<PAGE>
================================================================================
Fellow Shareholders:
The national economy is witnessing a period of exceptional stability marked
by a low level of inflation. In large part this has been brought about and is
persisting by reason of changes fundamental to production and consumer attitude.
We have entered a period dominated by vast and rapidly growing technological
advances most widely understood as being identified with the computer. This
dynamic force has expanded knowledge and consequent productive accomplishment
beyond the scope of anything heretofore possible. Machinery and equipment with
greater efficiency has come on line. Productivity is rising and labor costs are
declining. With skills enhanced in this process there is at hand a revolution in
production of goods and consequent increase of wealth. This in some ways is not
unlike the industrial revolution of the 1800's.
As this technological impact has been developing, world-wide competition
and concern about continued job availability has tempered wage demands.
Technological replacement or relocation of employable talent has effected
consumer attitudes at all levels restrained their use of disposable income.
Consumers have become resistant to price increases. They have also become more
determined in demanding better quality in exchange for their earnings.
At the same time social and retirement programs are coming under more
careful consideration as uncertainty arises about their dependability. And as
another generation comes closer to retirement events are suggesting to many
persons that they must begin to think in terms of providing means for their
retirement. In that event increased investment in suitable stocks and bonds will
be necessary to provide retirement benefits will occur. The demand for such
investments will rise and sustain improved market conditions.
The technological changes recited here suggest better opportunities from
investing in companies most likely to prosper from manufacture of equipment in
the field of technology, for example, in contrast to consumer types of goods.
This kind of basic philosophy has served to motivate investment selections by
your Fund.
Moreover, our analysis of the nation's economy leads to the conclusion that
interest rates are in a downward trend likely to continue over the next several
years. This belief is consistent with our view respecting inflation. These are
fundamental concepts upon which we will continue to rely in the management of
your Fund. We believe the market continues to hold opportunities for creation of
wealth and we will endeavor to find them for increasing your benefits.
Sincerely,
/s/ Charles W. Steadman
Charles W. Steadman
Chairman of the Board of
Trustees and President
================================================================================
<PAGE>
================================================================================
STEADMAN ASSOCIATED FUND
Portfolio of Investments
June 30, 1995
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ----------
<S> <C> <C>
COMMON STOCKS -- 92.2%
Auto & Truck -- 6.1%
Chrysler Corp.................................. 7,000 $ 335,125
----------
Total Auto & Truck 335,125
----------
Computer Software -- 18.2%
Borland Int'l (a).............................. 35,000 450,625
Cheyenne Software (a).......................... 10,000 185,000
Microsoft Corp. (a)............................ 4,000 361,500
----------
Total Computer Software 997,125
----------
Computer & Peripherals -- 26.8%
Altron Inc. (a)................................ 7,500 180,000
Atmel Corp. (a)................................ 7,500 415,313
EMC Corp. (a).................................. 5,000 121,250
Hewlett Packard Co............................. 5,000 372,500
IBM............................................ 4,000 384,000
----------
Total Computer & Peripherals 1,473,063
----------
Diversified -- 1.8%
Thermo Electron Corp. (a)...................... 2,500 100,625
----------
Total Diversified 100,625
----------
Drug -- 7.9%
Merck & Co..................................... 5,000 245,000
Upjohn Co...................................... 5,000 189,375
----------
Total Drug 434,375
----------
Precision Instrument -- 3.5%
Lam Research (a)............................... 3,000 192,000
----------
Total Precision Instrument 192,000
----------
Semiconductor -- 14.1%
Intel Corp..................................... 6,000 379,875
Micron Technology.............................. 6,000 329,250
Motorola Inc................................... 1,000 67,125
----------
Total Semiconductor 776,250
----------
</TABLE>
================================================================================
<PAGE>
================================================================================
STEADMAN ASSOCIATED FUND
Portfolio of Investments
June 30, 1995
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------- ----------
<S> <C> <C>
Telecom Services -- 8.9%
Precision Systems (a).......................... 15,000 106,875
SBC Communications............................. 8,000 381,000
----------
Total Telecom Services 487,875
----------
Toiletries/Cosmetics -- 4.9%
Gillette Co.................................... 6,000 267,750
----------
Total Toiletries/Cosmetics 267,750
----------
Total Common Stocks (Cost $4,273,965).......... 5,064,188
----------
PREFERRED STOCK -- 4.3%
NOKIA Preferred....................................... 4,000 238,500
----------
Total Preferred Stock (Cost $148,400).......... 238,500
----------
CALL OPTIONS PURCHASED -- 3.5%
Compaq Computer Corp., 8/18/95 at $45................. 5,000 13,750
Intel Corp., 8/18/95 at $70........................... 5,000 6,875
Louisiana Pacific Corp., 11/17/95 at $22.50........... 10,000 42,500
Mercantile Stores Inc., 9/15/95 at $45................ 12,500 40,625
Micron Technologies, 8/18/95 at $60................... 5,000 13,125
Microsoft Corp., 8/18/95 at $95....................... 5,000 11,875
Motorola Inc., 7/21/95 at $55......................... 5,000 61,250
----------
Total Call Options Purchased (Cost $199,550)... 190,000
----------
Total Portfolio of Investments
(Cost $4,621,915).......................... $5,492,688
==========
</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 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,
1995, and the related statements of operations for the period October 1, 1994
through June 30, 1995 and for the year ended September 30, 1994, the statements
of changes in net assets for the period October 1, 1994 through June 30, 1995
and the years ended September 30, 1994 and 1993, and the financial highlights
for the period October 1,1994 through June 30, 1995, and each of the five 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, 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 Associated Fund as of June 30, 1995, 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 18, 1995
================================================================================
<PAGE>
================================================================================
STEADMAN ASSOCIATED FUND
Statement of Assets and Liabilities
June 30, 1995
<TABLE>
<S> <C>
Assets:
Investments at value (Cost $4,621,915) (Note 1)...................... $ 5,492,688
Cash and cash equivalents............................................ 126,095
Receivable for securities sold....................................... 249,355
Interest receivable (Note 1)......................................... 8,214
-----------
Total assets.................................................... 5,876,352
-----------
Liabilities:
Payable for investments purchased.................................... 97,525
Accounts payable and accrued expenses................................ 16,506
Investment advisory and service fees payable (Note 4)................ 8,324
Other payable to affiliate (Note 4).................................. 18,635
Payable for Trust shares redeemed.................................... 241
-----------
Total liabilities............................................... 141,231
-----------
Net Assets................................................................... $ 5,735,121
Net assets consist of:
Undistributed net investment loss.................................... $(4,247,524)
Unrealized appreciation of Investments............................... 870,773
Accumulated net realized losses from security transactions........... (1,644,167)
Paid-in capital...................................................... 10,756,039
-----------
$ 5,735,121
===========
Net asset value, offering price and redemption price per share
($5,735,121 / 7,875,815 shares of no par value trust shares)......... $ .73
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
<PAGE>
================================================================================
STEADMAN ASSOCIATED FUND
Statements of Operations
<TABLE>
<CAPTION>
For the period For the
October 1, 1994 year ended
through June 30, 1995* September 30, 1994
---------------------- ------------------
<S> <C> <C>
Investment Income:
Dividends................................................... $ 72,551 $ 86,201
Interest.................................................... 28,206 37,811
--------- -----------
Total income........................................... 100,757 124,012
--------- -----------
Expenses:
Salaries and employee benefits (Note 4)..................... 148,188 200,715
Investment advisory fee (Note 4)............................ 41,902 74,029
Professional fees........................................... 38,543 142,109
Shareholder servicing fee (Note 4).......................... 33,620 47,679
Rent........................................................ 24,587 32,093
Computer services........................................... 14,381 10,523
Miscellaneous............................................... 10,550 4,849
Blue Sky Registration Fees.................................. 9,050 25,985
Custodian fees.............................................. 8,212 9,150
Reports to shareholders..................................... 7,717 22,287
Trustees' fees and expenses (Note 4)........................ 4,386 5,351
--------- -----------
Total expenses......................................... 341,136 574,770
--------- -----------
Net investment loss.................................... (240,379) (450,758)
--------- -----------
Realized and Unrealized Gain/(Loss) on Investments (Notes 1 and 3):
Net realized loss from investment transactions.............. (451,689) (1,192,478)
Change in unrealized appreciation of investments............ 689,335 232,086
--------- -----------
Net gain (loss) on investments.............................. 237,646 (960,392)
--------- -----------
Net decrease in net assets resulting from operations........ $ (2,733) $(1,411,150)
========= ===========
</TABLE>
*The Fund's fiscal year-end was changed to June 30.
The accompanying notes are an integral part of the financial statements.
================================================================================
<PAGE>
================================================================================
STEADMAN ASSOCIATED FUND
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the period For the For the
October 1, 1994 through year ended year ended
June 30, 1995* September 30, 1994 September 30, 1993
----------------------- ------------------ ------------------
<S> <C> <C> <C>
Decrease in net assets from operations:
Net investment loss..................................... $ (240,379) $ (450,758) $ (388,557)
Net realized gain (loss) from investment transactions... (451,689) (1,192,478) 3,401,820
Net realized loss from options written.................. -- 0 -- -- 0 -- (26,514)
Change in unrealized appreciation/depreciation.......... 689,335 232,086 (482,506)
---------- ----------- ----------
Net increase (decrease) in net assets resulting
from operations............................... (2,733) (1,411,150) 2,504,243
Decrease in net assets from trust share transactions (Note 2).. (568,786) (1,125,963) (914,981)
---------- ----------- ----------
Increase (decrease) in net assets................ (571,519) (2,537,113) 1,589,262
Net assets at beginning of period.............................. 6,306,640 8,843,753 7,254,491
---------- ----------- ----------
Net assets at end of period (including accumulated
net investment loss of $4,247,524, - $0 -, and
$1,865,601, respectively....................................... $5,735,121 $ 6,306,640 $8,843,753
========== =========== ==========
</TABLE>
* The Fund's fiscal year-end was changed to June 30.
The accompanying notes are an integral part of the financial statements.
================================================================================
<PAGE>
================================================================================
STEADMAN ASSOCIATED FUND
Financial Highlights
<TABLE>
<CAPTION>
For the period
October 1, 1994
through June 30, For the years ended September 30,
---------------- -------------------------------------------------------
1995* 1994 1993 1992 1991 1990
---------------- -------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period........ $.72 $.87 $.64 $.67 $.57 $.84
------ -----------------------------------------------------
Net investment loss.................... (.03) (.08) (.05) (.03) (.02) (.03)
Net realized and unrealized
gain (loss) on investments........ .04 (.07) .28 - .12 (.24)
------ -----------------------------------------------------
Total from investment operations....... .01 (.15) .23 (.03) .10 (.27)
------ -----------------------------------------------------
Net asset value, end of period.............. $.73 $.72 $.87 $.64 $.67 $.57)
====== =====================================================
Ratios/Supplemental Data:
Total return................................ 1.85%** (17.24)% 35.9% (4.5)% 17.5% (32.27)%
Ratio of expenses to average net assets..... 8.17%** 7.76% 5.79% 6.92% 7.16% 6.08%
Ratio of net investment income (loss)
to average net assets.................. (7.23)%** (6.09)% (4.63)% (5.14)% (3.29)% (4.94)%
Portfolio turnover rate..................... 505%** 241% 300% 301% 267% 86%
Net assets, end of period (in thousands).... $5,735 $6,307 $8,844 $7,254 $8,539 $8,392
</TABLE>
* 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 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. 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 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 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.
Fiscal Year
During 1995, the Fund changed its fiscal year end from September 30 to
June 30. The accompanying financial statements include audited financial
statements for the nine-month transition period ended June 30, 1995.
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 affectd by these
reclassifications.
================================================================================
<PAGE>
================================================================================
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 were as follows:
<TABLE>
<CAPTION>
For the period October 1, 1994 For the year For the year
through June 30, 1995 ended September 30, 1994 ended September 30, 1993
------------------------------ -------------------------- --------------------------
Shares Amount Shares Amount Shares Amount
--------- --------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold...................... 581 $ 413 -- 0 -- $ -- 0 -- -- 0 -- $ -- 0--
Shares redeemed.................. (845,933) (569,199) (1,426,814) (1,125.963) (1,168,798) (914,981)
--------- --------- ---------- ----------- ---------- ----------
Net decrease.................. (845,352) $(568,786) (1,426,814) $(1,125,963) (1,168,798) $ (914,981)
========= =========== ==========
Shares outstanding:
Beginning of period..... 8,721,167 10,147,981 11,316,779
--------- ---------- ----------
End of period........... 7,875,815 8,721,167 10,147,981
========= ========== ==========
</TABLE>
3. Purchases and sales of securities
During the nine month period ended June 30, 1995, purchases and proceeds
from sales of investment securities aggregated $17,865,580 and $17,665,418,
respectively. Unrealized appreciation of investments aggregated $870,773 of
which $927,068 related to gross unrealized appreciation and $56,295 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 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.
================================================================================
<PAGE>
================================================================================
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, 1995, 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 and a net realized capital loss for the fiscal period ended June
30, 1995, therefore no income tax provision is required. A full valuation
allowance has been provided for deferred tax assets, totalling approximately
$2,236,000 at June 30, 1995, 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 $4,248,000 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 and (2010)
$287,000. Capital loss carryforwards aggregating approximately $1,644,000 are
available to offset future capital gains, if any which expire as follows: (2001)
$1,192,000 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.
================================================================================
<PAGE>
STEADMAN
Associated
Fund
ANNUAL
REPORT
June 30, 1995
A Steadman NO-LOAD Mutual Fund
[LOGO APPEARS HERE] STEADMAN SECURITY
CORPORATION
Investment Adviser
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
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 Associated Fund.
account information or daily
Net Asset Values, call:
Shareholder Services
1-800-424-8570
202-223-1000 Washington, D.C. area
