[PHOTO]
AMERITOR
INDUSTRY
FUND
(Formerly Steadman American Industry Fund)
SEMI-ANNUAL
REPORT
December 31, 1998
An Ameritor NO-LOAD Mutual Fund
AMERITOR FINANCIAL CORPORATION
(Formerly Steadman Security Corporation)
Ameritor
Financial
Corporation
Investment Adviser
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AMERITOR INDUSTRY FUND
Dear Shareholder:
On September 23, 1998 the Board of Trustees voted to rename your Fund the
Ameritor Industry Fund. The Fund's investment advisor has been renamed Ameritor
Financial Corporation. In 1998, a merger of your Fund with three other Funds of
the then named Steadman Group of Funds was not accomplished for lack of quorum
necessary for this vote by the shareholders of all the Funds. Thereupon, the
Tustees voted to continue operating each Fund separately under the new name of
Ameritor.
Investments of the Fund appreciated during the past six months, but this
appreciation was overcome by high operating costs despite the cost reductions
achieved in this period. The program for reducing costs is ongoing, and the
policy of redeeming accounts with less than $100 is significantly lowering
shareholder-servicing fees. It is expected that most of these accounts will have
been eliminated by the end of this fiscal year, which will contribute to a
further reduction of operating expenses.
The Fund's portfolio is structured to achieve good performance, and with
lower operating costs we believe that the return for the fiscal year will be
better than that of this six month period.
We appreciate your continued confidence.
Sincerely,
/s/ Max Katcher
-----------------------
Max Katcher
President
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AMERITOR INDUSTRY FUND
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AMERITOR INDUSTRY FUND
Portfolio of Investments
December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ --------
COMMON STOCKS -- 100%
<S> <C> <C>
Air Transportation -- 10.4%
Alaska Air Group, Inc. ........................................ 2,000 $ 88,500
---------
Total Air Transportation 88,500
---------
Computer Peripherals -- 24.6%
Cisco Systems (a) ............................................. 2,250 208,828
---------
Total Computer Peripherals 208,828
---------
Consumer Finance -- 5.5%
Associates First Capital "A" .................................. 1,096 46,443
---------
Total Consumer Finance 46,443
---------
Financial Services -- 11.7%
Citigroup Corp. ............................................... 2,000 99,000
---------
Total Financial Services 99,000
---------
Motor Vehicles-- 13.8%
Ford Motor Co ................................................. 2,000 117,375
---------
Total Motor Vehicles 117,375
---------
Telecom Mfg. -- 12.9%
Lucent Technologies ........................................... 1,000 110,000
---------
Total Telecom Mfg 110,000
---------
Telephone Services -- 21.1%
MCIWorldcom, Inc. (a) ......................................... 2,500 179,375
---------
Total Telephone Services 179,375
---------
Total Portfolio of Investments (Cost $406,946) .................. $ 849,521
=========
</TABLE>
(a) Non-income producing security
The accompanying notes are an integral part of the financial statements.
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AMERITOR INDUSTRY FUND
Statement of Assets and Liabilities
December 31, 1998
(Unaudited)
<TABLE>
<S> <C>
Assets:
Investments at value (Cost $406,946) (Note 1) ........................ $ 849,521
Cash and cash equivalents (Note 1) ................................... 41,740
Interest receivable .................................................. 118
-----------
Total assets ....................................................... 891,379
-----------
Liabilities:
Accounts payable and accrued expenses ................................ 9,752
Investment advisory and service fees payable (Note 4) ................ 8,854
Other payable to affiliate (Note 4) .................................. 3,131
Payable for Trust shares redeemed .................................... 295
-----------
Total liabilities .................................................. 22,032
-----------
Net Assets ............................................................. $ 869,347
===========
Net assets consist of:
Accumulated net investment loss ...................................... $(4,583,517)
Unrealized appreciation of investments ............................... 442,575
Accumulated net realized losses plus distributions from realized gains (516,086)
Capital paid in less distributions since inception ................... 5,526,375
-----------
$ 869,347
===========
Net asset value, offering price and redemption price per share
($869,347 / 1,041,260 shares of no par value trust shares) ........... $ .84
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
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AMERITOR INDUSTRY FUND
Statement of Operations
for the six months ended December 31, 1998
(Unaudited)
<TABLE>
<S> <C> <C>
Investment Income:
Dividends ....................................................... $ 3,850
Interest ........................................................ 636
---------
Total income ................................................. $ 4,486
---------
Expenses:
Shareholder servicing fee (Note 4) .............................. 52,323
Salaries and employee benefits (Note 4) ......................... 15,578
Professional fees ............................................... 12,718
Reports to shareholders ......................................... 9,458
Computer services ............................................... 8,675
Investment advisory fee (Note 4) ................................ 3,974
Miscellaneous ................................................... 3,576
Rent ............................................................ 3,076
Trustees' fees and expenses (Note 4) ............................ 861
Custodian fees .................................................. 750
---------
Total expenses ............................................... 110,989
---------
Net investment loss ............................................. (106,503)
---------
Realized and Unrealized Gain (Loss) on Investments (Notes 1 and 3):
Net realized gain from investment transactions .................. 25,113
Change in unrealized appreciation of investments ................ 54,599
---------
Net gain on investments ......................................... 79,712
---------
Net decrease in net assets resulting from operations ............ $ (26,791)
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
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AMERITOR INDUSTRY FUND
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the 6 months
ended For the year For the year
December 31, ended June 30, ended June 30,
1998 (1) 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment loss ....................................... $ (106,503) $ (256,697) $ (301,308)
Net realized gain from investment transactions ............ 25,113 356,531 8,916
Change in unrealized appreciation ......................... 54,599 68,162 300,735
---------- ---------- ----------
Net increase (decrease) in net assets resulting
from operations ......................................... (26,791) 167,996 8,343
Decrease in net assets from trust share transactions (Note 2) (80,162) (167,793) (40,054)
---------- ---------- ----------
Increase (decrease) in net assets ........................... (106,953) 203 (31,711)
Net assets at beginning of period ........................... 976,300 976,097 1,007,808
---------- ---------- ----------
Net assets at end of period, including accumulated net
investment loss of $4,583,517, $4,477,014
and $4,220,318 ............................................ $ 869,347 $ 976,300 $ 976,097
========== ========== ==========
</TABLE>
(1) Unaudited
The accompanying notes are an integral part of the financial statements.
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AMERITOR INDUSTRY FUND
Financial Highlights
<TABLE>
<CAPTION>
For the six For the years For the period For the years
months ended ended February 1, 1995 ended
December 31(1) June 30 through June 30 January 31
------------- --------------------------- ---------------- ----------------
1998 1998 1997 1996 1995* 1995 1994
---- --------------------------- ---- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period ...... $.86 $.72 $.72 $.88 $.96 $1.65 $1.50
---- ---- ---- ---- ---- ---- ----
Net investment loss ....................... (.10) (.80) (.33) (.41) (.12) (.26) (.24)
Net realized and unrealized
gain (loss) on investments .............. .08 .94 .33 .25 .04 (.43) .39
---- ---- ---- ---- ---- ---- ----
Total from investment operations ........ (.02) .14 -- (.16) (.08) (.69) .15
---- ---- ---- ---- ---- ---- ----
Net asset value, end of period ............ $.84 $.86 $.72 $.72 $.88 $.96 $1.65
==== ==== ==== ==== ==== ==== =====
Ratios/Supplemental Data:
Total return .............................. (4.65)%** 18.36% .5% (18.48)% (20.01)%** (41.82)% 10.00%
Ratio of expenses to average net
assets .................................. 28.55%** 22.57% 31.07% 24.61% 24.62%** 17.69% 12.66%
Ratio of net investment loss to average
net assets .............................. (27.40)%** (21.28)% (28.77)% (24.10)% (22.86)%** (15.63)% (11.40)%
Portfolio turnover rate ................... -0-% 57% 128% 339% 617%** 289% 134%
Net assets, end of period (in thousands) .. $869 $976 $976 $1,008 $1,341 $1,472 $2,627
</TABLE>
(1) Unaudited
* The Fund's fiscal year-end was changed to June 30.
** Annualized
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AMERITOR INDUSTRY FUND
Notes to Financial Statements
1. Organization and significant accounting policies
Ameritor Industry Fund (the Fund) is registered under the Investment
Company Act of 1940, as amended, as a non-diversified, open-end investment
company.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies 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. 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
valued at the last reported sales price on the last business day 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
expenses 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 deferred
tax assets and liabilities arise from the tax effect of temporary differences
between the financial 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.
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AMERITOR INDUSTRY FUND
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 6 months For the year For the year ended
ended December 31, 1998 ended June 30, 1998 June 30, 1997
----------------------- ------------------------ -----------------------
Share Amount Shares Amount Shares Amount
--------- -------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Shares sold ................ -0- $ -0- -0- $ -0- -0- $ -0-
Shares redeemed ............ (96,827) (80,162) (208,727) (167,793) (51,675) (40,054)
--------- -------- --------- --------- --------- --------
Net decrease ............. (96,827) $(80,162) (208,727) $(167,793) (51,675) $(40,054)
======== ========= ========
Shares outstanding:
Beginning of period ...... 1,138,087 1,346,814 1,398,489
--------- --------- ---------
End of period ............ 1,041,260 1,138,087 1,346,814
========= ========= =========
</TABLE>
3. Purchases and sales of securities
During the six months ended December 31, 1998, purchases and proceeds from
sales of investment securities aggregated $--0-- and $197,131, respectively.
Unrealized appreciation of investments aggregated $442,575 of which
$442,575 relates to gross unrealized appreciation where there is an excess of
value over tax cost and $--0-- relates to gross unrealized depreciation of
investments where there is an excess of tax cost over value.
4. Investment advisory fee and transactions with affiliates
Ameritor Financial Corporation (AFC), 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 provided 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.
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AMERITOR INDUSTRY 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 investment
advisory fee, AFC received fees from the Fund for the performance of delegated
services. (dividend disbursing agent and transfer agent) as defined in the Trust
Indenture, as amended. The fee for such services was computed 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 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.
Certain officers and trustees of the Fund are "affiliated persons" of the
Investment Adviser, as defined by the Investment Company Act of 1940.
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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
