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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
STEADMAN
Associated
Fund
SEMI-ANNUAL
REPORT
December 31, 1995
Steadman NO LOAD Mutual Fund
[LOGO] STEADMAN SECURITY
CORPORATION
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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 is
also 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 levels 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 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
Charles W. Steadman
Chairman of the Board of
Trustees and President
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STEADMAN ASSOCIATED FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
(Unaudited)
Value
Shares (Note 1)
------ --------
COMMON STOCKS - 99.6%
Bank - 11.4%
Chase Manhattan Warrants (a)....... 19,000 $496,375
--------
Total Bank......................... 496,375
--------
Communications Equipment - 11.1%
Motorola........................... 2,500 142,500
Precision Systems (a).............. 25,000 337,500
--------
Total Communications Equipment..... 480,000
--------
Computer - 17.2%
Compaq (a)......................... 2,500 120,000
Hewlett Packard.................... 5,000 418,750
Silicon Graphics (a)............... 7,500 206,250
--------
Total Computer..................... 745,000
--------
Computer Storage Equipment - 10.7%
Conner Peripherals (a)............. 8,500 178,500
Seagate Technology (a)............. 6,000 285,000
--------
Total Computer Storage Equipment... 463,500
--------
Computer Software - 15.2%
Microsoft Corp. (a)................ 7,500 658,125
--------
Total Computer Software............ 658,125
--------
Computer Systems Design - 3.7%
Sun Microsystems (a)............... 3,500 159,688
--------
Total Computer Systems Design...... 159,688
--------
Credit Institution - 6.4%
Travelers Group Warrants (a)....... 10,000 276,250
--------
Total Credit Institution........... 276,250
--------
Drug - 2.2%
Regeneron Pharmaceuticals (a)...... 7,500 95,625
----------
Total Drug......................... 95,625
----------
Medical Instruments - 2.8%
Boston Scientific (a).............. 2,500 122,500
----------
Total Medical Instruments 122,500
----------
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STEADMAN ASSOCIATED FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
(Unaudited)
Value
Shares (Note 1)
------ --------
Motor Vehicles - 5.7%
General Motors "H"................. 5,000 245,625
----------
Total Motor Vehicles............... 245,625
----------
Semiconductor - 5.7%
Intel Corp......................... 2,500 141,875
----------
Intel Corp. Warrants (a)........... 4,000 107,000
----------
Total Semiconductor................ 248,875
----------
Special Industry Machinery - 4.5%
Applied Materials (a).............. 5,000 196,875
----------
Total Special Industry Machinery... 196,875
----------
Tel. and Tel. Apparatus - 3.0%
DSC Communications (a)............. 3,500 129,062
----------
Total Tel. and Tel. Apparatus...... 129,062
----------
Total Common Stocks (Cost $4,039,548)... 4,317,500
----------
CALL OPTIONS PURCHASED - .4%
American Tel. and Tel. 7/19/96 at $70... 10,000 18,750
----------
Total Call Options Purchased
(Cost $35,600)................... 18,750
----------
Total Portfolio of Investments
(Cost $4,075,148)................ $4,336,250
==========
(a) Non-income producing security.
The accompanying notes are an integral part of the financial statements.
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STEADMAN ASSOCIATED FUND
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
(Unaudited)
Assets:
Investments at value (Cost $4,075,148) (Note 1)... $ 4,336,250
Cash and cash equivalents......................... 335,305
Receivable for securities sold.................... 0
Interest and dividends receivable (Note 1)........ 2,425
-----------
Total Assets...................................... 4,693,980
-----------
Liabilities:
Payable for investments purchased................. 0
Accounts payable and accrued expenses............. 9,865
Investment advisory and service fees payable
(Note 4)........................................ 7,550
Other payable to affiliate (Note 4)............... 17,911
Payable for Trust shares redeemed................. 0
-----------
Total Liabilities................................. 35,326
-----------
Net Assets............................................. $ 4,658,654
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Net assets consist of:
Undistributed net investment loss.................. $(4,463,794)
Unrealized appreciation of investments............. 261,103
Accumulated net realized losses from security
transactions..................................... (1,389,104)
Paid-in capital.................................... 10,250,449
-----------
$ 4,658,654
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Net asset value, offering price and redemption
price per share ($4,658,654 / 7,187,084 shares
of no per value trust shares)........................ $ 0.65
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STEADMAN ASSOCIATED FUND
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the 6 months For the period
ended December October 1, 1994
31, 1996 /(1)/ through June 30,1995*
---------------- --------------------
<S> <C> <C>
Investment Income:
Dividends....................................................... $ 15,207 $ 72,551
Interest........................................................ 6,030 28,206
--------- ---------
Total income.................................................... 21,237 100,757
--------- ---------
Expenses:
Salaries and employee benefits (Note 4)......................... 94,237 148,188
Professional fees............................................... 42,844 38,543
Investment advisory fee (Note 4)................................ 27,953 41,902
Shareholder servicing fee (Note 4).............................. 21,215 33,620
Rent............................................................ 16,112 24,587
Miscellaneous................................................... 10,027 10,550
Blue Sky Registration Fees...................................... 7,820 9,050
Reporters to shareholders....................................... 6,081 7,717
Custodian fees.................................................. 5,500 8,212
Computer Services............................................... 3,979 14,381
Trustees' fees and expenses (Note 4)............................ 1,739 4,386
--------- ---------
Total expenses.................................................. 237,507 341,136
--------- ---------
Net investment loss............................................. (216,270) (240,379)
--------- ---------
Realized and Unrealized Gain (Loss) on Investments
(Notes 1 and 3):
Net realized gain (loss) from investment transactions........... 255,063 (451,689)
Change in unrealized appreciation of investments................ (609,670) 689,335
--------- ---------
Net gain (loss) on investments.................................. (354,607) 237,646
--------- ---------
Net decrease in net assets resulting from operations............ $(570,877) $ (2,733)
========= =========
</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.
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STEADMAN ASSOCIATED FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the 6 For the period For the year
months ended October 1, ended
December 31, 1994 through September 30,
1995/(1)/ June 30, 1995* 1994
------------ ------------- ------------
<S> <C> <C> <C>
Decrease in net assets from operations:
Net investment loss................................. $ (216,270) $ (240,379) $ (450,758)
Net realized gain (loss) from investment
transactions....................................... 255,063 (451,689) (1,192,478)
Change in unrealized
appreciation/depreciation.......................... (609,670) 689,335 232,086
----------- ---------- -----------
Net decrease in net assets resulting
from operations............................... (570,877) (2,733) (1,411,150)
Decrease in net assets from trust share
transactions (Note 2)................................... (505,590) (568,786) (1,125,963)
----------- ---------- -----------
Decrease in net assets.............................. (1,076,467) (571,519) (2,537,113)
Net assets at beginning of period........................ 5,735,121 6,306,640 8,843,753
----------- ---------- -----------
Net assets at end of period (including
accumulated net investment loss of $4,463,794,
$4,247,524 and $-0- respectively)....................... $ 4,658,654 $5,735,121 $ 6,306,640
=========== ========== ===========
</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.
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STEADMAN ASSOCIATED FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the
period
For the 6 October 1,
months ended 1994 through
December 31 /(1)/ June 30 For the years ended September 30
---------------- ------------ -----------------------------------
1995 1995* 1994 1993 1992 1991
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period................ $.73 $.72 $.87 $.64 $.67 $.57
---- ---- ---- ---- ---- ----
Net investment loss............................... (.03) (.03) (.08) (.05) (.03) (.02)
Net realized and unrealized gain (loss)
on investments................................... (.05) .04 (.07) .28 -- .12
---- ---- ---- ---- ---- ----
Total from investment operations................... (.08) .01 (.15) .23 (.03) .10
---- ---- ---- ---- ---- ----
Net asset value, end of period...................... $.65 $.73 $.72 $.87 $.64 $.67
==== ==== ==== ==== ==== ====
Ratios/Supplemental Data:
Total return.......................................... (21.92)%** 1.85%** (17.24)% 35.9% (4.5)% (17.5)%
Ratio of expenses to average net assets............... 8.56 %** 8.17%* 7.76% 5.79% 6.92% 7.16%
Ratio of net investment income (loss) to
average net assets................................... (7.80)%** (7.23)%** (6.09)% (4.63)% (5.14)% (3.29)%
Portfolio turnover rate............................... 338%** 505%** 241% 300% 301% 267%
Net assets, end of period (in thousands).............. $4,658 $ 5,735 $6,307 $8,844 $7,254 $8,539
</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.
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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.
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 reclassifications.
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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 shares were as follows:
<TABLE>
<CAPTION>
For the period October 1,
For the 6 months ended 1994 through June 30, For the year ended
December 31, 1995 1995 September 30, 1994
Shares Amount Shares Amount Shares Amount
----------- ----------- ------------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold....... - 0 - $ - 0 - 581 $ 413 - 0 - $ - 0 -
Shares
redeemed......... (688,731) (505,590) (845,933) (569,199) (1,426,814) (1,125,963)
--------- --------- --------- --------- ---------- -----------
Net decrease... (688,731) $(505,590) (845,352) $(568,786) (1,426,814) $(1,125,963)
========= ========= ===========
Shares
Outstanding:
Beginning of
period.......... 7,875,815 8,721,167 10,147,981
--------- --------- ----------
End of period.... 7,187,084 7,875,815 8,721,167
========= ========= ==========
</TABLE>
3.Purchases and sales of securities
During the six months ended December 31, 1995, purchases and proceeds from
sales of investment securities aggregated $9,003,019 and $9,689,178
respectively. Unrealized appreciation of investments aggregated $261,103
of which $463,930 related to gross unrealized appreciation and $202,827
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. Certain officers and trustees of the Fund are "affiliated
persons" of the Investment Adviser, as defined by the Investment Company
Act of 1940.
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