SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ]Preliminary Proxy Statement
[ ]Confidential,for Use of the Commission Only(as permitted by Rule 14a-6(e)(2))
[X]Definitive Proxy Statement
[ ]Definitive Additional Materials
[ ]Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Keyport Variable Investment Trust
(Name of Registrant as Specified In Its Charter)
Kevin M. Carome
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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5. Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
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KEYPORT VARIABLE INVESTMENT TRUST
(TO BE RENAMED "LIBERTY VARIABLE INVESTMENT TRUST")
COLONIAL-KEYPORT UTILITIES FUND
(TO BE RENAMED "STEIN ROE GLOBAL UTILITIES FUND,
VARIABLE SERIES")
Notice of Special Meeting of Shareholders
November 10, 1997
Dear Shareholder:
PLEASE TAKE NOTICE that a Special Meeting (the "Meeting") of the
shareholders of Colonial-Keyport Utilities Fund (to be renamed "Stein Roe
Global Utilities Fund, Variable Series") (the "Fund"), a series of Keyport
Variable Investment Trust (to be renamed "Liberty Variable Investment Trust")
(the "Trust"), will be held at the office of the Trust, 600 Atlantic Avenue,
24th Floor, Boston, Massachusetts 02110, at 2:00 p.m., Boston time, on Monday,
November 10, 1997 for the following purposes:
1. To approve or disapprove a new sub-advisory agreement, in the form set
forth in Appendix A, among Keyport Advisory Services Corp. (to be renamed
"Liberty Advisory Services Corp."), Stein Roe & Farnham Incorporated and
the Trust, with respect to the Fund.
2. To approve or disapprove the selection of Price Waterhouse LLP as the
independent public accountants of the Fund.
3. To transact such other business as may come before the Meeting and any
adjournments thereof.
Shareholders of record at the close of business on September 30, 1997,
are entitled to notice of and to vote at the Meeting and at any adjournments
thereof.
By order of the Board of Trustees,
Kevin M. Carome
Secretary
YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
PLEASE VOTE, SIGN AND RETURN YOUR PROXY CARD IN THE ENCLOSED POSTAGE-PAID
ENVELOPE IMMEDIATELY.
<PAGE>
KEYPORT VARIABLE INVESTMENT TRUST
(TO BE RENAMED "LIBERTY VARIABLE INVESTMENT TRUST")
COLONIAL-KEYPORT UTILITIES FUND
(TO BE RENAMED "STEIN ROE GLOBAL UTILITIES FUND,
VARIABLE SERIES")
PROXY STATEMENT FOR A SPECIAL MEETING OF
SHAREHOLDERS TO BE HELD ON NOVEMBER 10, 1997
The enclosed proxy, which was first mailed on or about October 13,
1997, is solicited by and on behalf of the Board of Trustees of Keyport
Variable Investment Trust (to be renamed "Liberty Variable Investment Trust")
(the "Trust") to be used at a Special Meeting of shareholders (the "Meeting")
of Colonial-Keyport Utilities Fund (to be renamed "Stein Roe Global Utilities
Fund, Variable Series") (the "Fund") to be held at the office of the Trust, 600
Atlantic Avenue, 24th Floor, Boston, Massachusetts 02110 on Monday, November
10, 1997 at 2:00 p.m., Boston time, and at any adjournment thereof, for the
purposes set forth in the accompanying Notice of Meeting.
Shareholders of record at the close of business on Tuesday, September 30,
1997 will be entitled to one vote for each share held. As of the record date,
there were 4,026,206.513 shares of beneficial interest of the Fund
outstanding, without par value, all of which were owned of record by
sub-accounts of separate accounts ("Separate Accounts") of life insurance
companies (the "Participating Life Insurance Companies") established to fund
benefits under variable annuity contracts and variable life insurance policies
issued by the Participating Insurance Companies. As of this date, all
Participating Insurance Companies are affiliated with Keyport Advisory Services
Corp. (to be renamed "Liberty Advisory Services Corp.") ("KASC"), the adviser
to the Fund ("Affiliated Participating Life Insurance Companies"). As of this
date, such Affiliated Participating Life Insurance Companies are Keyport Life
Insurance Company ("Keyport"), Independence Life & Annuity Company and Liberty
Life Assurance Company of Boston.
The Participating Insurance Companies are mailing copies of this proxy
material to the holders of these contracts and policies who, by completing and
signing the accompanying proxy cards, will instruct the Separate Accounts how
they wish the shares of the Fund to be voted. The Separate Accounts will vote
shares of the Fund as instructed on the proxy cards by their contract or policy
holders. If no instructions are specified on a proxy returned by a contract or
policy holder, the Separate Accounts will vote the shares of the Fund
<PAGE>
represented thereby FOR each of the proposals stated in the accompanying Notice
of Meeting. The Separate Accounts intend to vote shares for which no proxies
are returned in the same proportions as the shares for which instructions are
received. It is expected that proxy solicitations will be made primarily by
mail. KASC or its affiliates, rather than the Fund, will bear all proxy
solicitation costs.
As of the record date, no Trustees or officers of the Trust owned
beneficially or had the right to vote any outstanding shares of the Fund. As of
the record date, to the knowledge of the Fund there were no holders of record
of variable annuity contracts or variable life insurance policies who
beneficially had the right to vote 5% or more of the outstanding shares of the
Fund.
Any contract or policy holder may revoke his or her proxy at any time
before the shares represented thereby are voted by giving written notice of
revocation to the Secretary of the Trust or by proper execution and return of a
later dated proxy.
FURTHER INFORMATION CONCERNING THE TRUST IS CONTAINED IN ITS MOST RECENT
ANNUAL AND/OR SEMI-ANNUAL REPORT TO SHAREHOLDERS, WHICH MAY BE OBTAINED FREE OF
CHARGE BY CONTACTING KEYPORT FINANCIAL SERVICES CORP. AT 125 HIGH STREET,
BOSTON, MASSACHUSETTS 02110, OR CALLING THE SERVICE
HOTLINE AT (800) 367-3653 (OPTION 2).
BACKGROUND
KASC, 125 High Street, Boston, Massachusetts 02110, manages the assets of
the Fund pursuant to a management agreement with the Trust dated June 7, 1993,
as amended as of February 27, 1995, on behalf of the Fund (the "Management
Agreement"). Pursuant to the Management Agreement, KASC provides the Fund with
overall advisory and administrative services, as well as general office
facilities. KASC is an indirect wholly owned subsidiary of Liberty Financial
Companies, Inc. ("Liberty Financial"). Liberty Financial is an asset
accumulation and management company with two core product lines --
retirement-oriented insurance products and investment management products. Its
principal executive offices are located at 600 Atlantic Avenue, 24th Floor,
Boston, Massachusetts 02110. As of the date hereof, Liberty Mutual Insurance
Company ("Liberty Mutual") owned approximately 74% of Liberty Financial's
outstanding voting stock. Liberty Mutual is a Massachusetts-chartered mutual
property and casualty insurance company. The principal business activities of
<PAGE>
Liberty Mutual's subsidiaries other than Liberty Financial are
property-casualty insurance, insurance services and life insurance (including
group life and health insurance products) marketed through its own sales force.
Liberty Mutual's principal executive offices are located at 175 Berkeley
Street, Boston, Massachusetts 02117.
The Management Agreement permits KASC from time to time to engage one or
more sub-advisers to assist in the performance of its services. Pursuant to
such authority, KASC has engaged as sub-adviser Colonial Management Associates,
Inc. ("Colonial"), a Massachusetts corporation and indirect wholly owned
subsidiary of Liberty Financial. Colonial's principal business address is One
Financial Center, Boston, Massachusetts 02111. Colonial, KASC and the Trust
have entered into a sub-advisory agreement dated March 24, 1995 with respect to
the Fund (the "Current Sub-Advisory Agreement"). Under the Current Sub-Advisory
Agreement, Colonial manages the assets of the Fund in accordance with its
investment objective and investment program, policies and restrictions under
the supervision of KASC and the Board of Trustees. The Current Sub-Advisory
Agreement was most recently approved by shareholders of the Fund at a meeting
of shareholders held on February 27, 1995, and became effective on March 24,
1995.
The Management Agreement also permits KASC to delegate some or all of its
administrative duties and responsibilities under the agreement to Liberty
Financial or any of its majority or greater owned subsidiaries.
As more fully described below, the Trustees have approved the
recommendation by KASC and its affiliates to terminate the Current Sub-Advisory
Agreement and, subject to shareholder approval, enter into a new sub-advisory
agreement with Stein Roe & Farnham Incorporated ("Stein Roe"). Stein Roe, whose
principal business address is One South Wacker Drive, Chicago, Illinois 60606,
is a Delaware corporation and an indirect wholly owned subsidiary of Liberty
Financial.
At the same time that the Trustees voted to recommend to the shareholders
that they approve a new sub-advisory agreement with Stein Roe, the Trustees
approved the adoption of a new investment objective for the Fund. Presently,
the Fund's investment objective is to seek primarily current income and
secondarily long-term capital growth. The Fund's new investment objective will
be to seek current income and long term growth of capital and income. The
purpose of this change is to allow the Fund to invest in a broader range of
both debt and equity securities of domestic and foreign utilities companies, as
more fully described below.
<PAGE>
In addition, the Trustees approved the adoption of a new name for the
Fund. This new name, "Stein Roe Global Utilities Fund, Variable Series,"
reflects (i) the proposed relationship with Stein Roe as sub-adviser to the
Fund, and (ii) the adoption of a new investment program which emphasizes
investment in a broad range of debt and equity securities of large, established
utility companies located in at least three developed countries, including the
U.S. A more complete description of the Fund's new investment program is set
forth in Appendix B to this Proxy Statement. The changes in the Fund's name,
investment program and investment objective are not subject to approval by the
Fund's shareholders under any legal or contractual requirement. However, KASC
and its affiliates have determined that all of these changes are contingent
upon approval by the shareholders of the proposed sub-advisory agreement with
Stein Roe.
The Trustees of the Trust also approved a name change with respect to the
Trust, which will be renamed "Liberty Variable Insurance Trust." The change in
the Trust's name is not subject to approval by the shareholders of the Fund or
any other series of the Trust.
These changes in the Fund's name, investment objective and program, and
in the Trust's name, are expected to become effective on November 15, 1997.
These changes, as well as the proposed new sub-advisory agreement between Stein
Roe, KASC and the Trust with respect to the Fund (described below under Item
1), are disclosed in the most recent post-effective amendment to the Trust's
registration statement on Form N-1A, as filed with the Securities and Exchange
Commission (the "SEC") on August 28, 1997.
ITEM 1. APPROVAL OR DISAPPROVAL OF A NEW SUB-ADVISORY
AGREEMENT.
The Trustees of the Trust are proposing that shareholders approve a new
sub-advisory agreement (the "New Sub-Advisory Agreement") among Stein Roe, KASC
and the Trust with respect to the Fund. A description of the New Sub-Advisory
Agreement, the services to be provided thereunder, and the procedures for
termination and renewal is set forth below. The description of the New
Sub-Advisory Agreement provided below is qualified in its entirety by reference
to the form of the New Sub-Advisory Agreement, which is set forth in Appendix A
to this Proxy Statement. Additional information about Stein Roe is set forth
<PAGE>
below under "Other Information." The New Sub-Advisory Agreement was approved by
all the Trustees, including those Trustees (the "Independent Trustees") who are
not "interested persons" or "affiliates" (as defined in the Investment Company
Act of 1940, as amended (the "1940 Act")) of Stein Roe or of any other party to
the New Sub-Advisory Agreement, on August 14, 1997.
KASC and its affiliates recommend that shareholders of the Fund approve
the New Sub-Advisory Agreement for the following reasons: As set forth in the
Trust's current Prospectus, Colonial's investment program for the Fund has
normally involved investing substantially all of the Fund's assets in equity
securities of U.S. utilities companies. KASC and its affiliates believe that
certain general and competitive market forces affecting utilities companies,
including increased competition due to deregulation, make it advisable for a
utilities fund to have the flexibility to invest without limit in foreign
utilities companies and to invest up to 35% of the Fund's assets in equity
securities of any type and investment grade debt securities that are not issued
by utilities companies (see the description of the Fund's proposed new
investment program set forth in Appendix B to this Proxy Statement). Having
made this determination, KASC and its affiliates next determined that Stein Roe
is the appropriate entity to manage such investment program. KASC and its
affiliates made the latter determination in light of the performance of the
Global Utilities Trust, which is managed by Stein Roe in accordance with the
same investment objective and investment program that are proposed for the
Fund. The Trustees have approved these recommendations made by KASC and its
affiliates.
DESCRIPTION OF NEW SUB-ADVISORY AGREEMENT
The New Sub-Advisory Agreement is identical in all material respects to
the Current Sub-Advisory Agreement except for the identity of the sub-adviser,
its date of effectiveness and termination, and as set forth in this paragraph.
The New Sub-Advisory Agreement provides that Stein Roe shall not seek
<PAGE>
satisfaction of any obligations assumed by the Trust pursuant to the agreement
from the shareholders of the Funds, nor from the Trustees or any individual
Trustee of the Trust. Unlike the New Sub-Advisory agreement, the Current
Sub-Advisory Agreement does not contain any such provisions limiting the
sub-adviser's recourse regarding obligations assumed by the Trust pursuant to
that agreement.
The New Sub-Advisory Agreement, if approved by the vote of the holders of
a "majority of the outstanding voting securities" (as such term is defined
below) of the Fund, will become effective upon such approval. The compensation
payable to Stein Roe under the New Sub-Advisory Agreement will be the same as
that payable to Colonial under the Current Sub-Advisory Agreement. Under the
New Sub-Advisory Agreement, KASC, out of the management fees it receives from
the Trust, will pay Stein Roe a monthly fee for its services at the annual
percentage rate of 0.45% of the Fund's average daily net assets as determined
at the close of each business day during the month.
Net fees accrued to Colonial for sub-advisory services provided pursuant
to the Current Sub-Advisory Agreement for the last completed fiscal year of the
Fund ended December 31, 1996 were $218,730. Neither Colonial nor any affiliated
person of Colonial, nor any affiliated person of any such person, received any
other fees from the Trust for services provided to the Fund during the fiscal
year of the Fund ended December 31, 1996. There were no other material payments
by the Trust to Colonial, or any affiliated person of Colonial, during the
fiscal year of the Fund ended December 31, 1996. As of June 30, 1997, the Fund
had total net assets of approximately $47,230,000.
Under the New Sub-Advisory Agreement, subject to the supervision of KASC
and the Trustees, Stein Roe will manage the assets of the Fund in accordance
with its investment objective, policies and limitations set forth in the
Trust's prospectus and statement of additional information, purchase and sell
securities and other investments on behalf of the Fund, and report results to
KASC and the Trustees.
The New Sub-Advisory Agreement provides that it will continue in effect
until June 7, 1999, and thereafter so long as it is approved annually in
accordance with the 1940 Act. (The 1940 Act requires that, after an initial
term not exceeding two years, an advisory agreement be approved at least
annually by (i) the vote, cast in person at a meeting called for that specific
purpose, of a majority of the Independent Trustees and (ii) the majority vote
of the full Board of Trustees or the vote of a majority of the outstanding
voting securities (as defined in the 1940 Act) of the Fund.) The New
Sub-Advisory Agreement terminates automatically in the event of its assignment,
and may be terminated without penalty by Stein Roe or the Fund on sixty days'
written notice to the other party. In addition, unless otherwise permitted by
the 1940 Act, the New Sub-Advisory Agreement may be amended only by the
affirmative vote of the holders of a "majority of the outstanding voting
securities" of the Fund.
Under the New Sub-Advisory Agreement, Stein Roe shall not be subject to
any liability to the Trust, the Fund, any shareholder of the Trust or the Fund
or any other person, firm or organization, for any act or omission in the
course of, or connected with, rendering services thereunder, in the absence of
<PAGE>
willful misfeasance, bad faith or gross negligence on the part of Stein Roe, or
reckless disregard of its obligations and duties thereunder.
CERTAIN INFORMATION CONCERNING STEIN ROE
At June 30, 1997, total assets under management by Stein Roe for clients
that are managed in a similar manner as the Fund is expected to be managed by
Stein Roe were approximately $179 million, all of which were assets of
registered investment companies. Subject to the required approval by
shareholders of the Fund, Ophelia Barsketis and Deborah A. Jansen are expected
to co-manage the Fund. Mss. Barsketis and Jansen currently co-manage the Global
Utilities Trust, an open-end registered investment company whose investment
objectives and policies are substantially identical to those proposed for the
Fund. Ms. Barsketis is currently Senior Vice President of Stein Roe. Ms.
Barsketis joined Stein Roe in 1983 and progressed through a variety of equity
analyst positions before assuming her current responsibilities. Ms. Jansen is
Vice President and Senior Research Analyst for global and domestic equities and
global economic forecasting for Stein Roe. Ms. Jansen joined Stein Roe in 1987
and served as an associate economist and senior economist before assuming her
current responsibilities. Ms. Jansen left Stein Roe in January, 1995 and
returned to her position as Vice President in March, 1996. From June 5, 1995 to
June 30, 1995, Ms. Jansen was a Senior Research Equity Analyst for BancOne
Investment Advisers Corporation.
With regard to other investment companies having a similar investment
objective as the Fund for which Stein Roe serves as an investment adviser or
sub-adviser, the following table sets forth the fee paid by each such
investment company to Stein Roe or its affiliates (expressed as an annual
percentage of average daily net assets) and the net assets of the investment
company:
Total Net Assets as
Fund Annual Fee of 12/31/96 (in Millions)
Global Utilities Trust (1) $175,962,993
------------
(1) 0.55% on the first $400 million of average net assets and 0.50% on
assets in excess of $400 million.
<PAGE>
THE EVALUATION BY THE BOARD OF TRUSTEES
The Board of Trustees of the Trust authorized the termination of the
Current Sub-Advisory Agreement and approved the New Sub-Advisory Agreement at a
meeting held on August 14, 1997.
At that meeting, the Trustees reviewed all materials provided by KASC,
Stein Roe and their affiliates, and requested and received all information
which they deemed relevant to form a judgment as to whether the New
Sub-Advisory Agreement was in the best interests of the Fund and its
shareholders. The Trustees noted that Stein Roe was the appropriate entity to
manage the Fund in light of proposed changes to the Fund's investment objective
and program. The Trustees considered the nature and quality of services
expected to be provided by Stein Roe and reviewed and discussed information
regarding fees, expense ratios and performance. In evaluating Stein Roe's
ability to provide services to the Fund, the Trustees considered information as
to Stein Roe's business organization, financial resources, personnel and other
matters, including the management responsibilities of Ophelia Barsketis and
Deborah A. Jansen with respect to the Global Utilities Trust, and their
specialized experience and success as analysts and portfolio managers. The
Trustees compared the investment performance of certain accounts advised by
Stein Roe having investment objectives similar to the Fund as compared to
various benchmarks and to the investment performance of the Fund's assets as
managed by Colonial. The Trustees also noted that the sub-advisory fees would
not change under the New Sub-Advisory Agreement, and that the Fund would not be
subjected to any unfair burden as a result of the transition to a new
sub-adviser.
The Board of Trustees were also presented with information regarding the
circumstances in which best price and execution may be obtained from more than
one broker or dealer, and whether Stein Roe may, in its discretion, purchase
and sell securities through dealers who provide research, statistical and other
information to Stein Roe. Although certain research, market and statistical
information from brokers and dealers can be useful to the Fund and Stein Roe,
Stein Roe has advised that such information is, in its opinion, only
supplementary to Stein Roe's own research activities and the information must
still be analyzed, weighed and reviewed by Stein Roe. It was noted that such
information may be useful to Stein Roe in providing services to clients other
than the Fund. Conversely, it was noted such information provided to Stein Roe
by brokers and dealers through whom other clients of Stein Roe effect
securities transactions may be useful to Stein Roe in providing services to the
Fund.
<PAGE>
Based upon its review, the Board of Trustees concluded that (i) Stein Roe
is the appropriate entity to manage the Fund in light of its revised investment
objective and program, (ii) the New Sub-Advisory Agreement is reasonable, fair
and in the best interests of the Fund and its shareholders, and (iii) the fees
provided in the New Sub-Advisory Agreement are fair and reasonable in light of
the usual and customary charges made by others for services of the same nature
and quality. Accordingly, after consideration of the above factors, and such
other factors and information as it deemed relevant, the Board of Trustees,
including the Independent Trustees voting separately, unanimously approved the
New Sub-Advisory Agreement. The Board of Trustees, including the Independent
Trustees voting separately, also voted to recommend approval of the New
Sub-Advisory Agreement by the shareholders of the Fund.
REQUIRED VOTE
Approval of the New Sub-Advisory Agreement will require the affirmative
vote of a "majority of the outstanding voting securities" of the Fund (as
defined in the 1940 Act), which means the affirmative vote of the lesser of (i)
more than 50% of the outstanding shares of the Fund or (ii) 67% or more of the
shares of the Fund present at the Meeting, if more than 50% of the outstanding
shares of the Fund are represented at the Meeting in person or by proxy. If the
shareholders of the Fund do not approve the New Sub-Advisory Agreement, the
Trustees will take such further action as they may deem to be in the best
interests of the Fund's shareholders. For example, the Trust on behalf of the
Fund could negotiate a new sub-advisory agreement with a different advisory
organization, retain the Current Sub-Advisory Agreement with Colonial, or make
other appropriate arrangements, in either event subject to any required
approval by shareholders in accordance with the 1940 Act.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS OF THE FUND VOTE TO
APPROVE THE NEW SUB-ADVISORY AGREEMENT.
ITEM 2. APPROVAL OR DISAPPROVAL OF INDEPENDENT PUBLIC
ACCOUNTANTS
The Trustees of the Trust are proposing that shareholders ratify the
selection under Section 32(a) of the 1940 Act, by a majority of the Trustees
who are not "interested persons" (as that term is defined in the 1940 Act) of
the Trust, of Price Waterhouse LLP as independent public accountants, to
<PAGE>
certify every financial statement of the Fund required by any law or regulation
to be certified by independent public accountants and filed with the SEC in
respect of all or any part of the fiscal year of the Fund ending December 31,
1997. Price Waterhouse LLP has no direct or material indirect interest in the
Fund.
Price Waterhouse LLP has served as the Fund's independent certified public
accountants since the Fund's commencement of operations on July 1, 1993,
providing audit services and consultation with respect to the preparation of
filings with the SEC. Representatives of Price Waterhouse LLP are not expected
to be present at the Meeting.
REQUIRED VOTE
Ratification of the selection of Price Waterhouse LLP as the independent
certified public accountants of the Fund will require the affirmative vote of a
"majority of the outstanding voting securities" of the Fund (as defined in the
1940 Act), present in person or represented by proxy at the Meeting.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS OF THE FUND VOTE TO
RATIFY THE SELECTION OF PRICE WATERHOUSE LLP AS INDEPENDENT PUBLIC ACCOUNTANTS
FOR THE FUND.
OTHER INFORMATION
KASC, COLONIAL AND STEIN ROE. KASC is a wholly-owned subsidiary of
Keyport, which in turn is a wholly-owned subsidiary of SteinRoe Services Inc.,
which in turn is a wholly-owned subsidiary of Liberty Financial. The directors
of KASC are John W. Rosensteel, John E. Arant, III and Paul H. LeFevre, Jr. Mr.
Rosensteel is also the principal executive officer of KASC and a director of
Keyport Financial Services Corp., the principal underwriter for shares of the
Trust with respect to sales of shares to Affiliated Participating Life
Insurance Companies. The address of each such person is 125 High Street,
Boston, Massachusetts 02110.
Colonial is a wholly-owned subsidiary of The Colonial Group, Inc., which
in turn is a wholly-owned subsidiary of Liberty Financial. The directors of
Colonial are Bonny E. Boatman, Sheila A. Carroll, Harold W. Cogger, Carl C.
Ericson, C. Frazier Evans, Stephen E. Gibson, Donald S. MacKinnon, Michael H.
Koonce, Jeffrey L. McGregor, Helen Frame Peters, Daniel Rie and Davey S. Scoon.
<PAGE>
Mr. Gibson is also the principal executive officer of Colonial. The address of
each such person is One Financial Center, Boston, Massachusetts 02111.
Stein Roe is a wholly-owned subsidiary of SteinRoe Services Inc., which in
turn is a wholly-owned subsidiary of Liberty Financial. The directors of Stein
Roe are Kenneth R. Leibler, C. Allen Merritt, Jr., Hans P. Ziegler, Timothy K.
Armour and Harold W. Cogger. Mr. Ziegler is also the principal executive
officer of Stein Roe. The address of each such person is One South Wacker
Drive, Chicago, Illinois 60606.
The principal occupation of each director and the principal executive
officer of each of KASC, Colonial and Stein Roe is as a director and/or officer
of, respectively, KASC, Colonial, or Stein Roe and/or various of their
respective affiliated companies.
The following Trustees or officers of the Trust also serve as directors
and/or officers of KASC, Colonial or Stein Roe or of companies controlling,
controlled by or under common control with KASC, Colonial or Stein Roe:
<TABLE>
<CAPTION>
POSITION WITH KASC,
POSITION WITH COLONIAL, STEIN ROE
PERSON THE TRUST OR THEIR AFFILIATES
<S> <C> <C>
Richard R. Christensen President and Trustee President, Liberty Asset
Management Company
("LAMCO")
Timothy J. Jacoby Treasurer and Chief Financial
Officer Senior Vice President and Chief
Financial Officer, Colonial.
Peter L. Lydecker Controller and Chief Accounting
Officer Vice President, Colonial
Daniel Rie Vice President Senior Vice President, Colonial
John E. Lennon Vice President Vice President, Colonial
Michael H. Koonce Vice President Director, Senior Vice President
and General Counsel. Colonial
Carl C. Ericson Vice President Senior Vice President, Colonial
Ophelia Barsketis Vice President Senior Vice President, Stein Roe
Deborah A. Jansen Vice President Vice President and Senior
Research Analyst, Stein Roe
William R. Parmentier, Jr. Vice President Chief Investment Officer,
LAMCO
Christopher S. Carabell Vice President Vice President, Investments,
LAMCO
John A. Benning Assistant Secretary Senior Vice President and
General Counsel, Liberty
Financial
Kevin M. Carome Secretary Vice President and Associate
General Counsel, Liberty
Financial
</TABLE>
No Trustee or officer of the Trust who is not a director or officer of
KASC, Colonial or Stein Roe owns securities or has any other material direct or
<PAGE>
indirect interest in KASC, Colonial or Stein Roe or any other person
controlling, controlled by or under common control with KASC, Colonial or Stein
Roe. Since January 1, 1997, none of the Trustees of the Trust has had any
direct or indirect material interest in any material transaction, or in any
material proposed transaction, to which (i) KASC, Colonial or Stein Roe, (ii)
any affiliated person of KASC, Colonial or Stein Roe who controls KASC,
Colonial or Stein Roe either directly or indirectly through one or more
intermediaries, or (iii) any subsidiary of any such affiliated person of KASC,
Colonial or Stein Roe, was or is to be a party.
PRINCIPAL UNDERWRITER. Keyport Financial Services Corp. ("KFSC"), 125 High
Street, Boston, Massachusetts 02110, serves as principal underwriter to the
Trust with respect to sales of shares to Affiliated Participating Life
Insurance Companies. KFSC is a wholly owned subsidiary of Keyport.
OTHER MATTERS AND DISCRETION OF ATTORNEYS NAMED IN THE PROXY
As of this date, only the business mentioned in Items 1 and 2 of the
Notice of the Meeting is contemplated to be presented at the Meeting. If any
other matters properly come before the Meeting, the enclosed proxy shall be
voted in accordance with the best judgment of the proxy holders.
The Trust is a Massachusetts business trust and does not hold annual
meetings of shareholders of the Fund. Shareholder proposals for inclusion in
the Fund's proxy statement for any subsequent shareholder meetings must be
received by the Fund a reasonable period of time prior to any such meeting.
For the most recently completed fiscal year of the Fund ended December
31, 1996, no brokerage commissions with respect to the Fund's portfolio
transactions were paid to any broker that (i) is an affiliated person of the
Fund, or (ii) is affiliated with any such person described in clause (i) of
this paragraph, or (iii) an affiliated person of which is an affiliated person
of the Fund, KASC, Colonial, or the principal underwriter of the Trust.
Reports, proxy statements and other information have been filed with the
SEC and may be inspected and copied at the SEC's public reference room, 450
Fifth Street, N.W., Washington, D.C. 20549. Copies of such material can also be
obtained from the Public Reference Branch, Office of Consumer Affairs and
Information Services, Securities and Exchange Commission, Washington, D.C.
20549, at prescribed rates.
<PAGE>
SHAREHOLDERS ARE URGED TO VOTE, SIGN AND MAIL THEIR PROXIES IMMEDIATELY.
By Order of the Board of Trustees,
Kevin M. Carome, Secretary
October 13, 1997
<PAGE>
APPENDIX A
STEIN ROE GLOBAL UTILITIES FUND, VARIABLE SERIES
STEIN ROE SUB-ADVISORY AGREEMENT
AGREEMENT dated as of November 15, 1997 among LIBERTY VARIABLE INVESTMENT
TRUST, a Massachusetts business trust (the "Trust"), with respect to STEIN ROE
GLOBAL UTILITIES FUND, VARIABLE SERIES (the "Fund"), LIBERTY ADVISORY SERVICES
CORP., a Massachusetts corporation ("Adviser"), and STEIN ROE & FARNHAM
INCORPORATED, a Delaware corporation (the "Sub-Adviser").
In consideration of the promises and covenants herein, the parties agree
as follows:
1. The Sub-Adviser will manage the investment of the assets of the Fund
in accordance with its investment objective, policies and limitations set forth
in the Trust's prospectus and statement of additional information, as amended
from time to time, and will perform the other services herein set forth,
subject to the supervision of the Adviser and the Board of Trustees of the
Trust.
2. In carrying out its investment management obligations, the
Sub-Adviser shall:
(a) evaluate such economic, statistical and financial information and
undertake such investment research as it shall believe advisable;
(b) purchase and sell securities and other investments for the Fund in
accordance with the procedures described in the Trust's prospectus and
statement of additional information; and
(c) report results to the Adviser and to the Board of Trustees.
3. The Sub-Adviser shall be free to render similar services to others so
long as its services hereunder are not impaired thereby.
4. The Adviser shall pay the Sub-Adviser a monthly fee at the annual rate
of 0.45% of the average daily net assets of the Fund for managing the
investment of the assets of the Fund as provided in paragraph 1 above. Such fee
shall be paid in arrears on or before the 10th day of the next following
calendar month.
<PAGE>
5. This Agreement shall become effective on the date first written above,
and (a) unless otherwise terminated, shall continue until June 7, 1999 and from
year to year thereafter so long as approved annually in accordance with the
1940 Act; (b) may be terminated without penalty on sixty days' written notice
to the Sub-Adviser either by vote of the Board of Trustees of the Trust or by
vote of a majority of the outstanding voting securities of the Fund; (c) shall
automatically terminate in the event of its assignment; and (d) may be
terminated without penalty by the Sub-Adviser on sixty days' written notice to
the Trust.
6. This Agreement may be amended in accordance with the 1940 Act.
7. For the purpose of the Agreement, the terms "vote of a majority of the
outstanding shares," "affiliated person" and "assignment" shall have their
respective meanings defined in the 1940 Act and exemptions and interpretations
issued by the Securities and Exchange Commission under the 1940 Act.
8. In the absence of willful misfeasance, bad faith or gross negligence
on the part of the Sub-Adviser, or reckless disregard of its obligations and
duties hereunder, the Sub-Adviser shall not be subject to any liability to the
Trust or the Fund, to any shareholder of the Trust or the Fund or to any other
person, firm or organization, for any act or omission in the course of or
connection with rendering services hereunder.
9. The Fund may use the name "Stein Roe," or any other name derived from
the name "Stein Roe," only for so long as this Agreement or any extension,
renewal, or amendment hereof remains in effect, including any similar agreement
with any organization that shall have succeeded to the business of the
Sub-Adviser, so long as such organization is a majority or greater owned
subsidiary of Liberty Financial Companies, Inc. At such time as this Agreement
or any extension, renewal or amendment hereof, or each such other similar
successor organization agreement shall no longer be in effect, the Fund will
cease to use any name derived from the name "Stein Roe," any name similar
thereto, or any other name indicating that it is advised by or otherwise
connected with the Sub-Adviser, or with any organization which shall have
succeeded to the Sub-Adviser's business as an investment adviser.
10. The Sub-Adviser is hereby expressly put on notice of the limitation
of shareholder liability as set forth in the Declaration of Trust of the Trust
and agrees that obligations assumed by the Trust pursuant to this Agreement
<PAGE>
shall be limited in all cases to the assets of the Fund. The Sub-Adviser
further agrees that it shall not seek satisfaction of any such obligation from
the shareholders of the Fund, nor from the Trustees or any individual Trustee
of the Trust.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
STEIN ROE GLOBAL UTILITIES FUND, VARIABLE SERIES
By: LIBERTY VARIABLE INVESTMENT TRUST
By:
Title:
STEIN ROE & FARNHAM INCORPORATED
By:
Title:
LIBERTY ADVISORY SERVICES CORP.
By:
Title:
<PAGE>
APPENDIX B
PROPOSED NEW INVESTMENT OBJECTIVE AND INVESTMENT PROGRAM OF
THE COLONIAL-KEYPORT UTILITIES FUND (THE "FUND")
(TO BE RENAMED "STEIN ROE GLOBAL UTILITIES FUND, VARIABLE SERIES")
INVESTMENT OBJECTIVE. The Fund seeks current income and long-term growth
capital and income.
INVESTMENT PROGRAM. The Fund normally invests at least 65% of its total assets
in U.S. and foreign equity and debt securities of companies engaged in the
manufacture, production, generation, transmission, sale or distribution of
electricity, natural gas or other types of energy, or water or other sanitary
services, and companies engaged in telecommunications, including telephone,
telegraph, satellite, microwave and other communications media (but not
companies primarily engaged in public broadcasting, print media or cable
television) ("Utility Companies"). The Fund will invest primarily in securities
of large, established Utility Companies located in developed countries,
including the U.S. The Fund may invest without limit in foreign securities. The
Fund normally will invest in securities issued by companies located in at least
three other countries including the U.S. Up to 35% of the Fund's total assets
may be invested in equity securities of any type and investment grade debt
securities that are not issued by Utility Companies. Because the Fund
concentrates its investments in securities of Utility Companies, an investment
in the Fund may entail more risk than an investment in a more diversified
portfolio.
Equity securities purchased by the Fund generally include common and preferred
stock, warrants (rights) to purchase such stock, debt securities convertible
into such stock, and structured and unstructured American Depositary Receipts
(receipts issued in the U.S. by banks or trust companies evidencing ownership
of underlying foreign securities). At least 20% of the Fund's total assets will
be invested in equity securities of Utility Companies.
Debt securities purchased by the Fund generally include securities of any
maturity that pay fixed, floating or adjustable interest rates. The Fund may
invest in zero-coupon bonds and pay-in-kind securities.
The debt securities in which the Fund invests will be rated at the time of
investment at least Baa by Moody's Investors Service ("Moody's") or BBB by
Standard & Poor's Corporation ("S&P") or will be unrated but considered by
Stein Roe to be of comparable credit quality. Such securities will not
necessarily be sold if the rating is subsequently reduced unless any such
downgrade would cause the Fund to hold more than 5% of its total assets in debt
<PAGE>
securities rated below investment grade. Debt securities rated BBB or Baa have
speculative characteristics, and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity of the issuers of
such securities to make principal and interest payments than would likely be
the case with investments in securities with higher credit ratings.
The values of debt securities generally fluctuate inversely with changes in
interest rates. This is less likely to be true for adjustable or floating rate
securities, since interest rate changes are more likely to be reflected in
changes in the rates paid on the securities. However, reductions in interest
rates may also translate into lower return.
The values of securities issued by Utility Companies are especially affected by
changes in prevailing interest rate levels (as interest rates increase, the
values of Utility Company securities tend to decrease, and vice versa), as well
as by general competitive and market forces in the utility industries, changes
in federal and state regulation, energy conservation efforts and other
environmental concerns and, particularly with respect to nuclear facilities,
shortened economic life and cost overruns. Certain utilities, especially gas
and telephone utilities, have in recent years been affected by increased
competition, which could adversely affect the profitability of such utilities.
Similarly, the profitability of certain electric utilities may in the future be
adversely affected by increased competition resulting from partial
deregulation.
The Fund may purchase and sell (i) U.S. and foreign stock and bond index
futures contracts, (ii) U.S. and foreign interest rate futures contracts and
(iii) options on any of the foregoing. Such transactions will be entered into
(x) for hedging purposes or (y) to gain exposure to a particular market pending
investment in individual securities. The Fund also may purchase and sell
options on individual securities for hedging purposes. The Fund will purchase
and sell such derivative securities only with respect to securities it may
otherwise purchase or indices composed of such securities.
<PAGE>
BY SIGNING AND DATING THIS CARD, YOU AUTHORIZE THE PROXIES TO VOTE EACH
PROPOSAL AS MARKED, OR, IF NOT MARKED, TO VOTE "FOR" EACH PROPOSAL AND TO USE
THEIR DISCRETION TO VOTE ON ANY OTHER MATTER THAT MAY COME BEFORE THE SPECIAL
MEETING. IF YOU DO NOT INTEND PERSONALLY TO ATTEND THE SPECIAL MEETING, PLEASE
COMPLETE AND MAIL THIS CARD AT ONCE IN THE ENCLOSED ENVELOPE.
KEYPORT VARIABLE INVESTMENT TRUST
(TO BE RENAMED "LIBERTY VARIABLE INVESTMENT TRUST")
COLONIAL-KEYPORT UTILITIES FUND
(TO BE RENAMED "STEIN ROE GLOBAL UTILITIES FUND, VARIABLE SERIES")
PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR A MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 10, 1997
THE UNDERSIGNED HEREBY APPOINTS RICHARD R. CHRISTENSEN, BERNARD R.
BECKERLEGGE, JAMES J. KLOPPER, KEVIN M. CAROME AND JOHN A. BENNING, AND EACH
OF THEM, PROXIES OF THE UNDERSIGNED, WITH POWER OF SUBSTITUTION, TO VOTE AT THE
SPECIAL MEETING OF SHAREHOLDERS OF COLONIAL-KEYPORT UTILITIES FUND (TO BE
RENAMED STEIN ROE GLOBAL UTILITIES FUND, VARIABLE SERIES) (THE "FUND") TO BE
HELD AT 2:00 P.M. ON MONDAY, NOVEMBER 10, 1997 AT 600 ATLANTIC AVENUE, BOSTON,
MASSACHUSETTS, AND AT ANY ADJOURNMENTS THEREOF, AS FOLLOWS:
1 TO APPROVE A NEW SUB-ADVISORY AGREEMENT WITH RESPECT TO THE FUND AMONG
KEYPORT ADVISORY SERVICES CORP., STEIN, ROE & FARNHAM AND KEYPORT VARIABLE
INVESTMENT TRUST (TO BE RENAMED "LIBERTY VARIABLE INVESTMENT TRUST") (ITEM
1 OF THE NOTICE).
FOR AGAINST ABSTAIN
2 TO APPROVE THE SELECTION OF PRICE WATERHOUSE LLP AS THE INDEPENDENT
PUBLIC ACCOUNTANTS OF THE FUND (ITEM 2 OF THE NOTICE).
FOR AGAINST ABSTAIN
3 IN THEIR DISCRETION, UPON SUCH OTHER BUSINESS AS MAY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.
SIGNATURE SIGNATURE(JOINT OWNERS) DATE
PLEASE SIGN NAME OR NAMES EXACTLY AS PRINTED ABOVE TO AUTHORIZE
THE VOTING OF YOUR SHARES AS INDICATED ABOVE. WHERE SHARES ARE
REGISTERED WITH JOINT OWNERS, ALL JOINT OWNERS SHOULD SIGN.
PERSONS SIGNING AS EXECUTORS, ADMINISTRATORS, TRUSTEES, ETC.
SHOULD SO INDICATE. CORPORATE PROXIES SHOULD BE SIGNED BY AN
AUTHORIZED OFFICER.
