SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(c) OF THE SECURITIES
EXCHANGE ACT OF 1934
(Amendment No.___)
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Allmerica Investment Trust
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Preliminary Copies
ALLMERICA INVESTMENT TRUST
SELECT GROWTH FUND
440 LINCOLN STREET
WORCESTER, MA 01653
INFORMATION STATEMENT
On February 12, 2004, the Board of Trustees of Allmerica Investment Trust
(the "Trust") approved (1) a sub-advisory agreement (the "New Sub-Adviser
Agreement") for the Select Growth Fund series (the "Fund") of the Trust between
Allmerica Financial Investment Management Services, Inc. ("AFIMS"), the Trust's
investment manager, and GE Asset Management Incorporated ("GEAM"), which became
effective April 30, 2004, and (2) new principal investment strategies for the
portion of the Fund managed by GEAM. To pursue its investment objective, the
Fund uses a multi-manager approach whereby two Sub-Advisers, Jennison Associates
LLC ("Jennison") and GEAM, will manage their own portions of the Fund's assets.
The New Sub-Adviser Agreement is the same in all substantive respects to the
previous Sub-Adviser Agreement (the "Previous Sub-Adviser Agreement"), dated
August 5, 2003, in effect between AFIMS and Putnam Investment Management, LLC
("Putnam"), except that, based on the Fund's asset levels as of January 1,
2004, the sub-advisory fees that AFIMS will pay GEAM under the New Sub-Adviser
Agreement are lower than the sub-advisory fee paid under the Previous
Sub-Adviser Agreement and the effective date and termination dates of the
sub-adviser agreements are different. AFIMS will pay Jennison's and GEAM's
sub-adviser fees. AFIMS has voluntarily agreed to reduce its management fee paid
by the Fund by an amount that coincides with the benefit it receives from the
lower sub-adviser fee it is required to pay GEAM under the New Sub-Adviser
Agreement.
AFIMS manages the business affairs of the Fund pursuant to a management
agreement (the "Management Agreement") dated April 16, 1998 between the Trust
and AFIMS. The Management Agreement provides that, subject to the requirements
of the Investment Company Act of 1940, as amended (the "1940 Act") and the rules
and regulations thereunder, AFIMS at its expense may select and contract with a
sub-adviser or sub-advisers (each a "Sub-Adviser") to manage the investments of
one or more of the Funds in the Trust. AFIMS has selected Jennison and GEAM to
manage the investments of the Fund and such selection was approved by the Board
of Trustees of the Trust most recently at its May 13, 2004 meeting with respect
to Jennison and at its February 12, 2004 meeting with respect to GEAM. Each of
Jennison and GEAM initially will manage approximately one-half of the Fund's
assets. Thereafter, AFIMS will allocate the Fund's assets between the two
Sub-Advisers on a basis determined to be in the best interests of the Fund's
shareholders.
Under an order received from the U.S. Securities and Exchange Commission,
the Trust, on behalf of the Fund, and AFIMS are permitted to enter into and
amend sub-advisory agreements without receiving shareholder approval. The
Trustees of the Trust must approve such sub-advisory agreements, and the Fund
must provide specified information to shareholders within 90 days of the hiring
of any new sub-adviser or the retention of a sub-adviser whose ownership has
changed significantly. This Information Statement is being supplied to
shareholders to fulfill such information requirement and is being mailed on or
about May 31, 2004.
NO SHAREHOLDER VOTE WILL BE TAKEN WITH RESPECT TO THE MATTER DESCRIBED IN THIS
INFORMATION STATEMENT. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED
NOT TO SEND US A PROXY.
Background: Prior to the appointment of GEAM as a Sub-Adviser of the Fund,
Putnam and Jennison served as co-Sub-Advisers of the Fund. AFIMS and CRA
RogersCasey, Inc. ("CRA RogersCasey), a consultant retained by AFIMS to assist
it in evaluating the performance of the sub-advisers of the Trust, recommended
that the Trustees of the Fund terminate the Previous Sub-Adviser Agreement with
Putnam and enter into the New Sub-Adviser Agreement with GEAM. The decision to
replace Putnam with GEAM as a Sub-Adviser of the Fund was based primarily on
Putnam's underperformance in managing its allocated portion of the Fund's assets
and certain personnel changes to the management team assigned by Putnam to
manage the Fund.
In the course of the selection process, AFIMS and CRA RogersCasey reviewed
performance and background criteria relating to a number of investment advisory
firms, as well as written proposals and in-person presentations by several
investment advisory firms. They considered, among other things, the nature and
quality of the services to be provided by each sub-adviser candidate,
comparative data as to each sub-adviser candidate's investment performance, the
experience and financial condition of the sub-adviser candidate and its
affiliates, the level of sub-advisory fees to be paid compared to industry
averages, the sub-adviser candidate's commitment to mutual fund advisory
activities and the quality of the sub-adviser candidate's proposal generally. As
a part of the
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review process, AFIMS and CRA RogersCasey met with the Investment Operations
Committee/1/ (the "Committee") of the Board of Trustees and discussed with the
Committee the proposed selection of GEAM as a new Sub-Adviser for the Fund. The
Committee recommended to the full Board of Trustees approval of GEAM as a new
Sub-Adviser of the Fund. Upon completion of the review process, which included
discussion of the matter at the Trustees' committee and board meetings on
February 11, 2004 and February 12, 2004, the Trustees voted unanimously, with
the Trustees who are not "interested persons" (as such term is defined in the
1940 Act) of the Trust, AFIMS, the Sub-Advisers or their affiliates voting
separately after conferring with their independent counsel, to terminate the
Previous Sub-Adviser Agreement as of the close of business on April 29, 2004 and
to appoint GEAM as a new Sub-Adviser to the Fund effective April 30, 2004
pursuant to the New Sub-Adviser Agreement. In evaluating the proposal, the
Trustees considered generally the same factors considered by AFIMS and CRA
RogersCasey. The Trustees' decision to terminate the Previous Sub-Adviser
Agreement was based primarily on Putnam's underperformance in managing its
allocated portion of the Fund's assets and certain personnel changes to the
management team assigned by Putnam to manage the Fund
At the February 12, 2004 meeting, the Trustees were provided with financial
and other information about GEAM. At the meeting, they were also provided with
performance information relating to GEAM and information about its investment
style and current personnel. The Trustees considered the terms of the New
Sub-Adviser Agreement and the fact that it was substantially the same as the
Previous Sub-Adviser Agreement with Putnam. The Trustees also considered the
amount of advisory fees that would be paid by the Fund to AFIMS. The Trustees
concluded that entering into the New Sub-Adviser Agreement was in the best
interests of the Fund and its shareholders.
INFORMATION REGARDING GEAM
GEAM, a wholly-owned subsidiary of General Electric Company, is located at
3001 Summer Street, P.O. Box 7900, Stamford, CT 06904. As of March 31, 2004,
GEAM had approximately $185 billion in assets under management. David B.
Carlson, a Director and Executive Vice President of GEAM, is portfolio manager
for the portion of the Fund managed by GEAM. He oversees a team of professionals
who manage U.S. equity investments for GEAM. Mr. Carlson joined GEAM in 1982 as
a securities analyst for investment operations and became a vice president for
mutual fund portfolios in 1987, senior vice president in 1989 and executive vice
president in 2003.
All information about GEAM in this Information Statement has been provided
by GEAM.
Parent Company of GE Asset Management Incorporated
General Electric Company, 3135 Easton Turnpike, Fairfield, CT 06828-0001,
is 100% owner of GEAM.
Principal Executive Officers and Directors of GEAM
The table below lists the individuals who serve as principal executive
officers and directors of GEAM. The address for GEAM's personnel is 3001 Summer
Street, P.O. Box 7900, Stamford, CT 06904.
Name Principal Occupation
---- --------------------
David B. Carlson EVP-Domestic Equities
Michael Cosgrove EVP-Chief Commercial Officer
Ralph Layman EVP-International Equities
Alan Lewis EVP-General Counsel
Robert MacDougall EVP-Fixed Income
John Myers Chief Executive Officer
Donald Torey EVP-Alternative Investments
John Walker EVP-Chief Financial Officer
Kathryn Karlic EVP-Fixed Income
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/1/ The Investment Operations Committee is composed of three Trustees who are
not "interested persons" (as such term is defined in the 1940 Act) of the
Trust, AFIMS or the Sub-Adviser or their affiliates and two Trustees who are
"interested persons." The Committee monitors investment adviser performance
and analyzes fund data.
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No arrangements or understandings made in connection with the New
Sub-Adviser Agreement exist between AFIMS and GEAM with respect to the
composition of the Board of Directors of GEAM or the Board of Trustees of the
Trust or with respect to the selection or appointment of any person to any
office with any of them.
Other Funds Managed by GEAM
GEAM serves as adviser or sub-adviser to other mutual funds with similar
investment objectives as the Select Growth Fund. Information about these funds
appears in the following table, which shows investment advisory fees but not
other fund expenses. GEAM has not waived, reduced or otherwise agreed to reduce
its compensation from these funds under the applicable contracts.
Approximate
Assets as of
Fund Portfolio Objective May 1, 2004 Fees
- ---- --------- --------- ----------- ----
GE Funds GE Premier Growth Long term growth $601 million 0.60%
Equity Fund of capital and
future income
rather than current
income.
GE Institutional Funds Premier Growth Long term growth $342 million First $25million 0.55%
Equity Fund of capital and Next $25million: 0.45%
future income. Over $50 million: 0.35%
Description of the Previous Sub-Adviser Agreement and the New Sub-Adviser
Agreement
The Fund began operations on August 21, 1992. The Previous Sub-Adviser
Agreement was last submitted and approved by the shareholders of the Fund at a
Special Shareholder Meeting on September 18, 1996 for the purpose of approving a
new Sub-Adviser Agreement with Putnam. The Previous Sub-Adviser Agreement was
last approved by the Trustees, including the Trustees who are not "interested
persons" of the Trust, AFIMS, the Sub-Advisers, or their affiliates at a meeting
of the Board of Trustees on May 15, 2003. Except for different effective and
termination dates and the sub-advisory fee schedule, the terms of the New
Sub-Adviser Agreement are similar in all substantive respects to the terms of
the Previous Sub-Adviser Agreement.
For its services provided under the Previous Sub-Adviser Agreement, Putnam
was paid by AFIMS a fee computed daily and paid quarterly at an annual rate
based on Putnam's portion of the average daily net assets of the Fund as set
forth below:
Sub-Advisory Fees under the Previous Sub-Adviser Agreement
Net Assets Rate
---------- ----
First $50 Million .......................... 0.50%
Next $100 Million .......................... 0.45%
Next $100 Million .......................... 0.35%
Next $100 Million .......................... 0.30%
Over $350 Million .......................... 0.25%
During the fiscal year ended December 31, 2003, AFIMS would have paid
Putnam and Jennison $1,108,659 and $943,435, respectively, assuming that each
sub-adviser managed 50% of the Fund's net assets for the period January 1, 2003
through December 31, 2003, for their sub-advisory services. If the fee schedule
with respect to the New Sub-Adviser Agreement had been in effect during the last
fiscal year, GEAM and Jennison would have received $915,405 and $943,435,
respectively, representing a total decrease of $193,254, or 9.42%, from the fees
paid by AFIMS to Putnam and Jennison. For the period January 1, 2003 through
April 17, 2003, AFIMS paid Putnam $391,945 for its sub-advisory services. For
the period April 18, 2003 through December 31, 2003, AFIMS paid Putnam and
Jennison, which became a Sub-Adviser of the Fund effective April 18, 2003,
$879,849 and $749,286, respectively, for their sub-advisory services. Based on
the Fund's net assets at January 1, 2004 of approximately $625,965,935, the
annual sub-adviser fees paid by AFIMS would decrease from $2,327,898, to
$2,110,757, a decrease of $217,141, or 9.33%. AFIMS has voluntarily agreed to
reduce its management fee paid by the Fund by an amount that coincides with the
benefit it receives from the lower sub-advisory fees it is required to pay GEAM
under the New Sub-Adviser Agreement compared to the sub-advisory fees paid to
Putnam under the Previous Sub-Adviser Agreement.
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For its services under the New Sub-Adviser Agreement, GEAM will be paid by
AFIMS a fee computed daily and paid quarterly at an annual rate based on GEAM's
portion of the average daily net assets of the Fund as set forth below. The
Trustees believe the fee under the New Sub-Adviser Agreement provides an
effective means of compensating GEAM for its investment advisory services.
Sub-Advisory Fees under the New Sub-Adviser Agreement
Net Assets Fee Rate
---------- --------
First $25 Million .................. 0.60 %
Next $25 Million ................... 0.55 %
Next $25 Million ................... 0.45 %
Next $25 Million ................... 0.40 %
Over $100 Million .................. 0.245 %
The New Sub-Adviser Agreement provides that, in return for its fees, GEAM,
as Sub-Adviser, will manage the investment and reinvestment of assets of the
Fund subject to the control and supervision of the Board of Trustees and in
accordance with the investment objective and policies of the Fund as set forth
in the Trust's current registration statement and any other policies established
by the Board of Trustees or AFIMS. In this regard, it is the responsibility of
GEAM to make investment decisions for the Fund and to place the Fund's purchase
and sale orders for investment securities. The New Sub-Adviser Agreement states
that GEAM will provide at its expense all necessary investment, management and
administrative facilities needed to carry out its duties under the New
Sub-Adviser Agreement, but excluding brokerage expenses and pricing and
bookkeeping services.
The New Sub-Adviser Agreement will remain in full force and effect through
May 30, 2005 and shall continue in full force and effect for successive periods
of one year thereafter, but only so long as each such continuance is
specifically approved annually by the Board of Trustees, or by vote of the
holders of a majority of the Fund's outstanding voting securities, and by the
vote of a majority of the Trustees who are not "interested persons" of the
Trust, AFIMS, the Sub-Advisers, or any other sub-adviser to the Trust. The New
Sub-Adviser Agreement may be terminated at any time, without payment of any
penalty, by AFIMS, subject to the approval of the Trustees, by vote of the
Trustees, by vote of a majority of the outstanding voting securities of the
Fund, or by GEAM on 60 days' written notice. As required by the 1940 Act, the
New Sub-Adviser Agreement will automatically terminate, without the payment of
any penalty, in the event of its assignment. It also will terminate in the event
that the Management Agreement between the Trust and AFIMS shall have terminated
for any reason.
The New Sub-Adviser Agreement provides that, in the absence of (i) willful
misfeasance, bad faith or gross negligence on the part of GEAM, or (ii) reckless
disregard by GEAM of its obligations and duties under the New Sub-Adviser
Agreement, GEAM shall not be liable to the Trust, AFIMS or to any shareholder of
the Trust, for any error of judgment or mistake of law or for any loss in
connection with the matters to which the New Sub-Adviser Agreement relates.
In addition to approving the New Sub-Adviser Agreement, the Trustees also
approved new principal investment strategies for the Fund to reflect GEAM's
investment management style. The strategies available for use by Jennison are
not expected to change as a result of GEAM's appointment. In managing its
allocated portion of the Fund's assets, GEAM invests in 30 to 40 large- and
medium-sized companies that GEAM believes have above-average growth histories
and/or growth potential, while Jennison seeks common stocks of companies that it
believes are poised to achieve and maintain superior earnings growth. The Fund's
previous principal investment strategies, reflecting management of the Fund by
Putnam and Jennison, were stated in the Fund's prospectus dated May 1, 2003. The
strategies to be used by GEAM and Jennison, and the Fund's investment objective,
which remains unchanged, are included in the Trust's current prospectus dated
May 1, 2004. The new principal investment strategies also are set forth below.
Principal Investment Strategies of the Fund
To achieve its objective, the Fund takes a multi-manager approach whereby
two Sub-Advisers independently manage their own portions of the Fund's assets.
The portion of the Fund managed by GEAM invests primarily in 30 to 40 large- and
medium-sized companies that GEAM believes have above-average growth histories
and/or growth potential. GEAM selects common stocks from a number of industries
based on its views of the merits of individual companies. GEAM seeks to identify
stocks of companies with characteristics such as above-average annual growth
rates, financial strength and leadership in their respective industries.
Jennison looks for common stocks of predominantly mid- to large-sized companies
that it believes are poised to achieve and maintain superior earnings growth.
Both Sub-Advisers use a fundamental bottom-up approach to selecting stocks for
the Fund. Each
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of the Sub-Advisers manages approximately one-half of the Fund's assets. At any
point, however, the Manager may change the allocation of the Fund's assets
between the two Sub-Advisers on a basis determined by the Manager to be in the
best interest of shareholders. This means that the portion of assets managed by
one Sub-Adviser could be significantly larger than that managed by the other and
that the difference between such proportions could change from time to time.
At least 80% of the Fund's net assets normally will consist of common
stocks. The Fund also may purchase convertible bonds and preferred stocks and
warrants. The Fund normally invests substantially all of its investments in
equity securities, although it may invest up to 20% in debt securities including
up to 15% in "junk bonds". The Fund may invest up to 25% of its assets in
foreign securities (not including its investments in ADRs).
OTHER INFORMATION
The shares of the Fund may be purchased only by separate accounts
("Separate Accounts") established by Allmerica Financial Life Insurance and
Annuity Company ("Allmerica Financial Life") or First Allmerica Financial Life
Insurance Company ("First Allmerica") for the purpose of funding variable
annuity contracts and variable life insurance policies issued by Allmerica
Financial Life or First Allmerica and by qualified pension and retirement plans.
Both Allmerica Financial Life and First Allmerica are wholly-owned subsidiaries
of Allmerica Financial Corporation ("AFC"), a publicly-traded Delaware holding
company for a group of affiliated companies. On April 30, 2004, the Trustees and
officers of the Trust, as a group, beneficially owned less than 1% of the
outstanding shares of the Fund.
Annual Report
The Trust will furnish, without charge, a copy of the most recent Annual
Report to the Shareholders of the Fund. Requests should be directed to the Trust
at 440 Lincoln Street, Worcester, Massachusetts 01653 or by calling
1-800-533-7881.
Broker Commissions
During the fiscal year ended December 31, 2003, a total of $980.00 of
commissions was paid by the Fund to Wachovia Capital Markets LLC, an affiliated
broker-dealer of Prudential Investments LLC, an affiliate of Jennison. Such
amount represents .08% of the Fund's aggregate brokerage commissions paid in
fiscal year 2003.
Distributor, Administrator
VeraVest Investments, Inc. ("VII"), a wholly-owned subsidiary of AFC,
serves as the Distributor for the Trust. VII, AFIMS and AFC are located at 440
Lincoln Street, Worcester, MA 01653. Investors Bank & Trust Company, 200
Clarendon Street, Boston, MA 02116, serves as the Trust's administrator, fund
accountant and custodian.
May 31, 2004
5
Preliminary Copies
May 31, 2004
Dear Contract/Policy Owner:
GE Asset Management Incorporated ("GEAM") has been hired effective April
30, 2004 as a sub-adviser (a "Sub-Adviser") of the Select Growth Fund (the
"Fund") of Allmerica Investment Trust (the "Trust") to serve along with Jennison
Associates LLC ("Jennison"). Prior to the appointment of GEAM as a Sub-Adviser
of the Fund, Jennison and Putnam Investment Management, LLC ("Putnam") served as
co-Sub-Advisers of the Fund. GEAM, a wholly-owned subsidiary of General Electric
Company, had approximately $185 billion of assets under management as of March
31, 2004. Presently, each of GEAM and Jennison manage approximately one-half of
the Fund's assets. The investment advisory fees charged by the Trust's
investment manager, Allmerica Financial Investment Management Services, Inc., to
the Fund will not increase as a result of this change.
Please take a few minutes to read the attached Information Statement. It
contains additional information about GEAM, the factors that were considered by
management and the Trustees of the Fund in making the decision to hire GEAM, the
terms of the new Sub-Adviser Agreement with GEAM and GEAM's investment strategy.
This action will not require you to send a proxy and we are not asking
for a proxy. As always, please feel free to contact your financial
representative or us with any questions or comments you may have.
Sincerely,
/s/ John P. Kavanaugh
John P. Kavanaugh
President
Enclosure