7
LIBERTY VARIABLE INVESTMENT TRUST
COLONIAL GLOBAL EQUITY FUND, VARIABLE SERIES
COLONIAL HIGH YIELD SECURITIES FUND, VARIABLE SERIES
COLONIAL INTERNATIONAL FUND FOR GROWTH, VARIABLE SERIES
COLONIAL INTERNATIONAL HORIZONS FUND, VARIABLE SERIES
COLONIAL SMALL CAP VALUE FUND, VARIABLE SERIES
COLONIAL STRATEGIC INCOME FUND, VARIABLE SERIES
COLONIAL U.S. GROWTH & INCOME FUND, VARIABLE SERIES
CRABBE HUSON REAL ESTATE INVESTMENT FUND, VARIABLE SERIES
LIBERTY NEWPORT JAPAN OPPORTUNITIES FUND, VARIABLE SERIES
LIBERTY SELECT VALUE FUND, VARIABLE SERIES
LIBERTY VALUE FUND, VARIABLE SERIES
NEWPORT TIGER FUND, VARIABLE SERIES
XXXXX XXX GLOBAL UTILITIES FUND, VARIABLE SERIES
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT ("Agreement"), made this 1st day of November, 2001, between
LIBERTY VARIABLE INVESTMENT TRUST, a business trust organized under the laws of
The Commonwealth of Massachusetts (the "Trust"), on its own behalf and on behalf
of the following: Colonial Global Equity Fund, Variable Series, Colonial High
Yield Securities Fund, Variable Series, Colonial International Fund For Growth,
Variable Series, Colonial International Horizons Fund, Variable Series, Colonial
Small Cap Value Fund, Variable Series, Colonial Strategic Income Fund, Variable
Series, Colonial U.S. Growth & Income Fund, Variable Series, Crabbe Huson Real
Estate Investment Fund, Variable Series, Liberty Newport Japan Opportunities
Fund, Variable Series, Liberty Select Value Fund, Variable Series, Liberty Value
Fund, Variable Series, Newport Tiger Fund, Variable Series, Xxxxx Xxx Global
Utilities Fund, Variable Series, (each a "Fund," and collectively, the "Funds"),
and Liberty ADVISORY SERVICES CORP., a corporation organized under the laws of
The Commonwealth of Massachusetts (the "Manager").
WHEREAS, the Trust has been organized as an open-end management investment
company registered as such under the Investment Company Act of 1940, as amended
("Investment Company Act"), and is authorized to issue shares of beneficial
interest in one or more separate series (each representing interests in a
separate portfolio of securities and other assets), including the Funds, which
shares are to be issued and sold to and held by various separate accounts of
insurance companies ("Participating Insurance Companies");
WHEREAS, the Trust heretofore has created various other separate funds which are
covered by another Management Agreement between the Trust, on its own behalf and
on behalf of such other 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
Advisers Act of 1940, as amended (the "Investment Adviser's Act"), or qualifying
as a "bank" within the meaning of the Investment Adviser's Act and thereby
exempted from the requirement to be so registered, to manage all or a portion of
a Fund's assets, as determined by the Manager from time to time (a
"Sub-Adviser"); and
WHEREAS, the Manager is registered as an investment adviser under the Investment
Adviser's Act, and desires to provide services to the Trust and the 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 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 2A to any of its affiliates.
B. Investment Advisory Services.
(a) The Manager shall have responsibility for the management and investment of
the assets of the Funds, subject to and in accordance with the separate
investment objectives, policies and limitations of the Funds, as provided in the
Trust's Prospectus and Statement of Additional Information and governing
instruments, as amended from time to time, and any directions and policies which
the Trustees may issue to the Manager from time to time.
(b) The Manager shall provide a continuous investment program for the Funds,
shall revise each such program as necessary, and shall monitor implementation of
the program.
(c) The Manager may delegate its investment responsibilities under paragraph
2B(a) with respect to each Fund to one or more persons or companies registered
as investment advisers under the Investment Adviser's Act or qualifying as a
"bank" within the meaning of the Investment Adviser's Act and thereby exempted
from the requirement to be so registered ("Sub-Advisers") pursuant to an
agreement among the Trust, such Fund and each Sub-Adviser ("Sub-Advisory
Agreement"). Each Sub-Advisory Agreement may provide that the Sub-Adviser,
subject to the control and supervision of the Trustees and the Manager, shall
have full investment discretion for the Fund and shall make all determinations
with respect to the investment of the Fund's assets or any portion thereof
specified by the Manager. Any delegation of duties pursuant to this paragraph
shall comply with any applicable provisions of Section 15 of the Investment
Company Act, except to the extent permitted by any exemptive order of the
Securities and Exchange Commission or similar relief.
(d) The Manager shall be solely responsible for paying the fees of each
Sub-Adviser from the fees it collects as provided in paragraph 6 below.
(e) The Manager shall evaluate possible Sub-Advisers and shall advise the
Trustees of the candidates which the Manager believes are best suited to invest
the assets of each Fund; shall monitor and evaluate the investment performance
of each Sub-Adviser; shall recommend changes of or additions of Sub-Advisers
when appropriate; and shall coordinate the investment activities of the
Sub-Advisers.
(f) It is understood that the Manager may seek advice with respect to the
performance of any or all of its duties under paragraphs 2B(b) and (c) from a
person or company ("Consultant") pursuant to an agreement among the Manager, the
Trust and the Consultant (a "Fund Consulting Agreement"). A Fund Consulting
Agreement may provide that the Consultant, subject to the control and
supervision of the Trustees and the Manager, shall provide assistance to the
Manager with respect to each Fund's investment program, the selection,
monitoring and evaluation of Sub-Advisers and the allocation of each Fund's
assets to the Sub-Advisers.
(g) The Funds shall be solely responsible for paying the fees of any
Consultant.
(h) The Manager shall render regular reports to the Trustees relating to the
performance of its duties specified in paragraphs 2B(a), (b) and (c).
C. Expenses Borne By Manager. To the extent necessary to perform its obligations
under this Agreement, the Manager, at its own expense, shall furnish executive
and other personnel and office space, equipment and facilities, and shall pay
any other expenses incurred by it, in connection with the performance of its
duties hereunder, except that the Trust or the 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 reasonably request for use in the preparation of
its Registration Statement, reports and other documents required by federal laws
and any securities and insurance laws of the other states and other
jurisdictions in which the Trust's shares are sold.
E. Code of Ethics. The Manager has adopted a written code of ethics complying
with the requirements of Rule 17j-1 under the Investment Company Act and has
provided the Trust with a copy of the code of ethics and evidence of its
adoption. Within forty-five (45) days of the end of the last calendar quarter of
each year while this Agreement is in effect, an executive officer of the Manager
shall verify to the Trustees that the Manager has complied with the requirements
of Rule 17j-1 during the previous year and that there has been no violation of
the Manager's code of ethics or, if such a violation has occurred, that
appropriate action was taken in response to such violation. Upon the written
request of the Trust, the Manager shall permit the Trust to examine the reports
required to be made to the Manager by Rule 17j-1(c)(1).
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, shall have authority and discretion, as appropriate, to select brokers
and dealers to execute portfolio transactions for each Fund, and for the
selection of the markets on or in which the transactions will be executed.
B. In acting pursuant to paragraph 3A, the Manager and the Sub-Advisers may
place orders through such brokers and dealers in conformity with the policy with
respect to brokerage set forth in the Trust's then effective Registration
Statement.
C. It is understood that none of the Trust, the Manager or any Sub-Advisers will
adopt a formula for allocation of the Trust's brokerage, except as may be
provided for in the custody agreement with the Trust's Custodian.
D. It is understood that the Manager or a Sub-Adviser may, to the extent
permitted by applicable laws and regulations, aggregate securities to be sold or
purchased for a Fund and for other clients in order to obtain the most favorable
price and efficient execution. In that event, allocation of the securities
purchased or sold, as well as expenses incurred in the transaction, will be made
by the Manager or Sub-Adviser, as the case may be, in the manner it considers to
be the most equitable and consistent with its fiduciary obligations to the Trust
and to its other clients, and in conformity with any applicable policies adopted
by the Board of Trustees.
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;
X. Xxxxxxxxx fees and commissions;
H. Interest;
I. Costs of Board of Trustees and shareholder meetings;
X. Updates and printing of prospectuses and reports to shareholders;
X. Xxxx for filing reports with regulatory bodies and the maintenance of the
Trust's existence;
L. Membership dues for industry trade associations;
X. Xxxx to federal authorities for the registration of the shares of the
funds;
X. Xxxx 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
X. Xxxxxxxxxx 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 Fund may have an interest. The Manager shall have no
obligation to recommend for the Funds 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 the Funds, will pay the Manager
monthly in arrears a fee at an annual rate equal to the following percentage for
each Fund:
FUND ANNUAL RATE
------------------------------------------------------------------------------------------
Colonial Global Equity Fund, Variable Series 0.95%
Colonial High Yield Securities Fund, Variable Series 0.60%
Colonial International Fund For Growth, Variable Series 0.90% 0.85% in excess of $1 billion
Colonial International Horizons Fund, Variable Series 0.95% 0.90% in excess of $1 billion
Colonial Small Cap Value Fund, Variable Series 0.80%
Colonial Strategic Income Fund, Variable Series 0.65%
Colonial U.S. Growth & Income Fund, Variable Series 0.80% 0.70% in excess of $1 billion
Crabbe Huson Real Estate Investment Fund, Variable Series 1.00%
Liberty Newport Japan Opportunities Fund, Variable Series 1.20%
Liberty Select Value Fund, Variable Series 0.70%
Liberty Value Fund, Variable Series 0.65%
Newport Tiger Fund, Variable Series 0.90%
Xxxxx Xxx Global Utilities Fund, Variable Series 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 such Fund as determined in accordance with
the Trust's Prospectus as of the previous business day on which such 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 to comply with
(i) any statement included in the Prospectus and Statement of Additional
Information of the Trust, or (ii) instructions given by the Manager to any
Sub-Advisor for the purpose of ensuring the Trust's compliance with securities,
tax and other requirements applicable to the Trust's business and the investment
activities of its Funds; provided, however, that the indemnification provided in
this paragraph 7B shall apply only to the extent that a Sub-Adviser is liable to
the Trust and, after demand
by the Trust, is unable or refuses to discharge its obligations to the Trust.
C. No provision of this Agreement shall be construed to protect any Trustee or
officer of the Trust, or the Manager, from liability in violation of Sections
17(h) and (i) of the Investment Company Act.
8. Effective Date: Term.
This Agreement shall become effective on the later of (i) the date first written
above or (ii) the date on which the offer and sale of shares of the Fund has
been registered under the Securities Act and the Investment Company Act pursuant
to an effective Registration Statement of the Trust on Form N-1A and shall
continue until July 31, 2003, 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
(by the Board of Trustees of the Trust or by the vote of a majority of the
outstanding voting securities of the Fund) on sixty (60) days' written notice to
the Manager;
(b) shall immediately terminate in the event of its assignment; and
(c) may be terminated by the Manager on sixty (60) days written notice to the
Trust.
12. Definitions. As used in this Agreement, the terms "affiliated person,"
"assignment," "control," "interested person" and "vote of a majority of the
outstanding voting securities" shall have the meanings set forth in the
Investment Company Act and the rules and regulations thereunder, subject to any
applicable orders of exemption issued by the SEC.
13. Notice. Any notice under this Agreement shall be given in writing addressed
and delivered or mailed postpaid to the other party to this Agreement at its
principal place of business.
14. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
15. Shareholder Liability. The Manager is hereby expressly put on notice of the
limitation of shareholder liability as set forth in the Declaration of Trust of
the Trust and agrees that obligations assumed by the Trust pursuant to this
Agreement shall be limited in all cases to the Trust and its assets, and if the
liability relates to one or more Funds, the obligations thereunder shall be
limited to the respective assets of such Funds. The Manager further agrees that
it shall not seek satisfaction of any such obligation from the shareholders of
the Funds, nor from the Trustees or any individual Trustee of the Trust.
16. Governing Law. This Agreement shall be interpreted under, and the
performance of the Manager under this Agreement shall be consistent with, the
provisions of the Agreement and Declaration of Trust and By-Laws of the Trust,
the terms of the Investment Company Act, applicable rules and regulations
thereunder, the Code and regulations thereunder, and the Trust's Prospectus and
Statement of Additional Information, in each case as from time to time in
effect. The provisions of this Agreement shall be construed
and interpreted in accordance with the domestic substantive laws of The
Commonwealth of Massachusetts without giving effect to any choice or conflict of
laws rules or provisions that would result in the application of the domestic
substantive laws of any other jurisdiction; provided, however, that if such law
or any of the provisions of this Agreement conflict with the applicable
provisions of the Investment Company Act, the latter shall control.
17. Use of Manager's Name. The Trust may use the name "Liberty" or any other
name derived from the name "Liberty"only for so long as this Agreement (or
another similar management agreement pertaining to other series funds of the
Trust) or any extension, renewal, or amendment hereof (or thereof) remains in
effect, including any similar agreement with any organization that shall have
succeeded to the business of the Manager. At such time as this Agreement (and
each other similar agreement pertaining to such other series funds) or any
extension, renewal or amendment hereof (or thereof), or each such other similar
successor organization agreement shall no longer be in effect, the Trust will
cease to use any name derived from the name "Liberty," any name similar thereto,
or any other name indicating that it is managed by or otherwise connected with
the Manager, or with any organization which shall have succeeded to Manager's
business as investment advisor or manager.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original.
IN WITNESS WHEREOF, the parties hereto have duly executed this agreement on the
date first above written.
LIBERTY VARIABLE
INVESTMENT TRUST,
on its own behalf and on behalf of
Colonial Global Equity Fund, Variable Series
Colonial High Yield Securities Fund, Variable Series
Colonial International Fund For Growth, Variable Series
Colonial International Horizons Fund, Variable Series
Colonial Small Cap Value Fund, Variable Series
Colonial Strategic Income Fund, Variable Series
Colonial U.S. Growth & Income Fund, Variable Series
Crabbe Huson Real Estate Investment Fund, Variable Series
Liberty Newport Japan Opportunities Fund, Variable Series
Liberty Select Value Fund, Variable Series
Liberty Value Fund, Variable Series
Newport Tiger Fund, Variable Series
Xxxxx Xxx Global Utilities Fund, Variable Series
By: /s/Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Assistant Secretary
LIBERTY ADVISORY
SERVICES CORP.
By: /s/Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Chief Operating Officer
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