UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-00018
Ameritor Security Trust
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
4400 MacArthur Blvd, Suite 301, Washington, DC 20007
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(Address of principal executive offices) (Zip code)
Ameritor Financial Corporation
4400 MacArthur Blvd, Suite 301, Washington, DC 20007
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 202-625-6000
Date of fiscal year end: 6/30/2007
Date of reporting period: 12/31/2007
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.
AMERITOR
SECURITY
TRUST
SEMI-ANNUAL REPORT
December 31, 2007
An Ameritor NO-LOAD Mutual Fund
[LOGO] Ameritor
Financial
Corporation
Investment Advisor
Dear Shareholder:
As of the 6 month period ended December 31, 2007, the Fund had 2,576,608
shares outstanding and each share had an unaudited Net Asset Value ("NAV") of
$.33. This NAV compares with a NAV of $.37 at June 30, 2007, and an unaudited
NAV of $.36 per share at December 31, 2006.
During the period ended December 31, 2007, Ameritor Financial Corporation,
the Fund's Advisor, was responsible for management of the Fund's portfolio. And
portfolio manager Ms. Kinney continues her program of purchasing quality
securities she believes are undervalued and have the potential for capital
appreciation. As the market becomes more volatile, she plans to continue this
program, holding the quality securities in the portfolio and, at the same time,
maintaining a position in cash in order to take advantage of buying
opportunities during market corrections.
Were it not for the Fund's expense ratio the Fund would have had a
relatively good half year in that its portfolio of securities had an unrealized
gain of $50,856 or 5.9% (without taking into account Fund expenses). However,
taking into account those expenses, which we must, the Fund was down 10.8%. This
compares to a decrease of 1.8% for the Russell 2000 Index and a decrease of 2.3%
for the S&P 500 Index. We are very pleased that we have been able to reduce the
Fund's expense ratio by nearly half from a little more than 16% to 9.5%. We
continue to cut costs at all available junctures and hope to be able to continue
this trend.
Our portfolio strengths and gains are attributable to our exposure in
aerospace, oils, finance, machinery and semiconductors, all of which were up. We
had neutral performance in the medical sector. And, our portfolio weakness
resulted from our positions in building products, retail, banking, e-commerce,
metals and manufacturing, all of which were down. We look forward to refining
the portfolio during the last half of the fiscal year.
We are generally pleased with the Fund's portfolio performance for the
period and hope to keep trimming the expense ratio. Over the past few weeks the
market has undergone a sharp and emotional pullback that was the result
primarily of the continuing sub-prime mortgage concerns and tax related election
returns. While the pullback has been broad based we believe that it nonetheless
presents buying opportunities and we intend to be very proactive during this
period in looking for and reacting to such opportunities.
We believe that the economy retains a solid foundation even though it
faces many challenges in the months to come. The end of 2007 brought mixed
economic indicators but we think that economic growth will continue in 2008.
However, most market forecasts suggest a slower pace in the first half of 2008.
We believe in continued economic growth so long as Congress is able to enact a
short-term economic growth package and successfully address the challenges in
the housing and credit markets, rising health care costs, infrastructure
financing and the need to diversify our energy portfolios
As you no doubt are aware, Congress and the regulatory agencies, primarily
as the result of the Sarbanes/Oxley Act, have put extra expense burdens on all
mutual funds. These expenses are unimportant to larger institutions from a
percentage standpoint, but we smaller funds are subject to the same oversight
rules while operating with a much smaller asset base. These expenses impact
heavily on the Fund's performance. We are making every effort to reduce our
expenses and we will continue to do so in all respects. We also continue to
explore avenues which may be available to increase the Fund's assets which in
turn would operate to reduce the overall expense ratio and increase the Fund's
performance.
The performance data quoted represents past performance and investment
return and principle value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than the original cost. Please
remember that past performance does not guarantee future results and current
performance may be higher or lower than the performance data quoted.
Our thanks to our Board and many shareholders for their support during our
many years of operation.
Very truly yours,
/s/ Jerome Kinney
-----------------
Jerome Kinney
AMERITOR SECURITY FUND
ALLOCATION OF PORTFOLIO ASSETS
(Calculated as a percentage of Net Assets)
December 31, 2007
- --------------------------------------------------------------------------------
Sector Breakdown
--------------------------------------------------------
AEROSPACE 2.66%
AIRLINES 0.34%
APPAREL 2.40%
BANKS 5.69%
BUILDING PRODUCTS 2.35%
CABLE TV 0.85%
CELLULAR TELCOM 0.85%
COMPUTERS 10.01%
E-COMMERCE 3.26%
FINANCE 1.41%
FOOD 2.04%
HOTELS 1.19%
MACHINERY 2.23%
MANUFACTURING 7.48%
MEDICAL 10.36%
METALS 5.35%
MINERALS 3.05%
NEWSPAPERS 0.41%
OFFICE AUTOMATION 1.86%
OFFICE SUPPLIES 1.07%
OIL 14.77%
OIL & GAS 1.86%
PUBLISHING 1.02%
RECREATIONAL VEHICLES 2.49%
REHAB CENTERS 1.89%
RETAIL 2.76%
SAVINGS & LOAN 0.71%
SEMICONDUCTORS 2.78%
CASH EQUIVALENTS 4.88%
--------------------------------------------------------
Total Investments 98.02%
Liabilities in excess of other assets 1.98%
--------------------------------------------------------
Total Net Assets 100.00%
AMERITOR SECURITY TRUST FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 2007 (Unaudited)
Number Market
of Shares Description Value
- ------------- ----------- ----------
COMMON STOCKS: 93.14%
AEROSPACE 2.66%
300 United Technologies, Corp. 22,962
---------
AIRLINES 0.34%
500 Jetblue Airways, Corp. * 2,950
---------
APPAREL 2.40%
300 Crocs, Inc. * 11,043
500 Carters, Inc. * 9,675
---------
20,718
BANKS 5.69%
252 HSBC Holdings PLC - ADR 21,095
200 Wachovia, Corp. 7,606
350 Bank of America, Corp. 14,441
200 Citigroup, Inc. 5,888
---------
49,030
BUILDING PRODUCTS 2.35%
500 Home Depot, Inc. 13,470
300 Lowes Companies, Inc. 6,786
---------
20,256
CABLE TV 0.85%
400 Comcast, Corp. * 7,304
---------
CELLULAR TELCOM 0.85%
1,000 Alcatel Lucent, ADR * 7,320
---------
COMPUTERS 10.01%
200 Apple, Inc. * 39,616
800 Dell, Inc. * 19,608
200 International Business Machines, Corp. 21,620
200 Cisco Systems, Inc. * 5,414
---------
86,258
E-COMMERCE 3.26%
300 Shanda Interactive Entertainemnt, LTD. * 10,002
300 Ebay ,Inc. * 9,957
300 Nutrisystem, Inc. * 8,094
---------
28,053
FINANCE 1.41%
500 Western Union, Co. * 12,140
---------
FOOD 2.04%
300 Wrigley/William/Jr, Co. 17,565
---------
HOTELS 1.19%
300 Marriott International, Inc. 10,254
---------
MACHINERY 2.23%
200 Flowserve, Corp. 19,240
---------
MANUFACTURING 7.48%
550 Ingersoll Rand, Co. Ltd. CL-A 25,558
550 General Electric, Co. 20,388
300 Honeywell International, Inc. 18,471
---------
64,417
MEDICAL 10.36%
300 Wellpoint, Inc. * 26,319
300 Johnson & Johnson 20,010
300 Novartis AG - ADR 16,293
300 Medtronic, Inc. 15,081
250 Amgen, Inc. * 11,610
---------
89,313
Number Market
of Shares Description Value
- ------------- ----------- ----------
METALS 5.35%
700 Alcoa, Inc. 25,585
200 Freeport McMoran Copper 20,488
---------
46,073
MINERALS 3.05%
2,000 Northern Dynasty Minerals * 26,260
---------
NEWSPAPERS 0.41%
200 The New York Times, Co. CL-A 3,506
---------
OFFICE AUTOMATION 1.86%
350 Cannon, Inc. - ADR 16,040
---------
OFFICE SUPPLIES 1.07%
400 Staples, Inc. 9,228
---------
OIL 14.77%
300 Schlumberger, Ltd. 29,511
350 Canadian Natural Resources 25,599
400 Occidental Petroleum, Corp. 30,796
700 CNX Gas, Corp. * 22,365
500 Halliburton, Co. 18,955
---------
127,226
OIL & GAS 1.86%
300 Nabors Industries, Ltd. * 8,217
200 Chesapeake Energy, Corp. 7,840
---------
16,057
PUBLISHING 1.02%
200 Mcgraw Hill Cos, Inc. 8,762
---------
RECREATIONAL VEHICLES 2.49%
450 Polaris Industries, Inc. 21,497
---------
REHAB CENTERS 1.89%
500 Psychiatric Solutions, Inc. * 16,250
---------
RETAIL 2.76%
250 Walgreen, Co. 9,520
300 Walmart Stores, Inc. 14,259
---------
23,779
SAVINGS & LOAN 0.71%
450 Washington Mutual, Inc. 6,125
---------
SEMICONDUCTORS 2.78%
900 Intel, Corp. 23,994
---------
Total Common Stock (Cost $751,721) 802,577
---------
Par SHORT TERM INVESTMENTS 4.88%
- -------------
42,034 Evergreen Institutional
Money Market Fund (Cost $42,034) 42,034
---------
TOTAL INVESTMENTS:
(Cost: $793,755)** 98.02% 844,611
Assets in excess of other liabilities 1.98% 17,087
--------- ---------
NET ASSETS 100.00% $ 861,698
========= =========
* Non-income producing
** Cost for Federal income tax purposes is $793,755 and net unrealized
appreciation consists of:
Gross unrealized appreciation $ 130,113
Gross unrealized depreciation (79,257)
---------
Net unrealized appreciation $ 50,856
=========
See Notes to Financial Statements
AMERITOR SECURITY TRUST FUND
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2007 (Unaudited)
ASSETS
Investments at value (identified cost of $793,755) (Notes 1 & 4) $ 844,611
Receivables:
Interest 249
Dividends 701
Prepaid Expenses 16,816
------------
TOTAL ASSETS 862,377
------------
ACCRUED LIABILITIES
Accrued advisory fees 679
------------
TOTAL LIABILITIES 679
------------
NET ASSETS $ 861,698
============
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE ($861,698/2,576,608 shares outstanding) $ 0.33
============
At December 31, 2007, 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 $ 3,458,158
Accumulated realized losses on investments (2,647,316)
Net unrealized appreciation of investments 50,856
------------
Net Assets $ 861,698
============
See Notes to Financial Statements
AMERITOR SECURITY TRUST FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 2007 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends $ 5,755
Interest 2,264
----------
8,019
----------
EXPENSES
Administrative services (Note 2) $ 18,036
Legal and audit fees 7,322
Transfer agent fees (Note 2) 6,101
Accounting fees 6,228
Investment advisory fees (Note 2) 3,659
Custody fees 1,854
Directors 987
Miscellaneous 340
----------
Total expenses 44,527
----------
Net Investment Loss (36,508)
----------
NET REALIZED AND UNREALIZED GAINS/LOSSES ON
INVESTMENTS:
Net realized gain on investments 3,507
Net decrease in unrealized appreciation on investments (57,196)
----------
Net loss on investments (53,689)
----------
Net decrease in net assets resulting from operations $ (90,197)
----------
See Notes to Financial Statements
AMERITOR SECURITY TRUST FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months ended
December 31, 2007 Year ended
(Unaudited) June 30, 2007
----------------- -----------------
OPERATIONS
Net investment loss $ (36,508) $ (126,221)
Net realized gain(loss) on investments 3,507 (33,812)
Change in unrealized appreciation(depreciation) of investments (57,196) 41,314
----------------- -----------------
Net decrease in net assets resulting from operations (90,197) (118,719)
CAPITAL SHARE TRANSACTIONS (NOTE 3)
Net decrease in net assets resulting from capital share
transactions (8,802) (45,658)
----------------- -----------------
Net decrease in net assets (98,999) (164,377)
Net assets at beginning of year 960,697 1,125,074
----------------- -----------------
NET ASSETS at the end of the year $ 861,698 $ 960,697
================= =================
See Notes to Financial Statements
AMERITOR SECURITY TRUST FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
- --------------------------------------------------------------------------------
Six Months ended
December 31 2007 Year ended Year ended Year ended Year ended Year ended
(Unaudited) June 30 2007 June 30 2006 June 30 2005 June 30 2004 June 30 2003
--------- --------- --------- --------- --------- ---------
Per Share Operating Performance
Net asset value, beginning of year $ 0.37 $ 0.41 $ 0.37 $ 0.45 $ 0.45 $ 0.49
--------- --------- --------- --------- --------- ---------
Income from investment operations-
Net investment (loss) (0.04) (0.05) (0.05) (0.05) (0.05) (0.06)
Net realized and unrealized gain
(loss) on investments -- 0.01 0.09 (0.03) 0.05 0.02
--------- --------- --------- --------- --------- ---------
Total from investment operations (0.04) (0.04) 0.04 (0.08) -- (0.04)
--------- --------- --------- --------- --------- ---------
Net asset value, end of year $ 0.33 $ 0.37 $ 0.41 $ 0.37 $ 0.45 $ 0.45
========= ========= ========= ========= ========= =========
Total Return (10.81%) (9.76%) 10.81% (17.78%) 0.00% (8.16%)
========= ========= ========= ========= ========= =========
Ratios/Supplemental Data
Net assets, end of year (000's) $ 862 $ 961 $ 1,125 $ 1,071 $ 1,318 $ 1,340
Ratio to average net assets
Expense ratio - net 9.50%* 16.36% 12.84% 12.85% 12.56% 14.78%
Net (loss) (7.79%)* (12.85%) (11.51%) (11.70%) (11.81%) (14.14%)
Portfolio turnover rate 13% 140% 286% 606% 182% 214%
* Annualized
See Notes to Financial Statements
AMERITOR SECURITY TRUST FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 2007 (Unaudited)
- --------------------------------------------------------------------------------
(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 - Portfolio securities traded on a national
exchange on the valuation date are valued at the last quoted sale
price. Exchange traded securities for which there have been no
reported sales on the valuation date and securities listed on the
NASDAQ are valued using the NASDAQ Official Closing Price.
Securities or other assets for which market quotations are not
readily available or may be unreliable are value at their fair value
determined in good faith under procedures established and monitored
by the Funds board of directors. These procedures may include the
use of an independent pricing service which calculates prices based
upon yields or prices of securities of comparable quality, coupon,
maturity and type; indications as to value from dealers; and general
market conditions. Debt obligations with maturities of 0 days or
less are valued at amortized cost.
B. Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated
investment company and to make the requisite distributions of income
and capital gains to its shareholders sufficient to relieve it from
all or substantially all federal income taxes. Therefore, no federal
income tax provision is required. Accounting principles generally
accepted in the United States of America require that permanent
differences between financial reporting and tax reporting be
reclassified between various components of net assets.
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 uncertain tax
positions should be recognized, measured, presented and disclosed in
the financial statements. FIN 48 requires an 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. Management has analyzed the Fund's tax positions taken
on federal income tax returns for all open tax years (tax year ended
June 30, 2003-2007) for purposes of implementing FIN 48, and has
concluded that no provision for income tax is required in the Fund's
financial statements.
The Fund intends to utilize provisions of the federal income tax
laws which allow it to carry a realized capital loss forward for
eight years following the year of loss and offset such losses
against any future realized capital gains. At June 30, 2007 the Fund
had accumulated capital loss carryforwards for tax purposes of
$2,650,823. Of this amount, $1,716,365 expires June 30, 2009,
$843,827 expires June 30, 2010, $56,819 expires June 30, 2012 and
$33,812 expires June 30, 2015.
C. New Accounting Pronouncement - In September 2006, FASB issued FASB
Statement No. 157, "Fair Value Measurement" ("SFAS 157"), which
defines fair value, establishes a framework for measuring fair
value, and expands disclosures about fair value measurements. SFAS
157 is effective for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. The Fund believes the
adoption of SFAS 157 will have no material impact on its financial
statements.
D. Distributions to Shareholders - No distributions were paid in Fiscal
years 2006 or 2007. At June 30, 2007, the components of
distributable earnings (accumulated loss) on a tax basis of the Fund
were as follows:
AMERITOR SECURITY TRUST FUND
NOTES TO FINANCIAL STATEMENTS - (Continued)
December 31, 2007 (Unaudited)
- --------------------------------------------------------------------------------
Capital loss carryforward $(2,650,823)
Unrealized appreciation 108,052
-----------
$(2,542,771)
===========
E. 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.
F. 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.
G. 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, 2007 the Fund decreased paid
in capital by $126,221 and increased accumulated net investment
income by $126,221
(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.
(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:
AMERITOR SECURITY TRUST FUND
NOTES TO FINANCIAL STATEMENTS - (Continued)
December 31, 2007 (Unaudited)
- --------------------------------------------------------------------------------
Six Months Ended Year Ended
December 31, 2007 June 30,2007
----------------------------- -----------------------------
Shares Amount Shares Amount
----------- ----------- ----------- -----------
Shares redeemed (24,874) $ (8,802) (124,121) $ (45,658)
----------- ----------- ----------- -----------
Net decrease (24,874) $ (8,802) (124,121) $ (45,658)
=========== =========== =========== ===========
Shares outstanding
Beginning of year 2,601,482 2,725,603
----------- -----------
End of year 2,576,608 2,601,482
=========== ===========
(4) PURCHASE AND SALE OF SECURITIES
During the Six months ended December 31, 2007, purchases and proceeds from
sales of investment securities were $90,709 and $110,969, respectively.
Cost of securities for income tax purposes was $793,755 at December 31,
2007. Net unrealized appreciation of investments aggregated $50,856, which
relates to gross unrealized appreciation of $130,113 and gross unrealized
depreciation of $79,257.
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
1-800-424-8570 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 1-800-424-8570 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.
AMERITOR SECURITY TRUST FUND
EXPENSE EXAMPLES (UNAUDITED)
December 31, 2007
- --------------------------------------------------------------------------------
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, Security Trust 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 June 30, 2007 to December 31, 2007.
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
1/1/07 12/31/07 6/30/07 - 12/31/07*
------------ ---------- ----------
Actual $ 1,000.00 $ 891.89 $ 45.00
Hypothetical (5% return before expenses) $ 1,000.00 $ 945.95 $ 920.05
* Expenses are equal to the Fund's annual expense ratio of 9.50% multiplied
by the average account value over the period multiplied by 184/365 (to
reflect the one-half year period).
(5) TRUSTEES AND OFFICERS (UNAUDITED)
The following table sets forth certain information concerning the Trustees
and officers of the Fund.
- -------------------------- -------------- ------------- -------------------- ---------------- ------------------
(1) (2) (3) (4) (5) (6)
- -------------------------- -------------- ------------- -------------------- ---------------- ------------------
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 7 Years President and 1 Potomac
1410 Coventry Lane Trustee Served Chief Executive Group
Alexandria, VA 22304 Term is Officer of Homes;
Age 77 For Life Intervest Boat
Financial Corp. America
- -------------------------- -------------- ------------- -------------------- ---------------- ------------------
James I. Schwartz Non- 6 Year Retired President 1 None
14801Pennfield Circle Interested Served Capital City
#307 Trustee Term is Savings & Loan
Silver Spring, MD For Life And
20906 Schwartz & Co.
Age 81
- -------------------------- -------------- ------------- -------------------- ---------------- ------------------
Interested Trustee And Officers
- -------------------------- -------------- ------------- -------------------- ---------------- ------------------
Carole S. Kinney Trustee, 9 Years Chairman of the 1 None
8020 Thornley Court Secretary, served Board of
Bethesda, MD 20817 and Term is Ameritor
Age 62 Chairman For life Financial
of the Corporation
Fund Since 1998
- -------------------------- -------------- ------------- -------------------- ---------------- ------------------
Jerome Kinney President 9 Years Founder and 1 None
8020 Thornley Court served President,
Bethesda, MD 20817 Term=1 Jerome F. Kinney
Age 78 year Company
(builder);
President and
CEO,
Ameritor
Financial
Corporation
- -------------------------- -------------- ------------- -------------------- ---------------- ------------------
AMERITOR SECURITY TRUST
4400 MacArthur Blvd, #301
Washington, D.C. 20007-2521
1-800-424-8570
202-625-6000 Washington, D.C. area
Transfer Agent
Ameritor Financial Corporation
4400 MacArthur Blvd, #301
Washington, D.C. 20007-2521
Custodian
USBank
Two Liberty Place, Suite 2000
Philadelphia, PA 19102
Independent Registered
Public Accounting Firm
Tait, Weller & Baker, LLP
1818 Market Street, Ste. 2400
Philadelphia, PA 19103
For more information about
Ameritor Security Trust,
account information or daily
Net Asset Values, call:
Shareholder Services
1-800-424-8570
202-625-6000 Washington, D.C. area
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. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. 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 February 15, 2008
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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
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Date February 15, 2008
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* Print the name and title of each signing officer under his or her signature.