<PAGE>
Fellow Shareholders:
We are entering a period of investment opportunity related to a secular
trend toward lower rates, particularly rates of longer term. This casts our
vision beyond 1995 and into years that follow. There is further motivation for
our forward view derived from the increasingly rapid pace of technological
advance. 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 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 as reflected in recent accomplishments by the
Congress. 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. The quality of the holdings in your Fund are representative
of such forward progress.
Thank you for your continued support.
Sincerely,
Charles W. Steadman
Chairman of the Board of
Trustees and President
<PAGE>
================================================================================
STEADMAN ASSOCIATED FUND
Portfolio of Investments
March 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ --------
<S> <C> <C>
COMMON STOCKS--94.5%
Auto & Truck--6.3%
Chrysler.................................. 4,000 $167,500
Ford...................................... 5,000 135,000
Total Auto & Truck 302,500
Bank--2.2%
Citicorp.................................. 2,500 106,250
--------
Total Bank 106,250
--------
Computer & Peripherals--18.2%
Cabletron Systems (a)..................... 1,500 67,313
Hewlitt Packard........................... 4,000 481,500
IBM....................................... 4,000 327,500
--------
Total Computer & Peripherals 876,313
--------
Computer Software--8.1%
Microsoft Corp. (a)....................... 5,500 391,187
--------
Total Computer Software 391,187
--------
Drug--7.5%
Merck & Co. .............................. 4,300 183,288
Upjohn.................................... 5,000 178,750
--------
Total Drug 362,038
Insurance--3.1%
Home Holdings Inc. (a).................... 20,000 147,500
--------
Total Insurance 147,500
--------
Medical Services--8.2%
Healthcare Prop. Inv. .................... 4,000 118,500
National Health Investors................. 4,000 101,000
Wellpoint Health Networks (a)............. 5,000 175,000
--------
Total Medical Services 394,500
--------
Paper & Forest Products--2.3%
International Paper....................... 1,500 112,687
--------
Total Paper & Forest Products 112,687
================================================================================
</TABLE>
2
<PAGE>
STEADMAN ASSOCIATED FUND
Portfolio of Investments
March 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------------ ------------
<S> <C> <C>
Precision Instrument - 2.8%
LAM Research (a)............................................................... 3,000 134,250
----------
Total Precision Instrument 134,250
----------
Railroad - 2.9%
Conrail Inc. .................................................................. 2,500 140,313
----------
Total Railroad 140,313
----------
Semiconductor - 11.1%
Micron Technology.............................................................. 7,000 532,000
----------
Total Semiconductor 532,000
----------
Telecom Services - 16.7%
AT&T Corp. .................................................................... 9,000 465,750
SBC Communications............................................................. 8,000 337,000
---------
Total Telecom Services 802,750
Toiletries/Cosmetics - 5.1%
Gillette....................................................................... 3,000 244,875
Total Toiletries/Cosmetics 244,875
----------
Total Common Stocks (Cost $4,235,180).......................................... 4,547,163
PREFERRED STOCK - 3.1%
NOKIA Preferred..................................................................... 2,000 147,000
----------
Total Preferred Stock (Cost $148,400).......................................... 147,000
----------
</TABLE>
<PAGE>
STEADMAN ASSOCIATED FUND
Portfolio of Investments
March 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
CALL OPTIONS PURCHASED - 2.4% ---------- --------------
<S> <C> <C>
Mercantile Stores, 6/16/95 at $40.................................................. 12,500 73,438
Motorola, 7/21/95 at $55........................................................... 5,000 18,750
Upjohn, 7/21/95 at $30............................................................. 3,500 24,062
-------------
Total Call Options Purchased (Cost $127,063) 116,250
Total Portfolio of Investments (Cost $4,510,643) $ 4,810,413
-------------
(a) Non-income producing security.
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
================================================================================
STEADMAN ASSOCIATED FUND
Statement of Assets and Liabilities
March 31, 1995
(Unaudited)
<TABLE>
<S> <C>
Assets:
Investments at value (Cost $4,510,643) (Note 1)............................................................ $ 4,810,413
Receivable for securities sold............................................................................. 1,191,873
Interest and dividends receivable (Note 1)................................................................. 12,874
Cash and cash equivalents.................................................................................. 106,851
-----------
Total assets........................................................................................... 6,122,011
-----------
Liabilities:
Payable for investments purchased.......................................................................... 801,895
Accounts payable and accrued expenses...................................................................... 33,501
Investment advisory and service fees payable (Note 4)...................................................... 8,128
Other payable to affiliate (Note 4)........................................................................ 18,632
Payable for Trust shares redeemed.......................................................................... 545
Total liabilities..................................................................................... 862,701
-----------
Net Assets....................................................................................................... $ 5,259,310
===========
Net assets consist of:
Unrealized appreciation of investments..................................................................... 299,770
Accumulated net realized losses from security transactions................................................. (3,367,196)
Capital paid in............................................................................................ 8,326,736
-----------
$ 5,259,310
===========
Net asset value, offering price and redemption price per share
($5,259,310 / 8,171,729 shares of no par value trust shares)............................................... $ .64
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
<PAGE>
STEADMAN ASSOCIATED FUND
Statement of Operations
for the six months ended March 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Investment Income:
Dividends........................................................................ $ 54,065
Interest......................................................................... 26,368
Total income................................................................ $ 80,433
Expenses:
Salaries and employee benefits (Note 4).......................................... 101,514
Professional fees................................................................ 60,990
Investment advisory fee (Note 4)................................................. 28,318
Shareholder servicing fee (Note 4)............................................... 22,645
Rent............................................................................. 18,564
Reports to shareholders.......................................................... 7,140
Computer services................................................................ 6,216
Blue Sky Registration Expenses................................................... 5,050
Custodian fees................................................................... 4,450
Trustees' fees and expenses (Note 4)............................................. 2,283
Miscellaneous.................................................................... 6,069
---------
Total expenses.............................................................. 263,239
----------
Net investment loss......................................................... (182,806)
----------
Realized and Unrealized Loss on Investments (Notes 1 and 3):
Net realized loss from investment transactions.................................. (616,276)
Change in unrealized appreciation of investments for the period................. 118,333
----------
Net loss on investments..................................................... (497,943)
----------
Net decrease in net assets resulting from operations........................ $(680,749)
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
STEADMAN ASSOCIATED FUND
Statements of Changes in Net Assets
for the six months ended March 31, 1995 and the year ended September 30, 1994
(Unaudited)
<TABLE>
<CAPTION>
6 mos. 12 mos.
1995 1994
<S> <C> <C>
Increase (decrease) in net assets from operations:
Net investment loss............................................................. $ (182,806) $ (450,758)
Net realized gain (loss) from investment transactions........................... (616,276) (1,192,478)
Change in unrealized appreciation............................................... 118,333 232,086
----------- -----------
Net increase (decrease) in net assets resulting from operations............ (680,749) $(1,411,150)
Decrease in net assets from trust share transactions (Note 2)......................... (366,581) (1,125,963)
----------- -----------
Increase (decrease) in net assets.......................................... (1,047,330) (2,537,113)
Net assets at beginning of period..................................................... 6,306,640 8,843,753
----------- -----------
Net assets at end of period (including accumulated net investment
loss of $2,316,359 and $-0-, respectively)...................................... $ 5,259,310 $ 6,306,640
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
================================================================================
<TABLE>
<CAPTION>
STEADMAN ASSOCIATED FUND
Financial Highlights
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 income loss.............. (.02) (.08) (.05) (.03) (.02) (.03)
Net realized and unrealized gain (loss)
on investments........................ (.06) (.07) .28 .12 .24
--------------------------------------------------------------------
Total from investment operations....... (.08) (.15) .23 (.03) .10 (.27)
--------------------------------------------------------------------
Net asset value, end of period........... $.64 $.72 $.87 $.64 $.67 $.57
====================================================================
Ratios/Supplemental Data:
Total return*............................ (22.22)% (17.24)% 35.9% (4.5)% 17.5% (32.3)%
Net assets, end of period (in thousands). $5,259 $6,307 $8,844 $7,254 $8,539 $8,392
Ratio of expenses to average
net assets*............................ 9.26% 7.76% 5.79% 6.92% 7.16% 6.08%
Ratio of net investment income (loss)
to average net assets*................. (6.44)% (6.09)% (4.63)% (5.14)% (3.29)% (4.54)%
Portfolio turnover rate*................. 482% 241% 300% 301% 267 86%
(1) Unaudited for the six months ended March 31, 1995
*Annualized for the six months ended March 31, 1995
</TABLE>
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 is
recorded on the accrual basis.
Income taxes
During 1993 the Fund adopted Statement of Financial Accounting Standards
No. 109. "Accounting for Income Taxes" (SFAS 109"). SFAS 109, which applies
to the Fund in years when it does not qualify as a regulated investment
company under subchapter M of the Internal Revenue Code, requires the use of
the liability method of accounting for income taxes. Under the liability
method, the 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. The Fund intends to qualify as
a regulated investment company in 1995.
Components of net assets
The Fund in 1994 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. If the Fund qualifies as a
regulated investment company in 1995, the provisions of the statement will be
adopted.
<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>
6 mos. 12 mos.
1995 1994
----------------------- ------------------------
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold................ -0- $ -0- -0- $ -0-
Shares redeemed............ (549,438) (366,893) (1,426,814) (1,125,963)
--------- --------- ----------- -----------
Net decrease............. (549,438) $(366,893) (1,426,814) $(1,125,963)
========== ===========
Shares outstanding:
Beginning of period...... 8,721,167 10,147,981
--------- ----------
End of period............ 8,171,729 8,721,167
========= ==========
</TABLE>
3. Purchases and sales of securities
During the six month period ended March 31, 1995, purchases and proceeds
from sales of investment securities aggregated $14,034,723 and $13,705,480,
respectively.
The net unrealized appreciation of investments aggregated $299,770 of which
$380,900 related to gross unrealized appreciation and $81,130 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 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. (divided 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
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 Adviser, as defined by the Investment Company Act of 1940.
5. Unclaimed property
In December 1989, the Fund and other Steadman Funds were contacted by the
Unclaimed Property Clearinghouse (the Clearinghouse), as 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 amoung 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
STEADMAN ASSOCIATED FUND
1730 K Street, N.W.
Washington, D.C. 20006
1-800-424-8570
202-223-1000 Washington D.C. area Associated
Fund
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 SEMI-ANNUAL
Coopers & Lybrand L.L.P. REPORT
1800 M Street N.W.
Washington D.C. 20036 March 31, 1995
For more information about
Steadman Associated Fund,
account information or daily
Net Asset Values, call:
A Steadman NO-LOAD Mutual Fund
Shareholder Services
1-800-424-8570
202-223-1000 Washington, D.C. area [LOGO OF STEADMAN SECURITY
CORPORATION APPEARS HERE]
Investment Adviser
