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AMERITOR
SECURITY
TRUST
SEMI-ANNUAL
REPORT
December 31, 1999
An Ameritor NO-LOAD Mutual Fund
AMERITOR FINANCIAL CORPORATION
Ameritor
Financial
Corporation
Investment Adviser
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Dear Shareholder:
This past year has seen changes in the membership of the Board of Trustees and
the Management of the Ameritor Family of Funds. Richard Ellison, Carole Kinney
and I have been elected to the Board of Trustees and Dr. Max Katcher, a
Trustee and President of the Funds, has chosen to retire after 26 years of
faithful service to the Corporation. At the February 2nd meeting of the Board
of Trustees, I was elected as the new President of the Ameritor Family of
Funds.
With these changes has come a reexamination of the policies and role of the
Board of Trustees with regard to management and administration of the funds.
First and foremost, the Board of Trustees has pledged to be more proactive
with respect to overseeing the management of the Funds. Second, the Board is
committed to an identified course of action designed to improve the return on
shareholder investment.
We are pleased to announce that the Ameritor Security Trust appreciated
23.70%(/1/) this fiscal year to date. The Board of Trustees is evaluating
action it can take to help maintain good performance by (1) making changes in
portfolio management and (2) and taking steps to reduce operating costs.
The Board of Trustees is searching for a new, professional and experienced
investment manager. We expect to have that change effective by April of this
year.
Ameritor Financial Corporation will continue to serve as the Transfer Agent
and Investment Advisor to the Fund. The Corporation has undertaken aggressive
and systematic reductions of operating costs that are intended to benefit the
shareholders. In addition to day-to-day management and staff changes, the
offices of Ameritor Security Trust as well as Ameritor Financial Corporation
have relocated to 4400 MacArthur Boulevard, Suite 301,
(/1/)Total Return for the six month period 7/1/99 to 12/31/99 23.70%; total
return for the year 1/1/99 to 12/31/99 42.25%; total return 5 years
156.92%; Total return 10 years 192.98%. Past performance is not predic-
tive of future performance.
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Washington, D.C. 20007-2521. The new phone number is (202) 625-6000 extension
21 for Shareholder Services, or you may reach us toll free at (800) 424-8570.
Please make note of the new address and telephone number for future reference.
I look forward to working toward continued and enhanced appreciation of your
investments, lower operating costs and as a consequence, striving for a higher
shareholder return in future years.
Sincerely,
/s/ John J. Turner
John J. Turner
President
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AMERITOR SECURITY TRUST
Portfolio of Investments
December 31, 1999
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ----------
<S> <C> <C>
COMMON STOCKS -- 100%
Computer Equipment -- 6.0%
Hewlett Packard............................................ 3,000 $ 342,375
----------
Total Computer Equipment 342,375
----------
Computer Software -- 22.0%
Microsoft Corporation (a).................................. 11,500 1,342,625
----------
Total Computer Software 1,342,625
----------
Computer Systems Design -- 25.3%
Sun Microsystems (a)....................................... 20,000 1,548,750
----------
Total Computer Systems Design 1,548,750
----------
Motor Vehicles -- 3.9%
Ford Motor Company......................................... 4,500 239,906
----------
Total Motor Vehicles 239,906
----------
Residential Mortgages -- 2.0%
FNMA....................................................... 2,000 124,875
----------
Total Residential Mortgages 124,875
----------
Semiconductor -- 19.5%
Intel Corporation.......................................... 14,500 1,193,531
----------
Total Semiconductor 1,193,531
----------
Telecom Mfg. -- 7.3%
Lucent Technologies Inc.................................... 6,000 448,875
----------
Total Telecom Mfg 448,875
----------
Telephone Services -- 14.3%
MCI Worldcom Inc (a)....................................... 16,500 875,532
----------
Total Telephone Services 875,532
----------
Total Portfolio of Investments (Cost $1,606,631)........... $6,116,469
==========
</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, 1999
(Unaudited)
<TABLE>
<S> <C>
Assets:
Investments at value (Cost $1,606,631) (Note 1)................. $ 6,116,469
Cash and cash equivalents (Note 1).............................. 39,349
Due from affiliate (Note 4)..................................... 15,860
Receivable -- Securities Sold................................... 70,413
Dividends receivable............................................ 480
Interest receivable............................................. 191
-----------
Total Assets................................................... 6,242,762
-----------
Liabilities:
Accounts payable and accrued expenses........................... 18,857
Investment advisory and service fees payable (Note 4)........... 6,556
Other payable to affiliate (Note 4)............................. 5,923
Payable for trust shares redeemed............................... 45,630
-----------
Total Liabilities.............................................. 76,966
-----------
Net Assets........................................................ $ 6,165,796
===========
Net assets consist of:
Accumulated net investment loss................................. $(6,061,930)
Unrealized appreciation of investments.......................... 4,509,837
Accumulated net realized gains from security transactions....... 394,940
Paid-in capital................................................. 7,322,949
-----------
$ 6,165,796
===========
Net asset value, offering price and redemption price per share
($6,165,796 divided by 3,695,798 shares of no par value trust
shares)...................................................... $ 1.67
===========
</TABLE>
The accompanying notes are an integral part of the financial statements
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AMERITOR SECURITY TRUST
Statement of Operations
For the period ended December 31, 1999
(Unaudited)
<TABLE>
<S> <C> <C>
Investment Income:
Dividends................................................. $7,544
Interest.................................................. 1,703
------
Total Income............................................. $ 9,247
----------
Expenses:
Salaries and employee benefits (Note 4)................... 69,033
Investment advisory fee (Note 4).......................... 26,674
Professional fees......................................... 41,124
Shareholder servicing fee (Note 4)........................ 12,080
Rent (Note 4)............................................. 20,670
Custodian fees............................................ 1,394
Computer services (Note 4)................................ 18,100
Reports to shareholders................................... 6,141
Trustees' fees and expenses (Note 4)...................... 4,034
Miscellaneous............................................. 9,156
------
Total expenses........................................... 208,406
----------
Net investment loss...................................... (199,159)
----------
Realized and Unrealized Gain/(Loss) on Investments (Notes 1
and 3):
Net realized gain from investment transactions............ 285,271
Change in unrealized appreciation of investments.......... 1,091,679
----------
Net gain on investments................................... 1,376,950
----------
Net increase in net assets resulting from operations...... $1,177,791
==========
</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 six months For the year For the year
ended December 31, ended June 30, ended June 30,
1999/(1)/ 1999 1998
------------------ -------------- --------------
<S> <C> <C> <C>
Increase (decrease) in net
assets from operations:
Net investment loss.......... $ (199,159) $ (309,465) $ (372,085)
Net realized gain from
investment transactions.... 285,271 109,570 821,134
Change in unrealized
appreciation of
investments................ 1,091,679 1,934,937 320,395
---------- ---------- -----------
Net increase in net assets
resulting from operations.. 1,177,791 1,735,042 769,444
Decrease in net assets from
trust share transactions
(Note 2).................... (181,134) (469,200) (1,263,131)
---------- ---------- -----------
Decrease in net assets....... 996,657 1,265,842 (493,687)
Net assets at beginning of
period...................... 5,169,139 3,903,297 4,396,984
---------- ---------- -----------
Net assets at end of period,
including accumulated net
investment loss of
$6,061,930, $5,862,773 and
$5,553,307.................. $6,165,796 $5,169,139 $ 3,903,297
========== ========== ===========
</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 month For the years ended For the period
period ended June 30, October 1, 1994
December 31, --------------------------------- through June 30,
1999/(1)/ ** 1999 1998 1997 1996 1995*
------------ ------ ------ ------ ------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value,
beginning of period.. $ 1.35 $ .93 $ .76 $ .70 $ .73 $ .72
------ ------ ------ ------ ------ ------
Net investment income
(loss)............... (.05) (.22) (.09) (.11) (.17) (.03)
Net realized and
unrealized gain
(loss) on
investments.......... .37 .64 .26 .17 .14 .04
------ ------ ------ ------ ------ ------
Total from Investment
operations.......... .32 .42 .17 .06 (.03) .01
Dividends and
distributions paid:
From realized gains.... -- -- -- -- -- --
From net investment
income............... -- -- -- -- -- --
From capital........... -- -- -- -- -- --
------ ------ ------ ------ ------ ------
Total distributions... -- -- -- -- -- --
------ ------ ------ ------ ------ ------
Net asset value, end of
period............... $ 1.67 $ 1.35 $ .93 $ .76 $ .70 $ .73
====== ====== ====== ====== ====== ======
Ratio/Supplemental Data:
Total Return........... 23.70% 46.33% 21.40% 8.89% (4.38)% 1.85%**
Ratio of expenses to
avg. net assets...... 3.38% 7.24% 9.85% 12.42% 8.14% 8.17%**
Ratio of net investment
income (loss) to
average net assets... (3.23)% (6.76)% (8.95)% (11.82)% (7.48)% (7.23)%**
Portfolio turnover..... 0% 0% 48% 193% 231% 505%**
Net Assets, end of
period (000's)....... $6,166 $5,169 $3,903 $4,397 $4,581 $5,735
</TABLE>
/(1)/Unaudited
* 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
Financial Highlights -- continued
<TABLE>
<CAPTION>
For the years ended
September 30
----------------------------------------------------
1994 1993 1992 1991 1990 1989
------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value,
beginning of period.. $ .87 $ .64 $ .67 $ .57 $ .84 $ .60
------ ------ ------ ------ ------ -------
Net investment income
(loss)............... (.08) (.05) (.05) (.02) (.03)
Net realized and
unrealized gain
(loss) on
investments.......... (.07) .28 -- .12 (.24) .27
------ ------ ------ ------ ------ -------
Total from Investment
operations.......... (.15) .23 (.03) .10 (.27) .27
Dividends and
distributions paid:
From realized gains.... -- -- -- -- --
From net investment
income............... -- -- -- -- -- (.03)
From capital........... -- -- -- -- --
------ ------ ------ ------ ------ -------
Total distributions... -- -- -- -- -- --
------ ------ ------ ------ ------ -------
Net asset value, end of
period................ $ .72 $ .87 $ .64 $ .67 $ .57 $ .84
====== ====== ====== ====== ====== =======
Ratio/Supplemental Data:
Total Return........... (17.24)% 35.94% (4.47)% 17.51% (32.27)% 47.50%
Ratio of expenses to
avg. net assets...... 7.76% 5.79% 6.92% 7.16% 6.08% 6.65%
Ratio of net investment
income (loss) to
average net assets... (6.09)% (4.63)% (5.14)% (3.29)% (4.54)% (.24)%
Portfolio turnover..... 241% 300% 301% 267% 87% 208%
Net Assets, end of
period (000's)....... $6,307 $8,844 $7,254 $8,539 $8,392 $16,035
</TABLE>
The accompanying notes are an integral part of the financial statements.
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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 October 1, 1989 to September 30, 1994, the nine month pe-
riod ended June 30, 1995, the fiscal years from July 1, 1995 to June 30, 1999
and the six month period ending December 31, 1999.
[GRAPH]
TOTAL RETURNS VS S&P 500 INDEX
Average Annual Return
1 year 46.33%
5 year 13.40%
10 year 5.72%
Ameritor Security S & P 500
Date Trust** Index* & ***
---- ----------------- ------------
Oct-88 10,000 10,000
Sep-89 14,750 13,297
Sep-90 9,990 12,070
Sep-91 11,739 15,832
Sep-92 11,214 17,582
Sep-93 15,237 19,867
Sep-94 12,611 20,598
Sep-95 12,786 24,757
Sep-96 12,226 31,194
Sep-97 13,313 42,015
Sep-98 16,162 54,687
Sep-99 23,659 67,134
Dec-99/(1)/ 36,416 80,158
/(1)/Unaudited
* Past Performance is not predictive of future performance.
** Not annualized. The Fund's fiscal year was changed to June 30 in 1995.
*** S & P 500 Index is adjusted to reflect the reinvestment of dividends.
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AMERITOR SECURITY TRUST
Notes to Financial Statements
1. Organization and significant accounting policies
Ameritor Security Trust, formerly Steadman Security Trust, (the Fund) is
registered under the Investment Company act of 1940, as amended, as a non-di-
versified, open-end investment company. The Fund has not been accepting new
subscriptions for shares since November 1996.
The preparation of financial statements in conformity with generally ac-
cepted accounting principles requires management to make estimates and assump-
tions that affect the reported amounts of assets and liabilities and disclo-
sure of contingent assets and liabilities at the date of the financial state-
ments and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates and significant
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 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 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
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AMERITOR SECURITY TRUST
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 period ended For the year For the year
December 31, 1999(/1/) ended June 30, 1999 ended June 30, 1998
------------------------ -------------------- -----------------------
Shares Amounts Shares Amount Shares Amount
----------- ----------- --------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold............. --0-- $ --0-- --0-- $ --0-- --0-- $ --0--
Shares redeemed......... (120,946) (469,200) (400,392) (469,200) (1,550,896) (1,263,131)
----------- ----------- --------- --------- ---------- -----------
Net decrease............ (120,946) (469,200) (400,392) (469,200) (1,550,896) (1,263,131)
=========== =========== ========= ========= ========== ===========
Shares outstanding:
Beginning of period..... 3,816,744 4,217,136 5,768,032
----------- --------- ----------
End of period........... 3,695,798 3,816,744 4,217,136
=========== ========= ==========
</TABLE>
(/1/)Unaudited
3. Purchase and sales of securities
During this six month period ended December 31, 1999, purchases and proceeds
from sales of investment securities aggregated $748,000. Net unrealized appre-
ciation of investments aggregated $3,418,159, all of which relates 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
investment advisory fee, AFC received fees from the Fund for the performance
of
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AMERITOR SECURITY TRUST
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 program-
ming services. As of June 30, 1999, the Fund had reimbursed AFC $15,860 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 $591,000 at June 30, 1999, which arise principally from
net operating loss carryforwards and capital carryforwards available for in-
come tax purposes.
For income tax purposes, the fund has net operating loss carryforwards ap-
proximating $4,974,000 which are available to offset future net operating in-
come in non-qualifying years, if any, which expire as follows: (2000) $11,000;
(2001) $499,000; (2003) $328,000; (2004) $476,000; (2005) $534,000; (2006)
$324,000; (2007) $381,000; (2008) $539,000; (2009) $437,000; (2010) $287,000;
(2011) $401,000; (2012) $543,000; (2013) $0; and (2014) $214,000.
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AMERITOR SECURITY TRUST
4400 MacArthur Blvd, #301
Washington, D.C. 20007-2521
1-800-424-8570
202-625-6000 Washington, D.C. area
Transfer Agent
Ameritor Financial Corporation
4400 MacArthur Blvd, #301
Washington, D.C. 20007-2521
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
202-625-6000 Washington, D.C. area
