<PAGE>
Fellow Shareholders:
Now is the time to look forward into 1995 and beyond. This we can do with
the confidence based upon the firm foundation that has been building for many
years, not just yesterday, in monetary management determined to control
inflation. It is this successful achievement under Federal Reserve direction
that has given this nation the opportunity for developing our economy and
raising the standard of living that can only be accomplished in an environment
free of inflation fear. Then there can be seen a brightening economic horizon
dominated by a certain confidence that growth can be created and endure. When
inflation is curbed assurance will arise that value will be maintained and not
swept away by unbridled price increases. Productivity gains, a fundamental basis
for prosperity, will find their way into greater general wealth undiminished by
inflation. In these circumstances a much greater assurance essential for savings
and capital formation for business can arise.
There is also becoming apparent an improving comprehension of those
national objectives where political decisions have important effect upon
opportunities for the creation of wealth. There is increasing participation on
the part of American citizens in this process. This has been stimulated by
increasing means of communication that is only now beginning to have an impact
upon this decision process but which will be much greater as technology
progresses, which this can and will provide as a means for even more important
effect for the betterment of national direction both private and public. In this
context the opportunities for rewarding investments can expand. We think these
conditions will become more apparent as the year advances.
Thank you for your continued support.
Sincerely,
/s/ Charles W. Steadman
Charles W. Steadman
Chairman of the Board of
Trustees and President
<PAGE>
STEADMAN AMERICAN INDUSTRY FUND
Portfolio of Investments
January 31, 1995
<TABLE>
<CAPTION>
Value
Shares (Note 1)
-------- ---------
<S> <C> <C>
COMMON STOCKS -- 89.9%
Computer Software -- 16.3%
Broderbund Software (a)................................... 2,500 $ 115,625
---------
Total Computer Software 115,625
---------
Precision Instrument -- 15.8%
LAM Research (a).......................................... 3,000 112,500
---------
Total Precision Instrument 112,500
---------
Telecom Services -- 57.8%
ACC Corp.................................................. 15,000 232,500
Telefonos de Mexico S. A.................................. 5,000 176,875
---------
Total Telecom Services 409,375
---------
Total Common Stocks (Cost $673,247)....................... 637,500
---------
CALL OPTIONS PURCHASED -- 10.1%
Atlantic Richfield, 7/21/95 at $105......................... 5,000 21,250
Chevron, 6/16/95 at $40..................................... 5,000 31,875
Dow Chemical, 6/16/95 at $65................................ 2,500 6,875
International Paper, 7/21/95 at $75......................... 3,000 9,750
Storage Technology 6/16/95 at $30........................... 2,500 1,406
---------
Total Call Options Purchased (Cost $97,750)............ 71,156
---------
Total Portfolio of Investments (Cost $770,997)...... $ 708,656
=========
</TABLE>
(a) Non-income producing security.
The accompanying notes are an integral part of the financial statements.
<PAGE>
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 January 31, 1995, and the related statement of operations for the year
then ended, the statements of changes in net assets for each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended. 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 and
financial highlights 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 January 31, 1995, by correspondence with the custodian
and brokers. 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 January 31, 1995, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended, in conformity
with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Washington, D.C.
February 16, 1995
<PAGE>
STEADMAN AMERICAN INDUSTRY FUND
Statement of Assets and Liabilities
January 31, 1995
<TABLE>
<S> <C>
Assets:
Investments at value (Cost $770,997) (Note 1).......................... $ 708,656
Receivable for securities sold......................................... 91,930
Interest and dividends receivable (Note 1)............................. 1,568
Cash and cash equivalents.............................................. 712,356
----------------
Total assets........................................................ 1,514,510
----------------
Liabilities:
Accounts payable and accrued expenses.................................. 19,185
Investment advisory and service fees payable (Note 4).................. 15,018
Other payable to affiliate (Note 4).................................... 7,847
----------------
Total liabilities................................................... 42,050
----------------
Net Assets................................................................ $ 1,472,460
================
Net assets consist of:
Accumulated net investment loss........................................ $ (3,018,368)
Unrealized depreciation of investments................................. (62,341)
Accumulated net realized losses plus
distributions from realized gains.................................. (14,652,678)
Capital paid in less distributions since inception..................... 19,205,847
----------------
$ 1,472,460
================
Net asset value, offering price and redemption price per share
($1,472,460 / 1,540,271 shares of no par value trust shares)....... $ .96
================
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
STEADMAN AMERICAN INDUSTRY FUND
STATEMENT OF OPERATIONS
for the year ended January 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends........................................................... $ 21,703
Interest............................................................ 18,295
-------------
Total income..................................................... $ 39,998
EXPENSES:
Shareholder servicing fee (Note 4).................................. 172,619
Salaries and employee benefits (Note 4)............................. 73,545
Reports to shareholders............................................. 19,889
Investment advisory fee (Note 4).................................... 19,258
Professional fees................................................... 16,500
Computer services................................................... 10,499
Rent................................................................ 9,928
Miscellaneous....................................................... 9,971
Trustees' fees and expenses (Note 4)................................ 7,928
Custodian fees...................................................... 4,240
-------------
Total expenses................................................... 344,377
-------------
Net investment loss.............................................. (304,379)
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1 AND 3):
Net realized loss from investment transactions...................... (84,960)
Change in unrealized appreciation of investments for the year....... (700,806)
-------------
Net loss on investments.......................................... (785,766)
-------------
Net decrease in net assets resulting from operations............. $ (1,090,145)
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
STEADMAN AMERICAN INDUSTRY FUND
STATEMENTS OF CHANGES IN NET ASSETS
for the years ended January 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Increase (decrease) in net assets from operations:
Net investment loss.................................................... $ (304,379) $ (280,065)
Net realized gain (loss) from investment transactions.................. (84,960) 487,721
Change in unrealized appreciation...................................... (700,806) 24,627
----------- -----------
Net increase (decrease) in net assets resulting
from operations.................................................... (1,090,145) 232,283
Decrease in net assets from trust share transactions (Note 2)............... (64,452) (101,334)
----------- -----------
Increase (decrease) in net assets........................................... (1,154,597) 130,949
Net assets at beginning of year............................................. 2,627,057 2,496,108
----------- -----------
Net assets at end of year, including accumulated net
investment loss of $3,018,368 and $2,713,989
respectively........................................................... $ 1,472,460 $ 2,627,057
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
STEADMAN AMERICAN INDUSTRY FUND
Financial Highlights
<TABLE>
<CAPTION>
For the years ended January 31,
------------------------------------------------------
1995 1994 1993 1992 1991
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of year.............................. $1.65 $1.50 $1.54 $1.59 $1.94
------------------------------------------------------
Net investment loss......................................... (.26) (.24) (.19) (.20) (.19)
Net realized and unrealized
gain (loss) on investments................................ (.43) .39 .15 .15 (.16)
------------------------------------------------------
Total from investment operations............................ (.69) .15 (.04) (.05) (.35)
------------------------------------------------------
Net asset value, end of year.................................... $ .96 $1.65 $1.50 $1.54 $1.59
======================================================
Ratios/Supplemental Data:
Total return.................................................... (41.82)% 10.00% (2.60)% (3.14)% (18.04)%
Net assets, end of year (in thousands).......................... $1,472 $2,627 $2,496 $2,648 $2,844
Ratio of expenses to average net
assets...................................................... 17.69% 12.66% 14.83% 15.13% 13.75%
Ratio of net investment loss to average
net assets.................................................. (15.63)% (11.40)% (13.52)% (13.13)% (10.25)%
Portfolio turnover rate......................................... 289% 134% 221% 460% 211%
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
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. 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. All cash and cash
equivalents are invested in a single money market fund maintained by the
investment custodian.
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
is recorded on the accrual basis.
Federal 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.
Components of net assets
The Fund has not adopted Statement of Position 93-2 "Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies" which is
applicable only to investment companies that qualify as regulated
investment companies under subchapter M of the Internal Revenue Code. The
Fund did not qualify as a regulated investment company in fiscal 1995. If
the Fund qualifies as a regulated investment company in a future year, the
provisions of the Statement will be adopted at that time.
<PAGE>
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:
<TABLE>
<CAPTION>
1995 1994
------------------------- -----------------------
Shares Amount Shares Amount
-------- ----------- -------- ----------
<S> <C> <C> <C> <C>
Shares sold...................... -- 0 -- $ -- 0 -- -- 0 -- $ -- 0 --
Shares redeemed.................. (51,912) (64,452) (67,881) (101,334)
----------- ----------
Net decrease................... (51,912) $ (64,452) (67,881) $ (101,334)
=========== ==========
Shares outstanding:
Beginning of year.............. 1,592,183 1,660,064
--------- ---------
End of year.................... 1,540,271 1,592,183
========= =========
</TABLE>
3. PURCHASES AND SALES OF SECURITIES
During the year ended January 31, 1995, purchases and proceeds from
sales of investment securities aggregated $4,001,085 and $5,268,340,
respectively.
4. INVESTMENT ADVISORY FEE AND TRANSACTIONS WITH AFFILIATES
Steadman Security Corporation (SSC) has provided investment
advisory services under an agreement which was approved by the shareholders on
September 25, 1984. 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. The compensation paid to officers during the year ended
January 31, 1995 approximated $44,000.
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 AMERICAN INDUSTRY FUND
5. Federal income taxes
In the fiscal year ended January 31, 1995, 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 and realized capital losses in fiscal 1995, therefore no
income tax provision is required. A full valuation allowance was provided for
deferred tax assets totalling approximately $1,872,000 at January 31, 1995
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 $3,490,000 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 and (2010) $313,000.
Capital loss carryforwards aggregating approximately $1,435,000 are available
to offset future capital gains, if any, expiring as follows: (1996) $471,000;
(1998) $193,000 and (2000) $771,000.
At January 31, 1995, the cost of securities for federal income tax and
financial reporting purposes was $770,997. The net unrealized depreciation of
investments, aggregated $62,341, of which $32,878 is related to gross unrealized
appreciation and $95,219 is related to gross unrealized depreciation.
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
<PAGE>
STEADMAN AMERICAN INDUSTRY FUND
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. Under 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 settlement date, February 14, 1995. The
shares will be redeemed over a period of three years from the settlement date.
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.
The appeal does not affect the parties' obligations under the settlement
agreement and all parties have expressed their intention to fulfill those
obligations.
<PAGE>
STEADMAN
AMERICAN
INDUSTRY
FUND
ANNUAL
REPORT
January 31, 1995
A Steadman NO-LOAD Mutual Fund
[LOGO APPEARS HERE] STEADMAN SECURITY
CORPORATION
Investment Adviser
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
NationsBank Trust Company, N.A.
1501 Pennsylvania Ave., N.W.
Washington, D.C. 20013
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
