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SIGNATURE MAX KATCHER
TITLE EXEC. VICE PRES.
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<PAGE>
[STEADMAN SECURITY CORPORATION LETTERHEAD APPEARS HERE]
CHARLES W. STEADMAN February 17, 1997
CHAIRMAN OF THE BOARD AND PRESIDENT
Securities and Exchange Commission
450 5th Street, N.W.
Washington, D.C. 20549
Dear Sirs:
The Steadman Security Corporation and its affiliated mutual funds:
Steadman Associated Fund, Steadman American Industry Fund, Steadman Investment
Fund, and Steadman Technology and Growth Fund ("Funds") received the
resignation of Coopers & Lybrand L.L.P. on January 13, 1997 as independent
accountants.
The reports of Coopers & Lybrand L.L.P. on the financial statements for
the past two fiscal years contained no adverse opinion or disclaimers of opinion
and were not qualified or modified as to uncertainty, audit scope or accounting
principle.
In connection with its audits for the two most recent fiscal years and
through January 13, 1997, there have been no disagreements with Coopers &
Lybrand L.L.P. on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements if not
resolved to the satisfaction of Coopers & Lybrand L.L.P. would have caused them
to make reference thereto in their reports on the financial statements for such
years.
The Funds have requested that Coopers & Lybrand L.L.P. furnish it with a
letter addressed to the SEC (see attached) stating whether or not it agrees with
the above statements.
The Funds Board of Trustees approved Reznick, Fedder and Silverman as
the new independent accountants of the Funds as of January 14, 1997. During the
two most recent fiscal years and through January 13, 1997, the Funds have not
consulted with Reznick and Silverman on items which (1) were or should have been
subject to SAS 50 or (2) concerned the subject matter of a disagreement or
reportable event with the former auditor.
Sincerely,
/s/ Max Katcher
------------------------
Max Katcher
Executive Vice President
Enclosure
<PAGE>
[Letterhead of Reznick Fedder & Silverman appears here]
Independent Auditors' Report on Internal Control
To the Board of Trustees of
Steadman Associated Fund
In planning and performing our audit of the financial statements and financial
highlights of Steadman Associated Fund for the year ended June 30, 1997, we
considered its internal control structure, including procedures for safeguarding
securities, in order to determine our auditing procedures for the purpose of
expressing our opinion on the financial statements and financial highlights and
to comply with the requirements of Form N-SAR, not to provide assurance on the
internal control structure.
The management of Steadman Associated Fund is responsible for establishing and
maintaining an internal control structure. In fulfilling this responsibility,
estimates and judgments by management are required to assess the expected
benefits and related costs of internal control structure policies and
procedures. Two of the objectives of an internal control structure are to
provide management with reasonable, but not absolute, assurance that assets are
safeguarded against loss from unauthorized use or disposition and that
transactions are executed in accordance with management's authorization and
recorded properly to permit preparation of financial statements in conformity
with generally accepted accounting principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projection of any
evaluation of the structure to future periods is subject to the risk that it may
become inadequate because of changes in conditions or that the effectiveness of
the design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce to
a relatively low level the risk that errors or irregularities in amounts that
would be material in relation to the financial statements and financial
highlights being audited may occur and not be detected within a timely period by
employees in the normal course of performing their assigned functions. However,
we noted a certain matter, as noted below, involving the internal control
structure and its operations, including procedures for safeguarding securities,
that we considered to be a reportable condition, as of June 30, 1997, under
standards established by the American Institute of Certified Public Accountants.
Reportable conditions involve matters coming to our attention relating to
significant deficiencies in the design or operation of the internal control
structure that, in our judgement, could adversely affect the Funds ability to
record, process, summerize, and report financial data consistent with the
assertions of management in the financial statement.
As of June 30, 1997, and during the year then ended, Steadman Associated Fund
deviated from its policy in respect of concentration of investments in any
particular industry or group of industries as recited in its registration
statement. Management should review its policies and determine compliance with
such policies at all times.
This report is intended solely for the information and use of the Board of
Trustees and management of Steadman Associated Fund and the Securities and
Exchange Commission.
/s/ Reznick Fedder & Silverman
REZNICK FEDDER & SILVERMAN
Bethesda, Maryland
July 25, 1997
