UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-55408
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Ameritor Security Trust
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(Exact name of registrant as specified in charter)
4400 MacArthur Blvd NW, Suite 301, Washington, DC 20007
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(Address of principal executive offices) (Zip code)
Ameritor Financial Corporation
4400 MacArthur Blvd NW, Suite 301, Washington, DC 20007
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(Name and address of agent for service)
Registrant's telephone number, including area code: 202-625-6000
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Date of fiscal year end: 06/30/2007
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Date of reporting period: 12/31/06
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
February 15, 2007
Dear Shareholder:
In September, 2006 the Trustees for the Ameritor Security Trust Fund voted to
terminate the arrangement with the investment consultant. Presently, the Fund's
investment advisor is maintaining a new strategy of mixed stocks from small to
large cap to provide a portfolio of high quality with a low turnover. We
continue to seek more opportunities that will offer the fund greater growth
potential with stability and good performance, which is an important challenge
due to the small size of the fund.
Management continues to make changes in order to further reduce costs. This,
together with the prospects of an improving economy, should be beneficial to
your fund. With the overall economic improvement, as well as our current
investment strategy, we hope the fund will benefit from this in the near future.
Sincerely,
/s/ Jerome Kinney
Jerome Kinney,
President
AMERITOR SECURITY FUND
ALLOCATION OF PORTFOLIO ASSETS
(Calculated as a percentage of Net Assets)
December 31, 2006
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Sector Breakdown
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BIOTECHNOLOGY 1.79%
COMPUTERS 4.02%
CONGLOMERATE 2.26%
ELECTRICITY 2.15%
ENERGY 3.83%
HEALTHCARE 1.97%
MEDIA 1.02%
MINERALS 6.45%
RECREATION 2.21%
RETAIL 5.91%
SAVINGS & LOAN 2.15%
TELECOMMUNICATIONS 2.22%
Cash Equivalents 66.11%
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Total Investments 102.09%
Liabilities in excess of other assets -2.09%
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Total Net Assets 100.00%
AMERITOR SECURITY TRUST FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
12/31/2006 (Unaudited)
Number Market
of Shares Description Value
- ----------------- ------------------ -----------
COMMON STOCKS: 35.98%
BIOTECHNOLOGY 1.79%
250 Amgen, Inc. * 17,077
-----------
COMPUTERS 4.02%
800 Dell Computers * 20,072
900 Intel, Corp. * 18,225
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38,297
CONGLOMERATE 2.26%
550 Ingersoll, Rand, Co. 21,521
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ELECTRICITY 2.15%
550 General Electric 20,466
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ENERGY 3.83%
350 Canadian Natural Resources 18,630
700 CNX Gas, Corp. * 17,850
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36,480
HEALTHCARE 1.97%
500 Psychiatric Solutions * 18,760
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MEDIA 1.02%
400 The New York Times, Co. 9,744
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MINERALS 6.45%
5,000 Northern Dynasty * 40,500
700 Alcoa, Inc. 21,007
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61,507
RECREATION 2.21%
450 Polaris Industries * 21,074
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RETAIL 5.91%
450 Walgreen Company 20,651
Number Market
of Shares Description Value
- ----------------- ------------------ -----------
500 Home Depot, Inc. * 20,080
500 Lowes Companies * 15,575
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56,306
SAVINGS & LOAN 2.15%
450 Washington Mutual * 20,471
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TELECOMMUNICATIONS 2.22%
350 Alltell, Corp. 21,168
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Total Common Stock (Cost $311,892) 342,871
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Par SHORT TERM INVESTMENTS 66.11%
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629,970 Evergreen Institutional Money Market Fund (Cost $629,970) 629,970
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TOTAL INVESTMENTS:
(Cost: $941,862)** 102.09% 972,841
Liabilities in excess of other assets (2.09%) (19,958)
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NET ASSETS 100.00% $ 952,883
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* Non-income producing
** Cost for Federal income tax purposes is $941,862 and net unrealized
appreciation consists of:
Gross unrealized appreciation $ 33,519
Gross unrealized depreciation (2,540)
----------
Net unrealized appreciation $ 30,979
==========
See Notes to Financial Statements
AMERITOR SECURITY TRUST FUND
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2006 (Unaudited)
ASSETS
Investments at value (identified cost of $941,862) (Notes 1 & 4) $ 972,841
Receivables:
Interest 2,429
Dividends 221
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TOTAL ASSETS 975,491
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ACCRUED LIABILITIES
Accrued advisory fees 1,267
Accrued transfer agent fees 1,722
Accrued administrative fees 3,099
Accrued expenses 16,520
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TOTAL LIABILITIES 22,608
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NET ASSETS $ 952,883
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NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE ($952,883/2,652,426 shares outstanding) $ 0.36
===========
At December 31, 2006, there was an unlimited amount of no par value
shares of beneficial interest and the components of net assets are (Note 1):
Paid in capital $ 3,583,889
Accumulated realized losses on investments (2,661,985)
Net unrealized appreciation of investments 30,979
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Net Assets $ 952,883
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See Notes to Financial Statements
AMERITOR SECURITY TRUST FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 2006 (Unaudited)
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INCOME
Dividends $ 758
Interest 18,952
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19,710
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EXPENSES
Administrative services (Note 2) $ 30,000
Legal and audit fees 13,118
Transfer agent fees (Note 2) 11,524
Accounting fees 9,049
Investment advisory fees (Note 2) 5,075
Custody fees 4,428
Directors 1,010
Miscellaneous 9,664
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Total expenses 83,868
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Net Investment Loss (64,158)
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REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized loss on investments (44,974)
Net decrease in unrealized appreciation on investments (35,760)
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Net loss on investments (80,734)
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Net decrease in net assets resulting from operations $(144,892)
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See Notes to Financial Statements
AMERITOR SECURITY TRUST FUND
STATEMENT OF CHANGES IN NET ASSETS
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Six Months ended
December 31, 2006 Year ended
(Unaudited) June 30, 2006
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OPERATIONS
Net investment loss $ (64,158) $ (133,544)
Net realized gain(loss) on investments (44,974) 195,980
Change in unrealized appreciation(depreciation) of investments (35,760) 47,055
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Net increase/decrease in net assets resulting from operations (144,892) 109,491
CAPITAL SHARE TRANSACTIONS (NOTE 3)
Net decrease in net assets resulting from capital share
transactions (27,299) (55,876)
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Net increase/decrease in net assets (172,191) 53,615
Net assets at beginning of year 1,125,074 1,071,459
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NET ASSETS at the end of the period $ 952,883 $ 1,125,074
================== ==================
See Notes to Financial Statements
AMERITOR SECURITY TRUST FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
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Six Months ended
December 31, 2006 Year ended Year ended
(Unaudited) June 30 2006 June 30 2005
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Per Share Operating Performance
Net asset value, beginning of year $ 0.41 $ 0.37 $ 0.45
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Income from investment operations-
Net investment (loss) (0.02) (0.05) (0.05)
Net realized and unrealized gain (loss) on investments (0.03) 0.09 (0.03)
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Total from investment operations (0.05) 0.04 (0.08)
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Net asset value, end of year $ 0.36 $ 0.41 $ 0.37
================== ============ ============
Total Return (12.20%) 10.81% (17.78%)
================== ============ ============
Ratios/Supplemental Data
Net assets, end of year (000's) $ 953 $ 1,125 $ 1,071
Ratio to average net assets
Expense ratio - net 16.54%* 12.84% 12.85%
Net investment (loss) (12.65%)* (11.51%) (11.70%)
Portfolio turnover rate 169% 286% 606%
Year ended Year ended Year ended
June 30 2004 June 30 2003 June 30 2002
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Per Share Operating Performance
Net asset value, beginning of year $ 0.45 $ 0.49 $ 0.70
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Income from investment operations-
Net investment (loss) (0.05) (0.06) (0.07)
Net realized and unrealized gain (loss) on investments 0.05 0.02 (0.14)
------------ ------------ ------------
Total from investment operations -- (0.04) (0.21)
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Net asset value, end of year $ 0.45 $ 0.45 $ 0.49
============ ============ ============
Total Return 0.00% (8.16%) (30.00%)
============ ============ ============
Ratios/Supplemental Data
Net assets, end of year (000's) $ 1,318 $ 1,340 $ 1,517
Ratio to average net assets
Expense ratio - net 12.56% 14.78% 11.79%
Net investment (loss) (11.81%) (14.14%) (11.14%)
Portfolio turnover rate 182% 214% 293%
* Annualized
See Notes to Financial Statements
AMERITOR SECURITY TRUST FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 2006 (Unaudited)
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(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. The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements.
A. Security Valuation - The Fund's investments in securities are
carried at value. Securities listed on an exchange or quoted on a
national market system are valued at the last sales price as of 4:00
p.m. New York time on the day of valuation. Other securities traded
in over-the-counter market and listed securities for which no sale
was reported on that date are valued at the most recent bid price.
Securities for which market quotations are not readily available, if
any, are valued by using an independent pricing service or by
following procedures approved by the Board of Trustees. Short-term
investments are valued at cost which approximates value.
B. 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
by using the liability method, whereby deferred tax assets and
liabilities arise from the tax effect of temporary differences
between the financial statement and tax basis 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. At
June 30, 2006, for Federal income tax purposes, the Fund had a
capital loss carryforward of $2,617,011 of which $1,716,365 expires
in fiscal year 2009, and $843,827 expires in fiscal year 2010, and
$56,819 expires in fiscal year 2012 to offset future realized gains.
C. Distributions to Shareholders - No distributions were paid in fiscal
years 2005 or 2006. As of June 30, 2006, the components of
distributable earnings (accumulated loss) on a tax basis of the Fund
were as follows:
Capital loss carryforward $(2,617,011)
Unrealized appreciation 66,738
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$(2,550,273)
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D. Investment Transactions - Investment transactions are recorded on
the trade date. Realized gains and losses are determined by using
the specific identification cost method. Interest income is recorded
daily on the accrual basis. Dividend income is recorded on the
ex-dividend date.
E. Use of Estimates - The preparation of financial statements in
conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and
assumptions that affect the amount of assets, liabilities, expenses
and revenues reported in the financial statements. Actual results
could differ from those estimates.
F. Reclassification of Capital Accounts - Accounting Principles
generally accepted in the United States of America require that
certain components of net assets relating to permanent differences
be reclassified between financial and tax reporting. These
reclassifications have no effect on net assets or net asset value
per share. For the year ended June 30, 2006, the Fund decreased paid
in capital by $133,544 and increased accumulated net investment
income by $133,544
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1
AMERITOR SECURITY TRUST FUND
NOTES TO FINANCIAL STATEMENTS - (Continued)
December 31, 2006 (Unaudited)
- --------------------------------------------------------------------------------
G. UNCERTAINTY IN INCOME TAXES
On July 13, 2006, the Financial Accounting Standards Board ("FASB")
released FASB interpretation No. 48 "Accounting for uncertainty in Income
Taxes" ("FIN 48"). FIN 48 provides guidance for how uncertain tax
positions should be recognized, measured, presented and disclosed in the
financial statements. FIN 48 requires the evaluation of tax positions
taken or expected to be taken in the course of preparing the Fund's tax
returns to determine whether the tax positions are "more-likely-than-not"
of being sustained by the applicable tax authority. Tax positions not
deemed to meet the more-likely-than-not threshold would be recorded as a
tax benefit or expense in the current year. Adoption of FIN 48 is to be
implemented no later than June 29, 2007 and is to be applied to all open
tax years as of the effective date. The FASB Issue Statement of Financial
Accounting Standards No. 157, "Fair Value Measurements") (FASB 157), in
September 2006, which is effective for fiscal years beginning after
November 15, 2007. FAS 157 defines fair value, establishes a framework for
measuring fair value and expands the required financial statements
disclosures about fair value measurements. At this time, management is
evaluating the implications of FIN 48 and FASB 157 and its impact in the
financial statements has not yet been determined.
(2) INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
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 an annual rate of
$20.00 per account.
The administrative agreement with AFC provides administrative services to
and is generally responsible for the overall management and day-to-day
operations of the Fund. As compensation for these services, AFC receives a
fee at the annual rate of 0.20% of the Fund's average daily net assets.
The contract also provides that the aggregate fees for the aforementioned
administration, accounting and recordkeeping services shall not be less
than $5,000 per month.
Certain officers and trustees of the Fund are "affiliated persons" of the
Investment Adviser, as defined by the Investment Company Act of 1940.
- --------------------------------------------------------------------------------
2
AMERITOR SECURITY TRUST FUND
NOTES TO FINANCIAL STATEMENTS - (Continued)
December 31, 2006 (Unaudited)
- --------------------------------------------------------------------------------
(3) 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:
Six Months Ended Year Ended
---------------------------- --------------------------
December 31, 2006 June 30,2006
---------------------------- --------------------------
Shares Amount Shares Amount
---------- ------------ ---------- ----------
Shares redeemed (73,177) $ (27,299) (131,629) $ (55,876)
---------- ------------ ---------- ----------
Net decrease (73,177) $ (27,299) (131,629) $ (55,876)
========== ============ ========== ==========
Shares outstanding
Beginning of year 2,725,603 2,857,232
---------- ----------
End of year 2,652,426 2,725,603
========== ==========
(4) PURCHASE AND SALE OF SECURITIES
During the six months ended December 31, 2006, purchases and proceeds from
sales of investment securities were $607,903 and $705,712, respectively.
Cost of securities for income tax purposes was $941,862 at December 31,
2006. Net unrealized appreciation of investments aggregated $30,979, which
relates to gross unrealized appreciation of $33,519 and gross unrealized
depreciation of $2,540.
Supplemental Information
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
A description of the policies and procedures that the Fund uses to
determine how to vote proxies relating to securities held in the Fund's
portfolio is available, without charge and upon request, by calling
1-202-625-2112 or on the SEC's website at www.sec.gov. Information
regarding how the Fund voted proxies relating to portfolio securities
during the year ended June 30, 2006 is available on or through the SEC's
website at www.sec.gov.
QUARTERLY PORTFOLIO HOLDINGS
The Fund files with the SEC a complete schedule of its portfolio holdings,
as of the close of the first and third quarters of its fiscal year, on
"Form N-Q". These filings are available, without charge and upon request,
by calling 1-202-625-2112 or on the SEC's website at www.sec.gov. . The
Fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference
Room in Washington, D.C. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
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3
AMERITOR SECURITY TRUST FUND
EXPENSE EXAMPLES (UNAUDITED)
December 31, 2006 (Unaudited)
- --------------------------------------------------------------------------------
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, Investment Fund and (2) ongoing costs, including management fees and
other fund expenses. These examples are intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds. Each example is based
on an investment of $1,000 invested at the beginning of the period and held for
the entire period July 1, 2006 to December 31, 2006.
Actual Expenses
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During the Period"
to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on each Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in a Fund and other funds. To do so, compare these 5% hypothetical
examples with the 5% hypothetical examples that appear in the shareholder
reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs. Therefore, the
second line in the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher.
Beginning Ending Expenses Paid
Account Value Account Value During Period
7/1/06 12/31/06 7/1/06 - 12/31/06*
------------- ------------- ------------------
Actual $1,000.00 $853.65 $77.28
Hypothetical (5% return before expenses) $1,000.00 $810.97 $73.41
* Expenses are equal to the Fund's annualized expense ratio of 16.54%
multiplied by the average account value over the period multiplied by
184/365 (to reflect the one-half year period).
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4
AMERITOR SECURITY TRUST
NOTES TO FINANCIAL STATEMENTS - (Continued)
December 31, 2006
- --------------------------------------------------------------------------------
(5) TRUSTEES AND OFFICERS (UNAUDITED)
The following table sets forth certain information concerning the Trustees
and officers of the Fund.
- ---------------------------------------------------------------------------------------------------------------------------------
Name Position(s) Term of Principal Number of Other
Address and Held with Office and Occupation(s) Portfolios in Directorships
Age Fund Length of During Past Fund Complex Held by
Time Served 5 Years Overseen by Trustee
Trustee
- ---------------------------------------------------------------------------------------------------------------------------------
Non-Interested Trustee
- ---------------------------------------------------------------------------------------------------------------------------------
Richard P. Ellison Non-Interested 6 Years President and 2 Potomac Group
1410 Coventry Lane Trustee Served Chief Executive Homes;
Alexandria, VA 22304 Term is Officer of Boat
Age 76 for Life Intervest America
Financial Corp.
- ---------------------------------------------------------------------------------------------------------------------------------
James I. Schwartz
1480 Pennfield Circle Non- 5 Years Retired President 2 None
#307 Interested Served Capital City
Silver Spring, MD Trustee Term is Savings & Loan
20906 for Life And
Age 80 Schwartz & Co.
- ---------------------------------------------------------------------------------------------------------------------------------
Interested Trustee And Officers
- ---------------------------------------------------------------------------------------------------------------------------------
Carole S. Kinney Trustee, 8 Years Chairman of the 2 None
8020 Thornley Court Secretary, served Board of
Bethesda, MD 20817 and Term is Ameritor
Age 61 Chairman for life Financial
of the Corporation
Fund Since 1998
- ---------------------------------------------------------------------------------------------------------------------------------
Jerome Kinney President 8 Years Founder and None
8020 Thornley Court served President,
Bethesda, MD 20817 Term=1 Jerome F. Kinney
Age 77 year Company
(builder);
President and
CEO,
Ameritor
Financial
Corporation
- ---------------------------------------------------------------------------------------------------------------------------------
ITEM 2. CODE OF ETHICS.
Not applicable at this time.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable at this time.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable at this time.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. Included as part of item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's board of directors, where those changes
were implemented after the registrant last provided disclosure in response to
the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR 240.14a-101).
ITEM 10. CONTROLS AND PROCEDURES.
AMERITOR FUNDS
Disclosure Controls and Procedures
Adopted Pursuant to Rules 13a-15 and 15d-15 under the Securities Exchange Act of
1934 and Rule 30a-3 Under the Investment Company Act of 1940
I. Introduction
Ameritor Security Trust and Ameritor Investment Fund (the "Funds"), hereby
establish these disclosure controls and procedures ("Disclosure Procedures")
pursuant to Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934
("Exchange Act") and Rule 30a-3 under the Investment Company Act of 1940 (the
"1940 Act"). The Disclosure Procedures are designed to ensure that all
information that the Funds are required to disclose in their shareholder reports
(the "Reports") filed with the Securities and Exchange Commission ("SEC")
pursuant to Section 13(a) or Section 15(d) of the Exchange Act is recorded,
processed, summarized and reported within the time period specified in
applicable SEC rules and forms. The Disclosure Procedures also support the
certifications that the Funds' principal officers must sign and submit with each
Report filed with the SEC, and the required disclosures in the Reports about the
Funds' internal controls.
The overriding goals of these Disclosure Procedures are:
o To promote the timely accumulation and communication of information the
Funds are required to disclose in their Reports; and
o To promote reliable and accurate disclosure in the Reports.
II. Roles and Expectations of Fund Service Providers
The Funds rely on their service providers to perform substantially all
tasks related to the Funds' ongoing business operations, including preparing and
filing the Reports and preparing the information included in the Reports. The
Funds' strongest control for promoting timely and accurate disclosures,
therefore, is appropriate and reasonable oversight of their service providers.
Accordingly, the Funds encourage each service provider involved in the process
of preparing or filing a Report or preparing the information included in a
Report ("Service Provider") to adopt its own internal controls and procedures
governing, as applicable, the preparation and filing of Reports and the
recording, processing, generation and translation of information that it
provides to the Funds for inclusion in any Report ("Service Provider
Procedures").
In particular, the Funds expect each Service Provider to:
Provide Procedures - provide to the Funds' President a copy of its Service
Provider Procedures, if any;
Provide Amendments to Procedures - promptly provide to the Funds'
President a copy of any substantive changes or amendments to the Service
Provider Procedures;
Report Violations - promptly report to the Funds' President any material
violations of the Service Provider Procedures (and any corrective actions
taken);
Report Important Matters - promptly report to the Funds' President any
material misstatements or omissions or unfair presentations in any Report; any
suspected fraud relating to a Report; and any complaints about, or suspected or
perceived weaknesses, problems or breakdowns in, the Disclosure Procedures, the
Service Provider Procedures or any other internal controls related to the Funds,
a Report or Fund disclosure matters;
Create Due Diligence Files - create and maintain a due diligence file, and
other appropriate documentation and records for each Report; and
Submit Requested Information - submit on a timely basis information,
certifications or other documents related to a Report or Fund disclosure matters
as the Funds, through their President, may reasonably request.
III. Monitoring of Disclosure Controls
Roles and Responsibilities. The President is primarily responsible for the
proper functioning of the Disclosure Procedures and for evaluating the
Disclosure Procedures under Section V below. To discharge these broad
responsibilities, the President will communicate with and generally oversee the
Service Providers regarding Fund disclosure matters and matters relating to the
preparation and filing of Reports.
Oversight of and Coordination with Service Providers. The President will
coordinate with the Service Providers on an ongoing basis regarding the Funds'
disclosure obligations, the Disclosure Procedures and the Service Provider
Procedures.
Review of Service Provider Procedures. The President will ask each Service
Provider to provide a copy of its Service Provider Procedures, and any
substantive changes or amendments to the Procedures as they are adopted. The
President will initially and periodically thereafter review the Service Provider
Procedures and any substantive changes or amendments thereto.
IV. Material Misstatements/Omissions; Unfair Presentations; Fraud
If the President discovers or is informed about a suspected material
misstatement or omission, or an unfair presentation, in a Report, or suspected
fraud in relation to a Report, the President or his delegate will investigate
(or cause an appropriate Service Provider to investigate) the matter, focusing
on the effectiveness of applicable controls and procedures and consulting with
Service Providers or others as appropriate regarding corrective actions.
The President will prepare a report about any such investigations (and the
related findings and conclusions). The President will consider appropriate next
steps, such as investigating further or reporting the matter to the Audit
Committee.
V. Evaluating the Disclosure Procedures
Conducting the Evaluation. The President will evaluate, with the
participation of and input from, as applicable, the Service Providers, the Audit
Committee, and the Funds' independent auditor ("Outside Auditors"), the
effectiveness of the design and operation of these Disclosure Procedures and the
Service Provider Procedures. This evaluation must be completed within 90 days
before any Report is filed with the SEC.
Feedback on Controls. The Funds' President, in performing the functions of
a Chief Financial Officer, will ask the Audit Committee to alert the President
about any weaknesses, problems or complaints regarding financial internal
controls that it receives. The President will ask each Service Provider to give
notification of any weaknesses, problems or complaints regarding financial
internal controls that it receives.
Resolving Any Deficiencies in Controls. The President will promptly
investigate and resolve any suspected or perceived weaknesses, problems or
complaints in the design and operation of the financial internal controls, or
any suspected fraud in relation to a Report on internal controls. Appropriate
records will be created and maintained regarding the investigation and
resolution of any such matters.
The President will consider any deficiencies in the Disclosure Procedures,
and will determine the appropriate actions to take in order to resolve such
deficiencies. In making this determination, the President should consider
discussing these matters further with the Audit Committee, outside legal
counsel, and/or the Outside Auditors. At a minimum, however, the President will
disclose to the Audit Committee and the Outside Auditors:
Significant Deficiencies - any significant deficiencies in the design or
operation of the Disclosure Procedures (or those of Service Providers),
including any financial internal controls that adversely affect the Funds'
ability to record, process, summarize and report financial data, and identify
any material weakness in financial internal controls; and
Fraud - any fraud, whether or not material, that involves management, a
Service Provider or a Service Provider's employees who have a significant role
in the Funds' financial internal controls, as well as any material weakness
identified in the Funds' financial internal controls.
VI. Miscellaneous
Recordkeeping. The President will maintain appropriate records supporting
compliance with these Disclosure Procedures and records generated or received
pursuant to these Disclosure Procedures. Specifically, all substantive
determinations, judgments or actions taken in relation to these Disclosure
Procedures will be documented. All substantive documents created, distributed or
received in relation to these Disclosure Procedures will be maintained by the
President for the Funds' records.
Amendments. The President may amend these Disclosure Procedures from time
to time as appropriate. The President will report to the Board regarding any
substantive amendments to these Disclosure Procedures.
Use of Experts. The President may consult with outside legal counsel or
any other external experts as necessary or appropriate in furtherance of the
goals of the Disclosure Procedures.
Delegation. When these Disclosure Procedures require a particular person
to perform a task (other than actually signing the certification), it is
understood that the person may reasonably delegate that task to another
appropriate party.
Adopted: September 2003
ITEM 10. EXHIBITS
(a) Not applicable at this time.
(b) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 are
attached hereto as EX-99.CERT. Certifications pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 are attached hereto as EX-906CERT.
SIGNATURES
[See General Instruction F]
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Ameritor Security Trust
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By (Signature and Title)* /s/ Jerome Kinney,
President and Treasurer
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Date March 2, 2007
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Jerome Kinney,
President and Treasurer
--------------------------------------------
Date March 2, 2007