<PAGE>
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
NationsBank Trust Company, N.A. [LOGO OF STEADMAN INVESTMENT
1501 Pennsylvania Ave., N.W.
Washington, D.C. 20013 FUND].
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
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Fellow Shareholders:
The national economy is in an extensive transformation. This in large
measure is attributable to opportunities for creative endeavor of exceptional
magnitude provided by technological discovery and invention. These are changes
in the application of productive resources. Revised methods for industrial and
farm production have brought forth increased output with beneficial results
across a broad field of enterprise. The pace of this process quickened many
years ago and with the advent of the computer shifted into gear. The
efficiencies made possible by scientific achievement have also opened the way
for many enterprises to produce more with less, i.e., smaller facilities and
fewer employees. The widely reported downsizing for companies large and small
bears evidence of this. Such events have resulted in plant closings and employee
reductions. The consequent effect is reflected in consumer and potential home
buyer attitudes where an atmosphere of restraint has become apparent. This also
is felt in car sales and other so-called big ticket household items such as
refrigerators, dishwashers, floor coverings, and air conditioning.
The economy is expressing a correlative response to what is termed progress
and that sometimes causes economic dislocation, and also requires constant
adjustment which we endeavor to provide. One such example is seen in the area of
demographics. We have as a result of various scientific and other improvements
a society in which people are living longer. The ratio of older to younger is
also changing. In the United States by the year 2010 those older than 50 will
outnumber younger people 96 million to 74 million. This kind of development will
affect many industries. For as our population ages needs and desires also
change. It is also true that women are entering the work force at a slower rate
than previously. This will be shown in its effect upon the apparel industry as
the need for additional outfits diminishes.
The housing industry continues in a slump even though mortgage rates are
at the lowest level in two years. People generally are less willing to make
financial commitments than they were a year ago. They see their neighbors being
laid off or retired and fear this may happen to them. The Commerce Department
reported this past January 23 that the rise in personal income was the lowest
since August 1995, when it remained unchanged from the previous month.
Fund shareholders can receive guidance as to management's estimate of
market opportunity by a study of the portfolio holdings of the Fund at any given
time. The overview of the economy outlined at the beginning of this message
indicates a less favorable outlook for stocks in the retail, home building and
related sectors. More pleasing results we believe can be realized at this time
in the technological and financial sectors of business where we presently have
invested much of the Fund's resources.
The national economy continues to benefit generally from a low level of
inflation, and there appears little or no reason for any adverse change in this
condition. Productivity in manufacture with output per man-hour being maintained
at high levels will buttress this conclusion. Labor relations are calm with
strikes at their lowest level in 50 years, and this also supports economic
stability.
The economy has been slowing down during the past year with growth below
expectations. This in the absence of inflation risk has provided the Federal
Reserve an opportunity to supply the stimulus it did January 31, 1996. The
Federal Reserve dropped the short-term rates a quarter percentage point. This of
course was a cautious move, but the Fed acknowledged for the first time in its
statement accompanying this rate cut that the economy is not moving ahead as
expected. This may forecast another rate decrease in the near term.
This rate reduction and continued low level of inflation will give a steady
underpinning for the market and offer assurance for investors.
Thank you again for your continued confidence.
Sincerely,
/s/ Charles W. Steadman
Charles W. Steadman
Chairman of the Board of
Trustees and President
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STEADMAN TECHNOLOGY AND GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
---------- -----------
<S> <C> <C>
COMMON STOCKS - 100%
Bank - 11.2%
Chase Manhattan Warrants (a)........................................... 2,500 $ 65,313
-----------
Total Bank 65,313
-----------
Computer Storage Equipment - 28.7%
Conner Peripherals (a)................................................. 8,000 168,000
-----------
Total Computer Storage Equipment 168,000
-----------
Credit Institution - 45.9%
Federal National Mortgage Association.................................. 1,500 185,625
Travelers Group Warrants (a)........................................... 3,000 82,875
-----------
Total Credit Institution 268,500
-----------
Drug - 14.2%
Regeneron Pharmaceuticals (a).......................................... 6,500 82,875
-----------
Total Drug 82,875
-----------
Total Portfolio of Investments (Cost $572,653)......................... $ 584,688
===========
</TABLE>
(a) NON-INCOME PRODUCING SECURITY
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
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STEADMAN TECHNOLOGY AND GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments at value (Cost $572,653) (Note 1)................................................ $ 584,688
Cash and cash equivalents.................................................................... 14,730
Receivable for securities sold............................................................... 285,542
Interest receivable (Note 1)................................................................. 78
-----------
Total assets............................................................................ 885,038
-----------
LIABILITIES:
Payable for securities purchased ............................................................ 270,480
Accounts payable and accrued expenses ....................................................... 4,298
Investment advisory and service fees payable (Note 4) ....................................... 6,583
Other payable to affiliate (Note 4) ......................................................... 3,468
Payable for trust shares redeemed ........................................................... 1,278
-----------
Total liabilities ...................................................................... 286,107
-----------
NET ASSETS ....................................................................................... $ 598,931
===========
Net assets consist of:
Accumulated net investment loss ............................................................. $(2,586,256)
Unrealized appreciation of investments ...................................................... 12,035
Accumulated net realized losses ............................................................. (338,967)
Capital paid in less distributions since inception .......................................... 3,512,119
-----------
$ 598,931
===========
NET ASSET VALUE, offering price and redemption price per share
($598,931/541,496 shares of no par value trust shares) ...................................... $ 1.11
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
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STEADMAN TECHNOLOGY AND GROWTH FUND
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the 6 months For the period
ended January 1, 1995
December 31, 1995(1) through June 30, 1995*
-------------------- ----------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends ...................................................... $ - 0 - $ 255
Interest ....................................................... 1,488 5,403
------------------ -----------------
Total income .............................................. 1,488 5,658
------------------ -----------------
EXPENSES:
Shareholder servicing fee (Note 4) ............................. 36,867 37,490
Salaries and employee benefits (Note 4) ........................ 19,430 20,910
Professional fees .............................................. 19,274 7,428
Reports to shareholders ........................................ 3,891 3,162
Investment advisory fee (Note 4) ............................... 3,795 4,085
Computer services .............................................. 2,858 6,534
Rent ........................................................... 2,195 2,334
Trustees' fees and expenses (Note 4) ........................... 1,740 3,241
Miscellaneous .................................................. 1,208 4,515
Custodian fees ................................................. 952 1,851
------------------ -----------------
Total expenses ............................................ 92,210 91,550
------------------ -----------------
Net investment loss ....................................... (90,762) (85,892)
------------------ -----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1 AND 3):
Net realized loss from investment transactions ................. (132,597) (55,337)
Change in unrealized appreciation/depreciation of investments .. 47,440 59,947
------------------ -----------------
Net gain (loss) on investments ............................ (85,157) 4,610
------------------ -----------------
Net decrease in net assets resulting from operations ...... $ (175,919) $ (81,282)
================== =================
</TABLE>
(1) Unaudited
* The Fund's fiscal year-end was changed to June 30.
The accompanying notes are an integral part of the financial statements.
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STEADMAN TECHNOLOGY AND GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the 6 months For the period For the year
ended January 1, 1995 ended December
December 31, 1995(1) through June 30, 1995* 31, 1994
-------------------- --------------------- ---------------
<S> <C> <C> <C>
Decrease in net assets from operations:
Net investment loss .................................... $ (90,762) $ (85,892) $ (174,615)
Net realized gain (loss) from investment transactions... (132,597) (55,337) 15,713
Change in unrealized appreciation/depreciation,......... 47,440 59,947 (369,931)
------------- ----------- -------------
Net decrease in net assets resulting
from operations..................................... (175,919) (81,282) (528,833)
Decrease in net assets from trust share transactions (Note.2) (23,690) (14,277) (44,346)
------------- ----------- -------------
Decrease in net assets................................ (199,609) (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 $2,586,256, $2,495,495
and $2,284,399 respectively.............................. $ 598,931 $ 798,540 $ 894,099
============ =========== =============
</TABLE>
(1) Unaudited
* The Fund's fiscal year-end was changed to June 30.
The accompanying notes are an integral part of the financial statements.
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STEADMAN TECHNOLOGY AND GROWTH FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the 6 months For the period
ended January 1, 1995
December 31 through June 30 For the years ended December 31
-------------- --------------- ---------------------------------------
1995(1) 1995* 1994 1993 1992 1991
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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....................... (.16) (.22) (.45) (.40) (.33) (.30)
Net realized and unrealized
gain (loss) on investments............... (.16) 08 (.46) 19 .18 .93
---------------------------------------------------------------------------------
Total from investment operations......... (.32) (.14) (.91) (.21) (.15) .63
----------------------------------------------------------------------------------
Net asset value, end period................. $1.11 $1.43 $1.57 $2.48 $2.69 $2.84
==================================================================================
Ratios/Supplemental Data:
Total return................................ (44.75)%** (17.84)%** (36.69)% (7.81)% (5.28)% 28.51%
Ratio of expenses to average net
assets................................... 24.12%** 22.28%** 16.34% 11.94% 13.33% 14.10%
Ratio of net investment loss
to average net assets.................... (23.74)%** (20.90)%** (14.79)% (11.38)% (12.45)% (11.70)%
Portfolio turnover rate....................... 413%** 615%** 274% 128% 157% 318%
Net assets, end of period (in thousands)...... $599 $799 $894 $1,467 $1,634 $1,786
</TABLE>
(1) Unaudited
* The Fund's fiscal year-end was changed to June 30.
** Annualized
The accompanying notes are an integral part of the financial statements.
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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. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles for investment companies.
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. Short-term investments are stated at
cost, which, when combined with accrued interest receivable, approximates market
value. All cash and cash equivalents are invested in a single money market fund
maintained by the investment custodian.
SECURITY TRANSACTION 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.
FISCAL YEAR
During 1995, the Fund changed its fiscal year end from December 31 to
June 30.
COMPONENTS OF NET ASSET
In accordance with Statement of Position 93-2 "Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain, and
Return of Capital Distribution by Investment Companies," the Fund reclassified
to paid-in capital permanent differences between tax and financial reporting of
net investment loss and net realized gains/losses. The results of operations and
net assets are not affected by these reclassifications.
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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 shares were as follows:
<TABLE>
<CAPTION>
For the 6 months ended For the period January 1, 1995 For the year ended
December 31, 1995 through June 30, 1995 December 31, 1994
----------------------- --------------------- ----------------------
Shares Amount Shares Amount Shares Amount
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Shares sold.................. - 0 - $ - 0 - - 0 - $ - 0 - - 0 - $ - 0 -
Shares redeemed.............. (17,397) (23,690) (9,910) (14,277) (22,286) (44,346)
-------- --------- -------- --------- --------- ----------
Net decrease............... $(23,690) (9,910) $(14,277) (22,286) $ (44,346)
========= ========= ==========
Shares outstanding:
Beginning of period........ 558,893 568,803 591,089
--------- -------- -------
End of period.............. 541,496 558,893 568,803
========= ======== ========
</TABLE>
3. PURCHASES AND SALES OF SECURITIES
During the six months ended December 31, 1995, purchases and proceeds from
sales of investment securities aggregated $1,519,053 and $1,680,370,
respectively. The net unrealized appreciation of investments aggregated $12,035
of which $14,728 related to gross unrealized appreciation and $2,693 related to
gross unrealized depreciation.
4. INVESTMENT ADVISORY FEE AND TRANSACTIONS WITH AFFILIATES
Steadman Security Corporation (SSC) 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, ad defined by the Investment Company Act of 1940.
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