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
(Name of Registrant as Specified In Its Charter)
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October 29, 2004
Dear Contract/Policy Owner:
Grantham, Mayo, Van Otterloo & Co., LLC ("GMO") and J.P. Morgan
Investment Management Inc. ("J.P. Morgan") have been hired effective October 1,
2004 to replace Bank of Ireland Asset Management (U.S.) Limited ("BIAM") as the
new sub-advisers of the Select International Equity Fund (the "Fund") of
Allmerica Investment Trust (the "Trust"). GMO, with approximately $63 billion in
assets under management as of June 30, 2004, has been managing money since 1977.
J.P. Morgan had $570 billion in assets under management as of June 30, 2004 and
has been managing money since 1838. Initially each new sub-adviser will 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 remain the same.
Please take a few minutes to read the attached Information Statement. It
contains additional information about GMO and J.P. Morgan, the terms of the new
Sub-Adviser Agreements, the factors that were considered by management and the
Board of Trustees in making the decision to change sub-advisers and a
description of the Fund's new investment strategies.
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 us with any questions or
comments you may have.
Sincerely,
/s/ John P. Kavanaugh
John P. Kavanaugh
President
Allmerica Investment Trust
Enclosure
ALLMERICA INVESTMENT TRUST:
SELECT INTERNATIONAL EQUITY FUND
440 LINCOLN STREET
WORCESTER, MA 01653
INFORMATION STATEMENT
On August 3, 2004, the Board of Trustees of Allmerica Investment Trust
(the "Trust") approved (1) separate Sub-Adviser Agreements (the "New Sub-Adviser
Agreements"), attached as Appendix I and Appendix II, for the Select
International Equity Fund (the "Fund") of the Trust between Allmerica Financial
Investment Management Services, Inc. ("AFIMS"), the Trust's investment manager,
and each of Grantham, Mayo, Van Otterloo & Co., LLC ("GMO") and J.P. Morgan
Investment Management Inc. ("J.P. Morgan"), respectively, the Fund's
sub-advisers (the "Sub-Advisers"), which became effective on October 1, 2004,
and (2) new principal investment strategies for the Fund. The New Sub-Adviser
Agreements are the same in all substantive respects to the previous Sub-Adviser
Agreement (the "Previous Sub-Adviser Agreement"), dated April 16, 1998, between
AFIMS and Bank of Ireland Asset Management (U.S.) Limited ("BIAM"), except that
the sub-advisory fees which AFIMS will pay GMO and J.P. Morgan differ from the
sub-advisory fee structure in the Previous Sub-Adviser Agreement and the
effective date and termination dates are different. AFIMS will pay GMO's and
J.P. Morgan's sub-adviser fees. Although the amount of sub-advisory fees that
AFIMS will pay to the Sub-Advisers will increase as a result of this change,
there will be no change in the advisory fees paid by the Fund to AFIMS because
the amount of sub-advisory fees paid by AFIMS has no impact on the operating
expenses of the Fund.
AFIMS manages the business affairs of the Fund pursuant to a Management
Agreement (the "Management Agreement") dated April 16, 1998 between the Trust,
on behalf of the Fund, 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 to manage the
investments of one or more of the Funds in the Trust. AFIMS has selected GMO and
J.P. Morgan to manage the investments of the Fund and such selection was
approved by the Board of Trustees of the Trust at the August 3, 2004 Trustee
meeting. Each of GMO and J.P. Morgan will initially manage approximately
one-half of the Fund 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 October 29, 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 GMO and J.P. Morgan as
Sub-Advisers of the Fund, BIAM served as Sub-Adviser of the Fund. In the course
of supervising the Fund's affairs, the Trustees expressed concern about the
Fund's performance over various time periods. As a result, 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, conducted a
thorough review of BIAM's management of the Fund. After further consideration of
these issues, AFIMS and CRA RogersCasey recommended to the Investment Operations
Committee/1/ (the "Committee") of the Board of Trustees that the Trustees
terminate the Previous Sub-Adviser Agreement and establish a new sub-advisory
relationship for the Fund. AFIMS and CRA RogersCasey's recommendation to
terminate the Previous Sub-Adviser Agreement with BIAM was based primarily on
the Fund's underperformance relative to its benchmark and peer group for the
one- and three-year periods ending June 30, 2004.
At the Committee's request, AFIMS and CRA RogersCasey began reviewing
new sub-adviser candidates for the Fund. During the course of their review,
AFIMS and CRA RogersCasey, in consultation with the Committee, reviewed
performance and background criteria relating to a number of investment advisory
firms, as well as written proposals and in-person presentations by several
sub-adviser candidates. After completing their review, AFIMS and CRA RogersCasey
recommended that the Committee meet with certain sub-adviser candidates. Upon
completion of this process, the Committee recommended that the full Board of
Trustees approve GMO and J.P. Morgan as the new Sub-Advisers of the Fund.
In reviewing sub-adviser candidates, the Committee 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.
The Committee also considered whether the Fund's assets could be
managed more effectively by two sub-advisers. In this regard, the Committee
noted that a fund may achieve superior performance by utilizing two sub-advisers
to manage the fund's assets, as compared to one sub-adviser, and, at the same
time, may reduce variations of its returns over various time periods. The
Committee also noted that utilizing two sub-advisers to manage a fund's assets
may broaden the fund's exposure to various investment styles and asset classes,
depending on a sub-adviser's expertise in managing assets in these areas.
The full Board of Trustees considered the approval of the New
Sub-Adviser Agreements with each of GMO and J.P. Morgan at the August 3, 2004
Trustee meeting. At this meeting, the Trustees were provided with financial and
other information about GMO and J.P. Morgan. The Trustees were also provided
with performance information relating to GMO and J.P. Morgan and information
about their investment styles and current personnel. In the course of their
deliberations, the Trustees received information concerning the investment
philosophies, investment processes and research capabilities of GMO and J.P.
Morgan, and considered generally the same factors considered by the Committee in
reviewing the various sub-adviser candidates.
The Trustees considered information relating to the investment
performance of GMO and J.P. Morgan over various periods, including one-, three-
and five-year periods. The Trustees noted GMO's and J.P. Morgan's superior
long-term performance record compared to BIAM and each sub-adviser's superior
performance relative to the other sub-adviser candidates. The Trustees also took
into account GMO's and J.P. Morgan's experience in investing in international
equity securities. The Trustees also noted that utilizing two sub-advisers to
the Fund may improve the Fund's long-term performance while reducing volatility
in returns. The Trustees gave substantial consideration to how GMO's and J.P.
Morgan's investment styles would complement each other and to AFIMS and CRA
RogersCasey's recommendation that the Fund's assets could be managed more
effectively by two sub-advisers, one which uses an investment strategy that
reflects a significant bias for value stocks and utilizes multiple quantitative
models to evaluate stocks (GMO) and the other which takes a more growth oriented
approach to investing and seeks companies the stock prices of which do not
reflect their long-term earnings potential (J.P. Morgan). The Trustees also gave
significant consideration to the quality and stability of GMO's and J.P.
Morgan's investment management teams. The Trustees noted that GMO and J.P.
Morgan have exceptional investment personnel and research capabilities and that
these resources may contribute to improving the Fund's long-term performance.
The Trustees considered the terms of the New Sub-Adviser Agreements and the fact
that they were substantially the same as the terms of the Previous Sub-Adviser
Agreement. The Trustees also considered the fact that there would be no change
in the advisory fees paid by the Fund to AFIMS. The Trustees concluded that
entering into the New Sub-Adviser Agreements was in the best interests of the
Fund and its shareholders.
Upon completion of the review process, 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 September 30,
2004, to select GMO and J.P. Morgan as the new Sub-Advisers to the Fund
effective October 1, 2004 and to approve the New Sub-Adviser Agreements.
INFORMATION REGARDING GRANTHAM, MAYO, VAN OTTERLOO & CO., LLC ("GMO") AND
J.P. MORGAN INVESTMENT MANAGEMENT INC.("J.P. Morgan")
GMO, founded in 1977, is located at 40 Rowes Wharf, Boston,
Massachusetts 02110. As of June 30, 2004, the firm had approximately $63 billion
in assets under management. GMO is a privately-held global investment management
firm. Day-to-day management of the portion of the Fund managed by GMO is the
responsibility of the investment professionals in GMO's International
Quantitative Division.
J.P. Morgan, founded in 1838, is headquartered at 522 Fifth Avenue, New
York, New York 10036. As of June 30, 2004, the firm had $570 billion in assets
under management. J.P. Morgan is an indirect wholly-owned subsidiary of JPMorgan
Chase & Co., a publicly-traded company. James Fisher heads a team that is
responsible for the portion of the Fund managed by J.P. Morgan. He is a senior
portfolio manager and managing director in the firm's global portfolios group
based in London. Mr. Fisher joined the firm in 1985.
Except as otherwise specified herein, all information about GMO and
J.P. Morgan in this Information Statement has been provided by GMO and J.P.
Morgan.
PARENT COMPANIES OF GMO AND J.P. MORGAN
GMO is a privately-held global investment management firm.
The tables below list the names, addresses and ownership percentages of
all parent companies of J.P. Morgan.
- ----------
/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-Advisers or their affiliates, and two
Trustees who are "interested persons." The Committee monitors
investment adviser performance and analyzes fund data.
2
JPMorgan Chase & Co. 270 Park Avenue
(a publicly traded company) New York, NY 10017-2070
JPMorgan Fleming Asset Management Holdings Inc. 522 Fifth Avenue
(100% owned by JPMorgan Chase & Co.) New York, NY 10036
J.P. Morgan Investment Management Inc. 522 Fifth Avenue
(100% owned by JPMorgan Fleming Asset New York, NY 10036
Management Holdings Inc.)
PRINCIPAL EXECUTIVE OFFICERS AND DIRECTORS OF GMO AND J.P. MORGAN
The tables below list the individuals who serve as principal executive
officers and directors of GMO and J.P. Morgan, respectively. The address for
each officer and director of GMO is 40 Rowes Wharf, Boston, MA 02110. The
addresses for the officers and directors of J.P. Morgan are listed in the
"Address" column. None of the officers or directors of GMO or J.P. Morgan serves
as an officer or Trustee of the Trust.
GMO
NAME AND POSITION PRINCIPAL OCCUPATION
- ----------------- --------------------
Christopher Darnell Investment Director of GMO's
Board Member and Partner Quantitative Division
Arjun Divecha Investment Director of GMO's
Board Member and Partner Emerging Markets Division
Scott Eston Chief Operating Officer
Chief Operating Officer
and Partner
R. Jeremy Grantham Founding Partner
Chairman of the Board and
Founding Partner
Jon Hagler Board Member
Board Member and Partner
John Rosenblum Board Member
Board Member and Partner
Ann Spruill Investment Director of GMO's
Board Member and Partner International Active Division
Eyk Van Otterloo Founding Partner
Board Member and
Founding Partner
J.P. MORGAN
NAME PRINCIPAL OCCUPATION ADDRESS
- ---- -------------------- -------
James Staley Global Head of Asset & Wealth Management, JPMorgan JPMorgan Fleming Asset Management,
Chacse & Co. 522 Fifth Avenue, Floor 3
New York, NY 10036, U.S.A
David Kundert Chairman of Investment Management, JPMorgan Fleming Banc One Investment Advisors
Asset Management 1111 Polaris Parkway
Columbus, OH 43240, U.S.A
Paul Bateman CEO, JPMorgan Fleming Asset Management JPMorgan Fleming Asset Management,
Finsbury Dials, 20 Finsbury Street,
London EC2Y 9AQ
United Kingdom
Eve Guernsey CEO of Americas/ Institutional Americas JPMorgan Fleming Asset Management,
522 Fifth Avenue, Floor 3
New York, NY 10036, U.S.A
George Gatch President of JPMorgan Funds and Financial Intermediaries JPMorgan Fleming Asset Management,
522 Fifth Avenue, Floor 13
New York, NY 10036, U.S.A
3
Paul Scibetta CEO, J.P. Morgan Invest Inc. JPMorgan Fleming Asset Management,
522 Fifth Avenue, Floor 3
New York, NY 10036, U.S.A
Clive Brown CEO, International JPMorgan Fleming Asset Management,
Finsbury Dials, 20 Finsbury Street,
London EC2Y 9AQ
United Kingdom
Mark White Head of International Institutional Business JPMorgan Fleming Asset Management,
Finsbury Dials, 20 Finsbury Street,
London EC2Y 9AQ
United Kingdom
Jamie Broderick Head of European Retail and Mutual Fund Business JPMorgan Fleming Asset Management,
Finsbury Dials, 20 Finsbury Street,
London EC2Y 9AQ
United Kingdom
David Hsu Chief Executive, JF Asset Management JF Asset Management,
Charter House, Floor 21
8 Connaught Road, Central
Hong Kong
Keiichi Miki President, J.P. Morgan Fleming Asset Management (Japan) J.P. Morgan Fleming Asset
Ltd Management (Japan) Ltd
Akasaka Park Bldg, Floor 14
5-2-20 Akasaka, Minato-Ku
Tokyo 1076151 Japan
HEADS OF INVESTMENT MANAGEMENT
Martin Porter Global Head of Equities and Balanced Products JPMorgan Fleming Asset Management,
Finsbury Dials, 20 Finsbury Street,
London EC2Y 9AQ
United Kingdom
Seth Bernstein Global Head of Fixed Income JPMorgan Fleming Asset Management,
522 Fifth Avenue, Floor 5
New York, NY 10036, U.S.A
Joe Azelby Global Head of Real Estate JPMorgan Fleming Asset Management,
522 Fifth Avenue, Floor 9
New York, NY 10036, U.S.A
Larry Unrein Global Head of Private Equity & Hedge Funds JPMorgan Fleming Asset Management,
522 Fifth Avenue, Floor 15
New York, NY 10036, U.S.A
HEADS OF BUSINESS UNITS
Roy Kinnear Head of Risk Management & Financial JPMorgan Fleming Asset Management,
522 Fifth Avenue, Floor 3
New York, NY 10036, U.S.A
Gilbert Van Hassel Global Head of Technology and Operations JPMorgan Fleming Asset Management,
522 Fifth Avenue, Floor 17
New York, NY 10036, U.S.A
4
No arrangements or understandings made in connection with the New
Sub-Adviser Agreements exist between AFIMS, GMO and J.P. Morgan with respect to
the composition of the Boards of Directors of GMO and J.P. Morgan 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 GMO AND J.P. MORGAN.
GMO and J.P. Morgan serve as investment adviser or sub-adviser to other
investment company funds similar to Select International Equity Fund.
Information about these funds appears in the following table.
GMO FEES (AS ANNUAL
ASSETS AS OF PERCENTAGE OF
FUND OBJECTIVE 6/30/04 NET ASSETS)
- ---- --------- ------- -----------
GMO International Intrinsic Value Fund/2/ High Total Return $ 2,633.7 million Class II Shares/3/ 0.76%
Class III Shares/4/ 0.69%
Class IV Shares/5/ 0.63%
- ----------
/2/ The rate of compensation paid to GMO by the GMO International Intrinsic
Value Fund for all Classes of Shares includes a management fee equal to
0.54% and a shareholder services fee.
/3/ Class II Shares are subject to shareholder service fee of 0.22% and may
be purchased by investors whose total assets invested with GMO equals at
least $5 million.
/4/ Class III Shares are subject to a shareholder services fee of 0.15% and
may be purchased by investors whose total assets invested with GMO
equals at least $35 million.
/5/ Class IV Shares are subject to a shareholder services fee of 0.09% and
may be purchased by investors whose investment in the GMO International
Intrinsic Value Fund equals at least $125 million or whose total assets
with GMO equals at least $250 million and has invested at least $35
million in the GMO International Intrinsic Value Fund.
J.P. MORGAN FEES (AS ANNUAL
ASSETS AS OF PERCENTAGE OF
FUND OBJECTIVE 6/30/04 NET ASSETS)
- ---- --------- ------- -----------
ING JPMorgan Fleming International Portfolio Capital Growth $ 389.8 million First $100 million -0.60%
Next $200 million -0.40%
Next $200 million -0.35%
Over $500 million -0.30%
AST International Equity Portfolio (American Capital Growth $ 310.3 million First $250 million -0.35%
Skandia) Next $250 million -0.33%
Over $500 million -0.30%
Accessor International Equity Capital Growth $ 79.2 million Base fee of: 0.20%
Performance-based fee of:
(greater than) 4.00% 0.40%
(greater than) 2.00% and (less than) 4.00% 0.30%
(greater than) 0.00% and (less than) 2.00% 0.20%
(greater than) -2.00% and (less than) 0.00% 0.10%
(less than) -2.00% 0.00%
DESCRIPTION OF THE PREVIOUS SUB-ADVISER AGREEMENT AND THE NEW SUB-ADVISER
AGREEMENTS
The Fund began operations on May 2, 1994. The Previous Sub-Adviser
Agreement was last submitted for shareholder approval on May 2, 1994 in
connection with the commencement of the Fund's operations. 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 13, 2004. Except for
different effective and termination dates and the sub-advisory fee schedule, the
terms of the New Sub-Adviser Agreements are similar in all substantive respects
to the terms of the Previous Sub-Adviser Agreement.
5
For its services provided under the Previous Sub-Adviser Agreement, BIAM
was paid by AFIMS a fee computed daily and paid quarterly at an annual rate
based on the average daily net assets of the Fund as set forth below:
NET ASSETS FEE RATE
---------- --------
First $50 Million .......................... 0.45%
Next $50 Million .......................... 0.40%
Over $100 Million .......................... 0.30%
During the fiscal year ended December 31, 2003, AFIMS paid BIAM
$1,134,588 for its sub-advisory services pursuant to the Previous Sub-Adviser
Agreement. If the new sub-adviser fees had been in effect during the last fiscal
year, GMO and J.P. Morgan would have received $1,050,456, and $704,794,
respectively, ($1,755,250 in the aggregate) representing a total increase of
$620,662, or 54.70%, from the fees paid to BIAM. Based on the Fund's net assets
at June 30, 2004 of approximately $340,996,025, the annual aggregate sub-adviser
fees paid by AFIMS would increase from $1,147,988, to $1,774,233, an increase of
$626,245, or 54.55%.
Under the New Sub-Adviser Agreement with GMO, the Manager will pay GMO 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 $50 Million .......................... 0.75%
Next $50 Million .......................... 0.60%
Next $100 Million ......................... 0.55%
Next $100 Million ......................... 0.50%
Over $300 Million ......................... 0.45%
Under the New Sub-Adviser Agreement with J.P. Morgan, the Manager will
pay J.P. Morgan 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 .......................... 0.50%
Next $50 Million ......................... 0.45%
Over $100 Million ......................... 0.30%
The New Sub-Adviser Agreements provide that GMO and J.P. Morgan, as
Sub-Advisers, in return for their fees, will manage the investment and
reinvestment of the Sub-Adviser's portion of the 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 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 GMO and J.P.
Morgan to make investment decisions and to place purchase and sale orders for
investment securities for their respective portion of the Fund. The New
Sub-Adviser Agreements state that GMO and J.P. Morgan will provide at their
expense all necessary investment, management and administrative facilities
needed to carry out their duties under the New Sub-Adviser Agreements, but
excluding brokerage expenses and pricing and bookkeeping services.
The New Sub-Adviser Agreements 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 Agreements 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 GMO or J.P. Morgan, as applicable, in each case on 60 days' written
notice. As required by the 1940 Act, each of the New Sub-Adviser
6
Agreements will automatically terminate, without the payment of any penalty, in
the event of its assignment. They 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 Agreements provide that, in the absence of (i)
willful misfeasance, bad faith or gross negligence on the part of GMO and J.P.
Morgan, or (ii) reckless disregard by GMO or J.P. Morgan of their obligations
and duties under the respective New Sub-Adviser Agreement, they shall not be
liable to the Trust, AFIMS or to any shareholder or creditor of the Trust, for
any matter in connection with the performance of any of their services under the
respective New Sub-Adviser Agreements or for any good faith purchase or sale of
any investment made by them for the Trust.
* * * * * * * *
In addition to approving the New Sub-Adviser Agreements, the Trustees
also approved new principal investment strategies for the Fund that reflect
GMO's and J.P. Morgan's investment management styles. The previous principal
investment strategies are stated in the Fund's current prospectus dated May 1,
2004. The new strategies, which will become effective October 1, 2004, are set
forth below and in a supplement to the Prospectus dated August 11, 2004.
Principal Investment Strategies. Under normal market conditions, at least 80% of
the Fund's net assets (plus any borrowings for investment purposes) will be
invested in the equity securities of various companies located in foreign
countries (which may vary from time to time), including foreign subsidiaries of
United States companies. To pursue its objective, the Fund takes a multi-manager
approach whereby two Sub-Advisers independently manage their own portion of the
Fund's assets.
GMO uses an investment strategy that generally reflects a significant bias for
value stocks over growth stocks. GMO uses proprietary research and multiple
quantitative models to evaluate and select stocks, countries and currencies
based on several factors, including but not limited to:
. Stocks - valuation, quality of management, and improving
fundamentals;
. Countries - stock market valuation, positive GDP trends,
positive market sentiment, and industrial competitiveness; and
. Currencies - export and producer price parity, balance of
payments, interest rate differential, and relative strength of
currencies.
These models and factors may change over time.
J.P. Morgan takes a more growth-oriented approach to investing and seeks
companies the stock prices of which do not reflect their long-term earnings
potential. J.P. Morgan uses a bottom up investment strategy that combines local
market insight with global sector comparisons. The process begins with stock
rankings at the local level where stocks are evaluated based on business,
financial, management and valuation factors. A team of portfolio managers then
selects stocks for the portfolio using global sector analysts' recommendations.
The Fund may invest up to 10% of its net assets in emerging markets securities.
The Fund may also buy fixed-income debt securities, primarily for defensive
purposes, representing up to 20% of its net assets.
OTHER INFORMATION
The shares of the Fund may be purchased only by separate accounts
("Separate Accounts") established by First Allmerica Financial Life Insurance
Company ("First Allmerica") or Allmerica Financial Life Insurance and Annuity
Company ("Allmerica Financial Life") for the purpose of funding variable annuity
contracts and variable life insurance policies issued by First Allmerica or
Allmerica Financial Life and by qualified pension and retirement plans. Both
First Allmerica and Allmerica Financial Life are wholly-owned subsidiaries of
Allmerica Financial Corporation ("AFC"), a publicly-traded Delaware holding
company for a group of affiliated companies. On September 30, 2004 the Trustees
and officers of the Trust, as a group, beneficially owned less than 1% of the
outstanding shares of the Fund.
7
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, no commissions were paid
to brokers affiliated with the Sub-Adviser of the Fund.
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.
October 29, 2004
8
APPENDIX I
SUB-ADVISER AGREEMENT
SUB-ADVISER AGREEMENT executed as of October 1, 2004, between Allmerica
Financial Investment Management Services, Inc. (the "Manager") and Grantham,
Mayo, Van Otterloo & Co. LLC (the "Sub-Adviser").
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 of the Trustees of Allmerica
Investment Trust (the "Trust"), a Massachusetts business trust,
the Sub-Adviser, at its expense, will furnish continuously an
investment program for the following series of shares of the
Trust: the Select International Equity 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"). The Sub-Adviser
will make investment decisions only on behalf of the
Sub-Adviser's Portion and 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. In the performance of its
duties under this Agreement, the Sub-Adviser will comply 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 current Registration Statement of the Trust
filed with the Securities and Exchange Commission ("SEC") and
any applicable federal and state laws, and 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 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 current
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 to the
Sub-Adviser. The Sub-Adviser shall make its officers and
employees available to the Manager from time to time at
reasonable times and upon reasonable notice 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
to other clients of the Sub-Adviser as to which Sub-Adviser or
any affiliate of the Sub-Adviser exercises investment
discretion.
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. It is
also understood that the Sub-Adviser and persons controlled by or under
common control with the Sub-Adviser and any of its officers, employees
and persons affiliated with the Sub-Adviser, and any officer and
employee of any persons affiliated with Sub-Adviser (a) may render
investment management and advisory services to other investors and
institutions; (b) may own, purchase, or sell securities or other
interests in property which are the same, similar to or different from
those which the Sub-Adviser owns, purchases or sells for the
Sub-Adviser's Portion; and in rendering investment management and
advisory services to others, shall be free to take action with respect
to investments in securities or other interests in property which is the
same as, similar to or different from the action taken for the
Sub-Adviser's Portion.
3. 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.
4. 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.
5. 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 each 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 any 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.
(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.
6. CERTAIN DEFINITIONS
For the purposes of this Agreement, the "affirmative vote of a majority
of the outstanding voting securities" means
2
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 Securities Exchange Act of 1934 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.
7. NON-LIABILITY OF SUB-ADVISER
The Sub-Adviser shall be under no liability to the Trust, the Manager or
the Trust's Shareholders or creditors for any matter or thing in
connection with the performance of any of the Sub-Adviser's services
hereunder or for any losses sustained or that may be sustained in the
purchase, sale or retention of any investment for the Funds of the Trust
made by the Sub-Adviser in good faith; provided, however, that nothing
herein contained shall be construed to protect the Sub-Adviser against
any liability to the Trust by reason of the Sub-Adviser's own willful
misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and
duties hereunder.
8. 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.
3
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 Grantham, Mayo, Van Otterloo & Co. LLC 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 MANAGEMENT
SERVICES, INC.
By: /s/ John P. Kavanaugh
--------------------------------------
Title: President
--------------------------------------
GRANTHAM, MAYO, VAN OTTERLOO & Co. LLC
By: /s/ William R. Royer
--------------------------------------
Title: Partner, General Counsel
--------------------------------------
Accepted and Agreed to as of the day and year first above written:
ALLMERICA INVESTMENT TRUST
By: /s/ Donald P. Wayman
--------------------------------------------
Title: Vice President
--------------------------------------------
4
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 $50 Million......................... 0.75%
Next $50 Million.......................... 0.60%
Next $100 Million......................... 0.55%
Next $100 Million......................... 0.50%
Over $300 Million......................... 0.45%
The average daily net assets of the Fund shall be determined by taking an
average of all of the determinations of net asset 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.
5
APPENDIX II
SUB-ADVISER AGREEMENT
SUB-ADVISER AGREEMENT executed as of October 1, 2004, between Allmerica
Financial Investment Management Services, Inc. (the "Manager") and J.P. Morgan
Investment Management Inc. (the "Sub-Adviser").
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 of the Trustees of Allmerica
Investment Trust (the "Trust"), a Massachusetts business trust,
the Sub-Adviser, at its expense, will furnish continuously an
investment program for the following series of shares of the
Trust: the Select International Equity 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"). The Sub-Adviser
will make investment decisions on behalf of the Sub-Adviser's
Portion and 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 the Agreement and
Declaration of Trust and Bylaws of the Trust and the objectives
and policies of the Fund, as set forth in the current
Registration Statement of the Trust filed with the Securities
and Exchange Commission ("SEC") and any applicable federal and
state laws, and 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 to the Sub-Adviser. The Manager acknowledges and
agrees that the Sub-Adviser will manage 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
current 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 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
to other clients of the Sub-Adviser as to which Sub-Adviser or
any affiliate of the Sub-Adviser exercises investment
discretion.
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. It is
also 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.
3. 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. In addition, it is
agreed that all brokerage commissions, taxes, charges and other costs
incident to the purchase and sale of securities shall be charged to and
paid from the Fund.
4. 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.
5. 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 each 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 any 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.
(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.
6. 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.
2
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 Securities Exchange Act of 1934 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.
7. NON-LIABILITY OF SUB-ADVISER
The Sub-Adviser shall be under no liability to the Trust, the Manager or
the Trust's Shareholders or creditors for any matter or thing in
connection with the performance of any of the Sub-Adviser's services
hereunder or for any losses sustained or that may be sustained in the
purchase, sale or retention of any investment for the Funds of the Trust
made by it in good faith; provided, however, that nothing herein
contained shall be construed to protect the Sub-Adviser against any
liability to the Trust by reason of the Sub-Adviser's own willful
misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and
duties hereunder.
8. 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.
9. DISCLOSURE.
Neither the Manager nor the Fund shall, without the prior written
consent of the Sub-Adviser, make representations regarding or reference
to the Sub-Adviser or any affiliates in any disclosure document,
advertisement, sales literature or other promotional materials.
10. DELEGATION TO THIRD PARTIES
Except where prohibited by applicable law or regulation, the Sub-Adviser
may delegate or may employ a third party to perform any accounting,
administrative, reporting and ancillary services required to enable the
Sub-Adviser to perform its functions under this Agreement. The
Sub-Adviser will promptly notify the Manager of any such delegation of
services to a third-party, with such notification including a
description of the type of services to be provided to the Fund by the
third-party and, upon reasonable request, will provide the Manager with
supplemental information regarding the delegation of such duties to a
third-party. Notwithstanding any other provision of the Agreement, the
Sub-Adviser may provide information about the Manager and the Fund to
any such third party for the purposes of this paragraph, provided that
the third party is subject to a confidentiality agreement that
specifically prevents the misuse of any such information, including
portfolio holdings. The Sub-Adviser will act in good faith and with due
diligence in the selection, use and monitoring of third parties and
shall be solely responsible for any loss, mistake, negligence or
misconduct caused by such third party.
11. TRADE SETTLEMENT AT TERMINATION
Termination will be without prejudice to the completion of any
transaction initiated by the Sub-Adviser in accordance with the terms
hereof prior to the effective date of the termination. On, or after, the
effective date of termination, the Manager and Sub-Adviser agree to work
cooperatively to complete any such transactions in accordance with the
terms hereof.
12. CONFIDENTIAL INFORMATION
(a) Neither the Manager, the Fund or the Sub-Adviser shall disclose
information of a confidential nature acquired in consequence of
this Agreement, except for information which they may be
entitled or bound to disclose by law, regulation or which is
disclosed to their advisers where reasonably necessary for the
performance of their professional services or, in the case of
the Sub-Adviser, as permitted in accordance with the above
paragraph 10 (Delegation to Third Parties).
3
(b) Notwithstanding the provisions of 12(a), to the extent that any
market counterparty with whom the Sub-Adviser deals requires
information relating to the Fund (including, but not limited to,
the identity of the Manager or the Fund and market value of the
Fund), the Sub-Adviser shall be permitted to disclose such
information to the extent necessary to effect transactions on
behalf of the Fund in accordance with the terms of this
Agreement.
13. INSTRUCTION TO CUSTODIAN
The Sub-Adviser shall not have control of the investments or cash in the
Fund but shall have authority to issue to the Fund's custodian such
instructions as it may consider appropriate in connection with the
settlement of any transaction relating to the Fund which it has
initiated. The Sub-Adviser will not be responsible for supervising the
Fund's custodian.
14. ANTI-MONEY LAUNDERING
Each of the Manager and the Fund acknowledge that the Fund is in
compliance, and will continue to comply, with all applicable anti-money
laundering regulations. Further, each of the Manager and the Fund agree
to provide any documentation or information the Sub-Adviser may
reasonably request for the purpose of complying with its own anti-money
laundering obligations.
15. TRANSACTIONS IN DERIVATIVES
The Fund is permitted to purchase, sell, hold and generally deal in and
with domestic or foreign derivatives in accordance with its policies and
restrictions as set forth in the current Registration Statement of the
Trust filed with the SEC and any applicable law.
4
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 J.P. Morgan Investment
Management Inc. 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 MANAGEMENT
SERVICES, INC.
By: /s/ John P. Kavanaugh
--------------------------------------
Title: President
--------------------------------------
J.P. MORGAN INVESTMENT MANAGEMENT INC.
By: /s/ Aimee Marcus
--------------------------------------
Title: Vice President
--------------------------------------
Accepted and Agreed to as of the day and year first above written:
Allmerica Investment Trust
By: /s/ Donald P. Wayman
---------------------------
Title: Vice President
---------------------------
5
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 .60%
Next $25 Million .50%
Next $50 Million .45%
Over $100 Million .30%
The average daily net assets of the Fund shall be determined by taking an
average of all of the determinations of net asset 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.
6