<PAGE>
[LETTERHEAD OF AST APPEARS HERE]
May 14, 1997
Dear Valued Client:
On May 13, 1997, the Allmerica Securities Trust (ALM) Board of Trustees declared
a quarterly dividend of $.21 per share, payable June 30, 1997, to shareholders
of record on May 31, 1997. For the 12 months ended March 31, 1997, the Trust
paid dividends of $.86 per share, producing a current yield of 8.28%, based on
the first-quarter closing price of $10.375. By comparison, the 10-year Treasury
note yield was 6.90% on March 31, 1997.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Allmerica Securities Trust Facts
At March 31, 1997
<S> <C>
Market Value $10.375
Net Asset Value $11.192
Total Net Assets (000's) $96,162
Shares Outstanding (000's) 8,592
* Net Investment Income Per Share $0.21
* Increase/Decrease in
Per Share Value Resulting
from Investment Operations $0.21
Total Returns at 3/31/97
Allmerica Securities Trust
Three Months (0.19)%
Twelve Months 6.94%
Lehman Brothers Corporate
Bond Index
Three Months (1.01)%
Twelve Months 4.96%
</TABLE>
* For three months ended March 31, 1997
- --------------------------------------------------------------------------------
First Quarter Review
The first quarter of 1997 was characterized by growing investor nervousness in
both the fixed income and equity markets. The equity market made headlines as
the S&P 500 traded to new highs through the first half of the period. But, as
the quarter progressed, the fixed income markets took center stage, dominated by
fears of a shift to a tighter monetary policy by the Federal Reserve.
In his February testimony before Congress, Federal Reserve Chairman Greenspan
expressed concern about the continuing pace of economic expansion and discussed
the "irrational exuberance" of the asset markets. The equity market retraced
much of the year's gains in response. The fixed income market also reacted
swiftly by forcing yields up one half of one percent, indicating that a
tightening of policy at the next Federal Reserve meeting was a foregone
conclusion. For the quarter, the bond market lost 0.56%, as measured by the
Lehman Aggregate index.
Bolstering the argument in favor of a cautious policy stance was a slew of
robust economic data released in the first quarter. Business activity remained
strong, led by broad gains in final product demand. Retail sales and housing
statistics remained above trend, with consumers' purchasing power well supported
by continued job growth and income gains. Consumer confidence showed little sign
of waning.
As the market scrutinized each economic statistic in the context of current
monetary policy, it became clear that the Federal Reserve's current posture was
not sufficiently restrictive. Neither the activity in the most interest rate
sensitive sectors of the economy, nor the current appreciation in financial
asset valuations were suggestive of a tight credit environment. In fact, housing
demand had continued to rise, while equity and high yield bond prices moved to
new highs. On March 25, 1997, the Federal Reserve ended its longest neutral
policy stance by increasing the Federal funds rate target by one quarter of one
percent to 5.50%. Historically, the Federal Reserve does not make just one
policy adjustment during a cycle, so economic data and official commentary must
be closely watched to judge the duration and magnitude of this more restrictive
stance.
The corporate bond market once again outperformed U.S. Treasuries, adjusted for
duration differences. For most of the first quarter, spreads continued to narrow
from historically tight levels. Through February, not one sector of the
corporate market failed to provide higher returns than Treasuries. However, by
March, some sectors did give back a portion of those gains in reaction to the
Federal Reserve policy tightening. Emerging markets and high yield debt suffered
the most as a
<PAGE>
- --------------------------------------------------------------------------------
ALLMERICA SECURITIES TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS, March 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
Moody's
Par Value Ratings Value
--------- ------- -----
<C> <S> <C> <C>
CORPORATE NOTES AND BONDS - 75.36%
Finance - 16.15%
$ 1,000,000 BCH Cayman Islands, Ltd.
Yankee Subordinated Notes, Guaranteed
6.50%, 02/15/06 A $ 929,849
1,400,000 Capital One Financial Corp., Senior Notes
7.25%, 12/01/03 Ba 1,339,969
1,000,000 Cenfed Financial Corp.
11.17%, 12/15/01 (A) Bb 1,060,000
1,500,000 Colonial Capital, Series A, Guaranteed
8.92%, 01/15/27 (A) NR 1,472,344
975,000 Compass Trust, Series A, Guaranteed
8.23%, 01/15/27 NR 944,373
800,000 Conseco Finance Trust III
8.80%, 04/01/27 Ba 792,982
1,000,000 First Tennessee National Corp.
Subordinated Notes
6.75%, 11/15/05 A 947,625
321,509 Jennifer Holding Corp.
12.25%, 12/30/98 (B) NR 332,164
781,524 Mack Trust, Inc.
10.91%, 04/01/99 (B) NR 797,131
1,000,000 Merita Bank, Ltd.,
Yankee Subordinated Notes
6.50%, 01/15/06 A 930,890
683,581 Midland Funding Corp., Series C-91
10.33%, 07/23/02 Ba 731,432
1,000,000 Providian Capital, Series A, Guaranteed
9.53%, 02/01/27 (A) Baa 1,016,231
1,000,000 RHG Finance Corp., Guaranteed
8.88%, 10/01/05 Ba 1,040,095
1,000,000 Riggs Capital Trust
8.63%, 12/31/26 (A) Baa 980,386
1,000,000 St. George Bank, Ltd., Yankee Debenture
7.15%, 10/15/05 (A) Baa 969,560
1,250,000 Zions Institutional Capital Trust, Series A
8.54%, 12/15/26 (A) A 1,246,517
----------
15,531,548
----------
Oil, Gas, and Petroleum - 12.55%
2,000,000 ANR Pipeline Co., Debenture
9.63%, 11/01/21 Baa 2,381,122
1,000,000 Clark Oil & Refining Corp., Senior Notes
9.50%, 09/15/04 Ba 1,010,000
1,000,000 Georgia Gulf Corp.
7.63%, 11/15/05 Ba 941,515
1,000,000 Gulf Canada Resources, Ltd.,
Yankee Senior Notes
8.35%, 08/01/06 Ba 1,030,000
1,450,000 Seagull Energy Corp., Senior Notes
7.88%, 08/01/03 Ba 1,435,500
1,250,000 Snyder Oil Corp., Subordinated Notes
7.00%, 05/15/01 B 1,259,375
1,250,000 Texas Eastern Transmission Corp.
10.00%, 08/15/01 Baa 1,374,757
600,000 Texas Utilities Electric Co., First Mortgage
7.38%, 10/01/25 Baa 550,097
1,000,000 Tosco Corp.
7.00%, 07/15/00 Baa 994,908
1,000,000 Valero Management Partnership, LP
First Mortgage Notes, Series J
10.02%, 03/15/07 (B) NR 1,093,710
----------
12,070,984
----------
Industrial - 11.13%
2,000,000 Bethlehem Steel Corp., Senior Notes
10.38%, 09/01/03 B 2,085,000
950,000 Buckeye Cellulose Corp.,
Senior Subordinated Notes
9.25%, 09/15/08 Ba 961,875
1,000,000 Homeside, Inc., Senior Notes
11.25%, 05/15/03 (A) Ba 1,132,500
500,000 McDermott (J. Ray) SA,
Senior Subordinated Notes
9.38%, 07/15/06 B 512,500
1,000,000 RPM, Inc., Senior Notes
7.00%, 06/15/05 Baa 963,942
2,000,000 Usinor Sacilor, Senior Notes, Series A
7.16%, 03/25/04 (B) NR 1,991,360
2,000,000 USX-Marathon Group, Inc.
8.88%, 09/15/97 Baa 2,024,388
1,000,000 Westinghouse Electric Corp.
8.88%, 06/01/01 Ba 1,037,217
----------
10,708,782
----------
Communications - 6.52%
875,000 C-Tec Cable Systems, Inc.
Senior Secured Notes
9.65%, 09/01/99 (B) NR 902,335
1,000,000 Continental Cablevision, Inc., Senior Notes
8.50%, 09/15/01 Baa 1,045,205
750,000 Continental Cablevision, Inc., Senior Notes
8.30%, 05/15/06 Baa 776,447
555,000 GTE Corp.
8.75%, 11/01/21 A 614,196
400,000 Kerrville Telephone Co.
9.76%, 03/29/00 (B) NR 415,692
1,850,000 TCI Communications, Inc., Senior Debenture
7.88%, 02/15/26 Ba 1,614,576
1,000,000 Viacom, Inc., Senior Debenture, Guaranteed
7.63%, 01/15/16 Ba 898,489
----------
6,266,940
----------
Utilities - 5.87%
1,500,000 Connecticut Light & Power Co.
First Mortgage, Series 94D
7.88%, 10/01/24 Baa 1,480,902
1,332,000 North Atlantic Energy Corp.
First Mortgage, Series A
9.05%, 06/01/02 B 1,302,683
1,270,000 Sithe/Independence Funding Corp., Series A
9.00%, 12/30/13 Baa 1,313,371
1,500,000 Texas-New Mexico Power Co.
First Mortgage, Series U
9.25%, 09/15/00 Ba 1,543,227
----------
5,640,183
----------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
ALLMERICA SECURITIES TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (continued)
<TABLE>
<CAPTION>
Moody's
Par Value Ratings Value
- --------- ------- -----
<S> <C> <C> <C>
Manufacturing - 4.46%
$ 1,160,000 Boise Cascade Corp.
10.13%, 12/15/97 Baa $ 1,189,575
1,000,000 Fort Howard Corp., Senior Notes
8.25%, 02/01/02 B 982,500
1,000,000 Stone Container Corp., Senior Notes
11.88%, 12/01/98 B 1,050,000
1,000,000 Wyman-Gordon Co., Senior Notes
10.75%, 03/15/03 Ba 1,067,500
-----------
4,289,575
-----------
Transportation - 4.04%
1,000,000 AMR Corp., Debenture
10.00%, 02/01/01 Baa 1,089,401
1,437,275 Delta Airlines, Inc.
9.23%, 07/02/02 (B) NR 1,476,024
661,000 USAir, Inc., Equipment Trust, Series F
10.30%, 01/15/00 B 663,618
659,000 USAir, Inc., Equipment Trust, Series D
10.30%, 01/15/00 B 661,610
-----------
3,890,653
-----------
Consumer Products - 3.73%
1,000,000 Chiquita Brands International, Inc., Senior Notes
9.13%, 03/01/04 B 1,002,500
1,000,000 DiMon, Inc., Senior Notes, Series B
8.88%, 06/01/06 Ba 1,016,520
1,600,000 Ralston Purina Co., Debenture
7.75%, 10/01/15 Baa 1,565,168
-----------
3,584,188
-----------
Merchandising and Retail - 3.27%
1,000,000 Federated Department Stores, Inc., Senior Notes
10.00%, 02/15/01 Ba 1,077,816
1,000,000 Kroger Co., Senior Subordinated Notes
10.00%, 05/01/99 Baa 1,046,133
1,000,000 USG Corp., Senior Notes
8.50%, 08/01/05 Ba 1,017,500
-----------
3,141,449
-----------
Securities Brokers, Dealers and Exchanges - 2.98%
1,000,000 Donaldson Lufkin & Jenrette, Inc., Senior Notes
6.88%, 11/01/05 Baa 950,198
1,000,000 Jones (Edward D.) & Co., LP
7.95%, 04/15/06 (B) NR 993,970
1,000,000 Legg Mason, Inc., Senior Notes
6.50%, 02/15/06 Baa 920,009
-----------
2,864,177
-----------
Health Care - 2.68%
1,250,000 Allegiance Corp.
7.30%, 10/15/06 Baa 1,220,727
1,000,000 Tenet Healthcare Corp., Senior Notes
9.63%, 09/01/02 Ba 1,062,500
300,000 Tenet Healthcare Corp., Senior Subordinated Notes
8.63%, 01/15/07 Ba 292,500
-----------
2,575,727
-----------
Printing and Publishing - 1.98%
1,000,000 Time Warner, Inc., Debenture
9.15%, 02/01/23 Ba 1,062,538
850,000 Time Warner Entertainment Co., LP Baa
Senior Debenture
8.38%, 03/15/23 Baa 840,189
-----------
1,902,727
-----------
Total Corporate Notes and Bonds 72,466,933
(Cost $72,056,847) -----------
U.S. GOVERNMENT OBLIGATIONS - 11.98%
U.S. Treasury Bonds - 6.62%
6,150,000 7.25%, 05/15/16 Aa 6,171,143
200,000 7.13%, 02/15/23 Aaa 197,376
-----------
6,368,519
-----------
U.S. Treasury Notes - 5.36%
1,955,000 5.75%, 08/15/03 Aaa 1,844,421
2,000,000 7.75%, 01/31/00 Aaa 2,057,500
1,250,000 7.00%, 07/15/06 Aaa 1,252,344
-----------
5,154,265
-----------
Total U.S. Government Obligations 11,522,784
(Cost $12,093,396) -----------
ASSET-BACKED SECURITIES - 8.03%
1,000,000 American Airlines, Inc.
Pass-Through Trust, Series 1991-C2
9.73%, 09/29/14 A 1,119,220
369,972 Eaglemark Trust
Harley-Davidson, Series 1995-1
6.80%, 12/15/01 (A) Aaa 371,474
999,704 First Plus Home Loan Trust, Series 1996-2, Class A5
7.47%, 02/20/11 NR 1,000,797
636,200 Green Tree Financial Corp., Series 1995-A, Class A
7.25%, 07/15/05 P 623,673
1,000,000 National Auto Finance, Series 1996-1, Class A
6.33%, 12/21/02 Aaa 991,250
1,000,000 Premier Auto Trust, Series 1995-4, Class A4
6.00%, 05/06/00 Aaa 996,250
650,000 Resolution Trust Corp.,Series 1995-1
Class A4C, CMO
6.85%, 02/25/27 Aaa 635,781
1,339,328 United Air Lines, Inc.
Pass-Through Trust, Series 1991-B1
9.30%, 03/22/08 Baa 1,435,117
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
ALLMERICA SECURITIES TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (continued)
<TABLE>
<CAPTION>
Moody's
Par Value Ratings Value
--------- ------- -----
ASSET-BACKED SECURITIES (continued)
<S> <C> <C> <C>
$ 85,643 Western Financial Grantor Trust, Series 1994-2
Class A2
6.38%, 09/01/99 Aaa $ 85,081
468,300 Western Financial Grantor Trust
Series 1995-2, Class A2
7.10%, 07/01/00 Aaa 463,470
-----------
Total Asset-Backed Securities 7,722,113
(Cost $7,543,502) -----------
FOREIGN BONDS (C) - 2.56%
950,000 Republic of Colombia, Series E, MTN
8.66%, 10/07/16 (A) Ba 980,875
1,500,000 United Mexican States,
Yankee Emerging Market Notes
8.50%, 09/15/02 Ba 1,475,625
-----------
Total Foreign Bonds 2,456,500
(Cost $2,131,580) -----------
<CAPTION>
Shares Value
------ -----
<S> <C>
INVESTMENT COMPANY - 0.97%
936,297 State Street Bank & Trust Co. $ 936,297
-----------
Total Investment Company 936,297
(Cost $936,297) -----------
Total Investments - 98.90% 95,104,627
(Cost $94,761,622) -----------
Net Other Assets and Liabilities - 1.10% 1,057,524
-----------
Net Assets - 100.00% $96,162,151
===========
</TABLE>
- ------------------
(A) Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold, in transactions exempt from
registration, to qualified institutional buyers. At March 31, 1997, these
securities amounted to $9,229,887 or 9.60% of net assets.
(B) Restricted Securities - Represent ownership in private placement
investments which have not been registered with the Securities and Exchange
Commission under the Securities Act of 1933. At March 31, 1997, these
securities amounted to $8,002,386 or 8.32% of net assets.
(C) U.S. currency denominated.
CMO Collateralized Mortgage Obligation
MTN Medium Term Note
Quality Ratings
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
Baa 28%
Ba 26%
A 6%
Aaa 16%
Private Placements and Not Rated 13%
B and Bb. 11%
</TABLE>
Source: Moody's Investor Service
Security Diversification
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
Foreign Bonds 3%
Asset Backed Securities 8%
US Govt & Agency Obligations 12%
Corporate Notes & Bonds 75%
Cash Equivalents and Net Other
Assets & liabilities 2%
</TABLE>
Shareholder inquires regarding account information may be directed to:
The Bank of New York
Shareholder Relations Department -11E
PO Box 11258
Church Street Station
New York, New York 10286
1-800-432-8224
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments:
Investments at cost............................................ $94,761,622
Net unrealized appreciation (depreciation)..................... 343,005
-----------
Total investments at value..................................... 95,104,627
Receivable for investments sold.................................. 799,375
Interest and dividend receivables................................ 1,760,969
-----------
Total Assets................................................... 97,664,971
-----------
LIABILITIES:
Payable for investments purchased................................ 800,000
Payable to custodian............................................. 517,666
Advisory fee payable............................................. 40,759
Accrued expenses and other payables.............................. 144,395
-----------
Total Liabilities.............................................. 1,502,820
-----------
NET ASSETS......................................................... $96,162,151
===========
NET ASSETS consist of:
Par value........................................................ $ 8,592,306
Paid-in capital.................................................. 88,551,952
Undistributed (distribution in excess of
net investment income.......................................... (4,493)
Accumulated (distribution in excess of)
net realized gain (loss) on investments sold................... (1,320,619)
Net unrealized appreciation (depreciation) of investments........ 343,005
-----------
TOTAL NET ASSETS................................................... $96,162,151
===========
Shares of beneficial interest outstanding.......................... 8,592,306
-----------
NET ASSET VALUE
Per share........................................................ $ 11.192
===========
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Interest......................................................... $ 1,975,050
Dividends........................................................ 10,142
-----------
Total investment income........................................ 1,985,192
-----------
EXPENSES:
Advisory......................................................... 123,138
Custodian........................................................ 825
Fund accounting.................................................. 10,428
Transfer agent................................................... 49,378
Legal............................................................ 932
Audit............................................................ 1,692
Non-interested trustees' compensation............................ 2,502
Reports to shareholders.......................................... 22,194
New York Stock Exchange.......................................... 3,746
Miscellaneous.................................................... 3,145
-----------
Total expenses................................................. 217,980
-----------
NET INVESTMENT INCOME.............................................. 1,767,212
-----------
NET REALIZED AND UNREALIZED
GAIN(LOSS) ON INVESTMENTS:
Net realized gain(loss) on investments sold...................... (150,782)
Net change in unrealized appreciation
(depreciation) of investments.................................. (1,785,366)
-----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS............................................. (1,936,148)
-----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS.................................. $ (168,936)
===========
</TABLE>
<PAGE>
result of profit taking by "hot money" investors and mutual fund redemptions,
respectively. At quarter end, Allmerica Securities Trust had thirty percent
invested in domestic high yield and three percent invested in emerging markets
debt.
[LINE GRAPH APPEARS HERE]
U.S. Treasury Yield Curves
<TABLE>
<CAPTION>
12/31/96 3/31/97
<S> <C> <C>
3 Months 5.19 5.31
6 Months 5.30 5.53
12 Months 5.49 6.00
2 Years 5.87 6.41
3 Years 6.01 6.56
5 Years 6.21 6.75
10 Years 6.42 6.91
30 Years 6.64 7.09
</TABLE>
Despite a weakening in these two sectors, Allmerica Securities Trust
outperformed the Lehman corporate bond index, a benchmark which contains only
investment grade securities. Throughout the quarter, the Fund maintained a
shorter duration than the benchmark. In addition, the Fund's investment grade
holdings consisted primarily of BBB-rated securities which posted better returns
than single A or higher rated issues.
Two areas of focus for the Fund are media companies and Trust Preferred issues.
We believe companies such as Time Warner and TCI are stable to improving credits
whose spreads will narrow over time. Exposure to the Trust Preferred market was
increased during the quarter to approximately seven percent. New purchases
included Colonial Bank and Compass Bank, two regional banks based in Alabama, a
market which we believe is attractive to larger institutions seeking to expand
in the South; and Conseco and Providian, two insurance companies. Trust
Preferred issues continue to look undervalued relative to longer maturity
industrials.
[BAR GRAPH APPEARS HERE]
Maturity Diversification
<TABLE>
<S> <C>
UNDER 3 YEARS 13%
4-5 YEARS 14%
5-10 YEARS 40%
11-20 YEARS 16%
21 AND OVER 17%
</TABLE>
Looking ahead, the greatest uncertainty facing investment grade corporates is
the magnitude of additional monetary policy action. Historically, Federal
Reserve tightenings have hurt corporates for two reasons. First, higher interest
rates increase the likelihood of a slowdown in the economy which, in turn,
reduces corporate profitability. Second, the resulting flatter yield curve can
cause spreads for corporates to widen. To continue to provide investors with
higher absolute yields for assuming longer term credit risk, the incremental
spread over Treasuries must rise with the maturity of the corporate bond. If the
recent Federal Reserve move is perceived to be one of several, then it is likely
that corporates could experience a period of underperformance. Yet, over the
intermediate term, we continue to like the supply/demand picture of the
corporate market and remain constructive on the sector.
Sincerely,
/s/ John F. O'Brien /s/ Richard M. Reilly
John F. O'Brien Richard M. Reilly
Chairman President
[LOGO OF ALLMERICA FINANCIAL(R) APPEARS HERE]
440 Lincoln Street, Worcester, MA 01653
Allmerica Securities Trust is a Massachusetts Business Trust under an Agreement
and Declaration of Trust dated February 26, 1986 as amended and on file with the
Secretary of the Commonwealth of Massachusetts. This document is executed by the
Trustees or Officers as such and not individually, and no obligation of the
Trust shall be binding upon any of the Trustees, Officers or Shareholders, but
shall only bind the assets and property of the Trust.
<PAGE>
[LETTERHEAD OF ALLMERICA FINANCIAL APPEARS HERE]
June 9, 1997
VIA EDGAR
- ---------
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
RE: Allmerica Securities Trust
File Nos. 2-46558; 811-2338
Dear Sir/Madam:
Pursuant to Rule 30b2-1 under the Investment Company Act of 1940, as amended,
we are filing on behalf of the trust the quarterly report to shareholders
for the first quarter of 1997.
If you have any questions regarding this filing, please contact me at (508)
855-4013.
Please provide an electronic confirmation as evidence of your receipt of this
filing.
Sincerely,
/s/ George M. Boyd
George M. Boyd, Esq.
Secretary
GMB/pjd
