-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QMr96kHn/QKPtEBB3MhGdZg7vPpkZXiwr4bdgGm7KaXQE0Jdno7CD8UOhKgoNcS1 Kms+Mw9alj9d7Smc9Jpidg== 0000950109-03-000754.txt : 20030224 0000950109-03-000754.hdr.sgml : 20030224 20030224172404 ACCESSION NUMBER: 0000950109-03-000754 CONFORMED SUBMISSION TYPE: N-14/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20030224 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLMERICA INVESTMENT TRUST CENTRAL INDEX KEY: 0000756742 IRS NUMBER: 043158748 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-14/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-102568 FILM NUMBER: 03578070 BUSINESS ADDRESS: STREET 1: 440 LINCOLN ST CITY: WORCESTER STATE: MA ZIP: 01605 BUSINESS PHONE: 5088551000 MAIL ADDRESS: STREET 2: 440 LINCOLN ST MB 260 CITY: WORCESTER STATE: MA ZIP: 01653 FORMER COMPANY: FORMER CONFORMED NAME: SMA INVESTMENT TRUST DATE OF NAME CHANGE: 19920514 N-14/A 1 dn14a.txt AMENDMENT FILING TO N14 As filed with the Securities and Exchange Commission on or about February 24, 2003 File Nos. 811-4138 and 333-102568 ================================================================================ 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. 2 [X] 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 March 23, 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 and Aggressive Growth Fund, the "Acquired Funds") on Thursday, March 27, 2003 at 9:00 a.m. local 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' investment 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. 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 (effective April 1, 2003) Schroder Investment Management North America Ltd. 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 Opus Investment Management, Inc. (formerly 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 Opus Investment 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 26, 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 and Aggressive Growth Fund, the "Acquired Funds"), five series of Allmerica Investment Trust (the "Trust"), will be held at 9:00 a.m. local 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 and Equity Index 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 26, 2003 PROSPECTUS/PROXY STATEMENT February 26, 2003 ALLMERICA INVESTMENT TRUST This Prospectus/Proxy Statement describes the following four investment Funds of the Trust, an open-end diversified management investment company, 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/Proxy Statement explains what you should know about each of the Funds. Please read it carefully before you invest. You should retain this Prospectus/Proxy Statement for future reference. 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/Proxy Statement. Inclusion in this Prospectus/Proxy Statement 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/Proxy Statement 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 February 26, 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 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 and Aggressive Growth 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 and Equity Index Fund, the "Acquiring Funds"), another series of the Trust, in exchange for 1 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. local 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, 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. The address of each of the Insurance Companies and Separate Accounts is 440 Lincoln Street, Worcester, Massachusetts 01653. 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 26, 2003. 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 April 30, 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 20% 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. Each of these principal risks is described in greater detail in Appendix D. 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 Because the Funds have similar objectives, the principal risks associated with each Fund are similar. Like the Strategic Growth Fund, the Select Growth Fund invests primarily on the basis of its Sub-Adviser's judgments about the growth potential of particular companies. Accordingly, the most significant risk for each fund is Company Risk, the risk that fluctuations in the value of individual securities owing to changes in a company's business conditions and projections will adversely affect the value of the 8 Fund's investments. Both Funds are subject to liquidity risk, although for varying reasons. The 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 increased 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, 2002. 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% 0.82% 0.82% Distribution and Service (12b-1) Fees (%)*... 0.15% 0.15% 0.15% Other Expenses (%)........................... 0.39% 0.10% 0.10% Total Annual Fund Operating Expenses (%)..... 1.39%(1),(2) 1.07%(1),(2) 1.07%
- -------- * The Trust's Plan of Distribution and Service (12b-1 plan) became effective on May 1, 2002. (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 9 Select Growth Fund. After an expense reimbursement by the Manager, the total annual fund operating expenses of the Strategic Growth Fund were 1.20% for the year ended December 31, 2002. The total operating expenses of the Select Growth Fund were lower than the Fund's expense limitation throughout 2002. 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 and Strategic 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 1.37% for the Strategic Growth Fund and 1.01% 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, which are in addition to the expenses of the Funds. 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, 2002 . 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........................ $142 $443 $765 $1,677 Select Growth Fund........................... $110 $342 $593 $1,311 Select Growth Fund (pro forma combined)...... $110 $342 $593 $1,311
The above discussion of pro forma Annual Fund Operating Expenses and Example Expenses assumes that: (1) the current contractual agreements, including payments under the Fund's 12b-1 plan, 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, 2002. 10 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 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 11 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. 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, 2002, TCW had approximately $79 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 $251 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. For the 13 fiscal year ended December 31, 2002, the Strategic Growth Fund and Select Growth Fund paid Allmerica Financial advisory fees representing 0.85% (before reimbursement) and 0.82%, respectively, of their average net assets. For the same period, Allmerica Financial paid TCW fees equal to 0.85% of the Strategic Growth Fund's average net assets and Putnam fees equal to 0.34% of the Select Growth Fund's average net assets. 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-Advisers are undervalued in relation to the (Schroder Investment Management company's prospects for future North America Inc. and Schroder earnings growth. Investment Management North America Ltd.) consider various factors such . The Fund may invest up to 20% of as that country's political its net assets in fixed-income debt stability and economic prospects. securities, primarily for defensive purposes. . In selecting securities for the Fund, the Fund's Sub-Advisers focus 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 companies; 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. Each of these principal risks is described in greater detail in Appendix D. 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. In addition to Company Risk, the risk that fluctuations in the value of individual securities owing to changes in a company's business conditions and projections will adversely affect the value of the Fund's investments, the most significant risk for the International Equity Fund is Foreign Investment Risk, which includes the 16 risks associated with investments in foreign securities (less regulation and 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, 2002. 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% 0.91% 0.90% Distribution and Service (12b-1) Fees (%)**....................... 0.15% 0.15% 0.15% Other Expenses (%)................. 0.41% 0.13% 0.16% Total Annual Fund Operating Expenses (%)........... 1.71%(1),(2) 1.19%(1),(2) 1.21%
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, 2002. ** The Trust's Plan of Distribution and Service (12b-1 plan) became effective on May 1, 2002. (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 2002. 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 1.66% for the Emerging Markets Fund and 1.18% 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, which are in addition to the expenses of the Funds. 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, 2002 (in the case of the Emerging Markets Fund, assuming the current management fee applied throughout 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........................ $175 $543 $935 $2,032 International Equity Fund.................... $122 $380 $658 $1,450 International Equity Fund (pro forma combined).................................. $124 $386 $669 $1,473
The above discussion of pro forma Annual Fund Operating Expenses and Example Expenses assumes that: (1) the current contractual agreements, including payments under the Fund's 12b-1 plan, 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, 2002. 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, 2002, Schroder and Schroder Ltd. had approximately $22 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, 2002, BIAM managed over $49 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. Schroder Investment Management North America Ltd. 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 Schroder Investment Management North America Ltd. is 31 Gresham Street, London EC2V 7QA, United Kingdom. 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. For the fiscal year ended December 31, 2002, the Emerging Markets Fund and International Equity Fund paid Allmerica Financial advisory fees representing 1.25% and 0.91%, respectively, of their average net assets. For the same period, Allmerica Financial paid Schroder fees equal to 0.89% of the Emerging Markets Fund's average net assets and BIAM fees equal to 0.33% at the International Equity Fund's average net assets. 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. Each of these principal risks is described in greater detail in Appendix D. Growth and Income Fund Equity Index Fund ---------------------- ----------------- Company Risk Company Risk Derivatives Risk Derivatives Risk Investment Management Risk Market Risk Market Risk The most significant risks of an investment in the Equity Index Fund are Company Risk and Market Risk. Company Risk, generally, is the risk that fluctuations in the value of individual securities owing to changes in a company's business conditions and projections will adversely affect the value of the Fund's investments. Since the Equity Index Fund normally invests in the companies included in the S&P 500 Index, it is also subject to Market Risk, which is the risk that changing economic, political or market conditions or investor psychology can cause the value of the Fund's investments in these companies to fall. 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. 24 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 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, and in addition will not normally take advantage of opportunities to invest in debt 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 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, 2002. 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 (%)........................... 0.69% 0.28% 0.27% Distribution and Service (12b-1) Fees (%)*... 0.15% 0.15% 0.15% Other Expenses (%)........................... 0.08% 0.10% 0.09% Total Annual Fund Operating Expenses (%)..... 0.92%(1) 0.53%(1),(2) 0.51%
- -------- * The Trust's Plan of Distribution and Service (12b-1 plan) became effective on May 1, 2002. 25 (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 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 2002. 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 Equity Index 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 0.51% 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, which are in addition to the expenses of the Funds. 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, 2002 . 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.................. $94 $295 $511 $1,135 Equity Index Fund....................... $54 $170 $297 $ 666 Equity Index Fund (pro forma combined).. $52 $164 $286 $ 642
The above discussion of pro forma Annual Fund Operating Expenses and Example Expenses assumes that: (1) the current contractual agreements, including payments under the Fund's 12b-1 plan, 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, 2002. 26 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 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, 2002, J.P. Morgan and affiliates had over $516 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 Opus Investment Management, Inc. ("Opus"), 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, 2002, Opus had $18 billion in assets under management. Incorporated in 1993, Opus 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 Opus. 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.
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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 Opus Investment President responsibility for all Management, Inc. insurance client portfolios managed by Opus Investment 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 Opus 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 Opus Investment Management, Inc. is 440 Lincoln Street, Worcester, Massachusetts 01653. For the fiscal year ended December 31, 2002, the Growth and Income Fund and Equity Index Fund paid Allmerica Financial advisory fees representing 0.69% and 0.28%, respectively, of their average net assets. For the same period, Allmerica Financial paid J.P. Morgan fees equal to 0.30% of the Growth and Income Fund's average net assets and Opus fees equal to 0.10% of the Equity Index Fund's average net assets. 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 7, 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 20% 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 Management . The Fund may invest up Services, Inc.) to be to 15% of its net in the best interests assets in illiquid of the 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 believes 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. Each of these principal risks is described in greater detail in Appendix D. 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. Like the Aggressive Growth Fund, the Select Growth Fund invests primarily on the basis of its Sub-Adviser's judgments about the growth potential of particular companies. Accordingly, the most significant risk for each fund is Company Risk, the risk that fluctuations in the value of individual securities owing to changes in a company's business conditions and projections will adversely affect the value of the Fund's investments. 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, 2002. 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 (%)........................... 0.89% 0.82% 0.78% Distribution and Service (12b-1) Fees (%)*... 0.15% 0.15% 0.15% Other Expenses (%)........................... 0.11% 0.10% 0.10% Total Annual Fund Operating Expenses (%)..... 1.15%(1),(2) 1.07%(1),(2) 1.03%
- -------- * The Trust's Plan of Distribution and Service (12b-1 plan) became effective on May 1, 2002. (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 2002. 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 1.13% for the Aggressive Growth Fund and 1.01% for the Select Growth Fund. 33 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 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, which are in addition to the expenses of the Funds. 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, 2002 . 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....................... $118 $367 $636 $1,404 Select Growth Fund........................... $110 $342 $593 $1,311 Select Growth Fund (pro forma combined)...... $106 $329 $571 $1,264
The above discussion of pro forma Annual Fund Operating Expenses and Example Expenses assumes that: (1) the current contractual agreements, including payments under the Fund's 12b-1 plan, 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, 2002. 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, 2002, MFS had approximately $113 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, 2002, Jennison had approximately $48 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 $251 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.
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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. For the fiscal year ended December 31, 2002, the Aggressive Growth Fund and Select Growth Fund paid Allmerica Financial advisory fees representing 0.89% and 0.82%, respectively, of their average net assets. For the same period, Allmerica Financial paid fees to MFS and Jennison equal to 0.21% and 0.21%, respectively, of the Aggressive Growth Fund's average net assets and Putnam fees equal to 0.34% of the Select Growth Fund's average net assets. 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 (Opus including its Investment Management, investments in American Inc.) actively manages Depositary Receipts), the portfolio with a including up to 20% of view to producing a its assets in non-U.S. high level of total dollar denominated return for the Fund securities. while avoiding undue risks to capital. The . The dollar weighted Sub-Adviser attempts to average duration of the anticipate events Fund is expected to leading to price or range within 20% of the ratings changes through duration of the the use of in-depth domestic bond market as fundamental credit a whole (normally four research. to six years, although 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. Each of these principal risks is described in greater detail in Appendix D. 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). While credit risk is a significant risk for both Funds, 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, 2002. 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 (%)........................ 0.56% 0.41% 0.41% Distribution and Service (12b-1) Fees (%)* 0.15% 0.15% 0.15% Other Expenses (%)........................ 0.16% 0.07% 0.07% Total Annual Fund Operating Expenses (%).. 0.87%(1) 0.63%(1) 0.63%
- -------- * The Trust's Plan of Distribution and Service (12b-1 plan) became effective on May 1, 2002. (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 each Fund were less than their respective expense limitations throughout 2002. 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, which are in addition to the expenses of the Fund. 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, 2002 . 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.................. $89 $279 $484 $1,076 Investment Grade Income Fund........... $65 $202 $352 $ 788 Investment Grade Income Fund (pro forma combined)............................ $65 $202 $352 $ 788
The above discussion of pro forma Annual Fund Operating Expenses and Example Expenses assumes that: (1) the current contractual agreements, including payments under the Fund's 12b-1 plan, 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, 2002. 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 that 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-Advisers 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, 2002, WAMC had approximately $97 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, 2002, WAMC Ltd. had approximately $15 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 Opus Investment Management, Inc. ("Opus"), 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, 2002, Opus had $18 billion in assets under management. Incorporated in 1993, Opus 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 Opus. 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 Opus Investment insurance client portfolios Management, Inc. managed by Opus Investment 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 Opus 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 Opus Investment Management, Inc. is 440 Lincoln Street, Worcester, Massachusetts, 01653. For the fiscal year ended December 31, 2002, the Strategic Income Fund and Investment Grade Income Fund paid advisory fees to Allmerica Financial representing 0.56% and 0.41%, respectively, of their average net assets. For the same period, Allmerica Financial paid WAMC and WAMC Ltd. aggregate fees equal to 0.20% of the Strategic Income Fund's average net assets and Opus fees equal to 0.28% of the Investment Grade Income Fund's average net assets. 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 30, 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 30, 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. All of the Acquiring Funds and Acquired Funds share identical procedures regarding purchases, exchanges and redemptions of shares. These procedures are described in greater detail in Appendix D. Accordingly, 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. 46 . You will have the same voting rights under the Trust's Declaration of Trust and applicable law as you currently have. 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 Strategic Growth Fund's merger into the Select Growth Fund and the Emerging Markets Fund's merger into the 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. local 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 26, 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 (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 Acquired 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
As of the close of business on the Record Date, the Trustees and officers of the Trust, as a group, did not own of record or beneficially 1% or more of the outstanding shares of any Acquired Fund. 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. Any shareholder giving a proxy may revoke it before it is exercised at the Meeting by submitting a later-dated proxy, written notice of revocation or by attending the Meeting and voting the shares in person. 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. 49 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 that are present and entitled to vote on the matter for purposes of determining the presence of a quorum, but otherwise will be treated in the same way as shares with respect to which no proxies are received. 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. 50 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. 51 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: A-1 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. A-3 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] A-4 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 December 31, 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, 2002, includes the anticipated costs of each Merger 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) Proposal #1 ---------------- ------------- ------------- ------------- Net asset value.... $19,075,934 $375,958,982 $395,089,412 $681,650,550 Shares outstanding. 73,622,151 330,120,361 346,873,935 598,464,047 Net asset value per share............ $0.259 $1.139 $1.139 $1.139
Select International Equity Fund Select Emerging Select International Pro Forma Markets Fund Equity Fund Combined Proposal #2 ----------------- -------------------- -------------------- Net asset value.......... $ 52,031,853 $335,889,657 $388,124,940 Shares outstanding....... 81,541,658 384,149,836 444,078,879 Net asset value per share $0.638 $0.874 $0.874 Equity Index Fund Select Growth and Pro Forma Income Fund Equity Index Fund Combined Proposal #3 ----------------- -------------------- -------------------- Net asset value.......... $332,167,533 $342,682,878 $676,807,358 Shares outstanding....... 357,511,589 176,278,658 348,151,933 Net asset value per share $0.929 $1.944 $1.944
Select Growth Select Growth Fund Fund Select Aggressive Select Growth Pro Forma Pro Forma Growth Fund Fund Combined(3) Combined(2) Proposal #4 ----------------- ------------- ------------- ------------- Net asset value.... $286,095,206 $375,958,982 $662,495,435 $681,650,550 Shares outstanding. 321,589,108 330,120,361 581,646,563 598,464,047 Net asset value per share............ $0.890 $1.139 $1.139 $1.139
B-1
Select Investment Grade Select Investment Income Fund Select Strategic Grade Income Pro Forma Income Fund Fund Combined Proposal #5 ---------------- ----------------- ----------------------- Net asset value.......... $146,458,320 $620,074,063 $766,702,067 Shares outstanding....... 134,498,570 547,024,532 676,104,116 Net asset value per share $1.089 $1.134 $1.134
- -------- (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 SELECT GROWTH FUND The Select Growth Fund returned (27.60)% for 2002, slightly outperforming its benchmark, the Russell 1000 Growth Index, which returned (27.89)%. U.S. large-cap growth stocks were lower for the year, led by the utilities, technology, and communication services sectors. Helping the fund's performance were adept stock selection in consumer cyclicals, strong security selection and an overweight position versus the benchmark in capital goods and an overweight position in financial stocks, which outperformed the broad market. In the media segment of consumer cyclicals, performance was helped by an underweight position versus the benchmark in a major media company and an overweight position in an entertainment conglomerate. In the retail cyclicals sector, the portfolio benefited from its holdings of selected retailers, while in the capital goods sector, the fund's aerospace/defense positions added value by capitalizing on increased defense contracts and the anticipation of higher defense spending. An emphasis on banking within the financials sector was also beneficial to the fund. While maintaining an underweight position versus the benchmark, the Investment Sub-Adviser increased the fund's allocation to technology and health-care stocks throughout the year. The fund moved from an underweight to an overweight position versus the benchmark in consumer cyclicals and trimmed its large exposure to financial stocks. The fund remained overweighted versus the benchmark in the financial sector at year-end primarily due to holdings of bank stocks. The fund also held larger positions than the benchmark in communication services, particularly the regional telecommunication companies, and selected energy stocks. The fund ended the year underweighted versus the benchmark in the consumer staples, conglomerates and health care sectors. Average Annual Total Returns
1 Year 5 Years 10 Years -------- ------- -------- Select Growth Fund................. (27.60)% (4.66)% 4.78% Russell 1000 Growth Index.......... (27.89)% (3.84)% 6.71% S&P 500(R) Index................... (22.10)% (0.59)% 9.34% Lipper Large-Cap Core Funds Average (23.51)% (2.13)% 7.28%
C-1 Growth of a $10,000 Investment Since 1992 [CHART] Select Growth Russell 1000 Fund Growth Index S&P 500/R/ Index ------------- ------------ ---------------- 12/31/1992 10,000 10,000 10,000 12/31/1993 10,084 10,287 11,008 12/31/1994 9,934 10,557 11,153 12/31/1995 12,376 14,481 15,346 12/31/1996 15,102 17,830 18,871 12/31/1997 20,245 23,268 25,166 12/31/1998 27,420 32,274 32,359 12/31/1999 35,594 42,977 39,164 12/31/2000 29,259 33,337 35,596 12/31/2001 22,029 26,530 31,363 12/31/2002 15,949 19,130 24,429 The Select Growth Fund is a portfolio of 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 Core Funds Average is a non-weighted average of funds within the large-cap core 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 companies believed to have long-term growth potential. C-2 Portfolio Composition As of December 31, 2002, the sector allocation of net assets was: [CHART] Pharmaceuticals 19% Computer Software & Processing 9% Retailers 9% Computers & Information 7% Beverages, Food & Tobacco 6% Industrial - Diversified 6% Electronics 5% Banking 5% Financial Services 5% Insurance 4% Other 25% C-3 SELECT INTERNATIONAL EQUITY FUND The Select International Equity Fund returned (19.37)% for 2002, underperforming its benchmark, the MSCI EAFE Index, which returned (15.66)%. New Zealand and Austria were the best performing developed market countries in U.S. dollar terms. Some European countries did not perform as well, with Germany, Sweden and Finland all declining significantly. The U.S. economy proved to be quite resilient even as the stock market continued to decline, expanding by more than 2.0% in 2002. That is better than the Eurozone region where growth may have been below 1.0%. The euro registered gains of close to 18.0% against the U.S. dollar and Eurozone interest rates remained at a relatively higher level. Most global equity markets recorded negative returns in 2002 for the third successive year, despite a modest recovery in the fourth quarter. European markets were among the worst performers, with Germany's DAX Index declining 43.77% and the French CAC-40 Index falling 29.56%. Within the fund, consumer staples and energy stocks were among the best performers for the twelve-month period, while the telecommunication, technology and financial services sectors detracted from performance. The single largest contributor to the fund's underperformance was its underexposure to Japan, as the Japanese equity market outperformed the benchmark. The Investment Sub-Adviser continues to believe that investment opportunities in Japan may be limited, and intends to remain underweight versus the benchmark. If an economic recovery takes hold, the Investment Sub-Adviser believes that corporate profits may improve, although the level of improvement may be modest. However, the Investment Sub-Adviser does not expect economic growth to prompt an aggressive rise in interest rates. Average Annual Total Returns
1 Year 5 Years Life of Fund -------- ------- ------------ Select International Equity Fund.. (19.37)% (2.44)% 3.09% MSCI EAFE Index................... (15.66)% (2.61)% 0.66% Lipper International Funds Average (16.53)% (2.29)% 2.02%
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 12/31/1994 9,651 10,008 12/31/1995 11,545 11,165 12/31/1996 14,078 11,875 12/31/1997 14,733 12,119 12/31/1998 17,161 14,585 12/31/1999 22,603 18,565 12/31/2000 20,574 15,974 12/31/2001 16,155 12,552 12/31/2002 13,019 10,587 The Select International Equity Fund is a portfolio of 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 December 31, 2002, the country allocation of net assets was: [CHART] United Kingdom 30% Japan 14% Switzerland 13% Netherlands 10% France 9% Germany 6% Italy 4% Spain 4% Other 10% C-6 EQUITY INDEX FUND The Equity Index Fund returned (22.22)% for 2002, performing in line with its benchmark, the S&P 500(R) Index, which returned (22.10)%. Stock markets suffered their third year in a row of negative returns in 2002, with every major equity market index suffering double-digit losses for the year. The period began with much promise for economic growth as depleted inventories were being rebuilt following the surprising strength of consumer spending in the aftermath of September 11. Cautious optimism led many to believe that the Federal Reserve Board's easing cycle was over as it shifted from an easing bias to a neutral stance. By mid-year, however, most of the incoming data turned much softer, and the stock markets were roiled with lower profit reports and new scandals. Housing was the bright spot in the economy as sales of both new and existing homes hit record highs. Consumers replenished their ability to spend by refinancing their mortgages in record numbers, but consumer confidence began to suffer from the effects of a plummeting stock market and heightened geopolitical risk. The Federal Reserve Board decided to take action, lowering the federal funds rate to a generational-low 1.25%. The Investment Sub-Adviser believes that 2003 may hold promise for a return to positive stock market returns. However, the Investment Sub-Adviser feels that terrorism and global conflict could re-introduce elevated risk to the stock markets and bring pessimism back in vogue. Ultimately, an improvement in corporate profits may be the key to improved stock market performance. With the global economy mired in slow-growth mode, the Investment Sub-Adviser believes that this factor could prove elusive. Average Annual Total Returns
1 Year 5 Years 10 Years -------- ------- -------- Equity Index Fund........................... (22.22)% (0.77)% 8.91% S&P 500(R) Index............................ (22.10)% (0.59)% 9.34% Lipper S&P 500 Index Objective Funds Average (22.43)% (0.86)% 9.01%
Growth of a $10,000 Investment Since 1992 [CHART] Equity Index Fund S&P 500/R/ Index ----------------- ---------------- 12/31/1992 $10,000 $10,000 12/31/1993 10,953 11,008 12/31/1994 11,069 11,153 12/31/1995 15,074 15,346 12/31/1996 18,435 18,871 12/31/1997 24,410 25,166 12/31/1998 31,326 32,359 12/31/1999 37,719 39,164 12/31/2000 34,313 35,596 12/31/2001 30,189 31,363 12/31/2002 23,484 24,429 C-7 The Equity Index Fund is a portfolio of 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 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 December 31, 2002, the sector allocation of net assets was: [CHART] Pharmaceuticals 12% Banking 8% Retailers 6% Financial Services 6% Beverages, Food & Tobacco 6% Oil & Gas 6% Computer Software & Processing 6% Insurance 5% Computers & Information 5% Industrial - Diversified 4% Telephone Systems 4% Other 32% C-8 SELECT INVESTMENT GRADE INCOME FUND The Select Investment Grade Income Fund returned 8.14% for 2002, underperforming its benchmark, the Lehman Brothers Aggregate Bond Index, which returned 10.27%. Corporate scandals, massive bankruptcies and negative stock market news dominated the business headlines during 2002, but the good news for fixed-income investors was the sustained bond market rally that produced sound returns for the period. Cautious optimism led many investors to believe that the Federal Reserve Board's easing cycle was over, as it shifted from an easing bias to a neutral stance. By mid-year, however, much of the incoming economic data turned softer, and the equity markets were roiled by lower profit reports and new scandals. In November, the Federal Reserve Board reduced the target federal funds rate to a low 1.25%. The underperformance of the fund to its benchmark was largely driven by an overweight position in corporate bonds, primarily in the utility sector, which performed poorly. One bright spot was the performance of the mortgage-backed securities portion of the fund. Going forward, the Investment Sub-Adviser intends to add exposure in select areas of the market that may enjoy stable ratings and improving fundamentals. The Investment Sub-Adviser believes that interest rates will not go much lower and that the Federal Reserve Board's actions may produce positive results in the coming year. The Investment Sub-Adviser believes that there may be reasons to shorten durations in the fund, but that with the potential for war looming large in 2003, geopolitical risk remains in the forefront of investors' concerns. Consequently, the Investment Sub-Adviser intends to keep the duration of the fund just below the benchmark duration. Average Annual Total Returns
1 Year 5 Years 10 Years ------ ------- -------- Select Investment Grade Income Fund.................... 8.14% 6.60% 7.06% Lehman Brothers Aggregate Bond Index................... 10.27% 7.54% 7.51% Lipper Intermediate Investment Grade Debt Funds Average 8.61% 6.50% 6.79%
Growth of a $10,000 Investment Since 1992 [CHART] Select Investment Lehman Brothers Grade Income Fund Aggregate Bond Index ----------------- -------------------- 12/31/1992 10,000 10,000 12/31/1993 11,080 10,976 12/31/1994 10,752 10,656 12/31/1995 12,670 12,624 12/31/1996 13,121 13,081 12/31/1997 14,361 14,347 12/31/1998 15,506 15,592 12/31/1999 15,355 15,463 12/31/2000 16,940 17,261 12/31/2001 18,285 18,716 12/31/2002 19,774 20,638 C-9 The Select Investment Grade Income Fund is a portfolio of 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 Opus Investment Management, Inc. (formerly 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 December 31, 2002, the sector allocation of net assets was: [CHART] U.S. Government Agency Mortgage-Backed Securities 31% U.S. Government & Agency Obligations 29% Corporate Notes & Bonds 28% Asset-Backed & Mortgage-Backed Securities 6% Foreign Bonds 2% Foreign Government Obligations 2% Other 2% 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% 2002 -27.60% 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 Past (for the periods ending December 31, 2002) One Year Five Years Ten Years ------------------------------------------ -------- ---------- --------- Fund Shares........................ (27.60)% (4.66)% 4.78% S&P 500 Index*..................... (22.10)% (0.59)% 9.34% Russell 1000 Growth Index**........ (27.89)% (3.84)% 6.71%
- -------- * The S&P 500 Index(R) is an unmanaged index of 500 leading stocks. S&P 500(R) Index is a registered trademark of McGraw-Hill Companies, Inc. ** 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% 2002 -19.37% During the period shown above the highest quarterly return was 20.89% for the quarter ended 12/31/99 and the lowest was (21.48)% for the quarter ended 09/30/02. Performance Table
Average Annual Total Returns Past Past Since Inception (for the periods ending December 31, 2002) One Year Five Years (May 2, 1994) ------------------------------------------ -------- ---------- --------------- Fund Shares.............................. (19.37)% (2.44)% 3.09% Morgan Stanley Capital Intl. EAFE Index*. (15.66)% (2.61)% 0.66%
- -------- * 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] 1993 9.53% 1994 1.06% 1995 36.18% 1996 22.30% 1997 32.41% 1998 28.33% 1999 20.41% 2000 -9.03% 2001 -12.02% 2002 -22.22% During the period shown above the highest quarterly return was 21.41% for the quarter ended 12/31/98 and the lowest was (17.18)% for the quarter ended 9/30/02. Performance Table
Average Annual Total Returns Past Past Past (for the periods ending December 31, 2002) One Year Five Years Ten Years ------------------------------------------ -------- ---------- --------- Fund Shares................. (22.22)% (0.77)% 8.91% S&P 500 Index*.............. (22.10)% (0.59)% 9.34%
- -------- * The S&P 500 Index(R) is an unmanaged index of 500 leading stocks. S&P 500(R) Index is a registered trademark of McGraw-Hill Companies, Inc. 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 [CHART] 1993 10.80% 1994 -2.96% 1995 17.84% 1996 3.56% 1997 9.45% 1998 7.97% 1999 -0.97% 2000 10.31% 2001 7.94% 2002 8.14% 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, 2002) One Year Five Years Ten Years - ------------------------------------------ -------- ---------- --------- Fund Shares............................. 8.14% 6.60% 7.06% Lehman Brothers Aggregate Bond Index*... 10.27% 7.54% 7.51%
- -------- * 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. 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. ALLMERICA INVESTMENT TRUST FINANCIAL HIGHLIGHTS--For a Share Outstanding Throughout Each Period
Income from Investment Operations Less Distributions -------------------------------------------- ---------------------------------------------------- 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 Growth Fund(1) 2002 $1.576 $ 0.001 $(0.436) $(0.435) $(0.002) $ -- $(0.002) $(0.437) 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 -- (2) (0.023) (0.023) 0.617 Select International Equity Fund(1) 2002 $1.113 $ 0.013 $(0.226) $(0.213) $(0.017) $(0.009) $(0.026) $(0.239) 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 Equity Index Fund(1) 2002 $2.715 $ 0.027 $(0.616) $(0.589) $(0.028) $(0.154) $(0.182) $(0.771) 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 Select Investment Grade Income Fund(3) 2002 $1.106 $ 0.054 $ 0.034 $ 0.088 $(0.060) $ -- $(0.060) $ 0.028 2001 1.086 0.064(4) 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
- -------- (A)Including reductions. (B)Excluding reductions. Certain Funds have entered varying arrangements with brokers who reduced a portion of the Fund's expenses. (1)Net investment income (loss) per share before reductions were less than $0.013 in 2002, less than $0.018 in 2001, less than $0.013 in 2000, $0.011 in 1999, and less than $0.014 in 1998 for Select International Equity Fund; $0.000 in 2002, $0.001 in 2001, $(0.002) in 2000, $(0.003) in 1999, and $0.001 in 1998 for Select Growth Fund; and less than $0.027 in 2002, $0.029 in 2001 and less than $0.032 in 2000 for Equity Index Fund. (2)Dividends from net investment income are less than $0.0005. (3)Effective January 1, 2001, the Select Investment Grade Income Fund 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. (4)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 --------- ------ ---------- -------------- ---- ---- ---------- --------- $1.139 (27.60)% $ 375,959 0.05% 0.95% 1.01% 0.82% 125% 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% $0.874 (19.37)% $ 335,890 1.17% 1.13% 1.14% 0.91% 14% 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% $1.944 (22.22)% $ 342,683 1.16% 0.45% 0.47% 0.28% 10% 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% $1.134 8.14% $ 620,074 4.85% 0.58% 0.58% 0.41% 130% 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%
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, VeraVest 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 Manager's or the sub-adviser's 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 Fund's 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 Fund's recognition of ordinary income and may affect the timing or amount of the Fund's distributions. D-7 AIT ALLMERICA INVESTMENT TRUST FORM N-14 PART B STATEMENT OF ADDITIONAL INFORMATION February 26, 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 a series of Allmerica Investment Trust, a Massachusetts business trust. Similarly, each of the Select Growth Fund, International Equity Fund, Equity Index Fund, and Investment Grade Income Fund (collectively the "Acquiring Funds") is 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 February 26, 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 1-800-828-0540. 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 Report of the Acquiring Funds for the year ended December 31, 2002 and (ii) the Annual Report of the Acquired Funds for the year ended December 31, 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 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 year ended December 31, 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 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 year ended December 31, 2002, the proposed reorganization would result in a decrease of $13,180 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 $46,500 on a pro forma basis for the year ended December 31, 2002. These pro forma adjustments are reflected in the information presented below. The Acquired Funds of Proposal #1, Proposal #2, Proposal #3, and Proposal #5 and both the Acquired Fund and Acquiring Fund of Proposal #4 will bear the costs of the reorganizations, including costs of solicitation, subject to certain limited exceptions. The estimated costs for all five proposals are expected to total $320,000 and will include proxy processing, printing, mailing, legal, and audit fees and expenses. The Acquired Fund's portion of the total estimated reorganization costs is $5,154; this represents 0.02% of the average net assets for year ended December 31, 2002 of the Acquired Fund. For the year ended December 31, 2002, the total expenses of the Acquired Fund exceed the Acquired Fund's voluntary expense limitation; therefore, the Manager will voluntarily reimburse expenses that exceed the expense limitation of 1.20% of the Acquired Fund's average daily net assets. None of the securities held by the Acquired Fund will have to be sold in connection with the merger for the purpose of complying with the investment policies or limitations of the Acquiring Fund. The merger is expected to be tax free for federal income tax purposes. This means that no gain or loss will be recognized by the Acquired Fund or its shareholders as a 3 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. At December 31, 2002, the Acquired Fund had total capital loss carryforwards of $30,296,162; of this amount, $3,578,956 will be available to offset future capital gains, if any, in the Acquiring Fund. For the Year Ended December 31, 2002
Select Growth Fund Select Strategic Select Growth Pro Forma Growth Fund Fund Combined ---------------- ------------- ------------- Net Assets, end of period (000's) $19,076 $375,959 $395,089 Total Return..................... (46.38)% (27.60)% (28.46)% Ratios to Average Net Assets: Net Investment Income (Loss).. (1.13)% 0.05% 0.00% Operating Expenses/1/......... 1.18% 0.95% 0.95% Operating Expenses/2/......... 1.20% 1.01% 1.01% Operating Expenses/3/......... 1.33% 1.01% 1.01% Management Fees--Gross........ 0.85% 0.82% 0.82% Management Fees--Net.......... 0.73% 0.82% 0.82%
- -------- /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 period indicated. The unaudited pro forma information set forth above should be read in conjunction with the annual audited financial statements for the year ended December 31, 2002. 4 PROPOSAL #2 PRO FORMA FINANCIAL INFORMATION The unaudited pro forma information set forth below for the year ended December 31, 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 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 1.15% 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 year ended December 31, 2002, the proposed reorganization would result in a decrease of $174,871 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 $39,800 on a pro forma basis for the year ended December 31, 2002. These pro forma adjustments are reflected in the information presented below. The Acquired Funds of Proposal #1, Proposal #2, Proposal #3, and Proposal #5 and both the Acquired Fund and Acquiring Fund of Proposal #4 will bear the costs of the reorganizations, including costs of solicitation, subject to certain limited exceptions. The estimated costs for all five proposals are expected to total $320,000 and will include proxy processing, printing, mailing, legal, and audit fees and expenses. The Acquired Fund's portion of the total estimated reorganization costs is $11,203; this represents 0.02% of the average net assets for year ended December 31, 2002 of the Acquired Fund. None of the securities held by the Acquired Fund will have to be sold in connection with the merger for the purpose of complying with the investment policies or limitations of the Acquiring Fund. The merger is expected to be tax free for federal income tax purposes. This means that no gain or loss will be recognized by the 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. At December 31, 2002, the Acquired Fund had total capital loss carryforwards of $22,057,610; of this amount, $10,806,830 will be available to offset future capital gains, if any, in the Acquiring Fund. 5 For the Year Ended December 31, 2002
Select International Select Emerging Select International Equity Fund Pro Markets Fund Equity Fund Forma Combined --------------- -------------------- --------------- Net Assets, end of period (000's) $52,032 $335,890 $388,125 Total Return..................... (10.67)% (19.37)% (18.33)% Ratios to Average Net Assets: Net Investment Income (Loss)...................... (0.15)% 1.17% 1.06% Operating Expenses/2/......... 1.71% 1.13% 1.15% Operating Expenses/3/......... 1.76% 1.14% 1.17% Operating Expenses/4/......... 1.76% 1.14% 1.17% Management Fees--Gross........ 1.25%(1) 0.91% 0.91% Management Fees--Net.......... 1.25%(1) 0.91% 0.91%
- -------- /1/ Effective July 1, 2002, the management fee for Select Emerging Markets Fund was reduced from 1.35% to 1.15%. /2/ Including fee reimbursements from the manager and reductions. /3/ Excluding reductions. Certain Funds have entered into varying arrangements with brokers who reduced a portion of the Fund's expenses. /4/ 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 period indicated. The unaudited pro forma information set forth above should be read in conjunction with the annual audited financial statements for the year ended December 31, 2002. 6 PROPOSAL #3 PRO FORMA FINANCIAL INFORMATION The unaudited pro forma information set forth below for the year ended December 31, 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 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 year ended December 31, 2002, the proposed reorganization would result in a decrease of $2,035,451 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 $17,000 on a pro forma basis for the year ended December 31, 2002. These pro forma adjustments are reflected in the information presented below. The Acquired Funds of Proposal #1, Proposal #2, Proposal #3, and Proposal #5 and both the Acquired Fund and Acquiring Fund of Proposal #4 will bear the costs of the reorganizations, including costs of solicitation, subject to certain limited exceptions. The estimated costs for all five proposals are expected to total $320,000 and will include proxy processing, printing, mailing, legal, and audit fees and expenses. The Acquired Fund's portion of the total estimated reorganization costs is $95,594; this represents 0.02% of the average net assets for year ended December 31, 2002 of the Acquired Fund. None of the securities held by the Acquired Fund will have to be sold in connection with the merger for the purpose of complying with the investment policies or limitations of the Acquiring Fund. The merger is expected to be tax free for federal income tax purposes. This means that no gain or loss will be recognized by the 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. At 7 December 31, 2002, the Acquired Fund had total capital loss carryforwards of $183,896,382; of this amount, $63,248,491 will be available to offset future capital gains, if any, in the Acquiring Fund. For the Year Ended December 31, 2002
Equity Index Fund Select Growth and Equity Index Pro Forma Income Fund Fund Combined ----------------- ------------ ------------ Net Assets, end of period (000's) $332,168 $342,683 $676,807 Total Return..................... (25.31)% (22.22)% (23.76)% Ratios to Average Net Assets: Net Investment Income (Loss).. 0.64% 1.16% 1.11% Operating Expenses/1/......... 0.86% 0.45% 0.44% Operating Expenses/2/......... 0.86% 0.47% 0.45% Operating Expenses/3/......... 0.86% 0.47% 0.45% Management Fees--Gross........ 0.69% 0.28% 0.27% Management Fees--Net.......... 0.69% 0.28% 0.27%
- -------- /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 period indicated. The unaudited pro forma information set forth above should be read in conjunction with the annual audited financial statements for the year ended December 31, 2002. 8 PROPOSAL #4 PRO FORMA FINANCIAL INFORMATION The unaudited pro forma information set forth below for the year ended December 31, 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 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 year ended December 31, 2002, the proposed reorganization would result in a decrease of $614,308 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 $13,700 on a pro forma basis for the year ended December 31, 2002. These pro forma adjustments are reflected in the information presented below. The Acquired Funds of Proposal #1, Proposal #2, Proposal #3, and Proposal #5 and both the Acquired Fund and Acquiring Fund of Proposal #4 will bear the costs of the reorganizations, including costs of solicitation, subject to certain limited exceptions. The estimated costs for all five proposals are expected to total $320,000 and will include proxy processing, printing, mailing, legal, and audit fees and expenses. The Acquired Fund's portion and the Acquiring Fund's portion of the total estimated reorganization costs is $80,136 and $106,664, respectively; this represents 0.02% of the average net assets for year ended December 31, 2002 of each Fund. None of the securities held by the Acquired Fund will have to be sold in connection with the merger for the purpose of complying with the investment policies or limitations of the Acquiring Fund. The merger is expected to be tax free for federal income tax purposes. This means that no gain or loss will be recognized by the 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 9 Fund shareholders held in their Acquired Fund shares immediately before the merger. At December 31, 2002, the Acquired Fund had total capital loss carryforwards of $396,980,827; of this amount, $55,736,537 will be available to offset future capital gains, if any, in the Acquiring Fund. For the Year Ended December 31, 2002
Select Growth Select Aggressive Select Growth Fund Pro Forma Growth Fund Fund Combined ----------------- ------------- -------------- Net Assets, end of period (000's) $286,095 $375,959 $662,495 Total Return..................... (28.86)% (27.60)% (28.12)% Ratios to Average Net Assets: Net Investment Income (Loss).. (0.37)% 0.05% (0.08)% Operating Expenses/1/......... 1.07% 0.95% 0.95% Operating Expenses/2/......... 1.09% 1.01% 0.99% Operating Expenses/3/......... 1.09% 1.01% 0.99% Management Fees--Gross........ 0.89% 0.82% 0.78% Management Fees--Net.......... 0.89% 0.82% 0.78%
- -------- /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 period indicated. The unaudited pro forma information set forth above should be read in conjunction with the annual audited financial statements for the year ended December 31, 2002. 10 PROPOSAL #5 PRO FORMA FINANCIAL INFORMATION The unaudited pro forma information set forth below for the year ended December 31, 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 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 year ended December 31, 2002, the proposed reorganization would result in a decrease of $163,226 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 $27,700 on a pro forma basis for the year ended December 31, 2002. These pro forma adjustments are reflected in the information presented below. The Acquired Funds of Proposal #1, Proposal #2, Proposal #3, and Proposal #5 and both the Acquired Fund and Acquiring Fund of Proposal #4 will bear the costs of the reorganizations, including costs of solicitation, subject to certain limited exceptions. The estimated costs for all five proposals are expected to total $320,000 and will include proxy processing, printing, mailing, legal, and audit fees and expenses. The Acquired Fund's portion of the total estimated reorganization costs is $21,249; this represents 0.02% of the average net assets for year ended December 31, 2002 of the Acquired Fund. None of the securities held by the Acquired Fund will have to be sold in connection with the merger for the purpose of complying with the investment policies or limitations of the Acquiring Fund. The merger is expected to be tax free for federal income tax purposes. This means that no gain or loss will be recognized by the 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. 11 For the Year Ended December 31, 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) $146,458 $620,074 $766,702 Total Return..................... 8.92% 8.14% 8.25% Ratios to Average Net Assets: Net Investment Income (Loss).. 3.59% 4.85% 4.69% Operating Expenses/1/......... 0.84% 0.58% 0.59% Operating Expenses/2/......... 0.84% 0.58% 0.59% Operating Expenses/3/......... 0.84% 0.58% 0.59% Management Fees--Gross........ 0.56% 0.41% 0.41% Management Fees--Net.......... 0.56% 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 period indicated. The unaudited pro forma information set forth above should be read in conjunction with the annual audited financial statements for the year ended December 31, 2002. 12 PROPOSALS #1 AND #4 PRO FORMA FINANCIAL INFORMATION The unaudited pro forma information set forth below for the year ended December 31, 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 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 year ended December 31, 2002, the proposed reorganization would result in a decrease of $652,174 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 $60,200 on a pro forma basis for the year ended December 31, 2002. These pro forma adjustments are reflected in the information presented below. The Acquired Funds of Proposal #1, Proposal #2, Proposal #3, and Proposal #5 and both the Acquired Fund and Acquiring Fund of Proposal #4 will bear the costs of the reorganizations, including costs of solicitation, subject to certain limited exceptions. The estimated costs for all five proposals are expected to total $320,000 and will include proxy processing, printing, mailing, legal, and audit fees and expenses. The portion of the total estimated reorganization costs for Select Strategic Growth Fund, Select Aggressive Growth Fund, and the Acquiring Fund is $5,154, 80,136, and $106,664, respectively; this represents 0.02% of the average net assets for year ended December 31, 2002 of each Fund. For the year ended December 31, 2002, the total expenses of the Select Strategic Growth Fund exceed the Fund's voluntary expense limitation; therefore, the Manager will voluntarily reimburse expenses that exceed the expense limitation of 1.20% of the Select Strategic Growth Fund's average daily net assets. 13 None of the securities held by the Acquired Fund will have to be sold in connection with the merger for the purpose of complying with the investment policies or limitations of the Acquiring Fund. The merger is expected to be tax free for federal income tax purposes. This means that no gain or loss will be recognized by the Acquired Funds or their shareholders as a result of the merger. The aggregate tax basis of the Acquiring Fund shares received by the shareholders of the Acquired Funds will be the same as the aggregate tax basis the shareholders of the Acquired Funds held in their shares of the Acquired Funds immediately before the merger. At December 31, 2002, Select Strategic Growth Fund and Select Aggressive Growth Fund had total capital loss carryforwards of $30,296,162 and $396,980,827, respectively; of these amounts, $3,578,956 and $55,736,537, respectively, will be available to offset future capital gains, if any, in the Acquiring Fund. For the Year Ended December 31, 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).................... $19,076 $286,095 $375,959 $681,651 Total Return (Not Annualized) (28.86)% (46.38)% (27.60)% (28.61)% Ratios to Average Net Assets (Annualized): Net Investment Income (Loss).................. (1.13)% (0.37)% 0.05% (0.10)% Operating Expenses/1/..... 1.18% 1.07% 0.95% 0.95% Operating Expenses/2/..... 1.20% 1.09% 1.01% 0.99% Operating Expenses/3/..... 1.33% 1.09% 1.01% 0.99% Management Fees--Gross.... 0.85% 0.89% 0.82% 0.78% Management Fees--Net...... 0.73% 0.89% 0.82% 0.78%
- -------- /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 period indicated. The unaudited pro forma information set forth above should be read in conjunction with the annual audited financial statements for the year ended December 31, 2002. 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)(i) 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.
C-1 Exhibit 6(b)(ii) Form of Sub-Adviser Agreement between the Manager, Schroder Investment Management North America Inc. and Schroder Investment Managerment North America Ltd. with respect to the Select Emerging Markets Fund dated , 2003--filed herewith. 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. 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.
C-2 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. Exhibit 6(k) Form of Sub-Adviser Agreement between the Manager and Jennison Associates LLC with respect to the Select Growth Fund dated , 2003--filed herewith. 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 was filed previously in the Registration Statement on Form N-14 on January 17, 2003 and is incorporated herein by reference. 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.
C-3 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 was filed previously in the Registration Statement on Form N-14 on January 17, 2003 and is incorporated herein by reference. 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. 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 20th day of February, 2003. ALLMERICA INVESTMENT TRUST By: * ----------------------------- 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 --------- ----- ---- * President (Chief Executive February 20, 2003 - ----------------------- Officer), Chairman of John P. Kavanaugh the Board and Trustee /S/ PAUL T. KANE Treasurer (Principal February 20, 2003 - ----------------------- Accounting Officer, Paul T. Kane Principal Financial Officer) * Trustee February 20, 2003 - ----------------------- P. Kevin Condron * Trustee February 20, 2003 - ----------------------- Joceyln S. Davis * Trustee February 20, 2003 - ----------------------- Cynthia A. Hargadon * Trustee February 20, 2003 - ----------------------- T. Britton Harris, IV * Trustee February 20, 2003 - ----------------------- Gordon Holmes C-5 Signature Title Date --------- ----- ---- * Trustee February 20, 2003 - ----------------------- Mark A. Hug * Trustee February 20, 2003 - ----------------------- Attiat F. Ott * Trustee February 20, 2003 - ----------------------- Ranne P. Warner By: /s/ Paul T. Kane, as - ----------------------- Attorney-in-fact pursuant to Power of Attorney filed herewith C-6 EXHIBIT INDEX
Number Description ------ ----------- Exhibit 6(b)(ii) Form of Sub-Adviser Agreement Exhibit 6(k) Form of Sub-Adviser Agreement Exhibit 14 Consent of Independent Accountants
ALLMERICA INVESTMENT TRUST PROXY TABULATOR P.O. BOX 9132 HINGHAM, MA 02043-9132 PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES ALLMERICA INVESTMENT TRUST TRUST NAME PRINTS HERE FUND NAME PRINTS HERE 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 Strategic Growth Fund, Select Emerging Markets Fund, Select Growth and Income Fund, Select Aggressive Growth Fund, and Select Strategic Income Fund, five series of Allmerica Investment Trust, to be held at 9:00 a.m. local time on Thursday, March 27, 2003, at 440 Lincoln Street, Worcester, Massachusetts 01653, and at any adjournment thereof, 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 Prospectus/Proxy Statement and revokes any proxy heretofore given with respect to the vote 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 fill in box(es) as shown using black or blue ink or number 2 pencil. PLEASE DO NOT USE FINE POINT PENS. 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 proposals. 1. To approve the Agreement and Plan of Reorganization for the Select Strategic Growth Fund to merge with and into the Select Growth Fund. (To be voted by Select Strategic Growth Fund.) APPROVE DISAPPROVE ABSTAIN 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. (To be voted by Select Emerging Markets Fund.) APPROVE DISAPPROVE ABSTAIN 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. (To be voted by Select Growth and Income Fund.) APPROVE DISAPPROVE ABSTAIN 4. To approve the Agreement and Plan of Reorganization for the Select Aggressive Growth Fund to merge with and into the Select Growth Fund. (To be voted by Select Aggressive Growth Fund.) APPROVE DISAPPROVE ABSTAIN 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. (To be voted by Select Strategic Income Fund.) APPROVE DISAPPROVE ABSTAIN 6. In their discretion, the named proxies are authorized to vote such other business as may properly come before the Meeting, or any adjournments thereof. AIT EX-99.6(B)(II) 3 dex996bii.txt FORM OF SUBADVISER AGREEMENT WITH SCHRODER Exhibit 6(b)(ii) FORM OF SUB-ADVISER AGREEMENT SUB-ADVISER AGREEMENT executed as of , 2003 by and among Allmerica Financial Investment Management Services, Inc. (the "Manager") Schroder Investment Management North America Inc. (the "Sub-Adviser"), and Schroder Investment North America Ltd. ("SIMNA Ltd."). WITNESSETH: That in consideration of the mutual covenants herein contained, it is agreed as follows: 1. SERVICES TO BE RENDERED BY SUB-ADVISER TO THE TRUST (a) Subject always to the control of the Trustees of Allmerica Investment Trust (the "Trust"), a Massachusetts business trust, the Sub-Adviser, at its expense, will furnish continuously an investment program for the following series of shares of the Trust: the Select Strategic Income Fund (the "Fund") and such other series of shares as the Trust, the Manager and the Sub-Adviser may from time to time agree on (together, the "Funds"). The Sub-Adviser will make investment decisions on behalf of the Fund and place all orders for the purchase and sale of portfolio securities. In the performance of its duties, the Sub-Adviser will comply with the provisions of the Agreement and Declaration of Trust and Bylaws of the Trust and the objectives and policies of the Fund, as set forth in the current Registration Statement of the Trust filed with the Securities and Exchange Commission ("SEC") and any applicable federal and state laws, and will comply with other policies which the Trustees of the Trust (the "Trustees") or the Manager, as the case may be, may from time to time determine and which are furnished to the Sub-Adviser in writing. The Sub-Adviser shall make its officers and employees available to the Manager from time to time at reasonable times to review investment policies of the Fund and to consult with the Manager regarding the investment affairs of the Fund. In the performance of its duties hereunder, the Sub-Adviser is and shall be an independent contractor and, unless otherwise expressly provided or authorized, shall have no authority to act for or represent the Trust in any way or otherwise be deemed to be an agent of the Trust. (b) The Sub-Adviser, at its expense, will furnish (i) all investment and management facilities, including salaries of personnel necessary for it to perform the duties set forth in this Agreement, and (ii) administrative facilities, including clerical personnel and equipment necessary for the conduct of its investment activities for the Fund (excluding brokerage expenses and pricing and bookkeeping services). (c) The Sub-Adviser shall place all orders for the purchase and sale of portfolio investments for the Fund with issuers, brokers or dealers selected by the Sub-Adviser which may include brokers or dealers affiliated with the Sub-Adviser. In the selection of such brokers or dealers and the placing of such orders, the Sub-Adviser always shall seek best execution (except to the extent permitted by the next sentence hereof), which is to place portfolio transactions where the Fund can obtain the most favorable combination of price and execution services in particular transactions or provided on a continuing basis by a broker or dealer, and to deal directly with a principal market maker in connection with over-the-counter transactions, except when it is believed that best execution is obtainable elsewhere. Subject to such policies as the Trustees may determine, the Sub-Adviser shall not be deemed to have acted unlawfully or to have breached any duty created by this Agreement or otherwise solely by reason of its having caused the Trust to pay a broker or dealer that provides brokerage and research services an amount of commission for effecting a portfolio investment transaction in excess of the amount of commission another broker or dealer would have charged for effecting that transaction, if the Sub-Adviser determines in good faith that such excess amount of commission was reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of either that particular transaction or the overall responsibilities of the Sub-Adviser and its affiliates with respect to the Trust and to other clients of the Sub-Adviser as to which Sub-Adviser or any affiliate of the Sub-Adviser exercises investment discretion. (d) The Sub-Adviser may from time to time delegate to SIMNA Ltd. any or all of the responsibilities of the Sub-Adviser hereunder; provided, however, that the Sub-Adviser shall be liable under this Agreement for any acts or omissions of SIMNA Ltd. to the same extent as if such acts or omissions were committed by the Sub-Adviser itself. (e) In addition to being registered as an investment adviser in the United States, SIMNA Ltd. is regulated in the conduct of its investment business in the United Kingdom by the Investment Management Regulatory Organization Limited ("IMRO"). The Sub-Adviser and SIMNA Ltd. confirm that the Trust is a Non-private Customer as defined by IMRO. 2. OTHER AGREEMENTS It is understood that any of the shareholders, Trustees, officers and employees of the Trust may be a shareholder, partner, director, officer or employee of, or be otherwise interested in, the Sub-Adviser, and in any person controlling, controlled by or under common control with the Sub-Adviser, and that the Sub-Adviser and any person controlling, controlled by or under common control with the Sub-Adviser may have an interest in the Trust. It is also understood that the Sub-Adviser and persons controlling, controlled by or under common control with the Sub-Adviser have and may have advisory, management service or other contracts with other organizations and persons, and may have other interests and businesses. 2 3. COMPENSATION TO BE PAID BY THE MANAGER TO THE SUB-ADVISER The Manager will pay to the Sub-Adviser as compensation for the Sub-Adviser's services rendered a fee, determined as described in Schedule A, which is attached hereto and made a part hereof. Such fee shall be paid by the Manager and not by the Trust. The Sub-Adviser shall compensate SIMNA Ltd. for all reasonable direct and indirect costs associated with SIMNA Ltd.'s performance of services hereunder. In no event shall SIMNA Ltd. be entitled to any compensation hereunder from any person other than the Sub-Adviser (including without limitation the Manager or the Trust). 4. AMENDMENTS OF THIS AGREEMENT This Agreement (including Schedule A attached hereto) shall not be amended as to any Fund unless such amendment is approved at a meeting by the affirmative vote of a majority of the outstanding voting securities of the Fund, if such approval is required under the Investment Company Act of 1940, as amended ("1940 Act"), and by the vote, cast in person at a meeting called for the purpose of voting on such approval, of a majority of the Trustees who are not interested persons of the Trust, of the Manager, of the Sub-Adviser or of SIMNA Ltd. 5. EFFECTIVE PERIOD AND TERMINATION OF THIS AGREEMENT This Agreement shall be effective as of the date executed, and shall remain in full force and effect as to each Fund continuously thereafter, until terminated as provided below: (a) Unless terminated as herein provided, this Agreement shall remain in full force and effect through May 30, 2003 and shall continue in full force and effect for successive periods of one year thereafter, but only so long as such continuance is specifically approved at least annually (i) by the Trustees or by the affirmative vote of a majority of the outstanding voting securities of the Fund, and (ii) by a vote of a majority of the Trustees who are not interested persons of the Trust, of the Manager, of any Sub-Adviser or of SIMNA Ltd., by vote cast in person at a meeting called for the purpose of voting on such approval; provided, however, that if the continuance of this Agreement is submitted to the shareholders of the Fund for their approval and such shareholders fail to approve such continuance of this Agreement as provided herein, the Sub-Adviser may continue to serve hereunder in a manner consistent with the 1940 Act and the rules and regulations thereunder. (b) This Agreement may be terminated as to any Fund without the payment of any penalty by the Manager, subject to the approval of the Trustees, by vote of the Trustees, or by vote of a majority of the outstanding voting securities of such Fund at any annual or special meeting or by the Sub-Adviser, in each case on sixty days' written notice. (c) This Agreement shall terminate automatically, without the payment of any penalty, in the event of its assignment or in the event that the Management Agreement with the Manager shall have terminated for any reason. 3 (d) In the event of termination of this Agreement, the Fund will no longer use the name "Schroder", "Schroder Investment Management North America Inc." or "Schroder Investment Management North America Ltd." in materials relating to the Fund except as may be required by the 1940 Act and the rules and regulations thereunder. 6. CERTAIN DEFINITIONS For the purposes of this Agreement, the "affirmative vote of a majority of the outstanding voting securities" means the affirmative vote, at a duly called and held meeting of shareholders, (a) of the holders of 67% or more of the shares of the Fund present (in person or by proxy) and entitled to vote at such meeting, if the holders of more than 50% of the outstanding shares of the Fund entitled to vote at such meeting are present in person or by proxy, or (b) of the holders of more than 50% of the outstanding shares of the Fund entitled to vote at such meeting, whichever is less. For the purposes of this Agreement, the terms "control", "interested person" and "assignment" shall have their respective meanings defined in the 1940 Act and rules and regulations thereunder, subject, however, to such exemptions as may be granted by the SEC under said Act; the term "specifically approve at least annually" shall be construed in a manner consistent with the 1940 Act and the rules and regulations thereunder; and the term "brokerage and research services" shall have the meaning given in the Securities Exchange Act of 1934 and the rules and regulations thereunder. 7. NON-LIABILITY OF SUB-ADVISER The Sub-Adviser and SIMNA Ltd. shall be under no liability to the Trust, the Manager or the Trust's Shareholders or creditors for any matter or thing in connection with the performance of any of the Sub-Adviser's or SIMNA Ltd.'s services hereunder or for any losses sustained or that may be sustained in the purchase, sale or retention of any investment for the Funds of the Trust made by them in good faith; provided, however, that nothing herein contained shall be construed to protect the Sub-Adviser or SIMNA Ltd. against any liability to the Trust by reason of the Sub-Adviser's or SIMNA Ltd.'s own willful misfeasance, bad faith or gross negligence in the performance of their duties or by reason of their reckless disregard of their obligations and duties hereunder. 8. LIMITATIONS OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS A copy of the Trust's Agreement and Declaration of Trust is on file with the Secretary of the Commonwealth of Massachusetts, and notice is hereby given that this instrument is executed by the Trustees as Trustees and not individually and that the obligations of this instrument are not binding upon any of the Trustees, officers or shareholders individually but are binding only upon the assets and property of the appropriate Fund. 4 IN WITNESS WHEREOF, Allmerica Financial Investment Management Services, Inc. has caused this instrument to be signed in duplicate on its behalf by its duly authorized representative, Schroder Investment Management North America Inc. has caused this instrument to be signed in duplicate on its behalf by its duly authorized representative, and Schroder Investment Management North America Ltd. has caused this instrument to be signed in duplicate on its behalf by its duly authorized representative, all as of the day and year first above written. Allmerica Financial Investment Management Services, Inc. By: ---------------------------- Title: ---------------------------- Schroder Investment Management North America Inc. By: ---------------------------- Title: ---------------------------- Schroder Investment Management North America Ltd. By: ---------------------------- Title: ---------------------------- Accepted and Agreed to as of the day and year first above written: ALLMERICA INVESTMENT TRUST By: ---------------------------- Title: ---------------------------- 5 SCHEDULE A Effective as , 2003 The Manager will pay to the Sub-Adviser as full compensation for the Sub-Adviser's services rendered, a fee computed daily and paid quarterly at an annual rate of the average daily net assets of the Fund as described below: Net Assets Fee Rate ---------- -------- First $50 million ......... 0.80% Next $50 million .......... 0.70% Over $100 million ......... 0.60% The average daily net assets of the Fund shall be determined by taking an average of all of the determinations of net asset value during each month at the close of business on each business day during such month while this Agreement is in effect. The fee for each quarter shall be payable within ten (10) business days after the end of the quarter. If the Sub-Adviser shall serve for any period less than a full month, the foregoing compensation shall be prorated according to the proportion which such period bears to a full month. 6 EX-99.6(K) 4 dex996k.txt FORM OF SUBADVISER AGREEMENT WITH JENNISON Exhibit 6(k) FORM OF SUB-ADVISER AGREEMENT SUB-ADVISER AGREEMENT executed as of , 2003, between Allmerica Financial Investment Management Services, Inc. (the "Manager") and Jennison Associates LLC (the "Sub-Adviser"). WITNESSETH: That in consideration of the mutual covenants herein contained, it is agreed as follows: 1. SERVICES TO BE RENDERED BY SUB-ADVISER TO THE TRUST (a) Subject always to the control of the Trustees of Allmerica Investment Trust (the "Trust"), a Massachusetts business trust, the Sub-Adviser, at its expense, will furnish continuously an investment program for the following series of shares of the Trust: the Select Growth Fund (the "Fund") and such other series of shares as the Trust, the Manager and the Sub-Adviser may from time to time agree on (together, the "Funds"). The Sub-Adviser acknowledges the Fund may have one or more other sub-advisers and that the Manager shall from time to time determine the portion of the Fund's assets to be managed by the Sub-Adviser (the "Sub-Adviser's Portion"). The Sub-Adviser will make investment decisions on behalf of the Sub-Adviser's Portion and place all orders for the purchase and sale of portfolio securities. In the performance of its duties, the Sub-Adviser will comply with the provisions of the Agreement and Declaration of Trust and Bylaws of the Trust and the objectives and policies of the Fund, as set forth in the current Registration Statement of the Trust filed with the Securities and Exchange Commission ("SEC") and any applicable federal and state laws, and will comply with other policies which the Trustees of the Trust (the "Trustees") or the Manager, as the case may be, may from time to time determine and which are furnished to the Sub-Adviser including, if requested by the Manager, managing the Sub-Adviser's Portion as if it were a separate investment company for the purposes of determining compliance with the provisions of the Agreement and Declaration of Trust and Bylaws of the Trust and the objectives and policies of the Fund, as set forth in the current Registration Statement of the Trust filed with the SEC and any applicable federal and state laws, and other policies which the Trustees of the Trust or the Manager may furnish to the Sub-Adviser. The Sub-Adviser shall make its officers and employees available to the Manager from time to time at reasonable times to review investment policies of the Fund and to consult with the Manager regarding the investment affairs of the Fund. In the performance of its duties hereunder, the Sub-Adviser is and shall be an independent contractor and, unless otherwise expressly provided or authorized, shall have no authority to act for or represent the Trust in any way or otherwise be deemed to be an agent of the Trust. (b) The Sub-Adviser, at its expense, will furnish (i) all investment and management facilities, including salaries of personnel necessary for it to perform the duties set forth in this Agreement, and (ii) administrative facilities, including clerical personnel and equipment necessary for the conduct of the investment affairs of the Fund (excluding brokerage expenses and pricing and bookkeeping services). (c) The Sub-Adviser shall place all orders for the purchase and sale of portfolio investments for the Fund with issuers, brokers or dealers selected by the Sub-Adviser which may include brokers or dealers affiliated with the Sub-Adviser. In the selection of such brokers or dealers and the placing of such orders, the Sub-Adviser always shall seek best execution (except to the extent permitted by the next sentence hereof), which is to place portfolio transactions where the Fund can obtain the most favorable combination of price and execution services in particular transactions or provided on a continuing basis by a broker or dealer, and to deal directly with a principal market maker in connection with over-the-counter transactions, except when it is believed that best execution is obtainable elsewhere. Subject to such policies as the Trustees may determine, the Sub-Adviser shall not be deemed to have acted unlawfully or to have breached any duty created by this Agreement or otherwise solely by reason of its having caused the Trust to pay a broker or dealer that provides brokerage and research services an amount of commission for effecting a portfolio investment transaction in excess of the amount of commission another broker or dealer would have charged for effecting that transaction, if the Sub-Adviser determines in good faith that such excess amount of commission was reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of either that particular transaction or the overall responsibilities of the Sub-Adviser and its affiliates with respect to the Trust and to other clients of the Sub-Adviser as to which Sub-Adviser or any affiliate of the Sub-Adviser exercises investment discretion. 2. OTHER AGREEMENTS It is understood that any of the shareholders, Trustees, officers and employees of the Trust may be a shareholder, partner, director, officer or employee of, or be otherwise interested in, the Sub-Adviser, and in any person controlled by or under common control with the Sub-Adviser, and that the Sub-Adviser and any person controlled by or under common control with the Sub-Adviser may have an interest in the Trust. It is also understood that the Sub-Adviser and persons controlled by or under common control with the Sub-Adviser have and may have advisory, management service or other contracts with other organizations and persons, and may have other interests and businesses. 3. COMPENSATION TO BE PAID BY THE MANAGER TO THE SUB-ADVISER The Manager will pay to the Sub-Adviser as compensation for the Sub-Adviser's services rendered a fee, determined as described in Schedule A which is attached hereto and made a part hereof. Such fee shall be paid by the Manager and not by the Trust. 2 4. AMENDMENTS OF THIS AGREEMENT This Agreement (including Schedule A attached hereto) shall not be amended as to any Fund unless such amendment is approved at a meeting by the affirmative vote of a majority of the outstanding voting securities of the Fund, if such approval is required under the Investment Company Act of 1940, as amended ("1940 Act"), and by the vote, cast in person at a meeting called for the purpose of voting on such approval, of a majority of the Trustees who are not interested persons of the Trust or of the Manager or of the Sub-Adviser. 5. EFFECTIVE PERIOD AND TERMINATION OF THIS AGREEMENT This Agreement shall be effective as of the date executed, and shall remain in full force and effect as to each Fund continuously thereafter, until terminated as provided below: (a) Unless terminated as herein provided, this Agreement shall remain in full force and effect through May 30, 2004 and shall continue in full force and effect for successive periods of one year thereafter, but only so long as such continuance is specifically approved at least annually (i) by the Trustees or by the affirmative vote of a majority of the outstanding voting securities of the Fund, and (ii) by a vote of a majority of the Trustees who are not interested persons of the Trust or of the Manager or of any Sub-Adviser, by vote cast in person at a meeting called for the purpose of voting on such approval; provided, however, that if the continuance of this Agreement is submitted to the shareholders of the Fund for their approval and such shareholders fail to approve such continuance of this Agreement as provided herein, the Sub-Adviser may continue to serve hereunder in a manner consistent with the 1940 Act and the rules and regulations thereunder. (b) This Agreement may be terminated as to any Fund without the payment of any penalty by the Manager, subject to the approval of the Trustees, by vote of the Trustees, or by vote of a majority of the outstanding voting securities of such Fund at any annual or special meeting or by the Sub-Adviser, in each case on sixty days' written notice. (c) This Agreement shall terminate automatically, without the payment of any penalty, in the event of its assignment or in the event that the Management Agreement with the Manager shall have terminated for any reason. (d) In the event of termination of this Agreement, the Fund will no longer use the name "Jennison Associates LLC" in materials relating to the Fund except as may be required by the 1940 Act and the rules and regulations thereunder. 6. CERTAIN DEFINITIONS For the purposes of this Agreement, the "affirmative vote of a majority of the outstanding voting securities" means the affirmative vote, at a duly called and held 3 meeting of shareholders, (a) of the holders of 67% or more of the shares of the Fund present (in person or by proxy) and entitled to vote at such meeting, if the holders of more than 50% of the outstanding shares of the Fund entitled to vote at such meeting are present in person or by proxy, or (b) of the holders of more than 50% of the outstanding shares of the Fund entitled to vote at such meeting, whichever is less. For the purposes of this Agreement, the terms "control", "interested person" and "assignment" shall have their respective meanings defined in the 1940 Act and rules and regulations thereunder, subject, however, to such exemptions as may be granted by the SEC under said Act; the term "specifically approve at least annually" shall be construed in a manner consistent with the 1940 Act and the rules and regulations thereunder; and the term "brokerage and research services" shall have the meaning given in the Securities Exchange Act of 1934 and the rules and regulations thereunder. 7. NON-LIABILITY OF SUB-ADVISER The Sub-Adviser shall be under no liability to the Trust, the Manager or the Trust's Shareholders or creditors for any matter or thing in connection with the performance of any of the Sub-Adviser's services hereunder or for any losses sustained or that may be sustained in the purchase, sale or retention of any investment for the Funds of the Trust made by it in good faith; provided, however, that nothing herein contained shall be construed to protect the Sub-Adviser against any liability to the Trust by reason of the Sub-Adviser's own willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties hereunder. 8. LIMITATIONS OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS A copy of the Trust's Agreement and Declaration of Trust is on file with the Secretary of the Commonwealth of Massachusetts, and notice is hereby given that this instrument is executed by the Trustees as Trustees and not individually and that the obligations of this instrument are not binding upon any of the Trustees, officers or shareholders individually but are binding only upon the assets and property of the appropriate Fund. 4 IN WITNESS WHEREOF, Allmerica Financial Investment Management Services, Inc. has caused this instrument to be signed in duplicate on its behalf by its duly authorized representative and Jennison Associates LLC has caused this instrument to be signed in duplicate on its behalf by its duly authorized representative, all as of the day and year first above written. Allmerica Financial Investment Management Services, Inc. By: --------------------------- Title: --------------------------- Jennison Associates LLC By: --------------------------- Title: --------------------------- Accepted and Agreed to as of the day and year first above written: ALLMERICA INVESTMENT TRUST By: --------------------------- Title: --------------------------- 5 SCHEDULE A The Manager will pay to the Sub-Adviser as full compensation for the Sub-Adviser's services rendered, a fee computed daily and paid quarterly at an annual rate based on the Sub-Adviser's Portion of the average daily net assets of the Fund as described below: Net Assets Fee Rate ---------- -------- First $300 million .......... 0.35% Next $200 million ........... 0.30% Over $500 million ........... 0.25% The average daily net assets of the Fund shall be determined by taking an average of all of the determinations of net asset during each month at the close of business on each business day during such month while this Agreement is in effect. The fee for each quarter shall be payable within ten (10) business days after the end of the quarter. If the Sub-Adviser shall serve for any period less than a full month, the foregoing compensation shall be prorated according to the proportion which such period bears to a full month. 6 EX-99.14 5 dex9914.txt CONSENT OF INDEPENDENT ACCOUNTANTS Exhibit 14 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this registration statement on Form N-14 (the "Registration Statement") of our report dated February 7, 2003, relating to the financial statements and financial highlights which appears in the December 31, 2002 Annual Report to Shareholders of Allmerica Investment Trust, which are also incorporated by reference into the Registration Statement. We also consent to the references to us under the heading "Financial Highlights" in the Prospectus/Proxy Statement (the "Prospectus/Proxy Statement") which constitutes part of the Registration Statement, to the references to us under the headings "Financial Highlights" and "Independent Accountants" in the Prospectus of Allmerica Investment Trust dated May 1, 2002, which is incorporated by reference into the Prospectus/Proxy Statement, and to the references to us under the heading "Independent Accountants" in the Statement of Additional Information of Allmerica Investment Trust dated May 1, 2002, which is incorporated by reference into the Registration Statement. /s/ PricewaterhouseCoopers LLP Boston, Massachusetts February 24, 2003 -----END PRIVACY-ENHANCED MESSAGE-----