.*............. 1,020,000
25,000 EMC Corp.*....................... 2,731,250
10,000 Hewlett-Packard Co............... 1,139,375
18,000 Intel Corp....................... 1,481,625
18,000 Lucent Technologies, Inc......... 1,346,625
10,000 Microsoft Corp.*................. 1,167,500
-------------
15,192,875
-------------
CONSUMER STAPLES - 11.58%
24,000 Becton, Dickinson & Co........... 642,000
16,000 Bestfoods, Inc................... 841,000
29,000 Boston Scientific Corp.*......... 634,375
28,000 Coca-Cola Enterprises, Inc....... 563,500
42,000 Elan Corp. Plc, ADR*............. 1,239,000
16,000 Forest Laboratories, Inc......... 983,000
15,000 Genzyme Corp.*................... 675,000
11,000 Gillette Co...................... 453,062
12,000 Lilly (Eli) & Co................. 798,000
24,000 McDonald's Corp.................. 967,500
15,000 Merck & Co., Inc................. 1,005,937
26,000 PepsiCo, Inc..................... 916,500
27,000 Pfizer, Inc...................... 875,812
5,000 Procter & Gamble Co.............. 547,812
15,000 Warner-Lambert Co................ 1,229,062
-------------
12,371,560
-------------
FINANCE - 7.26%
20,000 American International Group, Inc. 2,162,500
11,000 Associates First Capital Corp.,
Class A 301,812
10,000 Bank One Corp.................... 320,625
13,000 Chase Manhattan Corp............. 1,009,937
34,000 Citigroup, Inc................... 1,889,125
15,000 Fannie Mae....................... 936,562
13,000 Hartford Financial Services Group, Inc. 615,875
13,000 Wells Fargo & Co................. 525,687
-------------
7,762,123
-------------
CONSUMER CYCLICAL - 6.18%
18,000 Black & Decker Corp.............. 940,500
18,000 Comcast Corp., Class A........... 910,125
25,000 CVS Corp......................... 998,437
11,000 Dayton Hudson Corp............... 807,812
37,500 Home Depot, Inc.................. 2,571,094
13,000 Walgreen Co...................... 380,250
-------------
6,608,218
-------------
ENERGY - 4.75%
26,000 Anadarko Petroleum Corp.......... 887,250
11,000 Chevron Corp..................... 952,875
13,201 Exxon Mobil Corp................. 1,063,506
SHARES VALUE
--------- ---------
ENERGY - (CONTINUED)
26,000 Halliburton Co................... $ 1,046,500
18,000 Schlumberger, Ltd................ 1,012,500
3,485 Transocean Sedco Forex, Inc...... 117,394
-------------
5,080,025
-------------
CAPITAL GOODS AND CONSTRUCTION - 4.30%
21,000 Boeing Co........................ 872,812
13,000 General Electric Co.............. 2,011,750
6,000 Honeywell, Inc................... 346,125
35,000 Tyco International, Inc.......... 1,360,625
-------------
4,591,312
-------------
UTILITIES - 2.43%
36,000 MCI WorldCom, Inc.*.............. 1,910,250
14,000 SBC Communications, Inc.......... 682,500
-------------
2,592,750
-------------
TRANSPORTATION - 1.66%
12,000 AMR Corp.*....................... 804,000
60,000 Southwest Airlines Co............ 971,250
-------------
1,775,250
-------------
TOTAL COMMON STOCKS ............. 55,974,113
-------------
(Cost $37,724,890)
PAR VALUE
----------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 22.01%
U.S. TREASURY BONDS - 8.23%
$ 455,000 12.00%, 08/15/13................. 608,367
450,000 7.50%, 11/15/16.................. 481,739
915,000 8.75%, 05/15/17.................. 1,092,995
690,000 8.88%, 08/15/17.................. 834,017
250,000 8.88%, 02/15/19.................. 304,393
1,200,000 8.75%, 05/15/20.................. 1,452,756
100,000 7.88%, 02/15/21.................. 111,824
300,000 8.13%, 08/15/21.................. 344,271
450,000 7.63%, 11/15/22.................. 493,817
400,000 7.13%, 02/15/23.................. 416,428
675,000 6.38%, 08/15/27.................. 648,311
1,190,000 6.13%, 11/15/27.................. 1,108,271
600,000 5.25%, 11/15/28.................. 494,724
485,000 5.25%, 02/15/29.................. 401,813
-------------
8,793,726
-------------
U.S. TREASURY NOTES - 6.15%
250,000 5.75%, 11/15/00.................. 249,335
1,000,000 4.50%, 01/31/01.................. 983,730
1,000,000 5.25%, 05/31/01.................. 987,450
240,000 6.13%, 12/31/01.................. 239,486
500,000 5.88%, 09/30/02.................. 495,040
475,000 7.25%, 05/15/04.................. 489,383
250,000 7.25%, 08/15/04.................. 257,850
SEE NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
- --------------------------------------------------------------------------------
ASSET ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
PAR VALUE VALUE
--------- ---------
U.S. TREASURY NOTES (CONTINUED)
$ 460,000 5.88%, 11/15/04.................. $ 451,122
800,000 5.63%, 02/15/06.................. 765,840
500,000 6.50%, 10/15/06.................. 498,850
300,000 6.13%, 08/15/07.................. 292,770
910,000 5.63%, 05/15/08.................. 856,356
-------------
6,567,212
-------------
FEDERAL HOME LOAN
MORTGAGE CORPORATION - 2.61%
500,000 5.50%, 05/15/02.................. 488,085
1,250,000 6.25%, 07/15/04.................. 1,221,875
930,000 6.63%, 09/15/09.................. 903,263
175,207 7.00%, 04/01/29, Pool # C00756, Gold 169,567
-------------
2,782,790
-------------
GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION - 2.20%
390,945 6.50%, 05/15/13, Pool # 473566... 379,338
43,916 7.00%, 11/15/13, Pool # 780921... 43,463
37,104 9.00%, 12/15/17, Pool # 780201... 39,144
230,755 6.50%, 05/15/24, Pool # 780168... 219,000
271,619 6.50%, 12/15/28, Pool # 495775... 254,895
396,721 6.00%, 03/15/29, Pool # 476986... 360,766
448,943 6.50%, 04/15/29, Pool # 474844.... 421,302
643,595 7.50%, 09/15/29, Pool # 466164... 636,355
-------------
2,354,263
-------------
FEDERAL NATIONAL
MORTGAGE ASSOCIATION - 1.90%
425,000 6.50%, 08/15/04.................. 419,811
520,000 6.38%, 06/15/09.................. 496,397
474,827 8.00%, 09/01/29, Pool # 511436... 478,683
632,817 8.00%, 11/01/29, Pool # 535031... 637,955
-------------
2,032,846
-------------
OTHER GOVERNMENT
AGENCY BONDS - 0.46%
500,000 A.I.D. Israel, Series 8-C
Guaranteed: U.S. Government
6.63%, 08/15/03.................. 496,245
-------------
FEDERAL HOME LOAN BANK - 0.46%
500,000 5.88%, 08/15/01.................. 495,535
-------------
TOTAL U.S. GOVERNMENT AND
AGENCY OBLIGATIONS .............. 23,522,617
-------------
(Cost $24,542,649)
PAR VALUE VALUE
--------- ---------
CORPORATE NOTES AND BONDS - 13.19%
$ 455,000 American Express Credit Corp.
8.50%, 08/15/01.................. $ 466,944
250,000 Associates Corp. of North America
7.88%, 09/30/01.................. 254,062
100,000 Bank One Milwaukee, N.A., MTN
6.35%, 03/19/01.................. 99,500
250,000 Becton Dickinson
7.15%, 10/01/09.................. 241,875
100,000 Becton Dickinson
7.00%, 08/01/27.................. 90,125
150,000 Becton Dickinson
6.70%, 08/01/28.................. 130,125
200,000 Burlington Northern Santa Fe Corp.
Debenture
6.88%, 02/15/16.................. 180,250
500,000 Caterpillar Financial Services Corp.
Series F, MTN
6.00%, 05/23/02.................. 488,125
300,000 Chase Manhattan Corp., MTN
5.50%, 02/15/01.................. 295,875
250,000 CIT Group, Inc., MTN
5.80%, 02/26/01.................. 247,188
250,000 Coca-Cola Enterprises, Inc.
6.38%, 08/01/01.................. 247,500
300,000 Colgate Palmolive Co. Series C, MTN
5.27%, 12/01/03.................. 281,535
500,000 DaimlerChrysler Corp. of
North America, MTN
6.84%, 10/15/02.................. 498,125
750,000 Diageo Capital Plc
6.00%, 03/27/03.................. 724,125
100,000 Diageo Capital Plc, Yankee
6.13%, 08/15/05.................. 94,250
250,000 Ford Motor Credit Co.
6.55%, 09/10/02.................. 246,875
250,000 Ford Motor Credit Co., Senior Note
5.75%, 02/23/04.................. 236,562
150,000 Ford Motor Credit Co.
6.70%, 07/16/04.................. 147,000
250,000 Ford Motor Credit Co.
6.38%, 12/15/05.................. 239,375
250,000 General Electric Capital Corp.
Series A, MTN
5.96%, 05/14/01.................. 247,572
190,000 General Motors Acceptance Corp.
Senior Unsubordinated
6.75%, 02/07/02.................. 188,812
150,000 Goldman Sachs Group, Inc.
6.65%, 05/15/09.................. 139,875
135,000 Hershey Foods Corp.
7.20%, 08/15/27.................. 127,406
200,000 Illinois Tool Works
5.75%, 03/01/09.................. 179,250
SEE NOTES TO FINANCIAL STATEMENTS.
23
<PAGE>
- --------------------------------------------------------------------------------
ASSET ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
PAR VALUE VALUE
--------- ---------
CORPORATE NOTES AND BONDS (CONTINUED)
$ 100,000 International Business Machines Corp.
6.22%, 08/01/27.................. $ 96,625
200,000 International Lease Finance Corp.
6.20%, 05/01/00.................. 199,974
100,000 May Department Stores Co.
7.45%, 10/15/16.................. 97,250
250,000 McDonald's Corp., Senior MTN
5.95%, 01/15/08.................. 230,625
250,000 MCI Worldcom, Inc.
6.13%, 04/15/02.................. 244,375
500,000 Mead Corp., Senior Note
6.60%, 03/01/02.................. 492,500
250,000 Minnesota Mining and
Manufacturing Co., Debenture
6.38%, 02/15/28.................. 213,438
165,000 National Rural Utilities
Collateral Trust
5.50%, 01/15/05.................. 151,388
250,000 National Rural Utilities
Cooperative Finance Corp.
6.13%, 05/15/05.................. 235,000
250,000 National Rural Utilities
Cooperative Finance Corp.
5.75%, 11/01/08.................. 223,438
100,000 NationsBank Corp., Senior Note
7.00%, 05/15/03.................. 99,750
300,000 Northern Telecom, Ltd., Yankee Note
6.00%, 09/01/03.................. 288,750
250,000 Norwest Corp. Series H, MTN
5.63%, 02/05/01.................. 247,187
400,000 Norwest Financial, Inc., Senior Note
7.75%, 08/15/01.................. 405,000
100,000 PACCAR Financial Corp.
Series H, Senior MTN
5.86%, 03/15/01.................. 98,750
100,000 Parker Hannifin Corp.
7.30%, 05/15/11.................. 98,250
150,000 Pepsi Bottling Holdings, Inc.
5.38%, 02/17/04 (A).............. 140,813
250,000 PepsiCo, Inc., MTN
5.75%, 01/15/08.................. 226,563
200,000 Phillips Petroleum Co., Debenture
9.38%, 02/15/11.................. 226,500
155,000 Pitney Bowes Inc.
5.95%, 02/01/05.................. 146,863
250,000 Pitney Bowes Credit Corp.
6.63%, 06/01/02.................. 249,375
250,000 Potomac Electric Power Co.
First Mortgage
6.50%, 09/15/05.................. 238,125
250,000 Potomac Electric Power Co.
First Mortgage
6.25%, 10/15/07.................. 237,812
350,000 Quebec Province Senior
Subordinated Notes
5.75%, 02/15/09.................. 310,688
PAR VALUE VALUE
--------- ---------
CORPORATE NOTES AND BONDS (CONTINUED)
$ 250,000 Quebec Province
7.50%, 09/15/29.................. $ 242,813
250,000 Sherwin-Williams Co., Senior Note
6.50%, 02/01/02.................. 247,500
150,000 Sprint Capital Corp.
5.88%, 05/01/04.................. 142,313
60,000 SunTrust Bank of Central Florida, MTN
6.90%, 07/01/07.................. 57,900
250,000 Sysco Corp.
7.25%, 04/15/07.................. 248,438
75,000 Sysco Corp., Debenture
6.50%, 08/01/28.................. 64,594
400,000 Tele-Communication, Inc., Senior Note
7.25%, 08/01/05.................. 398,500
95,000 Time Warner Entertainment, Debenture
8.38%, 03/15/23.................. 98,800
100,000 Union Oil Co. of California, MTN
Guaranteed: Unocal Corp.
6.70%, 10/15/07.................. 92,750
250,000 Wachovia Bank NC, N.A.
6.30%, 03/15/01.................. 248,125
250,000 Wal-Mart Stores, Senior Note
6.75%, 05/15/02.................. 250,000
125,000 Wal-Mart Stores, Senior Note
6.88%, 08/10/09.................. 121,719
500,000 Walt Disney Co., Senior Note
6.38%, 03/30/01.................. 497,500
100,000 Xerox Corp.
7.20%, 04/01/16.................. 94,250
-------------
TOTAL CORPORATE NOTES AND BONDS.. 14,096,572
-------------
(Cost $14,675,064)
ASSET-BACKED SECURITIES - 1.53%
225,000 America Express Credit Account
Master Trust
Series 1999-1, Class A
5.60%, 11/15/06.................. 213,327
250,000 Citibank Credit Card Master Trust I
Series 1999-7, Class A
6.65%, 11/15/06.................. 245,756
200,000 Daimler-Benz Vehicle Trust
Series 1998-A, Class A4
5.22%, 12/20/03.................. 194,141
250,000 Discover Card Master Trust I
Series 1999-1, Class A
5.30%, 08/15/04.................. 241,640
50,000 Ford Credit Auto Owner Trust
Series 1999-D, Class A4
6.40%, 10/15/02.................. 49,609
25,000 Green Tree Financial Corp.
Series 1999-5, Class A2
6.77%, 04/01/03.................. 24,875
200,000 MBNA Master Credit Card Trust
Series 1999-I, Class A
6.40%, 01/18/05.................. 197,562
SEE NOTES TO FINANCIAL STATEMENTS.
24
<PAGE>
- --------------------------------------------------------------------------------
ASSET ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
PAR VALUE VALUE
--------- ---------
ASSET-BACKED SECURITIES (CONTINUED)
$ 250,000 MBNA Master Credit Card Trust
Series 1999-M, Class A
6.60%, 04/16/07.................. $ 245,703
170,000 Premier Auto Trust
Series 1999-3, Class A4
6.43%, 03/08/04.................. 168,441
53,460 Rural Housing Trust, CMO
Series 1987-1, Class D
6.33%, 04/01/26.................. 52,157
-------------
TOTAL ASSET-BACKED SECURITIES ... 1,633,211
-------------
(Cost $1,658,249)
SHARES
----------
CONVERTIBLE PREFERRED STOCK - 0.18%
3,000 Loral Space and Communications,
Ltd., 6.00% (A).................. 189,390
-------------
TOTAL CONVERTIBLE PREFERRED STOCK 189,390
-------------
(Cost $162,772)
PAR VALUE
----------
REPURCHASE AGREEMENT - 10.24%
$10,944,000 State Street Bank
2.80%, 01/03/00, dated 12/31/99
Repurchase Price $10,946,554
(Collateralized by U.S. Treasury
Note 8.88%, due 08/15/17;
Total Par $8,980,000
Market Value $11,168,875)........ 10,944,000
-------------
TOTAL REPURCHASE AGREEMENT ...... 10,944,000
-------------
(Cost $10,944,000)
TOTAL INVESTMENTS - 99.53%....................... 106,359,903
-------------
(Cost $89,707,624)
NET OTHER ASSETS AND LIABILITIES - 0.47%......... 509,145
-------------
NET ASSETS - 100.00%............................. $ 106,869,048
=============
- -------------------------------------
* Non-income producing security.
(A) Securities exempt from registration under Rule 144A of the Securities Act
of 1933, as amended. These securities may only be resold, in transactions
exempt from registration, to qualified institutional buyers. At December
31, 1999, these securities amounted to $330,203 or 0.31% of net assets.
ADR American Depositary Receipt
CMO Collateralized Mortgage Obligation
MTN Medium Term Note
SEE NOTES TO FINANCIAL STATEMENTS.
25
<PAGE>
- --------------------------------------------------------------------------------
HIGH QUALITY BOND FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
PAR VALUE VALUE
--------- ---------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 38.94%
U.S. TREASURY BONDS - 24.06%
$ 300,000 12.00%, 08/15/13................. $ 401,121
90,000 7.50%, 11/15/16.................. 96,348
200,000 8.88%, 08/15/17.................. 241,744
400,000 9.00%, 11/15/18.................. 491,716
775,000 8.75%, 05/15/20.................. 938,238
325,000 7.88%, 02/15/21.................. 363,428
200,000 8.13%, 08/15/21.................. 229,514
250,000 7.13%, 02/15/23.................. 260,268
595,000 6.38%, 08/15/27.................. 571,474
290,000 6.13%, 11/15/27.................. 270,083
100,000 5.50%, 08/15/28.................. 85,358
490,000 5.25%, 11/15/28.................. 404,025
1,180,000 5.25%, 02/15/29.................. 977,606
150,000 6.13%, 08/15/29.................. 143,012
-------------
5,473,935
-------------
FEDERAL NATIONAL
MORTGAGE ASSOCIATION - 4.86%
250,000 6.38%, 06/15/09.................. 238,653
256,566 7.00%, 08/01/14.................. 253,597
300,000 6.16%, 08/07/28.................. 262,698
348,961 8.00%, 10/01/29.................. 351,795
-------------
1,106,743
-------------
U.S. TREASURY NOTES - 4.46%
200,000 6.38%, 03/31/01.................. 200,504
300,000 6.63%, 06/30/01.................. 301,785
200,000 5.50%, 07/31/01.................. 197,916
75,000 5.88%, 11/30/01.................. 74,523
50,000 5.88%, 09/30/02.................. 49,504
100,000 4.25%, 11/15/03.................. 92,926
100,000 5.88%, 02/15/04.................. 98,329
-------------
1,015,487
-------------
OTHER GOVERNMENT AGENCY BONDS - 2.79%
150,000 A.I.D. Israel, Series 8-C
Guaranteed: U.S. Government
6.63%, 08/15/03.................. 148,874
200,000 Private Export Funding Corp.
6.49%, 07/15/07.................. 194,250
300,000 Tennessee Valley Authority Power
Board Class 1993, Series C
6.13%, 07/15/03.................. 292,125
-------------
635,249
-------------
FEDERAL HOME LOAN
MORTGAGE CORPORATION - 1.50%
150,000 6.25%, 07/15/04.................. 146,625
200,000 6.63%, 09/15/09.................. 194,250
-------------
340,875
-------------
PAR VALUE VALUE
--------- ---------
U.S. TREASURY STRIPS - 1.27%
$ 500,000 4.86%, 05/15/08, Interest only (A) $ 287,400
-------------
TOTAL U.S. GOVERNMENT AND
AGENCY OBLIGATIONS .............. 8,859,689
-------------
(Cost $9,390,153)
CORPORATE NOTES AND BONDS - 34.64%
UTILITIES - 10.98%
250,000 Baltimore Gas and Electric
First Mortgage
6.50%, 02/15/03.................. 245,937
400,000 GTE Florida, Inc.,
Debenture, Series A
6.31%, 12/15/02.................. 392,500
250,000 MCI Worldcom, Inc., Note
6.13%, 04/15/02.................. 244,375
500,000 National Rural Utilities
Collateral Trust
6.38%, 10/15/04.................. 481,250
250,000 National Rural Utilities
Collateral Trust
5.50%, 01/15/05.................. 229,375
100,000 National Rural Utilities
Collateral Trust
6.20%, 02/01/08.................. 92,625
500,000 Pacificorp First Mortgage
6.38%, 05/15/08.................. 463,125
150,000 Potomac Electric Power Co.
First Mortgage
6.25%, 10/15/07.................. 142,687
225,000 Sprint Capital Corp.
Company Guaranty
6.90%, 05/01/19.................. 205,312
-------------
2,497,186
-------------
CONSUMER STAPLES - 9.11%
300,000 Heinz (H.J.) Co. Euro-Dollar, Debenture
5.75%, 02/03/03.................. 287,880
440,000 Hershey Foods Corp., Debenture
7.20%, 08/15/27.................. 415,250
200,000 McDonald's Corp., Senior MTN
5.95%, 01/15/08.................. 184,500
400,000 PepsiCo, Inc., MTN
5.75%, 01/15/08.................. 362,500
400,000 Sysco Corp., Debenture
6.50%, 08/01/28.................. 344,500
225,000 Time Warner Entertainment Co.
Debenture
8.38%, 03/15/23.................. 234,000
250,000 Wal-Mart Stores, Inc., Senior Note
6.88%, 08/10/09.................. 243,437
-------------
2,072,067
-------------
SEE NOTES TO FINANCIAL STATEMENTS.
26
<PAGE>
- --------------------------------------------------------------------------------
HIGH QUALITY BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
PAR VALUE VALUE
--------- ---------
FINANCE - 6.18%
$ 500,000 Bank One Milwaukee National
Association, MTN
6.35%, 03/19/01.................. $ 497,500
500,000 Ford Motor Credit Co., Senior Note
6.50%, 02/28/02.................. 494,375
250,000 Ford Motor Credit Co.
6.70%, 07/16/04.................. 245,000
75,000 Goldman Sachs Group, Note
6.65%, 05/15/09.................. 69,937
100,000 SunTrust Bank Atlanta
Subordinated Note, MTN
7.25%, 09/15/06.................. 98,375
-------------
1,405,187
-------------
TECHNOLOGY - 4.26%
175,000 International Business
Machines Corp., MTN
5.95%, 06/02/03.................. 169,312
100,000 International Business
Machines Corp., Debenture
6.22%, 08/01/27.................. 96,625
135,000 Pitney Bowes, Inc., Note
5.95%, 02/01/05.................. 127,912
350,000 Telecom de Puerto Rico Co., Note
6.15%, 05/15/02.................. 341,228
250,000 Telecom de Puerto Rico Co., Note
6.65%, 05/15/06.................. 235,502
-------------
970,579
-------------
HEALTHCARE - 1.69%
400,000 Abbott Laboratories
6.40%, 12/01/06.................. 385,500
-------------
CAPITAL GOODS AND CONSTRUCTION - 1.18%
300,000 Illinois Tool Works, Note
5.75%, 03/01/09.................. 268,875
-------------
BASIC MATERIALS - 0.75%
200,000 Minnesota Mining &
Manufacturing Co., Debenture
6.38%, 02/15/28.................. 170,750
-------------
REGIONAL AGENCIES - 0.49%
125,000 Quebec Province
Senior Unsubordinated Notes
5.75%, 02/15/09.................. 111,250
-------------
TOTAL CORPORATE NOTES AND BONDS . 7,881,394
-------------
(Cost $8,357,556)
PAR VALUE VALUE
--------- ---------
MORTGAGE-BACKED SECURITIES - 14.95%
GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION - 9.95%
$ 224,470 6.50%, 10/15/13, Pool # 446759... $ 217,806
272,895 6.75%, 07/20/22, Pool # 008022 (B) 275,580
206,572 7.50%, 10/15/27, Pool # 455324... 204,248
245,126 7.00%, 01/15/29, Pool # 499333... 236,699
234,712 7.00%, 02/15/29, Pool # 486937... 226,642
750,753 7.00%, 02/15/29, Pool # 492173... 724,942
239,708 6.00%, 03/15/29, Pool # 464632... 217,983
163,103 7.50%, 09/15/29, Pool # 508805... 161,268
-------------
2,265,168
-------------
FEDERAL HOME LOAN
MORTGAGE CORPORATION - 3.26%
250,000 6.00%, 04/15/22, Pool # 2118QC, CMO 234,608
179,576 6.50%, 10/15/23, Pool # 001990... 176,040
321,718 8.50%, 10/01/29, Pool # G01072, Gold 330,562
-------------
741,210
-------------
STRUCTURED MORTGAGE PRODUCT - 1.74%
135,735 Prudential Home Mortgage Securities
Series 1996-7, Class A-1, CMO
6.75%, 06/25/11.................. 134,801
267,299 Rural Housing Trust 1987-1
Series 1, Class D, CMO
6.33%, 04/01/26.................. 260,784
-------------
395,585
-------------
MORTGAGE-BACKED SECURITIES ...... 3,401,963
-------------
(Cost $3,527,272)
ASSET-BACKED SECURITIES - 8.97%
300,000 American Express Credit Account
Master Trust
Series 1999-1, Class A
5.60%, 11/15/06.................. 284,436
100,000 Capital Auto Receivables Asset Trust
Series 1999-1, Class A2
5.58%, 06/15/02.................. 98,593
400,000 Citibank Credit Card Master Trust I
Series 1998-6
5.85%, 04/10/03.................. 395,372
100,000 Daimler-Benz Vehicle Trust
Series 1998-A, Class A4
5.22%, 12/20/03.................. 97,070
500,000 Ford Credit Auto Owner Trust
Series 1999-D, Class A4
6.40%, 10/15/02.................. 496,090
SEE NOTES TO FINANCIAL STATEMENTS.
27
<PAGE>
- --------------------------------------------------------------------------------
HIGH QUALITY BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
PAR VALUE VALUE
--------- ---------
ASSET-BACKED SECURITIES (CONTINUED)
$ 500,000 MBNA Master Credit Card Trust
Series 1998-J, Class A
5.25%, 02/15/06.................. $ 472,030
200,000 MBNA Master Credit Card Trust
Series 1999-M, Class A
6.60%, 04/16/07.................. 196,563
-------------
TOTAL ASSET-BACKED SECURITIES ... 2,040,154
-------------
(Cost $2,066,139)
REPURCHASE AGREEMENT - 1.55%
353,000 State Street Bank
2.80%, 01/03/00, dated 12/31/99
Repurchase Price $353,08
(Collateralized by U.S. Treasury
Bond 8.88%, due 08/15/17;
Total Par $290,000
Market Value $360,688)........... 353,000
-------------
TOTAL REPURCHASE AGREEMENT ...... 353,000
-------------
(Cost $353,000)
TOTAL INVESTMENTS - 99.05%....................... 22,536,200
-------------
(Cost $23,694,120)
NET OTHER ASSETS AND LIABILITIES - 0.95%......... 216,455
-------------
NET ASSETS - 100.00%............................. $ 22,752,655
=============
- ---------------------------------------------
(A) Stripped securities represent the splitting of cash flows into interest
and principal. Holders, as indicated, are entitled to that portion of
the payment representing interest only or principal only.
(B) Variable rate bond. Rate shown reflects the rate in effect at December
31, 1999.
CMO Collateralized Mortgage Obligation
MTN Medium Term Note
SEE NOTES 6TO FINANCIAL STATEMENTS.
28
<PAGE>
- --------------------------------------------------------------------------------
COLUMBIA HIGH YIELD FUND II
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
PAR VALUE VALUE
--------- ---------
CORPORATE NOTES AND BONDS - 90.48%
COMMUNICATION - 23.74%
$ 140,000 Century Communications
Senior Notes
8.64%, 03/15/03 (B).............. $ 100,100
35,000 Comcast Corp.
Senior Subordinated Debentures
9.50%, 01/15/08.................. 36,225
50,000 Crown Castle International Corp.
Senior Notes
9.00%, 05/15/11.................. 49,125
75,000 CSC Holdings, Inc., Debentures
8.13%, 08/15/09.................. 75,000
25,000 Fox Sports Networks LLC
Senior Notes
8.88%, 08/15/07.................. 25,625
25,000 Jones Intercable, Inc.
Senior Notes
8.88%, 04/01/07.................. 26,250
50,000 Lenfest Communications
Senior Notes
8.38%, 11/01/05.................. 51,938
100,000 Level 3 Communications, Inc.
Senior Notes
9.13%, 05/01/08 (A).............. 94,500
50,000 Nextlink Communications
Senior Discount Note
9.45%, 04/15/08 (A).............. 31,125
25,000 Rogers Communications
Yankee Notes
8.88%, 07/15/07.................. 25,406
50,000 Unisys Corp., Senior Notes
11.75%, 10/15/04................. 55,000
-------------
570,294
-------------
CONSUMER CYCLICAL - 21.93%
50,000 Harrahs Operating Co., Inc.
7.88%, 12/15/05.................. 48,250
100,000 Hollinger International Publishing
8.63%, 03/15/05.................. 99,250
50,000 International Game Technology
Senior Notes
7.88%, 05/15/04 (A).............. 48,750
100,000 Outdoor Systems, Inc.
Senior Subordinated Notes
9.38%, 10/15/06.................. 105,000
50,000 Park Place Entertainment
Senior Notes
8.50%, 11/15/06.................. 49,500
75,000 Station Casinos, Inc.
Senior Subordinated Notes
9.75%, 04/15/07.................. 76,875
PAR VALUE VALUE
--------- ---------
CONSUMER CYCLICAL ((CONTINUED)
$ 100,000 Zale Corp., Senior Notes, Series B
8.50%, 10/01/07.................. $ 99,375
-------------
527,000
-------------
CAPITAL GOODS - 20.28%
100,000 AES Corp.
Senior Subordinated Notes
8.38%, 08/15/07.................. 92,750
35,000 Hayes Wheels International, Inc.,
Series B
9.13%, 07/15/07.................. 34,300
50,000 Lear Corp., Senior Notes
7.96%, 05/15/05 (A).............. 48,062
100,000 Newpark Resources, Inc., Series B
8.63%, 12/15/07.................. 94,625
35,000 Silgan Holdings, Inc.
Senior Subordinated Debentures
9.00%, 06/01/09.................. 33,688
100,000 United Stationers Supply
Senior Subordinated Notes
8.38%, 04/15/08 (A).............. 91,750
100,000 Westpoint Stevens, Inc., Senior Notes
7.88%, 06/15/05 (A).............. 92,000
-------------
487,175
-------------
HEALTH CARE - 7.12%
40,000 Conmed Corp., Senior Notes
9.00%, 03/15/08.................. 36,350
50,000 Health Care Properties
6.88%, 06/08/05.................. 43,375
35,000 HEALTHSOUTH Corp.
Senior Subordinated Notes
9.50%, 04/01/01.................. 35,000
10,000 Tenet Healthcare Corp.
Senior Notes
8.63%, 12/01/03.................. 9,800
50,000 Tenet Healthcare Corp.
Senior Subordinated Notes
8.13%, 12/01/08 (A).............. 46,688
-------------
171,213
-------------
UTILITIES - 5.97%
15,000 CMS Energy Corp.
Coupon Pass-Through Certificates
7.00%, 01/15/05.................. 13,781
100,000 Flag, Ltd., Senior Notes
8.25%, 01/30/08 (A).............. 92,000
37,805 Niagara Mohawk Power
Senior Notes, Series D
7.25%, 10/01/02.................. 37,616
-------------
143,397
-------------
SEE NOTES TO FINANCIAL STATEMENTS.
29
<PAGE>
- --------------------------------------------------------------------------------
COLUMBIA HIGH YIELD FUND II
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
PAR VALUE VALUE
--------- ---------
BASIC MATERIALS - 4.47%
$ 50,000 Ball Corp., Senior Notes
8.25%, 08/01/08 (A).............. $ 49,125
50,000 Scotts Co.
Senior Subordinated Notes
8.63%, 01/15/09 (A).............. 49,000
10,000 Webb (Del E.)
Senior Subordinated Debentures
9.00%, 02/15/06.................. 9,300
-------------
107,425
-------------
ENERGY - 3.08%
25,000 Pride International, Inc.
Senior Notes
10.00%, 06/01/09................. 25,563
50,000 Santa Fe Snyder Corp.
Senior Notes
8.05%, 06/15/04.................. 48,500
-------------
74,063
-------------
CONSUMER STAPLES - 2.95%
25,000 Cinemark USA, Inc.
Senior Subordinated Notes, Series B
9.63%, 08/01/08.................. 23,125
50,000 Tricon Global Restaurant
Senior Notes
7.45%, 05/15/05.................. 47,687
-------------
70,812
-------------
TRANSPORTATION - 0.94%
25,000 Teekay Shipping Corp.
Yankee Notes
8.32%, 02/01/08.................. 22,500
-------------
TOTAL CORPORATE OBLIGATIONS ..... 2,173,879
-------------
(Cost $2,226,034)
PAR VALUE VALUE
--------- ---------
U.S. GOVERNMENT OBLIGATION - 6.23%
U.S. TREASURY BILL - 6.23%
$ 150,000 4.12%, 01/20/00 (C).............. $ 149,674
-------------
TOTAL U.S. GOVERNMENT OBLIGATION 149,674
-------------
(Cost $149,674)
SHARES
----------
INVESTMENT COMPANY - 2.40%
57,515 Vista U.S. Government Money Market 57,515
-------------
TOTAL INVESTMENT COMPANY ........ 57,515
-------------
(Cost $57,515)
TOTAL INVESTMENTS - 99.11%....................... 2,381,068
-------------
(Cost $2,433,223)
NET OTHER ASSETS AND LIABILITIES - 0.89%......... 21,490
-------------
NET ASSETS - 100.00%............................. $ 2,402,558
=============
- -----------------------------------------------
(A) Securities exempt from registration under Rule 144A of the Securities Act
of 1933, as amended. These securities may only be resold, in transactions
exempt from registration, to qualified institutional buyers. At December
31, 1999, these securities amounted to $643,000 or 26.76% of net assets.
(B) Zero Coupon Bond. Rate shown reflects effective yield to maturity at time
of purchase.
(C) Discounted yield at time of purchase.
SEE NOTES TO FINANCIAL STATEMENTS.
30
<PAGE>
This page intentionally left blank.
<PAGE>
- --------------------------------------------------------------------------------
THE GALAXY VIP FUND
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
MONEY MARKET EQUITY GROWTH AND INCOME SMALL COMPANY
FUND FUND FUND GROWTH FUND
------------ ------------ ----------------- -------------
ASSETS:
<S> <C> <C> <C> <C>
Investments (Note 2):
Investments at cost................. $ 19,747,301 $ 79,804,765 $ 10,737,081 $ 1,467,230
Repurchase Agreement................ 2,356,000 2,654,000 812,000 157,000
Net unrealized appreciation (depreciation) -- 37,540,467 892,650 676,110
----------- ------------ ----------------- -------------
Total investments at value........ 22,103,301 119,999,232 12,441,731 2,300,340
Cash.................................. 33 1,773 656 712
Receivable for investments sold....... -- -- -- 7,102
Receivable for shares sold............ -- -- -- --
Interest and dividend receivable...... 4,077 44,000 18,665 105
Receivable from Investment Advisor (Note 4) -- -- -- 6,790
Deferred organizational expense (Note 2) -- -- 6,979 7,244
----------- ------------ ----------------- -------------
Total Assets........................ 22,107,411 120,045,005 12,468,031 2,322,293
----------- ------------ ----------------- -------------
LIABILITIES:
Dividends Payable..................... 101,637 7,472 1,086 --
Payable for investments purchased..... -- -- 11,183 --
Payable to custodian.................. -- -- -- --
Payable for shares repurchased........ 160,261 105,227 4,195 3
Advisory fee payable (Notes 3 & 4).... 2,696 72,721 7,610 --
Payable to Administrator (Notes 3 & 4) 2,599 11,474 3,270 3,018
Trustees' fees and expenses payable (Note 3) 602 4,210 140 27
Accrued expenses and other payables... 22,611 45,015 16,742 14,336
----------- ------------ ----------------- -------------
Total Liabilities................... 290,406 246,119 44,226 17,384
----------- ------------ ----------------- -------------
NET ASSETS.............................. $ 21,817,005 $ 119,798,886 $ 12,423,805 $ 2,304,909
============= ============== ================= =============
NET ASSETS CONSIST OF:
Par value (Note 5).................... $ 21,817 $ 5,395 $ 1,143 $ 161
Paid-in capital in excess of par value 21,795,028 79,760,653 11,646,507 1,445,038
Undistributed (overdistributed)
net investment income............... 263 (1,184) (117) (19)
Accumulated net realized gain (loss)
on investments sold................. (103) 2,493,555 (116,378) 183,619
Net unrealized appreciation (depreciation)
of investments...................... -- 37,540,467 892,650 676,110
----------- ------------ ----------------- -------------
TOTAL NET ASSETS......................... $ 21,817,005 $ 119,798,886 $ 12,423,805 $ 2,304,909
============= ============== ================= =============
SHARES OF BENEFICIAL INTEREST OUTSTANDING 21,816,845 5,394,734 1,143,071 161,307
NET ASSET VALUE:
offering and redemption price per share
(Net Assets / Shares Outstanding)..... $ 1.00 $ 22.21 $ 10.87 $ 14.29
============= ============== ================= =============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
32
<PAGE>
<TABLE>
<CAPTION>
COLUMBIA REAL ESTATE ASSET ALLOCATION HIGH QUALITY COLUMBIA HIGH
EQUITY FUND II FUND BOND FUND YIELD FUND II
--------------------- ---------------- ------------ -------------
ASSETS:
<S> <C> <C> <C> <C>
Investments (Note 2):
Investments at cost................. $ 1,100,246 $ 78,763,624 $ 23,341,120 $ 2,433,223
Repurchase Agreement................ -- 10,944,000 353,000 --
Net unrealized appreciation (depreciation) (113,349) 16,652,27 (1,157,920) (52,155)
-------------------- ---------------- ------------ -------------
Total investments at value........ 986,897 106,359,903 22,536,200 2,381,068
Cash.................................. -- 1,248 2,161 --
Receivable for investments sold....... -- -- -- --
Receivable for shares sold............ -- -- 24,166 --
Interest and dividend receivable...... 9,348 698,338 347,637 42,032
Receivable from Investment Advisor (Note 4) 5,988 -- -- 4,097
Deferred organizational expense (Note 2) 6,973 -- -- 6,973
-------------------- ---------------- ------------ -------------
Total Assets........................ 1,009,206 107,059,489 22,910,164 2,434,170
-------------------- ---------------- ------------ -------------
LIABILITIES:
Dividends Payable..................... -- 1,584 118,345 15,705
Payable for investments purchased..... 12,040 -- -- --
Payable to custodian.................. -- -- -- 378
Payable for shares repurchased........ 106 58,261 -- --
Advisory fee payable (Notes 3 & 4).... -- 67,095 7,781 --
Payable to Administrator (Notes 3 & 4) 2,281 11,943 2,096 2,718
Trustees' fees and expenses payable (Note 3) 18 2,364 1,078 50
Accrued expenses and other payables... 11,856 49,194 28,209 12,761
-------------------- ---------------- ------------ -------------
Total Liabilities................... 26,301 190,441 157,509 31,612
-------------------- ---------------- ------------ -------------
NET ASSETS.............................. $ 982,905 $ 106,869,048 $ 22,752,655 $ 2,402,558
==================== ================ ============ =============
NET ASSETS CONSIST OF:
Par value (Note 5).................... $ 122 $ 6,303 $ 2,343 $ 248
Paid-in capital in excess of par value 1,134,151 90,534,669 24,255,254 2,491,959
Undistributed (overdistributed)
net investment income............... 2,814 56 12,474 4,176
Accumulated net realized gain (loss)
on investments sold................. (40,833) (324,259) (359,496) (41,670)
Net unrealized appreciation (depreciation)
of investments...................... (113,349) 16,652,279 (1,157,920) (52,155)
-------------------- ---------------- ------------ -------------
TOTAL NET ASSETS......................... $ 982,905 $ 106,869,048 $ 22,752,655 $ 2,402,558
==================== ================ ============ =============
SHARES OF BENEFICIAL INTEREST OUTSTANDING 121,635 6,302,998 2,342,807 247,638
NET ASSET VALUE:
offering and redemption price per share
(Net Assets / Shares Outstanding)..... $ 8.08 $ 16.96 $ 9.71 $ 9.70
==================== ================ ============ =============
</TABLE>
33
<PAGE>
- --------------------------------------------------------------------------------
THE GALAXY VIP FUND
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
MONEY MARKET EQUITY GROWTH AND INCOME SMALL COMPANY
FUND FUND FUND GROWTH FUND
------------ ------------ ----------------- -------------
INVESTMENT INCOME:
<S> <C> <C> <C> <C>
Interest (Note 2)..................... $ 968,690 $ 130,445 $ 55,104 $ 5,787
Dividends (Note 2)..................... -- 742,119 137,074 1,173
------------ ------------ ----------------- -------------
Total investment income............. 968,690 872,564 192,178 6,960
------------ ------------ ----------------- -------------
EXPENSES:
Investment advisory fees (Note 3)...... 74,739 765,471 75,455 11,249
Administration fees (Note 3)........... 15,882 86,753 8,552 1,275
Custody fees........................... 14,129 19,854 17,209 26,772
Fund accounting fees (Note 3).......... 22,629 42,087 29,425 35,191
Professional fees...................... 15,412 25,123 12,721 11,935
Trustees' fees (Note 3)................ 282 2,694 166 36
Amortization of organization costs (Note 2) -- -- 2,197 2,197
Reports to shareholders................ 8,095 37,412 4,113 746
Miscellaneous.......................... 1,767 3,806 444 100
------------ ------------ ----------------- -------------
Total expenses before
reimbursement/waiver............. 152,935 983,200 150,282 89,501
Less: reimbursement/waiver (Note 4). (77,135) -- (72) (65,504)
------------ ------------ ----------------- -------------
Total expenses net of
reimbursement/waiver............. 75,800 983,200 150,210 23,997
------------ ------------ ----------------- -------------
NET INVESTMENT INCOME (LOSS).............. 892,890 (110,636) 41,968 (17,037)
------------ ------------ ----------------- -------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS (NOTE 2):
Net realized gain (loss) on investments sold -- 11,475,406 79,800 361,486
Net change in unrealized
appreciation (depreciation) of investments -- 14,108,713 481,482 614,996
------------ ------------ ----------------- -------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS................ -- 25,584,119 561,282 976,482
------------ ------------ ----------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS................. $ 892,890 $ 25,473,483 $ 603,250 $ 959,445
============ ============ ================= =============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
34
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMBIA REAL ESTATE ASSET ALLOCATION HIGH QUALITY COLUMBIA HIGH
EQUITY FUND II FUND BOND FUND YIELD FUND II
--------------------- ---------------- ------------ -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest (Note 2).....................
Dividends (Note 2).....................
$ 1,809 $ 2,881,285 $ 1,483,062 $ 202,583
Total investment income............. 59,060 392,444 -- 1,933
--------------------- ---------------- ------------ -------------
60,869 3,273,729 1,483,062 204,516
EXPENSES: -------------------- ---------------- ------------ -------------
Investment advisory fees (Note 3)......
Administration fees (Note 3)........... 6,980 707,718 128,753 14,268
Custody fees........................... 791 80,208 19,899 2,021
Fund accounting fees (Note 3).......... 6,687 29,103 21,723 5,950
Professional fees...................... 25,577 62,368 34,222 29,899
Trustees' fees (Note 3)................ 12,501 33,431 22,447 12,880
Amortization of organization costs (Note 2) 22 1,256 954 65
Reports to shareholders................ 2,197 -- -- 2,197
Miscellaneous.......................... 176 41,657 10,723 1,210
99 6,346 1,838 201
Total expenses before -------------------- ---------------- ------------ -------------
reimbursement/waiver.............
Less: reimbursement/waiver (Note 4). 55,030 962,087 240,559 68,691
(39,207) -- (89,706) (30,632)
Total expenses net of -------------------- ---------------- ------------ -------------
reimbursement/waiver.............
15,823 962,087 150,853 38,059
NET INVESTMENT INCOME (LOSS).............. -------------------- ---------------- ------------ -------------
45,046 2,311,642 1,332,209 166,457
-------------------- ---------------- ------------ -------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS (NOTE 2):
Net realized gain (loss) on investments sold
Net change in unrealized (48,332) 865,351 (333,729) (41,541)
appreciation (depreciation) of investments
(33,881) 3,331,615 (1,922,292) (110,950)
-------------------- ---------------- ------------ -------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS................
(82,213) 4,196,966 (2,256,021) (152,491)
-------------------- ---------------- ------------ -------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.................
$ (37,167) $ 6,508,608 $ (923,812) $ 13,966
==================== ================ ============ =============
</TABLE>
35
<PAGE>
- --------------------------------------------------------------------------------
THE GALAXY VIP FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MONEY MARKET FUND EQUITY FUND GROWTH AND INCOME FUND
------------------------ ------------------------- -------------------------
YEAR PERIOD
YEARS ENDED YEARS ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998 1999 1998(1)
------------ ----------- -------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSETS AT BEGINNING OF PERIOD........... $ 16,821,240 $ 15,329,905 $ 92,619,906 $ 69,862,961 $ 7,636,750 $ 10(a)
------------ ------------ ------------- ------------- ------------ ----------
INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS:
Net investment income (loss)............. 892,890 816,571 (110,636) 489,109 41,968 24,019
Net realized gain (loss) on investments
sold -- -- 11,475,406 19,517,742 79,800 (27,996)
Net change in unrealized appreciation
(depreciation)of investments.......... -- -- 14,108,713 (2,709,366) 481,482 411,168
----------- ----------- ------------ ----------- ----------- ----------
Net increase (decrease) in net assets
resulting from operations.......... 892,890 816,571 25,473,483 17,297,485 603,250 407,191
----------- ----------- ------------ ----------- ----------- ----------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income.................... (892,890) (816,592) -- (505,469) (41,968) (24,019)
In excess of net investment income....... -- -- -- -- (3,331) (2,926)
Net realized gain on investments......... -- -- (10,040,586) (18,138,988) (79,800) --
In excess of net realized gain on
investments -- -- -- -- (88,502) --
----------- ----------- ------------ ----------- ----------- ----------
Total Dividends....................... (892,890) (816,592) (10,040,586) (18,644,457) (213,601) (26,945)
----------- ----------- ------------ ----------- ----------- ----------
SHARE TRANSACTIONS:
Net proceeds from sale of shares......... 17,450,873 12,419,269 11,000,562 12,269,094 5,127,064 7,580,935
Issued to shareholders in reinvestment
of dividends.......................... 791,253 816,592 10,033,114 18,644,457 212,515 26,945
Cost of shares repurchased............... (13,246,361) (11,744,505) (9,287,593) (6,809,634) (942,173) (351,386)
----------- ----------- ------------ ----------- ----------- ----------
Net increase from share transactions.. 4,995,765 1,491,356 11,746,083 24,103,917 4,397,406 7,256,494
----------- ----------- ------------ ----------- ----------- ----------
Net increase in net assets............ 4,995,765 1,491,335 27,178,980 22,756,945 4,787,055 7,636,740
----------- ----------- ------------ ----------- ----------- ----------
NET ASSETS AT END OF PERIOD
(INCLUDING LINE A) $ 21,817,005 $ 16,821,240 $119,798,886 $ 92,619,906 $ 12,423,805 $7,636,750
============ ============ ============ ============= ============ ==========
(A) Undistributed (overdistributed)
net investment income................. $ 263 $ 263 $ (1,184) $ -- $ (117) $ --
============ ============ ============ ============= ============ ==========
OTHER INFORMATION:
SHARE TRANSACTIONS:
Sold..................................... 17,450,873 12,419,269 529,795 581,676 471,583 773,404
Issued to shareholders in reinvestment
of dividends.......................... 791,253 816,592 487,786 1,012,617 20,316 2,801
Repurchased.............................. (13,246,361) (11,744,505) (446,526) (321,065) (87,665) (37,369)
------------ ------------ ----------- ----------- ------------ ----------
Net increase in shares outstanding.... 4,995,765 1,491,356 571,055 1,273,228 404,234 738,836
============ ============ ============ ============= ============ ==========
- -------------------------------------
<FN>
(1) The Fund commenced operations on March 4, 1998.
(2) The Fund commenced operations on April 17, 1998.
(3) The Fund commenced operations on March 3, 1998.
(a) Amount represents initial seed money.
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
36
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL COMPANY COLUMBIA REAL ESTATE ASSET ALLOCATION
GROWTH FUND EQUITY FUND II FUND
-------------------------- -------------------------- -------------------------
YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED YEARS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998(2) 1999 1998(3) 1999 1998
------------ ------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSETS AT BEGINNING OF PERIOD........... $1,142,673 $ 10(a) $784,016 $250,000(a) $ 78,586,004 $42,535,206
---------- ---------- -------- -------- ------------ -----------
INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS:
Net investment income (loss)............. (17,037) (3,245) 45,046 21,823 2,311,642 1,646,677
Net realized gain (loss) on investments sold 361,486 (72,146) (48,332) (1,622) 865,351 668,851
Net change in unrealized appreciation
(depreciation)of investments.......... 614,996 61,114 (33,881) (79,468) 3,331,615 7,770,082
---------- ---------- -------- -------- ------------ -----------
Net increase (decrease) in net assets
resulting from operations.......... 959,445 (14,277) (37,167) (59,267) 6,508,608 10,085,610
---------- ---------- -------- -------- ------------ -----------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income.................... -- -- (38,564) (20,397) (2,311,642) (1,658,095)
In excess of net investment income....... -- (666) -- -- (7,365) (7,406)
Net realized gain on investments......... (90,900) -- -- -- (865,351) (954,596)
In excess of net realized gain on investments -- -- -- -- (63,437) (241,887)
---------- ---------- -------- -------- ------------ -----------
Total Dividends....................... (90,900) (666) (38,564) (20,397) (3,247,795) (2,861,984)
---------- ---------- -------- -------- ------------ -----------
SHARE TRANSACTIONS:
Net proceeds from sale of shares......... 376,912 1,167,022 352,248 643,056 25,773,603 29,289,514
Issued to shareholders in reinvestment
of dividends.......................... 90,900 666 38,564 20,397 3,246,211 2,861,984
Cost of shares repurchased............... (174,121) (10,082) (116,192) (49,773) (3,997,583) (3,324,326)
---------- ---------- -------- -------- ------------ -----------
Net increase from share transactions.. 293,691 1,157,606 274,620 613,680 25,022,231 28,827,172
---------- ---------- -------- -------- ------------ -----------
Net increase in net assets............ 1,162,236 1,142,663 198,889 534,016 28,283,044 36,050,798
---------- ---------- -------- -------- ------------ -----------
NET ASSETS AT END OF PERIOD (INCLUDING LINE A) $2,304,909 $1,142,673 $982,905 $784,016 $106,869,048 $78,586,004
========== ========== ======== ======== ============ ===========
(A) Undistributed (overdistributed)
net investment income................. $ (19) $ -- $ 2,814 $ 3,141 $ 56 --
========== ========== ======== ======== ============ ===========
OTHER INFORMATION:
SHARE TRANSACTIONS:
Sold..................................... 42,846 129,312 41,231 67,305 1,550,356 1,909,181
Issued to shareholders in reinvestment
of dividends.......................... 7,020 73 4,671 2,377 195,975 182,716
Repurchased.............................. (16,592) (1,353) (13,512) (5,437) (243,190) (217,344)
---------- ---------- -------- -------- ------------ -----------
Net increase in shares outstanding.... 33,274 128,032 32,390 64,245 1,503,141 1,874,553
========== ========== ======== ======== ============ ===========
</TABLE>
37
<PAGE>
- --------------------------------------------------------------------------------
THE GALAXY VIP FUND
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
HIGH QUALITY COLUMBIA HIGH
BOND FUND YIELD FUND II
---------------------------- ----------------------------
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998(1)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
NET ASSETS AT BEGINNING OF PERIOD............................... $23,288,822 $14,457,126 $2,453,694 $250,000(a)
----------- ----------- ---------- ----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income........................................ 1,332,209 985,174 166,457 83,002
Net realized gain (loss) on investments sold................. (333,729) 273,906 (41,541) 26,477
Net change in unrealized appreciation (depreciation) of investments (1,922,292) 394,647 (110,950) 58,795
----------- ----------- ---------- ----------
Net increase (decrease) in net assets resulting from operations (923,812) 1,653,727 13,966 168,274
----------- ----------- ---------- ----------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income........................................ (1,332,289) (985,105) (166,461) (82,994)
Net realized gain on investments............................. (34,729) -- (3,083) (23,378)
----------- ----------- ---------- ----------
Total Dividends........................................... (1,367,018) (985,105) (169,544) (106,372)
----------- ----------- ---------- ----------
SHARE TRANSACTIONS:
Net proceeds from sale of shares............................. 4,544,252 8,645,811 970,833 2,822,796
Issued to shareholders in reinvestment of dividends.......... 1,248,673 985,105 153,839 106,372
Cost of shares repurchased................................... (4,038,262) (1,467,842) (1,020,230) (787,376)
---------- ---------- ---------- ----------
Net increase from share transactions...................... 1,754,663 8,163,074 104,442 2,141,792
---------- ---------- ---------- ----------
Net increase (decrease) in net assets..................... (536,167) 8,831,696 (51,136) 2,203,694
----------- ----------- ---------- ----------
NET ASSETS AT END OF PERIOD (INCLUDING LINE A).................. $22,752,655 $23,288,822 $2,402,558 $2,453,694
=========== =========== ========== ==========
(A) Undistributed net investment income......................... $ 12,474 $ 5,159 $ 4,176 $ 1,854
=========== =========== ========== ==========
OTHER INFORMATION:
SHARE TRANSACTIONS:
Sold......................................................... 446,990 817,807 96,186 278,284
Issued to shareholders in reinvestment of dividends.......... 123,241 93,544 15,321 10,351
Repurchased.................................................. (403,290) (137,176) (100,707) (76,797)
----------- ----------- ---------- -----------
Net increase in shares outstanding........................ 166,941 774,175 10,800 211,838
=========== =========== ========== ===========
- -----------------------------------
<FN>
(1) The Fund commenced operations on March 3, 1998.
(a) Amount represents initial seed money.
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
38
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<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 (A)....................... 0.05 0.05 0.05 0.05 0.05
------- ------- ------- ------- -------
Total from Investment Operations.............. 0.05 0.05 0.05 0.05 0.05
------- ------- ------- ------- -------
Less Dividends:
Dividends from net
investment income............................. (0.05) (0.05) (0.05) (0.05) (0.05)
------- ------- ------- ------- -------
Total Dividends............................... (0.05) (0.05) (0.05) (0.05) (0.05)
------- ------- ------- ------- -------
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 ...................................... 4.86% 5.16% 4.99% 4.91% 5.38%
Ratios/Supplemental Data:
Net Assets, End of Period (000's).................. $ 21,817 $16,821 $15,330 $16,295 $17,925
Ratios to average net assets:
Net investment income including
reimbursement/waiver.......................... 4.78% 4.95% 4.88% 4.80% 5.25%
Operating expenses including
reimbursement/waiver.......................... 0.41% 0.55% 0.67% 0.60% 0.63%
Operating expenses excluding
reimbursement/waiver.......................... 0.82% 0.98% 1.12% 1.02% 1.11%
- -------------------------------------------------
<FN>
(A) Net investment income per share before reimbursement/waiver of fees by
the Investment Advisor and/or Administrator for the years ended December
31, 1999, 1998, 1997, 1996 and 1995 was $0.04, $0.05, $0.05, $0.05 and
$0.05, respectively.
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
39
<PAGE>
- --------------------------------------------------------------------------------
EQUITY FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------
1999 1998 1997 1996 1995
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............... $ 19.20 $ 19.68 $ 15.58 $ 12.99 $ 10.40
-------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income (loss) (A)................ (0.02) 0.13 0.21 0.19 0.18
Net realized and unrealized
gain on investments........................... 5.05 4.25 4.10 2.59 2.59
-------- ------- ------- ------- -------
Total from Investment Operations.............. 5.03 4.38 4.31 2.78 2.77
-------- ------- ------- ------- -------
Less Dividends:
Dividends from net
investment income............................. -- (.013) (0.21) (0.19) (0.18)
Dividends from net realized
capital gains................................. (2.02) (4.73) -- -- --
-------- ------- ------- ------- -------
Total Dividends............................... (2.02) (4.86) (0.21) (0.19) (0.18)
-------- ------- ------- ------- -------
Net increase (decrease) in net asset value......... 3.01 (0.48) 4.10 2.59 2.59
-------- ------- ------- ------- -------
Net Asset Value, End of Period..................... $ 22.21 $ 19.20 19.68 $ 15.58 $ 12.99
======== ======= ======= ======= =======
Total Return ...................................... 27.18% 23.52% 27.74% 21.49% $ 26.76%
Ratios/Supplemental Data:
Net Assets, End of Period (000's).................. $119,799 $92,620 $69,863 $46,242 $30,826
Ratios to average net assets:
Net investment income (loss) including
reimbursement/waiver.......................... (0.11)% 0.61% 1.20% 1.34% 1.55%
Operating expenses including
reimbursement/waiver.......................... 0.96% 1.05% 1.08% 1.10% 1.21%
Operating expenses excluding
reimbursement/waiver.......................... 0.96% 1.05% 1.08% 1.10% 1.24%
Portfolio Turnover Rate............................ 60% 75% 1% 8% 3%
- --------------------------------------------------------------------
<FN>
(A) Net investment income (loss) per share before reimbursement/waiver of fees by the Investment Advisor
and/or Administrator for the years ended December 31, 1999, 1998, 1997, 1996 and 1995 was $(0.02),
$0.13, $0.21, $0.19, and $0.18, respectively.
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
40
<PAGE>
- --------------------------------------------------------------------------------
GROWTH AND INCOME FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31,
1999 1998(1)
------------- --------------
<S> <C> <C>
Net Asset Value, Beginning of Period..................... $ 10.34 $ 10.00
------- -------
Income from Investment Operations:
Net investment income (A)................................ 0.05 0.05
Net realized and unrealized gain on investments.......... 0.68 0.34
------- -------
Total from Investment Operations....................... 0.73 0.39
------- -------
Less Dividends:
Dividends from net investment income..................... (0.05) (0.05)
Dividends in excess of net investment income............. --(2) --(2)
Dividends from net realized capital gains................ (0.07) --
Dividends in excess of net realized capital gains........ (0.08) --
------- -------
Total Dividends........................................ (0.20) (0.05)
------- -------
Net increase in net asset value............................. 0.53 0.34
------- -------
Net Asset Value, End of Period......................... $ 10.87 $ 10.34
======= =======
Total Return ............................................... 7.10% 3.72%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's)........................... $12,424 $ 7,637
Ratios to average net assets:
Net investment income including reimbursement/waiver..... 0.42% 0.69%*
Operating expenses including reimbursement/waiver........ 1.49% 1.50%*
Operating expenses excluding reimbursement/waiver........ 1.49% 2.58%*
Portfolio Turnover Rate..................................... 17% 30%**
- ----------------------------------------------
<FN>
* Annualized
** Not Annualized
(1) The Fund commenced operations on March 4, 1998.
(2) Amount is less than $0.005 per share.
(A) Net investment income (loss) per share before reimbursement/waiver of
fees by the Investment Advisor and/or Administrator for the year ended
December 31, 1999 and the period ended December 31, 1998 was $0.05 and
$(0.03), respectively.
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
41
<PAGE>
- --------------------------------------------------------------------------------
SMALL COMPANY GROWTH FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31,
1999 1998(1)
------------- --------------
<S> <C> <C>
Net Asset Value, Beginning of Period........................ $ 8.92 $10.00
------ ------
Income from Investment Operations:
Net investment (loss) (A)................................ (0.11) (0.02)
Net realized and unrealized gain (loss) on investments... 6.07 (1.05)
------ ------
Total from Investment Operations....................... 5.96 (1.07)
------ ------
Less Dividends:
Dividends in excess of net investment income............. -- (0.01)
Dividends from net realized capital gains................ (0.59) --
------ ------
Total Dividends........................................ (0.59) (0.01)
------ ------
Net increase (decrease) in net asset value.................. 5.37 (1.08)
------ ------
Net Asset Value, End of Period.............................. $14.29 $ 8.92
====== ======
Total Return ............................................... 67.49% (10.68)%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's)........................... $2,305 $1,143
Ratios to average net assets:
Net investment income (loss) including reimbursement/waiver (1.14)% (0.65)%*
Operating expenses including reimbursement/waiver........ 1.60% 1.60%*
Operating expenses excluding reimbursement/waiver........ 5.97% 12.86%*
Portfolio Turnover Rate..................................... 134% 87%**
- ------------------------------------------------------------------------------------------
<FN>
* Annualized
** Not Annualized
(1) The Fund commenced operations on April 17, 1998.
(A) Net investment (loss) per share before reimbursement/waiver of fees by
the Investment Advisor and/or Administrator for the year ended
December 31, 1999 and the period ended December 31, 1998 was $(0.54) and $(0.36), respectively.
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
42
<PAGE>
- --------------------------------------------------------------------------------
COLUMBIA REAL ESTATE EQUITY FUND II
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31,
1999 1998(1)
------------- --------------
<S> <C> <C>
Net Asset Value, Beginning of Period........................ $8.78 $10.00
----- ------
Income from Investment Operations:
Net investment income (A)................................ 0.38 0.28
Net realized and unrealized (loss) on investments........ (0.74) (1.24)
----- ------
Total from Investment Operations....................... (0.36) (0.96)
----- ------
Less Dividends:
Dividends from net investment income..................... (0.34) (0.26)
----- ------
Total Dividends........................................ (0.34) (0.26)
----- ------
Net (decrease) in net asset value........................... (0.70) (1.22)
----- ------
Net Asset Value, End of Period.............................. $8.08 $ 8.78
===== ======
Total Return ............................................... (4.13)% (9.57)%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's)........................... $ 983 $ 784
Ratios to average net assets:
Net investment income including reimbursement/waiver..... 4.84% 4.62%*
Operating expenses including reimbursement/waiver........ 1.70% 1.70%*
Operating expenses excluding reimbursement/waiver........ 5.91% 10.49%*
Portfolio Turnover Rate..................................... 33% 3%**
- -----------------------------------------------
<FN>
* Annualized
** Not Annualized
(1) The Fund commenced operations on March 3, 1998.
(A) Net investment income (loss) per share before reimbursement/waiver of
fees by the Investment Advisor and/or Administrator for the year ended
December 31, 1999 and the period ended December 31, 1998 was $0.05 and
$(0.26), respectively.
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
43
<PAGE>
- --------------------------------------------------------------------------------
ASSET ALLOCATION FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------
1999 1998 1997 1996 1995
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............... $ 16.37 $ 14.54 $ 13.37 $ 12.38 $ 9.80
-------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income (A)....................... 0.40 0.33 0.40 0.30 0.28
Net realized and unrealized
gain on investments........................... 0.74 2.17 2.11 1.53 2.58
-------- ------- ------- ------- -------
Total from Investment Operations.............. 1.14 2.50 2.51 1.83 2.86
-------- ------- ------- ------- -------
Less Dividends:
Dividends from net
investment income............................. (0.40) (0.39) (0.40) (0.30) (0.28)
Dividends in excess of net
investment income............................. --(1) --(1) -- -- --
Dividends from net realized
capital gains................................. (0.14) (0.22) (0.94) (0.54) --
Dividends in excess of net realized
capital gains................................. (0.01) (0.06) -- -- --
-------- ------- ------- ------- -------
Total Dividends............................... (0.55) (0.67) (1.34) (0.84) (0.28)
-------- ------- ------- ------- -------
Net increase in net asset value.................... 0.59 1.83 1.17 0.99 2.58
-------- ------- ------- ------- -------
Net Asset Value, End of Period..................... $ 16.96 $ 16.37 $ 14.54 $ 13.37 $ 12.38
======== ======= ======= ======= =======
Total Return ...................................... 7.06% 17.51% 19.03% 14.64% 29.42%
Ratios/Supplemental Data:
Net Assets, End of Period (000's).................. $106,869 $78,586 $42,535 $24,114 $17,246
Ratios to average net assets:
Net investment income including
reimbursement/waiver.......................... 2.45% 2.69% 2.90% 2.31% 2.54%
Operating expenses including
reimbursement/waiver.......................... 1.02% 1.07% 1.19% 1.33% 1.37%
Operating expenses excluding
reimbursement/waiver.......................... 1.02% 1.07% 1.25% 1.33% 1.54%
Portfolio Turnover Rate............................ 111% 88% 74% 45% 46%
- ----------------------------------------------------------------
<FN>
(1) Amount is less than $0.005.
(A) Net investment income per share before reimbursement/waiver of fees by
the Investment Advisor and/or Administrator for the year ended December
31, 1999, 1998, 1997, 1996 and 1995 was $0.40, $0.33, $0.39, $0.30, and
$0.26, respectively.
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
44
<PAGE>
- --------------------------------------------------------------------------------
HIGH QUALITY BOND FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............... $ 10.70 $ 10.31 $ 9.99 $ 10.37 $ 8.97
------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income (A)....................... 0.58 0.58 0.58 0.58 0.57
Net realized and unrealized
gain (loss) on investments.................... (0.98) 0.39 0.32 (0.38) 1.40
------- ------- ------- ------- -------
Total from Investment Operations.............. (0.40) 0.97 0.90 0.20 1.97
------- ------- ------- ------- -------
Less Dividends:
Dividends from net
investment income............................. (0.58) (0.58) (0.58) (0.58) (0.57)
Dividends from net realized
capital gains................................. (0.01) -- -- -- --
------- ------- ------- ------- -------
Total Dividends............................... (0.59) (0.58) (0.58) (0.58) (0.57)
------- ------- ------- ------- -------
Net increase (decrease) in
net asset value............................... (0.99) 0.39 0.32 (0.38) 1.40
------- ------- ------- ------- -------
Net Asset Value, End of Period..................... $ 9.71 $ 10.70 $ 10.31 $ 9.99 $ 10.37
======= ======= ======= ======= =======
Total Return ...................................... (3.78)% 9.70% 9.36% 1.57% 22.55%
Ratios/Supplemental Data:
Net Assets, End of Period (000's).................. $22,753 $23,289 $14,457 $11,814 $11,067
Ratios to average net assets:
Net investment income including
reimbursement/waiver.......................... 5.69% 5.55% 5.82% 5.78% 5.86%
Operating expenses including
reimbursement/waiver.......................... 0.64% 0.54% 0.77% 0.72% 0.80%
Operating expenses excluding
reimbursement/waiver.......................... 1.03% 1.10% 1.44% 1.38% 1.57%
Portfolio Turnover Rate............................ 197% 194% 160% 132% 21%
- -----------------------------------------------
<FN>
(A) Net investment income per share before reimbursement/waiver of fees by
the Investment Advisor and/or Administrator for the year ended December
31, 1999, 1998, 1997, 1996 and 1995 was $0.54, $0.52, $0.51, $0.51, and
$0.50, respectively.
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
45
<PAGE>
- --------------------------------------------------------------------------------
COLUMBIA HIGH YIELD FUND II
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31,
1999 1998(1)
------------- --------------
<S> <C> <C>
Net Asset Value, Beginning of Period........................ $ 10.36 $ 10.00
------- -------
Income from Investment Operations:
Net investment income (A)................................ 0.70 0.49
Net realized and unrealized gain (loss) on investments... (0.65) 0.45
------- -------
Total from Investment Operations....................... 0.05 0.94
------- -------
Less Dividends:
Dividends from net investment income..................... (0.70) (0.49)
Dividends from net realized capital gains................ (0.01) (0.09)
------- -------
Total Dividends........................................ (0.71) (0.58)
------- -------
Net increase (decrease) in net asset value.................. (0.66) 0.36
------- -------
Net Asset Value, End of Period.............................. $ 9.70 $ 10.36
======= =======
Total Return ............................................... 0.56% 9.61%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's)........................... $ 2,403 $ 2,454
Ratios to average net assets:
Net investment income including reimbursement/waiver..... 7.00% 6.18%*
Operating expenses including reimbursement/waiver........ 1.60% 1.60%*
Operating expenses excluding reimbursement/waiver........ 2.89% 4.25%*
Portfolio Turnover Rate..................................... 35% 89%**
- -----------------------------------------------
<FN>
* Annualized
** Not Annualized
(1) The Fund commenced operations on March 3, 1998.
(A) Net investment income per share before reimbursement/waiver of fees by
the Investment Advisor and/or Administrator for the year ended December
31, 1999 and the period ended December 31, 1998 was $0.57 and $0.28,
respectively.
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
46
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
The Galaxy VIP Fund, a Massachusetts business trust (the "Trust"), is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as a diversified open-end, management investment company, for the purpose
of providing a vehicle for the investment of assets of various separate accounts
established to fund variable annuity contracts and variable life insurance
policies. The accompanying financial statements and financial highlights are
those of 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 (individually a
"Fund,"collectively, the "Funds"), the eight managed investment portfolios
offered by the Trust as of the date of this report.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses during the
reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies in conformity with
generally accepted accounting principles consistently followed by the Trust in
the preparation of its financial statements.
PORTFOLIO VALUATION: Investments in securities 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 traded on over-the-counter
markets are valued at the last sales price. Short-term obligations that mature
in 60 days or less are valued at amortized cost, which approximates fair value.
Corporate debt securities and debt securities of U.S. issuers (other than
short-term investments), including municipal securities, are valued by an
independent pricing service approved by the Board of Trustees. When, in the
judgment of the service, quoted bid prices for 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 and asked prices. Investments with
prices that cannot be readily obtained, if any, are carried at fair value as
determined by the service based on methods which include consideration of yields
or prices of bonds of comparable quality, coupon maturity and type, indications
as to values from dealers, and general market conditions. All other securities
and assets are appraised at their fair value as determined in good faith under
consistently applied procedures established by and under the general supervision
of the Board of Trustees. The investments of the Money Market Fund are valued
utilizing the amortized cost valuation method permitted in accordance with Rule
2a-7 under the 1940 Act. This method involves valuing a portfolio security
initially at its cost and thereafter assuming a constant amortization to
maturity of any discount or premium.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Net realized gains and losses on sales of
securities are determined by the identified cost method. Interest income is
recorded on the accrual basis. Dividend income is recorded on the ex-dividend
date.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Dividends from net investment
income are declared daily and paid monthly with respect to the Money Market
Fund, High Quality Bond Fund and Columbia High Yield Fund II, and declared and
paid quarterly with respect to the Equity Fund, Growth and Income Fund, Small
Company Growth Fund, Columbia Real Estate Equity Fund II, and Asset Allocation
Fund. Net realized capital gains, if any, are distributed at least annually.
Income dividends and capital gains distributions are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles.
REPURCHASE AGREEMENTS: Each Fund may engage in repurchase agreement
transactions with institutions that the Fund's investment advisor has determined
are credit-worthy. Each repurchase agreement transaction is recorded at cost
plus accrued interest. Each Fund requires that the securities collateralizing a
repurchase agreement transaction be transferred to the Trust's custodian in a
manner that is intended to enable the Fund to obtain those securities in the
event of a counterparty default. The value of the collateral securities is
monitored daily to ensure that the value of the collateral, including accrued
interest, equals or exceeds the repurchase price. Repurchase agreement
transactions involve certain risks in the event of default or insolvency of the
counterparty, including possible delays or restrictions upon a Fund's ability to
dispose of the underlying securities, and a possible decline in the value of the
underlying securities during the period while the Fund seeks to assert its
rights.
FEDERAL INCOME TAXES: The Trust treats each Fund as a separate entity for
federal income tax purposes. Each Fund intends to qualify each year as a
"regulated investment company" under Subchapter M of the Internal Revenue Code.
By so qualifying, each Fund will not be subject to federal income taxes to the
extent it distributes substantially all of its taxable or tax-exempt income, if
any, for the tax year ending December 31. In addition, by distributing during
each calendar year substantially all of its net investment income, capital gains
and certain other amounts, if any, each Fund will not be subject to a federal
excise tax. Therefore, no federal income tax provision is recorded.
47
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
EXPENSES: The Trust accounts separately for the assets, liabilities and
operations of each Fund. Expenses directly attributable to a particular Fund are
charged to the Fund, while expenses which are attributable to more than one Fund
of the Trust are allocated among the respective Funds.
ORGANIZATION COSTS: Each Fund bears all costs in connection with its
organization, including the fees and expenses of registering and qualifying its
shares for distribution under federal securities laws. All such costs are being
amortized using the straight-line method over a period of five years beginning
with the commencement of each Fund's operation.
3. INVESTMENT ADVISORY, ADMINISTRATION AND OTHER
RELATED PARTY TRANSACTIONS
The Trust has entered into separate investment advisory agreements with Fleet
Investment Advisors Inc. ("Fleet") and Columbia Management Co. ("Columbia").
Fleet and Columbia (the "Investment Advisors") are indirect wholly-owned
subsidiaries of FleetBoston Corporation. Under the terms of its agreement with
the Trust, Fleet provides services for a fee, computed daily and paid monthly,
at an annual rate based upon the following percentages of average daily net
asset value: 0.40% for the Money Market Fund, 0.75% for the Equity, Growth and
Income, Small Company Growth and Asset Allocation Funds and 0.55% for the High
Quality Bond Fund. Under the terms of its agreement with the Trust, Columbia
provides services for a fee, computed daily and paid monthly, at an annual rate
based upon the following percentages of average daily net asset value: 0.75% for
the Columbia Real Estate Equity Fund II and 0.60% for the Columbia High Yield
Fund II (see Note 4).
The Trust and PFPC Inc. (formerly known as First Data Investor Services
Group, Inc.), an indirect wholly-owned subsidiary of PNC Bank Corp., are parties
to an administration agreement under which PFPC Inc. (the "Administrator")
provides services for a fee, computed daily and paid monthly, at the annual rate
of 0.085% of the first $1 billion of the combined average daily net assets of
the Funds, plus 0.078% of the next $1.5 billion of the combined average daily
net assets of the Funds, plus 0.073% of the combined average daily net assets of
the Funds in excess of $2.5 billion. The minimum aggregate annual fee payable
for administration of the Funds is $100,000. In addition, PFPC Inc. also
provides certain fund accounting and custody administration services pursuant to
certain fee arrangements. Pursuant to these fee arrangements, PFPC
Inc.compensates the Trust's custodian bank, The Chase Manhattan Bank, for its
services. Prior to December 1, 1999, the services described above were provided
by First Data Investor Services Group, Inc., a wholly-owned subsidiary of First
Data Corp. On that date, PFPC Trust Co., a wholly-owned subsidiary of PFPC
Worldwide, Inc. and an indirect wholly-owned subsidiary of PNC Bank Corp.,
acquired all of the outstanding stock of First Data Investor Services Group Inc.
As part of that transaction, PFPC Inc., also an indirect wholly-owned subsidiary
of PNCBank Corp., was merged into First Data Investor Services Group, Inc.,
which then changed its name to PFPC Inc.
Provident Distributors, Inc. (the "Distributor"), acts as the exclusive
distributor of the Trust's shares. Prior to December 1, 1999, First Data
Distributors, Inc., a wholly-owned subsidiary of First Data Investor Services
Group, Inc., acted as the exclusive distributor of the Trust's shares.
Certain officers of the Trust may be officers of the Administrator. Such
officers receive no compensation from the Trust for serving in their respective
roles. No officer, director or employee of the Investment Advisors serves as an
officer, trustee or employee of the Trust. Effective May 28, 1999, each Trustee
is entitled to receive for services as a trustee of the Trust, The Galaxy Fund
("Galaxy") and Galaxy Fund II ("Galaxy II") an aggregate fee of $45,000 per
annum plus certain other fees for attending or participating in meetings as well
as reimbursement for expenses incurred in attending meetings. Prior to May 28,
1999, each Trustee was entitled to receive for services as a trustee of the
Trust, Galaxy and Galaxy II an aggregate fee of $40,000 per annum plus certain
other fees for attending or participating in meetings as well as reimbursement
for expenses incurred in attending meetings. The Chairman of the Boards of
Trustees and the President and Treasurer of the Trust, Galaxy and Galaxy II are
also entitled to additional fees for their services in these capacities. These
fees are allocated among the funds of the Trust, Galaxy and Galaxy II, based on
their relative net assets.
Each Trustee is eligible to participate in The Galaxy Fund/The Galaxy VIP
Fund/Galaxy Fund II Deferred Compensation Plan (the "Plan"), an unfunded,
non-qualified deferred compensation plan. The Plan allows each trustee to defer
receipt of all or a percentage of fees which otherwise would be payable for
services performed.
Expenses for the year ended December 31, 1999 include legal fees paid to
Drinker Biddle & Reath LLP. A partner of that firm is Secretary to the Trust.
Pursuant to procedures adopted by the Board of Trustees and in accordance
with the 1940 Act, certain Funds placed a portion
48
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
of their portfolio transactions with Quick & Reilly Institutional Trading, a
division of Fleet Securities, Inc., an affiliate of the Funds' Advisors'. The
commissions paid to Quick & Reilly Institutional Trading for the period January
1, 1999 through December 31, 1999 were as follows:
FUND COMMISSIONS
------ -------------
Equity $ 9,426
Growth & Income 1,505
Asset Allocation 19,784
4. WAIVER OF FEES AND REIMBURSEMENT OF EXPENSES
The Investment Advisors and Administrator may voluntarily waive all or a
portion of the fees payable to them by the Funds. The Investment Advisors and
Administrator may, at their discretion, revise or discontinue the voluntary fee
waivers at any time.
For the year ended December 31, 1999, Fleet and the Administrator voluntarily
waived advisory, fund accounting and custody fees as follows:
FEES WAIVED BY FEES WAIVED BY
FUND FLEET ADMINISTRATOR
---- -------------- --------------
Money Market $ 46,712 $ 30,423
High Quality Bond 59,765 29,941
The Investment Advisors may, from time to time agree to reimburse a Fund for
expenses above a specified percentage of average net assets. For the year ended
December 31, 1999, the Investment Advisors agreed to reimburse the Growth and
Income Fund, the Small Company Growth Fund, the Columbia Real Estate Equity Fund
II and the Columbia High Yield Fund II in the amounts of $72, $65,504, $39,207
and $30,632, respectively.
5. SHARES OF BENEFICIAL INTEREST
The Trust's Declaration of Trust authorizes the Trustees to issue an
unlimited number of shares of beneficial interest, each with a par value of
$0.001. Shares of the Trust are currently classified into eight classes of
shares. Each share represents an equal proportionate interest in the respective
Fund, bears the same fees and expenses and is entitled to such dividends and
distributions of income earned as are declared at the discretion of the Trust's
Board of Trustees. Shareholders are entitled to one vote for each full 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.
6. PURCHASES AND SALES OF SECURITIES
The costs of purchases and proceeds from sales of securities, excluding
short-term investments, for the year ended December 31, 1999 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
--------- -----
FUND OTHER GOVERNMENT OTHER GOVERNMENT
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Equity $59,981,931 $ -- $ 59,912,474 $ --
Growth and Income 5,649,091 -- 1,502,805 --
Small Company Growth 1,953,055 -- 1,859,490 --
Columbia Real Estate Equity II 603,984 -- 287,768 --
Asset Allocation 41,337,040 72,532,511 30,761,877 61,742,223
High Quality Bond 16,457,071 30,243,914 12,284,985 32,551,965
Columbia High Yield II 758,863 -- 804,924 --
</TABLE>
The aggregate gross unrealized appreciation (depreciation), net unrealized
appreciation (depreciation) and cost for all securities, as computed on a
federal income tax basis, at December 31, 1999 for each Fund is as follows:
<TABLE>
<CAPTION>
FUND APPRECIATION (DEPRECIATION) NET COST
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Money Market $ -- $ -- $ -- $22,103,301
Equity 41,314,863 (4,016,816) 37,298,047 82,701,185
Growth and Income 2,089,232 (1,196,929) 892,303 11,549,428
Small Company Growth 848,824 (176,090) 672,734 1,627,606
Columbia Real Estate Equity II 8,274 (122,046) (113,772) 1,100,669
Asset Allocation 20,319,639 (3,734,061) 16,585,578 89,774,325
High Quality Bond 22,330 (1,209,178) (1,186,848) 23,723,048
Columbia High Yield II 13,700 (65,855) (52,155) 2,433,223
</TABLE>
49
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
7. CAPITAL LOSS CARRYFORWARD
At December 31, 1999, the Funds had capital loss carry forwards as follows:
FUND AMOUNT EXPIRATION
---- ------ ----------
Money Market $ 74 2002
29 2003
Columbia Real Estate
Equity II 1,400 2006
34,400 2007
High Quality Bond 300,153 2007
Columbia High Yield II 33,837 2007
8. POST OCTOBER LOSSES
Under current tax laws, certain capital losses realized after October 31 may
be deferred and treated as occurring on the first day of the following fiscal
year. For the fiscal year ended December 31, 1999, the following Funds elected
to defer losses between November 1, 1999 and December 31, 1999:
FUND POST OCTOBER LOSSES
---- -------------------
Growth and Income $116,031
Asset Allocation 257,558
Columbia Real Estate Equity II 9,317
High Quality Bond 30,415
Columbia High Yield II 7,833
9. FEDERAL INCOME TAX INFORMATION (UNAUDITED)
During the fiscal year ended December 31, 1999, the following Funds made
distributions from long-term capital gains:
FUND LONG-TERM GAINS PAID
---- --------------------
Equity $7,009,067
Growth and Income 84,319
Asset Allocation 643,908
High Quality Bond 34,729
Of the ordinary income (including short-term capital gain) distributions made
by the Equity, Asset Allocation and Growth and Income Funds during the fiscal
year ended December 31, 1999, 25.81%, 15.04% and 97.32%, respectively, qualify
for the dividends received deduction available to corporate shareholders.
10. LINE OF CREDIT (UNAUDITED)
Each Fund (except the Money Market Fund) and other affiliated funds participate
in a $150 million unsecured line of credit pursuant to a credit agreement dated
as of December 29, 1999. Borrowings may be made under the credit agreement only
for temporary or emergency purposes, such as repurchase or redemption of shares
of the Funds. Interest is charged to each Fund based on its borrowings. In
addition, a commitment fee, based on the average daily unused portion of the
line of credit, is allocated among the Funds and the other participating funds
at the end of each calendar quarter.
50
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
To the Shareholders and Board of Trustees of
The Galaxy VIP Fund:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments of The Galaxy VIP Fund (comprising, respectively,
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) as of December 31, 1999, and the
related statements of operations, the statements of changes in net assets, and
the financial highlights for the year then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statements of changes in net assets
for the periods ended December 31, 1998 and the financial highlights for each of
the periods then ended were audited by other auditors whose report dated
February 12, 1999 expressed an unqualified opinion on those statements and
financial highlights.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
financial statements and financial highlights. Our procedures included
confirmation of securities owned as of December 31, 1999 by correspondence with
the custodian and brokers or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting The Galaxy VIP Fund at December 31,
1999, the results of their operations, changes in their net assets and the
financial highlights for the year then ended, in conformity with accounting
principles generally accepted in the United States.
/S/ SIGNATURE
ERNST& YOUNG, LLP
Boston, Massachusetts
February 11, 2000
51
<PAGE>
- --------------------------------------------------------------------------------
GALAXY VIP FUND INFORMATION
- -------------------------------
TRUSTEES
AND OFFICERS
Dwight E. Vicks, Jr.
CHAIRMAN AND TRUSTEE
John T. O'Neill
PRESIDENT, TREASURER
AND TRUSTEE
Louis DeThomasis,
F.S.C., Ph.D.
TRUSTEE
Donald B. Miller
TRUSTEE
James M. Seed
TRUSTEE
Bradford S. Wellman
TRUSTEE
W. Bruce
McConnel, III, Esq.
SECRETARY
Jylanne Dunne
VICE PRESIDENT AND
ASSISTANT TREASURER
William Greilich
VICE PRESIDENT
INVESTMENT ADVISORS
Fleet Investment
Advisors Inc.
75 State Street
Boston, MA
02109
Columbia Management Co.
1300 S.W. Sixth Avenue
P.O. Box 1530
Portland, OR
97207-1350
DISTRIBUTOR
Provident Distributors, Inc.
Four Falls Corporate Center
6th Floor
West Conshohocken,
Pennsylvania 19428-2961
ADMINISTRATOR
PFPC Inc.
4400 Computer Drive
Westborough,
Massachusetts 01581-5108
- -------------------------------
This report is submitted for the general information of shareholders of The
Galaxy VIP Fund. It is not authorized for distribution to prospective investors
unless accompanied or preceded by an effective prospectus for The Galaxy VIP
Fund, which contains more information concerning investment policies, fees and
expenses and other pertinent information. Read the prospectus carefully before
you invest.
SHARES OF THE FUNDS ARE NOT BANK DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, FLEETBOSTON CORPORATION OR ANY OF ITS AFFILIATES, FLEET INVESTMENT
ADVISORS INC., COLUMBIA MANAGEMENT CO., OR ANY FLEETBANK. SHARES OF THE FUNDS
ARE NOT FEDERALLY INSURED BY, GUARANTEED BY, OBLIGATIONS OF OR OTHERWISE
SUPPORTED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENTAL AGENCY. INVESTMENT RETURN AND
PRINCIPAL VALUE WILL VARY AS A RESULT OF MARKET CONDITIONS OR OTHER FACTORS SO
THAT SHARES OF THE FUNDS, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. AN INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING
THE POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
[GRAPHIC OMITTED]
This report was printed on recycled paper.
52
<PAGE>
[GRAPHIC OMITTED]
GALAXY
FUNDS 4400 Computer Drive
P.O. Box 5108
Westborough, MA 01581-5108
- -----------------
STANDARD RATE
U.S. POSTAGE PAID
PERMIT NO. 9
BOSTON, MA
- -----------------
(12/99) Date of first use: March 1, 2000
