AMERITOR
INDUSTRY
FUND
ANNUAL
REPORT
June 30, 2000
An Ameritor NO-LOAD Mutual Fund
AMERITOR FINANCIAL CORPORATION
AMERITOR
FINANCIAL
CORPORATION
Investment Adviser
<PAGE>
Dear Shareholder:
Ameritor Industry Fund ended the fiscal year down 3.69%.* The investments for
the Funds rose substantially, but the gains achieved by the portfolio were
offset by high operating costs, mainly the expenses of servicing many small
shareholder accounts. Efforts to reduce costs continue, and we are working to
eliminate the large number of small shareholder accounts.
This past year has seen changes in the membership of the Board of Trustees and
the Management of the Ameritor Family of Funds. Max Katcher, Paul Wagner and
Paul Bowers have retired from the Board after many long years of service, and I
was elected President of the Funds at the April 12, 2000 meeting of the Board of
Trustees.
We are pleased to announce that the Funds' investment advisor has engaged Paul
Dietrich of Nye, Parnell and Emerson, a professional and experienced investment
advisor, as a consultant to Ameritor Financial Corporation to assist with the
selection of investments for the Funds.
Jerome Kinney, President of Ameritor Financial Corporation, has engaged North
Carolina Shareholder Services and Nottingham Fund Administrators to help
streamline transfer agency, fund accounting and administrative services for the
Funds. These changes are part of the efforts being made to reduce operating
costs for the ultimate benefit of shareholders.
We shall endeavor to keep your Fund an attractive investment and will continue
working toward enhanced appreciation of your investments, lower operating costs
and striving for a higher shareholder return in future years.
Sincerely,
/S/ Carole S. Kinney
Carole S. Kinney
President
--------
* The average annual return for the 5-year period ended June 30, 2000 was
-1.16%. The average annual return for the 10-year period ended June 30,
2000 was -8.91%. Past performance is not indicative of future results. Your
shares fluctuate so that their value, when you redeem, may be more or less
than when you invested in the Fund.
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Trustees
and Shareholders of
Ameritor Industry Fund
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Ameritor Industry Fund, as of June 30, 2000, and
the related statement of operations, the statement of changes in net assets and
the financial highlights for the year then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The financial statements for the year
ended June 30, 1999 and financial highlights presented for the four year period
ending June 30, 1999 were audited by other auditors whose report dated August 6,
1999 expressed an unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of June 30, 2000, by
correspondence with the custodian and brokers. 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 audit provides 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 the
Ameritor Industry Fund as of June 30, 2000, the results of its operations, the
changes in its net assets and the financial highlights for the year then ended,
in conformity with generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
August 2, 2000
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
AMERITOR INDUSTRY FUND
Portfolio of Investments
June 30, 2000
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (Note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK - 100.00%
Applications Software - 7.05%
Saga Systems, Inc. (a) ................................................................... 2,700 $ 33,581
Sanchez Computer Associates, Inc. (a) .................................................... 1,500 35,625
--------
Total Applications Software ......................................... 69,206
--------
Business Services - 5.54%
American Management Systems, Inc. (a) .................................................... 900 29,545
Deltek Systems, Inc. (a) ................................................................. 4,200 24,806
--------
Total Business Services ............................................. 54,351
--------
Computers - Integrated Systems - 13.12%
MICROS Systems, Inc. (a) ................................................................. 2,070 38,424
RWD Technologies, Inc. (a) ............................................................... 9,000 52,313
Systems & Computer Technology Corp. (a) .................................................. 1,900 38,000
--------
Total Computers - Integrated Systems ................................ 128,737
--------
Computer Serivces - 6.51%
iGATE Capital Corp. (a) .................................................................. 2,200 30,250
MERANT plc (a) ........................................................................... 3,300 33,619
--------
Total Computer Services ............................................. 63,869
--------
Electrical Products - 3.29%
WESCO International, Inc. (a) ............................................................ 3,400 32,300
--------
Total Electrical Products ........................................... 32,300
--------
Electronic Components - Semi Conductors - 5.76%
AstroPower, Inc. (a) ..................................................................... 1,100 29,837
Cree, Inc. (a) ........................................................................... 200 26,700
--------
Total Electronic Components - Semi Conductors ....................... 56,537
--------
Internet Services - 6.98%
America Online, Inc. (a) ................................................................. 650 34,287
Visual Networks, Inc. (a) ................................................................ 1,200 34,200
--------
Total Internet Services ............................................. 68,487
--------
Internet Software - 7.50%
Proxicom, Inc. (a) ....................................................................... 800 38,300
VeriSign, Inc. (a) ....................................................................... 200 35,300
--------
Total Internet Software ............................................. 73,600
--------
Networking Products - 3.23%
Black Box Corp. (a) ...................................................................... 400 31,669
--------
Total Networking Products ........................................... 31,669
--------
Power Systems - 3.46%
C&D Technologies, Inc. ................................................................... 600 33,900
--------
Total Power Systems ................................................. 33,900
--------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
AMERITOR INDUSTRY FUND
Portfolio of Investments
June 30, 2000
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (Note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK - 100.00%
Semiconductor Equipment - 3.96%
Amkor Technology, Inc. (a) ............................................................... 1,100 $ 38,844
--------
Total Semiconductor Equipment ....................................... 38,844
--------
Technology - Products - 3.57%
ScanSource, Inc. (a) ..................................................................... 900 34,988
--------
Total Technology - Products ......................................... 34,988
--------
Telecommunications - 26.90%
Arguss Communications, Inc. (a) .......................................................... 1,800 33,975
C-COR.net Corp. (a) ...................................................................... 1,400 37,800
Lucent Technologies, Inc. ................................................................ 1,500 88,875
WorldCom, Inc. (a) ....................................................................... 2,250 103,219
--------
Total Telecommunications ............................................ 263,869
--------
Wireless Equipment - 3.13%
RF Micro Devices, Inc. (a) ............................................................... 350 30,669
--------
Total Wireless Equipment ............................................ 30,669
--------
Total Portfolio of Investments (Cost $863,160) ........................................... $981,026
========
(a) Non-income producing
The accompanying notes are an integral part statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
AMERITOR INDUSTRY FUND
Statement of Assets and Liabilities
June 30, 2000
Assets:
Investments at value (Cost $863,160) (Note 1) ....................................................... $ 981,026
Cash ................................................................................................ 35,447
Receivable - securities sold ........................................................................ 576,243
Interest receivable ................................................................................. 166
-----------
Total assets ............................................................................ 1,592,882
-----------
Liabilities:
Accounts payable and accrued expenses ............................................................... 20,463
Investment advisory and service fee payable (Note 4) ................................................ 8,467
Payable - securities purchased ...................................................................... 766,028
-----------
Total liabilities ....................................................................... 794,958
-----------
Net Assets ........................................................................................................ $ 797,924
===========
Net assets consist of:
Accumulated net investment loss ..................................................................... $(4,944,578)
Unrealized appreciation of investments .............................................................. 117,866
Accumulated net realized gains from security transactions ........................................... 115,868
Paid-in capital ..................................................................................... 5,508,768
-----------
$ 797,924
===========
Net asset value, offering price and redemption price per share
($797,924 divided by 957,183 shares of no par value trust shares) ........................................... $ 0.83
===========
The accompanying notes are an integral part statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
AMERITOR INDUSTRY FUND
Statement of Operations
Year ended June 30, 2000
Investment Income:
Dividends ......................................................................... $ 5,532
Interest .......................................................................... 2,357
---------
Total income .......................................................... $ 7,889
---------
Expenses:
Salaries and employee benefits (Note 4) ........................................... 24,534
Investment advisory fee (Note 4) .................................................. 8,205
Professional fees ................................................................. 48,681
Shareholder servicing fee (Note 4) ................................................ 96,236
Rent (Note 4) ..................................................................... 5,041
Custodian fees .................................................................... 342
Computer services (Note 4) ........................................................ 22,590
Reports to shareholders ........................................................... 12,812
Trustees' fees and expenses (Note 4) .............................................. 8,037
Miscellaneous ..................................................................... 5,650
---------
Total expenses ........................................................ 232,128
---------
Net investment loss ................................................... (224,239)
---------
Realized and Unrealized Gain/(Loss) on Investments (Notes 1 and 3):
Net realized gain from investment transactions .................................... 616,285
Change in unrealized appreciation of investments .................................. (427,516)
---------
Net gain on investments ........................................................... 188,769
---------
Net decrease in net assets resulting from operations .............................. $ (35,470)
=========
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
AMERITOR INDUSTRY FUND
Statements of Changes in Net Assets
------------------------------------------------------------------------------------------------------------------------------------
For the year For the year
ended June 30, ended June 30,
2000 1999
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from operations:
Net investment loss ...................................................... $(224,239) $(243,325)
Net realized gain from investment transactions ........................... 616,285 94,265
Change in unrealized appreciation
of investments ....................................................... (427,516) 157,406
--------- ---------
Net increase(decrease) in net assets resulting
from operations ..................................................... (35,470) 8,346
Decrease in net assets from trust share transactions (Note 2) .......................... (48,571) (102,681)
--------- ---------
Decrease in net assets ................................................... (84,041) (94,335)
Net assets at beginning of period ...................................................... 881,965 976,300
--------- ---------
Net assets at end of period, including accumulated
net investment loss of $4,944,578 and $4,720,339 ................................ $ 797,924 $ 881,965
========= =========
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
AMERITOR INDUSTRY FUND
Financial Highlights
Years ended June 30,
-----------------------------------------------------------------------
2000 1999 1998 1997 1996
------- ------- ------- ------- -------
Per Share Operating Performance:
Net asset value, beginning of
period ........................................ $0.87 $0.86 $0.72 $0.72 $0.88
------- ------- ------- ------- -------
Net investment income (loss) ...................... (0.52) (0.71) (0.80) (0.33) (0.41)
Net Realized and unrealized gain
(loss) on investments ............................. 0.48 0.72 0.94 0.33 0.25
------- ------- ------- ------- -------
Total from Investment operations .................. (0.04) 0.01 0.14 0.00 (0.16)
------- ------- ------- ------- -------
Net asset value, end of period ........................ $0.83 $0.87 $0.86 $0.72 $0.72
======= ======= ======= ======= =======
Ratio/Supplemental Data:
Total Return ..................................... (4.42)% 1.23 % 18.36 % 0.50 % (18.48)%
Ratio of expenses to avg. net assets ............. 31.03 % 29.92 % 22.57 % 31.07 % 24.61 %
Ratio of net investment income(loss)
to average net assets ........................ (29.97)% (28.98)% (21.28)% (28.77)% (24.10)%
Portfolio turnover ............................... 94 % 0 % 57 % 128 % 339 %
Net Assets, end of period (000's) ................ $ 798 $ 882 $ 976 $ 976 $ 1,008
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
Performance Graph
The following graph provides a comparison of the change in the value of a
$10,000 investment in the Fund and same investment in the S & P 500 Index for
each fiscal year from July 1, 1990 to June 30, 2000.
[Line Graph Here]:
Total Return vs S & P 500 Index
-------------------------------
-------------------------------------------------
Fund Index
-------------------------------------------------
06/30/90 $10,000 $10,000
06/30/91 $6,730 $10,735
06/30/92 $6,066 $12,175
06/30/93 $6,919 $13,833
06/30/94 $5,735 $14,025
06/30/95 $4,171 $17,680
06/30/96 $3,413 $22,262
06/30/97 $3,413 $29,991
06/30/98 $4,076 $39,027
06/30/99 $4,123 $47,913
06/30/00 $3,941 $51,383
AVERAGE ANNUAL TOTAL RETURN
1 Year 5 Year 10 Year
(4.42)% (1.16)% (8.91)%
* Past performance is not predictive of future performance.
** S & P 500 Index is adjusted to reflect the reinvestment of dividends.
<PAGE>
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 Fund has not been accepting new subscriptions for shares since
November 1996.
In preparing financial statements in conformity with generally accepted
accounting principles, management makes estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements, as well as 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.
Security valuation
Investments in securities traded on a national securities exchange are
valued at the last reported sales price on its exchange. 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.
<PAGE>
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:
For the year ended June 30,
2000 1999
---- ----
Shares Amount Shares Amount
------ ------ ------ ------
Shares sold........... - 0 - $ - 0 - - 0 - $ - 0 -
Shares redeemed....... (58,493) (48,571) (122,411) (102,681)
--------- -------- --------- ---------
Net decrease.......... (58,493) $(48,571) (122,411) $(102,681)
========= ======== ========= =========
Shares outstanding:
Beginning of period... 1,015,676 1,138,087
--------- ---------
End of period......... 957,183 1,015,676
========= =========
3. Purchase and sales of securities
During the year ended June 30, 2000 purchases and proceeds from sales
of investment securities were $766,028 and $852,783, respectively. Net
unrealized appreciation of investments aggregated $117,866 which related to
gross unrealized appreciation and gross unrealized depreciation of $150,018 and
$32,152, respectively.
4. Investment advisory and transactions with affiliates
The investment advisory agreement with Ameritor Financial Corporation
("AFC"), an affiliate, provides for a fee 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 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
programming services.
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, 2000, the Fund did not meet the asset
diversification 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
<PAGE>
AMERITOR INDUSTRY FUND
year ended June 30, 2000, therefore no income tax provision is required. A full
valuation allowance was provided for deferred tax assets, totaling approximately
$1,374,000 at June 30, 2000, which arise principally from net operating loss
carryforwards available for income tax purposes.
For income tax purposes, the fund has net operating loss carryforwards
approximating $4,040,000 which are available to offset future net operating
income in non-qualifying years, if any, which expire as follows: (2001)
$100,000; (2002) $371,000; (2003) $235,000; (2004) $384,000; (2005) $365,000
(2006) $360,000; (2007) $335,000; (2008) $322,000; (2009) $313,000; (2010)
$134,000; (2011) $295,000; (2012) $316,000; (2013) $263,000; and (2014)
$247,000.
