SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(c) OF THE SECURITIES
EXCHANGE ACT OF 1934
(Amendment No.1 )
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Allmerica Investment Trust
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June 1, 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 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
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"), attached as an Appendix, for the Select Growth Fund series (the
"Fund") of the Trust between Allmerica Financial Investment Management
Services, Inc. ("AFIMS" or the "Manager"), 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 June 1, 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 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. The Trustees gave substantial consideration to the underperformance
of the Fund relative to its benchmark and peer group for the one- and
three-year periods ending December 31, 2003. The Trustees also considered the
turnover of Putnam's Large-Cap Growth and Specialty Growth teams, the
management teams responsible for the day-to-day management of Putnam's portion
of the Fund. The Trustees viewed such turnover as detrimental to the
consistency in management and long-term performance of 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. In the course of their deliberations, the Trustees
received information concerning the investment philosophy and investment
process applied by GEAM, as well as its research capabilities. The Trustees
considered information relating to the investment performance of GEAM over
various periods, including one-, three- and five-year periods. The Trustees
gave substantial consideration to how GEAM's investment style would complement
Jennison's investment style. The Trustees also gave significant consideration
to the quality and stability of GEAM's investment management team. 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
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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.
2
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
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 $25 million 0.55%
Equity Fund of capital and Next $25 million: 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
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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
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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.
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
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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
4
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 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).
5
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.
June 1, 2004
6
Appendix
SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT executed as of April 30, 2004, between Allmerica
Financial Investment Management Services, Inc. (the "Manager") and GE Asset
Management Incorporated (the "Sub-Adviser") (the "Agreement").
WITNESSETH:
That in consideration of the mutual covenants herein contained, it is agreed as
follows:
1. SERVICES TO BE RENDERED BY SUB-ADVISER TO THE TRUST
(a)Subject always to the control, supervision and direction of the Trustees
of Allmerica Investment Trust (the "Trust" or "AIT"), a Massachusetts
business trust, and any written guidelines adopted by the Trustees or
the Manager, the Sub-Adviser, at its expense, will furnish continuously
an investment program for the Select Growth Fund (the "Fund") and such
other series of shares as the Trust, the Manager and the Sub-Adviser may
from time to time agree on (together, the "Funds"). The Sub-Adviser
acknowledges the Fund may have one or more other sub-advisers and that
the Manager shall from time to time determine the portion of the Fund's
assets to be managed by the Sub-Adviser (the "Sub-Adviser's Portion"),
provided that the Manager provides reasonable advance written notice of
any change to the Sub-Adviser's Portion of the Fund. The Sub-Adviser
will make investment decisions on behalf of the Sub-Adviser's Portion
and will determine from time to time what investments will be purchased,
retained or sold for the Sub-Adviser's Portion of the Fund and shall
place all orders for the purchase and sale of portfolio securities
relating thereto. The Sub-Adviser shall not consult with any AIT
Sub-Adviser (other than an affiliated person of the Sub-Adviser),
concerning transactions for the Fund in securities or other assets. To
the extent that multiple AIT Sub-Advisers serve as investment advisers
of the Fund, the Sub-Adviser shall be responsible for providing
investment advice to the Fund only with respect to the Sub-Adviser's
Portion of the Fund's portfolio. In the performance of its duties, the
Sub-Adviser will comply with the provisions of this Agreement and
Declaration of Trust and Bylaws of the Trust and the objectives and
policies of the Fund, as set forth in the Trust's currently effective
registration statement under the 1940 Act, and any amendments or
supplements thereto ("Registration Statement") as filed with the
Securities and Exchange Commission ("SEC") and any applicable federal
and state laws. The Sub-Adviser will comply with other policies which
the Trustees of the Trust (the "Trustees") or the Manager, as the case
may be, may from time to time determine and which are furnished in
writing to the Sub-Adviser including, if requested by the Manager,
managing the Sub-Adviser's Portion as if it were a separate investment
company for the purposes of determining compliance with the provisions
of the Agreement and Declaration of Trust and Bylaws of the Trust and
the objectives and policies of the Fund, as set forth in the currently
effective Registration Statement of the Trust filed with the SEC and any
applicable federal and state laws, and other policies which the Trustees
of the Trust or the Manager may furnish in writing to the Sub-Adviser.
The Sub-Adviser shall make its officers and employees available to the
Manager from time to time at reasonable times to review investment
policies of the Fund and to consult with the Manager regarding the
investment affairs of the Fund. In the performance of its duties
hereunder, the Sub-Adviser is and shall be an independent contractor
and, unless otherwise expressly provided or authorized, shall have no
authority to act for or represent the Trust in any way or otherwise be
deemed to be an agent of the Trust.
(b)The Sub-Adviser, at its expense, will furnish (i) all investment and
management facilities, including salaries of personnel necessary for it
to perform the duties set forth in this Agreement, and (ii)
administrative facilities, including clerical personnel and equipment
necessary for the conduct of the investment affairs of the Fund
(excluding brokerage expenses and pricing and bookkeeping services).
(c)The Sub-Adviser shall place all orders for the purchase and sale of
portfolio investments for the Sub-Adviser's Portion with issuers,
brokers or dealers selected by the Sub-Adviser, which may include
brokers or dealers affiliated with the Sub-Adviser. In the selection of
such brokers or dealers and the placing of such orders, the Sub-Adviser
always shall seek best execution (except to the extent permitted by the
next sentence hereof), which is to place portfolio transactions where
the Fund can obtain the most favorable combination of price and
execution services in particular transactions or provided on a
continuing basis by a broker or dealer, and to deal directly with a
principal market maker in connection with over-the-counter transactions,
except when it is believed that best execution is obtainable elsewhere.
Subject to such policies as the Trustees may determine, the Sub-Adviser
shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement or otherwise solely by reason of its
having caused the Trust to pay a broker or dealer that provides
brokerage and research services an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission
another broker or dealer would have charged for effecting that
transaction, if the Sub-Adviser determines in good faith that such
excess amount of commission was reasonable in relation to the value of
the brokerage and research services provided by such broker or dealer,
viewed in terms of either that particular transaction or the overall
responsibilities of the Sub-Adviser and its affiliates with respect to
the Trust and with respect to other clients of the Sub-Adviser as to
which the Sub-Adviser or any affiliate of the Sub-Adviser exercises
investment discretion. Subject to the Sub-Adviser's obligations to seek
best execution, the Manager agrees that the Sub-Adviser, in its sole
discretion, may place transactions on behalf of the Fund with any
broker-dealer, which is deemed to be an affiliate of the Manager, the
Sub-Adviser or with any other entity that serves as investment adviser
or sub-adviser to the Fund, or which is otherwise affiliated with the
Fund in accordance with the 1940 Act (the "Affiliated Broker-Dealers")
so long as such transactions are effected in conformity with the
requirements (including any applicable exemptions and administrative
interpretations set forth in Part II of the Sub-Adviser's Form ADV
Registration Statement on file with the Securities and Exchange
Commission ("Form ADV")) of Section 11(a)(1)(H) of the Securities
Exchange Act of 1934 (the "1934 Act") and any other applicable laws and
regulations. In all such dealings, the Affiliated Broker-Dealers shall
be authorized and entitled to retain any commissions, remuneration or
profits which may be made in such transactions and shall not be liable
to account for the same to the Manager or the Trust.
(d)The Manager further authorizes the Sub-Adviser and the Affiliated
Broker-Dealers to execute agency cross transactions (the "Cross
Transactions") on behalf of the Fund. Cross Transactions are
transactions, which may be effected by the Affiliated Broker-Dealers
acting for both the Trust and the counterparty to the transaction. Cross
Transactions enable the Sub-Adviser to purchase or sell a block of
securities for the Trust at a set price and possibly avoid an
unfavorable price movement that may be created through entrance into the
market with such purchase or sale order. As such, the Sub-Adviser
believes that Cross Transactions can provide meaningful benefits for the
Trust and its clients generally. The Manager and the Trust should be
aware, however, that in a Cross Transaction an Affiliated Broker-Dealer
will be receiving commissions from both sides of the trade and,
therefore, there is a potentially conflicting division of loyalties and
responsibilities. The Manager may revoke, at any time, its authorization
on behalf of the Fund for the Sub-Adviser to execute cross transactions
by written notice to the Sub-Adviser.
(e)The Manager's administrator will provide daily capstock information with
respect to the Fund in a form reasonably satisfactory to the parties
hereto.
2. OTHER AGREEMENTS
It is understood that any of the shareholders, Trustees, officers and
employees of the Trust may be a shareholder, partner, director, officer or
employee of, or be otherwise interested in, the Sub-Adviser, and in any person
controlled by or under common control with the Sub-Adviser, and that the
Sub-Adviser and any person controlled by or under common control with the
Sub-Adviser may have an interest in the Trust.
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3. SERVICES NOT EXCLUSIVE
It is understood that the Sub-Adviser and persons controlled by or under
common control with the Sub-Adviser have and may have advisory, management
service or other contracts with other organizations and persons, and may have
other interests and businesses. The services furnished by the Sub-Adviser
hereunder are not to be deemed exclusive, and except as the Sub-Adviser may
otherwise agree in writing, the Sub-Adviser shall be free to furnish similar
services to others so long as its services under this Agreement are not
impaired thereby. Nothing in this Agreement shall limit or restrict the right
of any director, officer or employee of the Sub-Adviser, who may also be a
trustee, officer or employee of the Trust, to engage in any other business or
to devote his or her time and attention in part to the management or other
aspects of any other business, whether of a similar nature or a dissimilar
nature.
4. COMPENSATION TO BE PAID BY THE MANAGER TO THE SUB-ADVISER
The Manager will pay to the Sub-Adviser as compensation for the
Sub-Adviser's services rendered a fee, determined as described in Schedule A
which is attached hereto and made a part hereof. Such fee shall be paid by the
Manager and not by the Trust.
5. EXPENSES
During the term of this Agreement, the Sub-Adviser will bear all expenses
incurred by it in connection with its services under this Agreement. The
Sub-Adviser shall not be responsible for any other expenses incurred by the
Trust or the Manager.
6. AMENDMENTS OF THIS AGREEMENT
This Agreement (including Schedule A attached hereto) shall not be amended
as to any Fund unless such amendment is approved at a meeting by the
affirmative vote of a majority of the outstanding voting securities of the
Fund, if such approval is required under the Investment Company Act of 1940, as
amended ("1940 Act"), and by the vote, cast in person at a meeting called for
the purpose of voting on such approval, of a majority of the Trustees who are
not interested persons of the Trust or of the Manager or of the Sub-Adviser.
7. EFFECTIVE PERIOD AND TERMINATION OF THIS AGREEMENT
This Agreement shall be effective as of the date executed, and shall remain
in full force and effect as to the Sub-Adviser's Portion of the Fund
continuously thereafter, until terminated as provided below:
(a)Unless terminated as herein provided, this Agreement shall 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 such continuance is specifically approved at least annually
(i) by the Trustees or by the affirmative vote of a majority of the
outstanding voting securities of the Fund, and (ii) by a vote of a
majority of the Trustees who are not interested persons of the Trust or
of the Manager or of any Sub-Adviser, by vote cast in person at a
meeting called for the purpose of voting on such approval; provided,
however, that if the continuance of this Agreement is submitted to the
shareholders of the Fund for their approval and such shareholders fail
to approve such continuance of this Agreement as provided herein, the
Sub-Adviser may continue to serve hereunder in a manner consistent with
the 1940 Act and the rules and regulations thereunder.
(b)This Agreement may be terminated as to the Sub-Adviser's Portion of the
Fund without the payment of any penalty by the Manager, subject to the
approval of the Trustees, by vote of the Trustees, or by vote of a
majority of the outstanding voting securities of such Fund at any annual
or special meeting or by the Sub-Adviser, in each case on sixty days'
written notice.
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(c)This Agreement shall terminate automatically, without the payment of any
penalty, in the event of its assignment or in the event that the
Management Agreement with the Manager shall have terminated for any
reason.
8. CERTAIN DEFINITIONS
For the purposes of this Agreement, the "affirmative vote of a majority of
the outstanding voting securities" means the affirmative vote, at a duly called
and held meeting of shareholders, (a) of the holders of 67% or more of the
shares of the Fund present (in person or by proxy) and entitled to vote at such
meeting, if the holders of more than 50% of the outstanding shares of the Fund
entitled to vote at such meeting are present in person or by proxy, or (b) of
the holders of more than 50% of the outstanding shares of the Fund entitled to
vote at such meeting, whichever is less.
For the purposes of this Agreement, the terms "control", "interested person"
and "assignment" shall have their respective meanings defined in the 1940 Act
and rules and regulations thereunder, subject, however, to such exemptions as
may be granted by the SEC under said Act; the term "specifically approve at
least annually" shall be construed in a manner consistent with the 1940 Act and
the rules and regulations thereunder; and the term "brokerage and research
services" shall have the meaning given in the 1934 Act and the rules and
regulations thereunder.
For purposes of this Agreement, "AIT Sub-Adviser" means an investment
adviser, as defined in Section 2(a)(20)(B) of the 1940 Act, for a series of the
Trust other than the Manager.
9. NON-LIABILITY OF SUB-ADVISER
(a)The Sub-Adviser, its officers and directors, and any person who controls
the Sub-Adviser within the meaning of Section 15 of the Securities Act
of 1933, as amended, shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust or its shareholders
or by the Manager in connection with the matters to which this Agreement
relates, except a loss resulting from willful misfeasance, bad faith or
gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations and duties under this
Agreement.
(b)In no event will the Sub-Adviser have any responsibility or liability
for any other series of the Trust, for any portion of the Trust not
managed by the Sub-Adviser or for the acts or omissions of any other
current, prior or interim adviser or sub-adviser to the Trust.
In particular, in the event the Sub-Adviser shall manage only a portion
of the Trust's investments, the Sub-Adviser shall have no responsibility
for the Trust's being in violation of any applicable law or regulation
or investment policy or restriction applicable to the Trust as a whole
or for the Trust's failing to qualify as a regulated investment company
under the Code, if the securities and other holdings of the segment of
the Trust managed by the Sub-Adviser are such that such segment would
not be in such violation or fail to so qualify if such segment were
deemed a separate series of the Trust or a separate "regulated
investment company" under the Code.
(c)In no event will the Sub-Adviser have any responsibility or liability
for any investment transactions recommended or effected before the
effective date of this Agreement, or for any violations or alleged
violations of applicable law and regulation or investment policy or
restriction applicable to the Trust to the extent caused by the
Manager's failure to provide timely written information as set forth in
Section 13 below or to the extent caused by an Affiliated
Broker-Dealer's failure to comply with the requirements of Section
11(a)(1)(H) of the 1934 Act.
Nothing in this section shall be deemed a limitation or waiver of any
obligation or duty that may not by law be limited or waived.
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10. LIMITATIONS OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS
A copy of the Trust's Agreement and Declaration of Trust is on file with the
Secretary of the Commonwealth of Massachusetts, and notice is hereby given that
this instrument is executed by the Trustees as Trustees and not individually
and that the obligations of this instrument are not binding upon any of the
Trustees, officers or shareholders individually but are binding only upon the
assets and property of the appropriate Fund.
11. REPRESENTATIONS OF THE MANAGER AND SUB-ADVISER
The Manager and Sub-Adviser each represent, warrant and agree that each of
them: (i) are registered as an investment adviser under the Advisers Act and
will continue to be so registered for so long as this Agreement remains in
effect; (ii) are not prohibited by the 1940 Act or the Advisers Act from
performing the services contemplated by this Agreement; (iii) have met, and
will seek to continue to meet for so long as this Agreement remains in effect,
any other applicable federal or state requirements, or the applicable
requirements of any regulatory or industry self-regulatory agency, necessary to
be met in order to perform the services contemplated by this Agreement; (iv)
have the authority to enter into and perform the services contemplated by this
Agreement and the execution, delivery and performance by the Manager and
Sub-Adviser of this Agreement does not contravene or constitute a default under
any agreement binding upon either party; (v) have the authority to enter into
this Agreement and the Manager has the authority to appoint the Sub-Adviser as
an investment sub-adviser to perform the services contemplated by this
Agreement; (vi) will promptly notify the other party of the occurrence of any
event that would disqualify either party from serving as an investment adviser
of an investment company pursuant to Section 9(a) of the 1940 Act or otherwise.
12. FURTHER DUTIES
(a)The Manager agrees to provide to the Sub-Adviser copies of the Trust's
Trust Instrument, By-Laws, Registration Statement, written instructions
and directions of the Trustees and the Manager, and any amendments or
supplements to any of these materials as soon as practicable after such
materials become available; and further agrees to identify to the
Sub-Adviser in writing any investments that are restricted or prohibited
by the Fund, including those issued by entities that are affiliated
persons as defined in the 1940 Act, and any broker-dealers, which are
affiliated with the Manager (in addition to the Manager itself), or with
any entity other than the Sub-Adviser that serves as investment adviser,
sub-adviser or principal underwriter to the Fund.
(b)The Manager and the Sub-Adviser agree that neither of them nor any of
their affiliates, will in any way refer directly or indirectly to their
relationship with one another or any of their respective affiliates in
offering, marketing or other promotional materials without the express
consent of the other, which consent will be promptly provided and not
unreasonably withheld. Any offering, marketing or promotional material
submitted for approval will be deemed to be "consented to" if a response
is not received within 15 days of receipt of the material by a party.
13. GOVERNING LAW
This Agreement shall be construed in accordance with the 1940 Act and the
laws of the State of Massachusetts, without giving effect to the conflicts of
laws principles thereof. To the extent that the applicable laws of the State of
Massachusetts conflict with the applicable provisions of the 1940 Act, the
latter shall control.
14. NOTICES
Any notice herein required is to be in writing and is deemed to have been
given to the Sub-Adviser or the Manager upon receipt of the same at their
respective addresses set forth below. All written notices required or permitted
to be given under this Agreement will be delivered by personal service, by
postage mail return receipt requested or by facsimile machine or a similar
means of same delivery which providers evidence of receipt (with
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a confirming copy by mail as set forth herein). All notices provided to the
Manager will be sent to the attention of Counsel, 440 Lincoln Street,
Worcester, Massachusetts 01653. All notices provided to the Sub-Adviser will be
sent to the attention of Matt Simpson, Senior Vice-President, General
Counsel--Asset Management Services, GE Asset Management Incorporated. 3001
Summer Street P.O. Box 120031 Stamford, CT 06912. Facsimile: 203-708-3107.
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IN WITNESS WHEREOF, Allmerica Financial Investment Management Services, Inc.
has caused this instrument to be signed in duplicate on its behalf by its duly
authorized representative and GE Asset Management Incorporated has caused this
instrument to be signed in duplicate on its behalf by its duly authorized
representative, all as of the day and year first above written.
Allmerica Financial Investment
ManagementServices, Inc.
By: /s/ JOHN P. KAVANAUGH
------------------------------
Title: President
GE Asset Management Incorporated
By: /s/ MICHAEL COSGROVE
------------------------------
Title: Chief Commercial Officer
Accepted and Agreed to as of the day and year first above written:
Allmerica Investment Trust
By: /s/ DONALD P. WAYMAN
--------------------------
Title: Vice President
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SCHEDULE A
The Manager will pay to the Sub-Adviser as full compensation for the
Sub-Adviser's services rendered, a fee computed daily and paid quarterly at an
annual rate based on the Sub-Adviser's Portion of the average daily net assets
of the Fund as described below:
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 average daily net assets of the Fund shall be determined by taking an
average of all of the determinations of net assets during each month at the
close of business on each business day during such month while this Agreement
is in effect.
The fee for each quarter shall be payable within ten (10) business days
after the end of the quarter.
If the Sub-Adviser shall serve for any period less than a full month, the
foregoing compensation shall be prorated according to the proportion which such
period bears to a full month.
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