<PAGE>
STEADMAN AMERICAN
INDUSTRY FUND
1730 K Street, N.W
Washington, D.C. 20006
202-424-8570
1-800-223-1000 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
STEADMAN
AMERICAN
INDUSTRY
FUND
SEMI-ANNUAL
REPORT
December 31, 1995
[LOGO]
<PAGE>
================================================================================
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
Chairman of the Board of
Trustees and President
================================================================================
<PAGE>
================================================================================
STEADMAN AMERICAN INDUSTRY FUND
Portfolio of Investments
December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ --------
<S> <C> <C>
COMMON STOCKS - 100%
Bank - 21.3%
Chase Manhattan Warrants(a) ............................................... 9,300 $ 242,963
----------
Total Bank 242,963
----------
Communications Equipment - 9.5%
Precision Systems (a) ..................................................... 8,000 108,000
-------
Total Communications Equipment 108,000
-------
Computer Storage Equipment - 22.1%
Conner Peripherals (a) .................................................... 12,000 252,000
-------
Total Computer Storage Equipment 252,000
-------
Credit Institution - 17.2%
Federal National Mortgage Association ..................................... 400 49,500
Travelers Group Warrants (a) .............................................. 5,300 146,412
-------
Total Credit Institution 195,912
-------
Electronics - 10.3%
Trident Microsystems (a) .................................................. 5,000 117,500
-------
Total Electronics 117,500
-------
Semiconductor - 15.2%
Intel Corp. Warrants (a) .................................................. 6,500 173,875
-------
Total Semiconductor 173,875
-------
Telecom Services - 4.4%
Champion Technology Holding Ltd. .......................................... 100,000 50,500
------
Total Telecom Services 50,500
------
Total Portfolio of Investments (Cost $1,100,809) ............................. $1,140,750
==========
</TABLE>
(a) Non-income producing security
The accompanying notes are an integral part of the financial statements.
================================================================================
<PAGE>
================================================================================
STEADMAN AMERICAN INDUSTRY FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
Assets:
Investments at value (Cost $1,100,809) (Note 1) ................................................. $ 1,140,750
Receivable for securities sold .................................................................. - 0 -
Interest and dividends receivable (Note 1) ...................................................... 1,602
Cash and cash equivalents ....................................................................... 88,689
--------
Total assets ................................................................................. 1,231,041
-----------
Liabilities:
Payable for securities purchased ................................................................ 57,723
Accounts payable and accrued expenses ........................................................... 9,646
Investment advisory and service fees payable (Note 4) ........................................... 14,515
Other payable for Trust shares redeemed ......................................................... 5,436
Payable for Trust shares redeemed ............................................................... 525
------------
Total liabilities .......................................................................... 87,845
------------
Net Assets ........................................................................................... $ 1,143,196
============
Net assets consist of:
Accumulated net investment loss ................................................................. $ (3,782,061)
Unrealized appreciation of investments .......................................................... 39,942
Accumulated net realized losses plus distributions from realized gains .......................... (1,017,315)
------------
Capital paid in less distributions since inception .............................................. 5,902,630
------------
$ 1,143,196
============
Net asset value, offering price and redemption price per share
($1,143,196 - 1,442,904 shares of no par value trust shares) .................................... $ .79
============
</TABLE>
================================================================================
<PAGE>
STEADMAN AMERICAN INDUSTRY FUND
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the 6 months For the period
ended February 1, 1995 Year ended
December 31, through June 30, January 31,
1995/(1)/ 1995* 1995
--------- ----- ----
<S> <C> <C> <C>
Investment Income:
Dividends ....................................................... $ 1,160 $ 5,340 $ 21,703
Interest ....................................................... 2,616 4,671 18,295
----- ------ ------
Total income ................................................. 3,776 10,011 39,998
----- ------ ------
Expenses:
Shareholder servicing fee (Note 4) .............................. 83,010 71,059 172,619
Salaries and employee benefits (Note 4) ......................... 28,400 25,130 73,545
Professional fees ............................................... 17,976 16,000 16,500
Reports to shareholders ......................................... 8,481 7,635 19,889
Investment advisory fee (Note 4) ................................ 6,573 5,796 19,258
Miscellaneous ................................................... 6,467 3,083 9,971
Rent ............................................................ 3,769 3,123 9,928
Computer services ............................................... 2,985 5,413 10,499
Trustees' fees and expenses (Note 4) ............................ 2,240 1,741 7,928
Custodian fees .................................................. 1,500 2,500 4,240
--------- --------- ---------
Total expenses ................................................ (161,401) 141,480 344,377
--------- --------- ---------
Net investment loss ........................................... (157,625) (131,469) (304,379)
--------- --------- ---------
Realized and Unrealized Gain (Loss) on Investments
(Notes 1 and 3):
Net realized gain (loss) from investment transactions ........... 16,644 (69,865) (84,960)
Change in unrealized depreciation/appreciation of investments .. 10,367 91,916 (700,860)
--------- --------- ------------
Net gain (loss) on investments ................................. 27,011 22,051 (785,766)
--------- --------- ------------
Net decrease in net assets resulting from operations ........... $(130,614) $(109,418) $ (1,090,145)
========= ========= ============
</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 AMERICAN INDUSTRY FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the 6 months For the period For the
ended February 1, 1995 Year ended
December 31, through June 30, January 31,
1995/(1)/ 1995* 1995
--------- ----- ----
<S> <C> <C> <C>
Decrease in net assets from operations:
Net investment loss ..................................................... $ (157,625) $ (131,469) $ (304,379)
Net realized gain (loss) from investment transactions ................... 16,644 (69,865) (84,960)
Change in unrealized appreciation/depreciation .......................... 10,367 91,916 (700,806)
Net decrease in net assets resulting ---------- ----------- -----------
from operations ........................................................ (130,614) (109,418) (1,090,145)
Decrease in net assets from trust share transactions (Note 2) .............. (67,077) (22,155) (64,452)
---------- ----------- ----------
Decrease in net assets .................................................. (197,691) (131,573) (1,154,597)
2,627,057
Net assets at beginning of year ............................................ 1,340,887 1,472,460 ---------
--------- ---------
Net assets at end of year, including accumulated net
investment loss of $3,782,061, $3,624,436
and $3,018,368 respectively ............................................. $1,143,196 $1,340,887 $1,472,460
========== ========== ==========
</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 AMERICAN INDUSTRY FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the
Period
For the 6 February 1,
months ended 1995 through
December 31, June 30, For the years ended January 31,
--------- ----------- ----- ---- ---- ---- ----
1995/(1)/ 1995* 1995 1994 1993 1992 1991
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period $.88 $.96 $1.65 $1.50 $1.54 $1.59 $1.94
Net investment loss (.11) (.12) (.26) (.24) (.19) (.20) (.19)
Net realized and unrealized
gain (loss) on investments .02 .04 (.43) .39 .15 .15 (.16)
Total from investment operations (.09) (.08) (.69) .15 (.04) (.05) (.35)
Net asset value, end of period $.79 $.88 $.96 $1.65 $1.50 $1.54 $1.54
Ratios/Supplemental Data (20.45)%** (20.02)%** (41.82)% 10.00% (2.60)% (3.14)% (18.04)%
Total return
Ratio of expenses to average net
assets 25.16%** 24.62%** 17.69% 12.66% 14.83% 15.13% 13.75%
Ratio of net investment loss to average
net assets (24.56)%** (22.86)%** (15.63)% (11.40)% (13.52)% (13.13)% (10.25)%
Portfolio turnover rate 374%** 617%** 289% 134% 221% 460% 211%
Net assets, end of period (in thousands) $1.143 $1.341 $1.472 $2.627 $2.496 $2.648 $2.844
</TABLE>
(1) Unaudited
*The Fund's fiscal year-end was changed to June 30
**Annualized
================================================================================
<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 and
expenses are recorded on the actual 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 January 31 to June 30.
COMPONENTS OF NET ASSETS
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 reclassification.
================================================================================
<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>
For the 6 months For the period February 1, 1995 For the year
ended December 31, 1995 through June 30, 1995 ended January 31, 1995
----------------------- --------------------- ----------------------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Shares sold.................. -0- -0- -0- -0- -0- -0-
Shares redeemed.............. (73,271) (67,077) (24,096) (22,155) (51,912) (64,452)
Net decrease............... (73,271) $ (67,077) (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........... 1,442,904 1,516,175 1,540,271
</TABLE>
3. PURCHASES AND SALES OF SECURITIES
During the six months ended December 31, 1995, purchases and proceeds from
sales of investment securities aggregated $2,342,590 and $2,445,796,
respectively. Unrealized appreciation of investments aggregated $39,942 of
which $141,382 related to gross unrealized appreciation and $101,440 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 service was
commuted 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
reimbursement 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>
================================================================================
This page intentionally blank.
================================================================================
<PAGE>
================================================================================
This page intentionally blank.
================================================================================
<PAGE>
================================================================================
This page intentionally blank.
================================================================================
