[PHOTO]
AMERITOR
SECURITY
TRUST
(Formerly Steadman Security Trust 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 SECURITY TRUST
Dear Shareholder:
On September 23, 1998 the Board of Trustees voted to rename your Fund the
Ameritor Security Trust. The Fund's investment advisor has been renamed Ameritor
Financial Corporation. In 1998, a merger with the 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 Trustees
voted to continue operating each Fund separately under the new name of Ameritor.
The favorable performance of your Fund in the first half of this fiscal
year confirms that the changes enacted by the new management have been
effective. The Fund's return during this period placed it higher than 90% of
U.S. equity funds and well above the S&P 500 Index, thus making the list of best
performers in 1998.
Even after several years of having a strong, healthy economy, the U.S.
continues to experience good growth with low unemployment and interest rates.
But the pace of economic growth is expected to moderate as global economic
problems affect corporate earnings and lessen expectations of sustaining rising
stock market prices at the 1998 rate.
The Fund's portfolio is positioned to continue the good performance already
achieved this year.
We appreciate your continued confidence.
Sincerely,
/s/ Max Katcher
---------------------
Max Katcher
President
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AMERITOR SECURITY TRUST
Portfolio of Investments
December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ -----------
<S> <C> <C>
COMMON STOCKS-- 100%
Aircraft -- 1.4%
Boeing Co ................................................... 2,000 $ 65,250
-----------
Total Aircraft 65,250
-----------
Computer Equipment -- 5.7%
Hewlett Packard .............................................. 4,000 273,250
-----------
Total Computer Equipment 273,250
-----------
Computer Software -- 20.3%
Microsoft Corp. (a). ......................................... 7,000 970,812
-----------
Total Computer Software 970,812
-----------
Computer Systems Design -- 9.0%
Sun Microsystems (a) ......................................... 5,000 428,125
-----------
Total Computer Systems Design 428,125
-----------
Consumer Finance -- 2.3%
Associates First Capital "A". ................................ 2,620 111,023
-----------
Total Consumer Finance 111,023
-----------
Motor Vehicles -- 5.5%
Ford Motor Co. ............................................... 4,500 264,094
-----------
Total Motor Vehicles 264,094
-----------
Photographic Supplies -- 3.3%
Eastman Kodak Co ............................................. 2,200 158,400
-----------
Total Photographic Supplies 158,400
-----------
Residential Mortgages -- 5.4%
FNMA ......................................................... 3,500 259,000
-----------
Total Residential Mortgages 259,000
-----------
</TABLE>
(a) Non- income producing security
(Continued)
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AMERITOR SECURITY TRUST
Portfolio of Investments
December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ -----------
<S> <C> <C>
Semiconductor -- 19.9%
Intel Corp. .................................................. 8,000 948,500
-----------
Total Semiconductor 948,500
-----------
Telecom Mfg -- 6.9%
Lucent Technologies .......................................... 3,000 330,000
-----------
Total Telecom Mfg 330,000
-----------
Telephone Services -- 20.3%
MCIWorldcom Inc. (a) ......................................... 13,500 968,625
-----------
Total Telephone Services 968,625
-----------
Total Portfolio of Investment (Cost $2,103,498) .............. $ 4,777,079
===========
</TABLE>
(a) Non-income producing security
The accompanying notes are an integral part of the financial statements.
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AMERITOR SECURITY TRUST
Statement of Assets and Liabilities
December 31, 1998
(Unaudited)
Assets:
Investments at value (Cost $2,103,498) (Note 1) ............... $ 4,777,079
Cash and cash equivalents (Note 1) ............................ 49,995
Dividends receivable .......................................... 1,648
Interest receivable ........................................... 135
-----------
Total assets ................................................ 4,828,857
-----------
Liabilities:
Accounts payable and accrued expenses ......................... 7,276
Investment advisory and service fees payable (Note 4) ......... 2,840
Other payable to affiliate (Note 4) ........................... 11,283
Payable for trust shares redeemed ............................. 3,597
-----------
Total liabilities ........................................... 24,996
-----------
Net Assets ...................................................... $ 4,803,861
===========
Net assets consist of:
Undistributed net investment loss ............................. $(5,680,180)
Unrealized appreciation of investments ........................ 2,673,580
Accumulated net realized gain from security transactions ...... 6,596,532
Paid in capital ............................................... 1,213,929
-----------
$ 4,803,861
===========
Net asset value, offering price and redemption price per share
($4,803,861 / 4,059,963 shares of no par value trust shares) .. $ 1.18
===========
The accompanying notes are an integral part of the financial statements.
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AMERITOR SECURITY TRUST
Statement of Operations
for the six months ended December 31, 1998
(Unaudited)
<TABLE>
<S> <C> <C>
Investment Income:
Dividends ........................................................ $ 10,881
Interest ......................................................... 970
-----------
Total income ................................................... $ 11,851
-----------
Expenses:
Salaries and employee benefits (Note 4) .......................... 50,015
Professional fees ................................................ 24,102
Investment advisory fee (Note 4) ................................. 18,620
Rent ............................................................. 15,811
Shareholder servicing fee (Note 4) ............................... 13,017
Computer services ................................................ 8,675
Miscellaneous .................................................... 3,800
Reports to shareholders .......................................... 3,023
Custodian fees ................................................... 1,000
Trustees' fees and expenses (Note 4) ............................. 661
-----------
Total expenses ................................................. 138,724
-----------
Net investment loss .............................................. (126,873)
-----------
Realized and Unrealized Gain (Loss) on Investments (Notes 1 and 3):
Net realized loss from investment transactions ................... (14,195)
Change in unrealized appreciation of investments ................. 1,190,359
-----------
Net gain on investments .......................................... 1,176,164
-----------
Net increase in net assets resulting from operations ............. $ 1,049,291
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</TABLE>
The accompanying notes are an integral part of the financial statements.
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AMERITOR SECURITY TRUST
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 in net assets from operations:
Net investment loss ....................................... $ (126,873) $ (372,085) $ (534,287)
Net realized gain (loss) from investment transactions ..... (14,195) 821,134 306,022
Change in unrealized appreciation ......................... 1,190,359 320,395 644,512
----------- ----------- -----------
Net increase in net assets resulting
from operations ......................................... 1,049,291 769,444 416,247
----------- ----------- -----------
Decrease in net assets from trust share transactions (Note 2) (148,727) (1,263,131) (600,754)
----------- ----------- -----------
Increase (decrease) in net assets ........................... 900,564 (493,687) (184,507)
Net assets at beginning of period ........................... 3,903,297 4,396,984 4,581,491
----------- ----------- -----------
Net assets at end of period, including accumulated net
investment loss of $5,680,180, $5,553,307
and $5,181,222 ............................................ $ 4,803,861 $ 3,903,297 $ 4,396,984
=========== =========== ===========
</TABLE>
(1) Unaudited
The accompanying notes are an integral part of the financial statements.
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AMERITOR SECURITY TRUST
Financial Highlights
<TABLE>
<CAPTION>
For the six For the years For the period For the year
months ended ended October 1, 199 ended
December 31(1) June 30 through June 30 September 31
-------------- ----------------------------------- --------------- -------------
1998 1998 1997 1996 1995* 1994
------ ------ ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period .... $ .93 $ .76 $ .70 $ .73 $ .72 $ .87
------ ------ ------- ------ ------ -------
Net investment loss ..................... (.03) (.09) (.11) (.17) (.03) (.08)
Net realized and unrealized
gain (loss) on investments ............ .28 .26 .17 .14 .04 (.07)
------ ------ ------- ------ ------ -------
Total from investment operations ...... .25 .17 .06 (.03) .01 (.15)
------ ------ ------- ------ ------ -------
Net asset value, end of period .......... $ 1.18 $ .93 $ .76 $ .70 $ .73 $ .72
====== ====== ======= ====== ====== =======
Ratios/Supplemental Data:
Total return ............................ 53.76%** 21.40% 8.89% (4.38)% 1.85%** (17.24)%
Ratio of expenses to average net assets 6.91%** 9.85% 12.42% 8.14% 8.17%** 7.76%
Ratio of net investment loss to average
net assets ............................ (6.32)%** (8.95)% (11.82)% (7.48)% (7.23)%** (6.09)%
Portfolio turnover rate ................. .96% 48% 193% 231% 505%** 241%
Net assets, end of period (in thousands) $4,804 $3,903 $ 4,397 $4,581 $5,735 $ 6,307
</TABLE>
(1) Unaudited
* The Fund's fiscal year-end was changed to June 30.
** Annualized
The accompanying notes are an integral part of the financial statements.
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AMERITOR SECURITY TRUST
Notes to Financial Statements
1. Organization and significant accounting policies
Ameritor Security Trust (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 SECURITY TRUST
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- 609 $ 400
Shares redeemed (157,173) (148,727) (1,550,896) (1,263,131) (812,875) (601,154)
--------- --------- ---------- ----------- --------- ---------
Net decrease (157,173) $(148,727) (1,550,896) $(1,263,131) (812,266) $(601,154)
========= =========== =========
Shares outstanding:
Beginning of period 4,217,136 5,768,032 6,580,298
--------- ---------- ---------
End of period 4,059,963 4,217,136 5,768,032
========= ========== =========
</TABLE>
3. Purchases and sales of securities
During the six months ended December 31, 1998, purchases and proceeds from
sales of investment securities aggregated $38,124 and $294,621 respectively.
Unrealized appreciation of investments aggregated $2,673,580 of which
$2,721,193 relates to gross unrealized appreciation where there is an excess of
value over tax cost and $47,613 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 SECURITY TRUST
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 SECURITY TRUST
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 Security Trust,
account information or daily
Net Asset Values, call:
Shareholder Services
1-800-424-8570
202-223-1000 Washington, D.C. area
