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STEADMAN INVESTMENT FUND [Logo of 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
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Fellow Shareholders:
The national economy is in a 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 also
is 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 level 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 given
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 INVESTMENT FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 1)
------------ -----------
U.S. GOVERNMENT OBLIGATIONS -- 100%
<S> <C> <C>
U.S. Treasury Bond, 7.625% due 2/15/25 ......................................... 870,000 $ 1,063,983
U.S. Treasury Bond, 7.5% due 11/15/16 ......................................... 750,000 879,375
U.S. Treasury bond, 5.625% due 11/30/00 ........................................ 265,000 267,360
-----------
Total Portfolio of Investments (Cost $1,908,998) $ 2,210,718
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</TABLE>
The accompanying notes are an integral part of the financial statements
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STEADMAN INVESTMENT FUND
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at value (Cost $1,908,998) (Note 1) ................................................... $ 2,210,718
Interest receivable (Note 1) ...................................................................... 34,160
Cash and cash equivalents ......................................................................... 25,644
------------
Total asset ..................................................................................... 2,270,522
------------
LIABILITIES:
Accounts payable and accrued expenses ............................................................. 2,778
Investment advisory and service fees payable (Note 4) ............................................. 6,071
Other payable to affiliate (Note 4) ............................................................... 9,244
------------
Total liabilities ............................................................................... 18,093
------------
NET ASSETS .............................................................................................. $ 2,252,429
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Net assets consist of:
Accumulated net investment loss .................................................................... $(1,613,725)
Unrealized appreciation of investments ............................................................. 301,720
Accumulated net realized losses .................................................................... (456,779)
Capital paid in less distributions since inception ................................................. 4,021,213
------------
$ 2,252,429
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Net asset value, offering price and redemption price per share
($2,252,429 + 2,177,956 shares of no par value trust shares) ....................................... $ 1.03
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
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STEADMAN INVESTMENT FUND
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the 6 months
ended For the period January 1,
December 31, 1995(1) 1995 through June 30, 1995*
-------------------- ---------------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends......................................................... $ 0 $ 2,335
Interest.......................................................... 70,902 66,867
--------- -----------
Total income................................................. 70,902 69,202
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EXPENSES:
Salaries and employee benefits (Note 4)........................... 42,684 43,379
Shareholder servicing fee (Note 4)................................ 25,959 26,752
Professional fees................................................. 18,602 8,280
Investment advisory fee (Note 4).................................. 11,208 10,952
Rent.............................................................. 6,551 6,189
Computer services................................................. 3,209 5,826
Reports to shareholders........................................... 2,695 2,415
Miscellaneous..................................................... 1,885 5,141
Trustees' fees and expenses....................................... 1,740 4,097
Custodian fee..................................................... 1,200 2,629
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Total expenses............................................... 115,733 115,660
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Net investment loss.......................................... (44,831) (46,458)
--------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1 AND 3):
Net realized loss from investment transactions.................... (19,628) (242,568)
Change in unrealized depreciation/appreciation of investments..... 86,095 491,165
--------- -----------
Net gain on investments...................................... 66,467 248,597
--------- -----------
Net increase in net assets resulting from operations......... $ 21,636 $ 202,139
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</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 INVESTMENT FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the 6 months For the period For the
ended January 1, 1995 year ended
December 31, 1995(1) through June 30, 1995* December 31, 1994
-------------------- ---------------------- -----------------
<S> <C> <C> <C>
Increase (decrease) in net assets from operations:
Net investment loss....................................... $ (44,831) $ (46,458) $ (186,828)
Net realized loss from investment transactions............ (19,628) (242,568) (194,587)
Change in unrealized depreciation/appreciation net........ 86,095 491,165 779,305)
------------- ------------ -----------
Net increase in net assets resulting
from operations.................................... 21,636 202,139 (1,160,720)
Decrease in net assets from trust share transactions (Note 2).. (67,186) (63,007) (230,035)
------------- ------------ -----------
Increase (decrease) in net assets.................... (45,550) 139,132 (1,390,755)
Net assets at beginning of period.............................. 2,297,979 2,158,847 3,549,602
------------- ------------ -----------
Net assets at end of period (including accumulated net
investment loss of $1,613,725, $1,568,894
and $204,464 respectively)................................ $ 2,252,429 $ 2,297,979 $2,158,847
============= ============ ===========
</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 INVESTMENT FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the 6 months For the period
ended January 1, 1995 For the years ended December 31
December 31 through June 30
1995/1/ 1995* 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period......... $1.02 $.93 $1.42 $1.38 $1.49 $1.12
Net investment loss...................... (.02) (.02) (.08) (.06) (.09) (.06)
Net realized and unrealized
gain (loss) on investments............. .03 11 (.41) .10 (.02) .43
Total from investment, operations........ .01 .09 (.49) .04 (.11) .37
Net asset value, end of period............... $1.03 $1.02 $ .93 $1.42 $1.38 $1.49
Ratios/Supplemental Data:
Total return................................. 1.96%** 19.36%** (34.51)% 2.89% (7.05)% 32.95%
Ratio of expenses to average net
assets................................... 10.29%** 10.54%** 8.90% 6.48% 7.78% 7.88%
Ratio of net investment loss to average
net assets............................... (3.99)%** (4.24)%** (6.65)% (4.52)% (6.09)% (5.08)%
Portfolio turnover rate...................... 114%** 226%** 282% 179% 263% 245%
Net assets, end of period (in thousands)..... $2,252 $2,298 $2,159 $3,550 $3,781 $4,277
</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 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.
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.
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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 6 months ended For the period January 1 For the year
December 31, 1995 1995 through June 30, 1995 ended December 31, 1994
----------------- -------------------------- -----------------------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Shares sold..................... --0-- $ --0-- --0-- $ --0-- --0-- $ --0--
Shares redeemed................. (66,132) (67,186) (65,380) (63,007) (183,957) (230,035)
--------- --------- --------- --------- --------- ---------
Net decrease.................. $ (67,186) (65,380) $ (63,007) (183,957) $(230,035)
========= ========= =========
Shares outstanding:
Beginning of period......... 2,244,088 2,309,468 2,493,425
---------
End of Period............... 2,177,956 2,244,088 2,309,468
========= ========= =========
</TABLE>
3. PURCHASES AND SALES OF SECURITIES
During the six months ended December 31, 1995, purchases and sales of
investment securities aggregated $1,234,594 and $1,308,145, respectively. The
net unrealized appreciation of investments aggregated $301,720, of which
$301,754 relates to gross unrealized appreciation, and $34 relates to gross
unrealized depreciation.
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 Investment Company Act of 1940.
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