<PAGE>
As filed with the Securities and Exchange Commission on February 28, 2000
File Nos. 811-4138 and 2-94067
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. ____ [_]
Post-Effective Amendment No. 39 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [_]
Amendment No. 40 [X]
ALLMERICA INVESTMENT TRUST
--------------------------
(Name of Registrant)
440 Lincoln Street
WORCESTER, MASSACHUSETTS 01653
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code:
(508) 855-1000
(Names and Addresses of Agents for Service:)
George M. Boyd, Esq. Gregory D. Sheehan, Esq.
Allmerica Financial Ropes & Gray
440 Lincoln Street One International Place
Worcester, MA 01653 Boston, Massachusetts 02110
Approximate Date of Proposed Public Offering: as soon after filing as
- ---------------------------------------------------------------------
practicable
- -----------
It is proposed that this filing will become effective:
____ immediately upon filing pursuant to paragraph (b)
____ on (date) pursuant to paragraph (b)
____ 60 days after filing pursuant to paragraph (a)(1)
X on May 1, 2000 pursuant to paragraph (a)(1)
- ----
____ 75 days after filing pursuant to paragraph (a)(2)
____ on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
____ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
Allmerica Investment Trust
- -------------------------- Prospectus
May 1, 2000
This Prospectus describes the following investment Funds of the Trust which
serve as the underlying investments for insurance related accounts.
Select Emerging Markets Fund
Select Aggressive Growth Fund
Select Capital Appreciation Fund
Select Value Opportunity Fund
Select International Equity Fund
Select Growth Fund
Select Strategic Growth Fund
Select Growth and Income Fund
Select Investment Grade Income Fund
Money Market Fund
This Prospectus explains what you should know about each of the Funds. Please
read it carefully before you invest.
A particular Fund may not be available under the variable annuity or variable
life insurance policy which you have chosen. The Prospectus of the specific
insurance product you have chosen will indicate which Funds are available and
should be read in conjunction with this Prospectus. Inclusion in this Prospectus
of a Fund which is not available under your policy is not to be considered a
solicitation.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this Prospectus is adequate or complete. Any representation to the contrary is a
criminal offense.
Allmerica
Investment
Trust
440 Lincoln Street
Worcester, Massachusetts 01653
1-800-828-0540
<PAGE>
Table of Contents
-----------------
FUND SUMMARIES............................................................. 3
Objectives, Strategies and Risks................................... 4
Select Emerging Markets Fund................................. 4
Select Aggressive Growth Fund................................ 5
Select Capital Appreciation Fund............................. 6
Select Value Opportunity Fund................................ 7
Select International Equity Fund............................. 8
Select Growth Fund........................................... 9
Select Strategic Growth Fund................................. 10
Select Growth and Income Fund................................ 11
Select Investment Grade Income Fund.......................... 12
Money Market Fund............................................ 13
EXPENSE SUMMARY............................................................ 14
DESCRIPTION OF PRINCIPAL INVESTMENT RISKS.................................. 16
OTHER INVESTMENT STRATEGIES................................................ 18
MANAGEMENT OF THE FUNDS.................................................... 20
PRICING OF FUND SHARES..................................................... 28
PURCHASE AND REDEMPTION OF SHARES.......................................... 28
DISTRIBUTIONS AND TAXES.................................................... 29
FINANCIAL HIGHLIGHTS....................................................... 30
APPENDIX................................................................... 34
LEGEND
------
Performance [GRAPHIC APPEARS HERE]
Investment Objectives [GRAPHIC APPEARS HERE]
Financial Information [GRAPHIC APPEARS HERE]
Management of Fund [GRAPHIC APPEARS HERE]
Risk [GRAPHIC APPEARS HERE]
Investment Strategies [GRAPHIC APPEARS HERE]
- -----------------------------
Allmerica Investment Trust
2
<PAGE>
Fund Summaries
--------------
Allmerica Investment Trust provides a broad range of investment options through
10 separate investment portfolios, or Funds. Shares of the Funds are sold
exclusively to variable annuity and variable life insurance Separate Accounts
and qualified pension and retirement plans.
The investment manager of the Trust is Allmerica Financial Investment Management
Services, Inc. The Manager is responsible for managing the Trust's daily
business and has general responsibility for the management of the investments of
the Funds. The Manager, at its expense, has contracted with investment
Sub-Advisers to manage the investments of the Funds. Each Sub-Adviser has been
selected on the basis of various factors including management experience,
investment techniques and staffing. See "Management of the Funds" for more
information about the Manager and the Sub-Advisers.
The following summaries describe each Fund's investment objective and principal
investment strategies, identify the principal investment risks of investing in
the Fund and provide performance charts for the Fund. Note that any percentage
limitations listed under a Fund's principal investment strategies apply at the
time of investment. The principal risks are discussed in more detail under
"Description of Principal Investment Risks". The bar charts show how the
investment returns of the shares of a Fund have varied in the past ten years (or
for the life of the Fund if less than 10 years). The table following each bar
chart shows how the Fund's average annual return for the last one, five and ten
years (or for the life of the Fund, if shorter) compares to those of a
broad-based securities market index. Past performance does not necessarily
indicate how the Fund will perform in the future. The bar charts and tables give
some indication of the risks of investing in each Fund by showing changes in the
Fund's performance. The bar charts and tables do not reflect expenses associated
with the variable insurance product that you are purchasing. If those expenses
had been reflected, the performance shown would have been lower.
- ----------------------------
Allmerica Investment Trust
3
<PAGE>
Objectives, Strategies and Risks
Select Emerging Markets Fund
----------------------------
[GRAPHIC APPEARS HERE] Sub-Adviser: Schroder Investment Management North
America Inc.
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks long-term growth
of capital by investing in the world's emerging
markets.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: While its investments
are not limited to any specific region of the world,
the Fund normally invests at least 65% of its assets
in companies located or primarily operating in
countries with emerging markets. The Fund usually has
investments in at least five developing countries.
Before the Fund invests in a country, the Sub-Adviser
considers various factors such as that country's
political stability and economic prospects. In
selecting securities for the Fund, the Sub-Adviser
focuses on the long-term growth potential of the
securities.
The Fund invests primarily in equities, including
common stock, preferred stock, securities convertible
into common stock, rights and warrants and similar
securities. The Fund also may invest up to 35% of its
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", as further discussed in the
"Description of Principal Investment Risks."
[GRAPHIC APPEARS HERE] Principal Risks:
. Company Risk
. Credit Risk
. Currency Risk
. Derivatives Risk
. Emerging Markets Risk
. Foreign Investment Risk
. Investment Management Risk
. Liquidity Risk
. Market Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns [GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
65.72%
------
1999
During 1998 and the period shown above the highest quarterly return was 29.52%
for the quarter ended 12/31/99 and the lowest was (21.23)% for the quarter ended
9/30/98.
Performance Table
Average Annual Total Returns
(for the periods ending Past Since Inception
December 31, 1999) One Year (February 20, 1998)
- ------------------ -------- -------------------
Fund Shares 65.72% 15.22%
----------- ------- ------
MSCI Emerging Markets Free Index* 66.41% 11.50%
--------------------------------- ------- ------
* The MSCI Emerging Markets Free Index is an unmanaged index of 26 emerging
markets.
----------------------------
Allmerica Investment Trust
4
<PAGE>
Objectives, Strategies and Risks
Select Aggressive Growth Fund
-----------------------------
[GRAPHIC APPEARS HERE] Sub-Adviser: Nicholas-Applegate Capital Management,
L.P.
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks above-average
capital appreciation by investing primarily in common
stocks of companies which are believed to have
significant potential for capital appreciation.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: To pursue this goal,
the Fund looks predominantly for stocks of small and
mid-size companies that show potential for rapid
growth. The Fund typically invests in companies that,
because of positive developments affecting the
company, offer the possibility of accelerating
earnings. The Sub-Adviser uses systematic, fundamental
research in selecting investments for the Fund.
Under normal circumstances, the Fund invests at least
65% of its assets in common stocks, securities
convertible into common stocks and warrants. The Fund
also may invest in debt securities and preferred
stocks and up to 25% of its assets in foreign
securities (not including its investments in American
Depositary Receipts or "ADRs").
[GRAPHIC APPEARS HERE] Principal Risks:
. Company Risk
. Derivatives Risk
. Investment Management Risk
. Liquidity Risk
. Market Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns [GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
19.51% -2.31% 32.28% 18.55% 18.71% 10.56% 38.66%
- ------ ------ ------ ------ ------ ------ ------
1993 1994 1995 1996 1997 1998 1999
During the period shown above the highest quarterly return was 25.64% for the
quarter ended 12/31/99 and the lowest was (22.81)% for the quarter ended
9/30/98.
Performance Table
Average Annual Total Returns
(for the periods ending Past Past Since Inception
December 31, 1999) One Year Five Years (August 21, 1992)
- ------------------ -------- ---------- -----------------
Fund Shares 38.66% 23.32% 20.71%
----------- ------ ------ ------
Russell 2500 Index* 24.15% 19.43% 17.37%
------------------- ------ ------ ------
* The Russell 2500 Index is an unmanaged composite of 2,500 small-to-mid
capitalization stocks.
- ----------------------------
Allmerica Investment Trust
5
<PAGE>
Objectives, Strategies and Risks
Select Capital Appreciation Fund
--------------------------------
[GRAPHIC APPEARS HERE] Sub-Adviser: T. Rowe Price Associates, Inc.
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks long-term growth
of capital. Realization of income is not a significant
investment consideration and any income realized on
the Fund's investments will be incidental to its
primary objective.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: The Fund's
Sub-Adviser looks for companies with proven business
ideas and earnings growth rates in excess of market
averages. The Fund normally invests at least 50% of
its equity assets in securities of companies with
market capitalizations that fall within the range of
companies in the S&P Mid Cap 400 Index (as of December
31, 1999, $185 million to $37 billion market
capitalization). The Fund may also invest in larger
firms and firms with a market capitalization below
$185 million.
While the Fund invests primarily in common stocks, it
also may invest in preferred stocks, warrants,
government securities, corporate bonds and other debt
securities. Up to 25% of its assets may be invested in
"junk bonds". The Fund may invest without limitation
in foreign securities.
[GRAPHIC APPEARS HERE] Principal Risks:
. Company Risk
. Credit Risk
. Currency Risk
. Derivatives Risk
. Foreign Investment Risk
. Investment Management Risk
. Liquidity Risk
. Market Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns [GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
8.80% 14.28% 13.88% 25.36%
----- ------ ------ ------
1996 1997 1998 1999
During the period shown above the highest quarterly return was 27.90% for the
quarter ended 12/31/98 and the lowest was (18.54)% for the quarter ended
9/30/98.
T. Rowe Price Associates, Inc. became Sub-Adviser of the Fund on April 1, 1998.
Performance before that date is based on the performance of the Fund's previous
Sub-Adviser.
Performance Table
Average Annual Total Returns
(for the periods ending Past Since Inception
December 31, 1999) One Year (April 28, 1995)
- ------------------ -------- ----------------
Fund Shares 25.36% 21.42%
----------- ------ ------
Russell 2500 Index* 24.15% 18.67%
------------------- ------ ------
* The Russell 2500 Index is a unmanaged composite of 2,500 small-to-mid
capitalization stocks.
----------------------------
Allmerica Investment Trust
6
<PAGE>
Objectives, Strategies and Risks
Select Value Opportunity Fund
-----------------------------
[GRAPHIC APPEARS HERE] Sub-Adviser: Cramer Rosenthal McGlynn, LLC
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks long-term growth
of capital by investing primarily in a diversified
portfolio of common stocks of small and mid-size
companies, whose securities at the time of purchase
are considered by the Sub-Adviser to be undervalued.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: The Fund's
Sub-Adviser attempts to find stocks that are
attractively valued relative to their future prospects
and the market as a whole. The most promising
opportunities can be found in companies that are
temporarily out of favor or when most analysts are
confused about changes taking place at a company. In
these situations, the company's stock is often
undervalued.
The Fund invests primarily in companies with market
capitalization between $200 million and $5 billion.
The Fund normally invests at least 80% of the
portfolio in common stocks and may invest in other
equity securities and up to 25% of its assets in
foreign securities (not including its investments in
ADRs).
[GRAPHIC APPEARS HERE] Principal Risks:
. Company Risk
. Currency Risk
. Derivatives Risk
. Foreign Investment Risk
. Investment Management Risk
. Liquidity Risk
. Market Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns [GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
-6.51% 17.60% 28.53% 24.85% 4.87% -4.70%
------ ------ ------ ------ ----- ------
1994 1995 1996 1997 1998 1999
During the period shown above the highest quarterly return was 15.52% for the
quarter ended 3/31/99 and the lowest was (16.86)% for the quarter ended
6/30/99.
Cramer Rosenthal McGlynn, LLC became Sub-Adviser of the Fund on January 1, 1997.
Performance before that date is based on the performance of the Fund's previous
Sub-Adviser.
Performance Table
Average Annual Total Returns
(for the periods ending Past Past Since Inception
December 31, 1999) One Year Five Years (April 30, 1993)
- ------------------ -------- ---------- ----------------
Fund Shares -4.70% 13.52% 11.57%
----------- ------ ------ ------
Russell 2500 Index* 24.15% 19.43% 16.41%
------------------- ------ ------ ------
* The Russell 2500 Index is an unmanaged composite of 2,500 small-to-mid
capitalization stocks.
- ----------------------------
Allmerica Investment Trust
7
<PAGE>
Objectives, Strategies and Risks
Select International Equity Fund
--------------------------------
[GRAPHIC APPEARS HERE] Sub-Adviser: Bank of Ireland Asset Management (U.S.)
Limited
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks maximum long-term
total return (capital appreciation and income)
primarily by investing in common stocks of established
non-U.S. companies.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: Under normal market
conditions, at least 65% of the Fund's assets will be
invested in the securities of medium and large-size
companies located in at least five foreign countries,
not including the United States. To achieve its
objective, the Fund focuses on equity securities which
the Sub-Adviser believes are undervalued in relation
to the company's prospects for future earnings growth.
The Fund may also buy fixed-income debt securities,
primarily for defensive purposes.
[GRAPHIC APPEARS HERE] Principal Risks:
. Company Risk
. Currency Risk
. Derivatives Risk
. Foreign Investment Risk
. Investment Management Risk
. Market Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns [GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
19.63% 21.94% 4.65% 16.48% 31.71%
------ ------ ----- ------ ------
1995 1996 1997 1998 1999
During the period shown above the highest quarterly return was 20.89% for the
quarter ended 12/31/99 and the lowest was (17.69)% for the quarter ended
09/30/98.
Performance Table
Average Annual Total Returns
(for the periods ending Past Past Since Inception
December 31, 1999) One Year Five Years (May 2, 1994)
- ------------------ -------- ---------- -------------
Fund Shares 31.71% 18.54% 15.47%
----------- ------ ------ ------
Morgan Stanley Capital Intl.
EAFE Index* 27.31% 13.15% 11.54%
----------- ------ ------ ------
* The Morgan Stanley Capital International EAFE (Europe, Australia, Far East)
Index, reflecting reinvestment of gross dividends, is an unmanaged
capitalization weighted index of foreign developed country common stocks.
-----------------------------
Allmerica Investment Trust
8
<PAGE>
Objectives, Strategies and Risks
Select Growth Fund
------------------
[GRAPHIC APPEARS HERE] Sub-Adviser: Putnam Investment Management, Inc.
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks to achieve long-
term growth of capital by investing in a diversified
portfolio consisting primarily of common stocks
selected on the basis of their long-term growth
potential.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: To attain its
objective, the Fund looks for companies that appear to
have favorable long-term growth characteristics. The
Fund typically invests in stocks of large
capitalization companies, such as those included in
the S&P 500 Index, although it can also make
investments in smaller growth companies.
At least 65% of the Fund's assets normally will
consist of common stocks that the Sub-Adviser believes
have growth potential. The Fund also may purchase
convertible bonds and preferred stocks and warrants.
The Fund normally invests substantially all of its
investments in equity securities, although it may
invest up to 35% in debt securities including up to
15% in "junk bonds". The Fund may invest up to 25% of
its assets in foreign securities (not including its
investments in ADRs).
[GRAPHIC APPEARS HERE] Principal Risks:
. Company Risk
. Credit Risk
. Derivatives Risk
. Investment Management Risk
. Market Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns [GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
0.84% -1.49% 24.59% 22.02% 34.06% 35.44% 29.80%
----- ------ ------ ------ ------ ------ ------
1993 1994 1995 1996 1997 1998 1999
During the period shown above the highest quarterly return was 25.02% for the
quarter ended 12/31/98 and the lowest was (11.84)% for the quarter ended
09/30/98.
Putnam Investment Management, Inc. 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
(for the periods ending Past Past Since Inception
December 31, 1999) One Year Five Years (August 21, 1992)
- ------------------ -------- ---------- -----------------
Fund Shares 29.80% 29.06% 20.57%
----------- ------ ------ ------
S&P 500 Index* 21.03% 28.55% 21.46%
-------------- ------ ------ ------
* The S&P 500 Index(R), reflecting reinvestment of dividends, is an unmanaged
index of 500 leading stocks. S&P 500(R) Index is a registered trademark of
Standard & Poor's Corporation.
- --------------------------
Allmerica Investment Trust 9
<PAGE>
Objectives, Strategies and Risks
Select Strategic Growth Fund
--------------------------------
[GRAPHIC APPEARS HERE] Sub-Adviser: TCW Investment Management Company
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks long-term capital
appreciation.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: To pursue its
investment objective, the Fund invests (except when
maintaining a temporary defensive position) at least
65% of the value of its total assets in equity
securities issued by companies with market
capitalization, at the time of acquisition, within the
capitalization range of the companies comprising the
Standard & Poor's Small Cap 600 Index.
In managing the Fund's investments, the Sub-Adviser
pursues a small cap growth investment philosophy. The
Sub-Adviser uses fundamental company-by-company
analysis in conjunction with technical and
quantitative market analysis to screen potential
investments and to continuously monitor securities in
the Fund's portfolio.
The Fund focuses on small, fast-growing companies that
offer cutting-edge products, services or technologies.
Because these companies are often in their early
stages of development, their stocks tend to fluctuate
more than most other securities. The Fund may invest
up to 25% of its assets in foreign securities (not
including its investments in ADRs).
[GRAPHIC APPEARS HERE] Principal Risks:
. Company Risk
. Currency Risk
. Derivatives Risk
. Foreign Investment Risk
. Investment Management Risk
. Liquidity Risk
. Market Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns [GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
16.06%
------
1999
During 1998 and the period shown above the highest quarterly return was 16.94%
for the quarter ended 12/31/98 and the lowest was (16.77)% for the quarter ended
9/30/98.
TCW Investment Management Company became Sub-Adviser of the Fund on April 1,
2000. Performance before that date is based on the performance of the Fund's
previous Sub-Adviser.
Performance Table
Average Annual Total Returns
(for the periods ending Past Since Inception
December 31, 1999) One Year (February 20, 1998)
- ------------------ -------- -------------------
Fund Shares 16.06% 6.89%
----------- ------ -----
S&P 500 Index* 21.03% 21.80%
-------------- ------ ------
* The S&P 500 Index(R), reflecting reinvestment of dividends, is an unmanaged
index of 500 leading stocks. S&P 500(R) Index is a registered trademark of
Standard & Poor's Corporation.
--------------------------
10 Allmerica Investment Trust
<PAGE>
Objectives, Strategies and Risks
Select Growth and Income Fund
-----------------------------
[GRAPHIC APPEARS HERE] Sub-Adviser: J.P. Morgan Investment Management Inc.
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks a combination of
long-term growth of capital and current income. The
Fund will invest primarily in dividend-paying common
stocks and securities convertible into common stocks.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: The Fund invests in a
broadly diversified portfolio of equity securities,
primarily the common stock of companies included in
the S&P 500 Index. The Fund's industry diversification
and other risk characteristics will be similar to
those of the index. The Fund may invest in a wide
range of equity securities, consisting of common
stocks, preferred stocks, securities convertible into
common and preferred stocks and warrants. The Fund may
purchase individual stocks not presently paying
dividends if the Sub-Adviser believes the overall
portfolio is positioned to achieve its income
objective.
The Fund may invest up to 35% of its assets in
fixed-income securities, including up to 15% in "junk
bonds". However, the Fund's normal strategy is to be
nearly fully invested in equity securities. The Fund
may also invest up to 25% of its assets in foreign
securities (not including its investments in ADRs).
[GRAPHIC APPEARS HERE] Principal Risks:
. Company Risk
. Derivatives Risk
. Investment Management Risk
. Market Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns[GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
10.37% 0.73% 30.32% 21.26% 22.51% 16.43% 18.43%
------ ----- ------ ------ ------ ------ ------
1993 1994 1995 1996 1997 1998 1999
During the period shown above the highest quarterly return was 19.41% for the
quarter ended 12/31/98 and the lowest was (12.66)% for the quarter ended
9/30/98.
J.P. Morgan Investment Management Inc. became Sub-Adviser of the Fund on
April 1, 1999. Performance before that date is based on the performance of the
Fund's previous Sub-Advisers.
Performance Table
Average Annual Total Returns
(for the periods ending Past Past Since Inception
December 31, 1999) One Year Five Years (August 21, 1992)
- ------------------ -------- ---------- -----------------
Fund Shares 18.43% 21.69% 15.92%
----------- ------ ------ ------
S&P 500 Index* 21.03% 28.55% 21.46%
-------------- ------ ------ ------
* The S&P 500 Index(R), reflecting reinvestment of dividends, is an unmanaged
index of 500 leading stocks. S&P 500(R) Index is a registered trademark of
Standard & Poor's Corporation.
- --------------------------
Allmerica Investment Trust 11
<PAGE>
Objectives, Strategies and Risks
Select Investment Grade Income Fund
-----------------------------------
(formerly the Investment Grade Income Fund)
[GRAPHIC APPEARS HERE] Sub-Adviser: Allmerica Asset Management, Inc.
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks as high a level
of total return, which includes capital appreciation
as well as income, as is consistent with prudent
investment management.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: To achieve its goal,
the Fund invests in investment grade debt securities
and money market instruments such as bonds and other
corporate debt obligations; obligations issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities, or money market instruments,
including commercial paper, bankers acceptances and
negotiable certificates of deposit. The Fund also may
invest in mortgage-backed and asset-backed securities.
The Fund may invest up to 25% of its assets in foreign
securities (not including its investments in ADRs) and
up to 25% of its assets in debt obligations of
supranational entities.
Investment grade securities are rated in the four
highest grades by Moody's Investors Services or
Standard & Poor's Rating Services or unrated but
determined by the Sub-Adviser to be of comparable
quality. For more information about rating categories,
see the Appendix to the Statement of Additional
Information ("SAI"). The Fund may invest in securities
with relatively long maturities as well as securities
with shorter maturities.
The Sub-Adviser actively manages the portfolio with a
view to producing a high level of total return for the
Fund while avoiding undue risks to capital. The
Sub-Adviser attempts to anticipate events leading to
price or ratings changes through using in-depth
fundamental credit research.
[GRAPHIC APPEARS HERE] Principal Risks:
. Company Risk
. Interest Rate Risk
. Investment Management Risk
. Liquidity Risk
. Market Risk
. Prepayment Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns [GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
1990 .................... 8.02%
1991 .................... 16.75%
1992 .................... 8.33%
1993 .................... 10.80%
1994 .................... -2.96%
1995 .................... 17.84%
1996 .................... 3.56%
1997 .................... 9.45%
1998 .................... 7.97%
1999 .................... -0.97%
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 3/31/94.
Performance Table
Average Annual Total Returns
(for the periods ending Past Past Past
December 31, 1999) One Year Five Years Ten Years
- ------------------ -------- ---------- ---------
Fund Shares -0.97% 7.38% 7.69%
- ----------- ------ ----- -----
Lehman Brothers
Aggregate Bond Index* -0.83% 7.73% 7.69%
- --------------------- ------ ----- -----
* The Lehman Brothers Aggregate Bond Index(R) is an unmanaged index of 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.
-----------------------------
12 Allmerica Investment Trust
<PAGE>
Objectives, Strategies and Risks
Money Market Fund
-----------------
[GRAPHIC APPEARS HERE] Sub-Adviser: Allmerica Asset Management, Inc.
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks to obtain maximum
current income consistent with preservation of capital
and liquidity.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: The Fund seeks to
achieve its objective by investing in high quality
money market instruments such as obligations issued or
guaranteed by the United States Government, its
agencies, or instrumentalities; commercial paper;
obligations of banks or savings and loan associations
including bankers acceptances and certificates of
deposit; repurchase agreements and cash and cash
equivalents. The Fund may invest up to 25% of its
assets in U.S. dollar denominated foreign debt
securities and short-term instruments (not including
investments in ADR's).
Any security purchased for the Fund must receive the
highest or second highest quality rating by at least
two recognized rating agencies or by one if only one
has rated the security. If the security is unrated the
security must be seen by the Sub-Adviser as having
comparable quality. Portfolio securities will have a
remaining maturity of 397 days or less and the
portfolio is managed to maintain a dollar-weighted
maturity of 90 days or less.
The Fund attempts to maintain a constant net asset
value of $1.00 per share but it may not be able to do
so due to adverse market conditions or other factors
and it is possible for investors to lose money by
investing in the Fund. An investment in the Fund is
not a bank deposit and is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other
government agency.
[GRAPHIC APPEARS HERE] Principal Risks:
. Credit Risk
. Interest Rate Risk
. Investment Management Risk
. Market Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns[GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
8.17% 6.22% 3.78% 3.00% 3.93% 5.84% 5.36% 5.47% 5.51% 5.19%
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
During the period shown above the highest quarterly return was 2.01% for the
quarter ended 06/30/90 and the lowest was 0.73% for the quarter ended 6/30/93.
Performance Table
Average Annual Total Returns
(for the periods ending Past Past Past
December 31, 1999) One Year Five Years Ten Years
- ------------------ -------- ---------- ---------
Fund Shares 5.19% 5.47% 5.23%
----------- ----- ----- -----
IBC/Donoghue First Tier
Money Market Index* 4.57% 4.97% 4.79%
------------------- ----- ----- -----
* IBC/Donoghue is an independent firm that tracks regulated money market funds
on a yield, shareholder, assets size and portfolio allocation basis.
The Fund's 7-day yield ending December 31, 1999 was 5.57%.
- -----------------------------
Allmerica Investment Trust 13
<PAGE>
Expense Summary
---------------
Expenses are one of several factors to consider when investing in a Fund.
Expenses shown are based on expenses incurred in respect of shares of the Funds
for the 1999 fiscal year. The Examples show the cumulative expenses attributable
to a hypothetical $10,000 investment in each Fund over specified periods.
Fees and Expenses of the Funds
This table describes the fees and expenses that you may pay if you invest in the
Funds. Please note that the expenses listed below do not include the expenses of
the applicable variable insurance product that you are purchasing. 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.
<TABLE>
<CAPTION>
Annual Fund Operating Expenses
Shareholder (expenses deducted from Fund assets) Total Annual
Fees Fund
(fees paid directly Management Distribution Other Operating
from your investment) Fees (12b-1) Fees Expenses Expenses
--------------------- ---- ------------ -------- --------
<S> <C> <C> <C> <C> <C>
Select Emerging Markets Fund None 1.35% None 0.57% 1.92%(1),(2)
Select Aggressive Growth Fund None 0.81%* None 0.06% 0.87%(1),(2)*
Select Capital Appreciation Fund None 0.90%* None 0.07% 0.97%(1),(2)*
Select Value Opportunity Fund None 0.90%(1) None 0.07% 0.97%(1),(2)
Select International Equity Fund None 0.89% None 0.13% 1.02%(1),(2)
Select Growth Fund None 0.78% None 0.05% 0.83%(1),(2)
Select Strategic Growth Fund None 0.85% None 0.35% 1.20%(1),(2)
Select Growth and Income Fund None 0.67% None 0.07% 0.74%(1),(2)
Select Investment Grade Income Fund None 0.43% None 0.07% 0.50%(1)
Money Market Fund None 0.24% None 0.05% 0.29%(1)
</TABLE>
* Effective September 1, 1999, the management fee rates for the Select
Aggressive Growth Fund and Select Capital Appreciation Fund were revised.
The Management Fee and Total Annual Fund Operating Expense ratios shown in
the table above have been adjusted to assume that the revised rates took
effect on January 1, 1999.
(1) Through December 31, 2000, Allmerica Financial Investment Management
Services, Inc. (the "Manager") has declared a voluntary expense limitation
of 1.35% of average net assets for the Select Aggressive Growth Fund and
Select Capital Appreciation Fund, 1.25% for the Select Value Opportunity
Fund, 1.50% for the Select International Equity Fund, 1.20% for the Select
Growth Fund and Select Strategic Growth Fund, 1.10% for the Select Growth
and Income Fund, 1.00% for the Select Investment Grade Income Fund, and
0.60% for the Money Market Fund. The total operating expenses of these
Funds of the Trust were less than their respective expense limitations
throughout 1999 except the Select Strategic Growth Fund received a
reimbursement of $813.00 in 1999 under its expense limitation.
---------------------------
14 Allmerica Investment Trust
<PAGE>
In addition through December 31, 2000, the Manager has agreed to
voluntarily waive its management fee to the extent that expenses of the
Select Emerging Markets Fund 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 Fund after subtracting fees
paid by the Manager to the Fund's Sub-Adviser.
Through December 31, 2000, the Select Value Opportunity Fund's management
fee rate has been voluntarily limited to an annual rate of 0.90% of average
daily net assets.
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) These Funds 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 ratios
would have been 1.88% for Select Emerging Market Fund, 0.88% for the Select
Aggressive Growth Fund, 0.98% for the Select Capital Appreciation Fund,
0.88% for the Select Value Opportunity Fund, 1.01% for the Select
International Equity Fund, 0.81% for the Select Growth Fund, 1.17% for the
Select Strategic Growth Fund, and 0.73% for the Select Growth and Income
Fund.
Example
This Example is intended to help you compare the cost of investing in a Fund
with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in a Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment earns a 5% return each year and that
the Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
Fund 1 Year 3 Years 5 Years 10 Years
---- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Select Emerging Markets Fund $197 $608 $1,046 $2,259
---------------------------- ---- ---- ------ ------
Select Aggressive Growth Fund $93 $291 $506 $1,123
----------------------------- --- ---- ---- ------
Select Capital Appreciation Fund $100 $314 $544 $1,206
-------------------------------- ---- ---- ---- ------
Select Value Opportunity Fund $99 $310 $539 $1,194
----------------------------- --- ---- ---- ------
Select International Equity Fund $105 $326 $566 $1,253
-------------------------------- ---- ---- ---- ------
Select Growth Fund $85 $266 $462 $1,029
------------------ --- ---- ---- ------
Select Strategic Growth Fund $123 $383 $663 $1,461
---------------------------- ---- ---- ---- ------
Select Growth and Income Fund $76 $237 $413 $921
----------------------------- --- ---- ---- ----
Select Investment Grade Income Fund $51 $161 $280 $629
----------------------------------- --- ---- ---- ----
Money Market Fund $30 $93 $163 $369
----------------- --- --- ---- ----
</TABLE>
- ----------------------------
Allmerica Investment Trust 15
<PAGE>
[GRAPHIC APPEARS HERE] Description of Principal Investment 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 "Fund Summaries".
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 objective,
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 if the
issuer defaults on its obligation to pay principal or interest, the rating
agencies downgrade the issuer's credit rating or there is negative news that
affects the market's perception of the issuer's 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.
---------------------------
16 Allmerica Investment Trust
<PAGE>
Emerging Markets Risk
Investments in emerging markets securities involve all of the risks of
investments in foreign securities, and also have additional risks. The markets
of developing countries 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 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 Fund's
portfolio will generally fall. Conversely, when interest rates fall, the prices
of fixed income securities in the Fund's 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 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.
- ----------------------------
Allmerica Investment Trust 17
<PAGE>
[GRAPHIC APPEARS HERE] Other Investment Strategies
--------------------------------------------------
The Fund Summaries starting on page 3 describe the investment objective and the
principal investment strategies and risks of each Fund. The Funds may at times
use the following investment strategies. Attached as an Appendix is a chart with
a listing of various investment techniques and strategies that the Sub-Advisers
of the Funds may utilize. A Fund may decide that it is in the best interests of
shareholders to make changes to its investment objective and strategies
described in this Prospectus. These investment objectives and strategies may be
changed with the approval of the Board of Trustees, but without shareholder
approval.
Derivative Investments. (applicable to each Fund except the Money Market Fund)
Instead of investing directly in the types of portfolio securities described in
the Summary, each Fund, except the Money Market Fund, may buy or sell a variety
of "derivative" investments to gain exposure to particular securities or
markets. Derivatives are financial contracts whose value depends on, or is
derived from, the value of an underlying asset, reference rate or index. A
Fund's Sub-Adviser will sometimes use derivatives as part of a strategy designed
to reduce other risks and sometimes will use derivatives to enhance returns,
which increases opportunities for gain but also involves greater risk.
Foreign Investments. (applicable to each Fund) Each Fund may invest all or a
substantial part of its portfolio in securities of companies that are located or
primarily doing business in a foreign country. A company is considered to be
located in a foreign country if it is organized under the laws of, or has a
principal office in, that country. A company is considered as primarily doing
business in a country if (i) the company derives at least 50% of its gross
revenues or profits from either goods or services produced or sold in the
country or (ii) at least 50% of the company's assets are situated in the
country. A Fund may invest in foreign securities either directly or indirectly
through the use of depositary receipts, such as ADRs. Depositary receipts are
generally issued by banks or trust companies and evidence ownership of
underlying foreign securities. An ADR may be sponsored by the issuer of the
underlying foreign security or it may be issued in unsponsored form. The holder
of a sponsored ADR is likely to receive more frequent and extensive financial
disclosure concerning the foreign issuer than the holder of an unsponsored ADR
and generally will bear lower transaction charges. The Select Capital
Appreciation Fund and Select International Equity Fund may also purchase foreign
securities through European Depositary Receipts and Global Depositary Receipts.
High Yield Securities. (applicable to the Select Emerging Markets Fund, Select
Capital Appreciation Fund, Select Growth Fund and Select Growth and Income Fund)
The Select Emerging Markets Fund, Select Capital Appreciation Fund, Select
Growth Fund and Select Growth and Income Fund may purchase corporate debt
securities which are high yield securities, or "junk bonds" (rated at the time
of purchase BB or lower by Moody's or S&P, or equivalently rated by another
rating agency, or unrated but believed by the Sub-Adviser to have similar
quality.) These securities are considered to be speculative in their capacity to
pay interest and repay principal.
-----------------------------
Allmerica Investment Trust
18
<PAGE>
Lending of Securities. (applicable to all Funds) To realize additional income,
the Funds may lend portfolio securities to broker-dealer or financial
institutions in an amount up to 33-1/3% of a Fund's total assets. While any such
loan is outstanding, a Fund will continue to receive amounts equal to the
interest or dividends paid by the issuer on the securities, as well as interest
(less any rebates to be paid to the borrower) on the investment of the
collateral or a fee from the borrower. Each Fund will have the right to call
each loan and obtain the securities. Lending portfolio securities involves
possible delays in receiving additional collateral or in the recovery of the
securities or possible loss of rights in the collateral.
Restricted Securities. (applicable to all Funds) The Funds may purchase
securities that are not registered under Federal securities law ("restricted
securities"), but can be offered and sold to certain "qualified institutional
buyers". Each Fund will not invest more than 15% (10% for the Money Market Fund)
of its net assets in restricted securities (and securities deemed to be
illiquid). These limits do not apply if the Board of Trustees determines that
the restricted securities are liquid. The Board of Trustees has adopted
guidelines and delegated to the Manager the daily function of determining and
monitoring the liquidity of restricted securities. The Board, however, retains
sufficient oversight and is ultimately responsible for the determinations. This
investment practice could increase the level of illiquidity in a Fund if buyers
lose interest in restricted securities. As a result, a Fund might not be able to
sell these securities when its Sub-Adviser wants to sell, or might have to sell
them at less than fair value. In addition, market quotations for these
securities are less readily available.
Temporary Defensive Strategies. At times a Sub-Adviser may determine that market
conditions make it desirable temporarily to suspend a Fund's normal investment
activities. This is when the Fund may temporarily invest in a variety of
lower-risk securities, such as U.S. Government and other high quality bonds and
short-term debt obligations. Such strategies attempt to reduce changes in the
value of the Fund's shares. The Fund may not achieve its investment objective
while these strategies are in effect.
Frequent Trading. Certain Funds from time to time may engage in active and
frequent trading to achieve their investment objective. Frequent trading
increases transaction costs, which could detract from the Fund's performance.
- -----------------------------
Allmerica Investment Trust
19
<PAGE>
[GRAPHIC APPEARS HERE] Management of the Funds
----------------------------------------------
The Trust is governed by a Board of Trustees. Allmerica Financial Investment
Management Services, Inc. is the investment Manager of the Trust responsible for
managing the Trust's day-to-day business affairs. The Manager is located at 440
Lincoln Street, Worcester, MA 01653. The Manager and its predecessor, Allmerica
Investment Management Company, Inc., have been managing mutual funds since 1985.
The Manager currently serves as investment manager to one other mutual fund.
Sub-Advisers have been hired to manage the investments of the Funds. The Trust
and Manager have obtained an order of exemption from the SEC that permits the
Manager to enter into and materially amend sub-advisory agreements with non-
affiliated Sub-Advisers without obtaining shareholder approval. The Manager has
ultimate responsibility to oversee Sub-Advisers. The Manager has the ability,
subject to approval of the Trustees, to hire and terminate Sub-Advisers and to
change materially the terms of the Sub-Adviser Agreements, including the
compensation paid to the Sub-Advisers. The Sub-Advisers have been selected by
the Manager and Trustees with the help of BARRA RogersCasey, Inc., a pension
consulting firm. The fees earned by each Sub-Adviser and BARRA RogersCasey are
paid by the Manager. The performance by the Sub-Advisers is reviewed quarterly
by a committee of the Board of Trustees, with assistance from BARRA RogersCasey.
The following table provides information about each Fund's Sub-Adviser:
<TABLE>
<CAPTION>
Fund Name,
Sub-Adviser Name and Address Experience
---------------------------- ----------
<S> <C>
Select Emerging Markets Fund Organized in 1980 and has approximately $47 billion assets
Schroder Investment Management under management as of December 31, 1999.
North America Inc. Provides global equity and fixed income
787 Seventh Avenue management services to mutual funds and
New York, NY 10019 other institutional investors.
------------------ ------------------------------
Select Aggressive Growth Fund Has over $41 billion assets under management as of December
Nicholas-Applegate Capital Management, L.P. 31, 1999. Founded in 1984. Clients include employee benefit
600 West Broadway, Suite 2900 and retirement plans, foundations, investment companies and
San Diego, CA 92101 individuals.
------------------- ------------
Select Capital Appreciation Fund Manages with its affiliates assets totaling $179.9 billion as
T. Rowe Price Associates, Inc. of December 31, 1999 for eight million individual and
100 East Pratt Street institutional investor accounts.
Baltimore, MD 21202 Founded in 1937.
------------------- ----------------
Select Value Opportunity Fund Established in 1973. Over $3.2 billion assets under
Cramer Rosenthal McGlynn, LLC management as of December 31, 1999. Provides investment
707 Westchester Avenue advice to mutual funds, individuals, government agencies,
White Plains, NY 10604 pension plans and trusts.
---------------------- -------------------------
</TABLE>
-----------------------------
Allmerica Investment Trust
20
<PAGE>
<TABLE>
<CAPTION>
Fund Name,
Sub-Adviser Name and Address Experience
---------------------------- ----------
<S> <C>
Select International Equity Fund Managed over $50 billion in global securities as of December
Bank of Ireland Asset Management (U.S.) Ltd. 31, 1999. Founded in 1966. Provides international investment
26 Fitzwilliam Place, Dublin 2, management services.
Ireland and 20 Horseneck Lane
Greenwich, CT 06830
-------------------
Select Growth Fund As of December 31, 1999, $391 billion assets under
Putnam Investment Management, Inc. management, including affiliates.Investment manager of
One Post Office Square mutual funds and other clients since 1937.
Boston, MA 02109
----------------
Select Strategic Growth Fund Had over $70 billion in assets under management or
TCW Investment Management Company committed to management as of December 31, 1999.
865 South Figueroa Street, Suite 1800 Established in 1971. Manages pension and profit sharing
Los Angeles, CA 90017 funds, retirement/health and welfare funds, public employee
---------------------- retirement funds, and private accounts.
Select Growth and Income Fund Incorporated in 1984. With affiliates, approximately $349 billion
J.P. Morgan Investment Management Inc. assets under management as of December 31, 1999. Serves as
522 Fifth Avenue investment adviser for employee benefit plans and other
New York, NY 10036 institutional assets, as well as mutual funds and variable
------------------ annuities.
----------
Select Investment Grade Income Fund Incorporated in 1993. Had $13.3 billion assets under management
Allmerica Asset Management, Inc. as of December 31, 1999. Serves as investment adviser to
440 Lincoln Street investment companies and affiliated insurance company
Worcester, MA 01653 accounts.
-------------------
Money Market Fund See Select Investment Grade Income Fund above.
Allmerica Asset Management, Inc.
440 Lincoln Street
Worcester, MA 01653
-------------------
</TABLE>
For a sample listing of certain of the Sub-Advisers' clients, see "Investment
Management and Other Services" in the SAI.
- -----------------------------
Allmerica Investment Trust
21
<PAGE>
The following individuals or groups of individuals are primarily responsible for
the day-to-day management of the Funds' portfolios:
<TABLE>
<CAPTION>
Fund Name and Name and Title of Service with Business Experience
Sub-Adviser Name Portfolio Manager(s) Sub-Adviser for Past Five Years
---------------- -------------------- ----------- -------------------
<S> <C> <C> <C>
Select Emerging Markets Fund John A. Troiano, Director, 1981 - Present Director of Schroder with
Schroder Investment Management Chief Executive and Chairman responsibility for policy for
North America Inc. ("Schroder") of Emerging Markets Committee emerging markets.
Mark Bridgeman, 1990 - Present Fund Manager specializing in
First Vice President African markets.
Heather F. Crighton, Director 1993 - Present Fund Manager specializing in
and Senior Vice President Asian emerging markets.
-----------------------
Select Aggressive Growth Fund Lawrence S. Speidell, Partner 1994 - Present Director of Global/Systematic
Nicholas-Applegate Capital Portfolio Management and
Management, L.P. ("NACM") Research at NACM. Prior
to joining NACM, he spent
ten years with Batterymarch
Financial Management.
John J. Kane, Partner 1994 - Present Senior Portfolio Manager for
the U.S. Systematic portfolios
at NACM. Prior to joining
NACM in 1994, he was
employed by ARCO Invest-Management
Company and General Electric.
Mark W. Stuckelman, 1995 - Present Portfolio Manager for the
Portfolio Manager U.S. Systematic portfolios
at NACM. Prior to joining
NACM, he was employed for
five years with Wells Fargo
Bank, Fidelity Management
Trust Co., and BARRA, Inc.
--------------------------
Select Capital Appreciation Fund Brian W.H. Berghuis, 1985 - Present He has sixteen years
T. Rowe Price Associates, Inc. Chartered Financial Analyst experience in equity research
("T. Rowe Price") and portfolio management.
He is chairman of the investment
team for the Fund.
John F. Wakeman, Research 1989 - Present He spent ten years with
Analyst & Portfolio Manager T. Rowe Price as a research
analyst and portfolio manager
and has twelve years' experience in
equity research.
----------------
</TABLE>
-----------------------------
Allmerica Investment Trust
22
<PAGE>
<TABLE>
Fund Name and Name and Title of Service with Business Experience
Sub-Adviser Name Portfolio Manager(s) Sub-Adviser for Past Five Years
---------------- -------------------- ----------- -------------------
<S> <C> <C> <C>
Select Capital Appreciation Fund Marc L. Baylin, Chartered 1993 - Present He has eight years of
continued Financial Analyst investment experience in
equity research and has been
with T. Rowe Price for the past
six years as a research analyst
and portfolio manager.
----------------------
Select Value Opportunity Fund Ronald H. McGlynn, CEO and 1973 - Present He joined Cramer Rosenthal
Cramer Rosenthal McGlynn, President of Cramer Rosenthal in 1973, has 29 years of
LLC ("Cramer Rosenthal") investment experience and
serves as Co-Chief Investment
Officer and Portfolio Manager.
Jay B. Abramson, Executive 1985 - Present He has been with Cramer
Vice President and Director Rosenthal since 1985 and his
of Research and Co-Chief overall responsibility is for
Investment Officer investment research.
------------------ --------------------
Select International Equity Fund Christopher Reilly, 1980 - Present Since 1985, he has had
Bank of Ireland Asset Management Chief Investment Officer overall responsibility for asset
(U.S.) Limited ("BIAM") management. He previously
worked in the United
Kingdom in stockbrokering
and investment management.
Michael McCarthy, 1997 - Present Mr. McCarthy rejoined BIAM
Portfolio Manager in 1997 from a major life assurance
Company where he was Head of
Asset Management. Prior to this, he
worked for BIAM in the U.K. in a
senior portfolio management capacity.
Peter Wood, Senior 1985 - Present Prior to 1985, he spent five
Portfolio Manager years with another leading
investment management firm.
He is now responsible for
portfolio construction at BIAM.
Jane Neill, Senior Equity Analyst 1994 - Present Previously, she was Chief
Investment Officer with
another leading Irish investment
management firm.
----------------
Select Growth Fund C. Beth Cotner, CFA, 1995 - Present Prior to 1995, Ms. Cotner was
Putnam Investment Chief Investment Officer Executive Vice President at
Management, Inc. ("Putnam") Kemper Financial Services.
Manuel Weiss, CFA, 1987 - Present He has been an investment
Senior Vice President professional with Putnam
since 1987.
</TABLE>
- -----------------------------
Allmerica Investment Trust
23
<PAGE>
<TABLE>
<CAPTION>
Fund Name and Name and Title of Service with Business Experience
Sub-Adviser Name Portfolio Manager(s) Sub-Adviser for Past Five Years
---------------- -------------------- ----------- -------------------
<S> <C> <C> <C>
Select Strategic Growth Fund Christopher J. Ainley, Managing 1994 - Present Prior to joining TCW, Mr. Ainley
TCW Investment Management Director spent 2 years at Putnam Investments
Company ("TCW") 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, 1994 - Present Prior to 1994, Mr. Foreman
Group Managing Director & was employed by Putnam
Chief Investment Officer - Investment in Boston. He spent
U.S. Equities his last 5 years at Putnam managing
Institutional accounts and mutual
Funds. Mr. Foreman is a Chartered
Financial Analyst.
Charles Larsen 1984 - Present Prior to TCW, Mr. Larsen
Managing Director was a Senior Vice President and
Portfolio Manager for CIGNA
Investment Management Company.
He is a Chartered Financial Analyst and
Chartered Investment Counselor.
-------------------------------
Select Growth and Income Fund Bernard A. Kroll, Vice President 1996 - Present Prior to joining J.P. Morgan
J.P. Morgan Investment in 1996, Mr. Kroll was an
Management Inc. ("J.P. Morgan") equity derivatives specialist
at Goldman Sachs & Co.,
founded his own software
development firm and options
broker-dealer, and managed
several derivatives businesses
at Kidder, Peabody & Co.
He is a portfolio manager in
the Structured Equity Group.
Timothy J. Devlin, Vice President 1996 - Present Prior to joining J.P. Morgan
in 1996, Mr. Devlin was an
equity portfolio manager at
Mitchell Hutchins Asset
Management Inc. He is a
portfolio manager in the
Structured Equity Group.
James C. Wiess, Vice President 1992 - Present He is a portfolio manager in
the Structured Equity Group
and has been at J.P. Morgan
since 1992.
-----------
</TABLE>
-----------------------------
Allmerica Investment Trust
24
<PAGE>
<TABLE>
<CAPTION>
Fund Name and Name and Title of Service with Business Experience
Sub-Adviser Name Portfolio Manager(s) Sub-Adviser for Past Five Years
---------------- -------------------- ----------- -------------------
<S> <C> <C> <C>
Select Investment Grade Income Fund Ann K. Tripp, 1987 - Present She was a Portfolio Manager
Allmerica Asset Management, Inc. ("AAM") Vice President for AAM prior to becoming a
Vice President.
---------------
Money Market Fund John C. Donohue, Vice President 1995 - Present He was a portfolio manager
Allmerica Asset Management, Inc. at CS First Boston Investment
("AAM") Management prior to joining
AAM.
----
</TABLE>
- -----------------------------
Allmerica Investment Trust
25
<PAGE>
For the fiscal year ended December 31, 1999, the Funds paid the Manager the fees
shown in the table below:
Fee (as a percentage of
Fund average net assets)
- ---- -------------------
Select Emerging Markets Fund 1.35%
---------------------------- -----
Select Aggressive Growth Fund 0.85%
----------------------------- -----
Select Capital Appreciation Fund 0.91%
-------------------------------- -----
Select Value Opportunity Fund 0.90%
----------------------------- -----
Select International Equity Fund 0.89%
-------------------------------- -----
Select Growth Fund 0.78%
------------------ -----
Select Strategic Growth Fund 0.85%
---------------------------- -----
Select Growth and Income Fund 0.67%
----------------------------- -----
Investment Grade Income Fund (renamed the
Select Investment Grade Income Fund) 0.43%
----------------------------------- -----
Money Market Fund 0.24%
----------------- -----
For the fiscal year ended December 31, 1999, the Manager paid each Sub-Adviser
aggregate fees as set forth below:
<TABLE>
<CAPTION>
Fee (as a percentage of
Sub-Adviser average net assets)
----------- -------------------
<S> <C>
Schroder Investment Management North America Inc. (Select Emerging Markets Fund) 1.00%
-------------------------------------------------------------------------------- -----
Nicholas-Applegate Capital Management, L.P. (Select Aggressive Growth Fund) 0.48%
--------------------------------------------------------------------------- -----
T. Rowe Price Associates, Inc. (Select Capital Appreciation Fund) 0.46%
----------------------------------------------------------------- -----
Cramer Rosenthal McGlynn, LLC (Select Value Opportunity Fund) 0.52%
------------------------------------------------------------- -----
Bank of Ireland Asset Management (U.S.) Limited (Select International Equity Fund) 0.30%
---------------------------------------------------------------------------------- -----
Putnam Investment Management, Inc. (Select Growth Fund) 0.27%
------------------------------------------------------- -----
Cambiar Investors, Inc. * (Select Strategic Growth Fund) 0.50%
-------------------------------------------------------- -----
J.P. Morgan Investment Management Inc. ** (Select Growth and Income Fund) 0.26%
------------------------------------------------------------------------- -----
(Investment Grade Income Fund-renamed the
Allmerica Asset Management, Inc. Select Investment Grade Income Fund) 0.20%
---------------------------------------------------------------------- -----
Allmerica Asset Management, Inc. (Money Market Fund) 0.09%
---------------------------------------------------- -----
</TABLE>
-----------------------------
Allmerica Investment Trust
26
<PAGE>
* TCW replaced Cambiar Investors, Inc. ("Cambiar") Sub-Adviser of the Select
Strategic Growth Fund on April 1, 2000. Cambiar served as Sub-Adviser of
the Select Strategic Growth Fund from February 20, 1998 to March 31, 2000.
Cambiar received a fee computed daily at an annual rate based on the
average net assets of the Select Growth and Income Fund, based on the
following schedule:
Assets Rate
------ ----
First $50 Million 0.50%
----------------- -----
Next $100 Million 0.45%
----------------- -----
Next $100 Million 0.35%
----------------- -----
Next $100 Million 0.30%
----------------- -----
Over $350 Million 0.25%
----------------- -----
TCW receives a fee computed daily at an annual rate of 0.85% based on the
average daily net assets of the Select Strategic Growth Fund. When the average
daily net assets of the Fund exceed $100 million, the fee shall be computed
daily and paid quarterly at an annual rate of 0.75% of the total average daily
net assets of the Fund.
** J.P. Morgan Investment Management Inc. ("J.P. Morgan") replaced John A.
Levin & Co., Inc. ("Levin") as Sub-Adviser of the Select Growth and Income
Fund on April 1, 1999. Levin served as Sub-Adviser of the Select Growth and
Income Fund from September 1, 1994 to March 31, 1999. Levin received a fee
computed daily at an annual rate based on the average daily net assets of
the Select Growth and Income Fund, based on the following schedule:
Assets Rate
------ ----
First $100 Million 0.40%
------------------ -----
Next $200 Million 0.25%
----------------- -----
Over $300 Million 0.30%
----------------- -----
J.P. Morgan receives a fee computed daily at an annual rate based on the
average daily net assets of the Select Growth and Income Fund, based on the
following schedule:
Assets Rate
------ ----
First $500 Million 0.30%
------------------ -----
Next $500 Million 0.25%
----------------- -----
Over $1 Billion 0.20%
--------------- -----
- -----------------------------
Allmerica Investment Trust
27
<PAGE>
Pricing of Fund Shares
----------------------
The Funds sell and redeem their shares at a price equal to their net asset value
("NAV") without paying any sales or redemption charges. 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 NAV's 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. All securities of the Money
Market Fund are valued at amortized cost. Debt obligations in the other 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 other 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 Fund's 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 policies. The Distributor, Allmerica Investments, Inc., at its
expense, may provide promotional incentives to dealers who sell variable annuity
contracts which invest in the Funds. The Trust has obtained an exemptive order
from the Securities and Exchange Commission to permit Fund shares to be sold to
variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated life insurance companies and certain qualified
pension and retirement plans. Material irreconcilable conflicts may arise among
various insurance policy owners and plan participants. The Trustees will monitor
events to identify any material conflicts and determine if any action should be
taken to resolve such conflict.
No fee is charged by the Trust on redemption. The variable contracts funded
through the Separate Accounts are sold subject to certain fees and charges which
may include sales and redemption charges. See the prospectuses for the variable
insurance products.
Normally, redemption payments will be made within seven days after the Trust
receives a written redemption request. Redemptions may be suspended when trading
on the New York Stock Exchange is restricted or when permitted by the Securities
and Exchange Commission.
-----------------------------
Allmerica Investment Trust
28
<PAGE>
Distributions and Taxes
-----------------------
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 Select Growth and Income Fund and Select Investment Grade
Income Fund; annually in the case of the Select Emerging Markets Fund, Select
Aggressive Growth Fund, Select Capital Appreciation Fund, Select Value
Opportunity Fund, Select International Equity Fund, Select Growth Fund and
Select Strategic Growth Fund; and daily in the case of the Money Market 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.
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 from
a contract generally are subject to ordinary income tax and, in many cases, to
an additional 10% penalty tax on withdrawals before age 591/2. 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.
[GRAPHIC APPEARS HERE] Financial Highlights
--------------------
<TABLE>
<CAPTION>
Income from Investment Operations Less Distributions
--------------------------------------------- -----------------------------------------------------------------
Net Realized
Net and Distributions
Asset Net Unrealized Dividends from Net
Value Investment Gain (Loss) Total from from Net Realized Distributions
Year Ended Beginning Income on Investment Investment Capital in Return of Total
December 31, of Year (Loss)(/2/) Investments Operations Income Gains Excess Capital Distributions
------------ --------- ----------- ------------ ---------- ---------- ------------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Select Emerging
Markets
Fund(/1/)
1999 $0.784 $0.001 $0.513 $0.514 $(0.006) $ -- $ -- $ -- $(0.006)
1998(D) 1.000 0.006 (0.221) (0.215) (0.001) -- -- -- (0.001)
Select
Aggressive
Growth Fund
1999 2.460 (0.012) 0.963 0.951 -- -- -- -- --
1998 2.225 (0.008) 0.243 0.235 -- -- -- -- --
1997 2.037 (0.009) 0.387 0.378 -- (0.182) (0.008)(/3/) -- (0.190)
1996 1.848 (0.009) 0.351 0.342 -- (0.153) -- -- (0.153)
1995 1.397 (0.001) 0.452 0.451 -- -- -- -- --
Select Capital
Appreciation
Fund(/1/)
1999 1.640 (0.007) 0.423 0.416 -- (0.003) -- -- (0.003)
1998 1.698 (0.006) 0.241 0.235 -- (0.293) -- -- (0.293)
1997 1.485 (0.005) 0.218 0.213 -- -- -- -- --
1996 1.369 (0.003) 0.124 0.121 -- (0.005) -- -- (0.005)
1995(E) 1.000 (0.001) 0.397 0.396 -- (0.027) -- -- (0.027)
Select Value
Opportunity
Fund(/1/)
1999 1.686 0.006 (0.077) (0.071) -- (0.094) -- -- (0.094)
1998 1.626 0.014 0.066 0.080 (0.014) (0.006) -- -- (0.020)
1997 1.511 0.010 0.364 0.374 (0.010) (0.249) -- -- (0.259)
1996 1.238 0.011 0.342 0.353 (0.011) (0.069) -- -- (0.080)
1995 1.089 0.009 0.183 0.192 (0.009) (0.033) (0.001)(/3/) -- (0.043)
Select
International
Equity Fund
1999 1.542 0.012 0.477 0.489 -- -- -- -- --
1998 1.341 0.014 0.207 0.221 (0.020) -- -- -- (0.020)
1997 1.356 0.015 0.049 0.064 (0.019) (0.046) (0.014)(/4/) -- (0.079)
1996 1.136 0.011 0.238 0.249 (0.012) (0.003) (0.014)(/4/) -- (0.029)
1995 0.963 0.013 0.176 0.189 (0.011) (0.005) -- -- (0.016)
<CAPTION>
Net
Increase
(Decrease)
in
Year Ended Net Asset
December 31, Value
------------ ----------
<S> <C>
Select Emerging
Markets
Fund(/1/)
1999 $0.508
1998(D) (0.216)
Select
Aggressive
Growth Fund
1999 0.951
1998 0.235
1997 0.188
1996 0.189
1995 0.451
Select Capital
Appreciation
Fund(/1/)
1999 0.413
1998 (0.058)
1997 0.213
1996 0.116
1995(E) 0.369
Select Value
Opportunity
Fund(/1/)
1999 (0.165)
1998 0.060
1997 0.115
1996 0.273
1995 0.149
Select
International
Equity Fund
1999 0.489
1998 0.201
1997 (0.015)
1996 0.220
1995 0.173
</TABLE>
- ------------------
* Annualized
** Not Annualized
(A) Including reimbursements, waivers, and reductions.
(B) Excluding reductions. Certain Portfolios have entered into varying arrange-
ments with brokers who reduced a portion of the Portfolio's expenses.
(C) Excluding reimbursements and reductions.
(D) For period ended December 31, 1998.
(E) For period ended December 31, 1995.
(1) The Select Emerging Markets Fund commenced operations on February 20, 1998.
The Select Capital Appreciation Fund commenced operations on April 28, 1995
and changed sub-advisers on April 1, 1998. The Select Value Opportunity
Fund changed sub-advisers on January 1, 1997.
(2) Net investment income (loss) per share before reimbursement of fees by the
investment adviser or reductions were $0.000 in 1999, $0.004 in 1998 for
Select Emerging Markets Fund; $(0.013) in 1999, $(0.009) in 1998 and
$(0.010) in 1997 for Select Aggressive Growth Fund; $(0.001) in 1995 for
Select Capital Appreciation Fund; $0.005 in 1999, $0.013 in 1998, $0.009 in
1997 and $0.010 in 1996 for Select Value Opportunity Fund; and $0.011 in
1999, $0.014 in 1998, $0.015 in 1997 and $0.011 in 1996 for Select Interna-
tional Equity Fund.
(3) Distributions in excess of net realized capital gains.
(4) Distributions in excess of net investment income.
Ratios/Supplemental Data
-----------------------------------------------------
Ratios To Average Net Assets
----------------------------------------
<TABLE>
<CAPTION>
Net Asset Net Assets
Value End of Net Portfolio
End of Total Period Investment Operating Expenses Management Fee Turnover
Period Return (000's) Income (Loss) (A) (B) (C) Gross Net Rate
- --------- ------ ---------- ------------- ------ ------ ------ -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 1.292 65.72% $ 50,452 0.25% 1.88% 1.92% 1.92% 1.35% 1.35% 60%
0.784 (21.46)%** 20,873 0.96%* 2.19%* 2.19%* 2.54%* 1.35%* 1.00%* 62%**
3.411 38.66% 1,015,699 (0.46)% 0.88% 0.91% 0.91% 0.85% 0.85% 101%
2.460 10.56% 752,741 (0.36)% 0.92% 0.95% 0.95% 0.88% 0.88% 99%
2.225 18.71% 604,123 (0.45)% 0.99% 1.04% 1.04% 0.95% 0.95% 95%
2.037 18.55% 407,442 (0.53)% 1.08% 1.08% 1.08% 1.00% 1.00% 113%
1.848 32.28% 254,872 (0.07)% 1.09% -- 1.09% 1.00% 1.00% 104%
2.053 25.36% 417,087 (0.42)% 0.98% 0.98% 0.98% 0.91% 0.91% 61%
1.640 13.88% 310,582 (0.47)% 1.02% 1.04% 1.04% 0.94% 0.94% 141%
1.698 14.28% 240,526 (0.38)% 1.13% 1.13% 1.13% 0.98% 0.98% 133%
1.485 8.80% 142,680 (0.32)% 1.13% 1.13% 1.13% 1.00% 1.00% 98%
1.369 39.56%** 41,376 (0.25)%* 1.35%* -- 1.42%* 1.00%* 0.93%* 95%**
1.521 (4.70)% 308,331 0.43% 0.88% 0.97% 0.97% 0.90% 0.90% 98%
1.686 4.87% 268,405 0.95% 0.94% 0.98% 0.99% 0.91% 0.90% 73%
1.626 24.85% 202,139 0.73% 0.98% 1.04% 1.06% 0.92% 0.90% 110%
1.511 28.53% 113,969 0.91% 0.95% 0.97% 0.97% 0.85% 0.85% 20%
1.238 17.60% 64,575 0.86% 1.01% -- 1.01% 0.85% 0.85% 17%
2.031 31.71% 679,341 0.69% 1.01% 1.02% 1.02% 0.89% 0.89% 18%
1.542 16.48% 505,553 0.99% 1.01% 1.02% 1.02% 0.90% 0.90% 27%
1.341 4.65% 397,915 1.17% 1.15% 1.17% 1.17% 0.97% 0.97% 20%
1.356 21.94% 246,877 1.22% 1.20% 1.23% 1.23% 1.00% 1.00% 18%
1.136 19.63% 104,312 1.68% 1.24% -- 1.24% 1.00% 1.00% 24%
</TABLE>
FINANCIAL HIGHLIGHTS - For a Share Outstanding Throughout Each Period
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from Investment Operations
---------------------------------------------
Net Realized
Net and
Asset Net Unrealized
Value Investment Gain (Loss) Total from
Beginning Income on Investment
Year Ended December 31, of Period (Loss)(/2/) Investments Operations
- ----------------------- --------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
Select Growth Fund(/1/)
1999 $2.428 $(0.002) $0.709 $ 0.707
1998 1.811 0.002 0.638 0.640
1997 1.430 0.006 0.480 0.486
1996 1.369 0.005 0.297 0.302
1995 1.099 -- 0.270 0.270
Select Strategic
Growth Fund(/1/)
1999 0.973 0.003 0.153 0.156
1998(D) 1.000 0.002 (0.027) (0.025)
Select Growth and
Income Fund(/1/)
1999 1.779 0.022 0.298 0.320
1998 1.552 0.020 0.233 0.253
1997 1.405 0.020 0.293 0.313
1996 1.268 0.020 0.246 0.266
1995 1.027 0.019 0.290 0.309
<CAPTION>
Less Distributions
--------------------------------------------------------------
Net
Increase
Dividends Distributions (Decrease)
from Net from Net Distributions Return in
Investment Realized in of Total Net Asset
Year Ended December 31, Income Capital Gains Excess Capital Distributions Value
- ------------------------ ------------ ------------- ------------- ------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Select Growth Fund(/1/)
1999 $(0.001) $(0.085) $-- $-- $(0.086) 0.621
1998 --(3) (0.023) -- -- (0.023) 0.617
1997 (0.006) (0.099) -- -- (0.105) 0.381
1996 (0.005) (0.236) -- -- (0.241) 0.061
1995 -- -- -- -- -- 0.270
Select Strategic
Growth Fund(/1/)
1999 (0.003) -- -- -- (0.003) 0.153
1998(D) (0.002) -- -- -- (0.002) (0.027)
Select Growth and
Income Fund(/1/)
1999 (0.021) (0.145) -- -- (0.166) 0.154
1998 (0.020) (0.006) -- -- (0.026) 0.227
1997 (0.020) (0.146) -- -- (0.166) 0.147
1996 (0.020) (0.109) -- -- (0.129) 0.137
1995 (0.019) (0.049) -- -- (0.068) 0.241
</TABLE>
- ------------------------------------
* Annualized
** Not Annualized
(A) Including reimbursements and reductions.
(B) Excluding reductions. Certain Portfolios have entered into varying
arrangements with brokers who reduced a portion of the Portfolio's
expenses.
(C) Excluding reimbursements and reductions.
(D) For period ended December 31, 1998.
(1) The Select Growth Fund changed sub-advisers on July 1, 1996. The Select
Strategic Growth Fund commenced operations on February 20, 1998 and changed
sub-advisers on April 1, 2000. The Select Growth and Income Fund changed
sub-advisers on April 1, 1999.
(2) Net investment income (loss) per share before reimbursement of fees by the
investment adviser or reductions were $(0.003) in 1999, $0.001 in 1998,
$0.006 in 1997 and $0.005 in 1996 for Select Growth Fund; $0.003 in 1999,
$(0.001) in 1998 for Select Strategic Growth Fund; $0.019 in 1999, $0.027
in 1998, $0.038 in 1997 and $0.046 in 1996 for Growth Fund and $0.022 in
1999, $0.019 in 1998, $0.019 in 1997 and $0.019 in 1996 for the Select
Growth and Income Fund.
(3) Dividends from net investment income are less than $0.0005.
<TABLE>
<CAPTION>
Ratios/Supplemental Data
---------------------------------------------------------------------
Ratios To Average Net Assets
---------------------------------------------------
Net Assets
Net Asset End of Net Operating Management Portfolio
Value End Total Period Investment Expenses Fee Turnover
of Period Returns (000's) Income (Loss) (A) (B) (C) Gross Net Rate
- --------- ------- ---------- ------------- ---- ---- ---- ----- ---- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$3.049 29.80% $1,216,365 (0.08)% 0.81% 0.83% 0.83% 0.78% 0.78% 84%
2.428 35.44% 815,390 0.08% 0.85% 0.87% 0.87% 0.82% 0.82% 86%
1.811 34.06% 470,356 0.42% 0.91% 0.93% 0.93% 0.85% 0.85% 75%
1.430 22.02% 228,551 0.38% 0.92% 0.93% 0.93% 0.85% 0.85% 159%
1.369 24.59% 143,125 0.02% 0.97% -- 0.97% 0.85% 0.85% 51%
1.126 16.06% 31,254 0.41% 1.17% 1.20% 1.20% 0.85% 0.85% 58%
0.973 (2.47)%** 14,839 0.41%* 1.14%* 1.20%* 1.66%* 0.85%* 0.39%* 24%**
1.933 18.43% 844,538 1.17% 0.73% 0.74% 0.74% 0.67% 0.67% 131%
1.779 16.43% 646,086 1.26% 0.70% 0.73% 0.73% 0.68% 0.68% 112%
1.552 22.51% 473,552 1.34% 0.77% 0.80% 0.80% 0.73% 0.73% 71%
1.405 21.26% 295,638 1.44% 0.80% 0.83% 0.83% 0.75% 0.75% 78%
1.268 30.32% 191,610 1.69% 0.85% -- 0.85% 0.75% 0.75% 112%
</TABLE>
FINANCIAL HIGHLIGHTS - For a Share Outstanding Throughout Each Period
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from Investment Operations Less Distributions
--------------------------------------------------------- ------------------------------------------------------
Net Realized
Net and Distributions
Asset Net Unrealized Dividends from Net
Value Investment Gain (Loss) Total from from Net Realized Distributions
Year Ended Beginning Income on Investment Investment Capital in Return of Total
December 31, of Year (Loss) Investments Operations Income Gains Excess Capital Distributions
------------ --------- ------------ ------------ ---------- ---------- ------------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Grade
Income Fund(1)
1999 1.132 0.068 (0.079) (0.011) (0.069) (0.001) -- -- (0.070)
1998 1.112 0.067 0.020 0.087 (0.067) -- -- -- (0.067)
1997 1.084 0.071 0.028 0.099 (0.071) -- -- -- (0.071)
1996 1.117 0.070 (0.033) 0.037 (0.070) -- -- -- (0.070)
1995 1.012 0.071 0.106 0.177 (0.071) -- (0.001)(2) -- (0.072)
Money Market
Fund
1999 1.000 0.051 -- 0.051 (0.051) -- -- -- (0.051)
1998 1.000 0.054 -- 0.054 (0.054) -- -- -- (0.054)
1997 1.000 0.053 -- 0.053 (0.053) -- -- -- (0.053)
1996 1.000 0.052 -- 0.052 (0.052) -- -- -- (0.052)
1995 1.000 0.057 -- 0.057 (0.057) -- -- -- (0.057)
<CAPTION>
Net
Increase
(Decrease)
in
Year Ended Net Asset
December 31, Value
------------ ----------
<S> <C>
Investment Grade
Income Fund(/2/)
1999 (0.081)
1998 0.020
1997 0.028
1996 (0.033)
1995 0.105
Money Market
Fund
1999 --
1998 --
1997 --
1996 --
1995 --
</TABLE>
- ------------------------------------
(A) Including reimbursements and reductions.
(B) Excluding reductions. Certain Portfolios have entered into varying
arrangements with brokers who reduced a portion of the Portfolio's
expenses.
(C) Excluding reimbursements and reductions.
(1) Effective May 1, 2000, the name of the Investment Grade Income Fund was
changed to the Select Investment Grade Income Fund.
(2) Distributions in excess of net investment income.
<TABLE>
<CAPTION>
Ratios/Supplemental Data
---------------------------------------------------------------
Ratios To Average Net Assets
------------------------------------------------
Net Assets
Net Asset End of Net Operating Management Portfolio
Value End Total Year Investment Expenses Fee Turnover
of Year Return (000's) Income (Loss) (A) (B) (C) Gross Net Rate
- --------- ------ ---------- ------------- ---- ---- ---- ----- ---- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1.051 (0.97)% 240,541 6.22% 0.50% 0.50% 0.50% 0.43% 0.43% 75%
1.132 7.97% 230,623 6.01% 0.52% 0.52% 0.52% 0.43% 0.43% 158%
1.112 9.45% 189,503 6.48% 0.51% 0.51% 0.51% 0.41% 0.41% 48%
1.084 3.56% 157,327 6.50% 0.52% 0.52% 0.52% 0.40% 0.40% 108%
1.117 17.84% 141,625 6.66% 0.53% -- 0.53% 0.41% 0.41% 126%
1.000 5.19% 513,606 5.09% 0.29% 0.29% 0.29% 0.24% 0.24% N/A
1.000 5.51% 336,253 5.36% 0.32% 0.32% 0.32% 0.26% 0.26% N/A
1.000 5.47% 260,620 5.33% 0.35% 0.35% 0.35% 0.27% 0.27% N/A
1.000 5.36% 217,256 5.22% 0.34% 0.34% 0.34% 0.28% 0.28% N/A
1.000 5.84% 155,211 5.68% 0.36% -- 0.36% 0.29% 0.29% N/A
</TABLE>
The financial highlights tables are intended to help you understand each Fund's
financial performance for the past five years (or, if shorter, the period of the
Fund's operations). 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). This information has been audited by
PricewaterhouseCoopers LLP, whose report, along with each Fund's financial
statements, are included in the Statement of Additional Information or annual
report, which is available upon request.
- -----------------------------
Allmerica Investment Trust
29
<PAGE>
Appendix
[GRAPHIC]
Investment Techniques and Strategies
In managing its portfolios of investments, the Trust may make use of the
following investment techniques and strategies:
Symbols
o Permitted
-- Not Permitted
<TABLE>
<CAPTION>
Select Select Select Select Select
Emerging Aggressive Capital Value International Select
Markets Growth Appreciation Opportunity Equity Growth
Investment Technique/Strategy Fund Fund Fund Fund Fund Fund
- ----------------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Asset-Backed Securities -- -- -- -- -- --
Financial Futures Contracts
and Related Options o o o o o o
Foreign Securities o o o o o o
Forward Commitments -- -- o -- -- --
Forward Contracts on Foreign Currencies o -- o -- o o
High Yield Securities o -- o -- -- o
Investments in Money Market Securities o o o o o o
Mortgage-Backed Securities -- -- -- -- -- --
Purchasing Options o o o o o o
Repurchase Agreements o o o o o o
Restricted Securities o o o o o o
Reverse Repurchase Agreements -- -- o -- -- --
Securities Lending o o o o o o
Stand-By Commitments -- -- -- -- -- --
Stripped Mortgage-Backed Securities -- -- -- -- -- --
Swap and Swap-Related Products -- -- o -- -- --
When-Issued Securities o o o o o o
Writing Covered Options o o o o o o
- ----------------------- - - - - - -
<CAPTION>
Select Select Select Investment
Strategic Growth Grade Money
Growth and Income Income Market
Investment Technique/Strategy Fund Fund Fund Fund
---- ---- ---- ----
<S> <C> <C> <C> <C>
Asset-Backed Securities -- o o o
Financial Futures Contracts
and Related Options o o o --
Foreign Securities o o o o
Forward Commitments -- -- o o
Forward Contracts on Foreign Currencies -- -- -- --
High Yield Securities -- o -- --
Investments in Money Market Securities o o o o
Mortgage-Backed Securities -- -- o --
Purchasing Options o o o --
Repurchase Agreements o o o o
Restricted Securities o o o o
Reverse Repurchase Agreements -- -- -- --
Securities Lending o o o o
Stand-By Commitments -- -- o o
Stripped Mortgage-Backed Securities -- -- o --
Swap and Swap-Related Products -- -- -- --
When-Issued Securities o o o o
Writing Covered Options o o o --
- ----------------------- - - - --
</TABLE>
-----------------------------
30 Allmerica Investment Trust
<PAGE>
Allmerica Investment Trust
Select Emerging Markets Fund
Select Aggressive Growth Fund
Select Capital Appreciation Fund
Select Value Opportunity Fund
Select International Equity Fund
Select Growth Fund
Select Strategic Growth Fund
Select Growth and Income Fund
Select Investment Grade Income Fund
Money Market Fund
The Trust's Statement of Additional Information ("SAI") includes additional
information about the Funds. The Trust's annual and semi-annual reports to
shareholders include information about the investments of the Funds. The SAI and
the financial statements included in the Fund's most recent annual report to
shareholders are incorporated by reference into this prospectus, which means
they are part of this prospectus for legal purposes. The Trust's annual report
discusses the market conditions and investment strategies that significantly
affected each Fund's performance during its last fiscal year. You may get free
copies of these materials, request other information about a Fund or make
shareholder inquiries by calling 1-800-828-0540.
You may review and copy information about the Trust, including its SAI, at the
Securities and Exchange Commission's Public Reference Room in Washington, D.C.
You may call the Commission at 1-800-SEC-0330 for information about the
operation of the Public Reference Room. You may also access reports and other
information about the Trust on the Commission's Internet site at
http://www.sec.gov. You may get copies of this information, with payment of a
duplication fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009. You may need to refer to the Trust's file number
under the Investment Company Act, which is 811-4138.
ALLMERICA
INVESTMENT
TRUST
440 Lincoln Street, Worcester, Massachusetts 01653
1-800-828-0540
<PAGE>
Allmerica Investment Trust
- --------------------------
Prospectus
May 1, 2000
This Prospectus describes the following seven investment Funds of the Trust
which serve as the underlying investments for insurance related accounts.
Select Aggressive Growth Fund
Select International Equity Fund
Core Equity Fund
Equity Index Fund
Select Investment Grade Income Fund
Government Bond Fund
Money Market Fund
This Prospectus explains what you should know about each of the Funds. Please
read it carefully before you invest.
A particular Fund may not be available under the variable annuity or variable
life insurance policy which you have chosen. The Prospectus of the specific
insurance product you have chosen will indicate which Funds are available and
should be read in conjunction with this Prospectus. Inclusion in this Prospectus
of a Fund which is not available under your policy is not to be considered a
solicitation.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this Prospectus is adequate or complete. Any representation to the contrary is a
criminal offense.
ALLMERICA
INVESTMENT
TRUST
440 Lincoln Street
Worcester, Massachusetts 01653
1-800-828-0540
<PAGE>
Table of Contents
FUND SUMMARIES....................................................... 3
Objectives, Strategies and Risks............................. 4
Select Aggressive Growth Fund.......................... 4
Select International Equity Fund....................... 5
Core Equity Fund....................................... 6
Equity Index Fund...................................... 7
Select Investment Grade Income Fund.................... 8
Government Bond Fund................................... 9
Money Market Fund...................................... 10
EXPENSE SUMMARY...................................................... 11
DESCRIPTION OF PRINCIPAL INVESTMENT RISKS............................ 13
OTHER INVESTMENT STRATEGIES.......................................... 15
MANAGEMENT OF THE FUNDS.............................................. 17
PRICING OF FUND SHARES............................................... 22
PURCHASE AND REDEMPTION OF SHARES.................................... 22
DISTRIBUTIONS AND TAXES.............................................. 23
FINANCIAL HIGHLIGHTS................................................. 25
APPENDIX............................................................. 30
LEGEND
Performance [GRAPHIC APPEARS HERE]
Investment Objectives [GRAPHIC APPEARS HERE]
Financial Information [GRAPHIC APPEARS HERE]
Management of Fund [GRAPHIC APPEARS HERE]
Risk [GRAPHIC APPEARS HERE]
Investment Strategies [GRAPHIC APPEARS HERE]
- -----------------------------
Allmerica Investment Trust 2
<PAGE>
Fund Summaries
--------------
Allmerica Investment Trust provides a broad range of investment options through
separate investment portfolios, or Funds. Shares of the Funds are sold
exclusively to variable annuity and variable life insurance Separate Accounts
and qualified pension and retirement plans.
The investment manager of the Trust is Allmerica Financial Investment Management
Services, Inc. The Manager is responsible for managing the Trust's daily
business and has general responsibility for the management of the investments of
the Funds. The Manager, at its expense, has contracted with investment
Sub-Advisers to manage the investments of the Funds. Each Sub-Adviser has been
selected on the basis of various factors including management experience,
investment techniques and staffing. See "Management of the Funds" for more
information about the Manager and the Sub-Advisers.
The following summaries describe each Fund's investment objective and principal
investment strategies, identify the principal investment risks of investing in
the Fund and provide performance charts for the Fund. Note that any percentage
limitations listed under a Fund's principal investment strategies apply at the
time of investment. The principal risks are discussed in more detail under
"Description of Principal Investment Risks". The bar charts show how the
investment returns of the shares of a Fund have varied in the past 10 years (or
for the life of the Fund if less than 10 years). The table following each bar
chart shows how the Fund's average annual return for the last one, five and ten
years (or for the life of the Fund, if shorter) compare to those of a
broad-based securities market index. Past performance does not necessarily
indicate how the Fund will perform in the future. The bar charts and tables give
some indication of the risks of investing in each Fund by showing changes in the
Fund's performance. The bar charts and tables do not reflect expenses associated
with the variable insurance product that you are purchasing. If those expenses
had been reflected, the performance shown would have been lower.
- -----------------------------
Allmerica Investment Trust 3
<PAGE>
Objectives, Strategies and Risks
Select Aggressive Growth Fund
-----------------------------
[GRAPHIC APPEARS HERE] Sub-Adviser: Nicholas-Applegate Capital Management, L.P.
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks above-average
capital appreciation by investing primarily in common
stocks of companies which are believed to have
significant potential for capital appreciation.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: To pursue this goal,
the Fund looks predominantly for stocks of small and
mid-size companies that show potential for rapid growth.
The Fund typically invests in companies that, because of
positive developments affecting the company, offer the
possibility of accelerating earnings. The Sub-Adviser
uses systematic, fundamental research in selecting
investments for the Fund.
Under normal circumstances, the Fund invests at least
65% of its assets in common stocks, securities
convertible into common stocks and warrants. The Fund
also may invest in debt securities and preferred stocks
and up to 25% of its assets in foreign securities (not
including its investments in American Depositary
Receipts or "ADRs").
[GRAPHIC APPEARS HERE] Principal Risks:
. Company Risk
. Derivatives Risk
. Investment Management Risk
. Liquidity Risk
. Market Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns [GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
19.51% -2.31% 32.28% 18.55% 18.71% 10.56% 38.66%
- ------ ------ ------ ------ ------ ------ ------
1993 1994 1995 1996 1997 1998 1999
During the period shown above the highest quarterly return was 25.64% for the
quarter ended 12/31/99 and the lowest was (22.81)% for the quarter ended
9/30/98.
Performance Table
<TABLE>
<CAPTION>
Average Annual Total Returns
(for the periods ending Past Past Since Inception
December 31, 1999) One Year Five Years (August 21, 1992)
- ------------------ -------- ---------- -----------------
<S> <C> <C> <C>
Fund Shares 38.66% 23.32% 20.71%
----------- ------ ------ ------
Russell 2500 Index* 24.15% 19.43% 17.37%
------------------- ------ ------ ------
</TABLE>
* The Russell 2500 Index is an unmanaged composite of 2,500 small-to-mid
capitalization stocks.
-----------------------------
4 Allmerica Investment Trust
<PAGE>
Objectives, Strategies and Risks
Select International Equity Fund
--------------------------------
[GRAPHIC APPEARS HERE] Sub-Adviser: Bank of Ireland Asset Management (U.S.)
Limited
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks maximum long-term
total return (capital appreciation and income) primarily
by investing in common stocks of established non-U.S.
companies.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: Under normal market
conditions, at least 65% of the Fund's assets will be
invested in the securities of medium and large-size
companies located in at least five foreign countries,
not including the United States. To achieve its
objective, the Fund focuses on equity securities which
the Sub-Adviser believes are undervalued in relation to
the company's prospects for future earnings growth. The
Fund may also buy fixed-income debt securities,
primarily for defensive purposes.
[GRAPHIC APPEARS HERE] Principal Risks:
. Company Risk
. Currency Risk
. Derivatives Risk
. Foreign Investment Risk
. Investment Management Risk
. Market Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns [GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
19.63% 21.94% 4.65% 16.48% 31.71%
------ ------ ----- ------ ------
1995 1996 1997 1998 1999
During the period shown above the highest quarterly return was 20.89% for the
quarter ended 12/31/99 and the lowest was (17.69)% for the quarter ended
09/30/98.
Performance Table
Average Annual Total Returns
(for the periods ending Past Past Since Inception
December 31, 1999) One Year Five Years (May 2, 1994)
- ------------------ -------- ---------- -------------
Fund Shares 31.71% 18.54% 15.47%
----------- ------ ------ ------
Morgan Stanley Capital Intl.
EAFE Index* 27.31% 13.15% 11.54%
----------- ------ ------ ------
* The Morgan Stanley Capital International EAFE (Europe, Australia, Far East)
Index, reflecting reinvestment of gross dividends, is an unmanaged
capitalization weighted index of foreign developed country common stocks.
- -----------------------------
Allmerica Investment Trust 5
<PAGE>
Objectives, Strategies and Risks
Core Equity Fund
----------------
(formerly the Growth Fund)
[GRAPHIC APPEARS HERE] Sub-Adviser: Miller Anderson & Sherrerd, LLP
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks to achieve
long-term growth of capital through investments
primarily in common stocks and securities convertible
into common stocks that are believed to represent
significant underlying value in relation to current
market prices. Realization of current income, if any, is
incidental to this objective.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: To pursue its goal, the
Fund invests in securities that are diversified with
regard to issuers and industries. In selecting
securities, the Fund is not limited to any particular
style of investing and may invest in stocks considered
to be "growth" stocks as well as stocks considered to be
"value" stocks. The Fund may invest in well-established
or developing companies, both large and small.
The Fund normally will invest substantially all of its
assets in equity-type securities, including common
stocks, warrants, preferred stocks and debt securities
convertible into common stock and eligible real estate
securities. The Fund may invest up to 25% of its assets
in foreign securities (not including its investments in
ADRs).
[GRAPHIC APPEARS HERE] Principal Risks:
. Company Risk
. Derivatives Risk
. Investment Management Risk
. Market Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns [GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
1990........................... -0.30%
1991........................... 40.44%
1992........................... 7.11%
1993........................... 6.66%
1994........................... 0.16%
1995........................... 32.80%
1996........................... 20.19%
1997........................... 25.14%
1998........................... 19.32%
1999........................... 29.33%
During the period shown above the highest quarterly return was 21.48% for the
quarter ended 12/31/98 and the lowest was (14.61)% for the quarter ended
9/30/90.
Performance Table
Average Annual Total Returns
(for the periods ending Past Past Past
December 31, 1999) One Year Five Years Ten Years
- ------------------ -------- ---------- ---------
Fund Shares 29.33% 25.23% 17.31%
- ----------- ------ ------ ------
S&P 500 Index* 21.03% 28.55% 18.21%
- -------------- ------ ------ ------
* The S&P 500 Index(R), reflecting reinvestment of dividends, is an unmanaged
index of 500 leading stocks. S&P 500(R) Index is a registered trademark of
Standard & Poor's Corporation.
-----------------------------
6 Allmerica Investment Trust
<PAGE>
Objectives, Strategies and Risks
Equity Index Fund
-----------------
[GRAPHIC APPEARS HERE] Sub-Adviser: Allmerica Asset Management, Inc.
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks to achieve
investment results that correspond to the aggregate
price and yield performance of a representative
selection of common stocks that are publicly traded in
the United States.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: The Fund tries to
achieve its objective by attempting to replicate the
aggregate price and yield performance of the S&P 500
Index. Because of its policy of tracking the S&P 500
Index, the Fund does not follow traditional methods of
active investment management, which involve buying and
selling securities based upon analysis of economic and
market factors. The method used to select investments
for the Fund involves investing in common stocks in
approximately the order of their weightings in the S&P
500 Index. Under normal circumstances, the Fund will
hold approximately 500 different stocks included in the
S&P 500 Index. The Fund will incur expenses that are not
reflected in the performance results of the S&P 500
Index. Therefore, the return of the Fund may be lower
than the return of the S&P 500 Index. These factors,
among others, may result in "tracking error", which is a
measure of the degree to which the Fund's results differ
from the results of the S&P 500 Index.
[GRAPHIC APPEARS HERE] Principal Risks:
. Company Risk
. Derivatives Risk
. Market Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns [GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
1991.............................. 29.16%
1992.............................. 7.25%
1993.............................. 9.53%
1994.............................. 1.06%
1995.............................. 36.18%
1996.............................. 22.30%
1997.............................. 32.41%
1998.............................. 28.33%
1999.............................. 20.41%
During the period shown above the highest quarterly return was 21.41% for the
quarter ended 12/31/98 and the lowest was (9.96)% for the quarter ended 9/30/98.
Performance Table
Average Annual Total Returns
(for the periods ending Past Past Since Inception
December 31, 1999) One Year Five Years (September 28, 1990)
- ------------------ -------- ---------- --------------------
Fund Shares 20.41% 27.77% 20.66%
- ----------- ------ ------ ------
S&P 500 Index* 21.03% 28.55% 21.35%
- -------------- ------ ------ ------
* The S&P 500 Index(R), reflecting reinvestment of dividends, is an unmanaged
index of 500 leading stocks. S&P 500(R) Index is a registered trademark of
Standard & Poor's Corporation.
- -----------------------------
Allmerica Investment Trust 7
<PAGE>
Objectives, Strategies and Risks
Select Investment Grade Income Fund
-----------------------------------
(formerly the Investment Grade Income Fund)
[GRAPHIC APPEARS HERE] Sub-Adviser: Allmerica Asset Management, Inc.
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks as high a level of
total return, which includes capital appreciation as
well as income, as is consistent with prudent investment
management.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: To achieve its goal,
the Fund invests in investment grade debt securities and
money market instruments such as bonds and other
corporate debt obligations; obligations issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities, or money market instruments,
including commercial paper, bankers acceptances and
negotiable certificates of deposit. The Fund also may
invest in mortgage-backed and asset-backed securities.
The Fund may invest up to 25% of its assets in foreign
securities (not including its investments in ADRs) and
up to 25% of its assets in debt obligations of
supranational entities.
Investment grade securities are rated in the four
highest grades by Moody's Investors Services or Standard
& Poor's Rating Services or unrated but determined by
the Sub-Adviser to be of comparable quality. For more
information about rating categories, see the Appendix to
the Statement of Additional Information ("SAI"). The
Fund may invest in securities with relatively long
maturities as well as securities with shorter
maturities.
The Sub-Adviser actively manages the portfolio with a
view to producing a high level of total return for the
Fund while avoiding undue risks to capital. The
Sub-Adviser attempts to anticipate events leading to
price or ratings changes through using in-depth
fundamental credit research.
[GRAPHIC APPEARS HERE] Principal Risks:
. Company Risk
. Interest Rate Risk
. Investment Management Risk
. Liquidity Risk
. Market Risk
. Prepayment Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns [GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
1990 .................... 8.02%
1991 ....................16.75%
1992 .................... 8.33%
1993 ....................10.80%
1994 ....................-2.96%
1995 ....................17.84%
1996 .................... 3.56%
1997 .................... 9.45%
1998 .................... 7.97%
1999 ....................-0.97%
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 3/31/94.
Performance Table
Average Annual Total Returns
(for the periods ending Past Past Past
December 31, 1999) One Year Five Years Ten Years
- ------------------ -------- ---------- ---------
Fund Shares -0.97% 7.38% 7.69%
- ----------- ------ ----- -----
Lehman Brothers
Aggregate Bond Index* -0.83% 7.73% 7.69%
- --------------------- ------ ----- -----
* The Lehman Brothers Aggregate Bond Index(R) is an unmanaged index of 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.
-----------------------------
8 Allmerica Investment Trust
<PAGE>
Objectives, Strategies and Risks
Government Bond Fund
--------------------
[GRAPHIC APPEARS HERE] Sub-Adviser: Allmerica Asset Management, Inc.
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks high income,
preservation of capital, and maintenance of liquidity
primarily through investments in debt instruments issued
or guaranteed by the U.S. Government or its agencies or
instrumentalities ("U.S. Government securities") and in
related options, futures, and repurchase agreements.
Under normal conditions, at least 80% of the Fund's
assets will be invested in U.S. Government securities.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: To pursue its
objective, the Fund invests in U.S. Government
securities, such as Treasury bills, notes, and bonds,
which may differ only in their interest rates,
maturities and times of issuance. The Fund also may
invest in mortgage-backed government securities, other
instruments secured by U.S. Government securities,
asset-backed securities and separately-traded principal
and interest components of U.S. Treasury securities. The
Fund may invest up to 25% of its assets in debt
obligations of supranational entities.
The Sub-Adviser selects securities for the portfolio
with a view to producing a high level of current income
while avoiding undue risks to capital. The Fund may
invest in securities with relatively long maturities as
well as securities with shorter maturities.
[GRAPHIC APPEARS HERE] Principal Risks:
. Credit Risk
. Interest Rate Risk
. Investment Management Risk
. Market Risk
. Prepayment Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns [GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
1992................................. 6.59%
1993................................. 7.51%
1994................................. -0.88%
1995................................. 13.06%
1996................................. 3.51%
1997................................. 7.08%
1998................................. 7.67%
1999................................. 0.23%
During the period shown above the highest quarterly return was 4.32% for the
quarter ended 9/30/98 and the lowest was (1.49)% for the quarter ended 3/31/92.
Performance Table
Average Annual Total Returns
(for the periods ending Past Past Since Inception
December 31, 1999) One Year Five Years (August 26, 1991)
- ------------------ -------- ---------- -----------------
Fund Shares 0.23% 6.22% 6.16%
- ----------- ----- ----- -----
Lehman Brothers
Intermediate Government
Bond Index* 0.50% 6.93% 6.55%
- ----------- ----- ----- -----
* The Lehman Brothers Intermediate Government Bond Index(R) is an unmanaged
index of U.S. Government and Agency bonds with remaining maturities of one
to ten years.
- -----------------------------
Allmerica Investment Trust
9
<PAGE>
Objectives, Strategies and Risks
Money Market Fund
-----------------
[GRAPHIC APPEARS HERE] Sub-Adviser: Allmerica Asset Management, Inc.
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks to obtain maximum
current income consistent with preservation of capital
and liquidity.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: The Fund seeks to
achieve its objective by investing in high quality money
market instruments such as obligations issued or
guaranteed by the United States Government, its
agencies, or instrumentalities; commercial paper;
obligations of banks or savings and loan associations
including bankers acceptances and certificates of
deposit; repurchase agreements and cash and cash
equivalents. The Fund may invest up to 25% of its assets
in U.S. dollar denominated foreign debt securities and
short-term instruments (not including investments in
ADRs).
Any security purchased for the Fund must receive the
highest or second highest quality rating by at least two
recognized rating agencies or by one if only one has
rated the security. If the security is unrated the
security must be seen by the Sub-Adviser as having
comparable quality. Portfolio securities will have a
remaining maturity of 397 days or less and the portfolio
is managed to maintain a dollar-weighted maturity of 90
days or less.
The Fund attempts to maintain a constant net asset value
of $1.00 per share but it may not be able to do so due
to adverse market conditions or other factors and it is
possible for investors to lose money by investing in the
Fund. An investment in the Fund is not a bank deposit
and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
[GRAPHIC APPEARS HERE] Principal Risks:
. Credit Risk
. Interest Rate Risk
. Investment Management Risk
. Market Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns[GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
8.17% 6.22% 3.78% 3.00% 3.93% 5.84% 5.36% 5.47% 5.51% 5.19%
- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
During the period shown above the highest quarterly return was 2.01% for the
quarter ended 06/30/90 and the lowest was 0.73% for the quarter ended 6/30/93.
Performance Table
Average Annual Total Returns
(for the periods ending Past Past Past
December 31, 1999) One Year Five Years Ten Years
- ------------------ -------- ---------- ---------
Fund Shares 5.19% 5.47% 5.23%
----------- ----- ----- -----
IBC/Donoghue First Tier
Money Market Index* 4.57% 4.97% 4.79%
------------------- ----- ----- -----
* IBC/Donoghue is an independent firm that tracks regulated money market funds
on a yield, shareholder, assets size and portfolio allocation basis.
The Fund's 7-day yield ending December 31, 1999 was 5.57%.
-------------------------------
Allmerica Investment Trust
10
<PAGE>
Expense Summary
Expenses are one of several factors to consider when investing in a Fund.
Expenses shown are based on expenses incurred in respect of shares of the Funds
for the 1999 fiscal year. The Examples show the cumulative expenses attributable
to a hypothetical $10,000 investment in each Fund over specified periods.
Fees and Expenses of the Funds
This table describes the fees and expenses that you may pay if you invest in the
Funds. Please note that the expenses listed below do not include the expenses of
the applicable variable insurance product that you are purchasing. 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.
<TABLE>
<CAPTION>
Annual Fund Operating Expenses
Shareholder (expenses deducted from Fund assets) Total Annual
Fees Fund
(fees paid directly Management Distribution Other Operating
from your investment) Fees (12b-1) Fees Expenses Expenses
--------------------- ---- ------------ -------- --------
<S> <C> <C> <C> <C> <C>
Select Aggressive Growth Fund None 0.81%* None 0.06% 0.87%(1),(2)*
----------------------------- ---- ----- ---- -----
Select International Equity Fund None 0.89% None 0.13% 1.02%(1),(2)
-------------------------------- ---- ----- ---- -----
Core Equity Fund None 0.43% None 0.05% 0.48%(1),(2)
---------------- ---- ----- ---- -----
Equity Index Fund None 0.28% None 0.07% 0.35%(1)
----------------- ---- ----- ---- -----
Select Investment Grade Income Fund None 0.43% None 0.07% 0.50%(1)
----------------------------------- ---- ----- ---- -----
Government Bond Fund None 0.50% None 0.12% 0.62%(1)
-------------------- ---- ----- ---- -----
Money Market Fund None 0.24% None 0.05% 0.29%(1)
----------------- ---- ----- ---- -----
</TABLE>
* Effective September 1, 1999, the management fee rate for the Select
Aggressive Growth Fund was revised. The Management Fee and Total Annual
Fund Operating Expense ratios shown in the table above have been adjusted
to assume that the revised rate took effect on January 1, 1999.
(1) Through December 31, 2000, Allmerica Financial Investment Management
Services, Inc. (the "Manager") has declared a voluntary expense limitation
of 1.35% of average net assets for the Select Aggressive Growth Fund, 1.50%
for the Select International Equity Fund, 1.20% for the Core Equity Fund,
1.00% for the Select Investment Grade Income Fund and Government Bond Fund,
and 0.60% for the Equity Index Fund and Money Market Fund. The total
operating expenses of these Funds of the Trust were less than their
respective expense limitations throughout 1999.
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) These Funds 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 ratios
would have been 0.88% for the Select Aggressive Growth Fund, 1.01% for the
Select International Equity Fund, and 0.45% for the Core Equity Fund.
- -----------------------------
Allmerica Investment Trust
11
<PAGE>
Example
This Example is intended to help you compare the cost of investing in a Fund
with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in a Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment earns a 5% return each year and that
the Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
Fund 1 Year 3 Years 5 Years 10 Years
---- ------ ------- ------- --------
Select Aggressive Growth Fund $93 $291 $506 $1,123
----------------------------- --- ---- ---- ------
Select International Equity Fund $105 $326 $566 $1,253
-------------------------------- ---- ---- ---- ------
Core Equity Fund $49 $154 $269 $605
---------------- --- ---- ---- ----
Equity Index Fund $36 $113 $197 $444
----------------- --- ---- ---- ----
Select Investment Grade Income Fund $51 $161 $280 $629
----------------------------------- --- ---- ---- ----
Government Bond Fund $64 $199 $347 $776
-------------------- --- ---- ---- ----
Money Market Fund $30 $93 $163 $369
----------------- --- --- ---- ----
-----------------------------
Allmerica Investment Trust
12
<PAGE>
[GRAPHIC] Description of Principal Investment 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 "Fund Summaries".
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 objective,
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. The price of a fixed income security can be expected to fall if the
issuer defaults on its obligation to pay principal or interest, the rating
agencies downgrade the issuer's credit rating or there is negative news that
affects the market's perception of the issuer's 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.
- -----------------------------
Allmerica Investment Trust
13
<PAGE>
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 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 Fund's
portfolio will generally fall. Conversely, when interest rates fall, the prices
of fixed income securities in the Fund's 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 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.
-----------------------------
Allmerica Investment Trust
14
<PAGE>
[GRAPHIC] Other Investment Strategies
-------------------------------------
The Fund Summaries starting on page 3 describe the investment objective and the
principal investment strategies and risks of each Fund. The Funds may at times
use the following investment strategies. Attached as an Appendix is a chart with
a listing of various investment techniques and strategies that the Sub-Advisers
of the Funds may utilize. A Fund may decide that it is in the best interests of
shareholders to make changes to its investment objective and strategies
described in this Prospectus. These investment objectives and strategies may be
changed with the approval of the Board of Trustees, but without shareholder
approval.
Derivative Investments. (applicable to each Fund except the Money Market Fund)
Instead of investing directly in the types of portfolio securities described in
the Summary, each Fund, except the Money Market Fund, may buy or sell a variety
of "derivative" investments to gain exposure to particular securities or
markets. Derivatives are financial contracts whose value depends on, or is
derived from, the value of an underlying asset, reference rate or index. A
Fund's Sub-Adviser will sometimes use derivatives as part of a strategy designed
to reduce other risks and sometimes will use derivatives to enhance returns,
which increases opportunities for gain but also involves greater risk.
Foreign Investments. (applicable to each Fund except the Government Bond Fund)
Each Fund, except the Government Bond Fund, may invest all or a substantial part
of its portfolio in securities of companies that are located or primarily doing
business in a foreign country. A company is considered to be located in a
foreign country if it is organized under the laws of, or has a principal office
in, that country. A company is considered as primarily doing business in a
country if (i) the company derives at least 50% of its gross revenues or profits
from either goods or services produced or sold in the country or (ii) at least
50% of the company's assets are situated in the country. A Fund may invest in
foreign securities either directly or indirectly through the use of depositary
receipts, such as ADRs. Depositary receipts are generally issued by banks or
trust companies and evidence ownership of underlying foreign securities. An ADR
may be sponsored by the issuer of the underlying foreign security or it may be
issued in unsponsored form. The holder of a sponsored ADR is likely to receive
more frequent and extensive financial disclosure concerning the foreign issuer
than the holder of an unsponsored ADR and generally will bear lower transaction
charges. The Select International Equity Fund may also purchase foreign
securities through European Depositary Receipts and Global Depositary Receipts.
Lending of Securities. (applicable to all Funds) To realize additional income,
the Funds may lend portfolio securities to broker-dealer or financial
institutions in an amount up to 33 1/3% of a Fund's total assets. While any such
loan is outstanding, a Fund will continue to receive amounts equal to the
interest or dividends paid by the issuer on the securities, as well as interest
(less any rebates to be paid to the borrower) on the investment of the
collateral or a fee from the borrower. Each Fund will have the right to call
each loan and obtain the securities. Lending portfolio securities involves
possible delays in receiving additional collateral or in the recovery of the
securities or possible loss of rights in the collateral.
- -----------------------------
Allmerica Investment Trust
15
<PAGE>
Restricted Securities. (applicable to all Funds) The Funds may purchase
securities that are not registered under Federal securities law ("restricted
securities"), but can be offered and sold to certain "qualified institutional
buyers". Each Fund will not invest more than 15% (10% for the Money Market Fund)
of its net assets in restricted securities (and securities deemed to be
illiquid). These limits do not apply if the Board of Trustees determines that
the restricted securities are liquid. The Board of Trustees has adopted
guidelines and delegated to the Manager the daily function of determining and
monitoring the liquidity of restricted securities. The Board, however, retains
sufficient oversight and is ultimately responsible for the determinations. This
investment practice could increase the level of illiquidity in a Fund if buyers
lose interest in restricted securities. As a result, a Fund might not be able to
sell these securities when its Sub-Adviser wants to sell, or might have to sell
them at less than fair value. In addition, market quotations for these
securities are less readily available.
Temporary Defensive Strategies. At times a Sub-Adviser may determine that market
conditions make it desirable temporarily to suspend a Fund's normal investment
activities. This is when the Fund may temporarily invest in a variety of
lower-risk securities, such as U.S. Government and other high quality bonds and
short-term debt obligations. Such strategies attempt to reduce changes in the
value of the Fund's shares. The Fund may not achieve its investment objective
while these strategies are in effect.
Frequent Trading. Certain Funds from time to time may engage in active and
frequent trading to achieve their investment objective. Frequent trading
increases transaction costs, which could detract from the Fund's performance.
-----------------------------
Allmerica Investment Trust
16
<PAGE>
[GRAPHIC] Management of the Funds
---------------------------------
The Trust is governed by a Board of Trustees. Allmerica Financial Investment
Management Services, Inc. is the investment Manager of the Trust responsible for
managing the Trust's day-to-day business affairs. The Manager is located at 440
Lincoln Street, Worcester, MA 01653. The Manager and its predecessor, Allmerica
Investment Management Company, Inc., have been managing mutual funds since 1985.
The Manager currently serves as investment manager to one other mutual fund.
Sub-Advisers have been hired to manage the investments of the Funds. The Trust
and Manager have obtained an order of exemption from the SEC that permits the
Manager to enter into and materially amend sub-advisory agreements with
non-affiliated Sub-Advisers without obtaining shareholder approval. The Manager
has ultimate responsibility to oversee Sub-Advisers. The Manager has the
ability, subject to approval of the Trustees, to hire and terminate Sub-Advisers
and to change materially the terms of the Sub-Adviser Agreements, including the
compensation paid to the Sub-Advisers. The Sub-Advisers have been selected by
the Manager and Trustees with the help of BARRA RogersCasey, Inc., a pension
consulting firm. The fees earned by each Sub-Adviser and BARRA RogersCasey are
paid by the Manager. The performance by the Sub-Advisers is reviewed quarterly
by a committee of the Board of Trustees, with assistance from BARRA RogersCasey.
The following table provides information about each Fund's Sub-Adviser:
<TABLE>
<CAPTION>
Fund Name,
Sub-Adviser Name and Address Experience
---------------------------- ----------
<S> <C>
Select Aggressive Growth Fund Has over $41 billion assets under management as of December
Nicholas-Applegate Capital Management, L.P. 31, 1999. Founded in 1984. Clients include employee benefit
600 West Broadway, Suite 2900 and retirement plans, foundations, investment companies and
San Diego, CA 92101 individuals.
Select International Equity Fund Managed over $50 billion in global securities as of December
Bank of Ireland Asset Management (U.S.) Ltd. 31, 1999. Founded in 1966. Provides international investment
26 Fitzwilliam Place, Dublin 2, management services.
Ireland and 20 Horseneck Lane
Greenwich, CT 06830
Core Equity Fund Organized in 1969, and is now a division of Morgan Stanley
Miller Anderson & Sherrerd, LLP Dean Witter Investment Management ("MSDWIM"). Provides
One Tower Bridge investment advisory services to employee benefit plans, endowment funds,
West Conshohocken, PA 19428 foundations and other institutional investors. MSDWIM had $184
billion in assets under management as of December 31, 1999.
</TABLE>
- -----------------------------
Allmerica Investment Trust
17
<PAGE>
<TABLE>
<CAPTION>
Fund Name,
Sub-Adviser Name and Address Experience
---------------------------- ----------
<S> <C>
Equity Index Fund Incorporated in 1993. Had $13.3 billion in assets under
Allmerica Asset Management, Inc. management as of December 31, 1999. Serves as investment
440 Lincoln Street adviser to investment companies and affiliated insurance
Worcester, MA 01653 company accounts.
Select Investment Grade Income Fund See Equity Index Fund above
Allmerica Asset Management, Inc.
440 Lincoln Street
Worcester, MA 01653
Government Bond Fund See Equity Index Fund above
Allmerica Asset Management, Inc.
440 Lincoln Street
Worcester, MA 01653
Money Market Fund See Equity Index Fund above
Allmerica Asset Management, Inc.
440 Lincoln Street
Worcester, MA 01653
</TABLE>
For a sample listing of certain of the Sub-Advisers' clients, see "Investment
Management and Other Services" in the SAI.
-----------------------------
Allmerica Investment Trust
18
<PAGE>
The following individuals or groups of individuals are primarily responsible for
the day-to-day management of the Funds' portfolios:
<TABLE>
<CAPTION>
Fund Name and Name and Title of Service with Business Experience
Sub-Adviser Name Portfolio Manager(s) Sub-Adviser for Past Five Years
---------------- -------------------- ----------- -------------------
<S> <C> <C> <C>
Select Aggressive Growth Fund Lawrence S. Speidell, Partner 1994 - Present Director of Global/Systematic
Nicholas-Applegate Capital Portfolio Management and
Management, L.P. ("NACM") Research at NACM. Prior
to joining NACM, he spent
ten years with Batterymarch
Financial Management.
John J. Kane, Partner 1994 - Present Senior Portfolio Manager for the
U.S. Systematic portfolios at NACM.
Prior to joining NACM in 1994, he
was employed by ARCO Invest-
Management Company and General
Electric.
Mark W. Stuckelman, 1995 - Present Portfolio Manager for the
Portfolio Manager U.S. Systematic portfolios at NACM.
Prior to joining NACM, he was
employed for five years with Wells
Fargo Bank, Fidelity Management
Trust Co., and BARRA, Inc.
Select International Equity Fund Christopher Reilly, 1980 - Present Since 1985, he has had
Bank of Ireland Asset Management Chief Investment Officer overall responsibility for asset
(U.S.) Limited ("BIAM") management. He previously
worked in the United
Kingdom in stockbrokering
and investment management.
Michael McCarthy, 1997 - Present Mr. McCarthy rejoined BIAM
Portfolio Manager in 1997 from a major life assurance
Company where he was Head of
Asset Management. Prior to this, he
worked for BIAM in the U.K. in a
senior portfolio management capacity.
Peter Wood, Senior 1985 - Present Prior to 1985, he spent five
Portfolio Manager years with another leading
investment management firm.
He is now responsible for
portfolio construction at BIAM.
Jane Neill, Senior 1994 - Present Previously, she was Chief
Equity Analyst Investment Officer with
another leading Irish investment
management firm.
</TABLE>
- -----------------------------
Allmerica Investment Trust
19
<PAGE>
<TABLE>
<CAPTION>
Fund Name and Name and Title of Service with Business Experience
Sub-Adviser Name Portfolio Manager(s) Sub-Adviser for Past Five Years
- ---------------- -------------------- ----------- -------------------
<S> <C> <C> <C>
Core Equity Fund Gary G. Schlarbaum, 1987 - Present He has served on a committee
Miller Anderson & Sherrerd, LLP CFA and Managing Director of fund managers since 1993.
("MAS") Prior to 1987, Mr. Schlarbaum was
employed by First Chicago
Investment Advisors from 1984 -
1987.
Robert J. Marcin, 1988 - Present Prior to joining MAS in 1988,
CFA and Managing Director Mr. Marcin was an Account
Executive at Smith Barney Harris
Upham and Company, Inc.
Brian Kramp, 1997 - Present Mr. Kramp was employed
CFA and Vice President as an analyst and portfolio
manager by Meridian Investment
Company from 1985 - 1997.
James J. Jolinger, Principal 1994 - Present He has served on the fund
managers committee since 1997.
Prior to 1994, Mr. Jolinger was
employed by Oppenheimer Capital as
an Equity Analyst from 1987 to
1994.
Arden C. Armstrong, 1986 - Present Prior to joining MAS,
CFA and Managing Director Ms. Armstrong was employed
by Evans Economics, Inc.
Chris Leavy, 1997 - Present Prior to joining MAS, Mr. Leavy
CFA and Vice President was employed by Capitoline
Investment Services as a portfolio
Manager from 1995-1997.
Steven Epstein, 1996 - Present Prior to joining MAS, Mr. Epstein
Vice President attended the Wharton School,
University of Pennsylvania from
1994-1996, receiving an MBA.
Eric F. Scharpf, 1997 - Present Prior to joining MAS, Mr. Scharpf
Vice President attended the Whartonm School,
University of Pennsylvania from
1995-1997 receiving an MBA, and
served as a Financial Analyst for
Salomon Brothers from 1993-1995.
Select Investment Grade Income Ann K. Tripp, 1987 - Present She was a Portfolio Manager
Fund Allmerica Asset Vice President for AAM prior to becoming a
Management, Inc. ("AAM") Vice President.
Government Bond Fund Richard J. Litchfield, 1995 - Present He was a mortgage-backed
Allmerica Asset Management, Inc. CFA and Vice President securities analyst and trader
("AAM") at Keystone Investments, Inc.
prior to joining AAM.
Equity Index Fund and John C. Donohue, 1995 - Present He was a portfolio manager
Money Market Fund Vice President at CS First Boston Investment
Allmerica Asset Management, Inc. Management prior to joining
("AAM") AAM.
</TABLE>
-----------------------------
Allmerica Investment Trust
20
<PAGE>
For the fiscal year ended December 31, 1999, the Funds paid the Manager the fees
shown in the table below:
<TABLE>
<CAPTION>
Fee (as a percentage of
Fund average net assets)
- ---- -------------------
<S> <C>
Select Aggressive Growth Fund 0.85%
- ----------------------------- -----
Select International Equity Fund 0.89%
- -------------------------------- -----
Core Equity Fund 0.43%
- ---------------- -----
Equity Index Fund 0.28%
- ----------------- -----
Investment Grade Income Fund (renamed the
Select Investment Grade Income Fund) 0.43%
- ----------------------------------------- -----
Government Bond Fund 0.50%
- -------------------- -----
Money Market Fund 0.24%
- ----------------- -----
</TABLE>
For the fiscal year ended December 31, 1999, the Manager paid each Sub-Adviser
aggregate fees as set forth below:
<TABLE>
<CAPTION>
Fee (as a percentage of
Sub-Adviser average net assets)
- ----------- -------------------
<S> <C>
Nicholas-Applegate Capital Management, L.P. (Select Aggressive Growth Fund) 0.48%
- --------------------------------------------------------------------------- -----
Bank of Ireland Asset Management (U.S.) Limited (Select International Equity Fund) 0.30%
- ---------------------------------------------------------------------------------- -----
Miller Anderson & Sherrerd, LLP (Core Equity Fund) 0.21%
- -------------------------------------------------- -----
Allmerica Asset Management, Inc. (Equity Index Fund) 0.09%
- ---------------------------------------------------- -----
Allmerica Asset Management, Inc. (Investment Grade Income Fund - renamed
the Select Investment Grade Income Fund) 0.20%
- ------------------------------------------------------------------------ -----
Allmerica Asset Management, Inc. (Government Bond Fund) 0.18%
- ------------------------------------------------------- -----
Allmerica Asset Management, Inc. (Money Market Fund) 0.09%
- ---------------------------------------------------- -----
</TABLE>
- -----------------------------
Allmerica Investment Trust
21
<PAGE>
Pricing of Fund Shares
----------------------
The Funds sell and redeem their shares at a price equal to their net asset value
("NAV") without paying any sales or redemption charges. 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 NAV's 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. All securities of the Money
Market Fund are valued at amortized cost. Debt obligations in the other 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 other 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 Fund's 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 policies. The Distributor, Allmerica Investments, Inc., at its
expense, may provide promotional incentives to dealers who sell variable annuity
contracts which invest in the Funds. The Trust has obtained an exemptive order
from the Securities and Exchange Commission to permit Fund shares to be sold to
variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated life insurance companies and certain qualified
pension and retirement plans. Material irreconcilable conflicts may arise among
various insurance policy owners and plan participants. The Trustees will monitor
events to identify any material conflicts and determine if any action should be
taken to resolve such conflict.
No fee is charged by the Trust on redemption. The variable contracts funded
through the Separate Accounts are sold subject to certain fees and charges which
may include sales and redemption charges. See the prospectuses for the variable
insurance products.
Normally, redemption payments will be made within seven days after the Trust
receives a written redemption request. Redemptions may be suspended when trading
on the New York Stock Exchange is restricted or when permitted by the Securities
and Exchange Commission.
----------------------------
Allmerica Investment Trust
22
<PAGE>
Distributions and Taxes
-----------------------
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 Growth Fund, Equity Index Fund, Investment Grade Income Fund
and Government Bond Fund; annually in the case of the Select Aggressive Growth
Fund and Select International Equity Fund; and daily in the case of the Money
Market 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.
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 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.
Allmerica Investment Trust 23
<PAGE>
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----------------------------
Allmerica Investment Trust
24
<PAGE>
[GRAPHIC] Financial Highlights
Allmerica Investment Trust
FINANCIAL HIGHLIGHTS - For a Share Outstanding Throughout Each Period
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from Investment Operations Less Distributions
--------------------------------------------- -----------------------------------------------------------------
Net Realized
Net and Distributions
Asset Net Unrealized Dividends from Net
Value Investment Gain (Loss) Total from from Net Realized Distributions
Year Ended Beginning Income on Investment Investment Capital in Return of Total
December 31, of Year (Loss)(/1/) Investments Operations Income Gains Excess Capital Distributions
------------ --------- ----------- ------------ ---------- ---------- ------------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Select
Aggressive
Growth Fund
1999 2.460 (0.012) 0.963 0.951 -- -- -- -- --
1998 2.225 (0.008) 0.243 0.235 -- -- -- -- --
1997 2.037 (0.009) 0.387 0.378 -- (0.182) (0.008)(/2/) -- (0.190)
1996 1.848 (0.009) 0.351 0.342 -- (0.153) -- -- (0.153)
1995 1.397 (0.001) 0.452 0.451 -- -- -- -- --
Select
International
Equity Fund
1999 1.542 0.012 0.477 0.489 -- -- -- -- --
1998 1.341 0.014 0.207 0.221 (0.020) -- -- -- (0.020)
1997 1.356 0.015 0.049 0.064 (0.019) (0.046) (0.014)(/3/) -- (0.079)
1996 1.136 0.011 0.238 0.249 (0.012) (0.003) (0.014)(/3/) -- (0.029)
1995 0.963 0.013 0.176 0.189 (0.011) (0.005) -- -- (0.016)
<CAPTION>
Net
Increase
(Decrease)
in
Year Ended Net Asset
December 31, Value
------------ ----------
<S> <C>
Select
Aggressive
Growth Fund
1999 0.951
1998 0.235
1997 0.188
1996 0.189
1995 0.451
Select
International
Equity Fund
1999 0.489
1998 0.201
1997 (0.015)
1996 0.220
1995 0.173
</TABLE>
- ------------------
(A) Including reimbursements, waivers, and reductions.
(B) Excluding reductions. Certain Portfolios have entered into varying arrange-
ments with brokers who reduced a portion of the Portfolio's expenses.
(C) Excluding reimbursements and reductions.
(1) Net investment income (loss) per share before reimbursement of fees by the
investment adviser or reductions were $(0.013) in 1999, $(0.009) in 1998
and $(0.010) in 1997 for Select Aggressive Growth Fund; and $0.011 in 1999,
$0.014 in 1998, $0.015 in 1997 and $0.011 in 1996 for Select International
Equity Fund.
(2) Distributions in excess of net realized capital gains.
(3) Distributions in excess of net investment income.
Allmerica Investment Trust
Ratios/Supplemental Data
-----------------------------------------------------
Ratios To Average Net Assets
----------------------------------------
<TABLE>
<CAPTION>
Net Asset Net Assets
Value End of Net Portfolio
End of Total Period Investment Operating Expenses Management Fee Turnover
Period Return (000's) Income (Loss) (A) (B) (C) Gross Net Rate
- --------- ------ ---------- ------------- ------ ------ ------ -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3.411 38.66% 1,015,699 (0.46)% 0.88% 0.91% 0.91% 0.85% 0.85% 101%
2.460 10.56% 752,741 (0.36)% 0.92% 0.95% 0.95% 0.88% 0.88% 99%
2.225 18.71% 604,123 (0.45)% 0.99% 1.04% 1.04% 0.95% 0.95% 95%
2.037 18.55% 407,442 (0.53)% 1.08% 1.08% 1.08% 1.00% 1.00% 113%
1.848 32.28% 254,872 (0.07)% 1.09% -- 1.09% 1.00% 1.00% 104%
2.031 31.71% 679,341 0.69% 1.01% 1.02% 1.02% 0.89% 0.89% 18%
1.542 16.48% 505,553 0.99% 1.01% 1.02% 1.02% 0.90% 0.90% 27%
1.341 4.65% 397,915 1.17% 1.15% 1.17% 1.17% 0.97% 0.97% 20%
1.356 21.94% 246,877 1.22% 1.20% 1.23% 1.23% 1.00% 1.00% 18%
1.136 19.63% 104,312 1.68% 1.24% -- 1.24% 1.00% 1.00% 24%
</TABLE>
Allmerica Investment Trust
FINANCIAL HIGHLIGHTS - For a Share Outstanding Throughout Each Period
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from Investment Operations Less Distributions
--------------------------------------------- ----------------------------------------------------------------
Net Realized
Net and
Asset Net Unrealized Dividends Distributions
Value Investment Gain (Loss) Total from from Net from Net Distributions Return
Year Ended Beginning Income on Investment Investment Realized in of Total
December 31, of Period (Loss)(/2/) Investments Operations Income Capital Gains Excess Capital Distributions
----------------- --------- ----------- ------------ ---------- ---------- ------------- ------------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Growth Fund(/1/)
1999 2.825 0.020 0.779 0.799 (0.020) (0.294) -- -- (0.314)
1998 2.416 0.028 0.436 0.464 (0.028) (0.027) -- -- (0.055)
1997 2.333 0.039 0.540 0.579 (0.038) (0.458) -- -- (0.496)
1996 2.176 0.047 0.386 0.433 (0.048) (0.228) -- -- (0.276)
1995 1.814 0.049 0.539 0.588 (0.049) (0.177) -- -- (0.226)
Equity Index Fund
1999 3.408 0.036 0.656 0.692 (0.035) (0.005) -- -- (0.040)
1998 2.753 0.035 0.741 0.776 (0.034) (0.087) -- -- (0.121)
1997 2.165 0.034 0.664 0.698 (0.033) (0.077) -- -- (0.110)
1996 1.827 0.035 0.370 0.405 (0.035) (0.032) -- -- (0.067)
1995 1.468 0.035 0.474 0.509 (0.035) (0.047) (0.002)(/3/) (0.066) (0.150)
<CAPTION>
Net
Increase
(Decrease)
in
Year Ended Net Asset
December 31, Value
- ------------------- ----------
<S> <C>
Growth Fund(/1/)
1999 0.485
1998 0.409
1997 0.083
1996 0.157
1995 0.362
Equity Index Fund
1999 0.652
1998 0.655
1997 0.588
1996 0.338
1995 0.359
</TABLE>
- ------------------------------------
(A) Including reimbursements and reductions.
(B) Excluding reductions. Certain Portfolios have entered into varying
arrangements with brokers who reduced a portion of the Portfolio's
expenses.
(C) Excluding reimbursements and reductions.
(1) Effective May 1, 2000, the name of the Growth Fund was changed to the Core
Equity Fund.
(2) Net investment income (loss) per share before reimbursement of fees by the
investment adviser or reductions were $0.019 in 1999, $0.027 in 1998,
$0.038 in 1997 and $0.046 in 1996 for Growth Fund.
(3) Distributions in excess of net realized capital gains.
Allmerica Investment Trust
<TABLE>
<CAPTION>
Ratios/Supplemental Data
--------------------------------------------------------------
Ratios To Average Net Assets
------------------------------------------------
Net Assets
Net Asset End of Net Operating Management Portfolio
Value End Total Period Investment Expenses Fee Turnover
of Period Returns (000's) Income (Loss) (A) (B) (C) Gross Net Rate
- --------- ------- ---------- ------------- ---- ---- ---- ----- ---- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3.310 29.33% 1,076,297 0.65% 0.45% 0.48% 0.48% 0.43% 0.43% 116%
2.825 19.32% 860,333 1.08% 0.46% 0.49% 0.49% 0.44% 0.44% 100%
2.416 25.14% 728,679 1.48% 0.47% 0.49% 0.49% 0.43% 0.43% 79%
2.333 20.19% 556,751 2.04% 0.48% 0.51% 0.51% 0.44% 0.44% 72%
2.176 32.80% 444,871 2.34% 0.54% -- 0.54% 0.46% 0.46% 64%
4.060 20.41% 638,230 0.98% 0.35% 0.35% 0.35% 0.28% 0.28% 21%
3.408 28.33% 481,877 1.17% 0.36% 0.36% 0.36% 0.29% 0.29% 6%
2.753 32.41% 297,191 1.38% 0.44% 0.44% 0.44% 0.31% 0.31% 9%
2.165 22.30% 151,130 1.79% 0.46% 0.46% 0.46% 0.32% 0.32% 12%
1.827 36.18% 90,889 1.96% 0.55% -- 0.55% 0.34% 0.34% 8%
</TABLE>
Allmerica Investment Trust
FINANCIAL HIGHLIGHTS - For a Share Outstanding Throughout Each Period
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from Investment Operations Less Distributions
--------------------------------------------------------- ------------------------------------------------------
Net Realized
Net and Distributions
Asset Net Unrealized Dividends from Net
Value Investment Gain (Loss) Total from from Net Realized Distributions
Year Ended Beginning Income on Investment Investment Capital in Return of Total
December 31, of Year (Loss) Investments Operations Income Gains Excess Capital Distributions
------------ --------- ------------ ------------ ---------- ---------- ------------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Grade
Income Fund(1)
1999 1.132 0.068 (0.079) (0.011) (0.069) (0.001) -- -- (0.070)
1998 1.112 0.067 0.020 0.087 (0.067) -- -- -- (0.067)
1997 1.084 0.071 0.028 0.099 (0.071) -- -- -- (0.071)
1996 1.117 0.070 (0.033) 0.037 (0.070) -- -- -- (0.070)
1995 1.012 0.071 0.106 0.177 (0.071) -- (0.001)(2) -- (0.072)
Government
Bond Fund
1999 1.068 0.058 (0.056) 0.002 (0.059) -- -- -- (0.059)
1998 1.047 0.058 0.021 0.079 (0.058) -- -- -- (0.058)
1997 1.036 0.061 0.011 0.072 (0.061) -- -- -- (0.061)
1996 1.062 0.062 (0.026) 0.036 (0.062) -- -- -- (0.062)
1995 0.997 0.062 0.066 0.128 (0.062) -- (0.001)(2) -- (0.063)
Money Market
Fund
1999 1.000 0.051 -- 0.051 (0.051) -- -- -- (0.051)
1998 1.000 0.054 -- 0.054 (0.054) -- -- -- (0.054)
1997 1.000 0.053 -- 0.053 (0.053) -- -- -- (0.053)
1996 1.000 0.052 -- 0.052 (0.052) -- -- -- (0.052)
1995 1.000 0.057 -- 0.057 (0.057) -- -- -- (0.057)
<CAPTION>
Net
Increase
(Decrease)
in
Year Ended Net Asset
December 31, Value
------------ ----------
<S> <C>
Investment Grade
Income Fund(/2/)
1999 (0.081)
1998 0.020
1997 0.028
1996 (0.033)
1995 0.105
Government
Bond Fund
1999 (0.057)
1998 0.021
1997 0.011
1996 (0.026)
1995 0.065
Money Market
Fund
1999 --
1998 --
1997 --
1996 --
1995 --
</TABLE>
- ------------------------------------
(A) Including reimbursements and reductions.
(B) Excluding reductions. Certain Portfolios have entered into varying
arrangements with brokers who reduced a portion of the Portfolio's
expenses.
(C) Excluding reimbursements and reductions.
(1) Effective May 1, 2000, the name of the Investment Grade Income Fund was
changed to the Select Investment Grade Income Fund.
(2) Distributions in excess of net investment income.
Allmerica Investment Trust
<TABLE>
<CAPTION>
Ratios/Supplemental Data
---------------------------------------------------------------
Ratios To Average Net Assets
------------------------------------------------
Net Assets
Net Asset End of Net Operating Management Portfolio
Value End Total Year Investment Expenses Fee Turnover
of Year Return (000's) Income (Loss) (A) (B) (C) Gross Net Rate
- --------- ------ ---------- ------------- ---- ---- ---- ----- ---- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1.051 (0.97)% 240,541 6.22% 0.50% 0.50% 0.50% 0.43% 0.43% 75%
1.132 7.97% 230,623 6.01% 0.52% 0.52% 0.52% 0.43% 0.43% 158%
1.112 9.45% 189,503 6.48% 0.51% 0.51% 0.51% 0.41% 0.41% 48%
1.084 3.56% 157,327 6.50% 0.52% 0.52% 0.52% 0.40% 0.40% 108%
1.117 17.84% 141,625 6.66% 0.53% -- 0.53% 0.41% 0.41% 126%
1.011 0.23% 87,247 5.64% 0.62% 0.62% 0.62% 0.50% 0.50% 37%
1.068 7.67% 81,018 5.63% 0.64% 0.64% 0.64% 0.50% 0.50% 61%
1.047 7.08% 55,513 5.92% 0.67% 0.67% 0.67% 0.50% 0.50% 56%
1.036 3.51% 46,396 5.90% 0.66% 0.66% 0.66% 0.50% 0.50% 112%
1.062 13.06% 45,778 5.91% 0.69% -- 0.69% 0.50% 0.50% 180%
1.000 5.19% 513,606 5.09% 0.29% 0.29% 0.29% 0.24% 0.24% N/A
1.000 5.51% 336,253 5.36% 0.32% 0.32% 0.32% 0.26% 0.26% N/A
1.000 5.47% 260,620 5.33% 0.35% 0.35% 0.35% 0.27% 0.27% N/A
1.000 5.36% 217,256 5.22% 0.34% 0.34% 0.34% 0.28% 0.28% N/A
1.000 5.84% 155,211 5.68% 0.36% -- 0.36% 0.29% 0.29% N/A
</TABLE>
The financial highlights tables are intended to help you understand each Fund's
financial performance for the past five years (or, if shorter, the period of the
Fund's operations). 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). This information has been audited by
PricewaterhouseCoopers LLP, whose report, along with each Fund's financial
statements, are included in the Statement of Additional Information or annual
report, which is available upon request.
- -----------------------------
Allmerica Investment Trust
25
<PAGE>
Appendix
[GRAPHIC]
Investment Techniques and Strategies
In managing its portfolios of investments, the Trust may make use of the
following investment techniques and strategies:
Symbols
o Permitted
-- Not Permitted
<TABLE>
<CAPTION>
Select
Select Select Investment
Aggressive International Core Equity Grade Government Money
Growth Equity Equity Index Income Bond Market
Investment Technique/Strategy Fund Fund Fund Fund Fund Fund Fund
- ----------------------------- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Asset-Backed Securities -- -- o -- o o o
Financial Futures Contracts
and Related Options o o o o o o --
Foreign Securities o o o o o -- o
Forward Commitments -- -- -- -- o o o
Forward Contracts on Foreign
Currencies -- o -- -- -- -- --
High Yield Securities -- -- -- -- -- -- --
Investments in Money Market
Securities o o o o o o o
Mortgage-Backed Securities -- -- -- -- o o --
Purchasing Options o o o o o o --
Repurchase Agreements o o o o o o o
Restricted Securities o o o o o o o
Reverse Repurchase Agreements -- -- -- -- -- -- --
Securities Lending o o o o o o o
Stand-By Commitments -- -- -- -- o o o
Stripped Mortgage-Backed
Securities -- -- -- -- o o --
Swap and Swap-Related Products -- -- -- -- -- -- --
When-Issued Securities o o o o o o o
Writing Covered Options o o o o o o --
- ----------------------- - - - - - -
</TABLE>
- -----------------------------
Allmerica Investment Trust
26
<PAGE>
Allmerica Investment Trust
Select Aggressive Growth Fund
Select International Equity Fund
Core Equity Fund
Equity Index Fund
Select Investment Grade Income Fund
Government Bond Fund
Money Market Fund
The Trust's Statement of Additional Information ("SAI") includes additional
information about the Funds. The Trust's annual and semi-annual reports to
shareholders include information about the investments of the Funds. The SAI and
the financial statements included in the Fund's most recent annual report to
shareholders are incorporated by reference into this prospectus, which means
they are part of this prospectus for legal purposes. The Trust's annual report
discusses the market conditions and investment strategies that significantly
affected each Fund's performance during its last fiscal year. You may get free
copies of these materials, request other information about a Fund or make
shareholder inquiries by calling 1-800-828-0540.
You may review and copy information about the Trust, including its SAI, at the
Securities and Exchange Commission's Public Reference Room in Washington, D.C.
You may call the Commission at 1-800-SEC-0330 for information about the
operation of the Public Reference Room. You may also access reports and other
information about the Trust on the Commission's Internet site at
http://www.sec.gov. You may get copies of this information, with payment of a
duplication fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009. You may need to refer to the Trust's file number
under the Investment Company Act, which is 811-4138.
ALLMERICA
INVESTMENT
TRUST
440 Lincoln Street, Worcester, Massachusetts 01653
1-800-828-0540
<PAGE>
Allmerica Investment Trust
Prospectus
May 1, 2000
The Select Income Fund is a separate portfolio of the Trust which serves as the
underlying investment for insurance related accounts.
This Prospectus explains what you should know about the Fund. Please read it
carefully before you invest.
On or about July 1, 2000, subject to regulatory approval, shares of the Select
Investment Grade Income Fund of the Trust will be substituted for shares of the
Select Income Fund. As of the substitution date, shares of the Select Investment
Grade Income Fund will be available and shares of the Select Income Fund will no
longer be offered.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this Prospectus is adequate or complete. Any representation to the contrary is a
criminal offense.
ALLMERICA
INVESTMENT
TRUST
440 Lincoln Street
Worcester, Massachusetts
01653
1-800-828-0540
<PAGE>
<TABLE>
<CAPTION>
Table of Contents
<S> <C>
FUND SUMMARIES........................................................ 3
Objectives, Strategies and Risks.............................. 4
EXPENSE SUMMARY....................................................... 5
DESCRIPTION OF PRINCIPAL INVESTMENT RISKS............................. 6
OTHER INVESTMENT STRATEGIES........................................... 7
MANAGEMENT OF THE FUND................................................ 9
PRICING OF FUND SHARES................................................ 10
PURCHASE AND REDEMPTION OF SHARES..................................... 10
DISTRIBUTIONS AND TAXES............................................... 11
FINANCIAL HIGHLIGHTS.................................................. 12
APPENDIX.............................................................. 13
<CAPTION>
LEGEND
<S> <C>
Performance [GRAPHIC APPEARS HERE]
Investment Objectives [GRAPHIC APPEARS HERE]
Financial Information [GRAPHIC APPEARS HERE]
Management of Fund [GRAPHIC APPEARS HERE]
Risk [GRAPHIC APPEARS HERE]
Investment Strategies [GRAPHIC APPEARS HERE]
-----------------------------
Allmerica Investment Trust
</TABLE>
2
<PAGE>
Fund Summary
This Prospectus describes the Select Income Fund of Allmerica Investment Trust,
which provides a broad range of investment options through 14 separate
investment portfolios, or Funds. The other Funds are described in separate
prospectuses. Shares of the Fund are sold exclusively to variable annuity and
variable life insurance Separate Accounts and qualified pension and retirement
plans.
The investment manager of the Trust is Allmerica Financial Investment Management
Services, Inc. The Manager is responsible for managing the Trust's daily
business and has general responsibility for the management of the investments of
the Fund. The Manager, at its expense, has contracted with Standish, Ayer &
Wood, Inc. ("SAW") to manage the investments of the Select Income Fund. SAW has
been selected on the basis of various factors including management experience,
investment techniques and staffing. See "Management of the Fund" for more
information about the Manager and the Sub-Adviser.
The following summary describes the Select Income Fund's investment objective
and principal investment strategies, identifies the principal investment risks
of investing in the Fund and provides a performance chart for the Fund. Note
that any percentage limitations listed under the Fund's principal investment
strategies apply at the time of investment. The principal risks are discussed in
more detail under "Description of Principal Investment Risks". The bar chart
shows how the investment returns of the shares of the Fund have varied for the
life of the Fund. The table following the bar chart shows how the Fund's average
annual returns for the last one and five years and for the life of the Fund
compare to those of a broad-based securities market index. Past performance does
not necessarily indicate how the Fund will perform in the future. The bar chart
and table give some indication of the risks of investing in the Fund by showing
changes in the Fund's performance. The bar chart and table do not reflect
expenses associated with the variable insurance product that you are purchasing.
If those expenses had been reflected, the performance shown would have been
lower.
- -----------------------------
Allmerica Investment Trust
3
<PAGE>
Objectives, Strategies and Risks
Select Income Fund
[GRAPHIC APPEARS HERE] Sub-Adviser: Standish, Ayer & Wood, Inc.
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks a high level of
current income. The Fund will invest primarily in
investment grade, fixed-income securities.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: Examples of the types
of securities in which the Fund invests are corporate
debt obligations such as bonds, notes and debentures,
and obligations convertible into common stock;
commercial paper; obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities;
and debt securities backed by various types of financial
assets. The Fund also may invest in mortgage-backed and
asset-backed securities. The Fund's investments in
corporate debt securities are not limited to any
particular type of company or industry. The Fund may
invest up to 25% of its assets in foreign securities
(not including its investments in American Depositary
Receipts or "ADRs"), up to 35% of its assets in money
market instruments and up to 25% in debt obligations of
supranational entities.
The average maturity and the mix of portfolio securities
will vary depending on such factors as current market
conditions and the comparative yields from different
instruments. The Fund invests primarily in investment
grade securities rated in the four highest grades by
Moody's Investors Services or Standard & Poor's Rating
Services or similar rating organizations, and in unrated
securities. For more information about rating
categories, see the Appendix to the Statement of
Additional Information ("SAI"). The Fund also may invest
up to 25% of its assets in "junk bonds."
[GRAPHIC APPEARS HERE] Principal Risks:
. Credit Risk
. Interest Rate Risk
. Investment Management Risk
. Liquidity Risk
. Market Risk
. Prepayment Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns [GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
1993............................... 10.95%
1994............................... -4.82%
1995............................... 16.96%
1996............................... 3.32%
1997............................... 9.17%
1998............................... 6.83%
1999............................... -0.85%
During the period shown above the highest quarterly return was 5.64% for the
quarter ended 6/30/95 and the lowest was (3.87)% for the quarter ended 3/31/94.
Performance Table
Average Annual Total Returns
(for the periods ending Past Past Since Inception
December 31, 1999) One Year Five Years (August 21, 1992)
- ------------------ -------- ---------- -----------------
Fund Shares -0.85% 6.92% 5.52%
- ----------- ------ ----- -----
Lehman Brothers
Aggregate Bond Index* -0.83% 7.73% 6.24%
- --------------------- ------ ----- -----
* The Lehman Brothers Aggregate Bond Index(R) is an unmanaged index of 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.
-----------------------------
Allmerica Investment Trust
4
<PAGE>
Expense Summary
Expenses are one of several factors to consider when investing in the Select
Income Fund. Expenses shown are based on expenses incurred in respect of shares
of the Fund for the 1999 fiscal year. The Example shows the cumulative expenses
attributable to a hypothetical $10,000 investment in the Fund over specified
periods.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you invest in the
Fund. Please note that the expenses listed below do not include the expenses of
the applicable variable insurance product that you are purchasing. 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 Fund.
Annual Fund Operating Expenses
Shareholder (expenses deducted from Fund assets) Total Annual
Fees Fund
(fees paid directly Management Distribution Other Operating
from your investment) Fees (12b-1) Fees Expenses Expenses
- --------------------- ---- ------------ -------- --------
None 0.52% None 0.09% 0.61%(1)
(1) Through December 31, 2000, the Manager has declared a voluntary expense
limitation of 1.00% for the Select Income Fund. The total operating
expenses of the Fund were less than its expense limitation throughout
1999.
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
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment earns a 5% return each year and that
the Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$63 $196 $341 $764
- -----------------------------
Allmerica Investment Trust
5
<PAGE>
[GRAPHIC] Description of Principal Investment Risks
The following is a summary of the principal risks of investing in the Select
Income Fund and the factors likely to cause the value of your investment in the
Fund to decline. The principal risks applicable to the Fund are identified under
"Fund Summary". There are also many factors that could cause the value of your
investment in the Fund to decline which are not described here. It is important
to remember that there is no guarantee that the Fund will achieve its investment
objective, and an investor in the Fund could lose money.
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 if the
issuer defaults on its obligation to pay principal or interest, the rating
agencies downgrade the issuer's credit rating or there is negative news that
affects the market's perception of the issuer's credit risk.
Interest Rate Risk
When interest rates rise, the prices of fixed income securities in the Fund's
portfolio will generally fall. Conversely, when interest rates fall, the prices
of fixed income securities in the Fund's 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 the 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 the 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 the 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 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.
-----------------------------
Allmerica Investment Trust
<PAGE>
[GRAPHIC] Other Investment Strategies
The Fund Summary on page 3 describes the investment objective and the principal
investment strategies and risks of the Fund. The Fund may at times use the
following investment strategies. Attached as an Appendix is a chart with a
listing of various investment techniques and strategies that the Sub-Adviser of
the Fund may utilize. The Fund may decide that it is in the best interests of
shareholders to make changes to its investment objective and strategies
described in this Prospectus. The investment objective and strategies may be
changed with the approval of the Board of Trustees, but without shareholder
approval.
Derivative Investments. Instead of investing directly in the types of portfolio
securities described in the Summary, the Fund may buy or sell a variety of
"derivative" investments to gain exposure to particular securities or markets.
Derivatives are financial contracts whose value depends on, or is derived from,
the value of an underlying asset, reference rate or index. The Fund's
Sub-Adviser will sometimes use derivatives as part of a strategy designed to
reduce other risks and sometimes will use derivatives to enhance returns, which
increases opportunities for gain but also involves greater risk.
Foreign Investments. The Fund may invest all or a substantial part of its
portfolio in securities of companies that are located or primarily doing
business in a foreign country. A company is considered to be located in a
foreign country if it is organized under the laws of, or has a principal office
in, that country. A company is considered as primarily doing business in a
country if (i) the company derives at least 50% of its gross revenues or profits
from either goods or services produced or sold in the country or (ii) at least
50% of the company's assets are situated in the country. The Fund may invest in
foreign securities either directly or indirectly through the use of depositary
receipts, such as ADRs. Depositary receipts are generally issued by banks or
trust companies and evidence ownership of underlying foreign securities. An ADR
may be sponsored by the issuer of the underlying foreign security or it may be
issued in unsponsored form. The holder of a sponsored ADR is likely to receive
more frequent and extensive financial disclosure concerning the foreign issuer
than the holder of an unsponsored ADR and generally will bear lower transaction
charges.
High Yield Securities. The Select Income Fund may purchase corporate debt
securities which are high yield securities, or "junk bonds" (rated at the time
of purchase BB or lower by Moody's or S&P, or equivalently rated by another
rating agency, or unrated but believed by the Sub-Adviser to have similar
quality.) These securities are considered to be speculative in their capacity to
pay interest and repay principal.
- -----------------------------
Allmerica Investment Trust
7
<PAGE>
Lending of Securities. To realize additional income, the Fund may lend portfolio
securities to broker-dealer or financial institutions in an amount up to 33-1/3%
of the Fund's total assets. While any such loan is outstanding, the Fund will
continue to receive amounts equal to the interest or dividends paid by the
issuer on the securities, as well as interest (less any rebates to be paid to
the borrower) on the investment of the collateral or a fee from the borrower.
The Fund will have the right to call each loan and obtain the securities.
Lending portfolio securities involves possible delays in receiving additional
collateral or in the recovery of the securities or possible loss of rights in
the collateral.
Restricted Securities. The Fund may purchase securities that are not registered
under Federal securities law ("restricted securities"), but can be offered and
sold to certain "qualified institutional buyers". The Fund will not invest more
than 15% of its net assets in restricted securities (and securities deemed to be
illiquid). This limit does not apply if the Board of Trustees determines that
the restricted securities are liquid. The Board of Trustees has adopted
guidelines and delegated to the Manager the daily function of determining and
monitoring the liquidity of restricted securities. The Board, however, retains
sufficient oversight and is ultimately responsible for the determinations. This
investment practice could increase the level of illiquidity in the Fund if
buyers lose interest in restricted securities. As a result, the Fund might not
be able to sell these securities when its Sub-Adviser wants to sell, or might
have to sell them at less than fair value. In addition, market quotations for
these securities are less readily available.
Temporary Defensive Strategies. At times the Sub-Adviser may determine that
market conditions make it desirable temporarily to suspend the Fund's normal
investment activities. This is when the Fund may temporarily invest in a variety
of lower-risk securities, such as U.S. Government and other high quality bonds
and short-term debt obligations. Such strategies attempt to reduce changes in
the value of the Fund's shares. The Fund may not achieve its investment
objective while these strategies are in effect.
Frequent Trading. The Fund from time to time may engage in active and frequent
trading to achieve its investment objective. Frequent trading increases
transaction costs, which could detract from the Fund's performance.
- -----------------------------
Allmerica Investment Trust
8
<PAGE>
[GRAPHIC] Management of the Funds
---------------------------------
The Trust is governed by a Board of Trustees. Allmerica Financial Investment
Management Services, Inc. is the investment Manager of the Trust responsible for
managing the Trust's day-to-day business affairs. The Manager is located at 440
Lincoln Street, Worcester, MA 01653. The Manager and its predecessor, Allmerica
Investment Management Company, Inc., have been managing mutual funds since 1985.
The Manager currently serves as investment manager to one other mutual fund.
Standish, Ayer & Wood, Inc. ("SAW"), located at One Financial Center, Boston, MA
02111, serves as the Fund's Sub-Adviser. SAW was founded in 1933 and as of
December 31, 1999 had approximately $45 billion in assets under management. SAW
manages portfolios for pension plans, financial institutions and endowment and
foundation funds.
The Trust and Manager have obtained an order of exemption from the SEC that
permits the Manager to enter into and materially amend sub-advisory agreements
with non-affiliated Sub-Advisers without obtaining shareholder approval. The
Manager has ultimate responsibility to oversee the Sub-Adviser. The Manager has
the ability, subject to approval of the Trustees, to hire and terminate the
Sub-Adviser and to change materially the terms of the Sub-Adviser Agreement,
including the compensation paid to the Sub-Adviser. The Sub-Adviser has been
selected by the Manager and Trustees with the help of BARRA RogersCasey, Inc., a
pension consulting firm. The fees earned by the Sub-Adviser and BARRA
RogersCasey are paid by the Manager. The performance by the Sub-Adviser is
reviewed quarterly by a committee of the Board of Trustees, with assistance from
BARRA RogersCasey.
The following table provides information about the individuals from SAW who are
primarily responsible for the day-to-day management of the Select Income Fund:
<TABLE>
<CAPTION>
Name and Title of Service with Business Experience
Portfolio Manager(s) Sub-Adviser for Past Five Years
- -------------------- ----------- -------------------
<S> <C> <C>
Edward H. Ladd, 1962 - Present He is the firm's economist and
Chairman and Managing Director also assists clients in establish-
ing investment strategies.
Mr. Ladd is a Director of
the Federal Reserve Bank of
Boston, New England Electric
System, Greylock Management
and Harvard Management
Corp. and a member of SAW's
Executive Committee.
George W. Noyes, President and 1970 - Present He directs bond policy
Managing Director formulation and manages
institutional bond portfolios
at SAW. Mr. Noyes is Vice
Chairman of the ICFA
Research Foundation and
serves on SAW's Executive
Committee.
Dolores S. Driscoll, 1974 - Present She manages fixed-income
Managing Director portfolios with specific
emphasis on mortgage pass-
throughs and original issue
discount bonds. Ms. Driscoll
also serves on SAW's
Executive Committee.
Richard C. Doll, 1984 - Present He is a portfolio manager
Vice President and Director with research responsibilities
in convertible bonds. Prior to
joining SAW, Mr. Doll was a
Vice President with the Bank
of New England.
Maria D. Furman, Vice President 1976 - Present She is head of the tax-
and Managing Director exempt area and manages
insurance and pension fund
accounts. Ms. Furman
currently serves on SAW's
Executive Committee.
--------------------
</TABLE>
-----------------------------
Allmerica Investment Trust
9
<PAGE>
For the fiscal year ended December 31, 1999, the Fund paid the Manager a fee of
0.52% of the Fund's average net assets, and the Manager paid SAW an aggregate
fee of 0.20% of the Fund's average net assets.
Pricing of Fund Shares
The Select Income Fund sells and redeems its shares at a price equal to its net
asset value ("NAV") without paying any sales or redemption charges. 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 Fund does not accept orders
or compute its NAV on days when the Exchange is closed.
Debt securities (other than short-term obligations) normally are valued based on
pricing service valuations. Debt obligations 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 having a remaining
maturity of more than 60 days are based upon readily available market
quotations. Certain foreign markets may be open on days when the Fund does not
accept orders or price its shares. As a result, the NAV of the Fund's shares may
change on days when shareholders will not be able to buy or sell shares. In
other cases, debt and equity securities and any other assets are valued at their
fair value following procedures approved by the Trustees.
Purchase and Redemption of Shares
Shares of the Fund currently are purchased only by Separate Accounts which are
the funding mechanisms for variable annuity contracts and variable life
insurance policies. The Distributor, Allmerica Investments, Inc., at its
expense, may provide promotional incentives to dealers who sell variable annuity
contracts which invest in the Fund. 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.
- -----------------------------
Allmerica Investment Trust
10
<PAGE>
Distributions and Taxes
-----------------------
Distributions
The Fund pays out substantially all of its net capital gains to shareholders
each year. Net investment income is paid quarterly. 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.
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 the Fund are not currently taxable when left to accumulate
within a variable annuity or variable life insurance contract. Withdrawals 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.
[GRAPHIC] Financial Highlights
Allmerica Investment Trust
FINANCIAL HIGHLIGHTS - For a Share Outstanding Throughout Each Period
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from Investment Operations
---------------------------------------------------------
Net Realized
Net and
Asset Net Unrealized Dividends
Value Investment Gain (Loss) Total from from Net
Year Ended Beginning Income on Investment Investment
December 31, of Year (Loss) (/1/) Investments Operations Income
------------ --------- ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Select Income Fund
1999 $1.032 $0.062 $(0.071) $(0.009) $(0.009)
1998 1.022 0.059 0.010 0.069 (0.069)
1997 0.995 0.060 0.028 0.088 (0.061)
1996 1.024 0.061 (0.029) 0.032 (0.061)
1995 0.930 0.060 0.095 0.155 (0.060)
<CAPTION>
Less Distributions
------------------------------------------------------
Net
Distributions Increase
from Net (Decrease)
Realized Distributions in
Year Ended Capital in Return of Total Net Asset
December 31, Gains Excess Capital Distributions Value
------------ ------------- ---------------- --------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Select Income Fund
1999 $(0.007) $ -- $-- $(0.070) $(0.079)
1998 -- -- -- (0.059) 0.010
1997 -- -- -- (0.061) 0.027
1996 -- -- -- (0.061) (0.039)
1995 -- (0.001)(2) -- (0.061) 0.094
</TABLE>
- ------------------------------------
(A) Including reimbursements and reductions.
(B) Excluding reductions. Certain Portfolios have entered into varying
arrangements with brokers who reduced a portion of the Portfolio's
expenses.
(C) Excluding reimbursements and reductions.
(1) Net investment income (loss) per share before reimbursement of fees by the
investment adviser or reductions was $0.060 in 1995.
(2) Distributions in excess of net investment income.
<TABLE>
<CAPTION>
Ratios/Supplemental Data
---------------------------------------------------------------
Ratios To Average Net Assets
------------------------------------------------
Net Assets
Net Asset End of Net Operating Management Portfolio
Value End Total Year Investment Expenses Fee Turnover
of Year Return (000's) Income (Loss) (A) (B) (C) Gross Net Rate
- --------- ------ ---------- ------------- ---- ---- ---- ----- ---- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0.953 (0.85)% $174,037 6.26% 0.61% 0.61% 0.61% 0.52% 0.52% 177%
1.032 6.83% 160,450 5.92% 0.64% 0.64% 0.64% 0.54% 0.54% 130%
1.022 9.17% 104,253 6.12% 0.72% 0.72% 0.72% 0.59% 0.59% 79%
0.995 3.32% 77,498 6.29% 0.74% 0.74% 0.74% 0.60% 0.60% 108%
1.024 16.96% 60,368 6.24% 0.79% -- 0.80% 0.60% 0.59% 131%
</TABLE>
The financial highlights tables are intended to help you understand the 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 the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by PricewaterhouseCoopers LLP, whose report, along
with the Fund's financial statements, are included in the Statement of
Additional Information or annual report, which is available upon request.
-----------------------------
Allmerica Investment Trust
11
<PAGE>
[GRAPHIC] APPENDIX
Investment Techniques and Strategies
In managing its portfolios of investments, the Fund may make use of the
following investment techniques and strategies:
Symbols
o Permitted
-- Not Permitted
INVESTMENT TECHNIQUE/STRATEGY
Asset-Backed Securities o
Financial Futures Contracts
and Related Options o
Foreign Securities o
Forward Commitments o
Forward Contracts on Foreign Currencies --
High Yield Securities o
Investments in Money Market Securities o
Mortgage-Backed Securities o
Purchasing Options o
Repurchase Agreements o
Restricted Securities o
Reverse Repurchase Agreements --
Securities Lending o
Stand-By Commitments o
Stripped Mortgage-Backed Securities o
Swap and Swap-Related Products --
When-Issued Securities o
Writing Covered Options o
-----------------------------
Allmerica Investment Trust
13
<PAGE>
THIS PAGE LEFT BLANK INTENTIONALLY.
- -----------------------------
Allmerica Investment Trust
14
<PAGE>
Allmerica Investment Trust
Select Income Fund
The Trust's Statement of Additional Information ("SAI") includes additional
information about the Fund. The Trust's annual and semi-annual reports to
shareholders include information about the investments of the Fund. The SAI and
the financial statements included in the Fund's most recent annual report to
shareholders are incorporated by reference into this prospectus, which means
they are part of this prospectus for legal purposes. The Trust's annual report
discusses the market conditions and investment strategies that significantly
affected the Fund's performance during its last fiscal year. You may get free
copies of these materials, request other information about a Fund or make
shareholder inquiries by calling 1-800-828-0540.
You may review and copy information about the Trust, including its SAI, at the
Securities and Exchange Commission's Public Reference Room in Washington, D.C.
You may call the Commission at 1-800-SEC-0330 for information about the
operation of the Public Reference Room. You may also access reports and other
information about the Trust on the Commission's Internet site at
http://www.sec.gov. You may get copies of this information, with payment of a
duplication fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009. You may need to refer to the Trust's file number
under the Investment Company Act, which is 811-4138.
ALLMERICA INVESTMENT TRUST
440 Lincoln Street, Worcester, Massachusetts 01653
1-800-828-0540
<PAGE>
Allmerica Investment Trust
- --------------------------
Prospectus
May 1, 2000
The Money Market Fund is a separate portfolio of the Trust which serves as the
underlying investment for an insurance related account.
This Prospectus explains what you should know about the Fund. Please read it
carefully before you invest.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this Prospectus is adequate or complete. Any representation to the contrary is a
criminal offense.
ALLMERICA
INVESTMENT
TRUST
440 Lincoln Street
Worcester, Massachusetts 01653
1-800-828-0540
<PAGE>
Table of Contents
-----------------
FUND SUMMARY 3
Objectives, Strategies and Risks................................. 4
EXPENSE SUMMARY.......................................................... 5
DESCRIPTION OF PRINCIPAL INVESTMENT RISKS................................ 6
OTHER INVESTMENT STRATEGIES.............................................. 7
MANAGEMENT OF THE FUND................................................... 8
PRICING OF FUND SHARES................................................... 9
PURCHASE AND REDEMPTION OF SHARES........................................ 9
DISTRIBUTIONS AND TAXES.................................................. 10
FINANCIAL HIGHLIGHTS..................................................... 11
APPENDIX................................................................. 14
LEGEND
------
Performance [GRAPHIC APPEARS HERE]
Investment Objectives [GRAPHIC APPEARS HERE]
Financial Information [GRAPHIC APPEARS HERE]
Management of Fund [GRAPHIC APPEARS HERE]
Risk [GRAPHIC APPEARS HERE]
Investment Strategies [GRAPHIC APPEARS HERE]
-----------------------------
Allmerica Investment Trust
2
<PAGE>
Fund Summary
------------
This Prospectus describes the Money Market Fund of Allmerica Investment Trust,
which provides a broad range of investment options through 14 different Funds,
each a separate investment Portfolio. The other Funds are described in separate
prospectuses. Shares of the Funds are sold exclusively to variable annuity and
variable life insurance Separate Accounts and qualified pension and retirement
plans.
The investment manager of the Trust is Allmerica Financial Investment Management
Services, Inc. The Manager is responsible for managing the Trust's daily
business and has general responsibility for the management of the investments of
the Funds. The Manager, at its expense, has contracted with Allmerica Asset
Management, Inc. ("AAM") as Sub-Adviser to manage the investments of the Money
Market Fund. AAM has been selected on the basis of various factors including
management experience, investment techniques and staffing. See "Management of
the Funds" for more information about the Manager and the Sub-Adviser.
The following summary describes the Money Market Fund's investment objective and
principal investment strategies, identifies the principal investment risks of
investing in the Fund and provides a performance chart for the Fund. Note that
any percentage limitations listed under the Fund's principal investment
strategies apply at the time of investment. The principal risks are discussed in
more detail under "Description of Principal Investment Risks". The bar chart
shows how the investment returns of the shares of the Fund have varied in the
past ten years . The table following the bar chart shows how the Fund's average
annual returns for the last one, five and ten years compare to those of a
broad-based securities market index. Past performance does not necessarily
indicate how the Fund will perform in the future. The bar chart and table give
some indication of the risks of investing in the Fund by showing changes in the
Fund's performance. The bar chart and table do not reflect expenses associated
with the variable insurance product that you are purchasing. If those expenses
had been reflected, the performance shown would have been lower.
- -----------------------------
Allmerica Investment Trust
3
<PAGE>
Objectives, Strategies and Risks
Money Market Fund
-----------------
[GRAPHIC APPEARS HERE] Sub-Adviser: Allmerica Asset Management, Inc.
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks to obtain maximum
current income consistent with preservation of capital
and liquidity.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: The Fund seeks to
achieve its objective by investing in high quality money
market instruments such as obligations issued or
guaranteed by the United States Government, its
agencies, or instrumentalities; commercial paper;
obligations of banks or savings and loan associations
including bankers acceptances and certificates of
deposit; repurchase agreements and cash and cash
equivalents. The Fund may invest up to 25% of its assets
in U.S. dollar denominated foreign debt securities and
short-term instruments (not including investments in
ADRs).
Any security purchased for the Fund must receive the
highest or second highest quality rating by at least two
recognized rating agencies or by one if only one has
rated the security. If the security is unrated the
security must be seen by the Sub-Adviser as having
comparable quality. Portfolio securities will have a
remaining maturity of 397 days or less and the portfolio
is managed to maintain a dollar-weighted maturity of 90
days or less.
The Fund attempts to maintain a constant net asset value
of $1.00 per share but it may not be able to do so due
to adverse market conditions or other factors and it is
possible for investors to lose money by investing in the
Fund. An investment in the Fund is not a bank deposit
and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
[GRAPHIC APPEARS HERE] Principal Risks:
. Credit Risk
. Interest Rate Risk
. Investment Management Risk
. Market Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns[GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
8.17% 6.22% 3.78% 3.00% 3.93% 5.84% 5.36% 5.47% 5.51% 5.19%
- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
During the period shown above the highest quarterly return was 2.01% for the
quarter ended 06/30/90 and the lowest was 0.73% for the quarter ended 6/30/93.
Performance Table
Average Annual Total Returns
(for the periods ending Past Past Past
December 31, 1999) One Year Five Years Ten Years
- ------------------ -------- ---------- ---------
Fund Shares 5.19% 5.47% 5.23%
----------- ----- ----- -----
IBC/Donoghue First Tier
Money Market Index* 4.57% 4.97% 4.79%
------------------- ----- ----- -----
* IBC/Donoghue is an independent firm that tracks regulated money market funds
on a yield, shareholder, assets size and portfolio allocation basis.
The Fund's 7-day yield ending December 31, 1999 was 5.57%.
-----------------------------
Allmerica Investment Trust
4
<PAGE>
Expense Summary
---------------
Expenses are one of several factors to consider when investing in the Money
Market Fund. Expenses shown are based on expenses incurred in respect of shares
of the Fund for the 1999 fiscal year. The Example shows the cumulative expenses
attributable to a hypothetical $10,000 investment in the Fund over specified
periods.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you invest in the
Fund. Please note that the expenses listed below do not include the expenses of
the applicable variable insurance product that you are purchasing. 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 Fund.
<TABLE>
<CAPTION>
Annual Fund Operating Expenses
Shareholder (expenses deducted from Fund assets) Total Annual
Fees Fund
(fees paid directly Management Distribution Other Operating
from your investment) Fees (12b-1) Fees Expenses Expenses
- --------------------- ---- ------------ -------- --------
<S> <C> <C> <C> <C>
None 0.24% None 0.05% 0.29%(1)
---- ----- ---- ----- --------
</TABLE>
(1) Until further notice, the Manager has declared a voluntary expense
limitation of 0.60% for the Money Market Fund. The total operating expenses
of the Fund were less than its expense limitation throughout 1999.
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 the Fund. These limitations may be terminated at any time.
Example
This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment earns a 5% return
each year and that the Fund's operating expenses remain the same. Although
your actual costs may be higher or lower, based on these assumptions your
costs would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$30 $93 $163 $369
--- --- ---- ----
- -----------------------------
Allmerica Investment Trust
5
<PAGE>
[GRAPHIC] Description of Principal Investment Risks
---------------------------------------------------
The following is a summary of the principal risks of investing in the Money
Market Fund and the factors likely to cause the value of your investment in the
Fund to decline. The principal risks applicable to the Fund are identified under
"Fund Summary". There are also many factors that could cause the value of your
investment in the Fund to decline which are not described here. It is important
to remember that there is no guarantee that the Fund will achieve its investment
objective, and an investor in the Fund could lose money.
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. The price of a fixed income security can be expected to fall if the
issuer defaults on its obligation to pay principal or interest, the rating
agencies downgrade the issuer's credit rating or there is negative news that
affects the market's perception of the issuer's credit risk.
Interest Rate Risk
When interest rates rise, the prices of fixed income securities in the Fund's
portfolio will generally fall. Conversely, when interest rates fall, the prices
of fixed income securities in the Fund's portfolio will generally rise. Even a
Fund that invests in the highest quality debt securities is 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 the Fund does not achieve its
investment objective, even though the Sub-Adviser uses various investment
strategies and techniques.
Market Risk
This is the risk that the price of a security held by the Fund will fall due to
changing economic, political or market conditions or to factors affecting
investor psychology.
-----------------------------
Allmerica Investment Trust
6
<PAGE>
[GRAPHIC] Other Investment Strategies
-------------------------------------
The Fund Summary on page 3 describes the investment objective and the principal
investment strategies and risks of the Fund. The Fund may at times use the
following investment strategies. Attached as an Appendix is a chart with a
listing of various investment techniques and strategies that the Sub-Adviser of
the Fund may utilize. The Fund may decide that it is in the best interests of
shareholders to make changes to its investment objective and strategies
described in this Prospectus. The investment objective and strategies may be
changed with the approval of the Board of Trustees, but without shareholder
approval.
Foreign Investments. The Fund may invest all or a substantial part of its
portfolio in U.S. dollar denominated securities of companies that are located or
primarily doing business in a foreign country. A company is considered to be
located in a foreign country if it is organized under the laws of, or has a
principal office in, that country. A company is considered as primarily doing
business in a country if (i) the company derives at least 50% of its gross
revenues or profits from either goods or services produced or sold in the
country or (ii) at least 50% of the company's assets are situated in the
country. Funds may invest in foreign securities either directly or indirectly
through the use of depositary receipts, such as ADRs. Depositary receipts are
generally issued by banks or trust companies and evidence ownership of
underlying foreign securities.
Lending of Securities. To realize additional income, the Fund may lend portfolio
securities to broker-dealer or financial institutions in an amount up to 33-1/3%
of the Fund's total assets. While any such loan is outstanding, the Fund will
continue to receive amounts equal to the interest or dividends paid by the
issuer on the securities, as well as interest (less any rebates to be paid to
the borrower) on the investment of the collateral or a fee from the borrower.
The Fund will have the right to call each loan and obtain the securities.
Lending portfolio securities involves possible delays in receiving additional
collateral or in the recovery of the securities or possible loss of rights in
the collateral.
Restricted Securities. The Fund may purchase securities that are not registered
under Federal securities law ("restricted securities"), but can be offered and
sold to certain "qualified institutional buyers". The Fund will not invest more
than 10% of its net assets in restricted securities (and securities deemed to be
illiquid). These limits do not apply if the Board of Trustees determines that
the restricted securities are liquid. The Board of Trustees has adopted
guidelines and delegated to the Manager the daily function of determining and
monitoring the liquidity of restricted securities. The Board, however, retains
sufficient oversight and is ultimately responsible for the determinations. This
investment practice could increase the level of illiquidity in the Fund if
buyers lose interest in restricted securities. As a result, the Fund might not
be able to sell these securities when its Sub-Adviser wants to sell, or might
have to sell them at less than fair value. In addition, market quotations for
these securities are less readily available.
Temporary Defensive Strategies. At times a Sub-Adviser may determine that market
conditions make it desirable temporarily to suspend the Fund's normal investment
activities. The Fund may not achieve its investment objective while these
strategies are in effect.
- -----------------------------
Allmerica Investment Trust
7
<PAGE>
[GRAPHIC] Management of the Fund
--------------------------------
The Trust is governed by a Board of Trustees. Allmerica Financial Investment
Management Services, Inc. is the investment Manager of the Trust responsible for
managing the Trust's day-to-day business affairs. The Manager is located at 440
Lincoln Street, Worcester, MA 01653. The Manager and its predecessor, Allmerica
Investment Management Company, Inc., have been managing mutual funds since 1985.
The Manager currently serves as investment manager to one other mutual fund.
Allmerica Asset Management, Inc., located at 440 Lincoln Street, Worcester,
Massachusetts, serves as the Fund's Sub-Adviser. AAM was incorporated in 1993
and as of December 31, 1999 had $13.3 billion in assets under management. AAM
serves as investment adviser to investment companies and affiliated insurance
company accounts. John C. Donohue, Vice President of AAM, is primarily
responsible for the day-to-day management of the Fund. Mr. Donohue has been with
AAM since 1995. He was a portfolio manager at CS First Boston Investment
Management prior to joining AAM.
The Sub-Adviser has been selected by the Manager and Trustees with the help of
BARRA RogersCasey, Inc., a pension consulting firm. The fees earned by the
Sub-Adviser and BARRA RogersCasey are paid by the Manager. The performance of
the Sub-Adviser is reviewed quarterly by a committee of the Board of Trustees,
with assistance from BARRA RogersCasey.
For the fiscal year ended December 31, 1999, the Fund paid the Manager a fee of
0.24% of the Fund's average net assets, and the Manager paid AAM an aggregate
fee of 0.09% of the Fund's average net assets.
-----------------------------
Allmerica Investment Trust
8
<PAGE>
Pricing of Fund Shares
----------------------
The Money Market Fund sells and redeems its shares at a price equal to its net
asset value ("NAV") without paying any sales or redemption charges. 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 Fund does not accept orders
or compute its NAV on days when the Exchange is closed. All securities of the
Fund are valued at amortized cost.
Purchase and Redemption of Shares
---------------------------------
Shares of the Fund currently are purchased only by a separate account which is
the funding mechanism for a variable annuity contract. The Distributor,
Allmerica Investments, Inc., at its expense, may provide promotional incentives
to dealers who sell variable annuity contracts which invest in the Fund. 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 Account are sold subject to certain fees and charges which
may include sales and redemption charges. See the prospectuses for the variable
insurance product.
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.
- -----------------------------
Allmerica Investment Trust
9
<PAGE>
Distributions and Taxes
-----------------------
Distributions
The Fund pays out substantially all of its net investment income daily.
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 Account and any distributions are reinvested automatically by the
Separate Account.
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 the Fund are not currently taxable when left to accumulate
within a variable annuity or variable life insurance contract. Withdrawals 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.
-----------------------------
Allmerica Investment Trust
10
<PAGE>
[GRAPHIC] Financial Highlights
------------------------------
Allmerica Investment Trust
FINANCIAL HIGHLIGHTS - For a Share Outstanding Throughout Each Period
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from Investment Operations Less Distributions
--------------------------------------------------------- ---------------------------------------------------
Net Realized
Net and Distributions
Asset Net Unrealized Dividends from Net
Value Investment Gain (Loss) Total from from Net Realized Distributions
Year Ended Beginning Income on Investment Investment Capital in Return of Total
December 31, of Year (Loss) Investments Operations Income Gains Excess Capital Distributions
- ------------ --------- ------------ ------------ ---------- ---------- ------------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market
Fund
1999 1.000 0.051 -- 0.051 (0.051) -- -- -- (0.051)
1998 1.000 0.054 -- 0.054 (0.054) -- -- -- (0.054)
1997 1.000 0.053 -- 0.053 (0.053) -- -- -- (0.053)
1996 1.000 0.052 -- 0.052 (0.052) -- -- -- (0.052)
1995 1.000 0.057 -- 0.057 (0.057) -- -- -- (0.057)
<CAPTION>
Net
Increase
(Decrease)
in
Year Ended Net Asset
December 31, Value
- ------------ ----------
<S> <C>
Money Market
Fund
1999 --
1998 --
1997 --
1996 --
1995 --
</TABLE>
- ------------------------------------
(A) Including reimbursements and reductions.
(B) Excluding reductions. Certain Portfolios have entered into varying
arrangements with brokers who reduced a portion of the Portfolio's
expenses.
(C) Excluding reimbursements and reductions.
<TABLE>
<CAPTION>
Ratios/Supplemental Data
-------------------------------------------------------------
Ratios To Average Net Assets
------------------------------------------------
Net Assets
Net Asset End of Net Operating Management Portfolio
Value End Total Year Investment Expenses Fee Turnover
of Year Return (000's) Income (Loss) (A) (B) (C) Gross Net Rate
- --------- ------ ---------- ------------- ---- ---- ---- ----- ---- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1.000 5.19% 513,606 5.09% 0.29% 0.29% 0.29% 0.24% 0.24% N/A
1.000 5.51% 336,253 5.36% 0.32% 0.32% 0.32% 0.26% 0.26% N/A
1.000 5.47% 260,620 5.33% 0.35% 0.35% 0.35% 0.27% 0.27% N/A
1.000 5.36% 217,256 5.22% 0.34% 0.34% 0.34% 0.28% 0.28% N/A
1.000 5.84% 155,211 5.68% 0.36% -- 0.36% 0.29% 0.29% N/A
</TABLE>
The financial highlights tables are intended to help you understand the 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 the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by PricewaterhouseCoopers LLP, whose report, along
with the Fund's financial statements, are included in the Statement of
Additional Information or annual report, which is available upon request.
- -----------------------------
Allmerica Investment Trust
11
<PAGE>
[GRAPHIC] APPENDIX
Investment Techniques and Strategies
In managing its portfolio of investments, the Fund may make use of the following
investment techniques and strategies:
Symbols
o Permitted
-- Not Permitted
INVESTMENT TECHNIQUE/STRATEGY
-----------------------------
Asset-Backed Securities o
Financial Futures Contracts
and Related Options --
Foreign Securities o
Forward Commitments o
Forward Contracts on Foreign Currencies --
High Yield Securities --
Investments in Money Market Securities o
Mortgage-Backed Securities --
Purchasing Options --
Repurchase Agreements o
Restricted Securities o
Reverse Repurchase Agreements --
Securities Lending o
Stand-By Commitments o
Stripped Mortgage-Backed Securities --
Swap and Swap-Related Products --
When-Issued Securities o
Writing Covered Options --
----------------------- --
- -----------------------------
Allmerica Investment Trust
12
<PAGE>
This page left blank intentionally.
-----------------------------
Allmerica Investment Trust
13
<PAGE>
Allmerica Investment Trust
Money Market Fund
The Trust's Statement of Additional Information ("SAI") includes additional
information about the Fund. The Trust's annual and semi-annual reports to
shareholders include information about the investments of the Fund. The SAI and
the financial statements included in the Fund's most recent annual report to
shareholders are incorporated by reference into this prospectus, which means
they are part of this prospectus for legal purposes. The Trust's annual report
discusses the market conditions and investment strategies that significantly
affected a Fund's performance during its last fiscal year. You may get free
copies of these materials, request other information about a Fund or make
shareholder inquiries by calling 1-800-828-0540.
You may review and copy information about the Trust, including its SAI, at the
Securities and Exchange Commission's Public Reference Room in Washington, D.C.
You may call the Commission at 1-800-SEC-0330 for information about the
operation of the Public Reference Room. You may also access reports and other
information about the Trust on the Commission's Internet site at
http://www.sec.gov. You may get copies of this information, with payment of a
duplication fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009. You may need to refer to the Trust's file number
under the Investment Company Act, which is 811-4138.
ALLMERICA
INVESTMENT
TRUST
440 Lincoln Street, Worcester, Massachusetts 01653
1-800-828-0540
<PAGE>
Allmerica Investment Trust
- --------------------------
Prospectus
May 1, 2000
This Prospectus describes the following 13 investment Funds of the Trust which
serve as the underlying investments for insurance related accounts.
Select Emerging Markets Fund
Select Aggressive Growth Fund
Select Capital Appreciation Fund
Select Value Opportunity Fund
Select International Equity Fund
Select Growth Fund
Select Strategic Growth Fund
Core Equity Fund
Equity Index Fund
Select Growth and Income Fund
Select Investment Grade Income Fund
Government Bond Fund
Money Market Fund
This Prospectus explains what you should know about each of the Funds. Please
read it carefully before you invest.
A particular Fund may not be available under the variable annuity or variable
life insurance policy which you have chosen. The Prospectus of the specific
insurance product you have chosen will indicate which Funds are available and
should be read in conjunction with this Prospectus. Inclusion in this Prospectus
of a Fund which is not available under your policy is not to be considered a
solicitation.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this Prospectus is adequate or complete. Any representation to the contrary is a
criminal offense.
Allmerica Investment Trust
440 Lincoln Street
Worcester, Massachusetts 01653
1-800-828-0540
<PAGE>
Table of Contents
FUND SUMMARIES............................................................. 3
Objectives, Strategies and Risks................................... 4
Select Emerging Markets Fund................................. 4
Select Aggressive Growth Fund................................ 5
Select Capital Appreciation Fund............................. 6
Select Value Opportunity Fund................................ 7
Select International Equity Fund............................. 8
Select Growth Fund........................................... 9
Select Strategic Growth Fund................................. 10
Core Equity Fund............................................. 11
Equity Index Fund............................................ 12
Select Growth and Income Fund................................ 13
Select Investment Grade Income Fund.......................... 14
Government Bond Fund......................................... 15
Money Market Fund............................................ 16
EXPENSE SUMMARY............................................................ 17
DESCRIPTION OF PRINCIPAL INVESTMENT RISKS.................................. 21
OTHER INVESTMENT STRATEGIES................................................ 23
MANAGEMENT OF THE FUNDS.................................................... 25
PRICING OF FUND SHARES..................................................... 34
PURCHASE AND REDEMPTION OF SHARES.......................................... 34
DISTRIBUTIONS AND TAXES.................................................... 35
FINANCIAL HIGHLIGHTS....................................................... 36
APPENDIX................................................................... 43
LEGEND
Performance [GRAPHIC]
Investment [GRAPHIC]
Objectives
Financial [GRAPHIC]
Information
Management [GRAPHIC]
of Fund
Risk [GRAPHIC]
Investment [GRAPHIC]
Strategies
-------------------------------
Allmerica Investment Trust
2
<PAGE>
Fund Summaries
Allmerica Investment Trust provides a broad range of investment options through
13 separate investment portfolios, or Funds. Shares of the Funds are sold
exclusively to variable annuity and variable life insurance Separate Accounts
and qualified pension and retirement plans.
The investment manager of the Trust is Allmerica Financial Investment Management
Services, Inc. The Manager is responsible for managing the Trust's daily
business and has general responsibility for the management of the investments of
the Funds. The Manager, at its expense, has contracted with investment
Sub-Advisers to manage the investments of the Funds. Each Sub-Adviser has been
selected on the basis of various factors including management experience,
investment techniques and staffing. See "Management of the Funds" for more
information about the Manager and the Sub-Advisers.
The following summaries describe each Fund's investment objective and principal
investment strategies, identify the principal investment risks of investing in
the Fund and provide performance charts for the Fund. Note that any percentage
limitations listed under a Fund's principal investment strategies apply at the
time of investment. The principal risks are discussed in more detail under
"Description of Principal Investment Risks". The bar charts show how the
investment returns of the shares of a Fund have varied in the past ten years (or
for the life of the Fund if less than 10 years). The table following each bar
chart shows how the Fund's average annual return for the last one, five and ten
years (or for the life of the Fund, if shorter) compare to those of a
broad-based securities market index. Past performance does not necessarily
indicate how the Fund will perform in the future. The bar charts and tables give
some indication of the risks of investing in each Fund by showing changes in the
Fund's performance. The bar charts and tables do not reflect expenses associated
with the variable insurance product that you are purchasing. If those expenses
had been reflected, the performance shown would have been lower.
- -----------------------------
Allmerica Investment Trust
3
<PAGE>
Objectives, Strategies and Risks
Select Emerging Markets Fund
----------------------------
[GRAPHIC APPEARS HERE] Sub-Adviser: Schroder Investment Management North
America Inc.
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks long-term growth of
capital by investing in the world's emerging markets.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: While its investments
are not limited to any specific region of the world, the
Fund normally invests at least 65% of its assets in
companies located or primarily operating in countries
with emerging markets. The Fund usually has investments
in at least five developing countries. Before the Fund
invests in a country, the Sub-Adviser considers various
factors such as that country's political stability and
economic prospects. In selecting securities for the
Fund, the Sub-Adviser focuses on the long-term growth
potential of the securities.
The Fund invests primarily in equities, including common
stock, preferred stock, securities convertible into
common stock, rights and warrants and similar
securities. The Fund also may invest up to 35% of its
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", as further discussed in the "Description of
Principal Investment Risks."
[GRAPHIC APPEARS HERE] Principal Risks:
. Company Risk
. Credit Risk
. Currency Risk
. Derivatives Risk
. Emerging Markets Risk
. Foreign Investment Risk
. Investment Management Risk
. Liquidity Risk
. Market Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns [GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
65.72%
------
1999
During 1998 and the period shown above the highest quarterly return was 29.52%
for the quarter ended 12/31/99 and the lowest was (21.23)% for the quarter ended
9/30/98.
Performance Table
Average Annual Total Returns
(for the periods ending Past Since Inception
December 31, 1999) One Year (February 20, 1998)
- ------------------ -------- -------------------
Fund Shares 65.72% 15.22%
----------- ------- ------
MSCI Emerging Markets Free Index* 66.41% 11.50%
--------------------------------- ------- ------
* The MSCI Emerging Markets Free Index is an unmanaged index of 26 emerging
markets.
-------------------------------
Allmerica Investment Trust
4
<PAGE>
Objectives, Strategies and Risks
Select Aggressive Growth Fund
-----------------------------
[GRAPHIC APPEARS HERE] Sub-Adviser: Nicholas-Applegate Capital Management, L.P.
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks above-average
capital appreciation by investing primarily in common
stocks of companies which are believed to have
significant potential for capital appreciation.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: To pursue this goal,
the Fund looks predominantly for stocks of small and
mid-size companies that show potential for rapid growth.
The Fund typically invests in companies that, because of
positive developments affecting the company, offer the
possibility of accelerating earnings. The Sub-Adviser
uses systematic, fundamental research in selecting
investments for the Fund.
Under normal circumstances, the Fund invests at least
65% of its assets in common stocks, securities
convertible into common stocks and warrants. The Fund
also may invest in debt securities and preferred stocks
and up to 25% of its assets in foreign securities (not
including its investments in American Depositary
Receipts or "ADRs").
[GRAPHIC APPEARS HERE] Principal Risks:
. Company Risk
. Derivatives Risk
. Investment Management Risk
. Liquidity Risk
. Market Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns [GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
19.51% -2.31% 32.28% 18.55% 18.71% 10.56% 38.66%
------ ------ ------ ------ ------ ------ ------
1993 1994 1995 1996 1997 1998 1999
During the period shown above the highest quarterly return was 25.64% for the
quarter ended 12/31/99 and the lowest was (22.81)% for the quarter ended
9/30/98.
Performance Table
Average Annual Total Returns
(for the periods ending Past Past Since Inception
December 31, 1999) One Year Five Years (August 21, 1992)
- ------------------ -------- ---------- -----------------
Fund Shares 38.66% 23.32% 20.71%
----------- ------ ------ ------
Russell 2500 Index* 24.15% 19.43% 17.37%
------------------- ------ ------ ------
* The Russell 2500 Index is an unmanaged composite of 2,500 small-to-mid
capitalization stocks.
- -----------------------------
Allmerica Investment Trust
5
<PAGE>
Objectives, Strategies and Risks
Select Capital Appreciation Fund
--------------------------------
[GRAPHIC APPEARS HERE] Sub-Adviser: T. Rowe Price Associates, Inc.
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks long-term growth of
capital. Realization of income is not a significant
investment consideration and any income realized on the
Fund's investments will be incidental to its primary
objective.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: The Fund's Sub-Adviser
looks for companies with proven business ideas and
earnings growth rates in excess of market averages. The
Fund normally invests at least 50% of its equity assets
in securities of companies with market capitalizations
that fall within the range of companies in the S&P Mid
Cap 400 Index (as of December 31, 1999, $185 million to
$37 billion market capitalization). The Fund may also
invest in larger firms and firms with a market
capitalization below $185 million.
While the Fund invests primarily in common stocks, it
also may invest in preferred stocks, warrants,
government securities, corporate bonds and other debt
securities. Up to 25% of its assets may be invested in
"junk bonds". The Fund may invest without limitation in
foreign securities.
[GRAPHIC APPEARS HERE] Principal Risks:
. Company Risk
. Credit Risk
. Currency Risk
. Derivatives Risk
. Foreign Investment Risk
. Investment Management Risk
. Liquidity Risk
. Market Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns [GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
8.80% 14.28% 13.88% 25.36%
----- ------ ------ ------
1996 1997 1998 1999
During the period shown above the highest quarterly return was 27.90% for the
quarter ended 12/31/98 and the lowest was (18.54)% for the quarter ended
9/30/98.
T. Rowe Price Associates, Inc. became Sub-Adviser of the Fund on April 1, 1998.
Performance before that date is based on the performance of the Fund's previous
Sub-Adviser.
Performance Table
Average Annual Total Returns
(for the periods ending Past Since Inception
December 31, 1999) One Year (April 28, 1995)
- ------------------ -------- ----------------
Fund Shares 25.36% 21.42%
----------- ------ ------
Russell 2500 Index* 24.15% 18.67%
------------------- ------ ------
* The Russell 2500 Index is a unmanaged composite of 2,500 small-to-mid
capitalization stocks.
-------------------------------
Allmerica Investment Trust
6
<PAGE>
Objectives, Strategies and Risks
Select Value Opportunity Fund
-----------------------------
[GRAPHIC APPEARS HERE] Sub-Adviser: Cramer Rosenthal McGlynn, LLC
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks long-term growth of
capital by investing primarily in a diversified
portfolio of common stocks of small and mid-size
companies, whose securities at the time of purchase are
considered by the Sub-Adviser to be undervalued.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: The Fund's Sub-Adviser
attempts to find stocks that are attractively valued
relative to their future prospects and the market as a
whole. The most promising opportunities can be found in
companies that are temporarily out of favor or when most
analysts are confused about changes taking place at a
company. In these situations, the company's stock is
often undervalued.
The Fund invests primarily in companies with market
capitalization between $200 million and $5 billion. The
Fund normally invests at least 80% of the portfolio in
common stocks and may invest in other equity securities
and up to 25% of its assets in foreign securities (not
including its investments in ADRs).
[GRAPHIC APPEARS HERE] Principal Risks:
. Company Risk
. Currency Risk
. Derivatives Risk
. Foreign Investment Risk
. Investment Management Risk
. Liquidity Risk
. Market Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns [GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
-6.51% 17.60% 28.53% 24.85% 4.87% -4.70%
------ ------ ------ ------ ----- ------
1994 1995 1996 1997 1998 1999
During the period shown above the highest quarterly return was 15.52% for the
quarter ended 3/31/99 and the lowest was (16.86)% for the quarter ended
6/30/99.
Cramer Rosenthal McGlynn, LLC became Sub-Adviser of the Fund on January 1, 1997.
Performance before that date is based on the performance of the Fund's previous
Sub-Adviser.
Performance Table
Average Annual Total Returns
(for the periods ending Past Past Since Inception
December 31, 1999) One Year Five Years (April 30, 1993)
- ------------------ -------- ---------- ----------------
Fund Shares -4.70% 13.52% 11.57%
----------- ------ ------ ------
Russell 2500 Index* 24.15% 19.43% 16.41%
------------------- ------ ------ ------
* The Russell 2500 Index is an unmanaged composite of 2,500 small-to-mid
capitalization stocks.
- -----------------------------
Allmerica Investment Trust
7
<PAGE>
Objectives, Strategies and Risks
Select International Equity Fund
--------------------------------
[GRAPHIC APPEARS HERE] Sub-Adviser: Bank of Ireland Asset Management (U.S.)
Limited
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks maximum long-term
total return (capital appreciation and income) primarily
by investing in common stocks of established non-U.S.
companies.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: Under normal market
conditions, at least 65% of the Fund's assets will be
invested in the securities of medium and large-size
companies located in at least five foreign countries,
not including the United States. To achieve its
objective, the Fund focuses on equity securities which
the Sub-Adviser believes are undervalued in relation to
the company's prospects for future earnings growth. The
Fund may also buy fixed-income debt securities,
primarily for defensive purposes.
[GRAPHIC APPEARS HERE] Principal Risks:
. Company Risk
. Currency Risk
. Derivatives Risk
. Foreign Investment Risk
. Investment Management Risk
. Market Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns [GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
19.63% 21.94% 4.65% 16.48% 31.71%
------ ------ ----- ------ ------
1995 1996 1997 1998 1999
During the period shown above the highest quarterly return was 20.89% for the
quarter ended 12/31/99 and the lowest was (17.69)% for the quarter ended
09/30/98.
Performance Table
Average Annual Total Returns
(for the periods ending Past Past Since Inception
December 31, 1999) One Year Five Years (May 2, 1994)
- ------------------ -------- ---------- -------------
Fund Shares 31.71% 18.54% 15.47%
----------- ------ ------ ------
Morgan Stanley Capital Intl.
EAFE Index* 27.31% 13.15% 11.54%
----------- ------ ------ ------
* The Morgan Stanley Capital International EAFE (Europe, Australia, Far East)
Index, reflecting reinvestment of gross dividends, is an unmanaged
capitalization weighted index of foreign developed country common stocks.
-------------------------------
Allmerica Investment Trust
8
<PAGE>
Objectives, Strategies and Risks
Select Growth Fund
------------------
[GRAPHIC APPEARS HERE] Sub-Adviser: Putnam Investment Management, Inc.
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks to achieve long-
term growth of capital by investing in a diversified
portfolio consisting primarily of common stocks selected
on the basis of their long-term growth potential.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: To attain its
objective, the Fund looks for companies that appear to
have favorable long-term growth characteristics. The
Fund typically invests in stocks of large capitalization
companies, such as those included in the S&P 500 Index,
although it can also make investments in smaller growth
companies.
At least 65% of the Fund's assets normally will consist
of common stocks that the Sub-Adviser believes have
growth potential. The Fund also may purchase convertible
bonds and preferred stocks and warrants. The Fund
normally invests substantially all of its investments in
equity securities, although it may invest up to 35% in
debt securities including up to 15% in "junk bonds". The
Fund may invest up to 25% of its assets in foreign
securities (not including its investments in ADRs).
[GRAPHIC APPEARS HERE] Principal Risks:
. Company Risk
. Credit Risk
. Derivatives Risk
. Investment Management Risk
. Market Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns [GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
0.84% -1.49% 24.59% 22.02% 34.06% 35.44% 29.80%
----- ------ ------ ------ ------ ------ ------
1993 1994 1995 1996 1997 1998 1999
During the period shown above the highest quarterly return was 25.02% for the
quarter ended 12/31/98 and the lowest was (11.84)% for the quarter ended
09/30/98.
Putnam Investment Management, Inc. 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
(for the periods ending Past Past Since Inception
December 31, 1999) One Year Five Years (August 21, 1992)
- ------------------ -------- ---------- -----------------
Fund Shares 29.80% 29.06% 20.57%
----------- ------ ------ ------
S&P 500 Index* 21.03% 28.55% 21.46%
-------------- ------ ------ ------
* The S&P 500 Index(R), reflecting reinvestment of dividends, is an unmanaged
index of 500 leading stocks. S&P 500(R) Index is a registered trademark of
Standard & Poor's Corporation.
- -----------------------------
Allmerica Investment Trust
9
<PAGE>
Objectives, Strategies and Risks
Select Strategic Growth Fund
----------------------------
[GRAPHIC APPEARS HERE] Sub-Adviser: TCW Investment Management Company
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks long-term capital
appreciation.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: To pursue its
investment objective, the Fund invests (except when
maintaining a temporary defensive position) at least 65%
of the value of its total assets in equity securities
issued by companies with market capitalization, at the
time of acquisition, within the capitalization range of
the companies comprising the Standard & Poor's Small Cap
600 Index.
In managing the Fund's investments, the Sub-Adviser
pursues a small cap growth investment philosophy. The
Sub-Adviser uses fundamental company-by-company analysis
in conjunction with technical and quantitative market
analysis to screen potential investments and to
continuously monitor securities in the Fund's portfolio.
The Fund focuses on small, fast-growing companies that
offer cutting-edge products, services or technologies.
Because these companies are often in their early stages
of development, their stocks tend to fluctuate more than
most other securities. The Fund may invest up to 25% of
its assets in foreign securities (not including its
investments in ADRs).
[GRAPHIC APPEARS HERE] Principal Risks:
. Company Risk
. Currency Risk
. Derivatives Risk
. Foreign Investment Risk
. Investment Management Risk
. Liquidity Risk
. Market Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns [GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
16.06%
------
1999
During 1998 and the period shown above the highest quarterly return was 16.94%
for the quarter ended 12/31/98 and the lowest was (16.77)% for the quarter ended
9/30/98.
TCW Investment Management Inc. became Sub-Adviser of the Fund on April 1, 2000.
Performance before that date is based on the performance of the Fund's previous
Sub-Adviser.
Performance Table
Average Annual Total Returns
(for the periods ending Past Since Inception
December 31, 1999) One Year (February 20, 1998)
- ------------------ -------- -------------------
Fund Shares 16.06% 6.89%
----------- ------ -----
S&P 500 Index* 21.03% 21.80%
-------------- ------ ------
* The S&P 500 Index(R), reflecting reinvestment of dividends, is an unmanaged
index of 500 leading stocks. S&P 500(R) Index is a registered trademark of
Standard & Poor's Corporation.
-----------------------------
Allmerica Investment Trust
10
<PAGE>
Objectives, Strategies and Risks
Core Equity Fund
----------------
(formerly the Growth Fund)
[GRAPHIC APPEARS HERE] Sub-Adviser: Miller Anderson & Sherrerd, LLP
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks to achieve
long-term growth of capital through investments
primarily in common stocks and securities convertible
into common stocks that are believed to represent
significant underlying value in relation to current
market prices. Realization of current income, if any, is
incidental to this objective.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: To pursue its goal, the
Fund invests in securities that are diversified with
regard to issuers and industries. In selecting
securities, the Fund is not limited to any particular
style of investing and may invest in stocks considered
to be "growth" stocks as well as stocks considered to be
"value" stocks. The Fund may invest in well-established
or developing companies, both large and small.
The Fund normally will invest substantially all of its
assets in equity-type securities, including common
stocks, warrants, preferred stocks and debt securities
convertible into common stock and eligible real estate
securities. The Fund may invest up to 25% of its assets
in foreign securities (not including its investments in
ADRs).
[GRAPHIC APPEARS HERE] Principal Risks:
. Company Risk
. Derivatives Risk
. Investment Management Risk
. Market Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns [GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
1990........................... -0.30%
1991........................... 40.44%
1992........................... 7.11%
1993........................... 6.66%
1994........................... 0.16%
1995........................... 32.80%
1996........................... 20.19%
1997........................... 25.14%
1998........................... 19.32%
1999........................... 29.33%
During the period shown above the highest quarterly return was 21.48% for the
quarter ended 12/31/98 and the lowest was (14.61)% for the quarter ended
9/30/90.
Performance Table
Average Annual Total Returns
(for the periods ending Past Past Past
December 31, 1999) One Year Five Years Ten Years
- ------------------ -------- ---------- ---------
Fund Shares 29.33% 25.23% 17.31%
- ----------- ------ ------ ------
S&P 500 Index* 21.03% 28.55% 18.21%
- -------------- ------ ------ ------
* The S&P 500 Index(R), reflecting reinvestment of dividends, is an unmanaged
index of 500 leading stocks. S&P 500(R) Index is a registered trademark of
Standard & Poor's Corporation.
- -----------------------------
Allmerica Investment Trust
11
<PAGE>
Objectives, Strategies and Risks
Equity Index Fund
-----------------
[GRAPHIC APPEARS HERE] Sub-Adviser: Allmerica Asset Management, Inc.
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks to achieve
investment results that correspond to the aggregate
price and yield performance of a representative
selection of common stocks that are publicly traded in
the United States.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: The Fund tries to
achieve its objective by attempting to replicate the
aggregate price and yield performance of the S&P 500
Index. Because of its policy of tracking the S&P 500
Index, the Fund does not follow traditional methods of
active investment management, which involve buying and
selling securities based upon analysis of economic and
market factors. The method used to select investments
for the Fund involves investing in common stocks in
approximately the order of their weightings in the S&P
500 Index. Under normal circumstances, the Fund will
hold approximately 500 different stocks included in the
S&P 500 Index. The Fund will incur expenses that are not
reflected in the performance results of the S&P 500
Index. Therefore, the return of the Fund may be lower
than the return of the S&P 500 Index. These factors,
among others, may result in "tracking error", which is a
measure of the degree to which the Fund's results differ
from the results of the S&P 500 Index.
[GRAPHIC APPEARS HERE] Principal Risks:
. Company Risk
. Derivatives Risk
. Market Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns [GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
1991.............................. 29.16%
1992.............................. 7.25%
1993.............................. 9.53%
1994.............................. 1.06%
1995.............................. 36.18%
1996.............................. 22.30%
1997.............................. 32.41%
1998.............................. 28.33%
1999.............................. 20.41%
During the period shown above the highest quarterly return was 21.41% for the
quarter ended 12/31/98 and the lowest was (9.96)% for the quarter ended 9/30/98.
Performance Table
Average Annual Total Returns
(for the periods ending Past Past Since Inception
December 31, 1999) One Year Five Years (September 28, 1990)
- ------------------ -------- ---------- --------------------
Fund Shares 20.41% 27.77% 20.66%
- ----------- ------ ------ ------
S&P 500 Index* 21.03% 28.55% 21.35%
- -------------- ------ ------ ------
* The S&P 500 Index(R), reflecting reinvestment of dividends, is an unmanaged
index of 500 leading stocks. S&P 500(R) Index is a registered trademark of
Standard & Poor's Corporation.
-----------------------------
Allmerica Investment Trust
12
<PAGE>
Objectives, Strategies and Risks
Select Growth and Income Fund
-----------------------------
[GRAPHIC APPEARS HERE] Sub-Adviser: J.P. Morgan Investment Management Inc.
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks a combination of
long-term growth of capital and current income. The Fund
will invest primarily in dividend-paying common stocks
and securities convertible into common stocks.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: The Fund invests in a
broadly diversified portfolio of equity securities,
primarily the common stock of companies included in the
S&P 500 Index. The Fund's industry diversification and
other risk characteristics will be similar to those of
the index. The Fund may invest in a wide range of equity
securities, consisting of common stocks, preferred
stocks, securities convertible into common and preferred
stocks and warrants. The Fund may purchase individual
stocks not presently paying dividends if the Sub-Adviser
believes the overall portfolio is positioned to achieve
its income objective.
The Fund may invest up to 35% of its assets in
fixed-income securities, including up to 15% in "junk
bonds". However, the Fund's normal strategy is to be
nearly fully invested in equity securities. The Fund may
also invest up to 25% of its assets in foreign
securities (not including its investments in ADRs).
[GRAPHIC APPEARS HERE] Principal Risks:
. Company Risk
. Derivatives Risk
. Investment Management Risk
. Market Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns[GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
10.37% 0.73% 30.32% 21.26% 22.51% 16.43% 18.43%
------ ----- ------ ------ ------ ------ ------
1993 1994 1995 1996 1997 1998 1999
During the period shown above the highest quarterly return was 19.41% for the
quarter ended 12/31/98 and the lowest was (12.66)% for the quarter ended
9/30/98.
J.P. Morgan Investment Management Inc. became Sub-Adviser of the Fund on April
1, 1999. Performance before that date is based on the performance of the Fund's
previous Sub-Advisers.
Performance Table
Average Annual Total Returns
(for the periods ending Past Past Since Inception
December 31, 1999) One Year Five Years (August 21, 1992)
- ------------------ -------- ---------- -----------------
Fund Shares 18.43% 21.69% 15.92%
----------- ------ ------ ------
S&P 500 Index* 21.03% 28.55% 21.46%
-------------- ------ ------ ------
* The S&P 500 Index(R), reflecting reinvestment of dividends, is an unmanaged
index of 500 leading stocks. S&P 500(R) Index is a registered trademark of
Standard & Poor's Corporation.
- -----------------------------
Allmerica Investment Trust
13
<PAGE>
Objectives, Strategies and Risks
Select Investment Grade Income Fund
-----------------------------------
(formerly the Investment Grade Income Fund)
[GRAPHIC APPEARS HERE] Sub-Adviser: Allmerica Asset Management, Inc.
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks as high a level of
total return, which includes capital appreciation as
well as income, as is consistent with prudent investment
management.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: To achieve its goal,
the Fund invests in investment grade debt securities and
money market instruments such as bonds and other
corporate debt obligations; obligations issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities, or money market instruments,
including commercial paper, bankers acceptances and
negotiable certificates of deposit. The Fund also may
invest in mortgage-backed and asset-backed securities.
The Fund may invest up to 25% of its assets in foreign
securities (not including its investments in ADRs) and
up to 25% of its assets in debt obligations of
supranational entities.
Investment grade securities are rated in the four
highest grades by Moody's Investors Services or Standard
& Poor's Rating Services or unrated but determined by
the Sub-Adviser to be of comparable quality. For more
information about rating categories, see the Appendix to
the Statement of Additional Information ("SAI"). The
Fund may invest in securities with relatively long
maturities as well as securities with shorter
maturities.
The Sub-Adviser actively manages the portfolio with a
view to producing a high level of total return for the
Fund while avoiding undue risks to capital. The
Sub-Adviser attempts to anticipate events leading to
price or ratings changes through using in-depth
fundamental credit research.
[GRAPHIC APPEARS HERE] Principal Risks:
. Company Risk
. Interest Rate Risk
. Investment Management Risk
. Liquidity Risk
. Market Risk
. Prepayment Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns [GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
1990 .................... 8.02%
1991 ....................16.75%
1992 .................... 8.33%
1993 ....................10.80%
1994 ....................-2.96%
1995 ....................17.84%
1996 .................... 3.56%
1997 .................... 9.45%
1998 .................... 7.97%
1999 ....................-0.97%
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 3/31/94.
Performance Table
Average Annual Total Returns
(for the periods ending Past Past Past
December 31, 1999) One Year Five Years Ten Years
- ------------------ -------- ---------- ---------
Fund Shares -0.97% 7.38% 7.69%
- ----------- ------ ----- -----
Lehman Brothers
Aggregate Bond Index* -0.83% 7.73% 7.69%
- --------------------- ------ ----- -----
* The Lehman Brothers Aggregate Bond Index(R) is an unmanaged index of 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.
-----------------------------
Allmerica Investment Trust
14
<PAGE>
Objectives, Strategies and Risks
Government Bond Fund
--------------------
[GRAPHIC APPEARS HERE] Sub-Adviser: Allmerica Asset Management, Inc.
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks high income,
preservation of capital, and maintenance of liquidity
primarily through investments in debt instruments issued
or guaranteed by the U.S. Government or its agencies or
instrumentalities ("U.S. Government securities") and in
related options, futures, and repurchase agreements.
Under normal conditions, at least 80% of the Fund's
assets will be invested in U.S. Government securities.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: To pursue its
objective, the Fund invests in U.S. Government
securities, such as Treasury bills, notes, and bonds,
which may differ only in their interest rates,
maturities and times of issuance. The Fund also may
invest in mortgage-backed government securities, other
instruments secured by U.S. Government securities,
asset-backed securities and separately-traded principal
and interest components of U.S. Treasury securities. The
Fund may invest up to 25% of its assets in debt
obligations of supranational entities.
The Sub-Adviser selects securities for the portfolio
with a view to producing a high level of current income
while avoiding undue risks to capital. The Fund may
invest in securities with relatively long maturities as
well as securities with shorter maturities.
[GRAPHIC APPEARS HERE] Principal Risks:
. Credit Risk
. Interest Rate Risk
. Investment Management Risk
. Market Risk
. Prepayment Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns [GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
1992................................. 6.59%
1993................................. 7.51%
1994................................. -0.88%
1995................................. 13.06%
1996................................. 3.51%
1997................................. 7.08%
1998................................. 7.67%
1999................................. 0.23%
During the period shown above the highest quarterly return was 4.32% for the
quarter ended 9/30/98 and the lowest was (1.49)% for the quarter ended
3/31/92.
Performance Table
Average Annual Total Returns
(for the periods ending Past Past Since Inception
December 31, 1999) One Year Five Years (August 26, 1991)
- ------------------ -------- ---------- -----------------
Fund Shares 0.23% 6.22% 6.16%
- ----------- ----- ----- -----
Lehman Brothers
Intermediate Government
Bond Index* 0.50% 6.93% 6.55%
- ----------- ----- ----- -----
* The Lehman Brothers Intermediate Government Bond Index(R) is an unmanaged
index of U.S. Government and Agency bonds with remaining maturities of one
to ten years.
- -----------------------------
Allmerica Investment Trust
15
<PAGE>
Objectives, Strategies and Risks
Money Market Fund
-----------------
[GRAPHIC APPEARS HERE] Sub-Adviser: Allmerica Asset Management, Inc.
[GRAPHIC APPEARS HERE] Investment Objective: The Fund seeks to obtain maximum
current income consistent with preservation of capital
and liquidity.
[GRAPHIC APPEARS HERE] Principal Investment Strategies: The Fund seeks to
achieve its objective by investing in high quality money
market instruments such as obligations issued or
guaranteed by the United States Government, its
agencies, or instrumentalities; commercial paper;
obligations of banks or savings and loan associations
including bankers acceptances and certificates of
deposit; repurchase agreements and cash and cash
equivalents. The Fund may invest up to 25% of its assets
in U.S. dollar denominated foreign debt securities and
short-term instruments (not including investments in
ADRs).
Any security purchased for the Fund must receive the
highest or second highest quality rating by at least two
recognized rating agencies or by one if only one has
rated the security. If the security is unrated the
security must be seen by the Sub-Adviser as having
comparable quality. Portfolio securities will have a
remaining maturity of 397 days or less and the portfolio
is managed to maintain a dollar-weighted maturity of 90
days or less.
The Fund attempts to maintain a constant net asset value
of $1.00 per share but it may not be able to do so due
to adverse market conditions or other factors and it is
possible for investors to lose money by investing in the
Fund. An investment in the Fund is not a bank deposit
and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
[GRAPHIC APPEARS HERE] Principal Risks:
. Credit Risk
. Interest Rate Risk
. Investment Management Risk
. Market Risk
See "Description of Principal Investment Risks."
The bar chart and table below do not reflect expenses at the insurance product
level, and if they did, the performance shown would have been lower.
Calendar Year Annual Total Returns[GRAPHIC APPEARS HERE]
[BAR CHART APPEARS HERE]
8.17% 6.22% 3.78% 3.00% 3.93% 5.84% 5.36% 5.47% 5.51% 5.19%
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
During the period shown above the highest quarterly return was 2.01% for the
quarter ended 6/30/90 and the lowest was 0.73% for the quarter ended 6/30/93.
Performance Table
Average Annual Total Returns
(for the periods ending Past Past Past
December 31, 1999) One Year Five Years Ten Years
- ------------------ -------- ---------- ---------
Fund Shares 5.19% 5.47% 5.23%
----------- ----- ----- -----
IBC/Donoghue First Tier
Money Market Index* 4.57% 4.97% 4.79%
------------------- ----- ----- -----
* IBC/Donoghue is an independent firm that tracks regulated money market funds
on a yield, shareholder, assets size and portfolio allocation basis.
The Fund's 7-day yield ending December 31, 1999 was 5.57%.
7
-----------------------------
Allmerica Investment Trust
16
<PAGE>
Expense Summary
Expenses are one of several factors to consider when investing in a Fund.
Expenses shown are based on expenses incurred in respect of shares of the Funds
for the 1999 fiscal year. The Examples show the cumulative expenses attributable
to a hypothetical $10,000 investment in each Fund over specified periods.
Fees and Expenses of the Funds
This table describes the fees and expenses that you may pay if you invest in the
Funds. Please note that the expenses listed below do not include the expenses of
the applicable variable insurance product that you are purchasing. 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.
<TABLE>
<CAPTION>
Annual Fund Operating Expenses
Shareholder (expenses deducted from Fund assets) Total Annual
Fees Fund
(fees paid directly Management Distribution Other Operating
from your investment) Fees (12b-1) Fees Expenses Expenses
--------------------- ---- ------------ -------- --------
<S> <C> <C> <C> <C> <C>
Select Emerging Markets Fund None 1.35% None 0.57% 1.92%(1),(2)
Select Aggressive Growth Fund None 0.81%* None 0.06% 0.87%(1),(2)*
Select Capital Appreciation Fund None 0.90%* None 0.07% 0.97%(1),(2)*
Select Value Opportunity Fund None 0.90%(1) None 0.07% 0.97%(1),(2)
Select International Equity Fund None 0.89% None 0.13% 1.02%(1),(2)
Select Growth Fund None 0.78% None 0.05% 0.83%(1),(2)
Select Strategic Growth Fund None 0.85%* None 0.35% 1.20%(1),(2)
Core Equity Fund None 0.43% None 0.05% 0.48%(1),(2)
Equity Index Fund None 0.28% None 0.07% 0.35%(1)
Select Growth and Income Fund None 0.67% None 0.07% 0.74%(1),(2)
Select Investment Grade Income Fund None 0.43% None 0.07% 0.50%(1)
Government Bond Fund None 0.50% None 0.12% 0.62%(1)
Money Market Fund None 0.24% None 0.05% 0.29%(1)
</TABLE>
* Effective September 1, 1999, the management fee rates for the Select
Aggressive Growth Fund and Select Capital Appreciation Fund were revised.
The Management Fee and Total Annual Fund Operating Expense ratios shown
in the table above have been adjusted to assume that the revised rates
took effect on January 1, 1999.
(1) Through December 31, 2000, Allmerica Financial Investment Management
Services, Inc. (the "Manager") has declared a voluntary expense
limitation of 1.35% of average net assets for the Select Aggressive
Growth Fund and Select Capital Appreciation Fund, 1.25% for the Select
Value Opportunity Fund, 1.50% for the Select International Equity Fund,
1.20% for the Select Growth Fund, Select Strategic Growth Fund and Core
Equity Fund, 1.10% for the Select Growth and Income Fund, 1.00% for the
Select Investment Grade Income Fund and Government Bond Fund, and 0.60%
for the Money Market Fund. The total operating expenses of these Funds of
the Trust were less than their respective expense limitations throughout
1999 except the Select Strategic Growth Fund received a reimbursement of
$813.00 in 1999 under its expense limitation.
- -----------------------------
Allmerica Investment Trust
17
<PAGE>
In addition through December 31, 2000, the Manager has agreed to
voluntarily waive its management fee to the extent that expenses of the
Select Emerging Markets Fund 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 Fund after subtracting
fees paid by the Manager to the Fund's Sub-Adviser.
Through December 31, 2000, the Select Value Opportunity Fund's management
fee rate has been voluntarily limited to an annual rate of 0.90% of
average daily net assets.
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) These Funds 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 ratios
would have been 1.88% for Select Emerging Market Fund, 0.88% for the
Select Aggressive Growth Fund, 0.98% for the Select Capital Appreciation
Fund, 0.88% for the Select Value Opportunity Fund, 1.01% for the Select
International Equity Fund, 0.81% for the Select Growth Fund, 1.17% for
the Select Strategic Growth Fund, 0.45% for the Core Equity Fund, and
0.73% for the Select Growth and Income Fund.
Example
This Example is intended to help you compare the cost of investing in a Fund
with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in a Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment earns a 5% return each year and that
the Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
Fund 1 Year 3 Years 5 Years 10 Years
- ---- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Select Emerging Markets Fund $197 $608 $1,046 $2,259
- ---------------------------- ---- ---- ------ ------
Select Aggressive Growth Fund $93 $291 $506 $1,123
- ----------------------------- --- ---- ---- ------
Select Capital Appreciation Fund $100 $314 $544 $1,206
- -------------------------------- ---- ---- ---- ------
Select Value Opportunity Fund $99 $310 $539 $1,194
- ----------------------------- --- ---- ---- ------
Select International Equity Fund $105 $326 $566 $1,253
- -------------------------------- ---- ---- ---- ------
Select Growth Fund $85 $266 $462 $1,029
- ------------------ --- ---- ---- ------
Select Strategic Growth Fund $123 $383 $663 $1,461
- ---------------------------- ---- ---- ---- ------
Core Equity Fund $49 $154 $269 $605
- ---------------- --- ---- ---- ----
Equity Index Fund $36 $113 $197 $444
- ----------------- --- ---- ---- ----
Select Growth and Income Fund $76 $237 $413 $921
- ----------------------------- --- ---- ---- ----
Select Investment Grade Income Fund $51 $161 $280 $629
- ----------------------------------- --- ---- ---- ----
Government Bond Fund $64 $199 $347 $776
- -------------------- --- ---- ---- ----
Money Market Fund $30 $93 $163 $369
- ----------------- --- --- ---- ----
</TABLE>
-----------------------------
Allmerica Investment Trust
18
<PAGE>
[GRAPHIC] Description of Principal Investment 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 "Fund Summaries".
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 objective,
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 if the
issuer defaults on its obligation to pay principal or interest, the rating
agencies downgrade the issuer's credit rating or there is negative news that
affects the market's perception of the issuer's 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.
- -----------------------------
Allmerica Investment Trust
19
<PAGE>
Emerging Markets Risk
Investments in emerging markets securities involve all of the risks of
investments in foreign securities, and also have additional risks. The markets
of developing countries 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 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 Fund's
portfolio will generally fall. Conversely, when interest rates fall, the prices
of fixed income securities in the Fund's 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 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.
-----------------------------
Allmerica Investment Trust
20
<PAGE>
[GRAPHIC] Other Investment Strategies
The Fund Summaries starting on page 3 describe the investment objective and the
principal investment strategies and risks of each Fund. The Funds may at times
use the following investment strategies. Attached as an Appendix is a chart with
a listing of various investment techniques and strategies that the Sub-Advisers
of the Funds may utilize. A Fund may decide that it is in the best interests of
shareholders to make changes to its investment objective and strategies
described in this Prospectus. These investment objectives and strategies may be
changed with the approval of the Board of Trustees, but without shareholder
approval.
Derivative Investments. (applicable to each Fund except the Money Market Fund)
Instead of investing directly in the types of portfolio securities described in
the Summary, each Fund, except the Money Market Fund, may buy or sell a variety
of "derivative" investments to gain exposure to particular securities or
markets. Derivatives are financial contracts whose value depends on, or is
derived from, the value of an underlying asset, reference rate or index. A
Fund's Sub-Adviser will sometimes use derivatives as part of a strategy designed
to reduce other risks and sometimes will use derivatives to enhance returns,
which increases opportunities for gain but also involves greater risk.
Foreign Investments. (applicable to each Fund except the Government Bond Fund)
Each Fund, except the Government Bond Fund, may invest all or a substantial part
of its portfolio in securities of companies that are located or primarily doing
business in a foreign country. A company is considered to be located in a
foreign country if it is organized under the laws of, or has a principal office
in, that country. A company is considered as primarily doing business in a
country if (i) the company derives at least 50% of its gross revenues or profits
from either goods or services produced or sold in the country or (ii) at least
50% of the company's assets are situated in the country. A Fund may invest in
foreign securities either directly or indirectly through the use of depositary
receipts, such as ADRs. Depositary receipts are generally issued by banks or
trust companies and evidence ownership of underlying foreign securities. An ADR
may be sponsored by the issuer of the underlying foreign security or it may be
issued in unsponsored form. The holder of a sponsored ADR is likely to receive
more frequent and extensive financial disclosure concerning the foreign issuer
than the holder of an unsponsored ADR and generally will bear lower transaction
charges. The Select Capital Appreciation Fund and Select International Equity
Fund may also purchase foreign securities through European Depositary Receipts
and Global Depositary Receipts.
High Yield Securities. (applicable to the Select Emerging Markets Fund, Select
Capital Appreciation Fund, Select Growth Fund and Select Growth and Income Fund)
The Select Emerging Markets Fund, Select Capital Appreciation Fund, Select
Growth Fund and Select Growth and Income Fund may purchase corporate debt
securities which are high yield securities, or "junk bonds" (rated at the time
of purchase BB or lower by Moody's or S&P, or equivalently rated by another
rating agency, or unrated but believed by the Sub-Adviser to have similar
quality.) These securities are considered to be speculative in their capacity to
pay interest and repay principal.
- -----------------------------
Allmerica Investment Trust
21
<PAGE>
Lending of Securities. (applicable to all Funds) To realize additional income,
the Funds may lend portfolio securities to broker-dealer or financial
institutions in an amount up to 33-1/3% of a Fund's total assets. While any such
loan is outstanding, a Fund will continue to receive amounts equal to the
interest or dividends paid by the issuer on the securities, as well as interest
(less any rebates to be paid to the borrower) on the investment of the
collateral or a fee from the borrower. Each Fund will have the right to call
each loan and obtain the securities. Lending portfolio securities involves
possible delays in receiving additional collateral or in the recovery of the
securities or possible loss of rights in the collateral.
Restricted Securities. (applicable to all Funds) The Funds may purchase
securities that are not registered under Federal securities law ("restricted
securities"), but can be offered and sold to certain "qualified institutional
buyers". Each Fund will not invest more than 15% (10% for the Money Market Fund)
of its net assets in restricted securities (and securities deemed to be
illiquid). These limits do not apply if the Board of Trustees determines that
the restricted securities are liquid. The Board of Trustees has adopted
guidelines and delegated to the Manager the daily function of determining and
monitoring the liquidity of restricted securities. The Board, however, retains
sufficient oversight and is ultimately responsible for the determinations. This
investment practice could increase the level of illiquidity in a Fund if buyers
lose interest in restricted securities. As a result, a Fund might not be able to
sell these securities when its Sub-Adviser wants to sell, or might have to sell
them at less than fair value. In addition, market quotations for these
securities are less readily available.
Temporary Defensive Strategies. At times a Sub-Adviser may determine that market
conditions make it desirable temporarily to suspend a Fund's normal investment
activities. This is when the Fund may temporarily invest in a variety of
lower-risk securities, such as U.S. Government and other high quality bonds and
short-term debt obligations. Such strategies attempt to reduce changes in the
value of the Fund's shares. The Fund may not achieve its investment objective
while these strategies are in effect.
Frequent Trading. Certain Funds from time to time may engage in active and
frequent trading to achieve their investment objective. Frequent trading
increases transaction costs, which could detract from the Fund's performance.
-----------------------------
Allmerica Investment Trust
22
<PAGE>
[GRAPHIC] Management of the Funds
The Trust is governed by a Board of Trustees. Allmerica Financial Investment
Management Services, Inc. is the investment Manager of the Trust responsible for
managing the Trust's day-to-day business affairs. The Manager is located at 440
Lincoln Street, Worcester, MA 01653. The Manager and its predecessor, Allmerica
Investment Management Company, Inc., have been managing mutual funds since 1985.
The Manager currently serves as investment manager to one other mutual fund.
Sub-Advisers have been hired to manage the investments of the Funds. The Trust
and Manager have obtained an order of exemption from the SEC that permits the
Manager to enter into and materially amend sub-advisory agreements with
non-affiliated Sub-Advisers without obtaining shareholder approval. The Manager
has ultimate responsibility to oversee Sub-Advisers. The Manager has the
ability, subject to approval of the Trustees, to hire and terminate Sub-Advisers
and to change materially the terms of the Sub-Adviser Agreements, including the
compensation paid to the Sub-Advisers. The Sub-Advisers have been selected by
the Manager and Trustees with the help of BARRA RogersCasey, Inc., a pension
consulting firm. The fees earned by each Sub-Adviser and BARRA RogersCasey are
paid by the Manager. The performance by the Sub-Advisers is reviewed quarterly
by a committee of the Board of Trustees, with assistance from BARRA RogersCasey.
The following table provides information about each Fund's Sub-Adviser:
<TABLE>
<CAPTION>
Fund Name,
Sub-Adviser Name and Address Experience
- ---------------------------- ----------
<S> <C>
Select Emerging Markets Fund Organized in 1980 and has approximately $47 billion assets
Schroder Investment Management under management as of December 31, 1999.
North America Inc. Provides global equity and fixed income
787 Seventh Avenue management services to mutual funds and
New York, NY 10019 other institutional investors.
- ------------------ ------------------------------
Select Aggressive Growth Fund Has over $41 billion assets under management as of December
Nicholas-Applegate Capital Management, L.P. 31, 1999. Founded in 1984. Clients include employee benefit
600 West Broadway, Suite 2900 and retirement plans, foundations, investment companies and
San Diego, CA 92101 individuals.
- ------------------- ------------
Select Capital Appreciation Fund Manages with its affiliates assets totaling $179.9 billion as
T. Rowe Price Associates, Inc. of December 31, 1999 for eight million individual and
100 East Pratt Street institutional investor accounts.
Baltimore, MD 21202 Founded in 1937.
- ------------------- ----------------
Select Value Opportunity Fund Established in 1973. Over $3.2 billion assets under
Cramer Rosenthal McGlynn, LLC management as of December 31, 1999. Provides investment
707 Westchester Avenue advice to mutual funds, individuals, government agencies,
White Plains, NY 10604 pension plans and trusts.
- ---------------------- -------------------------
</TABLE>
- -----------------------------
Allmerica Investment Trust
23
<PAGE>
<TABLE>
<CAPTION>
Fund Name,
Sub-Adviser Name and Address Experience
---------------------------- ----------
<S> <C>
Select International Equity Fund Managed over $50 billion in global securities as of December
Bank of Ireland Asset Management (U.S.) Ltd. 31, 1999. Founded in 1966. Provides international investment
26 Fitzwilliam Place, Dublin 2, management services.
Ireland and 20 Horseneck Lane
Greenwich, CT 06830
- -------------------
Select Growth Fund As of December 31, 1999, $391 billion assets under
Putnam Investment Management, Inc. management, including affiliates. Investment manager of
One Post Office Square mutual funds and other clients since 1937.
Boston, MA 02109
- ----------------
Select Strategic Growth Fund Had over $70 billion in assets under management or
TCW Investment Management Company committed to management as of December 31, 1999.
865 South Figueroa Street, Suite 1800 Established in 1971. Manages pension and profit sharing
Los Angeles, CA 90017 funds, retirement/health and welfare funds, public employee
- ---------------------- retirement funds, and private accounts.
Core Equity Fund Organized in 1969, and is now a division of Morgan Stanley
Miller Anderson & Sherrerd, LLP Dean Witter Investment Management ("MSDWIM"). Provides
One Tower Bridge investment advisory services to employee benefit plans, endowment funds,
West Conshohocken, PA 19428 foundations and other institutional investors. MSDWIM had $184
- --------------------------- billion in assets under management as of December 31, 1999.
-----------------------------------------------------------
Equity Index Fund Incorporated in 1993. Had $13.3 billion in assets under
Allmerica Asset Management, Inc. management as of December 31, 1999. Serves as investment
440 Lincoln Street adviser to investment companies and affiliated insurance
Worcester, MA 01653 company accounts
- ------------------- ----------------
Select Growth and Income Fund Incorporated in 1984. With affiliates, approximately $349 billion
J.P. Morgan Investment Management Inc. assets under management as of December 31, 1999. Serves as
522 Fifth Avenue investment adviser for employee benefit plans and other
New York, NY 10036 institutional assets, as well as mutual funds and variable
- ------------------ annuities.
----------
Select Investment Grade Income Fund See Equity Index Fund above.
Allmerica Asset Management, Inc.
440 Lincoln Street
Worcester, MA 01653
- -------------------
Government Bond Fund See Equity Index Fund above
Allmerica Asset Management, Inc.
440 Lincoln Street
Worcester, MA 01653
- -------------------
Money Market Fund See Equity Index Fund above
Allmerica Asset Management, Inc.
440 Lincoln Street
Worcester, MA 01653
- --------------------
</TABLE>
-----------------------------
Allmerica Investment Trust
24
<PAGE>
For a sample listing of certain of the Sub-Advisers' clients, see "Investment
Management and Other Services" in the SAI.
The following individuals or groups of individuals are primarily responsible for
the day-to-day management of the Funds' portfolios:
<TABLE>
<CAPTION>
Fund Name and Name and Title of Service with Business Experience
Sub-Adviser Name Portfolio Manager(s) Sub-Adviser for Past Five Years
---------------- -------------------- ----------- -------------------
<S> <C> <C> <C>
Select Emerging Markets Fund John A. Troiano, Director, 1981 - Present Director of Schroder with
Schroder Investment Management Chief Executive and Chairman responsibility for policy for
North America Inc. ("Schroder") of Emerging Markets Committee emerging markets.
Mark Bridgeman, 1990 - Present Fund Manager specializing in
First Vice President African markets.
Heather F. Crighton, Director 1993 - Present Fund Manager specializing in
and Senior Vice President Asian emerging markets.
-----------------------
Select Aggressive Growth Fund Lawrence S. Speidell, Partner 1994 - Present Director of Global/Systematic
Nicholas-Applegate Capital Portfolio Management and
Management, L.P. ("NACM") Research at NACM. Prior
to joining NACM, he spent
ten years with Batterymarch
Financial Management.
John J. Kane, Partner 1994 - Present Senior Portfolio Manager for
the U.S. Systematic portfolios
at NACM. Prior to joining
NACM in 1994, he was
employed by ARCOInvest-
Management Company and General
Electric.
Mark W. Stuckelman, 1995 - Present Portfolio Manager for the
Portfolio Manager U.S. Systematic portfolios
at NACM. Prior to joining
NACM, he was employed for
five years with Wells Fargo
Bank, Fidelity Management
Trust Co., and BARRA, Inc.
--------------------------
Select Capital Appreciation Fund Brian W.H. Berghuis, 1985 - Present He has sixteen years
T. Rowe Price Associates, Inc. Chartered Financial Analyst experience in equity research
("T. Rowe Price") and portfolio management.
He is chairman of the investment
team for the Fund.
John F. Wakeman, Research 1989 - Present He spent ten years with
Analyst & Portfolio Manager T. Rowe Price as a research
analyst and portfolio manager
and has twelve years' experience
in equity research.
-------------------
</TABLE>
- -----------------------------
Allmerica Investment Trust
25
<PAGE>
<TABLE>
<CAPTION>
Fund Name and Name and Title of Service with Business Experience
Sub-Adviser Name Portfolio Manager(s) Sub-Adviser for Past Five Years
---------------- -------------------- ----------- -------------------
<S> <C> <C> <C>
Select Capital Appreciation Fund Marc L. Baylin, Chartered 1993 - Present He has eight years of
continued Financial Analyst investment experience in
equity research and has been
with T. Rowe Price for the past
six years as a research analyst
and portfolio manager.
---------------------
Select Value Opportunity Fund Ronald H. McGlynn, CEO and 1973 - Present He joined Cramer Rosenthal
Cramer Rosenthal McGlynn, President of Cramer Rosenthal in 1973, has 29 years of
LLC ("Cramer Rosenthal") investment experience and
serves as Co-Chief Investment
Officer and Portfolio Manager.
Jay B. Abramson, Executive 1985 - Present He has been with Cramer
Vice President and Director Rosenthal since 1985 and his
of Research and Co-Chief overall responsibility is for
Investment Officer investment research.
------------------ --------------------
Select International Equity Fund Christopher Reilly, 1980 - Present Since 1985, he has had
Bank of Ireland Asset Management Chief Investment Officer overall responsibility for asset
(U.S.) Limited ("BIAM") management. He previously
worked in the United
Kingdom in stockbrokering
and investment management.
Michael McCarthy, 1997 - Present Mr. McCarthy rejoined BIAM
Portfolio Manager in 1997 from a major life assurance
Company where he was Head of
Asset Management. Prior to this, he
worked for BIAM in the U.K. in a
senior portfolio management capacity.
Peter Wood, Senior 1985 - Present Prior to 1985, he spent five
Portfolio Manager years with another leading
investment management firm.
He is now responsible for
portfolio construction at BIAM.
Jane Neill, Senior Equity Analyst 1994 - Present Previously, she was Chief
Investment Officer with
another leading Irish investment
management firm.
----------------
</TABLE>
-----------------------------
Allmerica Investment Trust
26
<PAGE>
<TABLE>
<CAPTION>
Fund Name and Name and Title of Service with Business Experience
Sub-Adviser Name Portfolio Manager(s) Sub-Adviser for Past Five Years
---------------- -------------------- ----------- -------------------
<S> <C> <C> <C>
Select Growth Fund C. Beth Cotner, CFA, 1995 - Present Prior to 1995, Ms. Cotner was
Putnam Investment Chief Investment Officer Executive Vice President at
Management, Inc. ("Putnam") Kemper Financial Services.
Manuel Weiss, CFA, 1987 - Present He has been an investment
Senior Vice President professional with Putnam
since 1987.
Select Strategic Growth Fund Christopher J. Ainley, Managing 1994 - Present Prior to joining TCW, Mr. Ainley
TCW Investment Management Director spent 2 years at Putnam Investments
Company ("TCW") 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, 1994 - Present Prior to 1994, Mr. Foreman
Group Managing Director & was employed by Putnam
Chief Investment Officer - Investment in Boston. He spent
U.S. Equities his last 5 years at Putnam managing
Institutional accounts and mutual
Funds. Mr. Foreman is a Chartered
Financial Analyst.
Charles Larsen 1984 - Present Prior to TCW, Mr. Larsen
Managing Director was a Senior Vice President and
Portfolio Manager for CIGNA
Investment Management Company.
He is a Chartered Financial Analyst and
Chartered Investment Counselor.
------------------------------
Core Equity Fund Gary G. Schlarbaum, 1987 - Present He has served on a committee
Miller Anderson & Sherrerd, LLP CFA and Managing Director of fund managers since 1993.
("MAS") Prior to 1987, Mr. Schlarbaum was
employed by First Chicago
Investment Advisors from 1984 -
1987.
Robert J. Marcin, 1988 - Present Prior to joining MAS in 1988,
CFA and Managing Director Mr. Marcin was an Account
Executive at Smith Barney Harris
Upham and Company, Inc.
</TABLE>
- -----------------------------
Allmerica Investment Trust
27
<PAGE>
<TABLE>
<CAPTION>
Fund Name and Name and Title of Service with Business Experience
Sub-Adviser Name Portfolio Manager(s) Sub-Adviser for Past Five Years
---------------- -------------------- ----------- -------------------
<S> <C> <C> <C>
Core Equity Fund continued Brian Kramp, 1997 - Present Mr. Kramp was employed
CFA and Vice President as an analyst and portfolio
manager by Meridian Investment
Company from 1985 - 1997.
James J. Jolinger, Principal 1994 - Present He has served on the fund
managers committee since 1997.
Prior to 1994, Mr. Jolinger was
employed by Oppenheimer Capital as
an Equity Analyst from 1987 to
1994.
Arden C. Armstrong, 1986 - Present Prior to joining MAS,
CFA and Managing Director Ms. Armstrong was employed
by Evans Economics, Inc.
Chris Leavy, 1997 - Present Prior to joining MAS, Mr. Leavy
CFA and Vice President was employed by Capitoline
Investment Services as a portfolio
Manager from 1995-1997.
Steven Epstein, 1996 - Present Prior to joining MAS, Mr. Epstein
Vice President attended the Wharton School,
University of Pennsylvania from
1994-1996, receiving an MBA.
Eric F. Scharpf, 1997 - Present Prior to joining MAS, Mr. Scharpf
Vice President attended the Wharton School,
University of Pennsylvania from
1995-1997 receiving an MBA, and
served as a Financial Analyst for
Salomon Brothers from 1993-1995.
--------------------------------
Select Growth and Income Fund Bernard A. Kroll, Vice President 1996 - Present Prior to joining J.P. Morgan
J.P. Morgan Investment in 1996, Mr. Kroll was an
Management Inc. ("J.P. Morgan") equity derivatives specialist
at Goldman Sachs & Co.,
founded his own software
development firm and options
broker-dealer, and managed
several derivatives businesses
at Kidder, Peabody & Co.
He is a portfolio manager in
the Structured Equity Group.
Timothy J. Devlin, Vice President 1996 - Present Prior to joining J.P. Morgan
in 1996, Mr. Devlin was an
equity portfolio manager at
Mitchell Hutchins Asset
Management Inc. He is a
portfolio manager in the
Structured Equity Group.
James C. Wiess, Vice President 1992 - Present He is a portfolio manager in
the Structured Equity Group
and has been at J.P. Morgan
since 1992.
-----------
</TABLE>
-----------------------------
Allmerica Investment Trust
28
<PAGE>
<TABLE>
<CAPTION>
Fund Name and Name and Title of Service with Business Experience
Sub-Adviser Name Portfolio Manager(s) Sub-Adviser for Past Five Years
---------------- -------------------- ----------- -------------------
<S> <C> <C> <C>
Select Investment Grade Income Fund Ann K. Tripp, 1987 - Present She was a Portfolio Manager
Allmerica Asset Management, Inc. ("AAM") Vice President for AAM prior
to becoming a Vice President.
----------------------------
Government Bond Fund Richard J. Litchfield, 1995 - Present He was a mortgage-backed
Allmerica Asset Management, Inc. CFA and Vice President securities analyst and trader
("AAM") at Keystone Investments, Inc.
prior to joining AAM.
---------------------
Equity Index Fund and John C. Donohue, Vice President 1995 - Present He was a portfolio manager
Money Market Fund at CS First Boston Investment
Allmerica Asset Management, Inc. Management prior to joining
("AAM") AAM.
- ------- ----
</TABLE>
- -----------------------------
Allmerica Investment Trust
29
<PAGE>
For the fiscal year ended December 31, 1999, the Funds paid the Manager the fees
shown in the table below:
<TABLE>
<CAPTION>
Fee (as a percentage of
Fund average net assets)
---- -------------------
<S> <C>
Select Emerging Markets Fund 1.35%
---------------------------- -----
Select Aggressive Growth Fund 0.85%
----------------------------- -----
Select Capital Appreciation Fund 0.91%
-------------------------------- -----
Select Value Opportunity Fund 0.90%
----------------------------- -----
Select International Equity Fund 0.89%
-------------------------------- -----
Select Growth Fund 0.78%
------------------ -----
Select Strategic Growth Fund 0.85%
---------------------------- -----
Growth Fund (renamed the Core Equity Fund) 0.43%
------------------------------------------ -----
Equity Index Fund 0.28%
----------------- -----
Select Growth and Income Fund 0.67%
----------------------------- -----
Investment Grade Income Fund (renamed the Select Investment Grade Income Fund) 0.43%
------------------------------------------------------------------------------ -----
Government Bond Fund 0.50%
-------------------- -----
Money Market Fund 0.24%
----------------- -----
</TABLE>
For the fiscal year ended December 31, 1999, the Manager paid each Sub-Adviser
aggregate fees as set forth below:
<TABLE>
<CAPTION>
Fee (as a percentage of
Sub-Adviser average net assets)
- ----------- ------------------
<S> <C>
Schroder Investment Management North America Inc. (Select Emerging Markets Fund) 1.00%
- -------------------------------------------------------------------------------- -----
Nicholas-Applegate Capital Management, L.P. (Select Aggressive Growth Fund) 0.48%
- --------------------------------------------------------------------------- -----
T. Rowe Price Associates, Inc. (Select Capital Appreciation Fund) 0.46%
- ----------------------------------------------------------------- -----
Cramer Rosenthal McGlynn, LLC (Select Value Opportunity Fund) 0.52%
- ------------------------------------------------------------- -----
Bank of Ireland Asset Management (U.S.) Limited (Select International Equity Fund) 0.30%
- ---------------------------------------------------------------------------------- -----
Putnam Investment Management, Inc. (Select Growth Fund) 0.27%
- ------------------------------------------------------- -----
Cambiar Investors, Inc.* (Select Strategic Growth Fund) 0.50%
- -------------------------------------------------------- -----
Miller Anderson & Sherrerd, LLP (Growth Fund - renamed the Core Equity Fund) 0.21%
- ---------------------------------------------------------------------------- -----
Allmerica Asset Management, Inc. (Equity Index Fund) 0.09%
- ---------------------------------------------------- -----
J.P. Morgan Investment Management Inc. ** (Select Growth and Income Fund) 0.26%
- ------------------------------------------------------------------------- -----
Allmerica Asset Management, Inc. (Investment Grade Income Fund - renamed the Select Investment Grade Income Fund) 0.20%
- ----------------------------------------------------------------------------------------------------------------- -----
Allmerica Asset Management, Inc. (Government Bond Fund) 0.18%
- ------------------------------------------------------- -----
Allmerica Asset Management, Inc. (Money Market Fund) 0.09%
- ---------------------------------------------------- -----
</TABLE>
-----------------------------
Allmerica Investment Trust
30
<PAGE>
* TCW replaced Cambiar Investors, Inc. ("Cambiar") as Sub-Adviser of the
Select Strategic Growth Fund on April 1, 2000. Cambiar served as Sub-
Adviser of the Select Strategic Growth Fund from February 20, 1998 to March
31, 2000. Cambiar received a fee computed daily at an annual rate based on
the average net assets of the Select Growth and Income Fund, based on the
following schedule:
Assets Rate
------ ----
First $50 Million 0.50%
----------------- -----
Next $100 Million 0.45%
----------------- -----
Next $100 Million 0.35%
----------------- -----
Next $100 Million 0.30%
----------------- -----
Over $350 Million 0.25%
----------------- -----
TCW receives a fee computed daily at an annual rate of 0.85% based on the
average daily net assets of the Select Strategic Growth Fund. When the average
daily net assets of the Fund exceed $100 million, the fee shall be computed
daily and paid quarterly at an annual rate of 0.75% of the total average daily
net assets of the Fund.
** J.P. Morgan Investment Management Inc. ("J.P. Morgan") replaced John A.
Levin & Co., Inc. ("Levin") as Sub-Adviser of the Select Growth and Income
Fund on April 1, 1999. Levin served as Sub-Adviser of the Select Growth and
Income Fund from September 1, 1994 to March 31, 1999. Levin received a fee
computed daily at an annual rate based on the average daily net assets of
the Select Growth and Income Fund, based on the following schedule:
Assets Rate
------ ----
First $100 Million 0.40%
------------------ -----
Next $200 Million 0.25%
----------------- -----
Over $300 Million 0.30%
----------------- -----
J.P. Morgan receives a fee computed daily at an annual rate based on the average
daily net assets of the Select Growth and Income Fund, based on the following
schedule:
Assets Rate
------ ----
First $500 Million 0.30%
------------------ -----
Next $500 Million 0.25%
----------------- -----
Over $1 Billion 0.20%
--------------- -----
- -----------------------------
Allmerica Investment Trust
31
<PAGE>
Pricing of Fund Shares
The Funds sell and redeem their shares at a price equal to their net asset value
("NAV") without paying any sales or redemption charges. 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 NAV's 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. All securities of the Money
Market Fund are valued at amortized cost. Debt obligations in the other 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 other 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 Fund's 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 policies. The Distributor, Allmerica Investments, Inc., at its
expense, may provide promotional incentives to dealers who sell variable annuity
contracts which invest in the Funds. The Trust has obtained an exemptive order
from the Securities and Exchange Commission to permit Fund shares to be sold to
variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated life insurance companies and certain qualified
pension and retirement plans. Material irreconcilable conflicts may arise among
various insurance policy owners and plan participants. The Trustees will monitor
events to identify any material conflicts and determine if any action should be
taken to resolve such conflict.
No fee is charged by the Trust on redemption. The variable contracts funded
through the Separate Accounts are sold subject to certain fees and charges which
may include sales and redemption charges. See the prospectuses for the variable
insurance products.
Normally, redemption payments will be made within seven days after the Trust
receives a written redemption request. Redemptions may be suspended when trading
on the New York Stock Exchange is restricted or when permitted by the Securities
and Exchange Commission.
-----------------------------
Allmerica Investment Trust
32
<PAGE>
Distributions and Taxes
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 Core Equity Fund, Equity Index Fund, Select Growth and Income
Fund, Select Investment Grade Income Fund and Government Bond Fund; annually in
the case of the Select Emerging Markets Fund, Select Aggressive Growth Fund,
Select Capital Appreciation Fund, Select Value Opportunity Fund, Select
International Equity Fund, Select Growth Fund and Select Strategic Growth Fund;
and daily in the case of the Money Market 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.
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 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.
-----------------------------
Allmerica Investment Trust
33
<PAGE>
[GRAPHIC] Financial Highlights
Allmerica Investment Trust
FINANCIAL HIGHLIGHTS - For a Share Outstanding Throughout Each Period
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from Investment Operations Less Distributions
--------------------------------------------- -----------------------------------------------------------------
Net Realized
Net and Distributions
Asset Net Unrealized Dividends from Net
Value Investment Gain (Loss) Total from from Net Realized Distributions
Year Ended Beginning Income on Investment Investment Capital in Return of Total
December 31, of Year (Loss)(/2/) Investments Operations Income Gains Excess Capital Distributions
------------ --------- ----------- ------------ ---------- ---------- ------------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Select Emerging
Markets
Fund(/1/)
1999 $0.784 $0.001 $0.513 $0.514 $(0.006) $ -- $ -- $ -- $(0.006)
1998(D) 1.000 0.006 (0.221) (0.215) (0.001) -- -- -- (0.001)
Select
Aggressive
Growth Fund
1999 2.460 (0.012) 0.963 0.951 -- -- -- -- --
1998 2.225 (0.008) 0.243 0.235 -- -- -- -- --
1997 2.037 (0.009) 0.387 0.378 -- (0.182) (0.008)(/3/) -- (0.190)
1996 1.848 (0.009) 0.351 0.342 -- (0.153) -- -- (0.153)
1995 1.397 (0.001) 0.452 0.451 -- -- -- -- --
Select Capital
Appreciation
Fund(/1/)
1999 1.640 (0.007) 0.423 0.416 -- (0.003) -- -- (0.003)
1998 1.698 (0.006) 0.241 0.235 -- (0.293) -- -- (0.293)
1997 1.485 (0.005) 0.218 0.213 -- -- -- -- --
1996 1.369 (0.003) 0.124 0.121 -- (0.005) -- -- (0.005)
1995(E) 1.000 (0.001) 0.397 0.396 -- (0.027) -- -- (0.027)
Select Value
Opportunity
Fund(/1/)
1999 1.686 0.006 (0.077) (0.071) -- (0.094) -- -- (0.094)
1998 1.626 0.014 0.066 0.080 (0.014) (0.006) -- -- (0.020)
1997 1.511 0.010 0.364 0.374 (0.010) (0.249) -- -- (0.259)
1996 1.238 0.011 0.342 0.353 (0.011) (0.069) -- -- (0.080)
1995 1.089 0.009 0.183 0.192 (0.009) (0.033) (0.001)(/3/) -- (0.043)
Select
International
Equity Fund
1999 1.542 0.012 0.477 0.489 -- -- -- -- --
1998 1.341 0.014 0.207 0.221 (0.020) -- -- -- (0.020)
1997 1.356 0.015 0.049 0.064 (0.019) (0.046) (0.014)(/4/) -- (0.079)
1996 1.136 0.011 0.238 0.249 (0.012) (0.003) (0.014)(/4/) -- (0.029)
1995 0.963 0.013 0.176 0.189 (0.011) (0.005) -- -- (0.016)
<CAPTION>
Net
Increase
(Decrease)
in
Year Ended Net Asset
December 31, Value
------------ ----------
<S> <C>
Select Emerging
Markets
Fund(/1/)
1999 $0.508
1998(D) (0.216)
Select
Aggressive
Growth Fund
1999 0.951
1998 0.235
1997 0.188
1996 0.189
1995 0.451
Select Capital
Appreciation
Fund(/1/)
1999 0.413
1998 (0.058)
1997 0.213
1996 0.116
1995(E) 0.369
Select Value
Opportunity
Fund(/1/)
1999 (0.165)
1998 0.060
1997 0.115
1996 0.273
1995 0.149
Select
International
Equity Fund
1999 0.489
1998 0.201
1997 (0.015)
1996 0.220
1995 0.173
</TABLE>
- ------------------
* Annualized
** Not Annualized
(A) Including reimbursements, waivers, and reductions.
(B) Excluding reductions. Certain Portfolios have entered into varying arrange-
ments with brokers who reduced a portion of the Portfolio's expenses.
(C) Excluding reimbursements and reductions.
(D) For period ended December 31, 1998.
(E) For period ended December 31, 1995.
(1) The Select Emerging Markets Fund commenced operations on February 20, 1998.
The Select Capital Appreciation Fund commenced operations on April 28, 1995
and changed sub-advisers on April 1, 1998. The Select Value Opportunity
Fund changed sub-advisers on January 1, 1997.
(2) Net investment income (loss) per share before reimbursement of fees by the
investment adviser or reductions were $0.000 in 1999, $0.004 in 1998 for
Select Emerging Markets Fund; $(0.013) in 1999, $(0.009) in 1998 and
$(0.010) in 1997 for Select Aggressive Growth Fund; $(0.001) in 1995 for
Select Capital Appreciation Fund; $0.005 in 1999, $0.013 in 1998, $0.009 in
1997 and $0.010 in 1996 for Select Value Opportunity Fund; and $0.011 in
1999, $0.014 in 1998, $0.015 in 1997 and $0.011 in 1996 for Select Interna-
tional Equity Fund.
(3) Distributions in excess of net realized capital gains.
(4) Distributions in excess of net investment income.
Ratios/Supplemental Data
-----------------------------------------------------
Ratios To Average Net Assets
----------------------------------------
<TABLE>
<CAPTION>
Net Asset Net Assets
Value End of Net Portfolio
End of Total Period Investment Operating Expenses Management Fee Turnover
Period Return (000's) Income (Loss) (A) (B) (C) Gross Net Rate
- --------- ------ ---------- ------------- ------ ------ ------ -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 1.292 65.72% $ 50,452 0.25% 1.88% 1.92% 1.92% 1.35% 1.35% 60%
0.784 (21.46)%** 20,873 0.96%* 2.19%* 2.19%* 2.54%* 1.35%* 1.00%* 62%**
3.411 38.66% 1,015,699 (0.46)% 0.88% 0.91% 0.91% 0.85% 0.85% 101%
2.460 10.56% 752,741 (0.36)% 0.92% 0.95% 0.95% 0.88% 0.88% 99%
2.225 18.71% 604,123 (0.45)% 0.99% 1.04% 1.04% 0.95% 0.95% 95%
2.037 18.55% 407,442 (0.53)% 1.08% 1.08% 1.08% 1.00% 1.00% 113%
1.848 32.28% 254,872 (0.07)% 1.09% -- 1.09% 1.00% 1.00% 104%
2.053 25.36% 417,087 (0.42)% 0.98% 0.98% 0.98% 0.91% 0.91% 61%
1.640 13.88% 310,582 (0.47)% 1.02% 1.04% 1.04% 0.94% 0.94% 141%
1.698 14.28% 240,526 (0.38)% 1.13% 1.13% 1.13% 0.98% 0.98% 133%
1.485 8.80% 142,680 (0.32)% 1.13% 1.13% 1.13% 1.00% 1.00% 98%
1.369 39.56%** 41,376 (0.25)%* 1.35%* -- 1.42%* 1.00%* 0.93%* 95%**
1.521 (4.70)% 308,331 0.43% 0.88% 0.97% 0.97% 0.90% 0.90% 98%
1.686 4.87% 268,405 0.95% 0.94% 0.98% 0.99% 0.91% 0.90% 73%
1.626 24.85% 202,139 0.73% 0.98% 1.04% 1.06% 0.92% 0.90% 110%
1.511 28.53% 113,969 0.91% 0.95% 0.97% 0.97% 0.85% 0.85% 20%
1.238 17.60% 64,575 0.86% 1.01% -- 1.01% 0.85% 0.85% 17%
2.031 31.71% 679,341 0.69% 1.01% 1.02% 1.02% 0.89% 0.89% 18%
1.542 16.48% 505,553 0.99% 1.01% 1.02% 1.02% 0.90% 0.90% 27%
1.341 4.65% 397,915 1.17% 1.15% 1.17% 1.17% 0.97% 0.97% 20%
1.356 21.94% 246,877 1.22% 1.20% 1.23% 1.23% 1.00% 1.00% 18%
1.136 19.63% 104,312 1.68% 1.24% -- 1.24% 1.00% 1.00% 24%
</TABLE>
FINANCIAL HIGHLIGHTS - For a Share Outstanding Throughout Each Period
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from Investment Operations
---------------------------------------------
Net Realized
Net and
Asset Net Unrealized
Value Investment Gain (Loss) Total from
Beginning Income on Investment
Year Ended December 31, of Period (Loss)(/2/) Investments Operations
- ----------------------- --------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
Select Growth Fund(/1/)
1999 $2.428 $(0.002) $0.709 $ 0.707
1998 1.811 0.002 0.638 0.640
1997 1.430 0.006 0.480 0.486
1996 1.369 0.005 0.297 0.302
1995 1.099 -- 0.270 0.270
Select Strategic
Growth Fund(/1/)
1999 0.973 0.003 0.153 0.156
1998(D) 1.000 0.002 (0.027) (0.025)
Growth Fund(/1/)
1999 2.825 0.020 0.779 0.799
1998 2.416 0.028 0.436 0.464
1997 2.333 0.039 0.540 0.579
1996 2.176 0.047 0.386 0.433
1995 1.814 0.049 0.539 0.588
Equity Index Fund
1999 3.408 0.036 0.656 0.692
1998 2.753 0.035 0.741 0.776
1997 2.165 0.034 0.664 0.698
1996 1.827 0.035 0.370 0.405
1995 1.468 0.035 0.474 0.509
Select Growth and
Income Fund(/1/)
1999 1.779 0.022 0.298 0.320
1998 1.552 0.020 0.233 0.253
1997 1.405 0.020 0.293 0.313
1996 1.268 0.020 0.246 0.266
1995 1.027 0.019 0.290 0.309
<CAPTION>
Less Distributions
------------------------------------------------------------------
Net
Increase
Dividends Distributions (Decrease)
from Net from Net Distributions Return in
Investment Realized in of Total Net Asset
Year Ended December 31, Income Capital Gains Excess Capital Distributions Value
- ------------------------ ------------ ------------- ---------------- -------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Select Growth Fund(/1/)
1999 $(0.001) $(0.085) $ -- $ -- $(0.086) 0.621
1998 --(3) (0.023) -- -- (0.023) 0.617
1997 (0.006) (0.099) -- -- (0.105) 0.381
1996 (0.005) (0.236) -- -- (0.241) 0.061
1995 -- -- -- -- -- 0.270
Select Strategic
Growth Fund(/1/)
1999 (0.003) -- -- -- (0.003) 0.153
1998(D) (0.002) -- -- -- (0.002) (0.027)
Growth Fund(/1/)
1999 (0.020) (0.294) -- -- (0.314) 0.485
1998 (0.028) (0.027) -- -- (0.055) 0.409
1997 (0.038) (0.458) -- -- (0.496) 0.083
1996 (0.048) (0.228) -- -- (0.276) 0.157
1995 (0.049) (0.177) -- -- (0.226) 0.362
Equity Index Fund
1999 (0.035) (0.005) -- -- (0.040) 0.652
1998 (0.034) (0.087) -- -- (0.121) 0.655
1997 (0.033) (0.077) -- -- (0.110) 0.588
1996 (0.035) (0.032) -- -- (0.067) 0.338
1995 (0.035) (0.047) (0.002)(/4/) (0.066) (0.150) 0.359
Select Growth and
Income Fund(/1/)
1999 (0.021) (0.145) -- -- (0.166) 0.154
1998 (0.020) (0.006) -- -- (0.026) 0.227
1997 (0.020) (0.146) -- -- (0.166) 0.147
1996 (0.020) (0.109) -- -- (0.129) 0.137
1995 (0.019) (0.049) -- -- (0.068) 0.241
</TABLE>
- ------------------------------------
* Annualized
** Not Annualized
(A) Including reimbursements and reductions.
(B) Excluding reductions. Certain Portfolios have entered into varying
arrangements with brokers who reduced a portion of the Portfolio's
expenses.
(C) Excluding reimbursements and reductions.
(D) For period ended December 31, 1998.
(1) The Select Growth Fund changed sub-advisers on July 1, 1996. The Select
Strategic Growth Fund commenced operations on February 20, 1998 and changed
Sub-Advisers on April 1, 2000. Effective May 1, 2000, the name of the
Growth Fund was changed to the Core Equity Fund. The Select Growth and
Income Fund changed sub-advisers on April 1, 1999.
(2) Net investment income (loss) per share before reimbursement of fees by the
investment adviser or reductions were $(0.003) in 1999, $0.001 in 1998,
$0.006 in 1997 and $0.005 in 1996 for Select Growth Fund; $0.003 in 1999,
$(0.001) in 1998 for Select Strategic Growth Fund; $0.019 in 1999, $0.027
in 1998, $0.038 in 1997 and $0.046 in 1996 for Growth Fund and $0.022 in
1999, $0.019 in 1998, $0.019 in 1997 and $0.019 in 1996 for the Select
Growth and Income Fund.
(3) Dividends from net investment income are less than $0.0005.
(4) Distributions in excess of net realized capital gains.
<TABLE>
<CAPTION>
Ratios/Supplemental Data
---------------------------------------------------------------------
Ratios To Average Net Assets
---------------------------------------------------
Net Assets
Net Asset End of Net Operating Management Portfolio
Value End Total Period Investment Expenses Fee Turnover
of Period Returns (000's) Income (Loss) (A) (B) (C) Gross Net Rate
- --------- ------- ---------- ------------- ---- ---- ---- ----- ---- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$3.049 29.80% $1,216,365 (0.08)% 0.81% 0.83% 0.83% 0.78% 0.78% 84%
2.428 35.44% 815,390 0.08% 0.85% 0.87% 0.87% 0.82% 0.82% 86%
1.811 34.06% 470,356 0.42% 0.91% 0.93% 0.93% 0.85% 0.85% 75%
1.430 22.02% 228,551 0.38% 0.92% 0.93% 0.93% 0.85% 0.85% 159%
1.369 24.59% 143,125 0.02% 0.97% -- 0.97% 0.85% 0.85% 51%
1.126 16.06% 31,254 0.41% 1.17% 1.20% 1.20% 0.85% 0.85% 58%
0.973 (2.47)%** 14,839 0.41%* 1.14%* 1.20%* 1.66%* 0.85%* 0.39%* 24%**
3.310 29.33% 1,076,297 0.65% 0.45% 0.48% 0.48% 0.43% 0.43% 116%
2.825 19.32% 860,333 1.08% 0.46% 0.49% 0.49% 0.44% 0.44% 100%
2.416 25.14% 728,679 1.48% 0.47% 0.49% 0.49% 0.43% 0.43% 79%
2.333 20.19% 556,751 2.04% 0.48% 0.51% 0.51% 0.44% 0.44% 72%
2.176 32.80% 444,871 2.34% 0.54% -- 0.54% 0.46% 0.46% 64%
4.060 20.41% 638,230 0.98% 0.35% 0.35% 0.35% 0.28% 0.28% 21%
3.408 28.33% 481,877 1.17% 0.36% 0.36% 0.36% 0.29% 0.29% 6%
2.753 32.41% 297,191 1.38% 0.44% 0.44% 0.44% 0.31% 0.31% 9%
2.165 22.30% 151,130 1.79% 0.46% 0.46% 0.46% 0.32% 0.32% 12%
1.827 36.18% 90,889 1.96% 0.55% -- 0.55% 0.34% 0.34% 8%
1.933 18.43% 844,538 1.17% 0.73% 0.74% 0.74% 0.67% 0.67% 131%
1.779 16.43% 646,086 1.26% 0.70% 0.73% 0.73% 0.68% 0.68% 112%
1.552 22.51% 473,552 1.34% 0.77% 0.80% 0.80% 0.73% 0.73% 71%
1.405 21.26% 295,638 1.44% 0.80% 0.83% 0.83% 0.75% 0.75% 78%
1.268 30.32% 191,610 1.69% 0.85% -- 0.85% 0.75% 0.75% 112%
</TABLE>
FINANCIAL HIGHLIGHTS - For a Share Outstanding Throughout Each Period
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from Investment Operations Less Distributions
--------------------------------------------------------- ------------------------------------------------------
Net Realized
Net and Distributions
Asset Net Unrealized Dividends from Net
Value Investment Gain (Loss) Total from from Net Realized Distributions
Year Ended Beginning Income on Investment Investment Capital in Return of Total
December 31, of Year (Loss) Investments Operations Income Gains Excess Capital Distributions
------------ --------- ------------ ------------ ---------- ---------- ------------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Grade
Income Fund(1)
1999 1.132 0.068 (0.079) (0.011) (0.069) (0.001) -- -- (0.070)
1998 1.112 0.067 0.020 0.087 (0.067) -- -- -- (0.067)
1997 1.084 0.071 0.028 0.099 (0.071) -- -- -- (0.071)
1996 1.117 0.070 (0.033) 0.037 (0.070) -- -- -- (0.070)
1995 1.012 0.071 0.106 0.177 (0.071) -- (0.001)(2) -- (0.072)
Government
Bond Fund
1999 1.068 0.058 (0.056) 0.002 (0.059) -- -- -- (0.059)
1998 1.047 0.058 0.021 0.079 (0.058) -- -- -- (0.058)
1997 1.036 0.061 0.011 0.072 (0.061) -- -- -- (0.061)
1996 1.062 0.062 (0.026) 0.036 (0.062) -- -- -- (0.062)
1995 0.997 0.062 0.066 0.128 (0.062) -- (0.001)(2) -- (0.063)
Money Market
Fund
1999 1.000 0.051 -- 0.051 (0.051) -- -- -- (0.051)
1998 1.000 0.054 -- 0.054 (0.054) -- -- -- (0.054)
1997 1.000 0.053 -- 0.053 (0.053) -- -- -- (0.053)
1996 1.000 0.052 -- 0.052 (0.052) -- -- -- (0.052)
1995 1.000 0.057 -- 0.057 (0.057) -- -- -- (0.057)
<CAPTION>
Net
Increase
(Decrease)
in
Year Ended Net Asset
December 31, Value
------------ ----------
<S> <C>
Investment Grade
Income Fund(1)
1999 (0.081)
1998 0.020
1997 0.028
1996 (0.033)
1995 0.105
Government
Bond Fund
1999 (0.057)
1998 0.021
1997 0.011
1996 (0.026)
1995 0.065
Money Market
Fund
1999 --
1998 --
1997 --
1996 --
1995 --
</TABLE>
- ------------------------------------
(A) Including reimbursements and reductions.
(B) Excluding reductions. Certain Portfolios have entered into varying
arrangements with brokers who reduced a portion of the Portfolio's
expenses.
(C) Excluding reimbursements and reductions.
(1) Effective May 1, 2000, the name of the Investment Grade Income Fund was
changed to the Select Investment Grade Income Fund.
(2) Distributions in excess of net investment income.
<TABLE>
<CAPTION>
Ratios/Supplemental Data
---------------------------------------------------------------
Ratios To Average Net Assets
------------------------------------------------
Net Assets
Net Asset End of Net Operating Management Portfolio
Value End Total Year Investment Expenses Fee Turnover
of Year Return (000's) Income (Loss) (A) (B) (C) Gross Net Rate
- --------- ------ ---------- ------------- ---- ---- ---- ----- ---- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0.953 (0.85)% $174,037 6.26% 0.61% 0.61% 0.61% 0.52% 0.52% 177%
1.032 6.83% 160,450 5.92% 0.64% 0.64% 0.64% 0.54% 0.54% 130%
1.022 9.17% 104,253 6.12% 0.72% 0.72% 0.72% 0.59% 0.59% 79%
0.995 3.32% 77,498 6.29% 0.74% 0.74% 0.74% 0.60% 0.60% 108%
1.024 16.96% 60,368 6.24% 0.79% -- 0.80% 0.60% 0.59% 131%
1.051 (0.97)% 240,541 6.22% 0.50% 0.50% 0.50% 0.43% 0.43% 75%
1.132 7.97% 230,623 6.01% 0.52% 0.52% 0.52% 0.43% 0.43% 158%
1.112 9.45% 189,503 6.48% 0.51% 0.51% 0.51% 0.41% 0.41% 48%
1.084 3.56% 157,327 6.50% 0.52% 0.52% 0.52% 0.40% 0.40% 108%
1.117 17.84% 141,625 6.66% 0.53% -- 0.53% 0.41% 0.41% 126%
1.011 0.23% 87,247 5.64% 0.62% 0.62% 0.62% 0.50% 0.50% 37%
1.068 7.67% 81,018 5.63% 0.64% 0.64% 0.64% 0.50% 0.50% 61%
1.047 7.08% 55,513 5.92% 0.67% 0.67% 0.67% 0.50% 0.50% 56%
1.036 3.51% 46,396 5.90% 0.66% 0.66% 0.66% 0.50% 0.50% 112%
1.062 13.06% 45,778 5.91% 0.69% -- 0.69% 0.50% 0.50% 180%
1.000 5.19% 513,606 5.09% 0.29% 0.29% 0.29% 0.24% 0.24% N/A
1.000 5.51% 336,253 5.36% 0.32% 0.32% 0.32% 0.26% 0.26% N/A
1.000 5.47% 260,620 5.33% 0.35% 0.35% 0.35% 0.27% 0.27% N/A
1.000 5.36% 217,256 5.22% 0.34% 0.34% 0.34% 0.28% 0.28% N/A
1.000 5.84% 155,211 5.68% 0.36% -- 0.36% 0.29% 0.29% N/A
</TABLE>
The financial highlights tables are intended to help you understand each Fund's
financial performance for the past five years (or, if shorter, the period of the
Fund's operations). 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). This information has been audited by
PricewaterhouseCoopers LLP, whose report, along with each Fund's financial
statements, are included in the Statement of Additional Information or annual
report, which is available upon request.
- -----------------------------
Allmerica Investment Trust
34
<PAGE>
Appendix
Investment Techniques and Strategies
In managing its portfolios of investments, the Trust may make use of the
following investment techniques and strategies:
Symbols
o Permitted
-- Not Permitted
<TABLE>
<CAPTION>
Select Select Select Select Select Select
Emerging Aggressive Capital Value International Select Strategic
Markets Growth Appreciation Opportunity Equity Growth Growth
Investment Technique/Strategy Fund Fund Fund Fund Fund Fund Fund
- ----------------------------- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Asset-Backed Securities -- -- -- -- -- -- --
Financial Futures Contracts
and Related Options o o o o o o o
Foreign Securities o o o o o o o
Forward Commitments -- -- o -- -- -- --
Forward Contracts on Foreign
Currencies o -- o -- o o --
High Yield Securities o -- o -- -- o --
Investments in Money Market
Securities o o o o o o o
Mortgage-Backed Securities -- -- -- -- -- -- --
Purchasing Options o o o o o o o
Repurchase Agreements o o o o o o o
Restricted Securities o o o o o o o
Reverse Repurchase Agreements -- -- o -- -- -- --
Securities Lending o o o -- o o o
Stand-By Commitments -- -- -- -- -- -- --
Stripped Mortgage-Backed
Securities -- -- -- -- -- -- --
Swap and Swap-Related Products -- -- o -- -- -- --
When-Issued Securities o o o o o o o
Writing Covered Options o o o o o o o
- ----------------------- - - - - - -
</TABLE>
<TABLE>
<CAPTION>
Select Select
Growth Investment
Core Equity and Grade Government Money
Equity Index Income Income Bond Market
Investment Technique/Strategy Fund Fund Fund Fund Fund Fund
- ----------------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Asset-Backed Securities o -- o o o o
Financial Futures Contracts
and Related Options o o o o o --
Foreign Securities o o o o -- o
Forward Commitments -- -- -- o o o
Forward Contracts on Foreign
Currencies -- -- -- -- -- --
High Yield Securities -- -- -- -- -- --
Investments in Money Market
Securities o o o o o o
Mortgage-Backed Securities -- -- -- o o --
Purchasing Options o o o o o --
Repurchase Agreements o o o o o o
Restricted Securities o o o o o o
Reverse Repurchase Agreements -- -- -- -- -- --
Securities Lending o o o o o o
Stand-By Commitments -- -- -- o o o
Stripped Mortgage-Backed
Securities -- -- -- o o --
Swap and Swap-Related Products -- -- -- -- -- --
When-Issued Securities o o o o o o
Writing Covered Options o o o o o --
- ----------------------- - - - - - --
</TABLE>
42
Allmerica Investment Trust
<PAGE>
Allmerica Investment Trust
Select Emerging Markets Fund
Select Aggressive Growth Fund
Select Capital Appreciation Fund
Select Value Opportunity Fund
Select International Equity Fund
Select Growth Fund
Select Strategic Growth Fund
Core Equity Fund
Equity Index Fund
Select Growth and Income Fund
Select Investment Grade Income Fund
Government Bond Fund
Money Market Fund
The Trust's Statement of Additional Information ("SAI") includes additional
information about the Funds. The Trust's annual and semi-annual reports to
shareholders include information about the investments of the Funds. The SAI and
the financial statements included in the Fund's most recent annual report to
shareholders are incorporated by reference into this prospectus, which means
they are part of this prospectus for legal purposes. The Trust's annual report
discusses the market conditions and investment strategies that significantly
affected each Fund's performance during its last fiscal year. You may get free
copies of these materials, request other information about a Fund or make
shareholder inquiries by calling 1-800-828-0540.
You may review and copy information about the Trust, including its SAI, at the
Securities and Exchange Commission's Public Reference Room in Washington, D.C.
You may call the Commission at 1-800-SEC-0330 for information about the
operation of the Public Reference Room. You may also access reports and other
information about the Trust on the Commission's Internet site at
http://www.sec.gov. You may get copies of this information, with payment of a
duplication fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009. You may need to refer to the Trust's file number
under the Investment Company Act, which is 811-4138.
ALLMERICA
INVESTMENT
TRUST
440 Lincoln Street, Worcester, Massachusetts 01653
1-800-828-0540
<PAGE>
ALLMERICA INVESTMENT TRUST
STATEMENT OF ADDITIONAL INFORMATION
SELECT EMERGING MARKETS FUND
SELECT AGGRESSIVE GROWTH FUND
SELECT CAPITAL APPRECIATION FUND
SELECT VALUE OPPORTUNITY FUND
SELECT INTERNATIONAL EQUITY FUND
SELECT GROWTH FUND
SELECT STRATEGIC GROWTH FUND
CORE EQUITY FUND
EQUITY INDEX FUND
SELECT GROWTH AND INCOME FUND
SELECT INCOME FUND
SELECT INVESTMENT GRADE INCOME FUND
GOVERNMENT BOND FUND
MONEY MARKET FUND
THIS STATEMENT OF ADDITIONAL INFORMATION ("SAI") IS NOT A PROSPECTUS. IT SHOULD
BE READ IN CONJUNCTION WITH THE APPLICABLE PROSPECTUS OF ALLMERICA INVESTMENT
TRUST DATED MAY 1, 2000. A FREE COPY OF THE APPLICABLE PROSPECTUS MAY BE
OBTAINED FROM ALLMERICA INVESTMENT TRUST (THE "TRUST"), 440 LINCOLN STREET,
WORCESTER, MASSACHUSETTS 01653, (508) 855-1000.
The Trust's Financial Statements and related notes and the report of the
independent accountants for the fiscal year ended December 31, 1999 are
incorporated by reference into this SAI and are included in the Trust's Annual
Report to Shareholders. The Annual Report to Shareholders is available, without
charge, upon request, by calling the following toll free number: 1-800-828-0540.
DATED: MAY 1, 2000
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TABLE OF CONTENTS
TRUST HISTORY........................................................... 3
DESCRIPTION OF THE FUNDS AND THEIR INVESTMENTS AND RISKS................ 3
INVESTMENT RESTRICTIONS AND POLICIES................................ 10
INVESTMENT STRATEGIES AND TECHNIQUES................................ 11
PORTFOLIO TURNOVER.................................................. 25
MANAGEMENT OF THE TRUST................................................. 25
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES..................... 28
INVESTMENT MANAGEMENT AND OTHER SERVICES................................ 28
BROKERAGE ALLOCATION AND OTHER PRACTICES................................ 39
CAPITAL STOCK AND OTHER SECURITIES...................................... 41
PURCHASE, REDEMPTION AND PRICING OF SHARES.............................. 42
TAXATION OF THE FUNDS OF THE TRUST...................................... 43
UNDERWRITERS............................................................ 43
CALCULATION OF PERFORMANCE DATA......................................... 44
FINANCIAL STATEMENTS.................................................... 47
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TRUST HISTORY
The Trust is an open-end, diversified series investment company designed to
provide the underlying investment vehicle for various separate investment
accounts established by First Allmerica Financial Life Insurance Company ("First
Allmerica") or Allmerica Financial Life Insurance and Annuity Company
("Allmerica Financial Life"), wholly-owned subsidiary of First Allmerica. Shares
of the Trust are not offered to the general public but solely to such separate
investment accounts ("Separate Accounts"). Not all of the Funds are offered to
each Separate Account.
The Trust is a Massachusetts business trust established on October 11, 1984. It
currently is comprised of fourteen different portfolios: Select Emerging Markets
Fund, Select Aggressive Growth Fund, Select Capital Appreciation Fund, Select
Value Opportunity Fund, Select International Equity Fund, Select Growth Fund,
Select Strategic Growth Fund, Core Equity Fund (formerly the Growth Fund),
Equity Index Fund, Select Growth and Income Fund, Select Income Fund, Select
Investment Grade Income Fund (formerly the Investment Grade Income Fund),
Government Bond Fund and Money Market Fund (each, a "Fund"). The Trustees may
create additional funds in the future. On or about July 1, 2000, subject to
regulatory approval, shares of the Select Investment Grade Income Fund will be
substituted for shares of the Select Income Fund. As of the substitution date,
shares of the Select Income Fund will no longer be offered.
DESCRIPTION OF THE FUNDS
AND THEIR INVESTMENTS AND RISKS
ADDITIONAL INFORMATION ABOUT THE FUNDS
For a description of the Funds' principal investment strategies and risks, types
of investments each Fund may acquire and certain investment techniques it may
utilize, see "Principal Investment Strategies and Risks" and "Other Investment
Strategies and Risks" in the appropriate Prospectus for the underlying Funds of
the applicable Separate Account. Following are descriptions of additional Fund
strategies, policies and restrictions. Note that any percentage limitations
listed under each Fund below apply at the time of investment.
SELECT EMERGING MARKETS FUND
The Fund invests at least 65% of its total assets in equity securities of
companies that are domiciled or primarily doing business in developing countries
with emerging markets. A company is considered to be domiciled in a developing
country if it is organized under the laws of, or has a principal office in, that
country. A company is considered as primarily doing business in a developing
country if (i) the company derives at least 50% of its gross revenues or profits
from either goods or services produced or sold in the developing country or (ii)
at least 50% of the company's assets are situated in the developing country.
The Sub-Adviser may employ a temporary defensive strategy if deemed by it to be
appropriate due to economic or political conditions in emerging markets. When
using a defensive strategy, the Fund may invest up to 100% of its assets in
cash, high-quality debt securities or money market instruments of U.S. or
foreign issuers. In addition, most or all of its investment may be made in the
United States and in U.S. dollars for temporary defensive purposes.
The Fund may invest up to 15% of its net assets in securities which are
illiquid.
Investing in the Fund entails a substantial degree of risk. Investors are
strongly advised to consider carefully the special risks involved in investing
in emerging markets, which are in addition to the usual risks of investing in
developed countries around the world.
SELECT AGGRESSIVE GROWTH FUND
The selection of securities is made solely on the basis of their potential for
capital appreciation. Dividend and interest income from portfolio securities, if
any, is incidental to the Fund's investment objective.
At any given point, a substantial portion of the Fund's equity investments may
be in securities which are not listed for trading on national securities
exchanges and which, although publicly traded, may be less liquid than
securities issued
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by larger, more seasoned companies which trade on national securities exchanges.
Up to 15% of the Fund's net assets may be invested in securities which are
illiquid.
Because the price movement of the securities held by the Fund can be expected to
be more volatile than is the case for the market as a whole, and the net asset
value of a share of the Fund may fluctuate significantly, the Fund should not be
considered suitable for investors who are unable or unwilling to assume the risk
of loss inherent in an aggressive growth portfolio, nor should investment in the
Fund be considered a balanced or complete investment program.
When the Sub-Adviser of the Fund determines that market conditions warrant a
temporary defensive position, the Fund may invest without limitation in high-
grade, fixed income securities or U.S. Government securities, or hold assets in
cash or cash equivalents.
SELECT CAPITAL APPRECIATION FUND
Up to 15% of the Fund's net assets may be invested in securities which are
illiquid. When the Sub-Adviser of the Fund determines that market conditions
warrant a temporary defensive position, the Fund may invest without limitation
in high-grade, fixed income securities or U.S. Government securities, or hold
assets in cash or cash equivalents.
SELECT VALUE OPPORTUNITY FUND
The Fund may invest temporarily in preferred stocks, bonds and other defensive
issues. There are no restrictions or guidelines regarding the investment of Fund
assets in shares listed on an exchange or traded over-the- counter. The Fund may
invest up to 15% of its net assets in securities which are illiquid.
The portfolio normally will be diversified among different industry sectors, but
is not an index approach. Stocks are bought as investments and generally held
for the long term, rather than as active trading vehicles.
SELECT INTERNATIONAL EQUITY FUND
The Fund may invest up to 15% of its net assets in securities which are
illiquid. When the Sub-Adviser of the Fund determines that market conditions
warrant a temporary defensive position, the Fund may invest without limitation
in high-grade, fixed income securities or U.S. Government securities, or hold
assets in cash or cash equivalents.
SELECT GROWTH FUND
Although the Fund may invest in dividend-paying stocks, the generation of
current income is not an objective of the Fund. Any income that is received is
incidental to the Fund's objective of long-term growth of capital.
When choosing securities for the portfolio, the Sub-Adviser for the Select
Growth Fund focuses on companies that display strong financial characteristics
and earnings growth potential.
The stocks of smaller growth companies may involve a higher degree of risk than
other types of securities and the price movement of such securities can be
expected to be more volatile than is the case of the market on the whole. The
Fund may hold stocks traded on one or more of the national exchanges as well as
in the over-the-counter markets. Because opportunities for capital growth may
exist not only in new and expanding areas of the economy but also in mature and
cyclical industries, the Fund's portfolio investments are not limited to any
particular type of company or industry.
When the Sub-Adviser determines that market conditions warrant a temporary,
defensive position, the Fund may invest without limitation in high-grade, fixed-
income securities or U.S. Government securities, or hold assets in cash or cash
equivalents. To the extent the Fund is so invested it is not achieving its
objective to the same degree as under normal conditions.
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The Select Growth Fund's objective of seeking long-term growth of capital means
that its assets generally will be subject to greater risk than may be involved
in investing in securities that are not selected for growth potential. The Fund
may invest up to 15% of its net assets in securities which are illiquid.
SELECT STRATEGIC GROWTH FUND
The Fund may invest up to 15% of its net assets in securities which are
illiquid.
CORE EQUITY FUND (formerly the Growth Fund)
The Core Equity Fund proposes to keep its assets fully invested, but may
maintain reasonable amounts in cash or in high-grade, short-term debt securities
to meet current expenses and anticipated redemptions, and during temporary
periods pending investment in accordance with its policies.
In periods considered by management to warrant a more defensive position, the
Core Equity Fund may place a larger proportion of its portfolio in high-grade
preferred stocks, bonds or other fixed-income securities, including U.S.
Government securities, whether or not convertible into stock or with rights
attached, or retain cash.
The Core Equity Fund may invest in both listed and unlisted securities. The
Core Equity Fund also may invest in foreign as well as domestic securities.
The Fund may invest up to 15% of its net assets in securities which are
illiquid.
EQUITY INDEX FUND
The Equity Index Fund will attempt to replicate the investment results of the
Standard & Poor's 500 Composite Stock Price Index (the "S&P 500") while
minimizing transactional costs and other expenses. Stocks in the S&P 500 are
ranked in accordance with their statistical weighting from highest to lowest.
The method used to select investments for the Equity Index Fund involves
investing in common stocks in approximately the order of their weighting in the
S&P 500, beginning with those having the highest weighting. The Fund uses the
S&P 500 as the performance standard because it represents over 70 percent of the
total market value of all publicly-traded common stocks in the U.S., is well-
known to investors and, in the opinion of the Sub-Adviser, is representative of
the performance of common stocks publicly-traded in the United States. Many, but
not all, of the stocks in the S&P 500 are issued by companies that are among the
500 largest as measured by the aggregate market value of their outstanding stock
(market price per share multiplied by number of shares outstanding). Inclusion
of a stock in the S&P 500 does not imply that Standard & Poor's Ratings Service,
a division of McGraw-Hill Companies, Inc. ("S&P") has endorsed it as an
investment. With respect to investing in common stocks, there can be no
assurance of capital appreciation and there is a substantial risk of market
decline.
The Equity Index Fund's ability to duplicate the performance of the S&P 500 will
be influenced by the size and timing of cash flows into or out of the Fund, the
liquidity of the securities included in the S&P 500, transaction and operating
expenses and other factors. These factors, among others, may result in "tracking
error," which is a measure of the degree to which the Fund's results differ from
the results of the S&P 500.
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Tracking error is measured by the difference between total return for the S&P
500 with dividends reinvested and total return for the Fund with dividends
reinvested after deductions of transaction and operating expenses. For the 12
months ended December 31, 1999, the S&P 500 gained 21.03% versus a gain of
20.41% for the Equity Index Fund producing a tracking error of 0.62% before
advisory and administrative fees. Tracking error is monitored by the Sub-Adviser
on a regular basis. All tracking error deviations are reviewed to determine the
effectiveness of investment policies and techniques. If the tracking error
deviation exceeds industry standards for the Fund's asset size, the Sub-Adviser
will bring the deviation to the attention of the Trustees.
While the Board of Trustees of the Trust has selected the S&P 500 as the index
the Fund will attempt to replicate, the Trustees reserve the right to select
another index at any time without seeking shareholder approval if they believe
that the S&P 500 no longer represents a broad spectrum of common stocks that are
publicly traded in the United States or if there are legal, economic or other
factors limiting the use of any particular index. If the Trustees change the
index which the Equity Index Fund attempts to replicate, the Equity Index Fund
may incur significant transaction costs in switching from one index to another.
The Equity Index Fund will invest only in those stocks, and in such amounts, as
its investment adviser determines to be necessary or appropriate for the Equity
Index Fund to approximate the S&P 500. As the size of the Equity Index Fund
increases, the Equity Index Fund may purchase a larger number of stocks included
in the S&P 500, and the percentage of its assets invested in most stocks
included in the S&P 500 will approach the percentage that each such stock
represents in the S&P 500. However, there is no minimum or maximum number of
stocks included in the S&P 500 which the Equity Index Fund will hold. Under
normal circumstances, it is expected that the Equity Index Fund will hold
approximately 500 different stocks included in the S&P 500. The Equity Index
Fund may compensate for the omission of a stock that is included in the S&P 500,
or for purchasing stocks in other than the same proportions that they are
represented in the S&P 500, by purchasing stocks which are believed to have
characteristics which correspond to those of the omitted stocks.
The Equity Index Fund may invest in short-term debt securities to maintain
liquidity or pending investment in stocks. Such investments will not be made for
defensive purposes or in anticipation of a general decline in the market price
of stocks in which the Equity Index Fund invests; investors in the Equity Index
Fund bear the risk of general declines in the stock markets. The Equity Index
Fund also may take advantage of tender offers, resulting in higher returns than
are reflected in the performance of the S&P 500. In addition, the Equity Index
Fund may hold warrants, preferred stocks and debt securities, whether or not
convertible into common stock or with rights attached, if acquired as a result
of in-kind dividend distributions, mergers, acquisitions or other corporate
activity involving the common stocks held by the Equity Index Fund. Such
investment transactions and securities holdings may result in positive or
negative tracking error.
The Equity Index Fund may purchase or sell futures contracts on stocks indexes
for hedging purposes and in order to achieve a fully invested position while
maintaining sufficient liquidity to meet possible net redemptions. The
effectiveness of a strategy of investing in stock index futures contracts will
depend upon the continued availability of futures contracts based on the S&P 500
or which tend to move together with stocks included in the S&P 500. The Equity
Index Fund would not enter into futures contacts on stock indexes for
speculative purposes.
The Equity Index Fund may invest up to 25% of its assets in foreign securities
(not including its investments in American Depositary Receipts ("ADRs")). The
Equity Index Fund may invest up to 15% of its net assets in securities which are
illiquid.
Because of its policy of tracking the S&P 500, the Equity Index Fund is not
managed according to traditional methods of active investment management, which
involve the buying and selling of securities based upon investment analysis of
economic, financial and market factors. Consequently, the projected adverse
financial performance of a company normally would not result in the sale of the
company's stock and projected superior financial performance by a company
normally would not lead to an increase in the holdings of the company. From time
to time, the Sub-Adviser may make adjustments in the portfolio because of cash
flows, mergers, changes in the composition of the S&P 500 and other similar
reasons.
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Standard & Poor's Corporation is not in any way affiliated with the Equity Index
Fund or the Trust. "Standard & Poor's," "Standard & Poor's 500," and "500" are
trademarks of Standard & Poor's Corporation.
SELECT GROWTH AND INCOME FUND
To achieve its objective of long-term growth of capital and current income, the
Select Growth and Income Fund will invest primarily in dividend-paying common
stocks and securities convertible into common stocks. These may include
securities of large well-known companies as well as smaller growth companies.
The Fund may hold securities traded on one or more of the national exchanges as
well as in the over-the-counter markets. The Fund may purchase individual stocks
not presently paying dividends which offer opportunities for capital growth or
future income, provided that the Sub-Adviser believes the overall portfolio is
appropriately positioned to achieve its income objective. In certain
circumstances, fixed-income securities may be purchased by the Fund for long-
term growth potential.
The Fund may invest up to 15% of its net assets in securities which are
illiquid.
When the Sub-Adviser determines that market conditions warrant a temporary,
defensive position, the Fund may invest without limitation in high-grade, fixed-
income or U.S. Government securities, or hold assets in cash or cash
equivalents. To the extent the Fund is so invested, it is not achieving its
objective to the same degree as under normal conditions. There can be no
assurance of growth of capital, of course, and because the Fund invests a
substantial portion of its assets in common stocks and other securities which
fluctuate in value, there is substantial risk of market decline.
SELECT INCOME FUND
Investment grade corporate debt securities in which the Fund invests are: (a)
assigned a rating within the four highest grades (Baa/BBB or higher) by either
Moody's Investor Service, Inc. ("Moody's") or S&P, (b) equivalently rated by
another nationally recognized statistical rating organization ("NRSRO") or (c)
unrated securities but determined by the Sub-Adviser to be of comparable
quality. Securities rated in the fourth highest grade (rated Baa and BBB by
Moody's and S&P, respectively) are considered to have some speculative
characteristics. For more information concerning the rating categories of
corporate debt securities and commercial paper, see the Appendix to the SAI. The
types of securities in which the Fund invests include but are not limited to
U.S. dollar obligations of supranational entities such as the World Bank,
European Investment Bank and African Development Bank. The Fund may also invest
in interest-only and principal-only Treasury securities and in municipal bonds
when such bonds are deemed by the Sub-Adviser to be attractive investments for
the portfolio. The Fund serves as an investment vehicle for variable annuity
contracts and variable life insurance policies. Investments by the Fund in
municipal bonds offer no tax benefits in addition to those already offered to
variable annuity contract owners and variable life insurance policyholders.
The dollar average weighted maturity of the portfolio, excluding money market
instruments, is expected to range between 5 and 20 years under normal market
conditions. Although the Fund does not invest for short-term trading purposes,
portfolio securities may be sold from time to time without regard to the length
of time they have been held. The value of the Fund's portfolio securities
generally will vary inversely with changes in prevailing interest rates,
declining as interest rates rise and increasing as rates decline. The value will
also be affected by other market and economic factors. There is the risk with
corporate debt securities that the issuers may not be able to meet their
obligations on interest and principal payments.
The Fund may invest up to 15% of its net assets in securities which are
illiquid.
Obligations in which the Select Income Fund may invest include debt obligations
of supranational entities. Supranational entities include international
organizations designated or supported by governmental entities to promote
economic reconstruction or development and international banking institutions
and related government agencies. Obligations of supranational entities may be
supported by appropriated but unpaid commitments of their member countries, and
there is no assurance that these commitments will be undertaken or met in the
future.
SELECT INVESTMENT GRADE INCOME FUND (formerly the Investment Grade Income Fund)
The debt securities in which the Fund may invest are considered "investment
grade" in that they generally are suitable for purchase by prudent investors.
However, the lowest category of investment grade securities (rated Baa by
Moody's or BBB by S&P) may have speculative characteristics, such that changes
in economic conditions or other circumstances are more likely to lead to a
weakened capacity to make principal and interest payments than is the case of
debt securities with higher ratings. If the rating of a security falls below
investment grade, or an unrated security is deemed to have fallen below
investment grade, AAM analyzes relevant economic and market data in making a
determination of whether to retain or dispose of the investment. The performance
of the securities in the portfolio is monitored continuously, and they are
purchased and sold as conditions warrant and permit.
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The Fund may invest up to 15% of its net assets in securities which are
illiquid.
Obligations in which the Fund may invest include debt obligations of
supranational entities. Supranational entities include international
organizations designed or supported by governmental entities to promote economic
reconstruction or development and international banking institutions and related
government agencies. Obligations of supranational entities may be supported by
appropriated but unpaid commitments of their member countries, and there is no
assurance that these commitments will be undertaken or met in the future.
GOVERNMENT BOND FUND
The Government Bond Fund will invest in obligations issued or guaranteed by the
U.S. Government, its agencies and instrumentalities, and options and futures
thereon, as described in the Prospectus. Some U.S. Government securities are
backed by the full faith and credit of the United States. Other U.S. Government
securities are supported by (i) the right of the issuer to borrow from the U.S.
Treasury, (ii) discretionary authority of the U.S. Government to purchase the
obligations of the agency or instrumentality, or (iii) only the credit of the
instrumentality itself. No assurances can be given that the U.S. Government
would provide financial support to the U.S. Government sponsored
instrumentalities if it is not obligated to do so by law. The securities in
which the Government Bond Fund may invest include, but are not limited to, U.S.
Treasury bills, notes and bonds and obligations of the following: Banks for
Cooperatives, the Commodity Credit Corporation, the Federal Deposit Insurance
Corporation, Federal Farm Credit Banks, the Federal Financing Bank, Federal
National Mortgage Association, the General Insurance Fund, Government National
Mortgage Association, Government Services Administration (GSA Public Building
Trust Participation Certificates), the Production Credit Association, the
Student Loan Marketing Association, the Tennessee Valley Authority and the U.S.
Postal Service.
The Government Bond Fund may invest in mortgage-backed securities (including
pass-through securities) and participation certificates) of the Government
National Mortgage Association ("Ginnie Mae"), the Federal Home Loan Mortgage
Corporation ("Freddie Mac") and the Federal National Mortgage Association
("Fannie Mae").
Ginnie Mae certificates are mortgage-backed securities representing part
ownership of a pool of mortgage loans. The mortgage loans are issued by lenders
such as mortgage bankers, commercial banks and savings and loan associations,
and are either insured by the Federal Housing Administration or guaranteed by
the Veterans Administration. After approval of the pool by Ginnie Mae,
certificates in the pool are offered to investors by securities dealers. Once
the pool has been approved by Ginnie Mae, the timely payment of interest and
principal on the certificates is guaranteed by the full faith and credit of the
U.S. Government. The certificates are "pass through" securities because a pro
rata share of regular interest and principal payments, as well as unscheduled
early prepayments, on the underlying mortgage pool is passed through monthly to
the Fund.
Freddie Mac, a corporate instrumentality of the U.S. Government created by
Congress to increase the availability of mortgage credit for residential
housing, issues participation certificates representing undivided interests in
Freddie Mac's mortgage portfolio. While Freddie Mac guarantees the timely
payment of interest and ultimate collection of the principal of its
participation certificates, the participation certificates are not backed by the
full faith and credit of the U.S. Government. The "pass-through" characteristics
of Freddie Mac participation certificates are similar to Ginnie Mae
certificates, but Freddie Mac certificates differ from Ginnie Mae certificates
in that Freddie Mac mortgages are primarily conventional residential mortgages
rather than mortgages issued or guaranteed by a federal agency or
instrumentality.
Fannie Mae is a federally chartered corporation owned by private stockholders.
Fannie Mae purchases both conventional and federally insured or guaranteed
residential mortgages form various entities, and packages pools of such
mortgages in the form of pass-through certificates. Fannie Mae guarantees the
timely payment of principal and interest. Fannie Mae is authorized to borrow
from the U.S. Treasury to meet its obligations, but the certificates are not
backed by the full faith and credit of the U.S. Government.
The effective maturity of a mortgage-backed security may be shortened by
unscheduled or early payments of principal and interest on the underlying
mortgages, which may affect their effective yield. When the Government Bond Fund
receives the monthly "pass-through" payments (which may include unscheduled
prepayments of principal) it may be able to invest the payments only at a lower
rate of interest. During periods of declining interest rates, such securities
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therefore may be less effective as a means of "locking in" attractive long-term
interest rates and may have less potential for appreciation than conventional
bonds with comparable stated maturities.
The Fund may enter into repurchase agreements and, from time to time, may have
temporary investments in short-term debt obligations (including certificates of
deposit, bankers acceptances and commercial paper) pending the making of other
investments or for liquidity purposes.
The Fund may invest up to 15% of its net assets in securities which are
illiquid.
Obligations in which the Fund may invest include debt obligations of
supranational entities. Supranational entities include international
organizations designed or supported by governmental entities to promote economic
reconstruction or development and international banking institutions and related
government agencies. Obligations of supranational entities may be supported by
appropriated but unpaid commitments of their member countries, and there is no
assurance that these commitments will be undertaken or met in the future.
U.S. Government securities may be purchased or sold without regard to the length
of time they have been held to attempt to take advantage of short-term
differentials in yields, with the objective of seeking income while conserving
capital. While short-term trading increases portfolio turnover, the Government
Bond Fund incurs little or no brokerage costs for U.S. Government securities.
MONEY MARKET FUND
The Fund may invest in dollar-denominated obligations of foreign branches of
U.S. banks ("Euro dollars") and U.S. branches of foreign banks (if such U.S.
branches are subject to state banking requirements and Federal reserve reporting
requirements) which at the date of the investment have deposits of at least $1
billion as of their most recently published financial statements.
The Money Market Fund will not purchase any security unless (i) the security has
received the highest or second highest quality rating by at least two NRSROs or
by one NRSRO if only one has rated the security, or (ii) the security is unrated
and in the opinion of Allmerica Asset Management, Inc. ("AAM"), as Sub-Adviser
to the Fund, in accordance with guidelines adopted by the Trustees, is of a
quality comparable to one of the two highest ratings of an NRSRO. These
standards must be satisfied at the time an investment is made. If the quality of
the investment later declines, the Fund may continue to hold the investment, but
the Trustees will evaluate whether the security continues to present minimal
credit risks.
INVESTMENT RESTRICTIONS AND POLICIES
The following is a description of certain restrictions on investments of the
Funds (in addition to those described in the Prospectus). The investment
restrictions numbered 1 through 9 are fundamental and may not be changed without
the approval of a majority in interest of the shareholders of that Fund. The
other investment restrictions are not deemed fundamental and may be changed by
the Trustees without shareholder approval. The following investment restrictions
apply to each Fund, except as noted:
1. The Fund will not issue "senior securities" as defined in Section 18(g)
of the Investment Company Act of 1940 ("1940 Act").
2. The Fund will not borrow money, except in accordance with the provisions
of the 1940 Act and for temporary purposes when the aggregate amount borrowed
does not exceed 33 1/3% of the value of the Fund's total assets at the time
such borrowing is made. In general, a borrowing shall be regarded as being for
temporary purposes if it is repaid within 60 days and is not extended or
renewed.
3. The Fund will not act as an underwriter except to the extent that, in
connection with the disposition of portfolio securities, it may be deemed to be
an underwriter under certain federal securities laws.
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4. The Fund will not buy or sell real estate or interest in real estate,
although it may purchase and sell (a) securities which are secured by real
estate and (b) securities of companies which invest or deal in real estate.
5. The Fund will not engage in the purchase and sale of physical
commodities or contracts relating to physical commodities.
6. The Fund may make loans to other persons only through repurchase
agreements and securities lending. For purposes of this paragraph, the purchase
of an issue of publicly distributed bonds, debentures, or other debt securities,
whether or not the purchase was made upon the original issue of the securities,
is not to be considered the making of a loan by the Fund.
7. The Fund will not purchase securities on margin but may obtain such
short-term credits as are necessary for clearance transactions, and (except for
the Money Market Fund) may make margin payments in connection with financial
futures (including securities index futures) contracts, and options on such
future contracts and in the case of the Select Capital Appreciation Fund,
futures contracts on foreign currencies and related options. The Fund will not
participate on a joint or joint and several basis in any trading account in
securities or effect a short sale of securities.
*8. No Fund will concentrate its investments in particular industries,
including debt obligations of supranational entities and foreign governments,
but a Fund may invest up to 25% of the value of its total assets in a particular
industry. The restriction does not apply to investments in obligations issued or
guaranteed by the United States of America, its agencies or instrumentalities,
or to investments by the Money Market Fund in securities issued or guaranteed by
domestic branches of U.S. banks.
*9. As to 75% of the value of its total assets (100% for the Money Market
Fund), no Fund will invest more than 5% of the value of its total assets in the
securities of any one issuer (other than securities issued by or guaranteed as
to principal or interest by the United States Government or any agency or
instrumentality thereof) or acquire more than 10% of the voting securities of
any issuer. The remaining 25% of assets (other than for the Money Market Fund)
may be invested in the securities of one or more issuers without regard to such
limitations.
10. The Fund does not intend to invest in companies for the purpose of
exercising control or management.
11. The Fund may invest in the securities of one or more other investment
companies, subject to the provisions of the 1940 Act, as amended, any other
applicable laws or regulations and any applicable exemptive orders issued by the
Securities and Exchange Commission.
12. The Fund intends to purchase securities for investment and not to
purchase and sell them for trading purposes, except that the Select Capital
Appreciation Fund and the Government Bond Fund may engage in short term trading
of U.S. Government securities.
13. The Fund (except the Money Market Fund) may engage in transactions in
financial futures contracts and related options. The Money Market Fund will not
engage in transactions in financial futures or related options.
* These limitations apply as of the time of purchase. If through market
action the percentage limitations are exceeded, the Fund will not be required to
reduce the amount of its holdings in such investments.
INVESTMENT STRATEGIES AND TECHNIQUES
In managing its portfolios of investments, the Trust may make use of the
following investment strategies and techniques:
SECURITIES LENDING
Each Fund may loan its portfolio securities to broker-dealers pursuant to
agreements requiring that the loans be continuously secured by cash, cash
equivalents or securities issued or guaranteed by the United States government
or its agencies, or any combination of cash, cash equivalents and such
securities as collateral equal at all times to at least 102%
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of the market value of the securities loaned. Such loans are not made if, as a
result, the aggregate of all outstanding loans would exceed 33 1/3% of the value
of the Fund's total assets taken at current value. The Fund continues to receive
interest or dividends on the securities loaned, and simultaneously earns
interest on the investment of the loan collateral in U.S. Treasury securities,
certificates of deposit or other high-grade, short-term obligations or interest-
bearing cash equivalents or receives a fee from the borrower. Although voting
rights, or rights to consent, attendant to securities lent pass to the borrower,
such loans may be called at any time and may be called so that the securities
may be voted by the Fund if a material event affecting the investment is to
occur. There may be risks of delay in recovery of the securities or even loss of
rights in the collateral should the borrower of the securities fail financially.
However, loans are made only to firms deemed by the Fund's Sub-Adviser to be of
good standing, and when, in the judgment of the Fund's Sub-Adviser, the
consideration which can be earned currently from such securities loans justifies
the attendant risk.
FOREIGN SECURITIES
Each Fund except the Government Bond Fund may purchase foreign securities. The
Money Market Fund may invest only in U.S. dollar denominated foreign securities.
Accordingly, the relative strength of the U.S. dollar may be an important factor
in the performance of the Fund, depending on the extent of the Fund's foreign
investments. Securities of foreign issuers, particularly non- governmental
issuers, involve risks which are not associated ordinarily with investing in
domestic issuers. These risks include changes in currency exchange rates and
currency exchange control regulations. In addition, investments in foreign
countries could be affected by other factors generally not thought to be present
in the United States, including the unavailability of financial information or
the difficulty of interpreting financial information prepared under foreign
accounting standards, less liquidity and more volatility in foreign markets, the
possibility of expropriation, the possibility of heavy taxation, the impact of
political, social or diplomatic developments, limitations on the removal of
funds or other assets of a Fund, difficulties in evoking legal process abroad
and enforcing contractual obligations, and the difficulty of assessing economic
trends in foreign countries. Some foreign securities exchanges may not be as
developed or efficient as those in the United States and securities traded on
foreign securities exchanges generally are subject to greater price volatility.
There is also the possibility of adverse changes in investment or exchange
control regulations, expropriation or confiscatory taxation and limitations on
the removal of funds or other assets.
Investments in emerging countries involve exposure to economic structures that
are generally less diverse and mature than in the United States, and to
political systems which may be less stable. In addition, securities of issuers
located in emerging countries may have limited marketability and may be subject
to more abrupt or erratic price fluctuations. The risk also exists that an
emergency situation may arise in one or more emerging markets as a result of
which trading of securities may cease or may be substantially curtailed and
prices for a Fund's portfolio securities in such markets may not be readily
available. Many emerging market countries have experienced high rates of
inflation for many years. Inflation and rapid fluctuations in inflation rates
have had and may continue to have negative effects on the economies and
securities markets of certain countries with emerging markets. Emerging markets
generally are heavily dependent upon international trade and, accordingly, have
been and may continue to be affected adversely by trade barriers, exchange
controls, managed adjustments in relative currency values and other
protectionist measures imposed by the countries with which they trade. In
certain markets there have been times when settlements of securities
transactions have been unable to keep pace with the volume of securities
transactions, making it difficult to conduct such transactions.
The Funds may buy or sell foreign currencies, options on foreign currencies and
foreign currency futures contracts and options thereon and, in addition, the
Select Emerging Markets Fund, Select Capital Appreciation Fund, Select
International Equity Fund and Select Income Fund may invest in foreign currency
forward contracts. Although such instruments may reduce the risk of loss due to
a decline in the value of the currency that is sold, they also limit any
possible gain which might result should the value of the currency increase. Such
instruments will be used primarily to protect a Fund from adverse currency
movements; however, they also involve the risk that anticipated currency
movements will not be accurately predicted, thus adversely affecting a Fund's
total return. See "Financial Futures Contracts and Related Options" and "Forward
Contracts on Foreign Currencies."
The Funds' investments may include ADRs. For many foreign securities, there are
U.S. dollar-denominated ADRs which are traded in the United States on exchanges
or over the counter. ADRs represent the right to receive securities of foreign
issuers deposited in a domestic bank or a correspondent bank. An ADR may be
sponsored by the issuer of the underlying foreign security, or it may be issued
in unsponsored form. The holder of a sponsored ADR is likely to receive more
frequent and extensive financial disclosure concerning the foreign issuer than
the holder of an unsponsored ADR
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and generally will bear lower transaction charges. Each Fund may invest in both
sponsored and unsponsored ADRs. The Select International Equity Fund and the
Select Capital Appreciation Fund also may utilize European Depositary Receipts,
which are designed for use in European securities markets, and also may invest
in Global Depositary Receipts.
Obligations in which the Select Income Fund, Select Investment Grade Income Fund
and Government Bond Fund may invest include debt obligations of supranational
entities. Supranational entities include international organizations designated
or supported by governmental entities to promote economic reconstruction or
development and international banking institutions and related government
agencies. Obligations of supranational entities may be supported by appropriated
but unpaid commitments of their member countries, and there is no assurance that
these commitments will be undertaken or met in the future. A Fund may not invest
more than 25% of its assets in debt obligations of supranational entities.
Certain state insurance regulations may impose additional restrictions on a
Fund's holdings of foreign securities.
FORWARD COMMITMENTS
The Select Capital Appreciation Fund, Select Income Fund, Select Investment
Grade Income Fund, Government Bond Fund and Money Market Fund may enter into
contracts to purchase securities for a fixed price at a specified future date
beyond customary settlement time ("forward commitments"). If the Funds do so,
they will maintain cash or other liquid obligations having a value in an amount
at all times sufficient to meet the purchase price. Forward commitments involve
a risk of loss if the value of the security to be purchased declines prior to
the settlement date. Although the Funds generally will enter into forward
commitments with the intention of acquiring securities for their portfolio, they
may dispose of a commitment prior to settlement if their Sub-Adviser deems it
appropriate to do so. The Funds may realize short-term gains or losses upon the
sale of forward commitments. The Sub-Adviser will monitor the creditworthiness
of the parties to such forward commitments.
WHEN-ISSUED SECURITIES
Each Fund from time to time may purchase securities on a "when-issued" basis or
delayed delivery basis. Debt securities and municipal obligations often are
issued on this basis. The yield of such securities is fixed at the time a
commitment to purchase is made, with actual payment and delivery of the security
generally taking place 15 to 45 days later. During the period between purchase
and settlement, typically no payment is made by a Fund and no interest accrues
to the Fund. The market value of when-issued securities may be more or less than
the purchase price payable at settlement date. Purchase of when-issued
securities involves the risk that yields available in the market when delivery
occurs may be higher than those available when the when-issued order is placed
resulting in a decline in the market value of the security. There is also the
risk that under some circumstances the purchase of when-issued securities may
act to leverage the Fund. The Fund will establish a segregated account with the
Custodian in which it will maintain cash or liquid securities at least equal to
commitments for when-issued securities.
REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS
Each Fund may enter into repurchase agreements. Under a repurchase agreement, a
Fund may purchase an obligation of or guaranteed by the United States
Government, its agents or instrumentalities, with an agreement that the seller
will repurchase the obligation at an agreed upon price and date. The repurchase
price reflects an agreed-upon interest rate which is unrelated to the coupon
rate on the purchased obligation. Repurchase agreements usually are for short
periods, such as under one week, but may be as long as thirty days. No
repurchase agreement will be effected if, as a result, more than 30% of a Fund's
total assets taken at current value will be invested in repurchase agreements.
No more than 15% (10% for the Money Market Fund) of a Fund's total assets taken
at current value will be invested in repurchase agreements extending for more
than seven days and in other securities which are not readily marketable.
If a seller defaults upon the obligation to repurchase, the Funds may incur a
loss if the value of the purchased obligation (collateral) declines, and may
incur disposition costs in liquidating the collateral. If bankruptcy proceedings
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are commenced with respect to a seller, realization upon the collateral by the
Funds may be delayed or limited.
Prior to entering into a repurchase agreement, the Fund's Sub-Adviser evaluates
the creditworthiness of entities with which the Fund proposes to enter into the
repurchase agreement. The Trustees have established guidelines and standards of
review for the evaluation of creditworthiness by the Funds' Sub- Advisers and
monitor such Sub-Advisers' actions with respect to repurchase transactions.
The Select Capital Appreciation Fund also may enter into reverse repurchase
agreements. In a reverse repurchase agreement, a fund sells a portfolio security
to another party, such as a bank or broker-dealer, in return for cash and agrees
to repurchase the instrument at a particular price and at a future date. Reverse
repurchase agreement transactions can be considered a form of borrowing by the
Fund. Reverse repurchase agreements may be used to provide cash to satisfy
unusually heavy redemption requests or for other temporary or emergency purposes
without the necessity of selling portfolio securities or to earn additional
income on portfolio securities, such as treasury bills and notes. While a
reverse repurchase agreement is outstanding, the Fund will maintain cash and
appropriate liquid assets in a segregated custodial account to cover its
obligation under the reverse repurchase agreement. The Select Capital
Appreciation Fund will enter into reverse repurchase agreements only with
parties that its Sub-Adviser deems creditworthy.
WRITING COVERED OPTIONS
Each Fund other than the Money Market Fund may write call options and put
options on securities which the Fund owns as its Sub-Adviser shall determine to
be appropriate and to the extent permitted by applicable law. A call option
gives the purchaser of the option the right to buy and a writer the obligation
to sell the underlying security at the exercise price at any time prior to the
expiration of the option, regardless of the market price of the security during
the option period. A premium is paid to the writer as the consideration for
undertaking the obligations under the option contract. The writer forgoes the
opportunity to profit from an increase in the market price of the underlying
security above the exercise price except insofar as the premium represents such
a profit.
As the writer of a call option, a Fund receives a premium for undertaking the
obligation to sell the underlying security at a fixed price during the option
period if the option is exercised. So long as the Fund remains obligated as the
writer of a call, it forgoes the opportunity to profit from increases in the
market price of the underlying security above the exercise price of the option,
except insofar as the premium represents such a profit, and retains the risk of
loss should the value of the security decline. The Fund also may enter into
"closing purchase transactions" in order to terminate its obligation as the
writer of a call option prior to the expiration of the option. There is no
assurance that a Fund will be able to effect such transactions at any particular
time or at any acceptable price.
The writer of a put option is obligated to purchase specified securities from
the option holder at a specified price at any time before the expiration date of
the option. The purpose of writing such options is to generate additional income
for the Fund, but the Fund accepts the risk that it will be required to purchase
the underlying securities at a price in excess of the securities' market value
at the time of purchase.
Option transactions may increase a Fund's transaction costs and may increase the
portfolio turnover rate, depending on how many options written by the Fund are
exercised in a particular year.
PURCHASING OPTIONS
Each Fund other than the Money Market Fund may purchase put and call options to
the extent permitted by applicable law. A Fund will not purchase put or call
options if after such purchase more than 5% of its net assets, as measured by
the aggregate of the premiums paid for all such options held by the Fund, would
be so invested. A Fund would also be able to enter into closing sale
transactions in order to realize gains or minimize losses on exchange traded
options purchased by the Fund.
A Fund normally would purchase call options in anticipation of an increase in
the market value of securities. The purchase of a call option entitles the Fund,
in return for the premium paid, to purchase specified securities at a specified
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price during the option period. If the value of such securities exceeded the sum
of the exercise price, the premium paid and transaction costs during the option
period, the Fund would ordinarily realize a gain, if not, the Fund would realize
a loss.
A Fund normally would purchase put options in anticipation of a decline in the
market value of securities in its portfolio ("protective puts") or securities of
the type in which it may invest. The purchase of a put option would entitle the
Fund, in exchange for the premium paid, to sell specified securities at a
specified price during the option period. Gains or losses on the purchase of put
options would tend to be offset by countervailing changes in the value of
underlying portfolio securities. A Fund ordinarily would realize a gain if,
during the option period, the value of the underlying securities decreased below
the exercise price sufficiently to cover the premium and transaction costs;
otherwise, the Fund would realize a loss on the purchase of the put option.
There is no assurance that a liquid secondary market on an options exchange will
exist for a particular option or at a particular time. The hours of trading for
options on options exchanges may not conform to the hours during which the
underlying securities are traded. To the extent that the option markets close
before the markets for the underlying securities, significant price and rate
movements can take place in the underlying securities markets that cannot be
reflected in the option markets. In addition, the purchase of options is a
highly specialized activity which depends in part on the Sub-Adviser's ability
to predict future price fluctuations and the degree of correlation between the
options and securities markets. A Fund pays brokerage commission or spread in
connection with its options transactions as well as for purchases and sales of
the underlying securities.
FINANCIAL FUTURES CONTRACTS AND RELATED OPTIONS
Each Fund (other than the Money Market Fund) may invest in transactions in
financial futures contracts and related options for hedging purposes. In
addition, the Select Emerging Markets Fund, Select Capital Appreciation Fund,
Select International Equity Fund, Select Growth Fund and Select Income Fund may
utilize futures contracts on foreign currencies and related options. Through
certain hedging activities involving such futures contracts and related options,
it is possible to reduce the effects of fluctuations in interest rates and the
market prices of securities which may be quite volatile. Hedging is a means of
transferring a risk which an investor does not desire to assume during an
uncertain interest rate or securities market environment to another investor who
is willing to assume that risk.
The Select Emerging Markets Fund, Select Capital Appreciation Fund, Select
International Equity Fund, Select Growth Fund and Select Income Fund may buy and
write options on foreign currencies in a manner similar to that in which futures
or forward contracts on foreign currencies will be utilized. For example, a
decline in the U.S. dollar value of a foreign currency in which portfolio
securities are denominated will reduce the U.S. dollar value of such securities,
even if their value in the foreign currency remains constant. In order to
protect against such diminutions in the value of portfolio securities, the
Select Emerging Markets Fund, Select Capital Appreciation Fund, Select
International Equity Fund, Select Growth Fund and Select Income Fund may buy put
options on the foreign currency. If the value of the currency declines, the
Funds will have the right to sell such currency for a fixed amount in U.S.
dollars and will offset, in whole or in part, the adverse effect on its
portfolio.
Conversely, when a rise in the U.S. dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, the Select Emerging Markets Fund, Select Capital
Appreciation Fund, Select International Equity Fund, Select Growth Fund and
Select Income Fund may buy call options thereon. The purchase of such options
could offset, at least partially, the effects of the adverse movements in
exchange rates. As in the case of other types of options, however, the benefit
to the Funds from purchases of foreign currency options will be reduced by the
amount of the premium and related transaction costs. In addition, if currency
exchange rates do not move in the direction or to the extent desired, the Select
Emerging Markets Fund, Select Capital Appreciation Fund, Select International
Equity Fund, Select Growth Fund and Select Income Fund could sustain losses on
transactions in foreign currency options that would require such Funds to forgo
a portion or all of the benefits of advantageous changes in those rates.
The Select Emerging Markets Fund, Select Capital Appreciation Fund, Select
International Equity Fund, Select Growth Fund and Select Income Fund also may
write options on foreign currencies. For example, to hedge against a potential
decline in the U.S. dollar value of foreign currency denominated securities due
to adverse fluctuations in
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exchange rates, the Funds could write a call option on the relevant currency
instead of purchasing a put option. If the expected decline occurs, the option
will most likely not be exercised and the diminution in value of portfolio
securities will be offset by the amount of the premium received.
Similarly, instead of purchasing a call option to hedge against a potential
increase in the U.S. dollar cost of securities to be acquired, the Select
Emerging Markets Fund, Select Capital Appreciation Fund, Select International
Equity Fund, Select Growth Fund and Select Income Fund could write a put option
on the relevant currency which, if rates move in the manner projected, will
expire unexercised and allow the Funds to hedge the increased cost up to the
amount of the premium. As in the case of other types of options, however, the
writing of a foreign currency option will constitute only a partial hedge up to
the amount of the premium. If exchange rates do not move in the expected
direction, the option may be exercised and the Funds would be required to buy or
sell the underlying currency at a loss which may not be offset by the amount of
the premium. Through the writing of options on foreign currencies, the Select
Emerging Markets Fund, Select Capital Appreciation Fund, Select International
Equity Fund, Select Growth Fund and Select Income Fund also may lose all or a
portion of the benefits which might otherwise have been obtained from favorable
movements in exchange rates.
The Select Emerging Markets Fund, Select Capital Appreciation Fund, Select
International Equity Fund, Select Growth Fund and Select Income Fund may write
covered call options on foreign currencies. A call option written on a foreign
currency by the Funds is "covered" if the Funds own the underlying foreign
currency covered by the call or have an absolute and immediate right to acquire
that foreign currency without additional cash consideration (or for additional
cash consideration held in a segregated account by the Fund's custodian) upon
conversion or exchange of other foreign currency held in their portfolios. A
call option also is covered if the Funds have a call on the same foreign
currency and in the same principal amount as the call written if the exercise
price of the call held (i) is equal to or less than the exercise price of the
call written or (ii) is greater than the exercise price of the call written, if
the difference is maintained by the Funds in cash or other liquid assets in a
segregated account with the Funds' custodian.
The Select Emerging Markets Fund, Select Capital Appreciation Fund, Select
International Equity Fund, Select Growth Fund and Select Income Fund also may
write call options on foreign currencies for cross-hedging purposes that would
not be deemed to be covered. A call option on a foreign currency is for cross-
hedging purposes if it is not covered but is designed to provide a hedge against
a decline due to an adverse change in the exchange rate in the U.S. dollar value
of a security that the Funds own or have the right to acquire and that is
denominated in the currency underlying the option. In such circumstances, the
Select Emerging Markets Fund, Select Capital Appreciation Fund, Select
International Equity Fund, Select Growth Fund and Select Income Fund
collateralize the option by segregating cash or other liquid assets in an amount
not less than the value of the underlying foreign currency in U.S. dollars
marked-to-market daily. The Select Emerging Markets Fund, Select Capital
Appreciation Fund, Select International Equity Fund, Select Growth Fund and
Select Income Fund may invest without limitation in foreign currency options.
GENERAL INFORMATION
A futures contract on a security is a standardized agreement under which each
party is entitled and obligated either to make or to accept delivery, at a
particular time, of securities having a specified face value and rate of return
on foreign currencies. Currently, futures contracts are available on debt and
equity securities and on certain foreign currencies.
Futures contracts are traded on exchanges that are licensed and regulated by the
Commodity Futures Trading Commission ("CFTC"). A futures contract on an
individual security may be deemed to be a commodities contract. A Fund engaging
in a futures transaction initially will be required to deposit and maintain with
its Custodian, in the name of its brokers, an amount of cash or U.S. Treasury
bills equal to a small percentage (generally less than 5%) of the contract
amount to guarantee performance of its obligations. This amount is known as
"initial margin." Margin in a futures transaction is different from margin in a
securities transaction, in that financial futures initial margin does not
involve the borrowing of funds to finance the transactions. Unlike securities
margin, initial margin in a futures transaction is in the nature of a
performance bond or good faith deposit on the contract which is returned to the
fund upon termination of the financial future, assuming all contractual
obligations have been satisfied. As the price of the underlying security
fluctuates, making the position in the financial futures more or less valuable,
subsequent payments called "maintenance margin" or "variation margin" are made
to and from the broker on a daily basis. This process is called "marking to
market."
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The purchase and sale of financial futures is for the purpose of hedging against
changes in securities prices or interest rates. Hedging transaction serve as a
substitute for transactions in the underlying securities and can effectively
reduce investment risk. When prices are expected to rise, a fund, through the
purchase of futures contracts, can attempt to secure better prices than might be
later available in the stock market when it anticipates effecting purchases.
Similarly, when interest rates are expected to increase, a fund can seek to
offset a decline in the value of its debt securities through the sale of futures
contracts.
OPTIONS ON FINANCIAL FUTURES
The Funds other than the Money Market Fund may use options on futures contracts
in connection with hedging strategies. The purchase of put options on futures
contracts is a means of hedging the Fund's portfolio against the risk of
declining prices. The purchase of a call option on a futures contract represents
a means of hedging against a market advance when a Fund is not invested fully.
Depending on the pricing of the option compared with either the futures contract
upon which it is based or upon the price of the underlying securities, the
option may or may not be less risky than ownership of the futures contract or
underlying securities.
The writing of a call option on a futures contract may constitute a partial
hedge against declining prices of the securities or currencies which are
deliverable upon exercise of the futures contract. If the futures price at
expiration is below the exercise price, a Fund will retain the full amount of
the option premium, which provides a partial hedge against any decline that may
have occurred in the Fund's holding of securities or currencies.
The writing of a put option on a futures contract is analogous to the purchase
of a futures contract. If the option is exercised, the net cost to the Fund of
the securities or currencies acquired by it will be reduced by the amount of the
option premium received. If, however, market prices have declined, the Fund's
purchase price upon exercise may be greater than the price at which the
securities or currencies might be purchased in the cash market.
LIMITATIONS ON PURCHASE AND SALE OF FUTURES AND RELATED OPTIONS
A Fund generally will engage in transactions in futures contracts or related
options only as a hedge against changes in the values of securities or
currencies held in a Fund's portfolio or which it intends to purchase, or to a
limited extent to engage in non-hedging strategies. A Fund may not purchase or
sell a futures contract for non-hedging purposes if immediately thereafter the
sum of the amount of margin deposits and amount of variation margins paid from
time to time on the Fund's existing futures and related options positions and
premiums paid for related options would exceed 5% of the market value of the
Fund's total assets. The reasons a Fund may engage in non-hedging strategies
include: to seek to enhance return and to adjust efficiently the Fund's overall
exposure to certain markets. In instances involving the purchase of futures
contracts or call options thereon or the writing of put options thereon by a
Fund, an amount of cash and cash equivalents, equal to the market value of the
futures contracts and related options (less any related margin deposits), will
be deposited in a segregated account with its custodian in the name of the
broker to collateralize the position, and thereby insure that the use of such
futures contracts and options is unleveraged.
In implementing a Fund's overall risk management strategy, it is possible that
its Sub-Adviser will choose not to engage in any futures transactions or that
appropriate futures contracts or related options may not be available. A Fund
will engage in futures transactions only for appropriate hedging, risk
management or non-hedging purposes. A Fund will not enter into any particular
futures transaction unless its Sub-Adviser determines that the particular
transaction demonstrates an appropriate correlation with the Fund's investment
objectives and portfolio securities.
RISK OF TRANSACTIONS IN FUTURES
The sale and purchase of futures contracts is a highly specialized activity
which involves investment techniques and risks different from those associated
with ordinary portfolio securities transactions. There are several risks in
connection with the use of financial futures by a Fund as a hedging device.
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Successful use of financial futures by a Fund is subject to its Sub- Adviser's
ability to predict movements in the direction of interest rates or securities
prices and to assess other factors affecting markets for securities. For
example, a Fund may hedge against the possibility of an increase in interest
rates which would affect adversely the prices of debt securities held in its
portfolio. If prices of the debt securities increase instead, the Fund may lose
part or all of the benefit of the increased value of the hedged debt securities
because it may have offsetting losses in the futures positions. In addition, in
this situation, if the Fund has insufficient cash, it may have to sell
securities to meet the daily maintenance margin requirements. These sales may
be, but will not necessarily be, at increased prices to reflect the rising
market. The Fund may have to sell securities at a time when it may be
disadvantageous to do so.
Another risk arises because of the imperfect correlation between movements in
the price of the financial future and movements in the price of the securities
or currencies which are the subject of the hedge. First of all, the hours of
trading for futures contracts may not conform to the hours during which the
underlying assets are traded. To the extent that the futures markets close
before the markets for the underlying assets, significant price and rate
movements can take place in the underlying asset's market that cannot be
reflected in the futures markets. But even during identical trading hours, the
price of the future may move more than or less than the price of the assets
being hedged. While a hedge will not be fully effective if the price of the
future moves less that the price of the hedged assets, if the price of the
hedged assets has moved in an unfavorable direction, the Fund would be in a
better position than if it had not hedged at all. On the other hand, if the
price of the hedged assets has moved in a favorable direction, this advantage
may be offset partially by the price movement of the futures contract. If the
price of the futures moves more than the price of the asset, the Fund will
experience either a loss or a gain on the futures contract which will not be
completely offset by movements in the prices of the assets which are the subject
of the hedge.
In addition to the possibility that there may be an imperfect correlation at
all, between movements in the futures and the portion of the portfolio being
hedged, the market prices of the futures may be affected by certain other
factors. First, all participants in the futures market are subject to margin
deposit and maintenance requirements. Rather than meeting additional margin
deposit requirements, investors may close futures through offsetting
transaction, which could distort the normal relationship between securities or
currencies and futures markets. Secondly, from the point of view of speculators,
the deposit requirements in the futures market are less onerous than margin
requirements in the securities market. Therefore, increased participation by
speculators in the futures market may also cause temporary price or currency
distortions. Due to the possibility of price distortion in the futures market
and because of the imperfect correlation between movements in the prices of
securities or currencies and movements in the prices of futures, a correct
forecast of interest rate trends or market price movements by the Sub-Adviser
still may not result in a successful hedging transaction over a short time
frame.
Positions in futures contracts may be closed out only on an exchange or board of
trade which provides a secondary market for such futures. Although the Funds
intend to purchase or sell futures only on exchanges or boards of trade where
there appears to be an active secondary market, there is no assurance that a
liquid secondary market on an exchange or board of trade will exist for any
particular contract or at any particular time. Thus, it may not be possible to
close a futures position, and, in the event of adverse price movements, the Fund
would continue to be required to make daily cash payments of maintenance margin.
However, in the event futures have been used to hedge portfolio positions, such
underlying assets will not be sold until the futures can be terminated. In such
circumstances, an increase in the price of the underlying assets, if any, may
offset partially or completely losses on the future.
RISKS OF TRANSACTIONS IN OPTIONS ON FUTURES
There are several special risks relating to options on futures. First, the
ability to establish and close out positions in options is subject to the
maintenance of a liquid secondary market. A Fund will not purchase options on
futures on any exchange or board of trade unless, in the opinion of its Sub-
Adviser, the market for such options is developed sufficiently so that the risks
in connection with options on futures transactions are not greater than the
risks in connection with futures transactions. Compared with the purchase or
sale of futures, the purchase of call or put options on futures involves less
potential risk to the Fund because the maximum amount at risk is the premium
paid for the options (plus transaction costs). However, there may be
circumstances when the purchase of a call or put option on futures would result
in a loss to the Fund when the purchase or sale of a future would not, such as
when there is no
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movement in the price of the underlying securities. The writing of an option on
a futures contract involves risks similar to those risks relating to the sale of
futures contracts, as described above under "Risks of Transactions in Futures."
An option position may be closed out only on an exchange or board of trade which
provides a secondary market for an option of the same series. Although a Fund
generally will purchase only those options for which there appears to be an
active secondary market, there is no assurance that a liquid secondary market
will exist for any particular option or at any particular time. It might not be
possible to effect closing transactions in particular options, with the result
that the Fund would have to exercise its options in order to realize any profit
and would incur transaction costs upon the sale of financial futures pursuant to
the exercise of put options.
Because of the risks and the transaction costs associated with hedging
activities, there can be no assurance that a Fund's portfolio will perform as
well as or better than a comparable fund that does not invest in futures
contracts or related options.
FORWARD CONTRACTS ON FOREIGN CURRENCIES
A forward contract is an agreement between two parties in which one party is
obligated to deliver a stated amount of a stated asset at a specified time in
the future and the other party is obligated to pay a specified invoice amount
for the assets at the time of delivery. The Select Emerging Markets Fund, Select
Capital Appreciation Fund, Select International Equity Fund, Select Growth Fund
and Select Income Fund may enter into forward contracts to purchase and sell
government securities, foreign currencies or other financial instruments.
Forward contracts generally are traded in an interbank market conducted directly
between traders (usually large commercial banks) and their customers. Unlike
futures contracts which are standardized contracts, forward contracts can be
drawn specifically to meet the needs of the parties that enter into them. The
parties to a forward contract may agree to offset or terminate the contract
before its maturity, or may hold the contract to maturity and complete the
contemplated exchange. The following discussion summarizes the Select Emerging
Markets Fund's, Select Capital Appreciation Fund's, Select International Equity
Fund's, Select Growth Fund's and Select Income Fund's principal uses of forward
currency exchange contracts ("forward currency contracts"). The Funds may enter
into a forward currency contract with the stated contract value of up to the
value of the Funds' assets. A forward currency contract is an obligation to buy
or sell an amount of a specified currency for an agreed price (which may be in
U.S. dollars or a foreign currency). The Select Emerging Markets Fund, Select
Capital Appreciation Fund, Select International Equity Fund, Select Growth Fund
and Select Income Fund will exchange foreign currencies for U.S. dollars and for
other foreign currencies in the normal course of business and may buy and sell
currencies through forward currency contracts in order to fix a price for
securities they have agreed to buy or sell ("transaction hedge"). The Select
Emerging Markets Fund, Select Capital Appreciation Fund, Select International
Equity Fund, Select Growth Fund and Select Income Fund also may hedge some or
all of their investments denominated in foreign currency against a decline in
the value of that currency relative to the U.S. dollar by entering into forward
currency contracts to sell an amount of that currency (or a proxy currency whose
performance is expected to replicate or exceed the performance of that currency
relative to the U.S. dollar) approximating the value of some or all of their
portfolio securities denominated in that currency ("position hedge") or by
participating in options or futures contracts with respect to the currency. The
Funds also may enter into a forward currency contract with respect to a currency
where the Funds are considering the purchase or sale of investments denominated
in that currency but have not yet selected the specific investments
("anticipatory hedge").
In any of these circumstances, the Select Emerging Markets Fund, Select Capital
Appreciation Fund, Select International Equity Fund, Select Growth Fund and
Select Income Fund may enter alternatively into a forward currency contract to
purchase or sell one foreign currency for a second currency that is expected to
perform more favorably relative to the U.S. dollar if their Sub-Advisers believe
there is a reasonable degree of correlation between movements in the two
currencies ("cross-hedge").
These types of hedges minimize the effect of currency appreciation as well as
depreciation, but do not eliminate fluctuations in the underlying U.S. dollar
equivalent value of the proceeds of or rates of return on such Funds' foreign
currency denominated portfolio securities. The matching of the increase in value
of a forward contract and the decline in the U.S. dollar equivalent value of the
foreign currency denominated asset that is the subject of the hedge generally
will not be precise. Shifting the Funds' currency exposure from one foreign
currency to another removes the Funds' opportunity to profit from increases in
the value of the original currency and involves a risk of increased losses to
the Funds if their Sub-Advisers' projections of future exchange
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rates is inaccurate. Proxy hedges and cross-hedges may result in losses if the
currency used to hedge does not perform similarly to the currency in which
hedged securities are denominated. Unforeseen changes in currency prices may
result in poorer overall performance for the Select Emerging Markets Fund,
Select Capital Appreciation Fund, Select International Equity Fund, Select
Growth Fund and Select Income Fund than if they had not entered into such
contracts.
The Select Emerging Markets Fund, Select Capital Appreciation Fund, Select
International Equity Fund, Select Growth Fund and Select Income Fund will cover
outstanding forward currency contracts by maintaining liquid portfolio
securities denominated in or whose value is tied to the currency underlying the
forward contract or the currency being hedged. To the extent that the Select
Emerging Markets Fund, Select Capital Appreciation Fund, Select International
Equity Fund, Select Growth Fund and Select Income Fund are not able to cover
their forward currency positions with underlying portfolio securities, the
Funds' custodian will segregate cash or liquid assets having a value equal to
the aggregate amount of its commitments under forward contracts entered into
with respect to position hedges, cross-hedges and anticipatory hedges. If the
value of the securities used to cover a position or the value of segregated
assets declines, the Select Emerging Markets Fund, Select Capital Appreciation
Fund, Select International Equity Fund, Select Growth Fund and Select Income
Fund will find alternative cover or segregate additional cash or liquid assets
on a daily basis so that the value of the covered segregated assets will be
equal to the amount of the Funds' commitments with respect to such contracts. As
an alternative to segregating assets, the Select Emerging Markets Fund, Select
Capital Appreciation Fund, Select International Equity Fund, Select Growth Fund
and Select Income Fund may buy call options permitting it to buy the amount of
foreign currency being hedged by a forward sale contract or the Funds may buy
put options permitting them to sell the amount of foreign currency subject to a
forward buy contract.
While forward contracts currently are not regulated by the CFTC, the CFTC may in
the future assert authority to regulate forward contracts. In such event, the
Select Emerging Markets Fund's, Select Capital Appreciation Fund's, Select
International Equity Fund's, Select Growth Fund's and Select Income Fund's
ability to utilize forward contracts may be restricted. In addition, the Select
Emerging Markets Fund, Select Capital Appreciation Fund, Select International
Equity Fund, Select Growth Fund and Select Income Fund may not always be able to
enter into forward contracts at attractive prices and may be limited in their
ability to use these contracts to hedge portfolio assets.
SWAP AND SWAP-RELATED PRODUCTS
The Select Capital Appreciation Fund may enter into interest rate swaps, caps,
and floors on either an asset-based or liability-based basis, depending upon
whether it is hedging its assets or its liabilities, and will usually enter into
interest rate swaps on a net basis (i.e., the two payment streams are netted out
with the Fund receiving or paying, as the case may be, only the net amount of
the two payments). Interest rate swaps involve the exchange by the Fund with
another party of their respective commitments to pay or receive interest; for
example, an exchange of floating rate payments for fixed rate payments with
respect to a notional amount of principal. A currency swap is an agreement to
exchange cash flows on a notional amount of two or more currencies based on the
relative value differential among them. An index swap is an agreement to swap
cash flows on a notional amount based on changes in the values of the reference
indices. The purchase of a cap entitles the purchaser to receive payments on a
notional principal amount from the party selling such cap to the extent that a
specified index exceeds a predetermined interest rate or amount. The purchase of
a floor entitles the purchaser to receive payments on a notional principal
amount from the party selling such floor to the extent that a specified index
falls below a predetermined interest rate or amount.
The net amount of the excess, if any, of the Fund's obligations over its
entitlement with respect to each interest rate swap will be calculated on a
daily basis and an amount of cash or other liquid assets having an aggregate net
asset value at least equal to the accrued excess will be maintained in a
segregated account by the Fund's custodian. If the Fund enters into an interest
rate swap on other than a net basis, it will maintain a segregated account in
the full amount accrued on a daily basis of its obligations with respect to the
swap. The Fund will not enter into any interest rate swap, cap or floor
transaction unless the unsecured senior debt or the claims-paying ability of the
other party thereto is rated in one of the three highest rating categories of at
least one nationally recognized statistical rating organization at the time of
entering into such transaction. The Sub-Adviser will monitor the
creditworthiness of all counterparties on an ongoing basis. If there is a
default by the other party to such a transaction, the Fund will have contractual
remedies pursuant to the agreement related to the transaction.
The swap market has grown substantially in recent years with a large number of
banks and investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. As a result, the swap market has
become relatively liquid. Caps and floors are more recent innovations for which
standardized documentation has not yet
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been developed and, accordingly, they are less liquid than swaps. To the extent
the Fund sells (i.e., writes) caps and floors, it will segregate cash or high-
grade liquid assets having an aggregate net asset value at least equal to the
full amount on a daily basis of its obligations with respect to any caps or
floors.
There is no limit on the amount of interest rate swap transactions that may be
entered into by the Fund. These transactions may in some instances involve the
delivery of securities or other underlying assets to the Fund or its
counterparty to collateralize obligations under the swap. Under the
documentation currently used in those markets, the risk of loss with respect to
interest rates swaps is limited to the net amount of the payments that the Fund
is obligated contractually to make. If the other party to an interest rate swap
that is not collateralized defaults, the Fund would risk the loss of the net
amount of the payments that it contractually is entitled to receive. The Fund
may buy and sell (i.e., write) caps and floors without limitation, subject to
the segregation requirement described above.
ADDITIONAL RISKS OF OPTIONS ON FOREIGN CURRENCIES, FORWARD CONTRACTS AND FOREIGN
INSTRUMENTS
Unlike transactions entered into by the Funds in futures contracts, options on
foreign currencies and forward contracts are not traded on contract markets
regulated by the CFTC or (with the exception of certain foreign currency
options) by the SEC. To the contrary, such instruments are traded through
financial institutions acting as market-makers, although foreign currency
options also are traded on certain exchanges, such as the Philadelphia Stock
Exchange and the Chicago Board Options Exchange, subject to SEC regulation.
Similarly, options on currencies may be traded over-the-counter. In an over-the-
counter trading environment, many of the protections afforded to exchange
participants will not be available. For example, there are no daily price
fluctuation limits, and adverse market movements therefore could continue to an
unlimited extent over a period of time. Although the buyer of an option cannot
lose more than the amount of the premium plus related transaction costs, this
entire amount could be lost. Moreover, an option writer and a buyer or seller of
futures or forward contracts could lose amounts substantially in excess of any
premium received or initial margin or collateral posted due to the potential
additional margin and collateral requirements associated with such positions.
Options on foreign currencies traded on exchanges are within the jurisdiction of
the SEC, as other securities traded on such exchanges. As a result, many of the
protections provided to traders on organized exchanges will be available with
respect to such transactions. In particular, all foreign currency option
positions entered into on an exchange are cleared and guaranteed by the Office
of the Comptroller of the Currency ("OCC"), thereby reducing the risk of
counterparty default. Further, a liquid secondary market in options traded on an
exchange may be more readily available than in the over-the-counter market,
potentially permitting a Fund to liquidate open positions at a profit prior to
exercise or expiration, or to limit losses in the event of adverse market
movements.
The purchase and sale of exchange-traded foreign currency options, however, is
subject to the risks of the availability of a liquid secondary market described
above, as well as the risks regarding adverse market movements, margining of
options written, the nature of the foreign currency market, possible
intervention by governmental authorities and the effects of other political and
economic events. In addition, exchange-traded options on foreign currencies
involve certain risks not presented by the over-the-counter market. For example,
exercise and settlement of such options must be made exclusively through the OCC
which has established banking relationships in applicable foreign countries for
this purpose. As a result, the OCC, if it determines that foreign government
restrictions or taxes would prevent the orderly settlement of foreign currency
option exercises or would result in undue burdens on the OCC or its clearing
member, may impose special procedures on exercise and settlement, such as
technical changes in the mechanics of delivery, the fixing of dollar settlement
prices or prohibitions on exercise.
In addition, options on U.S. Government securities, futures contracts, options
on futures contracts, forward contracts and options on foreign currencies may be
traded on foreign exchanges and over-the-counter in foreign countries. Such
transactions are subject to the risk of governmental actions affecting trading
in or the prices of foreign currencies or securities. The value of such
positions also could be adversely affected by (i) other complex foreign
political and economic factors (ii) lesser availability than in the United
States of data on which to make trading decisions, (iii) delays in a Fund's
ability to act upon economic events occurring in foreign markets during
non-business hours in the United States, (iv) the imposition of different
exercise and settlement terms and procedures and margin requirements from those
in the United States and (v) low trading volume.
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RESTRICTED SECURITIES
Each Fund may invest up to 15% (10% for the Money Market Fund) of its net assets
in restricted securities (and securities deemed to be illiquid) unless the Board
of Trustees determines that such restricted securities are liquid. The Board of
Trustees has adopted guidelines and delegated to Allmerica Financial Investment
Management Services, Inc. (the "Manager" or "AFIMS") the daily function of
determining and monitoring liquidity of restricted securities. The Board,
however, will retain sufficient oversight and be responsible ultimately for the
determinations. Since it is not possible to predict with assurance exactly how
this market for restricted securities sold and offered under Rule 144A will
develop, the Board will monitor carefully a Fund's investments in securities,
focusing on such important factors, among others, as valuation, liquidity and
availability of information. Because market quotations are less readily
available, judgment at times may play a greater role in valuing these securities
than in the case of unrestricted securities.
INVESTMENTS IN MONEY MARKET SECURITIES
Each Fund may hold at least a portion of its assets in cash equivalents or money
market instruments. There is always the risk that the issuer of a money market
instrument may be unable to make payment upon maturity.
The Money Market Fund may hold uninvested cash reserves pending investment
during temporary, defensive periods or if, in the opinion of the Sub-Adviser,
suitable securities are not available for investment. Securities in which the
Money Market Fund may invest may not earn as high a level of current income as
long-term, lower quality securities which, however, generally have less
liquidity, greater market risk and more fluctuation in market value.
HIGH YIELD SECURITIES
Corporate debt securities purchased by the Select Emerging Markets Fund, Select
Capital Appreciation Fund, Select Growth Fund, Select Growth and Income Fund and
Select Income Fund will be rated at the time of purchase B or better by Moody's
or S&P, or equivalently rated by another NRSRO, or unrated but believed by the
Sub-Adviser to be of comparable quality under the guidelines established for the
Funds. The Select Growth Fund and the Select Growth and Income Fund may not
invest more than 15% of their assets, the Select Income Fund and the Select
Capital Appreciation Fund may not invest more than 25% of their assets and the
Select Emerging Markets Fund may not invest more than 35% of its assets at the
time of investment in securities rated below Baa by Moody's or BBB by S&P, or
equivalently rated by another NRSRO, or unrated but believed by the Sub-Adviser
to be of comparable quality. Securities rated B by Moody's or S&P (or
equivalently by another NRSRO) are below investment grade and are considered, on
balance, to be predominantly speculative with respect to capacity to pay
interest and repay principal and will generally involve more credit risk than
securities in the higher rating categories.
Periods of economic uncertainty and changes can be expected to result in
increased volatility of market prices of lower-rated securities, commonly known
as "high yield" securities or "junk bonds," and of the asset value of the Select
Emerging Markets Fund, Select Capital Appreciation Fund, Select Growth Fund,
Select Growth and Income Fund and Select Income Fund. Many issuers of high yield
corporate debt securities are leveraged substantially at times, which may impair
their ability to meet debt service obligations. Also, during an economic
downturn or substantial period of rising interest rates, highly leveraged
issuers may experience financial stress.
The lack of a liquid secondary market in certain lower-rated securities may have
an adverse impact on their market price and the ability of a Fund to dispose of
particular issues when necessary to meet its liquidity needs or in response to a
specific economic event such as a deterioration in the credit- worthiness of the
issuer. In addition, a less liquid market may interfere with the ability of a
Fund to value accurately high yield securities and, consequently, value a Fund's
assets. Furthermore, adverse publicity and investor perceptions may decrease the
value and liquidity of high yield securities. It is reasonable to expect any
recession to disrupt severely the market for high yield fixed-income securities,
have an adverse impact on the value of such securities and adversely affect the
ability of the issuers of such securities to repay principal and pay interest
thereon. The market prices of lower-rated securities are generally less
sensitive to interest rate changes than higher-rated investments, but more
sensitive to adverse economic or political changes or individual developments
specific to the issuer. Periods of economic or political uncertainty and change
can be expected to result in volatility of prices of these securities.
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The Funds also may invest in unrated debt securities of foreign and domestic
issuers. Unrated debt, while not necessarily of lower quality than rated
securities, may not have as broad a market. Sovereign debt of foreign
governments generally is rated by country. Because these ratings do not take
into account individual factors relevant to each issue and may not be updated
regularly, the Sub-Adviser may treat such securities as unrated debt. Unrated
debt securities and securities with different ratings from more than one agency
will be included in the 15%, 25% and 35% limits of the Funds as stated above,
unless such Fund's Sub-Adviser deems such securities to be the equivalent of
investment grade securities.
ASSET-BACKED SECURITIES
The Core Equity Fund, Select Growth and Income Fund, Select Income Fund, Select
Investment Grade Income Fund, Government Bond Fund and Money Market Fund may
purchase asset-backed securities, which represent a participation in, or are
secured by and payable from, a stream of payments generated by particular
assets, frequently a pool of assets similar to one another. Assets generating
such payments include instruments such as motor vehicle installment purchase
obligations, credit card receivables and home equity loans. Payment of principal
and interest may be guaranteed for certain amounts and time periods by a letter
of credit issued by a financial institution unaffiliated with the issuer of the
securities. The estimated life of an asset-backed security varies with the
prepayment experience of the underlying debt instruments. The rate of such
prepayments, and hence the life of the asset-backed security, will be primarily
a function of current market rates, although other economic and demographic
factors will be involved. Under certain interest rate and prepayment rate
scenarios, the Funds may fail to recoup fully their investment in asset-backed
securities. A Fund will not invest more than 20% of its total assets in asset-
backed securities.
MORTGAGE-BACKED SECURITIES
The Select Income Fund, Select Investment Grade Income Fund and Government Bond
Fund may invest in mortgage-backed securities which are debt obligations secured
by real estate loans and pools of loans on single family homes, multi-family
homes, mobile homes and, in some cases, commercial properties. The Funds may
acquire securities representing an interest in a pool of mortgage loans that are
issued or guaranteed by a U.S. government agency such as Ginnie Mae, Fannie Mae
and Freddie Mac.
Mortgage-backed securities are in most cases "pass-through" instruments through
which the holder receives a share of all interest and principal payments from
the mortgages underlying the certificate. Because the prepayment characteristics
of the underlying mortgages vary, it is not possible to predict accurately the
average life or realized yields of a particular issue of pass- through
certificates. During periods of declining interest rates, prepayment of
mortgages underlying mortgage-backed securities can be expected to accelerate.
When the mortgage obligations are prepaid, the Funds reinvest the prepaid
amounts in securities, the yield of which reflects interest rates prevailing at
the time. Moreover, prepayment of mortgages that underlie securities purchased
at a premium could result in losses.
The Funds also may invest in multiple class securities issued by U.S. government
agencies and instrumentalities such as Fannie Mae, Freddie Mac and Ginnie Mae,
including guaranteed collateralized mortgage obligations ("CMOs") and Real
Estate Mortgage Investment Conduit ("REMIC") pass-through or participation
certificates, when consistent with the Funds' investment objective, policies and
limitations. A CMO is a type of bond secured by an underlying pool of mortgages
or mortgage pass-through certificates that are structured to direct payment on
underlying collateral to different series or classes of obligations. A REMIC is
a CMO that qualifies for special tax treatment under the Internal Revenue Code
and invests in certain mortgages principally secured by interests in real
property and other permitted investments.
CMOs and guaranteed REMIC pass-through certificates ("REMIC Certificates")
issued by Fannie Mae, Freddie Mac and Ginnie Mae are types of multiple pass-
through securities. Investors may purchase beneficial interests in REMICs, which
are known as "regular" interests or "residual" interests. The Funds currently do
not intend to purchase residual interests in REMICs. The REMIC Certificates
represent beneficial ownership interests in a REMIC trust, generally consisting
of mortgage loans or Fannie Mae, Freddie Mac or Ginnie Mae guaranteed mortgage
pass-through certificates. The obligations of Fannie Mae or Freddie Mac under
their respective guaranty of the REMIC Certificates are obligations solely of
Fannie Mae or Freddie Mac, respectively.
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Fannie Mae REMIC Certificates are issued and guaranteed as to timely
distribution of principal and interest by Fannie Mae. In addition, Fannie Mae
will be obligated to distribute the principal balance of each class of REMIC
Certificates in full, whether or not sufficient funds are available otherwise.
For Freddie Mac REMIC Certificates, Freddie Mac guarantees the timely payment of
interest and also guarantees the payment of principal as payments are required
to be made on the underlying mortgage participation certificates ("PCs"). PCs
represent undivided interests in specified residential mortgages or
participations therein purchased by Freddie Mac and placed in a PC pool. With
respect to principal payments on PCs, Freddie Mac generally guarantees ultimate
collection of all principal of the related mortgage loans without offset or
deduction. Freddie Mac also guarantees timely payment of principal on certain
PCs referred to as "Gold PCs."
Ginnie Mae REMIC Certificates guarantee the full and timely payment of interest
and principal on each class of securities (in accordance with the terms of those
classes). This Ginnie Mae guarantee is backed by the full faith and credit of
the United States.
REMIC Certificates issued by Fannie Mae, Freddie Mac and Ginnie Mae are treated
as U.S. government securities for purposes of investment policies. There can be
no assurance that the U.S. Government will continue to provide financial support
to Fannie Mae, Freddie Mac or Ginnie Mae in the future.
STRIPPED MORTGAGE-BACKED SECURITIES
The Select Income Fund, Select Investment Grade Income Fund and Government Bond
Fund may invest in stripped mortgage-backed securities ("SMBS"). SMBS are
derivative multiclass mortgage securities. SMBS may be issued by agencies or
instrumentalities of the U.S. Government or by private originators of, or
investors in, mortgage loans, including savings and loan associations, mortgage
banks, commercial banks, investment banks and special purpose entities of the
foregoing.
SMBS usually are structured with two classes that receive different proportions
of the interest and principal distributions on a pool of mortgage assets. One
type of SMBS will have one class receiving some of the interest and most of the
principal from the mortgage assets, while the other class will receive most of
the interest and the remainder of the principal. In some cases, one class will
receive all of the interest (the interest-only or "IO" class) while the other
class will receive all of the principal (the principal-only or "PO" class). The
yield to maturity on an IO class is extremely sensitive to the rate of principal
payments (including prepayment on the related underlying mortgage assets), and a
rapid rate of principal payments may have a material, adverse effect on a
portfolio yield to maturity from these securities. If the underlying mortgage
assets experience greater than anticipated prepayments of principal, the Funds
may fail to recoup fully their initial investment in these securities even if
the security is in one of the highest rating categories. Certain SMBS may be
deemed "illiquid" and subject to the Funds' limitations on investment in
illiquid securities. The market value of the PO class generally is unusually
volatile in response to changes in interest rates. The yields on a class of SMBS
that receives all or most of the interest from mortgage assets generally are
higher than prevailing market yields in other mortgage-backed securities because
their cash flow patterns are more volatile and there is a greater risk that the
initial investment will not be recouped fully. The Sub- Adviser will seek to
manage these risks (and potential benefits) by investing in a variety of such
securities and by using certain hedging techniques.
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INTEREST-ONLY AND PRINCIPAL-ONLY TREASURY SECURITIES
The Select Income Fund and Government Bond Fund may invest in separately-traded
principal and interest components of U.S. Treasury securities. Treasury
securities are high-quality securities issued or guaranteed by the U.S.
Government and backed by the full faith and credit of the U.S. Treasury.
Treasury securities include Treasury bills, notes and bonds, which may differ
only in their interest rates, maturities and times of issuance. The yield to
maturity on an interest-only Treasury security is extremely sensitive to the
rate of principal payments, and a rapid rate of principal payments may have a
material, adverse effect on the portfolio's yield to maturity from these
securities. The market value of principal-only Treasury securities is unusually
volatile in response to changes in interest rates.
MUNICIPAL SECURITIES
The Select Income Fund may invest in municipal bonds. Municipal securities are
debt obligations issued by or on behalf of states, cities, municipalities and
other public authorities. The two principal classifications of municipal
securities are "general obligation" securities and "revenue" securities. General
obligation securities are secured by the issuer's pledge of its full faith,
credit and taxing power for the payment of principal and interest. Revenue
securities are payable only from the revenues derived from a particular facility
or class of facilities or, in some cases, from the proceeds of a special excise
tax or other specific revenue source such as the user of a facility being
financed. Revenue securities may include private activity bonds. Such bonds may
be issued by or on behalf of public authorities to finance various privately
operated facilities and are not payable from the unrestricted revenues of the
issuer. As a result, the credit quality of private activity bonds is frequently
related directly to the credit standing of private corporations or other
entities. In addition, the interest on private activity bonds issued after
August 7, 1986 is subject to the federal alternative minimum tax.
Municipal securities can be significantly affected by political changes as well
as uncertainties in the municipal market related to taxation, legislative
changes, or the rights of municipal security holders. Because many municipal
securities are issued to finance similar projects, especially those relating to
education, health care, transportation and utilities, conditions in those
sectors can affect the overall municipal market. In addition, changes in the
financial condition of an individual municipal issuer can affect the overall
municipal market.
HEDGING TECHNIQUES AND INVESTMENT PRACTICES
The Select Emerging Markets Fund, Select Capital Appreciation Fund and Select
International Equity Fund may employ certain strategies in order to manage
exchange rate risks. For example, the Funds may hedge some or all of their
investments denominated in a foreign currency against a decline in the value of
that currency. The Funds may enter into contracts to sell that foreign currency
for U.S. dollars (not exceeding the value of a Fund's assets denominated in or
exposed to that currency) or by participating in options on futures contracts
with respect to such currency ("position hedge"). The Funds also could hedge
that position by selling a second currency that is expected to perform similarly
to the currency in which portfolio investments are denominated for U.S. dollars
("proxy hedge"). The Funds also may enter into a forward contract to sell the
currency in which the security is denominated for a second currency that is
expected to perform better relative to the U.S. dollar if their Sub-Adviser
believes there is a reasonable degree of correlation between movements in the
two currencies ("cross-hedge"). As an operational policy, the Funds will not
commit more than 10% of their assets to the consummation of cross-hedge
contracts and either will cover currency hedging transactions with liquid
portfolio securities denominated in or whose value is tied to the applicable
currency or segregate liquid assets in the amount of such commitments. In
addition, when the Funds anticipate repurchasing securities denominated in a
particular currency, the Funds may enter into a forward contract to purchase
such currency in exchange for the dollar or another currency ("anticipatory
hedge").
These strategies minimize the effect of currency appreciation as well as
depreciation, but do not protect against a decline in the underlying value of
the hedged security. In addition, such strategies may reduce or eliminate the
opportunity to profit from increases in the value of the original currency and
may have an adverse impact on a Fund's performance if its Sub-Adviser's
projection of future exchange rates is inaccurate.
STAND-BY COMMITMENTS
The Select Income Fund, Select Investment Grade Income Fund, Government Bond
Fund and Money Market Fund may enter into Stand-by Commitments. Under a stand-by
commitment, a dealer agrees to purchase from the Fund, at the Fund's option,
specified securities at a specified price. Stand-by commitments are exercisable
by the Fund at any time before the maturity of the underlying security, and may
be sold, transferred or assigned by the Fund only with respect to the underlying
instruments.
Although stand-by commitments are often available without the payment of any
direct or indirect consideration, if necessary or advisable, the Fund may pay
for a stand-by commitment either separately in cash or by paying a higher price
for securities which are acquired subject to the commitment.
Where the Fund pays any consideration directly or indirectly for a stand-by
commitment, its cost will be reflected as unrealized depreciation for the period
during which the commitment is held by the Fund.
The Fund will enter into stand-by commitments only with banks and broker-
dealers which present minimal credit risks. In evaluating the creditworthiness
of the issuer of a stand-by commitment, the Sub-Adviser will review periodically
the issuer's assets, liabilities, contingent claims and other relevant financial
information.
The Fund will acquire stand-by commitments solely to facilitate liquidity and
does not intend to exercise its rights thereunder for trading purposes. Stand-by
commitments will be valued at zero in determining the Fund's net asset value.
PORTFOLIO TURNOVER
The portfolio turnover rate for a Fund is calculated by dividing the lesser of
purchases or sales of portfolio securities by the Fund for a given year by the
monthly average of the value of the Fund's portfolios securities for that year.
The purchase or sale of all securities whose maturities or expiration dates at
the time of acquisition are less than 12 months and of money market funds of
amounts too small to invest in short-term obligations are not included in the
portfolio turnover rate.
- ------------------------------
Allmerica Investment Trust
24
<PAGE>
A higher portfolio turnover rate may involve corresponding greater brokerage
commissions and other transaction costs, which would be borne directly by the
Fund, as well as additional realized gains and/or losses to shareholders.
Following are explanations of any significant variations in the Funds' portfolio
turnover rates over the two most recently completed fiscal years or any
anticipated variation in the portfolio turnover rate.
<TABLE>
<CAPTION>
FUND DECEMBER 31, 1998 DECEMBER 31, 1999
- ---- ----------------- -----------------
<S> <C> <C>
Select Emerging Markets Fund 62%** 60%
Select Aggressive Growth Fund 99% 101%
Select Capital Appreciation Fund* 141% 61%
Select Value Opportunity Fund 73% 98%
Select International Equity Fund 27% 18%
Select Growth Fund 86% 84%
Select Strategic Growth Fund 24%** 58%
Core Equity Fund (formerly the Growth Fund) 100% 116%
Equity Index Fund 6% 21%
Select Growth and Income Fund 112% 131%
Select Income Fund 130% 177%
Select Investment Grade Income Fund*** 158% 75%
(formerly the Investment Grade Income Fund)
Government Bond Fund 61% 37%
Money Market Fund N/A N/A
</TABLE>
* The portfolio turnover rate was greater in fiscal year 1998 due to a change
in the Fund's Sub-Adviser.
** Not annualized
*** The portfolio turnover rate was greater in fiscal year 1998 due to the
larger number of mortgage rolls held by the Fund during that period.
MANAGEMENT OF THE TRUST
The Trust is managed by a Board of Trustees. The Trustees have overall
responsibility for implementation of the investment policies and operations of
the Funds of the Trust. The Board of Trustees of the Trust holds regular
quarterly meetings and at other times on an as needed basis. The affairs of the
Trust are conducted in accordance with the Bylaws adopted by the Trustees and
the applicable laws of the Commonwealth of Massachusetts, the state in which the
Trust is organized.
<TABLE>
<CAPTION>
POSITIONS HELD PRESENT POSITION AND PRINCIPAL
NAME, ADDRESS AND AGE WITH THE TRUST/(1)/ OCCUPATIONS DURING THE PAST 5 YEARS
- --------------------- ------------------- -----------------------------------
<S> <C> <C>
P. Kevin Condron (54) Trustee President and Chief Executive Officer,
The Granite Group The Granite Group (plumbing supplies), 1998
12 E. Worcester Street - present; President, Central Supply Co., 1983 -
Worcester, Massachusetts 1997; Director, Peoples Heritage Financial Group;
Director, Family Bank
**Cynthia A. Hargadon (45) Trustee Director of Investments, National Automobile
1880 Virginia Avenue Dealers Association (retirement trust), 1999 -
McLean, Virginia present; President, Stable Value Investment Association
(investment trade group), 1996 - 1998; Senior
Vice President and Chief Investment Officer,
ICMA Retirement Corporation (investment adviser),
1987 - 1996
Gordon Holmes (62)(2) Trustee Lecturer at Bentley College, 1998 - present;
75 Clarendon Street Lecturer and Executive in Residence, Boston
Boston, Massachusetts University, 1997 - present; Certified Public
Accountant; Retired Partner, Tofias, Fleishman,
Shapiro & Co., P.C. (Accountants) 1976-1996
**John P. Kavanaugh (45)* Trustee and President, Allmerica Asset Management,
440 Lincoln Street Vice President, Inc. since 1995; Vice President, Director, Chief
Worcester, Massachusetts Investment Officer, First Allmerica and
Allmerica Financial Life Insurance and Annuity
Company ("Allmerica Financial Life")
**Bruce E. Langton (68) Trustee Trustee, Bankers Trust institutional mutual funds;
99 Jordan Lane Director, TWA Pilots Trust
Stamford, Connecticut Annuity Plan; Member, Investment Committee,
Unilever United States -Pension & Thrift plans
</TABLE>
------------------------------
Allmerica Investment Trust
25
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRESENT POSITION AND PRINCIPAL
NAME, ADDRESS AND AGE WITH THE TRUST/(1)/ OCCUPATIONS DURING THE PAST 5 YEARS
- --------------------- ------------------- -----------------------------------
<S> <C> <C>
John F. O'Brien (57)* Trustee and President, Chief Executive Officer and Director,
First 440 Lincoln Street Chairman of the Board, Allmerica; Director and Chairman of the Board,
Allmerica Financial Life; Director, Allmerica
Investments, Inc.; Director, ABIOMED, Inc.
(medical devices); Director, Cabot Corporation
(special chemicals), Director, TJX Corporation,
Inc. (retail)
Attiat F. Ott (64) Trustee Professor of Economics and Director of the
262 Salisbury Street Institute for Economic Studies, Clark University
Worcester, Massachusetts
**Paul D. Paganucci (69) Trustee Director and Chairman, Ledyard National Bank,
33 Rope Ferry Road since 1991; Director, Filene's Basement, Inc. (retailing);
Hanover, New Hampshire Director, Urstadt Biddle Properties, Inc. (real estate
investment firm); Director, IGI, Inc.
(pharmaceuticals).
**Richard M. Reilly (61)* Trustee President, Allmerica Financial Life since
440 Lincoln Street and President 1995; Vice President, First Allmerica; President,
Worcester, Massachusetts AFIMS; Director, Allmerica Investments, Inc.
**Ranne P. Warner (55) Trustee President, Centros Properties, USA (real estate);
Centros Properties USA, Inc. Owner, Ranne P. Warner and Company;
176 Federal Street, 6/th/ Floor Director, Wainwright Bank & Trust Co.
Boston, Massachusetts 02110 (commercial bank); Trustee, Ericksen Trust
(real estate)
Paul T. Kane (42)(2) Assistant Vice President Assistant Vice President, First Allmerica
440 Lincoln Street and Treasurer since June 1999; Vice President/Treasurer
Worcester, Massachusetts (Principal Accounting of Tax & Financial Services, BISYS Fund
Officer) Services, 1997-1999; Director of Shareholder
Reporting, Fidelity Investments, 1992-1997
George Boyd (55)(2) Secretary Counsel, First Allmerica since January 1997;
440 Lincoln Street Director, Mutual Fund Administration - Legal
Worcester, Massachusetts and Regulatory, Investors Bank & Trust Company,
1995 - 1996; Vice President and Counsel, 440
Financial Group and First Data Investor Services
Group, 1992 - 1995.
</TABLE>
(1) The individuals listed hold the same position with Allmerica Securities
Trust, a closed-end management investment company which is a part of the Trust
complex that includes the Trust.
(2) The individuals listed hold the same position with The Fulcrum Trust, an
open-end management investment company which is part of the Trust complex that
includes the Trust.
* Indicates the Trustees who are "interested persons" of the Trust as defined
in the 1940 Act.
** Indicates members of the Trust's Investment Operations Committee, which
reviews the performance of each Fund and recommends to the Board of
Trustees the selection and retention of Sub-Advisers.
The Trustees who are not directors, officers, or employees of the Trust or
any investment adviser are reimbursed for their travel expenses in attending
meetings of the Trust.
Listed below is the compensation paid to each Trustee by the Trust and by
all funds in the Trust complex for the fiscal year ended December 31, 1999. The
Fund currently does not provide any pension or retirement benefits for its
Trustees or officers.
------------------------------
Allmerica Investment Trust
26
<PAGE>
<TABLE>
<CAPTION>
COMPENSATION TABLE
AGGREGATE TOTAL COMPENSATION
COMPENSATION FROM TRUST COMPLEX
*NAME OF PERSON AND POSITION FROM TRUST PAID TO TRUSTEES*
- ---------------------------- ---------- -----------------
<S> <C> <C>
P. Kevin Condron $16,920 $19,000
Cynthia Hargadon $19,420 $21,500
Gordon Holmes $19,920 $29,500
Bruce E. Langton $22,420 $24,500
Attiat F. Ott $19,920 $22,000
Paul D. Paganucci** $11,500 $11,500
Ranne P. Warner $23,420 $25,500
John P. Kavanaugh 0 0
John F. O'Brien 0 0
Richard M. Reilly 0 0
</TABLE>
* Includes two other investment companies.
** Mr. Paganucci was appointed Trustee as of March 11, 2000.
The Trust, AFIMS, the Sub-Advisers and the Distributor, Allmerica Investments,
Inc. ("AII"), have adopted codes of ethics under Rule 17j-1 of the 1940 Act
which permit personnel subject to such codes to invest in securities, including
securities that may be purchased or held by the Funds of the Trust.
CONTROL PERSON AND PRINCIPAL HOLDERS OF SECURITIES
The Trust was established as a Massachusetts business trust under the laws of
Massachusetts by an Agreement and Declaration of Trust dated October 11, 1984
(the "Trust Declaration"). AFIMS is the Manager of the Trust. The shares of each
of the Funds of the Trust currently are purchased only by Separate Accounts
established by First Allmerica or Allmerica Financial Life for the purpose of
funding variable annuity contracts and variable life insurance policies. 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. The
Separate Accounts of First Allmerica or its affiliates are the shareholders of
the Trust. As of February 15, 2000, Allmerica Financial Life, owned both of
record and beneficially in excess of 47% of the shares of the Select Emerging
Markets Fund and in excess of 17% of the shares of the Select Strategic Growth
Fund. A shareholder that owns more than 25% of the shares of a Fund is deemed to
be a controlling person of such Fund. As of February 15, 2000, the Trustees and
officers of the Trust, as a group, owned less than 1% of the outstanding shares
of any Fund. AFIMS, First Allmerica and Allmerica Financial Life are direct or
indirect wholly-owned subsidiaries of Allmerica Financial Corporation ("AFC"), a
publicly-traded Delaware holding company for a group of affiliated companies,
the largest of which is First Allmerica. The address of AFIMS, First Allmerica,
Allmerica Financial Life and AFC is 440 Lincoln Street, Worcester, MA 01653.
AFIMS and First Allmerica were organized in Massachusetts and Allmerica
Financial Life was organized in Delaware. AFIMS also serves as investment
manager of The Fulcrum Trust, another open-end investment management company.
INVESTMENT MANAGEMENT AND OTHER SERVICES
The overall responsibility for the supervision of the affairs of the Trust vests
in the Board of Trustees of the Trust which meets on a quarterly basis. AFIMS
serves as investment manager of the Trust pursuant to a management agreement
between the Trust and the Manager (the "Management Agreement"). The Manager is
responsible for the management of the Trust's day-to-day business affairs and
has general responsibility for the management of the investments of the Funds.
The Manager has entered into sub-adviser agreements with different investment
advisory firms (the "Sub-Advisers") to manage each of the Funds, at its expense,
subject to the requirements of the 1940 Act, as amended. Each Sub- Adviser,
which has been selected on the basis of various factors including management
experience, investment techniques, and staffing, is authorized to engage in
portfolio transactions on behalf of the applicable Fund subject to such general
or specific instructions as may be given by the Trustees and/or the Manager.
-----------------------------
Allmerica Investment Trust
27
<PAGE>
The Sub-Advisers have been selected by the Manager and Trustees in consultation
with BARRA RogersCasey, Inc. ("BARRA RogersCasey"), a pension consulting firm.
BARRA RogersCasey is wholly controlled by BARRA, Inc. The cost of such
consultation is borne by the Manager.
BARRA RogersCasey provides consulting services to pension plans representing
hundreds of billions of dollars in total assets and, in its consulting capacity,
monitors the investment performance of over 1,000 investment advisers. As a
consultant, BARRA RogersCasey has no decision-making authority with respect to
the Funds, and is not responsible for advice provided by the Manager or the Sub-
Advisers. From time to time, specific clients of BARRA RogersCasey and the Sub-
Advisers will be named in sales materials.
The following is information relating to control and affiliations of the Manager
and certain Sub-Advisers of the Trust.
AFIMS, First Allmerica and Allmerica Financial Life are direct or indirect
wholly-owned subsidiaries of Allmerica Financial Corporation ("AFC"), a
publicly-traded Delaware holding company for a group of affiliated companies,
the largest of which is First Allmerica. First Allmerica and Allmerica Financial
Life have established Separate Accounts for the purpose of funding variable
annuity contracts and variable life insurance policies. The shares of each of
the Funds of the Trust may be purchased only through these Separate Accounts.
Schroder Investment Management North America Inc. ("Schroder"), Sub-Adviser to
the Select Emerging Markets Fund, is a wholly-owned U.S. subsidiary of Schroders
U.S. Holdings, Inc., the indirect wholly-owned U.S. subsidiary of Schroders plc,
a publicly owned holding company organized under the laws of England. As of June
30, 1999, Schroders plc and its affiliates had assets under management of
approximately $208 billion.
Nicholas-Applegate Capital Management, L.P. ("NACM") was founded in 1984 and
serves as Sub-Adviser to the Select Aggressive Growth Fund. NACM currently
manages over $40 billion of discretionary assets for numerous clients, including
employee benefit plans of corporations, public retirement systems and unions,
university endowments, foundations and other institutional investors and
individuals. NACM's principal business address is 600 West Broadway, San Diego,
California 92101.
T. Rowe Price Associates, Inc. ("T. Rowe Price") serves as Sub-Adviser to the
Select Capital Appreciation Fund. T. Rowe Price International Series, Inc., an
investment company managed by a T. Rowe Price affiliate, is currently used as an
investment vehicle for certain insurance products sponsored by First Allmerica
and Allmerica Financial Life.
Cramer Rosenthal McGlynn, LLC ("CRM"), Sub-Adviser to the Select Value
Opportunity Fund, is owned by its active investment professionals, Cramer
Rosenthal McGlynn, Inc., ("Cramer Rosenthal") and WT Investments, Inc. ("WTI")
an indirect, wholly-owned subsidiary of Wilmington Trust Corporation ("WTC").
Founded in 1973, Cramer Rosenthal provides investment advice to individuals,
state and local government agencies, pension and profit sharing plans, trusts,
estates, endowments and other organizations. WTC is a bank and holding company
and has operations in Delaware, Pennsylvania, Florida, Maryland and New York.
Through its subsidiaries, WTC engages in residential, commercial and
construction lending, deposit taking, insurance, travel, investment advisory and
broker-dealer services and mutual fund administration. As of December 31, 1999,
WTC, together with its subsidiaries, had $7.2 billion in assets. Wilmington
Trust Company, the largest subsidiary of WTC, is among the nation's largest
personal trust companies and holds approximately $137 billion in fiduciary
capacity. As of December 31, 1999, WTI owned a 26.14% fully diluted interest in
CRM.
Bank of Ireland Asset Management (U.S.) Limited ("BIAM"), Sub-Adviser to the
Select International Equity Fund, is a wholly-owned subsidiary of Bank of
Ireland. Bank of Ireland provides investment management services through a
network of affiliated companies, including BIAM which represents North American
clients.
Putnam Investment Management, Inc., ("Putnam") Sub-Adviser to the Select Growth
Fund, is a wholly-owned subsidiary of Putnam Investments, Inc., a holding
company which, other than a minority interest owned by employees, is in turn
wholly-owned by Marsh & McLennan Companies, Inc., a publicly-owned holding
company whose principal businesses are international insurance and reinsurance
brokerage, employee benefit consulting and investment management.
- -----------------------------
Allmerica Investment Trust
28
<PAGE>
TCW Investment Management Company ("TCW"), Sub-Adviser to the Select Strategic
Growth Fund, is a wholly-owned subsidiary of The TCW Group, Inc., a Nevada
corporation ("TCW Group"). TCW is a registered investment adviser with the
Securities and Exchange Commission under the Investment Advisers Act of 1940, as
amended. TCW's affiliates include other registered investment advisers and an
independent trust company chartered by the State of California (collectively,
"TCW Affiliates"). Ownership of TCW Group lies approximately 95% with employees
and 5% with directors. TCW Affiliates primary business is the provision of
investment management services. TCW Affiliates specialize in the management of
taxable and tax-exempt pools of capital for pension and profit sharing funds,
retirement/health and welfare funds, public employee retirement funds, financial
institutions, endowments and foundations as well as foreign investors. Through
TCW Affiliates' Private Client Services Group, customized investment management
services are provided to high net worth individuals and family offices. In
addition, TCW Affiliates manages a full line of no load mutual funds under the
brand name TCW Galileo Funds.
Miller Anderson & Sherrerd, LLP ("MAS"), Sub-Adviser to the Core Equity Fund
(formerly the Growth Fund), is wholly-owned by indirect subsidiaries of Morgan
Stanley Dean Witter & Co. ("MSDW"), and is a division of Morgan Stanley Dean
Witter Investment Management. MAS is the adviser of the MAS Funds, a registered
investment company offering investment alternatives to institutional clients
with a minimum initial investment of $1 million. MAS also manages certain assets
for First Allmerica and its affiliates. MSDW is a preeminent global financial
services firm that maintains leading market positions in each of its three
primary businesses - securities, asset management and credit services.
AAM serves as Sub-Adviser to the Equity Index Fund as well as the Select
Investment Grade Income Fund (formerly the Investment Grade Income Fund),
Government Bond Fund and Money Market Fund, other series of the Trust. AAM is a
direct, wholly-owned subsidiary of AFC. AAM serves as investment adviser to
First Allmerica's General Account and to a number of affiliated insurance
companies and other affiliated accounts, and as Adviser to Allmerica Securities
Trust, a diversified, closed-end management investment company. AFC is a
publicly-traded Delaware holding company for a group of affiliated companies.
J.P. Morgan Investment Management Inc. ("J.P. Morgan"), Sub-Adviser to the
Select Growth and Income Fund, is a wholly-owned asset management subsidiary of
J.P. Morgan & Co. Incorporated, which was founded in 1861, and serves as an
investment adviser for employee benefit plans and other institutional assets, as
well as mutual funds and variable annuities. J.P. Morgan & Co. Incorporated is a
bank holding company and a global financial services firm, providing specialized
advice and services for governments, businesses and individuals.
Standish, Ayer & Wood, Inc. ("SAW"), Sub-Adviser to the Select Income Fund, also
serves as investment adviser to an institutional account sponsored by an AFC
affiliate. Through its affiliate, Standish International Investment Management
Company, L.P. SAW offers international investment services. SAW is an
independent investment counseling firm owned by its twenty-five directors who
are active with the firm.
The following is a list of persons who are affiliated persons of the Trust and
affiliated persons of the Manager and/or any Sub-Adviser and the capacities in
which the person is affiliated.
<TABLE>
<CAPTION>
POSITION(S) HELD POSITION(S) HELD WITH THE MANAGER
NAME WITH THE TRUST OR SUB-ADVISER OF THE TRUST
---- -------------- ---------------------------
<S> <C> <C>
Stephen W. Bright Vice President Vice President, AAM; Vice President,
AFIMS
Ann K. Tripp Vice President Vice President, AAM
Paul T. Kane Assistant Vice President and Treasurer Assistant Vice President, AFIMS
(Principal Accounting Officer)
John C. Donohue Vice President Vice President, AAM
John P. Kavanaugh Vice President President, AAM; Vice President,
AFIMS
Richard J. Litchfield Vice President Vice President, AAM
John F. O'Brien Chairman of the Board Chairman and Director, AFIMS;
Director, AAM
Richard M. Reilly President Director and President, AFIMS
</TABLE>
-----------------------------
Allmerica Investment Trust
29
<PAGE>
First Allmerica, Allmerica Financial Life, AFIMS and AAM are direct or indirect,
wholly-owned subsidiaries of AFC. The Trust serves as an investment vehicle for
the Separate Accounts established by First Allmerica and Allmerica Financial
Life.
Under its Management Agreement with the Trust, the Manager is obligated to
perform certain administrative and management services for the Trust; furnishes
to the Trust all necessary office space, facilities, and equipment; and pays the
compensation, if any, of officers and Trustees who are affiliated with the
Manager. Other than the expenses specifically assumed by the Manager under the
Management Agreement, all expenses incurred in the operation of the Trust are
borne by the Trust, including fees and expenses associated with the registration
and qualification of the Trust's shares under the Securities Act of 1933 (the
"1933 Act"); other fees payable to the SEC; independent accountant, legal and
custodian fees; association membership dues; taxes; interest; insurance
premiums; brokerage commissions; fees and expenses of the Trustees who are not
affiliated with the Manager; expenses for proxies, prospectuses and reports to
shareholders; Fund recordkeeping expenses and other expenses.
For the services provided to the Funds, the Manager receives fees computed daily
at an annual rate based on the average daily net asset value of each Fund as set
forth below.
<TABLE>
<CAPTION>
SELECT SELECT SELECT CAPITAL SELECT VALUE SELECT SELECT
EMERGING AGGRESSIVE APPRECIATION OPPORTUNITY INTERNATIONAL GROWTH
MARKETS FUND GROWTH FUND FUND FUND EQUITY FUND FUND
------------ ----------- ---- ---- ----------- ----
<S> <C> <C> <C> <C> <C> <C>
Manager Fee 1.35%* (1) (1) (2) (1) (2)
<CAPTION>
SELECT SELECT
STRATEGIC CORE EQUITY SELECT GROWTH SELECT INVESTMENT
GROWTH EQUITY INDEX AND INCOME INCOME GRADE
FUND FUND FUND FUND FUND INCOME FUND
---- ---- ---- ---- ---- -----------
<S> <C> <C> <C> <C> <C> <C>
Manager Fee 0.85% (1) (3) (1) (4) (4)
<CAPTION>
GOVERNMENT MONEY
BOND MARKET
FUND FUND
---- ----
<S> <C> <C>
Manager Fee 0.50% (3)
</TABLE>
*The Manager voluntarily has agreed until further notice to waive its management
fee in the event that expenses of the Select Emerging Markets Fund exceed 2.00%
of the Fund's average daily net assets. The amount of such waiver will be
limited to the net amount of management fees earned by the Manager from the Fund
after subtracting the fees paid by the Manager to Schroder for sub-advisory
services.
(1) The Manager's fees for the Select Aggressive Growth Fund, Select
Capital Appreciation Fund, Select International Equity Fund, Core Equity
Fund (formerly the Growth Fund) and Select Growth and Income Fund,
computed daily at an annual rate based on the average daily net assets of
each Fund, are based on the following schedule:
<TABLE>
<CAPTION>
SELECT SELECT GROWTH
SELECT AGGRESSIVE SELECT CAPITAL INTERNATIONAL CORE AND INCOME
ASSETS GROWTH FUND APPRECIATION FUND EQUITY FUND EQUITY FUND FUND
- ------ ----------- ----------------- ----------- ----------- ----
<S> <C> <C> <C> <C> <C>
First $100 Million.. 1.00% 1.00% 1.00% 0.60% 0.75%
Next $150 Million... 0.90% 0.90% 0.90% 0.60% 0.70%
Next $250 Million... 0.80% 0.80% 0.85% 0.40% 0.65%
Over $500 Million... 0.70% 0.70% 0.85% 0.35% 0.65%
Over $1 Billion 0.65% 0.65% 0.85% 0.35% 0.65%
</TABLE>
30
<PAGE>
(2) The Manager's fees for the Select Value Opportunity Fund and Select Growth
Fund, computed daily at an annual rate based on the average daily net assets of
each Fund, are based on the following schedule:
SELECT VALUE
OPPORTUNITY SELECT GROWTH
ASSETS FUND FUND
------ ---- ----
First $100 Million................ 1.00% 0.85%
Next $150 Million................. 0.85% 0.85%
Next $250 Million................. 0.80% 0.80%
Next $250 Million................. 0.75% 0.75%
Over $750 Million................. 0.70% 0.70%
The Manager voluntarily has agreed to limit its management fees to an
annual rate of 0.90% of average daily net assets of the Select Value
Opportunity Fund until further notice.
(3) The Manager's fees for the Equity Index Fund and Money Market Fund,
computed daily at an annual rate based on the average daily net assets of
each Fund, are based on the following schedule:
EQUITY MONEY
INDEX MARKET
ASSETS FUND FUND
------ ---- ----
First $50 Million................. 0.35% 0.35%
Next $200 Million................. 0.30% 0.25%
Over $250 Million................. 0.25% 0.20%
(4) The Manager's fees for the Select Income Fund and Select Investment Grade
Income Fund (formerly the Investment Grade Income Fund), computed daily at an
annual rate based on the average daily net assets of each Fund, are based on the
following schedule:
SELECT
SELECT INVESTMENT
INCOME GRADE
ASSETS FUND INCOME FUND
------ ---- -----------
First $50 Million................. 0.60% 0.50%
Next $50 Million.................. 0.55% 0.45%
Over $100 Million................. 0.45% 0.40%
The Manager is responsible for the payment of all fees to the Sub-Advisers. The
Manager pays each Sub-Adviser fees computed daily at an annual rate based on the
average daily net asset value of each Fund as set forth below. In certain Funds,
Sub-Adviser fees vary according to the level of assets in such Funds, which will
reduce the fees paid by the Manager as Fund assets grow but will not reduce the
operating expenses of such Funds.
<TABLE>
<CAPTION>
SELECT SELECT SELECT CAPITAL SELECT VALUE SELECT SELECT
EMERGING AGGRESSIVE APPRECIATION OPPORTUNITY INTERNATIONAL GROWTH
MARKETS FUND GROWTH FUND FUND FUND EQUITY FUND FUND
------------ ----------- ---- ---- ----------- ----
<S> <C> <C> <C> <C> <C>
Sub-Adviser Fee (5) (6) 0.50% (7) (8) (9)
<CAPTION>
SELECT SELECT
STRATEGIC CORE EQUITY SELECT GROWTH SELECT INVESTMENT
GROWTH EQUITY INDEX AND INCOME INCOME GRADE INCOME
FUND FUND FUND FUND FUND FUND
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Sub-Adviser Fee (10) (11) 0.10% (12) 0.20% 0.20%
</TABLE>
-----------------------------
Allmerica Investment Trust
31
<PAGE>
GOVERNMENT MONEY
BOND MARKET
FUND FUND
---- ----
Sub-Adviser Fee 0.20% 0.10%
(5) For its services, Schroder will receive a fee computed daily at an annual
rate based on the average daily net assets of the Select Emerging Markets Fund,
under the following schedule:
ASSETS RATE
------ ----
First $50 Million..................................... 1.00%
Next $50 Million...................................... 0.85%
Next $150 Million..................................... 0.75%
Over $250 Million..................................... 0.60%
(6) For its services, NACM will receive a fee computed daily at an annual rate
based on the average daily net assets of the Select Aggressive Growth Fund,
under the following schedule:
ASSETS RATE
------ ----
First $100 Million.......................................... 0.60%
Next $150 Million........................................... 0.50%
Next $250 Million........................................... 0.40%
Next $250 Million........................................... 0.375%
Over $750 Million........................................... 0.35%
(7) For its services, CRM will receive a fee computed daily at an annual rate
based on the average daily net assets of the Select Value Opportunity Fund,
under the following schedule:
ASSETS RATE
------ ----
First $100 Million........................................ 0.60%
Next $150 Million......................................... 0.50%
Next $250 Million......................................... 0.40%
Next $250 Million......................................... 0.375%
Over $750 Million......................................... 0.35%
(8) For its services, BIAM will receive a fee computed daily at an annual rate
based on the average daily net assets of the Select International Equity Fund,
under the following schedule:
ASSETS RATE
------ ----
First $50 Million............................................ 0.45%
Next $50 Million............................................. 0.40%
Over $100 Million............................................ 0.30%
(9) For its services, Putnam will receive a fee computed daily at an annual rate
based on the average daily net assets of the Select Growth Fund under the
following schedule:
ASSETS RATE
------ ----
First $50 Million.............................................. 0.50%
Next $100 Million.............................................. 0.45%
Next $100 Million.............................................. 0.35%
Next $100 Million.............................................. 0.30%
Over $350 Million.............................................. 0.25%
Allmerica Investment Trust 32
<PAGE>
(10) For its services, TCW will receive a fee computed daily and paid quarterly
at an annual rate of 0.85% based on the average daily net assets of the Select
Strategic Growth Fund of up to $100 million. When the average daily net assets
of the Fund exceed $100 million, the fee shall be computed daily and paid
quarterly at an annual rate of 0.75% of the total average daily net assets of
the Fund.
(11) MAS will receive a fee based on the aggregate assets of the Core Equity
Fund and certain other accounts of the Manager and its affiliates which are
managed by MAS, under the following schedule:
ASSETS RATE
------ ----
First $50 Million........................................... 0.50%
Next $50 Million............................................ 0.375%
Next $400 Million........................................... 0.25%
Next $350 Million........................................... 0.20%
Over $850 Million........................................... 0.15%
(12) For its services, J.P. Morgan will receive a fee computed daily at an
annual rate based on the average daily net assets of the Select Growth and
Income Fund, under the following schedule:
ASSETS RATE
------ ----
First $500 Million.......................................... 0.30%
Next $500 Million........................................... 0.25%
Over $1 Billion............................................. 0.20%
The total gross fees (before reimbursement) paid to the Manager under the
Management Agreement for each of the last three fiscal years ended December 31,
1999 were as follows:
<TABLE>
<CAPTION>
FISCAL YEAR 1999 FISCAL YEAR 1998 FISCAL YEAR 1997
---------------- ---------------- ----------------
<S> <C> <C> <C>
Select Emerging Markets Fund* $427,873 $225,711 N/A
Select Aggressive Growth Fund $6,803,973 $5,977,909 $4,850,649
Select Capital Appreciation Fund $3,061,620 $2,417,031 $1,813,444
Select Value Opportunity Fund $2,531,026 $2,138,839 $1,433,016
Select International Equity Fund $4,936,001 $4,117,316 $3,258,876
Select Growth Fund $7,471,700 $5,112,118 $2,959,723
Select Strategic Growth Fund* $185,532 $68,645 N/A
Core Equity Fund (formerly the Growth Fund) $4,047,919 $3,519,665 $2,840,683
Equity Index Fund $1,531,338 $1,087,069 $705,708
Select Growth and Income Fund $4,909,248 $3,790,917 $2,807,177
Select Income Fund $900,831 $721,336 $524,021
Select Investment Grade Income Fund $1,059,711 $933,311 $710,821
(formerly the Investment Grade Income Fund)
Government Bond Fund $478,327 $338,796 $244,355
Money Market Fund $1,019,642 $731,259 $647,964
</TABLE>
* The Select Emerging Markets Fund and Select Strategic Growth Fund began
operations on February 20, 1998.
The total gross fees paid to each Sub-Adviser under the respective Sub-Adviser
Agreement for each of the last three fiscal years ended December 31, 1999 were
as follows:
<TABLE>
<CAPTION>
PAYMENTS MADE AS OF DECEMBER 31,
--------------------------------
FUND/SUB-ADVISER FISCAL YEAR 1999 FISCAL YEAR 1998 FISCAL YEAR 1997
- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C>
Select Emerging Markets Fund*
Schroder Investment Management North America Inc. $317,359 $167,193 N/A
("Schroder")
Select Aggressive Growth Fund
Nicholas-Applegate Capital Management, L.P. $3,819,739 $3,470,632 $2,885,239
Select Capital Appreciation Fund**
T. Rowe Price Associates, Inc. ("T. Rowe") $1,537,991 $1,332,970 $1,070,021
</TABLE>
--------------------------
33 Allmerica Investment Trust
<PAGE>
<TABLE>
<CAPTION>
PAYMENTS MADE AS OF DECEMBER 31,
--------------------------------
FUND/SUB-ADVISER FISCAL YEAR 1999 FISCAL YEAR 1998 FISCAL YEAR 1997
- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C>
Select Value Opportunity Fund
Cramer Rosenthal McGlynn, LLC ("CRM") $1,478,541 $1,269,130 $851,815
Select International Equity Fund
Bank of Ireland Asset Management (U.S.) Limited $1,640,792 $1,498,759 $1,137,825
Select Growth Fund
Putnam Investment Management, Inc. ("Putnam") $2,641,438 $2,030,082 $1,328,717
Select Strategic Growth Fund*
Cambiar Investors, Inc. ("Cambiar") $109,343 $40,380 N/A
Core Equity Fund (formerly the Growth Fund)
Miller Anderson & Sherrerd ("MAS")*** $1,973,870 $2,979,910 $2,669,867
Select Growth and Income Fund
J.P. Morgan Investment Management Inc. ("J.P. Morgan")**** $1,895,701 $1,668,885 $1,159,260
Select Income Fund
Standish, Ayer & Wood Inc. $344,798 $265,038 $177,505
Allmerica Asset Management, Inc.
Equity Index Fund, Select Investment Grade Income
Fund (formerly the Investment Grade Income Fund),
Government Bond Fund and Money Market Fund $1,560,580 $1,218,085 $911,548
</TABLE>
* The Select Emerging Markets Fund and Select Strategic Growth Fund began
operations on February 20, 1998. Cambiar was replaced by TCW as Sub-Adviser
of the Select Strategic Growth Fund on April 1, 2000.
** The Select Capital Appreciation Fund began business operations on April 28,
1995. Janus Capital Corporation ("JCC") was replaced by T. Rowe as
Sub-Adviser for the Select Capital Appreciation Fund on April 1, 1998. The
total dollar amount paid to JCC for the period January 1, 1998 through
March 31, 1998 was $345,171. The total dollar amount paid to T. Rowe for
the period April 1, 1998 through December 31, 1998 was $987,799.
*** Effective May 1, 2000, the name of the Growth Fund was changed to the Core
Equity Fund. Includes payments to MAS for advisory services provided to
certain other accounts of First Allmerica.
**** John A. Levin & Co., Inc. was replaced by J.P. Morgan as Sub-Adviser of the
Select Growth and Income Fund on April 1, 1999.
The following table shows voluntary expense limitations which the Manager has
declared for each Fund and the operating expenses incurred for the fiscal year
ended December 31, 1999 for each Fund:
- ----------------------------
Allmerica Investment Trust 34
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF AVERAGE DAILY ASSETS
----------------------------------
VOLUNTARY EXPENSE OPERATING
FUND LIMITATIONS EXPENSES+
---- ----------- ---------
<S> <C> <C>
Select Emerging Markets Fund * 1.88%
Select Aggressive Growth Fund 1.35% 0.88%
Select Capital Appreciation Fund 1.35% 0.98%
Select Value Opportunity Fund 1.25% 0.88%
Select International Equity Fund 1.50% 1.01%
Select Growth Fund 1.20% 0.81%
Select Strategic Growth Fund 1.20% 1.17%
Core Equity Fund (formerly the Growth Fund) 1.20% 0.45%
Equity Index Fund 0.60% 0.35%
Select Growth and Income Fund 1.10% 0.73%
Select Income Fund 1.00% 0.61%
Select Investment Grade Income Fund 1.00% 0.50%
(formerly the Investment Grade Income Fund)
Government Bond Fund 1.00% 0.62%
Money Market Fund 0.60% 0.29%
</TABLE>
+Including reductions such as directed brokerage credits. See "Brokerage
Allocation - Directed Brokerage Program" in the SAI.
* The Manager has agreed until further notice to waive voluntarily its
management fee in the event that expenses of the Select Emerging Markets Fund
exceed 2.00% of the Fund's average daily net assets. The amount of such waiver
will be limited to the net amount of management fees earned by the Manager from
the Fund after subtracting fees paid by the Manager to Schroder for sub-advisory
services.
The Manager will voluntarily reimburse its fees and any expenses above the
expense limitations. The expense limitations are voluntary and may be removed at
any time after a Fund's first fiscal year of operations with notice to existing
shareholders. The Manager reserves the right to recover from a Fund any fees,
within a current fiscal year period, which were reimbursed in that same year to
the extent that total annual expenses did not exceed the applicable expense
limitation. The expenses which are subject to the voluntary expense limitations
include management fees, independent accountant, legal and custodian fees;
recordkeeping expenses; fees and expenses of Trustees who are not affiliated
with the Manager; association membership dues, insurance; expenses for proxies,
prospectuses and reports to shareholders and fees associated with the
registration of Fund shares. Non-recurring and extraordinary expenses generally
are excluded in the determination of expense ratios of the Funds for purposes of
determining any applicable expense waiver or reimbursement. Quotations of yield
or total return for any period when an expense limitation is in effect will be
greater than if the limitation had not been in effect.
Each of the Management Agreement and sub-advisory agreements provides that it
may be terminated as to any Fund at any time by a vote of a majority in interest
of the shareholders of such Fund, by the Trustees or by the investment adviser
to such Fund without payment of any penalty on not more than 60 days' written
notice; provided, however, that the agreement will terminate automatically in
the event of its assignment. Each of the agreements will continue in effect as
to any Fund for a period of no more than two years from the date of its executor
only so long as such continuance is approved specifically at least annually by
the Trustees or by vote of a majority in interest of the shareholders of such
Fund. In either event, such continuance also must be approved by vote of a
majority of the Trustees who are not parties to the agreement or interested
persons of the Trust, the Manager or any sub-adviser, cast in person at a
meeting called for the purpose of voting such approval. The Trust and Manager
have obtained an order of exemption from the SEC that would permit the Manager
to enter into and materially amend sub-advisory agreements with non-affiliated
Sub-Advisers without obtaining shareholder approval. Under such agreements, any
liability of either the Manager or a sub-adviser is limited to situations
involving its willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties.
---------------------------
35 Allmerica Investment Trust
<PAGE>
As printed in Nelson's Directory of Plan Sponsors - 1998, following is a listing
of Schroder's current representative clients in emerging markets investments:
- Georgia-Pacific - New York City Retirement Systems
- Idaho P.E.R.S. - NYS Teachers' Retirement Systems
- Intermountain Health Care - Orange County Retirement System
- ISPAT Inland Inc. - Utah State Retirement System
- L.A. City Employees Retirement - Virginia Retirement Systems
- Louisiana State E.R.S. - Washington State Investment Board
- Merck & Co.
A listing of NACM's current representative clients is as follows:
- Champion International Corp. - San Francisco City and County
- Johnson & Johnson - Unisys Corporation
- Motion Picture Industry Pension Plan - United Parcel Services of America
- Screen Actors Guild - University of Notre Dame
- University of Southern California
A listing of T. Rowe's current representative clients is as follows:
- Allegheny Power System - Milliken & Company
- Armco, Inc. - New England Electric System
- Automobile Club of Southern California - New York Power Authority
- Baltimore Gas & Electric
Company (BGE) - Parsons Brinckerhoff
- The Black & Decker Corporation - The Pittston Company
- Consolidated Freightways Corporation - Polo Ralph Lauren
- Costco Wholesale - PRC Inc.
- Crawford & Company - Puget Sound Energy
- Cyprus Amex - Rank America
- Dames & Moore - Rochester Gas and Electric
Corporation
- DataCard - The Rouse Company
- Data General Corporation - Simplex Time Recorder Co.
- The Dial Corporation - Southeastern Freight Lines
- Entergy Corporation - State of Florida
- Federal Deposit Insurance - State of Illinois
Corporation
- Hocchst Marion Roussel, Inc. - State of Oklahoma
- Hyatt Corporation - Warner-Lambert Company
- Leo Burnett - Western Digital Corporation
- Lorrilard Tobacco Company - Winn-Dixie Stores
A listing of CRM's current representative clients is as follows:
- Indiana University Foundation - The McGraw-Hill Companies, Inc
- Maine State Retirement - The UCLA Foundation
- National Basketball Association
Players Pension Plan - University of Cincinnati
- New Mexico State Investment Council - University of Illinois Foundation
- Niagara Mohawk Power Corp. - U.S. Airways
- St. Mary's College of California
A listing of BIAM's current representative clients is as follows:
- CALSTRS - Pfizer Retirement Annuity Plan
- City of Dallas Employees' - Maryland State Retirement System
Retirement Fund
- Loyola Marymount University - Screen Actors Guild-Producers
Endowment Fund Pension Plan
- LTV Steel Corporation Pension
Fund - Tuft's University Endowment Fund
- Major League Baseball Players - Worcester County Retirement System
Benefit Plan
- ----------------------------
Allmerica Investment Trust 36
<PAGE>
A listing of Putnam Advisory Company, Inc.'s ("PAC")* current representative
clients is as follows:
- Bacardi Corporation - Matsushita Electric Corporation
of America
- California Public Employees' - New York Philharmonic Orchestra
Retirement System - The Nemours Foundation
- Hercules Incorporated - The Robert Wood Johnson Foundation
- Kemper Insurance - United Furniture Workers, AFL-CIO
- Los Angeles County Employees' - U.S. Chamber of Commerce
Retirement Association
*(PAC is the institutional affiliate of Putnam.)
A listing of TCW's current representative clients is as follows:
- Bakery, Confectionery, Tobacco Workers - Maryland State Retirement System
& Grain Millers International Union - MCI Communications Corporation
- Boilermaker-Blacksmith National - Michigan State University
Pension Trust - Minnesota State Board of
Investment
- Boston College - New York State Common Retirement
Fund
- Bradley Foundation - Northwest Airlines, Inc.
- California State Teachers' - Oklahoma Public Employees
Retirement System Retirement System
- Cargill, Incorporated - Oregon Public Employees'
- Central States Pension Plan Retirement System
- Cincinnati Bell Inc. - Pfizer, Inc.
- Colorado Public Employees - SunAmerica Life Insurance Company
Retirement Association - Textron, Inc.
- Eastman Kodak Company - The Boeing Company
- Florida State Board of Administration - The Duke Endowment
- General Mills, Inc. - The John D. and Catherine T.
- GTE Investment Management Corporation MacArthur Foundation
- Halliburton Company - The Kresge Foundation
- Hallmark Cards, Inc. - The University of Notre Dame Du
Lac
- IBM Corporation - University of Pittsburgh
- Illinois State Board of Investment - U.S. West
- Lehigh University - Vanderbilt University
- Litton Industries, Inc. - Xerox Corporation
A listing of MAS's current representative clients is as follows:
- AT&T - New York Philharmonic Society
- Boeing Company - Philip Morris, Inc.
- Federal Reserve - Smithsonian Institution
- J. Paul Getty Trust - United Technologies Corporation
- University of Notre Dame
A listing of J.P. Morgan's representative clients is as follows:
A listing of SAW's current representative clients is as follows:
- Archdiocese of Boston - Ford Motor Company
- AT&T - Harcourt General
- BankAmerica - New York Public Library
- Boston Symphony Orchestra - Northeastern University
- City of Houston
A listing of AAM's current representative clients is as follows:
- First Allmerica - Hannibal Regional Hospital
- Citizens Insurance - Massachusetts Education and
- Hanover Insurance Government Association Workers
- City of Worcester Retirement Compensation Trust
System
- Worcester County Contributory - Farm Credit System Association
Retirement System Captive
Insurance Company
--------------------------
37 Allmerica Investment Trust
<PAGE>
Under the terms of the Management Agreement, the Trust recognizes the Manager's
control of the name "Allmerica Investment Trust." The Trust agrees that its
right to use that name is non-exclusive and can be terminated by the Manager at
any time.
SERVICES AGREEMENTS
UNDERWRITER
Allmerica Investments, Inc. ("AII"), located at 440 Lincoln Street, Worcester,
Massachusetts 01653, (508) 855-1000, serves as the Trust's distributor pursuant
to a Distribution Agreement. AII is an indirect, wholly-owned subsidiary of AFC.
The following is a list of persons who are affiliated with both the Trust and
AII.
POSITION(S) HELD POSITION(S) HELD
NAME WITH THE TRUST WITH AII
---- -------------- --------
Paul T. Kane Assistant Vice President Assistant Vice President
and Treasurer (Principal
Accounting Officer)
John F. O'Brien Chairman of the Board Director
Richard M. Reilly President Director
FUND RECORDKEEPING SERVICES AGENT AND CUSTODIAN
Investors Bank & Trust Company ("IBT") replaced First Data Investor Services
Group, Inc. ("Investor Services Group") as the Trust's fund record keeping
services agent and replaced Bankers Trust Company as Custodian of the cash and
investment securities of the Trust on April 1, 1999. IBT is located at 200
Clarendon Street, 16th Floor, Boston, MA 02116. Under the terms of a Custodian
Agreement, IBT provides certain fund accounting, custodian and administration
services, including, but not limited to, determining the net asset value per
share of each of the Funds and maintaining the accounting records of the Trust;
and holding in custody the Trust's portfolio securities and receiving and
delivering them upon purchases and sales. IBT is entitled to receive an annual
fee for its services based on Fund assets and certain out-of-pocket expenses.
The Custodian Agreement provides for an initial term of three years and
thereafter renews automatically for successive one-year terms unless advance
notice of termination is delivered by the non-renewing party. The Custodian
Agreement may be terminated prior to the expiration of the initial term or a
renewal term provided certain conditions are met. The Custodian Agreement with
IBT is similar to the Fund Accounting Services Agreement previously in effect
with Investor Services Group and the Custodian Agreement previously in effect
with Bankers Trust Company. The compensation paid to Investor Services Group and
Bankers Trust Company was similar to the compensation which is paid to IBT
in terms of total dollar amount paid. The total fund recordkeeping fees paid to
Investor Services Group for the following periods were as follows:
THREE-MONTHS ENDED YEAR ENDED YEAR ENDED
MARCH 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
-------------- ----------------- -----------------
$240,112 $883,909 $748,941
The total fees paid to Bankers Trust Company for custodial services for the
following periods were as follows:
THREE-MONTHS ENDED YEAR ENDED YEAR ENDED
MARCH 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
-------------- ----------------- -----------------
$194,918 $850,873 $743,606
The total fee paid to IBT for fund accounting, custodial and administration
services for the nine-months ended December 31, 1999 was $1,653,590.
- ---------------------------
Allmerica Investment Trust 38
<PAGE>
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 160 Federal Street, Boston, Massachusetts 02110,
serves as the Fund's independent accountants providing audit and accounting
services including (i) examination of the annual financial statements, (ii)
assistance and consultation with respect to the preparation of filings with the
Securities and Exchange Commission, and (iii) review of annual income tax
returns.
BROKERAGE ALLOCATION AND OTHER PRACTICES
In accordance with the Management Agreement and sub-advisory agreements, the
respective Sub-Adviser has the responsibility for the selection of brokers for
the execution of purchases and sales of the securities in a given Fund's
portfolio subject to the direction of the Trustees. The Sub-Advisers place the
Funds' portfolio transactions with brokers and, if applicable, negotiate
commissions.
Broker-dealers may receive brokerage commissions on portfolio transactions of
the Funds. The Sub-Advisers also may place portfolio transactions with such
broker-dealers acting as principal, in which case no brokerage commissions are
payable but other transaction costs are incurred. The Funds have not dealt nor
do they intend to deal exclusively with any particular broker-dealer or group of
broker-dealers. It is each Fund's policy always to seek best execution. This
means that each Fund's portfolio transactions will be placed where the Fund can
obtain the most favorable combination of price and execution services in
particular transactions or as provided on a continuing basis by a broker-dealer,
and that the Fund will 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. In evaluating the execution services of a
broker-dealer, including the overall reasonableness of its brokerage commissions
paid, consideration is given to the firm's general execution and operational
capabilities and to its reliability, integrity and financial condition. Subject
to the practice of always seeking best execution, the Funds' securities
transactions may be executed by broker-dealers who also provide research
services (as defined below) to the Funds, the Sub-Advisers and the other clients
advised by the Sub-Advisers. Examples of such research services include reports
on specific companies or industries, economic and financial data, performance
measurement services, computer databases and pricing and appraisal services. The
sub-advisers may use all, some or none of such research services in providing
investment advisory services to each of its investment companies and other
clients, including the Funds. To the extent that such services are used, they
tend to reduce the expenses of the Sub-Advisers. In the opinion of the Sub-
Advisers it is impossible to assign an exact dollar value to such services.
BROKERAGE AND RESEARCH SERVICES
The agreements provide that, subject to such policies as the Trustees may
determine, the Sub-Advisers may cause a given Fund to pay a broker-dealer which
provides brokerage and research services an amount of commission for effecting a
securities transaction for that Fund in excess of the amount of commission which
another broker-dealer would have charged for effecting that transaction. As
provided in Section 28(e) of the Securities Exchange Act of 1934, "brokerage and
research services" include advice as to the value of securities; the
advisability of investing in, purchasing or selling securities; the availability
of securities or purchasers or sellers of securities; furnishing analyses and
reports concerning issuers, industries, securities, economic factors and trends;
portfolio strategy and performance of accounts; and effecting securities
transactions and performing functions incidental thereto (such as clearance and
settlement). The Sub-Advisers must determine in good faith that such greater
commission is reasonable in relation to the value of the brokerage and research
services provided by the executing broker-dealer viewed in terms of that
particular transaction or the overall responsibilities of the Sub-Advisers to
its respective Funds and all other clients. The Sub-Advisers also may consider
sales by broker-dealers of variable and group annuity contracts and variable
life insurance policies that contemplate the Funds as an investment option as a
factor in the selection of broker-dealers to execute portfolio transactions.
The other investment companies and clients advised by the Sub-Advisers sometimes
invest in securities in which the Funds also invest. A Sub-Adviser also may
invest for its own account in the securities in which the Funds invest. If the
Funds, such other investment companies and other clients of the Sub- Advisers
desire to buy or sell the same portfolio security at about the same time, the
purchases and sales normally are made as nearly as practicable on a pro rata
basis in proportion to the amounts desired to be purchased or sold by each. It
is recognized that in some cases this practice could have a detrimental effect
on the price or volume of the security as far as the Funds are concerned. In
other cases,
---------------------------
39 Allmerica Investment Trust
<PAGE>
however, it is believed that this practice may produce better executions. It is
the opinion of the Trustees that the desirability of retaining the Sub-Advisers
as investment advisers to their respective Funds outweighs the disadvantages, if
any, which might result from this practice.
Brokerage commissions for each of the last three years were as follows:
<TABLE>
<CAPTION>
FUND 1999 1998 1997
---- ---- ---- ----
<S> <C> <C> <C>
Select Emerging Markets Fund* $140,922 $105,823 N/A
Select Aggressive Growth Fund $1,710,414 $1,812,711 $1,238,116
Select Capital Appreciation Fund** $481,557 $683,523 $474,666
Select Value Opportunity Fund** $1,357,442 $742,439 $649,306
Select International Equity Fund $333,988 $369,191 $453,544
Select Growth Fund** $1,017,774 $724,915 $459,136
Select Strategic Growth Fund* $56,538 $32,898 N/A
Core Equity Fund** (formerly the Growth Fund) $2,626,717 $1,522,185 $969,754
Equity Index Fund $185,943 $106,104 $100,012
Select Growth and Income Fund** $1,216,781 $1,032,489 $962,045
</TABLE>
* The Select Emerging Markets Fund and Select Strategic Growth Fund began
operations on February 20, 1998.
** The following are the reasons for the differences in the amounts of brokerage
commissions paid for the most recent fiscal year compared to either of the two
prior fiscal years:
(1) The differences in the amounts of brokerage commissions paid during the
last three fiscal years for the Select Capital Appreciation Fund are due to
a change in Sub-Advisers on April 1, 1998 and the ensuing portfolio
turnover. (2) The differences in the amounts of brokerage commissions paid
during the last three fiscal years for the Core Equity Fund are due to
portfolio repositioning and normal portfolio activity trading. (3) The
differences in the amounts of brokerage commissions paid during the last
three fiscal years for the Select Value Opportunity Fund, Select Growth
Fund and Select Growth and Income Fund are attributable to growth in the
assets of each Fund.
The Select Income Fund, Select Investment Grade Income Fund (formerly the
Investment Grade Income Fund), Government Bond Fund and Money Market Fund
did not incur brokerage commissions in any of these years.
DIRECTED BROKERAGE PROGRAM
Certain Funds managed by the Manager participate in a directed brokerage program
whereby the Funds receive credit for brokerage activity and apply those credits
toward the payment of Fund expenses. Such Funds have entered into an agreement
with certain brokers which rebate a portion of commissions as credits toward
Fund expenses. In addition, this program gives Fund management the ability to
direct brokerage by firms which sell insurance products sponsored by First
Allmerica Financial and its affiliates. This second aspect of the program, which
would be limited to 15% of total commissions, has not been implemented. Such
amounts earned by the Funds in 1997, 1998 and 1999 under such agreements were as
follows:
<TABLE>
<CAPTION>
FUND 1999 1998 1997
---- ---- ---- ----
<S> <C> <C> <C>
Select Emerging Markets Fund* $11,910 $561 N/A
Select Aggressive Growth Fund $270,533 $229,479 $221,364
Select Capital Appreciation Fund $3,127 $41,567 N/A
Select Value Opportunity Fund $241,313 $96,620 $84,389
Select International Equity Fund $53,537 $24,678 $70,636
Select Growth Fund $232,990 $151,581 $90,962
Select Strategic Growth Fund $6,979 $5,373 N/A
Equity Index Fund $9,000 N/A N/A
Core Equity Fund (formerly the Growth Fund) $335,248 $208,457 $152,829
Select Growth and Income Fund $25,338 $175,705 $102,293
</TABLE>
- ----------------------------
Allmerica Investment Trust 40
<PAGE>
The Trust Declaration provides that all persons extending credit to, contracting
with, or having any claims against the Trust or a particular Fund shall look
only to the assets of the Trust or particular Fund for payment under such
credit, contract or claim, and neither the shareholders, Trustees, nor any of
the Trust's officers, employees or agents shall be personally liable thereof.
Under Massachusetts law, shareholders could, under certain circumstances, be
held liable for the obligations of the Trust. The Trust Declaration, however,
disclaims shareholder liability for acts or obligations of the Trust and
requires that notice of such disclaimer be given in each agreement, obligation
or instrument entered into or executed by the Trust or the Trustees. The Trust
Declaration provides for indemnification out of a Fund's property for all loss
and expense of any shareholder of that Fund held liable on account of being or
having been a shareholder. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is limited to circumstances in which
the Fund of which he or she was a shareholder would be unable to meet its
obligations.
Pursuant to the Trust Declaration, a Trustee is liable for his or her own
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee, but is not liable for
errors of judgment, mistakes of fact or law any act or omission in accordance
with the advice of counsel or other experts with respect to the meaning of the
Trust Declaration, or for failing to follow such advice.
CAPITAL STOCK AND OTHER SECURITIES
The Trust has an unlimited authorized number of shares of beneficial interest
which may be divided into an unlimited number of series of such shares, and
which are divided presently into 14 series of shares, one series underlying each
Fund. The Trust's shares are entitled to one vote per share (with proportional
voting for fractional shares). The rights accompanying Fund shares are vested
legally in the Separate Accounts. As a matter of policy, however, holders of
variable premium life insurance or variable annuity contracts funded through the
Separate Accounts have the right to instruct the Separate Accounts as to voting
Fund shares on all matters to be voted on by Fund shareholders. Voting rights of
the participants in the Separate Accounts are set forth more fully in the
prospectuses or offering circular relating to those Accounts.
Matters subject to a vote by the shareholders include changes in the fundamental
policies of the Trust as described in the Prospectus and the SAI, the election
or removal of Trustees and the approval of agreements with investment advisers.
A majority, for the purposes of voting by shareholders pursuant to the 1940 Act,
is 67% or more of the voting securities of an investment company present at an
annual or special meeting of shareholders if 50% of the outstanding voting
securities of such company are present or represented by proxy or more than 50%
of the outstanding voting securities of such company, whichever is less.
The Trust is not required to hold annual meetings of shareholders. The Trustees
or shareholders holding at least 10% of the outstanding shares may call special
meetings of shareholders.
The Trust Declaration provides that, on any matter submitted to a vote of the
shareholders, all shares shall be voted by individual series, except (1) when
required by the 1940 Act, shares shall be voted in the aggregate and not by
individual series, and (2) when the Trustees have determined that the matter
affects only the interests of one or more series, then only the shareholders of
such series shall be entitled to vote thereon.
Shares are freely transferable, are entitled to dividends as declared by the
Trustees and, on liquidation of the Trust, shareholders are entitled to receive
their pro rata portion of the net assets of the Fund of which they hold shares,
but not of any other Fund. Shareholders have no preemptive or conversion rights.
The Trust Declaration provides that all persons extending credit to, contracting
with, or having any claims against the Trust or a particular Fund shall look
only to the assets of the Trust or particular Fund for payment under such
credit, contract or claim, and neither the shareholders, Trustees, nor any of
the Trust's officers, employees or agents shall be personally liable thereof.
Under Massachusetts law, shareholders could, under certain circumstances, be
held liable for the obligations of the Trust. The Trust Declaration, however,
disclaims shareholder liability for acts of obligations of the
-------------------------------
41 Allmerica Investment Trust
<PAGE>
Trust and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Trust or the Trustees.
The Trust Declaration provides for indemnification out of a Fund's property for
all loss and expense of any shareholder of that Fund held liable on account of
being or having been a shareholder. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to circumstances
in which the Fund of which he or she was a shareholder would be unable to meet
its obligations.
Pursuant to the Trust Declaration, a Trustee is liable for his or her own
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee, but is not liable for
errors of judgment, mistakes of fact or law any act or omission in accordance
with the advice of counsel or other experts with respect to the meaning of the
Trust Declaration, or for failing to follow such advice.
PURCHASE, REDEMPTION, AND PRICING OF SECURITIES BEING OFFERED
Shares of the Funds are sold in a continuous offering and currently may be
purchased only by Separate Accounts of First Allmerica or its subsidiaries. The
Separate Accounts are the funding mechanisms for variable annuity contracts and
variable life insurance policies. Shares of the Trust are also currently being
issued under separate prospectuses to Separate Accounts of Allmerica Financial
Life, First Allmerica and subsidiaries of First Allmerica which issue variable
or group annuity policies or variable premium life insurance policies ("mixed
funding"). Shares of the Trust may also be issued to Separate Accounts of
unaffiliated life insurance companies and qualified pension and retirement plans
outside of the separate account context ("shared funding"). The Trust may serve
as a funding vehicle for all types of variable annuity contracts and variable
life insurance contracts offered by various participating insurance companies
and for qualified plans. Although neither Allmerica Financial Life nor the Trust
currently foresees any disadvantage, it is conceivable that in the future such
mixed funding may be disadvantageous for variable or group annuity policyowners
or variable premium life insurance policyowners ("Policyowners"). The Trustees
of the Trust intend to monitor events in order to identify any conflicts that
may arise between such Policyowners and to determine what action, if any, should
be taken in response thereto. If the Trustees were to conclude that separate
funds should be established for variable annuity and variable premium life
separate accounts, Allmerica Financial Life would pay the attendant expenses.
As described in the Prospectus, shares of each Fund are sold and redeemed at
their net asset value as next computed after receipt of the purchase or
redemption order without the addition of any selling commission or "sales load."
The redemption price may be more or less than the shareholder's cost. Each
purchase is confirmed to the Separate Account in a written statement of the
number of shares purchased and the aggregate number of shares currently held.
Unlike the Money Market Fund which attempts to maintain a stable net asset
value, the net asset value of the other Funds will fluctuate.
The net asset value per share of each Fund is the total net asset value of that
Fund divided by the number of shares outstanding. The total net asset value of
each Fund is determined by computing the value of the total assets of that Fund
and deducting total liabilities, including accrued liabilities. The net asset
value of the shares of each Fund is determined once daily as of the close of the
New York Stock Exchange on each day on which the Exchange is open for trading,
and no less frequently than once daily on each other day (other than a day
during which no shares of the Fund were tendered for redemption and no order to
purchase or sell such shares was received by the Fund) in which there was a
sufficient degree in trading in the Fund's portfolio securities that the current
net asset value of the Fund's shares might be affected materially by changes in
the value of such portfolio securities.
Equity securities are valued based on market value if market quotations are
readily available. Portfolio securities listed or traded on national securities
exchanges, or reported on the National Association of Securities Dealers
national market reporting system, are valued at the last sale price, or, if
there have been no sales on that day, at the mean of the current bid and ask
price. Over-the-counter securities for which market quotations are readily
available are valued at the mean between the most recent bid and ask price.
Securities that are primarily traded on foreign exchanges generally are valued
at the preceding closing values of such securities on their respective
exchanges. In valuing assets, prices denominated in foreign currencies are
converted to U.S. dollar equivalents at the current exchange rate. As authorized
by the Trustees, debt securities (other than short-term obligations) of the
Funds other than the Money Market Fund are valued on the basis of valuations
furnished by pricing services which reflect broker-dealer supplied valuations
and electronic data processing techniques. Such methods include the use of
market transactions for comparable securities and various relationships between
securities which generally are recognized by institutional traders. Short-term
obligations having remaining maturities of sixty (60) days or less are valued at
amortized cost.
- ----------------------------
Allmerica Investment Trust 42
<PAGE>
Short-term debt securities of the Funds other than the Money Market Fund having
a remaining maturity of more than sixty (60) days will be valued using a
"market-to-market" method based upon either the readily available market price
or, if reliable market quotations are not available, upon quotations by dealers
or issuers for securities of a similar type, quality and maturity. "Marking-to-
market" takes into account unrealized appreciation or depreciation due to
changes in interest rates or other factors which would influence the current
fair value of such securities.
All portfolio securities of the Money Market Fund will be valued by the
amortized cost method. The purpose of this method of calculation is to attempt
to maintain a constant net asset value per share of $1.00. No assurance can be
given that this goal can be attained. Amortized cost is an approximation of
market value determined by increasing systematically the carrying value of a
security acquired at a discount or reducing systematically the carrying value of
a security acquired at a premium, so that the carrying value is equal to
maturity value on the maturity date. It does not take into consideration
unrealized gains or losses. While the amortized cost method provides certainty
and consistency in portfolio valuation, it may result in valuations of portfolio
securities which are higher or lower than the prices at which the securities
could be sold. During such periods, the yield to investors in a Fund may differ
somewhat from that obtained if the Fund were to use mark-to-market value for its
portfolio securities. For example, if the use of amortized cost resulted in a
lower (higher) aggregate portfolio value on a particular day, a prospective
investor in the Fund would obtain a somewhat higher (lower) yield than would
result from marked-to-market valuation, and existing investors would receive
less (more) investment income.
The use of the amortized cost method of valuation by the Money Market Fund is
subject to rules of the Securities and Exchange Commission. Under the rules, the
Fund is required to maintain a dollar weighted average portfolio maturity of 90
days or less and to limit its investments to instruments which (1) its Sub-
Adviser, subject to the guidelines established by the Trustees, determines
present minimal credit risks; (2) have high quality ratings or are deemed
comparable, such that they are "eligible securities" as defined below; and (3)
have remaining maturity of thirteen months (397 days) or less at the time of
purchase, or are subject to a demand feature which reduces the remaining
maturity to thirteen months or less.
The Money Market Fund may purchase only "First or Second Tier eligible
securities" which are defined to include (1) securities which have received the
highest or second highest rating by at least two nationally recognized
statistical rating organizations ("NRSRO") or by only one NRSRO if only one has
rated the security and (2) securities which are unrated, but, in the Sub-
Adviser's opinion, are of comparable quality. The Money Market Fund may purchase
securities which were long-term at issuance but have a remaining maturity of
thirteen months or less at the time of purchase if (a) the issuer has comparable
short-term debt securities outstanding which are eligible securities or (b) the
issuer has no short-term rating and the securities have either no long-term
rating or a long-term rating in one of the two highest categories by an NRSRO.
The above standards must be satisfied at the time an investment is made. If the
quality of the investment later declines, the Fund (a) may dispose of the
security within five business days of the Sub-Adviser becoming aware of the new
rating, or (b) may continue to hold the investment, but the Trustees will
evaluate whether the security continues to present minimal credit risks.
As a part of the overall duty of care they owe to the Fund's shareholders, the
Trustees have established procedures reasonably designed to stabilize the net
asset value per share of the Money Market Fund as computed for the purpose of
distribution and redemption at $1.00 per share taking into account current
market conditions and the Fund's investment objective. At such reasonable
intervals as they deem appropriate in light of current market conditions, the
Trustees will compare the results of calculating the net asset value per share
based on amortized cost with the results based on available indications of
market value. If a difference of more than 1/2 of 1% occurs between the two
methods of valuation, the Trustees will consider taking whatever steps they deem
necessary to minimize any material dilution or other unfair results, such as
shortening the average portfolio maturity or realizing gains or losses.
All other securities and assets of a Fund, any assets whose value does not,
in the Manager's opinion, reflect fair value, will be valued at fair value as
determined in good faith pursuant to procedures adopted by the Board of Trustees
of the Trust.
TAXATION OF THE FUNDS OF THE TRUST
The Trust qualifies under Subchapter M of the Internal Revenue Code so that the
Trust will not be subject to federal income tax on any net income and any
capital gains to the extent they are distributed or are deemed to have been
-----------------------------
43 Allmerica Investment Trust
<PAGE>
distributed to shareholders. See the prospectuses for the Separate Accounts for
tax consequences to investors.
To comply with regulations under Section 817(h) of the Code which contains
certain diversification requirements, each Fund of the Trust will be required to
diversify its investments so that on the last day of each quarter of a calendar
year, no more than 55% of the value of its assets is represented by any one
investment, no more than 70% is represented by any two investments, no more than
80% is represented by any three investments, and no more than 90% is represented
by any four investments. Generally, securities of a single issuer are treated as
one investment and obligations of each U.S. Government agency and
instrumentality (such as the Government National Mortgage Association) are
treated for purposes of Section 817(h) as issued by separate issuers. In
addition, any security issued, guaranteed or insured (to the extent so
guaranteed or insured) by the United States or an instrumentality of the U.S.
will be treated as a security issued by the U.S. Government or its
instrumentality, whichever is applicable.
UNDERWRITERS
Under a Distribution Agreement, AII has a nonexclusive right to use its best
efforts to obtain from investors unconditional orders for the continuous
offering of shares authorized for issuance by the Trust. AII does not receive
direct compensation for its services as distributor of the Trust. AII, at its
expense, may provide promotional incentives to dealers that sell variable
annuity contracts for which the Funds serve as investment vehicles.
CALCULATION OF PERFORMANCE DATA
The Trust may advertise performance information for the Funds and may compare
performance of the Funds with other investment or relevant indices. The Funds
may also advertise "yield", "total return" and other non-standardized total
return data. For the non-money market funds, "yield," is calculated differently
than for the Money Market Fund. The Money Market Fund may advertise "yield" or
"effective yield," ALL PERFORMANCE FIGURES ARE BASED ON HISTORICAL EARNINGS AND
ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE. A Fund's share price, yield and
total return may fluctuate in response to market conditions and other factors,
and the value of Fund shares when redeemed may be more or less than their
original cost.
YIELDS AND TOTAL RETURNS QUOTED FOR THE FUNDS INCLUDE THE EFFECT OF DEDUCTING
THE FUNDS' EXPENSES, BUT MAY NOT INCLUDE CHARGES AND EXPENSES ATTRIBUTABLE TO A
PARTICULAR INSURANCE PRODUCT. SINCE SHARES OF THE FUNDS CAN BE PURCHASED ONLY
THROUGH A VARIABLE ANNUITY OR VARIABLE LIFE CONTRACT, YOU SHOULD REVIEW
CAREFULLY THE PROSPECTUS OF THE INSURANCE PRODUCT YOU HAVE CHOSEN FOR
INFORMATION ON RELEVANT CHARGES AND EXPENSES. INCLUDING THESE CHARGES IN THE
QUOTATIONS OF THE FUNDS' YIELDS AND TOTAL RETURNS WOULD HAVE THE EFFECT OF
DECREASING PERFORMANCE. PERFORMANCE INFORMATION FOR THE INSURANCE PRODUCT MUST
ALWAYS ACCOMPANY, AND BE REVIEWED WITH, ANY PERFORMANCE INFORMATION QUOTED FOR
THE FUNDS.
YIELDS OF THE FUNDS OTHER THAN THE MONEY MARKET FUND
The 30-day (or one month) standard yields of the Funds other than the Money
Market Fund are calculated as follows:
YIELD = 2[( a - b + 1)/6/ - 1)]
-------------------------------
cd
Where: a = dividends and interest earned by a Fund during the period;
b = expenses accrued for the period (net of reimbursements);
c = the average daily number of shares outstanding during the
period entitled to receive dividends; and
d = the maximum offering price per share on the last day of the
period.
For the purpose of determining net investment income earned during the period
(variable "a" in the formula), dividend income on equity securities held by a
Fund is recognized by accruing 1/360 of the stated dividend rate of the security
each day that the security is in the Fund. Except as noted below, interest
earned on debt obligations held by a Fund is calculated by computing the yield
to maturity of each obligation based on the market value of the obligation
(including actual accrued interest) at the close of business on the last
business day of each month, or, with respect to obligations purchased during the
month, the purchase price (plus actual accrued interest) and dividing the result
by 360 and multiplying the quotient by the market value of the obligation
(including actual accrued interest) in order to determine the interest income on
the obligation for each day of the subsequent month that the obligation is held
by the Fund. For purposes of this calculation, it is assumed that each month
contains 30 days. The maturity of an obligation with a call provision is the
next call date on which the obligation reasonably may be expected to be called
or, if none, the maturity date. With respect to debt obligations purchased at a
discount or premium, the formula generally calls for amortization of the
discount or premium. The amortization schedule will be adjusted monthly to
reflect changes in the market value of such debt obligations. Expenses accrued
for the period (variable "b" in the formula) include all recurring fees charged
by
- ----------------------------
Allmerica Investment Trust 44
<PAGE>
a Fund to all shareholder accounts in proportion to the length of the base
period and the Fund's mean (or median) account size. Undeclared earned income
will be subtracted from the offering price per share (variable "d" in the
formula).
MONEY MARKET FUND - YIELD AND EFFECTIVE YIELD
The yield of the Money Market Fund refers to the net income generated by an
investment in the Fund over a stated seven-day period, expressed as an annual
percentage rate. Yield is computed by determining the net change (exclusive of
capital changes) in the value of a hypothetical pre-existing account having a
balance of 1 (one) share at the beginning of a seven-day calendar period,
dividing the net change in account value by the value of the account at the
beginning of the period, and multiplying the return over the seven-day period by
365/7. Thus the income is "annualized:" the amount of income generated by the
investment during the seven-day period is assumed to be generated each week over
a 52-week period and is shown as a percentage of the investment. For purposes of
the calculation, net change in account value reflects the value of additional
shares purchased with dividends from the original share and dividends declared
on both the original share and any additional shares, but does not reflect
realized gains or losses or unrealized appreciation or depreciation.
The effective yield is calculated similarly, but the income earned by an
investment in the Money Market Fund is assumed to be reinvested. The "effective
yield" will be slightly higher than the "yield" because of this compounding
effect.
TOTAL RETURN
The Funds may advertise total return. The total return shows what an investment
in each Fund would have earned over a specific period of time (one, five, or ten
years since commencement of operations, if less) assuming that all distributions
and dividends by the Fund were reinvested, and less all recurring fees.
From time to time, the Fund may state its total return in advertisements and
investor communications. Total return may be stated for any relevant period as
specified in the advertisement or communication. Any statement of total return
or other performance data on the Fund will be accompanied by information on the
Fund's average annual total return over the most recent four calendar quarters
and the period from the Fund's inception of operations. The Fund also may
advertise aggregate annual total return information over different periods of
time.
A Fund's average annual total return is determined by reference to a
hypothetical $1,000 investment that includes capital appreciation and
depreciation for the stated period, according to the following formula:
P(1+T)n = ERV
Where: P = A hypothetical initial purchase of $1,000
T = average annual total return
n = number of years
ERV = Ending Redeemable Value of the hypothetical purchase at the
end of the period
Total return quoted in advertising reflects all aspects of the Fund's return,
including the effect of reinvesting dividends and capital gains distributions,
and any change in the Fund's net asset value per share over the period.
AVERAGE ANNUAL RETURNS are calculated by determining the change in value of a
hypothetical investment in the Fund over a stated period, and calculating the
annually compounded percentage rate that would have produced the same result if
the rate of growth or decline in value has been constant over the period.
Average annual returns covering periods of less than one year are calculated by
determining the Fund's total return for the period, extrapolating that return
for a full year, and stating the result as an annual return. Because this method
assumes that performance will remain constant for the entire year when in fact
it is unlikely that performance will remain constant, average annual returns for
a partial year must be viewed as strictly theoretical information.
INVESTORS ALSO SHOULD BE AWARE THAT A FUND'S PERFORMANCE IS NOT CONSTANT OVER
TIME, BUT VARIES FROM YEAR TO YEAR. AVERAGE ANNUAL RETURN REPRESENTS AVERAGED
FIGURES AS OPPOSED TO THE ACTUAL PERFORMANCE OF THE FUND.
--------------------------------
45 Allmerica Investment Trust
<PAGE>
A Fund also may quote cumulative total returns which reflect the simple change
in value of an investment over a stated period. Average annual total returns and
cumulative total returns may be quoted as a percentage or as a dollar amount.
They may be calculated for a single investment, for a series of investments or
for a series of redemptions over any time period. Total returns may be broken
down into their components of income and capital in order to show their
respective contributions to total return. Performance information may be quoted
numerically or in a table, graph or similar illustration.
OTHER PERFORMANCE INFORMATION
Performance information for a Fund may be compared with: (1) the S&P 500, Dow
Jones Industrial Average, Lehman Aggregate Bond Index, Russell 2000, Russell
3000, Beta Adjusted Russell 3000, Lehman Government corporate and 90 day
Treasury Bills, Solomon High Yield Bond Index, Bank Rate Monitor, NASDAQ Index
or other unmanaged indices so that investors may compare a Fund's results with
those of a group of unmanaged securities widely regarded by investors as
representative of the securities markets in general; (2) other registered
investment companies or other investment products tracked (a) by Lipper
Analytical Services; Morningstar, Inc. and IBC/Donoghue, Inc., all widely used
independent research firms which rank mutual funds and other investment
companies by overall performance, investment objectives and assets, or (b) by
other services, companies, publications or persons who rank such investment
companies on overall performance or other criteria; (3) or the Consumer Price
Index (a measure for inflation) to assess the real rate of return from an
investment in the Fund. Unmanaged indices may assume the reinvestment of
dividends but generally do not reflect deductions for administrative and
management costs and expenses.
All performance information is based on historical results and is not intended
to indicate future performance. Performance information reflects only the
performance of a hypothetical investment during the particular time period on
which the calculations are based. Performance information should be considered
in light of the investment objectives and policies, characteristics and quality
of the Fund and the market conditions during the given time period. Yield and
total return information may be useful for reviewing the performance of the Fund
and for providing a basis for comparison with other investment alternatives.
However, unlike bank deposits or other investments which pay a fixed yield for a
stated period of time, the yield and total return do fluctuate.
PERFORMANCE INFORMATION FOR PERIOD ENDED DECEMBER 31, 1999
Set forth below is average annual total return information for the Select
Emerging Markets Fund, Select Aggressive Growth Fund, Select Capital
Appreciation Fund, Select Value Opportunity Fund, Select International Equity
Fund, Select Growth Fund, Select Strategic Growth Fund, Core Equity Fund
(formerly the Growth Fund), Equity Index Fund, Select Growth and Income Fund,
Select Income Fund, Select Investment Grade Income Fund (formerly the Investment
Grade Income Fund), Government Bond Fund and Money Market Fund for the 1 year, 5
year, 10 year and/or since inception (the Trust began operations on April 29,
1985) periods ended December 31, 1999, yields for the Select Income Fund, Select
Investment Grade Income Fund and Government Bond Fund for the 30-day period
ended December 31, 1999 and yield and effective yield information for the Money
Market Fund for the seven-day period ended December 31, 1999.
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
1 Year Period 5 Year Period 10 Year Period Since Inception
------------- ------------- -------------- ---------------
<S> <C> <C> <C> <C>
Select Emerging Markets Fund 65.72% N/A N/A 15.22%*
Select Aggressive Growth Fund 38.66% 23.32% N/A 20.71%
Select Capital Appreciation Fund 25.36% N/A N/A 21.42%
Select Value Opportunity Fund (4.70)% 13.52% N/A 11.57%
Select International Equity Fund 31.71% 18.54% N/A 15.47%
Select Growth Fund 29.80% 29.06% N/A 20.57%
Select Strategic Growth Fund 16.06% N/A N/A 6.89%*
Core Equity Fund (formerly the Growth Fund) 29.33% 25.23% 17.31% 17.47%
Equity Index Fund 20.41% 27.77% N/A 20.66%
</TABLE>
- ----------------------------
Allmerica Investment Trust 46
<PAGE>
<TABLE>
<CAPTION>
1 Year Period 5 Year Period 10 Year Period Since Inception
------------- ------------- -------------- ---------------
<S> <C> <C> <C> <C>
Select Growth and Income Fund 18.43% 21.69% N/A 15.92%
Select Income Fund (0.85)% 6.92% N/A 5.52%
Select Investment Grade Income Fund (0.97)% 7.38% 7.69% 8.26%
(formerly Investment Grade Income Fund)
Government Bond Fund 0.23% 6.22% N/A 6.16%
Money Market Fund 5.19% 5.47% 5.23% 5.80%
</TABLE>
* Not Annualized
The Core Equity Fund (formerly the Growth Fund), Select Investment Grade Income
Fund (formerly the Investment Grade Income Fund) and the Money Market Fund all
began business operations on April 29, 1985. The Equity Index Fund began
operations on September 28, 1990. The Government Bond Fund began operations on
August 26, 1991. The Select Aggressive Growth Fund, Select Growth Fund, Select
Growth and Income Fund and Select Income Fund began operations on August 21,
1992. The Select Value Opportunity Fund began operations on April 30, 1993. The
Select International Equity Fund began operations on May 2, 1994. The Select
Capital Appreciation Fund began operations on April 28, 1995. The Select
Emerging Markets Fund and Select Strategic Growth Fund began operations on
February 20, 1998.
YIELDS FOR 30-DAY PERIODS
ENDED DECEMBER 31, 1999
-----------------------
(Unaudited)
Select Income Fund 6.87 %
Select Investment Grade Income Fund 7.04 %
(formerly Investment Grade Income Fund)
Government Bond Fund 6.92 %
<TABLE>
<CAPTION>
YIELD FOR SEVEN DAY PERIOD EFFECTIVE YIELD FOR SEVEN DAY PERIOD
ENDED DECEMBER 31, 1999 ENDED DECEMBER 31, 1999
----------------------- -----------------------
(Unaudited) (Unaudited)
<S> <C> <C>
Money Market Fund 5.57% 6.12%
</TABLE>
FINANCIAL STATEMENTS
The Trust's Financial Statements and related notes and the report of the
independent accountants contained in the Trust's annual report for the fiscal
year ended December 31, 1999 are incorporated by reference into this Statement
of Additional Information.
--------------------------------
47 Allmerica Investment Trust
<PAGE>
APPENDIX
Descriptions of Moody's Investors Service, Inc. ("Moody's") and Standard &
Poor's Ratings Service, a division of McGraw-Hill Companies, Inc. ("S&P")
commercial paper and bond ratings:
COMMERCIAL PAPER RATINGS
MOODY'S EMPLOYS THREE DESIGNATIONS, ALL JUDGED TO BE INVESTMENT GRADE, TO
INDICATE THE RELATIVE REPAYMENT CAPACITY OF RATED ISSUERS. THE TWO HIGHEST
DESIGNATIONS ARE AS FOLLOWS:
Issuers rated Prime-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity normally will be evidenced by the following
characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structures with moderate reliance on debt
and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
- Well-established access to a range of financial markets and assured
sources of alternate liquidity.
Issuers rated Prime-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This normally
will be evidenced by many of the characteristics cited above, but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be
subject more to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
S&P COMMERCIAL PAPER RATINGS ARE GRADED INTO SEVERAL CATEGORIES, RANGING
FROM "A-1" FOR THE HIGHEST QUALITY OBLIGATIONS TO "D" FOR THE LOWEST. THE
TWO HIGHEST RATING CATEGORIES ARE DESCRIBED AS FOLLOWS:
A-1 - This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus (+) sign designation.
A-2 - Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.
MUNICIPAL OBLIGATIONS
Moody's ratings for state and municipal and other short-term obligations will be
designated Moody's Investment Grade ("MIG"). This distinction is in recognition
of the differences between short-term credit risk and long-term risk. Factors
affecting the liquidity of the borrower are uppermost in importance in the
short-term borrowing, while various factors of the first importance in long-term
borrowing risk are of lesser importance in the long run. Symbols used will be as
follows:
MIG-1 - This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG-2 - This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
- ----------------------------
Allmerica Investment Trust 48
<PAGE>
A short-term rating also may be assigned on an issue having a demand feature.
Such ratings will be designated as VMIG to reflect such characteristics as
payment upon periodic demand rather than fixed maturity dates and payment
relying on external liquidity. Additionally, investors should be alert to the
fact that the source of payment may be limited to the external liquidity with no
or limited legal recourse to the issuer in the event that demand is not met.
VMIG-1 and VMIG-2 ratings carry the same definitions as MIG-1 and MIG-2,
respectively.
DESCRIPTION OF MOODY'S BOND RATINGS
Aaa - Bonds that are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and generally are referred to
as "gilt edge". Interest payments are protected by a large or exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
Aa - Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are known
generally as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
A - Bonds that are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements
may be present that suggest a susceptibility to impairment some time in the
future.
Baa - Bonds that are rated Baa are considered to be medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba - Bonds that are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B - Bonds that are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or maintenance of
other terms of the contract over any long period of time may be small.
Those bonds within the Aa, A, Baa, Ba, and B categories that Moody's
believes possess the strongest credit attributes within those categories
are designated by the symbols Aa1, A1, Baa1, Ba1, and B1.
DESCRIPTION OF S&P'S DEBT RATINGS
AAA - Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from AAA issues only in a small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated
categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher rates
categories.
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49 Allmerica Investment Trust
<PAGE>
BB, B, CCC, CC, C - Debt rated BB, B, CCC, CC, or C is regarded as having
predominantly speculative characteristics with respect to capacity to pay
interest and repay principal. BB indicates the least degree of speculation
and C the highest. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or
major exposures to adverse conditions.
Plus (+) or (-): The ratings from AA to CCC may be modified by the addition
of a plus or minus sign to show relative standing within the major
categories.
- ----------------------------
Allmerica Investment Trust 50
<PAGE>
PART C. OTHER INFORMATION
Item 23. 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 on April 15, 1998 and is
incorporated herein by reference.
Exhibit 2 Bylaws as amended May 10, 1999 are filed herein.
Exhibit 3 None
Exhibit 4(a) Management Agreement between Registrant and Allmerica
Financial Investment Management Services, Inc. (the
"Manager") dated April 16, 1998 (compensation schedule
amended as of September 1, 1999) is filed herein.
Exhibit 4(b) Sub-Adviser Agreement between the Manager and Schroder
Capital Management International Inc. with respect to the
Select Emerging Markets Fund dated April 16, 1998 was filed
previously in Post- effective Amendment No. 37 on February
25, 1999 and is incorporated herein by reference.
Exhibit 4(c) Sub-Adviser Agreement between the Manager and Nicholas-
Applegate Capital Management, L.P. with respect to the Select
Aggressive Growth Fund dated April 16, 1998 (compensation
schedule amended as of September 1, 1999) is filed herein.
Exhibit 4(d) Sub-Adviser Agreement between the Manager and T. Rowe Price
Associates, Inc. with respect to the Select Capital
Appreciation Fund dated April 16, 1998 was filed previously
in Post-effective Amendment No. 37 on February 25, 1999 and
is incorporated herein by reference.
Exhibit 4(e) Sub-Adviser Agreement between the Manager and Cramer
Rosenthal McGlynn, LLC dated April 16, 1998 with respect to
the Select Value Opportunity Fund was filed previously in
Post-effective Amendment No. 37 on February 25, 1999 and is
incorporated herein by reference.
Exhibit 4(f) 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 on
February 25, 1999 and is incorporated herein by reference.
Exhibit 4(g) 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 on February 25, 1999 and is
incorporated herein by reference.
Exhibit 4(h) Form of Sub-Adviser Agreement between the Manager and TCW
Investment Management Company with respect to the Select
Strategic Growth Fund dated April 1, 2000 is filed herein.
Exhibit 4(i) Sub-Adviser Agreement between the Manager and Miller Anderson
& Sherrerd, LLP with respect to the Core Equity Fund
(formerly the Growth Fund) dated April 16, 1998 was filed
previously in Post-effective Amendment No. 37 on February 25,
1999 and is incorporated herein by reference.
Exhibit 4(j) 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 on April 29, 1999 and is
incorporated herein by reference.
Exhibit 4(k) Sub-Adviser Agreement between the Manager and Standish, Ayer
& Wood, Inc. with respect to the Select Income Fund dated
April 16, 1998 was filed previously in Post-effective
Amendment No. 37 on February 25, 1999 and is incorporated
herein by reference.
1
<PAGE>
Exhibit 4(l) Sub-Adviser Agreement between the Manager and Allmerica
Asset Management, Inc. with respect to the Equity Index
Fund, Select Investment Grade Income Fund (formerly the
Investment Grade Income Fund), Government Bond Fund and
Money Market Fund dated April 16, 1998 was filed previously
in Post-effective Amendment No. 37 on February 25, 1999 and
is incorporated herein by reference.
Exhibit 5 Distribution Agreement with Allmerica Investments, Inc.
dated February 25, 1998 was filed previously in
Post-effective Amendment No. 36 on April 15, 1998 and is
incorporated herein by reference.
Exhibit 6 None
Exhibit 7 Custodian Agreement with Investors Bank & Trust Company is
filed herein.
Exhibit 8 Administration Services Agreement between Manager, Registrant
and Investors Bank & Trust Company is filed herein.
Exhibit 8(a) Securities Lending Agency Agreement with Investors Bank &
Trust Company is filed herein.
Exhibit 9 Opinion and consent of counsel is filed herein.
Exhibit 10 Consent of Independent Accountants is filed herein.
2
<PAGE>
Exhibit 11 None
Exhibit 12 Participation Agreement among Registrant, the Manager and
First Allmerica Financial Life Insurance Company dated
February 16, 1999 was filed previously in Post-effective
Amendment No. 37 on February 25, 1999 and is incorporated
herein by reference.
Exhibit 12(a) Participation Agreement among Registrant, the Manager and
Allmerica Financial Life Insurance and Annuity Company dated
February 16, 1999 was filed previously in Post-effective
Amendment No. 37 on February 25, 1999 and is incorporated
herein by reference.
Exhibit 13 None
Exhibit 14 None
Exhibit 15 None
Exhibit 16 Code of Ethics of Allmerica Investment Trust is filed herein.
Exhibit 17 Power of Attorney is filed herein.
Item 24. Persons Under Common Control with Registrant
--------------------------------------------
Registrant was organized by State Mutual Life Assurance Company of America, now
known as First Allmerica Financial Life Insurance Company ("First Allmerica"),
primarily for the purpose of providing a vehicle for the investment of assets
received by various separate investment accounts ("Separate Accounts")
established by First Allmerica and life insurance company subsidiaries of First
Allmerica including Allmerica Financial Life Insurance and Annuity Company
("Allmerica Financial Life"). The assets in such Separate Accounts are, under
state law, assets of the life insurance companies which have established such
accounts. Thus at any time First Allmerica and its life insurance company
subsidiaries will own such of Registrant's outstanding shares as are purchased
with Separate Account assets; however, where required to do so, First Allmerica
and its life insurance company subsidiaries will vote such shares only in
accordance with instructions received from owners of the contracts pursuant to
which sums are placed in such Separate Accounts.
Item 25. Indemnification
----------------
Article VIII of Registrant's Agreement and Declaration Trust, entitled
"Indemnification," was filed previously in Post-effective Amendment No. 36 on
April 15, 1998 and is incorporated herein by reference.
Article III, Section 12 of the Bylaws of First Allmerica was filed previously in
Post-effective Amendment No. 36 on April 15, 1998 and is incorporated herein by
reference.
Item 26. Business and Other Connections of Investment Manager and Sub-
-------------------------------------------------------------
Advisers
--------
The following Schedule Ds of Form ADV are incorporated by reference: Nicholas-
Applegate Capital Management, L.P., File No. 801-21442; Allmerica Asset
Management, Inc., File No. 801-44189; Allmerica Financial Investment Management
Services, Inc., File No. 801-55463; Miller, Anderson & Sherrerd, LLP, File No.
801-10437; Bank of Ireland Asset Management (U.S.) Limited, File No. 801-29606;
J.P. Morgan Investment Management Inc., File No. 801-21011; T. Rowe Price
Associates, Inc., File No. 801-856; Putnam Investment Management, Inc., File No.
801-7974; Cramer Rosenthal McGlynn, LLC, File No. 801-55244; Standish, Ayer &
Wood, Inc., File No. 801-584; Schroder Investment Management North America Inc.,
File No. 801-15834; and TCW Investment Management Company, File No. 801-20975.
3
<PAGE>
Item 27. Principal Underwriters
----------------------
(a) Allmerica Investments, Inc., the Distributor, does not act as principal
underwriter, depositor or investment adviser for any other investment company.
(b) The following information is provided with respect to the directors and
officers of Allmerica Investments, Inc., the Distributor:
<TABLE>
<CAPTION>
Name and Principal Business Positions and Offices with Positions and Offices with
Address Distributor Registrant
------- ----------- ----------
<S> <C> <C>
John F. Kelly Director N/A
Allmerica Financial
440 Lincoln Street
Worcester, MA 01653
- -------------------
John F. O'Brien Director Trustee
Allmerica Financial
440 Lincoln Street
Worcester, MA 01653
- -------------------
Stephen Parker Director N/A
Allmerica Financial Chief Executive Officer
440 Lincoln Street President
Worcester, MA 01653
- -------------------
Richard M. Reilly Director Trustee, President
Allmerica Financial Life Chairman of the Board
Insurance and Annuity Company
440 Lincoln Street
Worcester, MA 01653
- -------------------
Eric A. Simonsen Director N/A
Allmerica Financial
440 Lincoln Street
Worcester, MA 01653
- -------------------
Margaret L. Abbott Vice President N/A
Allmerica Financial
440 Lincoln Street
Worcester, MA 01653
- -------------------
Emil J. Aberizk Jr. Vice President N/A
Allmerica Financial
440 Lincoln Street
Worcester, MA 01653
- -------------------
Abigail M. Armstrong Counsel N/A
Allmerica Financial Assistant Secretary
440 Lincoln Street
Worcester, MA 01653
- -------------------
Edward T. Berger Chief Compliance Officer N/A
Allmerica Financial Vice President
440 Lincoln Street
Worcester, MA 01653
- -------------------
Michael J. Brodeur Vice President N/A
Allmerica Financial
440 Lincoln Street
Worcester, MA 01653
- -------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Business Positions and Offices with Positions and Offices with
Address Distributor Registrant
------- ----------- ----------
<S> <C> <C>
Kevin A. Chute Assistant Vice President N/A
Allmerica Financial
440 Lincoln Street
Worcester, MA 01653
- -------------------
Mark R. Colborn Vice President N/A
Allmerica Financial
440 Lincoln Street
Worcester, MA 01653
- -------------------
Claudia J. Eckels Vice President Operations N/A
Allmerica Financial
440 Lincoln Street
Worcester, MA 01653
- -------------------
Mary Eldridge Secretary/Clerk N/A
Allmerica Financial
440 Lincoln Street
Worcester, MA 01653
- -------------------
Lee W. Erickson Assistant Treasurer N/A
Allmerica Financial
440 Lincoln Street
Worcester, MA 01653
- --------------------
Philip L. Heffernan Vice President N/A
Allmerica Financial
440 Lincoln Street
Worcester, MA 01653
- -------------------
Paul T. Kane Assistant Vice President Assistant Vice President and
Allmerica Financial Treasurer
440 Lincoln Street (Principal Accounting Officer)
Worcester, MA 01653
- -------------------
Joseph W. MacDougall Jr. Assistant Secretary Assistant Secretary
Allmerica Financial
440 Lincoln Street
Worcester, MA 01653
- -------------------
Daniel Mastrototaro Vice President N/A
Allmerica Financial
440 Lincoln Street
Worcester, MA 01653
- -------------------
Jennifer R. Mazza Assistant Vice President N/A
Allmerica Financial
440 Lincoln Street
Worcester, MA 01653
- -------------------
William F. Monroe Jr. Vice President N/A
Allmerica Financial
440 Lincoln Street
Worcester, MA 01653
- -------------------
David J. Mueller Chief Financial Officer N/A
Allmerica Financial Controller, Vice President
440 Lincoln Street Financial Operations Principal
Worcester, MA 01653
- -------------------
Patricia A. Norton-Gatto Assistant Treasurer N/A
Allmerica Financial
440 Lincoln Street
Worcester, MA 01653
- -------------------
Edward J. Parry III Treasurer N/A
Allmerica Financial
440 Lincoln Street
Worcester, MA 01653
- --------------------
Martin A. Snow Assistant Treasurer N/A
Allmerica Financial
440 Lincoln Street
Worcester, MA
- -------------
Mark G. Steinberg Senior Vice President N/A
Allmerica Financial
440 Lincoln Street
Worcester, MA 01653
- -------------------
Paula J. Testa Assistant Vice President N/A
Allmerica Financial
440 Lincoln Street
Worcester, MA 01653
- -------------------
</TABLE>
(c) Not Applicable.
Item 28. Location of Accounts and Records
--------------------------------
Each account, book, or other document required to be maintained by Registrant
pursuant to Section 31(a) of
5
<PAGE>
the Investment Company Act of 1940, as amended and Rules 31a-1 to 31a-3
thereunder are maintained by Registrant at 440 Lincoln Street, Worcester,
Massachusetts 01653 or on behalf of the Registrant by Investors Bank & Trust
Company, 200 Clarendon Street, 16th Floor, Boston, MA 02116.
Item 29. Management Services
-------------------
Not applicable
Item 30. Undertakings
------------
Not applicable
6
<PAGE>
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 15th day of February, 2000.
ALLMERICA INVESTMENT TRUST
By: /s/ Richard M. Reilly
--------------------------------
Richard M. Reilly, 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.
<TABLE>
<CAPTION>
<S> <C> <C>
Signature Title Date
- --------- ----- ----
/s/ Richard M. Reilly President, Chief Executive Officer 2/15/00
- ------------------------------------- and Trustee -------
Richard M. Reilly
/s/ John F. O'Brien 2/15/00
- ------------------------------------- Chairman of the Board and Trustee -------
John F. O'Brien
/s/ Paul T. Kane 2/15/00
- ------------------------------------- Treasurer (Principal Accounting Officer) -------
Paul T. Kane
/s/ P. Kevin Condron 2/15/00
- ------------------------------------- Trustee -------
P. Kevin Condron
- ------------------------------------- Trustee -------
Cynthia A. Hargadon
/s/ Gordon Holmes 2/15/00
- ------------------------------------- Trustee -------
Gordon Holmes
/s/ John P. Kavanaugh 2/15/00
- ------------------------------------- Trustee -------
John P. Kavanaugh
/s/ Bruce E. Langton 2/15/00
- ------------------------------------- Trustee -------
Bruce E. Langton
/s/ Attiat F. Ott Trustee 2/15/00
- ------------------------------------- -------
Attiat F. Ott
/s/ Ranne P. Warner Trustee 2/15/00
- ------------------------------------- -------
Ranne P. Warner
</TABLE>
<PAGE>
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 _____ day of __________,
_____.
ALLMERICA INVESTMENT TRUST
--------------------------
By: _______________________________
Richard M. Reilly, 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 Officer ___________
Richard M. Reilly and Trustee
_______________________ Chairman of the Board and Trustee ___________
John F. O'Brien
_______________________ Treasurer (Principal Accounting ___________
Paul T. Kane Officer)
_______________________ Trustee ___________
P. Kevin Condron
/s/ Cynthia A. Hargadon Trustee 2/16/00
- ----------------------- -----------
Cynthia A. Hargadon
_______________________ Trustee ___________
Gordon Holmes
_______________________ Trustee ___________
John P. Kavanaugh
_______________________ Trustee ___________
Bruce E. Langton
_______________________ Trustee ___________
Attiat F. Ott
_______________________ Trustee ___________
Ranne P. Warner
<PAGE>
EXHIBIT INDEX
Number Description
- ------ -----------
Exhibit 2 Bylaws
Exhibit 4(a) Management Agreement between Registrant and Allmerica
Financial Investment Management Services, Inc. (the
"Manager") dated April 16, 1998.
Exhibit 4(c) Sub-Adviser Agreement between the Manager and Nicholas-
Applegate Capital Management, L.P. with respect to the
Select Aggressive Growth Fund dated April 16, 1998.
Exhibit 4(h) Form of Sub-Adviser Agreement between the Manager and TCW
Investment Management Company with respect to the Select
Strategic Growth Fund dated April 1, 2000.
Exhibit 7 Custodian Agreement with Investors Bank & Trust Company.
Exhibit 8 Administration Services Agreement between Manager,
Registrant and Investors Bank & Trust Company.
Exhibit 8(a) Securities Lending Agency Agreement with Investors Bank &
Trust Company.
Exhibit 9 Opinion and consent of counsel.
Exhibit 10 Consent of Independent Accountants.
Exhibit 16 Code of Ethics of Allmerica Investment Trust.
Exhibit 17 Power of Attorney.
<PAGE>
BYLAWS Exhibit 2
OF
ALLMERICA INVESTMENT TRUST
(As Amended May 10, 1999)
ARTICLE I
Agreement and Declaration of Trust and Principal Office
1.1 Agreement and Declaration of Trust. These Bylaws shall be subject to the
----------------------------------
Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of Allmerica Investment Trust, the Massachusetts
business trust established by the Declaration of Trust (the "Trust").
1.2 Principal Office of the Trust. The principal office of the Trust shall be
-----------------------------
located in Worcester, Massachusetts.
ARTICLE II
Meetings of Trustees
2.1 Regular Meetings. Regular meetings of the Trustees may be held without call
----------------
or notice at such places and at such times as the Trustees may from time to
time determine, provided that notice of the first regular meeting following
any such determination shall be given to absent Trustees. A regular meeting
of the Trustees may be held without call or notice immediately after and at
the same place as the annual meeting of the shareholders.
2.2 Special Meetings. Special meetings of the Trustees may be held at any time
----------------
and at any place designated in the call of the meeting when called by the
Chairman of the Board or the Treasurer or by two or more Trustees,
sufficient notice thereof being given to each Trustee by the Secretary or
an Assistant Secretary or by the officer or the Trustees calling the
meeting.
2.3 Notice. It shall be sufficient notice to the Trustee of a special meeting
------
to send notice by mail at least forty-eight hours or by telegram at least
twenty-four hours before the meeting addressed to the Trustee at his or her
usual or last known business or residence address or to give notice to him
or her in person or by telephone at least twenty-four hours before the
meeting. Notice of a meeting need not be given to any Trustee if a written
waiver of notice, executed by him or her before or after the meeting, is
filed with the records of the meeting, or to any Trustee who attends the
meeting without protesting prior thereto or at its commencement the lack of
notice to him or her. Neither notice of a meeting nor a waiver of a notice
need specify the purposes of the meeting.
2.4 Quorum. At any meeting of the Trustees a majority of the Trustees then in
------
office shall constitute a quorum. Any meeting may be adjourned from time to
time by a majority of the votes cast upon the questions, whether or not a
quorum is present, and the meeting may be held as adjourned without further
notice.
2.5 Action by Written Consent. Except where otherwise required under the
-------------------------
Investment Company Act of 1940, as amended, and under any other State or
Federal law or regulation applicable to the Trust, any action required or
permitted to be taken at any meeting of the Board of Trustees or any
committee thereof may be taken without a meeting if written consent thereto
is signed by a
<PAGE>
majority of the members of the Board of Trustees of committee (as the case
may be) and such written consent if filed with the minutes of the
proceedings of the Board of Trustees or committee; such consents shall be
treated for all purposes as a vote at a meeting.
2.6 Remuneration. The Trustees shall determine the amount of any retainer to be
------------
paid to the Trustees annually and the amount of any expense reimbursement
or remuneration to be paid to Trustees for attendance at meetings.
ARTICLE III
Officers
3.1 Enumeration; Qualification. The officers of the Trust shall be a Chairman
----------- -------------
of the Board, a President, a Treasurer, a Controller, a Secretary, and such
others officers, if any, as the Trustees from time to time may be in their
discretion elect. The Trust may also have such agents as the Trustees from
time to time may in their discretion appoint. Any officer may, but need
not, be a Trustee. Any two or more offices may be held by the same person.
A Trustee or officer may, but need not, be a shareholder.
3.2 Election. The Chairman of the Board, the President, the Treasurer, the
--------
Controller and the Secretary shall be elected annually by the Trustees.
3.3 Tenure. The Chairman of the Board, the President, the Treasurer, the
------
Controller and the Secretary shall hold office until their respective
successors are chosen and qualified, in each case until he or she sooner
dies, resigns, is removed or becomes disqualified.
3.4 Powers. Subject to the other provisions of these Bylaws, each officer shall
------
have, in addition to the duties and powers herein and in the Declaration of
Trust set forth, such duties and powers as are commonly incident to the
office occupied by him or her as if the Trust were organized as a
Massachusetts business corporation and such other duties and powers as the
Trustees may from time to time designate.
3.5 Chairman of the Board. The Chairman of the Board shall be the chief
---------------------
executive officer of the Trust unless the Trustee designate another officer
of the Trust as its chief executive officer.
The chief executive officer shall, subject to the control of the Trustees,
direct and manage the affairs of the Trust. The Chairman of the Board
shall preside at all meetings of the shareholders and regular or special
meetings of the Trustees.
If the chief executive officer should be absent or unable to discharge the
duties of his office, and officer designated by the chief executive officer
shall act.
3.6 President. In the absence of the Chairman of the Board, the President shall
---------
preside at all meetings of the shareholders and of the Trustees.
3.7 Treasurer; Controller. The Treasurer shall be the chief financial officer
--------- ----------
of the Trust, and shall, subject to the provisions of the Declaration of
Trust and to any arrangement made by the Trustees with a custodian,
investment adviser or manager, or transfer, shareholder servicing or
similar agent, be in charge of the valuable papers of the Trust and shall
have such other duties and powers as may be designated from time to time by
the Trustees or by the Chairman of the Board.
2
<PAGE>
The Controller shall be the chief accounting officer of the Trust and shall
be in charge of its books of account and accounting records. The
Controller shall be responsible for preparation of financial statements of
the Trust, and shall have such other duties and powers as may be designated
from time to time by the Trustees or by the Chairman of the Board.
3.8 Secretary. The Secretary shall record all proceedings of the shareholders
---------
and the Trustees in books to be kept therefor, which books or a copy
thereof shall be kept at the principal office of the Trust. In the absence
of the Secretary from any meeting of the shareholders or Trustees, an
Assistant Secretary, or if there be none or if he or she is absent, a
temporary Secretary chosen at such meeting shall record the proceedings
thereof in the aforesaid books.
3.9 Resignation and Removals. Any Trustee or officer may resign at any time by
------------------------
written instrument signed by him or her and delivered to the Chairman of
the Board of the Secretary or to a meeting of the Trustees. Such
resignation shall be effective upon receipt unless specified to be
effective at some other time. The Trustees may remove any officer elected
by them with or without cause. Except to the extent expressly provided in a
written agreement with the Trust, no Trustee or officer resigning and no
officer removed shall have any right to any compensation for any period
following his or her resignation or removal, or any right to damages on
account of such removal.
ARTICLE IV
Committees
4.1 General. The Trustees may elect, by majority vote, two or more Trustees to
-------
constitute an Executive Committee, which committee shall have and may
exercise when the Trustees are not in session any or all powers of the
Trustees in the management of the business and affairs of the Trust to the
extent granted by the Trustees and permitted under applicable law.
The Trustees likewise may appoint from their number other committees from
time to time, the number (not less than two) composing such committees, and
the functions to be performed by the same to be determined by the majority
vote of the Trustees. The term of any member of any committee shall be
fixed by the Trustees.
The Trustees may appoint an advisory board to consist of not more than five
members. The members of the advisory board shall be compensated in such
manner as the Trustees may determine and shall confer with and advise the
Trustees regarding the investments and other affairs of the Trust. Each
member of the advisory board shall hold office until the first meeting of
the Trustees following the next meeting of the shareholders and until his
or her successor is elected and qualified, or until he or she sooner dies,
resigns, is removed or becomes disqualified, or until the advisory board is
sooner abolished by the Trustees.
4.2 Quorum; Voting. A majority of the members of committee of the Trustees
------ ------
shall constitute a quorum for the transaction of business, and any action
of such a committee may be taken at a meeting by a vote of a majority of
the members present (a quorum being present) or evidenced by one or more
writings signed by such a majority. Members of a committee may participate
in a meeting of such committee by means of conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time, and participation by such
means shall constitute presence in person at a meeting.
3
<PAGE>
ARTICLE V
Reports
5.1 General. The Trustees and officers shall render reports at the time and in
-------
the manner required by the Declaration of Trust or any applicable law.
Officers and committees shall render such additional reports as they may
deem desirable or as may from time to time required by the Trustees.
ARTICLE VI
Fiscal Year
6.1 General. Except as from time to time otherwise provided by the Trustees,
-------
the initial fiscal year of the Trust shall end on such date as is
determined in advance or in arrears by the Treasurer, and subsequent fiscal
years shall end on such date in subsequent years.
ARTICLE VII
Seal
7.1 General. The seal of the Trust shall consist of a flat-faced die with the
-------
word "Massachusetts", together with the name of the Trust and the year of
its organization cut or engraved thereon but, unless otherwise required by
the Trustees, the seal shall not be necessary to be placed on, and its
absence shall not impair the validity of, any document, instrument or other
paper executed and delivered by or on behalf of the Trust.
ARTICLE VIII
Execution of Papers
8.1 General. Except as the Trustees may generally or in particular cases
-------
authorize the execution thereof in some other manner, all deeds, leases,
agreements, contracts, bonds, notes, checks, drafts and other obligations
made, accepted or endorsed by the Trust shall be signed by one or more duly
elected officers of the Trust and need not bear the seal of the Trust.
ARTICLE IX
Issuance of Shares and Share Certificates
9.1 Sale of Shares. Except as otherwise determined by the Trustees, the Trust
--------------
will issue and sell for cash or securities from time to time, full and
fractional shares of its shares of beneficial interest, such shares to be
issued and sold at a price of not less than net asset value per share as
from time to time determined in accordance with the Declaration of Trust
and these Bylaws and, in the case of fractional shares, at a proportionate
reduction in such price. In the case of shares sold for securities, such
securities shall be valued in accordance with the provisions for
determining value of assets of officers of the Trust and severally
authorized to take all such actions as may be necessary or desirable to
carry out this Section 9.1.
4
<PAGE>
9.2 Share Certificates. In lieu of issuing certificates for share, the
------------------
Trustees or the transfer agent may either issue receipts therefor or may
keep accounts upon the books of the Trust for the record holders of such
shares, who shall in either case be deemed, for all purposes hereunder, to
be the holders of certificates for such shares as if they had accepted such
certificates and shall be held to have expressly assented and agreed to the
terms thereof.
The Trustees may at any time authorize the issuance of share certificates.
In that event, each shareholder shall be entitled to a certificate stating
the number of shares owned by him or her, in such form as shall be
prescribed from time to time by the Trustees. Such certificates shall be
signed by the Chairman of the Board, the President or any Vice President
and by the Treasurer or any Assistant Treasurer. Such signatures may be
facsimile if the certificate is signed by a transfer agent, or by a
registrar, other than a Trustee, officer or employee of the Trust. In case
any officer who has signed or whose facsimile signature has been placed on
such certificate shall cease to be such officer before such certificate is
issued, it may be issued by the Trust with the same effect as if he were
such officer at the time of its issue.
9.3 Loss of Certificates. In the case of the alleged loss, destruction or
--------------------
mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees may prescribe.
9.4 Discontinuance of Issuance of Certificates. The Trustees may at any time
------------------------------------------
discontinue the issuance of share certificates and may, be written notice
of each shareholder, require the surrender of share certificates to the
Trust for cancellation. Such surrender and cancellation shall not affect
the ownership of shares of the Trust.
ARTICLE X
Provisions Relating to the Conduct of the Trust's Business
10.1 Determination of Net Asset Value Per Share. Net asset value per share of
------------------------------------------
each series of shares of the Trust shall mean: (i) the value of all assets
of such series; (ii) less total liabilities of such series; (iii) divided
by the number of shares of such series outstanding, in each case at the
time of each determination. The net asset value per share of each series
shall be determined as of the normal close of trading on the New York Stock
Exchange on each day on which such Exchange is open or at such other time
and on such other days as the Trustees may determine. As of any time other
than the normal close of trading on such Exchange, the Trustees may cause
the net asset value per share last determined to be determined again in a
similar manner or adjusted to reflect changes in market values of
securities in the portfolio, such adjustment to be made on the basis of
changes in selected security prices determined by the Trustees to be
relevant to the portfolio of such series or in averages or in other
standard and readily ascertainable market data, and the Trustees may fix
the time when such redetermined or adjusted net asset value per share of
each series shall become effective.
In valuing the portfolio investments of any series for determination of net
asset value per share of such series, securities for which market
quotations are readily available shall be valued at prices which, in the
opinion of the Trustees or the person designated by the Trustees to make
the determination, most nearly represent the market value of such
securities, and other securities and assets shall be valued at their fair
value as determined by or pursuant to the direction of the Trustees, which
in the case of short-term debt obligations, commercial paper and repurchase
agreements may, but need not, be on the basis of quoted yields for
securities of comparable maturity, quality and type, or on the basis of
amortized cost. Expenses and liabilities of the Trust
5
<PAGE>
shall be accrued each day. Liabilities may include such reserves for
taxes, estimated accrued expenses and contingencies as the Trustee of their
designates may be in their sole discretion deem fair and reasonable under
the circumstances. No accruals shall be in respect of taxes on unrealized
appreciation of securities owned unless the Trustees shall otherwise
determine. Dividends payable by the Trust shall be deducted as at the time
of but immediately prior to the determination of net asset value per share
on the record date therefor.
ARTICLE XI
Shareholders
11.1 Shareholders Meetings. A meeting of the shareholders of the Trust or of any
---------------------
one or more series of shares may be called at any time by the Trustees, by
the President or, if the Trustees and the President shall fail to call any
meeting of shareholders for a period of 30 days after written application
of one or more shareholders who hold at least 10% of all outstanding shares
of the Trust, if shareholders of all series are required under the
Declaration of Trust to vote in the aggregate and not by individual series
at such meeting, of any series, if shareholders of such series are entitled
under the Declaration of Trust to vote by individual series at such
meeting, then such shareholders may call such meeting. If the meeting is a
meeting of the shareholders of one or more series of shares, but not a
meeting of all shareholders of such one or more series shall be entitled to
notice of an to vote at the meeting. Each call of a meeting shall state the
place, date, hour and purposes of the meeting.
11.2 Record Dates. For the purpose of determining the shareholders who are
------------
entitled to vote or act at any meeting or an adjournment thereof, or who
are entitled to receive payment of any dividend or of any other
distribution, the Trustees may from time to time fix a time, which shall be
not more than 90 days before the date of any meeting of shareholders or the
date for the payment of any dividend or of any other distribution, as the
record date for determining the shareholders having the right to notice of
and to vote at such meeting and any adjournment thereof or the right to
receive such dividend or distribution, and in such case only shareholders
of record on such record date shall have such right notwithstanding any
transfer of shares on the books of the Trust after the record date; or
without fixing such record date the Trustees may for any of such purposes
close the register or transfer books for all or any part of such period.
ARTICLE XII
Amendments to the Bylaws
12.1 General. These Bylaws may be amended or repealed, in whole or in part, by a
-------
majority of the Trustees then in office at any meeting of the Trustees, or
by one or more writings signed by such a majority.
6
<PAGE>
Exhibit 4(a)
MANAGEMENT AGREEMENT
Allmerica Financial Investment Management Services, Inc. (the "Adviser") and
Allmerica Investment Trust ("Trust") hereby confirm their Agreement covering
services as hereinafter set forth. The terms and provisions of this Agreement
shall take effect on April 16, 1998.
1. The Trust hereby retains the Adviser as investment adviser for the series
of shares of the Trust as listed on Schedule A attached hereto and for such
other series of shares as the Trust and the Adviser may from time to time
agree on, each such series of shares being hereinafter referred to as a
"Fund." The Adviser shall also manage, supervise and conduct the other
affairs and business of the Trust and matters incidental thereto, subject
always to the provisions of the Trust's Agreement and Declaration of Trust,
Bylaws and of the provisions of the Investment Company Act of 1940, as
amended ("1940 Act"). In providing and performing such services, the
Adviser will function in cooperation with and subject always to the
direction and control of the Trustees of the Trust and in cooperation with
the Trust's authorized officers and representatives.
2. Investment Advisory Services. The Adviser agrees to act as the investment
----------------------------
adviser for, and to manage the investment of assets of, each Fund and to
make purchases and sales of securities for each Fund's account. The Adviser
shall assume responsibility for the management of the portfolio securities
of each Fund and the making and execution of all investment decisions for
each Fund.
A. Investment of each Fund's assets shall be in accordance with the
objectives and policies of each Fund as set forth in the current
Registration Statement of the Trust filed with the Securities and
Exchange Commission (the "SEC"), and any applicable federal and state
laws.
B. The Adviser shall report to the Trustees of the Trust (the "Trustees")
at such times and in such detail as the Trustees may from time to time
determine to be appropriate in order to permit the Trustees to
determine the adherence by the Adviser to the investment policies and
legal requirements of each Fund.
C. The Adviser shall place all orders for the purchase and sale of
portfolio investments for the account of the Funds with issuers,
brokers or dealers selected by the Adviser which may include brokers
or dealers affiliated with the Adviser. In the selection of such
brokers or dealers and the placing of such orders, the Adviser shall
always seek best execution (except to the extent permitted by the next
sentence hereof), which is to place portfolio transactions where the
Trust can obtain the most favorable combination of price and execution
services in particular transactions or provided on a continuous basis
by a broker or dealer, and to deal directly with a principal market
maker in connection with over-the-counter transactions, except when it
is believed that best execution is obtainable elsewhere. Subject to
such policies as the Trustees may determine, the
<PAGE>
Adviser shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by
reason of its having caused the Trust to pay a broker or dealer that
provides brokerage and research services an amount of commission for
effecting a portfolio investment transaction which is in excess of the
amount of commission another broker or dealer would have charged for
effecting that transaction, if the Adviser determines in good faith
that such excess amount of commission was reasonable in relation to
the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular
transaction or the overall responsibilities of the Adviser and its
affiliates with respect to the Trust and to other clients as to which
the Adviser or any affiliate of the Adviser exercises investment
discretion.
D. Subject to the provisions of the Trust's Agreement and Declaration of
Trust and the 1940 Act, the Adviser, at its expense, may select and
contract with one or more investment advisers (the "Sub-Advisers") to
provide to the Adviser such investment advice relating to the assets
of a Fund and related services as the Adviser may from time to time
deem appropriate, or delegate any or all of its functions hereunder to
one or more Sub-Advisers, provided that the Trustees shall approve any
such contract with a Sub-Adviser. So long as any Sub-Adviser serves as
investment adviser to any Fund pursuant to a Sub-Adviser Agreement in
substantially the form attached hereto as Exhibit A (the "Sub-Adviser
Agreement"), the obligation of the Adviser under this Agreement with
respect to managing the investment portfolio of such Fund shall be,
subject in any event to the control of the Trustees, to determine and
review with such Sub-Adviser the investment objectives, policies and
restrictions and placing of all orders for the purchase and sale of
portfolio securities for such Fund, all as further described in the
Sub-Adviser Agreement. The Adviser will compensate any Sub-Adviser of
any Fund for its services to such Fund. The Adviser may terminate the
services of any Sub-Adviser at any time, subject to the approval of
the Trustees, and shall at such time assume the responsibilities of
such Sub-Adviser unless and until a successor Sub-Adviser is selected.
3. Management Services. The Adviser will perform (or arrange for the
-------------------
performance by its affiliates) the management and administrative services
necessary for the operation of the Trust.
A. Subject to the supervision of the Trustees, and unless otherwise
provided herein the Adviser shall be responsible for the day to day
business activities of the Trust and shall perform all services
appropriate thereto, including: (i) providing for members of its
organization to serve without salaries as Trustees, officers, or
agents of the Trust; (ii) furnishing at its expense such office space
as may be necessary for the suitable conduct of the Trust's business
(other than pricing and bookkeeping) and all necessary light, heat,
telephone service, office equipment stationery, and stenographic,
clerical, mailing and messenger service in
2
<PAGE>
connection with such office; (iii) on behalf of the Funds of the
Trust, supervising relations with, and monitoring the performance of,
custodians, depositories, transfer and pricing agents, accountants,
attorneys, underwriters, brokers and dealers, insurers and other
persons in any capacity deemed to be necessary or desirable; (iv)
preparing all general shareholder communications, including
shareholder reports; (v) conducting shareholder relations; (vi)
maintaining the Trust's existence and its records; (vii) during such
times as shares are publicly offered, maintaining the registration and
qualification of the Trust's shares under federal and state law; and
(viii) investigating the development of management and shareholder
services (and, if appropriate, assisting in the development and
implementation of such services) designed to enhance the value or
convenience of the Funds of the Trust as investment vehicles.
B. The Adviser shall also furnish such reports, evaluations, information
or analyses to the Trust as the Trustees may request from time to time
or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Trustees with respect to Fund policies, and
shall carry out such policies as are adopted by the Trustees. The
Adviser shall, subject to review by the Trustees, furnish such other
services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Agreement.
Should the Trust have occasion to call upon the Adviser for services
not herein contemplated or through the Adviser to arrange for the
services of others, the Adviser will act for the Trust upon request to
the best of its ability, the compensation for its services to be
agreed upon with respect to each such occasion as it arises.
C. The Adviser will not furnish the Trust the following services under
this Agreement:
(i) determinations of the Trust's net assets and the net asset
value per share of its shares ("pricing");
(ii) maintenance of accounts, books and records as required by
Section 31(a) of the 1940 Act and the rules thereunder
("bookkeeping"); and
(iii) provision of custodian services, transfer agent services,
dividend disbursement and reinvestment services, shareholder
services, or shareholder recordkeeping services.
4. Expenses of the Trust. It is understood that the Trust will pay all its
---------------------
expenses other than those expressly stated to be payable by the Adviser
hereunder. The expenses payable by the Trust shall include, without
limitation; (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses associated with pricing and
bookkeeping;. (iv) fees and expenses of its Trustees other than those who
are "interested
3
<PAGE>
persons" of the Trust or the Adviser; (v) legal and audit expenses; (vi)
custodian, registrar and transfer agent fees and expenses; (vii) fees and
expenses related to the registration and qualification of the Trust and the
Fund's shares for distribution under state and federal securities laws;
(viii) expenses of printing and mailing reports and notices and proxy
material to shareholders of the Funds; (ix) all other expenses incidental
to holding meetings of the Trust's shareholders, including proxy
solicitations therefor; (x) insurance premiums for fidelity and other
coverage; (xi) its proportionate share of association membership dues;
(xii) expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xiii) expenses of printing
and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders: and (ix) such non-
recurring or extraordinary expenses as may arise, including those relating
to actions, suits or proceedings to which the Trust is a party and the
legal obligation which the Trust may have to indemnify the Trust's Trustees
and officers with respect thereto.
5. Compensation. As full compensation for the services furnished and expenses
------------
borne by the Adviser herein, the Trust will pay a monthly fee to the
Adviser, computed and paid monthly at an annual rate of the average daily
net assets of each Fund, as described in Schedule B which is attached
hereto.
The fee computed with respect to the net assets of each Fund shall be paid
from the assets of such Fund. The average daily net assets of each Fund
shall be determined by taking an average of all of the determinations of
net asset value during each month at the close of business on each business
day during such month while this Agreement is in effect. The fee for each
month shall be payable within five (5) business days after the end of the
month.
In the event that expenses of any Fund for any fiscal year should exceed
the expense limitation on investment company expenses imposed by any
statute or regulatory authority of any jurisdiction in which shares of the
Fund are then qualified for offer and sale, the compensation due the
Adviser such period shall be reduced by the amount of such excess by a
reduction or refund thereof, subject to readjustment during the Fund's
fiscal year. In the event that the expenses with respect to any Fund should
exceed any expense limitation which the Adviser may, by written notice to
the Trust, voluntarily declare to be effective, subject to such terms and
conditions as the Adviser may prescribe in the notice, the compensation due
the Adviser shall be reduced, and, if necessary, the Adviser shall bear
expenses with respect to the Fund, to the extent required by the expense
limitation.
If the Adviser shall serve for any period less than a full month, the
foregoing compensation shall be prorated according to the proportion which
such period bears to a full month.
4
<PAGE>
In addition to the foregoing, the Trust will reimburse the Adviser for the
traveling and incidental expenses (other than the regular Worcester office
expenses described above) which may be incurred in connection with special
work performed at its request.
6. Limitation of Liability. The Adviser shall be under no liability to the
-----------------------
Trust or its Shareholders or creditors for any matter or thing in
connection with the performance of any of the Adviser's services hereunder
or for any losses sustained or that may be sustained in the purchase, sale
or retention of any investment for the Funds of the Trust made by it in
good faith; provided, however, that nothing herein contained shall be
construed to protect the Adviser against any liability to the Trust by
reason of the Adviser's own willful misfeasance, bad faith, or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties hereunder.
7. Amendment. This Agreement may be amended at any time by mutual consent of
---------
the parties, provided that such amendment shall have been approved (i) by
vote of a majority of the outstanding voting securities of each Fund
affected by such amendment, and (ii) by vote of a majority of the Trustees
of the Trust who are not interested persons of the Adviser or any Sub-
Adviser or of the Trust, cast in person at a meeting called for the purpose
of voting on such approval.
8. Termination. This Agreement shall be effective as of the date executed, and
-----------
shall remain in full force and effect as to each Fund continuously
thereafter, until terminated as provided below.
A. Unless terminated as herein provided, this Agreement shall remain in
full force and effect through May 30, 1998, and shall continue in full
force and effect for successive periods of one year thereafter, but
only so long as each such continuance is approved (i) by the Trustees
or by the affirmative vote of a majority of the outstanding voting
securities of a Fund, and (ii) by a vote of a majority of the Trustees
who are not interested persons of the Trust or of the Adviser or of any
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 a Fund for their
approval and such shareholders fail to approve such continuance of this
Agreement as provided herein, the Adviser may continue to serve
hereunder in a manner consistent with the 1940 Act and the rules and
regulations thereunder.
B. This Agreement may be terminated as to any Fund without the payment of
any penalty by vote of the Trustees or by vote of a majority of the
outstanding voting securities of such Fund at any annual or special
meeting or by the Adviser on sixty days' written notice.
C. This Agreement shall automatically terminate in the event of its
assignment.
5
<PAGE>
9. Agreement and Declaration of Trust. A copy of the Trust's Agreement and
----------------------------------
Declaration is on file with the Secretary of State of the Commonwealth of
Massachusetts, and notice is hereby given that this instrument is executed
by the Trustees as Trustees and not individually, and that the obligations
of this instrument are not binding upon any of the Trustees, officers or
shareholders individually but are binding only upon the assets and property
of the Trust.
10. Other Agreements, etc. It is understood that any of the shareholders,
---------------------
Trustees, officers and employees of the Trust may be a shareholder,
partner, director, officer or employee of, or be otherwise interested in,
the Adviser, and in any person controlled by or under common control with
the Adviser, and that the Adviser and any person controlled by or under
common control with the Adviser may have an interest in the Trust. It is
also understood that the Adviser and persons controlled by or under common
control with the Adviser have and may have advisory, management service or
other contracts with other organizations and persons, and may have other
interests and businesses.
11. Miscellaneous. The Adviser, its directors, officers, and its employees
-------------
retain the right to engage in other business, and to render portfolio
management, investment advisory, or other services of any kind to any other
corporation, firm, individual, or association. Neither the Adviser nor any
officer, director, or shareholder of the Adviser shall act as principal or
receive any compensation in connection with the purchase or sale of
securities by or on behalf of the Trust other than the compensation
provided in this Agreement.
The Adviser is an independent contractor and not an agent of the Trust.
The Trust recognizes the Adviser's control of the names "SMA Investment
Trust" and "Allmerica Investment Trust" and agrees that its right to use
such names is non-exclusive and can be terminated by the Adviser at any
time. The use of such names will be terminated automatically if at any time
the Adviser or affiliate of the Adviser ceases to be investment adviser for
the Trust.
For the purposes of this Agreement, majority of the outstanding voting
securities of a Fund at any annual or special meeting shall mean a
concurring vote of (i) 67% or more of the shares of the Fund represented at
such meeting, if more than 50% of the outstanding shares of the Fund are
represented in person or by proxy, or (ii) 50% of the outstanding shares of
the Fund, whichever is less.
For the purposes of this Agreement, the terms "interested person" and
"assignment" shall have their respective meanings defined in the 1940 Act,
subject, however, to such exemptions as may be granted by the SEC under
said Act; the term "specifically approve at least annually" shall be
construed in a manner consistent with the 1940 Act and the rules and
regulations thereunder; and the term "brokerage and research services"
shall
6
<PAGE>
have the meaning given in the Securities Exchange Act of 1934 and the rules
and regulations thereunder.
Each party hereto shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the Securities and
Exchange Commission, the NASD and State insurance regulators) and shall
permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or
the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner, or the Insurance
Commissioner of any other state, with any information or reports in
connection with services provided under this Agreement which such
Commissioner may reasonably request in order to ascertain whether the
variable contracts operations of the Company are being conducted in a
manner consistent with the state's regulations concerning variable
contracts and any other applicable law or regulations.
This Agreement shall be effective on the date executed. Executed this 16th
day of April, 1998.
ALLMERICA FINANCIAL INVESTMENT
MANAGEMENT SERVICES, INC.
/s/ Julia Fletcher By: /s/ Richard M. Reilly
- ------------------------- ---------------------------------
Witness
ALLMERICA INVESTMENT TRUST
/s/ Julia Fletcher By: /s/ Thomas P. Cunningham
- ------------------------- ---------------------------------
Witness
7
<PAGE>
SCHEDULE A
SERIES OF SHARES OF THE TRUST
as of Effective May 1, 2000
Select Emerging Markets Fund
Select Aggressive Growth Fund
Select Capital Appreciation Fund
Select Value Opportunity Fund
Select International Equity Fund
Select Growth Fund
Select Strategic Growth Fund
Core Equity Fund
Equity Index Fund
Select Growth and Income Fund
Select Investment Grade Income Fund
Government Bond Fund
Money Market Fund
8
<PAGE>
SCHEDULE B
COMPENSATION
Effective as of September 1, 1999
As full compensation for the services furnished and expenses borne by the
Adviser herein, the Trust will pay a monthly fee to the Adviser, computed and
paid monthly at an annual rate of the average daily net assets of each Fund, as
described below:
<TABLE>
<CAPTION>
Select Select Select Capital Select Value Select Select
Emerging Aggressive Appreciation Opportunity International Growth
Markets Fund Growth Fund Fund Fund Equity Fund Fund
------------- ------------ --------------- ------------- -------------- -------
<S> <C> <C> <C> <C> <C> <C>
Manager Fee 1.35% (1) (1) (2) (1) (2)
<CAPTION>
Select
Strategic Equity Select Growth Select Investment
Growth Growth Index and Income Income Grade Income
Fund Fund Fund Fund Fund Fund
----------- ------------ ----------- -------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Manager Fee 0.85% (1) (3) (1) (4) (4)
<CAPTION>
Government Money
Bond Market
Fund Fund
---- ----
<S> <C> <C>
Manager Fee 0.50% (3)
</TABLE>
- --------------------------------------------------------------------------------
(1) The Manager's fees for the Select Aggressive Growth Fund, Select Capital
Appreciation Fund, Select International Equity Fund, Growth Fund and
Select Growth and Income Fund, computed daily at an annual rate based on the
average daily net assets of each Fund, are based on the following schedule:
<TABLE>
<CAPTION>
Select Select Growth
Select Aggressive Select Capital International Growth and Income
Assets Growth Fund Appreciation Fund Equity Fund Fund Fund
- ------ ----------- ----------------- ----------- ----------- ----
<S> <C> <C> <C> <C> <C>
First $100 Million .......... 1.00% 1.00% 1.00% 0.60% 0.75%
$100 to $250 Million ........ 0.90% 0.90% 0.90% 0.60% 0.70%
$250 to $500 Million ........ 0.80% 0.80% 0.85% 0.40% 0.65%
$500 to $1 Billion .......... 0.70% 0.70% 0.85% 0.35% 0.65%
Over $1 Billion ............. 0.65% 0.65% 0.85% 0.35% 0.65%
</TABLE>
9
<PAGE>
(2) The Manager's fee for the Select Value Opportunity Fund and Select Growth
Fund, computed daily at an annual rate based on the average daily net
assets of the Fund, is based on the following schedule:
Select
Value Select
Opportunity Growth
Assets Fund Fund
------ ---- ----
First $100 Million ............... 1.00% 0.85%
Next $150 Million ................ 0.85% 0.85%
Next $250 Million ................ 0.80% 0.80%
Next $250 Million ................ 0.75% 0.75%
Over $750 Million ................ 0.70% 0.70%
(3) The Manager's fees for the Equity Index Fund and Money Market Fund,
computed daily at an annual rate based on the average daily net assets of
each Fund, are based on the following schedule:
Equity Money
Index Market
Assets Fund Fund
------ ---- ----
First $50 Million ................ 0.35% 0.35%
Next $200 Million ................ 0.30% 0.25%
Over $250 Million ................ 0.25% 0.20%
(4) The Manager's fees for the Investment Grade Income Fund, computed daily at
an annual rate based on the average daily net assets of each Fund, are
based on the following schedule:
Investment
Grade
Assets Income Fund
------ -----------
First $50 Million ................ 0.50%
Next $50 Million ................. 0.45%
Over $100 Million ................ 0.40%
10
<PAGE>
EXHIBIT A
FORM OF
SUB-ADVISER AGREEMENT
SUB-ADVISER AGREEMENT executed as of ________________,1998 between Allmerica
Financial Investment Management Services, Inc. (the "Manager") and
__________________________________ (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
_______________________________ (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. 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).
11
<PAGE>
(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.
4. AMENDMENTS OF THIS AGREEMENT
This Agreement (including Schedule A attached hereto) shall not be amended
as to any
12
<PAGE>
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 _______________ 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 "______________" or "_________________" 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
13
<PAGE>
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.
14
<PAGE>
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 ___________________________ 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:
--------------------------------------
Its:
--------------------------------------
(NAME OF SUB-ADVISER)
By:
--------------------------------------
Its:
--------------------------------------
Accepted and Agreed to as of the day and year first above written:
ALLMERICA INVESTMENT TRUST
By:
--------------------------------------
Its:
--------------------------------------
15
<PAGE>
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 of the average daily net assets of the Fund as described below:
NET ASSETS FEE RATE
---------- --------
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.
16
<PAGE>
Exhibit 4(c)
SUB-ADVISER AGREEMENT
SUB-ADVISER AGREEMENT executed as of April 16, 1998 between ALLMERICA FINANCIAL
INVESTMENT MANAGEMENT SERVICES, INC. (the "Manager"), and NICHOLAS-APPLEGATE
CAPITAL MANAGEMENT (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 each of the
following series of shares of the Trust: Select Aggressive Growth Fund and such
other series of shares as the Trust, the Manager and the Sub-Adviser may from
time to time agree on (together, the "Funds"). The Sub-Adviser will make
investment decisions on behalf of each of the Funds and place all orders for the
purchase and sale of portfolio securities. In the performance of its duties,
the 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 each of the
Funds, as set forth in the current Registration Statement of the Trust filed
with the Securities and Exchange Commission and any applicable federal and state
laws, and will comply with other policies which the Trustees of the Trust (the
"Trustees") or the Manager, as the case may be, may from time to time determine
in writing. The 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 Funds and to consult with the Manager regarding the investment affairs of
the Funds.
(b) The Sub-Adviser, at its expense, will furnish (i) all necessary
investment and management facilities, including salaries of personnel required
for it to execute its duties faithfully, and (ii) administrative facilities,
including clerical personnel and equipment necessary for the efficient conduct
of the investment affairs of each of the Funds (excluding pricing and
bookkeeping services).
(c) The Sub-Adviser shall place all orders for the purchase and sale of
portfolio investments for each 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 each Fund can obtain the most favorable combination of price and execution
services in particular transactions or provided on a continuing basis by a
broker or dealer, and to deal directly with a principal market maker in
connection with over-the-counter transactions, except when it is believed that
best execution is obtainable elsewhere. Subject to such policies as the
Trustees may determine, the 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
<PAGE>
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 shall not be obligated to pay any expenses of or for a
Fund not expressly assumed by the Sub-Adviser pursuant to this Section 1.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and
employees of the Trust may be a shareholder, partner, director, officer or
employee of, or be otherwise interested in, the 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 and for the expenses borne by the Sub-Adviser
pursuant to Section 1, a fee, determined as described in Schedule A which is
attached hereto and made a part hereof. Such fee shall be paid by the Manager
and not by the Trust.
4. AMENDMENTS OF THIS AGREEMENT
This Agreement (including Schedule A hereto) shall not be amended as to any
Fund unless such amendment is approved at a meeting by the affirmative vote of a
majority of the outstanding voting securities of the Fund, and by the vote, cast
in person at a meeting called for the purpose of voting on such approval, of a
majority of the Trustees who are not interested persons of the Trust or of the
Manager or of the Sub-Adviser.
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
2
<PAGE>
through May 30, 1998, and shall continue in full force and effect for
successive periods of one year thereafter, but only so long as each such
continuance is approved annually (i) by the Trustees or by the
affirmative vote of a majority of the outstanding voting securities of a
Fund, and (ii) by a vote of a majority of the Trustees who are not
interested persons of the Trust or of the Manager or of any 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 a 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 Investment Company Act of 1940, as amended
("1940 Act") and the rules and regulations thereunder.
B. This Agreement may be terminated as to any Fund without the payment of
any penalty by the Manager, subject to the approval of the Trustees, by
vote of the Trustees, or by vote of a majority of the outstanding voting
securities of such Fund at any annual or special meeting or by the Sub-
Adviser on sixty days' written notice.
C. This Agreement shall terminate automatically, without the payment of any
penalty, in the event of its assignment or in the event that the
Management Agreement shall have terminated for any reason.
6. CERTAIN DEFINITIONS
For the purposes of this Agreement, the "affirmative vote of a majority of
the outstanding voting securities" means the affirmative vote, at a duly called
and held meeting of shareholders, (a) of the holders of 67% or more of the
shares of a Fund present (in person or by proxy) and entitled to vote at such
meeting, if the holders of more than 50% of the outstanding shares of the Fund
entitled to vote at such meeting are present in person or by proxy, or (b) of
the holders of more than 50% of the outstanding shares of the Fund entitled to
vote at such meeting, whichever is less.
For the purposes of this Agreement, the terms "control", "interested person"
and "assignment" shall have their respective meanings defined in the 1940 Act
and the Rules and Regulations thereunder, subject, however, to such exemptions
as may be granted by the Securities and Exchange Commission under said Act; the
term "specifically approve at least annually" shall be construed in a manner
consistent with the 1940 Act and the Rules and Regulations thereunder; and the
term "brokerage and research services" shall have the meaning given in the
Securities and Exchange Act of 1934 and the Rules and Regulations thereunder.
7. NONLIABILITY OF SUB-ADVISER
In the absence of willful misfeasance, bad faith or gross negligence on the
part of the Sub-Adviser, or reckless disregard of its obligations and duties
hereunder, the Sub-Adviser shall not be subject to any liability to the Trust,
to any shareholder of the Trust or to the Manager, for any act or omission in
the course of, or connected with, rendering services hereunder.
3
<PAGE>
8. LIMITATIONS OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS
A copy of the Trust's Agreement and Declaration of Trust is on file with the
Secretary of the Commonwealth of Massachusetts, and notice is hereby given that
this instrument is executed by the Trustees as Trustees and not individually and
that the obligations of this instrument are not binding upon any of the
Trustees, officers or shareholders individually but are binding only upon the
assets and property of the appropriate Fund.
9. MISCELLANEOUS
A. The Sub-Adviser shall be responsible for voting the securities of the
Funds.
B. Any notices from the Sub-Adviser to the Manager shall be mailed to the
following address:
Allmerica Financial Investment Management Services, Inc.
440 Lincoln Street
Worcester MA 01653
Attn: Counsel
Any notices from the Manager to the Sub-Adviser shall be mailed to the
following address:
Nicholas-Applegate Capital Management, L.P.
501 West Broadway, Suite 2000
San Diego CA 92101
Attn: Antonio C. Cabral, Jr.
Vice President
C. It is understood that this Agreement shall be governed by and construed
under and in accordance with the laws of the Commonwealth of
Massachusetts laws except when Federal securities laws or other Federal
laws are applicable.
4
<PAGE>
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 NICHOLAS-APPLEGATE CAPITAL MANAGEMENT has caused
this instrument to be signed in duplicate on its behalf by its duly authorized
representative, all as of the day and year first above written.
ALLMERICA FINANCIAL INVESTMENT
MANAGEMENT SERVICES, INC.
By: /s/ Richard M. Reilly
---------------------
Title: President
------------------
NICHOLAS-APPLEGATE CAPITAL MANAGEMENT
By: /s/ E. Blake Moore, Jr.
-----------------------
Title: General Counsel
--------------------
Accepted and Agreed to as of the day and year first above written:
ALLMERICA INVESTMENT TRUST
By: /s/ Thomas P. Cunningham
------------------------------
Title: Vice President & Treasurer
---------------------------
5
<PAGE>
SCHEDULE A
----------
Effective September 1, 1999
The Manager will pay to the Sub-Adviser as compensation for the Sub-Advisers
services rendered and for the expenses borne by the Sub-Adviser pursuant to
Section 1, a fee, computed daily at an annual rate based on the average daily
net assets of each Fund (valued in accordance with the current Registration
Statement of the Fund), as set forth below:
Fund Net Assets Fee Rate
---- ---------- --------
Select Aggressive Growth Fund First $100 million 0.60%
Next $150 million 0.50%
Next $250 million 0.40%
Next $250 million 0.375%
Over $750 million 0.35%
Such fee will be paid to the Sub-Adviser after the end of each calendar
quarter.
6
<PAGE>
FORM OF Exhibit 4(h)
SUB-ADVISER AGREEMENT
SUB-ADVISER AGREEMENT executed as of April 1, 2000 between Allmerica
Financial Investment Management Services, Inc. (the "Manager") and TCW
Investment Management Company (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 Strategic 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 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.
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
<PAGE>
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.
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.
2
<PAGE>
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 _______________ 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 "TCW Investment Management Company" or "The TCW Group" 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
<PAGE>
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
<PAGE>
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 TCW INVESTMENT MANAGEMENT COMPANY 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:
---------------------------------
TCW INVESTMENT MANAGEMENT COMPANY
By:
---------------------------------
Title:
---------------------------------
Accepted and Agreed to as of the day and year first above written:
ALLMERICA INVESTMENT TRUST
By: ---------------------------------
Title:
---------------------------------
5
<PAGE>
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 of 0.85% based on average daily net assets of the Fund of up to $100
million. When the average daily net assets of the Fund exceed $100 million, the
fee shall be computed daily and paid quarterly at an annual rate of 0.75% of the
total average daily net assets of the Fund.
FUND NET ASSETS FEE RATE
---- ---------- --------
Select Strategic Growth Fund First $100 million 0.85%
Over $100 million 0.75%
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
<PAGE>
Exhibit 7
CUSTODIAN AGREEMENT
between
INVESTORS BANK & TRUST COMPANY
and
ALLMERICA INVESTMENT TRUST
<PAGE>
CUSTODIAN AGREEMENT
AGREEMENT made as of this 1st day of April, 1999, between ALLMERICA
INVESTMENT TRUST, a Massachusetts business trust (the "Fund"), and INVESTORS
BANK & TRUST COMPANY, a Massachusetts trust company (the "Bank").
The Fund, an open-end management investment company on behalf of the
portfolios/series listed on Appendix A hereto (as such Appendix A may be amended
---------- ----------
from time to time) (each a "Portfolio" and collectively, the "Portfolios"),
desires to place and maintain all of its portfolio securities and cash in the
custody of the Bank. The Bank has at least the minimum qualifications required
by Section 17(f)(1) of the Investment Company Act of 1940 (the "1940 Act") to
act as custodian of the portfolio securities and cash of the Fund, and has
indicated its willingness to so act, subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. Bank Appointed Custodian. The Fund hereby appoints the Bank as
------------------------
custodian of its portfolio securities and cash delivered to the Bank as
hereinafter described and the Bank agrees to act as such upon the terms and
conditions hereinafter set forth. For the services rendered pursuant to this
Agreement the Fund agrees to pay to the Bank the fees set forth on Appendix B
----------
hereto.
2. Definitions. Whenever used herein, the terms listed below will have
-----------
the following meaning:
2.1 Authorized Person. Authorized Person will mean any of the persons
-----------------
duly authorized to give Proper Instructions or otherwise act on behalf of the
Fund by appropriate resolution of its Board, and set forth in a certificate as
required by Section 4 hereof.
2.2 Board. Board will mean the Board of Directors or the Board of
-----
Trustees of the Fund, as the case may be.
2.3 Security. The term security as used herein will have the same
--------
meaning assigned to such term in the Securities Act of 1933, as amended,
including, without limitation, any note, stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or participation in any profit
sharing agreement, collateral-trust certificate, preorganization certificate or
subscription, transferable share, investment contract, voting-trust certificate,
certificate of deposit for a security, fractional undivided interest in oil,
gas, or other mineral rights, any put, call, straddle, option, or privilege on
any security, certificate of deposit, or group or index of securities (including
any interest therein or based on the value thereof), or any put, call, straddle,
option, or privilege entered into on a national securities exchange relating to
a foreign currency, or, in general, any interest or instrument commonly known as
a "security", or any certificate of interest or participation in, temporary or
interim certificate for, receipt for, guarantee of, or warrant or right to
subscribe to, or option contract to purchase or sell any of the foregoing, and
futures, forward contracts and options thereon.
2.4 Portfolio Security. Portfolio Security will mean any Security owned
------------------
by the Fund.
2.5 Officers' Certificate. Officers' Certificate will mean, unless
---------------------
otherwise indicated, any request, direction, instruction, or certification in
writing signed by any two Authorized Persons of the Fund.
<PAGE>
2.6 Book-Entry System. Book-Entry System shall mean the Federal Reserve-
-----------------
Treasury Department Book Entry System for United States government,
instrumentality and agency securities operated by the Federal Reserve Bank, its
successor or successors and its nominee or nominees.
2.7 Depository. Depository shall mean The Depository Trust Company
----------
("DTC"), a clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934 ("Exchange
Act"), its successor or successors and its nominee or nominees. The term
"Depository" shall further mean and include any other person authorized to act
as a depository under the 1940 Act, its successor or successors and its nominee
or nominees, specifically identified in a certified copy of a resolution of the
Board.
2.8 Proper Instructions. Proper Instructions shall mean (i) instructions
-------------------
regarding the purchase or sale of Portfolio Securities, and payments and
deliveries in connection therewith, given by an Authorized Person, such
instructions to be given in such form and manner as the Bank and the Fund shall
agree upon from time to time, and (ii) instructions (which may be continuing
instructions) regarding other matters signed or initialed by an Authorized
Person. Oral instructions will be considered Proper Instructions if the Bank
reasonably believes them to have been given by an Authorized Person. The Fund
shall cause all oral instructions to be promptly confirmed in writing. The Bank
shall act upon and comply with any subsequent Proper Instruction which modifies
a prior instruction and shall use reasonable efforts to detect any discrepancy
between the original instruction and such confirmation and to report such
discrepancy promptly to the Fund. The Fund shall be responsible, at the Fund's
expense, for taking any action, including any reprocessing, necessary to correct
any such discrepancy or error, and to the extent such action requires the Bank
to act, the Fund shall give the Bank Proper Instructions as to the action
required. Upon receipt by the Bank of an Officers' Certificate as to the
authorization by the Board accompanied by a detailed description of procedures
approved by the Fund, Proper Instructions may include communication effected
directly between electro-mechanical or electronic devices provided that the
Board and the Bank agree in writing that such procedures afford adequate
safeguards for the Fund's assets.
3. Separate Accounts. The Bank will segregate the assets of each Portfolio
-----------------
to which this Agreement relates into a separate account for each such Portfolio
containing the assets of such Portfolio (and all investment earnings thereon).
Unless the context otherwise requires, any reference in this Agreement to any
actions to be taken by the Fund shall be deemed to refer to the Fund acting on
behalf of one or more of its Portfolios, any reference in this Agreement to any
assets of the Fund, including, without limitation, any portfolio securities and
cash and earnings thereon, shall be deemed to refer only to assets of the
applicable Portfolio, any duty or obligation of the Bank hereunder to the Fund
shall be deemed to refer to duties and obligations with respect to such
individual Portfolio and any obligation or liability of the Fund hereunder shall
be binding only with respect to such individual Portfolio, and shall be
discharged only out of the assets of such Portfolio.
4. Certification as to Authorized Persons. The Secretary or Assistant
--------------------------------------
Secretary of the Fund will at all times maintain on file with the Bank his or
her certification to the Bank, in such form as may be acceptable to the Bank, of
(i) the names and signatures of the Authorized Persons and (ii) the names of the
members of the Board, it being understood that upon the occurrence of any change
in the information set forth in the most recent certification on file (including
without limitation any person named in the most recent certification who is no
longer an Authorized Person as designated therein), the Secretary or Assistant
Secretary of the Fund will sign a new or amended certification setting forth the
change and the new, additional or omitted names or signatures. The Bank will be
entitled to rely and act upon any
2
<PAGE>
Officers' Certificate given to it by the Fund which has been signed by
Authorized Persons named in the most recent certification received by the Bank.
5. Custody of Cash. As custodian for the Fund, the Bank will open and
---------------
maintain a separate account or accounts in the name of the Fund or in the name
of the Bank, as Custodian of the Fund, and will deposit to the account of the
Fund all of the cash of the Fund, except for cash held by a subcustodian
appointed pursuant to Sections 14.2 or 14.3 hereof, including borrowed funds,
delivered to the Bank, subject only to draft or order by the Bank acting
pursuant to the terms of this Agreement. Pursuant to the Bank's internal
policies regarding the management of cash accounts and in order to allow the
Bank to comply with applicable Federal Deposit Insurance Corporation and Federal
Reserve Board regulations, the Bank may segregate certain portions of the cash
of the Fund into a separate savings deposit account upon which the Bank reserves
the right to require seven (7) days notice prior to withdrawal of cash from such
an account. The Fund may at any time instruct the Bank to cease such
segregation of the Fund's cash. Upon receipt by the Bank of Proper Instructions
(which may be continuing instructions) or in the case of payments for
redemptions and repurchases of outstanding shares of common stock of the Fund,
notification from the Fund's transfer agent as provided in Section 7, requesting
such payment, designating the payee or the account or accounts to which the Bank
will release funds for deposit, and stating that it is for a purpose permitted
under the terms of this Section 5, specifying the applicable subsection, the
Bank will make payments of cash held for the accounts of the Fund, insofar as
funds are available for that purpose, only as permitted in subsections 5.1-5.9
below.
5.1 Purchase of Securities. Upon the purchase of securities for the
----------------------
Fund, against contemporaneous receipt of such securities by the Bank or against
delivery of such securities to the Bank in accordance with generally accepted
settlement practices and customs in the jurisdiction or market in which the
transaction occurs registered in the name of the Fund or in the name of, or
properly endorsed and in form for transfer to, the Bank, or a nominee of the
Bank, or receipt for the account of the Bank pursuant to the provisions of
Section 6 below, each such payment to be made at the purchase price shown on a
broker's confirmation (or transaction report in the case of Book Entry Paper (as
that term is defined in Section 6.6 hereof)) of purchase of the securities
received by the Bank before such payment is made, as confirmed in the Proper
Instructions received by the Bank before such payment is made.
5.2 Redemptions. In such amount as may be necessary for the repurchase
-----------
or redemption of common shares of the Fund offered for repurchase or redemption
in accordance with Section 7 of this Agreement.
5.3 Distributions and Expenses of Fund. For the payment on the account
----------------------------------
of the Fund of dividends or other distributions to shareholders as may from time
to time be declared by the Board, interest, taxes, management or supervisory
fees, distribution fees, fees of the Bank for its services hereunder and
reimbursement of the expenses and liabilities of the Bank as provided hereunder,
fees of any transfer agent, fees for legal, accounting, and auditing services,
or other operating expenses of the Fund.
5.4 Payment in Respect of Securities. For payments in connection with
--------------------------------
the conversion, exchange or surrender of Portfolio Securities or securities
subscribed to by the Fund held by or to be delivered to the Bank.
5.5 Repayment of Loans. To repay loans of money made to the Fund, but,
------------------
in the case of final payment, only upon redelivery to the Bank of any Portfolio
Securities pledged or hypothecated therefor and upon surrender of documents
evidencing the loan;
3
<PAGE>
5.6 Repayment of Cash. To repay the cash delivered to the Fund for the
-----------------
purpose of collateralizing the obligation to return to the Fund certificates
borrowed from the Fund representing Portfolio Securities, but only upon
redelivery to the Bank of such borrowed certificates.
5.7 Foreign Exchange Transactions.
-----------------------------
(a) For payments in connection with foreign exchange contracts or
options to purchase and sell foreign currencies for spot and future delivery
(collectively, "Foreign Exchange Agreements") which may be entered into by the
Bank on behalf of the Fund upon the receipt of Proper Instructions, such Proper
Instructions to specify the currency broker or banking institution (which may be
the Bank, or any other subcustodian or agent hereunder, acting as principal)
with which the contract or option is made. The Bank shall have no duty with
respect to the selection of such currency brokers or banking institutions with
which the Fund deals or for their failure to comply with the terms of any
contract or option.
(b) In order to secure any payments in connection with Foreign
Exchange Agreements which may be entered into by the Bank pursuant to Proper
Instructions, the Fund agrees that the Bank shall have a continuing lien and
security interest, to the extent of any payment due under any Foreign Exchange
Agreement, in and to any property at any time held by the Bank for the Fund's
benefit or in which the Fund has an interest and which is then in the Bank's
possession or control (or in the possession or control of any third party acting
on the Bank's behalf). The Fund authorizes the Bank, in the Bank's sole
discretion, at any time to charge any such payment due under any Foreign
Exchange Agreement against any balance of account standing to the credit of the
Fund on the Bank's books, provided that if the obligations secured pursuant to
this section can be allocated to a specific Portfolio, such security interest
will be limited to the property held for that Portfolio only.
5.8 Other Authorized Payments. For other authorized transactions of
-------------------------
the Fund, or other obligations of the Fund incurred for proper Fund purposes;
provided that before making any such payment the Bank will also receive a
certified copy of a resolution of the Board signed by an Authorized Person
(other than the Person certifying such resolution) and certified by its
Secretary or Assistant Secretary, naming the person or persons to whom such
payment is to be made, and either describing the transaction for which payment
is to be made and declaring it to be an authorized transaction of the Fund, or
specifying the amount of the obligation for which payment is to be made, setting
forth the purpose for which such obligation was incurred and declaring such
purpose to be a proper corporate purpose.
5.9 Termination: Upon the termination of this Agreement as
-----------
hereinafter set forth pursuant to Section 8 and Section 16 of this Agreement.
6. Securities.
----------
6.1 Segregation and Registration. Except as otherwise provided
----------------------------
herein, and except for securities to be delivered to any subcustodian appointed
pursuant to Sections 14.2 or 14.3 hereof, the Bank as custodian will receive and
hold pursuant to the provisions hereof, in a separate account or accounts and
physically segregated at all times from those of other persons, any and all
Portfolio Securities which may now or hereafter be delivered to it by or for the
account of the Fund. All such Portfolio Securities will be held or disposed of
by the Bank for, and subject at all times to, the instructions of the Fund
pursuant to the terms of this Agreement. Subject to the specific provisions
herein relating to Portfolio Securities that are not physically held by the
Bank, the Bank will register all Portfolio Securities (unless otherwise directed
by Proper Instructions or an Officers' Certificate), in the name of a registered
nominee of the Bank as defined in the Internal Revenue Code and any Regulations
4
<PAGE>
of the Treasury Department issued thereunder, and will execute and deliver all
such certificates in connection therewith as may be required by such laws or
regulations or under the laws of any state.
The Fund will from time to time furnish to the Bank appropriate
instruments to enable it to hold or deliver in proper form for transfer, or to
register in the name of its registered nominee, any Portfolio Securities which
may from time to time be registered in the name of the Fund.
6.2 Voting and Proxies. Neither the Bank nor any nominee of the Bank
------------------
will vote any of the Portfolio Securities held hereunder, except in accordance
with Proper Instructions or an Officers' Certificate. The Bank will execute and
deliver, or cause to be executed and delivered, to the Fund or, if so instructed
by the Fund, to the investment advisor, all notices, proxies and proxy
soliciting materials delivered to the Bank with respect to such Securities, such
proxies to be executed by the registered holder of such Securities (if
registered otherwise than in the name of the Fund), but without indicating the
manner in which such proxies are to be voted.
6.3 Corporate Action. If at any time the Bank is notified that an
----------------
issuer of any Portfolio Security has taken or intends to take a corporate action
(a "Corporate Action") that affects the rights, privileges, powers, preferences,
qualifications or ownership of a Portfolio Security, including without
limitation, liquidation, consolidation, merger, recapitalization,
reorganization, reclassification, subdivision, combination, stock split or stock
dividend, which Corporate Action requires an affirmative response or action on
the part of the holder of such Portfolio Security (a "Response"), the Bank shall
notify the Fund or, if so instructed by the Fund, the investment advisor,
promptly of the Corporate Action, the Response required in connection with the
Corporate Action and the Bank's deadline for receipt from the Fund of Proper
Instructions regarding the Response (the "Response Deadline"). The Bank shall
use commercially reasonable efforts to monitor Corporate Action activity related
to Portfolio Securities. The Bank also shall employ systems to track the
statues of required Responses and the corresponding Corporate Action expiration
dates at the applicable depository. The Bank shall forward to the Fund via
telecopier and/or overnight courier all notices, information statements or other
materials relating to the Corporate Action promptly after receipt of such
materials by the Bank.
(a) The Bank shall act upon a required Response only after
receipt by the Bank of Proper Instructions from the Fund no later than 5:00 p.m.
on the date specified as the Response Deadline and only if the Bank (or its
agent or subcustodian hereunder) has actual possession of all necessary
Securities, consents and other materials no later than 5:00 p.m. on the date
specified as the Response Deadline.
(b) The Bank shall have no duty to act upon a required Response
if Proper Instructions relating to such Response and all necessary Securities,
consents and other materials are not received by and in the possession of the
Bank by 5:00 p.m. on the date specified as the Response Deadline.
Notwithstanding, the Bank shall use its best efforts to act upon a Response for
which Proper Instructions and/or necessary Securities, consents or other
materials are received by the Bank after 5:00 p.m. on the date specified as the
Response Deadline, it being acknowledged and agreed by the parties that while
any undertaking by the Bank to use its best efforts in such circumstances shall
not create a duty upon the Bank to complete such Response prior to its
expiration, the Bank nevertheless shall use its best efforts to do so.
(c) In the event that the Fund notifies the Bank of a Corporate
Action requiring a Response and the Bank has received no other notice of such
Corporate Action, the Response Deadline shall be one business day prior to the
Response expiration time set by the depository processing such Corporate Action
provided that the Fund has the information necessary to direct such Response.
5
<PAGE>
(d) Section 14.3(g) of this Agreement shall govern any Corporate
Action involving Foreign Portfolio Securities held by a Selected Foreign Sub-
Custodian.
6.4 Book-Entry System. Provided (i) the Bank has received a certified
-----------------
copy of a resolution of the Board specifically approving deposits of Fund assets
in the Book-Entry System, and (ii) for any subsequent changes to such
arrangements following such approval, the Board has reviewed and approved the
arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval:
(a) The Bank may keep Portfolio Securities in the Book-Entry System
provided that such Portfolio Securities are represented in an account
("Account") of the Bank (or its agent) in such System which shall not include
any assets of the Bank (or such agent) other than assets held as a fiduciary,
custodian, or otherwise for customers;
(b) The records of the Bank (and any such agent) with respect to
the Fund's participation in the Book-Entry System through the Bank (or any such
agent) will identify by book entry the Portfolio Securities which are included
with other securities deposited in the Account and shall at all times during the
regular business hours of the Bank (or such agent) be open for inspection by
duly authorized officers, employees or agents of the Fund. Where securities are
transferred to the Fund's account, the Bank shall also, by book entry or
otherwise, identify as belonging to the Fund a quantity of securities in a
fungible bulk of securities (i) registered in the name of the Bank or its
nominee, or (ii) shown on the Bank's account on the books of the Federal Reserve
Bank;
(c) The Bank (or its agent) shall pay for securities purchased for
the account of the Fund or shall pay cash collateral against the return of
Portfolio Securities loaned by the Fund upon (i) receipt of advice from the
Book-Entry System that such Securities have been transferred to the Account, and
(ii) the making of an entry on the records of the Bank (or its agent) to reflect
such payment and transfer for the account of the Fund. The Bank (or its agent)
shall transfer securities sold or loaned for the account of the Fund upon
(i) receipt of advice from the Book-Entry System that
payment for securities sold or payment of the initial cash or securities
collateral against the delivery of securities loaned by the Fund has been
transferred to the Account; and
(ii) the making of an entry on the records of the Bank (or
its agent) to reflect such transfer and payment for the account of the Fund.
Copies of all advices from the Book-Entry System of transfers of securities for
the account of the Fund shall identify the Fund, be maintained for the Fund by
the Bank and shall be provided to the Fund at its request. The Bank shall send
the Fund a confirmation, as defined by Rule 17f-4 of the 1940 Act, of any
transfers to or from the account of the Fund;
(d) The Bank will promptly provide the Fund with any report
obtained by the Bank or its agent on the Book-Entry System's accounting system,
internal accounting control and procedures for safeguarding securities deposited
in the Book-Entry System;
6.5 Use of a Depository. Provided (i) the Bank has received a
-------------------
certified copy of a resolution of the Board specifically approving deposits in
DTC or other such Depository and (ii) for any subsequent changes to such
arrangements following such approval, the Board has reviewed and approved the
6
<PAGE>
arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval:
(a) The Bank may use a Depository to hold, receive, exchange,
release, lend, deliver and otherwise deal with Portfolio Securities including
stock dividends, rights and other items of like nature, and to receive and remit
to the Bank on behalf of the Fund all income and other payments thereon and to
take all steps necessary and proper in connection with the collection thereof;
(b) Registration of Portfolio Securities may be made in the name of
any nominee or nominees used by such Depository and held for the account of the
Bank for its customers;
(c) Payment for securities purchased and sold may be made through
the clearing medium employed by such Depository for transactions of participants
acting through it. Upon any purchase of Portfolio Securities, payment will be
made only upon delivery of the securities to or for the account of the Fund and
the Fund shall pay cash collateral against the return of Portfolio Securities
loaned by the Fund only upon delivery of the Securities to or for the account of
the Fund; and upon any sale of Portfolio Securities, delivery of the Securities
will be made only against payment therefor or, in the event Portfolio Securities
are loaned, delivery of Securities will be made only against receipt of the
initial cash collateral to or for the account of the Fund; and
(d) The Bank shall use its best efforts and reasonable care to
provide that:
(i) The Depository obtains replacement of any certificated
Portfolio Security deposited with it in the event such Security is lost,
destroyed, wrongfully taken or otherwise not available to be returned to the
Bank upon its request;
(ii) Proxy materials received by a Depository with respect to
Portfolio Securities deposited with such Depository are forwarded immediately to
the Bank for prompt transmittal to the Fund;
(iii) Such Depository promptly forwards to the Bank
confirmation of any purchase or sale of Portfolio Securities and of the
appropriate book entry made by such Depository to the Fund's account;
(iv) Such Depository prepares and delivers to the Bank such
records with respect to the performance of the Bank's obligations and duties
hereunder as may be necessary for the Fund to comply with the recordkeeping
requirements of Section 31(a) of the 1940 Act and the Rules thereunder; and
(v) Such Depository delivers to the Bank all internal
accounting control reports, whether or not audited by an independent public
accountant, as well as such other reports as the Fund may reasonably request in
order to verify the Portfolio Securities held by such Depository and the Bank
shall, upon request by the Fund, forward such reports to the Fund.
6.6 Use of Book-Entry System for Commercial Paper. Provided the Bank
---------------------------------------------
has received a certified copy of a resolution of the Board specifically
approving participation in a system maintained by the Bank for the holding of
commercial paper in book-entry form ("Book-Entry Paper"), upon receipt of Proper
Instructions and upon receipt of confirmation from an Issuer (as defined below)
that the Fund has purchased such Issuer's Book-Entry Paper, the Bank shall issue
and hold in book-entry form, on behalf of
7
<PAGE>
the Fund, commercial paper issued by issuers with whom the Bank has entered into
a book-entry agreement (the "Issuers"). In maintaining procedures for Book-Entry
Paper, the Bank agrees that:
(a) The Bank will maintain all Book-Entry Paper held by the Fund in
an account of the Bank that includes only assets held by it for customers;
(b) The records of the Bank with respect to the Fund's purchase of
Book-Entry Paper through the Bank will identify, by book-entry, commercial paper
belonging to the Fund which is included in the Book-Entry System and shall at
all times during the regular business hours of the Bank be open for inspection
by duly authorized officers, employees or agents of the Fund;
(c) The Bank shall pay for Book-Entry Paper purchased for the
account of the Fund upon contemporaneous (i) receipt of advice from the Issuer
that such sale of Book-Entry Paper has been effected, and (ii) the making of an
entry on the records of the Bank to reflect such payment and transfer for the
account of the Fund;
(d) The Bank shall cancel such Book-Entry Paper obligation upon the
maturity thereof upon contemporaneous (i) receipt of advice that payment for
such Book-Entry Paper has been transferred to the Fund, and (ii) the making of
an entry on the records of the Bank to reflect such payment for the account of
the Fund; and
(e) The Bank will send to the Fund such reports on its system of
internal accounting control with respect to the Book-Entry Paper as the Fund may
reasonably request from time to time.
6.7 Use of Immobilization Programs. Provided (i) the Bank has received
------------------------------
a certified copy of a resolution of the Board specifically approving the
maintenance of Portfolio Securities in an immobilization program operated by a
bank which meets the requirements of Section 26(a)(1) of the 1940 Act, and (ii)
for each year following such approval the Board has reviewed and approved the
arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval, the Bank shall enter into
such immobilization program with such bank acting as a subcustodian hereunder.
6.8 Eurodollar CDs. Any Portfolio Securities which are Eurodollar CDs
--------------
may be physically held by the European branch of the U.S. banking institution
that is the issuer of such Eurodollar CD (a "European Branch"), provided that
such Portfolio Securities are identified on the books of the Bank as belonging
to the Fund and that the books of the Bank identify the European Branch holding
such Portfolio Securities. Notwithstanding any other provision of this Agreement
to the contrary, except as stated in the first sentence of this subsection 6.8
and provided it acts without negligence, bad faith and willful misconduct, the
Bank shall be under no other duty with respect to such Eurodollar CDs belonging
to the Fund.
6.9 Options and Futures Transactions.
--------------------------------
(a) Puts and Calls Traded on Securities Exchanges, NASDAQ or Over-
the-Counter.
(i) The Bank shall take action as to put options ("puts")
and call options ("calls") purchased or sold (written) by the Fund regarding
escrow or other arrangements (i) in accordance with the provisions of any
agreement entered into upon receipt of Proper Instructions among the Bank, any
broker-dealer registered with the National Association of Securities Dealers,
Inc. (the "NASD"), and, if necessary, the Fund, relating to the compliance with
the rules of the Options Clearing
8
<PAGE>
Corporation and of any registered national securities exchange, or of any
similar organization or organizations.
(ii) Unless another agreement requires it to do so, the Bank
shall be under no duty or obligation to see that the Fund has deposited or is
maintaining adequate margin, if required, with any broker in connection with any
option, nor shall the Bank be under duty or obligation to present such option to
the broker for exercise unless it receives Proper Instructions from the Fund.
The Bank shall have no responsibility for the legality of any put or call
purchased or sold on behalf of the Fund, the propriety of any such purchase or
sale, or the adequacy of any collateral delivered to a broker in connection with
an option or deposited to or withdrawn from a Segregated Account (as defined in
subsection 6.10 below). The Bank specifically, but not by way of limitation,
shall not be under any duty or obligation to: (i) periodically check or notify
the Fund that the amount of such collateral held by a broker or held in a
Segregated Account is sufficient to protect such broker or the Fund against any
loss; (ii) effect the return of any collateral delivered to a broker; or (iii)
advise the Fund that any option it holds, has or is about to expire. Such duties
or obligations shall be the responsibility of the Fund.
(b) Puts, Calls and Futures Traded on Commodities Exchanges
(i) The Bank shall take action as to puts, calls and futures
contracts ("Futures") purchased or sold by the Fund in accordance with the
provisions of any agreement entered into upon the receipt of Proper Instructions
among the Fund, the Bank and a Futures Commission Merchant registered under the
Commodity Exchange Act, relating to compliance with the rules of the Commodity
Futures Trading Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in connection with
transactions by the Fund.
(ii) The responsibilities of the Bank as to futures, puts and
calls traded on commodities exchanges, any Futures Commission Merchant account
and the Segregated Account shall be limited as set forth in subparagraph (a)(ii)
of this Section 6.9 as if such subparagraph referred to Futures Commission
Merchants rather than brokers, and Futures and puts and calls thereon instead of
options.
6.10 Segregated Account. The Bank shall upon receipt of Proper
------------------
Instructions establish and maintain a Segregated Account or Accounts for and on
behalf of the Fund.
(a) Cash and/or Portfolio Securities may be transferred into a
Segregated Account upon receipt of Proper Instructions in the following
circumstances:
(i) in accordance with the provisions of any agreement among
the Fund, the Bank and a broker-dealer registered under the Exchange Act and a
member of the NASD or any Futures Commission Merchant registered under the
Commodity Exchange Act, relating to compliance with the rules of the Options
Clearing Corporation and of any registered national securities exchange or the
Commodity Futures Trading Commission or any registered Contract Market, or of
any similar organizations regarding escrow or other arrangements in connection
with transactions by the Fund;
(ii) for the purpose of segregating cash or securities in
connection with options purchased or written by the Fund or commodity futures
purchased or written by the Fund;
(iii) for the deposit of liquid assets, such as cash, U.S.
Government securities or other high grade debt obligations, having a market
value (marked to market on a daily basis) at all times equal to not less than
the aggregate purchase price due on the settlement dates of all the Fund's then
outstanding forward commitment or "when-issued" agreements relating to the
purchase of Portfolio
9
<PAGE>
Securities and all the Fund's then outstanding commitments under reverse
repurchase agreements entered into with broker-dealer firms;
(iv) for the purposes of compliance by the Fund with the
procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange Commission
relating to the maintenance of Segregated Accounts by registered investment
companies;
(v) for other proper corporate purposes, but only, in the case of
this clause (v), upon receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board, or of the executive committee of
the Board signed by an officer of the Fund and certified by the Secretary or an
Assistant Secretary, setting forth the purpose or purposes of such Segregated
Account and declaring such purposes to be proper corporate purposes.
(b) Cash and/or Portfolio Securities may be withdrawn from a
Segregated Account pursuant to Proper Instructions in the following
circumstances:
(i) with respect to assets deposited in accordance with the
provisions of any agreements referenced in (a)(i) or (a)(ii) above, in
accordance with the provisions of such agreements;
(ii) with respect to assets deposited pursuant to (a)(iii) or
(a)(iv) above, for sale or delivery to meet the Fund's obligations under
outstanding forward commitment or when-issued agreements for the purchase of
Portfolio Securities and under reverse repurchase agreements;
(iii) for exchange for other liquid assets of equal or greater
value deposited in the Segregated Account;
(iv) to the extent that the Fund's outstanding forward commitment
or when-issued agreements for the purchase of portfolio securities or reverse
repurchase agreements are sold to other parties or the Fund's obligations
thereunder are met from assets of the Fund other than those in the Segregated
Account;
(v) for delivery upon settlement of a forward commitment or when-
issued agreement for the sale of Portfolio Securities; or
(vi) with respect to assets deposited pursuant to (a)(v) above, in
accordance with the purposes of such account as set forth in Proper
Instructions.
6.11 Interest Bearing Call or Time Deposits. The Bank shall, upon receipt
--------------------------------------
of Proper Instructions relating to the purchase by the Fund of interest-bearing
fixed-term and call deposits, transfer cash, by wire or otherwise, in such
amounts and to such bank or banks as shall be indicated in such Proper
Instructions. The Bank shall include in its records with respect to the assets
of the Fund appropriate notation as to the amount of each such deposit, the
banking institution with which such deposit is made (the "Deposit Bank"), and
shall retain such forms of advice or receipt evidencing the deposit, if any, as
may be forwarded to the Bank by the Deposit Bank. Such deposits shall be deemed
Portfolio Securities of the Fund and the responsibility of the Bank therefore
shall be the same as and no greater than the Bank's responsibility in respect of
other Portfolio Securities of the Fund.
10
<PAGE>
6.12 Transfer of Securities. The Bank will transfer, exchange, deliver or
----------------------
release Portfolio Securities held by it hereunder, insofar as such Securities
are available for such purpose, provided that any transfer, exchange, delivery
or release under this Section shall be made only in accordance with Proper
Instructions. The Proper Instructions shall state that such transfer, exchange
or delivery is for a purpose permitted under the terms of this Section 6.12, and
shall specify the applicable subsection, or describe the purpose of the
transaction with sufficient particularity to permit the Bank to ascertain the
applicable subsection. After receipt of such Proper Instructions, the Bank will
transfer, exchange, deliver or release Portfolio Securities only in the
following circumstances:
(a) Upon sales of Portfolio Securities for the account of the Fund,
against contemporaneous receipt by the Bank of payment therefor in full, or
against payment to the Bank in accordance with generally accepted settlement
practices and customs in the jurisdiction or market in which the transaction
occurs, each such payment to be in the amount of the sale price shown in a
broker's confirmation of sale received by the Bank before such payment is made,
as confirmed in the Proper Instructions received by the Bank before such payment
is made;
(b) In exchange for or upon conversion into other securities alone or
other securities and cash pursuant to any plan of merger, consolidation,
reorganization, share split-up, change in par value, recapitalization or
readjustment or otherwise, upon exercise of subscription, purchase or sale or
other similar rights represented by such Portfolio Securities, or for the
purpose of tendering shares in the event of a tender offer therefor, provided,
however, that in the event of an offer of exchange, tender offer, or other
exercise of rights requiring the physical tender or delivery of Portfolio
Securities, the Bank, absent its own negligence, bad faith and willful
misconduct, shall have no liability for failure to so tender in a timely manner
unless such Proper Instructions are received by the Bank at least two business
days prior to the date required for tender, and unless the Bank (or its agent or
subcustodian hereunder) has actual possession of such Security at least two
business days prior to the date of tender;
(c) Upon conversion of Portfolio Securities pursuant to their terms
into other securities;
(d) For the purpose of redeeming in-kind shares of the Fund upon
authorization from the Fund;
(e) In the case of option contracts owned by the Fund, for
presentation to the endorsing broker;
(f) When such Portfolio Securities are called, redeemed or retired or
otherwise become payable;
(g) For the purpose of effectuating the pledge of Portfolio Securities
held by the Bank in order to collateralize loans made to the Fund by any bank,
including the Bank; provided, however, that such Portfolio Securities will be
released only upon payment to the Bank for the account of the Fund of the moneys
borrowed, provided further, however, that in cases where additional collateral
is required to secure a borrowing already made, and such fact is made to appear
in the Proper Instructions, Portfolio Securities may be released for that
purpose without any such payment. In the event that any pledged Portfolio
Securities are held by the Bank, they will be so held for the account of the
lender, and after notice to the Fund from the lender in accordance with the
normal procedures of the lender and any loan agreement between the fund and the
lender that an event of deficiency or default on the loan has occurred, the Bank
may deliver such pledged Portfolio Securities to or for the account of the
lender;
11
<PAGE>
(h) for the purpose of releasing certificates representing Portfolio
Securities, against contemporaneous receipt by the Bank of the fair market value
of such security, as set forth in the Proper Instructions received by the Bank
before such payment is made;
(i) for the purpose of delivering securities lent by the Fund to a
bank or broker dealer, but only against receipt in accordance with street
delivery custom except as otherwise provided herein, of adequate collateral as
agreed upon from time to time by the Fund and the Bank, and upon receipt of
payment in connection with any repurchase agreement relating to such securities
entered into by the Fund;
(j) for other authorized transactions of the Fund or for other proper
corporate purposes; provided that before making such transfer, the Bank will
also receive a certified copy of resolutions of the Board, signed by an
authorized officer of the Fund (other than the officer certifying such
resolution) and certified by its Secretary or Assistant Secretary, specifying
the Portfolio Securities to be delivered, setting forth the transaction in or
purpose for which such delivery is to be made, declaring such transaction to be
an authorized transaction of the Fund or such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of such securities
shall be made; and
(k) upon termination of this Agreement as hereinafter set forth
pursuant to Section 8 and Section 16 of this Agreement.
As to any deliveries made by the Bank pursuant to this Section 6.12,
securities or cash receivable in exchange therefor shall be delivered to the
Bank.
7. Redemptions. In the case of payment of assets of the Fund held by the
-----------
Bank in connection with redemptions and repurchases by the Fund of outstanding
common shares, the Bank will rely on notification by the Fund's transfer agent
of receipt of a request for redemption and certificates, if issued, in proper
form for redemption before such payment is made. Payment shall be made in
accordance with the Articles of Incorporation or Declaration of Trust and By-
laws of the Fund (the "Articles"), from assets available for said purpose.
8. Merger, Dissolution, etc. of Fund. In the case of the following
---------------------------------
transactions, not in the ordinary course of business, namely, the merger of the
Fund into or the consolidation of the Fund with another investment company, the
sale by the Fund of all, or substantially all, of its assets to another
investment company, or the liquidation or dissolution of the Fund and
distribution of its assets, the Bank will deliver the Portfolio Securities held
by it under this Agreement and disburse cash only upon the order of the Fund set
forth in an Officers' Certificate, accompanied by a certified copy of a
resolution of the Board authorizing any of the foregoing transactions. Upon
completion of such delivery and disbursement and the payment of the fees through
the end of the then current term of this Agreement, disbursements and expenses
of the Bank and satisfactory completion of any other duties and obligations of
the Bank hereunder, this Agreement will terminate and the Bank shall be released
from any and all obligations hereunder.
9. Actions of Bank Without Prior Authorization. Notwithstanding anything
-------------------------------------------
herein to the contrary, unless and until the Bank receives an Officers'
Certificate to the contrary, the Bank will take the following actions without
prior authorization or instruction of the Fund or the transfer agent, if any:
9.1 Endorse for collection and collect on behalf of and in the name of
the Fund all checks, drafts, or other negotiable or transferable instruments or
other orders for the payment of money received
12
<PAGE>
by it for the account of the Fund and hold for the account of the Fund all
income, dividends, interest and other payments or distributions of cash with
respect to the Portfolio Securities held thereunder;
9.2 Present for payment all coupons and other income items held by it for
the account of the Fund which call for payment upon presentation and hold the
cash received by it upon such payment for the account of the Fund;
9.3 Receive and hold for the account of the Fund all securities received
as a distribution on Portfolio Securities as a result of a stock dividend, share
split-up, reorganization, recapitalization, merger, consolidation, readjustment,
distribution of rights and similar securities issued with respect to any
Portfolio Securities held by it hereunder.
9.4 Execute as agent on behalf of the Fund all necessary ownership and
other certificates and affidavits required by the Internal Revenue Code or the
regulations of the Treasury Department issued thereunder, or by the laws of any
state, now or hereafter in effect, inserting the Fund's name on such
certificates as the owner of the securities covered thereby, to the extent it
may lawfully do so and as may be required to obtain payment in respect thereof.
The Bank will execute and deliver such certificates in connection with Portfolio
Securities delivered to it or by it under this Agreement as may be required
under the provisions of the Internal Revenue Code and any Regulations of the
Treasury Department issued thereunder, or under the laws of any State;
9.5 Present for payment all Portfolio Securities which are called,
redeemed, retired or otherwise become payable, and hold cash received by it upon
payment for the account of the Fund; and
9.6 Exchange interim receipts or temporary securities for definitive
securities.
10. Collections and Defaults. The Bank will use reasonable efforts to
------------------------
collect promptly any funds which may to its knowledge become collectible arising
from Portfolio Securities, including dividends, interest and other income, and
to transmit promptly to the Fund notice actually received by it of any call for
redemption, offer of exchange, right of subscription, reorganization or other
proceedings affecting such Securities. If Portfolio Securities upon which such
income is payable are in default or payment is refused after due demand or
presentation, the Bank will notify the Fund in writing of any default or refusal
to pay within two business days from the day on which it receives knowledge of
such default or refusal.
11. Maintenance of Records and Accounting Services. The Bank will
----------------------------------------------
maintain records with respect to transactions for which the Bank is responsible
pursuant to the terms and conditions of this Agreement, and in compliance with
the applicable rules and regulations of the 1940 Act. The books and records of
the Bank pertaining to its actions under this Agreement and reports by the Bank
or its independent accountants concerning its accounting system, procedures for
safeguarding securities and internal accounting controls will be open to
inspection and audit at reasonable times by officers of or auditors employed by
the Fund and will be preserved by the Bank in the manner and in accordance with
the applicable rules and regulations under the 1940 Act.
The Bank shall perform fund accounting and shall keep the books of account
and render statements or copies from time to time as reasonably requested by the
Treasurer or any executive officer of the Fund.
The Bank shall assist generally in the preparation of reports to
shareholders and others, audits of accounts, and other ministerial matters of
like nature.
13
<PAGE>
The books and records maintained by the Bank on behalf of the Fund are the
property of the Fund and will be surrendered to the Fund upon request.
12. Fund Evaluation and Yield Calculation
-------------------------------------
12.1 Fund Evaluation. The Bank shall compute and, unless otherwise
---------------
directed by the Board, determine as of the close of regular trading on the New
York Stock Exchange on each day on which said Exchange is open for unrestricted
trading and as of such other days, or hours, if any, as may be authorized by the
Board, the net asset value and the public offering price of a share of capital
stock of the Fund, such determination to be made in accordance with the
provisions of the Articles and By-laws of the Fund and the Prospectus and
Statement of Additional Information relating to the Fund, as they may from time
to time be amended, and any applicable resolutions of the Board or procedures
adopted by the Board at the time in force and applicable; and promptly to notify
the Fund, the proper exchange and the NASD or such other persons as the Fund may
request of the results of such computation and determination. In computing the
net asset value hereunder, the Bank may rely in good faith upon information
furnished to it by any Authorized Person in respect of (i) the manner of accrual
of the liabilities of the Fund and in respect of liabilities of the Fund not
appearing on its books of account kept by the Bank, (ii) reserves, if any,
authorized by the Board or that no such reserves have been authorized, (iii) the
source of the quotations to be used in computing the net asset value, (iv) the
value to be assigned to any security for which no price quotations are
available, and (v) the method of computation of the public offering price on the
basis of the net asset value of the shares, and the Bank shall not be
responsible for any loss occasioned by such reliance or, absent any negligence,
bad faith and willful misconduct by the Bank, for any good faith reliance on
any quotations received from a source pursuant to (iii) above.
12.2. Yield Calculation. The Bank will compute the performance results
------------------
of the Fund (the "Yield Calculation") in accordance with the provisions of
Release No. 33-6753 and Release No. IC-16245 (February 2, 1988) (the "Releases")
promulgated by the Securities and Exchange Commission, and any subsequent
amendments to, published interpretations of or general conventions accepted by
the staff of the Securities and Exchange Commission with respect to such
releases or the subject matter thereof ("Subsequent Staff Positions"), subject
to the terms set forth below:
(a) The Bank shall compute the Yield Calculation for the Fund for
the stated periods of time as shall be mutually agreed upon, and communicate in
a timely manner the result of such computation to the Fund.
(b) In performing the Yield Calculation, the Bank will derive the
items of data necessary for the computation from the records it generates and
maintains for the Fund pursuant Section 11 hereof. The Bank shall have no
responsibility to review, confirm, or otherwise assume any duty or liability
with respect to the accuracy or correctness of any such data supplied to it by
the Fund, any of the Fund's designated agents or any of the Fund's designated
third party providers, provided, however, the Bank shall promptly notify the
Fund if the Bank becomes aware that such data is, or may be, inaccurate or
incorrect.
(c) At the request of the Bank, the Fund shall provide, and the
Bank shall be entitled to rely on, written standards and guidelines to be
followed by the Bank in interpreting and applying the computation methods set
forth in the Releases or any Subsequent Staff Positions as they specifically
apply to the Fund. In the event that the computation methods in the Releases or
the Subsequent Staff Positions or the application to the Fund of a standard or
guideline is not free from doubt or in the event
14
<PAGE>
there is any question of interpretation as to the characterization of a
particular security or any aspect of a security or a payment with respect
thereto (e.g., original issue discount, participating debt security, income or
return of capital) or otherwise or as to any other element of the computation
which is pertinent to the Fund, the Fund or its designated agent shall have the
responsibility for making the determination of how the security or payment is to
be treated for purposes of the computation and how the computation is to be made
and shall inform the Bank thereof on a timely basis. The Bank shall have no
responsibility to make independent determinations with respect to any item which
is covered by this Section, and shall not be responsible for its computations
made in accordance with such determinations absent negligence, bad faith and
willful misconduct by the Bank in the performance of such computations.
(d) The Fund shall keep the Bank informed of information and non-
public advice, or information obtained by the Fund from its independent auditors
or by its personnel or the personnel of its investment adviser, or Subsequent
Staff Positions related to the computations to be undertaken by the Bank
pursuant to this Agreement and the Bank shall not be deemed to have knowledge of
such non-public information (except as contained in the Releases) unless it has
been furnished to the Bank in writing.
13. Additional Services. The Bank shall perform the additional services
-------------------
for the Fund as are set forth on Appendix C hereto. Appendix C may be amended
---------- ----------
from time to time upon agreement of the parties to include further additional
services to be provided by the Bank to the Fund, at which time the fees set
forth in Appendix B shall be appropriately increased.
----------
14. Duties of the Bank.
------------------
14.1 Performance of Duties and Standard of Care. In performing its
------------------------------------------
duties hereunder and any other duties listed on any Schedule hereto, if any, the
Bank will be entitled to receive and act upon the advice of independent counsel
of its own selection, which may be counsel for the Fund, and will be without
liability for any action taken or thing done or omitted to be done in accordance
with this Agreement in good faith in conformity with such advice.
The Bank will be under no duty or obligation to inquire into and will not
be liable for:
(a) the validity of the issue of any Portfolio Securities
purchased by or for the Fund, the legality of the purchases thereof or the
propriety of the price incurred therefor;
(b) the legality of any sale of any Portfolio Securities by or for
the Fund or the propriety of the amount for which the same are sold;
(c) the legality of an issue or sale of any common shares of the
Fund or the sufficiency of the amount to be received therefor;
(d) the legality of the repurchase of any common shares of the
Fund or the propriety of the amount to be paid therefor;
(e) the legality of the declaration of any dividend by the Fund or
the legality of the distribution of any Portfolio Securities as payment in kind
of such dividend; and
(f) absent negligence, bad faith and willful misconduct by the
Bank, any property or moneys of the Fund unless and until received by it, and
any such property or moneys delivered or paid by it pursuant to the terms
hereof.
15
<PAGE>
Moreover, the Bank will not be under any duty or obligation to ascertain
whether any Portfolio Securities at any time delivered to or held by it for the
account of the Fund are such as may properly be held by the Fund under the
provisions of its Articles, By-laws, any federal or state statutes or any rule
or regulation of any governmental agency.
14.2 Agents and Subcustodians with Respect to Property of the Fund Held
------------------------------------------------------------------
in the United States. The Bank may employ agents of its own selection in the
- --------------------
performance of its duties hereunder and shall be responsible for the acts and
omissions of such agents as if performed by the Bank hereunder. Without
limiting the foregoing, certain duties of the Bank hereunder may be performed by
one or more affiliates of the Bank.
Upon receipt of Proper Instructions, the Bank may employ subcustodians
selected by or at the direction of the Fund, provided that any such subcustodian
meets at least the minimum qualifications required by Section 17(f)(1) of the
1940 Act to act as a custodian of the Fund's assets with respect to property of
the Fund held in the United States. The Bank shall have no liability to the Fund
or any other person by reason of any act or omission of any subcustodian
selected by or at the direction of the Fund and the Fund shall indemnify the
Bank and hold it harmless from and against any and all actions, suits and
claims, arising directly or indirectly out of the performance of any such
subcustodian. Upon request of the Bank, the Fund shall assume the entire defense
of any action, suit, or claim subject to the foregoing indemnity. The Fund shall
pay all fees and expenses of any subcustodian as provided in the fee schedule
attached as Appendix B hereto.
----------
14.3 Duties of the Bank with Respect to Property of the Fund Held Outside
--------------------------------------------------------------------
of the United States.
- --------------------
(a) Appointment of Foreign Sub-Custodians. The Fund hereby
-------------------------------------
authorizes and instructs the Bank to employ as sub-custodians for the Fund's
Portfolio Securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories designated on
the Schedule attached hereto (each, a "Selected Foreign Sub-Custodian"). Upon
receipt of Proper Instructions, the Bank and the Fund may agree to designate
additional foreign banking institutions and foreign securities depositories to
act as Selected Foreign Sub-Custodians hereunder. Upon receipt of Proper
Instructions, the Fund may instruct the Bank to cease the employment of any one
or more such Selected Foreign Sub-Custodians for maintaining custody of the
Fund's assets, and the Bank shall so cease to employ such sub-custodian as soon
as alternate custodial arrangements have been implemented.
(b) Foreign Securities Depositories. Except as may otherwise be
-------------------------------
agreed upon in writing by the Bank and the Fund, assets of the Fund shall be
maintained in foreign securities depositories only through arrangements
implemented by the foreign banking institutions serving as Selected Foreign Sub-
Custodians pursuant to the terms hereof. Where possible, such arrangements shall
include entry into agreements containing the provisions set forth in
subparagraph (d) hereof. Notwithstanding the foregoing, except as may otherwise
be agreed upon in writing by the Bank and the Fund, the Fund authorizes the
deposit in Euro-clear, the securities clearance and depository facilities
operated by Morgan Guaranty Trust Company of New York in Brussels, Belgium, of
Foreign Portfolio Securities eligible for deposit therein and the use of Euro-
clear in connection with settlements of purchases and sales of securities and
deliveries and returns of securities, until notified to the contrary pursuant to
subparagraph (a) hereunder.
(c) Segregation of Securities. The Bank shall identify on its
-------------------------
books as belonging to the Fund the Foreign Portfolio Securities held by each
Selected Foreign Sub-Custodian. Each agreement pursuant to which the Bank
employs a foreign banking institution shall require that such institution
16
<PAGE>
establish a custody account for the Bank and hold in that account Foreign
Portfolio Securities and other assets of the Fund, and, in the event that such
institution deposits Foreign Portfolio Securities in a foreign securities
depository, that it shall identify on its books as belonging to the Bank the
securities so deposited.
(d) Agreements with Foreign Banking Institutions. Each of the
--------------------------------------------
agreements pursuant to which a foreign banking institution holds assets of the
Fund (each, a "Foreign Sub-Custodian Agreement") shall be substantially in the
form provided to the Fund and shall provide that: (a) the Fund's assets will
not be subject to any right, charge, security interest, lien or claim of any
kind in favor of the foreign banking institution or its creditors or agent,
except a claim of payment for their safe custody or administration (including,
without limitation, any fees or taxes payable upon transfers or reregistration
of securities); (b) beneficial ownership of the Fund's assets will be freely
transferable without the payment of money or value other than for custody or
administration (including, without limitation, any fees or taxes payable upon
transfers or reregistration of securities); (c) adequate records will be
maintained identifying the assets as belonging to the Bank; (d) officers of or
auditors employed by, or other representatives of the Bank, including to the
extent permitted under applicable law, the independent public accountants for
the Fund, will be given access to the books and records of the foreign banking
institution relating to its actions under its agreement with the Bank; and (e)
assets of the Fund held by the Selected Foreign Sub-Custodian will be subject
only to the instructions of the Bank or its agents.
(e) Access of Independent Accountants of the Fund. Upon request of
---------------------------------------------
the Fund, the Bank will use its best efforts to arrange for the independent
accountants of the Fund to be afforded access to the books and records of any
foreign banking institution employed as a Selected Foreign Sub-Custodian insofar
as such books and records relate to the performance of such foreign banking
institution under its Foreign Sub-Custodian Agreement.
(f) Reports by Bank. The Bank will supply to the Fund from time to
---------------
time, as mutually agreed upon, statements in respect of the securities and other
assets of the Fund held by Selected Foreign Sub-Custodians, including but not
limited to an identification of entities having possession of the Foreign
Portfolio Securities and other assets of the Fund and advice of any transfers of
assets into or out of the accounts of such Selected Foreign Sub-Custodians.
(g) Transactions in Foreign Custody Account. Transactions with
---------------------------------------
respect to the assets of the Fund held by a Selected Foreign Sub-Custodian shall
be effected pursuant to Proper Instructions from the Fund to the Bank and shall
be effected in accordance with the applicable Foreign Sub-Custodian Agreement.
Notwithstanding any provision of this Agreement to the contrary,
settlement and payment for Foreign Portfolio Securities received for the account
of the Fund and delivery of Foreign Portfolio Securities maintained for the
account of the Fund may be effected in accordance with the customary established
securities trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including, without
limitation, delivering securities to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such securities from such purchaser
or dealer.
In connection with any action to be taken with respect to the Foreign
Portfolio Securities held hereunder, including, without limitation, the exercise
of any voting rights, subscription rights, redemption rights, exchange rights,
conversion rights or tender rights, or any other action in connection with any
other right, interest or privilege with respect to such Securities
(collectively, the "Rights"), the Bank shall promptly transmit to the Fund such
information in connection therewith as is
17
<PAGE>
made available to the Bank by the Foreign Sub-Custodian, and shall promptly
forward to the applicable Foreign Sub-Custodian any instructions, forms or
certifications with respect to such Rights, and any instructions relating to the
actions to be taken in connection therewith, as the Bank shall receive from the
Fund pursuant to Proper Instructions. Notwithstanding the foregoing, absent its
own negligence, bad faith and willful misconduct, the Bank shall have no further
duty or obligation with respect to such Rights, including, without limitation,
the determination of whether the Fund is entitled to participate in such Rights
under applicable U.S. and foreign laws, or the determination of whether any
action proposed to be taken with respect to such Rights by the Fund or by the
applicable Foreign Sub-Custodian will comply with all applicable terms and
conditions of any such Rights or any applicable laws or regulations, or market
practices within the market in which such action is to be taken or omitted.
(h) Liability of Selected Foreign Sub-Custodians. Each Foreign
--------------------------------------------
Sub-Custodian Agreement with a foreign banking institution shall require the
institution to exercise reasonable care in the performance of its duties and to
indemnify, and hold harmless, the Bank and the Fund from and against losses,
damages, costs, expenses, liabilities or claims arising out of or in connection
with the institution's performance of such obligations, all as set forth in the
applicable Foreign Sub-Custodian Agreement. The Bank shall grant the Fund a
right of subrogation with regard to the rights of the Bank as they affect the
Fund under any applicable Foreign Sub-Custodian Agreement. The Fund acknowledges
that the Bank, as a participant in Euro-clear, is subject to the Terms and
Conditions Governing the Euro-clear System, a copy of which has been made
available to the Fund. The Fund acknowledges that pursuant to such Terms and
Conditions, Morgan Guaranty Brussels shall have the sole right to exercise or
assert any and all rights or claims in respect of actions or omissions of, or
the bankruptcy or insolvency of, any other depository, clearance system or
custodian utilized by Euro-clear in connection with the Fund's securities and
other assets.
(i) Tax Law. The Bank shall have no responsibility or liability
-------
for any obligations now or hereafter imposed on the Fund or the Bank as
custodian of the Fund by the tax laws of any jurisdiction, and it shall be the
responsibility of the Fund to notify the Bank of the obligations imposed on the
Fund, or its partners or the Bank as the custodian of the Fund by the tax law of
any non-U.S. jurisdiction, including responsibility for withholding and other
taxes, assessments or other governmental charges, certifications and
governmental reporting. The Selected Foreign Sub-custodian and the Bank shall
use reasonable efforts to assist the Fund with respect to any claim for
exemption or refund under the tax law of jurisdictions for which the Fund has
provided such information.
14.4 Insurance. The Bank shall use the same care with respect to the
---------
safekeeping of Portfolio Securities and cash of the Fund held by it as it uses
in respect of its own similar property and shall maintain such insurance
coverage as the Bank believes is prudent and adequate.
14.5. Fees and Expenses of the Bank. The Fund will pay or reimburse the
-----------------------------
Bank from time to time for any transfer taxes payable upon transfer of Portfolio
Securities made hereunder, and for all necessary proper disbursements, expenses
and charges made or incurred by the Bank in the performance of this Agreement
(including any duties listed on any Schedule hereto, if any). For the services
rendered by the Bank hereunder, the Fund will pay to the Bank such compensation
or fees at such rate and at such times as shall be agreed upon in writing by the
parties from time to time. The Bank will also be entitled to reimbursement by
the Fund for reasonable expenses incurred in conjunction with termination of
this Agreement.
14.6 Advances by the Bank. The Bank may, in its sole discretion, advance
--------------------
funds on behalf of the Fund to make any payment permitted by this Agreement upon
receipt of any proper authorization required by this Agreement for such payments
by the Fund. Should such a payment or payments, with
18
<PAGE>
advanced funds, result in an overdraft (due to insufficiencies of the Fund's
account with the Bank, or for any other reason) this Agreement deems any such
overdraft or related indebtedness a loan made by the Bank to the Fund payable on
demand. Such overdraft shall bear interest at the current rate charged by the
Bank for such loans unless the Fund shall provide the Bank with agreed upon
compensating balances. The Fund agrees that the Bank shall have a continuing
lien and security interest to the extent of any overdraft or indebtedness or to
the extent required by law, whichever is greater, in and to any property at any
time held by it for the Fund's benefit or in which the Fund has an interest and
which is then in the Bank's possession or control (or in the possession or
control of any third party acting on the Bank's behalf). The Fund authorizes the
Bank, in the Bank's sole discretion, at any time to charge any overdraft or
indebtedness, together with interest due thereon, against any balance of account
standing to the credit of the appropriate Portfolio of the Fund on the Bank's
books.
15. Limitation of Liability.
-----------------------
15.1 The Bank shall exercise reasonable care and shall act without
negligence, bad faith or willful misconduct in the performance of its duties and
obligations hereunder. Notwithstanding anything in this Agreement to the
contrary, in no event shall the Bank or any of its officers, directors or
employees (collectively, the "Indemnified Parties") be liable to the Fund or any
third party, and the Fund shall indemnify and hold the Bank and the Indemnified
Parties harmless from and against any and all loss, damage, liability, actions,
suits, claims, costs and expenses, including legal fees, (a "Claim") arising as
a result of any act or omission of the Bank or any Indemnified Party under this
Agreement, except to the extent that any Claim results from the negligence,
willful misfeasance, willful misconduct or bad faith of the Bank or any
Indemnified Party. Without limiting the foregoing, neither the Bank nor the
Indemnified Parties shall be liable for, and the Bank and the Indemnified
Parties shall be indemnified against, any Claim arising as a result of:
(a) Any act or omission by the Bank or any Indemnified Party in
good faith reliance upon the terms of this Agreement, any Officer's Certificate,
Proper Instructions, resolution of the Board, telegram, telecopier, notice,
request, certificate or other instrument reasonably believed by the Bank to
genuine;
(b) Any act or omission of any subcustodian selected by or at the
direction of the Fund;
(c) Any act or omission of a Selected Foreign Sub-Custodian to the
extent which such Selected Foreign Sub-Custodian is not liable to the Bank
because such Selected Foreign Sub-Custodian acted in accordance the standards
applicable to custodians in the relevant market;
(d) Any Corporate Action, distribution or other event related to
Portfolio Securities which, at the direction of the Fund, have not been
registered in the name of the Bank or its nominee;
(e) Any Corporate Action requiring a Response for which the Bank
has not received Proper Instructions or obtained actual possession of all
necessary Securities, consents or other materials by 5:00 p.m. on the date
specified as the Response Deadline;
(f) Any act or omission of any European Branch of a U.S. banking
institution that is the issuer of Eurodollar CDs in connection with any
Eurodollar CDs held by such European Branch;
19
<PAGE>
(g) Information relied on in good faith by the Bank and supplied
by any Authorized Person in connection with the calculation of (i) the net asset
value and public offering price of the shares of capital stock of the Fund or
(ii) the Yield Calculation; or
(h) Acts of God, earthquakes, fires, floods, storms or other
disturbances of nature, epidemics, strikes, riots, nationalization,
expropriation, currency restrictions, acts of war, civil war or terrorism,
insurrection, nuclear fusion, fission or radiation, the interruption, loss or
malfunction of utilities, transportation or computers (hardware or software) and
computer facilities, the unavailability of energy sources and other similar
happenings or events beyond the reasonable control of the Bank. Notwithstanding
the foregoing, the Bank has and shall maintain appropriate back-up and disaster
recovery facilities and shall use it best efforts to provide all required
information and services hereunder to the Fund as soon as possible after any
such delay in performance.
15.2 Notwithstanding anything to the contrary in this Agreement, in no
event shall the Bank or the Indemnified Parties be liable to the Fund or any
third party for any special, consequential or punitive damages hereunder.
16. Termination.
-----------
16.1 The term of this Agreement shall be three years commencing upon the
date hereof (the "Initial Term"), unless earlier terminated as provided herein.
After the expiration of the Initial Term, the term of this Agreement shall
automatically renew for successive one-year terms (each a "Renewal Term") unless
notice of non-renewal is delivered by the non-renewing party to the other party
no later than ninety days prior to the expiration of the Initial Term or any
Renewal Term, as the case may be.
(a) Either party hereto may terminate this Agreement prior to the
expiration of the Initial Term or any Renewal Term in the event the other party
violates any material provision of this Agreement, provided that the non-
violating party gives written notice of such violation to the violating party
and the violating party does not cure such violation within 90 days of receipt
of such notice.
(b) If a majority of the Board reasonably determines that the
performance of the Bank under this Agreement has been unsatisfactory, written
notice (the "Notice") of such determination setting forth the reasons for such
determination shall be provided to the Bank. Such determination shall be based
upon such information as the Board in its sole discretion elects to consider,
including the Bank's performance against the "Performance Goals" (as defined
below). In order to be effective, any Notice must be executed by two officers of
the Fund. The Bank shall, within sixty (60) days after receipt of the Notice,
either (i) correct the deficiencies listed in the Notice; or (ii) renegotiate
terms of this Agreement in a form satisfactory to the Fund. If the conditions of
the preceding sentence are not met within such sixty (60) day period, the Fund
may terminate this Agreement without additional action by the Fund's Board upon
an additional sixty (60) days written notice. For the purposes of this Section,
"Performance Goals" shall mean the performance goal criteria mutually agreed
between the parties. The parties agree to develop the initial Performance Goals
no later than June 30, 1999 and agree to periodically review the Performance
Goals for necessary updates due to changes in the nature or scope of services
provided hereunder.
16.2 In the event of the termination of this Agreement, the Bank will
immediately upon receipt or transmittal, as the case may be, of notice of
termination, commence and prosecute diligently to completion the transfer of all
cash and the delivery of all Portfolio Securities duly endorsed and all records
maintained under Section 11 to the successor custodian when appointed by the
Fund. The obligation of the Bank to deliver and transfer over the assets of the
Fund held by it directly to such
20
<PAGE>
successor custodian will commence as soon as such successor is appointed and
will continue until completed as aforesaid. If the Fund does not select a
successor custodian within ninety (90) days from the date of delivery of notice
of termination the Bank may, subject to the provisions of subsection 16.3,
deliver the Portfolio Securities and cash of the Fund held by the Bank to a bank
or trust company of the Bank's own selection which meets the requirements of
Section 17(f)(1) of the 1940 Act and has a reported capital, surplus and
undivided profits aggregating not less than $2,000,000, to be held as the
property of the Fund under terms similar to those on which they were held by the
Bank, whereupon such bank or trust company so selected by the Bank will become
the successor custodian of such assets of the Fund with the same effect as
though selected by the Board. Thereafter, upon satisfactory completion of all
its duties and obligations hereunder, the Bank shall be released from any and
all obligations under this Agreement.
16.3 Prior to the expiration of ninety (90) days after notice of
termination has been given, the Fund may furnish the Bank with an order of the
Fund advising that a successor custodian cannot be found willing and able to act
upon reasonable and customary terms and that there has been submitted to the
shareholders of the Fund the question of whether the Fund will be liquidated or
will function without a custodian for the assets of the Fund held by the Bank.
In that event the Bank will deliver the Portfolio Securities and cash of the
Fund held by it, subject as aforesaid, in accordance with one of such
alternatives which may be approved by the requisite vote of shareholders, upon
receipt by the Bank of a copy of the minutes of the meeting of shareholders at
which action was taken, certified by the Fund's Secretary and an opinion of
counsel to the Fund in form and content satisfactory to the Bank. Thereafter,
upon satisfactory completion of all its duties and obligations hereunder, the
Bank shall be released from any and all obligations under this Agreement.
16.4 The Fund shall reimburse the Bank for any reasonable out-of-pocket
expenses incurred by the Bank in connection with the termination of this
Agreement, such as fees for the transfer of the Funds' assets and records to a
successor custodian and fees for any special processing in connection with such
transfer. The Fund shall not be liable for severance payments, retention
bonuses or termination bonuses to the Bank or its employees in connection with
the termination of this Agreement.
16.5 At any time after the termination of this Agreement, the Fund may,
upon written request, have reasonable access to the records of the Bank relating
to its performance of its duties as custodian.
17. Confidentiality. Both parties hereto agree than any non-public
---------------
information obtained hereunder concerning the other party is confidential and
may not be disclosed without the written consent of the other party, except as
may be required by applicable law or at the request of a governmental agency
having proper jurisdiction. The parties further agree that a breach of this
provision would irreparably damage the other party and accordingly agree that
each of them is entitled, in addition to all other remedies at law or in equity
to an injunction or injunctions without bond or other security to prevent
breaches of this provision.
18. Notices. Any notice or other instrument in writing authorized or
-------
required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and delivered via (I) United
States Postal Service registered mail, (ii) telecopier with written
confirmation, (iii) hand delivery with signature to such party at its office at
the address set forth below, namely:
(a) In the case of notices sent to the Fund to:
Allmerica Investment Trust
440 Lincoln Street
21
<PAGE>
Worcester, MA 01653
Attn: President
With a copy to: Counsel
(b) In the case of notices sent to the Bank to:
Investors Bank & Trust Company
200 Clarendon Street, P.O. Box 9130
Boston, Massachusetts 02117-9130
Attention: Geoffrey O'Connell, Director - Client Management
With a copy to: John E. Henry, General Counsel
or at such other place as such party may from time to time designate
in writing.
19. Amendments. This Agreement may not be altered or amended, except by
----------
an instrument in writing, executed by both parties.
20. Parties. This Agreement will be binding upon and shall inure to the
-------
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Fund
without the written consent of the Bank or by the Bank without the written
consent of the Fund, authorized and approved by its Board; and provided further
that termination proceedings pursuant to Section 16 hereof will not be deemed to
be an assignment within the meaning of this provision.
21. Governing Law. This Agreement and all performance hereunder will be
-------------
governed by the laws of the Commonwealth of Massachusetts, without regard to
conflict of laws provisions.
22. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
23. Entire Agreement. This Agreement, together with its Appendices,
----------------
constitutes the sole and entire agreement between the parties relating to the
subject matter herein and does not operate as an acceptance of any conflicting
terms or provisions of any other instrument and terminates and supersedes any
and all prior agreements and undertakings between the parties relating to the
subject matter herein.
24. Limitation of Liability. A copy of the Agreement and Declaration of
-----------------------
Trust of the Fund is on file with the Secretary of State of the Commonwealth of
Massachusetts, and notice is hereby given that this Agreement is executed by or
on behalf of the Fund by the Trustees as Trustees or by the officers as officers
and not individually, and that the obligations of this Agreement are not binding
upon any of the Trustees, officers or shareholders of the Fund, but are binding
only upon the assets and property of the Fund. The parties hereto agree that no
shareholder, Trustee or officer of the Fund may be held personally liable or
responsible for any obligation of the Fund arising out of this Agreement.
25. Several Obligations of the Portfolios. This Agreement is an agreement
-------------------------------------
entered into between the Bank and the Fund with respect to each Portfolio. With
respect to any obligation of the Fund on behalf of any Portfolio arising out of
this Agreement, the Bank shall look for payment or satisfaction of such
obligation solely to the assets of the Portfolio to which such obligation
relates as though the Bank had separately contracted with the Fund by separate
written instrument with respect to each Portfolio.
22
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first written above.
ALLMERICA INVESTMENT TRUST
By: /s/ Richard M. Reilly
-----------------------------
Title: President
INVESTORS BANK & TRUST COMPANY
By: /s/ Michael F. Rogers
-----------------------------
Title: Executive Vice President
23
<PAGE>
Appendices
----------
Appendix A.......................................... Portfolios
Appendix B.......................................... Fee Schedule
Appendix C.......................................... Additional Services
24
<PAGE>
Appendix A
----------
Portfolios
. Select Emerging Markets Fund
. Select Aggressive Growth Fund
. Select Capital Appreciation Fund
. Select Value Opportunity Fund
. Select International Equity Fund
. Select Growth Fund
. Select Strategic Growth Fund
. Growth Fund
. Equity Index Fund
. Select Growth and Income Fund
. Select Income Fund
. Investment Grade Income Fund
. Government Bond Fund
. Money Market Fund
<PAGE>
Appendix B
----------
Allmerica Investment Trust
Fee Schedule
================================================================================
CUSTODY, FUND ACCOUNTING, CALCULATION OF N.A.V. and
FUND ADMINISTRATION
================================================================================
A. Domestic Custody, Fund Accounting, Calculation of N.A.V. and Fund
------------------------------------------------------------------
Administration
--------------
The following fees will apply to all assets for which Investors Bank
provides custody, fund accounting, calculation of N.A.V. and fund
administration. This fee does not include transactions or global custody
costs.
Annual Fee
----------
First $2 Billion of Net Assets 3.5 Basis Points
Next $2Billion of Net Assets 2.5 Basis Points
Assets in excess of $4 Billion 2.0 Basis Points
The yearly minimum fee for each fund is $75,000. Future funds in addition
to the 14 funds are subject to a $75,000 minimum fee.
B. Transactions
------------
. DTC/Fed Book Entry $ 8**
. Physical Securities 35
. Options and Futures 18
. GNMA Securities 30
. Principal Paydown 5
. Foreign Currency 18***
. Outgoing Wires 7
. Incoming Wires 5
** Assumes trade information is sent electronically to Investors Bank in the
ISITC/SWIFT format. Manual trades will be billed at $12.00 per trade. There
are no transaction charges for use of the Investors Bank Repo.
*** There are no transaction charges for F/X contracts executed by Investors
Bank.
C. Foreign Subcustodian Fees
-------------------------
. Incremental basis point and transaction fees will be charged for all
foreign assets for which we are custodian. The asset based fees and
transaction fees vary by country, based upon the attached global custody
fee schedule. Local duties, script fees, registration, exchange fees, and
other market charges are out-of-pocket.
2
<PAGE>
. Investors Bank will require the fund to hold all international assets at
the subcustodian of our choice.
================================================================================
MISCELLANEOUS
================================================================================
A. Out-of-Pocket
-------------
. These charges consist of:
-Legal Expenses -Non Standard Extracts
-Printing, Delivery & Postage -Data Transmissions
-Third Party Review -Forms & Supplies
-Extraordinary Travel Expenses -Micro Rental
-Customized Systems -InvestView
Development/Reports
-Pricing and Verification services
-Telecommunications
-Financial Statement
Printing/Edgarization
-Support Equipment Rental
B. Domestic Balance Credit
-----------------------
. We allow use of balance credit against fees (excluding out-of-pocket
charges) for fund balances arising out of the custody relationship. The
credit is based on collected balances reduced by balances required to
support the activity charges of the accounts. The monthly earnings
allowance is equal to 75% of the 90-day T-bill rate.
C. Foreign Exchange, Cash Management and Securities Lending
--------------------------------------------------------
. This Fee Schedule assumes Investors Bank will perform foreign exchange,
cash management and security lending services for the portfolios.
Securities lending revenue is split with the portfolios and Investors
Bank on a 60/40% basis: 60% going to the portfolio. Securities lending
revenue to AIT is estimated to be $750,000 per year based on current
portfolios.
D. Payment
-------
. The above fees will be charged against the fund's custodian checking
account five business days after the invoice is mailed.
E. Systems
-------
. The details of any systems work will be determined after a thorough
business analysis. System's work will be billed on a time and material
basis. Investors Bank provides an allowance of 10 systems hours for data
extract set up and reporting extract set up. Additional hours will be
billed on a time and material basis.
3
<PAGE>
F. Term
----
. The term of this Fee Schedule shall be three years commencing upon the
date of conversion of the Company's assets to the Bank (the "Initial
term").
* This fee schedule is valid for 90 days from the date of issue.
* This fee schedule is contingent on Investors Bank providing custody and
related services for the Allmerica Separate Accounts, Allmerica Securities
Trust and The Fulcrum Trust.
* This fee schedule is confidential between Investors Bank and the Allmerica
Investment Trust and shall not be disclosed to any third party without the
written consent of both parties.
4
<PAGE>
Appendix C
----------
Additional Services
None.
5
<PAGE>
Exhibit 8
ADMINISTRATION SERVICES AGREEMENT
between
ALLMERICA FINANCIAL INVESTMENT MANAGEMENT SERVICES, INC.,
ALLMERICA INVESTMENT TRUST
and
INVESTORS BANK & TRUST COMPANY
<PAGE>
ADMINISTRATION SERVICES AGREEMENT
AGREEMENT made as of April 1, 1999 by and among ALLMERICA FINANCIAL
INVESTMENT MANAGEMENT SERVICES, INC., a Massachusetts corporation ("AFIMS"),
ALLMERICA INVESTMENT TRUST (the "Fund") and INVESTORS BANK & TRUST COMPANY, a
Massachusetts trust company (the "Bank").
WHEREAS, AFIMS serves as investment manager for the Fund, a registered
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), consisting of the separate portfolios listed on Appendix A hereto;
----------
and
WHEREAS, AFIMS desires to retain the Bank to render certain administrative
services to the Fund and the Bank is willing to render such services.
NOW, THEREFORE, in consideration of the mutual covenants herein set forth,
it is agreed between the parties hereto as follows:
1. Appointment.
------------
AFIMS hereby appoints the Bank to act as Administrator of the Fund on
the terms set forth in this Agreement. The Bank accepts such appointment and
agrees to render the services herein set forth for the compensation herein
provided.
2. Delivery of Documents.
----------------------
AFIMS has furnished the Bank with copies properly certified or
authenticated of each of the following:
(a) The Fund's incorporating or organizing documents filed with the
Commonwealth of Massachusetts on September 8, 1993 and all amendments thereto
(the "Articles");
(b) The Fund's by-laws and all amendments thereto (the "By-Laws");
(c) The Fund's agreements with all service providers which include
any investment advisory agreements, sub-investment advisory agreements, custody
agreements, distribution agreements and transfer agency agreements
(collectively, the "Agreements");
(d) The Fund's most recent amendment to its Registration Statement on
Form N-1A (the "Registration Statement") under the Securities Act of 1933 and
under the 1940 Act; and
(e) The Fund's most recent prospectus and statement of additional
information (the "Prospectus"); and
(f) Such other certificates, documents or opinions as may mutually be
deemed necessary or appropriate for the Bank in the proper performance of its
duties hereunder.
Upon request, AFIMS will promptly furnish, or cause to be furnished
the Bank copies of all amendments of or supplements to the foregoing.
Furthermore, each party to this Agreement will notify the other promptly of any
matter which may materially affect the performance by the Bank of its services
under this Agreement.
Page 1
<PAGE>
3. Duties of Administrator.
------------------------
Subject to the supervision and direction of the Board of Directors of
the Fund, the Bank, as Administrator, will assist in conducting various aspects
of the Fund's administrative operations and undertakes to perform the services
described in Appendix B hereto. The Bank may, from time to time, perform
----------
additional duties and functions which shall be set forth in an amendment to such
Appendix B executed by both parties. At such time, the fee schedule included in
- ----------
Appendix C hereto shall be appropriately amended.
- ----------
In performing all services under this Agreement, the Bank shall act in
conformity with the Fund's Articles and By-Laws and the 1940 Act and other laws
as applicable, as the same may be amended from time to time, and the investment
objectives, investment policies and other practices and policies set forth in
the Fund's Registration Statement, as the same may be amended from time to time.
Notwithstanding any item discussed herein, the Bank has no discretion over the
Fund's assets or choice of investments.
4. Duties of the Fund.
-------------------
(a) The Fund agrees to make its legal counsel available to the Bank
for instruction with respect to any matter of law arising in connection with the
Bank's duties hereunder, and the Fund further agrees that the Bank shall be
entitled to rely on such instruction without further investigation on the part
of the Bank.
5. Fees and Expenses.
------------------
(a) For the services to be rendered and the facilities to be
furnished by the Bank, as provided for in this Agreement, AFIMS will compensate
the Bank in accordance with the fee schedule attached as Appendix C hereto.
----------
Such fees do not include out-of-pocket disbursements (as delineated on the fee
schedule or other expenses with the prior approval of the Fund's management) of
the Bank for which the Bank shall be entitled to bill AFIMS separately and for
which AFIMS shall reimburse the Bank.
(b) The Bank shall not be required to pay any expenses incurred by
the Fund or AFIMS.
(c) This Agreement does not obligate the Fund to pay the Bank any
fees or disbursements as described under paragraph 5(a) above.
6. Limitation of Liability.
------------------------
(a) The Bank agrees to indemnify and hold AFIMS and its directors,
officers, employees, agents and representatives harmless from and against any
and all losses, damages, liabilities, claims, costs and expenses, including
reasonable attorneys' fees and expenses, resulting from any claim, demand,
action or suit arising out of the Bank's willful misfeasance, bad faith or gross
negligence in the performance of its obligations and duties under this
Agreement.
(b) AFIMS agrees to indemnify and hold the Bank and its directors,
officers, employees, agents and representatives harmless from and against any
and all losses, damages, liabilities, claims, costs, and expenses including
reasonable attorneys' fees and expenses, resulting from any claim, demand,
action or suit related to AFIMS's performance of, or failure to perform, its
obligations under this Agreement and not resulting from willful misfeasance, bad
faith or gross negligence of the Bank.
(c) The Bank may apply to AFIMS at any time for instructions and may
consult counsel for AFIMS, or its own counsel, Morgan, Lewis and Bockius, and
with accountants and other experts with respect to any matter arising in
connection with its duties hereunder, and the Bank shall not be liable or
Page 2
<PAGE>
accountable for any action taken or omitted by it in good faith in accordance
with such instruction, or with the opinion of such counsel, accountants, or
other experts. The Bank shall not be liable for any act or omission taken or
not taken in reliance upon any document, certificate or instrument which it
reasonably believes to be genuine and to be signed or presented by the proper
person or persons. The Bank shall not be held to have notice of any change of
authority of any officers, employees, or agents of the Fund until receipt of
written notice thereof has been received by the Bank from the Fund.
(d) In the event the Bank is unable to perform, or is delayed in
performing, its obligations under the terms of this Agreement because of acts of
God, earthquakes, fires, floods, storms or other disturbances of nature,
epidemics, strikes, riots, nationalization, expropriation, currency
restrictions, acts of war, civil war or terrorism, insurrection, nuclear fusion,
fission or radiation, the interruption, loss or malfunction of utilities,
transportation or computers (hardware or software) and computer facilities, the
unavailability of energy sources and other similar happenings or events beyond
the reasonable control of the Bank, the Bank shall not be liable to the Fund or
AFIMS for any damages resulting from such failure to perform, delay in
performance, or otherwise from such causes. Notwithstanding the foregoing, the
Bank has and shall maintain appropriate back-up and disaster recovery facilities
and shall use it best efforts to provide all required information and services
hereunder to the Fund and AFIMS as soon as possible after any such delay in
performance.
7. Term and Termination of Agreement.
------------------------
(a) The term of this Agreement shall be three years commencing upon
the date hereof (the "Initial Term"), unless earlier terminated as provided
herein. After the expiration of the Initial Term, the term of this Agreement
shall automatically renew for successive one-year terms (each a "Renewal Term")
unless notice of non-renewal is delivered by the non-renewing party to the other
party no later than ninety days prior to the expiration of the Initial Term or
any Renewal Term, as the case may be.
(i) Either party hereto may terminate this Agreement prior to the
expiration of the Initial Term or any Renewal Term in the event the other party
violates any material provision of this Agreement, provided that the non-
violating party gives written notice of such violation to the violating party
and the violating party does not cure such violation within 90 days of receipt
of such notice.
(ii) If a majority of the Fund's Board reasonably determines that
the performance of the Bank under this Agreement has been unsatisfactory,
written notice (the "Notice") of such determination setting forth the reasons
for such determination shall be provided to the Bank. Such determination shall
be based upon such information as the Fund's Board in its sole discretion elects
to consider, including the Bank's performance against the "Performance Goals"
(as defined below). In order to be effective, any Notice must be executed by two
officers of the Fund. The Bank shall, within sixty (60) days after receipt of
the Notice, either (i) correct the deficiencies listed in the Notice; or (ii)
renegotiate terms of this Agreement in a form satisfactory to the Fund. If the
conditions of the preceding sentence are not met within such sixty (60) day
period, the Fund may terminate this Agreement without additional action by the
Fund's Board upon an additional sixty (60) days written notice. For the purposes
of this Section, "Performance Goals" shall mean the performance goal criteria
mutually agreed between the parties. The parties agree to develop the initial
Performance Goals no later than June 30, 1999 and agree to periodically review
the Performance Goals for necessary updates due to changes in the nature or
scope of services provided hereunder.
Page 3
<PAGE>
(b) At any time after the termination of this Agreement, the Fund or
AFIMS may, upon written request, have reasonable access to the records of the
Bank relating to its performance of its duties as Administrator.
8. Miscellaneous.
--------------
(a) Any notice or other instrument authorized or required by this
Agreement to be given in writing to AFIMS or the Bank shall be sufficiently
given if addressed to that party and received by it at its office set forth
below or at such other place as it may from time to time designate in writing.
To AFIMS:
Allmerica Financial Investment Management Services, Inc.
440 Lincoln Street
Worcester, MA 01653
Attention: President
With a copy to: Counsel
To the Fund:
Allmerica Investment Trust
440 Lincoln Street
Worcester, MA 01653
Attention: President
With a copy to: Counsel
To the Bank:
Investors Bank & Trust Company
200 Clarendon Street, P.O. Box 9130
Boston, MA 02117-9130
Attention: Geoffrey M. O'Connell, Director, Client Management
With a copy to: John E. Henry, General Counsel
(b) This Agreement shall extend to and shall be binding upon the
parties hereto and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable without the written consent of the
other party.
(c) This Agreement shall be construed in accordance with the laws of
the Commonwealth of Massachusetts, without regard to its conflict of laws
provisions.
(d) This Agreement may be executed in any number of counterparts each
of which shall be deemed to be an original and which collectively shall be
deemed to constitute only one instrument.
(e) The captions of this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
9. Confidentiality.
----------------
All books, records, information and data pertaining to the business
of the other party which are exchanged or received pursuant to the negotiation
or the carrying out of this Agreement shall remain confidential, and shall not
be voluntarily disclosed to any other person, except as may be required in the
performance of duties hereunder or as otherwise required by law.
Page 4
<PAGE>
10. Use of Name.
-----------
AFIMS shall not use the name of the Bank or any of its affiliates in
any prospectus, sales literature or other material relating to the Fund in a
manner not approved by the Bank prior thereto in writing; provided however, that
the approval of the Bank shall not be required for any use of its name which
merely refers in accurate and factual terms to its appointment hereunder or
which is required by the Securities and Exchange Commission or any state
securities authority or any other appropriate regulatory, governmental or
judicial authority; provided further, that in no event shall such approval be
----------------
unreasonably withheld or delayed.
11. Limitation of Liability. A copy of the Agreement and Declaration of
-----------------------
Trust of the Fund is on file with the Secretary of State of the Commonwealth of
Massachusetts, and notice is hereby given that this Agreement is executed by or
on behalf of the Fund by the Trustees as Trustees or by the officers as officers
and not individually, and that the obligations of this Agreement are not binding
upon any of the Trustees, officers or shareholders of the Fund, but are binding
only upon the assets and property of the Fund. The parties hereto agree that no
shareholder, Trustee or officer of the Fund may be held personally liable or
responsible for any obligation of the Fund arising out of this Agreement.
(The remainder of this page intentionally left blank.)
Page 5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed and delivered by their duly authorized officers as of the date
first written above.
ALLMERICA INVESTMENT TRUST
By: /s/ Richard M. Reilly
-----------------------------
Name: Richard M. Reilly
Title: President
ALLMERICA FINANCIAL INVESTMENT
MANAGEMENT SERVICES, INC.
By: /s/ Stephen W. Bright
-----------------------------
Name: Stephen W. Bright
Title: Vice President
INVESTORS BANK & TRUST COMPANY
By: /s/ Michael F. Rogers
-----------------------------
Name: Michael F. Rogers
Title: Executive Vice President
Page 6
<PAGE>
Appendices
----------
Appendix A......................................... Portfolios
Appendix B......................................... Services
Appendix C......................................... Fee Schedule
<PAGE>
Appendix A
----------
Portfolios
. Select Emerging Markets Fund
. Select Aggressive Growth Fund
. Select Capital Appreciation Fund
. Select Value Opportunity Fund
. Select International Equity Fund
. Select Growth Fund
. Select Strategic Growth Fund
. Growth Fund
. Equity Index Fund
. Select Growth and Income Fund
. Select Income Fund
. Investment Grade Income Fund
. Government Bond Fund
. Money Market Fund
<PAGE>
Appendix B
----------
Services
<TABLE>
<CAPTION>
Suggested Fund Auditor or
Function Investors Bank & Trust Allmerica Counsel
- -------------------------------- ----------------------------------- ------------------------------- ---------------------------
MANAGEMENT REPORTING
& TREASURY ADMINISTRATION
- --------------------------------
<S> <C> <C> <C>
Monitor portfolio compliance in Perform tests of certain specific Continuously monitor portfolio A/C - Provide consultation
accordance with the current portfolio activity designed from activity and Fund operations in as needed on compliance
Prospectus and SAI. provisions of the Fund's Prospectus conjunction with 1940 Act, issues.
and SAI. Follow-up on potential Prospectus, SAI and any other
violations. applicable laws and regulations.
Monitor testing results and
approve resolution of compliance
Frequency: Daily issues.
Provide compliance summary Provide a report of compliance Review report. A/C - Provide consultation
package. testing results. as needed.
Frequency: Monthly
Perform asset diversification Perform asset diversification tests Continuously monitor portfolio A - Provide consultation
testing to establish at each tax quarter end. Follow-up activity in conjunction with as needed in establishing
qualification as a RIC and to on issues. IRS requirements. Review test positions to be taken in
meet requirements of Section results and take any necessary tax treatment of
817(h). action. Approve tax positions particular issues. Review
taken. quarter end tests on a
Frequency: Quarterly current basis.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Suggested Fund Auditor or
Function Investors Bank & Trust Allmerica Counsel
- ------------------------------------ ------------------------------------------------------------------------------------------
MANAGEMENT REPORTING
& TREASURY ADMINISTRATION (CONT.)
- ------------------------------------
<S> <C> <C> <C>
Perform qualifying income testing to Perform qualifying income Continuously monitor A- Consult as needed on tax
establish qualification as a RIC. testing (on book basis portfolio activity in accounting positions to be
income, unless material conjunction with IRS taken. Review in conjunction
differences are anticipated) requirements. Review test with year-end audit.
on quarterly basis and as results and take any
may otherwise be necessary. necessary action. Approve
Follow-up on issues. tax positions taken.
Frequency: Quarterly
Prepare the Fund's annual expense Prepare preliminary expense Provide asset level
budget. Establish daily accruals. budget. Notify fund projections. Approve
accounting of new accrual expense budget.
rates.
Frequency: Annually
Monitor the Fund's expense budget. Monitor actual expenses Provide asset level C/A - Provide consultation as
updating budgets/expense projections quarterly. requested.
accruals. Provide vendor information
as necessary. Review expense
analysis and approve budget
revisions.
</TABLE>
Frequency: Monthly
<PAGE>
<TABLE>
<CAPTION>
Suggested Fund Auditor
Function Investors Bank & Trust Allmerica or Counsel
- ------------------------------------ ------------------------------------------------------------------------------------------
MANAGEMENT REPORTING
& TREASURY ADMINISTRATION (CONT.)
- ------------------------------------
<S> <C> <C> <C>
Receive and coordinate payment of fund Propose allocations of Approve invoices and
expenses. invoice among Funds and allocations of payments.
obtain authorized approval Send invoices to IBT in a
to process payment. timely manner.
Frequency: As often as necessary
Calculate periodic dividend rates to be Calculate amounts available Establish and maintain C - Review dividend
declared in accordance with management for distribution. Coordinate dividend and distribution resolutions in
guidelines. review by management and/or policies. Approve conjunction with Board
auditors. Notify custody and distribution rates per share approval.
transfer agent of authorized and aggregate amounts.
dividend rates in accordance Obtain Board approval when A - Review and concur
with Board approved policy. required. with proposed
Report dividends to Board as distributions
required.
Frequency: Quarterly/Annually
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Suggested Fund Auditor
Function Investors Bank & Trust Allmerica or Counsel
- ------------------------------------ ------------------------------------------------------------------------------------------
MANAGEMENT REPORTING
& TREASURY ADMINISTRATION (CONT.)
- -----------------------------------
<S> <C> <C> <C>
Calculate total return information Provide total return Review total return
on Funds as defined in the current calculations. information.
Prospectus and SAI.
Frequency: Monthly
Prepare responses to major industry Prepare, coordinate as Identify the services to
questionnaires. necessary, and submit which the Funds report.
responses to the appropriate Provide information as
agency. requested.
Frequency: As often as necessary
Prepare disinterested trustee Form Summarize amounts paid to Provide social security
1099-Misc. trustees during the calendar numbers and current mailing
year. Prepare and mail Form address for trustees.
1099-Misc. Review and approve
Frequency: Annually information provided for
Form 1099-Misc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Suggested Fund Auditor
Function Investors Bank & Trust Allmerica or Counsel
FINANCIAL REPORTING
- ------------------------------------ ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Prepare financial information for Prepare selected portfolio Review financial
presentation to Fund Management and and financial information information.
Board of Directors. for inclusion in board
material.
Frequency: Quarterly
Coordinate the annual audit and Coordinate the creation of Provide past financial A - Perform audit and
semi-annual preparation and printing of templates reflecting statements and other issue opinion on
financial statements and notes with client-selected standardized information required to annual financial
management, fund accounting and the appearance and text of create templates, including statements.
fund auditors. financial statements and report style and graphics.
footnotes. Draft and manage Approve format and text as A/C - Review reports.
production cycle. Coordinate standard. Approve production
with IBT fund accounting the cycle and assist in managing
electronic receipt of to the cycle. Coordinate
portfolio and general ledger review and approval by
information. Assist in portfolio managers of
resolution of accounting portfolio listings to be
issues. Using templates, included in financial
draft financial statements, statements. Prepare
coordinate auditor and appropriate management
management review, and clear letter and coordinate
comments. Coordinate production of Management
printing of reports and Discussion and Analysis. Review
EDGAR conversion with and approve entire report. Make
outside printer and filing appropriate representations in
with the SEC via EDGAR. conjunction with audit.
Frequency: Annually/semi-annually
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Suggested Fund Auditor
Function Investors Bank & Trust Allmerica or Counsel
- ------------------------------------ ------------------------------------------------------------------------------------------
LEGAL
- ------------------------------------
<S> <C> <C> <C>
Prepare and file Form N-SAR. Prepare form for filing. Provide appropriate responses. C - Review initial
Obtain any necessary Provide applicable Exhibits to filing. A - Provide
supporting documents. File attach to filing. Review and annual audit internal
with SEC via EDGAR. authorize filing. control letter to
accompany the annual
filing.
Frequency: Semi-annually
Assist the preparation and filing of Accumulate capital stock Review and approve capital A/C - Review
Form 24f-2 Notice. information. stock worksheet. informally when
requested
Frequency: Annually
Respond to regulatory audits. Compile and provide Coordinate with regulatory C - Provide
documentation pursuant to auditors to provide requested consultation as
Assist audit requests. client documentation and resolutions needed.
in resolution of audit to inquiries.
inquiries.
Frequency: As needed (at least annually)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Suggested Fund Auditor
Function Investors Bank & Trust Allmerica or Counsel
- ------------------------------------ ------------------------------------------------------------------------------------------
TAX
- ------------------------------------
<S> <C> <C> <C>
Prepare income tax provisions. Calculate investment company Provide transaction A - Provide consultation as
taxable income, net tax information as requested. needed in establishing
exempt interest, net capital Identify Passive Foreign positions to be taken in tax
gain and spillback dividend Investment Companies treatment of particular
requirements. Identify (PFICs). Approve tax issues. Perform review in
book-tax accounting accounting positions to be conjunction with the
differences. Track required taken. Approve provisions. year-end audit.
information relating to
accounting differences.
Frequency: Annually
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Suggested Fund Auditor
Function Investors Bank & Trust Allmerica or Counsel
- ------------------------------------ ------------------------------------------------------------------------------------------
TAX (CONT.)
- ------------------------------------
<S> <C> <C> <C>
Calculate excise tax distributions Calculate required Provide transaction information A - Provide consultation
distributions to avoid as requested. Identify Passive as needed in establishing
imposition of excise tax. Foreign Investment Companies positions to be taken in
- Calculate capital (PFICs). Approve tax tax treatment of
gain net income and accounting positions to be particular issues.
foreign currency taken. Review and approve all Review and concur with
gain/loss through income and distribution proposed distributions
October 31. calculations, including per share.
- Calculate ordinary projected income and dividend
income and shares. Approve distribution
distributions rates per share and aggregate
through a specified amounts. Obtain Board approval
cut off date . when required.
- Project ordinary
income from cut off
date to December 31.
- Ascertain dividend
shares.
Identify book-tax accounting
differences. Track required
information relating to
accounting differences.
Coordinate review by
management and fund
auditors. Notify custody and
transfer agent of authorized
dividend rates in accordance
with Board approved policy.
Report dividends to Board as
required.
Frequency: Annually
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Function Investors Bank & Trust Allmerica or Counsel
- ------------------------------------ ------------------------------------------------------------------------------------------
TAX (CONT.)
- ------------------------------------
<S> <C> <C> <C>
Prepare tax returns Prepare excise and RIC tax returns. Review and sign tax return. A - Review and sign tax
return as preparer.
Frequency: Annually
Prepare Form 1099 Obtain yearly distribution Review and approve
information. Calculate 1099 information provided for
reclasses and coordinate with Form 1099.
transfer agent.
Frequency: Annually
Prepare other year-end tax-related Obtain yearly income distribution Review and approve
disclosures information. Calculate disclosures information provided.
(i.e., dividend received deductions,
foreign tax credits, tax-exempt
income, income by jurisdiction) and
coordinate with transfer agent.
Frequency: Annually
</TABLE>
<PAGE>
Appendix C
----------
Allmerica Investment Trust
--------------------------
Fee Schedule
- --------------------------------------------------------------------------------
CUSTODY, FUND ACCOUNTING, CALCULATION OF N.A.V. and
FUND ADMINISTRATION
- --------------------------------------------------------------------------------
A. Domestic Custody, Fund Accounting, Calculation of N.A.V. and Fund
------------------------------------------------------------------
Administration
----------------
The following fees will apply to all assets for which Investors Bank
provides custody, fund accounting, calculation of N.A.V. and fund
administration. This
fee does not include transactions or global custody costs.
Annual Fee
----------
First $2 Billion of Net Assets 3.5 Basis Points
Next $2Billion of Net Assets 2.5 Basis Points
Assets in excess of $4 Billion 2.0 Basis Points
The yearly minimum fee for each fund is $75,000. Future funds in addition
to the 14 funds are subject to a $75,000 minimum fee.
B. Transactions
------------
. DTC/Fed Book Entry $ 8**
. Physical Securities 35
. Options and Futures 18
. GNMA Securities 30
. Principal Paydown 5
. Foreign Currency 18***
. Outgoing Wires 7
. Incoming Wires 5
** Assumes trade information is sent electronically to Investors Bank in the
ISITC/SWIFT format. Manual trades will be billed at $12.00 per trade. There
are no transaction charges for use of the Investors Bank Repo.
***There are no transaction charges for F/X contracts executed by Investors
Bank.
<PAGE>
C. Foreign Subcustodian Fees
-------------------------
. Incremental basis point and transaction fees will be charged for all
foreign assets for which we are custodian. The asset based fees and
transaction fees vary by country, based upon the attached global
custody fee schedule. Local duties, script fees, registration,
exchange fees, and other market charges are out-of-pocket.
. Investors Bank will require the fund to hold all international assets
at the subcustodian of our choice.
- --------------------------------------------------------------------------------
MISCELLANEOUS
- --------------------------------------------------------------------------------
A. Out-of-Pocket
-------------
. These charges consist of:
-Legal Expenses -Non Standard Extracts
-Printing, Delivery & Postage -Data Transmissions
-Third Party Review -Forms & Supplies
-Extraordinary Travel Expenses -Micro Rental
-Customized Systems Development/Reports -InvestView
-Pricing and Verification services
-Telecommunications
-Financial Statement Printing/Edgarization
-Support Equipment Rental
B. Domestic Balance Credit
-----------------------
. We allow use of balance credit against fees (excluding out-of-pocket
charges) for fund balances arising out of the custody relationship.
The credit is based on collected balances reduced by balances required
to support the activity charges of the accounts. The monthly earnings
allowance is equal to 75% of the 90-day T-bill rate.
C. Foreign Exchange, Cash Management and Securities Lending
--------------------------------------------------------
. This Fee Schedule assumes Investors Bank will perform foreign
exchange, cash management and security lending services for the
portfolios. Securities lending revenue is split with the portfolios
and Investors Bank on a 60/40% basis: 60% going to the portfolio.
Securities lending revenue to AIT is estimated to be $750,000 per year
based on current portfolios.
D. Payment
-------
. The above fees will be charged against the fund's custodian checking
account five business days after the invoice is mailed.
<PAGE>
E. Systems
-------
. The details of any systems work will be determined after a thorough
business analysis. System's work will be billed on a time and material
basis. Investors Bank provides an allowance of 10 systems hours for
data extract set up and reporting extract set up. Additional hours
will be billed on a time and material basis.
F. Term
----
. The term of this Fee Schedule shall be three years commencing upon the
date of conversion of the Company's assets to the Bank (the "Initial
term").
* This fee schedule is valid for 90 days from the date of issue.
* This fee schedule is contingent on Investors Bank providing custody and
related services for the Allmerica Separate Accounts, Allmerica Securities
Trust and The Fulcrum Trust.
* This fee schedule is confidential between Investors Bank and the Allmerica
Investment Trust and shall not be disclosed to any third party without the
written consent of both parties.
<PAGE>
EXhibit 8(a)
SECURITIES LENDING AGENCY AGREEMENT
BETWEEN
INVESTORS BANK & TRUST COMPANY
AND
ALLMERICA INVESTMENT TRUST
<PAGE>
AGREEMENT, dated as of April 1, 1999, between Allmerica Investment Trust on
--------------------------
behalf of the Portfolios listed on Schedule A, (the "Lender"), and Investors
Bank & Trust Company, a trust company organized and existing under the laws of
the Commonwealth of Massachusetts (the "Bank").
WHEREAS, the Bank currently acts as custodian for securities held by it in
the Account (as defined below) from time to time on behalf of the Lender; and
WHEREAS, the Lender desires to appoint the Bank as its agent for the
purpose of lending securities in the Account as more fully set forth below; and
WHEREAS, the Bank has agreed to act as the Lender's agent for such purpose
pursuant to the terms hereof;
NOW, THEREFORE, for and in consideration of the mutual promises set forth
herein, the parties hereto agree as follows:
1. Definitions.
-----------
Whenever used in this Agreement, unless the context otherwise requires, the
following words shall have the meanings set forth below:
1.1 "Account" shall mean the custodial account or accounts established and
maintained by the Bank on behalf of the Lender for the safekeeping of securities
and monies received by the Bank from time to time.
1.2 "Approved Investment" shall mean any type of security, participation or
interest in property in which Cash Collateral may be invested or reinvested, as
set forth on Schedule I hereto (which may be amended from time to time to add
additional Approved Investments with the written consent of the Bank and the
Lender, or to delete any Approved Investment at the written direction of the
Lender).
1.3 "Authorized Person" shall be any officer of the Lender and any other
person, whether or not any such person is an officer or employee of the Lender,
duly authorized by corporate resolutions of the Board of Directors or Trustees,
as the case may be, of the Lender to give Oral and/or Written Instructions on
behalf of the Lender, such persons to be designated in a Certificate which
contains a specimen signature of such person.
1.4 "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry
system for receiving and delivering Government Securities (as defined herein)
and its successors and nominees.
1.5 "Borrower" shall mean any entity named on Schedule II hereto (as such
Schedule may be amended from time to time to add additional Borrowers with the
written consent of the Bank and the Lender, or to delete any Borrower at the
written direction of the Lender) or any affiliate of such named entity, provided
that if the Bank enters into a transaction with an affiliate of any named
Borrower, the Bank shall notify the Lender of such transaction promptly.
1.6 "Cash Collateral" shall mean either Fed funds or New York Clearing
House funds (next day funds), as applicable for a particular loan of Securities.
<PAGE>
1.7 "Certificate" shall mean any notice, instruction, schedule or other
instrument in writing, authorized or required by this Agreement to be given to
the Bank, which is actually received by the Bank and signed on behalf of the
Lender by an Authorized Person or a person reasonably believed by the Bank to be
an Authorized Person.
1.8 "Collateral" shall mean Cash Collateral unless the Bank and the Lender
have agreed in writing to additional collateral, including Government Securities
and Letters of Credit, in which case "Collateral" shall mean cash collateral and
such additional collateral
1.9 "Collateral Account" shall mean an account established and maintained
by the Bank for the purpose of holding Collateral, Cash Collateral and Approved
Investments, interest, dividends and other payments and distributions received
with respect to Collateral and Approved Investments ("Distributions"), and any
Securities Loan Fee paid by Borrowers in connection with Securities loans
hereunder.
1.10 "Depository" shall mean the Depository Trust Company, Participant's
Trust Company, Euroclear, and any other securities depository or clearing agency
(and their respective successors and nominees) authorized under applicable law
or regulation to act as a securities depository or clearing agency, as set forth
on Schedule IV hereto.
1.11 "Government Security" shall mean book-entry Treasury securities (as
defined in Subpart 0 of Treasury Department Circular No. 300, 31 C.F.R. 306) and
any other securities issued or fully guaranteed by the United States government
or any agency or instrumentality of the United States government.
1.12 "Letter of Credit" shall mean a clean, unconditional and irrevocable
letter of credit in favor of the Bank as agent for the Lender issued by a bank
named on Schedule III hereto as may be amended from time to time to add
additional banks by the written consent of the parties hereto, or to delete any
Bank at the written direction of the Lender.
1.13 "Oral Instructions" shall mean verbal instructions actually received
by the Bank from an Authorized Person or from a person reasonably believed by
the Bank to be an Authorized Person.
1.14 "Rebate" shall mean the amount payable by the Lender to a Borrower (as
set forth in a Receipt) in connection with Securities loans at any time
collateralized by Cash Collateral.
1.15 "Receipt" shall mean an advice or confirmation setting forth the terms
of a particular loan of Securities hereunder, including, without limitation, the
Collateral with respect to such loan.
1.16 "Securities Borrowing Agreement" shall mean with, respect to any
Borrower, the agreement pursuant to which the Bank lends securities on behalf of
its customers (including the Lender) to such Borrower as may be amended from
time to time.
1.17 "Securities Loan Fee" shall mean the amount payable by a Borrower to
the Bank pursuant to the applicable Securities Borrowing Agreement in connection
with Securities loans, if any, collateralized by Collateral other than Cash
Collateral.
1.18 "Security" shall mean any Government Securities, non-U.S. securities,
common stock and other equity securities, bonds, debentures, corporate debt
securities, notes, mortgages or other
2
<PAGE>
obligations, and any certificates, warrants or other instruments representing
rights to receive, purchase, or subscribe for the same, or evidencing or
representing any other rights or interests therein, which are available for
lending pursuant to Section 2.2 of this Agreement.
1.19 "Written Instructions" shall mean written communications actually
received by the Bank from an Authorized Person or from a person reasonably
believed by the Bank to be an Authorized Person by letter, memorandum, telegram,
cable, telex, telecopy facsimile, computer, video (CRT) terminal or other on-
line system, or any other method whereby the Bank is able to verify with a
reasonable degree of certainty the identity of the sender of such communications
or the sender is required to provide a password or other identification code.
2. Appointment; Scope of Agency Authority.
--------------------------------------
2.1 Appointment. The Lender hereby appoints the Bank as its agent to lend
-----------
Securities in the Account to Borrowers from time to time as hereinafter set
forth, and the Bank hereby accepts appointment as such agent and agrees to so
act. As agent for the Lender, the Bank shall, from time to time, loan
Securities to Borrowers in accordance with the applicable Securities Borrowing
Agreements. Lending transactions shall be allocated among the Bank's various
securities lending clients as provided by the Bank's securities lending software
systems. The Bank has provided to the Lender a copy of a letter from the law
firm of Townley & Updike regarding the allocation methodology of the Bank's
securities lending software system.
2.2 Securities Subject to Lending. Unless the Lender provides otherwise in
-----------------------------
writing to the Bank, all Securities maintained in the Account shall be available
for lending pursuant to this Agreement. If any Securities become subject to
pledge or hypothecation to a third party for any reason, including future and
option transactions, the Lender shall notify the Bank immediately that such
Securities are not available for lending hereunder. The Bank shall monitor the
market value of the Lender's assets in order to ensure that no more than 33% of
the Lender's assets are subject to loan hereunder at any time. If, due to a
change in the assets or liabilities of the Lender, the amount of Securities
loaned hereunder exceeds 33% of the Lender's assets, the Bank shall take
immediate steps to reduce the amount of Securities loaned hereunder to less than
33% of the Lender's assets.
2.3 Securities Borrowing Agreement. The Lender hereby acknowledges receipt
------------------------------
of a Securities Borrowing Agreement with respect to each Borrower and authorizes
the Bank to lend Securities in the Account to Borrowers pursuant to such
agreements. The Bank shall promptly provide the Lender with copies of any
material amendments or changes to such agreements. The Lender may elect to
terminate any Borrower from Schedule II at any time for any reason.
2.4 Loan Opportunities. The Lender acknowledges and agrees that the Bank
------------------
shall have the right to decline to make any loans of Securities under any
Securities Borrowing Agreement and to discontinue lending under any Securities
Borrowing Agreement in its sole discretion and without notice to the Lender. The
Lender agrees that, provided the Bank acts in good faith without negligence and
willful misconduct, it shall have no claim against the Bank based on, or
relating to, loans made for other customers or for the Bank's own account, or
loan opportunities refused hereunder, whether or not the Bank has made fewer or
more loans for any other customer or for the Bank's own account than for the
Lender, and whether or not any loan for another customer or for the Bank's own
account, or the opportunity refused, could have resulted in loans made
hereunder.
2.5 Use of Book-Entry System and Depositories. The Lender hereby authorizes
-----------------------------------------
the Bank on a continuous and on-going basis, to deposit in the Book-Entry System
and the applicable Depositories set
3
<PAGE>
forth on Schedule IV hereto all Securities eligible for deposit therein and to
utilize the Book-Entry System and Depositories to the extent possible in
connection with its receipt and delivery of Securities, Collateral, Approved
Investments and monies under this Agreement. Where Securities, Collateral (other
than Cash Collateral) and Approved Investments eligible for deposit in the Book-
Entry System or a Depository are transferred to the Account, the Bank shall
identify as belonging to the Lender the appropriate quantity of securities in a
fungible bulk of securities shown on the Bank's account on the books of the
Book-Entry System or the applicable Depository. Securities, Collateral and
Approved Investments deposited in the Book-Entry System or a Deposit will be
represented in accounts which include only assets held by the Bank for
customers, including but not limited to accounts in which the Bank acts in a
fiduciary or agency capacity.
3. Representations and Warranties.
------------------------------
3.1 Lender's Representations The Lender hereby represents and warrants to
------------------------
the Bank, which representations and warranties shall be deemed to be continuing
and to be reaffirmed on any day that a Securities loan hereunder is outstanding,
that:
(a) This Agreement is, and each Securities loan and Approved
Investment will be, legally and validly entered into by the Lender, does not,
and will not, violate any statute, regulation, rule, order or, judgment binding
on the Lender, or any provision of the Lender's charter or by-laws, or any
agreement binding on the Lender or affecting its property, and is enforceable
against the Lender in accordance with its terms, except as may be limited by
bankruptcy, insolvency or similar laws, or by equitable principles relating to
or limiting creditors rights generally;
(b) The person executing this Agreement and all Authorized Persons
acting on behalf of the Lender has and have been duly and properly authorized to
do so;
(c) It is lending Securities as principal for its own account and
it will not transfer, assign or encumber its interest in, or rights with respect
to, any securities loans;
(d) All Securities subject to lending pursuant to Section 2.2 of
this Agreement are free and clear of all liens, claims, security interests and
encumbrances, no such Security subject to lending has been sold and the Lender
has no present intention to sell any of the Securities subject to lending. The
Lender shall promptly delete from the list referenced in Section 2.2 hereof any
and all Securities which are no longer subject to the representations contained
in this sub-paragraph (d).
3.2 Bank's Representations The Bank hereby represents and warrants to the
----------------------
Lender, which representations and warranties shall be deemed to be continuing
and to be reaffirmed on any day that a Securities loan hereunder is outstanding,
that:
(a) This Agreement is legally and validly entered into by the Bank,
does not and will not, violate any statute, regulation, rule, order or, judgment
binding on the Bank, or any provision of the Bank's charter or by-laws, or any
agreement binding on the Bank or affecting its property, and is enforceable
against the Bank in accordance with its terms, except as may be limited by
bankruptcy, insolvency or similar laws, or by equitable principles relating to
or limiting creditors rights generally; and
(b) The person executing this Agreement on behalf of the Bank has
been duly and properly authorized to do so.
4. Securities Lending Transactions.
-------------------------------
4
<PAGE>
4.l Loan Initiation. From time to time the Bank may lend Securities to
---------------
Borrowers and deliver such Securities against receipt of Collateral in
accordance with the applicable Securities Borrowing Agreement.
4.2 Receipt of Collateral; Approved Investments.
-------------------------------------------
(a) For each loan hereunder the Bank shall receive all Collateral
required by the applicable Securities Borrowing Agreement, which for Cash
Collateral shall in no event be equivalent to less than 102% of the market value
of the Securities lent (as determined in accordance with the applicable
Securities Borrowing Agreement), and the Bank is hereby authorized and directed,
without obtaining any further approval from the Lender, to invest and reinvest
all or substantially all of the Cash Collateral received in any Approved
Investment. The Bank shall credit all Collateral, Approved Investments and
Distributions received with respect to Collateral and Approved Investments to
the Collateral Account and mark its books and records to identify the Lender's
ownership thereof as appropriate.
(b) All Approved Investments shall be for the account and risk of
the Lender. To the extent any loss arising out of Approved Investments results
in a deficiency in the amount of Collateral available for return to a Borrower
pursuant to the Securities Borrowing Agreement, the Lender agrees to pay the
Bank on demand cash in an amount equal to such deficiency.
(c) Except as otherwise provided herein, all Collateral, Approved
Investments and Distributions credited to the Collateral Account on behalf of
the Lender shall be controlled by, and subject only to the instructions and
discretion of, the Bank.
4.3 Distribution on Loaned Securities. The Bank shall receive
---------------------------------
distributions paid on loaned Securities from Borrowers and/or issuers in
accordance with the applicable Securities Borrowing Agreement and shall credit
all such amounts received by the Bank to the Account.
4.4 Marks to Market. The Bank shall on each Business Day, in
---------------
accordance with standard market practice, mark to market in U.S. dollars the
value of all Securities loaned hereunder and accordingly receive and release
Collateral and Approved Investments in accordance with the applicable Securities
Borrowing Agreement.
4.5 Collateral Substitutions. The Bank shall accept substitutions of
------------------------
Collateral in accordance with the applicable Securities Borrowing Agreement and
shall credit all such substitutions to the Collateral Account, provided however
that unless other Collateral has been mutually agreed upon in writing by the
Bank and the Lender, no other Collateral may be substituted for Cash Collateral.
Any substitutions of Collateral under this Section 4.5 shall be reported to the
Lender as part of the Bank's daily reporting schedule.
4.6 Termination of Loans. The Bank shall terminate any Securities loan
--------------------
to a Borrower in accordance with the applicable Securities Borrowing Agreement
as soon as practicable after:
(a) receipt by the Bank of a notice of termination pursuant to the
Securities Borrowing Agreement;
5
<PAGE>
(b) receipt by the Bank of Written Instructions from the Lender
instructing it to terminate a Securities loan;
(c) receipt by the Bank of Written Instructions from the Lender
deleting the Borrower to whom such loan was made from Schedule II hereto;
(d) upon the Bank's becoming aware of the occurrence of any default
pursuant to the applicable Securities Borrowing Agreement requiring termination
of such loan; or
(e) whenever the Bank, in its sole discretion, elects to terminate
such loan.
4.7 Securities Loan Fee. The Bank shall receive any applicable Securities
-------------------
Loan Fee paid by Borrowers pursuant to the Securities Borrowing Agreement and
credit all such amounts received to the Collateral Account.
4.8 The Borrower's Financial Condition. The Bank has delivered to the
----------------------------------
Lender each of the Borrower's most recent statements that have been made
available to the Bank pursuant to the Securities Borrowing Agreements. The Bank
shall promptly deliver to the Lender all statements and financial information
subsequently delivered to the Bank and required to be furnished to the Bank
under the Securities Borrowing Agreements.
4.9 Transfer Taxes and Necessary Costs. All transfer taxes and necessary
----------------------------------
costs with respect to the transfer of the loaned Securities by the Lender to the
Borrower and the Borrower to the Lender upon the termination of the loan shall
be paid by the Borrower in accordance with the applicable Securities Borrowing
Agreement.
4.10 Remedies Upon Default. In the event of any default by a Borrower under
---------------------
the applicable Securities Borrowing Agreement, the Bank shall use its best
efforts to pursue, on behalf of the Lender, any remedies that the Bank or the
Lender may have under the applicable Securities Borrowing Agreement and any
applicable laws and regulations.
4.11 Bank's Obligation. Except as specifically set forth herein, or in any
-----------------
applicable Securities Borrowing Agreement, the Bank shall have no duty or
obligation to take action to effect payment by a Borrower of any amounts owed by
such Borrower pursuant to the Securities Borrowing Agreement.
5. Concerning the Bank.
-------------------
5.1 Standard of Care: Indemnification.
---------------------------------
(a) The Bank shall not be liable for any costs, expenses, damages,
liabilities or claims (including attorneys and accountants fees) incurred by the
Lender, except those costs, expenses, damages, liabilities or claims arising out
of the Bank's negligence, willful misconduct, bad faith, or reckless disregard
of its obligations and duties hereunder. The Bank, except to the extent of its
own negligence, bad faith and willful misconduct, shall have no obligation
hereunder for costs, expenses, damages, liabilities or claims (including
reasonable attorneys and accountants fees), which are sustained or incurred by
reason of any action or inaction by the Book-Entry System or any Depository or
their respective successors or nominees.
(b) The Lender agrees to indemnify the Bank and to hold it harmless
from and against any and all costs, expenses, damages, liabilities or claims,
including reasonable fees and expenses of
6
<PAGE>
counsel, which the Bank may sustain or incur or which may be asserted against
the Bank by reason of or as a result of any action taken or omitted by the Bank
in connection with or arising out of the Bank's operating under and in
compliance with this Agreement, except those costs, expenses, damages,
liabilities or claims arising out of the Bank's negligence, bad faith, willful
misconduct, or reckless disregard of its obligations and duties hereunder. The
foregoing indemnity shall be a continuing obligation of the Lender, its
successors and assigns, notwithstanding the termination of any loans hereunder
or of this Agreement. Actions taken or omitted in reasonable reliance upon Oral
or Written Instructions, any Certificate, or upon any information, order,
indenture, stock certificate, power of attorney, assignment, affidavit or other
instrument reasonably believed by the Bank to be genuine or bearing the
signature of a person or persons reasonably believed by the Bank to be genuine
or bearing the signature of a person or persons reasonably believed to be
authorized to sign, countersign or execute the same, shall be presumed to have
been taken or omitted in good faith.
5.2 No Obligation to Inquire. Without limiting the generality of the
------------------------
foregoing, the Bank shall be under no obligation to inquire into, and, except to
the extent of the Bank's negligence, bad faith and willful misconduct, the Bank
shall not be liable for, the validity of the issue of any Securities at any time
held in the Account or Approved Investments held in the Collateral Account, or
the legality or propriety of any loans of Securities to Borrowers.
5.3 Advances, Overdrafts and Indebtedness; Security Interest.
--------------------------------------------------------
(a) The Bank may, in its sole discretion, advance funds on behalf
of the Lender in order to pay to Borrowers any Rebates or to return to Borrowers
Cash Collateral to which they are entitled pursuant to the Securities Borrowing
Agreement. The Bank may also, in its sole discretion and as a matter of
bookkeeping convenience, credit the Account with interest, dividends or other
distributions payable on Securities prior to its actual receipt of final payment
therefor and the Lender agrees that such bookkeeping credits may also be
reflected on its books, and otherwise, as "immediately available" or "same day"
funds or by some similar characterization. Notwithstanding any such credit or
characterization, all such credits shall be conditional upon the Bank's actual
receipt of final payment and may be reversed by the Bank to the extent that
final payment is not received. If the Bank, in its sole discretion, permits the
Lender to use funds credited to the Account prior to receipt by the Bank of
final payment thereof, the Lender shall nonetheless, continue to bear the risk
of, and liability for, the Bank's non receipt of final payment in full.
(b) The Lender agrees to repay the Bank on demand the amount of any
advance or credit described in Section 5.3(a) above or any other amount owed by
the Lender hereunder plus accrued interest at a rate per annum (based on a 360-
day year for the actual number of days involved) as agreed to by the parties
from time to time. In order to secure repayment of any credit, advance,
overdraft or other indebtedness of the Lender to the Bank arising hereunder, the
Lender hereby agrees that the Bank shall have a continuing lien and security
interest, to the extent of any such amounts owing, in and to all assets now or
hereafter held in the Account and the Collateral Account, which is then in the
Bank's possession or control or in the possession or control of any third party
acting on the Bank's behalf. In this regard, the Bank shall be entitled to
charge any amounts owed to the Bank hereunder against any balance of account
standing to the credit of the Lender on the Bank's books and, without limiting
the foregoing, to all the rights and remedies of a pledgee under common law and
a secured party under the Massachusetts Uniform Commercial Code and/or any other
applicable laws and/or regulations as then in effect.
(c) The rights of the Bank and the obligations of the Lender under
this Section are absolute and unconditional whether or not the Bank would be
entitled to indemnification pursuant to Section 5.l(b) hereof.
7
<PAGE>
(d) For all purposes of this Agreement, payment with respect to a
transaction will not be "final" until the Bank shall have received immediately
available funds which under applicable law or rule are irreversible, which are
not subject to any security interest, levy or other encumbrance, and which are
specifically applicable, or deemed by the Bank to be specifically applicable, to
such transaction. A debit by the Bank to any other account of the Lender
maintained by the Bank or to an account of any third party to whom or for whose
account Securities have been delivered shall not constitute final payment to the
extent that such debit creates an overdraft or does not otherwise result in the
receipt by the Bank of immediately available, irreversible and unencumbered
funds.
5.4 Advice of Counsel The Bank may, with respect to questions of law,
-----------------
apply for and obtain the advice and opinion of counsel and shall be fully
protected with respect to anything done or omitted by it in good faith in
conformity with such advice or opinion.
5.5 No Collection Obligations. The Bank, as Lending Agent, shall use
-------------------------
reasonable efforts to effect collection of any amounts payable in respect of
Securities or Approved Investments if such Securities or Approved Investments
are in default, or if payment is refused after due demand and presentation.
5.6 Pricing Methods. The Bank is authorized to utilize any recognized
---------------
pricing information service or any other means of valuation specified in the
applicable Securities Borrowing Agreement ("Pricing Methods") in order to
perform its valuation responsibilities with respect to loaned Securities,
Collateral and Approved Investments, and the Lender agrees to hold the Bank
harmless from and against any loss or damage suffered or incurred as a result of
errors or omissions of any such Pricing Methods, except to the extent such loss
or damage is due to the negligence, bad faith or willful misconduct of the Bank.
5.7 Agent's Fee. In connection with each Securities loan hereunder the
-----------
Lender shall pay to the Bank a fee equal to 40% of (a) net realized income
derived from Approved Investments, plus (b) any Securities Loan Fee paid or
payable by the Borrower, minus (c) any Rebate paid by the Bank to the Borrower.
The Bank is authorized, on a monthly basis, to charge its fee and any other
amounts owed by the Lender hereunder against the Account and/or Collateral
Account.
5.8 Reliance On Certificates and Instructions. The Bank shall be
-----------------------------------------
entitled to rely upon any Certificate, any information contained on any Schedule
hereto as may be amended in accordance with the terms hereof, and Written or
Oral Instruction actually received by the Bank and reasonably believed by the
Bank to be duly authorized and delivered. The Lender agrees to forward to the
Bank Written Instructions confirming Oral Instructions in such manner so that
such Written Instructions are received by the Bank by the close of business of
the same day that such Oral Instructions are given to the Bank. The Lender
agrees that the fact that such confirming Written Instructions are not received
on a timely basis or that contrary instructions are received by the Bank shall
in no way affect the validity or enforceability of the transactions authorized
by the Lender. The Bank will use reasonable efforts to report any subsequently
received contrary instructions. In this regard, the records of the Bank shall be
presumed to reflect accurately any Oral Instructions given by an Authorized
Person or a person reasonably believed by the Bank to be an Authorized Person.
5.9 Disclosure of Account Information. It is understood and agreed
---------------------------------
that the Bank is authorized to supply any information regarding the Account
which is required by any applicable law or governmental regulation now or
hereafter in effect.
8
<PAGE>
5.10 Statements. The Bank will at least daily furnish the Lender with
----------
statements relating to loans hereunder.
5.11 Force Majeure. The Bank shall not be responsible or liable for
-------------
any failure or delay in the performance of its obligations under this Agreement
arising out of or caused by acts of God, earthquakes, fires, floods, storms or
other disturbances of nature, epidemics, strikes, riots, nationalization,
expropriation, currency restrictions, acts of war, civil war or terrorism,
insurrection, nuclear fusion, fission or radiation, the interruption, loss or
malfunction of utilities, transportation, the unavailability of energy sources
and other similar happenings or events beyond the reasonable control of the Bank
except as results from the Bank's own negligence. Notwithstanding the
foregoing, the Bank has and shall maintain appropriate back-up and disaster
recovery facilities and shall use it best efforts to provide all required
information and services hereunder to the Lender as soon as possible after any
such delay in performance.
5.12 No Implied Duties.
-----------------
(a) The Bank and Lender shall have no duties or
responsibilities whatsoever except such duties and responsibilities as are
specifically set forth in this Agreement.
6. Termination. This Agreement may be terminated at any time by either party
-----------
upon delivery to the other party of a written notice specifying the date of such
termination, which shall be not less than 60 days after the date of receipt of
such notice. Notwithstanding any such notice, this Agreement shall continue in
full force and effect with respect to all loans of Securities outstanding on the
date of termination.
7. Miscellaneous.
-------------
7.1 Exclusivity. The Lender agrees that it shall not enter into any
-----------
other agreement with any third party whereby such third party is permitted to
make loans on behalf of the Lender of any securities held by the Bank in the
Account from time to time.
7.2 Certificates. The Lender agrees to furnish to the Bank a new
------------
Certificate in the event that any present Authorized Person ceases to be an
Authorized Person or in the event that any other Authorized Persons are
appointed and authorized. Until such new Certificate is received, the Bank shall
be fully protected in acting upon Oral Instructions or signatures of the present
Authorized Persons.
7.3 Notices.
-------
(a) Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Bank, shall be sufficiently given
if addressed to the Bank and received by it at its offices at 200 Clarendon
Street, P.O. Box 9130, Boston, Massachusetts 02117-9130, Attention: Securities
Lending Department, with a copy to: John E. Henry, General Counsel or at such
other place as the Bank may from time to time designate in writing.
(b) Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Lender shall be sufficiently given
if addressed to the Lender and mailed or delivered to it at its offices at 440
Lincoln Street, Worcester, MA 01653, Attention President, with a copy to Counsel
or at such other place as the Lender may from time to time designate in writing.
9
<PAGE>
7.4 Cumulative Rights and No Waiver. Each and every right granted to a
-------------------------------
party hereunder or under any other document delivered hereunder or in connection
herewith, or allowed it by law or equity, shall be cumulative and may be
exercised from time to time. No failure on the part of a party to exercise, and
no delay in exercising, any right will operate as a waiver thereof, nor will any
single or partial exercise by a party of any right preclude any other or future
exercise thereof or the exercise of any other right.
7.5 Severability. In case any provision in or obligation under this
------------
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or obligations
shall not in any way be affected or impaired thereby, and if any provision is
inapplicable to any person or circumstances, it shall nevertheless remain
applicable to all other persons and circumstances.
7.6 Amendments. This Agreement may not be amended or modified in any
----------
manner except by a written agreement executed by both parties.
7.7 Successors and Assigns. This Agreement shall extend to and shall
----------------------
be binding upon the parties hereto, and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable by either party
without the written consent of the other.
7.8 Governing Law; Consent to Jurisdiction. This Agreement shall be
--------- ----------------------------
construed in accordance with the laws of the Commonwealth of Massachusetts
without regard to conflict of laws principles thereof.
7.9 No Third Party Beneficiaries. In performing hereunder, the Bank is
----------------------------
acting solely on behalf of the Lender and no contractual or service relationship
shall be deemed to be established hereby between the Bank and any other person.
7.10 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
7.11 SIPA Notice. THE PROVISIONS OF THE SECURITIES INVESTOR PROTECTION
-----------
ACT OF 1970 MAY NOT PROTECT THE LENDER WITH RESPECT TO LOANS HEREUNDER AND,
THEREFORE, THE COLLATERAL DELIVERED TO THE BANK AS AGENT FOR THE LENDER, MAY
CONSTITUTE THE ONLY SOURCE OF SATISFACTION OF A BORROWER'S OBLIGATION IN THE
EVENT SUCH BORROWER FAILS TO RETURN THE LOANED SECURITIES.
7.12 Limitation of Liability. A copy of the Agreement and Declaration
-----------------------
of Trust of the Lender is on file with the Secretary of State of the
Commonwealth of Massachusetts, and notice is hereby given that this Agreement is
executed by or on behalf of the Lender by the Trustees as Trustees or by the
officers as officers and not individually, and that the obligations of this
Agreement are not binding upon any of the Trustees, officers or shareholders of
the Lender, but are binding only upon the assets and property of the Lender.
The parties hereto agree that no shareholder, Trustee or officer of the Lender
may be held personally liable or responsible for any obligation of the Lender
arising out of this Agreement.
[Remainder of Page Intentionally Left Blank]
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective corporate officers, thereunto duly authorized,
as of the day and year first above written.
ALLMERICA INVESTMENT TRUST
By: /s/ Richard M. Reilly
---------------------
Title: President
INVESTORS BANK & TRUST COMPANY
By: /s/ Michael F. Rogers
---------------------
Title: Executive Vice President
11
<PAGE>
Schedule I
Approved Investments
Bank Obligations:
- ------------------
Bank Obligations with Domestic and Foreign Banks including Offshore Time
Deposits. All Banks obligations will have a short term rating of TBW-1, A-1,
or P-1 from Thompson Bankwatch, S & P or Moody's at time of purchase.
Money Market Funds
Institutional Money Market Funds with assets greater than $500 million.
Repurchase Agreements
Collateral held by IBT or a third party subcustodian. Collateralized at a
minimum of 102%. Eligible Collateral includes US Government, Mortgage Backed
Securities, Commercial Paper (A-1 or P-1) & US Corporate Bonds (Investment
Grade)) with the following brokers.
ABN AMRO
Bear Stearns & Co, Inc
CS First Boston Corporation
Goldman Sachs & Co.
Lehman Brothers, Inc.
J.P. Morgan Securities, Inc
Merrill Lynch Government Securities.
Morgan Stanley & Co. Inc.
PaineWebber, Inc
Prudential Securities, Inc
UBS Securities.Inc
Commercial Paper
Must be rated A-1 by S&P or P-1 by Moodys at time of purchase.
Corporate Bond
- --------------
Must have a Short Term rating of rated A-1 by S&P or P-1 by Moodys or have
a Long Term Rating of Investment Grade at time of purchase.
Unsecured Promissory Notes (Master Notes)
- -----------------------------------------
Must have a rating or Parental rating of A-1 by S&P or P-1 by Moodys at
time of purchase.
Insurance Funding Agreements
Must have a minimum Issuers Claim Paying Ability rating of A by S&P or A by
Duff and Phelps at time of purchase. Must be putable back to the issuer
within 90 days.
<PAGE>
GENERAL
- -------
. All investments will be US Dollar denominated.
. The final maturity for any security/issue will be less than one year.
. All investments will be in compliance with Investment Company Act of 1940.
. All investments will meet the minimum applicable credit rating associated
with each fund at time of purchase.
. No more than 5% of the Funds total assets will be invested in any one Money
Market Fund, not to exceed 10% of the Funds total assets for total Money
Market Funds.
By:__________________________
Title:_______________________
Date:________________________
<PAGE>
Schedule II
Approved Borrowers
Bear Stearns & Co. Inc.
BT Alex Brown Inc.
Credit Suisse First Boston Corporation
Goldman, Sachs & Co.
Lehman Brothers, Inc.
Merrill Lynch, Pierce, Fenner & Smith, Inc.
Morgan Stanley & Co. Inc. (Includes Morgan Stanley Securities Services Inc.)
Prudential Securities, Inc.
Salomon Smith Barney Inc.
By:__________________________
Title:_______________________
Date:________________________
<PAGE>
Schedule III
Letter of Credit Banks
[To be Determined]
<PAGE>
Schedule IV
Depositories
The depositories approved by the Lender.
<PAGE>
EXHIBIT 9
February 28, 2000
Allmerica Investment Trust
440 Lincoln Street
Worcester, MA 01653
Ladies and Gentlemen:
In my capacity as Secretary of and Counsel to Allmerica Investment Trust (the
"Trust"), I have participated in the preparation of Amendment No. 40 to its
Registration Statement on Form N-1A under the Investment Company Act of 1940 and
Post-effective Amendment No. 39 under the Securities Act of 1933 with respect to
the issuance of its shares. I am of the opinion that, when sold in accordance
with the terms of the Prospectuses and Statement of Additional Information in
effect at the time of sale, the shares of each Fund of the Trust will be legally
issued, fully paid and non-assessable by the Trust.
In arriving at the foregoing opinion, I have made such examination of law and
examined such records and other documents as in my judgment are necessary or
appropriate. I hereby consent to the filing of this opinion as an exhibit to
the Registration Statement on Form N-1A.
Sincerely,
/s/ George M. Boyd
George M. Boyd
Secretary and Counsel
<PAGE>
EXHIBIT 10
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Post-Effective
Amendment No. 39 to the registration statement on Form N-1A ("Registration
Statement") of our report dated February 14, 2000, relating to the financial
statements and financial highlights which appears in the December 31, 1999
Annual Report to Shareholders of the 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", "Independent
Accountants" and "Financial Statements" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 25, 2000
<PAGE>
Exhibit 16
Allmerica Investment Trust
Allmerica Securities Trust
CODE OF ETHICS
Pursuant to Rule 17j-1
Allmerica Investment Trust and Allmerica Securities Trust (each being
hereinafter referred to as the "Trust") have determined to adopt this Code of
Ethics, ("this Code") to specify and prohibit certain types of personal
securities transactions deemed to create conflicts of interest, to prevent each
Trust's Officers, Trustees and other personnel, as applicable, from engaging in
conduct prohibited by Rule 17j-1 of the Investment Company Act of 1940 (the
"Rule") and to establish reporting requirements and enforcement procedures
pursuant to the provisions of the Rule.
GENERAL PRINCIPLES
This Code is intended to embody the following general principles:
1. The duty of all personnel at all times to place the interests of Trust
shareholders first;
2. The requirement that all personnel securities transactions must be
conducted consistent with this Code and in such a manner as to avoid
any actual or potential conflict of interest or any abuse of an
individual's position of trust and responsibility; and
3. The fundamental standard that personnel must not take inappropriate
advantage of their positions.
This Code is divided into three parts. The first part contains provisions
applicable to Trustees and Officers who are officers, directors or employees of
any investment adviser, sub-adviser, recordkeeping agent or principal
underwriter of the Trust ("Service Provider"). The second part pertains to
unaffiliated Trustees of the Trust. The third part contains recordkeeping and
other provisions.
CODE APPROVALS
The Board of Trustees of each Trust, including a majority of Trustees who are
not interested persons, must approve this Code, the code of ethics of each
Service Provider and any material changes to such codes. The Board must base
its approval of a code of ethics and any material changes to that code on a
determination that the code contains provisions reasonably necessary to prevent
applicable personnel from engaging in any conduct prohibited by Rule 17j-1 (b)
of the Rule. Before approving this Code or a code of ethics of an investment
adviser, sub-adviser or principal underwriter or an amendment to any such code,
the Board of Trustees must receive a certification that the applicable
organization has adopted procedures reasonably necessary to prevent its
officers, trustees/directors and other personnel from violating its code of
ethics. A Trust's Board of Trustees must approve the code of ethics of an
investment adviser, sub-adviser or principal underwriter before initially
retaining the firm's services. A Trust's Board must approve a material change
to a previously approved code no later than six months after adoption of the
material change. See also Section III.A. "Amendments to Service Provider's Code
of Ethics".
<PAGE>
I. Rules Applicable to Affiliated Officers and Trustees Who Are Officers,
Directors, or Employees of Service Providers.
A. Incorporation of Service Provider's Code of Ethics. The provisions of
each Service Provider's Code of Ethics are incorporated herein by
reference as the Trust's Code of Ethics applicable to Trustees, or
Officers of the Trust who are officers, directors or employees of a
Service Provider. A violation of a Service Provider's Code of Ethics
shall constitute a violation of this Code.
B. Reports.
(1) Trustees or Officers of the Trust who are officers, directors or
employees of a Service Provider shall file the confidential reports
required under such Service Provider's Code of Ethics with the
officer (the "Review Officer") designated from time to time by the
Trustees of the Trust to receive such reports.
(2) A report filed with the Review Officer shall be deemed to be filed
with the Trust of which the reporting individual is a Trustee or
Officer.
C. Review and Sanctions for Affiliated Officers. In respect of Officers of
the Trust who are also officers, directors or employees of a Service
Provider, the provisions of such Service Provider's Code of Ethics
relating to review and to sanctions shall govern. Where any violation of
the Service Provider's Code of Ethics is found in respect of any such
Officer of the Trust, it shall be reported to the Trustees of the Trust,
together with any sanctions imposed for such violation.
D. Review and Sanctions for Affiliated Trustees. In respect of Trustees of
the Trust who are also officers, directors or employees of a Service
Provider, the procedure for review and sanctions set forth in such
Service Provider's Code of Ethics shall govern. Where any violation of
the Service Provider's Code of Ethics is found in respect of any such
Affiliated Trustee of the Trust, it shall be reported to Trustees of the
Trust, together with any sanctions imposed for such violation. The
Trustees may, at their option, impose such further sanctions as are
deemed appropriate.
II. Rules Applicable to Unaffiliated Trustees.
A. Definitions.
(1) "Affiliated person" shall have the same meaning as set forth in
Section 2(a)(3) of the Investment Company Act.
(2) "Beneficial ownership" shall be interpreted in the same manner as
it would be in determining whether a person is subject to the
provisions of Section 16 of the Securities Exchange Act of 1934 and
the rules and regulations thereunder. Application of this
definition is explained in more detail in Appendix A hereto.
(3) "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the Investment Company Act. Section 2(a)(9) provides
that "control" means the power
2
<PAGE>
to exercise a controlling influence over the management or policies
of a company, unless such power is solely the result of an official
position with such company.
(4) "Disinterested Trustee" means a Trustee of the Trust who is not an
"interested person" of the Trust within the meaning of Section
2(a)(19) of the Investment Company Act. An "interested person"
includes any person who is an affiliated person of a broker or
dealer.
(5) "Purchase or sale of a security" includes, among other things, the
writing of an option to purchase or sell a security.
(6) "Security" shall have the same meaning as that set forth in Section
2(a)(36) of the Investment Company Act (in effect, all securities),
except that it shall not include direct obligations of the United
States, short-term securities issued or guaranteed by an agency or
instrumentality of the United States, bankers acceptances, bank
certificates of deposit, commercial paper and shares of registered
open-end investment companies, and any other securities excepted by
the Rule.
(7) A security is "being considered for purchase or sale" when a
recommendation to purchase or sell the security has been made and
communicated and, with respect to the person making the
recommendation, when such person seriously considers making such a
recommendation.
(8) "Unaffiliated Trustee" means a Trustee of the Trust who is not an
officer, director, employee or shareholder of any Service Provider
or of any affiliated person of any Service Provider.
B. Prohibited Purchases and Sales. No Unaffiliated Trustee of the Trust
shall purchase or sell, directly or indirectly, any security in which he
or she has, or by reason of such transaction acquires, any direct or
indirect beneficial ownership and which to his or her knowledge at the
time of such purchase or sale.
(1) is being considered for purchase or sale by the Trust; or
(2) is being purchased or sold by the Trust; or
(3) was purchased or sold by the Trust within the most recent 15 days
if such person participated in the recommendation to, or the
decision by, the Trust to purchase or sell such security.
C. Exempted Transactions. The prohibitions of Section II-B of this Code
shall not apply to
(1) purchases or sales effected in any account over which the
Unaffiliated Trustee has no direct or indirect influence or
control;
(2) purchases or sales which are non-volitional on the part of either
the Unaffiliated Trustee or the Trust;
3
<PAGE>
(3) purchases which are part of an automatic dividend reinvestment
plan;
(4) purchases effected upon the exercise of rights issued by an issuer
pro rata to all holders of a class of its securities, to the
--------
extent such rights were acquired from such issuer, and sales of
such rights so acquired;
(5) purchases or sales previously approved by the Trust's Review
Officer (a) since they are only remotely potentially harmful to the
Trust because they would be very unlikely to affect a highly
institutional market or because they clearly are not related
economically to the securities to be purchased, sold or held by the
Trust, or (b) as not presenting any danger of the abuses proscribed
by the Rule, which approval shall be confirmed in writing.
D. Reporting.
(1) Every Unaffiliated Trustee of the Trust who is also a Disinterested
Trustee of the Trust shall file with the person(s) designated by
the Trustees as "the Trust's Review Officer(s)" a report containing
the information described in Section II-D(4) of this Code with
respect to transactions in any security in which such Disinterested
Trustee has, or by reason of such transaction acquires, any direct
or indirect beneficial ownership, whether or not one of the
exemptions listed in Section 11-C applies, if such Trustee, at the
time of that transaction, knew or, in the ordinary course of
fulfilling his or her official duties as a Trustee of the Trust,
should have known that, during the 15-day period immediately
preceding or following the date of the transaction by the Trustee:
(a) such security was being purchased or sold by the Trust, or
(b) such security was being considered for purchase or sale by the
Trust or by a Service Provider for the portfolio of the Trust.
Notwithstanding the preceding sentence, any Disinterested Trustee may,
at his or her option, report the information described in Section II-
D(4) with respect to any one or more transactions in any security in
which such person has, or by reason of the transaction acquires, any
direct or indirect beneficial ownership.
(2) Every Unaffiliated Trustee of the Trust who is not also a
Disinterested Trustee of the Trust shall file with the Review
Officer(s) a report containing the information described in Section
II-D(4) of this Code with respect to transactions in any security
in which such Trustee has, or by reason of such transaction
acquires, any direct or indirect beneficial ownership, whether or
not one of the exemptions listed in Section II-C applies.
(3) Anything in Section II-D(1) or (2) above to the contrary
notwithstanding, no Unaffiliated Trustee shall be required to make
a report with respect to transactions effected for any account over
which such person does not have any direct or indirect influence or
control.
4
<PAGE>
(4) Every report shall be made not later than 10 days after the end of
the calendar quarter in which the transaction to which the report
relates was effected, and shall contain the following information.
(a) the date of the transaction, the title and the number of shares
or the principal amount of each security involved;
(b) the nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);
(c) the price at which the transaction was effected; and
(d) the name and address of the broker, dealer or bank with or
through whom the transaction was effected.
(5) Every report concerning a purchase or sale prohibited under Section
II-B herein with respect to which the reporting person relies upon
one of the exemptions provided in Section II-C herein shall contain
a brief statement of the exemption relied upon and the
circumstances of the transaction.
(6) Any such report may contain a statement that the report shall not
be construed as an admission by the person making such report that
he or she has any direct or indirect beneficial ownership in the
security to which the report relates. Such report also may contain
a statement that the report is made with respect to all portfolio
transactions of such person, and shall not be construed as an
admission that the person knew or should have known of portfolio
transactions by the Trust in such securities.
E. Review.
(1) The Trust's Review Officer(s) shall compare the reported personal
securities transactions with the completed and contemplated
portfolio transactions of the Trust to determine whether any
transaction ("Reviewable Transactions") listed in Section II-B
(disregarding exemptions provided by Section II-C(1) through (4))
may have occurred.
(2) If the Trust's Review Officer(s) determines that a Reviewable
Transaction may have occurred, the Review Officer shall determine
whether a violation of this Code may have occurred, taking into
account all the exemptions provided under Section II-C. Before
making any determination that a violation has been committed by a
Trustee, the Trust's Review Officer(s) shall give such person an
opportunity to supply additional information regarding the
transaction in question.
F. Sanctions. If the Trust's Review Officer(s) determines that any Trustee
of the Trust has violated this Code, he shall so advise the Chairman of
the Board of the Trust and also a committee consisting of the
Disinterested Trustees (other than the person whose transaction is under
consideration), and shall provide the committee with the report, the
record of pertinent actual or contemplated portfolio transactions or the
Trust, and any additional material supplied by such person. The
committee, at its option, either shall
5
<PAGE>
impose such sanctions as it deems appropriate or refer the matter to the
full Board of Trustees, which shall impose such sanctions as are deemed
appropriate.
III. Miscellaneous.
A. Amendments to Service Provider's Code of Ethics. Any amendment to a
Service Provider's Code of Ethics shall be deemed an amendment to
Section I-A of this Code, effective 90 days after written notice of such
amendment shall have been received by the Secretary of the Trust, unless
the Trustees of the Trust expressly determine that such amendment shall
become effective at an earlier date or have not approved the amendment
as provided under "Code Approvals".
B. Records. The Trust shall maintain records in the manner and to the
extent set forth below, which records may be maintained in any manner
described in Rule 31A-2(f)(1) under the Investment Company Act, and
shall be available for examination by representatives of the Securities
and Exchange Commission:
(1) A copy of this Code and any other code which is, or at any time
within the past five years has been, in effect shall be preserved
in an easily accessible place.
(2) A record of any violation of this Code and of any action taken as a
result of such violation shall be preserved in an easily accessible
place for a period of not less than five years following the end of
the fiscal year in which the violation occurs.
(3) A copy of each report made by any person pursuant to this Code shall
be preserved for a period of not less than five years from the end
of the fiscal year in which it is made, for the first two years in
an easily accessible place.
(4) A list of all persons who are, or within the past five years have
been, required to make reports pursuant to this Code, or who are
responsible for reviewing these reports, shall be maintained in an
easily accessible place.
C. Confidentiality. All reports of securities transactions and any other
information filed with the Trust pursuant to this Code shall be treated
as confidential.
D. Interpretation of Provisions. The Trustees may from time to time adopt
such interpretations of this Code as they deem appropriate.
E. Administration and Procedures. The Trusts must use reasonable diligence
and institute procedures reasonably necessary to prevent violations of
this Code. Each Trust must institute procedures by which appropriate
management or compliance personnel review reports required to be
submitted to the Trust under this Code. Each Trust must identify all
persons who are required to make reports to the Trust under this Code
and must inform those persons of their reporting obligation.
No less frequently than annually, each Trust must furnish to the Trust's
Board of Trustees and the Board of Trustees must consider, a written
report that:
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<PAGE>
(1) Describes any issues arising under this Code or procedures or the
codes of ethics of the Service Providers since the last report to
the Board of Trustees, including, but not limited to, information
about material violations of such codes or procedures and sanctions
imposed in response to the material violations; and
(2) Certifies that the Trust and its Service Providers have adopted
procedures reasonably necessary to prevent their respective
officers, trustees/directors and other personnel from violating
this Code or the codes of the respective Service Providers.
Adopted 2/14/95
Amended 2/15/00
7
<PAGE>
APPENDIX A
to
CODE OF ETHICS
This Code of Ethics relates to the purchase or sale of securities of which a
covered person has a direct or indirect "beneficial ownership" except for
purchases or sales in accounts over which the person has no direct or indirect
influence or control as described below.
Beneficial Ownership
"Beneficial ownership" means that one directly or indirectly, by written or
unwritten understanding, has (or shares a direct or indirect) financial interest
regardless of who is the owner of record. Financial interest means the
opportunity directly or indirectly to participate in the risks and rewards of a
transaction. Securities owned by a person or by a trust of which one has a
beneficial ownership or a similar arrangement include, but are not limited to:
(1) Securities owned by your spouse, your minor children and relatives of
you and your spouse who live in your home, including trusts of which
such persons are beneficiaries (other than interests in a trust over
which neither you nor such persons has any direct or indirect influence
or control over investments);
(2) A proportionate interest in securities held by a partnership of which
you are a general partner;
(3) Securities in which you have a right to dividends that is separated or
separable from the underlying securities;
(4) Securities that you have a right to acquire through the exercise or
conversion of another security, whether or not presently exercisable;
and
(5) Securities held in accounts from which you receive a performance
related fee based on less than one year's performance.
You do not have a financial interest in securities held by a corporation of
which you are not a controlling shareholder and do not have or share investment
control over its portfolio.
No Influence or Control
The Code does not apply to purchases and sales of securities transactions
effected in any account over which you do not have "any direct or indirect
influence or control". However, this "no direct or indirect influence or
control" exception is, in the opinion of our counsel, limited to few situations.
The principal one is that described in paragraph (1) above, where securities are
held in a trust, in which you have a beneficial interest, but where you are not
the Trustee and have no control or influence over the Trustee.
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<PAGE>
Exhibit 17
POWER OF ATTORNEY
We, the undersigned, hereby severally constitute and appoint Richard M. Reilly,
Joseph W. MacDougall, Jr., George M. Boyd and Gregory D. Sheehan, and each of
them singly, our true and lawful attorneys, with full power to them and each of
them, to sign for us, and in our names and in any and all capacities, any and
all amendments, including post-effective amendments, to the Registration
Statement on Form N-1A of Allmerica Investment Trust and to file the same with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys and each of
them, acting alone, full power and authority to do and perform each and every
act and thing requisite or necessary to be done in the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys or any of them may lawfully do or cause
to be done by virtue hereof. Witness our hands on the date set forth below.
<TABLE>
<CAPTION>
<S> <C> <C>
Signature Title Date
- --------- ----- ----
/s/ John F. O'Brien Chairman of the Board and Trustee 2/15/00
- ------------------------------------- -------
John F. O'Brien
/s/ Richard M. Reilly President, Chief Executive Officer 2/15/00
- ------------------------------------- and Trustee -------
Richard M. Reilly
/s/ Paul T. Kane Treasurer (Principal Accounting Officer) 2/15/00
- ------------------------------------- -------
Paul T. Kane
/s/ P. Kevin Condron Trustee 2/15/00
- -------------------------------------- -------
P. Kevin Condron
Trustee
- ------------------------------------- -------
Cynthia A. Hargadon
/s/ Gordon Holmes Trustee 2/15/00
- -------------------------------------- -------
Gordon Holmes
/s/ John P. Kavanaugh Trustee 2/15/00
- -------------------------------------- -------
John P. Kavanaugh
/s/ Bruce E. Langton Trustee 2/15/00
- -------------------------------------- -------
Bruce E. Langton
/s/ Attiat F. Ott Trustee 2/15/00
- -------------------------------------- -------
Attiat F. Ott
/s/ Ranne P. Warner Trustee 2/15/00
- -------------------------------------- -------
Ranne P. Warner
</TABLE>
<PAGE>
Exhibit 17
POWER OF ATTORNEY
We, the undersigned, hereby severally constitute and appoint Richard M. Reilly,
Joseph W. MacDougall, Jr., George M. Boyd and Gregory D. Sheehan, and each of
them singly, our true and lawful attorneys, with full power to them and each of
them, to sign for us, and in our names and in any and all capacities, any and
all amendments, including post-effective amendments, to the Registration
Statement on Form N-1A of Allmerica Investment Trust and to file the same with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys and each of
them, acting alone, full power and authority to do and perform each and every
act and thing requisite or necessary to be done in the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys or any of them may lawfully do or cause
to be done by virtue hereof. Witness our hands on the date set forth below.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
_______________________ Chairman of the Board and Trustee _________________
John F. O'Brien
_______________________ President, Chief Executive Officer _________________
Richard M. Reilly and Trustee
_______________________ Treasurer (Principal Accounting Officer) _________________
Paul T. Kane
_______________________ Trustee _________________
P. Kevin Condron
/s/ Cynthia A. Hargadon Trustee 2/16/00
- ----------------------- -----------------
Cynthia A. Hargadon
_______________________ Trustee _________________
Gordon Holmes
_______________________ Trustee _________________
John P. Kavanaugh
_______________________ Trustee _________________
Bruce E. Langton
_______________________ Trustee _________________
Attiat F. Ott
_______________________ Trustee _________________
Ranne P. Warner
</TABLE>
