As filed with the Securities and Exchange Commission on or about
January 17, 2003
File Nos. 811-4138 and 2-94067
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. __ [ ]
Post-Effective Amendment No. __ [ ]
(Check appropriate box or boxes)
Allmerica Investment Trust
(Exact Name of Registrant as Specified in Charter)
440 Lincoln Street
Worcester, Massachusetts 01653
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (800) 855-1000
George M. Boyd
Allmerica Financial Investment Management Services, Inc.
440 Lincoln Street
Worcester, Massachusetts 01653
(Name and Address of Agent for Service)
Copies to:
Gregory D. Sheehan, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110
Approximate Date of Proposed Public Offering: As soon as practicable after the
Registration Statement becomes effective under the Securities Act of 1933, as
amended.
It is proposed that this filing will become effective on February 17, 2003,
pursuant to Rule 488 under the Securities Act of 1933, as amended.
No filing fee is required because of reliance on Section 24(f) of the Investment
Company Act of 1940, as amended.
Title of Securities Being Registered ...... Shares of common stock, no par
value, of the Select Growth Fund,
the Select International Equity
Fund, the Equity Index Fund and the
Select Investment Grade Income
Fund, each a Series of the
Registrant
ALLMERICA INVESTMENT TRUST
440 LINCOLN STREET
WORCESTER, MASSACHUSETTS 01653
Dear Life Insurance Policy and Annuity Contract Owners:
Allmerica Investment Trust (the "Trust") will hold a special meeting of
shareholders of the Select Strategic Growth Fund (the "Strategic Growth Fund"),
Select Emerging Markets Fund (the "Emerging Markets Fund"), Select Growth and
Income Fund (the "Growth and Income Fund"), Select Aggressive Growth Fund (the
"Aggressive Growth Fund"), and Select Strategic Income Fund (the "Strategic
Income Fund," and, collectively with the Strategic Growth Fund, Emerging
Markets Fund, Growth and Income Fund, Aggressive Growth Fund and Strategic
Growth Fund, the "Acquired Funds") on Thursday, March 27, 2003 at 9:00 a.m.
Eastern Time at 440 Lincoln Street, Worcester, Massachusetts, 01653. At the
meeting, shareholders of each Acquired Fund will be asked to consider and
approve an Agreement and Plan of Reorganization whereby each Acquired Fund
would be reorganized into part of another series of the Trust (collectively,
the "Acquiring Funds"). If each of the Agreements and Plans of Reorganization
is approved,
. The Strategic Growth Fund would merge with and into the Select Growth
Fund (the "Select Growth Fund");
. The Emerging Markets Fund would merge with and into the Select
International Equity Fund (the "International Equity Fund");
. The Growth and Income Fund would merge with and into the Equity Index
Fund (the "Equity Index Fund");
. The Aggressive Growth Fund would merge with and into the Select Growth
Fund and
. The Strategic Income Fund would merge with and into the Select
Investment Grade Income Fund (the "Investment Grade Income Fund").
A formal Notice of Special Meeting of Shareholders appears on the next page,
followed by the combined Prospectus/Proxy Statement, which explains in more
detail the proposals to be considered.
The acquisition of each of the Acquired Funds has been proposed by Allmerica
Financial Investment Management Services, Inc., the Funds' adviser ("Allmerica
Financial"), as part of an overall plan of Allmerica Financial to streamline
the funds the Trust offers separate accounts ("Separate Accounts") maintained
by First Allmerica Financial Life Insurance Company and Allmerica Financial
Life Insurance and Annuity Company (the "Insurance Companies"). Allmerica
Financial recommended the proposed reorganizations to the Trust's Board of
Trustees in light of the Insurance Companies' recent decision to cease selling
variable life insurance and variable annuity contracts to the public.
Like each of the Acquired Funds, each of the Acquiring Funds is currently
offered only to separate accounts ("Separate Accounts") of the Insurance
Companies and is
advised by Allmerica Financial Investment Management Services, Inc. The
Strategic Growth Fund is subadvised by TCW Investment Management Company and
the Select Growth Fund is subadvised by Putnam Investment Management, LLC. The
Emerging Markets Fund is subadvised by Schroder Investment Management North
America Inc. and the International Equity Fund is subadvised by Bank of Ireland
Asset Management (U.S.) Limited. The Growth and Income Fund is subadvised by
J.P. Morgan Investment Management Inc. and the Equity Index Fund is subadvised
by Allmerica Asset Management, Inc. The Aggressive Growth Fund is subadvised by
both Massachusetts Financial Services Company and Jennison Associates LLC and
the Select Growth Fund is subadvised by Putnam Investment Management, LLC. The
Strategic Income Fund is subadvised by both Western Asset Management Company
and Western Asset Management Company Limited and the Investment Grade Income
Fund is subadvised by Allmerica Asset Management, Inc. Please review the
enclosed Prospectus/Proxy Statement for a more detailed description of the
proposed acquisition of each of the Acquired Funds and the specific reasons
each is being proposed.
Although you are not a direct shareholder of an Acquired Fund, as an owner
of a variable life insurance policy or variable annuity contract issued by
Separate Accounts of the Insurance Companies, you have the right to instruct
your Insurance Company how to vote at the meeting. You may give voting
instructions for the number of shares of the relevant Acquired Fund
attributable to your life insurance policy or annuity contract as of the close
of business on January 8, 2003.
YOUR VOTE IS IMPORTANT. PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED
INSTRUCTION FORM PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE WHETHER OR NOT
YOU PLAN TO BE PRESENT AT THE MEETING. YOU MAY STILL VOTE IN PERSON IF YOU
ATTEND THE MEETING.
Please take a few moments to review the details of the proposals. If you
have any questions regarding the acquisition of the Acquired Funds, please feel
free to call the contact number listed in the enclosed Prospectus/Proxy
Statement. We urge you to vote at your earliest convenience.
We appreciate your participation and prompt response in these matters and
thank you for your continued support.
Very truly yours,
John P. Kavanaugh
President
[February ], 2003
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 27, 2003
ALLMERICA INVESTMENT TRUST
To the Shareholders:
A Special Meeting of the shareholders of each of the Select Strategic Growth
Fund (the "Strategic Growth Fund"), Select Emerging Markets Fund (the "Emerging
Markets Fund"), Select Growth and Income Fund (the "Growth and Income Fund"),
Select Aggressive Growth Fund (the "Aggressive Growth Fund"), and Select
Strategic Income Fund (the "Strategic Income Fund," and, collectively with the
Strategic Growth Fund, Emerging Markets Fund, Growth and Income Fund,
Aggressive Growth Fund and Strategic Growth Fund, the "Acquired Funds"), five
series of Allmerica Investment Trust (the "Trust"), will be held at 9:00 a.m.
Eastern Time on Thursday, March 27, 2003, at 440 Lincoln Street, Worcester,
Massachusetts 01653 for these purposes:
1. To approve the Agreement and Plan of Reorganization providing for the
sale of all of the assets of the Strategic Growth Fund to, and the
assumption of all of the liabilities of the Strategic Growth Fund by,
the Select Growth Fund (the "Select Growth Fund"), another series of the
Trust, in exchange for shares of the Select Growth Fund, and the
distribution of such shares to the shareholders of the Strategic Growth
Fund, in complete liquidation of the Strategic Growth Fund.
2. To approve the Agreement and Plan of Reorganization providing for the
sale of all of the assets of the Emerging Markets Fund to, and the
assumption of all of the liabilities of the Emerging Markets Fund by,
the Select International Equity Fund (the "International Equity Fund"),
another series of the Trust, in exchange for shares of the International
Equity Fund, and the distribution of such shares to the shareholders of
the Emerging Markets Fund, in complete liquidation of the Emerging
Markets Fund.
3. To approve the Agreement and Plan of Reorganization providing for the
sale of all of the assets of the Growth and Income Fund to, and the
assumption of all of the liabilities of the Growth and Income Fund by,
the Equity Index Fund, another series of the Trust, in exchange for
shares of the Equity Index Fund, and the distribution of such shares to
the shareholders of the Growth and Income Fund, in complete liquidation
of the Growth and Income Fund.
4. To approve the Agreement and Plan of Reorganization providing for the
sale of all of the assets of the Aggressive Growth Fund to, and the
assumption of all of the liabilities of the Aggressive Growth Fund by,
the Select Growth Fund, another series of the Trust, in exchange for
shares of the Select Growth Fund, and the distribution of such shares to
the shareholders of the Aggressive Growth Fund, in complete liquidation
of the Aggressive Growth Fund.
5. To approve the Agreement and Plan of Reorganization providing for the
sale of all of the assets of the Strategic Income Fund to, and the
assumption of all of the liabilities of the Strategic Income Fund by,
the Select Investment Grade Income Fund (the "Investment Grade Income
Fund," and, collectively with the Select Growth Fund, International
Equity Fund, Equity Index Fund and Select Growth Fund, the "Acquiring
Funds"), another series of the Trust, in exchange for shares of the
Investment Grade Income Fund, and the distribution of such shares to the
shareholders of the Strategic Income Fund, in complete liquidation of
the Strategic Income Fund.
6. To consider and act upon any other matters that properly come before the
meeting and any adjourned session of the meeting.
Only shareholders of record as of the close of business on January 8, 2003
will be entitled to notice of and to vote at the meeting and any adjournment
thereof. For proposals 1 through 5 above, only shareholders of the particular
Acquired Fund at issue will be allowed to vote on the proposal pertaining to
the merger of that particular Acquired Fund into its relevant Acquiring Fund.
George M. Boyd
Secretary
[February ], 2003
PROSPECTUS February , 2003
ALLMERICA INVESTMENT TRUST
This Prospectus describes the following four investment Funds of the Trust
which serve as underlying investments for insurance related accounts.
Select Growth Fund
Select International Equity Fund
Equity Index Fund
Select Investment Grade Income Fund
This Prospectus explains what you should know about each of the Funds.
Please read it carefully before you invest.
A particular Fund may not be available under the variable annuity or
variable life insurance policy which you have chosen. The Prospectus of the
specific insurance product you have chosen will indicate which Funds are
available and should be read in conjunction with this Prospectus. Inclusion in
this Prospectus of a Fund which is not available under your policy is not to be
considered a solicitation.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this Prospectus is adequate or complete. Any representation to the contrary is
a criminal offense.
ALLMERICA
INVESTMENT
TRUST
440 Lincoln Street
Worcester, Massachusetts 01653
1-800-828-0540
PROSPECTUS/PROXY STATEMENT
[ ], 2003
Acquisition of the Assets and Liabilities of the Select Strategic Growth Fund,
Select Emerging Markets Fund, Select Growth and Income Fund, Select Aggressive
Growth Fund and Select Strategic Income Fund
ALLMERICA INVESTMENT TRUST
440 LINCOLN STREET
WORCESTER, MASSACHUSETTS 01653
(800) 828-0540
TABLE OF CONTENTS
I. Questions and Answers.................................................. 3
II. Proposal 1--Merger of the Strategic Growth Fund into the Select Growth
Fund.......................................................... 6
III. Proposal 2--Merger of the Emerging Markets Fund into the International
Equity Fund................................................... 14
IV. Proposal 3--Merger of the Growth and Income Fund into the Equity Index
Fund.......................................................... 22
V. Proposal 4--Merger of the Aggressive Growth Fund into the Select Growth
Fund.......................................................... 30
VI. Proposal 5--Merger of the Strategic Income Fund into the Investment
Grade Income Fund............................................. 37
VII. General Information.................................................... 45
Information About the Mergers.......................................... 45
Organization........................................................... 46
Shares to be Issued.................................................... 46
Federal Income Tax Consequences........................................ 47
Voting Information..................................................... 48
Costs of Mergers....................................................... 50
Appendix A--Form of Agreement and Plan of Reorganization.................... A-1
Appendix B--Capitalization.................................................. B-1
Appendix C--Management's Discussion of Fund Performance, Fund Return
Information and Financial Highlights.............................. C-1
Appendix D--Description of Principal Risks, Pricing of Fund Shares, Purchase
and Redemption of Shares, Distribution Fees, Distributions and
Taxes............................................................. D-1
Introduction
a) This Prospectus/Proxy Statement contains information that shareholders of
each of the Select Strategic Growth Fund (the "Strategic Growth Fund"), Select
Emerging Markets Fund (the "Emerging Markets Fund"), Select Growth and Income
Fund (the "Growth and Income Fund"), Select Aggressive Growth Fund (the
"Aggressive Growth Fund"), and Select Strategic Income Fund (the "Strategic
Income Fund," and, collectively with the Strategic Growth Fund, Emerging
Markets Fund, Growth and Income Fund, Aggressive Growth Fund, and the Strategic
Income Fund, the "Acquired Funds"), five series of Allmerica Investment Trust
(the "Trust"), should know before voting on the relevant following proposals:
1. The sale of all of the assets of the Strategic Growth Fund to, and the
assumption of all of the liabilities of the Strategic Growth Fund by, the
Select Growth Fund (the "Select Growth Fund"), another series of the Trust,
in exchange for shares of the Select Growth Fund, and the distribution of
such shares to the shareholders of the Strategic Growth Fund, in complete
liquidation of the Strategic Growth Fund (To be voted on by shareholders of
the Strategic Growth Fund only);
2. The sale of all of the assets of the Emerging Markets Fund to, and the
assumption of all of the liabilities of the Emerging Markets Fund by, the
Select International Equity Fund (the "International Equity Fund"), another
series of the Trust, in exchange for shares of the International Equity
Fund, and the distribution of such shares to the shareholders of the
Emerging Markets Fund, in complete liquidation of the Emerging Markets Fund
(To be voted on by shareholders of the Emerging Markets Fund only);
3. The sale of all of the assets of the Growth and Income Fund to, and
the assumption of all of the liabilities of the Growth and Income Fund by,
the Equity Index Fund, another series of the Trust, in exchange for shares
of the Equity Index Fund, and the distribution of such shares to the
shareholders of the Growth and Income Fund, in complete liquidation of the
Growth and Income Fund (To be voted on by shareholders of the Growth and
Income Fund only);
4. The sale of all of the assets of the Aggressive Growth Fund to, and
the assumption of all of the liabilities of the Aggressive Growth Fund by,
the Select Growth Fund, another series of the Trust, in exchange for shares
of the Select Growth Fund, and the distribution of such shares to the
shareholders of the Aggressive Growth Fund, in complete liquidation of the
Aggressive Growth Fund (To be voted on by shareholders of the Aggressive
Growth Fund only); and
5. The sale of all of the assets of the Strategic Income Fund to, and the
assumption of all of the liabilities of the Strategic Income Fund by, the
Select Investment Grade Income Fund (the "Investment Grade Income Fund,"
and, collectively with the Select Growth Fund, International Equity Fund,
Equity Index Fund and Select Growth Fund, the "Acquiring Funds"), another
series of the Trust,
1
in exchange for shares of the Investment Grade Income Fund, and the
distribution of such shares to the shareholders of the Strategic Income
Fund, in complete liquidation of the Strategic Income Fund (To be voted on
by shareholders of the Strategic Income Fund only).
Proposals 1-5 above will be considered at a Special Meeting of Shareholders
of the Acquired Funds (the "Meeting"), which will be held at 9:00 a.m. Eastern
Time on March 27, 2003, at the offices of Allmerica Financial Investment
Management Services, Inc., 440 Lincoln Street, Worcester, Massachusetts 01653.
Please read this Prospectus/Proxy Statement and keep it for future reference.
The proposed mergers of the Acquired Funds into the Acquiring Funds are
referred to individually as a "Merger" and collectively as the "Mergers."
Shares of the Acquired and Acquiring Funds (each, a "Fund" and, collectively,
the "Funds") are currently offered only to separate accounts ("Separate
Accounts") established by First Allmerica Financial Life Insurance Company
("First Allmerica") or Allmerica Financial Life Insurance and Annuity Company
("Allmerica Financial Life" and, together with First Allmerica, the "Insurance
Companies"), subsidiaries of Allmerica Financial Corporation ("AFC"), a
publicly-traded Delaware holding company for a group of affiliated companies,
the largest of which is First Allmerica, for the purpose of funding variable
annuity contracts and variable life insurance policies (such contracts and
policies being referred to hereafter as "Contracts") issued by First Allmerica
or Allmerica Financial Life. Each Insurance Company is the legal owner of
shares of the Acquired Funds and has the right to vote those shares at the
Meeting. Although you are not a direct shareholder of an Acquired Fund, as an
owner of a variable life insurance policy or variable annuity contract issued
by Separate Accounts of the Insurance Companies, you have the right to instruct
your Insurance Company how to vote at the Meeting.
If the Mergers occur, your contract will be invested in shares of the
relevant Acquiring Fund. If the Agreement and Plan of Reorganization, the form
of which is attached hereto as Appendix A (the "Reorganization Agreement"), is
approved by the shareholders of the Acquired Funds and the relevant Mergers
occur, each Acquired Fund will transfer all of the assets and liabilities
attributable to its shares to the relevant Acquiring Fund in exchange for
shares of the Acquiring Fund. Each exchange, which will be effected on the
basis of the relative net asset values of the relevant Acquired and Acquiring
Funds, will be followed immediately by the distribution of the shares of the
relevant Acquiring Fund received by the relevant Acquired Fund to the
shareholders of such Acquired Fund in complete liquidation of the Acquired Fund.
Each Merger is not dependent upon the approval of any of other Merger. The
outcome of a Proposal will not be affected by the outcome of any other
Proposal. For example, if Proposal 1 is approved by shareholders of the
Strategic Growth Fund, that Fund will be reorganized into the Select Growth
Fund, regardless of whether the shareholders of the Aggressive Growth Fund
approve Proposal 4.
2
Please review the information about the Acquiring Funds in Appendix C of
this Prospectus/Proxy Statement. Appendix C contains information concerning the
Acquiring Funds' performance. The following documents have been filed with the
Securities and Exchange Commission (the "SEC") and are incorporated into this
Prospectus/Proxy Statement by reference:
. The Statement of Additional Information of the Trust, dated May 1, 2002,
as revised or supplemented from time to time.
. The Statement of Additional Information of the Trust relating to this
Prospectus/Proxy Statement, dated February , 2003.
The Funds have previously sent their Annual and Semi-Annual Reports to their
shareholders. For a free copy of the Funds' most recent Annual and Semi-Annual
Reports or any of the documents listed above relating to the Funds, please call
1-800-828-0540 or write to Allmerica Investment Trust at 440 Lincoln Street,
Worcester, Massachusetts 01653. Text-only versions of all the Funds' documents
can be viewed online or downloaded from the EDGAR database on the SEC's
internet site at www.sec.gov. You can review and copy information about each
Fund by visiting the following location, and you can obtain copies, upon
payment of a duplicating fee, by electronic request at the following e-mail
address: publicinfo@sec.gov, or by writing the Public Reference Room, U.S.
Securities and Exchange Commission, Washington, DC 20549-0102. Information on
the operation of the Public Reference Room may be obtained by calling (202)
942-8090.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED WHETHER THIS PROSPECTUS/PROXY STATEMENT IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
I. QUESTIONS AND ANSWERS
The following questions and responses provide an overview of key features of
the Mergers and of the information contained in this combined Prospectus/Proxy
Statement. Please review the full Prospectus/Proxy Statement prior to casting
your vote.
1. What is being proposed?
The Trustees of the Trust (the "Trustees") are recommending the following
Proposals:
1. The sale of all of the assets of the Strategic Growth Fund to, and the
assumption of all of the liabilities of the Strategic Growth Fund by, the
Select
3
Growth Fund, in exchange for shares of the Select Growth Fund, and the
distribution of such shares to the shareholders of the Strategic Growth
Fund, in complete liquidation of the Strategic Growth Fund;
2. The sale of all of the assets of the Emerging Markets Fund to, and the
assumption of all of the liabilities of the Emerging Markets Fund by, the
International Equity Fund, in exchange for shares of the International
Equity Fund, and the distribution of such shares to the shareholders of the
Emerging Markets Fund, in complete liquidation of the Emerging Markets Fund;
3. The sale of all of the assets of the Growth and Income Fund to, and
the assumption of all of the liabilities of the Growth and Income Fund by,
the Equity Index Fund, in exchange for shares of the Equity Index Fund, and
the distribution of such shares to the shareholders of the Growth and Income
Fund, in complete liquidation of the Growth and Income Fund;
4. The sale of all of the assets of the Aggressive Growth Fund to, and
the assumption of all of the liabilities of the Aggressive Growth Fund by,
the Select Growth Fund, in exchange for shares of the Select Growth Fund,
and the distribution of such shares to the shareholders of the Aggressive
Growth Fund, in complete liquidation of the Aggressive Growth Fund and
5. The sale of all of the assets of the Strategic Income Fund to, and the
assumption of all of the liabilities of the Strategic Income Fund by, the
Investment Grade Income Fund, in exchange for shares of the Investment Grade
Income Fund, and the distribution of such shares to the shareholders of the
Strategic Income Fund, in complete liquidation of the Strategic Income Fund.
If a Proposal is approved, each Insurance Company Separate Account that owns
shares of the relevant Acquired Fund will receive shares of the relevant
Acquiring Fund with an aggregate net asset value equal to the aggregate net
asset value of its Acquired Fund shares as of the business day before the
closing of the relevant Merger. As a result, your variable life insurance or
annuity contract will be invested in Acquiring Fund shares, rather than in
Acquired Fund shares, beginning at the closing of such Merger. Each of the
Mergers is currently scheduled to take place on or around [ ], 2003.
2. Why are the Mergers being proposed?
The Mergers are being proposed as part of a plan by Allmerica Financial
Investment Management Services, Inc. ("Allmerica Financial" or the "Manager")
to streamline the funds the Trust offers to Separate Accounts maintained by the
Insurance Companies. Allmerica Financial recommended the proposed mergers to
the Trust's Board of Trustees in light of the recent decision by the Insurance
Companies to suspend sales of proprietary variable annuity and variable life
insurance contracts to the public. The Board was informed that this development
would mean that the Funds' assets are unlikely to increase, and may decrease in
the future.
4
The Trustees recommend approval of the Mergers because the Mergers offer
shareholders of the Acquired Funds an investment in larger funds with similar
investment objectives and strategies and the potential for improved
efficiencies. In addition, each of the Mergers will result in a decrease in the
shareholder expenses of the Acquired Funds. Please review "Reasons for the
Merger" in the Proposals section of this Prospectus/Proxy Statement for a full
description of the factors considered by the Trustees with respect to each
particular Merger.
3. How do the management fees and expenses of the Funds compare and what are
they estimated to be following the Mergers?
All of the Funds share the same investment manager, Allmerica Financial. In
each case, total expenses borne by shareholders of the Acquired Funds will
decrease as a result of the Mergers. Please review "Fees and Expenses" in the
Proposals section of this Prospectus/Proxy Statement for a full description and
comparison of the management fees and other operating expenses of the Funds.
4. How do the investment objectives, strategies and policies of each of the
Acquired Funds and the relevant Acquiring Funds compare?
Generally, each of the Acquired Funds and its Acquiring Fund counterpart
have similar investment objectives and policies. All of the Funds have
identical fundamental investment restrictions. Please review "Investment
Objectives, Strategies and Policies" in the Proposals section of this
Prospectus/Proxy Statement for a full description and comparison of the
investment objectives, strategies and policies of each of the Funds.
5. How do the shares of the Acquiring Funds to be issued compare with shares
of the Acquired Funds if the Mergers occur?
Shares of all Funds are currently offered only to Separate Accounts of the
Insurance Companies. Only one class of shares is offered by each Fund. The
Mergers will not affect your rights under your variable life insurance or
annuity contract to purchase, redeem and exchange shares. Dividends and
distributions of each Fund are automatically reinvested in additional shares of
the respective Fund.
6. What are the federal income tax consequences of the Mergers?
Provided that the Contracts funded through Separate Accounts of the
Insurance Companies qualify as insurance policies or annuity contracts under
Section 72 of the Internal Revenue Code of 1986, as amended (the "Code") or
life insurance contracts under Section 7702(a) of the Code, the Mergers will
not create any tax liability for
5
owners of the Contracts. The Mergers are expected to be tax free for federal
income tax purposes. This means that no gain or loss will be recognized by any
Acquired Fund or its shareholders as a result of the Merger. The aggregate tax
basis of the Acquiring Fund shares received by the Acquired Fund shareholders
will be the same as the aggregate tax basis the Acquired Fund shareholders held
in their Acquired Fund shares immediately before the Merger. For more
information, please see "Taxes" in Appendix D and "Federal Income Tax
Consequences" in the General Information section of this Prospectus/Proxy
Statement.
7. Will each Merger be voted on separately?
Yes. Each Merger is the subject of a separate Proposal. Only shares of the
relevant Acquired Fund will be eligible to vote on each Proposal. The outcome
of a Proposal will not be affected by the outcome of any other Proposal. For
example, if Proposal 1 is approved by shareholders of the Strategic Growth
Fund, that Fund will be reorganized into the Select Growth Fund, regardless of
whether the shareholders of the Aggressive Growth Fund approve Proposal 4.
II. PROPOSAL 1:
MERGER OF THE STRATEGIC GROWTH FUND INTO THE SELECT GROWTH FUND
The Proposal
You are being asked to approve the Reorganization Agreement dated as of
January 7, 2003, between the Strategic Growth Fund and the Select Growth Fund.
The form of the Reorganization Agreement is attached as Appendix A to this
Prospectus/Proxy Statement. By approving the Reorganization Agreement, you are
approving the merger of the Strategic Growth Fund into the Select Growth Fund
under the Reorganization Agreement.
Investment Objectives, Strategies and Policies
How do the investment objectives, strategies and policies of the Strategic
Growth Fund and the Select Growth Fund compare?
The Strategic Growth Fund and the Select Growth Fund have similar primary
investment objectives. This table shows the current investment objectives of
each Fund and the primary investment strategies used to achieve each Fund's
investment objective:
6
Strategic Growth Fund Select Growth Fund
--------------------- ------------------
Investment Objective: Investment Objective:
long-term capital long-term growth of
appreciation capital by investing in a
diversified portfolio
consisting primarily of
common stocks selected on
the basis of their
long-term growth potential
Strategic Growth Fund Select Growth Fund
--------------------- ------------------
Primary Investment Primary Investment
Strategies: Strategies:
The Strategic Growth Fund The Select Growth Fund
seeks to achieve its seeks to achieve its
investment objective as investment objective as
follows: follows:
. The Fund invests . The Fund normally
(except when invests at least 65% of
maintaining a temporary its assets in common
defensive position) at stocks that the
least 65% of the value Sub-Adviser (Putnam
of its total assets in Investment Management,
equity securities LLC) believes have
issued by companies growth potential.
with market
capitalization, at the . The Fund may also
time of acquisition, purchase convertible
within the bonds and preferred
capitalization range of stocks and warrants.
the companies
comprising the S&P . While the Fund normally
Small Cap 600 Index. invests substantially
all of its investments
. The Fund focuses on in equity securities,
small, fast-growing it may invest up to 35%
companies that offer in debt securities
cutting-edge products, including up to 15% in
services or lower rated bonds,
technologies. commonly known as "junk
bonds."
. The Fund's Sub-Adviser
(TCW Investment . The Fund may invest up
Management Company) to 25% of its assets in
pursues a small-cap foreign securities (not
growth investment including its
philosophy, using investments in American
fundamental Depositary Receipts).
company-by-company
analysis in conjunction . The Fund looks for
with technical and companies that appear
quantitative market to have favorable
analysis. long-term growth
characteristics.
. The Fund may invest up
to 25% of its assets in . The Fund typically
foreign securities (not invests in stocks of
including investments mid and large
in American Depositary capitalization
Receipts). companies, although it
can also make
. The Fund may invest up investments in smaller
to 15% of its net growth companies.
assets in illiquid
securities. . The Fund may invest up
to 15% of its net
assets in illiquid
securities.
7
The most significant difference in the principal investment strategies of
the two Funds is that while the Strategic Growth Fund invests primarily in
small capitalization companies, the Select Growth Fund invests mostly in mid
and large capitalization companies. Accordingly, the Select Growth Fund's risk
profile will reflect reduced risk associated with investments in smaller
companies than that of the Strategic Growth Fund. However, the Select Growth
Fund may invest up to 35% of its assets in debt securities, including up to 15%
in "junk bonds" (although historically it has not invested significantly in
"junk bonds") and therefore is likely to be more subject to credit risk than
the Strategic Growth Fund.
The Funds have identical fundamental and non-fundamental investment
restrictions. For more information about these investment restrictions, see the
current Statement of Additional Information of the Funds, which is incorporated
by reference to this Prospectus/Proxy Statement. For information about the
pricing of Fund shares, purchase and redemption of Fund shares and
distributions by the Funds, please see Appendix D.
Principal Investment Risks
What are the principal investment risks of the Select Growth Fund, and how do
they compare with those of the Strategic Growth Fund?
The following table shows the principal risks of each of the Funds.
Strategic Growth Fund Select Growth Fund
--------------------- ------------------
Company Risk
Company Risk
Currency Risk
Credit Risk
Derivatives Risk
Derivatives Risk
Foreign Investment Risk
Investment Management Risk
Investment Management Risk
Market Risk
Liquidity Risk
Market Risk
Technology Risk
Both Funds may invest in derivatives and therefore are subject to the risks
associated with the use of derivatives. These risks include unanticipated
losses substantially greater than the derivative's original cost, inability of
the other party to perform, mispricing and improper valuation. Both Funds may
invest in foreign securities and therefore are subject to the risks associated
with investments in foreign securities. Foreign securities may be subject to
less regulation and additional regional, national and currency risks. Both
Funds are subject to liquidity risk, although for varying reasons. The
8
Strategic Growth Fund is subject to liquidity risk because it invests heavily
in small capitalization companies and the technology industry, which is a
historically volatile investment sector. Since the Select Growth Fund may
invest in "Junk Bonds" it may be subject to liquidity risk which could subject
the Select Growth Fund to credit risk (the risk that an issuer will not be able
to pay principal and interest when due). The actual risks of investing in each
Fund depend on the securities held in each Fund's portfolio and on market
conditions, both of which change over time.
For more information about the risks of an investment in either the
Strategic Growth Fund or the Select Growth Fund, please refer to Appendix D and
the Funds' current Statement of Additional Information.
Fees and Expenses
How do the management fees and expenses of the Funds compare and what are
they estimated to be following the Merger?
The following table allows you to compare the management fees and expenses
of the Strategic Growth Fund and the Select Growth Fund and to analyze the
estimated expenses that the Trust expects the combined Fund to bear in the
first year following the Merger. The Total Annual Fund Operating Expenses shown
in the table below represent expenses incurred by each Fund for its last fiscal
year ended December 31, 2001, except the Funds were not subject to any
distribution fees during the 2001 fiscal year. The Total Annual Fund Operating
Expenses are deducted from the assets of each Fund. The table does not reflect
any of the charges associated with the Separate Accounts or variable contracts
that a variable life insurance or variable annuity holder may pay under
insurance or annuity contracts. You should refer to the variable insurance
product prospectus for more information relating to the fees and expenses of
that product, which are in addition to the expenses of the Funds.
Annual Fund Operating Expenses
(deducted directly from assets of the Fund)
Select
Growth
Strategic Select Fund
Growth Growth (pro forma
Fund Fund combined)
--------- ------ ----------
Management Fee (%)........................... 0.85% 0.79% 0.79%
Distribution and Service (12b-1) Fees (%).... 0.15% 0.15% 0.15%
Other Expenses (%)........................... 0.29% 0.06% 0.06%
Total Annual Fund Operating Expenses (%)..... 1.29%(1) 1.00%(1),(2) 1.00%
- --------
(1) Through December 31, 2003, the Manager has declared a voluntary expense
limitation of 1.20% of average net assets for both the Strategic Growth
Fund and the Select Growth Fund. The total operating expenses of these
Funds of the Trust were
9
less than their respective expense limitations throughout 2001. The
declaration of a voluntary management fee or expense limitation in any year
does not bind the Manager to declare future expense limitations with respect
to these Funds. These limitations may be terminated at any time.
(2) The Select Growth Fund has entered into an agreement with brokers whereby
brokers rebate a portion of commissions. Had these amounts been treated as
reductions of expenses, the total annual fund operating expense ratio would
have been 0.93% for the Select Growth Fund.
Example Expenses
The following Example helps you compare the cost of investing in the
Strategic Growth Fund and the Select Growth Fund currently with the cost of
investing in the combined Fund on a pro forma basis. The Example does not
reflect the expenses of the applicable variable insurance product that you have
purchased. You should refer to the applicable variable insurance product
prospectus for more information on those expenses. The table is based on the
following hypothetical conditions:
. $10,000 initial investment
. 5% total return for each year
. Each Fund's operating expenses remain the same as during the year ended
December 31, 2001
. assumes reinvestment of all dividends and distributions
Example Expenses
(your actual costs may be higher or lower)
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Strategic Growth Fund........................ $132 $411 $712 $1,564
Select Growth Fund........................... $103 $320 $555 $1,229
Select Growth Fund (pro forma combined)...... $103 $320 $555 $1,229
The above discussion of pro forma Annual Fund Operating Expenses and Example
Expenses assumes that: (1) the current contractual agreements of the Select
Growth Fund will remain in place; (2) certain duplicate costs involved in
operating the Strategic Growth Fund are eliminated; and (3) expense ratios are
based on pro forma combined assets as of December 31, 2001.
Reasons for the Merger
The Trustees, including all Trustees who are not "interested persons," as
that term is defined in the Investment Company Act of 1940, as amended, of the
Trust have
10
determined that the Merger would be in the best interests of the Strategic
Growth Fund and that the interests of existing shareholders of the Strategic
Growth Fund would not be diluted as a result of the Merger. The Trustees have
unanimously approved the Merger and recommend that you vote in favor of the
Merger by approving the Reorganization Agreement, the form of which is attached
as Appendix A to this Prospectus/Proxy Statement. You should carefully consider
whether retaining your indirect investment in the Select Growth Fund after the
Merger is consistent with your financial needs and circumstances.
The Merger is proposed by Allmerica Financial, the investment manager to
both the Strategic Growth Fund and the Select Growth Fund.
In proposing the Merger, Allmerica Financial presented to the Trustees the
following reasons for the Strategic Growth Fund to enter into the Merger:
. The fact that the Select Growth Fund's overall expense levels, and the
anticipated expense levels of the combined Funds, are significantly
lower than those of the Strategic Growth Fund;
. The fact that the Merger will afford contractholders the continued
opportunity to invest, through a Separate Account in a mutual fund with
an investment objective comparable to that of the Strategic Growth Fund;
. The fact that relatively low asset levels, with the expectation that
asset levels will decline in the future, have made the Strategic Growth
Fund less economical for Allmerica Financial and the Fund's Sub-Adviser
to manage, and will adversely affect Allmerica Financial's ability to
attract superior subadvisory services for the Fund in the future;
. The fact that, in the event the Strategic Growth Fund's asset levels
decline owing to the suspension of sales of insurance contracts by the
Insurance Companies, there will be fewer opportunities for the Fund to
achieve economies of scale to reduce expenses;
. The fact that the Merger is expected to be tax-free for shareholders; and
. The fact that in the absence of the Merger and in light of expected
future expense levels, the Board of Trustees would need to consider
other strategic alternatives.
The Trustees considered the differences in the Funds' investment objectives,
policies and strategies and the related risks. The Trustees also considered the
historical investment performance results of the Funds. No assurance can be
given that the Select Growth Fund will achieve any particular level of
performance after the Merger or that the combined Fund's expenses will be lower
than those of the Strategic Growth Fund.
11
Information About the Manager and Sub-Advisers
Allmerica Financial is the investment manager to both Funds. Allmerica
Financial has retained investment management firms (collectively,
"Sub-Advisers") to manage the Funds. Allmerica Financial has contracted with
TCW Investment Management Company ("TCW") as Sub-Adviser to make the day-to-day
investment decisions for the Strategic Growth Fund. As of December 31, 2001,
TCW had approximately $80 billion in assets under management. TCW manages
pension and profit sharing funds, retirement/health and welfare funds, public
employee retirement funds, and private accounts. Allmerica Financial has
contracted with Putnam Investment Management LLC ("Putnam") as Sub-Adviser to
make the day-to-day investment decisions for the Select Growth Fund. As of
December 31, 2002, Putnam had approximately $315 billion in assets under
management, including affiliates. Putnam has been an investment manager of
mutual funds and other clients since 1937.
The terms of the subadvisory contracts with respect to each of these Funds
are substantially the same. Allmerica Financial is responsible for overseeing
each Sub-Adviser's management of its Fund and for making recommendations to the
Trustees as to whether to retain each Sub-Adviser from year to year. The Merger
will not result in any changes to the terms of the subadvisory contract between
Allmerica Financial and Putnam. The Merger will result in a change in
Sub-Adviser for shareholders of the Strategic Growth Fund. In addition, if
shareholders of the Aggressive Growth Fund approve Proposal 4, Jennison
Associates LLC will serve as a Sub-Adviser to the Select Growth Fund with
respect to a portion of the Select Growth Fund's assets. Please see page 35 for
more information about Jennison Associates LLC.
12
The following table provides information about the individuals or groups of
individuals that are primarily responsible for the day-to-day management of
each of the Funds.
Fund Name and Sub-Adviser Name and Title of Service with Sub-Adviser Business Experience for
Name Portfolio Manager(s) ------------------------- Past Five Years
- ------------------------- -------------------------- -------------------------
Strategic Growth Fund Christopher J. Ainley, 1994 - Present Prior to joining TCW; Mr.
TCW Investment Management Managing Director Ainley spent two years at
Company Putnam Investment as a
Vice President and
Analyst in the Equity
Research Group and then
as a Portfolio Manager
for the Core Equity
Group. Previously he
served with J.P. Morgan
Investment Management and
Coopers and Lybrand.
Douglas S. Foreman, Group 1994 - Present Prior to 1994, Mr.
Managing Director and Foreman was employed by
Chief Investment Officer - Putnam Investment in
U.S. Equities Boston. He spent his last
five years at Putnam
managing institutional
accounts and mutual
funds. Mr. Foreman is a
Chartered Financial
Analyst.
Nicholas J. Capuano, 1990 - Present He joined TCW as an
Managing Director--U.S. Account Manager and later
Equities served in Client
Relations and in the
Earnings Momentum Group.
He started in Small Cap
Equities in 1994.
Select Growth Fund *
Putnam Investment
Management, LLC
- --------
* All investment decisions for the Select Growth Fund are made by an investment
team. The Putnam Specialty Growth Team has primary responsibility for the
day-to-day management of the Fund's portfolio.
The address of Allmerica Financial is 440 Lincoln Street, Worcester,
Massachusetts 01653. The address of TCW Investment Management Company is 865
South Figueroa Street, Suite 1800, Los Angeles, California 90017. The address
of Putnam Investment Management LLC is One Post Office Square, Boston,
Massachusetts 02109.
13
Federal Income Tax Consequences
Please review "Federal Income Tax Consequences" in the General Information
section of this Prospectus/Proxy Statement.
THE TRUSTEES OF ALLMERICA INVESTMENT TRUST UNANIMOUSLY RECOMMEND APPROVAL OF
THE REORGANIZATION AGREEMENT.
Required Vote for the Proposal
Approval of the Reorganization Agreement will require the affirmative vote
of a majority of the shares of the Strategic Growth Fund outstanding at the
record date for the Meeting.
III. PROPOSAL 2:
MERGER OF THE EMERGING MARKETS FUND INTO THE INTERNATIONAL EQUITY FUND
The Proposal
You are being asked to approve the Reorganization Agreement dated as of
January 7, 2003, between the Emerging Markets Fund and the International Equity
Fund. The form of the Reorganization Agreement is attached as Appendix A to
this Prospectus/Proxy Statement. By approving the Reorganization Agreement, you
are approving the merger of the Emerging Markets Fund into the International
Equity Fund under the Reorganization Agreement.
Investment Objectives, Strategies and Policies
How do the investment objectives, strategies and policies of the Emerging
Markets Fund and the International Equity Fund compare?
This table shows the current investment objectives of each Fund and the
primary investment strategies used to achieve each Fund's investment objective:
14
Emerging Markets Fund International Equity Fund
--------------------- -------------------------
Investment Objective: long-term Investment Objective: maximum
growth of capital by investing in the long-term total return (capital
world's emerging markets appreciation and income) primarily by
investing in common stocks of
established non-U.S. companies
Emerging Markets Fund International Equity Fund
--------------------- -------------------------
Primary Investment Strategies:
Primary Investment Strategies:
The Emerging Markets Fund seeks to The International Equity Fund seeks
achieve its investment objective as to achieve its investment objective
follows: as follows:
. The Fund normally invests at least . The Fund normally invests at least
80% of its net assets (plus any 80% of its net assets (plus any
borrowings for investment purposes) borrowings for investment purposes)
in companies located or primarily in equity securities of medium and
operating in countries with large size companies located in at
emerging markets; however its least five foreign countries (which
investments are not limited to any may vary from time to time), not
specific region of the world. including the United States.
. The Fund usually has investments in . The Fund focuses on equity
at least five developing countries. securities which the Fund's
Sub-Adviser (Bank of Ireland Asset
. Before the Fund invests in a Management (U.S.) Limited) believes
country, the Fund's Sub-Adviser are undervalued in relation to the
(Schroder Investment Management company's prospects for future
North America Inc.) considers earnings growth.
various factors such as that
country's political stability and . The Fund may invest up to 20% of
economic prospects. its net assets in fixed-income debt
securities, primarily for defensive
. In selecting securities for the purposes.
Fund, the Fund's Sub-Adviser
focuses on the long- term growth
potential of the securities.
. The Fund may invest up to 20% of
its net assets in debt securities
of issuers in emerging markets,
equity and debt securities of
issuers in developed countries,
cash and cash equivalents.
. The Fund may invest in lower rated
bonds, commonly known as "junk
bonds."
Significant differences between the two Funds' investment objectives and
strategies include the fact that the International Equity Fund's investment
objective is long-term
15
total return, with its emphasis on capital appreciation and current income,
while the Emerging Markets Fund's investment objective is long-term growth of
capital, with a generally lower emphasis on current income. In addition, while
the Emerging Markets Fund invests at least 80% of its assets in companies in
emerging markets, the International Equity Fund is not restricted to emerging
markets when selecting non-U.S. companies in which to invest. As a result, the
International Equity Fund typically invests little, if any, of its assets in
emerging markets stocks, as opposed to the Emerging Markets Fund. Furthermore,
the International Equity Fund normally invests in large and mid-size foreign
countries; the Emerging Markets Fund is not so restricted.
The Funds have identical fundamental and non-fundamental investment
restrictions. For more information about these investment restrictions, see the
current Statement of Additional Information of the Funds, which is incorporated
by reference to this Prospectus/Proxy Statement. For information about the
pricing of Fund shares, purchase and redemption of Fund shares and
distributions by the Funds, please see Appendix D.
Principal Investment Risks
What are the principal investment risks of the International Equity Fund, and
how do they compare with those of the Emerging Markets Fund?
The following table shows the principal risks of each of the Funds.
Emerging Markets Fund International Equity Fund
--------------------- -------------------------
Company Risk
Company Risk
Credit Risk
Currency Risk
Currency Risk
Derivatives Risk
Derivatives Risk
Foreign Investment Risk
Emerging Markets Risk
Investment Management Risk
Foreign Investment Risk
Market Risk
Investment Management Risk
Liquidity Risk
Market Risk
Because the Funds have many similar strategies, the principal risks
associated with each Fund are similar. Both Funds may invest in derivatives and
therefore are subject to the risks associated with the use of derivatives.
These risks include unanticipated losses substantially greater than the
derivative's original cost, inability of the other party to perform, mispricing
and improper valuation. Both Funds invest in foreign securities and are
therefore subject to the risks associated with such investments (less
regulation and
16
additional regional, national and currency risks). However, the Emerging
Markets Fund invests primarily in emerging markets securities which subject the
Emerging Markets Fund to an additional level of risk (including risks
associated with less developed legal and financial systems and greater market
volatility) to which the International Equity Fund generally is not subject.
Because the Emerging Markets Fund may invest in high-yield, lower-rated
securities ("junk bonds"), the International Equity Fund may be subject to less
credit risk than the Emerging Markets Fund. The combination of the Emerging
Markets Fund's investments in emerging markets and junk bonds makes it likely
that the International Equity Fund will be subject to less liquidity risk than
the Emerging Markets Fund. The actual risks of investing in each Fund depend on
the securities held in each Fund's portfolio and on market conditions, both of
which change over time.
For more information about the risks of an investment in either the Emerging
Markets Fund or the International Equity Fund, please refer to Appendix D and
the Funds' current Statement of Additional Information.
Fees and Expenses
How do the management fees and expenses of the Funds compare and what are
they estimated to be following the Merger?
The following table allows you to compare the management fees and expenses
of the Emerging Markets Fund and the International Equity Fund and to analyze
the estimated expenses that the Trust expects the combined Fund to bear in the
first year following the Merger. Except as noted below, the Total Annual Fund
Operating Expenses shown in the table below represent expenses incurred by each
Fund for its last fiscal year ended December 31, 2001. In addition, the Funds
were not subject to any distribution fees during the 2001 fiscal year. The
Total Annual Fund Operating Expenses are deducted from the assets of each Fund.
The table does not reflect any of the charges associated with the Separate
Accounts or variable contracts that a variable life insurance or variable
annuity holder may pay under insurance or annuity contracts. You should refer
to the variable insurance product prospectus for more information relating to
the fees and expenses of that product, which are in addition to the expenses of
the Funds.
Annual Fund Operating Expenses
(deducted directly from assets of the Fund)
International
Emerging International Equity Fund
Markets Equity (pro forma
Fund* Fund combined)
-------- ------------- -------------
Management Fee (%)................. 1.15% 0.89% 0.89%
Distribution and Service (12b-1)
Fees (%)......................... 0.15% 0.15% 0.15%
Other Expenses (%)................. 0.34% 0.12% 0.13%
Total Annual Fund
Operating Expenses (%)........... 1.64%(1),(2) 1.16%(1),(2) 1.17%
17
- --------
* The Management Fee and Total Annual Fund Operating Expenses for the Emerging
Markets Fund reflect the reduced management fee (1.15%) paid by the Emerging
Markets Fund beginning July 1, 2002. This table assumes the application of
the 1.15% management fee throughout the fiscal year ended December 31, 2001.
(1) Through December 31, 2003, the Manager has declared a voluntary expense
limitation of 1.50% of average net assets for the International Equity
Fund. The total operating expenses of the International Equity Fund was
less than its respective expense limitations throughout 2001. Through
December 31, 2003, the Manager has agreed to voluntarily waive its
management fee to the extent that the expenses of the Emerging Markets
Funds exceed 2.00% of the Fund's average daily net assets. The amount of
such waiver shall not exceed the net amount of management fees earned by
the Manager from the Emerging Markets Fund after subtracting fees paid by
the Manager to the Fund's Sub-Adviser. The declaration of a voluntary
management fee or expense limitation in any year does not bind the Manager
to declare future expense limitations with respect to these Funds. These
limitations may be terminated at any time.
(2) The Emerging Markets Fund and the International Equity Fund have entered
into agreements with brokers whereby brokers rebate a portion of
commissions. Had these amounts been treated as reductions of expenses, the
total annual fund operating expense ratio would have been 1.54% for the
Emerging Markets Fund and 1.14% for the International Equity Fund.
Example Expenses
The following Example helps you compare the cost of investing in the
Emerging Markets Fund and the International Equity Fund currently with the cost
of investing in the combined Fund on a pro forma basis. The Example does not
reflect the expenses of the applicable variable insurance product that you have
purchased. You should refer to the applicable variable insurance product
prospectus for more information on those expenses. The table is based on the
following hypothetical conditions:
. $10,000 initial investment
. 5% total return for each year
. Each Fund's operating expenses remain the same as during the year ended
December 31, 2001 (except with respect to the Emerging Markets Fund, for
which the total annual fund operating expenses will remain the same as
those effective July 1, 2002)
. assumes reinvestment of all dividends and distributions
18
Example Expenses
(your actual costs may be higher or lower)
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Emerging Markets Fund........................ $168 $521 $898 $1,956
International Equity Fund.................... $119 $370 $642 $1,415
International Equity Fund (pro forma
combined).................................. $120 $374 $647 $1,427
The above discussion of pro forma Annual Fund Operating Expenses and Example
Expenses assumes that: (1) the current contractual agreements of the
International Equity Fund will remain in place; (2) certain duplicate costs
involved in operating the Emerging Markets Fund are eliminated; and (3) expense
ratios are based on pro forma combined assets as of December 31, 2001.
Reasons for the Merger
The Trustees, including all Trustees who are not "interested persons," as
that term is defined in the Investment Company Act of 1940, as amended, of the
Trust have determined that the Merger would be in the best interests of the
Emerging Markets Fund and that the interests of existing shareholders of the
Emerging Markets Fund would not be diluted as a result of the Merger. The
Trustees have unanimously approved the Merger and recommend that you vote in
favor of the Merger by approving the Reorganization Agreement, the form of
which is attached as Appendix A to this Prospectus/Proxy Statement. You should
carefully consider whether retaining your indirect investment in the
International Equity Fund after the Merger is consistent with your financial
needs and circumstances.
The Merger is proposed by Allmerica Financial, the investment manager to
both the Emerging Markets Fund and the International Equity Fund.
In proposing the Merger, Allmerica Financial presented to the Trustees the
following reasons for the Emerging Markets Fund to enter into the Merger:
. The fact that relatively low asset levels, with the expectation that
asset levels will decline in the future, have made the Emerging Markets
Fund less economical for Allmerica Financial and the Fund's Sub-Adviser
to manage, and will adversely affect Allmerica Financial's ability to
attract superior subadvisory services for the Fund in the future;
. The fact that, in the event the Emerging Markets Fund's asset levels
decline owing to the suspension of sales of insurance contracts by the
Insurance Companies, there will be fewer opportunities for the Fund to
achieve economies of scale to reduce expenses;
19
. The fact that the International Equity Fund's management fees and
overall expense levels, and the anticipated expense levels of the
combined Fund, are significantly lower than those of the Emerging
Markets Fund;
. The fact that the Merger will afford contractholders the continued
opportunity to invest, through a Separate Account, in a mutual fund with
an investment objective and investment policies that focus on investment
opportunities outside the United States;
. The fact that the Merger is expected to be tax-free for shareholders; and
. The fact that in the absence of the Merger and in light of expected
future expense levels, the Board of Trustees would need to consider
other strategic alternatives.
The Trustees considered the differences in the Funds' investment objectives,
policies and strategies and the related risks. The Trustees also considered the
historical investment performance results of the Funds. No assurance can be
given that the International Equity Fund will achieve any particular level of
performance after the Merger or that the combined Fund's expenses will be lower
than those of the Emerging Markets Fund.
Information About the Manager and Sub-Advisers
Allmerica Financial is the investment manager to both Funds. Allmerica
Financial has retained investment management firms (collectively,
"Sub-Advisers") to manage the Funds. Allmerica Financial has contracted with
Schroder Investment Management North America Inc. ("Schroder") which has
delegated certain duties to its London affiliate, Schroder Investment
Management North America Ltd. ("Schroder LTD"), as Sub-Adviser to make the
day-to-day investment decisions for the Emerging Markets Fund. As of December
31, 2001, Schroder and Schroder LTD had approximately $31 billion in assets
under management. Organized in 1980, Schroder provides global equity and fixed
income management services to mutual funds and other institutional investors.
Allmerica Financial has contracted with Bank of Ireland Asset Management (U.S.)
Limited ("BIAM") as Sub-Adviser to make the day-to-day investment decisions for
the International Equity Fund. As of December 31, 2001, BIAM managed over $47
billion in global securities. Founded in 1966, BIAM provides international
investment management services.
The terms of the subadvisory contracts with respect to each of these Funds
are substantially the same. Allmerica Financial is responsible for overseeing
each Sub-Adviser's management of its Fund and for making recommendations to the
Trustees as to whether to retain each Sub-Adviser from year to year. The Merger
will not result in any changes to the terms of the subadvisory contract between
Allmerica Financial and BIAM.
20
The Merger will result in a change in Sub-Adviser for shareholders of the
Emerging Markets Fund.
The following table provides information about the individuals or groups of
individuals that are primarily responsible for the day-to-day management of
each of the Funds.
Fund Name and Name and Title of Service with Business Experience
Sub-Adviser Name Portfolio Manager(s) Sub-Adviser for Past Five Years
- ---------------- ---------------------- ------------------- -------------------------
Emerging Markets Fund *
Schroder Investment
Management North
America Inc.
International Equity Christopher Reilly, 1980 - Present Mr. Reilly joined BIAM in
Fund Chief Investment 1980 and has had overall
Bank of Ireland Asset Officer responsibility for asset
Management (U.S.) management since 1985.
Limited Prior to that, he worked
in the United Kingdom in
stockbrokering and
investment management. He
has over 31 years'
experience in the
investment industry
Jane Neill, Deputy 1994 - Present Ms. Neill joined BIAM in
Chief Investment 1994 from a major Irish
Officer--International investment management
firm, where she was Chief
Executive Officer. She
has 21 years experience
at a senior level in the
investment management
industry.
Des Sullivan, Deputy 1994 - Present Mr. Sullivan joined BIAM
Chief Investment in 1994 and has 21 years'
Officer investment experience. He
previously worked for
Ireland's largest life
assurance company as a
fund manager and as head
of equities at a major
stockbrokering company in
Ireland.
- --------
* All investment decisions for the Emerging Markets Fund are made by an
investment committee. Schroder's emerging markets investment committee
consists of investment professionals with specific geographic or regional
expertise, as well as members responsible for economic analysis and asset
allocation, investment strategy and global stock and sector selection.
21
The address of Allmerica Financial is 440 Lincoln Street, Worcester,
Massachusetts 01653. The address of Schroder Investment Management North
America Inc. is 875 Third Avenue, 22nd Floor, New York, New York 10022-6225.
The address of Bank of Ireland Asset Management (U.S.) Limited is 26
Fitzwilliam Place, Dublin 2, Ireland and 75 Holly Hill Lane, Greenwich,
Connecticut 06830.
Federal Income Tax Consequences
Please review "Federal Income Tax Consequences" in the General Information
section of this Prospectus/Proxy Statement.
THE TRUSTEES OF ALLMERICA INVESTMENT TRUST UNANIMOUSLY RECOMMEND APPROVAL OF
THE REORGANIZATION AGREEMENT.
Required Vote for the Proposal
Approval of the Reorganization Agreement will require the affirmative vote
of a majority of the shares of the Emerging Markets Fund outstanding at the
record date for the Meeting.
IV. PROPOSAL 3:
MERGER OF THE GROWTH AND INCOME FUND INTO THE EQUITY INDEX FUND
The Proposal
You are being asked to approve the Reorganization Agreement dated as of
January 7, 2003, between the Growth and Income Fund and the Equity Index Fund.
The form of the Reorganization Agreement is attached as Appendix A to this
Prospectus/Proxy Statement. By approving the Reorganization Agreement, you are
approving the merger of the Growth and Income Fund into the Equity Index Fund
under the Reorganization Agreement.
Investment Objectives, Strategies and Policies
How do the investment objectives, strategies and policies of the Growth and
Income Fund and the Equity Index Fund compare?
This table shows the current investment objectives of each Fund and the
primary investment strategies used to achieve each Fund's investment objective:
22
Growth and Income Fund Equity Index Fund
---------------------- -----------------
Investment Objective: Investment Objective:
long-term growth of investment results that
capital and current income correspond to the
aggregate price and yield
performance of a
representative selection
of common stocks that are
publicly traded in the
United States
Growth and Income Fund Equity Index Fund
---------------------- -----------------
Primary Investment
Strategies:
Primary Investment
Strategies:
The Growth and Income The Equity Index Fund
Fund seeks to achieve its seeks to achieve its
investment objective as investment objective as
follows: follows:
. The Fund invests . The Fund attempts to
primarily in dividend- replicate the aggregate
paying common stocks price and yield
and securities performance of the S&P
convertible into common 500 Index. Because of
stocks. its policy of tracking
the S&P 500 Index, the
. The Fund invests in a Fund does not follow
broadly diversified traditional methods of
portfolio of equity active investment
securities, primarily management, which
the common stock of involve buying and
companies included in selling securities
the S&P 500 Index. based upon analysis of
economic and market
. The Fund's industry factors. The method
diversification and used to select
other risk investments for the
characteristics will be Fund involves investing
similar to those of the in common stocks in
S&P 500 Index. approximately the order
of their weightings in
. The Fund may purchase the S&P 500 Index.
individual stocks not
presently paying . The Fund normally
dividends if the Fund's invests at least 80% of
Sub-Adviser (J.P. its net assets (plus
Morgan Investment borrowings made for
Management Inc.) investment purposes) in
believes the overall equity type securities.
portfolio is positioned
to achieve its income . The Fund normally holds
objective. equity securities of
approximately 500
. While the Fund's normal different companies
strategy is to be included in the S&P 500
nearly fully invested Index.
in equity securities,
the Fund may invest up
to 35% of its assets in
fixed-income
securities, including
up to 15% in lower
rated bonds, commonly
known as "junk bonds."
. The Fund may invest up
to 25% of its assets in
foreign securities (not
including its
investments in American
Depositary Receipts).
23
There are several significant differences in the investment objectives and
strategies of the two Funds. While the Growth and Income Fund invests primarily
in securities of companies included in the S&P 500 Index, the Equity Index
normally invests in substantially all 500 companies included in that index. The
Equity Index Fund therefore is not as actively managed as the Growth and Income
Fund. The Growth and Income Fund's investment objective includes long-term
growth of current income, whereas the Equity Index Fund does not select stocks
on the basis of their potential to provide current income. In addition, the
Growth and Income Fund may invest up to 35% of its assets in fixed-income
securities, including up to 15% in junk bonds, whereas the Equity Index Fund
normally may not invest more than 20% of its assets in debt securities and
typically does not invest in debt securities. Furthermore, the Growth and
Income Fund may invest substantially (up to 25% of its assets) in foreign
securities, but the Equity Index Fund typically does not invest in foreign
securities.
The Funds have identical fundamental and non-fundamental investment
restrictions. For more information about these investment restrictions, see the
current Statement of Additional Information of the Funds, which is incorporated
by reference to this Prospectus/Proxy Statement. For information about the
pricing of Fund shares, purchase and redemption of Fund shares and
distributions by the Funds, please see Appendix D.
Principal Investment Risks
What are the principal investment risks of the Equity Index Fund, and how do
they compare with those of the Growth and Income Fund?
The following table shows the principal risks of each of the Funds.
Growth and Income Fund Equity Index Fund
---------------------- -----------------
Company Risk
Company Risk
Derivatives Risk
Derivatives Risk
Investment Management Risk
Market Risk
Market Risk
Both Funds may invest in derivatives and therefore are subject to the risks
associated with the use of derivatives. These risks include unanticipated
losses substantially greater than the derivative's original cost, inability of
the other party to perform, mispricing and improper valuation. However, because
the Equity Index Fund does not follow traditional methods of active investment
management, the Equity Index Fund may be subject to less investment management
risk (the risk of not achieving its investment objective) than the Growth and
Income Fund.
In addition, the Equity Index Fund, because of its relatively lesser
investment flexibility, will be less exposed than the Growth and Income Fund to
the risks associated
24
with investments in fixed-income securities and foreign securities. To the
extent that the Equity Index Fund attempts to mirror the composite and
weighting of the S&P 500 Index, the Fund's performance will generally be tied
to increases and decreases of the index as a whole. As a result, the Fund may
not be able to benefit from attractive investment opportunities offered by
stocks that are not included in the S&P 500 Index or that are underweighted in
the index. The actual risks of investing in each Fund depend on the securities
held in each Fund's portfolio and on market conditions, both of which change
over time.
For more information about the risks of an investment in either the Growth
and Income Fund or the Equity Index Fund, please refer to Appendix D and the
Funds' current Statement of Additional Information.
Fees and Expenses
How do the management fees and expenses of the Funds compare and what are
they estimated to be following the Merger?
The following table allows you to compare the management fees and expenses
of the Growth and Income Fund and the Equity Index Fund and to analyze the
estimated expenses that the Trust expects the combined Fund to bear in the
first year following the Merger. The Total Annual Fund Operating Expenses shown
in the table below represent expenses incurred by each Fund for its last fiscal
year ended December 31, 2001, except the Funds were not subject to any
distribution fees during the 2001 fiscal year. The Total Annual Fund Operating
Expenses are deducted from the assets of each Fund. The table does not reflect
any of the charges associated with the Separate Accounts or variable contracts
that a variable life insurance or variable annuity holder may pay under
insurance or annuity contracts. You should refer to the variable insurance
product prospectus for more information relating to the fees and expenses of
that product, which are in addition to the expenses of the Funds.
Annual Fund Operating Expenses
(deducted directly from assets of the Fund)
Equity
Index Fund
Growth and Equity (pro forma
Income Fund Index Fund combined)
----------- ---------- ----------
Management Fee (%)........................... 0.68% 0.28% 0.26%
Distribution and Service (12b-1) Fees (%).... 0.15% 0.15% 0.15%
Other Expenses (%)........................... 0.05% 0.06% 0.06%
Total Annual Fund Operating Expenses (%)..... 0.88%(1),(2) 0.49%(1),(2) 0.47%
- --------
(1) Through December 31, 2003, the Manager has declared a voluntary expense
limitation of 1.10% of average net assets for the Growth and Income Fund and
25
0.60% for the Equity Index Fund. The total operating expenses of these Funds
of the Trust were less than their respective expense limitations throughout
2001. The declaration of a voluntary management fee or expense limitation in
any year does not bind the Manager to declare future expense limitations
with respect to these Funds. These limitations may be terminated at any time.
(2) The Growth and Income Fund and Equity Index Fund have entered into
agreements with brokers whereby brokers rebate a portion of commissions.
Had these amounts been treated as reductions of expenses, the total annual
fund operating expense ratio would have been 0.87% for the Growth and
Income Fund and 0.47% for the Equity Index Fund.
Example Expenses
The following Example helps you compare the cost of investing in the Growth
and Income Fund and the Equity Index Fund currently with the cost of investing
in the combined Fund on a pro forma basis. The Example does not reflect the
expenses of the applicable variable insurance product that you have purchased.
You should refer to the applicable variable insurance product prospectus for
more information on those expenses. The table is based on the following
hypothetical conditions:
. $10,000 initial investment
. 5% total return for each year
. Each Fund's operating expenses remain the same as during the year ended
December 31, 2001
. assumes reinvestment of all dividends and distributions
Example Expenses
(your actual costs may be higher or lower)
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Growth and Income Fund.................. $90 $282 $490 $1,088
Equity Index Fund....................... $50 $158 $275 $ 617
Equity Index Fund (pro forma combined).. $48 $151 $264 $ 592
The above discussion of pro forma Annual Fund Operating Expenses and Example
Expenses assumes that: (1) the current contractual agreements of the Equity
Index Fund will remain in place; (2) certain duplicate costs involved in
operating the Growth and Income Fund are eliminated; and (3) expense ratios are
based on pro forma combined assets as of December 31, 2001.
Reasons for the Merger
The Trustees, including all Trustees who are not "interested persons," as
that term is defined in the Investment Company Act of 1940, as amended, of the
Trust have
26
determined that the Merger would be in the best interests of the Growth and
Income Fund and that the interests of existing shareholders of the Growth and
Income Fund would not be diluted as a result of the Merger. The Trustees have
unanimously approved the Merger and recommend that you vote in favor of the
Merger by approving the Reorganization Agreement, the form of which is attached
as Appendix A to this Prospectus/Proxy Statement. You should carefully consider
whether retaining your indirect investment in the Equity Index Fund after the
Merger is consistent with your financial needs and circumstances.
The Merger is proposed by Allmerica Financial, the investment manager to
both the Growth and Income Fund and the Equity Index Fund.
In proposing the Merger, Allmerica Financial presented to the Trustees the
following reasons for the Growth and Income Fund to enter into the Merger:
. The fact that an expected decline in asset levels will make the Growth
and Income Fund less economical for Allmerica Financial and the Fund's
Sub-Adviser to manage, and will adversely affect Allmerica Financial's
ability to attract superior subadvisory services for the Fund in the
future;
. The fact that, in the event the Growth and Income Fund's asset levels
decline owing to the suspension of sales of insurance contracts by the
Insurance Companies, there will be fewer opportunities for the Fund to
achieve economies of scale to reduce expenses;
. The fact that the Equity Index Fund's management fees and overall
expense levels, and the anticipated expense levels of the combined Fund,
are significantly lower than those of the Growth and Income Fund;
. The fact that the Merger is expected to be tax-free for shareholders; and
. The fact that in the absence of the Merger and in light of expected
future expense levels, the Board of Trustees would need to consider
other strategic alternatives.
The Trustees considered the differences in the Funds' investment objectives,
policies and strategies and the related risks. The Trustees also considered the
historical investment performance results of the Funds. No assurance can be
given that the Equity Index Fund will achieve any particular level of
performance after the Merger or that the combined Fund's expenses will be lower
than those of the Growth and Income Fund.
Information About the Manager and Sub-Advisers
Allmerica Financial is the investment manager to both Funds. Allmerica
Financial has retained investment management firms (collectively,
"Sub-Advisers") to manage the
27
Funds. Allmerica Financial has contracted with J.P. Morgan Investment
Management Inc. ("J.P. Morgan") as Sub-Adviser to make the day-to-day
investment decisions for the Growth and Income Fund. As of December 31, 2001,
J.P. Morgan and affiliates had over $598 billion in assets under management.
Incorporated in 1984, J.P. Morgan serves as investment adviser for employee
benefit plans and other institutional assets, as well as mutual funds and
variable annuities. Allmerica Financial has contracted with Allmerica Asset
Management, Inc. ("AAM"), a direct, wholly-owned subsidiary of Allmerica
Financial Corporation, as Sub-Adviser to make the day-to-day investment
decisions for the Equity Index Fund. As of December 31, 2001, AAM had $18.8
billion in assets under management. Incorporated in 1993, AAM serves as
investment adviser to investment companies and affiliated insurance company
accounts and other third-party clients.
The terms of the subadvisory contracts with respect to each of these Funds
are substantially the same. Allmerica Financial is responsible for overseeing
each Sub-Adviser's management of its Fund and for making recommendations to the
Trustees as to whether to retain each Sub-Adviser from year to year. The Merger
will not result in any changes to the terms of the subadvisory contract between
Allmerica Financial and AAM. The Merger will result in a change in Sub-Adviser
for shareholders of the Growth and Income Fund.
The following table provides information about the individuals or groups of
individuals that are primarily responsible for the day-to-day management of
each of the Funds.
Fund Name and Name and Title of Service with Business Experience
Sub-Adviser Name Portfolio Manager(s) Sub-Adviser for Past Five Years
- ---------------- ----------------------- --------------------- -------------------------
Growth and Income Fund Jonathan N. Golub 2001 - Present Mr. Golub is a portfolio
J.P. Morgan Investment manager in the U.S.
Management Inc. Equity Group and is
responsible for product
management and client
servicing across all
equity products. Prior to
joining the firm, he led
the consultant relations
effort at Scudder Kemper
Investment and Chancellor
LGT.
Timothy J. Devlin, Vice 1996 - Present Prior to joining J.P.
President Morgan in 1996, Mr.
Devlin was an equity
portfolio manager at
Mitchell Hutchins Asset
Management Inc. He is a
portfolio manager in the
U.S. Structured Equity
Group.
28
Fund Name and Name and Title of Service with Business Experience
Sub-Adviser Name Portfolio Manager(s) Sub-Adviser for Past Five Years
- ---------------- ----------------------- --------------------- -------------------------
Equity Index Fund, Ann K. Tripp, Vice 1987 - Present Ms. Tripp has oversight
Allmerica Asset President responsibility for all
Management, Inc. insurance client
portfolios managed by
Allmerica Asset
Management, Inc. She also
oversees all fixed-income
trading operations for
the firm. Ms. Tripp has
direct management
responsibility for the
general accounts of
Allmerica Financial, as
well as several captive
and self-insured groups.
Before joining Allmerica
in 1987, Ms. Tripp was a
senior financial
consultant at The New
England and an Investment
Officer at Massachusetts
Capital Resource Company.
The address of Allmerica Financial is 440 Lincoln Street, Worcester,
Massachusetts 01653. The address of J.P. Morgan Investment Management Inc. is
522 Fifth Avenue, New York, New York 10036. The address of Allmerica Asset
Management, Inc. is 440 Lincoln Street, Worcester, Massachusetts 01653.
Federal Income Tax Consequences
Please review "Federal Income Tax Consequences" in the General Information
section of this Prospectus/Proxy Statement.
THE TRUSTEES OF ALLMERICA INVESTMENT TRUST UNANIMOUSLY RECOMMEND APPROVAL OF
THE REORGANIZATION AGREEMENT.
Required Vote for the Proposal
Approval of the Reorganization Agreement will require the affirmative vote
of a majority of the shares of the Growth and Income Fund outstanding at the
record date for the Meeting.
29
V. PROPOSAL 4:
MERGER OF THE AGGRESSIVE GROWTH FUND INTO THE SELECT GROWTH FUND
The Proposal
You are being asked to approve the Reorganization Agreement dated as of
[January/February ], 2003, between the Aggressive Growth Fund and the Select
Growth Fund. The form of the Reorganization Agreement is attached as Appendix A
to this Prospectus/Proxy Statement. By approving the Reorganization Agreement,
you are approving the merger of the Aggressive Growth Fund into the Select
Growth Fund under the Reorganization Agreement.
Investment Objectives, Strategies and Policies
How do the investment objectives, strategies and policies of the Aggressive
Growth Fund and the Select Growth Fund compare?
The Aggressive Growth Fund and the Select Growth Fund have similar primary
investment objectives. This table shows the current investment objectives of
each Fund and the primary investment strategies used to achieve each Fund's
investment objective:
Aggressive Growth Fund Select Growth Fund
---------------------- ------------------
Investment Objective: Investment Objective:
above-average capital long-term growth of
appreciation by investing capital by investing in a
primarily in common diversified portfolio
stocks of companies which consisting primarily of
are believed to have common stocks selected on
significant potential for the basis of their
capital appreciation long-term growth potential
Aggressive Growth Fund Select Growth Fund
---------------------- ------------------
Primary Investment Primary Investment
Strategies: Strategies:
The Aggressive Growth The Select Growth Fund
Fund seeks to achieve its seeks to achieve its
investment objective as investment objective as
follows: follows:
. The Fund normally . The Fund normally
invests at least 65% of invests at least 65% of
its assets in common its assets in common
stocks, securities stocks that the
convertible into common Sub-Adviser (Putnam
stocks and warrants. Investment Management,
LLC) believes have
. The Fund may also growth potential.
invest in debt
securities and . The Fund may also
preferred stocks. purchase convertible
bonds and preferred
. The Fund may invest up stocks and warrants.
to 25% of its assets in
foreign securities . While the Fund normally
(including investments invests substantially
in companies located or all of its investments
primarily operating in in equity securities,
countries with emerging it may invest up to 35%
markets, but not in debt securities
including its including up to 15% in
investments in American lower rated bonds,
Depositary Receipts). commonly known as "junk
bonds."
30
Aggressive Growth Fund Select Growth Fund
---------------------- ------------------
. The Fund may invest up
. The Fund takes a to 25% of its assets in
multi-manager approach foreign securities (not
whereby two including its
Sub-Advisers investments in American
(Massachusetts Depositary Receipts).
Financial Services
Company ("MFS") and . The Fund looks for
Jennison Associates LLC companies that appear
("Jennison")) to have favorable
independently manage long-term growth
their own portions of characteristics.
the Fund's assets
(approximately one-half . The Fund typically
each). At any point, invests in stocks of
the allocation of the mid and large
Fund's assets between capitalization
the two Sub-Advisers companies, although it
may change if can also make
determined by the investments in smaller
investment manager growth companies.
(Allmerica Financial
Investment Services, . The Fund may invest up
Inc.) to be in the best to 15% of its net
interests of the assets in illiquid
shareholders. securities.
. MFS looks for common
stocks of companies
that it believes are
early in their life
cycle but which have
the potential to become
major enterprises. MFS
also considers stocks
of larger companies
where earnings growth
is expected to
accelerate because of
special factors, such
as rejuvenated
management, new
products, changes in
consumer demand or
basic changes in the
economic environment.
. Jennison looks for
common stocks of
predominantly mid-to
large-sized companies
that it believes are
poised to achieve and
maintain superior
earnings growth.
. Both Sub-Advisers use a
fundamental bottom-up
approach to selecting
stocks for the Fund.
A significant difference in the principal investment strategies of the two
Funds is that while the Aggressive Growth Fund normally invests at least 65% of
its assets in common stocks, securities convertible into common stocks and
warrants, the Select Growth Fund normally invests at least 65% of its assets in
common stocks that its Sub-Adviser believe to have growth potential and may
purchase other types of securities, such as securities convertible into common
stocks and warrants, only to a more limited extent.
31
While both Funds may invest in debt securities, the Select Growth Fund may
invest up to 15% in junk bonds (although historically it has not invested
significantly in junk bonds) and therefore may be more subject to credit risk
than the Aggressive Growth Fund. Please see "Principal Investment Risks" below
for more information about such risks.
The Funds have identical fundamental and non-fundamental investment
restrictions. For more information about these investment restrictions, see the
current Statement of Additional Information of the Funds, which is incorporated
by reference to this Prospectus/Proxy Statement. For information about the
pricing of Fund shares, purchase and redemption of Fund shares and
distributions by the Funds, please see Appendix D.
Principal Investment Risks
What are the principal investment risks of the Select Growth Fund, and how do
they compare with those of the Aggressive Growth Fund?
The following table shows the principal risks of each of the Funds.
Aggressive Growth Fund Select Growth Fund
---------------------- ------------------
Company Risk Company Risk
Currency Risk Credit Risk
Derivatives Risk Derivatives Risk
Emerging Markets Risk Investment Management Risk
Foreign Investment Risk Market Risk
Investment Management Risk
Liquidity Risk
Market Risk
Because the Funds have similar objectives, the principal risks associated
with each Fund are similar. Both Funds may invest in derivatives and therefore
are subject to the risks associated with the use of derivatives. These risks
include unanticipated losses substantially greater than the derivative's
original cost, inability of the other party to perform, mispricing and improper
valuation. Both Funds may invest in foreign securities. Largely due to the
Select Growth Fund's ability to invest in junk bonds, the Select Growth Fund
may be more subject to credit risk (the risk that an issuer will not be able to
pay principal and interest when due) than the Aggressive Growth Fund. The
actual risks of investing in each Fund depend on the securities held in each
Fund's portfolio and on market conditions, both of which change over time.
For more information about the risks of an investment in either the
Aggressive Growth Fund or the Select Growth Fund, please refer to Appendix D
and the Funds' current Statement of Additional Information.
32
Fees and Expenses
How do the management fees and expenses of the Funds compare and what are
they estimated to be following the Merger?
The following table allows you to compare the management fees and expenses
of the Aggressive Growth Fund and the Select Growth Fund and to analyze the
estimated expenses that the Trust expects the combined Fund to bear in the
first year following the Merger. The Total Annual Fund Operating Expenses shown
in the table below represent expenses incurred by each Fund for its last fiscal
year ended December 31, 2001, except the Funds were not subject to any
distribution fees during the 2001 fiscal year. The Total Annual Fund Operating
Expenses are deducted from the assets of each Fund. The table does not reflect
any of the charges associated with the Separate Accounts or variable contracts
that a variable life insurance or variable annuity holder may pay under
insurance or annuity contracts. You should refer to the variable insurance
product prospectus for more information relating to the fees and expenses of
that product, which are in addition to the expenses of the Funds.
Annual Fund Operating Expenses
(deducted directly from assets of the Fund)
Select
Growth Fund
Aggressive Select (pro forma
Growth Fund Growth Fund combined)
----------- ----------- -----------
Management Fee (%)........................... 0.83% 0.79% 0.75%
Distribution and Service (12b-1) Fees (%).... 0.15% 0.15% 0.15%
Other Expenses (%)........................... 0.07% 0.06% 0.06%
Total Annual Fund Operating Expenses (%)..... 1.05%(1),(2) 1.00%(1),(2) 0.96%
- --------
(1) Through December 31, 2003, the Manager has declared a voluntary expense
limitation of 1.35% of average net assets for the Aggressive Growth Fund
and 1.20% for the Select Growth Fund. The total operating expenses of these
Funds of the Trust were less than their respective expense limitations
throughout 2001. The declaration of a voluntary management fee or expense
limitation in any year does not bind the Manager to declare future expense
limitations with respect to these Funds. These limitations may be
terminated at any time.
(2) The Aggressive Growth Fund and Select Growth Fund have entered into
agreements with brokers whereby brokers rebate a portion of commissions.
Had these amounts been treated as reductions of expenses, the total annual
fund operating expense ratio would have been 1.02% for the Aggressive
Growth Fund and 0.93% for the Select Growth Fund.
Example Expenses
The following Example helps you compare the cost of investing in the
Aggressive Growth Fund and the Select Growth Fund currently with the cost of
investing in the
33
combined Fund on a pro forma basis. The Example does not reflect the expenses
of the applicable variable insurance product that you have purchased. You
should refer to the applicable variable insurance product prospectus for more
information on those expenses. The table is based on the following hypothetical
conditions:
. $10,000 initial investment
. 5% total return for each year
. Each Fund's operating expenses remain the same as during the year ended
December 31, 2001
. assumes reinvestment of all dividends and distributions
Example Expenses
(your actual costs may be higher or lower)
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Aggressive Growth Fund....................... $108 $336 $582 $1,288
Select Growth Fund........................... $103 $320 $555 $1,229
Select Growth Fund (pro forma combined)...... $ 98 $307 $533 $1,182
The above discussion of pro forma Annual Fund Operating Expenses and Example
Expenses assumes that: (1) the current contractual agreements of the Select
Growth Fund will remain in place; (2) certain duplicate costs involved in
operating the Aggressive Growth Fund are eliminated; and (3) expense ratios are
based on pro forma combined assets as of December 31, 2001.
Reasons for the Merger
The Trustees, including all Trustees who are not "interested persons," as
that term is defined in the Investment Company Act of 1940, as amended, of the
Trust have determined that the Merger would be in the best interests of the
Aggressive Growth Fund and that the interests of existing shareholders of the
Aggressive Growth Fund would not be diluted as a result of the Merger. The
Trustees have unanimously approved the Merger and recommend that you vote in
favor of the Merger by approving the Reorganization Agreement, the form of
which is attached as Appendix A to this Prospectus/Proxy Statement. You should
carefully consider whether retaining your indirect investment in the Select
Growth Fund after the Merger is consistent with your financial needs and
circumstances.
The Merger is proposed by Allmerica Financial, the investment manager to
both the Aggressive Growth Fund and the Select Growth Fund.
34
In proposing the Merger, Allmerica Financial presented to the Trustees the
following reasons for the Aggressive Growth Fund to enter into the Merger:
. The fact that an expected decline in asset levels will make the
Aggressive Growth Fund less economical for Allmerica Financial and the
Fund's Sub-Adviser to manage, and will adversely affect Allmerica
Financial's ability to attract superior subadvisory services for the
Fund in the future;
. The fact that, in the event the Aggressive Growth Fund's asset levels
decline owing to the suspension of sales of insurance contracts by the
Insurance Companies, there will be fewer opportunities for the Fund to
achieve economies of scale to reduce expenses;
. The fact that the Select Growth Fund's management fees and overall
expense levels, and the anticipated expense levels of the combined Fund,
are lower than those of the Aggressive Growth Fund;
. The fact that the Merger will afford contractholders the continued
opportunity to invest, through a Separate Account, in a mutual fund with
an investment objective and investment policies comparable to those of
the Aggressive Growth Fund;
. The fact that the Merger is expected to be tax-free for shareholders; and
. The fact that in the absence of the Merger and in light of expected
future expense levels, the Board of Trustees would need to consider
other strategic alternatives.
The Trustees considered the differences in the Funds' investment objectives,
policies and strategies and the related risks. The Trustees also considered the
historical investment performance results of the Funds. No assurance can be
given that the Select Growth Fund will achieve any particular level of
performance after the Merger or that the combined Fund's expenses will be lower
than those of the Aggressive Growth Fund.
Information About the Manager and Sub-Advisers
Allmerica Financial is the investment manager to both Funds. Allmerica
Financial has retained investment management firms (collectively,
"Sub-Advisers") to manage the Funds. Allmerica Financial has contracted with
Massachusetts Financial Services Company ("MFS") and Jennison Associates LLC
("Jennison") as Sub-Advisers to make the day-to-day investment decisions for
the Aggressive Growth Fund. As of December 31, 2001, MFS had approximately $137
billion in assets under management. MFS was founded in 1924, with the creation
of the Massachusetts Investors Trust, which was America's first mutual fund. In
1982, MFS became a subsidiary of Sun Life Assurance Company of Canada. MFS
provides investment advice to institutional investors and other entities. As of
December 31, 2001, Jennison had approximately $62 billion in assets
35
under management. Founded in 1969, Jennison has been a Prudential Financial,
Inc., company since 1985. Jennison provides investment advice to mutual funds,
institutional accounts and other entities. Allmerica Financial has contracted
with Putnam Investment Management, LLC ("Putnam") as Sub-Adviser to make the
day-to-day investment decisions for the Select Growth Fund. As of December 31,
2002, Putnam had approximately $315 billion in assets under management,
including affiliates. Putnam has been an investment manager of mutual funds and
other clients since 1937.
The terms of the subadvisory contracts with respect to each of these Funds
are substantially the same. Allmerica Financial is responsible for overseeing
each Sub-Adviser's management of its Fund and for making recommendations to the
Trustees as to whether to retain each Sub-Adviser from year to year. The Merger
will not result in any changes to the terms of the subadvisory contract between
Allmerica Financial and Putnam. The Merger will result in a change in
Sub-Adviser for shareholders of the Aggressive Growth Fund. In addition, if
shareholders of the Aggressive Growth Fund approve this Proposal 4, Jennison
will serve as a Sub-Adviser to the Select Growth Fund with respect to a portion
of the Select Growth Fund's assets.
The following table provides information about the individuals or groups of
individuals that are primarily responsible for the day-to-day management of
each of the Funds.
Fund Name and Name and Title of Service with Business Experience
Sub-Adviser Name Portfolio Manager(s) Sub-Adviser for Past Five Years
- ---------------- ----------------------- ------------------- ---------------------------
Aggressive Growth Fund
Massachusetts Financial *
Services Company
Jennison Associates LLC Kathleen McCarragher 1998 - Present Ms. McCarragher, a Director
Director and Executive and Executive Vice
Vice President President of Jennison, is
also Dennison's Domestic
Equity Investment
Strategist. Prior to
joining Jennison in 1998,
she was Managing Director
and Director of Large Cap
Growth Equities at Weiss,
Peck & Greer L.L.C.
Michael Del Balso 1972 - Present Mr. Del Balso, a Director
Director and Executive and Executive Vice
Vice President President of Jennison, is
also Jennison's Director of
Equity Research. He joined
Jennison in 1972 after four
years with White, Weld &
Company, where he was a
Vice President.
36
Fund Name and Name and Title of Service with Business Experience
Sub-Adviser Name Portfolio Manager(s) Sub-Adviser for Past Five Years
- ---------------- ----------------------- ------------------- ---------------------------
Select Growth Fund **
Putnam Investment
Management, LLC
- --------
* All investment decisions for the Aggressive Growth Fund by MFS are made by
an investment team.
** All investment decisions for the Select Growth Fund are made by an
investment team. The Putnam Specialty Growth Team has primary responsibility
for the day-to-day management of the Fund's portfolio.
The address of Allmerica Financial is 440 Lincoln Street, Worcester,
Massachusetts 01653. The address of Massachusetts Financial Services Company is
500 Boylston Street, Boston, Massachusetts 02116. The address of Jennison
Associates, LLC is 466 Lexington Avenue, New York, New York 10017. The address
of Putnam Investment Management, LLC is One Post Office Square, Boston,
Massachusetts 02109.
Federal Income Tax Consequences
Please review "Federal Income Tax Consequences" in the General Information
section of this Prospectus/Proxy Statement.
THE TRUSTEES OF ALLMERICA INVESTMENT TRUST UNANIMOUSLY RECOMMEND APPROVAL OF
THE REORGANIZATION AGREEMENT.
Required Vote for the Proposal
Approval of the Reorganization Agreement will require the affirmative vote
of a majority of the shares of the Aggressive Growth Fund outstanding at the
record date for the Meeting.
VI. PROPOSAL 5:
MERGER OF THE STRATEGIC INCOME FUND INTO THE INVESTMENT GRADE INCOME FUND
The Proposal
You are being asked to approve the Reorganization Agreement dated as of
January 7, 2003, between the Strategic Income Fund and the Investment Grade
Income Fund. The form of the Reorganization Agreement is attached as Appendix A
to this Prospectus/Proxy Statement. By approving the Reorganization Agreement,
you are approving the merger of the Strategic Income Fund into the Investment
Grade Income Fund under the Reorganization Agreement.
37
Investment Objectives, Strategies and Policies
How do the investment objectives, strategies and policies of the Strategic
Income Fund and the Investment Grade Income Fund compare?
The Strategic Income Fund and the Investment Grade Income Fund have similar
primary investment objectives. This table shows the current investment
objectives of each Fund and the primary investment strategies used to achieve
each Fund's investment objective:
Strategic Income Fund Investment Grade Income
--------------------- Fund
----
Investment Objective: Investment Objective:
maximize total return, high level of total
consistent with prudent return, which includes
investment management and capital appreciation as
liquidity needs, by well as income, as is
investing in various consistent with prudent
types of fixed income investment management
securities
Strategic Income Fund Investment Grade Income
--------------------- Fund
----
Primary Investment Primary Investment
Strategies: Strategies:
The Strategic Income Fund The Investment Grade
seeks to achieve its Income Fund seeks to
investment objective as achieve its investment
follows: objective as follows:
. Examples of the types . The Fund invests in
of securities in which investment grade debt
the Fund invests are securities and money
corporate debt market instruments such
obligations such as as bonds and other
bonds, notes and corporate debt
debentures, and obligations;
obligations convertible obligations issued or
into common stock; guaranteed by the U.S.
obligations issued or Government, its
guaranteed by the U.S. agencies or
Government, its instrumentalities, or
agencies or money market
instrumentalities and instruments, including
mortgage-backed and commercial paper,
asset-backed securities. bankers acceptances and
negotiable certificates
. The Fund may invest up of deposit.
to 25% of its assets in
foreign securities (not . The Sub-Adviser
including its (Allmerica Asset
investments in American Management, Inc.)
Depositary Receipts), actively manages the
including up to 20% of portfolio with a view
its assets in non-U.S. to producing a high
dollar denominated level of total return
securities. for the Fund while
avoiding undue risks to
. The dollar weighted capital. The
average duration of the Sub-Adviser attempts to
Fund is expected to anticipate events
range within 20% of the leading to price or
duration of the ratings changes through
domestic bond market as the use of in-depth
a whole (normally four fundamental credit
to six years, although research.
this may vary).
38
Strategic Income Fund Investment Grade Income
--------------------- Fund
----
. The Fund may invest up . The Fund normally
to 15% of its assets in invests 100% of its net
high yield securities assets (plus any
or "junk bonds" rated borrowings made for
below investment grade investment purposes) in
but at least B or investment grade
higher by Moody's securities (securities
Investors Services or rated in the four
Standard & Poor's highest grades by
Rating Services or Moody's Investor
similar rating Services or Standard &
organizations, and in Poor's Rating Services
unrated securities or unrated but
determined by the determined by the
Sub-Advisers (Western Sub-Adviser to be of
Asset Management comparable quality).
Company and Western
Asset Management . The Fund may also
Company Limited) to be invest in mortgage-
of comparable quality. backed and asset-backed
securities.
. The Fund may invest up
to 20% of its assets in
foreign securities (not
including its
investments in American
Depositary Receipts)
and up to 25% of its
assets in debt
obligations of
supranational entities.
The most significant difference in the investment strategies of these two
Funds is that while the Investment Grade Income Fund normally invests 100% of
its assets in investment grade securities, the Strategic Income Fund may invest
up to 15% of its assets in "junk bonds" rated below investment grade and
therefore is more subject to credit risk than the Investment Grade Income Fund.
While both Funds may invest in foreign securities, the Strategic Income Fund
may invest in such securities to a greater extent than the Investment Grade
Income Fund (25% versus 20%) and also may invest in non-U.S. dollar denominated
securities. As a result, the Investment Grade Income Fund is likely to be less
subject to the risks associated with foreign securities than the Strategic
Income Fund. Please see "Principal Investment Risks" below for more information
about such risks.
The Funds have identical fundamental and non-fundamental investment
restrictions. For more information about these investment restrictions, see the
current Statement of Additional Information of the Funds, which is incorporated
by reference to this Prospectus/Proxy Statement. For information about the
pricing of Fund shares, purchase and redemption of Fund shares and
distributions by the Funds, please see Appendix D.
39
Principal Investment Risks
What are the principal investment risks of the Investment Grade Income Fund,
and how do they compare with those of the Strategic Income Fund?
The following table shows the principal risks of each of the Funds.
Strategic Income Fund Investment Grade Income
--------------------- Fund
----
Company Risk Company Risk
Credit Risk Credit Risk
Currency Risk Interest Rate Risk
Derivatives Risk Investment Management Risk
Emerging Market Risk Liquidity Risk
Foreign Investment Risk Market Risk
Interest Rate Risk Prepayment Risk
Investment Management Risk
Liquidity Risk
Market Risk
Prepayment Risk
Because the Funds have similar objectives, the principal risks associated
with each Fund are similar. Both Funds may invest in fixed-income securities
(including mortgage-backed securities). As a result, both Funds are subject to
interest rate risk (when interest rates rise, the prices of fixed income
securities generally fall) and prepayment risk (unforeseen loss of future
interest income due to prepayment of mortgage loans). The biggest difference in
the two Funds' risk profiles is that the Investment Grade Income Fund (unlike
the Strategic Income Fund) may not invest in junk bonds, and is therefore
subject to less credit risk than the Strategic Income Fund. While both Funds
may invest to a limited extent in foreign securities and are therefore both
subject to the risks associated with foreign securities (less regulation and
additional regional and national risks), the Investment Grade Income may be
less subject to currency risk than the Strategic Income Fund which can invest
directly in non-U.S. dollar denominated securities. The actual risks of
investing in each Fund depend on the securities held in each Fund's portfolio
and on market conditions, both of which change over time.
For more information about the risks of an investment in either the
Strategic Income Fund or the Investment Grade Income Fund, please refer to
Appendix D and the Funds' current Statement of Additional Information.
Fees and Expenses
How do the management fees and expenses of the Funds compare and what are
they estimated to be following the Merger?
The following table allows you to compare the management fees and expenses
of the Strategic Income Fund and the Investment Grade Income Fund and to
analyze the
40
estimated expenses that the Trust expects the combined Fund to bear in the
first year following the Merger. The Total Annual Fund Operating Expenses shown
in the table below represent expenses incurred by each Fund for its last fiscal
year ended December 31, 2001, except the Funds were not subject to any
distribution fees during the 2001 fiscal year. The Total Annual Fund Operating
Expenses are deducted from the assets of each Fund. The table does not reflect
any of the charges associated with the Separate Accounts or variable contracts
that a variable life insurance or variable annuity holder may pay under
insurance or annuity contracts. You should refer to the variable insurance
product prospectus for more information relating to the fees and expenses of
that product, which are in addition to the expenses of the Funds.
Annual Fund Operating Expenses
(deducted directly from assets of the Fund)
Investment
Grade
Investment Income
Strategic Grade Fund
Income Income (pro forma
Fund Fund combined)
--------- ---------- ----------
Management Fee (%)....................... 0.58% 0.41% 0.41%
Distribution and Service (12b-1) Fees (%) 0.15% 0.15% 0.15%
Other Expenses (%)....................... 0.39% 0.06% 0.06%
Total Annual Fund Operating Expenses (%). 1.12%(1) 0.62%(1) 0.62%
- --------
(1) Through December 31, 2003, the Manager has declared a voluntary expense
limitation of 1.00% of average net assets for the Strategic Income Fund and
Investment Grade Income Fund. The total operating expenses of the
Investment Grade Income Fund were less than their respective expense
limitations throughout 2001. The declaration of a voluntary management fee
or expense limitation in any year does not bind the Manager to declare
future expense limitations with respect to these Funds. These limitations
may be terminated at any time.
Example Expenses
The following Example helps you compare the cost of investing in the
Strategic Income Fund and the Investment Grade Income Fund currently with the
cost of investing in the combined Fund on a pro forma basis. The Example does
not reflect the expenses of the applicable variable insurance product that you
have purchased. You should refer to the applicable variable insurance product
prospectus for more information on those expenses. The table is based on the
following hypothetical conditions:
. $10,000 initial investment
. 5% total return for each year
41
. Each Fund's operating expenses remain the same as during the year ended
December 31, 2001
. assumes reinvestment of all dividends and distributions
Example Expenses
(your actual costs may be higher or lower)
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Strategic Income Fund.................. $115 $358 $620 $1,369
Investment Grade Income Fund........... $ 64 $199 $347 $ 776
Investment Grade Income Fund (pro forma
combined)............................ $ 64 $199 $347 $ 776
The above discussion of pro forma Annual Fund Operating Expenses and Example
Expenses assumes that: (1) the current contractual agreements of the Investment
Grade Income Fund will remain in place; (2) certain duplicate costs involved in
operating the Strategic Income Fund are eliminated; and (3) expense ratios are
based on pro forma combined assets as of December 31, 2001.
Reasons for the Merger
The Trustees, including all Trustees who are not "interested persons," as
that term is defined in the Investment Company Act of 1940, as amended, of the
Trust have determined that the Merger would be in the best interests of the
Strategic Income Fund and that the interests of existing shareholders of the
Strategic Income Fund would not be diluted as a result of the Merger. The
Trustees have unanimously approved the Merger and recommend that you vote in
favor of the Merger by approving the Reorganization Agreement, the form of
which is attached as Appendix A to this Prospectus/Proxy Statement. You should
carefully consider whether retaining your indirect investment in the Investment
Grade Income Fund after the Merger is consistent with your financial needs and
circumstances.
The Merger is proposed by Allmerica Financial, the investment manager to
both the Strategic Income Fund and the Investment Grade Income Fund.
In proposing the Merger, Allmerica Financial presented to the Trustees the
following reasons for the Strategic Income Fund to enter into the Merger:
. The fact tat the Investment Grade Income Fund's management fees and
overall expense levels, and the anticipated expense levels of the
combined Fund, are significantly lower than those of the Strategic
Income Fund;
. The fact that the Merger will afford contractholders the continued
opportunity to invest through a Separate Account in a mutual fund with
an investment
42
objective and investment policies comparable to those of the Strategic
Income Fund;
. The fact that relatively low asset levels, with the expectation that
asset levels will decline in the future, have made the Strategic Income
Fund less economical for Allmerica Financial and the Fund's Sub-Adviser
to manage, and will adversely affect Allmerica Financial's ability to
attract superior subadvisory services for the Fund in the future;
. The fact that, in the event the Strategic Income Fund's asset levels
decline owing to the suspension of sales of insurance contracts by the
Insurance Companies, there will be fewer opportunities for the Fund to
achieve economies of scale to reduce expenses;
. The fact that the Merger is expected to be tax-free for shareholders; and
. The fact that in the absence of the Merger and in light of expected
future expense levels, the Board of Trustees would need to consider
other strategic alternatives.
The Trustees considered the differences in the Fund's investment objectives,
policies and strategies and the related risks. The Trustees also considered the
historical investment performance results of the Fund. No assurance can be
given that the Investment Grade Income Fund will achieve any particular level
of performance after the Merger or that the combined Fund's expenses will be
lower than those of the Strategic Income Fund.
Information About the Manager and Sub-Advisers
Allmerica Financial is the investment manager to both Funds. Allmerica
Financial has retained investment management firms (collectively,
"Sub-Advisers") to manage the Funds. Allmerica Financial has contracted with
Western Asset Management Company ("WAMC") and Western Asset Management Company
Limited ("WAMC Ltd.") as Sub-Advisers to make the day-to-day investment
decisions for the Strategic Income Fund. As of December 31, 2001, WAMC had
approximately $85.3 billion in assets under management. WAMC serves as the
investment adviser for employee benefit plans and other institutional assets,
as well as mutual funds and variable annuities. As of December 31, 2001, WAMC
Ltd. had approximately $8.9 billion in assets under management. WAMC Ltd. was
acquired in 1996 and operates as an affiliate of WAMC. WAMC Ltd. provides
global fixed income management services to a wide variety of institutional
clients. Allmerica Financial has contracted with Allmerica Asset Management,
Inc. ("AAM"), a direct, wholly-owned subsidiary of Allmerica Financial
Corporation, as Sub-Adviser to make the day-to-day investment decisions for the
Investment Grade Income Fund. As of December 31, 2001, AAM had $18.8 billion in
assets under management. Incorporated in 1993, AAM serves as investment adviser
to investment companies and affiliated insurance company accounts and other
third-party clients.
43
The terms of the subadvisory contracts with respect to each of these Funds
are substantially the same. Allmerica Financial is responsible for overseeing
each Sub-Adviser's management of its Fund and for making recommendations to the
Trustees as to whether to retain each Sub-Adviser from year to year. The Merger
will not result in any changes to the terms of the subadvisory contract between
Allmerica Financial and AAM. The Merger will result in a change in Sub-Adviser
for shareholders of the Strategic Income Fund.
The following table provides information about the individuals or groups of
individuals that are primarily responsible for the day-to-day management of
each of the Funds.
Fund Name and Name and Title of Service with Business Experience
Sub-Adviser Name Portfolio Manager(s) Sub-Adviser for Past Five Years
- ---------------- ----------------------- ------------------- ---------------------------
Strategic Income Fund .
Western Asset Management *Stephen A. Walsh, 1991 - Present Prior to 1991, Mr. Walsh
Company Director of Portfolio served as a Portfolio
Management Manager with Security
Pacific Investment
Managers, Inc.
Western Asset Management Michael B. Zelouf, 1996 - Present Mr. Zelouf joined Lehman
Company Limited Director, International Brothers Global Asset
Investments Management as Portfolio
Manager in 1989 and was
promoted to Director,
International Investments
in 1996 when WAMC acquired
the firm.
Investment Grade Income Ann K. Tripp, Vice 1987 - Present Ms. Tripp has oversight
Fund President responsibility for all
Allmerica Asset insurance client portfolios
Management, Inc. managed by Allmerica Asset
Management, Inc. She also
oversees all fixed-income
trading operations for the
firm. Ms. Tripp has direct
management responsibility
for the general accounts of
Allmerica Financial, as
well as several captive and
self-insured groups. Before
joining Allmerica in 1987,
Ms. Tripp was a senior
financial consultant at The
New England and an
Investment Officer at
Massachusetts Capital
Resource Company.
- --------
* Mr. Walsh is head of an investment team of more than 30 individuals who are
primarily responsible for the day-to-day management of the Fund.
44
The address of Allmerica Financial is 440 Lincoln Street, Worcester,
Massachusetts 01653. The address of Western Asset Management Company is 117 E.
Colorado Boulevard, Pasadena, California 91105. The address of Western Asset
Management Company Limited is 155 Bishopgate, London, United Kingdom, EC2M3TY.
The address of Allmerica Asset Management, Inc. is 440 Lincoln Street,
Worcester, Massachusetts, 01653.
Federal Income Tax Consequences
Please review "Federal Income Tax Consequences" in the General Information
section of this Prospectus/Proxy Statement.
THE TRUSTEES OF ALLMERICA INVESTMENT TRUST UNANIMOUSLY RECOMMEND APPROVAL OF
THE REORGANIZATION AGREEMENT.
Required Vote for the Proposal
Approval of the Reorganization Agreement will require the affirmative vote
of a majority of the shares of the Strategic Income Fund outstanding at the
record date for the Meeting.
VII. GENERAL INFORMATION
Information about the Mergers
Terms of the Reorganization Agreements
If approved by the shareholders of the relevant Acquired Fund, each Merger
is expected to occur on or around April , 2003, pursuant to a Reorganization
Agreement, the form of which is attached as Appendix A to this Prospectus/Proxy
Statement. Each Reorganization Agreement is identical to the other
Reorganization Agreements, except for the names of the Funds involved. Please
review Appendix A. The following is a brief summary of the principal terms of
each Reorganization Agreement:
. The Acquired Fund will transfer all of its assets and liabilities
attributable to its shares to the Acquiring Fund in exchange for shares
of the Acquiring Fund (the "Merger Shares").
. The Merger will occur on the next business day after the time when the
assets of each Fund are valued for purposes of the Merger (the
"Valuation Date") (currently scheduled to be the close of regular
trading on the New York Stock Exchange on April , 2003 or such other
date and time as the parties may determine).
45
. The exchange, which will be effected on the basis of the relative net
asset value of the two Funds, will be followed immediately by the
distribution of the Merger Shares to the shareholders of the Acquired
Fund in complete liquidation of the Acquired Fund.
. After the Merger, the Acquired Fund will be terminated, and its affairs
will be wound up in an orderly fashion.
. The Merger requires approval by the Acquired Fund's shareholders and
satisfaction of a number of other conditions; the Merger may be
terminated at any time prior to closing with the approval of the
Trustees.
A shareholder or contract holder who objects to the Merger will not be
entitled under Massachusetts law or the Declaration of Trust of the Trust, as
amended (the "Declaration of Trust"), to demand payment for, or an appraisal
of, his or her shares. However, shareholders should be aware that the Merger as
proposed is not expected to result in recognition of gain or loss to
shareholders for federal income tax purposes. Holders of variable life or
variable annuity contracts invested in an Acquired Fund may exchange their
investment for an investment in other investment options, as provided in their
contracts before or after the Merger.
Organization
Each of the Merger Shares will be fully paid and nonassessable by the
relevant Acquiring Fund when issued, will be transferable without restriction,
and will have no preemptive or conversion rights. The Declaration of Trust
permits the Trustees to divide its shares, without shareholder approval, into
two or more series of shares representing separate investment portfolios and to
further divide any such series, without shareholder approval, into two or more
classes of shares, such series and/or classes having such preferences and
special or relative rights and privileges as the Trustees may determine. Each
of the Acquiring Fund's shares are not currently divided into more than one
class. The rights of shareholders of the Acquired Funds and the Acquiring Funds
under the Declaration of Trust and applicable law are identical.
Shares to be Issued
If the Mergers occur, the Insurance Companies, as shareholders of the
Acquired Funds, will receive shares of each relevant Acquiring Fund. The
Acquiring Fund shares issued in the Merger will have an aggregate net asset
value equal to the aggregate net asset value of the current shares of the
relevant Acquired Fund as of the Valuation Date. Procedures for purchasing and
redeeming shares will not change as a result of the Merger. Following the
Merger:
. You will have the same exchange options as you currently have.
. You will have the same voting rights under the Trust's Declaration of
Trust and applicable law as you currently have.
46
Information concerning the capitalization of each of the Funds is contained
in Appendix B.
Federal Income Tax Consequences
Provided that the contracts funded through the Separate Accounts of the
Insurance Companies qualify as annuity contracts under Section 72 of the Code
or as life insurance contracts under Section 7702(a) of the Code, the Mergers
will not create any tax liability for owners of the contracts.
The closing of each of the Mergers will be conditioned on receipt of an
opinion from Ropes & Gray to the effect that, on the basis of the existing
provisions of the Code, current administrative rules and court decisions and,
in the case of the Select Strategic Growth Fund's merger into the Select Growth
Fund and the Select Emerging Markets Fund's merger into the Select
International Equity Fund, although not entirely free from doubt, for federal
income tax purposes:
. the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code, and the Acquiring Fund and the Acquired Fund
will each be a "party to a reorganization" within the meaning of Section
368(b) of the Code;
. under Section 361 of the Code, no gain or loss will be recognized by the
Acquired Fund upon the transfer of its assets to the Acquiring Fund in
exchange for Acquiring Fund shares and the assumption by the Acquiring
Fund of the Acquired Fund's liabilities, or upon the distribution of
such Acquiring Fund shares to the shareholders of the Acquired Fund;
. under Section 1032 of the Code, no gain or loss will be recognized by
the Acquiring Fund upon the receipt of the assets of the Acquired Fund
in exchange for the assumption of the obligations of the Acquired Fund
and issuance of Acquiring Fund shares;
. under Section 362(b) of the Code, the Acquiring Fund's tax basis in the
assets that it receives from the Acquired Fund will be the same as the
basis of those assets in the hands of the Acquired Fund immediately
prior to the transfer;
. under Section 1223(2) of the Code, the Acquiring Fund's holding periods
in the assets that it receives from the Acquired Fund will include the
periods during which those assets were held by the Acquired Fund;
. under Section 354 of the Code, the Acquired Fund shareholders will
recognize no gain or loss upon the distribution of Acquiring Fund shares
to them in exchange for their shares of the Acquired Fund;
47
. under Section 358 of the Code, the aggregate tax basis of the Acquiring
Fund shares received by each shareholder of the Acquired Fund in
exchange for their Acquired Fund shares will be the same as the
aggregate tax basis of the Acquired Fund shares exchanged therefor;
. under Section 1223(l) of the Code, an Acquired Fund shareholder's
holding period for the Acquiring Fund shares received pursuant to the
Agreement and Plan of Reorganization will include the holding period for
the Acquired Fund shares exchanged for the Acquiring Fund shares;
provided such shares of the Acquired Fund were held as a capital asset
on the date of the exchange; and
. under Section 381 of the Code, the Acquiring Fund will succeed to the
capital loss carryovers of the Acquired Fund, if any, but the use by the
Acquiring Fund of any such carryovers (and of capital loss carryovers of
the Acquiring Fund) may be subject to limitation under Section 383 or
384 of the Code.
The opinion will be based on certain factual certifications made by officers
of the Trust and will also be based on customary assumptions. The opinion is
not a guarantee that the tax consequences of a Merger will be as described
above.
Voting Information
The Trustees are soliciting proxies in connection with the Meeting, which
has been called to be held at 9:00 a.m. Eastern Time on March 27, 2003, at the
offices of Allmerica Financial, 440 Lincoln Street, Worcester, Massachusetts
01653. The meeting notice, this Prospectus/Proxy Statement and the Form of
Proxy are first being mailed to contractholders beginning on or about February
, 2003. Shareholders of record of each of the Acquired Funds as of the close
of business on January 8, 2003 (the "Record Date") are eligible to vote on the
Proposals described in this Prospectus/Proxy Statement, except as otherwise
noted.
Voting Process. The shares of each of the Funds of the Trust may be
purchased only by Separate Accounts established 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.
48
As of the close of business on the Record Date, the number of shares
outstanding of each Fund was as follows:
Number of Shares Outstanding
Fund as of January 8, 2003
---- ----------------------------
Select Strategic Growth Fund....... 72,837,153.677
Select Emerging Markets Fund....... 81,537,557.191
Select Growth and Income Fund...... 353,186,985.270
Select Aggressive Growth Fund...... 319,452,982.666
Select Strategic Income Fund....... 133,441,389.133
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. Subject to certain exceptions the costs associated with such
solicitation, as well as the Meeting, will be borne by the Trust.
Shareholders may vote their shares of the Trust by completing the enclosed
proxy and returning it by mail to the Trust.
In the event that a quorum of Shareholders (thirty percent (30%) of all
shares issued and outstanding and entitled to vote at the Meeting), for any
Acquired Fund, is not represented at the Meeting or at any adjournments
thereof, or, even though a quorum is so represented, if sufficient votes in
favor of the matters set forth in the Notice of Meeting are not received by
March 26, 2003, the persons named as proxies may propose one or more
adjournments of the Meeting for a period or periods of not more than 90 days in
the aggregate and further solicitation of proxies may be made. Any such
adjournment may be effected by a majority of the votes properly cast in person
or by proxy on the question at the session of the Meeting to be adjourned. The
persons named as proxies will vote in favor of such adjournment those proxies
which they are entitled to vote in favor of the matters set forth in the Notice
of the Meeting. They will vote against any such adjournment those proxies
required to be voted against any such matters.
Quorum and Method of Tabulation. Thirty percent (30%) of the shares
entitled to vote, present in person or represented by proxy, constitute a
quorum for the transaction of business at the Meeting. Votes cast by proxy or
in person at the Meeting will be counted by persons appointed by the Trust to
act 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. The tellers will count shares represented by proxies that reflect
abstentions or "broker nonvotes" (i.e., shares held by brokers or nominees as
to which (i) instructions have not been received from the beneficial owners or
persons entitled to vote and (ii) the broker or nominee does not have the
discretionary voting power on a particular matter) as shares
49
that are present and entitled to vote on the matter for purposes of determining
the presence of a quorum.
Other Matters and Discretion of Persons Named as Proxies. While the Meeting
is called to act upon any business that may properly come before it, at the
date of this Proxy Statement the only business which management intends to
present or knows that others will present is the business mentioned in the
accompanying Notice. If any other matters properly come before the Meeting, and
on all procedural matters at the Meeting, it is intended that the enclosed
proxy shall be voted in accordance with the best judgment of the persons named
as proxies therein, or their substitutes, present and acting at the Meeting.
Date for Receipt of Shareholder Proposals. The Declaration of Trust does
not provide for regular annual meetings of Shareholders, nor does the Trust
currently intend to hold annual meetings. No proposals were submitted by
Shareholders for presentation at the Meeting. Shareholder proposals which are
intended to be presented at a subsequent meeting of Shareholders of the Trust
must be received at the principal executive offices of the Trust, 440 Lincoln
Street, Worcester, MA 01653, at least 160 days in advance of the date of any
such meeting in order to be included in the proxy statement and proxy related
to such meeting.
Costs of Mergers
Except as described below, the Acquired Funds will bear the costs of the
Mergers, including costs of solicitation, except for portfolio transaction
costs incurred by the Funds in connection with the purchase or sale of
portfolio securities in the ordinary course of business, which will be borne by
the respective Funds incurring such costs, and governmental fees required in
connection with the registration or qualification under applicable state and
federal laws of the shares of the Acquiring Funds to be issued, which will be
borne by the Acquiring Funds.
The costs of the merger between the Aggressive Growth Fund and the Select
Growth Fund will be borne equally by the Aggressive Growth Fund and the Select
Growth Fund. In making this determination, the Trustees considered the likely
impact of the merger on expenses borne by shareholders of both Funds, and
concluded that the merger will likely benefit each of the Funds in a similar
measure.
The costs to be borne by the Acquired Funds will include, among other costs,
the costs of this Prospectus/Proxy Statement. In the event that any of the
Mergers is not consummated, the relevant Acquired Fund will bear all of the
costs and expenses incurred by both the relevant Acquired Fund and Acquiring
Fund in connection with such Merger. [The Trustees have authorized the Manager
to retain [ ] as proxy solicitors with respect to the matters
contained in this Prospectus/Proxy Statement. The costs of [ ] in
providing such services to the Trust are estimated to be no more than $[ ].]
50
Appendix A
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement") is made as of
January 7, 2003 in Worcester, Massachusetts, by and between Allmerica
Investment Trust, a Massachusetts business trust (the "Trust"), on behalf of
its series (the "Acquired Fund"), and the Trust, on behalf of
its series (the "Acquiring Fund").
Plan of Reorganization
(a) The Acquired Fund will sell, assign, convey, transfer and deliver to the
Acquiring Fund on the Exchange Date (as defined in Section 6) all of its
properties and assets. In consideration therefor, the Acquiring Fund shall, on
the Exchange Date, assume all of the liabilities of the Acquired Fund existing
at the Valuation Time (as defined in Section 3(c)) and deliver to the Acquired
Fund a number of full and fractional Shares of beneficial interest of the
Acquiring Fund (the "Reorganization Shares") having an aggregate net asset
value equal to the value of the assets of the Acquired Fund attributable to the
Shares of the Acquired Fund transferred to the Acquiring Fund on such date less
the value of the liabilities of the Acquired Fund attributable to the Shares of
the Acquired Fund assumed by the Acquiring Fund on that date.
(b) Upon consummation of the transaction described in paragraph (a) above,
the Acquiring Fund shall distribute in complete liquidation to its shareholders
of record as of the Exchange Date the Reorganization Shares, each shareholder
being entitled to receive that proportion of such Reorganization Shares which
the number of shares of the Acquired Fund held by such shareholder bears to the
number of shares of the Acquired Fund outstanding on such date. Certificates
representing the Reorganization Shares will not be issued. All issued and
outstanding shares of the Acquired Fund will simultaneously be canceled on the
books of the Acquired Fund.
(c) As promptly as practicable after the liquidation of the Acquired Fund as
aforesaid, the Acquired Fund shall be dissolved pursuant to the provisions of
the Amended Agreement and Declaration of Trust of the Trust (the "Declaration
of Trust"), and applicable law, and its legal existence terminated. Any
reporting responsibility of the Acquired Fund is and shall remain the
responsibility of the Acquired Fund up to and including the Exchange Date and,
if applicable, such later date on which the Acquired Fund is liquidated.
Agreement
1. Representations, Warranties and Agreements of the Acquiring Fund. The
Acquiring Fund represents and warrants to and agrees with the Acquired Fund
that:
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a) The Acquiring Fund is a series of the Trust, a Massachusetts business
trust duly established and validly existing under the laws of The
Commonwealth of Massachusetts, and has power to own all of its properties
and assets and to carry out its obligations under this Agreement. The Trust
is qualified as a foreign association in every jurisdiction where required,
except to the extent that failure to so qualify would not have a material
adverse effect on the Trust. Each of the Trust and the Acquiring Fund has
all necessary federal, state and local authorizations to carry on its
business as now being conducted and to carry out this Agreement.
b) [Reserved]
c) A statement of assets and liabilities, statement of operations,
statement of changes in net assets and a schedule of investments (indicating
their market values) of the Acquiring Fund as of and for the year ended
December 31, 2001, and for the six months ending June 30, 2002, have been
furnished to the Acquired Fund. Such statements of assets and liabilities
and schedules fairly present the financial position of the Acquiring Fund as
of such dates and such statements of operations and changes in net assets
fairly reflect the results of its operations and changes in net assets for
the periods covered thereby in conformity with generally accepted accounting
principles.
d) The current prospectus and statement of additional information of the
Trust, each dated May 1, 2002, relating to the Acquiring Fund (collectively,
as from time to time amended, the "Acquiring Fund Prospectus"), which have
previously been furnished to the Acquired Fund, did not as of such date and
do not contain as of the date hereof, with respect to the Acquiring Fund,
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading.
e) There are no material legal, administrative or other proceedings
pending or, to the knowledge of the Trust or the Acquiring Fund, threatened
against the Trust or the Acquiring Fund, which assert liability on the part
of the Acquiring Fund. The Acquiring Fund knows of no facts which might form
the basis for the institution of such proceedings and is not a party to or
subject to the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects its business or its
ability to consummate the transactions herein contemplated.
f) The Acquiring Fund has no known liabilities of a material nature,
contingent or otherwise, other than those shown belonging to it on its
statement of assets and liabilities as of June 30, 2002, those incurred in
the ordinary course of its business as an investment company since June 30,
2002, and those to be assumed pursuant to this Agreement. Prior to the
Exchange Date, the Acquiring Fund will endeavor to quantify and to reflect
on its balance sheet all of its material known liabilities and will advise
the Acquired Fund of all material liabilities, contingent or otherwise,
A-2
incurred by it subsequent to June 30, 2002, whether or not incurred in the
ordinary course of business.
g) As of the Exchange Date, the Acquiring Fund will have filed all
federal and other tax returns and reports which, to the knowledge of the
officers of the Trust, are required to be filed by the Acquiring Fund and
will have paid or will pay all federal and other taxes shown to be due on
said returns or on any assessments received by the Acquiring Fund. All tax
liabilities of the Acquiring Fund have been adequately provided for on its
books, and no tax deficiency or liability of the Acquiring Fund has been
asserted, and no question with respect thereto has been raised or is under
audit, by the Internal Revenue Service or by any state or local tax
authority for taxes in excess of those already paid.
h) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Acquiring
Fund of the transactions contemplated by this Agreement, except such as may
be required under the Securities Act of 1933, as amended (the "1933 Act"),
the Securities Exchange Act of 1934, as amended (the "1934 Act"), the 1940
Act and state insurance, securities or blue sky laws (which term as used
herein shall include the laws of the District of Columbia and of Puerto
Rico).
i) The registration statement (the "Registration Statement") filed with
the Securities and Exchange Commission (the "Commission") by the Trust on
Form N-14 on behalf of the Acquiring Fund and relating to the Reorganization
Shares issuable hereunder and the proxy statement of the Acquired Fund
relating to the meeting of the Acquired Fund shareholders referred to in
Section 7(a) herein (together with the documents incorporated therein by
reference, the "Acquired Fund Proxy Statement"), on the effective date of
the Registration Statement, (i) will comply in all material respects with
the provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules
and regulations thereunder and (ii) will not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and at
the time of the shareholders meeting referred to in Section 7(a) and on the
Exchange Date, the prospectus which is contained in the Registration
Statement, as amended or supplemented by any amendments or supplements filed
with the Commission by the Trust, and the Acquired Fund Proxy Statement will
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that none of the
representations and warranties in this subsection shall apply to statements
in or omissions from the Registration Statement or the Acquired Fund Proxy
Statement made in reliance upon and in conformity with information furnished
by the Acquired Fund to the Acquiring Fund for use in the Registration
Statement or the Acquired Fund Proxy Statement.
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j) There are no material contracts outstanding to which the Acquiring
Fund is a party, other than as are or will be disclosed in the Acquiring
Fund Prospectus, the Registration Statement or the Acquired Fund Proxy
Statement.
k) All of the issued and outstanding shares of beneficial interest of the
Acquiring Fund have been offered for sale and sold in conformity with all
applicable federal and state securities laws (including any applicable
exemptions therefrom), or the Acquiring Fund has taken any action necessary
to remedy any prior failure to have offered for sale and sold such shares in
conformity with such laws.
l) The Acquiring Fund qualifies (in respect of each taxable year since
its commencement of operations) and will at all times through the Exchange
Date qualify for taxation as a "regulated investment company" under Sections
851 and 852 of the Code.
m) The issuance of the Reorganization Shares pursuant to this Agreement
will be in compliance with all applicable federal and state securities laws.
n) The Reorganization Shares to be issued to the Acquired Fund have been
duly authorized and, when issued and delivered pursuant to this Agreement,
will be legally and validly issued and will be fully paid and non-assessable
by the Acquiring Fund, and no shareholder of the Acquiring Fund will have
any preemptive right of subscription or purchase in respect thereof.
o) All issued and outstanding shares of the Acquiring Fund are, and at
the Exchange Date will be, duly authorized, validly issued, fully paid and
non-assessable by the Acquiring Fund. The Acquiring Fund does not have
outstanding any options, warrants or other rights to subscribe for or
purchase any Acquiring Fund shares, nor is there outstanding any security
convertible into any Acquiring Fund shares.
2. Representations, Warranties and Agreements of the Acquired Fund. The
Acquired Fund represents and warrants to and agrees with the Acquiring Fund
that:
a) The Acquired Fund is a series of the Trust, a Massachusetts business
trust duly established and validly existing under the laws of The
Commonwealth of Massachusetts, and has power to own all of its properties
and assets and to carry out this Agreement. The Trust is qualified as a
foreign association in every jurisdiction where required, except to the
extent that failure to so qualify would not have a material adverse effect
on the Trust. Each of the Trust and the Acquired Fund has all necessary
federal, state and local authorizations to own all of its properties and
assets and to carry on its business as now being conducted and to carry out
this Agreement.
b) [Reserved]
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c) A statement of assets and liabilities, statement of operations,
statement of changes in net assets and a schedule of investments (indicating
their market values) of the Acquired Fund as of and for the year ended
December 31, 2001, and for the six months ending June 30, 2002, have been
furnished to the Acquiring Fund. Such statements of assets and liabilities
and schedules fairly present the financial position of the Acquired Fund as
of such dates, and such statements of operations and changes in net assets
fairly reflect the results of its operations and changes in net assets for
the periods covered thereby, in conformity with generally accepted
accounting principles.
d) The current prospectuses and statement of additional information of
the Trust, each dated May 1, 2002 relating to the Acquired Fund
(collectively, as from time to time amended, the "Acquired Fund
Prospectus"), which have previously been furnished to the Acquiring Fund,
did not contain as of such dates and do not contain, with respect to the
Acquired Fund, any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
e) There are no material legal, administrative or other proceedings
pending or, to the knowledge of the Trust or the Acquired Fund, threatened
against the Trust or the Acquired Fund, which assert liability on the part
of the Acquired Fund. The Acquired Fund knows of no facts which might form
the basis for the institution of such proceedings and is not a party to or
subject to the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects its business or its
ability to consummate the transactions herein contemplated.
f) There are no material contracts outstanding to which the Acquired Fund
is a party, other than as are disclosed in the registration statement on
Form N-1A of the Trust or the Acquired Fund Prospectus.
g) The Acquired Fund has no known liabilities of a material nature,
contingent or otherwise, other than those shown on the Acquired Fund's
statement of assets and liabilities as of June 30, 2002 referred to above
and those incurred in the ordinary course of its business as an investment
company since such date. Prior to the Exchange Date, the Acquired Fund will
endeavor to quantify and to reflect on its balance sheet all of its material
known liabilities and will advise the Acquiring Fund of all material
liabilities, contingent or otherwise, incurred by it subsequent to June 30,
2002, whether or not incurred in the ordinary course of business.
h) As of the Exchange Date, the Acquired Fund will have filed all federal
and other tax returns and reports which, to the knowledge of the officers of
the Trust, are required to be filed by the Acquired Fund and has paid or
will pay all federal and other taxes shown to be due on said returns or on
any assessments received by the Acquired Fund. All tax liabilities of the
Acquired Fund have been adequately provided for on its books, and no tax
deficiency or liability of the Acquired Fund
A-5
has been asserted, and no question with respect thereto has been raised or
is under audit, by the Internal Revenue Service or by any state or local tax
authority for taxes in excess of those already paid.
i) At the Exchange Date, the Trust, on behalf of the Acquired Fund, will
have full right, power and authority to sell, assign, transfer and deliver
the Investments (as defined below) and any other assets and liabilities of
the Acquired Fund to be transferred to the Acquiring Fund pursuant to this
Agreement. At the Exchange Date, subject only to the delivery of the
Investments and any such other assets and liabilities as contemplated by
this Agreement, the Acquiring Fund will acquire the Investments and any such
other assets and liabilities subject to no encumbrances, liens or security
interests whatsoever and without any restrictions upon the transfer thereof,
except as previously disclosed to the Acquiring Fund. As used in this
Agreement, the term "Investments" shall mean the Acquired Fund's investments
shown on the schedule of its investments as of June 30, 2002 referred to in
Section 2(c) hereof, as supplemented with such changes in the portfolio as
the Acquired Fund shall make, and changes resulting from stock dividends,
stock split-ups, mergers and similar corporate actions through the Exchange
Date.
j) No registration under the 1933 Act of any of the Investments would be
required if they were, as of the time of such transfer, the subject of a
public distribution by either of the Acquiring Fund or the Acquired Fund,
except as previously disclosed to the Acquiring Fund by the Acquired Fund.
k) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Acquired Fund
of the transactions contemplated by this Agreement, except such as may be
required under the 1933 Act, 1934 Act, the 1940 Act or state insurance,
securities or blue sky laws.
l) The Registration Statement and the Acquired Fund Proxy Statement, on
the effective date of the Registration Statement, (i) will comply in all
material respects with the provisions of the 1933 Act, the 1934 Act and the
1940 Act and the rules and regulations thereunder and (ii) will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; and at the time of the shareholders meeting referred to in
Section 7(a) and on the Exchange Date, the Acquired Fund Proxy Statement and
the Registration Statement will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; provided,
however, that none of the representations and warranties in this subsection
shall apply to statements in or omissions from the Registration Statement or
the Acquired Fund Proxy Statement made in reliance upon and in conformity
with information furnished by the Acquiring Fund to the Acquired Fund or the
Trust for use in the Registration Statement or the Acquired Fund Proxy
Statement.
A-6
m) All of the issued and outstanding shares of beneficial interest of the
Acquired Fund shall have been offered for sale and sold in conformity with
all applicable federal and state securities laws (including any applicable
exemptions therefrom), or the Acquired Fund has taken any action necessary
to remedy any prior failure to have offered for sale and sold such shares in
conformity with such laws.
n) All issued and outstanding shares of the Acquired Fund are, and at the
Exchange Date will be, duly authorized, validly issued, fully paid and
non-assessable by the Acquired Fund. The Acquired Fund does not have
outstanding any options, warrants or other rights to subscribe for or
purchase any of the Acquired Fund shares, nor is there outstanding any
security convertible into any of the Acquired Fund shares.
3. Reorganization.
a) Subject to the requisite approval of the shareholders of the Acquired
Fund and to the other terms and conditions contained herein (including the
Acquired Fund's obligation to make the distribution described in Section
8(m)), the Acquired Fund agrees to sell, assign, convey, transfer and
deliver to the Acquiring Fund, and the Acquiring Fund agrees to acquire from
the Acquired Fund, on the Exchange Date all of the Investments and all of
the cash and other properties and assets of the Acquired Fund, whether
accrued or contingent (including cash received by the Acquired Fund upon the
liquidation by the Acquired Fund of any Investments), in exchange for that
number of shares of beneficial interest of the Acquiring Fund provided for
in Section 4 and the assumption by the Acquiring Fund of all of the
liabilities of the Acquired Fund, whether accrued or contingent, existing at
the Valuation Time (as defined below). Pursuant to this Agreement, the
Acquired Fund will, as soon as practicable after the Exchange Date,
distribute all of the Reorganization Shares received by it to the
shareholders of the Acquired Fund in exchange for their shares of the
Acquired Fund.
b) The Acquired Fund will pay or cause to be paid to the Acquiring Fund
any interest, cash or such dividends, rights and other payments received by
it on or after the Exchange Date with respect to the Investments and other
properties and assets of the Acquired Fund, whether accrued or contingent,
received by it on or after the Exchange Date. Any such distribution shall be
deemed included in the assets transferred to the Acquiring Fund at the
Exchange Date and shall not be separately valued unless the securities in
respect of which such distribution is made shall have gone "ex" such
distribution prior to the Valuation Time, in which case any such
distribution which remains unpaid at the Exchange Date shall be included in
the determination of the value of the assets of the Acquired Fund acquired
by the Acquiring Fund.
A-7
c) The Valuation Time shall be 4:00 p.m. Eastern time on the Exchange
Date or such earlier or later day as may be mutually agreed upon in writing
by the parties hereto (the "Valuation Time").
4. Valuation Time. On the Exchange Date, the Acquiring Fund will deliver to
the Acquired Fund a number of full and fractional Reorganization Shares having
an aggregate net asset value equal to the value of the assets of the Acquired
Fund attributable to the shares of the Acquired Fund transferred to the
Acquiring Fund on such date less the value of the liabilities of the Acquired
Fund attributable to the shares of the Acquired Fund assumed by the Acquiring
Fund on that date.
a) The net asset value of the Reorganization Shares to be delivered to
the Acquired Fund, the value of the assets attributable to the shares of the
Acquired Fund and the value of the liabilities attributable to the shares of
the Acquired Fund to be assumed by the Acquiring Fund shall in each case be
determined as of the Valuation Time.
b) The net asset value of the Reorganization Shares shall be computed in
the manner set forth in the Acquiring Fund Prospectus. The value of the
assets and liabilities of the shares of the Acquired Fund shall be
determined by the Acquiring Fund, in cooperation with the Acquired Fund,
pursuant to procedures which the Acquiring Fund would use in determining the
fair market value of the Acquiring Fund's assets and liabilities.
c) No adjustment shall be made in the net asset value of either the
Acquired Fund or the Acquiring Fund to take into account differences in
realized and unrealized gains and losses.
d) The Acquired Fund shall distribute the Reorganization Shares to the
shareholders of the Acquired Fund by furnishing written instructions to the
Acquiring Fund's transfer agent, which will as soon as practicable open
accounts for each Acquired Fund shareholder in accordance with such written
instructions.
e) The Acquiring Fund shall assume all liabilities of the Acquired Fund,
whether accrued or contingent, in connection with the acquisition of assets
and subsequent dissolution of the Acquired Fund or otherwise.
5. Expenses, Fees, etc.
a) The parties hereto understand and agree that the costs of all
transactions contemplated by the Agreement are being borne by the Acquired
Fund. Notwithstanding any of the foregoing, expenses will in any event be
paid by the party directly incurring such expenses if and to the extent that
the payment by the other party of such expenses would result in the
disqualification of either party as a "regulated investment company" within
the meaning of Section 851 of the Code.
A-8
b) In the event the transactions contemplated by this Agreement are not
consummated for any reason, the Acquired Fund shall bear all expenses
incurred in connection with such transactions.
c) Notwithstanding any other provisions of this Agreement, if for any
reason the transactions contemplated by this Agreement are not consummated,
no party shall be liable to the other party for any damages resulting
therefrom, including, without limitation, consequential damages, except as
specifically set forth above.
6. Exchange Date. Delivery of the assets of the Acquired Fund to be
transferred, assumption of the liabilities of the Acquired Fund to be assumed,
and the delivery of the Reorganization Shares to be issued shall be made at
Worcester, Massachusetts, as of April 30, 2003, or at such other date agreed to
by the Acquiring Fund and the Acquired Fund, the date and time upon which such
delivery is to take place being referred to herein as the "Exchange Date."
7. Meetings of Shareholders; Dissolution.
a) The Trust, on behalf of the Acquired Fund, agrees to call a meeting of
the Acquired Fund's shareholders to be held as soon as is practicable after
the effective date of the Registration Statement for the purpose of
considering the sale of all of its assets to and the assumption of all of
its liabilities by the Acquiring Fund as herein provided and adopting this
Agreement.
b) The Acquired Fund agrees that the liquidation and dissolution of the
Acquired Fund will be effected in the manner provided in the Declaration of
Trust in accordance with applicable law and that on and after the Exchange
Date, the Acquired Fund shall be liquidated and shall not conduct any
business except in connection with its liquidation and dissolution.
c) The Acquiring Fund has, in consultation with the Acquired Fund and
based in part on information furnished by the Acquired Fund, filed the
Registration Statement with the Commission. Each of the Acquired Fund and
the Acquiring Fund will cooperate with the other, and each will furnish to
the other the information relating to itself required by the 1933 Act, the
1934 Act and the 1940 Act and the rules and regulations thereunder to be set
forth in the Registration Statement.
8. Conditions to the Acquiring Fund's Obligations. The obligations of the
Acquiring Fund hereunder shall be subject to the following conditions:
a) That this Agreement shall have been adopted and the transactions
contemplated hereby shall have been approved by the requisite votes of the
holders of the outstanding shares of beneficial interest of the Acquired
Fund entitled to vote.
b) That the Acquired Fund shall have furnished to the Acquiring Fund a
statement of the Acquired Fund's assets and liabilities, with values
determined as
A-9
provided in Section 4 of this Agreement, together with a list of Investments
with their respective tax costs, all as of the Valuation Time, certified on
the Acquired Fund's behalf by the President (or any Vice President) and
Treasurer (or any Assistant Treasurer) of the Trust, and a certificate of
both such officers, dated the Exchange Date, that there has been no material
adverse change in the financial position of the Acquired Fund since June 30,
2002, other than changes in the Investments and other assets and properties
since that date or changes in the market value of the Investments and other
assets of the Acquired Fund, or changes due to dividends paid or losses from
operations.
c) That the Acquired Fund shall have furnished to the Acquiring Fund a
statement, dated the Exchange Date, signed by the President (or any Vice
President) and Treasurer (or any Assistant Treasurer) of the Trust
certifying that as of the Valuation Time and as of the Exchange Date all
representations and warranties of the Acquired Fund made in this Agreement
are true and correct in all material respects as if made at and as of such
dates and the Acquired Fund has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to such dates.
d) [Reserved]
e) That there shall not be any material litigation pending with respect
to the matters contemplated by this Agreement.
f) That the Acquiring Fund shall have received an opinion of Ropes &
Gray, counsel to the Acquired Fund, in form satisfactory to counsel to the
Acquiring Fund, and dated the Exchange Date, to the effect that (i) the
Trust is a Massachusetts business trust duly formed and is validly existing
under the laws of The Commonwealth of Massachusetts and has the power to own
all its properties and to carry on its business as presently conducted; (ii)
this Agreement has been duly authorized, executed and delivered by the Trust
on behalf of the Acquired Fund and, assuming that the Registration
Statement, the Acquired Fund Prospectus and the Acquired Fund Proxy
Statement comply with the 1933 Act, the 1934 Act and the 1940 Act and
assuming due authorization, execution and delivery of this Agreement by the
Trust on behalf of the Acquired Fund, is a valid and binding obligation of
the Trust on behalf of the Acquired Fund; (iii) the execution and delivery
of this Agreement did not, and the consummation of the transactions
contemplated hereby will not, violate the Declaration of Trust or By-Laws or
any provision of any agreement known to such counsel to which the Trust or
the Acquired Fund is a party or by which it is bound; and (iv) to the
knowledge of such counsel, no consent, approval, authorization or order of
any court or governmental authority is required for the consummation by the
Trust on behalf of the Acquired Fund of the transactions contemplated
hereby, except such as have been obtained under the 1933 Act, the 1934 Act
and the 1940 Act and such as may be required under state securities or blue
sky laws.
A-10
g) [Reserved]
h) That the Acquiring Fund shall have received an opinion of Ropes & Gray
(which opinion would be based upon certain factual representations and
subject to certain qualifications), dated the Exchange Date, in form
satisfactory to the Acquiring Fund and its counsel, to the effect that, on
the basis of the existing provisions of the Code, current administrative
rules, and court decisions, for federal income tax purposes (i) no gain or
loss will be recognized by the Acquiring Fund upon receipt of the
Investments transferred to the Acquiring Fund pursuant to this Agreement in
exchange for the Reorganization Shares; (ii) the basis to the Acquiring Fund
of the Investments will be the same as the basis of the Investments in the
hands of the Acquired Fund immediately prior to such exchange; and (iii) the
Acquiring Fund's holding periods with respect to the Investments will
include the respective periods for which the Investments were held by the
Acquired Fund.
i) That the assets of the Acquired Fund to be acquired by the Acquiring
Fund will include no assets which the Acquiring Fund, by reason of charter
limitations or of investment restrictions disclosed in the Registration
Statement in effect on the Exchange Date, may not properly acquire.
j) That the Registration Statement shall have become effective under the
1933 Act, and no stop order suspending such effectiveness shall have been
instituted or, to the knowledge of the Trust or the Acquiring Fund,
threatened by the Commission.
k) That the Trust shall have received from the Commission, any relevant
state securities administrator and any relevant state insurance regulatory
authority such order or orders as are reasonably necessary or desirable
under the 1933 Act, the 1934 Act, the 1940 Act, and any applicable state
securities or blue sky laws or state insurance laws in connection with the
transactions contemplated hereby, and that all such orders shall be in full
force and effect.
l) That all actions taken by the Trust on behalf of the Acquired Fund in
connection with the transactions contemplated by this Agreement and all
documents incidental thereto shall be satisfactory in form and substance to
the Acquiring Fund and its counsel.
m) That, prior to the Exchange Date, the Acquired Fund shall have
declared a dividend or dividends which, together with all previous such
dividends, shall have the effect of distributing to the shareholders of the
Acquired Fund (i) all of the excess of (x) the Acquired Fund's investment
income excludable from gross income under Section 103(a) of the Code over
(y) the Acquired Fund's deductions disallowed under Sections 265 and
171(a)(2) of the Code, (ii) all of the Acquired Fund's investment company
taxable income as defined in Section 852 of the Code (computed in each case
without regard to any deduction for dividends paid), and (iii) all of the
Acquired Fund's net capital gain realized (after reduction for any capital
loss carryover), in each case for the taxable year ending on December 31,
2002 and the subsequent taxable year ending on the Exchange Date.
A-11
n) That the Acquired Fund shall have furnished to the Acquiring Fund a
certificate, signed by the President (or any Vice President) and the
Treasurer (or any Assistant Treasurer) of the Trust, as to the tax cost to
the Acquired Fund of the securities delivered to the Acquiring Fund pursuant
to this Agreement, together with any such other evidence as to such tax cost
as the Acquiring Fund may reasonably request.
o) That the Acquired Fund's custodian shall have delivered to the
Acquiring Fund a certificate identifying all of the assets of the Acquired
Fund held or maintained by such custodian as of the Valuation Time.
p) [Reserved]
q) [Reserved]
r) [Reserved]
s) [Reserved]
9. Conditions to the Acquired Fund's Obligations. The obligations of the
Acquired Fund hereunder shall be subject to the following conditions:
a) That this Agreement shall have been adopted and the transactions
contemplated hereby shall have been approved by the requisite vote of the
holders of the outstanding shares of beneficial interest of the Acquired
Fund entitled to vote.
b) That the Trust, on behalf of the Acquiring Fund, shall have executed
and delivered to the Acquired Fund an Assumption of Liabilities dated as of
the Exchange Date pursuant to which the Acquiring Fund will assume all of
the liabilities of the Acquired Fund existing at the Valuation Time in
connection with the transactions contemplated by this Agreement, other than
liabilities arising pursuant to this Agreement.
c) That the Acquiring Fund shall have furnished to the Acquired Fund a
statement, dated the Exchange Date, signed by the President (or any Vice
President) and Treasurer (or any Assistant Treasurer) of the Trust,
certifying that as of the Valuation Time and as of the Exchange Date all
representations and warranties of the Acquiring Fund made in this Agreement
are true and correct in all material respects as if made at and as of such
dates, and that the Acquiring Fund has complied with all of the agreements
and satisfied all of the conditions on its part to be performed or satisfied
at or prior to each of such dates; and that the Trust shall have furnished
to the Acquired Fund a statement, dated the Exchange Date, signed by an
officer of the Trust certifying that as of the Valuation Time and as of the
Exchange Date, to the best of the knowledge of the Trust, after due inquiry,
all representations and warranties of the Acquiring Fund made in this
Agreement are true and correct in all material respects as if made at and as
of such date.
A-12
d) That there shall not be any material litigation pending or threatened
with respect to the matters contemplated by this Agreement.
e) That the Acquired Fund shall have received an opinion of Ropes & Gray,
counsel to the Acquiring Fund, in form satisfactory to counsel to the
Acquired Fund, and dated the Exchange Date, to the effect that (i) the Trust
is a Massachusetts business trust duly formed and is validly existing under
the laws of The Commonwealth of Massachusetts and has the power to own all
its properties and to carry on its business as presently conducted; (ii) the
Reorganization Shares to be delivered to the Acquired Fund as provided for
by this Agreement are duly authorized and upon such delivery will be validly
issued and will be fully paid and non-assessable by the Trust and the
Acquiring Fund and no shareholder of the Acquiring Fund has any preemptive
right to subscription or purchase in respect thereof; (iii) this Agreement
has been duly authorized, executed and delivered by the Trust on behalf of
the Acquiring Fund and, assuming that the Acquiring Fund Prospectus, the
Registration Statement and the Acquired Fund Proxy Statement comply with the
1933 Act, the 1934 Act and the 1940 Act and assuming due authorization,
execution and delivery of this Agreement by the Trust on behalf of the
Acquired Fund, is a valid and binding obligation of the Trust and the
Acquiring Fund; (iv) the execution and delivery of this Agreement did not,
and the consummation of the transactions contemplated hereby will not,
violate the Declaration of Trust or By-Laws, or any provision of any
agreement known to such counsel to which the Trust or the Acquiring Fund is
a party or by which it is bound; (v) no consent, approval, authorization or
order of any court or governmental authority is required for the
consummation by the Trust on behalf of the Acquiring Fund of the
transactions contemplated herein, except such as have been obtained under
the 1933 Act, the 1934 Act and the 1940 Act and such as may be required
under state securities or blue sky laws; and (vi) the Registration Statement
has become effective under the 1933 Act, and to best of the knowledge of
such counsel, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the 1933 Act.
f) That the Acquired Fund shall have received an opinion of Ropes & Gray,
dated the Exchange Date (which opinion would be based upon certain factual
representations and subject to certain qualifications), in form satisfactory
to the Acquired Fund and its counsel, to the effect that, on the basis of
the existing provisions of the Code, current administrative rules, and court
decisions, for federal income tax purposes: (i) no gain or loss will be
recognized by the Acquired Fund as a result of the reorganization; (ii) no
gain or loss will be recognized by shareholders of the Acquired Fund on the
distribution of Reorganization Shares to them in exchange for their shares
of the Acquired Fund; (iii) the aggregate tax basis of the Reorganization
Shares that the Acquired Fund's shareholders receive in place of their
Acquired Fund shares will be the same as the aggregate tax basis of the
A-13
Acquired Fund shares exchanged therefor; and (iv) an Acquired Fund
shareholder's holding period for the Reorganization Shares received pursuant
to the Agreement will be determined by including the holding period for the
Acquired Fund shares exchanged for the Reorganization Shares, provided that
the shareholder held the Acquired Fund shares as a capital asset.
g) That all actions taken by the Trust on behalf of the Acquiring Fund in
connection with the transactions contemplated by this Agreement and all
documents incidental thereto shall be satisfactory in form and substance to
the Acquired Fund and its counsel.
h) That the Registration Statement shall have become effective under the
1933 Act, and no stop order suspending such effectiveness shall have been
instituted or, to the knowledge of the Trust or the Acquiring Fund,
threatened by the Commission.
i) That the Trust shall have received from the Commission, any relevant
state securities administrator and any relevant state insurance regulatory
authority such order or orders as are reasonably necessary or desirable
under the 1933 Act, the 1934 Act, the 1940 Act, and any applicable state
securities or blue sky laws or state insurance laws in connection with the
transactions contemplated hereby, and that all such orders shall be in full
force and effect.
10. [Reserved]
11. Waiver of Conditions. Each of the Acquired Fund or the Acquiring Fund,
after consultation with counsel and by consent of the Trustees of the Trust, on
behalf of the Acquiring Fund and the Acquired Fund, as the case may be, on its
behalf or an officer authorized by such trustees, may waive any condition to
their respective obligations hereunder, except for the conditions set forth in
Sections 8(a), 8(h), 9(a) and 9(f).
12. No Broker, etc. Each of the Acquired Fund and the Acquiring Fund
represents that there is no person who has dealt with it or the Trust who by
reason of such dealings is entitled to any broker's or finder's or other
similar fee or commission arising out of the transactions contemplated by this
Agreement.
13. Termination. The Acquired Fund and the Acquiring Fund may, by consent
of the Trustees of the Trust, on behalf of the Acquired Fund and the Acquiring
Fund, terminate this Agreement. If the transactions contemplated by this
Agreement have not been substantially completed by September 30, 2003, this
Agreement shall automatically terminate on that date unless a later date is
agreed to by the Acquired Fund and the Acquiring Fund.
14. [Reserved]
A-14
15. Covenants, etc. Deemed Material. All covenants, agreements,
representations and warranties made under this Agreement and any certificates
delivered pursuant to this Agreement shall be deemed to have been material and
relied upon by each of the parties, notwithstanding an investigation made by
them or on their behalf.
16. Sole Agreement; Amendments. This Agreement supersedes all previous
correspondence and oral communications between the parties regarding the
subject matter hereof, constitutes the only understanding with respect to such
subject matter, may not be changed except by a letter of agreement signed by
each party hereto, and shall be construed in accordance with and governed by
the laws of The Commonwealth of Massachusetts.
[The remainder of this page has intentionally been left blank.]
A-15
17. Declaration of Trust. A copy of the Amended Agreement and Declaration
of Trust of Allmerica Investment Trust is on file with the Secretary of The
Commonwealth of Massachusetts, and notice is hereby given that this instrument
is executed on behalf of the Trustees of the Trust on behalf of the Acquiring
Fund and the Acquired Fund as trustees and not individually and that the
obligations of this instrument are not binding upon any of the Trustees,
officers or shareholders of the Trust and individually but are binding only
upon the assets and property of the Acquiring Fund or the Acquired Fund, as the
case may be.
ALLMERICA Investment Trust,
on behalf of its series
(the Acquired Fund)
By: -----------------------------
Name:
Title:
ALLMERICA Investment Trust
on behalf of its series
(the Acquiring Fund)
By: -----------------------------
Name:
Title:
A-16
Appendix B
CAPITALIZATION
The following tables shows the capitalization of each of the Acquired Funds
and Acquiring Funds as of June 30, 2002 and on a pro forma combined basis
giving effect to the acquisition of the assets and liabilities of each of the
Acquired Funds by the relevant Acquiring Funds at net asset value as of that
date. The information provided in the "Pro Forma Combined" column assumes each
Merger was consummated on December 31, 2001, and is for information purposes
only. No assurance can be given as to how many shares of each Acquiring Fund
will be received by the shareholders of the relevant Acquired Fund on the date
the Merger takes place.
Select Growth Select Growth
Fund Fund
Select Strategic Select Growth Pro Forma Pro Forma
Growth Fund Fund Combined(1) Combined(2)
---------------- ------------- ------------- -------------
Net asset value.... $24,774,571 $518,212,998 $543,027,764 $932,676,262
Shares outstanding. 77,340,446 399,807,762 419,002,904 719,657,610
Net asset value per
share............ $0.320 $1.296 $1.296 $1.296
Select International
Equity Fund
Select Emerging Select International Pro Forma
Markets Fund Equity Fund Combined
----------------- -------------------- --------------------
Net asset value.......... $ 55,413,570 $440,486,954 $496,059,867
Shares outstanding....... 79,043,864 409,720,788 461,451,039
Net asset value per share $0.701 $1.075 $1.075
Equity Index Fund
Select Growth and Pro Forma
Income Fund Equity Index Fund Combined
----------------- -------------------- --------------------
Net asset value.......... $466,532,455 $445,991,622 $913,721,780
Shares outstanding....... 442,745,570 190,555,188 390,479,393
Net asset value per share $1.054 $2.340 $2.340
Select Growth Select Growth
Fund Fund
Select Aggressive Select Growth Pro Forma Pro Forma
Growth Fund Fund Combined(3) Combined(2)
----------------- ------------- ------------- -------------
Net asset value.... $389,263,520 $518,212,998 $907,857,098 $932,676,262
Shares outstanding. 376,085,306 399,807,762 700,507,020 719,657,610
Net asset value per
share............ $1.035 $1.296 $1.296 $1.296
B-1
Select Investment Grade
Select Investment Income Fund
Select Strategic Grade Income Pro Forma
Income Fund Fund Combined
---------------- ----------------- -----------------------
Net asset value.......... $101,952,565 $620,307,471 $722,344,029
Shares outstanding....... 96,245,926 562,445,844 654,890,325
Net asset value per share $1.059 $1.103 $1.103
- --------
(1) Assumes approval of Proposal 1 only by shareholders of the Strategic Growth
Fund.
(2) Assumes approval both of Proposal 1 by shareholders of the Strategic Growth
Fund and of Proposal 4 by shareholders of the Aggressive Growth Fund.
(3) Assumes approval of Proposal 4 only by shareholders of the Aggressive
Growth Fund.
B-2
Appendix C
MANAGEMENT'S DISCUSSION AND ANALYSIS
SELECT GROWTH FUND
The Select Growth Fund returned (17.77)% for the first half of 2002,
outperforming its benchmark, the Russell 1000 Growth Index, which returned
(20.78)%.
The period was marked by an investment climate that continued to favor the
more defensive value stocks over the more aggressive growth stocks that the
Fund focuses on. Investor preferences like these tend to occur when economic
concerns persist or investor confidence erodes. In fact, as the period
progressed, investors became increasingly reluctant to invest in the stock
market at all, and many turned to bonds and cash investments. Economic
conditions had become more favorable through the period and were therefore not
what concerned investors. It was corporate scandals, including revelations of
improper accounting at several high profile companies that concerned investors
and further worsened an already depressed stock market.
Helping the Fund to outperform its index were good stock selection, a higher
than benchmark weighting in the financial sector, stock selection within the
healthcare and consumer cyclical sectors, and a slightly lower than benchmark
weighting in the technology sector.
Looking ahead, the Investment Sub-Adviser is likely to maintain relatively
smaller positions in technology, which require a resumption in capital spending
to be able to positively contribute to the U.S. economy. Despite the relatively
defensive position that has helped the fund over the period, the management
team is continuing to watch for opportunities to take new positions in higher
growth stocks as the economy and investor sentiment improve.
Average Annual Total Returns
Period Ending June 30, 2002 1 Year 5 Years Life of Fund
--------------------------- -------- ------- ------------
Select Growth Fund................... (27.00)% 0.23% 7.37%
Russell 1000 Growth Index............ (26.49)% (0.28)% 8.69%
S&P 500(R) Index..................... (17.99)% 3.66% 11.38%
Lipper Large-Cap Growth Funds Average (26.09)% 1.74% 9.38%
C-1
Growth of a $10,000 Investment Since 1992
[CHART]
Select Growth Russell 1000
Fund Growth Index S&P 500/R/ Index
------------- ------------ ----------------
8/21/1992
Inception
Date $10,000 $10,000 $10,000
6/30/1993 10,720 10,560 11,146
6/30/1994 10,497 10,528 11,302
6/30/1995 13,103 13,739 14,249
6/30/1996 15,458 17,559 17,955
6/30/1997 19,922 23,062 24,187
6/30/1998 27,675 30,303 31,481
6/30/1999 33,374 38,569 38,644
6/30/2000 38,606 48,469 41,445
6/30/2001 27,609 30,934 35,293
6/30/2002 20,154 22,740 28,945
The Select Growth Fund is a portfolio of the Allmerica Investment Trust.
Portfolio composition will vary over time.
Past performance is no guarantee of future results. Investment return and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
Effective 5/1/02, the benchmark changed from the S&P 500(R) Index to the
Russell 1000 Growth Index. The Russell 1000 Growth Index measures the
performance of those Russell 1000 companies with higher price-to-book ratios
and higher forecasted growth values. The S&P 500(R) Index is an unmanaged index
of 500 leading stocks. S&P 500(R) Index is a registered trademark of McGraw
Hill Companies, Inc. The Lipper Large-Cap Growth Funds Average is a
non-weighted average of funds within the large-cap growth investment objective.
Performance numbers are net of all fund operating expenses, but do not include
insurance charges. If performance information included the effect of these
additional charges, it would have been lower.
Performance prior to 7/1/96 is that of a prior Sub-Adviser.
Investment Sub-Adviser
Putnam Investment Management, LLC
About the Fund
Seeks long-term growth of capital by investing in stocks of companies
believed to have long-term growth potential.
C-2
Portfolio Composition
As of June 30, 2002, the sector allocation of net assets was:
[CHART]
Pharmaceuticals 14%
Retailers 10%
Computer Software & Processing 8%
Beverages, Food & Tobacco 8%
Electronics 6%
Computers & Information 6%
Banking 6%
Financial Services 5%
Industrial - Diversified 5%
Insurance 4%
Other 28%
C-3
SELECT INTERNATIONAL EQUITY FUND
The Select International Equity Fund returned (3.41)% for the first half of
2002, underperforming its benchmark, the MSCI EAFE Index, which returned
(1.38)%.
After making gains in the early part of 2002, European and Japanese stocks
fell. Some of the decline was tempered by the falling U.S. dollar, which helped
make the declines to U.S. investors less steep when local returns were
converted back to U.S. dollars. But investors were rattled by the rapidly
declining dollar, combined with the onslaught of bad news about accounting and
tax fraud involving high profile U.S. companies and their executives. Fearing
increasing risk, many investors fled stocks for the perceived safety of bonds.
Potential terrorist acts and the Middle East conflict produced additional
worries about the risks of equity investing.
Telecommunication stocks had the greatest negative impact on the Fund's
underperformance relative to its benchmark. Despite the fact the Fund held some
of the strongest stocks within this sector during the first half, these stocks
were weighed down by the sectors' ballooning debt and the high costs associated
with new product development. Media stocks also contributed to the portfolio's
negative performance during the first half. The tepid economic recovery did
little to boost revenue from movie tickets and music production. Certain
financial stocks also hurt performance, although one financial stock issued by
a U.K.-based company did advance. Certain consumer-related and energy stocks
also helped performance as consumers continued to spend and Middle East
tensions contributed to higher oil prices.
Looking ahead, the Investment Sub-Adviser sees signs that the economy may
continue to strengthen. Among these signs are expanding manufacturing and
generally low interest rates. Near term, however, non-market factors, including
political unrest and corporate malfeasance may continue to have a negative
effect on international stocks.
Average Annual Total Returns
Period Ending June 30, 2002 1 Year 5 Years Life of Fund
- --------------------------- -------- ------- ------------
Select International Equity Fund.. (11.19)% 0.43% 5.59%
MSCI EAFE Index................... (9.21)% (1.26)% 2.65%
Lipper International Funds Average (10.10)% (0.07)% 4.41%
C-4
Growth of a $10,000 Investment Since 1994
[CHART]
Select International
Equity Fund MSCI EAFE Index
-------------------- ---------------
5/2/1994
Inception
Date $10,000 $10,000
6/30/1994 9,620 10,088
6/30/1995 10,573 10,285
6/30/1996 12,463 11,686
6/30/1997 15,265 13,225
6/30/1998 17,448 14,069
6/30/1999 18,351 15,184
6/30/2000 22,306 17,832
6/30/2001 17,561 13,621
6/30/2002 15,595 12,380
The Select International Equity Fund is a portfolio of the Allmerica
Investment Trust. Portfolio composition will vary over time.
Special risk considerations are associated with investments in non-U.S.
companies, including fluctuating foreign exchange rates, foreign governmental
regulations and differing degrees of liquidity that may adversely affect the
portfolio.
Past performance is no guarantee of future results. Investment return and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
The MSCI EAFE Index is an unmanaged index of European, Australian and Far
East stocks. The Lipper International Funds Average is a non-weighted average
of funds within the international fund category. Performance numbers are net of
all fund operating expenses, but do not include insurance charges. If
performance information included the effect of these additional charges, it
would have been lower.
Investment Sub-Adviser
Bank of Ireland Asset Management (U.S.) Ltd.
About the Fund
Seeks maximum long-term total return by investing in non-U.S. companies
based on fundamental value.
C-5
Portfolio Composition
As of June 30, 2002, the country allocation of net assets was:
[CHART]
United Kingdom 29%
Japan 13%
Switzerland 13%
Netherlands 12%
France 10%
Germany 7%
Italy 4%
Australia 3%
Other 9%
C-6
EQUITY INDEX FUND
The Equity Index Fund returned (13.35)% for the first half of 2002, in line
with its benchmark, the S&P 500(R) Index, which returned (13.16)%.
After an impressive recovery in the last quarter of 2001, the U.S. equity
markets were dragged down by concerns about corporate accounting issues and the
possibility of interest rate increases, given better than expected economic
reports. The index was essentially flat at the end of the first quarter. The
second quarter was marked by tumbling stock prices at some high profile
companies whose top executives were accused of fraud. Not knowing whom or what
to trust, the financial markets reacted as expected, with the S&P 500(R) Index
plunging.
Within the Fund and the index, the worst performing stocks were in the
telecommunications and energy sectors, where many of the corporate scandals
were concentrated. As a result, investors fled those affected sectors. More
positively, healthcare, homebuilding and retailing sectors enjoyed the best
performance, as investors favored companies whose earnings were perceived as
truthfully reported and backed up by solid balance sheets.
The outlook for the second half of 2002 is uncertain as various indicators
alternately point to strength or weakness in the economy. Consumers continue to
spend, especially on housing, with new home sales in May especially strong.
Currently, the consensus is that the weak economic recovery will mean that the
Federal Reserve Board is unlikely to raise interest rates significantly before
the end of the year.
Average Annual Total Returns
Period Ending June 30, 2002 1 Year 5 Years 10 Years
- --------------------------- -------- ------- --------
Equity Index Fund........................... (18.32)% 3.40% 10.96%
S&P 500(R) Index............................ (17.99)% 3.66% 11.43%
Lipper S&P 500 Index Objective Funds Average (18.35)% 3.40% 11.06%
Growth of a $10,000 Investment Since 1992
[CHART]
Equity Index Fund S&P 500/R/ Index
----------------- ----------------
6/30/1992 $10,000 $10,000
6/30/1993 11,355 11,363
6/30/1994 11,428 11,523
6/30/1995 14,310 14,527
6/30/1996 17,897 18,304
6/30/1997 23,927 24,656
6/30/1998 30,988 32,092
6/30/1999 37,994 39,397
6/30/2000 40,600 42,253
6/30/2001 34,628 35,987
6/30/2002 28,284 29,513
C-7
The Equity Index Fund is a portfolio of the Allmerica Investment Trust.
Portfolio composition will vary over time.
Past performance is no guarantee of future results. Investment return and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
The S&P 500(R) Index is an unmanaged index of 500 leading stocks. S&P 500(R)
Index is a registered trademark of McGraw Hill Companies, Inc. The Lipper S&P
500(R) Index Objective Funds Average is a non-weighted average of funds within
the S&P 500(R) Index investment objective. Performance numbers are net of all
fund operating expenses, but do not include insurance charges. If performance
information included the effect of these additional charges, it would have been
lower.
Investment Sub-Adviser
Allmerica Asset Management, Inc.
About the Fund
Seeks to replicate the returns of the S&P 500(R) Index.
Portfolio Composition
As of June 30, 2002, the sector allocation of net assets was:
[CHART]
Pharmaceuticals 11%
Banking 8%
Oil & Gas 8%
Retailers 7%
Beverages, Food & Tobacco 6%
Financial Services 6%
Insurance 5%
Computer Software & Processing 5%
Computers & Information 4%
Industrial - Diversified 4%
Telephone Systems 4%
Other 32%
C-8
SELECT INVESTMENT GRADE INCOME FUND
The Select Investment Grade Income Fund returned 2.66% for the first half of
2002, underperforming its benchmark, the Lehman Brothers Aggregate Bond Index,
which returned 3.80%.
The first half of 2002 challenged and disappointed credit investors. The
period began on a high note with positive economic data suggesting the
likelihood of a rise in interest rates, but reports in the second quarter
indicated weakness. Accounting irregularities and fraud, among other illegal
activities, resulted in numerous large-scale downgrades of former
investment-grade bellwether bonds to junk bond status. Some issuers even faced
bankruptcy. Initially, interest rates rose, but then began to reverse course.
Within the Fund, holdings of bonds issued by telecommunication companies
detracted most from the Fund's performance compared with the index. The
Investment Sub-Adviser believed at the start of the period that the improving
economy would give a well-needed boost to these companies, however the sector
continued to fare poorly. More positively, bonds issued by companies in the
consumer sector helped performance. Also mortgage-backed securities held in the
portfolio did well in the first quarter when rates were rising slightly.
Looking ahead, it appears that the Federal Reserve will not raise short-term
interest rates any time soon, given the need to stimulate an economy still
suffering from increased unemployment and decreased capital spending. In such
an environment the Investment Sub-Adviser is likely to avoid individual
corporate bonds that could present excessive risk and focus on maintaining a
well diversified portfolio.
Average Annual Total Returns
Period Ending June 30, 2002 1 Year 5 Years 10 Years
- --------------------------- ------ ------- --------
Select Investment Grade Income Fund.................... 7.48% 6.75% 7.00%
Lehman Brothers Aggregate Bond Index................... 8.63% 7.57% 7.34%
Lipper Intermediate Investment Grade Debt Funds Average 7.17% 6.43% 6.48%
Growth of a $10,000 Investment Since 1992
[CHART]
Select Investment Lehman Brothers
Grade Income Fund Aggregate Bond Index
----------------- --------------------
6/30/1992 $10,000 $10,000
6/30/1993 11,365 11,180
6/30/1994 11,163 11,034
6/30/1995 12,545 12,417
6/30/1996 13,099 13,040
6/30/1997 14,194 14,103
6/30/1998 15,649 15,590
6/30/1999 15,982 16,079
6/30/2000 16,583 16,813
6/30/2001 18,306 18,701
6/30/2002 19,676 20,314
C-9
The Select Investment Grade Income Fund is a portfolio of the Allmerica
Investment Trust. Portfolio composition will vary over time.
Past performance is no guarantee of future results. Investment return and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
The Lehman Brothers Aggregate Bond Index is an unmanaged index of all
fixed-rate debt issues with an investment grade rating, at least one year to
maturity and an outstanding par value of at least $25 million. The Lipper
Intermediate Investment Grade Debt Funds Average tracks the performance of
funds investing in intermediate-term corporate and government debt securities.
Performance numbers are net of all fund operating expenses, but do not include
insurance charges. If performance information included the effect of these
additional charges, it would have been lower.
Investment Sub-Adviser
Allmerica Asset Management, Inc.
About the Fund
Seeks to generate a high level of total return which includes income and
capital appreciation.
Portfolio Composition
As of June 30, 2002, the sector allocation of net assets was:
[CHART]
U.S. Government & Agency Obligations 43%
Corporate Notes & Bonds 27%
U.S. Government Agency Mortgage-Backed Securities 16%
Asset-Backed & Mortgage-Backed Securities 8%
Foreign Bonds 3%
Other 3%
C-10
FUND RETURN INFORMATION
SELECT GROWTH FUND
The bar chart and table below do not reflect expenses at the insurance
product level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns
[CHART]
1993 0.84%
1994 -1.49%
1995 24.59%
1996 22.02%
1997 34.06%
1998 35.44%
1999 29.80%
2000 -17.79%
2001 -24.71%
During the period shown above the highest quarterly return was 25.02% for
the quarter ended 12/31/98 and the lowest was (20.19)% for the quarter ended
03/31/01.
Putnam Investment Management, L.L.C. became Sub-Adviser of the Fund on July
1, 1996. Performance before that date is based on the performance of the Fund's
previous Sub-Adviser.
Performance Table
Average Annual Total Returns Past Past Since Inception
(for the periods ending December 31, 2001) One Year Five Years (August 21, 1992)
- ------------------------------------------ -------- ---------- -----------------
Fund Shares......................... (24.71)% 7.84% 10.05%
S&P 500 Index*...................... (11.89)% 10.70% 13.77%
Russell 1000 Growth Index**(1)...... (20.42)% 8.27% 11.34%
- --------
* The S&P 500 Index(R) is an unmanaged index of 500 leading stocks. S&P 500(R)
Index is a registered trademark of Standard & Poor's Corporation.
** The Russell 1000 Growth Index measures the performance of those Russell 1000
companies with higher price-to-book ratios and higher forecasted growth
values. The Russell 1000(R) Index measures the performance of the 1,000
largest companies in the Russell 3000 Index. The Russell 1000(R) Growth
Index's inception was August 31, 1992.
C-11
SELECT INTERNATIONAL EQUITY FUND
The bar chart and table below do not reflect expenses at the insurance
product level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns
[CHART]
1995 19.63%
1996 21.94%
1997 4.65%
1998 16.48%
1999 31.71%
2000 -9.03%
2001 -21.43%
During the period shown above the highest quarterly return was 20.89% for
the quarter ended 12/31/99 and the lowest was (17.69)% for the quarter ended
09/30/98.
Performance Table
Average Annual Total Returns Past Past Since Inception
(for the periods ending December 31, 2001) One Year Five Years (May 2, 1994)
------------------------------------------ -------- ---------- ---------------
Fund Shares.............................. (21.43)% 2.79% 6.45%
Morgan Stanley Capital Intl. EAFE Index*. (21.20)% 1.17% 3.04%
- --------
* The Morgan Stanley Capital International EAFE (Europe, Australia, Far East)
Index is an unmanaged capitalization weighted index of foreign developed
country common stocks.
C-12
EQUITY INDEX FUND
The bar chart and table below do not reflect expenses at the insurance
product level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns
[CHART]
1992 7.25%
1993 9.53%
1994 1.06%
1995 36.18%
1996 22.3%
1997 32.41%
1998 28.33%
1999 20.41%
2000 -9.03%
2001 -12.02%
During the period shown above the highest quarterly return was 21.41% for
the quarter ended 12/31/98 and the lowest was (14.72)% for the quarter ended
9/30/01.
Performance Table
Average Annual Total Returns Past Past Past
(for the periods ending December 31, 2001) One Year Five Years Ten Years
------------------------------------------ -------- ---------- ---------
Fund Shares................. (12.02)% 10.37% 12.47%
S&P 500 Index*.............. (11.89)% 10.70% 12.94%
- --------
* The S&P 500 Index(R) is an unmanaged index of 500 leading stocks. S&P 500(R)
Index is a registered trademark of Standard & Poor's Corporation.
C-13
SELECT INVESTMENT GRADE INCOME FUND
The bar chart and table below do not reflect expenses at the insurance
product level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns
[GRAPHIC]
[CHART]
1992 8.33%
1993 10.8%
1994 -2.96%
1995 17.84%
1996 3.56%
1997 9.45%
1998 7.97%
1999 -0.97%
2000 10.31%
2001 7.94%
During the period shown above the highest quarterly return was 6.02% for the
quarter ended 6/30/95 and the lowest was (2.61)% for the quarter ended 03/31/94.
Performance Table
Average Annual Total Returns Past Past Past
(for the periods ending December 31, 2001) One Year Five Years Ten Years
- ------------------------------------------ -------- ---------- ---------
Fund Shares............................. 7.94% 6.86% 7.07%
Lehman Brothers Aggregate Bond Index*... 8.43% 7.43% 7.23%
- --------
* The Lehman Brothers Aggregate Bond Index(R) is an unmanaged index of all
fixed rate debt issues with an investment grade or higher rating, at least
one year to maturity and an outstanding par value of at least $25 million.
C-14
[THIS PAGE INTENTIONALLY LEFT BLANK]
C-15
FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you understand each
fund's financial performance for the past five years. Certain information
reflects financial results for a single Fund share. The total returns in the
tables represent the rate that an investor would have earned or lost on an
investment in a Fund (assuming reinvestment of all dividends and
distributions). Total returns do not include separate account expenses and
contract fees. Inclusion of such charges would reduce total return for all
periods shown. With the exception of information for the six months ended June
30, 2002, this information has been audited by PricewaterhouseCoopers LLP,
whose report, along with each Fund's financial statements, is incorporated
herein by reference to the Statement of Additional Information and is included
in the annual report, which is available upon request. Information relating to
the six months ended June 30, 2002 is unaudited and is included in the
semiannual report, which is also available upon request.
ALLMERICA INVESTMENT TRUST
FINANCIAL HIGHLIGHTS--For a Share Outstanding Throughout Each Period
Income from Investment Operations Less Distributions(A)
-------------------------------------------- ----------------------------------------------------
Net Realized
and Distributions
Net Asset Net Unrealized Dividends from Net Net Increase
Value Investment Gain (Loss) Total from from Net Realized (Decrease) in
Year Ended Beginning Income on Investment Investment Capital Total Net Asset
December 31, of Year (Loss) Investments Operations Income Gains Distributions Value
- -------------------- --------- ---------- ------------ ---------- ---------- ------------- ------------- -------------
Select International
Equity Fund(1)
2002(D) $1.113 $ 0.009 $(0.047) $(0.038) $ -- $ -- $ -- $(0.038)
2001 1.781 0.018 (0.385) (0.367) (0.024) (0.277) (0.301) (0.668)
2000 2.031 0.013 (0.191) (0.178) (0.009) (0.063) (0.072) (0.250)
1999 1.542 0.012 0.477 0.489 -- -- -- 0.489
1998 1.341 0.014 0.207 0.221 (0.020) -- (0.020) 0.201
1997 1.356 0.015 0.049 0.064 (0.033) (0.046) (0.079) (0.015)
Select Growth
Fund (1)
2002(D) $1.576 $ -- (2) $(0.280) $(0.280) $ -- $ -- $ -- $(0.280)
2001 2.214 0.002 (0.545) (0.543) -- (0.095) (0.095) (0.638)
2000 3.049 (0.001) (0.489) (0.490) -- (0.345) (0.345) (0.835)
1999 2.428 (0.002) 0.709 0.707 (0.001) (0.085) (0.086) 0.621
1998 1.811 0.002 0.638 0.640 -- (3) (0.023) (0.023) 0.617
1997 1.430 0.006 0.480 0.486 (0.006) (0.099) (0.105) 0.381
Equity Index
Fund(1)
2002(D) $2.715 $ 0.013 $(0.374) $(0.361) $(0.014) $ -- $(0.014) $(0.375)
2001 3.299 0.030 (0.422) (0.392) (0.029) (0.163) (0.192) (0.584)
2000 4.060 0.032 (0.362) (0.330) (0.034) (0.397) (0.431) 0.761)
1999 3.408 0.036 0.656 0.692 (0.035) (0.005) (0.040) 0.652
1998 2.753 0.035 0.741 0.776 (0.034) (0.087) (0.121) 0.655
1997 2.165 0.034 0.664 0.698 (0.033) (0.077) (0.110) 0.588
Select Investment
Grade Income
Fund(4)
2002(D) $1.106 $ 0.032 $(0.003) $ 0.029 $(0.032) $ -- $(0.032) $(0.003)
2001 1.086 0.064(5) 0.021 0.085 (0.065) -- (0.065) 0.020
2000 1.051 0.070 0.035 0.105 (0.070) -- (0.070) 0.035
1999 1.132 0.068 (0.079) (0.011) (0.069) (0.001) (0.070) (0.081)
1998 1.112 0.067 0.020 0.087 (0.067) -- (0.067) 0.020
1997 1.084 0.071 0.028 0.099 (0.071) -- (0.071) 0.028
- --------
* Not Annualized
** Annualized
(A) Certain prior year amounts have been reclassified to conform to current
year presentation.
(B) Including reductions.
(C) Excluding reductions. Certain Portfolios have entered varying arrangements
with brokers who reduced a portion of the Portfolio's expenses.
(D) For the six months ended June 30, 2002 (Unaudited).
(1) Net investment income (loss) per share before reductions were $0.024 in
2001, less than $0.013 in 2000, $0.011 in 1999, less than $0.014 in 1998
and less than $0.015 in 1997 for Select International Equity Fund; $0.001
in 2001, $(0.002) in 2000, $(0.003) in 1999, $0.001 in 1998, and less than
$0.006 in 1997 for Select Growth Fund; and $0.029 in 2001 and less than
$0.032 in 2000 for Equity Index Fund.
(2) Investment income is less than $0.0005.
(3) Dividends from net investment income are less than $0.0005.
(4) Effective January 1, 2001, the Select Investment Grade Income Fund has
adopted the provisions of the AICPA Audit and Accounting Guide for
Investment Companies and is amortizing premium and discount on debt
securities using the daily effective yield method. The effect of this
change for the year ended December 31, 2001 was a decrease in net
investment income per share by $0.003, an increase in net realized and
unrealized gains and losses per share by $0.003 and a decrease in the ratio
of net investment income to average net assets from 6.04% to 5.79%. Per
share data and ratio/supplemental data for periods prior to January 1, 2001
have not been restated to reflect this change in presentation.
(5) Computed using average shares outstanding through the period.
C-16
ALLMERICA INVESTMENT TRUST
Ratios/Supplemental Data
Ratios to Average Net Assets
-----------------------------------------
Net Asset Net Assets
Value End of Operating Expenses Portfolio
End of Total Period Net Investment ------------------ Management Turnover
Period Return (000's) Income (Loss) (B) (C) Fees Rate
- --------- ------ ---------- -------------- ---- ---- ---------- ---------
$1.075 (3.41)%* $ 440,487 1.72%** 1.08%** 1.09%** 0.90%** 9%*
1.113 (21.43)% 460,006 0.97% 0.99% 1.01% 0.89% 26%
1.781 (9.03)% 679,128 0.77% 0.98% 0.99% 0.88% 24%
2.031 31.71% 679,341 0.69% 1.01% 1.02% 0.89% 18%
1.542 16.48% 505,553 0.99% 1.01% 1.02% 0.90% 27%
1.341 4.65% 397,915 1.17% 1.15% 1.17% 0.97% 20%
$1.296 (17.77)%* $ 518,213 0.01%** 0.91%** 0.95%** 0.81%** 78%*
1.576 (24.71)% 660,893 0.12% 0.78% 0.85% 0.79% 91%
2.214 (17.79)% 1,040,237 (0.05)% 0.80% 0.81% 0.76% 79%
3.049 29.80% 1,216,365 (0.08)% 0.81% 0.83% 0.78% 84%
2.428 35.44% 815,390 0.08% 0.85% 0.87% 0.82% 86%
1.811 34.06% 470,356 0.42% 0.91% 0.93% 0.85% 75%
$2.340 (13.35)%* $ 445,992 0.97%** 0.41%** 0.42%** 0.28%** 3%*
2.715 (12.02)% 517,315 1.02% 0.32% 0.34% 0.28% 21%
3.299 (9.03)% 599,266 0.87% 0.32% 0.33% 0.27% 9%
4.060 20.41% 638,230 0.98% 0.35% 0.35% 0.28% 21%
3.408 28.33% 481,877 1.17% 0.36% 0.36% 0.29% 6%
2.753 32.41% 297,191 1.38% 0.44% 0.44% 0.31% 9%
$1.103 2.66%* $ 620,307 5.87%** 0.54%** 0.54%** 0.41%** 47%*
1.106 7.94% 571,582 5.79% 0.47% 0.47% 0.41% 114%
1.086 10.31% 445,609 6.53% 0.49% 0.49% 0.42% 159%
1.051 (0.97)% 240,541 6.22% 0.50% 0.50% 0.43% 75%
1.132 7.97% 230,623 6.01% 0.52% 0.52% 0.43% 158%
1.112 9.45% 189,503 6.48% 0.51% 0.51% 0.41% 48%
C-17
Appendix D
DESCRIPTION OF PRINCIPAL RISKS
The following is a summary of the principal risks of investing in a Fund and
the factors likely to cause the value of your investment in the Fund to
decline. The principal risks applicable to each Fund are identified under
"Principal Investment Risks" within each of the Proposals contained in the
Prospectus/Proxy Statement. There are also many factors that could cause the
value of your investment in a Fund to decline which are not described here. It
is important to remember that there is no guarantee that the Funds will achieve
their investment objectives, and an investor in any of the Funds could lose
money.
Company Risk
A Fund's equity and fixed income investments in a company often fluctuate
based on:
. the firm's actual and anticipated earnings,
. changes in management, product offerings and overall financial strength
and
. the potential for takeovers and acquisitions.
This is due to the fact that prices of securities react to the fiscal and
business conditions of the company that issued the securities. Factors
affecting a company's particular industry, such as increased production costs,
also may affect the value of its securities.
Smaller companies with market capitalizations of less than $1 billion or so
are more likely than larger companies to have limited products lines or smaller
markets for their goods and services. Small company stocks may not trade very
actively, and their prices may fluctuate more than stocks of other companies as
a result of lower liquidity. They may depend on a small or inexperienced
management group. Stocks of smaller companies also may be more vulnerable to
negative changes than stocks of larger companies.
Credit Risk
Credit risk is the risk that the issuer of a fixed income security will not
be able to pay principal and interest when due. There are different levels of
'credit risk'. Funds that invest in lower-rated securities have higher levels
of credit risk. Lower-rated or unrated securities of equivalent quality,
generally known as "junk bonds", have very high levels of credit risk. "Junk
bonds" are considered to be speculative in their capacity to pay interest and
repay principal. The price of a fixed income security can be expected to fall
D-1
if the issuer defaults on its obligation to pay principal or interest, the
rating agencies downgrade the issuers credit rating or there is negative news
that affects the market's perception of the issuers credit risk.
Currency Risk
This is the risk that the value of a Fund's investments may decline due to
fluctuations in exchange rates between the U.S. dollar and foreign currencies.
Funds that invest in securities denominated in or are receiving revenues in
foreign currencies are subject to currency risk. There is often a greater risk
of currency fluctuations and devaluations in emerging markets countries.
Derivatives Risk
A Fund may use derivatives to hedge against an opposite position that the
Fund also holds. While hedging can reduce or eliminate losses, it can also
reduce or eliminate gains. When a Fund uses derivatives to hedge, it takes the
risk that changes in the value of the derivative will not match those of the
asset being hedged. Incomplete correlation can result in unanticipated losses.
A Fund may also use derivatives as an investment vehicle to gain market
exposure. Gains or losses from derivative investments may be substantially
greater than the derivative's original cost. When a Fund uses derivatives, it
is also subject to the risk that the other party to the agreement will not be
able to perform. Additional risks associated with derivatives include
mispricing and improper valuation.
Emerging Markets Risk
Investments in emerging markets securities involve all of the risks of
investments in foreign securities, and also involve additional risks. The
markets of developing countries historically have been more volatile than the
markets of developed countries with more mature economies. Many emerging
markets companies in the early stages of development are dependent on a small
number of products and lack substantial capital reserves. In addition, emerging
markets often have less developed legal and financial systems. These markets
often have provided significantly higher or lower rates of return than
developed markets and. usually carry higher risks to investors than securities
of companies in developed countries.
Foreign Investment Risk
Investing in foreign securities involves risks relating to political, social
and economic developments abroad, as well as risks resulting from the
differences between the regulations to which U.S. and foreign issuers and
markets are subject. These risks may include the seizure by the government of
company assets, excessive taxation, withholding taxes on dividends and
interest, limitations on the use or transfer of portfolio
D-2
assets, and political or social instability. In the event of nationalization,
expropriation or other confiscation, a Fund could lose its entire investment.
Funds investing in foreign securities may experience rapid changes in value.
One reason for this volatility is that the securities markets of many foreign
countries are relatively small, with a limited number of companies representing
a small number of industries. Enforcing legal rights may be difficult, costly
and slow in foreign countries. Also, foreign companies may not be subject to
governmental supervision or accounting standards comparable to those applicable
to U.S. companies, and there may be less public information about their
operations.
Interest Rate Risk
When interest rates rise, the prices of fixed income securities in a Funds
portfolio will generally fall. Conversely, when interest rates fall, the prices
of fixed income securities in the Funds portfolio will generally rise. Even
Funds that invest in the highest quality debt securities are subject to
interest rate risk. Interest rate risk usually will affect the price of a fixed
income security more if the security has a longer maturity because changes in
interest rates are increasingly difficult to predict over longer periods of
time. Fixed income securities with longer maturities will therefore be more
volatile than other fixed income securities with shorter maturities.
Investment Management Risk
Investment management risk is the risk that a Fund does not achieve its
investment objective, even though the Sub-Adviser uses various investment
strategies and techniques,
Liquidity Risk
This is the risk that a Fund will not be able to sell a security at a
reasonable price because there are too few people who actively buy and sell, or
trade, that security on a regular basis. Liquidity risk increases for Funds
investing in foreign investments (especially emerging markets securities),
smaller companies, lower credit quality bonds (also called "junk bonds"),
restricted securities, over-the-counter securities and derivatives.
Market Risk
This is the risk that the price of a security held by a Fund will fall due
to changing economic, political or market conditions or to factors affecting
investor psychology.
Prepayment Risk
While mortgage-backed securities may have a stated maturity, their expected
maturities may vary when interest rates rise or fall. When interest rates fall,
homeowners
D-3
are more likely to prepay their mortgage loans which may result in an
unforeseen loss of future interest income to a Fund. Also, because prepayments
increase when interest rates fall, the prices of mortgage-backed securities do
not increase as much as other fixed income securities when interest rates fall.
Technology Risk
Investments in the technology industries, even though representing interests
in different companies within these industries, may be affected by common
economic forces and other factors. In addition, stock prices of companies in
technology industries have historically been more volatile than those of
companies in other industries.
PRICING OF FUND SHARES
The Funds sell and redeem their shares at a price equal to their net asset
value ("NAV"). The Funds do not charge any sales loads or redemption fees. The
NAV of a share is computed by adding the current value of all the Fund's
assets, subtracting its liabilities and dividing by the number of its
outstanding shares. NAV is computed once daily at the close of regular trading
on the New York Stock Exchange each day the Exchange is open--normally 4:00
p.m. Eastern Time. Orders for the purchase or redemption of shares are filled
at the next NAV computed after an order is received by the Fund. The Funds do
not accept orders or compute their NAVs on days when the Exchange is closed.
Equity securities are valued based on market value if market quotations are
readily available. Debt securities (other than short-term obligations) normally
are valued based on pricing service valuations. Debt obligations in the Funds
with a remaining maturity of 60 days or less are valued at amortized cost when
amortized cost is considered to represent fair value. Values for short-term
obligations of the Funds having a remaining maturity, of more than 60 days are
based upon readily available market quotations. In other cases, debt and equity
securities and any other assets are valued at their fair value following
procedures approved by the Trustees.
Certain foreign markets may be open on days when the Funds do not accept
orders or price their shares. As a result, the NAV of a Funds shares may change
on days when shareholders will not be able to buy or sell shares.
PURCHASE AND REDEMPTION OF SHARES
Shares of the Funds currently are purchased only by Separate Accounts which
are the funding mechanisms for variable annuity contracts and variable life
insurance
D-4
policies. The Distributor, Allmerica Investments, Inc., at its expense, may
provide promotional incentives to dealers who sell variable annuity contracts
which invest in the Funds. The Trust has obtained an exemptive order from the
Securities and Exchange Commission to permit Fund shares to be sold to variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated life insurance companies and certain qualified pension and
retirement plans. Material irreconcilable conflicts may arise among various
insurance policy owners and plan participants. The Trustees will monitor events
to identify any material conflicts and determine if any action should be taken
to resolve such conflict.
No fee is charged by the Trust on redemption. The variable contracts funded
through the Separate Accounts are sold subject to certain fees and charges
which may include sales and redemption charges. See the prospectuses for the
variable insurance products.
Normally, redemption payments will be made within seven days after the Trust
receives a written redemption request. Redemptions may be suspended when
trading on the New York Stock Exchange is restricted or when permitted by the
Securities and Exchange Commission.
Excessive trading of Fund shares in response to short-term fluctuations in
the market--also known as "market timing"--may make it very difficult to manage
a Funds investments and raise its expenses. To deter such activity, the Fund
does not permit frequent trading or market timing in order to protect the
interests of other investors. When market timing occurs, the Fund may have to
sell portfolio securities to have the cash necessary to redeem the market
timers shares. This can happen at a time when it is not advantageous to sell
any securities, which may harm the Fund's performance. When large dollar
amounts are involved, market timing can also make it difficult to use long term
investment strategies because it is not possible to predict how much cash the
Fund will have to invest. When in the Managers or the sub-advisers opinion such
activity would have a disruptive effect on portfolio management or harm other
investors, each Fund reserves the right to refuse or cancel purchase orders and
exchanges into the Fund by any person, group or commonly controlled account.
This trading policy applies to contract holders and policy holders
notwithstanding any contrary provisions in your insurance contract. The terms
of your insurance contract may also restrict your ability to trade among the
investment options available under your contract or policy.
DISTRIBUTION FEES
Effective May 1, 2002 each Fund has adopted a Plan of Distribution and
Service under Rule 12b-1 of the Investment Company Act of 1940 ("12b-1 Plan")
that permits the Funds to pay marketing and other fees to support the sale and
distribution of the Funds' shares and certain services to investment accounts.
The 12b-1 Plan authorizes
D-5
payment of a distribution and service fee at an annual rate of up to 0.25
percent of each Fund's average daily net assets. The 12b-1 Plan has been
implemented at an initial annual rate of 0.15 percent of each Fund's average
daily net assets. Because these fees are paid out of a Fund's assets on an
on-going basis, over time those fees will increase the cost 'of your investment
and may cost you more than paying other types of sales charges.
The Trust currently offers only one class of shares of each of the Funds,
the Service Shares (the "Shares").
DISTRIBUTIONS
Each Fund pays out substantially all of its net investment income and net
capital gains to shareholders each year. Net investment income is paid
quarterly in the case of the Equity Index Fund, Select Growth and Income Fund,
Select Strategic Income Fund and Select Investment Grade Income Fund and
annually in the case of the Select Emerging Markets Fund, Select Aggressive
Growth Fund, Select International Equity Fund, Select Growth Fund and Select
Strategic Growth Fund. Distributions of net capital gains for the year, if any,
are made annually. All dividends and capital gain distributions are applied to
purchase additional Fund shares at net asset value as of the payment date. Fund
shares are held by the Separate Accounts and any distributions are reinvested
automatically by the Separate Accounts unless an election is made on behalf of
a Separate Account to receive some or all of the dividend in cash.
TAXES
The Trust seeks to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies so that the Trust will not be
subject to federal income tax. Under current tax law, dividend or capital gain
distributions from any Fund are not currently taxable when left to accumulate
within a variable annuity or variable life insurance contract. Withdrawals of a
portion from a contract generally are subject to ordinary income tax and, in
many cases, to an additional 10% penalty tax on withdrawals before age 59 1/2.
Tax consequences to investors in the Separate Accounts which are invested in
the Trust are described in more detail in the prospectuses for those accounts.
In order for investors to receive the favorable tax treatment available for
holders of variable annuity and variable life contracts, the Separate Accounts
underlying such contracts, as well as the Funds in which such accounts invest,
must meet certain diversification requirements. Each Fund intends to comply
with these requirements. If a Fund does not meet such requirements, income
allocable to the contracts would be
D-6
taxable currently to the holders of such contracts and income for prior periods
with respect to such contracts also could be taxable, most likely in the year
of the failure to achieve the requisite diversification.
A Funds investments in foreign securities may be subject to withholding and
other taxes at the source, including on dividend or interest payments. In that
case, a Fund's yield on those securities would be decreased. In addition, a
Fund's investment in foreign securities or foreign currencies may increase or
accelerate the Funds recognition of ordinary income and may affect the timing
or amount of the Fund's distributions.
D-7
ALLMERICA INVESTMENT TRUST
FORM N-14
PART B
STATEMENT OF ADDITIONAL INFORMATION
February , 2003
This Statement of Additional Information (the "SAI") relates to the
following proposed reorganizations (the "Reorganizations"):
. The Select Strategic Growth Fund (the "Strategic Growth Fund") would
merge with and into the Select Growth Fund (the "Select Growth Fund");
. The Select Emerging Markets Fund (the "Emerging Markets Fund") would
merge with and into the Select International Equity Fund (the
"International Equity Fund");
. The Select Growth and Income Fund (the "Growth and Income Fund") would
merge with and into the Equity Index Fund;
. The Select Aggressive Growth Fund (the "Aggressive Growth Fund") would
merge with and into the Select Growth Fund; and
. The Select Strategic Income Fund (the "Strategic Income Fund") would
merge with and into the Select Investment Grade Income Fund (the
"Investment Grade Income Fund").
Each of the Strategic Growth Fund, Emerging Markets Fund, Growth and Income
Fund, Aggressive Growth Fund, and Strategic Income Fund (collectively the
"Acquired Funds") is each a series of Allmerica Investment Trust, a
Massachusetts business trust. Similarly, each of the International Equity Fund,
Equity Index Fund, Select Growth Fund and Investment Grade Income Fund
(collectively the "Acquiring Funds") is each a series of Allmerica Investment
Trust, a Massachusetts business trust.
This SAI contains information which may be of interest to shareholders
relating to the Reorganization, but which is not included in the
Prospectus/Proxy Statement dated January , 2003 (the "Prospectus/Proxy
Statement") of the Acquiring Funds. As described in the Prospectus/Proxy
Statement, the Reorganization would involve the transfer of substantially all
the assets of, and the assumption of substantially all the liabilities of, the
Acquired Funds, in exchange for shares of the Acquiring Funds. The Acquiring
Funds would distribute the Acquired Fund shares they receive to their
shareholders in complete liquidation of the Acquired Funds.
This SAI is not a prospectus, and should be read in conjunction with the
Prospectus/Proxy Statement. The Prospectus/Proxy Statement has been filed with
the Securities and Exchange Commission, and is available upon request and
without charge by writing to
1
Allmerica Investment Trust, 440 Lincoln Street, Worcester, MA 01653, or by
calling 1-877-773-8637.
Table of Contents
I. Additional Information about the Acquiring Funds and the Acquired Funds B-2
II. Information about the Effect of the Mergers............................ B-2
I. Additional Information about the Acquiring Funds and the Acquired Funds.
For the Acquiring Funds: Incorporated by reference to Statement of
Additional Information for the Acquiring Funds dated May 1, 2002, as filed with
the Securities and Exchange Commission.
For the Acquired Funds: Incorporated by reference to Statement of
Additional Information for the Acquired Funds dated May 1, 2002, as filed with
the Securities and Exchange Commission.
II. Financial Statements.
This SAI incorporates by reference (i) the Annual Reports of the Acquiring
Funds for the year ended December 31, 2001, (ii) the Semiannual Reports of the
Acquiring Funds for the six months ended June 30, 2002, (iii) the Annual Report
of the Acquired Funds for the year ended December 31, 2001, and (iv) the
Semiannual Report of the Acquired Funds for the six months ended June 30, 2002.
Each of these reports contains historical financial information regarding the
Funds. Such reports have been filed with the Securities and Exchange
Commission, and the financial statements and report of independent accountants
(in the case of the Annual Reports) therein are incorporated herein by
reference.
Information, including financial highlights, about the effect of the
proposed mergers on the Acquiring Funds is provided on the following pages.
2
PROPOSAL #1
PRO FORMA FINANCIAL INFORMATION
The unaudited pro forma information set forth below for the period ended
June 30, 2002 is intended to present ratios and supplemental data as if the
merger of the Select Strategic Growth Fund (the "Acquired Fund") into the
Select Growth Fund ("Acquiring Fund") (the "Funds") had been consummated at
December 31, 2001. The unaudited pro forma information set forth below for the
year ended December 31, 2001 is intended to present ratios and supplemental
data as if the merger of the Acquired Fund into the Acquiring Fund had been
consummated at June 30, 2002.
The Funds have the same investment manager, administrator, fund accounting
agent, fund recordkeeping services agent, custodian, and distributor. Each of
such service providers has entered into an agreement with the Trust which
governs the provision of services to the Funds. Such agreements contain the
same terms with respect to each Fund except for a difference in the investment
management fees charged by the Funds' investment manager. The Acquired Fund
pays a management fee at the annual rate of 0.85% of its average daily net
assets while the Acquiring Fund pays a management fee rate equal to a weighted
average of a series of annual rates ranging from 0.70% up to 0.85% based upon
the level of the fund's average daily net assets. On a pro forma basis for the
six months ended June 30, 2002, the proposed reorganization would result in a
decrease of $18,222 in the management fees charged with respect to the combined
assets of the Funds. Similarly, on a pro forma basis for the year ended
December 31, 2001, the proposed reorganization would result in a decrease of
$32,946 in the management fees charged with respect to the combined assets of
the Funds. The proposed reorganization would also result in a decrease in other
operating expenses (including custodian fees and audit fees) of approximately
$22,000 on a pro forma basis for the six months ended June 30, 2002 and $44,000
on a pro forma basis for the year ended December 31, 2001. These pro forma
adjustments are reflected in the information presented below.
For the Six Months Ended June 30, 2002
Select Growth
Fund
Select Strategic Select Growth Pro Forma
Growth Fund Fund Combined
---------------- ------------- -------------
Net Assets, end of period (000's)......... $24,775 $518,213 $543,028
Total Return (Not Annualized)............. (33.75)% (17.77)% (18.52)%
Ratios to Average Net Assets (Annualized):
Net Investment Income (Loss)........... (1.15)% 0.01% (0.03)%
Operating Expenses/1/.................. 1.20% 0.91% 0.91%
Operating Expenses/2/.................. 1.21% 0.95% 0.95%
Operating Expenses/3/.................. 1.25% 0.95% 0.95%
Management Fees--Gross................. 0.85% 0.81% 0.81%
Management Fees--Net................... 0.81% 0.81% 0.81%
3
For the Year Ended December 31, 2001
Select Growth
Fund
Select Strategic Select Growth Pro Forma
Growth Fund Fund Combined
---------------- ------------- -------------
Net Assets, end of period (000's) $35,178 $660,893 $696,147
Total Return..................... (29.28)% (24.71)% (24.89)%
Ratios to Average Net Assets:
Net Investment Income (Loss).. (0.73)% 0.12% 0.09%
Operating Expenses/1/......... 1.14% 0.78% 0.78%
Operating Expenses/2/......... 1.14% 0.85% 0.85%
Operating Expenses/3/......... 1.14% 0.85% 0.85%
Management Fees--Gross........ 0.85% 0.79% 0.79%
Management Fees--Net.......... 0.85% 0.79% 0.79%
- --------
/1/ Including fee reimbursements from the manager and reductions.
/2/ Excluding reductions. Certain Funds have entered into varying arrangements
with brokers who reduced a portion of the Fund's expenses.
/3/ Excluding fee reimbursements from the manager and reductions.
The total return figures set forth above for the Select Growth Fund on a pro
forma basis are based on a weighted average total return of the Acquiring Fund
and the Acquired Fund during the periods presented. The pro forma total return
figures for the Select Growth Fund may not be indicative of the total return
the Select Growth Fund would have achieved if the reorganization had been
consummated at the beginning of the periods indicated.
The unaudited pro forma information set forth above should be read in
conjunction with the semi-annual unaudited financial statements for the period
ended June 30, 2002 and the annual audited financial statements for the year
ended December 31, 2001.
4
PROPOSAL #2
PRO FORMA FINANCIAL INFORMATION
The unaudited pro forma information set forth below for the period ended
June 30, 2002 is intended to present ratios and supplemental data as if the
merger of the Select Emerging Markets Fund (the "Acquired Fund") into the
Select International Equity Fund ("Acquiring Fund") (the "Funds") had been
consummated at December 31, 2001. The unaudited pro forma information set forth
below for the year ended December 31, 2001 is intended to present ratios and
supplemental data as if the merger of the Acquired Fund into the Acquiring Fund
had been consummated at June 30, 2002.
The Funds have the same investment manager, administrator, fund accounting
agent, fund recordkeeping services agent, custodian, and distributor. Each of
such service providers has entered into an agreement with the Trust which
governs the provision of services to the Funds. Such agreements contain the
same terms with respect to each Fund except for a difference in the investment
management fees charged by the Funds' investment manager. Prior to July 1,
2002, the Acquired Fund paid a management fee at the annual rate of 1.35% of
its average daily net assets./1/ The Acquiring Fund pays a management fee rate
equal to a weighted average of a series of annual rates ranging from 0.85% up
to 1.00% based upon the level of the fund's average daily net assets. On a pro
forma basis for the six months ended June 30, 2002, the proposed reorganization
would result in a decrease of $140,850 in the management fees charged with
respect to the combined assets of the Funds. Similarly, on a pro forma basis
for the year ended December 31, 2001, the proposed reorganization would result
in a decrease of $245,173 in the management fees charged with respect to the
combined assets of the Funds. The proposed reorganization would also result in
a decrease in other operating expenses (including custodian fees and audit
fees) of approximately $18,500 on a pro forma basis for the six months ended
June 30, 2002 and $39,000 on a pro forma basis for the year ended December 31,
2001. These pro forma adjustments are reflected in the information presented
below.
For the Six Months Ended June 30, 2002
Select
International
Equity Fund
Select Emerging Select International Pro Forma
Markets Fund Equity Fund Combined
--------------- -------------------- -------------
Net Assets, end of period (000's) $55,414 $440,487 $496,060
Total Return (Not Annualized).... (2.23)% (3.41)% (3.28)%
Ratios to Average Net Assets
(Annualized):
Net Investment Income (Loss).. 0.28% 1.72% 1.62%
Operating Expenses/1/......... 1.78% 1.08% 1.10%
Operating Expenses/2/......... 1.82% 1.09% 1.11%
Operating Expenses/3/......... 1.82% 1.09% 1.11%
Management Fees--Gross........ 1.35% 0.90% 0.89%
Management Fees--Net.......... 1.35% 0.90% 0.89%
5
For the Year Ended December 31, 2001
Select
International
Equity Fund
Select Emerging Select International Pro Forma
Markets Fund Equity Fund Combined
--------------- -------------------- -------------
Net Assets, end of period (000's) $50,888 $460,006 $511,179
Total Return..................... (9.13)% (21.43)% (20.42)%
Ratios to Average Net Assets:
Net Investment Income (Loss).. 0.41% 0.97% 0.97%
Operating Expenses/1/......... 1.59% 0.99% 0.99%
Operating Expenses/2/......... 1.69% 1.01% 1.02%
Operating Expenses/3/......... 1.69% 1.01% 1.02%
Management Fees--Gross........ 1.35% 0.89% 0.89%
Management Fees--Net.......... 1.35% 0.89% 0.89%
- --------
Effective July 1, 2002, the management fee for Select Emerging Markets Fund
was reduced from 1.35% to 1.15%.
/1/ Including fee reimbursements from the manager and reductions.
/2/ Excluding reductions. Certain Funds have entered into varying arrangements
with brokers who reduced a portion of the Fund's expenses.
/3/ Excluding fee reimbursements from the manager and reductions.
The total return figures set forth above for the Select International Equity
Fund on a pro forma basis are based on a weighted average total return of the
Acquiring Fund and the Acquired Fund during the periods presented. The pro
forma total return figures for the Select International Equity Fund may not be
indicative of the total return the Select International Equity Fund would have
achieved if the reorganization had been consummated at the beginning of the
periods indicated.
The unaudited pro forma information set forth above should be read in
conjunction with the semi-annual unaudited financial statements for the period
ended June 30, 2002 and the annual audited financial statements for the year
ended December 31, 2001.
6
PROPOSAL #3
PRO FORMA FINANCIAL INFORMATION
The unaudited pro forma information set forth below for the period ended
June 30, 2002 is intended to present ratios and supplemental data as if the
merger of the Select Growth and Income Fund (the "Acquired Fund") into the
Equity Index Fund ("Acquiring Fund") (the "Funds") had been consummated at
December 31, 2001. The unaudited pro forma information set forth below for the
year ended December 31, 2001 is intended to present ratios and supplemental
data as if the merger of the Acquired Fund into the Acquiring Fund had been
consummated at June 30, 2002.
The Funds have the same investment manager, administrator, fund accounting
agent, fund recordkeeping services agent, custodian, and distributor. Each of
such service providers has entered into an agreement with the Trust which
governs the provision of services to the Funds. Such agreements contain the
same terms with respect to each Fund except for a difference in the investment
management fees charged by the Funds' investment manager. The Acquired Fund
pays a management fee rate equal to a weighted average of a series of annual
rates ranging from 0.65% up to 0.75% based upon the level of the fund's average
daily net assets while the Acquiring Fund pays a management fee rate equal to a
weighted average of a series of annual rates ranging from 0.25% up to 0.35%
based upon the level of the fund's average daily net assets. On a pro forma
basis for the six months ended June 30, 2002, the proposed reorganization would
result in a decrease of $1,187,849 in the management fees charged with respect
to the combined assets of the Funds. Similarly, on a pro forma basis for the
year ended December 31, 2001, the proposed reorganization would result in a
decrease of $2,918,365 in the management fees charged with respect to the
combined assets of the Funds. The proposed reorganization would also result in
a decrease in other operating expenses (including custodian fees and audit
fees) of approximately $10,000 on a pro forma basis for the six months ended
June 30, 2002 and $19,000 on a pro forma basis for the year ended December 31,
2001. These pro forma adjustments are reflected in the information presented
below.
For the Six Months Ended June 30, 2002
Equity Index
Fund
Select Growth and Equity Index Pro Forma
Income Fund Fund Combined
----------------- ------------ ------------
Net Assets, end of period (000's)......... $466,532 $445,992 $913,722
Total Return (Not Annualized)............. (15.62)% (13.35)% (14.52)%
Ratios to Average Net Assets (Annualized):
Net Investment Income (Loss)........... 0.53% 0.97% 0.96%
Operating Expenses/1/.................. 0.82% 0.41% 0.40%
Operating Expenses/2/.................. 0.82% 0.42% 0.40%
Operating Expenses/3/.................. 0.82% 0.42% 0.40%
Management Fees--Gross................. 0.68% 0.28% 0.26%
Management Fees--Net................... 0.68% 0.28% 0.26%
7
For the Year Ended December 31, 2001
Equity Index
Fund
Select Growth and Equity Index Pro Forma
Income Fund Fund Combined
----------------- ------------ ------------
Net Assets, end of period (000's) $609,818 $517,315 $1,130,071
Total Return..................... (11.75)% (12.02)% (11.84)%
Ratios to Average Net Assets:
Net Investment Income (Loss).. 0.56% 1.02% 1.00%
Operating Expenses/1/......... 0.72% 0.32% 0.31%
Operating Expenses/2/......... 0.73% 0.34% 0.32%
Operating Expenses/3/......... 0.73% 0.34% 0.32%
Management Fees--Gross........ 0.68% 0.28% 0.26%
Management Fees--Net.......... 0.68% 0.28% 0.26%
- --------
/1/ Including fee reimbursements from the manager and reductions.
/2/ Excluding reductions. Certain Funds have entered into varying arrangements
with brokers who reduced a portion of the Fund's expenses.
/3/ Excluding fee reimbursements from the manager and reductions.
The total return figures set forth above for the Equity Index Fund on a pro
forma basis are based on a weighted average total return of the Acquiring Fund
and the Acquired Fund during the periods presented. The pro forma total return
figures for the Equity Index Fund may not be indicative of the total return the
Equity Index Fund would have achieved if the reorganization had been
consummated at the beginning of the periods indicated.
The unaudited pro forma information set forth above should be read in
conjunction with the semi-annual unaudited financial statements for the period
ended June 30, 2002 and the annual audited financial statements for the year
ended December 31, 2001.
8
PROPOSAL #4
PRO FORMA FINANCIAL INFORMATION
The unaudited pro forma information set forth below for the period ended
June 30, 2002 is intended to present ratios and supplemental data as if the
merger of the Select Aggressive Growth Fund (the "Acquired Fund") into the
Select Growth Fund ("Acquiring Fund") (the "Funds") had been consummated at
December 31, 2001. The unaudited pro forma information set forth below for the
year ended December 31, 2001 is intended to present ratios and supplemental
data as if the merger of the Acquired Fund into the Acquiring Fund had been
consummated at June 30, 2002.
The Funds have the same investment manager, administrator, fund accounting
agent, fund recordkeeping services agent, custodian, and distributor. Each of
such service providers has entered into an agreement with the Trust which
governs the provision of services to the Funds. Such agreements contain the
same terms with respect to each Fund except for a difference in the investment
management fees charged by the Funds' investment manager. The Acquired Fund
pays a management fee rate equal to a weighted average of a series of annual
rates ranging from 0.65% up to 1.00% based upon the level of the fund's average
daily net assets while the Acquiring Fund pays a management fee rate equal to a
weighted average of a series of annual rates ranging from 0.70% up to 0.85%
based upon the level of the fund's average daily net assets. On a pro forma
basis for the six months ended June 30, 2002, the proposed reorganization would
result in a decrease of $372,061 in the management fees charged with respect to
the combined assets of the Funds. Similarly, on a pro forma basis for the year
ended December 31, 2001, the proposed reorganization would result in a decrease
of $832,258 in the management fees charged with respect to the combined assets
of the Funds. The proposed reorganization would also result in a decrease in
other operating expenses (including custodian fees and audit fees) of
approximately $8,500 on a pro forma basis for the six months ended June 30,
2002 and $18,500 on a pro forma basis for the year ended December 31, 2001.
These pro forma adjustments are reflected in the information presented below.
For the Six Months Ended June 30, 2002
Select Growth
Fund
Select Aggressive Select Growth Pro Forma
Growth Fund Fund Combined
----------------- ------------- -------------
Net Assets, end of period (000's) $389,264 $518,213 $907,857
Total Return (Not Annualized).... (17.27)% (17.77)% (17.54)%
Ratios to Average Net Assets
(Annualized):
Net Investment Income (Loss).. (0.45)% 0.01% (0.12)%
Operating Expenses/1/......... 1.05% 0.91% 0.90%
Operating Expenses/2/......... 1.05% 0.95% 0.93%
Operating Expenses/3/......... 1.05% 0.95% 0.93%
Management Fees--Gross........ 0.88% 0.81% 0.77%
Management Fees--Net.......... 0.88% 0.81% 0.77%
9
For the Year Ended December 31, 2001
Select Growth
Fund
Select Aggressive Select Growth Pro Forma
Growth Fund Fund Combined
----------------- ------------- -------------
Net Assets, end of period (000's) $516,676 $660,893 $1,178,419
Total Return..................... (21.60)% (24.71)% (23.31)%
Ratios to Average Net Assets:
Net Investment Income (Loss).. (0.32)% 0.12% (0.02)%
Operating Expenses/1/......... 0.87% 0.78% 0.76%
Operating Expenses/2/......... 0.90% 0.85% 0.81%
Operating Expenses/3/......... 0.90% 0.85% 0.81%
Management Fees--Gross........ 0.83% 0.79% 0.75%
Management Fees--Net.......... 0.83% 0.79% 0.75%
- --------
/1/ Including fee reimbursements from the manager and reductions.
/2/ Excluding reductions. Certain Funds have entered into varying arrangements
with brokers who reduced a portion of the Fund's expenses.
/3/ Excluding fee reimbursements from the manager and reductions.
The total return figures set forth above for the Select Growth Fund on a pro
forma basis are based on a weighted average total return of the Acquiring Fund
and the Acquired Fund during the periods presented. The pro forma total return
figures for the Select Growth Fund may not be indicative of the total return
the Select Growth Fund would have achieved if the reorganization had been
consummated at the beginning of the periods indicated.
The unaudited pro forma information set forth above should be read in
conjunction with the semi-annual unaudited financial statements for the period
ended June 30, 2002 and the annual audited financial statements for the year
ended December 31, 2001.
10
PROPOSAL #5
PRO FORMA FINANCIAL INFORMATION
The unaudited pro forma information set forth below for the period ended
June 30, 2002 is intended to present ratios and supplemental data as if the
merger of the Select Strategic Income Fund (the "Acquired Fund") into the
Select Investment Grade Income Fund ("Acquiring Fund") (the "Funds") had been
consummated at December 31, 2001. The unaudited pro forma information set forth
below for the year ended December 31, 2001 is intended to present ratios and
supplemental data as if the merger of the Acquired Fund into the Acquiring Fund
had been consummated at June 30, 2002.
The Funds have the same investment manager, administrator, fund accounting
agent, fund recordkeeping services agent, custodian, and distributor. Each of
such service providers has entered into an agreement with the Trust which
governs the provision of services to the Funds. Such agreements contain the
same terms with respect to each Fund except for a difference in the investment
management fees charged by the Funds' investment manager. The Acquired Fund
pays a management fee rate equal to a weighted average of a series of annual
rates ranging from 0.45% up to 0.60% based upon the level of the fund's average
daily net assets while the Acquiring Fund pays a management fee rate equal to a
weighted average of a series of annual rates ranging from 0.40% up to 0.50%
based upon the level of the fund's average daily net assets. On a pro forma
basis for the six months ended June 30, 2002, the proposed reorganization would
result in a decrease of $68,615 in the management fees charged with respect to
the combined assets of the Funds. Similarly, on a pro forma basis for the year
ended December 31, 2001, the proposed reorganization would result in a decrease
of $48,542 in the management fees charged with respect to the combined assets
of the Funds. The proposed reorganization would also result in a decrease in
other operating expenses (including custodian fees and audit fees) of
approximately $15,500 on a pro forma basis for the six months ended June 30,
2002 and $46,000 on a pro forma basis for the year ended December 31, 2001.
These pro forma adjustments are reflected in the information presented below.
For the Six Months Ended June 30, 2002
Select
Investment
Grade Income
Select Investment Fund
Select Strategic Grade Income Pro Forma
Income Fund Fund Combined
---------------- ----------------- ------------
Net Assets, end of period (000's) $101,953 $620,307 $722,344
Total Return (Not Annualized).... 3.08% 2.66% 2.71%
Ratios to Average Net Assets
(Annualized):
Net Investment Income (Loss).. 4.16% 5.87% 5.70%
Operating Expenses/1/......... 0.83% 0.54% 0.55%
Operating Expenses/2/......... 0.83% 0.54% 0.55%
Operating Expenses/3/......... 0.83% 0.54% 0.55%
Management Fees--Gross........ 0.58% 0.41% 0.41%
Management Fees--Net.......... 0.58% 0.41% 0.41%
11
For the Year Ended December 31, 2001
Select
Investment
Grade Income
Select Investment Fund
Select Strategic Grade Income Pro Forma
Income Fund Fund Combined
---------------- ----------------- ------------
Net Assets, end of period (000's)..... $54,481 $571,582 $626,158
Total Return.......................... 6.95% 7.94% 7.89%
Ratios to Average Net Assets:
Net Investment Income (Loss)....... 3.91% 5.79% 5.71%
Operating Expenses/1/.............. 0.97% 0.47% 0.47%
Operating Expenses/2/.............. 0.97% 0.47% 0.47%
Operating Expenses/3/.............. 0.97% 0.47% 0.47%
Management Fees--Gross............. 0.58% 0.41% 0.41%
Management Fees--Net............... 0.58% 0.41% 0.41%
- --------
/1/ Including fee reimbursements from the manager and reductions.
/2/ Excluding reductions. Certain Funds have entered into varying arrangements
with brokers who reduced a portion of the Fund's expenses.
/3/ Excluding fee reimbursements from the manager and reductions.
The total return figures set forth above for the Select Investment Grade
Income Fund on a pro forma basis are based on a weighted average total return
of the Acquiring Fund and the Acquired Fund during the periods presented. The
pro forma total return figures for the Select Investment Grade Income Fund may
not be indicative of the total return the Select Investment Grade Income Fund
would have achieved if the reorganization had been consummated at the beginning
of the periods indicated.
The unaudited pro forma information set forth above should be read in
conjunction with the semi-annual unaudited financial statements for the period
ended June 30, 2002 and the annual audited financial statements for the year
ended December 31, 2001.
12
PROPOSALS #1 AND #4
PRO FORMA FINANCIAL INFORMATION
The unaudited pro forma information set forth below for the period ended
June 30, 2002 is intended to present ratios and supplemental data as if the
merger of the Select Strategic Growth Fund and the Select Aggressive Growth
Fund ("Acquired Funds") into the Select Growth Fund ("Acquiring Fund") (the
"Funds") had been consummated at December 31, 2001. The unaudited pro forma
information set forth below for the year ended December 31, 2001 is intended to
present ratios and supplemental data as if the merger of the Acquired Funds
into the Acquiring Fund had been consummated at June 30, 2002.
The Funds have the same investment manager, administrator, fund accounting
agent, fund recordkeeping services agent, custodian, and distributor. Each of
such service providers has entered into an agreement with the Trust which
governs the provision of services to the Funds. Such agreements contain the
same terms with respect to each Fund except for a difference in the investment
management fees charged by the Funds' investment manager. The Select Strategic
Growth Fund pays a management fee at an annual rate of 0.85% of its average
daily net assets; the Select Aggressive Growth Fund pays a management fee rate
equal to a weighted average of a series of annual rates ranging from 0.65% up
to 1.00% based upon the level of the fund's average daily net assets while the
Acquiring Fund pays a management fee rate equal to a weighted average of a
series of annual rates ranging from 0.70% up to 0.85% based upon the level of
the fund's average daily net assets. On a pro forma basis for the six months
ended June 30, 2002, the proposed reorganization would result in a decrease of
$394,681 in the management fees charged with respect to the combined assets of
the Funds. Similarly, on a pro forma basis for the year ended December 31,
2001, the proposed reorganization would result in a decrease of $881,577 in the
management fees charged with respect to the combined assets of the Funds. The
proposed reorganization would also result in a decrease in other operating
expenses (including custodian fees and audit fees) of approximately $30,500 on
a pro forma basis for the six months ended June 30, 2002 and $62,400 on a pro
forma basis for the year ended December 31, 2001. These pro forma adjustments
are reflected in the information presented below.
For the Six Months Ended June 30, 2002
Select Growth
Select Fund
Select Strategic Aggressive Select Growth Pro Forma
Growth Fund Growth Fund Fund Combined
---------------- ----------- ------------- -------------
Net Assets, end of period
(000's).................... $24,775 $389,264 $518,213 $932,676
Total Return (Not Annualized) (33.75)% (17.27)% (17.77)% (17.99)%
Ratios to Average Net Assets
(Annualized):
Net Investment Income
(Loss).................. (1.15)% (0.45)% 0.01% (0.13)%
Operating Expenses/1/..... 1.20% 1.05% 0.91% 0.90%
Operating Expenses/2/..... 1.21% 1.05% 0.95% 0.92%
Operating Expenses/3/..... 1.25% 1.05% 0.95% 0.92%
Management Fees--Gross.... 0.85% 0.88% 0.81% 0.77%
Management Fees--Net...... 0.81% 0.88% 0.81% 0.77%
13
For the Year Ended December 31, 2001
Select Growth
Select Fund
Select Strategic Aggressive Select Growth Pro Forma
Growth Fund Growth Fund Fund Combined
---------------- ----------- ------------- -------------
Net Assets, end of period
(000's).................... $35,178 $516,676 $660,893 $1,213,690
Total Return (Not Annualized) (21.98)% (21.60)% (24.71)% (23.28)%
Ratios to Average Net Assets
(Annualized):
Net Investment Income
(Loss).................. (0.73)% (0.32)% 0.12% (0.03)%
Operating Expenses/1/..... 1.14% 0.87% 0.78% 0.76%
Operating Expenses/2/..... 1.14% 0.90% 0.85% 0.81%
Operating Expenses/3/..... 1.14% 0.90% 0.85% 0.81%
Management Fees--Gross.... 0.85% 0.83% 0.79% 0.75%
Management Fees--Net...... 0.85% 0.83% 0.79% 0.75%
- --------
/1/ Including fee reimbursements from the manager and reductions.
/2/ Excluding reductions. Certain Funds have entered into varying arrangements
with brokers who reduced a portion of the Fund's expenses.
/3 /Excluding fee reimbursements from the manager and reductions.
The total return figures set forth above for the Select Growth Fund on a pro
forma basis are based on a weighted average total return of the Acquiring Fund
and the Acquired Funds during the periods presented. The pro forma total return
figures for the Select Growth Fund may not be indicative of the total return
the Select Growth Fund would have achieved if the reorganization had been
consummated at the beginning of the periods indicated.
The unaudited pro forma information set forth above should be read in
conjunction with the semi-annual unaudited financial statements for the period
ended June 30, 2002 and the annual audited financial statements for the year
ended December 31, 2001.
14
PART C. OTHER INFORMATION
Item 16. Exhibits
Exhibit 1 Agreement and Declaration of Trust, dated October 11, 1984, as
amended May 12, 1992 was filed previously in Post-effective
Amendment No. 36 to the Registrant's Registration Statement on Form
N-1A on April 15, 1998 and is incorporated herein by reference.
Exhibit 2 Bylaws as amended May 10, 1999 were filed previously in Post-
effective Amendment No. 39 to the Registrant's Registration Statement
on Form N-1A on February 28, 2000 and are incorporated herein by
reference.
Exhibit 3 None
Exhibit 4 Form of Agreement and Plan of Reorganization, dated as of January 7,
2003, is filed as Appendix A to Part A of this Registration Statement.
Exhibit 5(a) Article VIII of Registrant's Agreement and Declaration Trust, entitled
"Indemnification," was filed previously in Post-effective Amendment
No. 36 to the Registrant's Registration Statement on Form N-1A on
April 15, 1998 and is incorporated herein by reference.
Exhibit 5(b) Article III, Section 12 of the Bylaws of First Allmerica was filed
previously in Post-effective Amendment No. 36 to the Registrant's
Registration Statement on Form N-1A on April 15, 1998 and is
incorporated herein by reference.
Exhibit 6(a) Management Agreement between Registrant and Allmerica Financial
Investment Management Services, Inc. (the "Manager") dated April 16,
1998 (compensation schedule amended as of October 1, 2000) was filed
previously in Post-Effective Amendment No. 41 to the Registrant's
Registration Statement on Form N-1A on April 11, 2001 and is
incorporated here by reference.
Exhibit 6(b) Sub-Advisor Agreement between the Manager and Schroder Investment
Management North America Inc. with respect to the Select Emerging
Markets Fund dated April 16, 1998 was filed previously in Post-
effective Amendment No. 37 to the Registrant's Registration Statement
on Form N-1A on February 25, 1999 and is incorporated here by
reference.
Exhibit 6(c) Sub-Adviser Agreement between the Manager and Massachusetts
Financial Services Company with respect to the Select Aggressive
Growth Fund dated June 1, 2001 was filed previously in Post-effective
Amendment No. 43 to the Registrant's Registration Statement on
Form N-1A on March 29, 2002 and is incorporated herein by reference.
C-1
Exhibit 6(d) Sub-Adviser Agreement between the Manager and Jennison Associates
LLC with respect to the Select Aggressive Growth Fund dated June 1,
2001 was filed previously in Post-effective Amendment No. 43 to the
Registrant's Registration Statement on Form N-1A on March 29, 2002
and is incorporated herein by reference.
Exhibit 6(e) Sub-Adviser Agreement between the Manager and Bank of Ireland
Asset Management (U.S.) Limited with respect to the Select
International Equity Fund dated April 16, 1998 was filed previously in
Post-effective Amendment No. 37 to the Registrant's Registration
Statement on Form N-1A on February 25, 1999 and is incorporated
herein by reference.
Exhibit 6(f) Sub-Adviser Agreement between the Manager and Putnam Investment
Management, Inc. with respect to the Select Growth Fund dated April
16, 1998 was filed previously in Post-effective Amendment No. 37 to
the Registrant's Registration Statement on Form N-1A on February 25,
1999 and is incorporated herein by reference.
Exhibit 6(g) Sub-Adviser Agreement between the Manager and TCW Investment
Management Services, Inc. with respect to the Select Strategic Growth
Fund dated July 6, 2001 was filed previously in Post-effective
Amendment No. 43 to the Registrant's Registration Statement on Form
N-1A on March 29, 2002 and is incorporated herein by reference.
Exhibit 6(h) Sub-Adviser Agreement between the Manager and J. P. Morgan
Investment Management Inc. with respect to the Select Growth and
Income Fund dated April 1, 1999 was filed previously in Post-effective
Amendment No. 38 to the Registrant's Registration Statement on Form
N-1A on April 29, 1999 and is incorporated herein by reference.
Exhibit 6(i) Sub-Adviser Agreement by and among the Manager, Western Asset
Management Company and Western Asset Management Company
Limited with respect to the Select Strategic Income Fund dated August
8, 2000 was filed previously in Post-Effective Amendment No. 41 to the
Registrant's Registration Statement on Form N-1A on April 11, 2001
and is incorporated herein by reference.
Exhibit 6(j) Sub-Adviser Agreement between the Manager and Allmerica Asset
Management, Inc. with respect to the Equity Index Fund and Select
Investment Grade Income Fund dated April 16, 1998 was filed
previously in Post-effective Amendment No. 37 to the Registrant's
Registration Statement on Form N-1A on February 25, 1999 and is
incorporated herein by reference.
C-2
Exhibit 7 Distribution Agreement with Allmerica Investments, Inc. dated
February 25, 1998 was filed previously in Post-effective Amendment
No. 36 to the Registrant's Registration Statement on Form N-1A on
April 15, 1998 and is incorporated herein by reference.
Exhibit 8 None
Exhibit 9 Custodian Agreement with Investors Bank & Trust Company, as
amended July 1, 2000 was filed previously in Post-effective
Amendment No. 43 to the Registrant's Registration Statement on Form
N-1A on March 29, 2002 and is incorporated herein by reference.
Exhibit 10 Plan of Distribution and Service under Rule 12b-1 was filed previously
in Post-effective Amendment No. 43 to the Registrant's Registration
Statement on Form N-1A on March 29, 2002 and is incorporated
herein by reference.
Exhibit 11 Opinion and consent of counsel is filed herein.
Exhibit 12 Opinion and consent of counsel regarding tax matters to be filed by
amendment.
Exhibit 13(a) Administration Services Agreement between Manager, Registrant and
Investors Bank & Trust Company, amended July 1, 2000 was filed
previously in Post-effective Amendment No. 43 to the Registrant's
Registration Statement on Form N-1A on March 29, 2002 and is
incorporated herein by reference.
Exhibit 13(b) Securities Lending Agency Agreement with Investors Bank & Trust
Company (Schedule II amended as of February 23, 2001) was filed
previously in Post-Effective Amendment No. 41 to the Registrant's
Registration Statement on Form N-1A on April 11, 2001 and is
incorporated herein by reference.
Exhibit 14 Consent of Independent Accountants is filed herein.
Exhibit 15 None
Exhibit 16 Power of Attorney is filed herein.
Exhibit 17(a) Participation Agreement among Registrant, the Manager and First
Allmerica Financial Life Insurance Company dated March 22, 2000
(Schedule A amended as of August 20, 2001) was filed previously in
Post-effective Amendment No. 43 to the Registrant's Registration
Statement on Form N-1A on March 29, 2002 and is incorporated
herein by reference.
C-3
Exhibit 17(b) Participation Agreement among Registrant, the Manager and
Allmerica Financial Life Insurance and Annuity Company dated
March 22, 2000 (Schedule A amended as of August 20, 2001) was
filed previously in Post-effective Amendment No. 43 to the
Registrant's Registration Statement on Form N-1A on March 29, 2002
and is incorporated herein by reference.
Item 17. Undertakings
(1) The undersigned registrant agrees that prior to any public reoffering of
the securities registered through the use of a prospectus which is a part
of this registration statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) of the Securities Act, the
reoffering prospectus will contain the information called for by the
applicable registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form.
(2) The undersigned registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as a part of an amendment to the
registration statement and will not be used until the amendment is
effective, and that, in determining any liability under the 1933 Act, each
post-effective amendment shall be deemed to be a new registration statement
for the securities offered therein, and the offering of the securities at
that time shall be deemed to be the initial bona fide offering of them.
(3) The Registrant agrees to file, by post-effective amendment, an opinion of
counsel or a copy of an Internal Revenue Service ruling supporting the tax
consequences of the proposed mergers described in this Registration
Statement within a reasonable time after receipt of such opinion or ruling.
C-4
SIGNATURES
Pursuant to the requirements of the Securities Act and the Investment
Company Act, Allmerica Investment Trust has duly caused this Registration
Statement to be signed on its behalf by the undersigned, duly authorized, in
the City of Worcester and Commonwealth of Massachusetts on the 17th day of
January, 2003.
ALLMERICA INVESTMENT TRUST
By: /s/ JOHN P. KAVANAUGH
-----------------------------
John P. Kavanaugh, President
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacities and
on the date(s) indicated.
Signature Title Date
--------- ----- ----
/S/ JOHN P. KAVANAUGH President (Chief Executive January 17, 2003
- ----------------------- Officer), Chairman of
John P. Kavanaugh the Board and Trustee
/S/ PAUL T. KANE Treasurer (Principal January 17, 2003
- ----------------------- Accounting Officer,
Paul T. Kane Principal Financial
Officer)
* Trustee January 17, 2003
- -----------------------
P. Kevin Condron
* Trustee January 17, 2003
- -----------------------
Joceyln S. Davis
* Trustee January 17, 2003
- -----------------------
Cynthia A. Hargadon
* Trustee January 17, 2003
- -----------------------
T. Britton Harris, IV
* Trustee January 17, 2003
- -----------------------
Gordon Holmes
C-5
Signature Title Date
--------- ----- ----
* Trustee January 17, 2003
- -----------------------
Mark A. Hug
* Trustee January 17, 2003
- -----------------------
Attiat F. Ott
* Trustee January 17, 2003
- -----------------------
Ranne P. Warner
By: /s/ John P. Kavanaugh, as
- -----------------------
Attorney-in-fact pursuant to
Power of Attorney filed
herewith
C-6
EXHIBIT INDEX
Number Description
------ -----------
Exhibit 11 Opinion and consent of counsel
Exhibit 14 Consent of Independent Accountants
Exhibit 16 Power of Attorney
ALLMERICA INVESTMENT TRUST
PROXY TABULATOR
P.O. BOX 9132
HINGHAM, MA 02043-9132
Please fold and detach card at perforation before mailing
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
INSURANCE COMPANY NAME PRINTS HERE TO BE HELD MARCH 27, 2003
FUND NAME PRINTS HERE ALLMERICA INVESTMENT TRUST
The undersigned hereby appoints John P. Kavanaugh, Joseph W. MacDougall,
Jr., Paul T. Kane, Gregory D. Sheehan 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 a Special Meeting of the shareholders of the Select
Emerging Markets Fund (the "Emerging Markets Fund"), Select Aggressive Growth
Fund (the "Aggressive Growth Fund"), Select Strategic Growth Fund (the
"Strategic Growth Fund"), Select Growth and Income Fund (the "Growth and Income
Fund"), and Select Strategic Income Fund (collectively with the Emerging Markets
Fund, Aggressive Growth Fund, Strategic Growth Fund, Growth and Income Fund and
Strategic Income Fund, the "Acquired Funds"), five series of Allmerica
Investment Trust (the "Trust"), to be held at 9:00 a.m. Eastern Time on
Thursday, March 27, 2003, at 440 Lincoln Street, Worcester, Massachusetts 01653
for the purposes listed on the reverse side of this card.
Only shareholders of record as of the close of business on January 8, 2003 will
be entitled to notice of and to vote at the meeting and any adjournment thereof.
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:___________________, 2003
Sign, Date and Return the Proxy Card Promptly
Using the Enclosed Envelope.
------------------------------------------------------
------------------------------------------------------
Signature; Signature(s) if held jointly
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.
AIT
Please fold and detach card at perforation before mailing
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" the
proposal.
Please fill in box(es) as shown using black or blue ink or number 2 pencil. [X]
PLEASE DO NOT USE FINE POINT PENS.
APPROVE DISAPPROVE ABSTAIN
1. To approve the Agreement and Plan of Reorganization for the Select Strategic [ ] [ ] [ ]
Growth Fund to merge with and into the Select Growth Fund.
2. To approve the Agreement and Plan of Reorganization for the Select Emerging [ ] [ ] [ ]
Markets Fund to merge with and into the Select International Equity Fund.
3. To approve the Agreement and Plan of Reorganization for the Select Growth [ ] [ ] [ ]
and Income Fund to merge with and into the Equity Index Fund.
4. To approve the Agreement and Plan of Reorganization for the Select [ ] [ ] [ ]
Aggressive Growth Fund to merge with and into the Select Growth Fund.
5. To approve the Agreement and Plan of Reorganization for the Select Strategic [ ] [ ] [ ]
Income Fund to merge with and into the Select Investment Grade Income Fund.
6. To consider and act upon any other matters that properly come before the
meeting and any adjourned session of the meeting.
AIT