PORTFOLIO MANAGEMENT AGREEMENT
WITH XXXXX'S PORTFOLIO MANAGERS
as of June 18, 1999
Oppenheimer Capital
Oppenheimer Tower
World Financial Center
New York, NY 10281
Re Portfolio Management Agreement
Ladies and Gentlemen:
Liberty All-Star Equity Fund, Variable Series (the "Fund") is a series
of the Liberty Variable Investment Trust (the "Trust"), a diversified open-end
investment company registered under the Investment Company Act of 1940 (the
"Act"), and is subject to the rules and regulations promulgated thereunder.
Liberty Advisor Services Corp. ("LASC") is the manager of the Fund.
Pursuant to the Management and Sub-Advisory Agreement of even date herewith (the
"Management and Sub-Advisory Agreement") among the Trust, on behalf of the Fund,
LASC and Liberty Asset Management Company (the "Fund Manager"), LASC delegates
to the Fund Manager responsibility for investment management of the Fund. In
furtherance thereof, the Fund Manager evaluates and recommends portfolio
managers for the Fund and is responsible for certain administrative matters
relating to the Fund.
l. Employment as a Portfolio Manager. The Trust being duly authorized
hereby employs Oppenheimer Capital (the "Portfolio Manager") as a discretionary
portfolio manager, on the terms and conditions set forth herein, of those assets
of the Fund which the Fund Manager determines to assign to the Portfolio Manager
(those assets being referred to as the "Fund Account"). The Fund Manager may,
from time to time, make additions to and withdrawals from the Fund Account.
2. Acceptance of Employment; Standard of Performance. The Portfolio
Manager accepts its employment as a discretionary portfolio manager and agrees
to use its best professional judgment to make timely investment decisions for
the Fund Account in accordance with the provisions of this Agreement.
3. Portfolio Management Services of Portfolio Manager. In providing
portfolio management services to the Fund Account, the Portfolio Manager shall
be subject to the investment objectives, policies and restrictions of the Fund
as set forth in the Trust's current registration statement under the Act (as the
same may be modified from time to time), and the investment restrictions set
forth in the Act and the Rules thereunder (as and to the extent set forth in
such registration statement or in other documentation furnished to the Portfolio
Manager by the Fund or the Fund Manager), to the supervision and control of the
Trustees of the Trust (the "Trustees"), and to instructions from the Fund
Manager. The Portfolio Manager shall not, without the prior approval of the Fund
or the Fund Manager, effect any transactions which would cause the Fund Account,
treated as a separate fund, to be out of compliance with any of such
restrictions or policies.
4. Transaction Procedures. All portfolio transactions for the Fund
Account will be consummated by payment to or delivery by the custodian of the
assets of the Fund (the "Custodian"), or such depositories or agents as may be
designated by the Custodian in writing, as custodian for the Fund, of all cash
and/or securities due to or from the Fund Account, and the Portfolio Manager
shall not have possession or custody thereof or any responsibility or liability
with respect to such custody. The Portfolio Manager shall advise and confirm in
writing to the Custodian all investment orders for the Fund Account placed by it
with brokers and dealers at the time and in the manner set forth in Schedule A
hereto (as Schedule A may be amended from time to time). The Fund shall issue to
the Custodian such instructions as may be appropriate in connection with the
settlement of any transaction initiated by the Portfolio Manager. The Fund shall
be responsible for all custodial arrangements and the payment of all custodial
charges and fees, and, upon giving proper instructions to the Custodian, the
Portfolio Manager shall have no responsibility or liability with respect to
custodial arrangements or the acts, omissions or other conduct of the Custodian.
5. Allocation of Brokerage. The Portfolio Manager shall have authority
and discretion to select brokers and dealers to execute portfolio transactions
initiated by the Portfolio Manager, and to select the markets on or in which the
transaction will be executed.
A In doing so, the Portfolio Manager's primary responsibility shall be to seek to obtain best net
price and execution for the Fund. However, this responsibility shall not obligate the Portfolio
Manager to solicit competitive bids for each transaction or to seek the lowest available
commission cost to the Fund, so long as the Portfolio Manager reasonably believes that the
broker or dealer selected by it can be expected to obtain a "best execution" market price on
the particular transaction and determines in good faith that the commission cost is reasonable
in relation to the value of the brokerage and research services (as defined in Section 28(e)(3)
of the Securities Exchange Act of 1934) provided by such broker or dealer to the Portfolio
Manager viewed in terms of either that particular transaction or of the Portfolio Manager's
overall responsibilities with respect to its clients, including the Fund, as to which the
Portfolio Manager exercises investment discretion, notwithstanding that the Fund may not be the
direct or exclusive beneficiary of any such services or that another broker may be willing to
charge the Fund a lower commission on the particular transaction.
B. Subject to the requirements of paragraph A above, the Fund Manager shall have the right to
request that transactions giving rise to brokerage commissions shall be executed by brokers and
dealers (and in amounts), to be agreed upon from time to time between the Fund Manager and the
Portfolio Manager, that provide brokerage or research services to the Fund or the Fund Manager,
or as to which an on-going relationship will be of value to the Fund in the management of its
assets, which services and relationship may, but need not, be of direct benefit to the Fund
Account. Notwithstanding any other provision of this Agreement, the Portfolio Manager shall not
be responsible under paragraph A above with respect to transactions executed through any such
broker or dealer.
C. The Portfolio Manager shall not execute any portfolio
transactions for the Fund Account with a broker or dealer
which is an "affiliated person" (as defined in the Act) of the
Fund, the Portfolio Manager or any other Portfolio Manager of
the Fund without the prior written approval of the Fund. The
Fund will provide the Portfolio Manager with a list of brokers
and dealers which are "affiliated persons" of the Fund or its
Portfolio Managers.
6. Proxies. The Portfolio Manager will vote all proxies solicited by or
with respect to the issuers of securities in which assets of the Fund Account
may be invested from time to time in accordance with such policies as shall be
determined by the Fund Manager.
7. Fees for Services. As its compensation for its services under this
Agreement, the Fund Manager will pay the Portfolio Manager monthly in arrears a
fee at an annual rate equal to 0.30% of the net asset value of the Fund Account.
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 fifteenth 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 days in
the year, and (ii) multiplying the product obtained pursuant to clause (i) above
by the net asset value of the Fund Account as determined in accordance with the
Trust's Prospectus as of the previous day on which the Fund was open for
business. The foregoing fee shall be prorated for any month during which this
Agreement is in effect for only a portion of the month. Pursuant to the
Management and Sub-Advisory Agreement, the Fund Manager is solely responsible
for the payment of fees to the Portfolio Manager, and the Portfolio Manager
agrees to seek payment of its fees solely from the Fund Manager.
8. Other Investment Activities of Portfolio Manager. The Trust on
behalf of the Fund acknowledges that the Portfolio Manager or one or more of its
affiliates has investment responsibilities, renders investment advice to and
performs other investment advisory services for other individuals or entities
("Client Accounts"), and that the Portfolio Manager, its affiliates or any of
its or their directors, officers, agents or employees may buy, sell or trade in
any securities for its or their respective accounts ("Affiliated Accounts").
Subject to the provisions of paragraph 2 hereof, the Trust on behalf of the Fund
agrees that the Portfolio Manager or its affiliates may give advice or exercise
investment responsibility and take such other action with respect to other
Client Accounts and Affiliated Accounts which may differ from the advice given
or the timing or nature of action taken with respect to the Fund Account,
provided that the Portfolio Manager acts in good faith, and provided further,
that it is the Portfolio Manager's policy to allocate, within its reasonable
discretion, investment opportunities to the Fund Account over a period of time
on a fair and equitable basis relative to the Client Accounts and the Affiliated
Accounts, taking into account the cash position and the investment objectives
and policies of the Fund and any specific investment restrictions applicable
thereto. The Trust on behalf of the Fund acknowledges that one or more Client
Accounts and Affiliated Accounts may at any time hold, acquire, increase,
decrease, dispose of or otherwise deal with positions in investments in which
the Fund Account may have an interest from time to time, whether in transactions
which involve the Fund Account or otherwise. The Portfolio Manager shall have no
obligation to acquire for the Fund Account a position in any investment which
any Client Account or Affiliated Account may acquire, and the Fund shall have no
first refusal, coinvestment or other rights in respect of any such investment,
either for the Fund Account or otherwise.
9. Limitation of Liability. The Portfolio Manager shall not be liable
for any action taken, omitted or suffered to be taken by it in its reasonable
judgment, in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Agreement, or in
accordance with (or in the absence of) specific directions or instructions from
the Fund or the Fund Manager, provided, however, that such acts or omissions
shall not have resulted from the Portfolio Manager's willful misfeasance, bad
faith or gross negligence, a violation of the standard of care established by
and applicable to the Portfolio Manager in its actions under paragraph 2 hereof
or breach of its duty or of its obligations hereunder (provided, however, that
the foregoing shall not be construed to protect the Portfolio Manager from
liability in violation of Section 17(i) of the Act).
10. Confidentiality. Subject to the duty of the Portfolio Manager and
the Fund to comply with applicable law, including any demand of any regulatory
or taxing authority having jurisdiction, the parties hereto shall treat as
confidential all information pertaining to the Fund Account and the actions of
the Portfolio Manager and the Fund in respect thereof.
11. Assignment. This Agreement shall terminate automatically in the
event of its assignment, as that term is defined in Section 2(a)(4) of the Act.
The Portfolio Manager shall notify the Fund in writing sufficiently in advance
of any proposed change of control, as defined in Section 2(a)(9) of the Act, as
will enable the Fund to consider whether an assignment as defined in Section
2(a)(4) of the Act will occur, and whether to take the steps necessary to enter
into a new contract with the Portfolio Manager.
12. Representations, Warranties and Agreements of the Fund. The Trust
on behalf of the Fund represents, warrants and agrees that:
A. The Portfolio Manager has been duly appointed to provide
investment services to the Fund Account as contemplated
hereby.
B. The Trust on behalf of the Fund will deliver to the Portfolio
Manager a true and complete copy of its then current
registration statement as effective from time to time and such
other documents governing the investment of the Fund Account,
or such other information as is necessary for the Portfolio
Manager to carry out its obligations under this Agreement.
13. Representations, Warranties and Agreements of the Portfolio
Manager. The Portfolio Manager represents, warrants and agrees that:
A. It is registered as an "Investment Adviser" under the
Investment Advisers Act of 1940
("Advisers Act").
B. It will maintain, keep current and preserve on behalf of the
Fund, in the manner required or permitted by the Act and the
Rules thereunder, the records identified in Schedule B (as
Schedule B may be amended from time to time). The Portfolio
Manager agrees that such records are the property of the Fund,
and will be surrendered to the Fund promptly upon request.
C. It will maintain in effect a written code of ethics complying
with the requirements of Rule l7j-l under the Act. Within 45
days of the end of each year while this Agreement is in
effect, an officer or general partner of the Portfolio Manager
shall certify to the Fund that the Portfolio Manager has
complied with the requirements of Rule l7j-l during the
previous year and that there has been no violation of its code
of ethics or, if such a violation has occurred, that
appropriate action was taken in response to such violation.
D. Upon request, the Portfolio Manager will promptly supply the
Trust with any information concerning the Portfolio Manager
and its stockholders, employees and affiliates which the Trust
may reasonably require in connection with the preparation of
its registration statement, proxy material, reports and other
documents relating to the Fund required to be filed under the
Act, the Securities Act of 1933, or other applicable
securities laws.
E. Reference is xxxxxx made to the Declaration of Trust dated March 4, 1993, as amended,
establishing the Trust, a copy of which has been filed with the Secretary of the Commonwealth
of Massachusetts and elsewhere as required by law, and to any and all amendments thereto so
filed or hereafter filed. The name Liberty Variable Investment Trust refers to the Trustees
under said Declaration of Trust, as Trustees and not personally, and no Trustee, shareholder,
officer, agent or employee of the Trust shall be held to any personal liability hereunder or in
connection with the affairs of the Trust or the Fund, but only the assets of the Fund are
liable under this Agreement. Without limiting the generality of the foregoing, neither the
Portfolio Manager nor any of its officers, directors, partners, shareholders or employees
shall, under any circumstances, have recourse or cause or willingly permit recourse to be had
directly or indirectly to any personal, statutory, or other liability of any shareholder,
Trustee, officer, agent or employee of the Trust or of any successor of the Trust or the Fund,
whether such liability now exists or is hereafter incurred, for claims against the Trust
estate, but shall look for payment solely to the assets of the Fund or any successor thereto.
14. Amendment. This Agreement may be amended at any time, but only by
written agreement among the Portfolio Manager, the Fund Manager and the Trust,
on behalf of the Fund, which amendment, other than amendments to Schedules A and
B (which may be amended by the Fund Manager acting alone), is subject to the
approval of the Trustees and the Shareholders of the Fund as and to the extent
required by the Act.
15. Effective Date; Term. This Agreement shall continue in effect for
two years from the date hereof and shall continue in effect thereafter provided
such continuance is specifically approved at least annually by (i) the Trust's
Board of Trustees or (ii) a vote of a "majority" (as defined in the Act) of the
Fund's outstanding voting securities, provided that in either event the
continuance is also approved by a majority of the Board of Trustees who are not
"interested persons" (as defined in the Act) of any party to this Agreement, by
vote cast in person at a meeting called for the purpose of voting on such
approval. The aforesaid requirement that continuance of this Agreement be
"specifically approved at least annually" shall be construed in a manner
consistent with the Act and the Rules and Regulations thereunder.
16. Termination. This Agreement may be terminated by any party, without
penalty, immediately upon written notice to the other parties in the event of a
breach of any provision thereof by a party so notified, or otherwise upon not
less than thirty (30) days' written notice to the Portfolio Manager in the case
of termination by the Trust on behalf of the Fund or the Fund Manager, or ninety
(90) days' written notice to the Trust and the Fund Manager in the case of
termination by the Portfolio Manager, but any such termination shall not affect
the status, obligations or liabilities of any party hereto to the other parties.
17. Applicable Law. To the extent that state law is not preempted by
the provisions of any law of the United States heretofore or hereafter enacted,
as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the Commonwealth
of Massachusetts.
18. Severability. If any term or condition of this Agreement shall be
invalid or unenforceable to any extent or in any application, then the remainder
of this Agreement, and such term or condition except to such extent or in such
application, shall not be affected thereby, and each and every term and
condition of this Agreement shall be valid and enforced to the fullest extent
and in the broadest application permitted by law.
IN WITNESS WHEREOF, the parties have hereunto set their hands as of the
date first written above.
LIBERTY VARIABLE INVESTMENT TRUST on its own behalf and on behalf of the Liberty
All-Star Equity Fund, Variable Series
By: Xxxxxxx X. Xxxxxx
Title: President
LIBERTY ASSET MANAGEMENT COMPANY
By: Xxxxxxx X. Xxxxxxxxxx
Title: President, Chief Executive Officer and Chief Investment Officer
ACCEPTED AND AGREED TO:
Oppenheimer Capital
By: Xxxxx X. XxXxxxxxx
Name:Xxxxx X. XxXxxxxxx
Title:COO
SCHEDULES: *
A. Operational Procedures
B. Record Keeping Requirements
* The Schedules relate to day-to-day operational logistics and to technical
compliance matters.
Schedule A
LIBERTY ALL-STAR EQUITY FUND, VARIABLE SERIES
Operational Procedures
In order to facilitate operations efficiency, it will be necessary for
a flow of information to be supplied to The Chase Manhattan Bank (the
Custodian), and Colonial Management Associates, Inc. (the Administrator).
The Portfolio Manager must furnish Colonial with daily information as
to executed trades, no later than 12:00 p.m. (Eastern time) on trade date plus
one to ensure the information is processed in time for pricing. If there are no
trades, a report must also be sent stating there were no trades for that day.
The necessary information can be transmitted via facsimile machine to Colonial,
Attention Xxxx Xxxxxxxxx, (the direct line to the machine is (000) 000-0000).
Upon receipt of brokers' confirmation the Portfolio Manager or the Administrator
must notify the other party if any differences exist. The reporting of trades by
the Portfolio Manager to Colonial shall include the following information:
1. Purchase or sale
2. Security name and description
3. Cusip and ticker symbol
4. Number of shares or units
5. Sale/purchase price per share or unit
6. Commission rate per share and aggregate commission or indicate net if
so
7. Executing broker and clearing bank, if any
8. Trade date
9. Settlement date
10. Interest purchased or sold, if applicable
11. Total net amount of the transaction
12. If other than HIGH COST is to be used on a sale, it must be identified
13. Name of Fund and Manager must be identified on trade ticket
14. Sequential numbering of all trades is also recommended
For confirmation of trades, please advise the brokers to use the Custodian's DTC
ID system number (No. 27028) to facilitate the receipt of information by the
Custodian. In addition, the Portfolio Manager should arrange to have a duplicate
confirmation sent to Colonial Management Assoc. as an interested party. Please
have confirms linked to CMA's existing sign on: N199.
1. All DTC Eligible Securities
Depository Trust Company (DTC)
Agent Bank Name: Chase Manhattan Bank
Agent Bank Number: 27028
Agent Bank Clearing Number: 902
2. Delivery Instructions
All Physical Securities
Chase Manhattan Bank
0 Xxx Xxxx Xxxxx
Ground Floor Window
New York, NY 10004
Ref: (Name of Fund)
All Government Issues Deliver through your area Federal Reserve Bank to:
The Chase Manhattan Bank
000000000
CMB/CUST/Account Number/Account Name
Wire Instructions:
The Chase Manhattan Bank
ABA #000000000
For credit to account 000-0-000000
For Further Credit to
Chase Account Number
Chase Account Name
The Custodian will supply the Portfolio Manager daily with a cash availability
report. This will normally be done by fax so that the Portfolio Manager will
know the amount available for investment purposes.
Schedule B
LIBERTY ALL-STAR EQUITY FUND, VARIABLE SERIES
Portfolio Management Agreement
RECORDS TO BE MAINTAINED BY THE PORTFOLIO MANAGER
1. (Rule 31a-1(b)(5) and (6)). A record of each brokerage order, and all other
portfolio purchases and sales, given by the Portfolio Manager on behalf of
the Fund for, or in connection with, the purchase or sale of securities,
whether executed or unexecuted. Such records shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any modifications or
cancellation thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time or receipt of a report of execution; and
X. The name of the person who placed the order on behalf of the Fund.
2. (Rule 31a-1(b)(9)). A record for each fiscal quarter, completed within ten
(10) days after the end of the quarter, showing specifically the basis or
bases upon which the allocation of orders for the purchase and sale of
portfolio securities to named brokers or dealers was effected, and the
division of brokerage commissions or other compensation on such purchase
and sale orders. Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Fund by brokers or dealers.
(ii) The supplying of services or benefits by brokers or dealers to:
(a) The Fund;
(b) The Manager (Liberty Asset Management Company);
(c) The Portfolio Manager; and
(d) Any person other than the foregoing.
(iii) Any other consideration other than the technical qualifications of the
brokers and dealers as such.
B. Shall show the nature of the services or benefits made available.
C.
Xxxxx describe in detail the application of any general or specific formula
or other determinant used in arriving at such allocation of purchase
and sale orders and such division of brokerage commissions or other
compensation.
D. The name of the person responsible for making the determination of such
allocation and such division of brokerage commissions or other
compensation.
3. (Rule 31a-a(b)(10)). A record in the form of an appropriate memorandum
identifying the person or persons, committees or groups authorizing the
purchase or sale of portfolio securities. Where an authorization is made
by a committee or group, a record shall be kept of the names of its
members who participate in the authorization. There shall be retained as
part of this record: any memorandum, recommendation or instruction
supporting or authorizing the purchase or sale of portfolio securities and
such other information as is appropriate to support the authorization.(1)
4. (Rule 31a-1(f)). Such accounts, books and other documents as a required to
be maintained by registered investment advisers by rule adopted under
Section 204 of the Investment Advisers Act of 1940, to the extent such
records are necessary or appropriate to record the Portfolio Manager's
transactions with the Fund.
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1 Such information might include: the current Form 10-K, annual and quarterly
reports, press releases, reports by analysts and from brokerage firms (including
their recommendation; i.e., buy, sell, hold) or any internal reports or
portfolio manager reviews.
