Dear Shareholders,
We are pleased to enclose the semi-annual report on the operations of The
Kansas Municipal Fund for the six months ended January 30, 1998. The Fund's
portfolio and related financial statements are presented within for your
review.
Will Rogers once said, "All I know is what I read in the paper." Well, if
you are reading today's financial reports all you get is confused. Inflation
or deflation? Higher rates or lower rates? Read a paper, watch television
or get on a mailing list and you will find opinions of economic forecasting
are quite often contradictory.
As we enter the new year, the U.S. economy is enjoying nearly seven years
of uninterrupted growth, the unemployment rate is the lowest since 1973, the
stock market is at record highs, interest rates are low and inflation is the
most docile in a generation. Yet, despite these events the financial markets
are volatile.
Recent events in foreign equity markets and their impact on the U.S. stock
market cause us to pause and question whether the recent drop in interest
rates is sustainable. Our sense is that yields on municipal bonds will stay
at their lower levels during the first half of 1998 when the bulk of the
Asian events slow down the U.S. economy, then edge higher in the latter part
of the year once the Asian drag subsides.
In spite of all this, tax-free municipal bonds are relatively cheap (a good
value) when compared to U.S. Treasury bonds. Long-term municipals
historically offer 75% to 80% of the return available from a 30 year Treasury
bond. As of this writing that ratio is about 85%.
The Kansas Municipal Fund utilized a partial hedge during the period. Futures
contracts in U.S. Treasury bonds were employed. By using a partial hedge to
protect against the possibility of interest rate hikes, share prices were
held down as rates declined during the six months ended January 30, 1998.
Share price began the period at $12.42 and closed at $12.26.
Throughout the period, the Fund has invested in high-grade Kansas tax-exempt
bonds. Among our purchases in the primary and secondary markets throughout
the six months were bonds issued by housing authorities, health care
facilities, and utilities.
High current income exempt from federal and Kansas income taxes with
preservation of capital remain the chief objectives of the Fund.
We invite your personal calls and visits.
Sincerely,
Monte L. Avery Robert E. Walstad
Chief Portfolio Strategist President
TERMS & DEFINITIONS
- -------------------
Appreciation
Increase in value of an asset.
Average Annual Total Return
A standardized measurement of the return (yield and appreciation) earned
by the fund on an annual basis, assuming all distributions are reinvested.
Coupon Rate or Face Rate
The rate of interest annually payable based on the face amount of the
bond; expressed as a percentage.
Depreciation
Decrease in value of an asset.
Lehman Brothers Municipal Bond Index
An unmanaged list of long-term, fixed-rate, investment-grade, tax-exempt
bonds representative of the municipal bond market. The index does not
take into account brokerage commissions or other costs, may include bonds
different from those in the fund, and may pose different risks than the
fund.
Market Value
Actual (or estimated) price at which a bond trades in the market place.
Maturity
A measure of the term or life of a bond in years. When a bond "matures",
the issuer repays the principal.
Net Asset Value (NAV)
The value of all your fund's assets, minus any liabilities, divided by
the number of outstanding shares, not including any initial sales charge.
Quality Ratings
A designation assigned by independent rating companies to give a relative
indication of a bond's credit worthiness. "AAA", "AA", "A" and "BBB"
indicate investment grade securities. Ratings can range from a high of
"AAA" to a low of "D".
Total Return
Measures both the net investment income and any realized and unrealized
appreciation or depreciation of the underlying investments in the fund's
portfolio for the period, assuming the reinvestment of all dividends.
It represents the aggregate percentage or dollar value change over the
period.
PERFORMANCE AND COMPOSITION
- ---------------------------
Portfolio Quality Ratings
(based on Total Long-Term Investments)
- --------------------------------------
[pie chart]
AAA 46.8%
AA 10.6%
A 22.9%
NR 12.5%
BBB 7.2%
Quality ratings reflect the financial strength of the issuer. They are
assigned by independent rating services such as Moody's Investors Services
and Standard & Poor's. Non-rated bonds have been determined to be of
appropriate quality for the portfolio by Ranson Capital Corporation, the
investment advisor.
Portfolio Market Sectors
(as a % of Net Assets)
- ------------------------
[pie chart]
H-Housing 34.8%
HC-Health Care 24.2%
U-Utilities 15.6%
GO-General Obligation 9.3%
W/S-Water/Sewer 6.2%
O-Other 3.8%
I-Industrial 2.7%
T-Transportation 2.3%
S-School 1.1%
Market sectors are breakdowns of the Fund's portfolio holdings into specific
investment classes.
COMPARATIVE INDEX GRAPH
- -----------------------
[line graph]
Comparison of change in value of a $10,000 investment in the
Kansas Municipal Fund and the Lehman Brother's Municipal
Bond Index
Kansas Municipal Kansas Municipal Lehman Brothers
Fund w/o Fund w/ max Municipal
sales charge sales charge Bond Index
----------------------------------------------------------------
11/15/90 $10,000 $ 9,575 $10,000
1991 $10,524 $10,077 $10,723
1992 $11,855 $11,351 $12,198
1993 $13,050 $12,495 $13,276
1994 $13,168 $12,609 $13,525
1995 $13,988 $13,394 $14,592
1996 $14,814 $14,184 $15,553
1997 $15,933 $15,256 $17,150
01/30/98 $16,122 $15,437 $17,839
AVERAGE ANNUAL TOTAL RETURNS
For periods ending January 30, 1998
- -----------------------------------------------------------------------
Since Inception
1 year 5 year (November 15, 1990)
- -----------------------------------------------------------------------
Without sales charge 4.76% 5.66% 6.85%
With sales charge 0.30% 4.75% 6.20%
- -----------------------------------------------------------------------
Putting Performance into Perspective
The graph comparing your Fund's performance to a benchmark index provides you
with a general sense of how your Fund performed. To put this information in
context, it may be helpful to understand the special differences between the
two. The Lehman Brothers index is a national index representative of the
national municipal bond market whereas the Fund concentrates its investments
in Kansas municipal bonds. Your Fund's total return for the period shown
appears with and without sales charges and includes Fund expenses and
management fees. A securities index measures the performance of a
theoretical portfolio. Unlike a fund, the index is unmanaged; there are no
expenses that affect the results. In addition, few investors could purchase
all of the securities necessary to match the index. And, if they could, they
would incur transaction costs and other expenses. All Fund and benchmark
returns include reinvested dividends. Returns are historical and are not a
guarantee of future results. The Fund's share price, yields and total returns
will vary, so that shares, when redeemed, may be worth more or less than their
original cost.
KEY STATISTICS
- --------------
07-31-97 NAV(share value) $12.42
01-30-98 NAV $12.26
Average Maturity 20.9 years
Number of Issues 91
Total Net Assets $123,503,236
<TABLE>
<CAPTION>
Schedule of Investments January 30, 1998 (Unaudited)
Name of Issuer
Percentages represent the market value of Rating Coupon Principal Market
each investment category to total net assets Moody's/S&P Rate Maturity Amount Value
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
KANSAS MUNICIPAL BONDS (98.0%)
Blue Valley, KS Recreation Commission C.O.P.'s NR/NR 6.600% 04/01/07 $ 245,000 $ 265,908
*Burlington, KS (Gas & Elec.) Rev. Ref. MBIA Aaa/AAA 7.000 06/01/31 4,000,000 4,443,680
Cowley Cty., KS Community College C.O.P.'s A/NR 7.000 03/01/12 900,000 965,430
Douglas Cty., KS USD #497 (Lawrence) G.O. AA/NR 6.000 09/01/15 1,000,000 1,093,920
Ellsworth Cty., KS G.O. MBIA NR/AAA 5.800 09/01/22 900,000 980,352
Ford Cty., KS Single Family Mrtge. Rev. Ref. A-1/NR 7.900 08/01/10 500,000 535,035
Gardner, KS Elec. Util. Rev. NR/NR 7.000 11/01/09 1,000,000 1,098,060
Garnett, KS Util. Rev. Ref & Impvt. MBIA Aaa/AAA 6.000 10/01/17 500,000 552,340
Goddard, KS (IFR Syst., Inc.) Indl. Rev. Ref. & Impvt. NR/NR 6.250 05/01/12 500,000 523,040
Gray Cty., KS USD #102 (Cimmarron) G.O. NR/NR 6.800 09/01/15 500,000 557,905
Hays, KS Sales Tax Rev. NR/NR 6.875 09/01/12 500,000 531,555
Hiawatha, KS (WalMart Stores) Indl. Rev. Ref. NR/AA 6.750 01/01/06 540,000 572,924
Hutchinson, KS Single Family Mrtge. Rev. Ref. A-1/NR 8.875 12/01/12 2,500,000 2,670,375
Johnson Cty., KS Internal Impvt. & Ref. AA-1/NR 6.125 09/01/12 2,410,000 2,640,902
Johnson Cty., KS Park & Recreation Rev. Ref. NR/NR 7.200 01/01/09 500,000 522,990
Johnson Cty., KS Single Family Mrtge. Rev. A-1/NR 7.100 05/01/12 1,000,000 1,071,350
Johnson Cty., KS USD #232 (DeSoto) School Blding. G.O. CGIC Aaa/AAA 6.000 03/01/12 500,000 546,595
Johnson Cty., KS Water Dist. #1 Rev. AA/AA+ 6.250 12/01/11 700,000 756,602
Johnson Cty., KS Water Dist. #1 Rev. Ref. AA/AA+ 6.500 12/01/13 500,000 540,420
KS Devl. Finance Auth. Rev. (Public Water Supply) AMBAC Aaa/NR 5.000 04/01/20 1,070,000 1,075,607
Kansas City, KS GNMA Mrtge. Rev. Aaa/NR 5.900 11/01/27 1,710,000 1,715,079
Kansas City, KS Util. Syst. Ref. & Impvt. FGIC Aaa/AAA 6.375 09/01/23 7,750,000 8,761,142
Kansas City, KS Util. Syst. Ref. & Impvt. AMBAC Aaa/AAA 6.300 09/01/16 2,000,000 2,183,300
Kansas City\Leavenworth Cty.\Lenexa, KS Mrtge. Rev. GNMA NR/AAA 7.850 11/01/10 555,000 592,934
KS Department of Transportation Highway Rev. AA/AA 6.000 09/01/12 2,200,000 2,417,712
KS Devl. Finance Auth. Multifamily Hsg (Indian Ridge Apts.) Rev NR/NR 6.000 01/01/28 1,150,000 1,159,625
KS Devl. Finance Auth. (Board of Regents) AMBAC Aaa/AAA 5.875 06/01/21 750,000 811,680
KS Devl. Finance Auth. (Board of Regents) Rev. NR/NR 6.000 04/01/08 500,000 537,405
KS Devl. Finance Auth. (El Dorado/Larned) Rev. Ref. MBIA Aaa/AAA 6.000 02/01/12 2,000,000 2,190,120
KS Devl. Finance Auth. (Highway Patrol Training Facs.) Rev. NR/NR 6.300 12/01/05 450,000 483,214
KS Devl. Finance Auth. (Martin Creek Place) Rev. FHA AA/NR 6.500 08/01/24 750,000 763,282
KS Devl. Finance Auth. (Martin Creek Place) Rev. FHA AA/NR 6.600 08/01/34 1,900,000 1,947,956
KS Devl. Finance Auth. (Sec. 8) Rev. Ref. MBIA Aaa/AAA 6.400 01/01/24 770,000 787,071
KS Devl. Finance Auth. (Stormont Vail) Hlth. Care Rev. MBIA Aaa/AAA 5.800 11/15/21 430,000 471,594
KS Devl. Finance Auth. (Stormont Vail) Hlth. Care Rev. MBIA Aaa/AAA 5.800 11/15/16 550,000 596,865
KS Devl. Finance Auth. (Stormont Vail) Hlth. Care Rev. MBIA Aaa/AAA 5.800 11/15/21 680,000 740,826
KS Devl. Finance Auth. Multifamily Hsg. Rev. NR/AAA 6.000 12/01/21 1,975,000 2,095,435
KS Devl. Finance Auth. Multifamily Hsg. Rev. NR/NR 6.500 02/01/18 2,065,000 2,171,967
KS Devl. Finance Auth. Multifamily Hsg. Rev. NR/NR 6.625 08/01/29 875,000 944,134
KS Devl. Finance Auth. Water Fund Rev. Aa-1/AA+ 6.000 11/01/14 500,000 548,370
KS Devl. Finance Auth. Water Fund Rev. Aa-1/AA+ 5.600 05/01/17 1,000,000 1,069,360
KS Water Finance Auth. (Public Water Supply Dist #6) Rev. NR/NR 6.000 05/01/17 255,000 268,984
Labette Cty., KS Single Family Mrtge. Rev. Ref. A-1/NR 8.400 12/01/11 10,000 10,706
Lawrence, KS (Brandon Woods) Multifamily Hsg. Devl. Rev. Ref. NR/AAA 6.625 04/01/12 2,000,000 2,069,560
Lawrence, KS (Memorial Hospital) Rev. A-3/NR 6.000 07/01/09 2,000,000 2,156,220
Lawrence, KS (Memorial Hospital) Rev. A-3/NR 6.200 07/01/14 1,200,000 1,311,888
Lawrence, KS (Memorial Hospital) Rev. A-3/NR 6.200 07/01/19 1,725,000 1,876,645
Leavenworth Cty., KS (Lansing) USD #469 G.O. CGIC Aaa/AAA 5.750 09/01/15 930,000 999,666
Leavenworth Cty., KS (Lansing) USD #469 G.O. AMBAC Aaa/AAA 5.750 09/01/14 875,000 940,590
Lenexa KS (Lakeview Village) Hlth. Care Facs. Rev. NR/BBB- 6.250 05/15/26 8,000,000 8,726,080
Lenexa, KS (Barrington Park) Multifamily Hsg. Rev. ASGUA Aaa/AAA 6.450 02/01/18 2,500,000 2,571,050
McPherson Cty., KS (McPherson) USD #418 G.O. CGIC Aaa/AAA 5.750 09/01/13 350,000 380,527
Merriam, KS (Shawnee Mission Medl. Ctr.) Rev. Ref. NR/A- 7.250 09/01/21 1,000,000 1,119,230
Miami Cty., KS Water Dist #2 Rev. Ref. ASGUA Aaa/AA 6.100 06/01/06 230,000 236,217
Miami Cty., KS Water Dist #2 Rev. Ref. ASGUA Aaa/AA 6.150 06/01/07 245,000 251,737
Miami Cty., KS Water Dist #2 Rev. Ref. ASGUA Aaa/AA 6.100 12/01/06 255,000 261,946
Olathe, KS (Bristol Pointe) Multifamily Hsg. Rev. Ref. FNMA NR/AAA 5.700 11/01/27 2,210,000 2,242,266
Olathe, KS (Jefferson Place) Multifamily Hsg. Rev. Ref. NR/A- 5.950 07/01/22 5,060,000 5,257,036
Olathe, KS (Jefferson Place) Multifamily Hsg. Rev. Ref. NR/A- 6.100 07/01/22 685,000 725,189
Olathe, KS Hlth. Care Ref. AMBAC Aaa/AAA 6.000 09/01/11 1,000,000 1,070,200
Olathe, KS Hlth. Care Ref. AMBAC Aaa/AAA 5.875 09/01/16 2,000,000 2,169,680
Olathe, KS Hlth. Care Ref. AMBAC Aaa/AAA 6.000 05/01/19 900,000 964,044
Park City, KS Sewer Syst. Rev. NR/NR 5.500 12/01/09 750,000 782,947
Pratt, KS Elec. Util. Syst. Rev. Ref. & Impvt. AMBAC Aaa/AAA 6.600 11/01/07 1,000,000 1,145,910
Salina, KS Combined Water & Sewage Syst. Impvt. Rev. MBIA Aaa/AAA 6.250 10/01/12 500,000 529,305
Saline Cty., KS Single Family Mrtge. Rev. Ref. A-1/NR 9.500 10/01/11 15,000 15,729
Scott City, KS Water Syst. Ref. G.O. NR/NR 6.100 09/01/14 625,000 689,225
Sedgwick\Shawnee Cty., KS Single Family Mrtge. Rev. GNMA Aaa/NR 7.800 11/01/24 460,000 484,389
Seward Cty., KS G.O. AMBAC Aaa/AAA 6.000 08/15/13 750,000 827,408
Seward Cty., KS Single Family Mrtge. Rev. NR/AA- 7.375 12/01/09 480,000 496,037
Seward Cty., KS Single Family Mrtge. Rev. Ref. A-1/NR 8.000 05/01/11 400,000 426,520
Shawnee Cty., KS (Auburn-Washburn) USD #437 G.O. Ref. FGIC Aaa/AAA 6.600 09/01/09 500,000 547,635
Shawnee, KS Int. Impvt. G.O. A-1/NR 5.850 12/01/06 235,000 256,514
Wellington, KS Waterworks & Sewage Util. Syst. Rev. AMBAC Aaa/AAA 6.250 05/01/12 1,250,000 1,358,375
Wichita KS Multifamily Hsg. Rev. (Innes Station Apt. 5) NR/NR 6.250 03/01/28 1,750,000 1,745,258
Wichita, KS (CSJ Hlth. Sys.) Rev. NR/A- 7.000 11/15/08 640,000 699,642
Wichita, KS (CSJ Hlth. Sys.) Rev. NR/A- 7.200 10/01/15 2,225,000 2,458,225
Wichita, KS (CSJ Hlth. Sys.) Rev. NR/A- 7.000 11/15/18 2,350,000 2,627,277
Wichita, KS (St. Francis) Facs. Impvt. & Ref. MBIA Aaa/AAA 6.250 10/01/10 1,000,000 1,103,980
Wichita, KS Airport Auth. Facs. Rev. Ref. ASGUA Aaa/AAA 7.000 03/01/05 440,000 469,762
Wichita, KS Hlth. Care (Masonic Home) Rev. NR/NR 6.375 12/01/22 1,775,000 1,807,696
Wichita, KS Multifamily Hsg. (Cimarron Apartments) FNMA NR/AAA 5.550 10/01/22 1,000,000 1,015,360
Wichita, KS Multifamily Hsg. Rev. NR/A 5.850 12/01/25 1,000,000 1,010,650
Wichita, KS Multifamily Hsg. Rev. FNMA NR/AAA 5.650 07/01/16 990,000 1,009,196
Wichita, KS Multifamily Hsg. Rev. FNMA NR/AAA 5.700 07/01/22 2,000,000 2,038,800
Wichita, KS Multifamily Hsg. Rev. Ref. GNMA Aaa/NR 6.125 08/20/28 1,900,000 1,941,059
Wichita, KS Public Blding. Commission Real Estate Rev. A/A+ 5.500 08/01/14 1,215,000 1,278,144
Wichita, KS Public Blding. Commission Rev. AMBAC Aaa/AAA 5.750 02/01/17 350,000 375,256
Wichita, KS Single Family Mrtge. Rev. Ref. A-1/NR 7.100 09/01/09 1,175,000 1,236,500
Wichita, KS Water & Sewer Util. Ref. & Impvt. FGIC Aaa/AAA 6.000 10/01/12 1,000,000 1,097,380
Wyandotte Cty., KS USD #203 (Piper) Ref. & Impvt. G.O. NR/NR 6.600 09/01/13 1,000,000 1,082,260
------------
TOTAL KANSAS MUNICIPAL BONDS (COST: $113,817,540) $121,099,961
SHORT TERM SECURITIES (0.1%)
Federated Tax-Free Trust (COST: $65,397) 65,397
------------
TOTAL INVESTMENTS IN SECURITIES (COST: $113,882,937) $121,165,358
OTHER ASSETS LESS LIABILITIES (1.9%) 2,337,878
------------
NET ASSETS $123,503,236
============
</TABLE>
*Indicates bonds are segregated by the custodian to cover when-issued or
delayed-delivery purchases.
FOOTNOTE: Non-rated (NR) securities have been determined to be of investment
grade quality by the Fund's Manager.
The accompanying notes are an integral part of these financial statements.
Financial Statements January 30, 1998
<TABLE>
<CAPTION>
Statement of Assets and Liabilities January 30, 1998 (Unaudited)
- ----------------------------------------------------------------
<S> <C>
Assets
Investment in securities, at value (cost: $113,882,937) $ 121,165,358
Security sales receivable 3,143,676
Accrued dividends receivable 2,978
Accrued interest receivable 2,109,691
Receivable for fund shares sold 126,420
-----------------
Total Assets $ 126,548,123
-----------------
Liabilities
Dividends payable $ 505,258
Accrued expenses 105,114
Security purchases payable 2,379,961
Payable for fund shares redeemed 378
Bank overdraft 54,176
-----------------
Total Liabilities $ 3,044,887
-----------------
Net Assets $ 123,503,236
=================
Net assets are represented by:
Paid-in capital $ 122,501,937
Accumulated undistributed net realized gain(loss) on investments (6,281,122)
Unrealized appreciation on investments 7,282,421
-----------------
Total amount representing net assets applicable to
10,071,898 outstanding shares of no par common
stock (unlimited shares authorized) $ 123,503,236
=================
Net asset value per share $ 12.26
=================
The accompanying notes are an integral part of these financial statements.
Statement of Operations For the six months ended January 30, 1998 (Unaudited)
- -----------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 3,700,397
Dividend 23,900
---------------
Total Investment Income $ 3,724,297
---------------
EXPENSES
Investment advisory fees $ 314,766
Service fees 157,383
Custodian fees 6,176
Transfer agent fees 65,990
Accounting service fees 38,421
Professional fees 7,700
Trustees fees 3,919
Reports to shareholders 5,423
Registration and filing fees 2,178
---------------
Total Expenses $ 601,956
Less expenses waived or absorbed
by the Fund's manager 3,901
---------------
Total Net Expenses $ 598,055
---------------
NET INVESTMENT INCOME $ 3,126,242
---------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES
Net realized gain (loss) from:
Investment transactions $ 703,452
Futures transactions (2,704,012)
Net change in unrealized appreciation (depreciation) of investments 348,761
---------------
Net Realized And Unrealized Gain (Loss) On Investments and Futures $ (1,651,799)
---------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 1,474,443
===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
Financial Statements January 30, 1998
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
For the six months ended January 30, 1998 and the year ended July 31, 1997
- --------------------------------------------------------------------------
<S> <C> <C>
For the Six
Months Ended For The Year
January 30, 1998 Ended
(Unaudited) July 31, 1997
--------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 3,126,242 $ 6,521,541
Net realized gain (loss) on investment and futures transactions (2,000,560) (2,222,212)
Net unrealized appreciation (depreciation) on investments 348,761 5,213,589
--------------------------------------------
Net Increase (Decrease) in Net Assets Resulting From Operations $ 1,474,443 $ 9,512,918
--------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income $ (3,126,242) $ (6,521,541)
Distributions from net realized gain on investment transactions 0 0
--------------------------------------------
Total Dividends and Distributions $ (3,126,242) $ (6,521,541)
--------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sale of shares $ 5,040,469 $ 6,910,719
Proceeds from reinvested dividends 2,165,760 4,496,123
Cost of shares redeemed (10,252,648) (18,545,716)
--------------------------------------------
Net Increase (Decrease) in Net Assets Resulting
From Capital Share Transactions $ (3,046,419) $ (7,138,874)
--------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS $ (4,698,218) $ 4,147,497)
NET ASSETS, BEGINNING OF PERIOD 128,201,454 132,348,951
--------------------------------------------
NET ASSETS, END OF PERIOD $ 123,503,236 $ 128,201,454
============================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements January 30, 1998 (Unaudited)
Note 1. ORGANIZATION
Business Operations - The Kansas Municipal Fund (the "Fund") is an investment
portfolio of Ranson Managed Portfolios (the "Trust") registered under the
Investment Company Act of 1940, as amended, as a non-diversified, open-end
management investment company. The Trust may offer multiple portfolios;
currently five portfolios are offered. Ranson Managed Portfolios is an
unincorporated business trust organized under Massachusetts law on August 10,
1990. The Fund had no operations from that date to November 15, 1990, other
than matters relating to organization and registration. On November 15,
1990, the Fund commenced its Public Offering of capital shares. The
investment objective of the Fund is to provide its shareholders with as high a
level of current income exempt from both federal and Kansas income tax as is
consistent with preservation of capital. The Fund will seek to achieve this
objective by investing primarily in a portfolio of Kansas municipal
securities. Shares of the Fund are offered at net asset value plus a maximum
sales charge of 4.25% of the offering price.
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investment security valuation - 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, (Capital), 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. Capital may employ a matrix system to
determine valuations. The Fund follows industry practice and records security
transactions on the trade date.
The Fund concentrates its investments in a single state. This concentration
may result in the Fund investing a relatively high percentage of its assets in
a limited number of issuers.
Federal and state income taxes - The Fund's policy is to comply with the
requirements of the Internal Revenue Code that are applicable to regulated
investment companies, and to distribute all of its net investment income and
any net realized gain on investments, to its shareholders. Therefore, no
provision for income taxes is required. The Fund has available at January
30, 1998, a net capital loss carryforward totaling $4,280,562, which may be
used to offset capital gains realized during subsequent years through July 31,
2005.
Distributions to shareholders - Dividends from net investment income, declared
daily and paid monthly, are reinvested in additional shares of the Fund at
net asset value or paid in cash. Capital gains, when available, are
distributed at least annually.
Investment income - Dividend income is recognized on the ex-dividend date and
interest income is recognized daily on an accrual basis. Premiums and
discounts on securities purchased are amortized using the effective interest
method over the life of the respective securities, unless callable, in which
case they are amortized to the earliest call date.
Futures contracts - The Fund may purchase and sell financial futures
contracts to hedge against changes in the values of tax-exempt municipal
securities the Fund owns or expects to purchase.
A futures contract is an agreement between two parties to buy or sell units
of a particular index or a certain amount of U.S. Government or municipal
securities at a set price on a future date. Upon entering into a futures
contract, the Fund is required to deposit with a broker an amount of cash
or securities equal to the minimum "initial margin" requirement of the futures
exchange on which the contract is traded. Subsequent payments ("variation
margin") are made or received by the Fund, dependent on the fluctuations in
the value of the underlying index. Daily fluctuations in value are recorded
for financial reporting purposes as unrealized gains or losses by the Fund.
When entering into a closing transaction, the Fund will realize, for book
purposes, a gain or loss equal to the difference between the value of the
futures contracts sold and the futures contracts to buy. Unrealized
appreciation (depreciation) related to open futures contracts is required
to be treated as realized gain (loss) for Federal income tax purposes.
Certain risks may arise upon entering into futures contracts. These
risks may include changes in the value of the futures contracts that may
not directly correlate with changes in the value of the underlying securities.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Note 3. CAPITAL SHARE TRANSACTIONS
As of January 30, 1998, there were unlimited shares of no par authorized;
10,071,898 and 10,321,705 shares were outstanding at January 30, 1998 and
July 31, 1997, respectively.
Transactions in capital shares were as follows:
Shares
----------------------------------
For the Six For The
Months Ended Year Ended
January 30, 1998 July 31, 1997
----------------------------------
Shares sold 411,367 563,448
Shares issued on reinvestment of dividends 176,704 367,495
Shares redeemed (837,878) (1,514,291)
----------------------------------
Net increase (decrease) (249,807) (583,348)
==================================
Note 4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Ranson Capital Corporation, the Fund's investment adviser and underwriter,
ND Resources, Inc., the Fund's transfer and accounting services agent, and
ND Capital, Inc., the Fund's agent for the purchase of certain investment
securities, are subsidiaries of ND Holdings, Inc., the Fund's sponsor.
The Fund has engaged Ranson Capital Corporation to provide investment advisory
and management services to the Fund. The Investment Advisory Agreement
provides for fees to be computed at an annual rate of 0.50% of the Fund's
average daily net assets. The Fund has recognized $314,766 of investment
advisory fees for the six months ended January 30, 1998. The Fund has a
payable to Ranson Capital Corporation of $51,816 at January 30, 1998 for
investment advisory fees. Certain officers and trustees of the Fund are
also officers and directors of the investment adviser.
The Fund pays an annual service fee to Ranson Capital Corporation, (Capital),
its principal underwriter, an annual fee for certain expenses incurred by
Capital in connection with the distribution of the Fund's shares. The annual
fee paid to Capital is calculated daily and paid monthly by the Fund at the
annual rate of 0.25% of the average daily net assets of the Fund. The
Fund has recognized $156,951 of service fee expenses after partial waiver for
the six months ended January 30, 1998. The Fund has a payable to Capital
of $25,476 at January 30, 1998 for service fees. In addition, the Fund has
engaged ND Capital, Inc. as agent for the purchase of certain investment
securities. For the six months ended January 30, 1998 commissions earned by
ND Capital, Inc. totaled $84,775 and are included in the cost basis of the
securities acquired.
ND Resources, Inc., (the transfer agent), provides shareholder services for a
monthly fee equal to an annual rate of 0.16% of the Fund's first $10 million
of net assets, 0.13% of the Fund's net assets on the next $15 million, 0.11%
of the Fund's net assets on the next $15 million, 0.10% of the Fund's net
assets on the next $10 million, and 0.09% of the Fund's net assets in excess
of $50 million. The Fund has recognized $65,990 of transfer agency fees and
expenses for the six months ended January 30, 1998. ND Resources, Inc. also
acts as the Fund's accounting services agent for a monthly fee equal to the
sum of a fixed fee of $2,000, and a variable fee equal to 0.05% of the Fund's
average daily net assets on an annual basis for the Fund's first $50 million
and at a lower rate on the average daily net assets in excess of $50 million.
The Fund has recognized $38,421 of accounting service fees for the six months
ended January 30, 1998.
Note 5. INVESTMENT SECURITY TRANSACTIONS
The cost of purchases and proceeds from sales of investment securities
(excluding short-term securities) aggregated $24,576,358 and $31,100,212,
respectively, for the six months ended January 30, 1998.
Note 6. INVESTMENT IN SECURITIES
At January 30, 1998, the aggregate cost of securities for federal income
tax purposes was $113,882,937, and the net unrealized appreciation of
investments based on the cost was $7,282,421, which is comprised of
$7,297,222 aggregate gross unrealized appreciation and $14,801 aggregate gross
unrealized depreciation.
<TABLE>
<CAPTION>
Financial Highlights Selected per share data and ratios for the period indicated
- --------------------------------------------------------------------------------
For the Six For the Year For the Year For the Year For the Year For the Year
Months Ended Ended Ended Ended Ended Ended
January 30, 1998 July 31, July 31, July 31, July 31, July 31,
(Unaudited) 1997 1996 1995 1994 1993
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.42 $ 12.14 $ 12.07 $ 12.00 $ 12.67 $ 12.22
------------------------------------------------------------------------------------------
Income from Investment Operations:
Net Investment Income $ .30 $ .61 $ .69 $ .65 $ .66 $ .69
Net realized and unrealized gain
(loss) on investment and futures
transactions (.16) .28 .07 .07 (.53) .50
------------------------------------------------------------------------------------------
Total From Investment
Operations $ .14 $ .89 $ .76 $ .72 $ .13 $ 1.19
------------------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment
income $ (.30) $ (.61) $ (.69) $ (.65) $ (.66) $ (.69)
Distributions from net capital
gains .00 .00 .00 .00 (.14) (.05)
------------------------------------------------------------------------------------------
Total Distributions $ (.30) $ (.61) $ (.69) $ (.65) $ (.80) $ (.74)
------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.26 $ 12.42 $ 12.14 $ 12.07 $ 12.00 $ 12.67
==========================================================================================
Total Return 2.38%(A)(B) 7.56%(A) 5.90%(A) 6.23%(A) 0.91%(A) 10.08%(A)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $ 123,503 $ 128,201 $ 132,349 $ 130,091 $ 127,337 $ 100,207
Ratio of net expenses (after
expense assumption) to average
net assets 0.95%(B)(C) 0.93%(C) 0.85%(C) 0.82%(C) 0.70%(C) 0.75% (C)
Ratio of net investment income
to average net assets 4.97%(B) 5.02% 5.18% 5.46% 5.26% 5.53%
Portfolio turnover rate 19.94% 18.64% 20.14% 57.00% 55.00% 62.00%
</TABLE>
(A) Excludes maximum sales charge of 4.25%.
(B) Ratio was annualized.
(C) During the periods indicated above, ND Holdings, Inc. or Ranson Capital
Corporation assumed expenses of $3,901, $46,741, $212,056, $295,875,
$419,129, and $282,407, respectively. If the expenses had not been
assumed, the annualized ratios of total expenses to average net assets
would have been 0.96%, 0.97%, 1.01%, 1.06%, 1.06%, and 1.13%,
respectively.
The accompanying notes are an integral part of these financial statements.
Dear Shareholders,
We are pleased to enclose the semi-annual report on the operations of The
Kansas Insured Intermediate Fund for the six months ended January 30,
1998. The Fund's portfolio and related financial statements are presented
within for your review.
Will Rogers once said, "All I know is what I read in the paper." Well, if
you are reading today's financial reports all you get is confused. Inflation
or deflation? Higher rates or lower rates? Read a paper, watch television
or get on a mailing list and you will find opinions of economic forecasting
are quite often contradictory.
As we enter the new year, the U.S. economy is enjoying nearly seven years
of uninterrupted growth, the unemployment rate is the lowest since 1973, the
stock market is at record highs, interest rates are low and inflation is the
most docile in a generation. Yet, despite these events the financial markets
are volatile.
Recent events in foreign equity markets and their impact on the U.S. stock
market cause us to pause and question whether the recent drop in interest
rates is sustainable. Our sense is that yields on municipal bonds will stay
at their lower levels during the first half of 1998 when the bulk of the
Asian events slow down the U.S. economy, then edge higher in the latter part
of the year once the Asian drag subsides.
In spite of all this, tax-free municipal bonds are relatively cheap (a good
value) when compared to U.S. Treasury bonds. Long-term municipals
historically offer 75% to 80% of the return available from a 30 year Treasury
bond. As of this writing that ratio is about 85%.
The Kansas Insured Intermediate Fund utilized a partial hedge during the
period. Futures contracts in U.S. Treasury bonds were employed. By using a
partial hedge to protect against the possibility of interest rate hikes,
share prices were held down as rates declined during the six months ended
January 30, 1998. Share price began the period at $12.23 and closed at
$12.13.
Throughout the period, the Fund has invested in high-grade insured Kansas
tax-exempt bonds. Among our purchases in the primary and secondary
markets throughout the six months were bonds issued by housing
authorities, hospitals, utilities, and transportation authorities.
High current income exempt from federal and Kansas income taxes with
preservation of capital remain the chief objectives of the Fund.
We invite your personal calls and visits.
Sincerely,
Monte L. Avery Robert E. Walstad
Chief Portfolio Strategist President
TERMS & DEFINITIONS
- -------------------
Appreciation
Increase in value of an asset.
Average Annual Total Return
A standardized measurement of the return (yield and appreciation)
earned by the fund on an annual basis, assuming all distributions are
reinvested.
Coupon Rate or Face Rate
The rate of interest annually payable based on the face amount of the
bond; expressed as a percentage.
Depreciation
Decrease in value of an asset.
Lehman Brothers Municipal Bond Index
An unmanaged list of long-term, fixed-rate, investment-grade, tax-exempt
bonds representative of the municipal bond market. The index does not
take into account brokerage commissions or other costs, may include bonds
different from those in the fund, and may pose different risks than the
fund.
Market Value
Actual (or estimated) price at which a bond trades in the market place.
Maturity
A measure of the term or life of a bond in years. When a bond "matures",
the issuer repays the principal.
Net Asset Value (NAV)
The value of all your fund's assets, minus any liabilities, divided by the
number of outstanding shares, not including any initial sales charge.
Quality Ratings
A designation assigned by independent rating companies to give a relative
indication of a bond's credit worthiness. "AAA", "AA", and "A", and
"BBB" indicate investment grade securities. Ratings can range from a
high of "AAA" to a low of "D".
Total Return
Measures both the net investment income and any realized and unrealized
appreciation or depreciation of the underlying investments in the fund's
portfolio for the period, assuming the reinvestment of all dividends.
It represents the aggregate percentage or dollar value change over the
period.
PERFORMANCE AND COMPOSITION
- ---------------------------
Portfolio Quality Ratings
(based on Total Long-Term Investments)
- --------------------------------------
[pie chart]
AAA 100.0%
Quality ratings reflect the financial strength of the issuer. They are
assigned by independent rating services such as Moody's Investors Services
and Standard & Poor's. Non-rated bonds have been determined to be of
appropriate quality for the portfolio by Ranson Capital Corporation, the
investment advisor.
Portfolio Market Sectors
(as a % of Net Assets)
- ------------------------
[pie chart]
GO-General Obligation 45.3%
HC-Health Care 23.2%
H-Housing 17.8%
W/S-Water/Sewer 6.8%
O-Other 3.1%
T-Transportation 1.4%
U-Utilities 1.2%
C/L-COP/Lease 1.2%
Market sectors are breakdowns of the Fund's portfolio holdings into specific
investment classes.
COMPARATIVE INDEX GRAPH
- -----------------------
[line graph]
<TABLE>
<CAPTION>
Comparison of change in value of $10,000 investment in The
Kansas Insured Intermediate Fund and Lehman Bros. Municipal 7
Year Maturity Bond Index
The Kansas Insured The Kansas Insured Lehman Bros. Municipal
Intermediate Fund Intermediate Fund 7 Year Maturity Bond Index
w/o sales charge w/ max sales charge
----------------------------------------------------------------------------
<S> <C> <C> <C>
11/23/1992 $10,000 $ 9,725 $10,000
1993 $10,829 $10,531 $10,694
1994 $11,025 $10,722 $10,981
1995 $11,656 $11,335 $11,869
1996 $12,326 $11,987 $12,470
1997 $12,912 $12,557 $13,548
01/30/98 $13,092 $12,732 $14,037
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS
For periods ending January 30, 1998
- ------------------------------------------------------------------------------
Since Inception
1 year 5 year (November 23, 1992)
- ------------------------------------------------------------------------------
Without sales charge 3.20% 5.20% 5.33%
With sales charge 0.36% 4.61% 4.77%
- ------------------------------------------------------------------------------
Putting Performance into Perspective
The graph comparing your Fund's performance to a benchmark index provides you
with a general sense of how your Fund performed. To put this information in
context, it may be helpful to understand the special differences between the
two. The Lehman Brothers index is a national index representative of the
national municipal bond market whereas the Fund concentrates its investments
in Kansas municipal bonds. Your Fund's total return for the period shown
appears with and without sales charges and includes Fund expenses and
management fees. A securities index measures the performance of a
theoretical portfolio. Unlike a fund, the index is unmanaged; there are no
expenses that affect the results. In addition, few investors could purchase
all of the securities necessary to match the index. And, if they could, they
would incur transaction costs and other expenses. All Fund and benchmark
returns include reinvested dividends. Returns are historical and are not a
guarantee of future results. The Fund's share price, yields and total returns
will vary, so that shares, when redeemed, may be worth more or less than their
original cost.
KEY STATISTICS
- --------------
07-31-97 NAV(share value) $12.23
01-30-98 NAV $12.13
Average Maturity 9.2 years
Number of Issues 57
Total Net Assets $22,633,673
<TABLE>
<CAPTION>
Schedule of Investments January 30, 1998 (Unaudited)
Name of Issuer
Percentages represent the market value of Rating Coupon Principal Market
each investment category to total net assets Moody's/S&P Rate Maturity Amount Value
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
KANSAS MUNICIPAL BONDS (96.9%)
Butler Cty., KS (Augusta) USD #402 G.O. AMBAC Aaa/AAA 5.400% 10/01/06 $ 200,000 $ 213,604
Douglas Cty., KS USD #491 (Eudora) Ref. G.O. AMBAC Aaa/AAA 7.750 03/01/01 190,000 209,999
*Douglas Cty., KS USD #497 (Lawrence) G.O. FGIC Aaa/AAA 7.200 09/01/02 1,370,000 1,538,770
Johnson & Miami Cnty KS GO USD # 230 FGIC Aaa/AAA 5.300 12/01/10 300,000 314,469
Johnson Cty., KS USD #232 (Desoto) G.O. CGIC Aaa/AAA 5.400 03/01/03 100,000 105,683
Johnson Cty., KS USD #232 (Desoto) G.O. MBIA Aaa/NR 5.150 09/01/09 510,000 533,664
Johnson Cty., KS USD #232 (Desoto) G.O. MBIA Aaa/NR 5.200 09/01/10 600,000 628,224
Johnson Cty., KS USD #233 (Olathe) G.O. AMBAC Aaa/AAA 6.150 03/01/07 300,000 325,317
Kansas City, KS (St. Margaret Hlth. Ctr.) AMBAC Aaa/AAA 5.700 08/01/03 250,000 266,032
Kansas City, KS Special Obligation Escrowed Aaa/AAA 6.000 02/15/03 200,000 215,316
KS Devl. Finance Auth. (Hays Medl. Ctr.) Rev. MBIA Aaa/AAA 5.300 11/15/09 375,000 392,801
KS Devl. Finance Auth. (Hays Medl. Ctr.) Rev. MBIA Aaa/AAA 5.200 11/15/08 375,000 393,514
KS Devl. Finance Auth. (Stormont Vail) Rev. MBIA Aaa/AAA 5.700 11/15/08 450,000 487,589
KS Devl. Finance Auth. (Stormont Vail) Rev. MBIA Aaa/AAA 5.600 11/15/07 100,000 107,384
KS Devl. Finance Auth. Multifamily Hsg. Rev. FNMA NR/AAA 5.700 12/01/09 325,000 331,012
KS Devl. Finance Auth. Pooled Ref. Lease Rev. MBIA Aaa/AAA 5.500 10/01/05 250,000 262,185
KS Devl. Finance Auth. Rev. Public Water Supply AMBAC Aaa/NR 4.900 04/01/12 150,000 150,193
KS Devl. Finance Auth. Rev. Public Water Supply AMBAC Aaa/NR 4.900 04/01/13 115,000 114,675
KS State Turnpike Auth. Rev. FGIC Aaa/AAA 5.450 09/01/10 200,000 212,372
Larned, KS (Cath. Hlth. Corp.) Hlth. Facs. Rev. MBIA Aaa/AAA 5.200 11/15/02 160,000 167,269
Larned, KS (Cath. Hlth. Corp.) Hlth. Facs. Rev. MBIA Aaa/AAA 5.300 11/15/03 170,000 178,753
Larned, KS (Cath. Hlth. Corp.) Hlth. Facs. Rev. MBIA Aaa/AAA 5.400 11/15/04 155,000 164,188
Lenexa, KS (Barrington Park) Multifamily Hsg. Rev. Aaa/AAA 6.050 02/01/06 350,000 363,125
Lenexa, KS (Barrington Park) Multifamily Hsg. Rev. Ref. Aaa/AAA 5.875 02/01/04 500,000 516,680
Lenexa, KS (Barrington Park) Multifamily Hsg. Rev. Ref. Aaa/AAA 5.950 02/01/05 250,000 260,140
Linn Cty., KS (Prairie View) USD #362 G.O. ASGUA Aaa/AA 5.500 11/01/09 500,000 527,710
McPherson Cty., KS (McPherson) USD #418 G.O. CGIC Aaa/AAA 5.700 09/01/06 400,000 435,616
McPherson Cty., KS (McPherson) USD #418 G.O. CGIC Aaa/AAA 5.500 09/01/05 100,000 107,523
McPherson Cty., KS USD #418 G.O. FSA Aaa/NR 4.450 09/01/10 600,000 591,312
Miami Cty., KS Water Dist. #2 Rev. Ref. ASGUA Aaa/AA 5.750 12/01/04 225,000 234,990
Olathe, KS (Bristol Pointe) MultiFamily Hsg. Rev. Ref. FNMA NR/AAA 5.250 11/01/12 485,000 490,650
Olathe, KS (Good Samaritan Soc.) AMBAC Aaa/AAA 5.500 05/01/03 110,000 116,383
Olathe, KS (Good Samaritan Soc.) AMBAC Aaa/AAA 5.400 05/01/02 150,000 157,170
Olathe, KS (Good Samaritan Soc.) AMBAC Aaa/AAA 5.200 05/01/01 140,000 145,573
Olathe, KS (Medl. Ctr.) Hlth. Facs. Rev. AMBAC Aaa/AAA 5.125 09/01/12 500,000 511,420
Olathe, KS (Medl. Ctr.) Hlth. Facs. Rev. Ref. AMBAC Aaa/AAA 5.600 09/01/05 1,000,000 1,063,510
Riley Cty., KS G.O. Ref. AMBAC Aaa/AAA 4.550 09/01/10 250,000 248,800
Sedgwick Cty., KS (Maize) USD #266 G.O. CGIC Aaa/AAA 5.500 09/01/05 300,000 321,453
Sedgwick Cty., KS (Maize) USD #266 G.O. CGIC Aaa/AAA 5.600 09/01/06 200,000 215,810
Sedgwick Cty., KS (Renwick) USD #267 G.O. AMBAC Aaa/AAA 6.000 11/01/07 570,000 613,884
Sedgwick Cty., KS (Renwick) USD #267 G.O. AMBAC Aaa/AAA 5.850 11/01/06 290,000 315,604
Sedgwick\Shawnee Cty., KS Single Family Mrtge. Ref. GNMA Aaa/AAA 5.250 11/01/04 60,000 60,793
Sedgwick\Shawnee Cty., KS Single Family Mrtge. Rev. GNMA Aaa/NR 5.200 12/01/08 565,000 570,978
Seward Cty., KS Hospital Ref. G.O. AMBAC Aaa/AAA 5.600 08/15/04 100,000 105,532
Seward Cty., KS Hospital Ref. G.O. AMBAC Aaa/AAA 5.600 08/15/04 150,000 158,298
Shawnee Cty., KS USD # 345 Seaman G.O. MBIA Aaa/NR 4.700 09/01/08 320,000 324,845
Shawnee Cty., KS (Shawnee Heights) USD #450 G.O. CGIC Aaa/AAA 6.500 09/01/00 250,000 266,153
Shawnee Cty., KS (Topeka) USD #501 G.O. FGIC Aaa/AAA 5.550 02/01/07 820,000 872,513
Wichita, KS (St. Francis Regl. Medl. Ctr.) Impvt. & Ref.
MBIA Aaa/AAA 6.100 10/01/04 775,000 828,258
Wichita, KS (St. Francis Regl. Medl. Ctr.) Impvt. & Ref.
MBIA Aaa/AAA 6.000 10/01/03 250,000 265,938
Wichita, KS Airport Auth. Facs. Rev. Ref. ASGUA Aaa/AAA 7.000 03/01/05 100,000 106,764
Wichita, KS Multifamily Hsg. Rev. FNMA NR/AAA 5.375 07/01/10 625,000 634,825
Wichita, KS Multifamily Hsg. (Cimarron Apartments) FNMA NR/AAA 5.250 10/01/12 800,000 810,544
Wichita, KS Water & Sewer Util. Rev. Ref. FGIC Aaa/AAA 5.600 04/01/05 610,000 641,458
Wichita, KS Water & Sewer Util. Rev. Ref. FGIC Aaa/AAA 5.750 10/01/06 150,000 158,732
Wichita, KS Water & Sewer Util. Rev. FGIC Aaa/AAA 5.000 07/01/11 500,000 509,105
Wyandotte Cty., KS Ref. & Impvt. G.O. FGIC Aaa/AAA 7.000 09/01/05 1,020,000 1,068,277
------------
TOTAL KANSAS MUNICIPAL BONDS (COST: $21,052,829) $ 21,933,379
------------
SHORT TERM SECURITIES (5.4%)
Federated Tax-Free Trust $ 47,546
Federated Intermediate Municipal Trust 1,184,695
------------
TOTAL SHORT TERM SECURITIES (COST: 1,236,396) $ 1,232,241
------------
TOTAL INVESTMENTS IN SECURITIES (COST: $22,289,225) $ 23,165,620
OTHER ASSETS LESS LIABILITIES (-2.4%) (531,947)
------------
NET ASSETS $ 22,633,673
============
</TABLE>
*Indicates bonds are segregated by the custodian to cover when-issued or
delayed-delivery purchases.
FOOTNOTE: Non-rated (NR) securities have been determined to be of investment
grade quality by the Funds Manager.
The accompanying notes are an integral part of these financial statements.
Financial Statements January 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Statement of Assets and Liabilities January 30, 1998 (Unaudited)
Assets
<S> <C>
Investment in securities, at value (cost: $22,289,225) $ 23,165,620
Accrued interest receivable 425,435
Accrued dividends receivable 2,643
----------------
Total Assets $ 23,593,698
----------------
Liabilities
Bank overdraft $ 10,251
Dividends payable 84,043
Accrued expenses 14,211
Security purchases payable 851,520
----------------
Total Liabilities $ 960,025
----------------
Net Assets $ 22,633,673
================
Net assets are represented by:
Paid-in capital $ 22,618,068
Accumulated undistributed net realized gain(loss) on investments (860,790)
Unrealized appreciation on investments 876,395
----------------
Total amount representing net assets applicable to
1,865,962 outstanding shares of no par common
stock (unlimited shares authorized) $ 22,633,673
================
Net asset value per share $ 12.13
================
The accompanying notes are an integral part of these financial statements.
Statement of Operations
For the six months ended January 30, 1998 (Unaudited)
- -----------------------------------------------------
INVESTMENT INCOME
Interest $ 598,920
Dividends 12,530
----------------
Total Investment Income $ 611,450
----------------
EXPENSES
Investment advisory fees $ 58,950
Custodian fees 937
Transfer agent fees 16,840
Accounting service fees 17,880
Professional fees 533
Trustees' fees 1,312
Reports to shareholders 1,329
Registration and filing fees 452
Amortization of organization costs 1,551
----------------
Total Expenses $ 99,784
Less expenses waived or absorbed
by the Fund's manager (9,808)
----------------
Total Net Expenses $ 89,976
----------------
NET INVESTMENT INCOME $ 521,474
----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES
Net realized gain (loss) from:
Investment transactions $ 258,283
Futures transactions (401,698)
Net change in unrealized appreciation (depreciation) of
investments (80,524)
----------------
Net Realized and Unrealized Gain (Loss) on Investments
and Futures $ (223,939)
----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 297,535
================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
For the six months ended January 30, 1998 and the year ended July 31, 1997
- --------------------------------------------------------------------------
<S> <C> <C>
For the Six
Months Ended For The Year
January 30, 1998 Ended
(Unaudited) July 31, 1997
--------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 521,474 $ 1,196,787
Net realized gain (loss) on investment and futures transactions (143,415) (411,602)
Net unrealized appreciation (depreciation) on investments (80,524) 525,690
--------------------------------------------
Net Increase (Decrease) in Net Assets Resulting From Operations $ 297,535 $ 1,310,875
--------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income $ (521,474) $ (1,196,787)
Distributions from net realized gain on investment transactions 0 0
--------------------------------------------
Total Dividends and Distributions $ (521,474) $ (1,196,787)
--------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sale of shares $ 329,619 $ 1,355,388
Proceeds from reinvested dividends 319,487 720,398
Cost of shares redeemed (3,324,912) (7,220,379)
--------------------------------------------
Net Increase (Decrease) in Net Assets Resulting
From Capital Share Transactions $ (2,675,806) $ (5,144,593)
--------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS $ (2,899,745) $ (5,030,505)
NET ASSETS, BEGINNING OF PERIOD 25,533,418 30,563,923
--------------------------------------------
NET ASSETS, END OF PERIOD $ 22,633,673 $ 25,533,418
============================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements January 30, 1998 (Unaudited)
Note 1. ORGANIZATION
Business Operations -The Kansas Insured Intermediate Fund (the "Fund") is an
investment portfolio of Ranson Managed Portfolios (the "Trust") registered
under the Investment Company Act of 1940, as amended, as a non-diversified,
open-end management investment company. The Trust may offer multiple
portfolios; currently five portfolios are offered. Ranson Managed Portfolios
is an unincorporated business trust organized under Massachusetts law on August
10, 1990. The Fund had no operations from that date to November 23, 1992,
other than matters relating to organization and registration. On November 23,
1992, the Fund commenced its Public Offering of capital shares. The
investment objective of the Fund is to provide its shareholders with as high
a level of current income exempt from both federal and Kansas income tax as
is consistent with preservation of capital. The Fund will seek to achieve
this objective by investing primarily in a portfolio of Kansas insured
securities. Shares of the Fund are offered at net asset value plus a maximum
sales charge of 2.75% of the offering price.
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investment security valuation - 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, ("Ranson") 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. Ranson may employ a matrix system to determine
valuations. The Fund follows industry practice and records security
transactions on the trade date.
The Fund concentrates its investments in a single state. This concentration
may result in the Fund investing a relatively high percentage of its assets
in a limited number of issuers.
Deferred organization costs - Costs incurred by the Fund in connection with
its organization are being amortized over a 60-month period on the
straight-line basis. Accumulated amortization at January 30, 1998 totaled
$42,113.
Federal and state income taxes - The Fund's policy is to comply with the
requirements of the Internal Revenue Code that are applicable to regulated
investment companies, and to distribute all of its net investment income
and any net realized gain on investments, to its shareholders. Therefore,
no provision for income taxes is required. The Fund has available at January
30, 1998, a net capital loss carryforward totaling $717,376, which may be used
to offset capital gains realized during subsequent years through July 31,
2005.
Distributions to shareholders - Dividends from net investment income,
declared daily and payable monthly, are reinvested in additional shares of the
Fund at net asset value or paid in cash. Capital gains, when available, are
distributed at least annually.
Investment income - Dividend income is recognized on the ex-dividend date
and interest income is recognized daily on an accrual basis. Premiums and
discounts on securities purchased are amortized using the effective interest
method over the life of the respective securities, unless callable, in which
case they are amortized to the earliest call date.
Futures contracts - The Fund may purchase and sell financial futures
to hedge against changes in the values of tax-exempt municipal securities the
Fund owns or expects to purchase.
A futures contract is an agreement between two parties to buy or sell units
of a particular index or a certain amount of U.S. Government or municipal
securities at a set price on a future date. Upon entering into a futures
contract, the Fund is required to deposit with a broker an amount of cash
or securities equal to the minimum "initial margin" requirement of the
futures exchange on which the contract is traded. Subsequent payments
("variation margin") are made or received by the Fund, dependent on the
fluctuations in the value of the underlying index. Daily fluctuations in
value are recorded for financial reporting purposes as unrealized gains or
losses by the Fund. When entering into a closing transaction, the Fund will
realize, for book purposes, a gain or loss equal to the difference between
the value of the futures contracts sold and the futures contracts to buy.
Unrealized appreciation (depreciation) related to open futures contracts
is required to be treated as realized gain (loss) for Federal income tax
purposes.
Certain risks may arise upon entering into futures contracts. These risks
may include changes in the value of the futures contracts that may not
directly correlate with changes in the value of the underlying securities.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Note 3. CAPITAL SHARE TRANSACTIONS
As of January 30, 1998, there were unlimited shares of no par authorized;
1,865,962 and 2,086,938 shares were outstanding at January 30, 1998 and
July 31, 1997, respectively.
Transactions in capital shares were as follows:
Shares
----------------------------------
For the Six For The
Months Ended Year Ended
January 30, 1998 July 31, 1997
----------------------------------
Shares sold 27,202 110,692
Shares issued on reinvestment of dividends 26,395 58,878
Shares redeemed (274,573) (589,765)
----------------------------------
Net increase (decrease) (220,976) (420,195)
==================================
Note 4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Ranson Capital Corporation, the Fund's investment adviser and underwriter,
and ND Resources, Inc., the Fund's transfer and accounting services agent,
are subsidiaries of ND Holdings, Inc., the Fund's sponsor.
The Fund has engaged Ranson Capital Corporation, to provide investment
advisory and management services to the Fund. The Investment Advisory
Agreement provides for fees to be computed at an annual rate of 0.50% of
the Fund's average daily net assets. The Fund has recognized $58,950 of
investment advisory fees for the six months ended January 30, 1998. The Fund
has a payable to Ranson Capital Corporation of $7,293 at January 30, 1998,
for investment advisory fees. Certain officers and trustees of the Fund are
also officers and directors of the investment adviser.
The Fund has engaged ND Capital, Inc. as agent for the purchase of certain
investment securities. For the six months ended January 30, 1998, commissions
earned by ND Capital, Inc. totaled $3,963 and are included in the cost basis
of the securities acquired.
ND Resources, Inc., (the transfer agent), provides shareholder services for a
monthly fee equal to an annual rate of 0.16% of the Fund's first $10 million
of net assets, 0.13% of the Fund's net assets on the next $15 million, 0.11%
of the Fund's net assets on the next $15 million, 0.10% of the Fund's net
assets on the next $10 million, and 0.09% of the Fund's net assets in excess
of $50 million. The Fund has recognized $16,840 of transfer agency fees and
expenses for the six months ended January 30, 1998. ND Resources, Inc. also
acts as the Fund's accounting services agent for a monthly fee equal to the
sum of a fixed fee of $2,000, and a variable fee equal to 0.05% of the Fund's
average daily net assets on an annual basis for the Fund's first $50 million
and at a lower rate on the average daily net assets in excess of $50 million.
The Fund has recognized $17,890 of accounting service fees for the six months
ended January 30, 1998.
Note 5. INVESTMENT SECURITY TRANSACTIONS
The cost of purchases and proceeds from the sales of investment
securities (excluding short-term securities) aggregated $4,789,686 and
$9,330,730, respectively, for the six months ended January 30, 1998.
Note 6. INVESTMENT IN SECURITIES
At January 30, 1998, the aggregate cost of securities for federal income tax
purposes was $22,289,225, and the net unrealized appreciation of investments
based on the cost was $876,395, which is comprised of $892,815 aggregate
gross unrealized appreciation and $16,420 aggregate gross unrealized
depreciation.
<TABLE>
<CAPTION>
Financial Highlights Selected per share data and ratios for the period indicated
- ---------------------------------------------------------------------------------
For the Six For the Year For the Year For the Year For the Year For the Period
Months Ended Ended Ended Ended Ended Since Inception
January 30, 1998 July 31, July 31, July 31, July 31, (Nov. 23,1992)
(Unaudited) 1997 1996 1995 1994 to July 31,1993
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.23 $ 12.19 $ 12.04 $ 11.92 $ 12.24 $ 11.59
---------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income $ .27 $ .53 $ .53 $ .54 $ .52 $ .32
Net realized and unrealized gain
(loss) on investment and futures
transactions (.10) .04 .15 .12 (.30) .65
---------------------------------------------------------------------------------------------
Total From Investment
Operations $ .17 $ .57 $ .68 $ .66 $ .22 $ .97
---------------------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment
income $ (.27) $ (.53) $ (.53) $ (.54) $ (.52) $ (.32)
Distributions from net capital
gains .00 .00 .00 .00 (.02) .00
---------------------------------------------------------------------------------------------
Total Distributions $ (.27) $ (.53) $ (.53) $ (.54) $ (.54) $ (.32)
---------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.13 $ 12.23 $ 12.19 $ 12.04 $ 11.92 $ 12.24
=============================================================================================
Total Return 2.80%(A)(B) 4.76%(A) 5.75%(A) 5.72%(A) 1.81%(A) 13.50%(A)(B)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $22,634 $25,533 $30,564 $30,678 $31,216 $22,110
Ratio of net expenses (after
expense assumption) to
average net assets 0.76%(B)(C) 0.76%(C) 0.69%(C) 0.62% (C) 0.51% (C) 0.33%(B)(C)
Ratio of net investment
income to average net assets 4.40%(B) 4.33% 4.37% 4.57% 4.26% 4.41%(B)
Portfolio turnover rate 20.62% 28.68% 19.96% 63.00% 56.00% 152.00%
</TABLE>
(A) Excludes maximum sales charge of 2.75%.
(B) Ratio was annualized.
(C) During the periods indicated above, ND Holdings, Inc. or Ranson Capital
Corporation assumed expenses of $9,808, $40,608, $71,943, $112,745,
$136,079 , and $68,286, respectively. If the expenses had not been
assumed, the annualized ratios of total expenses to average net assets
would have been 0.84%, 0.90%, 0.92%, 0.98%, 0.99%, and 1.24%,
respectively.
The accompanying notes are an integral part of these financial statements.
Dear Shareholders,
We are pleased to enclose the semi-annual report on the operations of The
Nebraska Municipal Fund, for the six months ended January 30, 1998. The
Fund's portfolio and related financial statements are presented within for
your review.
Will Rogers once said, "All I know is what I read in the paper." Well, if you
are reading today's financial reports all you get is confused. Inflation or
deflation? Higher rates or lower rates? Read a paper, watch television or
get on a mailing list and you will find opinions of economic forecasting are
quite often contradictory.
As we enter the new year, the U.S. economy is enjoying nearly seven years of
uninterrupted growth, the unemployment rate is the lowest since 1973, the
stock market is at record highs, interest rates are low and inflation is
the most docile in a generation. Yet, despite these events the financial
markets are volatile.
Recent events in foreign equity markets and their impact on the U.S. stock
market cause us to pause and question whether the recent drop in interest
rates is sustainable. Our sense is that yields on municipal bonds will stay
at their lower levels during the first half of 1998 when the bulk of the
Asian events slow down the U.S. economy, then edge higher in the latter part
of the year once the Asian drag subsides.
In spite of all this, tax-free municipal bonds are relatively cheap (a good
value) when compared to U.S. Treasury bonds. Long-term municipals
historically offer 75% to 80% of the return available from a 30 year Treasury
bond. As of this writing that ratio is about 85%.
The Nebraska Municipal Fund utilized a partial hedge during the period.
Futures contracts in U.S. Treasury bonds were employed. By using a partial
hedge to protect against the possibility of interest rate hikes, share
prices were held down as rates declined during the six months ended January
30, 1998. Share price began the period at $11.26 and closed at $11.24.
Throughout the period, the Fund has invested in high-grade Nebraska tax-exempt
bonds. Among our purchases in the primary and secondary markets throughout
the six months were bonds issued by housing authorities, hospitals, and
utilities.
High current income exempt from federal and Nebraska income taxes with
preservation of capital remain the chief objectives of the Fund.
We invite your personal calls and visits.
Sincerely,
Monte L. Avery Robert E. Walstad
Chief Portfolio Strategist President
TERMS & DEFINITIONS
- -------------------
Appreciation
Increase in value of an asset.
Average Annual Total Return
A standardized measurement of the return (yield and appreciation)
earned by the fund on an annual basis, assuming all distributions are
reinvested.
Coupon Rate or Face Rate
The rate of interest annually payable based on the face amount of the
bond; expressed as a percentage.
Depreciation
Decrease in value of an asset.
Lehman Brothers Municipal Bond Index
An unmanaged list of long-term, fixed-rate, investment-grade, tax-exempt
bonds representative of the municipal bond market. The index does not
take into account brokerage commissions or other costs, may include bonds
different from those in the fund, and may pose different risks than the
fund.
Market Value
Actual (or estimated) price at which a bond trades in the market place.
Maturity
A measure of the term or life of a bond in years. When a bond "matures",
the issuer repays the principal.
Net Asset Value (NAV)
The value of all your fund's assets, minus any liabilities, divided by
the number of outstanding shares, not including any initial sales charge.
Quality Ratings
A designation assigned by independent rating companies to give a relative
indication of a bond's credit worthiness. "AAA", "AA", "A" and "BBB"
indicate investment grade securities. Ratings can range from a high of
"AAA" to a low of "D".
Total Return
Measures both the net investment income and any realized and unrealized
appreciation or depreciation of the underlying investments in the fund's
portfolio for the period, assuming the reinvestment of all dividends.
It represents the aggregate percentage or dollar value change over the
period.
PERFORMANCE AND COMPOSITION
- ---------------------------
Portfolio Quality Ratings
(based on Total Long-Term Investments)
- -------------------------
[pie chart]
AAA 45.0%
AA 21.2%
A 19.4%
BBB 0.4%
NR 14.0%
Quality ratings reflect the financial strength of the issuer. They are
assigned by independent rating services such as Moody's Investors Services
and Standard & Poor's. Non-rated bonds have been determined to be of
appropriate quality for the portfolio by Ranson Capital Corporation, the
investment advisor.
Portfolio Market Sectors
(as a % of Net Assets)
- ------------------------
[pie chart]
H-Housing 22.6%
GO-General Obligation 17.4%
S-School 16.7%
U-Utilities 15.2%
O-Other 12.6%
HC-Health Care 12.1%
I-Industrial 3.4%
Market sectors are breakdowns of the Fund's portfolio holdings into specific
investment classes.
COMPARTATIVE INDEX GRAPH
- ------------------------
[line chart]
<TABLE>
<CAPTION>
Comparison of change in value of a $10,000 investment in The Nebraska Municipal Fund
and the Lehman Brothers Municipal Bond Index
The Nebraska Municipal The Nebraska Municipal The Lehman Brothers
Fund w/o sales charge Fund w/ max sales charge Muni Bond Index
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
11/17/93 $10,000 $ 9,575 $10,000
1994 $ 9,773 $ 9,357 $ 9,892
1995 $10,471 $10,026 $10,673
1996 $11,071 $10,600 $11,376
1997 $11,909 $11,402 $12,544
01/30/98 $12,192 $11,674 $13,048
</TABLE>
Average Annual Total Returns
For periods ending January 30, 1998
- ------------------------------------------------------------------------------
Since Inception
1 year 5 year (November 17, 1993)
- ------------------------------------------------------------------------------
Without sales charge 6.19% NA 4.83%
With sales charge 1.68% NA 3.75%
- ------------------------------------------------------------------------------
Putting Performance into Perspective
The graph comparing your Fund's performance to a benchmark index provides you
with a general sense of how your Fund performed. To put this information in
context, it may be helpful to understand the special differences between the
two. The Lehman Brothers index is a national index representative of the
national municipal bond market whereas the Fund concentrates its investments
in Nebraska municipal bonds. Your Fund's total return for the period shown
appears with and without sales charges and includes Fund expenses and
management fees. A securities index measures the performance of a
theoretical portfolio. Unlike a fund, the index is unmanaged; there are no
expenses that affect the results. In addition, few investors could purchase
all of the securities necessary to match the index. And, if they could, they
would incur transaction costs and other expenses. All Fund and benchmark
returns include reinvested dividends. Returns are historical and are not a
guarantee of future results. The Fund's share price, yields and total returns
will vary, so that shares, when redeemed, may be worth more or less than their
original cost.
KEY STATISTICS
- --------------
07-31-97 NAV(share value) $11.26
01-30-98 NAV $11.24
Average Maturity 21.0 years
Number of Issues 64
Total Net Assets $27,444,615
<TABLE>
<CAPTION>
Schedule of Investments January 30, 1998 (Unaudited)
Name of Issuer
Percentages represent the market value of Rating Coupon Principal Market
each investment category to total net assets Moody's/S&P Rate Maturity Amount Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NEBRASKA MUNICIPAL BONDS (97.5%)
Cass Cty. School Dist. #001 Plattsmouth AMBAC NR/AAA 5.000% 12/15/19 $ 250,000 $ 247,335
Chadron State College, NE Student Fees & Facs. Rev. Ref. NR/NR 5.700 07/01/11 300,000 309,336
Cuming Cty., NE School Dist. #020 (Bancraft-Rosalie) NR/NR 5.750 12/15/17 100,000 104,992
Dawson Cty., NE SID #1 Ref. G.O. A/A 5.650 02/01/22 300,000 313,335
Douglas Cty. NE (Lakeside Village Proj.) AMBAC Aaa/AAA 5.125 12/15/22 300,000 293,691
Douglas Cty. NE School Dist. #10 (Elkhorn) NR/A 5.000 12/15/13 200,000 200,418
Douglas Cty., NE (Cath. Hlth. Corp.) Rev. MBIA Aaa/AAA 5.500 11/15/21 340,000 356,031
Douglas Cty., NE School Dist. #10 (Elkhorn) AMBAC Aaa/AAA 5.400 12/15/14 400,000 415,868
Douglas Cty., NE SID #240 (LeBea) Ref. G.O. NR/NR 5.900 10/15/17 100,000 103,578
Douglas Cty., NE SID #295 G.O. NR/NR 6.500 06/01/17 800,000 847,840
Douglas Cty., NE SID #363 Hillsborough G.O. NR/NR 5.850 09/15/17 100,000 103,963
Douglas Cty., NE SID #392 Cinnamon Creek G.O. NR/NR 5.750 08/15/17 200,000 203,878
Douglas Cty., NE SID #396 First National Business Park NR/NR 5.750 09/01/17 100,000 104,491
Gage Cty., NE (Beatrice) School Dist. #15 G.O. AMBAC NR/AAA 5.900 12/15/16 850,000 915,203
Grand Island, NE Sewer Syst. Rev. A/NR 6.000 04/01/14 250,000 277,157
Hastings, NE Elec. Rev. A/A 6.300 01/01/19 370,000 410,926
Hemingford, NE G.O. NR/NR 5.600 02/15/12 115,000 119,870
Kearney Cty., NE Combined Util. Rev. A-1/NR 6.100 06/01/14 600,000 650,826
Kearney Cty., NE School Dist. #503 G.O. NR/NR 6.150 12/15/12 100,000 105,650
Lancaster Cty., NE (Bryan Memorial Hospital) Rev. MBIA NR/AAA 5.375 06/01/19 750,000 770,317
Lancaster Cty., NE Lincoln Medl. Educ. Foundn. Hosp. Rev. NR/NR 5.700 02/01/11 100,000 105,067
Lancaster Cty., NE Lincoln Medl. Educ. Foundn. Hosp. Rev. NR/NR 5.800 02/01/12 175,000 184,102
Lincoln, NE Elec. Syst. Rev. Aa/AA+ 5.750 09/01/16 750,000 804,375
Lincoln/Lancaster Cty., NE Public Bldg. Community Rev. Aa/AA+ 5.875 10/15/23 850,000 915,067
Lincoln/Lancaster Cty., NE Public Bldg. Community Aa/AA+ 5.800 10/15/18 475,000 521,483
NE Educ. Finance Auth. (Creighton Univ.) Rev. AMBAC Aaa/AAA 5.950 01/01/11 300,000 321,078
NE Educ. Finance Auth. (Midland Lutheran College) Rev. G.O. NR/NR 6.250 06/15/15 100,000 105,341
NE Educ. Finance Auth. (York College Project) Rev. NR/NR 5.400 10/15/12 275,000 282,626
NE Hgr. Educ. Loan Program Junior Subord. Term A/NR 6.450 06/01/18 400,000 434,748
NE Hgr. Educ. Loan Program Senior Subord. Term Aa/NR 6.250 06/01/18 800,000 850,408
NE Hgr. Educ. Loan Program Student Loan A/NR 5.875 06/01/14 1,350,000 1,402,987
NE Investment Fin Auth. (Great Plains Regl. Medl. Ctr.) Rev. NR/AA 5.450 11/15/17 400,000 402,004
NE Invmt. Finance Auth. (Great Plains Regl. Medl. Ctr.) Rev. NR/AA 6.500 05/15/14 150,000 164,030
NE Invmt. Finance Auth. (Muirfield Greens) Multifamily Rev. FHA Aa/NR 6.800 12/01/15 375,000 395,625
NE Invmt. Finance Auth. (Muirfield Greens) Multifamily Rev. FHA Aa/NR 6.850 12/01/25 525,000 558,164
NE Invmt. Finance Auth. Children (Healthcare Svcs.) Rev. AMBAC NR/AAA 5.500 08/15/27 1,000,000 1,034,830
NE Invmt. Finance Auth. Multifamily Hsg. Rev. FNMA NR/AAA 6.200 06/01/28 500,000 508,210
NE Invmt. Finance Auth. Multifamily Hsg. Rev. GNMA NR/AAA 6.000 06/01/17 500,000 508,370
NE Invmt. Finance Auth. Multifamily Hsg. Rev. GNMA NR/AAA 6.100 06/01/29 500,000 509,115
*NE Invmt. Finance Auth. Single Family Hsg. Rev. NR/AAA 6.600 09/01/20 710,000 737,072
NE Invmt. Finance Auth. Single Family Hsg. Rev. NR/AAA 6.500 09/01/18 400,000 409,772
NE Invmt. Finance Auth. Single Family Hsg. Rev. Aaa/AAA 6.300 09/01/28 1,110,000 1,132,744
NE Invmt. Finance Auth. Single Family Hsg. Rev. NR/AAA 5.850 09/01/28 470,000 477,384
NE Invmt. Finance Auth. Single Family Hsg. Rev. NR/AAA 5.850 09/01/28 400,000 406,284
NE Invmt. Finance Auth. Single Family Hsg. Rev. GNMA NR/AAA 6.200 09/01/17 250,000 257,570
NE Invmt. Finance Auth. Single Family Hsg. Rev. GNMA Aaa/AAA 6.250 03/01/21 300,000 306,456
NE Public Power Dist. Power Supply Syst. Rev. A-1/A+ 6.125 01/01/15 390,000 426,680
NE Public Power Dist. Power Supply Syst. Rev. A-1/A+ 5.750 01/01/20 790,000 811,725
Northeast NE Juvenile Auth. 1st Mrtge. Rev. NR/NR 6.375 06/01/17 280,000 290,150
Northeast NE Solid Waste Facs. Rev. MBIA Aaa/AAA 5.900 05/15/15 600,000 637,944
Omaha, NE Parking Facs. Corp. (Omaha Park 4\5) Lease Rev. Aa-1/AAA 5.700 09/15/15 750,000 802,650
Omaha, NE Public Power Dist. Elec. Syst. Rev. NR/AA 6.000 02/01/15 330,000 352,602
Omaha, NE Public Power Dist. Elec. Syst. Rev. Aa/AA 6.200 02/01/17 650,000 723,678
Omaha, NE Various Purpose Aaa/AAA 6.250 12/01/12 250,000 278,942
Omaha, NE Various Purpose Aaa/AAA 6.250 12/01/14 250,000 279,570
Otoe Cty., NE School Dist. #111 (Nebraska City) Ref. AMBAC Aaa/AAA 5.800 11/15/14 400,000 434,476
Papillion, NE G.O. NR/NR 6.150 07/01/12 105,000 111,224
Sarpy Cty., NE SID #142 (Fair Meadows) Ref. G.O. NR/NR 5.850 08/15/17 100,000 102,399
Sarpy Cty., NE SID #52 (Prairie Corners) G.O. NR/NR 6.000 10/01/17 300,000 310,653
Sarpy Cty., NE SID #86 (Willow Springs) G.O. NR/NR 6.250 01/15/17 100,000 105,155
Washington Cty., NE School Dist. #1 G.O. NR/A 5.800 07/15/11 100,000 106,523
Washington Cty., NE School Dist. #1 G.O. NR/A 5.900 07/15/15 135,000 146,517
York, NE Sewer Syst. Rev. NR/NR 5.850 06/01/12 140,000 149,201
York, NE Sewer Syst. Rev. NR/NR 6.000 06/01/17 100,000 108,099
-----------
TOTAL NEBRASKA MUNICIPAL BONDS (COST: $25,315,359) $26,767,805
-----------
SHORT TERM SECURITIES (2.3%)
Federated Tax-Free Trust $ 228,353
Federated Intermediate Municipal Trust 400,726
-----------
TOTAL SHORT-TERM SECURITIES (COST: $628,352) $ 628,726
-----------
TOTAL INVESTMENTS IN SECURITIES (COST: $25,943,711) $27,396,531
OTHER ASSESTS LESS LIABILITIES (0.2%) 48,084
-----------
NET ASSETS $27,444,615
===========
</TABLE>
*Indicates bonds are segregated by the custodian to cover when-issued or
delayed-delivery purchases.
Footnote: Non-rated securities have been determined to be of investment grade
quality by the Fund's Manager.
The accompanying notes are an integral part of these financial statements.
<TABLE>
<CAPTION>
Statement of Assets and Liabilities January 30, 1998 (Unaudited)
- ---------------------------------------------------------------
<S> <C>
Assets
Investment in securities, at value (Cost: $25,943,711) $ 27,396,531
Cash 172,168
Accrued interest receivable 378,817
Accrued dividends receivable 987
Receivable for fund shares sold 67,515
Deferred organization costs 4,586
----------------
Total Assets $ 28,020,604
----------------
Liabilities
Dividends payable $ 114,800
Accrued expenses 17,076
Security purchases payable 444,113
----------------
Total Liabilities $ 575,989
----------------
Net Assets $ 27,444,615
================
Net assets are represented by:
Paid-in capital $ 27,540,970
Accumulated undistributed net realized gain(loss) on
investments (1,549,175)
Unrealized appreciation on investments 1,452,820
----------------
Total amount representing net assets applicable to
2,442,744 outstanding shares of no par common
stock (Unlimited shares authorized) $ 27,444,615
================
Net asset value per share $ 11.24
================
Statement of Operations for the six months ended January 30, 1998 (Unaudited)
- -----------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 780,803
Dividends 8,239
----------------
Total Investment Income $ 789,042
----------------
EXPENSES
Investment advisory fees $ 69,239
Service fees 34,427
Custodian fees 1,603
Transfer agent fees 19,465
Accounting service fees 18,932
Professional fees 4,433
Reports to shareholders 1,729
Trustees fees 1,399
Registration and filing fees 5,079
Amortization of organization costs 2,763
----------------
Total Expenses $ 159,069
Less expenses waived or absorbed
by the Fund's manager 73,219
----------------
Total Net Expenses $ 85,850
----------------
NET INVESTMENT INCOME $ 703,192
----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES
Net realized gain (loss) from:
Investment transactions $ 95,155
Futures transactions (515,806)
Net change in unrealized appreciation (depreciation) of
investments 349,094
----------------
Net Realized And Unrealized Gain (Loss) On
Investments And Futures $ (71,557)
----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 631,635
================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
<CAPTION>
Financial Statements January 30, 1998
Statement of Changes in Net Assets
For the six months ended January 30, 1998 and the year ended July 31, 1997
- --------------------------------------------------------------------------
<S> <C> <C>
For the Six
Months Ended For The Year
January 30, 1998 Ended
(Unaudited) July 31, 1997
--------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 703,192 $ 1,223,208
Net realized gain (loss) on investment and futures transactions (420,651) (586,350)
Net unrealized appreciation (depreciation) on investments 349,094 1,151,347
--------------------------------------------
Net Increase (Decrease) in Net Assets Resulting From Operations $ 631,635 $ 1,788,205
--------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income $ (703,192) $ (1,223,208)
Distributions from net realized gain on investment and
futures transactions 0 0
--------------------------------------------
Total Dividends and Distributions $ (703,192) $ (1,223,208)
--------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sale of shares $ 1,503,384 $ 13,035,407
Proceeds from reinvested dividends 465,937 787,747
Cost of shares redeemed (2,254,703) (4,663,555)
-------------------------------------------
Net Increase (Decrease) in Net Assets Resulting
From Capital Share Transactions $ (285,382) $ 9,159,599
-------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS $ (356,939) $ 9,724,596
NET ASSETS, BEGINNING OF PERIOD $ 27,801,554 $ 18,076,958
------------------------------------------
NET ASSETS, END OF PERIOD $ 27,444,615 $ 27,801,554
==========================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements January 30, 1998 (Unaudited)
Note 1. ORGANIZATION
Business Operations - The Nebraska Municipal Fund (the "Fund") is an
investment portfolio of Ranson Managed Portfolios (the "Trust") registered
under the Investment Company Act of 1940, as amended, as a non-diversified,
open-end management investment company. The Trust may offer multiple
portfolios; currently five portfolios are offered. Ranson Managed Portfolios
is an unincorporated business trust organized under Massachusetts law on August
10, 1990. The Fund had no operations from that date to November 17,
1993, other than matters relating to organization and registration. On
November 17, 1993, the Fund commenced its Public Offering of capital shares.
The investment objective of the Fund is to provide its shareholders with as
high a level of current income exempt from both federal and Nebraska income
taxes as is consistent with preservation of capital. The Fund will seek
to achieve this objective by investing primarily in a portfolio of Nebraska
municipal securities. Shares of the Fund are offered at net asset value plus
a maximum sales charge of 4.25% of the offering price.
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investment security valuation - 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 (Capital), 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 Fund follows industry practic
and records security transactions on the trade date.
The Fund concentrates its investments in a single state. This concentration
may result in the Fund investing a relatively high percentage of its assets in
a limited number of issuers.
Deferred organization costs - Costs incurred by the Fund in connection
with its organization are being amortized over a 60-month period on the
straight-line basis. Accumulated amortization at January 30, 1998 totaled
$22,468.
Federal and state income taxes - The Fund's policy is to comply with the
requirements of the Internal Revenue Code that are applicable to regulated
investment companies, and to distribute all of its net investment
income and any net realized gain on investments, to its shareholders.
Therefore, no provision for income taxes is required. The Fund has available
at January 30, 1998, a net capital loss carryforward totaling $1,128,524,
which may be used to offset capital gains realized during subsequent years
through July 31, 2005.
Distributions to shareholders - Dividends from net investment income, declared
daily and payable monthly, are reinvested in additional shares of the Fund at
net asset value or paid in cash. Capital gains, when available, are
distributed at least annually.
Investment income - Dividend income is recognized on the ex-dividend date and
interest income is recognized daily on an accrual basis. Premiums and
discounts on securities purchased are amortized using the effective interest
method over the life of the respective securities, unless callable, in which
case they are amortized to the earliest call date.
Futures contracts - The Fund may purchase and sell financial futures contracts
to hedge against changes in the values of tax-exempt municipal securities the
Fund owns or expects to purchase.
A futures contract is an agreement between two parties to buy or sell units
of a particular index or a certain amount of U.S. Government or municipal
securities at a set price on a future date. Upon entering into a futures
contract, the Fund is required to deposit with a broker an amount of
cash or securities equal to the minimum "initial margin" requirement of
the futures exchange on which the contract is traded. Subsequent payments
("variation margin") are made or received by the Fund, dependent on the
fluctuations in the value of the underlying index. Daily fluctuations
in value are recorded for financial reporting purposes as unrealized
gains or losses by the Fund. When entering into a closing transaction,
the Fund will realize, for book purposes, a gain or loss equal to the
difference between the value of the futures contracts sold and the futures
contracts to buy. Unrealized appreciation (depreciation) related to open
futures contracts is required to be treated as realized gain (loss) for
Federal income tax purposes.
Certain risks may arise upon entering into futures contracts. These risks
may include changes in the value of the futures contracts that may not
directly correlate with changes in the value of the underlying securities.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Note 3. CAPITAL SHARE TRANSACTIONS
As of January 30, 1998, there were unlimited shares of no par authorized;
2,442,744 and 2,468,032 shares were outstanding at January 30, 1998 and July
31, 1997, respectively.
Transactions in capital shares were as follows:
Shares
----------------------------------
For the Six For The
Months Ended Year Ended
January 30, 1998 July 31, 1997
----------------------------------
Shares sold 135,095 1,172,643
Shares issued on reinvestment of dividends 41,734 71,004
Shares redeemed (202,117) (419,638)
----------------------------------
Net increase (decrease) (25,288) 824,009
==================================
Note 4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Ranson Capital Corporation, the Fund's investment adviser and underwriter,
ND Resources, Inc., the Fund's transfer and accounting services agent, and
ND Capital, Inc., the Fund's agent for the purchase of certain investment
securities, are subsidiaries of ND Holdings, Inc., the Fund's sponsor.
The Fund has engaged Ranson Capital Corporation to provide investment advisory
and management services to the Fund. The Investment Advisory Agreement
provides for fees to be computed at an annual rate of 0.50% of the Fund's
average daily net assets. The Fund has recognized $46,220 of investment
advisory fees after partial waiver of $23,019 for the six months ended
January 30, 1998. The Fund has a payable to Ranson Capital Corporation of
$5,829 at January 30, 1998 for investment advisory fees. Certain officers and
trustees of the Fund are also officers and directors of the investment adviser.
The Fund pays an annual service fee to Ranson Capital Corporation (Capital),
its principal underwriter, in connection with the distribution of the Fund's
shares. The annual fee paid to Capital is calculated daily and paid monthly
by the Fund at the annual rate of 0.25% of the average daily net assets of
the Fund. The Fund has recognized $28,851 of service fee expenses after
partial waiver of $5,576 for the six months ended January 30, 1998. In
addition, the Fund has engaged ND Capital, Inc. as agent for the purchase of
certain investment securities. For the six months ended January 30, 1998,
commissions earned by ND Capital, Inc. totaled $1,875 and are included in
the cost basis of the securities acquired.
ND Resources, Inc., (the transfer agent), provides shareholder services for
a monthly fee equal to an annual rate of 0.16% of the Fund's first $10
million of net assets, 0.13% of the Fund's net assets on the next $15 million,
0.11% of the Fund's net assets on the next $15 million, 0.10% of the
Fund's net assets on the next $10 million, and 0.09% of the Fund's net assets
in excess of $50 million. The Fund incurred $19,465 of transfer agency fees,
of which $15,995 was waived, for the six months ended January 30, 1998.
ND Resources, Inc. also acts as the Fund's accounting services agent for a
monthly fee equal to the sum of a fixed fee of $2,000, and a variable fee
equal to 0.05% of the Fund's average daily net assets on an annual basis for
the Fund's first $50 million and at a lower rate on the average daily net
assets in excess of $50 million. The Fund has incurred $18,932 of accounting
service fees, of which $15,772 was waived, for the six months ended January
30, 1998.
Note 5. INVESTMENT SECURITY TRANSACTIONS
The cost of purchases and proceeds from the sales of investment securities
(excluding short-term securities) aggregated $5,774,714 and $6,727,937
respectively, for the six months ended January 30, 1998.
Note 6. INVESTMENT IN SECURITIES
At January 30, 1998, the aggregate cost of securities for federal income
tax purposes was $25,943,711, and the net unrealized appreciation of
investments based on the cost was $1,452,820 which is comprised of
$1,453,475 aggregate gross unrealized appreciation and $655 aggregate
gross unrealized depreciation.
<TABLE>
<CAPTION>
Financial Highlights Selected per share data and ratios for the period indicated
- --------------------------------------------------------------------------------
For the For The Period
Six Months For the For The For The Since Inception
Ended Year Year Year Year (Nov. 17, 1993)
January 30, Ended Ended Ended Through
1998 July 31, July 31, July 31, July 31,
(Unaudited) 1997 1996 1995 1994
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.26 $ 11.00 $ 10.95 $ 10.82 $ 11.49
---------------------------------------------------------------------------------
Income from Investment Operations:
Net Investment Income $ .28 $ .55 $ .57 $ .59 $ .45
Net realized and unrealized gain
(loss) on investment and futures
transactions (.02) .26 .05 .13 (.67)
---------------------------------------------------------------------------------
Total From Investment Operations $ .26 $ .81 $ .62 $ .72 $ (.22)
---------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income $ (.28) $ (.55) $ (.57) $ (.59) $ (.45)
Distributions from net capital gains .00 .00 .00 .00 .00
---------------------------------------------------------------------------------
Total Distributions $ (.28) $ (.55) $ (.57) $ (.59) $ (.45)
---------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.24 $ 11.26 $ 11.00 $ 10.95 $ 10.82
=================================================================================
Total Return 4.76%(A)(B) 7.57%(A) 5.73%(A) 7.14%(A) (3.20)%(A)(B)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $27,445 $27,802 $18,077 $14,445 $8,171
Ratio of net expenses (after expense
assumption) to average net assets 0.62%(B)(C) 0.71%(C) 0.62%(C) 0.35%(C) 0.19%(B)(C)
Ratio of net investment income to
average net assets 5.10%(B) 5.03% 5.13% 5.63% 5.51%(B)
Portfolio turnover rate 21.20% 42.84% 27.20% 140.00% 314.00%
</TABLE>
(A) Excludes maximum sales charge of 4.25%.
(B) Ratio was annualized.
(C) During the periods indicated above, ND Holdings, Inc. or Ranson Capital
Corporation assumed expenses of $73,219, $124,394, $129,053, $146,913
and $70,186, respectively. If the expenses had not been assumed, the
annualized ratios of total expenses to average net assets would have been
1.16%, 1.22%, 1.38%, 1.66%, and 2.25%, respectively.
The accompanying notes are an integral part of these financial statements.
Dear Shareholders,
We are pleased to enclose the semi-annual report on the operations of the
Oklahoma Municipal Fund, for the six months ended January 30, 1998. The
Fund's portfolio and related financial statements are presented within for
your review.
Will Rogers once said, "All I know is what I read in the paper." Well,
if you are reading today's financial reports all you get is confused.
Inflation or deflation? Higher rates or lower rates? Read a paper, watch
television or get on a mailing list and you will find opinions of economic
forecasting are quite often contradictory.
As we enter the new year, the U.S. economy is enjoying nearly seven years of
uninterrupted growth, the unemployment rate is the lowest since 1973, the
stock market is at record highs, interest rates are low and inflation is
the most docile in a generation. Yet, despite these events the financial
markets are volatile.
Recent events in foreign equity markets and their impact on the U.S. stock
market cause us to pause and question whether the recent drop in interest
rates is sustainable. Our sense is that yields on municipal bonds will stay
at their lower levels during the first half of 1998 when the bulk of the Asian
events slow down the U.S. economy, then edge higher in the latter part of the
year once the Asian drag subsides.
In spite of all this, tax-free municipal bonds are relatively cheap (a good
value) when compared to U.S. Treasury bonds. Long-term municipals
historically offer 75% to 80% of the return available from a 30 year Treasury
bond. As of this writing that ratio is about 85%.
The Oklahoma Municipal Fund utilized a partial hedge during the period.
Futures contracts in U.S. Treasury bonds were employed. By using a partial
hedge to protect against the possibility of interest rate hikes, share prices
were held down as rates declined during the six months ended January 30, 1998.
Share price began the period at $11.86 and closed at $11.93.
Throughout the period, the Fund has invested in high-grade, double exempt
Oklahoma bonds, federal exempt Oklahoma bonds and double exempt insured
Purto Rico bonds. Among our purchases in the primary and secondary markets
throughout the six months were bonds issued by housing authorities, hospitals,
utilities and transportation authorities.
High current income exempt from federal and Oklahoma income taxes with
preservation of capital remain the chief objectives of the Fund.
We invite your personal calls and visits.
Sincerely,
Monte L. Avery Robert E. Walstad
Chief Portfolio Strategist President
TERMS & DEFINITIONS
- -------------------
Appreciation
Increase in value of an asset.
Average Annual Total Return
A standardized measurement of the return (yield and appreciation) earned
by the fund on an annual basis, assuming all distributions are reinvested.
Coupon Rate or Face Rate
The rate of interest annually payable based on the face amount of the
bond; expressed as a percentage.
Depreciation
Decrease in value of an asset.
Lehman Brothers Municipal Bond Index
An unmanaged list of long-term, fixed-rate, investment-grade, tax-exempt
bonds representative of the municipal bond market. The index does not
take into account brokerage commissions or other costs, may include bonds
different from those in the fund, and may pose different risks than the
fund.
Market Value
Actual (or estimated) price at which a bond trades in the market place.
Maturity
A measure of the term or life of a bond in years. When a bond "matures",
the issuer repays the principal.
Net Asset Value (NAV)
The value of all your fund's assets, minus any liabilities, divided by
the number of outstanding shares, not including any initial sales charge.
Quality Ratings
A designation assigned by independent rating companies to give a relative
indication of a bond's credit worthiness. "AAA", "AA", "A", and "BBB"
indicate investment grade securities. Ratings can range from a high of
"AAA" to a low of "D".
Total Return
Measures both the net investment income and any realized and unrealized
appreciation or depreciation of the underlying investments in the fund's
portfolio for the period, assuming the reinvestment of all dividends.
It represents the aggregate percentage or dollar value change over the
period.
PERFORMANCE AND COMPOSITION
- ---------------------------
Portfolio Quality Ratings
(based on Total Long-Term Investments)
- --------------------------------------
[pie chart]
AAA 63.3%
AA 12.0%
A 7.0%
BBB 7.5%
NR 10.2%
Quality ratings reflect the financial strength of the issuer. They are
assigned by independent rating services such as Moody's Investors Services
and Standard & Poor's. Non-rated bonds have been determined to be of
appropriate quality for the portfolio by Ranson Capital Corporation, the
investment advisor.
Portfolio Market Sectors
(as a % of Net Assets)
- ------------------------
[pie chart]
S-School 23.4%
U-Utilities 17.6%
HC-Health Care 14.0%
T-Transportation 11.7%
GO-General Obligation 10.9%
I-Industrial 10.2%
W/S-Water/Sewer 8.7%
H-Housing 3.5%
Market sectors are breakdowns of the Fund's portfolio holdings into specific
investment classes.
COMPARATIVE INDEX GRAPH
- -----------------------
<TABLE>
<CAPTION>
Comparison of change in value of a $10,000 investment in The
Oklahoma Municipal Fund and the Lehman Bros. Municipal Bond Index
The Oklahoma Municipal The Oklahoma Municipal Lehman Bros
Fund w/o sales charge Fund w/ max sales charge Muni Bond Index
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
09/25/96 $10,000 $ 9,575 $10,000
1997 $10,779 $10,321 $11,027
01/30/98 $11,141 $10,668 $11,470
</TABLE>
Average Annual Total Returns
For periods ending January 30, 1998
- --------------------------------------------------------------------- ------
Since Inception
1 year 5 year (September 25, 1996)
- ----------------------------------------------------------------------------
Without sales charge 8.84% NA 8.35%
With sales charge 4.22% NA 4.92%
- ----------------------------------------------------------------------------
Putting Performance into Perspective
The graph comparing your Fund's performance to a benchmark index provides you
with a general sense of how your Fund performed. To put this information in
context, it may be helpful to understand the special differences between the
two. The Lehman Brothers index is a national index representative of the
national municipal bond market whereas the Fund concentrates its investments
in Oklahoma municipal bonds. Your Fund's total return for the period shown
appears with and without sales charges and includes Fund expenses and
management fees. A securities index measures the performance of a
theoretical portfolio. Unlike a fund, the index is unmanaged; there are no
expenses that affect the results. In addition, few investors could purchase
all of the securities necessary to match the index. And, if they could, they
would incur transaction costs and other expenses. All Fund and benchmark
returns include reinvested dividends. Returns are historical and are not a
guarantee of future results. The Fund's share price, yields and total returns
will vary, so that shares, when redeemed, may be worth more or less than their
original cost.
KEY STATISTICS
- --------------
07/31/97 NAV(share value) $11.86
01/30/98 NAV $11.93
Average Maturity 19.7 years
Number of Issues 49
Total Net Assets $11,764,750
<TABLE>
<CAPTION>
Schedule of Investments January 30, 1998 (Unaudited)
Name of Issuer
Percentages represent the market value of Rating Coupon Principal Market
each investment category to total net assets Moody's/S&P Rate Maturity Amount Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OKLAHOMA MUNICIPAL BONDS (103.1%)
Eastern OK Board of Regents (State College) Rev. NR/NR 6.100% 06/01/17 $ 150,000 $ 158,713
Grand River Dam Auth., Rev. Ref. A/A- 5.000 06/01/12 100,000 99,950
Grand River Dam Auth., OK Rev. AMBAC Aaa/AAA 5.500 06/01/09 75,000 81,041
*Grand River Dam Auth., OK Rev. AMBAC Aaa/AAA 6.250 06/01/11 210,000 240,015
Grand River Dam Auth., OK Rev. Ref. AMBAC Aaa/AAA 5.500 06/01/13 120,000 129,554
Norman, OK (Regl. Hospital) Auth. Ref. MBIA Aaa/AAA 5.625 09/01/21 300,000 313,164
OK Board of Regents (NE State Univ. Ctr.) Rev. FSA Aaa/AAA 5.100 03/01/16 140,000 147,041
OK Board of Regents (OAMC) Connors State Coll. MBIA NR/AAA 4.650 06/01/18 570,000 559,586
OK Capital Impvt. Auth. Rev. A/NR 5.500 10/01/16 105,000 111,007
OK Devl. Finance Auth. (Bake Rite Inc. Project) Rev. NR/NR 8.500 08/01/14 250,000 266,198
OK Devl. Finance Auth. (DHS Cty. Office Bldg.) Rev. A/NR 5.250 11/01/11 120,000 122,138
OK Devl. Finance Auth. (DHS Cty. Office Bldg.) Rev. A/NR 5.300 11/01/12 275,000 280,055
OK Devl. Finance Auth. (OK City Univ.) Rev. Ref. AMBAC Aaa/AAA 5.125 06/01/17 545,000 551,088
OK Devl. Finance Auth. (Southern Nazarene Univ.) Rev. NR/NR 6.200 11/01/07 100,000 110,171
OK Devl. Finance Auth. (Southern Nazarene Univ.) Rev. NR/NR 6.500 11/01/13 75,000 83,393
OK Devl. Finance Auth. (Tulsa Vo Tech Dist. Proj.) Rev. Aaa/NR 5.100 08/01/15 750,000 776,895
OK Devl. Finance Auth. Public Facs. (Univ.) Rev. FSA Aaa/AAA 5.625 07/01/13 50,000 54,658
OK Hsg. Finance Agency Single Family Mrtge. Rev. GNMA Aaa/AAA 5.750 09/01/29 400,000 404,652
OK State Indl. Auth. (Deaconess Hlth. Care) Rev. NR/BBB 5.500 10/01/12 450,000 454,172
OK State Indl. Auth. Lease (Christian Univ. Science) Rev. NR/NR 5.600 02/01/07 190,000 196,789
OK State Indl. Finance Auth. G.O. Aa-3/NR 5.000 04/01/13 400,000 402,260
OK State Indl. Finance Auth. Unlimited G.O. Aa-3/NR 5.300 09/01/11 50,000 52,782
OK State Indl. Finance Auth. Unlimited G.O. Aa-3/NR 5.400 09/01/12 50,000 52,616
OK State Municipal Power Auth. Rev. Aaa/AAA 5.875 01/01/12 100,000 111,077
*OK State Municipal Power Auth. Rev. MBIA Aaa/AAA 5.875 01/01/15 775,000 875,835
OK State Student Loan Auth. A-1/NR 6.350 09/01/25 100,000 101,000
OK State Turnpike Auth. Rev. A-1/A+ 6.125 01/01/20 125,000 137,710
OK State Turnpike Auth. Rev. AMBAC Aaa/AAA 6.100 01/01/15 200,000 218,302
OK State Turnpike Auth. Rev. AMBAC Aaa/AAA 5.500 01/01/22 150,000 162,426
OK State Unlimited Tax G.O. Aa-3/AA 5.200 07/15/16 150,000 160,088
OK State Unlimited Tax G.O. Aa-3/AA 5.200 07/15/18 90,000 94,959
OK State Unlimited Tax G.O. Aa-3/AA 5.100 07/15/13 90,000 94,163
OK State Water (Loan Program) Rev. Aaa/AAA 6.400 09/01/11 100,000 114,003
OK State Water (Loan Program) Rev. NR/AA 6.250 10/01/12 50,000 54,819
OK State Water (Loan Program) Rev. NR/AA 5.400 09/01/15 105,000 113,079
OK State Water (Loan Program) Rev. NR/AA 5.100 09/01/16 415,000 431,774
Oklahoma City, OK Fin. Auth. (Epworth Villa) Rev. Ref. NR/NR 6.500 04/01/15 200,000 208,886
Oklahoma City, OK Fin. Auth. (Epworth Villa) Rev. Ref. NR/NR 7.000 04/01/22 200,000 211,288
Oklahoma Cty., OK Indl. Auth. (Benevolent Assoc.) Ref. Baa-1/NR 6.150 01/01/11 100,000 104,666
Puerto Rico Commonwealth Sewer Auth. Rev. AMBAC Aaa/AAA 5.000 07/01/19 300,000 306,096
Puerto Rico Commonwealth Auth. Rev. FSA Aaa/AAA 5.250 07/01/20 250,000 256,698
Puerto Rico Commonwealth Auth. Rev. MBIA Aaa/AAA 5.000 07/01/22 100,000 99,806
Puerto Rico Commonwealth Unlimited G.O. MBIA Aaa/AAA 5.375 07/01/21 400,000 419,344
Puerto Rico Comwlth Auth Infrastructure Fing AMBAC Aaa/AAA 5.000 07/01/21 500,000 501,945
Puerto Rico Elec. Power Auth. Rev. MBIA Aaa/AAA 5.375 07/01/27 500,000 525,910
Puerto Rico Indl.. (Auxilio Mutuo) MBIA Aaa/AAA 5.500 07/01/26 400,000 419,720
Puerto Rico Public Bldgs. Auth. Govt. Facs. Rev. AMBAC Aaa/AAA 5.000 07/01/27 100,000 98,703
Puerto Rico Public Bldgs. Auth. Govt. Facs. Rev. FSA NR/AAA 5.250 07/01/21 300,000 311,487
Shawnee, OK Hospital Auth. (Midamerica Hlth. Care) NR/BBB 6.125 10/01/14 325,000 344,812
-----------
TOTAL OKLAHOMA MUNICIPAL BONDS (COST: $11,736,969) $12,126,534
SHORT TERM SECURITIES (.2%)
Federated Tax-Free Trust (COST: $21,953) 21,953
-----------
TOTAL INVESTMENTS IN SECURITIES (COST: $11,758,922) $12,148,487
OTHER ASSETS LESS LIABILITIES (-3.3%) (383,737)
-----------
NET ASSETS $11,764,750
===========
</TABLE>
*Indicates bonds are segregated by the custodian to cover when-issued or
delayed delivery purchases.
Footnote: Non-rated (NR) investments have been determined to be of investment
grade quality by the Fund's Manager.
The accompanying notes are an integral part of these financial statements.
<TABLE>
<CAPTION>
Financial Statements January 30, 1998 (Unaudited)
Statement of Assets and Liabilities January 30, 1998
- ----------------------------------------------------
<S> <C>
Assets
Investment in securities, at value (Cost: $11,758,922) $ 12,148,487
Receivable from manager 62
Accrued interest receivable 147,461
Accrued dividends receivable 458
Receivable for fund shares sold 101,164
Deferred organization costs 23,158
----------------
Total Assets $ 12,420,790
----------------
Liabilities
Bank overdraft $ 40,000
Dividends payable 48,643
Security purchases payable 562,970
Accrued expenses 4,427
----------------
Total Liabilities $ 656,040
----------------
Net Assets $ 11,764,750
================
Net assets are represented by:
Paid-in capital $ 11,480,790
Accumulated undistributed net realized gain(loss) on investments (105,605)
Unrealized appreciation on investments 389,565
----------------
Total amount representing net assets applicable to
985,987 outstanding shares of no par common
stock (unlimited shares authorized) $ 11,764,750
================
Net asset value per share $ 11.93
================
The accompanying notes are an integral part of these financial statements.
Statement of Operations
For the Six Months Ended January 30, 1998 (Unaudited)
- ----------------------------------------------------
INVESTMENT INCOME
Interest $ 248,280
Dividends 6,232
----------------
Total Investment Income $ 254,512
----------------
EXPENSES
Investment advisory fees $ 23,418
Distribution fees (12b-1) 12,191
Custodian fees 481
Registration and filing fees 5,058
Transfer agent fees 8,096
Accounting service fees 14,470
Trustees fees 982
Reports to shareholders 819
Professional fees 3,988
----------------
Total Expenses $ 69,503
Less expenses waived or absorbed by the Fund's manager (61,972)
----------------
Total Net Expenses $ 7,531
----------------
NET INVESTMENT INCOME $ 246,981
----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES
Net realized gain (loss) on:
investment transactions $ (2,108)
futures transactions (103,497)
Net change in unrealized appreciation (depreciation) of investments 249,474
----------------
Net Realized And Unrealized Gain (Loss) On
Investments And Futures $ 143,869
----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 390,850
================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
<CAPTION>
Financial Statements January 30, 1998
Statement of Changes in Net Assets
For the six months ended January 30, 1998 and the year ended July 31, 1997
- --------------------------------------------------------------------------
<S> <C> <C>
For the Period
For the Six Since Inception
Months Ended (Sept. 25, 1996
January 30, 1998 Through
(Unaudited) July 31, 1997
--------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 246,981 $ 67,530
Net realized gain (loss) on investment and futures transactions (105,605) 19,246
Net unrealized appreciation (depreciation) on investments 249,474 140,091
--------------------------------------------
Net Increase (Decrease) in Net Assets Resulting From Operations $ 390,850 $ 226,867
--------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income $ (246,981) $ (67,530)
Distributions from net realized gain on investment transactions (19,246) 0
--------------------------------------------
Total Dividends and Distributions $ (266,227) $ (67,530)
--------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sale of shares $ 5,496,967 $ 6,448,490
Proceeds from reinvested dividends 130,495 23,486
Cost of shares redeemed (578,010) (40,638)
--------------------------------------------
Net Increase (Decrease) in Net Assets Resulting
From Capital Share Transactions $ 5,049,452 $ 6,431,338
--------------------------------------------
TOTAL INCREASE IN NET ASSETS $ 5,174,075 $ 6,590,675
NET ASSETS, BEGINNING OF PERIOD 6,590,675 0
--------------------------------------------
NET ASSETS, END OF PERIOD $ 11,764,750 $ 6,590,675
============================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements January 30, 1998 (Unaudited)
Note 1. ORGANIZATION
Business Operations - The Oklahoma Municipal Fund (the "Fund") is an
investment portfolio of Ranson Managed Portfolios (the "Trust") registered
under the Investment Company Act of 1940, as amended, as a non-diversified,
open-end management investment company. The Trust may offer multiple
portfolios; currently five portfolios are offered. Ranson Managed Portfolios
is an unincorporated business trust organized under Massachusetts law on August
10, 1990. The Fund had no operations from that date to September 25, 1996,
other than matters relating to organization and registration. On September
25, 1996, the Fund commenced its Public Offering of capital shares. 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 a certain
extent, 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 which are subject to Oklahoma state income taxes. The Fund
will seek to achieve this objective by investing primarily in a portfolio of
Oklahoma municipal securities. Shares of the Fund are offered at net asset
value plus a maximum sales charge of 4.25% of the offering price.
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investment security valuation - 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, ("Capital") 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. Capital may employ a matrix system to determine
valuations. The Fund follows industry practice and records security
transactions on the trade date.
The Fund concentrates its investments in a single state. This concentration
may result in the Fund investing a relatively high percentage of its assets
in a limited number of issuers.
Deferred organization costs - Costs incurred by the Fund in connection with
its organization will be amortized over a 60-month period on the straight-line
basis. Accumulated amortization at January 30, 1998 totaled $3,393.
Federal and state income taxes - The Fund's policy is to comply with the
requirements of the Internal Revenue Code that are applicable to regulated
investment companies, and to distribute all of its net investment income
and any net realized gain on investments, to its shareholders. Therefore, no
provision for income taxes is required.
Distributions to shareholders - Dividends from net investment income, declared
daily and payable monthly, are reinvested in additional shares of the Fund at
net asset value or paid in cash. Capital gains, when available, are
distributed at least annually.
Investment income - Dividend income is recognized on the ex-dividend date
and interest income is recognized daily on an accrual basis. Premiums and
discounts on securities purchased are amortized using the effective interest
method over the life of the respective securities, unless callable, in which
case they are amortized to the earliest call date.
Futures contracts - The Fund may purchase and sell financial futures contracts
to hedge against changes in the values of tax-exempt municipal securities the
Fund owns or expects to purchase.
A futures contract is an agreement between two parties to buy or sell units
of a particular index or a certain amount of U.S. Government or municipal
securities at a set price on a future date. Upon entering into a futures
contract, the Fund is required to deposit with a broker an amount of cash or
securities equal to the minimum "initial margin" requirement of the futures
exchange on which the contract is traded. Subsequent payments ("variation
margin") are made or received by the Fund, dependent on the fluctuations in
the value of the underlying index. Daily fluctuations in value are recorded
for financial reporting purposes as unrealized gains or losses by the Fund.
When entering into a closing transaction, the Fund will realize, for book
purposes, a gain or loss equal to the difference between the value of the
futures contracts sold and the futures contracts to buy. Unrealized
appreciation (depreciation) related to open futures contracts is required to
be treated as realized gain (loss) for Federal income tax purposes.
Certain risks may arise upon entering into futures contracts. These risks
may include changes in the value of the futures contracts that may not
directly correlate with changes in the value of the underlying securities.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Note 3. CAPITAL SHARE TRANSACTIONS
As of January 30, 1998, there were unlimited shares of no par authorized;
on January 30, 1998 and July 31, 1997 there were 985,987 and 555,618 shares
were outstanding, respectively.
<TABLE>
<CAPTION>
Transactions in capital shares were as follows:
Shares
---------------------------------------------
<S> <C> <C>
For the Six For The Period Since
Months Ended Inception (Sept. 25, 1996)
January 30, 1998 Through July 31, 1997
---------------------------------------------
Shares sold 467,920 557,078
Shares issued on reinvestment of dividends 11,069 2,039
Shares redeemed (48,620) (3,499)
---------------------------------------------
Net increase 430,369 555,618
==============================================
</TABLE>
Note 4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Ranson Capital Corporation, the Fund's investment adviser and underwriter,
ND Resources, Inc., the Fund's transfer and accounting services agent, and ND
Capital, Inc., the Fund's agent for the purchase of certain investment
securities, are subsidiaries of ND Holdings, Inc., the Fund's sponsor.
The Fund has engaged Ranson Capital Corporation to provide investment advisory
and management services to the Fund. The Investment Advisory Agreement
provides for fees to be computed at an annual rate of 0.50% of the Fund's
average daily net assets. The Fund has recognized $3,899 of investment
advisory fees for the six months ended January 30, 1998. Certain officers
and trustees of the Fund are also officers and directors of the investment
adviser.
The Fund pays an annual service fee to Ranson Capital Corporation (Capital),
its principal underwriter, in connection with the distribution of the Fund's
shares. The annual fee paid to Capital under the Plan is calculated daily
and paid monthly by the Fund at the annual rate of 0.25% of the average daily
net assets of the Fund. Capital has elected to waive all operation service
fees for the six months ended January 30, 1998. In addition, the Fund has
engaged ND Capital, Inc. as agent for the purchase of certain investment
securities. For the six months ended January 30, 1998 commissions earned by
ND Capital, Inc. totaled $9,056 and are included in the cost basis of the
securities acquired.
ND Resources, Inc., (the transfer agent), provides shareholder services for
a monthly fee equal to an annual rate of 0.16% of the Fund's first $10 million
of net assets, 0.13% of the Fund's net assets on the next $15 million, 0.11%
of the Fund's net assets on the next $15 million, 0.10% of the Fund's net
assets on the next $10 million, and 0.09% of the Fund's net assets in excess
of $50 million. ND Resources, Inc. also acts as the Fund's accounting
services agent for a monthly fee equal to the sum of a fixed fee of $2,000,
and a variable fee equal to 0.05% of the Fund's average daily net assets on
an annual basis for the Fund's first $50 million and at a lower rate on the
average daily net assets in excess of $50 million. ND Holdings, Inc. has
assumed all transfer agent and accounting service fees for the six months
ended January 30, 1998.
Note 5. INVESTMENT SECURITY TRANSACTIONS
The cost of purchases and proceeds from the sales of investment securities
(excluding short-term securities) aggregated $6,523,672 and $798,864
respectively, for the six months ended January 30, 1998.
Note 6. INVESTMENT IN SECURITIES
At January 30, 1998, the aggregate cost of securities for federal income tax
purposes was $11,758,922, and the net unrealized appreciation of investments
based on the cost was $389,565 which is comprised of $397,107 aggregate gross
unrealized appreciation and $7,542 aggregate gross unrealized depreciation.
<TABLE>
<CAPTION>
Financial Highlights Selected per share data and ratios for the period indicated
- --------------------------------------------------------------------------------
For The Period
For the Six Since Inception
Months Ended (Sept. 25, 1996)
January 30, 1998 Through
(Unaudited) July 31, 1997
-----------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.86 $ 11.49
-----------------------------------------
Income from Investment Operations:
Net Investment Income $ .30 $ .50
Net realized and unrealized gain (loss) on
investment and futures transactions .09 .37
-----------------------------------------
Total From Investment Operations $ .39 $ .87
-----------------------------------------
Less Distributions:
Dividends from net investment income $ (.30) $ (.50)
Distributions from net capital gains (.02) .00
-----------------------------------------
Total Distributions $ (.32) $ (.50)
-----------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.93 $ 11.86
=========================================
Total Return 6.76%(A)(B) 7.79%(A)(B)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $ 11,765 $ 6,591
Ratio of net expenses (after expense assumption)
to average net assets 0.16%(B)(C) 0.11%(C)
Ratio of net investment income to average net assets 5.12(B) 3.70%
Portfolio turnover rate 8.42% 63.70%
</TABLE>
(A) Excludes maximum sales charge of 4.25%.
(B) Ratio was annualized.
(C) During the period ended January 30, 1998 and the period ended July 31,
1997, ND Holdings, Inc. assumed expenses of $61,972, and $34,609,
respectively. If the expenses had not been assumed, the annualized ratio
of total expenses to average net assets would have been 1.44% and 2.01%,
respectively.
The accompanying notes are an integral part of these financial statements.
Dear Shareholders,
We are pleased to enclose the semi-annual report on the operations of The
Illinois Municipal Fund for the period since inception thru January 30, 1998.
The Fund's portfolio and related financial statements are presented within for
your review.
Will Rogers once said, "All I know is what I read in the paper." Well, if you
are reading today's financial reports all you get is confused. Inflation or
deflation? Higher rates or lower rates? Read a paper, watch television or
get on a mailing list and you will find opinions of economic forecasting are
quite often contradictory.
As we enter the new year, the U.S. economy is enjoying nearly seven years of
uninterrupted growth, the unemployment rate is the lowest since 1973, the
stock market is at record highs, interest rates are low and inflation is the
most docile in a generation. Yet, despite these events the financial markets
are volatile.
Recent events in foreign equity markets and their impact on the U.S. stock
market cause us to pause and question whether the recent drop in interest
rates is sustainable. Our sense is that yields on municipal bonds will stay
at their lower levels during the first half of 1998 when the bulk of the Asian
events slow down the U.S. economy, then edge higher in the latter part of the
year once the Asian drag subsides.
In spite of all this, tax-free municipal bonds are relatively cheap (a good
value) when compared to U.S. Treasury bonds. Long-term municipals
historically offer 75% to 80% of the return available from a 30 year Treasury
bond. As of this writing that ratio is about 85%.
The Illinois Municipal Fund, Inc. began the period at $11.49 and then closed
at $11.85.
Throughout the period, the Fund has invested in high-grade Illinois tax-exempt
bonds. Diversification remains an important strategy for the Fund. Among our
purchases in the primary and secondary markets throughout the period since
inception were bonds issued by housing, health care facilities, utilities,
schools, industrial and transportation authorities.
High current income exempt from federal and Illinois income taxes with
preservation of capital remain the chief objectives of the Fund.
We invite your personal calls and visits.
Sincerely,
Monte L. Avery Robert E. Walstad
Chief Portfolio Strategist President
TERMS & DEFINITIONS
- -------------------
Appreciation
Increase in value of an asset.
Average Annual Total Return
A standardized measurement of the return (yield and appreciation) earned
by the fund on an annual basis, assuming all distributions are reinvested.
Coupon Rate or Face Rate
The rate of interest annually payable based on the face amount of the
bond; expressed as a percentage.
Depreciation
Decrease in value of an asset.
Lehman Brothers Municipal Bond Index
An unmanaged list of long-term, fixed-rate, investment-grade, tax-exempt
bonds representative of the municipal bond market. The index does not
take into account brokerage commissions or other costs, may include bonds
different from those in the fund, and may pose different risks than the
fund.
Market Value
Actual (or estimated) price at which a bond trades in the market place.
Maturity
A measure of the term or life of a bond in years. When a bond "matures",
the issuer repays the principal.
Net Asset Value (NAV)
The value of all your fund's assets, minus any liabilities, divided by the
number of outstanding shares, not including any initial sales charge.
Quality Ratings
A designation assigned by independent rating companies to give a relative
indication of a bond's credit worthiness. "AAA", "AA" ,"A", and "BBB"
indicate investment grade securities. Ratings can range from a high of
"AAA" to a low of "D".
Total Return
Measures both the net investment income and any realized and unrealized
appreciation or depreciation of the underlying investments in the fund's
portfolio for the period, assuming the reinvestment of all dividends.
It represents the aggregate percentage or dollar value change over the
period.
PERFORMANCE AND COMPOSITION
- ---------------------------
Portfolio Quality Ratings
(based on Total Long-Term Investments
- -------------------------------------
[pie chart]
AAA 100.00%
Quality ratings reflect the financial strength of the issuer. They are
assigned by independent rating services such as Moody's Investors Services
and Standard & Poor's. Non-rated bonds have been determined to be of
appropriate quality for the portfolio by Ranson Capital Corporation, the
investment advisor.
Portfolio Market Sectors
(as a % of Net Assets)
- ------------------------
[pie chart]
GO-General Obligation 36.6%
HC-Health Care 28.5%
S-School 11.0%
T-Transportation 7.5%
W/S-Water/Sewer 7.5%
D-Demand 3.9%
I-Industrial 3.6%
M-Miscellaneous 1.4%
Market sectors are breakdowns of the Fund's portfolio holdings into specific
investment classes.
COMPARATIVE INDEX GRAPH
- -----------------------
<TABLE>
<CAPTION>
Comparison of change in value of a $10,000 investment in The Illinois Municipal Fund
and the Lehman Bros. Municipal Bond Index
The Illinois Municipal The Illinois Municipal Lehman Bros
Fund w/o sales charge Fund w/ max sales charge Muni Bond Index
---------------------------------------------------------------------------------
<S> <C> <C> <C>
10/11/97 $10,000 $ 9,575 $10,000
01/31/97 $10,422 $ 9,979 $10,377
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS
For periods ending January 30, 1998
- ------------------------------------------------------------------------------
Since Inception
1 year 5 year (October 11, 1997)
- ------------------------------------------------------------------------------
Without sales charge NA NA NA
With sales charge NA NA NA
- ------------------------------------------------------------------------------
Putting Performance into Perspective
The graph comparing your Fund's performance to a benchmark index provides you
with a general sense of how your Fund performed. To put this information in
context, it may be helpful to understand the special differences between the
two. The Lehman Brothers index is a national index representative of the
national municipal bond market whereas the Fund concentrates its investments
in Illinios municipal bonds. Your Fund's total return for the period shown
appears with and without sales charges and includes Fund expenses and
management fees. A securities index measures the performance of a
theoretical portfolio. Unlike a fund, the index is unmanaged; there are no
expenses that affect the results. In addition, few investors could purchase
all of the securities necessary to match the index. And, if they could, they
would incur transaction costs and other expenses. All Fund and benchmark
returns include reinvested dividends. Returns are historical and are not a
guarantee of future results. The Fund's share price, yields and total returns
will vary, so that shares, when redeemed, may be worth more or less than their
original cost.
KEY STATISTICS
- --------------
10/ 31/97 NAV(share value) $11.49
01/30/98 NAV $11.85
Average Maturity 22.7 years
Number of Issues 23
Total Net Assets $140,770
<TABLE>
<CAPTION>
Schedule of Investments January 30, 1998 (Unaudited)
Name of Issuer
Percentages represent the market value of Rating Coupon Principal Market
each investment category to total net assets Moody's/S&P Rate Maturity Amount Value
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ILLINOIS MUNICIPAL BONDS (98.4%)
Belleville, IL G.O. MBIA Aaa/NR 5.650% 01/01/17 $ 10,000 $ 10,511
Bolingbrook, IL G.O. FGIC Aaa/AAA 5.625 01/01/28 5,000 5,367
Central Lake Cty., IL (Water Agency) Ref. Rev. FGIC Aaa/AAA 5.375 05/01/20 5,000 5,085
Chicago, IL G.O FGIC Aaa/AAA 5.250 01/01/27 5,000 5,051
Chicago, IL Board of Educ. (school reform) AMBAC Aaa/AAA 5.250 12/01/22 5,000 5,085
Chicago, IL Midway Airport Rev. MBIA Aaa/AAA 5.750 01/01/22 5,000 5,298
Chicago, IL Park District AMBAC A-1/NR 5.375 01/01/25 5,000 5,050
Chicago, IL (State Univ.) Auxillary Facs. Rev. MBIA Aaa/AAA 6.150 12/01/23 5,000 5,398
Cook Cty., IL G.O. MBIA Aaa/AAA 5.375 11/15/18 5,000 5,125
De Kalb Cty., IL Public Bldg. Comm. Rev. MBIA Aaa/NR 5.200 12/01/16 5,000 5,077
Du Page Cty. IL (Stormwater Project) Ref. Aaa/AAA 5.600 01/01/21 5,000 5,353
IL, (Childrens Memorial Hospital) Facs. Auth. Rev. MBIA Aaa/AAA 5.000 08/15/22 5,000 4,866
IL, (Rush, Presbyterian, St. Lukes) Hlth. Facs Auth. Rev. MBIA Aaa/AAA 5.500 11/15/25 5,000 5,135
IL, (Sherman) Hlth. Facs. Auth. Rev. AMBAC Aaa/AAA 5.250 08/01/22 20,000 19,932
IL, (Ancilla) Hlth. Facs. Auth. Rev. MBIA Aaa/AAA 5.250 07/01/22 5,000 4,977
IL, (Springfield Memorial) Facs. Auth. Ref. Rev. MBIA Aaa/NR 5.200 10/01/11 5,000 5,152
Metropolitan Pier & Expo (McCoormick) Auth. Rev. MBIA Aaa/AAA 6.000 06/15/27 5,000 5,420
Oakbrook, IL G.O. MBIA Aaa/NR 5.000 01/01/15 5,000 4,996
Peoria Cty., IL Sales Tax G.O. FGIC Aaa/NR 5.000 12/15/11 5,000 5,107
IL Regl. Transportation Auth. Rev. MBIA Aaa/AAA 5.400 06/01/16 5,000 5,203
Saint Clair Cty., IL G.O. FGIC Aaa/AAA 5.750 10/01/23 5,000 5,231
Springfield, IL G.O. MBIA Aaa/AAA 5.375 12/01/21 5,000 5,088
Western IL Univ. Facs. Ref. Rev. MBIA Aaa/AAA 5.250 04/01/12 5,000 5,066
--------
TOTAL ILLINOIS MUNICIPAL BONDS (COST: $136,022) $138,573
--------
TOTAL INVESTMENTS IN SECURITIES (COST: $136,022) $138,573
OTHER ASSETS LESS LIABILITIES (1.6%) 2,197
--------
NET ASSETS $140,770
========
</TABLE>
*Indicates bonds are segregated by the custodian to cover when-issued or
delayed-delivery purchases.
The accompanying notes are an integral part of these financial statements.
FOOTNOTE: Non-rated securities have been determined to be of investment grade
quality by the Funds Manager.
<TABLE>
<CAPTION>
Financial Statements January 30,1998 (Unaudited)
Statement of Assets and Liabilities January 30, 1998 (Uanaudited)
- ----------------------------------------------------------------
<S> <C>
Assets
Investment in securities, at value (Cost: $136,022) $ 138,573
Cash 888
Accrued interest receivable 1,772
Accrued dividends receivable 20
Receivable from manager 712
Deferred organization costs 35,750
-------------
Total Assets $ 177,715
-------------
Liabilities
Dividends payable $ 483
Organizational costs payable 35,750
Other Payables 712
-------------
Total Liabilities $ 36,945
-------------
Net Assets $ 140,770
=============
Net assets are represented by:
Paid-in capital $ 138,360
Accumulated undistributed net realized gain(loss) on investments (141)
Unrealized appreciation on investments 2,551
-------------
Total amount representing net assets applicable to
11,881 outstanding shares of no par common
stock (unlimited shares authorized) $ 140,770
=============
Net asset value per share $ 11.85
=============
The accompanying notes are an integral part of these financial statements.
Statement of Operations
For the period since inception (October 11, 1997) through
January 30, 1998 (Unaudited)
- ----------------------------------------------------------
INVESTMENT INCOME
Interest $ 1,021
Dividends 62
-------------
Total Investment Income $ 1,083
-------------
EXPENSES
Investment advisory fees $ 110
Distribution fees (12b-1) 56
Custodian fees 2
Trustees fees 125
Transfer agent fees 58
Accounting service fees 6,012
Reports to shareholders 50
Professional fees 442
Registration & filing fees 1,183
-------------
Total Expenses $ 8,038
Less expenses waived or absorbed by the Fund's manager (8,038)
-------------
Total Net Expenses $ 0
-------------
NET INVESTMENT INCOME $ 1,083
=============
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on
investment transactions $ (141)
Net change in unrealized appreciation (depreciation) of investments 2,551
-------------
Net Realized And Unrealized Gain (Loss) On
Investments $ 2,410
-------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 3,493
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
<CAPTION>
Financial Statements January 30,1998 (Unaudited)
Statement of Changes in Net Assets
For the period since inception (October 11, 1997) through January 30, 1998
- --------------------------------------------------------------------------
<S> <C>
For The Period
Since Inception
(October 11, 1997)
Through
January 30, 1998
-----------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 1,083
Net realized gain (loss) on investment transactions (141)
Net unrealized appreciation (depreciation) on investments 2,551
-----------------
Net Increase (Decrease) in Net Assets Resulting From Operations $ 3,493
-----------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income $ (1,083)
Distributions from net realized gain on investment
transactions 0
-----------------
Total Dividends and Distributions $ (1,083)
-----------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sale of shares $ 138,297
Proceeds from reinvested dividends 63
Cost of shares redeemed 0
-----------------
Net Increase (Decrease) in Net Assets Resulting
From Capital Share Transactions $ 138,360
-----------------
TOTAL INCREASE IN NET ASSETS $ 140,770
NET ASSETS, BEGINNING OF PERIOD 0
-----------------
NET ASSETS, END OF PERIOD $ 140,770
=================
</TABLE>
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements January 30,1998
Note 1. ORGANIZATION
Business Operations - The Illinois Municipal Fund (the "Fund") is an
investment portfolio of Ranson Managed Portfolios (the "Trust") registered
under the Investment Company Act of 1940, as amended, as a non-diversified,
open-end management investment company. The Trust may offer multiple
portfolios; currently five portfolios are offered. Ranson Managed
Portfolios is an unincorporated business trust organized under Massachusetts
law on August 10, 1990. The Fund had no operations from that date to October
11, 1997, other than matters relating to organization and registration. On
October 11, 1997, the Fund commenced its Public Offering of capital shares.
The investment objective of the Fund is to provide its shareholders with as
high a level of current income exempt from federal income tax and, to the
extent indicated, Illinois income tax as is consistent with preservation of
capital. The Fund will seek to achieve this objective by investing primarily
in a portfolio of Illinois municipal securities. Shares of the Fund are
offered at net asset value plus a maximum sales charge of 4.25% of the
offering price.
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investment security valuation - 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, ("Ranson") 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. Ranson may employ a matrix
system to determine valuations. The Fund follows industry practice and
records security transactions on the trade date.
The Fund concentrates its investments in a single state. This concentration
may result in the Fund investing a relatively high percentage of its assets
in a limited number of issuers.
Deferred organization costs - Costs incurred by the Fund in connection with
its organization will be amortized over a 60-month period on the straight-line
basis.
Federal and state income taxes - The Fund's policy is to comply with the
requirements of the Internal Revenue Code that are applicable to regulated
investment companies, and to distribute all of its net investment income and
any net realized gain on investments, to its shareholders. Therefore, no
provision for income taxes is required.
Distributions to shareholders - Dividends from net investment income, declared
daily and payable monthly, are reinvested in additional shares of the Fund at
net asset value or paid in cash. Capital gains, when available, are
distributed at least annually.
Investment income - Dividend income is recognized on the ex-dividend date and
interest income is recognized daily on an accrual basis. Premiums and
discounts on securities purchased are amortized using the effective interest
method over the life of the respective securities, unless callable, in
which case they are amortized to the earliest call date.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Note 3. CAPITAL SHARE TRANSACTIONS
As of January 30, 1998, there were unlimited shares of no par authorized;
11,881 shares were outstanding.
Transactions in capital shares were as follows:
Shares
----------------------------
For the Period Since
Inception (October 11, 1997)
Through January 30, 1998
----------------------------
Shares sold 11,876
Shares issued on reinvestment of dividends 5
Shares redeemed 0
----------------------------
Net increase 11,881
============================
Note 4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Ranson Capital Corporation, the Fund's investment adviser and underwriter,
ND Resources, Inc., the Fund's transfer and accounting services agent, and ND
Capital, Inc., the Fund's agent for the purchase of certain investment
securities, are subsidiaries of ND Holdings, Inc., the Fund's sponsor.
The Fund has engaged Ranson Capital Corporation to provide investment advisory
and management services to the Fund. The Investment Advisory Agreement
provides for fees to be computed at an annual rate of 0.50% of the Fund's
average daily net assets. Capital has elected to waive all Investment
advisory fees for the period ended January 30, 1998. Certain officers and
trustees of the Fund are also officers and directors of the investment
adviser.
The Fund has adopted a distribution plan (the Plan) pursuant to Rule 12b-1
under the 1940 Act, whereby the Fund shall pay to Ranson Capital Corporation,
(Capital), its principal underwriter, an annual fee for certain expenses
incurred by Capital in connection with the distribution of the Fund's shares.
The annual fee paid to Capital under the Plan is calculated daily and paid
monthly by the Fund at the annual rate of 0.25% of the average daily net
assets of the Fund. Capital has elected to waive all 12b-1 fees for the
period ended January 30, 1998. In addition, the Fund has engaged ND Capital,
Inc. as agent for the purchase of certain investment securities.
ND Resources, Inc., (the transfer agent), provides shareholder services for a
monthly fee equal to an annual rate of 0.16% of the Fund's first $10 million
of net assets, 0.13% of the Fund's net assets on the next $15 million, 0.11%
of the Fund's net assets on the next $15 million, 0.10% of the Fund's net
assets on the next $10 million, and 0.09% of the Fund's net assets in excess
of $50 million. ND Resources, Inc. also acts as the Fund's accounting
services agent for a monthly fee equal to the sum of a fixed fee of $2,000,
and a variable fee equal to 0.05% of the Fund's average daily net assets on an
annual basis for the Fund's first $50 million and at a lower rate on the
average daily net assets in excess of $50 million. ND Holdings, Inc. has
assumed all transfer agent and accounting service fees for the period ended
January 30, 1998.
Note 5. INVESTMENT SECURITY TRANSACTIONS
The cost of purchases and proceeds from the sales of investment securities
(excluding short-term securities) aggregated $146,331 and $10,100
respectively, for the period ended January 30, 1998.
Note 6. INVESTMENT IN SECURITIES
At January 30, 1998, the aggregate cost of securities for federal income
tax purposes was $136,022, and the net unrealized appreciation of investments
based on the cost was $2,551 which is comprised of $2,618 aggregate gross
unrealized appreciation and $67 aggregate gross unrealized depreciation.
<TABLE>
<CAPTION>
Financial Highlights Selected per share data and ratios for the period indicated
- --------------------------------------------------------------------------------
For the Period Since
Inception (October 11, 1997)
Through January 30, 1998
----------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.49
----------------------------
Income from Investment Operations:
Net Investment Income $ .10
Net realized and unrealized gain (loss) on investments .36
----------------------------
Total From Investment Operations $ .46
----------------------------
Less Distributions:
Dividends from net investment income $ (.10)
Distributions from net capital gains .00
----------------------------
Total Distributions $ (.10)
----------------------------
NET ASSET VALUE, END OF PERIOD $ 11.85
============================
Total Return 16.88%(A)(B)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $ 141
Ratio of net expenses (after expense assumption)
to average net assets 0.0%(B)(C)
Ratio of net investment income to average net assets 4.8%(B)
Portfolio turnover rate 12.09%
</TABLE>
(A) Excludes maximum sales charge of 4.25%.
(B) Ratio was annualized.
(C) During the period ended January 31, 1997, ND Holdings, Inc. assumed
expenses of $8,038. If the expenses had not been assumed, the
annualized ratio of total expenses to average net assets would have been
35.54%.
The accompanying notes are an integral part of these financial statements.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 01
<NAME> THE KANSAS MUNICIPAL FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-END> JAN-31-1998
<INVESTMENTS-AT-COST> 113,882,937
<INVESTMENTS-AT-VALUE> 121,165,358
<RECEIVABLES> 5,382,765
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 126,548,123
<PAYABLE-FOR-SECURITIES> 2,379,961
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 664,926
<TOTAL-LIABILITIES> 3,044,887
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 122,501,937
<SHARES-COMMON-STOCK> 10,071,898
<SHARES-COMMON-PRIOR> 10,321,705
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4,280,562)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,282,421
<NET-ASSETS> 123,503,236
<DIVIDEND-INCOME> 23,900
<INTEREST-INCOME> 3,700,397
<OTHER-INCOME> 0
<EXPENSES-NET> (598,055)
<NET-INVESTMENT-INCOME> 3,126,242
<REALIZED-GAINS-CURRENT> (2,000,560)
<APPREC-INCREASE-CURRENT> 348,761
<NET-CHANGE-FROM-OPS> 1,474,443
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,126,242)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 411,367
<NUMBER-OF-SHARES-REDEEMED> 837,878
<SHARES-REINVESTED> 176,704
<NET-CHANGE-IN-ASSETS> (4,698,218)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 314,766
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 601,596
<AVERAGE-NET-ASSETS> 125,815,637
<PER-SHARE-NAV-BEGIN> 12.42
<PER-SHARE-NII> .30
<PER-SHARE-GAIN-APPREC> (.16)
<PER-SHARE-DIVIDEND> (.30)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.26
<EXPENSE-RATIO> 0.95<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Ratio of net expenses to average net assets, annualized.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 02
<NAME> THE KANSAS INSURED INTERMEDIATE FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-END> JAN-31-1998
<INVESTMENTS-AT-COST> 22,289,225
<INVESTMENTS-AT-VALUE> 23,165,620
<RECEIVABLES> 428,078
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 23,593,698
<PAYABLE-FOR-SECURITIES> 851,520
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 108,505
<TOTAL-LIABILITIES> 960,025
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 22,618,068
<SHARES-COMMON-STOCK> 1,865,862
<SHARES-COMMON-PRIOR> 2,086,938
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (717,376)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 876,395
<NET-ASSETS> 22,633,673
<DIVIDEND-INCOME> 12,530
<INTEREST-INCOME> 598,920
<OTHER-INCOME> 0
<EXPENSES-NET> (99,784)
<NET-INVESTMENT-INCOME> 521,474
<REALIZED-GAINS-CURRENT> (143,415)
<APPREC-INCREASE-CURRENT> (80,524)
<NET-CHANGE-FROM-OPS> 297,535
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (521,474)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 27,202
<NUMBER-OF-SHARES-REDEEMED> 274,573
<SHARES-REINVESTED> 26,395
<NET-CHANGE-IN-ASSETS> (2,899,745)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 58,950
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 99,784
<AVERAGE-NET-ASSETS> 23,681,951
<PER-SHARE-NAV-BEGIN> 12.23
<PER-SHARE-NII> .27
<PER-SHARE-GAIN-APPREC> (.10)
<PER-SHARE-DIVIDEND> (.27)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.13
<EXPENSE-RATIO> 0.76<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Ratio of net expenses to average net assets, annualized.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 03
<NAME> THE NEBRASKA MUNICIPAL FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-END> JAN-31-1998
<INVESTMENTS-AT-COST> 25,943,711
<INVESTMENTS-AT-VALUE> 27,396,531
<RECEIVABLES> 447,319
<ASSETS-OTHER> 176,754
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 28,020,604
<PAYABLE-FOR-SECURITIES> 444,113
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 131,876
<TOTAL-LIABILITIES> 575,989
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 27,540,970
<SHARES-COMMON-STOCK> 2,442,744
<SHARES-COMMON-PRIOR> 2,468,032
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,128,524)<F1>
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,452,820
<NET-ASSETS> 27,444,615
<DIVIDEND-INCOME> 8,239
<INTEREST-INCOME> 780,803
<OTHER-INCOME> 0
<EXPENSES-NET> (85,850)
<NET-INVESTMENT-INCOME> 703,192
<REALIZED-GAINS-CURRENT> (420,651)
<APPREC-INCREASE-CURRENT> 349,094
<NET-CHANGE-FROM-OPS> 631,635
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (703,192)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 135,095
<NUMBER-OF-SHARES-REDEEMED> 202,117
<SHARES-REINVESTED> 41,734
<NET-CHANGE-IN-ASSETS> (356,939)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 69,239
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 159,069
<AVERAGE-NET-ASSETS> 27,624,519
<PER-SHARE-NAV-BEGIN> 11.26
<PER-SHARE-NII> .28
<PER-SHARE-GAIN-APPREC> (.02)
<PER-SHARE-DIVIDEND> (.28)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.24
<EXPENSE-RATIO> 0.62<F2>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Includes $322,399 of accumulated realized losses inherited from the
Heartland Nebraska Tax-Free Fund pursuant to the agreement and plan of
reorganization.
<F2>Ratio of net expenses to average net assets, annualized.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 04
<NAME> THE OKLAHOMA MUNICIPAL FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-END> JAN-31-1998
<INVESTMENTS-AT-COST> 11,758,922
<INVESTMENTS-AT-VALUE> 12,148,487
<RECEIVABLES> 249,145
<ASSETS-OTHER> 23,158
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 12,420,790
<PAYABLE-FOR-SECURITIES> 562,970
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 93,070
<TOTAL-LIABILITIES> 656,040
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 11,480,790
<SHARES-COMMON-STOCK> 985,987
<SHARES-COMMON-PRIOR> 555,618
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 389,565
<NET-ASSETS> 11,764,750
<DIVIDEND-INCOME> 6,232
<INTEREST-INCOME> 248,280
<OTHER-INCOME> 0
<EXPENSES-NET> (7,531)
<NET-INVESTMENT-INCOME> 246,981
<REALIZED-GAINS-CURRENT> (105,605)
<APPREC-INCREASE-CURRENT> 249,474
<NET-CHANGE-FROM-OPS> 390,850
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (246,981)
<DISTRIBUTIONS-OF-GAINS> (19,246)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 467,920
<NUMBER-OF-SHARES-REDEEMED> 48,620
<SHARES-REINVESTED> 11,069
<NET-CHANGE-IN-ASSETS> 5,174,075
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 23,418
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 69,503
<AVERAGE-NET-ASSETS> 9,652,774
<PER-SHARE-NAV-BEGIN> 11.86
<PER-SHARE-NII> .30
<PER-SHARE-GAIN-APPREC> .09
<PER-SHARE-DIVIDEND> (.30)
<PER-SHARE-DISTRIBUTIONS> (.02)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.93
<EXPENSE-RATIO> 0.16<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Ratio of net expenses to average net assets, annualized.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 05
<NAME> THE ILLINOIS MUNICIPAL FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-END> JAN-31-1998
<INVESTMENTS-AT-COST> 136,022
<INVESTMENTS-AT-VALUE> 138,573
<RECEIVABLES> 2,504
<ASSETS-OTHER> 35,750
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 177,715
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 36,945
<TOTAL-LIABILITIES> 36,945
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 138,360
<SHARES-COMMON-STOCK> 11,881
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,551
<NET-ASSETS> 140,771
<DIVIDEND-INCOME> 62
<INTEREST-INCOME> 1,021
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 1,083
<REALIZED-GAINS-CURRENT> (141)
<APPREC-INCREASE-CURRENT> 2,551
<NET-CHANGE-FROM-OPS> 3,493
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,083)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,876
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 5
<NET-CHANGE-IN-ASSETS> 140,770
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 110
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8,038
<AVERAGE-NET-ASSETS> 90,463
<PER-SHARE-NAV-BEGIN> 11.49
<PER-SHARE-NII> .10
<PER-SHARE-GAIN-APPREC> .36
<PER-SHARE-DIVIDEND> (.10)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.85
<EXPENSE-RATIO> 0.00<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Ratio of net expenses to average net assets, annualized.
</FN>
</TABLE>
