As filed with the Securities and Exchange Commission on February 7, 1997
Securities Act File No. 333-20889
Investment Company Act File No. 811-00018
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------------------------
Pre-Effective Amendment No. __ Post-Effective Amendment No. 1
(Check Appropriate Box of Boxes)
STEADMAN ASSOCIATED FUND
--------------------------------
(Exact Name of Registration as Specified in its Charter)
(202) 223-1000
--------------------------------
(Area Code and Telephone Number)
1730 K Street, N.W.
Washington, D.C. 20006
--------------------------------
(Address of Principal Executive Offices, including Zip Code)
Max Katcher
Steadman Associated Fund
1730 K Street, N.W.
Washington, D.C. 20006
--------------------------------
(Name and Address of Agent for Service)
Copies to:
Peter R. Gilbert, Esq.
Manatt, Phelps & Phillips, LLP
1501 M Street, N.W., Suite 700
Washington, D.C. 20005
--------------------------------
(Name and Address of Agent for Service)
Approximate date of proposed public offering: As soon as practicable after
the Registration Statement has been declared effective under the Securities Act
of 1933.
Financial Statements and information of the Fund and the Other Funds
--Report of Independent Accountants, dated August 6, 1996.
--Portfolio of Investments, June 30, 1996.
--Statement of Assets and Liabilities, June 30, 1996.
--Statement of Operations, for the year ended June 30, 1996.
--Statements of Changes in Net Assets, for the year ended June 30, 1996,
for the period October 1, 1994 through June 30,1995 and the year ended
September 30, 1994.
--Financial Highlights, for the year ended June 30, 1996, for the period
October 1, 1994 through June 30, 1995 and for each of the four years
ended September 30.
--Notes to Financial Statements listed above.
STEADMAN ASSOCIATED FUND
1730 K Street, N.W.
Washington, D.C. 20006
1-800-424-8570
202-223-1000 Washington D.C. area
TRANSFER AGENT
Steadman Security Corporation
1730 K Street, N.W.
Washington, D.C. 20006
CUSTODIAN
Crestar Bank, N.A.
1445 New York Avenue, N.W.
Washington, D.C. 20005
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
1800 M Street N.W.
Washington D.C. 20036
For more information about
STEADMAN ASSOCIATED FUND.
account information or daily
Net Asset Values, call:
Shareholder Services
1-800-424-8570
202-223-1000 Washington, D.C. area
STEADMAN
ASSOCIATED
FUND
ANNUAL
REPORT
JUNE 30, 1996
A STEADMAN NO-LOAD MUTUAL FUND
STEADMAN SECURITY
CORPORATION
[LOGO]
INVESTMENT ADVISER
Fellow Shareholders:
The forces most dominant in present market behavior have continued to be a
low level of inflation and behavior of interest rates.
The economy generally is moving at a pace that is slowing. Although
employment levels remain high, there are indications that some of this can be
accounted for by a fact of two jobs among wage earners in many households. This
of course casts a question about the dependability of recent employment reports.
It also may support indications of there being a lesser rather than greater
likelihood that there will be an incentive for the Federal Reserve to initiate
any near term move to tighten money and raise rates.
These conditions suggest that the interest rates are going to decline.
Looking to the 30 year Treasury Bond for guidance we are beginning to see a
pattern of declining yield, of course with the Bond rising in price. We expect
this trend of declining interest rates to continue and bear with it very
favorable market consequences for your Fund.
Thank you for your confidence and continued support.
Sincerely,
/s/ Charles W. Steadman
Charles W. Steadman
Chairman of the Board of
Trustees and President
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
STEADMAN ASSOCIATED FUND
We have audited the accompanying statement of assets and liabilities of
Steadman Associated Fund, including the portfolio of investments, as of June 30,
1996, and the related statement of operations for the year ended, the statements
of changes in net assets for the year then ended and the periods October 1, 1994
through June 30, 1995, and October 1, 1993 through September 30, 1994, and the
financial highlights for the year ended June 30, 1996 and the period October 1,
1994 through June 30, 1995, and each of the four years ended September 30, 1994.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of June 30, 1996, by correspondence
with the custodian and broker. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Steadman Associated Fund as of June 30, 1996, the results of its operations, the
changes in its net assets, and the financial highlights for each of the
respective periods stated in the first paragraph, in conformity with generally
accepted accounting principles.
Coopers & Lybrand L.L.P.
Washington, D.C.
August 6, 1996
STEADMAN ASSOCIATED FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996
VALUE
SHARES (NOTE 1)
-------- ---------
COMMON STOCKS -- 96.6%
Communications Equipment -- 11.3%
Electronic Data Systems. . . . . . . . . . . . . . 2,000 $ 107,500
Motorola . . . . . . . . . . . . . . . . . . . . . 2,500 157,188
Precision Systems (a) . . . . . . . . . . . . . . 19,000 223,250
---------
Total Communications Equipment 487,938
---------
Computer Equipment -- 9.2%
Hewlett Packard. . . . . . . . . . . . . . . . . . 4,000 398,500
---------
Total Computer Equipment 398,500
---------
Computer Storage Equipment -- 12.0%
Iomega Corp. (a) . . . . . . . . . . . . . . . . . 4,000 116,000
Seagate Technology (a) . . . . . . . . . . . . . . 9,000 405,000
---------
Total Computer Storage Equipment 521,000
---------
Computer Systems -- 32.3%
Microsoft Corp. (a). . . . . . . . . . . . . . . . 7,500 900,937
Sun Microsystems (a) . . . . . . . . . . . . . . . 8,500 500,437
---------
Total Computer Systems 1,410,374
---------
Medical Instruments -- 1.9%
Boston Scientific (a). . . . . . . . . . . . . . . 1,800 81,000
---------
Total Medical Instruments 81,000
---------
Motor Vehicles -- 10.4%
General Motors "H".. . . . . . . . . . . . . . . . 7,500 450,938
---------
Total Motor Vehicles 450,938
---------
Oil & Gas Drilling -- 1.6%
Global Marine (a). . . . . . . . . . . . . . . . . 5,000 69,375
---------
Total Oil & Gas Drilling 69,375
---------
STEADMAN ASSOCIATED FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996
VALUE
SHARES (NOTE 1)
-------- ---------
Pharmaceutical -- 4.4%
Elan Corp. Warrants (a). . . . . . . . . . . . . . 2,500 59,687
Regeneron Pharmaceuticals (a). . . . . . . . . . . 7,500 130,313
---------
Total Pharmaceutical 190,000
---------
Radio & TV Equipment -- 6.0%
Geotek Communications, Inc. (a). . . . . . . . . . 7,500 102,656
Qualcomm Inc. (a). . . . . . . . . . . . . . . . . 3,000 159,375
---------
Total Radio & TV Equipment 262,031
---------
Semiconductor -- 7.5%
Intel Corp. Warrants (a) . . . . . . . . . . . . . . . 9,000 326,250
---------
Total Semiconductor 326,250
---------
Total Common Stocks (Cost $3,630,405). . . . . . . . . 4,188,406
---------
CALL OPTIONS PURCHASED -- 3.4%
Applied Materials, 1/17/97 at $30. . . . . . . . . . . 2,500 13,750
Applied Materials, 10/18/96 at $30 . . . . . . . . . . 1,500 6,000
American Tel. and Tel., 7/19/96 at $70 . . . . . . . . 20,000 1,250
IBM, 7/19/96 at $90. . . . . . . . . . . . . . . . . . 5,000 50,000
Iomega Corp., 11/15/96 at $30. . . . . . . . . . . . . 2,500 19,688
LAM Research, 12/20/96 at $25. . . . . . . . . . . . . 2,500 12,813
LSI Logic, 1/17/97 at $25. . . . . . . . . . . . . . . 2,500 13,750
Seagate Technology, 12/20/96 at $45. . . . . . . . . . 2,500 14,687
Sun Microsystems, 10/18/96 at $60. . . . . . . . . . . 2,500 15,625
---------
Total Call Options Purchased (Cost $187,250) . . . 147,563
---------
Total Portfolio of Investments (Cost $3,817,655) $ 4,335,969
---------
---------
(a) Non-income producing security.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1996
ASSETS:
Investments at value (Cost $3,817,655) (Note 1). . . . . . . $ 4,335,969
Cash and cash equivalents (Note 1). . . . . . . . . . . . . 314,978
Dividends receivable . . . . . . . . . . . . . . . . . . . . 1,860
Interest receivable. . . . . . . . . . . . . . . . . . . . . 449
Receivable for trust shares subscribed . . . . . . . . . . . 100
-----------
Total assets. . . . . . . . . . . . . . . . . . . . . . 4,653,356
-----------
LIABILITIES:
Payable for investments purchased. . . . . . . . . . . . . . 32,325
Accounts payable and accrued expenses. . . . . . . . . . . . 12,804
Investment advisory and service fees payable (Note 4). . . . 7,271
Other payable to affiliate (Note 4). . . . . . . . . . . 17,711
Payable for Trust shares redeemed. . . . . . . . . . . . . . 1,754
-----------
Total liabilities . . . . . . . . . . . . . . . . . . . 71,865
-----------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,581,491
-----------
-----------
NET ASSETS CONSIST OF:
Undistributed net investment loss. . . . . . . . . . . . . . $(4,646,935)
Unrealized appreciation of Investments . . . . . . . . . . . 518,314
Accumulated net realized losses from security transactions . (1,127,057)
Paid-in capital. . . . . . . . . . . . . . . . . . . . . . . 9,837,169
-----------
$9,837,169
-----------
-----------
NET ASSET VALUE, offering price and redemption price per share
($4,581,491 DIVIDED BY 6,580,298 shares of
no par value trust shares) . . . . . . . . . . . . . . . . $ .70
-----------
-----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
STEADMAN ASSOCIATED FUND
STATEMENT OF OPERATIONS
for the year ended June 30, 1996
INVESTMENT INCOME:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 23,904
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,242
--------
Total income . . . . . . . . . . . . . . . . . . . . . . $ 34,146
EXPENSES:
Salaries and employee benefits (Note 4). . . . . . . . . . . . . 184,729
Investment advisory fee (Note 4) . . . . . . . . . . . . . . . . 51,706
Professional fees. . . . . . . . . . . . . . . . . . . . . . . . 56,679
Shareholder servicing fee (Note 4) . . . . . . . . . . . . . . . 41,214
Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,281
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . 12,469
Blue Sky Registration Fees . . . . . . . . . . . . . . . . . . . 11,820
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . 11,186
Computer services. . . . . . . . . . . . . . . . . . . . . . . . 8,713
Reports to shareholders. . . . . . . . . . . . . . . . . . . . . 6,383
Trustees' fees and expenses (Note 4) . . . . . . . . . . . . . . 5,328
--------
Total expenses. . . . . . . . . . . . . . . . . . . . . . . 422,508
---------
Net investment loss . . . . . . . . . . . . . . . . . . . . (388,362)
---------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS (NOTES 1 AND 3):
Net realized gain from investment transactions . . . . . . . . . 517,110
Change in unrealized appreciation/(depreciation) of investments (352,459)
---------
Net gain on investments. . . . . . . . . . . . . . . . . . . . . 164,651
---------
Net decrease in net assets resulting from operations . . . . . . $(223,711)
---------
---------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
STEADMAN ASSOCIATED FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the period
For the year October 1, 1994 For the
ended June 30, through year ended
1996 June 30, 1995* September 30, 1994
----------------- ---------------- ------------------
Decrease in net assets from operations:
Net investment loss. . . . . . . . . . . . . . . . . . . . . $ (388,362) $ (240,379) $ (450,758)
Net realized gain (loss) from investment transactions. . . . 517,110 (451,689) (1,192,478)
Change in unrealized appreciation/depreciation . . . . . . . (352,459) 689,335 232,086
---------- ---------- ----------
Net increase (decrease) in net assets resulting
from operations. . . . . . . . . . . . . . . . . . (223,711) (2,733) (1,411,150)
---------- ---------- ----------
Decrease in net assets from trust share transactions (Note 2). . (929,919) (568,786) (1,125,963)
---------- ---------- ----------
Increase (decrease) in net assets. . . . . . . . . . . . . . (1,153,630) (571,519) (2,537,113)
Net assets at beginning of period. . . . . . . . . . . . . . . . 5,735,121 6,306,640 8,843,753
---------- ---------- ----------
Net assets at end of period (including accumulated
net investment loss of $4,635,886, $4,247,524 and
- - $0 -, respectively . . . . . . . . . . . . . . . . . . . . . . $4,581,491 $ 5,735,121 $ 6,306,640
---------- ---------- ----------
---------- ---------- ----------
* The Fund's fiscal year-end was changed to June 30.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
STEADMAN ASSOCIATED FUND
FINANCIAL HIGHLIGHTS
For the
period
October 1,
For the year 1994
ended through For the years ended September 30,
June 30 June 30,
---------- ---------- -------------------------------------------
1996 1995* 1994 1993 1992 1991
---------- ---------- -------------------------------------------
Per Share Operating Performance:
Net asset value, beginning of period . . . . . . . $.73 $.72 $.87 $.64 $.67 $.57
---------- ---------- -------------------------------------------
Net investment loss . . . . . . . . . . . . . (.17) (.03) (.08) (.05) (.03) (.02)
Net realized and unrealized
gain (loss) on investments . . . . . . . . .14 .04 (.07) .28 - .12
---------- ---------- -------------------------------------------
Total from investment operations. . . . . . . (.03) .01 (.15) .23 (.03) .10
---------- ---------- -------------------------------------------
Net asset value, end of period . . . . . . . . . . $.70 $.73 $.72 $.87 $.64 $.67
---------- ---------- -------------------------------------------
---------- ---------- -------------------------------------------
Ratios/Supplemental Data:
Total return . . . . . . . . . . . . . . . . . . . (4.38) 1.85%** (17.24)% 35.9% (4.5)% 17.5%
Ratio of expenses to average net assets. . . . . . 8.14% 8.17%** 7.76% 5.79% 6.92% 7.16%
Ratio of net investment income (loss)
to average net assets . . . . . . . . . . . . (7.48)% (7.23)%** (6.09)% (4.63)% (5.14)% (3.29)%
Portfolio turnover rate. . . . . . . . . . . . . . 231% 505%** 241% 300% 301% 267%
Net assets, end of period (in thousands) . . . . . $4,581 $5,735 $6,307 $8,844 $7,254 $8,539
* The Fund's fiscal year-end was changed to June 30.
** Annualized
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
STEADMAN ASSOCIATED FUND
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
- -
Steadman Associated Fund (the Fund) is registered under the Investment
Company Act of 1940, as amended, as a non-diversified, open-end investment
company. During 1995, the Fund changed its fiscal year end from September 30 to
June 30.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of its financial statements
CASH AND CASH EQUIVALENTS
Management defines cash equivalents as investments that mature in three
months or less. All cash and cash equivalents are invested in a single money
market fund maintained by the investment custodian.
SECURITY VALUATION
Investments in securities traded on a national securities exchange are valued
at the last reported sales price on the last business day of the period.
Investments for which no sale was reported on that date are valued at the mean
between the latest bid and asked prices.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are recorded on the trade date. Realized gains and
losses from security transactions are reported on an identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income and
expenses are recorded on the accrual basis.
Call options give the holder the right to purchase a security at a specified
price on a certain date. Risks arise from possible illiquidity of the options
market and from movements in security values. Options are reflected in the
accompanying Statement of Assets and Liabilities at market value.
INCOME TAXES
The Fund is subject to income taxes in years when it does not qualify as a
regulated investment company under subchapter M of the Internal Revenue Code.
The Fund accounts for income taxes using the liability method, whereby deferred
tax assets and liabilities arise from the tax effect of temporary differences
between the financial statement and taxes bases of assets and liabilities,
measured using presently enacted tax rates. If it is more likely than not that
some portion or all of a deferred tax asset will not be realized, a valuation
allowance is recognized.
STEADMAN ASSOCIATED FUND
2. TRUST SHARES
The Trust Indenture does not specify a limit to the number of shares which
may be issued. Transactions in trust shares were as follows:
For the year For the period October 1, 1994 For the year
ended June 30, 1996 through June 30, 1995 ended September 30, 1994
------------------------- ------------------------- -------------------------
Shares Amount Shares Amount Shares Amount
---------- ---------- ---------- ---------- ---------- ----------
Shares sold. . . . . . . . . 269 $ 200 581 $ 413 -- 0 -- $ -- 0--
Shares redeemed. . . . . . . (1,295,786) (930,119) (845,933) (569,199) (1,426,814) (1,125.963)
---------- ---------- ---------- ----------- ----------- -----------
Net decrease. . . . . . . (1,295,517) $ (929,919) (845,352) $ (568,786) (1,426,814) $(1,125,963)
---------- ----------- -----------
---------- ----------- -----------
Shares outstanding:
Beginning of period . . . 7,875,815 8,721,167 10,147,981
---------- ---------- ----------
End of period . . . . . . 6,580,298 7,875,815 8,721,167
---------- ---------- ----------
---------- ---------- ----------
3. PURCHASES AND SALES OF SECURITIES
During the year ended June 30, 1996, purchases and proceeds from sales of
investment securities aggregated $11,790,716 and $12,530,500, respectively.
Unrealized appreciation of investments aggregated $501,026 of which $648,718
related to gross unrealized appreciation where there is an excess of value over
tax cost and $147,692 related to gross unrealized depreciation where there is an
excess of tax cost over value.
4. INVESTMENT ADVISORY FEE AND TRANSACTIONS WITH AFFILIATES
Steadman Security Corporation (SSC), the affiliate, has provided advisory
services under an agreement which first became effective in 1972. On February
28, 1984, at the Annual Meeting of the shareholders, a new Investment Advisory
Agreement was approved. Under the new advisory agreement SSC will continue to
provide the same services it provided under the same terms and conditions of the
previous agreement. The agreement will continue in effect subject to the annual
approval by the Board of Trustees or by a majority of the outstanding voting
securities of the Fund. The fee for investment advisory services is based on 1%
of the first $35,000,000 of the average daily net assets of the Fund, 7/8 of 1 %
on the next $35,000,000 and 3/4 of 1% on all sums in excess thereof. In addition
to the investment advisory fee, SSC received fees from the Fund for the
performance of delegated services. (dividend disbursing agent and transfer
agent) as defined in the Trust Indenture, as amended. The fee for such services
was computed on the basis of the number of shareholder accounts calculated as of
the last business day of each month at $1.35 per accounts. SSC received
reimbursements from the Fund for the salaries and benefits of its employees who
perform functions other than investment advisory and shareholder service
functions for the Fund.
STEADMAN ASSOCIATED FUND
Certain officers and trustees of the Fund are "affiliated persons" of the
Investment Advisor, as defined by the Investment Company Act of 1940.
5. FEDERAL INCOME TAXES
In the fiscal period ended June 30, 1996, the Fund did not meet asset
diversification requirements applicable to regulated investments companies.
Thus, the Fund did not qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code. However, the Fund had a net
investment loss for the fiscal period ended June 30, 1996, therefore no income
tax provision is required. A full valuation allowance has been provided for
deferred tax assets, totalling approximately $2,194,000 at June 30, 1996, which
arise principally from net operating loss carryforwards and capital loss
carryforwards available for income tax purposes.
For income tax purposes, the Fund has net operating loss carryforwards
approximating $4,647,000 which are available to offset future net operating
income in non-qualifying years, if any, which expire as follows: (2000)
$443,000; (2001) $499,000; (2003) $328,000; (2004) $476,000; (2005) $534,000;
(2006) $324,000; (2007) $381,000; (2008) $539,000; (2009) $437,000; (2010)
$287,000 and (2011) $401,000. Capital loss carryforwards aggregating
approximately $1,110,000 are available to offset future capital gains, if any
which expire as follows: (2001) $658,000 and (2000) $452,000.
6. UNCLAIMED PROPERTY
In December 1989, the Fund and other Steadman Funds were contacted by the
Unclaimed Property Clearinghouse (the Clearinghouse), an association of some 45
member states organized to facilitate the collection for the states of unclaimed
property that is considered abandoned under the laws of the member states. The
Clearinghouse requested certain documents and information in order to determine
whether, and if so, to what extent its member states may assert claims for
abandoned accounts of the Fund's shareholders. On the basis of a review of the
documents and information provided in response to this request, the Special
Counsel for the Clearinghouse has informally asserted that the member states are
entitled to certain property of the Fund's shareholders. In addition, Steadman
Security Corporation holds certain unclaimed dividends of the Fund's
shareholders. In May 1991, the District of Columbia filed suit in the Superior
Court of the District of Columbia against the Fund, other Steadman Funds,
Steadman Security Corporation and its principal officer under the District of
Columbia Disposition of Unclaimed Property Act. Under this action the District
of Columbia sought possession and custody of the alleged abandoned property as
well as prejudgment interest, an unspecified amount of civil penalties, and
reimbursement for reasonable attorney's fees and costs. On March 25, 1993,
counsel for the District of Columbia, the Clearinghouse and the Fund executed a
settlement agreement, which involves no findings of any violations of law by the
Fund and other defendants. The Superior Court dismissed the suit as of November
30, 1993, although the terms of the settlement agreement do not call for
dismissal until after the closing of the agreement. The District of Columbia has
appealed the dismissal. In accordance with the settlement agreement, record
title to certain shares of the Fund and associated distributions were
transferred from the present shareholders of record to the members of the
Clearinghouse on the closing date, February 14, 1995. The shares will be
redeemed over a period of three years from this date. On May 9, 1995 the Court
of appeals dismissed the appeal.
STEADMAN AMERICAN
INDUSTRY FUND
1730 K Street, N.W.
Washington, D.C. 20006
1-800-424-8570
202-223-1000 Washington D.C. area
TRANSFER AGENT
Steadman Security Corporation
1730 K Street, N.W.
Washington, D.C. 20006
CUSTODIAN
Crestar Bank, N.A.
1445 New York Avenue, N.W.
Washington, D.C. 20005
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
1800 M Street N.W.
Washington D.C. 20036
FOR MORE INFORMATION ABOUT
STEADMAN AMERICAN INDUSTRY FUND,
account information or daily
Net Asset Values, call:
SHAREHOLDER SERVICES
1-800-424-8570
202-223-1000 Washington, D.C. area
STEADMAN
AMERICAN
INDUSTRY
FUND
ANNUAL
REPORT
June 30, 1996
A STEADMAN NO-LOAD MUTUAL FUND
STEADMAN SECURITY
CORPORATION
[LOGO]
Investment Adviser
Fellow Shareholders:
The forces most dominant in present market behavior have continued to be a
low level of inflation and behavior of interest rates.
The economy generally is moving at a pace that is slowing. Although
employment levels remain high, there are indications that some of this can be
accounted for by a fact of two jobs among wage earners in many households. This
of course casts a question about the dependability of recent employment reports.
It also may support indications of there being a lesser rather than greater
likelihood that there will be an incentive for the Federal Reserve to initiate
any near term move to tighten money and raise rates.
These conditions suggest that the interest rates are going to decline.
Looking to the 30 year Treasury Bond for guidance we are beginning to see a
pattern of declining yield, of course with the Bond rising in price. We expect
this trend of declining interest rates to continue and bear with it very
favorable market consequences for your Fund.
Thank you for your confidence and continued support.
Sincerely,
/s/ Charles W. Steadman
Charles W. Steadman
Chairman of the Board of
Trustees and President
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
STEADMAN AMERICAN INDUSTRY FUND
We have audited the accompanying statement of assets and liabilities of
Steadman American Industry Fund, including the portfolio of investments, as of
June 30, 1996, and the related statement of operations for the year then ended,
the statements of changes in net assets for the year then ended and the periods
February 1, 1995 through June 30, 1995, and February 1, 1994 through January 31,
1995 and the financial highlights for the year then ended and for the period
February 1, 1995 through June 30, 1995 and each of the four years ended January
31, 1995. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of June 30, 1996, by correspondence
with the custodian and broker. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Steadman American Industry Fund as of June 30, 1996, the results of its
operations, the changes in its net assets, and the financial highlights for each
of the respective periods stated in the first paragraph, in conformity with
generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Washington, D.C.
July 29, 1996
STEADMAN AMERICAN INDUSTRY FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996
Value
Shares (Note 1)
-------- ----------
COMMON STOCKS -- 100%
Communications Equipment -- 7.0%
Precision Systems (a) . . . . . . . . . . . . . . . . . 5,000 $ 58,750
--------
Total Communications Equipment 58,750
--------
Computer Peripherals -- 10.1%
Cisco Systems (a). . . . . . . . . . . . . . . . . . . . 1,500 84,938
--------
Total Computer Peripherals 84,938
--------
Computer Storage Equipment -- 21.4%
Seagate Technology (a) . . . . . . . . . . . . . . . . . 4,000 180,000
--------
Total Computer Storage Equipment 180,000
--------
Pharmaceutical -- 14.2%
Elan Corp. Warrants (a). . . . . . . . . . . . . . . . . 5,000 119,375
--------
Total Pharmaceutical 119,375
--------
Radio & TV Equipment -- 8.2%
Geotek Communications (a). . . . . . . . . . . . . . . . 5,000 68,437
--------
Total Radio & TV Equipment 68,437
--------
Semiconductor -- 32.4%
Intel Corp. Warrants (a).. . . . . . . . . . . . . . . . 7,500 271,875
--------
Total Semiconductor 271,875
--------
Telecom Services -- 6.7%
Champion Technology Holding Ltd. . . . . . . . . . . . . 100,000 56,500
--------
Total Telecom Services 56,500
--------
Total Portfolio of Investments (Cost $820,796) $839,875
--------
--------
(a) Non-income producing security.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
STEADMAN AMERICAN INDUSTRY FUND
Statement of Assets and Liabilities
June 30, 1996
Assets:
Investments at value (Cost $820,796) (Note 1) . . . . . . . $ 839,875
Dividends receivable. . . . . . . . . . . . . . . . . . . . 120
Interest receivable . . . . . . . . . . . . . . . . . . . . 256
Cash and cash equivalents (Note 1) . . . . . . . . . . . . 200,513
-----------
Total assets . . . . . . . . . . . . . . . . . . . . . 1,040,764
-----------
Liabilities:
Accounts payable and accrued expenses . . . . . . . . . . . 14,013
Investment advisory and service fees payable (Note 4) . . . 13,523
Other payable to affiliate (Note 4) . . . . . . . . . . . . 4,956
Payable for Trust shares redeemed . . . . . . . . . . . . . 464
-----------
Total liabilities. . . . . . . . . . . . . . . . . . . 32,956
-----------
Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,007,808
-----------
-----------
Net assets consist of:
Accumulated net investment loss . . . . . . . . . . . . . . $(3,919,011)
Unrealized appreciation of investments. . . . . . . . . . . 19,079
Accumulated net realized losses plus distributions
from realized gains. . . . . . . . . . . . . . . . . . . . (960,129)
Capital paid in less distributions since inception . . . . 5,867,869
-----------
$ 1,007,808
-----------
-----------
Net asset value, offering price and redemption price per share
($1,007,808 DIVIDED BY 1,398,489 shares of no par value
trust shares) . . . . . . . . . . . . . . . . . . . . . . . $ .72
-----------
-----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
STEADMAN AMERICAN INDUSTRY FUND
STATEMENT OF OPERATIONS
for the year ended June 30, 1996
Investment Income:
Dividends . . . . . . . . . . . . . . . . . . . . $ 1,270
Interest. . . . . . . . . . . . . . . . . . . . . 4,979
--------
Total income . . . . . . . . . . . . . . . $ 6,249
---------
Expenses:
Shareholder servicing fee (Note 4). . . . . . . . 160,315
Salaries and employee benefits (Note 4) . . . . . 55,920
Professional fees . . . . . . . . . . . . . . . . 26,297
Miscellaneous . . . . . . . . . . . . . . . . . . 10,512
Investment advisory fee (Note 4). . . . . . . . . 12,209
Reports to shareholders . . . . . . . . . . . . . 10,841
Rent . . . . . . . . . . . . . . . . . . . . . . 7,548
Trustees' fees and expenses (Note 4). . . . . . . 6,998
Computer services . . . . . . . . . . . . . . . . 6,589
Custodian fees. . . . . . . . . . . . . . . . . . 3,225
--------
Total expenses . . . . . . . . . . . . . . . 300,454
---------
Net investment loss . . . . . . . . . . . . . . . (294,205)
---------
Realized and Unrealized Gain (Loss) on Investments
(Notes 1 and 3):
Net realized gain from investment transactions. . 73,821
Change in unrealized appreciation/(depreciation)
of investments . . . . . . . . . . . . . . . . (10,496)
---------
Net gain on investments . . . . . . . . . . . . . 63,325
---------
Net decrease in net assets resulting from
operations. . . . . . . . . . . . . . . . . . . $(230,880)
---------
---------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
STEADMAN AMERICAN INDUSTRY FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the period
For the year February 1, 1995 For the year
ended June 30, through June 30, ended January 31,
1996 1995* 1995
-------------- ---------------- ----------------
Decrease in net assets from operations:
Net investment loss . . . . . . . . . . . . . . . . . . . . . . . . . $ (294,205) $ (131,469) $ (304,379)
Net realized gain (loss) from investment transactions . . . . . . . . 73,821 (69,865) (84,960)
Change in unrealized appreciation/depreciation. . . . . . . . . . . . (10,496) 91,916 (700,806)
----------- ----------- ------------
Net increase (decrease) in net assets resulting
from operations . . . . . . . . . . . . . . . . . . . . . . . . . . (230,880) (109,418) (1,090,145)
Decrease in net assets from trust share transactions (Note 2). . . . . . (102,199) (22,155) (64,452)
----------- ----------- ------------
Increase (decrease) in net assets. . . . . . . . . . . . . . . . . . . . (333,079) (131,573) 1,154,597
Net assets at beginning of period. . . . . . . . . . . . . . . . . . . . 1,340,887 1,472,460 2,627,057
----------- ----------- ------------
Net assets at end of period, including accumulated net
investment loss of $3,918,641, $3,624,436 and $3,018,368
respectively. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,007,808 $1,340,887 $1,472,460
----------- ----------- ------------
----------- ----------- ------------
* The Fund's fiscal year-end was changed to June 30.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
STEADMAN AMERICAN INDUSTRY FUND
FINANCIAL HIGHLIGHTS
For the year For the period
ended February 1, 1995
June 30, through June 30, For the years ended January 31,
-------- ---------------- ---------------------------------------
1996 1995* 1995 1994 1993 1992
-------- ---------------- ----------------------------------------
Per Share Operating Performance:
Net asset value, beginning of period. . . . . . $.88 $.96 $1.65 $1.50 $1.54 $1.59
-------- -------- -------- -------- -------- --------
Net investment loss . . . . . . . . . . . . . . (.41) (.12) (.26) (.24) (.19) (.20)
Net realized and unrealized
gain (loss) on investments. . . . . . . . . .25 .04 (.43) .39 .15 .15
-------- -------- -------- -------- -------- --------
Total from investment operations. . . . . . (.16) (.08) (.69) .15 (.04) (.05)
-------- -------- -------- -------- -------- --------
Net asset value, end of period. . . . . . . . . $.72 $.88 $.96 $1.65 $1.50 $1.54
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Ratios/Supplemental Data:
Total return. . . . . . . . . . . . . . . . . . (18.48)% (20.01)%** (41.82)% 10.00% (2.60)% (3.14)%
Ratio of expenses to average net
assets . . . . . . . . . . . . . . . . . . . 24.61% 24.62%** 17.69% 12.66% 14.83% 15.13%
Ratio of net investment loss to average
net assets . . . . . . . . . . . . . . . . . (24.10)% (22.86)%** (15.63)% (11.40)% (13.52)% (13.13)%
Portfolio turnover rate . . . . . . . . . . . . 339% 617%** 289% 134% 221% 460%
Net assets, end of period (in thousands). . . . $1,008 $1,341 $1,472 $2,627 $2,496 $2,648
* The Fund's fiscal year-end was changed to June 30.
** Annualized
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
STEADMAN AMERICAN INDUSTRY FUND
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Steadman American Industry Fund (the Fund) is registered under the
Investment Company Act of 1940, as amended, as a non-diversified, open-end
investment company. During 1995, the Fund changed its fiscal year end from
January 31 to June 30.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
period. Actual results could differ from those estimates. The following is a
summary of significant accounting policies consistently followed by the Fund in
the preparation of its financial statements.
CASH AND CASH EQUIVALENTS
Management defines cash equivalents as investments that mature in
three months or less. All cash and cash equivalents are invested in a
single money market fund maintained by the investment custodian.
SECURITY VALUATION
Investments in securities traded on a national securities exchange are
valued at the last reported sales price on the last business day of the
period. Investments for which no sale was reported on that date are valued
at the mean between the latest bid and asked prices.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are recorded on the trade date. Realized gains
and losses from security transactions are reported on an identified cost
basis. Dividend income is recorded on the ex-dividend date. Interest income
and expenses are recorded on the accrual basis.
INCOME TAXES
The Fund is subject to income taxes in years when it does not qualify
as a regulated investment company under subchapter M of the Internal
Revenue Code. The Fund accounts for income taxes using the liability
method, whereby deferred tax assets and liabilities arise from the tax
effect of temporary differences between the financial statement and tax
bases of assets and liabilities, measured using presently enacted tax
rates. If it is more likely than not that some portion or all of a
deferred tax asset will not be realized, a valuation allowance is
recognized.
STEADMAN AMERICAN INDUSTRY FUND
2. TRUST SHARES
The Trust Indenture does not specify a limit to the number of shares which
may be issued. Transactions in trust shares were as follows:
For the year For the period February 1, 1995 For the year
ended June 30, 1996 through June 30, 1995 ended January 31, 1995
------------------- -------------------------------- ----------------------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
Shares sold. . . . . . . -- 0 -- $ -- 0 -- -- 0 -- $ -- 0 -- -- 0-- $ -- 0--
Shares redeemed. . . . . (117,686) (102,199) (24,096) (22,155) (51,912) (64,452)
--------- ---------- --------- --------- --------- ---------
Net decrease . . . . . (117,686) $(102,199) (24,096) $(22,155) (51,912) $(64,452)
---------- --------- ---------
---------- --------- ---------
Shares outstanding:
Beginning of period . 1,516,175 1,540,271 1,592,183
--------- --------- ---------
End of period . . . . 1,398,489 1,516,175 1,540,271
--------- --------- ---------
--------- --------- ---------
3. PURCHASES AND SALES OF SECURITIES
During the year ended June 30, 1996, purchases and proceeds from sales of
investment securities aggregated $3,929,931 and $4,387,838, respectively.
Unrealized appreciation of investment aggregated $19,079 of which $51,388
related to gross unrealized appreciation in which market value exceeded tax cost
and $32,309 related to gross unrealized depreciation in which tax cost exceeded
market value.
4. INVESTMENT ADVISORY FEE AND TRANSACTIONS WITH AFFILIATES
Steadman Security Corporation (SSC), the affiliate, has provided advisory
services under an agreement which first became effective in 1972. On February
28, 1984, at the Annual Meeting of the shareholders, a new Investment Advisory
Agreement was approved. Under the new advisory agreement, SSC will continue to
provide the same services it provided under the same terms and conditions of the
previous agreement. The agreement will continue in effect subject to the annual
approval by the Board of Trustees or by a majority of the outstanding voting
securities of the Fund. The fee for investment advisory services is based on 1%
of the first $35,000,000 of the average daily net assets of the Fund, 7/8 of 1%
on the next $35,000,000 and 3/4 of 1% on all sums in excess thereof. In addition
to the investment advisory fee, SSC received fees from the Fund for the
performance of delegated services (dividend disbursing agent and transfer agent)
as defined in the Trust Indenture, as amended. The fee for such services was
computed on the basis of the number of shareholder accounts calculated as of the
last business day of each month at $1.35 per account. SSC received
reimbursements from the Fund for the salaries and benefits of its employees who
perform functions other than investment advisory and shareholder service
functions for the Fund.
Certain officers and trustees of the Fund are "affiliated persons" of the
Investment Adviser, as defined by the Investment Company Act of 1940.
STEADMAN AMERICAN INDUSTRY FUND
5. FEDERAL INCOME TAXES
In the fiscal year ended June 30, 1996, the Fund did not meet the asset
diversification requirements applicable to regulated investment companies. Thus,
the Fund did not qualify as a regulated investment company under Subchapter M of
the Internal Revenue Code. However, the Fund had a net investment loss in fiscal
1996, therefore no income tax provision is required. A full valuation allowance
was provided for deferred tax assets, totalling approximately $1,854,000 at June
30, 1996, which arise principally from net operating loss carryforwards and
capital carryforwards available for income tax purposes.
For income tax purposes, the Fund has net operating loss carryforwards
approximating $3,919,000 which are available to offset future net operating
income in non-qualifying years, if any, which expire as follows: (1999) $74,000;
(2000) $239,000; (2001) $139,000; (2002) $353,000; (2003) $371,000; (2004)
$235,000; (2005) $384,000; (2006) $365,000; (2007) $360,000; (2008) $335,000;
(2009) $322,000; (2010) $447,000 and (2011) $295,000. Capital loss carryforwards
aggregating approximately $960,000 are available to offset future capital gains,
if any, which expire as follows: (1997) $119,000; (1999) $771,000, and (2000)
$70,000.
6. UNCLAIMED PROPERTY
In December 1989, the Fund and other Steadman Funds were contacted by the
Unclaimed Property Clearinghouse (the Clearinghouse), an association of some 45
member states organized to facilitate the collection for the states of unclaimed
property that is considered abandoned under the laws of the member states. The
Clearinghouse requested certain documents and information in order to determine
whether, and if so, to what extent its member states may assert claims for
abandoned accounts of the Fund's shareholders. On the basis of a review of the
documents and information provided in response to this request, the Special
Counsel for the Clearinghouse has informally asserted that the member states are
entitled to certain property of the Fund's shareholders. In addition, Steadman
Security Corporation holds certain unclaimed dividends of the Fund's
shareholders. In May 1991, the District of Columbia filed suit in the Superior
Court of the District of Columbia against the Fund, other Steadman Funds,
Steadman Security Corporation and its principal officer under the District of
Columbia Disposition of Unclaimed Property Act. Under this action the District
of Columbia sought possession and custody of the alleged abandoned property as
well as prejudgment interest, an unspecified amount of civil penalties, and
reimbursement for reasonable attorney's fees and costs. On March 25, 1993,
counsel for the District of Columbia, the Clearinghouse and the Fund executed a
settlement agreement, which involves no findings of any violations of law by the
Fund and other defendants. The Superior Court dismissed the suit as of November
30, 1993, although the terms of the settlement agreement do not call for
dismissal until after the closing of the agreement. The District of Columbia
appealed the dismissal. In accordance with the settlement agreement, record
title to certain shares of the Fund and associated distributions were
transferred from the present shareholders of record to the members of the
Clearinghouse on the closing date, February 14, 1995. The shares will be
redeemed over a period of three years from this date. On May 9, 1995, the Court
of Appeals dismissed the appeal.
STEADMAN INVESTMENT FUND
1730 K Street, N.W.
Washington, D.C. 20006
1-800-424-8570
202-223-1000 Washington D.C. area
TRANSFER AGENT
Steadman Security Corporation
1730 K Street, N.W.
Washington, D.C. 20006
CUSTODIAN
Crestar Bank, N.A.
1445 New York Avenue, N.W.
Washington, D.C. 20005
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P
1800 M Street N.W.
Washington D.C. 20005
For more information about
STEADMAN INVESTMENT FUND.
account information or daily
Net Asset Values, call:
Shareholder Services
1-800-424-8570
202-223-1000 Washington, D.C. area
Fellow Shareholders:
STEADMAN
Investment
Fund
ANNUAL
REPORT
June 30, 1996
A STEADMAN NO-LOAD MUTUAL FUND
STEADMAN SECURITY
[LOGO] CORPORATION
Investment Adviser
Fellow Shareholders:
The forces most dominant in present market behavior have continued to be a
low level of inflation and behavior of interest rates.
The economy generally is moving at a pace that is slowing. Although
employment levels remain high, there are indications that some of this can be
accounted for by a fact of two jobs among wage earners in many households. This
of course casts a question about the dependability of recent employment reports.
It also may support indications of there being a lesser rather than greater
likelihood that there will be an incentive for the Federal Reserve to initiate
any near term move to tighten money and raise rates.
These conditions suggest that the interest rates are going to decline.
Looking to the 30 year Treasury Bond for guidance we are beginning to see a
pattern of declining yield, of course with the Bond rising in price. We expect
this trend of declining interest rates to continue and bear with it very
favorable market consequences for your Fund.
Thank you for your confidence and continued support.
Sincerely,
/s/ Charles W. Steadman
Charles W. Steadman
Chairman of the Board of
Trustees and President
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
STEADMAN INVESTMENT FUND
We have audited the accompanying statement of assets and liabilities of
Steadman Investment Fund, including the portfolio of investments, as of June 30,
1996, and the related statement of operations for the year ended June 30, 1996,
the statements of changes in net assets for the year then ended and the periods
January 1, 1995 through June 30, 1995, and January 1, 1994 through December 31,
1994 and the financial highlights for the year ended June 30, 1996 and the
period January 1, 1995 through June 30, 1995, and each of the four years ended
December 31, 1994. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of June 30, 1996, by correspondence
with the custodian and broker. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Steadman Investment Fund as of June 30, 1996, the results of its operations, the
changes in its net assets, and the financial highlights for each of the
respective periods stated in the first paragraph, in conformity with generally
accepted accounting principles.
Coopers & Lybrand L.L.P.
Washington, D.C.
July 29, 1996
STEADMAN INVESTMENT FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996
Value
Shares (Note 1)
---------- ------------
COMMON STOCK -- 100%
Communications Equipment -- 18.3%
Electronic Data Systems. . . . . . . . . . . . . . . 2,000 $ 107,500
Motorola, Inc. . . . . . . . . . . . . . . . . . . . 2,000 125,750
Precision Systems (a). . . . . . . . . . . . . . . . 5,000 58,750
----------
Total Communications Equipment 292,000
----------
Computer Equipment -- 6.2%
Hewlett-Packard. . . . . . . . . . . . . . . . . . . 1,000 99,625
----------
Total Computer Equipment 99,625
----------
Computer Peripherals -- 10.6%
Cisco Systems (a). . . . . . . . . . . . . . . . . . 3,000 169,875
----------
Total Computer Peripherals 169,875
----------
Computer Storage Equipment -- 13.3%
Iomega Corp. (a) . . . . . . . . . . . . . . . . . . 5,000 145,000
Seagate Technology (a) . . . . . . . . . . . . . . . 1,500 67,500
----------
Total Computer Storage Equipment 212,500
----------
Computer Systems Design -- 7.4%
Sun Microsystems (a) . . . . . . . . . . . . . . . . 2,000 117,750
----------
Total Computer Systems Design 117,750
----------
Medical Instruments -- 5.6%
Boston Scientific (a). . . . . . . . . . . . . . . . 2,000 90,000
----------
Total Medical Instruments 90,000
----------
STEADMAN INVESTMENT FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996
Value
Shares (Note 1)
---------- ------------
Motor Vehicles -- 9.4%
General Motors Class "H" . . . . . . . . . . . . . . 2,500 150,313
----------
Total Motor Vehicles 150,313
----------
Oil & Gas Drilling -- 8.7%
Global Marine (a). . . . . . . . . . . . . . . . . . 10,000 138,750
----------
Total Oil & Gas Drilling 138,750
----------
Pharmaceutical -- 8.1%
Regeneron Pharmaceutical (a) . . . . . . . . . . . . 7,500 130,312
----------
Total Pharmaceutical 130,312
----------
Radio and TV Equipment -- 4.3%
Geotek Communications, Inc. (a). . . . . . . . . . . 5,000 68,438
----------
Total Radio and TV Equipment 68,438
----------
Semiconductor -- 3.4%
Intel Corp. Warrants (a) . . . . . . . . . . . . . . 1,500 54,375
----------
Total Semiconductor 54,375
----------
Telephone Communications --4.7%
Lucent Technology. . . . . . . . . . . . . . . . . . 2,000 75,750
----------
Total Telephone Communications 75,750
----------
Total Portfolio of Investments (Cost $1,655,198) $ 1,599,688
----------
----------
(a) Non-Income producing security
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
STEADMAN INVESTMENT FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1996
Assets:
Investments at value (Cost $1,655,198) (Note 1). . . . . . . . . . . $ 1,599,688
Cash and cash equivalents (Note 1) . . . . . . . . . . . . . . . . . 261,004
Interest receivable . . . . . . . . . . . . . . . . . . . . . . . . 567
Dividends receivable . . . . . . . . . . . . . . . . . . . . . . . . 630
-----------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,861,889
-----------
Liabilities:
Accounts payable and accrued expenses. . . . . . . . . . . . . . . . 14,858
Investment advisory and service fees payable (Note 4). . . . . . . . 5,571
Other payable to affiliate (Note 4). . . . . . . . . . . . . . . . . 7,593
Payable for securities purchased . . . . . . . . . . . . . . . . . . 70,400
-----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . 98,422
-----------
Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,763,467
-----------
-----------
Net assets consist of:
Accumulated net investment loss. . . . . . . . . . . . . . . . . . . $(1,675,340)
Unrealized depreciation of investments . . . . . . . . . . . . . . . (55,510)
Accumulated net realized losses. . . . . . . . . . . . . . . . . . . (389,330)
Capital paid in less distributions since inception . . . . . . . . . 3,883,647
-----------
$ 1,763,467
-----------
-----------
Net asset value, offering price and redemption price per share
($1,763,467 DIVIDED BY 2,038,728 shares of no par value trust shares). . . $ .86
-----------
-----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
STEADMAN INVESTMENT FUND
STATEMENT OF OPERATIONS
for the year ended June 30, 1996
Investment Income:
Dividends . . . . . . . . . . . . . . . . . . . . . . . $ 1,530
Interest. . . . . . . . . . . . . . . . . . . . . . . . 112,558
---------
Total income . . . . . . . . . . . . . . . . . . . . $ 114,088
Expenses:
Salaries and employee benefits (Note 4) . . . . . . . . 84,139
Shareholder servicing fee (Note 4). . . . . . . . . . . 50,666
Professional fees . . . . . . . . . . . . . . . . . . . 30,275
Investment advisory fee (Note 4). . . . . . . . . . . . 21,259
Miscellaneous . . . . . . . . . . . . . . . . . . . . . 8,671
Rent. . . . . . . . . . . . . . . . . . . . . . . . . . 13,163
Computer services . . . . . . . . . . . . . . . . . . . 7,943
Reports to shareholders . . . . . . . . . . . . . . . . 5,149
Trustees' fees and expenses (Note 4). . . . . . . . . . 3,528
Custodian fees. . . . . . . . . . . . . . . . . . . . . 400
---------
Total expenses. . . . . . . . . . . . . . . . . . . . 225,193
-----------
Net investment loss . . . . . . . . . . . . . . . . . (111,105)
-----------
Realized and Unrealized Gain (Loss) on Investments (Notes 1 and 3):
Net realized gain from investment transactions. . . . . 47,825
Change in unrealized appreciation/(depreciation) of investments (271,135)
-----------
Net loss on investments . . . . . . . . . . . . . . . (223,310)
-----------
Net decrease in net assets resulting from operations. $ (334,415)
-----------
-----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
STEADMAN INVESTMENT FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the year For the period For the
ended June 30, January 1, 1995 year ended
1996 through June 30, 1995* December 31, 1994
---------------- ------------------- -----------------
Increase (decrease) in net assets from operations:
Net investment loss. . . . . . . . . . . . . . . . . . . . . . $ (111,105) $ (46,958) $ (46,458)
Net realized gain (loss) from investment transactions. . . . . 47,825 (242,568) (194,587)
Change in unrealized depreciation/appreciation . . . . . . . . (271,135) 491,165 (779,305)
----------- ----------- -----------
Net increase (decrease) in net assets resulting
from operations . . . . . . . . . . . . . . . . . . . . . . . (334,415) 202,139 (1,160,720)
Decrease in net assets from trust share transactions (Note 2). . (200,097) (63,007) (230,035)
----------- ----------- -----------
Increase (decrease) in net assets. . . . . . . . . . . . . . . . (534,512) 139,132 (1,390,755)
Net assets at beginning of period. . . . . . . . . . . . . . . . 2,297,979 2,158,847 3,549,602
----------- ----------- -----------
Net assets at end of period (including accumulated net
investment loss of $1,679,999, $1,568,894
and $204,464 respectively) . . . . . . . . . . . . . . . . . . . $1,763,467 $2,297,979 $2,158,847
----------- ----------- -----------
----------- ----------- -----------
* The Fund's fiscal year-end was changed to June 30.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
STEADMAN INVESTMENT FUND
FINANCIAL HIGHLIGHTS
For the year For the period
ended January 1, 1995 For the years ended December 31,
June 30, through June 30,
------------ ---------------- -------------------------------------
1996 1995* 1994 1993 1992 1991
------------ ---------------- -------------------------------------
Per Share Operating Performance:
Net asset value, beginning of period . . . . . $1.02 $.93 $1.42 $1.38 $1.49 $1.12
------------ ---------------- -------------------------------------
Net investment loss. . . . . . . . . . . . . . (.13) (.02) (.08) (.06) (.09) (.06)
Net realized and unrealized
gain (loss) on investments. . . . . . . . . (.03) 11 .(.41) .10 .(.02) .43
------------ ---------------- -------------------------------------
Total from investment operations . . . (.16) .09 (.49) .04 (.11) .37
------------ ---------------- -------------------------------------
Net asset value, end of period . . . . . . . . $.86 $1.02 $ .93 $1.42 $1.38 $1.49
------------ ---------------- -------------------------------------
------------ ---------------- -------------------------------------
Ratios/Supplemental Data:
Total return . . . . . . . . . . . . . . . . . (15.53)% 19.36%** (34.51)% 2.89% (7.05)% 32.95%
Ratio of expenses to average net
assets. . . . . . . . . . . . . . . . . . . 10.60% 10.54%** 8.90% 6.48% 7.78% 7.88%
Ratio of net investment loss to average
net assets. . . . . . . . . . . . . . . . . (5.23)% (4.24)%** (6.65)% (4.52)% (6.09)% (5.08)%
Portfolio turnover rate. . . . . . . . . . . . 382% 226%** 282% 179% 263% 245%
Net assets, end of period (in thousands) . . . $1,763 $2,298 $2,159 $3,550 $3,781 $4,277
*The Fund's fiscal year-end was changed to June 30.
**Annualized
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
STEADMAN INVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Steadman Investment Fund (the Fund) is registered under the Investment Company
Act of 1940, as amended, as a non-diversified, open-end investment company.
During 1995, the Fund changed its fiscal year end from December 31 to June 30.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of its financial statements.
CASH AND CASH EQUIVALENTS
Management defines cash equivalents as investments that mature in three
months or less. All cash and cash equivalents are invested in a single money
market fund maintained by the investment custodian.
SECURITY VALUATION
Investments in securities traded on a national securities exchange are
valued at the last reported sales price on the last business day of the
period. Investments for which no sale was reported on that date are valued at
the mean between the latest bid and asked prices.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are recorded on the trade date. Realized gains and
losses from security transactions are reported on an identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income and
expenses are recorded on the accrual basis.
INCOME TAXES
The Fund is subject to income taxes in years when it does not qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code.
The Fund accounts for income taxes using the liability method, whereby
deferred tax assets and liabilities arise from the tax effect of temporary
differences between the financial statement and tax bases of assets and
liabilities, measured using presently enacted tax rates. If it is more likely
than not that some portion or all of a deferred tax asset will not be
realized, a valuation allowance is recognized.
STEADMAN INVESTMENT FUND
2. TRUST SHARES
The Trust Indenture does not specify a limit to the number of shares which
may be issued. Transactions in trust shares were as follows:
For the year For the period January 1 For the year
ended June 30, 1996 1995 through June 30, 1995 ended December 31, 1994
----------------------- -------------------------- -----------------------
Shares Amount Shares Amount Shares Amount
-------- -------- -------- -------- -------- --------
Shares sold. . . . . . . . . -- 0 -- $ -- 0 -- -- 0 -- $ -- 0 -- -- 0 -- $ -- 0--
Shares redeemed. . . . . . . (205,360) (200,097) (65,380) (63,007) (183,957) (230,035)
------- ---------- -------- ---------- --------- ---------
Net decrease. . . . . . . (205,360) $ (200,097) (65,380) $ (63,007) (183,957) $(230,035)
. . . . . . . . . . . . ========== ========== =========
Shares outstanding:
Beginning of period. . . 2,244,088 2,309,468 2,493,425
--------- --------- ---------
End of Period. . . . . . 2,038,728 2,244,088 2,309,468
--------- --------- ---------
--------- --------- ---------
3. PURCHASES AND SALES OF SECURITIES
During the year ended June 30, 1996, purchases and sales proceeds of
investment securities aggregated $7,862,972 and $8,232,376, respectively.
The net unrealized depreciation of investments aggregated $55,510 of which
$75,670 related to gross unrealized appreciation where there is an excess of
value over tax cost and $131,180 related to gross unrealized depreciation of
investments where there is an excess of tax cost over value.
4. INVESTMENT ADVISORY FEE AND TRANSACTIONS WITH AFFILIATES
Steadman Security Corporation (SSC), the affilate, has provided investment
advisory services under an agreement which first became effective in 1972. On
February 28, 1984, at the Annual Meeting of the shareholders, a new Investment
Advisory Agreement was approved. Under the new advisory agreement SSC will
continue to provide the same services it provides under the same terms and
conditions of the previous agreement. The agreement will continue in effect
subject to the annual approval by the Board of Trustees or by a majority of the
outstanding voting securities of the Fund. The fee for investment advisory
services is based on 1% of the first $35,000,000 of the average daily net assets
of the Fund, 7/8 of 1% on the next $35,000,000 and 3/4 of 1% on all sums in
excess thereof. In addition to the investment advisory fee, SSC received fees
from the Fund for the performance of delegated services (dividend disbursing
agent and transfer agent) as defined in the Trust Indenture, as amended. The
fee for such services was computed on the basis of the number of shareholder
accounts calculated as of the last business day of each month at $1.35 per
account. SSC received reimbursements from the Fund for the salaries and
benefits of its employees who perform functions other than investment advisory
and shareholder service functions for the Fund.
Certain officers and trustees of the Fund are "affiliated persons" of the
Investment Adviser, as defined by the Investment Company Act of 1940.
5. FEDERAL INCOME TAXES
In the fiscal year June 30, 1996, the Fund did not meet the asset
diversification requirements applicable to regulated investment companies. Thus,
the Fund did not qualify as a regulated investment company under Subchapter M of
the Internal Revenue Code. However, the Fund had a net investment loss in the
fiscal period ended June 30, 1996, therefore no income tax provision is
required. A full valuation allowance has been provided for the deferred tax
assets, totalling approximately $784,000 at June 30, 1996, which arise
principally from net operating loss carryforwards and capital loss carryforwards
available for income tax purposes.
The Fund has net operating loss carryforwards approximating $1,675,000 which
are available to offset future net operating income in non-qualifying years, if
any, which expire as follows: (2004) $299,000; (2005) $304,000; (2006)
$222,000; (2007) $278,000; (2008) $217,000; (2009) $204,000; (2010) $46,000 and
(2011) 112,000. Capital loss carryforwards aggregating approximately $389,000
are available to offset future capital gains, if any, expiring as follows:
(1999) $147,000 and (2000) $243,000.
6. UNCLAIMED PROPERTY
In December 1989, the Fund and other Steadman Funds were contacted by the
Unclaimed Property Clearinghouse (the Clearinghouse), an association of some 45
member states organized to facilitate the collection for the states of unclaimed
property that is considered abandoned under the laws of the member states. The
Clearinghouse requested certain documents and information in order to determine
whether, and if so, to what extent its member states may assert claims for
abandoned accounts of the Fund's shareholders. On the basis of a review of the
documents and information provided in response to this request, the Special
Counsel for the Clearinghouse has informally asserted that the member states are
entitled to certain property of the Fund's shareholders. In addition Steadman
Security Corporation holds certain unclaimed dividends of the Fund's
shareholders. In May 1991, the District of Columbia filed suit in the Superior
Court of the District of Columbia against the Fund, other Steadman Funds,
Steadman Security Corporation and its principal officer under the District of
Columbia Disposition of Unclaimed Property Act. Under this action the District
of Columbia sought possession and custody of the alleged abandoned property as
well as prejudgment interest, an unspecified amount of civil penalties, and
reimbursement for reasonable attorney's fees and costs. On March 25, 1993,
counsel for the District of Columbia, the Clearinghouse and the Fund executed a
settlement agreement, which involves no findings of any violations of law by
the Fund and other defendants. The Superior Court dismissed the suit as of
November 30, 1993, although the terms of the settlement agreement do not call
for dismissal until after the closing agreement. The District of Columbia
appealed the dismissal. In accordance with the settlement agreement, record
title to certain shares of the Fund and associated distributions were
transferred from the present shareholders of record to the members of the
Clearinghouse on the closing date, February 14, 1995. The shares will be
redeemed over a period of three years from this date. On May 9, 1995, the Court
of Appeals dismissed the appeal.
STEADMAN TECHNOLOGY
AND GROWTH FUND
1730 K Street, N.W.
Washington, D.C. 20006
1-800-424-8570
202-223-1000 Washington D.C. area
TRANSFER AGENT
Steadman Security Corporation
1730 K Street, N.W.
Washington, D.C. 20006
CUSTODIAN
Crestar Bank, N.A.
1445 New York Avenue, N.W.
Washington, D.C. 20005
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
1800 M Street, N.W.
Washington, D.C. 20036
For more information about
STEADMAN TECHNOLOGY AND GROWTH FUND,
account information or daily
Net Asset Values, call:
Shareholder Services
1-800-424-8570
202-223-1000 Washington, D.C. area
STEADMAN
TECHNOLOGY
AND GROWTH
FUND
ANNUAL
REPORT
June 30, 1996
A Steadman NO-LOAD Mutual Fund
STEADMAN SECURITY
CORPORATION
[LOGO]
Investment Adviser
Fellow Shareholders:
The forces most dominant in present market behavior have continued to be a
low level of inflation and behavior of interest rates.
The economy generally is moving at a pace that is slowing. Although
employment levels remain high, there are indications that some of this can be
accounted for by a fact of two jobs among wage earners in many households. This
of course casts a question about the dependability of recent employment reports.
It also may support indications of there being a lesser rather than greater
likelihood that there will be an incentive for the Federal Reserve to initiate
any near term move to tighten money and raise rates.
These conditions suggest that the interest rates are going to decline.
Looking to the 30 year Treasury Bond for guidance we are beginning to see a
pattern of declining yield, of course with the Bond rising in price. We expect
this trend of declining interest rates to continue and bear with it very
favorable market consequences for your Fund.
Thank you for your confidence and continued support.
Sincerely,
/s/ Charles W. Steadman
Charles W. Steadman
Chairman of the Board of
Trustees and President
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
STEADMAN TECHNOLOGY AND GROWTH FUND
We have audited the accompanying statement of assets and liabilities of
Steadman Technology and Growth Fund, including the portfolio of investments, as
of June 30, 1996, and the related statement of operations for the year then
ended, the statements of changes in net assets for the year then ended and the
periods January 1, 1995 through June 30, 1995, and January 1, 1994 through
December 31, 1994 and the financial highlights for the year ended June 30, 1996,
and the period January 1, 1995 through June 30, 1995, and each of the four years
ended December 31, 1994. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of June 30, 1996, by correspondence with the
custodian and broker. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Steadman Technology and Growth Fund as of June 30, 1996, the results of its
operations, the changes in its net assets, and the financial highlights for each
of the respective periods stated in the first paragraph, in conformity with
generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Washington, D.C.
July 29, 1996
STEADMAN TECHNOLOGY AND GROWTH FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996
Value
Shares (Note 1)
------ --------
COMMON STOCKS -- 100%
Communications Equipment -- 6.9%
Precision Systems (a) . . . . . . . . . . . . . . 3,000 $ 35,250
--------
Total Communications Equipment 35,250
--------
Computer Storage Equipment -- 26.4%
Seagate Technology (a). . . . . . . . . . . . . . 3,000 135,000
--------
Total Computer Storage Equipment 135,000
--------
Pharmaceutical -- 43.1%
Elan Corp. Warrants (a) . . . . . . . . . . . . . 4,500 107,437
Regeneron Pharmaceuticals (a) . . . . . . . . . . 6,500 112,938
--------
Total Pharmaceutical 220,375
--------
Radio & TV Equipment -- 9.4%
Geotek Communications (a) . . . . . . . . . . . . 3,500 47,906
--------
Total Radio & TV Equipment 47,906
--------
Semiconductor -- 14.2%
Intel Corp. Warrants (a). . . . . . . . . . . . . 2,000 72,500
--------
Total Semiconductor 72,500
--------
Total Portfolio of Investments (Cost $462,417). . $511,031
--------
--------
(a) Non-income producing security
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
STEADMAN TECHNOLOGY AND GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1996
ASSETS:
Investments at value (Cost $462,417) (Note 1). . . . . . . . . . . $ 511,031
Cash and cash equivalents (Note 1). . . . . . . . . . . . . . . . 53,877
Interest receivable. . . . . . . . . . . . . . . . . . . . . . . . 131
-----------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . 565,039
-----------
LIABILITIES:
Accounts payable and accrued expenses. . . . . . . . . . . . . . . 13,050
Investment advisory and service fees payable (Note 4). . . . . . . 6,353
Other payable to affiliate (Note 4). . . . . . . . . . . . . . . . 3,229
-----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 22,632
-----------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 542,407
-----------
-----------
Net assets consist of:
Accumulated net investment loss. . . . . . . . . . . . . . . . . . $(2,670,098)
Unrealized appreciation of investments . . . . . . . . . . . . . . 48,614
Accumulated net realized losses . . . . . . . . . . . . . . . . . (336,113)
Capital paid in less distributions since inception.. . . . . . . . 3,500,004
-----------
$ 542,407
-----------
-----------
NET ASSET VALUE, offering price and redemption price per share
($542,407 DIVIDED BY 529,419 shares of no par value trust
shares). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.02
-----------
-----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
STEADMAN TECHNOLOGY AND GROWTH FUND
STATEMENT OF OPERATIONS
for the year ended June 30, 1996
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 855
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,979
------
Total income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,834
EXPENSES:
Shareholder servicing fee (Note 4). . . . . . . . . . . . . . . . . . . 72,446
Salaries and employee benefits (Note 4) . . . . . . . . . . . . . . . . 37,679
Professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,222
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,156
Reports to shareholders . . . . . . . . . . . . . . . . . . . . . . . . 7,472
Computer services . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,225
Investment advisory fee (Note 4). . . . . . . . . . . . . . . . . . . . 6,870
Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,260
Trustees' fees and expenses (Note 4). . . . . . . . . . . . . . . . . . 3,528
Custodian fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,838
------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 175,696
----------
Net investment loss . . . . . . . . . . . . . . . . . . . . . . . . . . (172,862)
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1 AND 3):
Net realized loss from investment transactions. . . . . . . . . . . . . (129,743)
Change in unrealized appreciation/(depreciation) of investments . . . . 84,018
----------
Net loss on investments . . . . . . . . . . . . . . . . . . . . . (45,725)
----------
Net decrease in net assets resulting from operations. . . . . . . $(218,587)
----------
----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
STEADMAN TECHNOLOGY AND GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the year For the period For the year
ended June 30, January 1, 1995 ended December
1996 through June 30,1995* 31, 1994
-------------- --------------------- --------------
Decrease in net assets from operations:
Net investment loss. . . . . . . . . . . . . . . . . . . . . $(172,862) $(85,892) $ (174,615)
Net realized gain (loss) from investment transactions. . . . (129,743) (55,337) 15,713
Change in unrealized appreciation/depreciation . . . . . . . 84,018 59,947 (369,931)
---------- --------- -----------
Net decrease in net assets resulting
from operations. . . . . . . . . . . . . . . . . . (218,587) (81,282) (528,833)
Decrease in net assets from trust share transactions (Note 2). . . (37,546) (14,277) (44,346)
---------- --------- -----------
Decrease in net assets . . . . . . . . . . . . . . . . (256,133) (95,559) (573,179)
Net assets at beginning of period. . . . . . . . . . . . . . . . . 798,540 894,099 1,467,278
---------- --------- -----------
Net assets at end of period, including accumulated net
investment loss of $2,668,357, $2,495,495
and $2,284,399, respectively . . . . . . . . . . . . . . . . $542,407 $798,540 $ 894,099
---------- --------- -----------
---------- --------- -----------
* The Fund's fiscal year-end was changed to June 30.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
STEADMAN TECHNOLOGY AND GROWTH FUND
FINANCIAL HIGHLIGHTS
For the For the period
year ended January 1, 1995
June 30, through June 30 For the years ended December 31,
---------- ---------------------------------------------------------
1996 1995 1994 1993 1992 1991
---------- ---------------------------------------------------------
Per Share Operating Performance:
Net asset value, beginning of period. . . . $1.43 $1.57 $2.48 $2.69 $2.84 $2.21
---------- ---------------------------------------------------------
Net investment loss . . . . . . . . . . . . (.58) (.22) (.45) (.40) (.33) (.30)
Net realized and unrealized
gain (loss) on investments. . . . . . .. .17 08 (.46) .19 .18 .93
---------- ---------------------------------------------------------
Total from investment operations. . . . (.41) (.14) (.91) (.21) (.15) .63
---------- ---------------------------------------------------------
Net asset value, end of period. . . . . . . $1.02 $1.43 $1.57 $2.48 $2.69 $2.84
---------- ---------------------------------------------------------
---------- ---------------------------------------------------------
Ratios/Supplemental Data:
Total return. . . . . . . . . . . . . . . . (28.29)% (17.84)%** (36.69)% (7.81)% (5.28)% 28.51%
Ratio of expenses to average net
assets. . . . . . . . . . . . . . . . . 25.19% 22.28%** 16.34% 11.94% 13.33% 14.10%
Ratio of net investment loss
to average net assets . . . . . . . . . (24.78)% (20.90)%** (14.79)% (11.38)% (12.45)% (11.70)%
Portfolio turnover rate . . . . . . . . . . 333% 615%** 274% 128% 157% 318%
Net assets, end of period (in thousands). . $542 $799 $894 $1,467 $1,634 $1,786
* The Fund's fiscal year-end was changed to June 30.
** Annualized
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
STEADMAN TECHNOLOGY AND GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Steadman Technology and Growth Fund (the Fund) is registered under the
Investment Company Act of 1940, as amended, as a nondiversified, open-end
investment company. During 1995, the Fund changed its fiscal year end from
December 31 to June 30.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies consistently followed
by the Fund in the preparation of its financial statements.
CASH AND CASH EQUIVALENTS
Management defines cash equivalents as investments that mature in
three months or less. All cash and cash equivalents are invested in a
single money market fund maintained by the investment custodian.
SECURITY VALUATION
Investments in securities traded on a national securities exchange are
valued at the last reported sales price on the last business day of the
period. Investments for which no sale was reported on that date are valued
at the mean between the latest bid and asked prices.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are recorded on the trade date. Realized gains
and losses from security transactions are reported on an identified cost
basis. Dividend income is recorded on the ex-dividend date. Interest
income and expenses are recorded on the accrual basis.
INCOME TAXES
The Fund is subject to income taxes in years when it does not qualify
as a regulated investment company under Subchapter M of the Internal
Revenue Code. The Fund accounts for income taxes using the liability
method, whereby deferred tax assets and liabilities arise from the tax
effect of temporary differences between the financial statement and tax
bases of assets and liabilities, measured using presently enacted tax
rates. If it is more likely than not that some portion or all of a deferred
tax asset will not be realized, a valuation allowance is recognized.
STEADMAN TECHNOLOGY AND GROWTH FUND
2. TRUST SHARES
The Trust Indenture does not specify a limit to the number of shares which
may be issued. Transactions in trust were as follows:
For the year For the period January 1, 1995 For the year ended
ended June 30, 1996 through June 30, 1995 December 31, 1994
----------------------- ------------------- --------------------
Shares Amount Shares Amount Shares Amount
--------- -------- -------- -------- -------- --------
Shares sold. . . . . . . . . -- 0 -- $ -- 0 -- -- 0 -- $ -- 0 -- -- 0 -- $ -- 0 --
Shares redeemed. . . . . . . (29,474) (37,546) (9,910) (14,277) (22,286) (44,346)
---------- ----------- -------- ---------- -------- -----------
Net decrease . . . . . . . . (29,474) $ (37,546) (9,910) $ (14,277) (22,286) $ (44,346)
----------- ---------- -----------
----------- ---------- -----------
Shares outstanding:
Beginning of period. . . . . 558,893 568,803 591,089
------- ------- -------
End of period. . . . . . . . 529,419 558,893 568,803
------- ------- -------
------- ------- -------
3. PURCHASES AND SALES OF SECURITIES
During the year ended June 30, 1996, purchases and proceeds from sales of
investment securities aggregated $2,259,821 and $2,531,447, respectively.
The net unrealized appreciation of investments aggregated $48,614 of which
$62,237 related to gross unrealized appreciation where there is an excess of
value over tax cost and $13,623 related to gross unrealized depreciation where
there is an excess of tax cost over value.
4. INVESTMENT ADVISORY FEE AND TRANSACTIONS WITH AFFILIATES
Steadman Security Corporation (SSC), the affiliate, has provided advisory
services under an agreement which first became effective in 1972. On February
28, 1984, at the Annual Meeting of the shareholders, a new Investment Advisory
Agreement was approved. Under the new advisory agreement, SSC will continue to
provide the same services it provided under the same terms and conditions of the
previous agreement. The agreement will continue in effect subject to the annual
approval by the Board of Trustees or by a majority of the outstanding voting
securities of the Fund. The fee for investment advisory services is based on 1%
of the first $35,000,000 of the average daily net assets of the Fund, 7/8 of 1%
on the next $35,000,000 and 3/4 of 1% on all sums in excess thereof. In
addition to the investment advisory fee, SSC received fees from the Fund for the
performance of delegated services (dividend disbursing agent and transfer agent)
as defined in the Trust Indenture, as amended. The fee for such services was
computed on the basis of the number of shareholder accounts calculated as of the
last business day of each month at $1.35 per account. SSC received
reimbursements from the Fund for the salaries and benefits of its employees who
perform functions other than investment advisory and shareholder service
functions for the Fund.
Certain officers and trustees of the Fund are "affiliated persons" of the
Investment Adviser, as defined by the Investment Company Act of 1940.
5. FEDERAL INCOME TAXES
In the fiscal year ended June 30, 1996, the Fund did not meet the asset
diversification requirements applicable to regulated investment companies. Thus,
the Fund did not qualify as a regulated investment company under Subchapter M of
the Internal Revenue Code. However, the Fund had a net investment loss in the
fiscal period ended June 30, 1996 and realized net capital losses in the fiscal
period ended June 30, 1996, therefore no income tax provision is required. A
full valuation allowance was provided throughout the fiscal period ended June
30, 1996 for deferred tax assets, totalling approximately $1,142,000 at June 30,
1996, which arise principally from net operating loss carryforwards and capital
loss carryforwards available for income tax purposes.
The Fund has net operating loss carryovers approximating $2,670,000 which
are available to offset future net operating income in non-qualifying years, if
any, which expire as follows: (1999) $111,000; (2000) $272,000; (2001) $264,000;
(2002) $252,000; (2003) $236,000; (2004) $240,000; (2005) $254,000; (2006)
$194,000; (2007) $212,000; (2008) $198,000; (2009) $177,000; (2010) $86,000 and
(2011) 174,000. Capital loss carryforwards aggregating approximately $336,000
are available to offset future capital gains, if any, which expire as follows:
(1997) $151,000; (2000) $55,000 and (2001) 130,000.
6. UNCLAIMED PROPERTY
In December 1989, the Fund and other Steadman Funds were contacted by the
Unclaimed Property Clearinghouse (the Clearinghouse), an association of some
45 member states organized to facilitate the collection for the states of
unclaimed property that is considered abandoned under the laws of the member
states. The Clearinghouse requested certain documents and information in order
to determine whether, and if so, to what extent its member states may assert
claims for abandoned accounts of the Fund s shareholders. On the basis of a
review of the documents and information provided in response to this request,
the Special Counsel for the Clearinghouse has informally asserted that the
member states are entitled to certain property of the Fund s shareholders. In
addition, Steadman Security Corporation holds certain unclaimed dividends of
the Fund s shareholders. In May 1991, the District of Columbia filed suit in
the Superior Court of the District of Columbia against the Fund, other
Steadman Funds, Steadman Security Corporation and its principal officer under
the District of Columbia Disposition of Unclaimed Property Act. Under this
action the District of Columbia sought possession and custody of the alleged
abandoned property as well as prejudgment interest, an unspecified amount of
civil penalties, and reimbursement for reasonable attorney s fees and costs.
On March 25, 1993, counsel for the District of Columbia, the Clearinghouse and
the Fund executed a settlement agreement, which involves no findings of any
violations of law by the Fund and other defendants. The Superior Court
dismissed the suit as of November 30, 1993, although the terms of the
settlement agreement do not call for dismissal until after the closing of the
agreement. The District of Columbia appealed the dismissal. In accordance
with the settlement agreement, record title to certain shares of the Fund and
associaled distributions were transferred from the present shareholders of
record to the members of the Clearinghouse on the closing date, February 14,
1995. The shares will be redeemed over a period of three years from this date.
On May 9, 1995, the Court of Appeals dismissed the appeal.
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement has
been signed on behalf of the registrant, in the City of Washington, District of
Columbia, on the 7th day of February, 1997.
Steadman Security Trust
Registrant
/s/ Charles W. Steadman
----------------------------------------
Charles W. Steadman, Trustee,
Chairman of the Board of Trustees and
President, Steadman Security Trust
We the undersigned trustees and officers of Steadman Associated Fund do
hereby severally constitute and appoint Charles W. Steadman our true and lawful
attorney and agent, to do any and all things and acts in our names in the
capacities indicated below and to execute all instruments for us and in our
names in the capacities indicated below which said Charles W. Steadman may deem
necessary or advisable to enable Steadman Associated Fund to comply with the
Securities Act of 1933, as amended, and any rules, regulations, and requirements
of the Securities and Exchange Commission, in connection with the registration
statement on Form N-14 relating to the offering of share interests in Steadman
Associated Fund, including specifically but not limited to, power and authority
to sign for us or any of us in our names in the capacities indicated below the
registration statement and any and all amendments (including post-effective
amendments) thereto; and we hereby ratify and confirm all that Charles W.
Steadman shall do or cause to be done by virtue hereof.
As required by the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities and on the dates
indicated.
(Signature) (Title) (Date)
/s/ Charles W. Steadman Chairman of the Board, February 7, 1997
- ------------------------- President and Trustee
Charles W. Steadman Principal Executive Officer
/s/ Max Katcher
- -------------------------
Max Katcher Executive Vice President,
Treasurer & Secretary February 7, 1997
Principal Financial Officer
Principal Accounting Officer
/s/ Paul A. Bowers
- -------------------------
Paul A. Bowers
Trustee February 7, 1997
/s/ John T. Hayward
- -------------------------
John T. Hayward
Trustee February 7, 1997
/s/ Paul E. Wagner
- -------------------------
Paul E. Wagner
Trustee February 7, 1997