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 811-00018
Ameritor Security Trust
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
4400 MacArthur Blvd, Suite 301, Washington, DC 20007
- --------------------------------------------------------------------------------
(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: 6/30/2008
Date of reporting period: 12/31/08
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.
ITEM 1. REPORT TO STOCKHOLDERS.
Dear Shareholder:
As of the 6 month period ended December 31, 2008, the Fund had 2,454,655
shares outstanding and each share had an unaudited Net Asset Value ("NAV") of
$.15. This NAV compares with an audited NAV of $.28 at June 30, 2008 and an
unaudited NAV of $.33 per share at December 31, 2007.
During the period ended December 31, 2008, Ameritor Financial Corp., the
Fund's Advisor, was responsible for management of the Fund's portfolio. As
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 has become more volatile however, she has been
trimming positions in sectors that have underperformed such as banking, airlines
and retail and in an effort to maintain a position in cash in order to take
advantage of buying opportunities that may be provided during market
corrections. She believes that opportunities may be presented in health care,
infrastructure and alternative energy as the Obama stimulus plan unfolds. She
also believes that there may be emerging opportunities in companies that have
had their dividend yield increased somewhat accidentally by beaten down stock
prices.
The Fund's portfolio of securities had an unrealized loss of $247,072
(35.9%) (without taking into account Fund expenses). However, taking into
account those expenses, which we must, the Fund was down 46.4%. This compares to
a decrease of 27.2% for the Russell 2000 Index and a decrease of 29.1% for the
S&P 500 Index. We continue to cut costs at all available junctures and hope to
be able to continue this trend. Obviously however, the depressed economy has
made this an increasingly daunting process.
Our portfolio strengths and gains are attributable primarily to our
exposure in stocks such as Walmart and Occidential Petroleum. Almost all other
positions and sectors, like the rest of the market, reflect significant
declines. We did have neutral, or nearly neutral, performance in the medical,
aerospace and energy sectors. However, our portfolio suffered significantly from
our positions in banking and manufacturing, all of which were down. We look
forward to refining the portfolio during the first half of the fiscal year
focusing on increasing our dividend yields and decreasing our exposure in
sectors we believe to present the greatest risk on the downside.
Over the past year the market has undergone wild swings, both up and down
as the result of many factors including hedge fund selling, institutional short
selling, bank failures, the continuing sub-prime mortgage concerns and a myriad
of other factors which seem to occur on a nearly daily basis. All of this makes
for a highly volatile and difficult to navigate market. While the general market
decline has been broad based we believe that it will present buying
opportunities and we intend to be very proactive during the next 6 months in
looking for and reacting to such opportunities while at the same time looking to
preserve capital with a more refined focus on companies paying substantial
dividends and having clean, low-debt balance sheets.
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 our many shareholders for their support during
our many years of operation.
Very truly yours,
/s/ Jerome Kinney
Jerome Kinney
President
AMERITOR SECURITY FUND
ALLOCATION OF PORTFOLIO ASSETS
(Calculated as a percentage of Net Assets)
December 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
Sector Breakdown
- --------------------------------------------------------------------------------
AEROSPACE 4.25%
AIRLINES 0.94%
APPAREL 1.53%
BANKS 5.62%
BEVERAGES 2.89%
BUILDING PRODUCTS 3.53%
CABLE TV 1.78%
CELLULAR TELCOM 0.57%
COAL 1.42%
COMMUNICATIONS 0.86%
COMPUTERS 10.31%
E-COMMERCE 4.01%
FINANCE 1.33%
LODGING 1.54%
MACHINERY 1.36%
MANUFACTURING 6.15%
MEDICAL 15.32%
METALS 2.78%
MINERALS 1.94%
OFFICE AUTOMATION 2.49%
OFFICE SUPPLIES 0.95%
OIL 15.72%
OIL & GAS 1.80%
PUBLISHING 1.22%
RECREATIONAL VEHICLES 2.27%
REHAB CENTERS 2.21%
RETAIL 4.68%
SAVINGS & LOAN 0.00%
SEMICONDUCTORS 1.94%
SHOES 0.10%
CASH EQUIVALENTS 2.89%
- --------------------------------------------------------------------------------
Total Investments 104.40%
Liabilities in excess of other assets -4.40%
- --------------------------------------------------------------------------------
Total Net Assets 100.00%
AMERITOR SECURITY TRUST FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 2008
(Unaudited)
Number Market
of Shares Description Value
- ----------------- ------------------ -------------------
COMMON STOCKS: 101.51%
AEROSPACE 4.25%
300 United Technologies, Corp. 16,080
-------------------
AIRLINES 0.94%
500 Jetblue Airways, Corp. * 3,550
-------------------
APPAREL 1.53%
300 Carters, Inc. * 5,778
-------------------
BANKS 5.62%
300 HSBC Holdings PLC - ADR 14,601
300 Bank of America, Corp. 4,224
200 Citigroup, Inc. 1,342
200 Wachovia, Corp. 1,108
-------------------
21,275
BEVERAGES 2.89%
200 Pepsico, Inc. 10,954
-------------------
BUILDING PRODUCTS 3.53%
300 Home Depot, Inc. 6,906
300 Lowes Companies, Inc. 6,456
-------------------
13,362
CABLE TV 1.78%
400 Comcast, Corp. 6,752
-------------------
CELLULAR TELCOM 0.57%
1,000 Alcatel Lucent Adr * 2,150
-------------------
COAL 1.42%
200 Alliance Resource, LP. 5,376
-------------------
COMMUNICATIONS 0.86%
200 Cisco Systems, Inc. * 3,260
29 Nortel Networks, Corp. * 8
-------------------
3,268
COMPUTERS 10.31%
200 Apple, Inc. * 17,070
200 International Business Machines, Corp. 16,832
500 Dell, Inc. * 5,120
-------------------
39,022
E-COMMERCE 4.01%
250 Shanda Interactive Entertainment, Ltd. * 8,090
300 Ebay, Inc. * 4,188
200 Nutrisystem, Inc. 2,918
-------------------
15,196
FINANCE 1.33%
350 Western Union, Co. 5,019
-------------------
LODGING 1.54%
300 Marriott International, Inc. 5,835
-------------------
MACHINERY 1.36%
100 Flowserve, Corp. 5,150
-------------------
MANUFACTURING 6.15%
300 Honeywell International, Inc. 9,849
400 Ingersoll Rand, Co. Ltd. CL-A 6,940
400 General Electric, Co. 6,480
-------------------
23,269
MEDICAL 15.32%
300 Wellpoint, Inc. * 12,639
250 Novartis AG - ADR 12,440
200 Johnson & Johnson 11,966
200 Amgen, Inc. * 11,550
300 Medtronic, Inc. 9,426
-------------------
58,021
METALS 2.78%
500 Alcoa, Inc. 5,630
200 Freeport McMoran Copper 4,888
-------------------
10,518
MINERALS 1.94%
2,000 Northern Dynasty Minerals * 7,360
-------------------
OFFICE AUTOMATION 2.49%
300 Cannon, Inc. - ADR 9,420
-------------------
OFFICE SUPPLIES 0.95%
200 Staples, Inc. 3,584
-------------------
OIL 15.72%
300 Occidental Petroleum, Corp. 17,997
300 Schlumberger, Ltd. 12,699
300 Canadian Natural Resources 11,994
350 CNX Gas, Corp. * 9,555
400 Halliburton, Co. 7,272
-------------------
59,517
OIL & GAS 1.80%
300 Nabors Industries, Ltd. * 3,591
200 Chesapeake Energy, Corp. 3,234
-------------------
6,825
PUBLISHING 1.22%
200 Mcgraw Hill, Cos., Inc. 4,638
-------------------
RECREATIONAL VEHICLES 2.27%
300 Polaris Industries, Inc. 8,595
-------------------
REHAB CENTERS 2.21%
300 Psychiatric Solutions, Inc. * 8,355
-------------------
RETAIL 4.68%
250 Walmart Stores, Inc. 14,015
150 Walgreen, Co. 3,700
-------------------
17,715
SAVINGS & LOAN 0.00%
450 Washington Mutual, Inc. 10
-------------------
SEMICONDUCTORS 1.94%
500 Intel, Corp. 7,330
-------------------
SHOES 0.10%
300 Crocs, Inc. * 372
-------------------
Total Common Stock (Cost $631,369) 384,296
-------------------
Par SHORT TERM INVESTMENTS 2.89%
- -----------------
10,960 Evergreen Institutional Money Market Fund
(Cost $10,960) 10,960
-------------------
TOTAL INVESTMENTS:
(Cost: $642,329)** 104.40% 395,256
Liabilities in excess of other assets (4.40%) (16,642)
------------------ -------------------
NET ASSETS 100.00% $ 378,614
================== ===================
* Non-income producing
** Cost for Federal income tax purposes is $642,329 and net unrealized
appreciation consists of:
Gross unrealized appreciation $ 5,577
Gross unrealized depreciation (252,650)
------------------
Net unrealized depreciation $ (247,073)
==================
See Notes to Financial Statements
AMERITOR SECURITY TRUST FUND
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2008
(Unaudited)
ASSETS
Investments at value (identified cost of $642,329) (Notes 1 & 4) $ 395,256
Receivables:
Interest 17
Dividends 849
Investments Sold 10,851
-----------
TOTAL ASSETS 406,973
-----------
ACCRUED LIABILITIES
Accrued administration fees 11,071
Accrued transfer agent fees 2,097
Accrued advisory fees 1,119
Accrued expenses 14,072
-----------
TOTAL LIABILITIES 28,359
-----------
NET ASSETS $ 378,614
===========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE ($378,614/2,454,655 shares outstanding) $ 0.15
===========
At December 31, 2008, 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 $ 3,270,466
Accumulated realized losses on investments (2,644,779)
Net unrealized depreciation of investments (247,073)
-----------
Net Assets $ 378,614
===========
See Notes to Financial Statements
AMERITOR SECURITY TRUST FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (Net of foreign taxes withheld of $17) $ 4,844
Interest 1,955
---------
6,799
---------
EXPENSES
Administrative services (Note 2) $ 30,000
Legal and audit fees 11,178
Transfer agent fees (Note 2) 7,910
Accounting fees 6,376
Investment advisory fees (Note 2) 2,721
Custody fees 1,382
Directors 3,800
Miscellaneous 7,288
---------
Total expenses 70,655
---------
Net Investment Loss (63,856)
---------
NET REALIZED AND UNREALIZED GAINS/LOSSES ON
INVESTMENTS:
Net realized loss on investments (2,425)
Net change in unrealized depreciation of investments (259,001)
---------
Net loss on investments (261,426)
---------
Net decrease in net assets resulting from operations $(325,282)
---------
See Notes to Financial Statements
AMERITOR SECURITY TRUST FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months ended
December 31, 2008 Year ended
(Unaudited) June 30, 2008
--------- ---------
OPERATIONS
Net investment loss $ (63,856) $(131,449)
Net realized gain(loss) on investments (2,425) 8,850
Change in unrealized depreciation of investments (259,001) (96,124)
--------- ---------
Net decrease in net assets resulting from operations (325,282) (218,723)
CAPITAL SHARE TRANSACTIONS (NOTE 3)
Net decrease in net assets resulting from capital share
transactions (20,504) (17,574)
--------- ---------
Net decrease in net assets (345,786) (236,297)
Net assets at beginning of the year 724,400 960,697
--------- ---------
NET ASSETS at the end of the year $ 378,614 $ 724,400
========= =========
See Notes to Financial Statements
AMERITOR SECURITY TRUST FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
- --------------------------------------------------------------------------------
Six Months ended
December 31 2008 Year ended Year ended Year ended Year ended Year ended
(Unaudited) June 30 2008 June 30 2007 June 30 2006 June 30 2005 June 30 2004
---------------- -------------- --------------- ---------------- --------------- --------------
Per Share Operating Performance
Net asset value, beginning of year $ 0.28 $ 0.37 $ 0.41 $ 0.37 $ 0.45 $ 0.45
---------- ---------- ---------- ------------ ------------ ------------
Income from investment operations-
Net investment loss (0.03) (0.05) (0.05) (0.05) (0.05) (0.05)
Net realized and unrealized gain
(loss) on investments (0.10) (0.04) 0.01 0.09 (0.03) 0.05
---------- ---------- ---------- ------------ ------------ ------------
Total from investment operations (0.13) (0.09) (0.04) 0.04 (0.08) --
---------- ---------- ---------- ------------ ------------ ------------
Net asset value, end of year $ 0.15 $ 0.28 $ 0.37 $ 0.41 $ 0.37 $ 0.45
========== ========== ========== ============ ============ ============
Total Return (46.43%) (24.32%) (9.76%) 10.81% (17.78%) 0.00%
========== ========== ========== ============ ============ ============
Ratios/Supplemental Data
Net assets, end of year (000's) $ 379 $ 724 $ 961 $ 1,125 $ 1,071 $ 1,318
Ratio to average net assets
Expense ratio - net 25.11% * 17.10% 16.36% 12.84% 12.85% 12.56%
Net (loss) (22.70%)* (15.42%) (12.85%) (11.51%) (11.70%) (11.81%)
Portfolio turnover rate 0% 15% 140% 286% 606% 182%
* Annualized
See Notes to Financial Statements
AMERITOR SECURITY TRUST FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
(1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Ameritor Security Trust 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.
The Fund Adopted Financial Accounting Standards Board (FASB)
Statement of Financial Accounting Standards No. 157, "Fair Value
Measurement" ("FAS 157"), on July 1, 2008. FAS 157 defines fair
value as the price that the Fund would receive to sell an asset or
pay to transfer a liability in an orderly transaction between market
participants at the measurement date. FAS 157 establishes a
framework for measuring fair value and a three level hierarchy for
fair value measurements based on the transparency of inputs to the
valuation of an asset or liability. Inputs may be observable or
unobservable and refer broadly to the assumptions that market
participants would use in pricing the asset or liability based on
market data obtained from sources independent of the Fund.
Unobservable inputs reflect the Fund's own assumptions about the
assumptions that market participants would use in pricing the asset
or liability developed based on the best information available under
the circumstances. The Fund's investment in its entirety is assigned
a level based upon the inputs which are significant to the overall
valuation. The hierarchy of inputs is summarized below.
Level 1 - quoted prices in active markets for identical investments.
Level 2 - other significant observable inputs (Including quoted
prices for similar investments, interest rates, prepayment
speeds, credit risk, etc.).
Level 3 - significant unobservable inputs (Including the Fund's own
assumptions in determining fair value of investments).
A financial instrument's level within the fair value hierarchy is
based on the lowest level of any input that is significant to the
fair value measurement. In determining fair value, the Fund
separates its financial instruments into two categories: Exchange
traded and Money Market Securities. The following summarizes the
valuation of the Fund's assets and liabilities by the SFAS 157 fair
value hierarchy as of December 31, 2008:
Balance
December 31, 2008 Level 1 Level 2 Level 3
Exchange traded common stocks $384,296 $ 384,296 $ 0 $ 0
Money Market Securities $ 10,960 $ 10,960 $ 0 $ 0
-------- --------- -------- --------
Total Asset Measured at Fair Value $395,256 $ 395,256 $ 0 $ 0
1
AMERITOR SECURITY TRUST FUND
NOTES TO FINANCIAL STATEMENTS - (Continued)
December 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
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. At June 30,
2008, for Federal income tax purposes, the Fund had a capital loss
carryforward of $2,641,967 of which $1,707,509 expires in fiscal
year 2009, $843,827 expires in fiscal year 2010, $56,819 expires in
fiscal year 2012 and $33,812 expires in fiscal year 2015 to offset
future realized gains.
Effective December 31, 2007, the Fund adopted Financial Accounting
Standards Board (FASB) Interpretation No. 48 (FIN 48), "Accounting
for uncertainty in Income Taxes". FIN 48 requires the evaluation of
tax positions taken on previously filed tax returns or expected to
be taken on future returns. These positions must meet a
"more-likely-than-not" standard that, based on the technical merits,
have a more than fifty percent likelihood of being sustained upon
examination. In evaluating whether a tax position will be examined
by the appropriate taxing authority that has full knowledge of all
relevant information. Tax positions not deemed to meet the
"more-likely-than-not" threshold are recorded as a tax expense in
the current year.
FIN 48 requires the Fund to analyze all open tax years, as defined
by the Statute of Limitations, for all major jurisdictions. Open tax
years are those that are open for exam by taxing authorities. As of
December 31, 2008, open Federal tax years include the tax years
ended June 30, 2005 through June 30, 2008. The Fund has no
examination in progress.
The Fund has reviewed all open tax years and major jurisdictions and
concluded that the adoptions of FIN 48 resulted in no effect to the
Fund's financial position or results of operation. There is no tax
liability resulting from unrecognized tax benefits relating to
uncertain income tax positions taken or expected to be taken for the
six months ended December 31, 2008. The Fund is also not aware of
any tax positions for which it is reasonably possible that the total
amount of unrecognized tax benefits will significantly change in the
next twelve months.
C. New Accounting Pronouncements - In March 2008, the FASB issued SFAS
No. 161, "Disclosures about Derivative Instruments and Hedging
Activities". The provisions are effective for fiscal years beginning
after November 15, 2008. SFAS 161 is intended to improve financial
reporting for derivative instruments by requiring enhanced
disclosure that enables investors to understand how and why an
entity uses derivatives, how derivatives are accounted for, and how
derivative instruments affect an entity's results of operations and
financial position. Management is currently evaluating the
implications of SFAS 161. The impact on the Fund's financial
statement disclosures, if any, is currently being assessed.
D. Distributions to Shareholders - No distributions were paid in fiscal
years 2007 or 2008. As of December 31, 2008, the components of
distributable earnings (accumulated loss) on a tax basis of the Fund
were as follows:
Capital loss carryforward $(2,644,779)
Unrealized appreciation (247,073)
-----------
$(2,891,852)
===========
2
AMERITOR SECURITY TRUST FUND
NOTES TO FINANCIAL STATEMENTS - (Continued)
December 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
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, 2008 the Fund decreased paid
in capital by $131,449 and decreased accumulated net investment loss
by $131,449
(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:
Six Months Ended Year Ended
December 31, 2008 June 30,2008
-------------------------- -------------------------
Shares Amount Shares Amount
----------- ----------- ----------- -----------
Shares redeemed (93,098) $ (20,504) (53,729) $ (17,574)
----------- ----------- ----------- -----------
Net decrease (93,098) $ (20,504) (53,729) $ (17,574)
=========== =========== =========== ===========
Shares outstanding
Beginning of year 2,547,753 2,601,482
----------- -----------
End of year 2,454,655 2,547,753
=========== ===========
3
AMERITOR SECURITY TRUST FUND
NOTES TO FINANCIAL STATEMENTS - (Continued)
December 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
(4) PURCHASE AND SALE OF SECURITIES
During the Six months ended December 31, 2008, purchases and proceeds from
sales of investment securities were $0 and $86,557, respectively. Cost of
securities for income tax purposes was $642,329 at December 31, 2008. Net
unrealized depreciation of investments aggregated $247,073, which relates
to gross unrealized appreciation of $5,577 and gross unrealized
depreciation of $252,650.
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, 2008 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.
4
AMERITOR SECURITY TRUST FUND
EXPENSE EXAMPLES (UNAUDITED)
December 31, 2008
- --------------------------------------------------------------------------------
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 July 1, 2008 to December 31, 2008.
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
7/1/08 12/31/08 7/1/08 - 12/31/08*
------------ ------------- ------------------
Actual $ 1,000.00 $ 517.24 $ 48.42
Hypothetical (5% return before expenses) $ 1,000.00 $ 1.050.00 $ 65.42
* Expenses are equal to the Fund's annual expense ratio of 12.66% multiplied
by the average account value over the period multiplied by 184/365 (to
reflect the one-half year period).
5
(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 9 Years President and 1 Potomac Group
1410 Coventry Lane Trustee Served Chief Executive Homes;
Alexandria, VA 22304 Term is Officer of Boat
Age 78 For Life Intervest America
Financial Corp.
- -------------------------------------------------------------------------------------------------------------
James I. Schwartz
14801Pennfield Circle Non- 7 Year Retired President 1 None
#307 Interested Served Capital City
Silver Spring, MD Trustee Term is Savings & Loan
20906 For Life And
Age 82 Schwartz & Co.
- -------------------------------------------------------------------------------------------------------------
Interested Trustee And Officers
- -------------------------------------------------------------------------------------------------------------
Carole S. Kinney Trustee, 10 Years Chairman of the 1 None
8020 Thornley Court Secretary, served Board of
Bethesda, MD 20817 and Term is Ameritor
Age 63 Chairman For life Financial
of the Corporation
Fund Since 1998
- -------------------------------------------------------------------------------------------------------------
Jerome Kinney President 10 Years Founder and None
8020 Thornley Court served President, 1
Bethesda, MD 20817 Term=1 Jerome F. Kinney
Age 79 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. [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
- --------------------------------------------------------------------------------
By (Signature and Title)* /s/ Jerome Kinney, President and Treasurer
--------------------------------------------
Date February 15, 2009
-----------------
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 February 15, 2009
-----------------
* Print the name and title of each signing officer under his or her signature.