<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. 26 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY /__ /
ACT OF 1940
Amendment No. 28 / 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
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, 1995, with the
Commission on September 29, 1995.
<PAGE>
RANSON MANAGED PORTFOLIOS
THE NEBRASKA MUNICIPAL FUND
CROSS REFERENCE SHEET
PURSUANT TO RULE 495(A) UNDER THE SECURITIES ACT OF 1933
Form N-1A, Part A, Item Number Heading in Prospectus
- ------------------------------ ---------------------
1 Cover Page Cover
2 Synopsis Highlights of the Fund and
Prospectus Summary; Fee and
Expense Table
3 Condensed Financial Information 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 Special Programs; Purchase
of Shares
8 Redemption or Repurchase Redemption of Shares
9 Pending Legal Proceedings *
Heading in Statement of
Form N-1A, Part B, Item Number 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 The Fund and its Shares
Principal Holders of Securities
16 Investment Advisory and Management and Investment
Other Services Advisory Agreement
17 Brokerage Allocation and Portfolio Transactions
Other Practices
18 Capital Stock and Other Securities Additional Information
Regarding Shares and Rights
- -i-
<PAGE>
Heading in Statement of
Form N-1A, Part B, Item Number Additional Information
- ------------------------------ -------------------------
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 Distributor, in Prospectus
22 Calculations of Performance Data Performance Data
23 Financial Statements Financial Statements
Form N-1A, Part C, Item Number Heading in Other Information
- ------------------------------ ----------------------------
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
_____________________
*Not applicable.
- -ii-
<PAGE>
PROSPECTUS
NOVEMBER 30, 1995 (As amended March 4, June 5 and September 10, 1996)
RANSON MANAGED PORTFOLIOS
THE NEBRASKA MUNICIPAL FUND
1 NORTH MAIN
MINOT, NORTH DAKOTA 58703
(701) 852-5292
(800) 601-5593
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. Investors
Fiduciary Trust Company ("IFTC") currently serves as the Fund's transfer agent
(the "Transfer Agent") and custodian (the "Custodian"). Effective on or about
April 3, 1996, ND Resources, Inc., will succeed IFTC as Transfer Agent and First
Western Bank & Trust will succeed IFTC as 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 the November 30, 1995, as amended
March 4, June 5 and September 10, 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 FOLLOWING 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."
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets) THE NEBRASKA MUNICIPAL FUND
EXPENSES AFTER
FEE WAIVER
<S> <C>
Management Fees* 0.20%
Rule 12b-1 Fees 0.25%
Other Expenses* 0.40%
-----
Total Fund Operating Expenses (after fee waivers) 0.85%
</TABLE>
<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>
[FN]
* The calculation presumes expenses for the curent 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 .50%, 0.25%, 0.91% and
1.66%, respectively, before fee waivers. THESE COSTS AND EXPENSES SHOULD NOT
BE CONDISDERED 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, and "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 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, 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 $100. 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."
3
<PAGE>
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."
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 account.
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
4
<PAGE>
Securities"). The Fund may from time to time to invest in participations in
municipal leases. 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").
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 rates. In
recent years there have been 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 purposes. 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. 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>
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 six Period From
months ended Year Ended November 17,
January 31, 1996 July 31, 1993 to
(unaudited)*** 1995 July 31, 1994*
---------------- ---------- --------------
<S> <C> <C> <C>
Net asset value at beginning of period $ 10.95 $10.82 $11.49
Income from investment operations:
Net investment income $ .34 .59 .45
Net realized and unrealized loss on investments .38 .13 (.67)
Total from investment operations $ .72 .72 (.22)
Less dividends:
Dividends from net investment income $ (.34) (.59) (.45)
Net asset value at end of period $ 11.33 $10.95 $10.82
TOTAL RETURN** $ 12.34%(a) 7.14%(a) -3.20%(a)(b)
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (000's omitted) $17,653 $14,445 $8,171
Ratio of expenses to average net assets .56%(b)(c) .35%(c) .19%(b)(c)
Ratio of net investment income to average net assets $ 5.16%(b) 5.63%(d) 5.51%(b)(d)
Portfolio turnover rate 17.96% 140.00% 314.00%
</TABLE>
* Commenced operations on November 17, 1993. Ratios and total return are
annualized.
** Total return is annualized and does not consider the effect of the sales
load.
*** Unaudited
_______________________
(a) Excludes maximum sales charge of 4.25%
(b) Ratio was annualized.
(c) During the six month period ended January 31, 1996 and the periods ended
July 31, 1995 and 1994, Ranson Capital Corporation assumed expenses of
$70,279, $146,913, $70,186, respectively. If the expenses had not been
assumed, the annualized ratios of total expenses to average net assets
would have been 1.42%, 1.66%, and 2.25%, respectively.
(d) Ratio of net investment income to average net assets prior to fee waiver
and expense reimbursement by the Advisor was 4.30% 4.32% and 3.45%.
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 three 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 total assets in Nebraska Municipal Securities which are
obligations of the Commonwealth of Puerto Rico, the Virgin Islands or Guam.
7
<PAGE>
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 number of Nebraska farms and ranches declined in 1993 to an estimated
55,000, from 56,000 in 1992. Since total land in farms and ranches remains
around 47 million acres, the size of the average farm and ranch increased 1.8
percent in 1993. Statewide, the average value of an acre of farmland
increased 9.0 percent by the end of 1993. The most recent Nebraska farm
income information reflects total cash receipts from farm marketings
decreased 2.9 percent in 1992 from the 1991 level. The leading non-farm job
sector in 1993 was the trade sector, comprising 25.2 percent of all non-farm
jobs. The number of trade sector jobs increased 1.4 percent from 1992 to
1993. The wholesale trade subsector accounted for 27.1 percent and the
retail subsector 72.9 percent of trade sector jobs. The services sector is
the second largest non-farm job sector accounting for 24.6 percent of total
jobs. The average monthly number of service sector jobs increased 1.2
percent in 1993 compared to 1992. The number of manufacturing jobs, which
represented 13.5 percent of non-farm employment, increased 2.2 percent in
1993 compared to 1992. The finance, insurance, and real estate sector is an
important job category in Nebraska, especially in Omaha and Lincoln. In
1993, the number of jobs in that sector averaged 50,274 per month, a 1.7
percent increase over 1992. Nationally, the number of finance, insurance
and real estate jobs declined 1.3 percent. The travel and tourism industry is
Nebraska's third leading generator of out-of-state revenue, following
agriculture and manufacturing. The 1993 spring and summer floods in Nebraska
threatened to reduce tourism and tourism revenue in the state last year;
however, expenditures in the State totaled over $1.9 billion in 1993, a 5.6
percent increase over 1992. Travel industry employment totaled approximately
36,000 people within the State, who serviced the estimated 15.2 million
visits to Nebraska in 1993 by non-residents, a 3.4 percent increase over 1992.
8
<PAGE>
The Legislature appropriated approximately $1.6 billion for State programs
from the State General Fund for fiscal year 1994, a reduction of $4.3 million
for the fiscal year 1993 budget, and recommended spending of approximately
$1.7 billion for fiscal year 1995. The major increases in the State budget
for the fiscal year 1993-95 biennium are the result of mandated programs and
entitlement programs and are concentrated primarily in the areas of Medicaid,
State aid to schools, public assistance and special education. The budget
also allowed for a 3.0 percent budget reserve ($99.5 million) at the end of
the biennium.
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.
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
9
<PAGE>
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 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
10
<PAGE>
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.
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
11
<PAGE>
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.
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
12
<PAGE>
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.
The Fund is a non-diversified investment company, but intends to comply with
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
13
<PAGE>
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 to 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 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.
14
<PAGE>
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 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.
15
<PAGE>
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 any of the foregoing policies that
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.
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 3:15 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.
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<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
------------- --------------- ----------------
AMOUNT OF PURCHASE
- ------------------
<S> <C> <C> <C>
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 $100 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
Corporations and registered representatives and other employees of such broker-
dealers, including their spouses and children; to financial institutions having
sales agreements with Ranson Capital Corporation, and employees of such
financial institutions, including their spouses and children; and to any broker-
dealer, financial institution, or other qualified firm which receives no
commissions for selling shares to its clients.
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<PAGE>
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
Corporation 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 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.
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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.
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.
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(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 $10,000 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
$10,000 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 $100) 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 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
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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,
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
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<PAGE>
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.
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.
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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.
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.
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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.
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.
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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 on
the redemption 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.
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
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<PAGE>
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.
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.
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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.
Overall portfolio management strategy for the Fund is determined by the
Manager under the general supervision and direction of Robert E. Walstad, the
President of the Fund and of the Manager 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. The
day-to-day management of the Fund, including credit analysis and the execution
of portfolio transactions, is the responsibility of Alex R. Meitzner, the
Assistant Vice President - Investments of the Manager. Mr. Meitzner had been
the Executive Vice President of the Manager until January 5, 1996, when he was
elected to his present position. All portfolio management decisions are
subject to weekly review by Mr. Walstad and to quarterly review by the Fund's
Board of Trustees.
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 Holdings, 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 investment adviser for the Kansas Insured
Intermediate Fund and The Kansas Municipal Fund, which have current net asset
values of $31,862,484 and $135,722,818, 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.
27
<PAGE>
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 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
28
<PAGE>
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.
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.
29
<PAGE>
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.
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.
30
<PAGE>
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) 852-5292 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 28
Shareholder Services and Reports 29
Calculation of Fund Performance Data 29
Summary of Procedures 30
</TABLE>
- ------------------------------------------------
- ------------------------------------------------
- ------------------------------------------------
- ------------------------------------------------
RANSON MANAGED
PORTFOLIOS
THE NEBRASKA
MUNICIPAL FUND
_____________________________
PROSPECTUS
DATED: November 30, 1995
(As amended March 4, June 25 and
September 10, 1996)
_____________________________
DISTRIBUTOR
RANSON CAPITAL CORPORATION
1 North Main
Minot, North Dakota 58703
- ------------------------------------------------
- ------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
INITIAL APPLICATION RANSON MANAGED PORTFOLIOS-
THE KANSAS INSURED INTERMEDIATE FUND
P.O. Box 759, Minot, North Dakota 58702
ACCOUNT APPLICATION
Mail to: The Nebraska Municipal Fund,
P.O. Box 759, Minot, North Dakota 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 ______________________under the ________
Custodian's name Minor's name State
Uniform Gifts/Transfers to Minors Act
/_/ TRUST
_____________________ as trustee(s) of _____________________ _______________
Trustee's name(s) Name of trust Date of trust
agreement 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: _________________________
Social Security or taxpayer ID number: ____________
Day telephone number_______________
- -------------------------------------------------------------------------------
2. INITIAL INVESTMENT
______ Check Enclosed for $__________(Minimum initial investment is
$1,000; thereafter $100.) 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.
- -------------------------------------------------------------------------------
<PAGE>
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 $10,000 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)
- -------------------------------------------------------------------------------
7. PREAUTHORIZED INVESTMENT PROGRAM
I hereby authorize the Investors Fiduciary Trust Company to draw from my
account monthly beginning on the /_/ 5th or /_/ 20th of ___________
Amount Name of Bank ABA Number
________________ __________________________ ________________________
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
- -------------------------------------------------------------------------------
<PAGE>
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 _____________________________________ ______________
Main Office Address ________________________________________ Account No.
Branch #____ Rep #_____ Representative Name_________________ ______________
Branch Address___________________ Telephone Number__________ Salesman's
Authorized Signature, Last Name
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 shall be read
in conjunction with the Prospectus for the Fund dated November 30, 1995, as
amended March 4, June 25, and September 10, 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.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
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<S> <C>
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 Allen, Gibbs & Houlik, Independent Auditors 13
Financial Statements 14
</TABLE>
THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED NOVEMBER 30, 1995,
as amended March 4, June 25 and September 10, 1996.
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 September 5, 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 and cash
3
<PAGE>
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.,
74 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
60 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
81 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,
61 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.,
51 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 0 0
Orlin W. Backes 0 0
Arthur A. Link 0 0
* 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 NDHoldings, 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 30, 1995, 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 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
8
<PAGE>
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 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
9
<PAGE>
(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 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
10
<PAGE>
of the Fund to take place even if less than a majority of the shareholders
are present on its scheduled date. 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, the Manager earned
$17,914 and $56,058, respectively, in management and investment advisory 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, the Manager earned
$18,024 and$35,341, 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, the Rule 12b-1 fee
totaled $8,957 and $27,823, respectively, of which $8,957 and $26,146,
respectively, was waived by the Distributor.
In addition, in connection with sales of shares of the Fund, Ranson
Capital Corporation retained $65,568 and $39,039 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,
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, 1995, was 5.30%.
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, 1995, was 9.38%.
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, 1995, was 5.17%.
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, 1995, was 0.15%.
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, 1995, was 4.71%.
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>
REPORT OF ALLEN, GIBBS & HOULIK, L.C.
INDEPENDENT AUDITORS
The Shareholders and Board of Trustees
Ranson Managed Portfolios-
The Nebraska Municipal Fund
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of The Nebraska Municipal Fund portfolio of Ranson
Managed Portfolios as of July 31, 1995, the related statement of operations for
the year then ended, and the statements of changes in net assets, and the
financial highlights for the year ended July 31, 1995 and the period from
November 17, 1993 (Commencement of Public Offering) to July 31, 1994. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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, 1995, by correspondence with the Fund's custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Nebraska Municipal Fund portfolio of Ranson Managed Portfolios at July 31, 1995,
the results of its operations for the year then ended, and the changes in its
net assets and the financial highlights for the year ended July 31, 1995 and the
period from November 17, 1993 (Commencement of Public Offering) to July 31,
1994, in conformity with generally accepted accounting principles.
ALLEN, GIBBS & HOULIK, L.C.
Wichita, Kansas
September 11, 1995
13
<PAGE>
<TABLE>
<CAPTION>
RANSON MANAGED PORTFOLIOS
THE NEBRASKA MUNICIPAL FUND
PORTFOLIO OF INVESTMENTS
July 31, 1995
Credit Ratings
Moody's/ Principal Value
General Obligation Bonds - 24.1% Standard & Poor's Amount (Note 1)
________________________________ _________________ _________ ________
<S> <C> <C> <C>
Lincoln-Lancaster County Public Building
Commission General Obligation Bonds
Series 1994, 6.30%, 10/15/03 NR/NR $ 200,000 $ 208,400
Douglas County School District 017 (Millard
Public Schools) General Obligation Bonds
Series 1994C, (MBIA Insured) 5.65%,
12/15/05 Aaa/AAA 400,000 412,998
Lancaster County School District 001 (Lincoln,
Nebraska Public Schools) General Obligation
Bonds Series 1993, 5.60%, 7/15/06 Aa/AAA 150,000 152,457
County of Douglas, Nebraska Law Enforcement
Center Facility Bonds Series 1995, 5.75%,
7/1/10 Aa/AA+ 275,000 278,301
Douglas County School District 001 (Omaha,
Nebraska Public Schools) General Obligation
Refunding Bonds Series 1993B, 5.00%, 12/15/11 Aa/AAA 200,000 189,503
City of Lincoln, Nebraska General Obligation
Storm Sewer and Drainage System Bonds,
Series 1995, 5.50%, 6/1/14 Aa/AAA 200,000 194,235
Otoe County School District III in the State of
Nebraska (Nebraska City Public Schools)
Refunding Bonds, Series 1995, (AMBAC Insured)
5.80%, 11/15/14 Aaa/AAA* 400,000 399,080
City of Lincoln, Nebraska General Obligation Storm
Sewer and Drainage System Bonds, Series 1995,
5.50%, 6/1/15 Aa/AAA 200,000 192,895
Nebraska Higher Education Loan Program, Inc. 1993-2
Series A-5B, 6.25%, 6/1/18 Aa/AA* 750,000 739,344
Nebraska Higher Education Loan Program, Inc. 1993-2
Series A-6 Junior Subordinate Bonds, 6.45%,
6/1/18 A/NR 400,000 402,727
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
<TABLE>
<CAPTION>
Credit Ratings
Moody's/ Principal Value
General Obligation Bonds (continued) Standard & Poor's Amount (Note 1)
____________________________________ _________________ _________ ________
<S> <C> <C> <C>
Cass County School District 001 In the State of
Nebraska (Plattsmouth Community Schools) General
Obligation Bonds Series 1994 (FGIC Insured)
6.35%, 12/1/19 Aaa/AAA 300,000 309,060
Total General Obligation Bonds 3,479,000
__________
Revenue Bonds - 68.8%
_____________________
Utility - 36.8%
_______________
City of Lincoln, Nebraska Water Revenue and
Refunding Bonds Series 1993, 5.30%, 8/15/11 Aa/AA+ 200,000 193,909
City of Grand Island, Nebraska Sewer System
Revenue Bonds Series 1994, 6.00%, 4/1/14 A/NR 250,000 252,242
City of Kearney, Nebraska Combined Utilities
Revenue Bonds Series 1994, 6.10%, 6/1/14 A1/NR 400,000 403,109
Nebraska Public Power District Power Supply
System Revenue Bonds Series 1993, 6.125%,
1/1/15 A1/A+ 390,000 396,895
Omaha Public Power District (Nebraska) Electric
System Revenue Bonds 1986 Series A, 6.00%,
2/1/15 NR/AA 330,000 332,515
Solid Waste Disposal Project Revenue Bonds Series
1995, Issued by the Northeast Nebraska Solid
Waste Coalition (MBIA Insured) 5.90%,
5/15/15 Aaa/AAA 600,000 598,633
City of Lincoln, Nebraska Electric System Revenue
Refunding Bonds 1993 Series A, 5.25%, 9/1/15 Aa/AA 490,000 459,927
City of Lincoln, Nebraska General Obligation
Various Purpose Bonds Series 1995, 5.50%,
12/1/15 Aa/AAA 200,000 195,927
Omaha Public Power District (Nebraska) Electric
System Revenue Bonds 1993 Series C, 5.50%,
2/1/17 Aa/AA 150,000 143,446
Omaha Public Power District (Nebraska) Electric
System Revenue Bonds 1993 Series B, 5.70%,
2/1/17 Aa/AA 250,000 245,146
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
<TABLE>
<CAPTION>
Credit Ratings
Moody's/ Principal Value
Revenue Bonds (continued) Standard & Poor's Amount (Note 1)
_________________________ _________________ _________ ________
Utility (continued)
___________________
<S> <C> <C> <C>
Omaha Public Power District (Nebraska) Electric
System Revenue Bonds, 1992, Series B, 6.20%,
2/1/17 Aa/AA 500,000 508,351
Municipal Energy Agency of Nebraska Power Supply
System Revenue Refunding Bonds 1992 Series A
(AMBAC Insured) 6.00%, 4/1/17 Aaa/AAA 500,000 496,407
City of Hastings, Nebraska Electric System Revenue
Refunding Bonds Series 1992, 6.30%, 1/1/19 A/A 370,000 378,695
Nebraska Public Power District Power Supply System
Revenue Bonds 1993 Series, 5.75%, 1/1/20 A1/A+ 750,000 715,973
__________
5,321,175
__________
Housing - 9.6%
______________
Nebraska Investment Finance Authority Multi-family
Housing Revenue Bonds (FHA Insured Mortgage
Loan - Muirfield Greens Apartments Project)
Series 1992A, 6.80%, 12/1/15 Aa/NR 100,000 103,375
Nebraska Investment Finance Authority Single Family
Housing Revenue Bonds 6.50%, 9/1/18 NR/AAA 500,000 511,875
Nebraska Investment Finance Authority Single Family
Housing Revenue Bonds 1994 Series A-1, 6.60%,
9/1/20 NR/AAA 750,000 767,813
1,383,063
_________
Health Care - 12.3%
___________________
Hospital Authority No. 1 of Buffalo County,
Nebraska Hospital Revenue Bonds (Sisters of
Charity Health Care Project) Series 1991
(MBIA Insured) 6.375%, 5/15/04 Aaa/AAA 250,000 260,615
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
<TABLE>
<CAPTION>
Credit Ratings
Moody's/ Principal Value
Revenue Bonds (continued) Standard & Poor's Amount (Note 1)
_________________________ _________________ _________ ________
Health Care (continued)
_______________________
<S> <C> <C> <C>
Hospital Authority No. 1 of Scotts Bluff County,
Nebraska Hospital Revenue Bonds Series 1992
(Regional West Medical Center Project) 6.45%,
12/15/04 A/A 275,000 289,005
Hospital Authority No. 1 of Buffalo County,
Nebraska Hospital Revenue Bonds (Sisters of
Charity Health Care Project) Series 1991
(MBIA Insured) 6.625%, 5/15/09 Aaa/AAA 300,000 315,980
The University of Nebraska Facilities Corporation
Hospital Revenue Refunding Bonds Series 1993
(University of Nebraska Medical Center
Project) 5.25%, 7/1/11 A1/AA- 250,000 238,582
Hospital Authority No. 1 of Lancaster County,
Nebraska Hospital Revenue Bonds (Bryan
Memorial Hospital Project) Series 1992 (MBIA
Insured) 6.60%, 6/1/12 Aaa/AAA 100,000 104,785
City of Lincoln, Nebraska Lincoln General
Hospital Revenue and Refunding Bonds Series
1993A (Capital Guaranty Insured) 6.20%,
12/1/14 Aaa/AAA 100,000 100,336
City of Lincoln, Nebraska Lincoln General
Hospital Revenue and Refunding Bonds Series
1993B (Capital Guaranty Insured) 6.20%,
12/1/14 Aaa/AAA 50,000 50,168
Hospital Authority No. 1 of Lancaster County,
Nebraska Hospital Revenue Bonds (Bryan
Memorial Hospital Project) Series 1992 (MBIA
Insured) 6.70%, 6/1/22 Aaa/AAA 400,000 413,399
__________
1,772,870
__________
Miscellaneous - 10.1%
_____________________
Nebraska Educational Finance Authority Revenue
Bonds Series 1994 (Creighton University
Project) (MBIA Insured) 5.70%, 11/1/04 Aaa/AAA 450,000 465,025
The Board of Regents of the University of
Nebraska Revenue Bonds, Series 1993
(University of Nebraska at Omaha Student
Center Project) 5.25%, 5/15/10 A1/A+ 250,000 240,549
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
<TABLE>
<CAPTION>
Credit Ratings
Moody's/ Principal Value
Revenue Bonds (continued) Standard & Poor's Amount (Note 1)
_________________________ _________________ _________ ________
Miscellaneous (continued)
_________________________
<S> <C> <C> <C>
Board of Trustees of the Nebraska State Colleges
Chadron State College Student Fees and
Facilities Revenue Refunding Bonds Series
1994, 5.70%, 7/1/11 NR/NR 240,000 235,331
City of Omaha, Nebraska Various Purpose Bonds
Series 1994, 6.25%, 12/1/12 Aaa/AAA 250,000 259,694
City of Omaha, Nebraska Various Purpose Bonds
Series 1994, 6.25%, 12/1/14 Aaa/AAA 250,000 259,423
_________
1,460,022
_________
Total Revenue Bonds 9,937,130
_________
_________
Total Investments - 92.9% (cost $13,354,568) 13,416,130
Other Assets, Less Liabilities - 7.1% 1,028,585
__________
Net Assets - 100.0% $14,444,715
__________
__________
</TABLE>
NR Not Rated
* Fitch
See Notes to Financial Statements.
18
<PAGE>
<TABLE>
<CAPTION>
RANSON MANAGED PORTFOLIOS
THE NEBRASKA MUNICIPAL FUND
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1995
<S> <C>
Assets
______
Investments, at value (cost $13,354,568) (Note 1) $13,416,130
Cash 44,102
Accrued interest receivable 186,338
Receivable for securities sold 1,358,512
Receivable for fund shares sold 87,827
Deferred organization costs (Note 1) 18,432
Total assets 15,111,341
___________
Liabilities and Net Assets
__________________________
Payable for:
Dividends (Note 1) 64,899
Securities purchased 597,000
Accrued expenses 4,727
___________
Total liabilities 666,626
___________
Net assets, applicable to 1,318,776 outstanding shares,
equivalent to $10.95 per share (unlimited number of
shares authorized, no par value) $14,444,715
___________
___________
Analysis of Net Assets
______________________
Capital shares $14,587,541
Accumulated undistributed net realized loss on security transactions (204,388)
Net unrealized depreciation of investments 61,562
Net assets $14,444,715
___________
___________
The Pricing of Shares
_____________________
Net asset value and redemption price per share (Net assets of
$14,444,715 / 1,318,776 shares outstanding) $10.95
______
______
Maximum public offering price per share (Net asset value,
plus 4.44% of net asset value or 4.25% of offering price) $11.44
______
______
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
<TABLE>
<CAPTION>
RANSON MANAGED PORTFOLIOS
THE NEBRASKA MUNICIPAL FUND
STATEMENT OF OPERATIONS
For the year ended July 31, 1995
<S> <C>
Investment income-interest $ 670,354
________
Expenses:
Investment advisory and management fee (Note 2) 56,058
Rule 12b-1 fees (Note 2) 27,823
Transfer agent fees 44,095
Administrative and accounting services fee (Note 2) 35,341
Amortization of organization costs (Note 1) 5,466
Insurance premiums 1,768
Custodian fees 6,432
Trustees' fees and expenses (Note 2) 512
Regulatory fees 3,124
Legal and audit fees 5,422
_________
Total expenses 186,041
Less fees waived and expenses reimbursed by manager and distributor (146,913)
_________
Net expenses paid by Fund 39,128
_________
Net investment income 631,226
_________
Realized and unrealized gain (loss) on investments:
Net realized loss on security transactions (28,177)
Net unrealized appreciation of investments 300,387
_________
Net gain on investments 272,210
_________
Net increase in net assets resulting from operations $ 903,436
_________
_________
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
<TABLE>
<CAPTION>
RANSON MANAGED PORTFOLIOS
THE NEBRASKA MUNICIPAL FUND
STATEMENT OF CHANGES IN NET ASSETS
Year Period
Ended November 17, 1993
July 31, 1995 to July 31, 1994
_______________ _________________
<S> <C> <C>
Increase in Net Assets
Operations:
Net investment income $ 631,226 $ 187,231
Net realized gain (loss) on security transactions (28,177) (176,212)
Net unrealized appreciation (depreciation)
of investments 300,387 (238,824)
_________ _________
Net increase (decrease) in net assets resulting
from operations 903,436 (227,805)
_________ _________
Dividends to shareholders from net investment income (631,226) (187,231)
_________ _________
Capital Share Transactions:
Proceeds from capital shares sold 6,756,929 9,508,470
Proceeds from shares issued in reinvestment
of dividends 382,395 92,146
Cost of capital shares redeemed (1,137,925) (1,014,474)
___________ ___________
Net increase in net assets from capital share
transactions 6,001,399 8,586,142
___________ ___________
Total increase in net assets 6,273,609 8,171,106
Net Assets:
Beginning of period 8,171,106 -0-
___________ ___________
End of period $14,444,715 $8,171,106
___________ ___________
___________ ___________
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
RANSON MANAGED PORTFOLIOS
THE NEBRASKA MUNICIPAL FUND
NOTES TO FINANCIAL STATEMENTS
July 31, 1995
1. BUSINESS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
SECURITY VALUATION
Investments are stated at value, as that term is defined in the Investment
Company Act of 1940 and the published rules and regulations thereunder. The net
asset value per share is determined at 3:15 p.m. (central standard time) on each
day the New York Stock Exchange is open for business and on any other day on
which there is a sufficient degree of trading in the portfolio securities that
the current net asset value of the Fund's shares might be materially affected.
Fixed income securities are valued at the mean of the quoted bid and asked
price. Securities for which quotations are not readily available (which
constitutes a majority of the securities held by the Fund) are valued at fair
value as determined by Ranson Capital Corporation (the "Manager") using methods
which include consideration of 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.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date, which is the date the
investments are purchased or sold. Realized gains and losses on the sale of
investments are determined on the identified cost basis for both financial
statement and income tax purposes. Interest income is recorded on the accrual
basis. The Fund amortizes original issue discounts and premiums paid on
purchases of investments on the same basis for both financial reporting and
income tax purposes.
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, 1995 totaled $8,667. 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, 1995.
INCOME TAXES
It is the policy of the Fund to qualify as a regulated investment company which
can distribute tax-exempt dividends by complying with provisions available to
certain investment companies, as defined in applicable sections of the Internal
Revenue Code, and to make distributions of income and
22
<PAGE>
RANSON MANAGED PORTFOLIOS
THE NEBRASKA MUNICIPAL FUND
NOTES TO FINANCIAL STATEMENTS
July 31, 1995
realized capital gains sufficient to relieve the Fund from all income taxes.
Therefore, no income tax provision is required. 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 Internal Revenue Code) to
shareholders.
DIVIDENDS AND DISTRIBUTIONS
The Fund declares a dividend of all of its net investment income on each day the
New York Stock Exchange is open, to shareholders of record as of 3:15 p.m.
(central standard time). Distributions from net investment income are paid or
reinvested monthly. Distributions from net realized capital gains, if any, are
declared and paid annually.
2. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund entered into a Management and Investment Advisory Agreement with Ranson
Capital Corporation (the "Manager") under which the Manager manages the Fund's
investment portfolio and provides other specified services. The Fund incurs a
monthly investment advisory and management fee equivalent on an annual basis to
.50 of 1% of the average daily net assets of the Fund. For the year ended July
31, 1995, the fee totaled $56,058. The Manager elected to waive this fee.
The Manager is obligated to pay all expenses (excluding taxes, brokerage fees
and commissions) which exceed 1.25% of the Fund's average daily net assets on an
annual basis.
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 is 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 .15% of the
annualized ADNA from $20,000,000 to $40,000,000 and at a lower rate on the
annualized ADNA in excess of $40,000,000. For the period ended July 31, 1995,
the fee totaled $35,341. The Manager elected to waive this fee.
The Fund has entered into a Distribution and Services Agreement with Ranson
Capital Corporation (the "Distributor"). For the year ended July 31, 1995, the
Distributor retained $39,290 in sales commissions from distribution of Fund
shares under the terms of the dealer agreement after allowances to unaffiliated
broker dealers of $33,187. This agreement provides for the payment of a sales
commission to Ranson Capital Corporation ranging from .65% to .05% of the
offering price of each share sold, depending on the number of shares sold.
Pursuant to the Fund's Shareholder Services Plan and the Distribution and
Services Agreement between the Fund and Ranson Capital Corporation, the Fund is
obligated to make periodic payments to the Distributor of annual amounts of up
to 0.25% of the average net asset value of the Fund. The Distributor may use
such fees to make payments to certain banks and broker-dealers which provide
administrative and shareholder services to the Fund and its shareholders and/or
for its expenses of distributing the Fund's shares. For the year ended July 31,
1995, 0.25% of the average net asset value totaled $27,823. The Manager elected
to waive $26,146 and the Fund paid the Distributors $1,677 during the year ended
July 31, 1995, all of which was paid to broker-dealers and banks.
23
<PAGE>
RANSON MANAGED PORTFOLIOS
THE NEBRASKA MUNICIPAL FUND
NOTES TO FINANCIAL STATEMENTS
July 31, 1995
Certain trustees and officers of the Fund are also directors, officers and/or
employees of the Manager. None of the trustees or officers so affiliated
received compensation from the Fund for services as trustees of the Fund. Fees
paid to non-affiliated trustees totaled $512 for the year ended July 31, 1995.
3. CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
Transactions in the capital shares of the Fund were as follows:
Year Ended Period
Year Ended November 17, 1993
July 31, 1995 to July 31, 1994
------------- -----------------
<S> <C> <C>
Shares sold 632,974 841,874
Shares issued in reinvestment of dividends 35,721 8,365
Shares redeemed (105,163) (94,995)
_________ ________
Net increase 563,532 755,244
</TABLE>
4. PURCHASES AND SALES OF INVESTMENTS
During the year ended July 31, 1995, the cost of investments purchased and the
proceeds from investments sold, excluding short-term investments, totaled
$20,190,379 and $15,693,220, respectively.
For federal income tax purposes, the identified cost of investments owned at
July 31, 1995 was $13,354,568 and unrealized depreciation of investments
consisted of:
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized appreciation $ 227,625
Gross unrealized depreciation (166,063)
___________
Net unrealized appreciation $ 61,562
</TABLE>
24
<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 six Period From
months ended Year Ended November 17,
January 31, 1996 July 31, 1993 to
(unaudited)*** 1995 July 31, 1994*
---------------- ---------- --------------
<S> <C> <C> <C>
Net asset value at beginning of period $ 10.95 $10.82 $11.49
Income from investment operations:
Net investment income $ .34 .59 .45
Net realized and unrealized loss on investments .38 .13 (.67)
Total from investment operations $ .72 .72 (.22)
Less dividends:
Dividends from net investment income $ (.34) (.59) (.45)
Net asset value at end of period $ 11.33 $10.95 $10.82
TOTAL RETURN** $ 12.34%(a) 7.14%(a) -3.20%(a)(b)
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (000's omitted) $17,653 $14,445 $8,171
Ratio of expenses to average net assets .56%(b)(c) .35%(c) .19%(b)(c)
Ratio of net investment income to average net assets $ 5.16%(b) 5.63%(d) 5.51%(b)(d)
Portfolio turnover rate 17.96% 140.00% 314.00%
</TABLE>
* Commenced operations on November 17, 1993. Ratios and total return are
annualized.
** Total return is annualized and does not consider the effect of the sales
load.
*** Unaudited
_______________________
(a) Excludes maximum sales charge of 4.25%
(b) Ratio was annualized.
(c) During the six month period ended January 31, 1996 and the periods ended
July 31, 1995 and 1994, Ranson Capital Corporation assumed expenses of
$70,279, $146,913, $70,186, respectively. If the expenses had not been
assumed, the annualized ratios of total expenses to average net assets
would have been 1.42%, 1.66%, and 2.25%, respectively.
(d) Ratio of net investment income to average net assets prior to fee waiver
and expense reimbursement by the Advisor was 4.30% 4.32% and 3.45%.
25
<PAGE>
INCORPORATION BY REFERENCE
The following financials of The Nebraska Municipal Fund filed on March 29, 1996,
for the period ending January 31, 1996 are incorporated by reference in this
Post-effective Amendment #26 dated September 10, 1996.
Schedule of Investments January 31, 1996 (Unaudited)
Statement of Assets and Liabilities January 31, 1996 (Unaudited)
Statement of Operations January 31, 1996 (Unaudited)
Statement of Changes in Net Assets
For the six months ended January 31, 1996 and year ended July 31,
1995
Notes to Financial Statements January 31, 1996 (Unaudited)
Financial Highlights
26
<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, 1995
Statement of Assets and Liabilities dated July 31, 1995
Statement of Operations dated July 31, 1995
Statement of Changes in Net Assets dated July 31, 1995
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 Investors Fiduciary Trust Company*
9. Form of Accounting and Administrative Services Agreement between
Registrant and Ranson Capital Corporation*
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 January 26, 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 September 5, 1996, the number of record holders of Registrant was
as follows:
The Kansas Municipal Fund: 4,677
The Kansas Insured Intermediate Fund: 841
The Nebraska Municipal Fund: 901
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>
(3)
Other Business
(2) Profession
(1) Affiliation Vocation or
Name and Principal with Investment Employment
Business Address Adviser Connection
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
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 $135,722,818,
$31,862,484 and $17,083,085 respectively, as of January 6, 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
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 the Registrant certifies that it has duly
caused this Post-Effective Amendment No. 26 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 5th day of September, 1996.
RANSON MANAGED PORTFOLIOS
/s/ Robert E. Walstad
By: ____________________________
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. 26 to Registration
Statement No. 33-36324 and Power of Attorney have been signed below by the
following persons in the capacities indicated on September 5, 1996:
SIGNATURES TITLE
----------- -------
/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
Robert E. Walstad the Board, President
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
Investors Fiduciary Trust Company*
9. Form of Accounting and Administrative Services Agreement between
Registrant and Ranson Capital Corporation*
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 23
CONSENT OF ALLEN, GIBBS & HOULIK, L.C., INDEPENDENT AUDITORS
We consent to the use of our report dated September 11, 1996 on the financial
statement referred to therein and to the reference to our firm under the caption
"Independent Auditors" in this Post-Effective Amendment #26 to the Registration
Statement on Form N-1A of The Nebraska Municipal Fund series of Ranson Managed
Portfolios filed with the Securities and Exchange Commission under the
Securities Act of 1933 (File No. 33-36324) and in this Amendment #28 to the
Registration Statement under the Investment Company Act of 1940 (File No.
811-6153).
ALLEN, GIBBS & HOULIK, L.C.
Wichita, Kansas
September 5, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000866841
<NAME> RANSON MANAGED PORTFOLIOS - THE NEBRASKA MUNICIPAL FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 16,997,986
<INVESTMENTS-AT-VALUE> 17,588,062
<RECEIVABLES> 277,564
<ASSETS-OTHER> 116,947
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 17,982,573
<PAYABLE-FOR-SECURITIES> 250,868
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 78,793
<TOTAL-LIABILITIES> 329,661
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 1,557,873
<SHARES-COMMON-PRIOR> 1,318,776
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 72,348
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 528,515
<NET-ASSETS> 17,652,912
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 457,233
<OTHER-INCOME> 0
<EXPENSES-NET> 45,019
<NET-INVESTMENT-INCOME> 412,214
<REALIZED-GAINS-CURRENT> 13,933
<APPREC-INCREASE-CURRENT> 590,076
<NET-CHANGE-FROM-OPS> 954,662
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 412,214
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 254,929
<NUMBER-OF-SHARES-REDEEMED> 39,052
<SHARES-REINVESTED> 23,220
<NET-CHANGE-IN-ASSETS> 3,208,197
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 40,039
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 115,298
<AVERAGE-NET-ASSETS> 16,002,962
<PER-SHARE-NAV-BEGIN> 10.95
<PER-SHARE-NII> .34
<PER-SHARE-GAIN-APPREC> .38
<PER-SHARE-DIVIDEND> .34
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.33
<EXPENSE-RATIO> .56<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Ratio of net expenses to average net assets, annualized.
</FN>
</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, 1995, was
0.15%, calculated as follows:
P(1+T)n = ERV
Where:
P = a hypothetical initial investment of $1,000
T = average annual total return = 0.15%
n = number of years = 1.70 years
ERV = ending redeemable value on July 31, 1995, of a hypothetical $1,000
payment made on November 17, 1993 = $1,002.57
TOTAL RETURN CALCULATION
The total return for the period from commencement of operations on November 17,
1993, to July 31, 1995, for the Nebraska Municipal Fund was 4.71%, calculated as
follows:
TR = (ERV - INAV) / INAV
Where:
TR = Total return = 4.71%
ERV = ending redeemable value on July 31, 1995, at $10.95/share of one
share purchased at net asset value on November 17, 1993,
plus reinvested dividends = $1,203.12
INAV = Initial net asset value of one share purchased on November 17,
1993, at 11.49/share = $1,149
CURRENT YIELD
The current yield for the one-month period ending July 31, 1995, was 5.30%,
calculated as follows:
CY = 2[(a-b + 1)6 -1] / cd
Where:
a = Dividends and interest earned during the one-month period ending July 31,
1995
b = Expenses accrued for the one-month period ending July 31, 1995
c = Average daily number of shares outstanding during the one-month period July
31, 1995, that were entitled to receive dividends
d = The maximum offering price per share on July 31, 1995
TAX EQUIVALENT YIELD
The tax equivalent yield for the one-month period ending July 31, 1995, was
9.38%, calculated as follows:
TEY = CY / (1-SITR)
Where:
TEY = Tax equivalent yield = 9.38%
CY = Current yield = 5.30%
SITR = Stated Income tax rate = 43.50%
DISTRIBUTION RETURN
The distribution return for the one-month period ending July 31, 1995, was
5.17%.
DR = [(IPS/31) (365)] / POP
Where:
DR = Distribution return = 5.17%
IPS = Income per share = .05026
POP = Public offering price per share = 11.44
