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As filed with the Securities and Exchange Commission on September 25, 1996
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 [_]
Registration No. 33-36324
Pre-Effective Amendment No. ____ [_]
Post-Effective Amendment No. 25 [X]
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [_]
Registration No. 811-6153
Amendment No. 27 [X]
RANSON MANAGED PORTFOLIOS
(Exact Name of Registrant as Specified in Declaration of Trust)
1 North Main, Minot, North Dakota 58703
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (701) 852-5292
Copies to:
Robert E. Walstad - President Mark J. Kneedy, Esq.
1 North Main Chapman and Cutler
Minot, North Dakota 58703 111 West Monroe Street
Chicago, Illinois 60603
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
[_] immediately upon filing [_] on (date) pursuant to paragraph (a)(1)
pursuant to paragraph (b)
[X] on September 25, 1996 [_] 75 days after filing pursuant
pursuant to paragraph (a)(2)
to paragraph (b)
[_] 60 days after filing pursuant [_] on (date) pursuant to paragraph (a)(2)
to paragraph (a)(1) of Rule 485.
If appropriate, check the following box:
[_] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
elected to register an indefinate number of shares and will file a Rule 24f-2
notice with the Commission within 180 days after July 31, 1997, the close of its
current fiscal year.
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CONTENTS
OF
REGISTRATION STATEMENT
The Registration Statement comprises the following papers and contents:
The Facing Sheet
Cross-Reference Sheet
Part A -- Prospectus
Part B -- The Statement of Additional Information
Part C -- Other Information
Signatures
Index to Exhibits
Exhibits
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RANSON MANAGED PORTFOLIOS
Cross Reference Sheet
Pursuant to Rule 495(a) under the Securities Act of 1933
Form N-1A, Part A, Item Number Heading in Prospectus
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1 Cover Page Cover
2 Synopsis Highlights of the Fund and Prospectus
Summary;
Fee and Expense Table
3 Condensed Financial Information Calculation of Fund Performance Data
4 General Description of Registrant The Fund; Investment Objective and
Policies
5 Management of the Fund The Fund; Dividends and Taxes;
Fund Management
5A Management's Discussion of Not Applicable
Fund Performance
6 Capital Stock and Other Description of Shares and Rights
Securities
7 Purchase of Securities Being Special Programs; Purchase of Shares
Offered
8 Redemption or Repurchase Redemption of Shares
9 Pending Legal Proceedings *
Heading in Statement of Additional
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Form N-1A, Part B, Item Number Information
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10 Cover Page Cover
11 Table of Contents Table of Contents
12 General Information and History The Fund and its Shares
13 Investment Objectives and Investment Objective, Policies and
Policies Restrictions
14 Management of the Fund Officers and Trustees
15 Control Persons and Principal The Fund and its Shares
Holders of Securities
16 Investment Advisory and Other Management and Investment Advisory
Services Agreement
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* Not applicable.
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17 Brokerage Allocation and Other Portfolio Transactions
Practices
18 Capital Stock and Other Securities Additional Information Regarding
Shares and Rights
19 Purchase, Redemption and Pricing of Net Asset Value, in Prospectus;
Shares Being Offered Purchase of Shares, in
Prospectus; Redemption of Shares,
in Prospectus
Heading in Statement of Additional
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Form N-1A, Part B, Item Number Information
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20 Tax Status Dividends and Taxes, in Prospectus
21 Underwriters Purchase of Shares, in Prospectus;
The Distributor, in Prospectus
22 Calculations of Performance Data Performance Data
23 Financial Statements Report of Independent Auditors;
Statement of Assets and
Liabilities
Form N-1A, Part C, Item Number Heading in Other Information
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24 Financial Statements and Exhibits Financial Statements and Exhibits
25 Persons Controlled by or Under Persons Controlled by or Under
Common Control with Registrant Common Control with Registrant
26 Number of Holders of Securities Number of Holders of Securities
27 Indemnification Indemnification
28 Business and Other Connections of Business and Other Connections of
Investment Adviser Investment Advisor
29 Principal Underwriters Principal Underwriters
30 Location of Accounts and Records Location of Accounts and Records
31 Management Services Management Services
32 Undertakings Undertakings
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration of qualification under the securities laws of any such State.
Subject to Completion September 25, 1996
PROSPECTUS
September 25, 1996
RANSON MANAGED PORTFOLIOS
THE OKLAHOMA MUNICIPAL FUND
1 North Main
Minot, North Dakota 58703
(701) 852-5292
(800) 601-5593
The Oklahoma Municipal Fund is an investment portfolio of Ranson Managed
Portfolios which is an unincorporated business trust organized under the laws of
Massachusetts on August 10, 1990. Ranson Managed Portfolios is an open-end
series non-diversified management company, known as a mutual fund. The term
"the Fund" as used herein shall refer to either Ranson Managed Portfolios or The
Oklahoma Municipal Fund series of Ranson Managed Portfolios as the context may
require. The investment objective of the Fund is to provide its shareholders
with as high a level of current income exempt from both federal income tax and,
to the extent indicated, Oklahoma income tax, as is consistent with preservation
of capital. Up to 30% of the Fund's total assets may be invested in Oklahoma
Municipal Securities (as defined herein) which are subject to Oklahoma state
income taxes. Under normal market conditions, the Fund's assets will be
invested in a portfolio of Oklahoma Municipal Securities which, in the opinion
of Ranson Capital Corporation, will produce a higher level of current income
than would be produced by a portfolio of Oklahoma Municipal Securities rated in
only the highest rating category, but contains Oklahoma Municipal Securities
which do not present a significant risk of loss of principal due to credit
characteristics. In pursuit of this objective, the Fund invests primarily in
debt obligations issued by or on behalf of the State of Oklahoma, its political
subdivisions and their agencies and instrumentalities. A substantial portion of
the income produced by the Fund may be includable in the calculation of
alternative minimum taxable income. Shares of the Fund therefore would not
ordinarily be a suitable investment for investors who are subject to the
alternative minimum tax.
A maximum sales load of 4.25% will be imposed on purchases (4.44% of the
net amount invested). The minimum initial investment is $1,000. See "Purchase of
Shares."
Ranson Capital Corporation (the "Manager") is the Fund's manager.
ND Resources, Inc. serves as the Fund's Transfer Agent and First Western Bank &
Trust serves as the Fund's Custodian.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY
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OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank and are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency.
READ AND RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE. THE PROSPECTUS
CONCISELY SETS FORTH INFORMATION INVESTORS SHOULD KNOW BEFORE INVESTING IN THE
FUND.
A Statement of Additional Information, dated the date of this Prospectus,
regarding the Fund (which is incorporated herein by reference) has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Fund at the above mailing address or by
telephoning the Manager at either of the numbers set forth above.
FEE AND EXPENSE TABLE
The following tables set forth (i) the non-recurring shareholder
transaction expenses, (ii) the recurring annual Fund operating expenses and
(iii) the estimated expenses paid directly and indirectly by a shareholder with
a $1,000 investment that is subject to the maximum sales load over 1 and 3 year
periods.
The following example should not be considered a representation of past or
future expenses. Actual expenses may be greater or lesser than those shown.
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load imposed on Purchases (as a percentage of
offering price) 4.25%
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There is no sales charge on reinvested dividends, deferred sales charge,
redemption fee or exchange fee. The Maximum Sales Load may be reduced or
eliminated as described in "Purchase of Shares" and "Special Programs."
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets) THE OKLAHOMA MUNICIPAL FUND
(Expense after Fee Waivers)
Management Fees (Expense after Fee Waiver) 0.20%
Rule 12b-1 Fees 0.25%
Other Expenses 0.40%
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Total Fund Operating Expenses (Expense
after Fee Waiver) 0.85%
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EXAMPLE
1 Year 3 Years
Shareholder would pay the following
expenses after fee waiver on a $1,000
investment, assuming a 5% annual return:
The Oklahoma Municipal Fund $51 $69
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The purpose of these tables is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. The calculation presumes expenses for the current year at the
projected rate of .85% for the Fund after a partial fee waiver by the Manager.
Other Expenses are estimated to be 0.40% while Management Fees, Rule 12b-1 Fees
and Total Fund Operating Expenses for the Fund are 0.50%, 0.25% and 1.15% before
fee waiver. These expenses assume a voluntary waiver by the Manager of a
portion of its fee not required by the Management and Investment Advisory
Agreement. These costs and expenses should not be considered a representation
of past or future expenses, and the actual expenses incurred by the Fund, and
the degree of expense reimbursement and fee waiver, if any, may be greater or
less in the future. See "Purchase of Shares" for information relating to sales
load discounts and "Fund Management" for the level of management fees and "The
Distributor" for information relating to the Fund's Shareholder Services Plan.
Long-term shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc.
HIGHLIGHTS OF THE FUND AND PROSPECTUS SUMMARY
The highlights and summary information below should be read in conjunction
with the detailed information appearing elsewhere in this Prospectus.
THE INVESTMENT OBJECTIVE of the Fund is to provide its shareholders with as
high a level of current income that is exempt from both federal income tax and,
to the extent indicated, Oklahoma income tax as is consistent with preservation
of capital. Under normal market conditions, the Fund's assets will be invested
in a portfolio of Oklahoma Municipal Securities which, in the opinion of Ranson
Capital Corporation, will produce a higher level of current income than would be
produced by a portfolio of Oklahoma Municipal Securities rated in only the
highest rating category, but contains Oklahoma Municipal Securities which do not
present a significant risk of loss of principal due to credit characteristics.
There is no assurance that the Fund's investment objective will be achieved. See
"Investment Objective and Policies -- Investment Objective."
THE INVESTMENT POLICY of the Fund is to invest in a portfolio of investment
grade municipal securities which generate interest income that is exempt from
both federal income tax and Oklahoma income tax, to the extent indicated. These
municipal securities (hereinafter referred to as "Oklahoma Municipal
Securities") generally include debt
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obligations of the State of Oklahoma, its political subdivisions,
municipalities, agencies and authorities, and certain industrial development and
other revenue bonds, short-term municipal notes, participation interests in
municipal leases and tax-exempt commercial paper issued by such entities. Up to
30% of the Fund's total assets may be invested in Oklahoma Municipal Securities
which are subject to Oklahoma state income taxes. See "Investment Objective and
Policies -- Oklahoma Municipal Securities" for a more complete description of
Oklahoma Municipal Securities. In certain circumstances the Fund may enter into
when-issued or delayed delivery transactions and purchase taxable securities.
The Fund may, for hedging purposes, enter into financial futures contracts,
options on such futures, municipal bond index futures contracts and options on
securities. These investments entail certain risks. See "Investment Objective
and Policies -- Futures Contracts and Options." The interest on certain Oklahoma
Municipal Securities in the Fund's portfolio may constitute an item of
preference for determining the federal alternative minimum tax for individuals
and corporations. See "Dividends and Taxes."
THE FUND'S SHARES MAY BE PURCHASED through Ranson Capital Corporation and
selected dealers at the public offering price, which is equal to the net asset
value next determined, plus a sales charge of 4.25% of the public offering price
(4.44% of the net amount invested). See "Purchase of Shares."
THE MINIMUM INITIAL INVESTMENT is $1,000 and the minimum additional
investment is $100. See "Purchase of Shares." The initial and minimum
investments will be less under certain conditions described under "Purchase of
Shares" and "Special Programs."
AN OPEN ACCOUNT PROGRAM will be established for each investor unless the
investor elects not to participate in such program as is provided under
"Purchase of Shares -- Open Account Program/Certificates."
SPECIAL PROGRAMS of the Fund include: a group program; a systematic
withdrawal program; a preauthorized investment program; a rights of accumulation
program; and a reinstatement privilege. See "Special Programs."
THE FUND has a Shareholder Services Plan adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940, pursuant to which .25% per annum of
average daily net assets will be used to pay dealers and banks selling Fund
shares for administrative and shareholder services or to pay for certain
distribution expenses. See "The Distributor."
DISTRIBUTIONS for the Fund will be declared daily from net investment
income and will be paid monthly; net capital gains, if any, will be distributed
at least annually. See "Dividends and Taxes."
CONFIRMATION STATEMENTS will be sent to all investors who have had purchase
or redemption activity in their account.
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REDEMPTIONS can be made at net asset value, without charge. The Fund may
require redemption of shares if the value of an account is reduced to $1,000 or
less (for any reason other than fluctuations in the market value of the Fund's
portfolio securities or, if as a result of the amount of an investor's initial
purchase, the value of such an account is $1,000 or less). See "Redemption of
Shares."
THE FUND'S MANAGER AND INVESTMENT ADVISER is Ranson Capital Corporation
which receives a monthly management and investment advisory fee equivalent on an
annual basis to .50 of 1% of the Fund's average daily net assets. Under the
terms of the Management and Investment Advisory Agreement between the Fund and
the Manager, the Manager pays all expenses of the Fund, including the Fund's
management and investment advisory fee and the Fund's dividend disbursing,
administrative and accounting services fees (but excluding taxes and brokerage
fees and commissions, if any) that exceed 1.25% of the Fund's average daily net
assets on an annual basis up to the amount of the management and investment
advisory fee payable by the Fund to the Manager. The Manager may assume
additional Fund expenses or waive portions of its fees in its discretion. See
"Fund Management." Ranson Capital Corporation will act as the Fund's Evaluator.
The procedures of the Evaluator and its valuations are reviewed by the officers
of the Fund under the general supervision of the Board of Trustees. See "Net
Asset Value."
RISK FACTORS: The Fund is subject to the risks of primarily concentrating
its investments in Oklahoma Municipal Securities and does not have the benefit
of geographical investment diversification (see "Investment Objective and
Policies"). Also, as a non-diversified investment company, the Fund has the
ability to invest a substantial portion of its assets in particular issuers
which may be advantageous when investing in Oklahoma Municipal Securities, but
which involves an increased risk of loss to the Fund should an issuer be unable
to make interest or principal payments or should the market value of such
securities decline. The Fund has the ability to purchase new issues of Oklahoma
Municipal Securities on a "when-issued" basis as well as outstanding issues on a
delayed delivery basis, both of which involve the potential risk of loss of
principal in the event either that the value of such securities to be purchased
declines prior to the settlement date or if such securities should ultimately
not be issued or delivered and the price of comparable securities has increased,
the cost of substitute securities having comparable par amounts, ratings and
yields will be greater than was originally contracted for. Twenty five percent
or more of the Oklahoma Municipal Securities in the Fund's portfolio may derive
their payment from mortgage loans and/or hospitals and other health care
facilities, respectively. In addition, a substantial portion of the Oklahoma
Municipal Securities in the Fund's portfolio may derive their payment from
utilities, turnpikes or from educational facilities, all of which entail certain
risks (see "Investment Objective and Policies -- Oklahoma Municipal
Securities"). The Fund may from time to time invest in participations in
municipal leases. Municipal leases are less liquid than many other municipal
securities and therefore will be subject to the risks of illiquidity referred to
in the next paragraph. Also, municipal leases are subject to the risk of "non-
appropriation" which allows the municipal lessee to terminate the lease and
eliminate its obligation to continue to make lease payments (see "Investment
Objective and Policies -- Oklahoma Municipal Securities").
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The Fund will invest a substantial portion of its assets in investment
grade Oklahoma Municipal Securities. Lower quality securities involve a greater
risk of default, including nonpayment of principal and interest, than investment
grade securities; however, the risk of default is present in investment grade
securities. Oklahoma Municipal Securities rated in the lowest category of
investment grade debt have speculative characteristics. The Fund will not invest
in Oklahoma Municipal Securities rated below investment grade (i.e. below BBB by
Standard & Poor's Corporation or Baa by Moody's Investors Service, Inc.);
however, the subsequent downgrading of an Oklahoma Municipal Security below
investment grade will not in itself cause such security to be sold from the
Fund's portfolio. Investment in medium-quality debt securities (rated BBB or A
by Standard & Poor's Corporation or Baa or A by Moody's Investors Service, Inc.)
involves greater investment risk, including the possibility of issuer default or
bankruptcy, than investment in higher-quality debt securities. An economic
downturn could severely disrupt this market and adversely affect the value of
outstanding bonds and the ability of the issuers to repay principal and
interest. During a period of adverse economic changes, including a period of
rising interest rates, issuers of such bonds are more likely to experience
difficulty in servicing their principal and interest payment obligations than is
the case with higher grade bonds. In addition, an investment in the Fund should
be made with an understanding that the value of the underlying portfolio may
decline with increases in interest rates. In recent years there have been wide
fluctuations in interest rates and thus in the value of fixed-rate, long-term
debt obligations generally. The Manager cannot predict whether these
fluctuations will continue in the future. The principal trading market for the
Oklahoma Municipal Securities will generally be in the over-the-counter market.
As a result, the existence of a liquid trading market for the Oklahoma Municipal
Securities may depend on whether dealers will make a market in such securities.
There can be no assurance that a market will be made for any of the Oklahoma
Municipal Securities, that any market for the Oklahoma Municipal Securities will
be maintained or of the liquidity of the Oklahoma Municipal Securities in any
markets made. In addition, certain of the Oklahoma Municipal Securities may be
subject to extraordinary optional and/or mandatory redemptions at par if certain
events should occur. To the extent securities were purchased at a price in
excess of the par value thereof and are subsequently redeemed at par as a result
of an extraordinary redemption, the Fund would suffer a loss of principal.
The Fund may invest in financial futures contracts and related options
thereon for hedging purposes. A risk in employing futures contracts to protect
against the price volatility of portfolio securities is that the prices of
securities subject to futures contracts may not correlate perfectly with the
behavior of the cash prices of the Fund's portfolio securities. The risk of
imperfect correlation may be increased by the fact that the Fund may trade in
futures contracts on taxable securities and there is no guarantee that the
prices of taxable securities will move in a manner similar to the prices of tax-
exempt securities. Another risk is that the Manager could be incorrect in its
expectations as to the direction or extent of various interest rate movements or
the time span within which the movements take place. For example, if the Fund
sold futures contracts in anticipation of an increase in interest rates, and
then interest rates went down, causing bond prices to rise, the Fund would lose
money and incur transaction costs on the sale.
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INVESTORS MAY CALL (800) 601-5593 for daily yield and daily net asset value
quotations and for information on account balances.
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THE FUND
Ranson Managed Portfolios is an unincorporated business trust organized
under the laws of Massachusetts on August 10, 1990. It is an open-end non-
diversified series management investment company or "mutual fund." The Oklahoma
Municipal Fund is one of four portfolios or "series" offered at this time. Like
other mutual funds, the Fund sells its shares to investors and uses the proceeds
to invest in various securities as described in this Prospectus. The Fund is
subject to the overall direction and monitoring function of the Board of
Trustees (the "Trustees").
Information regarding the Fund is available by telephoning or writing the
Fund at the phone number or address shown on the front cover of this Prospectus.
INVESTMENT OBJECTIVE AND POLICIES
Investment Objective
The investment objective of the Fund is to provide its shareholders with as
high a level of current income exempt from both federal income tax and, to the
extent indicated, Oklahoma income tax as is consistent with preservation of
capital. Under normal market conditions, the Fund's assets will be invested in a
portfolio of Oklahoma Municipal Securities which, in the opinion of Ranson
Capital Corporation, will produce a higher level of current income than would be
produced by a portfolio of Oklahoma Municipal Securities rated in only the
highest rating category, but contains Oklahoma Municipal Securities which do not
present a significant risk of loss of principal due to credit characteristics.
The Fund seeks to achieve its investment objective by investing primarily in
Oklahoma Municipal Securities (as further described below). At the respective
times of issuance of the Oklahoma Municipal Securities, certain, but not
necessarily all, of the issues of the Oklahoma Municipal Securities may have
been accompanied by an opinion of bond counsel to the respecting issuing
authorities that interest on such Oklahoma Municipal Securities are exempt from
Oklahoma income tax. The Fund may invest up to 30% of its total assets in
Oklahoma Municipal Securities, the interest on which is subject to Oklahoma
income tax. Oklahoma law provides that to the extent dividends paid by the Fund
are derived from Oklahoma Municipal Securities, they shall be exempt from
Oklahoma income tax.
A shareholder will receive taxable income in the event of capital gains
distributions by the Fund. In addition, the Fund has not established any limit
on the percentage of its portfolio that may be invested in Oklahoma Municipal
Securities subject to the alternative minimum tax provisions of federal tax law,
and a substantial portion of the income produced by the Fund may be includable
in the calculation of alternative minimum taxable income. Shares of the Fund
therefore would not ordinarily be a suitable investment for investors who are
subject to the alternative minimum tax. The suitability of shares of the Fund
for these investors will depend upon a comparison of the yield likely to be
provided from the Fund with the yield from comparable tax-exempt investments not
subject to the alternative
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minimum tax, and with the yield from comparable fully taxable investments, in
light of each such investor's tax position.
OKLAHOMA MUNICIPAL SECURITIES
As used in this Prospectus, the term "Oklahoma Municipal Securities" refers
to debt obligations of Oklahoma, its political subdivisions, municipalities,
agencies and authorities the interest payable on which is, in the opinion of
bond counsel to the issuer, exempt from federal income taxation. The Fund will
not invest more than 30% of its total assets in Oklahoma Municipal Securities,
the interest on which is subject to Oklahoma income tax. The term "Oklahoma
Municipal Securities" also includes obligations of the Commonwealth of Puerto
Rico, the Virgin Islands and Guam, the interest payable on which is, in the
opinion of bond counsel to the issuer, exempt from federal income taxation. The
Fund will not invest more than 30% of its total assets in Oklahoma Municipal
Securities which are obligations of the Commonwealth of Puerto Rico, the Virgin
Islands or Guam. Oklahoma Municipal Securities include debt obligations of
Oklahoma, its political subdivisions, municipalities, agencies and authorities
issued to obtain funds for various public purposes, including the construction
or improvement of a wide range of public facilities such as airports, bridges,
highways, hospitals, housing, jails, mass transportation, nursing homes, parks,
public buildings, recreational facilities, school facilities, streets and water
and sewer works. Other public purposes for which Oklahoma Municipal Securities
may be issued include the refunding of outstanding obligations, the anticipation
of taxes or state aids, the payment of judgments, the funding of student loans,
community redevelopment, the purchase of street maintenance and firefighting
equipment, or any authorized corporate purpose of the issuer except for the
payment of current expenses. In addition, certain types of industrial
development and other revenue bonds may be issued by or on behalf of public
corporations to finance privately operated housing facilities, air or water
pollution control facilities and certain local facilities for water supply, gas,
electricity or sewage or solid waste disposal. Other types of industrial
development bonds, the proceeds of which are used for the construction,
equipping, repair or improvement of privately operated industrial, commercial or
office facilities, constitute Oklahoma Municipal Securities, although current
federal income tax laws place substantial limitations on the size of such
issues.
Since the Fund will invest substantially all of its assets in Oklahoma
Municipal Securities, the Fund is susceptible to political and economic factors
affecting the issuers of Oklahoma Municipal Securities. Investors in the Fund
should consider that the economy of Oklahoma has been experiencing difficulties
as a result of an economic recession largely attributable to a decline in the
agricultural industry and a rapid decline that was experienced in the early and
mid 1980s in the energy industry which have, in turn, caused declines in the
real estate industry, the banking industry and most other sectors of the State's
economy. Continued low levels of economic activity, another decline in oil and
gas production prices, low growth in the State's major industries or private or
public financial difficulties could adversely affect Oklahoma Municipal
Securities in the portfolio of the Fund and consequently the value of a
shareholder's investment in the Fund.
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Governmental expense budgeting provisions in Oklahoma are conservative,
basically requiring a balanced budget each fiscal year unless a debt is approved
by a vote of the people providing for the collection of a direct annual tax to
pay the debt. Certain limited exceptions include: deficiency certificates issued
in the discretion of the Governor (however, the deficiency certificates may not
exceed $500,000 in any fiscal year) and debts to repel invasion, suppress
insurrection or to defend the State in the event of war.
To ensure a balanced annual budget, the State Constitution provides
procedures for certification by the State Board of Equalization of revenues
received in the previous fiscal year and amounts available for appropriation
based on a determination of revenues to be received by the State in the General
Revenue Fund in the next ensuing fiscal year.
Beginning July 1, 1985, surplus funds were to be placed in a Constitutional
Reserve Fund until the Reserve Fund equals 10% of the General Revenue Fund, as
certification for the preceding fiscal year.
The foregoing information constitutes only a brief summary of some of the
financial difficulties which may impact certain issuers of Oklahoma Municipal
Securities and does not purport to be a complete or exhaustive description of
all adverse conditions to which the issuers in the Fund are subject.
Additionally, many factors including national economic, social and environmental
policies and conditions, which are not within the control of the issuers of
Oklahoma Municipal Securities, could affect or could have an adverse impact on
the financial condition of the State and its various agencies and political
subdivisions. The Manager is unable to predict whether or to what extent such
factors or other factors may affect the issuers of Oklahoma Municipal
Securities, the market value or marketability of the Oklahoma Municipal
Securities or the ability of the respective issuers of the Oklahoma Municipal
Securities acquired by the Fund to pay interest on or principal of the Oklahoma
Municipal Securities.
The Fund has a fundamental investment restriction which prohibits it from
investing 25% or more of its total assets in securities of issuers in any single
industry. This restriction does not, however, place any such limitation on the
purchase of securities issued or guaranteed by the U.S. Government, its agencies
or instrumentalities or by Oklahoma, its political subdivisions, municipalities,
agencies and authorities.
Over 25% of the Oklahoma Municipal Securities in the Fund's portfolio may
derive their payment from mortgage loans. Such Oklahoma Municipal Securities are
single family mortgage revenue bonds issued for the purpose of acquiring from
originating financial institutions notes secured by mortgages on residences
located within the issuer's boundaries and owned by persons of low or moderate
income. Mortgage loans are generally partially or completely prepaid prior to
their final maturities, as a result of events such as the sale of the mortgaged
premises, default condemnation or casualty loss. Because these bonds are subject
to extraordinary mandatory redemption, in whole or in part, from such
prepayments on mortgage loans, a substantial portion of such bonds will probably
be redeemed prior to their scheduled maturities or even prior to their ordinary
call dates. Extraordinary mandatory redemption without premium could also result
from the failure of the originating
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financial institutions to make mortgage loans in sufficient amounts within a
specified time period or, in some cases, from the sale by the Bond issuer of the
mortgage loans. These bonds were issued under Section 103A of the Internal
Revenue Code, which Section contains certain ongoing requirements relating to
the use of the proceeds of such bonds in order for the interest on such bonds to
retain its tax-exempt status. In each case the issuer of the bonds has
covenanted to comply with applicable requirements and bond counsel to such
issuer has issued an opinion that the interest on the bonds is exempt from
federal income tax under existing laws and regulations. There can be no
assurance that such ongoing requirements will be met.
Over 25% of the Oklahoma Municipal Securities in the Fund's portfolio may
be health care revenue bonds. Ratings of bonds issued for health care facilities
are often based on feasibility studies that contain projections of occupancy
levels, revenues and expenses. A facility's gross receipts and net income
available for debt service may be affected by future events and conditions
including, among other things, demand for services, the ability of the facility
to provide the services required, physicians' confidence in the facility,
management capabilities, competition with other hospitals, efforts by insurers
and governmental agencies to limit rates, legislation establishing state rate-
setting agencies, expenses, government regulation, the cost and possible
unavailability of malpractice insurance and the termination or restriction of
governmental financial assistance, including that associated with Medicare,
Medicaid and other similar third party payor programs. Medicare reimbursements
are currently calculated on a prospective basis utilizing a single nationwide
schedule of rates. Prior to this nationwide approach, Medicare reimbursements
were based on the actual costs incurred by the health facility. The current
legislation may adversely affect reimbursements to hospitals and other
facilities for services provided under the Medicare program.
The Oklahoma Municipal Securities in which the Fund invests consist of
Oklahoma bonds, notes, commercial paper and participation interests in municipal
leases. Oklahoma tax-exempt notes and commercial paper are generally used to
provide for short-term capital needs and ordinarily have a maturity of up to one
year. These include notes issued in anticipation of tax revenue, revenue from
other government sources or revenue from bond offerings and short-term,
unsecured commercial paper, which is often used to finance seasonal working
capital needs or to provide interim construction financing. Oklahoma tax-exempt
leases are obligations of state and local government units incurred to lease or
purchase equipment or other property utilized by such governments. The Fund will
not originate leases as a lessor, but will instead purchase a participation
interest in the regular payment stream of the underlying lease from a bank,
equipment lessor or other third party. General obligation bonds are secured by
the issuer's pledge of its faith, credit and taxing power for the payment of
principal and interest. Revenue bonds are payable from the revenue derived from
a particular facility or class of facilities or, in some cases, from the
proceeds of a special excise or other specific revenue source, but not from the
general taxing power. Tax-exempt industrial development bonds are in most cases
revenue bonds and generally do not carry the pledge of the credit of the issuing
municipality. The revenues from which such bonds are paid generally constitute
an obligation of the corporate entity on whose behalf the bonds are issued.
-11-
<PAGE>
Although the participations in municipal leases which the Fund may purchase
(hereinafter called "lease obligations") do not constitute general obligations
of the municipality for which the municipality's taxing power is pledged, a
lease obligation is ordinarily backed by the municipality's covenant to budget
for, appropriate and make the payments due under the lease obligation. However,
certain lease obligations contain "non-appropriation" clauses which provide that
the municipality has no obligation to make lease payments in future years unless
money is appropriated for such purpose on a yearly basis. In addition to the
"nonappropriation" risk, these securities represent a relatively new type of
financing that has not yet developed the depth of marketability associated with
more conventional bonds. Although "non-appropriation" lease obligations are
secured by the leased property, disposition of the property in the event of
foreclosure might prove difficult. The Fund will only purchase lease obligations
which are rated in the top category by either Standard & Poor's Corporation or
Moody's Investor Service, Inc. The Fund will not invest more than 10% of its net
investment assets in lease obligations (including, but not limited to those
lease obligations which contain "non-appropriation clauses"), or any other
illiquid securities.
The Fund will only purchase lease obligations which are covered by an
existing opinion of legal counsel experienced in municipal lease transactions
that, as of the date of issue or purchase of each participation interest in a
municipal lease, the interest payable on such obligation is exempt from both
federal income tax and Oklahoma income tax and that the underlying lease was the
valid and binding obligation of the governmental issuer.
INVESTMENT POLICIES
It is a fundamental policy of the Fund, which may not be changed without
the approval of the majority of the Fund's shares, that under normal
circumstances at least 70% of the Fund's assets will be invested in Oklahoma
Municipal Securities which generate income that is exempt, in the opinion of
bond counsel, from both federal income tax and Oklahoma income tax and at least
80% of the Fund's assets will be invested in Oklahoma Municipal Securities which
generate income that is exempt, in the opinion of bond counsel, from federal
income tax. While the Fund attempts, under normal market conditions, to invest
all of its assets in Oklahoma Municipal Securities and must invest at least 65%
of the value of its assets in Oklahoma Municipal Securities under normal market
conditions, the Fund may temporarily invest up to 100% of its assets in taxable
fixed-income securities or hold up to 100% of its assets in cash during periods
of abnormal market conditions that dictate taking a defensive posture by
investing in such taxable obligations or cash. In addition, pending the
investment or reinvestment in Oklahoma Municipal Securities of proceeds of sales
of shares or sales of portfolio securities or in order to avoid the necessity of
liquidating portfolio investments to meet shareholders' redemption requests, the
Fund may invest up to 20% of its assets in taxable fixed income securities or
cash.
The Oklahoma Municipal Securities in which the Fund invests consist of
securities rated within the following grades assigned by Moody's Investors
Service, Inc. ("Moody's"): Aaa, Aa, A and Baa for bonds; MIG-1 and MIG-2 for
notes; Prime-1 and Prime-2 for commercial paper; or Standard & Poor's
Corporation ("S&P"): AAA, AA, A and BBB for
-12-
<PAGE>
bonds; SP-1 and SP-2 for notes; A-1 or A-2 for commercial paper. The risk of
default, including nonpayment of principal and interest, on securities rated
below the three highest grades is somewhat higher than the risk of default on
securities rated within the three highest grades. The Fund may also invest in
Oklahoma tax-exempt industrial development bonds, if the securities, at the time
of purchase, are rated investment grade quality by either Moody's or S&P. The
Fund will not invest in Oklahoma Municipal Securities rated below investment
grade by either Standard & Poor's Corporation or Moody's Investors Service, Inc.
While ratings at the time of purchase will determine which Oklahoma Municipal
Securities may be acquired by the Fund, a subsequent reduction in rating will
not require the Fund to dispose of the securities. The Fund will purchase
unrated Oklahoma Municipal Securities which have been determined to be of
investment grade quality at the time of purchase by the Fund's Manager pursuant
to guidelines established and maintained in good faith by the Board of Trustees
of the Fund. Many issuers of tax-exempt securities which have characteristics of
rated securities choose not to have their obligations rated. Although securities
which are not rated are not necessarily of lower quality, the market for them
may not be as broad as for rated securities, since many investors rely on rating
agencies for credit appraisal. As a fundamental policy, the Fund may not invest
more than 30% of its assets in unrated Oklahoma Municipal Securities. Also, the
Fund will not invest more than 15% of the Fund's net assets in lease
obligations, or in any other illiquid securities.
Taxable obligations which the Fund may purchase for temporary liquidity
purposes, or for temporary defensive purposes, may include: obligations of the
U.S. Government, its agencies or instrumentalities; other debt securities of
issuers having, at the time of purchase, a rating within the four highest grades
of Moody's or S & P; commercial paper rated P- 1 or better by Moody's or A-1 or
better by S & P; certificates of deposit of domestic banks, including foreign
branches of domestic banks, which have capital, surplus and undivided profits of
over $100 million; time deposits; bankers' acceptances, repurchase agreements
and obligations of Oklahoma with respect to any of the foregoing investments.
Interest earned from taxable obligations will be taxable to investors.
The Fund also may purchase floating and variable rate demand notes from
municipal and nongovernmental issuers. These notes normally have a stated
maturity in excess of one year, but permit the holder to demand payment of
principal plus accrued interest upon a specified number of days notice.
Frequently, such obligations are secured by letters of credit or other credit
support arrangements provided by banks. Use of letters of credit or other credit
support arrangements will generally not adversely affect the tax-exempt status
of these obligations. The Manager will rely upon the opinion of the issuer's
bond counsel to determine whether such notes are exempt from federal and
Oklahoma income taxation. The issuer of floating and variable rate demand notes
nominally has a corresponding right, after a given period, to prepay in its
discretion the outstanding principal amount of the note plus accrued interest
upon a specified number of days notice to the noteholders. The interest rate on
a floating rate demand note is based on a known lending rate, such as a bank's
prime rate, and is adjusted automatically each time such rate is adjusted. The
interest rate on a variable rate demand note is adjusted at specified intervals,
based upon a known lending rate. The Manager will monitor the creditworthiness
of the issuers of floating and variable rate
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<PAGE>
demand notes. The Fund will not invest in derivative financial instruments other
than in connection with its hedging activities.
The yields on Oklahoma Municipal Securities are dependent on a variety of
factors, including general money market conditions, the financial condition of
the issuer, general conditions of the Oklahoma municipal obligations market, the
size of a particular offering, the maturity of the obligation and the rating of
the issue or issuer. The ratings of Moody's and S&P represent their opinions as
to the quality of the Oklahoma Municipal Securities which they undertake to
rate. It should be emphasized, however, that ratings are general, and not
absolute, standards of quality. Consequently, Oklahoma Municipal Securities of
the same maturity, interest rate and rating may have different yields, while
Oklahoma Municipal Securities of the same maturity and interest rate with
different ratings may have the same yield. Subsequent to their purchase by the
Fund, particular Oklahoma Municipal Securities or other investments may cease to
be rated or their ratings may be reduced below the minimum rating required for
purchase by the Fund.
Medium-quality Oklahoma Municipal Securities (rated BBB or A by S&P or Baa
or A by Moody's) are obligations of issuers that are considered to possess
adequate, but not outstanding, capacities to service the obligations. Oklahoma
Municipal Securities rated in the lowest category of investment grade debt
(rated BBB by S&P or Baa by Moody's) may have speculative characteristics.
Because many issuers of medium-quality Municipal Securities choose not to have
their obligations rated by a rating agency, up to 30% of the Oklahoma Municipal
Securities in the Fund's portfolio may be unrated. Investment in medium-quality
debt securities involves greater investment risk, including the possibility of
issuer default or bankruptcy, than investment in higher-quality debt securities.
An economic downturn could severely disrupt this market and adversely affect the
value of outstanding bonds and the ability of the issuers to repay principal and
interest. During a period of adverse economic changes, including a period of
rising interest rates, issuers of such bonds are more likely to experience
difficulty in servicing their principal and interest payment obligations than is
the case with higher grade bonds. Medium quality debt securities tend to be less
marketable than higher-quality debt securities because the market for them is
less broad. The market for unrated debt securities is even narrower. During
periods of thin trading in these markets, the spread between bid and asked
prices is likely to increase significantly, and the Fund may have greater
difficulty selling the medium-quality debt securities in its portfolio.
The Fund is a non-diversified investment company, but intends to comply
with Subchapter M of the Internal Revenue Code. Because of the relatively small
number of issuers of investment grade Oklahoma Municipal Securities, the Fund
will probably use its ability as a non-diversified fund to invest a substantial
portion of its assets in the securities of certain issuers which the Fund's
Manager deems to be attractive investments, rather than invest in securities of
a large number of issuers merely to satisfy diversification requirements.
Although the Fund's Manager believes that the ability to invest a substantial
portion of the investments of the Fund in particular issuers is advantageous
when investing in Oklahoma Municipal Securities, such concentration involves an
increased risk of loss to the Fund should the issuer be unable to make interest
or principal payments or should the
-14-
<PAGE>
market value of such securities decline. Investment in a non-diversified
investment company such as the Fund may therefore entail greater risks than
investment in a "diversified" fund.
The Fund may invest up to 10% of its total assets in the securities of
other investment companies. Any investment by the Fund in securities issued by
other investment companies will result in the duplication of certain fees and
expenses.
FUTURES CONTRACTS AND OPTIONS
The Fund may invest in financial futures contracts ("futures contracts")
and related options thereon for hedging purposes. It is not the intent of the
Manager to speculate in futures contracts and related options as an aggressive
investment strategy, but rather as described below. The Fund may sell a futures
contract or a call option thereon or purchase a put option on such futures
contract if the Manager anticipates that interest rates will rise, as a hedge
against a decrease in the value of the Fund's portfolio securities. If the
Manager anticipates that interest rates will decline, the Fund may purchase a
futures contract or a call option thereon or sell a put option on such futures
contract to protect against an increase in the price of the securities the Fund
intends to purchase. These futures contracts and related options thereon will be
used only as a hedge against anticipated interest rate changes. A futures
contract sale creates an obligation by the Fund, as seller, to deliver the
specific type of instrument called for in the contract at a specified future
time for a specified price. Purchase of a futures contract creates an obligation
by the Fund, as purchaser, to take delivery of the specific type of financial
instrument at a specified future time at a specified price. A purchaser or
seller of a futures contract is required to make daily payments of cash to
reflect the change in the value of the underlying contract. The specific
securities delivered or taken, respectively, at settlement date would not be
determined until or near that date. The determination would be in accordance
with the rules of the exchange on which the futures contract sale or purchase
was effected.
Although the terms of futures contracts specify actual delivery or receipt
of securities, in most instances the contracts are closed out before the
settlement date without the making or taking of delivery of the securities.
Closing out of a futures contract is effected by entering into an offsetting
purchase or sale transaction prior to the expiration of the contract.
Unlike a futures contract, which requires the parties to buy and sell a
security on a set date unless offset, an option on a futures contract entitles
its purchaser to decide on or before a future date whether to enter into such a
contract (a long position in the case of a call option and a short position in
the case of a put option). If the purchaser decides not to enter into the
contract, the premium paid for the option on the contract is lost if it expires.
Since the cost of the option is fixed, there are no daily payments of cash by
the purchaser to reflect the change in the value of the underlying contract as
there are by a purchaser or seller of a futures contract. The seller of the
option, however, may be required to make daily maintenance margin payments to
reflect the change in value of the underlying contract. The value of the option
is reflected in the net asset value of the Fund.
-15-
<PAGE>
A risk in employing futures contracts to protect against the price
volatility of portfolio securities is that the prices of securities subject to
futures contracts may not correlate perfectly with the behavior of the cash
prices of the Fund's portfolio securities. The risk of imperfect correlation may
be increased by the fact that the Fund may trade in futures contracts on taxable
securities and there is no guarantee that the prices of taxable securities will
move in a manner similar to the prices of tax-exempt securities. The correlation
may be distorted in part by the fact that the futures market is influenced by
short-term traders seeking to profit from the difference between a contract or
security price objective and their cost of borrowed funds. Such distortions
generally are minor and should diminish as the contract approaches maturity.
Another risk is that the Manager could be incorrect in its expectations as
to the direction or extent of various interest rate movements or the time span
within which the movements take place. For example, if the Fund sold futures
contracts in anticipation of an increase in interest rates, and then interest
rates went down, causing bond prices to rise, the Fund would lose money,
including transaction costs, on the sale.
The Fund may not enter into futures contracts or purchase related options
thereon if immediately thereafter the amount committed to initial margin plus
the amount paid for premiums for unexpired options on futures contracts exceed
5% of the value of the Fund's total assets. Similarly, the Fund may not purchase
or sell futures contracts or related options thereon if, immediately thereafter,
more than one-third of its net assets would be hedged.
FORWARD COMMITMENTS
The Fund may purchase new issues of Oklahoma Municipal Securities and other
securities on a "when-issued" or delayed delivery basis, with delivery and
payment for the securities normally taking place within 45 days after the date
of the commitment to purchase. The payment obligation and the interest rate that
will be received on such securities are fixed at the time the buyer enters into
the commitment. The Fund may enter into such "forward commitments" if it holds,
and maintains until the settlement date in a segregated account with its
custodian, cash or high-grade, short-term obligations in an amount sufficient to
meet the purchase price. There is no percentage limitation on the Fund's total
assets which may be invested in forward commitments. Forward commitments involve
a risk of loss if the value of the Oklahoma Municipal Security or other security
to be purchased declines prior to the settlement date, which risk is in addition
to the risk of decline in the value of the Fund's other assets. Although the
Fund will generally enter into forward commitments with the intention of
acquiring Oklahoma Municipal Securities or other securities for its portfolio,
the Fund may dispose of a commitment prior to settlement if the Manager deems it
appropriate to do so. The Fund may realize short-term profits or losses upon the
sale of forward commitments, which profits or losses may constitute capital
gains or ordinary income depending upon a number of factors, including the
number of sales of such commitments.
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<PAGE>
PORTFOLIO TURNOVER
Portfolio transactions will be undertaken principally to accomplish the
Fund's objective in relation to anticipated movements in the general level of
interest rates, but the Fund may also engage in short-term trading consistent
with its objective. Securities may be sold in anticipation of a market decline
(a rise in interest rates) or purchased in anticipation of a market rise (a
decline in interest rates) and later sold. In addition, a security may be sold
and another purchased at approximately the same time to take advantage of what
the Manager believes to be a temporary disparity in the normal yield
relationship between the two securities. Yield disparities may occur for reasons
not directly related to the investment quality of particular issues or the
general movement of interest rates, due to such factors as changes in the
overall demand for or supply of various types of Oklahoma Municipal Securities
or changes in the investment objectives of investors.
The Fund's investment policies may lead to frequent changes in investments,
particularly in periods of rapidly fluctuating interest rates. A change in
securities held by the Fund is known as "portfolio turnover" and may involve the
payment by the Fund of dealer mark-ups or underwriting commissions, and other
transaction costs, on the sale of securities, including Oklahoma Municipal
Securities, as well as on the reinvestment of the proceeds in other securities.
The Fund anticipates that its annual portfolio turnover rate will not exceed
75%. Portfolio turnover rate for a fiscal year is the ratio of the lesser of the
dollar amount of the purchases or sales of portfolio securities to the monthly
average of the value of portfolio securities excluding securities whose
maturities at acquisition were one year or less. The Fund's portfolio turnover
rate will not be a limiting factor when the Fund deems it desirable to sell or
purchase securities. Frequent changes in the Fund's portfolio securities may
result in higher transaction costs for the Fund. In addition, in order to
qualify as a regulated investment company under the Internal Revenue Code, the
Fund must limit the portion of its gross income derived from the sale or other
disposition of stock or securities held for less than three months. If the Fund
were unable to satisfy this condition, among others, the Fund would be subject
to tax on its taxable income without deduction for distributions to
shareholders. See "Dividends and Taxes" in this Prospectus and "Portfolio
Transactions" in the Fund's Statement of Additional Information.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements with respect to not more than
10% of its total assets (taken at current value), except when investing for
temporary defensive purposes during times of adverse market conditions. A
repurchase agreement is a contract under which the Fund would acquire a security
for a relatively short period and the seller would agree to repurchase such
security at the Fund's cost plus interest within a specified time (generally one
day). Under the Investment Company Act of 1940, repurchase agreements are
considered loans by the Fund. The Fund will not enter into any repurchase
agreement in an amount which would jeopardize the Fund's status as a regulated
investment company or its ability to distribute tax-exempt dividends. Although
the Fund may enter into repurchase agreements with respect to any securities
which it may acquire consistent with its investment policies and restrictions,
it is the Fund's present intention to enter into repurchase
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<PAGE>
agreements only with respect to obligations of the U.S. Government or its
agencies or instrumentalities and with respect to Oklahoma Municipal Securities.
The Fund's custodian will hold the securities underlying any repurchase
agreement in a segregated account. In investing in repurchase agreements, the
Fund's risk is limited to the ability of the seller to pay the agreed-upon price
at the maturity of the repurchase agreement. In the opinion of the Manager, the
risk is not material, since in the event of default, barring extraordinary
circumstances, the Fund would be entitled to sell the underlying securities or
otherwise receive adequate protection under federal bankruptcy laws for its
interest in such securities. To the extent that proceeds from any sale upon a
default are less than the repurchase price, however, the Fund could suffer a
loss. In addition, the Fund may incur certain delays in obtaining direct
ownership of the collateral.
The Fund's Board of Trustees may change any of the foregoing policies that
are not fundamental without an affirmative vote of a of a "majority of the
Fund's outstanding voting shares," as defined in "Investment Objective, Policies
and Restrictions" in the Fund's Statement of Additional Information.
NET ASSET VALUE
The net asset value per share of the Fund is determined by calculating the
total value of the Funds' assets, deducting total liabilities, and dividing the
result by the number of shares outstanding. Fixed income securities are valued
at the mean between the quoted bid and asked price. Securities for which
quotations are not readily available (which will constitute a majority of the
securities held by the Fund) are valued at fair value as determined by Ranson
Capital Corporation (the "Evaluator") pursuant to procedures adopted by the
Board of Trustees using methods which include consideration of the following:
yields or prices of municipal bonds of comparable quality, type of issue,
coupon, maturity and rating, indications as to value from dealers and general
market conditions. The Evaluator may employ electronic data processing
techniques and/or a matrix system to determine valuations. The procedures
utilized by the Evaluator and its valuations are reviewed by the officers of the
Fund under the general supervision of the Board of Trustees and are periodically
reviewed by the Board of Trustees. Short-term securities with remaining
maturities of less than 60 days are valued at amortized cost. Other assets are
valued at fair value as determined in good faith by the Trustees of the Fund.
The net asset value of the Fund is computed once daily as of 3:15 p.m. Central
time on each day that the New York Stock Exchange is open for trading. The
public offering price based thereon becomes effective as of the time of such
computation. The New York Stock Exchange is closed on weekends and on the
following days: New Year's Day, Washington's Birthday, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The Fund
reserves the right to calculate the net asset value and to adjust the public
offering price based thereon more frequently than once each day if deemed
desirable.
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<PAGE>
PURCHASE OF SHARES
Shares may be purchased at the public offering price through any securities
dealer having a sales agreement with Ranson Capital Corporation (the
"Distributor"). Shares may also be purchased through banks and certain other
financial institutions that have agency agreements with the Distributor. These
financial institutions will receive transaction fees that are the same as
commissions to dealers and may charge their customers service fees relating to
investments in the Fund. Purchase requests should be addressed to the dealer or
agent from which this Prospectus was received which has a sales agreement with
the Distributor. Such dealer or agent may place a telephone order with the
Transfer Agent for the purchase of Fund shares. It is a dealer's or broker's
responsibility to promptly forward payment and registration instructions (or
completed applications) to the Transfer Agent for shares being purchased.
Reference should be made to the wire order to ensure proper settlement of the
trade. Payment must be received within three business days of the order or the
trade may be canceled and the dealer or broker placing the trade will be liable
for any losses. The public offering price is the net asset value per share next
determined plus a sales charge that will be a percentage of the public offering
price and will vary as shown below. Current sales charge rates are:
<TABLE>
<CAPTION>
SALES CHARGE
<S> <C> <C> <C>
AS A PERCENTAGE OF DEALER ALLOWANCE
AS A PERCENTAGE OF NET ASSET VALUE AS PERCENTAGE OF
OFFERING PRICE INVESTED OFFERING PRICE
AMOUNT OF PURCHASE
Less than $50,000 4.25% 4.44% 3.60%
$50,000 but less than
$100,000 3.75% 3.90% 3.15%
$ 100,000 but less than
$250,000 3.25% 3.36% 2.75%
$250,000 but less than
$500,000 2.50% 2.56% 2.00%
$500,000 but less than
$1,000,000 1.50% 1.52% 1.40%
$1,000,000 or more 0.75% 0.76% 0.70%
</TABLE>
The minimum initial investment is $1,000 and there is a $100 minimum on all
additional investments (excluding reinvestment of dividends and capital gains).
The Fund reserves the right to redeem Fund accounts that are reduced to a value
of less than $1,000 (for any reason other than fluctuation in the market value
of the Fund's portfolio securities or if as a result of the amount of an
investor's initial purchase, the value of such an account is $1,000 or less).
Should the Fund elect to exercise this right, the investor will be notified in
writing before such redemption is processed that the value of the investor's
account is less than $1,000 and that the investor will have sixty days to
increase the account to at least the $1,000 minimum amount before the account is
redeemed.
Shares of the Fund may be sold at net asset value to the officers and
Trustees of the Fund and to any employees of Ranson Capital Corporation or to
members of their immediate families. Immediate family members shall include
spouse, children, father, mother, brothers or sisters. Shares of the Fund may
also be sold at their net asset value to broker-dealers having sales agreements
with Ranson Capital Corporation and registered
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<PAGE>
representatives and other employees of such broker-dealers, including their
spouses and children; to financial institutions having sales agreements with
Ranson Capital Corporation and employees of such financial institutions,
including their spouses and children; and to any broker-dealer, financial
institution, or other qualified firm which receives no commissions for selling
shares to its clients.
From time to time the Distributor may implement programs under which
dealers and their representatives may be eligible to participate in which such
firms may win nominal awards for certain sales efforts or under which the
Distributor will reallow additional concessions to any dealer that sponsors
sales contests or recognition programs conforming to criteria established by the
Distributor or participates in sales programs sponsored by the Distributor.
These programs will not change the price that an investor pays for shares or the
amount that the Fund will receive from such sale. In addition, the Fund and the
Distributor may pay firms that sell the Fund's shares an annual service fee for
administrative and shareholder services, as described under "The Distributor."
Letters of Intent
An investor may qualify for a reduced sales charge immediately by stating
his or her intention to invest in one or more series of the Fund, during a 13-
month period, an amount that would qualify for a reduced sales charge and by
signing a nonbinding Letter of Intent which may be signed at any time within 90
days after the first investment to be included under the Letter of Intent. After
signing the Letter of Intent, each investment made by an investor will be
entitled to the sales charge applicable to the total investment indicated in the
Letter of Intent. If an investor does not complete the purchases under the
Letter of Intent within the 13-month period, the sales charge will be adjusted
upward, corresponding to the amount actually purchased. When an investor signs a
Letter of Intent, shares of a series of the Fund with a value of up to 5% of the
amount specified in the Letter of Intent will be restricted. If the total
purchases made by an investor under the Letter of Intent, less redemptions,
equals or exceeds the amount specified in the Letter of Intent, the restriction
on the shares will be removed. In addition, if the total purchases exceed the
amount specified and qualify for a further quantity discount, the Distributor
will make a retroactive price adjustment and will apply the adjustment to
purchase additional shares at the then current applicable offering price. If an
investor does not complete purchases under a Letter of Intent, the sales charge
is adjusted upward, and if after written notice to the investor, he or she does
not pay the increased sales charge, sufficient restricted shares will be
redeemed at the current net asset value to pay such charge. In connection with
the determination of sales charges applicable to the purchase of shares of the
Fund, the Letter of Intent program will take into account investments in shares
of any other mutual fund carrying a sales load of which Ranson Capital
Corporation is the Distributor.
Concurrent Purchases
An investor or his or her dealer or agent must notify the Transfer Agent
whenever a quantity discount is applicable to purchases. Upon such
notification, an investor will receive
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<PAGE>
the lowest applicable sales charge. Quantity discounts may be modified or
terminated by the Distributor at any time. For more information about quantity
discounts, contact the dealer or agent from which this Prospectus was obtained
or the Distributor.
Open Account Program/Certificates
All investors in the Fund will be enrolled in an Open Account Program when
they make their first investment in the Fund, unless they elect otherwise.
Investors may then make additional purchases whenever they wish, but they are
not obligated to make any additional investments. Whenever investors make an
investment in the Fund, full and fractional shares will be purchased for their
account at the next determined public offering price applicable to their
purchase after the Fund receives their order.
If an investor elects not to be enrolled in the Open Account Program by
notifying the Transfer Agent in written form, he or she will be sent share
certificates representing the full shares of the Fund and will be required to
surrender the certificates to redeem such shares. Fund share certificates will
be mailed within 10 days of an investor's request. Certificates will not be sent
outside of the United States. Investors should promptly notify the Fund if
certificates are not received. The Fund will not file a mail loss claim later
than one year after the issuance of Fund share certificates. After one year,
investors requesting replacement certificates may be required to post an
insurance bond in the amount of 2% of the market value of the certificated
shares.
SPECIAL PROGRAMS
Redemptions From Other Funds
Shares of the Fund may be purchased at net asset value where the amount
invested is documented to the Fund to be proceeds from the redemption of shares
of mutual funds which do not impose a contingent deferred sales charge or
redemption fee and where the investor paid an initial sales charge. Purchases
must be made within 60 days of redemption date. The Fund reserves the right to
modify or terminate this privilege at any time without notice.
Group Program
The Fund has a group investment and reinvestment program (the "Group
Program") which allows investors to purchase shares of a Series of the Fund with
a lower minimum initial investment and with a lower sales charge if the investor
and the Group Program of which he or she is a participant meet the cost saving
criteria set forth below.
Description of Group Program. If the investor's Group Program (such as an
employee investment program) meets the requirements described below, a series of
the Fund will modify the $1,000 initial investment requirement to such minimum
investment as may be determined by the Fund. The sales charge set forth under
"Purchase of Shares" for each
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purchase by a participant of a Group Program will be based on (i) the combined
current purchases of such group of shares together with (ii) the combined net
asset value of shares of such group at the time of such investment. The dealer
or agent, if any, through which the Group Program was initiated will be entitled
to a dealer concession or agency commission based on the sales charges paid by
participants of such Group Program.
Criteria for the Group Program. The cost savings criteria to the Fund that
must be met in order for a Group Program to qualify for the benefits set forth
above are:
(a) The administrator of an investor's investment program must have
entered into an agreement with the Distributor.
(b) Such agreement must provide that the administrator must submit a
single order and make payment with a single remittance for all investments
during each investment period (e.g., each pay period or distribution
period) by all investors who choose to invest through the Group Program.
(c) Such agreement must provide that the administrator will provide
the Transfer Agent with appropriate backup data for each participating
investor in a computerized format compatible with the Transfer Agent's
processing system.
Additional Criteria for the Group Program. As further requirements for
obtaining these special benefits under the Group Program, the Fund requires that
investments be in the form of an Open Account (with no share certificates being
issued), that all dividends and other distributions be reinvested in additional
shares without any systematic withdrawal program described herein and that the
minimum new investment in shares of the Fund by each participant in an employee
investment program be at least $25 per month. The Fund reserves the right to
modify or terminate this program at any time without notice.
Systematic Withdrawal Program
The owner of $10,000 or more of shares of the Fund (which may not be in
certificated form) may provide for the payment from his or her account of any
requested dollar amount to his or her designated payee monthly, quarterly or
annually. Sufficient shares will be redeemed from the investor's account for the
designated amount so that the payee will receive it approximately the first of
each month. Dividend distributions automatically will be reinvested under this
program. Depending upon the size of the payments requested, redemptions for the
purpose of making such payments may reduce or even exhaust the account. The
program may be terminated at any time by the investor. If an investor desires to
utilize this program, he or she may so indicate on the Account Application
included with this Prospectus.
It ordinarily will be disadvantageous to an investor to purchase shares
(except through reinvestment of distributions) while participating in a
systematic withdrawal program because he or she will be paying a sales charge to
purchase shares at the same time that shares are being redeemed upon which such
investor may already have paid a sales charge.
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Therefore, the Fund will not knowingly permit an investor to make additional
investments of less than $10,000 if an investor is at the same time making
systematic withdrawals at a rate greater than the dividend distributions being
paid on such investor's shares. The Fund reserves the right to amend or
terminate the systematic withdrawal program on thirty days' notice, and
investors may withdraw from the program at any time. The Fund reserves the right
to modify or terminate this program at any time.
Preauthorized Investment Program
An investor may establish an automatic investment program with his or her
Fund account. With the Preauthorized Investment Program, monthly investments
(minimum $100) are made automatically from an investor's account at a bank,
savings and loan or credit union into such investor's Fund account. By enrolling
in the Preauthorized Investment Program, the investor authorizes the Fund and
its agents to take money out of his or her predesignated bank, savings and loan
or credit union account and invest that money in his or her Fund account. If an
investor also has expedited wire transfer redemption privileges with his or her
Fund account, such investor must designate the same bank, savings and loan or
credit union account for both the Preauthorized Investment Program and wire
redemption programs. Any account owner may terminate this privilege simply by
sending written notice to the Transfer Agent. Termination will become effective
as soon as the Transfer Agent has had a reasonable time to act upon the request.
The Preauthorized Investment Program may not be used with passbook savings
accounts. Redemption proceeds from redeemed Fund shares purchased pursuant to
the Preauthorized Investment Program may be delayed up to 15 days after the
purchase date of such Fund shares. If an investor desires to utilize this
program, he or she may so indicate on the Account Application included with this
Prospectus. The Fund reserves the right to modify or terminate this program at
any time.
Rights of Accumulation
A purchase of shares may qualify for a cumulative quantity discount. The
applicable sales charge will be based on the total of:
(a) the investor's current purchase; and
(b) the net asset value (at the close of business on the previous day)
of the shares of the Fund held by an investor.
For example, if an investor owned shares worth $40,000 at the current net
asset value and purchased an additional $10,000 of shares, the sales charge for
the $10,000 purchase would be at the rate applicable to a single $50,000
purchase.
To qualify for the cumulative quantity discount on a purchase through a
broker-dealer, when each purchase is made, the investor or broker-dealer must
provide the Fund with sufficient information to verify that the purchase
qualifies for the discount.
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Reinstatement Privilege
An investor who has redeemed shares of the Fund may reinvest up to the full
amount of such redemption at net asset value at the time of reinvestment. An
investor using this privilege a year or more after such investor redeemed shares
of the Fund must file a new account application and provide proof that such
investor was a shareholder of the Fund. See "Dividends and Taxes" regarding the
potential tax implications of exercising this privilege. The Fund reserves the
right to modify or terminate this privilege at any time without notice.
REDEMPTION OF SHARES
Upon receipt of a redemption request in proper form addressed to the
Transfer Agent, shares of the Fund will be redeemed by the Fund. It is a
broker's or dealer's responsibility to promptly forward the redemption requests
to the Transfer Agent for shares being redeemed in order for shareholders to
receive the next determined net asset value. The redemption price for shares of
the Fund is based on the net asset value per share next determined after receipt
of the redemption request. Redemption requests must be in writing, accompanied
by any issued certificates (for investor protection, certificates should be sent
by registered mail). Redemption requests and any certificates or stock power
must be endorsed by all registered owners with signatures guaranteed by a member
firm of a national securities exchange or by a commercial bank, savings and loan
association or trust company. Further documentation may be requested from
corporations, executors, administrators, trustees or guardians.
Alternatively, an investor may place an order to sell shares (whether in
certificate or book entry form) through his or her dealer or agent which has a
sales agreement with the Distributor and from which this Prospectus was
received, which dealer or agent will telephone such request to the Distributor.
The investor will receive the net asset value next determined after the
Distributor receives such sell order from the dealer or agent. The Fund does not
charge for this transaction.
Whether shares are redeemed by the Fund or sold through an investor's
dealer or agent, a check for the proceeds ordinarily will be mailed to an
investor or his or her dealer or agent within three business days after a
redemption request or repurchase order and Share certificates (if any) are
received in proper form as set forth above.
If a request to redeem shares is received shortly after the purchase of
such shares, the Fund will not mail the proceeds until checks received for the
purchase of shares have cleared, which may take up to 15 days from the purchase
date. The proceeds of a redemption may be more or less than the cost of the
shares.
The right of redemption or resale of the Fund shares may be suspended or
the date of payment postponed during any period when the New York Stock Exchange
is closed.
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DIVIDENDS AND TAXES
Dividends
The Fund will declare distributions on a daily basis to shareholders of
record on the date of each declaration and will pay such distributions on a
monthly basis. The monthly distribution will be composed of the investment
income earned by the Fund less the expenses of the Fund plus all or a portion of
net short-term capital gains (such net short-term capital gains reduced by net
long-term capital losses, if any, and carryover capital losses from previous
years) realized by the Fund on transactions in securities. The Fund will also
declare and make distributions of net long-term capital gains, if any, at least
annually. Net long-term capital gain distributions consist of the realized long-
term capital gains on transactions in securities of the Fund, net of certain
realized capital losses and less certain carryover capital losses from previous
years.
The Fund automatically will credit monthly distributions and any capital
gain distributions to an investor's account in additional shares of the Fund
valued at net asset value on the date such distributions are payable, without
sales charge, unless an investor elects to the Transfer Agent of the Fund to
have distributions received in cash. Distributions that are reinvested are
treated as cash distributions for income tax purposes. If an investor elects to
change the method of distribution, such change will be effective only with
regard to distributions for which the payment date is seven or more business
days after the Transfer Agent has received the written request.
A check will be generated on the date on which distributions are payable
for dividends to be received in cash. An investor can expect to receive this
check within seven days. If the U. S. Postal Service cannot deliver the check,
or if the checks remain uncashed for six months, the dollar amount of such
distributions will be held in a non-interest bearing account for the benefit of
the investor and all future dividends found to be undeliverable or uncashed for
six months will be similarly held.
Distribution checks may be sent to parties other than the investor. The
Transfer Agent of the Fund can provide investors with a "Dividend Order" form
for such purposes. After the Transfer Agent receives this completed form with a
signature guarantee, distribution checks will be sent to the bank or other
person designated as an investor.
Taxes
The Fund intends to qualify each year as a regulated investment company
under Subchapter M of the Internal Revenue Code (the "Code") and, if so
qualified, will generally not be liable for federal income taxes to the extent
it timely distributes its earnings. If in any year the Fund should fail to
qualify under Subchapter M for tax treatment as a regulated investment company,
the Fund would incur a regular corporate federal income tax upon its taxable
income for that year, and distributions to shareholders of the Fund would be
taxable to such shareholders as ordinary income to the extent of the earnings
and profits of the
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Fund, including distributions that would otherwise qualify as exempt-interest
dividends. For shareholders of the Fund that are corporations, such
distributions would be eligible for the dividends-received deduction. In
addition, the Fund intends to invest in sufficient municipal securities so that
it will qualify to pay "exempt-interest dividends" (as defined in the Code) to
shareholders; the Fund's dividends payable from net tax-exempt interest earned
from municipal securities will qualify as exempt-interest dividends if, at the
close of each quarter of the taxable year of the Series, at least 50% of the
value of the Fund's total assets consists of tax-exempt municipal securities.
Exempt-interest dividends distributed to shareholders generally are not
subject to federal income tax except to the extent such interest is subject to
the alternative minimum tax, as discussed hereinafter. The percentage of income
that is tax-exempt is applied uniformly to all distributions made during each
calendar year and thus is an annual average for the Fund rather than a day-by-
day determination for each shareholder whether received in shares or in cash.
The percentage of all distributions of earnings other than exempt-interest
dividends paid by the Fund, such as net investment income received from
investments in debt securities other than tax-exempt municipal securities, and
any net realized short-term capital gains (including certain amounts deemed
distributed) will generally be taxable to the shareholders as ordinary income.
Any distribution of net related long-term capital gains (including amounts
deemed distributed) will generally be subject to federal taxation as long-term
capital gains ("long-term capital gain distributions"), regardless of the length
of time the investor has held such shares.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") subjects tax-
exempt municipal securities to the market discount rules of the Code effective
for municipal securities purchased after April 30, 1993. In general, market
discount is the amount (if any) by which the stated redemption price at maturity
exceeds an investor's purchase price (except to the extent that such difference,
if any, is attributable to original issue discount not yet accrued), subject to
a statutory de minimis rule. Market discount can arise based on the price the
Fund pays for municipal securities. Under the Tax Act, accretion of market
discount is taxable as ordinary income; under prior law the accretion had been
treated as capital gain. Market discount that accretes while the Fund holds a
municipal security would be recognized as ordinary income by the Fund when
principal payments are received on the municipal security, or upon sale or at
redemption (including early redemption), unless the Fund elects to include
market discount in taxable income as it accrues. Distributions to shareholders
of the Fund, to the extent of any market discount that is included in the Fund's
taxable income, would be taxable to shareholders as ordinary income.
For both individuals and corporations, interest paid on certain "private
activity bonds" issued on or after August 8, 1986 shall be treated as an item of
tax preference and may, therefore, be subject to the alternative minimum tax.
To the extent provided by regulations to be issued by the Secretary of the
Treasury, exempt-interest dividends paid by the Fund will be treated as interest
on private activity bonds to the extent of the proportionate amount of interest
on such private activity bonds received by the Fund. Such exempt-interest
dividends constitute a tax preference item subject to both the individual and
corporate alternative minimum tax. The Fund will annually supply shareholders
with a report
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indicating the percentage of Fund income attributable to bonds subject to the
alternative minimum tax.
Exempt-interest dividends received by a shareholder which are not with
respect to certain "private activity bonds" are not treated as a tax preference
item. However, for certain corporate shareholders such dividends will be
included in the computation of an adjustment item used in determining such
corporation's alternative minimum tax and environmental tax (the "Superfund
Tax"). The adjustment item is 75% of the excess of such corporate shareholder's
"adjusted current earnings" over its other alternative minimum taxable income
with certain adjustments. Although exempt-interest dividends received by a
shareholder will not be included in the gross income of corporations for federal
income tax purposes, "adjusted current earnings" include all tax-exempt
interest, including exempt-interest dividends received from the Fund. Corporate
shareholders are advised to consult their tax advisors with respect to the tax
consequences of the alternative minimum tax, the Superfund Tax and the branch
profits tax under Section 884 of the Code.
For taxpayers other than corporations, net capital gains are presently
subject to a maximum stated marginal tax rate of 28%. All taxpayers are required
to disclose to the Internal Revenue Service on their tax returns the amount of
tax-exempt interest earned during the year including exempt-interest dividends
from the Fund.
The hedging activities and transactions in options and futures contracts of
the Fund are subject to special tax provisions that may accelerate or defer
recognition of certain taxable gains or losses, or alter the holding periods of
certain of the Fund's securities, or convert capital gain into ordinary income
and convert short-term capital losses into long-term capital losses. These rules
could therefore affect the amount, timing and character of distributions to
shareholders. Recognition of unrealized taxable gains by the Fund under the
"mark to market" rules of the Code may increase the difficulty of compliance
with requirements which must be satisfied in order for the Fund to continue to
qualify as a regulated investment company, thus requiring the Fund to limit its
hedging activities. Such activities also may be limited by the requirement that
the Fund derive less than 30% of its annual gross income from the sale or other
disposition of securities held for less than three months in order to qualify as
a regulated investment company under the Code.
Although dividends generally will be treated as distributed when paid,
dividends declared in October, November or December, payable to shareholders of
record on a specified date in one of those months and paid during January of the
following year will be treated as having been distributed by the Fund (and
received by the shareholders) on December 31 of the year such dividends are
declared.
Distributions from the Fund will not generally be eligible for the
dividends received deduction for corporations.
The Fund is required by law to withhold a specified percentage of taxable
dividends and certain other payments, including redemption payments, paid to
non-corporate investors who do not certify to the Fund their correct taxpayer
identification number (in the case of
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individuals, their social security number) and in certain other circumstances as
may be required by the Code.
Under Section 86 of the Code, up to 50% of a social security recipient's
benefits may be included in taxable income for a benefit recipient if the sum of
his adjusted gross income, income from tax-exempt sources such as tax-exempt
bonds and distributions made by the Fund plus 50% of his social security
benefits exceeds certain base amounts. Income from the Fund is still tax-exempt
to the extent described above; it is only included in the calculation of whether
a recipient's income exceeds certain established amounts.
Redemption of shares of the Fund will be a taxable transaction for federal
income tax purposes and such investors will generally recognize gain or loss in
an amount equal to the difference between the basis of the shares and the amount
received. Assuming that investors hold such shares as a capital asset, the gain
or loss will be a capital gain or loss and will generally be long-term if
investors have held such shares for a period of more than one year. In the case
of shareholders holding shares of the Fund for six months or less and
subsequently selling those shares at a loss after receiving an exempt-interest
dividend, the loss will be disallowed to the extent of the exempt-interest
dividends received. If such loss is not entirely disallowed, it will be treated
as a long-term capital loss to the extent any long-term capital gain
distribution is made with respect to such shares during the six-month period or
less that the investor owns the shares. If a loss is realized on the redemption
of Fund shares, the reinvestment in additional Fund shares or the acquisition of
a contract or option to acquire securities that are substantially identical to
Fund shares within 30 days before or after the redemption may be subject to the
"wash sale" rules of the Code, resulting in a postponement of the recognition of
such loss for federal income tax purposes. In addition, an investor cannot take
into account any sales or similar charge incurred in acquiring shares of the
Fund (a "load charge," such charge does not include amounts paid with respect to
the reinvestment of mutual fund share dividends) in computing gain or loss on
the sale of shares of the Fund if the investor sells such shares within 90 days
of the date the shares are acquired and the investor obtains and subsequently
exercises the right to reinvest in shares of any mutual fund without the payment
of a load charge or with the payment of a reduced charge (however, such charges
shall be treated as incurred in connection with the reinvestment in shares).
The Tax Act raised tax rates on ordinary income while capital gains remain
subject to a 28 percent maximum stated rate. Because some or all capital gains
are taxed at a comparatively lower rate under the Tax Act, the Tax Act includes
a provision that recharacterizes capital gains as ordinary income in the case of
certain financial transactions that are "conversion transactions" effective for
transactions entered into after April 30, 1993. It is possible that this
provision could result in the recharacterization of amounts or distributions
otherwise characterized as capital gains by the Fund or a shareholder as
ordinary income. Shareholders of the Fund should consult with their tax
advisors regarding the potential effect of this provision on their investment in
shares of the Fund.
Interest on indebtedness which is incurred to purchase or carry shares of a
mutual fund which distributes exempt-interest dividends during the year is not
deductible for
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federal income tax purposes. Further, the Fund may not be an appropriate
investment for persons who are "substantial users" of facilities financed by
industrial development bonds held by the Fund or are "related persons" to such
users; such persons should consult their tax advisors before investing in the
Fund.
State and Local Tax Aspects. To the extent that exempt-interest dividends
are derived from interest on Oklahoma Municipal Securities that is exempt from
the Oklahoma income tax, such dividends will also qualify as exempt from the
Oklahoma income tax. However, to the extent that exempt-interest dividends are
derived from interest on Oklahoma Municipal Securities that is not exempt from
Oklahoma income tax, such dividends will be taxable for Oklahoma income tax
purposes to the shareholders of the Fund. As discussed earlier, the Fund may
invest up to 30% of its total assets in Oklahoma Municipal Securities which are
subject to Oklahoma state income taxes. Any nonqualifying exempt-interest
dividends and dividends taxable for federal income tax purposes as ordinary
income will be taxable for Oklahoma income tax purposes to the shareholders of
the Fund. Distributions treated as long-term capital gains for federal income
tax purposes will generally receive the same characterization under Oklahoma
law.
Except as described above with respect to Oklahoma income taxation, the
exemption from federal income tax for exempt-interest dividends does not
necessarily result in exemption for such dividends under the income or other tax
laws of any state or local taxing authority. Taxpayers should consult their own
advisors regarding the consequences under such taxes with respect to the
purchase, ownership, and disposition of shares of the Fund.
The tax discussion set forth above is for general information only.
Annually, shareholders of the Fund receive information as to the tax status of
distributions made by the Fund in each calendar year. The foregoing relates to
federal income taxation and to Oklahoma income taxation as in effect as of the
date of this Prospectus. Investors should consult their own tax advisors
regarding the federal, state, local, foreign and other tax consequences of an
investment in the Fund, including the effects of any change, including any
proposed change, in the tax laws.
Description of Shares and Rights
The Fund's Agreement and Declaration of Trust ("Trust Agreement") permits
its Trustees to issue an unlimited number of shares, without par value, from
each Series that is designated by the Board of Trustees. Each share of a Series
represents an equal proportionate interest in the assets and liabilities
belonging to the Series with each other share of such Series and is entitled to
such dividends and distributions out of the income belonging to the Series as
are declared by the Trustees. The shares do not have cumulative voting rights
nor any preemptive rights. In case of a liquidation, subject to the rights of
creditors, the holders of the shares of the Series being liquidated will be
entitled to receive a distribution out of the net assets belonging to the Series
being liquidated. Should additional Series be designated by the Board of
Trustees, the net asset value of the shares of each of such Series will be
computed based only upon the net assets of each such Series.
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Under Massachusetts law, if certain conditions prevail, shareholders of a
Massachusetts business trust could be deemed to have the same type of personal
liability for the obligations of the Fund as does a partner of a partnership.
The Trust Agreement contains an express disclaimer of liability on the part of
Fund shareholders and provides that the Fund shall assume the defense on behalf
of its shareholders. Thus, the risk of Fund shareholder liability is slight and
limited to a circumstance where a Series itself is unable to meet its
obligations.
As a Massachusetts business trust, the Fund is not required to and does not
intend to hold annual shareholders' meetings. However, the Trust Agreement
provides for Fund shareholder voting with respect to certain matters, including:
(a) the election or removal of Trustees if a meeting is called for that purpose;
(b) any contract as to which shareholder approval is required by the Investment
Company Act of 1940, as amended (the "1940 Act"); (c) any termination or
reorganization of the Fund or any Series of the Fund to the extent provided in
the Trust Agreement; and (d) any amendment of the Trust Agreement (other than
amendments designating new Series, changing the name of the Fund or any Series
of the Fund, supplying any omission, curing any ambiguity, or curing, correcting
or supplementing any provisions inconsistent with the 1940 Act or the Code).
Meetings of shareholders may be called upon written application specifying the
purpose of the meeting by shareholders holding at least 25% (or 10% if the
purpose of the meeting is to determine if a Trustee is to be removed from
office) of the shares then outstanding. In connection with the shareholders'
right to remove a Trustee, shareholders will be assisted with their
communications in such matter.
Fund Management
The business and affairs of the Fund will be managed under the direction of
the Board of Trustees. The Trustees are subject to the fiduciary
responsibilities imposed by the laws of the Commonwealth of Massachusetts.
Subject to the Trustees' authority, Ranson Capital Corporation, a Kansas
corporation, 1 North Main, Minot, North Dakota 58703, the Manager, will
supervise and implement the Fund's investment activities and will be responsible
for overall management of the Fund's business affairs. Ranson Capital
Corporation is also the investment adviser of the Fund and will perform certain
evaluations of the securities held by the Fund. The Fund will pay the Manager a
monthly management and investment advisory fee equivalent on an annual basis to
.50 of 1% of its average daily net assets.
Overall portfolio management strategy for the Fund is determined by the
Manager under the general supervision and direction of Robert E. Walstad, the
President of the Fund and the Manager since January 5, 1996. Mr. Walstad is also
the President of five other open-end funds and of ND Money Management, Inc.,
their investment adviser, and has supervised and directed the management of
their portfolios since they commenced operations. Mr. Walstad started in the
securities business with Paine Webber in 1972 as a retail broker. He became
branch manager with Dean Witter Reynolds in 1977 and spent ten years in that
capacity. In 1987, Mr. Walstad founded ND Holdings, which is also sponsor of
Integrity Mutual Funds. The day-to-day management of the Fund, including credit
analysis
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and the execution of portfolio transactions, is the responsibility of a
portfolio management team, consisting of Monte L. Avery, W. Dan Korgel and Alex
R. Meitzner. Mr. Avery started in the securities business with Paine Webber in
1981 as a retail broker transferring to Dean Witter in 1982. In 1988, Mr. Avery
joined First American Bank & Trust (Minot, ND) to help start their Invest
Center. He transferred back to Dean Witter in 1993 until joining ND Holdings in
1995. Mr. Avery is responsible for the daily pricing of the Integrity Mutual
Funds as well as their portfolio trading. He is also portfolio manager for the
Integrity Fund of Funds. Mr. Korgel was employed in the trust banking business
for 12 years prior to joining ND Holdings. He was with the trust department of
First American Bank & Trust (Minot, ND) for two years as head of investments and
operations. He joined ND Holdings in May 1988, and is the portfolio manager of
four of the mutual funds which are sponsored by ND Holdings. He is responsible
for the daily portfolio management of those funds. He is also Corporate
Treasurer for ND Holdings. Mr. Meitzner is the Assistant Vice President -
Investments of the Manager and had been Executive Vice President of the Manager
until January 5, 1996, when he was elected to his present position. Mr. Meitzner
is also Director, Executive Vice President/Trader of Ranson & Associates, Inc.
All portfolio management decisions are subject to weekly review by Mr. Walstad
and to quarterly review by the Fund's Board of Trustees.
The Manager is a broker-dealer registered with the Securities and Exchange
Commission and a wholly-owned subsidiary of The Ranson Company, Inc., a Kansas
corporation. All of the outstanding shares of stock of The Ranson Company,
Inc., are owned by ND Holdings, Inc., a North Dakota corporation. The Manager
was formed in 1990 and is also the investment adviser for The Kansas Municipal
Fund, The Kansas Insured Intermediate Fund and The Nebraska Municipal Fund,
which have current net asset values of approximately $130,872,000, $29,800,000
and $18,100,000, respectively. The Manager has not retained the right to
withdraw from the Fund the use of the name "Ranson," but the Manager may grant
the use of the name "Ranson" to another investment company.
Under the terms of the Management and Investment Advisory Agreement, the
Manager has agreed to pay all expenses of the Fund, including the Fund's
management and investment advisory fee and the Fund's administrative and
accounting services fees (but excluding taxes and brokerage fees and
commissions, if any) that exceed 1.25% of the Fund's average daily net assets on
an annual basis up to the amount of the investment advisory and management fee
payable by the Fund to the Manager. Reimbursements by the Manager for such Fund
expenses will be paid monthly based on annualized year to date expenses. All
other expenses shall be paid by the Fund. From time to time and subject to
discontinuance at any time, the Manager may voluntarily assume certain expenses
of the Fund. This will have the effect of lowering the overall expense ratio of
the Fund and of increasing yield to investors. The Fund's expenses include,
among others, taxes, brokerage fees and commissions, if any, fees of
Disinterested Trustees, expenses of Trustees' and shareholders' meetings,
insurance premiums, expenses of redemption of shares, expenses of issue and sale
of shares (to the extent not borne by the Distributor), expenses of printing and
mailing certificates, association membership dues, charges of the Fund's
custodian, and bookkeeping, auditing and legal expenses, and the fees and
expenses of registering the Fund and its shares with the Securities and Exchange
Commission, registering or qualifying its
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shares under state securities laws and the expenses of preparing and mailing
prospectuses and reports to shareholders.
ND Resources, Inc. ("Resources"), a wholly-owned subsidiary of ND Holdings,
Inc., a North Dakota corporation, acts as the Fund's administrative and
accounting services agent. For these services, Resources receives an
administrative and accounting services fee payable monthly from the Fund equal
to the sum of (i) $2,000 per month and (ii) 0.05% of the Fund's average daily
net assets on an annual basis for the Fund's first $50 million of average daily
net assets, 0.04% of the Fund's average daily net assets on an annual basis for
the Fund's next $50 million of average daily net assets, 0.03% of the Fund's
average daily net assets on an annual basis for the Fund's next $100 million of
average daily net assets, 0.02% of the Fund's average daily net assets on an
annual basis for the Fund's next $300 million of average daily net assets, and
0.01% of the Fund's average daily net assets on an annual basis for the Fund's
average daily net assets in excess of $500 million, together with reimbursement
of Resources' out-of-pocket expenses. This fee and reimbursement are in
addition to the investment advisory and management fee received by the Manager,
which is also indirectly owned by ND Holdings, Inc., from the Fund.
The Board of Trustees has the authority, without shareholder approval, to
determine who will perform the following services for the Fund: securities
evaluator; custodian of the Fund's securities and cash; and, dividend
disbursing, administrative and accounting services agent.
In effecting purchases and sales of the Fund's portfolio securities, the
Manager and the Fund may place orders with and pay brokerage commissions to
brokers which are affiliated with the Fund, the Manager, the Distributor or
selected dealers participating in the offering of the Fund's shares. In
addition, in selecting among firms to handle a particular transaction, the
Manager and the Fund may take into account whether the firm has sold or is
selling shares of the Fund. Subject to rules adopted by the Securities and
Exchange Commission, the Fund may also purchase municipal securities from other
members of underwriting syndicates of which the Distributor or other affiliates
of the Fund are members.
The Distributor
Shares of the Fund are offered on a continuous basis through Ranson Capital
Corporation, a Kansas Corporation, 1 North Main, Minot, North Dakota 58703.
Pursuant to a Distribution and Services Agreement, the Distributor will purchase
shares of the Fund for resale to the public, either directly or through
securities dealers or agents, and is obligated to purchase only those shares for
which it has received purchase orders. In addition to agreements with
securities dealers, the Distributor may enter into agreements with banks or bank
affiliates with respect to the sale of shares of the Fund. Under the Glass-
Steagall Act, banks and bank affiliates are prohibited from underwriting Fund
shares; however, the Glass-Steagall Act does permit certain agency transactions
and the banking regulators have not indicated that these particular agency
transactions are not permitted under such Act. In the event the Glass-Steagall
Act should prevent banks or bank affiliates from acting in any
-32-
<PAGE>
capacity or providing investor administrative and shareholder services, the
Fund's Trustees will consider what action, if any, is appropriate in order to
provide efficient services to the Fund. It is anticipated that a termination of
a relationship with a bank or bank affiliate would not result in a loss to
investors or a change in net asset value.
Under the Distribution and Services Agreement between the Fund and the
Distributor, the Distributor pays the expenses of distribution of the Fund's
shares, including preparation and distribution of literature relating to the
Fund and its investment performance and advertising and public relations
material. The Fund bears the expenses of registration of its shares with the
Securities and Exchange Commission and of sending prospectuses to existing
shareholders. The Distributor will permit their officers and employees to serve
without compensation as Trustees and officers of the Fund if duly elected to
such positions. The Fund will pay the cost of qualifying and maintaining
qualification of the shares for sale under the securities laws of the various
states if necessary. In addition, under the plan adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940 and under which the Fund will pay some
costs of the distribution of its shares, the Fund will pay the Distributor .25%
of the average daily net assets of the Fund and the Distributor may in turn pay
firms that sell the Fund's shares an annual service fee of up to .25% of average
daily net assets of customer accounts in existence for more than one year for
administrative and shareholder services or use some or all of such payment to
pay other distribution expenses which otherwise would be payable by the
Distributor.
The Distribution and Services Agreement continues in effect from year to
year if specifically approved at least annually by the shareholders or Board of
Trustees of the Fund and by the Fund's disinterested Trustees in compliance with
the Investment Company Act of 1940. The agreement may be terminated without
penalty upon sixty days' written notice by the Fund or ninety days' written
notice by the Distributor and will automatically terminate if it is assigned.
Shareholder Services and Reports
First Western Bank & Trust serves as Custodian of the Fund and will have
custody of all securities and cash of the Fund and will attend to the collection
of principal and income and payment for and collection of proceeds of securities
bought and sold by the Fund.
ND Resources, Inc. is the Transfer Agent for the Fund and will perform
bookkeeping, data processing and administrative services related to the
maintenance of shareholder accounts. When an investor makes an initial
investment in the Fund, an account will be opened on the Fund's books and the
investor will receive a confirmation of the opening of the account. An investor
will receive monthly statements giving details of all activity in his or her
account and will receive a statement whenever investments in or withdrawals from
such account are made. The statement with tax information for the year will be
mailed to investors by January 31 and will also be filed with the Internal
Revenue Service.
As a rule, the Fund will not issue share certificates. However, upon
written request to the Transfer Agent, a share certificate will be issued for
any or all of the full shares credited
-33-
<PAGE>
to an investor's account. Share certificates which have been issued may be
returned at any time.
Investors will receive annual financial statements, together with a report
of independent auditors, and semiannual unaudited financial statements.
Investors will also receive notices of shareholders' meetings. Shareholder
inquiries regarding their account should be directed to the Transfer Agent.
Calculation of Fund Performance Data
From time to time, the Fund may advertise several types of performance
information. These are "current yield," "tax equivalent yield," "average annual
total return" and "total return." Each of these figures is based upon historical
results and is not necessarily representative of the future performance of the
Fund.
Current yield is determined by annualizing net investment income earned per
share for a stated period (normally one month or thirty days) and dividing the
result by the maximum public offering price at the end of the evaluation period.
Tax equivalent yield is determined by dividing that portion of current
yield which is tax-exempt by one minus a stated combined state and federal
income tax rate and adding that portion of the current yield, if any, that is
not tax-exempt.
The Fund's distribution return is computed by dividing that portion of
current yield which is tax-exempt by one minus a stated combined state and
federal income tax rate and adding that portion of the current yield, if any,
that is not tax-exempt.
Average annual total return and total return figures measure both the net
investment income generated by the Fund and the effect of any realized or
unrealized appreciation or depreciation of the underlying investments in the
portfolio of the Fund for the period in question, assuming the reinvestment of
all dividends and capital gains distributions. Thus, these figures reflect the
change in the value of an investment in the Fund during a specified period.
Average annual total return will be quoted for at least the one, five and ten
year periods ending on a recent calendar quarter (or if such periods have not
yet elapsed, at the end of a shorter period corresponding to the life of the
Fund). Average annual total return figures are annualized and, therefore,
represent the average annual percentage change over the period in question.
Total return figures are not annualized and represent the aggregate percentage
or dollar value change over the period in question.
From time to time, the Fund's performance may be compared to that of the
Consumer Price Index or various unmanaged bond indexes and may also be compared
to the performance of other fixed income or government bond mutual funds or
mutual fund indexes as reported by entities such as Lipper Analytical Services,
Inc. ("Lipper"). Lipper is a widely recognized independent mutual fund
reporting service. Lipper performance calculations are based upon changes in
net asset value with all dividends reinvested and do not include the effect of
any sales charges.
-34-
<PAGE>
The Fund's shares are sold at net asset value plus a maximum sales charge
of 4.25% of the offering price. While the maximum sales charge is normally
reflected in the Fund's performance figures, certain total return calculations
may not include such charge and those results would be reduced if it were
included. The Fund's returns and net asset value will fluctuate. Shares of the
Fund are redeemable by an investor at the then current net asset value, which
may be more or less than original cost.
Summary of Procedures
The following summary is intended as a reference guide for investors. It is
not intended to be comprehensive. Investors should read the main body of the
Prospectus and consult with their dealer, agent or the Fund's customer service
representatives as necessary.
Purchases
Initial investments of $1,000 or more and an account application
(indicating phone order information as applicable) should be mailed to the
dealer or agent from which this Prospectus was received which has a sales
agreement with the Distributor or directly mailed to the Transfer Agent.
Investors qualifying for reduced initial minimum investments or reduced sales
charges should indicate their qualification on the application. Additional
investments should be sent to the same address. Investors should include the
purchase form from the bottom of their monthly statement and should include
their account number on the check.
Checks should be made payable to The Oklahoma Municipal Fund.
Redemptions
Redemption Requests must be signed by all registered owners, accompanied by
signature guarantee(s). Fund shares held in certificate form must be submitted
in proper form to effect redemption. The Transfer Agent may request such other
documentation from corporations, executors, administrators, trustees or
guardians as is deemed necessary to determine the authority of the individual
making the request.
Redemption Requests and Other Transfer Agent Inquiries should be sent to
the Fund, c/o the Transfer Agent.
Other
Address Changes: A new address should be indicated on the remittance advice
on the bottom of an investor's monthly statement (or on a copy of the monthly
statement) and mailed to the Transfer Agent at the above address. All other
requests must be signature guaranteed.
-35-
<PAGE>
Registration Changes: A new account is opened whenever there is a change in
registration. Therefore, the procedures for redemption by mail should be
followed indicating the requested registration changes. Shares will be
transferred to the new account at net asset value on the same date as the
closing of the old account.
Sales Information, Performance Data, Prior Days'
Offering Price and Net Asset Value
Call (701) 852-5292 Or (800) 601-5593
For Information on Account Balances and all Other Inquiries
Call (800) 601-5593
-36-
<PAGE>
- --------------------------------------------------------------------------------
Initial Application Ranson Managed Portfolios--
The Oklahoma Municipal Fund
P.O. Box 759, Minot, North Dakota 58702
Account Application
Mail To: The Oklahoma Municipal Fund, P.O. Box 759, Minot, North Dakota 58702
================================================================================
1. Account Registration (Please print)-Note: The name(s) and address shown
below must read exactly in accordance with the registration of Shareholder
Account (if any) currently on file.
[_] Individual or joint* account
________________________________ _______________________________________
Name Joint Owner's name
*Joint tenants with rights of survivorship, unless you specify otherwise.
[_] Check here if purchaser is employee of Broker/Dealer.
[_] Gift or transfer to a minor (UGMA/UTMA)
____________________as custodian for____________________under the___________
Custodian's name Minor's name State
Uniform Gifts/Transfers to Minors Act
[_] Trust
____________________________________ as trustee(s) of_______________________
Trustee's name(s) Name of trust agreement Date of trust agreement
Please include copy of first and last page of trust agreement.
[_] Corporation/other entity
_________________________ ______________________________________________
Name of corporation Type of organization (i.e. corporation,
or other entity non-profit, partnership)
Please attach a certified copy of your corporate resolution showing the
person(s) authorized to act on this account.
Address:_____________________________________ City, State, Zip:__________
Social Security or taxpayer ID number:_________ Day telephone number:_______
================================================================================
2. Initial Investment
_____ Check Enclosed for $__________ (Minimum Initial Investment is $1,000,
thereafter $100.) Make Check Payable to The Oklahoma Municipal Fund.
_____ The Dealer Firm Named Below Ordered My Initial Purchase of __________
Shares by Wire on ___________
Date
_____ Reinvestment of [_] Principal and Interest [_] Principal Only
================================================================================
3. Dividend and Distribution Options. All dividends and capital gains
reinvested unless indicated.
Dividends Capital Gains
[_] Reinvest [_] Reinvest
[_] Cash [_] Cash
All cash distributions to shareowner of record unless indicated below
Name_____________________________________________________________
Address__________________________________________________________
City____________________________State_______________Zip__________
Account number (if applicable) ______________ Attach voided check
if payable to your bank account.
===============================================================================
4. Letter of Intent
I request establishment of a Letter of Intent to purchase shares of Ranson
Managed Portfolios -- The Oklahoma Municipal Fund as described in this
Prospectus. These shares will be purchased over a thirteen-month period; the
aggregate amount of these purchases will be at least equal to the amount
indicated below:
_____ $50,000 _____ $100,000 _____ $250,000 _____ $500,000 _____ $1,000,000
_____ This is an amended Letter of Intent
===============================================================================
-37-
<PAGE>
===============================================================================
5. Rights of Accumulation
If this account qualifies for a reduced sales charge under the Rights of
Accumulation as described in this Prospectus, please give the following
information:
Account Number of Related Accounts Relationship to Investor
---------------------------------- -------------------------------
---------------------------------- -------------------------------
---------------------------------- -------------------------------
===============================================================================
6. Systematic Withdrawal Plan
_____ Systematic Withdrawal (Available only for accounts of $10,000 or
more)--Redeem sufficient shares on or about the 24th of the month and send
check to the owner listed above: ____ Monthly: ____Quarterly (Jan., Apr.,
July & Oct.) for $_____ (Minimum $50). The first redemption to take place on
the 24th of (indicate month) _____ (Note: All distributions from the Fund
must be reinvested) ____ Payment to a Different Payee or Account
(Optional)--If systematic withdrawal checks are to be payable to person or
address other than as registered above, make checks payable to:
Name_______________________________________________________________________
Address____________________________________________________________________
City___________________________________ State______________________ Zip____
Account Number ________________________(if applicable)
===============================================================================
7. Preauthorized Investment Program
I hereby authorize the Transfer Agent to draw from my account monthly
beginning on the [_] 5th or [_] 20th of _______________
Amount Name of Bank ABA Number
____________________ ____________________ ___________________
Bank Address Bank Account No.
_______________________________ _______________________________
Name shown on bank records
___________________________________________________________________________
Attached is one of unsigned checks marked "Void" to ensure the correct
encoding.
________________________________________ __________________________________
Signature Date Signature Co-depositor Date
-38-
<PAGE>
================================================================================
8. Your Signature and Tax Certifications
See enclosed substitute Instructions and Important Notice. The Fund reserves
the right to refuse to open an account without either a certified taxpayer
identification number ("TIN") or a certification of foreign status. Failure
to provide the tax certifications in this section may result in backup
withholding on payments relating to your account and/or in your inability to
qualify for treaty withholding rates.
--------------------------------- OR ---------------------------------------
Social Security Number Employer Identification Number
I am a citizen of:[_] U.S. [_] My Country of residence for tax purpose
------
is: [_] U.S. [_]
------
Check one of the following:
[_] The number shown above is my correct TIN. I am not subject to backup
withholding due to underreporting of interest or dividend income either
because no notification has been received from the IRS or because the
IRS has notified me that I am no longer subject to backup withholding.
(If you are subject to backup withholding, please cross out the second
sentence.)
[_] Awaiting TIN. A TIN has not been issued to me, but I am in the process
of applying for a TIN from either the appropriate Internal Revenue
Service Center or Social Security Administration Office. I understand
that if I do not provide a TIN to the Fund within 60 days, the Fund is
required to commence backup withholding until I provide a certified TIN.
I am not subject to backup withholding due to underreporting of interest
or dividend income either because no notification has been received from
the IRS or because the IRS has notified me that I am no longer subject
to backup withholding. (If you are subject to backup withholding, please
cross out the third sentence.)
[_] Exempt Recipient. I am an Exempt Recipient. The instructions give a
list of the most common Exempt Recipients. (You should still provide a
TIN.)
[_] Exempt Foreign Person. I am an Exempt Person as explained in the
instructions.
Under the penalties of perjury, I certify that (1) the information provided
on this application is true, correct and complete, (2) I have read the
prospectus for the Fund in which I am investing and agree to the terms
thereof, and (3) I am of legal age or an emancipated minor.
DATE:
-----------------------------
------------------------------- ----------------------------------
Signature Signature
================================================================================
9. BROKER/DEALER USE ONLY: (PLEASE PRINT) RANSON DEALER #
We hereby submit this application for the purchase of shares of The Oklahoma
Municipal Fund indicated in accordance with the terms of our selling
agreement with Ranson Managed Portfolios and with the prospectus for The
Oklahoma Municipal Fund. We agree to notify Distributor of any purchase made
under a letter of intent or right of accumulation.
Wire Order Only: The attached check for $ should be applied
against wire order -----------
Confirmation Number Dated For
Shares --------- --------- -------
---------
Securities Dealer Name
------------------------------------------------------
Main Office Address
---------------------------------------------------------
Branch # Rep # Representative Name
------------- -------------- ---------------
Branch Address Telephone Number
------------------------------- --------------
Authorized Signature, Securities Dealer
------------------------------------
Title
------------
[_] Check here if purchaser is employee of Broker/Dealer.
Account No. Salesman's Last Name
---------------- ----------------
R.R. No.
----------------
Accepted: Ranson Managed Portfolios By Date
------------------- ------------
- --------------------------------------------------------------------------------
-39-
<PAGE>
================================================================================
10. ADDITIONAL INFORMATION
Each time there is a transaction in a shareholder account, the shareholder
will receive a confirmation statement showing the current transaction.
Certificates can be issued for full shares only. These certificates will be
sent to the shareholder only upon specific request.
The method of delivery of share certificates is at the option and risk of
the shareholder. If sent by mail, registered and insured mail is suggested.
All correspondence regarding shareholder accounts should be addressed to
the Fund, c/o ND Resources, Inc., P.O. Box 759, Minot, North Dakota 58702.
This form is not authorized for distribution to prospective purchasers of
shares of the portfolio in states where such shares are not qualified for
sale.
- --------------------------------------------------------------------------------
-40-
<PAGE>
================================================================================
FUND MANAGER AND INVESTMENT ADVISER
RANSON CAPITAL CORPORATION
1 North Main
Minot, North Dakota 58703
TRANSFER AGENT
ND RESOURCES, INC.
1 North Main
Minot, North Dakota 58703
CUSTODIAN
First Western Bank & Trust
900 South Broadway
Minot, North Dakota 58701
INDEPENDENT AUDITORS
BRADY, MARTZ & ASSOCIATES, P.C.
24 West Central Avenue
Minot, North Dakota 58701
LEGAL COUNSEL
CHAPMAN AND CUTLER
111 West Monroe Street
Chicago, Illinois 60603
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
FEE AND EXPENSE TABLE.............2
HIGHLIGHTS OF THE FUND AND
PROSPECTUS SUMMARY.............3
THE FUND..........................8
INVESTMENT OBJECTIVE AND
POLICIES.......................8
NET ASSET VALUE..................18
PURCHASE OF SHARES...............18
SPECIAL PROGRAMS.................21
REDEMPTION OF SHARES.............24
DIVIDENDS AND TAXES..............24
DESCRIPTION OF SHARES AND
RIGHTS........................29
FUND MANAGEMENT..................30
THE DISTRIBUTOR..................32
SHAREHOLDER SERVICES AND
REPORTS.......................33
CALCULATION OF FUND
PERFORMANCE DATA..............33
SUMMARY OF PROCEDURES............34
</TABLE>
================================================================================
RANSON MANAGED
PORTFOLIOS
THE OKLAHOMA
MUNICIPAL FUND
--------------------------
PROSPECTUS
Dated: September 25, 1996
--------------------------
DISTRIBUTOR
RANSON CAPITAL CORPORATION
1 North Main
Minot, North Dakota 58703
================================================================================
<PAGE>
Subject to Completion, September 25, 1996
STATEMENT OF ADDITIONAL INFORMATION
RANSON MANAGED PORTFOLIOS
THE OKLAHOMA MUNICIPAL FUND
The Oklahoma Municipal Fund is an investment portfolio of Ranson Managed
Portfolios, a management investment company. The term "the Fund" as used herein
shall refer to either Ranson Managed Portfolios or The Oklahoma Municipal Fund
series of Ranson Managed Portfolios as the context may require. The investment
objective of The Oklahoma Municipal Fund is to provide its shareholders with as
high a level of current income exempt from both federal income tax and Oklahoma
income tax, to the extent indicated, as is consistent with preservation of
capital. Certain Oklahoma Municipal Securities (as defined in the Prospectus)
will be subject to Oklahoma state income taxes. Under normal market conditions,
the Fund's assets will be invested in a portfolio of Oklahoma Municipal
Securities which, in the opinion of Ranson Capital Corporation, will produce a
higher level of current income than would be produced by a portfolio of Oklahoma
Municipal Securities rated in only the highest rating category, but contains
Oklahoma Municipal Securities which do not present a significant risk of loss of
principal due to credit characteristics. Up to 30% of the Fund's total assets
may be invested in Oklahoma Municipal Securities which are subject to Oklahoma
state income taxes. The Fund's manager is Ranson Capital Corporation.
This Statement of Additional Information is not a prospectus but shall be
read in conjunction with the Prospectus for the Fund dated September 25, 1996
(the "Prospectus"). A copy of the Prospectus may be obtained without charge by
calling the Fund at 701/852-5292.
The Prospectus and this Statement of Additional Information omit certain of
the information contained in the registration statement filed with the
Securities and Exchange Commission, Washington, D.C. These items may be obtained
from the Commission upon payment of the fee prescribed, or inspected at the
Commission's office at no charge.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
The Fund and Its Shares........................................................2
Investment Objective, Policies and Restrictions................................2
Officers and Trustees..........................................................7
Compensation Table.............................................................8
Custodian......................................................................9
Independent Auditors...........................................................9
Management and Investment Advisory Agreement...................................9
Portfolio Transactions........................................................10
Additional Information Regarding Shares and Rights............................11
Expenses of the Fund..........................................................13
Performance Data..............................................................13
</TABLE>
THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED SEPTEMBER 25, 1996.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration of qualification under the securities laws of any such State.
<PAGE>
The Fund and Its Shares
The Oklahoma Municipal Fund is a newly-organized series of Ranson Managed
Portfolios, an open-end non-diversified management investment company organized
as an unincorporated business trust under the laws of Massachusetts on August
10, 1990.
Prior to the sale of shares of the Fund to the public, all shares of the
fund were owned by Ranson Capital Corporation. Since the Fund is newly formed,
as of the date of this Statement of Additional Information, Ranson Capital
Corporation controls 100% of the shares of the Fund.
Investment Objective, Policies and Restrictions
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Investment Objective and
Policies."
The investment objective of the Fund is to provide its shareholders with as
high a level of current income that is exempt from both federal income tax and
Oklahoma income tax, to the extent indicated, as is consistent with preservation
of capital. Under normal market conditions, the Fund's assets will be invested
in a portfolio of Oklahoma Municipal Securities which, in the opinion of Ranson
Capital Corporation, will produce a higher level of current income than would be
produced by a portfolio of Oklahoma Municipal Securities rated in only the
highest rating category, but contains Oklahoma Municipal Securities which do not
present a significant risk of loss of principal due to credit characteristics.
Up to 30% of the Fund's total assets may be invested in Oklahoma Municipal
Securities which are subject to Oklahoma state income taxes.
The investment policy of the Fund is to invest at least 70% of its assets
in a portfolio of Oklahoma Municipal Securities which generate interest income
that is exempt from both federal income tax and Oklahoma income tax. Oklahoma
Municipal Securities generally include debt obligations of the State of
Oklahoma, its political subdivisions, municipalities, agencies and authorities,
and certain industrial development and other revenue bonds, short-term municipal
notes, municipal leases and commercial paper issued by such entities and
obligations of the Commonwealth of Puerto Rico, the Virgin Islands and Guam.
Futures Contracts, Options on Futures and Municipal Bond Index Futures. The
Fund may purchase or sell financial futures contracts ("futures contracts") and
related options thereon. These futures contracts and related options thereon
will be used only as a hedge against anticipated interest rate changes. In
general a futures contract sale creates an obligation by the Fund, as seller, to
deliver the specific type of instrument called for in the contract at a
specified future time for a specified price. A futures contract purchase would
generally create an obligation by the Fund, as purchaser, to take delivery of
the specific type of financial instrument at a specified future time at a
specified price. The specific securities delivered or taken, respectively, at
settlement date would not be determined until on or near that date. The
determination would be in accordance with the rules of the exchange on which the
futures contract sale or purchase was effected.
-2-
<PAGE>
Although the terms of futures contracts specify actual delivery or receipt
of securities, in most instances the contracts are closed out before the
settlement date without the making or taking of delivery of the securities.
Closing out a futures contract is usually effected by entering into an
offsetting transaction. An offsetting transaction for a futures contract sale is
effected by the Fund entering into a futures contract purchase for the same
aggregate amount of the specific type of financial instrument at the same
delivery date. If the price in the sale exceeds the price in the offsetting
purchase, the Fund immediately is paid the difference and thus realizes a gain.
If the offsetting purchase price exceeds the sale price, the Fund pays the
difference and realizes a loss. Similarly, the closing out of a futures contract
purchase is effected by the Fund entering into a futures contract sale. If the
offsetting sale price exceeds the purchase price, the Fund realizes a gain, and
if the offsetting sale price is less than the purchase price, the Fund realizes
a loss.
Unlike a futures contract, which requires the parties to buy and sell an
instrument on a set date, an option on a futures contract entitles its holder to
decide on or before a future date whether to enter into such a contract (a long
position in the case of a call option and a short position in the case of a put
option). If the holder decides not to enter into the contract, the premium paid
for the contract is lost. Since the cost of the option is fixed, there are no
daily payments of cash by the purchaser to reflect the change in the value of
the underlying contract as discussed below for futures contracts. The seller of
the option, however, may be required to make daily maintenance margin payments
to reflect the change in the value of the underlying contract. The value of the
option is reflected in the net asset value of the Fund.
The Fund is required to maintain margin deposits with brokerage firms
through which it effects futures contracts and options thereon. The initial
margin requirements vary according to the type of the underlying instrument. In
addition, due to current industry practice, daily variations in gains and losses
on open contracts are required to be reflected in cash in the form of variation
margin payments. The Fund may be required to make additional margin payments
during the term of the contract.
Currently, futures contracts can be purchased on debt securities such as
U.S. Treasury Bills and Bonds, U.S. Treasury Notes with maturities between 6-1/2
and 10 years, Certificates of the Government National Mortgage Association, Bank
Certificates of Deposit and on a municipal bond index (see below). The Fund may
purchase or sell interest rate futures contracts covering these types of
financial instruments as well as new types of contracts that become available in
the future.
Financial futures contracts and related options contracts are traded in an
auction environment on the floors of several futures Exchanges--principally, the
Chicago Board of Trade, the Chicago Mercantile Exchange and the New York Futures
Exchange.
A risk in employing futures contracts to protect against the price
volatility of portfolio securities is that the prices of securities subject to
futures contracts may not correlate perfectly with the behavior of the cash
prices of the Fund's portfolio securities. The correlation may be distorted in
part by the fact that the futures market is influenced by
-3-
<PAGE>
short-term traders seeking to profit from the difference between a contract or
security price objective and their cost of borrowed funds. This would reduce the
value of futures contracts for hedging purposes over a short time period. The
correlation may be further distorted since the futures contracts that are being
used to hedge are not based on municipal obligations.
Another risk is that the Manager could be incorrect in its expectations as
to the direction or extent of various interest rate movements or the time span
within which the movements take place. For example, if the Fund sold futures
contracts in anticipation of an increase in interest rates, and then interest
rates went down, causing bond prices to rise, the Fund would lose money,
including transaction costs, on the sale.
In addition to the risks associated with investing in options on
securities, there are particular risks associated with trading in options on
futures. In particular, the ability to establish and close out positions on such
options will be subject to the development and maintenance of a liquid market in
such options. It is not certain that this market will develop.
A substantial majority (i.e., approximately 75%) of all anticipatory hedge
transactions (transactions in which the Fund does not own, at the time of the
transaction, but expects to acquire the securities corresponding to the relevant
futures contract) involving the purchase of futures contracts, call options or
written put options thereon will be completed by the purchase of securities
which are the subject of the hedge.
The Fund may not enter into futures contracts or related options thereon
if, immediately thereafter, the amount committed to initial margin plus the
amount paid for option premiums on open contracts exceeds 5% of the value of the
Fund's total assets. In instances involving the purchase of futures contracts by
the Fund, an amount equal to the gross market value of the futures contract will
be deposited in a segregated account of cash and cash equivalents and thereby
ensure that the use of such futures is unleveraged. The Fund may not purchase or
sell futures contracts or related positions if, immediately thereafter, more
than one-third of its net assets would be hedged.
The Fund may utilize trading in municipal bond index futures contracts for
hedging purposes. The strategy in employing such contracts will be similar to
that discussed above with respect to financial futures and options thereon. A
municipal bond index is a method of reflecting in a single number the market
value (based on an average of quotations from certain dealers) of many different
municipal bonds. The index fluctuates in response to changes in the market
values of the bonds included within the index. Unlike futures contracts on
particular financial instruments, futures on a municipal bond index will be
settled in cash if held until the close of trading in the contract. However, as
in any other futures contract, a position in the contract may be closed out by
purchase or sale of an offsetting contract for the same delivery month prior to
expiration of the contract. Because trading in municipal bond index futures
contracts has been taking place only for a short time, the Fund's ability to
utilize such contracts will be dependent upon the development and maintenance of
a market in such contract.
-4-
<PAGE>
The Securities and Exchange Commission generally requires that when
investment companies, such as the Fund, effect transactions of the foregoing
nature, such funds must either segregate cash or high quality, readily
marketable portfolio securities with its custodian in the amount of its
obligation under such transactions, or cover such obligations by maintaining
positions in portfolio securities, futures contracts or options that would serve
to satisfy or offset the risk of such obligations. When effecting transactions
of the foregoing nature, the Fund will comply with such segregation or cover
requirements.
Investment Restrictions. Fundamental investment restrictions limiting the
investments of the Fund provide that the Fund may not:
1. Borrow money, except from banks for temporary or emergency (not
leveraging) purposes and then in an amount not exceeding 10% of the value
of the Fund's total assets (including the amount borrowed). The Fund will
not borrow for leveraging purposes, and securities will not be purchased
while borrowings are outstanding. Interest paid on any money borrowed will
reduce the Fund's net income.
2. Pledge, hypothecate, mortgage or otherwise encumber its assets, in
excess of 10% of the value of its total assets (taken at the lower of cost
or current value) and then only to secure borrowings for temporary or
emergency purposes.
3. Purchase securities on margin, except such short-term credits as
may be necessary for the clearance of purchases and sales of securities.
The deposit of initial or maintenance margin by the Fund in connection with
financial futures contracts and related options transactions, including
municipal bond index futures contracts or related options transactions, is
not considered the purchase of a security on margin.
4. Make short sales of securities or maintain a short position for the
account of the Fund including any short sales "against the box."
5. Underwrite the securities of other issuers, except to the extent
that, in connection with the disposition of its portfolio investments it
may be deemed to be an underwriter under federal securities laws.
6. Purchase or sell real estate, but this shall not prevent the Fund
from investing in securities which are secured by real estate or interests
therein.
7. Purchase or sell commodities or commodity contracts except to the
extent the options and futures contracts the Fund may trade in are
considered to be commodities or commodities contracts.
8. Make loans to others except through the purchase of qualified debt
obligations and the entry into repurchase agreements.
9. Invest 25% or more of its total assets in the securities of issuers
in any single industry; provided that there shall be no such limitation on
the purchase of
-5-
<PAGE>
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities or by Oklahoma, its political subdivisions,
municipalities, agencies and authorities. (The Fund may, from time to time,
invest 25% or more of its assets in a particular segment of the municipal
bond market; however, the Fund will not invest 25% or more of its assets in
industrial development bonds in a single industry.)
10. Invest in securities of any issuer if, to the knowledge of the
Fund, officers and Trustees of the Fund or officers and directors of the
Manager who beneficially own more than 1/2 of 1% of the securities of that
issuer together own more than 5%.
11. Purchase securities restricted as to resale, if, as a result such
investment would exceed 5% of the value of the Fund's net assets.
12. Invest in (a) securities which at the time of such investment are
not readily marketable, including participation interests in municipal
leases, (b) securities the disposition of which is restricted under federal
securities laws (as described in fundamental restriction (11) above) and
(c) repurchase agreements maturing in more than seven days, if, as a
result, more than 10% of such Fund's net assets (taken at current value)
would be invested in securities described in (a), (b) and (c) above.
13. Invest more than 5% of its total assets in securities of any one
issuer, except that this limitation shall not apply to securities of the
U.S. Government, its agencies and instrumentalities and except that with
respect to 50% of the Fund's total assets the Fund may invest up to 25% of
its total assets in securities of any one issuer.
The Fund may not change any of these investment restrictions without the
approval of the lesser of (i) more than 50% of the Fund's outstanding shares or
(ii) 67% of the Fund's shares present or represented by proxy at a meeting at
which the holders of more than 50% of the outstanding shares are present or
represented by proxy. With the exception of the percentage restrictions set
forth in fundamental restrictions (1) and (12) above, which may not be exceeded
at any time, as long as the percentage restrictions described above are
satisfied at the time of the investment or borrowing, the Fund will be
considered to have abided by those restrictions even if, at a later time, a
change in values or net assets causes an increase or decrease in percentage
beyond that allowed.
The following investment restrictions of the Fund may be changed by the
Board of Trustees of the Fund.
The Fund will not:
1. Invest more than 5% of its total assets in the securities of any
other single investment company, nor more than 10% of its total assets in
the securities of two or more other investment companies, except as part of
a merger, consolidation or acquisition of assets.
2. Buy or sell oil, gas or other mineral leases, rights or royalty
contracts.
-6-
<PAGE>
An advisory fee will be charged for assets invested in securities of other
investment companies. However, the Fund will not invest more than 10% of its
total assets in such securities.
Officers and Trustees
The officers and Trustees of the Fund, their principal occupations for the
last five years and their affiliations, if any, with Ranson Capital Corporation
(the Manager and Distributor) are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Position(s) Held Principal Occupation(s)
Name, Address and Age with Fund/(1)/ During Past 5 Years/(2)/
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Lynn W. Aas Trustee Retired; Attorney; Director, ND Tax-Free Fund, Inc.,
904 NW 27th ND Insured Income Fund, Inc., Montana Tax-Free
Minot, North Dakota 58701 Fund, Inc., Integrity Fund of Funds, Inc., and
74 South Dakota Tax-Free Fund, Inc.; Director,
First Western Bank & Trust
- --------------------------------------------------------------------------------------------------------------------------
Orlin W. Backes Trustee Attorney; Director, ND Tax-Free Fund, Inc., ND
15 2nd Ave. SW, Suite 305 Insured Income Fund, Inc., Montana Tax-Free Fund,
Minot, North Dakota 58701 Inc., and South Dakota Tax-Free Fund, Inc. and
60 Integrity Fund of Funds, Inc.; Director, First
Western Bank & Trust
- --------------------------------------------------------------------------------------------------------------------------
Arthur A. Link Trustee Director, ND Tax-Free Fund, Inc., ND Insured Income
2001 Grimsrud Drive Fund, Inc., Montana Tax-Free Fund, Inc., South Dakota
Bismarck, North Dakota 58501 Tax-Free Fund, Inc. and Integrity Fund of Funds, Inc.;
81 Director; Bank Center First; Formerly Governor of the
State of North Dakota
- --------------------------------------------------------------------------------------------------------------------------
Peter A. Quist* Vice President Director and Vice President, ND Holdings, Inc.; Director,
1 North Main and Secretary Vice President and Secretary, ND Money Management, Inc.,
Minot, North Dakota 58703 ND Capital, Inc., ND Resources, Inc., ND Tax-Free Fund,
61 Inc., ND Insured Income Fund, Inc., Montana Tax-Free Fund,
Inc., South Dakota Tax-Free Fund, Inc., Integrity Fund of
Funds, Inc., The Ranson Company, Inc. and Ranson Capital
Corporation
- --------------------------------------------------------------------------------------------------------------------------
Robert E. Walstad* Trustee, Chairman, Director and President, ND Holdings, Inc.; Director,
1 North Main President President and Treasurer, ND Money Management, Inc., ND
Minot, North Dakota 58703 and Treasurer Capital, Inc., ND Resources, Inc., ND Tax-Free Fund,
51 Inc., ND Insured Income Fund, Inc., Montana Tax-Free
Fund, Inc., Integrity Fund of Funds, Inc., and South
Dakota Tax-Free Fund, Inc.; Director, President, CEO
and Treasurer, The Ranson Company, Inc., and Ranson
Capital Corporation
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
-7-
<PAGE>
- --------------------
* "Interested persons" of the Fund as that term is defined in the Investment
Company Act of 1940.
(1) The Trustees were elected at a joint special meeting of the shareholders of
the Fund complex of Ranson Managed Portfolios held on December 11, 1995,
but did not assume office until the closing of the Stock Purchase Agreement
between the shareholders of The Ranson Company, Inc., and ND Holdings,
Inc., on January 5, 1996. Prior to that time, the Board of Trustees
consisted of J. Joseph Hannah, H. Dene Heskett, Harrison F. Johnson, Kevin
F. Mitchelson, John A. Ranson and John S. Ranson.
(2) Lynn W. Aas and Orlin W. Backes were elected to the boards of directors of
the above-named funds (the "ND Fund") in 1994 and 1995, respectively.
Arthur A. Link has served on the boards of directors of the ND Funds since
their inceptions. Peter A. Quist has served as a director and as the Vice
President and Secretary of the ND Funds since their inceptions, except that
he was not elected to the board of directors of South Dakota Tax-Free Fund,
Inc., until 1995. Robert E. Walstad has served as a director and as the
President and Treasurer of the ND Funds since their inceptions. Mssrs.
Quist and Walstad were elected as directors and officers of The Ranson
Company, Inc., and Ranson Capital Corporation on January 5, 1996.
Compensation Table (2)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Aggregate compensation Total compensation
Name of person from the Oklahoma from registrant
position (1) Municipal fund series and fund complex
- -----------------------------------------------------------------------------
<S> <C> <C>
Lynn W. Aas 0 0
- -----------------------------------------------------------------------------
Orlin W. Backes 0 0
- -----------------------------------------------------------------------------
Arthur A. Link 0 0
- -----------------------------------------------------------------------------
*Robert E. Walstad 0 0
- -----------------------------------------------------------------------------
(J. Joseph Hannah) 1,125 1,500
- -----------------------------------------------------------------------------
(H. Dene Heskett) 1,125 1,500
- -----------------------------------------------------------------------------
(Harrison F. Johnson) 1,500 2,000
- -----------------------------------------------------------------------------
(Robert G. Langenwalter) 375 500
- -----------------------------------------------------------------------------
(Kevin F. Mitchelson) 375 500
- -----------------------------------------------------------------------------
*(John A. Ranson) 0 0
- -----------------------------------------------------------------------------
*(John S. Ranson) 0 0
- -----------------------------------------------------------------------------
</TABLE>
- --------------------
* "Interested persons" as defined in the Investment Company Act of 1940.
(1) Each of the named persons acted in the capacity of a Trustee. A new Board
of Trustees (the first four persons in the list) was elected at a joint
special meeting of the shareholders of the Fund comprising Ranson Managed
Portfolios held on December 11, 1995, but did not assume office until the
closing of the Stock Purchase Agreement between the shareholders of The
Ranson Company, Inc., and ND Holdings, Inc., on January 5, 1996. The names
of the Trustees who had served at any time during the fiscal year (8-1-94
through 7-31-95) are enclosed in parentheses.
(2) The compensation of any Trustee who is not an "interested person" as that
term is defined in the Investment Company Act of 1940 is paid by the
Manager. Until the closing of the Stock Purchase Agreement (see note (1)
above), Trustees who were not interested persons of the Manager or the
Distributor (the "Disinterested Trustees") were paid $500 plus expenses per
meeting of the Board of Trustees and committees thereof attended by such
Trustee. None of the Trustees who are interested persons received
compensation for services as Trustees. Each of the Disinterested Trustees
will be paid
-8-
<PAGE>
a fee of $10,000 for the calendar year ending December 31, 1996, plus any
expenses incurred in attending meetings. The $10,000 fee is apportioned
among the eight funds comprised in the Integrity Mutual Funds group on the
basis of gross assets.
As of September 25, 1996, the officers and Trustees of the Fund owned, as a
group, less than 1% of the shares of the Fund.
Custodian
First Western Bank & Trust, 900 South Broadway, Minot, North Dakota 58701,
is the Custodian of the Fund and has custody of all securities and cash of the
Fund. The Custodian, among other things, attends to the collection of principal
and income, and payment for and collection of proceeds of securities bought and
sold by the Fund.
Independent Auditors
Shareholders will receive annual financial statements, together with a
report of independent auditors, and semi-annual unaudited financial statements
of the Fund. The independent auditors for the Fund are Brady, Martz &
Associates, P.C., 24 West Central Avenue, Minot, North Dakota 58701. The
independent auditors will report on the Fund's annual financial statements,
review certain regulatory reports and the Fund's income tax returns, and perform
other professional accounting, auditing, tax and advisory services when engaged
to do so by the Fund.
Management and Investment Advisory Agreement
The Management and Investment Advisory Agreement (the "Agreement") between
the Manager and the Fund provides that the Manager will supply investment
research and portfolio management, including the selection of securities for the
Fund to purchase, hold or sell, and the selection of brokers through whom the
Fund's portfolio transactions are executed. The Manager also administers the
business affairs of the Fund, furnished offices, necessary facilities and
equipment, provides administrative services, and permits its officers and
employees to serve without compensation as directors and officers of the Fund if
duly elected to such positions. Fees and expense limitations under the Agreement
are described in the Prospectus.
The Agreement will continue in effect from year to year if specifically
approved by the Fund's Trustees or the Fund's shareholders and by the Fund's
Disinterested Trustees in compliance with the requirements of the Investment
Company Act of 1940 (the "1940 Act"). The Agreement may be terminated without
penalty upon 60 days' written notice by either party and will automatically
terminate in the event of assignment.
Ranson Capital Corporation serves as the Manager and is a wholly-owned
subsidiary of The Ranson Company, Inc., a Kansas corporation. ND Holdings,
Inc., a North Dakota corporation owns all of the outstanding shares of common
stock of The Ranson Company, Inc.
-9-
<PAGE>
Portfolio Transactions
The Manager will place orders for portfolio transactions for the Fund with
broker-dealer firms giving consideration to the quality, quantity and nature of
each firm's professional services. These services include execution, clearance
procedures, wire service quotations and statistical and other research
information provided to the Fund and the Manager including quotations necessary
to determine the value of the Fund's net assets. Any research benefits derived
are available for all clients of the Manager. Since statistical and other
research information is only supplementary to the research efforts of the
Manager and still must be analyzed and reviewed by one of its staff, the receipt
of research information is not expected to materially reduce the Manager's
expenses. In selecting among the firms believed to meet the criteria for
handling a particular transaction, the Manager may take into consideration that
certain firms have sold or are selling shares of the Fund and that certain firms
provide market, statistical or other research information to the Fund and the
Manager, and may select firms that are affiliated with the Fund or the Manager.
If it is believed to be in the best interests of the Fund, the Manager may
place portfolio transactions with brokers who provide the types of service
described above, even if it means the Fund will have to pay a higher commission
(or, if the broker's profit is part of the cost of the security, will have to
pay a higher price for the security) than would be the case if no weight were
given to the broker's furnishing of these services. This will be done, however,
only if, in the opinion of the Manager, the amount of additional commission or
increased cost is reasonable in relation to the value of the services.
If purchases or sales of securities of the Fund and of one or more other
portfolios of the Fund, investment companies or clients supervised by the
Manager are considered at or about the same time, transactions in such
securities will be allocated among the several portfolios of the Fund,
investment companies and clients in a manner deemed equitable to all by the
Manager, taking into account the respective sizes of the funds and the amount of
securities to be purchased or sold. Although it is possible that in some cases
this procedure could have a detrimental effect on the price or volume of the
security as far as the Fund is concerned, it is also possible that the ability
to participate in volume transactions and to negotiate lower brokerage
commissions will be beneficial to the Fund. The Fund expects that its portfolio
transactions in Oklahoma Municipal Securities will generally be effected on a
principal (as opposed to agency) basis and, accordingly, does not expect to
incur significant brokerage commissions.
While the Manager will be primarily responsible for the placement of the
Fund's business, the policies and practices in this regard must be consistent
with the foregoing and will at all times be subject to review by the Trustees of
the Fund.
The Board of Trustees has adopted certain policies incorporating the
standards of Rule 17e-1 issued by the Securities and Exchange Commission under
the 1940 Act which requires that the commissions paid to the Distributor and
other affiliates of the Fund must be reasonable and fair compared to the
commissions, fees or other remuneration received or to be received by other
brokers in connection with comparable transactions involving similar
-10-
<PAGE>
securities during a comparable period of time. The Rule and procedures also
contain review requirements and require the Manager to furnish reports to the
Board of Trustees and to maintain records in connection with such reviews. After
consideration of all factors deemed relevant, the Board of Trustees will
consider from time to time whether the advisory fee will be reduced by all or a
portion of the brokerage commission given to affiliated brokers.
Additional Information Regarding Shares and Rights
The Fund is a non-diversified, open-end investment company established
under Massachusetts law by an Agreement and Declaration of Trust ("Trust
Agreement") dated August 10, 1990, and is the type of organization commonly
known as a "Massachusetts business trust." It is a series company as
contemplated under Rule 18f-2 under the 1940 Act, having four series of shares
offered at this time which are known as "The Kansas Municipal Fund," "The Kansas
Insured Intermediate Fund", "The Nebraska Municipal Fund" and "The Oklahoma
Municipal Fund." The Trust Agreement provides that each shareholder, by virtue
of becoming such, will be held to have expressly assented and agreed to the
terms of the Trust Agreement and to have become a party thereto.
The Trust Agreement permits the Trustees to issue an unlimited number of
full and fractional shares, without par value, from each portfolio. Each share
of a portfolio represents an equal proportionate interest in the assets and
liabilities belonging to such portfolio with each other share of such portfolio
and is entitled to such dividends and distributions out of the income belonging
to such portfolio as are declared by the Trustees. The shares do not have
cumulative voting rights nor any preemptive rights. In case of a liquidation,
subject to the rights of creditors, the holders of shares of each portfolio
being liquidated will be entitled to receive as a series a distribution out of
the net assets belonging only to that portfolio. Under the Trust Agreement,
expenses attributable to any specific portfolio (whether start-up for a new
portfolio or on-going operating expenses) will be borne by that portfolio. Any
general expenses of the Fund not readily identifiable as belonging to a
particular portfolio are allocated by or under the direction of the Trustees in
such manner as the Trustees determine to be fair and equitable, usually in
proportion to the portfolio's relative net assets. The net asset value of the
shares of any portfolio will be computed based only upon the net assets of such
portfolio.
As a general matter, the Fund will not hold annual or other meetings of the
Fund's shareholders. This is because the Trust Agreement provides for Fund
shareholders voting only (a) for the election or removal of one or more Trustees
if a meeting is called for that purpose; (b) with respect to any contract as to
which shareholder approval is required by the 1940 Act (such as the Fund's
Management and Investment Advisory Agreement and the Distribution and Services
Agreement); (c) with respect to any termination or reorganization of the Fund or
any portfolio to the extent and as provided in the Trust Agreement; (d) with
respect to any amendment of the Trust Agreement (other than amendments
establishing and designating new portfolios, changing the name of the Fund or
the name of any portfolio, supplying any omission, curing any ambiguity, or
curing, correcting or supplementing any provision thereof which is internally
inconsistent with the 1940 Act or with the requirements of the Internal Revenue
Code and applicable regulations for the Fund to obtain the most
-11-
<PAGE>
favorable treatment thereunder available to regulated investment companies),
which amendments require approval by more than 50% of the shares entitled to
vote; (e) to the same extent as the stockholders of a Massachusetts business
corporation as to whether or not a court action, proceeding or claim should or
should not be brought or maintained derivatively or as a class action on behalf
of the Fund or the shareholders, and (f) with respect to such additional matters
relating to the Fund as may be required by the 1940 Act (such as changes in the
Fund's investment policies and restrictions), the Trust Agreement, the by-laws
of the Fund, or any registration of the Fund with the Securities and Exchange
Commission or any state, or as the Trustees may consider necessary or desirable.
Each Trustee serves until the next meeting of shareholders, if any, called
for the purpose of considering the election or reelection of such Trustee or of
a successor to such Trustee, and until the election and qualification of his
successor, if any, elected at such meeting, or until such Trustee sooner dies,
resigns, retires or is removed by the shareholders or two-thirds of the
Trustees.
The Trust Agreement provides that on any matter submitted to a vote of the
shareholders, all Fund shares entitled to vote, irrespective of portfolio, shall
be voted in the aggregate and not by portfolio except that (a) as to any matter
with respect to which a separate vote of any portfolio is required by the 1940
Act, such requirements as to a separate vote by that portfolio shall apply in
lieu of the aggregate voting as described above, and (b) when the Trustees have
determined that the matter affects only the interests of one or more portfolios,
then only shareholders of the affected portfolios shall be entitled to vote
thereon.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted by the provisions of the 1940 Act or applicable state law, or
otherwise, to the holders of the outstanding voting securities of an investment
company with separate portfolios like this Fund shall not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares (as defined below) of each portfolio "affected by" such
matter. Rule 18f-2 further provides that a portfolio shall be deemed to be
affected by a matter unless the interests of each portfolio in the matter are
substantially identical or the matter does not affect any interests of such
portfolio. The Rule specifically exempts the selection of independent auditors,
the approval of principal underwriting contracts and the election of trustees
from such separate voting requirements and specifically provides that any
required approval of the Fund's Management and Investment Advisory Agreement and
the Distribution and Services Agreement is subject to such separate voting
requirements. In addition, changes in the Fund's investment policies are also
subject to separate voting requirements.
The Trust Agreement provides that the presence at a meeting of shareholders
in person or by proxy of shareholders entitled to vote at least thirty percent
(30%) of the votes entitled to be cast on a matter (or if voting is to be by
portfolio, shareholders of each portfolio entitled to vote at least thirty
percent (30%) of the votes entitled to be cast by each portfolio) shall
constitute a quorum. This permits a meeting of shareholders of the Fund to take
place even if less than a majority of the shareholders are present on its
scheduled date.
-12-
<PAGE>
Shareholders would in such a case be permitted to take action which does not
require a larger vote than a majority of a quorum (the election of Trustees and
the ratification of the selection of independent public accountants are
examples). Some matters requiring a larger vote under the Trust Agreement, such
as termination or reorganization of the Fund and certain amendments of the Trust
Agreement, would not be affected by this provision. This is also true with
respect to matters which under the 1940 Act require the vote of a majority of
the outstanding voting shares (as defined below) of the Fund or a particular
portfolio.
As used in the Prospectus and this Statement of Additional Information, the
term "majority of the outstanding shares" of either the Fund or a particular
portfolio of the Fund means the vote of the lesser of (i) 67% or more of the
shares of the Fund or such portfolio present or represented by proxy at a
meeting, if the holders of more than 50% of the outstanding shares of the Fund
or of such portfolio are present or represented by proxy, or (ii) more than 50%
of the outstanding shares of the Fund or such portfolio.
Under the terms of the Trust Agreement, a Trustee is liable for his own
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office, and for nothing else, and shall
not be liable for errors of judgment or mistakes of fact or of law. The Trust
Agreement provides for indemnification by the Fund of the Trustees and the
officers of the Fund except with respect to any matter as to which such person
did not act in good faith in the reasonable belief that his action was in or not
opposed to the best interests of the Fund (or the predecessor corporation) but
such person may not be indemnified against any liability to the Fund or the Fund
shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. The Trust Agreement also provides that
any agreement or undertaking by the Trustees on behalf of the Fund is binding
upon the Fund only and not on the Trustees personally.
Expenses of the Fund
The Fund's expenses include, among others, management and investment
advisory fees, 12b-1 fees, accounting and administrative fees, taxes, brokerage
fees and commissions, if any, fees of Disinterested Trustees, expenses of
Trustees' and shareholders' meetings, insurance premiums, expenses of redemption
of shares, expenses of issue and sale of shares (to the extent not borne by the
Distributors), expenses of printing and mailing certificates, association
membership dues, charges of the Fund's custodian, and bookkeeping, auditing and
legal expenses, and the fees and expenses of registering the Fund and its shares
with the Securities and Exchange Commission, registering or qualifying its
shares under state securities laws and the expenses of preparing and mailing
prospectuses and reports to shareholders.
Performance Data
As described in the prospectus, the Fund's historical performance may be
shown in the form of "current yield," "tax equivalent yield," "average annual
total return" and "total return" figures. These various measures of performance
are described below.
-13-
<PAGE>
Current yield is determined in accordance with a standardized method
prescribed by rules of the Securities and Exchange Commission by annualizing net
investment income earned per share for a stated period (normally one month or
thirty days) and dividing the result by the maximum public offering price at the
end of the evaluation period. The Securities and Exchange Commission's rules for
calculating current yield require the use of certain standardized accounting
practices which are not necessarily consistent with those used by the Fund in
the preparation of its audited financial statements or federal tax return. The
Fund's current yield figure is based upon historical results and is not
necessarily representative of future performance.
Tax equivalent yield is determined by dividing that portion of current
yield which is tax-exempt by one minus a stated income tax rate and adding that
portion of current yield, if any, that is not tax-exempt.
The Fund's distribution return is computed by dividing the income per share
by the number of days in the current month, and the quotient is multiplied by
365. The result is divided by the offering price per share on the last day of
the month.
The Fund's average annual total return quotation is computed in accordance
with a standardized method prescribed by rules of the Securities and Exchange
Commission. The average annual total return for the Fund for a specific period
is found by first taking a hypothetical $1,000 investment ("initial investment")
in the Fund's shares on the first day of the period reduced by the maximum sales
charge in effect on that date and computing the "redeemable value" of that
investment at the end of the period. The redeemable value is then divided by the
initial investment, and the quotient is taken to the Nth root (N representing
the number of years in the period) and 1 is subtracted from the result, which is
then expressed as a percentage. The calculation assumes that all income and
capital gains dividends paid by the Fund have been reinvested at net asset value
on the reinvestment dates during the period.
The Fund's total return quotation is computed by aggregating the percentage
or dollar value change over the period in question, exclusive of the initial
sales charge.
The Fund's performance figures are based upon historical results and are
not necessarily representative of future performance. The Fund's shares are sold
at net asset value plus a maximum sales charge of 4.25% of the offering price.
Returns and net asset value will fluctuate. Factors affecting the Fund's
performance include general market conditions, operating expenses and investment
management. Any additional fees charged by a dealer or other financial services
firm would reduce the returns described in this section. Shares of the Fund are
redeemable at net asset value, which may be more or less than original cost.
The reason for filing Post-Effective Amendment No. 25 to the Registration
Statement was to remove the Statement of Assets and Liabilities and Report of
Independent Auditors from the Statement of Additional Information.
-14-
<PAGE>
PART C OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
(i) Financial Statements included in Part A of the Registration
Statement:
None.
(ii) Financial Statements included in Part B of the Registration
Statement:
None.
Schedules 2, 3, 4, 5, 6 and 7 have been omitted as the required
information is not present.
(b) Exhibits:
1. Agreement and Declaration of Trust dated August 10, 1990
(incorporated by reference to Form N-1A [File No. 33-36324]
filed on behalf of Ranson Managed Portfolios--The Kansas
Municipal Fund).
2. By-Laws (incorporated by reference to Form N-1A [File No.
33-36324] filed on behalf of Ranson Managed Portfolios--The
Kansas Municipal Fund).
3. Inapplicable.
4. Inapplicable.
5. Form of Management and Investment Advisory Agreement
between Registrant and Ranson Capital Corporation
(incorporated by reference to Post-effective Amendment
No. 11 to the Registration Statement).
6. (a) Form of Distribution and Services Agreement between
Registrant and Ranson Capital Corporation (incorporated by
reference to Post-effective Amendment No. 11 to the
Registration Statement).
(b) Dealer Agreement (incorporated by reference to Post-
effective Amendment No. 11 to the Registration Statement).
7. Inapplicable.
8. Form of Custodian Agreement between Ranson Managed
Portfolios and First Western Bank & Trust.
C-1
<PAGE>
9. Administrative and Accounting Services Agreement between
Registrant and ND Resources, Inc.
10. Opinion of Chapman and Cutler.
11. Inapplicable.
12. Inapplicable.
13. Inapplicable.
14. Shareholder Services Plan (incorporated by reference to
Post-effective Amendment No. 11 to the Registration
Statement).
15. Inapplicable.
16. Inapplicable.
Item 25. Persons Controlled by or under Common Control with Registrant.
Since The Oklahoma Municipal Fund portfolio of Registrant is newly formed
and has not yet commenced its public offering of its shares, there are no
outstanding shares of The Oklahoma Municipal Fund portfolio of Registrant. To
the best of Registrant's knowledge, as of September 25, 1996, no person is
directly or indirectly controlled by or under common control with The Oklahoma
Municipal Fund portfolio of Registrant.
Item 26. Number of Holders of Securities.
As of September 1, 1996, the number of record holders of Registrant was as
follows:
The Kansas Municipal Fund: 4,681
The Kansas Insured Intermediate Fund: 844
The Nebraska Municipal Fund: 901
The Oklahoma Municipal Fund: 0
-------
Item 27. Indemnification.
The following is a summary of the rights of indemnification set forth in
the Agreement and Declaration of Trust of Registrant (see Exhibit 1). Article
VIII of the Agreement and Declaration of Trust of Registrant provides generally
that any person who is or has been a trustee or officer of Registrant (including
persons who serve at the request of Registrant as directors, trustees or
officers of another organization and including persons who served as officers
and directors of the Registrant) shall be indemnified by Registrant to the
fullest extent permitted by law against liabilities and expenses reasonably
incurred by such person in connection with any claim, suit or proceeding in
which such person becomes involved as a party or otherwise by virtue of being or
having been such a trustee, director or officer and against amounts incurred in
settlement thereof. It is further provided in such Agreement and Declaration of
Trust that no indemnification shall be provided in the event that it is
determined that such person was engaged in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office or that such person did not act in good faith in the reasonable belief
that his action was in the best
C-2
<PAGE>
interests of Registrant. In the event of a settlement or other disposition not
involving a final determination of the foregoing matters by a court or other
body, no indemnification shall be provided unless such determination is made by
a vote of a majority of the "disinterested" trustees acting on the matter or a
written opinion of independent legal counsel. The right to indemnification as so
provided may be insured against by policies maintained by the Registrant and
shall continue as to any person who has ceased to be a trustee or officer of
Registrant.
Expenses of preparation and presentation of a defense by a person claiming
indemnification may be advanced by Registrant provided generally that such
person undertakes to repay any such advances if it is ultimately determined that
he is not entitled to indemnification and provided that either such undertaking
is secured by appropriate security or a majority of the "disinterested" trustees
acting on the matter or independent legal counsel in a written opinion
determines that there is reason to believe that such person ultimately will be
found entitled to indemnification.
The Agreement and Declaration of Trust provides further that in the event
that any shareholder or former shareholder shall be found to be personally
liable solely by reason of his being a shareholder and not because of acts or
omissions of such person, such shareholder shall be entitled out of assets of
the Registrant to be indemnified against all loss and expense arising from such
liability (provided there is no liability to reimburse any shareholder for taxes
paid by reason of such shareholder's ownership of shares or for losses suffered
by reason of any changes in value of any of Registrant's assets).
The Agreement and Declaration of Trust (Article IV, Section 2(o)) provides
specifically that the trustees have the power to purchase and pay for insurance
out of assets of Registrant as they deem necessary or appropriate for the
conduct of its business including policies insuring shareholders, trustees,
officers, employees, agents, investment managers, principal underwriters or
independent contracts or Registrant against claims or liabilities arising by
reason of such persons holding or having held any such office or position with
Registrant or by reason of any action alleged to have been taken or omitted by
such person in such office or position including any action taken or omitted
that may be determined to constitute negligence whether or not the Registrant
would have the power to indemnify such person against such liability.
The provisions with respect to indemnification in the Agreement and
Declaration of Trust of Registrant do not affect any rights of indemnification
that persons other than those specifically covered may have whether under
contract or otherwise under law.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to trustees, officers, and controlling persons of the
Registrant pursuant to the provisions of Registrant's Agreement and Declaration
of Trust, or otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
the event that a claim for indemnification against such liability (other than
the payment by the Registrant of expenses incurred or paid by a trustee, officer
or controlling person of Registrant in the successful defense of any action,
suit or
C-3
<PAGE>
proceeding) as asserted by such trustee, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Advisor.
The names of the directors and officers of the Manager and their
businesses, professions, vocations and employment during the past two fiscal
years, either for their own account or as directors, officers, employees,
partners or trustees, are as follows:
<TABLE>
<CAPTION>
(3)
(1) (2)
Other Business
Name and Principal Affiliation with Profession Vocation or
Business Address* Investment Advisor Employment Connection**
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Richard D. Olson Assistant Vice President - Sales
1 North Main
Minot, ND 58703
Peter A. Quist Director, Vice President and Secretary Director and Vice President, ND
1 North Main Holdings, Inc.; Director, Vice
Minot, ND 58703 President and Secretary, ND Money
Management, Inc., ND Capital, Inc.,
ND Resources, Inc., ND Tax-Free
Fund, Inc., ND Insured Income Fund,
Inc., Montana Tax-Free Fund, Inc.,
South Dakota Tax-Free Fund, Inc.,
Integrity Fund of Funds, Inc., and
The Ranson Company, Inc.; Vice
President and Secretary, Ranson Managed
Portfolios
Shannon D. Radke Assistant Vice President - Finance
1 North Main
Minot, ND 58703
</TABLE>
C-4
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Robert E. Walstad Director, President, CEO Director and President, ND
1 North Main and Treasurer Holdings, Inc.; Director, President
Minot, ND 58703 and Treasurer, ND Money Management,
Inc., ND Capital, Inc., ND Resources,
Inc., ND Tax-Free Fund, Inc., ND Insured
Income Fund, Inc., Montana Tax-Free Fund,
Inc., South Dakota Tax Free Fund, Inc. and
Integrity Fund of Funds, Inc.; Director,
President, CEO and Treasurer, The Ranson
Company, Inc., Trustee, Chairman, President
and Treasurer, Ranson Managed Portfolios
</TABLE>
Item 29. Principal Underwriters.
(a) Ranson Capital Corporation acts as investment advisor and manager of
The Kansas Municipal Fund, The Kansas Insured Intermediate Fund and The Nebraska
Municipal Fund having net assets of approximately $130,872,000, $29,800,000 and
$18,100,000, respectively, as of September 1, 1996.
(b) The information required by the following table is provided with
respect to each director, officer or partner of each principal underwriter named
in the answer to Item 21.
Ranson Capital Corporation
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices with Positions and Offices
Business Address Ranson Capital Corporation with Registrant
- --------------------------------------------------------------------------------
<S> <C> <C>
1 North Main
Minot, ND 58703
Richard D. Olson Assistant Vice President -
Sales
Peter A. Quist Director, Vice President Vice President and
and Secretary Secretary
Shannon D. Radke Assistant Vice President -
Finance
Robert E. Walstad Director, President, CEO Trustee, Chairman,
and Treasurer President and Treasurer
</TABLE>
C-5
<PAGE>
Item 30. Location of Accounts and Records.
All accounts, books and documents of Registrant are maintained at the
offices of Ranson Managed Portfolios, 1 North Main, Minot, North Dakota 58703
and with the Custodian at First Western Bank & Trust, 900 South Broadway, Minot,
North Dakota 58701,
Item 31. Management Services.
Inapplicable.
Item 31. Undertakings.
(a) Registrant hereby undertakes to file a post-effective amendment, using
financial statements which need not be certified, within four to six months from
the effective date of Registrant's 1933 Act Registration Statement.
(b) Registrant hereby undertakes, if requested to do so by the holders of
at least 10% of Registrant's outstanding shares, to call a meeting of
shareholders for the purpose of voting upon the question of removal of a trustee
or trustees and to assist in communications with other shareholders as required
by Section 16(c) of the 1940 Act.
C-6
<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant certifies that it has duly caused
this Post-Effective Amendment to be signed on its behalf by the undersigned duly
authorized in the City of Minot, and State of North Dakota on the 25th day of
September, 1996.
Ranson Managed Portfolios
By /s/ Robert E. Walstad
---------------------
Robert E. Walstad
President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to Registration Statement No. 33-36324 has been signed below
on behalf of the following persons in the capacities indicated on the 25th day
of September, 1996:
Signatures Title
/s/ Lynn W. Aas Trustee
- ---------------------------
Lynn W. Aas
/s/ Orlin W. Backes Trustee
- ---------------------------
Orlin W. Backes
/s/ Arthur A. Link Trustee
- ---------------------------
Arthur A. Link
/s/ Robert E. Walstad Trustee, Chairman of the Board,
- --------------------------- President and Treasurer
Robert E. Walstad
C-7
<PAGE>
Exhibit Index
1. Agreement and Declaration of Trust dated August 10, 1990 (incorporated by
reference to Form N-lA [File No. 33-36324] filed on behalf of Ranson Managed
Portfolios -- The Kansas Municipal Fund).
2. By-Laws (incorporated by reference to Form N-1A [File No. 33-36324] filed on
behalf of Ranson Managed Portfolios -- The Kansas Municipal Fund).
3. Inapplicable.
4. Inapplicable.
5. Form of Management and Investment Advisory Agreement between Registrant and
Ranson Capital Corporation (incorporated by reference to Post-effective
Amendment No. 11 to the Registration Statement).
6. (a) Form of Distribution and Services Agreement between Registrant and
Ranson Capital Corporation (incorporated by reference to Post-effective
Amendment No. 11 to the Registration Statement).
(b) Dealer Agreement (incorporated by reference to Post-effective Amendment
No. 11 to the Registration Statement).
7. Inapplicable.
8. Form of Custodian Agreement between Ranson Managed Portfolios and First
Western Bank & Trust.
9. Administrative and Accounting Services Agreement between Registrant and ND
Resources, Inc.
10. Opinion of Chapman and Cutler.
11. Inapplicable.
12. Inapplicable.
13. Inapplicable.
14. Shareholder Services Plan (incorporated by reference to Post-effective
Amendment No. 11 to the Registration Statement).
15. Inapplicable.
16. Inapplicable.
<PAGE>
EXHIBIT 9.1
CUSTODY AGREEMENT
THIS AGREEMENT made the 10th day of May, 1996, by and between First Western
Bank & Trust ("Custodian"), a bank organized under the laws of the state of
North Dakota, having its trust office located at 900 South Broadway, Minot,
North Dakota 58701, and Ranson Managed Portfolios ("Fund"), a Massachusetts
business trust having its principal office and place of business at 1 North
Main, Minot, North Dakota 58703.
W I T N E S S E T H:
WHEREAS, Fund desires to appoint First Western Bank and Trust as Custodian
of the securities and monies of Fund's investment portfolio; and
WHEREAS, First Western Bank & Trust is willing to accept such appointment;
NOW THEREFORE, for and in consideration of the mutual promises contained
herein, the parties hereto, intending to be legally bound, mutually covenant and
agree as follows:
1. APPOINTMENT OF CUSTODIAN. Fund hereby constitutes and appoints
Custodian as custodian of the Fund which is to include:
A. Appointment as custodian of the securities and monies at any time
owned by the Fund; and
B. Appointment as agent to perform certain accounting and
recordkeeping functions required of a duly registered investment
company in compliance with applicable provisions of federal, state
and local laws, rules and regulations including, as may be
required:
1. Provide information necessary for Fund to file required
financial reports; maintaining and preserving required books,
accounts and records as the basis for such reports; and
performing certain daily functions in connection with such
accounts and records.
2. Acting as liaison with independent auditors.
2. DELIVERY OF CORPORATE DOCUMENTS. Fund has delivered or will deliver to
Custodian prior to the effective date of this Agreement, copies of the
following documents and all amendments or supplements thereto, properly
certified or authenticated:
A. Resolutions of the Board of Trustees of Fund appointing Custodian
as custodian hereunder and approving the form of this Agreement;
and
B. Resolutions of the Board of Trustees of Fund designating certain
persons to give instructions on behalf of the Fund to Custodian
and authorizing Custodian to rely upon written instructions over
their signatures.
1
<PAGE>
3. DUTIES AND RESPONSIBILITIES OF CUSTODIAN.
A. Delivery of Assets
Fund will deliver or cause to be delivered to Custodian on the
effective date of this Agreement, or as soon thereafter as
practicable, and from time to time thereafter, all portfolio
securities acquired by it and monies then owned by it except as
permitted by the Investment Company Act of 1940 or from time to
time coming into its possession during the time this Agreement
shall continue in effect. Custodian shall have no responsibility
or liability whatsoever for or on account of securities or monies
not so delivered. All securities so delivered to Custodian (other
than bearer securities) shall be registered in the name of Fund or
its nominee, or of a nominee of Custodian, or shall be properly
endorsed and in form for transfer satisfactory to Custodian.
B. Delivery of Accounts and Records
Fund shall turn over to Custodian all of the Fund's relevant
accounts and records previously maintained by it. Custodian shall
be entitled to rely conclusively on the completeness and
correctness of the accounts and records turned over to it by Fund,
and Fund shall indemnify and hold Custodian harmless of and from
any and all expenses, damages and losses whatsoever arising out of
or in connection with any error, omission, inaccuracy or other
deficiency of such accounts and records or in the failure of Fund
to provide any portion of such or to provide any information
needed by the Custodian knowledgeably to perform its function
hereunder.
C. Delivery of Assets to Third Parties
Custodian will receive delivery of and keep safely the assets of
Fund delivered to it from time to time and the assets of each
Portfolio segregated in a separate account. Custodian will not
deliver, assign, pledge or hypothecate any such assets to any
person except as permitted by the provisions of this Agreement or
any agreement executed by it according to the terms of Section
3.S. of this Agreement. Upon delivery of any such assets to a
subcustodian pursuant to Section 3.S. of this Agreement, Custodian
will create and maintain records identifying those assets which
have been delivered to the subcustodian as belonging to the
applicable Portfolio of the Fund. The Custodian is responsible for
the safekeeping of the securities and monies of Fund only until
they have been transmitted to and received by other persons as
permitted under the terms of this Agreement. Custodian shall be
responsible for the monies and securities of Fund(s) held by
eligible foreign subcustodians to the extent the domestic
custodian with which the Custodian contracts is responsible to
Custodian. Custodian may participate directly or indirectly
through a subcustodian in the Depository Trust Company,
Treasury/Federal Reserve Book Entry System, Participant Trust
Company or other depository approved by the Fund (as such entities
are defined at 17 CFR Section 270.17f(b)).
D. Registration of Securities
Custodian will hold stocks and other registerable portfolio
securities of Fund registered in the name of Fund or in the name
of any nominee of Custodian for whose fidelity and liability
Custodian will be fully responsible, or in street certificate
2
<PAGE>
form, so-called, with or without any indication of fiduciary
capacity. Unless otherwise instructed, Custodian will register all
such portfolio securities in the name of its authorized nominee.
All securities, and the ownership thereof by Fund, which are held
by Custodian hereunder, however, shall at all times be
identifiable on the records of the Custodian. The Fund agrees to
hold Custodian and its nominee harmless for any liability as a
record holder of securities held in custody.
E. Exchange of Securities
----------------------
Upon receipt of instructions as defined herein in Section 4.A.,
Custodian will exchange, or cause to be exchanged, portfolio
securities held by it for the account of Fund for other securities
or cash issued or paid in connection with any reorganization,
recapitalization, merger, consolidation, split-up of shares,
change of par value, conversion or otherwise, and will deposit any
such securities in accordance with the terms of any reorganization
or protective plan. Without instructions, Custodian is authorized
to exchange securities held by it in temporary form for securities
in definitive form, to effect an exchange of shares when the par
value of the stock is changed, and, upon receiving payment
therefor, to surrender bonds or other securities held by it at
maturity or when advised of earlier call for redemption, except
that Custodian shall receive instructions prior to surrendering
any convertible security.
F. Purchases of Investments of the Fund
------------------------------------
Fund will, on each business day on which a purchase of securities
shall be made by it, deliver to Custodian instructions which shall
specify with respect to each such purchase:
1. The name of the Portfolio making such purchase;
2. The name of the issuer and description of the security;
3. The number of shares or the principal amount purchased, and
accrued interest, if any;
4. The trade date;
5. The settlement date;
6. The purchase price per unit and the brokerage commission,
taxes and other expenses payable in connection with the
purchase;
7. The total amount payable upon such purchase; and
8. The name of the person from whom or the broker or dealer
through whom the purchase was made.
In accordance with such instructions, Custodian will pay for out
of monies held for the account of Fund, but only insofar as monies
are available therein for such purpose, and receive the portfolio
securities so purchased by or for the account of Fund except that
Custodian may in its sole discretion advance funds to the Fund
which may result in an overdraft because the monies held by the
Custodian on behalf of the Fund are insufficient to pay the total
amount payable upon such purchase. Such payment will be made only
upon receipt by Custodian of the securities so purchased in form
for transfer satisfactory to Custodian.
3
<PAGE>
G. Sales and Deliveries of Investments of the Fund - Other than
Options and Futures
------------------------------------------------------------
Fund will, on each business day on which a sale of investment
securities of Fund has been made, deliver to Custodian
instructions specifying with respect to each such sale:
1. The name of the Portfolio making such sale;
2. The name of the issuer and description of the securities;
3. The number of shares or principal amount sold, and accrued
interest, if any;
4. The date on which the securities sold were purchased or other
information identifying the securities sold and to be
delivered;
5. The trade date;
6. The settlement date;
7. The sale price per unit and the brokerage commission, taxes or
other expenses payable in connection with such sale;
8. The total amount to be received by Fund upon such sale; and
9. The name of the broker or dealer through whom or person to
whom the sale was made.
In accordance with such instructions, Custodian will deliver or
cause to be delivered the securities thus designated as sold for
the account of Fund to the broker or other person specified in the
instructions relating to such sale, such delivery to be made only
upon receipt of payment therefor in such form as is satisfactory
to Custodian, with the understanding that Custodian may deliver or
cause to be delivered securities for payment in accordance with
the customs prevailing among dealers in securities.
H. Purchases or Sales of Security Options, Options on Indices and
Security Index Futures Contracts
--------------------------------------------------------------
Fund will, on each business day on which a purchase or sale of the
following options and/or futures shall be made by it, deliver to
Custodian instructions which shall specify with respect to each
such purchase or sale:
1. The name of the Portfolio making such purchase or sale;
2. Security Options
a. The underlying security;
b. The price at which purchased or sold;
c. The expiration date;
d. The number of contracts;
4
<PAGE>
e. The exercise price;
f. Whether the transaction is an opening, exercising,
expiring or closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased;
i. Market on which option traded;
j. Name and address of the broker or dealer through whom the
sale or purchase was made.
3. Options on Indices
a. The index;
b. The price at which purchased or sold;
c. The exercise price;
d. The premium;
e. The multiple;
f. The expiration date;
g. Whether the transaction is an opening, exercising,
expiring or closing transaction;
h. Whether the transaction involves a put or call;
i. Whether the option is written or purchased;
j. The name and address of the broker or dealer through
whom the sale or purchase was made, or other applicable
settlement instructions.
4. Security Index Futures Contracts
a. The last trading date specified in the contract and, when
available, the closing level, thereof;
b. The index level on the date the contract is entered into;
c. The multiple;
d. Any margin requirements;
e. The need for a segregated margin account (in addition to
instructions, and if not already in the possession of
Custodian, Fund shall deliver a substantially complete and
executed custodial safekeeping account and procedural
agreement which shall be incorporated by reference into
this Custody Agreement); and
5
<PAGE>
f. The name and address of the futures commission merchant
through whom the sale or purchase was made, or other
applicable settlement instructions.
5. Options on Index Future Contracts
a. The underlying index future contract;
b. The premium;
c. The expiration date;
d. The number of options;
e. The exercise price;
f. Whether the transaction involves an opening, existing,
expiring or closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased; and
i. The market on which the option is traded.
I. Securities Pledged or Loaned
----------------------------
If specifically allowed for in the prospectus of Fund:
1. Upon receipt of instructions, Custodian will release or cause
to be released securities held in custody to the pledgee
designated in such instructions by way of pledge or
hypothecation to secure any loan incurred by Fund; provided,
however, that the securities shall be released only upon
payment to Custodian of the monies borrowed, except that in
cases where additional collateral is required to secure a
borrowing already made, further securities may be released or
caused to be released for that purpose upon receipt of
instructions. Upon receipt of instructions, Custodian will
pay, but only from funds available for such purpose, any such
loan upon redelivery to it of the securities pledged or
hypothecated therefor and upon surrender of the note or notes
evidencing such loan.
2. Upon receipt of instructions, Custodian will release
securities held in custody to the borrower designated in such
instructions; provided, however, that the securities will be
released only upon deposit with Custodian of full cash
collateral as specified in such instructions, and that Fund
will retain the right to any dividends, interest or
distribution on such loaned securities. Upon receipt of
instructions and the loaned securities, Custodian will release
the cash collateral to the borrower.
J. Routine Matters
---------------
Custodian will, in general, attend to all routine and mechanical
matters in connection with the sale, exchange, substitution,
purchase, transfer, or other dealings with securities or other
property of Fund except as may be otherwise provided in this
Agreement or directed from time to time by the Board of Trustees
of Fund.
6
<PAGE>
K. Deposit Account
---------------
Custodian will open and maintain a special purpose deposit
account(s) in the name of Custodian on behalf of each Portfolio
(Accounts), subject only to draft or order by Custodian upon
receipt of instructions. All monies received by Custodian from or
for the account of a Portfolio shall be deposited in said
Accounts.
L. Income and Other Payments To Fund
---------------------------------
Custodian will:
1. Collect, claim and receive and deposit for the Account of each
Portfolio of the Fund all income and other payments which
become due and payable on or after the effective date of this
Agreement with respect to the securities deposited under this
Agreement, and credit the account of the applicable Portfolio
of the Fund.
2. Execute ownership and other certificates and affidavits for
all federal, state and local tax purposes in connection with
the collection of bond and note coupons; and
3. Take such other action as may be necessary or proper in
connection with:
a. the collection, receipt and deposit of such income and
other payments, including but not limited to the
presentation for payment of:
1. all coupons and other income items requiring
presentation; and
2. all other securities which may mature or be called,
redeemed, retired or otherwise become payable and
regarding which the Custodian has actual knowledge, or
notice of which is contained in publications of the
type to which it normally subscribes for such purpose;
and
b. the endorsement for collection, in the name of the
applicable Portfolio of the Fund, of all checks, drafts or
other negotiable instruments.
Custodian, however, will not be required to institute suit or take
other extraordinary action to enforce collection except upon
receipt of instructions and upon being indemnified to its
satisfaction against the costs and expenses of such suit or other
actions. Custodian will receive, claim and collect all stock
dividends, rights and other similar items and will deal with the
same pursuant to instructions. Unless prior instructions have been
received to the contrary. Custodian will, without further
instructions, sell any rights held for the account of Fund on the
last trade date prior to the date of expiration of such rights.
M. Payment of Dividends and Other Distributions
--------------------------------------------
On the declaration of any dividend or other distribution on the
shares of Beneficial Interest of Fund ("Fund Shares") by the Board
of Trustees of Fund, Fund shall deliver to Custodian instructions
with respect thereto, including a copy of the Resolution of said
Board of Trustees certified by the Secretary or an Assistant
Secretary of Fund wherein there shall be set forth the record date
as of which shareholders entitled to receive such dividend or
other distribution shall be determined, the date of payment of
such dividend or distribution, and the amount payable per share on
such dividend or distribution.
7
<PAGE>
Except if the ex-dividend date and the reinvestment date of any
dividend are the same, in which case funds shall remain in the
Custody Account, on the date specified in such Resolution for the
payment of such dividend or other distribution, Custodian will pay
out of the monies held for the account of Fund, insofar as the
same shall be available for such purposes, and credit to the
account of the Dividend Disbursing Agent for Fund, such amount as
may be necessary to pay the amount per share payable in cash on
Fund Shares issued and outstanding on the record date established
by such Resolution.
N. Shares of Fund Purchased by Fund
--------------------------------
Whenever any Fund Shares are repurchased or redeemed by Fund, Fund
or its agent shall advise Custodian of the aggregate dollar amount
to be paid for such shares and shall confirm such advice in
writing. Upon receipt of such advice, Custodian shall charge such
aggregate dollar amount to the Account of Fund and either deposit
the same in the account maintained for the purpose of paying for
the repurchase or redemption of Fund Shares or deliver the same in
accordance with such advice.
Custodian shall not have any duty or responsibility to determine
that Fund Shares have been removed from the proper shareholder
account or accounts or that the proper number of such shares have
been cancelled and removed from the shareholder records.
O. Shares of Fund Purchased from Fund
----------------------------------
Whenever Fund Shares are purchased from Fund, Fund will deposit or
cause to be deposited with Custodian the amount received for such
shares.
Custodian shall not have any duty or responsibility to determine
that Fund Shares purchased from Fund have been added to the proper
shareholder account or accounts or that the proper number of such
shares have been added to the shareholder records.
P. Proxies and Notices
-------------------
Custodian will promptly deliver or mail or have delivered or
mailed to Fund all proxies properly signed, all notices of
meetings, all proxy statements and other notices, requests or
announcements affecting or relating to securities held by
Custodian and Fund and will, upon receipt of instructions, execute
and deliver or cause its nominee to execute and deliver or mail or
have delivered or mailed such proxies or other authorizations as
may be required. Except as provided by this Agreement or pursuant
to instructions hereafter received by Custodian, neither it nor
its nominee will exercise any power inherent in any such
securities, including any power to vote the same, or execute any
proxy, power or attorney, or other similar instrument voting any
of such securities, or give any consent, approval or waiver with
respect thereto, or take any other similar action.
Q. Disbursements
-------------
Custodian will pay or cause to be paid insofar as funds are
available for the purpose, bills, statements and other obligations
of Fund (including but not limited to obligations in connection
with the conversion, exchange or surrender of securities owned by
Fund, interest charges, dividend disbursements, taxes, management
fees,
8
<PAGE>
custodian fees and expenses incurred for the benefit of the
Fund(s), legal fees, auditors' fees, transfer agents' fees,
brokerage commissions, compensation to personnel, and other
operating expenses of the Fund) pursuant to instructions of Fund
setting forth the name of the person to whom payment is to be
made, the amount of the payments, and the purpose of the payment.
R. Daily Statement of Accounts
---------------------------
Custodian will, within a reasonable time, render to Fund as of the
close of business on each day, a detailed statement of the amounts
received or paid and of securities received or delivered for the
account of Fund during said day. Custodian will, from time to
time, upon request by Fund, render a detailed statement of the
securities and monies held for Fund under this Agreement, and
Custodian will maintain such books and records as are necessary to
enable it to do so and will permit such persons as are authorized
by Fund including Fund's independent public accountants, access to
such records or confirmation of the contents of such records; and
if demanded, will permit federal and state regulatory agencies to
examine the securities, books and records. Upon the written
instructions of Fund or as demanded by federal or state regulatory
agencies, Custodian will instruct any subcustodian to permit such
persons as are authorized by Fund including Fund's independent
public accountants, access to such records or confirmation of the
contents of such records; and if demanded, to permit federal and
state regulatory agencies to examine the books, records and
securities held by subcustodian which relate to Fund.
S. Appointment of Subcustodian
---------------------------
1. Notwithstanding any other provisions of this Agreement, all or
any of the monies or securities of Fund may be held in
Custodian's own custody or in the custody of one or more other
banks or trust companies selected by Custodian and approved by
the Fund's Board of Trustees. Any such subcustodian must have
the qualifications required for custodian under the Investment
Company Act of 1940, as amended. The subcustodian may
participate directly or indirectly in the Depository Trust
Company, Treasury/Federal Reserve Book Entry System,
Participant Trust Company or other depository approved by the
Fund (as such entities are defined at 17 CFR Sec. 170.17f-
4(b)). The appointment of any subcustodian, depository, or
clearing agency used by the Custodian and approved by the Fund
will not relieve Custodian of any of its obligation hereunder
except as provided in Section 3.C. hereof.
2. Notwithstanding any other provisions of this Agreement, Fund's
foreign securities (as defined in Rule 17f5(c)(1) under the
Investment Company Act of 1940) and Fund's cash or cash
equivalents, in amounts reasonably necessary to effect Fund's
foreign securities transactions, may be held in the custody of
one or more banks or trust companies acting as subcustodians,
according to Section 3.S.1; and thereafter, pursuant to a
written contract or contracts as approved by Fund's Board of
Trustees, may be transferred to an account maintained by such
subcustodian with an eligible foreign custodian, as defined in
Rule 17f-5(c)(2), provided that any such arrangement involving
a foreign custodian shall be in accordance with the provisions
of Rule 17f-5 under the Investment Company Act of 1940 as that
Rule may be amended from time to time.
9
<PAGE>
T. Accounts and Records
--------------------
Custodian with the direction and as interpreted by the Fund,
Fund's accountants and/or other tax advisors will prepare and
maintain complete, accurate and current all accounts and records
required to be maintained by Fund and under the general Rules and
Regulations under the Investment Company Act of 1940 ("Rules") as
amended, under the Internal Revenue Code of 1986 ("Code") as
amended and as agreed upon between the parties and will preserve
said records in the manner and for the periods prescribed in said
Rules and Codes, or for such longer periods as is agreed upon by
the parties.
Custodian relies upon Fund to furnish, in writing, accurate and
timely information to complete Fund's records.
Custodian shall incur no liability and Fund shall indemnify and
hold harmless Custodian from and against any liability arising
from any failure of Fund to furnish such information in a timely
and accurate manner, even if Fund subsequently provides accurate
but untimely information. It shall be the responsibility of Fund
to furnish Custodian with the declaration, record and payment
dates and amounts of any dividends or income and any other special
actions required concerning each of its securities when such
information is not readily available from generally accepted
securities industry services or publications.
U. Accounts and Records Property of Fund
-------------------------------------
Custodian acknowledges that all of the accounts and records
maintained by Custodian pursuant to the Agreement are the property
of the Fund, and will be made available to Fund for inspection or
reproduction within a reasonable period of time, upon demand.
Custodian will assist Fund's independent auditors, or upon
approval of Fund, or upon demand, any regulatory body, in any
requested review of Fund's accounts and records but shall be
reimbursed for all expenses and employee time invested in any such
review outside of routine and normal periodic reviews. Upon
receipt from Fund of the necessary information, Custodian will
supply necessary data for Fund's completion of any necessary tax
returns, questionnaires, periodic reports to Shareholders and such
other reports and information requests as Fund and Custodian shall
agree upon from time to time.
V. Adoption of Procedures
----------------------
Custodian and Fund may from time to time adopt procedures as they
agree upon, and Custodian may conclusively assume that no
procedure approved by Fund, or directed by Fund, conflicts with or
violates any requirements of its prospectus, Declaration of Trust,
Bylaws, or any rule or regulation of any regulatory body or
governmental agency. Fund will be responsible to notify Custodian
of any changes in statutes, regulations, rules or policies which
might necessitate changes in Custodian's responsibilities or
procedures.
W. Overdrafts
----------
If Custodian shall in its sole discretion advance funds to the
account of the Fund which results in an overdraft because the
monies held by Custodian on behalf of the
10
<PAGE>
Fund are insufficient to pay the total amount payable upon a
purchase of securities as specified in Fund's instructions or for
some other reason, the amount of the overdraft shall be payable by
the Fund to First Western Bank & Trust upon demand and shall bear
an interest rate determined by Custodian from the date advanced
until the date of payment.
4. INSTRUCTIONS.
------------
A. The term "instructions," as used herein, means written or oral
instructions to Custodian from a designated representative of
Fund. Certified copies of resolutions of the Board of Trustees of
Fund naming one or more designated representatives to give
instructions in the name and on behalf of Fund, may be received
and accepted from time to time by Custodian as conclusive evidence
of the authority of any designated representative to act for Fund
and may be considered to be in full force and effect (and
Custodian will be fully protected in acting in reliance thereon)
until receipt by Custodian of notice to the contrary. Unless the
resolution delegating authority to any person to give instructions
specifically requires that the approval of anyone else will first
have been obtained, Custodian will be under no obligation to
inquire into the right of the person giving such instructions to
do so. Notwithstanding any of the foregoing provisions of this
Section 4, no authorizations or instructions received by Custodian
from Fund, will be deemed to authorize or permit any director,
trustee, officer, employee, or agent of Fund to withdraw any of
the securities or similar investments of Fund upon the mere
receipt of such authorization or instruction from such director,
trustee, officer, employee or agent.
Notwithstanding any other provision of this Agreement, Custodian,
upon receipt (and acknowledgement if required at the discretion of
Custodian) of the instructions of a designated representative of
Fund will undertake to deliver for Fund's account monies (provided
such monies are on hand or available) in connection with Fund's
transactions and to wire transfer such monies to such broker,
dealer, subcustodian, bank or other agent specified in such
instructions by a designated representative of Fund.
B. No later than the next business day immediately following each
oral instruction, Fund will send Custodian written confirmation of
such oral instruction. At Custodian's sole discretion, Custodian
may record on tape, or otherwise, any oral instruction whether
given in person or via telephone, each such recording identifying
the parties, the date and the time of the beginning and ending of
such oral instruction.
5. LIMITATION OF LIABILITY OF CUSTODIAN.
------------------------------------
A. Custodian shall hold harmless and indemnify Fund from and against
any loss or liability arising out of Custodian's negligence or bad
faith in the performance of its duties hereunder. In no event,
Custodian may request and obtain the advice and opinion of counsel
for Fund, or of its own counsel with respect to questions or
matters of law, and it shall be without liability to Fund for any
action taken or omitted by it in good faith, in conformity with
such advice or opinion. If Custodian reasonably believes that it
could not prudently act according to the instructions of the Fund
or the Fund's counsel, it may in its discretion, with notice to the
Fund, not act according to such instructions.
11
<PAGE>
B. Custodian may rely upon the advice of Fund and upon statements of
Fund's or and other person believed by, it in good faith, to be
expert in matters upon which they are consulted, and Custodian
shall not be liable for any actions taken, in good faith, upon
such statements.
C. If Fund requires Custodian in any capacity to take, with respect
to any securities, any action which involves the payment of money
by it, or which in Custodian opinion might make it or its nominee
liable for payment of monies or in any other way, Custodian, upon
notice of Fund given prior to such actions, shall be and be kept
indemnified by Fund in an amount and form satisfactory to
Custodian against any liability on account of such action.
D. Custodian shall be entitled to receive, and Fund agrees to pay to
Custodian, on demand, reimbursement for such cash disbursements,
costs and expenses as may be agreed upon from time to time by
Custodian and Fund.
E. Custodian shall be protected in acting as custodian hereunder upon
any instructions, advice, notice, request, consent, certificate or
other instrument or paper reasonably appearing to it to be genuine
and to have been properly executed and shall, unless otherwise
specifically provided herein, be entitled to receive as conclusive
proof of any fact or matter required to be ascertained from Fund
hereunder, a certificate signed by the Fund's President, or other
officer specifically authorized for such purpose.
F. Without limiting the generality of the foregoing, Custodian shall
be under no duty or obligation to inquire into, and shall not be
liable for:
1. The validity of the issue of any securities purchased by or
for Fund, the legality of the purchase thereof or evidence of
ownership required by Fund to be received by Custodian, or the
property of the decision to purchase or amount paid therefor;
2. The legality of the sale of any securities by or for Fund, or
the propriety of the amount for which the same are sold;
3. The legality of the issue or sale of any Beneficial Interest
of Fund, or the sufficiency of the amount to be received
therefor;
4. The legality of the repurchase or redemption of any shares of
Beneficial Interest of, or the property of the amount to be
paid therefor; or
5. The legality of the declaration of any dividend by Fund, or
the legality of the issue of any shares of Beneficial Interest
of Fund in payment of any stock dividend.
G. Custodian shall not be liable for, or considered to be Custodian
of, any money represented by any check, draft, wire transfer,
clearing house funds, uncollected funds, or instrument for the
payment of money received by it on behalf of Fund, until Custodian
actually receives such money, provided only that it shall advise
Fund promptly if it fails to receive any such money in the
ordinary course of business, and use its best efforts and
cooperate with Fund toward the end that such money shall be
received.
12
<PAGE>
H. Custodian shall not be responsible for loss occasioned by the
acts, neglects, defaults or insolvency of any broker, bank, trust
company, or any other person with whom Custodian may deal in the
absence of negligence, or bad faith on the part of Custodian.
I. Notwithstanding anything herein to the contrary, Custodian may,
and with respect to any foreign subcustodians appointed under
Section 3.S.2 must, provide Fund for its approval, agreements
with banks or trust companies which will act as subcustodians for
Fund pursuant to Section 3.S. of this agreement.
6. COMPENSATION. Fund will pay to Custodian such compensation as is
stated in the Fee Schedule attached hereto which may be changed from
time to time as agreed to in writing by Custodian and Fund. Custodian
may charge such compensation against monies held by it for the account
of Fund. Custodian will also be entitled, notwithstanding the
provisions of Section 5.C. or 5.D. hereof, to charge against any
monies held by it for the account of Fund the amount of any loss,
damage, liability, advance, or expense for which it shall be entitled
to reimbursement under the provisions of this Agreement including fees
or expenses due to First Western Bank & Trust for other services
provided to the Fund by Custodian. Custodian will not be entitled to
reimbursement by Fund for any loss or expenses of any subcustodian.
7. TERMINATION. Either party to this Agreement may terminate the same
by notice in writing, delivered or mailed, postage prepaid, to the
other party hereto and received not less than ninety (90) days prior
to the date upon which such termination will take effect. Upon
termination of this Agreement, Fund will pay to Custodian such
compensation for its reimbursable disbursements, costs and expenses
paid or incurred to such date and Fund will use its best efforts to
obtain a successor custodian. Unless the holders of a majority of the
outstanding shares of Beneficial Interest vote to have the securities,
funds and other properties held under this Agreement delivered and
paid over to some other person, firm or corporation specified in the
note, having not less than Two Million Dollars ($2,000,000) aggregate
capital, surplus and undivided profits, as shown by its last published
report, and meeting such other qualifications for custodian as set
forth in the Bylaws of Fund, the Board of Trustees of Fund will,
forthwith upon giving or receiving notice of termination of this
Agreement, appoint as successor custodian a bank or trust company
having such qualifications. Custodian will, upon termination of this
Agreement, deliver to the successor custodian so specified or
appointed, at Custodian's office, all securities then held by
Custodian hereunder, duly endorsed and in from for transfer, all funds
and other properties of Fund deposited with or held by Custodian
hereunder, or will cooperate in effecting changes in book-entries at
the Depository Trust Company or in the Treasury/Federal Reserve Book-
Entry System pursuant to 31 CFR Sec. 306.118. In the event no such
vote has been adopted by the holder of shares of Beneficial Interest
of Fund and no written order designating a successor custodian has
been delivered to Custodian on or before the date when such
termination becomes effective, then Custodian will deliver the
securities, funds and properties of Fund to a bank or trust company at
the selection of Custodian and meeting the qualifications for
custodian, if any, set forth in the Bylaws of Fund and having not less
than Two Million Dollars ($2,000,000) aggregate capital, surplus and
undivided profits, as shown by its last published report. Upon either
such delivery to a successor custodian, Custodian will have no further
obligations or liabilities under this Agreement. Thereafter such bank
or trust company will be the successor custodian under this Agreement
and will be entitled to reasonable compensation for its services. In
the event that no such successor custodian can be found, Fund will
submit to its shareholders,
13
<PAGE>
before permitting deliver of the cash and securities owned by Fund to
anyone other than a successor custodian, the question of whether Fund
will be liquidated or function without a custodian. Notwithstanding
the foregoing requirement as to delivery upon termination of this
Agreement, Custodian may make any other delivery of the securities,
funds and property of Fund which is permitted by the Investment
Company Act of 1940, Fund's Deed of Trust and Bylaws then in effect or
apply to a court of competent jurisdiction for the appointment of a
successor custodian.
8. NOTICES. Notices, requests, instructions and other writings received
by Fund at 1 North Main, Minot, North Dakota 58703, or at such other
address as Fund may have designated to Custodian in writing, will be
deemed to have been properly given to Fund hereunder; and notices,
requests, instructions and other writings received by Custodian at its
offices at 900 South Broadway, Minot, North Dakota 58701, or to such
other address as it may have designated to Fund in writing, will be
deemed to have been properly given to Custodian hereunder.
9. MISCELLANEOUS.
--------------
A. This Agreement is executed and delivered in the State of North
Dakota and shall be governed by the laws of said state.
B. All other terms and provisions of this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the
respective successor and assigns of the parties hereto.
C. No provisions of the Agreement may be amended or modified, in any
manner except by a written agreement properly authorized and
executed by both parties hereto.
D. The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or
effect.
E. This Agreement shall become effective on the 31st day of May,
1996.
F. This Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original but all of
which together will constitute one and the same instrument.
G. If any part, term or provision of this Agreement is by the courts
held to be illegal, in conflict with any law or otherwise invalid,
the remaining portion or portions shall be considered severable
and not be affected, and the rights and obligations of the parties
shall be construed and enforced as if the Agreement did not
contain the particular part, term or provision held to be illegal
or invalid.
H. This Agreement may not be assigned by either party without prior
written consent of the other party.
I. If any provision of the Agreement, either in its present form or
as amended from time to time, limits, qualifies or conflicts with
the Investment Company Act of 1940 and the rules and regulations
promulgated thereunder, such statutes, rules and regulations shall
be deemed to control and superseded such provision without
nullifying or terminating the remainder of the provisions of this
Agreement.
14
<PAGE>
J. Custodian will not release the identity of Fund to an issuer which
requests such information pursuant to the Shareholder
Communications Act of 1985 for the specific purpose of direct
communications between such issuer and Fund unless the Fund
directs Custodian otherwise.
K. A copy of the Declaration of Trust of the Fund is on file with the
Secretary of the Commonwealth of Massachusetts and notice is
hereby given that the Agreement has been executed on behalf of
Fund by the undersigned officer of Fund in his/her capacity as an
officer of Fund. The obligations of this Agreement shall only be
binding upon the assets and property of Fund and shall not be
binding upon any Trustee, officer or shareholder of Fund
individually.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers.
FIRST WESTERN BANK & TRUST
By:_______________________
ATTEST:
___________________________
RANSON MANAGED PORTFOLIOS
By:_______________________
President
ATTEST:
___________________________
15
<PAGE>
FEE SCHEDULE
CUSTODIAN CHARGES
FIRST WESTERN BANK & TRUST
Montana Tax-Free Fund, Inc., Integrity Fund of Funds, Inc., Ranson Managed
Portfolios, and any other mutual funds for which ND Money Management, Inc., or
Ranson Capital Corporation serves as investment adviser (hereinafter referred to
as the "Funds") shall compensate First Western Bank & Trust ("Custodian") for
services rendered pursuant to the Custodian Agreements entered into with each of
the Funds as follows:
For the period beginning May 10, 1996, and ending May 31, 1996, and monthly
thereafter, the Funds shall pay the Custodian a fee at the annual rate of .00015
of the first one hundred million dollars ($100,000,000) of combined net assets
of the Funds and .00010 of any combined net assets in excess of one hundred
million dollars ($100,000,000); provided, however, that the Funds shall pay the
Custodian a minimum monthly fee of five hundred dollars ($500).
By way of example only, if the Funds had combined net assets of ten million
dollars ($10,000,000) on May 31, 1996, the fee for the month of May would be
$500 (.00015 x $10,000,000 = $1,500/12 = $125, so the minimum monthly fee of
$500 would apply). If the combined net assets of the Funds on May 31 were one
hundred million dollars ($100,000,000), the fee for the month of May would be
$1,250 (.00015 x $100,000,000/12 = $1,250). If the combined net assets of the
Fund on May 31 were one hundred fifty million dollars ($150,000,000), the fee
for the month of May would be $1,666.67 (.00015 x $100,000,000 - $15,000 +
.00010 x $50,000,000 = $5,000 = $20,000/12 = $1,666.67).
The Custodian shall compute the fee payable pursuant to the Fee Schedule
and provide each of the Funds with detailed bills showing their proportionate
share of the fee as soon as practicable after the end of each calendar month.
The Funds shall each promptly pay the Custodian their proportionate share of the
fee.
16
<PAGE>
We, Robert E. Walstad and Peter A. Quist, President and Secretary,
respectively, of Ranson Managed Portfolios, (the "Fund"), a Massachusetts
business trust, do hereby certify that the following individuals have been duly
authorized as Authorized Persons to give Oral Instructions and Written
Instructions on behalf of the Fund, and the signatures set forth opposite their
respective names and their true and correct signatures:
Name Signature
- ---- ---------
Robert E. Walstad _____________________________________
W. Dan Korgel _____________________________________
Monte L. Avery _____________________________________
Shannon D. Radke _____________________________________
__________________________________________
Robert E. Walstad
President
__________________________________________
Peter A. Quist
Secretary
<PAGE>
ACCOUNTING SERVICES AGREEMENT
AGREEMENT dated as of this 5th day of January, 1996, by and between Ranson
Managed Portfolios, (the "Fund"), a Massachusetts business trust and ND
Resources, Inc., a North Dakota corporation.
In consideration of the mutual covenants hereinafter contained, it is
hereby agreed by and between the parties hereto as follows:
1. The Fund here appoints ND Resources, Inc. to provide accounting
services for the benefit of the Fund and its shareholders. Such services may
include, but are not limited to, bond interest and amortization accruals, daily
fee accruals, security valuation, calculation of daily net asset value,
calculation of a daily dividend rate, and preparation of semi-annual and annual
reports.
ND Resources Inc. accepts such appointment and agrees during such period to
render such services and to assume the obligations herein set forth for the
compensation herein provided. ND Resources Inc. shall for all purposes herein
provided be deemed to be an independent contractor and, unless otherwise
expressly provided or authorized, shall have no authority to act for or
represent the Fund in any way or otherwise be deemed an agent of the Fund. ND
Resources, Inc., by separate agreement with the Fund, may also service the Fund
in other capacities. In carrying out its duties and responsibilities hereunder,
ND Resources Inc. may contract with various Firms to provide certain of the
accounting services described herein. Such Firms shall at all times be deemed
to be independent contractors retained by ND Resources Inc. and not the Fund.
ND Resources Inc. and not the Fund will be responsible for the payment of
compensation to such Firms for such services.
2. For the services and facilities described in Section 1, each Portfolio
will pay to ND Resources, Inc. at the end of each calendar month an accounting
service fee equal to the sum of (i) $2,000 per month and (ii) 0.05% of the
Portfolio's average daily net assets on an annual basis for the Portfolio's
first $50 million of average daily net assets, 0.04% of the Portfolio's average
daily net assets on an annual basis for the Portfolio's next $50 million of
average net assets, 0.03% of the Portfolio's average daily net assets on an
annual basis for the Portfolio's next $100 million of average daily net assets,
0.02% of the Portfolio's average daily net assets on an annual basis for the
Portfolio's next $300 million of average daily net assets, and 0.01% of the
Portfolio's average daily net assets on an annual basis for the Portfolio's
average daily net assets in excess of $500 million, together with reimbursement
of out-of-pocket expenses. For the month and year in which this Agreement
becomes effective or terminates, there shall be an appropriate proration on the
basis of the number of days that the Agreement is in effect during such month
and year, respectively. The services of ND Resources Inc. to the Fund under
this Agreement are not to be deemed exclusive, and ND Resources, Inc. shall be
free to render similar services or other services to others.
The net asset value for each share of the Fund shall be calculated in
accordance with the provisions of the Fund's current prospectus. On each day
when net asset value is not calculated, the net asset value of a share of the
Fund shall be deemed to be the net asset value of such a share as of the close
of business on the last day on which such calculation was made for the purpose
of the foregoing computation.
<PAGE>
3. The Fund shall assume and pay all charges and expenses of its
operations not specifically assumed or otherwise to be provided by ND Resources,
Inc. under this Agreement.
4. This Agreement may be terminated at any time without the payment of any
penalty by the Fund or by ND Resources, Inc. on sixty (60) days written notice
to the other party. Termination of this Agreement shall not affect the right of
ND Resources, Inc. to receive payments on any unpaid balance of the compensation
described in Section 2 hereof earned prior to such termination. This Agreement
may not be amended to increase the amount to be paid to ND Resources, Inc. for
services hereunder without the vote of the Board of Trustees of the Fund. All
material amendments to this Agreement must in any event be approved by vote of
the Board of Trustees of the Fund.
5. If any provisions of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
6. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate for the receipt of such notice.
7. All parties hereto are expressly put on notice of the Fund's Agreement
and Declaration of the Trust and all amendments thereto, all of which are on
file with the Secretary of The Commonwealth of Massachusetts, and the limitation
of the shareholder and trustee liability contained therein. This Agreement has
been executed by and on behalf of the Fund by its representatives as such
representatives and not individually, and the obligations of the Fund hereunder
are not binding upon any of the trustees, officers or shareholders of the Fund
individually but are binding upon only the assets and property of the Fund.
8. This Agreement shall be construed in accordance with applicable federal
law and (except as to Section 7 hereof which shall be construed in accordance
with the laws of The Commonwealth of Massachusetts) the laws of the State of
North Dakota.
IN WITNESS WHEREOF, the Fund and ND Resources, Inc. have caused this
Agreement to be executed as of the day and year first above written.
By: /s/ Shannon D. Radke By: /s/ Robert E. Walstad
--------------------- ---------------------
Title: Operations Manager Title: President Ranson Managed Portfolios
------------------ -----------------------------------
<PAGE>
Exhibit 11.1
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
September 25, 1996
Ranson Managed Portfolios
1 North Main
Minot, North Dakota 58703
Re: Ranson Managed Portfolios
-------------------------
Gentlemen:
This opinion is being furnished in connection with the registration of
shares of beneficial interest ("Shares") of the Oklahoma Municipal Fund (the
"Fund"), a series of the Ranson Managed Portfolios ("Ranson"), a Massachusetts
business trust, pursuant to an amendment to the Registration Statement on
Form N-1A (the "Registration Statement") under the Securities Act of 1933, as
amended, to be filed by Ranson with the Securities and Exchange Commission.
In connection therewith, we have examined such documents, corporate
records, instruments and matters of law as we have deemed necessary or
appropriate for the purpose of rendering the opinions expressed herein, and are
familiar with the corporate proceedings taken by Ranson in connection with the
Registration Statement. In rendering such opinions, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, and the conformity to original documents of all documents
submitted to us as certified or photostatic copies.
Based upon and subject to the foregoing, after having given due regard to
such issues of law as we deem relevant and assuming that:
1. the Registration Statement remains effective, and the Prospectus
which is a part thereof and your Prospectus delivery procedures with
respect thereto fulfill all the requirements of the Securities Act of 1933
and the Investment Company Act of 1940 throughout all periods relevant to
this opinion;
2. all offers and issuances of Shares of the Fund registered under
the Registration Statement are conducted in a manner complying with the
terms of the Registration Statement; and
<PAGE>
Ranson Managed Portfolios
September 25, 1996
Page 2
3. all offers and issuances of Shares of the Fund registered under
the Registration Statement are conducted in compliance with the securities
laws of the states having jurisdiction thereof;
we are of the opinion that the Shares of the Fund covered by the Registration
Statement will be, when issued, legally and validly issued, fully paid and non-
assessable (except for the potential liability of shareholders described in the
Fund's prospectus under the caption "Description of Shares and Rights").
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement relating to the Shares referred to above, to the use of
our name and to the reference to our firm and said Registration Statement.
Respectfully submitted,
/s/ Chapman and Cutler
------------------------
Chapman and Cutler
