<PAGE>
PROSPECTUS SUPPLEMENT
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
INHEIRITAGE ACCOUNT (PROSPECTUS B)
ALLMERICA SELECT SEPARATE ACCOUNT AND
ALLMERICA SELECT SEPARATE ACCOUNT II
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
INHEIRITAGE ACCOUNT (PROSPECTUS B)
ALLMERICA SELECT SEPARATE ACCOUNT
ALLMERICA INVESTMENT TRUST
(SUPPLEMENT EFFECTIVE AUGUST 15, 1997 TO PROSPECTUSES DATED MAY 1, 1997)
At the Special Meeting of Shareholders of Allmerica Investment Trust
("Trust") which was held on August 15, 1997, shareholders approved all
proposals, including (1) amendments to the Trust's Management Agreement
and certain Sub-adviser Agreements and (2) amendments to the investment
objectives, policies and restrictions of certain Funds of the Trust.
The attached variable insurance product prospectus and Trust prospectus
are hereby amended as follows (all references are to the Trust
prospectus unless otherwise noted):
The second paragraph under "What are the Investment Objectives and
Policies?" is amended to read:
A Fund's investment objective and investment policies are not
fundamental and may be changed without shareholder approval.
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The following is included under "Investment Policies" in the section
entitled "What are the Investment Objectives and Policies?" for the
Select Income Fund:
The Fund may invest up to 25% of its assets in lower-rated securities,
commonly known as "junk bonds," which involve risks discussed under
"Certain Investment Strategies and Policies." For more information
concerning the rating categories of corporate debt securities, see the
Appendix to the Prospectus.
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The following is included under "Investment Policies" in the section
entitled "What are the Investment Objectives and Policies?" for the
Money Market Fund:
The Fund may invest up to 25% of its assets in U.S. dollar denominated
foreign securities (not including its investments in American Depositary
Receipts).
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The following is included under "Investment Policies" in the section
entitled "What are the Investment Objectives and Policies?" for the
Money Market Fund:
The Fund may invest up to 10% of its net assets in securities which are
illiquid because they are not readily marketable.
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<PAGE>
The management and sub-advisory fee tables under "Management Fees and
Expenses" of the Trust prospectus and the management and sub advisory
fee sections in the variable product prospectus are amended to read as
follows:
For the services 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 CAPITAL SELECT SELECT GROWTH
AGGRESSIVE APPRECIATION INTERNATIONAL AND INCOME
GROWTH FUND FUND EQUITY FUND FUND
----------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Manager Fee (1) (1) (1) 0.85%
SELECT GROWTH SELECT MONEY
AND INCOME INCOME MARKET
FUND FUND FUND
------------- ------ ------
Manager Fee (1) (2) (3)
</TABLE>
(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>
First $100 Million......... 1.00% 1.00% 1.00% 0.75%
$100 to $250 Million....... 0.90% 0.90% 0.90% 0.70%
$250 to $500 Million....... 0.85% 0.85% 0.85% 0.65%
Over $500 Million.......... 0.85% 0.85% 0.85% 0.65%
</TABLE>
(2) The Manager's fees for the Select Income Fund, computed daily at an
annual rate based on the average daily net assets of each Fund, are
based on the following schedule:
SELECT
INCOME
ASSETS FUND
------
First $50 Million........... 0.60%
$50 to $100 Million......... 0.55%
Over $100 Million........... 0.45%
(3) The Manager's fees for the Money Market Fund, computed daily at an
annual rate based on the average daily net assets of the Fund, are
based on the following schedule:
MONEY
MARKET
ASSETS FUND
------
First $50 Million............ 0.35%
Next $200 Million............ 0.25%
Over $250 Million............ 0.20%
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<PAGE>
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 CAPITAL SELECT SELECT
AGGRESSIVE APPRECIATION INTERNATIONAL GROWTH
GROWTH FUND FUND EQUITY FUND FUND
----------- -------------- ------------- ------
<S> <C> <C> <C> <C>
Sub-Adviser Fee (4) (4) (5) (6)
</TABLE>
SELECT GROWTH SELECT MONEY
AND INCOME INCOME MARKET
FUND FUND FUND
------------- ------ ------
Sub-Adviser Fee (7) 0.20% 0.10%
(4) For their services, NACM and JCC will receive a fee computed daily
at an annual rate based on the average daily net assets of the
Select Aggressive Growth Fund and Select Capital Appreciation Fund,
respectively, under the following schedule:
ASSETS RATE
------ ----
First $100 Million................ 0.60%
Next $150 Million................. 0.55%
Next $250 Million................. 0.50%
Over $500 Million................. 0.45%
(5) 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%
(6) 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%
(7) For its services, JAL 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 $100 Million................ 0.40%
Next $200 Million................. 0.25%
Over $300 Million................. 0.30%
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<PAGE>
The section on Foreign Securities under "Certain Investment Strategies
and Policies" is amended to change the heading as follows and insert the
following sentence after the fourth sentence of the first paragraph:
Foreign Securities (applicable to all Funds).
The Money Market Fund may invest only in U.S. dollar denominated foreign
securities.
The heading, first sentence of the first paragraph and the second
paragraph of the section on Options and Futures Transactions under
"Certain Investment Strategies and Policies" are amended to read:
Options and Futures Transactions (applicable to each Fund except the
Money Market Fund), Forward Contracts (applicable to Select Capital
Appreciation Fund and Select International Equity Fund) and swaps
(applicable to the Select Capital Appreciation Fund)
Through the writing and purchase of put and call options on its
securities, financial indices and foreign currencies, and the purchase
and sale of futures contracts and related options with respect to
securities, financial indices and (in the case of the Select Capital
Appreciation Fund and Select International Equity Fund) foreign
currencies in which it may invest, each Fund except the Money Market
Fund at times may seek to hedge against fluctuations in net asset value.
Additionally, the Select Capital Appreciation Fund and Select
International Equity Fund may invest in forward contracts and the Select
Capital Appreciation Fund in Swaps which may expose these Funds to
additional risks and transaction costs.
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The parenthetical phrase in the heading for the section on Restricted
Securities under "Certain Investment Strategies and Policies" is deleted
and the second sentence in the section is amended to read:
However, each Fund will not invest more than 15% (10% for the Money
Market Fund) of its net assets in restricted securities (and other
securities deemed to be illiquid) unless the Board of Trustees
determines, based upon a continuing review of the trading markets for
the specific restricted security, that such restricted securities are
liquid.
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The heading and first two paragraphs of the section on High Yield
Securities under "Certain Investment Strategies and Policies" are
amended to read as follows. Also, "25%" is added to the percentages
listed in the next to last sentence of the last paragraph in the
section.
HIGH YIELD SECURITIES (APPLICABLE TO THE SELECT CAPITAL APPRECIATION
FUND, SELECT GROWTH FUND, SELECT GROWTH AND INCOME FUND AND SELECT
INCOME FUND)
Corporate debt securities purchased by the Select Capital Appreciation
Fund, Select Growth Fund, Select Growth and Income Fund and Select
Income Fund will be rated at the time of purchase B or better by Moody's
or S&P, or equivalently rated by another NRSRO, or unrated but believed
by the Sub-adviser to be of comparable quality under the guidelines
established for the Funds. The Select Growth Fund and the Select Growth
and Income Fund may not invest more than 15% of their assets, the Select
Income Fund may not invest
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<PAGE>
more than 25% of its assets and the Select Capital Appreciation Fund may
not invest more than 35% of its assets at the time of investment
insecurities 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 Capital Appreciation Fund, Select Growth Fund,
Select Growth and Income Fund and Select Income Fund. Many issuers of
high yield corporate debt securities are leveraged substantially at
times, which may impair their ability to meet debt service obligations.
Also, during an economic downturn or substantial period of rising
interest rates, highly leveraged issuers may experience financial
stress.
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The heading and last sentence of the first paragraph of the section on
Asset-Backed Securities and Mortgage-Backed Securities under "Certain
Investment Strategies and Policies" are amended to read as follows:
Asset-Backed Securities and Mortgage-Backed Securities (applicable to
Select Income Fund and Money Market Fund)
A Fund will not invest more than 20% of its total assets in asset-backed
securities.
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The heading for the section on Stripped Mortgage-Backed Securities under
"Certain Investment Strategies and Policies" is amended to read:
Stripped Mortgage-Backed Securities (applicable to Select Income Fund
and Money Market Fund)
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The following is inserted at the end of the section entitled "Certain
Investment Strategies and Policies":
STAND-BY COMMITMENTS (applicable to Select Income Fund and Money Market
Fund)
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.
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<PAGE>
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.
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