GALAXY VIP FUND, 485APOS, 2000-10-06

GALAXY VIP FUND
485APOS, 2000-10-06

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<PAGE>

As filed with the Securities and Exchange Commission on October 6, 2000
Securities Act File No. 33-49290
Investment Company Act File No. 811-6726

================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/

Pre-Effective Amendment No.
Post-Effective Amendment No. 12 /X/

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 14 /X/

The Galaxy VIP Fund
(Exact Name of Registrant as Specified in Charter)
4400 Computer Drive
Westborough, Massachusetts 01581
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (800) 628-0414

W. Bruce McConnel, III
DRINKER BIDDLE & REATH LLP
One Logan Square
18th and Cherry Streets
Philadelphia, Pennsylvania 19103
(Name and Address of Agent for Service)

Copies to:

WILLIAM GREILICH, President
PFPC Inc.
4400 Computer Drive
P.O. Box 5108
Westborough, Massachusetts 01581

It is proposed that this filing will become effective (check appropriate box)

/ / immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/X/ 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of rule 485.

If appropriate, check the following box:

/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

Title of Securities Being Registered: Shares of beneficial interest.

<PAGE>

[Front cover page]

The Galaxy VIP Fund

Prospectus

____________, 2000

Money Market Fund

Equity Fund

Growth and Income Fund

Small Company Growth Fund

Large Company Index Fund

Small Company Index Fund

Columbia Real Estate Equity Fund II

Asset Allocation Fund

High Quality Bond Fund

Columbia High Yield Fund II

As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved any shares of these Funds or determined if this
prospectus is accurate or complete. Anyone who tells you otherwise is committing
a crime.

<PAGE>

TABLE OF CONTENTS

Contents Page
<S> <C>
Risk/return summary.......................................................1
Introduction..............................................................1
Money Market Fund.........................................................2
Equity Fund...............................................................5
Growth and Income Fund....................................................8
Small Company Growth Fund................................................11
Large Company Index Fund.................................................14
Small Company Index Fund.................................................17
Columbia Real Estate Equity Fund II......................................20
Asset Allocation Fund....................................................24
High Quality Bond Fund...................................................28
Columbia High Yield Fund II..............................................32
Additional information about risk........................................35

Fund management..........................................................36

How to invest in the Funds...............................................37
Buying and selling shares................................................37

Dividends, distribution and taxes........................................39

Financial highlights.....................................................40
</TABLE>

-i-

<PAGE>

RISK/RETURN SUMMARY

INTRODUCTION

THIS PROSPECTUS describes the investment portfolios (the "Funds") of The Galaxy
VIP Fund ("Galaxy VIP"). Shares of the Funds may be offered only to various life
insurance companies to fund benefits under their variable annuity contracts and
variable life insurance policies.

Beginning on the next page, you'll find the following important information
about each Fund:

- The Fund's investment objective (sometimes called the Fund's goal) and the
main investment strategies used by the Fund's investment adviser in trying
to achieve that objective
- The main risks associated with an investment in the Fund
- The Fund's past performance measured on both a year-by-year and long-term
basis.

THE FUNDS' INVESTMENT ADVISERS

Fleet Investment Advisors Inc. ("Fleet") is the investment adviser for the Money
Market Fund, Equity Fund, Growth and Income Fund, Small Company Growth Fund,
Large Company Index Fund, Small Company Index Fund, Asset Allocation Fund and
High Quality Bond Fund. Fleet was established in 1984 and has its main office at
75 State Street, Boston, Massachusetts 02109. Fleet also provides investment
management and advisory services to individual and institutional clients and
manages the investment portfolios of The Galaxy Fund and Galaxy Fund II.

Columbia Management Co. ("Columbia") serves as investment adviser to the
Columbia Real Estate Equity Fund II and Columbia High Yield Fund II. Columbia
was established in 1969 and has its main office at 1300 S.W. Sixth Avenue, P.O.
Box 1350, Portland, Oregon 97207. Columbia also manages the investment
portfolios of Columbia Funds.

Fleet and Columbia are indirect wholly-owned subsidiaries of FleetBoston
Financial Corporation, a registered bank holding company. As of June 30,
2000, Fleet managed over $101 billion in assets and Columbia managed over $22
billion in assets.

AN INVESTMENT IN THE FUNDS ISN'T A FLEET BANK DEPOSIT AND IT ISN'T INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY. ALTHOUGH THE MONEY MARKET FUND SEEKS TO PRESERVE THE VALUE OF YOUR
INVESTMENT AT $1.00 PER SHARE, IT'S POSSIBLE TO LOSE MONEY BY INVESTING IN THE
FUND. YOU COULD ALSO LOSE MONEY BY INVESTING IN ANY OF THE OTHER FUNDS.

<PAGE>

Money Market Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks as high a level of current income as is consistent with liquidity
and stability of principal.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund invests in a diversified portfolio of money market instruments,
including commercial paper, notes and bonds issued by U.S. corporations,
obligations issued by the U.S. Government and its agencies and
instrumentalities, and obligations issued by U.S. and foreign banks, such as
certificates of deposit. The Fund also invests in repurchase agreements backed
by U.S. Government obligations.

The Fund will only buy a security if it has the highest short-term rating from
at least two nationally recognized statistical rating organizations, or one such
rating if only one organization has rated the security. If the security is not
rated, it must be determined by the Adviser to be of comparable credit quality.

[Sidenote:]
MONEY MARKET INSTRUMENTS
Money market instruments are short-term debt obligations issued by banks,
corporations, the U.S. Government and state and local governments. Money market
instruments purchased by the Money Market Fund must meet strict requirements as
to investment quality, maturity and diversification. The Fund does not invest in
securities with remaining maturities of more than 397 days (subject to certain
exceptions) and the average maturity of all securities held by the Fund must be
90 days or less. Prior to purchasing a money market instrument for the Fund,
Fleet must determine that the instrument carries very little risk.

[Sidenote:]
REPURCHASE AGREEMENTS
Repurchase agreements are transactions in which a Fund buys securities from a
seller (usually a bank or broker-dealer) who agrees to buy them back from the
Fund on a certain date and at a certain price.

-2-
<PAGE>

THE MAIN RISKS OF INVESTING IN THE FUND

While money market funds are considered to be among the safest of all
investments, they are not risk free. Here are the main risks associated with an
investment in the Fund:

- INTEREST RATE RISK - The yield paid by the Fund will vary with changes in
short-term interest rates.

- CREDIT RISK - Although credit risk is very low because the Fund only
invests in high quality obligations, if an issuer fails to pay interest or
repay principal, the value of your investment could decline.

- REPURCHASE AGREEMENTS - Repurchase agreements carry the risk that the other
party may not fulfill its obligations under the agreement. This could cause
the value of your investment to decline.

- SHARE PRICE - There's no guarantee the Fund will be able to preserve the
value of your investment at $1.00 per share.

- SELECTION OF INVESTMENTS - Fleet evaluates the risks and rewards presented
by all securities purchased by the Fund and how they advance the Fund's
investment objective. It's possible, however, that these evaluations will
prove to be inaccurate.

HOW THE FUND HAS PERFORMED

The bar chart and table below show how the Fund has performed in the past and
give some indication of the risk of investing in the Fund. Both assume that all
dividends and distributions are reinvested in the Fund. How the Fund has
performed in the past doesn't necessarily show how it will perform in the
future.

The returns set forth below include the effect of deducting the Fund's expenses,
but do not include the charges and expenses attributable to a particular
variable annuity contract or variable life insurance policy. You should
carefully review the prospectus for the variable annuity contract or variable
life insurance policy you have chosen for information on relevant charges and
expenses. If these charges and expenses were included, the Fund's returns would
be lower.

-3-

<PAGE>

YEAR-BY-YEAR TOTAL RETURNS - CALENDAR YEARS

The bar chart shows how the performance of the Fund has varied from year to
year.

[bar chart goes here]

The Fund's year-to-date total return for the six months ended June 30, 2000 was
2.95%.

[Sidenote:]
Best quarter: 1.34% for the quarter ending December 31,1999
Worst quarter: 0.72% for the quarter ending March 31, 1994

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1999.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------

1 year 5 years Since inception
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Money Market Fund 4.86% 5.02% 4.62% (2/2/93)
----------------------------------------------------------------------------------------------------------
</TABLE>

To obtain the Fund's current 7-day yield, please call 1-877-BUY-GALAXY
(1-877-289-4252).

-4-
<PAGE>

Equity Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks long-term growth by investing in companies that the Fund's
investment adviser believes have above-average earnings potential.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund normally invests at least 75% of its total assets in a broadly
diversified portfolio of equity securities issued by U.S. companies, primarily
common stocks and securities that can be converted into common stocks.

[Sidenote:]
GROWTH STOCKS
Growth stocks offer strong revenue and earnings potential, and accompanying
capital growth, with generally less dividend income than value stocks.

The Fund invests mainly in companies which Fleet believes will have faster
earnings growth than the economy in general. Fleet looks for
large-capitalization companies (generally over $2 billion) in growing
industries, focusing on technological advances, good product development, strong
management and other factors which support future growth. Fleet seeks out
companies that have a history of strong earnings growth and are projected to
continue a similar pattern of growth over the next three to five years. From
time to time, the Fund may emphasize particular market sectors, such as
tehnology, in attempting to achieve its investment objective.

The Fund will sell a security when there is an adverse change in the projected
earnings growth of the company issuing the security. A security will also be
sold when, as a result of changes in the economy or the performance of the
security or other circumstances, Fleet believes that holding the security is no
longer consistent with the Fund's investment objective.

THE MAIN RISKS OF INVESTING IN THE FUND

Changes in the U.S. or foreign economies can cause the value of stocks and other
investments held by the Fund to fall. Stock prices may decline over short or
extended periods. Stock markets tend to move in cycles, with periods of rising
prices and periods of falling prices.

The value of your investment in the Fund will go up and down with the value of
the investments which the Fund holds. The Fund's investments may not perform as
well as other investments, even in times of rising markets.

-5-
<PAGE>

In addition, the Fund carries the following main risks:

- CONVERTIBLE SECURITIES - Securities that can be converted into common
stock, such as certain debt securities and preferred stock, are subject to
the usual risks associated with fixed income investments, such as interest
rate risk and credit risk. In addition, because they react to changes in
the value of the equity securities into which they will convert,
convertible securities are also subject to stock market risk.

- SECTOR RISK - To the extent that the Fund emphasizes particular market
sectors, such as technology, it will be especially susceptible to the risks
associated with investments in those market sectors. Stocks of technology
companies may be subject to greater price volatility than stocks of
companies in other sectors. Technology companies may produce or use
products or services that prove commercially unsuccessful, become obsolete
or become adversely impacted by government regulation. Technology stocks
may experience significant price movements caused by disproportionate
investor optimism or pessimism.

HOW THE FUND HAS PERFORMED

-6-

<PAGE>

YEAR-BY-YEAR TOTAL RETURNS - CALENDAR YEARS

The bar chart shows how the performance of the Fund has varied from year to
year.

[bar chart goes here ]

The Fund's year-to-date total return for the six months ended June 30, 2000 was
5.77%.

[Sidenote:]
Best quarter: 25.67% for the quarter ending December 31, 1998
Worst quarter: -11.61% for the quarter ending September 30, 1998

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1999, as compared to a broad-based market index.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------

1 year 5 years Since inception
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Equity Fund 27.18% 25.31% 18.84% ( 1/11/93)
----------------------------------------------------------------------------------------------------------
S&P 500 21.03% 28.54% 21.52% (since 12/31/92)
----------------------------------------------------------------------------------------------------------
</TABLE>

[Sidenote:]
The Standard & Poor's 500 Composite Stock Price Index (commonly referred to as
the S&P 500) is an unmanaged index that tracks the performance of 500 widely
held common stocks listed on the New York Stock Exchange, the American Stock
Exchange and NASDAQ. The S&P 500 is heavily weighted with the stocks of large
companies.

[Sidenote:]
PORTFOLIO MANAGER
The Fund's portfolio manager is Robert G. Armknecht, CFA, an Executive Vice
President of Fleet since 1988. He's primarily responsible for the day-to-day
management of the Fund's investment portfolio. Mr. Armknecht has been the Fund's
portfolio manager since July 1998. He has been with Fleet and its predecessors
since 1988.

-7-
<PAGE>

Growth and Income Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks to provide a relatively high total return through long-term
capital appreciation and current income.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund normally invests at least 65% of its total assets in the common stocks
of U.S. companies with large market capitalizations (generally over $2 billion)
that have prospects for above-average growth and dividends. Fleet focuses on
stocks which are believed to be attractively priced relative to expectations for
the future performance of the issuing company. Fleet also seeks a current yield
greater than that of the S&P 500, although not all Fund investments will pay
dividends. From time to time, the Fund may emphasize particular market sectors,
such as technology, in attempting to achieve its investment objective.

The Fund will sell a portfolio security when, as a result of changes in the
economy, Fleet believes that holding the security is no longer consistent with
the Fund's investment objective. A security may also be sold as a result of a
deterioration in the performance of the security or in the financial condition
of the issuer of the security.

[Sidenote:]
CURRENT INCOME
Current income includes both dividends from stocks and interest income from
fixed income securities, after deducting Fund expenses.

[Sidenote:]
MARKET CAPITALIZATION
A company's market capitalization is the price of a share of its stock,
multiplied by the number of shares held by investors.

THE MAIN RISKS OF INVESTING IN THE FUND

-8-
<PAGE>

In addition, the Fund carries the following main risks:

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR TOTAL RETURNS - CALENDAR YEARS

The bar chart shows the performance of the Fund during the last calendar year.

[bar chart goes here ]

<TABLE>
<CAPTION>
---------------------

1999
---------------------
<S> <C>
7.10%
---------------------
</TABLE>

The Fund's year-to-date total return for the six months ended June 30, 2000 was
1.62%.

[Sidenote:]
Best quarter: 9.34% for the quarter ending June 30,1999
Worst quarter: -10.52% for the quarter ending September 30, 1999

-9-
<PAGE>

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1999, as compared to a broad-based market index.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------

1 year Since inception
---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Growth and Income Fund 7.10% 6.07% (3/4/98)
---------------------------------------------------------------------------------------------------------------
S&P 500 21.03% 21.73% (since 2/28/98)
---------------------------------------------------------------------------------------------------------------
</TABLE>

[Sidenote:]
The S&P 500 is an unmanaged index that tracks the performance of 500 widely-held
common stocks listed on the New York Stock Exchange, the American Stock Exchange
and NASDAQ. The S&P 500 is heavily weighted with the stocks of large companies.

[Sidenote:]
PORTFOLIO MANAGER
The Fund's portfolio manager is Gregory M. Miller, a Vice President of Fleet
since 1996. He's been primarily responsible for the day-to-day management of the
Fund's investment portfolio since July 1998. Before that, Mr. Miller assisted in
managing Fleet's other growth and income equity products for seven years. He
joined Fleet in 1985.

-10-

<PAGE>

Small Company Growth Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks capital appreciation.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund normally invests at least 65% of its total assets in the equity
securities, primarily common stocks, of small companies that have market
capitalizations of $1.5 billion or less. The Fund invests primarily in the
common stock of U.S. companies, but may invest up to 20% of its total assets in
foreign equity securities.

In selecting investments for the Fund, Fleet looks for promising industries. It
then looks within those industries for what are judged to be reasonably priced
companies that have above-average growth potential. Fleet consults a wide range
of sources, including management, competitors, other industry sources and
regional brokerage analysts. From time to time, the Fund may emphasize
particular market sectors, such as technology, in attempting to achieve its
investment objective.

[Sidenote:]
MARKET CAPITALIZATION
A company's market capitalization is the price of a share of its stock,
multiplied by the number of shares held by investors.

[Sidenote:]
GROWTH STOCKS
Growth stocks offer strong revenue and earnings potential, and accompanying
capital growth, with generally less dividend income than value stocks.

THE MAIN RISKS OF INVESTING IN THE FUND

-11-
<PAGE>

In addition, the Fund carries the following main risks:

- SMALL COMPANIES RISK - Smaller companies tend to have limited resources,
product lines and market share. As a result, their share prices tend to
fluctuate more than those of larger companies. Their shares may also trade
less frequently and in limited volume, making them potentially less liquid.
The price of small company stocks might fall regardless of trends in the
broader market.

- FOREIGN INVESTMENTS - Foreign investments may be riskier than U.S.
investments because of factors such as foreign government restrictions,
changes in currency exchange rates, incomplete financial information about
the issuers of securities, and political or economic instability. Foreign
stocks may be more volatile and less liquid than U.S. stocks.

HOW THE FUND HAS PERFORMED

-12-

<PAGE>

YEAR-BY-YEAR TOTAL RETURNS - CALENDAR YEARS

The bar chart shows the performance of the Fund during the last calendar year.

[bar chart goes here ]

<TABLE>
<CAPTION>
---------------------

1999
---------------------
<S> <C>
67.49%
---------------------
</TABLE>

The Fund's year-to-date total return for the six months ended June 30, 2000 was
8.31%.

[Sidenote:]
Best quarter: 47.34% for the quarter ending December 31, 1999
Worst quarter: -8.41% for the quarter ending March 31, 1999

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1999, as compared to a broad-based market index.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------

1 year Since inception
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Small Company Growth Fund 67.49% 26.61% (4/17/98)
------------------------------------------------------------------------------------------------------------
Russell 2000 Index 21.26% 4.01% (since 4/30/98)
------------------------------------------------------------------------------------------------------------
</TABLE>

[Sidenote:]
The Russell 2000 Index is an unmanaged index that tracks the performance of the
2,000 smallest of the 3,000 largest U.S. companies, based on market
capitalization.

[Sidenote:]
PORTFOLIO MANAGER
The Fund's portfolio manager is Stephen D. Barbaro, CFA, a Senior Vice President
of Fleet since 1996. He's primarily responsible for the day-to-day management of
the Fund's investment portfolio. Mr. Barbaro has been the Fund's portfolio
manager since it commenced operations in April 1998. He has been in the
investment management business with Fleet and its predecessors since 1976.

-13-
<PAGE>

Large Company Index Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks to provide investment results that, before deduction of operating
expenses, match the price and yield performance of U.S. publicly traded common
stocks with large stock market capitalizations as represented by the S&P 500.

[Sidenote:]
S&P 500
The S&P 500 is an unmanaged index that tracks the performance of 500 widely held
common stocks listed on the New York Stock Exchange, the American Stock Exchange
and NASDAQ. The S&P 500 is heavily weighted with the stocks of large companies.

[Sidenote:]
MARKET CAPITALIZATION
A company's market capitalization is the price of a share of its stock,
multiplied by the number of shares held by investors. The average market
capitalization of the companies included in the S&P 500 as of September 29,
2000 was approximately $25.3 billion.

[Sidenote:]
THE INDEXING STRATEGY
The Fund is not actively managed. This means that Fleet does not use economic,
financial and market analysis in selecting securities for the Fund. Instead,
Fleet attempts to approximate the performance of the S&P 500 by investing the
Fund's assets in securities included in the S&P 500. Fleet relies on
sophisticated computer models in managing the Fund's investments. Because the
indexing approach generally involves low portfolio turnover, transaction and
administration costs tend to be low as well.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund uses an indexing strategy through the use of sophisticated computer
models to approximate the investment performance of the S&P 500. The Fund
invests substantially all (at least 80%) of its total assets in the common stock
of companies included in the S&P 500. Normally, the Fund holds all 500 stocks in
the S&P 500, and in approximately the same percentage as each stock is
represented in the S&P 500.

To the extent that, from time to time, the stocks in a particular market sector,
such as technology, comprise a significant proportion of the S&P 500, those
stocks will be represented in substantially the same proportion in the Fund.

The Fund will only purchase a security that is included in the S&P 500 at the
time of purchase. The Fund will normally only buy or sell securities to adjust
to changes in the composition of the S&P 500 or to accommodate cash flows into
and out of the Fund.

-14-
<PAGE>

The Fund also invests in stock index futures contracts in order to track the S&P
500 when the purchase of individual securities may be less efficient.

Under normal market conditions, it is expected that the quarterly performance of
the Fund, before expenses, will track the performance of the S&P 500 within a
.95 correlation coefficient.

[Sidenote:]

STOCK INDEX FUTURES CONTRACTS
A stock index futures contract obligates a Fund, at the end of the contract, to
pay or receive an amount equal to the difference between the value of the stock
index on the date the contract was struck and its value at the end of the
contract, multiplied by the dollar amount of the contract. No physical delivery
of the underlying stocks in the index is made.

THE MAIN RISKS OF INVESTING IN THE FUND

There is the additional risk that the Fund will fail to match the investment
results of the S&P 500 as a result of shareholder purchase and redemption
activity, transaction costs, expenses and other factors.

In addition, the Fund carries the following main risks:

- INDEXING RISK - Your investment in the Fund will typically decline in value
when the S&P 500 declines. Since the Fund is designed to track the S&P 500,
the Fund cannot purchase other securities that may help offset declines in
the S&P 500. In addition, because the Fund may not always hold all stocks
included in the S&P 500 and may not always be fully invested, the Fund's
performance may fail to match the performance of the S&P 500, after taking
expenses into account.

- SECTOR RISK - To the extent that the stocks in a particular market sector,
such as technology, comprise a significant portion of the S&P 500 and,
correspondingly, of the Fund's holdings, the Fund will be especially
susceptible to the risks associated with investments in those market
sectors. Stocks of technology companies may be subject to greater price
volatility then stocks of companies in other sectors. Technology companies
may produce or use products or services that prove commercially

-15-

<PAGE>

unsuccessful, become obsolete or become adversely impacted by government
regulation. Technology stocks may experience significant price movements
caused by disproportionate investor optimism or pessimism.

- STOCK INDEX FUTURES CONTRACTS - The Fund may not always be able to track
the performance of its index by entering into stock index futures contracts
because the prices of stock index futures contracts may not always match
the movement of the index to which they relate. Also, a liquid secondary
market may not be available, which might prevent Fleet from closing out a
futures contract when desired.

HOW THE FUND HAS PERFORMED

The Fund had not commenced operations prior to the date of this prospectus. No
performance information is presented because the Fund has less than one full
calendar year of performance history.

-16-
<PAGE>

Small Company Index Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks to provide investment results that, before deduction of operating
expenses, match the price and yield performance of U.S. publicly traded common
stocks with smaller stock market capitalizations, as represented by the Standard
& Poor's SmallCap 600 Stock Price Index (S&P SmallCap 600).

[Sidenote:]
S&P SMALLCAP 600
The S&P SmallCap 600 is an unmanaged index that tracks the performance of 600
domestic companies traded on the New York Stock Exchange, the American Stock
Exchange and NASDAQ. The S&P SmallCap 600 is heavily weighted with the stocks of
small companies.

[Sidenote:]
MARKET CAPITALIZATION
A company's market capitalization is the price of a share of its stock,
multiplied by the number of shares held by investors. The average market
capitalization of the companies included in the S&P SmallCap 600 as of
September 29, 2000 was approximately $640 million.

[Sidenote:]
THE INDEXING STRATEGY
The Fund is not actively managed. This means that Fleet does not use economic,
financial and market analysis in selecting securities for the Fund. Instead,
Fleet attempts to approximate the performance of the S&P SmallCap 600 by
investing the Fund's assets in securities included in the S&P SmallCap 600.
Fleet relies on sophisticated computer models in managing the Fund's
investments. Because the indexing approach generally involves low portfolio
turnover, transaction and administration costs tend to be low as well.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund uses an indexing strategy through the use of sophisticated computer
models to approximate the investment performance of the S&P SmallCap 600. The
Fund invests substantially all (at least 80%) of its total assets in the common
stocks of companies included in the S&P SmallCap 600. Normally, the Fund holds
all 600 stocks in the S&P SmallCap 600, in approximately the same percentage as
each stock is represented in the S&P SmallCap 600. From time to time, however,
when deemed advisable by Fleet, the Fund will not hold all of the stocks in the
S&P SmallCap 600 but instead will use a statistical technique known as
"portfolio optimization." When using portfolio optimization, Fleet will consider
whether or not to include each stock in the Fund based on that stock's
contribution to the Fund's market capitalization, industry representation and
exposure to certain fundamentals (such as dividend yield, price-earnings
multiple and

-17-

<PAGE>

average growth rates) as compared to the S&P SmallCap 600. When
utilized, portfolio optimization is expected to provide an effective method of
substantially duplicating the dividend income and capital gains of the S&P
SmallCap 600.

To the extent that, from time to time, the stocks in a particular market sector,
such as technology, comprise a significant portion of the S&P SmallCap 600,
those stocks will be represented in substantially the same proportion in the
Fund.

The Fund will only purchase a security that is included in the S&P SmallCap 600
at the time of purchase. The Fund will normally only buy or sell securities to
adjust to changes in the composition of the S&P SmallCap 600 or to accommodate
cash flows into and out of the Fund.

The Fund also invests in stock index futures contracts in order to track the S&P
SmallCap 600 when the purchase of individual securities may be less efficient.

Under normal market conditions, it is expected that the quarterly performance of
the Fund before expenses will track the performance of the S&P SmallCap 600
within a .95 correlation coefficient.

[Sidenote:]
STOCK INDEX FUTURES CONTRACTS
A stock index futures contract obligates a Fund, at the end of the contract, to
pay or receive an amount equal to the difference between the value of the stock
index on the date the contract was struck and its value at the end of the
contract, multiplied by the dollar amount of the contract. No physical delivery
of the underlying stocks in the index is made.

THE MAIN RISKS OF INVESTING IN THE FUND

There is the additional risk that the Fund will fail to match the investment
results of the S&P SmallCap 600 as a result of shareholder purchase and
redemption activity, transaction costs, expenses and other factors.

-18-
<PAGE>

In addition, the Fund carries the following main risks:

- INDEXING RISK - Your investment in the Fund will typically decline in value
when the S&P SmallCap 600 declines. Since the Fund is designed to track the
S&P SmallCap 600, the Fund cannot purchase other securities that may help
offset declines in stocks represented in the S&P SmallCap 600. In addition,
because the Fund may not always hold all stocks included in the S&P
SmallCap 600, such as when Fleet deems it advisable to utilize portfolio
optimization, and may not always be fully invested, the Fund's performance
may fail to match the performance of the S&P SmallCap 600, after taking
expenses into account.

- SECTOR RISK - To the extent that the stocks in a particular market sector,
such as technology, comprise a significant portion of the S&P SmallCap 600
and, correspondingly, of the Fund's holdings, the Fund will be especially
susceptible to the risks associated with investments in those market
sectors. Stocks of technology companies may be subject to greater price
volatility than stocks of companies in other sectors. Technology companies
may produce or use products or services that prove commercially
unsuccessful, become obsolete or become adversely impacted by government
regulation. Technology stocks may experience significant price movements
caused by disproportionate investor optimism or pessimism.

HOW THE FUND HAS PERFORMED

The Fund had not commenced operations prior to the date of this prospectus. No
performance information is presented because the Fund has less than one full
calendar year of performance history.

-19-
<PAGE>

Columbia Real Estate Equity Fund II

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks, with equal emphasis, capital appreciation and above-average
current income by investing primarily in the equity securities of companies in
the real estate industry.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund normally invests at least 65% of its total assets in the equity
securities, primarily common stocks, of companies principally engaged in the
real estate industry, primarily real estate investment trusts ("REITs").
The Fund invests primarily in the securities of U.S. companies.

In selecting portfolio securities for the Fund, Columbia focuses on total
return, with an emphasis on growth companies that offer both a strong balance
sheet and a dividend yield exceeding that of the S&P 500. The Fund's holdings
are diversified across several geographic regions and types of real estate.

The Fund will sell a portfolio security when, as a result of changes in the
economy or the performance of the security or other circumstances, Columbia
believes that holding the security is no longer consistent with the Fund's
investment objective.

[Sidenote:]
REITS
REITs pool investors' funds for investment primarily in real estate or related
loans. REITs are usually classified as either equity REITs, mortgage REITs or
hybrid REITs. Equity REITs invest directly in real estate and derive most of
their income from rental and lease payments, although they can also realize
capital gains by selling real estate that has appreciated in value. Mortgage
REITs make loans to commercial real estate developers and derive most of their
income from interest payments on the loans. Hybrid REITs combine the
characteristics of both equity REITs, and mortgage REITs.

[Sidenote:]
TOTAL RETURN
Total return consists of net income (dividend and/or interest income from
portfolio securities, after deducting Fund expenses) and capital gains and
losses, both realized and unrealized, from portfolio securities.

-20-
<PAGE>

THE MAIN RISKS OF INVESTING IN THE FUND

In addition, the Fund carries the following main risks:

- REAL ESTATE SECURITIES GENERALLY - Although the Fund will not invest in
real estate directly, it may be subject to risks similar to those
associated with the direct ownership of real estate because of its policy
of concentration in the securities of companies in the real estate
industry. These risks include declines in the value of real estate,
possible lack of availability of mortgage funds, overbuilding, extended
vacancies of properties, increases in property taxes and operating
expenses, changes in zoning laws, changes in neighborhood values, and
changes in interest rates. These risks may be more significant to the
extent that the Fund's investments are concentrated in a particular
geographic region.

- REITS - REITs are also subject to the risks associated with direct
ownership of real estate. Generally, an increase in interest rates will
decrease the value of high yielding securities and increase the cost of
obtaining financing, which could decrease the value of a REIT's
investments. Equity REITs may be affected by changes in the value of the
underlying property owned by the REIT, while mortgage REITs may be affected
by the quality of any credit extended. REITs are dependent upon management
skills, may not be diversified and are subject to heavy cash flow
dependency and defaults of borrowers. In addition, because REITs pay
dividends to their shareholders based upon available funds from operations,
it is quite common for a portion of these dividends to be designated as a
return of capital. Since the Fund includes dividends from REITs in its
distributions to shareholders, a portion of the Fund's dividends may also
be designated as a return of capital.

- SELECTION OF INVESTMENTS - Columbia evaluates the risks and rewards
presented by all securities purchased by the Fund and how they advance the
Fund's investment objective. It's possible, however, that these evaluations
will prove to be inaccurate.

HOW THE FUND HAS PERFORMED

-21-
<PAGE>

YEAR-BY-YEAR TOTAL RETURNS - CALENDAR YEARS

The bar chart shows the performance of the Fund during the last calendar year.

[bar chart goes here ]

<TABLE>
<CAPTION>
---------------------

1999
---------------------
<S> <C>
-4.13%
---------------------
</TABLE>

The Fund's year-to-date total return for the six months ended June 30, 2000 was
13.91%.

[Sidenote:]
Best quarter: 7.89% for the quarter ending June 30, 1999
Worst quarter: -8.46% for the quarter ending September 30, 1999

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1999, as compared to a broad-based market index.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------

1 year Since inception
--------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Columbia Real Estate Equity Fund II -4.13% -7.51% (3/3/98)
--------------------------------------------------------------------------------------------------------------
NAREIT Index -4.62% -11.15% (since 2/28/98)
--------------------------------------------------------------------------------------------------------------
</TABLE>

[Sidenote:]
The National Association of Real Estate Investment Trusts (NAREIT) Index is an
unmanaged index of all tax-qualified REITs listed on the New York Stock
Exchange, the American Stock Exchange and NASDAQ, which have 75% or more of
their gross invested book assets invested directly or indirectly in the equity
ownership of real estate.

[Sidenote:]
PORTFOLIO MANAGER
The Fund's portfolio manager is David W. Jellison, CFA, a Senior Vice President
of Columbia. He's primarily responsible for the day-to-day management of the
Fund's investment portfolio. Mr. Jellison has been the Fund's portfolio manager
since it began operations in March 1998.

-22-
<PAGE>

Prior to joining Columbia in 1992, Mr. Jellison was a Senior Research Associate
for RCM Capital Management.

-23-
<PAGE>

Asset Allocation Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks a high total return by providing both a current level of
income that is greater than that provided by the popular stock market
averages, as well as long-term growth in the value of the Fund's assets.

[Sidenote:]

CURRENT INCOME
Current income includes both dividends from stocks and interest income from
fixed income securities, after deducting Fund expenses.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund aims to provide income that is higher than the average income
provided by stocks included in the popular stock market averages. Fleet
interprets this to mean the Dow Jones Industrial Average of 30 major
companies and the S&P 500. Due to the Fund's expenses, however, net income
paid to investors may be less than that. The Fund also seeks long-term growth
in the value of its assets. Fleet attempts to achieve these goals and reduce
risk by allocating the Fund's assets among short-term debt securities, common
stocks, preferred stocks and bonds.

The Fund seeks a mix of stocks and bonds that will produce both income and
long-term capital growth. This mix will change from time to time as a result
of economic and market conditions. However, the Fund keeps at least 25% of
its total assets in fixed income investments, including debt securities and
preferred stocks, at all times.

Debt securities purchased by the Fund will be of investment grade quality,
which means that they will have one of the top four ratings assigned by
Standard & Poor's Ratings Group ("S&P") or Moody's Investors Service, Inc.
("Moody's") or will be unrated securities which Fleet has determined to be of
comparable quality. Occasionally, the rating of a security held by the Fund
may be downgraded below investment grade. If that happens, the Fund doesn't
have to sell the security unless Fleet determines that under the
circumstances the security is no longer an appropriate investment for the
Fund. However, the Fund will sell promptly any securities that are not rated
investment grade by S&P or Moody's if the securities exceed 5% of the Fund's
net assets.

In selecting portfolio securities for the Fund, Fleet's investment policy
committee develops an economic outlook and sets guidelines for the industries
and sectors in which the Fund should invest. In selecting equity securities,
Fleet favors stocks with long-term growth potential that are expected to
outperform their peers over time. Fleet also forecasts the direction and
degree of change in long-term interest rates to help in the selection of
fixed income securities. From time to time, the Fund may emphasize particular
market sectors, such as technology, in attempting to achieve its investment
objective.

-24-

<PAGE>

The Fund will sell a security when, as a result of changes in the economy,
Fleet determines it appropriate to revise the allocation of the Fund's assets
between stocks and bonds. A security may also be sold as a result of a
deterioration in the performance of the security or in the financial
condition of the issuer of the security.

THE MAIN RISKS OF INVESTING IN THE FUND

Changes in the U.S. or foreign economies can cause the value of stocks and
other investments held by the Fund to fall. Stock prices may decline over
short or extended periods. Stock markets tend to move in cycles, with periods
of rising prices and periods of falling prices.

The value of your investment in the Fund will go up and down with the value
of the investments which the Fund holds. The Fund's investments may not
perform as well as other investments, even in times of rising markets.

In addition, the Fund carries the following main risks:

- INTEREST RATE RISK - The value of fixed income investments such as bonds
are affected by movements in interest rates. Bond prices tend to fall when
interest rates rise and to rise when interest rates fall. Generally, the
longer the time until maturity, the more sensitive the price of a bond is
to interest rate changes.

- CREDIT RISK - The value of fixed income investments also depends on the
ability of an issuer to make principal and interest payments. If an issuer
can't meet its payment obligations or if its credit rating is lowered, the
value of its securities will decline. Debt securities which have the lowest
of the top four ratings assigned by S&P or Moody's have speculative
characteristics. Changes in the economy are more likely to affect the
ability of the issuers of these securities to make payments of principal
and interest than is the case with higher-rated securities.

- PREPAYMENT/EXTENSION RISK - Changes in interest rates may cause certain
fixed income investments held by the Fund to be paid off much sooner or
later than expected, which could adversely affect the Fund's value. In the
event that a security is paid off sooner than expected because of a decline
in interest rates, the Fund may be unable to recoup all of its initial
investment and may also suffer from having to reinvest in lower-yielding
securities. In the event of a later than expected payment because of a rise
in interest rates, the value of the obligation will decrease and the Fund
may suffer from the inability to invest in higher-yielding securities.

- PORTFOLIO COMPOSITION - The level of risk could increase if a larger
percentage of the Fund is invested in one particular asset class, such as
stocks or bonds. However, asset allocation funds are generally less
volatile than portfolios that contain only stocks.

-25-

<PAGE>

HOW THE FUND HAS PERFORMED

The bar chart and table below show how the Fund has performed in the past and
give some indication of the risk of investing in the Fund. Both assume that
all dividends and distributions are reinvested in the Fund. How the Fund has
performed in the past doesn't necessarily show how it will perform in the
future.

The returns set forth below include the effect of deducting the Fund's
expenses, but do not include the charges and expenses attributable to a
particular variable annuity contract or variable life insurance policy. You
should carefully review the prospectus for the variable annuity contract or
variable life insurance policy you have chosen for information on relevant
charges and expenses. If these charges and expenses were included, the Fund's
returns would be lower.

YEAR-BY-YEAR TOTAL RETURNS - CALENDAR YEARS

The bar chart shows how the performance of the Fund has varied from year to
year.

[bar chart goes here]

----------------- ---------------- ------------------ ----------------- ---------------- -----------------
1994 1995 1996 1997 1998 1999
----------------- ---------------- ------------------ ----------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
-2.15% 29.42% 14.64% 19.03% 17.51% 7.06%
----------------- ---------------- ------------------ ----------------- ---------------- -----------------

</TABLE>

The Fund's year-to-date total return for the six months ended June 30, 2000
was 5.82%

[Sidenote:]
Best quarter: 11.31% for the quarter ending December 31, 1998
Worst quarter: -3.25% for the quarter ending September 30, 1998

-26-

<PAGE>

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1999, as compared to broad-based market indices.

------------------------------- ----------------------- --------------------- -------------------------------
1 year 5 years Since inception
------------------------------- ----------------------- --------------------- -------------------------------
<S> <C> <C> <C>
Asset Allocation Fund 7.06% 17.37% 12.80% (2/6/93)
------------------------------- ----------------------- --------------------- -------------------------------
S&P 500 21.03% 28.54% 13.78% (since 1/31/93)
------------------------------- ----------------------- --------------------- -------------------------------
DJIA 27.29% 27.10% 22.41% (since 1/31/93)
------------------------------- ----------------------- --------------------- -------------------------------
</TABLE>

[Sidenote:]
The S&P 500 is an unmanaged index that tracks the performance of 500 widely held
common stocks listed on the New York Stock Exchange, the American Stock Exchange
and NASDAQ. The S&P 500 is heavily weighted with the stocks of large companies.

[Sidenote:]
The Dow Jones Industrial Average (DJIA) is an unmanaged price-weighted average
based on the "price only" performance of 30 blue chip stocks.

[Sidenote:]
PORTFOLIO MANAGER
The Fund's portfolio manager is Donald Jones, a Vice President of Fleet since
1991. He's primarily responsible for the day-to-day management of the Fund's
investment portfolio. Mr. Jones has been with Fleet and its predecessors since
1977 and has been the Fund's portfolio manager since it began operations in
1993.

-27-

<PAGE>

High Quality Bond Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks a high level of current income consistent with prudent risk of
capital.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund invests primarily in obligations issued or guaranteed by the U.S.
Government, its agencies and instrumentalities, as well as in corporate debt
obligations such as notes and bonds. The Fund also invests in asset-backed and
mortgage-backed securities and in money market instruments, such as commercial
paper and bank obligations.

In selecting portfolio securities for the Fund, Fleet monitors and evaluates
economic trends. It establishes duration targets, ranges of interest rates on
bonds of various maturities and determines the appropriate allocation of the
Fund's investments among various market sectors.

[Sidenote:]
AVERAGE WEIGHTED MATURITY
Average weighted maturity gives you the average time until all debt obligations
in a Fund come due or mature. It is calculated by averaging the time to maturity
of all debt obligations held by a Fund with each maturity "weighted" according
to the percentage of assets it represents.

[Sidenote:]
DURATION
Duration is an approximate measure of the price sensitivity of a Fund to changes
in interest rates. Unlike maturity which measures only the time until final
payment, duration gives you the average time it takes to receive all expected
cash flows (including interest payments, prepayments and final payments) on the
debt obligations held by a Fund.

Nearly all Fund investments will be of investment grade quality. These are
securities which have one of the top four ratings assigned by Standard & Poor's
Ratings Group ("S&P") or Moody's Investors Service, Inc. ("Moody's"), or are
unrated securities determined by Fleet to be of comparable quality. Under normal
market conditions, the Fund will invest at least 65% of its total assets in high
quality debt obligations that have one of the top two ratings assigned by S&P or
Moody's, or unrated securities determined by Fleet to be of comparable quality.
High quality securities tend to pay less income than lower-rated securities.
Occasionally, the rating of a security held by the Fund may be downgraded to
below investment grade. If that happens, the Fund doesn't have to sell the
security unless Fleet determines that under the circumstances the security is no
longer an appropriate investment for the Fund. However, the Fund will sell
promptly any securities that are not rated investment grade by either S&P or
Moody's if the securities exceed 5% of the Fund's net assets.

-28-

<PAGE>

The Fund's average weighted maturity will vary from time to time depending on
current market and economic conditions and Fleet's assessment of probable
changes in interest rates.

The Fund will sell a portfolio security when, as a result of changes in the
economy or the performance of the security or other circumstances, Fleet
believes that holding the security is no longer consistent with the Fund's
investment objective.

The Fund may trade its investments frequently in trying to achieve its
investment goal.

THE MAIN RISKS OF INVESTING IN THE FUND

All mutual funds are affected by changes in the economy and swings in investment
markets. These can occur within or outside the U.S. or worldwide, and may affect
only particular companies or industries.

In addition, the Fund carries the following main risks:

- INTEREST RATE RISK - The prices of debt securities generally tend to move
in the opposite direction to interest rates. When rates are rising, the
prices of debt securities tend to fall. When rates are falling, the prices
of debt securities tend to rise. Generally, the longer the time until
maturity, the more sensitive the price of a debt security is to interest
rate changes.

- CREDIT RISK - The value of debt securities also depends on the ability of
issuers to make principal and interest payments. If an issuer can't meet
its payment obligations or if its credit rating is lowered, the value of
its debt securities may fall. Debt securities which have the lowest of the
top four ratings assigned by S&P or Moody's have speculative
characteristics. Changes in the economy are more likely to affect the
ability of the issuers of these securities to make payments of principal
and interest than is the case with higher-rated securities.

- PREPAYMENT/EXTENSION RISK - Changes in interest rates may cause certain
debt securities held by the Fund, particularly asset-backed and
mortgage-backed securities, to be paid off much sooner or later than
expected, which could adversely affect the Fund's value. In the event that
a security is paid off sooner than expected because of a decline in
interest rates, the Fund may be unable to recoup all of its initial
investment and may also suffer from having to reinvest in lower-yielding
securities. In the event of a later than expected payment because of a rise
in interest rates, the value of the obligation will decrease and the Fund
may suffer from the inability to invest in higher-yielding securities.

- FREQUENT TRADING - Frequent trading of investments usually increases the
chance that the Fund will pay investors short-term capital gains. These
gains are taxable at higher rates than

-29-

<PAGE>

long-term capital gains. Frequent trading could also mean higher
brokerage commissions and other transaction costs, which could reduce
the Fund's returns.

HOW THE FUND HAS PERFORMED

The bar chart and the table below show how the Fund has performed in the past
and give some indication of the risk of investing in the Fund. Both assume that
all dividends and distributions are reinvested in the Fund. How the Fund has
performed in the past doesn't necessarily show how it will perform in the
future.

The returns set forth below include the effect of deducting the Fund's
expenses, but do not include the charges and expenses attributable to a
particular variable annuity contract or variable life insurance policy. You
should carefully review the prospectus for the variable annuity contract or
variable life insurance policy you have chosen for information on relevant
charges and expenses. If these charges and expenses were included, the Fund's
returns would be lower.

YEAR-BY-YEAR TOTAL RETURNS - CALENDAR YEARS

The bar chart shows how the performance of the Fund has varied from year to
year.

[bar chart goes here ]

----------------- ---------------- ------------------ ----------------- ---------------- -----------------
1994 1995 1996 1997 1998 1999
----------------- ---------------- ------------------ ----------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
-5.85% 22.55% 1.57% 9.36% 9.70% -3.78%
----------------- ---------------- ------------------ ----------------- ---------------- -----------------
</TABLE>

The Fund's year-to-date total return for the six months ended June 30, 2000 was
4.81%.

[Sidenote:]
Best quarter: 8.19% for the quarter ending June 30, 1995
Worst quarter: -3.49% for the quarter ending March 31, 1994

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1999, as compared to a broad-based market index.

------------------------------ -------------- --------------- ------------------------
1 year 5 years Since inception
------------------------------ -------------- --------------- ------------------------
<S> <C> <C> <C>
High Quality Bond Fund -3.78% 7.62% 5.41% (1/21/93)
------------------------------ -------------- --------------- ------------------------
Lehman Brothers Government/
Corporate Bond Index -2.15% 7.61% 6.16% (since 1/31/93)
------------------------------ -------------- --------------- ------------------------
</TABLE>

-30-

<PAGE>

[Sidenote:]
The Lehman Brothers Government/Corporate Bond Index is an unmanaged index which
tracks the performance of U.S. Government and corporate bonds.

[Sidenote:]
PORTFOLIO MANAGER
The Fund's portfolio manager is Marie M. Schofield, CFA, a Senior Vice President
of Fleet since February 1999. She's primarily responsible for the day-to-day
management of the Fund's investment portfolio. Ms. Schofield, who has over 20
years of investment experience, has been with Fleet since 1990 and served as a
Vice President and Manager of Fixed Income Investments until February 1999. She
has managed the Fund since March 1996.

-31-

<PAGE>

Columbia High Yield Fund II

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks a high level of current income by investing primarily in
lower-rated fixed income securities. Capital appreciation is a secondary
objective when consistent with the objective of high current income.

[Sidenote:]
The Fund is designed for investors who are willing to assume the risk of
significant fluctuations in the value of their investment in order to achieve a
high level of current income. The Fund should represent only a portion of a
balanced investment program.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund normally invests at least 65% of its total assets in high yielding
corporate debt securities, such as bonds, debentures and notes. These securities
will generally be rated BB or lower by Standard & Poor's Ratings Group ("S&P")
or Ba or lower by Moody's Investors Service, Inc. ("Moody's") or will be unrated
securities which Columbia has determined to be of comparable quality. Such lower
rated securities are not considered to be of investment grade quality and are
commonly referred to as "junk bonds." The Fund invests primarily in lower-rated
securities that are considered to be "upper tier," which means securities that
are rated BB or B by S&P or Ba or B by Moody's. No more than 10% of the Fund's
total assets will normally be invested in securities rated CCC or lower by S&P
or Caa or lower by Moody's.

While credit ratings are an important factor in evaluating lower-rated
securities, Columbia also considers a variety of other factors when selecting
portfolio securities for the Fund. These factors may include the issuer's
experience and managerial strength, its changing financial condition, its
borrowing requirements and debt maturity schedules, and its responsiveness to
changes in business conditions and interest rates. Because of the number of
considerations involved in investing in lower-rated debt securities, the success
of the Fund in achieving its investment objective may be more dependent upon
Columbia's credit analysis than would be the case if the Fund invested in higher
quality debt securities.

The Fund's average weighted maturity will vary from time to time depending on
current market conditions and Columbia's assessment of probable changes in
interest rates.

The Fund may trade its investments frequently in trying to achieve its
investment goal.

-32-

<PAGE>

THE MAIN RISKS OF INVESTING IN THE FUND

All mutual funds are affected by changes in the economy and swings in
investment markets. These can occur within or outside the U.S. or worldwide,
and may affect only particular companies or industries.

In addition, the Fund carries the following main risks:

- LOWER-RATED SECURITIES - Lower-rated securities may be issued in connection
with certain corporate restructurings, such as leveraged buyouts, mergers
or acquisitions, or by smaller less creditworthy companies or companies
with substantial debt. Such securities are subject to a high degree of risk
and are considered speculative by S&P and Moody's with respect to the
issuer's ability to make principal and interest payments. An economic
downturn or increase in interest rates is likely to have a greater negative
effect on the issuers of lower-rated securities and result in more defaults
than is the case for higher-rated securities. In addition, the markets for
lower-rated securities may be less liquid and less active than the markets
for higher rated securities, which may limit the ability of the Fund to
sell lower-rated securities at their expected value.

- FREQUENT TRADING - Frequent trading of investments usually increases the
chance that the Fund will pay investors short-term capital gains. These
gains are taxable at higher rates than long-term capital gains. Frequent
trading could also mean higher brokerage commissions and other transaction
costs, which could reduce the Fund's returns.

HOW THE FUND HAS PERFORMED

The bar chart and table below show how the Fund has performed in the past and
give some indication of the risk of investing in the Fund. Both assume that
all dividends and distributions are reinvested in the Fund. How the Fund has
performed in the past doesn't necessarily show how it will perform in the
future.

-33-

<PAGE>

The returns set forth below include the effect of deducting the Fund's
expenses, but do not include the charges and expenses attributable to a
particular variable annuity contract or variable life insurance policy. You
should carefully review the prospectus for the variable annuity contract or
variable life insurance policy you have chosen for information on relevant
charges and expenses. If these charges and expenses were included, the Fund's
returns would be lower.

YEAR-BY-YEAR TOTAL RETURNS - CALENDAR YEARS

The bar chart shows the performance of the Fund during the last calendar year.

[bar chart goes here ]

---------------------
1999
---------------------

0.56%
---------------------

The Fund's year-to-date total return for the six months ended June 30, 2000 was
0.89%.

[Sidenote:]
Best quarter: 2.18% for the quarter ending December 31, 1999
Worst quarter: -1.71% for the quarter ending September 30, 1999

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1999, as compared to a broad-based market index.

---------------------------------------- --------------- ----------------------
1 year Since inception
---------------------------------------- --------------- ----------------------
<S> <C> <C>
Columbia High Yield Fund II 0.56% 5.46% (3/3/98)
---------------------------------------- --------------- ----------------------
Lehman Brothers Aggregate Bond Index -0.82% 3.49% (since 2/28/98)
---------------------------------------- --------------- ----------------------
</TABLE>

[Sidenote:]
The Lehman Brothers Aggregate Bond Index is an unmanaged index made up of the
Lehman Brothers Government/Corporate Bond Index, its Mortgage Backed Securities
Index and its Asset Backed Securities Index.

[Sidenote:]
PORTFOLIO MANAGER
The Fund's portfolio managers are Jeffrey L. Rippey, CFA and Kurt M. Havnaer,
CFA, each a Vice President of Columbia. Mr. Rippey and Mr. Havnaer are
primarily responsible for the day-to-day management of the Fund's investment
portfolio. Mr. Rippey has managed the Fund since it began operations in March
1998. He has been with Columbia since 1981. Mr.

-34-

<PAGE>

Havnaer has co-managed the Fund since September 2000. Prior to joining
Columbia in 1996, Mr. Havnaer worked as a Portfolio Manager, Analyst and
Trader for SAFECO Asset Management Company.

ADDITIONAL INFORMATION ABOUT RISK

The main risks associated with an investment in each Fund have been described
above. The following supplements that discussion.

TEMPORARY DEFENSIVE POSITIONS

Each Fund may temporarily hold up to 100% of its total assets in investments
that are not part of its main investment strategy to try to avoid losses during
unfavorable market conditions. These investments may include cash (which will
not earn any income) and, with respect to each Fund other than the Money Market
Fund, money market instruments, debt securities issued or guaranteed by the U.S.
Government or its agencies and repurchase agreements. This strategy could
prevent a Fund from achieving its investment objective and could reduce the
Fund's return and affect its performance during a market upswing.

OTHER TYPES OF INVESTMENTS

This prospectus describes each Fund's principal investment strategies and the
particular types of securities in which each Fund principally invests. Each Fund
may, from time to time, pursue other investment strategies and make other types
of investments in support of its overall investment goal. These supplemental
investment strategies, which are not considered to be main investment strategies
of the Funds - and the risks involved - are described in detail in the Statement
of Additional Information (SAI) which is referred to on the back cover of this
prospectus.

-35-

<PAGE>

FUND MANAGEMENT

ADVISERS

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

ALLOCATION OF ORDERS FOR PORTFOLIO SECURITIES

Fleet and Columbia may allocate orders for the purchase and sale of portfolio
securities to certain financial institutions, including those that are
affiliated with Fleet or Columbia or that have sold shares of the Funds, to the
extent permitted by law or by order of the Securities and Exchange Commission.
Fleet and Columbia will allocate orders to such institutions only if they
believe that the quality of the transaction and the commission are comparable to
what they would be with other qualified brokerage firms.

MANAGEMENT FEES

The management fees paid to Fleet or Columbia, as the case may be, by the Funds
during the last fiscal year are set forth below. The Large Company Index Fund
and the Small Company Index Fund had not commenced operations prior to the date
of this prospectus. Fleet is entitled to receive advisory fees with respect to
the Large Company Index Fund and Small Company Index Fund at the annual rate of
0.25% of each Fund's average daily net assets.

--------------------------------------- ---------------------------------------
Management fee as a % of
Fund average net assets
--------------------------------------- ----------------------------------------
<S> <C>
--------------------------------------- ----------------------------------------
Money Market Fund 0.15%
--------------------------------------- ----------------------------------------
Equity Fund 0.75%
--------------------------------------- ----------------------------------------
Growth and Income Fund 0.75%
--------------------------------------- ----------------------------------------
Small Company Growth Fund 0.75%
--------------------------------------- ----------------------------------------
Columbia Real Estate Equity Fund II 0.75%
--------------------------------------- ----------------------------------------
Asset Allocation Fund 0.75%
--------------------------------------- ----------------------------------------
High Quality Bond Fund 0.29%
--------------------------------------- ----------------------------------------
Columbia High Yield Fund II 0.60%
--------------------------------------- ----------------------------------------
</TABLE>

-36-

<PAGE>

HOW TO INVEST IN THE FUNDS

PRICING OF SHARES

The net asset value per share ("NAV") of each Fund is determined as of the
close of regular trading hours on the New York Stock Exchange ("NYSE"),
currently 4:00 p.m. Eastern time, on each day the NYSE is open for trading.
The NYSE is generally open for business every Monday through Friday, except
for national holidays. Each Fund's NAV is calculated by dividing the value of
all securities and other assets belonging to the Fund, less the liabilities
charged to the Fund, by the number of shares of the Fund held by investors.

The investments of the Money Market Fund are valued at amortized cost, which
is approximately equal to market value. The investments of the other Funds
are valued according to market value. When a market quote is not readily
available, the security's value is based on "fair value" as determined by
Fleet or Columbia, as the case may be, under the supervision of Galaxy VIP's
Board of Trustees.

Sometimes, the price of a security trading on a foreign stock exchange may be
affected by events that happen after that exchange closes. If this happens,
the fair value of the security may be determined using other factors and may
not reflect the security's last quoted price. In addition, foreign securities
may trade on days when shares of the Funds are not priced. As a result, the
net asset value per share of a Fund holding these securities may change on
days when you won't be able to buy or sell Fund shares.

BUYING AND SELLING SHARES

Investors may not purchase or redeem shares of the Funds directly, but only
through variable annuity contracts and variable life insurance policies
offered by the separate accounts of participating insurance companies. You
should refer to your insurance company's prospectus for information on how to
purchase a variable annuity contract or variable life insurance policy, how
to select specific Funds of Galaxy VIP as investment options for your
contract or policy and how to redeem monies from Galaxy VIP.

The separate accounts of the participating insurance companies place orders
to purchase and redeem shares of the Funds based on, among other things, the
amount of premium payments to be invested and the amount of surrender and
transfer requests (as defined in the prospectus describing the variable
annuity contracts and variable life insurance policies issued by the
participating insurance companies) to be effected on that day pursuant to
variable annuity contracts and variable life insurance policies. Orders
received by Galaxy VIP are effected on days on which the NYSE is open for
trading. Orders for the purchase of shares of a Fund are effected at the NAV
next calculated after an order is received in good order by the Fund.
Redemptions are effected at the NAV next calculated after receipt of a
redemption request in good order by a Fund. Payment for redemptions will be
made by the Funds within seven days after the request is received. Galaxy VIP
may suspend the right of redemption under certain

-37-

<PAGE>

extraordinary circumstances in accordance with the rules of the Securities
and Exchange Commission.

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

Shares of the Funds may be sold to and held by separate accounts that fund
variable annuity and variable life insurance contracts issued by both
affiliated and unaffiliated participating insurance companies. Galaxy VIP
currently does not foresee any disadvantages to the holders of variable
annuity contracts and variable life insurance policies of affiliated and
unaffiliated participating insurance companies arising from the fact that
interests of the holders of variable annuity contracts and variable life
insurance policies may differ due to differences of tax treatment or other
considerations or due to conflicts between the affiliated or unaffiliated
participating insurance companies. Nevertheless, Galaxy VIP's Board of
Trustees will monitor events to seek to identify any material irreconcilable
conflicts which may possibly arise and to determine what action, if any,
should be taken in response to such conflicts. Should a material
irreconcilable conflict arise between the holders of variable annuity
contracts and variable life insurance policies of affiliated or unaffiliated
participating insurance companies, the participating insurance companies may
be required to withdraw the assets allocable to some or all of the separate
accounts from the Funds. Any such withdrawal could disrupt orderly portfolio
management to the potential detriment of such holders. The variable annuity
contracts and variable life insurance policies are described in the separate
prospectuses issued by the participating insurance companies. Galaxy VIP
assumes no responsibility for such prospectuses.

-38-

<PAGE>

DIVIDENDS, DISTRIBUTION AND TAXES

DIVIDENDS AND DISTRIBUTIONS

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

TAXES

Each 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 qualified during its last
taxable year, and intends to continue to qualify, and the Large Company Index
Fund and Small Company Index Fund intend to qualify, as a "regulated investment
company" for federal income tax purposes by satisfying the requirements under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a
regulated investment company, a Fund generally will not be subject to federal
income tax on its ordinary income and net realized capital gains, provided that
the Fund distributes them each year.

Each Fund also intends to comply with the diversification requirements of
Section 817(h) of the Code for variable annuity contracts and variable life
insurance policies so that the owners of such contracts and policies should not
be subject to federal income tax on dividends and distributions from the Fund to
the participating insurance companies' separate accounts.

Owners of variable annuity contracts and variable life insurance policies should
review the prospectus for their contract or policy for further tax information.

The foregoing is only a summary of certain tax considerations under current law,
which may be subject to change in the future. You should consult your tax
adviser for further information regarding the tax consequences of investments in
the Funds.

-39-

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights tables shown below will help you understand the Funds'
financial performance for the six-month period ended June 30, 2000 and for the
past five years (or the period since a particular Fund began operations).
Certain information reflects the financial performance of a single share. The
total returns in the tables represent the rate that an investor would have
earned (or lost) on an investment in each Fund, assuming all dividends and
distributions were reinvested. The information for the six-month period ended
June 30, 2000 is unaudited and is included, along with the Funds' financial
statements, in the Funds' Semi-Annual Report and incorporated by reference into
the SAI. The information for the fiscal year ended December 31, 1999 has been
audited by Ernst & Young, LLP, independent auditors, whose report, along with
the Funds' financial statements, are included in the Funds' Annual Report and
incorporated by reference into the SAI. The Semi-Annual Report, Annual Report
and the SAI are available free of charge upon request. The information for the
fiscal years or periods ended December 31, 1998, 1997, 1996 and 1995 was audited
by Galaxy VIP's former auditors, PricewaterhouseCoopers LLP. No financial
highlights are presented for the Large Company Index Fund and the Small Company
Index Fund because each Fund had not commenced operations prior to the date of
this prospectus.

-40-

<PAGE>

MONEY MARKET FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, 2000
(UNAUDITED) 1999 1998 1997 1996 1995
------------ ---- ----- ---- ----- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
---- ---- ---- ---- ---- ----
Income from Investment Operations:
Net investment income(1)............ 0.03 0.05 0.05 0.05 0.05 0.05
---- ---- ---- ---- ---- ----
Total from Investment Operations: 0.03 0.05 0.05 0.05 0.05 0.05
---- ---- ---- ---- ---- ----
Less Dividends:
Dividends from net investment
income............................ (0.03) (0.05) (0.05) (0.05) (0.05) (0.05)
---- ---- ---- ---- ---- ----
Total Dividends: (0.03) (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 $1.00
==== ==== ==== ==== ==== ====
Total Return.......................... 2.95%(2) 4.86% 5.16% 4.99% 4.91% 5.38%
Ratios/Supplemental Data:
Net Assets, End of Period (000s)......$17,015 $21,817 $16,821 $15,330 $16,295 $17,925
Ratios to average net assets:
Net investment income including
reimbursement/waiver................ 5.84%(3) 4.78% 4.95% 4.88% 4.80% 5.25%
Operating expenses including
reimbursement/waiver................ 0.31%(3) 0.41% 0.55% 0.67% 0.60% 0.63%
Operating expenses excluding
reimbursement/waiver................ 0.73%(3) 0.82% 0.98% 1.12% 1.02% 1.11%
------------
</TABLE>

(1) Net investment income per share before reimbursement/waiver of fees by
the investment adviser and/or administrator for the six months ended June
30, 2000 (unaudited) and the years ended December 31, 1999, 1998, 1997,
1996 and 1995 was $0.03, $0.04, $0.05, $0.05, $0.05 and $0.05,
respectively.
(2) Not annualized.
(3) Annualized.

-41-

<PAGE>

EQUITY FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, 2000
(UNAUDITED) 1999 1998 1997 1996 1995
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................ $22.21 $19.20 $19.68 $15.58 $12.99 $10.40
----- ----- ----- ----- ----- -----
Income from Investment Operations:
Net investment income (loss)(1)... (0.02) (0.02) 0.13 0.21 0.19 0.18
Net realized and unrealized gain
on investments.................. 1.30 5.05 4.25 4.10 2.59 2.59
---- ---- ---- ---- ---- ----
Total from Investment Operations: 1.28 5.03 4.38 4.31 2.78 2.77
---- ---- ---- ---- ---- ----
Less Dividends:
Dividends from net investment
income.......................... -- -- (0.13) (0.21) (0.19) (0.18)
---- ----
Dividends from net realized
capital gains................... (0.50) (2.02) (4.73) -- -- --
---- ---- ---- ---- ---- ----
Total Dividends: (0.50) (2.02) (4.86) (0.21) (0.19) (0.18)
---- ---- ---- ---- ---- ----
Net increase (decrease) in net asset
value............................. 0.78 3.01 (0.48) 4.10 2.59 2.59
---- ---- ---- ---- ---- ----
Net Asset Value, End of Period...... $22.99 $22.21 $19.20 $19.68 $15.58 $12.99
===== ===== ===== ===== ===== =====
Total Return........................ 5.77%(2) 27.18% 23.52% 27.74% 21.49% 26.76%
Ratios/Supplemental Data:
Net Assets, End of Period (000s).... $129,689 $119,799 $92,620 $69,863 $46,242 $30,826
Ratios to average net assets:
Net investment income (loss)
including reimbursement/waiver.... (0.14)%(3) (0.11)% 0.61% 1.20% 1.34% 1.55%
Operating expenses including
reimbursement/waiver.............. 0.95%(3) 0.96% 1.05% 1.08% 1.10% 1.21%
Operating expenses excluding
reimbursement/waiver.............. 0.95%(3) 0.96% 1.05% 1.08% 1.10% 1.24%
Portfolio Turnover Rate............. 26%(2) 60% 75% 1% 8% 3%
</TABLE>

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

(1) Net investment income (loss) per share before reimbursement/waiver of
fees by the investment adviser and/or administrator for the six months
ended June 30, 2000 (unaudited) and the years ended December 31, 1999,
1998, 1997, 1996 and 1995 was $(0.02), $(0.02), $0.13, $0.21, $0.19 and
$0.18, respectively.
(2) Not annualized.
(3) Annualized.

-42-

<PAGE>

GROWTH AND INCOME FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 2000 YEAR ENDED PERIOD ENDED
(UNAUDITED) DECEMBER 31, 1999 DECEMBER 31, 1998(1)
---------------- ----------------- ------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period......................... $10.87 $10.34 $10.00
------ ------ ------
Income from Investment Operations:
Net investment income(2)................................... 0.02 0.05 0.05
Net realized and unrealized gain on investments............ 0.16 0.68 0.34
---- ---- ----
Total from Investment Operations.......................... 0.18 0.73 0.39
---- ---- ----
Less Dividends:
Dividends from net investment income...................... (0.02) (0.05) (0.05)
Dividends in excess of net investment income.............. -- --(3) --(3)
Dividends from net realized capital gains................. -- (0.07) --
Dividends in excess of net realized capital gains......... -- (0.08) --
---- ---- ----
Total Dividends......................................... (0.02) (0.20) (0.05)
---- ---- ----
Net increase in net asset value.............................. 0.16 0.53 0.34
---- ---- ----
Net Asset Value, End of Period............................... $11.03 $10.87 $10.34
===== ===== =====
Total Return................................................. 1.62%(4) 7.10% 3.72%(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000s).......................... $12,993 $12,424 $7,637
Ratios to average net assets:
Net investment income including reimbursement/waiver...... 0.33%(5) 0.42% 0.69%(5)
Operating expenses including reimbursement/waiver......... 1.40%(5) 1.49% 1.50%(5)
Operating expenses excluding reimbursement/waiver......... 1.40%(5) 1.49% 2.58%(5)
Portfolio Turnover Rate...................................... 3%(4) 17% 30%(4)
-------------------
</TABLE>

(1) The Fund commenced operations on March 4, 1998.

(2) Net investment income (loss) per share before reimbursement/waiver of
fees by the investment adviser and/or administrator for the six months
ended June 30, 2000 (unaudited), the year ended December 31, 1999 and the
period ended December 31, 1998 was $0.02, $0.05 and $(0.03),
respectively.

(3) Amount is less than $0.005 per share.

(4) Not annualized.

(5) Annualized.

-43-
<PAGE>

SMALL COMPANY GROWTH FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 2000 YEAR ENDED PERIOD ENDED
(UNAUDITED) DECEMBER 31, 1999 DECEMBER 31, 1998(1)
------------ ----------------- ------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $14.29 $8.92 $10.00
----- ----- ------
Income from Investment Operations:
Net investment (loss)(2).................................. (0.06) (0.11) (0.02)
Net realized and unrealized gain (loss) on investments.... 1.23 6.07 (1.05)
---- ---- ----
Total from Investment Operations........................ 1.17 5.96 (1.07)
---- ---- ----
Less Dividends:
Dividends in excess of net investment income............ -- -- (0.01)
Dividends from net realized capital gains............... (0.58) (0.59) --
---- ---- ----
Total Dividends....................................... (0.58) (0.59) (0.01)
---- ---- ----
Net increase (decrease) in net asset value.................. 0.59 5.37 (1.08)
---- ---- ----
Net Asset Value, End of Period.............................. $14.88 $14.29 $8.92
====== ====== =====
Total Return................................................ 8.31%(3) 67.49% (10.68)%(3)
Ratios/Supplemental Data:
Net Assets, End of Period (000s).......................... $5,169 $2,305 $1,143
Ratios to average net assets:
Net investment (loss) including reimbursement/waiver...... (1.02)%(4) (1.14)% (0.65)%(4)
Operating expenses including reimbursement/waiver......... 1.61%(4) 1.60% 1.60%(4)
Operating expenses excluding reimbursement/waiver......... 3.24%(4) 5.97% 12.86%(4)
Portfolio Turnover Rate..................................... 47%(3) 134% 87%(3)
-------------------
</TABLE>

(1) The Fund commenced operations on April 17, 1998.

(2) Net investment (loss) per share before reimbursement/waiver of fees by
the investment adviser and/or administrator for the six months ended June
30, 2000 (unaudited), the year ended December 31, 1999 and the period
ended December 31, 1998 was $(0.16), $(0.54) and $(0.36), respectively.

(3) Not annualized.

(4) Annualized.

-44-

<PAGE>

COLUMBIA REAL ESTATE EQUITY FUND II
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

SIX MONTHS ENDED
JUNE 30, 2000 YEAR ENDED PERIOD ENDED
(UNAUDITED) DECEMBER 31, 1999 DECEMBER 31, 1998(1)
---------------- ----------------- --------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period....................... $8.08 $8.78 $10.00
----- ----- ------
Income from Investment Operations:
Net investment income(2)................................. 0.18 0.38 0.28
Net realized and unrealized (loss) on investments........ 0.93 (0.74) (1.24)
---- ---- ----
Total from Investment Operations...................... 1.11 (0.36) (0.96)
---- ---- ----
Less Dividends:
Dividends from net investment income.................. (0.17) (0.34) (0.26)
---- ---- ----
Total Dividends..................................... (0.17) (0.34) (0.26)
---- ---- ----
Net (decrease) in net asset value.......................... 0.94 (0.70) (1.22)
---- ---- ----
Net Asset Value, End of Period............................. $9.02 $8.08 $8.78
===== ===== =====
Total Return............................................... 13.91%(3) (4.13)% (9.57)%(3)
Ratios/Supplemental Data:
Net Assets, End of Period (000s)......................... $1,017 $983 $784
Ratios to average net assets:
Net investment income including reimbursement/waiver..... 4.22%(4) 4.84% 4.62%(4)
Operating expenses including reimbursement/waiver........ 1.70%(4) 1.70% 1.70%(4)
Operating expenses excluding reimbursement/waiver........ 5.74%(4) 5.91% 10.49%(4)
Portfolio Turnover Rate.................................... 12%(3) 33% 3%(3)
-------------------
</TABLE>

(1) The Fund commenced operations on March 3, 1998.

(3) Not annualized.

(4) Annualized.

-45-

<PAGE>

ASSET ALLOCATION FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED ------------------------
JUNE 30, 2000
(UNAUDITED) 1999 1998 1997 1996 1995
------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.. $16.96 $16.37 $14.54 $13.37 $12.38 $9.80
----- ----- ----- ----- ----- ----
Income from Investment Operations:
Net investment income(1)............ 0.20 0.40 0.33 0.40 0.30 0.28
Net realized and unrealized gain
on investments.................... 0.78 0.74 2.17 2.11 1.53 2.58
---- ---- ---- ---- ---- ----
Total from Investment Operations: 0.98 1.14 2.50 2.51 1.83 2.86
---- ---- ---- ---- ---- ----
Less Dividends:
Dividends from net investment
income............................ (0.18) (0.40) (0.39) (0.40) (0.30) (0.28)
Dividends in excess of net
investment income................. -- -- (2) -- (2) -- -- --
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:.................. (0.18) (0.55) (0.67) (1.34) (0.84) (0.28)
---- ---- ---- ---- ---- ----
Net increase in net asset
value............................... 0.80 0.59 1.83 1.17 0.99 2.58
---- ---- ---- ---- ---- ----
Net Asset Value, End of Period........ $17.76 $16.96 $16.37 $14.54 $13.37 $12.38
====== ====== ====== ====== ====== ======
Total Return.......................... 5.82%(3) 7.06% 17.51% 19.03% 14.64% 29.42%
Ratios/Supplemental Data:
Net Assets, End of Period (000s)......$109,263 $106,869 $78,586 $42,535 $24,114 $17,246
Ratios to average net assets:
Net investment income including
reimbursement/waiver.............. 2.39%(4) 2.45% 2.69% 2.90% 2.31% 2.54%
Operating expenses including
reimbursement/waiver.............. 0.98%(4) 1.02% 1.07% 1.19% 1.33% 1.37%
Operating expenses excluding
reimbursement/waiver.............. 0.98%(4) 1.02% 1.07% 1.25% 1.33% 1.54%
Portfolio Turnover Rate............... 35%(3) 111% 88% 74% 45% 46%
</TABLE>

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

(1) Net investment income per share before reimbursement/waiver of fees by
the investment adviser and/or administrator for the six months ended June
30, 2000 (unaudited) and the years ended December 31, 1999, 1998, 1997,
1996 and 1995 was $0.20, $0.40, $0.33, $0.39, $0.30 and $0.26,
respectively.

(2) Amount is less than $0.005

(3) Not annualized.

(4) Annualized.

-46-

<PAGE>

HIGH QUALITY BOND FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

YEAR ENDED DECEMBER 31,
----------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, 2000
(UNAUDITED) 1999 1998 1997 1996 1995
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.. $9.71 $10.70 $10.31 $9.99 $10.37 $8.97
----- ------ ------ ----- ------ -----
Income from Investment Operations:
Net investment income(1)............ 0.29 0.58 0.58 0.58 0.58 0.57
Net realized and unrealized gain
(loss) on investments.............. 0.17 (0.98) 0.39 0.32 (0.38) 1.40
---- ---- ---- ---- ---- ----
Total from Investment Operations:. 0.46 (0.40) 0.97 0.90 0.20 1.97
---- ---- ---- ---- ---- ----
Less Dividends:
Dividends from net investment
income............................ (0.29) (0.58) (0.58) (0.58) (0.58) (0.57)
---- ---- ---- ---- ---- ----
Dividends from net realized
Capital gains..................... -- (0.01) -- -- -- --
---- ---- ---- ---- ---- ----
Total Dividends:.................. (0.29) (0.59) (0.58) (0.58) (0.58) (0.57)
---- ---- ---- ---- ---- ----
Net increase (decrease) in net asset
Value............................... 0.17 (0.99) 0.39 0.32 (0.38) 1.40
---- ---- ---- ---- ---- ----
Net Asset Value, End of Period........ $9.88 $9.71 $10.70 $10.31 $9.99 $10.37
===== ===== ====== ====== ===== ======
Total Return.......................... 4.81%(2) (3.78)% 9.70% 9.36% 1.57% 22.55%
Ratios/Supplemental Data:
Net Assets, End of Period (000s)......$22,494 $22,753 $23,289 $14,457 $11,814 $11,067
Ratios to average net assets:
Net investment income including
Reimbursement/waiver................ 5.99%(3) 5.69% 5.55% 5.82% 5.78% 5.86%
Operating expenses including
Reimbursement/waiver................ 0.69%(3) 0.64% 0.54% 0.77% 0.72% 0.80%
Operating expenses excluding
Reimbursement/waiver................ 0.97%(3) 1.03% 1.10% 1.44% 1.38% 1.57%
Portfolio Turnover Rate............... 46%(2) 197% 194% 160% 132% 21%
</TABLE>

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

(1) Net investment income per share before reimbursement/waiver of fees by
the investment adviser and/or administrator for the six months ended June
30, 2000 (unaudited) and the years ended December 31, 1999, 1998, 1997,
1996 and 1995 was $0.26, $0.54, $0.52, $0.51, $0.51 and $0.50,
respectively.

(2) Not annualized.

(3) Annualized.

-47-

<PAGE>

COLUMBIA HIGH YIELD FUND II
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 2000 YEAR ENDED PERIOD ENDED
(UNAUDITED) DECEMBER 31, 1999 DECEMBER 31, 1998(1)
-------------- ----------------- -------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period..................... $9.70 $10.36 $10.00
----- ------ -----
Income from Investment Operations:
Net investment income(2)............................... 0.34 0.70 0.49
Net realized and unrealized gain on investments........ (0.26) (0.65) 0.45
------ ------ ----
Total from Investment Operations.................... 0.08 0.05 0.94
---- ---- ----
Less Dividends:
Dividends from net investment income................ (0.34) (0.70) (0.49)
Dividends from net realized capital gains........... -- (0.01) (0.09)
------ ------ ----
Total Dividends................................... (0.34) (0.71) (0.58)
------ ------ ----
Net increase in net asset value.......................... (0.26) (0.66) 0.36
------ ------ ----
Net Asset Value, End of Period........................... $9.44 $9.70 $10.36
===== ===== ======
Total Return............................................. 0.89%(3) 0.56% 9.61%(3)
Ratios/Supplemental Data:
Net Assets, End of Period (000s)....................... $2,380 $2,403 $2,454
Ratios to average net assets:
Net investment income including
reimbursement/waiver................................... 7.26%(4) 7.00% 6.18%(4)
Operating expenses including
reimbursement/waiver................................... 1.60%(4) 1.60% 1.60%(4)
Operating expenses excluding
reimbursement/waiver................................... 2.89%(4) 2.89% 4.25%(4)
Portfolio Turnover Rate.................................. 21%(3) 35% 89%(3)
-------------------
</TABLE>

(1) The Fund commenced operations on March 3, 1998.

(2) Net investment income per share before reimbursement/waiver of fees by
the investment adviser and/or administrator for the six months ended June
30, 2000 (unaudited), the year ended December 31, 1999 and the period
ended December 31, 1998 was $0.28, $0.57 and $0.28, respectively.

(3) Not annualized.

(4) Annualized.

-48-

<PAGE>

[Back Cover Page]

Where to find more information

You'll find more information about the Funds in the following documents:

ANNUAL AND SEMI-ANNUAL REPORTS
Galaxy VIP's annual and semi-annual reports contain more information about each
Fund and a discussion about the market conditions and investment strategies that
had a significant effect on each Fund's performance during the last fiscal year.

STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI contains detailed information about the Funds and their policies. By
law, it's incorporated by reference into (considered to be part of) this
prospectus.

You can get a free copy of these documents, request other information about the
Funds and make shareholder inquiries by calling Galaxy VIP toll-free at
1-877-BUY-GALAXY (1-877-289-4252) or by writing to:

The Galaxy VIP Fund
4400 Computer Drive
Westborough, MA 01581-9896

You may also contact your insurance company for more information.

You can write to the Securities and Exchange Commission (SEC) Public Reference
Section and ask them to mail you information about the Funds, including the SAI.
They'll charge you a fee for this service. You can also visit the SEC Public
Reference Room and copy the documents while you're there. For information about
the operation of the Public Reference Room, call the SEC.

Public Reference Section of the SEC
Washington, DC 20549-0102
1-202-942-8090

Reports and other information about the Funds are also available on the EDGAR
Database on the SEC's Web site at http://www.sec.gov. Copies of this information
may also be obtained, after paying a duplicating fee, by electronic request to
the SEC's e-mail address at [email protected].

Galaxy VIP's Investment Company Act File No. is 811-6726.

[Fleet Assigned Code]

<PAGE>

THE GALAXY VIP FUND
STATEMENT OF ADDITIONAL INFORMATION

______________, 2000

MONEY MARKET FUND
EQUITY FUND
GROWTH AND INCOME FUND
SMALL COMPANY GROWTH FUND
LARGE COMPANY INDEX FUND
SMALL COMPANY INDEX FUND
COLUMBIA REAL ESTATE EQUITY FUND II
ASSET ALLOCATION FUND
HIGH QUALITY BOND FUND
COLUMBIA HIGH YIELD FUND II

This Statement of Additional Information is not a prospectus. It
relates to the prospectus for the Funds dated _____________, 2000 (the
"Prospectus"). The Prospectus, as it may be supplemented or revised from time to
time, as well as the Funds' Annual Report to Shareholders dated December 31,
1999 (the "Annual Report") and Semi-Annual Reports to Shareholders dated June
30, 2000 (the "Semi-Annual Report"), may be obtained, without charge, by
writing:

The Galaxy VIP Fund
4400 Computer Drive
Westborough, MA 01581-5108

or by calling toll-free 1-877-BUY-GALAXY (1-877-289-4252)

The financial statements included in the Annual Report and the
report thereon of Ernst & Young, LLP, The Galaxy VIP Fund's independent
auditors, as well as the unaudited financial statements included in the
Semi-Annual Report, are incorporated by reference into this Statement of
Additional Information. The report of PricewaterhouseCoopers LLP, The Galaxy
VIP Fund's former independent auditors, dated February 12, 1999 on the
financial statements included in The Galaxy VIP Fund's Annual Report to
Shareholders for the fiscal year ended December 31, 1998 is also incorporated
by reference into this Statement of Additional Information.

<PAGE>

TABLE OF CONTENTS

PAGE

GENERAL INFORMATION...........................................................1
DESCRIPTION OF THE GALAXY VIP FUND AND ITS SHARES.............................1
INVESTMENT STRATEGIES, POLICIES AND RISKS.....................................3
In General................................................................3
Money Market Fund.........................................................4
Equity Fund...............................................................5
Growth and Income Fund....................................................6
Small Company Growth Fund.................................................6
Large Company Index Fund..................................................7
Small Company Index Fund..................................................7
Columbia Real Estate Equity Fund II.......................................8
Asset Allocation Fund.....................................................8
High Quality Bond Fund....................................................9
Columbia High Yield Fund II..............................................10
Special Risk Considerations..............................................11
Market Risk..............................................................11
Interest Rate Risk.......................................................11
Credit Risk..............................................................12
Foreign Securities.......................................................12
Indexing Risks...........................................................13
Real Estate Securities...................................................13
Lower-Rated Securities...................................................13
Other Investment Policies and Risk Considerations........................14
U.S. Government Obligations and Money Market Instruments.................14
Types of Municipal Securities............................................16
Variable and Floating Rate Obligations...................................16
Repurchase and Reverse Repurchase Agreements.............................17
Securities Lending.......................................................18
Investment Company Securities............................................18
The Indexing Approach - Large Company Index Fund and Small Company
Index Fund...............................................................19
Temporary Cash Balances..................................................20
REITs....................................................................21
Guaranteed Investment Contracts..........................................21
Bank Investment Contracts................................................22
Asset-Backed and Mortgage-Backed Securities..............................22
Mortgage Dollar Rolls....................................................25
Stripped Obligations.....................................................25
Derivative Securities....................................................26
American, European and Global Depository Receipts........................34

-i-
<PAGE>

TABLE OF CONTENTS
(CONTINUED)

PAGE

Convertible Securities....................................................35
When-Issued, Forward Commitment and Delayed Settlement Transactions.......36
Stand-By Commitments......................................................37
U.S. Treasury Rolls.......................................................37
Portfolio Securities Generally- Money Market Fund.........................38
Portfolio Turnover............................................................38
INVESTMENT LIMITATIONS........................................................38
VALUATION OF PORTFOLIO SECURITIES.............................................42
Valuation of the Money Market Fund........................................42
Valuation of the Equity Fund, Growth and Income Fund, Small
Company Growth Fund, Large Company Index Fund, Small
Company Index Fund, Columbia Real Estate Equity Fund II,
Asset Allocation Fund and Columbia High Yield Fund II....................43
VALUATION OF THE HIGH QUALITY BOND FUND.......................................44
DIVIDENDS - MONEY MARKET FUND.................................................44
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION................................44
ADDITIONAL INFORMATION ON TAXES...............................................45
TRUSTEES AND OFFICERS.........................................................46
Shareholder and Trustee Liability........................................50
INVESTMENT ADVISERS...........................................................50
DISTRIBUTOR...................................................................53
ADMINISTRATOR.................................................................53
CUSTODIAN.....................................................................55
EXPENSES......................................................................56
PORTFOLIO TRANSACTIONS........................................................56
AUDITORS......................................................................60
COUNSEL.......................................................................61
CODES OF ETHICS...............................................................61
PERFORMANCE AND YIELD INFORMATION.............................................61
Yield Quotations - Money Market Fund.....................................62
Yield and Total Returns Quotations - Non-Money Market Funds..............63
MISCELLANEOUS.................................................................66
FINANCIAL STATEMENTS..........................................................67
APPENDIX A...................................................................A-1
APPENDIX B...................................................................B-1

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<PAGE>

GENERAL INFORMATION

This Statement of Additional Information relates to the Prospectus for
shares of the ten Funds listed on the cover page and should be read in
conjunction with that Prospectus. This Statement of Additional Information is
incorporated by reference in its entirety into the Prospectus. No investment in
shares of the Funds should be made without reading the Prospectus.

SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, FLEETBOSTON FINANCIAL CORPORATION OR ANY OF ITS
AFFILIATES, FLEET INVESTMENT ADVISORS INC., COLUMBIA MANAGEMENT CO., OR ANY
FLEET BANK. SHARES OF THE FUNDS ARE NOT FEDERALLY INSURED BY, GUARANTEED BY,
OBLIGATIONS OF OR OTHERWISE SUPPORTED BY THE U.S. GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENTAL AGENCY. INVESTMENT RETURN AND 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 POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED. ALTHOUGH THE MONEY MARKET FUND SEEKS TO PRESERVE THE VALUE OF
YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN
THE FUND.

DESCRIPTION OF THE GALAXY VIP FUND AND ITS SHARES

The Galaxy VIP Fund ("Galaxy VIP") is an open-end, diversified series
investment company established exclusively for the purpose of providing an
investment vehicle for variable annuity contracts and variable life insurance
policies offered by the separate accounts of various life insurance companies
("Participating Insurance Companies"). Shares of Galaxy VIP are not offered to
the general public but solely to such separate accounts ("Separate Accounts").
Shares of Galaxy VIP may be sold to and held by Separate Accounts funding
variable annuity contracts and variable life insurance policies issued by both
affiliated and unaffiliated life insurance companies. Galaxy VIP is currently
offering shares of beneficial interest in ten investment portfolios: Money
Market Fund, Equity Fund, Growth and Income Fund, Small Company Growth Fund,
Large Company Index Fund, Small Company Index Fund, Columbia Real Estate Equity
Fund II, Asset Allocation Fund, High Quality Bond Fund and Columbia High Yield
Fund II. The Large Company Index Fund and the Small Company Index Fund are
referred to herein collectively as the "Index Funds."

Galaxy VIP was organized as a Massachusetts business trust on May 27,
1992. Galaxy VIP's Agreement and Declaration of Trust authorizes the Board of
Trustees to issue an unlimited number of shares and to classify or reclassify
any unissued shares into one or more additional classes or series by setting or
changing in any one or more respects their respective preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption. Galaxy VIP is a series
fund authorized to issue the following ten classes of units of beneficial
interest: Class A shares, representing interests in the Money Market Fund; Class
B shares, representing interests in the Equity Fund; Class C

<PAGE>

shares, representing interests in the Asset Allocation Fund; Class D shares,
representing interests in the High Quality Bond Fund; Class E shares,
representing interests in the Small Company Growth Fund; Class F shares,
representing interests in the Growth and Income Fund; Class G shares,
representing interests in the Columbia Real Estate Equity Fund II; Class H
shares, representing interests in the Columbia High Yield Fund II; Class I
shares, representing interests in the Large Company Index Fund; and Class J
shares, representing interests in the Small Company Index Fund. Each share of
Galaxy VIP has a par value of $.001 per share, represents an equal proportionate
interest in the related Fund with other shares of the same class, and is
entitled to such dividends and distributions out of the income earned on the
assets belonging to such Fund as are declared in the discretion of the Board of
Trustees.

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

Shareholders are entitled to one vote for each full share held, and a
proportionate fractional vote for each fractional share held, and will vote in
the aggregate and not by class, except as otherwise expressly required by law or
when the Board of Trustees determines that the matter to be voted on affects
only the interests of shareholders of a particular class. Voting rights are not
cumulative and, accordingly, the holders of more than 50% of the aggregate of
Galaxy VIP's outstanding shares may elect all of the trustees, irrespective of
the votes of other shareholders. The rights accompanying Fund shares are legally
vested in the Separate Accounts. However, Participating Insurance Companies will
vote Fund shares held in their Separate Accounts in a manner consistent with
timely voting instructions received from the holders of variable annuity
contracts and variable life insurance policies. Each Participating Insurance
Company will vote Fund shares held in its Separate Accounts for which no timely
instructions are received from the holders of variable annuity contracts and
variable life insurance policies, as well as shares it owns, in the same
proportion as those shares for which voting instructions are received.
Additional information concerning voting rights of the participants in the
Separate Accounts are more fully set forth in the prospectuses relating to those
Accounts issued by the Participating Insurance Companies.

Rule 18f-2 under the Investment Company Act of 1940, as amended (the
"1940 Act"), provides that any matter required to be submitted to the holders of
the outstanding voting securities of an investment company such as Galaxy VIP
shall not be deemed to have been effectively acted upon unless approved by the
holders of a majority of the outstanding shares of each Fund affected by the
matter. A particular Fund is deemed to be affected by a matter unless it is
clear that the interests of each Fund in the matter are substantially identical
or that the matter does not affect any interest of the Fund. Under the Rule, the
approval of an investment advisory agreement or any change in an investment
objective, if fundamental, or in a fundamental investment policy would be
effectively acted upon with respect to a Fund only if approved by a

-2-
<PAGE>

majority of the outstanding shares of such Fund. However, the Rule also provides
that the ratification of the appointment of independent public accountants, the
approval of principal underwriting contracts and the election of trustees may be
effectively acted upon by shareholders of Galaxy VIP voting without regard to
class.

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

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

INVESTMENT STRATEGIES, POLICIES AND RISKS

IN GENERAL

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

-3-
<PAGE>

The following description of the Funds' investment strategies, policies and
risks supplements the description set forth in the Prospectus.

MONEY MARKET FUND

Money market instruments that may be purchased by the Money Market Fund
include, but are not limited to, obligations of domestic and foreign banks
(including negotiable certificates of deposit, non-negotiable time deposits,
savings deposits and bankers' acceptances); commercial paper; corporate bonds;
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities; and repurchase agreements issued by financial institutions
such as banks and broker/dealers. These instruments have remaining maturities of
397 days or less (except for certain variable and floating rate notes and
securities underlying certain repurchase agreements) and the average maturity of
all securities held by the Fund will be 90 days or less. For more information,
see "Other Investment Policies and Risk Considerations" below.

Money market instruments in which the Money Market Fund may invest
include debt obligations issued by or on behalf of states, territories and
possessions of the United States, the District of Columbia and their
authorities, agencies, instrumentalities and political subdivisions, the
interest on which, in the opinion of bond counsel or counsel to the issuer, is
exempt from federal income tax. These debt obligations are commonly referred to
as municipal securities. Municipal securities may be advantageous for a taxable
portfolio such as the Fund when, as a result of prevailing economic, regulatory
or other circumstances, the yield of such securities on a pre-tax basis is
comparable to that of other debt securities the Fund can purchase. Dividends
paid by a taxable portfolio such as the Fund that come from interest on
municipal securities will be taxable to shareholders. The Fund may also invest
in municipal securities the interest on which is subject to federal income tax.

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

Determinations of comparable quality shall be made in accordance with
procedures established by the Board of Trustees. Generally, if a security has
not been rated by a Rating

-4-
<PAGE>

Agency, the Fund may acquire the security if Fleet determines that the security
is of comparable quality to securities that have received the requisite ratings.
Fleet also considers other relevant information in its evaluation of unrated
short-term securities. See Appendix A to this Statement of Additional
Information for a description of the rating categories of S&P, Moody's, Fitch
IBCA and certain other Rating Agencies.

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

See "Other Investment Policies and Risk Considerations" below for
information regarding additional investment policies of the Money Market Fund.

EQUITY FUND

Under normal market and economic conditions, the Equity Fund will
invest at least 75% of its total assets in a broadly diversified portfolio of
equity securities such as common stock, preferred stock, common stock warrants
and securities convertible into common stock. By investing in convertible
securities, the Fund will seek the opportunity, through the conversion feature,
to participate in the capital appreciation of the common stock into which the
securities are convertible.

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

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

See "Other Investment Policies and Risk Considerations" below for
information regarding additional investment policies of the Equity Fund.

-5-
<PAGE>

GROWTH AND INCOME FUND

Under normal market conditions, the Growth and Income Fund will invest
at least 65% of its total assets in common stock, preferred stock, common stock
warrants and securities convertible into common stock. The Fund may purchase
convertible securities, including convertible preferred stock, convertible bonds
or debentures, units consisting of bonds and warrants or a combination of the
features of several of these securities. Convertible bonds purchased by the Fund
will be rated BB or higher by S&P or Fitch IBCA or Ba or higher by Moody's at
the time of investment. See "Other Investment Policies and Risk
Considerations -- Convertible Securities" below for a discussion of the risks
of investing in convertible bonds rated "BB" by S&P or Fitch IBCA or "Ba" by
Moody's. See Appendix A to this Statement of Additional Information for a
description of S&P's, Fitch IBCA's and Moody's rating categories. The Fund may
also buy and sell options and futures contracts and utilize stock index futures
contracts, options, swap agreements, indexed securities and options on futures
contracts. See "Other Investment Policies and Risk Considerations -- Derivative
Securities" below.

The Fund may invest up to 20% of its total assets in foreign
securities, either directly or indirectly through ADRs, EDRs and Global
Depository Receipts ("GDRs"). Securities of foreign issuers may present greater
risks in the form of nationalization, confiscation, domestic marketability, or
other national or international restrictions. As a matter of practice, the Fund
will not invest in the securities of foreign issuers if any such risk appears to
Fleet to be substantial. See "Special Risk Considerations -- Foreign Securities"
and "Other Investment Policies and Risk Considerations -- American, European and
Global Depository Receipts" below.

See "Other Investment Policies and Risk Considerations" below for
information regarding additional investment policies of the Growth and Income
Fund.

SMALL COMPANY GROWTH FUND

Under normal market conditions, at least 65% of the Small Company
Growth Fund's total assets will be invested in the equity securities of
companies with market capitalizations of $1.5 billion or less ("small-cap
securities"). Small-cap securities in which the Fund may invest include common
stock, preferred stock, securities convertible into common stock, rights and
warrants. For temporary defensive purposes, the Fund may also invest in
corporate debt obligations. All debt obligations purchased by the Fund will be
rated at the time of purchase in one of the four highest rating categories
assigned by S&P ("AAA," "AA," "A" and "BBB") or Moody's ("Aaa," "Aa," "A" and
"Baa") or, if not rated, will be determined to be of an equivalent quality by
Fleet. See "Equity Fund" above for a description of the risks associated with
investments in securities rated BBB by S&P or Baa by Moody's. See Appendix A to
this Statement of Additional Information for a description of S&P's and Moody's
rating categories.

The issuers of small-cap securities tend to be companies which are
smaller or newer than those listed on the New York or American Stock Exchanges.
As a result, small-cap securities are

-6-
<PAGE>

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

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

The Fund may also buy and sell options and futures contracts and
utilize stock index futures contracts, options, swap agreements, indexed
securities and options on futures contracts. See "Other Investment Policies and
Risk Considerations -- Derivative Securities" below.

See "Other Investment Policies and Risk Considerations" below for
information regarding additional investment policies of the Small Company Growth
Fund.

LARGE COMPANY INDEX FUND

The Standard & Poor's 500 Composite Stock Price Index ("S&P 500") is
composed of 500 common stocks, most of which are listed on the New York Stock
Exchange (the "NYSE"). Standard & Poor's ("S&P") chooses the stocks for the
S&P 500 on a statistical basis. As of September 29, 2000, the stocks in the
S&P 500 had an average market capitalization of approximately $25.3 billion
and accounted for approximately 67% of the total market value of all U.S.
common stocks. Fleet believes that the S&P 500 is an appropriate benchmark
for the Fund because it is diversified, it is familiar to many investors and
it is widely accepted as a reference for common stock investments.

SMALL COMPANY INDEX FUND

The Standard & Poor's Small Cap 600 Stock Price Index ("S&P SmallCap
600 Index") is comprised of 600 U.S. common stocks with small market
capitalizations. Like the S&P 500, the weighting of stocks in the S&P
SmallCap 600 Index is based on each stock's relative total market
capitalization. As of September 29, 2000, stocks in the S&P SmallCap 600
Index accounted for about 2% of the total market value of all publicly traded
U.S. common stocks. The average capitalization of stocks included in the S&P
SmallCap 600 Index as of September 29, 2000 was approximately $640 million,
although the capitalization of some companies included in the S&P SmallCap
600 Index is significantly higher.

When utilized, the portfolio optimization program described in the
Prospectus is expected to provide an effective method of substantially
duplicating the dividend income and capital gains produced by the S&P SmallCap
600 Index. Since the Fund does not hold

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<PAGE>

every stock in the S&P SmallCap 600 Index when utilizing portfolio optimization,
it is not expected to track the S&P SmallCap 600 Index with the same degree of
accuracy as when it holds all 600 stocks in the Index.

COLUMBIA REAL ESTATE EQUITY FUND II

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

The Fund may also invest up to 35% of its total assets in the equity
securities of companies that are not principally engaged in the real estate
industry and in non-convertible debt securities. Columbia anticipates that
investments in companies not principally engaged in the real estate industry
will be primarily in securities of companies some of whose products and services
are related to the real estate industry.

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

See "Other Investment Policies and Risk Considerations" below for
information regarding additional investment policies of the Columbia Real Estate
Equity Fund II.

ASSET ALLOCATION FUND

The Asset Allocation Fund may invest up to 20% of its total assets in
foreign securities. Such foreign investments may be made directly, by purchasing
securities issued or guaranteed by

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

See "Other Investment Policies and Risk Considerations" below for
information regarding additional investment policies of the Asset Allocation
Fund.

HIGH QUALITY BOND FUND

The High Quality Bond Fund may invest, from time to time, in municipal
securities. The purchase of municipal securities may be advantageous when, as a
result of prevailing economic, regulatory or other circumstances, the
performance of such securities, on a pretax-basis, is comparable to that of
corporate or U.S. debt obligations. See "Other Investment Policies and Risk
Considerations -- Municipal Securities" below. In addition, the Fund may acquire
high quality obligations issued by Canadian Provincial Governments, which are
similar to U.S. municipal securities except that the income derived therefrom is
fully subject to U.S. federal taxation. These instruments are denominated in
U.S. dollars and have an established over-the-counter market in the United
States. The Fund may also invest in debt obligations of supranational entities.
See "Asset Allocation Fund" above. The Fund may also invest in U.S.
dollar-denominated high quality debt obligations of U.S. corporations issued
outside the United States.

The Fund may enter into interest rate futures contracts to hedge
against changes in the market values of fixed income instruments that the Fund
holds or intends to purchase. See "Other Investment Policies and Risk
Considerations -- Derivative Securities" below. At least 65% of the Fund's total
assets will be invested in non-convertible bonds. Any common stock received
through the conversion of convertible debt obligations will be sold in an
orderly manner as soon as possible.

Debt securities purchased by the Fund will be rated in one of the four
highest rating categories assigned by S&P ("AAA," "AA," "A" and "BBB") or
Moody's ("Aaa," "Aa," "A"

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and "Baa") or will be unrated securities determined by Fleet to be of comparable
quality, provided, however, that under normal market and economic conditions at
least 65% of the Fund's total assets will be invested in debt securities rated
in one of the two highest rating categories assigned by S&P or Moody's or
unrated debt securities determined by Fleet to be of comparable quality. See
"Equity Fund" above for a description of the risks associated with investments
in debt securities rated BBB by S&P or Baa by Moody's. See Appendix A to this
Statement of Additional Information for a description of S&P's and Moody's
rating categories.

See "Other Investment Policies and Risk Considerations" below for
information regarding additional investment policies of the High Quality Bond
Fund.

COLUMBIA HIGH YIELD FUND II

The Columbia High Yield Fund II may invest in a broad range of fixed
income securities, consisting of corporate debt securities, asset-backed
securities, bank obligations, collateralized bonds, loan and mortgage
obligations, commercial paper, preferred stock, repurchase agreements, savings
and loan obligations and U.S. Government and agency obligations. The Fund
generally will invest at least 65% of its total assets in high yielding fixed
income securities rated BB or lower by S&P or Ba or lower by Moody's. The Fund
intends to invest primarily in "upper tier" non-investment grade securities
(that is, securities rated BB/Ba or B) and no more than 10% of the Fund's total
assets will be invested in fixed income securities rated CCC or lower by S&P or
Caa or lower by Moody's. The Fund may also invest in unrated fixed income
securities when Columbia believes the security is of comparable quality to that
of securities eligible for purchase by the Fund. See "Special Risk
Considerations -- Lower-Rated Securities" below. See Appendix A to this
Statement of Additional Information for a description of S&P's and Moody's
rating categories.

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

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

Special tax considerations are associated with investing in lower-rated
debt securities structured as zero coupon or pay-in-kind securities. A zero
coupon security has no cash coupon payments. Instead, the issuer sells the
security at a substantial discount from its maturity value. The interest
equivalent received by the investor from holding this security to maturity is
the difference between the maturity value and the purchase price. Pay-in-kind
securities are

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securities that pay interest in either cash or additional securities, at the
issuer's option, for a specified period. The price of pay-in-kind securities is
expected to reflect the market value of the underlying debt plus an amount
representing accrued interest since the last payment. Zero coupon and
pay-in-kind securities are more volatile than cash pay securities. The Fund
accrues income on these securities prior to the receipt of cash payments. The
Fund intends to distribute substantially all of its income to its shareholders
to qualify for pass-through treatment under the tax laws and may, therefore,
need to use its cash reserves to satisfy distribution requirements.

See "Other Investment Policies and Risk Considerations" below for
information regarding additional investment policies of the Columbia High Yield
Fund II.

SPECIAL RISK CONSIDERATIONS

MARKET RISK

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

INTEREST RATE RISK

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

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<PAGE>

CREDIT RISK

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

FOREIGN SECURITIES

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

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

Certain of the risks associated with investments in foreign securities
are heightened with respect to investments in countries with emerging economies
or emerging securities markets. The risks of expropriation, nationalization and
social, political and economic instability are greater in those countries than
in more developed capital markets.

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<PAGE>

INDEXING RISKS

The Index Funds' ability to match their performance with an index may
be affected by, among other things, changes in the securities markets, the
manner in which the index is calculated and the timing of purchases and
redemptions of the Fund's shares. Galaxy VIP expects the investments of each
Index Fund to decline in value whenever the market, as represented by the
securities in its index, declines.

The Large Company Index Fund should exhibit price volatility similar to
that of the S&P 500. The Small Company Index Fund, since it invests in smaller
companies, may have greater price volatility and less liquidity than the Large
Company Index Fund.

REAL ESTATE SECURITIES

As stated in the Prospectus, the Columbia Real Estate Equity Fund II
will not invest in real estate directly. However, it may be subject to risks
similar to those associated with the direct ownership of real estate because of
its policy of concentration in the securities of companies in the real estate
industry. These risks include, in addition to those described in the Prospectus,
risks related to general, local, and regional economic conditions, dependence on
management skills and heavy cash flow, increased competition, losses due to
costs resulting from the clean-up of environmental problems, liability to third
parties for damages resulting from environmental problems, casualty or
condemnation losses, natural disasters, limitations on rents and changes in the
appeal of properties to tenants.

In addition to the risks described above and in the Prospectus, a REIT
could fail to qualify for pass-through of income under the Internal Revenue Code
of 1986, as amended, (the "Code"), or fail to maintain its exemption from
registration under the 1940 Act. The risk factors affecting REITs may also
adversely affect a borrower's or a lessee's ability to meet its obligations to
the REIT. If a borrower or lessee defaults, a REIT may experience delays in
enforcing its rights as a mortgagee or lessor and may incur substantial costs
associated with protecting its investments.

LOWER-RATED SECURITIES

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

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<PAGE>

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

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

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

U.S. GOVERNMENT OBLIGATIONS AND MONEY MARKET INSTRUMENTS

Each Fund may, in accordance with its investment policies, invest from
time to time in U.S. Government obligations and in money market instruments,
which include but are not limited to bank obligations, commercial paper and
corporate bonds with remaining maturities of 397 days or less.

Examples of the types of U.S. Government obligations that may be held
by the Funds include, without limitation, direct obligations of the U.S.
Treasury, and securities issued or guaranteed by the Federal Home Loan Banks,
Federal Farm Credit Banks, Federal Land Banks, Federal Housing Administration,
Farmers Home Administration, Export-Import Bank of the United States, Small
Business Administration, Government National Mortgage Association, Federal
National Mortgage Association, General Services Administration, Central Bank for
Cooperatives, Federal Home Loan Mortgage Corporation, Federal Intermediate
Credit Banks, Resolution Trust Corporation and Maritime Administration.

U.S. Treasury securities differ only in their interest rates,
maturities and time of issuance: Treasury Bills have initial maturities of one
year or less; Treasury Notes have initial maturities of one to ten years; and
Treasury Bonds generally have initial maturities of more than ten years.
Obligations of certain agencies and instrumentalities of the U.S. Government,
such as those of the Government National Mortgage Association, are supported by
the full faith and credit of the U.S. Treasury; others, such as those of the
Federal Home Loan Banks, are supported by the right of the issuer to borrow from
the Treasury; others, such as those of the Federal National Mortgage
Association, are supported by the discretionary authority of the U.S. Government
to purchase the agency's obligations; still others, such as those of the Federal
Home Loan Mortgage Corporation, are supported only by the credit of the
instrumentality. No assurance can be given that the U.S. Government would
provide financial support to U.S. Government-sponsored

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<PAGE>

instrumentalities if it is not obligated to do so by law. Some of these
instruments may be variable or floating rate instruments. See "Variable and
Floating Rate Obligations" below.

Bank obligations include bankers' acceptances, negotiable certificates
of deposit and non-negotiable time deposits issued for a definite period of time
and earning a specified return by a U.S. bank which is a member of the Federal
Reserve System or is insured by the Federal Deposit Insurance Corporation
("FDIC"), or by a savings and loan association or savings bank which is insured
by the FDIC. Bank obligations also include U.S. dollar-denominated obligations
of foreign branches of U.S. banks or of U.S. branches of foreign banks, all of
the same type as domestic bank obligations. Investments in bank obligations are
limited to the obligations of financial institutions having more than $1 billion
in total assets at the time of purchase. For purposes of the Money Market Fund's
investment policy with respect to bank obligations, the assets of a bank or
savings institution will be deemed to include the assets of its U.S. and foreign
branches.

Time deposits with a maturity longer than seven days or that do not
provide for payment within seven days after notice will be limited to 10% (15%
with respect to the Growth and Income Fund, Small Company Growth Fund, Large
Company Index Fund, Small Company Index Fund, Columbia Real Estate Equity Fund
II and Columbia High Yield Fund II) of a Fund's net assets. Investments by the
Money Market Fund, Equity Fund, Small Company Growth Fund, Large Company Index
Fund, Small Company Index Fund, Asset Allocation Fund and High Quality Bond Fund
in non-negotiable time deposits are limited to no more than 5% of each such
Fund's total assets at the time of purchase.

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

Investments in obligations of foreign branches of U.S. banks and U.S.
branches of foreign banks may subject a Fund to additional risks, including
future political and economic developments, the possible imposition of
withholding taxes on interest income, possible seizure or nationalization of
foreign deposits, the possible establishment of exchange controls, or the
adoption of foreign governmental restrictions which might adversely affect the
payment of principal and interest on such obligations. In addition, foreign
branches of U.S. banks and U.S. branches of foreign banks may be subject to less
stringent reserve requirements and to different accounting, auditing, reporting
and recordkeeping standards than those applicable to domestic branches of U.S.
banks. Such investments may also subject a Fund to investment risks similar to
those accompanying direct investments in foreign securities. See "Special Risk
Considerations -- Foreign Securities." The Funds will invest in the obligations
of U.S. branches of foreign banks or foreign branches of U.S. banks only when
Fleet or Columbia, as the case may be, believes that the credit risk with
respect to the instrument is minimal.

Commercial paper may include securities issued by corporations without
registration under the Securities Act of 1933, as amended, the (the "1933 Act")
in reliance on the so-called

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<PAGE>

"private placement" exemption in Section 4(2) ("Section 4(2) Paper"). Section
4(2) Paper is restricted as to disposition under the federal securities laws in
that any resale must similarly be made in an exempt transaction. Section 4(2)
Paper is normally resold to other institutional investors through or with the
assistance of investment dealers which make a market in Section 4(2) Paper, thus
providing liquidity. For purposes of each Fund's limitation on purchases of
illiquid instruments described under "Investment Limitations" below, Section
4(2) Paper will not be considered illiquid if Fleet or Columbia, as the case may
be, has determined, in accordance with the guidelines approved by Galaxy VIP's
Board of Trustees, that an adequate trading market exists for such securities.
The Funds may also purchase Rule 144A securities. See "Investment Limitations"
below for a discussion of possible consequences to the Funds as a result of
investing in Rule 144A securities.

TYPES OF MUNICIPAL SECURITIES

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

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

VARIABLE AND FLOATING RATE OBLIGATIONS

The Funds may purchase variable and floating rate instruments as
described in the Prospectus and this Statement of Additional Information.
Variable rate instruments provide for periodic adjustments in the interest rate.
Floating rate instruments provide for automatic adjustment of the interest rate
whenever some other specified interest rate changes. Some variable and floating
rate obligations are direct lending arrangements between the purchaser and the
issuer and there may be no active secondary market. However, in the case of
variable and floating rate obligations with a demand feature, a Fund may demand
payment of principal and accrued interest at a time specified in the instrument
or may resell the instrument to a third party. In the event that an issuer of a
variable or floating rate obligation defaulted on its payment

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<PAGE>

obligation, a Fund might be unable to dispose of the note because of the absence
of a secondary market and could, for this or other reasons, suffer a loss to the
extent of the default.

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

Variable and floating rate obligations held by the Money Market Fund
may have maturities of more than 397 days, provided the Fund is entitled to
payment of principal upon not more than 30 days' notice or at specified
intervals not exceeding one year (upon not more than 30 days' notice). Long-term
variable and floating rate obligations with a demand feature held by the Money
Market Fund will be deemed to have a maturity equal to the longer of the period
remaining to the next interest rate adjustment or the demand notice period.

REPURCHASE AND REVERSE REPURCHASE AGREEMENTS

Each Fund may purchase portfolio securities subject to the seller's
agreement to repurchase them at a mutually specified date and price
("repurchase agreements"). Repurchase agreements will be entered into only
with financial institutions such as banks and broker/dealers which are deemed
to be creditworthy by Fleet or Columbia, as the case may be. No Fund will
enter into repurchase agreements with Fleet or Columbia or any of their
affiliates. Unless a repurchase agreement has a remaining maturity of seven
days or less or may be terminated on demand by notice of seven days or less,
the repurchase agreement will be considered an illiquid security and will be
subject to each Fund's 10% limit (15% with respect to the Growth and Income
Fund, Small Company Growth Fund, Large Company Index, Small Company Index,
Columbia Real Estate Equity Fund II and Columbia High Yield Fund II) on such
investments described under "Investment Limitations" below. Repurchase
agreements are considered to be loans by a Fund under the 1940 Act.

The repurchase price under a repurchase agreement generally equals the
price paid by a Fund plus interest negotiated on the basis of current short-term
rates (which may be more or less than the rate on the securities underlying the
repurchase agreement). Securities subject to repurchase agreements will be held
by a Fund's custodian or sub-custodian in a segregated account or in the Federal
Reserve/Treasury book-entry system.

The seller under a repurchase agreement will be required to maintain
the value of the securities which are subject to the agreement and held by a
Fund at not less than the agreed upon repurchase price. If the seller defaulted
on its repurchase obligation, the Fund holding such obligation would suffer a
loss to the extent that the proceeds from a sale of the underlying

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<PAGE>

securities (including accrued interest) were less than the repurchase price
(including accrued interest) under the agreement. In the event that such a
defaulting seller filed for bankruptcy or became insolvent, disposition of such
securities by the Fund might be delayed pending court action.

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

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

SECURITIES LENDING

Each Fund may lend its portfolio securities to financial institutions
such as banks and broker/dealers in accordance with the investment limitations
described below. A Fund that loans portfolio securities would continue to accrue
interest on the securities loaned and would also earn income on the loans. Any
cash collateral received by the Funds would be invested in high quality,
short-term money market instruments. Such loans would involve risks of delay in
receiving additional collateral or in recovering the securities loaned or even
loss of rights in the collateral, should the borrower of the securities fail
financially. Any portfolio securities purchased with cash collateral would also
be subject to possible depreciation. Loans will generally be short-term, will be
made only to borrowers deemed by Fleet or Columbia to be of good standing and
only when, in Fleet's or Columbia's judgment, the income to be earned from the
loan justifies the attendant risks. The Funds currently intend to limit the
lending of their portfolio securities so that, at any given time, securities
loaned by a Fund represent not more than one-third of the value of its total
assets.

INVESTMENT COMPANY SECURITIES

Each Fund, except the Money Market Fund, may invest in securities
issued by other investment companies which invest in high quality, short-term
debt securities and which determine their net asset value per share based on
the amortized cost or penny-rounding method. Investments in other investment
companies will cause a Fund (and, indirectly, the Fund's shareholders) to
bear proportionately the costs incurred in connection with the investment
companies' operations. Securities of other investment companies will be
acquired by a Fund within the limits prescribed by the 1940 Act. Each Fund
currently intends to limit its investments so that, as determined immediately
after a securities purchase is made: (a) not more than 5% of the value of its
total assets will be invested in the securities of any one

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<PAGE>

investment company; (b) not more than 10% of the value of its total assets will
be invested in the aggregate in securities of other investment companies as a
group; (c) not more than 3% of the outstanding voting stock of any one
investment company will be owned by the Fund; and (d) not more than 10% of the
outstanding voting stock of any one closed-end investment company will be owned
in the aggregate by the Fund, other investment portfolios of Galaxy VIP, or any
other investment companies advised by Fleet or Columbia.

THE INDEXING APPROACH - LARGE COMPANY INDEX FUND AND SMALL COMPANY
INDEX FUND

The Index Funds are not managed in a traditional sense, that is, by
making discretionary judgments based on analysis of economic, financial and
market conditions. Instead, the Index Funds seek to match the investment
performance of their respective market segments, as represented by their
respective indexes, through the use of sophisticated computer models to
determine which stocks or bonds should be purchased or sold, while keeping
transaction and administrative costs to a minimum. In using sophisticated
computer models to select securities, an Index Fund will only purchase a
security that is included in its respective index at the time of such purchase.
An Index Fund may, however, temporarily continue to hold a security that has
been deleted from its respective index pending the rebalancing of the Fund's
portfolio. A list of securities included, as of the date of this Statement of
Additional Information, in each of the S&P 500 and S&P Small Cap 600 Index is
available free of charge by calling Galaxy VIP at 1-877-BUY-GALAXY
(1-877-289-4252), or by writing to Galaxy VIP, c/o PFPC Inc. ("PFPC"), 4400
Computer Drive, P.O. Box 5108, Westborough, Massachusetts 01581-5108.

While there can be no guarantee that each Index Fund's investment
results will precisely match the results of its corresponding index, Fleet
believes that, before deduction of operating expenses, there will be a very high
correlation between the returns generated by the Index Funds and their
respective indexes. Each Index Fund will attempt to achieve a correlation
between the performance of its portfolio and that of its respective index of at
least 0.95 before deduction of operating expenses. A correlation of 1.00 would
indicate perfect correlation, which would be achieved when an Index Fund's net
asset value, including the value of its dividend and capital gains
distributions, increases or decreases in exact proportion to changes in its
respective index. Each Index Fund's ability to correlate its performance with
its respective index, however, may be affected by, among other things, changes
in securities markets, the manner in which S&P calculates its indexes, and the
timing of purchases and redemptions. Fleet monitors the correlation of the
performance of the Index Funds in relation to their indexes under the
supervision of the Board of Trustees. In the unlikely event that a high
correlation is not achieved, the Board of Trustees will take appropriate steps
based on the reasons for the lower than expected correlation.

Fleet believes that the indexing approach should involve less turnover,
and thus lower brokerage costs, transfer taxes and operating expenses, than in
more traditionally managed funds, although there is no assurance that this will
be the case. Ordinarily, an Index Fund will buy or sell securities only to
reflect changes in an index (including mergers

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<PAGE>

or changes in the composition of an index) or to accommodate cash flows into and
out of the Index Fund. The costs and other expenses incurred in securities
transactions, apart from any difference between the investment results of an
Index Fund and that of its respective index, may cause the return of an Index
Fund to be lower than the return of its respective index. The Index Funds may
invest in less than all of the securities included in their respective indexes,
which may result in a return that does not match that of the indexes, after
taking expenses into account.

TEMPORARY CASH BALANCES

Each of the Index Funds will hold very small temporary cash balances to
efficiently manage transactional expenses. These cash balances generally are
expected, under normal conditions, not to exceed 2% of each Index Fund's net
assets at any time (excluding amounts used as margin and segregated assets with
respect to futures transactions and collateral for securities loans and
repurchase agreements). The Index Funds may invest these temporary cash balances
in short-term securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, high quality commercial paper (rated A-1 or
better by S&P or P-1 or better by Moody's), certificates of deposit and time
deposits of banking institutions having total assets in excess of $1 billion,
and repurchase agreements collateralized by U.S. Government securities. The
Index Funds may also hold these investments in connection with U.S. Treasury
rolls, which are not subject to the 2% limitation above. See "U.S.
Treasury Rolls - Index Funds" below.

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<PAGE>

REITs

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

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

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

GUARANTEED INVESTMENT CONTRACTS

The Money Market Fund and High Quality Bond Fund may invest in
guaranteed investment contracts ("GICs") issued or guaranteed by U. S. insurance
companies. The High Quality Bond Fund may also enter into GICs issued or
guaranteed by Canadian insurance companies. Pursuant to such contracts, the Fund
makes cash contributions to a deposit fund of the insurance company's general
account. The insurance company then credits to the Fund

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<PAGE>

payments at negotiated, floating or fixed interest rates. A GIC is a general
obligation of the issuing insurance company and not a separate account. The
purchase price paid for a GIC becomes part of the general assets of the
insurance company, and the contract is paid from the company's general assets.
The Money Market Fund will only purchase GICs that are issued or guaranteed by
insurance companies that at the time of purchase are rated in accordance with
the Fund's quality requirements as described in the Prospectus. The High Quality
Bond Fund will only purchase GICs that are issued or guaranteed by insurance
companies that at the time of purchase are rated at least AA by S&P or receive a
similar high rating from a nationally recognized service which provides ratings
of insurance companies. The Funds will not purchase GICs from Participating
Insurance Companies or their affiliated life insurance companies. GICs are
considered illiquid securities and will be subject to the Funds' 10% limitation
on illiquid investments, unless there is an active and substantial secondary
market for the particular instrument and market quotations are readily
available.

BANK INVESTMENT CONTRACTS

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

ASSET-BACKED AND MORTGAGE-BACKED SECURITIES

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

Asset-backed securities are generally issued as pass-through
certificates, which represent undivided fractional ownership interests in an
underlying pool of assets, or as debt instruments,

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<PAGE>

which are also known as collateralized obligations, and are generally issued as
the debt of a special purpose entity organized solely for the purpose of owning
such assets and issuing such debt. Asset-backed securities are often backed by a
pool of assets representing the obligations of a number of different parties.

The Asset Allocation Fund, High Quality Bond Fund and Columbia High
Yield Fund II may invest in mortgage-backed securities that represent pools of
mortgage loans assembled for sale to investors by various governmental agencies
and government-related organizations, such as the Government National Mortgage
Association ("GNMA"), Federal National Mortgage Association ("FNMA") and the
Federal Home Loan Mortgage Corporation ("FHLMC"). Mortgage-backed securities
provide a monthly payment consisting of interest and principal payments.
Additional payments may be made out of unscheduled repayments of principal
resulting from the sale of the underlying residential property, refinancing or
foreclosure, net of fees or costs that may be incurred. Prepayments of principal
on mortgage-backed securities may tend to increase due to refinancing of
mortgages as interest rates decline. To the extent that a Fund purchases
mortgage-backed securities at a premium, mortgage foreclosures and prepayments
of principal by mortgagors (which may be made at any time without penalty) may
result in some loss of the Fund's principal investment to the extent of the
premium paid. The yield of a Fund, should it invest in mortgage-backed
securities, may be affected by reinvestment of prepayments at higher or lower
rates than the original investment.

Mortgage-backed securities include fixed and adjustable Mortgage
Pass-Through Certificates, which provide the holder with a pro-rata share of
interest and principal payments on a pool of mortgages, ordinarily on
residential properties. There are a number of important differences among the
agencies and instrumentalities of the U.S. Government that issue mortgage-backed
securities and among the securities that they issue. Pass-Through Certificates
guaranteed by GNMA (also known as "Ginnie Maes") are guaranteed as to the timely
payment of principal and interest by GNMA, whose guarantee is backed by the full
faith and credit of the United States. Mortgage-backed securities issued by FNMA
include FNMA guaranteed Mortgage Pass-Through Certificates (also known as
"Fannie Maes") which are guaranteed as to timely payment of principal and
interest by FNMA. They are not backed by or entitled to the full faith and
credit of the United States, but are supported by the right of FNMA to borrow
from the Treasury. Mortgage-backed securities issued by FHLMC include FHLMC
Mortgage Participation Certificates (also known as "Freddie Macs"). Freddie Macs
are not guaranteed by the United States or by any Federal Home Loan Bank and do
not constitute a debt or obligation of the United States or of any Federal Home
Loan Bank. Freddie Macs entitle the holder to timely payment of interest, which
is guaranteed by FHLMC. FHLMC guarantees either ultimate collection or timely
payment of all principal payments on the underlying mortgage loans. When FHLMC
does not guarantee timely payment of principal, FHLMC is required to remit the
amount due on account of its guarantee of ultimate payment of principal no later
than one year after it becomes payable.

Other mortgage-backed securities are issued by private issuers,
generally originators of and investors in mortgage loans, including savings
associations, mortgage bankers, commercial banks, investment bankers, and
special purpose entities. These private mortgage-backed

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<PAGE>

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

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

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

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

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

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<PAGE>

MORTGAGE DOLLAR ROLLS

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

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

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

STRIPPED OBLIGATIONS

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

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<PAGE>

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

DERIVATIVE SECURITIES

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

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

Fleet or Columbia, as the case may be, will evaluate the risks
presented by the derivative securities purchased by the Funds, and will
determine, in connection with their day-to-day management of the Funds, how such
securities will be used in furtherance of the Funds' investment objectives. It
is possible, however, that Fleet's or Columbia's evaluations will prove to be
inaccurate or incomplete and, even when accurate and complete, it is possible
that

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<PAGE>

the Funds will, because of the risks discussed above, incur loss as a
result of their investments in derivative securities.

OPTIONS. Each Fund other than the Money Market Fund, Index Funds and
High Quality Bond Fund may write covered call options on securities. The Equity
Fund, Growth and Income Fund, Small Company Growth Fund, Columbia Real Estate
Equity Fund II, Asset Allocation Fund and Columbia High Yield Fund II may also
buy put options, buy call options and, with respect to each such Fund other than
the Equity Fund and Asset Allocation Fund, sell, or "write," secured put options
on particular securities or various securities indices or foreign currencies.
Options trading is a highly specialized activity which entails greater than
ordinary investment risks. Regardless of how much the market price of the
underlying security, index or currency increases or decreases, the option
buyer's risk is limited to the amount of the original investment for the
purchase of the option. However, options may be more volatile than the
underlying instruments, and therefore, on a percentage basis, an investment in
options may be subject to greater fluctuation than an investment in the
underlying instruments themselves. Put and call options purchased by a Fund will
be valued at the last sale price each day or, in the absence of such a price, at
the mean between bid and asked prices.

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

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

The call options written by a Fund will be "covered," which means that
the Fund writing the option owns the security underlying the call or has an
absolute and immediate right to acquire that security without additional cash
consideration (or, if additional cash consideration is required, liquid assets
in such amount as are held in a segregated account by its custodian) upon
conversion or exchange of other securities held by it. For a call option on an
index, the option is covered if the Fund involved owns securities whose price
changes, in the opinion of Fleet or Columbia, as the case may be, are expected
to be substantially similar to those of the index or it maintains with its
custodian liquid assets equal to the contract value. A call option is also
covered if the Fund involved holds a call on the same security or index as the
call written where the exercise price of the call held is (i) equal to or less
than the exercise price of the call written,

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<PAGE>

or (ii) greater than the exercise price of the call written provided the
difference is maintained by the Fund in liquid assets in a segregated account
with its custodian. A secured put option written by a Fund means that the Fund
maintains in a segregated account with the custodian cash or liquid portfolio
securities in an amount not less than the exercise price of the option at all
times during the option period.

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

A Fund's obligation to sell a security subject to a covered call option
written by it, or to purchase a security subject to a secured put option written
by it, may be terminated prior to the expiration date of the option by the
Fund's executing a closing purchase transaction, which is effected by purchasing
on an exchange an option of the same series (i.e., same underlying security,
exercise price and expiration date) as the option previously written. Such a
purchase does not result in the ownership of an option. A closing purchase
transaction will ordinarily be effected to prevent the underlying security from
being called, to permit the sale of the underlying security, or to permit the
writing of a new option containing different terms on the underlying security.
The cost of such a liquidation purchase plus transaction costs may be greater
than the premium received upon the original option, in which event the Fund will
have incurred a loss in the transaction. An option position may be closed out
only on an exchange which provides a secondary market for an option of the same
series. There is no assurance that a liquid secondary market on an exchange will
exist for any particular option. A covered call option writer, unable to effect
a closing purchase transaction, would not be able to sell the underlying
security until the option expires or the underlying security is delivered upon
exercise. As a result, the writer in such circumstances would be subject to the
risk of market decline in the underlying security during such period. A Fund
will write an option on a particular security only if Fleet or Columbia believes
that a liquid secondary market will exist on an exchange for options of the same
series which will permit the Fund to make a closing purchase transaction in
order to close out its position.

When a Fund writes a covered call option, an amount equal to the net
premium (the premium less the commission) received by the Fund is included in
the liability section of the Fund's statement of assets and liabilities as a
deferred credit. The amount of the deferred credit will be subsequently
marked-to-market to reflect the current value of the option written. The current
value of the traded option is the last sale price or, in the absence of a sale,
the average of the closing bid and asked prices. If an option expires on the
stipulated expiration date or if the Fund enters into a closing purchase
transaction, it will realize a gain (or loss if the cost of a closing purchase
transaction exceeds the net premium received when the option is sold) and the
deferred credit related to such option will be eliminated. Any gain on a covered
call option may

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<PAGE>
be offset by a decline in the market price of the underlying security during
the option period. If a covered call option is exercised, the Fund involved
may deliver the underlying security held by it or purchase the underlying
security in the open market. In either event, the proceeds of the sale will
be increased by the net premium originally received and the Fund will realize
a gain or loss. If a secured put option is exercised, the amount paid by the
Fund for the underlying security will be partially offset by the amount of
the premium previously paid to the Fund. Premiums from expired options
written by a Fund and net gains from closing purchase transactions are
treated as short-term capital gains for federal income tax purposes, and
losses on closing purchase transactions are short-term capital losses.

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

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

FUTURES AND RELATED OPTIONS. The Growth and Income Fund, Small Company
Growth Fund, Columbia Real Estate Equity Fund II, High Quality Bond Fund and
Columbia High Yield Fund II may invest to a limited extent in futures contracts,
and the Growth and Income Fund, Small Company Growth Fund, Columbia Real Estate
Equity Fund II and Columbia High Yield Fund II may invest in options on futures
contracts in order to gain fuller exposure to movements of securities prices
pending investment, for hedging purposes or to maintain liquidity. Futures
contracts obligate a Fund, at maturity, to take or make delivery of certain
securities or the cash value of a securities index. The High Quality Bond Fund
will only write contracts (both purchases and sales) for the future delivery of
fixed income securities (commonly known as interest rate futures contracts). The
Asset Allocation Fund will only write contracts (both purchases and sales) for
the future delivery of foreign currency. A Fund may not purchase or sell a
futures contract (or related option) unless immediately after any such
transaction the sum of the aggregate amount of margin deposits on its existing
futures positions and the amount of

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<PAGE>

premiums paid for related options is 5% or less of its total assets (after
taking into account certain technical adjustments).

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

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

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

FUTURES CONTRACTS - INDEX FUNDS. The Index Funds may enter into stock
index futures contracts that are traded on a national exchange only for bona
fide hedging purposes, or as otherwise permitted by Commodity Futures Trading
Commission ("CFTC") regulations. If permitted, an Index Fund may use stock index
futures to maintain cash reserves while remaining fully invested, to facilitate
trading, to reduce transaction costs or to seek higher investment returns when a
stock index futures contract is priced more attractively than the underlying
index.

A stock index futures contract is an agreement between a seller and a
buyer to deliver and take delivery of, respectively, a commodity which is
represented by a multiple of a stock price index at a future specified date. The
delivery is a cash settlement of the difference between the original transaction
price and the final price of the index times the multiple at the termination of
the contract. No physical delivery of the underlying stocks in the index is
made. By entering into a stock index futures contract, an Index Fund is able to
seek to protect its assets from fluctuations in value without necessarily buying
or selling the assets.

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An Index Fund may not engage in futures activities for other than bona
fide hedging purposes if the aggregate initial margin deposits on its
non-hedging futures contracts and premiums paid on its related options exceed 5%
of the fair market value of the Fund's total assets, after taking into account
unrealized profits and unrealized losses on futures contracts it has entered
into.

No consideration is paid or received by an Index Fund upon the purchase
or sale of a futures contract. Upon entering into a futures contract, a Fund
will be required to deposit in a segregated account with its custodian or an
eligible futures commission merchant an amount of cash or liquid securities
equal to approximately 1% to 10% of the contract amount (this amount is subject
to change by the exchange on which the contract is traded and brokers may
require a higher amount). This amount is known as "initial margin" and is in the
nature of a performance bond or good faith deposit on the contract, which is
returned to the Index Fund involved upon termination of the futures contract,
assuming all contractual obligations have been satisfied. The broker will have
access to amounts in the margin account if a Fund fails to meet its contractual
obligations. Subsequent payments, known as "variation margin," to and from the
broker, will be made daily as the price of the index or securities underlying
the futures contract fluctuates, making the long and short positions in the
futures contract more or less valuable, a process known as "marking-to-market."
At any time prior to the expiration of a futures contract, the Index Fund may
elect to close the position by taking an opposite position, which will operate
to terminate the Fund's existing position in the contract.

Galaxy VIP will set aside with its custodian, or with a designated
subcustodian, cash or liquid securities at least equal to the underlying
commodity value of each long position an Index Fund assumes in commodity futures
contracts or will take other actions consistent with regulatory requirements to
avoid leverage.

There are several risks in connection with investing in futures
contracts. Although each Index Fund intends to enter into futures contracts only
if there is an active market for such contracts, there is no assurance that a
liquid market will exist for the contracts at any particular time. Most futures
exchanges limit the amount of fluctuation permitted in futures contract prices
during a single trading day. Once the daily limit has been reached in a
particular contract, no trades may be made that day at a price beyond that
limit. It is possible that futures contract prices could move to the daily limit
for several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of futures positions and subjecting a Fund to
substantial losses. In such event, and in the event of adverse price movements,
a Fund would continue to be required to make daily cash payments of variation
margin.

Further there can be no assurance that there will be a perfect
correlation between movements in the price of stocks underlying a stock index
futures contract and movements in the price of stocks underlying the particular
Index Fund's target index. There is some risk, therefore, that the use of stock
index futures contracts may reduce the correlation between the performance of an
Index Fund and its index.

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Losses incurred in futures transactions and the costs of these
transactions will affect an Index Fund's performance. In addition, a Fund might
have to sell securities to meet daily variation margin requirements at a time
when it would be disadvantageous to do so. These sales of securities may, but
will not necessarily, be at increased prices.

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

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

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

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

These Funds may also invest in indexed securities. The value of these
securities is linked to foreign currencies, interest rates, commodities, indices
or other financial indicators. Most indexed securities are short- to
intermediate-term fixed income securities whose values at maturity or interest
rates rise or fall according to the change in one or more specified underlying
instruments. Indexed securities may be positively or negatively indexed (i.e.,
their value may increase or decrease if the underlying instrument appreciates),
and may have return

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characteristics similar to direct investments in the underlying instrument or to
one or more options on the underlying instrument. Indexed securities may be more
volatile than the underlying instrument itself. Neither Fund intends to invest
more than 5% of its total assets in swap agreements or indexed securities.

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

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

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

Forward foreign currency exchange contracts establish an exchange rate
at a future date. These contracts are transferable in the interbank market
conducted directly between currency traders (usually large commercial banks) and
their customers. A forward foreign currency

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<PAGE>

exchange contract generally has no deposit requirement and is traded at a net
price without commission. Neither spot transactions nor forward foreign currency
exchange contracts eliminate fluctuations in the prices of a Fund's portfolio
securities or in foreign exchange rates, or prevent loss if the prices of these
securities should decline.

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

AMERICAN, EUROPEAN AND GLOBAL DEPOSITORY RECEIPTS

The Equity Fund, Growth and Income Fund, Small Company Growth Fund and
Asset Allocation Fund may invest in ADRs and EDRs. The Growth and Income Fund
and Small Company Growth Fund may also invest in GDRs. ADRs are receipts issued
in registered form by a U.S. bank or trust company evidencing ownership of
underlying securities issued by a foreign issuer. EDRs are receipts issued in
Europe typically by non-U.S. banks or trust companies and foreign branches of
U.S. banks that evidence ownership of foreign or U.S. securities. GDRs are
receipts structured similarly to EDRs and are marketed globally. ADRs may be
listed on a national securities exchange or may be traded in the
over-the-counter market. EDRs are designed for use in European exchange and
over-the-counter markets. GDRs are designed for trading in non-U.S. securities
markets. ADRs, EDRs and GDRs traded in the over-the-counter market which do not
have an active or substantial secondary market will be considered illiquid and
therefore will be subject to the Funds' respective limitations with respect to
such securities. If a Fund invests in an unsponsored ADR, EDR or GDR, there may
be less information available to the Fund concerning the issuer of the
securities underlying the unsponsored ADR, EDR or GDR than is available for an
issuer of securities underlying a sponsored ADR, EDR or GDR. ADR prices are
denominated in U.S. dollars although the underlying securities are denominated
in a foreign currency. Investments in ADRs, EDRs and GDRs involve risks similar
to those accompanying direct investments in foreign securities. Certain of these
risks are described above under "Special Risk Considerations -- Foreign
Securities."

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CONVERTIBLE SECURITIES

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

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

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

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<PAGE>

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

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

WHEN-ISSUED, FORWARD COMMITMENT AND DELAYED SETTLEMENT TRANSACTIONS

Each Fund, except the Index Funds, may purchase eligible securities on
a "when-issued" basis and may purchase or sell eligible securities on a "forward
commitment" basis. Each Fund, except the Index Funds, may also purchase and sell
eligible securities on a "delayed settlement" basis. When-issued and forward
commitment transactions, which involve a commitment by a Fund to purchase or
sell particular securities with payment and delivery taking place at a future
date (perhaps one or two months later), permit the Fund to lock in a price or
yield on a security it owns or intends to purchase regardless of future changes
in interest rates. Delayed settlement describes settlement of a securities
transaction in the secondary market which will occur sometime in the future.

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

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

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<PAGE>

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

When-issued, forward commitment and delayed settlement transactions
involve the risk, however, that the yield or price obtained in a transaction may
be less favorable than the yield or price available in the market when the
securities delivery takes place. It is expected that forward commitments,
when-issued purchases and delayed settlements will not exceed 25% of a Fund's
total assets absent unusual market conditions. In the event a Fund's forward
commitments, when-issued purchases and delayed settlements ever exceeded 25% of
the value of its total assets, the Fund's liquidity and the ability of Fleet or
Columbia, as the case may be, to manage the Fund might be adversely affected.
The Funds will not engage in when-issued purchases, forward commitments and
delayed settlements for speculative purposes, but only in furtherance of their
respective investment objectives.

STAND-BY COMMITMENTS

The Money Market Fund and High Quality Bond Fund may acquire "stand-by
commitments" with respect to municipal securities held by them. Under a stand-by
commitment, a dealer agrees to purchase, at a Fund's option, specified municipal
securities at a specified price. Stand-by commitments are exercisable by a Fund
at any time before the maturity of the underlying security, and may be sold,
transferred or assigned by the Fund only with respect to the underlying
instruments. Each Fund expects that stand-by commitments will generally be
available without the payment of any direct or indirect consideration. However,
if necessary or advisable, a Fund may pay for a stand-by commitment either
separately in cash or by paying a higher price for portfolio securities which
are acquired subject to the commitment (thus reducing the yield otherwise
available for the same securities). Where a Fund pays any consideration directly
or indirectly for a stand-by commitment, its cost will be reflected as
unrealized depreciation for the period during which the commitment is held by
the Fund. Stand-by commitments acquired by a Fund would be valued at zero in
determining the Fund's net asset value.

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

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

U.S. TREASURY ROLLS

The Asset Allocation, High Quality Bond and Index Funds may hold
certain investments in connection with U.S. Treasury rolls. See "Temporary
Cash Balances" above with respect to the Index Funds. In U.S. Treasury rolls,
a Fund sells outstanding U.S. Treasury securities and buys back on a delayed
settlement basis the same U.S. Treasury securities. During the period prior
to the delayed settlement date, the assets from the sale of the U.S. Treasury
securities are invested in certain cash equivalent instruments. U.S. Treasury
rolls entail the risk that a Fund could suffer an opportunity loss if the
counterparty to the roll failed to perform its obligations on the settlement
date, and if market conditions changed adversely. Each Fund intends, however,
to enter into U.S. Treasury rolls only with U.S. Government securities
dealers recognized by the Federal Reserve Bank or with member banks of the
Federal Reserve System. Each Fund will hold and maintain in a segregated
account until the settlement date cash or other liquid assets in an amount
equal to the forward purchase price. For financial reporting and tax
purposes, the Funds propose to treat U.S. Treasury rolls as two separate
transactions, one involving the purchase of a security and a separate
transaction involving a sale. The Funds do not currently intend to enter into
U.S. Treasury rolls that are accounted for as a financing.

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PORTFOLIO SECURITIES GENERALLY - MONEY MARKET FUND

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

PORTFOLIO TURNOVER

Each Fund may sell a portfolio investment soon after its acquisition if
Fleet or Columbia, as the case may be, believes that such a disposition is
consistent with the Fund's investment objective. Portfolio investments may be
sold for a variety of reasons, such as a more favorable investment opportunity
or other circumstances bearing on the desirability of continuing to hold such
investments. A portfolio turnover rate of 100% or more is considered high,
although the rate of portfolio turnover will not be a limiting factor in making
portfolio decisions. A high rate of portfolio turnover involves correspondingly
greater brokerage commission expenses and other transaction costs, which must be
ultimately borne by a Fund's shareholders. High portfolio turnover may result in
the realization of substantial net capital gains.

INVESTMENT LIMITATIONS

In addition to each Fund's investment objective as stated in the
Prospectus, the following investment limitations are matters of fundamental
policy and may not be changed with respect to a particular Fund without the
affirmative vote of the holders of a majority of its outstanding shares (as
defined under "Miscellaneous").

No Fund may:

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

2. Borrow money or issue senior securities, except that each Fund may
borrow from domestic banks for temporary purposes (such as to obtain
cash to meet redemption requests when the liquidation of portfolio
securities is deemed disadvantageous by Fleet or Columbia) and then in
amounts not in excess of 10% with respect to the Money Market Fund and
High Quality Bond Fund, or 33%

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with respect to the Equity Fund, Growth and Income Fund, Small Company
Growth Fund, Large Company Index Fund, Small Company Index Fund,
Columbia Real Estate Equity Fund II, Asset Allocation Fund and
Columbia High Yield Fund II, of the value of its total assets at the
time of such borrowing (provided that each Fund, except the Large
Company Index Fund and Small Company Index Fund, may borrow pursuant
to reverse repurchase agreements in accordance with its investment
policies and in amounts not in excess of 10% with respect to the Money
Market Fund and High Quality Bond Fund, or 33% with respect to the
Equity Fund, Growth and Income Fund, Small Company Growth Fund, Large
Company Index Fund, Small Company Index Fund, Columbia Real Estate
Equity Fund II, Asset Allocation Fund and Columbia High Yield Fund II,
of the value of its total assets at the time of such borrowing); or
mortgage, pledge, or hypothecate any assets except in connection with
any such borrowing and in amounts not in excess of the lesser of the
dollar amounts borrowed or 10% with respect to the Money Market Fund
and High Quality Bond Fund, or 33% with respect to the Equity Fund,
Growth and Income Fund, Small Company Growth Fund, Large Company Index
Fund, Small Company Index Fund, Columbia Real Estate Equity Fund II,
Asset Allocation Fund and Columbia High Yield Fund II, of the value of
the Fund's total assets at the time of such borrowing. No Fund will
purchase securities while borrowings (including reverse repurchase
agreements) in excess of 5% of its total assets are outstanding. With
respect to each Fund other than the Money Market Fund, if the
securities held by a Fund should decline in value while borrowings are
outstanding, the net asset value of the Fund's outstanding shares will
decline in value by more than the proportionate decline in value
suffered by the Fund's securities.

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

4. Purchase securities of any one issuer, other than obligations issued
or guaranteed by the U.S. Government, its agencies or
instrumentalities, if immediately after such purchase more than 5% of
the value of its total assets would be invested in such issuer (the
"5% Limitation"), except that up to 25% of the value of the total
assets of the Equity Fund, Growth and Income Fund, Small Company
Growth Fund, Large Company Index Fund, Small Company Index Fund,
Columbia Real Estate Equity Fund II, Asset Allocation Fund, High
Quality Bond Fund and Columbia High Yield Fund II may be invested
without regard to such 5% Limitation, provided that the Money Market
Fund will be able to invest more than 5% (but no more than 25%) of its
total assets in the securities of a single

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issuer for a period of up to three business days after the purchase
thereof, but the Fund may not hold more than one such investment at
any one time.

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

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

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

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

9. Purchase or sell commodities or commodity contracts, or invest in oil,
gas or other mineral exploration or development programs or mineral
leases; provided, however, that (i) the High Quality Bond Fund may
enter into interest rate futures contracts to the extent permitted
under the Commodity Exchange Act and the 1940 Act; (ii) the Growth and
Income Fund, Small Company Growth Fund, Columbia Real Estate Equity
Fund II and Columbia High Yield Fund II may enter into futures
contracts and options on futures contracts; (iii) the Growth and
Income Fund, Small Company Growth Fund, Columbia Real Estate Equity
Fund II and Asset Allocation Fund may enter into forward currency
contracts and foreign currency futures contracts and related options
to the extent permitted by their respective investment objectives and
policies; and (iv) the Index Funds may invest in stock index futures
as described herein and in the Prospectus.

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

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

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

In addition to the above limitations:

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

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

-41-
<PAGE>

With respect to Investment Limitation No. 2 above, mortgage dollar
rolls entered into by the Asset Allocation Fund, High Quality Bond Fund and
Columbia High Yield Fund II and U.S. Treasury rolls entered into by the Asset
Allocation Fund, High Quality Bond Fund and Index Funds that are not
accounted for as financings shall not constitute borrowings.

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

With respect to Investment Limitation No. 4 above, adherence by the
Money Market Fund to the diversification requirements of Rule 2a-7 under the
1940 Act is deemed to constitute adherence to the diversification requirements
of Section 5(b)(i) of the 1940 Act.

With respect to Investment Limitation No. 4 above, the Index Funds
do not intend to acquire more than 10% of the outstanding voting securities
of any one isser.

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

In addition to the restrictions set forth above, each Fund may be
subject to investment restrictions imposed under state insurance laws and
regulations. These restrictions are non-fundamental and, in the event of
amendments to the applicable statutes or regulations, each Fund will comply,
without the approval of its shareholders, with the requirements as so modified.

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

VALUATION OF PORTFOLIO SECURITIES

VALUATION OF THE MONEY MARKET FUND

As stated in the Prospectus, the Money Market Fund's assets are valued
based upon the amortized cost method. Pursuant to this method, a security is
valued by reference to the Fund's acquisition cost as adjusted for amortization
of premium or accretion of discount, regardless of the impact of fluctuating
interest rates on the market value of the security.

-42-

<PAGE>

Although Galaxy VIP seeks to maintain the net asset value per share of the Fund
at $1.00, there can be no assurance that the net asset value per share will not
vary.

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

The Money Market Fund invests only in instruments which meet the
applicable quality requirements of Rule 2a-7 and maintains a dollar-weighted
average portfolio maturity appropriate to its objective of maintaining a stable
net asset value per share, provided that the Fund will not purchase any security
deemed to have a remaining maturity (as defined in the 1940 Act) of more than
397 days nor maintain a dollar-weighted average portfolio maturity which exceeds
90 days. Galaxy VIP's Board of Trustees has established procedures reasonably
designed, taking into account current market conditions and the Fund's
investment objective, to stabilize the net asset value per share of the Fund for
purposes of sales and redemptions at $1.00. These procedures include review by
the Board of Trustees, at such intervals as it deems appropriate, to determine
the extent, if any, to which the net asset value per share of the Fund,
calculated by using available market quotations, deviates from $1.00 per share.
In the event such deviation exceeds one-half of one percent, the Board of
Trustees will promptly consider what action, if any, should be initiated. If the
Board of Trustees believes that the extent of any deviation from the Fund's
$1.00 amortized cost price per share may result in material dilution or other
unfair results to new or existing investors, it has agreed to take such steps as
it considers appropriate to eliminate or reduce, to the extent reasonably
practicable, any such dilution or unfair results. These steps may include
selling portfolio instruments prior to maturity; shortening the average
portfolio maturity; withholding or reducing dividends; redeeming shares in kind;
reducing the number of the Fund's outstanding shares without monetary
consideration; or utilizing a net asset value per share determined by using
available market quotations.

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

In determining market value, the assets in the Equity Fund, Growth and
Income Fund, Small Company Growth Fund, Large Company Index Fund, Small Company
Index Fund, Columbia Real Estate Equity Fund II, Asset Allocation Fund and
Columbia High Yield Fund II which are traded on a recognized stock exchange are
valued at the last sale price on the securities

-43-
<PAGE>

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

VALUATION OF THE HIGH QUALITY BOND FUND

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

DIVIDENDS - MONEY MARKET FUND

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

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Shares in each Fund are sold on a continuous basis by Galaxy VIP's
distributor, Provident Distributors, Inc. ("PDI"). PDI is a registered
broker/dealer with principal offices

-44-
<PAGE>

located at 3200 Horizon Drive, King of Prussia, Pennsylvania 19406. PDI has
agreed to use appropriate efforts to solicit all purchase orders.

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

ADDITIONAL INFORMATION ON TAXES

In order to qualify as a regulated investment company under the Code, a
Fund must comply with certain distribution, diversification, source of income
and other applicable requirements. If for any taxable year a Fund does not
qualify for the special federal tax treatment afforded regulated investment
companies, all of the Fund's taxable income would be subject to tax at regular
corporate rates without any deduction for distributions to shareholders. In such
event, a Fund's distributions to segregated asset accounts holding shares of the
Fund may be taxable as ordinary income to the extent of the Fund's current and
accumulated earnings and profits. A failure of a Fund to qualify as a regulated
investment company also could result in the loss of the tax favored status of
variable annuity contracts and variable life insurance policies based on a
segregated asset account which invests in the Fund.

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

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

-45-
<PAGE>

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

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

TRUSTEES AND OFFICERS

The business and affairs of the Funds are managed under the direction
of Galaxy VIP's Board of Trustees in accordance with the laws of the
Commonwealth of Massachusetts and the Trust's Agreement and Declaration of
Trust. The trustees and executive officers of Galaxy VIP, their addresses,
principal occupations during the past five years, and other affiliations are as
follows:

<TABLE>
<CAPTION>
Principal Occupation
Positions with During Past 5 Years
Name and Address The Galaxy VIP Fund and Other Affiliations
---------------- ------------------- ----------------------
<S> <C> <C>
Dwight E. Vicks, Jr. Chairman & Trustee President & Director, Vicks Lithograph &
Vicks Lithograph & Printing Corporation (book manufacturing and
Printing Corporation commercial printing); Director, Utica Fire
Commercial Drive Insurance Company; Trustee, Savings Bank of
P.O. Box 270 Utica; Director, Monitor Life Insurance
Yorkville, NY 13495 Company; Director, Commercial Travelers
Age 66 Mutual Insurance Company; Trustee, The Galaxy
Fund; Trustee, Galaxy Fund II.

John T. O'Neill(1) President, Treasurer & Trustee Private Investor; Executive Vice President
28 Narragansett Bay and CFO, Hasbro, Inc. (toy and game
Avenue manufacturer) until December 1999; Trustee,
Warwick, RI 02889 The Galaxy Fund; Trustee, Galaxy Fund II.
Age 55

-46-
<PAGE>

<CAPTION>
Principal Occupation
Positions with During Past 5 Years
Name and Address The Galaxy VIP Fund and Other Affiliations
---------------- ------------------- ----------------------
<S> <C> <C>
Louis DeThomasis Trustee President, Saint Mary's College of Minnesota;
Saint Mary's College Director, Bright Day Travel, Inc.; Trustee,
of Minnesota Religious Communities Trust; Trustee, The
Winona, MN 55987 Galaxy Fund; Trustee, Galaxy Fund II.
Age 59

Donald B. Miller Trustee Chairman, Horizon Media, Inc. (broadcast
10725 Quail Covey Road services); Director/Trustee, Lexington Funds;
Boynton Beach, FL 33436 Chairman of the Board, Executive Committee,
Age 74 Compton International, Inc. (advertising
agency); Trustee, Keuka College; Trustee, The
Galaxy Fund; Trustee, Galaxy Fund II.

James M. Seed Trustee Chairman and President, The Astra Projects,
The Astra Ventures, Inc. Incorporated (land development); President,
One Citizens Plaza The Astra Ventures, Incorporated (previously,
Providence, RI 02903 Buffinton Box Company - manufacturer of
Age 58 cardboard boxes); Commissioner, Rhode Island
Investment Commission; Trustee, The Galaxy
Fund; Trustee, Galaxy Fund II.

Bradford S. Wellman(1) Trustee Private Investor; Vice President and
2468 Ohio Street Director, Acadia Management Company
Bangor, ME 04401 (investment services); Director, Essex County
Age 68 Gas Company, until January 1994; Director,
Maine Mutual Fire Insurance Co.; Member,
Maine Finance Authority; Trustee, The
Galaxy Fund; Trustee, Galaxy Fund II.

-47-
<PAGE>

<CAPTION>
Principal Occupation
Positions with During Past 5 Years
Name and Address The Galaxy VIP Fund and Other Affiliations
---------------- ------------------- ----------------------
<S> <C> <C>
W. Bruce McConnel, III Secretary Partner of the law firm Drinker Biddle &
One Logan Square Reath LLP, Philadelphia, Pennsylvania.
18th & Cherry Streets
Philadelphia, PA 19103
Age 57

William Greilich Vice President Vice President, PFPC, Inc., 1991-96; Vice
PFPC, Inc. President and Division Manager, PFPC, Inc.,
4400 Computer Drive 1996-present.
Westborough, MA 01581-5108
Age 46
</TABLE>

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

1. May be deemed to be an "interested person" within the definition set
forth in Section 2(a)(19) of the 1940 Act.

Effective September 8, 2000, each trustee receives an annual aggregate
fee of $54,000 for his services as a trustee of Galaxy VIP, The Galaxy Fund
("Galaxy") and Galaxy Fund II ("Galaxy II") (collectively, the "Trusts"), plus
an additional $4,000 for each in-person Galaxy Board meeting attended and $1,500
for each in-person Galaxy VIP or Galaxy II Board meeting attended not held
concurrently with an in-person Galaxy meeting, and is reimbursed for expenses
incurred in attending all meetings. Each trustee also receives $750 for each
telephone Board meeting in which the trustee participates, $1,000 for each
in-person Board committee meeting attended and $500 for each telephone Board
committee meeting in which the trustee participates. The Chairman of the Boards
of the Trusts is entitled to an additional annual aggregate fee in the amount of
$4,000, and the President and Treasurer of the Trusts is entitled to an
additional annual aggregate fee of $2,500 for their services in these respective
capacities. The foregoing trustees' and officers' fees are allocated among the
portfolios of the Trusts based on their relative net assets. For the period May
28, 1999 until September 7, 2000, each trustee was entitled to receive an annual
aggregate fee of $45,000 for his services as trustee of the Trusts, plus an
additional $3,500 for each in-person Galaxy Board meeting attended, with all
other fees being those currently in effect. Prior to May 28, 1999, each trustee
was entitled to receive an annual aggregate fee of $40,000 for his services as a
trustee of the Trusts, plus an additional $2,500 for each in-person Galaxy Board
meeting attended, with all other fees being the same as those currently in
effect.

Effective March 1, 1996, each trustee became entitled to participate in
The Galaxy Fund, The Galaxy VIP Fund and Galaxy Fund II Deferred Compensation
Plans (the "Original

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<PAGE>

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

No employee of PFPC, Inc. ("PFPC") receives any compensation from
Galaxy VIP for acting as an officer. No person who is an officer, director or
employee of Fleet, Columbia or any of their affiliates, serves as a trustee,
officer or employee of Galaxy VIP. As of the date of this Statement of
Additional Information, the trustees and officers of Galaxy VIP own less than 1%
of its outstanding shares.

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

<TABLE>
<CAPTION>
===================================== ========================== ================== ========================
Pension or
Retirement
Benefits Accrued Total Compensation
Aggregate Compensation as Part of Fund from Fund Complex*
Name of Person/Position from Galaxy VIP Expenses Paid to Trustees
------------------------------------- -------------------------- ------------------ ------------------------
<S> <C> <C> <C>
Bradford S. Wellman
Trustee $750 None $58,000
------------------------------------- -------------------------- ------------------ ------------------------
Dwight E. Vicks, Jr.
Chairman and Trustee $802 None $62,000
------------------------------------- -------------------------- ------------------ ------------------------
Donald B. Miller**
Trustee $750 None $58,000
------------------------------------- -------------------------- ------------------ ------------------------
Rev. Louis DeThomasis
Trustee $718 None $55,500
------------------------------------- -------------------------- ------------------ ------------------------
John T. O'Neill
President, Treasurer
and Trustee $782 None $60,500
------------------------------------- -------------------------- ------------------ ------------------------
James M. Seed**
Trustee $750 None $58,000
===================================== ========================== ================== ========================
</TABLE>

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

* The "Fund Complex" consists of Galaxy, Galaxy VIP and Galaxy II which
compromised a total of 43 separate portfolios as of December 31, 1999.

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<PAGE>

** Deferred compensation (including interest) in the amounts of $104,526
and $117,092 accrued during Galaxy VIP's fiscal year ended December 31,
1999 for Messrs. Miller and Seed, respectively.

SHAREHOLDER AND TRUSTEE LIABILITY

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

The Agreement and Declaration of Trust states further that no trustee,
officer or agent of Galaxy VIP shall be personally liable for or on account of
any contract, debt, claim, damage, judgment or decree arising out of or
connected with the administration or preservation of the trust estate or the
conduct of any business of Galaxy VIP; nor shall any trustee be personally
liable to any person for any action or failure to act except by reason of his
own bad faith, willful misfeasance, gross negligence or reckless disregard of
his duties as trustee. The Agreement and Declaration of Trust also provides that
all persons having any claim against the trustees or Galaxy VIP shall look
solely to the trust property for payment.

With the exceptions stated, the Agreement and Declaration of Trust
provides that a trustee is entitled to be indemnified against all liabilities
and expenses reasonably incurred by him in connection with the defense or
disposition of any proceeding in which he may be involved or with which he may
be threatened by reason of his being or having been a trustee, and that the
Board of Trustees shall indemnify representatives and employees of Galaxy VIP to
the same extent to which they themselves are entitled to indemnification.

INVESTMENT ADVISERS

Fleet serves as investment adviser to the Money Market Fund, Equity
Fund, Growth and Income Fund, Small Company Growth Fund, Large Company Index
Fund, Small Company Index fund, Asset Allocation Fund and High Quality Bond
Fund. Columbia serves as investment adviser to the Columbia Real Estate Equity
Fund II and Columbia High Yield Fund II. In their respective Advisory
Agreements, Fleet and Columbia have agreed to provide investment advisory

-50-
<PAGE>

services to the respective Funds as described in the Prospectus. Fleet and
Columbia have also agreed to pay all expenses incurred by them in connection
with their activities under the respective Advisory Agreements other than the
cost of securities (including brokerage commissions) purchased for the Funds.

For the services provided and expenses assumed pursuant to the Advisory
Agreements, Galaxy VIP has agreed (i) to pay Fleet advisory fees, accrued daily
and paid monthly, at the annual rate of .40% of the average daily net assets of
the Money Market Fund, .75% of the average daily net assets of the Equity Fund,
Growth and Income Fund, Small Company Growth Fund and Asset Allocation Fund,
.55% of the average daily net assets of the High Quality Bond Fund, and 0.25% of
the average daily net assets of the Large Company Index Fund and Small Company
Index Fund, and (ii) to pay Columbia advisory fees, accrued daily and paid
monthly, at the annual rate of .75% of the average daily net assets of the
Columbia Real Estate Equity Fund II and .60% of the average daily net assets of
the Columbia High Yield Fund II. Fleet and Columbia may from time to time, in
their discretion, waive advisory fees payable by the Funds in order to help
maintain a competitive expense ratio and may from time to time allocate a
portion of their advisory fees to subsidiaries of FleetBoston Financial
Corporation in consideration for administrative and other services which they
provide to beneficial shareholders.

For the fiscal years ended December 31, 1999, 1998 and 1997, Galaxy VIP
paid advisory fees (net of fee waivers) to Fleet and Columbia, as the case may
be, as set forth below:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED DECEMBER 31:
FUND 1999 1998 1997
---- ---- ---- ----
<S> <C> <C> <C>
Money Market Fund............................................... $ 28,027 $ 24,731 $ 23,186
Equity Fund..................................................... $765,471 $601,685 $440,287
Growth and Income Fund.......................................... $ 75,455 $ 26,269(1) *
Small Company Growth Fund....................................... $ 11,249 $ 3,708(2) *
Large Company Index Fund........................................ * * *
Small Company Index Fund........................................ * * *
Columbia Real Estate Equity Fund II............................. $ 6,980 $ 3,545(3) *
Asset Allocation Fund........................................... $707,718 $458,849 $235,874
High Quality Bond Fund.......................................... $ 68,988 $ 26,608 $ 17,993
Columbia High Yield Fund II..................................... 14,268 $ 8,055(3) *
</TABLE>

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

* Not in operation during the period.
(1) For the period from March 4, 1998 (commencement of operations) through
December 31, 1998.
(2) For the period from April 17, 1998 (commencement of operations) through
December 31, 1998.
(3) For the period from March 3, 1998 (commencement of operations) through
December 31, 1998.

-51-
<PAGE>

For the fiscal years ended December 31, 1999, 1998 and 1997, Fleet and
Columbia, as the case may be, waived advisory fees as follows:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED DECEMBER 31:
FUND 1999 1998 1997
---- ---- ---- ----
<S> <C> <C> <C>
Money Market Fund............................................... $46,712 $41,219 $38,641
Equity Fund..................................................... $ 0 $ 0 $ 0
Growth and Income Fund.......................................... $ 0 $ 0(1) *
Small Company Growth Fund....................................... $ 0 $ 0(2) *
Large Company Index Fund........................................ * * *
Small Company Index Fund........................................ * * *
Columbia Real Estate Equity Fund II............................. $ 0 $ 0(3) *
Asset Allocation Fund........................................... $ 0 $ 0 $ 0
High Quality Bond Fund.......................................... $59,765 $70,943 $47,982
Columbia High Yield Fund II..................................... $ 0 $ 0(3) *
</TABLE>

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

For the fiscal years ended December 31, 1999, 1998 and 1997, Fleet and
Columbia, as the case may be, reimbursed expenses as follows:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED DECEMBER 31:
FUND 1999 1998 1997
---- ---- ---- ----
<S> <C> <C> <C>
Money Market Fund............................................... $ 0 $ 0 $ 1,144
Equity Fund..................................................... $ 0 $ 0 $ 0
Growth and Income Fund.......................................... $ 72 $37,806(1) *
Small Company Growth Fund....................................... $65,504 $55,990(2) *
Large Company Index Fund........................................ * * *
Small Company Index Fund........................................ * * *
Columbia Real Estate Equity Fund II............................. $39,207 $41,560(3) *
Asset Allocation Fund........................................... $ 0 $ 0 $16,327
High Quality Bond Fund.......................................... $ 0 $ 0 $ 2,163
Columbia High Yield Fund II..................................... $30,632 $35,619(3) *
</TABLE>

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

Each Advisory Agreement provides that Fleet or Columbia, as the case
may be, shall not be liable for any error of judgment or mistake of law or for
any loss suffered by the Funds in connection with the performance of its duties
under the Advisory Agreement, except a loss resulting from a breach of fiduciary
duty with respect to the receipt of compensation for services or a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
Fleet or

-52-
<PAGE>

Columbia in the performance of its duties or from reckless disregard by it of
its duties and obligations thereunder. Unless sooner terminated, each Advisory
Agreement will continue in effect with respect to a particular Fund from year to
year as long as such continuance is approved at least annually (i) by the vote
of a majority of trustees who are not parties to such Advisory Agreement or
interested persons (as defined in the 1940 Act) of any such party, cast in
person at a meeting called for the purpose of voting on such approval; and (ii)
by Galaxy VIP's Board of Trustees, or by a vote of a majority of the outstanding
shares of such Fund. The term "majority of the outstanding shares of such Fund"
means, with respect to approval of an Advisory Agreement, the vote of the lesser
of (i) 67% or more of the shares of the Fund present at a meeting, if the
holders of more than 50% of the outstanding shares of the Fund are present or
represented by proxy, or (ii) more than 50% of the outstanding shares of the
Fund. Each Advisory Agreement may be terminated by Galaxy VIP or by Fleet or by
Columbia, as the case may be, on sixty days' written notice, and will terminate
immediately in the event of its assignment.

DISTRIBUTOR

PDI serves as Galaxy VIP's distributor. PDI is a registered
broker-dealer with principal offices located at 3200 Horizon Drive, King of
Prussia, Pennsylvania 19406. Jane Haegele is the sole shareholder of PDI.

Unless otherwise terminated, the Distribution Agreement between Galaxy
VIP and PDI remains in effect until November 30, 2000, and thereafter will
continue from year to year upon annual approval by Galaxy VIP's Board of
Trustees, or by the vote of a majority of the outstanding shares of Galaxy VIP
and by the vote of a majority of the Board of Trustees of Galaxy VIP who are not
parties to the Agreement or interested persons of any such party, cast in person
at a meeting called for the purpose of voting on such approval. The Agreement
will terminate in the event of its assignment, as defined in the 1940 Act.

ADMINISTRATOR

PFPC, Inc. ("PFPC") (formerly known as First Data Investor Services
Group, Inc.), located at 4400 Computer Drive, Westborough, Massachusetts
01581-5108, serves as the Funds' administrator. PFPC is a majority-owned
subsidiary of PNC Financial Services Group.

Under the Administration Agreement, PFPC has agreed to maintain office
facilities for Galaxy VIP, furnish Galaxy VIP with statistical and research
data, clerical, accounting, and bookkeeping services, provide certain other
services such as internal auditing services required by Galaxy VIP, and compute
the net asset value and net income of the Funds. PFPC prepares the Funds' annual
and semi-annual reports to the SEC, Federal and state tax returns, and filings
with state securities commissions, arranges for and bears the cost of processing
Share purchase and redemption orders, maintains the Funds' financial accounts
and records, and generally assists in all aspects of Galaxy VIP's operations.
Unless otherwise terminated, the

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<PAGE>

Administration Agreement will remain in effect until May 31, 2001 and thereafter
will continue from year to year upon annual approval of Galaxy VIP's Board of
Trustees.

For the services provided and expenses assumed pursuant to the
Administration Agreement, Galaxy VIP has agreed to pay PFPC administration fees,
computed daily and paid monthly, at the annual rate of .085% of the first $1
billion of the combined average daily net assets of the Funds, plus .078% of the
next $1.5 billion of the combined average daily net assets of the Funds, plus
.073% of the combined average daily net assets of the Funds in excess of $2.5
billion. In the event that the combined average daily net assets of the Funds
exceed $5 billion, the parties intend to review the level of compensation
payable to PFPC for its administration services. The minimum aggregate annual
fee payable for administration services is $100,000. In addition, PFPC receives
a separate annual fee from each Fund for certain fund accounting services and is
paid by each Fund for custody services provided by Galaxy VIP's custodian. From
time to time, PFPC may waive voluntarily all or a portion of the fees payable to
it by the Funds. For the fiscal year ended December 31, 1999, the Funds paid
PFPC administration fees at the effective annual rate of 0.85% of each Fund's
average daily net assets.

For the fiscal years ended December 31, 1999, 1998 and 1997, PFPC
received administration, custody and fund accounting fees (net of fee waivers)
as set forth below:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED DECEMBER 31:
FUND 1999 1998 1997
---- ---- ---- ----
<S> <C> <C> <C>
Money Market Fund............................................... $ 22,217 $ 29,160 $37,694
Equity Fund..................................................... $148,694 $121,817 $74,956
Growth and Income Fund.......................................... $ 55,186 $ 42,389(1) *
Small Company Growth Fund....................................... $ 63,238 $ 42,417(2) *
Large Company Index Fund........................................ * * *
Small Company Index Fund........................................ * * *
Columbia Real Estate Equity Fund II............................. $ 33,055 $ 30,477(3) *
Asset Allocation Fund........................................... $171,679 $113,830 $78,328
High Quality Bond Fund.......................................... $ 45,903 $ 31,725 $38,071
Columbia High Yield Fund II..................................... $ 37,870 $ 31,847(3) *
</TABLE>

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

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<PAGE>

For the fiscal years ended December 31, 1999, 1998 and 1997, PFPC
waived administration fees as set forth below:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED DECEMBER 31:
FUND 1999 1998 1997
---- ---- ---- ----
<S> <C> <C> <C>
Money Market Fund............................................... $30,423 $29,900 $30,000
Equity Fund..................................................... $ 0 $ 0 $ 0
Growth and Income Fund.......................................... $ 0 $ 0(1) *
Small Company Growth Fund....................................... $ 0 $ 0(2) *
Large Company Index Fund........................................ * * *
Small Company Index Fund........................................ * * *
Columbia Real Estate Equity Fund II............................. $ 0 $ 0(3) *
Asset Allocation Fund........................................... $ 0 $ 0 $ 0
High Quality Bond Fund.......................................... $29,941 $29,900 $30,000
Columbia High Yield Fund II..................................... $ 0 $ 0(3) *
</TABLE>

---------------------
* Not in operation during the period.
(1) For the period from March 4, 1998 (commencement of operations) through
December 31, 1998.
(2) For the period from April 17, 1998 (commencement of operations) through
December 31, 1998.
(3) For the period from March 3, 1998 (commencement of operations) through
December 31, 1998.

CUSTODIAN

The Chase Manhattan Bank ("Chase Manhattan"), located at One Chase
Manhattan Plaza, New York, New York 10081, a wholly-owned subsidiary of The
Chase Manhattan Corporation, serves as the custodian of the Funds' assets
pursuant to a Global Custody Agreement. Chase Manhattan may employ
sub-custodians for the Growth and Income Fund, Small Company Growth Fund,
Columbia Real Estate Equity Fund II, Asset Allocation Fund and Columbia High
Yield Fund II for the purpose of providing custodial services for the Funds'
foreign assets held outside the United States.

Under the Global Custody Agreement, Chase Manhattan has agreed to: (i)
maintain a separate account or accounts in the name of each Fund; (ii) hold and
disburse portfolio securities on account of each Fund; (iii) collect and make
disbursements of money on behalf of each Fund; (iv) collect and receive all
income and other payments and distributions on account of each Fund's portfolio
securities; (v) respond to correspondence from security brokers and others
relating to its duties; and (vi) make periodic reports to the Board of Trustees
concerning the Funds' operations. Chase Manhattan is authorized to select one or
more banks or trust companies to serve as sub-custodian for the Funds, provided
that Chase Manhattan shall remain responsible for the performance of all of its
duties under the custodian agreement and shall be liable to the Funds for any
loss which shall occur as a result of the failure of a sub-custodian to exercise
reasonable care with respect to the safekeeping of the Funds' assets. In
addition, Chase Manhattan also serves as Galaxy VIP's "foreign custody manager"
(as that term is defined in Rule 17f-5 under the 1940 Act) and in such capacity
employs sub-custodians for the Funds for the purpose of providing custodial
services for the foreign assets of the Funds held

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<PAGE>

outside the United States. The assets of the Funds are held under bank
custodianship in compliance with the 1940 Act

EXPENSES

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

PORTFOLIO TRANSACTIONS

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

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

Fleet or Columbia will select specific portfolio investments and effect
transactions for the Funds. Fleet and Columbia seek to obtain the best net price
and the most favorable execution of orders. Fleet or Columbia may, in its
discretion, effect transactions in portfolio securities with dealers who provide
research advice or other services to the Funds, Fleet or Columbia. Fleet or
Columbia is authorized to pay a broker or dealer who provides such brokerage and
research services a commission for executing a portfolio transaction for any
Fund which is in excess of the amount of commission another broker or dealer
would have charged for effecting that transaction if Fleet or Columbia
determines in good faith that such commission was reasonable in relation to the
value of the brokerage and research services provided by such broker or dealer,

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<PAGE>

viewed in terms of either that particular transaction or Fleet or Columbia's
overall responsibilities to the particular Fund and to Galaxy VIP. Such
brokerage and research services might consist of reports and statistics relating
to specific companies or industries, general summaries of groups of stocks or
bonds and their comparative earnings and yields, or broad overviews of the
stock, bond and government securities markets and the economy. The fees under
the investment advisory agreements between Galaxy VIP and Fleet and Galaxy VIP
and Columbia are not reduced by reason of receiving such brokerage and research
services. The Board of Trustees will periodically review the commissions paid by
the Funds to determine if the commissions paid over representative periods of
time were reasonable in relation to the benefits inuring to the Funds.

For the fiscal year ended December 31, 1999, the Funds paid commissions
in return for brokerage and research services ("soft dollar commissions") as
shown below:

<TABLE>
<CAPTION>
SOFT DOLLAR
FUND COMMISSIONS
---- -----------
<S> <C>
Money Market Fund ......................... $ 0
Equity Fund ............................... $75,625
Growth and Income Fund .................... $15,531
Small Company Growth Fund ................. $ 2,083
Large Company Index Fund .................. *
Small Company Index Fund .................. *
Columbia Real Estate Equity Fund II ....... $ 93
Asset Allocation Fund ..................... $25,535
High Quality Bond Fund .................... $ 0
Columbia High Yield Fund II ............... $ 0
</TABLE>

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

* Not in operation during the period.

For the fiscal years ended December 31, 1999, 1998 and 1997, the Funds
paid brokerage commissions as shown in the table below:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED DECEMBER 31:
FUND 1999 1998 1997
---- ---- ---- ----
<S> <C> <C> <C>
Money Market Fund............................................... $ 0 $ 0 $ 0
Equity Fund..................................................... $99,742 $116,241 $ 7,285
Growth and Income Fund.......................................... $16,413 $ 17,058(1) *
Small Company Growth Fund....................................... $ 3,035 $ 1,423(2) *
Large Company Index Fund........................................ * * *
Small Company Index Fund........................................ * * *
Columbia Real Estate Equity Fund II............................. $ 2,111 $ 1,696(3) *
Asset Allocation Fund........................................... $25,906 $ 28,923 $19,552
High Quality Bond Fund.......................................... $ 0 0 $ 0
Columbia High Yield Fund II..................................... $ 0 $ 0(3) *
</TABLE>

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

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<PAGE>

The increase in brokerage commissions paid by the Equity Fund during
the fiscal year ended December 31, 1998 resulted from a higher portfolio
turnover rate than in previous years. When Robert G. Armknecht was appointed as
portfolio manager for the Equity Fund on July 1, 1998, the Fund's investment
portfolio was restructured to more closely match the investment portfolio of
another equity fund in the Galaxy fund complex that Mr. Armknecht also manages
with a substantially similar investment style. Consequently, there were a
greater number of purchases and sales of portfolio securities for the Equity
Fund than there had been in past years.

During the period February 1, 1998 through December 31, 1998 and the
fiscal year ended December 31, 1999, certain Funds effected a portion of their
portfolio transactions through Quick & Reilly Institutional Trading ("Quick &
Reilly"), a division of Fleet Securities, Inc., which is an affiliate of Fleet
and Columbia. The table below discloses the aggregate amount of commissions paid
to Quick & Reilly by the Funds during the fiscal years ended December 31, 1998
and December 31, 1999.

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED
DECEMBER 31
FUND 1999 1998
---- ---- ----
<S> <C> <C>
Equity.......................................................... $ 9,426 $45,441
Growth and Income............................................... $ 1,505 $ 744(1)
Small Company Growth............................................ $ 0 $ 0(2)
Columbia Real Estate Equity II.................................. $ 0 $ 0(3)
Asset Allocation................................................ $19,784 $16,815
</TABLE>

----------------------------
1 For the period from March 4, 1998 (commencement of operations) through
December 31, 1998.
2 For the period from April 17, 1998 (commencement of operations) through
December 31, 1998.
3 For the period from March 3, 1998 (commencement of operations) through
December 31, 1998.

The table below shows (i) the percentage of each Fund's aggregate
brokerage commissions for the fiscal year ended December 31, 1999 that was paid
to Quick & Reilly, and (ii) the percentage of each Fund's aggregate dollar
amount of transactions that involved payment of commissions that was effected
through Quick & Reilly during the fiscal year ended December 31, 1999.

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<PAGE>

<TABLE>
<CAPTION>
% OF
% OF AGGREGATE
AGGREGATE COMMISSION
FUND COMMISSIONS TRANSACTIONS
---- ----------- ------------
<S> <C> <C>
Equity ........................................................... 9.45% 0.03%
Growth and Income ................................................ 9.17% 9.33%
Small Company Growth ............................................. 0.0% 0.0%
Columbia Real Estate Equity II ................................... 0.0% 0.0%
Asset Allocation ................................................. 76.37% 0.15%
</TABLE>

The Equity Fund, Growth and Income Fund, Small Company Growth Fund,
Columbia Real Estate Equity Fund II, Asset Allocation Fund, High Quality Bond
Fund and Columbia High Yield Fund II may engage in short-term trading to achieve
their investment objectives. Portfolio turnover may vary greatly from year to
year as well as within a particular year. The Money Market Fund does not intend
to seek profits from short-term trading. Its annual portfolio turnover will be
relatively high, but since brokerage commissions are normally not paid on money
market instruments, it should not have a material effect on the net income of
the Fund.

Except as permitted by the SEC or applicable law, the Funds will not
acquire portfolio securities from, make savings deposits in, enter into
repurchase or reverse repurchase agreements with, or sell securities to, Fleet,
Columbia, PFPC or their affiliates, and will not give preference to affiliates
and correspondent banks of Fleet or Columbia with respect to such transactions.

Galaxy VIP is required to identify any securities of its "regular
brokers or dealers" that the Funds have acquired during Galaxy VIP's most recent
fiscal year. At December 31, 1999 the following Galaxy VIP Funds held such
securities:

<TABLE>
<CAPTION>
DEBT/ PAR/ MARKET
FUND EQUITY SECURITY TYPE SHARES VALUE
---- ------ ------------- ------ -----
<S> <C> <C> <C> <C>

MONEY MARKET FUND
-----------------

Morgan (J.P.) & Co., Inc. D Commercial Paper 300,000 $ 296,804
State Street Bank D Repurchase Agreement 2,356,000 $ 2,356,000

EQUITY FUND
-----------

Chase Manhattan Corp. E Common Stock 25,000 $ 1,942,187
State Street Bank D Repurchase Agreement 2,654,000 $ 2,654,000

GROWTH & INCOME FUND
--------------------

Chase Manhattan Corp. E Common Stock 1,900 $ 147,606
Morgan (J.P.) & Co. E Common Stock 900 $ 113,963
State Street Bank D Repurchase Agreement 812,000 $ 812,000

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<PAGE>

SMALL COMPANY GROWTH FUND
-------------------------

State Street Bank D Repurchase Agreement 157,000 $ 157,000

ASSET ALLOCATION FUND
---------------------

Chase Manhattan Corp. E Common Stock 13,000 $ 1,009,937
Chase Manhattan Corp. D Corporate Bond 300,000 $ 295,875
State Street Bank D Repurchase Agreement 10,944,000 $10,944,000

HIGH QUALITY BOND FUND
----------------------

State Street Bank D Repurchase Agreement 353,000 $ 353,000
</TABLE>

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

AUDITORS

Ernst & Young, LLP, independent auditors, with offices at 200
Clarendon Street, Boston, Massachusetts 02110, serve as auditors for Galaxy
VIP. The financial highlights for the Funds (other than the Large Company
Index Fund and Small Company Index Fund which had not commenced operations as
of the date of this Statement of Additional Information) included in the
Prospectus and the financial statements for the Funds contained in Galaxy
VIP's Annual Report to Shareholders and incorporated by reference into this
Statement of Additional Information for the fiscal year ended December 31,
1999 have been audited by Ernst & Young, LLP. For the respective years and
periods ended December 31, 1998, 1997, 1996 and 1995, the financial
highlights of the Funds included in the Prospectus and the financial
statements for such years and periods contained in the Annual Report to
Shareholders were audited by PricewaterhouseCoopers LLP, Galaxy VIP's former
auditors.

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<PAGE>
COUNSEL

Drinker Biddle & Reath LLP (of which W. Bruce McConnel, III, Secretary
of Galaxy VIP, is a partner), One Logan Square, 18th & Cherry Streets,
Philadelphia, Pennsylvania 19103, are counsel to Galaxy VIP and will pass upon
certain legal matters on its behalf.

CODES OF ETHICS

Galaxy VIP, Fleet and Columbia have adopted codes of ethics pursuant to
Rule 17j-1 under the 1940 Act that permit investment personnel subject to their
particular codes of ethics to invest in securities, including securities that
may be purchased or held by the Fund, for their own accounts. The codes of
ethics are on public file with, and are available from, the Securities and
Exchange Commission's Public Reference Room in Washington, D.C.

PERFORMANCE AND YIELD INFORMATION

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

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

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

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

The Funds may also advertise their performance using "average annual
total return" figures over various periods of time. Such total return figures
reflect the average percentage

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<PAGE>

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

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

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

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

YIELD QUOTATIONS - MONEY MARKET FUND

The standardized annualized seven-day yield for the Money Market Fund
is computed by: (1) determining the net change, exclusive of capital changes and
income other than investment income, in the value of a hypothetical pre-existing
account in the Fund having a balance of one Share at the beginning of a
seven-day period, for which the yield is to be quoted, (2) dividing the net
change in account value by the value of the account at the beginning of the base
period to obtain the base period return, and (3) annualizing the results (I.E.,
multiplying the base period return by (365/7)). The net change in the value of
the account in the Fund includes

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<PAGE>

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

The current yield for the Money Market Fund may be obtained by calling
Galaxy VIP at 1-877-BUY-GALAXY (1-877-289-4252). For the seven-day period ended
June 30, 2000, the annualized yield of the Money Market Fund was 6.19% and the
effective yield was 6.38%.

YIELD AND TOTAL RETURNS QUOTATIONS - NON-MONEY MARKET FUNDS

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

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

Where: a = dividends and interest earned by a Fund during the period;

b = expenses accrued for the period (net of reimbursements);

c= average daily number of shares outstanding during
the period entitled to receive dividends; and

d= maximum offering price per share on the last day of
the period.

For the purpose of determining net investment income earned during the period
(variable "a" in the formula), dividend income on equity securities held by a
Fund is recognized by accruing 1/360 of the stated dividend rate of the security
each day that the security is in the Fund. Except as noted below, interest
earned on debt obligations held by a Fund is calculated by computing the yield
to maturity of each obligation based on the market value of the obligation
(including actual accrued interest) at the close of business on the last
business day of each month, or, with respect to obligations purchased during the
month, the purchase price (plus actual accrued interest) and dividing the result
by 360 and multiplying the quotient by the market value of the obligation

-63-
<PAGE>

(including actual accrued interest) in order to determine the interest income on
the obligation for each day of the subsequent month that the obligation is held
by the Fund. For purposes of this calculation, it is assumed that each month
contains 30 days. The maturity of an obligation with a call provision is the
next call date on which the obligation reasonably may be expected to be called
or, if none, the maturity date. With respect to debt obligations purchased at a
discount or premium, the formula generally calls for amortization of the
discount or premium. The amortization schedule will be adjusted monthly to
reflect changes in the market value of such debt obligations. Expenses accrued
for the period (variable "b" in the formula) include all recurring fees charged
by a Fund to all shareholder accounts in proportion to the length of the base
period and the Fund's mean (or median) account size. Undeclared earned income
will be subtracted from the offering price per share (variable "d" in the
formula).

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

Based on the foregoing calculation, the yields for the Equity Fund,
Asset Allocation Fund, High Quality Bond Fund, Growth and Income Fund, Small
Company Growth Fund, Columbia Real Estate Equity Fund II and Columbia High Yield
Fund II for the 30-day period ended June 30, 2000 were (0.18)%, 2.36%, 6.44%,
0.35%, 1.17%, 7.41%, and 8.38%, respectively. The Large Company Index Fund and
Small Company Index Fund were not in operation during the six-month period ended
June 30, 2000.

Each Fund that advertises its "average annual total return" computes
such return separately for each series of shares by determining the average
annual compounded rate of return during specified periods that equates the
initial amount invested to the ending redeemable value of such investment
according to the following formula:

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

Where: T = average annual total return;

ERV = ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the
l, 5 or 10 year (or other) periods at the
end of the applicable period (or a
fractional portion thereof);

P = hypothetical initial payment of $1,000; and

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<PAGE>

n = period covered by the computation, expressed
in years.

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

Aggregate Total Return = [(ERV/P) - l]

The calculations are made assuming that (1) all dividends and capital
gain distributions are reinvested on the reinvestment dates at the price per
share existing on the reinvestment date, (2) all recurring fees charged to all
shareholder accounts are included, and (3) for any account fees that vary with
the size of the account, a mean (or median) account size in the Fund during the
periods is reflected. The ending redeemable value (variable "ERV" in the
formula) is determined by assuming complete redemption of the hypothetical
investment after deduction of all nonrecurring charges at the end of the
measuring period.

The aggregate total returns for the Funds from the date of commencement
of operations through June 30, 2000 are set forth below:

FUND

<TABLE>
<S> <C>
Equity Fund(1) ................................................ 252.19%
Growth and Income Fund(2) ..................................... 13.17%
Small Company Growth Fund(3) .................................. 62.03%
Large Company Index Fund ...................................... *
Small Company Index Fund ...................................... *
Columbia Real Estate Equity Fund II(4) ........................ (1.26)%
Asset Allocation Fund(5) ...................................... 142.90%
High Quality Bond Fund(6) ..................................... 51.09%
Columbia High Yield Fund II(4) ................................ 11.20%
</TABLE>

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

* Not in operation during the period.
(1) For the period from January 11, 1993 (commencement of operations)
through December 31, 1998.
(2) For the period from March 4, 1998 (commencement of operations) through
December 31, 1998.
(3) For the period from April 17, 1998 (commencement of operations) through
December 31, 1998.
(4) For the period from March 3, 1998 (commencement of operations) through
December 31, 1998.
(5) For the period from February 6, 1993 (commencement of operations)
through December 31, 1998.
(6) For the period from January 21, 1993 (commencement of operations)
through December 31, 1998.

-65-
<PAGE>

The average annual total returns for the Funds for the one-year and
five-year periods (as applicable) ended June 30, 2000 are set forth below.

<TABLE>
<CAPTION>
FUND ONE-YEAR FIVE-YEAR
---- -------- ---------
<S> <C> <C>
Equity Fund ..................................................... 18.87% 22.99%
Growth and Income Fund .......................................... (3.90)% *
Small Company Growth Fund ....................................... 65.63% *
Large Company Index Fund ........................................ * *
Small Company Index Fund ........................................ * *
Columbia Real Estate Equity Fund II ............................. 4.58% *
Asset Allocation Fund ........................................... 9.77% 14.88%
High Quality Bond Fund .......................................... 4.29% 5.71%
Columbia High Yield Fund II ..................................... 1.32% *
</TABLE>

----------------------------------
* Not in operation during the period.

MISCELLANEOUS

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

As of September 20, 2000, all of the issued and outstanding shares
of the Money Market Fund and more than 25% of the issued and outstanding
shares of each of the Equity Fund, Growth and Income Fund, Small Company
Growth Fund, Columbia Real Estate Equity Fund II, Asset Allocation Fund, High
Quality Bond Fund and Columbia High Yield Fund II were owned by American
Skandia Life Assurance Corporation and held in Separate Accounts pursuant to
variable annuity contracts. As of September 20, 2000, Columbia Management
Company owned more than 5% of the Columbia Real Estate Equity Fund II and
Columbia High Yield Fund II.

Shareholders will receive unaudited semi-annual reports describing the
Funds' investment operations and annual financial statements audited by
independent certified public accountants.

A "vote of the holders of a majority of the outstanding shares" of a
particular Fund means, with respect to the approval of an investment advisory
agreement, a distribution plan or a change in an investment objective or
fundamental investment policy, the affirmative vote of the holders of the lesser
of (a) more than 50% of the outstanding shares of such Fund, or (b) 67% or

-66-
<PAGE>

more of the shares of such Fund present at a meeting if more than 50% of the
outstanding shares of such Fund are represented at the meeting in person or by
proxy.

FINANCIAL STATEMENTS

Galaxy VIP's Annual Report to Shareholders for the fiscal year ended
December 31, 1999 and Semi-Annual Report to Shareholders for the six-month
period ended June 30, 2000 have been filed with the SEC. The financial
statements in such Annual and Semi-Annual Reports are incorporated by
reference into this Statement of Additional Information. The financial
statements included in the Annual Report for the fiscal year ended December
31, 1999 have been audited by Ernst & Young, LLP, independent auditors, whose
report thereon also appears in such Annual Report and is incorporated herein
by reference. The financial statements in such Annual Report have been
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing. The financial
statements and Financial Highlights included in the Annual Reports for prior
periods were audited by PricewaterhouseCoopers LLP, Galaxy VIP's former
independent auditors. The report of PricewaterhouseCoopers LLP dated February
12, 1999 on the financial statements included in Galaxy VIP's Annual Report
to Shareholders for the fiscal year ended December 31, 1998 is also
incorporated herein by reference. The financial statements included in Galaxy
VIP's Semi-Annual Report for the six-month period ended June 30, 2000 are
unaudited.

-67-
<PAGE>

APPENDIX A

COMMERCIAL PAPER RATINGS

A Standard & Poor's commercial paper rating is a current
opinion of the creditworthiness of an obligor with respect to financial
obligations having an original maturity of no more than 365 days. The
following summarizes the rating categories used by Standard and Poor's for
commercial paper:

"A-1" - Obligations are rated in the highest category
indicating that the obligor's capacity to meet its financial commitment on
the obligation is strong. Within this category, certain obligations are
designated with a plus sign (+). This indicates that the obligor's capacity
to meet its financial commitment on these obligations is extremely strong.

"A-2" - Obligations are somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to
meet its financial commitment on the obligation is satisfactory.

"A-3" - Obligations exhibit adequate protection parameters.
However, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity of the obligor to meet its financial
commitment on the obligation.

"B" - Obligations are regarded as having significant
speculative characteristics. The obligor currently has the capacity to meet
its financial commitment on the obligation; however, it faces major ongoing
uncertainties which could lead to the obligor's inadequate capacity to meet
its financial commitment on the obligation.

"C" - Obligations are currently vulnerable to nonpayment
and are dependent upon favorable business, financial, and economic conditions
for the obligor to meet its financial commitment on the obligation.

"D" - Obligations are in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless Standard & Poor's
believes that such payments will be made during such grace period. The "D"
rating will be used upon the filing of a bankruptcy petition or the taking of
a similar action if payments on an obligation are jeopardized.

Moody's commercial paper ratings are opinions of the
ability of issuers to repay punctually senior debt obligations not having
an original maturity in excess of one year, unless explicitly noted. The
following summarizes the rating categories used by Moody's for commercial
paper:

A-1
<PAGE>

"Prime-1" - Issuers (or supporting institutions) have a
superior ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries;
high rates of return on funds employed; conservative capitalization structure
with moderate reliance on debt and ample asset protection; broad margins in
earnings coverage of fixed financial charges and high internal cash
generation; and well-established access to a range of financial markets and
assured sources of alternate liquidity.

"Prime-2" - Issuers (or supporting institutions) have a
strong ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, may be more
subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.

"Prime-3" - Issuers (or supporting institutions) have an
acceptable ability for repayment of senior short-term debt obligations. The
effect of industry characteristics and market compositions may be more
pronounced. Variability in earnings and profitability may result in changes
in the level of debt protection measurements and may require relatively high
financial leverage. Adequate alternate liquidity is maintained.

"Not Prime" - Issuers do not fall within any of the Prime
rating categories.

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

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

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

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

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

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

A-2
<PAGE>

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

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

Fitch IBCA short-term ratings apply to debt obligations
that have time horizons of less than 12 months for most obligations, or up to
three years for U.S. public finance securities. The following summarizes the
rating categories used by Fitch IBCA for short-term obligations:

"F1" - Securities possess the highest credit quality. This
designation indicates the best capacity for timely payment of financial
commitments and may have an added "+" to denote any exceptionally strong
credit feature.

"F2" - Securities possess good credit quality. This
designation indicates a satisfactory capacity for timely payment of financial
commitments, but the margin of safety is not as great as in the case of the
higher ratings.

"F3" - Securities possess fair credit quality. This
designation indicates that the capacity for timely payment of financial
commitments is adequate; however, near-term adverse changes could result in a
reduction to non-investment grade.

"B" - Securities possess speculative credit quality. This
designation indicates minimal capacity for timely payment of financial
commitments, plus vulnerability to near-term adverse changes in financial and
economic conditions.

"C" - Securities possess high default risk. This
designation indicates that default is a real possibility and that the
capacity for meeting financial commitments is solely reliant upon a
sustained, favorable business and economic environment.

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

Thomson Financial Bank Watch short-term ratings assess the likelihood of an
untimely payment of principal and interest of debt instruments with original
maturities of one year or less. The following summarizes the ratings used by
Thomson Financial BankWatch:

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

"TBW-2" - This designation represents Thomson Financial
BankWatch's second-highest category and indicates that while the degree of
safety regarding timely repayment of

A-3
<PAGE>

principal and interest is strong, the relative degree of safety is not as
high as for issues rated "TBW-1."

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

"TBW-4" - This designation represents Thomson Financial
BankWatch's lowest rating category and indicates that the obligation is
regarded as non-investment grade and therefore speculative.

CORPORATE AND MUNICIPAL LONG-TERM DEBT RATINGS

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

"AAA" - An obligation rated "AAA" has the highest rating
assigned by Standard & Poor's. The obligor's capacity to meet its financial
commitment on the obligation is extremely strong.

"AA" - An obligation rated "AA" differs from the highest
rated obligations only in small degree. The obligor's capacity to meet its
financial commitment on the obligation is very strong.

"A" - An obligation rated "A" is somewhat more susceptible
to the adverse effects of changes in circumstances and economic conditions
than obligations in higher-rated categories. However, the obligor's capacity
to meet its financial commitment on the obligation is still strong.

"BBB" - An obligation rated "BBB" exhibits adequate
protection parameters. However, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity of the obligor
to meet its financial commitment on the obligation.

Obligations rated "BB," "B," "CCC," "CC" and "C" are
regarded as having significant speculative characteristics. "BB" indicates
the least degree of speculation and "C" the highest. While such obligations
will likely have some quality and protective characteristics, these may be
outweighed by large uncertainties or major exposures to adverse conditions.

"BB" - An obligation rated "BB" is less vulnerable to
nonpayment than other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial or economic
conditions which could lead to the obligor's inadequate capacity to meet its
financial commitment on the obligation.

A-4
<PAGE>

"B" - An obligation rated "B" is more vulnerable to
nonpayment than obligations rated "BB", but the obligor currently has the
capacity to meet its financial commitment on the obligation. Adverse
business, financial or economic conditions will likely impair the obligor's
capacity or willingness to meet its financial commitment on the obligation.

"CCC" - An obligation rated "CCC" is currently vulnerable
to nonpayment, and is dependent upon favorable business, financial and
economic conditions for the obligor to meet its financial commitment on the
obligation. In the event of adverse business, financial, or economic
conditions, the obligor is not likely to have the capacity to meet its
financial commitment on the obligation.

"CC" - An obligation rated "CC" is currently highly
vulnerable to nonpayment.

"C" - The "C" rating may be used to cover a situation where
a bankruptcy petition has been filed or similar action taken, but payments on
this obligation are being continued.

"D" - An obligation rated "D" is in payment default. The
"D" rating category is used when payments on an obligation are not made on
the date due even if the applicable grace period has not expired, unless
Standard & Poor's believes that such payments will be made during such grace
period. The "D" rating also will be used upon the filing of a bankruptcy
petition or the taking of a similar action if payments on an obligation are
jeopardized.

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

"c" - The `c' subscript is used to provide additional
information to investors that the bank may terminate its obligation to
purchase tendered bonds if the long-term credit rating of the issuer is below
an investment-grade level and/or the issuer's bonds are deemed taxable.

"p" - The letter `p' indicates that the rating is
provisional. A provisional rating assumes the successful completion of the
project financed by the debt being rated and indicates that payment of debt
service requirements is largely or entirely dependent upon the successful,
timely completion of the project. This rating, however, while addressing
credit quality subsequent to completion of the project, makes no comment on
the likelihood of or the risk of default upon failure of such completion. The
investor should exercise his own judgment with respect to such likelihood and
risk.

* Continuance of the ratings is contingent upon Standard &
Poor's receipt of an executed copy of the escrow agreement or closing
documentation confirming investments and cash flows.

"r" - The `r' highlights derivative, hybrid, and certain
other obligations that Standard & Poor's believes may experience high
volatility or high variability in expected returns as a result of noncredit
risks. Examples of such obligations are securities with principal or

A-5
<PAGE>

interest return indexed to equities, commodities, or currencies; certain
swaps and options; and interest-only and principal-only mortgage securities.
The absence of an `r' symbol should not be taken as an indication that an
obligation will exhibit no volatility or variability in total return.

N.R. Not rated. Debt obligations of issuers outside the
United States and its territories are rated on the same basis as domestic
corporate and municipal issues. The ratings measure the creditworthiness of
the obligor but do not take into account currency exchange and related
uncertainties.

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

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

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

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

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

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

Con. (---) - Bonds for which the security depends upon the
completion of some act or the fulfillment of some condition are rated
conditionally. These are bonds secured by (a) earnings of projects under
construction, (b) earnings of projects unseasoned in operating experience,
(c) rentals which begin when facilities are completed, or (d) payments to
which some

A-6
<PAGE>

other limiting condition attaches. Parenthetical rating denotes probable
credit stature upon completion of construction or elimination of basis of
condition.

Note: Moody's applies numerical modifiers 1, 2, and 3 in
each generic rating classification from "Aa" through "Caa". The modifier 1
indicates that the obligation ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates a ranking in the lower end of its generic rating category.

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

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

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

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

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

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

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

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

"AAA" - Bonds considered to be investment grade and of the
highest credit quality. These ratings denote the lowest expectation of credit
risk and are assigned only in case of exceptionally strong capacity for
timely payment of financial commitments. This capacity is highly unlikely to
be adversely affected by foreseeable events.

A-7
<PAGE>

"AA" - Bonds considered to be investment grade and of very
high credit quality. These ratings denote a very low expectation of credit
risk and indicate very strong capacity for timely payment of financial
commitments. This capacity is not significantly vulnerable to foreseeable
events.

"A" - Bonds considered to be investment grade and of high
credit quality. These ratings denote a low expectation of credit risk and
indicate strong capacity for timely payment of financial commitments. This
capacity may, nevertheless, be more vulnerable to changes in circumstances or
in economic conditions than is the case for higher ratings.

"BBB" - Bonds considered to be investment grade and of good
credit quality. These ratings denote that there is currently a low
expectation of credit risk. The capacity for timely payment of financial
commitments is considered adequate, but adverse changes in circumstances and
in economic conditions are more likely to impair this capacity. This is the
lowest investment grade category.

"BB" - Bonds considered to be speculative. These ratings
indicate that there is a possibility of credit risk developing, particularly
as the result of adverse economic change over time; however, business or
financial alternatives may be available to allow financial commitments to be
met. Securities rated in this category are not investment grade.

"B" - Bonds are considered highly speculative. These
ratings indicate that significant credit risk is present, but a limited
margin of safety remains. Financial commitments are currently being met;
however, capacity for continued payment is contingent upon a sustained,
favorable business and economic environment.

"CCC", "CC" and "C" - Bonds have high default risk. Default
is a real possibility, and capacity for meeting financial commitments is
solely reliant upon sustained, favorable business or economic developments.
"CC" ratings indicate that default of some kind appears probable, and "C"
ratings signal imminent default.

"DDD," "DD" and "D" - Bonds are in default. The ratings of
obligations in this category are based on their prospects for achieving
partial or full recovery in a reorganization or liquidation of the obligor.
While expected recovery values are highly speculative and cannot be estimated
with any precision, the following serve as general guidelines. "DDD"
obligations have the highest potential for recovery, around 90%-100% of
outstanding amounts and accrued interest. "DD" indicates potential recoveries
in the range of 50%-90%, and "D" the lowest recovery potential, i.e., below
50%.

Entities rated in this category have defaulted on some or
all of their obligations. Entities rated "DDD" have the highest prospect for
resumption of performance or continued operation with or without a formal
reorganization process. Entities rated "DD" and "D" are generally undergoing
a formal reorganization or liquidation process; those rated "DD" are likely
to satisfy a higher portion of their outstanding obligations, while entities
rated "D" have a poor prospect for repaying all obligations.

A-8
<PAGE>

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

`NR' indicates the Fitch IBCA does not rate the issuer or
issue in question.

`Withdrawn': A rating is withdrawn when Fitch IBCA deems
the amount of information available to be inadequate for rating purposes, or
when an obligation matures, is called, or refinanced.

RatingAlert: Ratings are placed on RatingAlert to notify
investors that there is a reasonable probability of a rating change and the
likely direction of such change. These are designated as "Positive",
indicating a potential upgrade, "Negative", for a potential downgrade, or
"Evolving", if ratings may be raised, lowered or maintained. RatingAlert is
typically resolved over a relatively short period.

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

"AAA" - This designation indicates that the ability to
repay principal and interest on a timely basis is extremely high.

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

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

"BBB" - This designation represents the lowest
investment-grade category and indicates an acceptable capacity to repay
principal and interest. Issues rated "BBB" are more vulnerable to adverse
developments (both internal and external) than obligations with higher ratings.

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

A-9
<PAGE>

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

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

MUNICIPAL NOTE RATINGS

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

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

"SP-2" - The issuers of these municipal notes exhibit
satisfactory capacity to pay principal and interest, with some vulnerability
to adverse financial and economic changes over the term of the notes.

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

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

"MIG-1"/"VMIG-1" - This designation denotes best quality.
There is present strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.

"MIG-2"/"VMIG-2" - This designation denotes high quality.
Margins of protection are ample although not so large as in the preceding
group.

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

A-10
<PAGE>

"MIG-4"/"VMIG-4" - This designation denotes adequate
quality. Protection commonly regarded as required of an investment security
is present and although not distinctly or predominantly speculative, there is
specific risk.

"SG" - This designation denotes speculative quality. Debt
instruments in this category lack margins of protection.

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

A-11
<PAGE>

APPENDIX B

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

I. INTEREST RATE FUTURES CONTRACTS

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

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

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

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

B-1

<PAGE>

realizes a gain. If the offsetting purchase price exceeds the sale price, a
Fund pays the difference and realizes a loss. Similarly, the closing out of a
futures contract purchase is effected by a Fund entering into a futures
contract sale. If the offsetting sale price exceeds the purchase price, a
Fund realizes a gain, and if the purchase price exceeds the offsetting sale
price, a Fund realizes a loss.

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

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

EXAMPLE OF FUTURES CONTRACT SALE. A Fund would engage in an interest
rate futures contract sale to maintain the income advantage from continued
holding of a long-term bond while endeavoring to avoid part or all of the
loss in market value that would otherwise accompany a decline in long-term
securities prices. Assume that the market value of a certain security held by
a Fund tends to move in concert with the futures market prices of long-term
United States Treasury bonds ("Treasury bonds"). Fleet or Columbia, as the
case may be, wishes to fix the current market value of this portfolio
security until some point in the future. Assume the portfolio security has a
market value of 100, and Fleet or Columbia believes that, because of an
anticipated rise in interest rates, the value will decline to 95. A Fund
might enter into futures contract sales of Treasury bonds for an equivalent
of 98. If the market value of the portfolio security does indeed decline from
100 to 95, the equivalent futures market price for the Treasury bonds might
also decline from 98 to 93.

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

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

B-2

<PAGE>

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

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

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

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

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

B-3

<PAGE>

II. INDEX FUTURES CONTRACTS.

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

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

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

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

B-4

<PAGE>

ANTICIPATORY PURCHASE HEDGE: Buy the Future
Hedge Objective: Protect Against Increasing Price
<TABLE>
<CAPTION>

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

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

-Day Hedge is Lifted-

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

</TABLE>

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

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

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

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

-Day Hedge is Lifted-

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

</TABLE>

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

B-5

<PAGE>

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

PORTFOLIO FUTURES
--------- --------
<S> <C>
-Day Hedge is Placed-
Anticipate Buying $62,500 Buying 1 Index Futures at 125
Equity Portfolio Value of Futures = $62,500/Contract

-Day Hedge is Lifted-

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

</TABLE>

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

Factors:

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

PORTFOLIO FUTURES
--------- --------
<S> <C>

-Day Hedge is Placed-

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

-Day Hedge is Lifted-

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

</TABLE>

B-6

<PAGE>

III. FUTURES CONTRACTS ON FOREIGN CURRENCIES.

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

IV. MARGIN PAYMENTS

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

V. RISKS OF TRANSACTIONS IN FUTURES CONTRACTS

There are several risks in connection with the use of futures by a
Fund as hedging devices. One risk arises because of the imperfect correlation
between movements in the price of the futures and movements in the price of
the instruments which are the subject of the hedge. The price of the futures
may move more than or less than the price of the instruments being hedged. If
the price of the futures moves less than the price of the instruments which
are the subject of the hedge, the hedge will not be fully effective but, if
the price of the instruments being hedged has moved in an unfavorable
direction, a Fund would be in a better position than if it had not hedged at
all. If the price of the instruments being hedged has moved in a favorable
`
B-7

<PAGE>

direction, this advantage will be partially offset by the loss on the
futures. If the price of the futures moves more than the price of the hedged
instruments, a Fund will experience either a loss or gain on the futures
which will not be completely offset by movements in the price of the
instruments which are the subject of the hedge. To compensate for the
imperfect correlation of movements in the price of instruments being hedged
and movements in the price of futures contracts, a Fund may buy or sell
futures contracts in a greater dollar amount than the dollar amount of
instruments being hedged if the volatility over a particular time period of
the prices of such instruments has been greater than the volatility over such
time period of the futures, or if otherwise deemed to be appropriate by Fleet
or Columbia, as the case may be. Conversely, a Fund may buy or sell fewer
futures contracts if the volatility over a particular time period of the
prices of the instruments being hedged is less than the volatility over such
time period of the futures contract being used, or if otherwise deemed to be
appropriate by Fleet or Columbia. It is also possible that, where a Fund had
sold futures to hedge its portfolio against a decline in the market, the
market may advance and the value of instruments held in a Fund may decline.
If this occurred, a Fund would lose money on the futures and also experience
a decline in value in its portfolio securities.

Where futures are purchased to hedge against a possible increase in
the price of securities before a Fund is able to invest its cash (or cash
equivalents) in an orderly fashion, it is possible that the market may
decline instead; if a Fund then concludes not to invest its cash at that time
because of concern as to possible further market decline or for other
reasons, a Fund will realize a loss on the futures contract that is not
offset by a reduction in the price of the instruments that were to be
purchased.

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

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

B-8

<PAGE>

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

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

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

VI. OPTIONS ON FUTURES CONTRACTS.

Certain of the Funds may purchase options on the futures
contracts described above. A futures option gives the holder, in return for
the premium paid, the right to buy (call) from or sell (put) to the writer of
the option a futures contract at a specified price at any time during the
period of the option. Upon exercise, the writer of the option is obligated to
pay the difference between the cash value of the futures contract and the
exercise price. Like the buyer or seller of a futures contract, the holder,
or writer, of an option has the right to terminate its position prior to the
scheduled expiration of the option by selling, or purchasing, an option of
the same series, at which time the person entering into the closing
transaction will realize a gain or loss.

B-9

<PAGE>

Investments in futures options involve some of the same
considerations that are involved in connection with investments in futures
contracts (for example, the existence of a liquid secondary market). In
addition, the purchase or sale of an option also entails the risk that
changes in the value of the underlying futures contract will not be fully
reflected in the value of the option purchased. Depending on the pricing of
the option compared to either the futures contract upon which it is based, or
upon the price of the securities being hedged, an option may or may not be
less risky than ownership of the futures contract or such securities. In
general, the market prices of options can be expected to be more volatile
than the market prices on the underlying futures contract. Compared to the
purchase or sale of futures contracts, however, the purchase of call or put
options on futures contracts may frequently involve less potential risk to
the Funds because the maximum amount at risk is the premium paid for the
options (plus transaction costs). The writing of an option on a futures
contract involves risks similar to those risks relating to the sale of
futures contracts. Although permitted by their investment policies, the Funds
do not currently intend to write futures options during the current fiscal
year.

B-10

<PAGE>

THE GALAXY VIP FUND

FORM N-1A

PART C. OTHER INFORMATION

ITEM 23. EXHIBITS

(a) (1) Agreement and Declaration of Trust of Registrant dated
May 27, 1992 is incorporated herein by reference to
Exhibit (1) to Post-Effective Amendment No. 7 to the
Registrant's Registration Statement on Form N-1A (File
Nos. 33-49290/811-6726) as filed with the Securities and
Exchange Commission (the "Commission") on April 30, 1998
("PEA No. 7").

(2) Certificate of Classification of Shares pertaining to
Class A Shares, Class B Shares, Class C Shares and Class D
Shares.

(3) Certificate of Classification of Shares pertaining to
Class E Shares, Class F Shares, Class G Shares and Class H
Shares.

(4) Certificate of Classification of Shares pertaining to
Class I Shares and Class J Shares.

(b) Registrant's Code of Regulations is incorporated herein by
reference to Exhibit (2) to PEA No 7.

(c) Article V, Section 5.1, and Article VIII, Section 8.1, of
Registrant's Agreement and Declaration of Trust is
incorporated herein by reference as Exhibit (a)(1).

(d) (1) Investment Advisory Agreement dated September 30, 1992
between Registrant and Fleet Investment Advisors Inc. with
respect to the Money Market, Equity, Asset Allocation and
High Quality Bond Funds is incorporated herein by reference
to Exhibit (5)(a) to PEA No 7.

(2) Addendum No. 1 dated March 2, 1998 to Investment Advisory
Agreement between Registrant and Fleet Investment
Advisors Inc. with respect to the Growth and Income Fund
and Small Company Growth Fund is incorporated herein by
reference to Exhibit (5)(b) to PEA No 7.

<PAGE>

(3) Form of Addendum No. 2 to Investment Advisory Agreement
between Registrant and Fleet Investment Advisors Inc. with
respect to the Large Company Index Fund and Small Company
Index Fund.

(4) Advisory Agreement dated February 27, 1998 between
Registrant and Columbia Management Co. with respect to the
Columbia Real Estate Equity Fund II and Columbia High Yield
Fund II is incorporated herein by reference to
Exhibit (5)(c) to PEA No 7.

(e) (1) Distribution Agreement dated as of December 1, 1999 between
Registrant and Provident Distributors, Inc. is incorporated
herein by reference to Exhibit (e) to Post-Effective
Amendment No. 10 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-49290/811-6726) as filed with
the Commission on March 1, 2000 ("PEA No. 10").

(2) Form of Amendment No. 1 to Distribution Agreement between
Registrant and Provident Distributors, Inc. with respect to
the Large Company Index Fund and Small Company Index Fund.

(f) The Galaxy Fund/The Galaxy VIP Fund/Galaxy Fund II Deferred
Compensation Plan and Related Agreement effective as of
January 1, 1997 is incorporated herein by reference to
Exhibit (7) to Post-Effective Amendment No. 5 to the
Registrant's Registration Statement on Form N-1A (File
Nos. 33-49290/811-6726) as filed with the Commission on
February 28, 1997.

(g) (1) Global Custody Agreement dated November 13, 1992 between
Registrant and The Chase Manhattan Bank, N.A is
incorporated herein by reference to Exhibit (8)(a) to PEA
No. 7.

(2) Amendment to Global Custody Agreement dated March 2, 1998
between Registrant and The Chase Manhattan Bank with
respect to the Growth and Income Fund, Small Company
Growth Fund, Columbia Real Estate Equity Fund II and
Columbia High Yield Fund II is incorporated herein by
reference to Exhibit (g)(2) to Post-Effective Amendment
No. 9 to the Registrant's Registration Statement on
Form N-1A (File Nos. 33-49290/811-6726) as filed with the
Commission on February 26, 1999 ("PEA No. 9").

(3) Form of Amendment to Global Custody Agreement between
Registrant and The Chase Manhattan Bank with respect to
the Large Company Index Fund and Small Company Index Fund.

- 2 -
<PAGE>

(4) Amendment to Global Custody Agreement dated December 17,
1998 between Registrant and The Chase Manhattan Bank is
incorporated herein by reference to Exhibit (g)(3) to No. 9
PEA.

(5) Amendment to Global Custody Agreement dated September 7,
2000 between Registrant and The Chase Manhatten Bank with
respect to joint trading accounts.

(h) (1) Administration Agreement dated as of June 1, 1997 between
Registrant and PFPC Inc. (formerly knows as First Data
Investor Services Group, Inc.) is incorporated herein by
reference to Exhibit (9)(a) to Registrant's Post-Effective
Amendment No. 6 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-49290/811-6726) as filed with
the Commission on November 21, 1997.

(2) Amendment No. 1 dated February 27, 1998 to Administration
Agreement between Registrant and PFPC Inc, (formerly known
as First Data Investor Services Group, Inc.) with respect
to the Growth and Income Fund, Small Company Growth Fund,
Columbia Real Estate Equity Fund II and Columbia High
Yield Fund II is incorporated herein by reference to
Exhibit (9)(b) to PEA No. 7.

(3) Amendment No. 2 dated March 5, 1998 to Administration
Agreement between Registrant and PFPC Inc. (formerly known
as First Data Investor Services Group Inc.) is incorporated
herein by reference to Exhibit (h) (3) to PEA No. 9.

(4) Amendment No. 3 dated September 10, 1998 to Administration
Agreement between Registrant and PFPC Inc. (formerly known
as First Data Investors Services Group Inc.) is
incorporated herein by reference to Exhibit (h) (4) to PEA
No. 9.

(5) Amendment No. 4 dated December 1, 1999 to Administration
Agreement between Registrant and PFPC Inc. (formerly known
as First Data Investor Services Group, Inc.) is
incorporated herein by reference to Exhibit (h)(5) to PEA
No. 10.

(6) Form of Amendment No. 5 to Administration Agreement between
Registrant and PFPC Inc. (formerly known as First Data
Investor Services Group, Inc.) with respect to the Large
Company Index Fund and Small Company Index Fund.

- 3 -
<PAGE>

(7) Transfer Agency and Services Agreement dated September 7,
2000 between Registrant and PFPC Inc.

(8) Form of Amendment No. 1 to Transfer Agency and Services
Agreement between Registrant and PFPC Inc. with respect to
the Large Company Index Fund and Small Company Index Fund.

(9) Sales Agreement dated August 26, 1993 between Registrant
and American Skandia Life Assurance Corporation is
incorporated herein by reference to Exhibit (h)(6) to the
Registrant's Registration Statement on Form N-1A (File
No.s 33-49290/811-6726) as filed with the Commission on
April 28, 2000 ("PEA No. 11").

(10) Proposed Amendment No. 1 to Sales Agreement between
Registrant and American Skandia Life Assurance Corporation
is incorporated herein by reference to Exhibit (h) (6) to
PEA No. 9.

(11) Credit Agreement among The Galaxy Fund, the Registrant
and Galaxy Fund II and Deutsche Bank AG, New York Branch
dated December 29, 1999 is incorporated herein by reference
to Exhibit (h)(8) to PEA No. 10.

(12) Participation Agreement among Golden American Life
Insurance Company of New York, The Galaxy VIP Fund, Fleet
Investment Advisors Inc. and First Data Distributors, Inc.
dated October 1, 1999 is incorporated herein by reference
to Exhibit (h)(9) to PEA No. 11.

(13) Participation Agreement among First Golden American Life
Insurance Company of New York, The Galaxy VIP Fund, Fleet
Investment Advisors Inc. and First Data Distributors, Inc.
dated October 1, 1999 is incorporated herein by reference
to Exhibit (h)(10) to PEA No. 11.

(i) (1) Opinion of counsel with respect to 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 that shares are validly issued, fully paid and
non-assessable is incorporated herein by reference to
Exhibit (10) to PEA No. 7.

(2) Opinion of counsel with respect to the Large Company Index
Fund and Small Company Index Fund that shares will be
validly issued, fully paid and non-assessable.

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<PAGE>

(j) (1) Consent of Drinker Biddle & Reath LLP.

(2) Consent of PricewaterhouseCoopers LLP.

(3) Consent of Ernst & Young LLP.

(k) None.

(l) (1) Purchase Agreement dated January 8, 1993 between Registrant
and Fleet Investment Advisors Inc. is incorporated herein
by reference to Exhibit (13)(a) to PEA No. 7.

(2) Purchase Agreement dated March 2, 1998 between Registrant
and Fleet Investment Advisors Inc. with respect to the
Small Company Growth Fund and the Growth and Income Fund
is incorporated herein by reference to Exhibit (13)(b)
to PEA No. 7.

(3) Purchase Agreement dated February 27, 1998 between
Registrant and Columbia Management Co. with respect to the
Columbia Real Estate Equity Fund II and the Columbia High
Yield Fund II is incorporated herein by reference to
Exhibit (13)(c) to PEA No. 7.

(4) Form of Purchase Agreement between Registrant and Fleet
Investment Advisors Inc. with respect to the Large Company
Index Fund and Small Company Index Fund.

(m) None.

(o) None.

(p) (1) Code of Ethics - The Galaxy VIP Fund is incorporated herein
by reference to Exhibit (p)(1) to PEA No. 11.

(2) Code of Ethics - Fleet Investment Advisors, Inc. is
incorporated herein by reference to Exhibit (p)(2) to PEA
No. 11.

(3) Code of Ethics - Columbia Management Co. is incorporated
herein by reference to Exhibit (p)(3) to PEA No. 11.

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

Registrant is controlled by its Board of Trustees, the members of
which also serve as members of the Board of Trustees of The Galaxy
Fund and Galaxy Fund II.

ITEM 25. INDEMNIFICATION

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<PAGE>

Indemnification of Registrant's principal underwriter and custodian
against certain losses is provided for, respectively, in Section 1.15
of the Distribution Agreement, incorporated herein by reference as
Exhibit (e)(1), and in Section 12 of the Global Custody Agreement,
incorporated herein by reference as Exhibit (g)(1). Registrant has
obtained from a major insurance carrier a directors' and officers'
liability policy covering certain types of errors and omissions. In
addition, Section 9.3 of Registrant's Agreement and Declaration of
Trust, incorporated herein by reference as Exhibit (a)(1), provides as
follows:

9.3 INDEMNIFICATION OF TRUSTEES, REPRESENTATIVES AND EMPLOYEES.
The Trust shall indemnify each of its Trustees against all
liabilities and expenses (including amounts paid in
satisfaction of judgments, in compromise, as fines and
penalties, and as counsel fees) reasonably incurred by him in
connection with the defense or disposition of any action, suit
or other proceeding, whether civil or criminal, in which he
may be involved or with which he may be threatened, while as a
Trustee or thereafter, by reason of his being or having been
such a Trustee EXCEPT with respect to any matter as to which
he shall have been adjudicated to have acted in bad faith,
willful misfeasance, gross negligence or reckless disregard of
his duties, PROVIDED that as to any matter disposed of by a
compromise payment by such person, pursuant to a consent
decree or otherwise, no indemnification either for said
payment or for any other expenses shall be provided unless the
Trust shall have received a written opinion from independent
legal counsel approved by the Trustees to the effect that if
either the matter of willful misfeasance, gross negligence or
reckless disregard of duty, or the matter of bad faith had
been adjudicated, it would in the opinion of such counsel have
been adjudicated in favor of such person. The rights accruing
to any person under these provisions shall not exclude any
other right to which he may be lawfully entitled, PROVIDED
that no person may satisfy any right of indemnity or
reimbursement hereunder except out of the property of the
Trust. The Trustees may make advance payments in connection
with the indemnification under this Section 9.3, PROVIDED that
the indemnified person shall have given a written undertaking
to reimburse the Trust in the event it is subsequently
determined that he is not entitled to such indemnification.

The Trustees shall indemnify representatives and employees of
the Trust to the same extent that Trustees are entitled to
indemnification pursuant to this Section 9.3.

Insofar as indemnification for liability arising under the Securities
Act of 1933, as amended, may be permitted to trustees, officers and
controlling persons of Registrant pursuant to the foregoing
provisions, or otherwise, Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
Registrant of

- 6 -
<PAGE>

expenses incurred or paid by a trustee, officer or controlling person
of Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person
in connection with the securities being registered, Registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.

Section 9.6 of the Registrant's Agreement and Declaration of Trust,
filed herein as Exhibit (a)(1), also provides for the indemnification
of shareholders of the Registrant. Section 9.6 states as follows:

9.6 INDEMNIFICATION OF SHAREHOLDERS. In case any Shareholder or
former Shareholder shall be held to be personally liable
solely by reason of his being or having been a Shareholder and
not because of his acts or omissions or for some other reason,
the Shareholder or former Shareholder (or his heirs,
executors, administrators or other legal representatives or,
in the case of a corporation or other entity, its corporate or
other general successor) shall be entitled out of the assets
belonging to the classes of Shares with the same alphabetical
designation as that of the Shares owned by such Shareholder to
be held harmless from and indemnified against all loss and
expense arising from such liability. The Trust shall, upon
request by the Shareholder, assume the defense of any claim
made against any Shareholder for any act or obligations of the
Trust and satisfy any judgment thereon from such assets.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS

(1) Fleet Investment Advisors Inc. ("Fleet") is an investment
adviser registered under the Investment Advisers Act of 1940
(the "Advisers Act").

The list required by this Item 26 of officers and directors of
Fleet, together with information as to any business
profession, vocation or employment of a substantial nature
engaged in by such officers and directors during the past two
years is incorporated herein by reference to Schedules A and D
of Form ADV filed by Fleet pursuant to the Advisers Act (SEC
File No. 801-20312).

(2) Columbia Management Co. ("Columbia") is an investment adviser
registered under the Advisers Act.

The list required by this Item 26 of the officers and
directors of Columbia, together with the information as to any
business profession, vocation or employment of a substantial
nature engaged in by such officers and directors during the
past two years is incorporated herein by reference to
Schedules A and D of Form ADV filed by Columbia pursuant to
the Advisers Act (SEC File No. 801-5930).

- 7 -
<PAGE>

ITEM 27. PRINCIPAL UNDERWRITER

(a) In addition to The Galaxy VIP Fund, Provident Distributors, Inc.
(the "Distributor") currently acts as distributor for The Galaxy
Fund, Galaxy Fund II, International Dollar Reserve Fund I, Ltd.,
Provident Institutional Funds Trust, Columbia Common Stock Fund,
Inc., Columbia Growth Fund, Inc., Columbia International Stock
Fund, Inc., Columbia Special Fund, Inc., Columbia Small Cap Fund,
Inc., Columbia Real Estate Equity Fund, Inc., Columbia Balanced
Fund, Inc., Columbia Daily Income Company, Columbia U.S. Government
Securities Fund, Inc., Columbia Fixed Income Securities Fund, Inc.,
Columbia Municipal Bond Fund, Inc., Columbia High Yield Fund, Inc.,
Columbia National Municipal Bond Fund, Inc., GAMNA Series Funds,
Inc., WT Investment Trust, Kalmar Pooled Investment Trust, The RBB
Fund, Inc., Robertson Stephens Investment Trust, Harris Insight
Funds Trust, Alleghany Funds, Deutsche Asset Management VIT Funds,
First Choice Funds Trust, Forward Funds, Inc., IBJ Funds Trust,
Light Index Funds, Inc., LKCM Funds, Matthews International Funds,
McM Funds, Metropolitan West Funds, New Covenant Funds, Inc.,
Pictet Funds, Stratton Growth Fund, Inc., Stratton Monthly Dividend
REIT Shares, Inc., The Stratton Funds, Inc., Trainer, Wortham First
Mutual Funds, Undiscovered Managers Funds, Wilshire Target Funds,
Inc., Weiss, Peck & Greer Funds Trust, Weiss, Peck & Greer
International Fund, WPG Growth and Income Fund, WPG Growth Fund,
WPG Tudor Fund, RWB/WPG U.S. Large Stock Fund, Tomorrow Funds
Retirement Trust, The BlackRock Funds, Inc. (distributed by
BlackRock Distributors, Inc., a wholly-owned subsidiary of the
Distibutor), Northern Funds Trust and Northern Institutional Funds
Trust (distributed by Northern Funds Distributors, LLC, a
wholly-owned subsidiary of the Distibutor), The Offit Investment
Fund, Inc. (distributed by Offit Funds Distributor, Inc., a
wholly-owned subsidiary of the Distibutor), The Offit Variable
Insurance Fund, Inc. (distributed by Offit Funds Distributor, Inc.,
a wholly-owned subsidiary of the Distibutor) and ABN AMRO Funds
(distributed by ABN AMRO Distribution Services (USA), Inc., a
wholly-owned subsidiary of the Distributor).

(b) The information required by this Item 27 (b) with respect to each
director, officer, or partner of the Distributor is incorporated by
reference to Schedule A of Form BD filed by the Distributor with
the Securities and Exchange Commission pursuant to the Securities
Act of 1934 (File No. 8-45467).

- 8 -
<PAGE>

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS

(1) Fleet Investment Advisors Inc., 75 State Street, Boston,
Massachusetts 02109 (records relating to its functions as
investment adviser to Registrant's Money Market, Equity,
Growth and Income, Small Company Growth, Asset Allocation,
High Quality Bond, Large Company Index and Small Company
Index Funds).

(2) Columbia Management Co., 1300 S.W. Sixth Avenue, P.O. Box
1350, Portland, Oregon 97207-1350 (records relating to its
functions as investment adviser to Registrant's Columbia
Real Estate Equity Fund II and Columbia High Yield Fund II).

(3) Provident Distributors, Inc., 3200 Horizon Drive, King of
Prussia, Pennsylvania 19406 (records relating to its
functions as distributor).

(4) PFPC Inc. (formerly known as First Data Investor Services
Group, Inc.), 4400 Computer Drive, Westborough,
Massachusetts 01581-5108 (records relating to its functions
as administrator and transfer agent).

(5) Drinker Biddle & Reath LLP, One Logan Square, 18th and
Cherry Streets, Philadelphia, Pennsylvania 19103
(Registrant's Declaration of Trust, Code of Regulations
and Minute Books).

(6) The Chase Manhattan Bank, 1211 Avenue of the Americas,
New York, New York 10036 (records relating to its functions
as custodian).

ITEM 29. MANAGEMENT SERVICES

Inapplicable.

ITEM 30. UNDERTAKINGS

None.

- 9 -

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, the Registrant
has duly caused this Post-Effective Amendment No. 12 to its Registration
Statement on Form N-1A to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of Warwick, Rhode Island, on
the 6th day of October, 2000.

THE GALAXY VIP FUND
Registrant

/s/ JOHN T. O'NEILL
------------------------------
President
John T. O'Neill

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 12 to the Registration Statement has been signed
below by the following persons in the capacities and on the dates indicated.

Signature Title Date
--------- ----- ----
<S> <C> <C>

/s/ John T. O'neill Trustee, President
------------------- and Treasurer October 6, 2000
John T. O'Neill

*Dwight E. Vicks, Jr. Chairman of the Board
--------------------- of Trustees October 6, 2000
Dwight E. Vicks, Jr.

*Donald B. Miller Trustee October 6, 2000
-----------------
Donald B. Miller

*Louis DeThomasis Trustee October 6, 2000
-----------------
Louis DeThomasis

*Bradford S. Wellman Trustee October 6, 2000
--------------------
Bradford S. Wellman

*James M. Seed Trustee October 6, 2000
--------------
James M. Seed

/s/ John T. O'Neill
-------------------
*By: John T. O'Neill
Attorney-in-Fact

</TABLE>

<PAGE>

THE GALAXY VIP FUND

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby appoints
John T. O'Neill and W. Bruce McConnel, III, and either of them, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in his capacity as
trustee or officer, or both, to execute any and all amendments to the Trust's
Registration Statement on Form N-1A pursuant to the Investment Company Act of
1940, as amended, and the Securities Act of 1933, as amended (the "Acts"),
and all instruments necessary or incidental in connection therewith pursuant
to said Acts and any rules, regulations, or requirements of the Securities
and Exchange Commission in respect thereof, and to file the same with the
Securities and Exchange Commission, and either of said attorneys shall have
full power and authority to do and perform, in the name and on behalf of the
undersigned in any and all capacities, every act whatsoever requisite or
necessary to be done, as fully and to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys,
or either of them, may lawfully do or cause to be done by virtue hereof.

Dates: June 11, 1992. /s/ Dwight E. Vicks, Jr. Trustee
------------------------------------
Dwight E. Vicks, Jr.

<PAGE>

THE GALAXY VIP FUND

POWER OF ATTORNEY

Dates: June 11, 1992. /s/ Donald B. Miller
------------------------------------
Donald B. Miller

<PAGE>

THE GALAXY VIP FUND

POWER OF ATTORNEY

Dates: June 11, 1992. /s/ Brother Louis DeThomasis
------------------------------------
Brother Louis DeThomasis

<PAGE>

THE GALAXY VIP FUND

POWER OF ATTORNEY

Dates: June 11, 1992. /s/ Bradford S. Wellman
------------------------------------
Bradford S. Wellman

<PAGE>

THE GALAXY VIP FUND

POWER OF ATTORNEY

Dates: June 11, 1992. /s/ James M. Seed
------------------------------------
James M. Seed
<PAGE>

EXHIBIT INDEX

EXHIBIT NO. DESCRIPTION

(a) (2) Certificate of Classification of Shares pertaining to Class
A Shares, Class B Shares, Class C Shares and Class D Shares.

(a) (3) Certificate of Classification of Shares pertaining to Class
E Shares, Class F Shares, Class G Shares and Class H Shares.

(a) (4) Certificate of Classification of Shares pertaining to Class
I Shares and Class J Shares.

(d) (3) Form of Addendum No. 2 to Investment Advisory Agreement
between Registrant and Fleet Investment Advisors Inc. with
respect to the Large Company Index Fund and Small Company
Index Fund.

(e) (2) Form of Amendment No. 1 to Distribution Agreement between
Registrant and Provident Distributors, Inc. with respect to
the Large Company Index Fund and Small Company Index Fund.

(g) (3) Form of Amendment to Global Custody Agreement between
Registrant and The Chase Manhattan Bank with respect to the
Large Company Index Fund and Small Company Index Fund.

(h) (6) Form of Amendment No. 5 to Administration Agreement between
Registrant and PFPC Inc. (formerly known as First Data
Investor Services Group, Inc.) with respect to the Large
Company Index Fund and Small Company Index Fund.

(h) (7) Transfer Agency and Services Agreement dated September 7,
2000 between Registrant and PFPC Inc.

(h) (8) Form of Amendment No. 1 to Transfer Agency and Services
Agreement between Registrant and PFPC Inc. with respect to
the Large Company Index Fund and Small Company Index Fund.

(i) (2) Opinion of counsel with respect to the Large Company

<PAGE>

Index Fund and Small Company Index Fund that shares will be
validly issued, fully paid and non-assessable.

(j) (1) Consent of Drinker Biddle & Reath LLP.

(j) (2) Consent of PricewaterhouseCoopers LLP.

(j) (3) Consent of Ernst & Young LLP.

(l) (4) Form of Purchase Agreement between Registrant and Fleet
Investment Advisors Inc. with respect to the Large Company
Index Fund and Small Company Index Fund.

-2-