<PAGE>
1933 Act Registration No. 33-36324
1940 Act Registration No. 811-6153
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT /___/
OF 1933
Pre-Effective Amendment No. ____ /___/
Post-Effective Amendment No. 29 / X /
____
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY /___/
ACT OF 1940
Amendment No. 31 / X /
____
Ranson Managed Portfolios
-------------------------
(Exact Name of Registrant as Specified in Charter)
1 North Main, Minot, North Dakota 58703
---------------------------------------
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (701) 852-5292
Robert E. Walstad
Ranson Managed Portfolios
1 North Main
Minot, North Dakota 58703
(Name and Address of Agent for Service)
It is proposed that this filing will be effective (check appropriate box):
/ X / immediately upon filing pursuant to paragraph (b)
/___/ on (date) pursuant to paragraph (b)
/___/ 60 days after filing pursuant to paragraph (a)
/___/ on (date) pursuant to paragraph (a), of Rule 485
Declaration Pursuant to Rule 24f-2
Pursuant to the provisions of Rule 24f-2 under the Investment Company Act of
1940, Registrant has elected to register an indefinite number of shares and
filed its Rule 24f-2 Notice for the fiscal year ended July 31, 1996, with the
Commission on or before January 31, 1997.
<PAGE>
RANSON MANAGED PORTFOLIOS
The Nebraska Municipal Fund
Cross Reference Sheet
Pursuant to Rule 495(a) under the Securities Act of 1933
<TABLE>
<CAPTION>
Form N-1A, Part A, Item Number Heading in Prospectus
- ------------------------------ ---------------------
<C> <S> <C>
1 Cover Page Cover
2 Synopsis Fee and Expense Table;
Highlights of the Fund and Prospectus Summary
3 Condensed Financial Information Calculation of Fund Performance Data
4 General Description of Registrant The Fund; Investment Objective and Policies
5 Management of the Fund The Fund; Dividends and Taxes; Fund Management
6 Capital Stock and Other Securities Description of Shares and Rights
7 Purchase of Securities Being Offered Purchase of Shares
8 Redemption or Repurchase Redemption of Shares
9 Pending Legal Proceedings *
Form N-1A, Part B, Item Number Heading in Statement of Additional Information
- ------------------------------ ----------------------------------------------
10 Cover Page Cover
11 Table of Contents Table of Contents
12 General Information and History The Fund and Its Shares
13 Investment Objectives and Policies Investment Objective, Policies and Restrictions
14 Management of the Fund Officers and Trustees
15 Control Persons and Principal Holders The Fund and Its Shares
of Securities
16 Investment Advisory and Other Services Management and Investment Advisory Agreement
17 Brokerage Allocation and Other Practices Portfolio Transactions
18 Capital Stock and Other Securities Additional Information Regarding Shares and Rights
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Form N-1A, Part B, Item Number Heading in Statement of Additional Information
- ------------------------------ ----------------------------------------------
<C> <S> <C>
19 Purchase, Redemption and Pricing Net Asset Value, in Prospectus;
of Shares Being Offered Purchase of Shares, in Prospectus;
Redemption of Shares, in Prospectus
20 Tax Status Dividends and Taxes, in Prospectus
21 Underwriters Purchase of Shares, in Prospectus;
The Distributors, in Prospectus
22 Calculations of Performance Data Performance Data
23 Financial Statements Report of Independent Auditors
Statement of Assets and Liabilities
Financial Statements
Form N-1A, Part C, Item Number Heading in Other Information
- ------------------------------ ----------------------------
<C> <S> <C>
24 Financial Statements and Exhibits Financial Statements and Exhibits
25 Persons Controlled by or Under Persons Controlled by or Under
Common Control with Registrant Common Control with Registrant
26 Number of Holders of Securities Number of Holders of Securities
27 Indemnification Indemnification
28 Business and Other Connections of Business and Other Connections of
Investment Adviser Investment Advisor
29 Principal Underwriters Principal Underwriters
30 Location of Accounts and Records Location of Accounts and Records
31 Management Services Management Services
32 Undertakings Undertakings
</TABLE>
_____________________
*Not applicable.
-ii-
<PAGE>
[LOGO OF THE NEBRASKA MUNICIPAL FUND]
Ranson Managed Portfolios
The Nebraska Municipal Fund
1 North Main . Minot, North Dakota 58703 . (701) 857-0230 . (800) 601-5593
Prospectus November 27, 1996
-----------------
The Nebraska Municipal Fund is an investment portfolio of Ranson Managed
Portfolios which is an unincorporated business trust organized under the laws of
Massachusetts on August 10, 1990. Ranson Managed Portfolios is an open-end
series non-diversified management company, known as a mutual fund. The term "the
Fund" as used herein refers to either Ranson Managed Portfolios or The Nebraska
Municipal Fund Series of Ranson Managed Portfolios, as the context may require.
The investment objective of the Fund is to provide its shareholders with as high
a level of current income exempt from both federal income tax and Nebraska
income tax as is consistent with preservation of capital. Under normal market
conditions, the Fund's assets will be invested in a portfolio of Nebraska
Municipal Securities (as defined herein) which, in the opinion of Ranson Capital
Corporation, will produce a higher level of current income than would be
produced by a portfolio of Nebraska Municipal Securities rated in only the
highest rating category, but contains Nebraska Municipal Securities which do not
present a significant risk of loss of principal due to credit characteristics.
In pursuit of this objective, the Fund invests primarily in debt obligations
issued by or on behalf of the State of Nebraska, its political subdivisions and
their agencies and instrumentalities. A substantial portion of the income
produced by the Fund may be includable in the calculation of alternative minimum
taxable income. Shares of the Fund, therefore, would not ordinarily be a
suitable investment for investors who are subject to the alternative minimum
tax.
A maximum sales load of 4.25% will be imposed on purchases (4.44% of the
net amount invested). The minimum initial investment is $1,000. See "Purchase of
Shares."
Ranson Capital Corporation (the "Manager") is the Fund's manager. ND
Resources, Inc. (the "Transfer Agent"), serves as the Fund's transfer agent.
First Western Bank & Trust (the "Custodian"), is the Fund's custodian. For more
information concerning the Transfer Agent and the Custodian, see "Shareholder
Services and Reports."
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
READ AND RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE. THE PROSPECTUS
CONCISELY SETS FORTH INFORMATION INVESTORS SHOULD KNOW BEFORE INVESTING IN THE
FUND.
A Statement of Additional Information dated November 27, 1996, regarding
the Fund (which is incorporated herein by reference) has been filed with the
Securities and Exchange Commission and is available upon request and without
charge by writing the Fund at the above mailing address or by telephoning the
Manager at either of the numbers set forth above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
FEE AND EXPENSE TABLE
The following table sets forth (i) the non-recurring shareholder
transaction expenses, (ii) the recurring annual Fund operating expenses and
(iii) the estimated expenses paid directly and indirectly by a shareholder with
a hypothetical $1,000 investment that is subject to the maximum sales load over
1, 3, 5 and 10-year periods.
The example should not be considered a representation of past or future
expenses. Actual expenses may be greater or lesser than those shown.
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)
4.25%
There is no sales charge on reinvested dividends, deferred sales charge,
redemption fee or exchange fee. The Maximum Sales Load may be reduced or
eliminated as described in "Purchase of Shares" and "Special Programs."
Annual Fund Operating Expenses
(as a percentage of average net assets) The Nebraska Municipal Fund
Expenses After
Fee Waivers
Management Fees* 0.50%
-------
Rule 12b-1 Fees 0.25%
-------
Other Expenses* 0.10%
-------
Total Fund Operating Expenses (after fee waivers) 0.85%
=======
<TABLE>
<CAPTION>
Example
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Shareholders would pay the following expenses
after fee waivers on a $1,000 investment,
assuming a 5% annual return: $51 $68 $88 $143
</TABLE>
* The calculation presumes expenses for the current year at the projected
rate of 0.85% for the Fund after partial fee waivers by the Manager. These
expense estimates assume a voluntary waiver by the Manager of a portion of its
fees not required by the Management and Investment Advisory Agreement.
The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. Management Fees, Rule 12b-1 Fees, Other Expenses and Total Fund
Operating Expenses for the current fiscal year would be 0.50%, 0.25%, 0.55% and
1.30%, respectively, before fee waivers. These costs and expenses should not be
considered a representation of past or future expenses, and the actual expenses
incurred by the Fund and the degree of expense reimbursement and fee waivers, if
any, may be greater or less in the future. See "Purchase of Shares" for
information relating to sales load discounts, "Fund Management" for the level of
management fees and "The Distributor" for information relating to the Fund's
Shareholder Services Plan. Long-term shareholders may pay more than the economic
equivalent of the maximum front-end sales charge permitted by the National
Association of Securities Dealers, Inc.
2
<PAGE>
HIGHLIGHTS OF THE FUND AND PROSPECTUS SUMMARY
The highlights and summary information below should be read in conjunction
with the detailed information appearing elsewhere in this Prospectus.
THE INVESTMENT OBJECTIVE of the Fund is to provide its shareholders with as
high a level of current income that is exempt from both federal income tax and
Nebraska income tax as is consistent with preservation of capital. Under normal
market conditions, the Fund's assets will be invested in a portfolio of Nebraska
Municipal Securities (as defined herein) which, in the opinion of Ranson Capital
Corporation, will produce a higher level of current income than would be
produced by a portfolio of Nebraska Municipal Securities rated in only the
highest rating category, but contains Nebraska Municipal Securities which do not
present a significant risk of loss of principal due to credit characteristics.
There is no assurance that the Fund's investment objective will be achieved. See
"Investment Objective and Policies - Investment Objective."
THE INVESTMENT POLICY of the Fund is to invest in a portfolio of investment
grade municipal securities which generate interest income that is exempt from
both federal income tax and Nebraska income tax. These municipal securities
(hereinafter referred to as "Nebraska Municipal Securities") generally include
debt obligations of the State of Nebraska, its political subdivisions,
municipalities, agencies and authorities, and certain industrial development and
other revenue bonds, short-term municipal notes, participation interests in
municipal leases and tax-exempt commercial paper issued by such entities. See
"Investment Objective And Policies - Nebraska Municipal Securities" for a more
complete description of Nebraska Municipal Securities. In certain circumstances
the Fund may enter into when-issued or delayed delivery transactions and
purchase taxable securities. The Fund may, for hedging purposes, enter into
financial futures contracts, options on such futures, municipal bond index
futures contracts and options on securities. These investments entail certain
risks. See "Investment Objective and Policies - Futures Contracts and Options."
The interest on certain Nebraska Municipal Securities in the Fund's portfolio
may constitute an item of preference for determining the federal alternative
minimum tax for individuals and corporations. See "Dividends and Taxes."
THE FUND'S SHARES MAY BE PURCHASED through Ranson Capital Corporation and
selected dealers at the public offering price, which is equal to the net asset
value next determined, plus a sales charge of 4.25% of the public offering price
(4.44% of the net amount invested). See "Purchase of Shares."
THE MINIMUM INITIAL INVESTMENT is $1,000, and the minimum additional
investment is $50. See "Purchase of Shares." The initial and minimum investments
will be less under certain conditions described under "Purchase of Shares" and
"Special Programs."
AN OPEN ACCOUNT PROGRAM will be established for each investor unless the
investor elects not to participate in such program as is provided under
"Purchase of Shares - Open Account Program/Certificates."
SPECIAL PROGRAMS of the Fund include: a reinvestment program for those who
have invested in any Series of the Nebraska Tax-Exempt Trust; a group program; a
systematic withdrawal program; a preauthorized investment program; a rights of
accumulation program; and a reinstatement privilege. See "Special Programs."
3
<PAGE>
THE FUND has a Shareholder Services Plan adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940, pursuant to which .25% per annum of
average daily net assets will be used to pay dealers and banks selling Fund
shares for administrative and shareholder services or to pay for certain
distribution expenses. See "The Distributor."
DISTRIBUTIONS for the Fund will be declared daily from net investment
income and will be paid monthly; net capital gains, if any, will be distributed
at least annually. See "Dividends and Taxes."
CONFIRMATION STATEMENTS will be sent to all investors who have had purchase
or redemption activity in their accounts.
REDEMPTIONS can be made at net asset value without charge. The Fund may
require redemption of shares if the value of an account is reduced to $1,000 or
less (for any reason other than fluctuations in the market value of the Fund's
portfolio securities). See "Redemption of Shares."
THE FUND'S MANAGER AND INVESTMENT ADVISER is Ranson Capital Corporation
which receives a monthly management and investment advisory fee equivalent on an
annual basis to .50 of 1% of the Fund's average daily net assets. Under the
terms of the Management and Investment Advisory Agreement between the Fund and
the Manager, the Manager pays all expenses of the Fund, including the Fund's
management and investment advisory fee and the Fund's dividend disbursing,
administrative and accounting services fees (but excluding taxes and brokerage
fees and commissions, if any) that exceed 1.25% of the Fund's average daily net
assets on an annual basis up to the amount of the management and investment
advisory fee payable by the Fund to the Manager. The Manager may assume
additional Fund expenses or waive portions of its fees in its discretion. See
"Fund Management." Ranson Capital Corporation will act as the Fund's Evaluator.
The procedures of the Evaluator and its valuations are reviewed by the officers
of the Fund under the general supervision of the Board of Trustees. See "Net
Asset Value."
RISK FACTORS: The Fund is subject to the risks of primarily concentrating
its investments in Nebraska Municipal Securities and does not have the benefit
of geographical investment diversification (see "Investment Objective And
Policies"). Also, as a non-diversified investment company, the Fund has the
ability to concentrate investments in particular issuers which may be
advantageous when investing in Nebraska Municipal Securities, but which involves
an increased risk of loss to the Fund should an issuer be unable to make
interest or principal payments or should the market value of such securities
decline. The Fund has the ability to purchase new issues of Nebraska Municipal
Securities on a "when-issued" basis as well as outstanding issues on a delayed
delivery basis, both of which involve the potential risk of loss of principal.
In the event either that the value of such securities to be purchased declines
prior to the settlement date or if such securities should ultimately not be
issued or delivered and the price of comparable securities has increased, the
cost of substitute securities having comparable par amounts, ratings and yields
will be greater than was originally contracted for. A substantial portion of the
Nebraska Municipal Securities in the Fund's portfolio may derive their payment
from mortgage loans, utilities, or from hospitals and other health care
facilities, all of which entail certain risks (see "Investment Objective and
Policies - Nebraska Municipal Securities"). The Fund may from time to time to
invest in participations in municipal Municipal leases are less liquid than many
other municipal securities and therefore will be subject to the risks of
illiquidity referred to in the next paragraph. Also, municipal leases are
subject to the risk of "non-appropriation" which allows the municipal lessee to
terminate the lease and eliminate its obligation to continue to make lease
payments (see "Investment Objective and Policies - Nebraska Municipal
Securities").
4
<PAGE>
The Fund will invest a substantial portion of its assets in investment
grade Nebraska Municipal Securities. Lower quality securities involve a greater
risk of default, including nonpayment of principal and interest, than investment
grade securities; however, the risk of default is present in investment grade
securities. Nebraska Municipal Securities rated in the lowest category of
investment grade debt may have speculative characteristics. Investment in
medium-quality debt securities (rated BBB or A by Standard & Poor's Corporation
or Baa or A by Moody's Investors Service, Inc.) involves greater investment
risk, including the possibility of issuer default or bankruptcy, than investment
in higher-quality debt securities. An economic downturn could severely disrupt
this market and adversely affect the value of outstanding bonds and the ability
of the issuers to repay principal and interest. During a period of adverse
economic changes, including a period of rising interest rates, issuers of such
bonds are more likely to experience difficulty in servicing their principal and
interest payment obligations than is the case with higher grade bonds. In
addition, an investment in the Fund should be made with an understanding that
the value of the underlying portfolio may decline with increases in interest
wide fluctuations in interest rates and thus in the value of fixed-rate, long-
term debt obligations generally. The Manager cannot predict whether these
fluctuations will continue in the future. The principal trading market for the
Nebraska Municipal Securities will generally be in the over-the-counter market.
As a result, the existence of a liquid trading market for the Nebraska Municipal
Securities may depend on whether dealers will make a market in such securities.
There can be no assurance that a market will be made for any of the Nebraska
Municipal Securities, that any market for the Nebraska Municipal Securities will
be maintained or of the liquidity of the Nebraska Municipal Securities in any
markets made. In addition, certain of the Nebraska Municipal Securities may be
subject to extraordinary optional and/or mandatory redemptions at par if certain
events should occur. To the extent securities were purchased at a price in
excess of the par value thereof and are subsequently redeemed at par as a result
of an extraordinary redemption, the Fund would suffer a loss of principal.
The Fund may invest in financial futures contracts and related options
thereon for hedging against the price volatility of portfolio securities is that
the prices of securities subject to futures contracts may not correlate
perfectly with the behavior of the cash prices of the Fund's portfolio
securities. The risk of imperfect correlation may be increased by the fact that
the Fund may trade in futures contracts on taxable securities, and there is no
guarantee that the prices of taxable securities will move in a manner similar to
the prices of tax-exempt securities. Another risk is that the Manager could be
incorrect in its expectations as to the direction or extent of various interest
rate movements or the time span within which the movements take place. For
example, if the Fund sold futures contracts in anticipation of an increase in
interest rates, and then interest rates went down, causing bond prices to rise,
the Fund would lose money and incur transaction costs on the sale.
INVESTORS MAY CALL (800) 601-5593 for daily yield and daily net asset value
quotations. For information on account balances, call (800) 601-5593.
5
<PAGE>
CONDENSED FINANCIAL INFORMATION
SELECTED PER SHARE DATA AND RATIOS
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
For The Year For The Year For The Period Since
Ended Ended Inception (Nov. 17, 1993)
July 31, 1996 July 31, 1995 Through July 31, 1994
--------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD......................... $ 10.95 $ 10.82 $ 11.49
--------------------------------------------------------
Income from Investment Operations:
Net investment income...................................... $ .57 $ .59 $ .45
Net realized and unrealized gain (loss) on investments..... .05 .13 (.67)
--------------------------------------------------------
Total From Investment Operations......................... $ .62 $ .72 $ (.22)
--------------------------------------------------------
Less Distributions:
Dividends from net investment income....................... $ (.57) $ (.59) $ (.45)
Distributions from net capital gains....................... .00 .00 .00
--------------------------------------------------------
Total Distributions...................................... $ (.57) $ (.59) $ (.45)
--------------------------------------------------------
NET ASSET VALUE, END OF PERIOD............................... $ 11.00 $ 10.95 $ 10.82
========================================================
Total Return................................................. 5.73%(A) 7.14%(A) (3.20)%(A)(B)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)................... $18,077 $14,445 $ 8,171
Ratio of net expenses (after expense assumption) to
average net assets....................................... 0.62%(C) 0.35%(C) 0.19%(B)(C)
Ratio of net investment income to average net assets....... 5.13% 5.63% 5.51%(B)
Portfolio turnover rate.................................... 27.20% 140.00% 314.00%
</TABLE>
(A) Excludes maximum sales charge of 4.25%.
(B) Ratio was annualized.
(C) During the periods indicated above, ND Holdings, Inc. or Ranson Capital
Corporation assumed expenses of $129,053, $146,913 and $70,186,
respectively. If the expenses had not been assumed, the annualized ratios of
total expenses to average net assets would have been 1.38%, 1.66%, and
2.25%, respectively.
6
<PAGE>
THE FUND
Ranson Managed Portfolios is an unincorporated business trust organized
under the laws of Massachusetts on August 10, 1990. It is an open-end non-
diversified series management investment company or "mutual fund." The Nebraska
Municipal Fund is one of four portfolios or series (the "Series") offered at
this time. Like other mutual funds, the Fund sells its shares to investors and
uses the proceeds to invest in various securities as described in this
Prospectus. The Fund is subject to the overall direction and monitoring function
of the Board of Trustees (the "Trustees").
Information regarding the Fund is available by telephoning or writing the
Fund at the phone number or address shown on the front cover of this Prospectus.
INVESTMENT OBJECTIVE AND POLICIES
Investment Objective
The investment objective of the Fund is to provide its shareholders with as
high a level of current income exempt from both federal income tax and Nebraska
income tax as is consistent with preservation of capital. Under normal market
conditions, the Fund's assets will be invested in a portfolio of Nebraska
Municipal Securities (as defined herein) which, in the opinion of Ranson Capital
Corporation, will produce a higher level of current income than would be
produced by a portfolio of Nebraska Municipal Securities rated in only the
highest rating category, but contains Nebraska Municipal Securities which do not
present a significant risk of loss of principal due to credit characteristics.
The Fund seeks to achieve its investment objective by investing primarily in
Nebraska Municipal Securities (as further described below). Nebraska law
provides that to the extent dividends paid by the Fund are derived from Nebraska
Municipal Securities, they shall be exempt from Nebraska income tax, although
dividends derived from certain Nebraska Municipal Securities that are private
activity bonds may be taken into account in the computation of the Nebraska
alternative minimum tax.
A Shareholder will receive taxable income in the event of capital gains
distributions by the Fund. In addition, the Fund has not established any limit
on the percentage of its portfolio that may be invested in Nebraska Municipal
Securities subject to the alternative minimum tax provisions of federal tax law,
and a substantial portion of the income produced by the Fund may be includable
in the calculation of alternative minimum taxable income. Shares of the Fund
therefore would not ordinarily be a suitable investment for investors who are
subject to the alternative minimum tax. The suitability of shares of the Fund
for these investors will depend upon a comparison of the yield likely to be
provided from the Fund with the yield from comparable tax-exempt investments not
subject to the alternative minimum tax, and with the yield from comparable fully
taxable investments, in light of each such investor's tax position.
Nebraska Municipal Securities
As used in this Prospectus, the term "Nebraska Municipal Securities" refers
to debt obligations the interest payable on which is, in the opinion of bond
counsel to the issuer, exempt from both federal income taxation and Nebraska
income taxation. The term "Nebraska Municipal Securities" also includes
obligations of the Commonwealth of Puerto Rico, the Virgin Islands and Guam, the
interest payable on which is, in the opinion of bond counsel to the issuer,
exempt from federal income taxation. The Fund will not invest more than 15% of
its
7
<PAGE>
total assets in Nebraska Municipal Securities which are obligations of the
Commonwealth of Puerto Rico, the Virgin Islands or Guam. Nebraska Municipal
Securities include debt obligations of Nebraska, its political subdivisions,
municipalities, agencies and authorities issued to obtain funds for various
public purposes, including the construction or improvement of a wide range of
public facilities such as airports, bridges, highways, hospitals, housing,
jails, mass transportation, nursing homes, parks, public buildings, recreational
facilities, school facilities, streets and water and sewer works. Other public
purposes for which Nebraska Municipal Securities may be issued include the
refunding of outstanding obligations, the anticipation of taxes or state aids,
the payment of judgments, the funding of student loans, community redevelopment,
the purchase of street maintenance and firefighting equipment or any authorized
corporate purpose of the issuer except for the payment of current expenses. In
addition, certain types of industrial development and other revenue bonds may be
issued by or on behalf of public corporations to finance privately operated
housing facilities, air or water pollution control facilities and certain local
facilities for water supply, gas, electricity or sewage or solid waste disposal.
Other types of industrial development bonds, the proceeds of which are used for
the construction, equipping, repair or improvement of privately operated
industrial, commercial or office facilities, constitute Nebraska Municipal
Securities, although current federal income tax laws place substantial
limitations on the size of such issues.
Since the Fund will invest substantially all of its assets in Nebraska
Municipal Securities, the Fund is susceptible to political and economic factors
affecting the issuers of Nebraska Municipal Securities. The Nebraska economy
performed steadily during 1993 as the national economy slowly expanded. The
Nebraska economy generally avoided the national recession of the early 1990's
and continued to expand in 1993 with growth in the labor force, job numbers,
construction activity, business incorporations, retail sales, tourism visits and
expenditures and population. Overall, it is anticipated that the State's economy
will grow at a slightly slower rate during the next two years, even if the
national economy expands, as the Nebraska economy tends to be less cyclical than
the national economy. It typically does not grow as fast as the national economy
during expansions and does not contract as much during recessions.
The Fund has a fundamental investment restriction which prohibits the Fund
from investing more than 25% of its total assets in securities of issuers in any
single industry. This restriction does not, however, place any such limitation
on the purchase of securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, or by Nebraska, its political subdivisions,
municipalities, agencies and authorities.
Over 25% of the Nebraska Municipal Securities in the Fund's portfolio may
be health care revenue bonds. Ratings of bonds issued for health care facilities
are sometimes based on feasibility studies that contain projections of occupancy
levels, revenues and expenses. A facility's gross receipts and net income
available for debt service may be affected by future events and conditions
including among other things, demand for services, the ability of the facility
to provide the services required, physicians' confidence in the facility,
management capabilities, competition with other hospitals, efforts by insurers
and governmental agencies to limit rates, legislation establishing state rate-
setting agencies, expenses, government regulation, the cost and possible
unavailability of malpractice insurance and the termination of restriction of
governmental financial assistance, including that associated with Medicare,
Medicaid and other similar third party payor programs. Pursuant to recent
federal legislation, Medicare reimbursements are currently calculated on a
prospective basis utilizing a single nationwide schedule of rates. Prior to such
legislation Medicare reimbursements were based on the actual costs incurred by
the health facility. The current legislation may adversely affect reimbursements
to hospitals and other facilities for services provided under the Medicare
program.
8
<PAGE>
Over 25% of the Nebraska Municipal Securities in the Fund's portfolio may
derive their payment from mortgage loans. Certain of the Nebraska Municipal
Securities in the Fund's portfolio may be single family mortgage revenue bonds,
which are issued for the purpose of acquiring from originating financial
institutions notes secured by mortgages on residences located within the
issuer's boundaries and owned by persons of low or moderate income. Mortgage
loans are generally partially or completely prepaid prior to their final
maturities as a result of events such as sale of the mortgaged premises,
default, condemnation or casualty loss. Because these bonds are subject to
extraordinary mandatory redemption in whole or in part from such prepayments of
mortgage loans, a substantial portion of such bonds will probably be redeemed
prior to their scheduled maturities or even prior to their ordinary call dates.
The redemption price of such issues may be more or less than the offering price
of such bonds. Extraordinary mandatory redemption without premium could also
result from the failure of the originating financial institutions to make
mortgage loans in sufficient amounts within a specified time period or, in some
cases, from the sale by the bond issuer of the mortgage loans. Failure of the
originating financial institutions to make mortgage loans would be due
principally to the interest rates on mortgage loans funded from other sources
becoming competitive with the interest rates on the mortgage loans funded with
the proceeds of the single family mortgage revenues available for the payment of
the principal of or interest on such mortgage revenue bonds. Single family
mortgage revenue bonds issued after December 31, 1980, were issued under Section
103A of the Internal Revenue Code, which Section contains certain ongoing
requirements relating to the use of the proceeds of such bonds in order for the
interest on such bonds to retain its tax-exempt status. In each case, the issuer
of the bonds has covenanted to comply with applicable ongoing requirements, and
bond counsel to such issuer has issued an opinion that the interest on the bonds
is exempt from federal income tax under existing laws and regulations. There can
be no assurances that the ongoing requirements will be met. The failure to meet
these requirements could cause the interest on the bonds to become taxable,
possibly retroactively from the date of issuance.
Certain of the Nebraska Municipal Securities in the Fund's portfolio may be
obligations of issuers whose revenues are primarily derived from mortgage loans
to housing projects for low to moderate income families. The ability of such
issuers to make debt service payments will be affected by events and conditions
affecting financed projects including, among other things, the achievement and
maintenance of sufficient occupancy levels and adequate rental income, increases
in taxes, employment and income conditions prevailing in local labor markets,
utility costs and other operating expenses, the managerial ability of project
managers, changes in laws and governmental regulations, the appropriation of
subsidies and social and economic trends affecting the localities in which the
projects are located. The occupancy of housing projects may be adversely
affected by high rent levels and income limitations imposed under federal and
state programs. Like single family mortgage revenue bonds, multi-family mortgage
revenue bonds are subject to redemption and call features, including
extraordinary mandatory redemption features, upon prepayment, sale or non-
origination of mortgage loans as well as upon the occurrence of other events.
Certain issuers of single or multi-family housing bonds have considered various
ways to redeem bonds they have issued prior to the stated first redemption dates
for such bonds. In one situation, the New York City Housing Development
Corporation, in reliance on its interpretation of certain language in the
indenture under which one of its bond issues was created, redeemed all of such
issue at par in spite of the fact that such indenture provided that the first
optional redemption was to include a premium over par and could not occur prior
to 1992.
Over 25% of the Nebraska Municipal Securities in the Fund's portfolio may
be obligations of issuers whose
9
<PAGE>
revenues are primarily derived from the sale of electric energy. Utilities are
generally subject to extensive regulation by state utility commissions which,
among other things, establish the rates which may be charged and the appropriate
rate of return on an approved asset base. The problems faced by such issuers
include the difficulty in obtaining approval for timely and adequate rate
increases from the governing public utility commission, the difficulty in
financing large construction programs, the limitations on operations and
increased costs and delays attributable to environmental considerations,
increased competition, recent reductions in estimates of future demand for
electricity in certain areas of the country, the difficulty of the capital
market in absorbing utility debt, the difficulty in obtaining fuel at reasonable
prices and the effect of energy conservation. All of such issuers have been
experiencing certain of these problems in varying degrees. In addition, federal,
state and municipal governmental authorities may from time to time review
existing and impose additional regulations governing the licensing, construction
and operation of nuclear power plants, which may adversely affect the ability of
the issuers of such bonds to make payments of principal and/or interest of such
bonds.
The Nebraska Municipal Securities in which the Fund invests consist of
Nebraska tax-exempt bonds, notes, commercial paper and participation interests
in municipal leases. Nebraska tax-exempt notes and commercial paper are
generally used to provide for short-term capital needs and ordinarily have a
maturity of up to one year. These include notes issued in anticipation of tax
revenue, revenue from other government sources or revenue from bond offerings
and short-term, unsecured commercial paper, which is often used to finance
seasonal working capital needs or to provide interim construction financing.
Nebraska tax-exempt leases are obligations of state and local government units
incurred to lease or purchase equipment or other property utilized by such
governments. The Fund will not originate leases as a lessor, but will instead
purchase a participation interest in the regular payment stream of the
underlying lease from a bank, equipment lessor or other third party. General
obligation bonds are secured by the issuer's pledge of its faith, credit and
taxing power for the payment of principal and interest. Revenue bonds are
payable from the revenue derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise or other
specific revenue source, but not from the general taxing power. Tax-exempt
industrial development bonds are in most cases revenue bonds and generally do
not carry the pledge of the credit of the issuing municipality. The revenues
from which such bonds are paid generally constitute an obligation of the
corporate entity on whose behalf the bonds are issued.
Although the participations in municipal leases which the Fund may purchase
(hereinafter called "lease obligations") do not constitute general obligations
of the municipality for which the municipality's taxing power is pledged, a
lease obligation lease is ordinarily backed by the municipality's covenant to
budget for, appropriate and make the payments due under the lease obligation.
However, certain lease obligations contain "non-appropriation" clauses which
provide that the municipality has no obligation to make lease payments in future
years unless money is appropriated for such purpose on a yearly basis. In
addition to the "non-appropriation" risk, these securities represent a
relatively new type of financing that has not yet developed the depth of
marketability associated with more conventional bonds. Although "non-
appropriation" lease obligations are secured by the leased property, disposition
of the property in the event of foreclosure might prove difficult. The Fund will
only purchase lease obligations which are rated in the top rating category by
either Standard & Poor's Corporation or Moody's Investor Service, Inc. The Fund
will not invest more than 15% of its net investment assets in lease obligations
(including, but not limited to those lease obligations which contain "non-
appropriation clauses") or any other illiquid securities.
10
<PAGE>
The Fund will only purchase lease obligations which are covered by an
existing opinion of legal counsel experienced in municipal lease transactions
that, as of the date of issue or purchase of each participation interest in a
municipal lease, the interest payable on such obligation is exempt from both
federal income tax and Nebraska income tax and that the underlying lease was the
valid and binding obligation of the governmental issuer.
Investment Policies
It is a fundamental policy of the Fund, which may not be changed without
the approval of the majority of the Fund's shares, that under normal
circumstances at least 80% of the Fund's assets will be invested in Nebraska
Municipal Securities which generate income that is exempt, in the opinion of
bond counsel, from both federal income tax and Nebraska income tax. While the
Fund attempts, under normal market conditions, to invest all of its assets in
Nebraska Municipal Securities, the Fund may temporarily invest up to 100% of its
assets in taxable fixed-income securities or hold up to 100% of its assets in
cash during periods of abnormal market conditions that dictate taking a
defensive posture by investing in such taxable obligations or cash. In addition,
pending the investment or reinvestment in Nebraska Municipal Securities of
proceeds of sales of shares or sales of portfolio securities or in order to
avoid the necessity of liquidating portfolio investments to meet shareholders'
redemption requests, the Fund may invest up to 20% of its assets in taxable
fixed income securities or cash.
The Nebraska Municipal Securities in which the Fund invests consist of
securities rated within the following grades assigned by Moody's Investors
Service, Inc. ("Moody's"): Aaa, Aa, A and Baa for bonds; MIG-1 and MIG-2 for
notes; Prime-1 and Prime-2 for commercial paper; or Standard & Poor's
Corporation ("S & P"): AAA, AA, A and BBB for bonds; SP-1 and SP-2 for notes;
A-1 or A-2 for commercial paper. The risk of default, including nonpayment of
principal and interest, on securities rated below the three highest grades is
somewhat higher than the risk of default on securities rated within the three
highest grades. The Fund may also invest in Nebraska tax-exempt industrial
development bonds, if the securities, at the time of purchase, are rated
investment grade quality by either Moody's or S & P. While ratings at the time
of purchase will determine which Nebraska Municipal Securities may be acquired
by the Fund, a subsequent reduction in rating will not require the Fund to
dispose of the securities. The Fund will purchase unrated Nebraska Municipal
Securities which have been determined to be of investment grade quality at the
time of purchase by the Fund's Manager pursuant to guidelines established and
maintained in good faith by the Board of Trustees of the Fund. Many issuers of
tax-exempt securities which have characteristics of rated securities choose not
to have their obligations rated. Although securities which are not rated are not
necessarily of lower quality, the market for them may not be as broad as for
rated securities, since many investors rely on rating agencies for credit
appraisal. As a fundamental policy, the Fund may not invest more than 30% of its
assets in unrated Nebraska Municipal Securities. Also, the Fund will not invest
more than 15% of the Fund's net assets in lease obligations or in any other
illiquid securities.
Taxable obligations which the Fund may purchase for temporary liquidity
purposes, or for temporary defensive purposes, may include: obligations of the
U.S. Government, its agencies or instrumentalities; other debt securities of
issuers having, at the time of purchase, a rating within the four highest grades
of Moody's or S & P; commercial paper rated P-1 or better by Moody's or A-1 or
better by S & P; certificates of deposit of domestic banks, including foreign
branches of domestic banks, which have capital, surplus and undivided profits of
over $100 million; time deposits; bankers' acceptances, repurchase agreements
and obligations of Nebraska with respect to any of the foregoing investments.
Interest earned from taxable obligations will be taxable to investors.
11
<PAGE>
The Fund also may purchase floating and variable rate demand notes from
municipal and nongovernmental issuers. These notes normally have a stated
maturity in excess of one year, but permit the holder to demand payment of
principal plus accrued interest upon a specified number of days' notice.
Frequently, such obligations are secured by letters of credit or other credit
support arrangements provided by banks. Use of letters of credit or other credit
support arrangements will generally not adversely affect the tax-exempt status
of these obligations. The Manager will rely upon the opinion of the issuer's
bond counsel to determine whether such notes are exempt from federal and
Nebraska income taxation. The issuer of floating and variable rate demand notes
normally has a corresponding right, after a given period, to prepay in its
discretion the outstanding principal amount of the note plus accrued interest
upon a specified number of days' notice to the noteholders. The interest rate on
a floating rate demand note is based on a known lending rate, such as a bank's
prime rate, and is adjusted automatically each time such rate is adjusted. The
interest rate on a variable rate demand note is adjusted at specified intervals,
based upon a known lending rate. The Manager will monitor the creditworthiness
of the issuers of floating and variable rate demand notes. The Fund will not
invest in derivative financial instruments other than in connection with its
hedging activities.
The yields on Nebraska Municipal Securities are dependent on a variety of
factors, including general money market conditions, the financial condition of
the issuer, general conditions of the Nebraska tax-exempt obligation market, the
size of a particular offering, the maturity of the obligation and the rating of
the issue or issuer. The ratings of Moody's and S&P represent their opinions as
to the quality of the Nebraska Municipal Securities which they undertake to
rate. It should be emphasized, however, that ratings are general, and not
absolute, standards of quality. Consequently, Nebraska Municipal Securities of
the same maturity, interest rate and rating may have different yields, while
Nebraska Municipal Securities of the same maturity and interest rate with
different ratings may have the same yield. Subsequent to their purchase by the
Fund, particular Nebraska Municipal Securities or other investments may cease to
be rated or their ratings may be reduced below the minimum rating required for
purchase by the Fund.
Medium-quality Nebraska Municipal Securities (rated BBB or A by S&P or Baa
or A by Moody's) are obligations of issuers that are considered to possess
adequate, but not outstanding, capacities to service the obligations. Nebraska
Municipal Securities rated in the lowest category of investment grade debt
(rated BBB by S&P or Baa by Moody's ) may have speculative characteristics.
Because many issuers of medium-quality Municipal Securities choose not to have
their obligations rated by a rating agency, up to 30% of the Nebraska Municipal
Securities in the Fund's portfolio may be unrated. Investment in medium-quality
debt securities involves greater investment risk, including the possibility of
issuer default or bankruptcy, than investment in higher-quality debt securities.
An economic downturn could severely disrupt this market and adversely affect the
value of outstanding bonds and the ability of the issuers to repay principal and
interest. During a period of adverse economic changes, including a period of
rising interest rates, issuers of such bonds are more likely to experience
difficulty in servicing their principal and interest payment obligations than is
the case with higher grade bonds. Medium quality debt securities tend to be less
marketable than higher-quality debt securities because the market for them is
less broad. The market for unrated debt securities is even narrower. During
periods of thin trading in these markets, the spread between bid and asked
prices is likely to increase significantly, and the Fund may have greater
difficulty selling the medium-quality debt securities in its portfolio.
12
<PAGE>
The Fund is a non-diversified investment company, but intends to Subchapter
M of the Internal Revenue Code. Because of the relatively small number of
issuers of investment grade Nebraska Municipal Securities, the Fund will
probably use its ability as a non-diversified fund to concentrate its assets in
the securities of certain issuers which the Fund's Manager deems to be
attractive investments, rather than invest in securities of a large number of
issuers merely to satisfy diversification requirements. Although the Fund's
Manager believes that the ability to concentrate the investments of the Fund in
particular issuers is advantageous when investing in Nebraska Municipal
Securities, such concentration involves an increased risk of loss to the Fund
should the issuer be unable to make interest or principal payments or should the
market value of such securities decline. Investment in a non-diversified
investment company such as the Fund may therefore entail greater risks than
investment in a "diversified" fund.
The Fund may invest up to 10% of its total assets in the securities of
other investment companies. Any investment by the Fund in securities issued by
other investment companies will result in the duplication of certain fees and
expenses.
Futures Contracts and Options
The Fund may invest in financial futures contracts ("futures contracts")
and related options thereon for hedging purposes. It is not the intent of the
Manager to speculate in futures contracts and related options as an aggressive
investment strategy, but rather as described below. The Fund may sell a futures
contract or a call option thereon or purchase a put option on such futures
contract, if the Manager anticipates that interest rates will rise, as a hedge
against a decrease in the value of the Fund's portfolio securities. If the
Manager anticipates that interest rates will decline, the Fund may purchase a
futures contract or a call option thereon or sell a put option on such futures
contract, to protect against an increase in the price of the securities the Fund
intends to purchase. These futures contracts and related options thereon will be
used only as a hedge against anticipated interest rate changes. A futures
contract sale creates an obligation by the Fund, as seller, to deliver the
specific type of instrument called for in the contract at a specified future
time for a specified price. Purchase of a futures contract creates an obligation
by the Fund, as purchaser, to take delivery of the specific type of financial
instrument at a specified future time at a specified price. A purchaser or
seller of a futures contract is required to make daily payments of cash reflect
the change in the value of the underlying contract. The specific securities
delivered or taken, respectively, at settlement date would not be determined
until or near that date. The determination would be in accordance with the rules
of the exchange on which the futures contract sale or purchase was effected.
Although the terms of futures contracts specify actual delivery or receipt
of securities, in most instances the contracts are closed out before the
settlement date without the making or taking of delivery of the securities.
Closing out of a futures contract is effected by entering into an offsetting
purchase or sale transaction prior to the expiration of the contract.
Unlike a futures contract, which requires the parties to buy and sell a
security on a set date unless offset, an option on a futures contract entitles
its purchaser to decide on or before a future date whether to enter into such a
contract (a long position in the case of a call option and a short position in
the case of a put option). If the purchaser decides not to enter into the
contract, the premium paid for the option on the contract is lost if it expires.
Since the cost of the option is fixed, there are no daily payments of cash by
the purchaser to reflect the change in the value of the underlying contract as
there are by a purchaser or seller of a futures contract. The seller of the
13
<PAGE>
option, however, may be required to make daily maintenance margin payments to
reflect the change in value of the underlying contract. The value of the option
is reflected in the net asset value of the Fund.
A risk in employing futures contracts to protect against the price
volatility of portfolio securities is that the prices of securities subject to
futures contracts may not correlate perfectly with the behavior of the cash
prices of the Fund's portfolio securities. The risk of imperfect correlation may
be increased by the fact that the Fund may trade in futures contracts on taxable
securities, and there is no guarantee that the prices of taxable securities will
move in a manner similar to the prices of tax-exempt securities. The correlation
may be distorted in part by the fact that the futures market is influenced by
short-term traders seeking to profit from the difference between a contract or
security price objective and their cost of borrowed funds. Such distortions
generally are minor and should diminish as the contract approaches maturity.
Another risk is that the Manager could be incorrect in its expectations as
to the direction or extent of various interest rate movements or the time span
within which the movements take place. For example, if the Fund sold futures
contracts in anticipation of an increase in interest rates, and then interest
rates went down, causing bond prices to rise, the Fund would lose money,
including transaction costs, on the sale.
The Fund may not enter into futures contracts or purchase related options
thereon if immediately thereafter the amount committed to initial margin plus
the amount paid for premiums for unexpired options on futures contracts exceed
5% of the value of the Fund's total assets. Similarly, the Fund may not purchase
or sell futures contracts or related options thereon if, immediately thereafter,
more than one-third of its net assets would be hedged.
Forward Commitments
The Fund may purchase new issues of Nebraska Municipal Securities and other
securities on a "when-issued" or delayed delivery basis, with delivery and
payment for the securities normally taking place within 45 days after the date
of the commitment to purchase. The payment obligation and the interest rate that
will be received on such securities are fixed at the time the buyer enters into
the commitment. The Fund may enter into such "forward commitments" if it holds,
and maintains until the settlement date in a segregated account with its
custodian, cash or high-grade, short-term obligations in an amount sufficient to
meet the purchase price. There is no percentage limitation on the Fund's total
assets which may be invested in forward commitments. Forward commitments involve
a risk of loss if the value of the Nebraska Municipal Securities or other
security to be purchased declines prior to the settlement date, which risk is in
addition to the risk of decline in the value of the Fund's other assets.
Although the Fund will generally enter into forward commitments with the
intention of acquiring Nebraska Municipal Securities or other securities for its
portfolio, the Fund may dispose of a commitment prior to settlement if the
Manager deems it appropriate to do so. The Fund may realize short-term profits
or losses upon the sale of forward commitments, which profits or losses may
constitute capital gains or ordinary income depending upon a number of factors,
including the number of sales of such commitments.
Portfolio Turnover
Portfolio transactions will be undertaken principally to accomplish the
Fund's objective in relation to anticipated movements in the general level of
interest rates, but the Fund may also engage in short-term trading consistent
with its objective. Securities may be sold in anticipation of a market decline
(a rise in interest rates) or purchased in anticipation of a market rise (a
decline in interest rates) and later sold. In addition, a security may be sold
and another purchased at approximately the same time to take advantage of what
the Manager believes
14
<PAGE>
to be a temporary disparity in the normal yield relationship between the two
securities. Yield disparities may occur for reasons not directly related to the
investment quality of particular issues or the general movement of interest
rates, due to such factors as changes in the overall demand for or supply of
various types of Nebraska Municipal Securities or changes in the investment
objectives of investors.
The Fund's investment policies may lead to frequent changes in investments,
particularly in periods of rapidly fluctuating interest rates. A change in
securities held by the Fund is known as "portfolio turnover" and may involve the
payment by the Fund of dealer mark-ups or underwriting commissions and other
transaction costs on the sale of securities, including Nebraska Municipal
Securities, as well as on the reinvestment of the proceeds in other securities.
The Fund anticipates that its annual portfolio turnover rate will not exceed
75%. Portfolio turnover rate for a fiscal year is the ratio of the lesser of the
dollar amount of the purchases or sales of portfolio securities to the monthly
average of the value of portfolio securities--excluding securities whose
maturities at acquisition were one year or less. The Fund's portfolio turnover
rate will not be a limiting factor when the Fund deems it desirable to sell or
purchase securities. Frequent changes in the Fund's portfolio securities may
result in higher transaction costs for the Fund. In addition, in order to
qualify as a regulated investment company under the Internal Revenue Code, the
Fund must limit the portion of its gross income derived from the sale or other
disposition of stock or securities held for less than three months. If the Fund
were unable to satisfy this condition, among others, the Fund would be subject
to tax on its taxable income without deduction for distributions to
shareholders. See "Dividends and Taxes" in this Prospectus and "Portfolio
Transactions" in the Fund's Statement of Additional Information.
Repurchase Agreements
The Fund may enter into repurchase agreements with respect to not more than
10% of its total assets (taken at current value), except when investing for
temporary defensive purposes during times of adverse market conditions. A
repurchase agreement is a contract under which the Fund would acquire a security
for a relatively short period, and the seller would agree to repurchase such
security at the Fund's cost plus interest within a specified time (generally one
day). Under the Investment Company Act of 1940, repurchase agreements are
considered loans by the Fund. The Fund will not enter into any repurchase
agreement in an amount which would jeopardize the Fund's status as a regulated
investment company or its ability to distribute tax-exempt dividends. Although
the Fund may enter into repurchase agreements with respect to any securities
which it may acquire consistent with its investment policies and restrictions,
it is the Fund's present intention to enter into repurchase agreements only with
respect to obligations of the U.S. Government or its agencies or
instrumentalities and with respect to Nebraska Municipal Securities. The Fund's
Custodian will hold the securities underlying any repurchase agreement in a
segregated account. In investing in repurchase agreements, the Fund's risk is
limited to the ability of the seller to pay the agreed-upon price at the
maturity of the repurchase agreement. In the opinion of the Manager, the risk is
not material, since in the event of default, barring extraordinary
circumstances, the Fund would be entitled to sell the underlying securities or
otherwise receive adequate protection under federal bankruptcy laws for its
interest in such securities. To the extent that proceeds from any sale upon a
default are less than the repurchase price, however, the Fund could suffer a
loss. In addition, the Fund may incur certain delays in obtaining direct
ownership of the collateral.
The Fund's Board of Trustees may change are not fundamental without an
affirmative vote of a "majority of the Fund's outstanding voting shares," as
defined in "Investment Objective, Policies and Restrictions" in the Fund's
Statement of Additional Information.
15
<PAGE>
NET ASSET VALUE
The net asset value per share of the Fund is determined by calculating the
total value of the Fund's assets, deducting total liabilities, and dividing the
result by the number of shares outstanding. Fixed income securities for which
quotations are readily available are valued at the mean between the quoted bid
and asked price. Securities for which quotations are not readily available
(which will constitute a majority of the securities held by the Fund) are valued
at fair value as determined by Ranson Capital Corporation (the "Evaluator")
pursuant to procedures adopted by the Board of Trustees, using methods which
include consideration of the following: yields or prices of municipal bonds of
comparable quality, type of issue, coupon, maturity and rating, indications as
to value from dealers and general market conditions. The Evaluator may employ
electronic data processing techniques and/or a matrix system to determine
valuations. The procedures utilized by the Evaluator and its valuations are
reviewed by the officers of the Fund under the general supervision of the Board
of Trustees and are periodically reviewed by the Board of Trustees. Short-term
securities with remaining maturities of less than 60 days are valued at
amortized cost. Other assets are valued at fair value as determined in good
faith by the Trustees of the Fund. The net asset value of the Fund is computed
once daily as of 3:00 p.m. Central time on each day that the New York Stock
Exchange is open for trading. The public offering price based thereon becomes
effective as of the time of such computation. The New York Stock Exchange is
closed on weekends and on the following days: New Year's Day, Washington's
Birthday, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day and Christmas Day. The Fund reserves the right to calculate the net asset
value and to adjust the public offering price based thereon more frequently than
once each day if deemed desirable.
16
<PAGE>
PURCHASE OF SHARES
Shares may be purchased at the public offering price through any securities
dealer having a sales agreement with Ranson Capital Corporation (the
"Distributor"). Shares may also be purchased through banks and certain other
financial institutions that have agency agreements with the Distributor. These
financial institutions will receive transaction fees that are the same as
commissions to dealers and may charge their customers service fees relating to
investments in the Fund. Purchase requests should be addressed to the dealer or
agent from which this Prospectus was received which has a sales agreement with
the Distributor. Such dealer or agent may place a telephone order with the
Transfer Agent for the purchase of Fund shares. It is a dealer's or broker's
responsibility to promptly forward payment and registration instructions (or
completed applications) to the Transfer Agent for shares being purchased.
Reference should be made to the wire order to ensure proper settlement of the
trade. Payment must be received within seven days of the order or the trade may
be cancelled and the dealer or broker placing the trade will be liable for any
losses. The public offering price is the net asset value per share next
determined plus a sales charge that will be a percentage of the public offering
price and will vary as shown below. Current sales charge rates are:
<TABLE>
<CAPTION>
Sales Charge
------------
As a As a Dealer
Percentage of Percentage of Allowance
Offering Net Asset Value as Percentage of
Price Invested Offering Price
<S> <C> <C> <C>
Amount of Purchase
- ------------------
Less than $50,000 4.25% 4.44% 3.60%
$50,000 but less than $100,000 3.75% 3.90% 3.15%
$100,000 but less than $250,000 3.25% 3.36% 2.75%
$250,000 but less than $500,000 2.50% 2.56% 2.00%
$500,000 but less than $1,000,000 1.50% 1.52% 1.40%
$1,000,000 or more 0.75% 0.76% 0.70%
</TABLE>
The minimum initial investment is $1,000, and there is a $50 minimum on all
additional investments (excluding reinvestment of dividends and capital gains).
The Fund reserves the right to redeem Fund accounts that are reduced to a value
of less than $1,000 (for any reason other than fluctuation in the market value
of the Fund's portfolio securities). Should the Fund elect to exercise this
right, the investor will be notified before such redemption is processed that
the value of the investor's account is less than $1,000 and that the investor
will have sixty days to increase the account to at least the $1,000 minimum
amount before the account is redeemed.
Shares of the Fund may be sold at net asset value to the officers and
Trustees of the Fund, to any subsidiary companies of Ranson Capital Corporation
and to any employees of Ranson Capital Corporation or to members of their
immediate families. Immediate family members shall include spouses, children,
fathers, mothers, brothers or sisters. Shares of the Fund may also be sold at
their net asset value to broker-dealers having sales agreements with Ranson
Capital Corporation, and registered representatives and other employees of such
broker-dealers, including their spouses and children; to financial institutions
having sales agreement with Ranson Captial Corporation, and employees of such
financial institutions, including their spouses and children; and to
17
<PAGE>
any broker-dealer, financial institution, or other qualified firm which receives
no commissions for selling shares to its clients.
From time to time the Distributor may implement programs under which
dealers and their representatives may be eligible to participate in which such
firms may win nominal awards for certain sales efforts or under which the
Distributor will reallow additional concessions to any dealer that sponsors
sales contests or recognition programs conforming to criteria established by the
Distributor or participates in sales programs sponsored by the Distributor.
These programs will not change the price that an investor pays for shares or the
amount that the Fund will receive from such sale. In addition, the Fund and the
Distributor may pay firms that sell the Fund's shares an annual service fee for
administrative and shareholder services, as described under "The Distributor."
Letters of Intent
An investor may qualify for a reduced sales charge immediately by stating
his or her intention to invest in one or more series of the Fund, during a 13-
month period, an amount that would qualify for a reduced sales charge and by
signing a nonbinding Letter of Intent, which may be signed at any time within 90
days after the first investment to be included under the Letter of Intent. After
signing the Letter of Intent, each investment made by an investor will be
entitled to the sales charge applicable to the total investment indicated in the
Letter of Intent. If an investor does not complete the purchases under the
Letter of Intent within the 13-month period, the sales charge will be adjusted
upward, corresponding to the amount actually purchased. When an investor signs a
Letter of Intent, shares of a series of the Fund with a value of up to 5% of the
amount specified in the Letter of Intent will be restricted. If the total
purchases made by an investor under the Letter of Intent, less redemptions,
equals or exceeds the amount specified in the Letter of Intent, the restriction
on the shares will be removed. In addition, if the total purchases exceed the
amount specified and qualify for a further quantity discount, the Distributor
will make a retroactive price adjustment and will apply the adjustment to
purchase additional shares at the then current applicable offering price. If an
investor does not complete purchases under a Letter of Intent, the sales charge
is adjusted upward, and if after written notice to the investor, he or she does
not pay the increased sales charge, sufficient restricted shares will be
redeemed at the current net asset value to pay such charge. In connection with
the determination of sales charges applicable to the purchase of shares of the
Fund, the Letter of Intent program will take into account investments in shares
of any other mutual fund carrying a sales load of which Ranson Capital
Corporation is the Distributor.
Concurrent Purchases
An investor who concurrently purchases shares of the Fund and units of any
series of the Nebraska Tax-Exempt Trust sponsored by Ranson Capital will be
charged the sales charge on the respective purchase at the level specified in
the respective prospectus based on the aggregate dollar value of the combined
purchases.
An investor or his or her dealer or agent must notify the Transfer Agent
whenever a quantity discount is applicable to purchases. Upon such notification,
an investor will receive the lowest applicable sales charge. Quantity discounts
may be modified or terminated by the Distributor at any time. For more
information about quantity discounts, contact the dealer or agent from which
this Prospectus was obtained or the Distributor.
Open Account Program/Certificates
All investors in the Fund will be enrolled in an Open Account Program when
they make their first investment in the Fund, unless they elect otherwise.
Investors may then make additional purchases whenever they wish, but
18
<PAGE>
they are not obligated to make any additional investments. Whenever investors
make an investment in the Fund, full and fractional shares will be purchased for
their account at the next determined public offering price applicable to their
purchase after the Fund receives their order.
If an investor elects not to be enrolled in the Open Account Program by
notifying the Transfer Agent in written form, he or she will be sent share
certificates representing the full shares of the Fund and will be required to
surrender the certificates to redeem such shares. Fund share certificates will
be mailed within 10 days of an investor's request. Certificates will not be sent
outside of the United States. Investors should promptly notify the Fund if
certificates are not received. The Fund will not file a mail loss claim later
than one year after the issuance of Fund share certificates. After one year,
investors requesting replacement certificates may be required to post an
insurance bond in the amount of 2% of the market value of the certificated
shares.
SPECIAL PROGRAMS
Unit Investment Trust Reinvestment
Investors in any Series of The Nebraska Tax-Exempt Trust may reinvest
distributions of principal and interest from such trust in shares of the Fund
with no sales charge and no minimum investment. The Fund reserves the right to
modify or terminate this program at any time.
Redemptions From Other Funds
Shares of the Fund may be purchased at net asset value where the amount
invested is documented to the Fund to be proceeds from the redemption of shares
of an unrelated investment company which does not impose a contingent deferred
sales charge or redemption fee and where the investor paid an initial sales
charge. Purchases must be made within 60 days of the redemption date. The Fund
reserves the right to modify or terminate this privilege at any time.
Group Program
The Fund has a group investment and reinvestment program (the "Group
Program") which allows investors to purchase shares of a Series of the Fund with
a lower minimum initial investment and with a lower sales charge if the investor
and the Group Program of which he or she is a participant meet the cost saving
criteria set forth below.
Description of Group Program. If the investor's Group Program (such as an
employee investment program) meets the requirements described below, a series of
the Fund will modify the $1,000 initial investment requirement to such minimum
investment as may be determined by the Fund. The sales charge set forth under
"Purchase of Shares" for each purchase by a participant of a Group Program will
be based on (i) the combined current purchases of such group of shares together
with (ii) the combined net asset value of shares of such group at the time of
such investment. The dealer or agent, if any, through which the Group Program
was initiated will be entitled to a dealer concession or agency commission based
on the sales charges paid by participants of such Group Program.
19
<PAGE>
Criteria for the Group Program. The cost savings criteria to the Fund that
must be met in order for a Group Program to qualify for the benefits set forth
above are:
(a) The administrator of an investor's investment program must have
entered into an agreement with the Distributor.
(b) Such agreement must provide that the administrator must submit a
single order and make payment with a single remittance for all investments
during each investment period (e.g., each pay period or distribution period) by
all investors who choose to invest through the Group Program.
(c) Such agreement must provide that the administrator will provide the
Transfer Agent with appropriate backup data for each participating investor in a
computerized format compatible with the Transfer Agent's processing system.
Additional Criteria for the Group Program. As further requirements for
obtaining these special benefits under the Group Program, the Fund requires that
investments be in the form of an Open Account (with no share certificates being
issued), that all dividends and other distributions be reinvested in additional
shares without any systematic withdrawal program described herein and that the
minimum new investment in shares of the Fund by each participant in an employee
investment program be at least $25 per month. The Fund reserves the right to
modify or terminate this program at any time.
Systematic Withdrawal Program
The owner of $5,000 or more of shares of the Fund (which may not be in
certificated form) may provide for the payment from his or her account of any
requested dollar amount to his or her designated payee monthly, quarterly or
annually. Sufficient shares will be redeemed from the investor's account for the
designated amount so that the payee will receive it approximately the fifteenth
of each month. Dividend distributions automatically will be reinvested under
this program. Depending upon the size of the payments requested, redemptions for
the purpose of making such payments may reduce or even exhaust the account. The
program may be terminated at any time by the investor. If an investor desires to
utilize this program, he or she may contact the Transfer Agent for an
authorization form.
It ordinarily will be disadvantageous to an investor to purchase shares
(except through reinvestment of distributions) while participating in a
systematic withdrawal program because he or she will be paying a sales charge to
purchase shares at the same time that shares are being redeemed upon which such
investor may already have paid a sales charge. Therefore, the Fund will not
knowingly permit an investor to make additional investments of less than $5,000
if an investor is at the same time making systematic withdrawals at a rate
greater than the dividend distributions being paid on such investor's shares.
The Fund reserves the right to amend or terminate the systematic withdrawal
program on thirty days' notice, and investors may withdraw from the program at
any time. The Fund reserves the right to modify or terminate this program at any
time.
Preauthorized Investment Program
An investor may establish an automatic investment program with his or her
Fund account. With the Preauthorized Investment Program, monthly investments
(minimum $50) are made automatically from an investor's account at a bank,
savings and loan or credit union into such investor's Fund account. By enrolling
in
20
<PAGE>
the Preauthorized Investment Program, the investor authorizes the Fund and its
agents to take money out of his or her predesignated bank, savings and loan or
credit union account and invest that money in his or her Fund account. If an
investor also has expedited wire transfer redemption privileges with his or her
Fund account, such investor must designate the same bank, savings and loan or
credit union account for both the Preauthorized Investment Program and wire
redemption programs. Any account owner may terminate this privilege simply by
sending written notice to the Transfer Agent. Termination will become effective
as soon as the Transfer Agent has had a reasonable time to act upon the request.
The Preauthorized Investment Program may not be used with passbook savings
accounts. Fund shares purchased by the Preauthorized Investment Program must be
owned for 15 days before they may be redeemed. An investor may contact the
Transfer Agent for a Preauthorized Investment Program application. The Fund
reserves the right to modify or terminate this program at any time.
Rights of Accumulation
A purchase of shares may qualify for a cumulative quantity discount. The
applicable sales charge will be based on the total of:
(a) the investor's current purchase; and
(b) the net asset value (at the close of business on the previous day) of
the shares of the Fund held by an investor.
For example, if an investor owned shares worth $40,000 at the current net
asset value and purchased an additional $10,000 of shares, the sales charge for
the $10,000 purchase would be at the rate applicable to a single $50,000
purchase.
To qualify for the cumulative quantity discount on a purchase through a
broker-dealer, when each purchase is made, the investor or broker-dealer must
provide the Fund with sufficient information to verify that the purchase
qualifies for the discount.
Reinstatement Privilege
An investor who has redeemed shares of the Fund may reinvest up to the full
amount of such redemption at net asset value at the time of reinvestment. An
investor using this privilege a year or more after such investor redeemed shares
of the Fund must file a new account application and provide proof that such
investor was a shareholder of the Fund. See "Dividends and Taxes" regarding the
potential tax implications of exercising this privilege. The Fund reserves the
right to modify or terminate this privilege at any time.
REDEMPTION OF SHARES
Upon receipt of a redemption request in proper form addressed to the
Transfer Agent, shares of the Fund will be redeemed by the Fund. It is a
broker's or dealer's responsibility to promptly forward the redemption requests
to the Transfer Agent for shares being redeemed in order for shareholders to
receive the next determined net asset value. The redemption price for shares of
the Fund is based on the net asset value per share next determined after receipt
of the redemption request. Redemption requests must be in writing,
21
<PAGE>
accompanied by any issued certificates (for investor protection, certificates
should be sent by registered mail). Redemption requests and any certificates or
stock power must be endorsed by all registered owners with signatures guaranteed
by a member firm of a national securities exchange or by a commercial bank,
savings and loan association or trust company. Further documentation may be
requested from corporations, executors, administrators, trustees or guardians.
Alternatively, an investor may place an order to sell shares (whether in
certificate or book entry form) through his or her dealer or agent which has a
sales agreement with the Distributor and from which this Prospectus was
received, which dealer or agent will telephone such request to the Distributor.
The investor will receive the net asset value next determined after the
Distributor receives such sell order from the dealer or agent. The Fund does not
charge for this transaction.
Whether shares are redeemed by the Fund or sold through an investor's
dealer or agent, a check for the proceeds ordinarily will be mailed to an
investor or his or her dealer or agent within seven calendar days after a
redemption request or repurchase order and share certificates (if any) are
received in proper form as set forth above.
If a request to redeem shares is received shortly after the purchase of
such shares, the Fund will not mail the proceeds until checks received for the
purchase of shares have cleared, which may take up to 15 days. The proceeds of a
redemption may be more or less than the cost of the shares.
The right of redemption or resale of the Fund may be suspended or the date
of payment postponed during any period when the New York Share Exchange is
closed.
DIVIDENDS AND TAXES
Dividends
The Fund will declare distributions on a daily basis to shareholders of
record on the date of each declaration and will pay such distributions on a
monthly basis. The monthly distribution will be composed of the investment
income earned by the Fund less the expenses of the Fund plus all or a portion of
net short-term capital gains (such net short-term capital gains reduced by net
long-term capital losses, if any, and carryover capital losses from previous
years) realized by the Fund on transactions in securities. The Fund will also
declare and make distributions of net long-term capital gains, if any, at least
annually. Net long-term capital gain distributions consist of the realized long-
term capital gains on transactions in securities of the Fund, net of certain
realized capital losses and less certain carryover capital losses from previous
years.
The Fund automatically will credit monthly distributions and any capital
gain distributions to an investor's account in additional shares of the Fund
valued at net asset value on the date such distributions are payable, without
sales charge, unless an investor elects to the Transfer Agent of the Fund to
have distributions received in cash. Distributions that are reinvested are
treated as cash distributions for income tax purposes. If an investor elects to
change the method of distribution, such change will be effective only with
regard to distributions for which the payment date is seven or more business
days after the Transfer Agent has received the written request.
22
<PAGE>
A check will be generated on the date on which distributions are payable
for dividends to be received in cash. An investor can expect to receive this
check within seven days. If the U. S. Postal Service cannot deliver the check or
if the checks remain uncashed for six months, the checks will be reinvested in
the investor's account at the then-current net asset value and all future
dividends will be reinvested.
Distribution checks may be sent to parties other than the investor. The
Transfer Agent of the Fund can provide investors with a "Dividend Order" form
for such purposes. After the Transfer Agent receives this completed form with a
signature guarantee, distribution checks will be sent to the bank or other
person designated as an investor.
Taxes
The Fund has elected and intends to qualify each year as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986 (the
"Code") and, if so qualified, will generally not be liable for federal income
taxes to the extent it timely distributes its earnings. If in any year the Fund
should fail to qualify under Subchapter M for tax treatment as a regulated
investment company, the Fund would incur a regular corporate federal income tax
upon its taxable income for that year, and distributions to shareholders of the
Fund would be taxable to such shareholders as ordinary income to the extent of
the earnings and profits of the Fund, including distributions that would
otherwise qualify as exempt-interest dividends. For shareholders of the Fund
that are corporations, such distributions would be eligible for the
dividends-received deduction. In addition, the Fund intends to invest in
sufficient municipal securities so that it will qualify to pay "exempt-interest
dividends" (as defined in the Code) to shareholders. The Fund's dividends
payable from net tax-exempt interest earned from municipal securities will
qualify as exempt-interest dividends if, at the close of each quarter of the
taxable year of the Series, at least 50% of the value of the Fund's total
assets consists of tax-exempt municipal securities.
Exempt-interest dividends distributed to shareholders generally are not
subject to federal income tax except to the extent such interest is subject to
the alternative minimum tax, as discussed hereinafter. The percentage of income
that is tax-exempt is applied uniformly to all distributions made during each
calendar year and thus is an annual average for the Fund rather than a day-by-
day determination for each shareholder whether received in shares or in cash.
The percentage of all distributions of earnings other than exempt-interest
dividends paid by the Fund, such as net investment income received from
investments in debt securities other than municipal securities, and any net
realized short-term capital gains (including certain amounts deemed distributed)
will generally be taxable to the shareholders as ordinary income. Any
distribution of net realized long-term capital gains (including amounts deemed
distributed) will generally be subject to federal taxation as long-term capital
gains ("long-term capital gain distributions"), regardless of the length of time
the investor has held such shares.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") subjects tax-
exempt municipal securities to the market discount rules of the Code effective
for municipal securities purchased after April 30, 1993. In general, market
discount is the amount (if any) by which the stated redemption price at maturity
exceeds an investor's purchase price (except to the extent that such difference,
if any, is attributable to original issue discount not yet accrued), subject to
a statutory de minimus rule. Market discount can arise based on the price the
Fund pays for municipal securities. Under the Tax Act, accretion of market
discount is taxable as ordinary income; under prior law the accretion had been
treated as capital gain. Market discount that accretes while the Fund holds a
municipal security would be recognized as ordinary income by the Fund when
principal payments are received on the municipal security or upon sale or at
redemption (including early redemption), unless the Fund elects to include
market discount in taxable income as it accrues. Distributions to shareholders
of the Fund, to the extent of any market discount that is included in the Fund's
taxable income, would be taxable to shareholders as ordinary income.
23
<PAGE>
For both individuals and corporations, interest paid on certain "private
activity bonds" issued on or after August 8, 1986, will be treated as an item
of tax preference and may, therefore, be subject to the alternative minimum
tax. To the extent provided by regulations to be issued by the Secretary of the
Treasury, exempt-interest dividends paid by the Fund will be treated as
interest on private activity bonds to the extent of the proportionate amount of
interest on such private activity bonds received by the Fund. Such
exempt-interest dividends constitute a tax preference item subject to both the
individual and corporate alternative minimum tax. The Fund will annually supply
shareholders with a report indicating the percentage of Fund income
attributable to bonds subject to the alternative minimum tax.
Exempt-interest dividends received by a shareholder which are not with
respect to certain "private activity bonds" are not treated as a tax preference
item. However, for certain corporate shareholders such dividends will be
included in the computation of an adjustment item used in determining such
corporation's alternative minimum tax and environmental tax (the "Superfund
Tax"). The adjustment item is 75% of the excess of such corporate shareholder's
"adjusted current earnings" over its other alternative minimum taxable income
with certain adjustments. Although exempt-interest dividends received by a
shareholder will not be included in the gross income of corporations for
federal income tax purposes, "adjusted current earnings" include all tax-exempt
interest, including exempt-interest dividends received from the Fund. Corporate
shareholders are advised to consult their tax advisers with respect to the tax
consequences of the alternative minimum tax, the Superfund Tax and the branch
profits tax under Section 884 of the Code.
For taxpayers other than corporations, net capital gains are presently
subject to a maximum stated marginal tax rate of 28%. All taxpayers are
required to disclose to the Internal Revenue Service on their tax returns the
amount of tax-exempt interest earned during the year including exempt-interest
dividends from the Fund.
The hedging activities and transactions in options and futures contracts of
the Fund are subject to special tax provisions that may accelerate or defer
recognition of certain taxable gains or losses, or alter the holding periods of
certain of the Fund's securities or convert capital gain into ordinary income
and convert short-term capital losses into long-term capital losses. These
rules could therefore affect the amount, timing and character of distributions
to shareholders. Recognition of unrealized taxable gains by the Fund under the
"mark to market" rules of the Code may increase the difficulty of compliance
with requirements which must be satisfied in order for the Fund to continue to
qualify as a regulated investment company, thus requiring the Fund to limit its
hedging activities. Such activities also may be limited by the requirement that
the Fund derive less than 30% of its annual gross income from the sale or other
disposition of securities held for less than three months in order to qualify
as a regulated investment company under the Code.
Although dividends generally will be treated as distributed when paid,
dividends declared in October, November or December, payable to shareholders of
record on a specified date in one of those months and paid during January of
the following year, will be treated as having been distributed by the Fund (and
received by the shareholders) on December 31 of the year such dividends are
declared.
Distributions from the Fund will not generally be eligible for the
dividends received deduction for corporations.
24
<PAGE>
The Fund is required by law to withhold a specified percentage of taxable
dividends and certain other payments, including redemption payments, paid to
non-corporate investors who do not certify to the Fund their correct taxpayer
identification number (in the case of individuals, their social security
number) and in certain other circumstances as may be required by the Code.
Under Section 86 of the Code, up to 85% of a social security recipient's
benefits may be included in gross income for a benefit recipient if the sum of
his adjusted gross income, income from tax-exempt sources such as tax-exempt
bonds and distributions made by the Fund plus 50% of his social security
benefits exceeds certain base amounts. Income from the Fund is still
tax-exempt to the extent described above; it is only included in the
calculation of whether a recipient's income exceeds certain established amounts.
Redemption of shares of the Fund will be a taxable transaction for federal
income tax purposes, and such investors will generally recognize gain or loss
in an amount equal to the difference between the basis of the shares and the
amount received. Assuming that investors hold such shares as a capital asset,
the gain or loss will be a capital gain or loss and will generally be long-term
if investors have held such shares for a period of more than one year. In the
case of shareholders holding shares of the Fund for six months or less and
subsequently selling those shares at a loss after receiving an exempt-interest
dividend, the loss will be disallowed to the extent of the exempt-interest
dividends received. If such loss is not entirely disallowed, it will be treated
as a long-term capital loss to the extent any long-term capital gain
distribution is made with respect to such shares during the six-month period or
less that the investor owns the shares. If a loss is realized
of Fund shares, the reinvestment in additional Fund shares or the acquisition
of a contract or option to acquire securities that are substantially identical
to Fund shares within 30 days before or after the redemption may be subject to
the "wash sale" rules of the Code, resulting in a postponement of the
recognition of such loss for federal income tax purposes. In addition, an
investor cannot take into account any sales or similar charge incurred in
acquiring shares of the Fund (a "load charge," such charge does not include
amounts paid with respect to the reinvestment of mutual fund share dividends)
in computing gain or loss on the sale of shares of the Fund if the investor
sells such shares within 90 days of the date the shares are acquired and the
investor obtains and subsequently exercises the right to reinvest in shares of
any mutual fund without the payment of a load charge or with the payment of a
reduced charge (However, such charges shall be treated as incurred in
connection with the reinvestment in shares.).
The Tax Act raised tax rates on ordinary income while capital gains remain
subject to a 28 percent maximum stated rate. Because some or all capital gains
are taxed at a comparatively lower rate under the Tax Act, the Tax Act includes
a provision that recharacterizes capital gains as ordinary income in the case of
certain financial transactions that are "conversion transactions" effective for
transactions entered into after April 30, 1993. It is possible that this
provision could result in the recharacterization of amounts or distributions
otherwise characterized as capital gains by the Fund or a shareholder as
ordinary income. Shareholders of the Fund should consult with their tax advisers
regarding the potential effect of this provision on their investment in shares
of the Fund.
Interest on indebtedness which is incurred to purchase or carry shares of
a mutual fund which distributes exempt-interest dividends during the year is not
deductible for federal income tax purposes. Further, the Fund may not be an
appropriate investment for persons who are "substantial users" of facilities
financed by industrial development bonds held by the Fund or are "related
persons" to such users; such persons should consult their tax advisers before
investing in the Fund.
25
<PAGE>
State and Local Tax Aspects. To the extent that exempt-interest dividends
are derived from interest on Nebraska Municipal Securities that is exempt from
the Nebraska income tax and the Nebraska alternative minimum tax, such
dividends will also qualify as exempt from the Nebraska income tax and the
Nebraska alternative minimum tax. To the extent that exempt interest dividends
are derived from interest on Nebraska Municipal Securities that is included in
the computation of the Nebraska Alternative Minimum tax, such dividends will
also be included in the computation of the Nebraska alternative minimum tax.
Any nonqualifying exempt-interest dividends and dividends taxable for federal
income tax purposes as ordinary income will be taxable for Nebraska income tax
purposes to the shareholders of the Fund. Distributions treated as long-term
capital gains for federal income tax purposes will generally receive the same
characterization under Nebraska law. In the case of shareholders that are
subject to the Nebraska financial institutions franchise tax, dividends from
the Fund may affect the determination of such shareholders' maximum franchise
tax. Financial institutions are urged to consult their own tax advisers before
investing in the Fund.
Except as described above with respect to Nebraska income taxation,
the exemption from federal income tax for exempt-interest dividends does not
necessarily result in exemption for such dividends under the income or other
tax laws of any state or local taxing authority. Taxpayers should consult their
own advisers regarding the consequences under such taxes with respect to the
purchase, ownership and disposition of shares of the Fund.
The tax discussion set forth above is for general information only.
Annually, shareholders of the Fund receive information as to the tax status of
distributions made by the Fund in each calendar year. The foregoing relates to
federal income taxation and to Nebraska income taxation as in effect as of the
date of this Prospectus. Investors should consult their own tax advisers
regarding the federal, state, local, foreign and other tax consequences of an
investment in the Fund, including the effects of any change or any proposed
change, in the tax laws.
DESCRIPTION OF SHARES AND RIGHTS
The Fund's Agreement and Declaration of Trust ("Trust Agreement") permits
its Trustees to issue an unlimited number of shares, without par value, from
each Series that is designated by the Board of Trustees. Each share of a Series
represents an equal proportionate interest in the assets and liabilities
belonging to the Series with each other share of such Series and is entitled to
such dividends and distributions out of the income belonging to the Series as
are declared by the Trustees. The shares do not have cumulative voting rights
nor any preemptive rights. In case of a liquidation, subject to the rights of
creditors, the holders of the shares of the Series being liquidated will be
entitled to receive a distribution out of the net assets belonging to the
Series being liquidated. Should additional Series be designated by the Board of
Trustees, the net asset value of the shares of each of such Series will be
computed based only upon the net assets of each such Series.
Under Massachusetts law, if certain conditions prevail, shareholders of a
Massachusetts business trust could be deemed to have the same type of personal
liability for the obligations of the Fund as does a partner of a partnership.
The Trust Agreement contains an express disclaimer of liability on the part of
Fund shareholders and provides that the Fund shall assume the defense on behalf
of its shareholders. Thus, the risk of Fund shareholder liability is slight and
limited to a circumstance where a Series itself is unable to meet its
obligations.
26
<PAGE>
As a Massachusetts business trust, the Fund is not required to and does not
intend to hold annual shareholders' meetings. However, the Trust Agreement
provides for Fund shareholder voting with respect to certain matters,
including: (a) the election or removal of Trustees if a meeting is called for
that purpose; (b) any contract as to which shareholder approval is required by
the Investment Company Act of 1940, as amended (the "1940 Act"); (c) any
termination or reorganization of the Fund or any Series of the Fund to the
extent provided in the Trust Agreement; and (d) any amendment of the Trust
Agreement (other than amendments designating new Series, changing the name of
the Fund or any Series of the Fund, supplying any omission, curing any
ambiguity, or curing, correcting or supplementing any provisions inconsistent
with the 1940 Act or the Code). Meetings of shareholders may be called upon
written application specifying the purpose of the meeting by shareholders
holding at least 25% (or 10% if the purpose of the meeting is to determine if a
Trustee is to be removed from office) of the shares then outstanding. In
connection with the shareholders' right to remove a Trustee, shareholders will
be assisted with their communications in such manner.
FUND MANAGEMENT
The business and affairs of the Fund will be managed under the direction of
the Board of Trustees. The Trustees are subject to the fiduciary
responsibilities imposed by the laws of the Commonwealth of Massachusetts.
Subject to the Trustees' authority, Ranson Capital Corporation, a Kansas
Corporation, 1 North Main, Minot, North Dakota 58703 (the "Manager") will
supervise and implement the Fund's investment activities and will be responsible
for overall management of the Fund's business affairs. Ranson Capital
Corporation is also the investment adviser of the Fund and will perform certain
evaluations of the securities held by the Fund. The Fund will pay the Manager a
monthly management and investment advisory fee equivalent on an annual basis to
.50 of 1% of its average daily net assets. For the year ended July 31, 1996, the
Fund paid the Manager management and investment advisory fees equal to .33% of
the average net asset value of the Fund.
Overall portfolio management strategy for the Ranson Fund is determined by
Ranson Capital under the general supervision and direction of Robert E. Walstad,
the President of the Ranson Fund and of Ranson Capital since January 5, 1996.
Mr. Walstad is also the President of five other open-end funds and of ND Money
Management, Inc., their investment adviser, and has supervised and directed the
management of their portfolios since they commenced operations. Mr. Walstad
started in the securities business with Paine Webber in 1972 as a retail broker.
He became branch manager with Dean Witter Reynolds in 1977 and spent ten years
in that capacity. In 1987, Mr. Walstad founded ND Holdings, which is also
sponsor of Integrity Mutual Funds. The day-to-day management of Ranson Fund,
including credit analysis and the execution of portfolio transactions, is the
responsibility of a portfolio management team consisting of Monte L. Avery, W.
Dan Korgel and Alex R. Meitzner. Mr. Avery started in the securities business
with Paine Webber in 1981 as a retail broker and transferred to Dean Witter in
1982. In 1988, Mr. Avery joined First American Bank & Trust (Minot, ND) to help
start their Invest Center. He transferred back to Dean Witter in 1993 until
joining ND Holdings in 1995. Mr. Avery is responsible for the daily pricing of
the Integrity Mutual Funds as well as their portfolio trading. He is also
portfolio manager for the Integrity Fund of Funds. Mr. Korgel was employed in
the trust banking business for 12 years prior to joining ND Holdings. He was
with the trust department of First American Bank & Trust (Minot, ND) for two
years as head of investments and operations. Mr. Korgel joined ND Holdings in
May 1988, and is the portfolio manager of four of the mutual funds which are
sponsored by ND Holdings. He is responsible for the daily portfolio management
of those funds. He is also Corporate Treasurer for ND Holdings. Mr. Meitzner is
the Assistant Vice President -- Investments of Ranson Capital and had been
Executive Vice President of Ranson Capital until January 5, 1996, when he was
elected to his present position. Mr. Meitzner is also Director, Executive Vice
President/Trader of Ranson & Associates, Inc. All portfolio management decisions
are subject to weekly review by Mr. Walstad and to quarterly review by the
Ranson Fund's Board of Trustees.
27
<PAGE>
The Manager is a broker-dealer registered with the Securities and Exchange
Commission and a wholly-owned subsidiary of The Ranson Company, Inc., a Kansas
corporation. All of the outstanding shares of stock of The Ranson Company, Inc.,
are owned by ND Holding, Inc., a North Dakota Corporation. The Manager was
formed in 1990 and until December 29, 1995, served as sponsor, portfolio
supervisor and securities evaluator for Series 1 through 78 of The Kansas Tax-
Exempt Trust and Series 1 through 5 of The Nebraska Tax Exempt Trust.
The Manager is also the investment adviser for The Kansas Insured Intermediate
Fund and The Kansas Municipal Fund, which have current net asset values of
$28,598,340 and $131,961,343 respectively. The Manager has not retained the
right to withdraw from the Fund the use of the name "Ranson," but the Manager
may grant the use of the name "Ranson" to another investment company.
Under the terms of the Management and Investment Advisory Agreement, the
Manager has agreed to pay all expenses of the Fund, including the Fund's
management and investment advisory fee and the Fund's dividend disbursing,
administrative and accounting services fees (but excluding taxes and brokerage
fees and commissions, if any) that exceed 1.25% of the Fund's average daily net
assets on an annual basis up to the amount of the investment advisory and
management fee payable by the Fund to the Manager. Reimbursements by the Manager
for such Fund expenses will be paid monthly based on annualized year to date
expenses. All other expenses shall be paid by the Fund. From time to time and
subject to discontinuance at any time, the Manager may voluntarily assume
certain expenses of the Fund. This will have the effect of lowering the overall
expense ratio of the Fund and of increasing yield to investors. The Fund's
expenses include, among others, taxes, brokerage fees and commissions, if any,
fees of Disinterested Trustees, expenses of Trustees' and shareholders'
meetings, insurance premiums, expenses of redemption of shares, expenses of
issue and sale of shares (to the extent not borne by the Distributor), expenses
of printing and mailing certificates, association membership dues, charges of
the Fund's Custodian, and bookkeeping, auditing and legal expenses, and the fees
and expenses of registering the Fund and its shares with the Securities and
Exchange Commission, registering or qualifying its shares under state securities
laws and the expenses of preparing and mailing prospectuses and reports to
shareholders.
ND Resources, Inc. ("Resources"), a wholly-owned subsidiary of ND Holdings,
Inc., a North Dakota corporation, acts as the Fund's administrative and
accounting services agent. For these services, Resources receives an
administrative and accounting services fee payable monthly from the Fund equal
to the sum of (i) $2,000 per month and (ii) 0.05% of the Fund's average daily
net assets on an annual basis for the Fund's first $50 million of average daily
net assets, 0.04% of the Fund's average daily net assets on an annual basis for
the Fund's next $50 million of average daily net assets, 0.03% of the Fund's
average daily net assets on an annual basis for the Fund's next $100 million of
average daily net assets, 0.02% of the Fund's average daily net assets on an
annual basis for the Fund's next $300 million of average daily net assets, and
0.01% of the Fund's average daily net assets on an annual basis for the Fund's
average daily net assets in excess of $500 million, together with reimbursement
of Resource's out-of-pocket expenses. This fee and reimbursement are in addition
to the investment advisory and management fee received by the Manager, which is
also indirectly owned by ND Holdings, Inc., from the Fund.
The Board of Trustees has the authority, without shareholder approval, to
determine who will perform the following services for the Fund: securities
evaluator; custodian of the Fund's securities and cash; and dividend disbursing,
administrative and accounting services agent.
In effecting purchases and sales of the Fund's portfolio securities, the
Manager and the Fund may place orders with and pay brokerage commissions to
brokers which are affiliated with the Fund, the Manager, the Distributor or
selected dealers participating in the offering of the Fund's shares. In
addition, in selecting among
28
<PAGE>
firms to handle a particular transaction, the Manager and the Fund may take into
account whether the firm has sold or is selling shares of the Fund. Subject to
rules adopted by the Securities and Exchange Commission, the Fund may also
purchase municipal securities from other members of underwriting syndicates of
which the Distributor or other affiliates of the Fund are members.
THE DISTRIBUTOR
Shares of the Fund are offered on a continuous basis through Ranson Capital
Corporation, a Kansas Corporation, 1 North Main, Minot, North Dakota 58703.
Pursuant to a Distribution and Services Agreement, the Distributor will purchase
shares of the Fund for resale to the public, either directly or through
securities dealers or agents, and is obligated to purchase only those shares for
which it has received purchase orders. In addition to agreements with securities
dealers, the Distributor may enter into agreements with banks or bank affiliates
with respect to the sale of shares of the Fund. Under the Glass-Steagall Act,
banks and bank affiliates are prohibited from underwriting Fund shares; however,
the Glass-Steagall Act does permit certain agency transactions and the banking
regulators have not indicated that these particular agency transactions are not
permitted under such Act. In the event the Glass-Steagall Act should prevent
banks or bank affiliates from acting in any capacity or providing investor
administrative and shareholder services, the Fund's Trustees will consider what
action, if any, is appropriate in order to provide efficient services to the
Fund. It is anticipated that a termination of a relationship with a bank or bank
affiliate would not result in a loss to investors or a change in net asset
value.
Under the Distribution and Services Agreement between the Fund and the
Distributor, the Distributor pays the expenses of distribution of the Fund's
shares, including preparation and distribution of literature relating to the
Fund and its investment performance and advertising and public relations
material. The Fund bears the expenses of registration of its shares with the
Securities and Exchange Commission and of sending prospectuses to existing
shareholders. The Distributor will permit its officers and employees to serve
without compensation as Trustees and officers of the Fund if duly elected to
such positions. The Fund will pay the cost of qualifying and maintaining
qualification of the shares for sale under the securities laws of the various
states if necessary. In addition, under the plan adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940 and under which the Fund will pay some
costs of the distribution of its shares, the Fund will pay the Distributor .25%
of the average daily net assets of the Fund and the Distributor may in turn pay
firms that sell the Fund's shares an annual service fee of up to .25% of average
daily net assets of customer accounts in existence for more than one year for
administrative and shareholder services or use some or all of such payment to
pay other distribution expenses which otherwise would be payable by the
Distributor.
The Distribution and Services Agreement continues in effect from year to
year if specifically approved at least annually by the shareholders or Board of
Trustees of the Fund and by the Fund's Disinterested Trustees in compliance with
the Investment Company Act of 1940. The agreement may be terminated without
penalty upon sixty days' written notice by the Fund or ninety days' written
notice by the Distributor and will automatically terminate if it is assigned.
SHAREHOLDER SERVICES AND REPORTS
First Western Bank & Trust (the "Custodian"), 900 South Broadway, Minot,
North Dakota 58701, serves as Custodian of the Fund and has custody of all
securities and cash of the Fund and attends to the collection of principal and
income and payment for and collection of proceeds of securities bought and sold
by the Fund.
29
<PAGE>
ND Resources, Inc., (the "Transfer Agent"), 1 North Main, Minot, North
Dakota 58703, serves as the Transfer Agent for the Fund and performs
bookkeeping, data processing and administrative services related to the
maintenance of shareholder accounts. When an investor makes an initial
investment in the Fund, an account will be opened on the Fund's books and the
investor will receive a confirmation of the opening of the account. An investor
will receive confirmation statements giving details of all activity in his or
her account whenever investments in or withdrawals from such account are made.
The statement with tax information for the year will be mailed to investors by
January 31 and will also be filed with the Internal Revenue Service.
As a rule, the Fund will not issue share certificates. However, upon
written request to the Transfer Agent, a share certificate will be issued for
any or all of the full shares credited to an investor's account. Share
certificates which have been issued may be returned at any time.
Investors will receive annual financial statements, together with a report
of independent auditors, and semi-annual unaudited financial statements.
Investors will also receive notices of shareholders' meetings. Shareholder
inquiries regarding their account should be directed to the Transfer Agent.
CALCULATION OF FUND PERFORMANCE DATA
From time to time, the Fund may advertise several types of performance
information. These are "current yield," "tax equivalent yield," "distribution
return," "average annual total return" and "total return." Each of these figures
is based upon historical results and is not necessarily representative of the
future performance of the Fund.
Current yield is determined by annualizing net investment income earned per
share for a stated period (normally one month or thirty days) and dividing the
result by the maximum public offering price at the end of the evaluation period.
Tax equivalent yield is determined by dividing that portion of current
yield which is tax-exempt by one minus a stated combined state and federal
income tax rate and adding that portion of the current yield, if any, that is
not tax-exempt.
The Fund's distribution return is computed by dividing the income per share
by the number of days in the current month and the quotient is multiplied by
365. The result is divided by the offering price per share on the last day of
the month.
Average annual total return and total return figures measure both the net
investment income generated by the Fund and the effect of any realized or
unrealized appreciation or depreciation of the underlying investments in the
portfolio of the Fund for the period in question, assuming the reinvestment of
all dividends and capital gains distributions. Thus, these figures reflect the
change in the value of an investment in the Fund during a specified period.
Average annual total return will be quoted for at least the one, five and ten
year periods ending on a recent calendar quarter (or if such periods have not
yet elapsed, at the end of a shorter period corresponding to the life of the
Fund). Average annual total return figures are annualized and, therefore,
represent the average annual percentage change over the period in question.
Total return figures are not annualized and represent the aggregate percentage
or dollar value change over the period in question.
30
<PAGE>
From time to time, the Fund's performance may be compared to that of the
Consumer Price Index or various unmanaged bond indexes and may also be compared
to the performance of other fixed income or government bond mutual funds or
mutual fund indexes as reported by entities such as Lipper Analytical Services,
Inc. ("Lipper"). Lipper is a widely recognized independent mutual fund reporting
service. Lipper performance calculations are based upon changes in net asset
value with all dividends reinvested and do not include the effect of any sales
charges.
The Fund's shares are sold at net asset value plus a maximum sales charge
of 4.25% of the offering price. While the maximum sales charge is normally
reflected in the Fund's performance figures, certain total return calculations
may not include such charge and those results would be reduced if it were
included. The Fund's returns and net asset value will fluctuate. Shares of the
Fund are redeemable by an investor at the then current net asset value, which
may be more or less than original cost.
SUMMARY OF PROCEDURES
The following summary is intended as a reference guide for investors. It is
not intended to be comprehensive. Investors should read the main body of the
Prospectus and consult with their dealer, agent or the Fund's customer service
representatives as necessary.
Purchases
Initial investments of $1,000 or more and an account application
(indicating phone order information as applicable) should be mailed to the
dealer or agent from which this Prospectus was received which has a sales
agreement with the Distributor or directly mailed to the Transfer Agent.
Investors qualifying for reduced initial minimum investments or reduced sales
charges should indicate their qualification on the application. Additional
investments should be sent to the same address. Investors should include the
purchase form from the bottom of their monthly statement and should include
their account number on the check.
Checks should be made payable to The Nebraska Municipal Fund.
Redemptions
REDEMPTION REQUESTS must be signed by all registered owners, accompanied by
signature guarantee(s). Fund shares held in certificate form must be submitted
in proper form to effect redemption. The Transfer Agent may request such other
documentation from corporations, executors, administrators, trustees or
guardians as is deemed necessary to determine the authority of the individual
making the request.
REDEMPTION REQUESTS AND OTHER TRANSFER AGENT INQUIRIES should be sent to
the Fund, c/o the Transfer Agent.
Other
ADDRESS CHANGES: A new address should be indicated on the remittance advice
on the bottom of an investor's monthly statement (or on a copy of the monthly
statement) and mailed to the Transfer Agent at the above address. All other
requests must be signature guaranteed.
REGISTRATION CHANGES: A new account is opened whenever there is a change in
registration. Therefore, the procedures for redemption by mail should be
followed indicating the requested registration changes. Shares will be
transferred to the new account at net asset value on the same date as the
closing of the old account.
SALES INFORMATION, PERFORMANCE DATA, PRIOR DAY'S
OFFERING PRICE AND NET ASSET VALUE,
CALL (701) 857-0230 or (800) 601-5593.
FOR INFORMATION ON ACCOUNT BALANCES AND ALL OTHER INQUIRIES,
CALL (800) 601-5593
31
<PAGE>
Fund Manager and Investment Adviser
Ranson Capital Corporation
1 North Main
Minot, North Dakota 58703
Transfer Agent
ND Resources, Inc.
1 North Main
Minot, North Dakota 58703
Custodian
First Western Bank & Trust
900 South Broadway
Minot, North Dakota 58701
Independent Auditors
Brady, Martz & Associates, P.C.
24 West Central Avenue
Minot, North Dakota 58701
Legal Counsel
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
Fee and Expense Table..................................................... 2
Highlights of the Fund and
Prospectus Summary...................................................... 3
Condensed Financial Information........................................... 6
The Fund.................................................................. 7
Investment Objective and Policies......................................... 7
Net Asset Value........................................................... 16
Purchase of Shares........................................................ 17
Special Programs.......................................................... 19
Redemption of Shares...................................................... 21
Dividends and Taxes....................................................... 22
Description of Shares and Rights.......................................... 26
Fund Management........................................................... 27
The Distributor........................................................... 29
Shareholder Services and Reports.......................................... 29
Calculation of Fund Performance Data...................................... 30
Summary of Procedures..................................................... 31
</TABLE>
- -----------------------------------------------------------------------------
RANSON MANAGED
PORTFOLIOS
THE NEBRASKA
MUNICIPAL FUND
-----------------------
PROSPECTUS
November 27, 1996
-----------------
-----------------------
[LOGO OF THE NEBRASKA MUNICIPAL FUND]
Distributor
RANSON CAPITAL CORPORATION
1 North Main
Minot, North Dakota 58703
- -----------------------------------------------------------------------------
<PAGE>
================================================================================
INITIAL APPLICATION RANSON MANAGED PORTFOLIOS THE NEBRASKA MUNICIPAL FUND
ACCOUNT APPLICATION
Mail to: The Nebraska Municipal Fund, P.O. Box 759, Minot, ND 58702
================================================================================
1. Account Registration (Please print) - NOTE: The name(s) and address shown
below must read exactly in accordance with the registration of Shareholder
Account (if any) currently on file.
[_] Individual or joint* account
-------------------------------------- -----------------------------------
Name Joint Owner's name
*Joint tenants with rights of survivorship, unless you specify otherwise.
[_] Check here if purchaser is employee of Broker/Dealer.
[_] Gift or transfer to a minor (UGMA/UTMA)
__________________________________ as custodian for_________________________
Custodian's name Minor's name
under the ________________________
State
Uniform Gifts/Transfers to Minors Act
[_] Trust
____________________________ as trustee(s) of ______________________________
Trustee's name(s) Name of trust agreement Date of trust agreement
Please include copy of first and last page of trust agreement.
[_] Corporation/other entity
_____________________________________ ____________________________________
Name of corporation or other entity Type of organization
(i.e. corporation, non-profit,
partnership)
Please attach a certified copy of your corporate resolution showing the
person(s) authorized to act on this account.
Address: ____________________________ City, State, Zip: __________________
Day telephone number:_______________
================================================================================
2. Initial Investment
______ Check enclosed for $__________ (Minimum initial investment is $1,000;
thereafter $50.) Make check payable to The Nebraska Municipal Fund.
______ The dealer firm named below ordered my initial purchase of __________
shares by wire on ____________________.
Date
______ Reinvestment of [_] Principal and Interest [_] Principal Only
[_] Interest Only at Net Asset Value From the Following Unit Investment
Trust(s) ___________________________________________________________________
This authorization will be sent to the Trustee to change Reinvestment
instructions on the indicated UIT Series.
================================================================================
3. Dividend and Distribution Options. All dividends and capital gains
reinvested unless indicated.
Dividends Capital Gains
[_] Reinvest [_] Reinvest
[_] Cash [_] Cash
All cash distributions to shareowner of record unless indicated below
Name ____________________________________________________________________
Address ____________________________________________________________________
City _____________________________ State _______________ Zip ___________
Account number (if applicable) _____________ Attach voided check if payable
to your bank account.
================================================================================
4. Letter of Intent
I request establishment of a Letter of Intent to purchase shares of Ranson
Managed Portfolios-The Nebraska Municipal Fund as described in this
Prospectus. These shares will be purchased over a thirteen-month period; the
aggregate amount of these purchases will be at least equal to the amount
indicated below:
______ $50,000 ______ $100,000 ______ $250,000 ______ $500,000
______ $1,000,000
______ This is an amended Letter of Intent
================================================================================
5. Rights of Accumulation
If this account qualifies for a reduced sales charge under the Rights of
Accumulation as described in this Prospectus, please give the following
information:
Account Number of Related Accounts Relationship to Investor
___________________________________ ___________________________________
___________________________________ ___________________________________
___________________________________ ___________________________________
================================================================================
6. Systematic Withdrawal Plan
______ Systematic Withdrawal (Available only for accounts of $5,000 or
more)-Redeem sufficient shares on or about the 24th of the month and send
check to the owner listed above: ______ Monthly: ______Quarterly (Jan.,
Apr., July & Oct.) for $______________ (Minimum $50). The first redemption
to take place on the 24th of (indicate month) __________________________
(Note: All distributions from the Fund must be reinvested)
______ Payment to a different payee or account (Optional)-If systematic
withdrawal checks are to be payable to person or address other than as
registered above, make checks payable to:
Name ____________________________________________________________________
Address ____________________________________________________________________
City ________________________________ State__________________ Zip_________
Account Number ______________________ (if applicable)
================================================================================
<PAGE>
===============================================================================
7. Preauthorized Investment Program
I hereby authorize the Transfer Agent to draw from my account monthly
beginning on the [_] 5th or [_] 20th of ____________________________________
Amount Name of Bank ABA Number
____________________ ________________________ ____________________________
(Minimum $50)
Bank Address Bank Account No.
____________________________________ ______________________________________
Name shown on bank records
____________________________________________________________________________
Attached is one of unsigned checks marked "Void" to ensure the correct
encoding.
____________________________________ ______________________________________
Signature Date Signature Co-depositor Date
================================================================================
8. Your Signature and Tax Certifications
See enclosed substitute Instructions and Important Notice. The Fund reserves
the right to refuse to open an account without either a certified taxpayer
identification number ("TIN") or a certification of foreign status. Failure
to provide the tax certifications in this section may result in backup
withholding on payments relating to your account and/or in your inability to
qualify for treaty withholding rates.
____________________________________ OR ________________________________
Social Security Number Employer Identification Number
I am a citizen of: [_] U.S. [_] _____________ My Country of residence for
tax purposes is: [_]U.S. [_] ________________
Check one of the following:
[_] The number shown above is my correct TIN. I am not subject to backup
withholding due to underreporting of interest or dividend income either
because no notification has been received from the IRS or because the
IRS has notified me that I am no longer subject to backup withholding.
(If you are subject to backup withholding, please cross out the second
sentence.)
[_] Awaiting TIN. A TIN has not been issued to me, but I am in the process
of applying for a TIN from either the appropriate Internal Revenue
Service Center or Social Security Administration Office. I understand
that if I do not provide a TIN to the Fund within 60 days, the Fund is
required to commence backup withholding until I provide a certified TIN.
I am not subject to backup withholding due to underreporting of interest
or dividend income either because no notification has been received from
the IRS or because the IRS has notified me that I am no longer subject
to backup withholding. (If you are subject to backup withholding, please
cross out the third sentence.)
[_] Exempt Recipient. I am an exempt recipient. The instructions give a list
of the most common exempt recipients. (You should still provide a TIN.)
[_] Exempt Foreign Person. I am an exempt foreign person as explained in the
instructions.
Under the penalties of perjury, I certify that (1) the information provided
on this application is true, correct and complete, (2) I have read the
Prospectus for the Fund in which I am investing and agree to the terms
thereof, and (3) I am of legal age or an emancipated minor.
DATE: __________________________
______________________________ ________________________________
Signature Signature
================================================================================
9. Broker/Dealer Use Only: (Please print) Ranson Dealer #
We hereby submit this application for the purchase of shares of The Nebraska
Municipal Fund indicated in accordance with the terms of our selling
agreement with Ranson Managed Portfolios and with the Prospectus for The
Nebraska Municipal Fund. We agree to notify Distributor of any purchases
made under a letter of intent or right of accumulation.
Wire Order Only: The attached check for $_____________ should be applied
against wire order
Confirmation Number ______________ Dated ____________ For ________ Shares
Securities Dealer Name _______________________________ __________________
Account No.
Main Office Address _______________________________
____________________
Branch # _________ Rep #____________ Salesman's Last Name
Representative Name ___________________________________
Branch Address ________________________________________
Telephone Number ______________________________________
Authorized Signature, Securities Dealer _______________
Title _________________________________________________ ____________________
R.R. No.
ACCEPTED: Ranson Managed Portfolios By ___________________
Date _______________
================================================================================
10. Additional Information
Each time there is a transaction in a shareholder account, the shareholder
will receive a confirmation statement showing the current transaction.
Certificates can be issued for full shares only. These certificates will be
sent to the shareholder only upon specific request.
The method of delivery of share certificates is at the option and risk of
the shareholder. If sent by mail, registered and insured mail is suggested.
All correspondence regarding shareholder accounts should be addressed to the
Fund, c/o ND Resources, Inc., P.O. Box 759, Minot, North Dakota 58702.
This form is not authorized for distribution to prospective purchasers of
shares of the portfolio in states where such shares are not qualified for
sale.
================================================================================
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
RANSON MANAGED PORTFOLIOS
THE NEBRASKA MUNICIPAL FUND
The Nebraska Municipal Fund is an investment portfolio of Ranson Managed
Portfolios, a management investment company. The term "the Fund" as used herein
refers to either Ranson Managed Portfolios or The Nebraska Municipal Fund Series
of Ranson Managed Portfolios, as the context may require. The investment
objective of The Nebraska Municipal Fund is to provide its shareholders with as
high a level of current income exempt from both federal income tax and Nebraska
income tax as is consistent with preservation of capital. Under normal market
conditions, the Fund's assets will be invested in a portfolio of Nebraska
Municipal Securities (as defined herein) which, in the opinion of Ranson Capital
Corporation, will produce a higher level of current income than would be
produced by a portfolio of Nebraska Municipal Securities rated in only the
highest rating category, but contains Nebraska Municipal Securities which do not
present a significant risk of loss of principal due to credit characteristics.
The Fund's manager is Ranson Capital Corporation.
This Statement of Additional Information is not a prospectus but should be
read in conjunction with the Prospectus for the Fund dated November 27, 1996,
(the "Prospectus"). A copy of the Prospectus may be obtained without charge by
calling the Fund at (701) 852-5292.
The Prospectus and this Statement of Additional Information omit certain of
the information contained in the registration statement filed with the
Securities and Exchange Commission, Washington, D.C. These items may be obtained
from the Commission upon payment of the fee prescribed or inspected at the
Commission's office at no charge.
TABLE OF CONTENTS
Page
----
The Fund and Its Shares ................................................. 2
Investment Objective, Policies and Restrictions ......................... 2
Officers and Trustees ................................................... 6
Custodian ............................................................... 8
Independent Auditors .................................................... 8
Management and Investment Advisory Agreement ............................ 8
Portfolio Transactions .................................................. 8
Additional Information Regarding Shares and Rights ...................... 9
Expenses of the Fund .................................................... 11
Performance Data ........................................................ 12
Report of Brady, Martz & Associates, P.C. ............................... 13
Financial Statements .................................................... 14
This Statement of Additional Information is dated November 27, 1996.
<PAGE>
THE FUND AND ITS SHARES
The Fund is an open-end, non-diversified management investment company
organized as an unincorporated business trust under the laws of Massachusetts on
August 10, 1990.
To the best of the Fund's knowledge, as of November 15, 1996, no persons or
entities owned more than 5% of the shares of the Fund.
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Investment Objective And
Policies."
The investment objective of the Fund is to provide its shareholders with as
high a level of current income that is exempt from both federal income tax and
Nebraska income tax as is consistent with preservation of capital. Under normal
market conditions, the Fund's assets will be invested in a portfolio of Nebraska
Municipal Securities (as defined herein) which, in the opinion of Ranson Capital
Corporation, will produce a higher level of current income than would be
produced by a portfolio of Nebraska Municipal Securities rated in only the
highest rating category, but contains Nebraska Municipal Securities which do not
present a significant risk of loss of principal due to credit characteristics.
The investment policy of the Fund is to invest at least 80% of its assets
in a portfolio of Nebraska Municipal Securities (as defined in the Prospectus)
which generate interest income that is exempt, in the opinion of bond counsel,
from both federal income tax and Nebraska income tax. Nebraska Municipal
Securities generally include debt obligations of the State of Nebraska, its
political subdivisions, municipalities, agencies and authorities, and certain
industrial development and other revenue bonds, short-term municipal notes,
municipal leases and tax-exempt commercial paper issued by such entities and
obligations of the Commonwealth of Puerto Rico, the Virgin Islands and Guam.
Futures Contracts, Options on Futures and Municipal Bond Index Futures. The
Fund may purchase or sell financial futures contracts ("futures contracts") and
related options thereon. These futures contracts and related options thereon
will be used only as a hedge against anticipated interest rate changes. In
general a futures contract sale creates an obligation by the Fund, as seller, to
deliver the specific type of instrument called for in the contract at a
specified future time for a specified price. A futures contract purchase would
generally create an obligation by the Fund, as purchaser, to take delivery of
the specific type of financial instrument at a specified future time at a
specified price. The specific securities delivered or taken, respectively, at
settlement date would not be determined until on or near that date. The
determination would be in accordance with the rules of the exchange on which the
futures contract sale or purchase was effected.
Although the terms of futures contracts specify actual delivery or receipt
of securities, in most instances the contracts are closed out before the
settlement date without the making or taking of delivery of the securities.
Closing out a futures contract is usually effected by entering into an
offsetting transaction. An offsetting transaction for a futures contract sale is
effected by the Fund entering into a futures contract purchase for the same
aggregate amount of the specific type of financial instrument at the same
delivery date. If the price in the sale exceeds the price in the offsetting
purchase, the Fund immediately is paid the difference and thus realizes a gain.
If the offsetting purchase price exceeds the sale price, the Fund pays the
difference and realizes a loss. Similarly, the closing out of a futures contract
purchase is effected by the Fund entering into a futures contract sale. If the
offsetting sale price exceeds the purchase price, the Fund realizes a gain, and
if the offsetting sale price is less than the purchase price, the Fund realizes
a loss.
2
<PAGE>
Unlike a futures contract, which requires the parties to buy and sell an
instrument on a set date, an option on a futures contract entitles its holder to
decide on or before a future date whether to enter into such a contract (a long
position in the case of a call option and a short position in the case of a put
option). If the holder decides not to enter into the contract, the premium paid
for the contract is lost. Since the cost of the option is fixed, there are no
daily payments of cash by the purchaser to reflect the change in the value of
the underlying contract, as discussed below for futures contracts. The seller of
the option, however, may be required to make daily maintenance margin payments
to reflect the change in the value of the underlying contract. The value of the
option is reflected in the net asset value of the Fund.
The Fund is required to maintain margin deposits with brokerage firms
through which it effects futures contracts and options thereon. The initial
margin requirements vary according to the type of the underlying instrument. In
addition, due to current industry practice, daily variations in gains and losses
on open contracts are required to be reflected in cash in the form of variation
margin payments. The Fund may be required to make additional margin payments
during the term of the contract.
Currently, futures contracts can be purchased on debt securities such as
U.S. Treasury bills and bonds, U.S. Treasury notes with maturities between 6-1/2
and 10 years, certificates of the Government National Mortgage Association, bank
certificates of deposit and on a municipal bond index (see below). The Fund may
purchase or sell interest rate futures contracts covering these types of
financial instruments as well as new types of contracts that become available in
the future.
Financial futures contracts and related options contracts are traded in an
auction environment on the floors of several futures exchanges--principally, the
Chicago Board of Trade, the Chicago Mercantile Exchange and the New York Futures
Exchange.
A risk in employing futures contracts to protect against the price
volatility of portfolio securities is that the prices of securities subject to
futures contracts may not correlate perfectly with the behavior of the cash
prices of the Fund's portfolio securities. The correlation may be distorted in
part by the fact that the futures market is influenced by short-term traders
seeking to profit from the difference between a contract or security price
objective and their cost of borrowed funds. This would reduce the value of
futures contracts for hedging purposes over a short time period. The correlation
may be further distorted since the futures contracts that are being used to
hedge are not based on municipal obligations.
Another risk is that the Manager could be incorrect in its expectations as
to the direction or extent of various interest rate movements or the time span
within which the movements take place. For example, if the Fund sold futures
contracts in anticipation of an increase in interest rates, and then interest
rates went down, causing bond prices to rise, the Fund would lose money,
including transaction costs, on the sale.
In addition to the risks associated with investing in options on
securities, there are particular risks associated with trading in options on
futures. In particular, the ability to establish and close out positions on such
options will be subject to the development and maintenance of a liquid market in
such options. It is not certain that this market will develop.
A substantial majority (i.e., approximately 75%) of all anticipatory hedge
transactions (transactions in which the Fund does not own, at the time of the
transaction, but expects to acquire the securities corresponding to the relevant
futures contract) involving the purchase of futures contracts, call options or
written put options thereon will be completed by the purchase of securities
which are the subject of the hedge.
The Fund may not enter into futures contracts or related options thereon
if, immediately thereafter, the amount committed to initial margin plus the
amount paid for option premiums on open contracts exceeds 5% of the value of the
Fund's total assets. In instances involving the purchase of futures contracts by
the Fund, an amount equal to the gross market value of the futures contract will
be deposited in a segregated account of cash
3
<PAGE>
and cash equivalents and thereby ensure that the use of such futures is
unleveraged. The Fund may not purchase or sell futures contracts or related
positions if, immediately thereafter, more than one-third of its net assets
would be hedged.
The Fund may utilize trading in municipal bond index futures contracts for
hedging purposes. The strategy in employing such contracts will be similar to
that discussed above with respect to financial futures and options thereon. A
municipal bond index is a method of reflecting in a single number the market
value (based on an average of quotations from certain dealers) of many different
municipal bonds. The index fluctuates in response to changes in the market
values of the bonds included within the index. Unlike futures contracts on
particular financial instruments, futures on a municipal bond index will be
settled in cash if held until the close of trading in the contract. However, as
in any other futures contract, a position in the contract may be closed out by
purchase or sale of an offsetting contract for the same delivery month prior to
expiration of the contract. Because trading in municipal bond index futures
contracts has been taking place only for a short time, the Fund's ability to
utilize such contracts will be dependent upon the development and maintenance of
a market in such contracts.
The Securities and Exchange Commission generally requires that when
investment companies, such as the Fund, effect transactions of the foregoing
nature, such funds must either segregate cash or high quality, readily
marketable portfolio securities with its Custodian in the amount of its
obligation under such transactions or cover such obligations by maintaining
positions in portfolio securities, futures contracts or options that would serve
to satisfy or offset the risk of such obligations. When effecting transactions
of the foregoing nature, the Fund will comply with such segregation or cover
requirements.
Investment Restrictions. Fundamental investment restrictions limiting the
investments of the Fund provide that the Fund may not:
1. Borrow money, except from banks for temporary or emergency (not
leveraging) purposes and then in an amount not exceeding 10% of the
value of the Fund's total assets (including the amount borrowed). The
Fund will not borrow for leveraging purposes, and securities will not
be purchased while borrowings are outstanding. Interest paid on any
money borrowed will reduce the Fund's net income.
2. Pledge, hypothecate, mortgage or otherwise encumber its assets in
excess of 10% of the value of its total assets (taken at the lower of
cost or current value) and then only to secure borrowings for temporary
or emergency purposes.
3. Purchase securities on margin, except such short-term credits as may be
necessary for the clearance of purchases and sales of securities. The
deposit of initial or maintenance margin by the Fund in connection with
financial futures contracts and related options transactions, including
municipal bond index futures contracts or related options transactions,
is not considered the purchase of a security on margin.
4. Make short sales of securities or maintain a short position for the
account of the Fund including any short sales "against the box."
5. Underwrite the securities of other issuers, except to the extent that
in connection with the disposition of its portfolio investments, it may
be deemed to be an underwriter under federal securities laws.
6. Purchase or sell real estate, but this shall not prevent the Fund from
investing in securities which are secured by real estate or interests
therein.
4
<PAGE>
7. Purchase or sell commodities or commodity contracts except to the
extent the options and futures contracts the Fund may trade in are
considered to be commodities or commodities contracts.
8. Make loans to others except through the purchase of qualified debt
obligations and the entry into repurchase agreements.
9. Invest more than 25% of its total assets in the securities of issuers
in any single industry; provided that there shall be no such limitation
on the purchase of securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities or by Nebraska, its
political subdivisions, municipalities, agencies and authorities.
10. Invest in securities of any issuer if, to the knowledge of the Fund,
officers and Trustees of the Fund or officers and directors of the
Manager who beneficially own more than 1/2 of 1% of the securities of
that issuer together own more than 5%.
11. Purchase securities restricted as to resale, if, as a result, such
investment would exceed 5% of the value of the Fund's net assets.
12. Invest in (a) securities which at the time of such investment are not
readily marketable, including participation interests in municipal
leases, (b) securities the disposition of which is restricted under
federal securities laws (as described in fundamental restriction (11)
above) and (c) repurchase agreements maturing in more than seven days,
if, as a result, more than 15% of such Fund's net assets (taken at
current value) would be invested in securities described in (a), (b)
and (c) above.
13. Issue senior securities, except that the Fund may borrow money (as
described in fundamental restriction (1) above).
The Fund may not change any of these investment restrictions without the
approval of the lesser of (i) more than 50% of the Fund's outstanding shares or
(ii) 67% of the Fund's shares present or represented by proxy at a meeting at
which the holders of more than 50% of the outstanding shares are present or
represented by proxy. As long as the percentage restrictions described above are
satisfied at the time of the investment or borrowing, the Fund will be
considered to have abided by those restrictions even if, at a later time, a
change in values or net assets causes an increase or decrease in percentage
beyond that allowed.
The following investment restrictions of the Fund may be changed by the
Board of Trustees of the Fund.
The Fund will not:
1. Invest more than 5% of its total assets in the securities of any other
single investment company, nor more than 10% of its total assets in the
securities of two or more other investment companies, except as part of
a merger, consolidation or acquisition of assets.
2. Buy or sell oil, gas or other mineral leases, rights or royalty
contracts.
An advisory fee will be charged for assets invested in securities of other
investment companies. However, the Fund will not invest more than 10% of its
total assets in such securities.
5
<PAGE>
OFFICERS AND TRUSTEES
The officers and Trustees of the Fund and their principal occupations for
the last five years are as follows:
<TABLE>
<CAPTION>
Principal Occupation(s)
Name, Address Position(s) Held During Past
and Age with Registrant (1) 5 Years (2)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Lynn W. Aas Trustee Retired; Attorney; Director, ND
904 NW 27th Tax-Free Fund, Inc., ND Insured Income
Minot, North Dakota 58701 Fund, Inc., Montana Tax-Free Fund, Inc.,
75 South Dakota Tax-Free Fund, Inc. and
Integrity Fund of Funds, Inc.;
Director, First Western Bank & Trust
Orlin W. Backes Trustee Attorney; Director, ND Tax-Free Fund,
15 2nd Ave. SW, Suite 305 Inc., ND Insured Income Fund, Inc.,
Minot, North Dakota 58701 Montana Tax-Free Fund, Inc., South
61 Dakota Tax-Free Fund, Inc. and
Integrity Fund of Funds, Inc.;
Director, First Western Bank & Trust
Arthur A. Link Trustee Director, ND Tax-Free Fund, Inc.,
2001 Grimsrud Drive ND Insured Income Fund, Inc., Montana
Bismarck, North Dakota 58501 Tax-Free Fund, Inc., South Dakota
82 Tax-Free Fund, Inc. and Integrity Fund
of Funds, Inc.; Director, Bank Center
First; Formerly Governor of the State
of North Dakota
* Peter A. Quist Vice President Director and Vice President, ND Holdings,
1 North Main and Secretary Inc.; Director, Vice President and Secretary,
Minot, North Dakota 58703 ND Money Management, Inc., ND Capital,
62 Inc., ND Resources, Inc., ND Tax-Free
Fund, Inc., ND Insured Income Fund, Inc.,
Montana Tax-Free Fund, Inc., South Dakota
Tax-Free Fund, Inc., Integrity Fund of
Funds, Inc., The Ranson Company, Inc.
and Ranson Capital Corporation
* Robert E. Walstad Trustee, Chairman, Director and President, ND Holdings, Inc.;
1 North Main President and Director, President and Treasurer, ND
Minot, North Dakota 58703 Treasurer Money Management, Inc., ND Capital, Inc.,
52 ND Resources, Inc., ND Tax-Free Fund,
Inc., ND Insured Income Fund, Inc.,
Montana Tax-Free Fund, Inc., South Dakota
Tax-Free Fund, Inc. and Integrity Fund of
Funds, Inc.; Director, President, CEO and
Treasurer, The Ranson Company, Inc., and
Ranson Capital Corporation
</TABLE>
* "Interested Person" of the Fund as that term is defined in the Investment
Company Act of 1940.
6
<PAGE>
(1) The Trustees were elected at a joint special meeting of the
shareholders of The Kansas Municipal Fund, The Kansas Insured Municipal Fund -
Limited Maturity and The Nebraska Municipal Fund of Ranson Managed Portfolios
held on December 11, 1995, but did not assume office until the closing of the
Stock Purchase Agreement between the shareholders of The Ranson Company, Inc.,
and ND Holdings, Inc., on January 5, 1996. Prior to that time, the Board of
Trustees consisted of J. Joseph Hannah, H. Dene Heskett, Harrison F. Johnson,
Kevin F. Mitchelson, John A. Ranson and John S. Ranson.
(2) Lynn W. Aas and Orlin W. Backes were elected to the boards of directors
of the above-named funds (the "Funds") in 1994 and 1995, respectively. Arthur A.
Link has served on the boards of directors of the Funds since their inceptions.
Peter A. Quist has served as a director and as the Vice President and Secretary
of the Funds since their inceptions, except that he was not elected to the board
of directors of South Dakota Tax-Free Fund, Inc., until 1995. Robert E. Walstad
has served as a director and as the President and Treasurer of the Funds since
their inceptions. Mssrs. Quist and Walstad were elected as directors and
officers of The Ranson Company, Inc., and Ranson Capital Corporation on January
5, 1996.
<TABLE>
<CAPTION>
Compensation Table (2)
Aggregate Compensation Total Compensation From
Name of Person, From The Nebraska Registrant and
Position (1) Municipal Fund Series Fund Complex
- --------------------------------------------------------------------------------
<S> <C> <C>
Lynn W. Aas 493 10,000
Orlin W. Backes 493 10,000
Arthur A. Link 493 10,000
* Robert E. Walstad 0 0
(J. Joseph Hannah) 105 1,500
(H. Dene Heskett) 105 1,500
(Harrison F. Johnson) 140 2,000
(Robert G. Langenwalter) 35 500
(Kevin F. Mitchelson) 35 500
* (John A. Ranson) 0 0
* (John S. Ranson) 0 0
- --------------------------------------------------------------------------------
</TABLE>
* "Interested person" as defined in the Investment Company Act of 1940.
(1) Each of the named persons acted in the capacity of a Trustee. A new
Board of Trustees (the first four persons in the list) was elected at a joint
special meeting of the shareholders of The Kansas Municipal Fund Series, The
Kansas Insured Municipal Fund - Limited Maturity (renamed "The Kansas Insured
Intermediate Fund") Series and The Nebraska Municipal Fund Series of Ranson
Managed Portfolios held on December 11, 1995, but did not assume office until
the closing of the Stock Purchase Agreement between the shareholders of The
Ranson Company, Inc., and ND Holdings, Inc., on January 5, 1996. The names of
the Trustees who had served at any time during the fiscal year (8-1-94 through
7-31-95) are enclosed in parentheses.
(2) The compensation of any Trustee who is not an "interested person" as
that term is defined in the Investment Company Act of 1940 is paid by the
Manager. Until the closing of the Stock Purchase Agreement (see note (1)
above), Trustees who were not interested persons of the Manager or the
Distributor (the "Disinterested Trustees") were paid $500 plus expenses per
meeting of the Board of Trustees and committees thereof attended by such
Trustee. None of the Trustees who are interested persons received compensation
for services as Trustees. Each of the Disinterested Trustees will be paid a fee
of $10,000 for the calendar year ending December 31, 1996, plus any expenses
incurred in attending meetings. The $10,000 fee is apportioned among the eight
funds comprised in the Integrity Mutual Funds group on the basis of gross
assets.
As of November 15, 1996, the officers and Trustees of the Fund owned, as a
group, less than 1% of the shares of the Fund.
7
<PAGE>
CUSTODIAN
First Western Bank & Trust, 900 South Broadway, Minot, North Dakota, 58701,
serves as the Custodian of the Fund and has custody of all securities and cash
of the Fund. The Custodian, among other things, attends to the collection of
principal and income and payment for and collection of proceeds of securities
bought and sold by the Fund.
INDEPENDENT AUDITORS
Shareholders will receive annual financial statements, together with a
report of independent auditors, and semi-annual unaudited financial statements
of the Fund. The independent auditors for the Fund were Allen, Gibbs & Houlik,
L.C., 301 North Main, Suite 1700, Wichita, Kansas 67202. At a joint special
meeting of The Kansas Municipal Fund, The Kansas Insured Municipal Fund-Limited
Maturity and The Nebraska Municipal Fund held on December 11, 1995, the Fund's
shareholders voted to ratify the selection of Brady, Martz & Associates, P.C.,
24 West Central Avenue, Minot, North Dakota 58701, as independent auditors for
the Fund for the fiscal year ending July 31, 1996. There were no disagreements
at any time between the Fund and Allen, Gibbs & Houlik, L.C., on any matters of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure. The independent auditors will report on the Fund's annual
financial statements, review certain regulatory reports and the Fund's income
tax returns, and perform other professional accounting, auditing, tax and
advisory services when engaged to do so by the Fund.
MANAGEMENT AND INVESTMENT ADVISORY AGREEMENT
The Management and Investment Advisory Agreement (the "Agreement") between
the Manager and the Fund provides that the Manager will supply investment
research and portfolio management, including the selection of securities for
the Fund to purchase, hold or sell, and the selection of brokers through whom
the Fund's portfolio transactions are executed. The Manager also administers
the business affairs of the Fund, furnishes offices, necessary facilities and
equipment, provides administrative services, and permits its officers and
employees to serve without compensation as directors and officers of the Fund
if duly elected to such positions. Fees and expense limitations under the
Agreement are described in the Prospectus.
The Agreement will continue in effect from year to year if specifically
approved by the Fund's Trustees or the Fund's shareholders and by the Fund's
Disinterested Trustees in compliance with the requirements of the Investment
Company Act of 1940 (the "1940 Act"). The Agreement may be terminated without
penalty upon 60 days' written notice by either party and will automatically
terminate in the event of assignment.
Ranson Capital Corporation serves as the Fund Manager and is a wholly-owned
subsidiary of The Ranson Company, Inc., a Kansas corporation. ND Holdings, Inc.,
a North Dakota corporation, owns all of the outstanding shares of common stock
of The Ranson Company, Inc.
PORTFOLIO TRANSACTIONS
The Manager will place orders for portfolio transactions for the Fund with
broker-dealer firms giving consideration to the quality, quantity and nature of
each firm's professional services. These services include execution, clearance
procedures, wire service quotations and statistical and other research
information provided to the Fund and the Manager including quotations necessary
to determine the value of the Fund's net assets. Any research benefits derived
are available for all clients of the Manager. Since statistical and other
research information is only supplementary to the research efforts of the
Manager and still must be analyzed and reviewed by one of its staff, the
receipt of research information is not expected to materially reduce the
Manager's expenses. In selecting among the firms believed to meet the criteria
for handling a particular
8
<PAGE>
transaction, the Manager may take into consideration that certain firms have
sold or are selling shares of the Fund and that certain firms provide market,
statistical or other research information to the Fund and the Manager and may
select firms that are affiliated with the Fund or the Manager.
If it is believed to be in the best interests of the Fund, the Manager may
place portfolio transactions with brokers who provide the types of service
described above, even if it means the Fund will have to pay a higher commission
(or, if the broker's profit is part of the cost of the security, will have to
pay a higher price for the security) than would be the case if no weight were
given to the broker's furnishing of these services. This will be done, however,
only if, in the opinion of the Manager, the amount of additional commission or
increased cost is reasonable in relation to the value of the services.
If purchases or sales of securities of the Fund and of one or more other
portfolios of the Fund, investment companies or clients supervised by the
Manager are considered at or about the same time, transactions in such
securities will be allocated among the several portfolios of the Fund,
investment companies and clients in a manner deemed equitable to all by the
Manager, taking into account the respective sizes of the funds and the amount of
securities to be purchased or sold. Although it is possible that in some cases
this procedure could have a detrimental effect on the price or volume of the
security as far as the Fund is concerned, it is also possible that the ability
to participate in volume transactions and to negotiate lower brokerage
commissions will be beneficial to the Fund. The Fund expects that its portfolio
transactions in Nebraska Municipal Securities will generally be effected on a
principal (as opposed to agency) basis and, accordingly, does not expect to
incur significant brokerage commissions.
While the Manager will be primarily responsible for the placement of the
Fund's business, the policies and practices in this regard must be consistent
with the foregoing and will at all times be subject to review by the Trustees of
the Fund.
The Board of Trustees has adopted certain policies incorporating the
standards of Rule 17e-1 issued by the Securities and Exchange Commission under
the 1940 Act which require that the commissions paid to the Distributor and
other affiliates of the Fund must be reasonable and fair compared to the
commissions, fees or other remuneration received or to be received by other
brokers in connection with comparable transactions involving similar securities
during a comparable period of time. The Rule and procedures also contain review
requirements and require the Manager to furnish reports to the Board of Trustees
and to maintain records in connection with such reviews. After consideration of
all factors deemed relevant, the Board of Trustees will consider from time to
time whether the advisory fee will be reduced by all or a portion of the
brokerage commission given to affiliated brokers.
ADDITIONAL INFORMATION REGARDING SHARES AND RIGHTS
The Fund is a non-diversified, open-end investment company established
under Massachusetts law by an Agreement and Declaration of Trust ("Trust
Agreement") dated August 10, 1990, and is the type of organization commonly
known as a "Massachusetts business trust." It is a series company as
contemplated under Rule 18f-2 under the 1940 Act, having three series (the
"Series") of shares offered at this time which are known as "The Kansas
Municipal Fund", "The Kansas Insured Intermediate Fund" and "The Nebraska
Municipal Fund". The Trust Agreement provides that each shareholder, by virtue
of becoming such, will be held to have expressly assented and agreed to the
terms of the Trust Agreement and to have become a party thereto.
The Trust Agreement permits the Trustees to issue an unlimited number of
full and fractional shares, without par value, from each portfolio. Each share
of a portfolio represents an equal proportionate interest in the assets and
liabilities belonging to such portfolio with each other share of such portfolio
and is entitled to such dividends and distributions out of the income belonging
to such portfolio as are declared by the Trustees. The shares do not have
cumulative voting rights nor any preemptive rights. In case of a liquidation,
subject to the rights of creditors, the holders of shares of each portfolio
being liquidated will be entitled to receive as a Series a distribution out of
the net assets belonging only to that portfolio. Under the Trust Agreement,
expenses attributable to any specific portfolio (whether start-up for a new
portfolio or on-going operating expenses) will be borne by that portfolio. Any
general expenses of the Fund not readily identifiable as belonging to a
9
<PAGE>
particular portfolio are allocated by or under the direction of the Trustees in
such manner as the Trustees determine to be fair and equitable, usually in
proportion to the portfolio's relative net assets. The net asset value of the
shares of any portfolio will be computed based only upon the net assets of such
portfolio.
As a general matter, the Fund will not hold annual or other meetings of the
Fund's shareholders. This is because the Trust Agreement provides for Fund
shareholders voting only (a) for the election or removal of one or more Trustees
if a meeting is called for that purpose; (b) with respect to any contract as to
which shareholder approval is required by the 1940 Act (such as the Fund's
Management and Investment Advisory Agreement and the Distribution and Services
Agreement); (c) with respect to any termination or reorganization of the Fund or
any portfolio to the extent and as provided in the Trust Agreement; (d) with
respect to any amendment of the Trust Agreement (other than amendments
establishing and designating new portfolios, changing the name of the Fund or
the name of any portfolio, supplying any omission, curing any ambiguity, or
curing, correcting or supplementing any provision thereof which is internally
inconsistent with the 1940 Act or with the requirements of the Internal Revenue
Code and applicable regulations for the Fund to obtain the most favorable
treatment thereunder available to regulated investment companies), which
amendments require approval by more than 50% of the shares entitled to vote; (e)
to the same extent as the stockholders of a Massachusetts business corporation
as to whether or not a court action, proceeding or claim should or should not be
brought or maintained derivatively or as a class action on behalf of the Fund or
the shareholders; and (f) with respect to such additional matters relating to
the Fund as may be required by the 1940 Act (such as changes in the Fund's
investment policies and restrictions), the Trust Agreement, the by-laws of the
Fund, or any registration of the Fund with the Securities and Exchange
Commission or any state or as the Trustees may consider necessary or desirable.
Each Trustee serves until the next meeting of shareholders, if any, called
for the purpose of considering the election or reelection of such Trustee or of
a successor to such Trustee, and until the election and qualification of his
successor, if any, elected at such meeting, or until such Trustee sooner dies,
resigns, retires or is removed by the shareholders or two-thirds of the
Trustees.
The Trust Agreement provides that on any matter submitted to a vote of the
shareholders, all Fund shares entitled to vote, irrespective of portfolio, shall
be voted in the aggregate and not by portfolio except that (a) as to any matter
with respect to which a separate vote of any portfolio is required by the 1940
Act, such requirements as to a separate vote by that portfolio shall apply in
lieu of the aggregate voting as described above, and (b) when the Trustees have
determined that the matter affects only the interests of one or more portfolios,
then only shareholders of the affected portfolios shall be entitled to vote
thereon.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted by the provisions of the 1940 Act or applicable state law, or
otherwise, to the holders of the outstanding voting securities of an investment
company with separate portfolios like this Fund, shall not be deemed to have
been effectively acted upon unless approved by the holders of a majority of the
outstanding shares (as defined below) of each portfolio "affected by" such
matter. Rule 18f-2 further provides that a portfolio shall be deemed to be
affected by a matter unless the interests of each portfolio in the matter are
substantially identical or the matter does not affect any interests of such
portfolio. The Rule specifically exempts the selection of independent auditors,
the approval of principal underwriting contracts and the election of trustees
from such separate voting requirements and specifically provides that any
required approval of the Fund's Management and Investment Advisory Agreement and
the Distribution and Services Agreement is subject to such separate voting
requirements. In addition, changes in the Fund's investment policies are also
subject to separate voting requirements.
The Trust Agreement provides that the presence at a meeting of shareholders
in person or by proxy of shareholders entitled to vote at least thirty percent
(30%) of the votes entitled to be cast on a matter (or if voting is to be by
portfolio, shareholders of each portfolio entitled to vote at least thirty
percent (30%) of the votes entitled to be cast by each portfolio) shall
constitute a quorum. This permits a meeting of shareholders of the Fund to take
place even if less than a majority of the shareholders are present on its
scheduled date.
10
<PAGE>
Shareholders would in such a case be permitted to take action which does not
require a larger vote than a majority of a quorum (the election of Trustees and
the ratification of the selection of independent public accountants are
examples). Some matters requiring a larger vote under the Trust Agreement, such
as termination or reorganization of the Fund and certain amendments of the Trust
Agreement, would not be affected by this provision. This is also true with
respect to matters which under the 1940 Act require the vote of a majority of
the outstanding voting shares (as defined below) of the Fund or a particular
portfolio.
As used in the Prospectus and this Statement of Additional Information, the
term "majority of the outstanding shares" of either the Fund or a particular
portfolio of the Fund means the vote of the lesser of (i) 67% or more of the
shares of the Fund or such portfolio present or represented by proxy at a
meeting, if the holders of more than 50% of the outstanding shares of the Fund
or of such portfolio are present or represented by proxy, or (ii) more than 50%
of the outstanding shares of the Fund or such portfolio.
Under the terms of the Trust Agreement, a Trustee is liable for his own
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office, and for nothing else, and shall
not be liable for errors of judgment or mistakes of fact or of law. The Trust
Agreement provides for indemnification by the Fund of the Trustees and the
officers of the Fund except with respect to any matter as to which such person
did not act in good faith in the reasonable belief that his action was in or not
opposed to the best interests of the Fund (or the predecessor corporation) but
such person may not be indemnified against any liability to the Fund or the Fund
shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. The Trust Agreement also provides that
any agreement or undertaking by the Trustees on behalf of the Fund is binding
upon the Fund only and not on the Trustees personally.
EXPENSES OF THE FUND
The Fund's expenses include, among others, management and investment
advisory fees, 12b-1 fees, accounting and administrative fees, taxes, brokerage
fees and commissions, if any, fees of Disinterested Trustees, expenses of
Trustees' and shareholders' meetings, insurance premiums, expenses of redemption
of shares, expenses of issue and sale of shares (to the extent not borne by the
Distributor), expenses of printing and mailing certificates, association
membership dues, charges of the Fund's Custodian, and bookkeeping, auditing and
legal expenses, and the fees and expenses of registering the Fund and its shares
with the Securities and Exchange Commission, registering or qualifying its
shares under state securities laws and the expenses of preparing and mailing
prospectuses and reports to shareholders.
For the period from the commencement of operations on November 17, 1993, to
July 31, 1994, and for the year ended July 31, 1995 and July 31, 1996, the
Manager earned $17,914 and $56,058 (all of which was waived by the Manager), and
$84,492 ($28,152 was waived by the Manager), respectively, in management and
investment advisory fees.
For the period from the commencement of operations on November 17, 1993, to
July 31, 1994, and for the year ended July 31, 1995 and July 31, 1996, the
Manager earned $18,024, $35,341, and $35,320, respectively, in administrative
and accounting services fees all of which was waived by the Manager.
For the period from the commencement of operations on November 17, 1993, to
July 31, 1994, and for the year ended July 31, 1995 and July 31, 1996, the Rule
12b-1 fee totaled $8,957, $27,823, and $42,246, respectively, of which $8,957,
$26,146, and $0, respectively, was waived by the Distributor.
In addition, in connection with sales of shares of the Fund, Ranson Capital
Corporation retained $65,568, $39,039, and $53,836 of underwriting commissions
paid by shareholders during the period from the commencement of operations on
November 17, 1993, to July 31, 1994, and for the year ended July 31, 1995 and
July 31, 1996, respectively.
11
<PAGE>
PERFORMANCE DATA
As described in the Prospectus, the Fund's historical performance may be
shown in the form of "current yield," "tax equivalent yield," "distribution
return," "average annual total return" and "total return" figures. These various
measures of performance are described below.
Current yield is determined in accordance with a standardized method
prescribed by rules of the Securities and Exchange Commission by annualizing net
investment income earned per share for a stated period (normally one month or
thirty days) and dividing the result by the maximum public offering price at the
end of the evaluation period. The Securities and Exchange Commission's rules for
calculating current yield require the use of certain standardized accounting
practices which are not necessarily consistent with those used by the Fund in
the preparation of its audited financial statements or federal tax return. The
Fund's current yield figure is based upon historical results and is not
necessarily representative of future performance. The current yield for the one-
month period ending July 31, 1996, was 5.16%.
Tax equivalent yield is determined by dividing that portion of current
yield which is tax-exempt by one minus a stated income tax rate and adding that
portion of current yield, if any, that is not tax-exempt. The tax equivalent
yield for the one-month period ending July 31, 1996, was 9.13%.
The Fund's distribution return is computed by dividing the income per share
by the number of days in the current month and the quotient is multiplied by
365. The result is divided by the offering price per share on the last day of
the month. The distribution return for the one-month period ending July 31,
1996, was 4.94%.
The Fund's average annual total return quotation is computed in accordance
with a standardized method prescribed by rules of the Securities and Exchange
Commission. The average annual total return for the Fund for a specific period
is found by first taking a hypothetical $1,000 investment ("initial
investment") in the Fund's shares on the first day of the period reduced by the
maximum sales charge in effect on that date and computing the "redeemable
value" of that investment at the end of the period. The redeemable value is
then divided by the initial investment, and the quotient is taken to the Nth
root (N representing the number of years in the period) and 1 is subtracted
from the result, which is then expressed as a percentage. The calculation
assumes that all income and capital gains dividends paid by the Fund have been
reinvested at net asset value on the reinvestment dates during the period. The
average annual total return for the period from November 17, 1993 (inception),
to July 31, 1996, was 2.18%.
The Fund's total return quotation is computed by aggregating the percentage
or dollar value change over the period in question, exclusive of the initial
sales charge. The total return for the period from November 17, 1993, to July
31, 1996, was 10.71%.
The Fund's performance figures are based upon historical results and are
not necessarily representative of future performance. The Fund's shares are sold
at net asset value plus a maximum sales charge of 4.25% of the offering price.
Returns and net asset value will fluctuate. Factors affecting the Fund's
performance include general market conditions, operating expenses and investment
management. Any additional fees charged by a dealer or other financial services
firm would reduce the returns described in this section. Shares of the Fund are
redeemable at net asset value, which may be more or less than original cost.
12
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and Board of Trustees of
The Nebraska Municipal Fund
We have audited the accompanying statement of assets and liabilities of The
Nebraska Municipal Fund, (the Fund), including the schedule of investments, as
of July 31, 1996, the related statement of operations, the statement of changes
in net assets, and the financial highlights for the year then ended. These
financial statements and financial highlights are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit. The
statement of changes in net assets for the year ended July 31, 1995, and the
financial highlights for the year then ended and from the period since
inception (Nov. 17, 1993) through July 31, 1994, were audited by other auditors
whose report dated September 11, 1995, expressed an unqualified opinion on
those statements.
We conducted our audit 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 and
financial highlights 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 July 31, 1996, 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 audit provides 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
The Nebraska Municipal Fund, as of July 31, 1996, the results of its
operations, the changes in its net assets, and the financial highlights for the
year then ended, in conformity with generally accepted accounting principles.
BRADY, MARTZ & ASSOCIATES, P.C.
September 9, 1996
13
<PAGE>
RANSON MANAGED PORTFOLIOS
THE NEBRASKA MUNICIPAL FUND
PORTFOLIO OF INVESTMENTS
July 31, 1996
<TABLE>
<CAPTION>
Ratings (Unaudited)
Name of Issuer -------------------
Percentages represent the market value Std. & Coupon Principal Market
of each investment category to total net assets Moody's Poor's Rate Maturity Amount Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NEBRASKA MUNICIPAL BONDS (97.5%)
GENERAL OBLIGATION (12.4%)
Douglas Cty, NE (Law Enforcement Center) G.O. 95................... Aa AA+ 5.750% 07/01/10 $275,000 $ 281,988
Lincoln, NE G.O. Storm Sewer & Drng 95............................. Aa AAA 5.500 06/01/14 200,000 198,150
Lincoln, NE G.O. Storm Sewer & Drng 95............................. Aa AAA 5.500 06/01/15 200,000 196,718
Lincoln, NE G.O. Purpose 95........................................ Aa AAA 5.500 12/01/15 200,000 195,254
Lincoln/Lancaster Counties, NE Pub. Bldg. Comm. Rev................ Aa AA+ 5.875 10/15/23 850,000 837,768
Omaha, NE Various Purpose 94....................................... Aaa AAA 6.250 12/01/12 250,000 263,730
Omaha, NE Various Purpose 94....................................... Aaa AAA 6.250 12/01/14 250,000 261,508
----------
$2,235,116
----------
FINANCIAL/BUSINESS SERVICES (6.3%)
NE Higher Education Loan Program 93-2A-6........................... A NR 6.450% 06/01/18 $400,000 $ 402,048
NE Higher Education Loan Program 93-2A-5B.......................... Aa NR 6.250 06/01/18 750,000 736,343
----------
$1,138,391
----------
HOUSING (10.8%)
NE Invt. Fin. Auth. (Muirfield Greens) Multi-Family................ Aa-1 NR 6.800% 12/01/15 $100,000 $ 100,272
NE Invt. Fin. Auth. Single Family Mtg. Rev......................... NR AAA 6.600 09/01/20 740,000 735,464
NE Invt. Fin. Auth. Single Family Hsg. Rev.......................... NR AAA 6.500 09/01/18 400,000 390,932
NE Invt. Fin. Auth. Single Family Mtg. Rev.......................... NR AAA 5.950 03/01/27 250,000 244,158
NE Invt. Fin. Auth. Multi-Family Housing Rev........................ NR AAA 6.200 06/01/28 500,000 477,940
----------
$1,948,766
----------
INSURED/GUARANTEED (29.2%)
Cass Cty, NE USD #1 G.O. Bonds FGIC Insured......................... Aaa AAA 6.350% 12/01/19 $300,000 $ 309,612
Douglas Cty, NE Hosp. Dist. #2 Rev. MBIA Insured.................... Aaa AAA 5.500 11/15/21 340,000 329,460
Douglas Cty, NE SD #17 G.O. MBIA Insured............................ Aaa AAA 5.650 12/15/05 400,000 415,748
Gage Cty, NE SD #15 G.O. AMBAC Insured.............................. NR AAA 5.900 12/15/16 850,000 846,863
Lincoln, NE (Lincoln Gen. Hosp.) Rev. & Ref. 93A CGIC Insured....... Aaa AAA 6.200 12/01/14 100,000 102,906
Lincoln, NE (General Hosp.) Rev. & Ref. CGIC Insured................ Aaa AAA 6.200 12/01/14 50,000 51,453
NE Muni Energy Agcy Pwr. Sup Sys. Rev. Ref. 92A AMBAC Insured....... Aaa AAA 6.000 04/01/17 500,000 508,270
Otoe Cty, NE SD #111 (Nebraska City) Ref. 95 AMBAC Insured.......... Aaa AAA 5.800 11/15/14 400,000 402,448
Buffalo Cty, NE (Srs. Char. Hlth. Care) Hosp. Rev. 91 MBIA Insured.. Aaa AAA 6.375 05/15/04 250,000 268,590
Buffalo Cty, NE (Srs. Char. Hlth. Care) Rev. 91 MBIA Insured........ Aaa AAA 6.625 05/15/09 300,000 323,235
Lancaster Cty, NE (Bryan Mem. Hosp.) Auth. #1 Rev. 92 MBIA Insured.. Aaa AAA 6.600 06/01/12 100,000 107,403
Lancaster Cty, NE (Bryan Mem. Hosp.) Auth. #1 Rev. 92 MBIA Insured.. Aaa AAA 6.700 06/01/22 250,000 265,687
NE Education Fin. Auth. (Creighton Univ.) Rev. AMBAC Insured........ Aaa AAA 5.950 01/01/11 300,000 303,285
NE Education Fin. Auth. (Creighton Univ.) Rev. 94 MBIA Insured...... Aaa AAA 5.700 11/01/04 450,000 462,083
Northeast NE Solid Waste Facility Rev. MBIA Insured................. Aaa AAA 5.900 05/15/15 600,000 589,938
----------
$5,286,981
----------
MEDICAL CARE (3.0%)
Scotts Bluff Cty, NE (Regl. West) Hosp. Auth. Rev. 92.............. A A 6.450% 12/15/04 $275,000 $ 292,342
Univ. of NE Facs. Corp. (U. of NE Med. Ctr.) Rev. Ref. 93........... A-1 AA- 5.250 07/01/11 250,000 242,072
----------
$ 534,414
----------
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
RANSON MANAGED PORTFOLIOS
THE NEBRASKA MUNICIPAL FUND
PORTFOLIO OF INVESTMENTS
July 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
REAL ESTATE (4.1%)
Omaha, NE Parking Facs Corp. (Omaha Park 4/5) Lsc. Rev. 95... Aa-1 AAA 5.700% 09/15/15 $ 750,000 $ 740,385
-----------
$ 740,385
-----------
SCHOOL (8.0%)
Chadron St. College, NE Student Fees & Facs. Rev. Ref. 94.... NR NR 5.700% 07/01/11 $ 240,000 $ 232,606
Dawson Cty, NE (Lexington) SD #1 G.O. ....................... NR NR 5.350 12/15/11 125,000 121,367
Dawson Cty, NE (Lexington) SD #1 G.O. ....................... NR NR 5.400 12/15/12 135,000 130,864
Dawson Cty, NE (Lexington) SD #1 G.O. ....................... NR NR 5.450 12/15/13 115,000 111,248
Dawson Cty, NE (Lexington) SD #1 G.O. ....................... NR NR 5.450 12/15/14 140,000 135,282
Lancaster Cty, NE (Lincoln) SD #1 G.O........................ Aa AA 5.600 07/15/06 150,000 151,830
Douglas Cty, NE SD #1 (Omaha) G.O. Ref. 93B.................. Aa AAA 5.000 12/15/11 200,000 190,410
Univ. of NE (Omaha Student Ctr.) Brd. Rgts. Rev. 93......... A A+ 5.250 05/15/10 250,000 244,237
Washington Cty, NE (Blair) SD #1 G.O......................... NR A 5.900 07/15/15 135,000 135,486
-----------
$ 1,453,330
-----------
UTILITIES (23.7%)
Hastings, NE Electric Rev.................................... A A 6.300% 01/01/19 $370,000 $ 380,663
Hastings, NE Electric System Rev. Ref. 93.................... A A 5.200 01/01/13 100,000 93,875
Lincoln, NE Electric System Rev.............................. Aa AA+ 5.750 09/01/16 750,000 744,435
NE Pub Pwr Dist Pwr Supply System Rev. 93.................... A-1 A+ 6.125 01/01/15 390,000 395,756
NE Pub Pwr Dist Pwr Supply System Rev. 93.................... A-1 A+ 5.750 01/01/20 750,000 730,890
Omaha, NE Pub Pwr Dist Elec. System Rev...................... Aa AA+ 5.700 02/01/17 250,000 246,580
Omaha, NE Pub Pwr Dist Elec. System Rev. 86A................. NR AA 6.000 02/01/15 330,000 326,545
Omaha, NE Pub Pwr Dist Elec. System Rev. 92B................. Aa AA 6.200 02/01/17 500,000 516,790
Grand Island, NE Sewer System Rev. 94........................ A NR 6.000 04/01/14 250,000 257,035
Kearney, NE Combined Utilities Rev. 94....................... A-1 NR 6.100 06/01/14 400,000 395,600
Lincoln, NE Water Rev. and Ref. 93........................... Aa AA+ 5.300 08/15/11 200,000 196,686
-----------
$ 4,284,855
-----------
TOTAL NEBRASKA MUNICIPAL BONDS (COST: $17,537,502).............................................................. $17,622,238
SHORT TERM SECURITIES (6.1%)
Federated Tax-Free Trust (COST: $1,095,751)...................................................................... 1,095,751
-----------
TOTAL INVESTMENTS IN SECURITIES (COST: $18,633,253).............................................................. $18,717,989
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
See Notes to Financial Statements.
15
<PAGE>
RANSON MANAGED PORTFOLIOS
The NEBRASKA Municipal Fund
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1996
<TABLE>
<S> <C>
ASSETS
Investment in securities, at value (cost: $18,633,253) ..... $18,717,989
Cash ....................................................... 26,382
Accrued interest receivable ................................ 242,848
Accrued dividends receivable ............................... 2,979
Receivable for fund shares sold ............................ 20,498
Deferred organization costs ................................ 12,861
-----------
Total Assets ........................................... $19,023,557
-----------
LIABILITIES
Dividends payable .......................................... $ 81,161
Accrued expenses ........................................... 18,713
Security purchases payable ................................. 846,725
-----------
Total Liabilities ...................................... $ 946,599
-----------
NET ASSETS ..................................................... $18,076,958
===========
Net asset value per share, 1,644,023 shares outstanding .... $ 11.00
===========
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
RANSON MANAGED PORTFOLIOS
THE NEBRASKA MUNICIPAL FUND
STATEMENT OF OPERATIONS
July 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $960,630
Dividends 8,088
--------
Total Investment $968,718
--------
EXPENSES
Investment advisory fees $ 84,492
Distribution fees (12b-1) 42,246
Custodian fees 10,784
Transfer agent fees 45,119
Accounting service fees 35,320
Audit and legal fees 2,870
Printing and postage 3,124
Insurance 435
Trustees' fees 1,210
License, fees, and registrations 2,039
Amortization of organization costs 5,527
--------
Total Expenses $233,166
Less expenses waived or absorbed by the Fund's manager 129,053
--------
Total Net Expenses $104,113
--------
NET INVESTMENT INCOME $864,605
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES
Net realized gain (loss) from:
Investment transactions $(84,925)
Futures transactions 69,539
Net change in unrealized appreciation (depreciation) of
investments 23,173
--------
Net Realized And Unrealized Gain (Loss) On Investments And
Futures $ 7,787
--------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $872,392
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
See Notes to Financial Statements.
17
<PAGE>
RANSON MANAGED PORTFOLIOS
THE NEBRASKA MUNICIPAL FUND
STATEMENT OF CHANGES IN NET ASSETS
For the year ended July 31, 1996 and year ended July 31, 1995
<TABLE>
<CAPTION>
For The Year For The Year
Ended Ended
July 31, 1996 July 31, 1995
-----------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income..................................................................... $ 864,605 $ 631,226
Net realized gain (loss) on investment and futures transactions........................... (15,386) (28,177)
Net change in unrealized appreciation (depreciation) on investments....................... 23,173 300,387
-----------------------------
Net Increase (Decrease) in Net Assets Resulting From Operations........................ $ 872,392 $ 903,436
-----------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income...................................................... $ (864,605) $ (631,226)
Distributions from net realized gain on investment and futures transactions............... 0 0
-----------------------------
Total Dividends and Distributions...................................................... $ (864,605) $ (631,226)
-----------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sale of shares.............................................................. $ 4,757,147 $ 6,756,929
Proceeds from reinvested dividends........................................................ 543,019 382,395
Cost of shares redeemed................................................................... (1,675,710) (1,137,925)
-----------------------------
Net Increase (Decrease) in Net Assets Resulting From Capital Share Transactions........ $ 3,624,456 $ 6,001,399
-----------------------------
TOTAL INCREASE IN NET ASSETS................................................................... $ 3,632,243 $ 6,273,609
NET ASSETS, BEGINNING OF PERIOD................................................................ 14,444,715 8,171,106
-----------------------------
NET ASSETS, END OF PERIOD...................................................................... $ 18,076,958 $ 14,444,715
=============================
</TABLE>
The accompanying notes are an integral part of these financial statements.
See Notes to Financial Statements.
18
<PAGE>
RANSON MANAGED PORTFOLIOS
THE NEBRASKA MUNICIPAL FUND
NOTES TO FINANCIAL STATEMENTS
July 31, 1996
NOTE 1. ORGANIZATION
BUSINESS OPERATIONS - The Nebraska Municipal Fund (the "Fund") is an
investment portfolio of Ranson Managed Portfolios (the "Trust")
registered under the Investment Company Act of 1940, as amended, as a
non-diversified, open-end management investment company. The Trust may
offer multiple portfolios; currently three portfolios are offered.
Ranson Managed Portfolios is an unincorporated business trust
organized under Massachusetts law on August 10, 1990. The Fund had no
operations from that date to November 17, 1993, other than matters
relating to organization and registration. On November 17, 1993, the
Fund commenced its Public Offering of capital shares to the public.
The investment objective of the Fund is to provide its shareholders
with as high a level of current income exempt from both federal and
Nebraska income taxes as is consistent with preservation of capital.
The Fund will seek to achieve this objective by investing primarily in
a portfolio of Nebraska Municipal securities. Shares of the Fund are
offered at net asset value plus a maximum sales charge of 4.25% of the
offering price.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT SECURITY VALUATION - Investments in securities traded on
national securities exchanges are valued at the last reported sales
price at the close of each business day. Securities for which market
quotations are not readily available are valued at fair value as
determined in good faith by the portfolio management team. The Fund
follows industry practice and records security transactions on the
trade date.
The Fund concentrates its investments in a single state. This
concentration may result in the Fund investing a relatively high
percentage of its assets in a limited number of issuers.
DEFERRED ORGANIZATION COSTS - Costs incurred by the Fund in connection
with its organization are being amortized over a 60-month period on
the straight-line basis. Accumulated amortization at July 31, 1996
totaled $14,194. In the event that any of the initial shares acquired
by the Manager are redeemed during such period, the Fund will be
reimbursed by the Manager for unamortized organization costs in the
same proportion as that between the number of shares redeemed and the
number of initial shares outstanding at the time of redemption. All of
the initial shares remain outstanding as of July 31, 1996.
FEDERAL AND STATE INCOME TAXES - The Fund's policy is to comply with
the requirements of the Internal Revenue Code that are applicable to
regulated investment companies, and to distribute all of its net
investment income and any net realized gain on investments, to its
shareholders. Therefore, no provision for income taxes is required.
The Fund has available at July 31, 1996, a net capital loss
carryforward totaling $219,774, which may be used to offset capital
gains realized during subsequent years through July 31, 2004.
DISTRIBUTIONS TO SHAREHOLDERS - Dividends from net investment income,
declared daily and payable monthly, are reinvested in additional
shares of the Fund at net asset value or payable in cash. Capital
gains, when available, are distributed at least annually.
INVESTMENT INCOME - Dividend income is recognized on the ex-dividend
date and interest income is recognized daily on an accrual basis.
Premiums and discounts on securities purchased are amortized using the
effective interest method over the life of the respective securities,
unless callable, in which case they are amortized to the earliest call
date.
FUTURES CONTRACTS AND OPTIONS - The Fund may purchase and sell
financial futures and option contracts to hedge against changes in the
values of tax-exempt municipal securities the Fund owns or expects to
purchase.
A futures contract is an agreement between two parties to buy or sell
units of a particular index or a certain amount of U.S. Government or
municipal securities at a set price on a future date. Upon entering
into a futures contract, the Fund is required to deposit with a broker
an amount of cash or securities equal to the minimum "initial margin"
requirement of the futures exchange on which the contract is traded.
Subsequent payments ("variation margin") are made or received by the
Fund, dependent on the fluctuations in the value of the underlying
index. Daily fluctuations in value are recorded for financial
reporting purposes as unrealized gains or losses by the Fund. When
entering into a closing transaction, the Fund will realize, for book
purposes, a gain or loss equal to the difference between the value of
the futures contracts sold and the futures contracts to buy.
Daily fluctuations in the value of options are recorded for financial
reporting purposes as unrealized gains or losses by the Fund. Upon
sale or expiration of the option, the Fund will realize, for book
purposes, a gain or loss equal to the difference between the cost of
the option and the value on sale or expiration date.
Certain risks may arise upon entering into futures contracts and
options. These risks may include changes in the value of the futures
contracts or options that may not directly correlate with changes in
the value of the underlying securities.
USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
19
<PAGE>
RANSON MANAGED PORTFOLIOS
THE NEBRASKA MUNICIPAL FUND
PORTFOLIO OF INVESTMENTS
July 31, 1995
Note 3. CAPITAL SHARE TRANSACTIONS
As of July 31, 1996, there were unlimited shares of no par authorized; 1,644,023
and 1,318,776 shares were outstanding at July 31, 1996 and July 31, 1995,
respectively. Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
Shares Amount
----------------------------- -----------------------------
For The For The For The For The
Year Ended Year Ended Year Ended Year Ended
July 31, 1996 July 31, 1995 July 31, 1996 July 31, 1995
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold......................................................... 428,516 632,974 $ 4,757,147 $ 6,756,929
Shares issued on reinvestment of dividends.......................... 48,978 35,721 543,019 382,395
Shares redeemed..................................................... (152,247) (105,163) (1,675,710) (1,137,925)
-------------------------------------------------------------
Net increase........................................................ 325,247 563,532 $ 3,624,456 $ 6,001,399
=============================================================
</TABLE>
Note 4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Ranson Capital Corporation, the Fund's investment adviser and
underwriter, and ND Resources, Inc., the Fund's transfer and accounting
services agent, are subsidiaries of ND Holdings, Inc., the Fund's
sponsor.
The Fund has engaged Ranson Capital Corporation to provide investment
advisory and management services to the Fund. The Investment Advisory
Agreement provides for fees to be computed at an annual rate of 0.50% of
the Fund's average daily net assets. The Fund has recognized $84,492 of
investment advisory fees for the year ended July 31, 1996. The adviser
elected to waive $28,152 of this fee. The Fund has a payable to Ranson
Capital Corporation of $6,386 at July 31, 1996 for investment advisory
fees. Certain officers and trustees of the Fund are also officers and
directors of the investment adviser.
The Fund has adopted a distribution plan (the Plan) pursuant to Rule
12b-1 under the 1940 Act, whereby the Fund shall pay at the annual rate
of 0.25% of the average daily net assets of the Fund to Ranson Capital
Corporation (Capital), its principal underwriter, for expenses incurred
in the distribution of the Fund's shares. Pursuant to the Plan, Capital
is entitled to reimbursement each month for its actual expenses incurred
in the distribution and promotion of the Fund's shares, including the
printing of prospectuses and reports used for sales purposes, expenses
of preparation and printing of sales literature and other such
distribution related expenses, including any distribution or service
fees paid to securities dealers who have executed a dealer sales
agreement with Capital. Capital will be reimbursed at a rate not to
exceed 0.25% of the average daily net assets of the Fund for the prior
month. The Fund has recognized $42,246 of 12b-1 fee expenses for the
year ended July 31, 1996. The Fund has a payable to Ranson Capital
Corporation of $3,991 at July 31, 1996 for 12b-1 fees.
The Fund also entered into an Administrative and Accounting Services
Agreement whereby the Fund incurs a fee to the Manager for acting as the
Fund's administrative and accounting services agent. This monthly fee
was equal to the sum of a fixed fee ranging from $1,500-$2,500,
depending on the level of average daily net assets (ADNA), and a
variable fee equal to 0.15% of the annualized ADNA for the Funds first
$20 million and at a lower rate on the annualized ADNA in excess of $20
million.
On January 5, 1996, the Fund entered into a new Accounting Services
Agreement whereby the Fund incurs a fee to ND Resources, Inc. for acting
as the Fund's accounting services agent. This monthly fee is equal to
the sum of a fixed fee of $2,000, and a variable fee equal to 0.05% of
the annualized ADNA for the Fund's first $50 million, and at a lower
rate on the annualized ADNA in excess of $50 million. For the year ended
July 31, 1996, the fee from both agreements totaled $35,320.
On May 9, 1996 the Fund entered into a new Transfer Agency Agreement
whereby the Fund incurs a fee to ND Resources, Inc., (the transfer
agent), for providing shareholder services. This monthly fee is equal to
an annual rate of 0.16% of the Fund's first $10 million of net assets,
0.13% of the Fund's net assets on the next $15 million, 0.11% of the
Fund's net assets on the next $15 million, 0.10% of the Fund's net
assets on the next $10 million, and 0.09% of the Fund's net assets in
excess of $50 million. The Fund has recognized $5,962 of transfer agency
fees under this agreement for the year ended July 31, 1996.
Note 5. INVESTMENT SECURITY TRANSACTIONS
The cost of purchases and proceeds from the sales of investment
securities (excluding short-term securities) aggregated $8,812,494 and
$4,552,240, respectively, for the year ended July 31, 1996.
Note 6. INVESTMENT IN SECURITIES
At July 31, 1996, the aggregate cost of securities for federal income
tax purposes was $18,633,253, and the net unrealized appreciation of
investments based on the cost was $84,736 which is comprised of $247,569
aggregate gross unrealized appreciation and $162,833 aggregate gross
unrealized depreciation.
20
<PAGE>
RANSON MANAGED PORTFOLIOS
THE NEBRASKA MUNICIPAL FUND
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
For The Year For The Year For The Period Since
Ended Ended Inception (Nov. 17, 1993)
July 31, 1996 July 31, 1995 Through July 31, 1994
-----------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD......................... $ 10.95 $ 10.82 $ 11.49
-----------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................................... $ .57 $ .59 $ .45
Net realized and unrealized gain (loss) on investments... .05 .13 (.67)
-----------------------------------------------
Total From Investment Operations..................... $ .62 $ .72 $ (.22)
-----------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income..................... $ (.57) $ (.59) $ (.45)
Distributions from net capital gains..................... .00 .00 .00
-----------------------------------------------
Total Distributions.................................. $ (.57) $ (.59) $ (.45)
-----------------------------------------------
NET ASSET VALUE, END OF PERIOD............................... $ 11.00 $ 10.95 $ 10.82
===============================================
TOTAL RETURN................................................. 5.73%(A) 7.14%(A) (3.20)%(A)(B)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)................. $18,077 $14,445 $ 8,171
Ratio of net expenses (after expense assumption) to
average net assets..................................... 0.62%(C) 0.35%(C) 0.19%(B)(C)
Ratio of net investment income to average net assets..... 5.13% 5.63% 5.51%(B)
Portfolio turnover rate.................................. 27.20% 140.00% 314.00%
</TABLE>
(A) Excludes maximum sales charge of 4.25%.
(B) Ratio was annualized.
(C) During the periods indicated above, ND Holdings, Inc. or Ranson Capital
Corporation assumed expenses of $129,053, $146,913 and $70,186,
respectively. If the expenses had not been assumed, the annualized ratios
of total expenses to average net assets would have been 1.38%, 1.66%, and
2.25%, respectively.
21
<PAGE>
INCORPORATION BY REFERENCE
The following financials of The Nebraska Municipal Fund filed on September 9,
1996, for the period ending January 31, 1996 are incorporated by reference in
this Post-effective Amendment #29 dated November 27, 1996.
Schedule of Investments July 31, 1996
Statement of Assets and Liabilities July 31, 1996
Statement of Operations July 31, 1996
Statement of Changes in Net Assets
For year ended July 31, 1996
Notes to Financial Statements July 31, 1996
Financial Highlights
22
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits.
(a) Financial Statements:
(i) Financial Statements included in Part A of the Registration
Statement: Condensed Financial Information
(ii) Financial Statements included in Part B of the Registration
Statement:
Report of Independent Auditors
Portfolio of Investments dated July 31, 1996
Statement of Assets and Liabilities dated July 31, 1996
Statement of Operations dated July 31, 1996
Statement of Changes in Net Assets dated July 31, 1996
Schedules 2, 3, 4, 5, 6 and 7 have been omitted as the required
information is not applicable.
(b) Exhibits:
1. Agreement and Declaration of Trust dated August 10, 1990*
2. By-Laws*
3. Inapplicable
4. Inapplicable
5. Form of Management and Investment Advisory Agreement between
Registrant and Ranson Capital Corporation*
6. (a) Distribution and Services Agreement between Registrant and
Ranson Capital Corporation*
(b) Form of Dealer Agreement*
7. Inapplicable
8. Form of Custodian Agreement between Ranson Managed Portfolios and
First Western Bank and Trust
9. (a) Form of Accounting and Administrative Services Agreement
between Registrant and Ranson Capital Corporation, Inc.
(b) Form of Agency Agreement between Registrant and ND Resources,
Inc.
10. Opinion of Chapman and Cutler*
11. Consent of Independent Auditors
12. Inapplicable
13. Inapplicable
14. Inapplicable
15. Shareholder Services Plan*
16. Computation of Performance Data*
*Previously filed
ITEM 25. Persons Controlled by or Under Common Control With Registrant.
To the best of Registrant's knowledge, as of November 15, 1996, no person
is either directly or indirectly controlled by or under common control with
Registrant.
C-1
<PAGE>
ITEM 26. Number of Holders of Securities.
As of November 15, 1996, the number of record holders of Registrant was as
follows:
The Kansas Municipal Fund: 4,624
The Kansas Insured Intermediate Fund: 822
The Nebraska Municipal Fund: 909
ITEM 27. Indemnification.
The following is a summary of the rights of indemnification set forth in
the Agreement and Declaration of Trust of Registrant (see Exhibit 1). Article
VIII of the Agreement and Declaration of Trust of Registrant provides generally
that any person who is or has been a Trustee or officer of Registrant (including
persons who serve at the request of Registrant as directors, Trustees or
officers of another organization and including persons who served as officers
and directors of the Registrant) shall be indemnified by Registrant to the
fullest extent permitted by law against liabilities and expenses reasonably
incurred by such person in connection with any claim, suit or proceeding in
which such person becomes involved as a party or otherwise by virtue of being or
having been such a Trustee, director or officer and against amounts incurred in
settlement thereof. It is further provided in such Agreement and Declaration of
Trust that no indemnification shall be provided in the event that it is
determined that such person was engaged in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office or that such person did not act in good faith in the reasonable belief
that his action was in the best interests of Registrant. In the event of a
settlement or other disposition not involving a final determination of the
foregoing matters by a court or other body, no indemnification shall be provided
unless such determination is made by a vote of a majority of the Disinterested
Trustees acting on the matter or a written opinion of independent legal counsel.
The right to indemnification as so provided may be insured against by policies
maintained by the Registrant and shall continue as to any person who has ceased
to be a Trustee or officer of Registrant.
Expenses of preparation and presentation of a defense by a person claiming
indemnification may be advanced by Registrant provided generally that such
person undertakes to repay any such advances if it is ultimately determined
that he is not entitled to indemnification and provided that either such
undertaking is secured by appropriate security or a majority of the
Disinterested Trustees acting on the matter or independent legal counsel in a
written opinion determines that there is reason to believe that such person
ultimately will be found entitled to indemnification.
The Agreement and Declaration of Trust provides further that in the event
that any shareholder or former shareholder shall be found to be personally
liable solely by reason of his being a shareholder and not because of acts or
omissions of such person, such shareholder shall be entitled out of assets of
the Registrant to be indemnified against all loss and expense arising from such
liability (provided there is no liability to reimburse any shareholder for
taxes paid by reason of such shareholder's ownership of shares or for losses
suffered by reason of any changes in value of any of Registrant's assets).
The Agreement and Declaration of Trust (Article IV, Section 2(o)) provides
specifically that the Trustees have the power to purchase and pay for insurance
out of assets of Registrant as they deem necessary or appropriate for the
conduct of its business including policies insuring shareholders, Trustees,
officers, employees, agents, investment managers, principal underwriters or
independent contracts or Registrant against claims or liabilities arising by
reason of such persons holding or having held any such office or position with
Registrant or by reason of any action alleged to have been taken or omitted by
such person in such office or position including any action taken or omitted
that may be determined to constitute negligence whether or not the Registrant
would have the power to indemnify such person against such liability.
The provisions with respect to indemnification in the Agreement and
Declaration of Trust of Registrant do not affect any rights of indemnification
that persons other than those specifically covered may have whether under
contract or otherwise under law.
C-2
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to Trustees, officers, and controlling persons of the
Registrant pursuant to the provisions of Registrant's Agreement and Declaration
of Trust, or otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liability (other than the payment by the Registrant of expenses incurred or
paid by a Trustee, officer or controlling person of Registrant in the
successful defense of any action, suit or proceeding) as asserted by such
Trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
ITEM 28. Business and Other Connections of Investment Adviser.
The names of the directors and officers of the Manager and their
businesses, professions, vocations and employment during the past two fiscal
years, either for their own account or as directors, officers, employees,
partners or Trustees, are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
(3)
(1) (2) Other Business Profession
Name and Principal Affiliation with Vocation or
Business Address Investment Adviser Employment Connection
Alex R. Meitzner Assistant Vice President - Executive Vice President, Ranson
Suite 450 Investments Managed Portfolios; Director, Executive
120 S. Market Vice President/Trader, The Ranson
Wichita, KS 67202 Company, Inc.; Vice President, Ranson
& Company, Inc.
Richard D. Olson Assistant Vice President -
1 North Main Sales
Minot, ND 58703
Peter A. Quist Director, Vice President Director and Vice President, ND Holdings,
1 North Main and Secretary Inc.; Director, Vice President and Secretary,
Minot, ND 58703 ND Money Management, Inc., ND Capital,
Inc., ND Resources, Inc., ND Tax-Free
Fund, Inc., ND Insured Income Fund, Inc.,
Montana Tax-Free Fund, Inc., South Dakota
Tax-Free Fund, Inc., Integrity Fund of
Funds, Inc. and The Ranson Company, Inc.;
Vice President and Secretary, Ranson
Managed Portfolios
Shannon D. Radke Assistant Vice President -
1 North Main Finance
Minot, ND 58703
John A. Ranson Assistant Vice President - Trustee and President, Ranson Managed
Suite 450 Operations Portfolios; Executive Vice President,
120 S. Market Ranson & Company, Inc.; Director,
Wichita, KS 67202 President and CEO, The Ranson
Company, Inc.
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Robert E. Walstad Director, President, CEO Director and President, ND Holdings, Inc.;
1 North Main and Treasurer Director, President and Treasurer, ND
Minot, ND 58703 Money Management, Inc., ND Capital, Inc.,
ND Resources, Inc., ND Tax-Free Fund,
Inc., ND Insured Income Fund, Inc.,
Montana Tax-Free Fund, Inc., South Dakota
Tax-Free Fund, Inc. and Integrity Fund of
Funds, Inc.; Director, President, CEO and
Treasurer, The Ranson Company, Inc.;
Trustee, Chairman, President and Treasurer,
Ranson Managed Portfolios
Ruthanne N. Whitely Assistant Secretary Assistant Vice President, Ranson Capital
Suite 450 Corporation
120 S. Market
Wichita, KS 67202
</TABLE>
ITEM 29. Principal Underwriters.
(a) Ranson Capital Corporation acts as investment adviser and Manager of
The Kansas Municipal Fund, The Kansas Insured Intermediate Fund and The
Nebraska Municipal Fund, having net assets of $131,961,343, $28,598,340 and
$18,669,383, respectively, as of November 15, 1996, and also acted as
investment adviser for The Kansas Tax-Exempt Trust Series 1-78 and The Nebraska
Tax-Exempt Trust Series 1-5 until December 29, 1995.
(b) The information required by the following table is provided with
respect to each director, officer or partner of each principal underwriter named
in the answer to Item 21.
<TABLE>
<CAPTION>
Ranson Capital Corporation
(1) (2) (3)
Positions and
Offices with Positions and
Name and Principal Ranson Capital Offices
Business Address Corporation with Registrant
- ---------------------------------------------------------------------------------------
<S> <C> <C>
1 North Main
Minot, ND 58703
Alex R. Meitzner Assistant Vice President -
Investments
Richard D. Olson Assistant Vice President -
Sales
Peter A. Quist Director, Vice President Vice President and Secretary
and Secretary
Shannon D. Radke Assistant Vice President -
Finance
John A. Ranson Assistant Vice President -
Operations
Robert E. Walstad Director, President, CEO Trustee, Chairman, President
and Treasurer and Treasurer
</TABLE>
C-4
<PAGE>
ITEM 30. Location of Accounts and Records.
First Western Bank & Trust (the "Custodian"), 900 South Broadway, Minot,
North Dakota 58701, serves as Registrant's Custodian and will maintain all
records related to that function. ND Resources, Inc., ("Resources"), serves as
Registrant's Transfer Agent. Resources also serves as Registrant's accounting
services agent and maintains all records related to that function. Ranson
Capital Corporation serves as Registrant's investment adviser and Manager, as
well as the Distributor and principal underwriter of its shares, and maintains
all records related to those functions. Registrant maintains all of its
corporate records. The address of Resources, Ranson Capital Corporation and
Registrant is 1 North Main, Minot, North Dakota 58703.
ITEM 31. Management Services.
Inapplicable.
ITEM 32. Undertakings.
Registrant hereby undertakes to furnish each person to whom a Prospectus is
delivered with a copy of the Registrant's latest annual report to shareholders
upon request and without charge.
C-5
<PAGE>
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Registrant has duly caused this Post-effective
Amendment No. 29 to Registration Statement No. 33-36324 on Form N-1A to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Minot, State of North Dakota, on the 15th day of November, 1996.
RANSON MANAGED PORTFOLIOS
By /s/ Robert E. Walstad
--------------------------------------
Robert E. Walstad
President
The undersigned each hereby constitutes and appoints Robert E. Walstad his
attorney-in-fact and agent, for him and in his name, place, and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to Registration Statement No. 33-36324 and to file the same with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this Post-effective Amendment No. 29 to
Registration Statement No. 33-36324 and Power of Attorney have been signed
below by the following persons in the capacities indicated on November 15, 1996.
/s/ Lynn W. Aas Trustee
- ---------------------------
Lynn W. Aas
/s/ Orlin W. Backes Trustee
- ---------------------------
Orlin W. Backes
/s/ Arthur A. Link Trustee
- ---------------------------
Arthur A. Link
/s/ Robert E. Walstad Trustee, Chairman of
- --------------------------- the Board, President
Robert E. Walstad and Treasurer
C-6
<PAGE>
EXHIBIT INDEX
1. Agreement and Declaration of Trust dated August 10, 1990*
2. By-Laws*
3. Inapplicable
4. Inapplicable
5. Form of Management and Investment Advisory Agreement between Registrant
and Ranson Capital Corporation*
6. (a) Distribution and Services Agreement between Registrant and Ranson
Capital Corporation*
(b) Form of Dealer Agreement*
7. Inapplicable
8. Form of Custodian Agreement between Ranson Managed Portfolios and First
Western Bank and Trust
9. (a) Form of Accounting and Administrative Services Agreement between
Registrant and Ranson Capital Corporation
(b) Form of Agency Agreement between Registrant and ND Resources, Inc.
10. Opinion of Chapman and Cutler*
11. Consent of Independent Auditors
12. Inapplicable
13. Inapplicable
14. Inapplicable
15. Shareholder Services Plan*
16. Computation of Performance Data*
*Previously filed
<PAGE>
EXHIBIT (11)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANT
<PAGE>
[LETTERHEAD OF BRADY MARTZ]
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-effective Amendment No. 29 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated August
29, 1996, relating to the financial statements and selected per share data and
ratios of Nebraska Municipal Fund, which appears in such Statement of Additional
Information and to the incorporation by reference of our report into the
Prospectus which constitutes part of the Registration Statement. We also consent
to the reference to us under the heading "Accountant and Reports to
Shareholders" in such Statement of Additional Information and to the reference
to us under the heading "Financial Highlights" in the Prospectus and on the back
cover of the Prospectus.
BRADY, MARTZ & ASSOCIATES, P.C.
November 20, 1996
[LETTERHEAD OF BRADY MARTZ]
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> JUL-31-1996
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 18633253
<INVESTMENTS-AT-VALUE> 18717989
<RECEIVABLES> 266325
<ASSETS-OTHER> 39243
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 19023557
<PAYABLE-FOR-SECURITIES> 846725
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 99874
<TOTAL-LIABILITIES> 946599
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 1644023
<SHARES-COMMON-PRIOR> 1318776
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (219774)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 84736
<NET-ASSETS> 18076958
<DIVIDEND-INCOME> 8088
<INTEREST-INCOME> 960630
<OTHER-INCOME> 0
<EXPENSES-NET> (104113)
<NET-INVESTMENT-INCOME> 864605
<REALIZED-GAINS-CURRENT> (15386)
<APPREC-INCREASE-CURRENT> 23173
<NET-CHANGE-FROM-OPS> 872392
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (864605)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 428516
<NUMBER-OF-SHARES-REDEEMED> 152247
<SHARES-REINVESTED> 48978
<NET-CHANGE-IN-ASSETS> 3632243
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 84492
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 233166
<AVERAGE-NET-ASSETS> 16846818
<PER-SHARE-NAV-BEGIN> 10.95
<PER-SHARE-NII> .57
<PER-SHARE-GAIN-APPREC> .05
<PER-SHARE-DIVIDEND> (.57)
<PER-SHARE-DISTRIBUTIONS> .00
<RETURNS-OF-CAPITAL> .00
<PER-SHARE-NAV-END> 11.00
<EXPENSE-RATIO> .62
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
AVERAGE ANNUAL TOTAL RETURN CALCULATION
The Nebraska Municipal Fund Series' average annual total return for the
period from the commencement of operations on November 17, 1993, to July 31,
1996, was 2.18%, calculated as follows:
n
P(1+T) = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return = 2.18%
n = number of years = 2.70 years
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the base period, assuming reinvestment of all dividends
and distributions = $1,002.57
TOTAL RETURN CALCULATION
The total return for the period from commencement of operations on November
17, 1993, to July 31, 1996, for the Nebraska Municipal Fund was 10.71%,
calculated as follows:
TR = ERV - P
-------
P
Where:
TR = Total return = 10.71%
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the base period, assuming reinvestment of all dividends
and distributions = $1,107.10
P = a hypothetical initial payment of $1,000
<PAGE>
CURRENT YIELD
The current yield for the one-month period ending July 31, 1996, was 4.99%,
calculated as follows:
___ ___
|(a-b )6 |
CY = 2 |(--- + 1) -1 |
|(cd ) |
|___ ___
Where:
a = Dividends and interest earned during the one-month period ending July
31, 1996
b = Expenses accrued for the one-month period ending July 31, 1996
c = Average daily number of shares outstanding during the one-month period
July 31, 1996, that were entitled to receive dividends
d = The maximum offering price per share on July 31, 1996
TAX EQUIVALENT YIELD
The tax equivalent yield for the one-month period ending July 31, 1996, was
9.13%, calculated as follows:
TEY = CY
-------
(1-SITR)
Where:
TEY = Tax equivalent yield = 9.13%
CY = Current yield = 5.16%
SITR = Stated Income tax rate = 43.50%
DISTRIBUTION RETURN
The distribution return for the one-month period ending July 31, 1996, was
4.94%.
DR = IPS(360)/30
-----------
POP
Where:
DR = Distribution return = 4.94%
IPS = Income per share = .049508
POP = Public offering price per share = 11.49
<PAGE>
EXHIBIT (8)
CUSTODIAL AGREEMENT
<PAGE>
CUSTODY AGREEMENT
THIS AGREEMENT made the 10th day of May, 1996, by and between First Western
Bank & Trust, ("Custodian"), a bank organized under the laws of the state of
North Dakota, having its trust office located at 900 South Broadway, Minot,
North Dakota 58701, and Ranson Managed Portfolios, ("Fund"), a Massachusetts
business trust having its principal office and place of business at 1 North
Main, Minot, North Dakota 58703.
W I T N E S S E T H:
WHEREAS, Fund desires to appoint First Western Bank and Trust as Custodian
of the securities and monies of Fund's investment portfolio; and
WHEREAS, First Western Bank & Trust is willing to accept such appointment;
NOW THEREFORE, for and in consideration of the mutual promises contained
herein, the parties hereto, intending to be legally bound, mutually covenant
and agree as follows:
1. APPOINTMENT OF CUSTODIAN. Fund hereby constitutes and appoints
Custodian as custodian of the Fund which is to include:
A. Appointment as custodian of the securities and monies at any time
owned by the Fund; and
B. Appointment as agent to perform certain accounting and
recordkeeping functions required of a duly registered investment
company in compliance with applicable provisions of federal,
state and local laws, rules and regulations including, as may be
required:
1. Provide information necessary for Fund to file required
financial reports; maintaining and preserving required books,
accounts and records as the basis for such reports; and
performing certain daily functions in connection with such
accounts and records.
2. Acting as liaison with independent auditors.
2. DELIVERY OF CORPORATE DOCUMENTS. Fund has delivered or will deliver to
Custodian prior to the effective date of this Agreement, copies of the
following documents and all amendments or supplements thereto,
properly certified or authenticated:
A. Resolutions of the Board of Trustees of Fund appointing Custodian
as custodian hereunder and approving the form of this Agreement;
and
B. Resolutions of the Board of Trustees of Fund designating certain
persons to give instructions on behalf of the Fund to Custodian
and authorizing Custodian to rely upon written instructions over
their signatures.
1
<PAGE>
3. DUTIES AND RESPONSIBILITIES OF CUSTODIAN.
A. Delivery of Assets
Fund will deliver or cause to be delivered to Custodian on the
effective date of this Agreement, or as soon thereafter as
practicable, and from time to time thereafter, all portfolio
securities acquired by it and monies then owned by it except as
permitted by the Investment Company Act of 1940 or from time to
time coming into its possession during the time this Agreement
shall continue in effect. Custodian shall have no responsibility
or liability whatsoever for or on account of securities or monies
not so delivered. All securities so delivered to Custodian (other
than bearer securities) shall be registered in the name of Fund
or its nominee, or of a nominee of Custodian, or shall be
properly endorsed and in form for transfer satisfactory to
Custodian.
B. Delivery of Accounts and Records
Fund shall turn over to Custodian all of the Fund's relevant
accounts and records previously maintained by it. Custodian shall
be entitled to rely conclusively on the completeness and
correctness of the accounts and records turned over to it by
Fund, and Fund shall indemnify and hold Custodian harmless of and
from any and all expenses, damages and losses whatsoever arising
out of or in connection with any error, omission, inaccuracy or
other deficiency of such accounts and records or in the failure
of Fund to provide any portion of such or to provide any
information needed by the Custodian knowledgeably to perform its
function hereunder.
C. Delivery of Assets to Third Parties
Custodian will receive delivery of and keep safely the assets of
Fund delivered to it from time to time and the assets of each
Portfolio segregated in a separate account. Custodian will not
deliver, assign, pledge or hypothecate any such assets to any
person except as permitted by the provisions of this Agreement or
any agreement executed by it according to the terms of Section
3.S. of this Agreement. Upon delivery of any such assets to a
subcustodian pursuant to Section 3.S. of this Agreement,
Custodian will create and maintain records identifying those
assets which have been delivered to the subcustodian as belonging
to the applicable Portfolio of the Fund. The Custodian is
responsible for the safekeeping of the securities and monies of
Fund only until they have been transmitted to and received by
other persons as permitted under the terms of this Agreement.
Custodian shall be responsible for the monies and securities of
Fund(s) held by eligible foreign subcustodians to the extent the
domestic custodian with which the Custodian contracts is
responsible to Custodian. Custodian may participate directly or
indirectly through a subcustodian in the Depository Trust
Company, Treasury/Federal Reserve Book Entry System, Participant
Trust Company or other depository approved by the Fund (as such
entities are defined at 17 CFR Section 270.17f(b)).
D. Registration of Securities
Custodian will hold stocks and other registerable portfolio
securities of Fund registered in the name of Fund or in the name
of any nominee of Custodian for whose fidelity and liability
Custodian will be fully responsible, or in street certificate
2
<PAGE>
form, so-called, with or without any indication of fiduciary such
portfolio securities in the name of its authorized nominee. All
securities, and the ownership thereof by Fund, which are held by
Custodian hereunder, however, shall at all times be identifiable
on the records of the Custodian. The Fund agrees to hold
Custodian and its nominee harmless for any liability as a record
holder of securities held in custody.
E. Exchange of Securities
Upon receipt of instructions as defined herein in Section 4.A.,
Custodian will exchange, or cause to be exchanged, portfolio
securities held by it for the account of Fund for other
securities or cash issued or paid in connection with any
reorganization, recapitalization, merger, consolidation, split-up
of shares, change of par value, conversion or otherwise, and will
deposit any such securities in accordance with the terms of any
reorganization or protective plan. Without instructions,
Custodian is authorized to exchange securities held by it in
temporary form for securities in definitive form, to effect an
exchange of shares when the par value of the stock is changed,
and, upon receiving payment therefor, to surrender bonds or other
securities held by it at maturity or when advised of earlier call
for redemption, except that Custodian shall receive instructions
prior to surrendering any convertible security.
F. Purchases of Investments of the Fund
Fund will, on each business day on which a purchase of securities
shall be made by it, deliver to Custodian instructions which
shall specify with respect to each such purchase:
1. The name of the Portfolio making such purchase;
2. The name of the issuer and description of the security;
3. The number of shares or the principal amount purchased, and
accrued interest, if any;
4. The trade date;
5. The settlement date;
6. The purchase price per unit and the brokerage commission,
taxes and other expenses payable in connection with the
purchase;
7. The total amount payable upon such purchase; and
8. The name of the person from whom or the broker or dealer
through whom the purchase was made.
In accordance with such instructions, Custodian will pay for out
of monies held for the account of Fund, but only insofar as
monies are available therein for such purpose, and receive the
portfolio securities so purchased by or for the account of Fund
except that Custodian may in its sole discretion advance funds to
the Fund which may result in an overdraft because the monies held
by the Custodian on behalf of the Fund are insufficient to pay
the total amount payable upon such purchase. Such payment will be
made only upon receipt by Custodian of the securities so
purchased in form for transfer satisfactory to Custodian.
3
<PAGE>
G. Sales and Deliveries of Investments of the Fund - Other than
Options and Futures
Fund will, on each business day on which a sale of investment
securities of Fund has been made, deliver to Custodian
instructions specifying with respect to each such sale:
1. The name of the Portfolio making such sale;
2. The name of the issuer and description of the securities;
3. The number of shares or principal amount sold, and accrued
interest, if any;
4. The date on which the securities sold were purchased or
other information identifying the securities sold and to be
delivered;
5. The trade date;
6. The settlement date;
7. The sale price per unit and the brokerage commission, taxes
or other expenses payable in connection with such sale;
8. The total amount to be received by Fund upon such sale; and
9. The name of the broker or dealer through whom or person to
whom the sale was made.
In accordance with such instructions, Custodian will deliver or
cause to be delivered the securities thus designated as sold for
the account of Fund to the broker or other person specified in
the instructions relating to such sale, such delivery to be made
only upon receipt of payment therefor in such form as is
satisfactory to Custodian, with the understanding that Custodian
may deliver or cause to be delivered securities for payment in
accordance with the customs prevailing among dealers in
securities.
H. Purchases or Sales of Security Options, Options on Indices and
Security Index Futures Contracts
Fund will, on each business day on which a purchase or sale of
the following options and/or futures shall be made by it, deliver
to Custodian instructions which shall specify with respect to
each such purchase or sale:
1. The name of the Portfolio making such purchase or sale;
2. Security Options
a. The underlying security;
b. The price at which purchased or sold;
c. The expiration date;
d. The number of contracts;
4
<PAGE>
e. The exercise price;
f. Whether the transaction is an opening, exercising,
expiring or closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased;
i. Market on which option traded;
j. Name and address of the broker or dealer through whom
the sale or purchase was made.
3. Options on Indices
a. The index;
b. The price at which purchased or sold;
c. The exercise price;
d. The premium;
e. The multiple;
f. The expiration date;
g. Whether the transaction is an opening, exercising,
expiring or closing transaction;
h. Whether the transaction involves a put or call;
i. Whether the option is written or purchased;
j. The name and address of the broker or dealer through
whom the sale or purchase was made, or other applicable
settlement instructions.
4. Security Index Futures Contracts
a. The last trading date specified in the contract and,
when available, the closing level, thereof;
b. The index level on the date the contract is entered
into;
c. The multiple;
d. Any margin requirements;
e. The need for a segregated margin account (in addition to
instructions, and if not already in the possession of
Custodian, Fund shall deliver a substantially complete
and executed custodial safekeeping account and
procedural agreement which shall be incorporated by
reference into this Custody Agreement); and
5
<PAGE>
f. The name and address of the futures commission merchant
through whom the sale or purchase was made, or other
applicable settlement instructions.
5. Options on Index Future Contracts
a. The underlying index future contract;
b. The premium;
c. The expiration date;
d. The number of options;
e. The exercise price;
f. Whether the transaction involves an opening,
existing, expiring or closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased; and
i. The market on which the option is traded.
I. Securities Pledged or Loaned
If specifically allowed for in the prospectus of Fund:
1. Upon receipt of instructions, Custodian will release or
cause to be released securities held in custody to the
pledgee designated in such instructions by way of pledge or
hypothecation to secure any loan incurred by Fund; provided,
however, that the securities shall be released only upon
payment to Custodian of the monies borrowed, except that in
cases where additional collateral is required to secure a
borrowing already made, further securities may be released
or caused to be released for that purpose upon receipt of
instructions. Upon receipt of instructions, Custodian will
pay, but only from funds available for such purpose, any
such loan upon redelivery to it of the securities pledged or
hypothecated therefor and upon surrender of the note or
notes evidencing such loan.
2. Upon receipt of instructions, Custodian will release
securities held in custody to the borrower designated in
such instructions; provided, however, that the securities
will be released only upon deposit with Custodian of full
cash collateral as specified in such instructions, and that
Fund will retain the right to any dividends, interest or
distribution on such loaned securities. Upon receipt of
instructions and the loaned securities, Custodian will
release the cash collateral to the borrower.
J. Routine Matters
Custodian will, in general, attend to all routine and mechanical
matters in connection with the sale, exchange, substitution,
purchase, transfer, or other dealings with securities or other
property of Fund except as may be otherwise provided in this
Agreement or directed from time to time by the Board of Trustees
of Fund.
6
<PAGE>
K. Deposit Account
Custodian will open and maintain a special purpose deposit
account(s) in the name of Custodian on behalf of each Portfolio
(Accounts), subject only to draft or order by Custodian upon
receipt of instructions. All monies received by Custodian from or
for the account of a Portfolio shall be deposited in said
Accounts.
L. Income and Other Payments To Fund
Custodian will:
1. Collect, claim and receive and deposit for the Account of each
Portfolio of the Fund all income and other payments which become
due and payable on or after the effective date of this Agreement
with respect to the securities deposited under this Agreement,
and credit the account of the applicable Portfolio of the Fund.
2. Execute ownership and other certificates and affidavits for all
federal, state and local tax purposes in connection with the
collection of bond and note coupons; and
3. Take such other action as may be necessary or proper in
connection with:
a. the collection, receipt and deposit of such income and other
payments, including but not limited to the presentation for
payment of:
1. all coupons and other income items requiring
presentation; and
2. all other securities which may mature or be called,
redeemed, retired or otherwise become payable and
regarding which the Custodian has actual knowledge, or
notice of which is contained in publications of the type
to which it normally subscribes for such purpose; and
b. the endorsement for collection, in the name of the applicable
Portfolio of the Fund, of all checks, drafts or other
negotiable instruments.
Custodian, however, will not be required to institute suit or
take other extraordinary action to enforce collection except upon
receipt of instructions and upon being indemnified to its
satisfaction against the costs and expenses of such suit or other
actions. Custodian will receive, claim and collect all stock
dividends, rights and other similar items and will deal with the
same pursuant to instructions. Unless prior instructions have
been received to the contrary, Custodian will, without further
instructions, sell any rights held for the account of Fund on the
last trade date prior to the date of expiration of such rights.
M. Payment of Dividends and Other Distributions
On the declaration of any dividend or other distribution on the
shares of Beneficial Interest of Fund ("Fund Shares") by the
Board of Trustees of Fund, Fund shall deliver to Custodian
instructions with respect thereto, including a copy of the
Resolution of said Board of Trustees certified by the Secretary
or an Assistant Secretary of Fund wherein there shall be set
forth the record date as of which shareholders entitled to
receive such dividend or other distribution shall be determined,
the date of payment of such dividend or distribution, and the
amount payable per share on such dividend or distribution.
7
<PAGE>
Except if the ex-dividend date and the reinvestment date of any
dividend are the same, in which case funds shall remain in the
Custody Account, on the date specified in such Resolution for the
payment of such dividend or other distribution, Custodian will
pay out of the monies held for the account of Fund, insofar as
the same shall be available for such purposes, and credit to the
account of the Dividend Disbursing Agent for Fund, such amount as
may be necessary to pay the amount per share payable in cash on
Fund Shares issued and outstanding on the record date established
by such Resolution.
N. Shares of Fund Purchased by Fund
Whenever any Fund Shares are repurchased or redeemed by Fund,
Fund or its agent shall advise Custodian of the aggregate dollar
amount to be paid for such shares and shall confirm such advice
in writing. Upon receipt of such advice, Custodian shall charge
such aggregate dollar amount to the Account of Fund and either
deposit the same in the account maintained for the purpose of
paying for the repurchase or redemption of Fund Shares or deliver
the same in accordance with such advice.
Custodian shall not have any duty or responsibility to determine
that Fund Shares have been removed from the proper shareholder
account or accounts or that the proper number of such shares have
been cancelled and removed from the shareholder records.
O. Shares of Fund Purchased from Fund
Whenever Fund Shares are purchased from Fund, Fund will deposit
or cause to be deposited with Custodian the amount received for
such shares.
Custodian shall not have any duty or responsibility to determine
that Fund Shares purchased from Fund have been added to the proper
shareholder account or accounts or that the proper number of such
shares have been added to the shareholder records.
P. Proxies and Notices
Custodian will promptly deliver or mail or have delivered or
mailed to Fund all proxies properly signed, all notices of
meetings, all proxy statements and other notices, requests or
announcements affecting or relating to securities held by
Custodian for Fund and will, upon receipt of instructions,
execute and deliver or cause its nominee to execute and deliver
or mail or have delivered or mailed such proxies or other
authorizations as may be required. Except as provided by this
Agreement or pursuant to instructions hereafter received by
Custodian, neither it nor its nominee will exercise any power
inherent in any such securities, including any power to vote the
same, or execute any proxy, power of attorney, or other similar
instrument voting any of such securities, or give any consent,
approval or waiver with respect thereto, or take any other
similar action.
Q. Disbursements
Custodian will pay or cause to be paid insofar as funds are
available for the purpose, bills, statements and other
obligations of Fund (including but not limited to obligations in
connection with the conversion, exchange or surrender of
securities owned by Fund, interest charges, dividend
disbursements, taxes, management fees,
8
<PAGE>
custodian fees and expenses incurred for the benefit of the
Fund(s), legal fees, auditors' fees, transfer agents' fees,
brokerage commissions, compensation to personnel, and other
operating expenses of the Fund) pursuant to instructions of Fund
setting forth the name of the person to whom payment is to be
made, the amount of the payments, and the purpose of the payment.
R. Daily Statement of Accounts
Custodian will, within a reasonable time, render to Fund as of
the close of business on each day, a detailed statement of the
amounts received or paid and of securities received or delivered
for the account of Fund during said day. Custodian will, from
time to time, upon request by Fund, render a detailed statement
of the securities and monies held for Fund under this Agreement,
and Custodian will maintain such books and records as are
necessary to enable it to do so and will permit such persons as
are authorized by Fund including Fund's independent pubic
accountants, access to such records or confirmation of the
contents of such records; and if demanded, will permit federal
and state regulatory agencies to examine the securities, books
and records. Upon the written instructions of Fund or as demanded
by federal or state regulatory agencies, Custodian will instruct
any subcustodian to permit such persons as are authorized by Fund
including Fund's independent public accountants, access to such
records or confirmation of the contents of such records; and if
demanded, to permit federal and state regulatory agencies to
examine the books, records and securities held by subcustodian
which relate to Fund.
S. Appointment of Subcustodian
1. Notwithstanding any other provisions of this Agreement, all
or any of the monies or securities of Fund may be held in
Custodian's own custody or in the custody of one or more
other banks or trust companies selected by Custodian and
approved by the Fund's Board of Trustees. Any such
subcustodian must have the qualifications required for
custodian under the Investment Company Act of 1940, as
amended. The subcustodian may participate directly or
indirectly in the Depository Trust Company, Treasury/Federal
Reserve Book Entry System, Participant Trust Company or other
depository approved by the Fund (as such entities are defined
at 17 CFR Sec. 170.17f-4(b)). The appointment of any
subcustodian, depository, or clearing agency used by the
Custodian and approved by the Fund will not relieve Custodian
of any of its obligation hereunder except as provided in
Section 3.C. hereof.
2. Notwithstanding any other provisions of this Agreement,
Fund's foreign securities (as defined in Rule 17f5(c)(1)
under the Investment Company Act of 1940) and Fund's cash or
cash equivalents, in amounts reasonably necessary to effect
Fund's foreign securities transactions, may be held in the
custody of one or more banks or trust companies acting as
subcustodians, according to Section 3.S.1; and thereafter,
pursuant to a written contract or contracts as approved by
Fund's Board of Trustees, may be transferred to an account
maintained by such subcustodian with an eligible foreign
custodian, as defined in Rule 17f-5(c)(2), provided that any
such arrangement involving a foreign custodian shall be in
accordance with the provisions of Rule 17f-5 under the
Investment Company Act of 1940 as that Rule may be amended
from time to time.
9
<PAGE>
T. Accounts and Records
Custodian with the direction and as interpreted by the Fund,
Fund's accountants and/or other tax advisors will prepare and
maintain complete, accurate and current all accounts and records
required to be maintained by Fund and under the general Rules and
Regulations under the Investment Company Act of 1940 ("Rules") as
amended, under the Internal Revenue Code of 1986 ("Code") as
amended and as agreed upon between the parties and will preserve
said records in the manner and for the periods prescribed in said
Rules and Codes, or for such longer periods as is agreed upon by
the parties.
Custodian relies upon Fund to furnish, in writing, accurate and
timely information to complete Fund's records.
Custodian shall incur no liability and Fund shall indemnify and
hold harmless Custodian from and against any liability arising
from any failure of Fund to furnish such information in a timely
and accurate manner, even if Fund subsequently provides accurate
but untimely information. It shall be the responsibility of Fund
to furnish Custodian with the declaration, record and payment
dates and amounts of any dividends or income and any other
special actions required concerning each of its securities when
such information is not readily available from generally accepted
securities industry services or publications.
U. Accounts and Records Property of Fund
Custodian acknowledges that all of the accounts and records
maintained by Custodian pursuant to the Agreement are the
property of the Fund, and will be made available to Fund for
inspection or reproduction within a reasonable period of time,
upon demand. Custodian will assist Fund's independent auditors,
or upon approval of Fund, or upon demand, any regulatory body, in
any requested review of Fund's accounts and records but shall be
reimbursed for all expenses and employee time invested in any
such review outside of routine and normal periodic reviews. Upon
receipt from Fund of the necessary information, Custodian will
supply necessary data for Fund's completion of any necessary tax
returns, questionnaires, periodic reports to Shareholders and
such other reports and information requests as Fund and Custodian
shall agree upon from time to time.
V. Adoption of Procedures
Custodian and Fund may from time to time adopt procedures as they
agree upon, and Custodian may conclusively assume that no
procedure approved by Fund, or directed by Fund, conflicts with
or violates any requirements of its prospectus, Declaration of
Trust, Bylaws, or any rule or regulation of any regulatory body
or governmental agency. Fund will be responsible to notify
Custodian of any changes in statutes, regulations, rules or
policies which might necessitate changes in Custodian's
responsibilities or procedures.
W. Overdrafts
If Custodian shall in its sole discretion advance funds to the
account of the Fund which results in an overdraft because the
monies held by Custodian on behalf of the
10
<PAGE>
Fund are insufficient to pay the total amount payable upon a
purchase of securities as specified in Fund's instructions or for
some other reason, the amount of the overdraft shall be payable
by the Fund to First Western Bank & Trust upon demand and shall
bear an interest rate determined by Custodian from the date
advanced until the date of payment.
4. INSTRUCTIONS.
A. The term "instructions," as used herein, means written or oral
instructions to Custodian from a designated representative of
Fund. Certified copies of resolutions of the Board of Trustees of
Fund naming one or more designated representatives to give
instructions in the name and on behalf of Fund, may be received
and accepted from time to time by Custodian as conclusive
evidence of the authority of any designated representative to act
for Fund and may be considered to be in full force and effect
(and Custodian will be fully protected in acting in reliance
thereon) until receipt by Custodian of notice to the contrary.
Unless the resolution delegating authority to any person to give
instructions specifically requires that the approval of anyone
else will first have been obtained, Custodian will be under no
obligation to inquire into the right of the person giving such
instructions to do so. Notwithstanding any of the foregoing
provisions of this Section 4, no authorizations or instructions
received by Custodian from Fund, will be deemed to authorize or
permit any director, trustee, officer, employee, or agent of Fund
to withdraw any of the securities or similar investments of Fund
upon the mere receipt of such authorization or instruction from
such director, trustee, officer, employee or agent.
Notwithstanding any other provision of this Agreement, Custodian,
upon receipt (and acknowledgement if required at the discretion
of Custodian) of the instructions of a designated representative
of Fund will undertake to deliver for Fund's account monies
(provided such monies are on hand or available) in connection
with Fund's transactions and to wire transfer such monies to such
broker, dealer, subcustodian, bank or other agent specified in
such instructions by a designated representative of Fund.
B. No later than the next business day immediately following each
oral instruction, Fund will send Custodian written confirmation
of such oral instruction. At Custodian's sole discretion,
Custodian may record on tape, or otherwise, any oral instruction
whether given in person or via telephone, each such recording
identifying the parties, the date and the time of the beginning
and ending of such oral instruction.
5. LIMITATION OF LIABILITY OF CUSTODIAN.
A. Custodian shall hold harmless and indemnify Fund from and against
any loss or liability arising out of Custodian's negligence or
bad faith in the performance of its duties hereunder. In no
event, Custodian may request and obtain the advice and opinion of
counsel for Fund, or of its own counsel with respect to questions
or matters of law, and it shall be without liability to Fund for
any action taken or omitted by it in good faith, in conformity
with such advice or opinion. If Custodian reasonably believes
that it could not prudently act according to the instructions of
the Fund or the Fund's counsel, it may in its discretion, with
notice to the Fund, not act according to such instructions.
11
<PAGE>
B. Custodian may rely upon the advice of Fund and upon statements of
Fund's or and other person believed by, it in good faith, to be
expert in matters upon which they are consulted, and Custodian
shall not be liable for any actions taken, in good faith, upon
such statements.
C. If Fund requires Custodian in any capacity to take, with respect
to any securities, any action which involves the payment of money
by it, or which in Custodian's opinion might make it or its
nominee liable for payment of monies or in any other way,
Custodian, upon notice of Fund given prior to such actions, shall
be and be kept indemnified by Fund in an amount and form
satisfactory to Custodian against any liability on account of
such action.
D. Custodian shall be entitled to receive, and Fund agrees to pay to
Custodian, on demand, reimbursement for such cash disbursements,
costs and expenses as may be agreed upon from time to time by
Custodian and Fund.
E. Custodian shall be protected in acting as custodian hereunder
upon any instructions, advice, notice, request, consent,
certificate or other instrument or paper reasonably appearing to
it to be genuine and to have been properly executed and shall,
unless otherwise specifically provided herein, be entitled to
receive as conclusive proof of any fact or matter required to be
ascertained from Fund hereunder, a certificate signed by the
Fund's President, or other officer specifically authorized for
such purpose.
F. Without limiting the generality of the foregoing, Custodian shall
be under no duty or obligation to inquire into, and shall not be
liable for:
1. The validity of the issue of any securities purchased by or
for Fund, the legality of the purchase thereof or evidence of
ownership required by Fund to be received by Custodian, or
the propriety of the decision to purchase or amount paid
therefor;
2. The legality of the sale of any securities by or for Fund, or
the propriety of the amount for which the same are sold;
3. The legality of the issue or sale of any Beneficial Interest
of Fund, or the sufficiency of the amount to be received
therefor;
4. The legality of the repurchase or redemption of any shares of
Beneficial Interest of, or the propriety of the amount to be
paid therefor; or
5. The legality of the declaration of any dividend by Fund, or
the legality of the issue of any shares of Beneficial
Interest of Fund in payment of any stock dividend.
G. Custodian shall not be liable for, or considered to be Custodian
of, any money represented by any check, draft, wire transfer,
clearing house funds, uncollected funds, or instrument for the
payment of money received by it on behalf of Fund, until
Custodian actually receives such money, provided only that it
shall advise Fund promptly if it fails to receive any such money
in the ordinary course of business, and use its best efforts and
cooperate with Fund toward the end that such money shall be
received.
12
<PAGE>
H. Custodian shall not be responsible for loss occasioned by the
acts, neglects, defaults or insolvency of any broker, bank, trust
company, or any other person with whom Custodian may deal in the
absence of negligence, or bad faith on the part of Custodian.
I. Notwithstanding anything herein to the contrary, Custodian may,
and with respect to any foreign subcustodians appointed under
Section 3.S.2 must, provide Fund for its approval, agreements
with banks or trust companies which will act as subcustodians for
Fund pursuant to Section 3.S. of this agreement.
6. COMPENSATION. Fund will pay to Custodian such compensation as is
stated in the Fee Schedule attached hereto which may be changed from
time to time as agreed to in writing by Custodian and Fund. Custodian
may charge such compensation against monies held by it for the account
of Fund. Custodian will also be entitled, notwithstanding the
provisions of Section 5.C. or 5.D. hereof, to charge against any
monies held by it for the account of Fund the amount of any loss,
damage, liability, advance, or expense for which it shall be entitled
to reimbursement under the provisions of this Agreement including fees
or expenses due to First Western Bank & Trust for other services
provided to the Fund by Custodian. Custodian will not be entitled to
reimbursement by Fund for any loss or expenses of any subcustodian.
7. Termination. Either party to this Agreement may terminate the same by
notice in writing, delivered or mailed, postage prepaid, to the other
party hereto and received not less than ninety (90) days prior to the
date upon which such termination will take effect. Upon termination of
this Agreement, Fund will pay to Custodian such compensation for its
reimbursable disbursements, costs and expenses paid or incurred to
such date and Fund will use its best efforts to obtain a successor
custodian. Unless the holders of a majority of the outstanding shares
of Beneficial Interest vote to have the securities, funds and other
properties held under this Agreement delivered and paid over to some
other person, firm or corporation specified in the vote, having not
less than Two Million Dollars ($2,000,000) aggregate capital, surplus
and undivided profits, as shown by its last published report, and
meeting such other qualifications for custodian as set forth in the
Bylaws of Fund, the Board of Trustees of Fund will, forthwith upon
giving or receiving notice of termination of this Agreement, appoint
as successor custodian a bank or trust company having such
qualifications. Custodian will, upon termination of this Agreement,
deliver to the successor custodian so specified or appointed, at
Custodian's office, all securities then held by Custodian hereunder,
duly endorsed and in from for transfer, all funds and other properties
of Fund deposited with or held by Custodian hereunder, or will
cooperate in effecting changes in book-entries at the Depository Trust
Company or in the Treasury/Federal Reserve Book-Entry System pursuant
to 31 CFR Sec. 306.118. In the event no such vote has been adopted by
the holder of shares of Beneficial Interest of Fund and no written
order designating a successor custodian has been delivered to
Custodian on or before the date when such termination becomes
effective, then Custodian will deliver the securities, funds and
properties of Fund to a bank or trust company at the selection of
Custodian and meeting the qualifications for custodian, if any, set
forth in the Bylaws of Fund and having not less than Two Million
Dollars ($2,000,000) aggregate capital, surplus and undivided profits,
as shown by its last published report. Upon either such delivery to a
successor custodian, Custodian will have no further obligations or
liabilities under this Agreement. Thereafter such bank or trust
company will be the successor custodian under this Agreement and will
be entitled to reasonable compensation for its services. In the event
that no such successor custodian can be found, Fund will submit to its
shareholders,
13
<PAGE>
before permitting deliver of the cash and securities owned by Fund to
anyone other than a successor custodian, the question of whether Fund
will be liquidated or function without a custodian. Notwithstanding
the foregoing requirement as to delivery upon termination of this
Agreement, Custodian may make any other delivery of the securities,
funds and property of Fund which is permitted by the Investment
Company Act of 1940, Fund's Deed of Trust and Bylaws then in effect or
apply to a court of competent jurisdiction for the appointment of a
successor custodian.
8. NOTICES. Notices, requests, instructions and other writings received
by Fund at 1 North Main, Minot, North Dakota 58703, or at such other
address as Fund may have designated to Custodian in writing, will be
deemed to have been properly given to Fund hereunder; and notices,
requests, instructions and other writings received by Custodian at its
offices at 900 South Broadway, Minot, North Dakota 58701, or to such
other address as it may have designated to Fund in writing, will be
deemed to have been properly given to Custodian hereunder.
9. MISCELLANEOUS.
A. This Agreement is executed and delivered in the State of North
Dakota and shall be governed by the laws of said state.
B. All other terms and provisions of this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the
respective successor and assigns of the parties hereto.
C. No provisions of the Agreement may be amended or modified, in any
manner except by a written agreement properly authorized and
executed by both parties hereto.
D. The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or
effect.
E. This Agreement shall become effective on the 31st day of May,
1996.
F. This Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original but all of
which together will constitute one and the same instrument.
G. If any part, term or provision of this Agreement is by the courts
held to be illegal, in conflict with any law or otherwise
invalid, the remaining portion or portions shall be considered
severable and not be affected, and the rights and obligations of
the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be
illegal or invalid.
H. This Agreement may not be assigned by either party without prior
written consent of the other party.
I. If any provision of the Agreement, either in its present form or
as amended from time to time, limits, qualifies or conflicts with
the Investment Company Act of 1940 and the rules and regulations
promulgated thereunder, such statutes, rules and regulations
shall be deemed to control and superseded such provision without
nullifying or terminating the remainder of the provisions of this
Agreement.
14
<PAGE>
J. Custodian will not release the identity of Fund to an issuer
which requests such information pursuant to the Shareholder Communications Act
of 1985 for the specific purpose of direct communications between such issuer
and Fund unless the Fund directs the Custodian otherwise.
K. A copy of the Declaration of Trust of the Fund is on file with
the Secretary of the Commonwealth of Massachusetts and notice is hereby given
that the Agreement has been executed on behalf of Fund by the undersigned
officer of Fund in his/her capacity as an officer of Fund. The obligations of
this Agreement shall only be binding upon the assets and property of Fund and
shall not be binding upon any Trustee, officer or shareholder of Fund
individually.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers.
FIRST WESTERN BANK & TRUST
By:
-----------------------
ATTEST:
- ------------------------
RANSON MANAGED PORTFOLIOS
By:
-----------------------
President
ATTEST:
- ------------------------
15
<PAGE>
FEE SCHEDULE
CUSTODIAN CHARGES
FIRST WESTERN BANK & TRUST
Montana Tax-Free Fund, Inc., Integrity Fund of Funds, Inc., Ranson Managed
Portfolios, and any other mutual funds for which ND Money Management, Inc., or
Ranson Capital Corporation serves as investment adviser (hereinafter referred to
as the "Funds") shall compensate First Western Bank & Trust ("Custodian") for
services rendered pursuant to the Custodian Agreements entered into with each of
the Funds as follows:
For the period beginning May 10, 1996, and ending May 31, 1996, and monthly
thereafter, the Funds shall pay the Custodian a fee at the annual rate of .00015
of the first one hundred million dollars ($100,000,000) of combined net assets
of the Funds and .00010 of any combined net assets in excess of one hundred
million dollars ($100,000,000); provided, however, that the Funds shall pay the
Custodian a minimum monthly fee of five hundred dollars ($500).
By way of example only, if the Funds had combined net assets of ten million
dollars ($10,000,000) on May 31, 1996, the fee for the month of May would be
$500 (.00015 x $10,000,000 = $1,500 / 12 = $125, so the minimum monthly fee of
$500 would apply). If the combined net assets of the Funds on May 31 were one
hundred million dollars ($100,000,000), the fee for the month of May would be
$1,250 (.00015 x $100,000,000 / 12 = $1,250). If the combined net assets of the
Fund on May 31 were one hundred fifty million dollars ($150,000,000), the fee
for the month of May would be $1,666.67 (.00015 x $100,000,000 = $15,000 +
.00010 x $50,000,000 = $5,000 = $20,000 / 12 = $1,666.67).
The Custodian shall compute the fee payable pursuant to the Fee Schedule
and provide each of the Funds with detailed bills showing their proportionate
share of the fee as soon as practicable after the end of each calendar month.
The Funds shall each promptly pay the Custodian their proportionate share of the
fee.
16
<PAGE>
We, Robert E. Walstad and Peter A. Quist, President and Secretary,
respectively, of Ranson Managed Portfolios, (the "Fund"), a Massachusetts
business trust, do hereby certify that the following individuals have been duly
authorized as Authorized Persons to give Oral Instructions and Written
Instructions on behalf of the Fund, and the signatures set forth opposite their
respective names are their true and correct signatures:
Name Signature
Robert E. Walstad ---------------------------------------
W. Dan Korgel ---------------------------------------
Monte L. Avery ---------------------------------------
Shannon D. Radke ---------------------------------------
---------------------------------------
Robert E. Walstad
President
---------------------------------------
Peter A. Quist
Secretary
17
<PAGE>
EXHIBIT (9)(a)
ACCOUNTING SERVICES AGREEMENT
<PAGE>
ACCOUNTING SERVICES AGREEMENT
AGREEMENT dated as of this 5th day of January 1996, by and between Ranson
Managed Portfolios (the "Fund"), a Massachusetts business trust and ND
Resources, Inc., a North Dakota corporation.
In consideration of the mutual covenants hereinafter contained, it is
hereby agreed by and between the parties hereto as follows:
1. The Fund hereby appoints ND Resources, Inc. to provide accounting
services for the benefit of the Fund and its shareholders. Such services may
include, but are not limited to, bond interest and amortization accruals, daily
fee accruals, security valuation, calculation of daily net asset value,
calculation of a daily dividend rate, and preparation of semi-annual and annual
reports.
ND Resources Inc. accepts such appointment and agrees during such period to
render such services and to assume the obligations herein set forth for the
compensation herein provided. ND Resources Inc. shall for all purposes herein
provided be deemed to be an independent contractor and, unless otherwise
expressly provided or authorized, shall have no authority to act for or
represent the Fund in any way or otherwise be deemed an agent of the Fund. ND
Resources Inc., by separate agreement with the Fund, may also service the Fund
in other capacities. In carrying out its duties and responsibilities hereunder,
ND Resources Inc. may contract with various Firms to provide certain of the
accounting services described herein. Such Firms shall at all times be deemed to
be independent contractors retained by ND Resources Inc. and not the Fund. ND
Resources Inc. and not the Fund will be responsible for the payment of
compensation to such Firms for such services.
2. For the services and facilities described in Section 1, the Fund will
pay to ND Resources, Inc. at the end of each calendar month an accounting
service fee equal to the sum of (i) $2,000 per month and (ii) 0.05% of the
Fund's average daily net assets on an annual basis for the Fund's first $50
million of average daily net assets, .04% of the Fund's average daily net assets
on an annual basis for the Fund's next $50 million of average daily net assets,
0.03% of the Fund's average daily net assets on an annual basis for the Fund's
next $100 million of average daily net assets, 0.02% of the Fund's average daily
net assets on an annual basis for the Fund's next $300 million of average daily
net assets, and 0.01% of the Fund's average daily net assets on an annual basis
for the Fund's average daily net assets in excess of $500 million, together with
reimbursement of the Manager's out-of-pocket expenses. For the month and year in
which this Agreement becomes effective or terminates, there shall be an
appropriate proration on the basis of the number of days that the Agreement is
in effect during such month and year, respectively. The services of ND
Resources, Inc. to the Fund under this Agreement are not to be deemed exclusive,
and ND Resources, Inc. shall be free to render similar services or other
services to others.
The net asset value for each share of the Fund shall be calculated in
accordance with the provisions of the Fund's current prospectus. On each day
when net asset value is not calculated, the net asset value of a share of the
Fund shall be deemed to be the net asset value of such a share as of the close
of buiness on the last day on which such calculation was made for the purpose of
the foregoing computation.
3. The Fund shall assume and pay all charges and expenses of its
operations not specifically assumed or otherwise to be provided by ND Resources,
Inc. under this Agreement.
4. This Agreement may be terminated at any time without the payment of
any penalty by the Fund or by ND Resources, Inc. on sixty (60) days written
notice to the other party. Termination of this Agreement shall not affect the
right of ND Resources, Inc. to receive payments on any unpaid balance of the
compensation described in Section 2 hereof earned prior to such termination.
This Agreement may not be amended to increase the amount to be paid to ND
Resources, Inc. for services hereunder without the vote of the Board of
Directors of the Fund. All material amendments to this Agreement must in any
event be approved by vote of the Board of Directors of the Fund.
<PAGE>
5. If any provisions of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
6. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate for the receipt of such notice.
7. All parties hereto are expressly put on notice of the Fund's Agreement
and Article of Incorporation and all amendments thereto, all of which are on
file with the Secretary of The State of North Dakota, and the limitation of the
shareholder and director liability contained therein. This Agreement has been
executed by and on behalf of the Fund by its representatives as such
representatives and not individually, and the obligations of the Fund hereunder
are not binding upon any of the directors, officers or shareholders of the Fund
individually but are binding upon only the assets and property of the Fund.
8. This Agreement shall be construed in accordance with the laws of the
State of North Dakota.
IN WITNESS WHEREOF, the Fund and ND Resources, Inc. have caused this
Agreement to be executed as of the day and year first above written.
By: By:
----------------------------- ------------------------------
Title: Title:
-------------------------- ---------------------------
<PAGE>
EXHIBIT (9)(b)
AGENCY AGREEMENT
<PAGE>
TRANSFER AGENCY AGREEMENT
AGREEMENT dated as of November 15, 1996, between Ranson Managed Portfolios
(the "Fund"), a Massachusetts business trust, having its principal office and
place of business at #1 North Main, Minot, North Dakota 58703, and ND
Resources, Inc. (the "Transfer Agent"), a corporation organized under the laws
of the State of North Dakota with its principal place of business at #1 North
Main, Minot, North Dakota 58703.
W I T N E S S E T H:
That for and in consideration of the mutual promises hereinafter set forth,
the Fund and the Transfer Agent agree as follows:
1. Definitions.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following
meanings:
(a) "Authorized Person" shall be deemed to include the President, the
Vice President, the Secretary, and the Treasurer of the Fund, the
persons listed in Appendix A hereto, and any other person, whether or
not such person is an officer of the Fund, duly authorized to give
Oral Instructions or Written Instructions on behalf of the Fund as
indicated in a certificate furnished to the Transfer Agent pursuant to
Section 5(d) or 5(e) hereof as may be received by the Transfer Agent
from time to time.
(b) "Commission" shall have the meaning given it in the 1940 Act.
(c) "Custodian" refers to the custodian and any sub-custodian of all
securities and other property which the Fund may from time to time
deposit or cause to be deposited or held under the name or account of
such custodian.
(d) "Articles of Incorporation" shall mean the Fund's Articles of
Incorporation as now in effect and as the same may be amended from
time to time.
(e) "Officer" shall mean the President, Vice President, Secretary,
and Treasurer of the parties hereto.
(f) "Oral Instructions" shall mean instructions, other than written
instructions, actually received by the Transfer Agent from a person
reasonably believed by the Transfer Agent to be an Authorized
Person.
(g) "Prospectus" shall mean any current prospectus and statement of
additional information relating to the registration of the Fund's
shares under the Securities Act of 1933, as amended, and the 1940 Act.
(h) "Shares" refers to the units into which the shareholders'
proprietary interests in the Fund are divided.
<PAGE>
(i) "Shareholder" means a record owner of Shares;
(j) "Directors" or "Board of Directors" refers to the duly elected
Directors of the Fund.
(k) "Written Instructions" shall mean a written or electronic
communication actually received by the Transfer Agent from an
Authorized Person or from a person reasonably believed by the Transfer
Agent to be an Authorized Person by telex or any other such system
whereby the receiver of such communication is able to verify through
codes or otherwise with a reasonable degree of certainty the
authenticity of the sender of such communications.
(1) The "1940 Act" refers to the Investment Company Act of 1940, and
the Rules and Regulations promulgated thereunder, all as amended from
time to time.
2. Appointment of the Transfer Agent.
The Fund hereby appoints and constitutes the Transfer Agent as
transfer agent for its Shares and as Shareholder servicing agent, and
the Transfer Agent accepts such appointment and agrees to perform the
duties hereinafter set forth.
3. Compensation.
(a) The Fund will compensate the Transfer Agent for the performance of
its obligations hereunder in accordance with the fees set forth in the
written schedule of fees annexed hereto as Schedule A and incorporated
herein.
The Transfer Agent will bill the Fund as soon as practicable
after the end of each calendar month, and said billings will be
detailed in accordance with the Schedule A. The Fund will promptly pay
to the Transfer Agent the amount of such billing.
(b) Any compensation agreed to hereunder may be adjusted from time to
time upon mutual agreement by both parties hereto by attaching to
Schedule A of this Agreement a revised Fee Schedule, dated and signed
by an Officer of each party hereto.
4. Documents.
In connection with the appointment of the Transfer Agent, the
Fund shall, on or before the date this Agreement goes into effect, but
in any case, within a reasonable period of time for the Transfer Agent
to prepare to perform its duties hereunder, furnish the Transfer Agent
with the following documents:
(a) A certified copy of the Fund's Articles of Incorporation, as
amended.
(b) A certified copy of the Fund's Bylaws, as amended.
(c) A copy of the resolution of the Directors authorizing execution
and delivery of this Agreement.
2
<PAGE>
(d) If applicable, a specimen of the certificate for Shares of the
Fund in the form approved by the Directors, with a certificate of the
Secretary of the Fund as to such approval.
(e) All account application forms and other documents relating to
Shareholder accounts or to any plan, program, or service offered by
the Fund.
5. Further Documentation.
The Fund will also furnish from time to time the following
documents:
(a) The Fund's Registration Statement and each subsequent amendment
to the Fund's Registration Statement that is filed with the
Commission.
(b) Certificates as to any change in any Officer, Director, or
Investment Adviser of the Fund.
(c) Such other certificates, documents, or opinions as the Transfer
Agent deems to be appropriate or necessary for the proper performance
of its duties hereunder.
6. Representations of the Fund.
The Fund represents to the Transfer Agent that Shares will be
issued in accordance with the terms of the Articles of Incorporation
and the Prospectus and that such Shares shall be validly issued, fully
paid, and non-assessable by the Fund.
In the event that the Directors shall declare a distribution
payable in Shares, the Fund shall deliver to the Transfer Agent
written notice of such declaration signed on behalf of the Fund by an
Officer of the Fund, upon which the Transfer Agent shall be entitled
to rely for all purposes, certifying (i) the number of Shares
involved, (ii) that all appropriate action has been taken, and (iii)
that any amendment to the Articles of Incorporation which may be
required has been filed and is effective. Such notice shall be
accompanied by an opinion of counsel for the Fund relating to the
legal adequacy and effect of the transaction. This provision shall not
apply to Shares to be issued in the normal course of reinvestment of
any distributions or dividends in accordance with the Fund's
Prospectus.
7. Duties of the Transfer Agent.
The Transfer Agent shall be responsible for administering and/or
performing transfer agent functions; for acting as service agent in
connection with dividend and distribution functions; and for
performing Shareholder account and administrative agent functions in
connection with the issuance, transfer, and redemption or repurchase
(including coordination with the Custodian) of Shares. The operating
standards and procedures to be followed shall be determined from time
to time by agreement between the Transfer Agent and the Fund and shall
be expressed in a written schedule of duties of the Transfer Agent
annexed hereto as Schedule B and incorporated herein.
3
<PAGE>
8. Recordkeeping and Other Information.
The Transfer Agent shall create and maintain all necessary
records in accordance with all applicable laws, rules and regulations,
including, but not limited to, records required by Section 31(a) of
the 1940 Act and those records pertaining to the various functions
performed by it hereunder which are set forth in Schedule B hereto.
All records shall be available during regular business hours for
inspection and use by the Fund. Where applicable, such records shall
be maintained by the Transfer Agent for the periods and in the places
required by Rule 3la-2 under the 1940 Act.
Upon reasonable notice by the Fund, the Transfer Agent shall make
available during regular business hours its facilities and premises
employed in connection with the performance of its duties under this
Agreement for reasonable visitation by the Fund or any person retained
by the Fund.
To the extent required by said Section 31 and the rules and
regulations thereunder, the Transfer Agent agrees that all such
records prepared and maintained by the Transfer Agent relating to the
services to be performed by the Transfer Agent hereunder are the
property of the Fund.
The Transfer Agent and the Fund agree that all books, records,
information, and data pertaining to the business of the other party
which are exchanged or received in connection with this Agreement
shall remain confidential and shall not be voluntarily disclosed to
any person, except as may be required by law. In the case of any
requests or demands for any inspection of the Shareholder records of
the Fund, the Transfer Agent will endeavor to notify the Fund and to
secure instructions from an authorized Officer of the Fund as to such
inspection.
9. Other Duties.
In addition to the duties expressly set forth in Schedule B to
this Agreement, the Transfer Agent shall perform such other duties and
functions, and shall be paid such amounts therefor, as may from time
to time be agreed upon in writing between the Fund and the Transfer
Agent. Such other duties and functions shall be reflected in a written
amendment to Schedule B, dated and signed by an Officer of each party
hereto.
10. Reliance by Transfer Agent; Instructions.
(a) The Transfer Agent will be protected in acting upon Written or
Oral Instructions, as appropriate, believed to have been executed or
orally communicated by an Authorized Person and will not be held to
have any notice of any change of authority of any person until receipt
of a Written Instruction thereof from the Fund. The Transfer Agent
will also be protected in processing Share certificates which it
reasonably believes to bear the proper manual or facsimile signatures
of the Officers of the Fund and the proper countersignature of the
Transfer Agent.
4
<PAGE>
(b) At any time the Transfer Agent may apply to any Authorized Person
of the Fund for Written Instructions and may seek advice from legal
counsel for the Fund, or its own legal counsel, with respect to any
matter arising in connection with this Agreement, and it shall not be
liable for any action taken or not taken or suffered by it in good
faith in accordance with such Written Instructions or in accordance
with the opinion of counsel for the Fund or for the Transfer Agent;
provided, however, that if such reliance involves a potential material
loss to the Fund, the Transfer Agent will advise the Fund of any such
action(s) to be taken in accordance with the opinion of counsel to the
Transfer Agent. Written Instructions requested by the Transfer Agent
will be provided by the Fund within a reasonable period of time. In
addition, the Transfer Agent, its officers, agents, or employees,
shall accept Oral Instructions or Written Instructions given to them
by any person representing or acting on behalf of the Fund only if
said representative is known by the Transfer Agent, or its officers,
agents, or employees, to be an Authorized Person. The Transfer Agent
shall have no duty or obligation to inquire into, nor shall the
Transfer Agent be responsible for, the legality of any act done by it
upon the request or direction of an Authorized Person.
(c) Notwithstanding any of the foregoing provisions of this
Agreement, the Transfer Agent shall be under no duty or obligation to
inquire into, and shall not be liable for
(1) the legality of the issuance or sale of any Shares or the
sufficiency of the amount to be received therefor;
(2) the legality of the redemption of any Shares, or the
propriety of the amount to be paid therefor;
(3) the legality of the declaration of any dividend by the
Directors, or the legality of the issuance of any Shares in
payment of any dividend; or
(4) the legality of any recapitalization or readjustment of the
Shares.
11. Acts of God, Etc.
Neither the Transfer Agent nor the Fund will be liable or
responsible for delays or errors by reason of circumstances beyond its
reasonable control, including acts of civil or military authority,
national emergencies, fire, mechanical breakdown beyond its control,
flood or catastrophe, acts of God, insurrection, war, riots, or
failure beyond its control of transportation, communication, or power
supply.
12. Duty of Care and Indemnification.
The Fund and the Transfer Agent will indemnify each other against
and hold the other party harmless from any and all losses, claims,
damages, liabilities, or expenses (including reasonable counsel fees
and expenses) resulting from any claim, demand, action, or suit not
resulting from the bad faith or negligence of the other party, and
arising out of, or in connection with, the duties and responsibilities
described hereunder. In addition, the Fund will indemnify the Transfer
Agent against and hold it harmless from any and all losses, claims,
damages, liabilities, or expenses (including reasonable counsel fees
and expenses) resulting from any claim, demand, action, or suit as a
result of:
5
<PAGE>
(1) any action taken in accordance with Written or Oral
Instructions, or any other instructions, or Share certificates
reasonably believed by the Transfer Agent to be genuine and to be
signed, countersigned or executed, or orally communicated by an
Authorized Person;
(2) any action taken in accordance with written or oral advice
reasonably believed by the Transfer Agent to have been given by
counsel for the Fund or its own counsel; or
(3) any action taken as a result of any error or omission in any
record (including but not limited to magnetic tapes, computer
printouts, hard copies, and microfilm copies) delivered or caused
to be delivered by the Fund to the Transfer Agent in connection
with this Agreement.
In any case in which the Fund or the Transfer Agent may be asked
to indemnify or hold the other party harmless, the requesting party
will provide the other party with all pertinent facts concerning the
situation in question and will use reasonable care to identify and
provide notice of any situation which presents or appears likely to
present a claim for indemnification. Each party shall have the option
to defend the other party against any claim which may be the subject
of this indemnification, and in the event that a party so elects, such
defense shall be conducted by counsel chosen by the party making such
election; and such counsel shall be satisfactory to the other party,
and thereupon such electing party shall take over complete defense of
the claim, and the requesting party shall sustain no further legal or
other expenses in such situation for which it seeks indemnification
under this Section 12. Neither party will confess any claim or make
any compromise in any case in which the other party will be asked to
provide indemnification, except with the other party's prior written
consent. The obligations of the parties hereto under this Section
shall survive the termination of this Agreement.
13. Term and Termination.
This Agreement shall become effective on the date first set forth
above (the "Effective Date") and shall continue in effect from year to
year thereafter as the parties may mutually agree; provided, that
either party hereto may terminate this Agreement by giving to the
other party a notice in writing specifying the date of such
termination, which shall be not less than 60 days after the date of
receipt of such notice. In the event such notice is given by the Fund,
it shall be accompanied by a resolution of the Board of Directors of
the Fund, certified by the Secretary, electing to terminate this
Agreement and designating a successor transfer agent or transfer
agents. Upon such termination and at the expense of the Fund, the
Transfer Agent will deliver to such successor a certified list of
Shareholders of the Fund (with names, addresses, and taxpayer
identification or Social Security numbers), an historical record of
the account of each Shareholder and the status thereof, and all other
relevant books, records, correspondence, and other data established or
maintained by the Transfer Agent under this Agreement in the form
reasonably acceptable to the Fund, and will cooperate in the transfer
of such duties and responsibilities, including provisions for
assistance from the Transfer Agent's personnel in the establishment of
books, records, and other data by such successor or successors.
6
<PAGE>
14. Amendment.
This Agreement may not be amended or modified in any manner
except by a written agreement executed by both parties.
15. Subcontracting.
Except as otherwise provided below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party
without the express written consent of the other party. The Transfer
Agent may, in its sole discretion and without further approval from
the Fund, subcontract, in whole or in part, for the performance of its
obligations and duties hereunder with any person or entity including,
but not limited to, any affiliate or subsidiary; provided, however,
that (a) the Transfer Agent shall remain fully responsible to the Fund
for the acts and omissions of any agent or subcontractor as it is for
its own acts and omissions, and (b) to the extent that the Transfer
Agent subcontracts any functions or activities required or performed
by a registered transfer agent, the subcontracting party shall be a
duly registered transfer agent with the appropriate regulatory agency
as required under Section 17A of the Securities Exchange Act of 1934
and the rules and regulations thereunder, as amended.
16. Use of Transfer Agent's Name.
The Fund shall not use the name of the Transfer Agent in any
Prospectus, Statement of Additional Information, Shareholders' report,
sales literature, or other material relating to the Fund for other
than internal use, in a manner not approved prior thereto; provided,
that the Transfer Agent shall approve all reasonable uses of its name
which merely refer in accurate terms to its appointment hereunder or
which are required by the Commission or a state securities
administrator.
17. Use of the Fund's Name.
The Transfer Agent shall not use the name of the Fund or material
relating to the Fund on any documents or forms for other than internal
use in a manner not approved prior thereto in writing; provided, that
the Fund shall approve all reasonable uses of its name which merely
refer in accurate terms to the appointment of the Transfer Agent or
which are required by the Commission or a state securities
administrator.
18. Security.
The Transfer Agent represents and warrants that, to the best of
its knowledge, the various procedures and systems which the Transfer
Agent has implemented or will implement with regard to safeguarding
from loss or damage attributable to fire, theft, or any other cause
(including provision for 24 hours-a-day restricted access) of the
Fund's records and other data and the Transfer Agent's records, data,
equipment, facilities, and other property used in the performance of
its obligations hereunder are adequate and that it will make such
changes therein from time to time as in its judgment are required for
the secure performance of its obligations hereunder. The parties shall
review such systems and procedures on a periodic basis.
7
<PAGE>
19. Miscellaneous.
(a) Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Fund or the Transfer Agent
shall be sufficiently given if addressed to that party and received by
it at its office set forth below or at such other place as it may from
time to time designate in writing.
To the Fund:
Ranson Managed Portfolios
#1 North Main
Minot, ND 58703
To the Transfer Agent:
ND Resources, Inc.
#1 North Main
Minot, ND 58703
(b) This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by the Fund
without the written consent of the other party.
(c) This Agreement shall be construed in accordance with the laws of
the State of North Dakota.
(d) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original; but such counterparts
shall, together, constitute only one instrument.
(e) The captions of this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions
hereof or otherwise affect their construction or effect.
8
<PAGE>
20. Liability of Directors, Officers, and Shareholders.
The execution and delivery of this Agreement have been authorized
by the Directors of the Fund and signed by an authorized Officer of
the Fund, acting as such, and neither such authorization by such
Directors nor such execution and delivery by such Officer shall be
deemed to have been made by any of them individually or to impose any
liability on any of them personally, and the obligations of this
Agreement are not binding upon any of the Directors or Shareholders of
the Fund, but bind only the property of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective corporate officers thereunder duly authorized as of
the day and year first above written.
RANSON MANAGED PORTFOLIOS
By
---------------------------------
Date: November 15, 1996
Agreed and Accepted by:
ND RESOURCES, INC.
By
---------------------------------
Date: November 15, 1996
9
<PAGE>
APPENDIX A
We, Robert E. Walstad and Peter A. Quist, President and Secretary,
respectively, of Ranson Managed Portfolios (the "Fund"), a Massachusetts
business trust, do hereby certify that the following individuals have been duly
authorized as Authorized Persons to give Oral Instructions and Written
Instructions on behalf of the Fund, and the signatures set forth opposite their
respective names are their true and correct signatures:
Name Signature
---- ---------
Robert E. Walstad -----------------------------
W. Dan Korgel -----------------------------
----------------------------------
Robert E. Walstad
----------------------------------
Peter A. Quist
10
<PAGE>
SCHEDULE A*
FEE SCHEDULE
TRANSFER AGENT CHARGES
ND RESOURCES, INC.
<TABLE>
<CAPTION>
PERCENTAGE
FUND SIZE (NET ASSET VALUE) OF 1%
- --------------------------- ----------
<S> <C>
$ 0 TO $10,000,000 .16
10,000,001 TO 25,000,000 .13
25,000,001 TO 40,000,000 .11
40,000,001 TO 50,000,000 .10
50,000,001 AND LARGER .09
</TABLE>
*Amounts due under the above Fee Schedule are payable monthly and shall be
calculated as follows: The net asset value of all outstanding Fund shares
within each category (e.g., $0 to $10,000,000 is one category, $10,000,001 to
$25,000,000 is another, etc.) shall be multiplied by the percentage of 1%
applicable to such category and the product thereof divided by 12. The same
procedure shall be followed for each category in which the Fund has net asset
values. The amounts derived by multiplying the net asset value of each
category by the applicable percentages shall then be added together to
determine the amount payable for that month. By way of example only, if the
Fund had net assets of $10,500,000 for the month in question, the computation
would be as follows:
$10,000,000 x .0016 / 12 = $1,333.33
500,000 x .0013 / 12= 54.17
---------
$1,387.50
11
<PAGE>
SCHEDULE B
DUTIES OF THE TRANSFER AGENT
----------------------------
(See Exhibit 1 for Summary of Services.)
1. Shareholder Information.
The Transfer Agent shall maintain a record of the number of
Shares held by each holder of record which shall include his address
and taxpayer identification number and which shall indicate whether
such Shares are held in certificated or uncertificated form.
2. Shareholder Services.
The Transfer Agent will investigate all Shareholder inquiries
relating to Shareholder accounts and will answer all correspondence
from Shareholders and others relating to its duties hereunder and such
other correspondence as may from time to time be mutually agreed upon
between the Transfer Agent and the Fund. The Transfer Agent shall keep
records of Shareholder correspondence and replies thereto and of the
lapse of time between the receipt of such correspondence and the
mailing of such replies.
3. State Registration Reports.
The Transfer Agent shall furnish on a state-by-state basis sales
reports and such periodic and special reports as the Fund may
reasonably request and such other information, including Shareholder
lists and statistical information concerning accounts, as may be
agreed upon from time to time between the Fund and the Transfer Agent.
4. Mailing Communications to Shareholders; Proxy Materials.
The Transfer Agent will address and mail to Shareholders of the
Fund all reports to Shareholders, dividend and distribution notices,
and proxy material for the Fund's meetings of Shareholders. In
connection with meetings of Shareholders, the Transfer Agent will
report on proxies voted prior to meetings, act as inspector of
election at meetings, if so requested by the Fund, and certify Shares
voted at meetings.
5. Sales of Shares.
(a) Processing of Investment Checks or Other Investments. Upon receipt
of any check or other instrument drawn or endorsed to it as agent for,
or identified as being for the account of the Fund for the purchase of
Shares, the Transfer Agent shall stamp the check with the date of
receipt, shall forthwith process the same for collection, and shall
record the number of Shares sold, the trade date, the price per Share,
and the amount of money to be delivered to the Custodian of the Fund
for the sale of such Shares.
12
<PAGE>
(b) Issuance of Shares. Upon receipt of notification that the
Custodian has received the amount of money specified in the
immediately preceding paragraph, the Transfer Agent shall issue to and
hold in the account of the purchaser/Shareholder, or if no account is
specified therein, in a new account established in the name of the
purchaser, the number of Shares such purchaser is entitled to receive,
as determined in accordance with applicable federal law or regulation.
(c) Statements. On a quarterly basis, the Transfer Agent shall send
to the purchaser/Shareholder a statement of purchases which will show
the new Share balance, the Shares held under a particular plan, if
any, for withdrawing investments, the amount invested and the price
paid for the newly purchased Shares, or will be in such other form of
statement as the Fund and the Transfer Agent may agree from time to
time.
(d) Suspension of Sale of Shares. The Transfer Agent shall not be
required to issue any Shares where it has received a Written
Instruction from the Fund or written notice from any appropriate
federal or state authority that the sale of the Shares of the Fund has
been suspended or discontinued, and the Transfer Agent shall be
entitled to rely upon such Written Instructions or written
notification.
(e) Taxes in Connection with Issuance of Shares. Upon the issuance of
any Shares in accordance with the foregoing provisions of this
Section, the Transfer Agent shall not be responsible for the payment
of any original issue or other taxes required to be paid in connection
with such issuance.
(f) Returned Checks. In the event that any check or other order for
the payment of money is returned unpaid for any reason, the Transfer
Agent will:
(1) give prompt notice of such return to the Fund or its
designee;
(2) place a stop transfer order against all Shares issued as a
result of such check or order; and
(3) take such actions as the Transfer Agent may from time to time
deem appropriate.
6. Redemptions.
(a) Requirements for Transfer or Redemption of Shares. The Transfer
Agent shall process all requests from Shareholders to transfer or
redeem Shares in accordance with the procedures set forth in the
Prospectus and all determinations of the number of Shares required to
be redeemed to fund designated monthly payments, automatic payments,
or any other such distribution or withdrawal plan.
The Transfer Agent will transfer or redeem Shares upon receipt of
Written Instructions and Share certificates, if any, properly endorsed
for transfer or redemption, accompanied by such documents as the
Transfer Agent reasonably may deem necessary to evidence the authority
of the person making such transfer or redemption, and bearing
satisfactory evidence of the payment of stock transfer taxes, if any.
Except to the extent inconsistent with the procedures set forth
in the Prospectus, the Transfer Agent reserves the right to refuse to
transfer or redeem Shares until it is satisfied that the endorse-
13
<PAGE>
ment on the instructions is valid and genuine, and for that purpose it
will require a guarantee of signature by a member firm of a national
securities exchange, by any national bank or trust company, or by any
member bank of the Federal Reserve system. The Transfer Agent also
reserves the right to refuse to transfer or redeem Shares until it is
satisfied that the requested transfer or redemption is legally
authorized, and it shall incur no liability for the refusal, in good
faith, to make transfers or redemptions which the Transfer Agent, in
its good judgment, deems improper or unauthorized, or until it is
reasonably satisfied that there is no basis to any claims adverse to
such transfer or redemption.
The Transfer Agent may, in effecting transactions, rely upon the
provisions of the Uniform Act for the Simplification of Fiduciary
Security Transfers or the provisions of Article 8 of the Uniform
Commercial Code, as the same may be amended from time to time in the
State of North Dakota, which in the opinion of legal counsel for the
Fund or of its own legal counsel protect it in not requiring certain
documents in connection with the transfer or redemption of Shares. The
Fund may authorize the Transfer Agent to waive the signature guarantee
in certain cases by Written Instructions.
For the purpose of the redemption of Shares which have been
purchased within 15 days of a redemption request, the Transfer Agent
may refuse to redeem such Shares until the Transfer Agent has received
fed funds for the purchase of such Shares.
(b) Notice to Custodian and Fund. When Shares are redeemed, the
Transfer Agent shall, upon receipt of the instructions and documents
in proper form, deliver to the Custodian and the Fund a notification
setting forth the number of Shares to be redeemed. Such redemptions
shall be reflected on appropriate accounts maintained by the Transfer
Agent reflecting outstanding Shares and Shares attributed to
individual accounts and, if applicable, any individual withdrawal or
distribution plan.
(c) Payment of Redemption Proceeds. The Transfer Agent shall, upon
receipt of the moneys paid to it by the Custodian for the redemption
of Shares, pay to the Shareholder, or his authorized agent or legal
representative, such moneys as are received from the Custodian, all in
accordance with the redemption procedures described in the Prospectus;
provided, however, that the Transfer Agent shall pay the proceeds of
any redemption of Shares purchased within 15 days of a redemption
request to the Transfer Agent upon a determination that good funds
have been collected for the purchase of such Shares. The Fund shall
indemnify the Transfer Agent for any payment of redemption proceeds or
refusal to make such payment if the payment or refusal to pay is in
accordance with this Section.
The Transfer Agent shall not process or effect any redemptions
pursuant to a plan of distribution or redemption or in accordance with
any other Shareholder request upon the receipt by the Transfer Agent
of notification of the suspension of the determination of the Fund net
asset value.
7. Dividends.
(a) Notice to Transfer Agent and Custodian. Upon the declaration of
each dividend and each capital gains distribution by the Board of
Directors of the Fund with respect to Shares, the Fund shall furnish
to the Transfer Agent a copy of a resolution of its Board of Directors
certified by the Secretary setting forth with respect to the Shares
the date of the declaration of such dividend or distribution, the ex-
dividend date, the date of payment thereof, the record date as of
which
14
<PAGE>
Shareholders entitled to payment shall be determined, the amount
payable per Share to the Shareholders of record as of that date, the
total amount payable to the Transfer Agent on the payment date, and
whether such dividend or distribution is to be paid in Shares at net
asset value.
On or before the payment date specified in such resolution of the
Board of Directors, the Fund will cause the Custodian of the Fund to
pay to the Transfer Agent sufficient cash to make payment to the
Shareholders of record as of such payment date.
(b) Payment of Dividends by the Transfer Agent. The Transfer Agent
will, on the designated monthly payment date, automatically reinvest
all dividends in additional Shares at net asset value (determined on
such date) and mail to each Shareholder on a quarterly basis at his
address of record, or such other address as the Shareholder may have
designated, a statement showing the number of full and fractional
Shares (rounded to three decimal places) then currently owned by the
Shareholder and the net asset value of the Shares so credited to the
Shareholder's account; provided, however, that if the Transfer Agent
has on file a direction by the Shareholder to pay income dividends or
capital gains dividends, or both, in cash, such dividends shall be
paid in accordance with such instructions; and provided further, that
in the event of the return of two consecutive dividend checks as
undeliverable, Transfer Agent shall change such Shareholder account to
a reinvestment account if so provided in the Prospectus.
(c) Insufficient Funds for Payments. If the Transfer Agent does not
receive sufficient cash from the Custodian to make total dividend
and/or distribution payments to all Shareholders of the Fund as of the
record date, the Transfer Agent will, upon notifying the Fund,
withhold payment to all Shareholders of record as of the record date
until such sufficient cash is provided to the Transfer Agent.
(d) Information Returns. It is understood that the Transfer Agent
shall file such appropriate information returns concerning the payment
of dividends, return of capital, and capital gain distributions with
the proper federal, state, and local authorities as are required by
law to be filed and shall be responsible for the withholding of taxes,
if any, due on such dividends or distributions to Shareholders when
required to withhold taxes under applicable law.
15
<PAGE>
Exhibit 1
to
Schedule B
SUMMARY OF SERVICES
The services to be performed by the Transfer Agent shall be as follows:
A. DAILY RECORDS
Maintain daily on disc the following information with respect to each
Shareholder account as received:
. Name and Address (Zip Code)
. Balance of Shares held by Transfer Agent
. State of residence code
. Beneficial owner code: i.e., male, female, joint tenant, etc.
. Dividend code (reinvestment)
. Number of Shares held in certificate from
B. OTHER DAILY ACTIVITY
. Answer written inquiries relating to Shareholder accounts
(Matters relating to portfolio management, distribution of
Shares, and other management policy questions will be referred to
the Fund.).
. Furnish a Statement of Additional Information to any Shareholder
who requests (in writing or by telephone) such statement from the
Transfer Agent.
. Examine and process Share purchase applications in accordance
with the Prospectus.
. Furnish Forms W-9 to all Shareholders whose initial subscriptions
for Shares did not include taxpayer identification numbers.
. Process additional payments into established Shareholder accounts
in accordance with the Prospectus.
. Upon receipt of proper instructions and all required
documentation, process requests for redemption of Shares.
16
<PAGE>
. Identify redemption requests made with respect to accounts in
which Shares have been purchased within an agreed-upon period of
time for determining whether good funds have been collected with
respect to such purchase and process as agreed by the Transfer
Agent and the Fund in accordance with written procedures set
forth in the Fund's Prospectus.
. Examine and process all transfers of Shares, ensuring that all
transfer requirements and legal documents have been supplied.
. Issue and mail replacement checks.
C. REPORTS PROVIDED TO THE FUND
Furnish the following reports to the Fund:
. Daily financial totals
. Blue sky reports
. Monthly Form N-SAR information (sales/redemptions)
. Monthly report of outstanding Shares
. Monthly analysis of accounts by beneficial owner code
. Monthly analysis of accounts by Share range
. Analysis of sales by state; provide a "warning system" that
informs the Fund when sales of Shares in certain states are
within a specified percentage of the Shares registered in the
state
D. DIVIDEND ACTIVITY
. Calculate and process Share dividends and distributions as
instructed by the Fund.
. Compute, prepare, and mail all necessary reports to Shareholders,
federal, and/or state authorities as requested by the Fund.
E. MEETINGS OF SHAREHOLDERS
. Cause to be mailed proxy and related material for all meetings of
Shareholders. Tabulate returned proxies (Proxies must be
adaptable to mechanical equipment of the Transfer Agent or its
agents.) and supply daily reports when sufficient proxies have
been received. Costs incurred in providing this service will be
an out-of-pocket expense of the Transfer Agent.
17
<PAGE>
. Prepare and submit to the Fund an Affidavit of Mailing.
. At the time of the meeting, furnish a certified list of
Shareholders, hard copy, microfilm, or microfiche and, if
requested by the Fund, Inspectors of Election.
F. PERIODIC ACTIVITIES
. Cause to be mailed reports, Prospectuses, and any other
enclosures requested by the Fund (Material must be adaptable to
mechanical equipment of Transfer Agent or its agents.)
18
