AMERITOR
SECURITY
TRUST
ANNUAL
REPORT
June 30, 2000
An Ameritor NO-LOAD Mutual Fund
AMERITOR FINANCIAL CORPORATION
AMERITOR
FINANCIAL
CORPORATION
Investment Adviser
<PAGE>
Dear Shareholder:
I am pleased to report that Ameritor Security Trust had a return for this fiscal
year of 26.67%.* The fine performance of your Fund was accomplished by
maintaining a portfolio of investments that enjoyed significant appreciation and
continued efforts to reduce operating expenses. Because of its return, the Fund
fared favorably as compared to other funds in its category. In addition, the
Fund may now be sold in various jurisdictions, and we hope to be eligible for
sale in all jurisdictions shortly.
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
18.56%. The average annual return for the 10-year period ended June 30,
2000 was 7.89%. Past performance is not indicative of future results. The
results achieved last year, which was an unusually favorable year in the
market in certain sectors, will not necessarily be repeated in the future.
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 Security Trust
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Ameritor Security Trust, 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 Security Trust 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 SECURITY TRUST FUND
Portfolio of Investments
June 30, 2000
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (Note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK - 100.00%
Applications Software - 3.22%
Citrix Systems, Inc. (a) .................................................................... 3,000 $ 56,812
Microsoft Corp. (a) ......................................................................... 1,293 103,440
Siebel Systems, Inc. (a) .................................................................... 275 44,980
----------
Total Applications Software ........................................... 205,232
----------
Broadcast Services - 0.40%
UnitedGlobalCom, Inc. (a) ................................................................... 550 25,713
----------
Total Broadcast Services .............................................. 25,713
----------
Business Services - 1.75%
Compuware Corp. (a) ......................................................................... 3,900 40,462
Concord EFS, Inc. (a) ....................................................................... 1,600 41,600
Symbol Technologies, Inc. ................................................................... 530 29,647
----------
Total Business Services ............................................... 111,709
----------
Cellular Telecommunications - 2.97%
Nextel Communications, Inc. (a) ............................................................. 1,300 79,544
Vodafone Group PLC .......................................................................... 2,650 109,809
----------
Total Cellular Communications ......................................... 189,353
----------
Computers - 6.38%
Dell Computer Corp. (a) ..................................................................... 2,050 101,091
International Business Machines Corp. ....................................................... 500 54,781
MICROS Systems, Inc. (a) .................................................................... 1,830 33,969
Sun Microsystems, Inc. (a) .................................................................. 2,386 216,977
----------
Total Computers ....................................................... 406,818
----------
Computer Hardware & Software - 5.65%
EMC Corp. (a) ............................................................................... 3,500 269,281
Mercury Interactive Corp. (a) ............................................................... 640 61,920
VERITAS Software Corp. (a) .................................................................. 410 29,435
----------
Total Computer Hardware & Software .................................... 360,636
----------
Diversified Operations - 1.52%
General Electric Co. ........................................................................ 1,900 96,900
----------
Total Diversified Operations .......................................... 96,900
----------
Electronic Components - Misc. - 3.17%
CTS Corp. ................................................................................... 900 40,500
Sanmina Corp. (a) ........................................................................... 400 34,200
SCI Systems, Inc. (a) ....................................................................... 1,000 39,312
Solectron Corp. (a) ......................................................................... 2,100 87,938
----------
Total Electronic Components - Misc .................................... 201,950
----------
Electronic Components - Semi Conductors - 14.91%
Altera Corp. (a) ............................................................................ 475 48,420
Applied Micro Circuits Corp. (a) ............................................................ 1,400 138,250
Broadcom Corp. (a) .......................................................................... 650 142,309
Conexant Systems, Inc. (a) .................................................................. 850 41,331
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C>
AMERITOR SECURITY TRUST FUND
Portfolio of Investments
June 30, 2000
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (Note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK - 100.00%
Cree, Inc. (a) .............................................................................. 350 $ 46,725
Intel Corp. ................................................................................. 1,386 185,291
International Rectifier Corp. (a) ........................................................... 540 30,240
PMC-Sierra, Inc. (a) ........................................................................ 315 55,972
Rambus, Inc. (a) ............................................................................ 930 95,790
Texas Instruments, Inc. ..................................................................... 1,600 109,600
Xilinx, Inc. (a) ............................................................................ 700 57,794
----------
Total Electronic Components - Semi Conductors ......................... 951,722
----------
Electronic Measuring Instruments - 1.37%
Agilent Technologies, Inc. (a) .............................................................. 1,189 87,689
----------
Total Electronic Measuring Instruments ................................ 87,689
----------
Fiber Optics - 6.69%
CIENA Corp. (a) ............................................................................. 180 30,004
Harmonic, Inc. (a) .......................................................................... 2,550 57,216
JDS Uniphase Corp. (a) ...................................................................... 2,380 285,303
SDL, Inc. (a) ............................................................................... 190 54,186
----------
Total Fiber Optics .................................................... 426,709
----------
Finance - 0.91%
Capital One Financial Corp. ................................................................. 1,300 58,012
----------
Total Finance ......................................................... 58,012
----------
Internet Services - 2.23%
America Online, Inc. (a) .................................................................... 1,450 76,487
Juniper Networks, Inc. (a) .................................................................. 450 65,503
----------
Total Internet Services ............................................... 141,990
----------
Internet Software - 2.79%
BroadVision, Inc. (a) ....................................................................... 2,150 109,247
Inktomi Corp. (a) ........................................................................... 370 43,752
RealNetworks, Inc. (a) ...................................................................... 500 25,281
----------
Total Internet Software ............................................... 178,280
----------
Medical - Research & Development - 0.62%
Immunex Corp. (a) ........................................................................... 800 39,550
----------
Total Medical - Research & Development ................................ 39,550
----------
Medical Equipment - 0.92%
Cytyc Corp. (a) ............................................................................. 1,100 58,712
----------
Total Medical Equipment ............................................... 58,712
----------
Multimedia - 2.94%
Gemstar-TV Guide International, Inc. (a) .................................................... 1,200 73,744
Time Warner, Inc. ........................................................................... 1,500 114,000
----------
Total Mulitmedia ...................................................... 187,744
----------
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C>
AMERITOR SECURITY TRUST FUND
Portfolio of Investments
June 30, 2000
------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (Note 1)
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK - 100.00%
Networking Products - 7.18%
Cisco Systems, Inc. (a) ..................................................................... 5,000 $ 317,812
Network Appliance, Inc. (a) ................................................................. 700 56,350
Oracle Corp. (a) ............................................................................ 1,000 84,063
----------
Total Networking Products ............................................. 458,225
----------
Pharmaceuticals - 3.16%
MedImmune, Inc. (a) ......................................................................... 1,100 81,400
Pfizer, Inc. ................................................................................ 2,500 120,000
----------
Total Pharmaceuticals ................................................. 201,400
----------
Retail - 1.94%
Wal-Mart Stores, Inc. ....................................................................... 2,150 123,894
----------
Total Retail .......................................................... 123,894
----------
Semiconductor Equipment - 2.71%
Applied Materials, Inc. (a) ................................................................. 1,300 117,812
Vitesse Semiconductor Corp. (a) ............................................................. 750 55,172
----------
Total Semiconductor Equipment ......................................... 172,984
----------
Telecommunciations - 11.36%
Quest Communications Corp. (a) .............................................................. 500 24,844
Verizon Communications ...................................................................... 580 46,336
WorldCom, Inc. (a) .......................................................................... 14,250 653,719
----------
Total Telecommunications .............................................. 724,899
----------
Telecommunications Equipment - 10.84%
Advanced Fibre Communications, Inc. (a) ..................................................... 1,100 49,844
Comverse Technology, Inc. (a) ............................................................... 675 62,775
Lucent Technologies, Inc. ................................................................... 561 33,239
Nokia Corp. ................................................................................. 1,200 59,925
Nortel Networks Corp. ....................................................................... 1,770 120,803
QUALCOMM, Inc. (a) .......................................................................... 3,920 235,200
Tellabs, Inc. (a) ........................................................................... 1,900 130,031
----------
Total Telecommunciations Equipment .................................... 691,817
----------
Transportations Services - 0.71%
FedEx Corp. (a) ............................................................................. 1,200 45,600
----------
Total Transportation Services ......................................... 45,600
----------
Wireless Equipment - 3.66%
Motorola, Inc. .............................................................................. 3,400 99,025
Powerwave Technologies, Inc. (a) ............................................................ 1,330 58,520
RF Micro Devices, Inc. (a) .................................................................. 870 76,234
----------
Total Wireless Equipment .............................................. 233,779
----------
Total Portfolio of Investments (Cost $5,486,040) ................................................. $6,381,317
==========
(a) Non-income producing security.
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
AMERITOR SECURITY TRUST
Statement of Assets and Liabilities
June 30, 2000
Assets:
Investments at value (Cost $5,486,040) (Note 1) ............................................. $ 6,381,317
Cash ........................................................................................ 12,914
Receivable - securities sold ................................................................ 4,960,411
Dividends receivable ........................................................................ 480
Interest receivable ......................................................................... 476
------------
Total Assets .................................................................... 11,355,598
------------
Liabilities:
Accounts payable and accrued expenses ....................................................... 7,526
Investment advisory and service fees payable (Note 4) ....................................... 7,081
Payable - securities purchased .............................................................. 5,149,552
Payable for trust shares redeemed ........................................................... 6,215
------------
Total Liabilities ............................................................... 5,170,374
------------
Net Assets ................................................................................................ $ 6,185,224
============
Net assets consist of:
Accumulated net investment loss ............................................................. $ (6,243,600)
Unrealized appreciation of investments ...................................................... 895,277
Accumulated net realized gains from security transactions ................................... 4,361,121
Paid-in capital ............................................................................. 7,172,426
------------
6,185,224
============
Net asset value, offering price and redemption price per share
($6,185,224 divided by 3,607,515 shares of no par value trust shares) ............................... $ 1.71
============
The accompanying notes are an integral part of the financial statements.
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C>
AMERITOR SECURITY TRUST
Statement of Operations
For the year ended June 30, 2000
Investment Income:
Dividends ...................................................................... $ 16,157
Interest ....................................................................... 2,607
-----------
Total Income ....................................................... $ 18,764
-----------
Expenses:
Salaries and employee benefits (Note 4) ........................................ 143,604
Investment advisory fee (Note 4) ............................................... 57,658
Professional fees .............................................................. 76,843
Shareholder servicing fee (Note 4) ............................................. 23,910
Rent ........................................................................... 32,248
Custodian fees ................................................................. 2,924
Computer services .............................................................. 25,584
Reports to shareholders ........................................................ 18,961
Trustees' fees and expenses (Note 4) ........................................... 9,774
Miscellaneous .................................................................. 8,085
-----------
Total expenses ..................................................... 399,591
-----------
Net investment loss ................................................ (380,827)
-----------
Realized and Unrealized Gain/(Loss) on Investments (Notes 1 and 3):
Net realized gain from investment transactions ................................. 4,251,452
Change in unrealized appreciation of investments ............................... (2,522,882)
-----------
Net gain on investments ........................................................ 1,728,570
-----------
Net increase in net assets resulting from operations ........................... $ 1,347,743
===========
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Ameritor Sercurity Trust
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 .................................................... $ (380,827) $ (309,465)
Net realized gain from investment transactions ......................... 4,251,452 109,570
Change in unrealized appreciation
of investments ..................................................... (2,522,882) 1,934,937
----------- -----------
Net increase in net assets resulting
from operations ................................................... 1,347,743 1,735,042
Decrease in net assets from trust share transactions (Note 2) ........................ (331,658) (469,200)
----------- -----------
Increase in net assets ................................................. 1,016,085 1,265,842
Net assets at beginning of period .................................................... 5,169,139 3,903,297
----------- -----------
Net assets at end of period, including accumulated
net investment loss of $6,243,600 and $5,862,773 .............................. $ 6,185,224 $ 5,169,139
=========== ===========
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Ameritor Security Trust
Financial Highlights
For the years ended
June 30
-----------------------------------------------------------------------
2000 1999 1998 1997 1996
------- ------- ------- ------- -------
Per Share Operating Performance:
Net asset value, beginning of
period ..................................... $1.35 $0.93 $0.76 $0.70 $0.73
------- ------- ------- ------- -------
Net investment income (loss) ................... (0.19) (0.22) (0.09) (0.11) (0.17)
Net Realized and unrealized gain
(loss) on investments .......................... 0.55 0.64 0.26 0.17 0.14
------- ------- ------- ------- -------
Total from Investment operations ............... 0.36 0.42 0.17 0.06 (0.03)
------- ------- ------- ------- -------
Net asset value, end of period ..................... $1.71 $1.35 $0.93 $0.76 $0.70
======= ======= ======= ======= =======
Ratio/Supplemental Data:
Total Return .................................. 26.67 % 46.33 % 21.40 % 8.89 % (4.38)%
Ratio of expenses to avg. net assets .......... 6.93 % 7.24 % 9.85 % 12.42 % 8.14 %
Ratio of net investment income(loss)
to average net assets ..................... (6.61)% (6.76)% (8.95)% (11.82)% (7.48)%
Portfolio turnover ............................ 91 % 0 % 48 % 193 % 231 %
Net Assets, end of period (000's) ............. $ 6,185 $ 5,169 $ 3,903 $ 4,397 $ 4,581
The accompanying notes are an integral part of the financial statements.
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Ameritor Security Trust
Financial Highlights
For the period
October 1, 1994 For the years ended
through June 30 September 30,
--------------- ------------------------------------------------------------------------
1995* 1994 1993 1992 1991 1990 1989
------- ------- ------- ------- ------- ------- -------
Per Share Operating Performance:
Net asset value, beginning of
period .......................... $0.72 $0.87 $0.64 $0.67 $0.57 $0.84 $0.60
------- ------- ------- ------- ------- ------- -------
Net investment income (loss) ........ (0.03) (0.08) (0.05) (0.05) (0.02) (0.03) (0.03)
Net Realized and unrealized gain
(loss) on investments ............... 0.04 (0.07) 0.28 0.02 0.12 (0.24) 0.27
------- ------- ------- ------- ------- ------- -------
Total from Investment operations .... 0.01 (0.15) 0.23 (0.03) 0.10 (0.27) 0.24
------- ------- ------- ------- ------- ------- -------
Net asset value, end of period .......... $0.73 $0.72 $0.87 $0.64 $0.67 $0.57 $0.84
======= ======= ======= ======= ======= ======= =======
Ratio/Supplemental Data:
Total Return ....................... 1.85 %** (17.24)% 35.94 % (4.47)% 17.51 % (32.27)% 47.50 %
Ratio of expenses to avg. net assets 8.17 %** 7.76 % 5.79 % 6.92 % 7.16 % 6.08 % 6.65 %
Ratio of net investment income(loss)
to average net assets .......... (7.23)%** 6.09)% (4.63)% (5.14)% (3.29)% (4.54)% (0.24)%
Portfolio turnover ................. 505 %** 241 % 300 % 301 % 267 % 87 % 208 %
Net Assets, end of period (000's) .. $ 5,735 $ 6,307 $ 8,844 $ 7,254 $ 8,539 $ 8,392 $16,035
* Fund's fiscal year-end was changed to June 30.
** Annualized
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.
Total Return vs S & P 500 Index
-------------------------------
--------------------------------------------------
Ameritor S & P 500
Security Trust Index
--------------------------------------------------
06/30/90 $10,000.00 $10,000.00
06/30/91 $7,250.00 $10,735.00
06/30/92 $7,875.00 $12,175.00
06/30/93 $10,125.00 $13,833.00
06/30/94 $8,500.00 $14,025.00
06/30/95 $9,125.00 $17,680.00
06/30/96 $8,750.00 $22,262.00
06/30/97 $9,624.00 $29,991.00
06/30/98 $11,499.00 $39,027.00
06/30/99 $16,874.00 $47,913.00
06/30/00 $21,374.00 $51,383.00
AVERAGE ANNUAL TOTAL RETURN
1 Year 5 Year 10 Year
26.67% 18.56% 7.89%
* Past performance is not predictive of future performance.
** S & P 500 Index is adjusted to reflect the reinvestment of dividends.
<PAGE>
AMERITOR SECURITY TRUST
Notes to Financial Statements
1. Organization and significant accounting policies
Ameritor Security Fund, (the Fund), is registered under the Investment
Company act of 1940, as amended, as a non-diversified, open-end investment
company.
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 principal 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 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:
For the year ended June 30,
2000 1999
---- ----
Shares Amount Shares Amount
Shares sold............ 5,771 $ 8,297 - 0 - $ - 0 -
Shares redeemed........ (215,006) (339,955) (400,386) (469,200)
------- ------- ------- -------
Net decrease........... (209,235) $(331,658) (400,386) $(469,200)
======= ======= ======= =======
Shares outstanding:
Beginning of period.... 3,816,750 4,217,136
--------- ---------
End of period.......... 3,607,515 3,816,750
========= =========
3. Purchase and sales of securities
During the year ended June 30, 2000 purchases and proceeds from sales
of investment securities were $5,149,554 and $5,650,624, respectively. Net
unrealized appreciation of investments aggregated $895,277, which relates to
gross unrealized appreciation and gross unrealized depreciation of $1,060,621
and $165,344, repectively..
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
<PAGE>
AMERITOR SECURITY TRUST
the Internal Revenue Code. However, the Fund had a net investment loss in fiscal
year ended June 30, 2000, therefore no income tax provision is required. A full
valuation allowance was provided for deferred tax assets, totaling approximately
$375,000 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 $1,103,400 which are available to offset future net operating
income in non-qualifying years, if any, which expire as follows: (2011)
$346,400; (2012) $543,000; and (2014) $214,000.
