UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-02338
-----------------------------------
Allmerica Securities Trust
(Name of Registrant)
-----------------------------------
440 Lincoln Street
Worcester, Massachusetts 01653
(Address of Principal Executive Offices)
-----------------------------------
George M. Boyd, Secretary
Allmerica Financial
440 Lincoln Street
Worcester, MA 01653
(Name and Address of Agent for Service)
----------------------------------
Registrant's Telephone Number, including Area Code:
(508) 855-1000
-----------------------------------
Date of Fiscal Year End: December 31
-----------
Date of Reporting Period: June 30, 2003
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Item 1. Reports to Stockholders
The following is a copy of the report transmitted to stockholders pursuant to
Rule 30e-1 under the Investment Company Act of 1940:
Allmerica Securities Trust
Semi-Annual Report
June 30, 2003
-----------------------------
Allmerica Financial Semi-Annual Report
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June 30, 2003 . Allmerica Securities Trust
AST
2003
[LOGO]
ALLMERICA
FINANCIAL
TABLE OF CONTENTS
Trust Information......... 2
A Letter from the Chairman 3
Trust Overview............ 4
Financials................ F-1
Regulatory Disclosures and
Shareholder Information. F-12
TRUST INFORMATION
BOARD OF TRUSTEES
John P. Kavanaugh, Chairman
P. Kevin Condron*
Jocelyn S. Davis*
Cynthia A. Hargadon*
T. Britton Harris IV*
Gordon Holmes*
Mark A. Hug
Attiat F. Ott*
Ranne P. Warner*
OFFICERS
John P. Kavanaugh, President
Richard J. Litchfield, Vice President
Ann K. Tripp, Vice President
Donald P. Wayman, Vice President
Paul T. Kane, Treasurer
George M. Boyd, Secretary
INVESTMENT MANAGER
Opus Investment 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 Trustees
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers 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 Dept.-11E
P.O. Box 11258
Church Street Station, New York, NY 10286
1-800-432-8224
2
A LETTER FROM THE CHAIRMAN
Dear Client:
The global economy continued to sputter during the first half of 2003. At the
June economic summit in France, five of the eight leading industrialized
nations were either in recession or suffering from slow economic growth. Some
European and Japanese officials expressed concern that a continued decline in
the value of the already weak U.S. dollar could delay any global recovery. When
SARS appeared in China, the country's economic growth decelerated and exports
declined throughout the region. As the effects of deflation continued to wreak
havoc on Japan's economy, many companies struggled to remain viable. Global
stock markets dropped precipitously in the first quarter, but evolving
worldwide events triggered a strong second quarter rally, leaving many indices
in positive territory for the first half of 2003. Japan's Nikkei Average
finished the period up 6.48%, Hong Kong's Hang Seng Index was higher by 5.60%,
Germany's DAX Index rose 11.34%, England's FTSE Index gained 4.81% and France's
CAC 40 Index was up 3.08%.
During the period, business spending remained on hold as the United States led
a war against the leaders of Iraq. When coalition forces achieved rapid success
on the battlefield, several analysts predicted a surge in post-war economic
activity on the home front. Consumer confidence did spike when the major
fighting ended, but a stalled labor market and a continued lack of corporate
investment limited the extent of the rebound. The U.S. unemployment rate
reached 6.1% during the six-month period, as sluggish demand resulted in
additional layoffs. In an effort to stimulate economic growth and create jobs,
the U.S. Congress passed a $350 billion tax cut package and the Federal Reserve
Board cut the federal funds rate by 0.25%, to a low 1.00%. The U.S. stock and
bond markets seemed to be signaling better times ahead, as they posted solid
returns for the first six months of 2003. The S&P 500(R) Index finished up
11.77%, the Nasdaq Composite Index was higher by 21.82% and the Lehman Brothers
Aggregate Bond Index gained 3.92%.
Interest rates continued to fall during the first half of 2003, punctuated by
the Federal Reserve Board's cut of the target federal funds rate by 0.25% in
June. During this period of declining interest rates, Allmerica Securities
Trust produced a dividend yield that was competitive with other income-oriented
investments. Although it underperformed its benchmark, the Lehman Brothers U.S.
Credit Index, Allmerica Securities Trust produced a total return of 6.13% for
the first six months of 2003.
On behalf of the Board of Trustees,
/s/ John P. Kavanaugh
John P. Kavanaugh
Chairman of the Board
Allmerica Securities Trust
3
ALLMERICA SECURITIES TRUST
The Allmerica Securities Trust returned 6.13% for the first half of 2003,
underperforming its benchmark, the Lehman Brothers U.S. Credit Index, which
returned 7.32%.
The first quarter of 2003 was marked by economic and political uncertainty. The
buildup to the war with Iraq, coupled with an economy on the brink of
recessionary relapse, increased volatility in the market. The strong second
quarter was powered by lower interest rates across the board, punctuated by the
Federal Reserve Board cutting the federal funds rate by 0.25% to a low 1.00%.
Many analysts believed that economic activity would pick up after the major
fighting in Iraq ended, but signs of economic revival were not plentiful. The
credit sector led the way in terms of outperformance against Treasury
securities during the period. Investors continued to find value in corporate
bonds as Treasury yields plummeted and corporate earnings reports came in
slightly better than expected. During the first quarter, the wireless, refining
and media-cable sectors performed best, while utilities and finance led the way
in outperformance during the second quarter. The Trust benefited from the
migration to corporate bonds since it was overweighted in that asset class.
BBB-rated bonds performed best during the period, as investors sought the
highest-yielding sectors amidst one of the lowest absolute yield environments
most have ever witnessed. The Trust was more heavily invested in the higher
quality corporate securities and therefore did not get the benefit of owning
the weaker bonds that produced the biggest advances. All other spread sectors
posted excess returns over Treasury securities during the six-month period. The
Trust had a small exposure to these other sectors and benefited from the excess
return.
Average Annual Total Returns
1 Year 5 Year 10 Year
Allmerica Securities Trust 10.18% 4.96% 6.49%
Lehman Brothers U.S. Credit Index 15.59% 7.92% 7.74%
Lipper Corporate Debt Funds BBB-Rated Average 12.89% 6.14% 6.92%
Historical Performance
Total Return Total Return
on Net Asset Value on Market Value
1998 8.47% 11.13%
1999 (1.42)% (13.75)%
2000 6.76% 23.76%
2001 4.41% 6.00%
2002 5.54% 2.11%
2003 (As of June 30) 6.13% 8.72%
The Lehman Brothers U.S. Credit Index is an unmanaged index of all publicly
issued, fixed-rate, non-convertible investment grade corporate debt. The Lipper
Corporate Debt Funds BBB-Rated Average is a non-weighted index of funds within
the Corporate Debt Funds BBB-Rated category.
Portfolio composition is subject to change.
Investment Manager
Opus Investment Management, Inc.
About the Trust
Seeks to generate a high rate of current income for distribution to
shareholders.
Portfolio Composition
As of June 30, 2003, the sector allocation of net assets was:
[CHART]
Corporate Notes & Bonds 68%
U.S. Government & Agency Obligations 12%
Asset-Backed & Mortgage-Backed Securities 8%
Foreign Bonds 7%
Foreign Government Obligations 3%
Other 2%
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4
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Financials
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ALLMERICA SECURITIES TRUST
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PORTFOLIO OF INVESTMENTS - JUNE 30, 2003 (UNAUDITED)
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VALUE
PAR VALUE MOODY'S RATINGS (NOTE 2)
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U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS (I) - 0.4%
FREDDIE MAC - 0.4%
$ 198,344 5.00%, 05/15/21 NR $ 204,720
211,373 6.00%, 10/15/07 NR 219,596
--------------
424,316
--------------
TOTAL U.S. GOVERNMENT AGENCY
MORTGAGE-BACKED OBLIGATIONS 424,316
(Cost $425,180) --------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 12.1%
FANNIE MAE - 4.1%
870,000 2.88%, 10/15/05 Aaa 895,975
275,000 3.70%, 11/01/07 Aaa 284,571
1,950,000 4.63%, 05/01/13 Aa2 2,005,417
575,000 6.38%, 06/15/09 Aaa 680,973
--------------
3,866,936
--------------
FEDERAL HOME LOAN BANK - 3.6%
1,350,000 2.25%, 05/15/06 NR 1,368,423
1,625,000 7.63%, 05/14/10 Aaa 2,050,048
--------------
3,418,471
--------------
FREDDIE MAC - 0.3%
225,000 6.25%, 03/05/12 Aa2 247,792
--------------
U.S. TREASURY BOND - 3.7%
650,000 5.25%, 02/15/29 NR 707,764
225,000 6.00%, 02/15/26 NR 268,954
1,000,000 6.25%, 08/15/23 NR 1,224,922
950,000 7.25%, 08/15/22 NR 1,287,139
--------------
3,488,779
--------------
U.S. TREASURY NOTE - 0.4%
350,000 4.38%, 08/15/12 (a) NR 375,279
--------------
TOTAL U.S. GOVERNMENT AND AGENCY
OBLIGATIONS 11,397,257
(Cost $11,101,712) --------------
CORPORATE NOTES AND BONDS - 67.8%
AEROSPACE & Defense - 1.1%
450,000 Northrop Grumman Corp.
7.13%, 02/15/11 Baa3 539,064
500,000 Raytheon Co.
5.38%, 04/01/13 Baa3 528,909
--------------
1,067,973
--------------
AUTOMOTIVE - 1.2%
500,000 DaimlerChrysler North America
Holding Corp.
8.50%, 01/18/31 A3 597,500
500,000 General Motors Corp. (a)
7.20%, 01/15/11 Baa1 503,963
--------------
1,101,463
--------------
BANKING - 10.9%
450,000 Bank of America Corp.
4.88%, 09/15/12 Aa2 474,915
450,000 Bank of New York Co., Inc.
3.75%, 02/15/08 Aa3 468,515
1,000,000 Bank of New York Co., Inc.
6.38%, 04/01/12 A1 1,161,258
450,000 BB&T Corp. (b)
6.38%, 06/30/05 A2 488,529
450,000 Capital One Financial Corp.
7.25%, 12/01/03 Baa3 456,161
500,000 Citifinancial
6.75%, 07/01/07 Aa1 573,327
655,000 Fifth Third Bank
4.50%, 06/01/18 Aa3 642,421
500,000 Firstar Corp.
7.13%, 12/01/09 Aa3 604,440
500,000 Inter-American Development Bank
4.38%, 09/20/12 Aaa 528,395
85,000 MBNA Corp.
7.50%, 03/15/12 Baa2 100,752
350,000 MBNA Corp., MTN
6.25%, 01/17/07 Baa2 384,859
420,000 National City Bank of Indiana
4.88%, 07/20/07 Aa3 450,450
174,000 National City Corp.
5.75%, 02/01/09 A2 198,049
250,000 Northern Trust Co.
6.65%, 11/09/04 Aa3 267,393
200,000 Suntrust Banks, Inc.
6.38%, 04/01/11 Aa3 233,178
125,000 Suntrust Banks, Inc.
7.75%, 05/01/10 A1 155,401
500,000 U.S. Bancorp
5.10%, 07/15/07 Aa3 546,538
455,000 US Bank National Cincinnati
6.50%, 02/01/08 Aa3 524,571
475,000 Wachovia Bank N.A.
4.85%, 07/30/07 Aa2 513,261
455,000 Washington Mutual Bank FA
5.50%, 01/15/13 A3 496,004
450,000 Wells Fargo & Co.
5.13%, 02/15/07 Aa2 492,289
450,000 Wells Fargo & Co.
5.13%, 09/01/12 Aa3 484,659
--------------
10,245,365
--------------
BEVERAGES, FOOD & Tobacco - 3.6%
450,000 Anheuser-Busch Cos., Inc.
4.63%, 02/01/15 A1 470,322
445,000 Bottling Group LLC (a) (c)
4.63%, 11/15/12 A3 465,114
500,000 Conagra Foods, Inc.
7.50%, 09/15/05 Baa1 557,573
450,000 Diageo Capital, Plc
3.50%, 11/19/07 A2 463,123
460,000 General Mills, Inc.
6.00%, 02/15/12 Baa2 519,321
See Notes to Financial Statements.
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F-1
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ALLMERICA SECURITIES TRUST
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PORTFOLIO OF INVESTMENTS, CONTINUED - JUNE 30, 2003 (UNAUDITED)
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VALUE
PAR VALUE MOODY'S RATINGS (NOTE 2)
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BEVERAGES, FOOD &
TOBACCO (CONTINUED)
$ 830,000 Unilever Capital Corp.
5.90%, 11/15/32 A1 $ 893,673
--------------
3,369,126
--------------
CHEMICALS - 2.0%
250,000 Du Pont (E.I.) De Nemours and Co.
3.38%, 11/15/07 Aa3 257,214
250,000 Du Pont (E.I.) De Nemours and Co.
4.13%, 03/06/13 Aa3 251,131
200,000 Du Pont (E.I.) De Nemours and Co.
8.25%, 09/15/06 Aa3 237,596
1,000,000 Praxair, Inc.
6.63%, 10/15/07 A3 1,143,947
--------------
1,889,888
--------------
COMMERCIAL SERVICES - 1.9%
500,000 Allied Waste North America
8.50%, 12/01/08 Ba3 537,500
750,000 Pitney Bowes, Inc.
4.75%, 05/15/18 Aa3 765,199
490,000 USA Waste Services, Inc.
7.00%, 10/01/04 Baa3 519,656
--------------
1,822,355
--------------
COSMETICS & PERSONAL CARE - 2.2%
450,000 Gillette Co.
2.88%, 03/15/08 Aa3 452,057
300,000 Procter & Gamble Co.
4.75%, 06/15/07 Aa3 324,827
1,000,000 Procter & Gamble Co.
8.50%, 08/10/09 Aa3 1,284,123
--------------
2,061,007
--------------
ELECTRIC UTILITIES - 6.9%
550,000 Amerenenergy Generating
7.75%, 11/01/05 A3 615,906
500,000 Baltimore Gas & Electric Co.
5.20%, 06/15/33 A2 478,118
425,000 Detroit Edison Co.
6.13%, 10/01/10 A3 485,283
535,000 Dominion Resources, Inc.
7.60%, 07/15/03 Baa1 536,066
500,000 Duke Energy Corp.
7.50%, 08/16/05 Baa2 546,752
563,466 East Coast Power LLC
7.07%, 03/31/12 Ba2 580,370
420,000 Exelon Corp.
6.75%, 05/01/11 Baa2 485,935
225,000 Florida Power & Light
6.88%, 12/01/05 Aa3 251,184
600,000 Gulf States Utilities
8.25%, 04/01/04 Baa3 628,589
750,000 Nisource Finance Corp.
7.88%, 11/15/10 Baa3 885,525
500,000 Pinnacle Partners (c)
8.83%, 08/15/04 Ba2 518,750
450,000 PSEG Energy Holdings (c)
7.75%, 04/16/07 Baa3 475,875
--------------
6,488,353
--------------
ENTERTAINMENT & LEISURE - 2.3%
755,000 AOL Time Warner, Inc. (a)
6.15%, 05/01/07 Baa1 849,322
500,000 Harrah's Operating Co., Inc.
7.13%, 06/01/07 Baa3 565,567
350,000 Park Place Entertainment Corp. (a)
8.13%, 05/15/11 Ba2 384,125
300,000 Time Warner Cos., Inc.
7.57%, 02/01/24 Baa1 339,558
--------------
2,138,572
--------------
FINANCIAL SERVICES - 7.9%
500,000 American Express Co.
3.75%, 11/20/07 A1 521,029
200,000 American Express Credit Corp.
3.00%, 05/16/08 Aa3 201,378
535,000 CIT Group, Inc. (a)
4.00%, 05/08/08 A2 544,830
460,000 Ford Motor Credit Co. (a)
6.50%, 01/25/07 A3 483,977
400,000 Ford Motor Credit Co.
6.88%, 02/01/06 A3 424,240
825,000 Ford Motor Credit Co.
7.25%, 10/25/11 A3 848,160
500,000 General Electric Capital Corp., MTN
4.25%, 01/15/08 Aaa 529,609
500,000 General Electric Capital Corp.
8.75%, 05/21/07 Aaa 610,227
500,000 Household Finance Corp.
8.00%, 07/15/10 A1 620,265
800,000 KFW International Finance, Inc.
4.25%, 04/18/05 Aaa 838,675
500,000 Mellon Funding Corp.
5.00%, 12/01/14 A2 539,393
550,000 Pitney Bowes Credit Corp.
8.55%, 09/15/09 Aa3 688,563
500,000 Toyota Motor Credit Corp.
5.50%, 12/15/08 Aa1 566,017
--------------
7,416,363
--------------
FOOD RETAILERS - 1.6%
450,000 Kroger Co.
5.50%, 02/01/13 Baa3 475,002
450,000 Safeway, Inc.
6.50%, 03/01/11 Baa2 502,313
See Notes to Financial Statements.
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F-2
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ALLMERICA SECURITIES TRUST
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PORTFOLIO OF INVESTMENTS, CONTINUED - JUNE 30, 2003 (UNAUDITED)
- --------------------------------------------------------------------------------
VALUE
PAR VALUE MOODY'S RATINGS (NOTE 2)
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FOOD RETAILERS (CONTINUED)
$ 500,000 Safeway, Inc.
9.65%, 01/15/04 Baa3 $ 519,595
--------------
1,496,910
--------------
FOREST PRODUCTS & PAPER - 3.5%
500,000 International Paper Co. (c)
5.30%, 04/01/15 Baa2 514,047
350,000 International Paper Co.
7.50%, 05/15/04 Baa2 366,492
500,000 Kimberly-Clark Corp.
7.10%, 08/01/07 Aa2 585,238
750,000 Rock-Tenn Co.
5.63%, 03/15/13 Baa3 780,928
450,000 Weyerhaeuser Co.
5.25%, 12/15/09 Baa2 481,510
500,000 Weyerhaeuser Co.
6.75%, 03/15/12 Baa2 567,600
--------------
3,295,815
--------------
HOME CONSTRUCTION, FURNISHINGS &
APPLIANCES - 0.7%
500,000 Pulte Corp.
8.13%, 03/01/11 Baa3 613,591
--------------
INSURANCE - 1.0%
450,000 Marsh & McLennan Cos., Inc.
4.85%, 02/15/13 A2 468,132
450,000 UnitedHealth Group, Inc.
7.50%, 11/15/05 A3 509,113
--------------
977,245
--------------
MEDIA - BROADCASTING &
PUBLISHING - 3.1%
270,000 Belo Corp.
8.00%, 11/01/08 Baa3 326,930
500,000 Continental Cablevision, Inc.,
Senior Notes
8.30%, 05/15/06 Baa3 575,369
505,000 Cox Communications, Inc.
7.13%, 10/01/12 Baa2 603,037
500,000 News America Holdings, Inc.
7.38%, 10/17/08 Baa3 590,624
250,000 Viacom, Inc.
5.50%, 05/15/33 A3 248,529
450,000 Viacom, Inc.
7.88%, 07/30/30 A3 587,975
--------------
2,932,464
--------------
OIL & GAS - 6.7%
500,000 ANR Pipeline Co., Debenture
9.63%, 11/01/21 B1 590,000
375,000 Burlington Resources, Inc.
7.40%, 12/01/31 Baa1 469,150
580,000 Conoco Funding Co.
5.45%, 10/15/06 A3 640,248
500,000 Conoco Funding Co.
7.25%, 10/15/31 A3 628,136
500,000 Enterprise Products
8.25%, 03/15/05 Baa2 548,984
110,000 Occidental Petroleum Corp.
5.88%, 01/15/07 Baa2 122,110
500,000 Occidental Petroleum Corp.
6.50%, 04/01/05 Baa2 540,111
500,000 Oryx Energy Co.
8.00%, 10/15/03 Baa3 509,250
175,000 Parker & Parsley Petroleum Co.
8.88%, 04/15/05 Ba1 191,625
625,000 Phillips Petroleum
8.50%, 05/25/05 A3 704,029
195,000 Seagull Energy, Inc.
7.88%, 08/01/03 Baa3 195,000
600,000 Texaco Capital, Inc.
8.25%, 10/01/06 Aa3 722,439
400,000 XTO Energy, Inc.
7.50%, 04/15/12 Ba2 454,000
--------------
6,315,082
--------------
PHARMACEUTICALS - 2.1%
120,000 Johnson & Johnson
6.73%, 11/15/23 Aaa 145,976
750,000 Lilly (Eli) & Co.
7.13%, 06/01/25 Aa3 948,689
300,000 Wyeth Corp.
4.13%, 03/01/08 A3 310,992
150,000 Wyeth Corp.
5.25%, 03/15/13 A3 158,506
330,000 Zeneca Wilmington
7.00%, 11/15/23 Aa2 403,102
--------------
1,967,265
--------------
RETAILERS - 2.3%
500,000 J.C. Penney Co., Inc.
7.38%, 08/15/08 Ba3 516,250
500,000 Kohls Corp.
6.00%, 01/15/33 A3 540,903
450,000 Target Corp.
6.35%, 11/01/32 A2 501,796
450,000 Wal-Mart Stores, Inc.
7.55%, 02/15/30 Aa2 594,311
--------------
2,153,260
--------------
SECURITIES BROKER - 2.5%
450,000 Bear Stearns Cos., Inc.
4.00%, 01/31/08 A2 470,716
450,000 Goldman Sachs Group, Inc.
5.70%, 09/01/12 Aa3 494,383
333,153 Jones (Edward D.) & Co.,
LP (d) (e)
7.95%, 04/15/06 NR 362,594
500,000 Lehman Brothers Holdings, Inc.
4.00%, 01/22/08 A2 521,102
See Notes to Financial Statements.
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F-3
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ALLMERICA SECURITIES TRUST
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS, CONTINUED - JUNE 30, 2003 (UNAUDITED)
- --------------------------------------------------------------------------------
VALUE
PAR VALUE MOODY'S RATINGS (NOTE 2)
- ---------------------------------------------------------------------------------
SECURITIES BROKER (CONTINUED)
$ 475,000 Morgan Stanley Dean Witter & Co.
6.60%, 04/01/12 Aa3 $ 548,808
--------------
2,397,603
--------------
TELEPHONE SYSTEMS - 3.0%
500,000 BellSouth Corp.
6.88%, 10/15/31 A1 588,551
680,000 Sprint Capital Corp.
6.13%, 11/15/08 Baa3 738,022
120,000 Sprint Capital Corp.
7.90%, 03/15/05 Baa3 130,155
500,000 Verizon Florida, Inc.
6.13%, 01/15/13 A1 566,144
150,000 Verizon Global Funding Corp.
4.38%, 06/01/13 A2 149,577
125,000 Verizon Wireless Capital (b)
1.49%, 12/17/03 A3 124,960
450,000 Vodafone Group, Plc
5.38%, 01/30/15 A2 480,596
--------------
2,778,005
--------------
TRANSPORTATION - 1.3%
500,000 Consolidated Rail Corp.
9.75%, 06/15/20 Baa2 689,326
255,000 Union Pacific Corp.
5.38%, 06/01/33 Baa3 245,991
250,000 Union Pacific Corp.
6.63%, 02/01/08 Baa3 285,358
--------------
1,220,675
--------------
TOTAL CORPORATE NOTES AND BONDS 63,748,380
(Cost $59,882,757) --------------
ASSET-BACKED AND MORTGAGE-BACKED SECURITIES (I) - 7.7%
1,000,000 American Airlines, Inc., Pass-
Through Trust, Series 1991 - C2
9.73%, 09/29/14 Caa2 398,060
570,000 Bear Stearns Commercial Mortgage
Securities, Inc., Series 2002-PBW1,
Class A2
4.72%, 11/11/35 Aaa 597,514
250,000 Bear Stearns Mortgage
Securities, Inc., Series 1999-WF2,
Class A2, CMO
7.08%, 06/15/09 Aaa 296,901
500,000 Chase Manhattan Auto Owner Trust,
Series 2002-A, Class A4
4.24%, 09/15/08 Aaa 525,838
300,000 Citibank Credit Card Issuance
Trust, Series 2000-Cl, CMO
6.88%, 11/16/09 Aaa 352,104
250,000 DaimlerChrysler Auto Trust, Series
2002-B, Class A3
2.93%, 06/06/06 Aaa 254,817
500,000 General Electric Capital Commercial
Mortgage Corp., Series 2002-1A,
Class A3
6.27%, 12/10/35 Aaa 579,756
87,266 Green Tree Recreation Equipment &
Consumer Trust, Series 1997-B,
Class A1, CMO (f)
6.55%, 07/15/28 AAA 87,413
500,000 GS Mortgage Securities Corp. II,
Series 1997-GL, Class A2D
6.94%, 07/13/30 Aaa 574,896
250,000 MBNA Master Credit Card Trust,
Series 1995-C, Class A
6.45%, 02/15/08 Aaa 273,199
250,000 Morgan Stanley Dean Witter Capital
I, Series 2002-TOP7, Class B, CMO
6.08%, 01/15/39 Aa2 285,474
750,000 Morgan Stanley Dean Witter Capital
I, Series 2003-T0P9, Class A2,
CMO (f)
4.74%, 11/13/36 AAA 785,382
420,000 Toyota Auto Receivables Owner
Trust, Series 2002-B, Class A3
3.76%, 06/15/06 Aaa 429,632
1,000,000 Union Acceptance Corp., Series
2000-B, Class B
7.73%, 01/08/08 Aaa 1,071,015
1,013,838 United Air Lines, Inc., Pass-
Through Certificate (g)
9.30%, 03/22/08 Caa2 251,655
451,258 USAA Auto Owner Trust, Series
2000-1, Class A4
6.98%, 06/15/05 Aaa 460,762
--------------
TOTAL ASSET-BACKED AND
MORTGAGE-BACKED SECURITIES 7,224,418
(Cost $8,407,052) --------------
FOREIGN GOVERNMENT OBLIGATIONS (J) - 2.9%
450,000 Province of British Columbia
5.38%, 10/29/08 Aa2 505,842
550,000 Province of Manitoba
4.25%, 11/20/06 Aa2 587,826
500,000 Province of Ontario
2.63%, 12/15/05 Aa2 510,373
500,000 Province of Quebec
6.13%, 01/22/11 A1 581,753
500,000 Province of Quebec
7.00%, 01/30/07 A1 581,131
--------------
TOTAL FOREIGN GOVERNMENT
OBLIGATIONS 2,766,925
(Cost $2,527,329) --------------
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
F-4
- --------------------------------------------------------------------------------
ALLMERICA SECURITIES TRUST
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS, CONTINUED - JUNE 30, 2003 (UNAUDITED)
- --------------------------------------------------------------------------------
VALUE
PAR VALUE MOODY'S RATINGS (NOTE 2)
- ----------------------------------------------------------------------------------
FOREIGN BONDS (J) - 7.0%
$ 500,000 Alberta Energy Co., Ltd.
7.38%, 11/01/31 Baa1 $ 632,293
700,000 British Sky Broadcasting Group, Plc
7.30%, 10/15/06 Ba1 784,000
450,000 British Telecom, Plc (h)
8.38%, 12/15/10 Baa1 569,105
500,000 Calpine Canada Energy Finance
8.50%, 05/01/08 B1 390,000
355,000 Canadian Pacific, Ltd.
9.45%, 08/01/21 Baa2 511,860
450,000 Canadian Pacific Railroad
5.75%, 03/15/33 Baa2 465,188
450,000 Sappi Papier Holding AG (c)
6.75%, 06/15/12 Baa2 513,926
1,000,000 St. George Bank, Ltd., Yankee
Debenture (c)
7.15%, 10/15/05 A3 1,091,598
435,000 Stora Enso Oyj
7.38%, 05/15/11 Baa1 520,878
500,000 Telus Corp.
7.50%, 06/01/07 Ba1 557,500
500,000 Vodafone Group, Plc
6.25%, 11/30/32 A2 541,461
--------------
TOTAL FOREIGN BONDS 6,577,809
(Cost $6,158,594) --------------
MUNICIPAL OBLIGATIONS - 0.8%
750,000 Illinois State General Obligation
3.85%, 06/01/13 Aa3 737,235
--------------
TOTAL MUNICIPAL OBLIGATIONS 737,235
--------------
(Cost $748,522)
TOTAL INVESTMENTS - 98.7% 92,876,340
--------------
(Cost $89,251,146)
NET OTHER ASSETS AND LIABILITIES - 1.3% 1,177,643
--------------
TOTAL NET ASSETS - 100.0% $ 94,053,983
==============
- ----------------------------------
(a) All or a portion of this security is out on loan at June 30, 2003; the
value of the securities loaned amounted to $3,018,355. The value of
collateral amounted to $3,100,900 which consisted of cash equivalents.
(b) Variable rate security. The rate shown reflects rate in effect at period
end.
(c) Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold in transactions exempt from registration,
to qualified institutional buyers. At June 30, 2003, these securities
amounted to $3,579,310 or 3.8% of net assets.
(d) Security is valued by management (Note 2).
(e) 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 June 30, 2003, these
securities amounted to $362,594 or 0.4% of net assets.
(f) Standard & Poor's (S&P) credit ratings are used in the absence of a rating
by Moody's Investors, Inc.
(g) Issuer filed for bankruptcy.
(h) Debt obligation initially issued in coupon form which converts to a higher
coupon form at a specified date and rate. The rate shown is the rate at
period end. The maturity date shown is the ultimate maturity.
(i) Pass Through Certificates.
(j) U.S. currency denominated.
CMO Collateralized Mortgage Obligation
MTN Medium Term Note
NR Not Rated
FEDERAL INCOME TAX INFORMATION (SEE NOTE 2)
At June 30, 2003, the aggregate cost of investment securities for tax purposes
was $89,738,255. Net unrealized appreciation (depreciation) aggregated
$3,138,085, of which $4,838,634 related to appreciated investment securities and
$(1,700,549) related to depreciated investment securities.
OTHER INFORMATION
For the six months ended June 30, 2003, the aggregate cost of purchases and the
proceeds of sales, other than from short-term investments, included $31,931,609
and $19,567,476 of non-governmental issuers, respectively, and $37,578,960 and
$46,946,640 of 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:
Moody's Rating
(Unaudited)
Aaa 12.9%
Aa 22.3%
A 24.9%
Baa 25.9%
Ba 4.8%
B 1.1%
Caa 0.7%
NR (Not Rated) 6.5%
----
99.1%
====
S&P Ratings
(Unaudited)
AAA 0.9%
===
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
F-5
- --------------------------------------------------------------------------------
ALLMERICA SECURITIES TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES - JUNE 30, 2003 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investments:
Investments at cost $89,251,146
Net unrealized appreciation 3,625,194
-----------
Total investments at value+ 92,876,340
Cash 4,325
Short-term investments held as collateral for
securities loaned 3,100,900
Interest receivable 1,345,618
-----------
Total Assets 97,327,183
-----------
LIABILITIES:
Collateral for securities loaned 3,100,900
Management fee payable 31,799
Trustees' fees and expenses payable 11,654
Accrued expenses and other payables 128,847
-----------
Total Liabilities 3,273,200
-----------
NET ASSETS $94,053,983
===========
NET ASSETS CONSIST OF:
Par Value $ 8,592,306
Paid-in capital 88,140,954
Distribution in excess of net investment income (510,819)
Accumulated net realized loss (5,793,652)
Net unrealized appreciation 3,625,194
-----------
TOTAL NET ASSETS $94,053,983
===========
SHARES OF BENEFICIAL INTEREST OUTSTANDING
(10,000,000 AUTHORIZED SHARES WITH PAR VALUE OF
$1.00) 8,592,306
NET ASSET VALUE
Per share $ 10.946
===========
MARKET VALUE (CLOSING PRICE ON NEW YORK STOCK
EXCHANGE)
Per share $ 10.00
===========
+Total value of securities on loan $ 3,018,355
===========
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
F-6
- --------------------------------------------------------------------------------
ALLMERICA SECURITIES TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS - FOR THE SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $2,478,145
Securities lending income 4,047
----------
Total investment income 2,482,192
----------
EXPENSES
Management fees 198,565
Custodian and Fund accounting fees 36,205
Transfer agent fees 41,784
Legal fees 2,546
Audit fees 12,045
Trustees' fees and expenses 9,990
Reports to shareholders 2,320
New York Stock Exchange fees 12,212
Miscellaneous 2,862
----------
Total expenses 318,529
----------
NET INVESTMENT INCOME 2,163,663
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on investments sold 1,812,209
Net change in unrealized appreciation
(depreciation) of investments 1,542,382
----------
NET GAIN ON INVESTMENTS 3,354,591
----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $5,518,254
==========
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, 2003 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2002
- -----------------------------------------------------------------------------
NET ASSETS AT BEGINNING OF PERIOD $90,834,171 $90,773,702
----------- -----------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS:
Net investment income 2,163,663 4,857,694
Net realized gain (loss) on
investments sold 1,812,209 (2,344,097)
Net change in unrealized
appreciation (depreciation) of
investments 1,542,382 2,573,374
----------- -----------
Net increase in net assets resulting
from operations 5,518,254 5,086,971
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET
INVESTMENT INCOME (2,298,442) (5,026,502)
----------- -----------
Total increase in net assets 3,219,812 60,469
----------- -----------
NET ASSETS AT END OF PERIOD $94,053,983 $90,834,171
=========== ===========
Distribution in excess of net investment
income $ (510,819) $ (376,040)
=========== ===========
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
F-7
- --------------------------------------------------------------------------------
ALLMERICA SECURITIES TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS - FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2003 -------------------------------------------------------
(UNAUDITED) 2002 2001(1) 2000 1999 1998
---------------- ----------- ----------- -------- -------- ---------
Net Asset Value,
beginning of period $10.572 $10.565 $10.866 $10.958 $11.961 $ 11.821
------- ------- ------- ------- ------- --------
Income from Investment
Operations:
Net investment income 0.252 0.565 0.673(2) 0.802 0.802 0.810
Net realized and
unrealized gain (loss)
on investments 0.390 0.027 (0.209) (0.084) (0.965) 0.160
------- ------- ------- ------- ------- --------
Total from investment
operations 0.642 0.592 0.464 0.718 (0.163) 0.970
------- ------- ------- ------- ------- --------
Less Distributions(3):
Dividends from net
investment income (0.268) (0.585) (0.729) (0.800) (0.800) (0.830)
Distributions from net
realized capital gains -- -- -- (0.010) (0.040) --
Return of capital -- -- (0.036) -- -- --
------- ------- ------- ------- ------- --------
Total distributions (0.268) (0.585) (0.765) (0.810) (0.840) (0.830)
------- ------- ------- ------- ------- --------
Net increase (decrease)
in net asset value 0.374 0.007 (0.301) (0.092) (1.003) 0.140
------- ------- ------- ------- ------- --------
Net Asset Value, end of
period $10.946 $10.572 $10.565 $10.866 $10.958 $ 11.961
======= ======= ======= ======= ======= ========
Market Value, end of
period $ 10.00 $ 9.45 $ 9.83 $ 10.00 $ 8.81 $ 11.13
======= ======= ======= ======= ======= ========
Total Return on Market
Value, end of period 8.72%** $ 2.11% 6.00% 23.76% (13.75)% 11.13%
Ratios/Supplemental Data
Net assets, end of period
(000's) $94,054 $90,834 $90,774 $93,362 $94,157 $102,770
Ratios to average net
assets:
Net investment income 4.74%* 5.38% 6.23% 7.38% 7.00% 6.78%
Operating expenses 0.70%* 0.86% 0.79% 0.74% 0.77% 0.73%
Management fee 0.44%* 0.45% 0.50% 0.50% 0.49% 0.49%
Portfolio turnover rate 74%** 79% 128% 58% 24% 25%
- ---------------------------------------
* Annualized.
** Not annualized.
(1) Effective January 1, 2001, the Fund adopted the provisions of the AICPA
Audit and Accounting Guide for Investment Companies and is amortizing
premium and market discount on debt securities using the daily effective
yield method. The effect of this change for the year ended December 31,
2001 was a decrease in net investment income per share of $0.022, an
increase in net realized and unrealized gains and losses per share of
$0.022 and a decrease in the ratio of net investment income to average net
assets from 6.36% to 6.23%. Per share data and ratio/supplemental data for
periods prior to January 1, 2001 have not been restated to reflect this
change in presentation.
(2) Computed using average shares throughout the period.
(3) Certain prior year amounts have been reclassified to conform to the current
year presentation.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
F-8
- --------------------------------------------------------------------------------
ALLMERICA SECURITIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (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 accounting principles
generally accepted in the United States of America 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 using
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. This
method involves valuing a portfolio security initially at its cost and
thereafter assumes a constant amortization to maturity of any discount or
premium.
At June 30, 2003, one security with a value of $362,594 or 0.4% of net assets
was valued by management under the direction of the Board of Trustees.
SECURITY TRANSACTIONS AND INVESTMENT INCOME: Security transactions are recorded
as of the trade date. Realized gains and losses from security transactions are
determined on the basis of identified cost. Interest income, including
amortization 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 statements.
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 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
regulations. Differences between book basis and tax basis amounts are primarily
due to differing book and tax treatments in both the timing of the recognition
of losses deferred due to wash sales and differing treatments for the
amortization of premium and market discount. Permanent book and tax basis
differences relating to shareholder distributions will result in
reclassifications to paid in capital. 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.
SECURITIES LENDING: The Trust, using Investors Bank & Trust Company ("IBT") as
its lending agent, may loan securities to brokers and dealers in exchange for
negotiated lenders' fees. These fees are disclosed as "Securities lending
income" in the Statement of Operations. The Trust receives collateral against
the loaned securities, which must be
- --------------------------------------------------------------------------------
F-9
- --------------------------------------------------------------------------------
ALLMERICA SECURITIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
maintained at not less than 102% of the market value of the loaned securities
during the period of the loan. Collateral received is generally cash, and is
invested in short term investments. Lending portfolio securities involves
possible delays in receiving additional collateral or in the recovery of the
securities or possible loss of rights in the collateral. Information regarding
the value of the securities loaned and the value of the collateral at period end
is included in a footnote 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 (comprised of nine separate
portfolios).
3. INVESTMENT MANAGEMENT AND OTHER RELATED PARTY TRANSACTIONS
Opus Investment Management, Inc., a direct, wholly-owned subsidiary of Allmerica
Financial Corporation ("Allmerica Financial") serves as Investment Manager to
the Trust. Effective February 1, 2003, the name of Allmerica Asset
Management, Inc. was changed to Opus Investment Management, Inc. ("Opus"). For
these services, the Trust pays Opus an 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 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, Opus 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. Opus is solely responsible for the payment of
the administration fee and the Trust pays 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 the Investment Manager
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, 2003, First Allmerica Financial Life Insurance Company, an indirect,
wholly-owned subsidiary of Allmerica Financial, the Trustees and the officers of
the Trust owned in the aggregate 118,315 shares of beneficial interest.
3. RESTRICTED SECURITIES
At June 30, 2003, the Trust owned the following restricted security constituting
0.4% 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 restricted 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 Board of Trustees. Additional information on the restricted
security is as follows:
Date of Par Cost at
Issuer Acquisition Amount Acquisition Value
- -----------------------------------------------------------------------------
Jones (Edward D.) & Co., LP 05/06/94 $333,153 $333,153 $362,594
======== ========
- --------------------------------------------------------------------------------
F-10
- --------------------------------------------------------------------------------
ALLMERICA SECURITIES TRUST
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
SHAREHOLDER VOTING RESULTS: (UNAUDITED)
- --------------------------------------------------------------------------------
The annual meeting of the Trust's shareholders was held on April 16, 2003 at
which shareholders approved one proposal. The voting results were as follows:
PROPOSAL: To elect as Trustees the following nine nominees, each to serve until
the next Annual Meeting of Shareholders and until his or her successor is duly
elected and qualified.
Shares Shares
For Withheld Total
- ----------------------------------------------------------------------------------------------
P. KEVIN CONDRON: Number of Votes Cast: 6,747,128 183,762 6,930,890
Percentage of Votes Cast: 97.35% 2.65% 100.00%
JOCELYN S. DAVIS: Number of Votes Cast: 6,734,630 196,260 6,930,890
Percentage of Votes Cast: 97.17% 2.83% 100.00%
CYNTHIA A. HARGADON: Number of Votes Cast: 6,740,912 189,978 6,930,890
Percentage of Votes Cast: 97.26% 2.74% 100.00%
T. BRITTON HARRIS, IV: Number of Votes Cast: 6,736,900 193,990 6,930,890
Percentage of Votes Cast: 97.20% 2.80% 100.00%
GORDON HOLMES: Number of Votes Cast: 6,745,738 185,152 6,930,890
Percentage of Votes Cast: 97.33% 2.67% 100.00%
MARK A. HUG: Number of Votes Cast: 6,732,890 198,000 6,930,890
Percentage of Votes Cast: 97.14% 2.86% 100.00%
JOHN P. KAVANAUGH: Number of Votes Cast: 6,742,307 188,583 6,930,890
Percentage of Votes Cast: 97.28% 2.72% 100.00%
ATTIAT F. OTT: Number of Votes Cast: 6,745,250 185,640 6,930,890
Percentage of Votes Cast: 97.32% 2.68% 100.00%
RANNE P. WARNER: Number of Votes Cast: 6,745,428 185,462 6,930,890
Percentage of Votes Cast: 97.32% 2.68% 100.00%
- --------------------------------------------------------------------------------
F-11
- --------------------------------------------------------------------------------
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 investor'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 (UNAUDITED)
- --------------------------------------------------------------------------------
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 or rejoin 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.
INVESTMENT MANAGER: Opus Investment Management, Inc.
PORTFOLIO MANAGER: Ann K. Tripp
INVESTMENT OBJECTIVES: The Trust's primary investment objective is to provide a
high rate of current income, with capital appreciation as a secondary objective.
PRINCIPAL INVESTMENT POLICIES: The Trust seeks to achieve its objectives by
investing in various types of fixed income securities with an emphasis on
corporate debt obligations. Examples of the types of securities in which the
Trust invests are corporate bonds, notes and debentures; mortgage-backed and
asset-backed securities; obligations issued or guaranteed by the U.S.
Government, its agencies and instrumentalities; and money market instruments.
The Trust may invest up to 30% of its assets in high yield securities or "junk
bonds" rated below investment grade but at least B- or higher by Moody's
Investors Services or Standard & Poor's Rating Services or similar rating
organizations, and in unrated securities determined by the Investment Manager to
be of comparable quality. The Trust may invest up to 25% of its assets in U.S.
dollar denominated foreign debt securities. The Trust may invest in securities
with relatively long maturities as well as securities with shorter maturities.
PRINCIPAL RISKS:
.. Company Risk
.. Credit Risk
.. Foreign Investment Risk
.. Interest Rate Risk
.. Investment Management Risk
.. Liquidity Risk
.. Market Risk
.. Prepayment Risk
- --------------------------------------------------------------------------------
F-12
[LOGO]
ALLMERICA
FINANCIAL(R)
THE ALLMERICA FINANCIAL COMPANIES
---------------------------------
The Hanover Insurance Company Allmerica Financial Alliance Insurance Company
Allmerica Financial Benefit Insurance Company Citizens Insurance Company of
America Citizens Management Inc. AMGRO, Inc. Financial Profiles, Inc.
VeraVest Investments, Inc. VeraVest Investment Advisors, Inc. Opus Investment
Management, Inc. Allmerica Trust Company, N.A. First Allmerica Financial Life
Insurance Company Allmerica Financial Life Insurance and Annuity Company
(all states except NY)
12164(6/03) 03-1471
Item 2. Code of Ethics
Not Applicable
Item 3. Audit Committee Financial Expert
Not Applicable
Item 4. Principal Accountant Fees and Services
Not Applicable
Item 5. Audit Committee of Listed Registrants
Not Applicable
Item 6. Reserved.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not Applicable
Item 8. Reserved.
Item 9. Controls and Procedures
(a) The registrant's principal executive and principal financial
officers have concluded that, based on their evaluation of the
effectiveness of the registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment
Company Act of 1940) as of the date within 90 days of the
filing date of this report on Form N-CSR, such disclosure
controls and procedures provide reasonable assurances that
material information relating to the registrant is made known
to them by the appropriate persons.
(b) Changes to internal control over financial reporting: Not
Applicable
Item 10. Exhibits
(a) Not Applicable
(b)(1) Separate certifications by the registrant's principal executive
officer and principal financial officer, pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 and as required
by Rule 30a-2(a) under the Investment Company Act of 1940, are
attached hereto as Exhibit 99.CERT.
(2) A certification by the registrant's principal executive officer
and principal financial officer, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and as required by Rule 30a-2(b)
under the Investment Company Act of 1940 is attached hereto as
Exhibit 99.906CERT.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Allmerica Securities Trust
By: /s/ John P. Kavanaugh
-------------------------
John P. Kavanaugh
President and Chairman
Date: August 19, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ John P. Kavanaugh
-------------------------
John P. Kavanaugh
President and Chairman
Date: August 19, 2003
By: /s/ Paul T. Kane
-------------------------
Paul T. Kane
Assistant Vice President and Treasurer
(Principal Accounting Officer and
Principal Financial Officer)
Date: August 19, 2003