<PAGE>
AMERITOR
Industry
Fund
(Formerly Steadman American Industry Fund)
ANNUAL
REPORT
June 30, 1999
An Ameritor NO-LOAD Mutual Fund
AMERITOR FINANCIAL CORPORATION
(Formerly Steadman Security Corporation)
Ameritor
Financial
Corporation
Investment Adviser
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dear Shareholder:
Ameritor Industry Fund, formerly known as Steadman American Industry Fund,
appreciated very modestly in this fiscal year. It overcame the almost 5% loss
reported for the mid-year and yielded nearly a 1% gain for the whole year.
The investments of the Fund rose substantially but the gains achieved by the
portfolio were offset by high operating costs, mainly the expense of servicing
many small shareholder accounts and the re-programming of the Fund's computer
system to deal with the Year 2000 issue. Much of the outlay required for Y2K
compliance has already occurred so that additional costs to be incurred before
the year 2000 will be minor. It is anticipated that these improvements,
together with the ongoing program to reduce other costs, should lower expenses
significantly.
We look forward to continued appreciation of our investments and lower
operating costs. We expect to achieve a higher return for the next fiscal year.
We appreciate your continued confidence.
Sincerely,
/s/ Max Katcher
Max Katcher
President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees of
Ameritor Industry Fund
We have audited the accompanying statement of assets and liabilities, in-
cluding the portfolio of investments, of Ameritor Industry Fund as of June 30,
1999, the related statement of operations for the year then ended, the state-
ments of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the three years in the period
then ended. These financial statements and financial highlights are the re-
sponsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights for the year ended June 30, 1996, the period
February 1, 1995 through June 30, 1995, and the year ended January 31, 1995
were audited by other auditors whose report, dated August 6, 1996, expressed
an unqualified opinion on those financial highlights.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of mate-
rial misstatement. An audit includes examining, on a test basis, evidence sup-
porting the amounts and disclosures in the financial statements. Our proce-
dures included confirmation of securities owned as of June 30, 1999, by corre-
spondence with the custodian and/or broker. An audit also includes assessing
the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Ameritor Industry Fund as of June 30, 1999, the results of its operations for
the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the three
years in the period then ended, in conformity with generally accepted account-
ing principles.
Reznick Fedder & Silverman P.C.
Bethesda, Maryland
August 9, 1999
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AMERITOR INDUSTRY FUND
Portfolio of Investments
June 30, 1999
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ --------
<S> <C> <C>
COMMON STOCKS -- 100%
Computer Peripherals -- 29.4%
Cisco Systems Inc (a)........................................ 4,000 $258,000
--------
Total Computer Peripherals 258,000
--------
Consumer Finance -- 5.5%
Associates First Capital Corporation......................... 1,096 48,567
--------
Total Consumer Finance 48,567
--------
Financial Services -- 12.2%
Citigroup Inc (b)............................................ 2,250 106,875
--------
Total Financial Services 106,875
--------
Motor Vehicles -- 12.9%
Ford Motor Company........................................... 2,000 112,875
--------
Total Motor Vehicles 112,875
--------
Telecom Mfg. -- 15.4%
Lucent Technologies Inc...................................... 2,000 134,875
--------
Total Telecom Mfg 134,875
--------
Telephone Services -- 24.6%
MCI Worldcom Inc (a)......................................... 2,500 215,156
--------
Total Telephone Services 215,156
--------
Total Portfolio of Investments (Cost $330,966)............... $876,348
========
</TABLE>
(a) Non-income producing security.
(b) Formerly Travelers Group, Inc.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AMERITOR INDUSTRY FUND
Statement of Assets and Liabilities
June 30, 1999
<TABLE>
<S> <C>
Assets:
Investments at value (Cost $330,966) (Note 1)................... $ 876,348
Cash and cash equivalents (Note 1).............................. 39,525
Due from affiliate (Note 4)..................................... 2,860
Dividends receivable............................................ 20
Interest receivable............................................. 30
-----------
Total assets................................................... 918,783
-----------
Liabilities:
Accounts payable and accrued expenses........................... 24,242
Investment advisory and service fee payable (Note 4)............ 936
Other payable to affiliate (Note 4)............................. 8,334
Payable for trust shares redeemed............................... 3,306
-----------
Total liabilities.............................................. 36,818
-----------
Net Assets........................................................ $ 881,965
===========
Net assets consist of:
Accumulated net investment loss................................. $(4,720,339)
Unrealized appreciation of investments.......................... 545,382
Accumulated net realized losses from security transactions...... (500,417)
Capital paid in less distributions since inception.............. 5,557,339
-----------
$ 881,965
===========
Net asset value, offering price and redemption price per share
($881,965 divided by 1,015,676 shares of no par value trust
shares)......................................................... $ 0.87
===========
</TABLE>
The accompanying notes are an integral part of the financial statements
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AMERITOR INDUSTRY FUND
Statement of Operations
For the year ended June 30, 1999
<TABLE>
<S> <C> <C>
Investment Income:
Dividends................................................. $ 6,476
Interest.................................................. 1,484
--------
Total income............................................ $ 7,960
---------
Expenses:
Salaries and employee benefits (Note 4)................... 29,150
Investment advisory fee (Note 4).......................... 8,468
Professional fees......................................... 32,887
Shareholder servicing fee (Note 4)........................ 102,711
Rent (Note 4)............................................. 5,681
Custodian fees............................................ 1,257
Computer services (Note 4)................................ 35,442
Reports to shareholders................................... 19,216
Trustees' fees and expenses (Note 4)...................... 1,723
Pricing and subscriptions................................. 10,778
Miscellaneous............................................. 3,972
--------
Total expenses.......................................... 251,285
---------
Net investment loss..................................... (243,325)
---------
Realized and Unrealized Gain/(Loss) on
Investments (Notes 1 and 3):
Net realized gain from investment transactions............ 94,265
Change in unrealized appreciation of investments.......... 157,406
---------
Net gain on investments................................... 251,671
---------
Net increase in net assets resulting from operations...... $ 8,346
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AMERITOR INDUSTRY FUND
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the year For the year
ended June 30, ended June 30,
1999 1998
-------------- --------------
<S> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment loss............................. $(243,325) $(256,697)
Net realized gain from investment transactions.. 94,265 356,531
Change in unrealized appreciation of
investments................................... 157,406 68,162
--------- ---------
Net increase in net assets resulting from
operations.................................... 8,346 167,996
Decrease in net assets from trust share
transactions (Note 2).......................... (102,681) (167,793)
--------- ---------
(Decrease)/Increase in net assets............... (94,335) 203
Net assets at beginning of period................ 976,300 976,097
--------- ---------
Net assets at end of period, including
accumulated net investment loss of $4,720,339
and $4,477,014................................. $ 881,965 $ 976,300
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AMERITOR INDUSTRY FUND
Financial Highlights
<TABLE>
<CAPTION>
For the period For the
For the years ended June 30 February 1, 1995 year ended
--------------------------------- through June 30 January 31
1999 1998 1997 1996 1995* 1995
------ ------ ------ ------ ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value,
beginning of period.. $ .86 $ .72 $ .72 $ .88 $ 0.96 $ 1.65
------ ------ ------ ------ ------ ------
Net investment income
(loss)............... (.71) (.80) (.33) (.41) (.12) (.26)
Net realized and
unrealized gain
(loss) on
investments.......... .72 .94 .33 .25 .04 (.43)
------ ------ ------ ------ ------ ------
Total from Investment
operations.......... .01 .14 -- (.16) (.08) (.69)
------ ------ ------ ------ ------ ------
Net asset value, end of
period............... $ .87 $ .86 $ .72 $ .72 $ .88 $ .96
====== ====== ====== ====== ====== ======
Ratio/Supplemental Data:
Total Return........... 1.23% 18.36% .5% (18.48)% (20.01)%** (41.82)%
Ratio of expenses to
avg. net assets...... 29.92% 22.57% 31.07% 24.61% 24.62% 17.69%
Ratio of net investment
income (loss) to
average net assets... (28.98)% (21.28)% (28.77)% (24.10)% (22.86)%** (15.63)%
Portfolio turnover..... 0% 57% 128% 339% 617%** 289%
Net Assets, end of
period (000's)....... $ 882 $ 976 $ 976 $1,008 $1,341 $1,472
</TABLE>
* Fund's fiscal year-end was changed to June 30.
** Annualized
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AMERITOR INDUSTRY FUND
Notes to Financial Statements
1. Organization and significant accounting policies
Ameritor Industry Fund, formerly Steadman American Industry Fund, (the Fund)
is registered under the Investment Company act of 1940, as amended, as a non-
diversified, open-end investment company. The Fund has not been accepting new
subscriptions since November 1996.
The preparation of financial statements, in conformity with generally ac-
cepted accounting principles, requires management to make estimates and as-
sumptions that affect the reported amounts of assets and liabilities and dis-
closure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the re-
porting period. Actual results could differ from those estimates and signifi-
cant changes to estimates could occur in the near term. The following is a
summary of significant accounting policies consistently followed by the Fund
in the preparation of its financial statements.
Cash and cash equivalents
Management defines cash equivalents as investments that mature in three
months or less when acquired. All cash and cash equivalents are invested in a
single money market fund maintained by the investment custodian.
Security valuation
Investments in securities traded on a national securities exchange are val-
ued at the last reported sales price of the period. Investments for which no
sale was reported on that date are valued at the mean between the latest bid
and asked prices.
Security transactions and investment income
Security transactions are recorded on the trade date. Realized gains and
losses from security transactions are reported on an identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income and ex-
penses are recorded on the accrual basis.
Income taxes
The Fund is subject to income taxes in years when it does not qualify as a
regulated investment company under subchapter M of the Internal Revenue Code.
The Fund accounts for income taxes using the liability method, whereby de-
ferred tax assets and
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AMERITOR INDUSTRY FUND
liabilities arise from the tax effect of temporary differences between the fi-
nancial statement and tax bases of assets and liabilities, measured using
presently enacted tax rates. If it is more likely than not that some portion
or all of a deferred tax asset will not be realized, a valuation allowance is
recognized.
2.Trust shares
The Trust Indenture does not specify a limit to the number of shares which
may be issued. Transactions in trust shares were as follows:
<TABLE>
<CAPTION>
For the year For the year
ended June 30, 1999 ended June 30,1998
-------------------- --------------------
Shares Amount Shares Amount
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Shares sold......................... --0-- $ --0-- --0-- $ --0--
Shares redeemed..................... (122,411) (102,681) (208,727) (167,793)
--------- --------- --------- ---------
Net decrease...................... (122,411) (102,681) (208,727) (167,793)
========= ========= ========= =========
Shares outstanding:
Beginning of period............... 1,138,087 1,346,814
--------- ---------
End of period..................... 1,015,676 1,138,087
========= =========
</TABLE>
3. Purchase and sales of securities
During the year ended June 30, 1999, proceeds from sales of investment secu-
rities aggregated $271,393. Net unrealized appreciation of investments aggre-
gated $545,382, all of which related to gross unrealized appreciation where
there is an excess of value over tax cost.
4. Investment advisory and transactions with affiliates
Ameritor Financial Corporation (AFC), formerly Steadman Security Corpora-
tion, an affiliate, has provided advisory services under an agreement which
first became effective in 1972. On February 28, 1984, at the Annual Meeting of
the shareholders, a new Investment Advisory Agreement was approved. Under the
new advisory agreement AFC will continue to provide the same services it pro-
vided under the same terms and conditions of the previous agreement. The
agreement will continue in effect subject to the annual approval by the Board
of Trustees or by a majority of the outstanding voting securities of the Fund.
The fee for investment advisory services is based on 1% of the first
$35,000,000 of the average daily net assets of the Fund, 7/8 of 1% on the next
$35,000,000 and 3/4 of 1% on all sums in excess thereof. In addition to the
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AMERITOR INDUSTRY FUND
investment advisory fee, AFC received fees from the Fund for the performance
of delegated services (dividend disbursing agent and transfer agent) as de-
fined in the Trust Indenture, as amended. The fee for such services was com-
puted on the basis of the number of shareholder accounts calculated as of the
last business day of each month at $1.35 per account.
AFC also received reimbursements from the Fund for the salaries and benefits
of its employees who perform functions other than investment advisory and
shareholder service functions for the fund, for rent and for computer program-
ming services. As of June 30, 1999, the Fund had reimbursed AFC $2,860 in ex-
cess of amounts owed.
Certain officers and trustees of the Fund are "affiliated persons" of the
Investment Adviser, as defined by the Investment Company Act of 1940.
5. Federal income taxes
In the fiscal year ended June 30, 1999, the Fund did not meet the asset di-
versification requirements applicable to regulated investment companies. Thus,
the Fund did not qualify as a regulated investment company under Subchapter M
of the Internal Revenue Code. However, the Fund had a net investment loss in
fiscal year ended June 30, 1999; therefore, no income tax provision is re-
quired. A full valuation allowance was provided for net deferred tax assets,
totaling approximately $1,566,000 at June 30, 1999, which arise principally
from net operating loss carryforwards and capital carryforwards available for
income tax purposes.
For income tax purposes, the fund has net operating loss carryforwards ap-
proximating $4,671,000 which are available to offset future net operating in-
come in non-qualifying years, if any, which expire as follows: (2000)
$239,000; (2001) $139,000; (2002) $353,000; (2003) $371,000; (2004) $235,000;
(2005) $384,000 (2006) $365,000; (2007) $360,000; (2008) $335,000; (2009)
$322,000; (2010) $447,000; (2011) $295,000; (2012) $316,000; (2013) $263,000;
and (2014) $247,000. Capital loss carryforwards aggregating approximately
$70,000 are available to offset future capital gains, if any, expire in 2000.
6. Expiration of Shareholder States redemption restriction
In 1993, the Fund entered into a Settlement Agreement with approximately 47
states ("the Shareholder States") with respect to the recovery of shares and
distributions owned by persons who had allegedly abandoned these properties.
The Settlement Agreement provides among other things, that the Shareholder
States will not request redemption of their shares until February 14, 1998.
The Shareholder States currently own 13% of the shares in the fund. In July
1997, the Fund agreed to remove this restriction and allow Shareholder States
to redeem shares upon request. During 1999, approximately 3,600 shares were
redeemed by various states.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AMERITOR INDUSTRY FUND
7.Year 2000 (Unaudited)
The year 2000 (Y2K) issue involves the fact that many computers use two di-
gits to identify the year when processing date-sensitive information. Unless
corrected, this could cause widespread problems for entities when processing
information with dates of 2000 or later. Systems that use only two digits
could process data incorrectly or stop functioning altogether. Computer sys-
tems readiness for the Y2K is a major challenge for most businesses. The Fund,
in meeting this challenge, has allocated the resources necessary to ensure
that the computer systems utilized by the Fund are Y2K compliant. All of the
necessary upgrades of the systems, and the testing thereof, were completed in
August 1999. Total costs incurred for the project through June 30, 1999 ap-
proximated $18,500. Management believes the Fund's systems are Y2K compliant
and no additional costs are expected to be incurred. While management of the
Fund believes that its systems are Y2K complaint, there is no guarantee that
all of the Fund's vendors or other entities affecting the Fund's operations
will be Y2K compliant and, therefore, the Fund, as any other industry remains
susceptible to the consequences of the Y2K issue.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This Page Intentionally Blank
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
AMERITOR INDUSTRY FUND
1730 K Street, N.W. #904
Washington, D.C. 20006
1-800-424-8570
202-223-1000 Washington, D.C. area
Transfer Agent
Ameritor Financial Corporation
1730 K Street, N.W. #904
Washington, D.C. 20006
Custodian
Crestar Bank, N.A.
1445 New York Ave., N.W.
Washington, D.C. 20005
Independent Accountants
Reznick Fedder & Silverman P.C.
4520 East West Highway
Bethesda, Maryland 20814
For more information about
Ameritor Industry Fund,
account information or daily
Net Asset Values, call:
Shareholder Services
1-800-424-8570
202-223-1000 Washington, D.C. area
