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ALLMERICA INVESTMENT TRUST
(SUPPLEMENT TO PROSPECTUSES AND STATEMENT OF ADDITIONAL
INFORMATION DATED APRIL 29, 1996)
The Small Cap Value Fund (the "Fund") of Allmerica Investment Trust (the
"Trust") is one of the investment options available under the variable
contracts offered by Allmerica Financial Life Insurance and Annuity Company
and First Allmerica Financial Life Insurance Company.
Effective January 1, 1997, CRM Advisors, LLC ("CRM"), 520 Madison
Avenue, New York, New York 10022, replaced David L. Babson & Co. Inc. as the
Sub-Adviser of the Fund. Organized in 1995, CRM is an affiliate of Cramer
Rosenthal McGlynn, Inc. ("Cramer Rosenthal"), which was founded in 1973. CRM
provides advisory and sub-advisory services to mutual funds with
approximately $100 million under management. Cramer Rosenthal and its
affiliates currently have over $2.5 billion in assets under management and
provide investment advice to individuals, state and local government
agencies, pension and profit sharing plans, trusts, estates, endowments and
other organizations. Cramer Rosenthal is wholly owned by its active
investment professionals. Ronald H. McGlynn and Jay B. Abramson will share
primary responsibility for the day-to-day management of the Fund's
investments. Mr. McGlynn, who co-founded Cramer Rosenthal, is the Chief
Executive Officer and President of Cramer Rosenthal and CRM. Mr. Abramson,
who joined Cramer Rosenthal in 1985, is an Executive Vice President of Cramer
Rosenthal and CRM.
At a special meeting on March 18, 1997, the Fund's shareholders
approved: (i) an amendment to the Management Agreement between Allmerica
Investment Management Company, Inc. ("AIMCO"), the Manager of the Trust, and
the Trust relating to the Fund; (ii) a new Sub-adviser Agreement between
AIMCO and CRM relating to the Fund; and (iii) revisions in the name,
investment objective and investment policies of the Fund.
To reflect these changes (which become effective April 1, 1997), the
Prospectuses and Statement of Additional Information are amended as follows:
The name "Small Cap Value Fund" is changed to "Small-Mid Cap
Value Fund".
The Investment Objective of the Fund is amended to read as follows:
The Small-Mid Cap Value 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 the purchase are considered by the
Sub-Adviser to be undervalued.
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The Fund's Investment Policies as described in the section entitled, "What Are
the Investment Objectives and Policies?" in the Prospectuses are amended to read
as follows:
A stock will be considered to be attractively valued and, therefore,
eligible for investment in the Fund, if it is trading at a price which the
Sub-Adviser believes is reasonable relative to its own past valuation
history as well as compared to a large universe of stocks selected by the
Sub-Adviser, based on one or more of the following comparisons:
1. price relative to cash flow;
2. price relative to earnings;
3. price relative to sales; and
4. price relative to assets as measured by book value.
The Small-Mid Cap Value Fund generally intends to invest at least 65%
of its total assets in stocks of companies with market capitalization
between $200 million and $5 billion at the time of purchase and which are
listed on a national or regional exchange or over-the-counter with prices
quoted daily in the financial press. The Fund at times may invest
temporarily in preferred stocks, bonds or other defensive issues.
Normally, however, the Fund will maintain at least 80% of the portfolio in
common stocks.
The Small-Mid Cap Value Fund seeks investment opportunities in
companies whose stocks are trading at attractive valuations relative to the
market as a whole. The most attractive of these companies often exist
among those securities which have been out of favor, where Wall Street
coverage is limited, and where there is a degree of misunderstanding or
neglect resulting in low expectations. Value investing may reduce downside
risk while offering potential for capital appreciation as a company gains
favor among other investors and its stock price rises. 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.
Small-mid cap companies may present greater opportunities for capital
appreciation, but also may involve greater risk. Smaller cap companies,
when compared to larger cap companies, may be more dependent upon a single
product, have limited financial resources, have fewer securities
outstanding, experience greater price fluctuations and be somewhat less
liquid than securities of larger companies.
The Fund may invest up to 25% of its assets in foreign securities (not
including its investments in ADR's) which carry additional risks not
present in domestic securities. See "Certain Investment Strategies and
Policies - Foreign Securities."
The Fund may invest up to 15% of its assets in illiquid securities,
including restricted
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securities (as defined in its investment restrictions). Certain restricted
securities determined by the Trustees to be liquid are not subject to the
15% limitation. See "Certain Investment Strategies and Policies -
Restricted Securities."
For the fiscal year ended December 31, 1996, the portfolio turnover
rate for the Fund was 20%. The portfolio turnover rate for the Fund may
vary from year to year.
The advisory fee information relating to the Fund in the section of the
Prospectuses entitled "Management Fees and Expenses" is amended to read as
follows:
The Manager's fee for the Small-Mid Cap Value Fund, computed daily at an
annual rate based on the average daily net assets of the Fund, is based on
the following schedule:
Assets Fee Rate
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First $100 Million. . . . . . . . . . . . . . . . . . . . . 1.00%
Next $150 Million . . . . . . . . . . . . . . . . . . . . . 0.85%
Next $250 Million . . . . . . . . . . . . . . . . . . . . . 0.80%
Next $250 Million . . . . . . . . . . . . . . . . . . . . . 0.75%
Over $750 Million . . . . . . . . . . . . . . . . . . . . . 0.70%
AIMCO has committed to a voluntary limitation of its fee to an annual rate of
0.90% of average daily net assets until further notice.
For its services, CRM will receive a fee computed daily at an annual rate based
on the average daily net assets of the Small-Mid Cap Value Fund, under the
following schedule:
Assets Fee Rate
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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%
Dated: December 27, 1996 as amended March 19, 1997
