<PAGE>
[LETTERHEAD OF ALLMERICA FINANCIAL APPEARS HERE]
August 29, 1997
VIA EDGAR
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
RE: Allmerica Securities Trust
File Nos. 002-46558; 811-2338
Dear Sir/Madam:
Pursuant to Rule 30b2-1 (Form N-30D) under the Investment Company Act, as
amended, we are filing on behalf of the Trust the semi-annual report to
shareholders for the six months ended June 30, 1997.
If you have any questions regarding this filing, please contact me at (508)
855-3498.
Please provide an electronic confirmation of your receipt of this filing.
Sincerely,
/s/ Thomas P. Cunningham
Treasurer
TCP/jfd
cc: George M. Boyd, Esq.
<PAGE>
------------------
SEMI-ANNUAL REPORT
June 30, 1997
Allmerica
Securities
Trust
------------------
[LOGO OF AST APPEARS HERE]
<PAGE>
TRUST INFORMATION
- -------------------------------------------------------------------------------
BOARD OF TRUSTEES
John F. O'Brien, Chairman
Russell E. Fuller*
Cynthia A. Hargadon*
Gordon Holmes*
John P. Kavanaugh
Bruce E. Langton*
Attiat F. Ott*
Paul D. Paganucci*
Richard M. Reilly
Ranne P. Warner*
OFFICERS
Richard M. Reilly, President
Thomas P. Cunningham, Treasurer
INVESTMENT ADVISER
Allmerica Asset Management, Inc.
440 Lincoln Street
Worcester, MA 01653
REGISTRAR AND TRANSFER, DIVIDEND DISBURSING
AND REINVESTMENT AGENT
The Bank of New York
P.O. Box 11258, Church Street Station
New York, NY 10286
CUSTODIAN
Bankers Trust Company
16 Wall Street
New York, NY 10005
ADMINISTRATOR
First Data Investor Services Group
4400 Computer Drive
Westborough, MA 01581
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
160 Federal Street
Boston, MA 02110
LEGAL COUNSEL
Ropes & Gray
One International Place
Boston, MA 02110
SHAREHOLDER INQUIRIES
MAY BE DIRECTED TO:
The Bank of New York
Shareholder Relations
Department - 11E
P.O. Box 11258
Church Street Station
New York, NY 10286
1-800-432-8224
*Independent Trustees
<TABLE>
<CAPTION>
- --------
CONTENTS
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<S> <C>
A LETTER FROM THE CHAIRMAN ...................................................2
BOND & MONEY
MARKET OVERVIEW ..............................................................4
TRUST OVERVIEW ...............................................................6
FINANCIALS .................................................................F-1
SHAREHOLDER INFORMATION .................................................INSIDE
BACK COVER
</TABLE>
<PAGE>
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A LETTER FROM THE CHAIRMAN
- --------------------------------------------------------------------------------
[PHOTOGRAPH APPEARS HERE]
Dear Client:
The U.S. economy is in an almost ideal position of generating strong economic
growth coupled with low inflation and declining unemployment. However, this
strong picture has not been quite so clear on a daily or even a monthly basis.
As the year began, economic demand was very strong, resulting in a 5.9%
increase in Gross Domestic Product. Fearful that the strong first quarter growth
might ignite inflation, the Federal Reserve Board reacted by increasing the
Discount Rate 0.25% in late March. Interest rates increased across all bond
maturities as the market anticipated future rate increases by the Federal
Reserve and drove bond prices lower. As the second quarter progressed, demand
did in fact slow down as the Federal Reserve had anticipated which enabled them
to leave interest rates alone. As new economic data supported the proposition of
a slowing economy and a lack of inflationary pressures, demand for fixed income
investments increased and bond prices rose.
What this means to your portfolio is that flat first quarter results have
been followed by strong second quarter returns as interest rates stabilized and
ultimately declined. In short, during the second quarter, your portfolio
benefited from both price appreciation caused by declining interest rates and
strong coupon payments from the bonds in the portfolio. For the seventh
consecutive year, high yield corporates have been the best performing asset
class in the U.S. fixed income market. Approximately 30 percent of Allmerica
Securities Trust is allocated to below investment-grade securities. These
holdings are indicative of your portfolio manager's belief that "yield wins over
time." Your manager continues to keep a watchful eye out for broad economic
signs or individual credit concerns which could negatively impact these lower
quality bonds. At this point though, the economic outlook remains stable and the
portfolio manager believes the Trust is well-positioned to continue to provide
competitive returns to shareholders.
I am pleased to announce that on August 5, 1997, the Allmerica Securities
Trust Board of Trustees declared a quarterly dividend of $0.21 per share,
payable on September 30, 1997 to shareholders of record on August 29, 1997. For
the 12-month period ending June 30, 1997, the Trust paid dividends of $0.86 per
share, producing a current yield of 8.2% based on the period end closing price
of $10.50. By comparison, the 10-year Treasury note was 6.50% on June 30, 1997.
All of us at Allmerica Financial appreciate your interest in the Trust and
welcome the opportunity to serve your other financial needs through our broad
product offerings of variable life insurance and variable annuities.
On behalf of the Board of Trustees,
/s/ John F. O'Brien
John F. O'Brien
Chairman of the Board
Allmerica Securities Trust
- --------------------------------------------------------------------------------
"The economic outlook remains stable and the portfolio manager believes the
Trust is well-positioned to continue to provide competitive returns to
shareholders."
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- -
2
- -
<PAGE>
--------
OVERVIEW
--------
[LOGO OF AST APPEARS HERE]
-
3
-
<PAGE>
BOND &
MONEY MARKET
OVERVIEW
1992: Government and corporate bonds outperformed the stock market.
1993: U.S. economy gains momentum. Consumer spending and installment debt
increase.
1994: Federal Reserve Board raises interest rates six times in an effort to
slow down the economy and keep inflation in check, sending bond prices sharply
lower.
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: Despite the favorable outlook for bonds, a surprisingly strong economy
kindles fears about inflationary pressures and causes the Federal Reserve to
raise interest rates 0.25%.
Moving into 1997, many analysts predicted strong returns for the U.S. bond
market. But stable interest rates, despite an expanding economy, generated
sluggish returns for the bond market.
As the first quarter progressed, strong economic data, particularly in the
retail and housing segments, revealed possible signs of an overheated economy.
In an effort to squelch any uptick in inflation, the Federal Reserve Board
raised the Federal Funds rate by one quarter of one percent in the first quarter
to 5.50% on March 25, 1997. The bond market reacted sharply as investors sold
bonds, thereby driving prices lower and yields higher. As a result, most bond
funds lost money through the first quarter. The second quarter evolved with most
indicators pointing to signs of more moderate economic growth and subdued
inflation, which reduced pressure on the Federal Reserve Board to further
increase rates.
As fears of additional interest rate hikes subsided, the bond market rallied
and produced a positive 3.67% return for the second quarter. By mid-year, the
bond market's six month total return was a modest 3.07%.
Throughout the first half of 1997, the bond market was most affected by the
fact that there was little, if any, inflation. Historically, periods of low
unemployment have spurred higher inflation. But after four years of declining
unemployment, the rate of inflation in the U.S. has remained almost nonexistent.
Economic growth remains solid but not too strong.
[TIMELINE APPEARS HERE]
Convinced domestic growth will slow from 1996 levels, investors favor bonds at
the start of the year.
Signs of a strong economy raise fears over increasing interest rates and the
market softens.
In response to signs of a strong economy the Federal Reserve raises interest
rates 0.25% to head off inflation. The bond market declines.
- -
4
- -
<PAGE>
U.S. corporations are currently spending the equivalent of nearly 11.5% of real
GDP on business investments and dedicating a significant amount to information
technology.
The predominant beneficiaries of all this solid domestic growth and increased
corporate spending were corporate bonds. As of June 30, 1997, they represented
one of the best performing segments of the bond market, along with
mortgage-backed and asset-backed securities.
In contrast, yields on U.S. Treasuries dwindled. As a result of the healthy
economy and the strong equity market, the budget deficit for the fiscal year
ending September 30, 1997, is now estimated to be less than one third of the
original $155 billion forecast. This, in turn, has significantly reduced the
need for Treasury financing in the bond market and will reduce the supply of new
Treasury bonds coming into the market. Fixed income investors are therefore
fighting not only low interest rates, but a dwindling supply of new investment
opportunities. Steady demand for good fixed income securities has caused the
spread between most sectors of the bond market and U.S. Treasuries to narrow.
Overall, this means that managers are having to work harder than ever to add
value to their portfolios.
As for shorter-term money market instruments, they've become less attractive
as investors could seek to garner higher returns -- albeit with added risk --
from other investments.
Looking ahead, most market analysts predict that domestic growth will
continue to strengthen before slowing sometime in the fourth quarter of 1997.
Since projections are also calling for continued subdued inflation, interest
rates are anticipated to remain in the stable-to-low range. As in the past six
months, many analysts believe that incremental return for bond investors is
likely to come from selective investments in spread assets, such as corporate
bonds and mortgage-backed securities.
[TIMELINE APPEARS HERE]
Interest rates begin to decline as slower economic growth emerges and the
bond market begins to recover.
Stable-to-declining interest rates bode well for mortgage-backed securities
and corporate bonds.
Reduced estimates for the budget deficit limit the need for U.S. Treasury
financing.
By mid-year, the bond market overall posted a below-average return of 3.07%.
-
5
-
<PAGE>
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ALLMERICA SECURITIES TRUST
- --------------------------------------------------------------------------------
INVESTMENT ADVISER:
Allmerica Asset Management, Inc.
ABOUT THE FUND:
Seeks to generate a high rate of current income for distribution to
shareholders.
PORTFOLIO COMPOSITION: As of June 30, 1997, the sector allocation of net assets
was:
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
Corporate Notes and Bonds 77%
U.S. Government Obligations 10%
Asset-Backed Securities 9%
Foreign Bonds 2%
Cash Equivalents and Other 2%
</TABLE>
The Lehman Brothers Corporate Bond index is an unmanaged index of all publically
issued, fixed-rate, non-convertible investment grade corporate debt. The Lipper
Corporate Debt BBB-Rated Fund Average is a non-weighted index of 112 funds
within the Corporate BBB Debt Fund category.
For the six-month period ended June 30, 1997, the Allmerica Securities Trust
delivered a solid return of 3.81%.
After declining slightly in the first quarter, the U.S. bond market gained
more than 3% during the second quarter. Strong consumer demand and low inflation
fueled expansion in U.S. corporations and higher levels of investment spending.
In fact, corporate spending currently equals nearly 11.5% of real Gross Domestic
Product. Despite this activity, yield spreads remain narrow between Treasuries
and other sectors of the bond market, particularly corporates and mortgage-
backed securities.
Given the narrow spreads, the managers focused more on individual security
selection. Within the corporate sector, one of the Trust's largest positions is
Telecommunications, Inc. (TCI), a dominant cable provider.
In the banking sector, the Trust also holds several preferred positions. In
selecting these issues, the Trust first finds well-run institutions and then
looks for smaller companies which are attractive acquisitions for larger banks
seeking to expand into new regions. Based on this criteria, the Trust has
invested in securities of Zions Institutional Capital Trust, Compass Trust, and
Colonial Capital.
On the utility front, the Trust's holdings in Connecticut Light & Power
proved disappointing as they were downgraded by Standard & Poor's when the state
legislature deferred any decision on utility deregulation until next year.
In addition, for the seventh consecutive year, high-yield corporates have
been one of the best performing asset classes within the U.S. fixed income
market. Approximately 30% of the Trust's assets is allocated to below
investment-grade securities, with most of the issues rated BB-, and have the
potential for an upgrade to investment grade status within a 12 to 18 month time
frame.
Looking toward the second half of 1997, the Trust expects economic growth to
firm and the trade-off between unemployment and inflation to eventually
re-emerge. Given this outlook, the Trust remains modestly defensive in its
interest rate outlook and is positioned slightly shorter in duration than the
index.
HISTORICAL PERFORMANCE
<TABLE>
<CAPTION>
Total Return Total Return
on Net Asset Value on Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
1992 .........................11.09%.......................20.35%
1993 .........................12.65%........................6.87%
1994 .........................(2.41%).....................(12.48%)
1995 .........................18.58%.......................21.71%
1996 ......................... 5.35% .......................6.06%
Through 6/30/97 .............. 3.81% .......................6.55%
</TABLE>
Average Annual Total Returns
<TABLE>
<CAPTION>
Years ended June 30, 1997 1 year 5 year 10 year
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Allmerica Securities Trust 10.03% 8.39% 9.48%
Lehman Brothers Corporate Bond Index 8.79% 8.03% 9.47%
Lipper Corporate Debt
BBB-Rated Fund Average 8.85% 8.09% 8.83%
</TABLE>
- -
6
- -
<PAGE>
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ALLMERICA SECURITIES TRUST
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PORTFOLIO OF INVESTMENTS . June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Par Value Moody's Ratings (Note 2)
- --------------------------------------------------------------------------------
CORPORATE NOTES AND BONDS - 76.69%
<S> <C> <C> <C>
Finance - 17.32%
$ 500,000 AT&T Capital Corp., Series 4, MTN
6.26%, 02/18/99 Baa $ 499,248
1,000,000 BCH Cayman Islands, Ltd.
Yankee Subordinated Notes, Guaranteed
6.50%, 02/15/06 A 944,513
1,400,000 Capital One Financial Corp., Senior Notes
7.25%, 12/01/03 Baa 1,369,203
1,000,000 Cenfed Financial Corp.
11.17,% 12/15/01 (A) Bb 1,062,500
1,500,000 Colonial Capital II, Series A, Guaranteed
8.92%, 01/15/27 (A) NR 1,496,806
975,000 Compass Trust, Series A, Guaranteed
8.23%, 01/15/27 NR 974,949
800,000 Conseco Financing Trust III
8.80%, 04/01/27 Ba 822,684
1,000,000 First Tennessee National Corp.
Subordinated Notes
6.75%, 11/15/05 Baa 971,309
1,000,000 Homeside Lending, Inc., MTN
6.88%, 05/15/00 Baa 1,002,549
281,781 Jennifer Holding Corp.
12.25%, 12/30/98 (B) NR 289,093
539,209 Mack Trusts, Inc.
10.91%, 04/01/99 (B) NR 552,598
1,000,000 Merita Bank, Ltd., Yankee Subordinated Notes
6.50%, 01/15/06 A 953,463
683,581 Midland Funding Corp., Series C-91
Senior Secured Lease Obligation
10.33,% 07/23/02 Ba 747,797
1,000,000 The Money Store, Inc.
8.05%, 04/15/02 Ba 1,011,818
1,000,000 Providian Capital, Series A, Guaranteed
9.53%, 02/01/27 (A) Baa 1,047,452
1,000,000 Riggs Capital Trust
8.63%, 12/31/26 (A) Baa 978,584
1,000,000 St. George Bank, Ltd., Yankee Debenture
7.15%, 10/15/05 (A) Baa 994,610
1,250,000 Zions Institutional Capital Trust, Series A
Guaranteed
8.54%, 12/15/26 A 1,287,820
---------------
17,006,996
---------------
Oil, Gas and Petroleum - 13.54%
2,000,000 ANR Pipeline Co., Debenture
9.63%, 11/01/21 Baa 2,446,098
1,000,000 Clark Oil & Refining Corp., Senior Notes
9.50%, 09/15/04 Ba 1,025,000
1,000,000 Gulf Canada Resources, Ltd.
Yankee Senior Notes
8.35%, 08/01/06 Ba 1,057,500
900,000 Oryx Energy Co., Debenture
10.00%, 06/15/99 Ba 953,139
1,450,000 Seagull Energy Corp., Senior Notes
7.88%, 08/01/03 Ba 1,442,750
Oil, Gas and Petroleum (continued)
1,250,000 Snyder Oil Corp., Subordinated Notes
7.00%, 05/15/01 B 1,293,875
1,250,000 Texas Eastern Transmission Corp., Debenture
10.00%, 08/15/01 Baa 1,388,021
600,000 Texas Utilities Electric Co., First Mortgage
7.38%, 10/01/25 Baa 569,757
1,000,000 Tosco Corp.
7.00%, 07/15/00 Baa 1,007,232
1,000,000 USX-Marathon Group, Inc.
8.88%, 09/15/97 Baa 1,005,452
1,000,000 Valero Management Partnership, LP
First Mortgage, Series J-12
10.02%, 03/15/07 (B) NR 1,103,940
---------------
13,292,764
---------------
Industrial - 10.52%
2,000,000 Bethlehem Steel Corp., Senior Notes
10.38%, 09/01/03 B 2,090,000
950,000 Buckeye Cellulose Corp.
Senior Subordinated Notes
9.25%, 09/15/08 Ba 978,500
1,000,000 Georgia Gulf Corp.
7.63%, 11/15/05 Ba 966,057
649,000 Homeside, Inc., Senior Notes, Series B
11.25%, 05/15/03 (A) Ba 754,463
500,000 McDermott (J. Ray) SA
Senior Subordinated Notes
9.38%, 07/15/06 B 513,750
950,000 Owens-Illinois, Inc., Senior Notes
7.85%, 05/15/04 Ba 967,715
1,000,000 RPM, Inc., Senior Notes
7.00%, 06/15/05 Baa 988,355
2,000,000 Usinor Sacilor, Senior Notes, Series A
7.16%, 03/25/04 (B) NR 2,020,520
1,000,000 Westinghouse Electric Corp., Debenture
8.88%, 06/01/01 Ba 1,049,787
---------------
10,329,147
---------------
Communications - 7.59%
875,000 C-Tec Cable Systems, Inc., Senior Secured Notes
9.65%, 09/01/99 (B) NR 902,685
1,000,000 Comcast Cable Communications, Inc.
8.13%, 05/01/04 (A) Ba 1,040,477
1,000,000 Continental Cablevision, Inc., Senior Notes
8.50%, 09/15/01 Baa 1,056,469
750,000 Continental Cablevision, Inc., Senior Notes
8.30%, 05/15/06 Baa 795,554
555,000 GTE Corp., Debenture
8.75%, 11/01/21 A 634,758
300,000 Kerrville Telephone Co.
9.76%, 03/29/00 (B) NR 314,913
1,850,000 TCI Communications, Inc., Senior Debenture
7.88%, 02/15/26 Ba 1,763,416
1,000,000 Viacom, Inc., Senior Debenture, Guaranteed
7.63%, 01/15/16 Ba 940,817
---------------
7,449,089
---------------
</TABLE>
See Notes to Financial.
- ---------------------------------------------------
F-1
<PAGE>
<TABLE>
<CAPTION>
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ALLMERICA SECURITIES TRUST
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PORTFOLIO OF INVESTMENTS, Continued . June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Value
Par Value Moody's Ratings (Note 2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Utilities - 5.84%
$1,500,000 Connecticut Light & Power Co.
First Mortgage, Series 94D
7.88%, 10/01/24 Ba $ 1,541,626
1,247,000 North Atlantic Energy Corp.
First Mortgage, Series A
9.05%, 06/01/02 B 1,248,764
1,270,000 Sithe/Independence Funding Corp.,
Series A 9.00%, 12/30/13 Baa 1,390,251
1,500,000 Texas-New Mexico Power Co.
First Mortgage, Series U
9.25%, 09/15/00 Ba 1,555,537
-------------
5,736,178
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Transportation - 3.98%
1,000,000 AMR Corp., Debenture
10.00%, 02/01/01 Baa 1,098,673
1,437,275 Delta Airlines, Inc.
9.23%, 07/02/02 (B) NR 1,474,415
659,000 USAir, Inc., Equipment Trust, Series D
10.30%, 01/15/00 B 663,943
661,000 USAir, Inc., Equipment Trust, Series F
10.30%, 01/15/00 B 665,958
-------------
3,902,989
-------------
Consumer Products - 3.76%
1,000,000 Chiquita Brands International, Inc.,
Senior Notes 9.13%, 03/01/04 B 1,037,500
1,000,000 DiMon, Inc., Senior Notes, Series B
8.88%, 06/01/06 Ba 1,040,108
1,600,000 Ralston Purina Co., Debenture
7.75%, 10/01/15 Baa 1,612,555
---------------
3,690,163
---------------
Merchandising and Retail - 3.24%
1,000,000 Federated Department Stores, Inc.
Senior Notes
10.00%, 02/15/01 Baa 1,096,675
1,000,000 Kroger Co., Senior Subordinated Notes
10.00%, 05/01/99 Ba 1,048,961
1,000,000 USG Corp., Senior Notes
8.50%, 08/01/05 Ba 1,033,750
---------------
3,179,386
---------------
Securities Brokers, Dealers and Exchanges - 2.98%
1,000,000 Donaldson Lufkin & Jenrette, Inc.,
Senior Notes 6.88%, 11/01/05 Baa 971,242
1,000,000 Jones (Edward D.) & Co., LP
7.95%, 04/15/06 (B) NR 1,011,360
1,000,000 Legg Mason, Inc., Senior Notes
6.50%, 02/15/06 Baa 945,345
---------------
2,927,947
---------------
Health Care - 2.69%
1,250,000 Allegiance Corp.
7.30%, 10/15/06 Baa 1,253,900
1,000,000 Tenet Healthcare Corp., Senior Notes
9.63%, 09/01/02 Ba 1,075,000
300,000 Tenet Healthcare Corp.
Senior Subordinated Notes
8.63%, 01/15/07 Ba 306,000
---------------
2,634,900
---------------
Paper - 2.13%
1,000,000 Fort Howard Corp., Senior Notes
8.25%, 02/01/02 Baa 1,035,000
1,000,000 Stone Container Corp., Senior Notes
11.88%, 12/01/98 B 1,052,500
---------------
2,087,500
---------------
Printing and Publishing - 2.01%
1,000,000 Time Warner, Inc., Debenture
9.15%, 02/01/23 Ba 1,103,666
850,000 Time Warner Entertainment Co., LP
Senior Debenture
8.38%, 03/15/23 Baa 871,211
---------------
1,974,877
---------------
Manufacturing - 1.09%
1,000,000 Wyman-Gordon Co., Senior Notes
10.75%, 03/15/03 Ba 1,070,000
---------------
Total Corporate Notes and Bonds 75,281,936
(Cost $73,257,632) ---------------
U.S. GOVERNMENT OBLIGATIONS - 10.01%
U.S. Treasury Bonds - 6.74%
6,150,000 7.25%, 05/15/16 Aaa 6,413,300
200,000 7.13%, 02/15/23 Aaa 205,871
---------------
6,619,171
---------------
U.S. Treasury Notes - 3.27%
955,000 5.75%, 08/15/03 Aaa 922,172
1,000,000 6.50%, 08/15/05 Aaa 997,500
1,250,000 7.00%, 07/15/06 Aaa 1,285,938
---------------
3,205,610
---------------
Total U.S. Government Obligations 9,824,781
(Cost $9,978,197) ---------------
</TABLE>
See Notes to Financial Statements.
------------------------------------------------------
F-2
<PAGE>
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ALLMERICA SECURITIES TRUST
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PORTFOLIO OF INVESTMENTS, Continued . June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Par Value Moody's Ratings (Note 2)
- --------------------------------------------------------------------------------
ASSET-BACKED SECURITIES - 8.68%
<S> <C> <C> <C>
$1,000,000 American Airlines, Inc.
Pass-Through Trust, Series 1991-C2
9.73%, 09/29/14 A $ 1,152,640
314,486 Eaglemark Trust
Harley-Davidson, Series 1995-1
6.80%, 12/15/01 (A) Aaa 315,744
999,704 First Plus Home Loan Trust
Series 1996-2, Class A5
7.47%, 02/20/11 NR 1,018,108
1,000,000 Green Tree Recreational Equipment &
Consumer Trust
Series 1997-B, Class A-1
6.55%, 07/15/28 NR 997,188
615,683 Green Tree Financial Corp.
Series 1995-A, Class A
7.25%, 07/15/05 P 613,011
936,867 National Auto Finance, Series 1996-1, Class A
6.33%, 12/21/02 Aaa 941,205
1,000,000 Premier Auto Trust, Series 1995-4, Class A4
6.00%, 05/06/00 Aaa 1,000,300
650,000 Resolution Trust Corp.
Series 1995-1, Class A4C, CMO
6.85% 02/25/27 Aaa 645,938
1,339,328 United Airlines, Inc.
Pass-Through Trust, Series 1991-B1
9.30%, 03/22/08 Baa 1,369,342
68,443 Western Financial Grantor Trust
Series 1994-2, Class A2
6.38%, 09/01/99 Aaa 68,775
397,270 Western Financial Grantor Trust
Series 1995-2, Class A2
7.10%, 07/01/00 Aaa 401,254
---------------
Total Asset-Backed Securities 8,523,505
---------------
(Cost $8,316,125)
FOREIGN BONDS (C) - 2.58%
950,000 Republic of Colombia, Series E, MTN
8.66%, 10/07/16 (A) Ba 1,010,112
1,500,000 United Mexican States
Yankee Emerging Market Notes
8.50%, 09/15/02 Ba 1,526,250
---------------
Total Foreign Bonds 2,536,362
---------------
INVESTMENT COMPANY - 0.00%
282 State Street Bank & Trust Co. $ 282
---------------
Total Investment Company 282
---------------
(Cost $282)
Total Investments - 97.96% 96,166,866
---------------
(Cost $93,683,816)
Net Other Assets and Liabilities - 2.04% 2,004,603
---------------
Net Assets - 100.00% $ 98,171,469
===============
</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 June 30, 1997, these
securities amounted to $8,700,748 or 8.86% 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. For additional
information concerning each restricted security. (See Note 5.)
(C) U.S. currency denominated.
CMO Collateralized Mortgage Obligation
MTN Medium Term Note
FEDERAL INCOME TAX INFORMATION (SEE NOTE 2)
At June 30, 1997, the aggregate cost of investment securities for tax purposes
was $93,683,816. Net unrealized appreciation (depreciation) aggregated
$2,483,050, of which $3,304,325 related to appreciated investment securities and
$(821,275) related to depreciated investment securities.
OTHER INFORMATION
For the six months ended June 30, 1997, the aggregated cost of purchases and the
proceeds of sales, other than from short-term investments, included $11,767,520
and $5,835,262 from non-governmental issuers, respectively, and $2,497,344 and
$8,023,193 from U.S. Government and Agency issuers, respectively.
The composition of ratings of both long-term and short-term debt holdings as a
percentage of total value of investments in securities is as follows:
<TABLE>
<CAPTION>
Moody's Ratings (Unaudited)
<S> <C>
Aaa 13.72%
A 5.17
Baa 28.87
Ba 28.94
Bb 1.11
B 8.91
P .64
NR (Not Rated) 12.64
-------
100.00%
=======
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------
F-3
<PAGE>
- --------------------------------------------------------------------------------
ALLMERICA SECURITIES TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES . June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments (Note 2):
Investments at cost ....................................................................... $ 93,683,816
Net unrealized appreciation (depreciation) ................................................ 2,483,050
-------------
Total investments at value ............................................................. 96,166,866
Cash ......................................................................................... 169,443
Short-term investments held as collateral for securities loaned (Note 2) ..................... 8,577,885
Interest and dividend receivables ............................................................ 1,961,791
-------------
Total Assets............................................................................ 106,875,985
-------------
LIABILITIES:
Advisory fee payable (Note 3)................................................................. 41,053
Accrued expenses and other payables .......................................................... 85,578
Collateral for securities loaned (Note 2)..................................................... 8,577,885
-------------
Total Liabilities ...................................................................... 8,704,516
-------------
NET ASSETS....................................................................................... $ 98,171,469
=============
NET ASSETS consist of:
Par Value (Note 4)............................................................................ $ 8,592,306
Paid-in capital .............................................................................. 88,551,952
Undistributed (distribution in excess of)net investment income ............................... 19,188
Accumulated (distribution in excess of) net realized gain (loss) on investments sold ......... (1,475,027)
Net unrealized appreciation (depreciation) of investments .................................... 2,483,050
-------------
TOTAL NET ASSETS................................................................................. $ 98,171,469
=============
Shares of beneficial interest outstanding (10,000,000 authorized shares with par value of $1.00). 8,592,306
NET ASSET VALUE
Per Share..................................................................................... $ 11.426
=============
MARKET VALUE
Per Share..................................................................................... $ 10.500
=============
</TABLE>
See Notes to Financial Statements.
--------------------------------------
F-4
<PAGE>
- --------------------------------------------------------------------------------
ALLMERICA SECRUITIES TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS . For the Six Months Ended June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Interest (Note 2) ............................................................................ $3,956,274
Dividends (Note 2) ........................................................................... 19,369
----------
Total investment income ................................................................... 3,975,643
----------
EXPENSES:
Investment advisory fees (Note 3) ............................................................ 245,961
Fund accounting fees (Note 3) ................................................................ 16,218
Transfer agent fees........................................................................... 9,380
Legal fees ................................................................................... 3,951
Audit fees ................................................................................... 3,005
Trustees' fees and expenses (Note 3) ......................................................... 4,196
Reports to shareholders ...................................................................... 62,533
New York Stock Exchange fees ................................................................. 7,746
Miscellaneous ................................................................................ 27,376
----------
Total expenses ............................................................................ 380,366
----------
NET INVESTMENT INCOME ........................................................................... 3,595,277
----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS (Note 2):
Net realized gain (loss) on investments sold ................................................. (305,190)
Net change in unrealized appreciation (depreciation) of investments........................... 354,679
----------
NET GAIN (LOSS) ON INVESTMENTS .................................................................. 49,489
----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS ............................................................. $ 3,644,766
==========
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1997 December 31,
(Unaudited) 1996
---------------------------------
<S> <C> <C>
NET ASSETS at beginning of period $ 98,135,471 $ 100,483,120
-------------- -------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income............................................. 3,595,277 7,242,093
Net realized gain (loss) on investments sold...................... (305,190) 824,395
Net change in unrealized appreciation (depreciation) of investments 354,679 (3,024,365)
-------------- -------------
Net increase (decrease) in net assets resulting from operations .. 3,644,766 5,042,123
-------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ............................................ (3,608,768) (7,389,772)
-------------- -------------
Total increase (decrease) in net assets ....................... 35,998 (2,347,649)
-------------- -------------
NET ASSETS at end of period(including line A) ....................... $ 98,171,469 $ 98,135,471
============== =============
(A) Undistributed (distribution in excess of) net investment income.. $ 19,188 $ 32,679
============== =============
OTHER INFORMATION:
Share Transactions:
Issued to shareholders in reinvestment of dividends .............. -- --
============== =============
</TABLE>
See Notes to Financial Statements.
- ----------------------------------------------------------------------
F-5
<PAGE>
- --------------------------------------------------------------------------------
ALLMERICA SECURITIES TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS - For a Share Outstanding Throughout each Period
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Years Ended December 31,
----------------------------------------------------------------
June 30, 1997
(Unaudited) 1996 1995 1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period ......... $ 11.421 $ 11.694 $ 10.644 $ 11.773 $ 11.302 $ 11.084
--------- --------- --------- --------- --------- ---------
Income from Investment Operations:
Net investment income ..................... 0.418 0.843 0.860 0.843 0.909 0.954
Net realized and unrealized gain (loss)
on investments.......................... 0.007 (0.256) 1.050 (1.122) 0.472 0.234
--------- --------- --------- --------- --------- ---------
Total from Investment Operations:.... 0.425 0.587 1.910 (0.279) 1.381 1.188
--------- --------- --------- --------- --------- ---------
Less Distributions:
Dividends from net investment income....... (0.420) (0.860) (0.860) (0.850) (0.910) (0.970)
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in net asset value.... 0.005 (0.273) 1.050 (1.129) 0.471 0.218
--------- --------- --------- --------- --------- ---------
Net Asset Value, end of period................ $ 11.426 $11.421 $11.694 $10.644 $11.773 $11.302
========= ========= ========= ========= ========= =========
Market Value, end of period................... $ 10.500 $10.250 $10.500 $ 9.375 $ 11.625 $ 11.750
========= ========= ========= ========= ========= =========
Total Return on Market Value, end of period... 6.55%** 6.06% 21.71% (12.48)% 6.87% 20.35%
Ratios/Supplemental Data:
Net Assets, end of period(000's).............. $ 98,171 $98,135 $100,483 $91,458 $101,161 $95,417
Ratios to average net assets:
Net investment income ..................... 7.43%* 7.44% 7.64% 7.59% 7.72% 8.49%
Operating expenses ........................ 0.79%* 0.75% 0.77% 0.78% 0.74% 0.76%
Management Fee............................. 0.51% 0.50% 0.51% 0.50% 0.51% 0.53%
Portfolio Turnover Rate ...................... 14% 47% 42% 42% 55% 55%
</TABLE>
- ------------------------------
* Annualized
** Not Annualized
See Notes to Financial Statements.
-----------------------------------------
F-6
<PAGE>
- --------------------------------------------------------------------------------
ALLMERICA SECURITIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS . June 30, 1997 (Unaudited)
- -------------------------------------------------------------------------------
1. ORGANIZATION
Allmerica Securities Trust (the "Trust") was organized as a Massachusetts
business trust on June 30, 1986 and is registered under the Investment Company
Act of 1940, as amended, as a diversified, closed-end management investment
company.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The following is a summary of significant accounting policies which are in
conformity with generally accepted accounting principles consistently followed
by the Trust in the preparation of its financial statements.
Security Valuation: Corporate debt securities and debt securities of the U.S.
government and its agencies (other than short-term investments) are valued by an
independent pricing service approved by the Board of Trustees which utilizes
market quotations and transactions, quotations from dealers and various
relationships among securities in determining value. If not valued by a pricing
service, such securities are valued at prices obtained from independent brokers.
Investments with prices that cannot be readily obtained are carried at fair
value as determined in good faith under consistently applied procedures
established by and under the supervision of the Board of Trustees. Short-term
investments that mature in 60 days or less are valued at amortized cost. At June
30, 1997, prices of securitites whose total value represented 10.60% of net
assets were available only from a principal market maker. These prices may
differ from what would have been used had a broader market for the securities
existed.
Securities Transactions and Investment Income: Securities transactions are
recorded on the trade date. Net realized gains and losses on investments sold
are recorded on the basis of identified cost. Interest income is recorded on the
accrual basis and consists of interest accrued and, if applicable, discounts
earned on zero coupon bonds, original issue discount bonds, stepped-coupon bonds
and payment in kind bonds are accreted. Dividend income is recorded on the
ex-dividend date.
Federal Taxes: The Trust 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, the Trust will not be subject to Federal income taxes
to the extent that it distributes all of its taxable income and net realized
gains, if any, for its tax year ending December 31. In addition, by distributing
during each calendar year substantially all of its net investment income,
capital gains and certain other amounts, if any, the Trust will not be subject
to Federal excise tax. Therefore, no Federal income tax provision is required.
Paid-in capital, undistributed net investment income and accumulated net
realized gain (loss) have been adjusted in the Statement of Assets and
Liabilities for permanent book-tax differences for the year ended December 31,
1996.
Distribution to Shareholders: Dividends to shareholders from net investment
income are recorded on the ex-dividend date and paid quarterly. Net realized
capital gains, if any, are distributed at least annually. Income and capital
gain distributions are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles. These
differences are primarily due to differing treatment for paydown gains/losses on
certain securities, market discounts and losses deferred due to wash sales. Any
taxable income or gain remaining at fiscal year end will be distributed in the
following year.
Permanent book-tax differences, if any, are not included in ending undistributed
net investment income for the purpose of calculating net investment income per
share in the Financial Highlights.
- --------------------------------------
F-7
<PAGE>
- --------------------------------------------------------------------------------
ALLMERICA SECURITIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, Continued . June 30, 1997 (Unaudited)
- -------------------------------------------------------------------------------
Securities Lending: The Trust loans securities to certain brokers who pay the
Trust negotiated lenders' fees. Collateral must be maintained at a value at
least equal to the value at all times of the securities lent. At June 30, 1997,
bonds with aggregate value of approximately $8,258,358 were on loan to brokers.
The loans were secured with cash collateral of $8,577,885, which was
subsequently invested in cash equivalents. The related income earned was $11,711
which is included in interest income for the period ended June 30, 1997.
Expenses: Most expenses of the Trust can be directly attributable to the Trust.
Expenses which can not be directly attributable to the Trust are allocated based
upon relative net assets among the Trust and two other registered investment
companies within First Allmerica Financial Life Insurance Company.
3. INVESTMENT ADVISORY FEES AND OTHER RELATED PARTY TRANSACTIONS
Allmerica Asset Management, Inc. ("AAM"), a wholly-owned subsidiary of First
Allmerica Financial Life Insurance Company ("First Allmerica"), serves as
Investment Adviser to the Trust. For these services, the Trust pays AAM
aggregate monthly compensation at an annual rate of (a) 3/10 of 1% of average
net assets plus (b) 2-1/2% of the amount of interest and dividend income.
To the extent that normal operating expenses of the Trust, excluding taxes,
interest, brokerage commissions and extraordinary expenses, but including the
investment advisory fee, exceed 1.50% of the first $30,000,000 of the Trust's
average weekly net assets, and 1% of any excess of such value over $100,000,000,
AAM will bear such excess expenses.
AAM has entered into an Administrative Services Agreement with First Data
Investor Services Group, Inc. ("FDISG"), a wholly-owned subsidiary of First Data
Corporation, whereby FDISG performs administrative services for the Trust and is
entitled to receive an administrative fee and certain out-of-pocket expenses.
AAM is solely responsible for the payment of the administration fee to FDISG. In
a separate agreement, FDISG receives fees from the Trust for certain fund
accounting services provided in its capacity as pricing and bookkeeping agent.
The Trust pays no salaries or compensation to any of its officers. Trustees who
are not directors, officers, or employees of the Trust or the 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. SHARES OF BENEFICIAL INTEREST
There are 10,000,000 shares of $1.00 par value common stock authorized.
5. RESTRICTED SECURITIES
At June 30, 1997, the Trust owned the following restricted securities
constituting 7.81% of net assets which may not be publicly sold without
registration under the Securities Act of 1933. The Trust would bear the
registration costs in connection with the disposition of restricted securities
held in the portfolio. The Trust does not have the right to demand that such
securities be registered. The value of these securities is determined by
valuations supplied by a pricing service or brokers or, if not available, in
good faith by or at the direction of the Trustees. Additional information on
restricted securities is as follows:
<TABLE>
<CAPTION>
Date of Par Cost at
Issuer Acquisition Amount Acquisition Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
C-Tec Cable Systems, Inc. 07/06/89 $ 875,000 $ 875,000 $ 902,685
Delta Airlines, Inc. 12/12/91 1,437,275 1,454,231 1,474,415
Jennifer Holding Corp. 07/17/87 281,781 299,483 289,093
Jones (Edward D.) & Co., L.P. 05/06/94 1,000,000 1,000,000 1,011,360
Kerrville Telephone Co. 02/09/90 300,000 300,000 314,913
Mack Trusts, Inc. 07/14/95 539,209 560,026 552,598
Usinor Sacilor 01/14/94 2,000,000 2,000,000 2,020,520
Valero Management Partnership, L.P. 03/04/87 1,000,000 1,000,000 1,103,940
-----------------------------------------------
Total $ 7,488,740 $ 7,669,524
===============================================
</TABLE>
---------------------------------------
F-8
<PAGE>
- --------------------------------------------------------------------------------
ALLMERICA SECURITIES TRUST
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
SHAREHOLDER VOTING RESULTS (Unaudited):
At the Annual Meeting of Shareholders held on April 16, 1997, results of
shareholder voting for the election of Trustees were as follows:
<TABLE>
<CAPTION>
Shares for Name of Trustee % of Shares Voted Shares Withheld
---------- --------------- ----------------- ---------------
<S> <C> <C> <C>
6,389,776 John F. O'Brien 97.97 132,089
6,425,986 Russell E. Fuller 98.53 95,879
6,389,072 Gordon Holmes 97.96 132,793
6,421,402 John P. Kavanaugh 98.46 100,463
6,384,795 Bruce E. Langton 97.90 137,070
6,387,930 Attiat F. Ott 97.95 133,935
6,429,119 Paul D. Paganucci 98.58 92,746
6,426,740 Richard M. Reilly 98.54 95,125
6,372,369 Ranne P. Warner 97.71 149,496
</TABLE>
By a vote of 6,366,266 shares in favor, representing 74.09% of shares
outstanding, with 155,599 shares withheld, shareholders ratified and approved
the appointment of Price Waterhouse LLP as independent accountants for the Trust
for the fiscal year ending December 31, 1997.
QUARTERLY DATA (Unaudited):
<TABLE>
<CAPTION>
Net realized and Net increase (decrease)
Net investment unrealized gains (losses) in net assets resulting
income on investments from operations
-------------- ------------------------- -----------------------
Total
Quarterly Investment Per Per Per
period Income Amount Share Amount Share Amount Share
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1995
3/31/95 2,011,795 1,831,470 0.21 2,300,857 0.27 4,132,327 0.48
6/30/95 2,005,417 1,822,485 0.21 4,093,980 0.48 5,916,465 0.69
9/30/95 2,075,239 1,896,060 0.22 432,024 0.05 2,328,084 0.27
12/31/95 2,042,117 1,842,631 0.22 2,195,093 0.25 4,037,724 0.47
1996
3/31/96 2,005,042 1,816,051 0.211 (3,493,629) (0.406) (1,677,578) (0.195)
6/30/96 1,997,565 1,859,532 0.217 (856,366) (0.100) 1,003,166 0.117
9/30/96 1,996,408 1,795,479 0.209 467,738 0.054 2,263,217 0.263
12/31/96 1,977,684 1,771,031 0.206 1,682,287 0.196 3,453,318 0.402
1997
3/31/97 1,985,192 1,767,212 0.205 (1,936,148) (0.224) (168,936) (0.019)
6/30/97 1,990,451 1,828,065 0.213 1,985,637 0.231 3,813,702 0.444
</TABLE>
- --------------------------------------
F-9
<PAGE>
- --------------------------------------------------------------------------------
ALLMERICA SECURITIES 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 investor's
shares, when sold may be worth more or less than their original cost.
This report is authorized for distribution to existing shareholders of Allmerica
Securities Trust.
------------------------------------
F-10
<PAGE>
SHAREHOLDER INFORMATION
- ------------------------------------------------------------------------------
AUTOMATIC DIVIDEND
INVESTMENT PLAN
As a shareholder, you may participate in the Trust's Automatic Dividend
Investment Plan. Under the plan, dividends and other distributions are
automatically invested in additional full and fractional shares of the Trust to
be held on deposit in your account. Such dividends and other distributions are
invested at the net asset value if lower than market price plus brokerage
commission or, if higher, at the market price plus brokerage commission. You
will receive a statement after each payment date for a dividend or other
distribution that will show the details of the transaction and the status of
your account. You may terminate participation in or rejoin the plan at any time.
CASH INVESTMENT PLAN
The cash investment plan provides a systematic, convenient and inexpensive
means to increase your investment in the Trust by putting your cash to work. The
plan permits you to invest amounts ranging from $25 to $1,000 in any one month
to purchase additional shares of the Trust. Regular monthly investment is not
required.
Your funds are consolidated with funds of other participants to purchase
shares. Shares are purchased in bulk and you realize the commission savings. You
pay only a service charge of $1.00 per transaction and your proportionate share
of the brokerage commission.
Your account will be credited with full and fractional shares purchased.
Following each investment, you will receive a statement showing the details of
the transaction and the current status of the account. The plan is voluntary and
you may terminate at any time.
<PAGE>
[LOGO OF ALLMERICA FINANCIAL APPEARS HERE]
First Allmerica Financial Life Insurance Company . Allmerica Financial Life
Insurance and Annuity Company (licensed in all states except NY & HI)
Allmerica Trust Company, N.A. . Allmerica Investments, Inc. . Allmerica
Investment Management Company, Inc.
Allmerica Asset Management, Inc. . Allmerica Property & Casualty Companies,
Inc. . The Hanover Insurance Company
Sterling Risk Management, Inc. . Citizens Corporation . Citizens Insurance
Company of America . AMGRO, Inc.
440 Lincoln Street, Worcester, Massachusetts 01653
