<PAGE>
----------------------------
Allmerica Financial Semi-Annual Report
------------------------------------------------ ----------------------------
June 30, 2000
. Allmerica Securities Trust
[LOGO]
<PAGE>
Table of Contents
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Trust Information ....................................................... 2
A Letter from the Chairman .............................................. 3
Bond & Money Market Overview ............................................ 4
Trust Overview .......................................................... 6
Financials ............................................................ F-1
Shareholder Information .............................................. F-10
1
<PAGE>
Trust Information
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Board of Trustees
John F. O'Brien, Chairman
P. Kevin Condron(*)
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
Paul T. Kane, Treasurer
George M. Boyd, Secretary
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
Administrator and Custodian
Investors Bank & Trust Company
200 Clarendon Street, Boston, MA 02116
Independent Accountants
PricewaterhouseCoopers LLP
160 Federal Street, Boston, MA 02110
Legal Counsel
Ropes & Gray
One International Place, Boston, MA 02110
Shareholders Inquires 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
2
<PAGE>
A Letter from the Chairman
[PHOTO]
Dear Client:
The first half of 2000 has proven to be a perplexing period in the U.S. Bond
market. Mixed economic signals, Federal Reserve actions and increased corporate
credit concerns have collectively propelled the market into uncharted territory.
The Federal Reserve's continued concern about strong economic growth and
corresponding fears of inflation prompted them to raise short term interest
rates in February, March and May. In June, economic data, which had previously
shown inflationary growth, started weakening and the Federal Reserve left
interest rates unchanged. In addition to this, the U.S. Treasury started its
Treasury buy-back program with surplus funds to reduce the level of outstanding
debt. This reduces the supply of Treasuries, driving their prices up and their
yields down. The combination of short term interest rate hikes and long term
interest rate declines produced an inverted yield curve, which has not persisted
since 1990.
Within this unprecedented market environment, the Allmerica Securities Trust
produced a total return of 2.78%, outperforming the return of the Lehman
Corporate Bond Index of 2.68%. While the Fund outperformed for the period, there
were months where performance suffered due to the fund's investment grade and
high yield corporate bond focus. Certain credits weakened during the period and
the corporate bond market reacted with a general spread widening. The long term
spread sector focus that we've taken has benefited the fund especially during
the month of June where the Fund's total return was 2.51%.
We are pleased to report that on August 8, 2000, the Allmerica Securities Board
of Trustees declared a quarterly dividend of $0.20 per share, payable on
September 29, 2000, to shareholders of record on August 31, 2000. For the twelve
month period ended June 30, 2000, the Trust paid dividends of $0.84 per share,
including a $0.04 per share capital gain distribution, producing a current yield
of 8.78% based on the closing price of $9.563. By comparison, the yield on the
10-year Treasury note as of June 30, 2000 was 6.02%.
Thank you for your continued interest in the Allmerica Securities Trust. The
portfolio is well positioned to provide you with the opportunity for competitive
returns, as we continue to work hard to earn your confidence.
On behalf of the Board of Trustees,
/S/ John F. O'Brien
John F. O'Brien
Chairman of the Board
Allmerica Securities Trust
3
<PAGE>
Bond & Money Market Overview
1996: Outlook for Federal Reserve policy affects U.S. bond market.
Long-predicted interest rate cuts, which would have fueled this market, never
occur.
1997: Low inflation and declining interest rates fuel the bond market, which
enjoys its best returns since 1995.
1998: During 1998, bond investments produced widely divergent results as a
series of dramatic swings either left them highly in favor or badly battered.
1999: Inflation concerns and a booming U.S. economy prompt the Federal Reserve
to hike interest rates. Fixed income markets close the second half with the
worst performing year ever.
2000: Bond investments suffer as a result of continued interest rate hikes by
the Federal Reserve in an effort to stave off inflation.
Events occurred during the first six months of 2000, which led to one of the
worst relative performances for corporate bonds, mortgage- and asset-backed
securities, and agencies (spread sectors). However, by June signs of an economic
slowdown began to emerge. Spread sectors rebounded as the Federal Reserve Board
decided to forego another interest rate increase at its June meeting.
Taking center stage was the inversion of the yield curve at the start of the
first quarter. Usually the longer a bond's maturity, the higher its yield. An
inverted yield curve is a demonstration of the opposite where shorter bonds
(with maturities of less than two years) produce higher yields. The yield curve
began to invert as a result of low issuance of new investment grade bonds and
the Treasury's quicker-than-expected announcement to buy back as much as $30
billion in bonds during this year alone. The Treasury's announcement took the
market by surprise and investors promptly bid up the price of the longer
maturity bonds, sending its yield below the Federal Funds rate by March. The
yield on the long bond ended the first quarter at 5.84%.
The yield curve inversion gathered momentum in the first quarter as the Federal
Reserve continued its efforts to slow down the economy by raising interest rates
in February and March by a total of .50%. Lower yields on Treasury bonds caused
corporate bonds, mortgage- and asset-backed securities, and agencies to
underperform. Concerns about the future of the economy caused spread sectors to
underperform as investors became unclear about future potential for revenue and
earnings growth and the impact on coverage of interest cost. Taxable bond mutual
funds saw over $30 billion in redemptions and overall asset allocation began to
favor the equity market.
[GRAPHIC]
2000 JAN
Treasury announces buy back of $30 billion in bonds, sending bond prices up and
yields down.
[GRAPHIC]
FEB
Federal Reserve raises interest rates by 0.25%. The yield curve begins to
invert.
MAR
Federal Reserve raises interest rates again by 0.25%. Volatile conditions shut
down issuance of investment grade bonds.
4
<PAGE>
Bond & Money Market Overview
In the meantime, unusual events took place in the mortgage-backed securities
market, affecting both agencies and mortgage-backed securities. Congressional
scrutiny over Fannie Mac and Freddie Mac, two major government-sponsored enter-
prises, resulted in large-scale selling in the agencies and mortgage-backed
securities market.
By March, volatile market conditions virtually shut down new issuance of
investment grade bonds as investors' appetite for risk diminished. Supply and
demand within the fixed income marked moved out of alignment causing corporates
to underperform Treasuries by 227 basis points for the first quarter with March
producing the second worst monthly performance for spread product since 1990.
The Federal Reserve Board raised interest rates again in May by an additional
.50%, bringing the total tightening to 1.75% since June 1999. However, as the
second quarter progressed, the economy began to show signs of a slowdown.
Satisfied that interest rate hikes were beginning to have the desired effect,
the Federal Reserve voted to hold off on any further rate increases at their
June meeting.
Corporate bonds, mortgage- and asset-backed securities continued to dramatically
underperform U.S. Treasuries through May. The inverted yield curve persisted as
a result of the shrinking supply of U.S. Treasury securities and tightenings by
the Federal Reserve. Positive yield spreads were offset by negative price
returns as investment banks continued to diminish earnings volatility by
reducing their exposure to spread product. As Treasuries rallied in response to
the shrinking supply, spread sectors continued to underperform until June, when
the economy began to show signs that it may be headed for a soft landing. Once
the Federal Reserve decided to forego another interest rate hike, spread sector
performance began to gain, finally outperforming like-duration Treasuries by 50
basis points at the end of the second quarter.
The Federal Funds rate remains at 6.50%, the highest level since January 1991.
The goal of the Federal Reserve Board is to engineer a soft landing for the
economy, which translates as a slowdown in growth without entering into a
recession. The economy has begun to show signs of moderation. Retail sales have
declined and consumer spending on big-ticket items has slowed. The outlook for
spread sector performance is optimistic, especially if the Federal Reserve's
tightening cycle is coming to a close. However, the preliminary growth rate for
the annual gross domestic product stands at 5.2% as of June 2000. The Federal
Reserve considers a rate of 3.5% to 4% to be as fast as the economy can growth
without sparking inflation. The Federal Reserve remains cautious, and depending
upon whether or not the economy shows more definitive signs of a slowdown, may
consider another rate hike at their August meeting.
APR
Spread sectors continue to dramatically underperform U.S. Treasuries.
[GRAPHIC]
MAY
Federal Reserve votes to hold off on additional interest rate increases.
Corporates and Mortgages outperform like-duration Treasuries due to signs of a
slowing economy.
JUN
Federal Reserve raises interest rates by another 0.50% to 6.50%. The inverted
yield curve persists as a result of the shrinking supply of U.S. Treasuries and
continued rate hikes.
[GRAPHIC]
5
<PAGE>
Allmerica Securities Trust
For the period ended June 30, 2000, the Allmerica Securities Trust returned
2.53%, underperforming the benchmark Lehman Brothers Corporate Bond Index
return of 2.68%.
This year's corporate bond market malaise created some compelling values,
enabling the manager to add a number of new positions in both the investment
grade and high yield sectors. Each of these names has been carefully researched
by our analysts and selected for their strong prospects within their respective
industries. Their corresponding spreads offer exceptional value relative to
historical spread levels.
The manager sold certain positions this year where the risks had begun to
outweigh the potential rewards. Perhaps the most dramatic victim was an Indiana-
based insurance company that has grown rapidly through a series of acquisitions.
News of management's plan to sell their consumer finance unit was not well
received by investors, and soon the company's bonds plummeted in value due to
the large loss that would be incurred upon consummation of the sale. After
careful consideration of all the various outcomes, Allmerica Securities Trust's
fund manager sold these particular bonds at a substantial loss. This action
certainly hampered performance for the quarter. Other bonds were sold, as well,
due to concerns about the direction of credit quality and market liquidity.
The manager remains confident that the corporate bond market offers great value
to investors at this juncture. By June, corporates and mortgage-backed
securities outperformed like-duration Treasuries. Tightening by the Federal
Reserve may be at or near its end, as the June employment report confirms other
recent signs of a slowing economy. While the biggest risk to our constructive
outlook for corporate bonds remains the economy, our diversified portfolio and
disciplined investment approach will position the manager to pursue competitive
returns over the long term.
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, 2000, the sector allocation of net assets was:
[GRAPH]
Corporate Notes & Bonds 69%
U.S. Government Obligations 13%
Asset Backed & Mortgage Backed 10%
Foreign Bonds 4%
Others 4%
Average Annual Total Returns
Years ended June 30, 2000 1 Year 5 Years 10 Years
Allmerica Securities Trust 2.77% 6.54% 8.54%
Lehman Brothers Corporate Bond Index 3.02% 5.98% 8.18%
Lipper Corporate Debt
BBB-Rated Funds Average 2.29% 5.57% 07.99%
Historical Performance
Total Return Total Return
on Net Asset Value on Market Value
1995 18.58% 21.71%
1996 5.35% 6.06%
1997 11.34% 14.07%
1998 8.47% 11.13%
1999 (1.42%) (13.75%)
2000 (As of June 30) 2.53% 13.39%
The Lehman Brothers Corporate Bond Index is an unmanaged index of all publicly
issued, fixed-rate, non-convertible investment grade corporate debt. The Lipper
Corporate Debt BBB-rated Funds Average is a non-weighted index of 145 funds
within the Corporate BBB Debt Fund category.
Portfolio composition is subject to change.
6
<PAGE>
Financials
<PAGE>
This page intentionally left blank.
<PAGE>
Allmerica Securities Trust
PORTFOLIO OF INVESTMENTS . June 30, 2000 (Unaudited)
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<TABLE>
<CAPTION>
Value
Par Value Moody's Ratings (Note 2)
<C> <S> <C> <C>
------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS - 12.9%
U.S. Treasury Bond - 10.3%
$3,300,000 7.13%, 02/15/23 Aaa $3,660,938
5,150,000 7.25%, 05/15/16 Aaa 5,666,612
250,000 7.63%, 11/15/22 Aaa 291,953
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9,619,503
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U.S. Treasury Note - 2.6%
1,000,000 5.63%, 05/15/08 Aaa 964,375
1,000,000 6.00%, 08/15/09 Aaa 991,875
415,000 7.00%, 07/15/06 Aaa 429,914
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2,386,164
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Total U.S. Government Obligations
(Cost $12,083,984) 12,005,667
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CORPORATE NOTES AND BONDS - 68.6%
Airlines - 3.1%
1,000,000 AMR Corp., Debenture
10.00%, 02/01/01 Baa2 1,007,736
670,683 Delta Air Lines, Inc.
9.23%, 07/02/02 (a) Baa1 677,189
1,182,333 United Air Lines, Inc.
9.30%, 03/22/08 Baa1 1,224,719
----------
2,909,644
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Automotive - 1.7%
1,000,000 Federal-Mogul Co.
7.38%, 01/15/06 Ba2 727,257
1,000,000 Ford Motor Credit Co.
5.80%, 01/12/09 A2 869,930
----------
1,597,187
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Banking - 8.4%
1,400,000 Capital One Financial Corp. 7.25%,
12/01/03 Baa3 1,366,938
1,000,000 Chase Manhattan Corp.
6.38%, 02/15/08 A1 915,732
1,500,000 Colonial Capital II, Series A,
Guaranteed
8.92%, 01/15/27 (b) BB 1,255,288
975,000 Compass Trust I, Series A 8.23%,
01/15/27 A3 800,397
1,000,000 First Tennessee National Corp.,
Subordinated Notes
6.75%, 11/15/05 A3 930,493
550,000 MBNA Corp., Senior Notes, MTN 6.96%,
09/12/02 Baa2 537,762
1,000,000 Providian Capital, Series A,
Guaranteed
9.53%, 02/01/27 (c) Ba3 840,729
1,000,000 Riggs Capital Trust
8.63%, 12/31/26 (c) Baa3 793,499
</TABLE>
<TABLE>
<CAPTION>
Value
Par Value Moody's Ratings (Note 2)
<C> <S> <C> <C>
------------------------------------------------------------------------------
Banking (continued)
$ 400,000 Wells Fargo Bank NA
7.55%, 06/21/10 Aa2 $ 394,640
----------
7,835,478
----------
Beverages, Food & Tobacco - 1.7%
1,000,000 DiMon, Inc., Senior Notes, Series B
8.88%, 06/01/06 Ba2 903,444
700,000 J. Seagram & Sons, Inc.
7.60%, 12/15/28 Baa3 662,026
----------
1,565,470
----------
Building Materials - 2.1%
1,000,000 RPM, Inc., Senior Notes
7.00%, 06/15/05 Baa2 956,227
1,000,000 USG Corp., Senior Notes
8.50%, 08/01/05 Baa1 1,029,759
----------
1,985,986
----------
Chemicals - 2.1%
1,000,000 Georgia Gulf Corp.
7.63%, 11/15/05 Ba1 957,525
1,000,000 Lyondell Chemical Co.
9.63%, 05/01/07 Ba3 985,000
----------
1,942,525
----------
Commercial Services - 0.8%
750,000 Cox Communications, Inc. 6.63%,
06/14/02 (c) Baa1 735,853
----------
Communications - 2.9%
1,000,000 Lucent Technologies, Inc.
6.45%, 03/15/29 A2 883,209
950,000 Metromedia Fiber Network, Inc.
10.00%, 11/15/08 B2 935,750
950,000 Winstar Communications, Inc. 12.75%,
04/15/10 (c) B3 885,875
----------
2,704,834
----------
Computers & Information - 2.3%
1,075,000 Hewlett-Packard Co.
7.15%, 06/15/05 Aa2 1,078,915
1,000,000 International Business Machines Corp.
8.38%, 11/01/19 A1 1,098,121
----------
2,177,036
----------
Electric Utilities - 2.9%
1,550,000 Connecticut Light & Power Co., First
Mortgage, Series D
7.88%, 10/01/24 Baa3 1,549,994
577,000 North Atlantic Energy Corp., First
Mortgage, Series A
9.05%, 06/01/02 Ba2 574,698
</TABLE>
See Notes to Financial Statements.
--------------------------------------------
F-1
<PAGE>
Allmerica Securities Trust
PORTFOLIO OF INVESTMENTS, Continued . June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Par Value Moody's Ratings (Note 2)
<C> <S> <C> <C>
------------------------------------------------------------------------------
Electric Utilities (continued)
$ 600,000 Texas Utilities Co.
7.38%, 10/01/25 A3 $ 542,333
----------
2,667,025
----------
Electronics - 0.5%
500,000 Raytheon Co.
6.45%, 08/15/02 Baa2 488,325
----------
Entertainment & Leisure - 1.5%
800,000 Royal Caribbean Cruises, Ltd. 6.75%,
03/15/08 Baa2 688,453
750,000 Royal Caribbean Cruises, Ltd. 8.13%,
07/28/04 Baa2 722,074
----------
1,410,527
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Financial Services - 2.9%
649,000 Homeside International, Inc., Senior
Notes
11.25%, 05/15/03 A1 702,542
1,000,000 Legg Mason, Inc., Senior Note 6.50%,
02/15/06 Baa2 933,135
1,000,000 Money Store, Inc., Senior Notes,
Guaranteed
8.05%, 04/15/02 A1 1,008,485
----------
2,644,162
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Forest Products & Paper - 0.9%
950,000 Republic Group, Inc., Senior
Subordinated Notes
9.50%, 07/15/08 B2 788,500
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Health Care Providers - 2.0%
675,000 Allegiance Corp.
7.30%, 10/15/06 A2 674,006
1,000,000 Tenet Healthcare Corp., Senior Notes
7.63%, 06/01/08 Ba1 916,250
300,000 Tenet Healthcare Corp., Senior
Subordinated Notes
8.63%, 01/15/07 Ba3 286,500
----------
1,876,756
----------
Household Products - 1.0%
950,000 Owens-Illinois, Inc., Senior Notes
7.85%, 05/15/04 Ba1 902,049
----------
Industrial - Diversified - 1.1%
1,000,000 General Electric Capital Corp. 7.50%,
05/15/05 Aaa 1,011,991
----------
</TABLE>
<TABLE>
<CAPTION>
Value
Par Value Moody's Ratings (Note 2)
<C> <S> <C> <C>
------------------------------------------------------------------------------
Media - Broadcasting & Publishing -
9.7%
$1,000,000 Charter Communications Holdings,
Inc.
8.25%, 04/01/07 B2 $ 882,500
750,000 Continental Cablevision, Inc.,
Senior Notes
8.30%, 05/15/06 A2 774,937
1,000,000 CSC Holdings, Inc., Debenture 7.88%,
02/15/18 Ba1 919,816
1,000,000 Lenfest Communications, Inc. 8.38%,
11/01/05 Baa2 1,021,043
1,000,000 Liberty Media Group
7.88%, 07/15/09 Baa3 962,781
850,000 Time Warner Entertainment Co., LP,
Debenture
8.38%, 03/15/23 Baa2 868,397
1,000,000 Time Warner, Inc., Debenture 9.15%,
02/01/23 Baa3 1,096,426
500,000 Viacom, Inc.
7.75%, 06/01/05 Baa1 503,484
1,000,000 Viacom, Inc., Senior Debenture,
Guaranteed
7.63%, 01/15/16 Baa1 966,397
1,000,000 Westinghouse Electric Corp.,
Debenture
8.38%, 06/15/02 Baa1 1,020,580
----------
9,016,361
----------
Metals - 2.9%
2,000,000 Bethlehem Steel Corp., Senior Notes
10.38%, 09/01/03 Ba3 1,980,000
1,000,000 LTV Corp., Senior Notes, Guaranteed
8.20%, 09/15/07 Ba3 730,000
----------
2,710,000
----------
Oil & Gas - 8.4%
2,000,000 ANR Pipeline Co., Debenture 9.63%,
11/01/21 Baa1 2,267,388
1,000,000 Clark Oil & Refining Corp., Senior
Notes
9.50%, 09/15/04 Ba3 890,000
1,450,000 Ocean Energy, Inc., Senior Notes,
Series B
7.63%, 07/01/05 Ba1 1,377,500
1,000,000 Oryx Energy Co.
8.13%, 10/15/05 Baa1 1,020,812
1,250,000 Texas Eastern Transmission Corp.,
Debenture
10.00%, 08/15/01 A2 1,288,914
1,000,000 Tosco Corp.
7.00%, 07/15/00 Baa2 999,911
----------
7,844,525
----------
</TABLE>
See Notes to Financial Statements.
------------------------------------------------------
F-2
<PAGE>
Allmerica Securities Trust
PORTFOLIO OF INVESTMENTS, Continued . June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Par Value Moody's Ratings (Note 2)
<C> <S> <C> <C>
------------------------------------------------------------------------------
Retailers - 4.3%
$1,225,000 Federated Department Stores 8.50%,
06/01/10 Baa1 $1,247,451
950,000 Meyer (Fred), Inc.
7.38%, 03/01/05 Baa3 926,484
1,000,000 Meyer (Fred), Inc.
7.45%, 03/01/08 Baa3 956,417
1,000,000 Saks, Inc.
7.00%, 07/15/04 Baa3 897,627
----------
4,027,979
----------
Securities Broker - 0.5%
425,000 Morgan Stanley Dean Witter & Co.
7.75%, 06/15/05 Aa3 427,216
----------
Telephone Systems - 4.2%
1,175,000 AT & T Corp.
6.00%, 03/15/09 A1 1,047,676
500,000 AT & T Corp.
7.65%, 09/15/06 Baa3 495,107
1,000,000 Qwest Communications International,
Inc.
7.25%, 11/01/08 Baa1 955,584
900,000 Sprint Capital Corp.
7.63%, 06/10/02 Baa1 903,344
500,000 US West Communications, Inc. 6.38%,
10/15/02 A2 487,789
----------
3,889,500
----------
Transportation - 0.7%
750,000 CSX Corp.
6.25%, 10/15/08 Baa2 662,819
----------
Total Corporate Notes and Bonds
(Cost $66,015,163) 63,821,748
----------
ASSET-BACKED AND MORTGAGE-BACKED SECURITIES - 10.0%
1,000,000 American Airlines, Inc., Pass-
Through Trust, Series 1991 - C2
9.73%, 09/29/14 A2 1,110,550
1,000,000 BankBoston RV Asset Backed Trust,
Series 1997-1, Class A8, CMO
6.54%, 02/15/09 Aaa 987,170
750,000 Capital One Master Trust, Series
1998-4, Class A
5.43%, 01/15/07 Aaa 710,670
902,733 DLJ Commercial Mortgage Corp.,
Series 1998-CF2, Class A1A
5.88%, 11/12/31 Aaa 850,863
1,000,000 First Security Auto Owner Trust,
Series 1999-1, Class A4,
5.74%, 06/15/04 Aaa 976,250
1,000,000 Government Lease Trust, Series GSA1,
Class A-2
6.18%, 05/18/05 (c) Aaa 966,910
</TABLE>
<TABLE>
<CAPTION>
Value
Par Value Moody's Ratings (Note 2)
<C> <S> <C> <C>
-------------------------------------------------------------------------------
$ 224,734 Green Tree Financial Corp., Series
1995-A, Class A
7.25%, 07/15/05 Baa3 $ 215,461
316,062 Green Tree Recreation Equipment &
Consumer Trust, Series 1997-B, Class
A1, CMO 6.55%, 07/15/28 (b) AAA 311,350
666,576 Jones (Edward D.) & Co., LP 7.95%,
04/15/06 (a) NR 658,157
379,997 Midland Cogeneration Venture LP,
Series C-91
10.33%, 07/23/02 Baa3 388,934
116,655 National Auto Finance, Series 1996-1,
Class A, CMO
6.33%, 12/21/02 Aaa 115,330
1,270,000 Sithe/Independence Funding Corp.,
Series A
9.00%, 12/30/13 Baa3 1,311,986
700,000 Valero Management Partnership, LP
10.02%, 03/15/07 (a) NR 736,841
-----------
Total Asset-Backed And Mortgage-
Backed Securities (Cost $9,388,505) 9,340,472
-----------
FOREIGN BONDS (d) - 3.8%
1,000,000 Banco Nacional de Comercio Exterior,
MTN
8.00%, 07/18/02 Baa3 995,000
1,150,000 BCH Cayman Islands, Ltd., Yankee
Subordinated Note, Guaranteed
6.50%, 02/15/06 A1 1,072,542
1,000,000 St. George Bank, Ltd., Yankee
Debenture
7.15%, 10/15/05 (c) Baa1 965,793
500,000 United Mexican States, Yankee
Emerging Market Notes
8.50%, 09/15/02 Baa3 500,625
-----------
Total Foreign Bonds
(Cost $3,446,310) 3,533,960
-----------
<CAPTION>
Shares
------
<C> <S> <C> <C>
INVESTMENT COMPANY - 2.8%
2,635,784 SSgA Prime Money Market Fund NR 2,635,784
-----------
Total Investment Company (Cost
$2,635,784) 2,635,784
-----------
Total Investments - 98.1%
(Cost $93,569,746) 91,337,631
-----------
Net Other Assets and Liabilities - 1.9% 1,753,347
-----------
Total Net Assets - 100.0% $93,090,978
===========
</TABLE>
See Notes to Financial Statements.
--------------------------------------------
F-3
<PAGE>
Allmerica Securities Trust
PORTFOLIO OF INVESTMENTS, Continued . June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
(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. For additional information concerning
each restricted security, see Note 5.
(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. This security may be resold, in transactions exempt from registra-
tion, to qualified institutional buyers. At June 30, 2000, these securities
amounted to $5,188,659 or 5.6% of net assets.
(d) U.S. currency denominated.
CMO Collateralized Mortgage Obligation
MTN Medium Term Note
Federal Income Tax Information (see Note 2)
At June 30, 2000, the aggregate cost of investment securities for tax purposes
was $93,569,746. Net unrealized appreciation (depreciation) aggregated
$(2,232,115), of which $1,177,814 related to appreciated investment securities
and $(3,409,929) related to depreciated investment securities.
Other Information
For the six months ended June 30, 2000, the aggregate cost of purchases and the
proceeds of sales, other than from short-term investments, included $17,937,365
and $17,241,637 of non-governmental issuers, respectively, and $1,264,316 and
$1,455,257 of U.S. Government and Agency issuers, respectively.
At June 30, 2000, the value of the securities loaned amounted to $10,224,150.
The value of collateral amounted to $10,416,250 which consisted of cash equiva-
lents.
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 Rating
<S> <C>
Aaa 19.3%
Aa2 1.6%
Aa3 0.5%
A1 6.4%
A2 6.7%
A3 2.5%
Baa1 14.8%
Baa2 9.7%
Baa3 14.4%
Ba1 5.6%
Ba2 2.4%
Ba3 6.2%
B2 2.8%
B3 1.0%
NR (Not Rated) 4.4%
-----
98.3%
=====
</TABLE>
<TABLE>
<CAPTION>
S&P Ratings
<S> <C>
AAA 0.3%
BB 1.4%
------
1.7%
======
</TABLE>
See Notes to Financial Statements.
------------------------------------------------------
F-4
<PAGE>
Allmerica Securities Trust
STATEMENT OF ASSETS AND LIABILITIES . June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments:
Investments at cost............................................. $ 93,569,746
Net unrealized appreciation (depreciation)...................... (2,232,115)
------------
Total investments at value...................................... 91,337,631
Cash............................................................ 1,867
Short-term investments held as collateral for securities
loaned......................................................... 10,416,250
Interest receivable............................................. 1,907,596
------------
Total Assets.................................................... 103,663,344
------------
LIABILITIES:
Advisory fee payable............................................ 40,276
Trustees' fees and expenses payable............................. 9,831
Accrued expenses and other payables............................. 106,009
Collateral for securities loaned................................ 10,416,250
------------
Total Liabilities............................................... 10,572,366
------------
NET ASSETS....................................................... $ 93,090,978
============
NET ASSETS consist of:
Par Value....................................................... $ 8,592,306
Paid-in capital................................................. 88,445,043
Undistributed (distribution in excess of) net investment
income......................................................... (18,826)
Accumulated (distribution in excess of) net realized gain (loss)
on investments sold............................................ (1,695,430)
Net unrealized appreciation (depreciation) of investments....... (2,232,115)
------------
TOTAL NET ASSETS................................................. $ 93,090,978
============
Shares of beneficial interest outstanding (10,000,000 authorized
shares with par value of $1.00)................................. 8,592,306
NET ASSET VALUE
Per share....................................................... $ 10.834
============
MARKET VALUE (closing price on New York Stock Exchange)
Per share....................................................... $ 9.563
============
</TABLE>
See Notes to Financial Statements.
--------------------------------------------
F-5
<PAGE>
Allmerica Securities Trust
STATEMENT OF OPERATIONS . For the Six Months Ended June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest (including income on securities loaned of $6,162)....... $ 3,747,299
-----------
EXPENSES:
Investment advisory fees......................................... 236,773
Custodian and Fund accounting fees............................... 35,617
Transfer agent fees.............................................. 37,944
Legal fees....................................................... 2,541
Audit fees....................................................... 16,340
Trustees' fees and expenses...................................... 11,232
Reports to shareholders.......................................... 24,579
New York Stock Exchange fees..................................... 18,775
Miscellaneous.................................................... 1,804
-----------
Total expenses................................................... 385,605
-----------
NET INVESTMENT INCOME............................................. 3,361,694
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments sold..................... (1,761,769)
Net change in unrealized appreciation (depreciation) of
investments..................................................... 771,327
-----------
NET GAIN (LOSS) ON INVESTMENTS.................................... (990,442)
-----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS... $ 2,371,252
===========
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended
June 30, 2000 Year Ended
(Unaudited) December 31, 1999
--------------------------------------------------------------------------------
<S> <C> <C>
NET ASSETS at beginning of period........... $94,156,648 $102,770,164
----------- ------------
INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS:
Net investment income...................... 3,361,694 6,892,681
Net realized gain (loss) on investments
sold...................................... (1,761,769) 683,803
Net change in unrealized appreciation
(depreciation) of investments............. 771,327 (8,972,463)
----------- ------------
Net increase (decrease) in net assets
resulting from operations................. 2,371,252 (1,395,979)
----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income...................... (3,436,922) (6,873,845)
Distribution of capital gains.............. -- (343,692)
----------- ------------
Total distributions........................ (3,436,922) (7,217,537)
----------- ------------
Total increase (decrease) in net assets.... (1,065,670) (8,613,516)
----------- ------------
NET ASSETS at end of period................. $93,090,978 $ 94,156,648
=========== ============
Undistributed (distribution in excess of)
net investment income...................... $ (18,826) $ 56,402
=========== ============
</TABLE>
See Notes to Financial Statements.
------------------------------------------------------
F-6
<PAGE>
Allmerica Securities Trust
FINANCIAL HIGHLIGHTS . For a Share Outstanding Throughout Each Period
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year ended December 31,
June 30, 2000 -----------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of period.... $10.958 $11.961 $ 11.821 $ 11.421 $11.694 $ 10.644
------- ------- -------- -------- ------- --------
Income from Investment
Operations:
Net investment income.. 0.391 0.802 0.810 0.837 0.843 0.860
Net realized and
unrealized gain (loss)
on investments........ (0.115) (0.965) 0.160 0.403 (0.256) 1.050
------- ------- -------- -------- ------- --------
Total from Investment
Operations............ 0.276 (0.163) 0.970 1.240 0.587 1.910
------- ------- -------- -------- ------- --------
Less Distributions:
Dividends from net
investment income..... (0.400) (0.800) (0.819) (0.840) (0.860) (0.860)
Distributions in excess
of net investment
income................ -- -- (0.011) -- -- --
Distributions of
capital gains......... -- (0.040) -- -- -- --
------- ------- -------- -------- ------- --------
Total distributions.... (0.400) (0.840) (0.830) (0.840) (0.860) (0.860)
------- ------- -------- -------- ------- --------
Net increase (decrease)
in net asset value..... (0.124) (1.003) 0.140 0.400 (0.273) 1.050
------- ------- -------- -------- ------- --------
Net Asset Value, end of
period................. $10.834 $10.958 $ 11.961 $ 11.821 $11.421 $ 11.694
======= ======= ======== ======== ======= ========
Market Value, end of
period................. $ 9.563 $ 8.813 $ 11.125 $ 10.813 $10.250 $ 10.500
======= ======= ======== ======== ======= ========
Total Return on Market
Value, end of period... 13.39%** (13.75)% 11.13% 14.07% 6.06% 21.71%
Ratios/Supplemental Data
Net assets, end of
period (000's)......... $93,091 94,157 $102,770 $101,572 $98,135 $100,483
Ratios to average net
assets:
Net investment income.. 7.23%* 7.00% 6.78% 7.27% 7.44% 7.64%
Operating expenses..... 0.83%* 0.77% 0.73% 0.72% 0.75% 0.77%
Management fee......... 0.51%* 0.49% 0.49% 0.50% 0.50% 0.51%
Portfolio turnover
rate.................. 20%** 24% 25% 27% 47% 42%
</TABLE>
------------------
* Annualized
** Not annualized
See Notes to Financial Statements.
--------------------------------------------
F-7
<PAGE>
Allmerica Securities Trust
NOTES TO FINANCIAL STATEMENTS (Unaudited)
--------------------------------------------------------------------------------
1. ORGANIZATION
Allmerica Securities Trust (the "Trust") was organized as a Massachusetts busi-
ness trust on June 30, 1986, and is registered under the Investment Company Act
of 1940, as amended, as a diversified, closed-end management investment compa-
ny.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions at
the date of the financial statements. Actual results could differ from those
estimates.
The following is a summary of significant accounting policies followed by the
Trust in the preparation of its financial statements:
Security Valuation: 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 rela-
tionships among securities in determining value. If not valued by a pricing
service, such securities are valued at prices obtained from independent bro-
kers. 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.
Security Transactions and Investment Income: Security transactions are recorded
as of trade date. Realized gains and losses from security transactions are
determined on the basis of identified cost. Interest income, including amorti-
zation of premium and accretion of discount on securities, is accrued daily.
Income distributions earned by the Trust from investments in certain investment
companies are recorded as interest income in the accompanying financial state-
ments. Dividend income is recorded on the ex-dividend date.
Federal Taxes: The Trust intends to continue to qualify as a "regulated invest-
ment 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 it distributes all of its taxable income and net realized
gains, if any, for its fiscal year. In addition, by distributing during each
calendar year substantially all of its net investment income, 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.
Distributions to Shareholders: Dividends to shareholders resulting 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 gains distributions are determined in accordance with income tax regu-
lations which may differ from generally accepted accounting principles. These
differences are primarily due to differing book and tax treatments in the tim-
ing of the recognition of gains or losses, including "Post-October Losses" and
losses deferred due to wash sales; and permanent differences due to differing
treatments for paydowns gains/losses on certain securities, foreign currency
transactions, market discount, and non-taxable dividends. Any taxable income or
gain remaining at fiscal year end is distributed in the following year. Perma-
nent book and tax basis differences relating to shareholder distributions will
result in reclassifications to paid in capital. Undistributed net investment
income may include temporary book and tax basis differences which will reverse
in a subsequent period. Permanent book-tax differences, if any, are not
included in ending undistributed net investment income for the purpose of cal-
culating net investment income per share in the Financial Highlights.
Securities Lending: The Trust is using Investors Bank & Trust Company ("IBT")
as its lending agent to loan securities to brokers in exchange for negotiated
lenders' fees. These fees are included in interest income on the Statement of
Operations. The Trust receives obligations of the U.S. Government and its agen-
cies, cash and/or cash equivalents and/or letters of credit as collateral
against the loaned securities, in an amount at least equal to 102% of the mar-
ket value of the loaned securities. This collateral must be maintained at not
less than 102% of the market value of the loaned securities
------------------------------------------------------
F-8
<PAGE>
Allmerica Securities Trust
NOTES TO FINANCIAL STATEMENTS (Unaudited), Continued
--------------------------------------------------------------------------------
during the period of the loan. Information regarding the value of the securi-
ties loaned and the value of the collateral at period end is included under the
caption "Other Information" at the end of the Trust's Portfolio of Investments.
Expenses: Most expenses of the Trust can be directly attributable to the Trust.
Expenses which cannot be directly attributable to the Trust are allocated based
upon relative net assets among the Trust and one other affiliated registered
investment company, Allmerica Investment Trust.
3. INVESTMENT ADVISORY FEES AND OTHER RELATED PARTY TRANSACTIONS
Allmerica Asset Management, Inc. ("AAM"), a direct, wholly-owned subsidiary of
Allmerica Financial Corporation ("Allmerica Financial"), serves as Investment
Adviser to the Trust. For these services, the Trust pays AAM aggregate monthly
compensation at the 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 1.00% of any excess of such value over
$30,000,000, AAM will bear such excess expenses.
IBT performs fund administration, custodian and fund accounting services for
the Trust. IBT is entitled to receive a fee for these services, in addition to
certain out-of-pocket expenses. AAM is solely responsible for the payment of
the administration fee and the Trust will pay the fees for the fund accounting
and custodian services to IBT.
The Trust pays no salaries or compensation to any of its officers. Trustees who
are not directors, officers or employees of the Trust or any investment adviser
are reimbursed for their travel expenses in attending meetings of the Trustees
and receive 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. At June
30, 2000, First Allmerica Financial Life Insurance Company, a direct, wholly-
owned subsidiary of Allmerica Financial, the Trustees and the officers of the
Trust owned in the aggregate 113,544 shares of beneficial interest.
5. RESTRICTED SECURITIES
At June 30, 2000, the Trust owned the following restricted securities consti-
tuting 2.23% 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 portfo-
lio. The Trust does not have the right to demand that such securities be regis-
tered. 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 the restricted securities
is as follows:
<TABLE>
<CAPTION>
Date of Par Cost at
Issuer Acquisition Amount Acquisition Value
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Delta Air Lines, Inc. 12/12/91 $670,683 $ 678,572 $ 677,189
Jones (Edward D.) & Co., LP 05/06/94 666,576 666,576 658,157
Valero Management Partnership, LP 03/04/87 700,000 700,000 736,841
---------- ----------
Total $2,045,148 $2,072,187
========== ==========
</TABLE>
--------------------------------------------
F-9
<PAGE>
Allmerica Securities Trust
REGULATORY DISCLOSURES (Unaudited)
--------------------------------------------------------------------------------
The performance data quoted represents past performance and the investment
return and principal value of an investment will fluctuate so that an invest-
or's shares, when redeemed, may be worth more or less than their original cost.
This report is authorized for distribution to existing shareholders of
Allmerica Securities Trust.
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 frac-
tional shares of the Trust to be held on deposit in your account. Such divi-
dends 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 or rejoin at any time.
Cash Investment Plan: The cash investment plan provides a systematic, conve-
nient 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. Fol-
lowing 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.
TRUST NAMES NEW PORTFOLIO MANAGER
--------------------------------------------------------------------------------
Richard J. Litchfield, Vice President of Allmerica Asset Management, Inc.
("AAM"), has been selected to serve as portfolio manager of the Trust. Mr.
Litchfield, who joined AAM in 1995, also serves as portfolio manager of the
Select Investment Grade Income Fund of Allmerica Investment Trust, an open-end
investment company sub-advised by AAM; the AAM Investment Grade Core Fixed
Income Composite portfolio and other client accounts. Prior to joining AAM, he
was a fixed-income securities analyst at Keystone Investments, Inc. Mr.
Litchfield replaces Lisa M. Coleman, who resigned earlier this year to take a
position with another investment adviser, and Ann K. Tripp, who served as
interim portfolio manager after Ms. Coleman resigned.
------------------------------------------------------
F-10
<PAGE>
[LOGO OF ALLMERICA FINANCIAL]
First Allmerica Financial Life Insurance Company . Allmerica Financial Life
Insurance and Annuity Company (licensed in all states except NY) Allmerica Trust
Company, N.A. . Allmerica Investments, Inc. . Allmerica Investment Management
Company, Inc. The Hanover Insurance Company . AMGRO, Inc. . Allmerica Financial
Alliance Insurance Company Allmerica Asset Management, Inc. . Allmerica
Financial Benefit Insurance Company . Sterling Risk Management Services, Inc.
Citizens Corporation . Citizens Insurance Company of America . Citizens
Management Inc. 440 Lincoln Street, Worcester, Massachusetts 01653
(6/00)
