<PAGE>
PROSPECTUS SUPPLEMENT
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
VEL ACCOUNT (VEL PLUS) AND GROUP VEL ACCOUNT
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
GROUP VEL 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")
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.
----------------------------
The fifth paragraph under "Growth Fund - Investment Policies" in the section
entitled "What are the Investment Objective and Policies?" is deleted.
----------------------------
The following is included under "Investment Policies" in the section entitled
"What are the Investment Objectives and Policies?" for the Growth Fund, Equity
Index Fund, Investment Grade Income Fund and Government Bond Fund:
The Fund may invest up to 15% of its net assets in securities which
are illiquid because they are not readily marketable.
----------------------------
The following is included under "Investment Policies" in the section entitled
"What are the Investment Objectives and Policies?" for the Investment Grade
Income Fund and Government Bond Fund:
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. The Fund
may not invest more than 25% of its assets in debt obligations of
supranational entities.
<PAGE>
The following replaces the third from last paragraph under "Investment Policies"
in the section entitled "What are the Investment Objectives and Policies?" for
the Investment Grade Income Fund:
The Fund may invest up to 25% of its assets in foreign securities (not
including its investments in American Depositary Receipts).
----------------------------
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).
----------------------------
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.
----------------------------
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 Small Mid Select Select
Aggressive Appreciation Cap International Growth Growth
Growth Fund Fund Value Fund Equity Fund Fund Fund
--------------- ----- ----------- ------------ ----- -----
<S> <C> <C> <C> <C> <C> <C>
Manager Fee (1) (1) (2) (1) 0.85% (1)
Equity Select Growth Investment Government Money
Index and Income Grade Income Bond Market
Fund Fund Fund Fund Fund
------ ----- ------ ---- ------
Manager Fee (3) (1) (4) 0.50% (3)
</TABLE>
(1) The Manager's fees for the Select Aggressive Growth Fund, Select Capital
Appreciation Fund, Select International Equity Fund, Growth Fund and Select
Growth and Income Fund, computed daily at an annual rate based on the
average daily net assets of each Fund, are based on the following schedule:
-2-
<PAGE>
<TABLE>
<CAPTION>
Select Select Growth
Select Aggressive Select Capital International and Income
Assets Growth Fund Appreciation Fund Equity Fund Growth Fund Fund
-------- ----------- ----------------- ------------ ----------- ----
<S> <C> <C> <C> <C> <C>
. First $100 Million . . . . . . . . 1.00% 1.00% 1.00% 0.60% 0.75%
. $100 to $250 Million............ . 0.90% 0.90% 0.90% 0.60% 0.70%
. $250 to $500 Million............ . 0.85% 0.85% 0.85% 0.40% 0.65%
. Over $500 Million................. 0.85% 0.85% 0.85% 0.35% 0.65%
</TABLE>
(2) 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
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%
The Manager voluntarily has agreed to limit its fees to an annual
rate of 0.90% of average daily net assets until further notice.
(3) The Manager's fees for the Equity Index Fund and Money Market Fund,
computed daily at an annual rate based on the average daily net assets of
each Fund, are based on the following schedule:
EQUITY MONEY
INDEX MARKET
ASSETS FUND FUND
------- ----- -------
First $50 Million. . . . . . . . . . . . 0.35% 0.35%
Next $200 Million. . . . . . . . . . . . 0.30% 0.25%
Over $250 Million. . . . . . . . . . . . 0.25% 0.20%
(4) The Manager's fees for the Investment Grade Income Fund, computed daily at
an annual rate based on the average daily net assets of the Fund, are based
on the following schedule:
INVESTMENT
GRADE
ASSETS INCOME FUND
------- ------------
First $50 Million. . . . . . . . . . . . 0.50%
$50 to $100 Million. . . . . . . . . . . 0.45%
Over $100 Million... . . . . . . . . . . 0.40%
The Manager is responsible for the payment of all fees to the Sub-Advisers.
The Manager pays each Sub-Adviser fees computed daily at an annual rate
based on the average daily net asset value of each Fund as set forth below.
In certain Funds, Sub-Adviser fees vary according to the level of assets in
such Funds, which will reduce the fees paid by the Manager as Fund assets
grow but will not reduce the operating expenses of such Funds.
-3-
<PAGE>
<TABLE>
<CAPTION>
SELECT SELECT CAPITAL SMALL-MID SELECT SELECT
AGGRESSIVE APPRECIATION CAP INTERNATIONAL GROWTH GROWTH
GROWTH FUND FUND VALUE FUND EQUITY FUND FUND FUND
------------ ---- ----------- ------------ ----- -----
<S> <C> <C> <C> <C> <C> <C>
Sub-Adviser Fee (5) (5) (6) (7) (8) (9)
EQUITY SELECT GROWTH INVESTMENT GOVERNMENT MONEY
INDEX AND INCOME GRADE INCOME BOND MARKET
FUND FUND FUND FUND FUND
----- ---- ---- ---- -----
Sub-Adviser Fee 0.10% (10) 0.20% 0.20% 0.10%
</TABLE>
(5) 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%
(6) 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 RATE
------ -----
First $100 Million. . . . . . . . . . . 0.60%
Next $150 Million.. . . . . . . . . . . 0.50%
Next $250 Million . . . . . . . . . . . 0.40%
Next $250 Million . . . . . . . . . . . 0.375%
Over $750 Million . . . . . . . . . . . 0.35%
(7) For its services, 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%
(8) 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%
-4-
<PAGE>
(9) For its services, MAS will receive a fee based on the aggregate assets of
the Growth 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%
$50 Million to $100 Million . . . . . . 0.375%
$100 Million to $500 Million. . . . . . 0.25%
$500 Million to $850 Million. . . . . . 0.20%
Over $850 Million . . . . . . . . . . . 0.15%
(10) 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%
--------------------------
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. (The last paragraph
of the section is deleted).
Foreign Securities (applicable to each Fund except the Government Bond
Fund).
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.
----------------------------
-5-
<PAGE>
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.
----------------------------
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.
HIGH YIELD SECURITIES (APPLICABLE TO THE SELECT CAPITAL
APPRECIATION FUND, SELECT GROWTH FUND AND SELECT GROWTH AND
INCOME FUND)
Corporate debt securities purchased by the Select Capital
Appreciation Fund, Select Growth Fund and Select Growth and
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 and the Select Capital
Appreciation 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 Capital Appreciation
Fund, Select Growth Fund and Select Growth and 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 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:
-6-
<PAGE>
Asset-Backed Securities and Mortgage-Backed Securities (applicable to
Investment Grade Income Fund, Government Bond Fund and Money Market
Fund)
A Fund will not invest more than 20% of its total assets in
asset-backed securities.
----------------------------
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 Investment Grade
Income Fund, Government Bond Fund and Money Market Fund)
----------------------------
The following is inserted at the end of the section entitled "Certain Investment
Strategies and Policies":
STAND-BY COMMITMENTS (applicable to Investment Grade Income Fund,
Government Bond 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.
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.
-7-
