<PAGE>
Fellow Shareholders:
The economy continues to exhibit remarkable growth with low inflation even
after several years of strong performance. With inflation last year at 3.3
percent and the fourth-quarter 1996 GDP running at an annual rate of 4.7
percent, and the prospects good for continuing stability, many analysts see
little cause for worry about the stock market.
The Dow Jones industrial average (DJIA) has surpassed a level of 7,000, or
about 6,000 points higher than the level of 1,000 in 1982, only 15 years ago.
When you consider that the DJIA level was approximately 1,000 in 1966, the
spectacular rise of this index in the past 15 years stands out in contrast with
the flatness of the prior period. This upward movement of stock prices is
strongly correlated to the extensive transformation of the national economy from
technological discovery and accompanying increased output that we have
experienced in recent years, a phenomenon which I disclosed to you a year ago.
Looking ahead, we believe that there will be growth in 1997, but not at the
level achieved in 1996. Some economists are predicting the following in 1997:
retail sales increasing by 5% or less; fewer new vehicles in 1997 than in 1996;
lower housing starts and building permits; slowing of inventory buildup; and
lower exports. Despite these expectations, performance in 1997 should be
reasonably good and the Fund will continue to participate in stocks of high
quality companies.
Sincerely,
/s/ Charles W. Steadman
Charles W. Steadman
Chairman of the Board of
Trustees and President
<PAGE>
STEADMAN TECHNOLOGY and GROWTH FUND
Portfolio of Investments
December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ --------
<S> <C> <C>
COMMON STOCKS -- 97.4%
Information Processing -- 21.6%
Imation Corp.................................... 2,500 $ 70,313
--------
Total Information Processing 70,313
--------
Oil & Gas Drilling -- 14.8%
Parker Drilling Company (a)..................... 5,000 48,125
--------
Total Oil & Gas Drilling 48,125
--------
Real Estate Investment Trust -- 18.4%
Capstead Mortgage............................... 2,500 60,000
--------
Total Real Estate Investment Trust 60,000
--------
Semiconductors -- 28.4%
Intel Corp. Warrants (a)........................ 1,000 92,250
--------
Total Semiconductors 92,250
--------
Telephone Communications -- 14.2%
Lucent Technologies............................. 1,000 46,200
--------
Total Telephone Communications 46,200
--------
Total Common Stock (Cost $298,238) 316,888
========
CALL OPTIONS PURCHASED -- 2.6%
Computer Associates Int'l., 4/18/97 at $55....... 2,500 8,437
--------
Total Call Options Purchased (Cost $8,300) 8,437
--------
Total Portfolio of Investments (Cost $306,538) 325,375
========
</TABLE>
(a) Non-income producing security
The accompanying notes are an integral part of the financial statements.
<PAGE>
STEADMAN TECHNOLOGY and GROWTH FUND
Statement of Assets and Liabilities
December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Assets:
<S> <C>
Investments at value (Cost $306,538) (Note 1)................. $ 325,375
Cash and cash equivalents (Note 1)............................ 102,284
Interest receivable........................................... 149
-----------
Total assets............................................... 427,808
-----------
Liabilities:
Accounts payable and accrued expenses......................... 16,847
Investment advisory and service fees payable (Note 4)......... 6,090
Other payable to affiliate (Note 4)........................... 2,656
-----------
Total liabilities.......................................... 25,593
-----------
Net Assets...................................................... $ 402,215
===========
Net assets consist of:
Accumulated net investment loss............................... $(2,757,905)
Unrealized appreciation of investments........................ 18,837
Accumulated net realized losses............................... (347,374)
Capital paid in less distributions since inception............ 3,488,657
-----------
$ 402,215
Net asset value, offering price and redemption price per share
($402,215 / 516,352 shares of no par value trust shares)... $.78
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
STEADMAN TECHNOLOGY and GROWTH FUND
Statements of Operations
for the six months ended
December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Investment Income:
<S> <C>
Dividends....................................................... $ 2,757
Interest........................................................ 1,586
----------
Total income................................................. $ 4,343
Expenses:
Shareholder servicing fee (Note 4)............................. 33,950
Salaries and employee benefits (Note 4)........................ 16,277
Professional fees.............................................. 27,436
Reports to shareholders........................................ 2,280
Investment advisory fee (Note 4)............................... 1,598
Computer services.............................................. 1,704
Rent........................................................... 3,262
Trustees' fees and expenses (Note 4)........................... 3,309
Miscellaneous.................................................. 1,413
Custodian fees................................................. 921
----------
Total expenses............................................... 92,150
----------
Net investment loss.......................................... (87,807)
----------
Realized and Unrealized Gain (Loss) on Investments (Notes 1 and 3):
Net realized loss from investment transactions................. (11,262)
Change in unrealized appreciation/depreciation of investments.. (29,776)
Net loss on investments...................................... (41,038)
----------
Net decrease in net assets resulting from operations......... $(128,845)
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
STEADMAN TECHNOLOGY and GROWTH FUND
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the 6 months For the year For the period
ended ended June 30 January 1, 1995
December 31,1996/(1)/ 1996 through June 30, 1995*
<S> <C> <C> <C>
Decrease in net assets from operations:
Net investment loss.............................................. $ (87,807) $(172,862) $ (85,892)
Net realized loss from investment transactions................... (11,262) (129,743) (55,337)
Change in unrealized appreciation/depreciation,.................. 29,776 84,018 59,947
--------- --------- ---------
Net decrease in net assets resulting
from operations.............................................. (128,845) (218,587) (81,282)
Decrease in net assets from trust share transactions (Note 2)....... (11,347) (37,546) (14,277)
--------- --------- ---------
Decrease in net assets......................................... (140,192) (256,133) (95,559)
Net assets at beginning of period................................... 542,407 798,540 894,099
--------- --------- ---------
Net assets at end of period, including accumulated net
investment loss of $2,757,905, $2,670,098
and $2,495,495 respectively...................................... $ 402,215 $ 542,407 $ 798,540
========= ========= =========
</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.
<PAGE>
STEADMAN TECHNOLOGY and GROWTH FUND
Financial Highlights
<TABLE>
<CAPTION>
For the 6 months For the year For the period
ended ended January 1,1995
December 31, 1996/(1)/ June 30, through June 30* For the years ended December 31
--------------------------------------------------------------------------------------
1996 1996 1995 1994 1993 1992
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period....... $1.02 $1.43 $1.57 $2.48 $2.69 $2.84
--------------------------------------------------------------------------------------
Net investment loss...................... (.16) (.58) (.22) (.45) (.40) (.33)
Net realized and unrealized
gain (loss) on investments............... (.08) .17 .08 (.46) .19 .18
--------------------------------------------------------------------------------------
Total from investment operations......... (.24) (.41) (.14) (.91) (.21) (.15)
--------------------------------------------------------------------------------------
Net asset value, end of period............. $.78 $1.02 $1.43 $1.57 $2.48 $2.69
--------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Total return............................... (47.06)%** (28.29)% (17.84)%** (36.69)% (7.81)% (5.28)%
Ratio of expenses to average net
assets................................... 39.95%** 25.19% 22.28%** 16.34% 11.94% 13.33%
Ratio of net investment loss
to average net assets.................... (38.07)%** (24.78)% (20.90)%** (14.79)% (11.38)% (12.45)%
Portfolio turnover rate.................... 618%** 333% 615%** 274% 128% 157%
Net assets, end of period (in thousands)... $402 $542 $799 $894 $1,467 $1,634
</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.
<PAGE>
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.
<PAGE>
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 year ended For the period January 1, 1995
December 31,1996 June 30, 1996 through June 30, 1995
---------------- ------------- ---------------------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Shares sold.............. -- 0 -- $ -- 0 -- -- 0 -- $ -- 0 -- -- 0 -- $ -- 0 --
Shares redeemed.......... (13,067) (11,347) (29,474) (37,546) (9,910) (14,277)
------- ------- ------- ------- ------ -------
Net decrease......... (13,067) $(11,347) (29,474) $(37,546) (9,910) $(14,277)
======= ======== ======= ======== ====== ========
Shares outstanding:
Beginning of period.. 529,419 558,893 568,803
------- ------- -------
End of period........ 516,352 529,419 558,893
======= ======= =======
</TABLE>
3. Purchases and sales of securities
During the six months ended December 31, 1996, purchases and proceeds from
sales of investment securities aggregated $1,163,845 and $1,319,220,
respectively.
The net unrealized appreciation of investments aggregated $18,837 of which
$22,675 related to gross unrealized appreciation where there is an excess of
value over tax cost and $3,838 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) 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.
<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
Crestar Bank N.A.
1445 New York Ave.,N.W.
Washington, D.C. 20005
Independent Accountants
Coopers & Lybrand L.L.P.
1900 K Street, N.W.
Washington, D.C. 20006
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
SEMI-ANNUAL
REPORT
December 31,1996
A Steadman NO-LOAD Mutual Fund
[LOGO OF STEADMAN STEADMAN SECURITY
SECURITY CORPORATION CORPORATION
APPEARS HERE]
Investment Advise
