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AMERITOR
Investment
Fund
(Formerly Steadman Investment Fund)
ANNUAL
REPORT
June 30, 1999
An Ameritor NO-LOAD Mutual Fund
AMERITOR FINANCIAL CORPORATION
(Formerly Steadman Security Corporation)
Ameritor
Financial
Corporation
Investment Adviser
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Dear Shareholder:
I am pleased to report that your Fund's return for this fiscal year exceeded
the 32.46% return of the previous year. The gain amounted to over 44% this
year, an achievement placing the Fund as one of the best performing funds over
the past twelve months.
The good performance of your Fund is the result of maintaining a portfolio of
investments that has appreciated greatly and continued efforts to reduce
operating expenses. You will note that the portfolio turnover rate, which is
shown on the Financial Highlights page of the Annual Report, has dropped
dramatically in the past two years. This reflects a basic change in managing
the Fund's portfolio and has benefited performance.
Your Fund has been closed to new investment for the past ten years because of
difficulties the former management had with federal authority and poor
performance generally, which precluded registering its shares for sale.
Although the record of the Fund's new management is not quite two years old,
the improved performance over this period confirms that the Fund is going the
right direction and consideration is being given to registering the shares for
sale once again in the near future.
We shall endeavor to keep your Fund an attractive investment and appreciate
your continued confidence.
Sincerely,
/s/ Max Katcher
Max Katcher
President
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INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees of
Ameritor Investment Fund
We have audited the accompanying statement of assets and liabilities, in-
cluding the portfolio of investments, of Ameritor Investment Fund as of June
30, 1999, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the three years in the
period 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
audits. The financial highlights for the year ended June 30, 1996, the period
January 1, 1995 through June 30, 1995, and the year ended December 31, 1994
were audited by other auditors whose report, dated August 6, 1996, expressed
an unqualified opinion on those financial highlights.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of mate-
rial misstatement. An audit includes examining, on a test basis, evidence sup-
porting the amounts and disclosures in the financial statements. Our proce-
dures included confirmation of securities owned as of June 30, 1999, by corre-
spondence with the custodian and/or broker. 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 audits provide 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
Ameritor Investment Fund as of June 30, 1999, the results of its operations
for the year then ended, the changes in its net assets for each of the two
years in the period then ended, and the financial highlights for each of the
three years in the period then ended, in conformity with generally accepted
accounting principles.
Bethesda, Maryland
August 9, 1999
Resnick Fedder & Silverman P.C.
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AMERITOR INVESTMENT FUND
Portfolio of Investments
June 30, 1999
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ----------
<S> <C> <C>
COMMON STOCKS -- 100%
Computer Peripherals -- 22.6%
Cisco Systems Inc (a)...................................... 9,000 $ 580,500
----------
Total Computer Peripherals 580,500
----------
Computer System Design -- 13.4%
Sun Microsystems Inc (a)................................... 5,000 344,375
----------
Total Computer System Design 344,375
----------
Electronics -- 2.2%
General Motors Corporation Class "H"....................... 1,000 56,250
----------
Total Electronics 56,250
----------
Oil and Gas Drilling -- 3.6%
Global Marine Inc.......................................... 6,000 92,625
----------
Total Oil and Gas Drilling 92,625
----------
Plastic and Rubber Mfg -- 2.7%
Dupont E I De Nemours & Co................................. 1,000 68,313
----------
68,313
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Telecom Mfg. -- 28.9%
Lucent Technologies Inc.................................... 11,000 741,813
----------
Total Telecom Mfg 741,813
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Telephone Services -- 26.6%
MCI Worldcom Inc (a)....................................... 5,000 430,313
AT & T Corporation......................................... 4,500 251,155
----------
Total Telephone Services 681,468
----------
Total Portfolio of Investments (Cost $850,176)............. $2,565,344
==========
</TABLE>
(a) Non-income producing security.
The accompanying notes are an integral part of the financial statements.
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AMERITOR INVESTMENT FUND
Statement of Assets and Liabilities
June 30, 1999
<TABLE>
<S> <C>
Assets:
Investments at value (Cost $850,176) (Note 1).................... $2,565,344
Cash and cash equivalents (Note 1)............................... 77,301
Due from affiliate (Note 4)...................................... 7,280
Dividends receivable............................................. 240
Interest receivable.............................................. 169
----------
Total assets.................................................... 2,650,334
----------
Liabilities:
Accounts payable and accrued expenses............................ 30,523
Investment advisory and service fees payable (Note 4)............ 2,074
Other payable to affiliate (Note 4).............................. 3,421
Payable for trust shares redeemed................................ 10,342
----------
Total Liabilities............................................... 46,360
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Net Assets......................................................... $2,603,974
==========
Net assets consist of:
Accumulated net investment loss.................................. $2,422,360
Unrealized appreciation of investments........................... 1,715,168
Accumulated net realized losses from security transactions....... (133,916)
Capital paid in less distributions since inception............... 3,445,082
----------
$2,603,974
==========
Net asset value, offering price and redemption price per share
($2,603,974 divided by 1,604,654 shares of no par value trust
shares)....................................................... $ 1.62
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
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AMERITOR INVESTMENT FUND
Statement of Operations
For the year ended June 30, 1999
<TABLE>
<S> <C> <C>
Investment Income:
Dividends................................................ $6,747
Interest................................................. 4,292
------
Total income........................................... $ 11,039
----------
Expenses:
Salaries and employee benefits (Note 4).................. 73,669
Investment advisory fee (Note 4)......................... 21,256
Professional fees........................................ 40,700
Shareholder servicing fee (Note 4)....................... 43,324
Pricing and subscriptions................................ 10,778
Rent (Note 4)............................................ 14,269
Custodian fees........................................... 1,428
Computer services (Note 4)............................... 35,771
Reports to shareholders.................................. 8,485
Trustees' fees and expenses (Note 4)..................... 1,323
Miscellaneous............................................ 4,658
------
Total expenses......................................... 255,661
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Net Investment loss.................................... (244,622)
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Realized and Unrealized Gain/(Loss) on Investments (Notes 1
and 3):
Net realized gain from investment transactions........... 53,091
Change in unrealized appreciation of investments......... 1,013,876
----------
Net gain on investments.................................. 1,066,967
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Net increase in net assets resulting from operations..... $ 822,345
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
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AMERITOR INVESTMENT FUND
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the year For the year
ended June 30, ended June 30,
1999 1998
-------------- --------------
<S> <C> <C>
Increase (decrease) in net assets from
operations:
Net investment loss............................. $ (244,622) $ (234,679)
Net realized gain from investment transactions.. 53,091 387,654
Change in unrealized appreciation of
investments................................... 1,013,876 338,651
---------- ----------
Net increase in net assets resulting from
operations.................................... 822,345 491,626
Decrease in net assets from trust share
transactions (Note 2).......................... (98,183) (245,704)
---------- ----------
Increase in net assets.......................... 724,162 245,922
Net assets at beginning of period................ 1,879,812 1,633,890
---------- ----------
Net assets at end of period, including
accumulated net investment loss of $2,422,360
and $2,177,738................................. $2,603,974 $1,879,812
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
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AMERITOR INVESTMENT FUND
Financial Highlights
<TABLE>
<CAPTION>
For the years ended For the period For the
June 30 January 1, 1995 year ended
--------------------------------- through June 30 December 31
1999 1998 1997 1996 1995* 1994
------ ------ ------ ------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value,
beginning of period.. $ 1.12 $ .85 $ .86 $ 1.02 $ .93 $ 1.42
------ ------ ------ ------ ------ ------
Net investment income
(loss)............... (.21) (.29) (.03) (.13) (.02) (.08)
Net realized and
unrealized gain
(loss) on
investments.......... .71 .56 .02 (.03) .11 (.41)
------ ------ ------ ------ ------ ------
Total from Investment
operations.......... .50 .27 (.01) (.16) .09 (.49)
------ ------ ------ ------ ------ ------
Net asset value, end of
period............... $ 1.62 $ 1.12 $ .85 $ .86 $ 1.02 $ .93
====== ====== ====== ====== ====== ======
Ratio/Supplemental Data:
Total Return........... 44.59% 32.46% (2.05)% (15.53)% 19.36%** (34.51)%
Ratio of expenses to
avg. net assets...... 11.97% 14.54% 16.47% 10.60% 10.54%** 8.90%
Ratio of net investment
income(loss) to
average net assets... (11.46)% (13.52)% (15.75)% (5.23)% (4.24)%** (6.65)%
Portfolio turnover..... 0% 34% 138% 382% 226%** 282%
Net Assets, end of
period (000's)....... $2,604 $1,880 $1,634 $1,763 $2,298 $2,159
</TABLE>
* Fund's fiscal year-end was changed to June 30.
** Annualized
The accompanying notes are an integral part of the financial statements.
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AMERITOR INVESTMENT FUND
Notes to Financial Statements
1.Organization and significant accounting policies
Ameritor Investment Fund, formerly Steadman Investment Fund, (the Fund) is
registered under the Investment Company act of 1940, as amended, as a non-di-
versified, open-end investment company. The Fund has not been accepting new
subscriptions for shares since November 1996.
The preparation of financial statements in conformity with generally ac-
cepted accounting principles requires management to make estimates and assump-
tions that affect the reported amounts of assets and liabilities and disclo-
sure of contingent assets and liabilities at the date of the financial state-
ments and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates and significant
changes to estimates could occur in the near term. The following is a summary
of significant accounting policies consistently followed by the Fund in the
preparation of its financial statements.
Cash and cash equivalents
Management defines cash equivalents as investments that mature in three
months or less when acquired. All cash and cash equivalents are invested in a
single money market fund maintained by the investment custodian.
Security valuation
Investments in securities traded on a national securities exchange are val-
ued at the last reported sales price on the last business day of the period.
Investments for which no sale was reported on that date are valued at the mean
between the latest bid and asked prices.
Security transactions and investment income
Security transactions are recorded on the trade date. Realized gains and
losses from security transactions are reported on an identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income and ex-
penses are recorded on the accrual basis.
Income taxes
The Fund is subject to income taxes in years when it does not qualify as a
regulated investment company under subchapter M of the Internal Revenue Code.
The Fund accounts for income taxes using the liability method, whereby de-
ferred tax assets and
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AMERITOR INVESTMENT FUND
liabilities arise from the tax effect of temporary differences between the fi-
nancial statement and tax bases of assets and liabilities, measured using
presently enacted tax rates. If it is more likely than not that some portion
or all of a deferred tax asset will not be realized, a valuation allowance is
recognized.
2.Trust shares
The Trust Indenture does not specify a limit to the number of shares which
may be issued. Transactions in trust shares were as follows:
<TABLE>
<CAPTION>
For the year For the year
ended June 30, 1999 ended June 30, 1998
--------------------- --------------------
Shares Amount Shares Amount
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Shares sold........................ --0-- $ --0-- --0-- $ --0--
Shares redeemed.................... (70,261) (98,183) (253,579) (245,704)
---------- --------- --------- ---------
Net decrease..................... (70,261) (98,183) (253,579) (245,704)
========== ========= ========= =========
Shares outstanding:
Beginning of period.............. 1,674,915 1,928,494
---------- ---------
End of period.................... 1,604,654 1,674,915
========== =========
</TABLE>
3.Purchase and sales of securities
During the year ended June 30, 1999, proceeds from sales of investment secu-
rities aggregated $231,651. Net unrealized appreciation of investments aggre-
gated $1,715,168 of which $1,808,283 relates to gross unrealized appreciation
where there is an excess of value over tax cost and $93,115 related to gross
unrealized depreciation where there is an excess of tax cost over value.
4.Investment advisory and transactions with affiliates
Ameritor Financial Corporation (AFC), formerly Steadman Security Corpora-
tion, an affiliate, has provided advisory services under an agreement which
first became effective in 1972. On February 28, 1984, at the Annual Meeting of
the shareholders, a new Investment Advisory Agreement was approved. Under the
new advisory agreement, AFC will continue to provide the same services it pro-
vided under the same terms and conditions of the previous agreement. The
agreement will continue in effect subject to the annual approval by the Board
of Trustees or by a majority of the outstanding voting securities of the Fund.
The fee for investment advisory services is based on 1% of the first
$35,000,000 of the average daily net assets of the Fund, 7/8 of 1% on the next
$35,000,000 and 3/4 of 1% on all sums in excess thereof. In
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AMERITOR INVESTMENT FUND
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 serv-
ices was computed on the basis of the number of shareholder accounts calcu-
lated 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 servic-
es. As of June 30, 1999, the Fund had reimbursed AFC $7,280 in excess of
amounts owed.
Certain officers and trustees of the Fund are "affiliated persons" of the
Investment Adviser, as defined by the Investment Company Act of 1940.
5.Federal income taxes
In the fiscal year ended June 30, 1999, the Fund did not meet the asset di-
versification requirements applicable to regulated investment companies. Thus,
the Fund did not qualify as a regulated investment company under Subchapter M
of the Internal Revenue Code. However, the Fund had a net investment loss in
fiscal year ended June 30, 1999; therefore, no income tax provision is re-
quired. A full valuation allowance was provided for net deferred tax assets,
totaling approximately $273,000 at June 30, 1999, which arise principally from
net operating loss carryforwards and capital carryforwards available for in-
come tax purposes.
For income tax purposes, the fund has net operating loss carryforwards ap-
proximating $2,434,000 which are available to offset future net operating in-
come in non-qualifying years, if any, which expire as follows: (2004)
$299,000; (2005) $304,000 (2006) $222,000; (2007) $278,000; (2008) $217,000;
(2009) $204,000; (2010) $40,000; (2011) $112,000; (2012) $270,000, (2013)
$239,000 and (2014) $249,000. Capital loss carryforwards aggregating approxi-
mately $134,000 are available to offset future capital gains, if any, and ex-
pire in 2003.
6.Expiration of Shareholder States redemption restriction
In 1993, the Fund entered into a Settlement Agreement with approximately 47
states ("the Shareholder States") with respect to the recovery of shares and
distributions owned by persons who had allegedly abandoned these properties.
The Settlement Agreement provides, among other things, that the Shareholder
States will not request redemption of their shares until February 14, 1998.
The Shareholder States currently own 13% of shares in the Fund. In July 1998,
the Fund agreed to remove this restriction and allow Shareholder States to re-
deem shares upon request. During 1999, approximately 4,900 shares were re-
deemed by various states.
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AMERITOR INVESTMENT FUND
7.Year 2000 (Unaudited)
The year 2000 (Y2K) issue involves the fact that many computers use two di-
gits to identify the year when processing date-sensitive information. Unless
corrected, this could cause widespread problems for entities when processing
information with dates of 2000 or later. Systems that use only two digits
could process data incorrectly or stop functioning altogether. Computer sys-
tems readiness for the Y2K is a major challenge for most businesses. The Fund,
in meeting this challenge, has allocated the resources necessary to ensure
that the computer systems utilized by the Fund are Y2K compliant. All of the
necessary upgrades of the systems, and the testing thereof, were completed in
August 1999. Total costs incurred for the project through June 30, 1999 ap-
proximated $18,500. Management believes the Fund's systems are Y2K compliant
and no additional costs are expected to be incurred. While management of the
Fund believes that its systems are Y2K complaint, there is no guarantee that
all of the Fund's vendors or other entities affecting the Fund's operations
will be Y2K compliant and, therefore, the Fund, as any other industry remains
susceptible to the consequences of the Y2K issue.
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This Page Intentionally Blank
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AMERITOR INVESTMENT FUND
1730 K Street, N.W. #904
Washington, D.C. 20006
1-800-424-8570
202-223-1000 Washington, D.C. area
Transfer Agent
Ameritor Financial Corporation
1730 K Street, N.W. #904
Washington, D.C. 20006
Custodian
Crestar Bank, N.A.
1445 New York Ave., N.W.
Washington, D.C. 20005
Independent Accountants
Reznick Fedder & Silverman P.C.
4520 East West Highway
Bethesda, Maryland 20814
For more information about
Ameritor Investment Fund,
account information or daily
Net Asset Values, call:
Shareholder Services
1-800-424-8570
202-223-1000 Washington, D.C. area
