<PAGE>
[Logo]
October 2000
Dear Valued Client:
Allmerica Securities Trust Facts
At September 30, 2000
Market Value $ 9.563
Net Asset Value $10.806
Total Net Assets (000's) $92,851
Shares Outstanding (000's) 8,592
* Net Investment Income Per Share $ 0.60
* Increase/Decrease in
Per Share Value Resulting
from Investment Operations $ 0.46
Total Returns at 9/30/00
Allmerica Securities Trust
Nine Months 4.24%
Twelve Months 3.90%
Lehman Brothers Corporate
Bond Index
Nine Months 5.80%
Twelve Months 5.84%
* For nine months ended September 30, 2000
In contrast to the inverted curve at the beginning of the quarter, the yield
curve flattened dramatically, resulting in a slightly more normal curve by
quarter-end. The yield spread between two-year Treasury notes and ten-year notes
has narrowed from 34 to just 16 basis points over the quarter. This action
largely resulted from the market's view that the Federal Reserve may be finished
with its tightening policy and may be near adoption of a neutral monetary policy
directive. Slowing growth in a number of economic data have confirmed that the
Federal Reserve's six tightening moves are having the desired effect of reducing
GDP growth to a more sustainable level. Meanwhile, inflation appears to be well
behaved following a slight rise earlier this year.
Despite these positive developments, the manager anticipates the Federal Reserve
will maintain its tightening bias through early next year due to the fact that
actual GDP growth has yet to slow measurably and the tight labor market
persists. Thus far, the economy could be said to have downshifted from fifth to
fourth gear, hardly a significant slow-down and one that cannot yet be
guaranteed, since powerful momentum still exists in such areas as capital
spending and technology. The Federal Reserve may be poised for further rate
hikes unless real evidence of a slower pace of growth emerges.
The total return for the Allmerica Securities Trust was 1.68% for the third
quarter, while the Lehman Brothers Corporate Bond Index return for the same
period was 3.04%. Much of the underperformance was due to the fund's allocation
to high yield bonds and credit concerns in individual securities. Most every
investor in corporate bonds has felt some pain this year due to earnings
problems and credit blow-ups, particularly in the high yield market. Event risk
is high as the stock market leadership tables are rotating, and merger activity
is as strong as ever. Corporate spreads have now largely discounted most or all
of this potential bad news and appear attractive enough to warrant our continued
investment in the sector.
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>
ALLMERICA SECURITIES TRUST
PORTFOLIO OF INVESTMENTS, SEPTEMBER 30, 2000 (UNAUDITED)
Moody's
Par Value Ratings Par Value
--------- ------- ---------
U.S. GOVERNMENT OBLIGATIONS - 22.1%
Fannie Mae - 2.2%
$2,000,000 7.00%, 07/15/05 Aaa $ 2,034,728
-----------
U.S. Treasury Bonds - 12.0%
3,300,000 7.13%, 02/15/23 Aaa 3,706,313
5,150,000 7.25%, 05/15/16 Aaa 5,730,987
1,450,000 7.63%, 11/15/22 Aaa 1,712,812
-----------
11,150,112
-----------
U.S. Treasury Notes - 7.9%
3,000,000 5.63%, 05/15/08 Aaa 2,942,814
1,000,000 6.00%, 08/15/09 Aaa 1,004,063
1,850,000 6.50%, 02/15/10 Aaa 1,926,312
1,000,000 6.75%, 05/15/05 Aaa 1,035,938
415,000 7.00%, 07/15/06 Aaa 436,399
-----------
7,345,526
-----------
Total U.S. Government Obligations 20,530,366
(Cost $20,479,149) -----------
CORPORATE NOTES AND BONDS - 62.0%
Airlines - 2.8%
1,000,000 AMR Corp., Debenture
10.00%, 02/01/01 Baa2 1,005,375
366,595 Delta Air Lines, Inc.
9.23%, 07/02/02 (a) NR 371,662
1,147,082 United Air Lines, Inc.
9.30%, 03/22/08 Baa1 1,204,378
-----------
2,581,415
-----------
Automotive - 1.4%
1,000,000 Federal-Mogul Co.
7.38%, 01/15/06 Ba2 390,000
1,000,000 Ford Motor Credit Co.
5.80%, 01/12/09 A2 886,014
-----------
1,276,014
-----------
Banking - 9.7%
525,000 Bank of America Corp.
7.13%, 09/15/06 Aa2 524,370
1,000,000 BSCH Issuance Ltd.
7.63%, 09/14/10 A1 997,925
1,400,000 Capital One Financial Corp.
7.25%, 12/01/03 Baa3 1,377,884
1,000,000 Chase Manhattan Corp.
6.38%, 02/15/08 A1 950,033
1,500,000 Colonial Capital II, Series A, Guaranteed
8.92%, 01/15/27 (b) BB 1,264,009
975,000 Compass Trust I, Series A
8.23%, 01/15/27 A3 806,342
550,000 MBNA Corp., Senior Notes, MTN
6.96%, 09/12/02 Baa2 545,850
500,000 Pinnacle Partners
8.83%, 08/15/04 (c) Ba1 505,423
1,000,000 Providian Capital, Series A, Guaranteed
9.53%, 02/01/27 (c) Ba3 846,334
1,000,000 Riggs Capital Trust
8.63%, 12/31/26 (c) Baa3 774,938
400,000 Wells Fargo Bank NA
7.55%, 06/21/10 Aa2 408,240
-----------
9,001,348
-----------
Beverages, Food & Tobacco - 1.7%
$1,000,000 DiMon, Inc., Senior Notes, Series B
8.88%, 06/01/06 Ba2 914,511
700,000 J. Seagram & Sons, Inc.
7.60%, 12/15/28 Baa3 691,273
-----------
1,605,784
-----------
Building Materials - 2.2%
1,000,000 RPM, Inc., Senior Notes
7.00%, 06/15/05 Baa2 970,280
1,000,000 USG Corp., Senior Notes
8.50%, 08/01/05 Baa1 1,041,274
-----------
2,011,554
-----------
Communications - 4.2%
1,000,000 Global Crossing Holding Ltd.
9.13%, 11/15/06 Ba2 990,000
1,000,000 Lucent Technologies, Inc.
6.45%, 03/15/29 A2 840,818
950,000 Metromedia Fiber Network, Inc.
10.00%, 11/15/08 B2 888,250
500,000 Williams Communications Group, Inc.
11.70%, 08/01/08 (c) B2 477,500
950,000 Winstar Communications, Inc.
12.75%, 04/15/10 (c) B3 688,750
-----------
3,885,318
-----------
Computers & Information - 1.2%
1,075,000 Hewlett-Packard Co.
7.15%, 06/15/05 Aa2 1,090,174
-----------
Electric Utilities - 3.9%
1,550,000 Connecticut Light & Power Co.,
First Mortgage, Series D
7.88%, 10/01/24 Baa3 1,558,172
1,000,000 East Coast Power LLC
7.07%, 03/31/12 Baa3 914,530
577,000 North Atlantic Energy Corp.,
First Mortgage, Series A
9.05%, 06/01/02 Ba2 582,682
600,000 Texas Utilities Co.
7.38%, 10/01/25 A3 556,376
-----------
3,611,760
-----------
Electronics - 0.5%
500,000 Raytheon Co.
6.45%, 08/15/02 Baa2 494,109
-----------
Entertainment & Leisure - 2.6%
800,000 Royal Caribbean Cruises, Ltd.
6.75%, 03/15/08 Baa2 693,834
750,000 Royal Caribbean Cruises, Ltd.
8.13%, 07/28/04 Baa2 728,604
1,000,000 Time Warner Cos., Inc.
7.57%, 02/01/24 Baa3 957,711
-----------
2,380,149
-----------
Financial Services - 3.7%
750,000 Finova Capital Corp.
6.13%, 03/15/04 Ba1 555,465
250,000 Finova Capital Corp.
7.25%, 11/08/04 Ba1 188,284
649,000 Homeside International, Inc.,
Senior Notes
11.25%, 05/15/03 A1 697,675
1,000,000 Legg Mason, Inc., Senior Notes
6.50%, 02/15/06 Baa1 956,124
1,000,000 Money Store, Inc., Senior Notes,
Guaranteed
8.05%, 04/15/02 A1 1,014,351
-----------
3,411,899
-----------
Forest Products & Paper - 1.0%
950,000 Republic Group, Inc.,
Senior Subordinated Notes
9.50%, 07/15/08 B2 951,187
-----------
Health Care Providers - 2.0%
675,000 Allegiance Corp.
7.30%, 10/15/06 A2 670,068
1,000,000 Tenet Healthcare Corp., Senior Notes
7.63%, 06/01/08 Ba1 946,250
300,000 Tenet Healthcare Corp.,
Senior Subordinated Notes
8.63%, 01/15/07 Ba3 297,000
-----------
1,913,318
-----------
Industrial - Diversified - 1.1%
1,000,000 General Electric Capital Corp.
7.50%, 05/15/05 Aaa 1,025,587
-----------
Media - Broadcasting & Publishing - 8.1%
1,000,000 Adelphia Communications
10.88%, 10/01/10 B2 980,000
1,000,000 Chancellor Media Corp.
8.00%, 11/01/08 Ba1 1,010,000
750,000 Continental Cablevision, Inc.,
Senior Notes
8.30%, 05/15/06 A2 780,076
1,000,000 CSC Holdings, Inc., Debenture
7.88%, 02/15/18 Ba1 926,424
1,000,000 Lenfest Communications, Inc.
8.38%, 11/01/05 Baa2 1,043,718
1,000,000 Liberty Media Group
7.88%, 07/15/09 Baa3 984,185
750,000 Time Warner Entertainment Co., LP,
Debenture
8.38%, 03/15/23 Baa2 774,314
1,000,000 Viacom, Inc., Senior Debenture,
Guaranteed
7.63%, 01/15/16 Baa1 1,001,769
-----------
7,500,486
-----------
Metals - 1.5%
1,000,000 LTV Corp., Senior Notes, Guaranteed
8.20%, 09/15/07 Ba3 490,000
1,000,000 Lukens, Inc.
7.63%, 08/01/04 Ba3 919,281
-----------
1,409,281
-----------
Oil & Gas - 5.5%
2,000,000 ANR Pipeline Co., Debenture
9.63%, 11/01/21 Baa1 2,292,072
500,000 Enron Corp.
7.63%, 09/10/04 Baa1 508,042
1,250,000 Texas Eastern Transmission Corp.,
Debenture
10.00%, 08/15/01 A2 1,279,620
1,000,000 Tosco Corp.
8.13%, 02/15/30 Baa2 1,010,091
-----------
5,089,825
-----------
Retailers - 3.4%
1,225,000 Federated Department Stores
8.50%, 06/01/10 Baa1 1,225,333
950,000 Meyer (Fred), Inc.
7.38%, 03/01/05 Baa3 939,805
1,000,000 Meyer (Fred), Inc.
7.45%, 03/01/08 Baa3 967,269
-----------
3,132,407
-----------
Securities Broker - 0.5%
425,000 Morgan Stanley Dean Witter & Co.
7.75%, 06/15/05 Aa3 437,572
-----------
Telephone Systems - 4.3%
500,000 AT & T Corp.
7.65%, 09/15/06 Baa3 501,454
1,175,000 GTE California, Inc.
6.70%, 09/01/09 Aa3 1,119,746
1,000,000 Qwest Capital Funding
7.90%, 08/15/10 (c) Baa1 1,019,685
900,000 Sprint Capital Corp.
7.63%, 06/10/02 Baa1 911,955
500,000 US West Communications, Inc.
6.38%, 10/15/02 A2 492,894
-----------
4,045,734
-----------
Transportation - 0.7%
750,000 CSX Corp.
6.25%, 10/15/08 Baa2 682,342
-----------
Total Corporate Notes And Bonds 57,537,263
(Cost $59,483,846) -----------
ASSET-BACKED AND MORTGAGE-BACKED SECURITIES - 8.9%
1,000,000 American Airlines, Inc., Pass-Through Trust,
Series 1991-C2
9.73%, 09/29/14 A2 1,119,630
1,000,000 BankBoston RV Asset Backed Trust,
Series 1997-1, Class A8, CMO
6.54%, 02/15/09 Aaa 993,730
750,000 Capital One Master Trust,
Series 1998-4, Class A
5.43%, 01/15/07 Aaa 721,830
885,957 DLJ Commercial Mortgage Corp.,
Series 1998-CF2, Class A1A
5.88%, 11/12/31 Aaa 848,689
1,000,000 Government Lease Trust,
Series GSA1, Class A-2
6.18%, 05/18/05 (c) Aaa 978,250
178,500 Green Tree Financial Corp.,
Series 1995-A, Class A
7.25%, 07/15/05 Baa3 173,929
285,703 Green Tree Recreation Equipment &
Consumer Trust, Series 1997-B,
Class A1, CMO
6.55%, 07/15/28 (b) AAA 283,814
666,576 Jones (Edward D.) & Co., LP
7.95%, 04/15/06 (a) NR 666,156
314,632 Midland Cogeneration Venture LP,
Series C-91
10.33%, 07/23/02 Baa2 320,909
87,123 National Auto Finance, Series 1996-1,
Class A, CMO
6.33%, 12/21/02 Aaa 86,673
1,270,000 Sithe/Independence Funding Corp.,
Series A
9.00%, 12/30/13 Baa3 1,346,937
700,000 Valero Management Partnership, LP
10.02%, 03/15/07 (a) NR 742,889
-----------
Total Asset-Backed And
Mortgage-Backed Securities 8,283,436
(Cost $8,198,321) -----------
FOREIGN BONDS (d) - 3.0%
1,000,000 Repsol International Finance
7.45%, 07/15/05 A2 1,010,643
1,000,000 St. George Bank, Ltd., Yankee Debenture
7.15%, 10/15/05 (c) Baa1 985,545
250,000 Telefonica Europe BV
7.75%, 09/15/10 A2 249,115
500,000 United Mexican States,
Yankee Emerging Market Notes
8.50%, 09/15/02 Baa3 502,500
-----------
Total Foreign Bonds 2,747,803
(Cost $2,579,780) -----------
Shares Value
------ -----
INVESTMENT COMPANY - 0.1%
91,730 SSgA Prime Money Market Fund NR $ 91,730
-----------
Total Investment Company 91,730
(Cost $91,730) -----------
Total Investments - 96.1% 89,190,598
(Cost $90,832,826) -----------
Net Other Assets and Liabilities - 3.9% 3,659,927
-----------
Total Net Assets - 100.0% $92,850,525
===========
----------
a Restricted Security - Represents ownership in a private placement investment
which has not been registered with the Securities and Exchange Commission
under the Securities Act of 1933. At September 30, 2000, these securities
amounted to $1,780,707 or 1.9% of net assets.
b Standard & Poor's (S&P) credit ratings are used in the absence of a rating
by Moody's Investors, Inc.
c Security 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 September 30, 2000,
these securities amounted to $6,276,425 or 6.8% of net assets.
d U.S. currency denominated.
CMO Collateralized Mortgage Obligation
MTN Medium Term Note
--------------------------------------------------
Moody's Quality Ratings*
Percentage of Fund's Total Investments
Aaa 29%
Aa 4%
A 14%
Baa 35%
Ba 12%
B 4%
Not Rated 2%
* Standard & Poor's (S&P) credit ratings are used
in the absence of a rating by Moody's
--------------------------------------------------
--------------------------------------------------
Security Diversification
Percentage of Fund's Total Investments
U.S Government Obligations 23%
Asset-Backed and
Mortgage-Backed Securities 9%
Foreign Bonds 3%
Corporate Notes and Bonds 65%
--------------------------------------------------
Shareholder inquiries 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>
<TABLE>
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STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2000 (UNAUDITED)
---------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments:
Investments at cost ............................................................................ $90,832,826
Net unrealized appreciation (depreciation) ..................................................... (1,642,228)
-----------
Total investments at value ................................................................... 89,190,598
Cash ............................................................................................. 7,731
Receivable for investments sold .................................................................. 2,966,885
Short-term investments held as collateral for securities loaned .................................. 13,688,000
Interest and dividend receivables ................................................................ 1,772,565
-----------
Total Assets ................................................................................. 107,625,779
-----------
LIABILITIES:
Payable for investment purchased ................................................................. 907,420
Advisory fee payable ............................................................................. 40,316
Trustees' fees and expenses payable .............................................................. 4,775
Accrued expenses and other payables .............................................................. 134,743
Collateral for securities loaned ................................................................. 13,688,000
-----------
Total Liabilities ............................................................................ 14,775,254
-----------
NET ASSETS ......................................................................................... $92,850,525
===========
NET ASSETS consist of:
Par Value ........................................................................................ $ 8,592,306
Paid-in capital .................................................................................. 88,445,043
Undistributed (distribution in excess of) net investment income .................................. (28,760)
Accumulated (distribution in excess of) net realized gain (loss) on investments sold ............. (2,515,836)
Net unrealized appreciation (depreciation) of investments ........................................ (1,642,228)
-----------
TOTAL NET ASSETS ................................................................................... $92,850,525
===========
Shares of beneficial interest outstanding (10,000,000 authorized shares with par value of $1.00) .. 8,592,306
NET ASSET VALUE
Per share ........................................................................................ $ 10.806
===========
MARKET VALUE (closing price on New York Stock Exchange)
Per share ........................................................................................ $ 9.563
===========
</TABLE>
<TABLE>
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STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED)
---------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
Interest (including income on securities loaned of $18,408) ...................................... $ 5,593,802
-----------
EXPENSES
Investment advisory fees ......................................................................... 353,499
Custodian and Fund accounting fees ............................................................... 49,230
Transfer agent fees .............................................................................. 41,325
Legal fees ....................................................................................... 3,260
Audit fees ....................................................................................... 21,748
Trustees' fees and expenses ...................................................................... 11,232
Reports to shareholders .......................................................................... 32,844
New York Stock Exchange fees ..................................................................... 7,185
Miscellaneous .................................................................................... 3,255
-----------
Total exepenses ................................................................................ 523,578
-----------
NET INVESTMENT INCOME .............................................................................. 5,070,224
-----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments sold ................................................... (2,498,504)
Net change in unrealized appreciation (depreciation) of investments ............................ 1,361,214
-----------
NET GAIN (LOSS) ON INVESTMENTS ..................................................................... (1,137,290)
-----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS ................................................................. $ 3,932,934
===========
</TABLE>
<PAGE>
Corporate bonds were truly a mixed bag this quarter. On the one hand, corporate
credit quality is strong after a lengthy period of rapid productivity growth and
respectable top-line growth. On the other hand, the rosy economic landscape that
helped produce those results appears to be drawing to a close, leaving many
companies struggling to keep pace with investors' profit growth expectations.
This second point has caused many companies' stock prices to plummet, which has
forced CEOs with free cash flow to entertain stock buyback programs in lieu of
debt reductions.
--------------------------------------------------------------------------------
MATURITY DIVERSIFICATION
PERCENTAGE OF FUND'S TOTAL INVESTMENTS
9% 17% 39% 14% 21%
Under 3 3-5 5-10 10-20 20-Over
Years
--------------------------------------------------------------------------------
----------------------------------------------------
Bond Equivalent U.S. Treasury Curves
Yield Percentage
Maturity 12/31/99 9/30/00
3 Months 5.31% 6.20%
6 Months 5.73% 6.28%
1 year 5.96% 6.08%
2 years 6.24% 5.97%
5 years 6.34% 5.84%
10 years 6.44% 5.80%
30 years 6.48% 5.88%
----------------------------------------------------
The end result is that corporate credit quality has probably peaked and may
begin to show signs of deterioration next year if GDP growth begins to tail off.
Due to this outlook on the fundamentals, higher-quality corporates are favored,
particularly in the long end and BBB-rated corporates in the short end of the
curve. In addition, holdings which threaten to continue to underperform are
being sold. On the other hand, too many of certain issues have been sold,
resulting in the decision to hold out for ultimate recovery in select holdings,
which have taken especially large valuation hits. Although this quarter's
restructuring has contributed to underperformance, the Fund is now better
positioned for the future.
Looking ahead, we plan to continue overhauling corporate exposure to reflect our
concerns on the direction of credit quality while building in solid liquidity
within the sector by favoring "jumbo" issues ($1 billion dollar plus in size).
The wild cards in fashioning an economic outlook include oil, the euro and the
election. Each of these influences could produce undesirable effects potentially
resulting in an altered outlook for 2001.
/s/ John F. O'Brien /s/ Richard M. Reilly
[Logo]
ALLMERICA
FINANCIAL(R)
THE ALLMERICA FINANCIAL COMPANIES
---------------------------------
First Allmerica Financial Life Insurance Company o Allmerica Financial Life
Insurance and Annuity Company (licensed in all states except NY)
Allmerica Trust Company, N.A. o Allmerica Investments, Inc. o Allmerica
Investment Management Company, Inc. o Financial Profiles, Inc. o The Hanover
Insurance Company o AMGRO, Inc. o Allmerica Financial Alliance Insurance Company
o Allmerica Asset Management, Inc. Allmerica Financial Benefit Insurance Company
o Sterling Risk Management Services, Inc. Citizens Insurance Company of America
o Citizens Management Inc.
440 Lincoln Street, Worcester, Massachusetts 01653
