Registration Nos: 33-59216
811-7556
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. 16 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. 17 / X /
(Check appropriate box or boxes)
LIBERTY VARIABLE INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
One Financial Center, Boston, Massachusetts 02111
(Address of Principal Executive Offices)
617-426-3750
(Registrant's Telephone Number, including Area Code)
Name and Address of
Agent for Service Copy to
- ----------------- -------
Nancy L. Conlin, Esq. John M. Loder, Esq.
Colonial Management Associates, Inc. Ropes & Gray
One Financial Center One International Place
Boston, MA 02111 Boston, MA 02110-2624
It is proposed that this filing will become effective (check appropriate box):
/ / Immediately upon filing pursuant to paragraph (b).
/ / On (date) pursuant to paragraph (b).
/ / 60 days after filing pursuant to paragraph (a)(1).
/ / on (date) pursuant to paragraph (a)(1).
/ X / 75 days after filing pursuant to paragraph (a)(2).
/ / on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
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 18, 1993 under the
Securities Act of 1933 pursuant to Rule 24f-2. A Rule 24f-2 Notice with respect
to the fiscal year ended December 31, 1996 was filed on or about February 28,
1997.
<PAGE>
LIBERTY VARIABLE INVESTMENT TRUST
Cross Reference Sheet Pursuant to Rule 481(a)
(Colonial International Horizons Fund, Variable Series)
Item Number of Form N-1A Prospectus Location or Caption
PART A
1. Front Cover Page; Back Cover Page
2. The Fund; Other Investment Strategies and Risks
3. Not Applicable
4. The Fund
5. Not Applicable
6. Trust Management Organizations
7. Shareholder Information
8. The Trust; Trust Management Organizations
9. Not Applicable
<PAGE>
LIBERTY VARIABLE INVESTMENT TRUST
PROSPECTUS dated June 1, 1999
Colonial International Horizons Fund, Variable Series
Trust shares available only through variable annuity contracts and variable life
insurance policies of participating insurance companies.
* * * *
This Prospectus must be accompanied by a prospectus for your variable annuity
contract or variable life insurance policy. Retain both prospectuses for future
reference.
* * * *
Although trust shares have been registered with the Securities and Exchange
Commission, the Commission has not approved any shares offered in this
prospectus or determined whether this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
- ----------------------------- ------------------------------
NOT FDIC-INSURED MAY LOSE VALUE
NO BANK GUARANTEE
- ----------------------------- ------------------------------
<PAGE>
TABLE OF CONTENTS
THE TRUST
THE FUND
Investment Goals
Primary Investment Strategies
Primary Investment Risks
TRUST MANAGEMENT ORGANIZATIONS
Trustees
Investment Advisor
Investment Sub-Advisor and Portfolio Managers
OTHER INVESTMENT STRATEGIES AND RISKS
Temporary Defensive Measures
Hedging Strategies
Year 2000 Compliance
SHAREHOLDER INFORMATION
<PAGE>
THE TRUST
Liberty Variable Investment Trust ("Trust") includes thirteen separate
mutual funds, each with its own investment goal and strategies. This Prospectus
contains information about one Fund in the Trust, Colonial International
Horizons Fund, Variable Series (the "Fund"). Liberty Advisory Services
Corp. ("LASC") is the investment advisor to the Fund. LASC has appointed
Colonial Management Associates, Inc. ("Colonial"), an affiliate of LASC, as
Sub-Advisor to the Fund.
Other Funds may be added or deleted from time to time.
The Fund is an investment option under variable annuity contracts ("VA
contracts") and variable life insurance policies ("VLI policies") issued by life
insurance companies (Participating Insurance Companies). Some (but not all)
Participating Insurance Companies are affiliated with the Fund's investment
advisor. Participating Insurance Companies invest in the Fund through separate
accounts that they set up for that purpose. Owners of VA contracts and of VLI
policies invest in sub-accounts of those separate accounts through instructions
they give to their insurance company.
The prospectuses of the Participating Insurance Companies' separate accounts
describe which Funds are available to the purchasers of their own VA contracts
and VLI policies. The Trust assumes no responsibility for those prospectuses.
<PAGE>
THE FUND
INVESTMENT GOALS - COLONIAL INTERNATIONAL HORIZONS FUND, VARIABLE SERIES
- -------------------------------------------------------------------------------
The Fund seeks long-term growth and preservation of capital purchasing power.
PRIMARY INVESTMENT STRATEGIES
- -------------------------------------------------------------------------------
The Fund invests in securities of companies which Colonial believes will provide
superior long-term growth and securities of inflation sensative companies
located outside the U.S. Colonial generally selects stocks of companies in
industires and markets that they believe will react favorable to inflation in
the U.S. economy. Inflation sensative companies in which the Fund may invest
include:
companies engaged in the development and processing of natural resources, and
companies engaged in consumer oriented businesses.
The Fund is a non-diversifed mutual fund and, although it generally will not, it
may invest more than 5% of its total assets in the securites of one company.
PRIMARY INVESTMENT RISKS
- -------------------------------------------------------------------------------
The primary risks of investing in the Fund are described below. There are many
circumstances (including additional risks that are not described here) which
could cause you to lose money by investing in the Fund or prevent the Fund from
achieving its goals.
Additionally, as a non-diversified mutual fund, the Fund is allowed to invest a
greater percentage of its total net assets in the securities of a single
company. Therefore, the Fund may have an increased risk of loss compared to a
similar diversified mutual fund.
Market risk is the risk that the price of a security held by the Fund will fall
due to changing economic, political or market conditions, or due to the
financial condition of the company which issued the security.
Foreign securities are subject to special risks. Foreign stock markets can be
extremely volatile. The liquidity of foreign securities may be more limited than
domestic securities, which means that the Fund may at times be unable to sell
foreign securities at desirable prices. Fluctuations in currency exchange rates
may impact the value of foreign securities. Brokerage commissions, custodial
fees and other fees are generally higher for foreign investments. In addition,
foreign governments may impose withholding taxes which would reduce the amount
of income available to distribute to shareholders. Other risks include the
following: possible delays in the settlement of transactions; less publicly
available information about companies; the impact of political, social or
diplomatic events; and possible seizure, expropriation or nationalization of the
company or its assets.
<PAGE>
TRUST MANAGEMENT ORGANIZATIONS
THE TRUSTEES
- -------------------------------------------------------------------------------
The business of the Trust and the Funds is supervised by the Trust's Board of
Trustees. The SAI contains names of and biographical information on the
Trustees.
THE ADVISOR: LIBERTY ADVISORY SERVICES CORP. (LASC)
- -------------------------------------------------------------------------------
LASC, located at 125 High Street, Boston Massachusetts 02110, is the investment
advisor to the Trust. LASC is a wholly owned subsidiary of Liberty Financial
Companies, Inc. ("LFC"). LASC designates the Trust's Sub-Advisors, evaluates and
monitors Sub-Advisors' performance and investment programs and recommends to the
Board of Trustees whether Sub-Advisors' contracts should be continued or
modified and the addition or deletion of Sub-Advisors. LASC also has the
responsibility to administer the Trust's operations, which it may delegate, at
its own expense, to certain affiliates. LASC has delegated its administrative
responsibilities to colonial in accordance with this authority.
For its services as investment advisor, the Trust pays LASC a management fee at
the annual rate of % of the average daily net assets of the Fund.
THE SUB-ADVISOR: COLONIAL MANAGEMENT ASSOCIATES, INC. (COLONIAL)
- -------------------------------------------------------------------------------
Colonial, an investment advisor since 1931, is the Sub-Advisor of the Fund.
Colonial's principal business address is One Financial Center, Boston,
Massachusetts 02111. Colonial is a wholly-owned subsidiary of LFC. Colonial
manages the assets of the Fund under the supervision of LASC and the Board of
Trustees. Colonial determines which securities and other instruments are
purchased and sold for the Fund.
LASC, out of the management fees it receives from the Trust, pays Colonial
sub-advisory fees at the annual rate of % of the average daily net assets of the
Fund.
Gita Rao, a Vice President of Colonial, co-manages the Fund. Ms. Rao has managed
various other Colonial funds since 1995. Prior to joining Colonial, she was a
global equity analyst at Fidelity Management & Research Company from 1994 to
1995 and a Vice President in the domestic equity research group at Kidder,
Peabody and Company from 1991 to 1994.
Nicholas Ghajar, an Assistant Vice President of Colonial, co-manages the Fund.
Mr. Ghajar has either been an associate portfolio manager or an equity analyst
of various other equity funds at Colonial since 1991.
Colonial also provides transfer agency and pricing and record keeping services
for the Fund under separate agreements.
Colonial's investment advisory business is managed together with the mutual
funds and institutional investment advisory business of its affiliate, Stein Roe
$ Farnham Incorporated (Stein Roe) are by a combined management team of
employees from both companies. Stein Roe also shares personnel, facilities and
systems with Colonial that may be used in providing administrative services to
the Fund. Both Colonial and Stein Roe are subsidiaries of Liberty Financial
Companies, Inc.
Colonial can use the services of AlphaTrade Inc., an affiliated broker-dealer,
when buying or selling equity securities for a fund's portfolio, pursuant to
procedures adopted by the Board of Trustees.
DISTRIBUTION PLAN
- --------------------------------------------------------------------------------
The Trust has adopted a plan of distribution for on behalf of the Fund in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Trust pays to Liberty Funds Distributor, Inc. a distribution fee
of [0.25%] of the average daily net assets attributable to the Fund's shares.
Because these fees are an ongoing expense, over time they increase the cost of
an investment and the shares may cost more than shares that are not subject to a
distribution fee.
<PAGE>
OTHER INVESTMENT STRATEGIES AND RISKS
The Fund's primary investments and its risks are described above in its
description This section describe other investments the Fund may make and the
risks associated with them. In seeking to achieve its goal, the Fund may invest
in various types of securities and engage in various investment techniques which
are not the principle focus of the Fund and therefore are not described in this
prospectus. These types of securities and investment practices are identified
and discussed in the Fund's SAI, which you may obtain free of charge (see back
cover). Approval by the Fund's shareholders is not required to modify or change
any of the Fund's investment goals or investment strategies.
TEMPORARY DEFENSIVE MEASURES
- -------------------------------------------------------------------------------
Colonial may determine that adverse market conditions make it desirable to
suspend temporarily the Fund's normal investment activities. During such times,
the Fund may, but is not required to, invest in cash or high quality, short-term
debt securities, without limit. Taking a temporary defensive position may
prevent the Fund from achieving its investment objective.
HEDGING STRATEGIES
- -------------------------------------------------------------------------------
shapeType1fFlipH0fFlipV0fillColor0fFilled1lineWidth0fLine0fShadow0The Fund may
enter into a number of hedging strategies, including the use of futures and
options, to gain or reduce exposure to particular securities or markets. These
strategies, which are commonly referred to as derivatives, involve the use of
financial instruments whose values derive from the future, not current,
performance of an underlying security, an index or a currency. The Fund may use
these strategies for hedging purposes (attempting to offset a potential loss in
one position by establishing an interest in an opposite position) or to adjust
the Fund's maturity. Hedging strategies involve the risk that they may
exaggerate a loss, potentially losing more money than the actual cost of the
security, or limit a potential gain. Also, with some hedging strategies there is
the risk that the other party to the transaction may fail to honor its contract
terms, causing a loss to the Fund.
YEAR 2000 COMPLIANCE
- -------------------------------------------------------------------------------
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, Colonial and other service providers do 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."
LASCColonial, the Fund's distributor and transfer agent (Liberty Companies) are
taking steps that they believe are reasonably designed to address the Year 2000
Problem, including working with vendors who furnish services, software and
systems to the Fund, to provide that date-related information and data can be
properly processed after January 1, 2000. Many Fund service providers and
vendors, including the Liberty Companies, are in the process of making Year 2000
modifications to their software and systems and believe that such modifications
will be completed on a timely basis prior to January 1, 2000. However, no
assurances can be given that all modifications required to ensure proper data
processing and calculation on and after January 1, 2000 will be timely made or
that services to the Fund will not be adversely affected.
<PAGE>
SHAREHOLDER INFORMATION
Purchase and Redemptions The Participating Insurance Companies place daily
orders to purchase and redeem shares of the Fund. These orders generally reflect
the net effect of instructions they receive from holders of their VA contracts
and VLI policies and certain other terms of those contracts and policies. The
Trust issues and redeems shares at NAV without imposing any selling commissions,
sales charge or redemption charge. Shares generally are sold and redeemed at
their net asset value ("NAV") next determined after receipt of purchase or
redemption requests from Participating Insurance Companies. The right of
redemption may be suspended or payment postponed whenever permitted by
applicable law and regulations.
How the Fund's Share Price is Determined Each share price is its NAV next
determined. NAV is the difference between the value of a fund's assets and
liabilities divided by the number of shares outstanding. We determine NAV
at the close of regular trading on the New York Stock Exchange ("NYSE"),
usually 4:00 p.m. New York time.
To calculate NAV on a given day, we value each stock listed or traded on a stock
exchange at its latest sale price on that day. If there are no sales on that
day, we value the security at the most recent quoted bid price. We value each
over-the-counter security or National Association of Securities Dealers
Automated Quotation (Nasdaq) security as of the last sales price of that day. We
value other over-the-counter securities that have reliable quotes at the latest
quoted bid price.
We value long-term debt obligations and securities convertible into common stock
at fair value. Pricing services provide the Fund with the value of the
securities. When the price of a security is not available, including days when
we determine that the sale or bid price of the security does not reflect that
security's market value, we will value the security at a fair value determined
in good faith under procedures established by the Board of Trustees.
We value a security at fair value when events have occurred after the last
available market price and before the close of the NYSE that materially affect
the security's price. In the case of foreign securities, this could include
events occurring after the close of the foreign market and before the close of
the NYSE.
The Fund's foreign securities may trade on days when the NYSE is closed for
trading and Participating Insurance Companies may not purchase or redeem shares.
Dividends and Distributions The Fund intends to declare and distribute, as
dividends or capital gain 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
investment 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
NAV, as of record date for the distributions.
<PAGE>
- -------------------------------------------------------------------------------
FOR MORE INFORMATION
- -------------------------------------------------------------------------------
You may wish to read the SAI for more information on the Fund and the securities
in which it invests. The SAI is incorporated into this prospectus by reference,
which means that it is considered to be part of this prospectus.
You can get free copies of reports and the SAI, request other information and
discuss your questions about the Fund by writing:
Keport Financial Services Corp.
125 High Street
Boston, MA 02111
or by calling or writing the Participating Insurance Company which issued your
variable annuity contract or variable life insurance policy.
Text-only versions of all Fund documents can be viewed online or downloaded from
the SEC at www.sec.gov.
You can review and copy information about the Fund by visiting the following
location, and you can obtain copies upon payment of a duplicating fee, by
writing or calling the:
Public Reference Room
Securities and Exchange Commission
Washington, DC 20549-6009
Information on the operation of the Public Reference Room may be obtained by
calling the Commission at 1-800-SEC-0330.
Investment Company Act file number:
Liberty Variable Investment Trust 811-07556
<PAGE>
LIBERTY VARIABLE INVESTMENT TRUST
Cross Reference Sheet Pursuant to Rule 481(a)
(Colonial Global Equity Fund, Variable Series)
Item Number of Form N-1A Prospectus Location or Caption
PART A
1. Front Cover Page; Back Cover Page
2. The Fund; Other Investment Strategies and Risks
3. Not Applicable
4. The Fund
5. Not Applicable
6. Trust Management Organizations
7. Shareholder Information
8. The Trust; Trust Management Organizations
9. Not Applicable
<PAGE>
LIBERTY VARIABLE INVESTMENT TRUST
PROSPECTUS dated June 1, 1999
Colonial Global Equity Fund, Variable Series
Trust shares available only through variable annuity contracts and variable life
insurance policies of participating insurance companies.
* * * *
This Prospectus must be accompanied by a prospectus for your variable annuity
contract or variable life insurance policy. Retain both prospectuses for future
reference.
* * * *
Although trust shares have been registered with the Securities and Exchange
Commission, the Commission has not approved any shares offered in this
prospectus or determined whether this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
- ----------------------------- ------------------------------
NOT FDIC-INSURED MAY LOSE VALUE
NO BANK GUARANTEE
- ----------------------------- ------------------------------
<PAGE>
TABLE OF CONTENTS
THE TRUST
THE FUND
Investment Goals
Primary Investment Strategies
Primary Investment Risks
TRUST MANAGEMENT ORGANIZATIONS
Trustees
Investment Advisor
Investment Sub-Advisors and Portfolio Managers
OTHER INVESTMENT STRATEGIES AND RISKS
Temporary Defensive Measures
Hedging Strategies
Year 2000 Compliance
SHAREHOLDER INFORMATION
<PAGE>
THE TRUST
Liberty Variable Investment Trust ("Trust") includes thirteen separate
mutual funds, each with its own investment goal and strategies. This
Prospectus contains information about one Fund in the Trust, Colonial Global
Equity Fund, Variable Series (the "Fund"). Liberty Advisory Services Corp.
("LASC") is the investment advisor to the Fund. LASC has appointed Colonial
Management Associates, Inc. ("Colonial"), an affiliate of LASC, as Sub-Advisor
to the Fund.
Other Funds may be added or deleted from time to time.
The Fund is an investment option under variable annuity contracts ("VA
contracts") and variable life insurance policies ("VLI policies") issued by life
insurance companies (Participating Insurance Companies). Some (but not all)
Participating Insurance Companies are affiliated with the Fund's investment
advisor. Participating Insurance Companies invest in the Fund through separate
accounts that they set up for that purpose. Owners of VA contracts and of VLI
policies invest in sub-accounts of those separate accounts through instructions
they give to their insurance company.
The prospectuses of the Participating Insurance Companies' separate accounts
describe which Funds are available to the purchasers of their own VA contracts
and VLI policies. The Trust assumes no responsibility for those prospectuses.
<PAGE>
THE FUND
INVESTMENT GOALS - COLONIAL GLOBAL EQUITY FUND, VARIABLE SERIES
- --------------------------------------------------------------------------------
The Fund seeks long-term growth by investing primarily in global equity
securities.
PRIMARY INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
Under normal market conditions, the Fund invests primarily in both U.S. and
foreign equity securities. The Fund may invest in companies of any size,
including small capitalization stocks. The Fund may also invest in high quality
foreign government debt securities. The Fund generally diversifies its holdings
across several different countries and regions.
The Fund may invest up to 10% of its assets in shares of other investment
companies. Investing in investment companies may involve payment of duplicate
fees because the Fund, as a shareholder, will indirectly pay a portion of the
other investment company's expenses.
PRIMARY INVESTMENT RISKS
- --------------------------------------------------------------------------------
The primary risks of investing in the Fund are described below. There are many
circumstances (including additional risks that are not described here) which
could cause you to lose money by investing in the Fund or prevent the Fund from
achieving its goals.
Market risk is the risk that the price of a security held by the Fund will fall
due to changing economic, political or market conditions, or due to the
financial condition of the company which issued the security.
Interest rate risk is the risk of a decline in the price of a bond when interest
rates increase. In general, if interest rates rise, bond prices fall; and if
interest rates fall, bond prices rise. Changes in the values of bonds usually
will not affect the amount of income the Fund receives from them but will affect
the value of the Fund's shares. Interest rate risk is generally greater for
bonds with longer maturities.
Foreign securities are subject to special risks. Foreign stock markets can be
extremely volatile. The liquidity of foreign securities may be more limited than
domestic securities, which means that the Fund may at times be unable to sell
foreign securities at desirable prices. Fluctuations in currency exchange rates
may impact the value of foreign securities. Brokerage commissions, custodial
fees and other fees are generally higher for foreign investments. In addition,
foreign governments may impose withholding taxes which would reduce the amount
of income available to distribute to shareholders. Other risks include the
following: possible delays in the settlement of transactions; less publicly
available information about companies; the impact of political, social or
diplomatic events; and possible seizure, expropriation or nationalization of the
company or its assets.
<PAGE>
TRUST MANAGEMENT ORGANIZATIONS
THE TRUSTEES
- -------------------------------------------------------------------------------
The business of the Trust and the Funds is supervised by the Trust's Board of
Trustees. The SAI contains names of and biographical information on the
Trustees.
THE ADVISOR: LIBERTY ADVISORY SERVICES CORP. (LASC)
- -------------------------------------------------------------------------------
LASC, located at 125 High Street, Boston Massachusetts 02110, is the investment
advisor to the Trust. LASC is a wholly owned subsidiary of Liberty Financial
Companies, Inc. ("LFC"). LASC designates the Trust's Sub-Advisors, evaluates and
monitors Sub-Advisors' performance and investment programs and recommends to the
Board of Trustees whether Sub-Advisors' contracts should be continued or
modified and the addition or deletion of Sub-Advisors. LASC also has the
responsibility to administer the Trust's operations, which it may delegate, at
its own expense, to certain affiliates. LASC has delegated its administrative
responsibilities to colonial in accordance with this authority.
For its services as investment advisor, the Trust pays LASC a management fee at
the annual rate of % of the average daily net assets of the Fund.
THE SUB-ADVISOR: COLONIAL MANAGEMENT ASSOCIATES, INC. (COLONIAL)
- -------------------------------------------------------------------------------
Colonial, an investment advisor since 1931, is the Sub-Advisor of the Fund.
Colonial's principal business address is One Financial Center, Boston,
Massachusetts 02111. Colonial is a wholly-owned subsidiary of LFC. Colonial
manages the assets of the Fund under the supervision of LASC and the Board of
Trustees. Colonial determines which securities and other instruments are
purchased and sold for the Fund.
LASC, out of the management fees it receives from the Trust, pays Colonial
sub-advisory fees at the annual rate of % of the average daily net assets of the
Fund.
Gita Rao, a Vice President of Colonial, co-manages the Fund. Ms. Rao has managed
various other Colonial funds since 1995. Prior to joining Colonial, she was a
global equity analyst at Fidelity Management & Research Company from 1994 to
1995 and a Vice President in the domestic equity research group at Kidder,
Peabody and Company from 1991 to 1994.
Nicholas Ghajar, an Assistant Vice President of Colonial, co-manages the
Fund. Mr. Ghajar has either been an associate portfolio manager or an equity
analyst of various other equity funds at Colonial since 1991.
Colonial also provides transfer agency and pricing and record keeping services
for the Fund under separate agreements.
Colonial's investment advisory business is managed together with the mutual
funds and institutional investment advisory business of its affiliate, Stein Roe
$ Farnham Incorporated (Stein Roe) are by a combined management team of
employees from both companies. Stein Roe also shares personnel, facilities and
systems with Colonial that may be used in providing administrative services to
the Fund. Both Colonial and Stein Roe are subsidiaries of Liberty Financial
Companies, Inc.
Colonial can use the services of AlphaTrade Inc., an affiliated broker-dealer,
when buying or selling equity securities for a fund's portfolio, pursuant to
procedures adopted by the Board of Trustees.
DISTRIBUTION PLAN
- --------------------------------------------------------------------------------
The Trust has adopted a plan of distribution for on behalf of the Fund in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Trust pays to Liberty Funds Distributor, Inc. a distribution fee
of [0.25%] of the average daily net assets attributable to the Fund's shares.
Because these fees are an ongoing expense, over time they increase the cost of
an investment and the shares may cost more than shares that are not subject to a
distribution fee.
<PAGE>
OTHER INVESTMENT STRATEGIES AND RISKS
The Fund's primary investments and its risks are described above in its
description This section describe other investments the Fund may make and the
risks associated with them. In seeking to achieve its goal, the Fund may invest
in various types of securities and engage in various investment techniques which
are not the principle focus of the Fund and therefore are not described in this
prospectus. These types of securities and investment practices are identified
and discussed in the Fund's SAI, which you may obtain free of charge (see back
cover). Approval by the Fund's shareholders is not required to modify or change
any of the Fund's investment goals or investment strategies.
TEMPORARY DEFENSIVE MEASURES
- -------------------------------------------------------------------------------
Colonial may determine that adverse market conditions make it desirable to
suspend temporarily the Fund's normal investment activities. During such times,
the Fund may, but is not required to, invest in cash or high quality, short-term
debt securities, without limit. Taking a temporary defensive position may
prevent the Fund from achieving its investment objective.
HEDGING STRATEGIES
- -------------------------------------------------------------------------------
The Fund may enter into a number of hedging strategies, including the use
of futures and options, to gain or reduce exposure to particular securities or
markets. These strategies, which are commonly referred to as derivatives,
involve the use of financial instruments whose values derive from the future,
not current, performance of an underlying security, an index or a currency. The
Fund may use these strategies for hedging purposes (attempting to offset a
potential loss in one position by establishing an interest in an opposite
position) or to adjust the Fund's maturity. Hedging strategies involve the
risk that they may exaggerate a loss, potentially losing more money than the
actual cost of the security, or limit a potential gain. Also, with some hedging
strategies there is the risk that the other party to the transaction may fail
to honor its contract terms, causing a loss to the Fund.
YEAR 2000 COMPLIANCE
- -------------------------------------------------------------------------------
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, Colonial and other service providers do 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."
LASCColonial, the Fund's distributor and transfer agent (Liberty Companies) are
taking steps that they believe are reasonably designed to address the Year 2000
Problem, including working with vendors who furnish services, software and
systems to the Fund, to provide that date-related information and data can be
properly processed after January 1, 2000. Many Fund service providers and
vendors, including the Liberty Companies, are in the process of making Year 2000
modifications to their software and systems and believe that such modifications
will be completed on a timely basis prior to January 1, 2000. However, no
assurances can be given that all modifications required to ensure proper data
processing and calculation on and after January 1, 2000 will be timely made or
that services to the Fund will not be adversely affected.
<PAGE>
SHAREHOLDER INFORMATION
Purchase and Redemptions The Participating Insurance Companies place daily
orders to purchase and redeem shares of the Fund. These orders generally reflect
the net effect of instructions they receive from holders of their VA contracts
and VLI policies and certain other terms of those contracts and policies. The
Trust issues and redeems shares at NAV without imposing any selling commissions,
sales charge or redemption charge. Shares generally are sold and redeemed at
their net asset value ("NAV") next determined after receipt of purchase or
redemption requests from Participating Insurance Companies. The right of
redemption may be suspended or payment postponed whenever permitted by
applicable law and regulations.
How the Fund's Share Price is Determined Each share price is its NAV next
determined. NAV is the difference between the value of a fund's assets and
liabilities divided by the number of shares outstanding. We determine NAV
at the close of regular trading on the New York Stock Exchange ("NYSE"),
usually 4:00 p.m. New York time.
To calculate NAV on a given day, we value each stock listed or traded on a stock
exchange at its latest sale price on that day. If there are no sales on that
day, we value the security at the most recent quoted bid price. We value each
over-the-counter security or National Association of Securities Dealers
Automated Quotation (Nasdaq) security as of the last sales price of that day. We
value other over-the-counter securities that have reliable quotes at the latest
quoted bid price.
We value long-term debt obligations and securities convertible into common stock
at fair value. Pricing services provide the Fund with the value of the
securities. When the price of a security is not available, including days when
we determine that the sale or bid price of the security does not reflect that
security's market value, we will value the security at a fair value determined
in good faith under procedures established by the Board of Trustees.
We value a security at fair value when events have occurred after the last
available market price and before the close of the NYSE that materially affect
the security's price. In the case of foreign securities, this could include
events occurring after the close of the foreign market and before the close of
the NYSE.
The Fund's foreign securities may trade on days when the NYSE is closed for
trading and Participating Insurance Companies may not purchase or redeem shares.
Dividends and Distributions The Fund intends to declare and distribute, as
dividends or capital gain 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
investment 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
NAV, as of record date for the distributions.
<PAGE>
- -------------------------------------------------------------------------------
FOR MORE INFORMATION
- -------------------------------------------------------------------------------
You may wish to read the SAI for more information on the Fund and the securities
in which it invests. The SAI is incorporated into this prospectus by reference,
which means that it is considered to be part of this prospectus.
You can get free copies of reports and the SAI, request other information and
discuss your questions about the Fund by writing:
Keport Financial Services Corp.
125 High Street
Boston, MA 02111
or by calling or writing the Participating Insurance Company which issued your
variable annuity contract or variable life insurance policy.
Text-only versions of all Fund documents can be viewed online or downloaded from
the SEC at www.sec.gov.
You can review and copy information about the Fund by visiting the following
location, and you can obtain copies upon payment of a duplicating fee, by
writing or calling the:
Public Reference Room
Securities and Exchange Commission
Washington, DC 20549-6009
Information on the operation of the Public Reference Room may be obtained by
calling the Commission at 1-800-SEC-0330.
Investment Company Act file number:
811-07556
<PAGE>
LIBERTY VARIABLE INVESTMENT TRUST
Cross Reference Sheet Pursuant to Rule 481(a)
(Crabbe Huson Real Estate Investment Fund, Variable Series)
Item Number of Form N-1A Prospectus Location or Caption
PART A
1. Front Cover Page; Back Cover Page
2. The Fund; Other Investment Strategies and Risks
3. Not Applicable
4. The Fund
5. Not Applicable
6. Trust Management Organizations
7. Shareholder Information
8. The Trust; Trust Management Organizations
9. Not Applicable
<PAGE>
LIBERTY VARIABLE INVESTMENT TRUST
PROSPECTUS dated June 1, 1999
Crabbe Huson Real Estate Investment Fund, Variable Series
Trust shares available only through variable annuity contracts and variable life
insurance policies of participating insurance companies.
* * * *
This Prospectus must be accompanied by a prospectus for your variable annuity
contract or variable life insurance policy. Retain both prospectuses for future
reference.
* * * *
Although trust shares have been registered with the Securities and Exchange
Commission, the Commission has not approved any shares offered in this
prospectus or determined whether this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
- ----------------------------- ------------------------------
NOT FDIC-INSURED MAY LOSE VALUE
NO BANK GUARANTEE
- ----------------------------- ------------------------------
<PAGE>
TABLE OF CONTENTS
THE TRUST
THE FUND
Investment Goals
Primary Investment Strategies
Primary Investment Risks
TRUST MANAGEMENT ORGANIZATIONS
Trustees
Investment Advisor
Investment Sub-Advisor and Portfolio Managers
OTHER INVESTMENT STRATEGIES AND RISKS
Temporary Defensive Measures
Year 2000 Compliance
SHAREHOLDER INFORMATION
<PAGE>
THE TRUST
Liberty Variable Investment Trust ("Trust") includes thirteen separate mutual
funds, each with its own investment goal and strategies. This Prospectus
contains information about one Fund in the Trust, Crabbe Huson Real Estate
Investment Fund, Variable Series (the "Fund"). Liberty Advisory Services Corp.
("LASC") is the investment advisor to the Fund. LASC has appointed Crabbe
Huson Group, Inc. ("Crabbe Huson"), an affiliate of LASC, as Sub-Advisor to the
Fund.
Other Funds may be added or deleted from time to time.
The Fund is an investment option under variable annuity contracts ("VA
contracts") and variable life insurance policies ("VLI policies") issued by life
insurance companies (Participating Insurance Companies). Some (but not all)
Participating Insurance Companies are affiliated with the Fund's investment
advisor. Participating Insurance Companies invest in the Fund through separate
accounts that they set up for that purpose. Owners of VA contracts and of VLI
policies invest in sub-accounts of those separate accounts through instructions
they give to their insurance company.
The prospectuses of the Participating Insurance Companies' separate accounts
describe which Funds are available to the purchasers of their own VA contracts
and VLI policies. The Trust assumes no responsibility for those prospectuses.
<PAGE>
THE FUND
INVESTMENT GOALS - CRABBE HUSON REAL ESTATE INVESTMENT FUND, VARIABLE SERIES
- -------------------------------------------------------------------------------
The Fund seeks to provide growth of capital and current income.
PRIMARY INVESTMENT STRATEGIES
- -------------------------------------------------------------------------------
UNDERSTANDING CONTRARIAN INVESTING
The contrarian approach puts primary emphasis on security price, balance sheet
and the relationship between the market price of a security and its estimated
intrinsic value as a share of an ongoing business. The basic value contrarian
approach is based on the adivsor's belief that the securities of many companies
often sell at a discount from the securities' estimated intrinsic value. The
Fund attempts to identify and invest in such undervalued securities in the hope
that their market price will rise to their estimated intrinsic value.
Under normal market conditions, the Fund invests at least 75% of its total
assets in equity securities of real estate investment trusts (REITs) and other
real estate industry companies. In managing the Fund, the advisor follows a
basic value, contrarian approach in selecting securities for its portfolio.
The contrarian approach puts primary emphasis on security price, balance sheet
and the relationship between the market price of a security and its estimated
intrinsic value as a share of an ongoing business. The basic value contrarian
approach is based on the Crabbe Huson's belief that the securities of many
companies often sell at a discount from the securities' estimated intrinsic
value. The Fund attempts to identify and invest in such undervalued securities
in the hope that their market price will rise to their estimated intrinsic
value.
REITs are pooled investment vehicles that invest primarily in income producing
real estate or real estate related loans or interest. The Fund's REIT
investments will consist primarily of equity REITs which invest the majority of
their assets directly in real estate and derive income primarily from rents.
Other real estate industry companies in which the Fund may invest are companies
that derive at least 50% of their revenues or profits from either (a) the
ownership, development, construction, financing, management or sale of
commercial, industrial or residential real estate or (b) products or services
related to the real estate industry, such as building supplies or mortgage
servicing.
PRIMARY INVESTMENT RISKS
- -------------------------------------------------------------------------------
The primary risks of investing in the Fund are described below. There are many
circumstances (that are not described here) which could cause you to lose money
by investing in the Fund or could prevent the Fund from achieving its goals.
Market risk is the risk that the price of a security held by the Fund will fall
due to changing economic, political or market conditions, or due to the
financial condition of the company which issued the security.
Investing in REITs involves certain unique risks in addition to those risks
associated with the real estate industry in general. The prices of equity REITs
are affected by changes in the value of the underlying property owned by the
REITs. REITs are subject to heavy cash flow dependency and default by borrowers.
A REIT must distribute 95% of its taxable income to qualify for beneficial
federal tax treatment. If a REIT is unable to qualify, then it would be taxed as
a corporation and distributions to shareholders would be reduced. In addition,
although the Fund does not invest directly in real estate, an investment in the
Fund is subject to certain of the risks assosciated with the ownership of real
estate. These risks include possible declines in the value of real estate, risks
related to general and local economic conditions, possible lack of availability
of mortgage funds, and changes in interest rates.
<PAGE>
TRUST MANAGEMENT ORGANIZATIONS
THE TRUSTEES
- -------------------------------------------------------------------------------
The business of the Trust and the Funds is supervised by the Trust's Board of
Trustees. The SAI contains names of and biographical information on the
Trustees.
THE ADVISOR: LIBERTY ADVISORY SERVICES CORP. (LASC)
- -------------------------------------------------------------------------------
LASC, located at 125 High Street, Boston Massachusetts 02110, is the investment
advisor to the Trust. LASC is a wholly owned subsidiary of Liberty Financial
Companies, Inc. ("LFC"). LASC designates the Trust's Sub-Advisors, evaluates and
monitors Sub-Advisors' performance and investment programs and recommends to the
Board of Trustees whether Sub-Advisors' contracts should be continued or
modified and the addition or deletion of Sub-Advisors. LASC also has the
responsibility to administer the Trust's operations, which it may delegate, at
its own expense, to certain affiliates. LASC has delegated its administrative
responsibilities to colonial in accordance with this authority.
For its services as investment advisor, the Trust pays LASC a management fee at
the annual rate of % of the average daily net assets of the Fund.
THE SUB-ADVISOR: CRABBE HUSON GROUP, INC. (CRABBE HUSON)
- -------------------------------------------------------------------------------
Crabbe Huson, located at 121 S.W. Morrison, Suite 1400, Portland, Oregon 97204,
is the Sub-Advisor of the FundCrabbe Huson has been an investment advisor since
1980. Crabbe Huson manages the assets of the Fund under the supervision of LASC
and the Board of Trustees. Crabbe Huson determines which securities and other
instruments are purchased and sold for the Fund.
LASC, out of the management fees it receives from the Trust, pays Crabbe Huson
sub-advisory fees at the annual rate of % of the average daily net assets of the
Fund.
John E. Maack has been employed by Crabbe Huson as a portfolio manager and
securities analyst since 1988. He has co-managed the Fund since its inception.
Michael B. Stokes joined Crabbe Huson in August, 1996. Prior to joining Crabbe
Huson, Mr. Stokes was a financial analyst for Salomon Brothers from July, 1994
to June, 1996. He has co-managed the Fund since its inception.
DISTRIBUTION PLAN
- --------------------------------------------------------------------------------
The Trust has adopted a plan of distribution for on behalf of the Fund in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Trust pays to Liberty Funds Distributor, Inc. a distribution fee
of [0.25%] of the average daily net assets attributable to the Fund's shares.
Because these fees are an ongoing expense, over time they increase the cost of
an investment and the shares may cost more than shares that are not subject to a
distribution fee.
<PAGE>
OTHER INVESTMENT STRATEGIES AND RISKS
The Fund's primary investments and its risks are described above in its
description This section describe other investments the Fund may make and the
risks associated with them. In seeking to achieve its goal, the Fund may invest
in various types of securities and engage in various investment techniques which
are not the principle focus of the Fund and therefore are not described in this
prospectus. These types of securities and investment practices are identified
and discussed in the Fund's SAI, which you may obtain free of charge (see back
cover). Approval by the Fund's shareholders is not required to modify or change
any of the Fund's investment goals or investment strategies.
TEMPORARY DEFENSIVE MEASURES
- -------------------------------------------------------------------------------
Crabbe Huson may determine that adverse market conditions make it desirable to
suspend temporarily the Fund's normal investment activities. During such times,
the Fund may, but is not required to, invest in cash or high quality, short-term
debt securities, without limit. Taking a temporary defensive position may
prevent the Fund from achieving its investment objective.
HEDGING STRATEGIES
- -------------------------------------------------------------------------------
The Fund may enter into a number of hedging strategies, including the use
of futures and options, to gain or reduce exposure to particular securities or
markets. These strategies, which are commonly referred to as derivatives,
involve the use of financial instruments whose values derive from the
future, not current, performance of an underlying security, an index or a
currency. The Fund may use these strategies for hedging purposes (attempting
to offset a potential loss in one position by establishing an interest in an
opposite position) or to adjust the Fund's maturity. Hedging strategies
involve the risk that they may exaggerate a loss, potentially losing
more money than the actual cost of the security, or limit a potential gain.
Also, with some hedging strategies there is the risk that the other party to the
transaction may fail to honor its contract terms, causing a loss to the Fund.
YEAR 2000 COMPLIANCE
- -------------------------------------------------------------------------------
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 the advisor and other service providers do 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." The Fund's advisor,
administrator, distributor, and transfer agent ("Liberty Companies") are taking
steps that they believe are reasonably designed to address the Year 2000
Problem, including communicating with vendors who furnish services, software and
systems to the Fund, to provide that date-related information and data can be
properly processed after January 1, 2000. Many Fund service providers and
vendors, including the Liberty Companies, are in the process of making Year 2000
modifications to their software and systems and believe that such modifications
will be completed on a timely basis prior to January 1, 2000. However, no
assurances can be given that all modifications required to ensure proper data
processing and calculation on and after January 1, 2000 will be timely made or
that services to the Fund will not be adversely affected.
.
<PAGE>
SHAREHOLDER INFORMATION
Purchase and Redemptions The Participating Insurance Companies place daily
orders to purchase and redeem shares of the Fund. These orders generally reflect
the net effect of instructions they receive from holders of their VA contracts
and VLI policies and certain other terms of those contracts and policies. The
Trust issues and redeems shares at NAV without imposing any selling commissions,
sales charge or redemption charge. Shares generally are sold and redeemed at
their net asset value ("NAV") next determined after receipt of purchase or
redemption requests from Participating Insurance Companies. The right of
redemption may be suspended or payment postponed whenever permitted by
applicable law and regulations.
How the Fund's Share Price is Determined Each share price is its NAV next
determined. NAV is the difference between the value of a fund's assets and
liabilities divided by the number of shares outstanding. We determine NAV
at the close of regular trading on the New York Stock Exchange ("NYSE"),
usually 4:00 p.m. New York time.
To calculate NAV on a given day, we value each stock listed or traded on a stock
exchange at its latest sale price on that day. If there are no sales on that
day, we value the security at the most recent quoted bid price. We value each
over-the-counter security or National Association of Securities Dealers
Automated Quotation (Nasdaq) security as of the last sales price of that day. We
value other over-the-counter securities that have reliable quotes at the latest
quoted bid price.
We value long-term debt obligations and securities convertible into common stock
at fair value. Pricing services provide the Fund with the value of the
securities. When the price of a security is not available, including days when
we determine that the sale or bid price of the security does not reflect that
security's market value, we will value the security at a fair value determined
in good faith under procedures established by the Board of Trustees.
We value a security at fair value when events have occurred after the last
available market price and before the close of the NYSE that materially affect
the security's price. In the case of foreign securities, this could include
events occurring after the close of the foreign market and before the close of
the NYSE.
The Fund's foreign securities may trade on days when the NYSE is closed for
trading and Participating Insurance Companies may not purchase or redeem shares.
Dividends and Distributions The Fund intends to declare and distribute, as
dividends or capital gain 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
investment 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
NAV, as of record date for the distributions.
<PAGE>
- -------------------------------------------------------------------------------
FOR MORE INFORMATION
- -------------------------------------------------------------------------------
You may wish to read the SAI for more information on the Fund and the securities
in which it invests. The SAI is incorporated into this prospectus by reference,
which means that it is considered to be part of this prospectus.
You can get free copies of reports and the SAI, request other information and
discuss your questions about the Fund by writing:
Keport Financial Services Corp.
125 High Street
Boston, MA 02111
or by calling or writing the Participating Insurance Company which issued your
variable annuity contract or variable life insurance policy.
Text-only versions of all Fund documents can be viewed online or downloaded from
the SEC at www.sec.gov.
You can review and copy information about the Fund by visiting the following
location, and you can obtain copies upon payment of a duplicating fee, by
writing or calling the:
Public Reference Room
Securities and Exchange Commission
Washington, DC 20549-6009
Information on the operation of the Public Reference Room may be obtained by
calling the Commission at 1-800-SEC-0330.
Investment Company Act file number:
Liberty Variable Investment Trust 811-07556
<PAGE>
LIBERTY VARIABLE INVESTMENT TRUST
Cross Reference Sheet Pursuant to Rule 481(a)
(Progress High Alpha Concentration Fund, Variable Series)
Item Number of Form N-1A Prospectus Location or Caption
PART A
1. Front Cover Page; Back Cover Page
2. The Fund; Other Investment Strategies and Risks
3. Not Applicable
4. The Fund
5. Not Applicable
6. Trust Management Organizations
7. Shareholder Information
8. The Trust; Trust Management Organizations
9. Not Applicable
<PAGE>
LIBERTY VARIABLE INVESTMENT TRUST
PROSPECTUS DATED JUNE 1, 1999
Progress High Alpha Concentration Fund, Variable Series
Trust shares available only through variable annuity contracts and variable life
insurance policies of participating insurance companies.
* * * *
This Prospectus must be accompanied by a prospectus for your variable annuity
contract or variable life insurance policy. Retain both prospectuses for future
reference.
* * * *
Although trust shares have been registered with the Securities and Exchange
Commission, the Commission has not approved any shares offered in this
prospectus or determined whether this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
- ------------------------------------------------------------
NOT FDIC-INSURED MAY LOSE VALUE
NO BANK GUARANTEE
- ------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
THE TRUST
THE FUND
Investment Goals
Primary Investment Strategies
Primary Investment Risks
TRUST MANAGEMENT ORGANIZATIONS
Trustees
Investment Advisor
Investment Sub-Advisors and Portfolio Managers
OTHER INVESTMENT STRATEGIES AND RISKS
Temporary Defensive Measures
Year 2000 Compliance
SHAREHOLDER INFORMATION
2
<PAGE>
THE TRUST
Liberty Variable Investment Trust ("Trust") includes thirteen separate mutual
funds, each with its own investment goal and strategies. This Prospectus
contains information about one Fund in the Trust, Progress High Alpha
Concentration Fund, Variable Series (the "Fund"). Liberty Advisory Services
Corp. ("LASC") is the investment advisor to the Fund. LASC has appointed
Progress Investment Management Company ("Progress"), an affiliate of LASC, as
sub-advisor to the Fund.
Other Funds may be added or deleted from time to time.
The Fund is an investment option under variable annuity contracts ("VA
contracts") and variable life insurance policies ("VLI policies") issued by life
insurance companies (Participating Insurance Companies). Some (but not all)
Participating Insurance Companies are affiliated with the Fund's investment
advisor. Participating Insurance Companies invest in the Fund through separate
accounts that they set up for that purpose. Owners of VA contracts and of VLI
policies invest in sub-accounts of those separate accounts through instructions
they give to their insurance company.
The prospectuses of the Participating Insurance Companies' separate accounts
describe which Funds are available to the purchasers of their own VA contracts
and VLI policies. The Trust assumes no responsibility for those prospectuses.
3
<PAGE>
THE FUND
INVESTMENT GOALS - PROGRESS HIGH ALPHA CONCENTRATION FUND, VARIABLE SERIES
- --------------------------------------------------------------------------------
The Fund seeks to provide long-term capital appreciation. The Fund will normally
concentrate its investments in a select group of 30 to 50 common stocks.
PRIMARY INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
Under normal market conditions, the Fund invests primarily in equity securities,
which include common stocks, bonds convertible into stocks, warrants and other
rights to purchase stocks. To a limited extent, the Fund may invest in debt
securities if this strategy will assist the Fund in seeking total return.
The Fund's sub-advisor, Progress, pursues "high alpha" by maintaining a
portfolio of relatively few securities. "High alpha" is a mathematical estimate
of how much the portfolio is expected to return against a market benchmark,
based on its relationship to beta (volatility).
Progress utilizes a multi-manager concept. Progress allocates the Fund's
portfolio assets among a number of independent investment advisory organizations
(Portfolio Managers). There are five Portfolio Managers as of the date of this
prospectus each of which employs a different investment style. Progress will
initially allocate the portfolio among the Portfolio Managers so as to maintain
an approximately equal allocation of the portfolio among them. Over time, the
allocation of portfolio assets among Portfolio Managers will change, depending
upon the relative valuation of the portfolio. Progress will make allocation
decisions based upon their analysis of each Portfolio Manager's investment style
and performance. Each Portfolio Manager will select and manage between six to
ten securities for the Fund's portfolio.
In Progress' opinion, the multi-manager concept provides advantages over the use
of a single manager because of the following primary factors:
- - Portfolio holdings represent the best ideas of each of the five Portfolio
Managers, rather than the ideas of any one manager;
- - Risk control through diversification among Portfolio Managers;
- - Relationships with investment managers that may not meet traditional
investment search criteria, but have exceptional potential for excess
return; and
- - Each Portfolio Manager has an individual investment style that complements
that of other Portfolio Managers.
4
<PAGE>
PRIMARY INVESTMENT RISKS
- --------------------------------------------------------------------------------
The primary risks of investing in the Fund are described below. There are many
circumstances (that are not described here) which could cause you to lose money
by investing in the Fund or could prevent the Fund from achieving its goals. As
a non-diversified mutual fund, the Fund is allowed to invest a greater
percentage of its assets in the securities of fewer companies. Therefore, the
Fund may have an increased risk of loss in a single security compared to a
similar diversified mutual fund.
The Fund is intended to be a long-term investment vehicle and is not designed to
provide a means of speculating on short-term stock market movements. However,
Progress may determine that adverse market conditions make it desirable to
suspend temporarily the Fund's normal investment activities. During such times,
the Fund may, but is not required to, invest in cash or high quality, short-term
debt securities, without limit. Taking a temporary defensive position may
prevent a Fund from achieving its investment objective.
Because the Fund will generally invest in stocks, the Fund will experience
market risk. Market risk is the risk that the price of a security held by the
Fund will fall due to changing economic, political or market conditions, or due
to the financial condition of the company which issued the security.
5
<PAGE>
TRUST MANAGEMENT ORGANIZATIONS
THE TRUSTEES
- --------------------------------------------------------------------------------
The business of the Trust and the Funds is supervised by the Trust's Board of
Trustees. The SAI contains names of and biographical information on the
Trustees.
THE ADVISOR: LIBERTY ADVISORY SERVICES CORP. (LASC)
- --------------------------------------------------------------------------------
LASC, located at 125 High Street, Boston Massachusetts 02110, is the investment
advisor to the Trust. LASC is a wholly owned subsidiary of Liberty Financial
Companies, Inc. ("LFC"). LASC designates the Trust's Sub-Advisors, evaluates and
monitors Sub-Advisors' performance and investment programs and recommends to the
Board of Trustees whether Sub-Advisors' contracts should be continued or
modified and the addition or deletion of Sub-Advisors. LASC also has the
responsibility to administer the Trust's operations, which it may delegate, at
its own expense, to certain affiliates. LASC has delegated its administrative
responsibilities to colonial in accordance with this authority.
For its services as investment advisor, the Trust pays LASC a management fee at
the annual rate of ____% of the average daily net assets of the Fund.
THE SUB-ADVISOR: PROGRESS INVESTMENT MANAGEMENT COMPANY
- --------------------------------------------------------------------------------
Progress, located at 71 Stevenson Street, Suite 1620, San Francisco, CA 94105,
is the sub-advisor of the Fund.
LASC, out of the management fees it receives from the Trust, pays Progress a
sub-advisory fee at the annual rate of [0.00%] of the average daily net assets
of the Fund.
Progress is a manager of other investment managers which Progress recommends to
the Board of Trustees for appointment pursuant to a portfolio management
agreement [among the Trust, Progress and the Portfolio Manager.] That management
agreement permits each Portfolio Manager to have full investment discretion and
authority over investment of a portion of the Fund's assets.
The Fund's current Portfolio Managers are:
- - Simms Capital Management Inc., an investment advisor since 1984, is
located at 55 Railroad Avenue, Greenwich, CT 06830.
- - McKinley Capital Management, Inc., an investment advisor since 1990, is
located at 3301 C Street, Anchorage, AK 99503.
- - RASARA Strategies, Inc., an investment advisor since 1992, is located at
12 Mount Airy Road, Croton-Hudson, NY 10520.
- - Wilson/Bennett Capital Management, Inc., an investment advisor since 1987,
is located at 8260 Greensboro Drive, Suite 250, McLean, VA 22120.
- - Penn Capital Management, Inc., an investment advisor since 1988, is
located at 52 Haddonfield-Berlin Road, Suite 1000, Cherry Hill, NJ 08034.
Progress continuously monitors the performance and investment styles of the
Fund's Portfolio Managers and from time to time may recommend changes of
Portfolio Managers based on factors such as:
- - Changes in a Portfolio Manager's investment style or a departure by an
individual manager from the firm;
- - A deterioration in a Portfolio Manager's performance relative to that of
other investment management firms practicing a similar style, or
- - Adverse changes in its ownership or personnel.
Progress also may recommend Portfolio Manager changes to change the mix of
investment styles employed by the Fund's Portfolio Managers. The Board of
Trustees must approve all Portfolio Manager changes.
Out of the management fees it receives from LASC, Progress pays each Portfolio
Manager a fee at the annual rate of [0.00%] of the average daily net assets of
the portion of the Fund's assets assigned to that Portfolio Manager.
No one individual at Progress is responsible for Progress' investment management
of the Fund. The following individuals, who work for the indicated Portfolio
Managers, manage a portion of the Fund's assets:
6
<PAGE>
- - Robert A. Simms, Sr., President of Simms Capital Management Inc. The
Portfolio Manager manages the large cap growth portion of the Fund's
portfolio.
- - Robert B. Gillam, President of McKinley Capital Management, Inc. The
Portfolio Manager manages the aggressive growth portion of the Fund's
portfolio.
- - Raymond C. Stewart, President of RASARA Strategies, Inc. The Portfolio
Manager manages the financial services sector portion of the Fund's
portfolio.
- - John W. Fisher, Jr., President of Wilson/Bennett Capital Management, Inc.
The Portfolio Manager manages the large cap value portion of the Fund's
portfolio.
- - Richard A. Hocker, Senior Vice President and Chief Investment Officer of
Penn Capital Management, Inc. The Portfolio Manager manages the small cap
value and high yield bond portion of the Fund's portfolio.
The Trust and Progress have applied for an exemptive order from the Securities
and Exchange Commission that permits the Fund to change Portfolio Managers
without a vote of the shareholders. Information regarding any new Portfolio
Manager will be sent to holders of VA contracts and VLI policies within 90 days
following the effective date of the change.
DISTRIBUTION PLAN
- --------------------------------------------------------------------------------
The Trust has adopted a plan of distribution for on behalf of the Fund in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Trust pays to Liberty Funds Distributor, Inc. a distribution fee
of [0.25%] of the average daily net assets attributable to the Fund's shares.
Because these fees are an ongoing expense, over time they increase the cost of
an investment and the shares may cost more than shares that are not subject to a
distribution fee.
7
<PAGE>
OTHER INVESTMENT STRATEGIES AND RISKS
The Fund's primary investments and its risks are described above in its
description This section describe other investments the Fund may make and the
risks associated with them. In seeking to achieve its goal, the Fund may invest
in various types of securities and engage in various investment techniques which
are not the principle focus of the Fund and therefore are not described in this
prospectus. These types of securities and investment practices are identified
and discussed in the Fund's SAI, which you may obtain free of charge (see back
cover). Approval by the Fund's shareholders is not required to modify or change
any of the Fund's investment goals or investment strategies.
TEMPORARY DEFENSIVE MEASURES
- --------------------------------------------------------------------------------
Crabbe Huson may determine that adverse market conditions make it desirable to
suspend temporarily the Fund's normal investment activities. During such times,
the Fund may, but is not required to, invest in cash or high quality, short-term
debt securities, without limit. Taking a temporary defensive position may
prevent the Fund from achieving its investment objective.
HEDGING STRATEGIES
- --------------------------------------------------------------------------------
The Fund may enter into a number of hedging strategies, including the use of
futures and options, to gain or reduce exposure to particular securities or
markets. These strategies, which are commonly referred to as derivatives,
involve the use of financial instruments whose values derive from the future,
not current, performance of an underlying security, an index or a currency. The
Fund may use these strategies for hedging purposes (attempting to offset a
potential loss in one position by establishing an interest in an opposite
position) or to adjust the Fund's maturity. Hedging strategies involve the risk
that they may exaggerate a loss, potentially losing more money than the actual
cost of the security, or limit a potential gain. Also, with some hedging
strategies there is the risk that the other party to the transaction may fail to
honor its contract terms, causing a loss to the Fund.
YEAR 2000 COMPLIANCE
- --------------------------------------------------------------------------------
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 the advisor and other service providers do 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." The Fund's advisor,
administrator, distributor, and transfer agent ("Liberty Companies") are taking
steps that they believe are reasonably designed to address the Year 2000
Problem, including communicating with vendors who furnish services, software and
systems to the Fund, to provide that date-related information and data can be
properly processed after January 1, 2000. Many Fund service providers and
vendors, including the Liberty Companies, are in the process of making Year 2000
modifications to their software and systems and believe that such modifications
will be completed on a timely basis prior to January 1, 2000. However, no
assurances can be given that all modifications required to ensure proper data
processing and calculation on and after January 1, 2000 will be timely made or
that services to the Fund will not be adversely affected.
8
<PAGE>
SHAREHOLDER INFORMATION
PURCHASE AND REDEMPTIONS The Participating Insurance Companies place daily
orders to purchase and redeem shares of the Fund. These orders generally reflect
the net effect of instructions they receive from holders of their VA contracts
and VLI policies and certain other terms of those contracts and policies. The
Trust issues and redeems shares at NAV without imposing any selling commissions,
sales charge or redemption charge. Shares generally are sold and redeemed at
their net asset value ("NAV") next determined after receipt of purchase or
redemption requests from Participating Insurance Companies. The right of
redemption may be suspended or payment postponed whenever permitted by
applicable law and regulations.
HOW THE FUND'S SHARE PRICE IS DETERMINED Each share price is its NAV next
determined. NAV is the difference between the value of a fund's assets and
liabilities divided by the number of shares outstanding. We determine NAV at the
close of regular trading on the New York Stock Exchange ("NYSE"), usually 4:00
p.m. New York time.
To calculate NAV on a given day, we value each stock listed or traded on a stock
exchange at its latest sale price on that day. If there are no sales on that
day, we value the security at the most recent quoted bid price. We value each
over-the-counter security or National Association of Securities Dealers
Automated Quotation (Nasdaq) security as of the last sales price of that day. We
value other over-the-counter securities that have reliable quotes at the latest
quoted bid price.
We value long-term debt obligations and securities convertible into common stock
at fair value. Pricing services provide the Fund with the value of the
securities. When the price of a security is not available, including days when
we determine that the sale or bid price of the security does not reflect that
security's market value, we will value the security at a fair value determined
in good faith under procedures established by the Board of Trustees.
We value a security at fair value when events have occurred after the last
available market price and before the close of the NYSE that materially affect
the security's price. In the case of foreign securities, this could include
events occurring after the close of the foreign market and before the close of
the NYSE.
The Fund's foreign securities may trade on days when the NYSE is closed for
trading and Participating Insurance Companies may not purchase or redeem shares.
DIVIDENDS AND DISTRIBUTIONS The Fund intends to declare and distribute, as
dividends or capital gain 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
investment 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
NAV, as of record date for the distributions.
9
<PAGE>
FOR MORE INFORMATION
- --------------------------------------------------------------------------------
You may wish to read the SAI for more information on the Fund and the securities
in which it invests. The SAI is incorporated into this prospectus by reference,
which means that it is considered to be part of this prospectus.
You can get free copies of reports and the SAI, request other information and
discuss your questions about the Fund by writing:
Keport Financial Services Corp.
125 High Street
Boston, MA 02111
or by calling or writing the Participating Insurance Company which issued your
variable annuity contract or variable life insurance policy.
Text-only versions of all Fund documents can be viewed online or downloaded from
the SEC at www.sec.gov.
You can review and copy information about the Fund by visiting the following
location, and you can obtain copies upon payment of a duplicating fee, by
writing or calling the:
Public Reference Room
Securities and Exchange Commission
Washington, DC 20549-6009
Information on the operation of the Public Reference Room may be obtained by
calling the Commission at 1-800-SEC-0330.
INVESTMENT COMPANY ACT FILE NUMBER:
Liberty Variable Investment Trust 811-07556
<PAGE>
Cross Reference Sheet Pursuant to Rule 481(a)
(Colonial International Horizons Fund, Variable Series)
(Colonial Global Equity Fund, Variable Series)
(Crabbe Huson Real Estate Investment Fund, Variable Series)
(Progress High Alpha Concentration, Variable Series)
Location or Caption in Statement of
Additional Information
Item Number of Form N-1A
PART B
10. Cover Page; Table of Contents
11. Organization and History
12. Investment Restrictions; Other
Considerations; Description of Certain
Investments
13. Investment Management and Other Services;
More Facts About Trust
14. More Facts About Trust
15. Investment Management and Other Services
16. Other Considerations
17. More Facts About Trust
18. Other Considerations
19. More Facts About Trust
20. Other Considerations
21. Investment Performance
22. Independent Accountants
<PAGE>
LIBERTY VARIABLE INVESTMENT TRUST
One Financial Center
Boston, Massachusetts 02111
COLONIAL INTERNATIONAL HORIZONS FUND, VARIABLE SERIES
COLONIAL GLOBAL EQUITY FUND, VARIABLE SERIES
CRABBE HUSON REAL ESTATE INVESTMENT FUND, VARIABLE SERIES
PROGRESS HIGH ALPHA CONCENTRATION, VARIABLE SERIES
STATEMENT OF ADDITIONAL INFORMATION
DATED JUNE 1, 1999
The Statement of Additional Information ("SAI") is not a Prospectus,
but should be read in conjunction with the Trust's Prospectus, dated June 1,
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 June 1, 1999.
<PAGE>
TABLE OF CONTENTS
ITEM PAGE
ORGANIZATION AND HISTORY..................................................
INVESTMENT MANAGEMENT AND OTHER SERVICES..................................
General..........................................................
Trust Charges and Expenses.......................................
INVESTMENT RESTRICTIONS...................................................
Colonial International Horizons Fund.............................
Colonial Global Equity Fund......................................
Crabbe Huson Real Estate Investment Fund.........................
Progress High Alpha Concentration Fund...........................
MORE FACTS ABOUT TRUST....................................................
Mixed and Shared Funding.........................................
Organization.....................................................
Trustees and Officers............................................
Principal Holders of Securities..................................
Custodians.......................................................
OTHER CONSIDERATIONS......................................................
Portfolio Turnover...............................................
Suspension of Redemptions........................................
Valuation of Securities..........................................
Portfolio Transactions...........................................
DESCRIPTION OF CERTAIN INVESTMENTS........................................
Money Market Instruments.........................................
Investments in Less Developed Countries..........................
Foreign Currency Transactions....................................
Options on Securities............................................
Futures Contracts and Related Options............................
Passive Foreign Investment Companies.............................
Securities Loans.................................................
INVESTMENT PERFORMANCE....................................................
INDEPENDENT ACCOUNTANTS
S-2
<PAGE>
ORGANIZATION AND HISTORY
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
thirteen Funds: Colonial Growth and Income Fund, Variable Series ("Growth and
Income Fund"); Stein Roe Global Utilities Fund, Variable Series ("Global
Utilities Fund"); Colonial International Fund for Growth, Variable Series
("International Fund For Growth"); Colonial U.S. Stock Fund, Variable Series
("U.S. Stock Fund"); Colonial Strategic Income Fund, Variable Series ("Strategic
Income Fund"); Newport Tiger Fund, Variable Series ("Tiger Fund"); Liberty
All-Star Equity Fund, Variable Series ("All-Star Equity Fund"); Colonial Small
Cap Value Fund, Variable Series ("Small Cap Value Fund"), Colonial High Yield
Securities Fund, Variable Series ("High Yield Securities Fund") Colonial
International Horizons Fund, Variable Series ("International Horizons Fund"),
Colonial Global Equity Fund, Variable Series ("Global Equity Fund"), Crabbe
Huson Real Estate Investment Fund, Variable Series ("Real Estate Investment
Fund") and Progress High Alpha Concentration Fund, Variable Series ("High Alpha
Concentration Fund"). The Trust may add or delete Funds from time to time. The
Trust commenced operations on July 1, 1993.
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 interest of
owners may differ. Additional information regarding such differing interest and
related risks are described below under "MORE FACTS ABOUT THE TRUST -- MIXED AND
SHARED FUNDING."
INVESTMENT MANAGEMENT AND OTHER SERVICES
GENERAL
Liberty Advisory Services Corp. ("LASC") serves as Manager pursuant to
investment advisory agreements between the Trust on behalf of the Funds and LASC
(the "Management Agreements"). 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 71.95% 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 each of International Horizons Fund
and Global Equity Fund, have entered into separate Sub-Advisory Agreements
("Colonial Sub-Advisory Agreements") with Colonial Management Associates, Inc.
("Colonial"). Colonial is an indirect wholly owned subsidiary of LFC.
LASC and the Trust, on behalf of the Real Estate Investment Fund, have
entered into a separate Sub-Advisory Agreement (the "Crabbe Huson Sub-Advisory
Agreement" collectively, with the Colonial Sub-Advisory Agreements and the
Crabbe Huson Sub-Advisory Agreement, the
S-3
<PAGE>
"Sub-Advisory Agreements") with Crabbe Huson Group, Inc. ("Crabbe Huson").
Crabbe Huson is a wholly owned subsidiary of LFC.
LASC and the Trust, on behalf of the, have entered into a separate
Sub-Advisory Agreement (the "Progress Sub-Advisory Agreement;") with Progress
Investment Management Company ("Progress") Progress is a wholly owned subsidiary
of LFC.
Progress Investment Management Company. ("Progress") sub-advises High
Alpha Concentration Fund pursuant to the Management Agreement for such Fund (to
which Progress is a party). High Alpha Concentration Fund's investment program
is based upon Progress' multi-manager concept. Progress allocates the Fund's
portfolio assets among a number of independent investment management
organizations ("Portfolio Managers") -- currently five in number -- each of
which employs a different investment style, and periodically rebalances the
Fund's portfolio among the Portfolio Managers so as to optimize the portfolio
throughout all market cycles. Each Portfolio Manager provides these services
under a Portfolio Management Agreement (the "Portfolio Management Agreements")
among the Trust, on behalf of High Alpha Concentration Fund, Progress and such
Portfolio Manager.
High Alpha Concentration Fund's current Portfolio Managers are:
- - Simms Capital Management Inc.
- - McKinley Capital Management, Inc.
- - RASARA Strategies, Inc.
- - Wilson/Bennett Capital Management, Inc.
- - Penn Capital Management, Inc.
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: Paul H.
LeFevre, Jr. (principal executive officer), and Mark R. Tully. Mr. LeFevre 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.
Colonial Management Associates, Inc. COGRA, LLC (COGRA), One Financial
Center, Boston, Massachusetts 02111, owns all of the outstanding common stock of
Colonial. COGRA is an indirect wholly-owned subsidiary of LFC. The directors and
principal executive officer of Colonial are Nancy L. Conlin, Stephen E. Gibson
(principal executive officer) and Davey S. Scoon.
Crabbe Huson Group, Inc. Crabbe Huson, at 121 S.W. Morrison, Suite
1400, Portland, Oregon 97204, is a wholly owned subsidiary of LFC. The directors
and principal executive officer of Crabbe Huson are Kenneth R. Leibler, James E.
Crabbe (principal executive officer), Lindsay Cook.
Progress Investment Management Company. Progress, located at 71
Stevenson Street, Suite 1620, San Francisco, CA 94105, is a wholly owned
subsidiary of LFC. The directors and
S-4
<PAGE>
principal executive officers of Progress are Marx L. Casenave, II (principal
executive officer), Kenneth R. Leibler, Lindsay Cook, A. Ronald Berryman,
Clayton C. Jue, Thurman V. White, Jr. and Rick A. Yamamoto.
As of the date of this Statement of Additional Information, the
following entities serve as Progress' Portfolio Managers for High Alpha
Concentration Fund:
- Simms Capital Management, Inc. Simms Capital Management Inc.
("Simms"), 55 Railroad Avenue, Greenwich, CT 06830, is a
corporation of which Robert A. Simms, Sr. is President,
Director and Treasurer.
- McKinley Capital Management, Inc. McKinley Capital Management,
Inc. ("McKinley"), 3301 C Street, Ankorage, AK 99503, is
[describe ownership]. McKinley's principal executive officer
is Robert Gillam, and its directors are [ ] and [ ].
- RASARA Strategies, Inc. RASARA Strategies, Inc. ("RASARA"), 12
Mount Airy Road, Croton-Hudson, NY 10520, is a corporation of
which Raymond C. Stewart is President.
- Wilson/Bennett Capital Management, Inc. Wilson/Bennett Capital
Management, Inc., 8260 Greensboro Drive, Suite 250, McLean, VA
22120, is a [partnership].John W. Fisher (chief executive
officer) and James B. Moloney are the founding partners.
- Penn Capital Management, Inc. Penn Capital Management, Inc.
("Penn Capital"), 52 Haddonfield-Berlin Road, Suite 1000,
Cherry Hill, NJ 08034, is a corporation of which Marcia A.
Hocker is President and Chief Operating Officer and Richard A.
Hocker is Chief Investment Officer. Kathleen A. News is the
Managing Director.
The Management Agreements, the Sub-Advisory Agreements and the
Portfolio Management Agreements provide that none of LASC, Colonial, Crabbe
Huson, Progress or Progress' Portfolio Managers (collectively, the "Advisors"),
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 any 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 such Advisor of its respective duties under such
agreements, except for liability resulting from willful misfeasance, bad faith
or gross negligence on the part of LASC or such Advisor, in the performance of
its respective duties or from reckless disregard by such Advisor of its
respective obligations and duties thereunder.
S-5
<PAGE>
TRUST CHARGES AND EXPENSES
International Horizons Fund, Global Equity Fund, Real Estate Investment
Fund and High Alpha Concentration Fund each commenced operations on June 1,
1999.
MANAGEMENT FEES. Each Fund listed below pays LASC a management fee as
follows pursuant to the Management Agreements described in the Prospectus:
FUND FEE
International Horizons Fund
Global Equity Fund
Real Estate Investment Fund
High Alpha Concentration Fund
- ----------
CERTAIN ADMINISTRATIVE EXPENSES. Each Fund listed below pays Colonial or an
affiliate thereof as follows for pricing and bookkeeping services.
FUND FEE
International Horizons Fund
Global Equity Fund
Real Estate Investment Fund
High Alpha Concentration Fund
PRINCIPAL UNDERWRITER
Liberty Funds Distributor, Inc.(LFD) , One Financial Center, Boston, MA 02111,
serves as the principal underwriter for the Funds.
The Trustees have approved a plan of distribution (Plan) pursuant to Rule
12b-1 under the 1940 Act Under the Plan, the Funds pay LFD a monthly
distribution fee at the annual rate of up to[ 0.25%] of each Fund's average
daily net assets. [LFD has voluntarily agreed to waive a portion of the
distribution fee so that it does not exceed 0. % annually.] LFD may
terminate this waiver at any time without shareholder approval. LFD may use
the entire amount of such fees to defray the cost of commissions and service
fees paid to financial service firms (FSFs) and for certain other purposes.
Since the distribution fees are payable regardless of the amount of
LFD's expenses, LFD may realize a profit from the fees.
The Plan authorizes any other payments by the Fund to LFD and its affiliates
(including the Advisor) to the extent that such payments might be construed to
be indirect financing of the distribution of fund shares.
The Trustees believe the Plan could be a significant factor in the growth
and retention of Fund assets resulting in a more advantageous expense ratio
and increased investment flexibility which could benefit each Fund's
shareholders. The Plan will continue in effect from year to year so long as
continuance is specifically approved at least annually by a vote of the
Trustees, including the Trustees who are not interested persons of the Trust
and have no direct or indirect financial interest in the operation of the
Plan or in any agreements related to the Plan (Independent Trustees), cast in
person at a meeting called for the purpose of voting on the Plan. The Plan may
not be amended to increase the fee materially without approval by vote of
a majority of the outstanding voting securities of the relevant class of
shares and all material amendments of the Plan must be approved by the Trustees
in the manner provided in the foregoing sentence. The Plan may be terminated
at any time by vote of a majority of the Independent Trustees or by vote of a
majority of the outstanding voting securities of the relevant Fund's shares.
The continuance of the Plan will only be effective if the selection and
nomination of the Trustees who are not interested persons of the Trust is
effected by such disinterested Trustees.
EXPENSE LIMITATIONS. LASC has agreed to reimburse all expenses,
including management fees, but excluding interest, taxes, brokerage, and other
expenses which are capitalized in accordance with generally accepted accounting
principles, and extraordinary expenses, incurred by each of the Funds as
follows: International Horizons Fund - in excess of [ ]% of average daily net
asset value per annum; Global Equity Fund - in excess of [ ]% of average daily
net asset value per annum; Real Estate Investment Fund - in excess of [ ]% of
average daily net asset value per annum; and High Alpha Concentration Fund - in
excess of [ ]% of average daily net asset value per annum, in each case for the
period from June 1, 1999 until [date].
S-6
<PAGE>
INVESTMENT RESTRICTIONS
In addition to the restrictions set forth in the Prospectus with
respect to each Fund which are described as fundamental investment policies, the
investment restrictions specified below with respect to each Fund as
"FUNDAMENTAL INVESTMENT POLICIES" have been adopted as fundamental investment
policies of each Fund. Such fundamental investment policies may be changed only
with the consent of a "majority of the outstanding voting securities" of the
particular Fund. As used in the Prospectus and in this SAI, the term "majority
of the outstanding voting securities" means the lesser of (i) 67% of the voting
securities of a Fund present at a meeting where the holders of more than 50% of
the outstanding voting securities of a Fund are present in person or by proxy,
or (ii) more than 50% of the outstanding voting securities of a Fund. Shares of
each Fund will be voted separately on matters affecting only that Fund,
including approval of changes in the fundamental objectives, policies, or
restrictions of that Fund.
Total assets and net assets are determined at current value for
purposes of compliance with investment restrictions and policies. All percentage
limitations will apply at the time of investment and are not violated unless an
excess or deficiency occurs as a result of such investment. For purposes of the
diversification requirement of the Investment Company Act of 1940, as amended
(the "1940 Act"), the issuer with respect to a security is the entity whose
revenues support the security.
EACH FUND (OTHER THAN INTERNATIONAL HORIZONS FUND)
FUNDAMENTAL INVESTMENT POLICIES. The Funds may:
1. Issue senior securities only through borrowing money from banks for
temporary or emergency purposes up to 10% of its net assets; however,
the Fund will not purchase additional portfolio securities while
borrowings exceed 5% of net assets;
2. Underwrite securities issued by others only when disposing of
portfolio securities;
3. Make loans through lending of securities not exceeding 30% of total
assets, through the purchase of debt instruments and similar evidences
of indebtedness typically sold privately to financial institutions and
through repurchase agreements;
4. (With the exception of Real Estate Investment Fund) Not concentrate
more than 25% of its total assets in any one industry;
5. With respect to 75% of total assets not purchase any security (other
than obligations of the U.S. Government and cash items including
receivables) if as a result more than 5% of its total assets would
then be invested in securities of a single issuer or purchase the
voting securities of an issuer if, as a result of such purchase, the
Fund would own more than 10% of the outstanding voting shares of such
issuer; and
S-7
<PAGE>
6. Own real estate if it is acquired as the result of owning securities
and not more than 5% of total assets; provided that the Real Estate
Investment Fund may invest in securities that are secured by real
estate or interest therein and may purchase and sell mortgage-related
securities and may hold and sell real estate acquired by the Fund as a
result of the ownership of securities.
OTHER INVESTMENT POLICIES. As non-fundamental investment policies of the
Funds, which may be changed without a shareholder vote, the Funds may not:
1. Purchase securities on margin, but it may receive short-term credit to
clear securities transactions and may make initial or maintenance
margin deposits in connection with futures transactions;
2. Purchase and sell futures contracts and related options if the total
initial margin and premiums required to establish non-hedging
positions exceed 5% of its total assets;
3. Have a short securities position, unless the Fund owns, or owns rights
(exercisable without payment) to acquire, an equal amount of such
securities; and
4. Invest more than 15% of its assets in illiquid assets.
INTERNATIONAL HORIZONS FUND
FUNDAMENTAL INVESTMENT POLICIES. International Horizons Fund may:
1. Issue senior securities only through borrowing money from banks for
temporary or emergency purposes up to 10% of its net assets; however,
the Fund will not purchase additional portfolio securities while
borrowings exceed 5% of net assets;
2. Underwrite securities issued by others only when disposing of
portfolio securities;
3. Make loans through lending of securities not exceeding 30% of total
assets, through the purchase of debt instruments and similar evidences
of indebtedness typically sold privately to financial institutions and
through repurchase agreements;
4. Not concentrate more than 25% of its total assets in any one industry;
5. Only own real estate acquired as the result of owning securities and
not more than 5% of total assets; and
6. Purchase and sell futures contracts and related options so long as the
total initial margin and premiums on the contracts do not exceed 5% of
its total assets; and
OTHER INVESTMENT POLICIES. As non-fundamental investment policies of
International Horizons Fund which may be changed without a shareholder vote, the
Fund may not:
S-8
<PAGE>
1. Purchase securities on margin, but it may receive short-term credit to
clear securities transactions and may make initial or maintenance
margin deposits in connection with futures transactions;
2. Have a short securities position, unless the Fund owns, or owns rights
(exercisable without payment) to acquire, an equal amount of such
securities; and
3. Invest more than 15% of its net assets in illiquid assets.
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), including those of Keyport, Independence Life & Annuity
Company ("Independence") and Keyport Benefit Life Insurance Company ("Keyport
Benefit"), each of which is a wholly owned subsidiary of Keyport, and Liberty
Life Assurance Company of Boston ("Liberty Life"), a 90%-owned subsidiary of
Liberty Mutual. 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 one or more Funds or shares of
another Fund may be substituted. This might force a Fund to sell securities at
disadvantageous prices.
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.
S-9
<PAGE>
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, age 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).
<TABLE>
<CAPTION>
======================================== ======================= =============================================
Positions(s) held Principal occupations
Name, Age and Address with the Trust during past five years
======================================== ======================= =============================================
<S> <C> <C>
Robert J. Birnbaum(71) Trustee Retired (formerly Special Counsel, Dechert
313 Bedford Road Price & Rhoads (law) from September, 1988
Ridgewood, NJ 07450 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(68) Trustee Retired (formerly Chairman of the Board and
Carriage Way Chief Executive Officer, Shore Bank & Trust
Danvers, MA 01923 Company (banking) from 1992 to 1993).
Director or Trustee: Colonial Funds, Empire
Company Limited.
- ---------------------------------------- ----------------------- =============================================
John V. Carberry*(51) Trustee Senior Vice President of Liberty Financial
56 Woodcliff Road Companies, Inc. 1998-present (prior thereto
Wellesley Hills, MA 02481 Managing Director, Salomon Brothers Inc.).
Nominee for election as a Trustee of the
Colonial Funds.
- ---------------------------------------- ----------------------- =============================================
</TABLE>
S-10
<PAGE>
<TABLE>
<CAPTION>
======================================== ======================= =============================================
Positions(s) held Principal occupations
Name, Age and Address with the Trust during past five years
======================================== ======================= =============================================
<S> <C> <C>
Lora S. Collins(63) Trustee Attorney (formerly Attorney, Kramer, Levin,
1175 Hill Road Naftalis & Frankel (law) prior to November,
Southold, NY 11971 1996). Trustee: Colonial Funds.
- ---------------------------------------- ----------------------- ---------------------------------------------
</TABLE>
S-11
<PAGE>
<TABLE>
<CAPTION>
======================================== ======================= =============================================
Positions(s) held Principal occupations
Name, Age and Address with the Trust during past five years
======================================== ======================= =============================================
<S> <C> <C>
James E. Grinnell(69) Trustee Private Investor. Director or Trustee:
22 Harbor Avenue Colonial Funds, Liberty All-Star Equity
Marblehead, MA 01945 Fund, Liberty All-Star Growth Fund, Inc.
- ---------------------------------------- ----------------------- ---------------------------------------------
Richard W. Lowry(62) Trustee Private Investor. Director or Trustee:
10701 Charleston Drive Colonial Funds, Liberty All-Star Equity
Vero Beach, FL 32963 Fund, Liberty All-Star Growth Fund, Inc.
- ---------------------------------------- ----------------------- ---------------------------------------------
Salvatore Macera(67) Trustee Private Investor (formerly Executive Vice
26 Little Neck Lane President of Itek Corp. and President of
New Seabury, MA 02649 Itek Optical & Electronic Industries,
Inc.). Trustee of LVIT and SRVIT.
- ---------------------------------------- ----------------------- ---------------------------------------------
William E. Mayer(58) Trustee Partner, Development Capital, LLC
500 Park Avenue, 5th Floor (investments); formerly Dean of the College
New York, NY 10022 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.
- ---------------------------------------- ----------------------- ---------------------------------------------
James L. Moody, Jr.(67) Trustee Retired (formerly Chairman of the Board
16 Running Tide Road from May, 1994 to May, 1997, Chief
Cape Elizabeth, ME 04107 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(55) Trustee Dean of the School of Management, Boston
140 Commonwealth Avenue College (higher education). Director or
Chestnut Hill, MA 02167 Trustee: Colonial Funds, Liberty All-Star
Equity Fund, Liberty All-Star Growth Fund,
Inc., Hyde Athletic Industries, Inc.
- ---------------------------------------- ----------------------- ---------------------------------------------
</TABLE>
S-12
<PAGE>
<TABLE>
<CAPTION>
======================================== ======================= =============================================
Positions(s) held Principal occupations
Name, Age and Address with the Trust during past five years
======================================== ======================= =============================================
<S> <C> <C>
Thomas E. Stitzel(58) Trustee Professor of Finance, College of Business,
2208 Tawny Woods Place Boise State University; Business consultant
Boise, ID 83706 and author. Trustee of LVIT and SRVIT.
- ---------------------------------------- ----------------------- ---------------------------------------------
Robert L. Sullivan(70) Trustee Retired Partner, KPMG Peat Marwick LLP
45 Sankaty Avenue (management consulting) (formerly
Siasconset, MA 02564 self-employed Management Consultant).
Trustee: Colonial Funds.
- ---------------------------------------- ----------------------- ---------------------------------------------
Anne-Lee Verville(53) Trustee Consultant (formerly General Manager,
359 Stickney Hill Road Global Education Industry from 1994 to
Hopkinton, NH 03229 1997, and President, Applications Solutions
Division from 1991 to 1994, IBM
Corporation). Nominee for election as a
Trustee of the Colonial Funds.
- ---------------------------------------- ----------------------- ---------------------------------------------
</TABLE>
S-13
<PAGE>
<TABLE>
<CAPTION>
======================================== ======================= =============================================
Positions(s) held Principal occupations
Name, Age and Address with the Trust during past five years
======================================== ======================= =============================================
<S> <C> <C>
Stephen E. Gibson(45) President President of the Colonial Funds since June,
One Financial Center 1998, Chairman of the Board since July,
Boston, MA 02111 1998, Chief Executive Officer and President
since December 1996 and Director, since
July, 1996 of Colonial Management
Associates, Inc. (formerly Executive Vice
President from July, 1996 to December,
1996); Director, Chief Executive
Officer and President of COGRA since
December, 1998 (formerly Director, Chief
Executive Officer and President of
The Colonial Group, Inc. (TCG) from
December, 1996 to December, 1998);
Assistant Chairman of Stein Roe &
Farnham Incorporated (SR&F) since
August, 1998 (formerly Managing
Director of Marketing of Putnam
Investments, June, 1992 to July, 1996.).
- ---------------------------------------- ----------------------- ---------------------------------------------
Timothy J. Jacoby(45) Treasurer and Chief Treasurer and Chief Financial Officer of
One Financial Center Financial Officer the Colonial Funds; Senior Vice President
Boston, MA 02111 and Chief Financial Officer of Colonial
Management Associates, Inc.; formerly
Senior Vice President, Fidelity Accounting
and Custody Services, Inc. and Assistant
Treasurer to the Fidelity Group of Funds.
- ---------------------------------------- ----------------------- ---------------------------------------------
</TABLE>
S-14
<PAGE>
<TABLE>
<CAPTION>
======================================== ======================= =============================================
Positions(s) held Principal occupations
Name, Age and Address with the Trust during past five years
======================================== ======================= =============================================
<S> <C> <C>
Davey S. Scoon(51) Vice President Vice President of the Colonial Funds since
One Financial Center June, 1993; Executive Vice President since
Boston, MA 02111 July, 1993 and Director since March, 1985
of Colonial Management Associates, Inc. (formerly
Senior Vice President and Treasurer of Colonial
Management Associates, Inc. from March, 1985 to
July, 1993); Executive Vice President and
Chief Operating Officer of COGRA since
December, 1998 (formerly Executive Vice
President and Chief Operating Officer, TCG
from March, 1995 to December, 1998;
Vice President -- Finance and Administration
from November, 1985 to March, 1995);
Executive Vice President of SR&F since
August, 1998.
- ---------------------------------------- ----------------------- ---------------------------------------------
J. Kevin Connaughton(34) Controller and Chief Controller and Chief Accounting Officer of
One Financial Center Accounting Officer the Colonial Funds since February, 1998;
Boston, MA 02111 Vice President of Colonial Management
Associates, Inc. since February, 1998
(formerly Senior Tax Manager, Coopers &
Lybrand, LLP from April, 1996 to
January, 1998; Vice President, 440 Financial
Group/First Data Investor Services Group
from March, 1994 to April, 1996; Vice
President, The Boston Company (subsidiary of
Mellon Bank) from December, 1993 to March,
1994; Assistant Vice President and Tax
Manager, The Boston Company from March,
1992 to December, 1993).
- ---------------------------------------- ----------------------- ---------------------------------------------
</TABLE>
S-15
<PAGE>
<TABLE>
<CAPTION>
======================================== ======================= =============================================
Positions(s) held Principal occupations
Name, Age and Address with the Trust during past five years
======================================== ======================= =============================================
<S> <C> <C>
Nancy L. Conlin(45) Secretary Director, Senior Vice President and General
One Financial Center Counsel, Colonial Management Associates,
Boston, MA 02111 Inc. (April, 1998 to present); Vice
President and Counsel (February, 1994
to April, 1998).
- ---------------------------------------- ----------------------- ---------------------------------------------
</TABLE>
As indicated in the above table, certain Trustees and officers of the Trust
also hold positions with LFC, Keyport, LASC, KFSC, Colonial, Stein Roe, Newport,
Progress 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 below sets forth (1) the aggregate compensation paid by the Trust
to the Trustees for 1998, and (ii) the amount of compensation paid to the
Trustees of the Trust in their capacities as Trustees of the Liberty Funds
Complex for service for 1998 (a):
COMPENSATION TABLE
<TABLE>
<CAPTION>
Total Compensation From Liberty Funds Complex
Aggregate 1998 Compensation Paid to the Directors/Trustees For The
from the Trust(b) Calendar Year Ended December 31, 1998(c)
<S> <C> <C>
Trustee
Robert J. Birnbaum $ 592 $124,429
Tom Bleasdale 592 115,000(e)
John V. Carberry 0(d) 0(d)
Lora S. Collins 592 97,429
James E. Grinnell 592 128,071
Richard W. Lowry 592 123,214
Salvatore Macera 10,393 25,250
William E. Mayer 296 113,286
James L. Moody, Jr. 592(e) 105,857(e)
John J. Neuhauser 599 130,323
Thomas E. Stitzel 10,393 25,250
Robert L. Sullivan 649 104,100
Anne-Lee Verville 592(e) 23,445(e)
</TABLE>
(A) The Liberty Funds do not currently provide pension or retirement plan
benefits to the Trustees.
(b) Messrs. Birnbaum, Bleasdale, Carberry, Grinnell, Lowry, Mayer, Moody,
Neuhauser and Sullivan and Mses. Collins and Verville joined the Board of
the Trustees of the Trust on December 17, 1998.
S-16
<PAGE>
(c) At December 31, 1998, the Liberty Funds Complex consisted of 52 open-end
and 5 closed-end management investment company portfolios advised by the
Administrator or its affiliates, Newport Fund Management, Inc., Crabbe
Huson Group, Inc. and Stein Roe & Farnham Incorporated, nine funds of the
Trust and the closed-end Liberty All-Star Equity and Liberty All-Star
Growth Fund, Inc. advised by Liberty Asset Management Company, another
affiliate of the Administrator.
(d) Mr. Carberry does not receive compensation for serving as a Trustee.
(e) Payable in later years as deferred compensation $52,000.
PRINCIPAL HOLDERS OF SECURITIES
All the shares of the Funds 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 or by the general account of Keyport. At June 1, 1999
the general account of Keyport owned of record xx% of International Horizons
Fund, xx% of Global Equity Fund, xx% of Real Estate Investment Fund and of xx%
High Alpha Concentration Fund. At all meetings of shareholders of the Funds,
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 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 Funds 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
June 1, 1999 owned beneficially 5% or more of the outstanding shares of any
Fund.
CUSTODIAN
The Chase Manhattan Bank, 3 MetroTech Center, 8th Floor, Brooklyn, NY
11245, is custodian of the securities and cash owned by the Funds. The custodian
is responsible for holding all securities and cash of each 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 Funds, 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 Funds or the
Trust. Portfolio securities of the Funds 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
S-17
<PAGE>
custody of various foreign branches of the custodian and/or third party
subcustodians, including foreign banks and foreign securities depositories.
OTHER CONSIDERATIONS
PORTFOLIO TURNOVER
Although no Fund purchases securities with a view to rapid turnover, there
are no limitations on the length of time that securities must be held by any
Fund and a 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
portfolio were sold and either repurchased or replaced within one year. Although
the Funds cannot predict portfolio turnover rate, it is estimated that, under
normal circumstances, the annual rate for each Fund will be no greater than
100%.
If a Fund writes a substantial number of call or put options (on securities
or indexes) or engages in the use of futures contracts or options on futures
contracts (all referred to as "Collateralized Transactions"), and the market
prices of the securities underlying the Collateralized Transactions move
inversely to the Collateralized Transaction, there may be a very substantial
turnover of the portfolios. The Funds pay brokerage commissions in connection
with options and futures transactions and effecting closing purchase or sale
transactions, as well as for the purchases and sales of other portfolio
securities other than fixed income securities.
International Horizons Fund and Global Equity Fund may be expected to
experience higher portfolio turnover rates if such Funds make a change in its
respective investments from one geographic sector (e.g., Europe; Japan; emerging
Asian markets; etc.) to another geographic sector. Costs will be greater if the
change is from the sector in which the greatest proportion of its assets are
invested.
SUSPENSION OF REDEMPTIONS
The right to redeem shares or to receive payment with respect to any
redemption of shares of the Funds 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 Funds is not
reasonably practicable, or (iii) for such other periods as the SEC may by order
permit for protection of shareholders of the Funds.
VALUATION OF SECURITIES
The assets of the Funds 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
S-18
<PAGE>
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
Jr., Day, Presidents' Day, 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
The Trust has no obligation to do business with any broker-dealer or group
of broker-dealers in executing transactions in securities with respect to the
Funds, and the Funds have no intention to deal exclusively with any particular
broker-dealer or group of broker-dealers.
Each of Colonial, Crabbe Huson and each of Progress' Portfolio Managers
(each an "Advisor") places the transactions of the Funds with broker-dealers
selected by it and, if applicable, negotiates commissions. Broker-dealers may
receive brokerage commissions on portfolio transactions, including the purchase
and writing of options, the effecting of closing purchase and sale transactions,
and the purchase and sale of underlying securities upon the exercise of options
and the purchase or sale of other instruments. The Funds from time to time may
also execute portfolio transactions with such broker-dealers acting as
principals.
S-19
<PAGE>
Except as described below in connection with commissions paid to a clearing
agent on sales of securities, it is each Fund's policy and the policy of its
Advisor always to seek best execution, which is to place the Fund's transactions
where the Fund can obtain the most favorable combination of price and execution
services in particular transactions or provided on a continuing basis by a
broker-dealer, and to deal directly with a principal market maker in connection
with over-the-counter transactions, except when the Advisor believes that best
execution is obtainable elsewhere. In evaluating the execution services of,
including the overall reasonableness of brokerage commissions paid to, a
broker-dealer, consideration is given to, among other things, the firm's general
execution and operational capabilities, and to its reliability, integrity and
financial condition.
Subject to such policy of always seeking best execution, and subject to the
additional matters described below regarding each of International Horizons
Fund, Global Equity Fund and High Alpha Concentration Fund, securities
transactions of the Funds may be executed by broker-dealers who also provide
research services (as defined below) to an Advisor, the Funds or other accounts
as to which such Advisor exercises investment discretion. Such advisor may use
all, some or none of such research services in providing investment advisory
services to each of its clients, including the Fund(s) it advises. To the extent
that such services are used by the Advisors, they tend to reduce their expenses.
It is not possible to assign an exact dollar value for such services.
Subject to such policies as the Board of Trustees may determine, each of
the Advisors may cause a Fund to pay a broker-dealer that provides brokerage and
research services to it an amount of commission for effecting a securities
transaction, including the sale of an option or a closing purchase transaction,
for a Fund in excess of the amount of commission that another broker-dealer
would have charged for effecting that transaction. As provided in Section 28(e)
of the Securities Exchange Act of 1934, "brokerage and research services"
include advice as to the value of securities, the advisability of investing in,
purchasing or selling securities and the availability of securities or
purchasers or sellers of securities; furnishing analyses and reports concerning
issuers, industries, securities, economic factors and trends and portfolio
strategy and performance of accounts; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement). An
Advisor placing a brokerage transaction must determine in good faith that such
greater commission is reasonable in relation to the value of the brokerage and
research services provided to it by the executing broker-dealer viewed in terms
of that particular transaction or its overall responsibilities to the applicable
Fund and all its other clients.
Certain of the other accounts of any of the Advisors may have investment
objectives and programs that are similar to those of the Funds. Accordingly,
occasions may arise when each of the Advisors engages in simultaneous purchase
and sale transactions of securities that are consistent with the investment
objectives and programs of a Fund and such other accounts. On those occasions,
the Advisor will allocate purchase and sale transactions in an equitable manner
according to written procedures as approved by the Board of Trustees. Such
procedures may, in particular instances, be either advantageous or
disadvantageous to a Fund.
Consistent with applicable rules of the National Association of Securities
Dealers, Inc., and subject to seeking best execution and such other policies as
the Board of Trustees may determine,
S-20
<PAGE>
each of the Advisors may consider sales of VA contracts and VLI policies as a
factor in the selection of broker-dealers to execute securities transactions for
the Funds.
Additional Matters Pertaining to International Horizons Fund and Colonial
Global Equity Fund. The portfolio manager for the International Horizons Fund
and Global Equity Fund is Gita Rao, who is jointly employed by Colonial and
Stein Roe & Farnham Incorporated ("Stein Roe") (each of which is an indirect
wholly owned subsidiary of LFC). Colonial utilizes the trading facilities of
Stein Roe to place all orders on behalf of the International Horizons Fund and
Global Equity Fund for the purchase and sale of portfolio securities, futures
contracts and foreign currencies. The Funds and the other accounts advised by
Ms. Rao sometimes invest in the same securities and sometimes enter into similar
transactions utilizing futures contracts and foreign currencies. In certain
cases, purchases and sales on behalf of the Funds and such other accounts will
be bunched and executed on an aggregate basis. In such cases, each participating
account (including the International Horizons Fund or Global Equity Fund) will
receive the average price at which the trade is executed. Where less than the
desired aggregate amount is able to be purchased or sold, the actual amount
purchased or sold will be allocated among the participating accounts (including
the International Horizons Fund and Global Equity Fund) in proportion to the
amounts desired to be purchased or sold by each. Although in some cases these
practices could have a detrimental effect on the price or volume of the
securities, futures or currencies as far as the International Horizons Fund or
Global Equity Fund is concerned, Colonial believes that in most cases these
practices should produce better executions. It is the opinion of Colonial that
the advantages of these practices outweigh the disadvantages, if any, which
might result from them.
Portfolio transactions on behalf of the International Horizons Fund and
Global Equity Fund may be executed by broker-dealers who provide research
services to Colonial or Stein Roe which are used in the investment management of
such Fund or other accounts over which Colonial or Stein Roe exercise investment
discretion. Such transactions will be effected in accordance with the policies
described above. No portfolio transactions on behalf of the Fund will be
directed to a broker-dealer in consideration of the broker-dealer's provision of
research services to Colonial, or to Colonial and Stein Roe, unless a
determination is made that such research assists Colonial in its investment
management of the International Horizons Fund and Global Equity Fund or other
accounts over which Colonial exercises investment discretion.
Additional Matters Pertaining to High Alpha Concentration Fund. The
Portfolio Management Agreements with Progress' Portfolio Managers provide that
Progress has the right to request that transactions giving rise to brokerage
commissions, in amounts to be agreed upon from time to time between Progress and
the Portfolio Manager, be executed by brokers and dealers (to be agreed upon
from time to time between Progress and the Portfolio Manager) which provide
research products and services to Progress or to High Alpha Concentration Fund
or other accounts managed by Progress (collectively with High Alpha
Concentration Fund, "Progress Clients"). The commissions paid on such
transactions may exceed the amount of commissions another broker would have
charged for effecting that transaction. Research products and services made
available to Progress through brokers and dealers executing transactions for
Progress Clients involving brokerage commissions include performance and other
qualitative and quantitative data relating to investment managers in general and
the Portfolio Managers in particular; data relating to the
S-21
<PAGE>
historic performance of categories of securities associated with particular
investment styles; mutual fund portfolio and performance data; data relating to
portfolio manager changes by pension plan fiduciaries; quotation equipment; and
related computer hardware and software, all of which research products and
services are used by Progress in connection with its selection and monitoring of
portfolio managers (including the Portfolio Managers) for Progress Clients, the
assembly of a mix of investment styles appropriate to Progress' Clients'
investment objectives, and the determination of overall portfolio strategies.
Progress from time to time reaches understandings with each of the
Portfolio Managers as to the amount of the High Alpha Concentration Fund
portfolio transactions initiated by such Portfolio Manager that are to be
directed to brokers and dealers which provide research products and services to
Progress. These amounts may differ among the Portfolio Managers based on the
nature of the markets for the types of securities managed by them and other
factors.
These research products and services are used by Progress in connection
with its management of Progress Clients' portfolios, regardless of the source of
the brokerage commissions. In instances where Progress receives from
broker-dealers products or services which are used both for research purposes
and for administrative or other non-research purposes, Progress makes a good
faith effort to determine the relative proportions of such products or services
which may be considered as investment research, based primarily on anticipated
usage, and pays for the costs attributable to the non-research usage in cash.
DESCRIPTION OF CERTAIN INVESTMENTS
The following is a description of certain types of investments which may be
made by one or more of the Funds.
MONEY MARKET INSTRUMENTS
As stated in the Prospectus, each Fund may invest in a variety of
high-quality money market instruments. The money market instruments that may be
used by each Fund may include:
UNITED STATES GOVERNMENT OBLIGATIONS. These consist of various types of
marketable securities issued by the U.S. Treasury, i.e., bills, notes and bonds.
Such securities are direct obligations of the U.S. Government and differ mainly
in the length of their maturity. Treasury bills, the most frequently issued
marketable government security, have a maturity of up to one year and are issued
on a discount basis.
UNITED STATES GOVERNMENT AGENCY SECURITIES. These consist of debt
securities issued by agencies and instrumentalities of the U.S. Government,
including the various types of instruments currently outstanding or which may be
offered in the future. Agencies include, among others, the Federal Housing
Administration, Government National Mortgage Association, Farmer's Home
Administration, Export-Import Bank of the United States, Maritime
Administration, and General Services Administration. Instrumentalities include,
for example, each of the Federal Home Loan Banks, the National Bank for
Cooperatives, the Federal Home Loan Mortgage Corporation, the
S-22
<PAGE>
Farm Credit Banks, the Federal National Mortgage Association, and the United
States Postal Service. These securities are either: (i) backed by the full faith
and credit of the U.S. Government (e.g., U.S. Treasury Bills); (ii) guaranteed
by the U.S. Treasury (e.g., Government National Mortgage Association
mortgage-backed securities); (iii) supported by the issuing agency's or
instrumentality's right to borrow from the U.S. Treasury (e.g., Federal National
Mortgage Association Discount Notes); or (iv) supported only by the issuing
agency's or instrumentality's own credit (e.g., securities issued by the
Farmer's Home Administration).
BANK AND SAVINGS AND LOAN OBLIGATIONS. These include certificates of
deposit, bankers' acceptances, and time deposits. Certificates of deposit
generally are short-term, interest-bearing negotiable certificates issued by
commercial banks or savings and loan associations against funds deposited in the
issuing institution. Bankers' acceptances are time drafts drawn on a commercial
bank by a borrower, usually in connection with an international commercial
transaction (e.g., to finance the import, export, transfer, or storage of
goods). With a bankers' acceptance, the borrower is liable for payment as is the
bank, which unconditionally guarantees to pay the draft at its face amount on
the maturity date. Most bankers' acceptances have maturities of six months or
less and are traded in secondary markets prior to maturity. Time deposits are
generally short-term, interest-bearing negotiable obligations issued by
commercial banks against funds deposited in the issuing institutions. The Funds
will not invest in any security issued by a commercial bank or a savings and
loan association unless the bank or savings and loan association is organized
and operating in the United States, has total assets of at least one billion
dollars, and is a member of the Federal Deposit Insurance Corporation ("FDIC"),
in the case of banks, or insured by the FDIC in the case of savings and loan
associations; provided, however, that such limitation will not prohibit
investments in foreign branches of domestic banks which meet the foregoing
requirements. The Funds will not invest in time-deposits maturing in more than
seven days.
SHORT-TERM CORPORATE DEBT INSTRUMENTS. These include commercial paper
(i.e., short-term, unsecured promissory notes issued by corporations to finance
short-term credit needs). Commercial paper is usually sold on a discount basis
and has a maturity at the time of issuance not exceeding nine months. Also
included are non-convertible corporate debt securities (e.g., bonds and
debentures). Corporate debt securities with a remaining maturity of less than 13
months are liquid (and tend to become more liquid as their maturities lessen)
and are traded as money market securities. Each Fund may purchase corporate debt
securities having greater maturities.
REPURCHASE AGREEMENTS. The Funds may invest in repurchase agreements. A
repurchase agreement is an instrument under which the investor (such as a Fund)
acquires ownership of a security (known as the "underlying security") and the
seller (i.e., a bank or primary dealer) agrees, at the time of the sale, to
repurchase the underlying security at a mutually agreed upon time and price,
thereby determining the yield during the term of the agreement. This results in
a fixed rate of return insulated from market fluctuations during such period,
unless the seller defaults on its repurchase obligations. The underlying
securities will consist only of securities issued by the U.S. Government, its
agencies or instrumentalities ("U.S. Government Securities"). Repurchase
agreements are, in effect, collateralized by such underlying securities, and,
during the term of a repurchase agreement, the seller will be required to
mark-to-market such securities every business day and to provide such additional
collateral as is necessary to maintain the value of all collateral at
S-23
<PAGE>
a level at least equal to the repurchase price. Repurchase agreements usually
are for short periods, often under one week, and will not be entered into by a
Fund for a duration of more than seven days if, as a result, more than 15% of
the value of that Fund's total assets would be invested in such agreements or
other securities which are illiquid.
The Funds will seek to assure that the amount of collateral with respect to
any repurchase agreement is adequate. As with any extension of credit, however,
there is risk of delay in recovery or the possibility of inadequacy of the
collateral should the seller of the repurchase agreement fail financially. In
addition, a Fund could incur costs in connection with disposition of the
collateral if the seller were to default. The Funds will enter into repurchase
agreements only with sellers deemed to be creditworthy under creditworthiness
standards approved by the Board of Trustees and only when the economic benefit
to the Funds is believed to justify the attendant risks. The Board of Trustees
believes these standards are designed to reasonably assure that such sellers
present no serious risk of becoming involved in bankruptcy proceedings within
the time frame contemplated by the repurchase agreement. The Funds may enter
into repurchase agreements only with commercial banks or registered
broker-dealers.
ADJUSTABLE RATE AND FLOATING RATE SECURITIES. Adjustable rate securities
(i.e., variable rate and floating rate instruments) are securities that have
interest rates that are adjusted periodically, according to a set formula. The
maturity of some adjustable rate securities may be shortened under certain
special conditions described more fully below.
Variable rate instruments are obligations (usually certificates of deposit)
that provide for the adjustment of their interest rates on predetermined dates
or whenever a specific interest rate changes. A variable rate instrument subject
to a demand feature is considered to have a maturity equal to the longer of the
period remaining until the next readjustment of the interest rate or the period
remaining until the principal amount can be recovered through demand.
Floating rate instruments (generally corporate notes, bank notes or
Eurodollar certificates of deposit) have interest rate reset provisions similar
to those for variable rate instruments and may be subject to demand features
like those for variable rate instruments. The interest rate is adjusted,
periodically (e.g. daily, monthly, semi-annually), to the prevailing interest
rate in the marketplace. The interest rate on floating rate securities is
ordinarily determined by reference to, or is a percentage of, a bank's prime
rate, the 90-day U.S. Treasury bill rate, the rate of return on commercial paper
or bank certificates of deposit, an index of short-term interest rates or some
other objective measure. The maturity of a floating rate instrument is
considered to be the period remaining until the principal amount can be
recovered through demand.
INVESTMENTS IN LESS DEVELOPED COUNTRIES
International Horizons Fund's investments in foreign securities may include
investments in countries whose economies or securities markets are considered by
Colonial not to be highly developed (referred to as "emerging market
countries"). Normally up to 35% of the Fund's assets will be invested in such
emerging market countries. As of May 1, 1999, the following countries were
considered by Colonial to be emerging market countries:
S-24
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Europe and
Asia Latin America the Middle East Africa
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C>
India Argentina Czech Republic South Africa
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Indonesia Brazil Egypt
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Korea Chile Greece
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Pakistan Colombia Hungary
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Philippines Mexico Israel
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Sri Lanka Peru Jordan
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Taiwan Venezuela Portugal
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Thailand Russia
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Turkey
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
</TABLE>
Tiger Fund invests primarily in companies located in the Tiger
countries of East Asia, which include Indonesia, Korea, the Philippines, Taiwan
and Thailand.
FOREIGN CURRENCY TRANSACTIONS
Each of International Horizons Fund and Global Equity Fund may engage
in currency exchange transactions to protect against uncertainty in the level of
future currency exchange rates. These Funds may purchase foreign currencies on a
spot or forward basis in conjunction with their investments in foreign
securities and to hedge against fluctuations in foreign currencies. The Fund
also may buy and sell currency futures contracts and options thereon for such
hedging purposes.
A Fund may engage in both "transaction hedging" and "position hedging."
When it engages in transaction hedging, a Fund enters into foreign currency
transactions with respect to specific receivables or payables of the Fund
generally arising in connection with purchases or sales of its portfolio
securities. A Fund will engage in transaction hedging when it desires to "lock
in" the U.S. dollar price of a security it has agreed to purchase or sell, or
the U.S. dollar equivalent of a dividend or interest payment in a foreign
currency. By transaction hedging a Fund attempts to protect itself against a
possible loss resulting from an adverse change in the relationship between the
U.S. dollar and the applicable foreign currency during the period between the
date on which the security is purchased or sold, or on which the dividend or
interest payments is declared, and the date on which such payments are made or
received.
A Fund may purchase or sell a foreign currency on a spot (or cash)
basis at the prevailing spot rate in connection with the settlement of
transactions in portfolio securities denominated in that foreign currency. A
Fund may also enter into contracts to purchase or sell foreign currencies at a
S-25
<PAGE>
future date ("forward contracts") and (if the Fund is so authorized) purchase
and sell foreign currency futures contracts.
For transaction hedging purposes a Fund which is so authorized may also
purchase exchange-listed and over-the-counter call and put options on foreign
currency futures contracts and on foreign currencies. Over-the-counter options
are considered to be illiquid by the SEC staff. A put option on a futures
contract gives the Fund the right to assume a short position in the futures
contract until expiration of the option. A put option on a currency gives the
Fund the right to sell a currency at an exercise price until the expiration of
the option. A call option on a futures contract gives the Fund the right to
assume a long position in the futures contract until the expiration of the
option. A call option on a currency gives the Fund the right to purchase a
currency at the exercise price until the expiration of the option.
When it engages in position hedging, a Fund enters into foreign
currency exchange transactions to protect against a decline in the values of the
foreign currencies in which its portfolio securities are denominated (or an
increase in the value of currency for securities which the Fund expects to
purchase, when the Fund holds cash or short-term investments). In connection
with position hedging, a Fund which is so authorized may purchase put or call
options on foreign currency and foreign currency futures contracts and buy or
sell forward contracts and foreign currency futures contracts. A Fund may enter
into short sales of a foreign currency to hedge a position in a security
denominated in that currency. In such circumstances, the Fund will maintain in a
segregated account with its Custodian an amount of cash or liquid debt
securities equal to the excess of (i) the amount of foreign currency required to
cover such short sale position over (ii) the amount of such foreign currency
which could then be realized through the sale of the foreign securities
denominated in the currency subject to the hedge.
The precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved will not
generally be possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the value of
those securities between the dates the currency exchange transactions are
entered into and the dates they mature.
It is impossible to forecast with precision the market value of
portfolio securities at the expiration or maturity of a forward or futures
contract. Accordingly, it may be necessary for a Fund to purchase additional
foreign currency on the spot market (and bear the expense of such purchase) if
the market value of the security or securities being hedged is less than the
amount of foreign currency the Fund is obligated to deliver and if a decision is
made to sell the security or securities and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot market some of the
foreign currency received upon the sale of the portfolio security or securities
if the market value of such security or securities exceeds the amount of foreign
currency the Fund is obligated to deliver.
Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which the Fund owns or intends to purchase
or sell. They simply establish a rate of exchange which the Fund can achieve at
some future point in time. Additionally, although these
S-26
<PAGE>
techniques tend to minimize the risk of loss due to a decline in the value of
the hedged currency, they tend to limit any potential gain which might result
from the increase in value of such currency.
Currency Forward and Futures Contracts
Each of International Horizons Fund and Global Equity Fund will enter
into such contracts only when cash or equivalents equal in value to either (i)
the commodity value (less any applicable margin deposits) or (ii) the difference
between the commodity value (less any applicable margin deposits) and the
aggregate market value of all equity securities denominated in the particular
currency held by the Fund have been deposited in a segregated account of the
Fund's custodian. A forward currency contract involves an obligation to purchase
or sell specific currency at a future date, which may be any fixed number of
days from the date of the contract as agreed by the parties, at a price set at
the time of the contract. In the case of a cancelable contract, the holder has
the unilateral right to cancel the contract at maturity by paying a specified
fee. The contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A
contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. A currency futures contract is a standardized contract for
the future delivery of a specified amount of a foreign currency at a future date
at a price set at the time of the contract. Currency futures contracts traded in
the United States are designed and traded on exchanges regulated by the
Commodities Futures Trading Commission ("CFTC"), such as the New York Mercantile
Exchange.
Forward currency contracts differ from currency futures contracts in
certain respects. For example, the maturity date of a forward contract may be
any fixed number of days from the date of the contract agreed upon the parties,
rather than a predetermined date in a given month. Forward contracts may be in
any amounts agreed upon by the parties rather than predetermined amounts. Also,
forward contracts are traded directly between currency traders so that no
intermediary is required. A forward contract generally requires no margin or
other deposit.
At the maturity of a forward or futures contract, the Fund may either
accept or make delivery of the currency specified in the contract, or at or
prior to maturity enter into a closing transaction involving the purchase or
sale of an offsetting contract. Closing transactions with respect to forward
contracts are usually effected with the currency trader who is a party to the
original forward contract. Closing transactions with respect to futures
contracts are effected on a commodities exchange; a clearing corporation
associated with the exchange assumes responsibility for closing out such
contracts.
Positions in currency futures contracts may be closed out only on an
exchange or board of trade which provides a secondary market in such contracts.
Although the Funds intend to purchase or sell currency futures contracts only on
exchanges or boards of trade where there appears to be an active secondary
market, there is no assurance that a secondary market on an exchange or board of
trade will exist for any particular contract or at any particular time. In such
event, it may not be possible to close a futures position and, in the event of
adverse price movements, the Fund would continue to be required to make daily
cash payments or variation margin.
S-27
<PAGE>
Currency Options
In general, options on currencies operate similarly to options on
securities and are subject to many risks similar to those applicable to currency
futures and forward contracts. Currency options are traded primarily in the
over-the-counter market, although options on currencies have recently been
listed on several exchanges. Options are traded not only on the currencies of
individual nations, but also on the European Currency Unit ("ECU"). The ECU is
composed of amounts of a number of currencies, and is the official medium of
exchange of the European Economic Community's European Monetary System.
Global Equity Fund and International Horizons Fund will only purchase
or write currency options when Colonial believes that a liquid secondary market
exists for such options. There can be no assurance that a liquid secondary
market will exist for a particular option at any specified time. Currency
options are affected by all of those factors which influence exchange rates and
investments generally. To the extent that these options are traded over the
counter, they are considered to be illiquid by the SEC staff.
The value of any currency, including the U.S. dollar, may be affected
by complex political and economic factors applicable to the issuing country. In
addition, the exchange rates of currencies (and therefore the value of currency
options) may be significantly affected, fixed, or supported directly or
indirectly by government actions. Government intervention may increase risks
involved in purchasing or selling currency options, since exchange rates may not
be free to fluctuate in respect to other market forces.
The value of a currency option reflects the value of an exchange rate
which in turn reflects relative values of two currencies, the U.S. dollar and
the foreign currency in question. Because currency transactions occurring in the
interbank market involve substantially larger amounts than those that may be
involved in the exercise of currency options, investors may be disadvantaged by
having to deal in an odd-lot market for the underlying currencies in connection
with options at prices that are less favorable than for round-lots. Foreign
governmental restrictions or taxes could result in adverse changes in the cost
of acquiring or disposing of currencies.
Valuations
There is no systematic reporting of last sale information for
currencies and there is no regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely basis.
Available quotation information is generally representative of very large
round-lot transactions in the interbank market and thus may not reflect exchange
rates for smaller odd-lot transactions (less than $1 million) where rates may be
less favorable. The interbank market in currencies is a global, around-the-clock
market. To the extent that options markets are closed while the markets for the
underlying currencies remain open, significant price and rate movements may take
place in the underlying markets that cannot be reflected in the options markets.
Settlement Procedures
S-28
<PAGE>
Settlement procedures relating to the Funds' investments in foreign
securities and to their foreign currency exchange transactions may be more
complex than settlements with respect to investments in debt or equity
securities of U.S. issuers, and may involve certain risks not present in such
Funds' domestic investments, including foreign currency risks and local custom
and usage. Foreign currency transactions may also involve the risk that an
entity involved in the settlement may not meet its obligations.
Foreign Currency Conversion
Although foreign exchange dealers do not charge a fee for currency
conversion, they do realize a profit based on the difference (the "spread")
between prices at which they are buying and selling various currencies. Thus, a
dealer may offer to sell a foreign currency to the Funds at one rate, while
offering a lesser rate of exchange should the Funds desire to resell that
currency to the dealer. Foreign currency transactions may also involve the risk
that an entity involved in the settlement may not meet its obligations.
OPTIONS ON SECURITIES
Each Fund may purchase and sell options on individual securities.
Writing covered options.
A Fund may write covered call options and covered put options on
securities held in its portfolio when, in the opinion of the sub-advisor, such
transactions are consistent with the Fund's investment objective and policies.
Call options written by the Fund give the purchaser the right to buy the
underlying securities from the Fund at a stated exercise price; put options give
the purchaser the right to sell the underlying securities to the Fund at a
stated price.
A Fund may write only covered options, which means that, so long as the
Fund is obligated as the writer of a call option, it will own the underlying
securities subject to the option (or comparable securities satisfying the cover
requirements of securities exchanges). In the case of put options, the Fund will
hold cash and/or high-grade short-term debt obligations equal to the price to be
paid if the option is exercised. In addition, the Fund will be considered to
have covered a put or call option if and to the extent that it holds an option
that offsets some or all of the risk of the option it has written. The Fund may
write combinations of covered puts and calls on the same underlying security.
A Fund will receive a premium from writing a put or call option, which
increases the Fund's return on the underlying security if the option expires
unexercised or is closed out at a profit. The amount of the premium reflects,
among other things, the relationship between the exercise price and the current
market value of the underlying security, the volatility of the underlying
security, the amount of time remaining until expiration, current interest rates,
and the effect of supply and demand in the options market and in the market for
the underlying security. By writing a call option, the Fund limits its
opportunity to profit from any increase in the market value of the underlying
security above the exercise price of the option but continues to bear the risk
S-29
<PAGE>
of a decline in the value of the underlying security. By writing a put option,
the Fund assumes the risk that it may be required to purchase the underlying
security for an exercise price higher than its then-current market value,
resulting in a potential capital loss unless the security subsequently
appreciates in value.
A Fund may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction in which it purchases
an offsetting option. The Fund realizes a profit or loss from a closing
transaction if the cost of the transaction (option premium plus transaction
costs) is less or more than the premium received from writing the option.
Because increases in the market price of a call option generally reflect
increases in the market price of the security underlying the option, any loss
resulting from a closing purchase transaction may be offset in whole or in part
by unrealized appreciation of the underlying security.
If a Fund writes a call option but does not own the underlying
security, and then it writes a put option, the Fund may be required to deposit
cash or securities with its broker as "margin" or collateral for its obligation
to buy or sell the underlying security. As the value of the underlying security
varies, the Fund may have to deposit additional margin with the broker. Margin
requirements are complex and are fixed by individual brokers, subject to minimum
requirements currently imposed by the Federal Reserve Board and by stock
exchanges and other self-regulatory organizations.
Purchasing put options.
A Fund may purchase put options to protect its portfolio holdings in an
underlying security against a decline in market value. Such hedge protection is
provided during the life of the put option since the Fund, as holder of the put
option, is able to sell the underlying security at the put exercise price
regardless of any decline in the underlying security's market price. For a put
option to be profitable, the market price of the underlying security must
decline sufficiently below the exercise price to cover the premium and
transaction costs. By using put options in this manner, the Fund will reduce any
profit it might otherwise have realized from appreciation of the underlying
security by the premium paid for the put option and by transaction costs.
Purchasing call options.
A Fund may purchase call options to hedge against an increase in the
price of securities that the Fund wants ultimately to buy. Such hedge protection
is provided during the life of the call option since the Fund, as holder of the
call option, is able to buy the underlying security at the exercise price
regardless of any increase in the underlying security's market price. In order
for a call option to be profitable, the market price of the underlying security
must rise sufficiently above the exercise price to cover the premium and
transaction costs. These costs will reduce any profit the Fund might have
realized had it bought the underlying security at the time it purchased the call
option.
Over-the-Counter (OTC) options.
S-30
<PAGE>
The Staff of the Division of Investment Management of the Securities
and Exchange Commission has taken the position that OTC options purchased by a
Fund and assets held to cover OTC options written by the Fund are illiquid
securities. Although the Staff has indicated that it is continuing to evaluate
this issue, pending further developments, a Fund will enter into OTC options
transactions only with primary dealers in U.S. Government Securities and, in the
case of OTC options written by the Fund, only pursuant to agreements that will
assure that the Fund will at all times have the right to repurchase the option
written by it from the dealer at a specified formula price. The Fund will treat
the amount by which such formula price exceeds the amount, if any, by which the
option may be "in the money" as an illiquid investment. It is the present policy
of the Fund not to enter into any OTC option transaction if, as a result, more
than 15% of the Fund's net assets would be invested in (i) illiquid investments
(determined under the foregoing formula) relating to OTC options written by the
Fund, (ii) OTC options purchased by the Fund, (iii) securities which are not
readily marketable and (iv) repurchase agreements maturing in more than seven
days.
Risk factors in options transactions.
The successful use of a Fund's options strategies depends on the
ability of its Advisor to forecast interest rate and market movements correctly.
When it purchases an option, the Fund runs the risk that it will lose
its entire investment in the option in a relatively short period of time, unless
the Fund exercises the option or enters into a closing sale transaction with
respect to the option during the life of the option. If the price of the
underlying security does not rise (in the case of a call) or fall (in the case
of a put) to an extent sufficient to cover the option premium and transaction
costs, the Fund will lose part or all of its investment in the option. This
contrasts with an investment by the Fund in the underlying securities, since the
Fund may continue to hold its investment in those securities notwithstanding the
lack of a change in price of those securities.
The effective use of options also depends on a Fund's ability to
terminate option positions at times when its Advisor deems it desirable to do
so. Although the Fund will take an option position only if the Advisor believes
there is a liquid secondary market for the option, there is no assurance that
the Fund will be able to effect closing transactions at any particular time or
at an acceptable price.
If a secondary trading market in options were to become unavailable, a
Fund could no longer engage in closing transactions. Lack of investor interest
might adversely affect the liquidity of the market for particular options or
series of options. A marketplace may discontinue trading of a particular option
or options generally. In addition, a market could become temporarily unavailable
if unusual events -- such as volume in excess of trading or clearing capability
- -- were to interrupt normal market operations.
A marketplace may at times find it necessary to impose restrictions on
particular types of options transactions, which may limit a Fund's ability to
realize its profits or limit its losses.
S-31
<PAGE>
Disruptions in the markets for the securities underlying options
purchased or sold by a Fund could result in losses on the options. If trading is
interrupted in an underlying security, the trading of options on that security
is normally halted as well. As a result, the Fund as purchaser or writer of an
option will be unable to close out its positions until options trading resumes,
and it may be faced with losses if trading in the security reopens at a
substantially different price. In addition, the Options Clearing Corporation
("OCC") or other options markets may impose exercise restrictions. If a
prohibition on exercise is imposed at the time when trading in the option has
also been halted, the Fund as purchaser or writer of an option will be locked
into its position until one of the two restrictions has been lifted. If a
prohibition on exercise remains in effect until an option owned by the Fund has
expired, the Fund could lose the entire value of its option.
Special risks are presented by internationally-traded options. Because
of time differences between the United States and various foreign countries, and
because different holidays are observed in different countries, foreign options
markets may be open for trading during hours or on days when U.S. markets are
closed. As a result, option premiums may not reflect the current prices of the
underlying interest in the United States.
FUTURES CONTRACTS AND RELATED OPTIONS
Each Fund may buy and sell certain future contracts (and in certain
cases related options), to the extent and for the purposes specified in the
Prospectus.
A futures contract sale creates an obligation by the seller to deliver
the type of financial instrument called for in the contract in a specified
delivery month for a stated price. A futures contract purchase creates an
obligation by the purchaser to take delivery of the type of financial instrument
called for in the contract in a specified delivery month at a stated price. The
specific instruments delivered or taken at settlement date are not determined
until on or near that date. The determination is made in accordance with the
rules of the exchanges on which the futures contract was made. Futures contracts
are traded in the United States only on a commodity exchange or boards of trade
- -- known as "contract markets" -- approved for such trading by the CFTC, and
must be executed through a futures commission merchant or brokerage firm which
is a member of the relevant contract market.
Although futures contracts by their terms call for actual delivery or
acceptance of the underlying financial instruments, the contracts usually are
closed out before the settlement date without the making or taking of delivery.
Closing out a futures contract sale is effected by purchasing a futures contract
for the same aggregate amount of the specific type of financial instrument with
the same delivery date. If the price of the initial sale of the futures contract
exceeds the price of the offsetting purchase, the seller is paid the difference
and realizes a gain. Conversely, if the price of the offsetting purchase exceeds
the price of the initial sale, the seller realizes a loss. Similarly, the
closing out of a futures contract purchase is effected by the purchaser's
entering into a futures contract sale. If the offsetting sale price exceeds the
purchase price, the purchaser realizes a gain, and if the purchase price exceeds
the offsetting sale price, the purchaser realizes a loss.
S-32
<PAGE>
Unlike when a Fund purchases or sells a security, no price is paid or
received by the Fund upon the purchase or sale of a futures contract, although
the Fund is required to deposit with its custodian in a segregated account in
the name of the futures broker an amount of cash and/or U.S. Government
Securities. This amount is known as "initial margin." The nature of initial
margin in futures transactions is different from that of margin in security
transactions in that futures contract margin does not involve the borrowing of
funds by the Fund to finance the transactions. Rather, initial margin is in the
nature of a performance bond or good faith deposit on the contract that is
returned to the Fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied. Futures contracts also involve
brokerage costs.
Subsequent payments, called "variation margin," to and from the broker
(or the custodian) are made on a daily basis as the price of the underlying
security or commodity fluctuates, making the long and short positions in the
futures contract more or less valuable, a process known as "marking to market."
A Fund may elect to close some or all of its futures positions at any
time prior to their expiration. The purpose of making such a move would be to
reduce or eliminate the hedge position then currently held by the Fund. The Fund
may close its positions by taking opposite positions which will operate to
terminate the Fund's position in the futures contracts. Final determinations of
variation margin are then made, additional cash is required to be paid by or
released to the Fund, and the Fund realizes a loss or gain. Such closing
transactions involve additional commission costs.
A Fund will enter into futures contracts only when, in compliance with
the SEC's requirements, cash or high quality liquid debt securities equal in
value to the commodity value (less any applicable margin deposits) have been
deposited in a segregated account of the Fund's custodian.
Options on futures contracts
A Fund may purchase and write call and put options on futures contracts
it may buy or sell and enter into closing transactions with respect to such
options to terminate existing positions. The Fund may use such options on
futures contracts in lieu of purchasing and selling the underlying futures
contracts. Such options generally operate in the same manner as options
purchased or written directly on the underlying investments.
As with options on securities, the holder or writer of an option may
terminate his position by selling or purchasing an offsetting option. There is
no guarantee that such closing transactions can be effected.
A Fund will be required to deposit initial margin and maintenance
margin with respect to put and call options on futures contracts written by it
pursuant to brokers' requirements similar to those described above. The Fund
will enter into written options on futures contracts only when, in compliance
with the SEC's requirements, cash or equivalents equal in value to the commodity
value
S-33
<PAGE>
(less any applicable margin deposits) have been deposited in a segregated
account of the Fund's custodian.
Risks of transactions in futures contracts and related options
Successful use of futures contracts by a Fund is subject its
sub-advisor's ability to predict correctly movements in the direction of
interest rates and other factors affecting securities markets.
Compared to the purchase or sale of futures contracts, the purchase of
call or put options on futures contracts involves less potential risk to a Fund
because the maximum amount at risk is the premium paid for the options (plus
transaction costs). However, there may be circumstances when the purchase of a
call or put option on a futures contract would result in a loss to the Fund when
the purchase or sale of a futures contract would not, such as when there is no
movement in the prices of the hedged investments. The writing of an option on a
futures contract involves risks similar to those relating to the sale of futures
contracts.
There is no assurance that higher than anticipated trading activity or
other unforeseen events might not at times render certain market clearing
facilities inadequate, and thereby result in the institution by exchanges of
special procedures which may interfere with the timely execution of customer
orders.
To reduce or eliminate a hedge position held by a Fund, the Fund may
seek to close out a position. The ability to establish and close out positions
will be subject to the development and maintenance of a liquid secondary market.
It is not certain that this market will develop or continue to exist for a
particular futures contract. Reasons for the absence of a liquid secondary
market on an exchange include the following: (i) there may be insufficient
trading interest in certain contracts or options; (ii) restrictions may be
imposed by an exchange on opening transactions or closing transactions or both;
(iii) trading halts, suspensions or other restrictions may be imposed with
respect to particular classes or series of contracts or options, or underlying
securities; (iv) unusual or unforeseen circumstances may interrupt normal
operations on an exchange; (v) the facilities of an exchange or a clearing
corporation may not at all times be adequate to handle current trading volume;
or (vi) one or more exchanges could, for economic or other reasons, decide or be
compelled at some future date to discontinue the trading of contracts or options
(or a particular class or series of contracts or options), in which event the
secondary market on that exchange (or in the class or series of contacts or
options), would cease to exist, although outstanding contracts or options on the
exchange that had been issued by a clearing corporation as a result of trades on
that exchange would continue to be exercisable in accordance with their terms.
Index futures contracts and related options; associated risks
An index futures contract is a contract to buy or sell units of an
index at a specified future date at a price agreed upon when the contract is
made. Entering into a contract to buy units of an index is commonly referred to
as buying or purchasing a contract or holding a long position in the index.
Entering into a contract to sell units of an index is commonly referred to as
selling a contract or holding a short position. A unit is the current value of
the index. A Fund may enter into stock
S-34
<PAGE>
index future contracts, debt index futures contracts, or other index futures
contracts (e.g., an interest rate futures contract), as specified in the
Prospectus. A Fund may also purchase and sell options on index futures
contracts, to the extent specified in the Prospectus.
There are several risks in connection with the use by a Fund of index
futures as a hedging device. One risk arises because of the imperfect
correlation between movements in the prices of the index futures and movements
in the prices of securities which are the subject of the hedge. The Fund's
sub-advisor will attempt to reduce this risk by selling, to the extent possible,
futures on indices the movements of which will, in its judgment, have a
significant correlation with movements in the prices of the Fund's portfolio
securities sought to be hedged.
Successful use of index futures by a Fund for hedging purposes is also
subject to its sub-advisor's ability to predict correctly movements in the
direction of the market. It is possible that, where the Fund has sold futures to
hedge its portfolio against a decline in the market, the index on which the
futures are written may advance and the value of securities subject to the hedge
held in the Fund's portfolio may decline. If this occurs, the Fund would lose
money on the futures and also experience a decline in the value in its portfolio
securities. However, while this could occur to a certain degree, over time the
value of the Fund's portfolio should tend to move in the same direction as the
market indices which are intended to correlate to the price movements of the
portfolio securities sought to be hedged. It is also possible that, if the Fund
has hedged against the possibility of a decline in the market adversely
affecting securities held in its portfolio and securities prices increase
instead, the Fund will lose part or all of the benefit of the increased values
of those securities that it has hedged because it will have offsetting losses in
its futures positions. In addition, in such situations, if the Fund has
insufficient cash, it may have to sell securities to meet daily variation margin
requirements.
In addition to the possibility that there may be an imperfect
correlation, or no correlation at all, between movements in the index futures
and the securities of the portfolio being hedged, the prices of index futures
may not correlate perfectly with movements in the underlying index due to
certain market distortions. First, all participants in the futures markets are
subject to margin deposit and maintenance requirements. Rather than meeting
additional margin deposit requirements, investors may close futures contracts
through offsetting transactions which would distort the normal relationship
between the index and futures markets. Second, margin requirements in the
futures markets are less onerous than margin requirements in the securities
markets, and as a result the futures markets may attract more speculators than
the securities markets. Increased participation by speculators in the futures
markets may also cause temporary price distortions. Due to the possibility of
price distortions in the futures markets and also because of the imperfect
correlation between movements in the index and movements in the prices of index
futures, even a correct forecast of general market trends by a Fund's
sub-advisor may still not result in a successful hedging transaction.
Options on index futures are similar to options on securities except
that options on index futures give the purchaser the right, in return for the
premium paid, to assume a position in an index futures contract (a long position
if the option is a call and a short position if the option is a put), at a
specified exercise price at any time during the period of the option. Upon
exercise of the option,
S-35
<PAGE>
the delivery of the futures position by the writer of the option to the holder
of the option will be accompanied by delivery of the accumulated balance in the
writer's futures margin account which represents the amount by which the market
price of the index futures contract, at exercise, exceeds (in the case of a
call) or is less than (in the case of a put) the exercise price of the option on
the index future. If an option is exercised on the last trading day prior to the
expiration date of the option, the settlement will be made entirely in cash
equal to the difference between the exercise price of the option and the closing
level of the index on which the future is based on the expiration date.
Purchasers of options who fail to exercise their options prior to the exercise
date suffer a loss of the premium paid.
SECURITIES LOANS
Each Fund may make loans of its portfolio securities amounting to not
more than 30% of its total assets. The risks in lending portfolio securities, as
with other extensions of credit, consist of possible delay in recovery of the
securities or possible loss of rights in the collateral should the borrower fail
financially. As a matter of policy, securities loans are made to broker-dealers
pursuant to agreements requiring that loans be continuously secured by
collateral in cash or short-term debt obligations at least equal at all times to
the value of the securities on loan. This collateral is deposited with the
Trust's custodian which segregates and identifies these assets on its books as
security for the loan. The borrower pays to the Fund an amount equal to any
dividends, interest or other distributions received on securities lent. The
borrower is obligated to return identical securities on termination of the loan.
The Fund retains all or a portion of the interest received on investment of the
cash collateral or receives a fee from the borrower. Although voting rights or
rights to consent with respect to the loaned securities pass to the borrower,
the Fund retains the right to call the loans at any time on reasonable notice,
and it will do so in order that the securities may be voted by the Fund if the
holders of such securities are asked to vote upon or consent to matters
materially affecting the investment. The Fund may also call such loans in order
to sell the securities involved. The Trust has adopted these policies, in part,
so that interest, dividends and other distributions received on the loaned
securities, the interest or fees paid by the borrower to the Fund for the loan,
and the investment income from the collateral will qualify under certain
investment limitations under Subchapter M of the Internal Revenue Code.
INVESTMENT PERFORMANCE
Each of the Funds 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)to the nth power
Where: P = a hypothetical initial payment of $1,000
S-36
<PAGE>
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).
The figures contained in this "Investment Performance" section will
assume reinvestment of all dividends and distributions. They are not necessarily
indicative of future results. The performance of a 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 a
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 Funds'
total returns will 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.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP are the Trust's independent accountants.
S-37
<PAGE>
PART C. OTHER INFORMATION
Item 23. Exhibits:
COLONIAL INTERNATIONAL HORIZONS FUND, VARIABLE SERIES (CIHF, VS)
COLONIAL GLOBAL EQUITY FUND, VARIABLE SERIES (CGEF, VS)
CRABBE HUSON REAL ESTATE INVESTMENT FUND, VARIABLE SERIES (CHREIF, VS)
PROGRESS HIGH ALPHA CONCENTRATION FUND, VARIABLE SERIES (PHACF, VS)
(a) Agreement and Declaration of Trust (1)
(b) By-Laws (1)
(c) Not Applicable
(d)(1)(i) Form of Management Agreement between Liberty Variable
Investment Trust ("Trust"), with respect to CIHF, VS and
Liberty Advisory Services Corp. ("LASC")(1)
(d)(1)(ii) Form of Sub-Advisory Agreement between the Trust, on
behalf of CIHF, VS, LASC and Colonial Management
Associates, Inc. ("Colonial")(1)
(d)(2)(i) Form of Management Agreement between the Trust, with
respect to CGEF, VS and LASC (1)
(d)(2)(ii) Form of Sub-Advisory Agreement between the Trust, on
behalf of CGEF, VS, LASC and Colonial(1)
(d)(3)(i) Form of Management Agreement between the Trust, with
respect to CHREIF, VS and LASC (1)
(d)(3)(ii) Form of Sub-Advisory Agreement between the Trust, on
behalf of CHREIF, VS, LASC and Crabbe Huson Group,
Inc.(1)
(d)(4)(i) Form of Management Agreement between the Trust, with
respect to PHACF, VS and LASC(1)
(d)(4)(ii) Form of Sub-Advisory Agreement between the Trust, on
behalf of PHACF, VS, LASC and Progress(1)
(d)(5) Form of Portfolio Management Agreement among the Trust,
on behalf of PHACF, VS, Progress and Progress's
Portfolio Managers(1)
(e)(1)(i) Underwriting Agreement between the Trust and Keyport
Financial Services Corp. ("KFSC")(1)
(e)(1)(ii) Amendment No. 1 to KFSC Underwriting Agreement
(e)(2) Underwriting Agreement between the Trust and Liberty
Funds Distributor, Inc. ("LFDI") (2)
(f) Not applicable
(g) Form of Custody Agreement between the Trust and The
Chase Manhattan Bank(1)
(h)(1)(i) Form of Pricing and Bookkeeping Agreement between the
Trust and Colonial(1)
(h)(1)(ii) Amendment No. 1 to Pricing and Bookkeeping Agreement(1)
(h)(1)(iii) Amendment No. 2 to Pricing and Bookkeeping Agreement(1)
(h)(1)(iv) Amendment No. 3 to Pricing and Bookkeeping Agreement(1)
(h)(2)(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 Liberty
Funds Services, Inc. ("LFSI")(including form of Transfer
Agency Agreement and Amendment No. 1 thereto)(1)
(h)(2)(ii) Amendment No. 2 to Transfer Agency Agreement(1)
(h)(2)(iii) Amendment No. 3 to Transfer Agency Agreement(1)
(h)(3) Participation Agreement among the Trust, KFSC, Keyport
Life Insurance Company and Liberty Life Assurance
Company of Boston(1)
(i) Opinion and consent of counsel as to the legality of
the securities being registered (included with annual
Rule 24f-2 Notices)
(j) Not applicable
(k) Not applicable
(l) Not applicable
(m) Distribution Plan adopted pursuant to Section 12b-1 of
the Investment Company Act of 1940, incorporated by
reference to the Distributer's contract filed as
Exhibits (e)(1)(i) and (e)(2)
(n) Not Applicable
(o) Not Applicable
Power of Attorney for: Robert J. Birnbaum, Tom Bleasdale, John V. Carberry, Lora
S. Collins, James E. Grinnell, Richard W. Lowry, Salvatore Macera, William E.
Mayer, James L. Moody, Jr., John J. Neuhauser, Thomas E. Stitzel, Robert L.
Sullivan and Anne-Lee Verville - filed as Exhibit 15(a) in Part C, Item 24(b) of
Post-Effective Amendment No. 14 to the Registration Statement on Form N-1A of
Liberty Variable Investment Trust (File Nos. 33-59216 and 811-7556) and is
hereby incorporated by reference and made a part of this Registration Statement
(1) To be filed by amendment.
(2) Incorporated by reference to Post-Effective Amendment No. 9 to
the Registration Statement filed with the Commission via EDGAR on
or about August 29, 1997.
Item 24. 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 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").
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.
<PAGE>
KFSC and LFDI, the Trust's principal underwriters,
LASC, the Trust's investment manager, Colonial,
LASC's sub-advisor with respect to GIF, IFFG, USSF
and SIF, Stein Roe, LASC's sub-advisor with respect
to GUF, Newport, LASC's sub-advisor with respect to
NTF, LAMCO, LASC's sub-advisor with respect to
All-Star, subsidiaries of Liberty
Financial Companies, Inc. ("Liberty Financial"),
Boston, Massachusetts. Liberty Mutual Insurance
Company ("Liberty Mutual"), Boston, Massachusetts, as
of December 31, 1998 owned, indirectly, approximately
71% 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 25. 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;
<PAGE>
(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.
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.
<PAGE>
In the event that a claim for indemnification against
such liabilities (other than the payment by
Registrant or 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 person 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 effort, omission, or breach of any duty
owed to the Trust or any Fund by the investment
manager.
Item 26. Business and Other Connections of Investment Advisor
Certain information pertaining to business and other
connections of the Registrant's investment manager,
LASC, Colonial, the sub-advisor to each of CGEF and
CIHF, Crabbe Huson, the sub-advisor to CHREIF,
and Progress Investment Management Company,
the sub-advisor to PHACF, and each of
Investment Management, Inc., Oppenheimer Capital,
Sims Capital Management, Inc., McKinley Capital
Management Inc., RASARA Strategies, Inc., Wilson/
Bennett Capital Management, Inc. and Penn Capital
Management, Inc., each of which firms serves as a
Portfolio Manager to Progress, is incorporated herein
by reference to the section of the Prospectuses
relating to CIHF, CGEF, CHREIF and PAHCF
captioned "TRUST MANAGEMENT ORGANIZATIONS" and to the
section of the Statement of Additional Information
relating to those Funds captioned "INVESTMENT
MANAGEMENT AND
<PAGE>
OTHER SERVICES."
Set forth below is a list of each director and
officer of LASC, and each director and certain
officers of Colonial, Crabbe Huson, Progress
Investment Management Company and each
of Progress'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 owned 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 Advisor Other Positions During
Past Two Fiscal Years
<S> <C> <C>
Paul H. LeFevre, Jr. President, Chief Executive President and Chief Executive
Officer and Chairman of the Board Officer (since November, 1998),
of Directors Executive Vice President, Senior
Vice President and Chief Financial
Officer (prior to November, 1998),
Keyport
Stewart R. Morrison Senior Vice President and Chief Senior Vice President and Chief
Investment Officer Investment Officer of Keyport
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
Daniel C. Bryant Vice President Vice President and Assistant
Secretary of Keyport (since
December, 1997): Chief Legal
Counsel, Department of Business
Regulation, State of Rhode Island
(March, 1995 to November, 1997)
Jeffrey J. Whitehead Vice President and Treasurer Vice President and Treasurer of
Keyport
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Jacob M. Herschler Vice President Vice President of Keyport
</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 Management Associates, Inc. ("Colonial")
Colonial is a direct wholly owned subsidiary of COGRA, LLC ("COGRA"). COGRA
is a indirect owned subsidiary of Liberty Financial.
<TABLE>
<CAPTION>
Name and Current Position with Advisor Other Positions During
Past Two Fiscal Years
<S> <C> <C>
Stephen E. Gibson President, Chief Executive Managing Director, Marketing, of
Officer and Chairman of the Board Putnam Mutual 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
Financial Officer and Treasurer Accounting and 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 Center, Boston,
Massachusetts 02111.
Crabbe Huson Group, Inc. ("Crabbe Huson")
Crabbe Huson is a direct wholly owned subsidiary of Liberty Financial.
The business and other connections of the officers
and directors of Crabbe Huson are listed on the Form ADV
of Crabbe Huson Group, Inc. as currently on file with the
Commission (File No. 801-15154), the text of which is
incorporated herein by reference: (a) Items 1 and 2 of
Part 2, and (b) Section 6, Business Background of each
Schedule D.
The business address of Crabbe Huson and each individual listed in the ADV
is c/o Crabbe Huson Group, Inc., 121 S.W. Morrison, Suite 1400, Portland, Oregon
97204.
Progress Investment Management Company ("Progress")
Progress is a direct wholly owned subsidiary of Liberty Financial.
The business and other connections of the officers
and directors of Progress are listed on the Form ADV of
Progress Investment Management Company as currently on
file with the Commission (File No. 801-55737), the text
of which is incorporated herein by reference: (a) Items
1 and 2 of Part 2, and (b) Section 6, Business Background
of each Schedule D.
The business address of Progress and each individual listed in the ADV
is c/o Progress Investment Management Company, 71 Stevenson Street, Suite 1620,
San Francisco, California 94105.
Simms Capital Management, Inc. ("Simms")
Simms is owned by Robert Alderson Simms, Sr.
The business and other connections of the officers
and directors of Simms are listed on the Form ADV of Simms
as currently on file with the Commission
(File No. 801-38275), the text of which is incorporated
herein by reference: (a) Items 1 and 2 of Part 2, and (b)
Section 6, Business Background of each Schedule D.
The business address of Simms and Mr. Simms is 55 Railroad Avenue, Greenwich,
Connecticut 06830.
McKinley Capital Management, Inc. ("McKinley")
The business and other connections of the officers
and directors of McKinley are listed on the Form ADV of
McKinley as currently on file with the Commission
(File No. 801-38751), the text of which is incorporated
herein by reference: (a) Items 1 and 2 of Part 2, and (b)
Section 6, Business Background of each Schedule D.
RASARA Strategies, Inc. ("RASARA")
The business and other connections of the officers
and directors of RASARA are listed on the Form ADV of
RASARA as currently on file with the Commission
(File No. 801-43299), the text of which is incorporated
herein by reference: (a) Items 1 and 2 of Part 2, and (b)
Section 6, Business Background of each Schedule D.
Wilson/Bennett Capital Management, Inc. ("Wilson/Bennett")
Wilson/Bennett is owned solely by John Wilson Fisher and James Bennett
Moloney.
The business and other connections of the officers
and directors of Wilson/Bennett are listed on the Form ADV
of Wilson/Bennett as currently on file with the Commission
(File No. 801-40215), the text of which is incorporated
herein by reference: (a) Items 1 and 2 of Part 2, and (b)
Section 6, Business Background of each Schedule D.
The business address of Wilson/Bennett and each individual listed in the ADV
is c/o Wilson/Bennett Capital Management, Inc., 8260 Greensboro Drive, Suite 250
McLean, Virginia 22102.
Penn Capital Management Company, Inc. ("Penn Capital")
Penn Capital is owned by Marcia A. and Richard A. Hocker, Kathleen A. News,
Kimberley and Kristen Hocker.
The business and other connections of the officers
and directors of Penn Capital are listed on the Form ADV
of Penn Capital as currently on file with the Commission
(File No. 801-31452), the text of which is incorporated
herein by reference: (a) Items 1 and 2 of Part 2, and (b)
Section 6, Business Background of each Schedule D.
The business address of Penn Capital and each individual listed in the ADV
is c/o Penn Capital Management Company, Inc., 52 Haddonfield-Berlin Road, Suite
1000, Cherry Hill, New Jersey 08034.
Item 27. Principal Underwriters
(a) KFSC and LFDI act as principal underwriters of the Registrant's shares on
a best-efforts basis.
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
LFDI also acts as a principal underwriter for the following investment
companies:
Colonial Trust I
Colonial High Yield Securities Fund
Colonial Income Fund
Colonial Strategic Income Fund
Stein Roe Adviser Tax-Managed Growth Fund
Colonial Trust II
Colonial Money Market Fund
Colonial Intermediate U.S. Government Fund
<PAGE>
Colonial Short Duration U.S. Government Fund
Newport Japan Opportunities Fund
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 Balanced Fund
Colonial Global Utilities Fund
The Crabbe Huson Special Fund
Crabbe Huson Small Cap Fund
Crabbe Huson Real Estate Investment Fund
Crabbe Huson Equity Fund
Crabbe Huson Managed Income & Equity Fund
Crabbe Huson Oregon Tax-Free Fund
Crabbe Huson Contrarian Income Fund
Crabbe Huson Contrarian Fund
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
Counselor Select Income Fund
Counselor Select Balanced Fund
Counselor Select Growth Fund
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. Growth & Income Fund
Colonial Small Cap Value Fund
Colonial Value Fund
Newport Asia Pacific Fund
Colonial Trust VII
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
LAMCO Trust I
Liberty All-Star Growth and Income Fund
Liberty Newport World Portfolio
Global Opportunity Fund
Newport Tiger Fund
<PAGE>
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
Business Address* with Underwriter with the Registrant
<S> <C> <C>
Paul H. LeFever President and Director None
Rogelio P. Zaplit Treasurer 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.
Francis E. Reinhart Director None
James J. Klopper Clerk and Director None
Donald A. Truman Assistant Clerk None
Set forth below is information concerning each director and officer of LFDI.
<TABLE>
<CAPTION>
Name and Principal Business Address* Positions with Underwriter Positions and Officers
with the 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
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
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Beth Brown Vice President None
Stacy Burtman Vice President None
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 Noin 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
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
John Ziolkowski Assistant Vice President None
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Philip J. Iudice, Jr. Treasurer and Chief Financial None
Officer
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>
*LFDI's address is One Financial Center, Boston, Massachusetts 02111.
(c) not applicable.
Item 28. 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 LFDI, 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.
<PAGE>
Item 29. 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 30. Undertakings
Not Applicable
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Post-Effective
Amendment No. 16 to its Registration Statement under the Securities Act of 1933
and Amendment No. 17 under the Investment Company Act of 1940, to be signed on
its behalf by the undersigned, duly authorized, in the City of Boston, and The
Commonwealth of Massachusetts on this 19th day of March, 1999.
LIBERTY VARIABLE INVESTMENT TRUST
By: STEPHEN E. GIBSON
----------------------
Stephen E. Gibson, President
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment has been signed below by the following persons in their capacities and
on the date indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ---------- ----- ----
<S> <C> <C>
STEPHEN E. GIBSON President (chief March 19, 1999
- ---------------------- Executive officer)
Stephen E. Gibson
TIMOTHY J. JACOBY Treasurer and Chief March 19, 1999
- ----------------- Financial Officer
Timothy J. Jacoby (principal financial
officer)
J. KEVIN CONNAUGHTON Controller and Chief March 19, 1999
- -------------------- Accounting Officer
J. Kevin Connaughton (principal accounting
officer)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
ROBERT J. BIRNBAUM* Trustee
- ----------------------
Robert J. Birnbaum
TOM BLEASDALE* Trustee
- ----------------------
Tom Bleasdale
JOHN V. CARBERRY* Trustee
- ----------------------
John V. Carberry
LORA S. COLLINS* Trustee
- ----------------------
Lora S. Collins
JAMES E. GRINNELL* Trustee
- ----------------------
James E. Grinnell
RICHARD W. LOWRY* Trustee */s/ Suzan M. Barron
- ---------------------- --------------------
Richard W. Lowry Suzan M. Barron
Attorney-in-fact
For each Trustee
SALVATORE MACERA* Trustee March 19, 1999
- ----------------------
Salvatore Macera
WILLIAM E. MAYER* Trustee
- ----------------------
William E. Mayer
JAMES L. MOODY, JR. * Trustee
- ----------------------
James L. Moody, Jr.
JOHN J. NEUHAUSER* Trustee
- ----------------------
John J. Neuhauser
THOMAS E. STITZEL* Trustee
- ----------------------
Thomas E. Stitzel
ROBERT L. SULLIVAN* Trustee
- ----------------------
Robert L. Sullivan
ANNE-LEE VERVILLE* Trustee
- ----------------------
Anne-Lee Verville
</TABLE>
