Exhibit 12(b)
April 17, 2003
Allmerica Select Strategic Growth Fund
c/o Allmerica Investment Trust
440 Lincoln Street
Worcester, MA 01653
Allmerica Select Growth Fund
c/o Allmerica Investment Trust
440 Lincoln Street
Worcester, MA 01653
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization (the "Agreement"), dated January 7, 2003, between Allmerica
Investment Trust (the "Trust"), on behalf of Allmerica Select Strategic Growth
Fund ("Target Fund"), and the Trust on behalf of Allmerica Select Growth Fund
("Acquiring Fund"). The Agreement describes a proposed transaction (the
"Transaction") to occur on April 17, 2003, or such other date as may be decided
by the parties (the "Closing Date"), pursuant to which Acquiring Fund will
acquire substantially all of the assets of Target Fund in exchange for shares of
beneficial interest in Acquiring Fund (the "Acquiring Fund Shares") and the
assumption by Acquiring Fund of all of the liabilities of Target Fund, following
which the Acquiring Fund Shares received by Target Fund will be distributed by
Target Fund to its shareholders in liquidation and termination of Target Fund.
This opinion as to certain federal income tax consequences of the Transaction is
furnished to you pursuant to Sections 8(h) and 9(f) of the Agreement.
Capitalized terms not defined herein are used herein as defined in the
Agreement.
Target Fund is a series of the Trust, which is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end management
investment company. Shares of Target Fund are redeemable at net asset value at
each shareholder's option. Target Fund has elected to be a regulated investment
company for federal income tax purposes under Section 851 of the Internal
Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Trust. Shares of Acquiring Fund are redeemable
at net asset value at each shareholder's option. Acquiring Fund has elected to
be a regulated investment company for federal income tax purposes under Section
851 of the Code.
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Allmerica Select Strategic Growth Fund April 17, 2003
Allmerica Select Growth Fund
For purposes of this opinion, we have considered the Agreement, the Acquired
Fund Proxy Statement, the Registration Statement (including the items
incorporated by reference therein), and such other items as we have deemed
necessary to render this opinion. In addition, you have provided us with letters
dated as of the date hereof, representing as to certain facts, occurrences and
information upon which you have indicated that we may rely in rendering this
opinion (whether or not contained or reflected in the documents and items
referred to above).
The facts you have represented as to in paragraph 5 of the letter from Acquiring
Fund dated as of the date hereof, support the conclusion that Acquiring Fund
will continue the historic business of Target Fund as an open-end, actively
managed investment company that seeks long-term growth of capital by investing
primarily in common stocks of which at least a significant portion are issued by
companies that are either organized or have their principal activities or
interests within the United States ("U.S. companies").
The comparison using data from the comparison dates (as such term is defined in
paragraph 5 of the letter from Acquiring Fund) demonstrated a significant
overlap of the type of securities in which the Funds invested; each Fund
invested at least 94.5 percent of its assets in common stocks. In addition, the
comparison showed a significant overlap in the industry sectors in which both
Funds invested. Each Fund invested at least 51.7 percent of its net assets in
the following eight sectors: retail, computer software and processing,
electronics, pharmaceuticals, computers and information, medical supplies,
commercial services, and media--broadcasting and publishing. In addition, each
Fund invested at least 51.1 percent of its net assets in three broader industry
sector categories--the technology sector category, the consumer products sector
category, and the health care sector category. In addition, neither Acquiring
Fund nor Target Fund invested more than 14.4 percent of its assets in any one
sector, and each Fund invested at least 2.9 percent of its assets in exactly 11
different sectors. Furthermore, each Fund invested at least 9.1 percent of its
assets in each of five broader industry sector categories, and neither Fund
invested more than 24.1 percent of its assets in any one broader industry sector
category or more than 40.6 percent of its assets in any two broader industry
sector categories.
Based on the foregoing representations and assumptions and our review of the
documents and items referred to above, we are of the opinion that for federal
income tax purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code, and Acquiring Fund and
Target Fund each will be a "party to a reorganization" within
the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
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Allmerica Select Strategic Growth Fund April 17, 2003
Allmerica Select Growth Fund
(iii) The basis in the hands of Acquiring Fund of the assets of Target
Fund transferred to Acquiring Fund in the Transaction will be
the same as the basis of such assets in the hands of Target Fund
immediately prior to the transfer;
(iv) The holding periods of the assets of Target Fund in the hands of
Acquiring Fund will include the periods during which such assets
were held by Target Fund;
(v) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in
liquidation;
(vi) No gain or loss will be recognized by Target Fund shareholders
upon the exchange of their Target Fund shares for Acquiring Fund
Shares;
(vii) The aggregate basis of Acquiring Fund Shares that a Target Fund
shareholder receives in connection with the Transaction will be
the same as the aggregate basis of his or her Target Fund shares
exchanged therefor;
(viii) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the period
for which he or she held the Target Fund shares exchanged
therefor, provided that he or she held such Target Fund shares
as capital assets; and
(ix) Acquiring Fund will succeed to and take into account the items
of Target Fund described in Section 381(c) of the Code.
Acquiring Fund will take these items into account subject to the
conditions and limitations specified in Sections 381, 382, 383,
and 384 of the Code and the Regulations thereunder.
In connection with this opinion we call your attention to Revenue
Ruling 87-76, 1987-2 C.B. 84, published by the Internal Revenue Service ("IRS").
In that ruling, the IRS held that the so-called "continuity of business
enterprise" requirement necessary to tax-free reorganization treatment was not
met in the case of an acquisition of an investment company that invested in
corporate stocks and bonds by an investment company that invested in municipal
bonds. Specifically, the IRS based its ruling on its conclusion that the
business of investing in corporate stocks and bonds is not the same line of
business as investing in municipal bonds. We believe that the IRS's conclusion
in this ruling is questionable, and that, even if the IRS's conclusion is
correct, the facts of this Transaction are distinguishable from those in the
published ruling.
We believe that Acquiring Fund and Target Fund are both engaged in the same line
of business, namely, to achieve long-term growth of capital for the benefit of
their respective stockholders by investing primarily in common stocks, of which
at least a significant portion are of U.S.
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Allmerica Select Strategic Growth Fund April 17, 2003
Allmerica Select Growth Fund
companies, spread across a broad range of individual industry sectors and a
number of the same broader industry sector categories. After the Transaction,
Acquiring Fund will continue that business for the benefit of the stockholders
of both Target and Acquiring Funds. While Acquiring Fund will dispose of certain
investments formerly held by Target Fund in order to conform with its criteria
for the selection of investments, it will apply the same criteria to its own
historic investments. All proceeds generated by all such dispositions will be
reinvested in a manner fully consistent with the shared historic investment
policies of both Funds (although Acquiring Fund will invest primarily in stocks
of large- and mid capitalization companies, such as those included in the
Russell 1000 Index, while Target Fund has historically invested in equity
securities of small- and mid-capitalization companies (specifically, those
within the capitalization range of companies comprising the Standard & Poor's
Small Cap 600 Index). In these circumstances, we are of the opinion that
Acquiring Fund will have continued the historic business of Target Fund--by
investing primarily in common stocks, of which at least a significant portion
are of U.S. companies, to achieve long-term capital growth, for the benefit of,
among others, the historic stockholders of Target Fund--and as a result, the
continuity of business enterprise doctrine will be satisfied. Because Revenue
Ruling 87-76 is the only published ruling dealing specifically with the
application of the "continuity of business enterprise" requirement to a
reorganization involving investment companies, however, our opinion cannot be
free from doubt. No ruling has been or will be obtained from the IRS as to the
subject matter of this opinion and there can be no assurance that the IRS or a
court of law will concur with the opinion set forth above.
Our opinion is based on the Code, Treasury Regulations, IRS rulings, judicial
decisions, and other applicable authority, all as in effect on the date of this
opinion. The legal authorities on which this opinion is based may be changed at
any time. Any such changes may be retroactively applied and could modify the
opinions expressed above.
Very truly yours,
/s/ Ropes & Gray
Ropes & Gray