33 Act File #333-20889
40 Act File #811-00018
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
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Post-Effective Amendment No. 17 [X]
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AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 23 [X]
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(check appropriate box or boxes)
AMERITOR SECURITY TRUST
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(Exact Name of Registrant as Specified in Charter)
4400 MacArthur Blvd, #301, Washington, D.C. 20007-2521
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: 202-223-1000
Carole Kinney, President
Ameritor Security Trust
4400 MacArthur Blvd, #301
Washington, D.C. 20007-2521
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(Name and Address of Agent for Service of Process)
It is proposed that this filing will become effective (check appropriate box):
[X] immediately upon filing pursuant to paragraph (b);
[ ] on ________ (date) pursuant to paragraph (b);
[ ] 60 days after filing pursuant to paragraph (a)(1);
[ ] on ________ (date) pursuant to paragraph (a)(1);
[ ] 75 days after filing pursuant to paragraph (a)(2); or
[ ] on ________ (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
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PART A
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PROSPECTUS
AMERITOR SECURITY TRUST
A No-Load Fund - No Sales Charge
Shares are Purchased and Redeemed at Net Asset Value
November 1, 2000
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This Prospectus contains information you should know before investing. Please
keep it for future reference. A Statement of Additional Information about the
Fund, dated November 1, 2000, has been filed with the Securities and Exchange
Commission and is incorporated by reference in this Prospectus. To obtain a free
copy, call 202-223-1000 or 1-800-424-8570.
Mutual fund shares are not deposits or obligations of, or guaranteed by, any
depository institution. Shares are not insured by the Federal Deposit Insurance
Corporation (FDIC), or any other agency, and are subject to investment risks,
including possible loss of the principal amount invested.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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TABLE OF CONTENTS
Page
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INFORMATION ABOUT THE AMERITOR SECURITY TRUST.....................................................................1
About the Fund...........................................................................................1
Investments, Risks, and Performance: What to Expect.....................................................1
Fees and Expenses: What to Expect........................................................................4
Other Information about the Fund.........................................................................5
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES, AND RELATED RISKS.........................................6
Investment Objective of the Fund.........................................................................6
Implementation of Investment Objective...................................................................6
Concentration Policy.....................................................................................7
Temporary Defensive Positions............................................................................7
Portfolio Turnover.......................................................................................8
Portfolio Risks..........................................................................................8
Portfolio Diversification...............................................................................12
MANAGEMENT, ORGANIZATION, AND CAPITAL STRUCTURE..................................................................13
Investment Advisor......................................................................................13
Organization and Capital Structure......................................................................14
Special Provisions of the Trust Indenture of the Fund...................................................14
Legal Proceedings.......................................................................................15
SHAREHOLDER INFORMATION..........................................................................................15
Pricing of Fund Shares..................................................................................15
Purchase of Fund Shares.................................................................................16
Redemption of Fund Shares...............................................................................16
Dividends and Distributions.............................................................................17
Tax Status and Consequences.............................................................................17
CONDENSED FINANCIAL INFORMATION OF THE FUND......................................................................18
Financial Highlights....................................................................................19
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SUMMARY INFORMATION ABOUT THE AMERITOR SECURITY TRUST
ABOUT THE FUND
The Ameritor Security Trust (hereinafter, the "Fund") is a common-law trust
organized under the laws of the District of Columbia. The Fund was originally
founded in 1939 under the name Associated Fund Trust. As of June 30, 2000, the
Fund had approximately $6 million of assets under management.
INVESTMENTS, RISKS, AND PERFORMANCE: WHAT TO EXPECT
To help you decide whether this fund is appropriate for you, this section
reviews the Fund's investment objective, strategy, and potential risks. As with
all mutual funds, there is no guarantee this fund will achieve its goals.
What is the Fund's investment objective?
The primary investment objective of the Fund is to seek current
income. As a secondary objective, the Fund seeks to maximize the total
return but only to the extent consistent with its primary investment
objective.
What are the Fund's principal investment strategies?
The Fund seeks to meet its investment objective through a broad range
of investment vehicles. The Fund may also make substantial temporary
defensive investments in (i) high-grade debt securities of all types,
(ii) U.S. government securities, and (iii) repurchase agreements. If
the Fund makes substantial temporary defensive investments, the Fund
may not achieve its investment objective.
In choosing an investment for the Fund, the Fund is not restricted to
any particular criteria or quality standards except as expressly
provided for in this Prospectus. With respect to common and preferred
stock investments, the Fund's financial adviser generally looks for
issuers that pay attractive dividends and show growth potential, based
on fundamental analysis of the relevant industries and the issuers'
financial strength. With respect to debt instruments (other than
short-term debt used for defensive purposes), the Fund's investment
adviser considers probable interest rate movements and generally
chooses investment grade instruments. The yield sought by the Fund on
investment grade instruments usually exceeds that of short-term U.S.
treasury securities.
The Fund uses the following principal investment strategies to attempt
to achieve its investment objective.
o The purchase and sale of common and preferred stock of U.S. and
non-U.S. (foreign) issuers.
o The purchase and sale of call options. This is primarily to
achieve premium income but may also be used for hedging purposes.
o The purchase and sale of U.S. government securities.
o The purchase and sale of high-yield/high-risk bonds, sometimes
called Junk Bonds.
o The purchase and sale of U.S. government agency mortgage-backed
securities.
1
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What are the main risks of investing in the Fund?
Investing in the Fund involves investment risk. Because securities
fluctuate in price, there is a risk of loss of principal.
An investor should select investments which reflect his or her
financial goals, time horizon, and risk tolerance. The Fund is not
intended to provide a complete or balanced investment program, but can
serve as one component of an investor's program to accumulate assets
for retirement, college tuition, or other major goals. Investors
should consult with their personal accountant or investment advisor
prior to making an investment in the Fund.
o The fund should not represent your complete investment program or
be used for short-term trading.
By investing in the Fund, an investor assumes the risks of investing
in the types of investments acquired by the Fund. Investing in
securities involves varying degrees of market risk, credit or
financial risk, and prepayment risk. The Fund invests primarily in
stocks, some of which may not be currently producing income, which
could limit its potential for current income compared with a fund that
invests primarily in interest-earning assets such as debt securities.
In addition, the Fund is not restricted in the investment vehicles and
techniques that it may use, some of which are highly specialized and
involve significant risks.
The use of the investment techniques described in this Prospectus can
produce portfolio turnover of 100% or more per year. The portfolio
turnover for the year ended June 30, 2000 was 91%. High portfolio
turnover (100% or more) increases the Fund's brokerage costs and
increases the likelihood that the Fund will experience short-term
gains and losses.
Common and preferred stock issued by non-U.S. (foreign) issuers
presents additional special risks. For example, political, social, and
economic developments abroad might adversely affect foreign
investments. Often, there is less information publicly available about
foreign issuers, so it can be more challenging to assess the viability
and prospects of foreign companies. The value of investments that are
denominated in foreign currencies may be adversely affected by
fluctuations in foreign currency values. In addition, given the
particular risks associated with investing in developing countries, an
investment in the developing countries should be considered
speculative.
The Fund may engage in a variety of investment strategies relating to
the use of options, including the writing (selling) of covered call
options. When writing a covered call option, the Fund, in return for
the premium (purchase price), gives up the opportunity for profit from
a price increase in the underlying security above the exercise price.
However, the Fund retains the risk of loss should the price of the
security decline. The use of options could limit the Fund's ability to
meet its investment objective because, unlike one who owns securities
not subject to an option, the Fund has no control over when it may be
required to sell the underlying securities. The Fund may be presented
with an exercise notice at any time prior to the expiration of its
obligation as a writer, even if selling the underlying security at
that time is not advantageous to the Fund.
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Because the Fund currently is not classified as a regulated investment
company ("RIC") under the Internal Revenue Code of 1986, as amended
("Code"), the Fund is subject to taxation on its income similar to a
corporation. In addition, the distributions from the Fund are taxable
under the normal corporate tax rules. This double layer of tax may
result in a decrease in the amount of distributions an investor may
receive.
For the fiscal year ending June 30, 2001, the Fund intends to qualify
as a RIC under the Code. As a result, the Fund will distribute most of
its income and gains to its shareholders every year. Income dividends,
if any, may be paid quarterly and capital gains distributions, if any,
will be made at least annually.
For the year ended June 30, 2000, the Fund's percentage of expenses to
average net assets was 6.93%. This expense ratio is higher than most
other funds, which typically have substantially more assets. With an
expense ratio of 6.93%, the Fund would need to increase net assets
equivalent to the expense ratio in order to maintain its net assets at
the same level, assuming there are no redemptions. A decrease in net
assets, whether caused by redemptions or a decrease in return on the
Fund's investments, would cause the expense ratio to increase, absent
a reduction in expenses.
o The above Summary Information about the Ameritor Security Trust
is a summary of information contained in other portions of this
Prospectus. For more details on the Fund's investment strategies
and techniques and the risks of such investments, see the section
entitled "Investment Objectives, Principal Investment Strategies,
and Related Risks" in this Prospectus and see the Fund's
Statement of Additional Information. Also, additional information
about the Fund's investments is available in the Fund's annual
and semi-annual reports to shareholders.
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Risk/Return Bar Chart and Table
The bar chart and table shown below provide an indication of the risks of
investing in the Fund by showing (on a calendar year basis) changes in the
Fund's annual total return from year to year and by showing (on a calendar year
basis) how the Fund's average annual returns for one year, five years, and ten
years compare to those of broad-based securities market indices. How the Fund
has performed in the past is not necessarily an indication of how the Fund may
perform in the future.
[BAR CHART HERE]:
Year to Year Total Returns (as of December 31)
1990 -25.00%
1991 24.56%
1992 5.63%
1993 10.67%
1994 -20.48%
1995 -1.52%
1996 15.38%
1997 -1.33%
1998 59.46%
1999 41.53%
o During the 10-year period shown in the bar chart above, the highest return
for a calendar quarter was 31.11% (quarter ended December 31, 1998).
o During the 10-year period shown in the bar chart above, the lowest return
for a calendar quarter was -16.67% (quarter ended December 31, 1995).
o The year-to-date return as of the most recent calendar quarter was -0.60%
(quarter ended September 30, 2000).
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Average Annual Total Returns Past 1 Past 5 Past 10
Period ended December 31, 1999* Year Years Years
----------------------------------------- ------------ ------------ ------------
Ameritor Security Trust 41.53% 20.39% 8.19%
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S&P 500 Index ** 21.04% 28.54% 18.20%
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* Adjusted to reflect reinvestment of dividends
** The S&P 500 Composite Index is the Standard & Poor's Composite Stock Price
Index of 500 stocks and is a widely recognized, unmanaged index of common
stock prices.
FEES AND EXPENSES: WHAT TO EXPECT
What fees or expenses will I pay?
For a better understanding of the expenses you will incur when
investing in the Fund, a summary based on the Fund's operations during
the fiscal year ended June 30, 2000 is set forth below. There are no
sales fees (loads) imposed upon any purchase of Fund shares,
reinvestment or dividends, or redemption of Fund shares. Furthermore,
there are no distribution (and/or service) (12b-1) fees.
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The following tables describe the fees and expenses that you may pay
if you buy and hold shares of the Fund.
SHAREHOLDER FEES (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases.............. None
Maximum Deferred Sales Charge (Load).......................... None
Maximum Sales Charge (Load) Imposed on Reinvested Dividend.... None
Redemption Fees (1)........................................... None
Exchange Fees................................................. None
Maximum Account Fee........................................... None
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(1) The Fund imposes a service charge on wire redemptions of less than
$5,000.
ANNUAL FUND OPERATING EXPENSES (expenses deducted from Fund assets)
As a Percentage of
Average Net Assets
Management fees (1)........................................ 1.00%
Distribution (and/or service) (12b-1) fees................. 0.00%
Other expenses
Salaries and employee benefits....................... 2.49%
Professional fees.................................... 1.33%
Total other expenses................................. 2.11%
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Total annual Fund operating expenses.......................... 6.93%
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(1) The management fee is higher than that paid by most other
investment companies.
The numbers in the above table provide an estimate of how much it will cost
to operate the Fund for a year based on 2000 fiscal year expenses. These
are costs you pay directly because they are deducted from the Fund's total
assets before the daily share price is determined and before distributions
are made.
EXAMPLE: This example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example
assumes you invest $10,000 in the Fund for the time periods indicated. The
example also assumes (i) a 5% annual return and (ii) redemption at the end
of the period.
---------------------- ------------ ------------ ------------ ------------
Period Invested 1 Year 3 Years 5 Years 10 Years
---------------------- ------------ ------------ ------------ ------------
Your Costs $686 $2,019 $3,302 $6,297
---------------------- ------------ ------------ ------------ ------------
This example should not be considered a representation of past or future
expenses, and actual expenses may be greater or less than shown.
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OTHER INFORMATION ABOUT THE FUND
What are some of the Fund's potential rewards?
Income is normally a more stable and predictable component of total return
than capital appreciation. While the price of a company's stock can go up
or down in response to earnings or to fluctuations in the general market,
income is usually more reliable.
The Fund is designed for investors seeking to balance the income and
relative stability of securities over the long term with potential capital
appreciation through common stocks.
How can I tell if the Fund is appropriate for me?
Consider your investment goals, your time horizon for achieving those
goals, and your tolerance for risk. If you are investing primarily for
safety and liquidity or primarily for current income (such as dividends),
you should consider another investment. If you can accept the price
fluctuations of stocks in an effort to achieve income and capital
appreciation, the Fund could be an appropriate part of your overall
investment strategy.
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT
STRATEGIES, AND RELATED RISKS
INVESTMENT OBJECTIVE OF THE FUND
The primary investment objective of the Fund is to seek current income. As a
secondary objective, the Fund seeks to maximize the total return but only to the
extent consistent with its primary investment objective. The Fund's investment
objective may be changed by a vote of the Trustees of the Fund at any time
without a vote of the shareholders of the Fund.
IMPLEMENTATION OF INVESTMENT OBJECTIVE
The Fund seeks to meet its investment objective through a broad range of
investment vehicles. In seeking to achieve its investment objective, the Fund
primarily will use the following principal investments, without limitation:
o Common stocks of any issuer.
o Preferred stocks, warrants, and convertible securities of any issuer.
o Corporate bonds and debentures and debt securities issued or
guaranteed by the U.S. government or its agencies or
instrumentalities.
o Money market instruments, such as commercial paper, bank certificates
of deposit, and U.S. government securities.
6
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In choosing an investment for the Fund, the Fund is not restricted to any
particular criteria or quality standards except as expressly provided for in
this Prospectus. With respect to equity investments, the Fund's financial
adviser generally looks for issuers that pay attractive dividends and show
growth potential, based on fundamental analysis of the relevant industries and
the issuers' financial strength. With respect to debt instruments (other than
short-term debt used for defensive purposes), the Fund's investment adviser
considers probable interest rate movements and generally chooses investment
grade instruments. The yield sought by the Fund on investment grade instruments
usually exceeds that of short-term U.S. treasury securities.
The Fund may also use the following principal investment strategies:
o The purchase and sale of securities of U.S. and non-U.S. issuers.
o The purchase and sale of call options. This is primarily to achieve
premium income but may also be used for hedging purposes.
o The purchase and sale of U.S. government securities.
o The purchase and sale of high-yield bonds, sometimes called Junk
Bonds.
o The purchase and sale of U.S. government agency mortgage-backed
securities.
The Fund may also on occasion use derivatives as a non-principal investment
strategy. The term derivative is used to describe financial instruments whose
value is derived from an underlying security (E.G., a stock or bond) or a market
benchmark (E.G., an interest rate index). Many types of investments representing
a wide range of potential risks and rewards fall under the "derivatives"
umbrella - from conventional instruments, such as callable bonds, futures, and
options, to more exotic investments, such as stripped mortgage securities and
structured notes. While the term "derivative" only recently became widely known
among the investing public, derivatives have in fact been employed by investment
managers for many years.
The Fund will invest in derivatives only if the expected risks and rewards are
consistent with its objectives, policies, and overall risk profile as described
in this Prospectus. The Fund currently only writes covered call options. The
Fund will limit its use of derivatives to situations in which they may enable
the Fund to accomplish the following: increase yield; hedge against a decline in
principal value; invest in eligible asset classes with greater efficiency and
lower cost than is possible through direct investment; or adjust portfolio
duration.
The Fund may also investment in high yield (high-risk) debt securities as a
non-principal investment strategy. These bonds, which are commonly known as
"junk bonds," may provide higher yields, but present a higher risk of loss of
interest and principal, as well as a greater risk of default. These securities
may also be more susceptible to changes in economic or market conditions than
investment grade bonds, resulting in greater price volatility. At times, the
markets in which these securities are traded may be less liquid than the markets
for higher rated securities. Lower liquidity may adversely affect the price at
which a particular security may be sold. Accordingly, an investment in high
yield (high-risk) debt securities should also be considered speculative.
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CONCENTRATION POLICY
The current concentration policy of the Fund states that it is not the policy of
the Fund to invest 25% or more of the value of its total assets in any one
industry. An industry is determined by looking at the standard industry
classification (SIC) code (i.e., if two companies have the same SIC code, the
companies would be in the same industry). However, when securities of a given
industry come to constitute 25% or more of the value of the Fund's total assets
by reason of changes in value of either the concentrated securities or other
securities, the excess need not be sold. The Fund has also instituted policies
and procedures to assist in preventing a violation of the concentration policy
of the Fund. The policy provides that prior to the investment advisor making a
purchase of a security, the chief financial officer, or designee thereof, must
confirm that the purchase will not result in a violation of the concentration
policy. In addition, pursuant to the policy, the chief financial officer will
determine weekly if any portfolio securities have appreciated in value above 25%
such that additional purchases would be prohibited.
TEMPORARY DEFENSIVE POSITIONS
In response to unfavorable market conditions, the Fund may commit up to 100% of
its assets to temporary defensive investments in (i) high-grade debt securities
of all types, (ii) U.S. government securities, and (iii) repurchase agreements.
While the Fund believes that these temporary defensive
investments are consistent with the Fund's investment objective, the rate of
return on such investments tends to be lower and may have an adverse effect on
Fund performance. If the Fund makes substantial temporary defensive investments,
the Fund may not achieve its investment objective.
PORTFOLIO TURNOVER
The use of the principal investment strategies discussed above can produce
portfolio turnover of 100% or more per year. The portfolio turnover for the year
ended June 30, 2000 was 91%. High portfolio turnover (100% or more) increases
the Fund's brokerage costs and increases the likelihood that the Fund will
experience short-term gains and losses.
PORTFOLIO RISKS
GENERAL. Because of its investment policy, the Fund may or may not be suitable
or appropriate for all investors. The Fund is not a money market fund and is not
an appropriate investment for those whose primary objective is principal
stability. The Fund will normally have substantially all of its assets in equity
securities (E.G., common stocks). This portion of the Fund's assets will be
subject to all of the risks of investing in the stock market. There is risk in
all investments. The value of the portfolio securities of the Fund will
fluctuate based upon market conditions.
The Fund is not diversified across a large number of industries. Although the
Fund seeks to reduce risk by investing in a diversified portfolio, such
diversification does not eliminate all risk. Unlike other funds that may invest
in substantially more industry segments, the Fund is subject to increased
portfolio risk.
SECURITIES OF FOREIGN (NON-U.S.) ISSUERS. The Fund may invest in U.S.
dollar-denominated and non-U.S. dollar-denominated securities of foreign
(issuers. There are special risks in foreign investing.
Individual foreign economies of certain countries differ favorably or
unfavorably from the United States' economy in such respects as growth of gross
national product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position. The internal politics of
certain foreign countries are not as stable as in the United States. Governments
in certain foreign countries continue to participate to a significant degree,
through ownership interest or regulation, in their respective economies. Action
by these governments could have a significant effect on market prices of
securities and payment of dividends. The economies of many foreign countries are
heavily dependent upon international trade and are accordingly affected by
protective trade barriers and economic conditions of their trading partners. The
enactment by these trading partners of protectionist trade legislation could
have a significant adverse effect upon the securities markets of such countries.
With respect to certain foreign countries, especially developing and emerging
ones, there is the possibility of adverse changes in investment or exchange
control regulations, expropriation or confiscatory taxation, limitations on the
removal of funds or other assets of the Fund, political or social instability,
or diplomatic developments which could adversely affect investments by the Fund
in those countries.
OPTIONS. The Fund may engage in a variety of investment strategies relating to
the use of options including the following:
O WRITING CALL OPTIONS. The Fund may write (sell) American or European
style "covered" call options and purchase options to close out options
previously written by the Fund. In writing covered call options, the
Fund expects to generate additional premium income which should serve
to enhance the Fund's total return and reduce the effect of any price
decline of the security or currency involved in the
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option. Covered call options will generally be written on securities
or currencies which, in the Fund's opinion, are not expected to have
any major price increases or moves in the near future but which, over
the long term, are deemed to be attractive investments for the Fund.
A call option gives the holder (buyer) the "right to purchase" a
security or currency at a specified price (the exercise price) at
expiration of the option (European style) or at any time until a
certain date (the expiration date) (American style). So long as the
obligation of the writer of a call option continues, the writer may be
presented with an exercise notice by the broker-dealer through whom
the option was sold, requiring the writer to deliver the underlying
security or currency against payment of the exercise price. This
obligation terminates upon the expiration of the call option, or such
earlier time at which the writer effects a closing purchase
transaction by repurchasing an option identical to that previously
sold. To secure the writer's obligation to deliver the underlying
security or currency in the case of a call option, a writer is
required to deposit in escrow the underlying security or currency or
other assets in accordance with the rules of a clearing corporation.
The Fund will write only covered call options. This means that the
Fund will own the security or currency subject to the option or an
option to purchase the same underlying security or currency, having an
exercise price equal to or less than the exercise price of the
"covered" option, or will establish and maintain with its custodian
for the term of the option, an account consisting of cash, U.S.
government securities, other liquid high-grade debt obligations, or
other suitable cover as determined by the Securities and Exchange
Commission ("SEC") having a value equal to the fluctuating market
value of the optioned securities or currencies.
Portfolio securities or currencies on which call options may be
written will be purchased solely on the basis of investment
considerations consistent with the Fund's investment objective. The
writing of covered call options is a conservative investment technique
believed to involve relatively little risk (in contrast to the writing
of naked or uncovered options, which the Fund will not do), but
capable of enhancing the Fund's total return. When writing a covered
call option, the Fund, in return for the premium, gives up the
opportunity for profit from a price increase in the underlying
security or currency above the exercise price, but conversely retains
the risk of loss should the price of the security or currency decline.
Unlike one who owns securities or currencies not subject to an option,
the Fund has no control over when it may be required to sell the
underlying securities or currencies, because it may be presented with
an exercise notice at any time prior to the expiration of its
obligation as a writer. If a call option which the Fund has written
expires, the Fund will realize a gain in the amount of the premium;
however, such gain may be offset by a decline in the market value of
the underlying security or currency during the option period. If the
call option is exercised, the Fund will realize a gain or loss from
the sale of the underlying security or currency.
The premium the Fund will receive from writing a call option will
reflect, among other things, the current market price of the
underlying security or currency, the relationship of the exercise
price to such market price, the historical price volatility of the
underlying security or currency, and the length of the option period.
Once the decision to write a call option has been made, the Fund, in
determining whether a particular call option should be written on a
particular security or currency, will consider the reasonableness of
the anticipated premium and the likelihood that a liquid secondary
market will exist for those options. The premium received by the Fund
for writing covered call options will be recorded as a liability of
the Fund. This liability will be adjusted daily to the option's
current market value, which will be the latest sale price at the time
at which the net asset value per share of the Fund is computed (close
of the New York Stock Exchange), or, in the absence of such sale, the
latest asked price. The option will be terminated upon expiration of
the option, the purchase of an identical option in a closing
transaction, or delivery of the underlying security or currency upon
the exercise of the option.
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Closing transactions will be effected in order to realize a profit on
an outstanding call option, to prevent an underlying security or
currency from being called, or, to permit the sale of the underlying
security or currency. Furthermore, effecting a closing transaction
will permit the Fund to write another call option on the underlying
security or currency with either a different exercise price or
expiration date or both. If the Fund desires to sell a particular
security or currency from its portfolio on which it has written a call
option, or purchased a put option, it will seek to effect a closing
transaction prior to, or concurrently with, the sale of the security
or currency. There is, of course, no assurance that the Fund will be
able to effect such closing transactions at favorable prices. If the
Fund cannot enter into such a transaction, it may be required to hold
a security or currency that it might otherwise have sold. When the
Fund writes a covered call option, it runs the risk of not being able
to participate in the appreciation of the underlying securities or
currencies above the exercise price, as well as the risk of being
required to hold on to securities or currencies that are depreciating
in value. This could result in higher transaction costs. The Fund will
pay transaction costs in connection with the writing of options to
close out previously written options. Such transaction costs are
normally higher than those applicable to purchases and sales of
portfolio securities.
Call options written by the Fund will normally have expiration dates
of less than nine months from the date written. The exercise price of
the options may be below, equal to, or above the current market values
of the underlying securities or currencies at the time the options are
written. From time to time, the Fund may purchase an underlying
security or currency for delivery in accordance with an exercise
notice of a call option assigned to it, rather than delivering such
security or currency from its portfolio. In such cases, additional
costs may be incurred.
The Fund will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than the
premium received from the writing of the option. Because increases in
the market price of a call option will generally reflect increases in
the market price of the underlying security or currency, any loss
resulting from the repurchase of a call option is likely to be offset
in whole or in part by appreciation of the underlying security or
currency owned by the Fund.
The Fund will not write a covered call option if, as a result, the
aggregate market value of all portfolio securities or currencies
covering written call or put options exceeds 25% of the market value
of the Fund's net assets. In calculating the 25% limit, the Fund will
offset, against the value of assets covering written calls and puts,
the value of purchased calls and puts on identical securities or
currencies with identical maturity dates.
O PURCHASING CALL OPTIONS. The Fund may purchase American or European
style call options. As the holder of a call option, the Fund has the
right to purchase the underlying security or currency at the exercise
price at any time during the option period (American style) or at the
expiration of the option (European style). The Fund may enter into
closing sale transactions with respect to such options, exercise them
or permit them to expire. The Fund may purchase call options for the
purpose of increasing its current return or avoiding tax consequences
that could reduce its current return. The Fund may also purchase call
options in order to acquire the underlying securities or currencies.
The Fund will not commit more than 5% of its assets to premiums when
purchasing call and put options. The Fund may also purchase call
options on underlying securities or currencies it owns in order to
protect unrealized gains on call options previously written by it. A
call option would be purchased for this purpose where tax
considerations make it inadvisable to realize such gains through a
closing purchase transaction. Call options may also be purchased at
times to avoid realizing losses.
10
<PAGE>
DEBT SECURITIES. Although at June 30, 2000, all of the Fund's assets were
invested in common stocks, the Fund may invest in convertible securities,
corporate debt securities, and preferred stocks which hold the prospect of
contributing to the achievement of the Fund's objectives. Yields on short-,
intermediate-, and long-term securities are dependent on a variety of factors,
including the general conditions of the money and bond markets, the size of a
particular offering, the maturity of the obligation, and the credit quality and
rating of the issuer. Debt securities with longer maturities tend to have higher
yields and are generally subject to potentially greater capital appreciation and
depreciation than obligations with shorter maturities and lower yields. The
market prices of debt securities usually vary, depending upon available yields.
An increase in interest rates will generally reduce the value of portfolio
investments, and a decline in interest rates will generally increase the value
of portfolio investments. The ability of the Fund to achieve its investment
objective is also dependent on the continuing ability of the issuers of the debt
securities in which the Fund invests to meet their obligations for the payment
of interest and principal when due. The Fund's investment program permits it to
purchase below investment-grade securities. Because investors generally perceive
that there are greater risks associated with investment in lower-quality
securities, the yields from such securities normally exceed those obtainable
from higher-quality securities. However, the principal value of lower-rated
securities generally will fluctuate more widely than higher-quality securities.
Lower-quality investments entail a higher risk of default; that is, the
nonpayment of interest and principal by the issuer than higher-quality
investments. Such securities are also subject to special risks, discussed below.
Although the Fund seeks to reduce risk by portfolio diversification, credit
analysis, and attention to trends in the economy, industries and financial
markets, such efforts will not eliminate all risk. There can, of course, be no
assurance that the Fund will achieve its investment objective.
After having been purchased by the Fund, a debt security may cease to be rated
or its rating may be reduced below the minimum required for purchase by the
Fund. Neither event will require a sale of such security by the Fund. However,
the Fund will consider such event in its determination of whether the Fund
should continue to hold the security. To the extent that the ratings given by
Moody's Investor Services or Standard & Poor's may change as a result of changes
in such organizations or their rating systems, the Fund will attempt to use
comparable ratings as standards for investments in accordance with the
investment policies contained in the Prospectus.
The Fund may invest in low-quality bonds commonly referred to as "junk bonds."
Junk bonds are regarded as predominantly speculative with respect to the
issuer's continuing ability to meet principal and interest payments. Because
investment in low- and lower-medium-quality bonds involves greater investment
risk, to the extent the Fund invests in such bonds, achievement of its
investment objective will be more dependent on the Fund's credit analysis than
would be the case if the Fund were investing in higher-quality bonds. Junk bonds
may be more susceptible to real or perceived adverse economic conditions than
investment-grade bonds. A projection of an economic downturn, or higher interest
rates, for example, could cause a decline in high-yield bond prices because the
advent of such events could lessen the ability of highly leveraged issuers to
make principal and interest payments on their debt securities. In addition, the
secondary trading market for high-yield bonds may be less liquid than the market
for higher-grade bonds, which can adversely affect the ability of a Fund to
dispose of its portfolio securities. Bonds for which there is only a "thin"
market can be more difficult to value inasmuch as objective-pricing data may be
less available and judgment may play a greater role in the valuation process.
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES. These are obligations issued
or guaranteed by the United States government of one of its agencies or
instrumentalities, such as the Government National Mortgage Association ("Ginnie
Mae" or "GNMA"), the Federal National Mortgage Association ("Fannie Mae" or
"FNMA") the Federal Home Loan Mortgage Corporation ("Freddie Mac" or "FHLMC"),
and the Federal Agricultural Mortgage Corporation ("Farmer Mac" or "FAMC").
FNMA, FHLMC, and FAMC obligations are not backed by the full faith and credit of
the U.S. Government as
11
<PAGE>
GNMA certificates are, but they are supported by the instrumentality's right to
borrow from the United States Treasury. U.S. Government Agency Mortgage-Backed
Certificates provide for the pass-through to investors of their pro-rata share
of monthly payments (including any prepayments) made by the individual borrowers
on the pooled mortgage loans, net of any fees paid to the guarantor of such
securities and the servicer of the underlying mortgage loans. Each of GNMA,
FNMA, FHLMC, and FAMC guaranties timely distributions of interest to certificate
holders. GNMA and FNMA guarantee timely distributions of scheduled principal.
FHLMC has in the past guaranteed only the ultimate collection of principal of
the underlying mortgage loan; however, FHLMC now issues mortgage-backed
securities (FHLMC Gold PCS) which also guarantee timely payment of monthly
principal reductions.
Prepayments on the underlying mortgages and their effect upon the rate of return
of a mortgage-backed security, is the principal investment risk for a purchaser
of such securities, like the Fund. Over time, any pool of mortgages will
experience prepayments due to a variety of factors, including (1) sales of the
underlying homes (including foreclosures), (2) refinancing of the underlying
mortgages, and (3) increased amortization by the mortgagee. These factors, in
turn, depend upon general economic factors, such as level of interest rates and
economic growth. Thus, investors normally expect prepayment rates to increase
during periods of strong economic growth or declining interest rates, and to
decrease in recessions and rising interest rate environments. Accordingly, the
life of the mortgage-backed security is likely to be substantially shorter than
the stated maturity of the mortgages in the underlying pool. Because of such
variation in prepayment rates, it is not possible to predict the life of a
particular mortgage-backed security, but FHA statistics indicate that 25- to
30-year single family dwelling mortgages have an average life of approximately
12 years. The majority of Ginnie Mae Certificates are backed by mortgages of
this type, and, accordingly, the generally accepted practice treats Ginnie Mae
Certificates as 30-year securities which prepay in full in the 12th year. FNMA
and Freddie Mac Certificates may have differing prepayment characteristics.
REAL ESTATE INVESTMENT TRUST (REIT). A real estate investment trust, commonly
referred to as a REIT, is an entity that receives special tax benefits under the
Internal Revenue Code for maintaining a specific percentage of its assets in
real estate and real estate related assets. Investors in the Fund may experience
many of the same risks involved with investing in real estate directly because
of investments made by the Fund in REITs. These risks include: declines in real
estate values, risks related to local or general economic conditions,
particularly lack of demand, overbuilding and increased competition, increases
in property taxes and operating expenses, changes in zoning laws, heavy cash
flow dependency, possible lack of availability of mortgage funds, obsolescence,
losses due to natural disasters, condemnation of properties, regulatory
limitations on rents and fluctuations in rental income, variations in market
rental rates, and possible environmental liabilities. REITs can be affected by
rising interest rates that may cause investors to demand a high annual yield
from future distributions which, in turn, could decrease the market prices for
the REITs. In addition, rising interest rates also increase the costs of
obtaining financing for real estate projects. Because many real estate projects
are dependent upon receiving financing, this could cause the value of the REITs
in which the Fund invests to decline. REITs may hold mortgages that the
mortgagors elect to prepay during periods of declining interest rates which may
diminish the yield on such REITs. In addition, borrowers may not be able to
repay mortgages when due which could have a negative effect on the Fund.
NON-DIVERSIFICATION OF THE PORTFOLIO
The Fund has elected to qualify as a "non-diversified investment company" so
that the Fund may invest its assets in the securities of a small number of
issuers. This subjects the value of the Fund's portfolio directly to the
increase or decrease in the particular investment. Thus, the opportunity for
gain and the risk of loss are not spread over as broad a base as would be the
case in a "diversified" company. While diversification spreads the risk of loss
over a broader base, it also restricts the ability of the Advisor to take
maximum advantage of investment opportunities that it determines are in the best
interest of the Fund.
The Fund will limit its investments in the securities of a small number of
issuers only when the investment advisor determines that it is in the best
interest of the Fund to do so.
12
<PAGE>
MANAGEMENT, ORGANIZATION, AND CAPITAL STRUCTURE
INVESTMENT ADVISOR
The Fund has entered into an investment advisory agreement (the "Advisory
Agreement") with Ameritor Financial Corporation which has its principal offices
at 4400 MacArthur Blvd #301, Washington D.C. 20007-2521. All voting stock of
Ameritor Financial Corporation is owned by United Securities, Inc., a Maryland
corporation whose sole shareholders are Carole S. Kinney and Charles T.W.
Steadman.
Since commencing business through its predecessor, William Allen Steadman &
Company, in 1932, the advisor has principally engaged in the business of
providing continuous investment supervision for the Fund. Under the terms of the
Advisory Agreement, the advisor manages the investments of the Fund and is
responsible for overall management of its business affairs subject to
supervision of the Trustees. As compensation for its services, the Fund pays to
the Advisor a monthly advisory fee at the annual rate of 1% of the first
$35,000,000 of the average daily net asset value of the Fund, 7/8 of 1% on the
next $35,000,000 and 3/4 of 1% on all sums in excess thereof. The advisory fee
is higher than that paid by many other investment companies. The Advisor also
receives certain other fees, which are described in the Statement of Additional
Information.
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<PAGE>
ORGANIZATION AND CAPITAL STRUCTURE
The Fund is organized as a common law trust under the laws of the District of
Columbia and has outstanding only one class of shares of beneficial interest.
All shareholders have equal voting rights, and all shares participate equally in
dividends and other distributions by the Fund, and in the residual assets of the
Fund in the event of liquidation. Fractional shares have the same rights
proportionately as do full shares, except that, pursuant to the trust indenture,
fractional shares do not have the right to vote. Shareholders of the Fund have
no preemptive rights and no conversion or subscription rights. The Fund does not
hold regularly scheduled annual shareholders' meetings. Special meetings are
called when required by applicable laws and regulations. No shareholder of the
Fund shall be subject to any liability to any person in connection with the
property or affairs of any such Fund.
In addition, the governing documents of the Fund contain several other
provisions relating to shareholders' rights that are uncommon to most other
mutual funds including: (a) trustees hold office for a term of unlimited
duration, (b) shareholders are entitled to vote for or against any amendments to
the Trust Indenture, only in very limited circumstances, (c) shareholders are
not entitled to vote for or against a termination of the Fund, and (d) except as
otherwise required by law, shareholders may call special meetings only upon a
vote of 90% of the outstanding shares.
Shareholders of the Fund have certain rights with respect to removal of
Trustees. Under these provisions, shareholders may remove one or more Trustees
by declaration or vote of two-thirds of the Fund's outstanding shares. The
Trustees will promptly call a meeting of shareholders for the purpose of voting
upon the question of removal of Trustees when requested to do so by the record
holders of not less than 10% of the outstanding shares of the Fund.
SPECIAL PROVISIONS OF THE TRUST INDENTURE OF THE FUND
The following discussion is a general summary of the material provisions of the
Amended and Restated Trust Indenture of the Fund. The description of these
provisions is necessarily general and reference should be made in each case to
the complete document.
1. Election and Removal of Trustees. Trustees are chosen for a term of
unlimited duration. Trustees may only be removed by a vote of 90% of
the remaining Trustees or a vote of two-thirds of the shareholders.
2. Meetings of Shareholders. Special meetings of the Shareholders may be
called at any time by the Chairman or by a majority of the Trustees,
and shall be called upon written request of shareholders holding in
the aggregate not less than ninety percent (90%) of the outstanding
shares having voting rights. The Trustees shall promptly call a
meeting of shareholders for the purpose of voting upon the question of
removal of Trustees when requested to do so by the record holders of
not less than 10% of the outstanding shares of the Fund.
3. Absence of Cumulative Voting. The Amended and Restated Trust Indenture
provides that there shall not be cumulative voting by shareholders for
the election of Trustees. The absence of cumulative voting rights
means that holders of a majority of the shares voted at a meeting of
shareholders may, if they so choose, elect all Trustees to be
selected, thus precluding minority shareholder representation among
the Trustees. Other than a provision of the Act requiring every
shareholder to have equal voting power, no provision of the Act
requires cumulative voting.
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<PAGE>
4. Possible Limitation on Acquisition. The trust indenture of the Fund
permits the Trustees to limit the amount of Fund shares owned at any
one time by any one person to 5% of Fund shares. The purpose of this
provision is to allow the Trustees to prevent a person from becoming
an affiliated person within the meaning of Section 2 of the 1940 Act.
There is no provision of the Act that limits the percentage ownership
one person may have in an open-end investment company.
LEGAL PROCEEDINGS
There are no material legal proceedings to which the Fund is a party. The
Investment Advisor is involved in a legal proceeding in the Superior Court of
the District of Columbia, Consuelo M. Steadman v. Steadman Security Corporation
and Ameritor Financial Corporation, Case # 98 CA 009193, filed on December 3,
1998. The Plaintiff is suing Steadman Security Corporation and Ameritor
Financial Corporation for breach of an employment contract which entitled the
plaintiff to compensation and benefits after the death of her late husband,
Charles W. Steadman, former president of the Defendant Corporation. The
plaintiff is seeking an amount of not less then $115,000 per year for 3 years,
and $50,000 for each year thereafter until plaintiff's death, plus any
additional monies due pursuant to the employment contract.
SHAREHOLDER INFORMATION
PRICING OF FUND SHARES
The Fund's net asset value per share is determined at the close of trading on
the New York Stock Exchange (currently 4:00 p.m., New York Time) on days when
the New York Stock Exchange is open for business. The New York Stock Exchange is
open for business Monday through Friday, except holidays. Fund shares are bought
and sold at the net asset value next calculated after the buy or sell order is
placed. It is computed by dividing the value of net assets (i.e., the value of
the assets less liabilities) by the total number of shares outstanding.
Portfolio securities are valued at the last sale price on the national
securities exchange or national securities market on which the securities are
primarily traded. Securities not listed on an exchange or national securities
market or securities for which there were no transactions are valued at the mean
between the most recent reported bid and asked prices. Any securities or other
assets for which market quotations are not readily available are valued at fair
value as determined in good faith by the Trustees. Debt securities having
remaining maturities of less than 60 days are valued by the amortized cost
method, unless the Trustees determine this is not fair value. Expenses and fees,
including the management fee, are accrued daily and taken into account for the
purpose of determining the net asset value.
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<PAGE>
PURCHASE OF FUND SHARES
The Fund is currently in the process of registering Fund shares for sale in
certain states. The Fund will offer the shares at net asset value without
payment of any sales fee (load) or commission when purchases are made directly
from the Fund. Shares purchased through registered broker-dealers may incur a
transaction fee.
To make an initial investment and open an account, complete the attached
application and forward it with a check or money order for $1,000 or more, made
payable to Ameritor Security Trust, 107 North Washington Street, Post Office Box
4365, Rocky Mount, NC 27803-0365 Initial investments of less than $1,000 will
not be accepted.
After an account has been established, a confirmation will be issued indicating
the amount invested, the number of shares purchased, and the purchase price per
share (net asset value per share). The confirmation will include a deposit stub,
which may be used to make an additional investment of $100 or more at any time
by completing the form and mailing with a check in the appropriate amount.
Additional investments of less than $100 will not be accepted.
Investments received prior to the closing of the New York Stock Exchange
(currently 4:00 p.m., New York Time) and which are in good order will be
credited at the net asset value determined at the close of the exchange on that
day. Investments received after closing will be credited at the net asset value
on the next subsequent day in which the net asset value of the Fund is
calculated.
All investments are subject to the Fund's acceptance and subject to compliance
with state and federal securities laws. The Fund may decline to accept an
investment when in the judgment of the Fund's investment advisor, the acceptance
of such investment would not be in the interest of existing shareholders or
after consultation with counsel, such investment would violate any state or
federal securities law. This determination is made upon receipt of the purchase
order or as soon thereafter as reasonably practicable. The prospective investor
whose order is not accepted will have his or her check or money order returned
as soon as possible thereafter. This Prospectus does not constitute an offer to
sell, or the solicitation of an offer to buy, any securities offered hereby to
any person in any jurisdiction in which such offer or solicitation would be
unlawful.
Stock certificates for shares are ordinarily not issued, as they are not
necessary and complicate redemption.
REDEMPTION OF FUND SHARES
Money may be withdrawn from an account at any time by following the procedures
set forth herein. Shares will be redeemed at the net asset value next calculated
after the request has been received in good order and the proceeds are paid by
check within seven days after receipt of a redemption request.
Accounts without share certificates - A signed request (all joint owners must
sign) stating the amount to be withdrawn must be made to Ameritor Security
Trust, 107 North Washington Street, Post Office Box 4365, Rocky Mount, NC
27803-0365. For amounts over $1,000 it will be necessary to obtain a "signature
guarantee" from a commercial bank or trust company. Signature guarantees shall
be accepted from all eligible guarantor institutions, which include domestic
banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations.
Instant Liquidity (by telephone) - Any amount may be withdrawn by telephone by
calling 1-(800)-424-8570 on any business day if telephone withdrawals have been
previously authorized on the Investment Application. Telephone instructions from
any person representing himself or herself to be you or your representative, and
believed by Ameritor Financial Corporation, as Transfer Agent for the Fund, to
be genuine will be acted upon. The Fund or the Transfer Agent will not be liable
for executing unauthorized instructions communicated by telephone that they
reasonably
16
<PAGE>
believe to be genuine. The Fund will employ reasonable procedures to confirm
that instructions communicated by telephone are genuine.
Accounts with share certificates - The signed share certificates (all joint
owners must sign) together with a "signature guarantee" from an eligible
guarantor institution (see "Accounts without share Certificates," above) and a
written request that the certificates be redeemed, must be submitted to Ameritor
Security Trust, 107 North Washington Street, Post Office Box 4365, Rocky Mount,
NC 27803-0365.
Requests for redemption by corporations, executors, administrators, trustees or
guardians may require further documentation.
The proceeds of redemptions are paid by check within seven days after receipt of
a request for redemption that complies with the procedures set forth above.
Proceeds may also be wired to a bank or trust company if wire transfers have
been previously authorized on the Investment Application. When a personal or
corporate check was used to purchase the shares, redemption proceeds will be
released only when bank clearance on the check has been received. This procedure
could take up to seven days after the purchase date and can be avoided by
submitting a certified check along with the purchase order. Also, there may be a
charge if a shareholder uses a broker-dealer to repurchase the Fund's shares.
The right of redemption may be suspended during any period when: (a) trading on
the New York Stock Exchange is restricted as determined by the SEC or such
Exchange is closed for other than weekends and holidays; or (b) as permitted by
the SEC.
For cost reasons we may close an account upon 30 days written notice when the
net asset value of the shares in an account is less than $100 as a result of
redemptions. Involuntary redemption may be avoided if additional funds are added
to the account during the 30-day period.
SYSTEMATIC WITHDRAWAL PLAN. The Fund has a Systematic Withdrawal Plan under
which shareholders who own at least $5,000 (at current net asset value)
worth of the Fund, may receive a fixed distribution amount at monthly
intervals by redeeming a portion of their shares equal to the specified
dollar amounts on a monthly basis. A sufficient number of shares will be
liquidated at the then current net asset value attributable to such shares
on the date of liquidation to meet withdrawals specified. Systematic
withdrawals are processed on the twenty-fifth day of the month.
Shareholders who wish to exercise this election should request and complete
the Systematic Withdrawal Application.
SHAREHOLDER RETIREMENT PLANS. Taxes on current income can be deferred by
investing in Keogh Plans, Individual Retirement Accounts (IRAs), Simplified
Employee Pensions (SEPs), 401(k), pension, profit sharing, employee
benefit, deferred compensation and other qualified retirement plans. The
federal tax law governing these tax-deferred retirement plans must be
complied with to avoid adverse tax consequences.
The Fund does not directly sponsor any retirement plans. However, shareholders
may fund their own self-directed IRA or other qualified plan with Ameritor
Security Trust shares. You should contact the Adviser for specific plan
documentation and any additional information you may require. You should also
consult your tax adviser before investing.
DIVIDENDS AND DISTRIBUTIONS
For the fiscal year ending June 30, 2001, the Fund intends to qualify as a RIC
under the Code. As a result, the Fund will distribute most of its income and
capital gains to its shareholders every year. Income dividends, if any, will be
paid at least annually and capital gains distributions, if any, will be made at
least annually. Unless an election to the contrary is made in writing to the
Fund at 107 North Washington Street, Post Office Box 4365, Rocky Mount, NC
27803-0365, all income dividends and all capital gains distributions payable on
shares of the Fund will be reinvested in additional shares at the net asset
value in effect on the dividend or distribution record date. Although the Fund
will not be taxed on the amounts it distributions, shareholders will generally
be taxed regardless of whether distributions are received in cash or are
reinvested in additional Fund shares. A particular distribution generally will
be taxable as either ordinary income or long-term capital gains. If a Fund
designates a distribution as a capital gains distribution, it will be taxable to
shareholders as long-term capital gains, regardless of how long they have held
their Fund shares.
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<PAGE>
TAX STATUS AND CONSEQUENCES
Although the Fund intends to qualify as a RIC, there is no guarantee that the
Fund will meet the RIC qualifications. If the Fund does not qualify as a RIC,
distributions from the Fund are taxable under the normal corporate tax rules for
federal income tax purposes. Non-redemption cash distributions to shareholders
constitute ordinary dividend income if such distributions are out of the
corporation's current or accumulated earnings and profits. Thereafter, the
distributions are a non-taxable return of basis to the extent of the recipient's
tax basis for the recipient's shares. Any distributions in excess of earnings
and profits and in excess of such tax basis constitute gain from a deemed sale
or exchange of the shares.
Redemption distributions may be taxable under the rules described above, or such
redemptions may be treated for federal income tax purposes as a sale or exchange
of the redeemed shares. Such characterization depends upon the application to
the recipient of Section 302(b) of the Code. A redemption distribution may be a
sale or exchange of the redeemed shares for tax purposes if it is not
essentially equivalent to a dividend, is a substantially disproportionate
redemption, is in complete termination of a shareholder's interest in the
corporation, or is a redemption from a non-corporate shareholder in partial
liquidation of the distributor (all within the technical meanings of Section
302(b)). Such determinations are highly individualized. Shareholders must
consult with their own tax advisors concerning the effect to them of any
redemption distribution from the Fund.
Special rules apply for federal income tax purposes if the Fund makes a
distribution of its assets in kind (which could be a liquidating distribution
from the Fund or a non-liquidating distribution). Other special tax rules apply
if the Fund makes a distribution of its shares or rights to acquire its shares
to its shareholders with respect to their Fund shares. No such distributions are
contemplated currently by the Fund so an explanation of these rules is beyond
the scope of this discussion.
The foregoing discussion relates solely to U.S. federal income tax law as
applicable to U.S. persons (I.E., U.S. citizens and residents and U.S. domestic
corporations, partnerships, trusts and estates). Each shareholder who is not a
U.S. person should consult his or her tax advisor regarding the U.S. and foreign
tax consequences of ownership of shares of the Fund, including the likelihood
that such a shareholder would be subject to a U.S. withholding tax at a rate of
30% (or at a lower rate under a tax treaty) on amounts constituting ordinary
income to him or her, where such amounts are treated as income from U.S. sources
under the Code.
In addition to federal taxes, shareholders of the Fund may be subject to state
and local taxes on distributions from the Fund. Shareholders should consult
their own tax advisors with respect to the tax status of distributions from the
Fund in their own state and localities. For more information on taxation, see
the section entitled "Taxation of the Fund" in the Statement of Additional
Information."
CONDENSED FINANCIAL INFORMATION OF THE FUND
The financial data included in the table below have been derived from audited
financial statements of the Fund. The financial data for the fiscal year ended
June 30, 2000 has been audited by Tait, Weller and Baker, independent auditors,
whose report covering such period is incorporated by reference into the SAI. The
financial data for the fiscal years ended June 30, 1999, 1998, 1997, 1996, 1995,
and September 30, 1994, 1993, 1992, and 1991 were audited by other independent
auditors.
This information should be read in conjunction with the Fund's latest audited
annual financial statements and notes thereto, which are also incorporated by
reference into the SAI, a copy of which may be obtained at no charge by calling
the Fund at 1-800-424-8570.
18
<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>
<PAGE>
<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>
19
<PAGE>
ADDITIONAL INFORMATION
________________________________________________________________________________
AMERITOR SECURITY TRUST
________________________________________________________________________________
Additional information about the Fund is available in the Fund's SAI. Additional
information about the Fund's investments is also available in the Fund's Annual
and Semi-annual Reports to shareholders. The Fund's Annual Report includes a
discussion of market conditions and investment strategies that significantly
affected the Fund's performance during its last fiscal year.
The SAI and the Annual and Semi-annual Reports are available free of charge upon
request (you may also request other information about the Fund or make
shareholder inquiries) by contacting us:
By telephone: 1-800-424-8570
By mail: Ameritor Security Trust
c/o NC Shareholder Services
107 North Washington Street
Post Office Box 4365
Rocky Mount, NC 27803-0365
By e-mail: [email protected]
On the Internet: www.ncfunds.com
Information about the Fund can also be reviewed and copied at the SEC's Public
Reference Room in Washington, D.C. Inquiries on the operations of the public
reference room may be made by calling the SEC at 1-202-942-8090. Reports and
other information about the Fund are available on the SEC's Internet site at
http://www.sec.gov, and copies of this information may be obtained, upon payment
of a duplicating fee, by electronic request at the following e-mail address:
[email protected], or by writing the SEC's Public Reference Section,
Washington, D.C. 20549-0102.
Investment Company Act file number 811-00018
<PAGE>
PART B
======
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF ADDITIONAL INFORMATION
The date of this Statement of Additional Information is November 1, 2000.
AMERITOR SECURITY TRUST
This Statement of Additional Information is not a prospectus but should be read
in conjunction with the Fund's prospectus dated November 1, 2000. You may obtain
a copy of the Fund's prospectus by writing to Ameritor Security Trust, Post
Office Box 4365, Rocky Mount, NC, 27803-4365 or calling Shareholder Services at
202-223-1000 or 1-800-424-8570. A prospectus with more complete information,
including management fees and expenses, will be sent to you. Please read it
carefully before investing.
TABLE OF CONTENTS
Fund History........................................1
Description of the Fund and its Investments
and Risks...........................................1
The Fund...................................1
Investment Strategies......................1
Investment Risks...........................1
Fund Policies..............................4
Temporary Defensive Positions..............6
Portfolio Turnover.........................6
Management of the Fund..............................6
Board of Trustees Responsibilities.........6
Management.................................6
Control Persons and Principal Holders of
Securities..........................................8
Investment Advisory and Other
Services............................................8
Investment Advisor; Services
Provided............................................8
Principal Underwriter..........................9
Brokerage Allocation and Other
Practices..........................................10
Brokerage Transactions and
Selection.................................10
Directed Brokerage........................10
Description of Fund Shares.........................11
Purchase and Pricing of Shares.....................12
Purchase of Fund Shares...................12
Offering Price of Fund Shares.............12
Taxation of the Fund...............................13
Calculation of Performance Data....................13
Financial Statements...............................13
2
<PAGE>
FUND HISTORY
The Fund, originally named the Associated Fund Trust, is a common law trust and
was organized under the laws of the District of Columbia pursuant to a trust
indenture on February 23, 1939. The Fund's name was changed in 1969 to the
Steadman Associated Fund, in January 1997 to the Steadman Security Trust, and in
September 1998 to the Ameritor Security Trust.
DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS
THE FUND
The Fund is a no-load, non-diversified, open-end investment company. The Fund is
registered under the Investment Company Act of 1940, as amended (hereinafter
referred to as the 1940 Act).
INVESTMENT STRATEGIES
The following information supplements the discussion of the Fund's investment
strategies discussed in the Fund's prospectus.
Although not the Fund's principal investment strategies, the Fund may also use
the following:
o The sale of securities pursuant to repurchase agreements.
o The purchase and sale of put options. This is primarily to
achieve premium income but may also be used for hedging purposes.
o Borrowing to increase the amount of money available for the Fund
to invest.
o The purchase and sale of restricted or illiquid securities.
o Short sales.
o Lending securities in the Fund's portfolio.
o The purchase and sale of real estate and real estate related
loans and securities, other than U.S. Government agency
mortgage-backed securities.
INVESTMENT RISKS
The following information supplements the discussion of the Fund's investment
strategies discussed in the Fund's prospectus.
REPURCHASE AGREEMENTS. The Fund may enter into a repurchase agreement through
which an investor (such as the Fund) purchases a security (known as the
"underlying security") from a well-established securities dealer or a bank that
is a member of the Federal Reserve System. Any such dealer or bank will be on
the Fund's approved list and must have a minimum credit rating with respect to
its short-term debt by Standard & Poor's Corporation or by Moody's Investors
Services, Inc.. At that time, the bank or securities dealer agrees to repurchase
the underlying security at the same price, plus specified interest. Repurchase
agreements are generally for a short period of time, often less than a week.
Repurchase agreements which do not provide for payment within seven days will be
treated as illiquid securities. The Fund will only enter into repurchase
agreements where (i) the underlying securities are of
1
<PAGE>
the type (excluding maturity limitations) which the Fund would be allowed to
purchase directly, (ii) the market value of the underlying security, including
interest accrued, will be at all times equal to or exceed the value of the
repurchase agreement, and (iii) payment for the underlying security is made only
upon physical delivery or evidence of book-entry transfer to the account of the
custodian or a bank acting as agent. In the event of a bankruptcy or other
default of a seller of a repurchase agreement, the Fund could experience both
delays in liquidating the underlying security and losses, including: (a)
possible decline in the value of the underlying security during the period while
the Fund seeks to enforce its rights thereto; (b) possible subnormal levels of
income and lack of access to income during this period; and (c) expenses of
enforcing its rights.
OPTIONS.
o WRITING COVERED PUT OPTIONS. The Fund may write American or European
style covered put options and purchase options to close out options
previously written by the Fund. A put option gives the purchaser of
the option the right to sell, and the writer (seller) has the
obligation to buy, the underlying security or currency at the exercise
price during the option period (American style) or at the expiration
of the option (European style). So long as the obligation of the
writer continues, the writer may be presented with an exercise notice
by the broker-dealer through whom such option was sold, requiring the
writer to make payment to the exercise price against delivery of the
underlying security or currency. The operation of put options in other
respects, including their related risks and rewards, is substantially
identical to that of call options.
The Fund would write put options only on a covered basis, which means
that the Fund would maintain in a segregated account cash, U.S.
government securities, other liquid high-grade debt obligations, or
other suitable cover as determined by the SEC, in an amount not less
than the exercise price or the Fund will own an option to sell the
underlying security or currency subject to the option having an
exercise price equal to or greater than the exercise price of the
"covered" option at all times while the put option is outstanding.
(The rules of a clearing corporation currently require that such
assets be deposited in escrow to secure payment of the exercise
price.)
The Fund would generally write covered put options in circumstances
where the Fund wishes to purchase the underlying security or currency
for the Fund's portfolio at a price lower than the current market
price of the security or currency. In such event, the Fund would write
a put option at an exercise price which, reduced by the premium
received on the option, reflects the lower price it is willing to pay.
Because the Fund would also receive interest on debt securities or
currencies maintained to cover the exercise price of the option, this
technique could be used to enhance current return during periods of
market uncertainty. The risk in such a transaction would be that the
market price of the underlying security or currency would decline
below the exercise price less the premiums received. Such a decline
could be substantial and result in a significant loss to the Fund. In
addition, the Fund, because it does not own the specific securities or
currencies which it may be required to purchase in exercise of the
put, cannot benefit from appreciation, if any, with respect to such
specific securities or currencies.
The Fund will not write a covered put option if, as a result, the
aggregate market value of all portfolio securities or currencies
covering put or call options exceeds 25% of the market value of the
Fund's net assets. In calculating the 25% limit, the Fund will offset,
against the value of assets covering written puts and calls, the value
of purchased puts and calls on identical securities or currencies with
identical maturity dates.
o PURCHASING PUT OPTIONS. The Fund may purchase American or European
style put options. As the holder of a put option, the Fund has the
right to sell the underlying security or currency at the exercise
price at any time during the option period (American style) or at the
expiration of the option
2
<PAGE>
(European style). The Fund may enter into closing sale transactions
with respect to such options, exercise them or permit them to expire.
The Fund may purchase put options for defensive purposes in order to
protect against an anticipated decline in the value of its securities
or currencies.
The Fund may also purchase put options at a time when the Fund does
not own the underlying security or currency. By purchasing put options
on a security or currency it does not own, the Fund seeks to benefit
from a decline in the market price of the underlying security or
currency. If the put option is not sold when it has remaining value,
and if the market price of the underlying security or currency remains
equal to or greater than the exercise price during the life of the put
option, the Fund will lose its entire investment in the put option. In
order for the purchase of a put option to be profitable, the market
price of the underlying security or currency must decline sufficiently
below the exercise price to cover the premium and transaction costs,
unless the put option is sold in a closing sale transaction.
The Fund will not commit more than 5% of its assets to premiums when
purchasing put and call options. The premium paid by the Fund when
purchasing a put option will be recorded as an asset of the Fund. This
asset will be adjusted daily to the option's current market value,
which will be the latest sale price at the time at which the net asset
value per share of the Fund is computed (close of New York Stock
Exchange), or, in the absence of such sale, the latest bid price. This
asset will be terminated upon expiration of the option, the selling
(writing) of an identical option in a closing transaction, or the
delivery of the underlying security or currency upon the exercise of
the option.
o DEALER (OVER-THE-COUNTER) OPTIONS. The Fund may engage in transactions
involving dealer options. Certain risks are specific to dealer
options. While the Fund would look to a clearing corporation to
exercise exchange-traded options, if the Fund were to purchase a
dealer option, it would rely on the dealer from whom it purchased the
option to perform if the option were exercised. Failure by the dealer
to do so would result in the loss of the premium paid by the Fund as
well as loss of the expected benefit of the transaction.
Exchange-traded options generally have a continuous liquid market
while dealer options have none. Consequently, the Fund will generally
be able to realize the value of a dealer option it has purchased only
by exercising it or reselling it to the dealer who issued it.
Similarly, when the Fund writes a dealer option, it generally will be
able to close out the option prior to its expiration only by entering
into a closing purchase transaction with the dealer to which the Fund
originally wrote the option. While the Fund will seek to enter into
dealer options only with dealers who will agree to and which are
expected to be capable of entering into closing transactions with the
Fund, there can be no assurance that the Fund will be able to
liquidate a dealer option at a favorable price at any time prior to
expiration. Until the Fund, as a covered dealer call option writer, is
able to effect a closing purchase transaction, it will not be able to
liquidate securities (or other assets) or currencies used as cover
until the option expires or is exercised. In the event of insolvency
of the contra party, the Fund may be unable to liquidate a dealer
option. With respect to options written by the Fund, the inability to
enter into a closing transaction may result in material losses to the
Fund. For example, because the Fund must maintain a secured position
with respect to any call option on a security it writes, the Fund may
not sell the assets which it has segregated to secure the position
while it is obligated under the option. This requirement may impair a
Fund's ability to sell portfolio securities or currencies at a time
when such sale might be advantageous.
The Staff of the SEC has taken the position that purchased dealer
options and the assets used to secure the written dealer options are
illiquid securities. The Fund may treat the cover used for written OTC
options as liquid if the dealer agrees that the Fund may repurchase
the OTC option it has written for a maximum price to be calculated by
a predetermined formula. In such cases, the OTC option would be
considered illiquid only to the extent the maximum repurchase price
under the formula exceeds the intrinsic value of the option.
3
<PAGE>
LENDING OF PORTFOLIO SECURITIES. Securities loans are made to broker-dealers or
institutional investors or other persons, pursuant to agreements requiring that
the loans be continuously secured by collateral at least equal at all times to
the value of the securities lent marked to market on a daily basis. The
collateral received will consist of cash, U.S. government securities, letters of
credit or such other collateral as may be permitted under its investment
program. While the securities are being lent, the Fund will continue to receive
the equivalent of the interest or dividends paid by the issuer on the
securities, as well as interest on the investment of the collateral or a fee
from the borrower. The Fund has a right to call each loan and obtain the
securities, within such period of time which coincides with the normal
settlement period for purchases and sales of such securities in the respective
markets. The Fund will not have the right to vote on securities while they are
being lent, but it will call a loan in anticipation of any important vote. The
risk in lending portfolio securities, as with other extensions of secured
credit, consist of possible delay in receiving additional collateral or in the
recovery of the securities or possible loss of rights in the collateral should
the borrower fail financially. Loans will only be made to firms deemed by the
Fund to be of good standing and will not be made unless, in the judgment of the
Fund, the consideration to be earned from such loans would justify the risk.
MORTGAGE-RELATED SECURITIES. Mortgage-related securities, other than U.S.
Government agency mortgage-backed securities, in which the Fund may invest
include, but are not limited to, those described below.
o MORTGAGE-BACKED SECURITIES. Mortgage-backed securities are securities
representing an interest in a pool of mortgages. The mortgages may be
of a variety of types, including adjustable rate, conventional 30-year
fixed rate, graduated payment, and 15-year fixed rate. Principal and
interest payments made on the mortgages in the underlying mortgage
pool are passed through to the Fund. This is in contrast to
traditional bonds where principal is normally paid back at maturity in
a lump sum. When a mortgage in the underlying mortgage pool is
prepaid, an unscheduled principal prepayment is passed through to the
Fund. This principal is returned to the Fund at par. As a result, if a
mortgage security were trading at a premium, its total return would be
lowered by prepayments, and if a mortgage security were trading at a
discount, its total return would be increased by prepayments.
Unscheduled prepayments of principal shorten the securities' weighted
average life and may lower their total return. The value of these
securities also may change because of changes in the market's
perception of the creditworthiness of the entity that issued them. In
addition, the mortgage securities market in general may be adversely
affected by changes in governmental regulation or tax policies.
FUND POLICIES
POLICY ON ISSUANCE OF SENIOR SECURITIES. The Fund, as an open-end, management
investment company registered under the 1940 Act, is prohibited from issuing
senior securities. The Fund may not issue preferred stock or debt securities of
any kind, nor may the Fund borrow from any entity other then a bank.
BORROWING POLICY. The Fund's current borrowing policy is that the Fund may
borrow from banks for investment purposes not to exceed 33 1/3% of the value of
the Fund's total assets, less its liabilities other than such borrowings. This
borrowing, which is a speculative technique known as leveraging, generally will
be unsecured, except to the extent the Fund enters into reverse repurchase
agreements described below. The 1940 Act requires the Fund to maintain
continuous asset coverage (that is, total assets including borrowings, less
liabilities exclusive of borrowings) of 300% of the amount borrowed. If the 300%
asset coverage should decline as a result of market fluctuations or other
reasons, the Fund is required to sell some of its portfolio holdings within
three days to reduce the debt and restore the 300% asset coverage, even though
it may be disadvantageous from an investment standpoint to sell securities at
4
<PAGE>
that time. Leveraging may exaggerate the effect on net asset value of any
increase or decrease in the market value of the Fund's portfolio. Money borrowed
for leveraging will be subject to interest costs which may or may not be
recovered by appreciation of the securities purchased. The Fund also may be
required to maintain minimum average balances in connection with such borrowing
or to pay a commitment or other fee to maintain a line of credit; either of
these requirements would increase the cost of borrowing over the stated interest
rate.
Among the forms of borrowing in which the Fund may engage is the entry into
reverse repurchase agreements with members of the New York Stock Exchange (or
subsidiaries thereof), members of the Federal Reserve System, recognized primary
U.S. government securities dealers, or institutions which the investment adviser
of the Fund has determined to be of comparable creditworthiness. These
transactions involve the transfer by the Fund of an underlying debt instrument
in return for cash proceeds based on a percentage of the value of the security.
The Fund retains the right to receive interest and principal payments on the
security. At an agreed upon future date, the Fund repurchases the security at
principal, plus accrued interest. In certain types of agreements, there is no
agreed-upon repurchase date and interest payments are calculated daily, often
based on the prevailing overnight repurchase rate. The Fund will maintain in a
segregated custodial account cash, cash equivalents, or U.S. government
securities or other high quality liquid debt securities at least equal to the
aggregate amount of its reverse repurchase obligations, plus accrued interest,
in certain cases, in accordance with releases promulgated by the Securities and
Exchange Commission. The Securities and Exchange Commission views reverse
repurchase transactions as collateralized borrowings by the Fund. These
agreements, which are treated as if reestablished each day, may provide the Fund
with a flexible borrowing tool.
CONCENTRATION POLICY. The current concentration policy of the Fund states that
it is not the policy of the Fund to invest 25% or more of the value of its total
assets in any one industry. An industry is determined by looking at the standard
industry classification (SIC) code (i.e., if two companies have the same SIC
code, the companies would be in the same industry). However, when securities of
a given industry come to constitute 25% or more of the value of the Fund's total
assets by reason of changes in value of either the concentrated securities or
other securities, the excess need not be sold. The Fund has also instituted
policies and procedures to assist in preventing a violation of the concentration
policy of the Fund. The policy provides that prior to the investment advisor
making a purchase of a security, the chief financial officer, or designee
thereof, must confirm that the purchase will not result in a violation of the
concentration policy. In addition, pursuant to the policy, the chief financial
officer will determine weekly if any portfolio securities have appreciated in
value above 25% such that additional purchases would be prohibited.
POLICY ON PURCHASING AND SELLING REAL ESTATE AND COMMODITIES. The Fund may
purchase and sell real estate, including land and buildings and securities of
companies whose assets consist of real property and interests therein. Although
the Fund may purchase commodities, the Fund does not purchase or intend to
purchase commodities, and has no policy governing its purchase of commodities.
POLICY ON MAKING LOANS. The Fund may make both long and short-term loans to
others, including the purchase of non-publicly offered debt securities on a
case-by-case basis.
LIMITATIONS ON FUND POLICIES. The Fund's Trust Indenture provides that the Fund
may, in the sole discretion of the investment advisor and to the maximum extent
permissible by the applicable laws and regulations, engage in all lawful
investment activities. Without limitation on any other investment activities,
the Fund reserves freedom of action to engage in the foregoing types of
activities specified in Section (8)(b) of the 1940 Act. The extent to which the
Fund intends to engage in the foregoing activities is entirely dependent upon
the market conditions and the economic environment in which the Fund must
5
<PAGE>
operate. Thus it is not practical to predict the extent to which the Fund will
or may engage in such activities. The Fund intends to engage in these activities
to the maximum extent permissible under applicable laws and regulations when, in
the judgment of the investment advisor, such activities appear to be beneficial
to the Fund and its shareholders. Accordingly, the risks involved in an
investment in the Fund may be greater than the risks generally associated with
many other mutual funds.
TEMPORARY DEFENSIVE POSITIONS
In response to unfavorable market conditions, the Fund may commit up to 100% of
its assets to temporary defensive investments in (i) high-grade debt securities
of all types, (ii) U.S. government securities, and (iii) repurchase agreements.
While the Fund believes that these temporary defensive investments are
consistent with the Fund's investment objective, the rate of return on such
investments tend to be lower and may have an adverse effect on Fund performance.
PORTFOLIO TURNOVER
The portfolio turnover rate during the year dropped significantly from prior
years as a result of a new management philosophy. For the years ended June 30,
2000, 1999, 1998, 1997, anf 1996, the portfolio turnover rate was 91%, 0%, 48%,
193%, 231%, and 505%, respectively.
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES RESPONSIBILITIES
Pursuant to the Trust Indenture of the Fund, the Trustees possess full,
exclusive and absolute power, control and authority over the Fund property and
the business of the Fund to the same extent as if the Trustees were the sole and
absolute owners of the Fund property and business in their own right. This
authority is exercised free from any power or control on the part of the
shareholders of the Fund, except as may be required by law. The Trustees may
also delegate certain functions as may be permitted by the Trust Indenture.
MANAGEMENT
TRUSTEES AND OFFICERS. The following table sets forth certain information
concerning the Trustees and officers of the Fund.
<TABLE>
<S> <C> <C> <C>
Position(s) Held Principal Occupation(s)
Name, Address, and Age Age(1) with the Fund During Past 5 Years
----------------------------- --------- ----------------------------- ------------------------------
W. MARK CRAIN 48 Trustee Professor of Economics and Research
9603 Concerto Circle Associate with the Center for Study of
Vienna, VA 22182 Public Choice George Mason
University Fairfax, Virginia
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Position(s) Held Principal Occupation(s)
Name, Address, and Age Age(1) with the Fund During Past 5 Years
----------------------------- --------- ----------------------------- ------------------------------
RICHARD P. ELLISON 69 Trustee President and CEO, Intervest Financial
1410 Coventry Lane Corporation. Formerly President, Boat
Alexandria, VA 22304 America Corporation. Director, Potomac
Group Homes, Inc. and Boat America
Corporation
RICHARD O. HAASE 65 Trustee Vice President: Maiden, Hasse & Smith,
7026 Elizabeth Drive a Washington DC real estate valuation
McLean, VA 22101 company
CAROLE S. KINNEY (2) 54 Trustee and President of the Chairman of the Board of Ameritor
8020 Thornley Court Fund Financial Corporation, National
Bethesda, MD 20817 Association of Securities
Dealers-Agent, Former stock broker with
Solomon-Smith Barney
JEROME KINNEY 71 Treasurer of the Fund
8020 Thornley Ct. President of Ameritor Financial
Bethesda, MD 20817 Corporation
JOHN T. TURNER 66 Trustee, Chairman Senior Vice President, SYNTEK
1125 Trotting Horse Lane Technologies, Inc.
Great Falls, VA 22066
</TABLE>
--------------
(1) As of November 1, 2000.
(2) Interested person as defined by Section 2(a)(19) of the Investment Company
Act.
COMPENSATION. The following table sets forth the compensation of the members of
the Board of Trustees for the fiscal year ended June 30, 2000. Trustees are paid
$300 per meeting attended plus reimbursement for certain expenses of attending
the meeting. No officer received compensation from the Fund exceeding $60,000.
The Fund, the other Ameritor funds, and Ameritor Financial Corporation do not
provide any pension or retirement benefits.
<TABLE>
<S> <C> <C>
Total Compensation from Fund
Aggregate Compensation and Fund Complex Paid
Name and Position from the Fund to Trustees (1)
--------------------------------------- -------------------------------------- ---------------------------------
W. MARK CRAIN $1,333 $4,000
Trustee
RICHARD P. ELLISON(2) $1,333 $4,000
Trustee
RICHARD O. HAASE $1,333 $4,000
Trustee
CAROLE S. KINNEY (2) none none
Trust and Secretary of the Fund
JOHN T. TURNER (2) $1,333 $4,000
Trustee
--------------
</TABLE>
(1) Includes compensation for serving on the Boards of Trustees of the
Fund, as well as the Ameritor Industry Fund and the Ameritor Investment
Fund.
(2) Became a member of the Board of Trustees on June 16, 1999.
7
<PAGE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of October 30, 2000, no person beneficially owned of record, or to the
knowledge of the Fund, beneficially owned, more than 5% of the then outstanding
shares of the Fund. Furthermore, no person has exerted himself or herself as a
party in control of the Fund and there has been no adjudication under section
2(a)(9) of the 1940 Act that control exists.
As of October 30, 2000, the Trustees and officers of the Fund, as a group
beneficially owned no shares in the Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISOR; SERVICES PROVIDED
The Fund has entered into an investment advisory agreement (the "Advisory
Agreement") with Ameritor Financial Corporation which has its principal offices
at 4400 MacArthur Blvd #301, Washington D.C. 20007-2521. All voting stock of
Ameritor Financial Corporation is owned by United Securities, Inc., a Maryland
corporation whose sole shareholders are Carole S. Kinney and Charles T.W.
Steadman.
Since commencing business through its predecessor, William Allen Steadman &
Company, in 1932, the advisor has principally engaged in the business of
providing continuous investment supervision for the Funds. Under the terms of
the Advisory Agreement, the advisor manages the investments of the Fund and is
responsible for overall management of its business affairs subject to
supervision of the Trustees. As compensation for its services, each Fund pays to
the advisor a monthly advisory fee at the annual rate of 1% of the first
$35,000,000 of the average daily net asset value of the Fund, 7/8 of 1% on the
next $35,000,000 and 3/4 of 1% on all sums in excess thereof. The advisory fee
is higher than that paid by many other investment companies.
8
<PAGE>
The Fund paid investment advisory fees during the last three fiscal years as
follows: June 30, 2000, $57,658; June 30, 1999, $44,520; June 30, 1998, $41,538.
Under an agreement with the Fund which is contained in the approved minutes of
the Fund, Ameritor Financial Corporation also serves as Transfer and Dividend
Disbursing Agent and Agent for Administration of Shareholder Accounts
(hereinafter "delegated services") for the Fund.
For the Delegated Services, the Transfer Agent is paid a fee calculated based
upon the number of shareholder accounts plus a monthly minimum.
The Fund paid fees for delegated services for the last three fiscal years ending
as follows: June 30, 2000, $23,910; June 30, 1999, $25,664; and June 30, 1998,
$28,299
Ameritor Financial Corporation also receives reimbursements from the Fund for
salaries and benefits of its employees who perform directly attributable
functions to the Fund other than investment advisory and shareholder services.
These functions include: fund accounting, reviewing the Fund's internal
financial reports; coordinating the editing, printing and mailing of reports to
the Fund's shareholders; internal audit of the Fund's books, transactions, and
daily pricing; compliance with SEC regulation, including registration;
preparation of materials for Trustees' meetings; legal and other administrative
functions; and clerical assistance related to the above. Additionally, Ameritor
Financial Corporation receives reimbursements from the Fund for rent computer
expenses. Reimbursements for the fiscal year ending June 30, 2000 totaled
$228,482.
Effective September 1, 2000, the advisor entered into a Fund Accounting
Agreement and a Transfer Agent Agreement with the Fund in which the advisor
serves as the Fund's administrator and transfer agent for the Fund. Under the
Fund Accounting Agreement, the advisor assists in the performance of its
administrative responsibilities to the Fund, coordinates the services of each
vendor of services to the Fund, and provides the Fund with other necessary
administrative, fund accounting, and compliance services. In addition, the
advisor makes available the office space, equipment, personnel, and facilities
required to provide such services to the Fund. Under the Transfer Agent
Agreement, the advisor serves as the transfer, dividend paying, and shareholder
servicing agent for the Fund.
Ameritor Financial Corporation assumes no responsibility under the Advisory
Agreement other than to render the services called for thereunder, in good
faith, and is not responsible for any action of the Fund in following or
declining to follow any advice or recommendation. It is not liable for any error
of judgment or mistake of law or for any loss suffered by the Fund in connection
with matters to which the Advisory Agreement relates, except for a loss
resulting from willful misfeasance, bad faith, gross negligence or reckless
disregard in the performance of its duties under the Advisory Agreement.
Directors, officers and employees of the investment advisor have the unlimited
and unrestricted right to engage in any other business or to devote time and
attention in part to the management or other aspects of any other business,
whether of a similar or dissimilar nature.
The Advisory Agreement also provides that the Fund will pay all of its ordinary
expenses of operation except specifically excepted, such expenses of operation
including, but not being limited to, the following: (i) the expenses of
maintaining its own books of accounts; (ii) the expenses of its custodian, the
transfer agent and dividend disbursing agent; (iii) the expenses of computing
the daily net asset value of the shares; (iv) the fees and expenses of the
Trustees including, contrary to most other funds, the fees of those Trustees who
also may be directors of the investment advisor or its subsidiary corporation;
(v) the expenses of meetings of shareholders; (vi) the expenses of printing and
mailing of all shareholder reports and other required reports and documents
provided shareholders, including the cost of printing and mailing prospectuses
to shareholders; (vii) taxes of any kind assessed against the Fund; (viii)
interest and commissions; (ix) Securities and Exchange Commission registration
fees; (x) state registration fees; (xi) the expenses of trust existence; (xii)
all or part of the salaries of the fund officers and other employees who also
may be directors or officers or employees of the Adviser or its subsidiaries;
(xiii) the fees of auditors; (xiv) the fees of legal counsel; (xv) travel,
entertainment, publication, telephone, telegraph, office space rent; and (xvi)
all other ordinary expenses of operation. The Fund also will pay all
extraordinary expenses of whatever kind unless such expenses have been
specifically assumed by the investment advisor.
9
<PAGE>
PRINCIPAL UNDERWRITER
The Fund currently has no principal underwriter.
BROKERAGE ALLOCATION AND OTHER PRACTICES
BROKERAGE TRANSACTIONS AND SELECTION
Ameritor Financial Corporation makes decisions as to buying and selling
investment securities, subject to supervision by the Fund's Board of Trustees.
It is the practice of the Fund to seek the most favorable prices and execution
of orders for the purchase or sale of portfolio securities, taking into
consideration the facilities and services of a particular broker or dealer.
Subject to these considerations, the Fund has authorized the investment advisor
to place a portion of such business on a principal or agency basis with eligible
brokers who have provided statistical, quote, and research material to Ameritor
Financial Corporation. Research services include written and oral advice,
analyses and reports concerning issuers, industries, securities, markets,
economic factors and trends and portfolio strategy. The Fund has been informed
that, to the extent brokerage is allocated to obtain statistical, investment,
research, or quotation services, the investment advisor will be assisted in
providing to the Fund more thorough and complete advisory material. Although
such services may tend to reduce the expenses of the investment advisor in
rendering investment advice to the Fund, the value of the services is not
determinable. Ameritor Financial Corporation's investment personnel determine
the overall reasonableness of commissions paid by rating brokers or dealers on
such general factors as execution capabilities, quality of research and
financial condition, and net results of specific transactions in such terms as
price, promptness, size of order, and difficulty of execution.
The Fund's investment adviser, acting on behalf of the Fund, is authorized to
pay a brokerage commission in excess of that which another broker might have
charged for effecting the same transaction, in recognition of the value of
brokerage or research services. The investment adviser and the Trustees consider
the above allocation of brokerage to be consistent with the Fund's brokerage
policy. Brokers do not exercise investment discretion as to the Fund's portfolio
securities, hence no brokerage is allocated for such service.
The following table sets forth the amount of brokerage paid by the Fund and the
total volume of transactions for the periods indicated.
For the fiscal year ended June 30,
------------------------------------------------
2000 1999 1998
------------------------------------------------
Transactions............ $10,800,178 $748,000 $4,888,372
Brokerage............... $7,440 $3,790 $18,730
As the above table indicates, during the fiscal year ended June 30, 2000, the
total amount of transactions and the brokerage paid thereon increased
substantially from the prior year. Brokerage increased 96%, while the amount of
transactions increased 1,344% from fiscal 1999 to fiscal 2000. This increase is
due to the advisor's philosophy that in the fiscal year 1999 the large
technology securities advanced considerably, but in the fiscal year 2000 the
advisor made a major shift in holdings to reflect the market changes and also to
achieve wider diversification of the Fund's portfolio.
10
<PAGE>
DESCRIPTION OF FUND SHARES
The Fund is organized as a common law trust under the laws of the District of
Columbia and has outstanding only one class of shares of beneficial interest.
All shareholders have equal voting rights, and all shares participate equally in
dividends and other distributions by the Fund, and in the residual assets of
such Fund in the event of liquidation. Fractional shares have the same rights
proportionately as do full shares, except that fractional shares do not have
voting rights. Shares of the Fund have no preemptive rights and no conversion or
subscription rights. The Fund does not hold regularly scheduled annual
shareholders' meetings. Special meetings are called when required by applicable
laws and regulations. No shareholder of any Fund shall be subject to any
liability to any person in connection with the property or affairs of any such
Fund. The shares of the Fund are not subject to mandatory redemption and or
subject to a sinking fund.
In addition, the governing documents of the Fund contain several other
provisions relating to shareholders' rights that are uncommon to most other
mutual funds including: (a) trustees hold office for a term of unlimited
duration, (b) shareholders are entitled to vote for or against any amendments to
the Trust Indenture only under limited circumstances, (c) shareholders are not
entitled to vote for or against a termination of the Fund, and (d) except as
otherwise required by law, shareholders may call special meetings only upon a
vote of 90% of the outstanding shares.
As interpreted by the staff of the Securities and Exchange Commission, the 1940
Act provides shareholders of the Fund with certain rights with respect to
removal of Trustees. Under these provisions, shareholders may remove one or more
Trustees by declaration or vote of two-thirds of each Fund's outstanding shares.
The Trustees will promptly call a meeting of shareholders for the purpose of
voting upon the question of removal of Trustees when requested to do so by the
record holders of not less than 10% of the outstanding shares of the Fund. The
Fund will comply with these procedures.
The Trust Indenture of the Fund provides that there shall not be cumulative
voting by shareholders for the election of Trustees. The absence of cumulative
voting rights means that holders of a majority of the shares voted at a meeting
of shareholders may, if they so choose, elect all Trustees to be selected, thus
precluding minority shareholder representation among the Trustees. Other than a
provision of the Act requiring every shareholder to have equal voting power, no
provision of the Act requires cumulative voting.
11
<PAGE>
Finally, a provision of the Trust Indenture of the Fund permits the Trustees to
limit the amount of Fund shares owned at any one time by any one person to 5% of
Fund shares. This provision allows the Trustees to prevent a person from
becoming an affiliated person within the meaning of Section 2 of the 1940 Act.
There is no provision of the Act that limits the percentage ownership one person
may have in an open-end investment company.
PURCHASE AND PRICING OF SHARES
PURCHASE OF FUND SHARES
The Fund is currently in the process of registering Fund shares for sale in
certain states. The Fund will offer the shares at net asset value without
payment of any sales fee (load) or commission when purchases are made directly
from the Fund. Shares purchased through registered broker-dealers may incur a
transaction fee.
To make an initial investment and open an account, complete the attached
application and forward it with a check or money order for $1,000 or more, made
payable to Ameritor Security Trust, 107 North Washington Street, Post Office Box
4365, Rocky Mount, NC 27803-0365. Initial investments of less than $1,000 will
not be accepted.
After an account has been established, a confirmation will be issued indicating
the amount invested, the number of shares purchased, and the purchase price per
share (net asset value per share). The confirmation will include a deposit stub,
which may be used to make an additional investment of $100 or more at any time
by completing the form and mailing with a check in the appropriate amount.
Additional investments of less than $100 will not be accepted.
Investments received prior to the closing of the New York Stock Exchange
(currently 4:00 p.m., New York Time) and are in good order will be credited at
the net asset value determined at the close of the exchange on that day.
Investment received after closing will be credited at the net asset value on the
next subsequent day in which the net asset value of the Fund is calculated.
All investments are subject to our acceptance and subject to compliance with
state and federal securities laws. The Fund may decline to accept an investment
when in the judgment of the Fund's investment advisor, the acceptance of such
investment would not be in the interest of existing shareholders or after
consultation with counsel, such investment would violate any state or federal
securities law. This determination is made upon receipt of the purchase order or
as soon thereafter as reasonably practicable. The prospective investor whose
order is not accepted will have his or her check or money order returned as soon
as possible thereafter. This Prospectus does not constitute an offer to sell, or
the solicitation of an offer to buy, any securities offered hereby to any person
in any jurisdiction in which such offer or solicitation would be unlawful.
Stock certificates for shares are ordinarily not issued, as they are not
necessary and complicate redemption.
OFFERING PRICE OF FUND SHARES
Fund shares are bought and sold at the net asset value next calculated after the
buy or sell order is placed. The Fund's net asset value per share is determined
at the close of trading on the New York Stock Exchange (currently 4:00 p.m., New
York Time) on days when the New York Stock Exchange is open for business. It is
computed by dividing the value of net assets (I.E., the value of the assets less
liabilities) by the total number of shares outstanding. Portfolio securities are
valued at the last sale price on the national
12
<PAGE>
securities exchange or national securities market on which the securities are
primarily traded. Securities not listed on an exchange or national securities
market or securities for which there were no transactions are valued at the mean
between the most recent reported bid and asked prices. Any securities or other
assets for which market quotations are not readily available are valued at fair
value as determined in good faith by the Trustees. Debt securities having
remaining maturities of less than 60 days are valued by the amortized cost
method, unless the Trustees determine this is not fair value. Expenses and fees,
including the management fee, are accrued daily and taken into account for the
purpose of determining the net asset value.
TAXATION OF THE FUND
For the fiscal year ended June 30, 2000 and prior years, the Fund did not
qualify as a regulated investment company ("RIC") under the Internal Revenue
Code of 1986, as amended ("Code"). However, for the fiscal year ending June 30,
2001, the Fund intends to qualify as a RIC under the rules of Sections 851
through 855 of Subchapter M of the Code. If the Fund does not meet this
classification as a RIC under the Code, and there is no guarantee that the Fund
will meet the requirements of the Code, the Fund will be taxed under the normal
corporate tax rules under Subchapter C of the Code. While not being qualified as
a RIC will permit the Fund to utilize certain loss carryforwards, which at June
30, 2000 totaled approximately $1,102,300 it will not be able to take advantage
of certain potentially favorable tax rules applicable to electing qualified
regulated investment companies.
If the Fund qualifies as a RIC, the Fund will not be taxed on the amount it
distributes. However, shareholders will generally be taxed regardless of whether
distributions are received in cash or are reinvested in additional Fund shares.
A particular distribution generally will be taxable as either ordinary income or
long-term capital gains. If a Fund designates a distribution as a capital gains
distribution, it will be taxable to shareholders as long-term capital gains,
regardless of how long they have held their Fund shares.
Under the federal income tax law, the Fund is required to report to the Internal
Revenue Service all dividend distributions. Under the backup withholding
provisions, all distributions by the Fund may be subject to withholding of
federal income tax at the rate of 31% in the case of non-exempt shareholders who
fail to furnish the Fund with their correct taxpayer identification numbers and
with required certifications regarding their status under federal income tax
laws. If the withholding provisions are applicable, any such distributions will
be reduced by the amounts required to be withheld. Investors should consult
their tax advisors about the applicability of the backup withholding provisions.
CALCULATION OF PERFORMANCE DATA
The Fund will calculate its total rate of return for certain periods by
determining the average annual compounded rates of return over these periods
that would cause an investment of $10,000 (with all dividends and distributions
reinvested) to reach the value of that investment at the end of the periods. The
Fund may also calculate total rates of return, which represent aggregate
performance over a period or year-by-year performance. The average annual total
rate of return for Fund shares for the one year, five year, and ten year periods
ended June 30, 2000 are 26.67%, 18.56% and 7.89%, respectively.
FINANCIAL STATEMENTS
The audited financial statements for the fiscal year ended June 30, 2000,
including the financial highlights appearing in the Annual Report to
shareholders, are incorporated by reference and made a part of this document.
13
<PAGE>
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>
<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%
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>
<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%
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>
<PAGE>
<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" othe 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.
<PAGE>
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS
Exhibit Description
------- -----------
(a) Amended and Restated Trust Indenture of Ameritor Security
Trust (1)
(c) Specimen share certificate (1)
(d) Ameritor Security Trust Amended and Restated Investment
Advisory Agreement (1)
(g) Custodian agreement and depository contract with Crestar
Bank N.A. (1)
(i) Opinion of Manatt, Phelps & Phillips, LLP as to the
legality of the securities being registered (1)
(n) Financial Data Schedule (2)
(x)(i) Power of Attorney of John T. Hayward (3)
(x)(ii) Power of Attorney of Paul A. Bowers (3)
(x)(iii) Power of Attorney of Paul F. Wagner (3)
(x)(iv) Power of Attorney of W. Mark Crain (3)
(x)(v) Power of Attorney of Richard O. Haase (3)
(x)(vi) Power of Attorney of Carole S. Kinney (3)
(x)(vii) Power of Attorney of John T. Turner (3)
(x)(viii) Power of Attorney of Richard P. Ellison (3)
(y)(i) Consent of Reznick Fedder & Silverman, P.C. (4)
(y)(ii) Consent of Manatt, Phelps & Phillips, LLP (4)
(y)(iii) Consent of Beth Anne Roth, LLC (5)
(y)(iv) Consent of Tait, Weller & Baker (5)
____________________
(1) Incorporated by reference to the Exhibits to the Registration Statement on
Form N-14 originally filed with the SEC on January 1, 1997 (SEC File Number:
333-20889).
(2) Contained in electronically filed version only.
(3) Incorporated by reference to the signature page of the Post-effective
Amendment No 15 to the Registration Statement on Form N-1A filed with the
SEC on June 30, 1999.
(4) Incorporated herein by reference to Registrant's Registration Statement on
Form N-1A filed on November 16, 1999 (File No. 333-20889).
(5) Incorporated
<PAGE>
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND
None.
ITEM 25. INDEMNIFICATION
Not applicable.
Section 5.3 of the Amended Restated Trust Indenture of Ameritor Security Trust
and Declaration of Trust (the "Trust Agreement"), provides that the Fund shall
indemnify each of its trustees, advisors, officers, employees, and agents
(including any person who serves at the request of the Fund as a director,
officer, partner, trustee or the like of another organization in which the Fund
has any interest as a shareholder, creditor or otherwise) against all
liabilities and expenses, including amounts paid in satisfaction of judgments,
in compromise, as fines or penalties and as counsel fees, reasonably incurred by
such person in connection with the defense or disposition of any action, suit or
other proceeding, whether civil or criminal, in which the person may be involved
or with which the person may be threatened, while acting as a trustee or
advisor, or as an officer, employee, or agent of the Fund or the trustees, or
thereafter, by reason of the person being or having been a trustee, advisor,
officer, employee or agent. However, indemnification shall not be available with
respect to any matter as to which such person has been adjudicated to have acted
in bad faith or with willful misconduct or reckless disregard of such person's
duties or gross negligence or not to have acted in good faith in the reasonable
belief that such person's action was in the best interest of the Fund. If the
matter is disposed of by a compromise payment, pursuant to a consent decree or
otherwise, no indemnification either for said payment or for any other expenses
shall be provided unless such compromise shall have been approved as in the best
interests of the Fund by a majority of the disinterested trustees or the Fund
has received a written opinion of independent legal counsel to the effect that
the person to be indemnified appears to have acted in good faith in the
reasonable belief that such person's action was in the best interests of the
fund. A provision of this section of the Trust Agreement also provides that the
Trust Agreement is not the sole means of indemnification and that the Fund may
indemnify persons as provided by applicable law.
The District of Columbia Code does not contain a provision relating to the
indemnification of trustees, officers, employees, or agents of a trust. However,
under general common law trust principles, a trustee is normally entitled to
reimbursement from the trust for all necessary and reasonable expenditures made
in the execution of the trust if the trustee acted in good faith for the benefit
of the trust. However, under common law trust principles, property of the trust
cannot be used to reimburse the trustee for losses or expenses incurred by the
trustee, unless the trustee has exercised good faith and common prudence.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISOR
Not Applicable
ITEM 27. PRINCIPAL UNDERWRITERS
Not Applicable. The Fund does not have a principal underwriter.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
Each account, book, or other document required to be maintained by Section 31(a)
of the Investment Company Act of 1940, as amended, is maintained by the Ameritor
Financial Corporation at 4400 MacArthur Blvd, #301, Washington D.C. 20007-2521.
<PAGE>
ITEM 29. MANAGEMENT SERVICES
Not applicable. There are no management-related service contracts to which the
Fund or the investment advisor are a party.
ITEM 30. UNDERTAKINGS
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended
("Securities Act"), and the Investment Company Act of 1940, as amended, the
Registrant certifies that it meets all of the requirements for effectiveness of
this registration statement under Rule 485(b) under the Securities Act and has
duly caused this Post-Effective Amendment No. 17 to its Registration Statement
to be signed on its behalf by the undersigned, thereto duly authorized, in the
District of Columbia, on this 1st day of November 1, 2000.
AMERITOR SECURITY TRUST
By: /s/ Carole S. Kinney
______________________________
Carole S. Kinney
President, Trustee
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Post-Effective Amendment No. 17 to the Registration Statement has been signed
below by the following persons in the capacities and on the date indicated.
* Trustee
_____________________________________________________________
W. MARK CRAIN Date
* Trustee
_____________________________________________________________
RICHARD P. ELLISON Date
* Trustee
_____________________________________________________________
RICHARD O. HAASE Date
* Trustee
_____________________________________________________________
JOHN T. TURNER Date
/s/ Carole S. Kinney November 1, 2000
_____________________________________________________________ Trustee
CAROL S. KINNEY Date
* By: /s/ Carole S. Kinney Dated: November 1, 2000
_________________________________________________
Carole S. Kinney
Attorney-in-Fact
