KEYPORT VARIABLE INVESTMENT TRUST
COLONIAL-KEYPORT INTERNATIONAL FUND FOR GROWTH
COLONIAL-KEYPORT U.S. FUND FOR GROWTH
COLONIAL-KEYPORT STRATEGIC INCOME FUND
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT ("Agreement"), made this 2nd day of May, 1994,
between KEYPORT VARIABLE INVESTMENT TRUST, a business trust organized under the
laws of The Commonwealth of Massachusetts (the "Trust"), on its own behalf and
on behalf of the Colonial-Keyport International Fund For Growth ("IFFG"), the
Colonial-Keyport U.S. Fund For Growth ("USFFG"), and the Colonial-Keyport
Strategic Income Fund "SIF" (collectively, the "Funds", and individually a
"Fund"), and KEYPORT ADVISORY SERVICES CORP., a corporation organized under the
laws of The Commonwealth of Massachusetts (the "Manager").
WHEREAS, the Trust has been organized as an open-end management
investment company registered as such under the Investment Company Act of 1940,
as amended ("Investment Company Act"), and is authorized to issue shares of
beneficial interest in one or more separate series (each representing interests
in a separate portfolio of securities and other assets), including the Funds,
which shares are to be issued and sold to and held by various separate accounts
of Keyport Life Insurance Company ("Keyport"), Keyport America Life Insurance
Company ("Keyport America") and Liberty Life Assurance Company of Boston
("Liberty Life") or separate accounts of other insurance companies that are
affiliated or are not affiliated with Keyport (collectively, "Participating
Insurance Companies");
WHEREAS, the Trust heretofore has created three other separate funds
which are covered by the Management Agreement dated June 7, 1993 among the
Trust, on its own behalf and on behalf of such other three series funds, and the
Manager, and the Trust may in the future create additional fund(s) that may be
covered by other separate agreements;
WHEREAS, the Trust desires the Manager to render certain administrative
services and to render total investment management services to the Trust and the
Funds, all in the manner and on the terms and conditions hereinafter set forth;
WHEREAS, the Trust authorizes the Manager to enter into
sub-advisory agreements with one or more firms registered as investment advisers
under the Investment Advisors Act of 1940, as amended ("the Investment Adviser's
Act), or qualifying as a "bank" within the meaning of the Investment Adviser's
Act and thereby exempted from the requirement to be so registered, to manage all
or a portion of a Fund's assets, as determined by the Manager from time to time
("Sub-Adviser"), and further authorizes such Sub-Advisers, with the consent of
the Manager, to enter into their own sub-advisory agreements with one or more
other firms so registered or qualified, to manage all or a portion of such
assets ("Second-Tier Sub-Adviser"); and
WHEREAS, the Manager is registered as an investment adviser under the
Investment Adviser's Act, and desires to provide services to the Trust and the
Funds in consideration of and on the terms and conditions hereinafter set forth;
NOW, THEREFORE, the Trust, on its own behalf and on behalf of each of
the Funds, and the Manager hereby agree as follows:
1. Employment of the Investment Adviser.
The Trust hereby employs the Manager (i) to provide certain
administrative and limited oversight services and (ii) to provide investment
management and related services to the Trust and the Funds, all in the manner
set forth in Section 2 of this Agreement, subject to the direction of the
Trustees, and for the period, in the manner, and on the terms set forth
hereinafter. The Manager hereby accepts such employment and agrees during such
period to render the services and to assume the obligations herein set forth.
The Manager shall for all purposes herein be deemed to be an independent
contractor and, except as expressly provided or authorized (whether herein or
otherwise), shall have no authority to act for or represent the Trust in any way
or otherwise be deemed an agent of the Trust.
2. Obligations of, and Services to be Provided by, the Manager.
The Manager undertakes to provide the services hereinafter set
forth and to assume the following obligations:
A. Administrative Services.
(a) The Manager will provide general administrative services
as hereinafter set forth ("Administrative Services"), all subject to the overall
direction and control of the Board of Trustees of the Trust (the "Board").
(b) Such Administrative Services shall not include investment
advisory, custodian, underwriting and distribution, transfer agency or pricing
and bookkeeping services, but shall include; (i) provision of office space,
equipment and facilities necessary in connection with the services to be
performed hereunder and the maintenance of the headquarters of the Trust; (ii)
maintenance of the corporate books and records of the Trust (other than those of
its records maintained by the Sub-Advisers referred to in paragraph 2(B)(c)
below, the transfer agent, the custodian and the pricing and bookkeeping agent);
(iii) administration of all dealings and relationships with the Trustees for
meetings of the Board, the scheduling of such meetings and the conduct thereof;
(iv) preparation and filing of proxy materials and administration of
arrangements for meetings of shareholders or beneficial owners of the Funds; (v)
preparation and filing of all required reports and all updating and other
amendments to the Trust's Registration Statement under the Investment Company
Act, the Securities Act of 1933, as amended (the "Securities Act"), and the
rules and regulations thereunder; (vi) calculation of distributions required or
advisable under the Investment Company Act and the Internal Revenue Code of
1986, as amended (the "Code"); (vii) periodic computation and reporting to the
Trustees of each Fund's compliance with diversification and other portfolio
requirements of the Investment Company Act and the Code; (viii) development and
implementation of general shareholder and beneficial owner correspondence and
communications relating to the Funds, including the preparation and filing of
shareholder and beneficial owner reports as are required or deemed advisable;
and (ix) general oversight of the custodial, net asset value computation,
portfolio accounting, financial statement preparation, legal, tax and accounting
services performed for the Trust or the Funds by others.
It is understood that the Manager may, in its discretion and at its
expense, delegate some or all of its administrative duties and responsibilities
under this subsection 2(A) to its affiliate, Liberty Investment Services, Inc.
B. Investment Advisory Services.
(a) The Manager shall have responsibility for the management
and investment of the assets of each Fund, subject to and in accordance with the
separate investment objectives, policies and limitations of each Fund, as
provided in the Trust's Prospectus and Statement of Additional Information and
governing instruments, as amended from time to time, and any directions and
policies which the Trustees may issue to the Manager from time to time.
(b) The Manager shall provide a continuous investment program
for each Fund, shall revise each such program as necessary, and shall monitor
implementation of the program.
(c) The Manager may delegate its investment responsibilities
under paragraph 2 (B)(a) with respect to the Trust or any Fund to one or more
persons or companies registered as investment advisers under the Investment
Adviser's Act or qualifying as a "bank" within the meaning of the Investment
Adviser's Act and thereby exempted from the requirement to be so registered
("Sub-Advisers") pursuant to an agreement among the Trust, such Fund and each
Sub-Adviser ("Sub-Advisory Agreement"). Each Sub-Advisory Agreement may provide
that the Sub-Adviser, subject to the control and supervision of the Trustees and
the Manager, shall have full investment discretion for the affected Fund and
shall make all determinations with respect to the investment of that Fund's
assets or any portion thereof specified by the Manager. Any selection of duties
pursuant to this paragraph shall comply with any applicable provisions of
Section 15 of the Investment Company Act, except to the extent permitted by any
exemptive order of the Securities and Exchange Commission or similar relief.
In addition, the Sub-Advisory Agreement may provide that the
Sub-Advisor may delegate its investment responsibilities under this paragraph 2
(B) (c) with respect to the Trust or any Fund to one or more persons or
companies registered or qualified under the Investment Adviser's Act as provided
in the immediately preceding paragraph ("Second-Tier Sub-Advisers") pursuant to
an agreement among the Trust, such Fund, such Sub-Adviser and each such
Second-Tier Sub-Adviser ("Second-Tier Sub-Advisory Agreement"). Each Second-Tier
Sub-Advisory Agreement may provide that the Second-Tier Sub-Adviser, subject to
the control and supervision of the Trustees, the Manager, and the Sub-Adviser,
shall make all determinations with respect to the investment of that Fund's
assets or any portion thereof specified by the Sub-Adviser. Any selection of
duties pursuant to this paragraph shall comply with any applicable provisions of
Section 15 of the Investment Company Act, except to the extent permitted by any
exemptive order of the Securities and Exchange Commission or similar relief.
(d) The Manager shall be solely responsible for paying the
fees of each Sub-Adviser from the fees it collects as provided in paragraph 6
below. Each Sub-Adviser shall be solely responsible for paying the fees of each
of its Second-Tier Sub-Advisers from the fees it collects pursuant to its
Sub-Advisory Agreement.
(e) The Manager shall evaluate possible Sub-Advisers and
Second-Tier Sub-Advisers and shall advise the Trustees of the candidates which
the Manager believes are best suited to invest the assets of each Fund; shall
monitor and evaluate the investment performance of each Sub-Adviser and
Second-Tier Sub Advisers shall recommend changes of or additions of Sub-Advisers
and Second-Tier Sub-Advisers when appropriate and shall coordinate the
investment activities of the Sub-Advisers and Second Tier Sub-Advisers.
(f) It is understood that the Manager may seek advice with
respect to the performance of any or all of its duties under paragraphs 2(B)(b)
and (c) from a person or company ("Consultant") pursuant to an agreement among
the Manager, the Trust and the Consultant (a "Fund Consulting Agreement"). A
Fund Consulting Agreement may provide that the Consultant, subject to the
control and supervision of the Trustees and the Manager, shall provide
assistance to the Manager with respect to each Fund's investment program, the
selection, monitoring and evaluation of Sub-Advisers and Second-Tier
Sub-Advisers and the allocation of each Fund's assets to the Sub-Advisers and
Second-Tier Sub-Advisers.
(g) The Funds shall be solely responsible for paying the fees
of any Consultant.
(h) The Manager shall render regular reports to the Trustees
relating to the performance of its duties specified in paragraphs 2(B)(a), (b)
and (c).
C. Expenses Borne By Manager.
To the extent necessary to perform its obligations under this
Agreement, the Manager, at its own expense, shall furnish executive and other
personnel and office space, equipment and facilities, and shall pay any other
expenses incurred by it, in connection with the performance of its duties
hereunder, except that the Trust or the Funds, as appropriate, shall reimburse
the Manager for its out-of-pocket costs, including telephone, postage and
supplies, incurred by it in connection with communications with shareholders and
beneficial owners of the Funds. The Manager shall pay all salaries, fees and
expenses of Trustees or officers of the Trust who are employees of the Manager.
The Manager shall not be obligated to bear any other expenses incidental to the
operations and business of the Trust. The Manager shall not be required to pay
or provide any credit for services provided by the Trust's custodian, transfer
agent or other agents.
D. Provision of Information Necessary for Preparation of
Registration Statement Amendments and Other Materials.
The Manager will make available and provide such information
as the Trust may reasonable request for use in the preparation of its
Registration Statement, reports and other documents required by federal laws and
any securities and insurance laws of the other states and other jurisdictions in
which the Trust's shares are sold.
E. Code of Ethics.
The Manager has adopted a written code of ethics complying
with the requirements of Rule 17j-1 under the Investment Company Act and has
provided the Trust with a copy of the code of ethics and evidence of its
adoption. Within forty-five (45) days of the end of the last calendar quarter of
each year while this Agreement is in effect, an executive officer of the Manager
shall verify to the Trustees that the Manager has complied with the requirements
of Rule 17j-1 during the previous year and that there has been no violation of
the Manager's code of ethics or, if such a violation has occurred, that
appropriate action was taken in response to such violation. Upon the written
request of the Trust, the Manager shall permit the Trust to examine the reports
required to be made to the Manager by Rule 17j-1(c)(1).
F. Disqualification.
The Manager shall immediately notify the Trustees of the
occurrence of any event which would disqualify the Manager from serving as an
investment adviser of an investment company pursuant to Section 9(a) of the
Investment Company Act or any other applicable statute or regulation.
G. Other Obligations and Service.
The Manager shall make its officers and employees available to
the Trustees and officers of the Trust for consulting and discussions regarding
the management of the Trust and its investment activities.
3. Execution and Allocation of Portfolio Brokerage.
A. The Manager, subject to the control and direction of the
Trustees, any Sub-Advisers, subject to the control and direction of the Trustees
and the Manager, and any Second-Tier Sub-Advisers, subject to the control and
direction of the Trustees, the Manager and the applicable Sub-Adviser, shall
have authority and discretion, as appropriate, to select brokers and dealers to
execute portfolio transactions for each Fund, and for the selection of the
markets on or in which the transactions will be executed.
B. In acting pursuant to paragraph 3(A), the Manager, the
Sub-Advisers and the Second-Tier Sub-Adviser may place orders through such
brokers and dealers in conformity with the policy with respect to brokerage set
forth in the Trust's then effective Registration Statement.
C. It is understood that none of the Trust, the Manager, any
Sub-Advisers or any Second-Tier Sub-Advisors will adopt a formula for allocation
of the Trust's brokerage, except as may be provided for in the Custody Services
Agreement with the Trust's Custodian.
D. It is understood that the Manager, a Sub-Adviser or a
Second-Tier Sub-Adviser may, to the extent permitted by applicable laws and
regulations, aggregate securities to be sold or purchased for a Fund and for
other clients in order to obtain the most favorable price and efficient
execution. In that event, allocation of the securities purchased or sold, as
well as expenses incurred in the transaction, will be made by the Manager,
Sub-Adviser or Second-Tier Sub-Adviser, as the case may be, in the manner it
considers to be the most equitable and consistent with its fiduciary obligations
to the Trust and to its other clients.
E. The Manager shall provide such reports as the Trustees may
reasonably request with respect to each Fund's total brokerage and the manner in
which that brokerage was allocated.
4. Expenses of the Trust.
It is understood that the Trust (or each of its funds
(including the Funds), where applicable) will pay, or will enter into
arrangements that require third parties to pay, all of the expenses of the
Trust or such funds, other than those expressly assumed by the Manager
herein, including without limitation:
A. Advisory, sub-advisory and administrative fees;
B. Fees for services of independent public accountants;
C. Legal and consulting fees;
D. Transfer agent, custodian and portfolio recordkeeping
and tax information services;
E. Expenses of periodic calculations of the funds' net
asset values and of equipment for communication among
the funds' custodian, transfer agent and others;
F. Taxes and the preparation of the funds' tax returns;
G. Brokerage fees and commissions;
H. Interest;
I. Costs of Board of Trustees and shareholder meetings;
J. Updates and printing of prospectuses and reports to
shareholders;
K. Fees for filing reports with regulatory bodies and
the maintenance of the Trust's existence;
L. Membership dues for industry trade associations;
M. Fees to federal authorities for the registration of
the shares of the funds;
N. Fees and expenses of Trustees who are not directors,
officers, employees or stockholders of the Manager of
its affiliates;
O. Insurance and fidelity bond premiums; and
P. Litigation and other extraordinary expenses of a
non-recurring nature.
5. Activities and Affiliates of the Manager.
A. The Trust acknowledges that the Manager or one or more of
its affiliates may have investment or administrative responsibilities or render
investment advice to or perform other investment advisory services for other
individuals or entities, and that the Manager, its affiliates or any of its or
their directors, officers, agents or employees may buy, sell or trade in
securities for its or their respective accounts ("Affiliated Accounts"). Subject
to the provisions of paragraph 3, the Trust agrees that the Manager or its
affiliates may give advice or exercise investment responsibility and take such
other action with respect to Affiliated Accounts which may differ from the
advice given or the timing or nature of action with respect to the Funds,
provided that the Manager acts in good faith. The Trust acknowledges that one or
more of the Affiliated Accounts may at any time hold, acquire, increase,
decrease, dispose of or otherwise deal with positions in investments in which
the Funds may have an interest. The Manager shall have no obligation to
recommend for a Fund a position in any investment which an Affiliated Account
may acquire, and the Trust shall have no first refusal, co-investment or other
rights in respect of any such investment, either for the Funds or otherwise.
B. Subject to and in accordance with the Declaration of Trust
and By-Laws of the Trust as currently in effect and the Investment Company Act
and the rules thereunder, it is understood that Trustees, officers and agents of
the Trust and shareholders of the Trust are or may be interested persons as
defined by the Investment Company Act ("Interested Persons") of the Manager or
its affiliates as directors, officers, agents and shareholders of the Manager or
its affiliates; that directors, officers, agents and shareholders of the Manager
or its affiliates are or may be Interested Persons of the Trust as Trustees,
officers, agents, shareholders or otherwise; that the Manager or its affiliates
may be Interested Persons of the Trust as shareholders or otherwise; and that
the effect of any such interests shall be governed by said Declaration of Trust,
By-Laws and the Investment Company Act and the rules thereunder.
6. Compensation of the Manager.
For all services to be rendered and payments made pursuant to this
Agreement, the Trust, on its own behalf and on behalf of each Fund, will pay the
Manager monthly in arrears a fee at an annual rate equal to a percentage of the
net asset value of each Fund as follows: IFFG -- 0.90%, USFFG -- 0.80%; and SIF
-- 0.65%. The fee shall be accrued for each calendar day and the sum of the
daily fee accruals shall be paid monthly on or before the tenth day of the
following calendar month. The daily accruals of the fee will be computed by (i)
multiplying the annual percentage rate referred to above by the fraction the
numerator of which is one and the denominator of which is the number of calendar
days in the year, and (ii) multiplying the product obtained pursuant to clause
(i) above by the net asset value of each Fund as determined in accordance with
the Trust's prospectus as of the previous business day on which each Fund was
open for business. The foregoing fee shall be prorated for any month during
which this Agreement is in effect for only a portion of the month.
7. Liabilities of the Manager.
A. Except as provided below, in the absence of willful
misfeasance, bad faith, gross negligence, or reckless disregard of obligations
or duties hereunder on the part of the Manager, the Manager shall not be subject
to liability to the Trust or to any shareholder of the Trust for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security.
B. The Manager shall indemnify and hold harmless the Trust
from any loss, cost, expense or damage resulting from the failure of any
Sub-Advisor or any Second-Tier Sub-Advisor to comply with (i) any statement
included in the Prospectus and Statement of Additional Information of the Trust,
or (ii) instructions given by the Manager to any Sub-Advisor or any Second-Tier
Sub-Advisor for the purpose of ensuring the Trust's compliance with securities,
tax and other requirements applicable to the Trust's business and the investment
activities of its Funds; provided, however, that the indemnification provided in
this paragraph 7(B) shall apply only to the extent that a Sub-Adviser or
Second-Tier Sub-Advisor is liable to the Trust and, after demand by the Trust,
is unable or refuses to discharge its obligations to the Trust.
C. No provision of this Agreement shall be construed to
protect any Trustee or officer of the Trust, or the Manager, from liability in
violation of Sections 17(h) and (i) of the Investment Company Act.
8. Effective Date: Term.
This Agreement shall become effective, with respect to any Fund, on the
later of (i) the date first written above or (ii) the date on which the offer
and sale of shares of such Fund has been registered under the Securities Act and
the Investment Company Act pursuant to an effective Registration Statement of
the Trust on Form N-1A and shall continue until June 7, 1995, and from year to
year thereafter, but only so long as such continuance is specifically approved
at least annually by a vote of the Trustees, including the vote of a majority of
the Trustees who are not interested persons of the Trust, cast in person at a
meeting called for the purpose of voting on such approval, or by vote of a
majority of the outstanding voting securities. The aforesaid provision shall be
construed in a manner consistent with the Investment Company Act and the rules
and regulations thereunder.
9. Assignment.
No assignment of this Agreement shall be made by the Manager, and this
Agreement shall terminate automatically in the event of any such assignment. The
Manager shall notify the Trust in writing in advance of any proposed change of
control to enable the Trust to take the steps necessary to enter into a new
advisory contract.
10. Amendment
This Agreement may be amended at any time, but only by written
Agreement between the Manager and the Trust, which is subject to the approval of
the Trustees of the Trust and the shareholders of any affected Fund in the
manner required by the Investment Company Act and the rules thereunder.
11. Termination.
This Agreement:
(a) may at any time be terminated without payment of any
penalty, by the Trust or, as to any Fund, by that
Fund (by the Board of Trustees of the Trust or by the
vote of a majority of the outstanding voting
securities) on sixty (60) days' written notice to the
Manager;
(b) shall immediately terminate in the event of its
assignment; and
(c) may be terminated by the Manager on sixty (60) days
written notice to the Trust.
12. Definitions.
As used in this Agreement, the terms "affiliated person," "assignment,"
"control," "interested person" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the Investment Company Act and
the rules and regulations thereunder, subject to any applicable orders of
exemption issued by the SEC.
13. Notice.
Any notice under this Agreement shall be given in writing addressed and
delivered or mailed postpaid to the other party to this Agreement at its
principal place of business.
14. Severability.
If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
15. Shareholder Liability.
The Manager is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Declaration of Trust of the Trust and
agrees that obligations assumed by the Trust pursuant to this Agreement shall be
limited in all cases to the Trust and its assets, and if the liability relates
to one or more Funds, the obligations thereunder shall be limited to the
respective assets of such Funds. The Manager further agrees that it shall not
seek satisfaction of any such obligation from the shareholders of the Funds, nor
from the Trustees or any individual Trustee of the Trust.
16. Governing Law.
This Agreement shall be interpreted under, and the performance of the
Manager under this Agreement shall be consistent with, the provisions of the
Agreement and Declaration of Trust and By-Laws of the Trust, the terms of the
Investment Company Act, applicable rules and regulations thereunder, the Code
and regulations thereunder, and the Trust's Prospectus and Statement of
Additional Information, in each case as from time to time in effect. The
provisions of this Agreement shall be construed and interpreted in accordance
with the domestic substantive laws of The Commonwealth of Massachusetts without
giving effect to any choice or conflict of laws rules or provisions that would
result in the application of the domestic substantive laws of any other
jurisdiction; provided, however, that if such law or any of the provisions of
this Agreement conflict with the applicable provisions of the Investment Company
Act, the latter shall control.
17. Use of Manager's Name.
The Trust may use the name "Keyport" or any other name derived from the
name "Keyport" only for so long as this Agreement (or another similar management
agreement pertaining to other series funds of the Trust) or any extension,
renewal, or amendment hereof (or thereof) remains in effect, including any
similar agreement with any organization that shall have succeeded to the
business of the Manager. At such time as this Agreement (and each other similar
agreement pertaining to such other series funds) or any extension, renewal or
amendment hereof (or thereof), or each such other similar successor organization
agreement shall no longer be in effect, the Trust will cease to use any name
derived from the name "Keyport," any name similar thereto, or any other name
indicating that it is managed by or otherwise connected with the Manager, or
with any organization which shall have succeeded to Manager's business as
investment advisor or manager.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
IN WITNESS WHEREOF, the parties hereto have duly executed this
agreement on the date first above written.
ATTEST: KEYPORT VARIABLE INVESTMENT TRUST,
on its own behalf and on behalf of each Fund
By: Xxxxxxx X. Xxxxxxxxxxx
Title: Secretary President
ATTEST: KEYPORT ADVISORY SERVICES CORP.
By: Xxxx X. Ponnatus
Title: Secretary Title:
