<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(Amendment No. ____)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 14a-12
Allmerica Investment Trust
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
ALLMERICA INVESTMENT TRUST
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 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 August 15, 1997. At the Meeting, you and the other
shareholders will be asked to consider and vote on the proposals listed below.
Certain of the proposals relate to all of the Funds of the Trust and others
affect only certain Funds. The Funds to which each proposal relates and the
shareholders entitled to vote on each proposal are indicated in parentheses.
1. To elect eight Trustees, each to serve until his or her successor is
duly elected and qualified (combined vote by the shareholders of all Funds
of the Trust);
2. To ratify or reject the selection by the Trustees of the firm of
Price Waterhouse LLP as independent accountants of the Trust for the
fiscal year ending December 31, 1997 (combined vote by the shareholders of
all Funds of the Trust);
3. To approve or disapprove an Amendment to the Management Agreement
between Allmerica Investment Management Company, Inc. ("AIMCO") and the
Trust, as set forth in Exhibit I to the attached Proxy Statement, which
includes proposed changes in the management fee schedules for seven Funds
of the Trust (separate votes by the shareholders of the Select Aggressive
Growth Fund, Select Capital Appreciation Fund, Select International Equity
Fund, Growth Fund, Select Growth and Income Fund, Select Income Fund and
Investment Grade Income Fund);
4. To approve or disapprove Amended Schedule A to the Sub-Adviser
Agreement between AIMCO and Nicholas-Applegate Capital Management, L.P.
relating to the Select Aggressive Growth Fund, as set forth in Exhibit II
to the attached Proxy Statement, which includes proposed changes in the
sub-adviser fee schedule for such Fund (vote by the shareholders of the
Select Aggressive Growth Fund);
5. To approve or disapprove Amended Schedule A to the Sub-Adviser
Agreement between AIMCO and Janus Capital Corporation relating to Select
Capital Appreciation Fund, as set forth in Exhibit III to the attached
Proxy
<PAGE>
Statement, which includes proposed changes in the sub-adviser fee schedule
for such Fund (vote by the shareholders of the Select Capital Appreciation
Fund);
6. To approve or disapprove an arrangement that would permit the
investment manager of the Trust to enter into and materially amend sub-
advisory agreements with non-affiliated sub-advisers without obtaining
shareholder approval (separate votes by the shareholders of the Select
Aggressive Growth Fund, Select Capital Appreciation Fund, Small-Mid Cap
Value Fund, Select International Equity Fund, Select Growth Fund, Growth
Fund, Select Growth and Income Fund and Select Income Fund);
7. To approve or disapprove changing the status of the investment
objective of each Fund of the Trust from fundamental to non-fundamental
(separate votes by the shareholders of each Fund of the Trust);
8. To approve or disapprove revisions in the investment restrictions of
each Fund of the Trust to permit the Fund to borrow money for temporary
purposes when the aggregate amount borrowed does not exceed 33 1/3% of the
value of the Fund's total assets at the time such borrowing is made
(separate votes by the shareholders of each Fund of the Trust);
9. To approve or disapprove changing the status of the investment
restrictions of each Fund of the Trust relating to financial futures and
related options from fundamental to non-fundamental (separate votes by the
shareholders of each Fund of the Trust);
10. To approve or disapprove revisions in the investment policies of the
Small-Mid Cap Value Fund to permit the Fund to engage in financial futures
and related options transactions (vote by the shareholders of the Small-
Mid Cap Value Fund);
11. To approve or disapprove changing the status of certain investment
policies of the Growth Fund from fundamental to non-fundamental (vote by
the shareholders of the Growth Fund); and
12. To approve or disapprove revisions in the investment restrictions of
five Funds of the Trust to permit such Funds to invest in securities which
are restricted as to disposition under federal securities laws (separate
votes by the shareholders of the Growth Fund, Equity Index Fund,
Investment Grade Income Fund, Government Bond Fund and Money Market Fund).
Shareholders of record as of the close of business on June 6, 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
2
<PAGE>
ENCLOSED PROXY CARD. If you do attend the Meeting, you may revoke the Proxy
and vote in person.
Any shareholder with questions regarding the Meeting or the proxy materials
may call 1-800-533-2105.
By order of the
Trustees
George M. Boyd
Secretary
Worcester MA
July 7, 1997
3
<PAGE>
ALLMERICA INVESTMENT TRUST
440 LINCOLN STREET
WORCESTER, MASSACHUSETTS 01653
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
AUGUST 15, 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 Trust, to be held at
the offices of the Trust, 440 Lincoln Street, Worcester MA 01653 on August 15,
1997 for the purposes set forth in the accompanying Notice. The mailing date
of this Proxy Statement is on or about July 7, 1997.
A summary of each proposal to be voted upon at the Meeting follows showing
which proposals apply to each Fund of the Trust. You are encouraged to read
the detailed descriptions of the proposals, also included in this Proxy
Statement, for more information.
<TABLE>
<CAPTION>
PROPOSAL
NUMBER SUMMARY DESCRIPTION OF PROPOSAL FUND(S) TO WHICH PROPOSAL APPLIES
-------- ------------------------------- ---------------------------------
<C> <S> <C>
1 Election of eight Trustees All Funds
including seven current Trustees
and one new Trustee.
2 Ratify the selection of Price All Funds
Waterhouse LLP as independent
accountants.
3 Approval of an Amendment to the Select Aggressive Growth
Management Agreement, including Fund, Select Capital
changes to reduce the management Appreciation Fund, Select
fees of the Select Aggressive International Equity Fund,
Growth Fund, Select Capital Select Growth and Income
Appreciation Fund, Select Fund, Select Income Fund,
International Equity Fund, Select Growth Fund and
Growth and Income Fund and Select Investment Grade Income Fund
Income Fund and to increase the
management fees of the Growth Fund
and Investment Grade Income Fund.
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
PROPOSAL
NUMBER SUMMARY DESCRIPTION OF PROPOSAL FUND(S) TO WHICH PROPOSAL APPLIES
-------- ------------------------------- ---------------------------------
<C> <S> <C>
4 Approval of Amended Schedule A to Select Aggressive Growth
the Sub-Adviser Agreement relating Fund
to the Select Aggressive Growth
Fund, including changes to reduce
the sub-adviser fees.
5 Approval of Amended Schedule A to Select Capital Appreciation
the Sub-Adviser Agreement relating Fund
to the Select Capital Appreciation
Fund, including changes to reduce
the sub-adviser fees.
6 Approve an arrangement that would Select Aggressive Growth
permit the investment manager of Fund, Select Capital
the Trust to enter into and Appreciation Fund, Small-Mid
materially amend sub-advisory Cap Value Fund,
agreements with non-affiliated sub- Select International Equity
advisers without a shareholder Fund, Select Growth Fund,
vote. Growth Fund,
Select Growth and Income
Fund and Select Income Fund
7 Change the status of the investment All Funds
objective of each Fund of the Trust
from fundamental to non-fundamental
to allow the investment objectives
to be amended in the future without
a shareholder vote.
8 Amend the investment restrictions All Funds
of each Fund to increase the amount
of money it may borrow for
temporary purposes from 5% to 33
1/3% of Fund assets.
9 Change the status of the investment All Funds
restrictions of each Fund relating
to financial futures and options
from fundamental to non-fundamental
to allow such restrictions to be
amended in the future without a
shareholder vote.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PROPOSAL
NUMBER SUMMARY DESCRIPTION OF PROPOSAL FUND(S) TO WHICH PROPOSAL APPLIES
-------- ------------------------------- ---------------------------------
<C> <S> <C>
10 Amend the investment policies of Small-Mid Cap Value Fund
the Small-Mid Cap Value Fund to
permit the Fund to engage in
financial futures and related
options transactions.
11 Change the status of certain Growth Fund
investment policies of the Growth
Fund from fundamental to non-
fundamental to allow the policies
to be amended in the future without
a shareholder vote.
12 Revise the investment restrictions Growth Fund,
of the Growth Fund, Equity Index Equity Index Fund,
Fund, Investment Grade Income Fund, Investment Grade Income
Government Bond Fund and Money Fund, Government Bond Fund
Market Fund of the Trust to permit and Money Market Fund
such Funds to invest in securities
which are restricted as to
disposition under federal
securities laws.
</TABLE>
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 Trust.
The Trust will furnish, without charge, a copy of the most recent Annual
Report to the shareholders of the Trust and its most recent Semi-Annual Report
succeeding the Annual Report, if available. Requests should be directed to the
Trust at 440 Lincoln Street, Worcester, Massachusetts 01653 or by calling 1-
800-533-2105.
The Trust's investment manager is Allmerica Investment Management Company,
Inc. ("AIMCO"), an indirect wholly-owned subsidiary of Allmerica Financial
Corporation ("AFC"), a publicly-traded Delaware holding company for a group of
affiliated companies, the largest of which is First Allmerica Financial Life
Insurance Company ("First Allmerica"). The address of AIMCO, AFC and First
Allmerica is 440 Lincoln Street, Worcester MA 01653. First Data Investor
Services Group, Inc., a wholly-owned subsidiary of First Data Corporation,
calculates net asset value per share, maintains general accounting records and
performs certain administrative services for the Trust. Its address is 4400
Computer Drive, Westborough MA 01581.
3
<PAGE>
The shares of each of the Funds of the Trust may be purchased only by
separate accounts ("Separate Accounts") established by First Allmerica or
Allmerica Financial Life Insurance and Annuity Company ("Allmerica Financial
Life"), a subsidiary of AFC, 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 Financial Life. Subject to certain exceptions with respect to
unregistered Separate Accounts, First Allmerica and Allmerica Financial Life
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. Except when otherwise permitted by applicable law or regulation,
interests in Contracts for which no Proxies are received will be voted in
proportion to the Proxy instructions which are received from Contract Owners.
First Allmerica and Allmerica Financial Life also will vote shares in a
registered Separate Account that they own and which are not attributable to
Contracts in the same proportion.
If any of Proposals Nos. 3 through 12, as stated herein, are approved by
shareholders of the applicable Fund, you will be notified of the changes. If
you are a Contract Owner affected by these changes, you will be given the
option to request transfer of your invested holdings without charge on written
request within sixty (60) days of the later of (1) the effective date of such
change, or (2) your receipt of the notice of the right to transfer.
As of the close of business on June 6, 1997, the number of shares
outstanding of each Fund of the Trust were as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES
OUTSTANDING AS OF
FUND JUNE 6, 1997
---- -----------------
<S> <C>
Select Aggressive Growth Fund................................ 223,356,357.57
Select Capital Appreciation Fund............................. 120,910,803.20
Small-Mid Cap Value Fund..................................... 89,672,351.64
Select International Equity Fund............................. 232,645,935.80
Select Growth Fund........................................... 199,458,463.33
Growth Fund.................................................. 244,622,036.67
Equity Index Fund............................................ 86,667,492.13
Select Growth and Income Fund................................ 241,462,975.18
Select Income Fund........................................... 85,285,813.49
Investment Grade Income Fund................................. 153,684,963.02
Government Bond Fund......................................... 44,728,025.36
Money Market Fund............................................ 247,042,800.83
----------------
Total....................................................... 1,969,538,018.17
================
</TABLE>
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.
4
<PAGE>
PROPOSAL NO. 1
ELECTION OF TRUSTEES
(APPLIES TO ALL FUNDS)
The Declaration of Trust provides that the Trust shall have a Board of
Trustees ("Board") composed of not less than three nor more than fifteen
Trustees to be elected by ballot by the shareholders. The number of members of
the Board has been fixed by the Board at eight, the current number of members.
There are seven nominees for re-election and one new nominee for election. The
Trust's Nominating Committee and Board of Trustees have voted to recommend
Cynthia A. Hargadon to replace Russell E. Fuller, who is expected to retire
from the Board upon the election of his successor pursuant to the Board's
retirement policy.
Biographical data for the seven Trustees of the Trust who have been
nominated for re-election and for the new nominee is set forth below.
Information relating to the principal officers of the Trust is set forth under
"Information Pertaining to Allmerica Financial Corporation." It is proposed at
the Meeting that the persons listed below each be elected to serve as such
until his or her successor is elected and qualified. All have stated they
would be willing to serve if re-elected or elected as applicable. There are no
arrangements between any Trustee and any other person pursuant to which he or
she was or is to be selected as a Trustee.
<TABLE>
<CAPTION>
BENEFICIAL
OWNERSHIP OF
NAME AND AGE OF NOMINEE SHARES AS
AND PRESENT POSITION WITH TRUST PRINCIPAL OCCUPATIONS AND SERVED OF
(IF APPLICABLE) AS OF 5/31/97 DIRECTORSHIPS(1) SINCE 5/31/97(2)
------------------------------- ------------------------- ------- ------------
<S> <C> <C> <C>
Cynthia A. Hargadon (42)........ President, Stable Value Nominee None
Association (investment
trade group), and Senior
Consultant, Johnson
Custom Strategies
(investment services
firm), 1996 to Present;
Senior Vice President
and Chief Investment
Officer, ICMA Retirement
Corporation (investment
adviser), 1987-1996.
Gordon Holmes (59).............. Certified Public 1985 None
Trustee, Chairman of the Audit Accountant; Retired
Committee and Member of the Partner, Tofias,
Fund Operations Committee Fleishman, Shapiro & Co.
(Accountants) 1975-1996.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
BENEFICIAL
OWNERSHIP OF
NAME AND AGE OF NOMINEE SHARES AS
AND PRESENT POSITION WITH TRUST PRINCIPAL OCCUPATIONS AND SERVED OF
(IF APPLICABLE) AS OF 5/31/97 DIRECTORSHIPS(1) SINCE 5/31/97(2)
------------------------------- ------------------------- ------ ------------
<S> <C> <C> <C>
*John P. Kavanaugh (42).......... President, Allmerica 1995 (3)
Trustee Asset Management, Inc.
("AAM") since 1995; Vice
President, First
Allmerica and Allmerica
Financial Life.
Bruce E. Langton (66)............ Director, Competitive 1996 None
Trustee, Member of the Technologies, Inc.
Nominating Committee (technology transfer);
Trustee, Bankers Trust
institutional mutual
funds; Member,
Investment Committee,
TWA Pilots Trust Annuity
Plan; Member, Investment
Committee, Unilever
United States--Pension &
Thrift plans.
*John F. O'Brien (54)............ President, Chief 1989 None
Trustee, Chairman of the Board Executive Officer and
Director, First
Allmerica; Director and
Chairman of the Board,
Allmerica Financial
Life.
Attiat F. Ott (61)............... Professor of Economics 1991 None
Trustee, Chairman of the Fund and Director of the
Operations Committee and Member Institute for Economic
of the Audit Committee Studies, Clark
University.
*Richard M. Reilly (59).......... President, Allmerica 1991 (4)
Trustee and President Financial Life since
1995; Vice President,
First Allmerica and
President, AIMCO.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
BENEFICIAL
OWNERSHIP OF
NAME AND AGE OF NOMINEE SHARES AS
AND PRESENT POSITION WITH TRUSTS PRINCIPAL OCCUPATIONS AND SERVED OF
(IF APPLICABLE) AS OF 5/31/97 DIRECTORSHIPS(1) SINCE 5/31/97(2)
-------------------------------- ------------------------- ------ ------------
<S> <C> <C> <C>
Ranne P. Warner (52)............. President, Centros 1985 None
Trustee, Member of the Properties, USA (real
Nominating Committee and Fund estate development and
Operations Committee consulting company);
Owner, Ranne P. Warner
and Company (real estate
consulting firm);
Director, Wainwright
Bank & Trust Co.
(commercial bank).
</TABLE>
- -----------
* Messrs. Kavanaugh, O'Brien and Reilly are "interested persons", as defined
in the Investment Company Act of 1940 as amended (the "1940 Act"), of the
Trust and of AFC because of their affiliations with AFC.
(1) Except as otherwise noted, each individual has held the office indicated
or other offices in the same organization for the last five years. The
business address of each person is 440 Lincoln Street, Worcester,
Massachusetts 01653. AAM, AIMCO, Allmerica Financial Life and First
Allmerica are affiliates of the Trust.
(2) On May 31, 1997, the Trustees and officers as a group beneficially owned
less than 1% of the outstanding shares of each Fund of the Trust.
<TABLE>
<CAPTION>
NUMBER OF
SHARES
(3) FUND ---------
<S> <C>
Select Aggressive Growth Fund.......................... 122
Select International Equity Fund....................... 76
<CAPTION>
NUMBER OF
SHARES
(4) FUND ---------
<S> <C>
Select Aggressive Growth Fund.......................... 2,682
Small Mid-Cap Value Fund............................... 3,169
Select Growth Fund..................................... 3,393
Growth Fund............................................ 10,042
Equity Index Fund...................................... 10,019
Select Income Fund..................................... 2,097
Investment Grade Income Fund........................... 9,788
Government Bond Fund................................... 107,566
</TABLE>
The Trust's Board, which is currently composed of five non-interested
Trustees and three interested Trustees, met five times during the fiscal year
ended December 31, 1996 and all of the Trustees attended at least 75% of the
Board and Committee meetings during the fiscal year. The Trustees received the
following compensation during that year. No officer of the Trust received
compensation from the Trust for serving in such capacity.
7
<PAGE>
COMPENSATION TABLE
<TABLE>
<CAPTION>
TOTAL COMPENSATION FROM TRUST
AND FUND COMPLEX (WHICH
NAME OF PERSON AGGREGATE COMPENSATION INCLUDES TWO OTHER INVESTMENT
AND POSITION FROM TRUST COMPANIES) PAID TO TRUSTEES
-------------- ---------------------- -----------------------------
<S> <C> <C>
Russell E. Fuller......... $8,075.64 $8,500
Trustee, Chairman of the
Nominating Committee
Gordon Holmes............. $8,544.84 $9,000
Trustee, Chairman of the
Audit Committee and
Member of the Fund
Operations Committee
*Bruce E. Langton......... $5,729.26 $6,000
Trustee, Member of the
Nominating Committee
Attiat F. Ott............. $8,075.64 $8,500
Trustee, Chairman of the
Fund Operations
Committee
and Member of the Audit
Committee
Ranne P. Warner........... $8,075.64 $8,500
Trustee, Member of the
Nominating Committee and
Fund Operations
Committee
*John D. Hunt............. $1,876.80 $2,000
former Trustee, former
Member of the Fund
Operations Committee and
the Nominating Committee
**Thomas S. Zocco......... $8,544.84 $9,000
former Trustee, former
Chairman of the Fund
Operations Committee and
former Member of the
Audit
Committee
John P. Kavanaugh......... None None
Trustee
John F. O'Brien........... None None
Trustee
Richard M. Reilly......... None None
Trustee
</TABLE>
8
<PAGE>
- -----------
* Mr. Langton was elected by the Trustees on February 6, 1996 to fill the
vacancy on the Board created by the retirement of Mr. Hunt.
** Mr. Zocco resigned from the Board effective December 31, 1996.
The Trust has no retirement or pension plan for its Trustees. The Trust does
not have a compensation committee; such matters are considered by the Trust's
Nominating Committee.
The Trust's Fund Operations Committee is composed entirely of Trustees who
are not "interested persons" of the Trust, AFC or its affiliates. Currently,
Dr. Ott (Chairman), Mr. Holmes and Ms. Warner comprise the Committee. The
Committee separately reviews and makes recommendations to the Trustees on a
variety of matters, including the various contractual arrangements between the
Trust and its investment adviser, custodian and shareholder servicing agent,
proposals to continue or modify the terms of such agreements and certain
matters where there may be a possible conflict of interest between the
interests of the Trust and AFC or its affiliates. During the fiscal year ended
December 31, 1996, the Committee had one meeting. The Committee has had one
meeting in 1997.
The Trust's Audit Committee is composed entirely of Trustees who are not
"interested persons" of the Trust, AFC or its affiliates. Currently, Mr.
Holmes (Chairman) and Dr. Ott comprise the Committee. This Committee reviews
and evaluates the audit function, including recommending to the Board the
independent accountants to be selected for the Trust, review of all auditing
procedures and arrangements and review of qualifications of key personnel
performing audit work. During the fiscal year ended December 31, 1996, the
Committee had two meetings. The Committee has had one meeting in 1997.
The Trust's Nominating Committee is composed entirely of Trustees who are
not "interested persons" of the Trust, AFC or its affiliates. Currently Mr.
Fuller (Chairman), Mr. Langton and Ms. Warner comprise the Committee. The
Committee is charged with the duties of reviewing the composition and
compensation of the Trustees, proposing additional non-interested Trustees for
election to the Board and reviewing major personnel changes of the Trust.
During the fiscal year ended December 31, 1996, the Committee had one meeting.
The Nominating Committee will consider nominees recommended by shareholders.
Recommendations should be submitted to the Committee in care of the Secretary
of the Trust. The Committee has had one meeting in 1997.
If any of the nominees for election as Trustees shall by reason of death or
for any other reason become unavailable as a candidate at the Meeting, votes
pursuant to the enclosed proxy will be cast for a substitute candidate in the
discretion of the persons named as proxies therein, or their substitutes,
present and acting at the Meeting, or the Trustees may reduce the size of the
Board to less than eight.
9
<PAGE>
INFORMATION PERTAINING TO ALLMERICA FINANCIAL CORPORATION
The following table lists the executive officers of the Trust, each of whom
is an employee of AFC or its affiliates:
<TABLE>
<CAPTION>
NME AND AGE OF OFFICERS ASA
OF 5/31/97 POSITION WITH THE TRUST SERVED SINCE
- --------------------------- ----------------------- ------------
<S> <C> <C>
John F. O'Brien (54)............ Chairman of the Board and Trustee 1989
Richard M. Reilly (59).......... President and Trustee 1991
John P. Kavanaugh (42).......... Vice President and Trustee 1995
Thomas P. Cunningham (51)....... Vice President and Treasurer 1996
(Principal Accounting Officer)
Lisa M. Coleman (37)............ Vice President 1994
Stephen W. Bright (42).......... Vice President 1997
William K. Fain (38)............ Vice President 1996
George M. Boyd (52)............. Secretary 1997
</TABLE>
- -----------
Messrs. O'Brien, Reilly, Kavanaugh and Fain have been employees of AFC or its
affiliates for the last five years. Mr. O'Brien currently is President, Chief
Executive Officer and Director, First Allmerica and Director and Chairman of
the Board, Allmerica Financial Life; Mr. Reilly currently is President,
Allmerica Financial Life; Vice President, First Allmerica; and President,
AIMCO; Mr. Kavanaugh currently is President, Allmerica Asset Management, Inc.
("AAM") and Vice President, First Allmerica and Allmerica Financial Life; Mr.
Fain currently is Vice President, AAM; Mr. Cunningham currently is Vice
President of AIMCO and was Vice President, First Data Investor Services Group,
Inc., 1994-1995 and Vice President, Fidelity Investments, 1990-1993; Ms.
Coleman currently is Vice President of AAM and was Deputy Manager, Brown
Brothers Harriman, 1989-1994; Mr. Bright currently is Vice President of AAM
and was Client Relationship Manager, Connecticut Mutual, 1994-1995 and
Investment Officer, Travelers, 1986-1994; and Mr. Boyd currently is Counsel of
First Allmerica and was Director, Mutual Fund Administration--Legal and
Regulatory, Investors Bank & Trust Company, 1995-1996 and Vice President and
Counsel, 440 Financial Group and First Data Investor Services Group, Inc.,
1992-1995.
RECOMMENDED SHAREHOLDER ACTION AND REQUIRED VOTE
The Trustees recommend that the shareholders vote for each nominee.
Shareholders of all Funds of the Trust vote together in the election of
Trustees. A plurality of the votes properly cast in person or by proxy at the
Meeting is required for the election of the Trustees. Abstentions will have no
effect on the election.
10
<PAGE>
PROPOSAL NO. 2
RATIFICATION OR REJECTION OF SELECTION
OF INDEPENDENT ACCOUNTANTS
(APPLIES TO ALL FUNDS)
Subject to ratification by a majority in interest of shareholders
represented at the Meeting, the firm of Price Waterhouse LLP was selected as
independent accountants for the Trust for the fiscal year ending December 31,
1997 by all of the Trustees who are not "interested persons" of the Trust on
the recommendation of the Audit Committee of the Trustees. Price Waterhouse
LLP also serves as independent accountants for Allmerica Securities Trust,
Allmerica Funds and other affiliates of AFC, but has no relationship with any
of them other than as independent accountants. During the fiscal year ended
December 31, 1996, the audit services provided to the Trust by Price
Waterhouse LLP included examination of financial statements, review of filings
with the Securities and Exchange Commission ("SEC") and preparation of tax
returns. No non-audit services were provided to the Trust.
It is intended that proxies not limited to the contrary will be voted in
favor of ratifying the selection of Price Waterhouse LLP under Section 32(a)
of the 1940 Act as independent public accountants to certify every financial
statement of the Trust required by any law or regulation to be certified by
independent public accountants and filed with the SEC in respect of all or any
part of the fiscal year ending December 31, 1997. Price Waterhouse LLP has no
direct or material indirect interest in the Trust. Representatives of Price
Waterhouse LLP are not expected to be present at the Meeting, but have been
given the opportunity to make a statement if they so desire and will be
available should any matter arise requiring their presence.
RECOMMENDED SHAREHOLDER ACTION AND REQUIRED VOTE
The Trustees recommend that the selection of Price Waterhouse LLP be
ratified. Shareholders of all Funds of the Trust vote together on this matter.
A majority of the votes cast on the matter at the Meeting, in person or by
proxy, is required for approval of this item. Abstentions will have no affect
on the election.
11
<PAGE>
PROPOSAL NO. 3
APPROVAL OR DISAPPROVAL OF AN AMENDMENT
TO THE MANAGEMENT AGREEMENT BETWEEN
ALLMERICA INVESTMENT MANAGEMENT COMPANY, INC. AND
ALLMERICA INVESTMENT TRUST
(APPLIES TO THE SELECT AGGRESSIVE GROWTH FUND,SELECT CAPITAL APPRECIATION
FUND,
SELECT INTERNATIONAL EQUITY FUND, GROWTH FUND,SELECT GROWTH AND INCOME FUND,
SELECT INCOME FUND AND INVESTMENT GRADE INCOME FUND)
The shareholders of the Select Aggressive Growth Fund, Select Capital
Appreciation Fund, Select International Equity Fund, Growth Fund, Select
Growth and Income Fund, Select Income Fund and Investment Grade Income Fund
are being asked by the Trustees to approve an amendment (the "Amendment") to
the Management Agreement (the "Management Agreement") between AIMCO and the
Trust dated July 1, 1992. Except for the revised fee schedules which are
proposed with respect to the seven Funds, the Management Agreement, as
amended, would be the same in all substantive respects as the Management
Agreement presently in effect. The Management Agreement was last submitted to
shareholders of the Small-Mid Cap Value Fund on March 18, 1997 to approve
changes in the fees for that Fund. The changes to the fee schedules were
approved by the Board of Trustees of the Trust, including all of the "non-
interested" Trustees, at a meeting on May 13, 1997. A copy of the Management
Agreement, including the Amendment, is set forth in Exhibit I to this Proxy
Statement and the description of the Management Agreement set forth in this
Proxy Statement is qualified in its entirety by reference to Exhibit I.
PROPOSED FEE CHANGES
The Amendment would reduce the level of management fees and provide
graduated fee schedules for the Select Aggressive Growth Fund, Select Capital
Appreciation Fund, Select International Equity Fund, Select Growth and Income
Fund and Select Income Fund (the "Select Funds"). Under the proposal, the
existing graduated fee schedules would be revised and the level of management
fees would be increased for the Growth Fund and Investment Grade Income Fund.
The proposed changes in management fees would have a direct effect on the
level of expenses of each Fund named above. The Amendment, in the aggregate,
would reduce the total management fees received by AIMCO.
The proposed reductions in management fees for the Select Aggressive Growth
Fund and Select Capital Appreciation Fund are contingent upon and subject to
shareholder approval of Proposal No. 4 and Proposal No. 5, respectively.
Therefore, the Amendment will be implemented with respect to the Select
Aggressive Growth Fund only if Amended Schedule A to the Sub-Adviser Agreement
relating to that Fund (see Proposal No. 4) is approved by shareholders at the
Meeting, and with respect to the Select Capital Appreciation Fund only if
Amended Schedule A to the Sub-Adviser Agreement relating to that Fund (see
Proposal No. 5) is approved by shareholders at the Meeting.
12
<PAGE>
Following are schedules showing the fees currently paid by the seven Funds
compared to the fees proposed under the Amendment.
CURRENT MANAGEMENT FEES
For its services to the following Funds, AIMCO receives fees computed daily
at an annual rate based on the average daily net asset value of each Fund as
set forth below.
<TABLE>
<CAPTION>
SELECT SELECT CAPITAL SELECT SELECT GROWTH SELECT
AGGRESSIVE APPRECIATION INTERNATIONAL AND INCOME INCOME
GROWTH FUND FUND EQUITY FUND FUND FUND
- ----------- -------------- ------------- ------------- ------
<S> <C> <C> <C> <C>
1.00% 1.00% 1.00% 0.75% 0.60%
</TABLE>
AIMCO's fees for the Growth Fund and Investment Grade Income Fund, computed
daily at an annual rate based on the average daily net assets of each Fund,
are based on the following schedule:
<TABLE>
<CAPTION>
INVESTMENT
GROWTH GRADE INCOME
ASSETS FUND FUND
------ ------ ------------
<S> <C> <C>
First $50 Million.......................................... 0.60% 0.50%
Next $200 Million.......................................... 0.50% 0.35%
Over $250 Million.......................................... 0.35% 0.25%
</TABLE>
PROPOSED MANAGEMENT FEES
For its services to the Funds, AIMCO would receive fees computed daily at an
annual rate based on the average daily net asset value of each Fund as set
forth below.
<TABLE>
<CAPTION>
SELECT SELECT SELECT
AGGRESSIVE CAPITAL INTERNATIONAL SELECT GROWTH
GROWTH APPRECIATION EQUITY GROWTH AND
ASSETS FUND FUND FUND FUND INCOME FUND
------ ---------- ------------ ------------- ------ -------------
<S> <C> <C> <C> <C> <C>
First $100 Million.. 1.00% 1.00% 1.00% 0.60% 0.75%
$100 to $250
Million........... 0.90% 0.90% 0.90% 0.60% 0.70%
$250 to $500
Million........... 0.85% 0.85% 0.85% 0.40% 0.65%
Over $500 Million... 0.85% 0.85% 0.85% 0.35% 0.65%
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT
SELECT GRADE
ASSETS INCOME FUND INCOME FUND
------ ----------- -----------
<S> <C> <C>
First $50 Million...................................... 0.60% 0.50%
$50 to $100 Million.................................... 0.55% 0.45%
Over $100 Million...................................... 0.45% 0.40%
</TABLE>
13
<PAGE>
The following table shows (i) the aggregate amount of management fees paid
during the fiscal year ended December 31, 1996; (ii) the amounts that would
have been paid had the proposed management fees been in effect; and (iii) the
difference between the aggregate amounts stated for items (i) and (ii) above
as a percentage of the amounts stated for item (i).
<TABLE>
<CAPTION>
(II) AMOUNTS THAT
(I) MANAGEMENT FEES WOULD HAVE BEEN PERCENTAGE
PAID DURING FISCAL PAID IF PROPOSED DIFFERENCE
YEAR ENDED FEES HAD BEEN IN BETWEEN
FUND DECEMBER 31, 1996 EFFECT (I) AND (II)
---- ------------------- ----------------- ------------
<S> <C> <C> <C>
Select Aggressive Growth
Fund.................... $ 3,302,349 $ 3,031,997 (8.19%)
Select Capital
Appreciation Fund....... $ 902,600 $ 902,600 0.00%
Select International
Equity Fund............. $ 1,701,942 $ 1,631,748 (4.12%)
Select Growth and Income
Fund.................... $ 1,778,832 $ 1,710,243 (3.86%)
Select Income Fund........ $ 398,522 $ 390,312 (2.06%)
Growth Fund............... $ 2,163,374 $ 2,486,714 14.95%
Investment Grade Income
Fund.................... $ 596,308 $ 670,780 12.49%
--------------- ----------------
Total$10,843,927 Total$10,824,394
</TABLE>
At net asset levels as of May 31, 1997, the aggregate annual reductions in
fees to shareholders of the Select Funds would amount to $1,017,330, or 7.9%.
The amount of dollar reduction for each portfolio and the percentage of the
reduction in total management fees are shown below.
<TABLE>
<CAPTION>
PERCENTAGE REDUCTION
FUND DOLLAR REDUCTION IN MANAGEMENT FEES
---- ---------------- --------------------
<S> <C> <C>
Select Aggressive Growth Fund............ $ 465,110 10.1%
Select Capital Appreciation Fund......... $ 75,495 4.3%
Select International Equity Fund......... $ 267,437 8.2%
Select Growth and Income Fund............ $ 192,293 7.0%
Select Income Fund....................... $ 16,995 3.4%
----------
Total.................................... $1,017,330
</TABLE>
14
<PAGE>
At net asset levels as of May 31, 1997, the aggregate increases in fees to
shareholders of the Growth Fund and Investment Grade Income Fund would amount
to $408,733, or 12.2%. The amount of dollar increase for each portfolio and
the percentage of increase in total management fees are shown below.
<TABLE>
<CAPTION>
PERCENTAGE INCREASE IN
FUND DOLLAR INCREASE MANAGEMENT FEES
---- --------------- ----------------------
<S> <C> <C>
Growth Fund............................. $325,000 12.1%
Investment Grade Income Fund............ $ 83,733 12.7%
--------
Total................................... $408,733
</TABLE>
The dollar increase for the Growth Fund would not exceed $325,000 even if
its net assets increased in the future since the fee rate at the highest net
asset break point is equal to the current fee rate charged at this level.
The fee changes being proposed would result in an overall decrease in the
level of revenues paid to AIMCO. If all of the proposals were approved,
including the proposed changes in the sub-advisory fee schedules, the net
aggregate reduction in annual revenues received from the Funds ($608,597) and
the reduction in annual sub-adviser fees payable by AIMCO ($285,073) (see
Proposal Nos. 4 and 5) would, at May 31, 1997 net asset levels, result in a
net annual reduction of $323,524 to the revenue of AIMCO.
The Trustees believe the assets of the Select Funds have reached a size that
calls for the introduction of a graduated fee schedule. They also believe the
Amendment provides a more consistent fee structure. In voting to approve the
Amendment, the Trustees reviewed data showing that the proposed management fee
reductions for the Select Funds and the fee increases for the Growth Fund and
Investment Grade Income Fund, combined with actual operating expenses, would
bring the Funds closer in line with industry norms for operating expenses.
The proposal would establish graduated fee schedules for the Select Funds,
none of which currently has break points in its management fee. The base level
fees would remain the same. If the Amendment is approved, seven of the Trust's
eight equity portfolios and three of the four fixed-income portfolios of the
Trust will have graduated management fee schedules in place, featuring rate
reductions at specified break point levels. The break points would allow the
Select Funds to pass on to investors savings that may be realized from
economies of scale as net assets increase. Mutual funds typically consider
adding break points to their investment advisory fee schedules as portfolio
assets grow to a point where economies of scale can be achieved. When
considering the Amendment, the Trustees reviewed statistics showing
substantial overall growth in Fund assets.
15
<PAGE>
The Trustees believe the graduated fee schedules proposed for the Select
Funds are an appropriate means of compensating AIMCO for its management
services. The new fee schedules would enable the Select Fund shareholders to
realize potential cost savings from management fee reductions as Fund assets
increase while allowing AIMCO to earn a reasonable return from its management
services.
Reductions are also being proposed in the sub-adviser fees of the Select
Aggressive Growth Fund and the Select Capital Appreciation Fund (See Proposals
Nos. 4 and 5). The change in sub-adviser fees would not reduce Fund expenses
because AIMCO is solely responsible for paying such fees. The reduction in
sub-adviser fees would lower AIMCO's expenses and help offset the anticipated
reduction in its management fee revenues, as explained above.
The management fee currently paid to AIMCO by the Growth Fund is
significantly lower than those paid by the other actively managed equity Funds
of the Trust, and the current management fee paid by the Investment Grade
Income Fund is less than the fee paid by the Select Income Fund, a comparable
fixed-income Fund. Unlike the fees adopted for the Select Funds, the current
management fees for the Growth Fund and Investment Grade Income Fund were
adopted in 1988 and do not reflect the increased oversight responsibilities
that AIMCO assumed starting in 1992. AIMCO has entered into sub-adviser
agreements for the management of the investments of each Fund of the Trust.
The Sub-Advisers have been selected by AIMCO and the Trustees in consultation
with Rogers, Casey & Associates, Inc. ("Rogers Casey"), a leading pension
consulting firm. Rogers Casey also assists AIMCO in continuously monitoring
and evaluating the performance of each of the Sub-Advisers and with its other
oversight responsibilities. The cost of Rogers Casey's services are borne
entirely by AIMCO. Under the proposal, the base level fee percentages would
remain the same while the existing break points would be changed. No increase
is being proposed in the sub-adviser fees of the Growth Fund or the Investment
Grade Income Fund.
In making its recommendation to approve the Amendment, the Trustees
carefully evaluated the high quality of services AIMCO has provided and is
expected to continue to provide, the management fees and expense ratios of
other comparable funds, the generally favorable relative performance of the
Funds since commencement of operations, the impact the fee changes would have
on Fund expenses and AIMCO's profitability and other information they deemed
relevant. Based on the factors discussed above, the Trustees determined that
the proposed fee changes as set forth in the Amendment are fair and reasonable
and in the best interest of the applicable Funds and their shareholders.
16
<PAGE>
The following table shows (i) the expenses paid by the Growth Fund and the
Investment Grade Income Fund based on amounts incurred during the most recent
fiscal year, and (ii) pro forma expenses using the proposed management fee
schedules.
COMPARATIVE FEE TABLE
GROWTH FUND
INVESTMENT GRADE INCOME FUND
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
ACTUAL EXPENSES
<TABLE>
<CAPTION>
MANAGEMENT 12B-1 OTHER TOTAL FUND
FEES FEES EXPENSES OPERATING EXPENSES
---------- ----- -------- ------------------
<S> <C> <C> <C> <C>
Growth Fund....................... 0.44% -- 0.07% 0.51%
Investment Grade Income Fund...... 0.40% -- 0.12% 0.52%
</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.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Growth Fund..................................... $ 5 $16 $28 $63
Investment Grade Income Fund.................... $ 5 $16 $28 $64
</TABLE>
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
PRO FORMA EXPENSES
<TABLE>
<CAPTION>
MANAGEMENT 12B-1 OTHER TOTAL FUND
FEES FEES EXPENSES OPERATING EXPENSES
---------- ----- -------- ------------------
<S> <C> <C> <C> <C>
Growth Fund....................... 0.50% -- 0.07% 0.57%
Investment Grade Income Fund...... 0.45% -- 0.12% 0.57%
</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.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Growth Fund..................................... $ 6 $18 $31 $70
Investment Grade Income Fund.................... $ 6 $18 $31 $70
</TABLE>
The purpose of the Comparative Fee Table is to assist the investor in
understanding the various costs and expenses that an investor in a Fund would
have borne directly or indirectly. The table does not reflect Separate Account
fees, including sales loads, borne by investors in the Fund. THE EXAMPLES
SHOULD NOT BE CONSIDERED REPRESENTATIVE OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
----------------------
17
<PAGE>
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 13, 1997. Except for the different fee
schedules, the terms of the Management Agreement, as amended, are the same in
all material respects to the terms of the existing Management Agreement. Under
the Management Agreement, AIMCO continuously provides business management
services to the Funds of the Trust 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 portfolios 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 with
respect to a Fund for successive periods of one year only so long as such
continuance is specifically approved annually by the Board of Trustees, or by
a vote of the holders of a majority of that Fund's outstanding voting
securities, and by a vote of a majority of the Trustees who are not
"interested persons" of the Trust, AIMCO, or any sub-adviser to the Trust. The
Management Agreement may be terminated at any time as to any Fund, without
payment of penalty, by AIMCO, by vote of the Trustees or by vote of a majority
of the outstanding voting securities of that 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 the 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 a 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.
INFORMATION REGARDING ALLMERICA INVESTMENT MANAGEMENT COMPANY, INC.
AIMCO is an indirect wholly-owned subsidiary of Allmerica Financial
Corporation ("AFC"), a publicly-traded 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 has served as investment manager of the Allmerica Funds, an open-
end investment company which is being liquidated. Following is information on
the type, size and management fees of two other portfolios of the Trust having
an investment objective similar to three of the Funds whose management fees
are proposed to be amended.
18
<PAGE>
(For each portfolio of the Trust, AIMCO has declared voluntary expense
limitations which are not reflected in the table below.)
<TABLE>
<CAPTION>
FUND NET ASSETS AS OF 4/30/97 FEE RATE
---- ------------------------ --------
<S> <C> <C>
Small-Mid Cap Value Fund.................... $130,014,405 (1)
(similar to Select Aggressive Growth
Fund, Select Capital Appreciation Fund)
Select Growth Fund.......................... $292,019,788 0.85%
(similar to Growth Fund)
</TABLE>
-----------
(1)
<TABLE>
<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>
AIMCO voluntarily has agreed to limit its fee to an annual rate of 0.90% of
average daily net assets until further notice.
The Directors of AIMCO are: John F. Kelly, John F. O'Brien, Richard M.
Reilly and Eric A. Simonsen. The business address of each is the address of
AIMCO's office. Mr. Reilly is also President and Chief Executive Officer of
AIMCO. Mr. Kelly is a Director, Senior Vice President and General Counsel of
First Allmerica. Mr. Simonsen is a Director and Vice President of First
Allmerica and President of Allmerica Services Corporation. 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 Financial Life;
George M. Boyd is Secretary of the Trust and Counsel for First Allmerica;
Thomas P. Cunningham is a Vice President of AIMCO and Treasurer of the Trust;
Lisa M. Coleman is a Vice President of the Trust and of Allmerica Asset
Management, Inc. ("AAM"), an indirect wholly-owned subsidiary of AFC; John C.
Donohue is a Vice President of the Trust and an Assistant Vice President of
AAM; Stephen W. Bright is a Vice President of the Trust and of AAM; William K.
Fain is a Vice President of the Trust and of AAM, and Richard J. Litchfield is
a Vice President of the Trust and an Assistant Vice President of AAM.
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.
19
<PAGE>
During the fiscal year ended December 31, 1996, no commissions were paid to
any brokers affiliated with AIMCO. Because shares of the Funds are available
for purchase only by First Allmerica or Allmerica Financial Life, the Trust
has no principal underwriter.
RECOMMENDATION AND REQUIRED VOTE
As provided in the 1940 Act, approval of the Amendment to the Management
Agreement with respect to a Fund requires the affirmative vote of a majority
(defined in the Miscellaneous section) of the outstanding voting securities of
such Fund. Abstentions have the effect of a negative vote on the proposal to
approve the Amendment. If the shareholders of any applicable Fund fail to
approve the Amendment, AIMCO will continue to serve as manager of that Fund in
accordance with the existing Management Agreement.
The Trustees recommend that shareholders vote to approve the Amendment.
PROPOSAL NO. 4
APPROVAL OR DISAPPROVAL OF AMENDED SCHEDULE A
TO THE SUB-ADVISER AGREEMENT BETWEEN
ALLMERICA INVESTMENT MANAGEMENT COMPANY, INC.
AND NICHOLAS-APPLEGATE CAPITAL MANAGEMENT, L.P.
RELATING TO THE SELECT AGGRESSIVE GROWTH FUND
(APPLIES TO THE SELECT AGGRESSIVE GROWTH FUND)
Shareholders of the Select Aggressive Growth Fund are being asked by the
Trustees to approve an amendment to Schedule A ("Amended Schedule A") to the
Sub-Adviser Agreement dated August 21, 1992 (the "Sub-Adviser Agreement")
between AIMCO and Nicholas-Applegate Capital Management, L.P. ("NACM") which
provides for a change in the sub-adviser fees payable by AIMCO to NACM. The
Sub-Adviser Agreement, as amended, attached as Exhibit II, is identical in all
substantive respects to the existing Sub-Adviser Agreement except for the
changes to the fee structure discussed below. The existing Sub-Adviser
Agreement was last submitted to Fund shareholders on August 21, 1992 for the
purpose of approving the Agreement generally. The existing Sub-Adviser
Agreement, including the proposed changes to the sub-adviser fees, was last
approved by the Trustees, including the Trustees who are not "interested
persons," at a meeting of the Board of Trustees on May 13, 1997.
PROPOSED FEE CHANGES
Changes are now being proposed in the level of management fees paid by the
Select Aggressive Growth Fund to AIMCO and the level of sub-advisory fees paid
by AIMCO to NACM. As a result of the changes in management fees, expenses
incurred by shareholders at the Fund's current net asset level will decrease.
The change in sub-
20
<PAGE>
adviser fees will not reduce Fund expenses because AIMCO is solely responsible
for paying such fees.
The fee proposals under both the Management Agreement and the Sub-Adviser
Agreement include the establishment of break points which would reduce the fee
rates as net assets increase to specified levels. The base level management
fee and sub-adviser fee would remain the same. The proposal to amend the fee
structure under the Management Agreement is discussed in detail in this Proxy
Statement under Proposal No. 3.
Following is a table showing the current and proposed sub-adviser fee
schedule for the Select Aggressive Growth Fund. AIMCO pays the fees earned by
NACM at an annual rate based on the average daily net assets of the Fund as
shown below.
<TABLE>
<CAPTION>
FEE RATE
----------------
NET ASSET LEVELS CURRENT PROPOSED
- ---------------- ------- --------
<S> <C> <C>
First $100 Million............................................. 0.60% 0.60%
Next $150 Million.............................................. 0.60% 0.55%
Next $250 Million.............................................. 0.60% 0.50%
Over $500 Million.............................................. 0.60% 0.45%
</TABLE>
During the fiscal year ended December 31, 1996, AIMCO paid NACM $1,981,410
for its advisory services pursuant to the fee schedule under the current Sub-
Adviser Agreement. If the proposed sub-adviser fee schedule had been in effect
during the last fiscal year, NACM would have received $1,826,175, representing
a decrease of $155,235, or 7.8%. At the net asset level of the Select
Aggressive Growth Fund on May 31, 1997 of $460,073,319, the aggregate
reduction in fees payable by AIMCO to NACM would amount to $285,073 or 10.3%.
The Trustees believe the proposed changes in the management fee and sub-
adviser fee for the Select Aggressive Growth Fund, as well as the fee changes
proposed for the other Funds (see Proposal Nos. 3 and 5), will provide a more
consistent fee structure. In addition, the Trustees believe the assets of the
Select Aggressive Growth Fund have reached a size that calls for introduction
of a graduated fee schedule. The Fund currently has no break points in either
its management fee or its sub-adviser fee. Mutual funds often consider adding
break points to their advisory fee schedules as portfolio assets grow to a
point where economies of scale can be realized. The proposed change in the
management fee would establish a graduated fee schedule, allowing the Select
Aggressive Growth Fund to pass on to investors savings that may be realized
from economies of scale as net assets increase. While the change in sub-
adviser fees would not reduce Fund expenses directly, the reduction in sub-
adviser fees would lower AIMCO's expenses, helping offset the anticipated
reduction in its management fee revenues. Therefore, it is an important part
of the overall plan to revise the fee structures of both the Fund and the
Trust.
The Trustees' recommendation to shareholders to approve Amended Schedule A
is based on consideration of various factors, including the type and quality
of sub-
21
<PAGE>
advisory services provided by NACM, NACM's performance record compared to the
performance of other advisers and the level of fees paid to NACM compared to
industry levels.
INFORMATION REGARDING NICHOLAS-APPLEGATE CAPITAL MANAGEMENT, L.P.
NACM has served as Sub-Adviser to the Select Aggressive Growth Fund since
the Fund was established in 1992. As an investment adviser, NACM supervises
accounts with approximately $28.9 billion in total assets as of March 31,
1997. NACM's clients are primarily major corporate employee benefit funds,
public employee retirement plans, foundations and endowment funds, investment
companies and individuals. Founded in 1984, NACM is located at 600 West
Broadway, Suite 2900, San Diego, California 92101.
Nicholas-Applegate Capital Management Holdings LP ("NACMH") is the sole
general partner of NACM and Arthur Nicholas, managing partner of NACM,
controls NACMH. Following is a list of the limited partners of NACM, showing
their principal areas of responsibility. The business address of each, and of
NACMH, is the same as the address of NACM's offices, except for Richard Graf,
James Kellerman, John Pipkin and Fred Robertson whose business address is
located at NACM's offices at 1990 Post Oak Boulevard, Suite 1100, Houston, TX
77056.
<TABLE>
<CAPTION>
LIMITED PARTNERS PRINCIPAL RESPONSIBILITY
---------------- -----------------------------------------
<S> <C>
Arthur Nicholas Managing Partner
Laura DeMarco Client Service/Marketing
Richard Graf Client Service/Marketing
Peter Johnson Director of Client Service/Marketing
John Kane Senior Portfolio Manager--U.S. Systematic
James Kellerman Senior Portfolio Manager--Fixed Income
George Kenney Chief Information Officer
John Marshall Chief Investment Officer,
Mid/Large Cap Equities
James McComsey Client Service/Marketing
Thomas Pindelski Chief Financial Officer
John Pipkin Fixed Income Management
Fred Robertson Chief Investment Officer,
Fixed Income
Catherine Somhegyi Chief Investment Officer,
Global Equity Management
Lawrence Speidell Director of Global/Systematic
Portfolio Management and Research
John Wylie Chief Investment Officer,
Investor Services Group
</TABLE>
All information about NACM has been provided by NACM.
22
<PAGE>
DESCRIPTION OF THE SUB-ADVISER AGREEMENT
The Sub-Adviser Agreement provides that NACM, 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 NACM to make investment decisions for the Fund and to place
the Fund's purchase and sale orders for investment securities. The Sub-Adviser
Agreement states that NACM 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 Sub-Adviser
Agreement, but excluding pricing and bookkeeping services.
The Sub-Adviser Agreement 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 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 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 NACM, in each case on 60 days' written notice. As required by the
1940 Act, the 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 Sub-Adviser Agreement provides that, in
the absence of (i) willful misfeasance, bad faith or gross negligence on the
part of NACM, or (ii) reckless disregard by NACM of its obligations and duties
under the Sub-Adviser Agreement, NACM 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 Sub-Adviser Agreement.
RECOMMENDATION AND REQUIRED VOTE
As provided in the 1940 Act, approval of Amended Schedule A to the 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
Amended Schedule A. If the shareholders of the Fund fail to approve Amended
Schedule A, NACM will continue to serve as Sub-Adviser pursuant to the
existing Sub-Adviser Agreement.
The Trustees recommend that shareholders vote to approve Amended Schedule A
to the Sub-Adviser Agreement.
23
<PAGE>
PROPOSAL NO. 5
APPROVAL OR DISAPPROVAL OF AMENDED SCHEDULE A
TO THE SUB-ADVISER AGREEMENT BETWEEN
ALLMERICA INVESTMENT MANAGEMENT COMPANY, INC.
AND JANUS CAPITAL CORPORATION
RELATING TO THE SELECT CAPITAL APPRECIATION FUND
(APPLIES TO THE SELECT CAPITAL APPRECIATION FUND)
Shareholders of the Select Capital Appreciation Fund are being asked by the
Trustees to approve an amendment to Schedule A ("Amended Schedule A") to the
Sub-Adviser Agreement dated April 28, 1995 (the "Sub-Adviser Agreement")
between AIMCO and Janus Capital Corporation ("JCC") which provides for a
change in the sub-adviser fees payable by AIMCO to JCC. The Sub-Adviser
Agreement, as amended, attached as Exhibit III, is identical in all
substantive respects to the existing Sub-Adviser Agreement except for the
changes to the fee structure discussed below. The existing Sub-Adviser
Agreement was last submitted to Fund shareholders on April 28, 1995 for the
purpose of initially approving the Agreement. The existing Sub-Adviser
Agreement, including the proposed changes in sub-adviser fees, was last
approved by the Trustees, including the Trustees who are not "interested
persons," at a meeting of the Board of Trustees on May 13, 1997.
PROPOSED FEE CHANGES
Changes are now being proposed in the level of management fees paid by the
Select Capital Appreciation Fund to AIMCO and the level of sub-advisory fees
paid by AIMCO to JCC. As a result of the changes in management fees, expenses
incurred by shareholders at the Fund's current net asset level will decrease.
The change in sub-adviser fees would not reduce Fund expenses because AIMCO is
solely responsible for paying such fees.
The fee proposals under both the Management Agreement and the Sub-Adviser
Agreement include the establishment of break points which would reduce the fee
rates as net assets increase to specified levels. The base level management
fee and sub-adviser fee would remain the same. The proposal to amend the fee
structure under the Management Agreement is discussed in detail in this Proxy
Statement under Proposal No. 3.
Following is a table showing the current and proposed sub-adviser fee
schedule for the Select Capital Appreciation Fund. AIMCO pays the fees earned
by JCC at an annual rate based on the average daily net assets of the Fund as
shown below.
<TABLE>
<CAPTION>
FEE RATE
----------------
ET ASSET LEVELSN CURRENT PROPOSED
- ---------------- ------- --------
<S> <C> <C>
First $100 million............................................ 0.60% 0.60%
Next $150 million............................................. 0.55% 0.55%
Next $250 million............................................. 0.55% 0.50%
Over $500 million............................................. 0.55% 0.45%
</TABLE>
24
<PAGE>
During the fiscal year ended December 31, 1996, AIMCO paid JCC $541,560 for
its advisory services pursuant to the fee schedule under the current Sub-
Adviser Agreement. If the proposed Sub-Adviser fee schedule had been in effect
during the last fiscal year, JCC would have received $541,560, representing no
reduction. Pursuant to the proposed graduated fee schedule for JCC, fee
reductions would begin to occur when the net assets of the Fund exceed a level
of $250,000,000. At May 31, 1997, the Fund's aggregate net assets were
$175,494,698.
The Trustees believe the proposed changes in the management fee and sub-
adviser fee for the Select Capital Appreciation Fund, as well as the fee
changes proposed for the other Funds (see Proposal Nos. 3 and 4), will provide
a more consistent fee structure. The Trustees also believe the assets of the
Select Capital Appreciation Fund have reached a size that calls for the
establishment of a comprehensive graduated fee schedule. The Fund currently
has no break points in its management fee and only one break point in its sub-
adviser fee. Mutual funds typically consider adding break points to their
advisory fee schedules as portfolio assets grow to a point where economies of
scale can be achieved. The proposed change in the management fee would
establish a graduated fee schedule, allowing the Fund to pass on to investors
savings that may be realized from economies of scale as net assets increase.
While the change in sub-adviser fees would not reduce Fund expenses directly,
as Fund assets grow, the reduction in sub-adviser fees would lower AIMCO's
expenses, helping offset the anticipated reduction in its management fee
revenues. Therefore, the proposed change in sub-adviser fees is an important
part of the overall plan to revise the fee structures of both the Fund and the
Trust.
The Trustees' recommendation to shareholders to approve Amended Schedule A
is based on consideration of various factors, including the type and quality
of sub-advisory services provided by JCC, JCC's performance record compared to
the performance of other advisers and the level of fees paid to JCC compared
to industry levels.
INFORMATION REGARDING JANUS CAPITAL CORPORATION
JCC has served as Sub-Adviser to the Select Capital Appreciation Fund since
1995. JCC has served as investment adviser to the Janus Fund since 1969 and
currently serves as investment adviser to all of the Janus retail funds, as
well as adviser or sub-adviser to other mutual funds and individual,
corporate, charitable and retirement accounts. Kansas City Southern
Industries, Inc., ("KCSI") a publicly-traded holding company whose primary
subsidiaries are engaged in transportation and financial services, owns
approximately 83% of the outstanding stock of JCC. Thomas H. Bailey, President
and Chairman of the Board of JCC, owns approximately 12% of JCC's outstanding
stock. As of June 2, 1997, JCC had approximately $57 billion in total assets
under management. JCC is located at 100 Fillmore Street, Denver, Colorado
80206-4923. KCSI is located at 114 West 11th Street, Kansas City, Missouri
64105-1804.
25
<PAGE>
Following is information on the type, size and advisory fees of other
similar investment company funds managed by JCC:
<TABLE>
<CAPTION>
FUND NET ASSETS AS OF 6/2/97 FEE SCHEDULE
---- ----------------------- ------------
<S> <C> <C>
Janus Investment Fund
Janus Enterprise Fund...... $573,447,136 1.00% of first $30 million
.75% of next $270 million
.70% of next $200 million
.65% on assets over $500 million
Janus Aspen Series
Aggressive Growth $400,089,431 1.00% on first $30 million/1/
Portfolio.................. .75% on next $270 million
.70% on next $200 million
.65% on assets over $500 million
John Hancock Variable
Series Trust I--
Mid-Cap Growth Portfolio... $ 24,259,092 .60% on first $100 million,
.55% over $100 million
JNL Series Trust
JNL Capital Growth Series.. $ 55,994,758 .55% on first $100 million,
.50% on $100-500 million,
.45% over $500 million
Maxim Series Fund, Inc.--
Mid-Cap Portfolio.......... $200,273,860 .60% on first $100 million,
.55% on assets over $100 million
Metropolitan Series Fund--
Janus Mid-Cap Portfolio.... $ 18,164,195 .55% on first $100 million,
.50% on next $400 million,
.45% over $500 million
Sierra Trust Funds--
Emerging Growth Fund....... $247,725,524 .55% on first $100 million,
.50% over $100 million
The Sierra Variable Trust--
Emerging Growth Fund....... $ 45,090,071 .55% on first $25 million,
.50% over $25 million
IDEX SERIES FUND
IDEX Capital Appreciation
Portfolio.................. $ 23,153,814 50% of fees received by Adviser
less 50% of fee waiver
or reimbursement/2/
</TABLE>
- -----------
(1) Janus Capital has agreed to reduce the Portfolio's advisory fee to the
extent that such fee exceeds the effective rate of the Janus retail fund
corresponding to such Portfolio. The effective rate is the advisory fee
calculated by the corresponding retail fund as of the last day of each
calendar quarter (expressed as an annual rate). The effective rate of
Janus Enterprise Fund was .73% for the quarter ended March 31, 1997.
(2) Adviser's fee is 1.00% of first $750 million, 0.9% of next $250 million,
and 0.85% of assets in excess of $1 billion.
26
<PAGE>
Following is a list of the names and principal occupations of the directors
and principal executive officers of JCC.
<TABLE>
<CAPTION>
POSITION WITH JANUS
NAME AND ADDRESS CAPITAL CORPORATION OTHER BUSINESS
---------------- ----------------------- -------------------------------
<S> <C> <C>
Thomas H. Bailey........ President, Director Chairman of Trustees and
100 Fillmore St. and Chairman, President of Janus Aspen Series
Denver, CO Chief Executive Officer and Janus
Investment Fund, Denver,
Colorado;
Chairman and Director
IDEX Management, Inc.
Largo, FL
James P. Craig, III..... Vice President, Executive Vice President and
100 Fillmore St. Director and Chief Trustee Janus Aspen Series
Denver, CO Investment Officer Janus Investment Fund Denver,
CO
Michael E. Herman....... Director Chairman, Finance Committee
9300 Ward Pkwy. Ewing Marion Kauffman
Kansas City, MO Foundation
Kansas City, MO; President,
Kansas City Royals Baseball
Team
Thomas A. McDonnell..... Director President, Treasurer and
1055 Broadway Director,
Kansas City, MO DST Systems Inc.
Kansas City, MO;
Executive Vice President and
Director
Kansas City Southern
Industries, Inc.
Kansas City, MO;
Director, First of Michigan
Capital
Corporation
Detroit, MI
Michael Stolper......... Director President, Stolper & Co., Inc.
525 "B" Street San Diego, CA;
San Diego, CA President, Seaport Venture,
Inc.
San Diego, CA
Landon H. Rowland....... Director President and Chief Executive
114 W. 11th St. Officer
Kansas City, MO Kansas City Southern
Industries, Inc.
Kansas City, MO
</TABLE>
All information about JCC has been provided by JCC.
DESCRIPTION OF THE SUB-ADVISER AGREEMENT
The Sub-Adviser Agreement provides that JCC, 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
27
<PAGE>
Board of Trustees or AIMCO, will manage the investment and reinvestment of
assets of the Fund. In this regard, it is the responsibility of JCC to make
investment decisions for the Fund and to place the Fund's purchase and sale
orders for investment securities. The Sub-Adviser Agreement states that JCC
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 Sub-Adviser Agreement, but excluding
pricing and bookkeeping services.
The Sub-Adviser Agreement 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 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 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 JCC, in each case on 60 days' written notice. As required by the
1940 Act, the 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 Sub-Adviser Agreement provides that, in
the absence of (i) willful misfeasance, bad faith or gross negligence on the
part of JCC, or (ii) reckless disregard by JCC of its obligations and duties
under the Sub-Adviser Agreement, JCC 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 Sub-Adviser Agreement.
RECOMMENDATION AND REQUIRED VOTE
As provided in the 1940 Act, approval of Amended Schedule A to the 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
Amended Schedule A. If the shareholders of the Fund fail to approve Amended
Schedule A, JCC will continue to serve as Sub-Adviser pursuant to the existing
Sub-Adviser Agreement.
The Trustees recommend that shareholders vote to approve Amended Schedule A
to the Sub-Adviser Agreement.
28
<PAGE>
PROPOSAL NO. 6
TO APPROVE OR DISAPPROVE AN ARRANGEMENT THAT WOULD PERMIT THE INVESTMENT
MANAGER OF THE TRUST TO ENTER INTO AND MATERIALLY AMEND SUB-ADVISORY
AGREEMENTS WITH NON-AFFILIATED SUB-ADVISERS WITHOUT OBTAINING SHAREHOLDER
APPROVAL
(APPLIES TO THE SELECT AGGRESSIVE GROWTH FUND, SELECT CAPITAL APPRECIATION
FUND, SMALL-MID CAP VALUE FUND, SELECT INTERNATIONAL EQUITY FUND, SELECT
GROWTH FUND, GROWTH FUND, SELECT GROWTH AND INCOME FUNDAND SELECT INCOME FUND)
AIMCO is responsible for handling the business affairs of the Trust as its
investment manager. 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. AIMCO has entered
into sub-adviser agreements for the management of the investments of each
Fund.
The Trust and AIMCO plan to seek an exemptive order from the SEC that would
permit AIMCO to enter into and materially amend sub-advisory agreements with
sub-advisers that are not affiliated with AIMCO without obtaining shareholder
approval. Absent an SEC exemptive order, a shareholder meeting would have to
be held at which shareholders representing a majority of the outstanding
securities would have to approve any new or amended sub-adviser agreement. The
SEC recently has begun to issue such exemptive orders to other mutual fund
groups which, like the Trust, employ multiple sub-advisers. Shareholder
approval of the arrangement is required as a condition to obtaining this type
of exemptive order from the SEC.
If the requested exemptive order is granted, a sub-adviser to a Fund may
serve as sub-adviser to such Fund pursuant to a written sub-adviser agreement
with AIMCO that has not been approved by shareholders of such Fund. The
requested relief also would apply where a sub-adviser to a Fund is serving
pursuant to a sub-adviser agreement that is terminated as a result of an
assignment of the contract due to a change of control of the sub-adviser. In
such case, the sub-adviser could continue to act as sub-adviser to such Fund
under a new sub-adviser agreement that had not been approved by shareholders
of the Fund. The Board, including the non-interested Trustees, will continue
to approve new agreements between AIMCO and a sub-adviser as well as changes
to existing agreements. The requested relief will not apply to the Management
Agreement between AIMCO and the Trust, and changes to the Management Agreement
will continue to require approval of shareholders.
If the requested relief is granted by the SEC and shareholders of the Funds
approve this proposal, AIMCO will have the ability, subject to the approval of
the Board, to hire and terminate sub-advisers to the Funds and to change
materially the
29
<PAGE>
terms of the sub-advisory agreements, including the compensation paid to the
sub-advisers, without the approval of the shareholders of the Funds. Such
changes in sub-advisory arrangements would not increase the fees paid by a
Fund for investment advisory services since sub-advisory fees are paid by
AIMCO out of its advisory fee and are not additional charges to a Fund.
Currently, each Fund has only one sub-adviser and there are no present plans
to retain more than one sub-adviser for any Fund. However, if the requested
exemptive order is granted, the Trust also would be permitted in a situation
where there is more than one sub-adviser to a Fund to disclose in its
Prospectus, financial statements and certain other documents only (i) fees
paid to AIMCO by that Fund, (ii) aggregate fees paid by AIMCO to sub-advisers
to that Fund, (iii) net advisory fees retained by AIMCO with respect to that
Fund after payment of sub-advisory fees and (iv) fees paid by AIMCO to any
affiliate serving as sub-adviser to that Fund. Therefore, in such a situation
the Trust would not have to disclose separately the fees paid by AIMCO to a
particular sub-adviser.
Another condition of the exemptive order requires notification to
shareholders within 60 days of hiring a new sub-adviser or the implementation
of any proposed material change in a sub-advisory agreement. This notification
must include all information that would be included in a proxy statement, so
any saving in legal expenses involved in preparing the document as compared to
a proxy statement would not be significant. However, the actual expense of
tabulating votes and holding a shareholder meeting would not be incurred,
resulting in a cost savings to the Fund.
Any such exemptive order typically would include other conditions designed
to protect shareholder interests. For example, the nomination of new
independent Trustees would be placed within the discretion of the current
independent Trustees.
Other conditions of the exemptive order would include the following:
. Any Fund relying on the requested relief will disclose in the Trust's
Prospectus the existence, substance and effect of the SEC order
granting such relief, and
. AIMCO will provide management and administrative services to the Funds,
including overall supervisory responsibility for the general management
and investment of each Fund's securities portfolio and, subject to
review and approval of the Board, will (a) set the Fund's overall
investment strategies, (b) select sub-advisers, (c) when appropriate,
allocate and reallocate a Fund's assets among multiple sub-advisers,
(d) monitor and evaluate the investment performance of the sub-advisers
and (e) ensure that the sub-advisers comply with the Fund's investment
objectives, policies and restrictions.
Current regulations provide a 120-day window in which to obtain shareholder
approval of a new sub-adviser agreement but permit no increase in the sub-
adviser's compensation during that 120-day period. The exemptive order would
give AIMCO
30
<PAGE>
the ability to pay the new sub-adviser a higher fee immediately. Therefore,
the exemptive order would give AIMCO added flexibility in recruiting top
performing sub-advisers. Any such fee would be the sole obligation of AIMCO.
While AIMCO expects its relationship with the sub-advisers to the Funds to
be long-term and stable over time, approval of this proposal will permit AIMCO
to act quickly in situations where AIMCO and the Board believe that a change
in sub-advisers or to a sub-advisory agreement, including any fee paid to a
sub-adviser, is warranted. This proposal will eliminate the delay of convening
a meeting of shareholders to approve certain sub-advisory changes.
RECOMMENDATION AND REQUIRED VOTE
The Trustees recommend that the shareholders approve the proposed
arrangement described above.
Approval of the proposal requires the affirmative vote of a majority
(defined in the Miscellaneous section) of the outstanding voting securities of
a Fund. Abstentions have the effect of a negative vote on the proposal to
approve the arrangement. If shareholders of a Fund fail to approve the
proposal, an exemptive order will not be sought with respect to that Fund.
PROPOSAL NO. 7
APPROVAL OR DISAPPROVAL OF CHANGING
THE STATUS OF THE INVESTMENT OBJECTIVE OF EACH FUND OF THE TRUST
FROM FUNDAMENTAL TO NON-FUNDAMENTAL
(APPLIES TO ALL FUNDS)
Currently, each Fund's investment objective is categorized as fundamental
and may not be changed without the approval of a majority in interest of the
shareholders of that Fund. It is proposed that the status of the investment
objectives of the Funds of the Trust be changed from fundamental to non-
fundamental to allow the investment objectives to be amended in the future by
the Trustees without shareholder approval. The investment objectives are
stated in the Funds' current Prospectuses dated May 1, 1997.
The Trustees believe that making the status of the investment objectives
non-fundamental would give the Funds added flexibility in responding to
changing market conditions. Obtaining shareholder approval is a time-consuming
process because it involves preparing, filing and distributing proxy
materials, tabulating the proxy votes and then holding a shareholder meeting.
If the required favorable vote is not obtained, shareholders may have to be
resolicited, causing further delays. By having the ability
31
<PAGE>
to change their investment objectives without a shareholder vote, the Funds
would be able to take advantage of new investment opportunities or change
strategies on a more timely basis.
The proposal is also intended to help minimize Fund expenses. If the
proposal is approved, a Fund could change its investment objective without
incurring the expenses associated with preparing and mailing proxy materials
and holding a formal shareholder meeting. Certain basic shareholder
protections would be maintained in that shareholders would still receive prior
written notice of any amendments to the investment objective and the Trustees,
who are required to represent the interests of the shareholders, would have to
vote to approve such amendments. In addition, the Trustees would have the
option of submitting any changes to shareholders for approval even though not
required to do so. None of the Funds is presently planning to change its
investment objective or the way it is managed. Any changes in the Funds'
investment objectives would occur infrequently.
RECOMMENDATION AND REQUIRED VOTE
The Trustees recommend that shareholders approve the proposed change in the
status of the investment objectives from fundamental to non-fundamental, as
described above.
The affirmative vote of a majority (defined in the Miscellaneous section) of
each Fund's outstanding voting securities is required to approve the proposed
change with respect to that Fund. Abstentions have the effect of a negative
vote on this proposal.
PROPOSAL NO. 8
APPROVAL OR DISAPPROVAL OF REVISIONS IN THE
INVESTMENT RESTRICTIONS OF EACH FUND OF THE TRUST
TO PERMIT THE FUND TO BORROW MONEY FOR
TEMPORARY PURPOSES WHEN THE AGGREGATE AMOUNT
BORROWED DOES NOT EXCEED 33 1/3% OF THE VALUE OF THE
FUND'S TOTAL ASSETS AT THE TIME SUCH BORROWING IS MADE
(APPLIES TO ALL FUNDS)
The Trustees propose modifying the Funds' current investment restrictions
regarding borrowing to permit the Funds to borrow money for temporary purposes
when the aggregate amount borrowed does not exceed 33 1/3% of the value of the
Fund's total assets at the time such borrowing is made. Currently, the
borrowing restrictions, which are categorized as fundamental and may not be
changed without shareholder approval, permit a Fund to borrow up to 5% of the
Fund's total assets at the time such borrowing is made. The proposal is made
in response to recent changes
32
<PAGE>
in certain state laws on borrowing. Set forth below for comparison are the
Funds' current and proposed investment restrictions related to borrowing.
Current Investment Restrictions on Borrowing. The Fund will not borrow
money, except for temporary purposes where the aggregate amount borrowed does
not exceed 5% of the value of the Fund's total assets at the time such
borrowing is made. In general, a borrowing shall be regarded as being for
temporary purposes if it is repaid within 60 days and is not extended or
renewed.
Proposed Investment Restrictions on Borrowing. The Fund will not borrow
money, except in accordance with the provisions of the 1940 Act and for
temporary purposes when the aggregate amount borrowed does not exceed 33 1/3%
of the value of the Fund's total assets at the time such borrowing is made. In
general, a borrowing shall be regarded as being for temporary purposes if it
is repaid within 60 days and is not extended or renewed.
Under Section 18(f) of the 1940 Act, a Fund is permitted to borrow from any
bank provided there is asset coverage of at least 300%. In the event such
asset coverage falls below 300%, the Fund has a three day period in which to
bring the asset coverage into compliance.
Changing the investment restrictions on borrowing would give the Trust the
ability to obtain additional funds to satisfy redemption requests should the
need arise. Borrowed monies would not be used for this purpose on a regular
basis and no other uses are contemplated for borrowed funds at the present
time. Shareholders should note that there is an increased risk of loss when a
Fund uses a large portion of its assets to engage in borrowing. Shareholders
are also reminded that borrowing involves interest rate risk and expenses to
the Fund. The Trustees believe that the benefits offered by having the ability
to borrow money to the extent permitted under the law outweigh the potential
risks.
RECOMMENDATION AND REQUIRED VOTE
The Trustees recommend that the shareholders approve the proposed change in
the investment restrictions on borrowing, as described above.
The affirmative vote of a majority (defined in the Miscellaneous section) of
each Fund's outstanding voting securities is required to approve the proposed
change for that Fund. Abstentions have the effect of a negative vote on this
proposal.
33
<PAGE>
PROPOSAL NO. 9
APPROVAL OR DISAPPROVAL OF REVISIONS IN THE
INVESTMENT RESTRICTIONS OF EACH FUND OF THE TRUST
TO CHANGE FROM FUNDAMENTAL TO NON-FUNDAMENTAL THE
INVESTMENT RESTRICTIONS RELATING TO FINANCIAL
FUTURES AND RELATED OPTIONS
(APPLIES TO ALL FUNDS)
Currently, each Fund's investment restrictions on financial futures and
related options are considered to be fundamental and may not be changed
without the approval of a majority in interest of the shareholders of that
Fund. It is proposed that these investment restrictions be changed from
fundamental to non-fundamental to allow them to be amended in the future
without shareholder approval.
Set forth below for comparison are the Funds' current and proposed
investment restrictions on financial futures and related options.
Current Investment Restrictions on Financial Futures and Related
Options (Investment Restriction No. 5 as set forth in the Funds' Statement of
Additional Information dated May 1, 1997):
5. The Fund will not engage in the purchase and sale of commodities or
commodity contracts, except financial futures (including securities index
futures) contracts and related options and in the case of the Select
Capital Appreciation Fund, futures contracts on foreign currencies and
related options. The Money Market Fund will not engage in transactions in
financial futures or related options.
Proposed Investment Restrictions on Financial Futures and Related Options.
Under this proposal, the current investment restrictions would be divided into
two separate restrictions, the first being fundamental (new No. 5) and second
non-fundamental (new No. 11) as follows:
5. The Fund will not engage in the purchase and sale of physical
commodities or contracts relating to physical commodities.
11. The Fund (except the Money Market Fund) may engage in transactions
in financial futures contracts and related options. The Money Market Fund
will not engage in transactions in financial futures or related options.
Financial futures contracts and related options are used by the Funds, other
than the Small-Mid Cap Value Fund and Money Market Fund, primarily for hedging
purposes. The current policies of the Small-Mid Cap Value Fund, as stated in
the Fund's Prospectuses and Statement of Additional Information, each dated
May 1,
34
<PAGE>
1997, prohibit it from using financial futures and related options. Under a
separate proposal (see Proposal No. 10), the Small-Mid Cap Value Fund would be
permitted to engage in futures transactions. Through hedging activities,
including the writing and purchase of put and call options and purchase and
sale of futures contracts and related options, it is possible to reduce the
effects of fluctuations in interest rates and the market prices of securities.
Among the risks inherent in the use of financial futures and options are the
risk that interest rates, securities prices and currency markets may not move
in the directions anticipated and the fact that skills needed to use these
strategies are different from those needed to select portfolio securities.
Making the restrictions on financial futures non-fundamental would allow the
Funds to make appropriate changes in the restrictions quickly in response to
changing market conditions without the expense of holding a formal shareholder
meeting. Certain basic shareholder protections would be maintained in that the
Trustees, who are required to represent the interests of shareholders, would
have to vote to approve any such changes and shareholders would be given
written notice of the changes. The proposal is consistent with the practice
followed by other mutual funds which typically classify their investment
restrictions on financial futures as non-fundamental. Shareholders should note
that none of the Funds, except the Small-Mid Cap Value Fund (see Proposal No.
10), is presently planning to change its current policies with respect to
financial futures and related options.
RECOMMENDATION AND REQUIRED VOTE
The Trustees recommend that the shareholders approve the proposed change in
the status of the investment restrictions relating to financial futures and
related options, as described above.
The affirmative vote of a majority (defined in the Miscellaneous section) of
each Fund's outstanding voting securities is required to approve the proposed
change with respect to that Fund. Abstentions have the effect of a negative
vote on this proposal.
PROPOSAL NO. 10
APPROVAL OR DISAPPROVAL OF REVISIONS IN THE
INVESTMENT POLICIES OF THE SMALL-MID CAP VALUE
FUND TO PERMIT THE FUND TO ENGAGE IN FINANCIAL FUTURES
AND RELATED OPTIONS TRANSACTIONS
(APPLIES TO THE SMALL-MID CAP VALUE FUND)
The Trustees propose modifying the investment policies of the Small-Mid Cap
Value Fund to permit the Fund to engage in financial futures and related
options transactions. The current policies of the Fund prohibit it from using
financial futures
35
<PAGE>
and related options. These policies currently are deemed to be fundamental
restrictions which may not be changed without shareholder approval. Under a
separate proposal (see Proposal No. 9) the policies would be changed to non-
fundamental restrictions which could be changed without shareholder approval.
Through the writing and purchase of put and call options on its securities,
financial indices and foreign currencies, and the purchase and sale of futures
contracts and related options with respect to securities and financial
indices, the Fund would seek to hedge against fluctuations in net asset value.
The Fund's ability to engage in options and futures strategies will depend on
the availability of liquid markets in such instruments. There is no assurance
that the Small-Mid Cap Value Fund will be able to utilize these instruments
effectively.
A futures contract on a security is a standardized agreement under which
each party is entitled and obligated either to make or to accept delivery, at
a particular time, of securities having a specified face value and rate of
return. Currently, futures contracts are available on debt securities, on
indexes of equity securities such as the Standard & Poors 500 Index, and on
certain foreign currencies.
The purchase and sale of financial futures generally is for the purpose of
hedging against changes in securities prices or interest rates. Hedging
transactions serve as a substitute for transactions in the underlying
securities and can effectively reduce investment risk. When prices are
expected to rise, a fund, through the purchase of futures contracts, can
attempt to secure better prices than might be later available in the stock
market when it anticipates effecting purchases. Similarly, when stock market
prices generally are expected to decline, a fund can seek to offset a decline
in the value of its equity securities through the sale of futures contracts.
The purchase of put options on futures contracts is a means of hedging a
fund's portfolio against the risk of declining prices. The purchase of a call
option on a futures contract represents a means of hedging against a market
advance when a fund is not invested fully.
In connection with transactions in futures and related options, the Fund
will be required to deposit as "initial margin" an amount of cash and/or
securities. Thereafter, subsequent payments may be made to and from the broker
to reflect changes in the value of the futures contract.
The Fund generally will engage in transactions in futures contracts or
related options only as a hedge against changes in the values of securities
held in the Fund's portfolio or which it intends to purchase, or to a limited
extent to enhance return. The Fund may not purchase or sell a futures contract
for non-hedging purposes if immediately thereafter the sum of the amount of
margin deposits and amount of variation margins paid from time to time on the
Fund's existing futures and related
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options positions and premiums paid for related options would exceed 5% of the
market value of the Fund's total assets.
Risks inherent in the use of futures and options ("derivative instruments")
include (1) the risk that interest rates, securities prices and currency
markets will not move in the directions anticipated; (2) imperfect correlation
between the price of derivative instruments and movements in the prices of the
securities, interest rates or currencies being hedged; (3) the fact that
skills needed to use these strategies are different from those needed to
select portfolio securities; (4) the possible absence of a liquid secondary
market for any particular instrument at any time; and (5) the possible need to
defer closing out certain hedged positions to avoid adverse tax consequences.
The Fund will purchase futures and options only on exchanges or boards of
trade when there appears to be an active secondary market, but there can be no
assurance that a liquid secondary market will exist for any future or option
at any particular time.
Financial futures and related options are widely used by mutual funds,
including funds that compete with the Small-Mid Cap Value Fund. The Trustees
believe the Small-Mid Cap Value Fund should have the ability to engage in
financial futures and related options transactions because these strategies
could benefit the Fund and its shareholders. They believe the potential
benefits outweigh the risks involved in using these instruments.
RECOMMENDATION AND REQUIRED VOTE
The Trustees recommend that the shareholders approve the proposed change in
the investment policies of the Small-Mid Cap Value Fund to permit the Fund to
use financial futures and related options, as described above.
The affirmative vote of a majority (defined in the Miscellaneous section) of
the Fund's outstanding voting securities is required to approve the proposed
change. Abstentions have the effect of a negative vote on this proposal.
PROPOSAL NO. 11
APPROVAL OR DISAPPROVAL OF CHANGING THE STATUS OF
CERTAIN INVESTMENT POLICIES OF THE GROWTH FUND
FROM FUNDAMENTAL TO NON-FUNDAMENTAL
(APPLIES TO THE GROWTH FUND )
Currently, the investment policies described in the first, third and fourth
paragraphs under "What are the Investment Objectives and Policies?--Growth
Fund--Investment Policies" in the Growth Fund's Prospectus dated May 1, 1997
are categorized as fundamental and may not be changed without shareholder
approval.
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The Trustees recommend changing the status of these investment policies to
non-fundamental to allow them to be amended by the Trustees without a
shareholder vote.
The investment policies presented in the first, third and fourth paragraphs
under the Prospectus sections referenced above describe the types of
securities in which the Fund may invest and place limitations on the amount of
portfolio assets that may be invested in certain investments, such as foreign
securities. The text of these investment policies is set forth in Exhibit IV.
Making the investment policies non-fundamental would give the Fund added
flexibility in responding to the changing market environment and would help
minimize expenses because the policies could be amended on a more timely basis
without the costs of holding a formal shareholder meeting. Obtaining
shareholder approval is a time-consuming process because it involves
preparing, filing and distributing proxy materials, tabulating proxy votes and
then holding the meeting. The proposal would also eliminate the expenses
associated with preparing and mailing proxy materials. Certain basic
shareholder protections would be maintained in that the Trustees, who are
required to represent the interests of shareholders, would have to vote to
approve any changes in the investment policies and shareholders would be given
written notice of such changes. The proposal is consistent with the practice
followed by other mutual funds which typically classify their investment
policies as non-fundamental. None of the investment policies of the other
Funds of the Trust are classified as fundamental. Shareholders should note
that the Growth Fund is not planning to change any of its investment policies
at the present time.
RECOMMENDATION AND REQUIRED VOTE
The Trustees recommend that the shareholders approve changing the status of
the Growth Fund's investment policies from fundamental to non-fundamental, as
described above.
The affirmative vote of a majority (defined in the Miscellaneous section) of
the Fund's outstanding voting securities is required to approve the proposed
change. Abstentions have the effect of a negative vote on this proposal.
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PROPOSAL NO. 12
APPROVAL OR DISAPPROVAL OF REVISIONS IN THE INVESTMENT
RESTRICTIONS OF THE GROWTH FUND, EQUITY INDEX FUND,
INVESTMENT GRADE INCOME FUND, GOVERNMENT BOND FUND
AND MONEY MARKET FUND TO PERMIT SUCH FUNDS TO INVEST
IN SECURITIES WHICH ARE RESTRICTED AS TO DISPOSITION
UNDER FEDERAL SECURITIES LAWS
(APPLIES TO THE GROWTH FUND, EQUITY INDEX FUND,INVESTMENT GRADE INCOME FUND,
GOVERNMENT BOND FUNDAND MONEY MARKET FUND)
The Trustees propose modifying the investment restrictions of the Growth
Fund, Equity Index Fund, Investment Grade Income Fund, Government Bond Fund
and Money Market Fund to permit such Funds to invest in securities which are
restricted as to disposition under federal securities laws. The present
investment limitations prohibit these five Funds from investing in restricted
securities, which refer to securities that have not been registered under the
Securities Act of 1933 ("1933 Act"). Restricted securities, along with
securities for which market quotations are not readily available, are
considered to be types of illiquid securities. Under current SEC guidelines a
mutual fund may invest up to 15% (10% for a money market fund) of its net
assets in illiquid securities. The Funds' present restrictions were adopted
many years ago prior to the development of active markets at institutional
levels for securities which are restricted for general retail purposes. The
present investment restrictions are classified as fundamental and may not be
changed without shareholder approval.
Set forth below are the Funds' current investment restrictions (Investment
Restriction No. 3 in the Statement of Additional Information dated May 1,
1997):
3. The Fund will not act as an underwriter except to the extent that, in
connection with the disposition of portfolio securities, it may be deemed to
be an underwriter under certain federal securities laws. The Fund (except for
the Select Aggressive Growth Fund, Select Capital Appreciation Fund, Small-Mid
Cap Value Fund, Select International Equity Fund, Select Growth Fund, Select
Growth and Income Fund, and Select Income Fund) will not invest in securities
which are restricted as to disposition under federal securities laws.
Under the proposal, the present investment restrictions set forth in the
second sentence of Investment Restriction No. 3 would be replaced with the
following non-fundamental policy, which could be changed by the Trustees
without a shareholder vote:
The Fund may invest up to 15% (10% for the Money Market Fund) of its net
assets in securities which are illiquid because they are not readily
marketable.
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The proposed policy is consistent with current guidelines established by the
SEC and with the practice followed by most other mutual funds, in terms of
placing a restriction on the purchase of "illiquid securities" rather than
"restricted securities." None of the five Funds presently invests in
securities which, at the time of purchase, are illiquid. Shareholders should
be aware that illiquid securities generally involve a higher degree of risk
than liquid securities because a Fund may not be able to sell them when its
sub-adviser wishes to do so or might have to sell them at less than fair
market value. Also, illiquid securities may be more difficult to value at
times than liquid securities.
The proposal would allow the Funds to purchase fixed-income securities
offered and sold to "qualified institutional buyers" under Rule 144A of the
1933 Act. Rule 144A securities are restricted as to resale. A Fund would not
invest more than 15% (10% for the Money Market Fund) of its assets in such
securities unless the Trustees determined that the securities are liquid. The
Trustees have adopted guidelines for determining and monitoring the liquidity
of restricted securities offered under Rule 144A.
The Trustees believe that the proposal to allow the five Funds to invest in
restricted securities would increase the Funds' investment opportunities,
potentially making them more competitive. They believe the benefits offered by
these opportunities outweigh the risks involved. This proposal also would
eliminate certain inconsistencies among the investment restrictions of all
Funds of the Trust. These inconsistencies have made it difficult to monitor
the Funds' compliance with the restrictions on restricted securities.
RECOMMENDATION AND REQUIRED VOTE
The Trustees recommend that the shareholders approve revisions in the
investment restrictions of the Growth Fund, Equity Index Fund, Investment
Grade Income Fund, Government Bond Fund and Money Market Fund to permit such
Funds to invest in securities which are restricted as to disposition under
federal securities laws.
The affirmative vote of a majority (defined in the Miscellaneous section) of
each Fund's outstanding voting securities is required to approve the proposed
change with respect to that Fund. Abstentions have the effect of a negative
vote on this proposal.
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MISCELLANEOUS
Definition of Majority. "Majority of the outstanding voting securities"
means with respect to any Fund or the Trust the affirmative vote of the lesser
of (1) more than 50% of the outstanding shares of the Fund or the Trust, as
applicable, and (2) 67% or more of the shares of the Fund or the Trust, as
applicable, 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 proposals, except Proposal No.
1 (Election of Trustees) and Proposal No. 2 (Ratification of the Selection of
Independent Accountants).
Other Business. The Trustees know of no other business to be brought before
the Meeting. However, 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.
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 Trust does not currently
intend to hold such meetings. Shareholder proposals for inclusion in the
Trust's proxy statement for any subsequent meeting must be received by the
Trust not less than 160 days prior to any such meeting.
Administrator. First Data Investor Services Group, Inc., a wholly-owned
subsidiary of First Data Corporation, 4400 Computer Drive, Westborough, MA
01581, serves as the Trust's administrator.
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PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY. A SELF-ADDRESSED,
POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
Richard M. Reilly
President
Worcester, MA
July 7, 1997
42
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EXHIBIT I
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,
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<PAGE>
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 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
2
<PAGE>
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 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 ("pricing");
(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;
3
<PAGE>
(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 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.
4
<PAGE>
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.
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
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<PAGE>
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.
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.
6
<PAGE>
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.
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 /s/ Robert T. Stemple
______________________________________ By:___________________________________
Witness Assistant Vice President
Allmerica Investment Trust
/s/ Stephen P. Setterlund /s/ Richard M. Reilly
______________________________________ By:___________________________________
Witness President
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<PAGE>
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:
SCHEDULE A
ANNUAL FEES
<TABLE>
<CAPTION>
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>
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%
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)
/s/ Robert T. Stemple
By: __________________________________
Dated: August 21, 1992
Acknowledged by Allmerica Investment Management
Company, Inc.
/s/ Richard M. Reilly
By: __________________________________
Dated: August 21, 1992
9
<PAGE>
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
/s/ Richard M. Reilly
By: __________________________________
Date: April 30, 1993
Acknowledged by Allmerica Investment
Management Company, Inc.
/s/ Abigail Armstrong
By: __________________________________
Date: April 30, 1993
10
<PAGE>
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
/s/ Robert T. Stemple
By: __________________________________
Dated: May 1, 1994
Acknowledged by Allmerica Investment
Management Company, Inc.
/s/ Eric Levy
By: __________________________________
Dated: May 1, 1994
11
<PAGE>
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
/s/ Robert T. Stemple
By: __________________________________
Dated: March 20 , 1995
Acknowledged by Allmerica Investment
Management Company, Inc.
/s/ Richard M. Reilly
By: __________________________________
Dated: March 20 , 1995
12
<PAGE>
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.
The Trust and the Adviser amend the Agreement as it relates to the Small-Mid
Cap Value Fund (formerly the Small Cap Value Fund), one of the series of the
Trust, to provide that the fee paid to the Adviser will be computed daily and
paid monthly at an annual rate based on the Fund's average daily net assets,
as set forth below:
<TABLE>
<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
/s/ Thomas P. Cunningham
By: __________________________________
Date: 4-1-97
Allmerica Investment Management
Company, Inc.
/s/ Richard M. Reilly
By: __________________________________
Date: April 1, 1997
13
<PAGE>
FORM OF
AMENDMENT NO. 2
Amendment No. 2, effective August , 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.
The Trust and the Adviser amend the Agreement as it relates to the Select
Aggressive Growth Fund, Select Capital Appreciation Fund, Select International
Equity Fund, Growth Fund, Select Growth and Income Fund, Select Income Fund
and Investment Grade Income Fund, series of the Trust, to provide that the fee
paid to the Adviser will be computed daily at an annual rate based on the
average daily net asset value of each Fund as set forth below:
<TABLE>
<CAPTION>
SELECT SELECT SELECT
AGGRESSIVE CAPITAL INTERNATIONAL SELECT GROWTH
GROWTH APPRECIATION EQUITY GROWTH AND
ASSETS FUND FUND FUND FUND INCOME FUND
------ ---------- ------------ ------------- ------ -------------
<S> <C> <C> <C> <C> <C>
First $100 Million.. 1.00% 1.00% 1.00% 0.60% 0.75%
$100 to $250 Mil-
lion.............. 0.90% 0.90% 0.90% 0.60% 0.70%
$250 to $500 Mil-
lion.............. 0.85% 0.85% 0.85% 0.40% 0.65%
Over $500 Million... 0.85% 0.85% 0.85% 0.35% 0.65%
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT
SELECT GRADE
ASSETS INCOME FUND INCOME FUND
------ ----------- -----------
<S> <C> <C>
First $50 Million....................................... 0.60% 0.50%
$50 to $100 Million..................................... 0.55% 0.45%
Over $100 Million....................................... 0.45% 0.40%
</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 Allmerica Investment Management
Company, Inc.
By: __________________________________ By: __________________________________
Date: ________________________________ Date: ________________________________
14
<PAGE>
EXHIBIT II
SUBADVISER AGREEMENT
Subadviser Agreement executed as of August 21, 1992 between Allmerica
Investment Management Company, Inc. (the "Manager"), and Nicholas-Applegate
Capital Management (the "Subadviser").
Witnesseth:
That in consideration of the mutual covenants herein contained, it is agreed
as follows:
1. SERVICES TO BE RENDERED BY SUBADVISER TO THE TRUST
(a) Subject always to the control of the Trustees of Allmerica Investment
Trust (the "Trust"), a Massachusetts business trust, the Subadviser, at its
expense, will furnish continuously an investment program for each of the
following series of shares of the Trust: Select Aggressive Growth Fund and
such other series of shares as the Trust, the Manager and the Subadviser may
from time to time agree on (together, the "Funds"). The Subadviser will make
investment decisions on behalf of each of the Funds and place all orders for
the purchase and sale of portfolio securities. In the performance of its
duties, the Subadviser will comply with the provisions of the Agreement and
Declaration of Trust and Bylaws of the Trust and the objectives and policies
of each of the Funds, as set forth in the current Registration Statement of
the Trust filed with the Securities and Exchange Commission 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 in writing. The Subadviser shall make its officers and
employees available to the Manager from time to time at reasonable times to
review investment policies of the Funds and to consult with the Manager
regarding the investment affairs of the Funds.
(b) The Subadviser, at its expense, will furnish (i) all necessary
investment and management facilities, including salaries of personnel required
for it to execute its duties faithfully, and (ii) administrative facilities,
including clerical personnel and equipment necessary for the efficient conduct
of the investment affairs of each of the Funds (excluding pricing and
bookkeeping services).
(c) The Subadviser shall place all orders for the purchase and sale of
portfolio investments for each Fund with issuers, brokers or dealers selected
by the Subadviser which may include brokers or dealers affiliated with the
Subadviser. In the selection of such brokers or dealers and the placing of
such orders, the Subadviser always shall seek best execution, (except to the
extent permitted by the next sentence hereof) which
1
<PAGE>
is to place portfolio transactions where each 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 Subadviser 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 Subadviser
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 Subadviser and its affiliates with
respect to the Trust and to other clients of the Subadviser as to which
Subadviser or any affiliate of the Subadviser exercises investment discretion.
(d) The Subadviser shall not be obligated to pay any expenses of or for a
Fund not expressly assumed by the Subadviser pursuant to this Section 1.
2. 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 Subadviser, and in any person
controlled by or under common control with the Subadviser, and that the
Subadviser and any person controlled by or under common control with the
Subadviser may have an interest in the Trust. It is also understood that the
Subadviser and persons controlled by or under common control with the
Subadviser 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 SUBADVISER
The Manager will pay to the Subadviser as compensation for the Subadviser's
services rendered and for the expenses borne by the Subadviser pursuant to
Section 1, 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 hereto) shall not be amended as to any
Fund unless such amendment is approved at a meeting by the affirmative vote of
a
2
<PAGE>
majority of the outstanding voting securities of the Fund, 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 Subadviser.
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 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
annually (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 Manager 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 Subadviser may continue to serve hereunder in a
manner consistent with the Investment Company Act of 1940, as amended
("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 Subadviser 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 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 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.
3
<PAGE>
For the purposes of this Agreement, the terms "control", "interested person"
and "assignment" shall have their respective meanings defined in the 1940 Act
and the Rules and Regulations thereunder, subject, however, to such exemptions
as may be granted by the Securities and Exchange Commission 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 and Exchange Act of 1934 and the Rules and Regulations
thereunder.
7. NONLIABILITY OF SUBADVISER
In the absence of willful misfeasance, bad faith or gross negligence on the
part of the Subadviser, or reckless disregard of its obligations and duties
hereunder, the Subadviser shall not be subject to any liability to the Trust,
to any shareholder of the Trust or to the Manager, for any act or omission in
the course of, or connected with, rendering services 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. MISCELLANEOUS
A. The Subadviser shall be responsible for voting the securities of the
Funds.
B. Any notices from the Subadviser to the Manager shall be mailed to the
following address:
Allmerica Investment Management Company, Inc.
440 Lincoln Street
Worcester MA 01653
Attn: Counsel
Any notices from the Manager to the Subadviser shall be mailed to the
following address:
Nicholas-Applegate Capital Management
501 West Broadway, Suite 2000
San Diego CA 92101
Attn: Antonio C. Cabral, Jr.
Vice President
4
<PAGE>
C. It is understood that this Agreement shall be governed by and
construed under and in accordance with the laws of the Commonwealth
of Massachusetts laws except when Federal securities laws or other
Federal laws are applicable.
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 NICHOLAS-APPLEGATE CAPITAL MANAGEMENT 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.
/s/ Eric Levy
By: _____________________________________________
Nicholas-Applegate Capital Management, a
California limited partnership By: Nicholas-
Applegate Capital Management, Inc., General
Partner
/s/ Antonio A. Cabral, Jr.
By: _____________________________________________
Antonio A. Cabral, Jr.
Vice President
Accepted and Agreed to
as of the day and year first
above written:
Allmerica Investment Trust
/s/ Richard M. Reilly
By: _____________________________________________
5
<PAGE>
FORM OF
AMENDED SCHEDULE A
TO THE SUB-ADVISER AGREEMENT BETWEEN
ALLMERICA INVESTMENT MANAGEMENT COMPANY,
INC. (THE "MANAGER") AND NICHOLAS-APPLEGATE CAPITAL
MANAGEMENT, L.P. (THE "SUB-ADVISER") DATED AUGUST 21, 1992
RELATING TO THE SELECT AGGRESSIVE GROWTH FUND
EFFECTIVE AUGUST , 1997
The Manager will pay to the Sub-Adviser as compensation for the Sub-Adviser's
services rendered and for the expenses borne by the Sub-Adviser pursuant to
Section 1, a fee, computed daily at an annual rate based on the average daily
net assets of each Fund (valued in accordance with the current Registration
Statement of the Fund), as set forth below:
<TABLE>
<CAPTION>
FUND NET ASSETS FEE RATE
---- ------------------ --------
<S> <C> <C>
Select Aggressive Growth Fund....................... First $100,000,000 0.60%
Next $150,000,000 0.55%
Next $250,000,000 0.50%
Over $500,000,000 0.45%
</TABLE>
Such fee will be paid to the Sub-Adviser after the end of each calendar
quarter.
Allmerica Investment Management Company, Inc.
By: _____________________________________________
Nicholas-Applegate Capital Management, L.P.
By: _____________________________________________
Accepted and Agreed to by Allmerica Investment
Trust
By: _____________________________________________
6
<PAGE>
EXHIBIT III
SUB-ADVISER AGREEMENT
Sub-Adviser Agreement executed as of April 28, 1995 between ALLMERICA
INVESTMENT MANAGEMENT COMPANY, INC, 440 Lincoln Street, Worcester,
Massachusetts 01653 (the "Manager"), and JANUS CAPITAL CORPORATION, with a
principal place of business at 100 Fillmore Street, Suite 300, Denver,
Colorado 80206-4923 (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 Allrnerica 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 CAPITAL APPRECIATION FUND and such
other series of shares as the Trust, the Manager and the Sub- Adviser may from
time to time agree on (the "Fund"). The Sub-Adviser will have exclusive
authority to make investment decisions on behalf of the Fund and place all
orders for the purchase and sale of portfolio securities in such proportions
as the Sub-Adviser may determine without regard to the length of time the
securities have been held and the resulting rate of portfolio turnover or any
tax considerations, subject however, to the Fund's investment objective,
policies and restrictions and to the supervision by the Manager and the Board
of Trustees of the Trust. 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 objective and policies of the Fund, as set forth
in the current Registration Statement of the Trust ("Registration Statement")
filed with the Securities and Exchange Commission ("SEC") and any applicable
federal and state laws, and upon receipt of the relevant disclosure documents,
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. 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, except as necessary to
perform this Agreement, or 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.
1
<PAGE>
(b) The Sub-Adviser, at its expense, will furnish all investment and
management personnel, facilities, and equipment necessary to perform the
duties set forth in this Agreement.
(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 or the Manager. 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 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 to which the Sub-Adviser or any affiliate of the
Sub-Adviser exercises investment discretion.
2. OBLIGATIONS OF THE MANAGER
(a) The Manager shall timely furnish information to the Sub-Adviser
regarding the composition of assets in the Fund, cash requirements and cash
available for investment in the Fund.
(b) The Manager shall provide to the Sub-Adviser, a copy of the Fund's most
recent Registration Statement, including the most recent prospectuses and the
statement of additional information, including any amendments, updates or
supplements to such documents before or at the time the amendments, updates or
supplements become effective.
(c) The Manager also shall provide the Sub-Adviser with any additional
materials or information that the Sub-Adviser may reasonably request from time
to time to enable it to perform its duties under this Agreement.
2
<PAGE>
3. 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.
4. COMPENSATION TO BE PAID BY THE MANAGER TO THE SUB-ADVISER
The Manager will pay to the Sub-Adviser as compensation for the Sub-
Adviser's services rendered, a fee, determined as described in Schedule A
which is attached hereto and made a part hereof. Such fee shall be paid by the
Manager and not by the Trust.
5. AMENDMENTS OF THIS AGREEMENT
This Agreement (including Schedule A 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, 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.
6. 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 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 specifically approved at least
annually (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 Manager or
of any Sub-Adviser, by vote cast in person at a meeting wherein the annual
renewal of investment advisory agreements is traditionally undertaken or 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
3
<PAGE>
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 Investment Company Act of 1940, as
amended ("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, 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 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 shall have terminated for any reason.
7. 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 the rules and regulations thereunder, subject, however, to such exemptions
as may be granted by the SEC under said Act; and the term "brokerage and
research services" shall have the meaning given in the Securities and Exchange
Act of 1934 and the rules and regulations thereunder.
8. NONLIABILITY 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.
4
<PAGE>
9. 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 Fund.
10. CONFLDENTIALITY AND PROPRIETARY RIGHTS
(a) The Manager will not directly, or indirectly and will not permit its
employees, officers, directors, agents, contractors, or the Fund to, in any
form or by any means, use, disclose or furnish to any person or entity,
records or information concerning the business of the Sub-Adviser, except as
necessary for the performance of its duties under this Agreement or its
investment management agreement with the Fund.
(b) The Sub-Adviser will not directly, or indirectly, and will not permit
its employees, officers, directors or agents to in any form or by any means,
use, disclose or furnish to any person or entity, records or information
concerning the business of the Manager or the Fund, except as necessary for
the performance of its duties under this Agreement.
(c) The Sub-Adviser is the sole owner of the name and mark "Janus " The
Manager shall provide the Sub-Adviser with any and all written sales and
marketing material in which Manager proposes to use the name and mark "Janus"
and Sub-Adviser shall have five (5) business days to review and approve the
use of such material by the Manager, which approval shall not be unreasonably
withheld. The Manager shall not permit the Fund to, without prior written
approval of the Sub-Adviser, use the name or mark "Janus" or make
representations regarding the Sub-Adviser or its affiliates.
(d) Upon termination of this Agreement for any reason, Manager shall use its
best efforts to cause the Fund to immediately cease all use of the "Janus"
name or any "Janus" mark.
11. NON-EXCLUSIVITY
(a) The Sub-Adviser and its affiliates may act as the investment adviser and
provide other services to various investment companies and other managed
accounts. In the event of such activities, the transactions and associated
costs will be allocated among such clients (including the Fund) in a manner
that the Sub-Adviser believes to be equitable provided that such allocation
complies with industry standards and
5
<PAGE>
provided further that the Sub-Adviser shall report to the Board of Trustees
regarding such allocation of transaction expenses when requested to do so.
(b) The Sub-Adviser, its affiliates, or any of their directors, officers,
employees or agents may buy, sell or trade any securities or other investment
instruments for its or their own account or for the account of others for whom
it or they may be acting, provided that such activities will not adversely
affect or otherwise impair the performance by the Sub-Adviser of its
responsibilities under this Agreement and shall be in accordance with all
applicable laws and regulations.
(c) The Sub-Adviser shall be subject to a written code of ethics adopted by
it pursuant to Rule 17j-1(b) or the 1940 Act (the "Code"), and shall not be
subject to any other code of ethics, including the Manager's code of ethics,
unless specifically adopted by the Sub-Adviser. The Sub-Adviser shall forward
any proposed amendments to such Code to the Manager.
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 JANUS CAPITAL CORPORATION and 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.
/s/ Eric Levy
By:___________________________________
TITLE: VICE PRESIDENT AND
TREASURER
Janus Capital Corporation
/s/ Stephen L. Stieneker
By:___________________________________
TITLE: ASSISTANT VICE PRESIDENT
Accepted and Agreed to as of the day
and year first above written:
Allmerica Investment Trust
/s/ Robert T. Stemple
By:___________________________________
TITLE: VICE PRESIDENT AND CONTROLLER
6
<PAGE>
FORM OF
AMENDED SCHEDULE A
TO THE SUB-ADVISER AGREEMENT BETWEEN
ALLMERICA INVESTMENT MANAGEMENT COMPANY, INC.(THE "MANAGER")
AND JANUS CAPITAL CORPORATION (THE "SUB-ADVISER") DATED APRIL 28, 1995
RELATING TO THE SELECT CAPITAL APPRECIATION FUND
EFFECTIVE AUGUST , 1997
The Manager will pay to the Sub-Adviser as full compensation for the Sub-
Adviser's services rendered, a fee, accrued monthly and paid quarterly based
on the average daily net assets of the Fund as set forth below:
<TABLE>
<CAPTION>
FUND NET ASSETS FEE RATE
---- ------------------ --------
<S> <C> <C>
Select Capital Appreciation Fund................... First $100,000,000 0.60%
Next $150,000,000 0.55%
Next $250,000,000 0.50%
Over $500,000,000 0.45%
</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 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.
Allmerica Investment Management
Company, Inc.
By: __________________________________
Janus Capital Corporation
By: __________________________________
Accepted and Agreed to by Allmerica
Investment Trust
By: __________________________________
7
<PAGE>
EXHIBIT IV
GROWTH FUND INVESTMENT POLICIES AS STATED IN THE FUND'S PROSPECTUS DATED MAY
1, 1997
Investment Policies: The Growth Fund is not limited to investments in any
particular type of company and may invest in any company which, in the opinion
of management, is likely to further its investment objective. The Growth Fund
will pursue its investment objective by maintaining a flexible position
regarding the type of companies, as well as the types of securities, in which
it will invest. Investments may include, but are not limited to, developing or
well-established companies, whether small or large. It is anticipated that
there will be a mix of assets in the Growth Fund. For example, portions of the
Growth Fund may be invested in equity securities of good quality or in well-
established companies considered to represent good value, based on factors
including historical investment standards (such as price/book value ratios and
price/earnings ratios) or in smaller emerging growth companies which are in
the development stage and are expected to achieve above-average earnings
growth because of special factors (such as changes in the economy, the
relative attractiveness of the various securities markets, or changes in
consumer demand).
* * *
The Growth Fund normally will invest substantially all of its assets in
equity-type securities, including common stocks, warrants (which are options
to purchase common stock at specified prices during a specified time period
with the investment risk that the market value of the underlying common stock
may not be high enough in relation to the warrant exercise price to justify
purchase pursuant to the terms of the warrant), preferred stocks and debt
securities convertible into or carrying rights to purchase common stock or to
participate in earnings, and real estate securities to the extent permitted by
paragraph four under "Investment Restrictions" in the SAI. In periods
considered by management to warrant a more defensive position, the Growth Fund
may place a larger proportion of its portfolio in high-grade preferred stocks,
bonds, or other fixed-income securities, including U.S. Government securities,
whether or not convertible into stock or with rights attached, or retain cash.
The Fund may engage in the options and futures strategies described under
"Certain Investment Strategies and Policies."
The Growth Fund may invest in both listed and unlisted securities. The
Growth Fund also may invest in foreign as well as domestic securities. The
Fund may invest up to 25% of its assets in foreign securities (not including
its investments in American Depositary Receipts ("ADRs"). The Growth Fund will
not concentrate its foreign investments in any particular foreign country, or
limit its investments to issuers listed on particular exchanges or traded in
particular money market centers. Investments in foreign securities carry
additional risks not present in domestic securities. See "Certain Investment
Strategies and Policies." The Sub-Adviser will consider these and other
factors before investing and will not cause the Growth Fund to invest in
foreign securities unless, in its opinion, such investments will meet the
standards and objectives of the Growth Fund.
<PAGE>
ALLMERICA INVESTMENT TRUST
PROXY
This Proxy is solicited on behalf of the Board of Trustees.
The undersigned hereby appoints Richard M. Reilly, Thomas P. Cunningham and
George M. Boyd, and each of them, attorneys and proxies of the undersigned, with
full power of substitution, and does hereby request that the votes attributable
to all of the undersigned's shares be cast as directed, with all powers the
undersigned would possess if personally present, at the Special Meeting of
Shareholders of Allmerica Investment Trust to be held at 440 Lincoln Street,
Worcester, Massachusetts 01653, on Friday, August 15, 1997 at 10:00 a.m., local
time, and at any adjournment thereof.
This Proxy when properly executed will be voted in the manner directed by
the shareholder. If no direction is made, the Proxy will be voted "FOR" all
proposals. If a proxy is not received from a particular shareholder, except
when otherwise permitted by applicable law, the votes attributable to his or her
interest will be allocated in the same ratio as votes for which instructions
have been received. A proxy marked in such manner as not to withhold authority
to vote for the election of any nominee shall be deemed to grant such authority.
Certain proposals relate only to certain Funds. See Proxy Statement to identify
which proposals apply to your Fund. In their discretion, the named proxies are
authorized to vote upon other business as may properly come before the Meeting,
or any adjournment thereof. The mailing date of this Proxy is on or about July
7, 1997.
To Vote For, Against or Abstain from voting on specific prosposals, check the
appropriate boxes below.
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF TRUSTEES FOR all nominees [ ] WITHHOLD AUTHORITY [ ] *EXCEPTIONS [ ]
listed below. to vote for all nominees listed below.
</TABLE>
Nominees: Cynthia A. Hargadon, Gordon Holmes, John P. Kavanaugh, Bruce E.
Langton, John F. O'Brien, Attiat F. Ott, Richard M. Reilly, and
Ranne P. Warner.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space below.)
*Exceptions
-----------------------------------------------------------------
2. RATIFICATION OF PRICE WATERHOUSE LLP AS INDEPENDENT ACCOUNTANTS
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. APPROVAL OF AMENDMENT TO MANAGEMENT AGREEMENT BETWEEN ALLMERICA
INVESTMENT MANAGEMENT COMPANY, INC. ("AIMCO") AND THE TRUST
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. APPROVAL OF AMENDED SCHEDULE A TO SUB-ADVISER AGREEMENT BETWEEN AIMCO AND
NICHOLAS-APPLEGATE CAPITAL MANAGEMENT, L.P.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. APPROVAL OF AMENDED SCHEDULE A TO SUB-ADVISER AGREEMENT BETWEEN AIMCO AND
JANUS CAPITAL CORPORATION
FOR [ ] AGAINST [ ] ABSTAIN [ ]
6. APPROVAL OF ARRANGEMENT TO PERMIT INVESTMENT MANAGER TO ENTER INTO AND
MATERIALLY AMEND SUB-ADVISORY AGREEMENTS WITH NON-AFFILIATED SUB-ADVISERS
WITHOUT SHAREHOLDER APPROVAL
FOR [ ] AGAINST [ ] ABSTAIN [ ]
7. APPROVAL OF CHANGE IN STATUS OF INVESTMENT OBJECTIVE OF EACH FUND FROM
FUNDAMENTAL TO NON-FUNDAMENTAL
FOR [ ] AGAINST [ ] ABSTAIN [ ]
8. APPROVAL OF REVISIONS IN INVESTMENT RESTRICTIONS OF EACH FUND TO PERMIT FUND
TO BORROW MONEY WHEN AGGREGATE AMOUNT BORROWED DOES NOT EXCEED 33 1/3% OF
VALUE OF FUND'S TOTAL ASSETS
FOR [ ] AGAINST [ ] ABSTAIN [ ]
9. APPROVAL OF CHANGE IN STATUS OF INVESTMENT RESTRICTIONS OF EACH FUND
RELATING TO FINANCIAL FUTURES AND RELATED OPTIONS FROM FUNDAMENTAL TO NON-
FUNDAMENTAL
FOR [ ] AGAINST [ ] ABSTAIN [ ]
<PAGE>
10. APPROVAL OF REVISIONS IN INVESTMENT POLICIES OF THE SMALL-MID CAP VALUE FUND
TO PERMIT FUND TO ENGAGE IN FINANCIAL FUTURES AND RELATED OPTIONS
TRANSACTIONS
FOR [ ] AGAINST [ ] ABSTAIN [ ]
11. APPROVAL OF CHANGE IN STATUS OF CERTAIN INVESTMENT POLICIES OF GROWTH FUND
FROM FUNDAMENTAL TO NON-FUNDAMENTAL
FOR [ ] AGAINST [ ] ABSTAIN [ ]
12. APPROVAL OF REVISIONS IN INVESTMENT RESTRICTIONS OF CERTAIN FUNDS TO PERMIT
SUCH FUNDS TO INVEST IN SECURITIES RESTRICTED AS TO DISPOSITION UNDER
FEDERAL SECURITIES LAWS
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Fund Name
Policy Number
Policyowner
Policyowner's Address
Please sign exactly as the name appears hereon. When signing as executor,
administrator, attorney, trustee or guardian, please give full title. 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 Meeting and Proxy Statement and revokes
any proxy heretofore given with respect to the votes covered by this Proxy.
Dated: , 1997
---------------------------------------------------
---------------------------------------------------
Signature
---------------------------------------------------
Signature if held jointly
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.
<PAGE>
[PASTE-UP LETTERHEAD HERE]
July 7, 1997
Dear Valued Client:
The enclosed Proxy Statement contains a number of proposals to be voted on at
a Special Meeting of Shareholders to be held on August 15, 1997. Some apply to
all of the Funds in the Trust while others apply only to a few or to a single
Fund. We have clearly identified which proposals apply to which Fund. This
letter briefly summarizes the proposals. You are, of course, encouraged to
refer to the Proxy Statement for more detailed information.
Generally speaking, the proposals fall into three categories: Administrative
Matters, Matters Affecting the Management or Sub-Advisory Agreements, and
Matters Affecting Investment Restrictions of one or more of the Funds. Each of
the proposals is summarized below.
A. Administrative Matters. Proposals Nos. 1 and 2
Proposal No. 1 involves the election of eight Trustees, seven of whom
currently serve as Trustees and one of whom is a new nominee. (This applies to
all Funds.)
Proposal No. 2 involves the ratification of the selection of Price Waterhouse
as independent accountants. (This applies to all the Funds.)
B. Matters Affecting the Management or Sub-Advisory Agreements. (Proposals
Nos. 3-6)
Proposal No. 3 involves proposed amendments to the fee schedules of the
Management Agreement which would result in lower management fees for the
Select Aggressive Growth Fund, Select Capital Appreciation Fund, Select
International Equity Fund, Select Growth and Income Fund and Select Income
Fund (the "Select Funds") and increased management fees for the Growth Fund
and Investment Grade Income Fund. In recognition of the growth in the Select
Fund assets, the Trustees are proposing that graduated fee structures be
introduced for the Select Funds. At the level of net assets of the Select
Funds on May 31, 1997, the proposed graduated fee schedule would reduce the
annual management fees payable to Allmerica Investment Management Company,
Inc. ("AIMCO"), the Funds' Investment Manager, by $1,017,330, or 7.9%, in the
aggregate. In agreeing to the proposed increase in the existing graduated fee
schedules for the Growth Fund and Investment Grade Income Fund, the Trustees
gave particular attention to the increase in the supervisory duties conducted
by AIMCO in its monitoring of the actions of the sub-advisers. The combined
increase in the annual management fee, again based on May 31, 1997 net assets,
would amount to $408,733, or 12.2%. While the Trustees evaluated the proposed
fee schedules individually with respect to each Fund, they did note that the
overall effect of the proposed Management Agreement changes would be to reduce
the aggregate management fees paid to AIMCO. Based on the net asset levels of
the Funds involved as of May 31, 1997, the aggregate net reduction would
amount to $608,597, or 3.7%.
Proposals Nos. 4 and 5 involve proposed reductions in the sub-advisory fees
paid by AIMCO to the sub-advisers of the Select Aggressive Growth Fund
(Nicholas-Applegate Capital Management, L.P.) and Select Capital Appreciation
Fund (Janus Capital Corporation), respectively. The proposed reduction would
amount to a total reduction of $285,073, or 10.3%, on an annualized basis,
using May 31, 1997 net assets. The sub-advisory fees are paid by AIMCO and not
the Fund and, therefore, the proposed reduction in sub-advisory fees does not
reduce the Fund operating expenses.
(continued on reverse side)
[PASTE-UP LETTERHEAD HERE]
<PAGE>
Proposal No. 6 involves the approval of an arrangement that would permit the
Investment Manager of the Trust to enter into and materially amend sub-
advisory agreements with non-affiliated sub-advisers, without a shareholder
vote. This proposal seeks to take advantage of a new position adopted by the
SEC whereby it has authorized investment managers in a "manager of managers"
structure to replace a sub-adviser without the necessity of a shareholder
vote, provided notification of such change is given to shareholders within 60
days. This provides important flexibility to the Investment Manager. The
Investment Manager has initiated three changes in sub-advisers since 1990,
each of which required shareholder approval (in all cases receiving a
favorable vote of approximately 90% or greater) in order to implement fully.
C. Matters Affecting Investment Restrictions (Proposals Nos. 7-12)
Certain of these proposals reflect requests by the sub-advisers to the
Trustees for changes in the Funds' investment restrictions to increase
flexibility and conform to standard practice.
. Proposal No. 7 would change the status of the investment objective of each
Fund from fundamental to non-fundamental to allow the investment objectives
to be amended in the future without a shareholder vote. This would give the
Funds added flexibility in responding to changing market conditions and help
minimize Fund expenses related to shareholder meetings.
. Proposal No. 8 would increase the amount of money each Fund may borrow for
temporary purposes from 5% to 33 1/3% of Fund assets. Recent changes in
certain state regulations would allow us to make this change.
. Proposal No. 9 would change the status of the investment restrictions of
each Fund relating to financial futures and options from fundamental to non-
fundamental to allow such restrictions to be amended in the future without a
shareholder vote. Making the restrictions on financial futures non-
fundamental would allow the Funds to make appropriate changes in the
restrictions quickly in response to changing market conditions without the
expense of holding a formal shareholder meeting.
. Proposal No. 10 would amend the investment policies of the Small-Mid Cap
Value Fund to permit the Fund to engage in financial futures and related
options transactions, which are widely used in the mutual fund industry.
. Proposal No. 11 would change the status of certain investment policies of
the Growth Fund from fundamental to non-fundamental to allow the policies to
be amended in the future without a shareholder vote. This proposal is
consistent with the practice followed by other mutual funds which typically
classify their investment policies as non-fundamental.
. Proposal No. 12 would revise the investment restrictions of the Growth Fund,
Equity Index Fund, Investment Grade Income Fund, Government Bond Fund and
Money Market Fund to permit such Funds to invest in securities which are
restricted as to disposition under federal securities laws. The Trustees
believe this proposal would increase the Funds' investment opportunities.
The Trustees and management encourage you to support these important
proposals.
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(s) promptly. A postage-paid envelope is enclosed for
this purpose.
Sincerely yours,
/s/ Richard M. Reilly
Richard M. Reilly
President
SHAREHOLDERS ARE URGED TO SIGN AND RETURN THE ENCLOSED PROXY CARD(S) IN THE
ENCLOSED ENVELOPE SO AS TO BE REPRESENTED AT THE MEETING.
