<PAGE>
================================================================================
Fellow Shareholders:
Opportunities for improvement of national economy are enhanced by a
prevailing low level of inflation and exceptional price stability. Our analysis
indicates that these basic conditions are likely to endure into the foreseeable
future. This has brought forth the conclusion that interest rates will have a
downward trend for an ensuing two to three year period.
Looking at factors dominating interest rates as they existed six months
back we decided that a decline in long term rates was going to occur and this
did in fact happen. Having made that assessment we invested Fund assets early
this year in the 30 year Treasury Bonds. Results have been satisfactory and this
investment is well serving shareholders interests as is shown in the Financial
Highlights section of this report.
We shall continue our endeavor to increase your benefits.
Sincerely,
/s/ Charles W. Steadman
Charles W. Steadman
Chairman of the Board of
Trustees and President
================================================================================
<PAGE>
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STEADMAN INVESTMENT FUND
Portfolio of Investments
June 30, 1995
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
--------- ----------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS -- 100%
U.S. Treasury Bond, 7.625% due 2/15/25............................... 1,000,000 $1,128,750
U.S. Treasury Bond, 7.5% due 11/15/16................................ 1,000,000 1,088,906
----------
Total Portfolio of Investments (Cost $2,002,031)...... $2,217,656
==========
</TABLE>
The accompanying notes are an integral part of the financial statements
================================================================================
<PAGE>
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of
Steadman Investment Fund
We have audited the accompanying statement of assets and liabilities of
Steadman Investment Fund, including the portfolio of investments, as of June 30,
1995, and the related statements of operations for the period January 1, 1995
through June 30, 1995 and for the year ended December 31, 1994, the statements
of changes in net assets for the period January 1, 1995 through June 30, 1995
and the years ended December 31, 1994 and 1993, and the financial highlights for
the period January 1, 1995 through June 30, 1995, and each of the five years
ended December 31, 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. 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 Investment 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 INVESTMENT FUND
Statement of Assets and Liabilities
June 30, 1995
<TABLE>
<S> <C>
Assets:
Investments at value (Cost $2,002,031) (Note 1)............... $ 2,217,656
Interest receivable (Note 1).................................. 38,873
Cash and cash equivalents..................................... 70,957
-----------
Total assets............................................. 2,327,486
-----------
Liabilities:
Accounts payable and accrued expenses......................... 8,169
Investment advisory and service fees payable (Note 4)......... 6,374
Other payable to affiliate (Note 4)........................... 13,975
Payable for Trust shares redeemed............................. 989
-----------
Total liabilities........................................ 29,507
-----------
Net Assets............................................................. $ 2,297,979
===========
Net assets consist of:
Accumulated net investment loss............................... $(1,568,894)
Unrealized appreciation of investments........................ 215,625
Accumulated net realized losses............................... (437,155)
Capital paid in less distributions since inception............ 4,088,403
-----------
$ 2,297,979
===========
Net asset value, offering price and redemption price per share
($2,297,979 / 2,244,088 shares of no par value trust shares)........... $ 1.02
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
<PAGE>
================================================================================
STEADMAN INVESTMENT FUND
Statements of Operations
<TABLE>
<CAPTION>
For the period January 1, For the year ended
1995 through June 30, 1995* December 31, 1994
--------------------------- ------------------
<S> <C> <C>
Investment Income:
Dividends............................................................... $ 2,335 $ 40,693
Interest................................................................ 66,867 22,416
--------- -----------
Total income....................................................... 69,202 63,109
--------- -----------
Expenses:
Salaries and employee benefits (Note 4)................................. 43,379 93,598
Shareholder servicing fee (Note 4)...................................... 26,752 54,463
Investment advisory fee (Note 4)........................................ 10,952 28,041
Professional fees....................................................... 8,280 19,572
Rent.................................................................... 6,189 13,721
Computer services....................................................... 5,826 10,720
Miscellaneous........................................................... 5,141 9,931
Trustees' fees and expenses............................................. 4,097 5,596
Custodian fees.......................................................... 2,629 4,536
Reports to shareholders................................................. 2,415 9,759
--------- -----------
Total expenses.......................................................... 115,660 249,937
--------- -----------
Net investment loss..................................................... (46,458) (186,828)
--------- -----------
Realized and Unrealized Gain/ (Loss) on Investments (Notes 1 and 3):
Net realized loss from investment transactions.......................... (242,568) (194,587)
Change in unrealized depreciation/appreciation of investments........... 491,165 (779,305)
--------- -----------
Net gain (loss) on investments.................................... 248,597 (973,892)
--------- -----------
Net increase (decrease) in net assets resulting from operations... $ 202,139 $(1,160,720)
========= ===========
</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 INVESTMENT FUND
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the period For the For the
January 1, 1995 year ended year ended
through June 30, 1995* December 31, 1994 December 31, 1993
---------------------- ----------------- -----------------
<S> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment loss........................................ $ (46,458) $ (186,828) $ (169,788)
Net realized gain (loss) from investment transactions...... (242,568) (194,587) 281,152
Change in unrealized depreciation/appreciation net......... 491,165 (779,305) (4,563)
---------- ----------- ----------
Net increase (decrease) in net assets resulting
from operations....................................... 202,139 (1,160,720) 106,801
Decrease in net assets from trust share transactions (Note 2)... (63,007) (230,035) (338,682)
---------- ----------- ----------
Increase (decrease) in net assets............................... 139,132 (1,390,755) (231,881)
Net assets at beginning of period............................... 2,158,847 3,549,602 3,781,483
---------- ----------- ----------
Net assets at end of period (including accumulated net
investment loss of $1,568,894, $204,464
and $17,636 respectively)....................................... $2,297,979 $ 2,158,847 $3,549,602
========== =========== ==========
</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 INVESTMENT FUND
Financial Highlights
<TABLE>
<CAPTION>
For the period
January 1, 1995
through June 30, For the years ended December 31,
---------------- ----------------------------------------------------------
1995* 1994 1993 1992 1991 1990
---------------- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period........ $.93 $1.42 $1.38 $1.49 $1.12 $1.32
------- ----------------------------------------------------------
Net investment loss......................... (.02) (.08) (.06) (.09) (.06) (.09)
Net realized and unrealized
gain (loss) on investments.......... .11 (.41) .10 (.02) .43 (.11)
------- ----------------------------------------------------------
Total from investment operations........ .09 (.49) .04 (.11) .37 (.20)
------- ----------------------------------------------------------
Net asset value, end of period.............. $1.02 $ .93 $1.42 $1.38 $1.49 $1.12
======= ==========================================================
Ratios/Supplemental Data:
Total return................................ 19.36%** (34.51)% 2.89% (7.05)% 32.95% (15.15)%
Ratio of expenses to average net
assets...................................... 10.54%** 8.90% 6.48% 7.78% 7.88% 10.31%
Ratio of net investment loss to average
net assets.................................. (4.24)%** (6.65)% (4.52)% (6.09)% (5.08)% (7.27)%
Portfolio turnover rate..................... 226%** 282% 179% 263% 245% 144%
Net assets, end of period (in thousands).... $2,298 $2,159 $3,550 $3,781 $4,277 $3,530
</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 INVESTMENT FUND
Notes to Financial Statements
1. Significant accounting policies
Steadman Investment 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 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 December 31 to
June 30. The accompanying financial statements include audited financial
statements for the six-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 result of operations and net assets are not affected by these
reclassifications.
================================================================================
<PAGE>
================================================================================
STEADMAN INVESTMENT 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 January 1 For the year ended For the year
1995 through June 30, 1995 December 31, 1994 ended December 31, 1993
-------------------------- ------------------------- ------------------------
Shares Amount Shares Amount Shares Amount
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Shares sold..................... -- 0 -- $ -- 0 -- -- 0 -- $ -- 0 -- -- 0 -- $ -- 0--
Shares redeemed................. (65,380) (63,007) (183,957) (230,035) (238,376) (338,682)
--------- --------- --------- --------- --------- ---------
Net decrease................. (65,380) $ (63,007) (183,957) $(230,035) (238,376) $(338,682)
========= ========= =========
Shares outstanding:
Beginning of period...... 2,309,468 2,493,425 2,731,801
--------- --------- ---------
End of Period............ 2,244,088 2,309,468 2,493,425
========= ========= =========
</TABLE>
3. Purchases and sales of securities
During the six month period ended June 30, 1995, purchases and sales of
investment securities aggregated $2,303,700 and $2,083,522, respectively.
Unrealized appreciation of investments aggregated $215,625, all of which
relates to gross unrealized appreciation.
4. Investment advisory fee and transactions with affiliates
Steadman Security Corporation (SSC) has provided investment 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 provides 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 account. 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
================================================================================
<PAGE>
================================================================================
Investment Company Act of 1940.
5. Federal income taxes
In the fiscal period ended June 30, 1995, the Fund did meet the asset
diversification requirements applicable to regulated investment companies. Thus,
the Fund did qualify as a regulated investment company under Subchapter M of the
Internal Revenue Code. However, the Fund had a net investment loss and realized
net capital losses in the fiscal period ended June 30, 1995, therefore no income
tax provision is required. A full valuation allowance has been provided for the
deferred tax assets, totalling approximately $760,000 at June 30, 1995, which
arise principally from net operating loss carryforwards and capital loss
carryforwards available for income tax purposes.
The Fund has net operating loss carryforwards approximating $1,570,000
which are available to offset future net operating income in non-qualifying
years, if any, which expire as follows: (2004) $299,000; (2005) $304,000; (2006)
$222,000; (2007) $278,000; (2008) $217,000; (2009) $204,000 and (2010) $46,000.
Capital loss carryforwards aggregating approximately $438,000 are available to
offset future capital gains, if any, expiring as follows: (1999) $195,000 and
(2000) $243,000.
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 agreement. The District of Columbia 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.
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<PAGE>
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This Page is intentionally Blank
================================================================================
<PAGE>
STEADMAN
Investment
Fund
ANNUAL
REPORT
June 30, 1995
A Steadman NO-LOAD Mutual Fund
[LOGO APPEARS HERE] STEADMAN SECURITY
CORPORATION
Investment Adviser
STEADMAN INVESTMENT 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 Investment Fund.
account information or daily
Net Asset Values, call:
Shareholder Services
1-800-424-8570
202-223-1000 Washington, D.C. area
