<PAGE>
Dear Shareholder:
We are pleased to submit the annual report for The Kansas Municipal Fund.
Included with this report is a list of portfolio holdings, along with the
audited financial statements for the fiscal year ended July 31, 1996.
Management Discussion and Analysis:
Due to moderate economic growth and low inflation, the bond market advanced
through the second half of 1995 and into January of 1996. Municipal bond prices
then declined in the February-March-April time frame. Federal Reserve monetary
policy became less accommodative in response to the growth picture in the
American economy.
The Kansas Municipal Fund turned in steady performance during the past 12
months. The net asset value per share was $12.07 at the beginning of the period
and increased to $12.14 by the end of the reporting period on July 31, 1996.
Portfolio manager, Alex Meitzner continues to invest primarily in high-grade
Kansas tax-exempt bonds.
Economic Outlook and Municipal Bonds:
U.S. economic growth has been slowed by Federal Reserve action and it is our
opinion that inflation will remain under control. This stable environment
should bode well for investing in tax-exempt bonds.
We continue to be pleased with the performance of the Fund and would like to
take this opportunity to thank you for your support and look forward to serving
the shareholders of The Kansas Municipal Fund.
Sincerely,
/s/ Robert E. Walstad
---------------------
Robert E. Walstad
President
<PAGE>
SCHEDULE OF INVESTMENTS July 31, 1996
<TABLE>
<CAPTION>
NAME OF ISSUER RATINGS
(UNAUDITED)
Percentages represent the market value --------------------
of each investment category to total STD. & COUPON PRINCIPAL
net assets MOODY'S POOR'S RATE MATURITY AMOUNT MARKET VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
KANSAS MUNICIPAL BONDS (96.7%)
GENERAL OBLIGATION (4.6%)
Johnson Co., KS Int. Imp. & Rev. 92A Aa AA 6.125% 09/01/12 $2,410,000 $ 2,490,880
Leawood, KS G.O. 96A Aa1 NR 5.000 09/01/15 500,000 473,435
Park City, KS G.O. Ref. & Sewer 93 NR NR 5.500 12/01/13 275,000 266,414
Sedgwick Co., KS G.O. 93A Aa-1 AA 5.200 08/01/13 500,000 478,770
Shawnee, KS G.O. Int. Imp. 92B A-1 NR 5.800 12/01/05 485,000 515,836
Shawnee, KS G.O. Int. Imp. 92B A-1 NR 5.850 12/01/06 235,000 248,059
Topeka, KS G.O. Aa NR 5.650 08/15/11 500,000 504,390
Wyandotte Co., KS USD #203 (Piper) G.O. NR NR 6.600 09/01/13 1,000,000 1,054,240
Ref. 92 -------------
$ 6,032,024
-------------
HOUSING (14.4%)
Ford Co., KS Single Family Mtg. Rev. A-1 NR 7.900% 08/01/10 $ 965,000 $ 1,004,044
Ref. 92A
Hutchinson, KS Single Family Mtg. Rev. A-1 NR 6.500 12/01/09 840,000 848,350
Ref. 92
Hutchinson, KS Single Family Mtg. Rev. A-1 NR 8.875 12/01/12 3,120,000 3,243,115
Ref. 92
Johnson Co., KS Single Family Mtg. Rev. A-1 NR 7.100 05/01/12 1,450,000 1,492,470
94
Kansas City, KS GNMA Coll. Mtg. Rev. NR AAA 7.350 12/01/23 775,000 787,036
SFMR 91
Kansas City, KS GNMA Coll. Mtg. Rev. Aaa NR 5.900 11/01/27 2,105,000 2,054,901
Hsg.
KS Dev. Finance Auth. (Martin Creek) Aa NR 6.600 08/01/34 1,900,000 1,868,821
Hsg. Dev. Rev. 93E
KS Dev. Finance Auth. (Martin Creek) Aa NR 6.500 08/01/24 750,000 733,920
Hsg. Dev. Rev. 93E
Labette Co., KS Single Family Mtg Rev. A-1 NR 8.400 12/01/11 660,000 689,304
Ref. 93A
Lawrence, KS (Brandon Woods) NR AAA 6.625 04/01/12 2,000,000 2,016,880
Multi-Family Hsg. Dev. Rev. Ref. 93
Reno Co., KS Single Family Mtg. Rev. Aaa NR 8.700 09/01/11 405,000 423,513
Ref. 91B
Saline Co., KS Single Family Mtg. Rev. A-1 NR 9.500 10/01/11 195,000 203,071
Ref. 91A
Seward Co., KS Single Family Mtg. Rev. NR AA- 7.375 12/01/09 480,000 483,907
79A
Seward Co., KS Single Family Mtg. Rev. A-1 NR 8.000 05/01/11 590,000 616,745
Ref. 91B
Wichita, KS Multi-Family Hsg. Rev. NR A 5.850 11/01/25 1,000,000 982,770
Wichita, KS Single Family Mtg. Rev. A-1 NR 7.100 09/01/09 1,605,000 1,655,381
Ref. 93B -------------
$ 19,104,228
-------------
INSURED/GUARANTEED (48.6%)
Allen Co., KS USD #258 (Humboldt) G.O. Aaa AAA 7.000% 09/01/09 $ 630,000 $ 714,489
School Bldg. 95B AMBAC Insured
Burlington, KS Gas and Electric PCR Aaa AAA 7.000 06/01/31 4,000,000 4,256,680
MBIA Insured
Butler Co., KS USD #402 (Augusta) G.O. Aaa AAA 5.250 10/01/12 2,500,000 2,429,250
Ref. 94 CGIC Insured
Butler Co., KS USD #394 (Rose Hill) Aaa AAA 5.375 09/01/13 1,935,000 1,896,919
G.O. Ref. & 93 AMBAC Insured
Garnett, KS Utility Ref. & Imp. Rev. Aaa AAA 6.000 10/01/17 500,000 510,510
MBIA Insured
Johnson Co., KS USD #232 (DeSoto) G.O. Aaa AAA 6.000 03/01/12 500,000 516,995
School Bldg 92 CGIC Insured
Johnson Co., KS (Olathe) USD #233 G.O. Aaa AAA 5.625 09/01/14 650,000 646,366
94 AMBAC Insured
Kansas City, KS Comm. College Rev. 96 Aaa AAA 5.000 05/15/16 1,150,000 1,064,371
MBIA Insured
Kansas City, KS (Rainbow Towers) NR AAA 6.600 07/01/14 250,000 251,130
Multi-Family Hsg. 94 FHA Gtd.
Kansas City/Leavenworth Co./Lenexa, KS NR AAA 8.400 05/01/15 220,000 228,697
GNMA Coll. Mtg. Rev. 88A GNMA Gtd.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Kansas City/Leavenworth Co./Lenexa, KS NR AAA 7.850 11/01/10 635,000 665,785
GNMA Coll. Mtg. Rev. 88B GNMA Gtd.
Kansas City/Leavenworth Co./Lenexa, KS NR AAA 8.000 11/01/20 170,000 178,770
GNMA Coll. Mtg. Rev. 88C GNMA Gtd.
KS Dev. Finance Auth. (Sec. 8 Asstd. Aaa AAA 6.000 07/01/12 200,000 200,304
Proj.) Hsg. Dev. Rev. Ref. 93A MBIA
Insured
Kansas City, KS Utility System Ref. & Aaa AAA 6.300 09/01/16 2,000,000 2,114,500
Imp. 92 AMBAC Insured
Kansas City, KS Utility System System Aaa AAA 6.375 09/01/23 8,750,000 9,136,837
Ref. & Imp. 94 FGIC Insured
KS Dev. Fin. Auth. (Sect. 8) Hsg. Dev. Aaa AAA 6.300 07/01/12 285,000 284,005
Rev. Ref. 92A MBIA Insured
KS Dev. Fin. Auth. (Sect. 8) Hsg. Dev. Aaa AAA 6.400 01/01/24 770,000 755,462
Rev. Ref. 92A MBIA Insured
KS Dev. Fin. Auth. (Brd. of Regents) Aaa AAA 5.875 06/01/21 750,000 745,718
AMBAC Insured
KS Dev. Fin. Auth. (El Dorado/ Larned) Aaa AAA 6.000 02/01/12 2,000,000 2,077,380
Ref. Rev. 92L MBIA Insured
KS Dev. Fin. Auth. (Stormont Vail) Aaa AAA 5.800 11/15/21 680,000 667,298
Hlth. Care Rev. 96G MBIA Insured
KS Turnpike Authority Turnpike Rev. 93 Aaa AAA 5.400 09/01/09 260,000 261,092
AMBAC Insured
KS Turnpike Authority Turnpike Rev. 93 Aaa AAA 5.250 09/01/13 1,020,000 988,166
AMBAC Insured
KS Turnpike Authority Turnpike Rev. 93 Aaa AAA 5.250 09/01/17 950,000 906,547
AMBAC Insured
Leavenworth Co., KS (Lansing) USD #469 Aaa AAA 5.750 09/01/14 875,000 871,605
G.O. 95 AMBAC Insured
Leavenworth Co., KS (Lansing) USD #469 Aaa AAA 5.750 09/01/15 930,000 923,462
G.O. 95 CGIC Insured
Lenexa, KS (Barrington Park) Aaa AAA 6.050 02/01/06 350,000 356,573
Multi-Family Hsg. Rev. 93A ASSET GUAR.
Insured
Lenexa, KS (Barrington Park) Aaa AAA 6.450 02/01/18 2,500,000 2,476,675
Multi-Family Hsg. Rev. 93A ASSET GUAR.
Insured
McPherson Co., KS (McPherson) USD #418 Aaa AAA 5.750 09/01/13 350,000 354,386
G.O. 94 CGIC Insured
Miami Co., KS Water Dist #2 Ref. Rev. Aaa AA 6.100 06/01/06 230,000 236,507
93 ASSET GUAR Insured
Miami Co., KS Water Dist #2 Ref. Rev. Aaa AA 6.100 12/01/06 255,000 263,086
93 ASSET GUAR. Insured
Miami Co., KS Water Dist #2 Ref. Rev. Aaa AA 6.150 06/01/07 245,000 252,076
93 ASSET GUAR. Insured
Olathe, KS Health Care Ref. AMBAC Aaa AAA 6.000 05/01/19 900,000 885,357
Insured
Olathe, KS Health Care Ref. AMBAC Aaa AAA 6.000 09/01/11 1,000,000 1,018,290
Insured
Olathe, KS Health Care Ref. AMBAC Aaa AAA 5.875 09/01/16 2,000,000 2,009,840
Insured
Olathe, KS (Medical Center) Hlth. Care Aaa AAA 5.500 09/01/18 730,000 706,114
96 AMBAC Insured
Olathe, KS (Medical Center) Hlth. Care Aaa AAA 5.500 09/01/24 740,000 707,248
96 AMBAC Insured
Olathe/Labette Co., KS GNMA Coll. Mtg. Aaa AAA 8.000 11/01/20 220,000 227,599
Rev. MBIA Insured
Olathe/Labette Co., KS GNMA Coll. Mtg. NR AAA 7.750 09/01/22 170,000 174,474
Rev. 90A GNMA Gtd.
Pratt, KS Electric Utility Sys. Ref. & Aaa AAA 6.600 11/01/07 1,000,000 1,099,720
Imp. Rev. 92 AMBAC Insured
Salina, KS (Asbury-Saline Regl. Med. Aaa AAA 5.300 10/01/13 750,000 722,243
Ctr.) Rev. Ref. 93 AMBAC Insured
Salina, KS Comb. Water & Sewage Sys. Aaa AAA 6.250 10/01/12 500,000 521,955
Imp. Rev. 92 MBIA Insured
Salina, KS Comb. Water & Sewage Sys. Aaa AAA 5.250 09/01/12 1,250,000 1,207,725
Ref. Rev. 94 MBIA Insured
Sedgwick/Shawnee Cos., KS Single Family Aaa NR 7.750 11/01/24 540,000 552,733
Mtg. Ref. Rev. 94C-1 GNMA Gtd.
Sedgwick/Shawnee Cos., KS Single Family Aaa NR 8.050 05/01/24 375,000 386,321
Mtg. 94A-II GNMA Gtd.
Sedgwick/Shawnee Cos., KS Single Family Aaa NR 7.800 11/01/24 460,000 473,519
Mtg. GNMA Gtd.
Sedgwick/Shawnee Cos., KS GNMA Coll. NR AAA 8.250 11/01/20 380,000 393,258
Mtg. Rev. 88E GNMA Gtd.
Sedgwick/Shawnee Cos., KS Coll. GNMS NR AAA 7.875 04/01/11 405,000 421,232
Mtg. Ln 88D GNMA Gtd.
Sedgwick/Shawnee Cos., KS GNMA Coll. Aaa AAA 7.875 12/01/21 300,000 304,713
Mtg. Rev. 89A MBIA Gtd.
Sedgwick/Shawnee Cos., KS Coll. GNMA Aaa NR 7.000 12/01/98 165,000 164,475
Mtg. Ln 91C GNMA Gtd.
Sedgwick Co., KS USD #260 (Derby) G.O. Aaa AAA 6.000 10/01/10 500,000 524,825
92 AMBAC Insured
Sedgwick Co., KS (Maize) USD #266 G.O. Aaa AAA 5.500 09/01/10 465,000 470,199
93 FGIC Insured
Sedgwick Co., KS (Maize) USD #266 G.O. Aaa AAA 5.250 09/01/13 2,805,000 2,729,545
93 FGIC Insured
Seward Co., KS G.O. 92B AMBAC Insured Aaa AAA 6.000 08/15/13 750,000 774,952
Shawnee Co., KS (Meninger) Health Care Aaa AAA 5.000 08/15/16 2,000,000 1,831,460
Rev. CGIC Insured
Shawnee Co., KS (Auburn-Washburn) USD Aaa AAA 6.600 09/01/09 500,000 544,240
#437 G.O. FGIC Insured
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Shawnee Co., KS (Auburn-Washburn) G.O. Aaa AAA 5.250 09/01/11 250,000 246,010
AMBAC Insured
Shawnee Co., KS (Auburn-Washburn) G.O. Aaa AAA 5.250 09/01/12 350,000 341,793
AMBAC Insured
Shawnee Co., KS (Auburn-Washburn) G.O. Aaa AAA 5.250 09/01/13 500,000 486,550
AMBAC Insured
Sumner Co., KS USD #357 (Belle Plaine) Aaa AAA 5.550 09/01/13 625,000 618,556
G.O. Ref. Imp. 93 AMBAC Insured
Wellington, KS Elect. Wtrwks. & Sew. Aaa AAA 6.250 05/01/12 1,250,000 1,318,175
Util. Sys. Rev. 92 AMBAC Insured
Wichita, KS (St. Francis Regl. Medl. Aaa AAA 6.250 10/01/10 250,000 268,255
Ctr.) Facs. Imp. 92B-3 MBIA Insured
Wichita, KS (St. Francis Regl. Medl. Aaa AAA 6.250 10/01/10 1,000,000 1,073,020
Ctr.) Facs. Ref. 92B-3 MBIA Insured
Wichita, KS Public Bldg. Comm. Rev. WSU Aaa AAA 5.750 02/01/17 350,000 347,291
Ser. G-1 AMBAC Insured
Wichita, KS Water & Sewer Utility Ref. Aaa AAA 6.000 10/01/12 1,000,000 1,028,540
& Imp. 93B FGIC Insured
Wichita, KS Multi-Family Hsg. Rev. Ref. Aaa NR 6.125 08/20/28 1,900,000 1,890,652
93-2A GNMA Gtd.
Wichita, KS Airport Auth. Facilities NR AAA 7.000 03/01/05 440,000 445,918
Ref. Rev. 92 ASSET GUAR. Insured
Wyandotte Co., KS G.O. Ref. & Imp. 89 Aaa AAA 7.000 09/01/05 220,000 231,506
FGIC Insured -------------
$ 64,379,944
-------------
LEISURE & RECREATION (0.6%)
Blue Valley, KS Recreation Commission NR NR 6.600% 04/01/07 $ 245,000 $ 263,821
COP's 93
Johnson Co., KS Park & Rec. Rev. Ref. 91 NR NR 7.200 01/01/09 500,000 535,225
-------------
$ 799,046
-------------
MEDICAL CARE (9.9%)
Kansas City, KS Hospital Rev. NR A- 8.100% 12/01/04 $ 619,000 $ 626,088
(Prov.-St. Margaret) Hlth. Center 92
Kansas City, KS (St. Margaret Hlth. Aa NR 5.900 08/01/05 300,000 316,038
Ctr.) Hosp. Rev. 92
Lawrence, KS (Memorial Hosp.) Hosp. A NR 6.000 07/01/09 2,000,000 2,043,920
Rev. 94
Lawrence, KS (Memorial Hosp.) Hosp. A NR 6.200 07/01/14 1,200,000 1,219,968
Rev. 94
Lawrence, KS (Memorial Hosp.) Rev. 94 A NR 6.200 07/01/19 1,725,000 1,729,589
Merriam, KS (Shawnee Mission Medical NR A- 7.250 09/01/21 1,000,000 1,061,120
Ctr.) Rev. 91B
Wichita, KS (St. Francis Hosp. & Sch.) NR AAA 6.750 10/01/07 595,000 608,292
Hosp. Rev. 7A ESCROWED TM
Wichita KS (CSJ Hlth. Sys.) Rev. 91X NR A- 7.000 11/15/08 640,000 681,536
Wichita KS (CSJ Hlth. Sys.) Rev. 85XXV NR A- 7.200 10/01/15 2,225,000 2,353,294
Wichita KS (CSJ Hlth. Sys.) Rev. 91X NR A- 7.000 11/15/18 2,350,000 2,461,766
-------------
$ 13,101,611
-------------
POLLUTION CONTROL (0.4%)
KS Dev. Fin. Water Poll. Control Rev. Aa AA+ 6.000% 11/01/14 $ 500,000 $ 508,700
Fd. Rev. 93-2 -------------
$ 508,700
-------------
REAL ESTATE (2.2%)
Wichita, KS (Cessna Citation Svc. Ctr.) NR AA+ 7.250% 05/15/30 $ 100,000 $ 99,112
Arpt. Rev. 90
Hays, KS Sales Tax Rev. 920 NR NR 6.875 09/01/12 500,000 518,970
Hiawatha, KS (Wal Mart Stores) NR AA 6.750 01/01/06 650,000 691,444
Industrial Rev. Ref. 91
KS Dev. Fin. Auth. (KS Hwy. Patrol NR NR 6.300 12/01/05 450,000 479,673
Training Fac.) Rev. 92T
Wichita Public Bldg. Commission Real A A+ 5.500 08/01/14 1,215,000 1,182,523
Estate Rev. -------------
$ 2,971,722
-------------
TRANSPORTATION (3.9%)
KS Dept. of Transportation Hgwy. Rev. Aa AA 6.000% 09/01/09 $ 150,000 $ 157,577
92A
KS Dept. of Transportation Hgwy. Rev. Aa AA 6.000 09/01/12 2,200,000 2,285,096
92A
KS Dept. of Transportation Hgwy. Rev. 93 Aa AA 5.375 03/01/13 1,740,000 1,701,076
KS Dept. of Transportation Hgwy. Rev. 93 Aa AA 5.375 03/01/12 1,000,000 985,110
-------------
$ 5,128,859
-------------
SCHOOL (3.8%)
Cowley Co., KS Community College COP's A NR 7.000% 03/01/12 $ 900,000 $ 950,121
92
Douglas Co., KS USD 497 (Lawrence) G.O. Aa NR 6.000 09/01/15 1,000,000 1,033,280
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Gray Co., KS (Cimmarron) USD #102 G.O. NR NR 6.800 09/01/15 500,000 545,000
Johnson Co., KS (Shawnee Mission) USD Aa-1 AA 5.300 10/01/14 900,000 865,566
#512 G.O. 95
KS Dev. Fin. Auth. (KS Brd. Rgts.- NR NR 6.000 04/01/08 500,000 513,380
Lewis Field Stadium) 93C
KS Dev. Fin. Auth. (KS Brd. Rgts.) A A+ 6.350 03/01/09 300,000 312,957
Energy Cons. Rev. 92G
Lyon Co., KS USD #253 G.O. Ref. 93 A NR 5.600 10/01/10 800,000 804,584
-------------
$ 5,024,888
-------------
UTILITIES (8.2%)
Gardner, KS Electric Utility Rev. NR NR 7.000% 11/01/09 $1,000,000 $ 1,089,040
Park City, KS Sewer System Rev. 93 NR NR 5.500 12/01/09 1,000,000 986,290
Atchison, KS Sewer System Rev. 92A NR NR 6.700 09/01/12 115,000 121,265
Atchison, KS Sewer System Rev. 92A NR NR 6.700 09/01/13 125,000 131,867
Johnson Co., KS Water Dist. #1 Water Aa AA+ 6.500 12/01/13 500,000 537,505
Rev. Ref. 91
Johnson Co., KS Water Dist. #1 Rev. 91 Aa AA+ 6.250 12/01/11 700,000 741,755
Johnson Co., KS Water Dist. #1 Rev. Aa AA+ 5.300 12/01/12 4,465,000 4,314,663
Ref. 93
Johnson Co., KS Water Dist. #1 Rev. Aa AA+ 5.250 12/01/15 1,500,000 1,420,830
Ref. 93
Johnson Co., KS Water Dist. #1 Water Aa AA+ 5.750 12/01/19 500,000 491,751
Rev. 94
Sabetha, KS G.O. Ref. & Water 93B NR NR 5.500 12/01/13 400,000 387,512
Scott City, KS G.O. Water System Ref. NR NR 6.100 09/01/14 625,000 642,656
93A -------------
$ 10,865,134
-------------
TOTAL KANSAS MUNICIPAL BONDS (COST: $126,208,814) $127,916,156
-------------
SHORT TERM SECURITIES (1.5%)
Federated Intermediate Muni Trust $ 1,971,563
Federated Tax Free Trust 52,103
-------------
TOTAL SHORT TERM SECURITIES (COST: $2,010,937) $ 2,023,666
-------------
TOTAL INVESTMENTS IN SECURITIES (COST: $128,219,751) $129,939,822
===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
FINANCIAL STATEMENTS July 31, 1996
STATEMENT OF ASSETS AND LIABILITIES July 31, 1996
- --------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investment in securities, at value (cost: $128,219,751) $ 129,939,822
Cash 589,363
Accrued interest receivable 2,521,623
Receivable for fund shares sold 38,283
Accrued dividends receivable 12,110
--------------
Total Assets $ 133,101,201
--------------
LIABILITIES
Dividends payable $ 603,569
Accrued expenses 113,068
Payable for fund shares redeemed 35,613
--------------
Total Liabilities $ 752,250
--------------
NET ASSETS $ 132,348,951
==============
Net asset value per share, 10,905,053 shares
outstanding $ 12.14
==============
STATEMENT OF OPERATIONS for the year ended July 31, 1996
- --------------------------------------------------------
INVESTMENT INCOME
Interest $ 7,972,486
Dividend 34,993
--------------
Total Investment Income $ 8,007,479
--------------
EXPENSES
Investment advisory fees $ 666,479
Distribution fees (12b-1) 333,240
Custodian fees 56,597
Transfer agent fees 162,119
Accounting service fees 93,203
Audit and legal fees 7,655
Insurance 3,722
Directors fees 1,480
Printing and postage 5,548
Trustees' fees 6,968
License, fees, and registrations 1,474
--------------
Total Expenses $ 1,338,485
Less expenses waived or absorbed
by the Fund's manager 212,056
--------------
Total Net Expenses $ 1,126,429
--------------
NET INVESTMENT INCOME $ 6,881,050
--------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FUTURES
<S> <C>
Net realized gain (loss) from: $ 349,751
Investments 555,372
Futures
Net change in unrealized appreciation (depreciation) of
investments (215,174)
---------
Net Realized And Unrealized Gain (Loss) On Investments $ 689,949
---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $7,570,999
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
FINANCIAL STATEMENTS July 31, 1996
STATEMENT OF CHANGES IN NET ASSETS
For the years ended July 31, 1996 and July 31, 1995
- ----------------------------------------------------
<TABLE>
<CAPTION>
For The Year Ended For The Year Ended
July 31, 1996 July 31, 1995
------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 6,881,050 $ 6,929,239
Net realized gain (loss) on investment and futures transactions 905,123 (2,051,318)
Net change in unrealized appreciation (depreciation) on investments (215,174) 2,658,906
-----------------------------------
Net Increase (Decrease) in Net Assets Resulting From Operations $ 7,570,999 $ 7,536,827
-----------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income $ (6,881,050) $ (6,929,239)
Distributions from net realized gain on investment transactions 0 0
====================================
Total Dividends and Distributions $ (6,881,050) $ (6,929,239)
====================================
CAPITAL SHARE TRANSACTIONS
Proceeds from sale of shares $ 11,224,770 $ 13,828,413
Proceeds from reinvested dividends 4,686,205 4,800,996
Cost of shares redeemed (14,343,258) (16,482,540)
-------------------------------------
Net Increase (Decrease) in Net Assets Resulting $ 1,567,717 $ 2,146,869
From Capital Share Transactions -------------------------------------
TOTAL INCREASE IN NET ASSETS $ 2,257,666 $ 2,754,457
NET ASSETS, BEGINNING OF PERIOD 130,091,285 $127,336,828
-------------------------------------
NET ASSETS, END OF PERIOD $132,348,951 $130,091,285
=====================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS July 31, 1996
NOTE 1. ORGANIZATION
BUSINESS OPERATIONS - The Kansas 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 15, 1990, other than
matters relating to organization and registration. On November 15, 1990, the
Fund commenced its Public Offering of capital shares to the public. The
investment objective of the Fund is to provide its shareholders with as high a
level of current income exempt from both federal and Kansas income tax as is
consistent with preservation of capital. The Fund will seek to achieve this
objective by investing primarily in a portfolio of Kansas Municipal securities.
Shares of the Fund are offered at net asset value plus a maximum sales charge of
4.25% of the offering price.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT SECURITY VALUATION - Investments in securities traded on national
securities exchanges are valued at the last reported sales price at the close of
each business day. Securities for which market quotations are not readily
available are valued at fair value as determined in good faith by the portfolio
management team. The Fund follows industry practice and records security
transactions on the trade date.
The Fund concentrates its investments in a single state. This concentration may
result in the Fund investing a relatively high percentage of its assets in a
limited number of issuers.
FEDERAL AND STATE INCOME TAXES - The Fund's policy is to comply with the
requirements of the Internal Revenue Code that are applicable to regulated
investment companies, and to distribute all of its net investment income and any
net realized gain on investments, to its shareholders. Therefore, no provision
for income taxes is required. The Fund has available at July 31, 1996, a net
capital loss carryforward totaling $2,058,350, which may be used to offset
capital gains realized during subsequent years through July 31, 2004.
DISTRIBUTIONS TO SHAREHOLDERS - Dividends from net investment income, declared
daily and payable monthly, are reinvested in additional shares of the Fund at
net asset value or payable in cash. Capital gains, when available, are
distributed at least annually.
INVESTMENT INCOME - Dividend income is recognized on the ex-dividend date and
interest income is recognized daily on an accrual basis. Premiums and discounts
on securities purchased are amortized using the effective interest method over
the life of the respective securities, unless callable, in which case they are
amortized to the earliest call date.
FUTURES CONTRACTS AND OPTIONS - The Fund may purchase and sell financial futures
and option contracts to hedge against changes in the values of tax-exempt
municipal securities the Fund owns or expects to purchase.
A futures contract is an agreement between two parties to buy or sell units of a
particular index or a certain amount of U.S. Government or municipal securities
at a set price on a future date. Upon entering into a futures contract, the
Fund is required to deposit with a broker an amount of cash or securities equal
to the minimum "initial margin" requirement of the futures exchange on which the
contract is traded. Subsequent payments ("variation margin") are made or
received by the Fund, dependent on the fluctuations in the value of the
underlying index. Daily fluctuations in value are recorded for financial
reporting purposes as unrealized gains or losses by the Fund. When entering
into a closing transaction, the Fund will realize, for book purposes, a gain or
loss equal to the difference between the value of the futures contracts sold and
the futures contracts to buy.
Daily fluctuations in the value of options are recorded for financial reporting
purposes as unrealized gains or losses by the Fund. Upon sale or expiration of
the option, the Fund will realize, for book purposes, a gain or loss equal to
the difference between the cost of the option and the value on sale or
expiration date.
Certain risks may arise upon entering into futures contracts and options. These
risks may include changes in the value of the futures contracts or options that
may not directly correlate with changes in the value of the underlying
securities.
<PAGE>
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Note 3. CAPITAL SHARE TRANSACTIONS
As of July 31, 1996, there were unlimited shares of no par authorized;
10,905,053 and 10,777,009 shares were outstanding at July 31, 1996 and July 31,
1995, respectively.
Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
Shares Amount
------- ------
For the For the For the For the
year ended year ended year ended year ended
July 31, 1996 July 31, 1995 July 31, 1996 July 31, 1995
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 918,984 1,168,053 $ 11,224,770 $ 13,828,413
Shares issued on reinvestment of 383,410 405,903 4,686,205 4,800,996
dividends
Shares redeemed (1,174,350) (1,407,824) (14,343,258) (16,482,540)
---------------------------------------------------------------
Net increase 128,044 166,132 $ 1,567,717 $ 2,146,869
===============================================================
</TABLE>
NOTE 4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Ranson Capital Corporation, the Fund's investment adviser and underwriter, and
ND Resources, Inc., the Fund's transfer and accounting services agent, are
subsidiaries of ND Holdings, Inc., the Fund's sponsor.
The Fund has engaged Ranson Capital Corporation, to provide investment advisory
and management services to the Fund. The Investment Advisory Agreement provides
for fees to be computed at an annual rate of 0.50% of the Fund's average daily
net assets. The Fund has recognized $666,479 of investment advisory fees for the
year ended July 31, 1996. The Fund has a payable to Ranson Capital Corporation
of $58,692 at July 31, 1996 for investment advisory fees. Certain officers and
trustees of the Fund are also officers and directors of the investment adviser.
The Fund has adopted a distribution plan (the Plan) pursuant to Rule 12b-1 under
the 1940 Act, whereby the Fund shall pay at the annual rate of 0.25% of the
average daily net assets of the Fund to Ranson Capital Corporation (Capital),
its principal underwriter, for expenses incurred in the distribution of the
Fund's shares. Pursuant to the Plan, Capital is entitled to reimbursement each
month for its actual expenses incurred in the distribution and promotion of the
Fund's shares, including the printing of prospectuses and reports used for sales
purposes, expenses of preparation and printing of sales literature and other
such distribution related expenses, including any distribution or service fees
paid to securities dealers who have executed a dealer sales agreement with
Capital. Capital will be reimbursed at a rate not to exceed 0.25% of the average
daily net assets of the Fund for the prior month. The Fund has recognized
$333,240 of 12b-1 fee expenses for the year ended July 31, 1996. The Fund has a
payable to Ranson Capital Corporation of $29,346 at July 31, 1996 for 12b-1
fees.
The Fund also entered into an Administrative and Accounting Services Agreement
whereby the Fund incurs a fee to the Manager for acting as the Fund's
administrative and accounting services agent. This monthly fee was equal to the
sum of a fixed fee ranging from $1,500-$2,500, depending on the level of average
daily net assets (ADNA), and a variable fee equal to 0.15% of the annualized
ADNA for the Funds first $20 million and at a lower rate on the annualized ADNA
in excess of $20 million.
On January 5, 1996, the Fund entered into a new Accounting Services Agreement
whereby the Fund incurs a fee to ND Resources, Inc. for acting as the Fund's
accounting services agent. This monthly fee is equal to the sum of a fixed fee
of $2,000, and a variable fee equal to 0.05% of the annualized ADNA for the
Fund's first $50 million, and at a lower rate on the annualized ADNA in excess
of $50 million. For the year ended July 31, 1996, the fee from both agreements
totaled $93,203.
<PAGE>
On May 9, 1996 the Fund entered into a new transfer agency agreement whereby the
Fund incurs a fee to ND Resources, Inc., (the transfer agent), for providing
shareholder services for a monthly fee equal to an annual rate of 0.16% of the
Fund's first $10 million of net assets, 0.13% of the Fund's net assets on the
next $15 million, 0.11% of the Fund's net assets on the next $15 million, 0.10%
of the Fund's net assets on the next $10 million, and 0.09% of the Fund's net
assets in excess of $50 million. The Fund has recognized $41,957 of transfer
agency fees under this agreement for the year ended July 31, 1996.
Note 5. INVESTMENT SECURITY TRANSACTIONS
Cost of purchases and proceeds from sale of investment securities (excluding
short-term securities) aggregated $29,868,715 and $26,354,732 respectively, for
the year ended July 31, 1996.
Note 6. INVESTMENT IN SECURITIES
At July 31, 1996, the aggregate cost of securities for federal income tax
purposes was $128,219,751, and the net unrealized appreciation of investments
based on the cost was $1,720,071, which is comprised of $2,821,053 aggregate
gross unrealized appreciation and $1,100,982 aggregate gross unrealized
depreciation.
<PAGE>
FINANCIAL HIGHLIGHTS Selected per share data and ratios for the period indicated
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year For the Year For the Year For the Year For the Year
Ended July 31, Ended July 31, Ended July 31, Ended July 31, Ended July 31,
1996 1995 1994 1993 1992
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 12.07 $ 12.00 $ 12.67 $ 12.22 $ 11.54
-------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income $ .69 $ .65 $ .66 $ .69 $ .72
Net realized and unrealized gain
(loss) on investments .07 .07 (.53) .50 .69
-------------------------------------------------------------------------------------------
Total From Investment Operations $ .76 $ .72 $ .13 $ 1.19 $ 1.41
-------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net
investment income $ (.69) $ (.65) $ (.66) $ (.69) $ (.72)
Distributions from
net capital gains .00 .00 (.14) (.05) (.01)
-------------------------------------------------------------------------------------------
Total Distributions $ (.69) $ (.65) $ (.80) $ (.74) $ (.73)
-------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.14 $ 12.07 $ 12.00 $ 12.67 $ 12.22
===========================================================================================
TOTAL RETURN 5.90%(A) 6.23%(A) 0.91%(A) 10.08%(A) 13.31%(A)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (in thousands) $132,349 $130,091 $127,337 $100,207 $52,010
Ratio of expenses (after
expense assumption)
to average net assets 0.85%(B) 0.82%(B) 0.70%(B) 0.75%(B) 0.70%(B)
Ratio of net investment
income to average net assets 5.18% 5.46% 5.26% 5.53% 6.00%
Portfolio turnover rate 20.14% 57.00% 55.00% 62.00% 51.00%
</TABLE>
(A) Excludes maximum sales charge of 4.25%
(B) During the periods indicated above, ND Holdings, Inc. or Ranson Capital
Corporation assumed expenses of $212,056, $295,875, $419,129, $282,407, and
$231,617, respectively. If the expenses had not been assumed, the
annualized ratios of total expenses to average net assets would have been
1.01%, 1.06%, 1.06%, 1.13%, and 1.25%, respectively.
<PAGE>
GRAPH APPEARS HERE
Comparison of change in value of $10,000 investment in The Kansas Municipal Fund
and Lehman Bros. Municipal Bond Index (Unaudited)
<TABLE>
<CAPTION>
The Kansas Municipal The Kansas Municipal Lehman Bros
Fund w/o sales charge Fund w/ max sales charge Municipal Bond Index
---------------------------------------------------------------------
<S> <C> <C> <C>
11/15/1990 $10,000 $ 9,575 $10,000
1991 $10,524 $10,077 $10,723
1992 $11,855 $11,351 $12,198
1993 $13,050 $12,495 $13,276
1994 $13,168 $12,609 $13,525
1995 $13,988 $13,394 $14,592
1996 $14,814 $14,184 $15,553
</TABLE>
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and Board of Trustees of
The Kansas Municipal Fund
We have audited the accompanying statement of assets and liabilities of The
Kansas Municipal Fund, (the Fund), including the schedule of investments, as of
July 31, 1996, the related statement of operations, the statement of changes in
net assets, and the financial highlights for the year then ended. These
financial statements and financial highlights are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit. The statement
of changes in net assets for the year ended July 31, 1995, and the financial
highlights for each of the four years in the period ended July 31, 1996, were
audited by other auditors whose report dated September 11, 1995, expressed an
unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned as of July 31, 1996, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Kansas Municipal Fund, as of July 31, 1996, the results of its operations, the
changes in its net assets, and the financial highlights for the year then ended,
in conformity with generally accepted accounting principles.
BRADY, MARTZ & ASSOCIATES, P.C.
September 9, 1996
<PAGE>
Dear Shareholder:
We are pleased to submit the annual report for The Nebraska Municipal Fund.
Included with this report is a list of portfolio holdings, along with the
audited financial statements for the fiscal year ended July 31, 1996.
Management Discussion and Analysis:
Due to moderate economic growth and low inflation, the bond market advanced
through the second half of 1995 and into January of 1996. Municipal bond prices
then declined in the February-March-April time frame. Federal Reserve monetary
policy became less accommodative in response to the growth picture in the
American economy.
The Nebraska Municipal Fund turned in steady performance during the past 12
months. The net asset value per share was $10.95 at the beginning of the period
and increased to $11.00 by the end of the reporting period on July 31, 1996.
Portfolio manager, Alex Meitzner continues to invest primarily in high-grade
Nebraska tax-exempt bonds.
Economic Outlook and Municipal Bonds:
U.S. economic growth has been slowed by Federal Reserve action and it is our
opinion that inflation will remain under control. This stable environment
should bode well for investing in tax-exempt bonds.
We continue to be pleased with the performance of the Fund and would like to
take this opportunity to thank you for your support and look forward to serving
the shareholders of The Nebraska Municipal Fund.
Sincerely,
/s/ Robert E. Walstad
Robert E. Walstad
President
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS July 31, 1996
NAME OF ISSUER
RATINGS (UNAUDITED)
Percentages represent the market value -------------------
of each investment category to total STD. & COUPON PRINCIPAL MARKET
net assets MOODY'S POOR'S RATE MATURITY AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NEBRASKA MUNICIPAL BONDS (97.5%)
GENERAL OBLIGATION (12.4%)
Douglas Cty, NE (Law Enforcement Center) G.O. 95 Aa AA+ 5.750% 07/01/10 $ 275,000 $ 281,988
Lincoln, NE G.O. Storm Sewer & Drng 95 Aa AAA 5.500 06/01/14 200,000 198,150
Lincoln, NE G.O. Storm Sewer & Drng 95 Aa AAA 5.500 06/01/15 200,000 196,718
Lincoln, NE G.O. Purpose 95 Aa AAA 5.500 12/01/15 200,000 195,254
Lincoln/Lancaster Counties, NE Pub. Bldg. Comm. Rev. Aa AA+ 5.875 10/15/23 850,000 837,768
Omaha, NE Various Purpose 94 Aaa AAA 6.250 12/01/12 250,000 263,730
Omaha, NE Various Purpose 94 Aaa AAA 6.250 12/01/14 250,000 261,508
----------
$2,235,116
----------
FINANCIAL/BUSINESS SERVICES (6.3%)
NE Higher Education Loan Program 93-2A-6 A NR 6.450% 06/01/18 $ 400,000 $ 402,048
NE Higher Education Loan Program 93-2A-5B Aa NR 6.250 06/01/18 750,000 736,343
----------
$1,138,391
----------
HOUSING (10.8%)
NE Invt. Fin. Auth. (Muirfield Greens) Multi-Family Aa-1 NR 6.800% 12/01/15 $ 100,000 $ 100,272
NE Invt. Fin. Auth. Single Family Mtg. Rev. NR AAA 6.600 09/01/20 740,000 735,464
NE Invt. Fin. Auth. Single Family Hsg. Rev. NR AAA 6.500 09/01/18 400,000 390,932
NE Invt. Fin. Auth. Single Family Mtg. Rev. NR AAA 5.950 03/01/27 250,000 244,158
NE Invt. Fin. Auth. Multi-Family Housing Rev. NR AAA 6.200 06/01/28 500,000 477,940
----------
$1,948,766
----------
INSURED/GUARANTEED (29.2%)
Cass Cty, NE USD #1 G.O. Bonds FGIC Insured Aaa AAA 6.350% 12/01/19 $ 300,000 $ 309,612
Douglas Cty, NE Hosp. Dist. #2 Rev. MBIA Insured Aaa AAA 5.500 11/15/21 340,000 329,460
Douglas Cty, NE SD #17 G.O. MBIA Insured Aaa AAA 5.650 12/15/05 400,000 415,748
Gage Cty, NE SD #15 G.O. AMBAC Insured NR AAA 5.900 12/15/16 850,000 846,863
Lincoln, NE (Lincoln Gen. Hosp.) Rev. & Ref. 93A
CGIC Insured Aaa AAA 6.200 12/01/14 100,000 102,906
Lincoln, NE (General Hosp.) Rev. & Ref.
CGIC Insured Aaa AAA 6.200 12/01/14 50,000 51,453
NE Muni Energy Agcy Pwr. Sup Sys. Rev.
Ref. 92A AMBAC Insured Aaa AAA 6.000 04/01/17 500,000 508,270
Otoe Cty, NE SD #111 (Nebraska City)
Ref. 95 AMBAC Insured Aaa AAA 5.800 11/15/14 400,000 402,448
Buffalo Cty, NE (Srs. Char. Hlth. Care)
Hosp. Rev. 91 MBIA Insured Aaa AAA 6.375 05/15/04 250,000 268,590
Buffalo Cty, NE (Srs. Char. Hlth. Care)
Rev. 91 MBIA Insured Aaa AAA 6.625 05/15/09 300,000 323,235
Lancaster Cty, NE (Bryan Mem. Hosp.)
Auth. #1 Rev. 92 MBIA Insured Aaa AAA 6.600 06/01/12 100,000 107,403
Lancaster Cty, NE (Bryan Mem. Hosp.)
Auth. #1 Rev. 92 MBIA Insured Aaa AAA 6.700 06/01/22 250,000 265,687
NE Education Fin. Auth. (Creighton
Univ.) Rev. AMBAC Insured Aaa AAA 5.950 01/01/11 300,000 303,285
NE Education Fin. Auth. (Creighton
Univ.) Rev. 94 MBIA Insured Aaa AAA 5.700 11/01/04 450,000 462,083
Northeast NE Solid Waste Facility Rev. MBIA Insured Aaa AAA 5.900 05/15/15 600,000 589,938
----------
$5,286,981
----------
MEDICAL CARE (3.0%)
Scotts Bluff Cty, NE (Regl. West) Hosp. Auth. Rev. 92 A A 6.450% 12/15/04 $ 275,000 $ 292,342
Univ. of NE Facs. Corp. (U. of NE Med. Ctr.) Rev. Ref. 93 A-1 AA- 5.250 07/01/11 250,000 242,072
----------
$ 534,414
----------
REAL ESTATE (4.1%)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Omaha, NE Parking Facs Corp. (Omaha Park 4/5)
Les. Rev. 95 Aa-1 AAA 5.700% 09/15/15 $ 750,000 $ 740,385
-----------
$ 740,385
-----------
SCHOOL (8.0%)
Chadron St. College, NE Student Fees & Facs.
Rev. Ref. 94 NR NR 5.700% 07/01/11 $ 240,000 $ 232,606
Dawson Cty, NE (Lexington) SD #1 G.O. NR NR 5.350 12/15/11 125,000 121,367
Dawson Cty, NE (Lexington) SD #1 G.O. NR NR 5.400 12/15/12 135,000 130,864
Dawson Cty, NE (Lexington) SD #1 G.O. NR NR 5.450 12/15/13 115,000 111,248
Dawson Cty, NE (Lexington) SD #1 G.O. NR NR 5.450 12/15/14 140,000 135,282
Lancaster Cty, NE (Lincoln) SD #1 G.O. Aa AA 5.600 07/15/06 150,000 151,830
Douglas Cty, NE SD #1 (Omaha) G.O. Ref. 93B Aa AAA 5.000 12/15/11 200,000 190,410
Univ. of NE (Omaha Student Ctr.) Brd. Rgts. Rev. 93 A A+ 5.250 05/15/10 250,000 244,237
Washington Cty, NE (Blair) SD #1 G.O. NR A 5.900 07/15/15 135,000 135,486
-----------
$ 1,453,330
===========
UTILITIES (23.7%)
Hastings, NE Electric Rev. A A 6.300% 01/01/19 $ 370,000 $ 380,663
Hastings, NE Electric System Rev. Ref. 93 A A 5.200 01/01/13 100,000 93,875
Lincoln, NE Electric System Rev. Aa AA+ 5.750 09/01/16 750,000 744,435
NE Pub Pwr Dist Pwr Supply System Rev. 93 A-1 A+ 6.125 01/01/15 390,000 395,756
NE Pub Pwr Dist Pwr Supply System Rev. 93 A-1 A+ 5.750 01/01/20 750,000 730,890
Omaha, NE Pub Pwr Dist Elec. System Rev. Aa AA+ 5.700 02/01/17 250,000 246,580
Omaha, NE Pub Pwr Dist Elec. System Rev. 86A NR AA 6.000 02/01/15 330,000 326,545
Omaha, NE Pub Pwr Dist Elec. System Rev. 92B Aa AA 6.200 02/01/17 500,000 516,790
Grand Island, NE Sewer System Rev. 94 A NR 6.000 04/01/14 250,000 257,035
Kearney, NE Combined Utilities Rev. 94 A-1 NR 6.100 06/01/14 400,000 395,600
Lincoln, NE Water Rev. and Ref. 93 Aa AA+ 5.300 08/15/11 200,000 196,686
-----------
$ 4,284,855
-----------
TOTAL NEBRASKA MUNICIPAL BONDS (COST: $17,537,502) $17,622,238
SHORT TERM SECURITIES (6.1%)
Federated Tax-Free Trust (COST: $1,095,751) 1,095,751
-----------
TOTAL INVESTMENTS IN SECURITIES (COST: $18,633,253) $18,717,989
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
FINANCIAL STATEMENTS July 31, 1996
STATEMENT OF ASSETS AND LIABILITIES July 31, 1996
- ---------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investment in securities, at value (Cost: $18,633,253) $ 18,717,989
Cash 26,382
Accrued interest receivable 242,848
Accrued dividends receivable 2,979
Receivable for fund shares sold 20,498
Deferred organization costs 12,861
------------
Total Assets $ 19,023,557
------------
LIABILITIES
Dividends payable $ 81,161
Accrued expenses 18,713
Security purchases payable 846,725
------------
Total Liabilities $ 946,599
------------
NET ASSETS $ 18,076,958
============
Net asset value per share, 1,644,023 shares outstanding $ 11.00
============
STATEMENT OF OPERATIONS for the year ended July 31, 1996
- ---------------------------------------------------------
INVESTMENT INCOME
Interest $ 960,630
Dividends 8,088
------------
Total Investment Income $ 968,718
------------
EXPENSES
Investment advisory fees $ 84,492
Distribution fees (12b-1) 42,246
Custodian fees 10,784
Transfer agent fees 45,119
Accounting service fees 35,320
Audit and legal fees 2,870
Printing and postage 3,124
Insurance 435
Trustees' fees 1,210
License, fees, and registrations 2,039
Amortization of organization costs 5,527
------------
Total Expenses $ 233,166
Less expenses waived or absorbed
by the Fund's manager 129,053
------------
Total Net Expenses $ 104,113
------------
NET INVESTMENT INCOME $ 864,605
------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FUTURES
Net realized gain (loss) from:
Investment transactions $ (84,925)
Futures transactions 69,539
Net change in unrealized appreciation (depreciation) of 23,173
investments
Net Realized And Unrealized Gain (Loss) On
Investments And Futures $ 7,787
---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 872,392
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
FINANCIAL STATEMENTS July 31, 1996
STATEMENT OF CHANGES IN NET ASSETS
For the year ended July 31, 1996 and year ended July 31, 1995
- -------------------------------------------------------------
<TABLE>
<CAPTION>
For The Year For The Year
Ended July Ended July
31, 1996 31, 1995
---------------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
<S> <C> <C>
Net investment income $ 864,605 $ 631,226
Net realized gain (loss) on investment and futures transactions (15,386) (28,177)
Net change in unrealized appreciation (depreciation) on investments 23,173 300,387
---------------------------
Net Increase (Decrease) in Net Assets Resulting From Operations $ 872,392 $ 903,436
---------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income $ (864,605) $ (631,226)
Distributions from net realized gain on investment and futures transactions 0 0
---------------------------
Total Dividends and Distributions $ (864,605) $ (631,226)
---------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sale of shares $ 4,757,147 $ 6,756,929
Proceeds from reinvested dividends 543,019 382,395
Cost of shares redeemed (1,675,710) (1,137,925)
---------------------------
Net Increase (Decrease) in Net Assets Resulting
From Capital Share Transactions $ 3,624,456 $ 6,001,399
---------------------------
TOTAL INCREASE IN NET ASSETS $ 3,632,243 $ 6,273,609
NET ASSETS, BEGINNING OF PERIOD 14,444,715 8,171,106
---------------------------
NET ASSETS, END OF PERIOD $18,076,958 $14,444,715
===========================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS July 31, 1996
NOTE 1. ORGANIZATION
BUSINESS OPERATIONS - The Nebraska Municipal Fund (the "Fund") is an investment
portfolio of Ranson Managed Portfolios (the "Trust") registered under the
Investment Company Act of 1940, as amended, as a non-diversified, open-end
management investment company. The Trust may offer multiple portfolios;
currently three portfolios are offered. Ranson Managed Portfolios is an
unincorporated business trust organized under Massachusetts law on August 10,
1990. The Fund had no operations from that date to November 17, 1993, other than
matters relating to organization and registration. On November 17, 1993, the
Fund commenced its Public Offering of capital shares to the public. The
investment objective of the Fund is to provide its shareholders with as high a
level of current income exempt from both federal and Nebraska income taxes as is
consistent with preservation of capital. The Fund will seek to achieve this
objective by investing primarily in a portfolio of Nebraska Municipal
securities. Shares of the Fund are offered at net asset value plus a maximum
sales charge of 4.25% of the offering price.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT SECURITY VALUATION - Investments in securities traded on national
securities exchanges are valued at the last reported sales price at the close of
each business day. Securities for which market quotations are not readily
available are valued at fair value as determined in good faith by the portfolio
management team. The Fund follows industry practice and records security
transactions on the trade date.
The Fund concentrates its investments in a single state. This concentration may
result in the Fund investing a relatively high percentage of its assets in a
limited number of issuers.
DEFERRED ORGANIZATION COSTS - Costs incurred by the Fund in connection with its
organization are being amortized over a 60-month period on the straight-line
basis. Accumulated amortization at July 31, 1996 totaled $14,194. In the event
that any of the initial shares acquired by the Manager are redeemed during such
period, the Fund will be reimbursed by the Manager for unamortized organization
costs in the same proportion as that between the number of shares redeemed and
the number of initial shares outstanding at the time of redemption. All of the
initial shares remain outstanding as of July 31, 1996.
FEDERAL AND STATE INCOME TAXES - The Fund's policy is to comply with the
requirements of the Internal Revenue Code that are applicable to regulated
investment companies, and to distribute all of its net investment income and any
net realized gain on investments, to its shareholders. Therefore, no provision
for income taxes is required. The Fund has available at July 31, 1996, a net
capital loss carryforward totaling $219,774, which may be used to offset capital
gains realized during subsequent years through July 31, 2004.
DISTRIBUTIONS TO SHAREHOLDERS - Dividends from net investment income, declared
daily and payable monthly, are reinvested in additional shares of the Fund at
net asset value or payable in cash. Capital gains, when available, are
distributed at least annually.
INVESTMENT INCOME - Dividend income is recognized on the ex-dividend date and
interest income is recognized daily on an accrual basis. Premiums and discounts
on securities purchased are amortized using the effective interest method over
the life of the respective securities, unless callable, in which case they are
amortized to the earliest call date.
FUTURES CONTRACTS AND OPTIONS - The Fund may purchase and sell financial futures
and option contracts to hedge against changes in the values of tax-exempt
municipal securities the Fund owns or expects to purchase.
A futures contract is an agreement between two parties to buy or sell units of a
particular index or a certain amount of U.S. Government or municipal securities
at a set price on a future date. Upon entering into a futures contract, the Fund
is required to deposit with a broker an amount of cash or securities equal to
the minimum "initial margin" requirement of the futures exchange on which the
contract is traded. Subsequent payments ("variation margin")
<PAGE>
are made or received by the Fund, dependent on the fluctuations in the value of
the underlying index. Daily fluctuations in value are recorded for financial
reporting purposes as unrealized gains or losses by the Fund. When entering into
a closing transaction, the Fund will realize, for book purposes, a gain or loss
equal to the difference between the value of the futures contracts sold and the
futures contracts to buy.
Daily fluctuations in the value of options are recorded for financial reporting
purposes as unrealized gains or losses by the Fund. Upon sale or expiration of
the option, the Fund will realize, for book purposes, a gain or loss equal to
the difference between the cost of the option and the value on sale or
expiration date.
Certain risks may arise upon entering into futures contracts and options. These
risks may include changes in the value of the futures contracts or options that
may not directly correlate with changes in the value of the underlying
securities.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 3. CAPITAL SHARE TRANSACTIONS
As of July 31, 1996, there were unlimited shares of no par authorized; 1,644,023
and 1,318,776 shares were outstanding at July 31, 1996 and July 31, 1995,
respectively.
Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
Shares Amount
------ ------
For The For The For The For The
Year Ended Year Ended Year Ended Year Ended
July 31, 1996 July 31, 1995 July 31, 1996 July 31, 1995
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 428,516 632,974 $ 4,757,147 $ 6,756,929
Shares issued on reinvestment
of dividends 48,978 35,721 543,019 382,395
Shares redeemed (152,247) (105,163) (1,675,710) (1,137,925)
-------------------------------------------------------------
Net increase 325,247 563,532 $ 3,624,456 $ 6,001,399
=============================================================
</TABLE>
NOTE 4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Ranson Capital Corporation, the Fund's investment adviser and underwriter, and
ND Resources, Inc., the Fund's transfer and accounting services agent, are
subsidiaries of ND Holdings, Inc., the Fund's sponsor.
The Fund has engaged Ranson Capital Corporation to provide investment advisory
and management services to the Fund. The Investment Advisory Agreement provides
for fees to be computed at an annual rate of 0.50% of the Fund's average daily
net assets. The Fund has recognized $84,492 of investment advisory fees for the
year ended July 31, 1996. The adviser elected to waive $28,152 of this fee.
The Fund has a payable to Ranson Capital Corporation of $6,386 at July 31, 1996
for investment advisory fees. Certain officers and trustees of the Fund are
also officers and directors of the investment adviser.
The Fund has adopted a distribution plan (the Plan) pursuant to Rule 12b-1 under
the 1940 Act, whereby the Fund shall pay at the annual rate of 0.25% of the
average daily net assets of the Fund to Ranson Capital Corporation (Capital),
its principal underwriter, for expenses incurred in the distribution of the
Fund's shares. Pursuant to the Plan, Capital is entitled to reimbursement each
month for its actual expenses incurred in the distribution and promotion of the
Fund's shares, including the printing of prospectuses and reports used for sales
purposes, expenses of preparation and printing of sales literature and other
such distribution related expenses, including any
<PAGE>
distribution or service fees paid to securities dealers who have executed a
dealer sales agreement with Capital. Capital will be reimbursed at a rate not to
exceed 0.25% of the average daily net assets of the Fund for the prior month.
The Fund has recognized $42,246 of 12b-1 fee expenses for the year ended July
31, 1996. The Fund has a payable to Ranson Capital Corporation of $3,991 at July
31, 1996 for 12b-1 fees.
The Fund also entered into an Administrative and Accounting Services Agreement
whereby the Fund incurs a fee to the Manager for acting as the Fund's
administrative and accounting services agent. This monthly fee was equal to the
sum of a fixed fee ranging from $1,500-$2,500, depending on the level of average
daily net assets (ADNA), and a variable fee equal to 0.15% of the annualized
ADNA for the Funds first $20 million and at a lower rate on the annualized ADNA
in excess of $20 million.
On January 5, 1996, the Fund entered into a new Accounting Services Agreement
whereby the Fund incurs a fee to ND Resources, Inc. for acting as the Fund's
accounting services agent. This monthly fee is equal to the sum of a fixed fee
of $2,000, and a variable fee equal to 0.05% of the annualized ADNA for the
Fund's first $50 million, and at a lower rate on the annualized ADNA in excess
of $50 million. For the year ended July 31, 1996, the fee from both agreements
totaled $35,320.
On May 9, 1996 the Fund entered into a new Transfer Agency Agreement whereby the
Fund incurs a fee to ND Resources, Inc., (the transfer agent), for providing
shareholder services. This monthly fee is equal to an annual rate of 0.16% of
the Fund's first $10 million of net assets, 0.13% of the Fund's net assets on
the next $15 million, 0.11% of the Fund's net assets on the next $15 million,
0.10% of the Fund's net assets on the next $10 million, and 0.09% of the Fund's
net assets in excess of $50 million. The Fund has recognized $5,962 of transfer
agency fees under this agreement for the year ended July 31, 1996.
NOTE 5. INVESTMENT SECURITY TRANSACTIONS
The cost of purchases and proceeds from the sales of investment securities
(excluding short-term securities) aggregated $8,812,494 and $4,552,240
respectively, for the year ended July 31, 1996.
NOTE 6. INVESTMENT IN SECURITIES
At July 31, 1996, the aggregate cost of securities for federal income tax
purposes was $18,633,253, and the net unrealized appreciation of investments
based on the cost was $84,736 which is comprised of $247,569 aggregate gross
unrealized appreciation and $162,833 aggregate gross unrealized depreciation.
<PAGE>
FINANCIAL HIGHLIGHTS Selected per share data and ratios for the period indicated
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For The Period
Since Inception
For The Year For the Year (Nov. 17, 1993)
Ended July 31, Ended July 31, Through July 31,
1996 1995 1994
-------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.95 $ 10.82 $ 11.49
-------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income $ .57 $ .59 $ .45
Net realized and unrealized gain (loss) on investments .05 .13 (.67)
-------------------------------------------------------------
Total From Investment Operations $ .62 $ .72 $ (.22)
-------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income $ (.57) $ (.59) $ (.45)
Distributions from net capital gains .00 .00 .00
-------------------------------------------------------------
Total Distributions $ (.57) $ (.59) $ (.45)
-------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.00 $ 10.95 $ 10.82
=============================================================
TOTAL RETURN 5.73%(A) 7.14%(A) (3.20)%(A)(B)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $18,077 $14,445 $ 8,171
Ratio of net expenses (after expense assumption) to
average net assets 0.62%(C) 0.35%(C) 0.19% (B)(C)
Ratio of net investment income to average net assets 5.13% 5.63% 5.51% (B)
Portfolio turnover rate 27.20% 140.00% 314.00%
</TABLE>
(A) Excludes maximum sales charge of 4.25%.
(B) Ratio was annualized.
(C) During the periods indicated above, ND Holdings, Inc. or Ranson Capital
Corporation assumed expenses of $129,053, $146,913 and $70,186,
respectively. If the expenses had not been assumed, the annualized ratios
of total expenses to average net assets would have been 1.38%, 1.66%, and
2.25%, respectively.
<PAGE>
GRAPH APPEARS HERE
Comparison of change in value of $10,000 investment in The Nebraska Municipal
Fund and Lehman Bros. Municipal Bond Index (Unaudited)
<TABLE>
<CAPTION>
The Nebraska Municipal The Nebraska Municipal Lehman Bros
Fund w/o sales charge Fund w/ max sales charge Municipal Bond Index
----------------------------------------------------------------------
<S> <C> <C> <C>
11/17/1993 $10,000 $ 9,575 $10,000
1994 $ 9,773 $ 9,357 $ 9,892
1995 $10,471 $10,026 $10,673
1996 $11,071 $10,600 $11,376
</TABLE>
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and Board of Trustees of
The Nebraska Municipal Fund
We have audited the accompanying statement of assets and liabilities of The
Nebraska Municipal Fund, (the Fund), including the schedule of investments, as
of July 31, 1996, the related statement of operations, the statement of changes
in net assets, and the financial highlights for the year then ended. These
financial statements and financial highlights are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit. The statement
of changes in net assets for the year ended July 31, 1995, and the financial
highlights for the year then ended and from the period since inception (Nov. 17,
1993) through July 31, 1994, were audited by other auditors whose report dated
September 11, 1995, expressed an unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned as of July 31, 1996, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Nebraska Municipal Fund, as of July 31, 1996, the results of its operations, the
changes in its net assets, and the financial highlights for the year then ended,
in conformity with generally accepted accounting principles.
BRADY, MARTZ & ASSOCIATES, P.C.
September 9, 1996
<PAGE>
DEAR SHAREHOLDER:
We are pleased to submit the annual report for The Kansas Insured Intermediate
Fund. Included with this report is a list of portfolio holdings, along with the
audited financial statements for the fiscal year ended July 31, 1996.
Management Discussion and Analysis:
Due to moderate economic growth and low inflation, the bond market advanced
through the second half of 1995 and into January of 1996. Municipal bond prices
then declined in the February-March-April time frame. Federal Reserve monetary
policy became less accommodative in response to the growth picture in the
American economy.
The Kansas Insured Intermediate Fund turned in steady performance during the
past 12 months. The net asset value per share was $12.04 at the beginning of the
period and increased to $12.19 by the end of the reporting period on July 31,
1996. Portfolio manager, Alex Meitzner continues to invest primarily in insured
Kansas tax-exempt bonds.
Economic Outlook and Municipal Bonds:
U.S. economic growth has been slowed by Federal Reserve action and it is our
opinion that inflation will remain under control. This stable environment should
bode well for investing in tax-exempt bonds.
We continue to be pleased with the performance of the Fund and would like to
take this opportunity to thank you for your support and look forward to serving
the shareholders of The Kansas Insured Intermediate Fund.
Sincerely,
/s/Robert E. Walstad
Robert E. Walstad
President
<PAGE>
SCHEDULE OF INVESTMENTS July 31, 1996
<TABLE>
<CAPTION>
NAME OF ISSUER RATINGS
(UNAUDITED)
------------------
Percentages represent the market value of each investment STD. & COUPON PRINCIPAL MARKET
category to total net assets MOODY'S POOR'S RATE MATURITY AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
KANSAS MUNICIPAL BONDS (96.46%)
Anderson Co., KS (Garnett) USD #365 G.O. 93 AMBAC Insured Aaa AAA 5.000% 09/01/04 $ 200,000 $ 201,920
Anderson Co., KS (Garnett) USD #365 G.O. 93 AMBAC Insured Aaa AAA 5.200 03/01/05 210,000 214,519
Anderson Co., KS (Garnett) USD #365 G.O. 93 AMBAC Insured Aaa AAA 5.200 09/01/05 210,000 215,399
Butler Co., KS (Augusta) USD #402 G.O. 93 AMBAC Insured Aaa AAA 5.400 10/01/06 200,000 206,954
Butler Co., KS (Rose Hill) USD #394 G.O. 93 AMBAC Insured Aaa AAA 4.750 09/01/03 250,000 249,183
Chanute, KS Electric Light, Water & Gas Sys Ref. Rev. 92 A Aaa AAA 5.875 05/01/04 500,000 523,605
MBIA Insured
Derby, KS Sewer Utility System Rev AMBAC Insured Aaa AAA 5.000 08/01/08 540,000 520,636
Douglas Co., KS USD #491 (Eudora) G.O. School Bldg. Ref. & Aaa AAA 7.750 03/01/01 190,000 212,585
Imp. 93 AMBAC Insured
Douglas Co., KS USD #491 (Eudora) G.O. School Bldg. Ref. & Aaa AAA 7.750 03/01/03 255,000 293,469
Imp. 93 AMBAC Insured
Douglas Co., KS (Lawrence) USD #497 G.O. FGIC Insured Aaa AAA 7.200 09/01/02 1,370,000 1,533,290
Franklin Co., KS General Obligation 92 FGIC Insured Aaa AAA 6.100 09/01/02 100,000 104,482
Garden City, KS Health Care Rev. MBIA Insured Aaa AAA 4.900 11/15/07 400,000 386,224
Hutchinson, KS Water and Sewer Ref. Rev. 93 AMBAC Insured Aaa AAA 4.400 12/01/01 240,000 237,475
Hutchinson, KS Water and Sewer Ref. Rev. 93 AMBAC Insured Aaa AAA 4.550 12/01/02 355,000 351,638
Hutchinson, KS Water and Sewer Ref. Rev. 93 AMBAC Insured Aaa AAA 4.700 12/01/03 200,000 198,192
Johnson\Miami Cos., KS (Spring Hill) G.O. 93 FGIC Insured Aaa AAA 5.250 12/01/02 190,000 195,406
Johnson\Miami Cos., KS (Spring Hill) G.O. 93 FGIC Insured Aaa AAA 5.250 12/01/03 325,000 332,982
Johnson\Miami Cos., KS USD #230 G.O. FGIC Insured Aaa AAA 5.250 12/01/04 500,000 511,585
Johnson\Miami Cos., KS (Spring Hill) G.O. 93 FGIC Insured Aaa AAA 5.250 12/01/05 350,000 359,233
Johnson Co., KS USD #229 (Blue Valley) FGIC Insured Aaa AAA 5.100 10/01/02 200,000 204,044
Johnson Co., KS USD #229 (Blue Valley) FGIC Insured Aaa AAA 5.400 10/01/04 1,000,000 1,025,230
Johnson Co., KS (DeSoto) USD #232 G.O. 92 CGIC Insured NR AAA 5.200 03/01/02 100,000 102,334
Johnson Co., KS (DeSoto) USD #232 G.O. 92 CGIC Insured Aaa AAA 5.400 03/01/03 100,000 103,185
Johnson Co., KS (Olathe) USD #491 G.O. 93 AMBAC Insured Aaa AAA 5.450 09/01/02 100,000 104,307
Johnson Co., KS (Olathe) USD #233 G.O. 92B AMBAC Insured Aaa AAA 5.650 09/01/03 1,485,000 1,555,033
Johnson Co., KS (Olathe) USD #233 G.O. AMBAC Insured Aaa AAA 5.950 09/01/05 400,000 427,568
Johnson Co., KS (Olathe) USD #233 G.O. 92B AMBAC Insured Aaa AAA 6.150 03/01/07 300,000 323,022
Kansas City, KS G.O. Ref. & Imp. 91 FSA Insured Aaa AAA 6.150 09/01/00 500,000 524,335
Kansas City, KS (Srs. of Prov.-St. Margaret Hlth Ctr.) 92 Aaa AAA 5.700 08/01/03 250,000 259,778
AMBAC Insured
Kansas Devl. Finance Auth. (Stormont Vail) Hlth. Rev. MBIA Aaa AAA 5.700 11/15/08 450,000 449,793
Insured
Kansas City Special Obligation 92 ESCROWED TM. NR AAA 6.000 02/15/03 200,000 211,328
Kansas Municipal Energy Agency Rev. AMBAC Insured Aaa AAA 4.550 12/01/02 300,000 295,545
Kansas Devl. Finance Auth. Pooled Ref. Lease Rev. 94C MBIA Aaa AAA 5.500 10/01/05 250,000 258,648
Insured
Larned, KS (Catholic Hlth. Corp.) Hlth. Facs Rev. 94A MBIA Aaa AAA 5.200 11/15/02 160,000 163,259
Insured
Larned, KS (Catholic Hlth. Corp.) Hlth. Facs Rev. 94A MBIA Aaa AAA 5.300 11/15/03 170,000 173,541
Insured
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Insured
Larned, KS (Catholic Hlth. Corp.) Hlth.
Facs. Rev. 94A MBIA Insured Aaa AAA 5.400 11/15/04 155,000 159,103
Lenexa, KS (Barrington Park) Multifam.
Hsg. Rev. Ref. 93A ASSET GUAR. Insured Aaa AAA 5.875 02/01/04 500,000 508,780
Lenexa, KS (Barrington Park) Multifam.
Hsg. Rev. Ref. 93A ASSET GUAR. Insured Aaa AAA 5.950 02/01/05 250,000 257,298
Linn Co., KS (Prairie View) USD #362
G.O. ASSET GUAR. Insured NR AA 5.500 11/01/09 500,000 498,930
McPherson Co., KS (McPherson) USD #418
G.O. 94 CGIC Insured Aaa AAA 5.500 09/01/05 100,000 104,232
McPherson Co., KS (McPherson) USD #418
G.O. CGIC Insured Aaa AAA 5.700 09/01/06 400,000 420,008
Miami Co., KS Rural Water Dist. #2 Ref.
Rev. 93 ASSET GUAR. Insured Aaa AA 5.750 12/01/04 225,000 227,250
Olathe, KS (Evang. Luth. Good Samaritan
Soc.) 94 AMBAC Insured Aaa AAA 5.200 05/01/01 140,000 142,758
Olathe, KS (Evang. Luth. Good Samaritan
Soc.) 94 AMBAC Insured Aaa AAA 5.400 05/01/02 150,000 154,271
Olathe, KS (Evang. Luth. Good Samaritan
Soc.) 94 AMBAC Insured Aaa AAA 5.500 05/01/03 110,000 113,520
Olathe, KS (Medical Center) Hlth. Facs.
Rev. Ref. 94A AMBAC Insured Aaa AAA 5.600 09/01/05 1,000,000 1,037,280
Ottawa Co., KS (Twin Valley) USD #240
G.O. 93 AMBAC Insured Aaa AAA 5.250 09/01/01 100,000 102,372
Ottawa Co., KS (Twin Valley) USD #240
G.O. 93 AMBAC Insured Aaa AAA 5.300 09/01/02 135,000 138,384
Reno Co., KS (Buhler) USD #313 G.O. 96B
FSA Insured Aaa AAA 4.700 09/01/06 260,000 256,095
Reno Co., KS (Buhler) USD #313 G.O. 96B
FSA Insured Aaa AAA 4.800 09/01/07 250,000 245,880
Salina, KS (Asbury-Saline Regl Med.
Ctr.) Hosp. Rev. Ref. 93 AMBAC Insured Aaa AAA 5.000 10/01/04 850,000 850,026
Salina, KS (Asbury-Salina Regl Med.
Ctr.) Hosp. Rev. Ref. 93 AMBAC Insured Aaa AAA 5.000 10/01/05 100,000 99,822
Salina, KS Comb. Water & Sew. Sys. Rev.
Ref. 94 MBIA Insured Aaa AAA 4.400 09/01/02 400,000 393,312
Sedgwick\Shawnee Cos., KS Coll. Single
Family Mtg. Ref. 94BII GNMA Gtd. Aaa NR 5.250 11/01/04 300,000 294,804
Sedgwick Co., KS (Derby) G.O. 93 AMBAC
Insured Aaa AAA 4.900 10/01/04 645,000 645,019
Sedgwick Co., KS (Maize) USD #266 G.O.
93 FGIC Insured Aaa AAA 4.650 09/01/03 345,000 340,801
Sedgwick Co., KS (Maize) USD #266 G.O.
94B CGIC Insured Aaa AAA 5.500 09/01/05 300,000 311,805
Sedgwick Co., KS (Maize) USD #266 G.O.
94B CGIC Insured Aaa AAA 5.600 09/01/06 200,000 208,438
Sedgwick Co., KS (Renwick) USD #267
G.O. 95 AMBAC Insured Aaa AAA 5.850 11/01/06 290,000 305,532
Sedgwick Co., KS (Renwick) USD #267
G.O. 95 AMBAC Insured Aaa AAA 6.000 11/01/07 570,000 604,223
Seward Co., KS G.O. Hospital Ref. 92B
AMBAC Insured Aaa AAA 5.600 08/15/04 100,000 103,915
Seward Co., KS G.O. Hospital Ref. 92B
AMBAC Insured Aaa AAA 5.600 08/15/04 150,000 155,872
Shawnee Co. KS USD #437 (Aub-Wash)
AMBAC Insured Aaa AAA 6.700 09/01/00 415,000 447,548
Shawnee Co. KS USD #437 (Aub-Wash)
AMBAC Insured Aaa AAA 6.625 09/01/01 475,000 514,363
Shawnee Co., KS (Shawnee Heights) USD
#450 G.O. 94 CGIC Insured Aaa AAA 6.500 09/01/00 250,000 267,860
Shawnee Co., KS (Topeka) USD #501 G.O.
95 FGIC Insured Aaa AAA 5.550 02/01/07 820,000 841,139
Sumner Co., KS (Belle Plaine) USD #357
G.O. 93 AMBAC Insured Aaa AAA 6.250 09/01/02 230,000 247,170
Sumner Co., KS (Belle Plaine) USD #357
G.O. 93 AMBAC Insured Aaa AAA 6.250 09/01/03 265,000 285,288
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Wellington, KS Electric, Waterworks & Aaa AAA 5.300 11/01/02 350,000 360,749
Sewage Util. Sys. Ref. Rev. 93 AMBAC
Insured
Wichita, KS Airport Auth. Facs Ref. NR NR 7.000 03/01/05 100,000 101,345
Rev. 92 ASSET GUAR. Insured
Wichita, KS (St Francis Regl. Med. Aaa AAA 5.625 10/01/00 405,000 421,269
Ctr.) Hosp. Facs. Imp. & Ref. Rev.
92B-3 MBIA Insured
Wichita, KS (St Francis Regl. Med. Aaa AAA 6.000 10/01/03 250,000 262,603
Ctr.) Hosp. Facs. Imp. & Ref. 92A-3
MBIA Insured
Wichita, KS (St Francis Regl. Med. Aaa AAA 6.100 10/01/04 775,000 838,999
Ctr.) Hosp. Facs. Imp. & Ref. 92A-3
MBIA Insured
Wichita, KS Water & Sewer Util Ref. & Aaa AAA 5.500 10/01/04 320,000 329,763
Imp. Rev. Bonds FGIC Insured
Wichita, KS Water & Sewer Util Ref. & Aaa AAA 5.600 04/01/05 610,000 632,680
Imp. Rev. 93 FGIC Insured
Wichita, KS Water & Sewer Util Ref.& Aaa AAA 5.750 10/01/06 150,000 156,927
Imp. Ref. 93B FGIC Insured
Winfield, KS Electric Sys. Ref. Rev. 93 Aaa AAA 5.000 09/01/04 580,000 583,642
AMBAC Insured
Wyandotte Co., KS G.O. Ref. & Imp 89 Aaa AAA 7.000 09/01/05 1,020,000 1,073,346
FGIC Insured
Wyandotte Co., KS USD #204 (Bonner Aaa AAA 5.200 09/01/04 400,000 409,136
Springs) AMBAC Insured
------------
TOTAL KANSAS MUNICIPAL BONDS (COST: $29,052,055) $ 29,483,284
SHORT TERM SECURITIES(2.08%)
Federated Tax-Free Trust (COST: $635,349) 635,349
------------
TOTAL INVESTMENTS IN SECURITIES (COST: $29,687,404) $ 30,118,633
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Financial Statements July 31, 1996
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
July 31, 1996
- -----------------------------------
<S> <C>
Assets
Investment in securities, at value (cost: $29,687,404) $ 30,118,633
Accrued interest receivable 579,552
Security Sales Receivable 508,554
Accrued dividends receivable 1,212
Deferred organization costs 9,266
------------
Total Assets $ 31,217,217
------------
Liabilities
Security purchases payable $ 499,239
Dividends payable 118,520
Accrued expenses 19,509
Bank overdraft 16,026
------------
Total Liabilities $ 653,294
------------
Net Assets $ 30,563,923
============
Net asset value per share, 2,507,133 shares outstanding $ 12.19
============
Statement of Operations for the year ended July 31, 1996
- --------------------------------------------------------
INVESTMENT INCOME
Interest $ 1,577,775
Dividends 6,305
------------
Total Investment Income $ 1,584,080
------------
EXPENSES
Investment advisory fees $ 156,871
Custodian fees 15,610
Transfer agent fees 51,836
Accounting service fees 47,195
Audit and legal fees 3,456
Insurance 873
Trustees' fees 2,201
Printing & postage 3,312
License, fees & registrations 125
Amortization of organization costs 7,715
------------
Total Expenses $ 289,194
Less expenses waived or absorbed
by the Fund's manager 71,943
------------
Total Net Expenses $ 217,251
------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
NET INVESTMENT INCOME $1,366,829
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES
Net realized gain (loss) from:
Investment transactions $ (39,295)
Futures transactions 86,105
Net change in unrealized appreciation (depreciation) of investments 340,266
----------
Net Realized And Unrealized Gain (Loss) On Investments And Futures $ 387,076
----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $1,753,905
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
FINANCIAL STATEMENTS JULY 31, 1996
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JULY 31, 1996 AND JULY 31, 1995
- ---------------------------------------------------
<TABLE>
<CAPTION>
For The Year For The Year
Ended July 31, Ended July 31,
1996 1995
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 1,366,829 $ 1,422,773
Net realized gain (loss) on investment and futures transactions 46,810 (228,035)
Net change in unrealized appreciation (depreciation) on investments 340,266 597,579
----------- -----------
Net Increase (Decrease) in Net Assets Resulting From Operations $ 1,753,905 $ 1,792,317
----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income $(1,366,829) $(1,422,773)
Distributions from net realized gain on investment transactions 0 0
----------- -----------
Total Dividends and Distributions $(1,366,829) $(1,422,773)
----------- -----------
CAPITAL SHARE TRANSACTIONS
Proceeds from sale of shares $ 2,780,585 $ 6,159,028
Proceeds from reinvested dividends 811,269 842,459
Cost of shares redeemed (4,093,311) (7,908,705)
----------- -----------
Net Increase (Decrease) in Net Assets Resulting From Capital Share Transactions $ (501,457) $ (907,218)
----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS $ (114,381) $ (537,674)
NET ASSETS, BEGINNING OF PERIOD 30,678,304 31,215,978
----------- -----------
NET ASSETS, END OF PERIOD $30,563,923 $30,678,304
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS JULY 31, 1996
NOTE 1. ORGANIZATION
BUSINESS OPERATIONS - The Kansas Insured Intermediate 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 23, 1992, other
than matters relating to organization and registration. On November 23, 1992,
the fund commenced its Public Offering of capital shares to the public. The
investment objective of the Fund is to provide its shareholders with as high a
level of current income exempt from both federal and Kansas income tax as is
consistent with preservation of capital. The Fund will seek to achieve this
objective by investing primarily in a portfolio of Kansas insured securities.
shares of the Fund are offered at net asset value plus a maximum sales charge of
4.25% of the offering price.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT SECURITY VALUATION - Investments in securities traded on national
securities exchanges are valued at the last reported sales price at the close of
each business day. Securities for which market quotations are not readily
available are valued at fair value as determined in good faith by the portfolio
management team. The Fund follows industry practice and records security
transactions on the trade date.
The Fund concentrates its investments in a single state. This concentration may
result in the Fund investing a relatively high percentage of its assets in a
limited number of issuers.
DEFERRED ORGANIZATION COSTS - Costs incurred by the Fund in connection with its
organization are being amortized over a 60-month period on the straight-line
basis. Accumulated amortization at July 31, 1996 totaled $28,233. In the event
that any of the initial shares acquired by the Manager are redeemed during such
period, the Fund will be reimbursed by the Manager for unamortized organization
costs in the same proportion as that between the number of shares redeemed and
the number of initial shares outstanding at the time of redemption. All of the
initial shares remain outstanding as of July 31, 1996.
FEDERAL AND STATE INCOME TAXES - The Fund's policy is to comply with the
requirements of the Internal Revenue Code that are applicable to regulated
investment companies, and to distribute all of its net investment income and any
net realized gain on investments, to its shareholders. Therefore, no provision
for income taxes is required. The Fund has available at July 31, 1996, a net
capital loss carryforward totaling $305,774, which may be used to offset capital
gains realized during subsequent years through July 31, 2004.
DISTRIBUTIONS TO SHAREHOLDERS - Dividends from net investment income, declared
daily and payable monthly, are reinvested in additional shares of the Fund at
net asset value or payable in cash. Capital gains, when available, are
distributed at least annually.
INVESTMENT INCOME - Dividend income is recognized on the ex-dividend date and
interest income is recognized daily on an accrual basis. Premiums and discounts
on securities purchased are amortized using the effective interest method over
the life of the respective securities, unless callable, in which case they are
amortized to the earliest call date.
FUTURES CONTRACTS AND OPTIONS - The Fund may purchase and sell financial futures
and option contracts to hedge against changes in the values of tax-exempt
municipal securities the Fund owns or expects to purchase.
A futures contract is an agreement between two parties to buy or sell units of a
particular index or a certain amount of U.S. Government or municipal securities
at a set price on a future date. Upon entering into a futures contract, the
Fund is required to deposit with a broker an amount of cash or securities equal
to the minimum "initial margin" requirement of the futures exchange on which the
contract is traded. Subsequent payments ("variation margin") are made or
received by the Fund, dependent on the fluctuations in the value of the
underlying index. Daily fluctuations in value are recorded for financial
reporting purposes as unrealized
<PAGE>
gains or losses by the Fund. When entering into a closing transaction, the Fund
will realize, for book purposes, a gain or loss equal to the difference between
the value of the futures contracts sold and the futures contracts to buy.
Daily fluctuations in the value of options are recorded for financial reporting
purposes as unrealized gains or losses by the Fund. Upon sale or expiration of
the option, the Fund will realize, for book purposes, a gain or loss equal to
the difference between the cost of the option and the value on sale or
expiration date.
Certain risks may arise upon entering into futures contracts and options. These
risks may include changes in the value of the futures contracts or options that
may not directly correlate with changes in the value of the underlying
securities.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 3. CAPITAL SHARE TRANSACTIONS
As of July 31, 1996, there were unlimited shares of no par authorized; 2,507,133
and 2,548,917 shares were outstanding at July 31, 1996 and July 31, 1995,
respectively.
Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
Shares Amount
------ ------
For The For The For The For The
Year Ended Year Ended Year Ended Year Ended
July 31, 1996 July 31, 1995 July 31, 1996 July 31, 1995
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 227,680 530,284 $ 2,780,585 $ 6,159,028
Shares issued on reinvestment of
dividends 66,410 71,607 811,269 842,459
Shares redeemed (335,874) (672,773) (4,093,311) (7,908,705)
-------------------------------------------------------------
Net increase (decrease) (41,784) (70,882) $ (501,457) $ (907,218)
=============================================================
</TABLE>
NOTE 4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Ranson Capital Corporation, the Funds investment adviser and underwriter, and ND
Resources, Inc., the Funds transfer and accounting services agent, are
subsidiaries of ND Holdings, Inc., the Funds sponsor.
The Fund has engaged Ranson Capital Corporation, to provide investment advisory
and management services to the Fund. The Investment Advisory Agreement provides
for fees to be computed at an annual rate of 0.50% of the Fund's average daily
net assets. The Fund has recognized $156,871 of investment advisory fees for
the year ended July 31, 1996. The Fund has a payable to Ranson Capital
Corporation of $13,630 at July 31, 1996 for investment advisory fees. Certain
officers and trustees of the Fund are also officers and directors of the
investment adviser.
The Fund also entered into an Administrative and Accounting Services Agreement
whereby the Fund incurs a fee to the Manager for acting as the Funds
administrative and accounting services agent. This monthly fee was equal to the
sum of a fixed fee ranging from $1,500-$2,500, depending on the level of average
daily net assets (ADNA), and a variable fee equal to 0.15% of the annualized
ADNA for the Funds first $20 million and at a lower rate on the annualized ADNA
in excess of $20 million.
On January 5, 1996, the Fund entered into a new Accounting Services Agreement
whereby the Fund incurs a fee to ND Resources, Inc. for acting as the Funds
accounting services agent. This monthly fee is equal to the sum of a fixed fee
of $2,000, and a variable fee equal to 0.05% of the annualized ADNA for the
Funds first $50 million, and at a lower rate on the annualized ADNA in excess of
$50 million. For the year ended July 31, 1996, the fee from both agreements
totaled $47,195.
<PAGE>
On May 9, 1996 the Fund entered into a new transfer agency agreement whereby the
Fund incurs a fee to ND Resources, Inc., (the transfer agent), for providing
shareholder services for a monthly fee equal to an annual rate of 0.16% of the
Funds first $10 million of net assets, 0.13% of the Funds net assets on the next
$15 million, 0.11% of the Funds net assets on the next $15 million, 0.10% of
the Funds net assets on the next $10 million, and 0.09% of the Funds net assets
in excess of $50 million. The Fund has recognized $12,888 of transfer agency
fees under this agreement for the year ended July 31, 1996.
NOTE 5. INVESTMENT SECURITY TRANSACTIONS
The cost of purchases and proceeds from the sales of investment securities
(excluding short-term securities) aggregated $6,122,745 AND $6,591,845
respectively, for the year ended July 31, 1996.
NOTE 6. INVESTMENT IN SECURITIES
At July 31, 1996, the aggregate cost of securities for federal income tax
purposes was $29,687,404, and the net unrealized appreciation of investments
based on the cost was $431,229, which is comprised of $531,853 aggregate gross
unrealized appreciation and $100,624 aggregate gross unrealized depreciation.
<PAGE>
FINANCIAL HIGHLIGHTS Selected per share data and ratios for the period indicated
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year For the Year For the Year For the Period Since
Ended July 31, Ended July 31, Ended July 31, Inception (Nov. 23, 1992)
1996 1995 1994 to July 31, 1993
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.04 $ 11.92 $ 12.24 $ 11.59
-------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income $ .53 $ .54 $ .52 $ .32
Net realized and unrealized gain (loss) on
investments .15 .12 (.30) .65
-------------------------------------------------------------------------------
Total From Investment Operations $ .68 $ .66 $ .22 $ .97
-------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income $ (.53) $ (.54) $ (.52) $ (.32)
Distributions from net capital gains .00 .00 (.02) .00
-------------------------------------------------------------------------------
Total Distributions $ (.53) $ (.54) $ (.54) $ (.32)
-------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.19 $ 12.04 $ 11.92 $ 12.24
===============================================================================
TOTAL RETURN 5.75%(A) 5.72%(A) 1.81%(A) 13.50%(A)(B)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $30,564 $30,678 $31,216 $22,110
Ratio of net expenses (after expense assumption)
to average net assets 0.69(C) 0.62%(C) 0.51%(C) 0.33%(B)(C)
Ratio of net investment income to average net
assets 4.37% 4.57% 4.26% 4.41%(B)
Portfolio turnover rate 19.96% 63.00% 56.00% 152.00%
</TABLE>
(A) Excludes maximum sales charge of 2.75%.
(B) Ratio was annualized.
(C) During the periods indicated above, ND Holdings, Inc. or Ranson Capital
Corporation assumed expenses of $71,943, $112,745, $136,079, and $68,286,
respectively. If the expenses had not been assumed, the annualized ratios
of total expenses to average net assets would have been .92%, .98%, .99%,
and 1.24%, respectively.
<PAGE>
GRAPH APPEARS HERE
Comparison of change in value of $10,000 investment
in The Kansas Insured Intermediate Fund
and Lehman Bros. Municipal 7 Year Maturity Bond Index (Unaudited)
<TABLE>
<CAPTION>
The Kansas Insured The Kansas Insured
Intermediate Fund Intermediate Fund Lehman Bros. Municipal
w/o sales charge w/ max sales charge 7 Year Maturity Bond Index
-----------------------------------------------------------------------
<S> <C> <C> <C>
11/23/1992 $10,000 $ 9,725 $10,000
1993 $10,829 $10,531 $10,694
1994 $11,025 $10,722 $10,981
1995 $11,656 $11,335 $11,869
1996 $12,326 $11,987 $12,470
</TABLE>
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and Board of Trustees of
The Kansas Insured Intermediate Fund
We have audited the accompanying statement of assets and liabilities of The
Kansas Insured Intermediate Fund, (the Fund), including the schedule of
investments, as of July 31, 1996, the related statement of operations, the
statement of changes in net assets, and the financial highlights for the year
then ended. These financial statements and financial highlights are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit. The statement of changes in net assets for the year ended July 31, 1995,
and the financial highlights for the years ended July 31, 1995, and 1994, and
for the period since inception (November 23, 1992) to July 31, 1993, were
audited by other auditors whose report dated September 11, 1995, expressed an
unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned as of July 31, 1996, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Kansas Insured Intermediate Fund, as of July 31, 1996, the results of its
operations, the changes in its net assets, and the financial highlights for the
year then ended, in conformity with generally accepted accounting principles.
BRADY, MARTZ & ASSOCIATES, P.C.
September 9, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> This schedule contains summary financial information extracted from
The Kansas Municipal Fund and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> KANSAS MUNICIPAL FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1995
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 128219751
<INVESTMENTS-AT-VALUE> 129939822
<RECEIVABLES> 2572016
<ASSETS-OTHER> 589363
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 133101201
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 752250
<TOTAL-LIABILITIES> 752250
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 10905053
<SHARES-COMMON-PRIOR> 10777009
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2058350)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1720071
<NET-ASSETS> 132348951
<DIVIDEND-INCOME> 34993
<INTEREST-INCOME> 7972486
<OTHER-INCOME> 0
<EXPENSES-NET> (1126429)
<NET-INVESTMENT-INCOME> 6881050
<REALIZED-GAINS-CURRENT> 905123
<APPREC-INCREASE-CURRENT> (215174)
<NET-CHANGE-FROM-OPS> 7570999
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (6881050)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 918984
<NUMBER-OF-SHARES-REDEEMED> 1174350
<SHARES-REINVESTED> 383410
<NET-CHANGE-IN-ASSETS> 2257666
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 666479
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1338485
<AVERAGE-NET-ASSETS> 132958181
<PER-SHARE-NAV-BEGIN> 12.07
<PER-SHARE-NII> .69
<PER-SHARE-GAIN-APPREC> .07
<PER-SHARE-DIVIDEND> (.69)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.14
<EXPENSE-RATIO> .85<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Ratio of net expenses (after expense assumption) to average net assets,
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> NEBRASKA MUNICIPAL FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1995
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 18633253
<INVESTMENTS-AT-VALUE> 18717989
<RECEIVABLES> 266325
<ASSETS-OTHER> 39243
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 19023557
<PAYABLE-FOR-SECURITIES> 846725
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 99874
<TOTAL-LIABILITIES> 946599
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 1644023
<SHARES-COMMON-PRIOR> 1318776
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (219774)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 84736
<NET-ASSETS> 18076958
<DIVIDEND-INCOME> 8088
<INTEREST-INCOME> 960630
<OTHER-INCOME> 0
<EXPENSES-NET> (104113)
<NET-INVESTMENT-INCOME> 864605
<REALIZED-GAINS-CURRENT> (15386)
<APPREC-INCREASE-CURRENT> 23173
<NET-CHANGE-FROM-OPS> 872392
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (864605)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 428516
<NUMBER-OF-SHARES-REDEEMED> 152247
<SHARES-REINVESTED> 48978
<NET-CHANGE-IN-ASSETS> 3632243
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 84492
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 233166
<AVERAGE-NET-ASSETS> 16846818
<PER-SHARE-NAV-BEGIN> 10.95
<PER-SHARE-NII> .57
<PER-SHARE-GAIN-APPREC> .05
<PER-SHARE-DIVIDEND> (.57)
<PER-SHARE-DISTRIBUTIONS> .00
<RETURNS-OF-CAPITAL> .00
<PER-SHARE-NAV-END> 11.00
<EXPENSE-RATIO> .62
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> KANSAS INSURED INTERMEDIATE FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1995
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 29687404
<INVESTMENTS-AT-VALUE> 30118633
<RECEIVABLES> 1089318
<ASSETS-OTHER> 9266
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 31217217
<PAYABLE-FOR-SECURITIES> 499239
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 154055
<TOTAL-LIABILITIES> 653294
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 2507133
<SHARES-COMMON-PRIOR> 2548917
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (305774)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 431229
<NET-ASSETS> 30563923
<DIVIDEND-INCOME> 6305
<INTEREST-INCOME> 1577775
<OTHER-INCOME> 0
<EXPENSES-NET> (217251)
<NET-INVESTMENT-INCOME> 1366829
<REALIZED-GAINS-CURRENT> 46810
<APPREC-INCREASE-CURRENT> 340266
<NET-CHANGE-FROM-OPS> 1753905
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1366829)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 227680
<NUMBER-OF-SHARES-REDEEMED> 335874
<SHARES-REINVESTED> 66410
<NET-CHANGE-IN-ASSETS> (114381)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 156871
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 289194
<AVERAGE-NET-ASSETS> 31276498
<PER-SHARE-NAV-BEGIN> 12.04
<PER-SHARE-NII> .53
<PER-SHARE-GAIN-APPREC> .15
<PER-SHARE-DIVIDEND> (.53)
<PER-SHARE-DISTRIBUTIONS> .00
<RETURNS-OF-CAPITAL> .00
<PER-SHARE-NAV-END> 12.19
<EXPENSE-RATIO> .69
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
