File No. 33-59216
File No. 811-07556
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. 13 [X]
and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 14 [X]
(check appropriate box or boxes)
LIBERTY VARIABLE INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
Federal Reserve Plaza, 600 Atlantic Avenue,
Boston, Massachusetts 02210
Registrant's Telephone Number Including Area Code: (617) 722-6000
JOHN A. BENNING, ESQ.
Senior Vice President and General Counsel
Liberty Financial Companies, Inc.
Federal Reserve Plaza, 600 Atlantic Avenue
(Name and Address of Agent for Service)
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Approximate Date of Proposed Public Offering:
It is proposed that this filing become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[ ] on ____________ pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(i) of Rule 485
[ ] on ____________ pursuant to paragraph (a)(i) of Rule 485
[X] 75 days after filing pursuant to paragraph (a)(2) of Rule 485
[ ] on ____________ pursuant to paragraph (a)(ii) of Rule 485
An indefinite number of shares of beneficial interest of all existing and
subsequently created series of the Trust under the Securities Act of 1933 were
registered by the Registration Statement filed on March 8, 1993 under the
Securities Act of 1933 pursuant to Rule 24f-2.
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LIBERTY VARIABLE INVESTMENT TRUST
[SoGen] Overseas Fund, Variable Series (the "Overseas Fund")
CROSS REFERENCE SHEET
(as required by Rule 481(a))
PART A
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FORM N-1A LOCATION
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1. Cover Page Cover Page
2. Synopsis The Trust
3. Condensed Financial Information Financial Highlights; Other Considerations:
Investment Return
4. General Description of Registrant Cover Page; The Trust
5. Management of the Fund Trust Management Organizations
5A. Management's Discussion of Fund Information required by Item 5A is included in
Performance the Annual Report for the year ended December 31, 1997
of Registrant's predecessor. As required by said Item 5,
the Registrant undertakes under "Financial Highlights"
in the Prospectus to provide a copy of said Annual Report
free of charge to persons requesting the same.
6. Capital Stock and Other Securities The Trust; Other Considerations: Purchases
and Redemptions, Net Asset Value, Distributions,
Taxes, Shareholder Communications, Organization,
Meetings and Voting Rights
7. Purchase of Securities Being Offered Other Considerations: Purchases and Redemptions,
Net Asset Value
8. Redemption or Repurchase Other Considerations: Purchases and Redemptions
9. Pending Legal Proceedings Not Applicable
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PART B
FORM N-1A LOCATION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History More Facts About the Trust: Mixed and Shared Funding,
Organization; History
13. Investment Objectives and Policies Investment Objective, Policies and Restrictions
14. Management of the Fund Investment Management and Other Services; More Facts
About the Trust: Trustees and Officers
15. Control Persons and Principal More Facts About the Trust: Principal
Holders of Securities Holders of Securities
16. Investment Advisory and Other Investment Management and Other Services;
Services More Facts About the Trust: Custodian,
Independent Accountants and Financial Statements
17. Brokers Allocation and Other Other Considerations:
Practices Portfolio Transactions
18. Capital Stock and Other Securities Other Considerations: Expenses of the Funds,
Purchases and Redemptions, Net Asset Value (Part A)
19. Purchase, Redemption and Pricing Other Considerations: Purchases and Redemptions, Net
of Securities Being Offered Asset Value (Part A)
20. Tax Status Other Considerations: Taxes
(Part A)
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21. Underwriters Other Considerations: Purchases and Redemptions (Part A)
22. Calculation of Performance Data Investment Performance
23. Financial Statements The financial statements required by item 23 with respect
to the Overseas Fund are incorporated by reference to
the December 31, 1997 Annual Report and the June 30, 1998
Semi-Annual Report of the Overseas Fund's predecessor, SoGen
Variable Overseas Fund.
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PART C
Information required to be set forth in Part C is set forth under the
appropriate item, so numbered, in Part C of the Registration Statement.
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PROSPECTUS
LIBERTY VARIABLE INVESTMENT TRUST
[SOGEN] OVERSEAS FUND, VARIABLE SERIES
January __, 1999
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NOT
May lose value
FDIC-
No bank guarantee
INSURED
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[SOGEN] OVERSEAS FUND, VARIABLE SERIES
Federal Reserve Plaza
600 Atlantic Avenue
Boston, Massachusetts 02210
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[SoGen] Overseas Fund, Variable Series (the "Fund") is one of ten separate
portfolios of Liberty Variable Investment Trust (the "Trust"), an open-end
management investment company that offers its shares only as pooled funding
vehicles for variable annuity contracts ("VA Contracts") and Variable Life
Insurance Policies ("VLI Policies") of participating insurance companies. The
Trust may add or delete Funds from time to time.
The Fund seeks long-term growth of capital by investing primarily in securities
of small and medium size non-U.S. companies. There is no assurance that the
Fund will achieve its objective.
The Fund's investment advisor is [Societe Generale] Asset Management Corp.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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This Prospectus contains information about the Fund that a prospective investor
should know before applying for certain variable annuity contracts and variable
life insurance policies offered by separate accounts of insurance companies
investing in the Trust. Please read it carefully and retain it for future
reference.
Additional facts about the Funds are included in a Statement of Additional
Information dated January __, 1999, incorporated herein by reference, which has
been filed with the Securities and Exchange Commission. For a free copy write
to Keyport Financial Services Corp. at 125 High Street, Boston, Massachusetts
02110 or other broker-dealers offering the variable annuity contracts and
variable life insurance policies of Participating Insurance Companies (as such
term is defined in this Prospectus).
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THIS PROSPECTUS MUST BE ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE APPROPRIATE
VA CONTRACTS OR VLI POLICIES OF THE APPLICABLE PARTICIPATING INSURANCE COMPANY.
BOTH PROSPECTUSES SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
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The date of this Prospectus is January __, 1999
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TABLE OF CONTENTS
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THE TRUST ........................................... 3
FINANCIAL HIGHLIGHTS ................................ 4
INVESTMENT OBJECTIVE AND POLICIES ................... 5
INVESTMENT RESTRICTIONS ............................. 5
IMPLEMENTATION OF POLICIES AND RISKS ................ 5
TRUST MANAGEMENT ORGANIZATIONS ...................... 8
The Trustees ....................................... 8
The Manager: Liberty Advisory Services Corp.
(LASC) .......................................... 8
The Sub-Advisor: [Societe Generale] Asset
Management Corp. ................................ 8
TRUST SERVICE ORGANIZATIONS ......................... 8
Custodian .......................................... 8
Independent Accountants ............................ 8
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OTHER CONSIDERATIONS ................................ 9
Expenses of the Fund ............................... 9
Portfolio Transactions ............................. 9
Rule 12B-1 Plan .................................... 9
Year 2000 .......................................... 9
Purchases and Redemptions .......................... 10
Investment Return .................................. 10
Net Asset Value .................................... 10
Distributions ...................................... 10
Taxes .............................................. 11
Shareholder Communications ......................... 11
Organization, Meetings, and Voting Rights .......... 12
Additional Information ............................. 12
APPENDIX A: Description of Bond Ratings ............. A-1
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THE TRUST
The Trust is an open-end management investment company currently consisting of
ten series, one of which, [SoGen] Overseas Fund, Variable Series (the "Fund"),
is offered by this Prospectus. The Trust may add or delete Funds from time to
time.
The Trust is the funding vehicle for variable annuity contracts ("VA
contracts") and variable life insurance policies ("VLI policies") offered by
the separate accounts of life insurance companies ("Participating Insurance
Companies"), including life insurance companies that are affiliated with the
investment advisor of the Fund.
The Participating Insurance Companies and their separate accounts are the
shareholders or investors ("shareholders") of the Fund. Owners of VA contracts
and owners of VLI policies invest in sub-accounts of separate accounts of the
Participating Insurance Companies that, in turn, invest in the Fund.
The prospectuses of the separate accounts of the Participating Insurance
Companies describe which Funds of the Trust are available to the separate
accounts offering the VA contracts and VLI policies. The Trust assumes no
responsibility for those prospectuses. However, Liberty Advisory Services Corp.
(formerly named "Keyport Advisory Services Corp.") ("LASC") and the Board of
Trustees of the Trust ("Board of Trustees") monitor events to identify any
material conflicts that may arise between the interests of the Participating
Insurance Companies or between the interests of owners of VA contracts and VLI
policies. The Trust currently does not foresee any disadvantages to the owners
of VA contracts and VLI policies arising from the fact that certain interests
of the owners may differ. The Statement of Additional Information contains
additional information regarding such differing interests and related risks.
LASC provides investment management and advisory services to the Fund pursuant
to its Management Agreement with the Trust.
[Societe Generale] Asset Management Corp. ("SoGen") subadvises the Fund
pursuant to a Sub-Advisory Agreement (the "SoGen Sub-Advisory Agreement") with
the Fund and LASC.
LASC has delegated various administrative matters to Colonial Management
Associates, Inc. ("Colonial"), an affiliate of LASC and SoGen. Colonial also
provides transfer agency and pricing and record keeping services to the Trust.
Keyport Financial Services Corp. ("KFSC") serves as the principal underwriter
of the Trust with respect to sales of shares to Participating Insurance
Companies that are affiliated with LASC and SoGen, and Liberty Funds
Distributors, Inc. ("LFDI") serves as the principal underwriter with respect to
sales of shares to Participating Insurance Companies that are not affiliated
with LASC and SoGen.
LASC, SoGen, Colonial, KFSC and LFDI, are wholly-owned direct or indirect
subsidiaries of Liberty Financial Companies, Inc. ("LFC"). As of December 31,
1998, approximately ___% of the combined voting power of LFC's issued and
outstanding voting stock was held, indirectly, by Liberty Mutual Insurance
Company ("Liberty Mutual").
3
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FINANCIAL HIGHLIGHTS
The information for the period from February 3, 1997 (commencement of
operations) to December 31, 1997, has been audited by KPMG Peat Marwick LLP,
certified public accountants, whose report thereon is incorporated by reference
in the Statement of Additional Information. The information for the six months
ended June 30, 1998 is unaudited. Further information concerning investment
performance is contained in the Fund's 1997 Annual Report to Shareholders,
which is available without charge.
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Six Months
Ended Period from
June 30, 1998 February 3, 1997 to
(Unaudited) December 31, 1997
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Selected Per Share Data
Net asset value, beginning of period ............................... $ 9.77 $ 10.00
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Income from investment operations:
Net investment income (loss) ...................................... 0.11 (0.01)
Net realized and unrealized gains (losses) on investments ......... 0.63 (0.22)
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Total from investment operations ................................ 0.74 (0.23)
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Net asset value, end of period ..................................... $ 10.51 $ 9.77
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Total Return ....................................................... 15.14%* (2.30)%++
Ratios and Supplemental data
Net assets, end of period (000's) .................................. $ 4,267 $ 1,391
Ratio of operating expenses to average net assets .................. 2.00%*+ 2.00%*+
Ratio of net investment income to average net assets ............... 1.83%*++ (0.14)%*++
Portfolio turnover rate ............................................ 9.13% 8.88%
Average commission rate paid# ...................................... $0.0114 $0.0098
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* Annualized.
++ Total return for the period ended December 31, 1997 is not annualized.
+ The annualized ratio of operating expenses to average net assets for the six
months ended June 30, 1998 and the period from February 3, 1997 to December
31, 1997 would have been 4.18% and 16.07%, respectively, without the effect
of earnings credits, and the investment advisory fee waiver and expense
reimbursement provided by SoGen.
++ The annualized ratio of net investment income to average net assets for the
six months ended June 30, 1998 and the period from February 3, 1997 to
December 31, 1997 would have been (0.35%) and (14.20%), respectively,
without the effects of the earnings credits, and the investment advisory
fee waiver and expense reimbursement provided by SoGen.
# Average commission rate paid is expressed on a per share basis. Not all
commissions are computed on a per share basis; therefore, commissions
expressed as a percentage of transactions may be higher.
4
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Further information about the performance of the Fund is contained in the
Trust's annual report to shareholders for the period ended December 31, 1997,
which may be obtained without charge from KFSC or from the Participating
Insurance Company issuing the applicable VA contract or VLI policy.
INVESTMENT OBJECTIVE AND POLICIES
General. All investments, including mutual funds, have risks, and no one mutual
fund is suitable for all investors. The Fund by itself does not constitute a
complete investment program. The net asset value of the shares of the Fund will
vary with market conditions and there can be no guarantee that the Fund will
achieve its investment objective.
More information about the portfolio securities in which the Fund invests,
including certain risks and investment limitations, is provided in the
Statement of Additional Information.
Investment Objective. The Fund seeks long-term growth of capital.
Investment Program. The Fund seeks to achieve its investment objective by
investing primarily in securities of small and medium size non-U.S. companies.
The Fund particularly seeks companies that have growth potential, financial
strength and stability, strong management and fundamental value. However, the
Fund may invest in companies that do not have all of these characteristics.
The Fund may invest in securities traded in mature markets (for example, Japan,
Canada and the United Kingdom) and in emerging markets (Mexico and Indonesia,
for example). A list of the mature and emerging markets in which the Fund may
invest is included in the Statement of Additional Information under "Investment
Policies, Techniques and Risks--Foreign Securities." There are no limits on the
Fund's geographic asset distribution, but the Fund ordinarily invests in at
least three countries outside the United States.
The equity securities in which the Fund may invest include common and preferred
stocks, warrants or other similar rights, and convertible securities. The Fund
may purchase foreign securities in the form of sponsored or unsponsored
American Depository Receipts (ADRs), Global Depository Receipts (GDRs) and
European Depository Receipts (EDRs) or other securities representing underlying
shares of foreign issuers. The Fund may also invest in any other type of
security, including up to 20% of its total assets in debt securities. Such debt
securities may include lower-rated securities, commonly referred to as "junk
bonds" (i.e., securities rated BB or lower by Standard & Poor's Corporation
("S&P") or Ba or lower by Moody's Investors Service, Inc. ("Moody's")), and
securities that are not rated. There are no restrictions as to the ratings of
debt securities acquired by the Fund or the portion of the Fund's assets that
may be invested in debt securities in a particular rating category. Under
normal market conditions, the Fund invests at least 75% of its total assets,
taken at market value, in foreign securities. The Fund may also invest in
"structured securities" in which the value is linked to the price of an
underlying instrument.
INVESTMENT RESTRICTIONS
The Fund has adopted certain investment restrictions that may not be changed
without shareholder approval. Among other restrictions, the Fund will not:
1. With respect to 75% of its total assets, invest more than 5% of its assets
(valued at time of investment) in securities of any one issuer, except in
U.S. government obligations, or acquire securities of any one issuer which
at the time of investment represent more than 10% of the voting securities
of the issuer;
2. Borrow money except that in exceptional circumstances the Fund may borrow
from banks for temporary purposes, provided that such borrowings shall be
unsecured and may not exceed 10% of the Fund's net assets at the time of
borrowing (including the amount borrowed). The Fund will not purchase
securities while borrowings exceed 5% of its total assets; or
3. Invest more than 25% of its assets (valued at time of investment) in
securities of companies in any one industry (other than U.S. Government
Securities).
A complete description of the Fund's investment restrictions is included in the
Statement of Additional Information.
IMPLEMENTATION OF POLICIES AND RISKS
In addition to the investment policies described above (and subject to certain
restrictions described herein), the Fund may invest in some or all of the
following securities and employ some or all of the following investment
techniques, some of which may present special risks as described below. A more
complete discussion of these securities and investment techniques and their
associated risks is contained in the Fund's Statement of Additional
Information.
Because the Fund's investments will be subject to the market fluctuations and
risks inherent in all investments, there can be no assurance that the Fund's
stated objectives will be realized. SoGen will seek to minimize these risks
through professional management and investment diversification. The value of
shares of the Fund when sold may be higher or lower than when purchased. SoGen
advises certain other investment companies with the same or similar investment
objectives. The
5
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Fund, however, is separately managed and the investments made by the Fund will
not necessarily be the same as those made on behalf of the other investment
companies managed by SoGen.
Foreign Securities. Under normal conditions, the Fund invests in a diversified
portfolio of foreign securities. From time to time, many foreign economies have
grown faster than the U.S. economy, and the returns on investments in these
countries have exceeded those of similar U.S. investments, although there can
be no assurance that these conditions will continue. International investing
allows investors to achieve greater diversification and to take advantage of
changes in foreign economies and market conditions.
The greater risks involved in foreign investing should be understood and
carefully considered. Investing in foreign securities and other positions which
are generally denominated in foreign currencies, and utilization of forward
foreign currency exchange contracts (see "Currency Exchange Transactions"
below), involve certain risks and opportunities not typically associated with
investing in U.S. securities. These include: fluctuations in the rates of
exchange between the U.S. dollar and foreign currencies; changes in exchange
control regulations or currency restrictions that would prevent cash from being
brought back to the United States; less public information with respect to
issuers of securities; less governmental supervision of stock exchanges,
securities brokers and issuers of securities; different accounting, auditing
and financial reporting standards; different settlement periods and trading
practices; less liquidity and frequently greater price volatility in foreign
markets than in the United States; imposition of foreign taxes; and sometimes
less advantageous legal, operational and financial protections applicable to
foreign sub-custodial arrangements.
Investing in countries outside the United States entails political risk. There
exists the possibility of restrictions on foreign investors, expropriation of
assets, confiscatory taxation, seizure or nationalization of foreign bank
deposits or other assets, establishment of exchange controls, or other adverse
political or social developments that could affect investment in these nations.
Economies in individual markets may differ favorably or unfavorably from the
U.S. economy in such respects as growth of gross domestic product, rates of
inflation, currency depreciation, capital reinvestment, resource
self-sufficiency and balance of payments positions. Many emerging market
countries have experienced extremely high rates of inflation for many years.
That has had and may continue to have very negative effects on the economies
and securities markets of those countries.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the United States. There
also may be a lower level of monitoring and regulation in emerging markets of
traders, insiders and investors. Enforcement of existing regulations has been
extremely limited.
The Fund is subject to the following guidelines for diversification of foreign
security investments. If the Fund has less than 20% of its assets in foreign
issuers, then all of such investment may be in issuers located in one country.
If the Fund has at least 20% but less than 40% of its assets in foreign
issuers, then such investment must be allocated to issuers located in at least
two different countries. Similarly, if the Fund has at least 40% but less than
60% of its assets in foreign issuers, such investment must be allocated to at
least three different countries. Foreign investments must be allocated to at
least four different countries if at least 60% of the Fund's assets are in
foreign issuers, and to at least five different countries if at least 80% are
invested in foreign issuers. For purposes of such allocations, a company will
be considered located in the country in which it is domiciled, in which it is
primarily traded, from which it derives a significant portion of its revenues
or in which a significant portion of its goods or services are produced. In
addition, the Fund may have no more than 20% of its net assets invested in
securities of issuers located in any one country, except that the Fund may have
35% of its net assets invested in securities of issuers located in any one of
the following countries: Australia, Canada, France, Japan, the United Kingdom,
or Germany. The Fund's investment in the U.S. issuers is not subject to the
foreign country diversification guidelines.
Currency Exchange Transactions. The Fund may engage in currency exchange
transactions to hedge against losses in the U.S. dollar value of its portfolio
securities resulting from possible variations in exchange rates and not for
speculation. A currency exchange transaction may be conducted either on a spot
(i.e. cash) basis at the spot rate for purchasing or selling currency
prevailing in the foreign exchange market or through a forward currency
exchange contract ("forward contract"). A forward contract is an agreement to
purchase or sell a specified currency at a specified future date (or within a
specified time period) and price set at the time of the contract. Forward
contracts are usually entered into with banks and broker/dealers, are not
exchange-traded and are usually for less than one year, but may be renewed.
Currency exchange transactions may involve currencies of the different
countries in which the Fund may invest. Although forward contracts may be used
to protect the Fund from adverse currency movements, the use of such hedges may
reduce or eliminate the potentially positive effect of currency revaluations on
the Fund's total return.
Investments in Debt Securities. The Fund may invest up to 20% of its total
assets in debt securities that are below investment grade quality. The Fund may
also invest in debt securities which are in default. "Investment grade" debt
securities are those rated within the four highest ratings categories of S&P or
Moody's or, if unrated, determined by the Fund's investment adviser to be of
comparable quality. The market value of debt securities generally varies in
response to changes in interest rates and the financial conditions of each
issuer. During periods of declining interest rates, the value of debt
securities generally increases. Conversely, during periods of rising interest
rates, the value of such securities generally declines. These changes in market
value will be reflected in the Fund's net asset value.
6
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Securities rated BBB by S&P or Baa by Moody's (the lowest investment grade
ratings) are considered to be medium grade and to have speculative
characteristics. Debt securities that are rated below investment grade or, if
unrated, are considered by SoGen to be equivalent to below investment grade
(often referred to as "junk bonds"), on balance, are considered predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal according to the terms of the obligation and, therefore, carry
greater investment risk, including the possibility of issuer default and
bankruptcy. They are likely to be less marketable and more adversely affected
by economic downturns than higher-quality debt securities. (For additional
information on these debt securities see Appendix A to this Prospectus and
"Lower-Rated Debt Securities" in the Statement of Additional Information.)
Other Investment Companies. Certain markets are closed in whole or in part to
equity investments by foreigners. The Fund may be able to invest in such
markets solely or primarily through governmentally-authorized investment
companies. The Fund generally may invest up to 10% of its assets in shares of
other investment companies and up to 5% of its assets in any one investment
company (in each case measured at the time of investment), as long as no
investment represents more than 3% of the outstanding voting stock of the
acquired investment company at the time of investment. These restrictions do
not apply to certain investment companies known as private investment companies
and "qualified purchaser" investment companies.
Investment in another investment company may involve the payment of a premium
above the value of the issuer's portfolio securities, and is subject to market
availability. In the case of a purchase of shares of such a company in a public
offering, the purchase price may include an underwriting spread. The Fund does
not intend to invest in such an investment company unless, in the judgement of
the Fund's investment adviser, the potential benefits of such investment
justify the payment of any applicable premium or sales charge. As a shareholder
in an investment company, the Fund would bear its ratable share of that
investment company's expenses, including its advisory and administration fees.
At the same time, the Fund would continue to pay its own management fees and
other expenses.
"When-Issued" or "Delayed Delivery" Securities. The Fund may purchase
securities on a "when-issued" or "delayed delivery" basis. When-issued or
delayed delivery securities are securities purchased for future delivery at a
stated price and yield. The Fund will generally not pay for such securities or
start earning interest on them until they are received. Securities purchased on
a when-issued or delayed delivery basis are recorded as assets and are
marked-to-market daily. The Fund will not invest more than 25% of its assets in
when-issued or delayed delivery securities, does not intend to purchase such
securities for speculative purposes and will make commitments to purchase
securities on a when-issued or delayed delivery basis with the intention of
actually acquiring the securities. However, the Fund reserves the right to sell
acquired when-issued or delayed delivery securities before their settlement
dates if deemed advisable.
Structured Securities. The Fund may invest in structured notes and/or preferred
stock, the value of which is linked to the price of an underlying instrument.
Structured securities have different characteristics and risks than other types
of securities in which the Fund may invest. For example, the coupon, dividend
and/or redemption amounts may be increased or decreased depending on the change
in the value of an underlying instrument. See "Structured Securities" in the
Statement of Additional Information for further information.
Temporary Strategies; Cash Reserves. The Fund has the flexibility to respond
promptly to changes in market and economic conditions. In the interest of
preserving shareholders' capital, SoGen may employ a temporary defensive
investment strategy if it determines such a strategy to be warranted. Pursuant
to such a defensive strategy, the Fund temporarily may hold cash (U.S. dollars,
foreign currencies, multinational currency units) and/or invest up to 100% of
its assets in high quality debt securities or money market instruments of U.S.
or foreign issuers. Most or all of the Fund's investments may be made in the
United States and denominated in U.S. dollars. It is impossible to predict
whether, when or for how long the Fund will employ defensive strategies.
In addition, pending investment of proceeds from new sales of shares or to meet
ordinary daily cash needs, the Fund temporarily may hold cash (U.S. dollars,
foreign currencies or multinational currency units) and may invest any portion
of its assets in money market instruments.
Illiquid Securities. The Fund may invest up to 15% of its total assets in
illiquid securities, including securities acquired in private placements.
Because an active trading market for such securities may not exist, the sale of
such securities may be subject to delay and additional costs. Time deposits and
repurchase agreements maturing in more than seven days are considered to be
illiquid. The Fund, subject to the limitations for illiquid investments stated
above, may purchase securities that have been privately placed but that are not
eligible for purchase and sale under Rule 144A under the Securities Act of
1933. That rule permits certain qualified institutional buyers, such as the
Fund, to trade in private placed securities that have not been registered for
sale under that Act. Rule 144A securities may or may not be liquid depending on
the guidelines established by the Board of Trustees of the Trust. See "Illiquid
Securities" in the Statement of Additional Information.
Expenses. The cost of investing in foreign securities is higher than the cost
of investing in U.S. securities. Investing in the Fund is an efficient way for
an individual to participate in foreign markets, but its expenses, including
advisory and custody fees, are higher than the expenses of a typical domestic
mutual fund.
Change of Objective. The Fund's investment objective may be changed by the
Board of Trustees of the Trust without shareholder approval. If there were such
a change, each shareholder should consider whether the Fund would remain an
appropriate investment in light of his or her then current financial position
and needs. Shareholder will be notified a minimum of sixty days in advance of
any change in investment objective.
7
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TRUST MANAGEMENT ORGANIZATIONS
The Trustees
The business of the Trust and the Funds is supervised by the Trust's Board of
Trustees. The Statement of Additional Information contains the names of and
biographical information on the Trustees.
The Manager: Liberty Advisory Services Corp. (LASC)
LASC, 125 High Street, Boston Massachusetts 02110, is the manager of the Trust.
LASC was incorporated on January 8, 1993 under the laws of the Commonwealth of
Massachusetts.
In accordance with its Management Agreements with the Trust, LASC designs and
supervises a continuous investment program for the Fund and the other
portfolios of the Trust, evaluates and monitors the performance, investment
programs, and compliance with applicable laws and regulations of SoGen and the
Sub-Advisors of the other portfolios of the Trust, and recommends to the Board
of Trustees whether SoGen's and such other Sub-Advisers' respective contracts
should be continued or modified and whether a new sub-adviser or multiple
sub-advisers should be added or deleted. LASC is also responsible for
administering the Trust's operations, including the provision of office space
and equipment in connection with the maintenance of the Trust's headquarters,
preparation and filing of required reports, arrangements for Trustees' and
shareholders' meetings, maintenance of the Trust's corporate books and records,
communications with shareholders, and oversight of custodial, accounting and
other services provided to the Fund and the other portfolios of the Trust by
others. In accordance with its Management Agreements with the Trust, LASC may,
at its own expense, delegate the performance of certain of its administrative
responsibilities to its affiliate LFC, or any of LFC's majority-owned
subsidiaries. LASC has delegated its administrative responsibilities to
Colonial in accordance with this authority. LASC, or its affiliates, pay all
compensation of the Trust's trustees and officers who are employees of LASC or
its affiliates.
The Trust may add funds that utilize the investment advisory services of more
than one portfolio adviser, whereby each portfolio adviser is responsible for
specified portions of the Funds' investments. LASC will be responsible for the
selection and supervision of such advisers and the allocation of the portions
of the assets among such advisers.
The management fee payable to LASC by the Fund under the Management Agreement
is at the annual rate of 0.75% of the average daily net assets of the Fund,
accrued daily and paid monthly, from which LASC pays SoGen a sub-advisory fee
at the annual rate of 0.55% of such average daily net assets. LASC, SoGen and
Colonial have voluntarily agreed until , 2001 to waive a portion of the
management, sub-advisory and transfer agency fees otherwise payable to them to
the extent the ratio of the Fund's annual operating expenses, excluding
interest, taxes, brokerage commissions, expenses which are capitalized in
accordance with accepted accounting principles and extraordinary expenses, to
its average daily net assets exceeds %.
The Sub-Advisor: [Societe Generale] Asset Management Corp.
[SoGen], previously known as Societe Generale Asset Management Corp., as
Sub-Advisor to LASC, manages the Fund's investment portfolio. SoGen, a
registered investment adviser formed in 1990 whose address is 1221 Avenue of
the Americas, New York, NY 10020, has since been a direct wholly-owned
subsidiary of LFC and an affiliate of LASC and Colonial, it previously having
been an indirect subsidiary of Societe Generale, a French bank. Jean-Marie
Eveillard, President and a director of SoGen, is primarily responsible for the
day-to-day management of the Fund's portfolio. Mr. Eveillard has been a
director and President or Executive Vice President of SoGen since prior to
1993.
TRUST SERVICE ORGANIZATIONS
Custodian
The Chase Manhattan Bank, 3 Chase Metro Tech Center, 8th Floor, Brooklyn, New
York 11245 is the custodian of the Fund's portfolio securities. Foreign
securities are maintained in the custody of foreign branches of U.S. banks,
foreign banks and foreign trust companies that are members of The Chase
Manhattan Bank's global custody network or foreign depositories used by such
members.
Independent Accountants
Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110 are the
Trust's independent accountants.
KPMG Peat Marwick LLP, 757 Third Avenue, New York, NY 10017, are the Fund's
independent accountants.
8
<PAGE>
OTHER CONSIDERATIONS
Expenses of the Fund
The Fund generally will pay all its expenses, other than those borne by LASC,
Colonial, and SoGen. LASC, SoGen and Colonial have voluntarily agreed, until
, 2001, to waive a portion of the management, sub-advisory and transfer
agency fees otherwise payable to them to the extent the ratio of the Fund's
annual operating expenses, excluding interest, taxes, brokerage, and other
expenses which are capitalized in accordance with accepted accounting
procedures, and extraordinary expenses, to it average daily net assets exceeds
%.
The expenses payable by the Fund include, among other things, the management
fees payable to LASC, described above; fees for services of independent
accountants; consultant fees; legal fees; transfer agent, custodian and
portfolio record keeping and tax information services fees; fees for pricing
and record keeping services, and of equipment for communication among the
Fund's custodian, LASC, Colonial, SoGen and others; taxes and fees for the
preparation of the Fund's tax returns; brokerage fees and commissions;
interest; costs of Board of Trustees and shareholder meetings; cost of updates
and printing of prospectuses and reports to shareholders; fees for filing
reports with regulatory bodies and the maintenance of the Trust's existence;
membership dues for industry trade associations; fees to federal authorities
for the registration of the shares of the Fund; fees and expenses of Trustees
who are not directors, officers, employees or stockholders of LASC, Colonial,
SoGen or their affiliates; insurance and fidelity bond premiums; and other
extraordinary expenses of a non-recurring nature.
It is the policy of the Trust that expenses directly charged or attributable to
any particular portfolio of the Trust, including the Fund, will be paid from
the assets of that portfolio. General expenses of the Trust will be allocated
among and charged to the assets of each of the portfolios of the Trust,
including the Fund, on a basis that the Board of Trustees deems fair and
equitable, which may be based on the relative assets of each portfolio or the
nature of the services performed and their relative applicability to each
portfolio.
Portfolio Transactions
SoGen selects the brokers and dealers which execute orders for the purchase and
sale of the Fund's portfolio securities. SoGen seeks to achieve "best
execution" of such orders. "Best execution" means prompt and reliable execution
at the most favorable securities prices, taking into account a number of
largely judgmental considerations. In addition, subject to the policy of best
execution and to applicable regulations, SoGen may consider sales of the Fund's
shares as a factor in the selection of brokers to execute portfolio
transactions.
Rule 12B-1 Plan
The Fund has adopted a Distribution Plan and Agreement (the "Plan") pursuant to
Rule 12b-1 of the Investment Company Act of 1940. Under the Plan, the Fund may
pay KFSC and LFDI (the "Distributors") a quarterly distribution related fee at
an annual rate not to exceed 0.25% of the average daily value of the Fund's net
assets. Under the terms of the Plan, the Fund is authorized to make payments to
the Distributors for remittance to an insurance company that is the issuer of a
VA Contract or VLI Policy invested in shares of the Fund in order to pay or
reimburse such insurance company for distribution and shareholder servicing-
related expenses incurred or paid by such insurance company. The Distributors
bear distribution expenses to the extent they are not covered by payments under
the Plan. Any distribution expenses incurred by the Distributors in any fiscal
year of the Fund, which are not reimbursed from payments under the Plan accrued
in such fiscal year, will not be carried over for payment under the Plan in any
subsequent year.
Expenses payable pursuant to this Plan may include, but are not necessarily
limited to: (a) the printing and mailing of Fund prospectuses, statements of
additional information, any supplements thereto and shareholder reports for
existing and prospective VA Contract and VLI Policy owners; (b) those relating
to the development, preparation, printing and mailing of Fund advertisements,
sales literature and other promotional materials describing and/or relating to
the Fund and including materials intended for use within the insurance company,
or for broker-dealer only use or retail use; (c) holding seminars and sales
meetings designed to promote the distribution of Fund shares; (d) obtaining
information and providing explanations to VA Contract and VLI Policy owners
regarding Fund investment objectives and policies and other information about
the Fund, including its performance; (e) training sales personnel regarding the
Fund; (f) compensating sales personnel in connection with the allocation of
cash values and premiums of VA Contract and VLI Policies to the Fund; (g)
personal service and/or maintenance of VA Contract and VLI Policy accounts with
respect to Fund shares attributable to such accounts; and (h) financing any
other activity that the Trust's Board of Trustees determines is primarily
intended to result in the sale of shares.
Year 2000
Like other investment companies, financial and business organizations and
individuals around the world, the Fund could be adversely affected if the
computer systems used by LASC, SoGen and Colonial or other service providers to
the Fund do
9
<PAGE>
not properly process and calculate date-related information and data from and
after January 1, 2000. This is commonly known as the "Year 2000 Problem." LASC,
SoGen and Colonial are taking steps that they believe are reasonably designed
to address the Year 2000 Problem with respect to computer systems that they use
and are taking steps to obtain reasonable assurances that comparable steps are
being taken by the Fund's other service providers. At this time, however, there
can be no assurance that these steps will be sufficient to avoid any adverse
impact to the Fund.
The Year 2000 Problem is expected to impact corporations, which may include
issuers of portfolio securities held by the Fund, to varying degrees based upon
various factors, including, but not limited to, the corporation's industry
sector and degree of technological sophistication. The Fund is unable to
predict what impact, if any, the Year 2000 Problem will have on issuers of the
portfolio securities held by the Fund.
Purchases and Redemptions
The Participating Insurance Companies place daily orders to purchase and redeem
shares of the Fund based on, among other things, the net amount of purchase
payments to be invested and surrender and transfer requests to be effected on
that day pursuant to the VA contracts and VLI policies, including deductions
for fees and charges by the applicable insurance company separate account. The
Fund continuously offers and redeems shares at net asset value without the
addition of any selling commission, sales load or redemption charge. Shares are
sold and redeemed at their net asset value as next determined after receipt of
purchase payments or redemption requests, respectively, by the separate
accounts. Similarly, shares are sold or redeemed as a result of such other
transactions under the VA contracts and VLI policies at the net asset value
computed for the day on which such transactions are effected by the separate
accounts. The right of redemption may be suspended or payments postponed
whenever permitted by applicable law and regulations.
Investment Return
Average annual total return for the Fund is calculated in accordance with the
Securities and Exchange Commission's formula and assumes reinvestment of all
distributions. Other total returns differ from average annual total return only
in that they may relate to different time periods and may represent aggregate
as opposed to average annual total returns. The Fund's average annual total
return is determined by computing the annual percentage change in value of a
$1,000 investment in the Fund for a specified period, assuming reinvestment of
all dividends and distributions.
Performance information describes the Fund's performance for the period shown
and does not predict future performance. Comparison of the Fund's yield or
total return with those of alternative investments should consider differences
between the Fund and the alternative investments. The Fund's investment
performance figures do not reflect the cost of insurance and the separate
account fees and charges which vary with the VA contracts and VLI policies
offered through the separate accounts of the Participating Insurance Companies,
and which will decrease the return realized by a contract or policyholder.
Net Asset Value
The net asset value per share of the Fund is determined as of the close of
regular trading on the New York Stock Exchange ("NYSE") (currently 4:00 p.m.,
New York time). Net asset value per share is calculated for the Fund by
dividing the current market value of total portfolio assets, less all
liabilities (including accrued expenses), by the total number of shares
outstanding. Net asset value is determined on each day when the NYSE is open,
except on such days in which no order to purchase or redeem shares is received.
The NYSE is scheduled to be open Monday through Friday throughout the year
except for certain federal and other holidays.
All assets denominated in foreign currencies are converted to U.S. dollars. The
books and records of the Trust are recorded in U.S. dollars.
Fund securities are valued based on market quotations or, if such quotations
are not available, at fair market value determined in good faith under
procedures established by the Board of Trustees. Investments maturing in 60
days or less are valued at amortized cost.
Distributions
The Fund intends to declare and distribute, as dividends or capital gains
distributions, at least annually, substantially all of its net investment
income and net profits realized from the sale of portfolio securities, if any,
to its shareholders (Participating Insurance Companies' separate accounts). The
net investment income of the Fund consists of all dividends or interest
received by the Fund, less estimated expenses (including the advisory and
administrative fees). Income dividends will be declared and distributed
annually. All net short-term and long-term capital gains of the Fund, net of
carry-forward losses, if any, realized during the fiscal year, are declared and
distributed periodically, no less frequently than annually. All dividends and
distributions are reinvested in additional shares of the Fund at net asset
value, as of the record date for the distributions.
10
<PAGE>
Taxes
The Fund intends to elect to be treated and to qualify as a "regulated
investment company" under Subchapter M of the Code. As a result of such
election, for any tax year in which the Fund meets the investment limitations
and the distribution, diversification and other requirements referred to below,
to the extent the Fund distributes its taxable net investment income and its
net realized long-term and short-term capital gains, the Fund will not be
subject to federal income tax, and the income of the Fund will be treated as
the income of its shareholders. Under current law, since the shareholders are
life insurance company "segregated asset accounts," they will not be subject to
income tax currently on this income to the extent such income is applied to
increase the values of VA contracts and VLI policies.
Among the conditions for qualification and avoidance of taxation at the Trust
level, Subchapter M imposes investment limitations, distribution requirements,
and requirements relating to the diversification of investments. The
requirements of Subchapter M may affect the investments made by each portfolio
of the Trust, including the Fund. Any of the applicable diversification
requirements could require a sale of assets of a portfolio that would affect
the net asset value of the Fund.
In addition, the Tax Reform Act of 1986 made certain changes to the tax
treatment of regulated investment companies, including the imposition of a
nondeductible 4% excise tax on certain undistributed amounts. To avoid this
tax, the Fund must declare and distribute to its shareholders by the end of
each calendar year at least 98% of ordinary income earned during that calendar
year and at least 98% of capital gain net income, net of carry-forward losses,
if any, realized for the twelve-month period ending October 31 of that year,
plus any remaining undistributed income from the prior year.
Pursuant to the requirements of Section 817(h) of the Code, the only
shareholders of the Trust and its portfolios, including the Fund, will be
Participating Insurance Companies and their separate accounts that fund VA
contracts, VLI policies and other variable insurance contracts and retirement
plans. The prospectus that describes a particular VA contract or VLI policy
discusses the taxation of both separate accounts and the owner of such contract
or policy.
The Fund intends to comply with the requirements of Section 817(h) of the Code
and the related regulations issued thereunder by the Treasury Department. These
provisions impose certain diversification requirements affecting the securities
in which the Fund may invest and other limitations. The diversification
requirements of Section 817(h) of the Code are in addition to the
diversification requirements under Subchapter M and the Investment Company Act
of 1940. The consequences of failure to meet the requirements of Section 817(h)
could result in taxation of the Participating Insurance Company offering the VA
contracts and VLI policies and immediate taxation of all owners of the
contracts and policies to the extent of appreciation on investment under the
contracts. The Trust believes it is in compliance with these requirements.
The Secretary of the Treasury may issue additional rulings or regulations that
will prescribe the circumstances in which a variable insurance contract owner's
control of the investments of a segregated asset account may cause such owner,
rather than the insurance company, to be treated as an owner of the assets of a
segregated asset account. It is expected that such regulations would have
prospective application. However, if a ruling or regulation were not considered
to set forth a new position, the ruling or regulation could have retroactive
effect.
The Trust therefore may find it necessary, and reserves the right to take
action to assure, that a VA contract or VLI policy continues to qualify as an
annuity or insurance contract under federal tax laws. The Trust, for example,
may be required to alter the investment objectives of any portfolio, including
the Fund or substitute the shares of one portfolio for those of another. No
such change of investment objectives or substitution of securities will take
place without notice to the contract and policy owners with interests invested
in the affected portfolio and without prior approval of the Securities and
Exchange Commission, or the approval of a majority of such owners, to the
extent legally required.
Investment income received by the Fund from sources within foreign countries
may be subject to foreign income taxes withheld at the source. The United
States has entered into tax treaties with many foreign countries which entitle
a Fund to a reduced tax or exemption from tax on such income.
Gains and losses from foreign currency dispositions, foreign-currency
denominated debt securities and payables or receivables, and foreign currency
forward contracts are subject to special tax rules that generally cause them to
be recharacterized as ordinary income and losses, and may affect the timing and
amount of the Fund's recognition of income, gain or loss.
It is impossible to determine the effective rate of foreign tax in advance
since the amount of a Fund's assets, if any, to be invested within various
countries will fluctuate and the extent to which tax refunds will be recovered
is uncertain.
The preceding is a brief summary of some relevant tax considerations. This
discussion is not intended as a complete explanation or a substitute for
careful tax planning and consultation with individual tax advisers.
Shareholder Communications
Owners of VA contracts and VLI policies, issued by the Participating Insurance
Companies or for which shares of one or more Funds are the investment vehicles,
receive from the Participating Insurance Company unaudited semi-annual
financial statements and audited year-end financial statements of such Funds
certified by the Trust's independent auditors. Each report shows the
investments owned by each Fund and provides other information about the Trust
and its operations. Copies of such reports may be obtained from the
Participating Insurance Company or the Secretary of the Trust.
11
<PAGE>
Organization, Meetings, and Voting Rights
The Trust, of which the Fund is a separate series, or portfolio, is organized
as a Massachusetts business trust under an Agreement and Declaration of Trust
("Declaration of Trust") dated March 4, 1993. The Declaration of Trust may be
amended by a vote of either the Trust's shareholders or the Board of Trustees.
The Trust is authorized to issue an unlimited number of shares of beneficial
interest without par value, in one or more series as the Board of Trustees may
authorize. Each portfolio, including the Fund, is a separate series of the
Trust.
The Fund is the successor to a portfolio of SoGen Variable Funds, Inc., an
investment company organized under the laws of Maryland in September, 1995. On
, 199 , the shareholders of the predecessor series approved an Agreement
and Plan of Reorganization pursuant to which the predecessor portfolio was
reorganized as a separate series, or portfolio, of the Trust. At the closing of
the reorganization, the shares of the predecessor portfolio were exchanged for
shares of the Fund equal in net asset value.
Each share of the Fund is entitled to participate pro rata in any dividends and
other distributions declared by the Board of Trustees with respect to the Fund,
and all shares of the Fund have equal rights in the event of liquidation of the
Fund.
The Trust is not required to hold annual meetings and does not intend to do so.
However, special meetings may be called for purposes such as electing Trustees
or approving an amendment to an advisory contract. Shareholders receive one
vote for each Fund share. Shares of the Trust vote together except when
required to vote separately by portfolio. Shareholders have the power to remove
Trustees and to call meetings to consider removal.
Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Trust's Declaration of Trust disclaims liability of the
shareholders, the Trustees, or officers of the Trust for acts or obligations of
the Trust, which are binding only on the assets and property of the Trust (or
the applicable portfolio thereof) and requires that notice of such disclaimer
be given in each agreement, obligation, or contract entered into or executed by
the Trust or the Board. The Declaration of Trust provides for indemnification
out of the Trust's assets (or the applicable portfolio) for all losses and
expenses of any shareholder held personally liable for the obligations of the
Trust. Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is believed to be remote because it is limited to
circumstances in which the disclaimer is inoperative and the Trust itself is
unable to meet its obligations. The risk to any one portfolio of sustaining a
loss on account of liabilities incurred by another portfolio also is believed
to be remote.
Additional Information
This Prospectus, including the Statement of Additional Information which has
been incorporated by reference herein, does not contain all the information set
forth in the Registration Statement filed by the Trust with the Securities and
Exchange Commission under the Securities Act of 1933. Copies of the
Registration Statement may be obtained from the Commission or may be examined
at the office of the Commission in Washington, D.C.
12
<PAGE>
APPENDIX A
Description of Bond Ratings
The ratings of certain debt instruments in which one or more of the Funds may
invest are described below:
Standard and Poor's Corporation--Bond Ratings
AAA bonds have the highest rating assigned by S&P. Capacity to pay interest and
repay principal is extremely strong.
AA bonds have a very strong capacity to pay interest and repay principal, and
they differ from AAA only in small degree.
A bonds have a strong capacity to pay interest and repay principal, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB bonds are regarded as having an adequate capacity to pay interest and repay
principal. Whereas they normally exhibit adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay interest and repay principal than for bonds in
the A category.
BB, B, CCC and CC bonds are regarded, on balance, as predominantly speculative
with respect to capacity to pay interest and repay principal in accordance with
the terms of the obligation. BB indicates the lowest degree of speculation and
CC the highest degree. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or
large exposures to adverse conditions.
C ratings are reserved for income bonds on which no interest is being paid.
D bonds are in default, and payment of interest and/or principal is in arrears.
Plus (+) or minus (-) are modifiers relative to the standing within the major
rating categories.
Moody's Investors Service, Inc.--Bond Ratings
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 edge". Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. While 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 Aaa
bonds they comprise what are generally known as high grade bonds. They are
rated lower than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities. Those bonds in
the Aa through B groups which Moody's believes possess the strongest investment
attributes are designated by the symbol Aa1, A1 and Baa1.
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 bonds are judged to have speculative elements; their future cannot be
considered as well secured. Often the protection of interest and principal
payments may be very moderate and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position characterizes bonds in
this class.
B bonds generally lack characteristics of the desirable investment. Assurance
of interest and principal payments or of maintenance of other terms of the
contract over any long period of time may be small.
Caa bonds are of poor standing. Such issues may be in default or there may be
present elements of danger with respect to principal or interest.
Ca bonds represent obligations which are speculative in a high degree. Such
issues are often in default or have other marked shortcomings.
C bonds are the lowest rated class of bonds and issues so rated can be regarded
as having extremely poor prospects of ever attaining any real investment
standing.
A-1
<PAGE>
Distributed by: Keyport Financial Services Corp.
125 High Street, Boston, MA 02110-2712
Liberty Funds Distributors, Inc.
One Financial Place
Boston, MA 02111
Liberty Variable Investment Trust Managed and Advised by:
Liberty Advisory Services Corp.
125 High Street
Boston, Massachusetts 02110
Sub-Adviser
[Societe Generale Asset Management Corp.]
1221 Avenue of the Americas
New York, NY 10020
VIT 5/98
<PAGE>
LIBERTY VARIABLE INVESTMENT TRUST
[SoGen] Overseas Fund, Variable Series
Federal Reserve Plaza, 600 Atlantic Avenue
Boston, Massachusetts 02210
STATEMENT OF ADDITIONAL INFORMATION
Dated January , 1999
The Statement of Additional Information ("SAI") is not a Prospectus,
but should be read in conjunction with the Trust's Prospectus, dated January ,
1999 and any supplement thereto, which may be obtained at no charge by calling
Keyport Financial Services Corp. at (800) 437-4466, or by contacting the
applicable Participating Insurance Company, or the broker-dealers offering
certain variable annuity contracts or variable life insurance policies issued by
the Participating Insurance Company.
The date of this SAI is January , 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
<S> <C>
INVESTMENT MANAGEMENT AND OTHER SERVICES............................... S-3
General....................................................... S-3
Fund Charges and Expenses; Expense Limitations................ S-4
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS........................ S-4
Investment Objectives......................................... S-4
Investment Policies, Techniques and Risks..................... S-4
Investment Restrictions....................................... S-10
MORE FACTS ABOUT TRUST ................................................ S-12
Mixed and Shared Funding...................................... S-12
Distribution of the Fund's Shares............................. S-12
Organization.................................................. S-14
Trustees and Officers ........................................ S-14
Principal Holders of Securities............................... S-19
Custodian..................................................... S-20
OTHER CONSIDERATIONS .................................................. S-20
Portfolio Turnover ........................................... S-20
Suspension of Redemptions..................................... S-20
Valuation of Securities ...................................... S-21
Portfolio Transactions ....................................... S-21
INVESTMENT PERFORMANCE ................................................ S-23
HISTORY ............................................................... S-24
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS....................... S-24
</TABLE>
S-2
<PAGE>
Liberty Variable Investment Trust (the "Trust"), a Massachusetts
business trust, is registered with the Securities and Exchange Commission
("SEC") as an open-end management investment company. The Trust currently offers
ten Funds, one of which, - [SoGen] Overseas Fund, Variable Series (the "Fund"),
- - is the subject of this Statement of Additional Information. The Trust may add
or delete Funds from time to time. The Trust commenced operations on July 1,
1993.
INVESTMENT MANAGEMENT AND OTHER SERVICES
General
Liberty Advisory Services Corp. ("LASC") serves as Manager pursuant to
an investment advisory agreements between the Trust on behalf of the Fund (the
"Management Agreement"). LASC is a direct wholly owned subsidiary of Keyport
Life Insurance Company ("Keyport"), which is an indirect wholly owned subsidiary
of Liberty Financial Companies, Inc. ("LFC"). As of December 31, 1998,
approximately _____% of the combined voting power of LFC's outstanding voting
stock was owned, indirectly, by Liberty Mutual Insurance Company ("Liberty
Mutual").
LASC and the Trust, on behalf of the Fund, have entered into a
Sub-Advisory Agreement (the "Sub-Advisory Agreement") with [Societe Generale]
Asset Management Corp. ("SoGen"). SoGen is an indirect wholly owned subsidiary
of LFC.
Liberty Advisory Services Corp. Keyport owns all of the outstanding
common stock of LASC. LASC's address is 125 High Street, Boston, Massachusetts
02110. The directors and principal executive officer of LASC are: John W.
Rosensteel (principal executive officer); John E. Arant, III, James J. Klopper,
and Paul H. LeFevre, Jr. Mr. Rosensteel also is a director of Keyport Financial
Services Corp. ("KFSC"), the principal underwriter for shares of the Funds sold
to Participating Insurance Companies (as such term is defined in the Prospectus)
that are affiliated with Keyport.
[Societe Generale] Asset Management Corp. LFC, 600 Atlantic Avenue,
Boston, Massachusetts 02210, owns all the outstanding capital stock of SoGen.
The directors and principal executive officer of SoGen are: Jean-Marie Eveillard
(principal executive officer), Kenneth R. Leibler and Lindsay Cook.
The Management and Sub-Advisory Agreements provide that neither LASC or
SoGen, nor any of their respective directors, officers, stockholders (or
partners of stockholders), agents, or employees shall have any liability to the
Trust or any shareholder of the Fund for any error of judgment, mistake of law
or any loss arising out of any investment, or for any other act or omission in
the performance by LASC or SoGen of its duties under such agreements, except for
liability resulting from willful misfeasance, bad faith or gross negligence on
the part of LASC or SoGen in the performance of its duties or from reckless
disregard by it of its obligations and duties thereunder.
S-3
<PAGE>
Fund Charges and Expenses; Expense Limitations
The Fund is the successor to a series, or portfolio, of SoGen Variable
Funds, Inc., an investment company sponsored by SoGen and formed in September,
1995. The predecessor portfolio commenced operations on February 3, 1997, and
was reorganized as the Fund on _______, 1999 following the acquisition of all
the capital stock of SoGen by LASC's indirect parent, LFC. SoGen waived in its
entirety the advisory fee of $5,742 payable to it by the predecessor portfolio
for the period from February 3, 1997 through December 31, 1997.
The management fee payable to LASC by the Fund under the Management
Agreement is at the annual rate of 0.75% of the average daily net assets of the
Fund, accrued daily and paid monthly, from which LASC, under the Sub-Advisory
Agreement, pays SoGen at the annual rate of 0.55 % of such average daily net
assets. LASC, SoGen and Colonial Management Associates, Inc. ("Colonial"), which
provides transfer agency and pricing and bookkeeping services to the Fund, have
voluntarily agreed until __________, 2001 to waive the management, sub-advisory,
transfer agency and pricing and bookkeeping fees otherwise payable to them to
the extent the ratio of the Fund's annual operating expenses, excluding
interest, taxes, brokerage commissions, expenses which are capitalized in
accordance with accepted accounting principles and extraordinary expenses, to
its average daily net assets exceeds _____%.
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS
Investment Objective.
The Fund seeks long-term growth of capital by investing primarily in
securities of small and medium size non-U.S. companies. The Fund uses the
techniques and invests in the types of securities described below and in the
Prospectus.
Investment Policies, Techniques and Risks.
Foreign Securities. The Fund will invest in foreign securities, which
may entail a greater degree of risk (including risks relating to exchange rate
fluctuations, tax provisions, or expropriation of assets) than does investment
in securities of domestic issuers. The Fund may invest in securities of foreign
issuers directly or in the form of American Depository Receipts (ADRs), Global
Depository Receipts (GDRs), European Depository Receipts (EDRs), or other
securities representing underlying shares of foreign issuers. Positions in these
securities are not necessarily denominated in the same currency as the common
stocks into which they may be converted. ADRs are receipts typically issued by
an American bank or trust company evidencing ownership of the underlying
securities. EDRs are European receipts evidencing a similar arrangement. GDRs
are global offerings where two securities are issued simultaneously in two
markets, usually publicly in non-U.S. markets and privately in the U.S. market.
Generally ADRs, in registered form, are designed for use in the U.S. securities
markets, EDRs, in bearer form, are designed for use in European securities
markets. GDR's are designed for use in the U.S. and
S-4
<PAGE>
European securities markets. The Fund may invest in both "sponsored" and
"unsponsored" ADRs. In a sponsored ADR, the issuer typically pays some or all of
the expenses of the depository and agrees to provide its regular shareholder
communications to ADR holders. An unsponsored ADR is created independently of
the issuer of the underlying security. The ADR holders generally pay the
expenses of the depository and do not have an undertaking from the issuer of the
underlying security to furnish shareholder communications. Issuers of
unsponsored ADRs are not obligated to disclose material information in the
United States and, therefore, there may not be a correlation between such
information and the market value of the ADRs. The Fund does not expect to invest
5% or more of its total assets in unsponsored ADRs.
With respect to portfolio securities that are issued by foreign issuers
or denominated in foreign currencies, the investment performance of the Fund is
affected by the strength or weakness of the U.S. dollar against these
currencies. For example, if the dollar falls in value relative to the Japanese
yen, the dollar value of a yen-denominated stock held in the portfolio will rise
even though the price of the stock remains unchanged. Conversely, if the dollar
rises in value relative to the yen, the dollar value of the yen-denominated
stock will fall. (See discussion of transaction hedging and portfolio hedging
under "Currency Exchange Transactions.")
Investors should understand and consider carefully the risks involved
in foreign investing. Investing in foreign securities, positions which are
generally denominated in foreign currencies, and utilization of forward foreign
currency exchange contracts involve certain risks and opportunities not
typically associated with investing in U.S. securities. These considerations
include: fluctuations in the rates of exchange between the U.S. dollar and
foreign currencies; possible imposition of exchange control regulations or
currency restrictions that would prevent cash from being brought back to the
United States; less public information with respect to issuers of securities;
less governmental supervision of stock exchanges, securities brokers, and
issuers of securities; different accounting, auditing and financial reporting
standards; different settlement periods and trading practices; less liquidity
and frequently greater price volatility in foreign markets than in the United
States; imposition of foreign taxes; and sometimes less advantageous legal,
operational and financial protections applicable to foreign sub-custodial
arrangements.
Although the Fund seeks to invest in companies and governments of
countries having stable political environments, there is the possibility of
expropriation or confiscatory taxation, seizure or nationalization of foreign
bank deposits or other assets, establishment of exchange controls, the adoption
of foreign government restrictions, or other adverse political, social or
diplomatic developments that could affect investment in these nations.
The countries in which the Fund invests are included in those listed
below. The Fund may not invest in all the countries listed, and it may invest in
other countries as well, when such investments are consistent with the Fund's
investment objective and policies.
S-5
<PAGE>
<TABLE>
<CAPTION>
Mature Markets Emerging Markets
-------------- ----------------
<S> <C> <C> <C>
Australia Japan Argentina Nigeria
Austria Luxembourg Brazil Pakistan
Belgium Netherlands Chile People's Republic of China
Canada New Zealand Czech Republic Peru
Denmark Norway Ecuador Philippines
Finland Singapore Greece Poland
France Spain Hungary Portugal
Germany Sweden India South Africa
Hong Kong Switzerland Indonesia South Korea
Ireland United Kingdom Israel Sri Lanka
Italy United States Jamaica Taiwan
Jordan Thailand
Kenya Turkey
Malaysia Uruguay
Mexico Venezuela
Morocco Vietnam
</TABLE>
It may not be feasible for the Fund currently to invest in all of these
countries due to restricted access to their securities markets or inability to
implement satisfactory custodial arrangements.
Currency Exchange Transactions. A currency exchange transaction may be
conducted either on a spot (i.e., cash) basis at the spot rate for purchasing or
selling currency prevailing in the foreign exchange market or through a forward
currency exchange contract ("Forward Contract"). A Forward Contract is an
agreement to purchase or sell a specified currency at a specified future date
(or within a specified time period) and price set at the time of the contract.
Forward Contracts are usually entered into with banks and broker/dealers, are
not exchange traded and are usually for less than one year, but may be renewed.
Currency exchange transactions may involve currencies of the different
countries in which the Fund may invest, and serve as hedges against possible
variations in the exchange rates between these currencies and the U.S. dollar.
The Fund's currency transactions are limited to transaction hedging and
portfolio hedging involving either specific transactions or portfolio positions.
Transaction hedging is the purchase or sale of a Forward Contract with respect
to specific payables or receivables of the Fund accruing in connection with the
purchase or sale of portfolio securities. Portfolio hedging is the use of a
Forward Contract with respect to a portfolio security position denominated or
quoted in a particular currency. The Fund may engage in portfolio hedging with
respect to the currency of a particular country in amounts approximating actual
or anticipated positions in securities denominated in that currency.
S-6
<PAGE>
If the Fund enters into a Forward Contract, the custodian bank will
segregate liquid assets of the Fund having a value equal to the Fund's
commitment under such Forward Contract. At the maturity of a Forward Contract to
deliver a particular currency, the Fund may either sell the portfolio security
related to such contract and make delivery of the currency, or it may retain the
security and either acquire the currency on the spot market or terminate its
contractual obligation to deliver the currency by purchasing an offsetting
contract with the same currency trader obligating it to purchase on the same
maturity date the same amount of the currency.
It is impossible to forecast with absolute precision the market value
of portfolio securities at the expiration of a Forward Contract. Accordingly, it
may be necessary for the Fund to purchase additional currency on the spot market
(and bear the expense of such purchase) if the market value of the security is
less than the amount of currency the Fund is obligated to deliver, and if a
decision is made to sell the security and make delivery of the currency.
Conversely, it may be necessary to sell on the spot market some of the currency
received upon the sale of the portfolio security if its market value exceeds the
amount of currency the Fund is obligated to deliver.
If the Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or a loss to the extent that there has
been movement in Forward Contract prices. If the Fund engages in an offsetting
transaction, it may subsequently enter into a new Forward Contract to sell the
currency. Should forward prices decline during the period between the date the
Fund enters into a Forward Contract for the sale of a currency and the date it
enters into an offsetting contract for the purchase of the currency, the Fund
will realize a gain to the extent the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to purchase. Should forward
prices increase, the Fund will suffer a loss to the extent the price of the
currency it has agreed to purchase exceeds the price of the currency it has
agreed to sell. A default on the contract would deprive the Fund of unrealized
profits or force the Fund to cover its commitments for purchase or sale of
currency, if any, at the current market price.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also preclude the
opportunity for gain if the value of the hedged currency should rise. Moreover,
it may not be possible for the Fund to hedge against a devaluation that is so
generally anticipated that the Fund is not able to contract to sell the currency
at a price above the devaluation level it anticipates. The cost to the Fund of
engaging in currency exchange transactions varies with such factors as the
currency involved, the length of the contract period and prevailing market
conditions. Since currency exchange transactions are usually conducted on a
principal basis, no fees or commissions are involved.
Lower-Rated Debt Securities. The Fund may invest in debt securities,
including lower-rated securities (i.e., securities rated BB or lower by Standard
& Poor's Corporation ("S&P") or Ba or lower by Moody's Investors Service, Inc.
("Moody's"), commonly called "junk bonds") and securities that are not rated.
There are no restrictions as to the ratings of debt securities
S-7
<PAGE>
acquired by the Fund or the portion of the Fund's assets that may be invested in
debt securities in a particular rating category, except that the Fund will not
invest more than 20% of its assets in securities rated below investment grade or
unrated securities considered by the investment adviser to be of comparable
credit quality.
Securities rated BBB by S&P or Baa by Moody's (the lowest investment
grade ratings) are considered to be of medium grade and to have speculative
characteristics. Debt securities rated below investment grade are predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal. Although lower-rated debt and comparable unrated debt securities may
offer higher yields than do higher rated securities, they generally involve
greater volatility of price and risk of principal and income, including the
possibility of default by, or bankruptcy of, the issuers of the securities. In
addition, the markets in which lower-rated and unrated debt securities are
traded are more limited than those in which higher rated securities are traded.
Adverse publicity and investors' 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. During periods of thin trading
in these markets, the spread between bid and asked prices is likely to increase
significantly, and the Fund may have greater difficulty selling its portfolio
securities. See "Computation of Net Asset Value." Analyses of the
creditworthiness of issuers of lower-rated debt securities may be more complex
than for issuers of higher rated securities, and the ability of the Fund to
achieve its investment objective may, to the extent of investment in lower-rated
debt securities, be more dependent upon such creditworthiness analyses than
would be the case if the Fund were investing in higher rated securities.
Lower-rated debt securities may be more susceptible to real or
perceived adverse economic and competitive industry conditions than investment
grade securities. The prices of lower-rated debt securities have been found to
be less sensitive to interest rate changes than higher rated investments, but
more sensitive to adverse economic downturns or individual corporate
developments. A projection of an economic downturn or of a period of rising
interest rates, for example, could cause a decline in lower-rated debt
securities' prices because the advent of a recession could lessen the ability of
a highly-leveraged company to make principal and interest payments on its debt
securities. If the issuer of lower-rated debt securities defaults, the Fund may
incur additional expenses seeking recovery.
A more complete description of the characteristics of bonds in each
rating category is included in the appendix to this Statement of Additional
Information.
Bank Obligations. The Fund may invest in bank obligations, which may
include bank certificates of deposit, time deposits or bankers' acceptances.
Certificates of deposit and time deposits are negotiable certificates issued
against funds deposited in a commercial bank for a definite period of time and
earning a specified return. Bankers' acceptances are negotiable drafts or bills
of exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning in effect that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Investments in these instruments are limited to
S-8
<PAGE>
obligations of domestic banks (including their foreign branches) and U.S. and
foreign branches of foreign banks having capital surplus and undivided profits
in excess of $100 million.
When-Issued or Delayed-Delivery Securities. The Fund may purchase
securities on a "when-issued" or "delayed delivery" basis. Although the payment
and interest terms of these securities are established at the time the Fund
enters into the commitment, the securities may be delivered and paid for a month
or more after the date of purchase, when their value may have changed. The Fund
makes such commitments only with the intention of actually acquiring the
securities, but may sell the securities before settlement date if the investment
adviser deems it advisable for investment reasons.
At the time the Fund enters into a binding obligation to purchase
securities on a when-issued basis, liquid assets of the Fund having a value at
least as great as the purchase price of the securities to be purchased will be
segregated on the books of the Fund and held by the custodian throughout the
period of the obligation. The use of these investment strategies, as well as any
borrowing by the Fund, may increase net asset value fluctuation.
Structured Securities. The Fund may invest in structured notes and/or
preferred stock, the value of which is linked to currencies, interest rates,
other commodities, indices or other financial indicators. Structured securities
differ from other types of securities in which the Fund may invest in several
respects. For example, the coupon dividend and/or redemption amount at maturity
may be increased or decreased depending on changes in the value of the
underlying instrument.
Investment in structured securities involves certain risks. In addition
to the credit risk of the security's issuer and the normal risks of price
changes in response to changes in interest rates, the redemption amount may
decrease as a result of changes in the price of the underlying instrument.
Further, in the case of certain structured securities, the coupon and/or
dividend may be reduced to zero, and any further declines in the value of the
underlying instrument may then reduce the redemption amount payable on maturity.
Finally, structured securities may be more volatile than the price of the
underlying instrument.
Illiquid Securities. The Fund may invest up to 15% of its total assets
in illiquid securities, including certain securities that are subject to legal
or contractual restrictions on resale ("restricted securities").
Generally, restricted securities may be sold only in privately
negotiated transactions or in a public offering with respect to which a
registration statement is in effect under the Securities Act of 1933 (the "1933
Act"). Where registration is required, the Fund may be obligated to pay all or
part of the registration expenses and a considerable period may elapse between
the time of the decision to sell and the time the Fund may be permitted to sell
a security under an effective registration statement. If, during such a period,
adverse market conditions were to develop, the Fund might obtain a less
favorable price than that which prevailed when it decided to sell.
S-9
<PAGE>
Restricted securities will be priced at fair value as determined in good faith
by the Board of Trustees. If, through the appreciation of illiquid securities or
the depreciation of liquid securities, the Fund should be in a position where
more than 15% of the value of its net assets is invested in illiquid assets,
including restricted securities, the Fund will take appropriate steps to protect
liquidity.
Notwithstanding the above, the Fund may purchase securities that have
been privately placed but that are eligible for purchase and sale under Rule
144A under the 1933 Act. That rule permits certain qualified institutional
buyers, such as the Fund, to trade in privately placed securities that have not
been registered for sale under the 1933 Act. SoGen, under the supervision of the
Board of Trustees of the Trust, will consider whether securities purchased under
Rule 144A are illiquid and thus subject to the Fund's restriction on investing
in illiquid securities. A determination as to whether a Rule 144A security is
liquid or not is a question of fact. In making this determination, SoGen will
consider the trading markets for the specific security, taking into account the
unregistered nature of a Rule 144A security. In addition, SoGen could consider
(1) the frequency of trades and quotes, (2) the number of dealers and potential
purchasers, (3) the dealer undertakings to make a market, and (4) the nature of
the security and of market place trades (e.g., the time needed to dispose of the
security, the method of soliciting offers and the mechanics of transfer). The
liquidity of Rule 144A securities would be monitored and if, as a result of
changed conditions, it is determined that a Rule 144A security is no longer
liquid, the Fund's holdings of illiquid securities would be reviewed to
determine what steps, if any, are required to assure that the Fund does not
invest more than the maximum percentage of its assets in illiquid securities.
Investing in Rule 144A securities could have the effect of increasing the amount
of the Fund's assets invested in illiquid securities if qualified institutional
buyers are unwilling to purchase such securities.
Change of Objective. The investment objective of the Fund is not a
fundamental policy and, accordingly, may be changed by the Board of Trustees
without shareholder approval. Shareholders will be notified a minimum of sixty
days in advance of any change in investment objective.
Investment Restrictions.
In pursuing its investment objective, the Fund will not:
1. With respect to 75% of the value of the Fund's total assets, invest
more than 5% of its total assets (valued at time of investment) in
securities of any one issuer, except securities issued or guaranteed
by the government of the United States, or any of its agencies or
instrumentalities, or acquire securities of any one issuer which, at
the time of investment, represent more than 10% of the voting
securities of the issuer;
2. Borrow money except that in exceptional circumstances the Fund may
borrow from banks for temporary purposes, provided that such
borrowings shall be unsecured and
S-10
<PAGE>
may not exceed 10% of the Fund's net assets at the time of the
borrowing (including the amount borrowed). The Fund will not purchase
securities while borrowings exceed 5% of its total assets;
3. Invest more than 25% of its assets (valued at time of investment) in
securities of companies in any one industry other than U.S. Government
Securities;
4. Make loans, but this restriction shall not prevent the Fund from (a)
buying a part of an issue of bonds, debentures, or other obligations
that are publicly distributed, or from investing up to an aggregate of
15% of its total assets (taken at market value at the time of each
purchase) in parts of issues of bonds, debentures or other obligations
of a type privately placed with financial institutions or (b) lending
portfolio securities, provided that the Fund may not lend securities
if, as a result, the aggregate value of all securities loaned would
exceed 33% of its total assets (taken at market value at the time of
such loan);*
5. Underwrite the distribution of securities of other issuers; however,
the Fund may acquire "restricted" securities which, in the event of a
resale, might be required to be registered under the Securities Act of
1933 (the "1933 Act") on the grounds that the Fund could be regarded
as an underwriter as defined by the 1933 Act with respect to such
resale;
6. Purchase and sell real estate or interests in real estate, although it
may invest in marketable securities of enterprises that invest in real
estate or interests in real estate;
7. Make margin purchases of securities, except for the use of such
short-term credits as are needed for clearance of transactions;
8. Sell securities short or maintain a short position, except short sales
against-the-box.
Restrictions 1 through 8 above (except the portions in parentheses) are
"fundamental," which means that they cannot be changed without the vote of a
majority of the outstanding voting securities of the Fund (defined by the
Investment Company Act of 1940 as the lesser of (i) 67% of the Fund's shares
present at a meeting if more than 50% of the shares outstanding are present or
(ii) more than 50% of the Fund's outstanding shares). In addition, the Fund is
subject to a number of restrictions that may be changed by the Board of
Directors without shareholder approval. Under those non-fundamental
restrictions, the Fund will not:
a. Invest in companies for the purpose of management or the exercise of
control;
b. Pledge, mortgage or hypothecate its assets, except as may be necessary
in connection with permitted borrowings or in connection with short
sales;
- ------------
* The Fund has no present intention of lending its portfolio securities.
S-11
<PAGE>
c. Purchase or sell commodities or commodity contracts, except that it
may enter into forward contracts and may sell commodities received by
it as distributions on portfolio investments; and
d. Purchase or sell put and call options on securities or on futures
contracts.
Notwithstanding the foregoing investment restrictions, the Fund may
purchase securities pursuant to the exercise of subscription rights, provided
that such purchase will not result in the Fund's ceasing to be a diversified
investment company. Japanese and European corporations frequently issue
additional capital stock by means of subscription rights offerings to existing
shareholders at a price substantially below the market price of the shares. The
failure to exercise such rights would result in the Fund's interest in the
issuing company being diluted. The market for such rights is not well developed
in all cases and, accordingly, the Fund may not always realize full value on the
sale of rights. The exception applies in cases where the limits set forth in the
investment restrictions would otherwise be exceeded by exercising rights or
would have already been exceeded as a result of fluctuations in the market value
of the Fund's portfolio securities with the result that the Fund would be forced
either to sell securities at a time when it might not otherwise have done so, or
to forego exercising the rights.
MORE FACTS ABOUT THE TRUST
Mixed and Shared Funding
As described in the Prospectus, the Trust serves as the funding medium
for VA contracts and VLI policies of Participating Insurance Companies (as such
term is defined therein). This is referred to as "mixed and shared funding." The
interests of owners of VA contracts and VLI policies could diverge based on
differences in state regulatory requirements, changes in the tax laws or other
unanticipated developments. The Trust does not foresee any such differences or
disadvantages at this time. However, the Board of Trustees monitors for such
developments to identify any material irreconcilable conflicts and to determine
what action, if any, should be taken in response to such conflicts. If such a
conflict were to occur, one or more separate accounts of Participating Insurance
Companies might be required to withdraw its investments in the Fund or shares of
another portfolio of the Trust may be substituted. This might force the Fund to
sell securities at disadvantageous prices.
Distribution of The Fund's Shares
Pursuant to underwriting or distribution contracts with the Trust,
Keyport Financial Services Corp. ("KFSC") serves as principal underwriter of the
shares of the portfolios of the Trust (including the Fund) with respect to the
sale of shares to Participating Insurance Companies that are affiliated with
LASC and SoGen, and Liberty Funds Distributors, Inc. ("LFDI") serves as
principal underwriter with respect the sale of such shares to Participating
S-12
<PAGE>
Insurance Companies that are not so affiliated. KFSC and LFDI (collectively
referred to as the "Distributors") are affiliates of LASC and SoGen through
common control by LFC.
The Fund has adopted a Distribution Plan and Agreement (the "Plan")
pursuant to Rule 12b-1 of the Investment Company Act of 1940. Under the Plan,
the Fund may pay the Distributors a quarterly distribution related fee at an
annual rate not to exceed 0.25% of the average daily value of the Fund's net
assets. Under the terms of the Plan, the Fund is authorized to make payments to
the Distributors for remittance to a Participating Insurance Company in order to
pay or reimburse such Participating Insurance Company for distribution and
shareholder servicing-related expenses incurred or paid by it. Distribution
expenses incurred in any fiscal year, which are not reimbursed from payment
under the Plan accrued in such fiscal year, will not be carried over for payment
under the Plan in any subsequent year.
During the period from February 3, 1997 (commencement of operations)
through December 31, 1997, the Fund incurred distribution related fees for
expenditures under the Plan in the aggregate amount of $1,914, which constituted
0.25% of the Fund's average daily net assets during the period. Such amount was
paid by the principal underwriter of the predecessor of the Fund to
Participating Insurance Companies.
Expenses payable pursuant to this Plan may include, but are not limited
to, expenses relating to the preparation, printing and distribution of
prospectuses to existing and prospective VA Contract or VLI Policy owners;
development, preparation, printing and mailing of Fund advertisements; expenses
relating to holding seminars and sales meetings designed to promote the
distribution of Fund shares; training sales personnel regarding the Fund;
compensating sales personnel in connection with the allocation of cash values
and premiums of the VA Contracts to the Fund; and financing any other activity
that the Trust's Board of Trustees determines is primarily intended to result in
the sale of shares.
The Plan provides that it will continue in effect only so long as its
continuance is approved at least annually by the Trust's Board of Trustees and
by the Trustees who are not interested persons of the Trust and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreements relating to the Plan (the "Independent Trustees"). In the case of an
agreement relating to the Plan, the Plan provides that such agreement may be
terminated, without penalty, by a vote of a majority of the Independent
Trustees, or by a majority of the Fund's outstanding voting securities, on 60
days' written notice to the Distributors, and provides further that such
agreement will automatically terminate in the event of its assignment. The Plan
also states that it may not be amended to increase the maximum amount of the
payments thereunder without the approval of a majority of the outstanding voting
securities of the Fund. No material amendment to the Plan will, in any event, be
effective unless it is approved by a vote of the directors and the Independent
Trustees.
S-13
<PAGE>
Organization
The Trust is required to hold a shareholders' meeting to elect Trustees
to fill vacancies in the event that less than a majority of Trustees were
elected by shareholders. Trustees may also be removed by the vote of two-thirds
of the outstanding shares at a meeting called at the request of shareholders
whose interests represent 10% or more of the outstanding shares.
The shares do not have cumulative voting rights, which means that the
holders of more than 50% of the shares of the Funds voting for the election of
Trustees can elect all of the Trustees, and, in such event, the holders of the
remaining shares will not be able to elect any Trustees.
The Funds are not required by law to hold regular annual meetings of
their shareholders and do not intend to do so. However, special meetings may be
called for purposes such as electing or removing Trustees or changing
fundamental policies.
Under Massachusetts law, shareholders of a business trust may, under
certain circumstances, be held personally liable for the obligations of the
Trust. The Trust's shareholders are the separate accounts of Participating
Insurance Companies, and, in certain cases, the general account of Keyport.
However, the Trust's Declaration of Trust disclaims liability of the
shareholders, the Trustees, or officers of the Trust for acts or obligations of
the Trust, which are binding only on the assets and property of the Trust (or
the applicable Fund thereof) and requires that notice of such disclaimer be
given in each agreement, obligation, or contract entered into or executed by the
Trust or the Board of Trustees. The Declaration of Trust provides for
indemnification out of the Trust's assets (or the applicable Fund) for all
losses and expenses of any shareholder held personally liable for the
obligations of the Trust. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is believed to be remote because it is
limited to circumstances in which the disclaimer is inoperative and the Trust
itself is unable to meet its obligations. The risk to any one Fund of sustaining
a loss on account of liabilities incurred by another Fund is also believed to be
remote.
Trustees and Officers
The Trustees and officers of the Trust, together with information as to
their principal addresses and business occupations during the last five years,
are shown below. An asterisk next to a name indicates that a Trustee is
considered an "interested person" of the Trust (as defined in the 1940 Act).
S-14
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================================
Positions(s) held Principal occupations
Name and Address with the Trust during past five years
===============================================================================================================
<S> <C> <C>
Robert J Birnbaum Trustee Retired (formerly Special Counsel, Dechert Price &
Rhoads (law) from September, 1988 to December, 1993).
Director or Trustee: Colonial Funds, Liberty All-Star
Equity Fund, Liberty All-Star Growth Fund, Inc., The
Emerging Germany Fund.
- -------------------------------- ------------------- ----------------------------------------------------------
Tom Bleasdale Trustee Retired (formerly Chairman of the Board and Chief
Executive Officer, Shore Bank & Trust Company (banking)
from 1992 to 1993). Director or Trustee: Colonial Funds,
Empire Company Limited.
- -------------------------------- ------------------- ----------------------------------------------------------
John Carberry* Trustee Senior Vice President of Liberty Financial Companies,
Inc. 1998-present (prior thereto Managing Director,
Salomon Brothers Inc.). Nominee for election as a
Trustee of the Colonial Funds.
- -------------------------------- ------------------- ----------------------------------------------------------
Lora S. Collins Trustee Attorney (formerly Attorney, Kramer, Levin, Naftalis &
Frankel (law) prior to November, 1996). Trustee:
Colonial Funds.
- -------------------------------- ------------------- ----------------------------------------------------------
James E. Grinnell Trustee Private Investor. Director or Trustee: Colonial Funds,
Liberty All-Star Equity Fund, Liberty All-Star Growth
Fund, Inc.
- -------------------------------- ------------------- ----------------------------------------------------------
Richard W. Lowry Trustee Private Investor. Director or Trustee: Colonial Funds,
Liberty All-Star Equity Fund, Liberty All-Star Growth
Fund, Inc.
- -------------------------------- ------------------- ----------------------------------------------------------
William E. Mayer Trustee Partner, Development Capital, LLC (investments);
formerly Dean of the College of Business and Management,
University of Maryland (higher education) from October,
1992 to November, 1996. Director or Trustee: Colonial
Funds, Liberty All-Star Equity Fund, Hambrecht & Quist
Incorporated, Chart House Enterprises, Johns Manville.
- -------------------------------- ------------------- ----------------------------------------------------------
</TABLE>
S-15
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================================
Positions(s) held Principal occupations
Name and Address with the Trust during past five years
===============================================================================================================
<S> <C> <C>
Salvatore Macera Trustee Private investor (formerly Executive Vice President of
Itek Corp. and President of Itek Optical & Electronic
Industries, Inc.). Trustee of LVIT and SRVIT.
- -------------------------------- ------------------- ----------------------------------------------------------
James L. Moody, Jr. Trustee Retired (formerly Chairman of the Board from May, 1994
to May 1997, Chief Executive Officer and Director from
May, 1973 to May, 1992, Hannaford Bros. Co. (food
distributor)). Director or Trustee: Colonial Funds,
Penobscot Shoe Co., Staples, Inc., UNUM Corporation,
IDEXX Laboratories, Inc., Empire Company Limited.
- -------------------------------- ------------------- ----------------------------------------------------------
John J. Neuhauser Trustee Dean of the School of Management, Boston College (higher
education). Director or Trustee: Colonial Funds, Liberty
All-Star Equity Fund, Liberty All-Star Growth Fund,
Inc., Hyde Athletic Industries, Inc.
- -------------------------------- ------------------- ----------------------------------------------------------
Thomas E. Stitzel Trustee Professor of Finance, College of Business, Boise State
University; Business consultant and author. Trustee of
LVIT and SRVIT.
- -------------------------------- ------------------- ----------------------------------------------------------
Robert L. Sullivan Trustee Retired Partner, KPMG Peat Marwick LLP (management
consulting) (formerly self-employed Management
Consultant). Trustee: Colonial Funds.
- -------------------------------- ------------------- ----------------------------------------------------------
Anne-Lee Verville Trustee Consultant (formerly General Manager, Global Education
Industry from 1994 to 1997, and President, Applications
Solutions Division from 1991 to 1994, IBM Corporation).
Nominee for election as a Trustee of the Colonial Funds.
- -------------------------------- ------------------- ----------------------------------------------------------
</TABLE>
S-16
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
Positions(s) held Principal occupations
Name and Address with the Trust during past five years
======================================================================================================================
<S> <C> <C>
Timothy J. Jacoby Treasurer and Chief Treasurer and Chief Financial Officer of the Colonial
One Financial Center Financial Officer Funds; Senior Vice President and Chief Financial Officer
Boston, MA 02111 of Colonial Management Associates, Inc.; formerly Senior
Vice President, Fidelity Accounting and Custody
Services, Inc. and Assistant Treasurer to the Fidelity
Group of Funds
- ---------------------------------- ------------------------ ----------------------------------------------------------
John E. Lennon Vice President Vice President, Colonial
One Financial Center Management Associates, Inc.
Boston, MA 02111
- ---------------------------------- ------------------------ ----------------------------------------------------------
Nancy L. Conlin None Director, Senior Vice President and General Counsel,
One Financial Center Colonial Management Associates, Inc. (April, 1998 to
Boston, MA 02111 present); Vice President and Counsel (February, 1994 to
April, 1998); Partner, Mintz, Levin, Cohn, Ferris,
Glovsky & Popeo, prior thereto
- ---------------------------------- ------------------------ ----------------------------------------------------------
Andrea Feingold Vice President Vice President, Colonial Management Associates, Inc.
One Financial Center
Boston, MA 02111
- ---------------------------------- ------------------------ ----------------------------------------------------------
James P. Haynie Vice President Vice President, Colonial Management Associates, Inc.
One Financial Center
Boston, MA 02111
- ---------------------------------- ------------------------ ----------------------------------------------------------
Michael Rega Vice President Vice President, Colonial Management Associates, Inc.
One Financial Center
Boston, MA 02111
- ---------------------------------- ------------------------ ----------------------------------------------------------
Carl C. Ericson Vice President Senior Vice President (Vice President prior to 1996) and
One Financial Center Manager of the Taxable Fixed Income Group, Colonial
Boston, MA 02111 Management Associates, Inc.
- ---------------------------------- ------------------------ ----------------------------------------------------------
John M. Mussey Vice President President, Newport Fund Management, Inc.
580 California Street
San Francisco, CA 94104
- ---------------------------------- ------------------------ ----------------------------------------------------------
</TABLE>
S-17
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
Positions(s) held Principal occupations
Name and Address with the Trust during past five years
======================================================================================================================
<S> <C> <C>
Ophelia Barsketis Vice President Senior Vice President, Stein Roe
One South Wacker Drive
Chicago, Illinois 60606
- ---------------------------------- ------------------------ ----------------------------------------------------------
Deborah A. Jansen Vice President Vice President and Senior Research Analyst, Stein Roe
One South Wacker Drive (March 1996 to present and 1987 to January, 1995); from
Chicago, Illinois 60606 June 5, 1995 to June 30, 1995, Senior Equity Research
Analyst, BankOne Investment Advisers Corporation
- ---------------------------------- ------------------------ ----------------------------------------------------------
William R. Parmentier, Jr. Vice President Chief Investment Officer, LAMCO (April, 1995 to
600 Atlantic Avenue present); Chief Investment Officer of Grumman
Boston, Massachusetts 02210 Corporation, 1979-1994
- ---------------------------------- ------------------------ ----------------------------------------------------------
Christopher S. Carabell Vice President Vice President, Investments, LAMCO (March, 1996 to
600 Atlantic Avenue present); Associate Director, U.S. Equity Research,
Boston, Massachusetts 02210 Rogers Casey & Associates, January, 1995 to March,
1996; Director of Investments, Boy Scouts of America,
Inc., June, 1990 to January, 1995
- ---------------------------------- ------------------------ ----------------------------------------------------------
John A. Benning Assistant Secretary Senior Vice President and General Counsel, Liberty
Federal Reserve Plaza Financial Companies, Inc.
600 Atlantic Avenue
Boston, MA 02210
- ---------------------------------- ------------------------ ----------------------------------------------------------
Kevin M. Carome Secretary Since August 1993, Associate General Counsel and Vice
Federal Reserve Plaza President (since February 1995), Liberty Financial
600 Atlantic Avenue Companies, Inc.; General Counsel, Stein Roe & Farnham
Boston, MA 02210 Incorporated (January 1998 to present)
================================== ======================== ==========================================================
</TABLE>
As indicated in the above table, certain Trustees and officers of the
Trust also hold positions with LFC, LASC, KFSC, SoGen and/or certain of their
affiliates. Certain of the Trustees and officers of the Trust hold comparable
positions with certain other investment companies.
Compensation of Trustees
The table set forth below presents certain information regarding the
fees paid to the Trustees for their services in such capacity and total fees
paid to them by all other investment
S-18
<PAGE>
companies affiliated with the Trust. Trustees do not receive any pension or
retirement benefits from the Trust. No officers of the Trust or other
individuals who are affiliated with the Trust receive any compensation from the
Trust for services provided to it.
<TABLE>
<CAPTION>
Compensation Table
- -----------------------------------------------------------------------------------
Total Compensation
From the Trust and
Affiliated Investment
Name of Trustee Aggregate 1997 Compensation* Companies in 1997**
- --------------- --------------------------- ---------------------
<S> <C> <C>
Richard R. Christensen -- --
John A. Bacon Jr. $12,500 $33,500
Salvatore Macera 12,500 33,500
Dr. Thomas E. Stitzel 12,500 33,500
</TABLE>
- ---------------
* Consists of Trustee fees in the amount of (i) a $5,000 annual retainer, (ii)
a $1,500 meeting fee for each meeting attended in person and (iii) a $500
meeting fee for each telephone meeting.
** Includes Trustee fees paid by the Trust and Trustee fees paid by SteinRoe
Variable Investment Trust.
Principal Holders of Securities
All the shares of the portfolios of the Trust, including the Fund, are
held of record by sub-accounts of separate accounts of Participating Insurance
Companies on behalf of the owners of VA contracts and VLI policies. Shares of
some of the portfolios other than the Fund are held by the general account of
Keyport. At all meetings of shareholders of the Fund, Participating Insurance
Companies will vote the shares held of record by sub-accounts of their
respective separate accounts as to which instructions are received from the VA
contract and VLI policy owners on behalf of whom such shares are held only in
accordance with such instructions. All such shares as to which no instructions
are received (as well as, in the case of shares of other portfolios of the Trust
held by Keyport, all shares held by its general account) will be voted in the
same proportion as shares as to which instructions are received (with Keyport's
general account shares being voted in the proportions determined by instructing
owners of Keyport VA contracts and VLI policies). There is no requirement as to
the minimum level of instructions which must be received from policy and
contract owners. Accordingly, each Participating Insurance Company and Keyport
disclaims beneficial ownership of the shares of the Fund and the other
portfolios of the Trust held of record by the sub-accounts of their respective
separate accounts (or, in the case of Keyport, its general account). No
Participating Insurance Company has informed the Trust that it knows of any
owner of a VA contract or VLI policy issued by it which on _______, 1998 owned
beneficially 5% or more of the outstanding shares of the Fund.
S-19
<PAGE>
Custodian
The Chase Manhattan Bank, 3 Metro Tech Center, 8th Floor, Brooklyn, New
York 11245, is the custodian for the Fund. The custodian is responsible for
holding all securities and cash of the Fund, receiving and paying for securities
purchased, delivering against payment securities sold, receiving and collecting
income from investments, making all payments covering expenses of the Fund, and
performing other administrative duties, all as directed by persons authorized by
the Trust. The custodian does not exercise any supervisory function in such
matters as the purchase and sale of portfolio securities, payment of dividends,
or payment of expenses of the Fund or the Trust. Portfolio securities of the
Fund purchased in the U.S. are maintained in the custody of the custodian and
may be entered into the Federal Reserve Book Entry system, or the security
depository system of the Depository Trust Company or other securities depository
systems. Portfolio securities purchased outside the U.S. are maintained in the
custody of various foreign branches of the custodians and/or third party
subcustodians, including foreign banks and foreign securities depositories.
OTHER CONSIDERATIONS
Portfolio Turnover
Although the Fund does not purchase securities with a view to rapid
turnover, there are no limitations on the length of time that securities must be
held by the Fund, and the Fund's annual portfolio turnover rate may vary
significantly from year to year. A 100% turnover rate would occur if all of the
securities in the Fund's portfolio were sold and either repurchased or replaced
within one year. Although the Fund cannot predict its portfolio turnover rate,
it is estimated that, under normal circumstances, the annual rate for the Fund
will be no greater than ____%. The portfolio turnover rate of the Fund are shown
under "Financial Highlights" in the Prospectus.
Suspension of Redemptions
The right to redeem shares or to receive payment with respect to any
redemption of shares of the Fund may only be suspended (i) for any period during
which trading on the New York Stock Exchange ("NYSE") is restricted or the NYSE
is closed, other than customary weekend and holiday closing, (ii) for any period
during which an emergency exists as a result of which disposal of securities or
determination of the net asset value of the Fund is not reasonably practicable,
or (iii) for such other periods as the SEC may by order permit for protection of
shareholders of the Fund.
S-20
<PAGE>
Valuation of Securities
The assets of the Fund are valued as follows:
Debt securities generally are valued by a pricing service which
determines valuations based upon market transactions for normal,
institutional-size trading units of similar securities. However, in
circumstances where such prices are not available or where Colonial (the Trust's
pricing and bookkeeping agent) deems it appropriate to do so, an
over-the-counter or exchange bid quotation is used. Securities listed on an
exchange or on Nasdaq are valued at the last sale price. Listed securities for
which there were no sales during the day and unlisted securities are valued at
the last quoted bid prices. Short-term obligations with a maturity of 60 days or
less are valued at amortized cost when such cost approximates market value
pursuant to procedures approved by the Trustees. The values of foreign
securities quoted in foreign currencies are translated into U.S. dollars at the
exchange rate as of 3:00 p.m. Eastern time. Portfolio positions for which there
are no such valuations and other assets are valued at fair value as determined
in good faith under the direction of the Trustees.
The net asset value of shares of each Fund is normally calculated as of
the close of regular trading on the NYSE, currently 4:00 p.m., Eastern time, on
every day the NYSE is open for trading, except on days where both (i) the degree
of trading in a Fund's portfolio securities would not materially affect the net
asset value of that Fund's shares and (ii) no shares of a Fund were tendered for
redemption and no purchase order was received. The NYSE is open Monday through
Friday, except on the following holidays: New Year's Day, Martin Luther King
Day, Washington's Birthday, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day.
Generally, trading in certain securities (such as foreign securities)
is substantially completed each day at various times prior to the close of the
NYSE. The values of these securities used in determining the net asset value are
computed as of such times. Also, because of the amount of time required to
collect and process trading information as to large numbers of securities
issues, the values of certain securities (such as convertible bonds and U.S.
government securities) are determined based on market quotations collected
earlier in the day at the latest practicable time prior to the close of the
NYSE. Occasionally, events affecting the value of such securities may occur
between such times and the close of the NYSE which will not be reflected in the
computation of a Fund's net asset value. If events materially affecting the
value of such securities occur during such period, then these securities will be
valued at their fair value following procedures approved by the Trustees.
Portfolio Transactions
SoGen is responsible for selecting members of securities exchanges,
brokers and dealers (such members, brokers and dealers being hereinafter
referred to as "brokers") for the execution
S-21
<PAGE>
of the Fund's portfolio transactions and, when applicable, the negotiation of
commissions in connection therewith.
Purchase and sale orders are usually placed with brokers who are
selected by SoGen as being able to achieve "best execution" of such orders.
"Best execution" means prompt and reliable execution at the most favorable
securities price, taking into account the other considerations as hereinafter
set forth. The determination of what may constitute best execution of a
securities transaction by a broker involves a number of considerations,
including, without limitation, the overall direct net economic result to the
Fund (involving both price paid or received and any commissions and other costs
paid), the efficiency with which the transaction is effected, the ability to
effect the transaction at all where a large block is involved, availability of
the broker to stand ready to execute possibly difficult transactions in the
future, and the financial strength and stability of the broker. Such
considerations are judgmental and are weighed by SoGen in determining the
overall reasonableness of brokerage commissions.
SoGen is authorized to allocate brokerage and principal business to
brokers who have provided brokerage and research services, as such services are
defined in Section 28(e) of the Securities Exchange Act of 1934, as amended (the
"1934 Act"), for the Fund and/or other accounts, if any, for which SoGen
exercises investment discretion (as defined in Section 3(a)(35) of the 1934 Act)
and, as to transactions as to which fixed minimum commission rates are not
applicable, to cause the Fund to pay a commission for effecting a securities
transaction in excess of the amount another broker would have charged for
effecting the transaction, if SoGen in making the selection in question
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker, viewed in terms of either that particular transaction or of SoGen
overall responsibilities with respect to the Fund and the other accounts as to
which it exercises investment discretion. In reaching such determination, SoGen
is not required to place or attempt to place a specific dollar value on the
research or execution services of a broker or on the portion of any commission
reflecting either of said services. In demonstrating that such determinations
were made in good faith, SoGen must be prepared to show that all commissions
were allocated and paid for purposes contemplated by the Fund's brokerage
policy; that the research services provide lawful and appropriate assistance to
SoGen in the performance of its investment decision-making responsibilities; and
that the commissions paid were within a reasonable range. The determination that
commissions were within a reasonable range will be based on any available
information as to the level of commissions known to be charged by other brokers
on comparable transactions, but there will be taken into account the Fund's
policies that (i) obtaining a low commission is deemed secondary to obtaining a
favorable securities price, since it is recognized that usually it is more
beneficial to the Fund to obtain a favorable price than to pay the lowest
commission, and (ii) the quality, comprehensiveness and frequency of research
studies which are provided for SoGen are useful to SoGen in performing its
services under the investment advisory contract with the Fund. Research services
provided by brokers to SoGen are considered to be in addition to, and not in
lieu of, services required to be performed by SoGen under such investment
advisory contract. Research services provided by brokers include written
reports, responses to
S-22
<PAGE>
specific inquiries and interviews with analysts. These services also include
invitations to meetings arranged by such brokers with the management of
companies in the Fund's portfolios or in which the Fund may invest.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc. and subject to obtaining prices at least as
favorable as those provided by other qualified brokers, SoGen may consider sales
of VA Contracts and VLI Policies that are invested in shares of the Fund as a
factor in the selection of brokers to execute portfolio transactions.
The Fund has been advised by SoGen that it may combine brokerage orders
for the Fund with orders from its other clients when placing such orders with
brokers for execution. In the event orders are placed for the Fund and one or
more other clients for the purchase or sale of the same security, the Fund and
each such other client may share in each transaction in the proportion that each
customer's order bears to the aggregate of such orders. The Fund's orders are
accorded priority over those received from SoGen for its own account or from any
of its officers, directors or employees.
For the period February 3, 1997 (commencement of operations) through
December 31, 1997, the Fund's predecessor paid a total of $3,828 in brokerage
commissions, with respect to portfolio transactions aggregating $867,702, all of
which was placed with brokers or dealers who provided research and investment
information. Of such amount, $329 in brokerage commissions (8.594% of the
aggregate) with respect to portfolio transactions aggregating $70,482 (8.1228%
of the aggregate) was placed with brokers or dealers who at the time were
affiliates of the Fund's predecessor.
INVESTMENT PERFORMANCE
The Fund may quote total return figures from time to time. Total return
on a per share basis is the amount of dividends received per share plus or minus
the change in the net asset value per share for a given period. Total return
percentages may be calculated by dividing the value of a share at the end of a
given period by the value of the share at the beginning of the period and
subtracting one.
Average Annual Total Return is computed as follows:
ERV = P(1+T)(n)
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
(n) = number of years
ERV = ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the
period (or fractional portion thereof).
S-23
<PAGE>
For example, for a $1,000 investment in the Fund, the "Total Return",
the "Total Return Percentage" and (where applicable) the "Average Annual Total
Return" for the period from February 3, 1997 (commencement of operations) to
December 31, 1997 were $_________, (2.30)% and (2.30)%, respectively.
The foregoing figures assume reinvestment of all dividends and
distributions. They are not necessarily indicative of future results. The
performance of the Fund is a result of conditions in the securities markets,
portfolio management, and operating expenses. Although information such as that
shown above is useful in reviewing the Fund's performance and in providing some
basis for comparison with other investment alternatives, it should not be used
for comparison with other investments using different reinvestment assumptions
or time periods. The Fund's total return does not reflect the cost of insurance
and other insurance company separate account charges which vary with the VA
contracts and VLI policies offered through the separate accounts of the
Participating Insurance Companies.
HISTORY
The Fund is the successor to a series, or portfolio (the "Predecessor
Fund"), of SoGen Variable Funds, Inc., an investment company sponsored by SoGen
and its then parent corporation and formed in September, 1995. The Predecessor
Fund commenced operations on February 3, 1995, and, with approval by the
shareholders of the Predecessor Fund, was reorganized into the Fund on
___________, 1999, following the acquisition of all the capital stock of SoGen
from SoGen's former shareholders by LASC's indirect parent, Liberty Financial
Companies, Inc.
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS
The financial statements of the Predecessor Fund as at December 31,
1997 and for the period from February 3, 1997 (commencement of operations) to
that date, together with the related Report of Independent Accountants,
appearing in the December 31, 1997 Annual Report of the Predecessor Fund are
incorporated into this Statement of Additional Information by reference. Such
financial statements have been so incorporated by reference, and the Financial
Highlights as at such date and for such period have been so included in the
Prospectus, in reliance upon the report of KPMG Peat Marwick LLP, Certified
Public Accountants, given on the authority of said firm as experts in accounting
and auditing.
The unaudited financial statements as at and for the six months ended
June 30, 1998 appearing in the June 30, 1998 Semi-Annual Report of the
Predecessor Fund are also incorporated into this Statement of Additional
Information by reference.
Copies of the December 31, 1997 Annual Report and the June 30, 1998
Semi-Annual Report of the Predecessor Fund may be obtained without charge by
writing to Keyport Financial Services Corp. at 125 High Street, Boston,
Massachusetts 02110 or other broker-dealers offering VA Contracts or VLI
Policies of Participating Insurance Companies.
S-24
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements.
(1) The following financial statements for each of the Funds in the
Trust (other than Liberty All-Star Equity Fund, Variable Series ("All-Star
Fund") and [SoGen] Overseas Fund, Variable Series ("Overseas Fund") are
incorporated by reference into Part B of this filing from the Registrant's
December 31, 1997 Annual Report:
Independent Accountants' Report
Schedule of Investments as of December 31, 1997
Statement of Assets and Liabilities as of December 31, 1997
Statement of Operations for the year or period ended December 31, 1997
Statement of Changes in Net Assets for the years or periods ended
December 31, 1997 and 1996
Financial Highlights for the years or periods ended December 31, 1997
and 1996
(2) The following financial statements for the Overseas Fund are
incorporated by reference into Part B of this filing from the December 31, 1997
Annual Report (in the case of the audited financial statements as at such date
and for the period then ended) and the June 30, 1998 Semi-Annual Report (in the
case of the unaudited financial statements as at such date and for the six
months then ended) of the Overseas Fund's predecessor, SoGen Variable Funds,
Inc. (see "History" in Part B).
Schedule of Investments - December 31, 1997
Statement of Assets and Liabilities - December 31, 1997
Statement of Operations - For the Period February 3, 1997 (Commencement
of Operations) to December 31, 1997
Statement of Changes in Net Assets - For the Period February 3, 1997
(Commencement of Operations) to December 31, 1997
Notes to Financial Statements
Independent Auditors' Report
Schedule of Investments - June 30, 1998 (unaudited)
Statement of Assets and liabilities - June 30, 1998 (unaudited)
Statement of Operations for the Six Months ended June 30, 1998
(unaudited)
Statement of Changes in Net Assets for the Six Months ended June 30,
1998 (unaudited)
Notes to Financial Statements
(b) Exhibits.
C-1
<PAGE>
<TABLE>
<S> <C>
1. Agreement and Declaration of Trust (1)
2. By-Laws (1)
3. Not Applicable
4. Not Applicable
5(a)(i). Management Agreement between the Trust, on behalf of each
of Colonial Growth and Income Fund, Variable Series
("GIF") (under its former name "Colonial-Keyport Growth
and Income Fund") and Stein Roe Global Utilities Fund,
Variable Series ("GUF") (under its former name
"Colonial-Keyport Utilities Fund"), and Liberty Advisory
Services Corp. ("LASC") (2)(8)
5(a)(ii). Management Agreement between the Trust, on behalf of each
of Colonial International Fund For Growth, Variable
Series ("IFFG") (under its former name "Colonial-Keyport
International Fund For Growth"), Colonial U.S. Stock
Fund, Variable Series ("USSF") (under its former name
"Colonial-Keyport U.S. Fund For Growth") and Colonial
Strategic Income Fund, Variable Series ("SIF") (under its
former name "Colonial-Keyport Strategic Income Fund"),
and LASC. (3)(8)
5(a)(iii) Amendment No. 1 to Management Agreements listed as
Exhibits 5(a)(i) and 5(a)(ii). (5)(8)
5(a)(iv). Management Agreement between the Trust, on behalf of
Newport Tiger Fund, Variable Series ("NTF") (under its
former name "Newport-Keyport Tiger Fund"), and LASC.
(5)(8)
5(a)(v) Management and Sub-Advisory Agreement between the Trust,
on behalf of All-Star Fund, LASC and Liberty Asset
Management Company ("LAMCO").(9)
5(a)(vi) Management Agreement between the Trust, on behalf of each
of Colonial Small Cap Value Fund, Variable Series ("SCV")
and Colonial High Yield Securities Fund, Variable Series
("HYS"), and LASC.(10)
5(a)(vii) Form of Management Agreement between the Trust, on behalf
of the Overseas Fund, and LASC.
5(b)(i). [deleted]
5(b)(ii). Sub-Advisory Agreement among the Trust, on behalf of the
GIF, LASC and Colonial Management Associates, Inc.
("Colonial"). (2)(8)
C-2
<PAGE>
5(b)(iii). Sub-Advisory Agreement among the Trust, on behalf of GUF,
LASC and Stein Roe & Farnham Incorporated ("Stein
Roe")(10).
5(b)(iv). Sub-Advisory Agreement among the Trust, on behalf of
IFFG, LASC and Colonial. (3)(8)
5(b)(v). [deleted]
5(b)(vi). Sub-Advisory Agreement among the Trust, on behalf of
USSF, LASC and Colonial. (4)(8)
5(b)(vii). [deleted]
5(b)(viii). Sub-Advisory Agreement among the Trust, on behalf of SIF,
LASC and Colonial. (4)(8)
5(b)(ix). Sub-Advisory Agreement among the Trust, on behalf of NTF,
LASC and Newport Fund Management, Inc. ("Newport").
(5)(8)
5(b)(x) Form of Portfolio Management Agreement among the Trust,
on behalf of All-Star Fund, LAMCO and LAMCO's Portfolio
Managers.(9)
5(b)(xi) Sub-Advisory Agreement among the Trust, on behalf of SCV,
LASC and Colonial.(10)
5(b)(xii) Sub-Advisory Agreement among the Trust, on behalf of HYS,
LASC and Colonial.(10)
5(b)(xiii) Form of Sub-Advisory Agreement among the Trust, on behalf
of Overseas Fund, LASC and [Societe Generale Asset
Management Corp.]
6(a). Underwriting Agreement between the Trust and Keyport
Financial Services Corp. ("KFSC") (2)
6(b) Amendment No. One to KFSC Underwriting Agreement. (9)
6(c) Underwriting Agreement between the Trust and Colonial
Investment Services Inc., now Liberty Financial
Investments, Inc. ("LFII"). (9)
7. Not Applicable
8. Form of Custody Agreement between the Trust and The Chase
Manhattan Bank (11)
C-3
<PAGE>
9(a)(i). Joinder and Release Agreement with Respect to Transfer
Agency Agreement dated as of January 3, 1995 among the
Trust, Liberty Investment Services, Inc. and Colonial
Investors Service Center, Inc. (including form of
Transfer Agency Agreement and Amendment No. One thereto)
(5)(8)
9(a)(ii). Amendment No. Two to Transfer Agency Agreement (5)(8)
9(a)(iii). Amendment No. Three to Transfer Agency Agreement (9)
9(b). Participation Agreement among the Trust, Keyport
Financial Services Corp., Keyport Life Insurance Company,
and Liberty Life Assurance Company of Boston (2)(8)
9(c)(i). Pricing and Bookkeeping Agreement between the Trust and
Colonial (2)(8)
9(c)(ii). Amendment No. One to Pricing and Bookkeeping Agreement
(3)(8)
9(c)(iii). Amendment No. Two to Pricing and Bookkeeping Agreement
(5)(8)
9(c)(iv) Amendment No. Three to Pricing and Bookkeeping Agreement
(9)
10. Opinion and consent of counsel as to the legality of the
securities being registered (included with annual Rule
24f-2 Notices)
11. Consent of Independent Accountants (to be filed by
amendment)
12. Not Applicable
13. Not Applicable
14. Not applicable
15. Not applicable
16. Calculation of Total Returns (7)
17. Financial Data Schedules as to Overseas Fund (12)
18. Not applicable
19(a). Power of Attorney executed by each Trustee of the Trust
pertaining to this Registration Statement (6)
</TABLE>
C-4
<PAGE>
(1) Incorporated by reference to Keyport Variable Investment Trust,
Registration Statement on Form N-1A (33-59216) (the "Registration
Statement"), as filed with the SEC on March 8, 1993.
(2) Incorporated by reference to Pre-Effective Amendment No. 1 to the
Registration Statement, as filed with the SEC on June 11, 1993.
(3) Incorporated by reference to Post-Effective Amendment No. 3 to the
Registration Statement, as filed with the SEC on April 27, 1994.
(4) Incorporated by reference to Post-Effective Amendment No. 4 to the
Registration Statement, as filed with the SEC on May 4, 1994.
(5) Incorporated by reference to Post-Effective Amendment No. 6 to the
Registration Statement, as filed on April 27, 1995.
(6) Contained on Signature Pages to Post-Effective Amendment No. 3 to
the Registration Statement, as filed with the SEC on April 27, 1994
(and incorporated therefrom by reference).
(7) Incorporated by reference to Post-Effective Amendment No. 8 to this
Registration Statement filed April, 1997.
(8) Note: The name of the Trust was changed to "Liberty Variable
Investment Trust" before the effective date of this amendment.
Agreements designated by this note (8) were entered into under the
Trust's original name ("Keyport Variable Investment Trust"). In
addition, the name of LASC has also changed "Keyport Advisory Services
Corp."
(9) Incorporated by reference to Post-Effective Amendment No. 9 to this
Registration Statement filed August 29, 1997.
(10) Incorporated by reference to Post-Effective Amendment No. 11 to
this Registration Statement filed March 3, 1998.
(11) Incorporated by reference to Post-Effective Amendment No. 12 to
this Registration Statement filed April 30, 1998.
(12) Incorporated by reference to Exhibit 27 to Post-Effective
Amendment No. 2 of the Registration Statement on Form N-1A of the
Overseas Fund's predecessor, SoGen Variable Funds, Inc. (File No.
33-96668).
Item 25. Persons Controlled by or Under Common Control with Registrant.
Shares of the Trust registered pursuant to this Registration Statement
will be offered and sold to Keyport Life Insurance Company ("Keyport"), a stock
life insurance company organized
C-5
<PAGE>
under the laws of Rhode Island, and to certain of its separate investment
accounts and certain of the respective separate investment accounts of Liberty
Life Assurance Company of Boston ("Liberty Life"), a stock life insurance
company organized as a Massachusetts corporation, and Independence Life &
Annuity Company, a stock life insurance company organized under the laws of
Rhode Island (formerly known as "Crown America Life Insurance Company" and
thereafter formerly known as "Keyport America Life Insurance Company")
("Independence"), although it is not anticipated that shares of the Overseas
Fund will be offered to separate investment accounts of Keyport, Liberty Life or
Independence until May 1, 1999. Shares of the Registrant may also sold to other
separate accounts of Keyport, Liberty Life, Independence or other life insurance
companies as the funding medium for other insurance contracts and policies in
addition to the currently offered contracts and policies. The purchasers of
insurance contracts and policies issued in connection with such accounts will
have the right to instruct Keyport, Liberty Life and Independence with respect
to the voting of the Registrant's shares held by their respective separate
accounts. Subject to such voting instruction rights, Keyport, Liberty Life,
Independence and their respective separate accounts directly control the
Registrant.
KFSC and LFII, the Trust's principal underwriters, LASC, the Trust's investment
manager, Colonial, LASC's sub-adviser with respect to GIF, IFFG, USSF and SIF,
Stein Roe, LASC's sub-adviser with respect to GUF, Newport, LASC's sub-adviser
with respect to NTF, LAMCO, LASC's sub-adviser with respect to All-Star,
________________ (formerly "Societe Generale Asset Management Corp. and herein
referred to as the "Overseas Sub-Advisor"), LASC's sub-advisor with respect to
the Overseas Fund, Keyport and Independence are each wholly owned indirect (or,
in the case of the Overseas Sub-Advisor, direct) subsidiaries of Liberty
Financial Companies, Inc. ("Liberty Financial"), Boston, Massachusetts. Liberty
Mutual Insurance Company ("Liberty Mutual"), Boston, Massachusetts, as of
November 1, 1998 owned, indirectly, approximately 72.09% of the combined voting
power of the outstanding voting stock of Liberty Financial (with the balance
being publicly-held). Liberty Life is a 90%-owned subsidiary of Liberty Mutual.
Item 26. Number of Holders of Securities.
As of November 1, 1998, the number of holders of shares of beneficial
interest of each Fund of the Trust was as follows:
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
-------------- ------------------------
<S> <C>
Growth and Income Fund 12
Global Utilities Fund 10
International Fund For Growth 10
U.S. Stock Fund 10
Strategic Income Fund 13
Tiger Fund 10
All-Star Fund
Overseas Fund
</TABLE>
C-6
<PAGE>
Item 27. Indemnification.
Article Tenth of the Agreement and Declaration of Trust of Registrant
(Exhibit 1), which Article is incorporated herein by reference, provides that
Registrant shall provide indemnification of its trustees and officers (including
each person who serves or has served at Registration's request as a director,
officer, or trustee of another organization in which Registrant has any interest
as a shareholder, creditor or otherwise) ("Covered Persons") under specified
circumstances.
Section 17(h) of the 1940 Act provides that neither the Agreement and
Declaration of Trust nor the By-Laws of Registrant, nor any other instrument
pursuant to which Registrant is organized or administered, shall contain any
provision which protects or purports to protect any trustee or officer of
Registrant against any liability to Registrant or its shareholders to which he
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office. In accordance with Section 17(h) of the 1940 Act, Article Tenth shall
not protect any person against any liability to Registrant or its shareholders
to which he would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in the
conduct of his office.
To the extent required under the 1940 Act:
(i) Article Tenth does not protect any person against any liability to
Registrant or to its shareholders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office;
(ii) in the absence of a final decision on the merits by a court or
other body before whom a proceeding was brought that a Covered Person was not
liable by reason of willful misfeasance, bad, faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his office, no
indemnification is permitted under Article Tenth unless a determination that
such person was not so liable is made on behalf of Registrant by (a) the vote of
a majority of the trustees who are neither "interested persons" of Registrant,
as defined in Section 2(a)(19) of the 1940 Act, nor parties to the proceeding
("disinterested, non-party trustees"), or (b) an independent legal counsel as
expressed in a written opinion; and
(iii) Registrant will not advance attorney's fees or other expenses
incurred by a Covered Person in connection with a civil or criminal action, suit
or proceeding unless Registrant receives an undertaking by or on behalf of the
Covered Person to repay the advance (unless it is ultimately determined that he
is entitled to indemnification) and (a) the Covered Person provides security for
his undertaking, or (b) Registrant is insured against losses arising by reason
of any lawful advances, or (c) a majority of the disinterested, non-party
trustees of Registrant or an independent legal counsel as expressed in a written
opinion, determine, based on a review of readily-available facts (as opposed to
a full trial-type inquiry), that there is reason to believe that the Covered
Person ultimately will be found entitled to indemnification.
C-7
<PAGE>
Any approval of indemnification pursuant to Article Tenth does not
prevent the recovery from any Covered Person of any amount paid to such Covered
Person in accordance with Article Tenth as indemnification if such Covered
Person is subsequently adjudicated by a court of competent jurisdiction not to
have acted in good faith in the reasonable belief that such Covered Person's
action was in, or not opposed to, the best interests of Registrant or to have
been liable to Registrant or its shareholders by reason of willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties involved in the
conduct of such Covered Person's office.
Article Tenth also provides that its indemnification provisions are not
exclusive.
Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to trustees, officers, and controlling persons of the
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 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by Registrant of 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 of whether such indemnification by it is against
public policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
Registrant, its trustees and officers, its investment manager, and
persons affiliated with them are insured against certain expenses in connection
with the defense of actions, suits, or proceedings, and certain liabilities that
might be imposed as a result of such actions, suits, or proceedings. Registrant
will not pay any portion of the premiums for coverage under such insurance that
would (1) protect any trustee or officer against any liability to Registrant or
its shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office or (2) protect its investment manager or
principal underwriter, if any, against any liability to Registrant or its
shareholders to which such person would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence, in the performance of its
duties, or by reason of its reckless disregard of its duties and obligations
under its contract or agreement with the Registrant; for this purpose the
Registrant will rely on an allocation of premiums determined by the insurance
company.
In addition, LASC, Registrant's investment manager, maintains
investment advisory professional liability insurance to insure it, for the
benefit of the Trust and its non-interested trustees, against loss arising out
of any error, omission, or breach of any duty owed to the Trust or any Fund by
the investment manager.
C-8
<PAGE>
Item 28. Business and Other Connections of Investment Advisers
Certain information pertaining to business and other connections of the
Registrant's investment manager, LASC, Colonial, the sub-adviser to each of GIF,
IFFG, USSF and SIF, Stein Roe, the sub-adviser to GUF, Newport, the sub-adviser
to NTF, and LAMCO, the sub-adviser to All-Star, and each of J.P. Morgan
Investment Management, Inc., Oppenheimer Capital, Westwood Management Corp.,
Wilke-Thompson Capital Management, Inc. and Boston Partners Asset Management,
L.P., each of which firms serves as a Portfolio Manager to LAMCO, is
incorporated herein by reference to the section of the Prospectus relating to
GIF, IFFG, USSF, SIF, GUF, NTF and All-Star captioned "TRUST MANAGEMENT
ORGANIZATIONS" and to the section of the Statement of Additional Information
relating to those Funds captioned "INVESTMENT MANAGEMENT AND OTHER SERVICES."
Certain information pertaining to the business and other connections of the
Overseas Sub-Advisor is incorporated herein by reference to the section of the
Prospectus relating to the Overseas Fund captioned "TRUST MANAGEMENT
ORGANIZATIONS" and to the section of the Statement of Additional Information
relating to the Overseas Fund captioned "INVESTMENT MANAGEMENT AND OTHER
SERVICES".
Set forth below is a list of each director and officer of LASC, and
each director and certain officers of Colonial, Newport, the Overseas
Sub-Advisor, LAMCO, and each of LAMCO's Portfolio Managers indicating each
business, profession, vocation, or employment of a substantial nature in which
each such person has been, at any time during the past two fiscal years, engaged
for his or her own account or in the capacity of director, officer, partner, or
trustee.
Liberty Advisory Services, Inc.
Liberty Advisory Services, Inc. is a direct wholly owned subsidiary of
Keyport. Keyport is a direct wholly owed subsidiary of SteinRoe Services, Inc.
("SSI"). SSI is a direct wholly owned subsidiary of Liberty Financial. As stated
above, Liberty Financial is an indirect majority owned subsidiary of Liberty
Mutual.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Name and Current Position with Adviser Other Positions During Past Two Fiscal Years
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Paul H. LeFevre, Jr. President, Chief Executive Executive Vice President, Senior Vice President
Officer and Chairman of the Board and Chief Financial Officer of Keyport
of Directors
- ---------------------------- ----------------------------------- ----------------------------------------------------
Bernard R. Beckerlegge Senior Vice President and General Senior Vice President and General Counsel of
Counsel Keyport
- ---------------------------- ----------------------------------- ----------------------------------------------------
Stewart R. Morrison Senior Vice President and Chief Senior Vice President and Chief Investment
Investment Officer Officer of Keyport
- ---------------------------- ----------------------------------- ----------------------------------------------------
Francis E. Reinhart Senior Vice President Senior Vice President, Chief Information Officer
and Chief Administrative Officer of Keyport; Vice
President - Administration of KFSC
- ---------------------------- ----------------------------------- ----------------------------------------------------
C-9
<PAGE>
- ---------------------------- ----------------------------------- ----------------------------------------------------
Mark R. Tully Senior Vice President Senior Vice President and Chief Sales Officer of
Keyport
- ---------------------------- ----------------------------------- ----------------------------------------------------
James J. Klopper Vice President and Clerk Vice President, Counsel and Secretary of Keyport;
Clerk of KFSC
- ---------------------------- ----------------------------------- ----------------------------------------------------
</TABLE>
The business address of LASC and each individual listed in the
foregoing table is c/o Keyport Life Insurance Company, 125 High Street, Boston,
Massachusetts 02110.
Colonial
Colonial is a direct wholly owned subsidiary of The Colonial Group,
Inc. ("TCG"). TCG is a direct wholly owned subsidiary of Liberty Financial.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Name and Current Position with Adviser Other Positions During Past Two Fiscal Years
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Stephen E. Gibson President, Chief Executive Managing Director, Marketing, of Putnam Mutual
Officer and Chairman of the Board Funds, Inc.
of Directors
- ---------------------------- ----------------------------------- ----------------------------------------------------
Nancy L. Conlin Senior Vice President, General Vice President and Counsel
Counsel and Director
- ---------------------------- ----------------------------------- ----------------------------------------------------
Timothy J. Jacoby Senior Vice President, Chief Senior Vice President of Fidelity Accounting and
Financial Officer and Treasurer Custody Services, Inc.
- ---------------------------- ----------------------------------- ----------------------------------------------------
Davey S. Scoon Executive Vice President and Same
Director
- ---------------------------- ----------------------------------- ----------------------------------------------------
</TABLE>
The business address of Colonial and each individual listed in the
foregoing table is c/o Colonial Management Associates, Inc., One Financial
Place, Boston, Massachusetts 02111.
Newport
Newport is a direct wholly owned subsidiary of Newport Pacific
Management, Inc. ("Newport Pacific"). Newport Pacific is a direct wholly owned
subsidiary of Liberty Newport Holdings, Ltd. ("LNH"). LNH is a direct wholly
owned subsidiary of Liberty Financial.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Name and Current Position with Adviser Other Positions During Past Two Fiscal Years
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
John M. Mussey President, Chief Executive Holds same offices at Newport Pacific Management,
Officer and Chairman of the Board Inc.
of Directors
- ---------------------------- ----------------------------------- ----------------------------------------------------
C-10
<PAGE>
- ---------------------------- ----------------------------------- ----------------------------------------------------
R James Carlson Chief Operating Officer, Holds same offices at Newport Pacific Management,
Treasurer, Secretary and Chief Inc.; Controller and Compliance Officer of Spare,
Compliance Officer Kaplan, Bischel & Associates, Inc., San Francisco
- ---------------------------- ----------------------------------- ----------------------------------------------------
Kenneth R. Leibler Director President, Chief Executive Officer and Director of
Liberty Financial
- ---------------------------- ----------------------------------- ----------------------------------------------------
Lindsay Cook Senior Vice President and Director Executive Vice President since February 1997;
Senior Vice President of Liberty Financial prior
thereto
- ---------------------------- ----------------------------------- ----------------------------------------------------
Thomas R. Tuttle Senior Vice President Senior Vice President of Newport Pacific
Management, Inc.
- ---------------------------- ----------------------------------- ----------------------------------------------------
Robert B. Cameron Senior Vice President Senior Vice President of Newport Pacific
Management, Inc.
- ---------------------------- ----------------------------------- ----------------------------------------------------
Michael Ellis Senior Vice President Senior Vice President of Newport Pacific
Management, Inc.
- ---------------------------- ----------------------------------- ----------------------------------------------------
Christopher H. Legallet Senior Vice President Senior Vice President of Newport Pacific
Management, Inc.; Managing Director of Jupiter
Asset Management (Asia) Ltd., Hong Kong
- ---------------------------- ----------------------------------- ----------------------------------------------------
David Richie Smith Senior Vice President Senior Vice President of Newport Pacific
Management, Inc.
- ---------------------------- ----------------------------------- ----------------------------------------------------
</TABLE>
The principal business address of Newport and Messrs. Mussey and Tuttle
and Mss. Frantz and Couch is 580 California Street, Suite 1960, San Francisco,
California 94104. The principal address of each other person listed in the
preceding table is 600 Atlantic Avenue, Suite 2400, Boston, Massachusetts 02210.
The Overseas Sub-Advisor
The Overseas Sub-Advisor is a direct wholly-owned subsidiary of Liberty
Financial.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Positions and Offices
Name with Overseas Sub-Advisor Other Positions During Past Two Years
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Jean-Marie Eveillard President and Director None
- ---------------------------- ---------------------------------- -------------------------------------------------
Kenneth R. Leibler Director President and Chief Executive Officer and
Director of Liberty Financial
- ---------------------------- ---------------------------------- -------------------------------------------------
Lindsay Cook Director Executive Vice President of Liberty Financial
- ---------------------------- ---------------------------------- -------------------------------------------------
Elizabeth Tobin Vice President None
- ---------------------------- ---------------------------------- -------------------------------------------------
Charles de Vaulx Vice President None
- ---------------------------- ---------------------------------- -------------------------------------------------
Philip J. Bafundo Vice President Secretary and Treasurer, Overseas Sub-Advisor
- ---------------------------- ---------------------------------- -------------------------------------------------
J. Andrew Hilbert Treasurer Senior Vice President and Chief Financial
Officer, Liberty Financial
- ---------------------------- ---------------------------------- -------------------------------------------------
Ignatius Chithelen Vice President Securities Analyst, Overseas Sub-Advisor
- ---------------------------- ---------------------------------- -------------------------------------------------
C-11
<PAGE>
- ---------------------------- ---------------------------------- -------------------------------------------------
Sean J. McKeown Vice President Operations Manager, Overseas Sub-Advisor
- ---------------------------- ---------------------------------- -------------------------------------------------
John A. Benning Secretary Senior Vice President and General Counsel,
Liberty Financial
- ---------------------------- ---------------------------------- -------------------------------------------------
</TABLE>
The principal business address of the Overseas Sub-Advisor and Messrs.
Eveillard, de Vaulx, Bafundo, Chithelen and McKeown and Ms. Tobin is 1221 Avenue
of the Americas, New York, NY 10020. The principal business address of Messrs.
Leibler, Cook, Hilbert and Benning is 600 Atlantic Avenue, Boston, MA 02210.
J.P. Morgan Investment Management, Inc.
J.P. Morgan Investment Management, Inc. is a wholly-owned subsidiary of
J.P. Morgan & Co., Incorporated.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Other Positions During Past
Name and Current Position with Adviser Two Fiscal Years
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Frederick A. Nelson, III Managing Director --
- ------------------------------------------------------------------------------------------------------------
Henry D. Cavanna Managing Director --
- ------------------------------------------------------------------------------------------------------------
William B. Peterson Managing Director --
- ------------------------------------------------------------------------------------------------------------
William M. Riegel Managing Director --
- ------------------------------------------------------------------------------------------------------------
Timothy J. Devlin Vice President Vice President, Mitchell
Hutchins Asset Management,
Inc.
- ------------------------------------------------------------------------------------------------------------
Patrick Jakobson Vice President --
- ------------------------------------------------------------------------------------------------------------
</TABLE>
The principal business address of such firm and each such person is 552
Fifth Avenue, New York, New York 10036.
Oppenheimer Capital
Oppenheimer Capital is a wholly-owned subsidiary of PIMCO Advisers L.P.
C-12
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Other Positions During Past
Name and Current Position with Adviser Two Fiscal Years
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
George Long Chairman, Chief Executive --
Officer & Chief Investment
Officer
- ------------------------------------------------------------------------------------------------------------
Frank LeCates Managing Director, Director --
of Research
- ------------------------------------------------------------------------------------------------------------
Pierre Daviron President, Oppenheimer --
Capital International
- ------------------------------------------------------------------------------------------------------------
Robert Bluestone Managing Director, Fixed --
Income Management
- ------------------------------------------------------------------------------------------------------------
Joseph M. Rusbarsky Managing Director, Client --
Relations & Marketing
- ------------------------------------------------------------------------------------------------------------
Julius A. Nicolai Managing Director --
- ------------------------------------------------------------------------------------------------------------
John G. Lindenthal Managing Director --
- ------------------------------------------------------------------------------------------------------------
Herbert S. Fitzgibbon Managing Director --
- ------------------------------------------------------------------------------------------------------------
Kenneth H. Mortenson Managing Director --
- ------------------------------------------------------------------------------------------------------------
Philip T. Rodilosso Managing Director --
- ------------------------------------------------------------------------------------------------------------
Eugene Vesell Managing Director --
- ------------------------------------------------------------------------------------------------------------
Dick Glasebrook Managing Director --
- ------------------------------------------------------------------------------------------------------------
Eileen P. Rominger Managing Director --
- ------------------------------------------------------------------------------------------------------------
Linda Ferrante Managing Director --
- ------------------------------------------------------------------------------------------------------------
Tom Rackley Managing Director --
- ------------------------------------------------------------------------------------------------------------
Johnathan K. Greenburg Senior Vice President --
- ------------------------------------------------------------------------------------------------------------
Jeffrey Tarnoff Senior Vice President --
- ------------------------------------------------------------------------------------------------------------
Colin Glinsman Senior Vice President --
- ------------------------------------------------------------------------------------------------------------
David Santry Senior Vice President --
- ------------------------------------------------------------------------------------------------------------
Thomas Scerbo Senior Vice President --
- ------------------------------------------------------------------------------------------------------------
Jeff Whittington Senior Vice President --
- ------------------------------------------------------------------------------------------------------------
Irv Rotkowitz Senior Vice President --
- ------------------------------------------------------------------------------------------------------------
Sandra Birnbaum Senior Vice President --
- ------------------------------------------------------------------------------------------------------------
Mary Ann Schreiber Senior Vice President --
- ------------------------------------------------------------------------------------------------------------
Paul Doane Senior Vice President --
- ------------------------------------------------------------------------------------------------------------
Geoff Mullen Senior Vice President --
- ------------------------------------------------------------------------------------------------------------
Brad Goldman Senior Vice President --
- ------------------------------------------------------------------------------------------------------------
Michael Borkan Senior Vice President --
- ------------------------------------------------------------------------------------------------------------
Malcolm Bishop Senior Vice President --
- ------------------------------------------------------------------------------------------------------------
Evan Weston Senior Vice President --
- ------------------------------------------------------------------------------------------------------------
</TABLE>
C-13
<PAGE>
The business address of such firm and each such person is Oppenheimer
Tower, World Financial Center, New York, New York 10281.
Boston Partners Asset Management, L.P.
The firm is owned by its 39 partners. Desmond S. Heathwood is the sole
General Partner. Its and his address is One Financial Center, Boston,
Massachusetts 02111.
Westwood Management Corp.
The firm is owned by Southwest Securities Group, Inc.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Other Positions During Past
Name and Current Position with Adviser Two Fiscal Years
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Susan M. Byrne Director, President, Chief Director of each of Southwest
Executive Officer and Treasurer Securities Group, Inc. and Westwood
Trust
- -------------------------------- ---------------------------------- ----------------------------------------
Jacquiline L. Finney Secretary and Assistant --
Treasurer
- -------------------------------- ---------------------------------- ----------------------------------------
</TABLE>
The address of such firm and each such person is 300 Crescent Court,
Suite 1320, Dallas, Texas 75201.
Wilke/Thompson Capital Management, Inc.
The firm is employee owned. Mr. Thompson (see below) owns the
controlling interest.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Other Positions During Past
Name and Current Position with Adviser Two Fiscal Years
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mark A. Thompson Director, Chairman --
and Principal Investment
Officer
- -------------------------------- ------------------------------ -------------------------------
Anthony L. Ventura Director, President and Partner of Wessels, Arnold &
Chief Executive Officer Henderson
- -------------------------------- ------------------------------ -------------------------------
Dona L. Feick Portfolio Manager --
- -------------------------------- ------------------------------ -------------------------------
Stephen M. Kensinger Portfolio Manager --
- -------------------------------- ------------------------------ -------------------------------
</TABLE>
The business address of such firm and each such person is 3800 Norwest
Center, 90 South Seventh M. Street, Minneapolis, Minnesota 55402.
Item 29. Principal Underwriters
(a) KFSC and LFII act as principal underwriters of the Registrant's
shares on a best-efforts basis.
C-14
<PAGE>
KFSC also acts as principal underwriter for the following investment
companies:
SteinRoe Variable Investment Trust
Special Venture Fund, Variable Series
Growth Stock Fund, Variable Series
Balanced Fund, Variable Series
Mortgage Securities Fund, Variable Series
Money Market Fund, Variable Series
LFII also acts as principal underwriter for the following investment
companies:
Colonial Trust I
Colonial High Yield Securities Fund
Colonial Income Fund
Colonial Strategic Income Fund
Colonial Tax-Managed Growth Fund
Colonial Trust II
Colonial Government Money Market Fund
Colonial Intermediate U.S. Government Fund
Colonial Short Duration U.S. Government Fund
Colonial Newport Japan Fund
Colonial Newport Tiger Cub Fund
Newport Greater China Fund
Colonial Trust III
Colonial Select Value Fund
The Colonial Fund
Colonial Federal Securities Fund
Colonial Global Equity Fund
Colonial International Horizons Fund
Colonial Strategic Balance Fund
Colonial International Fund For Growth
Colonial Trust IV
Colonial Tax-Exempt Fund
Colonial Tax-Exempt Insured Fund
Colonial High Yield Municipal Fund
Colonial Utilities Fund
Colonial Intermediate Tax-Exempt Fund
Colonial Municipal Money Market Fund
C-15
<PAGE>
Colonial Trust V
Colonial California Tax-Exempt Fund
Colonial Connecticut Tax-Exempt Fund
Colonial Florida Tax-Exempt Fund
Colonial Massachusetts Tax-Exempt Fund
Colonial Michigan Tax-Exempt Fund
Colonial Minnesota Tax-Exempt Fund
Colonial New York Tax-Exempt Fund
Colonial North Carolina Tax-Exempt Fund
Colonial Ohio Tax-Exempt Fund
Colonial Trust VI
Colonial U.S. Stock Fund
Colonial Small Cap Value Fund
Colonial Equity Income Fund
Colonial International Equity Fund
Colonial Aggressive Growth Fund
Colonial Trust VII
Colonial Newport Tiger Fund
Colonial Intermediate High Income Fund
Colonial InterMarket Income Trust I
Colonial Municipal Income Trust
Colonial High Income Municipal Trust
Colonial Investment Grade Municipal Trust
LFC Utilities Trust
Colonial Global Utilities Fund
Liberty Newport World Portfolio
Global Opportunity Fund
Newport Tiger Fund
Newport Pacific Fund
Stein Roe Latin America Fund
(b) Set forth below is information concerning each director and officer
of KFSC.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Name and Principal Positions and Offices Positions and Offices with
Business Address* with Underwriter the Registrant
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
John W. Rosensteel Chairman and President None
- ------------------------------ --------------------------------------------- ------------------------------
William L. Dixon Vice President - Compliance None
- ------------------------------ --------------------------------------------- ------------------------------
</TABLE>
- ------------------
* The principal business address of KFSC and each person listed in the table is
c/o Keyport Life Insurance Company, 125 High Street, Boston, Massachusetts
02110.
C-16
<PAGE>
<TABLE>
<S> <C> <C>
- ------------------------------ --------------------------------------------- ------------------------------
Francis E. Reinhart Vice President - Administration None
and Director
- ------------------------------ --------------------------------------------- ------------------------------
James J. Klopper Clerk None
- ------------------------------ --------------------------------------------- ------------------------------
Donald A. Truman Assistant Clerk None
- ------------------------------ --------------------------------------------- ------------------------------
</TABLE>
Set forth below is information concerning each director and officer of
LFII.
<TABLE>
<CAPTION>
- --------------------------------------- -------------------------------------- --------------------------------------
Positions and Officers with the
Name and Principal Business Address* Positions with Underwriter Registrant
- --------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Stephen E. Gibson Chairman of the Board None
- --------------------------------------- -------------------------------------- --------------------------------------
James Tambone Chief Executive Officer None
- --------------------------------------- -------------------------------------- --------------------------------------
Lou Tasiopoulos President None
- --------------------------------------- -------------------------------------- --------------------------------------
Kevin O'Shea Managing Director None
- --------------------------------------- -------------------------------------- --------------------------------------
C. Frazier Evans Managing Director None
- --------------------------------------- -------------------------------------- --------------------------------------
John Bartlett Managing Director None
- --------------------------------------- -------------------------------------- --------------------------------------
Marilyn Karagiannis Managing Director None
- --------------------------------------- -------------------------------------- --------------------------------------
Elizabeth Clapp Senior Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Bryan Eckelman Senior Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
David Feldman Senior Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Stephen A. Gerolkoulis Senior Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Keith H. VanEtten Senior Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Cynthia Erickson Zarker Senior Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Cynthia Davey Regional Senior Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Thomas Harrington Regional Senior Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Joseph Hodgkins Regional Senior Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
David W. Kelson Regional Senior Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Gregory McCombs Regional Senior Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Ann R. Moberly Regional Senior Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Christopher Reed Regional Senior Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Michael W. Scott Regional Senior Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Judith Anderson Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Debra Babbitt Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Beth Brown Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Stacy Burtman Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
C-17
<PAGE>
- --------------------------------------- -------------------------------------- --------------------------------------
Patrick Campbell Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Marian Desilets Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Steve DiMaio Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Christopher Downey Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Cynthia Jones Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Mary McKenzie Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Catherne Menchin Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Patrick Morner Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Kevin Nolin Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Frank Quirk Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Rebecca Scarlott Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Lou Sideropoulos Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Deborah Young Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Rick Ballou Regional Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Gregory Carroll Regional Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Daniel Chrzanowski Regional Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Andrew Crossfield Regional Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
James Devaney Regional Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
John Donovan Regional Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Kim P. Emerson Regional Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Robert Fifield Regional Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Matthew Goldberg Regional Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Brian Guenard Regional Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Terry M. Kelley Regional Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Andrew Nerney Regional Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Tracy Predmore Regional Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
David Schulman Regional Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Darren Smith Regional Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Eric Studer Regional Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
R. Andrew Sutton Regional Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Brian Tuttle Regional Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Paul Villanova Regional Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Valerie Wess Regional Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Linda Brandon Assistant Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Diana Castagna Assistant Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Donna Donovan Assistant Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Thomas Gariepy Assistant Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Douglas Geer Assistant Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Leslie Moon Assistant Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Linda Raftery Assistant Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Peter Tufts Assistant Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
John Vaccaro Assistant Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
C-18
<PAGE>
- --------------------------------------- -------------------------------------- --------------------------------------
John Ziolkowski Assistant Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Philip J. Iudice, Jr. Treasurer and Chief Financial Officer None
- --------------------------------------- -------------------------------------- --------------------------------------
Nancy L. Conlin Clerk and Director None
- --------------------------------------- -------------------------------------- --------------------------------------
Kevin S. Jacobs Assistant Clerk None
- --------------------------------------- -------------------------------------- --------------------------------------
John W. Reading Assistant Clerk None
- --------------------------------------- -------------------------------------- --------------------------------------
Davey S. Scoon Director None
- --------------------------------------- -------------------------------------- --------------------------------------
</TABLE>
- -------------
* LFII's address is One Financial Center, Boston, MA 02111.
(c) Not applicable.
Item 30. Location of Accounts and Records
The following entities prepare, maintain, and preserve the records
required by Section 31(a) of the Investment Company Act of 1940 (the "1940 Act")
for the Registrant. These services are provided to the Registrant through
written agreements between the parties to the effect that such services will be
provided to the Registrant for such periods prescribed by the rules and
regulations of the Securities and Exchange Commission under the 1940 Act and
such records are the property of the entity required to maintain and preserve
such records and will be surrendered promptly on request.
The Chase Manhattan Bank, 3 Chase Metro Tech Center, 8th Floor,
Brooklyn, New York 11745, serves as custodian for the Trust. In such capacity,
the custodian bank keeps records regarding securities and other assets in
custody and in transfer, bank statements, canceled checks, financial books and
records, and other records relating to its duties as custodian. Liberty Funds
Services, Inc. (formerly Colonial Investors Service Center, Inc.), One Financial
Center, Boston, MA 02111, serves as the transfer agent and dividend disbursing
agent for the Registrant, and in such capacities is responsible for records
regarding each shareholder's account and all disbursements made to shareholders.
In addition, LASC, pursuant to its Fund Management Agreements with the
Registrant with respect to the Trust, has delegated to (i) Colonial, One
Financial Center, Boston, Massachusetts 02111, and (ii) Liberty Financial
Companies, Inc., 600 Atlantic Avenue, Boston, Massachusetts 02210, the
obligation to maintain the records required pursuant to such agreements.
Colonial also maintains all records pursuant to its Pricing and Bookkeeping
Agreement with the Trust. KFSC, 125 High Street, Boston, Massachusetts 02110,
and LFII, One Financial Center, Boston, MA 02111, serve as principal
underwriters for the Trust, and in such capacity each such firm maintains all
records required pursuant to its Underwriting Agreement with the Registrant.
C-19
<PAGE>
Item 31. Management Services
LASC, pursuant to its Fund Managed Agreements with the Trust, has
delegated its duties thereunder to provide certain administrative services to
the Trust to Colonial and Liberty Financial.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) The Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
C-20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Registrant has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Boston, and Commonwealth of Massachusetts on the
4th day of November, 1998.
LIBERTY VARIABLE INVESTMENT TRUST
(Registrant)
By: /s/ RICHARD R. CHRISTENSEN*
-----------------------------
Richard R. Christensen
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form N-1A has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ RICHARD R. CHRISTENSEN* President and Trustee November 4, 1998
- ------------------------------------- (Principal Executive
Richard R. Christensen Officer)
/s/ TIMOTHY J. JACOBY Treasurer (Principal November 4, 1998
- ------------------------------------- Financial and Accounting
Timothy J. Jacoby Officer)
/s/ JOHN A. BACON JR.* Trustee November 4, 1998
- -------------------------------------
John A. Bacon Jr.
/s/ SALVATORE MACERA* Trustee November 4, 1998
- -------------------------------------
Salvatore Macera
/s/ THOMAS E. STITZEL* Trustee November 4, 1998
- -------------------------------------
Thomas E. Stitzel
</TABLE>
By: /s/ KEVIN M. CAROME
-----------------------
Attorney-in-Fact
C-21
<PAGE>
EXHIBIT INDEX
Exhibit No.
- -----------
5(a)(vii) Form of Management Agreement between Registrant, on behalf of the
Overseas Fund, and Liberty Advisory Services Corp.
5(b)(xii) Form of Sub-Advisory Agreement among the Registrant, on behalf of
the Overseas Fund, [Societe Generale Asset Management Corp.]
C-22
Exhibit 5(a)(vii)
LIBERTY VARIABLE INVESTMENT TRUST
[SOGEN] OVERSEAS FUND, VARIABLE SERIES
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT ("Agreement"), made this __ day of January, 1999,
between LIBERTY VARIABLE INVESTMENT TRUST, a business trust organized under the
laws of The Commonwealth of Massachusetts (the "Trust"), on its own behalf and
on behalf of the [SoGen] Overseas Fund, Variable Series (the "Fund"), and
LIBERTY ADVISORY SERVICES CORP., a corporation organized under the laws of The
Commonwealth of Massachusetts (the "Manager").
WHEREAS, the Trust has been organized as an open-end management
investment company registered as such under the Investment Company Act of 1940,
as amended ("Investment Company Act"), and is authorized to issue shares of
beneficial interest in one or more separate series (each representing interests
in a separate portfolio of securities and other assets), including the Fund,
which shares are to be issued and sold to and held by various separate accounts
of Keyport Life Insurance Company ("Keyport"), Independence Life & Annuity
Company ("Independence") and Liberty Life Assurance Company of Boston ("Liberty
Life") or separate accounts of other insurance companies that are affiliated or
are not affiliated with Keyport (collectively, "Participating Insurance
Companies");
WHEREAS, the Trust heretofore has created ten other separate funds
which are covered by Management Agreements among the Trust, on its own behalf
and on behalf of such other funds, and the Manager; and the Trust may in the
future create additional fund(s) that may be covered by other separate
agreements;
WHEREAS, the Trust desires the Manager to render certain administrative
services and to render total investment management services to the Trust and the
Fund, all in the manner and on the terms and conditions hereinafter set forth;
WHEREAS, the Trust authorizes the Manager to enter into sub-advisory
agreements with one or more firms registered as investment advisers under the
Investment Advisors Act of 1940, as amended (the "Investment Adviser's Act"), or
qualifying as a "bank" within the meaning of the Investment Adviser's Act and
thereby exempted from the requirement to be so registered, to manage all or a
portion of a Fund's assets, as determined by the Manager from time to time (a
"Sub-Adviser"); and
WHEREAS, the Manager is registered as an investment adviser under the
Investment Adviser's Act, and desires to provide services to the Trust and the
Fund in consideration of and on the terms and conditions hereinafter set forth;
<PAGE>
NOW, THEREFORE, the Trust, on its own behalf and on behalf of the Fund,
and the Manager hereby agree as follows:
1. Employment of the Investment Adviser.
The Trust hereby employs the Manager (i) to provide certain
administrative and limited oversight services and (ii) to provide investment
management and related services to the Trust and the Fund, all in the manner set
forth in Section 2 of this Agreement, subject to the direction of the Trustees,
and for the period, in the manner, and on the terms set forth hereinafter. The
Manager hereby accepts such employment and agrees during such period to render
the services and to assume the obligations herein set forth. The Manager shall
for all purposes herein be deemed to be an independent contractor and, except as
expressly provided or authorized (whether herein or otherwise), shall have no
authority to act for or represent the Trust in any way or otherwise be deemed an
agent of the Trust.
2. Obligations of, and Services to be Provided by, the Manager.
The Manager undertakes to provide the services hereinafter set
forth and to assume the following obligations:
A. Administrative Services.
(a) The Manager will provide general administrative services as
hereinafter set forth ("Administrative Services"), all subject to the overall
direction and control of the Board of Trustees of the Trust (the "Board").
(b) Such Administrative Services shall not include investment
advisory, custodian, underwriting and distribution, transfer agency or pricing
and bookkeeping services, but shall include; (i) provision of office space,
equipment and facilities necessary in connection with the services to be
performed hereunder and the maintenance of the headquarters of the Trust; (ii)
maintenance of the corporate books and records of the Trust (other than those of
its records maintained by the Sub-Advisers referred to in paragraph 2(B)(c)
below, the transfer agent, the custodian and the pricing and bookkeeping agent);
(iii) administration of all dealings and relationships with the Trustees for
meetings of the Board, the scheduling of such meetings and the conduct thereof;
(iv) preparation and filing of proxy materials and administration of
arrangements for meetings of shareholders or beneficial owners of the Funds; (v)
preparation and filing of all required reports and all updating and other
amendments to the Trust's Registration Statement under the Investment Company
Act, the Securities Act of 1933, as amended (the "Securities Act"), and the
rules and regulations thereunder; (vi) calculation of distributions required or
advisable under the Investment Company Act and the Internal Revenue Code of
1986, as amended (the "Code"); (vii) periodic computation and reporting to the
Trustees of each Fund's compliance with diversification and other portfolio
requirements of the Investment Company Act and the Code; (viii) development and
implementation of general shareholder and beneficial owner correspondence and
communications relating to the Funds, including the preparation and filing of
shareholder and beneficial owner reports as are required or deemed
2
<PAGE>
advisable; and (ix) general oversight of the custodial, net asset value
computation, portfolio accounting, financial statement preparation, legal, tax
and accounting services performed for the Trust or the Funds by others.
It is understood that the Manager may, in its discretion and at its
expense, delegate some or all of its administrative duties and responsibilities
under this subsection 2A to its affiliate, Liberty Financial Companies, Inc.
("LFC"), or any majority or greater owned subsidiaries of LFC.
B. Investment Advisory Services.
(a) The Manager shall have responsibility for the management and
investment of the assets of the Fund, subject to and in accordance with the
separate investment objectives, policies and limitations of the Fund, as
provided in the Trust's Prospectus and Statement of Additional Information and
governing instruments, as amended from time to time, and any directions and
policies which the Trustees may issue to the Manager from time to time.
(b) The Manager shall provide a continuous investment program for
the Fund, shall revise each such program as necessary, and shall monitor
implementation of the program.
(c) The Manager may delegate its investment responsibilities under
paragraph 2B(a) with respect to the Fund to one or more persons or companies
registered as investment advisers under the Investment Adviser's Act or
qualifying as a "bank" within the meaning of the Investment Adviser's Act and
thereby exempted from the requirement to be so registered ("Sub-Advisers")
pursuant to an agreement among the Trust, such Fund and each Sub-Adviser
("Sub-Advisory Agreement"). Each Sub-Advisory Agreement may provide that the
Sub-Adviser, subject to the control and supervision of the Trustees and the
Manager, shall have full investment discretion for the Fund and shall make all
determinations with respect to the investment of the Fund's assets or any
portion thereof specified by the Manager. Any delegation of duties pursuant to
this paragraph shall comply with any applicable provisions of Section 15 of the
Investment Company Act, except to the extent permitted by any exemptive order of
the Securities and Exchange Commission or similar relief.
(d) The Manager shall be solely responsible for paying the fees of
each Sub-Adviser from the fees it collects as provided in paragraph 6 below.
(e) The Manager shall evaluate possible Sub-Advisers and shall
advise the Trustees of the candidates which the Manager believes are best suited
to invest the assets of each Fund; shall monitor and evaluate the investment
performance of each Sub-Adviser; shall recommend changes of or additions of
Sub-Advisers when appropriate; and shall coordinate the investment activities of
the Sub-Advisers.
(f) It is understood that the Manager may seek advice with respect
to the performance of any or all of its duties under paragraphs 2B(b) and (c)
from a person or company ("Consultant") pursuant to an agreement among the
Manager, the Trust and the Consultant (a
3
<PAGE>
"Fund Consulting Agreement"). A Fund Consulting Agreement may provide that the
Consultant, subject to the control and supervision of the Trustees and the
Manager, shall provide assistance to the Manager with respect to each Fund's
investment program, the selection, monitoring and evaluation of Sub-Advisers and
the allocation of each Fund's assets to the Sub-Advisers.
(g) The Funds shall be solely responsible for paying the fees of
any Consultant.
(h) The Manager shall render regular reports to the Trustees
relating to the performance of its duties specified in paragraphs 2B(a), (b) and
(c).
C. Expenses Borne By Manager.
To the extent necessary to perform its obligations under this
Agreement, the Manager, at its own expense, shall furnish executive and other
personnel and office space, equipment and facilities, and shall pay any other
expenses incurred by it, in connection with the performance of its duties
hereunder, except that the Trust or the Fund, as appropriate, shall reimburse
the Manager for its out-of-pocket costs, including telephone, postage and
supplies, incurred by it in connection with communications with shareholders and
beneficial owners of the Fund. The Manager shall pay all salaries, fees and
expenses of Trustees or officers of the Trust who are employees of the Manager.
The Manager shall not be obligated to bear any other expenses incidental to the
operations and business of the Trust. The Manager shall not be required to pay
or provide any credit for services provided by the Trust's custodian, transfer
agent or other agents.
D. Provision of Information Necessary for Preparation of Registration
Statement Amendments and Other Materials.
The Manager will make available and provide such information as
the Trust may reasonably request for use in the preparation of its Registration
Statement, reports and other documents required by federal laws and any
securities and insurance laws of the other states and other jurisdictions in
which the Trust's shares are sold.
E. Code of Ethics.
The Manager has adopted a written code of ethics complying with
the requirements of Rule 17j-1 under the Investment Company Act and has provided
the Trust with a copy of the code of ethics and evidence of its adoption. Within
forty-five (45) days of the end of the last calendar quarter of each year while
this Agreement is in effect, an executive officer of the Manager shall verify to
the Trustees that the Manager has complied with the requirements of Rule 17j-1
during the previous year and that there has been no violation of the Manager's
code of ethics or, if such a violation has occurred, that appropriate action was
taken in response to such violation. Upon the written request of the Trust, the
Manager shall permit the Trust to examine the reports required to be made to the
Manager by Rule 17j-1(c)(1).
4
<PAGE>
F. Disqualification.
The Manager shall immediately notify the Trustees of the
occurrence of any event which would disqualify the Manager from serving as an
investment adviser of an investment company pursuant to Section 9(a) of the
Investment Company Act or any other applicable statute or regulation.
G. Other Obligations and Service.
The Manager shall make its officers and employees available to the
Trustees and officers of the Trust for consulting and discussions regarding the
management of the Trust and its investment activities.
3. Execution and Allocation of Portfolio Brokerage.
A. The Manager, subject to the control and direction of the
Trustees, and any Sub-Advisers, subject to the control and direction of the
Trustees and the Manager, shall have authority and discretion, as appropriate,
to select brokers and dealers to execute portfolio transactions for each Fund,
and for the selection of the markets on or in which the transactions will be
executed.
B. In acting pursuant to paragraph 3A, the Manager and the
Sub-Advisers may place orders through such brokers and dealers in conformity
with the policy with respect to brokerage set forth in the Trust's then
effective Registration Statement.
C. It is understood that the Manager or a Sub-Adviser may, to the
extent permitted by applicable laws and regulations, aggregate securities to be
sold or purchased for a Fund and for other clients in order to obtain the most
favorable price and efficient execution. In that event, allocation of the
securities purchased or sold, as well as expenses incurred in the transaction,
will be made by the Manager or Sub-Adviser, as the case may be, in the manner it
considers to be the most equitable and consistent with its fiduciary obligations
to the Trust and to its other clients, and in conformity with any applicable
policies adopted by the Board of Trustees.
D. The Manager shall provide such reports as the Trustees may
reasonably request with respect to each Fund's total brokerage and the manner in
which that brokerage was allocated.
4. Expenses of the Trust.
It is understood that the Trust (or each of its funds (including
the Fund), where applicable) will pay, or will enter into arrangements that
require third parties to pay, all of the expenses of the Trust or such funds,
other than those expressly assumed by the Manager herein, including without
limitation:
A. Advisory, sub-advisory and administrative fees;
5
<PAGE>
B. Fees for services of independent public accountants;
C. Legal and consulting fees;
D. Fees for transfer agent, custodian and portfolio
recordkeeping and tax information services;
E. Expenses of periodic calculations of the funds' net asset
values and of equipment for communication among the funds'
custodian, transfer agent and others;
F. Taxes and the preparation of the funds' tax returns;
G. Brokerage fees and commissions;
H. Interest;
I. Costs of Board of Trustees and shareholder meetings;
J. Updates and printing of prospectuses and reports to
shareholders;
K. Fees for filing reports with regulatory bodies and the
maintenance of the Trust's existence;
L. Membership dues for industry trade associations;
M. Fees to federal authorities for the registration of the
shares of the funds;
N. Fees and expenses of Trustees who are not directors,
officers, employees or stockholders of the Manager of its
affiliates;
O. Distribution fees of the Fund under a distribution plan
adopted pursuant to Rule 12b-1 under the Investment Company
Act;
P. Insurance and fidelity bond premiums; and
Q. Litigation and other extraordinary expenses of a
non-recurring nature.
5. Activities and Affiliates of the Manager.
A. The Trust acknowledges that the Manager or one or more of its
affiliates may have investment or administrative responsibilities or render
investment advice to or perform other investment advisory services for other
individuals or entities, and that the Manager, its affiliates or any of its or
their directors, officers, agents or employees may buy, sell or trade in
6
<PAGE>
securities for its or their respective accounts ("Affiliated Accounts"). Subject
to the provisions of paragraph 3, the Trust agrees that the Manager or its
affiliates may give advice or exercise investment responsibility and take such
other action with respect to Affiliated Accounts which may differ from the
advice given or the timing or nature of action with respect to the Fund,
provided that the Manager acts in good faith. The Trust acknowledges that one or
more of the Affiliated Accounts may at any time hold, acquire, increase,
decrease, dispose of or otherwise deal with positions in investments in which
the Fund may have an interest. The Manager shall have no obligation to recommend
for the Fund a position in any investment which an Affiliated Account may
acquire, and the Trust shall have no first refusal, co-investment or other
rights in respect of any such investment, either for the Fund or otherwise.
B. Subject to and in accordance with the Declaration of Trust and
By-Laws of the Trust as currently in effect and the Investment Company Act and
the rules thereunder, it is understood that Trustees, officers and agents of the
Trust and shareholders of the Trust are or may be interested persons as defined
by the Investment Company Act ("Interested Persons") of the Manager or its
affiliates as directors, officers, agents and shareholders of the Manager or its
affiliates; that directors, officers, agents and shareholders of the Manager or
its affiliates are or may be Interested Persons of the Trust as Trustees,
officers, agents, shareholders or otherwise; that the Manager or its affiliates
may be Interested Persons of the Trust as shareholders or otherwise; and that
the effect of any such interests shall be governed by said Declaration of Trust,
By-Laws and the Investment Company Act and the rules thereunder.
6. Compensation of the Manager.
For all services to be rendered and payments made pursuant to this
Agreement, the Trust, on its own behalf and on behalf of Fund, will pay the
Manager monthly in arrears a fee at an annual rate equal to 0.75% of the net
asset value of the Fund. The fee shall be accrued for each calendar day and the
sum of the daily fee accruals shall be paid monthly on or before the tenth day
of the following calendar month. The daily accruals of the fee will be computed
by (i) multiplying the annual percentage rate referred to above by the fraction
the numerator of which is one and the denominator of which is the number of
calendar days in the year, and (ii) multiplying the product obtained pursuant to
clause (i) above by the net asset value of the Fund as determined in accordance
with the Trust's Prospectus as of the previous business day on which the Fund
was open for business. The foregoing fee shall be prorated for any month during
which this Agreement is in effect for only a portion of the month.
7. Liabilities of the Manager.
A. Except as provided below, in the absence of willful
misfeasance, bad faith, gross negligence, or reckless disregard of obligations
or duties hereunder on the part of the Manager, the Manager shall not be subject
to liability to the Trust or to any shareholder of the Trust for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security.
7
<PAGE>
B. The Manager shall indemnify and hold harmless the Trust from
any loss, cost, expense or damage resulting from the failure of any Sub-Advisor
to comply with (i) any statement included in the Prospectus and Statement of
Additional Information of the Trust, or (ii) instructions given by the Manager
to any Sub-Advisor for the purpose of ensuring the Trust's compliance with
securities, tax and other requirements applicable to the Trust's business and
the investment activities of its Funds; provided, however, that the
indemnification provided in this paragraph 7B shall apply only to the extent
that a Sub-Adviser is liable to the Trust and, after demand by the Trust, is
unable or refuses to discharge its obligations to the Trust.
C. No provision of this Agreement shall be construed to protect
any Trustee or officer of the Trust, or the Manager, from liability in violation
of Sections 17(h) and (i) of the Investment Company Act.
8. Effective Date: Term.
This Agreement shall become effective on the later of (i) the date
first written above or (ii) the date on which the offer and sale of shares of
the Fund has been registered under the Securities Act and the Investment Company
Act pursuant to an effective Registration Statement of the Trust on Form N-1A
and shall continue until January , 2001, and from year to year thereafter, but
only so long as such continuance is specifically approved at least annually by a
vote of the Trustees, including the vote of a majority of the Trustees who are
not interested persons of the Trust, cast in person at a meeting called for the
purpose of voting on such approval, or by vote of a majority of the outstanding
voting securities. The aforesaid provision shall be construed in a manner
consistent with the Investment Company Act and the rules and regulations
thereunder.
9. Assignment.
No assignment of this Agreement shall be made by the Manager, and
this Agreement shall terminate automatically in the event of any such
assignment. The Manager shall notify the Trust in writing in advance of any
proposed change of control to enable the Trust to take the steps necessary to
enter into a new advisory contract.
10. Amendment.
This Agreement may be amended at any time, but only by written
Agreement between the Manager and the Trust, which is subject to the approval of
the Trustees of the Trust and the shareholders of any affected Fund in the
manner required by the Investment Company Act and the rules thereunder.
11. Termination.
This Agreement:
8
<PAGE>
(a) may at any time be terminated without payment of any
penalty, by the Trust (by the Board of Trustees of
the Trust or by the vote of a majority of the
outstanding voting securities of the Fund) on sixty
(60) days' written notice to the Manager;
(b) shall immediately terminate in the event of its assignment;
and
(c) may be terminated by the Manager on sixty (60) days written
notice to the Trust.
12. Definitions.
As used in this Agreement, the terms "affiliated person,"
"assignment," "control," "interested person" and "vote of a majority of the
outstanding voting securities" shall have the meanings set forth in the
Investment Company Act and the rules and regulations thereunder, subject to any
applicable orders of exemption issued by the SEC.
13. Notice.
Any notice under this Agreement shall be given in writing
addressed and delivered or mailed postpaid to the other party to this Agreement
at its principal place of business.
14. Severability.
If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
15. Shareholder Liability.
The Manager 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 shall be
limited in all cases to the Trust and its assets, and if the liability relates
to one or more Funds, the obligations thereunder shall be limited to the
respective assets of such Funds. The Manager further agrees that it shall not
seek satisfaction of any such obligation from the shareholders of the Funds, nor
from the Trustees or any individual Trustee of the Trust.
16. Governing Law.
This Agreement shall be interpreted under, and the performance of
the Manager under this Agreement shall be consistent with, the provisions of the
Agreement and Declaration of Trust and By-Laws of the Trust, the terms of the
Investment Company Act, applicable rules and regulations thereunder, the Code
and regulations thereunder, and the Trust's Prospectus and Statement of
Additional Information, in each case as from time to time in effect. The
provisions of this Agreement shall be construed and interpreted in accordance
with the domestic substantive
9
<PAGE>
laws of The Commonwealth of Massachusetts without giving effect to any choice or
conflict of laws rules or provisions that would result in the application of the
domestic substantive laws of any other jurisdiction; provided, however, that if
such law or any of the provisions of this Agreement conflict with the applicable
provisions of the Investment Company Act, the latter shall control.
17. Use of Manager's Name.
The Trust may use the name "Liberty" or any other name derived
from the name "Liberty" only for so long as this Agreement (or another similar
management agreement pertaining to other series funds of the Trust) or any
extension, renewal, or amendment hereof (or thereof) remains in effect,
including any similar agreement with any organization that shall have succeeded
to the business of the Manager. At such time as this Agreement (and each other
similar agreement pertaining to such other series funds) or any extension,
renewal or amendment hereof (or thereof), or each such other similar successor
organization agreement shall no longer be in effect, the Trust will cease to use
any name derived from the name "Liberty," any name similar thereto, or any other
name indicating that it is managed by or otherwise connected with the Manager,
or with any organization which shall have succeeded to Manager's business as
investment advisor or manager.
This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
IN WITNESS WHEREOF, the parties hereto have duly executed this
agreement on the date first above written.
ATTEST: LIBERTY VARIABLE INVESTMENT TRUST,
on its own behalf and on behalf of [SoGen] Overseas
Fund, Variable Series
_____________________ By: __________________________________
Title: Secretary Title:
ATTEST: KEYPORT ADVISORY SERVICES CORP.
_____________________ By: __________________________________
Title: Secretary Title:
10
Exhibit 5(b)(xiii)
[SOGEN] OVERSEAS FUND, VARIABLE SERIES
[SOCIETE GENERALE] ASSET MANAGEMENT CORP.
SUB-ADVISORY AGREEMENT
AGREEMENT dated as of January , 1999 among LIBERTY VARIABLE INVESTMENT
TRUST, a Massachusetts business trust (the "Trust"), with respect to [SoGen]
Overseas Fund, Variable Series (the "Fund"), KEYPORT ADVISORY SERVICES CORP., a
Massachusetts corporation ("Adviser"), and, [Societe Generale] Asset Management
Corp. 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 Advisor shall pay the Sub-Adviser a monthly fee at the annual
rate of 0.55% 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.
5. This Agreement shall become effective on the date first written
above, and (a) unless otherwise terminated, shall continue until January , 2001
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
<PAGE>
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 day's 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 "_______," or any other name derived from
the name "__________," 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-Advisor. 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 "__________," 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
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.
2
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
[SOGEN] OVERSEAS FUND, VARIABLE SERIES
By: LIBERTY VARIABLE INVESTMENT TRUST
By:
-------------------------------------
Title:
[SOCIETE GENERALE] ASSET MANAGEMENT CORP.
By:
-------------------------------------
Title:
LIBERTY ADVISORY SERVICES CORP.
By:
-------------------------------------
Title:
3
