<PAGE>
Allmerica Investment Trust
(Supplement Effective October 1, 2000 to Prospectus dated May 1, 2000)
The following two investment portfolios are being offered in the attached
Prospectus:
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
<PAGE>
Select Strategic Income Fund
----------------------------
Sub-Advisers: Western Asset Management Company
*Western Asset Management Company Limited
Investment Objective: The Fund seeks to maximize total return, consistent with
prudent investment management and liquidity needs, by investing in various types
of fixed income securities.
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; obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and
mortgage-backed and asset-backed securities. The Fund may invest up to 25% of
its assets in foreign securities (not including its investments in American
Depositary Receipts), including up to 20% of its assets in non-U.S. dollar
denominated securities.
The dollar weighted average duration of the Fund is expected to range within 20%
of the duration of the domestic bond market as a whole (normally four to six
years, although this may vary) as measured by the Sub-Adviser. The Fund may
invest up to 15% of its assets in high yield securities or "junk bonds" rated
below investment grade but at least B or higher by Moody's Investors Services or
Standard & Poor's Rating Services or similar rating organizations, and in
unrated securities 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").
Principal Risks:
. Credit Risk
. Currency Risk
. Derivatives Risk
. Emerging Market Risk
. Foreign Investment Risk
. Interest Rate Risk
. Investment Management Risk
. Liquidity Risk
. Market Risk
. Prepayment Risk
See "Description of Principal Investment Risks."
*Western Asset Management Company has delegated some of its duties as
Sub-Adviser to its London affiliate, Western Asset Management Company Limited
("WAMCL"), to handle the non-U.S. dollar trading functions performed on behalf
of the Fund.
-2-
<PAGE>
___________________________
The attached Prospectus is amended as follows to reflect the availability of the
Equity Index Fund and Select Strategic Income Fund.
___________________________
The Equity Index Fund and Select Strategic Income Fund are added as the eighth
and tenth Funds, respectively, listed on the cover page.
___________________________
The number "10" is changed to "12" in the first sentence of the first paragraph
under the section on page 3 of the Prospectus entitled, "Fund Summaries".
___________________________
The following sentence is added at the end of the last paragraph under the
section entitled, "Fund Summaries", on page 3 of the Prospectus: A bar chart and
table are not included for the Select Strategic Income Fund, since as of
December 31, 1999 it had not yet had a full calendar year of investment returns.
___________________________
The information on the Sub-Advisers, Investment Objective, Principal Investment
Strategies and Principal Risks on the first two pages of this Supplement
regarding the Equity Index Fund and Select Strategic Income Fund are included as
new pages 11 and 13, respectively.
___________________________
The table under the section "EXPENSE SUMMARY" showing the total annual fund
operating expenses for each Fund is amended to include the following and the
first sentence of footnote (1) to the table is amended to read as follows:
<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>
Equity Index Fund None 0.28% None 0.07% 0.35%(1)
Select Strategic Income Fund None 0.60% None 0.17%** 0.77%(1)
</TABLE>
**The "other expenses" shown for the Select Strategic Income Fund are based on
estimated amounts that will be incurred in respect of shares of the Fund for the
2000 fiscal year.
(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
-3-
<PAGE>
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 Strategic Income
Fund and Select Investment Grade Income Fund, and 0.60% for the Equity Index
Fund and Money Market Fund.
--------------------
The table under the section entitled "Example" on page 15 of the Prospectus is
amended to include the following:
<TABLE>
<CAPTION>
Fund 1 Year 3 Years 5 Years 10 Years
---- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Equity Index Fund $36 $113 $197 $444
Select Strategic Income Fund $79 $248 ---- ----
</TABLE>
--------------------
The second sentence under the section entitled, "Other Investment Strategies",
on page 18 of the Prospectus is amended to read, in its entirety, as follows:
The Funds may at times use the following investment strategies, some of
which are principal investment strategies, as noted under the principal
investment strategy section for each Fund under the section entitled,
"Objectives, Strategies and Risks".
--------------------
The heading and first sentence of the section on High Yield Securities under
"Other Investment Strategies" is amended to read as follows:
High Yield Securities. (applicable to the Select Emerging Markets
Fund, Select Capital Appreciation Fund, Select Growth Fund, Select
Growth and Income Fund and Select Strategic Income Fund) The Select
Emerging Markets Fund, Select Capital Appreciation Fund, Select
Growth Fund, Select Growth and Income Fund and Select Strategic
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 Investors Services or Standard & Poor's Rating
Services, or equivalently rated by another rating agency, or unrated
but believed by the Sub-Adviser to have similar quality.
--------------------
The following is added to the table on page 21 of the Prospectus under the
section entitled, "Management of the Funds":
-4-
<PAGE>
<TABLE>
<CAPTION>
Fund Name, Experience
Sub-Adviser(s) Name and Address
<S> <C>
Equity Index Fund Incorporated in 1993. Had $13.3 billion in assets
Allmerica Asset Management, Inc. under management as of December 31, 1999.
440 Lincoln Street Serves as investment adviser to investment
Worcester, MA 01653 companies and affiliated insurance company
accounts.
Select Strategic Income Fund Founded in 1971. Had $59.4 billion in assets
Western Asset Management Company under management as of December 31, 1999.
117 E. Colorado Blvd. Provides fixed-income management services to a
Pasadena, CA 91105 wide variety of institutional clients.
Western Asset Management Company Limited Acquired in 1996 and operates as an affiliate of
155 Bishopgate Western Asset Management Company. Had
London, UK EC2M3TY $4.54 billion in assets under management as of
December 31, 1999. Provides global fixed
income management services to a wide variety of
institutional clients.
</TABLE>
----------------------------------------
The table on page 24 of the Prospectus containing information about the
individuals primarily responsible for the day-to-day management of the Fund's
portfolios is amended to include the following information relating to the
Equity Index Fund and Select Strategic Income Fund:
<TABLE>
<CAPTION>
Fund Name and Name and Title of Service With Business Experience
Sub-Adviser(s) Name Portfolio Manager(s) Sub-Adviser For Past Five Years
<S> <C> <C> <C>
Equity Index Fund John C. Donohue, 1995-Present He was a portfolio manager at
Allmerica Asset Vice President CS First Boston Investment
Management, Inc. Management prior to joining AAM.
Select Strategic *Stephen A. Walsh, 1991-Present Prior to 1991, Mr. Walsh served
Income Fund Director of Portfolio as a Portfolio Manager with
Western Asset Management Security Pacific Investment
Management Company Managers, Inc.
*Mr. Walsh is head of
an investment team of
more than 30
individuals who are
primarily responsible
for the day-to-day
management of the
Fund.
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
Fund Name and Name and Title of Service With Business Experience
Sub-Adviser(s) Name Portfolio Manager(s) Sub-Adviser For Past Five Years
<S> <C> <C> <C>
Western Asset Michael B. Zelouf 1996-Present Mr. Zelouf joined Lehman
Management Company Director, International Brothers Global Asset
Limited Investments Management as Portfolio
Manager in 1989 and was
promoted to Director,
International Investments in
1996 when Western Asset
acquired the firm.
</TABLE>
-------------------------
The following is added to the first table on page 25 of the Prospectus under the
section entitled, "Management of the Funds":
<TABLE>
<CAPTION>
Fee (as a percentage of
Fund average net assets)
-------------------------------------------------------------------------------------
<S> <C>
Equity Index Fund 0.28%
Select Strategic Income Fund *
</TABLE>
*The Select Strategic Income Fund will pay the Manager a fee computed daily at
an annual rate of the average daily net assets of the Fund as set forth below:
Net Assets Fee
---------- ---
First $50 million 0.60%
Next $50 million 0.55%
Over $100 million 0.45%
-------------------------
The following is added to the second table on page 25 of the Prospectus under
the section entitled, "Management of the Funds":
<TABLE>
<CAPTION>
Fee (as a percentage of
Sub-Adviser average net assets)
-------------------------------------------------------------------------------------------
<S> <C>
Allmerica Asset Management, Inc. (Equity Index Fund) 0.09%
Western Asset Management Company (Select Strategic Income Fund) ***
</TABLE>
***The Manager will pay Western Asset Management Company a fee computed daily
at an annual rate of the average daily net assets of the Select Strategic Income
Fund as set forth below (Western Asset Management Company is responsible for the
payment of any fee to Western Asset Management Company Limited):
Net Assets Fee
---------- ---
First $100 million 0.30%
Over $100 million 0.15%
-------------------------
The second sentence under the heading "Distributions" in the section entitled
"Distributions and Taxes" on page 28 of the Prospectus is amended, in its
entirety, to read as follows:
-6-
<PAGE>
Net investment income is paid quarterly in the case of the Equity Index Fund,
Select Growth and Income Fund, Select Strategic Income Fund and Select
Investment Grade Income Fund; 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.
--------------------------
The Financial Highlights table on pages 32 and 33 of the Prospectus is amended
to read, in its entirety, as follows to include information relating to the
Equity Index Fund:
-7-
<PAGE>
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
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)
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)
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. 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; 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.
-8-
<PAGE>
<TABLE>
<CAPTION>
ALLMERICA INVESTMENT TRUST
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%**
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>
-9-
<PAGE>
The Appendix on page 37 of the Prospectus is amended to include the following
information relating to the Equity Index Fund and Select Strategic Income Fund:
Investment Techniques and Strategies
In managing its portfolios of investments, the Trust may make use of the
following investment techniques and strategies:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Symbols Equity Index Select Strategic
. Permitted Fund Income Fund
-- Not Permitted
<S> <C> <C>
Investment Technique/Strategy
-------------------------------------------------------------------------------
Asset-Backed Securities -- .
Financial Futures Contracts
and Related Options . .
Foreign Securities . .
Forward Commitments -- .
Forward Contracts on Foreign Currencies -- .
High Yield Securities -- .
Interest-Only and Principal-Only
Treasury Securities -- .
Investments in Money Market Securities . .
Mortgage-Backed Securities -- .
Municipal Securities -- .
Purchasing Options . .
Repurchase Agreements . .
Restricted Securities . .
Reverse Repurchase Agreements -- --
Securities Lending . .
Stand-By Commitments -- .
Stripped Mortgage-Backed Securities -- .
Swap and Swap-Related Products -- --
When-Issued Securities . .
Writing Covered Options . .
-------------------------------------------------------------------------------
</TABLE>
The Equity Index Fund and Select Strategic Income Fund are added as the eighth
and tenth Funds, repectively, listed on the back cover page of the Prospectus.
-10-
<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..................................................... 27
PURCHASE AND REDEMPTION OF SHARES.......................................... 27
DISTRIBUTIONS AND TAXES.................................................... 28
FINANCIAL HIGHLIGHTS....................................................... 29
APPENDIX................................................................... 36
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]
-----------------------------
2 Allmerica Investment Trust
<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 the period shown above the highest quarterly return was 29.52% for the
quarter ended 12/31/99 and the lowest was (3.85)% for the quarter ended
9/30/99
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.
----------------------------
4 Allmerica Investment Trust
<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.
----------------------------
6 Allmerica Investment Trust
<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.
-----------------------------
8 Allmerica Investment Trust
<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
. Technology 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 the period shown above the highest quarterly return was 16.66%
for the quarter ended 12/31/99 and the lowest was (11.60)% for the quarter ended
9/30/99.
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. However,
this amount was not enough to make a difference in the percentage shown for
the Fund's total annual operating expense and expense limitation (both
1.20%).
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.
---------------------------
14 Allmerica Investment Trust
<PAGE>
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, 0.84% for the Select
Aggressive Growth Fund, 0.97% 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 $89 $279 $484 $1,076
----------------------------- --- ---- ---- ------
Select Capital Appreciation Fund $99 $310 $539 $1,194
-------------------------------- --- ---- ---- ------
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.
Technology Risk
Investments in the technology industries, even though representing interests in
different companies within these industries, may be affected by common economic
forces and other factors. In addition, stock prices of companies in technology
industries have historically been more volatile than those of companies in other
industries.
--------------------------
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 all Funds) 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 Investors Services or Standard & Poor's
Rating Services, 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.
-----------------------------
18 Allmerica Investment Trust
<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>
-----------------------------
20 Allmerica Investment Trust
<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 as of
TCW Investment Management Company December 31, 1999. Established in 1971. Manages pension and
865 South Figueroa Street, Suite 1800 profit sharing funds, retirement/health and welfare funds,
Los Angeles, CA 90017 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>
-----------------------------
Allmerica Investment Trust 21
<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 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 16 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 12 years' experience in
equity research.
Marc L. Baylin, Chartered 1993 - Present He has eight years of
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.
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-----------------------------
22 Allmerica Investment Trust
<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 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.
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.
Michael McCarthy, 1997 - Present Mr. McCarthy rejoined BIAM
Portfolio Manager in 1997 from New Ireland Assurance
Company where he was head of
asset management. Prior to this, he
worked for BIAM in the United Kingdom
in a senior portfolio management capacity.
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.
---------------------------------------------------------------------------------------------------------------------------------
Select Strategic Growth Fund Christopher J. Ainley, Managing 1994 - Present Prior to joining TCW, Mr. Ainley
TCW Investment Management Director spent two 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.
---------------------------------------------------------------------------------------------------------------------------------
</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 Douglas S. Foreman, 1994 - Present Prior to 1994, Mr. Foreman
continued Group Managing Director & was employed by Putnam
Chief Investment Officer - Investment in Boston. He spent
U.S. Equities his last five 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.
---------------------------------------------------------------------------------------------------------------------------------
Select Investment Grade Income Richard J. Litchfield 1995 - Present He was a mortgage-backed securities
Fund Allmerica Asset Management, CFA and Vice President analyst and trader at Keystone
Inc. ("AAM") Investments, Inc. prior to joining
AAM.
---------------------------------------------------------------------------------------------------------------------------------
Equity 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>
-----------------------------
24 Allmerica Investment Trust
<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 25
<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 Strategic Growth 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%
--------------- -----
-----------------------------
26 Allmerica Investment Trust
<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 27
<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.
--------------------------
28 Allmerica Investment Trust
<PAGE>
[GRAPHIC APPEARS HERE] Financial Highlights
--------------------
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>
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.
-----------------------------
30 Allmerica Investment Trust
<PAGE>
ALLMERICA INVESTMENT TRUST
Ratios/Supplemental Data
------------------------
<TABLE>
<CAPTION>
Ratios To Average Net Assets
------------------------------------------------------
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>
--------------------------
Allmerica Investment Trust 31
<PAGE>
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
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.
--------------------------
32 Allmerica Investment Trust
<PAGE>
ALLMERICA INVESTMENT TRUST
Ratios/Supplemental Data
------------------------
<TABLE>
<CAPTION>
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>
--------------------------
Allmerica Investment Trust 33
<PAGE>
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)
----------------------------------------------------------------------------------------------------------------------------------
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.
--------------------------
34 Allmerica Investment Trust
<PAGE>
ALLMERICA INVESTMENT TRUST
Ratios/Supplemental Data
------------------------
<TABLE>
<CAPTION>
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>
--------------------------
Allmerica Investment Trust 35
<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
. 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 . . . . . .
Foreign Securities . . . . . .
Forward Commitments -- -- . -- -- --
Forward Contracts on Foreign Currencies . -- . -- . .
High Yield Securities . -- . -- -- .
Investments in Money Market Securities . . . . . .
Mortgage-Backed Securities -- -- -- -- -- --
Purchasing Options . . . . . .
Repurchase Agreements . . . . . .
Restricted Securities . . . . . .
Reverse Repurchase Agreements -- -- . -- -- --
Securities Lending . . . . . .
Stand-By Commitments -- -- -- -- -- --
Stripped Mortgage-Backed Securities -- -- -- -- -- --
Swap and Swap-Related Products -- -- . -- -- --
When-Issued Securities . . . . . .
Writing Covered Options . . . . . .
-----------------------------------------------------------------------------------------------------------------------------------
<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 -- . . .
Financial Futures Contracts
and Related Options . . . --
Foreign Securities . . . .
Forward Commitments -- -- . .
Forward Contracts on Foreign Currencies -- -- -- --
High Yield Securities -- . -- --
Investments in Money Market Securities . . . .
Mortgage-Backed Securities -- -- . --
Purchasing Options . . . --
Repurchase Agreements . . . .
Restricted Securities . . . .
Reverse Repurchase Agreements -- -- -- --
Securities Lending . . . .
Stand-By Commitments -- -- . .
Stripped Mortgage-Backed Securities -- -- . --
Swap and Swap-Related Products -- -- -- --
When-Issued Securities . . . .
Writing Covered Options . . . --
----------------------------------------------------------------------------------------------------------
</TABLE>
-----------------------------
36 Allmerica Investment Trust
<PAGE>
THIS PAGE LEFT BLANK INTENTIONALLY.
-----------------------------
Allmerica Investment Trust 37
<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
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 STRATEGIC 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 PROSPECTUSES OF ALLMERICA INVESTMENT
TRUST DATED MAY 1, 2000 AND JULY 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: OCTOBER 1, 2000
<PAGE>
<TABLE>
TABLE OF CONTENTS
<S> <C>
TRUST HISTORY............................................................ 3
DESCRIPTION OF THE FUNDS AND THEIR INVESTMENTS AND RISKS................. 3
INVESTMENT RESTRICTIONS AND POLICIES.................................... 9
INVESTMENT STRATEGIES AND TECHNIQUES.................................... 10
PORTFOLIO TURNOVER...................................................... 25
MANAGEMENT OF THE TRUST.................................................. 25
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES...................... 27
INVESTMENT MANAGEMENT AND OTHER SERVICES................................. 27
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............................................................. 44
CALCULATION OF PERFORMANCE DATA.......................................... 44
FINANCIAL STATEMENTS..................................................... 47
</TABLE>
___________________________
Allmerica Investment Trust 2
<PAGE>
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"), a wholly-owned subsidiary of First Allmerica.
Shares of the Trust are not offered to the general public but solely to variable
annuity and variable life insurance separate accounts ("Separate Accounts") and
qualified pension and retirement plans. 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 Strategic 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.
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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3 Allmerica Investment Trust
<PAGE>
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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Allmerica Investment Trust 4
<PAGE>
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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5 Allmerica Investment Trust
<PAGE>
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.
___________________________
Allmerica Investment Trust 6
<PAGE>
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 STRATEGIC INCOME FUND
Corporate debt securities in which the Fund invests are: (a) assigned a rating
within the six highest grades (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 investment grade but are considered to have some speculative
characteristics. Securities below investment grade (rated Ba and B and BB and B
by Moody's and S&P, respectively), are "junk" bonds. 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 and qualified pension and retirement plans. 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.
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 Strategic 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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7 Allmerica Investment Trust
<PAGE>
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
_____________________________
Allmerica Investment Trust 8
<PAGE>
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% 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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9 Allmerica Investment Trust
<PAGE>
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%
____________________________
Allmerica Investment Trust 10
<PAGE>
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 Strategic 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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11 Allmerica Investment Trust
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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 Strategic 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 Strategic 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 only instruments in which the Fund is authorized to invest
(except in the case of the Money Market Fund that such instruments may have
remaining maturities in excess of one year), with an agreement that the seller
will repurchase the obligation at an agreed upon price and date. Normally, the
instruments that are subject to repurchase agreements are obligations issued or
guaranteed by the U.S. Government, its agencies or instumentalities or high
grade corporate debt securities. 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 or more. 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, except the Money Market Fund may
invest up to 100% of its total assets 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. Repurchase agreement guidelines have been established for
use by the Fund's Manager and Sub-Advisers.
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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13 Allmerica Investment Trust
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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 Strategic 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 Strategic 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 Strategic 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 Strategic 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 Strategic 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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<PAGE>
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 Strategic 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 Strategic 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 Strategic 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 Strategic 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 Strategic
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 Strategic 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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15 Allmerica Investment Trust
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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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Allmerica Investment Trust 16
<PAGE>
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 Strategic 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 Strategic 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 Strategic 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 Strategic 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 Strategic 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
____________________________
Allmerica Investment Trust 18
<PAGE>
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 Strategic 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 Strategic 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 Strategic 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 Strategic 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 Strategic 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 Strategic 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 Strategic 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
_____________________________
19 Allmerica Investment Trust
<PAGE>
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.
___________________________
Allmerica Investment Trust 20
<PAGE>
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 Strategic 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, the Select Growth and Income
Fund and the Select Strategic Income Fund may not invest more than 15% of their
assets, the Select Capital Appreciation Fund may not invest more than 25% of its
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 Strategic 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.
___________________________
21 Allmerica Investment Trust
<PAGE>
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 Strategic 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 Strategic 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.
___________________________
Allmerica Investment Trust 22
<PAGE>
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 Strategic 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.
_____________________________
23 Allmerica Investment Trust
<PAGE>
INTEREST-ONLY AND PRINCIPAL-ONLY TREASURY SECURITIES
The Select Strategic 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 Strategic 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 Strategic 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.
____________________________
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 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 President, Potomac Asset Management, May 2000 - present;
1880 Virginia Avenue Director of Investments, National Automobile Dealers
McLean, Virginia Association (retirement trust), 1999 - May 2000;
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 Annuity Plan; Member,
Stamford, Connecticut Investment Committee, Unilever United States
-Pension & Thrift plans
</TABLE>
____________________________
25 Allmerica Investment Trust
<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
Kristin L. Bushard (33)(2) Vice President Director, Investment Advisory Services - Allmerica Asset
440 Lincoln Street Management, Inc. Since April 2000; Manager, Stable Value Products;
Worcester, Massachusetts and risk analyst and investment consultant with First Allmerica,
1990 - April 2000
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.
_____________________________
26 Allmerica Investment Trust
<PAGE>
COMPENSATION TABLE
<TABLE>
<CAPTION>
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 March 15, 2000, Allmerica Financial Life, owned both of
record and beneficially in excess of 44% of the shares of the Select Emerging
Markets Fund and in excess of 16% 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 March 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.
__________________________
27 Allmerica Investment Trust
<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. The firm is
controlled by Arthur E. Nicholas, managing partner. 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"), a publicly-traded company,
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"), which is a publicly-traded company, 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 ("JPMCI"), 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. JPMCI, a publicly-traded
company, is a bank holding company and a global financial services firm,
providing specialized advice and services for governments, businesses and
individuals. JPMCI has announced that it will merge with The Chase Manhattan
Corporation. The merged firm will be named J.P. Morgan Chase & Co. The deal is
expected to close in the first quarter of 2001 and is subject to approval by
shareholders of both companies, as well as by U.S. Federal and State and foreign
regulatory authorities.
Western Asset Management Company ("WAM"), Sub-Adviser to the Select Strategic
Income Fund, is a wholly-owned subsidiary of Legg Mason, Inc., a publicly owned
holding company which is also the parent company of Legg Mason Wood Walker, Inc.
and Howard, Weil, Labouisse, Friedrichs Incorporated, both of which are broker-
dealers. WAM provides fixed-income management services to a wide variety of
institutional clients. WAM has delegated some of its duties as Sub-Adviser to
its London affiliate, Western Asset Management Company Limited ("WAMCL"), to
handle the non-U.S. dollar trading functions performed on behalf of the Select
Strategic Income Fund. WAMCL is also a wholly-owned subsidiary of Legg Mason,
Inc. and provides fixed income management services for large institutional
clients and mutual funds.
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>
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>
__________________________
29 Allmerica Investment Trust
<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)
</TABLE>
<TABLE>
<CAPTION>
SELECT SELECT SELECT
STRATEGIC CORE EQUITY SELECT GROWTH STRATEGIC 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% (3) (4) (1) (5) (5)
</TABLE>
<TABLE>
<CAPTION>
GOVERNMENT MONEY
BOND MARKET
FUND FUND
---- ----
<S> <C> <C>
Manager Fee 0.50% (6)
</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, 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 AND INCOME
ASSETS GROWTH FUND APPRECIATION FUND EQUITY FUND FUND
------ ----------- ----------------- ----------- ----
<S> <C> <C> <C> <C>
First $100 Million.. 1.00% 1.00% 1.00% 0.75%
Next $150 Million... 0.90% 0.90% 0.90% 0.70%
Next $250 Million... 0.80% 0.80% 0.85% 0.65%
Over $500 Million... 0.70% 0.70% 0.85% 0.65%
Over $1 Billion 0.65% 0.65% 0.85% 0.65%
</TABLE>
__________________________
Allmerica Investment Trust 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:
<TABLE>
<CAPTION>
SELECT VALUE
OPPORTUNITY SELECT GROWTH
ASSETS FUND FUND
------ ---- ----
<S> <C> <C>
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%
</TABLE>
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 fee for the Core Equity Fund, computed daily at an annual
rate based on the average daily net assets of the Fund, is based on the
following schedule:
<TABLE>
<CAPTION>
ASSETS RATE
------ ----
<S> <C>
First $250 Million............ 0.60%
Next $250 Million............. 0.55%
Next $250 Million............. 0.50%
Over $750 Million............. 0.45%
</TABLE>
(4) The Manager's fee for the Equity Index Fund computed daily at an annual
rate based on the average daily net assets of the Fund, is based on the
following schedule:
<TABLE>
<CAPTION>
ASSETS RATE
------ ----
<S> <C>
First $50 Million............. 0.35%
Next $200 Million............. 0.30%
Over $250 Million............. 0.25%
</TABLE>
(5) The Manager's fees for the Select Strategic 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:
<TABLE>
<CAPTION>
SELECT SELECT
STRATEGIC INVESTMENT
INCOME GRADE
ASSETS FUND INCOME FUND
------ ---- -----------
<S> <C> <C>
First $50 Million............. 0.60% 0.50%
Next $50 Million.............. 0.55% 0.45%
Over $100 Million............. 0.45% 0.40%
</TABLE>
(6) The Manager's fee for the Money Market Fund, computed daily at an annual
rate based on the average daily net assets of the Fund, is based on the
following schedule:
<TABLE>
<CAPTION>
ASSETS RATE
------ ----
<S> <C>
First $100 Million............ 0.35%
Next $400 Million............. 0.30%
Next $250 Million............. 0.25%
Over $750 Million............. 0.20%
</TABLE>
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> <C>
Sub-Adviser Fee (7) (8) 0.50% (9) (10) (11)
</TABLE>
<TABLE>
<CAPTION>
SELECT SELECT SELECT
STRATEGIC CORE EQUITY SELECT GROWTH STRATEGIC 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 (12) (13) 0.10% (14) (15) 0.20%
</TABLE>
__________________________
31 Allmerica Investment Trust
<PAGE>
GOVERNMENT MONEY
BOND MARKET
FUND FUND
---- ----
Sub-Adviser Fee 0.20% 0.10%
(7) 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%
(8) 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%
(9) 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%
(10) 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%
(11) 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>
(12) 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.
(13) 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%
(14) 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%
(15) For its services, WAM will receive a fee computed daily at an annual rate
based on the average daily net assets of the Select Strategic Income Fund,
under the following schedule:
ASSETS RATE
------ ----
First $100 Million...................... 0.30%
Over $100 Million....................... 0.15%
WAM is solely responsible for the payment of any fee to WAMCL.
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 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
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>
PERCENTAGE OF AVERAGE DAILY ASSETS
----------------------------------
<TABLE>
<CAPTION>
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 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:
<TABLE>
<S> <C>
- 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
</TABLE>
___________________________
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:
<TABLE>
<S> <C>
- 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. MacArthur
- GTE Investment Management Corporation 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' 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 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
</TABLE>
___________________________
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.
<TABLE>
<CAPTION>
POSITION(S) HELD POSITION(S) HELD
NAME WITH THE TRUST WITH AII
---- -------------- --------
<S> <C> <C>
Paul T. Kane Assistant Vice President and Treasurer Assistant Vice President
(Principal Accounting Officer)
John F. O'Brien Chairman of the Board Director
Richard M. Reilly President Director
</TABLE>
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, 16/th/ 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:
<TABLE>
<CAPTION>
THREE-MONTHS ENDED YEAR ENDED YEAR ENDED
MARCH 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
-------------- ----------------- -----------------
<S> <C> <C>
$240,112 $883,909 $748,941
</TABLE>
The total fees paid to Bankers Trust Company for custodial services for the
following periods were as follows:
<TABLE>
<CAPTION>
THREE-MONTHS ENDED YEAR ENDED YEAR ENDED
MARCH 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
-------------- ----------------- -----------------
<S> <C> <C>
$194,918 $850,873 $743,606
</TABLE>
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 Strategic 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 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 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. 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 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
----------------------- -----------------------
<S> <C> <C>
(Unaudited) (Unaudited)
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.
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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.
____________________________
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
