<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
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14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to [Section]240.14a-11(c) or [Section]14a-12
Allmerica Investment Trust (for its series portfolio Small Cap Value Fund)
(Name of Registrant as Specified In Its Charter)
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<PAGE> 3
PRELIMINARY COPY
ALLMERICA INVESTMENT TRUST: SMALL CAP VALUE FUND
440 LINCOLN STREET, WORCESTER, MASSACHUSETTS
=========================================
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
=========================================
To the Shareholders:
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of the Small Cap Value Fund (the "Fund"), a separate series of
Allmerica Investment Trust (the "Trust"), will be held at the offices of the
Trust at 440 Lincoln Street, Worcester, Massachusetts 01653 at 10:00 a.m. local
time, on Tuesday, March 18, 1997. At the Meeting, you and the other Shareholders
of the Fund will be asked to consider and vote:
1. To approve or disapprove revisions in the investment objective, name and
policies of the Fund to change from investing primarily in small cap value
stocks to investing primarily in small and mid-cap value stocks.
2. To approve or disapprove a new Sub-Adviser Agreement between Allmerica
Investment Management Company, Inc. ("AIMCO") and CRM Advisors, LLC relating to
the Fund, as set forth in Exhibit 1 to the attached Proxy Statement;
3. To approve or disapprove an amendment to the Management Agreement
between AIMCO and the Trust relating to the Fund, as set forth in Exhibit 2 to
the attached Proxy Statement; and
4. To transact such other business as may properly come before the Meeting,
or any adjournment thereof.
Shareholders of record as of the close of business on January 10, 1997, are
entitled to notice of, and to vote at, the Meeting. Your attention is called to
the accompanying Proxy Statement.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO COMPLETE,
SIGN, DATE AND RETURN PROMPTLY THE ENCLOSED PROXY CARD. If you do attend the
Meeting, you may revoke the Proxy and vote in person.
Worcester, MA
February 10, 1997
By order to the Trustees
----------------------------
Joseph W. MacDougall, Jr.
Secretary
<PAGE> 4
PRELIMINARY COPY
ALLMERICA INVESTMENT TRUST: SMALL CAP VALUE FUND
440 LINCOLN STREET
WORCESTER, MASSACHUSETTS 01653
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
MARCH 18, 1997
The enclosed Proxy is solicited on behalf of the Trustees of Allmerica
Investment Trust, a Massachusetts business trust (the "Trust"), to be voted at a
Special Meeting (the "Meeting") of Shareholders of the Small Cap Value Fund, a
separate series of the Trust (the "Fund"), to be held at the offices of the
Trust, 440 Lincoln Street, Worcester, MA 01653 on March 18, 1997 for the
purposes set forth in the accompanying Notice. The mailing date of this Proxy
Statement is on or about February 10, 1997.
A Shareholder may revoke the accompanying Proxy at any time prior to its
use by filing with the Secretary of the Trust a written revocation or duly
executed Proxy bearing a later date. The Proxy will not be voted if the
Shareholder is present at the Meeting and elects to vote in person. Attendance
at the Meeting alone will not serve to revoke the Proxy.
In addition to the solicitation of Proxies by mail, officers and employees
of the Trust, without additional compensation, may solicit Proxies in person or
by telephone. The costs associated with such solicitation and the Meeting will
be borne by the Fund.
The Trust will furnish, without charge, a copy of the most recent Annual
Report to the Shareholders of the Fund and its most recent Semi-Annual Report.
Requests should be directed to the Fund at 440 Lincoln Street, Worcester,
Massachusetts 01653 or by calling (800) 533-7881.
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 Life"), a subsidiary of First Allmerica, for the purpose of
funding variable annuity contracts and variable life insurance policies (such
contracts and policies are referred to hereafter as "Contracts") issued by First
Allmerica or Allmerica Life. First Allmerica and Allmerica Life, however, will
vote the shares of the Fund held in each Separate Account in accordance with
instructions received from variable life insurance policy owners and variable
annuity contract owners or participants (collectively, "Contract Owners") with
respect to all matters on which Fund Shareholders are entitled to vote. Interest
in Contracts for which no timely instructions are received will be voted in
proportion to the instructions which are received from Contract Owners. First
Allmerica and Allmerica Life also will vote shares in a Separate Account that
they own and which are not attributable to Contracts in the same proportion. As
of the close of business on January 10, 1997, there were 76,308,406.004 shares
of the Fund outstanding.
The persons named in the accompanying Proxy will vote in each case as
directed by the Proxy, but in the absence of such voting directions they intend
to vote FOR each proposal and may vote in their discretion with respect to other
matters not now known to the Board of Trustees that may be presented at the
Meeting.
<PAGE> 5
1. APPROVAL OR DISAPPROVAL OF REVISIONS IN THE INVESTMENT OBJECTIVE, NAME AND
POLICIES OF THE FUND TO CHANGE FROM INVESTING PRIMARILY IN SMALL CAP VALUE
STOCKS TO INVESTING PRIMARILY IN SMALL AND MID-CAP VALUE STOCKS
The Trustees propose modifying the Fund's investment objective to provide
that it shall invest primarily in the common stock of both small and mid-size
companies rather than primarily in the common stock of smaller companies only.
The Trustees also propose changing the name of the Fund to the "Small-Mid Cap
Value Fund" and amending certain related investment policies. Set forth below
for comparison are the Fund's current investment objective and the proposed
investment objective.
CURRENT INVESTMENT OBJECTIVE. The Small Cap Value Fund seeks long-term
growth of capital by investing primarily in a diversified portfolio of common
stocks of smaller, faster growing companies whose securities at the time of
purchase are considered by the Sub-Adviser to be realistically valued in the
smaller company sector of the market.
PROPOSED INVESTMENT OBJECTIVE (changes underlined): The Small-Mid Cap Value
Fund seeks long-term growth of capital by investing primarily in a diversified
portfolio of common stocks of small and mid-size companies, whose securities at
the time of purchase are considered by the Sub-Adviser to be undervalued.
In addition to the revisions in the investment objective, the investment
policies would be changed to state that the Fund generally intends to invest at
least 65% of its total assets in stocks of companies with market capitalization
between $200 million and $5 billion at the time of purchase, compared to the
current limits on market capitalization of between $250 million and $1 billion.
The investment policies would be amended to add "price relative to cash flow" as
a fourth factor to be utilized by the Sub-Adviser to identify attractively
valued stocks as potential portfolio investments. (The other factors are: price
relative to earnings, to sales and to assets as measured by book value.) Subject
to shareholder approval, the policies also will be amended to permit the Fund to
invest up to 15% of its assets in illiquid securities. Currently, the Fund does
not invest in any security which, at the time of purchase, is not readily
marketable. Illiquid securities generally involve a higher degree of risk than
liquid securities.
The Trustees believe that changing the portfolio from a small cap value
fund to a small-mid cap value fund will expand the range of attractive
investment opportunities available to the Fund and will better position the Fund
relative to Trust's other equity portfolios. The proposal is consistent with
Fund management's recent decision to retain CRM Advisors, LLC ("CRM") as the
Fund's new Sub-Adviser. A value oriented investment adviser, CRM specializes in
equity securities of small and mid-size companies with market capitalization in
the $200 million to $5 billion range. More information about CRM is included
under Item 2 of this Proxy Statement. The proposed amendments also may reduce
somewhat the risk of investing in the Fund since mid cap companies, when
compared to small cap companies, generally have greater financial resources and
their securities are usually subject to more moderate price fluctuations.
RECOMMENDATION AND REQUIRED VOTE
The Trustees recommend that Shareholders approve the proposed changes in
the investment objective, name and policies of the Fund, as described above.
2
<PAGE> 6
The affirmative vote of a majority (defined in the Miscellaneous section)
of the Fund's outstanding voting securities is required to approve the proposed
changes. Abstentions have the effect of a negative vote on this proposal.
2. APPROVAL OR DISAPPROVAL OF A NEW SUB-ADVISER
AGREEMENT BETWEEN ALLMERICA INVESTMENT
MANAGEMENT COMPANY, INC. AND CRM ADVISORS, LLC
RELATING TO THE SMALL CAP VALUE FUND
The Trustees recommend that the Shareholders of the Fund approve a new
Sub-Adviser Agreement (the "New Sub-Adviser Agreement") between Allmerica
Investment Management Company, Inc. ("AIMCO") and CRM Advisors, LLC ("CRM").
Except for a revised fee structure which is discussed below, the New Sub-Adviser
Agreement is the same in all substantive respects as the sub-adviser agreement
(the "Previous Sub-Adviser Agreement"), dated June 30, 1995, previously in
effect between AIMCO and David L. Babson & Co. Inc. ("Babson"). The Previous
Sub-Adviser Agreement was last submitted to Shareholders on June 27, 1995. A
copy of the New Sub-Adviser Agreement is set forth in Exhibit 1 to this Proxy
Statement.
PROPOSED FEE CHANGES
AIMCO manages the business affairs of the Fund pursuant to a Management
Agreement with the Trust dated July 1, 1992 (the "Management Agreement") which
provides that AIMCO 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 of the Trust.
Acting in accordance with the Management Agreement and the Investment Company
Act of 1940 (the "1940 Act") and regulations thereunder, AIMCO selected CRM to
replace Babson as the Sub-Adviser of the Fund, and the Trustees subsequently
approved the selection.
Changes are now being proposed in the level of management fees paid by the
Fund to AIMCO and the level of sub-advisory fees paid by AIMCO to CRM. These
proposed changes in fees require shareholder approval. As a result of the
changes in management fees, expenses incurred by Shareholders at the Fund's
current net asset level will increase. To minimize the impact on Fund expenses,
AIMCO is proposing to voluntarily limit its fee until further notice. A
comparative fee table showing the Fund's current and pro forma expenses is
presented in Item 3 of this Proxy Statement. The change in sub-adviser fees will
not increase directly Fund expenses because AIMCO is solely responsible for
paying such fees. However, the proposal to revise the management fees paid by
the Fund to AIMCO is made in part to offset the additional cost that AIMCO
expects to incur from higher sub-adviser fee payments.
The fee proposals under both the Management Agreement and the New
Sub-Adviser Agreement include breakpoints which will reduce the fee rates as net
assets increase to specified levels. The proposal to amend the fee structure
under the Management Agreement is discussed in detail in Item 3 of this Proxy
Statement.
Prior to Shareholder approval of the New Sub-Adviser Agreement, CRM will
receive from AIMCO a fee computed daily at an annual rate of .50% of the average
daily net assets of the Fund, the same fee that was paid to Babson. Under the
New Sub-Adviser Agreement, the annual fee payable by AIMCO to
3
<PAGE> 7
CRM will be increased from .50% to .60% with respect to the first $100 million
of the Fund's average daily net assets, will remain at .50% with respect to the
next $150 million of the Fund's average daily net assets, and will be reduced
with respect to average daily net assets in excess of $250 million.
<TABLE>
Following is the complete fee schedule proposed for the New Sub-Adviser
Agreement. AIMCO will pay the fees earned by CRM quarterly based on the average
daily net assets of the Fund shown below.
<CAPTION>
Net Assets Fee Rate
---------- --------
<S> <C>
First $100 Million 0.60%
Next $150 Million 0.50%
Next $250 Million 0.40%
Next $250 Million 0.375%
Over $750 Million 0.35%
</TABLE>
During the fiscal year ended December 31, 1996, AIMCO paid Babson $428,814
for its advisory services pursuant to the fee schedule under the Previous
Sub-Adviser Agreement, which provides for a sub-advisory fee of .50% of the
Fund's average daily net assets. If the proposed sub-adviser fee had been in
effect during the last fiscal year, the sub-adviser would have received
$513,171, representing an increase of $84,357, or 19.7%. The proposed
sub-adviser fee at the Fund's net assets on January 15, 1997 of approximately
$114,000,000 would increase annual fees paid by AIMCO to CRM from $570,000 to
$670,000, an increase of $100,000 or 17.5%.
The Trustees believe that the new graduated sub-adviser fee structure
should provide an effective means of compensating CRM for its advisory services
while reducing the level of sub-adviser fees as Fund assets grow. Such a
reduction in sub-adviser fees would benefit AIMCO directly, but Shareholders
would receive a similar benefit from Fund asset growth as a result of the
graduated fee schedule proposed for the Management Agreement. (See proposal in
Item 3 of this Proxy Statement.) The proposed sub-adviser fees are believed by
the Trustees and AIMCO to be comparable to industry averages.
BACKGROUND
Prior to CRM becoming Sub-Adviser to the Fund, Babson served as Sub-Adviser
of the Fund. Under investment performance criteria established by AIMCO and a
consultant hired by AIMCO, each sub-adviser is continuously monitored against
relevant indices and peer groups. Based upon the proposed revisions to the
investment objective and policies of the Fund, and upon the recommendation of
AIMCO and its consultant, the Trustees approved the termination of the Previous
Sub-Adviser Agreement with Babson as of January 1, 1997. CRM began serving as
Sub-Adviser to the Fund as of that date, pursuant to an interim sub-adviser
agreement. Subject to Shareholder approval, the New Sub-Adviser Agreement will
be effective April 1, 1997.
In the course of selecting a replacement sub-adviser, AIMCO and its
consultant reviewed performance and background criteria, as well as written and
in-person proposals by a number of investment advisory firms. In evaluating the
proposals, they considered, among other things, the nature and quality of the
services to be provided by each sub-adviser, comparative data as to each
sub-adviser's investment per-
4
<PAGE> 8
formance, the experience and financial condition of the sub-adviser and its
affiliates, the cost of the proposed advisory services, the sub-adviser's
commitment to mutual fund advisory activities and the quality of the
sub-adviser's capabilities generally. Based on this selection and review
process, AIMCO and its consultant proposed final candidates to the Allmerica
Manager Evaluation Committee. After deliberation, the Committee recommended to
the Trustees the selection of CRM as sub-adviser for the Fund and reported the
reasons for this recommendation. In considering such matters, the Trustees were
advised by independent counsel. Upon completion of the review process and
following a presentation to the Trustees by CRM, the Trustees voted, with the
"non-interested" Trustees of the Trust voting separately, to appoint CRM
Sub-Adviser to the Fund and to recommend to Shareholders of the Fund that they
approve the New Sub-Adviser Agreement.
INFORMATION REGARDING CRM ADVISORS, LLC
CRM is an affiliate of Cramer Rosenthal McGlynn, Inc. ("Cramer Rosenthal").
Both firms are located at 520 Madison Avenue, New York, New York 10022. Cramer
Rosenthal was founded in 1973 to serve a select number of high net worth
individuals. The firm has since expanded into the institutional marketplace
managing a variety of portfolios for pension funds, endowments and foundations.
Cramer Rosenthal manages accounts for individuals, trusts and estates. It offers
separate account management for equity, balanced and fixed-income investments.
Organized in New York in 1995, CRM provides advisory and sub-advisory services
to mutual funds with approximately $100 million under management. Cramer
Rosenthal and its affiliates currently manage a total of more than $2.5 billion
in assets.
Cramer Rosenthal is 100% owned by its active investment professionals.
Together, the principals have a total of more than 130 years of investment
experience. None of the Trustees or officers of the Trust is affiliated with
Cramer Rosenthal or its affiliates. There are no arrangements or understandings
between AIMCO and Cramer Rosenthal or its affiliates with respect to the
composition of the Board of Trustees of the Trust or of the Board of Directors
of Cramer Rosenthal or CRM or with respect to the selection or appointment of
any person to any office of either the Trust or Cramer Rosenthal and its
affiliates.
CRM views equity investment prospects on a long-term basis. Its value
oriented investment philosophy is to take advantage of periodic inefficiencies
which develop in the valuation of publicly traded businesses. CRM seeks to
identify companies that are undergoing dynamic change whose securities may be
undervalued. The firm specializes in providing investment advice related to
equity securities of small and mid-cap companies. Cramer Rosenthal and its
affiliates have maintained a competitive per-
5
<PAGE> 9
<TABLE>
formance record with respect to other value oriented investment managers.
Following is information on the type, size and advisory fees of other similar
investment company funds managed by CRM:
<CAPTION>
Fund Net Assets as of 12/31/96 Fee Rate
---- ------------------------- --------
<S> <C> <C>
CRM Small Cap Value Fund $70,000,000 0.75%
Pilgrim America Master Series
Mid-Cap Value Fund $30,000,000 0.50% (sub-advisor fee)
</TABLE>
Ronald H. McGlynn and Jay B. Abramson will share primary responsibility for
the day-to-day management of the Fund's investments. Mr. McGlynn, who co-founded
Cramer Rosenthal, is the firm's Chief Executive Officer and President. Mr.
Abramson, who joined Cramer Rosenthal in 1985, is Executive Vice President.
<TABLE>
Following is a complete list of the executive officers and Directors of
Cramer Rosenthal and CRM:
<CAPTION>
Position(s) with both
Name Cramer Rosenthal and CRM
---- ------------------------
<S> <C>
Gerald B. Cramer Chairman, Director
Edward J. Rosenthal Vice Chairman, Treasurer, Director
Ronald H. McGlynn President, Chief Executive Officer, Director
Jay B. Abramson Executive Vice President, Director
Fred M. Filon Senior Vice President, Director
Arthur J. Pergament Senior Vice President
Eugene A. Trainor III Senior Vice President
</TABLE>
All information about CRM and Cramer Rosenthal has been provided by CRM.
DESCRIPTION OF THE PREVIOUS SUB-ADVISER AGREEMENT AND THE NEW SUB-ADVISER
AGREEMENT
The Previous Sub-Adviser Agreement was executed as of June 30, 1995 and was last
approved by the Trustees, including the Trustees who were not "interested
persons," at a meeting of the Board of Trustees on May 21, 1996. Except for the
description of Babson and different effective and termination dates and the fee
schedule, the terms of the New Sub-Adviser Agreement are similar in all material
respects to the terms of the Previous Sub-Adviser Agreement. The New Sub-Adviser
Agreement is attached to this Proxy Statement as Exhibit 1, and the description
of the New Sub-Adviser Agreement set forth in this Proxy Statement is qualified
in its entirety by reference to Exhibit 1.
The New Sub-Adviser Agreement provides that CRM, as Sub-Adviser thereunder,
in return for its fee, and subject to the control and supervision of the Board
of Trustees and in conformance 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 AIMCO, will manage the
investment and reinvestment of assets of the Fund. In this regard, it is the
responsibility of CRM to make investment decisions for the Fund and to place the
Fund's purchase and sale orders for investment securities. The New Sub-
6
<PAGE> 10
Adviser Agreement states that CRM will provide at its expense all necessary
investment, management and administrative facilities, including salaries of
personnel and equipment needed to carry out its duties under the New Sub-Adviser
Agreement, but excluding pricing and bookkeeping services.
The New Sub-Adviser Agreement shall remain in full force and effect for two
years from April 1, 1997 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, AIMCO, the Sub-Adviser, 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 AIMCO, 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 CRM, in each case 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 AIMCO
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 CRM, or (ii) reckless
disregard by CRM of its obligations and duties under the New Sub-Adviser
Agreement, CRM shall not be liable to the Trust or the Fund, or to any
Shareholder of the Fund, for any act or omission in the course of, or connected
with, rendering services under the New Sub-Adviser Agreement.
RECOMMENDATION AND REQUIRED VOTE
As provided in the 1940 Act, approval of the New Sub-Adviser Agreement
requires the affirmative vote of a majority (defined in the Miscellaneous
section) of the outstanding voting securities of the Fund. Abstentions have the
effect of a negative vote on the proposal to approve the New Sub-Adviser
Agreement. If the Shareholders of the Fund fail to approve the New Sub-Adviser
Agreement, CRM will continue to serve as Sub-Adviser in a manner consistent with
the 1940 Act, until such time as the Trustees select a different sub-adviser for
the Fund.
The Trustees recommend that Shareholders vote to approve the New
Sub-Adviser Agreement.
3. APPROVAL OR DISAPPROVAL OF AN AMENDMENT TO THE
MANAGEMENT AGREEMENT BETWEEN ALLMERICA INVESTMENT
MANAGEMENT COMPANY, INC. AND ALLMERICA INVESTMENT
TRUST RELATING TO THE SMALL CAP VALUE FUND
Shareholders of the Fund are being asked by the Trustees to approve an
amendment (the "Amendment") to the Management Agreement with AIMCO, which
provides for a change in the management fees payable by the Fund to AIMCO. The
Management Agreement, as amended, attached as Exhibit 2, is identical in all
respects to the existing Management Agreement except for the changes to the fee
struc-
7
<PAGE> 11
ture discussed below. The existing Management Agreement was last submitted to
Fund Shareholders on April 30, 1993.
PROPOSED FEE CHANGES
The recommendation by Trustees to change the management fees is being made
in conjunction with the proposal discussed above to change the level of fees
paid to the Sub-Adviser of the Fund. These fee changes require Shareholder
approval. Under the Management Agreement, AIMCO may contract with sub-advisers
to manage the investments of the funds of the Trust. CRM has been retained by
AIMCO to serve as Sub-Adviser of the Fund replacing Babson, the previous
sub-adviser, and a proposal to approve the Sub-Adviser Agreement with CRM,
including a new fee schedule, is presented in Item 2 of this Proxy Statement.
Under the Management Agreement, AIMCO is solely responsible for the payment of
sub-adviser fees. The proposal to change the management fees is made in part to
offset the additional cost that AIMCO expects to incur from higher sub-adviser
fee payments. The new management fee schedule also is intended to provide AIMCO
with the flexibility necessary to adjust fees in the future should a subsequent
change in the sub-adviser of the Fund be appropriate.
The proposal to amend the fee schedule of the Management Agreement will
permit an increase in the annual fee payable by the Fund to AIMCO from .85%, the
current rate for all asset levels, to 1.00% with respect to the first $100
million of the Fund's average daily net assets. The fee will remain at .85% with
respect to the next $150 million of the Fund's average daily net assets and will
be reduced with respect to average daily net assets in excess of $250 million.
<TABLE>
Following is the complete compensation schedule proposed for the Management
Agreement:
<CAPTION>
Net Assets Fee Rate
---------- --------
<S> <C>
First $100 million 1.00%
Next $150 million 0.85%
Next $250 million 0.80%
Next $250 million 0.75%
Over $750 million 0.70%
</TABLE>
The proposed management fees at the Fund's net assets on January 15, 1997
of approximately $114,000,000 would provide for an increase in the annual fees
paid to AIMCO from $969,000 to $1,119,000, an increase of $150,000 or 15.5%. A
comparative fee table showing the Fund's current and pro forma expenses is
presented below. To minimize the impact of the fee increase on Fund expenses,
AIMCO has committed to a voluntary limitation of its fee to an annual rate of
0.90% of average daily net assets until further notice. Such limitation, so long
as it is in effect, would result in a net annual fee increase at current net
assets payable by the Fund of $57,000 or 5.9%. The increase in sub-adviser fees
at current net assets, less the increase in management fees, would result in an
overall fee decrease to AIMCO of $43,000.
During the fiscal year ended December 31, 1996, the Fund paid AIMCO
$726,992 in management fees pursuant to the management fee schedule currently in
effect. If the proposed management fee and the voluntary fee limitations had
been
8
<PAGE> 12
in effect during the last fiscal year, AIMCO would have received $769,757,
representing an increase of $42,765, or 5.9%.
The proposed graduated fee schedule is similar in structure to the
graduated fee schedule proposed for the new Sub-Adviser as presented in Item 2
of this Proxy Statement. The Trustees believe the graduated fee schedule is an
appropriate means of compensating AIMCO for its management services. It will
enable Fund Shareholders to realize potential cost savings from management fee
reductions as Fund assets increase and will offset the added expense that AIMCO
expects to incur from increased sub-adviser fee payments.
COMPARATIVE FEE TABLE
<TABLE>
The following table shows (i) the expenses paid by the Fund based on
amounts incurred during the most recent fiscal year, and (ii) pro forma expenses
using the proposed management fee schedule.
The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in the Fund would have borne
directly or indirectly. The table does not reflect Separate Account fees,
including sales loads, borne by Contract Owners in the Fund.
<CAPTION>
Current Pro Forma
Annual Operating Expenses Expenses Expenses
------------------------- -------- --------
(as a percentage of average net assets)
<S> <C> <C>
Management Fees(After Voluntary Fee Waivers)* 0.85% 0.90%
12b-1 Fees none none
Other Expenses 0.09% 0.09%
Total Fund Operating Expenses
(After Voluntary Fee Waivers)* 0.94% 0.99%
</TABLE>
9
<PAGE> 13
* Absent voluntary fee waivers, pro forma Management Fees would be 0.98%
and pro forma Total Fund Operating Expenses would be 1.07%.
<TABLE>
EXAMPLE
The investor would pay
the following expenses on a $1,000
investment, assuming (1) 5%
annual return and (2) redemption
at the end of each time period.
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Current Expenses: $ 9 $29 $51 $113
Pro forma Expenses: $10 $31 $54 $119
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
BACKGROUND
AIMCO manages the business affairs of the Fund pursuant to the Management
Agreement. Subject to the requirements of the 1940 Act, AIMCO 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 of the Trust. The sub-advisers are selected on the
basis of various factors including management experience, investment techniques
and staffing. A leading pension consulting firm is used to assist with the
selection of sub-advisers and the ongoing monitoring of investment performance.
The cost of such consulting services is borne by AIMCO.
MANAGEMENT AGREEMENT
AIMCO entered into the existing Management Agreement with the Trust as of
July 1, 1992. The existing Management Agreement was last approved by the
Trustees, including the Trustees who were not "interested persons," at a meeting
of the Board of Trustees on May 21, 1996. Under the Management Agreement, AIMCO
continuously provides business management services to the Fund and, subject to
the general oversight of the Trustees, manages all of the administrative and
day-to-day business affairs of the Trust. AIMCO also has general oversight
responsibility for the management of the investments of the funds of the Trust,
subject to such policies and instructions as the Trustees may from time to time
establish. The Management Agreement, as amended, shall continue in full force
and effect for successive periods of one year only so long as each such
continuance is specifically approved annually by the Board of Trustees, or by a
vote of the holders of a majority of the Fund's outstanding voting securities,
and by a vote of a majority of the Trustees who are not "interested persons" of
the Trust, AIMCO, the Sub-Adviser or any other sub-adviser to the Trust. The
Management Agreement may be terminated at any time, without payment of penalty,
by AIMCO, by vote of the Trustees or by vote of a majority of the
10
<PAGE> 14
outstanding voting securities of the Fund, in each case on 60 days written
notice. As required by the 1940 Act, the Management Agreement will automatically
terminate, without the payment of any penalty, in the event of its assignment.
The Management Agreement provides that, in absence of (i) willful
misfeasance, bad faith or gross negligence on the part of AIMCO, or (ii)
reckless disregard by AIMCO of its obligations and duties under the Management
Agreement, AIMCO shall not be liable to the Trust or the Fund, or to any
Shareholder of the Fund, for any act or omission in the course of, or connected
with, rendering services under the Management Agreement.
The Management Agreement, as amended, is attached to this Proxy Statement
as Exhibit 2, and the description of the Management Agreement, as amended, set
forth in this Proxy Statement is qualified in its entirety by reference to
Exhibit 2.
INFORMATION REGARDING ALLMERICA INVESTMENT MANAGEMENT COMPANY, INC.
AIMCO is a wholly-owned subsidiary of Allmerica Financial Corporation
("AFC"), a Delaware holding company for a group of affiliated companies, the
largest of which is First Allmerica, an insurance company, organized in
Massachusetts in 1844. AIMCO and AFC are located at 440 Lincoln Street,
Worcester, Massachusetts 01653. AIMCO, organized August 19, 1985, also serves as
investment manager of the Allmerica Funds, an open-ended investment company.
Following is information on the type, size and management fees of other domestic
equity portfolios of the Trust managed by AIMCO.
<TABLE>
<CAPTION>
Fund Net Assets as of 12/31/96 Fee Rate
---- ------------------------- --------
<S> <C> <C>
Select Aggressive Growth Fund $406,089,764 1.00%
Select Capital Appreciation Fund $140,818,348 1.00%
Growth Fund $563,548,682 (1)
Select Growth Fund $231,639,351 0.85%
</TABLE>
<TABLE>
<CAPTION>
(1)
Assets Fee Rate
------ --------
<S> <C>
First $50 Million 0.60%
Next $200 Million 0.50%
Over $250 Million 0.35%
</TABLE>
The Directors of AIMCO are: John F. Kelly, John F. O'Brien, Richard M.
Reilly and Eric A. Simonsen. Mr. Reilly is also President and Chief Executive
Officer of AIMCO. Mr. O'Brien also serves as a Trustee of the Trust and Mr.
Reilly is President and a Trustee of the Trust. John P. Kavanaugh serves as a
Trustee and Vice President of the Trust and as a Vice President of First
Allmerica and Allmerica Life; Joseph W. MacDougall, Jr., is Secretary of the
Trust and a Vice President of First Allmerica, and Thomas P. Cunningham is a
Vice President of AIMCO and Treasurer of the Trust.
11
<PAGE> 15
Following is a description of purchase and sale transactions since January
1, 1996, by the Trustees of the Trust involving shares of First Allmerica common
stock.
--------------------------------
--------------------------------
--------------------------------
--------------------------------
No arrangements or understandings exist between AIMCO and the Trustees with
respect to the composition of the Board of Trustees of the Trust or the Board of
Directors of AIMCO or with respect to the selection or appointment of any person
to any office with either of them.
During the fiscal year ended December 31, 1996, no commissions were paid to
any brokers affiliated with AIMCO. Because shares of the Fund are available for
purchase only by First Allmerica or Allmerica Life, the Fund has no principal
underwriter.
RECOMMENDATION AND REQUIRED VOTE
As provided in the 1940 Act, approval of the Amendment to the Management
Agreement requires the affirmative vote of a majority (defined in the
Miscellaneous section ) of the outstanding voting securities of the Fund.
Abstentions have the effect of a negative vote on the proposal to approve the
Amendment. If the Shareholders of the Fund fail to approve the Amendment, AIMCO
will continue to serve as manager of the Trust in a manner consistent with the
1940 Act while the Trustees determine an appropriate course of action.
The Trustees recommend that Shareholders vote to approve the Amendment.
MISCELLANEOUS
DEFINITION OF MAJORITY. "Majority of the outstanding voting securities"
means the affirmative vote of the lesser of (1) more than 50% of the outstanding
shares of the Fund and (2) 67% or more of the shares of the Fund present at the
Meeting if more than 50% of the outstanding shares are present at the Meeting in
person or by proxy.
METHODS OF TABULATION. Shares represented by proxies that reflect
abstentions and "broker non-votes" (i.e., shares held by brokers or nominees as
to which (i) instructions have not been received from the beneficial owners or
the persons entitled to vote and (ii) the broker or nominee does not have the
discretionary voting power on a particular matter) will be counted as shares
that are present and entitled to vote on the matter for purposes of determining
the presence of a quorum. Votes cast by proxy or in person at the Meeting will
be counted by persons appointed as tellers for the Meeting.
The tellers will count the total number of votes cast "for" approval of the
proposals for purposes of determining whether sufficient affirmative votes have
been cast. With respect to all proposals, abstentions and broker non-votes have
the effect of a negative vote on the proposal.
OTHER BUSINESS. The Trustees know of no other business to be brought before
the Meeting. However,
12
<PAGE> 16
if any other matters properly come before the Meeting, it is the Trustees'
intention that proxies which do not contain specific restrictions to the
contrary will be voted on such matters in accordance with the judgment of the
persons named in the enclosed form of Proxy.
13
<PAGE> 17
DATE FOR RECEIPT OF SHAREHOLDERS' PROPOSALS FOR SUBSEQUENT MEETING OF
SHAREHOLDERS. The Trust's Agreement and Declaration of Trust does not provide
for regular annual meetings of Shareholders, and the Fund does not currently
intend to hold such meetings. Shareholder proposals for inclusion in the Fund's
proxy statement for any subsequent meeting must be received by the Trust a
reasonable period of time prior to any such meeting.
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY TO ENSURE THAT A
QUORUM IS PRESENT AT THE MEETING. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE.
RICHARD M. REILLY
President
February 10, 1997
Worcester, MA
14
<PAGE> 18
SUB-ADVISER AGREEMENT
SUB-ADVISER AGREEMENT executed as of ___________, 1997 between Allmerica
Investment Management Company, Inc. (the "Manager") and CRM Advisors, 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 SMALL CAP VALUE 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 will make
investment decisions on behalf of the Funds and place all orders for the
purchase and sale of portfolio securities. 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 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 Funds. 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 Fund 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
<PAGE> 19
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.
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 __________, 1997, 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 for a period of two years 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
<PAGE> 20
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.
(d) in the event of termination of this agreement, the Fund will no longer
use the name "Cramer Rosenthal McGlynn, Inc." or "CRM Advisors, LLC" in
materials relating to the Fund except as may be required by the 1940 Act and
the rules and regulations thereunder.
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
a 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.
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.
<PAGE> 21
IN WITNESS WHEREOF, ALLMERICA INVESTMENT MANAGEMENT COMPANY, INC. has caused
this instrument to be signed in duplicate on its behalf by its duly authorized
representative and CRM Advisors, 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 INVESTMENT MANAGEMENT COMPANY, INC.
By: __________________________
Its: __________________________
CRM ADVISORS, LLC
By: __________________________
Its: __________________________
Accepted and Agreed to as of the day and year first above written:
ALLMERICA INVESTMENT TRUST
By: __________________________
Its: __________________________
<PAGE> 22
SCHEDULE A
----------
<TABLE>
The Manager will pay to the Sub-Adviser as full compensation for the
Sub-Adviser's services rendered, a fee computed and paid quarterly at an annual
rate of the average daily net assets of the Fund as described below:
<CAPTION>
Net Assets Fee Rate
---------- --------
<S> <C>
First $100 million 0.60%
Next $150 million 0.50%
Next $250 million 0.40%
Next $250 million 0.375%
Over $750 million 0.35%
</TABLE>
The average daily net assets of the Fund shall be determined by taking an
average of all of the determinations of net asset value 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.
<PAGE> 23
MANAGEMENT AGREEMENT
Allmerica Investment Management Company, Inc. (the "Adviser") and Allmerica
Investment Trust ("Trust") hereby confirm their Agreement covering services as
hereinafter set forth. The terms and provisions of this Agreement shall take
effect on July 1, 1992.
1. The Trust hereby retains the Adviser as investment adviser for the
series of shares of the Trust entitled the Growth Fund, Equity Index
Fund. Investment Grade Income Fund, the Government Bond Fund and the
Money Market Fund and for such other series of shares as the Trust and
the Adviser may from time to time agree on, each such series of shares
being hereinafter referred to as a "Fund." The Adviser shall also
manage, supervise and conduct the other affairs and business of the
Trust and matters incidental thereto, subject always to the provisions
of the Trust's Agreement and Declaration of Trust, Bylaws and of the
provisions of the Investment Company Act of 1940, as amended ("1940
Act"). In providing and performing such services, the Adviser will
function in cooperation with and subject always to the direction and
control of the Trustees of the Trust and in cooperation with the Trust's
authorized officers and representatives.
2. INVESTMENT ADVISORY SERVICES. The Adviser agrees to act as the
investment adviser for, and to manage the investment of assets of, each
Fund and to make purchases and sales of securities for each Fund's
account. The Adviser shall assume responsibility for the management of
the portfolio securities of each Fund and the making and execution of
all investment decisions for each Fund.
A. Investment of each Fund's assets shall be in accordance with the
objectives and policies of each Fund as set forth in the current
Registration Statement of the Trust filed with the Securities and
Exchange Commission (the "SEC"), and any applicable federal and
state laws.
B. The Adviser shall report to the Trustees of the Trust (the
"Trustees") at such times and in such detail as the Trustees may
from time to time determine to be appropriate in order to permit
the Trustees to determine the adherence by the Adviser to the
investment policies and legal requirements of each Fund.
C. The Adviser shall place all orders for the purchase and sale of
portfolio investments for the account of the Funds with issuers,
brokers or dealers selected by the Adviser which may include
brokers or dealers affiliated with the Adviser. In the selection
of such brokers or dealers and the placing of such orders, the
Adviser shall always seek best execution (except to the extent
permitted by the next sentence hereof), which is to place
portfolio transactions where the Trust can obtain the most
favorable combination of price and execution services in
particular transactions or provided on a continuous 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
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
<PAGE> 24
amount of commission for effecting a portfolio investment
transaction which is in excess of the amount of commission
another broker or dealer would have charged for effecting that
transaction, if the 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 Adviser and
its affiliates with respect to the Trust and to other clients as
to which the Adviser or any affiliate of the Adviser exercises
investment discretion.
D. Subject to the provisions of the Trust's Agreement and
Declaration of Trust and the 1940 Act, the Adviser, at its
expense, may select and contract with one or more investment
advisers (the "Subadvisers") to provide to the Adviser such
investment advice relating to the assets of a Fund and related
services as the Adviser may from time to time deem appropriate,
or delegate any or all of its functions hereunder to one or more
Subadvisers, provided that the Trustees shall approve any such
contract with a Subadviser. So long as any Subadviser serves as
investment adviser to any Fund pursuant to a Subadviser Agreement
in substantially the form attached hereto as Exhibit A (the
"Subadviser Agreement"), the obligation of the Adviser under this
Agreement with respect to managing the investment portfolio of
such Fund shall be, subject in any event to the control of the
Trustees, to determine and review with such Subadviser the
investment objectives, policies and restrictions and placing of
all orders for the purchase and sale of portfolio securities for
such Fund, all as further described in the Subadviser Agreement.
The Adviser will compensate any Subadviser of any Fund for its
services to such Fund. The Adviser may terminate the services of
any Subadviser at any time, subject to the approval of the
Trustees, and shall at such time assume the responsibilities of
such Subadviser unless and until a successor Subadviser is
selected.
3. MANAGEMENT SERVICES. The Adviser will perform (or arrange for the
performance by its affiliates) the management and administrative
services necessary for the operation of the Trust.
A. Subject to the supervision of the Trustees, and unless otherwise
provided herein the Advisor shall be responsible for the day to
day business activities of the Trust and shall perform all
services appropriate thereto, including: (i) providing for
members of its organization to serve without salaries as
Trustees, officers, or agents of the Trust; (ii) furnishing at
its expense such office space as may be necessary for the
suitable conduct of the Trust's business (other than pricing and
bookkeeping) and all necessary light, heat, telephone service,
office equipment stationery, and stenographic, clerical, mailing
and messenger service in connection with such office; (iii) on
behalf of the Funds of the Trust, supervising relations with, and
monitoring the performance of, custodians, depositories, transfer
and pricing agents, accountants, attorneys, underwriters, brokers
and dealers, insurers and other persons in any capacity deemed to
be necessary or desirable; (iv) preparing all general shareholder
communications, including shareholder reports; (v) conducting
shareholder relations; (vi) maintaining the Trust's existence and
its records; (vii) during such times
- 2 -
<PAGE> 25
as shares are publicly offered, maintaining the registration and
qualification of the Trust's shares under federal and state law;
and (viii) investigating the development of management and
shareholder services (and, if appropriate, assisting in the
development and implementation of such services) designed to
enhance the value or convenience of the Funds of the Trust as
investment vehicles.
B. The Adviser shall also furnish such reports, evaluations,
information or analyses to the Trust as the Trustees may request
from time to time or as the Adviser may deem to be desirable. The
Adviser shall make recommendations to the Trustees with respect
to Fund policies, and shall carry out such policies as are
adopted by the Trustees. The Adviser shall, subject to review by
the Trustees, furnish such other services as the Adviser shall
from time to time determine to be necessary or useful to perform
its obligations under this Agreement. Should the Trust have
occasion to call upon the Adviser for services not herein
contemplated or through the Adviser to arrange for the services
of others, the Adviser will act for the Trust upon request to the
best of its ability, the compensation for its services to be
agreed upon with respect to each such occasion as it arises.
C. The Adviser will not furnish the Trust the following services
under this Agreement:
(i) determinations of the Trust's net assets and the net asset
value per share of its shares ("pricings");
(ii) maintenance of accounts, books and records as required by
Section 31(a) of the 1940 Act and the rules thereunder
("bookkeeping"); and
(iii) provision of custodian services, transfer agent services,
dividend disbursement and reinvestment services,
shareholder services, or shareholder recordkeeping
services.
4. EXPENSES OF THE TRUST. It is understood that the Trust will pay all its
expenses other than those expressly stated to be payable by the Adviser
hereunder. The expenses payable by the Trust shall include, without
limitation; (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses associated with pricing
and bookkeeping;. (iv) fees and expenses of its Trustees other than
those who are "interested persons" of the Trust or the Adviser; (v)
legal and audit expenses; (vi) custodian, registrar and transfer agent
fees and expenses; (vii) fees and expenses related to the registration
and qualification of the Trust and the Fund's shares for distribution
under state and federal securities laws; (viii) expenses of printing and
mailing reports and notices and proxy material to shareholders of the
Funds; (ix) all other expenses incidental to holding meetings of the
Trust's shareholders, including proxy solicitations therefor; (x)
insurance premiums for fidelity and other coverage; (xi) its
proportionate share of association membership dues; (xii) expenses of
typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xiii) expenses of printing and
mailing Prospectuses
- 3 -
<PAGE> 26
and Statements of Additional Information and supplements thereto sent to
existing shareholders: and (ix) such non-recurring or extraordinary
expenses as may arise, including those relating to actions suits or
proceedings to which the Trust is a party and the legal obligation which
the Trust may have to indemnify the Trust's Trustees and officers with
respect thereto.
5. COMPENSATION. As full compensation for the services furnished and
expenses borne by the Adviser herein, the Trust will pay a monthly fee
to the Adviser, computed and paid monthly at an annual rate of the
average daily net assets of each Fund, as described in Schedule A which
is attached hereto.
The fee computed with respect to the net assets of each Fund shall be
paid from the assets of such Fund. The average daily net assets of each
Fund shall be determined by taking an average of all of the
determinations of net asset value 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 month shall be payable within five (5)
business days after the end of the month.
In the event that expenses of any Fund for any fiscal year should exceed
the expense limitation on investment company expenses imposed by any
statute or regulatory authority of any jurisdiction in which shares of
the Fund are then qualified for offer and sale, the compensation due the
Adviser such period shall be reduced by the amount of such excess by a
reduction or refund thereof, subject to readjustment during the Fund's
fiscal year. In the event that the expenses with respect to any Fund
should exceed any expense limitation which the Adviser may, by written
notice to the Trust, voluntarily declare to be effective, subject to
such terms and conditions as the Adviser may prescribe in the notice,
the compensation due the Adviser shall be reduced, and, if necessary,
the Adviser shall bear expenses with respect to the Fund, to the extent
required by the expense limitation.
If the 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.
In addition to the foregoing, the Trust will reimburse the Adviser for
the traveling and incidental expenses (other than the regular Worcester
office expenses described above) which may be incurred in connection
with special work performed at its request.
6. LIMITATION OF LIABILITY. The Adviser shall be under no liability to the
Trust or its Shareholders or creditors for any matter or thing in
connection with the performance of any of the 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 Adviser against any
liability to the Trust by reason of the 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.
- 4 -
<PAGE> 27
7. AMENDMENT. This Agreement may be amended at any time by mutual consent
of the parties, provided that such amendment shall have been approved
(i) by vote of a majority of the outstanding voting securities of each
Fund affected by such amendment, and (ii) by vote of a majority of the
Trustees of the Trust who are not interested persons of the Adviser or
any Subadviser or of the Trust, cast in person at a meeting called for
the purpose of voting on such approval.
8. TERMINATION. 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 for two years from the date hereof, and
shall continue in full force and effect for successive periods of
one year thereafter, but only so long as each such continuance is
approved (i) by the Trustees or by the affirmative vote of a
majority of the outstanding voting securities of a Fund, and (ii)
by a vote of a majority of the Trustees who are not interested
persons of the Trust or of the Adviser or of any Subadviser, 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 a Fund for
their approval and such shareholders fail to approve such
continuance of this Agreement as provided herein, the 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 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 Adviser on sixty days'
written notice.
C. This Agreement shall automatically terminate in the event of its
assignment.
9. AGREEMENT AND DECLARATION OF TRUST. A copy of the Trust's Agreement and
Declaration is on file with the Secretary of State 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 Trust.
10. OTHER AGREEMENTS, ETC. 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 Adviser, and in any person controlled by or under common control
with the Adviser, and that the Adviser and any person controlled by or
under common control with the Adviser may have an interest in the Trust.
It is also understood that the Adviser and persons controlled by or
under common control with the Adviser have and may have advisory,
management service or other contracts with other organizations and
persons, and may have other interests and businesses.
- 5 -
<PAGE> 28
11. MISCELLANEOUS. The Adviser, its directors, officers, and its employees
retain the right to engage in other business, and to render portfolio
management, investment advisory, or other services of any kind to any
other corporation, firm, individual, or association. Neither the Adviser
nor any officer, director, or shareholder of the Adviser shall act as
principal or receive any compensation in connection with the purchase or
sale of securities by or on behalf of the Trust other than the
compensation provided in this Agreement.
The Adviser is an independent contractor and not an agent of the Trust.
The Trust recognizes the Adviser's control of the names "SMA
Investment Trust" and "Allmerica Investment Trust" and agrees that its
right to use such names is non-exclusive and can be terminated by the
Adviser at any time. The use of such names will be terminated
automatically if at any time the Adviser or affiliate of the Adviser
ceases to be investment adviser for the Trust.
For the purposes of this Agreement, majority of the outstanding voting
securities of a Fund at any annual or special meeting shall mean a
concurring vote of (i) 67% or more of the shares of the Fund
represented at such meeting, if more than 50% of the outstanding shares
of the Fund are represented in person or by proxy, or (ii) 50% of the
outstanding shares of the Fund, whichever is less
For the purposes of this Agreement, the terms "interested person" and
"assignment" shall have their respective meanings defined in the 1940
Act, 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.
Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the NASD and State insurance
regulators) and shall permit such authorities reasonable access to its
books and records in connection with any investigation or inquiry
relating to this Agreement or the transactions contemplated hereby.
- 6 -
<PAGE> 29
Notwithstanding the generality of the foregoing, each party hereto
further agrees to furnish the California Insurance Commissioner, or the
Insurance Commissioner of any other state, with any information or
reports in connection with services provided under this Agreement which
such Commissioner may reasonably request in order to ascertain whether
the variable contracts operations of the Company are being conducted in
a manner consistent with the state's regulations concerning variable
contracts and any other applicable law or regulations.
This Agreement shall be effective on the date executed. Executed this 1st day of
July, 1992.
ALLMERICA INVESTMENT
MANAGEMENT COMPANY, INC.
/s/ Stephen P. Setterlund By: /s/ Robert T. Stemple
- ---------------------------------- ------------------------------------
Witness Assistant Vice President
ALLMERICA INVESTMENT TRUST
/s/ Stephen P. Setterlund By: /s/ Richard M. Reilly
- ---------------------------------- ------------------------------------
Witness President
- 7 -
<PAGE> 30
<TABLE>
As full compensation for the services furnished and expenses borne by the
Adviser herein, the Trust will pay a monthly fee to the Adviser, computed and
paid monthly at an annual rate of the average daily net assets of each Fund, as
described below:
<CAPTION>
SCHEDULE A
ANNUAL FEES
-----------
Investment Money Equity Government
Growth Grade Income Market Index Bond
Assets Fund Fund Fund Fund Fund
------ ------ ------------ ------ ------ ----------
<S> <C> <C> <C> <C> <C>
Up to $50,000,000 0.60% 0.50% 0.35% 0.35% 0.50%
Next $200,000,000 0.50% 0.35% 0.25% 0.30% 0.50%
On the remainder 0.35% 0.25% 0.20% 0.25% 0.50%
</TABLE>
- 8 -
<PAGE> 31
FORM
----
OF
--
NOTICE
------
Notice, effective August 21, 1992, with respect to the Form of
Management Agreement ( the "Agreement") between Allmerica Investment Management
Company, Inc. (the "Adviser") and Allmerica Investment Trust (the "Trust")
dated July 1, 1992.
The Trust hereby gives notice that:
(i) four additional series of the Trust, Select Aggressive
Growth Fund, Select Growth Fund, Select Growth and Income
Fund and Select Income Fund (the "New Series"), have been
established, each New Series constitutes a "Fund" for
purposes of Section 1 of the Agreement, and the Adviser will
serve as investment adviser for the New Series under the
terms of the Agreement; and
(ii) for purposes of Section 5 of the Agreement, the Trust will
pay a monthly fee to the Adviser, computed and paid monthly
at an annual rate of the average daily net assets of each of
the New Series, as indicated below:
ANNUAL FEES
------ ----
Select Aggressive Growth Fund Select Growth Fund
1.00% 0.85%
Select Growth and Income Fund Select Income Fund
0.75% 0.60%
<PAGE> 32
This Notice is not intended to and does not, alter or amend the
Agreement, which remains in full force and effect.
Allmerica Investment Trust
(formerly SMA Investment Trust)
By: Robert T. Stemple
------------------------------------
Dated: August 21, 1992
Acknowledged by Allmerica Investment
Management Company, Inc.
By: Richard M. Reilly
------------------------------
Dated: August 21, 1992
<PAGE> 33
NOTICE
Notice, effective April 30, 1993, with respect to the Management Agreement
between Allmerica Investment Management Company, Inc. (the "Adviser") and
Allmerica Investment Trust (the "Trust") dated July 1, 1992 (the "Agreement").
The Trust hereby gives notice that:
(i) one additional series of the Trust, The Small Cap Value Fund
(the "New Series"), has been established. This New Series
constitutes a "Fund" for purposes of Section 1 of the
Agreement and the Adviser will serve as investment adviser for
the New Series under the terms of the Agreement, and
(ii) for purposes of Section 5 of the Agreement, the Trust will pay
a monthly fee to the Adviser, computed daily and paid monthly
at an annual rate of .85% of the average daily net assets of
the New Series.
This Notice is not intended to and does not otherwise alter or amend the
Agreement which remains in full force and effect.
Allmerica Investment Trust
By:________________________________
Date:______________________________
Acknowledged by
Allmerica Investment Management Company, Inc.
By:_______________________________
Date:_____________________________
<PAGE> 34
NOTICE
Notice, effective May 1, 1994, with respect to the Management Agreement (the
"Agreement") between Allmerica Investment Management Company, Inc. (the
"Adviser") and Allmerica Investment Trust (the "Trust") dated July 1, 1992.
The Trust hereby gives notice that:
(i) one additional series of the Trust, The Select International Equity
Fund (the "New Series"), has been established, this New Series
constitutes a "Fund" for purposes of Section 1 of the Agreement, and
the Adviser will serve as investment adviser for the New Series under
the terms of the Agreement; and
(ii) for purposes of Section 5 of the Agreement, the Trust will pay a
monthly fee to the Adviser, computed daily and paid monthly at an
annual rate of 1.00% of the average daily net assets of the New Series.
This Notice is not intended to and does not, alter or amend the Agreement, which
remains in full force and effect.
Allmerica Investment Trust
By: Robert T. Stemple
-------------------------------
Date:_____________, 1994
Acknowledged by Allmerica Investment
Management Company, Inc.
By: ???
-------------------------------
Date:_____________, 1994
<PAGE> 35
NOTICE
Notice, effective April 28, 1995, with respect to the Management Agreement (the
"Agreement") between Allmerica Investment Management Company, Inc. (the
"Adviser") and Allmerica Investment Trust (the "Trust") dated July 1, 1992.
The Trust hereby gives notice that:
(i) one additional series of the Trust, the Select Capital Appreciation
Fund (the "New Series"), has been established, this New Series
constitutes a "Fund" for purposes of Section 1 of the Agreement, and
the Adviser will serve as investment adviser for the New Series under
the terms of the Agreement; and
(ii) for purposes of Section 5 of the Agreement, the Trust will pay a
monthly fee to the Adviser, computed daily and paid monthly at an
annual rate of 1.00% of the average daily net assets of the New Series.
This Notice is not intended to and does not, alter or amend the Agreement, which
remains in full force and effect.
Allmerica Investment Trust
By: Robert T. Stemple
-------------------------------
Date: March 20, 1995
Acknowledged by Allmerica Investment
Management Company, Inc.
By: Richard M. Reilly
-------------------------------
Date: March 20, 1995
<PAGE> 36
AMENDMENT NO. 1
Amendment No. 1, effective April 1, 1997 (the "Amendment"), with respect to the
Management Agreement between Allmerica Investment Management Company, Inc. (the
"Adviser") and Allmerica Investment Trust (the "Trust") dated July 1, 1992 (the
"Agreement"), as supplemented;
<TABLE>
The Trust and the Adviser amend the Agreement as it relates to the Small Cap
Value Fund, one of the series of the Trust, to provide that the monthly fee paid
to the Adviser will be as described below:
<CAPTION>
Net Assets Fee Rate
---------- --------
<S> <C>
First $100 million 1.00%
Next $150 million 0.85%
Next $250 million 0.80%
Next $250 million 0.75%
Over $750 million 0.70%
</TABLE>
This Amendment does not intend to and does not otherwise alter or amend the
Agreement which remains in full force and effect.
Allmerica Investment Trust
By:________________________________
Date:______________________________
Allmerica Investment Management
Company, Inc.
By:________________________________
Date:______________________________
<PAGE> 37
ALLMERICA INVESTMENT TRUST
SMALL CAP VALUE FUND
PRELIMINARY COPY
PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoints Richard M. Reilly, Thomas P. Cunningham and
Joseph W. MacDougall, Jr., and each of them, attorneys and proxies of the
undersigned, with full power of substitution, and does hereby request that the
votes attributable to the undersigned's interest be cast as directed, with all
powers the undersigned would possess if personally present, at the Special
Meeting of Shareholders of the Small Cap Value Fund (the "Fund") of Allmerica
Investment Trust (the "Trust") to be held at 440 Lincoln Street, Worcester,
Massachusetts, on Tuesday, March 18, 1997 at 10:00 a.m. local time, and at any
adjournment thereof.
BE SURE TO VOTE, SIGN AND DATE THIS
PROXY ON THE REVERSE SIDE.
THE TRUSTEES RECOMMEND VOTING "FOR" ALL PROPOSALS
Please vote by filling in the appropriate box below, as shown, using blue or
black ink or dark pencil. Do not use red ink.
1. Proposal to approve or disapprove revisions in the investment
objective, name and policies of the Fund to change from
investing primarily in small cap value stocks to investing
primarily in small and mid-cap value stocks.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. Proposal to approve or disapprove a new Sub-Adviser Agreement
between Allmerica Investment Management Company, Inc. ("AIMCO")
and CRM Advisors, LLC relating to the Fund.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to approve or disapprove an amendment to the Management
Agreement between AIMCO and the Trust relating to the Fund.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the named proxies are authorized to vote
upon such other business as may properly come before the Meeting, or any
adjournment thereof.
<PAGE> 38
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL
BE VOTED "FOR" ALL PROPOSALS. IF A PROXY IS NOT RECEIVED FROM A PARTICULAR
CONTRACT OWNER, THEN THE VOTES ATTRIBUTABLE TO HIS OR HER INTEREST WILL BE
ALLOCATED IN THE SAME RATIO AS VOTES FOR WHICH INSTRUCTIONS HAVE BEEN RECEIVED.
Please sign exactly as name appears
hereon. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such. If a corporation, please sign in
full corporate name by president or
other authorized officer. If a
partnership, please sign in partnership
name by authorized person. If joint
owners, each owner should sign.
Note: The undersigned hereby
acknowledges receipt of the Notice of
Special Meeting and Proxy Statement, and
revokes any Proxy heretofore given with
respect to the votes covered by this
Proxy.
Dated: _______________, 1997 ________________________________________
PLEASE MARK, SIGN, DATE Signature
AND RETURN THIS PROXY ________________________________________
PROMPTLY USING THE Signature if held jointly
ENCLOSED ENVELOPE.
<PAGE> 39
DRAFT PRELIMINARY COPY
February 10, 1997
Dear Valued Client:
The enclosed proxy materials relate to a Special Meeting of Shareholders of the
Small Cap Value Fund (the "Fund") of Allmerica Investment Trust (the "Trust"),
to be held on March 18, 1997 at 10:00 a.m., local time, here in our offices at
440 Lincoln Street, Worcester, Massachusetts 01653 (the "Meeting").
At the Meeting, Shareholders will be asked to approve:
(i) revisions in the investment objective, name and policies of the Fund
to change from investing primarily in small cap value stocks to
investing primarily in small and mid-cap value stocks;
(ii) a new Sub-Adviser Agreement between Allmerica Investment Management
Company, Inc. ("AIMCO"), the Manager of the Fund, and CRM Advisors,
LLC ("CRM"), the Sub-Adviser of the Fund, including a new
sub-adviser fee structure; and
(iii) an amendment to the management Agreement between AIMCO and the trust
which provides for a change in the management fees payable by the
Fund to AIMCO.
The Trustees recommend to Shareholders that they approve each of these
proposals.
Management believes that changing the Fund from a small cap value portfolio to a
small-mid cap value portfolio will expand the range of attractive investment
opportunities available to it and will better position the Fund relative to the
Trust's other equity portfolios. The determination to broaden the Fund's
investment objective and related policies was one of the main reasons that
Management decided to consider a change in sub-advisers. Following an extensive
evaluation process of various candidates, including the former Sub-Adviser,
David L. Babson & Co. Inc. ("Babson"), Management selected CRM, a value oriented
investment adviser specializing in small-mid cap equity securities, to replace
Babson as the Fund's Sub-Adviser.
In the process of reviewing available candidates to become sub-adviser,
Management concluded that a revision to the management fee structure would be
appropriate. The proposed new structure provides for an increase in both the
Management Agreement and the Sub-Adviser Agreement at the
<PAGE> 40
base level. Both the Management Agreement and the new Sub-Adviser Agreement also
provide for breakpoints which would reduce the fee rates as net assets of the
Fund increase to specified levels. Thus, the Shareholders should realize cost
savings from management fee reductions as Fund assets increase. As a result of
the proposed changes in management fees, expenses incurred by Shareholders at
the Fund's current net asset level would increase. To minimize the effect of the
fee increase on Fund expenses, AIMCO has committed to a voluntary limitation of
its fee until further notice. Due to the increase in the sub-advisory fee to be
paid to CRM, the net effect of these changes is to reduce AIMCO's net
compensation. The Trustees believe that the proposed management and sub-adviser
fee structures provide appropriate means for compensating AIMCO and CRM.
Although the Trustees would like very much to have you attend the Meeting, they
realize that this is not always possible. Whether or not you plan to be present
at the Meeting, your vote is needed. Please complete, sign and return the
enclosed proxy card promptly. A postage paid envelope is enclosed for this
purpose.
Sincerely yours,
Richard M. Reilly,
President
SHAREHOLDERS ARE URGED TO SIGN AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED
ENVELOPE SO AS TO BE REPRESENTED AT THE MEETING.
