<PAGE>
Allmerica Financial Semi-Annual Report
- ------------------------------------------------
JUNE 30, 1999
Allmerica Investment Trust
. Money Market Fund 1999
A
I 1999
T
[LOGO OF ALLMERICA FINANCIAL(R) APPEARS HERE]
<PAGE>
General Information ........................... 2
A Letter from the Chairman .................... 3
Bond & Money Market Overview .................. 4
Money Market Fund ............................. 6
Financials .................................... F-1
For further information, see the accompanying semi-annual report.
See Client Notices on page F-12.
Table of Contents 1
<PAGE>
Officers of First Allmerica Financial Life Insurance
Company (FAFLIC) and Allmerica Financial Life
Insurance and Annuity Company (AFLIAC)
John F. O'Brien, President, CEO (FAFLIC) and
Chairman of the Board (AFLIAC)
Richard M. Reilly, President and CEO (AFLIAC)
Edward J. Parry, III, Vice President, CFO and Treasurer
Abigail M. Armstrong, Secretary and Counsel
Investment Manager
Allmerica Financial Investment Management Services, Inc.
440 Lincoln Street, Worcester, MA 01653
General Distributor
Allmerica Investments, Inc.
440 Lincoln Street, Worcester, MA 01653
Independent Accountants
PricewaterhouseCoopers LLP
160 Federal Street, Boston, MA 02110
Administrator and Custodian
Investors Bank & Trust Company
200 Clarendon Street, Boston, MA 02116
Legal Counsel
Ropes & Gray
One International Place, Boston, MA 02110
Officers of Allmerica Investment Trust (AIT)
Richard M. Reilly, President
Paul T. Kane, Treasurer
George M. Boyd, Secretary
Board of Trustees of AIT
John F. O'Brien, Chairman
P. Kevin Condron/1/
Cynthia A. Hargadon/1/
Gordon Holmes/1/
John P. Kavanaugh
Bruce E. Langton/1/
Attiat F. Ott/1/
Richard M. Reilly
Ranne P. Warner/1/
Investment Sub-Adviser
Allmerica Asset Management, Inc.
440 Lincoln Street, Worcester, MA 01653
Money Market Fund
/1/Independent Trustees
2 General Information
<PAGE>
[PHOTO OF JOHN F. O'BRIEN APPEARS HERE]
Dear Client:
As the year began, most market analysts were predicting a swift slow-down in GDP
growth during 1999. This view was initiated by the global weakness seen in Latin
American, European and Asian markets, and the impact they were expected to have
on the U.S. Contrary to this outlook, economic statistics released early in the
year presented evidence that the U.S. economy remained strong. Unemployment
reached record-low levels and consumer spending was quite strong. Based on this
new information, investors began to worry that the economy might actually be too
strong. Ultimately, this could drive prices and inflation higher, even though
actual inflation figures remained relatively low.
As these concerns mounted, investors drove interest rates higher in anticipation
of the Federal Reserve Board raising rates. Over the course of the six month
period, interest rates on bonds maturing in two to thirty years rose roughly
1.00% driving bond prices lower. Shorter bonds suffered a similar fate as even
six month bonds saw prices decline and interest rates rise 0.50%. On June 30, in
a move widely anticipated by the market, the Federal Reserve raised interest
rates 0.25%.
Most bond investors saw their securities decline in value during the first half
of 1999 due to the increase in interest rates, even though corporate credit
quality remained quite strong. In this environment, money market funds offered a
safe haven because of the short maturity schedule of their holdings.
The Allmerica Investment Trust (AIT) Money Market Fund focuses on three primary
goals: preservation of capital, maintenance of liquidity, and attractive current
income. The Fund's manager continued to deliver on these objectives and produce
highly competitive returns. We appreciate your continued confidence in the AIT
Money Market Fund and look forward to serving more of your financial needs
through Allmerica's broad array of insurance and retirement products.
On behalf of the Board of Trustees,
/s/ John F. O'Brien
John F. O'Brien
Chairman of the Board
Allmerica Financial Life Insurance and Annuity Company
A Letter from the Chairman 3
<PAGE>
1995: U.S. bond market enjoys its third best performance in 30 years, thanks to
strong total returns from 30-year U.S. Treasuries and corporate issues.
1996: Outlook for Federal Reserve policy affects U.S. bond market.
Long-predicted interest rate cuts, which would have fueled this market, never
occur.
1997: Low inflation and declining interest rates fuel the bond market, which
enjoys its best returns since 1995.
1998: During 1998, bond investments produced widely divergent results as a
series of dramatic swings either left them highly in favor or badly battered.
1999: The first half of 1999 was a turbulent period for the bond market.
Performance varied from the first quarter to the second, leaving the majority of
bond investors disappointed.
The first half of 1999 was a turbulent period for the bond market. Performance
varied from the first quarter to the second, leaving the majority of bond
investors disappointed.
The year began with a certain confidence in the stability of the domestic
economy. Agency, corporate, and mortgage-backed bonds rallied, encouraging
investors to take advantage of bond yield premiums that had been de-emphasized
during the Treasury rally of 1998. However, the economy grew more rapidly than
predicted and patterns of inflation, such as increasing commodity prices, became
evident. By the end of the second quarter the Federal Reserve raised interest
rates 0.25% against the threat of inflation. As the quarter progressed most
sectors tended to decline in value, treasuries suffering the greatest losses. On
the other hand, emerging markets showed signs of life in the second quarter and
a few emerging markets bonds made their debut as stand out performers.
The second quarter marked the first time in two years in which some foreign
markets outperformed the U.S. bond market. Through-out Asia, economic recovery
was evident and interest rates fell. Japan's economy, in particular, showed
great signs of recovery throughout the first half of this year, inspiring
enthusiasm among international investors. Latin America also fared well, the
most significant performers being Mexico and Brazil, both in the process of
economic recovery.
As a group, however, foreign markets underperformed the U.S. bond market in the
second quarter, the major culprit being Europe, where a backup in interest rates
has been significant. Introduced on January 1, the new European currency, the
"euro", lost 13% of its value against the dollar within six months. Many
European bonds sold at a great dis-
[TIME LINE APPEARS HERE]
[GRAPHIC APPEARS HERE] 1999 JAN
The new European Currency is introduced. Over the course of six months, the euro
loses 13% of its value against the dollar.
A rally of agency, corporate, and mortgage-backed bonds encourages investors to
take advantage of bond yield premiums.
[GRAPHIC APPEARS HERE] FEB
Investors take a cautious stance toward the rapidly growing economy and the
threat of an increase in interest rates by favoring the money market and U.S.
Treasuries.
MAR
Corporate and securitized spreads widen, due principally to the high rate of net
new issuance from companies such as Sprint, Conoco, and Ford.
4 Bond & Money Market Overview
<PAGE>
count to American bonds, yet it appears unlikely that the European Central Bank
will tighten its monetary policy in the near future. A highly probable source of
the foreign market's underperformance is the Japanese selling of
euro-denominated issues in the face of the significant weakness of the euro
against both the dollar and the yen.
Although the Federal Reserve announced their decision to adopt a neutral bias in
conjunction with an increase in interest rates in late June, they are on the
lookout for signs that the domestic economy is strengthening, in which case a
more forceful bias will be in order. The record pace of corporate bond issuance
displayed late in the second quarter is one indicator that the economy is, in
fact, continuing to strengthen. The high rate of net new issuance, higher than
the total for any previous year with the exception of last year's, has been the
largest force in widening corporate and securitized spreads. The predominance of
"mega" issues, such as the Ford and earlier AT&T issues, has also tended to
reduce liquidity in the broader corporate market as more money is drawn to
relatively few large and liquid issues.
The money market also struggled as a result of the volatile economy but managed
to outperform the bond market. Ultimately, it was the very strength of the
economy that worried investors and the Federal Reserve about the potential for
higher inflation. The domestic economy turned out to be more resilient than
predicted. Housing and auto sales remained strong and corporate fundamentals
remained positive. Investors remained defensive against rising interest rates
over the last quarter and were rewarded by turning their attention to the
general security of the money market.
Looking ahead in the U.S. economy, interest rates appear to be near the top of
their projected trading range. Although corporate fundamentals remain positive,
corporate spreads are likely to experience volatility in expectation of large
new issues from companies such as Ford. Many foreign economies are in the
process of recovery, their bond markets benefiting from increasing investor
enthusiasm. Overall, the bond market seems to be in the process of gaining
stability. However, investors are remaining cautious and could favor U.S.
Treasuries.
[TIME LINE APPEARS HERE]
APR
Japan shows signs of economic recovery along with other foreign countries such
as Brazil and Mexico, marking the first time in two years in which some foreign
markets outperform the U.S. bond market.
[GRAPHIC APPEARS HERE] MAY
As a group, foreign markets underperform the U.S. bond market, the major culprit
being Europe, where a backup in interest rates is significant.
In response to rapid economic growth, the Federal Reserve combines a neutral
bias with a 0.25% raise in interest rates to guard against inflation.
[GRAPHIC APPEARS HERE] JUN
Bond & Money Market Overview 5
<PAGE>
The Money Market Fund posted a 2.43% return for the six month period ending June
30, 1999, outperforming the IBC/Donoghue First Tier Money Market Index's return
of 2.13% for the same period.
The first quarter was turbulent for the U.S. bond market. However, economic
statistics released during the quarter presented evidence that the domestic
economy was more resilient than previously believed. Housing and auto sales
remained robust, unemployment reached historically low levels and inflation
remained subdued.
During the second quarter, investors continued to face volatile interest rates.
Strong economic indicators released during the quarter led to a dramatic rise in
interest rates. The rise in bond yields this year occurred despite few signs of
any change in the underlying rate of inflation.
In late June, the Federal Reserve tightened monetary policy by 0.25% to 5% in an
effort to slow the economy. Still, economic indicators are suggesting further
strength ahead. The housing market maintains considerable strength despite
rising mortgage rates. Consumer confidence is high and fosters a continuation of
consumer demand. Fed officials will remain on guard against inflation and have
demonstrated that they are willing to fine tune policy quickly.
The portfolio will continue to emphasize commercial paper holdings and
short/medium term notes as corporate fundamentals remain positive. Maximum
liquidity will be provided by a combination of agency securities and repurchase
agreements without sacrificing yield. The portfolio's average weighted maturity
will be structured between 65-80 days as stable cash flows enable the portfolio
to capitalize on steep yield curve opportunities.
Investment Sub-Adviser
Allmerica Asset Management, Inc.
About the Fund
Strives to maximize current income for investors while preserving capital and
liquidity.
Portfolio Composition
As of June 30, 1999, the sector allocation of net assets was:
[BAR GRAPH APPEARS HERE]
Commercial Paper 39%
Corporate Notes and Bonds 31%
U.S. Government and Agency Obligations 11%
Certificates of Deposit 10%
Municipal Bonds 4%
Other 5%
Average Annual Total Returns
Years ended June 30, 1999 1 Year 5 Years 10 Years
Money Market Fund 5.19% 5.38% 5.40%
IBC/Donoghue First Tier
Money Market Index 4.61% 4.93% 4.98%
Lipper Money Market Funds Average 4.51% 4.90% 4.98%
Average Yield as of June 30, 1999
Money Market Fund 7-Day Yield 4.68%
Growth of a $10,000 Investment Since 1989
[LINE GRAPH APPEARS HERE]
Date Money Market Fund IBC/Donoghue First Tier Money Market Index
- ---- ----------------- ------------------------------------------
6/89 $10,000 $10,000
12/89 10,426 10,421
12/90 11,278 11,235
12/91 11,981 11,873
12/92 12,435 12,268
12/93 12,807 12,591
12/94 13,311 13,056
12/95 14,088 13,766
12/96 14,843 14,438
12/97 15,654 15,161
12/98 16,517 15,913
6/99 16,918 16,252
The Money Market Fund is a portfolio of the Allmerica Investment Trust.
Portfolio composition will vary over time. The Fund is neither insured nor
guaranteed the Federal Deposit Insurance Corporation or any other Government
Agency. Although the Fund seeks to maintain a net asset value of $1.00 per
share, it is possible to lose money by investing in the Fund. Past performance
is no guarantee of future results. Investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. IBC/Donoghue is an independent firm
that tracks 2a-7 regulated money market funds on a yield, shareholder, asset
size and portfolio allocation basis. The Lipper Money Market Funds Average is
the average investment performance of 317 funds within the Money Market
category. Performance numbers are net of all fund operating expenses, but do not
include insurance charges. If performance information included the effect of
these additional charges, it would have been lower.
6 Money Market Fund
<PAGE>
Financials
<PAGE>
This page left blank intentionally.
<PAGE>
Money Market Fund
PORTFOLIO OF INVESTMENTS . June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- ------------------------------------------------------------------------------
<C> <S> <C>
COMMERCIAL PAPER (B) - 38.9%
Financial Services - 14.3%
$14,000,000 Finova Capital Corp.
5.08%, 02/25/00 $14,000,000
7,000,000 Heller Financial, Inc.
4.90%, 07/26/99 6,886,619
5,000,000 Heller Financial, Inc.
4.90%, 08/30/99 4,923,778
7,000,000 Lexington Parker Capital Corp. (A)
4.88%, 07/07/99 6,961,096
11,041,000 Pegasus Two Ltd Corp.
5.05%, 08/23/99 10,924,839
7,923,000 Transamerica Asset Funding
5.18%, 08/16/99 7,863,718
7,000,000 Westways Funding II, Ltd. (A)
4.90%, 07/14/99 6,952,361
-----------
58,512,411
-----------
Insurance - 6.0%
5,000,000 Aetna Services, Inc.
5.00%, 07/21/99 4,971,528
2,700,000 Aetna Services, Inc.
5.03%, 07/19/99 2,686,796
10,000,000 Prudential Funding Corp.
4.84%, 07/12/99 9,930,089
6,900,000 Swiss RE Financial Products
4.90%, 08/16/99 6,816,414
-----------
24,404,827
-----------
Education - 4.3%
13,783,000 Iowa Student Loan Co.
4.98%, 07/21/99 13,704,827
3,800,000 Southwest Student Services
4.98%, 07/06/99 3,786,333
-----------
17,491,160
-----------
Automotive - 4.2%
6,000,000 American Honda Finance Corp. (A)
5.00%, 01/20/00 5,998,332
3,608,000 Enterprise Funding Corp. (A)
4.93%, 08/09/99 3,577,366
4,000,000 General Motors Acceptance Corp.
8.00%, 10/01/99 4,026,467
3,600,000 Republic Industrial Funding Corp.
4.95%, 07/06/99 3,586,635
-----------
17,188,800
-----------
Transportation - 2.3%
9,500,000 Los Angeles Metropolitan Transportation Authority
5.05%, 07/12/99 9,499,845
-----------
</TABLE>
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- ------------------------------------------------------------------------
<C> <S> <C>
Chemicals - 1.9%
$2,000,000 Akzo Nobel, Inc.
4.95%, 09/17/99 $ 1,972,225
5,925,000 CIBA Specialty Chemicals Corp.
4.83%, 08/24/99 5,824,838
-----------
7,797,063
-----------
Securities Broker - 1.6%
1,575,000 Bear Stearns Cos., Inc.
6.50%, 05/15/00 1,589,121
5,050,000 Lehman Brothers Holdings, Inc.
7.63%, 07/15/99 5,052,183
-----------
6,641,304
-----------
Electric Utilities - 1.4%
1,000,000 Cogentrix of Richmond, Inc.
5.05%, 07/14/99 996,213
5,000,000 Florida Power & Light Group Capital, Inc. (A)
4.91%, 08/18/99 4,908,619
-----------
5,904,832
-----------
Heavy Machinery - 1.4%
1,246,000 Cooperative Association Tractor Dealers
5.05%, 07/13/99 to 07/16/99 1,241,302
4,500,000 John Deere Capital Corp.
5.68%, 04/10/00 4,507,025
-----------
5,748,327
-----------
Banking - 0.9%
1,265,000 Bank of Scotland
5.00%, 08/23/99 1,251,647
2,500,000 Den Norske Bank ASA
4.91%, 12/24/99 2,408,278
-----------
3,659,925
-----------
Telephone Systems - 0.4%
1,500,000 Nynex Capital Funding Corp.
9.40%, 06/01/00 1,549,498
-----------
Beverages, Food & Tobacco - 0.2%
1,000,000 Diageo Plc
6.50%, 09/15/99 1,002,262
-----------
Total Commercial Paper 159,400,254
-----------
(Cost $159,400,254)
CORPORATE NOTES - 31.0%
Securities Broker - 11.1%
6,000,000 Bear Stearns Cos., Inc.
4.99%, 08/25/99 6,000,000
3,965,000 Bear Stearns Cos., Inc.
7.63%, 09/15/99 3,982,901
7,000,000 Donaldson, Lufkin & Jenrette, Inc., MTN
5.25%, 10/05/99 7,000,000
2,000,000 Donaldson, Lufkin & Jenrette, Inc.
6.31%, 05/26/00 2,007,405
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------
F-1
<PAGE>
Money Market Fund
PORTFOLIO OF INVESTMENTS, Continued . June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- ---------------------------------------------------------------------
<C> <S> <C>
CORPORATE NOTES (continued)
Securities Broker (continued)
$14,000,000 Morgan Stanley Dean Witter & Co.
5.06%, 02/14/00 $14,000,000
6,750,000 Paine Webber Group, Inc.
7.00%, 03/01/00 6,808,226
5,500,000 Paine Webber Group, Inc., MTN
5.85%, 10/21/99 5,500,000
-----------
45,298,532
-----------
Banking - 8.1%
4,000,000 Bankers Trust Corp.
9.50%, 05/14/00 4,139,466
1,691,000 Chase Manhattan Corp.
7.75%, 11/01/99 1,705,177
2,500,000 Chase Manhattan Corp., MTN
5.37%, 10/26/99 2,502,292
6,000,000 Chase Manhattan Corp., MTN
4.96%, 01/20/00 6,000,516
1,000,000 First Chicago NBD Corp., MTN
5.39%, 12/14/99 1,001,109
5,000,000 First National Bank of Chicago, Euro MTN
7.00%, 04/30/00 5,068,982
7,000,000 Key Bank National Association
5.13%, 03/24/00 6,997,781
2,000,000 Norwest Financial, Inc.
6.88%, 06/15/00 2,020,142
3,500,000 Shawmut National Corp.
8.63%, 12/15/99 3,554,635
-----------
32,990,100
-----------
Financial Services - 3.6%
1,000,000 Beneficial Corp., MTN
5.09%, 01/10/00 1,000,507
2,000,000 Household Finance Corp.
6.75%, 05/01/00 2,022,014
6,000,000 Liberty Lighthouse U.S. Capital
5.09%, 09/15/99 6,000,000
6,000,000 Liberty Lighthouse U.S. Capital (A)
5.05%, 08/16/99 6,000,000
-----------
15,022,521
-----------
Telephone Systems - 2.0%
8,000,000 GTE Corp.
5.14%, 05/12/00 7,995,143
-----------
Automotive - 1.2%
4,000,000 Ford Motor Credit Corp.
6.38%, 09/15/99 4,009,251
715,000 General Motors Acceptance Corp.
5.04%, 12/09/99 714,619
-----------
4,723,870
-----------
</TABLE>
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- -----------------------------------------------------------------------------
<C> <S> <C>
Industrial - Diversified - 1.2%
$5,000,000 General Electric Capital Corp., MTN
4.95%, 04/13/00 $ 5,000,000
-----------
Electric Utilities - 1.2%
5,000,000 National Rural Utilities Cooperative Finance Corp.
5.18%, 06/26/00 5,000,000
-----------
Heavy Machinery - 1.0%
4,000,000 Caterpillar Financial Services Corp., MTN
6.28%, 05/01/00 4,026,427
-----------
Commercial Services - 0.7%
3,000,000 International Lease Finance Corp.
6.63%, 05/01/00 3,034,261
-----------
Transportation - 0.7%
3,000,000 Richmond County Development Authority
5.65%, 06/01/00 2,995,431
-----------
Retailers - 0.2%
1,000,000 Wal-Mart Stores, Inc.
5.85%, 06/01/00 1,001,680
-----------
Total Corporate Notes 127,087,965
-----------
(Cost $127,087,965)
U.S. GOVERNMENT AGENCY OBLIGATIONS (B) - 11.0%
Federal Home Loan Bank - 6.8%
15,000,000 4.75%, 11/03/99 15,000,000
8,000,000 5.15%, 03/24/00 8,002,153
5,000,000 5.22%, 03/17/00 5,000,000
-----------
28,002,153
-----------
Sallie Mae - 2.2%
9,018,000 5.47%, 07/15/99 9,018,000
-----------
Fannie Mae - 2.0%
8,000,000 4.84%, 07/01/99 7,907,502
-----------
Total U.S. Government Agency Obligations 44,927,655
-----------
(Cost $44,927,655)
CERTIFICATES OF DEPOSIT - 9.8%
3,000,000 Bankers Trust Corp. (A)
5.07%, 08/09/99 2,997,496
10,000,000 Barclays Bank, Plc, Yankee CD
4.89%, 05/12/00 9,994,923
5,000,000 Bear Stearns Cos., Inc.
5.00%, 02/02/00 5,000,000
3,000,000 Commerzbank, AG, Yankee CD
4.99%, 01/25/00 2,999,789
8,000,000 European American Bank
5.28%, 05/12/00 7,998,001
4,000,000 Goldman Sachs and Co. (A)
5.04%, 02/07/00 4,000,000
</TABLE>
See Notes to Financial Statements.
------------------------------------------------------
F-2
<PAGE>
Money Market Fund
PORTFOLIO OF INVESTMENTS, Continued . June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- ----------------------------------------------------------------------
<C> <S> <C>
CERTIFICATES OF DEPOSIT (continued)
$4,236,000 Merrill Lynch & Co., Inc.
5.40%, 02/15/00 $4,246,801
3,000,000 Rabobank Nederland NV
6.45%, 08/16/99 3,002,015
----------
Total Certificates Of Deposit 40,239,025
----------
(Cost $40,239,025)
MUNICIPAL BONDS - 4.1%
Virginia - 2.4%
10,000,000 Virginia State Housing Development Authority
5.25%, 08/05/99 9,998,628
----------
Connecticut - 1.7%
6,900,000 Connecticut State Housing, AMBAC
5.10%, 11/15/16 6,900,000
----------
Total Municipal Bonds 16,898,628
----------
(Cost $16,898,628)
</TABLE>
FEDERAL INCOME TAX INFORMATION (SEE NOTE 2)
At June 30, 1999, the aggregate cost on investment securities for tax purposes
was $398,269,278.
<TABLE>
<CAPTION>
Par Value
Value (Note 2)
- -------------------------------------------------------------------------
<C> <S> <C>
ASSET-BACKED AND MORTGAGE-BACKED SECURITIES - 2.4%
$ 308,087 Copelco Capital Funding Corp.
5.68%, 08/16/99 $ 308,087
4,399,778 Fidelity Equipment Lease Trust, Series 1999-1,
Class A1 (A), CMO
5.16%, 06/16/00 4,399,820
5,000,000 SMM Trust, 1999-C (A)
5.20%, 01/26/00 5,000,000
------------
Total Asset-Backed and
Mortgage-Backed Securities 9,707,907
------------
(Cost $9,707,907)
<CAPTION>
Shares
------
<C> <S> <C>
INVESTMENT COMPANIES - 0.0%
4,383 Scudder Institutional Money Market Fund 4,383
3,461 SSgA Prime Money Market Fund 3,461
------------
Total Investment Companies 7,844
------------
(Cost $7,844)
Total Investments - 97.2% 398,269,278
------------
(Cost $398,269,278)
Net Other Assets and Liabilities - 2.8% 11,343,066
------------
Total Net Assets - 100.0% $409,612,344
============
</TABLE>
- ------------------
(A) Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold, in transactions exempt from registra-
tion, to qualified institutional buyers. At June 30, 1999, these securities
amounted to $50,795,090 or 12.40% of net assets.
(B) Effective yield at time of purchase
AMBAC American Municipal Bond Assurance Corporation
CMO Collateralized Mortgage Obligations
MTN Medium Term Note
See Notes to Financial Statements.
- --------------------------------------------
F-3
<PAGE>
Allmerica Investment Trust
STATEMENT OF ASSETS AND LIABILITIES (in 000's) . June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Money
Market
Fund
- --------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments:
Investments at cost................................................. $398,269
Repurchase agreements at cost....................................... --
--------
Total investments at value.......................................... 398,269
Cash ................................................................ 20
Receivable for investments sold...................................... --
Receivable for shares sold........................................... 7,830
Interest and dividend receivables.................................... 3,638
--------
Total Assets........................................................ 409,757
--------
LIABILITIES:
Payable for investments purchased.................................... --
Payable for shares repurchased....................................... --
Payable to custodian................................................. --
Collateral for securities loaned..................................... --
Net unrealized depreciation on forward currency contracts............ --
Advisory fee payable................................................. 80
Accrued expenses and other payables.................................. 65
--------
Total Liabilities................................................... 145
--------
$
NET ASSETS........................................................... 409,612
========
NET ASSETS consist of
$
Paid-in capital...................................................... 409,709
Undistributed net investment income ................................. --
Accumulated net realized gain (loss) on investments sold ............ (97)
Net unrealized appreciation (depreciation) of investments............ --
--------
$
TOTAL NET ASSETS..................................................... 409,612
========
Shares of beneficial interest outstanding
(unlimited authorization, no par value) (in 000's)................... 409,711
NET ASSET VALUE,
Offering and redemption price per share
(Net Assets/Shares Outstanding)...................................... $ 1.000
========
</TABLE>
See Notes to Financial Statements.
------------------------------------------------------
F-4
<PAGE>
Allmerica Investment Trust
STATEMENT OF OPERATIONS (in 000's) . For the Six Months Ended June 30, 1999
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Money
Market
Fund
- -------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
Interest........................................................... $ 9,269
Dividends.......................................................... 25
---------
Total investment income............................................ 9,294
---------
EXPENSES
Investment advisory fees........................................... 449
Custodian and Fund accounting fees................................. 45
Legal fees......................................................... 2
Audit fees......................................................... 10
Trustees' fees and expenses........................................ 3
Reports to shareholders............................................ 26
Miscellaneous...................................................... 3
---------
Total expenses before reductions and waiver........................ 538
Less reductions.................................................... --
Less reimbursement/waiver.......................................... --
---------
Total expenses net of reductions and waiver........................ 538
---------
NET INVESTMENT INCOME (LOSS)........................................ 8,756
---------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments sold....................... --
Net change in unrealized appreciation (depreciation) of investments
.................................................................. --
---------
NET GAIN (LOSS) ON INVESTMENTS...................................... --
---------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS..... $ 8,756
=========
</TABLE>
See Notes to Financial Statements.
- ---------------------------------------------
F-5
<PAGE>
Allmerica Investment Trust
STATEMENTS OF CHANGES IN NET ASSETS (in 000's)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Money Market
Fund
- ---------------------------------------------------------------------------------
Six Months Ended Year Ended
June 30, 1999 December 31,
(Unaudited) 1998
- ---------------------------------------------------------------------------------
<S> <C> <C>
NET ASSETS at beginning of period................. $ 336,253 $ 260,619
--------- ---------
Increase (decrease) in net assets
resulting from operations:
Net investment income (loss)..................... 8,756 14,920
Net realized gain (loss) on investments sold .... -- (52)
Net change in unrealized appreciation
(depreciation) of investments .................. -- --
--------- ---------
Net increase in net assets resulting from
operations...................................... 8,756 14,868
--------- ---------
Distributions to shareholders from:
Net investment income............................ (8,756) (14,920)
Distribution in excess of net investment income.. -- (2)
Net realized gain on investments................. -- --
--------- ---------
Total distributions............................. (8,756) (14,922)
--------- ---------
Capital share transactions at net asset value of
$1.00 per share:
Net proceeds from sales of shares................ 350,582 327,728
Issued to shareholders in reinvestment of
distributions................................... 8,756 14,922
Cost of shares repurchased....................... (285,979) (266,962)
--------- ---------
Net increase from capital share transactions.... 73,359 75,688
--------- ---------
Total increase (decrease) in net assets and
shares ........................................ 73,359 75,634
--------- ---------
NET ASSETS at the end of period................... 409,612 336,253
========= =========
Undistributed (distribution in excess of) net
investment income (loss)......................... $ -- $ --
========= =========
</TABLE>
See Notes to Financial Statements.
------------------------------------------------------
F-6
<PAGE>
Allmerica Investment Trust
- --------------------------------------------------------------------------------
[THIS PAGE INTENTIONALLY LEFT BLANK]
- --------------------------------------------
F-7
<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
Asset Net Unrealized Dividends Distributions
Value Investment Gain (Loss) Total from from Net from Net Distributions
Year Ended Beginning Income on Investment Investment Realized in Return of Total
December 31, of Period (Loss) Investments Operations Income Capital Gains Excess Capital Distributions
- ------------ --------- ---------- ------------ ---------- ---------- ------------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market
Fund
1999(D) 1.000 0.024 -- 0.024 (0.024) -- -- -- (0.024)
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)
1994 1.000 0.039 -- 0.039 (0.039) -- -- -- (0.039)
<CAPTION>
Net
Increase
(Decrease)
in
Year Ended Net Asset
December 31, Value
- ------------ ----------
<S> <C>
Money Market
Fund
1999(D) --
1998 --
1997 --
1996 --
1995 --
1994 --
</TABLE>
- ------------------------------------
* Annualized
** Not Annualized
(A) Including reimbursements 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 six months ended June 30, 1999 (Unaudited)
See Notes to Financial Statements.
---------------------------------------------------
F-8
<PAGE>
Allmerica Investment Trust
<TABLE>
<CAPTION>
Ratios/Supplemental Data
--------------------------------------------------------------------
Ratios To Average Net Assets
---------------------------------------------------
Net Assets
Net Asset End of Net Operating Management Portfolio
Value End Total Period Investment Expenses Fee Turnover
of Period Returns (000's) Income (Loss) (A) (B) (C) Gross Net Rate
- --------- ------- ---------- ------------- ---- ---- ---- ----- ---- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1.000 2.43%** 409,612 4.84%* 0.30%* 0.30%* 0.30%* 0.25%* 0.25%* 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
1.000 3.93% 95,991 3.94% 0.45% -- 0.45% 0.31% 0.31% N/A
</TABLE>
- --------------------------------------------
F-9
<PAGE>
Allmerica Investment Trust
NOTES TO FINANCIAL STATEMENTS (Unaudited)
- --------------------------------------------------------------------------------
1.ORGANIZATION
Allmerica Investment Trust (the "Trust") is registered under the Investment
Company Act of 1940 ("the 1940 Act"), as amended, as an open-end, diversified
management investment company established as a Massachusetts business trust for
the purpose of providing a vehicle for the investment of assets of various sep-
arate accounts established by Allmerica Financial Life Insurance and Annuity
Company ("Allmerica Financial"), a wholly-owned subsidiary of First Allmerica
Financial Life Insurance Company ("First Allmerica") or other affiliated insur-
ance companies. As of the date of this report, the Trust offered fourteen man-
aged investment portfolios. The accompanying financial statements and financial
highlights are those of the Money Market Fund (the "Portfolio").
2.SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions at
the date of the financial statements. Actual results could differ from those
estimates.
The following is a summary of significant accounting policies followed by the
Trust in the preparation of its financial statements:
Security Valuation: Securities of the Portfolio are valued utilizing the amor-
tized cost valuation method, permitted in accordance with Rule 2a-7 under the
1940 Act. This method involves valuing a portfolio security initially at its
cost and thereafter assuming a constant amortization to maturity of any dis-
count or premium.
Security Transactions and Investment Income: Security transactions are recorded
on trade date. Realized gains and losses from security transactions are deter-
mined on the basis of identified cost. Interest income, including amortization
of premium and accretion of discount on securities, is accrued daily. Dividend
income is recorded on ex-dividend date.
Federal Income Taxes: The Trust treats each portfolio as a separate entity for
Federal income tax purposes. Each portfolio intends to continue to qualify as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended. By so qualifying, each portfolio will not be subject to
Federal income taxes to the extent it distributes all of its taxable income and
net realized gains, if any, for its fiscal year. In addition, by distributing
during each calendar year substantially all of its net investment income, capi-
tal gains and certain other amounts, if any, each portfolio will not be subject
to Federal excise tax. Therefore, no Federal income tax provision is required.
Distributions to Shareholders: Dividends from net investment income are
declared and reinvested daily for the Money Market Fund. The Portfolio declares
and distributes all net realized capital gains, if any, at least annually. The
distributions are recorded on ex-dividend date. Income and capital gains dis-
tributions are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. These differences are
primarily due to differing book and tax treatments in the timing of the recog-
nition of gains or losses and forwards, including "Post-October Losses" and
losses deferred due to wash sales; and permanent differences due to differing
treatments for paydown gains/losses on certain securities, foreign currency
transactions, market discount, and non-taxable dividends. Any taxable income or
gain remaining at fiscal year end is distributed in the following year.
Expenses: The Trust accounts separately for assets, liabilities and operations
of each portfolio. Expenses directly attributed to a portfolio are charged to
the portfolio, while expenses which are attributable to more than one portfolio
of the Trust are allocated among the respective portfolios.
Repurchase Agreements: Each portfolio may engage in repurchase agreement trans-
actions with institutions that the Sub-Adviser has determined are creditworthy
pursuant to guidelines established by the Trust's Board of Trustees. Each
------------------------------------------------------
F-10
<PAGE>
Allmerica Investment Trust
NOTES TO FINANCIAL STATEMENTS (Unaudited), Continued
- --------------------------------------------------------------------------------
jrepurchase agreement transaction is recorded at cost. Each portfolio requires
that the securities purchased in a repurchase agreement transaction be trans-
ferred to the Trust's Custodian in a manner that is intended to enable the
portfolio to obtain those securities in the event of a counterparty default.
The Investment Adviser monitors the value of the securities, including accrued
interest, daily to ensure that the value of the collateral equals or exceeds
amounts due under the repurchase agreement. Repurchase agreement transactions
involve certain risks in the event of default or insolvency of the
counterparty, including possible delays or restrictions upon the portfolio's
ability to dispose of the underlying securities, and a possible decline in the
value of the underlying securities during the period while the portfolio seeks
to assert its rights.
3. INVESTMENT ADVISORY, ADMINISTRATION, AND OTHER RELATED PARTY TRANSACTIONS
Allmerica Financial Investment Management Services, Inc. (the "Manager"), a
wholly-owned subsidiary of First Allmerica, serves as Investment Adviser and
Administrator to the Trust. Under the terms of the management agreement, the
Portfolio pays a management fee, calculated daily and payable monthly, at an
annual rate based upon the following fee schedule:
<TABLE>
<CAPTION>
Percentage of Average Daily Net
Assets
First Next Over
Portfolio $50,000,000 $200,000,000 $250,000,000
- ---------------------------------------------------
<S> <C> <C> <C>
Money Market 0.35% 0.25% 0.20%
</TABLE>
The Manager has entered into Sub-Adviser Agreement for the management of the
investments of the Portfolio. The Manager is solely responsible for the payment
of all fees to the Sub-Adviser. The Sub-Adviser for the Portfolio is Allmerica
Asset Management, Inc.
Effective April 1, 1999, Investors Bank & Trust provides transfer agency, port-
folio accounting and custody services to the Trust and receives fees and reim-
bursement of certain out-of-pocket expenses for its services. The Manager has
entered into an Administrative Services Agreement with Investors Bank & Trust,
whereby Investors Bank & Trust performs certain administrative services for the
portfolios and is entitled to receive an administrative fee and certain out-of-
pocket expenses. The Manager is solely responsible for the payment of the
administrative fee to Investors Bank & Trust. Prior to April 1, 1999, First
Data Investor Services Group, Inc. performed fund administration and fund
accounting services for the Trust, and custodian services were performed by
Bankers Trust.
The Trust pays no salaries or compensation to any of its officers. 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 Trustees,
and receive quarterly meeting and retainer fees for their services. Such
amounts are paid by the Trust.
4.REIMBURSEMENT OF EXPENSES AND WAIVER OF FEES
In the event normal operating expenses of the Portfolio, excluding taxes,
interest, broker commissions, and extraordinary expenses, but including the
advisory fee, exceed certain voluntary expense limitations by a percentage of
average net assets (Money Market Fund - 0.60%), the Manager will voluntarily
reimburse fees and any expenses in excess of the expense limitations. Expense
limitations may be removed or revised at any time after a portfolio's first
fiscal year of operations without prior notice to existing shareholders.
5.SHARES OF BENEFICIAL INTEREST
The Trust's Declaration of Trust authorizes the Trustees to issue an unlimited
number of shares of beneficial interest for the portfolios, each without a par
value.
- --------------------------------------------
F-11
<PAGE>
Allmerica Investment Trust
REGULATORY DISCLOSURES
- --------------------------------------------------------------------------------
The performance data quoted represents past performance and the investment
return and principal value of an investment will fluctuate so that an invest-
or's shares, when redeemed, may be worth more or less than their original cost.
An investment in the Money Market Fund is not insured or guaranteed by the Fed-
eral Deposit Insurance Corporation or any other government agency. Although the
Portfolio seeks to preserve the value of your investment at a stable net asset
value of $1.00 per share, it is possible to lose money by investing in the
Portfolio.
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Portfolio and are not authorized
for distribution to prospective investors in the fund unless preceded or accom-
panied by an effective prospectus, which include important information related
to charges and expenses.
CLIENT NOTICES
- --------------------------------------------------------------------------------
Year 2000 (unaudited): Some computer software cannot distinguish between dates
in the year 2000 and dates in the year 1900 because of the way that the dates
are encoded and calculated. The services provided to the Trust by the Manager,
Sub-Advisers, Custodian and other external service providers depend on the
proper functioning of their computer software. Failure to correct or replace
any non-compliant software could adversely affect, among other things, the han-
dling of securities trades, the payment of interest and dividends, the pricing
of the Trust's securities and of the Trust's shares, and account services. The
Trust has requested information from its service providers with respect to
their plans to be Year 2000 compliant. The Trust has been advised by its serv-
ice providers that they either are Year 2000 compliant now or expect to be com-
pliant prior to December 31, 1999. However, there can be no guarantee that the
Trust's operations will not be adversely affected by non-compliant computer
systems of its service providers or other third parties which interact with
such service providers. The Year 2000 problem could also have an adverse effect
on issuers, including foreign issuers, whose securities are owned by the Port-
folios, potentially decreasing the value of such securities.
* * * * * *
------------------------------------------------------
F-12
<PAGE>
[LOGO OF ALLMERICA FINANCIAL(R) APPEARS HERE]
First Allmerica Financial Life Insurance Company . Allmerica Financial Life
Insurance and Annuity Company (licensed in all states except NY) Allmerica Trust
Company, N.A. . Allmerica Investments, Inc. . Allmerica Investment Management
Company, Inc. The Hanover Insurance Company . AMGRO, Inc. . Allmerica Financial
Alliance Insurance Company Allmerica Asset Management, Inc. . Allmerica
Financial Benefit Insurance Company . Sterling Risk Management Services, Inc.
Citizens Corporation . Citizens Insurance Company of America . Citizens
Management Inc. 440 Lincoln Street, Worcester, Massachusetts 01653
11129 (6/99)
