As filed with the Securities and Exchange Commission on November 30, 1999
1933 Act Registration No. 33-36324
1940 Act Registration No. 811-6153
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. -------- [ ]
Post-Effective Amendment No. 43 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 45
Ranson Managed Portfolios
(Exact Name of Registrant as Specified in Charter)
1 North Main, Minot, North Dakota 58703
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (701) 852-5292
with a copy to:
Robert E. Walstad Mark J. Kneedy
President Chapman and Cutler
Ranson Managed Portfolios 111 West Monroe Street
1 North Main Chicago, Illinois 60603
Minot, ND 58703
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
[X] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and contents:
The Facing Sheet
Part A-Prospectus for The Kansas Municipal Fund, The Kansas Insured
Intermediate Fund, The Nebraska Municipal Fund and The Oklahoma Municipal
Fund (the "Funds")
Part B-Statement of Additional Information for the Funds
Part C-Other Information
Signatures
Exhibits
Explanatory Note: This Registration Statement contains the Prospectus and
Statement of Additional Information for The Kansas Municipal Fund, The
Kansas Insured Intermediate Fund, The Nebraska Municipal Fund and The
Oklahoma Municipal Fund, each a series of the Ranson Managed Portfolios,
a registered investment company.
November 30, 1999
RANSON
MANAGED PORTFOLIOS
[Logo]
THE KANSAS MUNICIPAL FUND
THE KANSAS INSURED INTERMEDIATE FUND
THE NEBRASKA MUNICIPAL FUND
THE OKLAHOMA MUNICIPAL FUND
PROSPECTUS
- -----------------------------------------------------------------------------
This prospectus is intended to provide important information to help you
evaluate whether one of the Ranson Managed Portfolios listed above may be
right for you. Please read it carefully before investing and keep it for
future reference. To learn more about how the Ranson Managed Portfolios can
help you achieve your financial goals, call us at (800) 276-1262.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
PAGE
The Kansas Municipal Fund 3
Fund Summary 3
How the Fund Has Performed 4
What Are the Fund's Expenses? 5
The Kansas Insured Intermediate Fund 7
Fund Summary 7
How the Fund Has Performed 8
What Are the Fund's Expenses? 9
The Nebraska Municipal Fund 11
Fund Summary 11
How the Fund Has Performed 12
What Are the Fund's Expenses? 13
The Oklahoma Municipal Fund 15
Fund Summary 15
How the Fund Has Performed 16
What Are the Fund's Expenses? 17
Fund Management 19
Principal Investment Strategies 20
How We Select Investments 22
Risk Management 22
Non-Principal Investment Strategies 23
Principal Risk Factors 23
The Shares We Offer 25
How To Reduce Your Sales Charge 25
How to Buy Shares 26
Systematic Investing-the Preauthorized Investment Program 27
Special Services 27
How To Sell Shares 28
Systematic Withdrawal Program 29
Distributions and Taxes 29
Shareholder Services Plan 30
Net Asset Value 30
Fund Service Providers 31
Shareholders Inquiries 31
Financial Highlights 32
Appendix-Additional State Information A-1
-2-
THE KANSAS MUNICIPAL FUND
FUND SUMMARY
INVESTMENT OBJECTIVE
The fund seeks to provide its shareholders with as high a level of current
income that is exempt from both federal and Kansas income tax as is consistent
with preservation of capital.
PRINCIPAL STRATEGIES: HOW THE FUND PURSUES ITS OBJECTIVE
The fund purchases primarily Kansas municipal securities that are rated
investment grade at the time of purchase by independent ratings agencies.
The fund may buy non-rated municipal securities if the fund's investment
adviser judges them to be of comparable quality. The fund is non-
diversified and may invest more of its assets in a single issuer than a
diversified fund. The expected average dollar weighted maturity of the
fund's portfolio is between 10 and 25 years.
The fund's investment adviser uses a value-oriented strategy and looks for
higher-yielding municipal securities that offer the potential for above-
average return. To assess a municipal security's value, the adviser
considers the security's yield, price, credit quality and future prospects.
The fund may also invest in financial futures and related options for hedging
purposes.
PRINCIPAL RISKS: WHAT ARE THE RISKS OF INVESTING IN THE FUND?
The principal risks of investing in the fund are interest rate and credit risk.
Interest rate risk is the risk that interest rates will rise causing the
prices of municipal securities to fall. The longer the average maturity of a
fund's portfolio, the greater its interest rate risk. Credit risk is the risk
that an issuer of a municipal security will be unable to make interest and
principal payments. In general, lower rated bonds carry greater credit risk.
These may have speculative characteristics and changes in economic conditions
or other circumstances are more likely to lead to a weakened capacity to
make principal and interest payments than is the case with higher grade
securities.
Because the fund is non-diversified and invests primarily in Kansas municipal
securities, the fund is particularly susceptible to any economic, political
or regulatory developments affecting a particular issuer or issuers of Kansas
municipal securities in which the fund invests.
Because the fund uses hedging strategies, the fund also bears the risk that
the price movements of the futures and options will not correlate with the
price movements of the portfolio securities being hedged.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. You should be aware that loss of money is a
risk of investing.
IS THIS FUND RIGHT FOR YOU?
The fund may be a suitable investment for you if you seek to:
* Earn regular monthly tax-free dividends;
* Preserve investment capital over time;
* Reduce taxes on investment income;
* Set aside money systematically for retirement, estate planning
or college funding.
You should not invest in this fund if you seek to:
* Pursue an aggressive, high-growth investment strategy;
* Invest through an IRA or 401(k) plan;
* Avoid fluctuations in share price;
* Avoid alternative minimum tax.
-3-
THE KANSAS MUNICIPAL FUND
HOW THE FUND HAS PERFORMED
The chart and table below provide some indication of the risk of investing
in the fund by showing performance changes year to year and how average annual
returns over one, five-year and the life of the fund compare with those of a
broad measure of market performance. Past performance is not an indication of
future performance.
ANNUAL TOTAL RETURNS (AS OF 12/31 EACH YEAR)
[bar graph]
1991 9.05%
1992 10.13%
1993 12.53%
1994 -6.30%
1995 15.70%
1996 2.95%
1997 5.10%
1998 4.02%
For the periods shown, the highest and lowest quarterly returns were 6.70%
and -3.85% for the quarters ending 3/31/95 and 3/31/94. The bar chart and
highest/lowest quarterly returns do not reflect sales charges, which would
reduce returns, while the average annual return table does.
Average Annual Total Returns
for the Periods Ending December 31, 1998
1 Year 5 Year Inception(1)
- ------------------------------------------------------------------------------
Fund -0.40% 3.16% 5.93%
LB Market Benchmark(2) 6.48% 6.22% 8.07%
[FN]
(1) The inception period is from November 15, 1990 to December 31, 1998.
The year-to-date return as of 9/30/99 was -3.26%.
(2) LB Market Benchmark returns reflect the performance of the Lehman Brothers
Municipal Bond Index, an unmanaged index comprised of a broad range of
investment grade municipal bonds.
</FN>
-4-
THE KANSAS MUNICIPAL FUND
WHAT ARE THE FUND'S EXPENSES?
This table describes the fees and expenses that you may pay if you buy and
hold shares of the fund.
----------------------------------------------------
SHAREHOLDER FEES (fees paid directly from your investment)(1)
Maximum Sales Charge (Load) Imposed on Purchases(2) 4.25%
(as a percentage of offering price)
Maximum Deferred Sales Charge (Load) None
Maximum sales charge (Load) Imposed on Reinvested Dividends None
Redemption Fees None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
Management Fees 0.50%
Distribution and Service (12b-1) Fees(3) 0.25%
Other Expenses 0.22%
------
Total Annual Fund Operating Expenses(4) 0.97%
[FN]
(1) Authorized Dealers and other firms may change additional fees for
shareholder transactions or for advisory services. Please see their
materials for details.
(2) Reduce sales charges apply to purchase of $50,000 or more. See "The
Shares Offer."
(3) Because the fund pays 12b-1 fees, long-term shareholders may pay more
in distribution expenses than the economic equivalent of the maximum
front-end sales charges permitted by the NASD.
(4) Under the terms of the advisory agreement, the investment adviser has
agreed to pay the expenses of the fund (excluding taxes and brokerage
fees and commissions, if any) that exceed 1.25% of the fund's average
daily net assets on an annual basis up to the amount of the investment
advisory and management fee. The investment adviser and underwriter may
also voluntarily waive fees or reimburse expenses not required under
the advisory contract from time to time. Accordingly, after fee
waivers and expense reimbursements, the fund's actual total annual
operating expenses were 0.95% for the fiscal year ended July 30, 1999.
</FN>
-5-
THE KANSAS MUNICIPAL FUND
EXAMPLE:
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
This example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods.
The example also assumes that your investment has a 5% return each year and
that the fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
----------------------------------------------------
$520 $721 $938 $1,564
-6-
THE KANSAS INSURED INTERMEDIATE FUND
FUND SUMMARY
INVESTMENT OBJECTIVE
The fund seeks to provide its shareholders with as high a level of current
income that is exempt from both federal income tax and Kansas income tax as
is consistent with preservation of capital.
PRINCIPAL STRATEGIES: HOW THE FUND PURSUES ITS OBJECTIVE
The fund purchases primarily Kansas municipal securities that are rated
investment grade (Aaa/AAA) at the time of purchase by independent ratings
agencies. The fund purchases primarily insured municipal securities. The
fund may also invest up to 15% of its total assets in municipal securities
backed by an escrow or trust account that contains sufficient U.S. Government-
backed securities to assure timely payment of interest and principal. The
fund is non-diversified and may invest more of its assets in a single issuer
than a diversified fund. Under normal market conditions, the expected average
dollar weighted maturity of the fund's portfolio is between 3 and 10 years.
The fund's investment adviser uses a value-oriented strategy and looks for
higher-yielding municipal securities that offer the potential for above-
average return. To assess a municipal security's value, the adviser
considers the security's yield, price, credit quality and future prospects.
The fund may also invest in financial futures and related options for hedging
purposes.
PRINCIPAL RISKS: WHAT ARE THE RISKS OF INVESTING IN THE FUND?
The principal risks of investing in the fund are interest rate and credit risk.
Interest rate risk is the risk that interest rates will rise causing the
prices of municipal securities to fall. The longer the average maturity of a
fund's portfolio, the greater its interest rate risk. Credit risk is the risk
that an issuer of a municipal security will be unable to make interest and
principal payments. In general, lower rated bonds carry greater credit risk.
These may have speculative characteristics and changes in economic conditions
or other circumstances are more likely to lead to a weakened capacity to make
principal and interest payments than is the case with higher grade securities.
Because the fund is non-diversified and invests primarily in Kansas municipal
securities, the fund is particularly susceptible to any economic, political
or regulatory developments affecting a particular issuer or issuers of Kansas
municipal securities in which the fund invests.
Because the fund uses hedging strategies, the fund also bears the risk that
the price movements of the futures and options will not correlate with the
price movements of the portfolio securities being hedged.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. You should be aware that loss of money is a risk of
investing.
IS THIS FUND RIGHT FOR YOU?
The fund may be a suitable investment for you if you seek to:
* Earn regular monthly tax-free dividends;
* Preserve investment capital over time;
* Reduce taxes on investment income;
* Set aside money systematically for retirement, estate planning
or college funding;
* Prefer insured securities to uninsured securities which may
provide a higher income.
You should not invest in this fund if you seek to:
* Pursue an aggressive, high-growth investment strategy;
* Invest through an IRA or 401(k) plan;
* Avoid fluctuations in share price;
* Avoid alternative minimum tax.
-7-
KANSAS INSURED INTERMEDIATE FUND
HOW THE FUND HAS PERFORMED
The chart and table below provide some indication of the risk of investing
in the fund by showing performance changes year to year and how average annual
returns over one, five-year and the life of the fund compare with those of a
broad measure of market performance. Past performance is not an indication of
future performance.
ANNUAL TOTAL RETURNS (AS OF 12/31 EACH YEAR)
[bar graph]
1993 13.78%
1994 -5.29%
1995 13.36%
1996 3.25%
1997 3.18%
1998 4.68%
For the periods shown, the highest and lowest quarterly returns were 4.81%
and -3.85% for the quarters ending 3/31/95 and 3/31/94. The bar chart and
highest/lowest quarterly returns do not reflect sales charges, which would
reduce returns, while the average annual return table does.
Average Annual Total Returns
for the Periods Ending December 31, 1998
1 Year 5 Year Inception(1)
- ------------------------------------------------------------------------------
Fund 1.81% 3.09% 4.71%
LB Market Benchmark(2) 6.23% 5.79% 6.58%
[FN]
(1) The inception period is from November 23, 1992 to December 31, 1998.
The year-to-date return as of 9/30/99 was -1.46%.
(2) LB Market Benchmark returns reflect the performance of the Lehman Brothers
7 Year Municipal Bond Index, an unmanaged index comprised of a broad range
of investment grade municipal bonds.
</FN>
-8-
THE KANSAS INSURED INTERMEDIATE FUND
WHAT ARE THE FUND'S EXPENSES?
This table describes the fees and expenses that you may pay if you buy and
hold shares of the fund.
-----------------------------------------------
SHAREHOLDER FEES (fees paid directly from your investment) (1)
Maximum Sales Charge (Load) Imposed on Purchases(2) 2.75%
(as a percentage of offering price)
Maximum Deferred Sales Charge (Load) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends None
Redemption Fees None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
Management Fees 0.50%
Other Expenses 0.39%
-------
Total Annual Fund Operating Expenses(3) 0.89%
[FN]
(1) Authorized Dealers and other firms may charge additional fees for
shareholders transactions or for advisory services. Please see their
materials for details.
(2) Reduced sales charges apply to purchases of $50,000 or more. See "The
Shares We Offer."
(3) Under the terms of the advisory agreement, the investment adviser has
agreed to pay the expenses of the fund (excluding taxes and brokerage
fees and commissions, if any) that exceed .75% of the fund's average
daily net assets on an annual basis. The investment adviser may also
voluntarily waive fees or reimburse expenses not required under the
advisory contract from time to time. Accordingly, after fee waivers and
expense reimbursements, the fund's actual total annual operating
expenses were 0.75% for the fiscal year ended July 30, 1999.
</FN>
-9-
THE KANSAS INSURED INTERMEDIATE FUND
EXAMPLE:
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
This example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that
the fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
-----------------------------------------------------
$362 $548 $749 $1,330
-10-
THE NEBRASKA MUNICIPAL FUND
FUND SUMMARY
INVESTMENT OBJECTIVE
The fund seeks to provide its shareholders with as high a level of current
income exempt from both federal and Nebraska income tax as is consistent with
preservation of capital.
PRINCIPAL STRATEGIES: HOW THE FUND PURSUES ITS OBJECTIVE
The fund purchases primarily Nebraska municipal securities that are rated
investment grade at the time of purchase by independent ratings agencies.
The fund may buy non-rated municipal securities if the fund's investment
adviser judges them to be of comparable quality. The fund is non-diversified
and may invest more of its assets in a single issuer than a diversified
fund. Under normal market conditions, the fund's assets will be invested in
a portfolio of Nebraska municipal securities which the adviser believes will
produce a higher level of current income than a portfolio of Nebraska municipal
securities with the highest rating, but that do not present significant
credit risk. The expected average dollar weighted maturity of the fund's
portfolio is between 10 and 25 years.
The fund's investment adviser uses a value-oriented strategy and looks for
higher-yielding municipal securities that offer the potential for above-
average return. To assess a municipal security's value, the adviser
considers the security's yield, price, credit quality and future prospects.
The fund may also invest in financial futures and related options for hedging
purposes.
PRINCIPAL RISKS: WHAT ARE THE RISKS OF INVESTING IN THE FUND?
The principal risks of investing in the fund are interest rate and credit
risk. Interest rate risk is the risk that interest rates will rise causing
the prices of municipal securities to fall. The longer the average maturity
of a fund's portfolio, the greater its interest rate risk. Credit risk is
the risk that an issuer of a municipal security will be unable to make
interest and principal payments. In general, lower rated bonds carry greater
credit risk. These may have speculative characteristics and changes in
economic conditions or other circumstances are more likely to lead to a
weakened capacity to make principal and interest payments than is the case
with higher grade securities.
Because the fund is non-diversified and invests primarily in Nebraska
municipal securities, the fund is particularly susceptible to any economic,
political or regulatory developments affecting a particular issuer or issuers
of Nebraska municipal securities in which the fund invests.
Because the fund uses hedging strategies, the fund also bears the risk that
the price movements of the futures and options will not correlate with the
price movements of the portfolio securities being hedged.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. You should be aware that loss of money is a risk of
investing.
IS THIS FUND RIGHT FOR YOU?
The fund may be a suitable investment for you if you seek to:
* Earn regular monthly tax-free dividends;
* Preserve investment capital over time;
* Reduce taxes on investment income;
* Set aside money systematically for retirement, estate planning
or college funding.
You should not invest in this fund if you seek to:
* Pursue an aggressive, high-growth investment strategy;
* Invest through an IRA or 401(k) plan;
* Avoid fluctuations in share price;
* Avoid alternative minimum tax.
-11-
THE NEBRASKA MUNICIPAL FUND
HOW THE FUND HAS PERFORMED
The chart and table below provide some indication of the risk of investing
in the fund by showing performance changes year to year and how average
annual returns over one, five-year and the life of the fund compare with those
of a broad measure of market performance. Past performance is not an
indication of future performance.
ANNUAL TOTAL RETURNS (AS OF 12/31 EACH YEAR)
[bar graph]
1994 -4.90%
1995 17.02%
1996 2.48%
1997 6.37%
1998 5.15%
For the periods shown, the highest and lowest quarterly returns were 7.74%
and -4.95% for the quarters ending 3/31/95 and 3/31/94.
The bar chart and highest/lowest quarterly returns do not reflect sales
charges, which would reduce returns, while the average annual return
table does.
Average Annual Total Returns
for the Periods Ending December 31, 1998
1 Year 5 Year Inception(1)
- ------------------------------------------------------------------------------
Fund 0.68% 3.86% 3.98%
LB Market Benchmark(2) 6.48% 6.22% 6.42%
[FN]
(1) The inception period is from November 17, 1993 to December 31, 1998.
The year-to-date return as of 9/30/99 was -4.22%.
(2) LB Market Benchmark returns reflect the performance of the Lehman Brothers
Municipal Bond Index, an unmanaged index comprised of a broad range of
investment grade municipal bonds.
</FN>
-12-
THE NEBRASKA MUNICIPAL FUND
WHAT ARE THE FUND'S EXPENSES?
This table describes the fees and expenses that you may pay if you buy and
hold shares of the fund.
Shareholder Fees (fees paid directly from your investment) (1)
Maximum Sales Charge (Load) Imposed on Purchases(2) 4.25%
(as a percentage of the offering price)
Maximum Deferred Sales Charge (Load) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends None
Redemption Fees None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
Management Fees 0.50%
Distribution and Service (12b-1) Fees(3) 0.25%
Other Expenses 0.35%
------
Total Annual Fund Operating Expenses(4) 1.10%
- -------------------------
[FN]
(1) Authorized Dealers and other firms may charge additional fees for
shareholder transactions or for advisory services. Please see their
materials for details.
(2) Reduced sales charges apply to purchases of $50,000 or more. See "The
Shares We Offer."
(3) Because the fund pays 12b-1 fees, long-term shareholders may pay more
in distribution expenses than the economic equivalent of the maximum
front-end sales charges permitted by the NASD.
(4) The investment adviser and underwriter has agreed to waive fees through
May 24, 2001 in order to prevent Total Operating Expenses from exceeding
85% of the average daily net asset value of fund shares. In addition,
under the terms of the advisory contract, the investment adviser has
agreed to pay the expenses of the fund (excluding taxes and brokerage fees
and commission, if any) that exceed 1.25% of the fund's average daily net
assets on an annual basis up to the amount of the investment advisory and
management fee. The investment adviser and underwriter may also voluntary
waive fees or reimburse expenses not required by these agreement from time
to time. Accordingly, after fee waivers and expense reimbursements, the
fund's total annual operating expenses were 0.70% for the fiscal year
ended July 30, 1999.
</FN>
-13-
THE NEBRASKA MUNICIPAL FUND
EXAMPLE:
This example is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds.
This example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that
the fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------
$532 $760 $1,005 $1,708
-14-
THE OKLAHOMA MUNICIPAL FUND
FUND SUMMARY
INVESTMENT OBJECTIVE
The fund seeks to provide its shareholders as high a level of current income
exempt from both federal income tax and, to the extent indicated, Oklahoma
income tax as is consistent with preservation of capital.
PRINCIPAL STRATEGIES: HOW THE FUND PURSUES ITS OBJECTIVE
The fund purchases primarily Oklahoma municipal securities that are rated
investment grade at the time of purchase by independent ratings agencies.
The fund may buy non-rated municipal bonds if the fund's investment
adviser judges them to be of comparable quality. The fund may invest up to
30% of its assets in Oklahoma municipal securities which are subject to
Oklahoma income tax. The fund is non-diversified and may invest more of its
assets in a single issuer than a diversified fund. Under normal market
conditions, the fund's assets will be invested in a portfolio of Oklahoma
municipal securities which the adviser believes will produce a higher level
of current income than a portfolio of Oklahoma municipal securities with the
highest rating, but that do not possess significant credit risk. The expected
average dollar weighted maturity of the fund's portfolio is between
10 and 25 years.
The fund's investment adviser uses a value-oriented strategy and looks for
higher-yielding municipal securities that offer the potential for above-
average return. To assess a security's value, the adviser considers the
bond's yield, price, credit quality and future prospects.
The fund may also invest in futures and options on futures for hedging
purposes.
PRINCIPAL RISKS: WHAT ARE THE RISKS OF INVESTING IN THE FUND?
The principal risks of investing in the fund are interest rate and credit
risk. Interest rate risk is the risk that interest rates will rise
causing the prices of municipal securities to fall. The longer the average
maturity of a fund's portfolio, the greater its interest rate risk. Credit
risk is the risk that an issuer of a municipal security will be unable to make
interest and principal payments. In general, lower rated municipal securities
carry greater credit risk. These may have speculative characteristics and
changes in economic conditions or other circumstances are more likely to lead
to a weakened capacity to make principal and interest payments than is the case
with higher grade securities.
Because the fund is non-diversified and invests primarily in Oklahoma
municipal securities, the fund is particularly susceptible to any economic,
political or regulatory developments affecting a particular issuer or issuers
of Oklahoma municipal securities in which the fund invests.
Because the fund uses hedging strategies, the fund also bears the risk that
the price movements of the futures and options will not correlate with the
price movements of the portfolio securities being hedged.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. You should be aware that loss of money is a risk of
investing.
IS THIS FUND RIGHT FOR YOU?
The fund may be a suitable investment for you if you seek to:
* Earn regular monthly tax-free dividends;
* Preserve investment capital over time;
* Reduce taxes on investment income;
* Set aside money systematically for retirement, estate planning
or college funding.
You should not invest in this fund if you seek to:
* Pursue an aggressive, high-growth investment strategy;
* Invest through an IRA or 401(k) plan;
* Avoid fluctuations in share price;
* Avoid alternative minimum tax.
-15-
THE OKLAHOMA MUNICIPAL FUND
HOW THE FUND HAS PERFORMED
The chart and table below provide some indication of the risk of investing
in the fund by showing performance changes year to year and how average
annual returns over one year and the life of the fund compare with those
of a broad measure of market performance. Past performance is not an
indication of future performance.
ANNUAL TOTAL RETURNS (AS OF 12/31 EACH YEAR)
[bar graph]
1997 8.02%
1998 4.84%
For the periods shown, the highest and lowest quarterly returns were 3.56%
and -1.23%, for the quarters ending 6/30/97 and 3/31/97. The bar chart and
highest/lowest quarterly returns do not reflect sales charges, which would
reduce returns, while the average annual return table does.
Average Annual Total Returns
for the Periods Ending December 31, 1998
1 Year Inception(1)
- ------------------------------------------------------------------------------
Fund 0.38% 4.68%
LB Market Benchmark(2) 6.48% 8.40%
[FN]
(1) The inception period is from September 25,1996 to December 31, 1998.
The year-to-date return as of 9/30/99 was -4.48%.
(2) LB Market Benchmark returns reflect the performance of the Lehman Brothers
Municipal Bond Index, an unmanaged index comprised of a broad range of
investment grade municipal bonds.
</FN>
-16-
THE OKLAHOMA MUNICIPAL FUND
WHAT ARE THE FUND'S EXPENSES?
This table describes the fees and expenses that you may pay if you buy and
hold shares of the fund.
SHAREHOLDER FEES (fees paid directly from your investment)(1)
Maximum Sales Charge (Load) Imposed on Purchases(2) 4.25%
(as a percentage of offering price)
Maximum Deferred Sales Charge (Load) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends None
Redemption Fees None
Exchange Fee None
Annual Fund Operating Expenses (expenses that are deducted from fund assets)
Management Fees 0.50%
Distribution and Service (12b-1) Fees(3) 0.25%
Other Expenses 0.48%
------
Total Annual Fund Operating Expenses(4) 1.23%
- -----------------------------
[FN]
(1) Authorized Dealers and other firms may charge additional fees for
shareholder transactions or for advisory services.
(2) Reduced sales charge apply to purchases of $50,000 or more. See "The
Shares We Offer."
(3) Because the fund pays 12b-1 fees, long-term shareholders may pay more
in distribution expenses than the economic equivalent of the maximum
front-end sales charges permitted by the NASD.
(4) Under the terms of the advisory agreement, the investment adviser has
agreed to pay all expenses of the fund (excluding taxes and brokerage
fees and commissions, if any) that exceed 1.25% of the fund's average
daily net assets on an annual basis up to the amount of the advisory and
management fee. The investment adviser and underwriter may also
voluntarily waive fees and reimburse expenses not required under the
advisory contract from time to time. Accordingly, after fee waivers and
expense reimbursements, the fund's total annual operating expenses was
0.36% for the fiscal year ended July 30, 1999.
</FN>
-17-
THE OKLAHOMA MUNICIPAL FUND
EXAMPLE:
This example is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds.
This example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods.
The example also assumes that your investment has a 5% return each year and
that the fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
1 Years 3 Years 5 Years 10 Years
-------------------------------------------------
$542 $790 $1,057 $1,818
-18-
FUND MANAGEMENT
The overall management of the business and affairs of the funds is the
responsibility of the funds' Board of Trustees. Ranson Capital Corporation
("Ranson"), 1 North Main, Minot, North Dakota 58703, is the investment adviser
to the funds. Ranson has been advising mutual funds since 1989 and currently
has assets under management of approximately $194 million. Ranson is
responsible for selecting and ongoing monitoring of the securities in each
fund's portfolio, performing certain evaluations of the fund's portfolio
securities, managing the funds' business affairs and providing certain
administrative services, office space, equipment and clerical services for
managing the funds' investments and effecting their portfolio transactions.
Ranson also pays the salaries and fees of all officers and trustees of the
funds who are affiliated persons of Ranson.
Ranson determines the portfolio management strategy of the funds under the
general supervision and direction of Robert E. Walstad, President of the
funds and Ranson. Monte L. Avery, Chief Portfolio Strategist, and W. Dan
Korgel are the portfolio managers for the funds and are primarily responsible
for the day-to-day management of each fund's portfolio, including credit
analysis and the execution of portfolio transactions. Mr. Walstad started
in the securities business with Paine Webber as a retail broker in 1972. In
1977, he became branch manager with Dean Witter Reynolds and spent ten years
in that capacity. In 1987, Mr. Walstad founded ND Holdings Inc. ("ND
Holdings"), which owns Ranson, the funds' investment adviser and underwriter
as of 1996. Since January 5, 1996, Mr. Walstad has been President of Ranson
and of the funds, directing their management. ND Holdings is also the
sponsor of Integrity Mutual Funds, which currently offers four open-end
funds. Mr. Walstad is also the President of the Integrity Mutual Funds, their
investment adviser, ND Money Management, Inc., and their underwriter, ND
Capital, Inc. Mr. Walstad has supervised and directed the management of the
portfolios of these funds since they commenced operations with the first fund
being offered in 1989.
Mr. Avery started in the securities business with PaineWebber in 1981 as a
retail broker transferring to Dean Witter in 1982. In 1988, Mr. Avery joined
Bremer Bank, N.A. (Minot, ND) to help start their Invest Center. He
transferred back to Dean Witter in 1993 until joining ND Holdings in 1995.
Since 1995, Mr. Avery has been a co-manager of Integrity Mutual
Funds. Mr. Avery is also responsible for the daily pricing of the Integrity
Mutual Funds as well as their portfolio tradings. He is also portfolio
manager for Integrity Fund of Funds, Inc. since January 1996. Mr. Korgel
was employed in the trust banking business for 12 years prior to joining ND
Holdings in 1988. Mr. Korgel was head of investments and operations for the
trust department of Bremer Bank, N.A. (Minot, ND) for two years. In addition
to being a co-manager of the Integrity Mutual Funds, Mr. Korgel is
Corporate Treasurer of ND Holdings. All portfolio management decisions are
subject to periodic review by Mr. Walstad and to quarterly review by the Board
of Trustees.
For providing management services, Ranson is paid an annual fund management
fee by each fund of 0.50% of the fund's average daily net assets, payable
monthly.
For the most recent fiscal year, the funds paid, after expense reimbursements,
the following management fees to Ranson, as a percentage of average net assets:
The Kansas Municipal Fund--------------------------------------.50%
The Kansas Insured Intermediate Fund---------------------------.36%
The Nebraska Municipal Fund------------------------------------.35%
The Oklahoma Municipal Fund------------------------------------.03%
Under the terms of the advisory agreement of the Kansas Municipal Fund,
The Nebraska Municipal Fund and The Oklahoma Municipal Fund, Ranson has
agreed to pay all expenses of the respective fund, including the fund's
management and investment advisory fee and the fund's disbursing,
administrative and accounting services fee (but excluding taxes and brokerage
fees and commissions, if any) that exceed 1.25% of the fund's average daily
net assets on an annual basis up to the amount of Ranson's advisory and
management fee. Similarly, under the terms of the advisory agreement of
The Kansas Insured Intermediate Fund, Ranson has agreed to pay the expenses
of such fund (excluding taxes and brokerage fees and commissions, if any)
that exceed .75% of the fund's average daily net assets on an annual basis.
Each fund pays all of its other expenses. These expenses include custodial,
transfer agent, accounting and legal fees; brokerage fees and commissions, if
any; service fees; expenses of redemption of shares; insurance premiums;
expenses of preparing prospectus and reports to shareholders; interest;
bookkeeping; fees for disinterested trustees; taxes; fees for registering fund
shares and extraordinary expenses. Ranson may assume additional fund expenses
or waiver portions of its fee in its discretion. See the Statement of
Additional Information for an additional discussion of fund expenses.
-19-
PRINCIPAL INVESTMENT STRATEGIES
SECURITIES THE FUNDS INVEST IN
The funds' investment policies, unless otherwise noted, may be changed by
the funds' Board of Trustees without shareholder approval.
MUNICIPAL OBLIGATIONS
Each fund seeks, under normal market conditions, to invest all of its assets
in municipal securities of its respective state. Municipal securities include
debt obligations (such as bonds, notes, commercial paper and lease
obligations) issued by the respective state and its political subdivisions,
municipalities, agencies and authorities and U.S. territories and possessions.
States, local governments and municipalities issue municipal securities to
raise money for various public purposes such as building public facilities,
refinancing outstanding obligations and financing general operating
expenses. These securities include general obligation bonds, which are
backed by the full faith and credit of the issuer and may be repaid from
any revenue source and revenue bonds, which may be repaid only from the
revenue of a specific facility or source.
The funds may purchase municipal securities that represent lease obligations.
These carry special risks because the issuer of the securities may not be
obligated to appropriate money annually to make payments under the lease.
In order to reduce this risk, each fund will not invest more than 10% (15%
in the case of The Nebraska Municipal Fund) in lease obligations. Each fund
will also only purchase lease obligations which are rated in the top rating
category by independent rating agencies.
Each fund may also invest in municipal bonds of U.S. territories and
possessions (such as Puerto Rico, the U.S. Virgin Islands and Guam) which are
exempt from regular federal income taxes. The Kansas Insured
Intermediate Fund and The Nebraska Municipal Fund may not invest more than
15%, and The Oklahoma Municipal Fund may not invest more than 30% of their
respective total assets in these territorial municipal securities.
Each fund (other than The Kansas Insured Intermediate Fund) has adopted a
fundamental policy that, under normal market conditions, at least 80% of the
fund's assets (70% for The Oklahoma Municipal Fund) will be invested in
municipal securities that pay interest exempt from both federal and the
relevant state's income taxes. The Oklahoma Municipal Fund will also, as a
matter of fundamental policy, invest at least 80% of its assets in Oklahoma
municipal securities that pay interest exempt from federal income tax. These
fundamental policies may not be changed without shareholder approval. The
Oklahoma Fund, however, may invest up to 30% of its total assets in Oklahoma
municipal securities that pay interest subject to Oklahoma income tax.
-20-
RATING REQUIREMENTS FOR THE KANSAS MUNICIPAL FUND,
THE NEBRASKA MUNICIPAL FUND AND THE OKLAHOMA MUNICIPAL FUND
The Kansas Municipal Fund, The Nebraska Municipal Fund and The Oklahoma
Municipal Fund invest in municipal securities that are rated investment grade
at the time of purchase by Moody's Investor Service, Inc. ("Moody's") or by
Standard & Poor's Corporation ("S&P") or are unrated but judged to be of
comparable quality by the funds' investment adviser. The rated municipal
securities will fall within the following grades:
* for bonds - Aaa, Aa, A and Baa (Moody's) or AAA, AA, A and BBB
(S&P)
* for notes - M1G-1 and M1G-2 (Moody's) or SP-1 and SP-2 (S&P)
* for commercial paper - Prime-1 and Prime-2 (Moody's) or A-1
and A-2 (S&P)
If subsequent to the purchase of a municipal security, the ratings on such
securities are reduced, a fund will not be required to dispose of the
securities. In addition, The Kansas Municipal Fund, The Nebraska Municipal
Fund and The Oklahoma Municipal Fund will not invest more than 30% of their
assets in unrated municipal securities. This is a fundamental policy which
may not be changed without shareholder approval.
RATING AND INSURANCE REQUIREMENTS - THE KANSAS INSURED INTERMEDIATE FUND
The Kansas Insured Intermediate Fund primarily purchases insured municipal
securities. Under normal market conditions, The Kansas Insured Intermediate
Fund will invest at least 95% of its total assets in Kansas municipal
securities which are either covered by insurance guaranteeing the timely
payment of principal and interest on these securities or are backed by an
escrow or trust account that contains sufficient U.S. government or U.S.
government agency securities to ensure timely payment of interest and
principal. This is a fundamental policy that may not be changed without
shareholder approval. Each insured municipal security will be covered by
insurance applicable to the specific security which may have been obtained
either at the time of issuance or subsequently. Insurance guarantees only
the timely payment of interest and principal on the bonds; it does not
guarantee the value of either individual bonds or fund shares.
The fund will only purchase insured Kansas municipal securities the insurers
of which have total assets of at least $75 million, capital and surplus of at
least $50 million and whose claims-paying ability is rated: "Aaa" by
Moody's, or "AAA" by S&P, Fitch IBCA, Inc., or Duff & Phelps at the time of
purchase. The Kansas municipal securities covered by the insurance will be
rated "Aaa" or "AAA" because of the claims-paying rating of the insurer. The
security's rating may be lower if the rating were based primarily on the
credit quality of the issuer without regard to the insurance. There is no
percentage limitation on the percentage of the fund's assets that may be
invested in Kansas municipals securities insured by any given insurer.
If subsequent to the purchase of an insured municipal security the rating on
the claims-paying ability of the insurer or the municipal security is
reduced, the fund is not required to dispose of the security.
The Kansas Insured Intermediate Fund may only invest up to 15% of its total
assets in Kansas municipal securities (rated Aaa/AAA) that are backed by an
escrow or trust account containing sufficient U.S. Government or U.S.
Government agency securities to ensure timely payment of principal and
interest. These securities are generally uninsured and are normally regarded
as having the credit characteristics of the underlying U.S. Government-backed
securities.
ALTERNATIVE MINIMUM TAX
Each fund may invest up to 100% of its assets in municipal securities that
pay interest subject to the alternative minimum tax ("AMT"). Shares of a fund,
therefore, would not ordinarily be suitable for investors subject to AMT.
PORTFOLIO MATURITY
Each fund buys municipal bonds with different maturities in pursuit of its
investment objective but expects under normal market conditions, an
investment portfolio with an average dollar weighted maturity of 10 to 25
years (3 to 10 years with respect to The Kansas Insured Intermediate Fund).
-21-
HOW WE SELECT INVESTMENTS
Ranson selects municipal obligations for the funds based upon its assessment
of a bond's relative value in terms of current yield, price, credit quality
and future prospects. Ranson reviews municipal securities available for
purchase, monitors the continued creditworthiness of each fund's municipal
investments, and analyzes economic, political, and demographic trends
affecting the municipal markets. Based on our analysis of this research,
we select those municipal obligations that we believe represent the most
attractive values.
PORTFOLIO TURNOVER
A fund buys and sells portfolio securities in the normal course of its
investment activities. The proportion of the fund's investment portfolio
that is sold and replaced with new securities during a year is known as the
fund's portfolio turnover rate. The funds anticipate that their annual
portfolio turnover rate will generally not exceed 75%. A turnover rate of
100% would occur, for example, if a fund sold and replaced securities valued
at 100% of its net assets within one year. Active trading would result in
the payment by the fund of increased brokerage costs and the realization of
taxable capital gains. The funds generally adjust their portfolios in view of
prevailing or anticipated market conditions and the fund's investment
objective. The funds, however, may also make short-term trades to take
advantage of market opportunities. In deciding to sell a portfolio security,
Ranson generally considers such factors as the bond's yield, the continued
creditworthiness of the issuer and prevailing market conditions. In periods of
rapidly fluctuating interest rates, a fund's investment policy may lead to
frequent changes in investments.
RISK MANAGEMENT
INVESTMENT LIMITATIONS
The funds have adopted certain limitations that cannot be changed without
shareholder approval and are designed to limit your investment risk. Under
these restrictions, each fund may not invest 25% or more of its total assets
in any industry. In applying this limitation, government issuers of municipal
securities are not considered part of any "industry." However, municipal
securities backed by the assets and revenues of non-governmental users will be
considered issued by these users in applying this limitation. Each fund may
also invest over 25% of its assets in municipal securities whose revenues
derive from similar types of projects (such as healthcare, electric utilities
or mortgage loans). See the Statement of Additional Information for more
information regarding the funds' investment policies and restrictions and
the risks associated with these policies.
HEDGING STRATEGIES
Each fund may also engage in various investment strategies designed to hedge
against interest rate changes using financial futures and related options whose
prices, in the opinion of the fund's investment adviser, correlate with the
values of securities the fund owns or expects to purchase. Each fund may not
enter into futures contracts or purchase related options if immediately after
the transaction the amount committed to initial margin plus the amount paid
for premiums for unexpired options on futures contracts exceed 5% of the value
of the fund's total assets. Similarly, each fund may not purchase or sell
futures contracts or related options if more than one-third of its net assets
would be hedged immediately after the transaction.
The ability of a fund to benefit from options and futures is largely dependent
on Ranson's ability to use such strategies successfully. If Ranson's judgment
about the general direction of interest rates or markets is wrong, the
overall performance of the fund will be poorer than if no such futures or
options had been used. In addition, a fund's ability effectively to hedge
all or a portion of its portfolio through transactions in futures and options
depends on the degree to which price movements in the futures and options
correlate with the price movements in the fund's portfolio. Consequently,
if the price of the futures and options moves more or less than the price of
the security that is subject to the hedge, the fund will experience a gain or
loss that will not be completely offset by movements in the price of the
security. The risk of imperfect correlation is greater where the securities
underlying futures contracts are taxable securities (rather than municipal
securities), are issued by companies in different market sectors or have
different maturities, ratings or geographic mixes than the security being
hedged. In addition, the correlation may be affected by additions to or
deletions from the index which serves as the basis for a futures contract.
-22-
A fund could lose money on futures transactions or an option can expire
worthless. Losses (or gains) involving futures can sometimes be substantial
in part because a relatively small price movement in a futures contract may
result in an immediate and substantial loss (or gain) for a fund. Use of
options may also (i) result in losses to a fund, (ii) force the purchase or
sale of portfolio securities at inopportune times or for prices higher than
or lower than current market values, (iii) limit the amount of appreciation
the fund can realize on its investments, (iv) increase the cost of holding a
security and reduce the returns on securities or (v) cause a fund to hold a
security it might otherwise sell.
TEMPORARY INVESTMENT STRATEGIES
Each fund may, from time to time, take temporary defensive positions that are
inconsistent with the fund's principal investment strategies in attempting to
respond to adverse market conditions. Each fund may therefore invest up to
100% of its assets in short-term high quality taxable fixed-income securities
or hold up to 100% of its assets in cash during periods of abnormal market
conditions. In addition, pending the investment in municipal securities or to
avoid liquidating portfolio securities to meet shareholder redemptions, each
fund may invest up to 20% of its assets in taxable fixed income securities or
cash. The taxable obligations a fund may purchase for temporary liquidity
purposes or temporary defensive purposes include: obligations of the U.S.
government (its agencies and instrumentalities), debt securities rated within
the four highest grades (the highest grade with respect to The Kansas Insured
Intermediate Fund) by independent rating agencies, commercial paper,
certificates of deposit, time deposits, bankers' acceptances, repurchase
agreements and obligations of the relevant state with respect to these
investments. During these periods, a fund may not be able to achieve its
investment objective. For more detailed information on eligible short-term
investments, see the Statement of Additional Information.
NON-PRINCIPAL INVESTMENT STRATEGIES
DELAYED DELIVERY SECURITIES
As a non-principal investment strategy, each fund may buy or sell securities
on a when-issued or delayed-delivery basis, paying for or taking delivery
of the securities at a later date, normally within 15 to 45 days of the
trade. Such transactions involve an element of risk because the value of the
securities to be purchased may decline before the settlement date. In
addition, each fund is required to set aside cash or liquid high-grade debt
securities to satisfy its commitments to buy when-issued or delayed-delivery
securities. While these assets are set aside, the cash and securities are
not available to make additional investments or for trading. There is no
percentage limitation on a fund's total assets which may be invested in these
forward commitments.
PRINCIPAL RISK FACTORS
Risk is inherent in all investing. Investing in the funds involves risk,
including the risk that you may receive little or no return on your
investment or that you may even lose part or all of your investment.
Before you invest, you should consider the following risks:
-23-
INTEREST RATE RISK: the risk that the value of the fund's portfolio
will decline because of rising market interest rates (bond prices move
in the opposite direction of interest rates). The longer the average
maturity (duration) of a fund's portfolio, the greater its interest rate risk.
CREDIT RISK: the risk that an issuer of a bond is unable to meet its
obligation to make interest and principal payments due to changing market
conditions. Generally, lower rated bonds provide higher current income but
are considered to carry greater credit risk than higher rated bonds. Year
2000 issues may affect the ability of municipal issuers to meet their payment
obligations to their bond holders and may adversely affect their credit
ratings.
CONCENTRATION RISK: because the funds primarily purchase municipal bonds
from a specific state, each fund also bears investment risk from the economic,
political or regulatory changes that could adversely affect municipal bond
issuers in that state and therefore the value of the fund's investment
portfolio. See "Appendix-Additional State Information."
In addition, each fund may also invest over 25% of its assets in municipal
securities whose revenues derive from similar types of projects including
health care, housing, utilities and education. Each fund therefore bears
the risk that economic, political or regulatory developments could adversely
affect these industries and therefore the value of a fund's portfolio.
NON-DIVERSIFICATION RISK: each fund is a non-diversified fund and as such,
each fund may invest more than 5% of its assets in the obligations of any
issuer. Because a relatively high percentage of the fund's assets may be
invested in the municipal securities of a limited number of issuers, the
fund's portfolio securities may be more susceptible to any single economic,
political or regulatory occurrence than the portfolio securities of a
diversified investment company.
In addition, because of the relatively small number of issuers of municipal
securities in Kansas, Nebraska and Oklahoma, the funds are more likely to
invest a higher percentage of their assets in the securities of a single
issuer than an investment company which invests in a broad range of tax-
exempt securities. The funds are therefore subject to greater risks of loss
if an issuer is unable to make interest or principal payments or if the
market value of such securities declines.
INCOME RISK: the risk that the income from the fund's portfolio will decline
because of falling market interest rates. This can result when the fund
invests the proceeds from the new share sales or from matured or called
bonds, at market interest rates that are below the portfolio's current
earnings rate.
INFLATION RISK: the risk that the value of assets or income from
investments will be less in the future as inflation decreases the value of
money. As inflation increases, the value of the funds' assets can decline as
can the value of the funds' distributions.
YEAR 2000 DISCLOSURE
Ranson and the funds' service providers each rely on computer systems to
manage the funds' investments, process transactions and provide account
maintenance. Because of the way computers historically have stored dates,
some of these systems currently may not be able to correctly process activity
occurring in the year 2000. Ranson is working with the funds' service
providers to adapt their systems to address this "Year 2000" issue. The
necessary work has been substantially completed, but there can be no
assurance that the systems of all the parties that the fund interacts
with will work together seamlessly.
-24-
In addition, the ability of issuers to make timely payments of interest and
principal or to continue their operations or services may be impaired by the
inadequate preparation of their computer systems for the year 2000. This may
adversely affect the market values of securities of specific issuers or of
securities generally if the inadequacy of preparation is perceived as
widespread or as affecting trading markets.
THE SHARES WE OFFER
You can buy shares at the offering price, which is the net asset value per
share plus an up-front sales charge. Each fund, other than the Kansas Insured
Intermediate Fund, has adopted a plan under Rule 12b-1 that allows the fund to
pay for the expenses of the distribution of its shares and for services
provided to shareholders. Under each plan, the respective fund will pay an
annual Rule 12b-1 fee of 0.25% of its average daily net assets. Ranson
retains the up-front sales charge and the service fee on accounts with no
authorized dealer of record. Because these fees are paid out of a fund's
assets on an on-going basis, over time these fees will increase the cost
of your investment and may cost you more than paying other types of sales
charges. See "Shareholder Services Plan" for additional information
regarding these plans.
The up-front sales charge and the commissions paid to dealers for the
funds, except The Kansas Insured Intermediate Fund, is as follows:
<TABLE>
<CAPTION>
Authorized Dealer
Sales Charge as % of Sales Charge as % of Net Commission as % of
Amount of Purchase Public Offering Price Amount Invested Public Offering Price
<S> <C> <C> <C>
Less than $50,000 4.25% 4.44% 3.60%
- -------------------------------------------------------------------------------------------------------------
$50,000 but less than $100,000 3.75% 3.90% 3.15%
- -------------------------------------------------------------------------------------------------------------
$100,000 but less than $250,000 3.25% 3.36% 2.75%
- -------------------------------------------------------------------------------------------------------------
$250,000 but less than $500,000 2.50% 2.56% 2.00%
- -------------------------------------------------------------------------------------------------------------
$500,000 but less than $1,000,000 1.50% 1.52% 1.40%
- -------------------------------------------------------------------------------------------------------------
$1,000,000 and over 0.75% 0.76% 0.70%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
The following up-front sales charges and commissions apply to The Kansas
Insured Intermediate Fund:
<TABLE>
<CAPTION>
Authorized Dealer
Sales Charge as % of Sales Charge as % of Net Commission as % of
Amount of Purchase Public Offering Price Amount Invested Public Offering Price
<S> <C> <C> <C>
Less than $50,000 2.75% 2.85% 2.50%
- -------------------------------------------------------------------------------------------------------------
$50,000 but less than $100,000 2.25% 2.30% 2.00%
- -------------------------------------------------------------------------------------------------------------
$100,000 but less than $250,000 1.75% 1.78% 1.50%
- -------------------------------------------------------------------------------------------------------------
$250,000 but less than $500,000 1.25% 1.27% 1.10%
- -------------------------------------------------------------------------------------------------------------
$500,000 but less than $1,000,000 0.75% 0.76% 0.65%
- -------------------------------------------------------------------------------------------------------------
$1,000,000 and over 0.25% 0.25% 0.25%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO REDUCE YOUR SALES CHARGE
We offer a number of ways to reduce or eliminate the up-front sales charge on
fund shares:
SALES CHARGE REDUCTIONS SALES CHARGE WAIVERS
* Rights of accumulation * Reinvestments from certain unit
* Letter of intent investment trusts formerly sponsored
* Group purchase by Ranson
* Purchases using redemptions from
unrelated funds
* Purchases of The Kansas Insured
Intermediate Fund using redemptions
from The Kansas Municipal Fund
* Purchases of The Kansas Municipal
Fund using redemption proceeds of The
Kansas Insured Intermediate Fund
(subject to a reduced sales load)
* Officers and trustees of the funds,
subsidiaries of Ranson, employees of
Ranson and certain members of their
-25-
families
* Authorized broker-dealers and
financial institutions and employees
(including their spouses and children)
of such broker-dealers and
institutions
* Any broker-dealer, financial
institution or other qualified
firm which does not receive
commissions for selling shares to
its clients
Financial institutions may also purchase shares of The Kansas Insured
Intermediate Fund for their own account or as a record owner on behalf
of fiduciary or custody accounts subject to a front-end sales charge of
0.75% of the public offering price (0.76% of the net amount invested).
The dealer commission on such purchases is 0.70% of the public offering
price. Financial institutions which purchase shares of the fund for
accounts of their customers may impose separate charges on these customers
for account services.
In addition, investors who concurrently purchase shares of The Kansas
Municipal Fund and The Kansas Insured Intermediate Fund will be charged
the sales load applicable to the aggregate dollar value of the combined
purchases.
Please refer to the Statement of Additional Information for detailed program
descriptions and eligibility requirements. Additional information is
available from your financial adviser or by calling (800) 276-1262. Your
financial adviser can also help you prepare any necessary application forms.
You or your financial adviser must notify Ranson at the time of each purchase
if you are eligible for any of these programs. The funds may modify or
discontinue these programs at any time.
HOW TO BUY SHARES
Fund shares may be purchased on any business day, which is any day the New
York Stock Exchange is open for business and normally ends at 3 p.m., Minot,
North Dakota time. Generally, the Exchange is closed on weekends, national
holidays and Good Friday.
You may buy shares through investment dealers who have sales agreements with
Ranson, the funds' distributor or directly from Ranson. If you do not have
a dealer, call (800) 276-1262 and Ranson can refer you to one. Shares may
also be purchased through banks and certain other financial institutions that
have agency agreements with Ranson. These financial institutions receive
transaction fees that are the same as commissions to dealers and may charge
you additional service fees.
Purchase requests should be addressed to the authorized dealer or agent from
which you received this Prospectus. Such dealers or agents may place a
telephone order with Ranson for the purchase of shares. It is the broker's or
dealer's responsibility to promptly forward payment and the purchase
application to the transfer agent for the investor to receive the next
determined net asset value. Payment for shares purchased by telephone
should be received within three business days. Checks should be made payable
to the name of the applicable Fund.
Share certificates will only be issued by written request to the funds'
transfer agent.
MINIMUM INVESTMENTS AND SHARE PRICE
You may open an account with $1,000 ($50 for the automatic investment program)
and make additional investments at any time with as little as $50. The funds
may change these minimum initial investments at any time.
-26-
The price you pay for shares will depend on how and when the fund receives
your order. You will receive the share price next determined after the fund
has received your order. If you place your order by contacting the fund
directly, your order must be received by the fund prior to the close of
trading of the New York Stock Exchange (normally 3:00 p.m., Minot, North Dakota
time) for you to receive that day's price. However, if you place your order
through a dealer prior to the close of trading of the New York Stock Exchange
and the fund receives such order prior to the close of business of the fund
(normally 5:00 p.m., Minot, North Dakota time), you will receive that day's
price. Dealers are obligated to transmit orders promptly. See "Net Asset
Value" for a discussion of how shares are priced.
SYSTEMATIC INVESTING-THE PREAUTHORIZED INVESTMENT PROGRAM
Once you have established a fund account, systematic investing allows you to
make regular investments through automatic deductions from your bank account
(simply complete the appropriate section of the account application form) or
call ND Resources, Inc. ("ND Resources") at (800) 601-5593 for appropriate
forms.
With the Preauthorized Investment Program, you can make regular investments of
$50 or more per month by authorizing us to take money out of your bank,
savings and loan or credit union account. If an investor has expedited wire
transfer redemption privileges with his or her fund account, such investor must
designate the same bank, savings and loan or credit union account for both
Preauthorized Investment Program and wire redemption programs. Fund shares
purchased by the Preauthorized Investment Program must be owned for 15 days
before they may be redeemed. You can stop the withdrawals at any time by
sending a written notice to ND Resources, the funds'
transfer agent, at P.O. Box 759, Minot, ND 58702. The termination will become
effective within 7 days after the transfer agent has received the request.
The funds may terminate or modify this privilege at any time.
SPECIAL SERVICES
To help make your investing with us easy and efficient, we offer you the
following services at no extra cost.
EXCHANGING SHARES
You may exchange fund shares into an identically registered account at any
time for shares of any mutual fund underwritten by ND Capital, Inc. or Ranson
at net asset value, subject to the following conditions:
(1) When exchanging into shares of a fund which imposes a CDSC, no
CDSC will be imposed upon redemption of the newly acquired shares.
(2) Shares must be held for at least six months prior to exchange
when exchanging into a higher-load fund.
(3) When exchanging into another single-state municipal fund, the
shareholder must be a resident of that state or any other state in which the
fund is registered.
Your exchange must meet the minimum purchase requirements of the fund into
which you are exchanging and be available in your state. Because an exchange
is treated for tax purposes as a concurrent sale and purchase, and any gain
may be subject to tax, you should consult your tax adviser about the tax
consequences of any contemplated exchange.
The exchange privilege is not intended to allow you to use a fund for short-
term trading. Because excessive exchanges may interfere with portfolio
management, raise fund operating expenses or otherwise have an adverse effect
on other shareholders, each fund reserves the right to revise or suspend the
exchange privilege on 60 days written notice, limit the amount or number of
exchanges or reject any exchange. A shareholder considering an exchange
should obtain and read the prospectus of the fund and consider the
differences between it and the fund whose shares he owns before making an
exchange. For additional information on how to exercise the exchange
privilege, call ND Resources at (800) 601-5593.
REINSTATEMENT PRIVILEGE
If you redeem fund shares, you may reinstate all or part of your redemption
proceeds at net asset value without incurring any additional charges. An
investor exercising this privilege a year or more after redemption must
complete a new account application and provide proof that the investor was a
shareholder of the fund. The funds may modify or terminate this privilege
at any time.
-27-
HOW TO SELL SHARES
You may sell (redeem) your shares on any day the New York Stock Exchange is
open. You will receive the share price next determined after the fund has
received your properly completed redemption request as described below. Your
redemption request must be received before the close of trading for you to
receive that day's price.
You can sell your shares at any time by sending a written request to the
appropriate fund, c/o ND Resources, P.O. Box 759, Minot, ND 58702 or by
placing an order to sell through your financial adviser. Such dealers or
agents may place a telephone order with Ranson for the sale of shares. It
is the broker's or dealer's responsibility to promptly forward the redemption
requests to the transfer agent for shares being redeemed to receive the next
determined net asset value.
To properly complete your redemption request, your request must include the
following information:
* The fund's name;
* Your name and account number;
* The dollar or share amount you wish to redeem;
* The signature of each owner exactly as it appears on the account;
* The name of the person to whom you want your redemption proceeds paid
(if other than to the shareholder of record);
* The address where you want your redemption proceeds sent (if other than
the address of record);
* Any certificates you have for the shares (signed certificate or a duly
endorsed stock power); and
* Any required signature guarantees.
We will normally mail your check the next business day, but in no event more
than seven days after we receive your request. If you purchased your shares
by check, your redemption proceeds will not be mailed until your check has
cleared which may take up to 15 days from the date of purchase. Guaranteed
signatures are required if you are redeeming more than $50,000, you want the
check payable to someone other than the shareholder of record or you want
the check sent to another address. Signature guarantees must be obtained from
a commercial bank, trust company, savings and loan association or brokerage
firm. A notary public cannot provide a signature guarantee.
You should note that the funds reserve the right to liquidate your account
upon 60 days' written notice if the value of your account falls below $1,000
for any reason other than a fluctuation in the market value of the fund
shares. The funds also reserve the right to redeem in-kind (that is to pay
redemption requests in cash and portfolio securities or wholly in portfolio
securities). Because you would receive portfolio securities in an in-kind
redemption, you would still be subject to market risk and may incur transaction
costs in selling the securities.
A fund may also suspend the right of redemption under the following unusual
circumstances:
* when the New York Stock Exchange is closed (other than weekends and
holidays) or trading is restricted as determined by the SEC;
* when an emergency exists, making disposal of portfolio securities or
the valuation of net assets not reasonably practicable as determined
by the SEC; or
* during any period when the SEC has by order permitted a suspension of
redemption for the protection of shareholders.
-28-
SYSTEMATIC WITHDRAWAL PROGRAM
If the value of your fund account is at least $5,000, you may request to
have any requested dollar amount withdrawn automatically from your account.
You may elect to receive payments monthly, quarterly or annually. You should
receive such designated amounts approximately the first of each month. If
payments exceed reinvested dividends and distributions, an investor's shares
will be reduced and eventually depleted. You must complete the appropriate
section of the account application to participate in the fund's systematic
withdrawal plan. Each fund will not knowingly permit investors to make
additional investments of less than $5,000 (except through reinvestment of
dividends) if the investor is also participating in this program. To
participate in this program, shares may not be in certificated form. You may
terminate participation in the program at any time. The Fund may terminate
or modify this program upon thirty days' notice.
DISTRIBUTIONS AND TAXES
The funds declare dividends daily to shareholders of record on the date of
each declaration. The funds will pay such distributions monthly. These
monthly distributions are composed of net investment income and all or a
portion of net short-term capital gains. The funds will also declare and
pay net long-term capital gains (if any) at least annually.
REINVESTMENTS OPTIONS
The funds automatically reinvest your monthly dividends and capital gains
distributions in additional fund shares at net asset value unless you request
distributions to be received in cash. You may change your selected method of
distribution, provided such change will be effective only for distributions
paid seven or more days after the transfer agent receives the written request.
The funds will send a check to investors selecting to receive dividends in
cash. You may have your distribution check paid to a third party or sent to
an address other than your address of record (although a signature guarantee
will be required). Checks to be sent to an investor's bank should include a
voided check. For further information, contact ND Resources at (800) 601-5593.
TAXES AND TAX REPORTING
Because the funds invest in municipal bonds from a specific state, each fund's
regular monthly dividends payable from the net tax-exempt interest earned from
these municipal securities will generally be exempt from regular federal income
tax. All or a portion of these dividends, however, may be subject to any
state and local taxes. These dividends may also be subject to the federal
alternative minimum tax (AMT).
Although the funds do not seek to realize taxable income or capital gains,
the funds may realize and distribute taxable income or capital gains from
time to time as a result of each fund's normal investment activities. To
the extent the funds engage in hedging transactions in futures contracts and
options thereon, the funds may earn capital gains or losses. Net investment
income earned on debt obligations other than municipal securities and net
-29-
short-term gains are taxable as ordinary income. Net long-term capital gains
are taxable as long-term capital gains regardless of how long you have owned
your investment. Dividends do not qualify for a dividends received deduction
if you are a corporate shareholder. For information regarding the state tax
consequences of a fund investment, see Appendix-Additional State Information.
Early in each year you will receive a statement detailing the amount and
nature of all dividends and capital gains, including any percentage of your
fund dividends attributable to municipal obligations, that you were paid
during the prior year. The tax status of your dividends is not affected by
whether you reinvest your dividends or receive them in cash. If you receive
social security benefits, you should be aware that any tax-free income is
taken into account in calculating the amount of these benefits that may be
subject to federal income tax.
Tax laws are subject to change, so we urge you to consult your tax adviser
about your particular tax situation and how it might be affected by current
tax law.
Please note that if you do not furnish us with your correct Social Security
number or employer identification number, federal law requires us to withhold
federal income tax from your distributions and redemption proceeds at a rate
of 31%.
BUYING OR SELLING SHARES CLOSE TO A RECORD DATE
Buying fund shares shortly before the record date for a taxable dividend is
commonly known as "buying the dividend." The entire dividend may be taxable
to you even though a portion of the dividend effectively represents a return
of your purchase price. Similarly, if you sell or exchange fund shares
shortly before the record date for a tax-exempt dividend, a portion of the
price you receive may be treated as a taxable capital gain even though it
reflects tax-free income earned but not yet distributed by the fund.
SHAREHOLDER SERVICES PLAN
Ranson serves as the distributor of the funds' shares. In this capacity,
Ranson manages the offering of the funds' shares and is responsible for all
sales and promotional activities. In order to pay for some of the costs of
distributing its shares and for providing services to shareholders, each
fund (other than The Kansas Insured Intermediate Fund) has adopted a
shareholder services plan (the "Plan") under Rule 12b-1 under the Investment
Company Act of 1940, that allows the fund to pay Ranson, the fund's
distributor, 0.25% of the average daily net assets of the fund. Ranson, in
turn, may use this fee to pay authorized dealers, including Ranson, banks,
savings and loan associations and their associated broker-dealers an annual
service fee of up to 0.25% of the average daily net assets of the shares held
in their customer accounts for providing administrative and shareholder
services. To be eligible for the service fee, dealers or other service
organizations must have been servicing the accounts for at least one year.
The services provided may include answering shareholder inquiries, assisting
in redeeming shares, interpreting confirmations, statements and other
documents and providing other personal services to shareholders. Ranson
may also use some or all of this 12b-1 fee for its expenses of
distribution of a fund's shares.
NET ASSET VALUE
The price you pay for your shares is based on the fund's net asset value per
share which is determined as of the close of trading (normally 3:00 p.m.
Minot, North Dakota time) on each day the New York Stock Exchange is open
for business. Net asset value is calculated by taking the total value of
the fund's assets, including interest or dividends accrued but not yet
collected, less all liabilities, and dividing by the total number of shares
outstanding. The result, rounded to the nearest cent, is the net asset value
per share. All valuations are subject to review by the funds' Board of
Trustees or its delegate.
In determining net asset value, expenses are accrued and applied daily.
Fixed income securities for which market quotations are readily available
are valued at the mean between the quoted bid and ask prices. When market
quotations are not readily available (which is usually the case for municipal
securities), Ranson establishes the fair market value pursuant to procedures
established by the Board of Trustees. In establishing fair value, Ranson
considers factors such as the yields and prices of comparable municipal
bonds, the type of issue, coupon, maturity and rating, indications of value
from dealers and general market conditions. Ranson may also use a computer
based system, a "matrix system," to compare securities to determine
valuations. The procedures used by Ranson and its valuations are reviewed by
the officers of the funds under the general supervision of the Board of
Trustees and periodically by the Board. Short-term securities with remaining
maturities of less than 60 days are valued at amortized cost.
Options that are traded on an exchange are valued at the last sales price,
unless there is no last sales price. In that case, the options will be valued
at the mean between the closing bid and ask prices. Financial futures are
valued at their settlement prices established on the board of trade or
exchange on which they are traded. Other securities, including restricted
securities, and other assets are valued at fair value as established by the
Board of Trustees or its delegate. If an event were to occur, after the
value of an instrument was established but before net asset value per share
was determined, which would likely materially change the net asset value, then
the instrument would be valued using fair value considerations by the Board of
Trustees or its delegate.
-30-
FUND SERVICE PROVIDERS
The custodian of the assets of the funds is First Western Bank & Trust, 900
South Broadway, Minot, North Dakota 58701. ND Resources, Inc., a wholly-owned
subsidiary of ND Holdings, Inc., is the funds' transfer agent. As transfer
agent, ND Resources performs bookkeeping, data processing, accounting and
other administrative services for the operation of the funds and the
maintenance of shareholder accounts.
SHAREHOLDER INQUIRIES
All inquiries regarding the funds should be directed to Ranson at 1 North
Main, Minot, ND 58703 or call (800) 276-1262.
All inquiries regarding account information should be directed to ND
Resources at P.O. Box 759, Minot, ND 58702 or call (800) 601-5593.
-31-
FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you understand the
funds' recent past performance. Certain information reflects financial
results for a single fund share. The total returns in the table represent
the rate that an investor would have earned on an investment in the fund
(assuming reinvestment of all dividends and distributions). This information
has been audited by Brady, Martz & Associates, P.C., whose report, along with
the fund's financial statements are included in the annual report.
Further information about a fund's performance is contained in the fund's
latest annual shareholder report. You may obtain a free copy of the fund's
latest annual shareholder report upon of request from the fund.
THE KANSAS MUNICIPAL FUND
<TABLE>
<CAPTION>
For the Year For the Year For the Year For the Year For the Year
Ended Ended Ended Ended Ended
July 30, 1999 July 31, 1998 July 31, 1997 July 31, 1996 July 31, 1995
<S> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $12.15 $12.42 $12.14 $12.07 $12.00
-----------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income $ .58 $ .60 $ .61 $ .69 $ .65
Net realized and unrealized gain
(loss) on investment and futures
transactions (.17) (.27) .28 .07 .07
------------------------------------------------------------------------------------
Total Income (loss) From
Investment Operations $ .41 $ .33 $ .89 $ .76 $ .72
------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income $ (.58) $ (.60) $ (.61) $ (.69) $ (.65)
Distributions from net capital gains .00 .00 .00 .00 .00
------------------------------------------------------------------------------------
Total Distributions $ (.58) $ (.60) $ (.61) $ (.69) $ (.65)
------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $11.98 $12.15 $12.42 $12.14 $12.07
====================================================================================
TOTAL RETURN 3.44%(A) 2.76%(A) 7.56%(A) 5.90%(A) 6.23%(A)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $155,882 $120,024 $128,201 $132,349 $130,091
Ratio of net expenses
(after expense assumption)
to average net assets 0.95%(B) 0.95%(B) 0.93%(B) 0.85%(B) 0.82%(B)
Ratio of net investment income
to average net assets 4.80% 4.93% 5.02% 5.18% 5.46%
Portfolio turnover rate 13.54% 26.68% 18.64% 20.14% 57.00%
____________
<FN>
(A) Excludes maximum sales charge of 4.25%.
(B) During the periods indicated above, ND Holdings, Inc. or Ranson Capital
Corporation assumed/waived expenses of $23,429, $3,901, $46,741, $212,056 and
$295,875, respectively. If the expenses had not been assumed/waived, the annualized
ratio of total expenses to average net assets would have been 0.97%, 0.95%,
0.97%, 1.01% and 1.06%, respectively.
</FN>
</TABLE>
-32-
THE KANSAS INSURED INTERMEDIATE FUND
<TABLE>
<CAPTION>
For the Year For the Year For the Year For the Year For the Year
Ended Ended Ended Ended Ended
July 30, 1999 July 31, 1998 July 31, 1997 July 31, 1996 July 31, 1995
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $12.07 $12.23 $12.19 $12.04 $11.92
------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income $ .53 $ .54 $ .53 $ .53 $ .54
Net realized and unrealized gain
(loss) on investment and futures
transactions (.09) (.16) .04 .15 .12
------------------------------------------------------------------------------------
Total Income (loss) From
Investment Operations $ .44 $ .38 $ .57 $ .68 $ .66
------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income $ (.53) $ (.54) $ (.53) $ (.53) $ (.54)
Distributions from net capital gains .00 .00 .00 .00 .00
------------------------------------------------------------------------------------
Total Distributions $ (.53) $ (.54) $ (.53) $ (.53) $ (.54)
------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $11.98 $12.07 $12.23 $12.19 $12.04
====================================================================================
TOTAL RETURN 3.70%(A) 3.17%(A) 4.76%(A) 5.75%(A) 5.72%(A)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $21,333 $20,585 $25,533 $30,564 $30,678
Ratio of net expenses
(after expense assumption)
to average net assets 0.75%(B) 0.75%(B) 0.76%(B) 0.69%(B) 0.62%(B)
Ratio of net investment income
to average net assets 4.39% 4.42% 4.33% 4.37% 4.57%
Portfolio turnover rate 16.34% 25.46% 28.68% 19.96% 63.00%
____________
<FN>
(A) Excludes maximum sales charge of 2.75%.
(B) During the periods indicated above, ND Holdings, Inc. or Ranson Capital
Corporation assumed/waived expenses of $29,229, $13,708, $40,608, $71,943
and $112,745, respectively. If the expenses had not been assumed/waived, the
annualized ratio of total expenses to average net assets would have
been 0.89%, 0.82%, 0.90%, 0.92% and 0.98%, respectively.
</FN>
</TABLE>
-33-
THE NEBRASKA MUNICIPAL FUND
<TABLE>
<CAPTION>
For the Year For the Year For the Year For the Year For the Year
Ended Ended Ended Ended Ended
July 30, 1999 July 31, 1998 July 31, 1997 July 31, 1996 July 31, 1995
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $11.13 $11.26 $11.00 $10.95 $10.82
------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income $ .54 $ .56 $ .55 $ .57 $ .59
Net realized and unrealized gain
(loss) on investment and futures
transactions (.12) (.13) .26 .05 .13
------------------------------------------------------------------------------------
Total Income (loss) From
Investment Operations $ .42 $ .43 $ .81 $ .62 $ .72
------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income $ (.54) $ (.56) $ (.55) $ (.57) $ (.59)
Distributions from net capital gains .00 .00 .00 .00 .00
------------------------------------------------------------------------------------
Total Distributions $ (.54) $ (.56) $ (.55) $ (.57) $ (.59)
------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $11.01 $11.13 $11.26 $11.00 $10.95
=====================================================================================
TOTAL RETURN 3.82%(A) 3.95%(A) 7.57%(A) 5.73%(A) 7.14%(A)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $41,943 $26,318 $27,802 $18,077 $14,445
Ratio of net expenses
(after expense assumption)
to average net assets 0.70%(B) 0.63%(B) 0.71%(B) 0.62%(B) 0.35%(B)
Ratio of net investment income
to average net assets 4.83% 5.06% 5.03% 5.13% 5.63%
Portfolio turnover rate 12.58% 26.36% 42.84% 27.20% 140.00%
____________
<FN>
(A) Excludes maximum sales charge of 4.25%.
(B) During the periods indicated above, ND Holdings, Inc. or Ranson
Capital Corporation assumed/waived expenses of $119,949, $51,233,
$124,394, $129,053 and $146,913, respectively. If the expenses had
not been assumed/waived, the annualized ratio of total expenses to average
net assets would have been 1.10%, 0.81%, 1.22%, 1.38% and 1.66%,
respectively.
</FN>
</TABLE>
-34-
THE OKLAHOMA MUNICIPAL FUND
<TABLE>
<CAPTION>
For the Period
Since Inception
For the Year For the Year (September 25,
Ended Ended 1996) through
July 30, 1999 July 31, 1998 July 31, 1997
<S> <C> <C> <C>
----------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $11.68 $11.86 $11.49
-----------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income $ .56 $ .60 $ .50
Net realized and unrealized gain
(loss) on investment and futures
transactions (.07) (.16) .37
----------------------------------------------------
Total Income (loss) From
Investment Operations $ .49 $ .44 $ .87
----------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income $ (.56) $ (.60) $ (.50)
Distributions from net capital gains .00 (.02) .00
----------------------------------------------------
Total Distributions $ (.56) $ (.62) $ (.50)
-----------------------------------------------------
NET ASSET VALUE, END OF PERIOD $11.61 $11.68 $11.86
=====================================================
TOTAL RETURN 4.25%(A) 3.81%(A) 7.79%(A)(B)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $16,135 $11,335 $6,591
Ratio of net expenses
(after expense assumption)
to average net assets 0.36%(C) 0.20%(C) 0.11%(C)
Ratio of net investment income
to average net assets 4.74% 5.08% 3.70%
Portfolio turnover rate 32.09% 53.32% 63.07%
____________
<FN>
(A) Excludes maximum sales charge of 4.25%.
(B) Raito was annualized.
(C) During the periods indicated above, ND Holdings, Inc. or Ranson
Capital Corporation assumed/waived expenses of $133,089, $53,180 and $34,609,
respectively. If the expenses had not been assumed/waived, the annualized ratio of
total expenses to average net assets would have been 1.23%, 0.71%
and 2.01%, respectively.
</FN>
</TABLE>
-35-
APPENDIX - ADDITIONAL STATE INFORMATION
Because the funds primarily purchase municipal bonds from a specific state,
each fund also bears investment risk from economic, political or regulatory
changes that could adversely affect municipal bond issuers in that state and
therefore the value of the fund's investment portfolio. The following
discussion of special state considerations was obtained from official offering
statements of these issuers and has not been independently verified by the
funds. The discussion includes general state tax information related to an
investment in fund shares. Because tax laws are complex and often change, you
should consult your tax adviser about the state tax consequences of a specific
fund investment.
KANSAS
Kansas's economy is primarily based on agriculture, particularly crop and
livestock production and manufacturing. Kansas, a largely rural state with
a population of 2.6 million, experienced another year of strong economic
growth in 1998. Stability in durable goods manufacturing, coupled with healthy
performance in the service, construction and trade industries, sustained the
state's economic growth throughout the year. Also, Kansas leads the nation in
wheat and sorghum production. However, during 1998, agricultural employment
is estimated to have declined 12% and personal income from farming to have
declined 15%. Services and trade, the two largest areas of employment in
Kansas, experienced 4% and 3.2% growth, respectively, during 1998, creating
53,000 jobs. Per capita income in 1998 increased 5.3%. Slow population
growth (1.1% in 1998), combined with steady employment growth, has continued
to push the state's employment rate lower each year. During 1998, Kansas'
average unemployment rate fell to 3.6%, down slightly from 3.8% in 1997. The
national average unemployment rate was 4.5% and 4.9% in 1998 and 1997,
respectively.
The State of Kansas has no general obligation debt rating. However, it seeks
an underlying rating on specific issues of at least AA- from Standard &
Poor's and A1 from Moody's.
TAX TREATMENT
The Kansas Municipal Fund's and The Kansas Insured Intermediate Fund's
regular monthly dividends will not be subject to the Kansas income tax to
the extent they are paid out of income earned on Kansas municipal
securities that are exempt from Kansas income taxes. In addition, with
respect to The Kansas Insured Intermediate Fund, dividends derived from
insurance proceeds representing the interest on defaulted municipal
securities that qualifies as exempt from Kansas income taxes, will also not
be subject to Kansas income tax. The portion of these funds' monthly
dividends that are derived from interest on municipal securities or other
obligations that is not exempt from Kansas income taxes, will likewise be
subject to Kansas income tax. You will therefore be subject to Kansas income
tax to the extent the funds distribute any taxable income or realized capital
gains, or if you sell or exchange a fund's shares and realize a capital gain
on the transaction. Distributions treated as long-term capital gains for
federal tax purposes are generally treated the same for Kansas state tax
purposes.
NEBRASKA
Nebraska's economy is primarily based on agriculture and manufacturing.
The state's economy expanded during 1997 and 1998 with steady growth in
labor force, employment, retail sales, income and tourism. During 1997,
the state ranked third in the nation in livestock and livestock products
with $5.5 billion in cash receipts and sixth in crop production at $4.6
billion. Any changes in agriculture and in the agricultural economy will
continue to have significant consequences for the overall Nebraska economy.
Job growth in manufacturing averaged just over 2% during 1997 and 1998,
while the nation as a whole experienced declining employment in this sector.
Total nonfarm employment increased by 15,400 jobs or 1.8% during 1998, with
the largest percentage gains in construction, the finance, insurance and real
estate sector, transportation/utilities and the services sector, the state's
largest employer. The Nebraska unemployment rate has been among the lowest
in the nation throughout the 1990s. The state's average unemployment rate
in 1998 was 2.1% compared to 4.5% for the nation. Per capita personal income
grew 3.3% in 1997 to $23,656 or 92% of the U.S. average.
TAX TREATMENT
The Nebraska Municipal Fund's regular monthly dividends will not be subject
to Nebraska income taxes to the extent they are paid out of income earned on
Nebraska municipal securities that is exempt from Nebraska income taxes and
the Nebraska alternative minimum tax (AMT). The fund's dividends will be
subject to the Nebraska AMT to the extent they are derived from interest on
Nebraska municipal securities subject to Nebraska AMT. The portion of the
fund's dividends that are derived from interest on municipal securities or
other obligations subject to Nebraska income tax will likewise be subject to
Nebraska income tax. Distributions treated as long-term capital gains for
federal tax purposes are generally treated the same for Nebraska state tax
purposes. You will therefore be subject to Nebraska income tax to the extent
the fund distributes any taxable income or realized capital gains, or if you
sell or exchange fund shares and realize a capital gain on the transaction.
Shareholders that are subject to the Nebraska financial institutions franchise
tax should note that dividends from the Nebraska Municipal Fund could affect
your maximum franchise tax. You should therefore consult your own tax
advisers before investing.
OKLAHOMA
Oklahoma's economy is primarily dependent on agriculture, manufacturing and
services. In 1997, agriculture added more than $4.2 billion to Oklahoma's
Gross State Product. All major sectors of the economy, with the exception of
mining, improved in 1998. Based on data through First Quarter 1999, the
state's employment has grown 1.57 million, reflecting 1.2% annual growth
during 1998. However, manufacturing, which has usually led job growth in
recent years, increased by only 0.5% in 1998. Oklahoma has one of the lowest
unemployment rates among its neighboring states. Oklahoma's annual
unemployment rate in 1998 matched the national average of 4.5%. In 1998,
Oklahoma dropped from 43rd to 44th among the states in terms of average per
capita personal income, which is currently 80% of the national average.
Oklahoma's population rate has increased 6.4% since 1990. Because employment
growth currently outpaces annual population growth in Oklahoma, the state is
facing a tight labor market and could see significant wage pressures as well
as labor shortages. The state's general obligation bonds are rated AA by
Standard & Poor's, Aa by Moody's and AA by Fitch.
TAX TREATMENT
The Oklahoma Municipal Fund's regular monthly dividends will not be subject
to Oklahoma income taxes to the extent they are derived from income earned
on Oklahoma municipal securities that is exempt from Oklahoma income tax.
The portion of the fund's dividends that are derived from interest on
municipal securities or other obligations that is not exempt from Oklahoma
income taxes, will likewise be subject to Oklahoma income tax. As noted
earlier, The Oklahoma Municipal Fund may invest up to 30% of its total
assets in Oklahoma municipal securities that are subject to Oklahoma state
income taxes. Distributions treated as long-term capital gains are generally
treated the same for Oklahoma state tax purposes. You will therefore be
subject to Oklahoma income tax to the extent the fund distributes any taxable
income or realized capital gains, or if you sell or exchange fund shares and
realize a capital gain on the transaction.
A-2
THE KANSAS MUNICIPAL FUND
THE KANSAS INSURED INTERMEDIATE FUND
THE NEBRASKA MUNICIPAL FUND
THE OKLAHOMA MUNICIPAL FUND
-----------------------------------
1 North Main * Minot, North Dakota 58703 * (701) 852-5292
P.O. Box 759 * Minot, North Dakota 58702
(800) 276-1262 * Marketing * Fax (701) 838-4902
(800) 601-5593 * Transfer Agent * Fax (701) 852-2548
INVESTMENT ADVISER
Ranson Capital Corporation
1 North Main
Minot, ND 58703
PRINCIPAL UNDERWRITER
Ranson Capital Corporation
1 North Main
Minot, ND 58703
CUSTODIAN
First Western Bank & Trust
900 South Broadway
Minot, ND 58701
TRANSFER AGENT
ND Resources, Inc.
1 North Main, Minot, ND 58703
P.O. Box 759, Minot, ND 58702
INDEPENDENT ACCOUNTANT
Brady, Martz & Associates, P.C.
24 West Central Avenue
Minot, ND 58701
LEGAL COUNSEL
Chapman and Cutler
111 West Monroe Street
Chicago, IL 60603
A-3
RANSON MANAGED PORTFOLIOS
The Kansas Municipal Fund
The Kansas Insured Intermediate Fund
The Nebraska Municipal Fund
The Oklahoma Municipal Fund
Several additional sources of information are available to you. The Statement
of Additional Information (SAI), incorporated by reference into this
prospectus, contains detailed information on the funds' policies and
operation. Annual and semiannual reports contain management's discussion of
market conditions, investment strategies, and performance results as of the
fund's latest semiannual or annual fiscal year end. Call Ranson at
(800) 276-1262 to request a free copy of any of these materials.
You may also obtain this and other fund information directly from the
Securities and Exchange Commission (SEC). The SEC may charge a copying fee
for this information. Visit the SEC on-line at http://www.sec.gov or in
person at the SEC's Public Reference Room in Washington, D.C. Call the SEC
at (800) SEC-0330 for room hours and operation. You may also request fund
information by writing to the SEC's Public Reference Section, Washington,
D.C. 20549.
Ranson Managed Portfolios
1 North Main
Minot, North Dakota 58703
(800) 276-1262
The fund's SEC file no. 811-6153
A-4
STATEMENT OF ADDITIONAL INFORMATION
November 30, 1999
RANSON MANAGED PORTFOLIOS
The Kansas Municipal Fund
The Kansas Insured Intermediate Fund
The Nebraska Municipal Fund
The Oklahoma Municipal Fund
1 North Main
Minot, North Dakota 58703
(701) 852-5292
(800) 601-5593/Transfer Agent
(800) 276-1262/Marketing
This Statement of Additional Information is not a prospectus, but should be
read in conjunction with the Prospectus for The Kansas Municipal Fund,
The Kansas Insured Intermediate Fund, The Nebraska Municipal Fund and
The Oklahoma Municipal Fund (the "Funds") dated November 30, 1999,
(the "Prospectus"). A copy of the Prospectus may be obtained without charge
by calling the Funds at (800) 276-1262.
TABLE OF CONTENTS
Page
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS 1
INVESTMENTS 8
PORTFOLIO TURNOVER 14
BOND INSURANCE FOR THE KANSAS INSURED INTERMEDIATE FUND 15
ADDITIONAL RISK CONSIDERATIONS 16
MANAGEMENT OF THE FUNDS 18
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES 21
CUSTODIAN AND TRANSFER AGENT 21
INDEPENDENT AUDITORS 22
MANAGEMENT AND INVESTMENT ADVISORY AGREEMENT 22
PORTFOLIO TRANSACTIONS 23
THE DISTRIBUTOR 25
SHAREHOLDER SERVICES PLANS 27
ADDITIONAL INFORMATION ON THE PURCHASE AND REDEMPTION OF SHARES 29
SALES CHARGE REDUCTIONS 31
SALES LOAD WAIVERS 33
SPECIAL PROGRAMS 34
REDEMPTION OF SHARES 36
DIVIDENDS AND TAXES 36
ADDITIONAL INFORMATION REGARDING ORGANIZATION AND SHARE ATTRIBUTES 42
EXPENSES OF THE FUND 45
PERFORMANCE DATA 45
FINANCIAL STATEMENTS 50
APPENDIX A-RATINGS OF INVESTMENTS A-1
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS
The Funds are each series of The Ranson Managed Portfolios (the "Trust"), an
open-end, non-diversified management series investment company. The
investment objective and certain investment policies of each Fund are
described in the Funds' Prospectus. The following supplements that
information and should be read in conjunction with the Funds' Prospectus.
Investment Policies
THE KANSAS MUNICIPAL FUND. It is a fundamental investment policy of The
Kansas Municipal Fund, which may not be changed without the approval of the
majority of the Fund's shares, that under normal market conditions, at least
80% of the Fund's assets will be invested in "Kansas Municipal Securities"
which generate income that is exempt, in the opinion of bond counsel, from
both federal income tax and Kansas income tax. Kansas Municipal Securities
has the same definition and includes the same type of securities as set forth
for such term under "Investment Policies-The Kansas Insured Intermediate Fund."
THE KANSAS INSURED INTERMEDIATE FUND. It is a fundamental investment
policy of The Kansas Insured Intermediate Fund, which may not be changed
without the approval of a majority of the Fund's shares, to invest, under
normal market conditions, at least 95% of its total assets in "Kansas
Municipal Securities" which are either covered by insurance guaranteeing the
timely payment of principal and interest thereon or backed by an escrow or
trust account containing sufficient U.S. Government or U.S. Government agency
securities to ensure timely payment of principal and interest. Kansas
Municipal Securities refers to debt obligations the interest payable on
which is, in the opinion of bond counsel to the issuer, exempt from both
federal income taxation and Kansas income taxation. Kansas Municipal
Securities generally include debt obligations of the State of Kansas, its
political subdivisions, municipalities, agencies and authorities and certain
industrial development and other revenue bonds, short-term municipal notes,
municipal leases and tax-exempt commercial paper issued by such entities and
obligations of the Commonwealth of Puerto Rico, the United States Virgin
Islands and Guam. The Kansas Insured Intermediate Fund will not invest more
than 15% of its total assets in Kansas Municipal Securities which are
obligations of the Commonwealth of Puerto Rico, the U.S. Virgin Islands or
Guam.
The Fund may also only invest up to 15% of the Fund's total assets in Kansas
Municipal Securities rated "Aaa" or "AAA" that are entitled to the benefit of
an escrow or trust account which contains securities issued or guaranteed by
the U.S. Government or U.S. Government agencies and backed by the full faith
and credit of the United States sufficient in amount to ensure the payment of
interest and principal on the original interest payment and maturity dates
("collateralized obligations"). Such collateralized obligation generally
will not be insured and will include, but are not limited to, Kansas Municipal
Securities that have been (1) advance refunded where the proceeds of the
refunding have been used to purchase U.S. Government or U.S. Government agency
securities that are placed in escrow and whose interest or maturing principal
payments, or both, are sufficient to cover the remaining scheduled debt
service on the Kansas Municipal Securities, or (2) issued under state or local
housing finance programs which use the issuance proceeds to fund mortgages that
are then exchanged of U.S. Government or U.S. Government agency securities and
deposited with a trustee as security for the Kansas Municipal Securities. Such
collateralized obligations are normally regarded as having the credit
characteristics of the underlying U.S. Government or U.S. Government agency
securities.
THE NEBRASKA MUNICIPAL FUND. It is a fundamental policy of The Nebraska
Municipal Fund, which may not be changed without the approval of the majority
of the Fund's shares, that, under normal circumstances, at least 80% of the
Fund's assets will be invested in "Nebraska Municipal Securities" which
generate income that is exempt, in the opinion of bond counsel, from both
federal income tax and Nebraska income tax.
Nebraska Municipal Securities refers to debt obligations the interest payable
on which is, in the opinion of bond counsel to the issuer, exempt from both
federal income taxation and Nebraska income taxation. Nebraska Municipal
Securities generally include debt obligations of the State of Nebraska, its
political subdivisions, municipalities, agencies and authorities and certain
industrial development and other revenue bonds, short-term municipal notes,
municipal leases and tax-exempt commercial paper issued by such entities.
Nebraska Municipal Securities also include obligations of the Commonwealth
of Puerto Rico, the United States Virgin Islands and Guam, the interest on
which is, in the opinion of bond counsel to the issuer, exempt from federal
income taxation. The Fund will not invest more than 15% of its total assets
in Nebraska Municipal Securities which are obligations of the Commonwealth of
Puerto Rico, the U.S. Virgin Islands or Guam.
THE OKLAHOMA MUNICIPAL FUND. It is a fundamental policy of this Fund, which
may not be changed without the approval of the majority of the Fund's shares,
that under normal market circumstances, at least 70% of the Fund's assets will
be invested in "Oklahoma Municipal Securities" which generate income that is
exempt, in the opinion of bond counsel, from both federal income tax and
Oklahoma income tax and at least 80% of the Fund's assets will be invested in
Oklahoma Municipal Securities which generate income that is exempt, in the
opinion of bond counsel, from federal income tax. Oklahoma Municipal
Securities refers to debt obligations of Oklahoma, its political subdivisions,
municipalities and authorities the interest payable on which is, in the
opinion of bond counsel to the issuer, exempt from federal income taxation.
Oklahoma Municipal Securities generally include debt obligations of the State
of Oklahoma, its political subdivisions, municipalities, agencies and
authorities and certain industrial development and other revenue bonds,
short-term municipal notes, municipal leases and commercial paper issued by
such entities. Oklahoma Municipal Securities include obligations of the
Commonwealth of Puerto Rico, the United States Virgin Islands and Guam, the
interest payable on which is, in the opinion of bond counsel to the issuer,
exempt from federal income taxation. The Fund will not invest more than 30% of
its total assets in Oklahoma Municipal Securities which are obligations of the
Commonwealth of Puerto Rico, the United States Virgin Islands or Guam. The
Fund may invest up to 30% of its total assets in Oklahoma Municipal Securities,
the interest on which is subject to Oklahoma income tax.
Investment Restrictions
Each of the Funds, as a fundamental policy, may not, without the approval
of a majority of the shares of that Fund:
1. Borrow money, except from banks for temporary or emergency
(not leveraging) purposes and then in an amount not exceeding 10% of
the value of the Fund's total assets (including the amount borrowed).
Each Fund will not borrow for leveraging purposes, and securities will
not be purchased while borrowings are outstanding. Interest paid on any
money borrowed will reduce the Fund's net income.
2. Pledge, hypothecate, mortgage or otherwise encumber its assets
in excess of 10% of the value of its total assets (taken at the lower of
cost or current value) and then only to secure borrowings for temporary
or emergency purposes.
3. Purchase securities on margin, except such short-term credits
as may be necessary for the clearance of purchases and sales of securities.
The deposit of initial or maintenance margin by the Fund in connection with
financial futures contracts and related options transactions, including
municipal bond index futures contracts or related options transactions,
is not considered the purchase of a security on margin.
-2-
4. Make short sales of securities or maintain a short position for
the account of the Fund including any short sales "against the box."
5. Underwrite the securities of other issuers, except to the extent
that in connection with the disposition of its portfolio investments, it may
be deemed to be an underwriter under federal securities laws.
6. Purchase or sell real estate, but this shall not prevent the Fund
from investing in securities which are secured by real estate or interest
therein.
7. Purchase or sell commodities or commodity contracts except to the
extent the options and futures contracts a Fund may trade in are considered to
be commodities or commodities contracts.
8. With respect to The Kansas Municipal Fund and The Kansas Insured
Intermediate Fund, make loans to others except through the purchase of
qualified debt obligations and the entry into repurchase agreements referred
to in the Prospectus. With respect to The Nebraska Municipal Fund and The
Oklahoma Municipal Fund, make loans to others except through the purchase of
qualified debt obligations and the entry into repurchase agreements.
9. With respect to The Kansas Municipal Fund and The Kansas Insured
Intermediate Fund, invest more than 25% of its total assets in the
securities of issuers in any single industry; provided that there shall be no
such limitation on the purchase of securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. With respect to The Nebraska
Municipal Fund and The Oklahoma Municipal Fund, invest more than 25% of its
assets in the securities of issuers in any single issuer; provided that there
shall be no such limitation on the purchase of securities issued or guaranteed
by the U.S. Government, its agencies or instrumentalities or by the state
after which the Fund was named or their political subdivisions, municipalities,
agencies and authorities.
(Each Fund may, from time to time, invest more than 25% of its assets in
a particular segment of the municipal bond market; however, the Fund will not
invest more than 25% of its assets in industrial development bonds in a single
industry.)
10. Invest in securities of any issuer if, to the knowledge of the Fund,
officers and Trustees of the Fund or officers and directors of Ranson Capital
Corporation (the "Adviser" or the "Distributor") who beneficially own more than
1/2 of 1% of the securities of that issuer together own more than 5%.
11. Purchase securities restricted as to resale, if, as a result, such
investment would exceed 5% of the value of such Fund's total net assets.
-3-
12. Invest in (a) securities which at the time of such investment are
not readily marketable, including participation interests in municipal leases,
(b) securities the disposition of which is restricted under federal securities
laws (as described in fundamental restriction (11) above) and (c) repurchase
agreements maturing in more than seven days, if, as a result, more than 10%
(15% in the case of the Nebraska Municipal Fund) of such Fund's net assets
(taken at current value) would be invested in securities described in (a),
(b) and (c) above.
13. With respect to The Kansas Insured Intermediate Fund, issue
senior securities, except as described in paragraph 4 above. With
respect to The Nebraska Municipal Fund, issue senior securities, except
that the Fund may borrow money (as described in fundamental restriction
(1) above).
14. With respect to The Oklahoma Municipal Fund and The Kansas
Municipal Fund, invest more than 5% of its total assets in securities of
any one issuer, except that this limitation shall not apply to securities
of the U.S. Government, its agencies and instrumentalities and except that
with respect to 50% of the Fund's total assets, the Fund may invest up to
25% of its total assets in securities of any one issuer.
Each Fund may not change any of these investment restrictions without
the approval of the lesser of (i) more than 50% of the Fund's outstanding
shares or (ii) 67% of the Fund's shares present or represented by proxy at a
meeting at which the holders of more than 50% of the outstanding shares are
present or represented by proxy. Except for restriction (1), if the percentage
restrictions described under "Investment Restrictions" above are satisfied at
the time of the investment or borrowing, a Fund will be considered to have
abided by those restrictions even if, at a later time, a change in values or
net assets causes an increase or decrease in percentage beyond that allowed.
However, with respect to The Oklahoma Municipal Fund, restrictions (1) and
(12) may not be exceeded at any time.
The following investment restrictions of each Fund may be changed by
the Board of Trustees of the Fund.
Each Fund will not:
1. Invest more than 5% of its total assets in the securities of any
other single investment company, nor more than 10% of its total assets in
the securities of two or more other investment companies, except as part
of a merger, consolidation or acquisition of assets.
2. Buy or sell oil, gas or other mineral leases, rights or royalty
contracts.
An advisory fee will be charged for assets invested in securities of
other investment companies. However, each Fund will not invest more than
10% of Its total assets in such securities Any investment by a Fund in
securities issued by other investment companies will result in duplication
of certain fees.
-4-
Diversification and Concentration Policies
Each Fund is a non-diversified investment company under the Investment
Company Act of 1940. This means that more than 5% of a Fund's assets may
be invested in the obligations of any issuer. The Funds, however, intend
to comply with Subchapter M of the Internal Revenue Code (the "Code") that
limits the aggregate value of all holdings (except U.S. Government and cash
items, as defined in the Code) that exceed 5% of the Fund's total assets to
an aggregate amount of 50% of such assets. Also, holdings of a single
issuer (with the same exceptions) may not exceed 25% of a Fund's total
assets. These limits are measured at the end of each quarter. Under the
Subchapter M limits, up to 50% of a Fund's total assets may be invested in as
few as two single issuers. In the event of decline of creditworthiness or
default upon the obligations of one or more such issuers exceeding 5%, an
investment in a Fund will entail greater risk than in a portfolio having a
policy of "diversification" because a high percentage of the Fund's assets
may be invested in municipal obligations of one or two issuers. Furthermore,
a high percentage of investments among few issuers may result in a greater
degree of fluctuation in the market value of the assets of a Fund and
consequently a greater degree of fluctuation of the Fund's net asset value,
because the Fund will be more susceptible to economic, political or
regulatory developments affecting these securities than would be the case
with a portfolio composed of varied obligations of more issuers.
In addition, because of the relatively small number of issuers of
municipal securities in Kansas, Nebraska and Oklahoma, each Fund is more
likely to invest a higher percentage of its assets in the securities of a
single issuer than an investment company which invests in a broad range of
tax-exempt securities. This practice involves an increased risk of loss
to the Fund if the issuer is unable to make interest or principal payments
or if the market value of such securities declines.
As noted in item 9 under "Investment Limitations," a fund will not invest
25% or more of its total assets in any industry. Governmental issuers of
municipal securities are not considered part of an "industry." However,
municipal securities backed only by the assets and revenues of non-
governmental users will for this purpose be deemed to be issued by such non-
governmental users, in which case the 25% limitation would apply to such
obligations. Accordingly, a Fund will not invest 25% or more of its assets
in obligations deemed to be issued by non-governmental users in any one
industry.
Over 25% of the municipal securities in a Fund's portfolio may be health
care revenue bonds. Ratings of bonds issued for health care facilities are
often based on feasibility studies that contain projections of occupancy
levels, revenues and expenses. A facility's gross receipts and net income
available for debt service may be affected by future events and conditions
including, among other things, demand for services, the ability of the
facility to provide the services required, physicians' confidence in the
facility, management capabilities, competition with other hospitals,
efforts by insurers and government agencies to limit rates, legislation
establishing state rate-setting agencies expenses, government regulation,
the cost and possible unavailability of malpractice insurance and the
termination or restriction of governmental financial assistance, including
that associated with Medicare, Medicaid and other similar third party
payor programs. Medicare reimbursements are currently calculated on a
prospective basis utilizing a single nationwide schedule of rates.
Prior to this nationwide approach, Medicare reimbursements were based on the
actual costs incurred by the health facility. The current legislation may
adversely affect reimbursements to hospitals and other facilities for services
provided under the Medicare program.
-5-
Over 25% of the municipal securities in a Fund's portfolio may derive
their payment from mortgage loans. Certain of these municipal securities in
a Fund may be single family mortgage revenue bonds issued for the purpose of
acquiring from originating financial institutions notes secured by mortgages
on residences located within the issuer's boundaries and owned by persons of
low or moderate income. Mortgage loans are generally partially or completely
prepaid prior to their final maturities, as a result of events such as the
sale of the mortgaged premises, default condemnation or casualty loss.
Because these bonds are subject to extraordinary mandatory redemption, in
whole or in part, from such prepayments on mortgage loans, a substantial
portion of such bonds will probably be redeemed prior to their scheduled
maturities or even prior to their ordinary call dates. The redemption price
of such issues may be more or less than the offering price of such bonds.
Extraordinary mandatory redemption without premium could also result from the
failure of the originating financial institutions to make mortgage loans in
sufficient amounts within a specified time period or, in some cases, from the
sale by the Bond issuer of the mortgage loans. Failure of the originating
financial institutions to make mortgage loans would be due principally to the
interest rates on mortgage loans funded from other sources becoming
competitive with the interest rates on the mortgage loans funded with the
proceeds of the single family mortgage revenues available for the payment of
the principal of or interest on such mortgage revenue bonds. Single family
mortgage revenue bonds issued after December 31, 1980, were issued under
Section 103A of the Internal Revenue Code, which Section contains certain
ongoing requirements relating to the use of the proceeds of such bonds in
order for the interest on such bonds to retain its tax-exempt status. In
each case the issuer of the bonds has covenanted to comply with applicable
requirements and bond counsel to such issuer has issued an opinion that the
interest on the bonds is exempt from federal income tax under existing laws
and regulations. There can be no assurance that such ongoing requirements
will be met. The failure to meet these requirements could cause the interest
on the bonds to become taxable, possibly retroactively from the date of
issuance.
Certain of the municipal securities in a Fund's portfolio may be
obligations of issuers whose revenues are primarily derived from mortgage loans
to housing projects for low to moderate income families. The ability of such
issuers to make debt service payments will be affected by events and conditions
affecting financed projects including, among other things, the achievement and
maintenance of sufficient occupancy levels and adequate rental income,
increases in taxes, employment and income conditions prevailing in local labor
markets, utility costs and other operating expenses, the managerial ability of
project managers, changes in laws and governmental regulations, the
appropriation of subsidies and social and economic trends affecting the
localities in which the projects are located. The occupancy of housing
projects may be adversely affected by high rent levels and income limitations
imposed under federal and state programs. Like single family mortgage revenue
bonds, multi-family mortgage revenue bonds are subject to redemption and call
features, including extraordinary mandatory redemption features, upon
prepayment, sale or non-origination of mortgage loans as well as upon the
occurrence of other events. Certain issuers of single or multi-family housing
bonds have considered various ways to redeem bonds they have issued prior to
the stated first redemption dates for such bonds. In one situation, the New
York City Housing Development Corporation, in reliance on its interpretation
of certain language in the indenture under which one of its bond issues was
created, redeemed all of such issue at par in spite of the fact that such
indenture provided that the first optional redemption was to include a
premium over par and could not occur prior to 1992.
-6-
Over 25% of the municipal securities in a Fund's portfolio may be obligations
of issuers whose revenues are primarily derived from the sale of electric
energy. Utilities are generally subject to extensive regulation by state
utility commissions which, among other things, establish the rates which
may be charged and the appropriate rate of return on an approved assets based.
The problems faced by such issuers include the difficulty in obtaining
approval for timely and adequate rate increases from the governing public
utility commission, the difficulty in financing large construction programs,
the limitations on operations and increased costs and delays attributable to
environmental considerations, increased competition, recent reductions in
estimates of future demand for electricity in certain areas of the country,
the difficulty of the capital market in absorbing utility debt, the difficulty
in obtaining fuel at reasonable prices and the effect of energy conservation.
All of such issuers have been experiencing certain of these problems in
varying degrees. In addition, federal, state and municipal governmental
authorities may from time to time review existing and impose additional
regulations governing the licensing, construction and operation of nuclear
power plants, which may adversely affect the ability of the issuers of such
bonds to make payments of principal and/or interest of such bonds.
Over 25% of the municipal securities in a Fund's portfolio may be
university and college revenue obligations. University and college
revenue obligations are obligations of issuers whose revenues are derived
mainly from tuition, dormitory revenues, grants and endowments. General
problems faced by such issuers include declines in the number of "college"
age individuals, possible inability to raise tuitions and fees, the
uncertainty of continued receipt of federal grants and state funding and
government legislation or regulations which may adversely affect the revenues
or costs of such issuers.
INVESTMENTS
Municipal Securities
Each Fund seeks to invest in a portfolio of investment grade municipal
securities which generate interest income that is exempt from both federal
income tax and income tax of the state after which the Fund was named (e.g.,
Nebraska income tax for The Nebraska Municipal Fund). Notwithstanding the
foregoing, The Oklahoma Municipal Fund may invest up to 30% of its total
assets in Oklahoma Municipal Securities which are subject to Oklahoma state
income taxes.
Municipal securities are debt obligations issued by the state, its
political subdivisions, municipalities, agencies and authorities issued to
obtain funds for various public purposes, including the construction or
improvement of a wide range of public facilities such as airports, bridges,
highways, hospitals, housing, jails, mass transportation, nursing homes,
parks, public buildings, recreational facilities, school facilities, streets
and water and sewer works. Other public purposes for which municipal
securities may be issued include the refunding of outstanding obligations,
the anticipation of taxes or state aids, the payment of judgments, the funding
of student loans, community redevelopment, the purchase of street maintenance
and firefighting equipment or any authorized corporate purpose of the issuer
except for the payment of current expenses. In addition, certain types of
industrial development and other revenue bonds may be issued by or on behalf
of public corporations to finance privately operated housing facilities, air
or water pollution control facilities and certain local facilities for water
supply, gas, electricity or sewage or solid waste disposal. Other types of
industrial development bonds, the proceeds of which are used for the
construction, equipping, repair or improvement of privately operated
industrial, commercial or office facilities, constitute municipal securities,
although current federal income tax laws place substantial limitations on the
size of such issues.
-7-
The municipal securities in which a Fund invests consist of its
respective state's tax-exempt bonds, notes, commercial paper and participation
interests in municipal leases, except to the extent The Oklahoma Fund may
invest its assets in Oklahoma Municipal Securities, subject to Oklahoma income
tax, as described in the Funds' Prospectus. Tax-exempt notes and commercial
paper are generally used to provide for short-term capital needs and
ordinarily have a maturity of up to one year. These include notes issued in
anticipation of tax revenue, revenue from other government sources or revenue
from bond offerings and short-term, unsecured commercial paper, which is often
used to finance seasonal working capital needs or to provide interim
construction financing. Tax-exempt leases are obligations of state and local
government units incurred to lease or purchase equipment or other property
utilized by such governments. Each Fund will not originate leases as a
lessor, but will instead purchase a participation interest in the regular
payment stream of the underlying lease from a bank, equipment lessor or other
third party. General obligation bonds are secured by the issuer's pledge of
its faith, credit and taxing power for the payment of principal and interest.
Revenue bonds are payable from the revenue derived from a particular facility
or class of facilities or, in some cases, from the proceeds of a special
excise or other specific revenue source, but not from the general taxing power.
Tax-exempt industrial development bonds are in most cases revenue bonds and
generally do not carry the pledge of the credit of the issuing municipality.
The revenues from which such bonds are paid generally constitute an obligation
of the corporate entity on whose behalf the bonds are issued.
Although the participation in municipal leases which a Fund may purchase
(hereinafter called "lease obligations") do not constitute general obligations
of the municipality for which the municipality's taxing power is pledged, a
lease obligation is ordinarily backed by the municipality's covenant to budget
for, appropriate and make the payments due under the lease obligation.
However, certain lease obligations contain "non-appropriation" clauses which
provide that the municipality has no obligation to make lease payments in
future years unless money is appropriated for such purpose on a yearly basis.
In addition to the "non-appropriation" risk, these securities represent a
relatively new type of financing that has not yet developed the depth of
marketability associated with more conventional bonds and therefore may be
less liquid than other municipal securities. Although "non-appropriation"
lease obligations are secured by the leased property, disposition of the
property in the event of foreclosure might prove difficult. A Fund will only
purchase lease obligations which are rated in the top category by either
Standard & Poor's Corporation ("S&P") or Moody's Investor Service, Inc.
("Moodys"). Each Fund will not invest more than 10% (15% in the case of The
Nebraska Municipal Fund) of its net investment assets in lease obligations
(including, but not limited to those lease obligations which contain "non-
appropriation clauses"), or any other illiquid securities.
-8-
Each Fund will only purchase lease obligations which are covered by
an existing opinion of legal counsel experienced in municipal lease
transactions that, as of the date of issue or purchase of each participation
interest in a municipal lease, the interest payable on such obligation is
exempt from both federal income tax and the relevant state's income tax and
that the underlying lease was the valid and binding obligation of the
governmental issuer.
Each Fund also may purchase floating and variable rate demand notes
from municipal and non-governmental issuers. These notes normally have a
stated maturity in excess of one year, but permit the holder to demand payment
of principal plus accrued interest upon a specified number of days notice.
Frequently, such obligations are secured by letters of credit or other credit
support arrangements provided by banks. Use of letters of credit or other
credit support arrangements will generally not adversely affect the tax-exempt
status of these obligations. Ranson Capital Corporation, the Funds' Adviser,
will rely upon the opinion of the issuer's bond counsel to determine whether
such notes are exempt from federal and the relevant State's income taxation.
The issuer of floating and variable rate demand notes normally has a
corresponding right, after a given period, to prepay in its discretion the
outstanding principal amount of the note plus accrued interest upon a
specified number of days notice to the noteholders. The interest rate on a
floating rate demand note is based on a known lending rate, such as a bank's
prime rate, and is adjusted automatically each time such rate is adjusted.
The interest rate on a variable rate demand note is adjusted at specified
intervals, based upon a known lending rate. The Adviser will monitor the
creditworthiness of the issuers of floating and variable rate demand notes.
Each Fund will not invest in derivative financial instruments other than in
connection with its hedging activities.
As noted, the Funds invest a substantial portion of their assets in
investment grade municipal securities. Lower quality securities involve a
greater risk of default, including nonpayment of principal and interest, than
investment grade securities; however, the risk of default is present in
investment grade securities. Municipal securities rated in the lowest
category of investment grade debt may have speculative characteristics.
Investment in medium-quality debt securities (rated BBB or A by S&P or Baa or
A by Moody's) involves greater investment risk, including the possibility of
issuer default or bankruptcy, than investment in higher-quality debt
securities. Medium-quality municipal securities are considered to possess
adequate, but not outstanding, capacities to service its obligations. An
economic downturn could severely disrupt this market and adversely affect the
value of outstanding bonds and the ability of the issuers to repay principal
and interest. During a period of adverse economic changes, including a period
of rising interest rates, issuers of such bonds are more likely to experience
difficulty in servicing their principal and interest payment obligations than
is the case with higher grade bonds. The principal trading market for the
municipal securities will generally be in the over-the-counter market. As a
result, the existence of a liquid trading market for the municipal securities
may depend on whether dealers will make a market in such securities. There can
be no assurance that a market will be made for any of the municipal securities,
that any market for the municipal securities will be maintained or of the
liquidity of the municipal securities in any markets made. Medium-quality debt
securities tend to be less marketable than higher-quality debt securities
because the market is less liquid. The market for unrated debt securities is
even narrower. During periods of thin trading in these markets, the spread
between bid and asked prices is likely to increase significantly, and a Fund
may have greater difficulty selling the medium-quality debt securities in its
portfolio.
-9-
In addition, certain of the municipal securities in which a Fund invests
may be subject to extraordinary optional and/or mandatory redemptions at par if
certain events should occur. To the extent securities were purchased at a
price in excess of the par value thereof and are subsequently redeemed at par
as a result of an extraordinary redemption, a Fund would suffer a loss of
principal.
In addition to the foregoing, the yields on municipal securities are
dependent on a variety of factors, including general money market conditions,
the financial condition of the issuer, general conditions of the state's tax-
exempt obligation market, the size of a particular offering, the maturity of
the obligation and the rating of the issue or issuer. The ratings of Moody's
and S&P represent their opinions as to the quality of the municipal securities
which they undertake to rate. It should be emphasized, however, that ratings
are general, and not absolute, standards of quality. Consequently, municipal
securities of the same maturity, interest rate and rating may have different
yields, while municipal securities of the same maturity and interest rate
with different ratings may have the same yield. Subsequent to their
purchase by a Fund, particular municipal securities or other investments
may cease to be rated or their ratings may be reduced below the minimum
rating required for purchase by a Fund.
Future Contracts, Options on Futures and Municipal Bond Index Futures
Each Fund may purchase or sell financial futures contracts
("futures contracts") and related options thereon. These futures contracts
and related options thereon will be used only as a hedge against anticipated
interest rate changes. Each Fund may sell a futures contract or a call
option thereon or purchase a put option on such futures contract, if the
Adviser anticipates that interest rates will rise, as a hedge against a
decrease in the value of the Fund's portfolio securities. If the Adviser
anticipates that interest rates will decline, a Fund may purchase a futures
contract or a call option thereon or sell a put option on such futures
contract, to protect against an increase in the price of the securities the
Fund intends to purchase. In general, a futures contract sale creates an
obligation by the Fund, as seller, to deliver the specific type of instrument
called for in the contract at a specified future time for a specified price.
A futures contract purchase would generally create an obligation by the Fund,
as purchaser, to take delivery of the specific type of financial instrument at
a specified future time at a specified price. A purchaser or seller of a
futures contract is required to make daily payments of cash to reflect the
change in the value of the underlying contract. The specific securities
delivered or taken, respectively, at settlement date would not be determined
until on or near that date. The determination would be in accordance with the
rules of the exchange on which the futures contract sale or purchase was
effected.
-10-
Although the terms of futures contracts specify actual delivery or receipt of
securities, in most instances the contracts are closed out before the
settlement date without the making or taking of delivery of the securities.
Closing out a futures contract is usually effected by entering into an
offsetting transaction prior to the expiration of the contract. An offsetting
transaction for a futures contract sale is effected by a Fund entering into a
futures contract purchase for the same aggregate amount of the specific type
of financial instrument at the same delivery date. If the price in the sale
exceeds the price in the offsetting purchase, the Fund immediately is paid
the difference and thus realizes a gain. If the offsetting purchase price
exceeds the sale price, the Fund pays the difference and realizes a loss.
Similarly, the closing out of a futures contract purchase is effected by a
Fund entering into a futures contract sale. If the offsetting sale price
exceeds the purchase price, the Fund realizes a gain, and if the offsetting
sale price is less than the purchase price, the Fund realizes a loss.
Unlike a futures contract, which requires the parties to buy and
sell an instrument on a set date, the purchase of an option on a futures
contract entitles its holder to decide on or before a future date whether
to enter into such a contract (a long position in the case of a call option
and short position in the case of a put option). If the holder decides not
enter into the contract, the premium paid for the contract is lost. Since
the cost of the option is fixed, there are no daily payments of cash by the
purchaser to reflect the change in the value of the underlying contract, as
discussed below for futures contracts. The seller of the option, however,
may be required to make daily maintenance margin payments to reflect the
change in the value of the underlying contract. The value of the option is
reflected in the net asset value of the Fund.
A Fund is required to maintain margin deposits with brokerage firms
through which it effects futures contracts and options thereon. The initial
margin requirements vary according to the type of underlying instrument. In
addition, due to current industry practice, daily variations in gains and
losses on open contracts are required to be reflected in cash in the form of
variation margin payments. A Fund may be required to make additional margin
payments during the term of the contract.
A Fund may purchase or sell interest rate futures contracts covering
these types of financial instruments as well as new types of contracts that
become available in the future.
Financial futures contracts and related options contracts are traded
in an auction environment on the floors of several futures exchanges -
principally, the Chicago Board of Trade, the Chicago Mercantile Exchange
and the New York Futures Exchange.
A risk in employing futures contracts to protect against the price
volatility of portfolio securities is that the prices of securities subject
to futures contracts may not correlate perfectly with the behavior of the
cash prices of the Fund's portfolio securities. The correlation may be
distorted in part by the fact that the futures market is influenced by short-
term traders seeking to profit from the difference between a contract or
security price objective and their cost of borrowed funds. This would reduce
the value of futures contracts for hedging purposes over a short time period.
The correlation may be further distorted since the futures contracts that are
being used to hedge are not based on municipal obligations. In this regard,
the risk of imperfect correlation may be increased by the fact that a Fund
may trade in futures contracts on taxable securities, and there is no
guarantee that the prices of taxable securities will move in a manner
similar to the prices of tax-exempt securities.
-11-
Another risk is that the Adviser could be incorrect in its expectations as to
the direction or extent of various interest rate movements or the time span
within which the movements take place. For example, if the Fund sold futures
contracts in anticipation of an increase in interest rates, and then interest
rates went down, causing bond prices to rise, the Fund would lose money,
including transaction costs, on the sale.
In addition to the risks associated with investing in futures, there are
particular risks associated with trading in options on futures. In particular,
the ability to establish and close out positions on such options will be
subject to the development and maintenance of a liquid market in such options.
It is not certain that this market will develop.
A substantial majority (i.e., approximately 75%) of all anticipatory
hedge transactions (transactions in which the Fund does not own, at the time
of the transaction, but expects to acquire the securities corresponding to
the relevant futures contract) involving the purchase of futures contracts,
call options or written put options thereon will be completed by the purchase
of securities which are the subject of the hedge.
A Fund may not enter into futures contracts or related options thereon
if, immediately thereafter, the amount committed to initial margin plus the
amount paid for option premiums on open contracts exceeds 5% of the value of
the Fund's total assets. In instances involving the purchase of futures
contracts by a Fund, an amount equal to the gross market value of the futures
contract will be deposited in a segregated account of cash and cash equivalents
and thereby ensure that the use of such futures is unleveraged. A Fund may not
purchase or sell futures contracts or related positions if, immediately
thereafter, more than one-third of its net assets would be hedged.
A Fund may utilize trading in municipal bond index futures contracts for
hedging purposes. The strategy in employing such contracts will be similar to
that discussed above with respect to financial futures and options thereon.
A municipal bond index is a method of reflecting in a single number the market
value (based on an average of quotations from certain dealers) of many
different municipal bonds. The index fluctuates in response to changes in the
market values of the bonds included within the index. Unlike futures
contracts on particular financial instruments, futures on a municipal bond
index will be settled in cash if held until the close of trading in the
contract. However, as in any other futures contracts, a position in the
contract may be closed out by purchase or sale of an offsetting contract for
the same delivery month prior to expiration of the contract. Because trading
in municipal bond index futures contracts has been taking place only for a
short time, a Fund's ability to utilize such contracts will be dependent
upon the development and maintenance of a market in such contracts.
The Securities and Exchange Commission generally requires that when
investment companies, such as a Fund, effect transactions of the foregoing
nature, such funds must either segregate cash or high quality, readily
marketable portfolio securities with its custodian in the amount of its
obligation under such transactions or cover such obligations by maintaining
positions in portfolio securities, futures contracts or options that would
serve to satisfy or offset the risk of such obligations. When effecting
transactions of the foregoing nature, a Fund will comply with such
segregation or cover requirements.
-12-
Repurchase Agreements
Each Fund may enter into repurchase agreements with respect to not
more than 10% of its total assets (taken at current value), except when
investing for temporary defensive purposes during times of adverse market
conditions. A repurchase agreement is a contract under which a Fund would
acquire a security for a relatively short period and the seller would
agree to repurchase such security at the Fund's cost plus interest within
a specified time (generally one day). Under the Investment Company Act of
1940, repurchase agreements are considered loans by the Fund. A Fund will
not enter into any repurchase agreement in an amount which would jeopardize
the Fund's status as a regulated investment company or its ability to
distribute tax-exempt dividends. Although a Fund may enter into repurchase
agreements with respect to any securities which it may acquire consistent
with its investment policies and restrictions, it is each Fund's present
intention to enter into repurchase agreements only with respect to obligations
of the U.S. Government or its agencies or instrumentalities and with respect to
its relevant state's municipal securities. The Funds' custodian will hold the
securities underlying any repurchase agreement in a segregated account. In
investing in repurchase agreements, a Fund's risk is limited to the ability
of the seller to pay the agreed-upon price at the maturity of the repurchase
agreement. In the opinion of the Adviser, the risk is not material, since
in the event of default, barring extraordinary circumstances, a Fund would
be entitled to sell the underlying securities or otherwise receive adequate
protection under federal bankruptcy laws for its interest in such
securities. To the extent that proceeds from any sale upon a default are
less than the repurchase price, however, a Fund could suffer a loss. In
addition, a Fund may incur certain delays in obtaining direct ownership of
the collateral.
Forward Commitments
As described in the Funds' Prospectus, each Fund may purchase securities on
a "when issued" or delayed delivery basis, with delivery and payment for the
securities normally taking place within 45 days after the date of the
commitment to purchase. The payment obligation and the interest rate that
will be received on such securities are fixed at the time the buyer enters
into the commitment. Each Fund may enter into such "forward commitments"
if it holds, and maintains until the settlement date in a segregated account
with its custodian, cash or high-grade, short-term obligations in an amount
sufficient to meet the purchase price. There is no percentage limitation on
a Fund's total assets which may be invested in forward commitments. Forward
commitments involve a risk of loss if the value of the municipal securities or
other security to be purchased declines prior to the settlement date, which
risk is in addition to the risk of decline in the value of the Fund's other
assets. Forward commitments also involve the risk that should the securities
ultimately not be issued or delivered and the price of comparable securities
has increased, the cost of substitute securities having comparable par
amounts, ratings and yields will be greater than originally contracted for.
Although each Fund will generally enter into forward commitments with the
intention of acquiring the securities for its portfolio, a Fund may dispose
of a commitment prior to settlement if the Adviser deems it appropriate to do
so. Each Fund may realize short-term profits or losses upon the sale of
forward commitments, which profits or losses may constitute capital gains or
ordinary income depending upon a number of factors, including the number of
sales of such commitments.
-13-
Temporary Investments
Taxable obligations which a Fund may purchase for temporary liquidity
purposes, or for temporary defensive purposes, may include: obligations of
the U.S. Government, its agencies or instrumentalities; other debt securities
of issuers having, at the time of purchase, a rating within the four highest
grades (the highest grade with respect to The Kansas Insured Intermediate
Fund) of Moody's or S&P; commercial paper rated P-1 or better by Moody's
or A-1 or better by S&P; certificates of deposit of domestic banks,
including foreign branches of domestic banks, which have capital, surplus and
undivided profits of over $100 million; time deposits; bankers' acceptances,
repurchase agreements and obligations of the Fund's relevant state with respect
to any of the foregoing investments.
PORTFOLIO TURNOVER
Portfolio transactions will be undertaken principally to accomplish a
Fund's objective in relation to anticipated movements in the general level
of interest rates, but a Fund may also engage in short-term trading consistent
with its objective. Securities may be sold in anticipation of a market
decline (a rise in interest rates) or purchased in anticipation of a market
rise (a decline in interest rates) and later sold. In addition, a security
may be sold and another purchased at approximately the same time to take
advantage of what the Adviser believes to be a temporary disparity in the
normal yield relationship between the two securities. Yield disparities may
occur for reasons not directly related to the investment quality of
particular issues or the general movement of interest rates, due to such
factors as changes in the overall demand for or supply of various types of
municipal securities or changes in the investment objectives of investors.
Each Fund's investment policies may lead to frequent changes in
investments, particularly in periods of rapidly fluctuating interest rates.
A change in securities held by a Fund is known as "portfolio turnover" and
may involve the payment by the Fund of dealer mark-ups or underwriting
commissions and other transaction costs, on the sale of securities,
including municipal securities, as well as on the reinvestment of the
proceeds in other securities. Each Fund anticipates that its annual
portfolio turnover rate will not exceed 75%. Portfolio turnover rate for
a fiscal year is the ratio of the lesser of the dollar amount of the
purchases or sales of portfolio securities to the monthly average of the
value of portfolio securities excluding securities whose maturities at
acquisition were one year or less. Each Fund's portfolio turnover rate will
not be a limiting factor when the Fund deems it desirable to sell or purchase
securities. Frequent changes in a Fund's portfolio securities may result in
higher transaction costs for the Fund.
BOND INSURANCE FOR THE KANSAS INSURED INTERMEDIATE FUND
Each insured Kansas Municipal Security in which The Kansas Insured
Intermediate Fund will invest, will be covered by Original Issue Insurance or
Secondary Market Insurance. In any event, the Fund will invest in Kansas
Municipal Securities insured by insurers having total admitted assets of at
least $75 million, capital and surplus of at least $50 million and claims-
paying ability ratings of "Aaa" by Moody's, "AAA" by S&P, "AAA" by Fitch
IBCA, Inc., or "AAA" by Duff & Phelps. There is no limitation on the
percentage of the Fund's assets that may be invested in Kansas Municipal
Securities insured by any given insurer.
-14-
ORIGINAL ISSUE INSURANCE. Original Issue Insurance is purchased with
respect to a particular issue of municipal obligations by the issuer thereof
or a third party in conjunction with the original issuance of such municipal
obligations. Under such insurance, the insurer unconditionally guarantees,
to the holder of the municipal obligation, the timely payment of principal
and interest on such obligation when and as such payments shall become due,
but shall not be paid by the issuer, except that in the event of any
acceleration of the due date of the principal by reason of mandatory or
optional redemption (other than acceleration by reason of a mandatory sinking
fund payment), default or otherwise, the payments guaranteed may be made in
such amounts and at such times as payments of principal would have been due
had there not been such acceleration. The insurer is responsible for such
payments less any amounts received by the holder from any trustee for the
municipal obligation issuers or from any other source. Original Issue
Insurance does not guarantee payment on an accelerated basis, the payment
of any redemption premium (except with respect to certain premium payments
in the case of certain small issue industrial development and pollution
control municipal obligations), the value of the shares of a Fund, or the
market value of municipal obligations or payments of any tender purchase
price upon the tender of the municipal obligations. Original Issue Insurance
also does not insure against nonpayment of principal of or interest on
municipal obligations resulting from the insolvency, negligence or any
other act or omission of the trustee or other paying agent for such
obligations.
In the event that interest on or principal of a Kansas Municipal
Security, covered by insurance is due for payment but is unpaid by reason
of nonpayment by the issuer thereof, the applicable insurer will make
payments to its fiscal agent (the "Fiscal Agent") equal to such unpaid
amounts or principal and interest not later than one business day after
the insurer has been notified that such nonpayment has occurred (but not
earlier than the date such payment is due). The Fiscal Agent will disburse
to the Fund the amount of principal and interest which is then due for payment
but is unpaid upon receipt by the Fiscal Agent of (i) evidence of the Fund's
right to receive payment of such principal and interest and (ii) evidence,
including any appropriate instruments of assignment, that all of the rights
of payment of such principal or interest then due for payment shall
thereupon vest in the insurer. Upon payment by the insurer of any principal
or interest payments with respect to any Kansas Municipal Securities, the
insurer shall succeed to the rights of the Fund with respect to such payment.
Original Issue Insurance remains in effect as long as the Kansas
Municipal Securities covered thereby remain outstanding and the insurer
remains in business, regardless of whether the Fund ultimately disposes of
such Kansas Municipal Securities. Consequently, Original Issue Insurance may
be considered to represent an element of market value with respect to the
Kansas Municipal Securities so insured, but the exact effect, if any, of this
insurance on such market value cannot be estimated.
SECONDARY MARKET INSURANCE. Subsequent to the time of original issuance
of a Kansas Municipal Security, the Fund, or a third party may, upon the
payment of a single premium, purchase insurance on such Kansas Municipal
Security. Secondary Market Insurance generally provides the same type of
coverage as is provided by Original Issue Insurance and, as is the case with
Original Issue Insurance, Secondary Market Insurance remains in effect as long
as the Kansas Municipal Securities covered thereby remain outstanding and the
insurer remains in business, regardless of whether the Fund ultimately disposes
of such Kansas Municipal Securities.
-15-
ADDITIONAL RISK CONSIDERATIONS
An investment in the Funds are subject to a number of risks, some of which
have been described in the Funds' Prospectus under "Fund Summary" for each
Fund and the "Principal Risk Factors" Section. See also "Investments" and
"Investment Objective, Policies and Restrictions" above for some of the risks
associated with the Funds' investment policies. In addition to the foregoing,
you should note that each Fund is a series of a registered investment company
the shares of which are being offered through the same prospectus.
Accordingly, one Fund could be liable for any misstatement, inaccuracy or
incomplete disclosure in the prospectus concerning another Fund.
As described in the Prospectus, each of the Funds invests primarily
in municipal securities from a specific state. Each Fund is therefore more
susceptible to political, economic or regulatory factors adversely affecting
issuers of municipal securities in its state. Brief summaries of these
factors are contained in the Prospectus. Set forth below is additional
information that bears upon the risk of investing in municipal securities
issued by public authorities in the states of currently offered Funds.
This information was obtained from official statements of issuers located
in the respective states as well as from other publicly available official
documents and statements. The Funds have not independently verified any of
the information contained in such statements and documents. The information
below is intended only as a general summary and is not intended as a
discussion of any specific factor that may affect any particular obligation or
issuer. Additionally, many factors including national economic, social and
environmental policies and conditions, which are not within the control of
issuers of municipal securities, could affect or could have an adverse impact
on the financial condition of a Fund's state and its various agencies and
political subdivisions. The Adviser is unable to predict whether or to what
extent such factors or other factors may affect issuers of municipal
securities in which a Fund invests, the market value or marketability of these
municipal securities or the ability of the respective issuers of the municipal
securities acquired by a Fund to pay interest on or principal of the municipal
securities.
FACTORS PERTAINING TO KANSAS. Since The Kansas Municipal Fund and The
Kansas Insured Intermediate Fund will invest substantially all of its assets
in Kansas Municipal Securities, such Funds are susceptible to political and
economic factors affecting issuers of Kansas Municipal Securities. Kansas is
a largely rural state with a population of approximately 2.6 million. In
1998, Kansas experienced another year of strong economic growth with stability
in durable goods manufacturing and a healthy performance in the service, trade
and construction industries. During 1999 however, nonfarm employment is
expected to increase by only 2.0%, about half of the 1998 increase. During
1998, Kansas' average unemployment rate fell to 3.6%, down slightly from 3.8%
in 1997. Nationally, the average unemployment rates were 4.5% and 4.9% for
1998 and 1997, respectively. Agriculture is one of the most important sectors
of the state's economy. Kansas leads the nation in wheat and sorghum
production, generates about 20% of the nation's cattle for slaughter and is a
major producer of sunflowers, hay and soybeans. In 1999, the farm economy is
expected to remain soft, but production should continue to increase slowly.
The Kansas Constitution provides for the issuance of general obligation bonds
subject to certain restrictions, but no bonds have been issued under this
provision for many years.
-16-
FACTORS PERTAINING TO OKLAHOMA. Since The Oklahoma Municipal Fund will invest
substantially all of its assets in Oklahoma Municipal Securities, the Fund is
susceptible to political and economic factors affecting the issuers of
Oklahoma Municipal Securities. Oklahoma's economy has undergone significant
diversification over the past two decades. Since the oil bust of the early
eighties, the state has broadened its economic base to rely less on petroleum
and agriculture. There have been sizable employment increases in the state's
manufacturing and service sectors over the past ten years, resulting in a
production mix very similar to that of the nation as a whole. Current
economic performance is much better than that experienced during the mid-
1980s. All major sectors of the state's economy, with the exception of
mining, improved during 1998. The state had 1.2% annual employment growth
during 1998. Oklahoma also has one of the lowest unemployment rates in its
region at 4.5%, the same as the national average for 1998. Personal income
growth in the state has continued to remain strong, although Oklahoma dropped
from 43rd to 44th among the states in terms of average per capita personal
income.
Governmental expense budgeting provisions in Oklahoma are conservative,
basically requiring a balanced budget each fiscal year unless a debt is
approved by a vote of the people providing for the collection of a direct
annual tax to pay the debt. Certain limited exceptions include: deficiency
certificates issued at the discretion of the Governor (however, the deficiency
certificates may not exceed $500, in any fiscal year) and debts to repel
invasion, suppress insurrection or to defend the State in the event of war.
To ensure a balanced annual budget, the State Constitution provides
procedures for certification by the State Board of Equalization of revenues
received in the previous fiscal year and amounts available for appropriation
based on a determination of revenues to be received by the State in the
General Revenue Fund in the next ensuing fiscal year.
Beginning July 1, 1985, surplus funds were to be placed in a
Constitutional Reserve Fund until the Reserve Fund equals 10% of the
General Revenue Fund, as certification for the preceding fiscal year.
As of June 30, 1998, this fund balance totaled $297.4 million, half of
which may be appropriated under restricted conditions.
FACTORS PERTAINING TO NEBRASKA. Since The Nebraska Municipal Fund
will invest substantially all of its assets in Nebraska Municipal Securities,
the Fund is susceptible to political and economic factors affecting the
issuers of Nebraska Municipal Securities. Along with positive population
growth, Nebraska has enjoyed regular economic growth during the past few
years. Historically, the state's economy is less cyclical than the national
economy; that is, it typically does not grow as quickly as the national
economy during periods of expansion but also does not contract as much
during periods of recession. Nebraska's economy expanded during 1998 with
steady growth in labor force, employment, retail sales, income and tourism.
Overall, the state's economy will continue to remain strong through 1999
although businesses have indicated weaknesses tied to the agriculture sector.
This could increase migration from rural areas to the cities of Nebraska.
-17-
MANAGEMENT OF THE FUNDS
The management of each Fund, including general supervision of the
duties performed for a Fund under its Investment Advisory Agreement, is
the responsibility of the Trust's Board of Trustees. The number of
trustees of the Trust is four, two of whom are "interested persons" (as
the term "interested persons" is defined in the Investment Company Act of
1940 (the "1940 Act") and three of whom are "disinterested persons." The
names and business addresses of the trustees and officers of the Trust and
their principal occupations and other affiliations during the past five
years are set forth below, with the trustees or officers who are
"interested persons" of the Trust indicated by an asterisk.
<TABLE>
<CAPTION>
NAME, ADDRESS POSITION(S) HELD PRINCIPAL OCCUPATION(S)
AND AGE WITH REGISTRANT (1) DURING PAST 5 YEARS (2)
<S> <C> <C>
Lynn W. Aas Trustee Retired; Attorney; Director, ND Holdings, Inc.
904 NW 27th (May 1988 to August 1994), ND Insured
Minot, ND 58703 Income Fund, Inc. (December 1994 to August
78 1999), ND Tax-Free Fund, Inc., (since
December 1994) Montana Tax-Free Fund,
Inc., (since December 1994) South Dakota
Tax-Free Fund, Inc., (since December 1994)
Integrity Fund of Funds, Inc., and Integrity
Small-Cap Fund of Funds, Inc. (since
September 1998); Director, First
Western Bank & Trust
Orlin W. Backes Trustee Attorney, McGee, Hankla, Backes &
15 2nd Ave., SW - Ste. 305 Wheeler, P.C.; Director, ND Tax-Free Fund,
Minot, ND 58704 Inc. (since April, 1995), ND Insured
64 Income Fund, Inc. (March 1995 to August
1999), Montana Tax-Free Fund, Inc. (since
April, 1995), South Dakota Tax-Free Fund,
Inc. (since April, 1995), Integrity Fund of
Funds, Inc. (since April 1995), and Integrity
Small-Cap Fund of Funds, Inc. (since
September 1998); Director, First Western
Bank & Trust
R. James Maxson Trustee Attorney, Farhart, Lian and Maxson, P.C.;
600 22nd Avenue NW Director, ND Tax-Free Fund, Inc. (since
Minot, ND 58703 January 1999), Montana Tax-Free Fund, Inc.
51 (since January 1999), South Dakota Tax-Free
Fund, Inc. (since January 1999), Integrity
Fund of Funds, Inc. (since January 1999), and
Integrity Small-Cap Fund of Funds, Inc. (since
January 1999)
*Peter A. Quist Vice President Attorney; Director and Vice President, ND
1 North Main and Secretary Holdings, Inc.; Director, Vice President and
Minot, ND 58703 Secretary, ND Money Management, Inc., ND
65 Capital, Inc., ND Resources, Inc., ND Tax-
Free Fund, Inc., ND Insured Income Fund,
Inc. (November 1990 to August 1999),
Montana Tax-Free Fund, Inc., South Dakota
Tax-Free Fund, Inc. (since April 1995),
Integrity Fund of Funds, Inc., Integrity Small-
Cap Fund of Funds, Inc. (since September
1998), The Ranson Company, Inc. (January
1996 to February 1997), and Ranson Capital
Corporation (since January 1996)
*Robert E. Walstad Trustee, Chairman, Director and President, ND Holdings, Inc,
1 North Main President, and Treasurer Director, President and Treasurer, ND Money
Minot, ND 58703 Management, Inc., ND Capital, Inc., ND
55 Resources, Inc., ND Tax-Free Fund, Inc., ND
Insured Income Fund, Inc. (November 1990 to
August 1999), Montana Tax-Free Fund, Inc.,
South Dakota Tax-Free Fund, Inc., Integrity
Fund of Funds, Inc., and Integrity Small-Cap
Fund of Funds, Inc. (since September 1998);
Director, President, CEO, and Treasurer, The
Ranson Company, Inc. (January 1996 to
February 1997), and Ranson Capital
Corporation (since January 1996)
<FN>
- ---------------------------------
(1) Other than Mr. Maxson, Messrs. Aas, Backes and Walstad were elected
to the Board of Trustees at a joint special meeting of the shareholders
of The Kansas Municipal Fund, The Kansas Insured Municipal Fund-Limited
Maturity and The Nebraska Municipal Fund of Ranson Managed Portfolios
held on December 11, 1995, but did not assume office until January 5,
1996. Mr. R. James Maxson was elected to the Board of Trustees on
December 4, 1998, effective January 1, 1999, following the retirement of
Arthur A. Link.
(2) Except as otherwise indicated, each individual has held the office(s)
shown for the past five years.
</FN>
</TABLE>
Trustees, who are not "interested persons" as that term is defined
in the 1940 Act of the Trust, are paid an annual fee of $10,000 for serving
as a director or trustee, as the case may be, on the boards of all the funds
in the Fund complex. In addition to the Trust (which includes the four Funds
which are series of the Trust), the trustees are also directors of five open-
end investment companies advised by ND Money Management, Inc., an affiliate of
the Adviser. The annual fee paid to the trustees is allocated among the funds
in the complex (including each Fund) as follows: Each fund pays a minimum of
$500, and the remainder of the fee is allocated among the funds on the basis
of their relative net asset values. Messrs. Quist and Walstad, who are the
only "interested persons" of such funds, receive no compensation from the
funds.
-19-
The following tables set forth compensation paid by each Fund to each
of the trustees and total compensation paid to each trustee by all the funds
in the complex for the calendar year ended December 31, 1998 The Funds have no
retirement or pension plans.
<TABLE>
<CAPTION>
COMPENSATION TABLE
AGGREGATE*
COMPENSATION AGGREGATE* AGGREGATE* TOTAL**
AGGREGATE* FROM THE KANSAS COMPENSATION COMPENSATION COMPENSATION
COMPENSATION INSURED FROM THE FROM THE FROM FUNDS AND
NAME OF PERSON, FROM THE KANSAS INTERMEDIATE NEBRASKA OKLAHOMA FUND COMPLEX
POSITION(S) MUNICIPAL FUND FUND MUNICIPAL FUND MUNICIPAL FUND PAID TO TRUSTEES
<S> <C> <C> <C> <C> <C>
Lynn W. Aas
Trustee $ 2,356.41 $ 825.50 $ 913.92 $ 685.30 $10,000.00
Orlin W. Backes
Trustee $ 2,356.41 $ 825.50 $ 913.92 $ 685.30 $10,000.00
Arthur A. Link(1)
Trustee $ 2,356.41 $ 825.50 $ 913.92 $ 685.30 $10,000.00
R. James Maxson(2)
Trustee $ -0- $ -0- $ -0- $ -0- $ -0-
Peter A. Quist
Vice President, and
Secretary -0- -0- -0- -0- -0-
Robert E. Walstad
Trustee, Chairman, President,
and Treasurer -0- -0- -0- -0- -0-
------------- ------------ ------------- ------------- -----------
Totals $ 7,069.22 $ 2,476.49 $ 2,741.76 $ 2,055.90 $30,000.00
- -----------------------------
<FN>
(1) Mr. Link has retired effective December 31, 1998, and was paid the
above fees for his services as trustee or director, as the case
may be, for 1998.
(2) Mr. Maxson was appointed to the board of each Fund on December 4, 1998,
effective January 1, 1999.
* Based on compensation paid to the directors for the one-year period ended
December 31, 1998 for services to the respective Fund.
** Based on the compensation paid to the trustees for the one-year period
ended December 31, 1998 for services to the Funds and five other open-
end funds advised by ND Money Management, Inc., an affiliate of the
Adviser.
</FN>
</TABLE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of November 18, 1999 the officers and Trustees of each Fund
owned, as a group, less than 1% of the shares of each Fund.
To the best of the knowledge of the respective Fund, as of
November 18, 1999, the following persons owned, of record or
beneficially 5% or more of the shares of the Funds:
-20-
THE KANSAS INSURED INTERMEDIATE FUND
Name Address Percent Ownership
SEI TRUST COMPANY One Freedom Valley Drive, 14.05%
Oakes, PA 19456
THE OKLAHOMA MUNICIPAL FUND
Name Address Percent Ownership
RSPS Investments, 4712 Tamarisk Drive 5.79%
Inc. L.P. Oklahoma City, OK 73120
As of November 18, 1999, no person owned of record or was known by the
respective fund to own of record or beneficially 5% or more of the
Outstanding shares of The Kansas Municipal Fund or The Nebraska
Municipal Fund.
CUSTODIAN AND TRANSFER AGENT
First Western Bank & Trust, 900 South Broadway, Minot, North Dakota
58701, serves as the custodian of the Funds and has custody of all
securities and cash of the Funds. The custodian, among other things,
attends to the collection of principal and income and payment for and
collection of proceeds of securities bought and sold by the Funds.
ND Resources, Inc. ("Resources" or the "Transfer Agent"), a
wholly-owned subsidiary of ND Holdings, Inc. ("ND Holdings"), a North
Dakota corporation, provides each Fund with accounting services.
Resources is located at 1 North Main, Minot, North Dakota 58703. For these
services, Resources receives an administrative and accounting services fee
payable monthly from each Fund equal to the sum of (i) $2,000 per month and
(ii) 0.05% of the respective Fund's average daily net assets on an annual
basis for such Fund's first $50 million of average daily net assets, 0.04% of
such Fund's average daily net assets on an annual basis for the Fund's next
$50 million of average daily net assets, 0.03% of such Fund's average daily net
assets on an annual basis for the Fund's next $100 million of average daily net
assets, 0.02% of such Fund's average daily net assets on an annual basis for
the Fund's next $300 million of average daily net assets, and 0.01% of such
Fund's average daily net assets on an annual basis for the Fund's average daily
net assets in excess of $500 million, together with reimbursement of
Resource's out-of-pocket expenses.
-21-
For the years ended July 31, 1997, July 31, 1998, and July 30, 1999,
The Kansas Municipal Fund paid $77,994, $76,138 and $ 74,511, respectively,
in administrative and accounting fees. For the year ended July 30, 1997,
July 31, 1998, and July 30, 1999, The Kansas Insured Intermediate Fund
paid Resources $37,836, $38,166, and $ 34,563, respectively, in
administrative and accounting services fees.
For the years ended July 31, 1997, July 31, 1998, and July 30, 1999,
The Nebraska Municipal Fund paid Resources $36,328, $40,831 and $ 39,190,
respectively, of which $36,328, $0, and $ 0, respectively, was waived by
Resources. For the period from commencement of operations on September 25,
1996 to July 30, 1997 and for the fiscal years ending July 31, 1998, and
July 30, 1999, The Oklahoma Municipal Fund paid Resources $23,369, $29,198,
and $ 31,978, respectively, in administrative and accounting services fees,
of which $23,369, $0, and $ 5,686, respectively, was waived by Resources.
INDEPENDENT AUDITORS
Each Fund's independent public accountant is Brady, Martz & Associates,
P.C., 24 West Central Avenue, Minot, North Dakota 58701. Shareholders will
receive annual financial statements, together with a report of independent
auditors and semiannual unaudited financial statements of the Funds. The
independent auditors will report on the Funds' annual financial statements,
review certain regulatory reports and the Funds' income tax returns, and
perform other professional accounting, auditing, tax and advisory services
when engaged to do so by the Funds.
MANAGEMENT AND INVESTMENT ADVISORY AGREEMENT
Ranson Capital Corporation (the Adviser) has been retained by each
Fund under a Management and Investment Advisory Agreement (each as "Agreement")
to act as each Fund's investment adviser, subject to the authority of the
Board of Trustees. The Adviser is a wholly-owned subsidiary of ND Holdings,
Inc., a venture capital corporation organized under the laws of North Dakota
on September 22, 1987. The address of the Adviser is 1 North Main, Minot,
North Dakota 58703.
The Adviser will supply investment research and portfolio management,
including the selection of securities for each Fund to purchase, hold or
sell and the selection of brokers through whom a Fund's portfolio
transactions are executed. The Adviser also administers the business affairs
of each Fund, furnishes offices, necessary facilities and equipment, provides
administrative services and permits its officers and employees to serve
without compensation as trustees and officers of a Fund if duly elected to
such positions.
For the management services and facilities furnished by the Adviser,
each of the Funds has agreed to pay the Investment Adviser an annual
management fee, payable monthly, of 0.50% of the respective Fund's average
daily net assets. Under the terms of each Agreement, the Adviser has agreed
to pay all expenses of a Fund, including the Fund's management and investment
advisory fee and the Fund's dividend disbursing, administrative and accounting
services fees (but excluding taxes and brokerage fees and commissions, if any)
that exceed 1.25% (.75% with respect to The Kansas Insured Intermediate Fund)
of the Fund's average daily net assets on an annual basis (up to the amount of
the investment advisory and management fee payable by the Fund to the
Adviser in the case of The Kansas Municipal Fund, The Nebraska Municipal Fund
and. The Oklahoma Municipal Fund). Reimbursements by the Adviser for such Fund
expenses will be paid monthly based on annualized year to date expenses.
All other expenses shall be paid by the respective Fund. In addition, the
Adviser may at its own discretion from time to time waive fees and reimburse
expenses. The table below sets forth the advisory fees paid by the Funds,
net of any expenses reimbursements, and the fees waived and expenses
reimbursed by the Adviser for the periods indicated.
-22-
<TABLE>
<CAPTION>
Management Fees
Net of Expense Reimbursement Fee Waivers and Expense
to Ranson for the Year Ended Reimbursements for the Year Ended
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
7/31/97 7/31/98 7/30/99 7/31/97 7/31/98 7/30/99
The Kansas Municipal Fund $650,009 $619,124 $592,103 $ 0 $ 0 $ 0
The Kansas Insured Intermediate Fund $138,457 $ 95,378 $ 76,432 $ 0 $ 16,567 $29,229
The Nebraska Municipal Fund $105,643 $ 80,205 $107,311 $ 17,399 $ 56,537 $44,196
The Oklahoma Municipal Fund $ 1,341* $ 3,899 $ 4,998 $ 5,426* $ 47,045 $70,643
- -----------------------------
<FN>
* For the period from commencement of operations on September 25,
1996 to July 31, 1997.
</FN>
</TABLE>
The Agreement with each Fund will continue in effect from year to year if
specifically approved by the Fund's trustees or the Fund's shareholders
and by the Fund's Disinterested trustees in compliance with the requirements
of the 1940 Act. The Agreement may be terminated without penalty upon
60 days' written notice by
either party and will automatically terminate in the event of assignment.
Robert E. Walstad, a trustee and officer of the Trust, and Peter A. Quist,
an officer of the Trust, are also directors and officers of the Adviser as
indicated under "Management of the Funds."
PORTFOLIO TRANSACTIONS
Allocation of portfolio transactions to various brokers is determined
by the Adviser in its best judgment and in a manner deemed fair and
reasonable to shareholders. The Adviser may consider a number of factors
in determining brokers to use for a Fund's portfolio transactions including
the quality, quantity, price and nature of each firm's professional
services. The primary consideration is prompt and efficient execution of
orders in an effective manner at the most favorable price. The Adviser may
consider a broker's services including execution, clearance procedures and
wire service quotations. The Adviser may also consider statistical and other
investment research information provided to the Funds and the Adviser.
Research services may include advice as to the value of securities; quotes to
value a Fund's assets; the advisability of investing in purchasing or
selling securities; the availability of securities or purchasers or sellers
of securities; furnishing analyses and reports concerning issues, industries,
securities, economic factors and trends, portfolio strategy and performance
of accounts. Any research benefits derived are available for all clients of
the Adviser and not all the services may be used by the Adviser in connection
with a Fund. Since statistical and other research information is only
supplementary to the research efforts of the Adviser and still must be
analyzed and reviewed by one of its staff, the receipt of research
information is not expected to materially reduce the Adviser's expenses.
In selecting among the firms believed to meet the criteria for handling a
particular transaction, the Adviser may take into consideration that
certain firms have sold or are selling shares of a Fund and that certain
firms provide market, statistical or other research information to the
Funds and the Adviser. The Adviser and the Funds may place orders to effect
purchases and sales of portfolio securities with and pay brokerage
commissions to brokers that are affiliated with the Funds, the Adviser or
Distributor, or selected dealers participating in the offering of a Fund's
shares. Subject to rules adopted by the Securities and Exchange Commission,
a Fund may also purchase municipal securities from other members of
underwriting syndicates of which the Distributor or other affiliates of the
Funds are members.
-23-
If it is believed to be in the best interests of a Fund, the Adviser
may place portfolio transactions with brokers who provide the types of
service described above, even if it means the respective Fund will have to
pay a higher commission (or, if the broker's profit is part of the cost of
the security, will have to pay a higher price for the security) than would
be the case if no weight were given to the broker's furnishing of there
services. This will be done, however, only if, in the opinion of the Adviser,
the amount of additional commission or increased cost is reasonable in
relation to the value of the services.
If purchases or sales of securities for a Fund, for one or more Funds
of the Trust, investment companies or clients supervised by the Adviser are
considered at or about the same time, transactions in such securities will
be allocated among the Funds, investment companies and other clients in a
manner deemed equitable to all by the Adviser, taking into account the
respective sizes of the funds and the amount of securities to be purchased
or sold. Although it is possible that in some cases this procedure could have
a detrimental effect on the price or volume of the security as far as a Fund
is concerned, it is also possible that the ability to participate in volume
transactions and to negotiate lower brokerage commissions will be beneficial
to the Funds.
The Funds expect that their portfolio transactions in municipal securities
will generally be effected on a principal (as opposed to agency) basis and,
accordingly, do not expect to incur significant brokerage commissions.
Each Fund's cost of portfolio transactions will consist primarily of
dealer or underwriter spreads. The Funds may also pay mark-ups on principal
transactions. Commissions will be paid on the Funds futures and option
transactions, if any.
While the Adviser will be primarily responsible for the placement of
the Funds' business, the policies and practices in this regard must be
consistent with the foregoing and will at all times be subject to review
by the Trustees of the Funds.
The Board of Trustees has adopted certain policies incorporating the
standards of Rule 17e-1 issued by the Securities and Exchange Commission
under the 1940 Act which require that the commissions paid to the
Distributor and other affiliates of the Fund must be reasonable and fair
compared to the commissions, fees or other remuneration received or to be
received by other brokers in connection with comparable transactions involving
similar securities during a comparable period of time. The Rule and procedures
also contain review requirements and require the Adviser to furnish reports to
the Board of Trustees and to maintain records in connection with such reviews.
After consideration of all factors deemed relevant, the Board of Trustees will
consider from time to time whether the advisory fee will be reduced by all or a
portion of the brokerage commissions given to affiliated brokers.
-24-
The table below reflects the aggregate commissions paid by the Funds
for the periods indicated:
<TABLE>
<CAPTION>
Commissions Paid for Fiscal Year Ended
-----------------------------------------
<S> <C> <C> <C>
7/31/97 7/31/98 7/31/99
The Kansas Municipal Fund $ 3,125 $ 84,775 $ 0
The Kansas Insured Intermediate Fund $ 0 $ 3,963 $ 625
The Nebraska Municipal Fund $ 1,050 $ 1,875 $ 0
The Oklahoma Municipal Fund $ 3,063* $ 9,056 $ 0
- ------------------------
<FN>
* For period from commencement of operations on September 25,
1996 to July 31, 1997.
</FN>
</TABLE>
Ranson Capital Corporation, the Fund's Distributor, was
the only dealer through which transaction involving the payment of commissions
was effected. Accordingly, 100% of the brokerage commissions paid by the Funds
(as reflected above) were paid to Ranson Capital Corporation. Fluctuation in
commissions were due to changes in procedures in the purchase and sale of
municipal securities.
THE DISTRIBUTOR
Shares of each Fund are offered on a continuous basis through Ranson
Capital Corporation (the Distributor), a wholly-owned subsidiary of ND
Holdings, Inc., 1 North Main, Minot, North Dakota 58703. Robert E. Walstad
is a trustee, chairman, president and treasurer of the Trust, and Peter A.
Quist is a vice president and secretary of the Trust. Both Mr. Walstad and
Mr. Quist are also directors and officers of the Distributor. Pursuant to a
Distribution and Services Agreement with each Fund, the Distributor will
purchase shares of the Funds for resale to the public, either directly or
through securities brokers dealers, banks or other agents, and is obligated to
purchase only those shares for which it has received purchase orders.
The distributor has agreed to use its best efforts to solicit orders for the
sale of the applicable Fund's shares. The Distributor receives for its
services the excess, if any, of the sales price of a Fund's share less the
net asset value of those shares, and reallows a majority or all of such
amounts to the dealers who sold the shares; the Distributor may act as such a
dealer. The staff of the Securities and Exchange Commission takes the position
that dealers who receive 90% or more of the applicable sales charge may be
deemed underwriters under the Securities Act of 1993, as amended.
-25-
Under the Distribution and Services Agreement between the respective Fund
and the Distributor, the Distributor pays the expenses of distribution of a
Fund's shares, including preparation and distribution of literature relating
to a Fund and its investment performance and advertising and public relations
material. Each Fund bears the expenses of registration of its shares with the
Securities and Exchange Commission and of sending prospectuses to existing
shareholders. The Distributor will permit its officers and employees to serve
without compensation as Trustees and officers of the Funds if duly elected to
such positions. Each Fund will pay the cost of qualifying and maintaining
qualification of the shares for sale under the securities laws of the various
states after the initial qualification of the shares. In addition, The Kansas
Municipal Fund, The Nebraska Municipal Fund and The Oklahoma Municipal Fund
have each adopted a plan pursuant to Rule 12b-1 under the 1940 Act pursuant to
which the respective Fund will pay some costs of the distribution of its
shares. The Kansas Municipal Fund, The Nebraska Municipal Fund and The
Oklahoma Municipal Fund will each pay the Distributor annually 0.25% of the
average daily net assets of respective Fund and the Distributor may in turn
pay firms that sell the respective Fund's shares an annual service fee of up
to 0.25% of average daily net assets of their customer accounts in existence
for more than one year for administrative and shareholder services or use
some or all of such payment to pay other distribution expenses which
otherwise would be payable by the Distributor. See "Shareholder
Services Plan" below.
Each Distribution and Services Agreement continues in effect
from year to year if specifically approved at least annually by the
shareholders or Board of Trustees of the Fund and by the Fund's
Disinterested Trustees in compliance with the Investment Company
Act of 1940. Each agreement applicable to The Kansas Municipal Fund, The
Nebraska Municipal Fund and The Oklahoma Municipal Fund may be terminated
without penalty upon sixty days' written notice by the majority of the
Disinterested Trustees or outstanding voting securities or ninety days'
written notice by the Distributor and will automatically terminate if it is
assigned. The agreement applicable to The Kansas Insured Intermediate Fund
may be terminated by the Distributor or the Fund up on ninety days' written
notice and will automatically terminate if it is assigned.
The following table reflects the amount of underwriting
commissions each Fund paid and the amount retained by the Distributor
for each of the last three fiscal years.
<TABLE>
<CAPTION>
AMOUNT RETAINED
UNDERWRITING COMMISSIONS BY THE DISTRIBUTOR
FUND FOR THE FISCAL YEAR ENDED FOR THE FISCAL YEAR ENDED
------------------------------- ------------------------------
7/31/97 7/31/98 7/31/99 7/31/97 7/31/98 7/31/99
<S> <C> <C> <C> <C> <C> <C>
The Kansas
Municipal Fund $203,847 $240,890 $223,614 $30,956 $37,441 $34,200
The Kansas Insured
Intermediate Fund $19,969 $9,327 $29,792 $2,162 $1,019 $2,708
The Nebraska
Municipal Fund $106,935 $102,856 $128,966 $16,703 $15,842 $19,724
The Oklahoma
Municipal Fund $203,894* $196,274 $235,985 $31,507* $29,538 $36,090
<FN>
* For period from commencement of operations on September 25,
1996 to July 31, 1997.
</FN>
</TABLE>
-26-
The following table sets forth the amount of underwriting commissions,
brokerage commissions, compensation on redemptions and any other compensation
received by the Distributor from the respective Fund during the most recent
fiscal year.
<TABLE>
<CAPTION>
Net Underwriting
Discounts and Brokerage
Fund Commissions Commissions Other
<S> <C> <C> <C>
The Kansas Municipal Fund $34,200 0 $272,623*
The Kansas Insured Intermediate Fund $2,708 $625 0
The Nebraska Municipal Fund $19,724 0 0
The Oklahoma Municipal Fund $36,092 0 0
* The Distributor received this amount under the 12b-1 plan of The Kansas Municipal Fund.
</TABLE>
SHAREHOLDER SERVICES PLANS
The Kansas Municipal Fund, The Nebraska Municipal Fund and The Oklahoma
Municipal Fund have each adopted a shareholder services plan (the "Plan")
pursuant to Rule 12b-1 of the 1940 Act.
Rule 12b-1 provides that any payments made by a Fund in connection
with the distribution of its shares may be made only pursuant to a written
plan describing all material aspects of the proposed financing of the
distribution and also requires that all agreements with any person relating
to the implementation of a plan must be in writing. Each Fund has also
entered into a related Distribution and Services Agreement with the
Distributor.
Under each Fund's Plan, The Kansas Municipal Fund, The Nebraska Municipal
Fund, and The Oklahoma Municipal Fund will each pay the Distributor an annual
fee of up to 0.25% of the average daily net assets of the respective Fund
(the "12b-1 Fee"). The Distributor may use this 12b-1 Fee to pay a fee on
a quarterly basis to broker-dealers, including the Distributor and affiliates
of the adviser, banks and savings and loan institutions and their affiliates
and associated broker-dealers that have entered into Service Agreements with
the Distributor ("Service Organizations") of annual amounts of up to 0.25%
of the average net asset value of all shares of the respective Fund owned by
shareholders with whom the Service Organization has a servicing relationship
(the "Accounts"), provided that no such payment with respect to an Account
shall be made until the Service Organization has been servicing such account
for more than one year. To the extent any of the 12b-1 Fee is not paid to
Service Organizations as a service fee, the Distributor may use such fee for
its expenses of distribution of Fund shares. The 12b-1 Fee to the
Distributor is calculated and paid monthly and the service fee to Service
Organizations is calculated quarterly and paid the month following the
calculation.
-27-
Each Fund's Plan continues in effect from year to year, provided that
each such continuance is approved at least annually by a vote of the Funds'
Board of Trustees, including a majority of the trustees who are not
"interested persons" of such Fund and have no direct or indirect financial
interest in the operation of the Plan or in any agreements entered into
in connection with the Plan (the "Qualified Trustees"). Each Fund's Plan may
be terminated at any time, without penalty, by vote of a majority of the
Qualified Trustees of the Fund or by vote of a majority of the outstanding
shares of the Fund. Any amendment to a Plan to increase materially the
amount the Fund is authorized to pay thereunder would require approval by a
majority of the outstanding shares of the respective Fund. Other material
amendments to a Fund's Plan would be required to be approved by vote of the
Board of Trustees, including a majority of the Qualified Trustees.
The Distributor may at its own discretion waive a portion of its fees
from time to time, although such waiver is not required. The table below
provides the fees paid by Funds, under the Plan, net of waivers, for the
period indicated and the amount of fees waived by the Distributor.
<TABLE>
<CAPTION>
12B-1 FEES PAID AFTER WAIVERS AMOUNT OF 12B-1 FEES WAIVED
FOR FISCAL YEAR BY DISTRIBUTOR FOR
ENDED 7/31/99 FISCAL YEAR ENDED 7/31/99
<S> <C> <C>
The Kansas Municipal Fund $272,623 $ 0
The Nebraska Municipal Fund $ 0 $100,313
The Oklahoma Municipal Fund $ 0 $121,301
</TABLE>
The 12b-1 Fees paid by The Kansas Municipal Fund during the fiscal year
ended July 31, 1998 were spent on $191,679 as compensation to broker-dealers
for services; $4,096 on advertising; $7,691 on distribution-related overhead;
$44,389, for salaries and payroll taxes and $24,768 was retained by the
Distributor.
The Distributor is a wholly-owned subsidiary of ND Holdings. Robert E.
Walstad and Peter A. Quist are directors and president and vice president,
respectively, of Holdings. Mr. Walstad is also a trustee and officer of the
Funds and a director and officer of the Distributor. Mr. Quist is an officer
of the Funds and a director and officer of the Distributor. See "Management
of the Funds." Mr. Walstad and Mr. Quist are also shareholders of ND Holdings
and, accordingly, may indirectly benefit from the payment of 12b-1 Fees or
brokerage commissions by the Funds to the Distributor.
ADDITIONAL INFORMATION ON THE PURCHASE AND REDEMPTION OF SHARES
You may purchase shares of a Fund at the public offering price equal to
the applicable net asset value per share plus an up-front sales charge
imposed at the time of purchase as set forth in the Prospectus. Set forth
below is an example of the method of computing the offering price of the
shares of each of the Funds. The examples assume a purchase on July 30,
1999 of shares from the Fund aggregating less than $50,000, subject to the
schedule of sales charges set forth in the Prospectus, at a price based on
net asset value of the shares:
-28-
<TABLE>
<CAPTION>
THE KANSAS THE NEBRASKA THE OKLAHOMA
MUNICIPAL MUNICIPAL MUNICIPAL
FUND FUND FUND
---------- ------------- -------------
<S> <C> <C> <C>
Net asset value per share $ 11.98 $ 11.01 $ 11.61
Per Share Sales Charge ___ 4.25% of public
offering price (4.44% of net asset value per
share) $ .53 $ .49 $ .52
Per Share Offering Price to the Public $ 12.51 $ 11.50 $ 12.13
Shares Outstanding (July 30, 1999) 9,675,452 3,808,712 1,389,570
</TABLE>
The Kansas Insured
Intermediate Fund
-------------------
Net Asset per share $ 11.98
Per Share Sales Charge __ 2.75% of
public offering price (2.83% of net
asset value per share) $ .34
Per Share Offering Price to the Public $ 12.32
Shares Outstanding (July 30, 1999) 1,781,246
Shares may be purchased at the public offering price through any
securities dealer having a sales agreement with the Distributor. Shares
may also be purchased through banks and certain other financial institutions
that have agency agreements with the Distributor. These financial
institutions will receive transaction fees that are the same as the
commissions to dealers and may charge their customers service fees relating to
investments in the Fund. Purchase requests should be addressed to the dealer
or agent from which this Prospectus was received which has a sales agreement
with the Distributor. Such dealer or agent may place a telephone order with
the Distributor for the purchase of Fund shares. It is a dealer's or
broker's responsibility to promptly forward payment and registration
instructions (or completed applications) to the Transfer Agent for shares
being purchased in order for investors to receive the next determined net
asset value. Reference should be made to the wire order to ensure proper
settlement of the trade. Payment for shares purchased by telephone should
be received within three business days. Payment must be received within
seven days of the order or the trade may be canceled and the dealer or
broker placing the trade will be liable for any losses.
-29-
Each Fund receives the net asset value of all its respective shares
that are sold. The Distributor retains the full applicable sales charge
(the excess of the offering price over the net amount invested) from which
it pays the uniform reallowances shown in the Prospectus to investment
dealers and to its salesmen who sell Fund shares. From time to time the
Distributor may implement programs under which dealers and their
representatives may be eligible to participate in which such firms may
win nominal awards for certain sales efforts or under which the Distributor
will reallow additional concessions to any dealer that sponsors sales
contests or recognition programs conforming to criteria established by the
Distributor or participates in sales programs sponsored by the Distributor.
These programs will not change the price that an investor pays for shares or
the amount that a Fund will receive from such sale.
Each Fund reserves the right to withdraw all or any part of the offering
of its shares and to reject purchase orders. Also, from time to time, a Fund
may temporarily suspend the offering of its shares to new investors. During
the period of such suspension, persons who are already shareholders of the
respective Fund normally will be permitted to continue to purchase additional
shares and to have dividends reinvested.
In order to facilitate redemptions and to eliminate the need for
safekeeping, the Transfer Agent will not issue certificates for shares unless
required to do so by notifying the Transfer Agent in writing that the
investor elects not to be enrolled in the open account program. You may
write to the Transfer Agent, ND Resources, Inc., at 1 North Main, Minot,
North Dakota 58703. The Transfer Agent will send share certificates
representing the full and fractional shares of the respective Fund and
you will be required to surrender the certificates to redeem or exchange
such shares. Fund share certificates will be mailed within 10 days of an
investor's request. Certificates will not be sent outside of the United
States. Investors should promptly notify the respective Fund if certificates
are not received. A Fund will not file a mail loss claim later than one year
after the issuance of Fund share certificates. After one year, investors
requesting replacement certificates may be required to post an insurance
bond in the amount of 2% of the market value of the certificated shares.
Minimum Investment
The minimum initial investment is $1,000, and there is a $50 minimum
on all additional investments (excluding reinvestment of dividends and
capital gains). Each Fund reserves the right to redeem its Fund accounts
that are reduced to a value of less than $1,000 (for any reason other than
fluctuation in the market value of the Fund's portfolio securities).
Should a Fund elect to exercise this right, the investor will be notified
before such redemption is processed that the value of the investor's account
is less than $1,000 and that the investor will have sixty days to increase
the account to at least the $1,000 minimum amount before the account is
redeemed.
-30-
SALES CHARGE REDUCTIONS
Letters of Intent
An investor may qualify for a reduced sales charge immediately by
stating his or her intention to invest in one or more of the Funds, during
a 13-month period, an amount that would qualify for a reduced sales charge
and by signing a nonbinding Letter of Intent, which may be signed at any
time within 90 days after the first investment to be included under the
Letter of Intent. After signing the Letter of Intent, each investment made
by an investor will be entitled to the sales charge applicable to the total
investment indicated in the Letter of Intent. If an investor does not
complete the purchases under the Letter of Intent within the 13-month period,
the sales charge will be adjusted upward, corresponding to the amount
actually purchased. When an investor signs a Letter of Intent, shares of a
Fund with a value of up to 5% of the amount specified in the Letter of Intent
will be restricted. If the total purchases made by an investor under the
Letter of Intent, less redemptions, equals or exceeds the amount specified
in the Letter of Intent, the restriction on the shares will be removed. In
addition, if the total purchases exceed the amount specified and qualify for
a further quantity discount, the Distributor will make a retroactive price
adjustment and will apply the adjustment to purchase additional shares at the
then current applicable offering price. If an investor does not complete
purchases under a Letter of Intent, the sales charge is adjusted upward, and,
if after written notice to the investor, he or she does not pay the increased
sales charge, sufficient restricted shares will be redeemed at the current net
asset value to pay such charge. In connection with the determination of
sales charges applicable to the purchase of shares of a Fund, the Letter of
Intent program will take into account investments in shares of any other
mutual fund carrying a sales load of which Ranson Capital Corporation is
the Distributor.
Group Program
Each Fund has a group investment and reinvestment program (the "Group
Program") which allows investors to purchase shares of a Fund with a lower
minimum initial investment and with a lower sales charge if the investor and
the Group Program of which he or she is a participant meet the cost saving
criteria set forth below.
DESCRIPTION OF GROUP PROGRAM. If the investor's Group Program (such as
an employee investment program) meets the requirements described below, a
Fund will modify the $1,000 initial investment requirement to such minimum
investment as may be determined by the Fund. The sales charge set forth in
the Funds' Prospectus for each purchase by a participant of a Group Program
will be based on (i) the combined current purchases of such group of shares
together with (ii) the combined net asset value of shares of such group at
the time of such investment. The dealer or agent, if any, through which the
Group Program was initiated will be entitled to a dealer concession or agency
commission based on the sales charges paid by participants of such Group
Program.
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CRITERIA FOR THE GROUP PROGRAM. The cost savings criteria to a Fund that must
be met in order for a Group Program to qualify for the benefits set forth above
are:
(a) The administrator of an investor's investment program must have
entered into an agreement with the Distributor.
(b) Such agreement must provide that the administrator must submit a
single order and make payment with a single remittance for all investments
during each investment period (e.g., each pay period or distribution period)
by all investors who choose to invest through the Group Program.
(c) Such agreement must provide that the administrator will provide
the Transfer Agent with appropriate backup data for each participating
investor in a computerized format compatible with the Transfer Agent's
processing system.
ADDITIONAL CRITERIA FOR THE GROUP PROGRAM. As further requirements for
obtaining these special benefits under the Group Program, each Fund requires
that investments be in the form of an open account (with no share certificates
being issued), that all dividends and other distributions be reinvested in
additional shares without any systematic withdrawal program described herein
and that the minimum new investment in shares of a Fund by each participant
in an employee investment program be at least $25 per month. Each Fund
reserves the right to modify or terminate this program at any time.
Rights of Accumulation
A purchase of shares may qualify for a cumulative quantity discount.
The applicable sales charge will be based on the total of:
(a) the investor's current purchase; and
(b) the net asset value (at the close of business on the previous day)
of the shares of the Funds held by an investor.
For example, if an investor owned shares worth $40,000 at the current net
asset value and purchased an additional $10,000 of shares, the sales charge
for the $10,000 purchase would be at the rate applicable to a single $50,000
purchase.
To qualify for the cumulative quantity discount on a purchase through a
broker-dealer, when each purchase is made, the investor or broker-dealer must
provide the respective Fund with sufficient information to verify that the
purchase qualifies for the discount.
Concurrent Purchases
An investor who concurrently purchases shares of The Kansas Insured
Intermediate Fund and shares of The Kansas Municipal Fund will be charged
the sales charge on the respective purchase at the level specified in the
respective prospectus based on the aggregate dollar value of the combined
purchases.
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An investor or his or her dealer or agent must notify the Transfer
Agent whenever a quantity discount is applicable to purchases. Upon such
notification, an investor will receive the lowest applicable sales charge.
Quantity discounts may be modified or terminated by the Distributor at any
time. For more information about quantity discounts, contact the dealer or
agent from which the Funds' Prospectus was obtained or the Distributor.
SALES LOAD WAIVERS
Shares of the Funds may be sold at net asset value to the officers and
Trustees of the Funds, to any subsidiary companies of Ranson Capital
Corporation and to any employees of Ranson Capital Corporation or to members
of their immediate families. Immediate family members shall include spouses,
children, fathers, mothers, brothers or sisters. Shares of the Funds may
also be sold at their net asset value to broker-dealers having sales
agreements with Ranson Capital Corporation, and registered representatives
and other employees of such broker-dealers, including their spouses and
children; to financial institutions having sales agreements with Ranson Capital
Corporation, and employees of such financial institutions, including their
spouses and children; and to any broker-dealer, financial institution or
other qualified firm which receives no commissions for selling shares to its
clients. The elimination of sales loads to these classes of persons is
provided because of reduced sales efforts required and to encourage
participation in the Funds.
Financial institutions may purchase shares of The Kansas Insured
Intermediate Fund for their own account or as a record owner on behalf
of fiduciary or custody accounts subject to a sales charge equal to
0.75% of the public offering price (0.76% of the net amount invested),
which includes a dealer allowance of 0.70% of the public offering price.
State securities laws may require financial institutions purchasing for
their customers to register as dealers. Financial institutions which
purchase shares of the Funds for accounts of their customers may impose
separate charges on these customers for account services. Corporate
payroll plans which qualify as Group Programs as described above may
also purchase shares of the Fund.
Unit Investment Trust Reinvestment
Investors in any Series of The Kansas Tax-Exempt Trust formerly
sponsored by Ranson may reinvest distributions of principal and interest
from such trust in shares of The Kansas Municipal Fund or The Kansas
Insured Intermediate Fund with no sales charge and no minimum investment.
Investors in any Series of The Nebraska Tax-Exempt Trust formerly
sponsored by Ranson may reinvest distributions of principal and interest
from such trust in shares of The Nebraska Municipal Fund with no sales
charge and no minimum investment. Such Funds reserve the right to modify
or terminate this program at any time.
Redemptions from Other Funds
Shares of the Funds may be purchased at net asset value where the amount
invested is documented to the Fund to be proceeds from the redemption of
shares of an unrelated investment company which does not impose a contingent
deferred sales charge or redemption fee and where the investor paid an
initial sales charge. Purchases must be made within 60 days of the
redemption date. Each Fund reserves the right to modify or terminate
this privilege at any time.
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In addition, shares of The Kansas Insured Intermediate Fund may be
purchased at net asset value where the amount invested is documented to the
Fund to be proceeds from the redemption of shares of The Kansas Municipal
Fund. Similarly, where the amount invested is documented to be proceeds from
the redemption of shares of The Kansas Insured Intermediate Fund, shares of
The Kansas Municipal Fund may be purchased at net asset value plus a sales
charge equal to the difference between the sales charge set forth under
"The Shares We Offer" in the Prospectus and the sales charge originally paid
with respect to the redeemed shares of The Kansas Insured Intermediate Fund.
Purchases must be made within 60 days of the redemption date. The Kansas
Municipal Fund and The Kansas Insured Intermediate Fund reserve the right to
modify or terminate these privileges at any time.
SPECIAL PROGRAMS
Exchange Privilege
By contacting the Transfer Agent, a shareholder may exchange some or all
of his shares into any of the funds underwritten by ND Capital, Inc., or
Ranson Capital Corporation at net asset value, subject to these conditions:
(1) When exchanging into shares of a back-end load fund, no contingent
deferred sales charge will be imposed upon redemption of the newly acquired
shares, (2) Shares must be held for at least six months prior to exchange
when exchanging into a higher-load fund, and (3) When exchanging into another
single-state municipal fund, the shareholder must be a resident of that state
or any other state in which the Fund is registered.
Each exchange involves the redemption of fund shares to be exchanged and
the purchases of fund shares. As a result, any gain or loss on the redemption
of fund shares exchanged is reportable on the shareholder's federal income tax
return. The exchange privilege may be changed or discontinued upon 60 days'
written notice to shareholders and is available only to shareholders in states
where such exchanges may be legally made. A shareholder considering an
exchange should obtain and read the prospectus of the fund and consider the
differences between it and the fund whose shares he owns before making an
exchange.
For further information on how to exercise the exchange
privilege, contact the Transfer Agent.
Systematic Withdrawal Program
The owner of $5,000 or more of shares of a Fund (which may not be in
certificated form) may provide for the payment from his or her account of any
requested dollar amount to his or her designated payee monthly, quarterly or
annually. Sufficient shares will be redeemed from the investor's account for
the designated amount so that the payee will receive it approximately the
first of each month. Dividend distributions automatically will be
reinvested under this program. Depending upon the size of the payments
requested, redemptions for the purpose of making such payments may reduce
or even exhaust the account. The program may be terminated at any time by
the investor.
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It ordinarily will be disadvantageous to an investor to purchase
shares (except through reinvestment of distributions) while participating
in a systematic withdrawal program because he or she will be paying a sales
charge to purchase shares at the same time that shares are being redeemed
upon which such investor may already have paid a sales charge. Therefore,
a Fund will not knowingly permit an investor to make additional investments
of less than $5,000 if an investor is at the same time making systematic
withdrawals at a rate greater than the dividend distributions being paid
on such investor's shares. Each Fund reserves the right to amend or
terminate the systematic withdrawal program on thirty days' notice, and
investors may withdraw from the program at any time. For additional
information, see "Systematic Withdrawal Plan" in the Funds' Prospectus.
Preauthorized Investment Program
An investor may establish an automatic investment program with his
or her Fund account. With the Preauthorized Investment Program,
monthly investments (minimum $50) are made automatically from an investor's
account at a bank, savings and loan or credit union into such investor's Fund
account. The Preauthorized Investment Program may not be used with passbook
savings accounts. Each Fund reserves the right to modify or terminate this
program at any time. See "Systematic Investing-The Preauthorized Investment
Program" in the Funds' Prospectus for additional information.
Reinstatement Privilege
An investor who has redeemed shares of a Fund may reinvest up to the full
amount of such redemption at net asset value at the time of reinvestment.
An investor using this privilege a year or more after such investor redeemed
shares of the respective Fund must file a new account application and provide
proof that such investor was a shareholder of the Fund. See "Taxes"
regarding the potential tax implications of exercising this privilege.
Each Fund reserves the right to modify or terminate this privilege at any time.
REDEMPTION OF SHARES
Any shareholder may require its respective Fund to redeem shares.
Redemption requests must be in writing, accompanied by any issued
certificates (for investor protection, certificates should be sent by
registered mail). Redemption requests over $50,000 and any certificates or
stock power must be endorsed by all registered owners with signatures
guaranteed by a member firm of a national securities exchange or by a
commercial bank, savings and loan association or trust company. Further
documentation may be requested from corporations, executors, administrators,
trustees or guardians.
-35-
Alternatively, an investor may place an order to sell shares (whether
in certificate or book entry form) through his or her dealer or agent which
has a sales agreement with the Distributor and from which this Prospectus
was received, which dealer or agent will telephone such request to the
Distributor. The investor will receive the net asset value next determined
after the Distributor receives such sell order from the dealer or agent. A
Fund does not charge for this transaction. Authorized Dealers may change
additional fees for shareholder transactions or for advisory services.
Whether shares are redeemed by the Fund or sold through an investor's
dealer or agent, a check for the proceeds ordinarily will be mailed to an
investor or his or her dealer or agent as promptly as practicable but in no
event later than seven days after a redemption request or repurchase order
and share certificates (if any) are received in proper form as set forth above.
DIVIDENDS AND TAXES
Dividends
Each Fund will declare distributions on a daily basis to shareholders of
record on the date of each declaration and will pay such distributions on a
monthly basis. The monthly distribution will be composed of the investment
income earned by the respective Fund less the expenses of the Fund plus all
or a portion of net short-term capital gains (such net short-term capital
gains reduced by net long-term capital losses, if any, and carryover capital
losses from previous years) realized by the Fund on transactions in
securities. Each Fund will also declare and make distributions of net long-
term capital gains, if any, at least annually. Net long-term capital gain
distributions consist of the realized long-term capital gains on transactions
in securities of the respective Fund, net of certain realized capital losses
and less certain carryover capital losses from previous years.
Each Fund automatically will credit monthly distributions and any capital
gain distributions to an investor's account in additional shares of the
respective Fund valued at net asset value on the date such distributions are
payable, without sales charge, unless an investor notifies the Transfer Agent
to have distributions received in cash. Distributions that are reinvested are
treated as cash distributions for income tax purposes.
A check will be generated on the date on which distributions are payable
for dividends to be received in cash. An investor can expect to receive
this check within seven days. If the U.S. Postal Service cannot deliver
the check or if the checks remain uncashed for six months, the checks will
be reinvested in the investor's account at the then-current net asset value
and all future dividends will be reinvested.
If an investor wants distribution checks sent to other parties, he or she
should notify the Transfer Agent of that fact in writing. If checks are to
be sent to the investor's bank, a voided check should be attached. (A
signature guarantee is not required.) If checks are payable to a person or an
address other than the person or address under which the shares are registered,
a signature guarantee is required.
-36-
If a shareholder has elected to receive dividends and/or capital gain
distributions in cash and the postal or other delivery service is unable to
deliver checks to the shareholder's address of record, such shareholder's
distribution option will automatically be converted to having all dividend
and other distributions reinvested in additional shares. No interest will
accrue on amounts represented by uncashed distribution or redemption checks.
Taxes
Each Fund has elected and intends to qualify each year as a regulated
investment company ("RIC") under Subchapter M of the Internal Revenue Code
of 1986, is amended (the "Code"). If the Fund so qualifies, and timely
distributes to shareholders 90% or more of its taxable income (without regard
to its net capital gain, i.e., the excess of its long-term capital gain over
its short-term capital loss), it will not be subject to federal income tax
on the portion of its taxable income (including any net capital gain) that
it distributes to shareholders. In addition, to the extent the Fund
distributes to shareholders at least 98% of its taxable income (including
any net capital gain), it will not be subject to the 4% excise tax on
certain undistributed income of RICs. The Fund intends to timely distribute
its taxable income (including any net capital gains) to avoid imposition of
federal income tax or the excise tax. If in any year a Fund should fail to
qualify under Subchapter M for tax treatment as a regulated investment
company, a Fund would incur a regular corporate federal income tax upon its
taxable income for that year, and distributions to shareholders of the
respective Fund would be taxable to such shareholders as ordinary income to
the extent of the earnings and profits of the Fund, including distributions
that would otherwise qualify as exempt-interest dividends.
In addition, each Fund intends to invest in sufficient municipal
securities so that it will qualify to pay "exempt-interest dividends"
(as defined in the Code) to shareholders. Each Fund's dividends payable from
net tax-exempt interest earned from municipal securities will qualify as
exempt-interest dividends if, at the close of each quarter of the taxable
year of the Fund, at least 50% of the value of the respective Fund's total
assets consists of tax-exempt municipal securities. Insurance proceeds
received by a Fund under any insurance policies which represent maturing
interest on defaulted obligations held by the Fund will be excludable from
federal gross income if and to the same extent as such interest would have
been so excludable if paid by the issuer of the defaulted obligation, provided
that at the time such policies are purchased, the amounts paid for such
policies are reasonable, customary and consistent with the reasonable
expectation that the issuer of the obligation, rather than the insurer,
will pay debt service on the bonds.
Exempt-interest dividends distributed to shareholders generally are
excluded from gross income for federal income tax purposes except in the
case of certain substantial users of facilities financed with the proceeds
of bonds owned by the Fund and related persons. Such exempt-interest
dividends may be taken into account in determining the alternative minimum
tax, as discussed hereinafter. The percentage of income that is tax-exempt
is applied uniformly to all distributions made during each calendar year and
thus is an annual average for a Fund rather than a day-by-day determination
for each shareholder whether received in shares or in cash. The percentage
of all distributions of earnings other than exempt-interest dividends paid
by a Fund, such as net realized investment income received from investments
in debt securities other than municipal securities, and any net realized
short-term capital gains (including certain amounts deemed distributed) will
generally be taxable to the shareholders as ordinary income. Any
distribution of net realized long-term capital gains (including amounts deemed
distributed) which are properly designated as capital gains dividends by the
Fund will generally be subject to federal taxation as long-term capital
gains ("long-term capital gain distributions"), regardless of the length of
time the investor has held such shares. The Internal Revenue Service
Restructuring and Reform Act of 1998 (the "1998 Tax Act") provides that for
taxpayers other than corporations, net capital gain realized from property
(with certain exclusions) is generally subject to a maximum marginal stated
rate of 20% (10% in the case of certain taxpayers in the lowest tax bracket).
Capital gain or loss is long-term if the holding period for the asset is more
than one year, and is short-term if the holding period is one year or less.
The date on which a share is acquired (i.e., the "trade date") is excluded
for purposes of determining the holding period of the shares. Capital gains
realized from assets held for one year or less are taxed at the same rates as
ordinary income.
-37-
Distributions to shareholders will be taxable to shareholders in the
manner described above, regardless of whether the shareholder receives the
dividends or reinvests them in additional shares of the Fund. All taxpayers
are required to report to the Internal Revenue Service on their tax returns
the amount of tax-exempt interest earned during the year, including exempt
interest dividends from a Fund.
"The Revenue Reconciliation Act of 1993" (the "1993 Tax Act") subjects
tax-exempt municipal securities to the market discount rules of the Code
effective for municipal securities purchased after April 30, 1993. In general,
market discount is the amount (if any) by which the stated redemption price
at maturity exceeds an investor's purchase price (except to the extent that
such difference, if any, is attributable to original issue discount not yet
accrued), subject to a statutory de minimus rule. Market discount can arise
based on the price a Fund pays for municipal securities. Under the 1993 Tax
Act, accretion of market discount is taxable as ordinary income; under prior
law the accretion had been treated as capital gain. Market discount that
accretes while a Fund holds a municipal security would be recognized as
ordinary income by the Fund when principal payments are received on the
municipal security or upon sale or at redemption (including early redemption),
unless the Fund elects to include market discount in taxable income as it
accrues. Distributions to shareholders of a Fund, to the extent of any
market discount that is included in the Fund's taxable income, would be
taxable to shareholders as ordinary income.
For both individuals and corporations, interest paid on certain "private
activity bonds" issued on or after August 8, 1986, will be treated as an item
of tax preference and may, therefore, be subject to the alternative minimum
tax. To the extent provided by regulations to be issued by the Secretary of
the Treasury, exempt-interest dividends paid by a Fund will be treated as
interest on private activity bonds to the extent of the proportionate amount
of interest on such private activity bonds received by the Fund. Such exempt-
interest dividends constitute a tax preference item subject to both the
individual and corporate alternative minimum tax. Each Fund will annually
supply shareholders with a report indicating the percentage of Fund income
attributable to bonds subject to the alternative minimum tax.
-38-
Exempt-interest dividends received by a shareholder which are not with
respect to certain "private activity bonds" are not treated as a tax
preference item. However, for certain corporate shareholders such dividends
will be included in the computation of an adjustment item used in determining
such corporation's alternative minimum tax. The adjustment item is 75% of the
excess of such corporate shareholder's "adjusted current earnings" over its
other alternative minimum taxable income with certain adjustments. Although
exempt-interest dividends received by a shareholder will not be included in
the gross income of corporations for federal income tax purposes, "adjusted
current earnings" include all tax-exempt interest, including exempt-interest
dividends received from the Fund. Corporate shareholders are advised to
consult their tax advisers with respect to the tax consequences of the
alternative minimum tax and the branch profits tax under Section 884 of the
Code.
Although dividends generally will be treated as distributed when paid,
dividends declared in October, November or December, payable to shareholders
of record on a specified date in one of those months and paid during January
of the following year, will be treated as having been distributed by the Fund
(and received by the shareholders) on December 31 of the year such dividends
are declared.
Distributions from a Fund will not generally be eligible for the dividends
received deduction for corporations.
A Fund is required by law to withhold a specified percentage of taxable
dividends and certain other payments, including redemption payments, paid to
non-corporate investors who do not certify to the Fund their correct taxpayer
identification number (in the case of individuals, their social security
number) and in certain other circumstances.
Under Section 86 of the Code, up to 85% of a social security recipient's
benefits may be included in gross income for a benefit recipient if the sum
of his adjusted gross income, income from tax-exempt sources such as tax-
exempt bonds and distributions made by a Fund, plus 50% of his social security
benefits exceeds certain base amounts. Exempt interest dividends from the
Fund are still excluded from gross income to the extent described above;
they are only included in the calculation of whether a recipient's income
exceeds certain established amounts.
Redemption of shares of a Fund will be a taxable transaction for federal
income tax purposes, and such investors will generally recognize gain or loss
in an amount equal to the difference between the basis of the shares and the
amount received. Assuming that investors hold such shares as a capital asset,
the gain or loss will be a capital gain or loss and will generally be long-
term if investors have held such shares for a period of more than one year.
In the case of shareholders holding shares of a Fund for six months or less
and subsequently selling those shares at a loss after receiving an exempt-
interest dividend, the loss will be disallowed to the extent of the exempt-
interest dividends received. If such loss is not entirely disallowed, it will
be treated as a long-term capital loss to the extent any long-term capital
gain distribution is made with respect to such shares during the six-month
period or less that the investor owns the shares. If a loss is realized on
the redemption of Fund shares, the reinvestment in additional Fund shares or
the acquisition of a contract or option to acquire securities that are
substantially identical to the respective Fund shares within 30 days before or
after the redemption may be subject to the "wash sale" rules of the Code,
resulting in a postponement of the recognition of such loss for federal income
tax purposes. In addition, an investor cannot take into account any sales or
similar charge incurred in acquiring shares of a Fund (a "load charge," such
charge does not include amounts paid with respect to the reinvestment of mutual
fund share dividends) in computing gain or loss on the sale of shares of a Fund
if the investor sells such shares within 90 days of the date the shares are
acquired and the investor obtains and subsequently exercises the right to
reinvest in shares of any mutual fund without the payment of a load charge or
with the payment of a reduced charge (However, such charges shall be treated
as incurred in connection with the reinvestment in shares).
-39-
The 1993 Tax Act, the Tax Act includes a provision that may
recharacterize capital gains as ordinary income in the case of certain
financial transactions that are "conversion transactions" effective for
transactions entered into after April 30, 1993. It is possible that this
provision could result in the recharacterization of amounts or distributions
otherwise characterized as capital gains by a Fund or a shareholder as
ordinary income. Shareholders of a Fund should consult with their advisers
regarding the potential effect of this provision on their investment in
shares of the Fund.
Under the Code, certain miscellaneous itemized deductions, such as
investment expenses, tax return preparation fees, and employee business
expenses, will be deductible by individuals only to the extent they exceed
2% of adjusted gross income. Miscellaneous itemized deductions subject to
this limitation do not include expenses incurred by a Fund so long as shares
of the Fund are held by 500 or more persons at all times during the taxable
year or another exception is met. In the event the shares of the Fund are
held by less than 500 persons, additional taxable income may be realized by
individual (and other noncorporate) shareholders in excess of the
distributions received from the Fund.
The Taxpayer Relief Act of 1997 includes provisions that treat certain
transactions designed to reduce or eliminate risk of loss and opportunities
for gain (e.g., short sales, offsetting notional principal contracts,
futures or forward contracts, or similar transactions) as constructive sales
for purposes of gain (but not loss) recognition and for purposes of measuring
the holding period. Shareholders should consult their own tax advisers with
regard to any such constructive sales rules.
Except to the extent described in the Funds' Prospectus under "Appendix-
Additional State Information" regarding Kansas, Nebraska, and Oklahoma income
taxation, the exemption from federal income tax for exempt-interest dividends
does not necessarily result in exemption for such dividends under the income
or other tax laws of any state or local taxing authority. Taxpayers should
consult their own advisers regarding the consequences under such taxes with
respect to the purchase, ownership and disposition of shares of the Funds.
Interest on indebtedness which is incurred to purchase or carry shares
of a mutual fund which distributes exempt-interest dividends during the year
is not deductible for federal income tax purposes. Further, a Fund may not
be an appropriate investment for persons who are "substantial users" of
facilities financed by industrial development bonds held by the respective
Fund or are "related persons" to such users; such persons should consult
their tax advisers before investing in the respective Fund.
-40-
State Taxes
THE KANSAS MUNICIPAL FUND AND THE KANSAS INSURED INTERMEDIATE FUND.
To the extent that exempt-interest dividends are derived from interest on
Kansas Municipal Securities or insurance proceeds under any insurance policies
which represent maturing interest on defaulted Kansas Municipal Securities
that are exempt from Kansas income taxes, such dividends will also qualify as
exempt from Kansas income taxes. Otherwise, both the nonqualifying exempt-
interest dividends and dividends taxable for federal income tax purposes as
ordinary income will be subject to income tax in the hands of the shareholders
of The Kansas Municipal Fund and The Kansas Insured Intermediate Fund.
Distributions treated as long-term capital gains for federal income tax
purposes will generally receive the same characterization under Kansas law.
Corporations and banks are urged to consult their own tax advisers
before investing in The Kansas Municipal Fund and The Kansas Insured
Intermediate Fund.
THE NEBRASKA MUNICIPAL FUND. To the extent that exempt-interest dividends
are derived from interest on Nebraska Municipal Securities that is exempt
from the Nebraska income tax and the Nebraska alternative minimum tax,
such dividends will also qualify as exempt from the Nebraska income tax and
the Nebraska alternative minimum tax. To the extent that exempt interest
dividends are derived from interest on Nebraska Municipal Securities that
is included in the computation of the Nebraska Alternative Minimum tax,
such dividends will also be included in the computation of the Nebraska
alternative minimum tax. Any nonqualifying exempt-interest dividends and
dividends taxable for federal income tax purposes as ordinary income will
be taxable for Nebraska income tax purposes to the shareholders of The
Nebraska Municipal Fund. Distributions treated as long-term capital gains
for federal income tax purposes will generally receive the same
characterization under Nebraska law. In the case of shareholders that are
subject to the Nebraska financial institutions franchise tax, dividends from
the Fund may affect the determination of such shareholders' maximum franchise
tax. Financial institutions are urged to consult their own advisers before
investing in The Nebraska Municipal Fund.
THE OKLAHOMA MUNICIPAL FUND. To the extent that exempt-interest
dividends are derived from interest on Oklahoma Municipal Securities
that is exempt from the Oklahoma income tax, such dividends will also
qualify as exempt from the Oklahoma income tax. However, to the extent
that exempt-interest dividends are derived from interest on Oklahoma
Municipal Securities that is not exempt from Oklahoma income tax, such
dividends will be taxable for Oklahoma income tax purposes to the
shareholders of The Oklahoma Municipal Fund. As discussed earlier such Fund
may invest up to 30% of its total assets in Oklahoma Municipal Securities
which are subject to Oklahoma state income taxes. Any nonqualifying exempt-
interest dividends and dividends taxable for federal income tax purposes as
ordinary income will be taxable for Oklahoma income tax purposes to the
shareholders of The Oklahoma Municipal Fund. Distributions treated as long-
term capital gains for federal income tax purposes will generally receive the
same characterization under Oklahoma law.
The tax discussion set forth above is for general information only. Annually,
shareholders of a Fund receive information as to the tax status of
distributions made by the Fund in each calendar year. The foregoing relates
to federal income taxation as in effect as of the date of this Statement of
Additional Information. Investors should consult their own tax advisers
regarding the federal, state, local, foreign and other tax consequences of
an investment in a Fund, including the effects of any change or any proposed
change, in the tax laws.
-42-
ADDITIONAL INFORMATION REGARDING ORGANIZATION AND SHARE ATTRIBUTES
Ranson Managed Portfolios is a non-diversified, open-end investment
company established under Massachusetts law by an Agreement and Declaration
of Trust ("Trust Agreement") dated August 10, 1990, and is the type of
organization commonly known as a "Massachusetts business trust." It is a
series company as contemplated under Rule 18f-2 under the 1940 Act. Each
of the Funds is a non-diversified management investment company organized as
a series of the Trust. Each Fund is a separate series issuing its own
shares. The Funds currently are the only outstanding series of the Trust.
The Trust Agreement provides that each shareholder, by virtue of becoming
such, will be held to have expressly assented and agreed to the terms of the
Trust Agreement and to have become a party thereto.
The Trust Agreement permits the Trustees to issue an unlimited number of
full and fractional shares, without par value, from each series that is
designated by the Board of Trustees. Each share of a Fund represents an
equal proportionate interest in the assets and liabilities belonging to such
portfolio with each other share of such portfolio and to such dividends and
distributions out of the income belonging to such portfolio as are declared
by the Trustees. The shares do not have cumulative voting rights nor any
preemptive rights or conversion rights. In case of a liquidation, subject
to the rights of creditors, the holders of shares of each portfolio being
liquidated will be entitled to receive as a Series an equal proportionate
interest in the distribution out of the net assets belonging only to that
portfolio. Under the Trust Agreement, expenses attributable to any
specific portfolio (whether start-up for a new portfolio or on-going
operating expenses) will be borne by that portfolio. Any general expenses
of the Fund not readily identifiable as belonging to a particular portfolio
are allocated by or under the direction of the Trustees in such manner as the
Trustees determine to be fair and equitable, usually in proportion to the
portfolio's relative net assets. The net asset value of the shares of any
portfolio will be computed based only upon the net assets of such portfolio.
Under Massachusetts law, if certain conditions prevail, shareholders of a
Massachusetts business trust could be deemed to have the same type of personal
liability for the obligations of a Fund as does a partner of a partnership.
The Trust Agreement contains an express disclaimer of liability on the part of
Fund shareholders and provides that the Fund shall assume the defense on
behalf of its shareholders. Thus, the risk of Fund shareholder liability is
slight and limited to a circumstance where a Fund itself is unable to meet its
obligations.
-42-
As a general matter, each Fund is not required to and does not intend to
hold annual or other meetings of the respective Fund's shareholders. However,
the Trust Agreement provides for Fund shareholder voting with respect to
certain matters, including: (a) the election or removal of one or more
Trustees if a meeting is called for that purpose; (b) any contract as to
which shareholder approval is required by the 1940 Act (such as a Fund's
Management and Investment Advisory Agreement and the Distribution and Services
Agreement); (c) any termination or reorganization of the Trust or any Fund to
the extent and as provided in the Trust Agreement; (d) any amendment of the
Trust Agreement (other than amendments establishing and designating new
series, changing the name of the Trust or the name of any series, supplying
any omission, curing any ambiguity, or curing, correcting, or supplementing
any provision thereof which is internally inconsistent with the 1940 Act or
with the requirements of the Internal Revenue Code and applicable regulations
for a Fund to obtain the most favorable treatment thereunder available to
regulated investment companies), which amendments require approval by more
than 50% of the shares entitled to vote; (e) to the same extent as the
stockholders of a Massachusetts business corporation as to whether or not a
court action, proceeding, or claim should or should not be brought or
maintained derivatively or as a class action on behalf of a Fund or the
shareholders; and (f) with respect to such additional matters relating to the
respective Fund as may be required by the 1940 Act (such as changes in a
Fund's investment policies and restrictions), the Trust Agreement, the by-laws
of a Fund, or any registration of a Fund with the Securities and Exchange
Commission or any state or as the Trustees may consider necessary or desirable.
Meetings of shareholders may be called upon written application specifying
the purpose of the meeting by shareholders holding at least 25% (or 10% if
the purpose of the meeting is to determine if a Trustee is to be removed from
office) of the shares then outstanding. In connection with the shareholders'
right to remove a Trustee, shareholders will be assisted with their
communication in such manner.
Each Trustee serves until the next meeting of shareholders, if any, called
for the purpose of considering the election or reelection of such Trustee or
of a successor to such Trustee, and until the election and qualification of
his successor, if any, elected at such meeting, or until such Trustee sooner
dies, resigns, retires or is removed by the shareholders or two-thirds of the
Trustees.
The Trust Agreement provides that on any matter submitted to a vote of
the shareholders, all Fund shares entitled to vote, irrespective of portfolio,
shall be voted in the aggregate and not by portfolio except that (a) as to
any matter with respect to which a separate vote of any portfolio is required
by the 1940 Act, such requirements as to a separate vote by that portfolio
shall apply in lieu of the aggregate voting as described above, and (b) when
the Trustees have determined that the matter affects only the interests of
one or more portfolios, then only shareholders of the affected portfolios
shall be entitled to vote thereon.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted by the provisions of the 1940 Act or applicable state law, or
otherwise, to the holders of the outstanding voting securities of an
investment company with separate portfolios like this Trust, shall not be
deemed to have been effectively acted upon unless approved by the holders
of a majority of the outstanding shares (as defined below) of each portfolio
"affected by" such matter. Rule 18f-2 further provides that a portfolio
shall be deemed to be affected by a matter unless the interests of each
portfolio in the matter are substantially identical or the matter does not
affect any interests of such portfolio. The Rule specifically exempts the
selection of independent auditors, the approval of principal underwriting
contracts and the election of trustees from such separate voting
requirements. In addition, the Rule provides that a majority vote of a
portfolio's shareholders is effective approval of an advisory contract
for that series, unless state law requires otherwise. In addition,
changes in certain investment policies of an investment company are also
subject to separate voting requirements.
-43-
The Trust Agreement provides that the presence at a meeting of shareholders
in person or by proxy of shareholders entitled to vote at least thirty
percent (30%) of the votes entitled to be cast on a matter (or if voting is
to be by portfolio, shareholders of each portfolio entitled to vote at least
thirty percent (30%) of the votes entitled to be cast by each portfolio)
shall constitute a quorum. This permits a meeting of shareholders of a
Fund to take place even if less than a majority of the shareholders are
present on its scheduled date. Shareholders would in such a case be
permitted to take action which does not require a larger vote than a majority
of a quorum (the election of Trustees and the ratification of the selection of
independent public accountants are examples). Some matters requiring a
larger vote under the Trust Agreement, such as termination or reorganization
of a Fund and certain amendments of the Trust Agreement, would not be affected
by this provision. This is also true with respect to matters which under the
1940 Act require the vote of a majority of the outstanding voting shares (as
defined below) of the Trust or a particular portfolio.
As used in this Statement of Additional Information, the term "majority
of the outstanding shares" of either the Trust or a particular portfolio of
the Trust means the vote of the lesser of (i) 67% or more of the shares of the
Trust or such portfolio present or represented by proxy at a meeting, if the
holders of more 50% of the outstanding shares of the Trust or of such
portfolio are present or represented by proxy, or (ii) more than 50% of the
outstanding shares of the Trust or such portfolio.
Under the terms of the Trust Agreement, a Trustee is liable for his own
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office, and for nothing else, and shall
not be liable for errors of judgment or mistakes of fact or of law. The Trust
Agreement provides for indemnification by the Trust of the Trustees and the
officers of the Trust except with respect to any matter as to which such
person did not act in good faith in the reasonable belief that his action was
in or not opposed to the best interests of the Trust (or the predecessor
corporation) but such person may not be indemnified against any liability to
the Trust or the Trust shareholders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office. The Trust
Agreement also provides that any agreement or undertaking by the Trustees on
behalf of the Trust is binding upon the Trust only and not on the Trustees
personally.
EXPENSES OF THE FUND
Each Fund's expenses include, among others, management and investment
advisory fees, accounting and administrative fees, taxes, brokerage fees
and commissions, if any, fees of Disinterested Trustees, any Rule 12b-1
distribution or service fees, expenses of Trustees' and shareholders'
meetings, insurance premiums, expenses of redemption of shares, expenses
of issue and sale of shares (to the extent not borne by the Distributor),
expenses of printing and mailing certificates, association membership dues,
charges of a Fund's custodian, and bookkeeping, auditing and legal expenses,
and the fees and expenses of registering a Fund and its shares with the
Securities and Exchange Commission, registering or qualifying its shares
under state securities laws and the expenses of preparing and mailing
prospectuses and reports to shareholders.
-44-
PERFORMANCE DATA
From time to time, a Fund may advertise several types of performance
information. These are "current yield," "tax equivalent yield," "distribution
rate," "average annual total return," and "total return" figures. Each of
these figures is based upon historical results and is not necessarily
representative of the future performance of a Fund. These various measures
of performance are described below.
In addition, from time to time, a fund's performance may be compared to
that of the Consumer Price Index or various unmanaged bond indexes and may
also be compared to the performance of other fixed income or government bond
mutual funds or mutual fund indexes as reported by entities such as Lipper
Analytical Services, Inc. ("Lipper"). Lipper is a widely recognized
independent mutual fund reporting service. Lipper performance calculations
are based upon changes in net asset value with all dividends reinvested and
do not include the effect of any sales charges.
YIELD
Yield reflects the income per share deemed earned by a Fund's portfolio
investments. The current yield for the one-month period ending July 30, 1999,
for The Kansas Municipal Fund, The Kansas Insured Intermediate Fund, The
Nebraska Municipal Fund and The Oklahoma Municipal Fund, was 4.73%, 4.38%,
4.77% and 4.76% respectively. Absent fee waivers and expense assumptions,
the 30-day SEC yield as of July 30, 1999 for The Kansas Municipal Fund, The
Kansas Insured Intermediate Fund, The Nebraska Municipal Fund and The Oklahoma
Municipal Fund, was 4.002%, 3.740%, 4.516% and 4.942%, respectively.
Current yield is determined in accordance with a standardized method
prescribed by rules of the Securities and Exchange Commission by dividing
the net investment income earned per share for a stated period (normally one
month or thirty days) and by the maximum public offering price on the last
day of the evaluation period according to the following formula:
CY = 2(a-b/cd + 1)6 -1}
-45-
Where:
a = Dividends and interest earned during the period
b = Expenses accrued for the period (net of reimbursements)
c = Average daily number of shares outstanding during the period that
were entitled to receive dividends
d = The maximum offering price per share on the last day of the period
The Securities and Exchange Commission's rules for calculating current
yield require the use of certain standardized accounting practices which are
not necessarily consistent with those used by a Fund in the preparation of
its audited financial statements or federal tax return. A Fund's yield may
therefore not equal its distribution rate, the income paid to an investor's
account or the income reported in the Fund's financial statements. Each
Fund's current yield figure is based upon historical results and is not
necessarily representative of future performance.
Tax Equivalent Yield
Tax equivalent yield shows the yield from a taxable investment which
would produce an after tax yield equal to that of a fund that invests in
tax-exempt securities. The tax equivalent yield for The Kansas Municipal
Fund, The Kansas Insured Intermediate Fund, The Nebraska Municipal Fund,
and The Oklahoma Municipal Fund, for the one-month period ending July 30,
1999, was 8.74%, 8.07%, 8.86% and 8.86%, respectively. The tax equivalent
yield is determined by dividing that portion of current yield which is tax-
exempt by the remainder of one minus a stated combined federal and state
income tax rate and adding the product to that portion of current yield,
if any, that is not tax-exempt.
The tax equivalent yield for each Fund for the one-month period ending
July 30, 1999, was calculated as follows:
TEY = CY
(1-SITR)
<TABLE>
<CAPTION>
Where:
THE KANSAS THE KANSAS INSURED THE NEBRASKA THE OKLAHOMA
MUNICIPAL FUND INTERMEDIATE FUND MUNICIPAL FUND MUNICIPAL FUND
<S> <C> <C> <C> <C>
TEY = Tax equivalent yield 8.74% 8.07% 8.86% 8.86%
CY = Current yield 4.73% 4.38% 4.77% 4.76%
SITR = Combined Federal and
State Income tax rate* 46.1% 46.1% 46.6% 46.6%
<FN>____________________
* The calculations were based on the highest marginal federal and
state tax rates for 1999.
</FN>
</TABLE>
-46-
Distribution Rate
The distribution return for The Kansas Municipal Fund, The Kansas Insured
Intermediate Fund, The Nebraska Municipal Fund and The Oklahoma Municipal Fund,
for the one-month period ending July 30, 1999, was 4.66%, 4.33%, 4.70%
and 4.70%, respectively. A Fund's distribution return is computed by dividing
the income per share by the number of days in the current month, and the
quotient is multiplied by 360. The result is divided by the offering price
per share on the last day of the month. The distribution rate differs from
yield and total return and therefore is not intended to be a complete measure
of performance. Distribution Return may sometimes differ from yield because
a Fund may be paying out more than it is earning and because it may include
the effect of amortization of bond premiums to the extent such premiums
arise after the bonds were purchased.
Accordingly, the distribution return for each Fund for the one-month
period ending July 30, 1999, was calculated as follows:
DR = IPS(360)/30
POP
<TABLE>
<CAPTION>
Where:
THE KANSAS THE KANSAS INSURED THE NEBRASKA THE OKLAHOMA
MUNICIPAL FUND INTERMEDIATE FUND MUNICIPAL FUND MUNICIPAL FUND
<S> <C> <C> <C> <C>
DR = Distribution return 4.66% 4.33% 4.70% 4.70%
IPS = Income per share $.048786 $.044528 $.045239 $.047673
POP = Public offering price per share $12.51 $12.32 $11.50 $12.31
</TABLE>
Average Annual Total Return
Average annual total return reflects the hypothetical annually compounded
return that would have produced the same cumulative total return if a Fund's
performance had been constant over the entire period. A Fund's average
annual total return quotation is computed in accordance with a standardized
method prescribed by rules of the Securities and Exchange Commission
according to the following formula:
P(1+T)n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
N = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made
at the beginning of the 1-, 5- or 10-year periods at the
end of the 1-, 5- or 10-year periods (or fractional portion), assuming
reinvestment of all dividends and distributions
-47-
Pursuant to the formula, the average annual total return for a Fund for
a specific period is found by first taking a hypothetical $1,000 investment
("initial investment") in the Fund's shares on the first day of the period
reduced by the maximum sales charge in effect on that date and computing the
"redeemable value" of that investment at the end of the period. The
redeemable value is then divided by the initial investment, and the quotient
is taken to the nth root (n representing the number of years in the period)
and 1 is subtracted from the result, which is then expressed as a percentage.
The calculation assumes that all income and capital gains dividends paid by
the Fund have been reinvested at net asset value on the reinvestment dates
during the period.
The following table reflects the average annual total return for each of
the Funds for the periods indicated:
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
--------------------------------------------------------------------------
ONE YEAR* FIVE YEARS* FROM INCEPTION**
ENDED ENDED THROUGH
JULY 30, 1999 JULY 30, 1999 JULY 30, 1999
<S> <C> <C> <C>
The Kansas Municipal Fund (.95%) 4.25% 5.71%
The Kansas Insured Intermediate Fund .85% 4.03% 4.52%
The Nebraska Municipal Fund (.59%) 4.72% 3.71%
The Oklahoma Municipal Fund (.18%) N/A 3.95%
- -------------------------
<FN>
* The return includes the effect of the maximum front-end sales load of
4.25% (2.75% with respect to The Kansas Insured Intermediate Fund).
** The inception date for The Kansas Municipal Fund, The Kansas Insured
Intermediate Fund, and The Nebraska Municipal Fund The Oklahoma
Municipal Fund is November 15, 1990, November 23, 1992, November 17,
1993, and September 25, 1996, respectively.
</FN>
</TABLE>
All performance figures are based on historical results and are not intended
to indicate future performance.
Total Return
Cumulative total return reflects a Fund's performance over a stated period
of time and is computed as follows:
TR = ERV - P
P
Where:
TR = Total return
ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the base period, assuming
reinvestment of all dividends and distributions
P = a hypothetical initial payment of $1,000
-48-
Calculation of cumulative total return is not subject to a prescribed
formula. Cumulative total return for a specific period is calculated by
first taking a hypothetical initial investment in Fund shares on the first
day of the period, deducting (in some cases) the maximum sales charge and
computing the "redeemable value" of that investment at the end of the period.
The cumulative total return percentage is then determined by subtracting the
initial investment from the redeemable value and dividing the remainder by
the initial investment and expressing the result as a percentage. The
calculation assumes that all income and capital gains distributions by the
Fund have been reinvested at net asset value on the reinvestment dates during
the period. Cumulative total return may also be shown as the increased
dollar value of the hypothetical investment over the period. Cumulative
total return calculations that do not include the effect of the sales charge
would be reduced if such charge were included. The following table shows
the total return for the Funds, without including the effect of the sales
charge, for the periods indicated:
<TABLE>
<CAPTION>
Funds Period Total Return
<S> <C> <C>
The Kansas Municipal Fund November 15, 1990 - July 30, 1999 69.36%
The Kansas Insured Intermediate Fund November 23, 1992 - July 30, 1999 38.15%
The Nebraska Municipal Fund November 17, 1993 - July 30, 1999 28.53%
The Oklahoma Municipal Fund September 25, 1996 - July 30, 1999 16.62%
</TABLE>
These cumulative total return figures would be reduced if the calculation
took into account the effect of the sales charge. Cumulative total returns
may be presented in advertising and sales literature taking into account the
effect of sales charges. The Fund's performance figures are based upon
historical results and are not necessarily representative of future
performance. A Fund's shares are sold at net asset value plus a maximum sales
charge set forth in the Funds' Prospectus. Returns and net asset value will
fluctuate. Factors affecting a Fund's performance include general market
conditions, operating expenses and investment management. Any additional fees
charged by a dealer or other financial services firm would reduce the returns
described in this section. Shares of a Fund are redeemable at net asset value,
which may be more or less than original cost.
FINANCIAL STATEMENTS
The audited financial statements for the Fund's most recent fiscal year
appear in the Fund's Annual Report and are incorporated by reference. The
Annual Report accompanies this Statement of Additional Information.
-49-
APPENDIX A
RATINGS OF INVESTMENTS
Standard & Poor's Ratings Group-A brief description of the applicable
Standard & Poor's Ratings Group ("S&P") rating symbols and their meanings
(as published by S&P) follows:
LONG TERM DEBT
An S&P corporate or municipal debt rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation. This
assessment may take into consideration obligors such as guarantors, insurers
or lessees.
The debt rating is not a recommendation to purchase, sell or hold a
security, inasmuch as it does not comment as to market price or suitability
for a particular investor.
The ratings are based on current information furnished by the issuer or
obtained by S&P from other sources it considers reliable. S&P does nor
perform an audit in connection with any rating and may, on occasion, rely
on unaudited financial information. The ratings may be changed, suspended
or withdrawn as a result of changes in, or unavailability of, such
information, or based on other circumstances.
The ratings are based, in varying degrees, on the following
considerations:
1. Likelihood of default-capacity and willingness of the
obligor as to the timely payment of interest and repayment of principal in
accordance with the terms of the obligation;
2. Nature of and provisions of the obligation;
3. Protection afforded by, and relative position of, the obligation
in the event of bankruptcy, reorganization or other arrangement under the
laws of bankruptcy and other laws affecting creditors' rights.
INVESTMENT GRADE
AAA Debt rated 'AAA' has the highest rating assigned by S&P. Capacity
to pay interest and repay principal is extremely strong.
AA Debt rated 'AA' has a very strong capacity to pay interest and
repay principal and differs from the highest rated issues only in
small degree.
A-1
A Debt rated 'A' has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
BBB Debt rated 'BBB' is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher
rated categories.
SPECULATIVE GRADE RATING
Debt rated 'BB', 'B', 'CCC', 'CC' and 'C' is regarded as having
predominantly speculative characteristics with respect to capacity to pay
interest and repay principal. 'BB' indicates the least degree of speculation
and 'C' the highest. While such debt will likely have some quality and
protective characteristics these are outweighed by major uncertainties or
major exposures to adverse conditions.
BB Debt rated 'BB' has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial or
economic conditions which could lead to inadequate capacity to
meet timely interest and principal payments. The 'BB' rating
category is also used for debt subordinated to senior debt that is
assigned in actual or implied 'BBB-' rating.
B Debt rated 'B' has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial or economic conditions will likely
impair capacity or willingness to pay interest and repay principal.
The 'B' rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied 'BB' or 'BB-' rating.
CCC Debt rated 'CCC' has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial and
economic conditions to meet timely payment of interest and repayment
of principal. In the event of adverse business, financial or
economic conditions, it is not likely to have the capacity to pay
interest and repay principal.
The 'CCC' rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied 'B' or 'B-'
rating.
CC The rating 'CC' typically is applied to debt subordinated to senior
debt that is assigned an actual or implied 'CCC' debt rating.
A-2
C The rating 'C' typically is applied to debt subordinated to senior
debt which is assigned an actual or implied 'CCC-' debt rating.
The 'C' rating may be used to cover a situation where a bankruptcy
petition has been filed, but debt service payments are continued.
CI The rating 'CI' is reserved for income bonds on which no interest is
being paid.
D Debt rated 'D' is in payment default. The 'D' rating category is
used when interest payments or principal payments are not made on
the date due even if the applicable grace period has not expired,
unless S&P believes that such payments will be made during such grace
period. The 'D' rating also will be used upon the filing of a
bankruptcy petition if debt service payments are jeopardized.
Plus (+) or Minus (-): The ratings from 'AA' to 'CCC' may be modified
by the addition of a plus or minus sign to show relative standing within the
major rating categories.
Provisional Ratings: The letter "p" indicates that the rating is
provisional. A provisional rating assumes the successful completion of the
project financed by the debt being rated and indicates that payment of debt
service requirements is largely or entirely dependent upon the successful and
timely completion of the project. This rating, however, while addressing credit
quality subsequent to completion of the project, makes no comment on the
likelihood of, or the risk of default upon failure of, such completion. The
investor should exercise judgment with respect to such likelihood and risk.
L The letter 'L' indicates that the rating pertains to the principal
amount of those bonds to the extent that the underlying deposit
collateral is federally insured by the Federal Savings & Loan
Insurance Corp. or the Federal Deposit Insurance Corp.* and interest
is adequately collateralized. In the case of certificates of
deposit the letter 'L' indicates that the deposit, combined with
other deposits being held in the same right and capacity will be
honored for principal and accrued pre-default interest up to the
federal insurance limits within 30 days after closing of the insured
institution or, in the event that the deposit is assumed by a
successor insured institution, upon maturity.
[FN]
( Continuance of the rating is contingent upon S&P's receipt of an executed
copy of the escrow agreement or closing documentation confirming investments
and cash flow.
</FN>
NR Indicates no rating has been requested, that there is insufficient
information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
MUNICIPAL NOTES
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in 3 years or less will likely receive a note
rating. Notes maturing beyond 3 years will most likely receive a long-term
debt rating. The following criteria will be used in making that assessment:
-Amortization schedule (the larger the final maturity relative to other
maturities, the more likely it will be treated as a note).
-Source of payment (the more dependent the issue is on the market
for its refinancing, the more likely it will be treated as a note).
NOTE RATING SYMBOLS ARE AS FOLLOWS:
SP-1 Strong capacity to pay principal and interest. An issue
determined to possess a very strong capacity to pay debt
service is given a plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest with
some vulnerability to adverse financial and economic changes
over the term of the notes.
SP-3 Speculative capacity to pay principal and interest.
A note rating is not a recommendation to purchase, sell or hold a
security inasmuch as it does not comment as to market price or suitability
for a particular investor. The ratings are based on current information
furnished to S&P by the issuer or obtained by S&P from other sources it
considers reliable. S&P does not perform an audit in connection with any
rating and may, on occasion, rely on unaudited financial information. The
ratings may be changed, suspended or withdrawn as a result of changes in or
unavailability of such information or based on other circumstances.
COMMERCIAL PAPER
An S&P commercial paper rating is a current assessment of the likelihood
of timely payment of debt having an original maturity of no more than 365 days.
Ratings are graded into several categories, ranging from 'A-l' for the highest
quality obligations to 'D' for the lowest. These categories are as follows:
A-1 This designation indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus sign
(+) designation.
A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as
high as for issues designated 'A-1.'
A-4
A-3 Issues carrying this designation have adequate capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the
higher designations.
B Issues rated 'B' are regarded as having only speculative capacity
for timely payment.
C This rating is assigned to short-term debt obligations with a
doubtful capacity for payment.
D Debt rated 'D' is in payment default. The 'D' rating category is
used when interest payments or principal payments are not made on
the date due, even if the applicable grace period has not expired,
unless S&P believes that such payments will be made during such
grace period.
A commercial rating is not a recommendation to purchase, sell or hold a
security inasmuch as it does not comment as to market price or suitability
for a particular investor. The ratings are based on current information
furnished to S&P by the issuer or obtained by S&P from other sources it
considers reliable. S&P does not perform an audit in connection with any
rating and may, on occasion, rely on unaudited financial information. The
ratings may be changed, suspended or withdrawn as a result of changes in or
unavailability of such information or based on other circumstances.
Moody's Investors Service, Inc.-A brief description of the applicable
Moody's Investors Service, Inc. ("Moody's") rating symbols and their meanings
(as published by Moody's) follows:
LONG TERM DEBT
An S&P corporate or municipal debt rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation.
This assessment may take into consideration obligors such as guarantors,
insurers or lessees.
The debt rating is not a recommendation to purchase, sell, or hold a
security, inasmuch as it does not comment as to market price or suitability
for a particular investor.
The ratings are based on current information furnished by the issuer or
obtained by S&P from other sources it considers reliable. S&P does not
perform an audit in connection with any rating and may, on occasion, rely on
unaudited financial information. The ratings may be changed, suspended, or
withdrawn as a result of changes in, or unavailability of, such information,
or based on other circumstances.
The ratings are based, in varying degrees, on the following considerations:
1. Likelihood of default-capacity and willingness of the obligor as
to the timely payment of interest and repayment of principal in accordance
with the terms of the obligation;
A-5
2. Nature of and provisions of the obligation;
3. Protection afforded by, and relative position of, the obligation
in the event of bankruptcy, reorganization or other arrangement under the
laws of bankruptcy and other laws affecting creditors' rights.
INVESTMENT GRADE
AAA Debt rated 'AAA' has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA Debt rated 'AA' has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small
degree.
A Debt rated 'A' has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
debt in higher rated categories.
BBB Debt rated 'BBB' is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits
adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for debt in this
category than in higher rated categories.
SPECULATIVE GRADE RATING
Debt rated 'BB', 'B', 'CCC, 'CC' and 'C' is regarded as having
predominantly speculative characteristics with respect to capacity to pay
interest and repay principal. 'BB' indicates the least degree of speculation
and 'C' the highest. While such debt will likely have some quality and
protective characteristics these are outweighed by major uncertainties or
major exposures to adverse conditions.
BB Debt rated 'BB' has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial or
economic conditions which could lead to inadequate capacity to meet
timely interest and principal payments. The 'BB' rating category is
also used for debt subordinated to senior debt that is assigned an
actual or implied 'BBB-' rating.
B Debt rated 'B' has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial or economic conditions will likely
impair capacity or willingness to pay interest and repay principal.
The 'B' rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied 'BB' or 'BB-' rating.
A-6
CCC Debt rated 'CCC' has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial and
economic conditions to meet timely payment of interest and repayment
of principal. In the event of adverse business, financial or
economic conditions, it is not likely to have the capacity to pay
interest and repay principal.
The 'CCC' rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied 'B' or 'B-'
rating.
CC The rating 'CC' typically is applied to debt subordinated to senior
debt that is assigned an actual or implied 'CCC' debt rating.
C The rating 'C' typically is applied to debt subordinated to senior
debt which is assigned an actual or implied 'CCC-' debt rating.
The 'C' rating may be used to cover a situation where a bankruptcy
petition has been filed, but debt service payments are continued.
CI The rating 'CI' is reserved for income bonds on which no interest
is being paid.
D Debt rated 'D' is in payment default. The 'D' rating category is
used when interest payments or principal payments are not made on the
date due even if the applicable grace period has not expired, unless
S&P believes that such payments will be made during such grace
period. The 'D' rating also will be used upon the filing of a
bankruptcy petition if debt service payments are jeopardized.
Plus (+) or Minus (-): The ratings from 'AA' to 'CCC' may be modified
by the addition of a plus or minus sign to show relative standing within the
major rating categories.
Provisional Ratings: The letter "p" indicates that the rating is
provisional. A provisional rating assumes; the successful completion of the
project financed by the debt being rated and indicates that payment of debt
service requirements is largely or entirely dependent upon the successful and
timely completion of the project. This rating, however, while addressing
credit quality subsequent to completion of the project, makes no comment on
the likelihood of, or the risk of default upon failure of, such completion.
The investor should exercise judgment with respect to such likelihood and risk.
L The letter 'L' indicates that the rating pertains to the principal
amount of those bonds to the extent that the underlying deposit
collateral is federally insured by the Federal Savings & Loan
Insurance Corp. or the Federal Deposit Insurance Corp.* and interest
is adequately collateralized. In the case of certificates of
deposit the letter 'L' indicates that the deposit, combined with
other deposits being held in the same right and capacity will be
honored for principal and accrued pre-default interest up to the
federal insurance limits within 30 days after closing of the insured
institution or, in the event that the deposit is assumed by a
successor insured institution, upon maturity.
[FN]
( Continuance of the rating is contingent upon S&P's receipt of an executed
copy of the escrow agreement or closing documentation confirming investments
and cash flow.
</FN>
A-7
NR Indicates no rating has been requested, that there is insufficient
information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
MUNICIPAL NOTES
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in 3 years or less will likely receive a note
rating. Notes maturing beyond 3 years will most likely receive a long-
term debt rating. The following criteria will be used in making that
assessment:
-Amortization schedule (the larger the final maturity relative to other
maturities, the more likely it will be treated as a note).
-Source of payment (the more dependent the issue is on the market
for its refinancing, the more likely it will be treated as a note).
NOTE RATING SYMBOLS ARE AS FOLLOWS:
SP-1 Strong capacity to pay principal and interest. An issue determined
to possess a very strong capacity to pay debt service is given a
plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest with some
vulnerability to adverse financial and economic changes over the
term of the notes.
SP-3 Speculative capacity to pay principal and interest.
A note rating is not a recommendation to purchase, sell, or hold a
security inasmuch as it does not comment as to market price or suitability
for a particular investor. The ratings are based on current information
furnished to S&P by the issuer or obtained by S&P from other sources it
considers reliable. S&P does not perform an audit in connection with any
rating and may, on occasion, rely on unaudited financial information. The
ratings may be changed, suspended, or withdrawn as a result of changes in or
unavailability of such information or based on other circumstances.
COMMERCIAL PAPER
An S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365 days.
A-8
Ratings are graded into several categories, ranging from 'A-1' for the highest
quality obligations to 'D' for the lowest. These categories are as follows:
A-1 This designation indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus sign
(+) designation.
A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as
high as for issues designated 'A-1'.
A-3 Issues carrying this designation have adequate capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the
higher designations.
B Issues rated 'B' are regarded as having only speculative capacity
for timely payment.
C This rating is assigned to short-term debt obligations with a
doubtful capacity for payment.
D Debt rated 'D' is in payment default. The 'D' rating category is
used when interest payments or principal payments are not made on
the date due, even if the applicable grace period has not expired,
unless S&P believes that such payments will be made during such
grace period.
A commercial rating is not a recommendation to purchase, sell or hold a
security inasmuch as it does not comment as to market price or suitability for
a particular investor. The ratings are based on current information furnished
to S&P by the issuer or obtained by S&P from other sources it considers
reliable. S&P does not perform an audit in connection with any rating and
may, on occasion, rely on unaudited financial information. The ratings may
be changed, suspended, or withdrawn as a result of changes in or
unavailability of such information or based on other circumstances.
Moody's Investors Service, Inc.-A brief description of the applicable
Moody's Investors Service, Inc. ("Moody's") rating symbols and their meanings
(as published by Moody's) follows:
LONG TERM DEBT
Aaa Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a
large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
A-9
Aa Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in
Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which
make the long-term risks appear somewhat larger than in Aaa
securities.
A Bonds which are rated A possess may favorable investment attributes
and are to be considered as upper medium grade obligations.
Factors giving security to principal and interest are considered
adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future.
Moody's bond rating symbols may contain numerical modifiers of a
generic rating classification. The modifier 1 indicates that the
bond ranks at the high end of its category; the modifier 2
indicates a mid-range ranking, and the modifier 3 indicates that
the issue ranks in the lower end of its generic rating category.
Baa Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate
for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact
have speculative characteristics as well.
Ba Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate
and thereby not well safeguarded during both good and bad times over
the future. Uncertainty of position characterizes bonds in this
class.
B Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments
or of maintenance of other terms of the contract over any long
period of time may be small.
Caa Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with
respect to principal or interest.
Ca Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other
marked shortcomings.
C Bonds which are rated C are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects
of ever attaining any real investment standing.
Con(..)Bonds for which the security depends upon the completion of some
act or the fulfillment of some condition are rated conditionally.
These are bonds secured by (a) earnings of projects under
construction, (b) earnings of projects unseasoned in operation
experience, (c) rentals which begin when facilities are completed,
or (d) payments to which some other limiting condition attaches.
Parenthetical rating denotes probable credit stature upon completion
of construction or elimination of basis of condition.
A-10
Note: Those bonds in the Aa, A, Baa, Ba and B groups which Moody's
believes possess the strongest investment attributes are
designated by the symbols Aal, Al, Baal, Bal and Bl.
MUNICIPAL SHORT-TERM LOANS
MIG 1/VMIG 1 This designation denotes best quality. There is present
strong protection by established cash flows, superior
liquidity support or demonstrated broad based access to the
market for refinancing.
MIG 2/VMIG 2 This designation denotes high quality. Margins or protection
are ample although not so large as in the preceding group.
MIG 3/VMIG 3 This designation denotes favorable quality. All security
elements are accounted for but there is lacking the
undeniable strength of the preceding grades. Liquidity and
cash flow protection may be narrow and market access for
refinancing is likely to be less well-established.
MIG 4/VMIG 4 This designation denotes adequate quality. Protection
commonly regarded as required of an investment security is
present and although not distinctly or predominantly
speculative, there is specific risk.
COMMERCIAL PAPER
Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of senior short-term promissory obligations.
Prime-1 repayment capacity will often be evidenced by many of the following
characteristics:
-Leading market positions in well-established industries.
-High rates of return on Fund employed.
-Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
-Broad margins in earnings coverage of fixed financial charges and
high internal cash generation.
A-11
-Well-established access to a range of financial markets and assured
sources of alternate liquidity.
Issuers rated Prime-2 (or related supporting institutions) have a strong
capacity for repayment of senior short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, may be more
subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
Issuers rated Prime-3 (or related supporting institutions) have an
acceptable capacity for repayment of senior short-term promissory
obligations. The effect of industry characteristics and market compositions
may be more pronounced. Variability in earnings and profitability may result
in changes in the level of debt protection measurements and may require
relatively high financial leverage. Adequate alternate liquidity is
maintained.
Issuers rated Not Prime do not fall within any of the Prime rating
categories.
Duff & Phelps, Inc.-A brief description of the applicable Duff & Phelps,
Inc. ("D&P") ratings symbols and their meanings (as published by D&P) follows:
LONG TERM DEBT
These ratings represent a summary opinion of the issuer's long-term
fundamental quality. Rating determination is based on qualitative and
quantitative factors which may vary according to the basic economic and
financial characteristics of each industry and each issuer. Important
considerations are vulnerability to economic cycles as well as risks related
to such factors as competition, government action, regulation, technological
obsolescence, demand shifts, cost structure and management depth and
expertise. The projected viability of the obligor at the trough of the cycle
is a critical determination.
Each rating also takes into account the legal form of the security, (e.g.,
first mortgage bonds, subordinated debt, preferred stock, etc.). The extent
of rating dispersion among the various classes of securities is determined by
several factors including relative weightings of the different security
classes in the capital structure, the overall credit strength of the issuer
and the nature of covenant protection.
The Credit Rating Committee formally reviews all ratings once per quarter
(more frequently, if necessary). Ratings of 'BBB-' and higher fall within the
definition of investment grade securities, as defined by bank and insurance
supervisory authorities. Structured finance issues, including real estate,
asset-backed and mortgage-backed financings, use this same rating scale.
Duff & Phelps Credit Rating claims paying ability ratings of insurance
companies use the same scale with minor modification in the definitions.
Thus, an investor can compare the credit quality of investment alternatives
across industries and structural types. A "Cash Flow Rating" (as noted for
specific ratings) addresses the likelihood that aggregate principal and
interest will equal or exceed the rated amount under appropriate stress
conditions.
A-12
Rating Scale Definition
AAA Highest credit quality. The risk factors are negligible,
being only slightly more than for risk-free U.S. Treasury
debt.
AA+ High credit quality. Protection factors are strong.
AA Risk is modest, but may vary slightly from time to time
AA- because of economic conditions.
A+ Protection factors are average but adequate. However,
AA risk factors are more variable and greater in periods
AA- of economic stress.
BBB+ Below average protection factors but still considered
BBB sufficient for prudent investment. Considerable
BBB- variability in risk during economic cycles.
B+ Below investment grade but deemed likely to meet
B obligations when due. Present or prospective
B- financial protection factors fluctuate according to
industry conditions or company fortunes. Overall
quality may move up or down frequently within this
category.
CCC Below investment grade and possessing risk that
obligations will not be met when due. Financial
protection factors will fluctuate widely according
to economic cycles, industry conditions and/or company
fortunes. Potential exists for frequent changes in the
rating within this category or into a higher or lower
rating grade.
Well below investment grade securities. Considerable
uncertainty exists as to timely payment of principal,
interest or preferred dividends. Protection factors
are narrow and risk can be substantial with unfavorable
economic/industry conditions and/or with unfavorable
company developments.
DD Defaulted debt obligations. Issuer failed to meet
scheduled principal and/or interest payments.
DP Preferred stock with dividend arrearages.
A-13
SHORT-TERM DEBT RATINGS
Duff & Phelps' short-term ratings are consistent with the rating criteria
used by money market participants. The ratings apply to all obligations with
maturities of under one year, including commercial paper, the uninsured
portion of certificates of deposit, unsecured bank loans, master notes,
bankers acceptances, irrevocable letters of credit and current maturities
of long-term debt. Asset-backed commercial paper is also rated according
to this scale.
Emphasis is placed on liquidity which is defined as not only cash from
operations, but also access to alternative sources of Fund including trade
credit, bank lines and the capital markets. An important consideration is
the level of an obligor's reliance on short-term Fund on an ongoing basis.
The distinguishing feature of Duff & Phelps Credit Ratings' short-term
ratings is the refinement of the traditional '1' category. The majority of
short-term debt issuers carry the highest rating, yet quality differences
exist within that tier. As a consequence, Duff & Phelps Credit Rating has
incorporated gradations of '1+' (one plus) and 'l-' (one minus) to assist
investors in recognizing those differences.
These ratings are recognized by the SEC for broker-dealer requirements,
specifically capital computation guidelines. These ratings meet Department
of Labor ERISA guidelines governing pension and profit sharing investments.
State regulators also recognize the ratings of Duff & Phelps Credit Rating
for insurance company investment portfolios.
Rating Scale Definition
HIGH GRADE
D-1+ Highest certainty of timely payment. Short-term
liquidity, including internal operating factors and/or
access to alternative sources of Fund, is outstanding
and safety is just below risk-free U.S. Treasury short-
term obligations.
D-1 Very high certainty of timely payment. Liquidity factors
are excellent and supported by good fundamental protection
factors. Risk factors are minor.
D-1- High certainty of timely payment. Liquidity factors are
strong and supported by good fundamental protection
factors. Risk factors are very small.
GOOD GRADE
A-14
D-2 Good certainty of timely payment. Liquidity factors and
company fundamentals are sound. Although ongoing funding
needs may enlarge total financing requirements, access to
capital markets is good. Risk factors are small.
SATISFACTORY GRADE
D-3 Satisfactory liquidity and other protection factors
qualify issue as to investment grade. Risk factors are
larger and subject to more variation. Nevertheless,
timely payment is expected.
NON-INVESTMENT GRADE
D-4 Speculative investment characteristics. Liquidity is not
sufficient to insured against disruption in debt service.
Operating factors and market access may be subject to a
high degree of variation.
DEFAULT
D-5 Issuer failed to meet scheduled principal and/or interest
payments.
Fitch IBCA, Inc.-A brief description of the applicable Fitch IBCA, Inc.
("Fitch") ratings symbols and meanings (as published by Fitch) follows:
LONG TERM DEBT
Fitch investment grade bond ratings provide a guide to investors in
determining the credit risk associated with a particular security. The
ratings represent Fitch's assessment of the issuer's ability to meet the
obligations of a specific debt issue or class of debt in a timely manner.
The rating takes into consideration special features of the issue, its
relationship to other obligations of the issuer, the current and prospective
financial condition and operating performance of the issuer and any guarantor,
as well as the economic and political environment that might affect the
issuer's future financial strength and credit quality.
Fitch ratings do not reflect any credit enhancement that may be provided
by insurance policies or financial guaranties unless otherwise indicated.
Bonds that have the same rating are of similar but not necessarily identical
credit quality since the rating categories do not fully reflect small
differences in the degrees of credit risk.
Fitch ratings are not recommendations to buy, sell or hold any security.
Ratings do not comment on the adequacy of market price, the suitability of any
security for a particular investor or the tax-exempt nature or taxability of
payments made in respect of any security.
A-15
Fitch ratings are based on information obtained from issuers, other
obligors, underwriters, their experts and other sources Fitch believes to be
reliable. Fitch does not audit or verify the truth or accuracy of such
information. Ratings may be changed, suspended or withdrawn as a result of
changes in, or the unavailability of, information or for other reasons.
AAA Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated 'AAA'.
Because bonds rated in the 'AAA' and 'AA' categories are not
significantly vulnerable to foreseeable future developments,
short-term debt of the issuers is generally rated 'F-1+'.
A Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal
is considered to be strong, but may be more vulnerable to adverse
changes in economic conditions and circumstances than bonds with
higher ratings.
BBB Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal
is considered to be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to have adverse impact
on these bonds and, therefore, impair timely payment. The
likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
Fitch speculative grade bond ratings provide a guide to investors in
determining the credit risk associated with a particular security. The
ratings ('BB' to 'C') represent Fitch's assessment of the likelihood of
timely payment of principal and interest in accordance with the terms of
obligation for bond issues not in default. For defaulted bonds, the rating
('DDD' to 'D') is an assessment of the ultimate recovery value through
reorganization or liquidation.
The rating takes into consideration special features of the issue, its
relationship to other obligations of the issuer, the current and prospective
financial condition and operating performance of the issuer and any
guarantor, as well as the economic and political environment that might
affect the issuer's future financial strength.
Bonds that have the same rating are of similar but not necessarily
identical credit quality since the rating categories cannot fully reflect
the differences in the degrees of credit risk.
BB Bonds are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives
can be identified which could assist the obligor in satisfying
its debt service requirements.
A-16
B Bonds are considered highly speculative. While bonds in this class
are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the
obligor's limited margin of safety and the need for reasonable
business and economic activity throughout the life of the issue.
CCC Bonds have certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations
requires an advantageous business and economic environment.
CC Bonds are minimally protected. Default in payment of interest
and/or principal seems probable over time.
C Bonds are in imminent default in payment of interest or principal.
DDD, Bonds are in default on interest and/or principal payments.
DD Such bonds are extremely speculative and should be valued on the
and basis of their ultimate recovery value in liquidation or
D reorganization of the obligor. 'DDD' represents the highest
potential for recovery of these bonds, and 'D' represents the
lowest potential for recovery.
SHORT-TERM RATINGS
Fitch's short-term ratings apply to debt obligations that are payable on
demand or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes and municipal
and investment notes.
The short-term rating places greater emphasis than a long-term rating
on the existence of liquidity necessary to meet the issuer's obligations in
a timely manner.
F-l+ Exceptionally Strong Credit Quality Issues assigned this rating
are regarded as having the strongest degree of assurance for
timely payment.
F-1 Very Strong Credit Quality Issues assigned this rating reflect
an assurance of timely payment only slightly less in degree than
issues rated 'F-1+'.
F-2 Good Credit Quality Issues assigned this rating have a satisfactory
degree of assurance for timely payment but the margin of safety is
not as great as for issues assigned 'F-1+' and 'F-l' ratings.
F-3 Fair Credit Quality Issues assigned this rating have
characteristics suggesting that the degree of assurance for
timely payment is adequate; however, near-term adverse changes
could cause these securities to be rated below investment grade.
A-17
Part C. Other Information
Item 23. Exhibits:
---------
(a) Agreement and Declaration of Trust for Registrant dated
August 10, 1990.1
(b) By-Laws of Registrant.1
(c) Specimen Certificate for The Kansas Municipal Fund.1
(d)(1)(a) Management and Investment Advisory Agreement between Registrant
and Ranson Capital Corporation ("Ranson") on behalf of The Kansas Municipal
Fund.1
(d)(1)(b) Management and Investment Advisory Agreement between Registrant
and Ranson on behalf of The Kansas Insured Intermediate Fund.1
(d)(1)(c) Management and Investment Advisory Agreement between Registrant
and Ranson on behalf of The Nebraska Municipal Fund.1
(d)(1)(d) Management and Investment Advisory Agreement between Registrant
and Ranson on behalf of The Oklahoma Municipal Fund.1
(e)(1)(a) Distribution and Services Agreement between Registrant and
Ranson on behalf of The Kansas Municipal Fund.1
(e)(1)(b) Distribution and Services Agreement between Registrant and
Ranson on behalf of The Kansas Insured Intermediate Fund.1
(e)(1)(c) Distribution and Services Agreement between Registrant and
Ranson on behalf of The Nebraska Municipal Fund.1
(e)(1)(d) Distribution and Services Agreement between Registrant and
Ranson on behalf of The Oklahoma Municipal Fund.1
(e)(2) Dealer Agreement.1
(f) Not applicable.
(g) Custodian Agreement between Registrant and First Western Bank
& Trust on behalf of all Series.2
[FN]
1 Filed herewith.
2 Incorporated by reference to post-effective amendment no. 30 filed on
November 27, 1996 on Form N-1A for Registrant.
</FN>
(h)(1) Transfer Agency Agreement between Registrant and ND Resources,
Inc. on behalf of all Series.2
(h)(2) Accounting Services Agreement between Registrant and ND
Resources, Inc. on behalf of all Series. 3
(i)(1)(a) Opinion and Consent of Chapman and Cutler for The Kansas
Municipal Fund dated November 14, 1990.1
(i)(1)(b) Opinion and Consent of Chapman and Cutler for The Kansas
Insured Intermediate Fund dated November 12, 1992.1
(i)(1)(c) Opinion and Consent of Chapman and Cutler for The Nebraska
Municipal Fund dated November 16, 1993.1
(i)(1)(d) Opinion and Consent of Chapman and Cutler dated September 25,
1996 for The Oklahoma Municipal Fund.3
(i)(1)(e) Opinion and Consent of Chapman and Cutler dated November 29,
1999 for all Series.1
(j) Consent of Independent Public Accountants.1
(k) Not Applicable.
(l) Subscription Agreement with Ranson.1
(m)(1)(a) Shareholder Services Plan for The Kansas Municipal Fund.1
(m)(1)(b) Shareholder Services Plan for The Nebraska Municipal Fund.1
(m)(1)(c) Shareholder Services Plan for The Oklahoma Municipal Fund.1
(n) Not applicable.
(o) Not applicable.
[FN]
3 Incorporated by reference to post-effective amendment no. 25 filed on
September 25, 1996 on Form N-1A for Registrant.
</FN>
Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
--------------------------------------------------------------
To the best of Registrant's knowledge, as of November 19, 1999, no person
is either directly or indirectly controlled by or under common control with
Registrant.
-2-
Item 25. INDEMNIFICATION.
------------------
The following is a summary of the rights of indemnification set forth
in the Agreement and Declaration of Trust of Registrant (see Exhibit 1).
Article VIII of the Agreement and Declaration of Trust of Registrant
provides generally that any person who is or has been a Trustee or officer of
Registrant (including persons who serve at the request of Registrant as
directors, Trustees, or officers of another organization and including persons
who served as officers and directors of the Registrant) shall be indemnified
by Registrant to the fullest extent permitted by law against liabilities and
expenses reasonably incurred by such person in connection with any claim,
suit, or proceeding in which such person becomes involved as a party or
otherwise by virtue of being or having been such a Trustee, director, or
officer and against amounts incurred in settlement thereof. It is further
provided in such Agreement and Declaration of Trust that no indemnification
shall be provided in the event that it is determined that such person was
engaged in willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office or that such
person did not act in good faith in the reasonable belief that his action
was in the best interests of Registrant. In the event of a settlement or
other disposition not involving a final determination of the foregoing
matters by a court or other body, no indemnification shall be provided unless
such determination is made by a vote of a majority of the Disinterested
Trustees acting on the matter or a written opinion of independent legal
counsel. The right to indemnification as so provided may be insured against
by policies maintained by the Registrant and shall continue as to any person
who has ceased to be a Trustee or officer of Registrant.
Expenses of preparation and presentation of a defense by a person
claiming indemnification may be advanced by Registrant provided generally that
such person undertakes to repay any such advances if it is ultimately
determined that he is not entitled to indemnification and provided that either
such undertaking is secured by appropriate security or a majority of the
Disinterested Trustees acting on the matter or independent legal counsel in a
written opinion determines that there is reason to believe that such person
ultimately will be found entitled to indemnification.
The Agreement and Declaration of Trust provides further that in the
event that any shareholder or former shareholder shall be found to be
personally liable solely by reason of his being a shareholder and not because
of acts or omissions of such person, such shareholder shall be entitled,
out of assets of the Registrant, to be indemnified against all loss and
expense arising from such liability (provided there is no liability to
reimburse any shareholder for taxes paid by reason of such shareholder's
ownership of shares or for losses suffered by reason of any changes in
value of any of Registrant's assets).
The Agreement and Declaration of Trust (Article IV, Section 2 (o))
provides specifically that the Trustees have the power to purchase and pay
for insurance out of assets of Registrant as they deem necessary or
appropriate for the conduct of its business including policies insuring
shareholders, Trustees, officers, employees, agents, investment managers,
principal underwriters, or independent contracts or Registrant against claims
or liabilities arising by reason of such persons holding or having held any
such office or position with Registrant or by reason of any action alleged to
have been taken or omitted by such person in such office or position including
any action taken or omitted that may be determined to constitute negligence
whether or not the Registrant would have the power to indemnify such person
against such liability.
-3-
The provisions with respect to indemnification in the Agreement and
Declaration of Trust of Registrant do not affect any rights of indemnification
that persons other than those specifically covered may have whether under
contract or otherwise under law.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to Trustees, officers, and controlling persons
of the Registrant pursuant to the provisions of Registrant's Agreement and
Declaration of Trust, or otherwise, Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liability (other than the payment by the Registrant of expenses
incurred or paid by a Trustee, officer, or controlling person of Registrant
in the successful defense of any action, suit, or proceeding) as asserted by
such Trustee, officer, or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
Item 26. Business and Other Connections of Investment Adviser.
-----------------------------------------------------
The names of the directors and officers of the Manager and their
businesses, professions, vocations, and employment during the past two fiscal
years, either for their own account or as directors, officers, employees,
partners, or Trustees, are as follows:
<TABLE>
<CAPTION>
(1) (2) (3)
OTHER BUSINESS PROFESSION
NAME AND PRINCIPAL AFFILIATION WITH VOCATION OR
BUSINESS ADDRESS INVESTMENT ADVISER EMPLOYMENT CONNECTION
<S> <C> <C>
Richard D. Olson Assistant Vice President- None
1 North Main Sales
Minot, ND 58703
-4-
(1) (2) (3)
OTHER BUSINESS PROFESSION
NAME AND PRINCIPAL AFFILIATION WITH VOCATION OR
BUSINESS ADDRESS INVESTMENT ADVISER EMPLOYMENT CONNECTION
Peter A. Quist Director, Vice President Director and Vice President, ND
1 North Main and Secretary Holdings, Inc.; Director, Vice
Minot, ND 58703 President, and Secretary, ND Money
Management, Inc., ND Capital, Inc.,
ND Resources, Inc., ND Tax-Free Fund,
Inc., ND Insured Income Fund,
Inc. (November 1990 to August
1999), Montana Tax-Free Fund, Inc.,
South Dakota Tax-Free Fund, Inc.,
Integrity Fund of Funds, Inc., Integrity
Small-Cap Fund of Funds, Inc.; Vice
President and Secretary, Ranson
Managed Portfolios
Robert E. Walstad Director, President, CEO Director and President, ND Holdings,
1 North Main and Treasurer Inc.; Director, President, and
Minot, ND 58703 Treasurer, ND Money Management,
Inc., ND Capital, Inc., ND Resources,
Inc., ND Tax-Free Fund, Inc., ND
Insured Income Fund, Inc. (November
1990 to August 1999), Montana Tax-
Free Fund, Inc., South Dakota Tax-
Free Fund, Inc., Integrity Fund of
Funds, Inc., and Integrity Small-Cap
Fund of Funds, Inc.; Trustee, Chairman,
President, and Treasurer,
Ranson Managed Portfolios
</TABLE>
Item 27. PRINCIPAL UNDERWRITERS.
-----------------------
(a) Ranson Capital Corporation only acts as investment adviser
and manager and principal underwriter for The Kansas
Municipal Fund, The Kansas Insured Intermediate Fund,
The Nebraska Municipal Fund, and The Oklahoma Municipal
Fund, each a series of the Ranson Managed Portfolios.
(b) The information required by the following table is provided
with respect to each director, officer, or partner of each
principal underwriter named in the answer to Item 20.
-5-
RANSON CAPITAL CORPORATION
<TABLE>
<CAPTION>
(1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES WITH POSITIONS AND OFFICES
BUSINESS ADDRESS RANSON CAPITAL CORPORATION WITH REGISTRANT
<S> <C> <C>
Richard D. Olson Assistant Vice President-Sales None
1 North Main
Minot, ND 58703
Peter A. Quist Director, Vice President, and Vice President and Secretary
1 North Main Secretary
Minot, ND 58703
Robert E. Walstad Director, President, CEO, and Trustee, Chairman, President,
1 North Main Treasurer and Treasurer
Minot, ND 58703
</TABLE>
(c) Not applicable.
Item 28. LOCATION OF ACCOUNTS AND RECORDS.
---------------------------------
First Western Bank & Trust (the "Custodian"), 900 South Broadway,
Minot, North Dakota 58701, serves as Registrant's Custodian and will
maintain all records related to that function. ND Resources, Inc.
("Resources"), serves as Registrant's transfer agent and maintain all records
related to that function. Resources also serves as Registrant's accounting
service agent and maintains all records related to that function. Ranson
Capital Corporation serves as Registrant's investment adviser and Manager, as
well as the Distributor and principal underwriter of its shares, and maintains
all records related to those functions. Registrant maintains all of its
corporate records. The address of Resources, Ranson Capital Corporation, and
Registrant is 1 North Main, Minot, North Dakota 58703.
Item 29. MANAGEMENT SERVICES.
--------------------
Not applicable.
Item 30. UNDERTAKINGS.
--------------
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Registrant certifies that it meets all the
requirements for effectiveness of this Registration Statement under 485(b)
under the Securities Act of 1933 and has duly caused this Post-effective
Amendment No. 43 to Registrant's Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Minot, State of North Dakota, on the 26th day of November, 1999.
-6-
RANSON MANAGED PORTFOLIOS
By /s/ Robert E. Walstad
---------------------
Robert E. Walstad
President
The undersigned each hereby constitutes and appoints Robert E. Walstad
his attorney-in-fact and agent, for him and in his name, place, and stead, in
any and all capacities, to sign any and all amendments (including post-
effective amendments) to Registration Statement No. 33-36324 and to file the
same with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorney-in-
fact and agent full power and authority to do and perform each and every act
and thing requisite and necessary to be done, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Post-effective Amendment No. 43 to Registrant's Registration Statement on
Form N-1A and Power of Attorney have been signed below by the following
persons in the capacities indicated on November 26, 1999.
/s/ Lynn W. Aas * Trustee
- -------------------------------------------
Lynn W. Aas
/s/ Orlin W. Backes * Trustee
- -------------------------------------------
Orlin W. Backes
/s/ R. James Maxson * Trustee
- -------------------------------------------
R. James Maxson
/s/ Robert E. Walstad * Trustee, Chairman of the Board,
- -------------------------------------------
Robert E. Walstad President, and Treasurer
-7-
Exhibit
Number Exhibit
- ------ -------
(a) Agreement and Declaration of Trust for Registrant dated
August 10, 1990.
(b) By-Laws of Registrant.
(c) Specimen Certificate for The Kansas Municipal Fund.
(d)(1)(a) Management and Investment Advisory Agreement between Registrant
and Ranson Capital Corporation ("Ranson") on behalf of The Kansas Municipal
Fund.
(d)(1)(b) Management and Investment Advisory Agreement between Registrant
and Ranson on behalf of The Kansas Insured Intermediate Fund.
(d)(1)(c) Management and Investment Advisory Agreement between Registrant
and Ranson on behalf of The Nebraska Municipal Fund.
(d)(1)(d) Management and Investment Advisory Agreement between Registrant
and Ranson on behalf of The Oklahoma Municipal Fund.
(e)(1)(a) Distribution and Services Agreement between Registrant and
Ranson on behalf of The Kansas Municipal Fund.
(e)(1)(b) Distribution and Services Agreement between Registrant and
Ranson on behalf of The Kansas Insured Intermediate Fund.
(e)(1)(c) Distribution and Services Agreement between Registrant and
Ranson on behalf of The Nebraska Municipal Fund.
(e)(1)(d) Distribution and Services Agreement between Registrant and
Ranson on behalf of The Oklahoma Municipal Fund.
(e)(2) Dealer Agreement.
(i)(1)(a) Opinion and Consent of Chapman and Cutler for The Kansas
Municipal Fund dated November 14, 1990.
(i)(1)(b) Opinion and Consent of Chapman and Cutler for The Kansas
Insured Intermediate Fund dated November 12, 1992.
(i)(1)(c) Opinion and Consent of Chapman and Cutler for The Nebraska
Municipal Fund dated November 16, 1993.
-8-
(i)(1)(e) Opinion and Consent of Chapman and Cutler dated November 29,
1996 for all series.
(j) Consent of Independent Public Accountants.
(l) Subscription Agreement with Ranson.
(m)(1)(a) Shareholder Services Plan for The Kansas Municipal Fund.
(m)(1)(b) Shareholder Services Plan for The Nebraska Municipal Fund.
(m)(1)(c) Shareholder Services Plan for The Oklahoma Municipal Fund.
-9-
Exhibit
Number Exhibit
------ -------
(a) Agreement and Declaration of Trust for Registrant
dated August 10, 1990
Exhibit (a)
RANSON MANAGED PORTFOLIOS
AGREEMENT AND DECLARATION OF TRUST
AGREEMENT AND DECLARATION OF TRUST made this 10th day of August, 1990, by
the Trustee whose signature is set forth below (together with all other
persons from time to time duly elected, qualified and serving as Trustees in
accordance with the provision of Article IV hereof, the "Trustees"), and by
the holders of shares of beneficial interest to be issued hereunder as
hereinafter provided.
WITNESSETH
WHEREAS, the Trustees hereunder are desirous of forming a trust for the
purposes of carrying on the business of a management investment company; and
WHEREAS, in furtherance of such purposes, the Trustees are acquiring and
may hereafter acquire assets and properties, to hold and manage as trustees of
a Massachusetts voluntary association with transferable shares in accordance
with the provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets and properties, which they may from time to time
acquire in any manner as Trustees hereunder IN TRUST to manage and dispose
of the same upon the following terms and conditions for the pro rata benefit
of the holders from time to time of Shares in this Trust as hereinafter set
forth.
ARTICLE I
NAME AND DEFINITIONS
NAME AND REGISTERED AGENT
Section 1. This Trust shall be known as "Ranson Managed Portfolios" and
the Trustees shall conduct the business of the Trust under that name or any
other name as they may from time to time determine. The registered agent for
the Trust in Massachusetts shall be CT Corporation System, 2 Oliver Street,
Boston, Massachusetts, or such other person as the Trustees may from time to
time designate.
DEFINITIONS
Section 2. Whenever used herein, unless otherwise required by the
context or specifically provided:
(a) The "Trust" refers to the Massachusetts voluntary association
established by this Agreement and Declaration of Trust, as
amended from time to time, pursuant to Massachusetts General
Laws, Chapter 182.
(b) "Trustees" refers to the Trustees of the Trust named herein or
elected in accordance with Article IV and then in office.
(c) "Shares" mean the equal proportionate transferable units of
interest into which the beneficial interest in the Trust shall be
divided from time to time, or, if more than one series is
authorized under or pursuant to Article III, the equal
proportionate transferable units of interest into which each such
series shall be divided from time to time;
(d) "Shareholder" means a record owner of Shares:
(e) The "1940 Act" refers to the Investment Company Act of 1940
(and any successor statute) and the Rules and Regulations
thereunder, all as amended from time to time;
(f) The terms "Affiliated Person," "Assignment," "Commission,"
"Interested Person," "Principal Underwriter" and "vote of a
majority of the outstanding voting securities" shall have the
meanings given them in the 1940 Act;
(g) "Declaration of Trust" shall mean this Agreement and Declaration
of Trust as amended or restated from time to time;
(h) "By-Laws" shall mean the By-Laws of the Trust as amended from
time to time; and
(i) "Net asset value" shall have the meaning set forth in Section 6
of Article VI hereof.
ARTICLE II
NATURE AND PURPOSE
The Trust is a voluntary association (commonly known as a business trust)
of the type referred to in Chapter 182 of the General Laws of the Commonwealth
of Massachusetts. The Trust is not intended to be, shall not be deemed to be,
and shall not be treated as, a general or a limited partnership, joint
venture, corporation or joint stock company, nor shall the Trustees or
Shareholders or any of them for any purpose be deemed to be, or be treated in
any way whatsoever as though they were, liable or responsible hereunder as
partners or joint venturers. The purpose of the Trust is to engage in, operate
and carry on the business of an open-end management investment company and to
do any and all acts or things as are necessary, convenient, appropriate,
incidental or customary in connection therewith.
ARTICLE III
SHARES
DIVISION OF BENEFICIAL INTEREST
SECTION 1. The Shares of the Trust shall be issued in one or more series
as the Trustees may, without Shareholder approval, authorize from time to
time. Each series shall be preferred over all other series in respect of the
assets allocated to that series as hereinafter provided. The beneficial
interest in each series shall at all times be divided into Shares (without par
value) of such series, each of which shall represent an equal proportionate
interest in such series with each other Share of the same series, none having
priority or preference over another Share of the same series. The number of
Shares authorized shall be unlimited, and the Shares so authorized may be
represented in part by fractional Shares. The Trustees may from time to time
divide or combine the Shares of any series into a greater or lesser number
without thereby changing the proportionate beneficial interests in the series.
Without limiting the authority of the Trustees set forth in this Section 1 to
establish and designate any further series, the Trustees hereby establish and
designate a single series of Shares to be known as the "The Kansas Municipal
Fund." The establishment and designation of any series of Shares in addition
to the foregoing shall be effective upon the execution by a majority of the
then Trustees of an instrument setting forth such establishment and
designation and the relative rights and preferences of such series. As
provided in Article IX, Section 1 hereof, any series of Shares (whether or
not there shall then be Shares outstanding of said series) may be terminated
by the Trustees by written notice to the Shareholders of such series or by
the vote of the Shareholders of such series entitled to vote more than fifty
percent (50%) of the votes entitled to be cast on the matter. In the event
of any such termination, a majority of the then Trustees shall execute an
instrument setting forth the termination of such series.
OWNERSHIP OR SHARES
SECTION 2. The ownership and transfer of Shares shall be recorded on the
books of the Trust or its transfer or similar agent. No certificates
certifying the ownership of Shares shall be issued except as the Trustees may
otherwise determine from time to time. The Trustees may make such rules as
they consider appropriate for the issuance of Share certificates, the transfer
of Shares and similar matters. The record books of the Trust as kept by the
Trust or any transfer or similar agent of the Trust, as the case may be,
shall be conclusive as to who are the Shareholders of each series and as to
the number of Shares of each series held from time to time by each Shareholder.
INVESTMENTS IN THE TRUST; ASSETS OF A SERIES
SECTION 3. The Trustees may issue Shares of the Trust to such persons and
on such terms and, subject to any requirements of law, for such consideration,
which may consist of cash or tangible or intangible property or a combination
thereof, as they may from time to time authorize.
All consideration received by the Trust for the issue or sale of Shares
of a particular series, together with all income, earnings, profits. and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation thereof, and any funds or payments derived from any reinvestment
of such proceeds in whatever form the same may be, shall irrevocably belong
to such series of Shares for all purposes, subject only to the rights of
creditors, and shall be so handled upon the books of account of the Trust
and are herein referred to as "assets of" such series.
RIGHT TO REFUSE ORDERS
Section 4. The Trust by action of its Trustees shall have the right to refuse
to accept any subscription for its Shares at any time without any cause or
reason therefore whatsoever. Without limiting the foregoing, the Trust shall
have the right not to accept subscriptions under circumstances or in
amounts as the Trustees in their sole discretion consider to be
disadvantageous to existing Shareholders and the Trust may from time to time
set minimum and/or maximum amounts which may be invested in Shares by a
subscriber.
TIME FOR DETERMINING SALES PRICE
SECTION 5. The time or times as of which the net asset value shall be
determined for the purpose of determining the sales price for Shares issued
pursuant to this Article III shall be at such times as the Trustees may
establish from time to time in accordance with applicable provisions of the
1940 Act.
ORDER IN PROPER FORM
SECTION 6. The criteria for determining what constitutes an order in
proper form and the time of receipt of such an order by the Trust shall be
prescribed by resolution of the Trustees.
WHEN SHARES BECOME OUTSTANDING
SECTION 7. Shares subscribed for and for which an order in proper form has
been received shall be deemed to be outstanding as of the time of acceptance
of the order therefore and the determination of the net price thereof, which
price shall be then deemed to be an asset of the Trust.
MERGER OR CONSOLIDATION
SECTION 8. In connection with the acquisition of all or substantially all
the assets or stock of another investment company, investment trust, or of a
company classified as a personal holding company under Federal Income Tax
laws, the Trustees may issue or cause to be issued Shares of a series and
accept in payment therefor, in lieu of cash, such assets at their market
value, or such stock at the market value of the assets held by such investment
company or investment trust, either with or without adjustment for contingent
costs or liabilities.
NO PREEMPTIVE RIGHTS, ETC.
SECTION 9. Shareholders shall have no preemptive or other right to receive,
purchase or subscribe for any additional Shares or other securities issued by
the Trust. The Shareholders shall have no appraisal rights with respect to
their Shares and, except as otherwise determined by the Trustees in their sole
discretion, shall have no exchange or conversion rights with respect to their
Shares.
STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY
SECTION 10. Shares shall be deemed to be personal property giving only the
rights provided in this instrument. Every Shareholder by virtue of having
become a Shareholder shall be held to have expressly assented and agreed to
the terms of the Declaration of Trust and to have become a party thereto. The
death of a Shareholder during the continuance of the Trust shall not operate
to terminate the same nor entitle the representative of any deceased
Shareholder to an accounting or to take any action in court or elsewhere
against the Trust or the Trustees, but only to the rights of said decedent
under this Trust. Ownership of Shares shall not entitle the Shareholder to
any title in or to the whole or any part of the Trust property or right to
call for a partition or division of the same or for an accounting, nor shall
the ownership of Shares constitute the Shareholders partners. Neither the
Trust nor the Trustees, nor any officer, employee or agent of the Trust shall
have any power to bind personally any Shareholder, nor except as specifically
provided herein to call upon any Shareholder for the payment of any sum of
money or assessment whatsoever other than such as the Shareholder may at any
time personally agree to pay.
SHAREHOLDER INSPECTION RIGHTS
SECTION 11. Any Shareholder or his agent may inspect and copy during
normal business hours any of the following documents of the Trust: By-Laws,
minutes of the proceedings of the Shareholders and annual financial statements
of the Trust, including a balance sheet and financial statements of
operations. The foregoing rights or inspection of Shareholders of the Trust are
the exclusive and sole rights of the Shareholders with respect thereto and no
Shareholder of the Trust shall have, as a Shareholder, the right to inspect or
copy any of the books, records or other documents of the Trust except as
specifically provided in this Section 11 of this Article III or except as
otherwise determined by the Trustees.
ARTICLE IV
THE TRUSTEES
NUMBER, DESIGNATION, ELECTION, TERM, ETC.
SECTION 1.
(a) Initial Trustee. Upon his execution of this Declaration of Trust
or a counterpart hereof or some other writing in which he accepts
such Trusteeship and agrees to the provisions hereof, John A
Ranson shall become a Trustee hereof.
(b) Number. The Trustees serving as such, whether named above or
hereafter becoming Trustees, may increase or decrease the number
of Trustees to a number other than the number heretofore
determined which number shall not be less than three nor more
than fifteen except during the period that the initial Trustee
named above is sole Trustee. No decrease in the number of
Trustees shall have the effect of removing any Trustee from
office prior to the expiration of his term, but the number of
Trustees may be decreased in conjunction with the removal of a
Trustee pursuant to subsection (e) of this Section 1.
(c) Term. Each Trustee, whether named above or hereafter becoming a
Trustee. shall serve as a. Trustee until the next meeting of
Shareholders, if any, called for the purpose of considering the
election or re-election of such Trustee or of a successor to such
Trustee, and until the election and qualification of his
successor, if any, elected at such meeting, or until such Trustee
sooner dies. resigns. retires or is removed. Upon the election
and qualification of a new Trustee, the Trust estate shall vest
in the new Trustee (together with the continuing or other new
Trustee) without any further act or conveyance. Prior to any
sale of Shares pursuant to any public offering, the initial
Trustee named above shall have the right to appoint other
persons as Trustees each to serve with such initial Trustee as
aforesaid until the first meeting of Shareholders called for the
purpose of the election or re-election of such Trustee or of a
successor to such Trustee.
(d) Resignation and Retirement. Any Trustee may resign his trust or
retire as a Trustee, by written instrument signed by him and
delivered to the other Trustees or to any officer of the Trust,
and such resignation or retirement shall take effect upon such
delivery or upon such later date as is specified in such
instrument.
(e) Removal. Any Trustee may be removed for cause at any time by
written instrument, signed by at least a majority of the number
of Trustees prior to such removal, specifying the date upon
which such removal shall become effective. Any Trustee may be
removed with or without cause (i) by the vote of the Shareholders
entitled to be cast on the matter voting together without regard
to series at any meeting called for such purpose, or (ii) by a
written consent filed with the custodian of the Trust's portfolio
securities and executed by the Shareholders entitled to vote more
than fifty percent (50%) of the votes entitled to be cast on the
matter voting together without regard to series.
Whenever ten or more Shareholders of record who have been such
for at least six months preceding the date of application, and
who hold in the aggregate Shares constituting at least one
percent of the outstanding Shares of the Trust, shall apply to
the Trustees in writing, stating that they wish to communicate
with other Shareholders with a view to obtaining signatures to
a request for a meeting to consider removal of a Trustee and
accompanied by a form of communication and request that they
wish to transmit, the Trustees shall within five business days
after receipt of such application inform such applicants as to
the approximate cost of mailing to the Shareholders of record
the proposed communication and form of request. Upon the written
request of such applicants, accompanied by a tender of the
material to be mailed and of the reasonable expenses of mailing,
the Trustees shall, within reasonable promptness, mail such
material to all Shareholders of record at their addresses as
recorded on the books of the Trust. Notwithstanding the
foregoing, the Trustees may refuse to mail such material on the
basis and in accordance with the procedures set forth in the last
two paragraphs of Section 16(c) of the Investment Company Act of
1940 as amended.
(f) Vacancies. Any vacancy or anticipated vacancy resulting from
any reason. including without limitation the death, resignation,
retirement, removal or incapacity of any of the Trustees, or
resulting from an increase in the number of Trustees by the
other Trustees may (but so long as there are at least three
remaining Trustees, need not unless required by the 1940 Act) be
filled either by a majority of the remaining Trustees, even if
less than a quorum, through the appointment in writing of such
other person as such remaining Trustees in their discretion shall
determine or, whenever deemed appropriate by the remaining
Trustees, by the election by the Shareholders, at a meeting
called for such purpose, of a person to fill such vacancy, and
such appointment or election shall be effective upon the written
acceptance of the person named therein to serve as a Trustee and
agreement by such person to be bound by the provisions of this
Declaration of Trust, except that any such appointment or
election in anticipation of a vacancy to occur by reason of
retirement, resignation, or increase in number of Trustees to be
effective at a later date shall become effective only at or after
the effective date of said retirement, resignation, or increase
in number of Trustees. As soon as any Trustee so appointed or
elected shall have accepted such appointment or election and
shall have agreed in writing to be bound by this Declaration of
Trust and the appointment or election is effective, the Trust
estate shall vest in the new Trustee, together with the
continuing Trustees, without any further act or conveyance.
(g) Mandatory Election by Shareholders. Notwithstanding the foregoing
provisions of this Section 1, the Trustees shall call a meeting
of the Shareholders for the election of one or more Trustees at
such time or times as may be required in order that the
provisions of the 1940 Act may be complied with, and the
authority hereinabove provided for the Trustees to appoint any
successor Trustee or Trustees shall be restricted if such
appointment would result in failure of the Trust to comply with
any provision of the 1940 Act.
(h) Effect of Death, Resignation. Etc. The death, resignation,
retirement, removal or incapacity of the Trustees, or any one of
them. shall not operate to annul or terminate the Trust or to
revoke or terminate any existing agency or contract created or
entered into pursuant to the terms of this Declaration of Trust.
(i) No Accounting. Except under circumstances which would justify his
removal for cause, no person ceasing to be a Trustee as a result
of his death, resignation, retirement, removal or incapacity
(nor the estate of any such person) shall be required to make an
accounting to the Shareholders or remaining Trustees upon such
cessation.
POWERS
SECTION 2. The Trustees, subject only to the specific limitations contained
in this Declaration of Trust or otherwise imposed by the 1940 Act or other
applicable law, shall have, without further or other authorization and free
from any power or control of the Shareholders, full, absolute and exclusive
power, control and authority over the Trust assets and the business and affairs
of the Trust to the same extent as if the Trustees were the sole and absolute
owners thereof in their own right and to do all such acts and things as in
their sole judgment and discretion are necessary and incidental to, or
desirable for the carrying out of any of the purposes of the Trust or
conducting the business of the Trust. Any determination made in good faith by
the Trustees of the purposes of the Trust or the existence of any power or
authority hereunder shall be conclusive. In construing the provisions of this
Declaration of Trust, there shall be a presumption in favor of the grant of
power and authority to the Trustees. Without limiting the foregoing, the
Trustees may adopt By-Laws not inconsistent with this Declaration of Trust
containing provisions relating to the business of the Trust, the conduct of
its affairs, its rights or powers and the rights or powers of its
Shareholders, Trustees, officers, employees and other agents and may amend
and repeal them to the extent that such By-Laws do not reserve that right to
the Shareholders; fill vacancies in their number, including vacancies
resulting from increases in their number, unless a vote of the Trust's
Shareholders is required to fill such vacancies pursuant to the 1940 Act;
elect and remove such officers and appoint and terminate such agents as they
consider appropriate; appoint from their own number, and terminate, any one
or more committees consisting of two or more Trustees, including an executive
committee which may, when the Trustees are not in session, exercise some or
all of the powers and authority of the Trustees as the Trustees may determine;
appoint an advisory board, the members of which shall not be Trustees and need
not be Shareholders; employ one or more investment advisers or managers as
provided in Section 6 of this Article IV; employ one or more custodians of
the assets of the Trust and authorize such custodians to employ subcustodians
and to deposit all or any part of such assets in a system or Systems for the
central handling of securities; retain a transfer agent or a Shareholder
services agent, or both; provide for the distribution of Shares by the
Trust, through one or more principal underwriters or otherwise; set record
dates for the determination of Shareholders with respect to various matters;
and in general delegate such authority as they consider desirable to any
officer of the Trust, to any committee of the Trustees and to any agent or
employee of the Trust or to any such custodian or underwriter.
In furtherance of and not in limitation of the foregoing. the
Trustees shall have power and authority'
(a) To invest and reinvest in, to buy or otherwise acquire, to hold,
for investment or otherwise, to sell or otherwise dispose of, to
lend or to pledge, to trade in or deal in securities or interests
of all kinds, however evidenced, or obligations of all kinds,
however evidenced, or rights, warrants, or contracts to acquire
such securities, interests. or obligations, of any private or
public company, corporation, association, general or limited
partnership, trust or other enterprise or organization, foreign
or domestic, or issued or guaranteed by any national or state
government, foreign or domestic, or their agencies,
instrumentalities or subdivisions (including but not limited to,
bonds, debentures, bills, time notes and all other evidences of
indebtedness); negotiable or non-negotiable instruments; any and
all futures contracts, government securities and money market
instruments (including but not limited to, bank certificates of
deposit, finance paper, commercial paper, bankers acceptances,
and all kinds of repurchase agreements);
(b) To invest and reinvest in, to buy or otherwise acquire, to hold,
for investment or otherwise, to sell or otherwise dispose of
foreign currencies, and funds and exchanges, and make deposits
in banks, savings banks, trust companies, and savings and loan
associations, foreign or domestic;
(c) To acquire (by purchase, lease or otherwise) and to hold, use,
maintain, develop, and dispose of (by sale or otherwise) any
property, real or personal. and any interest therein;
(d) To sell, exchange, lend, pledge, mortgage, hypothecate, write
options on and lease any or all of the assets of the Trust;
(e) To vote or give assent, or exercise any rights of ownership,
with respect to stock or other securities or property; and to
execute and deliver proxies or powers of attorney to such person
or persons as the Trustees shall deem proper, granting to such
person or persons such power and discretion with relation to
securities or property as the Trustees shall deem proper:
(f) To exercise powers and rights of subscription or otherwise which
in any manner arise out of ownership of securities;
(g) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form,
or in the name of the Trustees or of the Trust or in the name of
a custodian, subcustodian or other depository or a nominee or
nominees or otherwise;
(h) To allocate assets, liabilities and expenses of the Trust to a
particular series of Shares or to apportion the same among two
or more series, provided that any liabilities or expenses
incurred by a particular series shall be payable solely out of
the assets of that series;
(i) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer, any
security or property of which is or was held in the Trust; to
consent to any contract, lease, mortgage, purchase or sale of
property by such corporation or issuer, and to pay calls or
subscriptions with respect to any security held in the Trust;
(j) To join with other security holders in acting through a
committee, depository, voting trustee or otherwise, and in that
connection to deposit any security with, or transfer any security
to, any such committee, depository or trustee, and to delegate to
them such power and authority with relation to any security
(whether or not so deposited or transferred) as the Trustees
shall deem proper, and to agree to pay, and to pay, such portion
of the expenses and compensation of such committee, depository or
trustee as the Trustees shall deem proper;
(k) To compromise, arbitrate or otherwise adjust claims in favor of
or against the Trust or any matter in controversy, including but
not limited to claims for taxes;
(l) To enter into joint ventures, general or limited partnerships
and any other combinations or associations;
(m) To borrow funds;
(n) To endorse or guarantee the payment of any notes or other
obligations of any person; to make contracts of guaranty or
suretyship, or otherwise assume liability for payment thereof;
and to mortgage and pledge the Trust property or any part thereof
to secure any or all of such obligations;
(o) To purchase and pay for entirely out of Trust property such
insurance as they may deem necessary or appropriate for the
conduct of the business, including, without limitation, insurance
policies insuring the assets of the Trust and payment of
distributions and principal on its portfolio investments, and
insurance policies insuring the Shareholders, Trustees, officers,
employees, agents. investment advisers or managers, principal
underwriters, or independent contractors of the Trust
individually against all claims and liabilities of every nature
arising by reason of holding, being or having held any such
office or position, or by reason of any action alleged to have
been taken or omitted by any such person as Shareholder, Trustee,
officer, employee, agent, investment adviser or manager,
principal underwriter, or independent contractor, including any
action taken or omitted that may be determined to constitute
negligence, whether or not the Trust would have the power to
indemnify such person against such liability; and
(p) To pay pensions for faithful service, as deemed appropriate by
the Trustees, and to adopt, establish and carry out pension,
profit-sharing, share bonus, share purchase, savings, thrift and
other retirement, incentive and benefit plans, trusts and
provisions, including the purchasing of life insurance and
annuity contracts as a means of providing such retirement and
other benefits, for any or all of the Trustees, officers,
employees and agents of the Trust.
The Trustees shall not in any way be bound or limited by any present or
future law or custom in regard to investments by trustees of common law trusts.
Except as otherwise provided herein or from time to time in the By-Laws, any
action to be taken by the Trustees may be taken by a majority of the Trustees
present at a meeting of Trustees (if a quorum be present), within or without
Massachusetts, including any meeting held by means of a conference telephone or
other communications equipment by means of which all persons participating in
the meeting can communicate with each other simultaneously and participation by
such means shall constitute presence in person at a meeting, or by written
consents of a majority of the Trustees then in office.
PAYMENT OF EXPENSES, ALLOCATION OF LIABILITIES
SECTION 3. The Trustees are authorized to pay or to cause to be paid out
of the principal or income of the Trust, or partly out of principal and partly
out of income, as they deem fair, all expenses, fees, charges, taxes and
liabilities incurred or arising in connection with the Trust, or in connection
with the management thereof, including, but not limited to, the Trustees'
compensation and such expenses and charges for the services of the Trust's
officers, employees, investment adviser or manager, principal underwriter,
auditor, counsel, custodian, transfer agent, shareholder servicing agent,
and such other agents or independent contractors and such other expenses and
charges as the Trustees may deem necessary or proper to incur.
The assets of a particular series of Shares shall be charged with the
liabilities (including, in the discretion of the Trustees, or their delegate,
accrued expenses and reserves) incurred in respect of such series (but not with
liabilities incurred in respect of any other series) and such series shall also
be charged with its share of any other liabilities. The determination of the
Trustees shall be final and conclusive as to the amount of liabilities to be
charged to one or more particular series. The Trustees may delegate from time
to time the power to make such allocation to one or more Trustees or to an
agent of the Trust appointed for such purpose. The liabilities with which a
series is so charged are herein referred to as the "liabilities of" such
series.
SECTION 4. The Trustees shall have the power, as frequently as they may
determine, to cause each Shareholder to pay directly, in advance or arrears,
for charges of the Trust's custodian or transfer or shareholder service or
similar agent, an amount fixed from time to time by the Trustees, by setting
off such charges due from such Shareholder from declared but unpaid dividends
owed such Shareholder and/or by reducing the number of Shares in the account
of such Shareholder by that number of full and/or fractional Shares which
represents the outstanding amount of such charges due from such Shareholder.
OWNERSHIP OF ASSETS OF THE TRUST
SECTION 5. Title to all of the assets of each series of the Trust and of
the Trust shall at all times be considered as vested in the Trustees.
ADVISORY, MANAGEMENT AND DISTRIBUTION
SECTION 6. Subject to a favorable vote of a majority of the outstanding
voting securities of a series of the Trust, the Trustees may on behalf of
such series, at any time and from time to time, contract for exclusive or
nonexclusive advisory and/or management services with a corporation, trust,
association or other organization, every such contract to comply with such
requirements and restrictions as may be set forth in the By-Laws; and any such
contract may contain such other terms interpretive of or in addition to said
requirements and restrictions as the Trustees may determine, including,
without limitation, authority to determine from time to time what investments
shall be purchased, held, sold or exchanged and what portion, if any, of the
assets of such series shall be held univested and to make changes in such
series' investments. The Trustees may also, at any time and from time to time,
contract with a corporation, trust, association or other organization,
appointing it exclusive or nonexclusive distributor or principal underwriter
for the Shares, every such contract to comply with such requirements and
restrictions as may be set forth in the By-Laws; and any such contract may
contain such other terms interpretive of or in addition to said requirements
and restrictions as the Trustees may determine.
The fact that:
(a) any of the Shareholders, Trustees, or officers of the Trust is
a shareholder, director, officer, partner, trustee, employee,
manager, adviser, principal underwriter, or distributor or
agent of or for any corporation, trust, association, or other
organization, or of or for any parent or affiliate of any
organization, with which an advisory or management or principal
underwriter's or distributor's contract, or transfer, Shareholder
services or other agency contract may have been or may hereafter
be made, or that any such organization, or any parent or
affiliate thereof, is a Shareholder or has an interest in the
Trust, or that
(b) any corporation, trust, association or other organization with
which an advisory or management or principal underwriter's or
distributor's contract, or transfer, Shareholder services or
other agency contract may have been or may hereafter be made
also has an advisory or management contract, or principal
underwriter's or distributor's contract, or transfer, Shareholder
services or other agency contract with one or more other
corporations, trusts, associations, or other organizations, or
has other businesses or interests shall not affect the validity
of any such contract or disqualify any Shareholder, Trustee or
officer of the Trust from voting upon or executing the same or
create any liability or accountability to the Trust or its
Shareholders.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
VOTING POWERS
SECTION 1. The Shareholders shall have power to vote only: (a) for the
election or removal of Trustees as provided in Article IV, Section 1; (b)with
respect to any investment adviser or manager as provided in Article IV,
Section 6; (c) with respect to any termination or reorganization of the Trust
or any series thereof to the extent and as provided in Article IX. Section 1;
(d) with respect to any amendment of this Declaration of Trust to the extent
and as provided in Article IX, Section 4; (e) to the same extent as the
stockholders of a Massachusetts business corporation as to whether or not a
court action, proceeding or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or the Shareholders;
and (f) with respect to such additional matters relating to the Trust as may
be required by law, the 1940 Act, this Declaration of Trust, the By-Laws or
any registration of the Trust with the Securities and Exchange Commission
(or any successor agency) or any state, or as the Trustees may consider
necessary or desirable.
Each whole share shall be entitled to one vote as to any matter on which
it is entitled to vote and each fractional share shall be entitled to a
proportionate fractional vote. Notwithstanding any other provision of the
Declaration of Trust, on any matter submitted to a vote of Shareholders all
Shares of the Trust then entitled to vote shall be voted in the aggregate and
not by individual series, except (a) when required by the 1940 Act, Shares
shall be voted by individual series and not in the aggregate; and (b) when
the Trustees have determined that the matter affects only the interest of one
or more series, then only Shareholders of such series shall be entitled to
vote thereon. There shall be no cumulative voting in the election of Trustees.
Shares may be voted in person or by proxy.
A proxy with respect to Shares held in the name of two or more persons
shall be valid if executed by any one of them unless at or prior to the
exercise of the proxy the Trust receives a specific written notice to the
contrary from any one of them. A proxy purporting to be executed by or on
behalf of a Shareholder shall be deemed valid unless challenged at or prior
to its exercise and the burden of proving invalidity shall rest on the
challenger.
Until Shares are issued, the Trustees may exercise all rights of
Shareholders and may take any action required by law, this Declaration of
Trust or the By-Laws to be taken by Shareholders.
SHAREHOLDER MEETINGS
SECTION 2. Meetings of Shareholders (including meetings involving only one
or more but less than all series) may be called and held from time to time
for the purpose of taking action upon any matter requiring the vote or
authority of the Shareholders as herein provided or upon any other matter
deemed by the Trustees to be necessary or desirable. Such meetings shall be
held at the principal office of the Trust as set forth in the By-Laws of the
Trust, or at any such other place within the United States as may be designated
in the call thereof, which call shall be made by the Trustees or the Chairman
of the Trust. Meetings of Shareholders may be called by the Trustees or such
other person or persons as may be specified in the By-Laws and shall be called
by the Trustees or such other person or persons as may be specified in the
By-Laws upon written application by Shareholders holding at least 25% (or ten
percent (10%) if the purpose of the meeting is to determine if a Trustee is to
be removed from office) of the Shares then outstanding requesting a meeting be
called for a purpose requiring action by the Shareholders as provided herein
or in the By-Laws, which purpose shall be specified in any such written
application.
Shareholders shall be entitled to at least seven days' written notice of
any meeting of the Shareholders.
QUORUM AND REQUIRED VOTE
SECTION 3. The presence at a meeting of Shareholders in person or by proxy of
Shareholders entitled to vote at least thirty percent (30%) of all votes
entitled to be cast at the meeting of each series entitled to vote as a series
shall be a quorum for the transaction of business at a Shareholders' meeting,
except that where any provision of law or of this Declaration of Trust permits
or requires that the holders of Shares shall vote in the aggregate and not as a
series, then the presence in person or by proxy of Shareholders entitled to
vote at least thirty percent (30%) of all votes entitled to be cast at the
meeting (without regard to series) shall constitute a quorum. Any lesser
number, however, shall be sufficient for adjournments. Any adjourned session or
sessions may be held within a reasonable time after the date set for the
original meeting without the necessity of further notice.
Except when a larger vote is required by any provisions of the 1940 Act,
this Declaration of Trust or the By-Laws, a majority of the Shares of each
series voted on any matter shall decide such matter insofar as that series is
concerned, provided that where any provision of law or of this Declaration of
Trust permits or requires that the holders of Share vote in the aggregate and
not as a series, then a majority of the Shares voted on the matter (without
regard to series) shall decide such matter and a plurality shall elect a
Trustee.
ACTION BY WRITTEN CONSENT
SECTION 4. Any action taken by Shareholders may be taken without a
meeting if Shareholders entitled to vote more than fifty percent (50%) of the
votes entitled to be cast on the matter of each series or, where any provision
of law or of this Declaration of Trust permits or requires that the holders of
Shares vote in the aggregate and not as a series, if Shareholders entitled to
vote more than fifty percent (50%) of the votes entitled to be cast thereon
(without regard to series) (or in either case such larger vote as shall be
required by any provision of this Declaration of Trust or the By-Laws) consent
to the action in writing and such written consents are filed with the records
of the meetings of Shareholders. Such consent shall be treated for all
purposes as a vote taken at a meeting of Shareholders.
ADDITIONAL PROVISIONS
SECTION 5. The By-Laws may include further provisions for Shareholders'
votes and meetings and related matters not inconsistent with the provisions
hereof.
ARTICLE VI
DISTRIBUTIONS, REDEMPTIONS AND REPURCHASES,
AND DETERMINATION OF NET ASSET VALUE
DISTRIBUTIONS
SECTION 1. The Trustees may in their sole discretion from time to time
distribute to the Shareholders of any series such income and gains, accrued or
realized, as the Trustees may determine, after providing for actual and
accrued expenses and liabilities of such series (including such reserves as
the Trustees may establish) determined in accordance with this Declaration of
Trust and good accounting practices. The Trustees shall have full discretion
to determine which items shall be treated as income and which items as capital
and their determination shall be binding upon the Shareholders. Distributions
to any series, if any be made, shall be in Shares of such series, in cash or
otherwise and on a date or dates determined by the Trustees. At any time and
from time to time in their discretion, the Trustees may distribute to the
Shareholders of any series as of a record date or dates determined by the
Trustees, in Shares of such series. in cash or otherwise, all or part of any
gains realized on the sale or disposition of property of the series or
otherwise, or all or part of any other principal of the Trust attributable to
the series. Each distribution pursuant to this Section 1 shall be made ratably
according to the number of Shares of the series held by the several
Shareholders on the applicable record date thereof, provided that distributions
from assets of a series may only be made to the holders of the Shares of such
series and provided that no distributions need be made on Shares purchased
pursuant to orders received, or for which payment is made, after such time
or times as the Trustees may determine. Any distribution paid in Shares will
be paid at the net asset value thereof as determined in accordance with this
Declaration of Trust. The Trustees have the power, in their discretion, to
distribute for any year amounts sufficient to enable the Trust as a "regulated
investment company" under the Internal Revenue Code of 1986 as amended (or any
successor thereto) to avoid any liability for federal income tax in respect of
that year.
REDEMPTIONS AND REPURCHASES
SECTION 2. Any holder of Shares of the Trust may by presentation of a request
in proper form, together with his certificates, if any, for such Shares, in.
proper form for transfer to the Trust or duly authorized agent of the Trust,
request redemption of his shares for the net asset value thereof determined
and computed in accordance with the provisions of this Section 2 and the
provisions of Section 6 of this Article VI.
Upon receipt by the Trust or its duly authorized agent, as the case may
be, of such a request for redemption of Shares in proper form, such Shares
shall be redeemed at the net asset value per share of the particular series
next determined after such request is received or determined as of such other
time fixed by the Trustees as may be permitted or required by the 1940 Act.
The criteria for determining what constitutes a proper request for redemption
and the time of receipt of such request shall be fixed by the Trustees.
The obligation of the Trust to redeem its Shares of each series as set
forth above in this Section 2 shall be subject to the condition that such
obligation may be suspended by the Trust by or under authority of the Trustees
during any period or periods when and to the extent permissible under the 1940.
Act If there is such a suspension, any Shareholder may withdraw any request
for redemption which has been received by the Trust during any such period and
the applicable net asset value with respect to which would but for such
suspension be calculated as of a time during such period. Upon such withdrawal,
the Trust shall return to the Shareholder the certificates therefor, if any.
The Trust may also purchase, repurchase or redeem Shares in accordance with
such other methods, upon such other terms and subject to such other conditions
as the Trustees may from time to time authorize at a price not exceeding the
net asset value of such Shares in effect when the purchase or repurchase or
any contract to purchase or repurchase is made. Shares of any series redeemed
or repurchased by the Trust hereunder shall be cancelled upon such redemption
or repurchase without further action by the Trust or the Trustees and the
number of issued and outstanding Shares of such series shall thereupon be
reduced by such amount.
PAYMENT FOR SHARES REDEEMED
SECTION 3. Payment of the redemption price for Shares redeemed pursuant to
this Article VI shall be made by the Trust or its duly authorized agent after
receipt by the Trust or its duly authorized agent of a request for redemption
in proper form (together with any certificates for such shares as provided in
Section 2 above) in accordance with procedures and subject to conditions
prescribed by the Trustees; provided, however. that payment may be postponed
during the period in which the redemption of Shares is suspended under Section
2 above. Subject to any generally applicable limitation imposed by the
Trustees, any payment on redemption, purchase or repurchase by the Trust of
Shares may, if authorized by the Trustees, be made wholly or partly in kind,
instead of in cash. Such payment in kind shall be made by distributing
securities or other property, constituting, in the opinion of the Trustees, a
fair representation of the various types of securities and other property then
held by the series of Shares being redeemed, purchased or repurchased (but not
necessarily involving a portion of each of the series' holdings) and taken at
their value used in determining the net asset value of the Shares in respect
of which payment is made.
REDEMPTIONS AT THE OPTION OF THE TRUST
SECTION 4. The Trust shall have the right at its option and at any time
and from time to time to redeem Shares of any Shareholder at the net asset
value thereof as determined in accordance with Section 6 of this Article VI,
if at such time such Shareholder owns fewer Shares of a series than, or Shares
of a series having an aggregate net asset value of less than, an amount
determined from time to time by the Trustees. Any such redemption at the
option of the Trust shall be made in accordance with such other criteria
and procedures for determining the Shares to be redeemed, the redemption
date and the means of effecting such redemption as the Trustees may from
time to time authorize.
ADDITIONAL PROVISIONS RELATING TO REDEMPTIONS AND REPURCHASES
SECTION 5. The completion of redemption, purchase or repurchase of Shares
shall constitute a full discharge of the Trust and the Trustees with respect
to such Shares. No dividend or distribution (including, without limitation,
any distribution paid upon termination of the Trust or of any series) with
respect to, nor any redemption or repurchase of, the Shares of any series
shall be effected by the Trust other than from the assets of such series.
DETERMINATION OF NET ASSET VALUE
SECTION 6. The term "net asset value" of each Share of a series as of any
particular time shall be the quotient, rounded to such extent as the Trustees
shall determine from time to time in a manner consistent with the 1940 Act,
obtained by dividing the value, as at such time, of the net assets of such
series (i.e., the value of the assets of such series less the liabilities of
such series, exclusive of liabilities represented by the Shares of such series)
by the total number of Shares of such series outstanding at such time, all
determined and computed in accordance with the Trust's current prospectus.
The Trustees, or any officer, or officers or agent of the Trust designated
for the purpose by the Trustees shall determine the net asset value of the
Shares of each series, and the Trustees shall fix the time or times as of
which the net asset value of the Shares of each series shall be determined
and shall fix the periods during which any such net asset value shall be
effective as to sales, redemptions and repurchases of, and other transactions
in, the Shares of such series, except as such times and periods for any such
transaction may be fixed by other provisions of this Declaration of Trust or
by the By-Laws.
Determinations in accordance with this Section 6 made in good faith shall
be binding on all parties concerned.
HOW LONG SHARES ARE OUTSTANDING
SECTION 7. Shares of the Trust surrendered to the Trust for redemption by
it pursuant to the provisions of Section 2 of this Article VI shall be deemed
to be outstanding until the redemption price thereof is determined pursuant
to this Article VI and, thereupon and until paid, the redemption price thereof
shall be deemed to be a liability of the Trust. Shares of the Trust purchased
by the Trust in the open market shall be deemed to be outstanding until
confirmation of purchase thereof by the Trust and, thereupon and until paid,
the redemption price thereof shall be deemed to be a liability of the Trust.
Shares of the Trust redeemed by the Trust pursuant to Section 4 of this
Article VI shall be deemed to be outstanding until said Shares are deemed to
be redeemed in accordance with procedures adopted by the Trustees pursuant to
said Section 4.
ARTICLE VII
COMPENSATION AND LIMITATION OF LIABILITY OF TRUSTEES
COMPENSATION
SECTION 1. The Trustees as such shall be entitled to reasonable
compensation from the Trust if the rate thereof is prescribed in advance by
such Trustees. Nothing herein shall in any way prevent the employment of any
Trustee for advisory, management, legal, accounting, investment banking or
other services and payment for the same by the Trust, it being recognized that
such employment may result in such Trustee being considered an Affiliated
Person or an Interested Person.
LIMITATION OF LIABILITY
SECTION 2. The Trustees shall not be responsible or liable in any event for
any neglect or wrongdoing of any officer, agent, employee, investment adviser
or manager, principal underwriter or custodian, nor shall any Trustee be
responsible for the act or omission of any other Trustee. Nothing in this
Declaration of Trust shall protect any Trustee against any liability to which
such Trustee would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee.
Every note, bond, contract, instrument, certificate, Share or undertaking
and every other act or thing whatsoever executed or done by or on behalf of
the Trust or the Trustees or any of them in connection with the Trust shall
be conclusively deemed to have been executed or done only in or with respect
to their or his or her capacity as Trustees or Trustee and neither such
Trustees or Trustee nor the Shareholders shall be personally liable thereon.
Every note, bond, contract, instrument, certificate or undertaking made or
issued by the Trustees or by any officers or officer shall give notice that
this Declaration of Trust is on file with the Secretary of The Commonwealth of
Massachusetts and shall recite that the same was executed or made by or on
behalf of the Trust by them as Trustees or Trustee or as officers or officer
and not individually and that the obligations of such instrument are not
binding upon any of them or the Shareholders individually but are binding only
upon the assets and property of the Trust or a particular series of Shares, and
may contain such further recital as he or she or they may deem appropriate,
but the omission thereof shall not operate to bind any Trustees or Trustee or
officers or officer or Shareholders or Shareholder individually.
All persons extending credit to, contracting with or having any claim
against the Trust or a particular series of Shares shall look only to the
assets of the Trust or the assets of that particular series of Shares, as
the case may be, for payment under such credit, contract or claim; and neither
the Shareholders nor the Trustees, nor any of the Trust's officers, employees
or agent, whether past, present or future, shall be personally liable therefor.
TRUSTEES' GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY
SECTION 3. The exercise by the Trustees of their powers and discretions
hereunder shall be binding upon everyone interested. A Trustee shall be liable
only for his own willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of Trustee, and
for nothing else, and shall not be liable for errors of judgment or mistakes
of fact or law. The Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of Trust and their
duties as Trustees hereunder, and shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such advice.
In discharging their duties, the Trustees, when acting in good faith, shall be
entitled to rely upon the books of account of the Trust and upon written
reports made to the Trustees by any officer appointed by them, any independent
public accountant and (with respect to the subject matter of the contract
involved) any officer, partner or responsible employee of any other paaty to
any contract entered into pursuant to Section 2 of Article IV. The Trustees
shall not be required to give any bond as such, nor any surety if a bond is
required.
LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES
SECTION 4. No person dealing with the Trustees shall be bound to make any
inquiry concerning the validity of any transaction made or to be made by the
Trustees or to see to the application of any payments made or property
transferred to the Trust or upon its order.
ARTICLE VIII
INDEMNIFICATION
Subject to the exceptions and limitations contained in this Article, every
person who is, or has been, a Trustee or officer of the Trust (including
persons who serve at the request of the Trust as directors, officers or
trustees of another organization in which the Trust has an interest as a
shareholder, creditor or otherwise) hereinafter referred to as a "Covered
Person," shall be indemnified by the Trust to the fullest extent permitted
by law against liability and against all expenses expenses reasonably incurred
or paid by him in connection with any claim, action, suit or proceeding in
which he becomes involved as a Party or otherwise by virtue of his being or
having been such a Trustee, director or officer and against amounts paid or
incurred by him in settlement thereof.
No indemnification shall be provided hereunder to a Covered Person:
(a) against any liability to the Trust or its Shareholders by
reason of a final adjudication by the court or other body before
which the proceeding was brought that he engaged in willful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office;
(b) with respect to any matter as to which he shall have been
finally adjudicated not to have acted in good faith in the
reasonable belief that his action was in the best interests of
the Trust; or
(c) in the event of a settlement or other disposition not involving a
final adjudication (as provided in paragraph (a) or (b)) and
resulting in a payment by a Covered Person, unless there has been
either a determination that such Covered Person did not engage
in willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office by
the court or other body approving the settlement or other
disposition or a reasonable determination, based on a review of
readily available facts (as opposed to a full trial-type inquiry)
that he did not engage in such conduct:
(i) by a vote of a majority of the Disinterested Trustees acting on
the matter (provided that a majority of the Disinterested
Trustees then in office act on the matter); or
(ii) by written opinion of independent legal counsel.
The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not affect any
other rights to which any Covered Person may now or hereafter be entitled,
shall continue as to a Person who has ceased to be such a Covered Person and
shall inure to the benefit of the heirs, executors and administrators of such
a person. Nothing contained herein shall affect any rights to indemnification
to which Trust personnel other than Covered Persons may be entitled by
contract or otherwise under law.
Expenses of preparation and presentation of a defense to any claim,
action, suit or proceeding subject to a claim for indemnification under this
Article shall be advanced by the Trust prior to final disposition thereof upon
receipt of an undertaking by or on behalf of the recipient to repay such
amount if it is ultimately determined that he is not entitled to
indemnification under this Article, provided that either:
(a) such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against
losses arising out of any such advances; or
(b) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in
office act on the matter) or independent legal counsel in a
written opinion shall determine, based upon a review of the
readily available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the recipient
ultimately will be found entitled to indemnification.
As used in this Article, a "Disinterested Trustee" is one (a) who is not an
"interested person" of the Trust (as defined by the 1940 Act (including anyone
who has been exempted from being an "interested person" by any rule,
regulation or order of the Securities and Exchange Commission)), and (b)
against whom none of such actions, suits or other proceedings or another
action, suit or other proceeding on the same or similar grounds is then or has
been pending.
As used in this Article, the words "claim," "action," "suit" or
"proceeding" shall apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened; and the words
"liability" and "expenses" shall include without limitation, attorneys' fees,
costs, judgment, accounts paid in settlement, fines, penalties and other
liabilities.
In case any Shareholder or former Shareholder shall be held to be
personally liable solely by reason of his or her being or having been a
Shareholder and not because of his or her acts or omissions or for some other
reason, the Shareholder or former Shareholder (or his or her heirs, executors,
administrators or other legal representatives or in the case of a corporation
or other entity, its corporate or other general successor) shall be entitled
out of the assets of the particular series of Shares of which he or she is or
was a Shareholder to be held harmless from and indemnified against all loss
and expense arising from such liability; provided, however, there shall be no
liability or obligation of the Trust arising hereunder to reimburse any
Shareholder for taxes paid by reason of such Shareholder's ownership of Shares
or for losses suffered by reason of any changes in value of any Trust assets.
ARTICLE IX
MISCELLANEOUS
DURATION, TERMINATION AND REORGANIZATION OF TRUST
SECTION 1. Unless terminated as provided herein, the Trust shall continue
without limitation of time. The Trust may be terminated at any time by the
Trustees by written notice to the Shareholders without a vote of the
Shareholders of the Trust or by the vote of the Shareholders entitled to vote
more than fifty percent (50%) of the votes of each series entitled to be cast
on the matter. Any series of Shares may be terminated at any time by the
Trustees by written notice to the Shareholders of such series without a vote
of the Shareholders of such series or by the vote of the Shareholders of such
series entitled to vote more than fifty percent (50%) of the votes entitled to
be cast on the matter.
Upon termination of the Trust or of any one or more series of Shares, after
paying or otherwise providing for all charges, taxes, expenses and liabilities,
whether due or accrued or anticipated, of the particular series as may he
determined by the Trustees, the Trust shall in accordance with such procedures
as the Trustees consider appropriate reduce the remaining assets of the
particular series to distributable form in cash or other securities, or any
combination thereof, and distribute the proceeds to the Shareholders of the
series involved, ratably according to the number of Shares of such series held
by the several Shareholders of such series on the date of termination.
At any time by the affirmative vote of the Shareholders of the affected
series entitled to vote more than fifty percent (50%) of the votes entitled to
be cast on the matter, the Trustees may sell, convey and transfer the assets of
the Trust, or the assets belonging to any one or more series, to another trust.
partnership, association or corporation organized under the laws of any state
of the United States, or to the Trust to be held as assets belonging to another
Series of the Trust, in exchange for cash, shares or other securities
(including, in the case of a transfer to another series of the Trust, Shares
of such other series) with such transfer being made subject to, or with the
assumption by the transferee of, the liability belonging to each series the
assets of which are so distributed. Following such transfer, the Trustees shall
distribute such cash, shares or other securities (giving due effect to the
assets and liabilities belonging to any other differences among the various
series the assets belonging to which have so been transferred) among the
Shareholders of the series the assets belonging to which have been so
transferred; and if all of the assets of the Trust have been so transferred,
the Trust shall be terminated.
FILING OF COPIES, REFERENCES, HEADINGS
SECTION 2. The original or a copy of this instrument and of each amendment
hereto stall be kept at the office of the Trust where it may be inspected by
any Shareholder. A copy of this instrument and of each amendment hereto shall
be filed by the Trust with the Secretary of The Commonwealth of Massachusetts
and with the Boston City Clerk, as well as any other governmental office
where such filing may from time to time be required. Anyone dealing with the
Trust may rely on a certificate by an officer of the Trust as to whether or
not any such amendments have been made and as to any matters in connection
with the Trust hereunder; and, with the same effect as if it were the original,
may rely on a copy certified by an officer of the Trust to be a copy of this
instrument or of any such amendments. In this instrument and in any such
amendment, references to this instrument, and all expressions like' "herein,"
"hereof" and "hereunder" shall be deemed to refer to this instrument as
amended from time to time. Headings are placed herein for convenience of
reference only and shall not be taken as a part hereof or control or affect
the meaning, construction or effect of this instrument. This instrument may
be executed in any number of counterparts each of which shall be deemed an
original.
APPLICABLE LAW
SECTION 3. This Declaration of Trust is made in The Commonwealth of
Massachusetts, and it is created under and is to be governed by and construed
and administered according to the laws of said Commonwealth.
The Trust shall be of the type commonly called a Massachusetts business
trust, and without limiting the provisions hereof, the Trust may exercise
all powers which are ordinarily exercised by such a trust.
AMENDMENTS
SECTION 4. This Declaration of Trust may be amended at any time by an
instrument in writing signed by a majority of the then Trustees when
authorized so to do by vote of Shareholders holding more than fifty percent
(50%) of the Shares of each series entitled to vote, except that an amendment
which shall affect the holders of one or more series of Shares but not the
holders of all outstanding series shall be authorized by vote of the
Shareholders holding more than fifty percent (50%) of the Shares entitled to
vote of each series affected and no vote of Shareholders of a series not
affected shall be required. Amendments having the purpose of changing the name
of the Trust or of supplying any omission, curing any ambiguity or curing,
correcting or supplementing any provision which is defective or inconsistent
with the 1940 Act or with the requirements of the Internal Revenue Code and
the regulations thereunder for the Trust's obtaining the most favorable
treatment thereunder available to regulated investment companies or of
establishing and designating or abolishing any series of Shares in accordance
with Section 1 of Article III hereof shall not require authorization by
Shareholder vote.
USE OF THE NAME
SECTION 5. Trust is adopting its trust name and the name of the first Series
of the proposed fund by permission of Ranson Capital Corporation ("'RCC"), and
the Trust's right to use the name "Ranson Managed Portfolios" and the name
"The Kansas Municipal Fund" is subject to the right of RCC or its successors
or assigns at any time to control the usage of the name "Ranson Managed
Portfolios" and the name "The Kansas Municipal Fund" by the Trust and to
direct that the Trust stop using the name "Ranson Managed Portfolios" and,
or the name "The Kansas Municipal Fund" in any form or combination as part
of its name, service mark, as a Series of a Fund, and in any literature or
reference whatsoever. All proprietary interest in the names "Ranson Managed
Portfolios" and "The Kansas Municipal Fund" shall remain exclusively the
property of RCC and at the written request of RCC or its successors or assigns,
delivered to the Trust at its registered office in Boston, Massachusetts, if
any, and if none, at its principal office, the Trust shall forthwith stop using
the name "Ranson Managed Portfolios" and, or the name "The Kansas Municipal
Fund" in accordance with the provisions of such request. The provisions hereof
are binding upon the Trust, its trustees, officers, Shareholders, creditors,
successors or assigns and all other persons claiming under or through it. The
terms of this Section 5 do not preclude the use of the names "Ranson Managed
Portfolios" or "The Kansas Municipal Fund" by any other person or organization,
whether now existing or hereafter created, to which RCC may grant the right to
such name.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal for
himself and his assigns, as of the day and year first above written.
(SEAL) /s/John A. Ranson
-----------------
John A. Ranson
Suite 45O
120 S. Market
Wichita, Kansas 67202
STATE OF KANSAS )
) SS.
COUNTY OF SEDGWICK )
Then personally appeared the above-named John A. Ranson who acknowledged the
foregoing instrument to be his free act and deed, before me this 10th day of
August, 1990.
/s/ Ruthanne N. Whitely
-----------------------
Notary Public
My Commission Expires:
March 11, 1991
Exhibit
Number Exhibit
------ -------
(b) By-Laws of Registrant.
Exhibit (b)
BY-LAWS
OF
RANSON MANAGED PORTFOLIOS
SECTION 1. AGREEMENT AND DECLARATION OF
TRUST AND PRINCIPAL OFFICE
1.1. AGREEMENT AND DECLARATION OF TRUST. These By-Laws shall be subject
to the Agreement and Declaration of Trust, as from time to time in effect
(the "Declaration of Trust"), of RANSON MANAGED PORTFOLIOS, the
Massachusetts business trust established by the Declaration of Trust
(the "Trust).
1.2. PRINCIPAL OFFICE OF THE TRUST; RESIDENT AGENT. The principal office
of the Trust shall be located in Wichita, Kansas. Its resident agent in
Massachusetts shall be CT Corporation System, 2 Oliver Street, Boston,
Massachusetts or such other person as the Trustees may from time to time select
SECTION 2. SHAREHOLDERS
2.1. SHAREHOLDER MEETINGS. Meetings of the shareholders may be called at any
time by the Trustees, by the Chairman or, if the Trustees and the Chairman
shall fail to call any meeting of shareholders for a period of 30 days after
written application of one or more shareholders who hold at least 25% of all
shares issued and outstanding and entitled to vote at the meeting, then such
shareholders may call such meeting. Each call of a meeting shall state the
place, date, hour and purposes of the meeting.
2.2. PLACE OF MEETINGS. All meetings of the shareholders shall he held at
the principal office of the Trust, or, to the extent permitted by the
Declaration of Trust, at such other place within the United States as shall
be designated by the Trustees or the Chairman of the Trust.
2.3. NOTICE OF MEETINGS. A written notice of each meeting of shareholders,
stating the place, date and hour and the purposes of the meeting, shall be
given at least seven days before the meeting to each shareholder entitled to
vote thereat by leaving such notice with him or at his residence or usual
place of business or by mailing it, postage prepaid, and addressed to such
shareholder at his address as it appears in the records of the Trust. Such
notice shall be given by the secretary or an assistant secretary or by an
officer designated by the Trustees. No notice of any meeting of shareholders
need be given to a shareholder if a written waiver of notice executed before
or after the meeting by such shareholder or his attorney thereunto duly
authorized, is filed with the records of the meeting.
2.4. BALLOTS. No ballot shall he required for any election unless requested
by a shareholder present or represented at the meeting and entitled to vote
in the election.
2.5 PROXIES AND VOTING. Shareholders entitled to vote may vote either in
person or by proxy in writing dated not more than six months before the
meeting named therein, which proxies shall be filed with the secretary or
other person responsible to record the proceedings of the meeting before being
voted. Unless otherwise specifically limited by their terms, such proxies
shall entitle the holders thereof to vote at any adjournment of such meeting
but shall not be valid after the final adjournment of such meeting. At all
meetings of shareholders, unless the voting is conducted by inspectors, all
questions relating to the qualification of voters, the validity of proxies
and the acceptance or rejection of votes shall be decided by the Chairman
of the meeting.
SECTION 3. TRUSTEES
3.1. COMMITTEES AND ADVISORY BOARD. The Trustees may appoint from their
number an executive committee and other committees. Any such committee may
be abolished and reconstituted at any time and from time to time by the
Trustees. Except as the Trustees may otherwise determine, any such committee
may make rules for conduct of its business. The Trustees may appoint an
advisory board to consist of not less than two nor more than five members.
The members of the advisory board shall be compensated in such manner as
the Trustees may determine and shall confer with and advise the Trustees
regarding the investments and other affairs of the Trust. Each member of
the advisory board shall hold office until the first meeting of the Trustees
following the meeting of the shareholders, if any, next following his
appointment and until his successor is appointed and qualified, or until
he sooner dies, resigns, is removed, or becomes disqualified, or until
the advisory board is sooner abolished by the Trustees.
3.2. REGULAR MEETINGS. Regular meetings of the Trustees may be held without
call or notice at such places and at such times as the Trustees may from time
to time determine, provided that notice of the first regular meeting following
any such determination shall be given to absent Trustees. A regular meeting of
the Trustees may be held without call or notice immediately after and at the
same place as any meeting of the shareholders.
3.3. SPECIAL MEETINGS. Special meetings of the Trustees may be held at any
time and at any place designated in the call of the meeting, when called by
the Chairman or by two or more Trustees, sufficient notice thereof being given
to each Trustee by the secretary or an assistant secretary or by the officer
or one of the Trustees calling the meeting.
3.4. NOTICE. It shall be sufficient notice to a Trustee to send notice by
mail at least three days or by telegram at least twenty-four hours before the
meeting addressed to the Trustee at his or her usual or last known business or
residence address or to give notice to him or her in person or by telephone at
least twenty-four hours before the meeting. Notice of a meeting need not be
given to any Trustee if a written waiver of notice, executed by him or her
before or after the meeting, is filed with the records of the meeting, or to
any Trustee who attends the meeting without protesting prior thereto or at its
commencement the lack of notice to him or her. Neither notice of a meeting
nor a waiver of a notice need specify the purposes of the meeting.
3.5. QUORUM. At any meeting of the Trustees a majority of the Trustees then
in office shall constitute a quorum. Any meeting may be adjourned from time to
time by a majority of the votes cast upon the question, whether or not a
quorum is present, and the meeting may be held as adjourned without further
notice.
SECTION 4. OFFICERS AND AGENTS
4.1. ENUMERATION; QUALIFICATION. The officers of the Trust shall be a
Chairman of the Board, a president, a treasurer, a secretary and such other
officers, if any, as the Trustees from time to time may in their discretion
elect or appoint. The Trust may also have such agents, if any, as the Trustees
from time to time may in their discretion appoint. Any officer may be but
none need be a Trustee or shareholder. Any two or more offices may be held
by the same person.
4.2. POWERS. Subject to the other provisions of these By-Laws, each officer
shall have, in addition to the duties and powers herein and in the Declaration
of Trust set forth, such duties and powers as are commonly incident to his or
her office as if the Trust were organized as a Massachusetts business
corporation and such other duties and powers as the Trustees may from time to
time designate.
4.3. ELECTION. The Chairman, the president, the treasurer and the secretary
shall be elected annually by the Trustees at their first meeting in each
calendar year or at such later meeting in such year as the Trustees shall
determine. Other officers or agents, if any, may be elected or appointed by
the Trustees at said meeting or at any other time.
4.4. TENURE. The Chairman, president, treasurer and secretary shall hold
office until the first meeting of Trustees in each calendar year and until
their respective successors are chosen and qualified, or in each case until
he or she sooner dies, resigns, is removed or becomes disqualified. Each
other officer shall hold office and each agent shall retain his or her
authority at the pleasure of the Trustees.
4.5. CHAIRMAN OF THE BOARD. The Chairman of the Board of Trustees shall be
the chief executive officer of the Trust; shall, subject to the control of
the Trustees, have general charge and supervision of the Trust; shall preside
at all meetings of the shareholders and of the Trustees at which he is present;
and shall see that all orders and resolutions of the Board of Trustees are
carried into effect (sometimes referred to herein as the "Chairman").
4.6. PRESIDENT AND VICE PRESIDENTS. The president shall be the chief
administrative officer of the Trust. The president shall at the request or in
the absence or disability of the Chairman exercise the powers of the Chairman
and shall perform such other duties and have such other powers as the Trustees
shall prescribe from time to time. Any vice president shall at the request or
in the absence or disability of the president exercise the powers of the
president and perform such other duties and have such other powers as shall
be designated from time to time by the Trustees.
4.7. TREASURER AND CONTROLLER. The treasurer shall be the chief financial
officer of the Trust and subject to any arrangement made by the Trustees with
a bank or trust company or other organization as custodian or transfer or
shareholder services agent, shall be in charge of its valuable papers and shall
have such other duties and powers as may be designated from time to time by
the Trustees or by the Chairman. If at any time there shall be no controller,
the treasurer shall also be the chief accounting officer of the Trust and
shall have the duties and power prescribed herein for the controller. Any
assistant treasurer shall have such duties and powers as shall be designated
from time to time by the Trustees.
The controller, if any be elected, shall be the chief accounting officer of
the Trust and shall be in charge of its books of account and accounting
records. The Controller shall be responsible for preparation of financial
statements of the Trust and shall have such other duties and powers as may
be designated from time to time by the Trustees or the Chairman.
4.8. SECRETARY AND ASSISTANT SECRETARIES. The secretary shall record all
proceedings of the shareholders and the Trustees in books to be kept therefor,
which books shall be kept at the principal office of the Trust. In the absence
of the secretary from any meeting of shareholders or Trustees, an assistant
secretary, or if there be none or he or she is absent, a temporary clerk
chosen at the meeting shall record the proceedings thereof in the aforesaid
books.
SECTION 5. RESIGNATIONS AND REMOVALS
Any Trustees, officer or advisory board member may resign at any time by
delivering his or her resignation in writing to the Chairman of the Board,
the president or the secretary or to a meeting of the Trustees. The Trustees
may remove any officer or advisory board member elected or appointed by them
with or without cause by the vote of a majority of the Trustees then in
office. Except to the extent expressly provided in a written agreement with
the Trust, no Trustee, officer, or advisory board member resigning, and no
officer or advisory board member removed shall have any right to any
compensation for any period following his or her resignation or removal, or
any right to damages on account of such removal.
SECTION 6. VACANCIES
A vacancy in the office of Trustee shall be filled in accordance with the
Declaration of Trust. Vacancies resulting from the death, resignation,
incapacity or removal of any officer may be filled by the Trustees. Each
successor of any such officer shall hold office for the unexpired term,
and in the case of the Chairman, the president, the treasurer and the
secretary, until his or her successor is chosen and qualified, or in
each case until he or she sooner dies, resigns, is removed or becomes
disqualified.
SECTION 7. SHARES OR BENEFICIAL INTEREST
7.1. SHARE CERTIFICATES. No certificates certifying the ownership of shares
shall be issued except as the Trustees may otherwise authorize. In the event
that the Trustees authorize the issuance of share certificates, subject to the
provisions of Section 7.3, each shareholder shall be entitled to a certificate
stating the number of shares owned by him or her, in such form as shall be
prescribed from time to time by the Trustees. Such certificate shall be signed
by the Chairman, the President or a Vice President and by the Treasurer,
Assistant Treasurer, Secretary or Assistant Secretary. Such signatures may be
facsimiles if the certificate is signed by a transfer or shareholder services
agent or by a registrar, other than a Trustee, officer or employee of the
Trust. In case any officer who has signed or whose facsimile signature has
been placed on such certificate shall have ceased to be such officer before
such certificate is issued, it may be issued by the Trust with the same effect
as if he or she were such officer at the time of its issue.
In lieu of issuing certificates for shares, the Trustees or the transfer or
shareholder services agent may either issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares,
who shall in either case be deemed, for all purposes hereunder, to be the
holders of certificates for such shares as if they had accepted such
certificates and shall be held to have expressly assented and agreed to the
terms hereof
7.2. LOSS OF CERTIFICATES. In the case of the alleged loss or destruction or
the mutilation of a share certificate, a duplicate certificate may be issued
in place thereof, upon such terms as the Trustees may prescribe.
7.3. DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The Trustees may at any time
discontinue the issuance of share certificates and may, by written notice to
each shareholder, require the surrender of share certificates to the Trust for
cancellation. Such surrender and cancellation shall not affect the ownership
of shares in the Trust.
SECTION 8. RECORD DATE
The Trustees may fix in advance a time, which shall not be more than 60 days
before the date of any meeting of shareholders or the date for the payment of
any dividend or making of any other distribution to shareholders, as the
record date for determining the shareholders having the right to notice and
to vote at such meeting and any adjournment thereof or the right to receive
such dividend or distribution, and in such case only shareholders of record
on such record date shall have such right, notwithstanding any transfer of
shares on the books of the Trust after the record date.
SECTION 9. SEAL
The seal of the Trust shall, subject to alteration by the Trustees, consist
of a flat-faced circular die with the word "Massachusetts" together with the
name of the Trust and the year of its organization, cut or engraved thereon;
but, unless otherwise required by the Trustees, the seal shall not be
necessary to be placed on, and its absence shall not impair the validity of,
any document, instrument or other paper executed and delivered by or on behalf
of the Trust.
SECTION 10. EXECUTION OF PAPERS
Except as the Trustees may generally or in particular cases authorize the
execution thereof in some other manner, all deeds, leases, transfers,
contracts, bonds, notes, checks, drafts and other obligations made, accepted
or endorsed by the Trust shall be signed, and any transfers of securities
standing in the name of the Trust shall be executed, by the Chairman or the
President or by one of the Vice Presidents or by the Treasurer or by
whomsoever else shall be designated for that purpose by the vote of the
Trustees and need not bear the seal of the Trust.
SECTION 11. FISCAL YEAR
The fiscal year of the Trust shall end on such date in each year as the
Trustees shall from time to time determine.
SECTION 12. PROVISIONS RELATING TO THE CONDUCT OF THE TRUST'S BUSINESS
12.1. DEALINGS WITH AFFILIATES. The Trust shall not purchase or retain
securities issued by any issuer if one or more of the holders of the
securities of such issuer or one or more of the officers or directors
of such issuer is an officer or Trustee of the Trust or officer or director
of any organization, association or corporation with which the Trust has an
investment adviser's contract ("investment adviser"), if to the knowledge of
the Trust, one or more of such officers or Trustees of the Trust or such
officers or directors of such investment advisers owns beneficially more
than one-half of one percent of the shares or securities of such issuer
and such officers, Trustees and directors owning more than one-half of
one percent of such shares or securities together own beneficially more
than five percent of such outstanding shares or securities. Each Trustee
and officer of the Trust shall give notice to the Secretary of the
identity of all issuers whose securities are held by the Trust of which
such officer or Trustee owns as much as one-half of one percent of the
outstanding securities, and the Trust shall not be charged with the
knowledge of such holdings in the absence of receiving such notice if
the Trust has requested such information not less often than quarterly.
Subject to the provisions of the preceding paragraph, no officer, Trustee
or agent of the Trust and no officer, director or agent of any investment
adviser shall deal for or on behalf of the Trust with himself as principal
or agent, or with any partnership, association or corporation in which he
has a material financial interest; provided that the foregoing provisions
shall not prevent (a) officers and Trustees of the Trust from buying, holding
or selling shares in the Trust, or from being partners, officers or directors
of or financially interested in any investment adviser to the Trust or in any
corporation, firm or association which may at any time have a distributor's or
principal underwriter's contract with the Trust; (b) purchases or sales of
securities or other property if such transaction is permitted by or is exempt
or exempted from the provisions of the Investment Company Act of 1940 or any
rule or regulation thereunder and if such transaction does not involve any
commission or profit to any security dealer who is, or one or more of whose
partners, shareholders, officers or directors is an officer or Trustee of the
Trust or an officer or director of the investment adviser, manager or principal
underwriter of the Trust; (c) employment of legal counsel, registrar, transfer
agent, shareholder services, dividend disbursing agent or custodian who is, or
has a partner, stockholder, officer or director who is, an officer or Trustee
of the Trust; (d) sharing statistical, research and management expenses,
including office hire and services, with any other company in which an officer
or Trustee of the Trust is an officer or director or financially interested.
12.2. DEALING IN SECURITIES OF THE TRUST. The Trust, the investment adviser,
any corporation, firm or association which may at any time have an exclusive
distributor's or principal underwriter's contract with the Trust (the
"distributor") and the officers and Trustees of the Trust and officers and
directors of every investment adviser and distributor, shall not take long or
short positions in the securities of the Trust; except that:
(a) the distributor may place orders with the Trust for its shares
equivalent to orders received by the distributor, including orders with
respect to any plan or any similar plan described in the then current
Prospectus of the Fund;
(b) shares of the Trust may be purchased at not less than net asset
value for investment by the investment adviser and by officers,
directors, or trustees, as the case may be, of the distributor,
including any subsidiaries of the distributor, the investment adviser,
or the Trust and by any trust, pension, profit-sharing or other benefit
plan for such persons, or any other such persons as described in the
then current Prospectus of the Fund, no such purchase to be in
contravention of any applicable state or federal requirements.
12.3. LIMITATION ON CERTAIN LOANS. The Trust shall not make loans to any
officer, Trustee or employee of the Trust or any investment adviser or
distributor or their respective officers, directors or partners or employees.
12.4. CUSTODIAN. All securities and cash owned by the Trust shall be
maintained in the custody of one or more banks or trust companies having
(according to its last published report) not less than two million dollars
($2,000,000) aggregate capital, surplus and undivided profits (any such bank
or trust company is hereinafter referred to as the "custodian"); provided,
however, the custodian may deliver securities as collateral on borrowings
effected by the Trust, provided, that such delivery shall be conditioned upon
receipt of the borrowed funds by the custodian except where additional
collateral is being pledged on an outstanding loan and the custodian may
deliver securities lent by the Trust against receipt of initial collateral
specified by the Trust. Subject to such rules, regulations and orders, if
any, as the Securities and Exchange Commission may adopt, the Trust may, or
may permit any custodian to, deposit all or any part of the securities owned
by the Trust in a system for the central handling of securities operated by
the Federal Reserve Banks, or established by a national securities exchange
or national securities association registered with said Commission under the
Securities Exchange Act of 1934, or such other person as may be permitted by
said Commission, pursuant to which system all securities of any particular
class or series of any issue deposited with the system are treated as fungible
and may be transferred or pledged by bookkeeping entry, without physical
delivery of such securities.
The Trust shall upon the resignation or inability to serve of its custodian
or upon change of the custodian:
(a) in the case of such resignation or inability to serve, use its
best efforts to obtain a successor custodian;
(b) require that the cash and securities owned by the Trust be
delivered directly to the successor custodian; and
(c) in the event that no successor custodian can be found, submit to
the shareholders, before permitting delivery of the cash and securities owned
by the Trust otherwise than to a successor custodian; the question whether or
not the Trust shall be liquidated or shall function without a custodian.
12.5. REPORTS TO SHAREHOLDERS. The Trust shall send to each shareholder of
record at least annually a statement of the condition of the Trust and of the
results of its operation, containing all information required by applicable l
aws or regulations.
SECTION 13. AMENDMENTS
These By-Laws may be amended or repealed, in whole or in part, by a majority
of the Trustees then in office at any meeting of the Trustees, or by one or
more writings signed by such majority.
Exhibit
Number Exhibit
------ -------
(c) Specimen Certificate for The Kansas Municipal Fund.
Exhibit (c)
RANSON MANAGED PORTFOLIOS
0338 THE KANSAS MUNICIPAL FUND CUSIP NO.: 753266 10 5
A TRUST FOUNDED UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
This Certificate that CANCELLED
BANK IV WICHITA, NA
Is the owner of: WICHITA, KANSAS
Fully paid and non-assessable shares of The Kansas Municipal Fund series of
Ranson Managed Portfolios transferable only on the books of the Trust in
Person or by duly authorized attorney upon surrender of this Certificate
Properly endorsed. Certificate properly endorsed. This Certificate is not
Valid unless countersigned by the Transfer Agent.
In Witness Whereof, the said Trust has caused this Certificate to be signed
By its duly authorized officers and its Trust seal to be hereunder affixed.
Countersigned:
Bank IV Wichita, National Association John A. Ranson
Transfer Agent President
Authorized Signature Robia K. Pinkerton
Secretary
[seal] Ranson Managed Portfolio * Massachusetts Trust
Exhibit
Number Exhibit
------ -------
(d)(1)(a) Management and Investment Advisory Agreement between Registrant
and Ranson Capital Corporation ("Ranson") on behalf of The
Kansas Municipal Fund
Exhibit (d)(1)(a)
MANAGEMENT AND INVESTMENT ADVISORY AGREEMENT
THIS MANAGEMENT AND INVESTMENT ADVISORY AGREEMENT dated as of January
5, 1996 by and between RANSON MANAGED PORTFOLIOS (the "Fund"), a
Massachusetts Business Trust, and RANSON CAPITAL CORPORATION (the "Manager"),
a Kansas corporation.
1. (a) RETENTION OF MANAGER BY FUND. The Fund hereby employs the
Manager to act as the investment adviser for and to manage the investment
and reinvestment of the assets of The Kansas Municipal Fund portfolio of
the Fund in accordance with such portfolio's investment objective and policies
and restrictions, and to administer its affairs to the extent requested by,
and subject to the review and supervision of, the trustees of the Fund (the
"trustees") for the period and upon the terms herein set forth. The investment
of funds shall be subject to all applicable restrictions of the Agreement
and Declaration of Trust and By-Laws of the Fund as may from time to time
be in force. The term "Fund" as used herein shall refer to either RANSON
MANAGED PORTFOLIOS or any of the portfolios of the Fund as the context may
require.
(b) MANAGER'S ACCEPTANCE OF EMPLOYMENT. The Manager accepts
such employment and agrees during such period to render such services, to
supply investment research and portfolio management (including without
limitation the selection of securities for the Fund to purchase, hold or
sell and the selection of brokers through whom the Fund's portfolio
transactions are executed, in accordance with the policies adopted by the
Fund and its Board of Trustees), to administer the business affairs of the
Fund, to furnish offices and necessary facilities and equipment to the Fund,
to provide administrative services for the Fund, to render periodic reports
to the Trustees of the Fund, and to permit any of its officers or employees
to serve without compensation as Trustees or officers of the Fund if elected
to such positions.
(c) The Manager may, at its option, appoint a subadviser, which
shall assume all or such responsibilities and obligations of the Manager
pursuant to this Agreement as shall be delegated to the subadviser, provided,
however, that any appointment of a subadviser and assumption of
responsibilities and obligations of Manager by such subadviser shall be
subject to approval by the Trustees of the Fund and, to the extent necessary,
shareholders of the Fund. The Manager agrees to give the Fund prompt written
notice of any termination of or notice to terminate any subadviser agreement.
(d) INDEPENDENT CONTRACTOR. The Manager shall be deemed to be an
independent contractor under this Agreement and, unless otherwise expressly
provided or authorized, shall have no authority to act for or represent the
Fund in any way or otherwise be deemed an agent of the Fund.
(e) NON-EXCLUSIVE AGREEMENT. The services of the Manager to the
Fund under this Agreement are not to be deemed exclusive, and the Manager
shall be free to render similar services or other services to others so
long as its services hereunder are not impaired thereby.
2. (a) FEE. For the services and facilities described in Section 1,
the Fund will pay to the Manager at the end of each calendar month an
investment management fee equivalent on an annual basis to .50 of 1% of its
average daily net assets.
(b) EXPENSES PAID BY MANAGER. The Manager hereby agrees to pay
all expenses of the Fund, including the Fund's management and investment
advisory fee and the Fund's dividend disbursing, administrative and
accounting services fee (but excluding taxes and brokerage fees and
commissions, if any) that exceed 1.25% of the Fund's average daily net
assets on an annual basis up to the amount of the management and investment
advisory fee payable by the Fund to the Manager. All other expenses shall
be paid by the Fund. From time to time and subject to discontinuance at
any time, the Manager may voluntarily assume certain expenses of the Fund.
Organizational costs borne by the Manager to the Fund will be amortized and
reimbursed to the Manager by the Fund over a 60-month period.
(c) DETERMINATION OF NET ASSET VALUE. The net asset value of the
Fund shall be calculated as of 3:14 p.m. Wichita time or the closed of the
New York Stock Exchange, whichever is earlier, on each day the Exchange is
open for trading or as of such other time or times as the Trustees may
determine in accordance with the provisions of the Agreement and Declaration
of Trust and By-Laws of the Fund as from time to time in force and in
accordance with the provisions of the Investment Company Act of 1940. For
the purpose of the foregoing computations, on each day when net asset value
is not calculated, the net asset value of a share of the Fund shall be deemed
to be the net asset value of such share as of the close of business on the
last day on which such calculation was made.
(d) PRORATION. For the month and year in which this Agreement
becomes effective or terminates, there shall be an appropriate proration
of the Manager's fee on the basis of the number of days that the Agreement
is in effect during such month and year, respectively.
3. EXPENSES. In addition to the fee of the Manager, the Fund shall
assume and pay any expenses for services rendered by a custodian for the
safekeeping of the Fund's securities or other property, for keeping its books
of account, for any other charges of the custodian and for calculating the net
asset value of the Fund as provided in the Agreement and Declaration of Trust
of the Fund. The Manager shall not be required to pay, and the Fund shall
assume and pay, the charges and expenses of its operations, including
compensation of the Trustees (other than those affiliated with the Manager
and other than those affiliated with the distributors of the Fund, if the
distributors have agreed to pay such compensation), charges and expenses
of independent accountants, of legal counsel and of any transfer or dividend
disbursing agent, costs of acquiring and disposing of portfolio securities,
interest (if any) on obligations incurred by the Fund, costs of share
certificates, membership due in the Investment Company Institute or any
similar organization, costs of reports and notices to shareholders, costs
of registering shares of the Fund under the Federal securities laws,
miscellaneous expenses and all taxes and fees to federal, state or other
governmental agencies on account of the registration of securities issued
by the Fund, filing of corporate documents or otherwise. The Fund shall
not pay or incur any obligation for any management or administrative
expenses for which the Fund intends to seek reimbursement from the Manager
without first obtaining the written approval of the Manager. The Manager
shall arrange, if desired by the Fund, for officers or employees of the
Manager to serve, without compensation from the Fund, as Trustees, officers
or agents of the Fund if duly elected or appointed to such positions and
subject to their individual consent and to any limitations imposed by law.
4. INTERESTED PERSONS. Subject to applicable statutes and regulations,
it is understood that Trustees, officers, shareholders and agents of the Fund
are or may be interested in the Manager as directors, officers, shareholders
and agents or otherwise, and that the directors, officers, shareholders and
agents of the Manager may be interested in the Fund as Trustees, officers,
shareholders, agents or otherwise.
5. LIABILITY. The Manager shall not be liable for any error of
judgment or of law, or for any loss suffered by the Fund in connection with
the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of the Manager
in the performance of its obligations and duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement.
6. (a) TERM. This Agreement shall become effective on the date hereof
and shall remain in full force until the second anniversary of the date
hereof unless sooner terminated as hereinafter provided. This Agreement
shall continue in force from year to year thereafter, but only as long as
such continuance is specifically approved at least annually in the manner
required by the Investment Company Act of 1940.
(b) TERMINATION. This Agreement shall automatically terminate in
the event of its assignment. This Agreement may be terminated at any time
without the payment of any penalty by the Fund or by the Manager on sixty
(60) days written notice to the other party. The Fund may effect termination
by action of the Trustees or by vote of a majority of the outstanding shares
of The Kansas Municipal Fund series, accompanied by appropriate notice.
This Agreement may be terminated at any time without the payment of
any penalty and without advance notice by the Trustees or by vote of a
majority of the outstanding shares of The Kansas Municipal Fund series
in the event that it shall have been established by a court or competent
jurisdiction that the Manager or any officer or director of the Manager has
taken any action which results in a breach of the covenants of the Manager
set forth herein.
(c) PAYMENT UPON TERMINATION. Termination of this Agreement shall
not affect the right of the Manager to receive payments on any unpaid balance
of the compensation described in Section 2 earned prior to such termination.
7. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or other vise, the remainder
shall not be thereby affected.
8. NOTICES. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other party at
such address as such other party may designate for the receipt of such notice.
9. all parties hereto are expressly put on notice of the Fund's Agreement
and Declaration of Trust dated August 10, 1990, and all amendments thereto,
all of which are on file with the Secretary of the Commonwealth of
Massachusetts, and the limitation of shareholder and Trustee liability
contained therein. This Agreement has been executed by and on behalf of
the Fund by its representatives as such representatives and not individually,
and the obligations of the Fund hereunder are not binding upon any of the
Trustees, officers or shareholders of the Fund individually but are binding
upon only the assets and property of the Fund. With respect to any claim
by Manager for recovery of that portion of the investment management fee
(or any other liability of the Fund arising hereunder) allocated to a
particular portfolio, if there is more than one, whether in accordance with
the express terms hereof or other vise, the Manager shall have recourse
solely against the assets of that portfolio to satisfy such claim and shall
have no recourse against the assets of any other portfolio for such purpose.
IN WITNESS WHEREOF, the Fund and the Manager have caused this Agreement to
be executed on the day and year first above written.
RANSON MANAGED PORTFOLIOS
By: /s/Robert E. Walstad
----------------------
Robert E. Walstad
President
RANSON CAPITAL CORPORATION
By: /s/Robert E. Walstad
-----------------------
Robert E. Walstad
President
Exhibit
Number Exhibit
------ -------
(d)(1)(b) Management and Investment Advisory Agreement between Registrant
and Ranson Capital Corporation ("Ranson") on behalf of The
Kansas Insured Intermediate Fund
Exhibit (d)(1)(b)
MANAGEMENT AND INVESTMENT ADVISORY AGREEMENT
THIS MANAGEMENT AND INVESTMENT ADVISORY AGREEMENT dated as of January
5, 1996 by and between RANSON MANAGED PORTFOLIOS (the "Fund"), a
Massachusetts Business Trust, and RANSON CAPITAL CORPORATION (the "Manager"),
a Kansas corporation.
1. (a) RETENTION OF MANAGER BY FUND. The Fund hereby employs the
Manager to act as the investment adviser for and to manage the investment
and reinvestment of the assets of The Kansas Insured Intermediate Fund
portfolio of the Fund in accordance with such portfolio's investment objective
and policies and restrictions, and to administer its affairs to the extent
requested by, and subject to the review and supervision of, the trustees of
the Fund (the "trustees") for the period and upon the terms herein set forth.
The investment of funds shall be subject to all applicable restrictions of
the Agreement and Declaration of Trust and By-Laws of the Fund as may from
time to time be in force. The term "Fund" as used herein shall refer to
either RANSON MANAGED PORTFOLIOS or any of the portfolios of the Fund as the
context may require.
(b) MANAGER'S ACCEPTANCE OF EMPLOYMENT. The Manager accepts
such employment and agrees during such period to render such services, to
supply investment research and portfolio management (including without
limitation the selection of securities for the Fund to purchase, hold or
sell and the selection of brokers through whom the Fund's portfolio
transactions are executed, in accordance with the policies adopted by the
Fund and its Board of Trustees), to administer the business affairs of the
Fund, to furnish offices and necessary facilities and equipment to the Fund,
to provide administrative services for the Fund, to render periodic reports
to the Trustees of the Fund, and to permit any of its officers or employees
to serve without compensation as Trustees or officers of the Fund if elected
to such positions.
(c) The Manager may, at its option, appoint a subadviser, which
shall assume all or such responsibilities and obligations of the Manager
pursuant to this Agreement as shall be delegated to the subadviser, provided,
however, that any appointment of a subadviser and assumption of
responsibilities and obligations of Manager by such subadviser shall be
subject to approval by the Trustees of the Fund and, to the extent necessary,
shareholders of the Fund. The Manager agrees to give the Fund prompt written
notice of any termination of or notice to terminate any subadviser agreement.
(d) INDEPENDENT CONTRACTOR. The Manager shall be deemed to be an
independent contractor under this Agreement and, unless otherwise expressly
provided or authorized, shall have no authority to act for or represent the
Fund in any way or otherwise be deemed an agent of the Fund.
(e) NON-EXCLUSIVE AGREEMENT. The services of the Manager to the
Fund under this Agreement are not to be deemed exclusive, and the Manager
shall be free to render similar services or other services to others so
long as its services hereunder are not impaired thereby.
2. (a) FEE. For the services and facilities described in Section 1,
the Fund will pay to the Manager at the end of each calendar month an
investment management fee equivalent on an annual basis to .50 of 1% of its
average daily net assets.
(b) EXPENSES PAID BY MANAGER. The Manager hereby agrees to pay
all expenses of the Fund, including the Fund's management and investment
advisory fee and the Fund's dividend disbursing, administrative and
accounting services fee (but excluding taxes and brokerage fees and
commissions, if any) that exceed .75% of the Fund's average daily net
assets on an annual basis. All other expenses shall be paid by the Fund.
From time to time and subject to discontinuance at any time, the Manager
may voluntarily assume certain expenses of the Fund.
(c) DETERMINATION OF NET ASSET VALUE. The net asset value of the
Fund shall be calculated as of 3:14 p.m. Wichita time or the closed of the
New York Stock Exchange, whichever is earlier, on each day the Exchange is
open for trading or as of such other time or times as the Trustees may
determine in accordance with the provisions of the Agreement and Declaration
of Trust and By-Laws of the Fund as from time to time in force and in
accordance with the provisions of the Investment Company Act of 1940. For
the purpose of the foregoing computations, on each day when net asset value
is not calculated, the net asset value of a share of the Fund shall be deemed
to be the net asset value of such share as of the close of business on the
last day on which such calculation was made.
(d) PRORATION. For the month and year in which this Agreement
becomes effective or terminates, there shall be an appropriate proration
of the Manager's fee on the basis of the number of days that the Agreement
is in effect during such month and year, respectively.
3. EXPENSES. In addition to the fee of the Manager, the Fund shall
assume and pay any expenses for services rendered by a custodian for the
safekeeping of the Fund's securities or other property, for keeping its books
of account, for any other charges of the custodian and for calculating the net
asset value of the Fund as provided in the Agreement and Declaration of Trust
of the Fund. The Manager shall not be required to pay, and the Fund shall
assume and pay, the charges and expenses of its operations, including
compensation of the Trustees (other than those affiliated with the Manager
and other than those affiliated with the distributors of the Fund, if the
distributors have agreed to pay such compensation), charges and expenses
of independent accountants, of legal counsel and of any transfer or dividend
disbursing agent, costs of acquiring and disposing of portfolio securities,
interest (if any) on obligations incurred by the Fund, costs of share
certificates, membership due in the Investment Company Institute or any
similar organization, costs of reports and notices to shareholders, costs
of registering shares of the Fund under the Federal securities laws,
miscellaneous expenses and all taxes and fees to federal, state or other
governmental agencies on account of the registration of securities issued
by the Fund, filing of corporate documents or otherwise. The Fund shall
not pay or incur any obligation for any management or administrative
expenses for which the Fund intends to seek reimbursement from the Manager
without first obtaining the written approval of the Manager. The Manager
shall arrange, if desired by the Fund, for officers or employees of the
Manager to serve, without compensation from the Fund, as Trustees, officers
or agents of the Fund if duly elected or appointed to such positions and
subject to their individual consent and to any limitations imposed by law.
4. INTERESTED PERSONS. Subject to applicable statutes and regulations,
it is understood that Trustees, officers, shareholders and agents of the Fund
are or may be interested in the Manager as directors, officers, shareholders
and agents or otherwise, and that the directors, officers, shareholders and
agents of the Manager may be interested in the Fund as Trustees, officers,
shareholders, agents or otherwise.
5. LIABILITY. The Manager shall not be liable for any error of
judgment or of law, or for any loss suffered by the Fund in connection with
the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of the Manager
in the performance of its obligations and duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement.
6. (a) TERM. This Agreement shall become effective on the date hereof
and shall remain in full force until the second anniversary of the date
hereof unless sooner terminated as hereinafter provided. This Agreement
shall continue in force from year to year thereafter, but only as long as
such continuance is specifically approved at least annually in the manner
required by the Investment Company Act of 1940.
(b) TERMINATION. This Agreement shall automatically terminate in
the event of its assignment. This Agreement may be terminated at any time
without the payment of any penalty by the Fund or by the Manager on sixty
(60) days written notice to the other party. The Fund may effect termination
by action of the Trustees or by vote of a majority of the outstanding shares
of The Kansas Insured Intermediate Fund series, accompanied by appropriate
notice. This Agreement may be terminated at any time without the payment of
any penalty and without advance notice by the Trustees or by vote of a
majority of the outstanding shares of The Kansas Insured Intermediate Fund
series in the event that it shall have been established by a court or competent
jurisdiction that the Manager or any officer or director of the Manager has
taken any action which results in a breach of the covenants of the Manager
set forth herein.
(c) PAYMENT UPON TERMINATION. Termination of this Agreement shall
not affect the right of the Manager to receive payments on any unpaid balance
of the compensation described in Section 2 earned prior to such termination.
7. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or other vise, the remainder
shall not be thereby affected.
8. NOTICES. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other party at
such address as such other party may designate for the receipt of such notice.
9. all parties hereto are expressly put on notice of the Fund's Agreement
and Declaration of Trust dated August 10, 1990, and all amendments thereto,
all of which are on file with the Secretary of the Commonwealth of
Massachusetts, and the limitation of shareholder and Trustee liability
contained therein. This Agreement has been executed by and on behalf of
the Fund by its representatives as such representatives and not individually,
and the obligations of the Fund hereunder are not binding upon any of the
Trustees, officers or shareholders of the Fund individually but are binding
upon only the assets and property of the Fund. With respect to any claim
by Manager for recovery of that portion of the investment management fee
(or any other liability of the Fund arising hereunder) allocated to a
particular portfolio, if there is more than one, whether in accordance with
the express terms hereof or other vise, the Manager shall have recourse
solely against the assets of that portfolio to satisfy such claim and shall
have no recourse against the assets of any other portfolio for such purpose.
IN WITNESS WHEREOF, the Fund and the Manager have caused this Agreement to
be executed on the day and year first above written.
RANSON MANAGED PORTFOLIOS
By: /s/Robert E. Walstad
----------------------
Robert E. Walstad
President
RANSON CAPITAL CORPORATION
By: /s/Robert E. Walstad
-----------------------
Robert E. Walstad
President
Exhibit
Number Exhibit
------ -------
(d)(1)(c) Management and Investment Advisory Agreement between Registrant
and Ranson Capital Corporation ("Ranson") on behalf of The
Nebraska Municipal Fund
Exhibit (d)(1)(c)
MANAGEMENT AND INVESTMENT ADVISORY AGREEMENT
THIS MANAGEMENT AND INVESTMENT ADVISORY AGREEMENT dated as of January
5, 1996 by and between RANSON MANAGED PORTFOLIOS (the "Fund"), a
Massachusetts Business Trust, and RANSON CAPITAL CORPORATION (the "Manager"),
a Kansas corporation.
1. (a) RETENTION OF MANAGER BY FUND. The Fund hereby employs the
Manager to act as the investment adviser for and to manage the investment
and reinvestment of the assets of The Nebraska Municipal Fund portfolio of
the Fund in accordance with such portfolio's investment objective and policies
and restrictions, and to administer its affairs to the extent requested by,
and subject to the review and supervision of, the trustees of the Fund (the
"trustees") for the period and upon the terms herein set forth. The investment
of funds shall be subject to all applicable restrictions of the Agreement
and Declaration of Trust and By-Laws of the Fund as may from time to time
be in force. The term "Fund" as used herein shall refer to either RANSON
MANAGED PORTFOLIOS or any of the portfolios of the Fund as the context may
require.
(b) MANAGER'S ACCEPTANCE OF EMPLOYMENT. The Manager accepts
such employment and agrees during such period to render such services, to
supply investment research and portfolio management (including without
limitation the selection of securities for the Fund to purchase, hold or
sell and the selection of brokers through whom the Fund's portfolio
transactions are executed, in accordance with the policies adopted by the
Fund and its Board of Trustees), to administer the business affairs of the
Fund, to furnish offices and necessary facilities and equipment to the Fund,
to provide administrative services for the Fund, to render periodic reports
to the Trustees of the Fund, and to permit any of its officers or employees
to serve without compensation as Trustees or officers of the Fund if elected
to such positions.
(c) The Manager may, at its option, appoint a subadviser, which
shall assume all or such responsibilities and obligations of the Manager
pursuant to this Agreement as shall be delegated to the subadviser, provided,
however, that any appointment of a subadviser and assumption of
responsibilities and obligations of Manager by such subadviser shall be
subject to approval by the Trustees of the Fund and, to the extent necessary,
shareholders of the Fund. The Manager agrees to give the Fund prompt written
notice of any termination of or notice to terminate any subadviser agreement.
(d) INDEPENDENT CONTRACTOR. The Manager shall be deemed to be an
independent contractor under this Agreement and, unless otherwise expressly
provided or authorized, shall have no authority to act for or represent the
Fund in any way or otherwise be deemed an agent of the Fund.
(e) NON-EXCLUSIVE AGREEMENT. The services of the Manager to the
Fund under this Agreement are not to be deemed exclusive, and the Manager
shall be free to render similar services or other services to others so
long as its services hereunder are not impaired thereby.
2. (a) FEE. For the services and facilities described in Section 1,
the Fund will pay to the Manager at the end of each calendar month an
investment management fee equivalent on an annual basis to .50 of 1% of its
average daily net assets.
(b) EXPENSES PAID BY MANAGER. The Manager hereby agrees to pay
all expenses of the Fund, including the Fund's management and investment
advisory fee and the Fund's dividend disbursing, administrative and
accounting services fee (but excluding taxes and brokerage fees and
commissions, if any) that exceed 1.25% of the Fund's average daily net
assets on an annual basis up to the amount of the management and investment
advisory fee payable by the Fund to the Manager. All other expenses shall
be paid by the Fund. From time to time and subject to discontinuance at
any time, the Manager may voluntarily assume certain expenses of the Fund.
Organizational costs borne by the Manager to the Fund will be amortized and
reimbursed to the Manager by the Fund over a 60-month period.
(c) DETERMINATION OF NET ASSET VALUE. The net asset value of the
Fund shall be calculated as of 3:14 p.m. Wichita time or the closed of the
New York Stock Exchange, whichever is earlier, on each day the Exchange is
open for trading or as of such other time or times as the Trustees may
determine in accordance with the provisions of the Agreement and Declaration
of Trust and By-Laws of the Fund as from time to time in force and in
accordance with the provisions of the Investment Company Act of 1940. For
the purpose of the foregoing computations, on each day when net asset value
is not calculated, the net asset value of a share of the Fund shall be deemed
to be the net asset value of such share as of the close of business on the
last day on which such calculation was made.
(d) PRORATION. For the month and year in which this Agreement
becomes effective or terminates, there shall be an appropriate proration
of the Manager's fee on the basis of the number of days that the Agreement
is in effect during such month and year, respectively.
3. EXPENSES. In addition to the fee of the Manager, the Fund shall
assume and pay any expenses for services rendered by a custodian for the
safekeeping of the Fund's securities or other property, for keeping its books
of account, for any other charges of the custodian and for calculating the net
asset value of the Fund as provided in the Agreement and Declaration of Trust
of the Fund. The Manager shall not be required to pay, and the Fund shall
assume and pay, the charges and expenses of its operations, including
compensation of the Trustees (other than those affiliated with the Manager
and other than those affiliated with the distributors of the Fund, if the
distributors have agreed to pay such compensation), charges and expenses
of independent accountants, of legal counsel and of any transfer or dividend
disbursing agent, costs of acquiring and disposing of portfolio securities,
interest (if any) on obligations incurred by the Fund, costs of share
certificates, membership due in the Investment Company Institute or any
similar organization, costs of reports and notices to shareholders, costs
of registering shares of the Fund under the Federal securities laws,
miscellaneous expenses and all taxes and fees to federal, state or other
governmental agencies on account of the registration of securities issued
by the Fund, filing of corporate documents or otherwise. The Fund shall
not pay or incur any obligation for any management or administrative
expenses for which the Fund intends to seek reimbursement from the Manager
without first obtaining the written approval of the Manager. The Manager
shall arrange, if desired by the Fund, for officers or employees of the
Manager to serve, without compensation from the Fund, as Trustees, officers
or agents of the Fund if duly elected or appointed to such positions and
subject to their individual consent and to any limitations imposed by law.
4. INTERESTED PERSONS. Subject to applicable statutes and regulations,
it is understood that Trustees, officers, shareholders and agents of the Fund
are or may be interested in the Manager as directors, officers, shareholders
and agents or otherwise, and that the directors, officers, shareholders and
agents of the Manager may be interested in the Fund as Trustees, officers,
shareholders, agents or otherwise.
5. LIABILITY. The Manager shall not be liable for any error of
judgment or of law, or for any loss suffered by the Fund in connection with
the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of the Manager
in the performance of its obligations and duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement.
6. (a) TERM. This Agreement shall become effective on the date hereof
and shall remain in full force until the second anniversary of the date
hereof unless sooner terminated as hereinafter provided. This Agreement
shall continue in force from year to year thereafter, but only as long as
such continuance is specifically approved at least annually in the manner
required by the Investment Company Act of 1940.
(b) TERMINATION. This Agreement shall automatically terminate in
the event of its assignment. This Agreement may be terminated at any time
without the payment of any penalty by the Fund or by the Manager on sixty
(60) days written notice to the other party. The Fund may effect termination
by action of the Trustees or by vote of a majority of the outstanding shares
of The Nebraska Municipal Fund series, accompanied by appropriate notice.
This Agreement may be terminated at any time without the payment of
any penalty and without advance notice by the Trustees or by vote of a
majority of the outstanding shares of The Nebraska Municipal Fund series
in the event that it shall have been established by a court or competent
jurisdiction that the Manager or any officer or director of the Manager has
taken any action which results in a breach of the covenants of the Manager
set forth herein.
(c) PAYMENT UPON TERMINATION. Termination of this Agreement shall
not affect the right of the Manager to receive payments on any unpaid balance
of the compensation described in Section 2 earned prior to such termination.
7. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or other vise, the remainder
shall not be thereby affected.
8. NOTICES. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other party at
such address as such other party may designate for the receipt of such notice.
9. all parties hereto are expressly put on notice of the Fund's Agreement
and Declaration of Trust dated August 10, 1990, and all amendments thereto,
all of which are on file with the Secretary of the Commonwealth of
Massachusetts, and the limitation of shareholder and Trustee liability
contained therein. This Agreement has been executed by and on behalf of
the Fund by its representatives as such representatives and not individually,
and the obligations of the Fund hereunder are not binding upon any of the
Trustees, officers or shareholders of the Fund individually but are binding
upon only the assets and property of the Fund. With respect to any claim
by Manager for recovery of that portion of the investment management fee
(or any other liability of the Fund arising hereunder) allocated to a
particular portfolio, if there is more than one, whether in accordance with
the express terms hereof or other vise, the Manager shall have recourse
solely against the assets of that portfolio to satisfy such claim and shall
have no recourse against the assets of any other portfolio for such purpose.
IN WITNESS WHEREOF, the Fund and the Manager have caused this Agreement to
be executed on the day and year first above written.
RANSON MANAGED PORTFOLIOS
By:/s/Robert E. Walstad
----------------------
Robert E. Walstad
President
RANSON CAPITAL CORPORATION
By: /s/Robert E. Walstad
-----------------------
Robert E. Walstad
President
Exhibit
Number Exhibit
------ -------
(d)(1)(d) Management and Investment Advisory Agreement between Registrant
and Ranson Capital Corporation ("Ranson") on behalf of The
Oklahoma Municipal Fund
Exhibit (d)(1)(d)
MANAGEMENT AND INVESTMENT ADVISORY AGREEMENT
THIS MANAGEMENT AND INVESTMENT ADVISORY AGREEMENT dated as of __________
____________ by and between RANSON MANAGED PORTFOLIOS (the "Fund"), a
Massachusetts Business Trust, and RANSON CAPITAL CORPORATION (the "Manager"),
a Kansas corporation.
1. (a) RETENTION OF MANAGER BY FUND. The Fund hereby employs the
Manager to act as the investment adviser for and to manage the investment
and reinvestment of the assets of The Oklahoma Municipal Fund portfolio of
the Fund in accordance with such portfolio's investment objective and policies
and restrictions, and to administer its affairs to the extent requested by,
and subject to the review and supervision of, the trustees of the Fund (the
"trustees") for the period and upon the terms herein set forth. The investment
of funds shall be subject to all applicable restrictions of the Agreement
and Declaration of Trust and By-Laws of the Fund as may from time to time
be in force. The term "Fund" as used herein shall refer to either RANSON
MANAGED PORTFOLIOS or any of the portfolios of the Fund as the context may
require.
(b) MANAGER'S ACCEPTANCE OF EMPLOYMENT. The Manager accepts
such employment and agrees during such period to render such services, to
supply investment research and portfolio management (including without
limitation the selection of securities for the Fund to purchase, hold or
sell and the selection of brokers through whom the Fund's portfolio
transactions are executed, in accordance with the policies adopted by the
Fund and its Board of Trustees), to administer the business affairs of the
Fund, to furnish offices and necessary facilities and equipment to the Fund,
to provide administrative services for the Fund, to render periodic reports
to the Trustees of the Fund, and to permit any of its officers or employees
to serve without compensation as Trustees or officers of the Fund if elected
to such positions.
(c) The Manager may, at its option, appoint a subadviser, which
shall assume all or such responsibilities and obligations of the Manager
pursuant to this Agreement as shall be delegated to the subadviser, provided,
however, that any appointment of a subadviser and assumption of
responsibilities and obligations of Manager by such subadviser shall be
subject to approval by the Trustees of the Fund and, to the extent necessary,
shareholders of the Fund. The Manager agrees to give the Fund prompt written
notice of any termination of or notice to terminate any subadviser agreement.
(d) INDEPENDENT CONTRACTOR. The Manager shall be deemed to be an
independent contractor under this Agreement and, unless otherwise expressly
provided or authorized, shall have no authority to act for or represent the
Fund in any way or otherwise be deemed an agent of the Fund.
(e) NON-EXCLUSIVE AGREEMENT. The services of the Manager to the
Fund under this Agreement are not to be deemed exclusive, and the Manager
shall be free to render similar services or other services to others so
long as its services hereunder are not impaired thereby.
2. (a) FEE. For the services and facilities described in Section 1,
the Fund will pay to the Manager at the end of each calendar month an
investment management fee equivalent on an annual basis to .50 of 1% of its
average daily net assets.
(b) EXPENSES PAID BY MANAGER. The Manager hereby agrees to pay
all expenses of the Fund, including the Fund's management and investment
advisory fee and the Fund's dividend disbursing, administrative and
accounting services fee (but excluding taxes and brokerage fees and
commissions, if any) that exceed 1.25% of the Fund's average daily net
assets on an annual basis up to the amount of the management and investment
advisory fee payable by the Fund to the Manager. All other expenses shall
be paid by the Fund. From time to time and subject to discontinuance at
any time, the Manager may voluntarily assume certain expenses of the Fund.
Organizational costs borne by the Manager to the Fund will be amortized and
reimbursed to the Manager by the Fund over a 60-month period.
(c) DETERMINATION OF NET ASSET VALUE. The net asset value of the
Fund shall be calculated as of 3:14 p.m. Wichita time or the closed of the
New York Stock Exchange, whichever is earlier, on each day the Exchange is
open for trading or as of such other time or times as the Trustees may
determine in accordance with the provisions of the Agreement and Declaration
of Trust and By-Laws of the Fund as from time to time in force and in
accordance with the provisions of the Investment Company Act of 1940. For
the purpose of the foregoing computations, on each day when net asset value
is not calculated, the net asset value of a share of the Fund shall be deemed
to be the net asset value of such share as of the close of business on the
last day on which such calculation was made.
(d) PRORATION. For the month and year in which this Agreement
becomes effective or terminates, there shall be an appropriate proration
of the Manager's fee on the basis of the number of days that the Agreement
is in effect during such month and year, respectively.
3. EXPENSES. In addition to the fee of the Manager, the Fund shall
assume and pay any expenses for services rendered by a custodian for the
safekeeping of the Fund's securities or other property, for keeping its books
of account, for any other charges of the custodian and for calculating the net
asset value of the Fund as provided in the Agreement and Declaration of Trust
of the Fund. The Manager shall not be required to pay, and the Fund shall
assume and pay, the charges and expenses of its operations, including
compensation of the Trustees (other than those affiliated with the Manager
and other than those affiliated with the distributors of the Fund, if the
distributors have agreed to pay such compensation), charges and expenses
of independent accountants, of legal counsel and of any transfer or dividend
disbursing agent, costs of acquiring and disposing of portfolio securities,
interest (if any) on obligations incurred by the Fund, costs of share
certificates, membership due in the Investment Company Institute or any
similar organization, costs of reports and notices to shareholders, costs
of registering shares of the Fund under the Federal securities laws,
miscellaneous expenses and all taxes and fees to federal, state or other
governmental agencies on account of the registration of securities issued
by the Fund, filing of corporate documents or otherwise. The Fund shall
not pay or incur any obligation for any management or administrative
expenses for which the Fund intends to seek reimbursement from the Manager
without first obtaining the written approval of the Manager. The Manager
shall arrange, if desired by the Fund, for officers or employees of the
Manager to serve, without compensation from the Fund, as Trustees, officers
or agents of the Fund if duly elected or appointed to such positions and
subject to their individual consent and to any limitations imposed by law.
4. INTERESTED PERSONS. Subject to applicable statutes and regulations,
it is understood that Trustees, officers, shareholders and agents of the Fund
are or may be interested in the Manager as directors, officers, shareholders
and agents or otherwise, and that the directors, officers, shareholders and
agents of the Manager may be interested in the Fund as Trustees, officers,
shareholders, agents or otherwise.
5. LIABILITY. The Manager shall not be liable for any error of
judgment or of law, or for any loss suffered by the Fund in connection with
the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of the Manager
in the performance of its obligations and duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement.
6. (a) TERM. This Agreement shall become effective on the date hereof
and shall remain in full force until the second anniversary of the date
hereof unless sooner terminated as hereinafter provided. This Agreement
shall continue in force from year to year thereafter, but only as long as
such continuance is specifically approved at least annually in the manner
required by the Investment Company Act of 1940.
(b) TERMINATION. This Agreement shall automatically terminate in
the event of its assignment. This Agreement may be terminated at any time
without the payment of any penalty by the Fund or by the Manager on sixty
(60) days written notice to the other party. The Fund may effect termination
by action of the Trustees or by vote of a majority of the outstanding shares
of The Oklahoma Municipal Fund series, accompanied by appropriate notice.
This Agreement may be terminated at any time without the payment of
any penalty and without advance notice by the Trustees or by vote of a
majority of the outstanding shares of The Oklahoma Municipal Fund series
in the event that it shall have been established by a court or competent
jurisdiction that the Manager or any officer or director of the Manager has
taken any action which results in a breach of the covenants of the Manager
set forth herein.
(c) PAYMENT UPON TERMINATION. Termination of this Agreement shall
not affect the right of the Manager to receive payments on any unpaid balance
of the compensation described in Section 2 earned prior to such termination.
7. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or other vise, the remainder
shall not be thereby affected.
8. NOTICES. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other party at
such address as such other party may designate for the receipt of such notice.
9. all parties hereto are expressly put on notice of the Fund's Agreement
and Declaration of Trust dated August 10, 1990, and all amendments thereto,
all of which are on file with the Secretary of the Commonwealth of
Massachusetts, and the limitation of shareholder and Trustee liability
contained therein. This Agreement has been executed by and on behalf of
the Fund by its representatives as such representatives and not individually,
and the obligations of the Fund hereunder are not binding upon any of the
Trustees, officers or shareholders of the Fund individually but are binding
upon only the assets and property of the Fund. With respect to any claim
by Manager for recovery of that portion of the investment management fee
(or any other liability of the Fund arising hereunder) allocated to a
particular portfolio, if there is more than one, whether in accordance with
the express terms hereof or other vise, the Manager shall have recourse
solely against the assets of that portfolio to satisfy such claim and shall
have no recourse against the assets of any other portfolio for such purpose.
IN WITNESS WHEREOF, the Fund and the Manager have caused this Agreement to
be executed on the day and year first above written.
RANSON MANAGED PORTFOLIOS
By: /s/Robert E. Walstad
----------------------
Robert E. Walstad
President
RANSON CAPITAL CORPORATION
By: /s/Robert E. Walstad
-----------------------
Robert E. Walstad
President
Exhibit
Number Exhibit
------ -------
(e)(1)(a) Distribution and Service Agreement between Registrant
and Ranson on behalf of The Kansas Municipal Fund.
Exhibit (e)(1)(a)
DISTRIBUTION AND SERVICES AGREEMENT
THIS DISTRIBUTION AND SERVICES AGREEMENT dated November 13, 1990, by and
between RANSON MANAGED PORTOLIOS a Massachusetts business trust (the "Fund"),
and RANSON CAPITAL CORPORATION, a Kansas corporation, (the "Distributor").
1. APPOINTMENT OF DISTRIBUTOR. The Fund appoints the Distributor as the
principal underwriter and exclusive Distributor of shares of The Kansas
Municipal Fund series of Ranson Managed Portfolios (the "Shares"), effective as
of the date upon which the continuous public offering of the Fund's Shares
shall commence (the "Effective Date"). The Fund reserves the right, however,
to refuse at any time or times to sell Shares hereunder for any reason deemed
adequate by the Trustees of the Fund. The term "Fund" as used herein shall
refer to either Ranson Managed Portfolios or The Kansas Municipal Fund as the
context may require.
The Distributor will use its best efforts to sell through its organization
and through other dealers the Shares which the Distributor has the right to
purchase under Section 2 hereof, but the Distributor does not undertake to sell
any specific number of Shares.
The Distributor agrees that it will not take any long or short positions
in the Shares, except for long positions in those Shares purchased by the
Distributor in accordance with any systematic sales plan or any similar plan
described in the then current Prospectus of the Fund and except as permitted by
Section 2 hereof, and that so far as it can control the situation, it will
prevent any of its directors, officers or stockholders from taking any long
or short positions in the Shares, except for legitimate investment purposes.
2. SALE OF SHARES TO THE DISTRIBUTOR. The Fund hereby grants to the
Distributor the right, except as herein otherwise provided, to purchase Shares
upon the terms herein set forth. Such right hereby granted shall not apply to
Shares issued or transferred or sold at net asset value: (a) in connection with
the merger or consolidation of the Fund with any other investment company or
the acquisition by the Fund of all or substantially all of the assets or of
the outstanding Shares of any investment company; (b) in connection with a pro
rata distribution directly to the holders of Fund Shares in the nature of a
stock dividend or stock split; (c) upon the exercise of purchase or
subscription rights granted to the holders of Shares on a pro rata basis;
(d) in connection with the automatic reinvestment of dividends and
distribution from the Fund; or (e) in connection with the issue and sale
of Shares to Trustees, officers and employees of the Fund, and to directors,
officers and employees of the investment adviser (or any portfolio manager)
of the Fund or any principal underwriter (including the Distributor) of the
Fund, and to any trust, pension, profit-sharing or other benefit plan for any
of the aforesaid persons or any other such persons as described in the then
current Prospectus of the Fund, as permitted by Rule 22d-1 under the
Investment Company Act of 1940.
The Distributor shall have the right to buy from the Fund the Shares
needed, but not more than the Shares needed (except for reasonable allowances
for clerical errors, delays and errors of transmission and cancellation of
orders) to fill unconditional orders for Shares received by the Distributor
from dealers and investors during each period when a particular net asset
value and public offering price are in effect as provided in Section 3 hereof;
and the price which the Distributor shall pay for the Shares so purchased
shall be the net asset value used in determining the public offering price on
which such orders were based. The Distributor shall notify the Fund at the end
of each such period, or as soon thereafter on that business day as the orders
received in such period have been compiled, of the number of Shares which the
Distributor elects to purchase hereunder.
3. PUBLIC OFFERING PRICE. The public offering price per Share shall
be determined in accordance with the then current Prospectus of the Fund.
In no event shall the public offering price exceed the net asset value per
Share plus a sales charge of 8.5% of the public offering price. The net
asset value per Share shall be determined in the Agreement and Declaration
of Trust of the Fund as then amended and in accordance with the current
Prospectus of the Fund. The Fund will cause immediate notice to be given
to the Distributor of each change in net asset value as soon as it is
determined. Discounts to dealers purchasing Shares from the Distributor
for resale shall be set forth in the form of Dealer Agreement between the
Distributor and securities dealers, as from time to time amended, and, if
such discounts are described in the then current Prospectus for the Fund,
shall be as so set forth.
4. COMPLIANCE WITH NASD RULES, ETC. In selling Fund Shares, the
Distributor will in all respects duly conform with all state and Federal
laws relating to the sale of such securities and with all applicable rules
and regulations of all regulatory bodies, including without limitation, the
Rules of Fair Practice of the National Association of Securities Dealers,
Inc. and all applicable rules and regulations of the Securities and
Exchange Commission under the Investment Company Act of 1940, and will
indemnify and save the Fund harmless from any damage or expense on account
of any unlawful act by the Distributor or its agents or employees. The
Distributor is not, however, to be responsible for the acts of other dealers.
Neither the distributor, any dealer, nor any other person is authorized by
the Fund to give any information or to make any representations, other than
those contained in the Registration Statement or Prospectus heretofore or
hereafter filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (as any such Registration Statement and
Prospectus may have been or may be amended from time to time), covering the
Shares, and in any supplemental information to any such Prospectus approved
by the Fund in connection with the offer or sale of Shares. All such sales
shall be made by the Distributor as principal for its own account.
5. EXPENSES.
(a) The fund will pay or cause to be paid:
(i) all expenses in connection with the registration of Fund Shares under
the Federal securities laws, and the Fund will exercise its best efforts to
obtain said registration and qualification;
(ii) all expenses of qualifying and maintaining qualification of the
Shares for sale under the securities laws of the various states after the
initial registration in such states of the Shares;
(iii) all expenses in connection with the printing of any notices of
shareholders' meetings, proxy and proxy statements and enclosures therewith,
as well as any other notice or communication sent to shareholders or otherwise,
any annual, semi-annual or other report of communications sent to the
shareholders, and the expenses of sending prospectuses relating to the Shares
to existing shareholders;
(iv) all expenses of any Federal or state original issue tax or transfer
tax payable upon the issuance, transfer or delivery of Shares from the Fund
to the Distributor; and
(v) the cost of preparing and issuing any Share certificates which may
be issued to represent Shares.
(b) The expenses of preparing, printing and distributing advertising
and sales literature; of printing and distributing prospectuses relating
to the Shares (other than deliveries to existing shareholders), reports to
shareholders and proxy material used in connection with the sale of Shares;
of initially qualifying the Shares for sale under the securities laws of
the various states; and of any other activity which is primarily intended
to result in the sale of Shares issued by the Fund will be paid by the
Distributor, except to the extent described in Section 7 of this Agreement.
The Distributor will also permit its officers and employees to serve without
compensation as Trustees and officers of the Fund if duly elected to such
positions.
6. REPURCHASE OF SHARES. The Fund hereby authorizes the Distributor
to repurchase, upon the terms and conditions hereinafter set forth, as the
Fund's agent and for the Fund's account, such as may be offered for sale to
the Fund from time to time by holders of such Shares or their agents:
(a) Subject to and in conformity with all applicable Federal and state
legislation, any applicable rules of the National Association of Securities
Dealers, Inc. and any applicable rules and regulations of the Securities and
Exchange Commission under the Investment Company Act of 1940, the Distributor
may accept offers of holders of Shares to resell such Shares to the Fund on
such term and conditions and at such prices as described and provided for
in the then current Prospectus of the Fund.
(b) The Distributor agrees to notify the Fund at such times as the
Fund may specify of the number of Shares repurchased for the Fund's account
and the time or times of such repurchases, and the Fund shall notify the
Distributor of the prices applicable to such repurchases.
(c) The Fund shall have the right to suspend or revoke the foregoing
authorization at any time; unless otherwise stated, any such suspension or
revocation shall be effective forthwith upon receipt of notice thereof by
telegraph or by written instrument from any of the Fund's officers. In the
event that the Distributor's authorization is, by the terms of such notice,
suspended for more than twenty-four hours or until further notice, the
authorization given by this Section 6 shall not be revived except by vote
of the Board of Trustees of the Fund.
(d) The Distributor agrees that all repurchases of Shares made by the
Distributor shall be made only as agent for the Fund's account and pursuant
to the terms and conditions herein set forth.
(e) The Fund agrees to authorize and direct its Custodian for the Fund
to pay for the Fund's account the repurchase price of any Shares so repurchased
for the Fund against delivery of the certificates representing such Shares
in proper form for transfer to the Fund or against the authorized transfer
of book Shares from an Open Account and against delivery of any other
documentation required by the Board of Trustees of the Fund.
(f) The Distributor shall receive no commissions or other compensation
in respect to any repurchases of Shares for the Fund under the foregoing
authorization and appointment as agent.
(g) If any shares sold to the Distributor under the terms of this
Agreement are redeemed or repurchased by the Fund or by the Distributor as
agent or are tendered for redemption within seven business days after the date
of the Fund's confirmation of the original purchase, the Distributor shall
forfeit the amount above the net asset value received by it in respect of
such Shares, provided that the portion, if any, of such amount reallowed by
he Distributor to dealers shall be repayable to the Fund only to the extent
recovered by the Distributor from the dealer concerned. The Distributor shall
include in the form of Dealer Agreement with securities dealers a corresponding
provision for the forfeiture by dealer of their concession with respect to
Shares purchased by them and redeemed or repurchased by the Fund or by the
Distributor, as agent within seven business days after the date of the Fund's
confirmation of their purchases.
7. SERVICE FEE. The Fund will pay an annual fee to the Distributor (the
"Distributor's Fee") of .25% times the average of the net asset values of the
Fund. The Distributor may pay a fee on a quarterly basis (the "Servicing Fee")
to broker-dealers, including the Distributor and affiliates of the adviser and
portfolio manager of the Fund, banks and savings and loan institutions and
their affiliates and associated broker-dealers that have entered into service
agreements with the Distributor ("Service Organizations") of annual amounts of
up to 0.25% of the average net asset value of all Shares owned by shareholders
with whom the Service Organization has a servicing relationship (the
"Accounts"), provided that no such payment of a Service Fee with respect to an
Account shall be made until the Service Organization has been servicing such
Account for more than a year (the "Eligible Accounts"). To the extent the
Servicing Fee is not paid to Service Organizations out of the Distributor's
Fee, the Distributor may use such fee to pay any of the expenses set forth in
Section 5(b) of this Agreement.
(a) the amount which the Fund will pay the Distributor for the
Distributor's Fee in any calendar month shall be calculated by multiplying
1/12th of 0.25% times the average of the net asset value of the Fund on
each day during the month.
(b) The amount which the Distributor may pay the Service Organizations in
any calendar quarter shall be calculated by multiplying 1/4th of the
percentage set forth in the Service Agreement with each Service
Organization (up to a maximum of 0.25%) times the average net asset value
of the Eligible Accounts with respect to such Service Organization during
such quarter.
(c) For the purpose of determining the maximum amounts payable or
reimbursable under this Agreement, the net asset value of the Fund shall
be determined as described in Section 3 of this Agreement.
(d) The Distributor shall provide the Trustees, at least quarterly, a
written report of all amounts expended by the Distributor pursuant to this
Section 7 and, to the extent applicable, Section 5, stating in such report
the purposes for which such amounts were expended.
8. INDEMNIFICATION. The Fund agrees to indemnify and hold harmless the
Distributor and each of its directors and officers and each person, if any,
who controls the Distributor within the meaning of Section 15 of the 1933 Act
against any loss, liability, claim, damages or expense (including the
reasonable cost of investigating or defending any alleged loss, liability,
claim, damages, or expense and reasonable counsel fees incurred in connection
therewith), arising by reason of any person acquiring any Shares, based upon
the ground that the registration statement, Prospectus, shareholder or other
information filed or made public by the Fund (as from time to time amended),
included an untrue statement of a material fact or omitted to state a material
fact required to be stated or necessary in order to make the statements not
misleading under the 1933 Act, or any other statute or the common law.
However, the Fund does not agree to indemnify the Distributor or hold it
harmless to the extent that the statement or omission was made in reliance
upon, and in conformity with, information furnished to the Fund by or on
behalf of the Distributor. In no case (i) is the indemnity of the Fund
in favor of the Distributor or any person indemnified to be deemed to protect
the Distributor or any person against any liability to the Fund or its
security holders to which the Distributor or such person would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of their duties or by reason of their reckless disregard
of their obligations and duties under this Agreement, or (ii) is the fund
to be liable under its indemnity agreement contained in this section with
respect to any claim made against the Distributor or any person (or after the
Distributor or the person shall have received notice or service on any
designated agent). However, failure to notify the Fund of any claim shall
not relieve the Fund from any liability which it may have to the Distributor
or any person against whom such action is brought otherwise than on account
of its indemnity agreement contained in this paragraph. The Fund shall be
entitled to participate at its own expense in the defense, or, if it so
elects, to assume the defense of any suit brought to enforce any claims,
but if the Fund elects to assume the defense, the defense shall be conducted
by counsel chosen by it and elects to assume the defense of any suit and
retain counsel, the Distributor, officers or Trustees or controlling person
or persons, defendant or defendants in the suit, shall bear the fees and
expenses of any additional counsel retained by them. If the Fund does not
elect to assume the defense of any suit, it will reimburse the Distributor,
officers or Trustees or controlling person or persons, defendant or defendants
in the suit, for the reasonable fees and expenses of any counsel retained by
them. The Fund agrees to notify the Distributor promptly of the commencement
of any litigation or proceedings against it or any of its officers or Trustees
in connection with the issuance or sale of any of the Shares.
The Distributor also covenants and agrees that it will indemnify and hold
harmless the Fund and each of its Trustees and officers and each person, if
any, who controls the Fund within the meaning of Section 15 of the 1933 Act,
against any loss, liability, damages, claim or expense (including the
reasonable cost of investigating or defending any alleged loss, liability,
damages, claim or expense and reasonable counsel fees incurred in connection
therewith) arising by reason of any person acquiring any Shares, based upon
the 1933 Act or any other stature or common law, alleging any wrongful act
of the Distributor or any of its employees or alleging that the registration
statement, Prospectus, shareholder reports or other information filed or made
public by the Fund (as from time to time amended), included an untrue statement
of a material fact or omitted to state a material fact required to be stated
or necessary in order to make the statements not misleading, insofar as the
statement or omission was made in reliance upon, and in conformity with
information furnished to the Fund by or on behalf of the Distributor. In no
case (i) is the indemnity of the Distributor in favor of the Fund or any
person indemnified to be deemed to protect the Fund or any person against
any liability to which the Fund or such person would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement, or (ii) is the Distributor
to be liable under its indemnity agreement contained in this paragraph
with respect to any claim made against the Fund or any person indemnified
unless the Fund or person, as the case may be, shall have notified the
Distributor in writing of the claim within a reasonable time after the
summons or other first written notification giving information of the nature
of the claim shall have been served upon the Fund or person (or after the
Fund or such person shall have received notice of service on any designated
agent). However, failure to notify the Distributor of any claim shall not
relieve the Distributor from any liability which it may have to the Fund or
any person against whom the action is brought otherwise than on account of
its indemnity agreement contained in this paragraph. In the case of any
notice to the Distributor, it shall be entitled to participate, at its own
expense, in the defense or, if it so elects, to assume the defense of any
suit brought to enforce the claim, but if the Distributor elects to assume
the defense, the defense shall be conducted by counsel chosen by it and
satisfactory to the Fund, to its officers and Trustees and to any controlling
person or persons, defendant or defendants in the suit. In the event that
the Distributor elects to assume the defense of any suit and retain counsel,
the Fund or controlling persons, defendant or defendants in the suit, shall
bear the fees and expense of any additional counsel retained by it. If the
Distributor does not elect to assume the defense of any suit, it will
reimburse the Fund, officers and Trustees or controlling person or persons,
defendant or defendants in the suit, for the reasonable fees and expenses
of any counsel retained by it. The Distributor agrees to notify the Fund
promptly of the commencement of any litigation or proceedings against it
in connection with the issue and sale of any of the Shares.
9. CONTINUATION, AMENDMENT OR TERMINATION OF THE AGREEMENT. This
Agreement shall become effective on the Effective Date (it having been
approved prior to such date by a majority of the Fund's Board of Trustees
including a majority of the Disinterested Trustees, as defined below) and
shall remain in full force until the second anniversary of the Effective
Date unless sooner terminated as provided herein. This Agreement shall
continue in force from year to year hereafter so long as such continuance
is approved in the manner required by the Investment Company Act of 1940
(a) this Agreement shall immediately terminate in the event of its assignment;
and (b) this Agreement may be terminated by the Distributor or the Fund on
ninety (90) days' written notice. Upon termination of this Agreement, the
obligations of the parties hereunder shall cease and terminate as of the
date of such termination, except for any obligation to respond for a breach
of this Agreement committed prior to such termination.
This Agreement may be amended at any time by mutual consent of the
parties, provided that such consent on the part of the Fund shall have
been approved (i) by the Trustees of the Fund, and (ii) by vote of a majority
of the Disinterested Trustees cast in person at a meeting called for the
purpose of voting on such amendment.
For the purpose of this section, the term "assignment" shall have
the meaning defined in the Investment Company Act of 1940, as amended.
10. NOTICE. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid, to the other party at any office
of such party or ast such other address as such party shall have designated
in writing.
11. LIMITATION OF LIABILITY. The parties hereto are expressly put on
notice of the Fund's Agreement and Declaration of Trust dated August 10,
1990 and all amendments thereto, all of which are on file with the Secretary
of The Commonwealth of Massachusetts, and the limitation of shareholder
and Trustee liability contained therein. This agreement has been executed
by and on behalf of the Fund by its representatives as such representatives
and not individually, and the obligations of the Fund hereunder are not
binding upon any of the Trustees, officers or shareholders of the Fund
individually but are binding upon only the assets and property of the Fund.
With respect to any claim by the Distributor for recovery of that portion
of the Distribution Fee (or any other liability of the Fund arising hereunder)
allocated to a particular portfolio, if there is more than one, whether in
accordance with the express terms hereof or otherwise, the Distributor shall
have recourse solely against the assets of that portfolio to satisfy such
claim and shall have no recourse against the assets of any other portfolio
for such purpose.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be executed on their behalf on the day and year first above written.
Ranson Managed Portfolios
By: /s/John A Ranson
----------------------
RANSON CAPITAL CORPORATION
By: /s/John A Ranson
----------------------
Exhibit
Number Exhibit
------ -------
(e)(1)(b) Distribution and Service Agreement between Registrant
and Ranson on behalf of The Kansas Insured Intermediate Fund.
Exhibit (e)(1)(b)
DISTRIBUTION AND SERVICES AGREEMENT
THIS DISTRIBUTION AND SERVICES AGREEMENT dated November 12, 1992, by and
between RANSON MANAGED PORTOLIOS a Massachusetts business trust (the "Fund"),
and RANSON CAPITAL CORPORATION, a Kansas corporation, (the "Distributor").
1. APPOINTMENT OF DISTRIBUTOR. The Fund appoints the Distributor as the
principal underwriter and exclusive Distributor of shares of The Kansas Insured
Municipal Fund - Limited Maturity series of Ranson Managed Portfolios (the
"Shares"), effective as of the date upon which the continuous public offering
of the Fund's Shares shall commence (the "Effective Date"). The Fund reserves
the right, however, to refuse at any time or times to sell Shares hereunder for
any reason deemed adequate by the Trustees of the Fund. The term "Fund" as
used herein shall refer to either Ranson Managed Portfolios or The Kansas
Insured Municipal Fund - Limited Maturity as the context may require.
The Distributor will use its best efforts to sell through its organization
and through other dealers the Shares which the Distributor has the right to
purchase under Section 2 hereof, but the Distributor does not undertake to sell
any specific number of Shares.
The Distributor agrees that it will not take any long or short positions
in the Shares, except for long positions in those Shares purchased by the
Distributor in accordance with any systematic sales plan or any similar plan
described in the then current Prospectus of the Fund and except as permitted by
Section 2 hereof, and that so far as it can control the situation, it will
prevent any of its directors, officers or stockholders from taking any long
or short positions in the Shares, except for legitimate investment purposes.
2. SALE OF SHARES TO THE DISTRIBUTOR. The Fund hereby grants to the
Distributor the right, except as herein otherwise provided, to purchase Shares
upon the terms herein set forth. Such right hereby granted shall not apply to
Shares issued or transferred or sold at net asset value: (a) in connection with
the merger or consolidation of the Fund with any other investment company or
the acquisition by the Fund of all or substantially all of the assets or of
the outstanding Shares of any investment company; (b) in connection with a pro
rata distribution directly to the holders of Fund Shares in the nature of a
stock dividend or stock split; (c) upon the exercise of purchase or
subscription rights granted to the holders of Shares on a pro rata basis;
(d) in connection with the automatic reinvestment of dividends and
distribution from the Fund; or (e) in connection with the issue and sale
of Shares to Trustees, officers and employees of the Fund, and to directors,
officers and employees of the investment adviser (or any portfolio manager)
of the Fund or any principal underwriter (including the Distributor) of the
Fund, and to any trust, pension, profit-sharing or other benefit plan for any
of the aforesaid persons or any other such persons as described in the then
current Prospectus of the Fund, as permitted by Rule 22d-1 under the
Investment Company Act of 1940.
The Distributor shall have the right to buy from the Fund the Shares
needed, but not more than the Shares needed (except for reasonable allowances
for clerical errors, delays and errors of transmission and cancellation of
orders) to fill unconditional orders for Shares received by the Distributor
from dealers and investors during each period when a particular net asset
value and public offering price are in effect as provided in Section 3 hereof;
and the price which the Distributor shall pay for the Shares so purchased
shall be the net asset value used in determining the public offering price on
which such orders were based. The Distributor shall notify the Fund at the end
of each such period, or as soon thereafter on that business day as the orders
received in such period have been compiled, of the number of Shares which the
Distributor elects to purchase hereunder.
3. PUBLIC OFFERING PRICE. The public offering price per Share shall
be determined in accordance with the then current Prospectus of the Fund.
In no event shall the public offering price exceed the net asset value per
Share plus a sales charge of 8.5% of the public offering price. The net
asset value per Share shall be determined in the Agreement and Declaration
of Trust of the Fund as then amended and in accordance with the current
Prospectus of the Fund. The Fund will cause immediate notice to be given
to the Distributor of each change in net asset value as soon as it is
determined. Discounts to dealers purchasing Shares from the Distributor
for resale shall be set forth in the form of Dealer Agreement between the
Distributor and securities dealers, as from time to time amended, and, if
such discounts are described in the then current Prospectus for the Fund,
shall be as so set forth.
4. COMPLIANCE WITH NASD RULES, ETC. In selling Fund Shares, the
Distributor will in all respects duly conform with all state and Federal
laws relating to the sale of such securities and with all applicable rules
and regulations of all regulatory bodies, including without limitation, the
Rules of Fair Practice of the National Association of Securities Dealers,
Inc. and all applicable rules and regulations of the Securities and
Exchange Commission under the Investment Company Act of 1940, and will
indemnify and save the Fund harmless from any damage or expense on account
of any unlawful act by the Distributor or its agents or employees. The
Distributor is not, however, to be responsible for the acts of other dealers.
Neither the distributor, any dealer, nor any other person is authorized by
the Fund to give any information or to make any representations, other than
those contained in the Registration Statement or Prospectus heretofore or
hereafter filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (as any such Registration Statement and
Prospectus may have been or may be amended from time to time), covering the
Shares, and in any supplemental information to any such Prospectus approved
by the Fund in connection with the offer or sale of Shares. All such sales
shall be make by the Distributor as agent for and on behalf of the Fund.
5. EXPENSES.
(a) The fund will pay or cause to be paid:
(i) all expenses in connection with the registration of Fund Shares under
the Federal securities laws, and the Fund will exercise its best efforts to
obtain said registration and qualification;
(ii) all expenses of qualifying and maintaining qualification of the
Shares for sale under the securities laws of the various states after the
initial registration in such states of the Shares;
(iii) all expenses in connection with the printing of any notices of
shareholders' meetings, proxy and proxy statements and enclosures therewith,
as well as any other notice or communication sent to shareholders or otherwise,
any annual, semi-annual or other report of communications sent to the
shareholders, and the expenses of sending prospectuses relating to the Shares
to existing shareholders;
(iv) all expenses of any Federal or state original issue tax or transfer
tax payable upon the issuance, transfer or delivery of Shares from the Fund
to the Distributor; and
(v) the cost of preparing and issuing any Share certificates which may
be issued to represent Shares.
(b) The expenses of preparing, printing and distributing advertising
and sales literature; of printing and distributing prospectuses relating
to the Shares (other than deliveries to existing shareholders), reports to
shareholders and proxy material used in connection with the sale of Shares;
of initially qualifying the Shares for sale under the securities laws of
the various states; and of any other activity which is primarily intended
to result in the sale of Shares issued by the Fund will be paid by the
Distributor, except to the extent described in Section 7 of this Agreement.
The Distributor will also permit its officers and employees to serve without
compensation as Trustees and officers of the Fund if duly elected to such
positions.
6. REPURCHASE OF SHARES. The Fund hereby authorizes the Distributor
to repurchase, upon the terms and conditions hereinafter set forth, as the
Fund's agent and for the Fund's account, such as may be offered for sale to
the Fund from time to time by holders of such Shares or their agents:
(a) Subject to and in conformity with all applicable Federal and state
legislation, any applicable rules of the National Association of Securities
Dealers, Inc. and any applicable rules and regulations of the Securities and
Exchange Commission under the Investment Company Act of 1940, the Distributor
may accept offers of holders of Shares to resell such Shares to the Fund on
such term and conditions and at such prices as described and provided for
in the then current Prospectus of the Fund.
(b) The Distributor agrees to notify the Fund at such times as the
Fund may specify of the number of Shares repurchased for the Fund's account
and the time or times of such repurchases, and the Fund shall notify the
Distributor of the prices applicable to such repurchases.
(c) The Fund shall have the right to suspend or revoke the foregoing
authorization at any time; unless otherwise stated, any such suspension or
revocation shall be effective forthwith upon receipt of notice thereof by
telegraph or by written instrument from any of the Fund's officers. In the
event that the Distributor's authorization is, by the terms of such notice,
suspended for more than twenty-four hours or until further notice, the
authorization given by this Section 6 shall not be revived except by vote
of the Board of Trustees of the Fund.
(d) The Distributor agrees that all repurchases of Shares made by the
Distributor shall be made only as agent for the Fund's account and pursuant
to the terms and conditions herein set forth.
(e) The Fund agrees to authorize and direct its Custodian for the Fund
to pay for the Fund's account the repurchase price of any Shares so repurchased
for the Fund against delivery of the certificates representing such Shares
in proper form for transfer to the Fund or against the authorized transfer
of book Shares from an Open Account and against delivery of any other
documentation required by the Board of Trustees of the Fund.
(f) The Distributor shall receive no commissions or other compensation
in respect to any repurchases of Shares for the Fund under the foregoing
authorization and appointment as agent.
(g) If any shares sold to the Distributor under the terms of this
Agreement are redeemed or repurchased by the Fund or by the Distributor as
agent or are tendered for redemption within seven business days after the date
of the Fund's confirmation of the original purchase, the Distributor shall
forfeit the amount above the net asset value received by it in respect of
such Shares, provided that the portion, if any, of such amount reallowed by
he Distributor to dealers shall be repayable to the Fund only to the extent
recovered by the Distributor from the dealer concerned. The Distributor shall
include in the form of Dealer Agreement with securities dealers a corresponding
provision for the forfeiture by dealer of their concession with respect to
Shares purchased by them and redeemed or repurchased by the Fund or by the
Distributor, as agent within seven business days after the date of the Fund's
confirmation of their purchases.
7. INDEMNIFICATION. The Fund agrees to indemnify and hold harmless the
Distributor and each of its directors and officers and each person, if any,
who controls the Distributor within the meaning of Section 15 of the 1933 Act
against any loss, liability, claim, damages or expense (including the
reasonable cost of investigating or defending any alleged loss, liability,
claim, damages, or expense and reasonable counsel fees incurred in connection
therewith), arising by reason of any person acquiring any Shares, based upon
the ground that the registration statement, Prospectus, shareholder or other
information filed or made public by the Fund (as from time to time amended),
included an untrue statement of a material fact or omitted to state a material
fact required to be stated or necessary in order to make the statements not
misleading under the 1933 Act, or any other statute or the common law.
However, the Fund does not agree to indemnify the Distributor or hold it
harmless to the extent that the statement or omission was made in reliance
upon, and in conformity with, information furnished to the Fund by or on
behalf of the Distributor. In no case (i) is the indemnity of the Fund
in favor of the Distributor or any person indemnified to be deemed to protect
the Distributor or any person against any liability to the Fund or its
security holders to which the Distributor or such person would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of their duties or by reason of their reckless disregard
of their obligations and duties under this Agreement, or (ii) is the fund
to be liable under its indemnity agreement contained in this section with
respect to any claim made against the Distributor or any person (or after the
Distributor or the person shall have received notice or service on any
designated agent). However, failure to notify the Fund of any claim shall
not relieve the Fund from any liability which it may have to the Distributor
or any person against whom such action is brought otherwise than on account
of its indemnity agreement contained in this paragraph. The Fund shall be
entitled to participate at its own expense in the defense, or, if it so
elects, to assume the defense of any suit brought to enforce any claims,
but if the Fund elects to assume the defense, the defense shall be conducted
by counsel chosen by it and elects to assume the defense of any suit and
retain counsel, the Distributor, officers or Trustees or controlling person
or persons, defendant or defendants in the suit, shall bear the fees and
expenses of any additional counsel retained by them. If the Fund does not
elect to assume the defense of any suit, it will reimburse the Distributor,
officers or Trustees or controlling person or persons, defendant or defendants
in the suit, for the reasonable fees and expenses of any counsel retained by
them. The Fund agrees to notify the Distributor promptly of the commencement
of any litigation or proceedings against it or any of its officers or Trustees
in connection with the issuance or sale of any of the Shares.
The Distributor also covenants and agrees that it will indemnify and hold
harmless the Fund and each of its Trustees and officers and each person, if
any, who controls the Fund within the meaning of Section 15 of the 1933 Act,
against any loss, liability, damages, claim or expense (including the
reasonable cost of investigating or defending any alleged loss, liability,
damages, claim or expense and reasonable counsel fees incurred in connection
therewith) arising by reason of any person acquiring any Shares, based upon
the 1933 Act or any other stature or common law, alleging any wrongful act
of the Distributor or any of its employees or alleging that the registration
statement, Prospectus, shareholder reports or other information filed or made
public by the Fund (as from time to time amended), included an untrue statement
of a material fact or omitted to state a material fact required to be stated
or necessary in order to make the statements not misleading, insofar as the
statement or omission was made in reliance upon, and in conformity with
information furnished to the Fund by or on behalf of the Distributor. In no
case (i) is the indemnity of the Distributor in favor of the Fund or any
person indemnified to be deemed to protect the Fund or any person against
any liability to which the Fund or such person would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement, or (ii) is the Distributor
to be liable under its indemnity agreement contained in this paragraph
with respect to any claim made against the Fund or any person indemnified
unless the Fund or person, as the case may be, shall have notified the
Distributor in writing of the claim within a reasonable time after the
summons or other first written notification giving information of the nature
of the claim shall have been served upon the Fund or person (or after the
Fund or such person shall have received notice of service on any designated
agent). However, failure to notify the Distributor of any claim shall not
relieve the Distributor from any liability which it may have to the Fund or
any person against whom the action is brought otherwise than on account of
its indemnity agreement contained in this paragraph. In the case of any
notice to the Distributor, it shall be entitled to participate, at its own
expense, in the defense or, if it so elects, to assume the defense of any
suit brought to enforce the claim, but if the Distributor elects to assume
the defense, the defense shall be conducted by counsel chosen by it and
satisfactory to the Fund, to its officers and Trustees and to any controlling
person or persons, defendant or defendants in the suit. In the event that
the Distributor elects to assume the defense of any suit and retain counsel,
the Fund or controlling persons, defendant or defendants in the suit, shall
bear the fees and expense of any additional counsel retained by it. If the
Distributor does not elect to assume the defense of any suit, it will
reimburse the Fund, officers and Trustees or controlling person or persons,
defendant or defendants in the suit, for the reasonable fees and expenses
of any counsel retained by it. The Distributor agrees to notify the Fund
promptly of the commencement of any litigation or proceedings against it
in connection with the issue and sale of any of the Shares.
8. CONTINUATION, AMENDMENT OR TERMINATION OF THE AGREEMENT. This
Agreement shall become effective on the Effective Date (it having been
approved prior to such date by a majority of the Fund's Board of Trustees
including a majority of the Disinterested Trustees, as defined below) and
shall remain in full force until the second anniversary of the Effective
Date unless sooner terminated as provided herein. This Agreement shall
continue in force from year to year hereafter so long as such continuance
is approved in the manner required by the Investment Company Act of 1940
(a) this Agreement shall immediately terminate in the event of its assignment;
and (b) this Agreement may be terminated by the Distributor or the Fund on
ninety (90) days' written notice. Upon termination of this Agreement, the
obligations of the parties hereunder shall cease and terminate as of the
date of such termination, except for any obligation to respond for a breach
of this Agreement committed prior to such termination.
This Agreement may be amended at any time by mutual consent of the
parties, provided that such consent on the part of the Fund shall have
been approved (i) by the Trustees of the Fund, and (ii) by vote of a majority
of the Disinterested Trustees cast in person at a meeting called for the
purpose of voting on such amendment.
For the purpose of this section, the term "assignment" shall have
the meaning defined in the Investment Company Act of 1940, as amended.
9. NOTICE. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid, to the other party at any office
of such party or ast such other address as such party shall have designated
in writing.
10. LIMITATION OF LIABILITY. The parties hereto are expressly put on
notice of the Fund's Agreement and Declaration of Trust dated August 10,
1990 and all amendments thereto, all of which are on file with the Secretary
of The Commonwealth of Massachusetts, and the limitation of shareholder
and Trustee liability contained therein. This agreement has been executed
by and on behalf of the Fund by its representatives as such representatives
and not individually, and the obligations of the Fund hereunder are not
binding upon any of the Trustees, officers or shareholders of the Fund
individually but are binding upon only the assets and property of the Fund.
With respect to any claim by the Distributor for recovery of that portion
of the Distribution Fee (or any other liability of the Fund arising hereunder)
allocated to a particular portfolio, if there is more than one, whether in
accordance with the express terms hereof or otherwise, the Distributor shall
have recourse solely against the assets of that portfolio to satisfy such
claim and shall have no recourse against the assets of any other portfolio
for such purpose.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be executed on their behalf on the day and year first above written.
Ranson Managed Portfolios
By: /s/John A Ranson
----------------------
RANSON CAPITAL CORPORATION
By: /s/John A Ranson
----------------------
Exhibit
Number Exhibit
------ -------
(e)(1)(c) Distribution and Service Agreement between Registrant
and Ranson on behalf of The Nebraska Municipal Fund.
Exhibit (e)(1)(c)
DISTRIBUTION AND SERVICES AGREEMENT
THIS DISTRIBUTION AND SERVICES AGREEMENT dated November 12, 1993, by and
between RANSON MANAGED PORTOLIOS a Massachusetts business trust (the "Fund"),
and RANSON CAPITAL CORPORATION, a Kansas corporation, (the "Distributor").
1. APPOINTMENT OF DISTRIBUTOR. The Fund appoints the Distributor as the
principal underwriter and exclusive Distributor of shares of The Nebraska
Municipal Fund series of Ranson Managed Portfolios (the "Shares"), effective
as of the date upon which the continuous public offering of the Fund's Shares
shall commence (the "Effective Date"). The Fund reserves the right, however,
to refuse at any time or times to sell Shares hereunder for any reason deemed
adequate by the Trustees of the Fund. The term "Fund" as used herein shall
refer to either Ranson Managed Portfolios or The Nebraska Municipal Fund as the
context may require.
The Distributor will use its best efforts to sell through its organization
and through other dealers the Shares which the Distributor has the right to
purchase under Section 2 hereof, but the Distributor does not undertake to sell
any specific number of Shares.
The Distributor agrees that it will not take any long or short positions
in the Shares, except for long positions in those Shares purchased by the
Distributor in accordance with any systematic sales plan or any similar plan
described in the then current Prospectus of the Fund and except as permitted by
Section 2 hereof, and that so far as it can control the situation, it will
prevent any of its directors, officers or stockholders from taking any long
or short positions in the Shares, except for legitimate investment purposes.
2. SALE OF SHARES TO THE DISTRIBUTOR. The Fund hereby grants to the
Distributor the right, except as herein otherwise provided, to purchase Shares
upon the terms herein set forth. Such right hereby granted shall not apply to
Shares issued or transferred or sold at net asset value: (a) in connection with
the merger or consolidation of the Fund with any other investment company or
the acquisition by the Fund of all or substantially all of the assets or of
the outstanding Shares of any investment company; (b) in connection with a pro
rata distribution directly to the holders of Fund Shares in the nature of a
stock dividend or stock split; (c) upon the exercise of purchase or
subscription rights granted to the holders of Shares on a pro rata basis;
(d) in connection with the automatic reinvestment of dividends and
distribution from the Fund; or (e) in connection with the issue and sale
of Shares to Trustees, officers and employees of the Fund, and to directors,
officers and employees of the investment advisor (or any portfolio manager)
of the Fund or any principal underwriter (including the Distributor) of the
Fund, and to any trust, pension, profit-sharing or other benefit plan for any
of the aforesaid persons or any other such persons as described in the then
current Prospectus of the Fund, as permitted by Rule 22d-1 under the
Investment Company Act of 1940.
The Distributor shall have the right to buy from the Fund the Shares
needed, but not more than the Shares needed (except for reasonable allowances
for clerical errors, delays and errors of transmission and cancellation of
orders) to fill unconditional orders for Shares received by the Distributor
from dealers and investors during each period when a particular net asset
value and public offering price are in effect as provided in Section 3 hereof;
and the price which the Distributor shall pay for the Shares so purchased
shall be the net asset value used in determining the public offering price on
which such orders were based. The Distributor shall notify the Fund at the end
of each such period, or as soon thereafter on that business day as the orders
received in such period have been compiled, of the number of Shares which the
Distributor elects to purchase hereunder.
3. PUBLIC OFFERING PRICE. The public offering price per Share shall
be determined in accordance with the then current Prospectus of the Fund.
In no event shall the public offering price exceed the net asset value per
Share plus a sales charge of 8.5% of the public offering price. The net
asset value per Share shall be determined in the Agreement and Declaration
of Trust of the Fund as then amended and in accordance with the current
Prospectus of the Fund. The Fund will cause immediate notice to be given
to the Distributor of each change in net asset value as soon as it is
determined. Discounts to dealers purchasing Shares from the Distributor
for resale shall be set forth in the form of Dealer Agreement between the
Distributor and securities dealers, as from time to time amended, and, if
such discounts are described in the then current Prospectus for the Fund,
shall be as so set forth.
4. COMPLIANCE WITH NASD RULES, ETC. In selling Fund Shares, the
Distributor will in all respects duly conform with all state and Federal
laws relating to the sale of such securities and with all applicable rules
and regulations of all regulatory bodies, including without limitation, the
Rules of Fair Practice of the National Association of Securities Dealers,
Inc. and all applicable rules and regulations of the Securities and
Exchange Commission under the Investment Company Act of 1940, and will
indemnify and save the Fund harmless from any damage or expense on account
of any unlawful act by the Distributor or its agents or employees. The
Distributor is not, however, to be responsible for the acts of other dealers.
Neither the distributor, any dealer, nor any other person is authorized by
the Fund to give any information or to make any representations, other than
those contained in the Registration Statement or Prospectus heretofore or
hereafter filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (as any such Registration Statement and
Prospectus may have been or may be amended from time to time), covering the
Shares, and in any supplemental information to any such Prospectus approved
by the Fund in connection with the offer or sale of Shares. All such sales
shall be made by the Distributor as principal for its own account.
5. EXPENSES.
(a) The fund will pay or cause to be paid:
(i) all expenses in connection with the registration of Fund Shares under
the Federal securities laws, and the Fund will exercise its best efforts to
obtain said registration and qualification;
(ii) all expenses of qualifying and maintaining qualification of the
Shares for sale under the securities laws of the various states after the
initial registration in such states of the Shares;
(iii) all expenses in connection with the printing of any notices of
shareholders' meetings, proxy and proxy statements and enclosures therewith,
as well as any other notice or communication sent to shareholders or otherwise,
any annual, semi-annual or other report of communications sent to the
shareholders, and the expenses of sending prospectuses relating to the Shares
to existing shareholders;
(iv) all expenses of any Federal or state original issue tax or transfer
tax payable upon the issuance, transfer or delivery of Shares from the Fund
to the Distributor; and
(v) the cost of preparing and issuing any Share certificates which may
be issued to represent Shares.
(b) The expenses of preparing, printing and distributing advertising
and sales literature; of printing and distributing prospectuses relating
to the Shares (other than deliveries to existing shareholders), reports to
shareholders and proxy material used in connection with the sale of Shares;
of initially qualifying the Shares for sale under the securities laws of
the various states; and of any other activity which is primarily intended
to result in the sale of Shares issued by the Fund will be paid by the
Distributor, except to the extent described in Section 7 of this Agreement.
The Distributor will also permit its officers and employees to serve without
compensation as Trustees and officers of the Fund if duly elected to such
positions.
6. REPURCHASE OF SHARES. The Fund hereby authorizes the Distributor
to repurchase, upon the terms and conditions hereinafter set forth, as the
Fund's agent and for the Fund's account, such as may be offered for sale to
the Fund from time to time by holders of such Shares or their agents:
(a) Subject to and in conformity with all applicable Federal and state
legislation, any applicable rules of the National Association of Securities
Dealers, Inc. and any applicable rules and regulations of the Securities and
Exchange Commission under the Investment Company Act of 1940, the Distributor
may accept offers of holders of Shares to resell such Shares to the Fund on
such term and conditions and at such prices as described and provided for
in the then current Prospectus of the Fund.
(b) The Distributor agrees to notify the Fund at such times as the
Fund may specify of the number of Shares repurchased for the Fund's account
and the time or times of such repurchases, and the Fund shall notify the
Distributor of the prices applicable to such repurchases.
(c) The Fund shall have the right to suspend or revoke the foregoing
authorization at any time; unless otherwise stated, any such suspension or
revocation shall be effective forthwith upon receipt of notice thereof by
telegraph or by written instrument from any of the Fund's officers. In the
event that the Distributor's authorization is, by the terms of such notice,
suspended for more than twenty-four hours or until further notice, the
authorization given by this Section 6 shall not be revived except by vote
of the Board of Trustees of the Fund.
(d) The Distributor agrees that all repurchases of Shares made by the
Distributor shall be made only as agent for the Fund's account and pursuant
to the terms and conditions herein set forth.
(e) The Fund agrees to authorize and direct its Custodian for the Fund
to pay for the Fund's account the repurchase price of any Shares so repurchased
for the Fund against delivery of the certificates representing such Shares
in proper form for transfer to the Fund or against the authorized transfer
of book Shares from an Open Account and against delivery of any other
documentation required by the Board of Trustees of the Fund.
(f) The Distributor shall receive no commissions or other compensation
in respect to any repurchases of Shares for the Fund under the foregoing
authorization and appointment as agent.
(g) If any shares sold to the Distributor under the terms of this
Agreement are redeemed or repurchased by the Fund or by the Distributor as
agent or are tendered for redemption within seven business days after the date
of the Fund's confirmation of the original purchase, the Distributor shall
forfeit the amount above the net asset value received by it in respect of
such Shares, provided that the portion, if any, of such amount reallowed by
he Distributor to dealers shall be repayable to the Fund only to the extent
recovered by the Distributor from the dealer concerned. The Distributor shall
include in the form of Dealer Agreement with securities dealers a corresponding
provision for the forfeiture by dealer of their concession with respect to
Shares purchased by them and redeemed or repurchased by the Fund or by the
Distributor, as agent within seven business days after the date of the Fund's
confirmation of their purchases.
7. SERVICE FEE. The Fund will pay an annual fee to the Distributor (the
"Distributor's Fee") of .25% times the average of the net asset values of the
Fund. The Distributor may pay a fee on a quarterly basis (the "Servicing Fee")
to broker-dealers, including the Distributor and affiliates of the adviser and
portfolio manager of the Fund, banks and savings and loan institutions and
their affiliates and associated broker-dealers that have entered into service
agreements with the Distributor ("Service Organizations") of annual amounts of
up to 0.25% of the average net asset value of all Shares owned by shareholders
with whom the Service Organization has a servicing relationship (the
"Accounts"), provided that no such payment of a Service Fee with respect to an
Account shall be made until the Service Organization has been servicing such
Account for more than a year (the "Eligible Accounts"). To the extent the
Servicing Fee is not paid to Service Organizations out of the Distributor's
Fee, the Distributor may use such fee to pay any of the expenses set forth in
Section 5(b) of this Agreement.
(a) the amount which the Fund will pay the Distributor for the
Distributor's Fee in any calendar month shall be calculated by multiplying
1/12th of 0.25% times the average of the net asset value of the Fund on
each day during the month.
(b) The amount which the Distributor may pay the Service Organizations in
any calendar quarter shall be calculated by multiplying 1/4th of the
percentage set forth in the Service Agreement with each Service
Organization (up to a maximum of 0.25%) times the average net asset value
of the Eligible Accounts with respect to such Service Organization during
such quarter.
(c) For the purpose of determining the maximum amounts payable or
reimbursable under this Agreement, the net asset value of the Fund shall
be determined as described in Section 3 of this Agreement.
(d) The Distributor shall provide the Trustees, at least quarterly, a
written report of all amounts expended by the Distributor pursuant to this
Section 7 and, to the extent applicable, Section 5, stating in such report
the purposes for which such amounts were expended.
8. INDEMNIFICATION. The Fund agrees to indemnify and hold harmless the
Distributor and each of its directors and officers and each person, if any,
who controls the Distributor within the meaning of Section 15 of the 1933 Act
against any loss, liability, claim, damages or expense (including the
reasonable cost of investigating or defending any alleged loss, liability,
claim, damages, or expense and reasonable counsel fees incurred in connection
therewith), arising by reason of any person acquiring any Shares, based upon
the ground that the registration statement, Prospectus, shareholder or other
information filed or made public by the Fund (as from time to time amended),
included an untrue statement of a material fact or omitted to state a material
fact required to be stated or necessary in order to make the statements not
misleading under the 1933 Act, or any other statute or the common law.
However, the Fund does not agree to indemnify the Distributor or hold it
harmless to the extent that the statement or omission was made in reliance
upon, and in conformity with, information furnished to the Fund by or on
behalf of the Distributor. In no case (i) is the indemnity of the Fund
in favor of the Distributor or any person indemnified to be deemed to protect
the Distributor or any person against any liability to the Fund or its
security holders to which the Distributor or such person would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of their duties or by reason of their reckless disregard
of their obligations and duties under this Agreement, or (ii) is the fund
to be liable under its indemnity agreement contained in this section with
respect to any claim made against the Distributor or any person (or after the
Distributor or the person shall have received notice or service on any
designated agent). However, failure to notify the Fund of any claim shall
not relieve the Fund from any liability which it may have to the Distributor
or any person against whom such action is brought otherwise than on account
of its indemnity agreement contained in this paragraph. The Fund shall be
entitled to participate at its own expense in the defense, or, if it so
elects, to assume the defense of any suit brought to enforce any claims,
but if the Fund elects to assume the defense, the defense shall be conducted
by counsel chosen by it and elects to assume the defense of any suit and
retain counsel, the Distributor, officers or Trustees or controlling person
or persons, defendant or defendants in the suit, shall bear the fees and
expenses of any additional counsel retained by them. If the Fund does not
elect to assume the defense of any suit, it will reimburse the Distributor,
officers or Trustees or controlling person or persons, defendant or defendants
in the suit, for the reasonable fees and expenses of any counsel retained by
them. The Fund agrees to notify the Distributor promptly of the commencement
of any litigation or proceedings against it or any of its officers or Trustees
in connection with the issuance or sale of any of the Shares.
The Distributor also covenants and agrees that it will indemnify and hold
harmless the Fund and each of its Trustees and officers and each person, if
any, who controls the Fund within the meaning of Section 15 of the 1933 Act,
against any loss, liability, damages, claim or expense (including the
reasonable cost of investigating or defending any alleged loss, liability,
damages, claim or expense and reasonable counsel fees incurred in connection
therewith) arising by reason of any person acquiring any Shares, based upon
the 1933 Act or any other stature or common law, alleging any wrongful act
of the Distributor or any of its employees or alleging that the registration
statement, Prospectus, shareholder reports or other information filed or made
public by the Fund (as from time to time amended), included an untrue statement
of a material fact or omitted to state a material fact required to be stated
or necessary in order to make the statements not misleading, insofar as the
statement or omission was made in reliance upon, and in conformity with
information furnished to the Fund by or on behalf of the Distributor. In no
case (i) is the indemnity of the Distributor in favor of the Fund or any
person indemnified to be deemed to protect the Fund or any person against
any liability to which the Fund or such person would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement, or (ii) is the Distributor
to be liable under its indemnity agreement contained in this paragraph
with respect to any claim made against the Fund or any person indemnified
unless the Fund or person, as the case may be, shall have notified the
Distributor in writing of the claim within a reasonable time after the
summons or other first written notification giving information of the nature
of the claim shall have been served upon the Fund or person (or after the
Fund or such person shall have received notice of service on any designated
agent). However, failure to notify the Distributor of any claim shall not
relieve the Distributor from any liability which it may have to the Fund or
any person against whom the action is brought otherwise than on account of
its indemnity agreement contained in this paragraph. In the case of any
notice to the Distributor, it shall be entitled to participate, at its own
expense, in the defense or, if it so elects, to assume the defense of any
suit brought to enforce the claim, but if the Distributor elects to assume
the defense, the defense shall be conducted by counsel chosen by it and
satisfactory to the Fund, to its officers and Trustees and to any controlling
person or persons, defendant or defendants in the suit. In the event that
the Distributor elects to assume the defense of any suit and retain counsel,
the Fund or controlling persons, defendant or defendants in the suit, shall
bear the fees and expense of any additional counsel retained by it. If the
Distributor does not elect to assume the defense of any suit, it will
reimburse the Fund, officers and Trustees or controlling person or persons,
defendant or defendants in the suit, for the reasonable fees and expenses
of any counsel retained by it. The Distributor agrees to notify the Fund
promptly of the commencement of any litigation or proceedings against it
in connection with the issue and sale of any of the Shares.
9. CONTINUATION, AMENDMENT OR TERMINATION OF THE AGREEMENT. This
Agreement shall become effective on the Effective Date (it having been
approved prior to such date by a majority of the Fund's Board of Trustees
including a majority of the Disinterested Trustees, as defined below) and
shall remain in full force until the second anniversary of the Effective
Date unless sooner terminated as provided herein. This Agreement shall
continue in force from year to year hereafter so long as such continuance
is approved in the manner required by the Investment Company Act of 1940
(a) this Agreement shall immediately terminate in the event of its assignment;
and (b) this Agreement may be terminated by the Distributor or the Fund on
ninety (90) days' written notice. Upon termination of this Agreement, the
obligations of the parties hereunder shall cease and terminate as of the
date of such termination, except for any obligation to respond for a breach
of this Agreement committed prior to such termination.
This Agreement may be amended at any time by mutual consent of the
parties, provided that such consent on the part of the Fund shall have
been approved (i) by the Trustees of the Fund, and (ii) by vote of a majority
of the Disinterested Trustees cast in person at a meeting called for the
purpose of voting on such amendment.
For the purpose of this section, the term "assignment" shall have
the meaning defined in the Investment Company Act of 1940, as amended.
10. NOTICE. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid, to the other party at any office
of such party or ast such other address as such party shall have designated
in writing.
11. LIMITATION OF LIABILITY. The parties hereto are expressly put on
notice of the Fund's Agreement and Declaration of Trust dated August 10,
1990 and all amendments thereto, all of which are on file with the Secretary
of The Commonwealth of Massachusetts, and the limitation of shareholder
and Trustee liability contained therein. This agreement has been executed
by and on behalf of the Fund by its representatives as such representatives
and not individually, and the obligations of the Fund hereunder are not
binding upon any of the Trustees, officers or shareholders of the Fund
individually but are binding upon only the assets and property of the Fund.
With respect to any claim by the Distributor for recovery of that portion
of the Distribution Fee (or any other liability of the Fund arising hereunder)
allocated to a particular portfolio, if there is more than one, whether in
accordance with the express terms hereof or otherwise, the Distributor shall
have recourse solely against the assets of that portfolio to satisfy such
claim and shall have no recourse against the assets of any other portfolio
for such purpose.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be executed on their behalf on the day and year first above written.
Ranson Managed Portfolios
By: /s/John A Ranson
----------------------
RANSON CAPITAL CORPORATION
By: /s/John A Ranson
----------------------
Exhibit
Number Exhibit
------ -------
(e)(1)(d) Distribution and Service Agreement between Registrant
and Ranson on behalf of The Oklahoma Municipal Fund.
Exhibit (e)(1)(d)
DISTRIBUTION AND SERVICES AGREEMENT
THIS DISTRIBUTION AND SERVICES AGREEMENT dated _______________, by and
between RANSON MANAGED PORTOLIOS a Massachusetts business trust (the "Fund"),
and RANSON CAPITAL CORPORATION, a Kansas corporation, (the "Distributor").
1. APPOINTMENT OF DISTRIBUTOR. The Fund appoints the Distributor as the
principal underwriter and exclusive Distributor of shares of The Oklahoma
Municipal Fund series of Ranson Managed Portfolios (the
"Shares"), effective as of the date upon which the continuous public offering
of the Fund's Shares shall commence (the "Effective Date"). The Fund reserves
the right, however, to refuse at any time or times to sell Shares hereunder for
any reason deemed adequate by the Trustees of the Fund. The term "Fund" as
used herein shall refer to either Ranson Managed Portfolios or The Oklahoma
Municipal Fund as the context may require.
The Distributor will use its best efforts to sell through its organization
and through other dealers the Shares which the Distributor has the right to
purchase under Section 2 hereof, but the Distributor does not undertake to sell
any specific number of Shares.
The Distributor agrees that it will not take any long or short positions
in the Shares, except for long positions in those Shares purchased by the
Distributor in accordance with any systematic sales plan or any similar plan
described in the then current Prospectus of the Fund and except as permitted by
Section 2 hereof, and that so far as it can control the situation, it will
prevent any of its directors, officers or stockholders from taking any long
or short positions in the Shares, except for legitimate investment purposes.
2. SALE OF SHARES TO THE DISTRIBUTOR. The Fund hereby grants to the
Distributor the right, except as herein otherwise provided, to purchase Shares
upon the terms herein set forth. Such right hereby granted shall not apply to
Shares issued or transferred or sold at net asset value: (a) in connection with
the merger or consolidation of the Fund with any other investment company or
the acquisition by the Fund of all or substantially all of the assets or of
the outstanding Shares of any investment company; (b) in connection with a pro
rata distribution directly to the holders of Fund Shares in the nature of a
stock dividend or stock split; (c) upon the exercise of purchase or
subscription rights granted to the holders of Shares on a pro rata basis;
(d) in connection with the automatic reinvestment of dividends and
distribution from the Fund; or (e) in connection with the issue and sale
of Shares to Trustees, officers and employees of the Fund, and to directors,
officers and employees of the investment adviser (or any portfolio manager)
of the Fund or any principal underwriter (including the Distributor) of the
Fund, and to any trust, pension, profit-sharing or other benefit plan for any
of the aforesaid persons or any other such persons as described in the then
current Prospectus of the Fund, as permitted by Rule 22d-1 under the
Investment Company Act of 1940.
The Distributor shall have the right to buy from the Fund the Shares
needed, but not more than the Shares needed (except for reasonable allowances
for clerical errors, delays and errors of transmission and cancellation of
orders) to fill unconditional orders for Shares received by the Distributor
from dealers and investors during each period when a particular net asset
value and public offering price are in effect as provided in Section 3 hereof;
and the price which the Distributor shall pay for the Shares so purchased
shall be the net asset value used in determining the public offering price on
which such orders were based. The Distributor shall notify the Fund at the end
of each such period, or as soon thereafter on that business day as the orders
received in such period have been compiled, of the number of Shares which the
Distributor elects to purchase hereunder.
3. PUBLIC OFFERING PRICE. The public offering price per Share shall
be determined in accordance with the then current Prospectus of the Fund.
In no event shall the public offering price exceed the net asset value per
Share plus a sales charge of 8.5% of the public offering price. The net
asset value per Share shall be determined in the Agreement and Declaration
of Trust of the Fund as then amended and in accordance with the current
Prospectus of the Fund. The Fund will cause immediate notice to be given
to the Distributor of each change in net asset value as soon as it is
determined. Discounts to dealers purchasing Shares from the Distributor
for resale shall be set forth in the form of Dealer Agreement between the
Distributor and securities dealers, as from time to time amended, and, if
such discounts are described in the then current Prospectus for the Fund,
shall be as so set forth.
4. COMPLIANCE WITH NASD RULES, ETC. In selling Fund Shares, the
Distributor will in all respects duly conform with all state and Federal
laws relating to the sale of such securities and with all applicable rules
and regulations of all regulatory bodies, including without limitation, the
Rules of Fair Practice of the National Association of Securities Dealers,
Inc. and all applicable rules and regulations of the Securities and
Exchange Commission under the Investment Company Act of 1940, and will
indemnify and save the Fund harmless from any damage or expense on account
of any unlawful act by the Distributor or its agents or employees. The
Distributor is not, however, to be responsible for the acts of other dealers.
Neither the distributor, any dealer, nor any other person is authorized by
the Fund to give any information or to make any representations, other than
those contained in the Registration Statement or Prospectus heretofore or
hereafter filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (as any such Registration Statement and
Prospectus may have been or may be amended from time to time), covering the
Shares, and in any supplemental information to any such Prospectus approved
by the Fund in connection with the offer or sale of Shares. All such sales
shall be made by the Distributor as principal for its own account.
5. EXPENSES.
(a) The fund will pay or cause to be paid:
(i) all expenses in connection with the registration of Fund Shares under
the Federal securities laws, and the Fund will exercise its best efforts to
obtain said registration and qualification;
(ii) all expenses of qualifying and maintaining qualification of the
Shares for sale under the securities laws of the various states after the
initial registration in such states of the Shares;
(iii) all expenses in connection with the printing of any notices of
shareholders' meetings, proxy and proxy statements and enclosures therewith,
as well as any other notice or communication sent to shareholders or otherwise,
any annual, semi-annual or other report of communications sent to the
shareholders, and the expenses of sending prospectuses relating to the Shares
to existing shareholders;
(iv) all expenses of any Federal or state original issue tax or transfer
tax payable upon the issuance, transfer or delivery of Shares from the Fund
to the Distributor; and
(v) the cost of preparing and issuing any Share certificates which may
be issued to represent Shares.
(b) The expenses of preparing, printing and distributing advertising
and sales literature; of printing and distributing prospectuses relating
to the Shares (other than deliveries to existing shareholders), reports to
shareholders and proxy material used in connection with the sale of Shares;
of initially qualifying the Shares for sale under the securities laws of
the various states; and of any other activity which is primarily intended
to result in the sale of Shares issued by the Fund will be paid by the
Distributor, except to the extent described in Section 7 of this Agreement.
The Distributor will also permit its officers and employees to serve without
compensation as Trustees and officers of the Fund if duly elected to such
positions.
6. REPURCHASE OF SHARES. The Fund hereby authorizes the Distributor
to repurchase, upon the terms and conditions hereinafter set forth, as the
Fund's agent and for the Fund's account, such as may be offered for sale to
the Fund from time to time by holders of such Shares or their agents:
(a) Subject to and in conformity with all applicable Federal and state
legislation, any applicable rules of the National Association of Securities
Dealers, Inc. and any applicable rules and regulations of the Securities and
Exchange Commission under the Investment Company Act of 1940, the Distributor
may accept offers of holders of Shares to resell such Shares to the Fund on
such term and conditions and at such prices as described and provided for
in the then current Prospectus of the Fund.
(b) The Distributor agrees to notify the Fund at such times as the
Fund may specify of the number of Shares repurchased for the Fund's account
and the time or times of such repurchases, and the Fund shall notify the
Distributor of the prices applicable to such repurchases.
(c) The Fund shall have the right to suspend or revoke the foregoing
authorization at any time; unless otherwise stated, any such suspension or
revocation shall be effective forthwith upon receipt of notice thereof by
telegraph or by written instrument from any of the Fund's officers. In the
event that the Distributor's authorization is, by the terms of such notice,
suspended for more than twenty-four hours or until further notice, the
authorization given by this Section 6 shall not be revived except by vote
of the Board of Trustees of the Fund.
(d) The Distributor agrees that all repurchases of Shares made by the
Distributor shall be made only as agent for the Fund's account and pursuant
to the terms and conditions herein set forth.
(e) The Fund agrees to authorize and direct its Custodian for the Fund
to pay for the Fund's account the repurchase price of any Shares so repurchased
for the Fund against delivery of the certificates representing such Shares
in proper form for transfer to the Fund or against the authorized transfer
of book Shares from an Open Account and against delivery of any other
documentation required by the Board of Trustees of the Fund.
(f) The Distributor shall receive no commissions or other compensation
in respect to any repurchases of Shares for the Fund under the foregoing
authorization and appointment as agent.
(g) If any shares sold to the Distributor under the terms of this
Agreement are redeemed or repurchased by the Fund or by the Distributor as
agent or are tendered for redemption within seven business days after the date
of the Fund's confirmation of the original purchase, the Distributor shall
forfeit the amount above the net asset value received by it in respect of
such Shares, provided that the portion, if any, of such amount reallowed by
he Distributor to dealers shall be repayable to the Fund only to the extent
recovered by the Distributor from the dealer concerned. The Distributor shall
include in the form of Dealer Agreement with securities dealers a corresponding
provision for the forfeiture by dealer of their concession with respect to
Shares purchased by them and redeemed or repurchased by the Fund or by the
Distributor, as agent within seven business days after the date of the Fund's
confirmation of their purchases.
7. SERVICE FEE. The Fund will pay an annual fee to the Distributor (the
"Distributor's Fee") of .25% times the average of the net asset values of the
Fund. The Distributor may pay a fee on a quarterly basis (the "Servicing Fee")
to broker-dealers, including the Distributor and affiliates of the adviser and
portfolio manager of the Fund, banks and savings and loan institutions and
their affiliates and associated broker-dealers that have entered into service
agreements with the Distributor ("Service Organizations") of annual amounts of
up to 0.25% of the average net asset value of all Shares owned by shareholders
with whom the Service Organization has a servicing relationship (the
"Accounts"), provided that no such payment of a Service Fee with respect to an
Account shall be made until the Service Organization has been servicing such
Account for more than a year (the "Eligible Accounts"). To the extent the
Servicing Fee is not paid to Service Organizations out of the Distributor's
Fee, the Distributor may use such fee to pay any of the expenses set forth in
Section 5(b) of this Agreement.
(a) the amount which the Fund will pay the Distributor for the
Distributor's Fee in any calendar month shall be calculated by multiplying
1/12th of 0.25% times the average of the net asset value of the Fund on
each day during the month.
(b) The amount which the Distributor may pay the Service Organizations in
any calendar quarter shall be calculated by multiplying 1/4th of the
percentage set forth in the Service Agreement with each Service
Organization (up to a maximum of 0.25%) times the average net asset value
of the Eligible Accounts with respect to such Service Organization during
such quarter.
(c) For the purpose of determining the maximum amounts payable or
reimbursable under this Agreement, the net asset value of the Fund shall
be determined as described in Section 3 of this Agreement.
(d) The Distributor shall provide the Trustees, at least quarterly, a
written report of all amounts expended by the Distributor pursuant to this
Section 7 and, to the extent applicable, Section 5, stating in such report
the purposes for which such amounts were expended.
8. INDEMNIFICATION. The Fund agrees to indemnify and hold harmless the
Distributor and each of its directors and officers and each person, if any,
who controls the Distributor within the meaning of Section 15 of the 1933 Act
against any loss, liability, claim, damages or expense (including the
reasonable cost of investigating or defending any alleged loss, liability,
claim, damages, or expense and reasonable counsel fees incurred in connection
therewith), arising by reason of any person acquiring any Shares, based upon
the ground that the registration statement, Prospectus, shareholder or other
information filed or made public by the Fund (as from time to time amended),
included an untrue statement of a material fact or omitted to state a material
fact required to be stated or necessary in order to make the statements not
misleading under the 1933 Act, or any other statute or the common law.
However, the Fund does not agree to indemnify the Distributor or hold it
harmless to the extent that the statement or omission was made in reliance
upon, and in conformity with, information furnished to the Fund by or on
behalf of the Distributor. In no case (i) is the indemnity of the Fund
in favor of the Distributor or any person indemnified to be deemed to protect
the Distributor or any person against any liability to the Fund or its
security holders to which the Distributor or such person would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of their duties or by reason of their reckless disregard
of their obligations and duties under this Agreement, or (ii) is the fund
to be liable under its indemnity agreement contained in this section with
respect to any claim made against the Distributor or any person (or after the
Distributor or the person shall have received notice or service on any
designated agent). However, failure to notify the Fund of any claim shall
not relieve the Fund from any liability which it may have to the Distributor
or any person against whom such action is brought otherwise than on account
of its indemnity agreement contained in this paragraph. The Fund shall be
entitled to participate at its own expense in the defense, or, if it so
elects, to assume the defense of any suit brought to enforce any claims,
but if the Fund elects to assume the defense, the defense shall be conducted
by counsel chosen by it and elects to assume the defense of any suit and
retain counsel, the Distributor, officers or Trustees or controlling person
or persons, defendant or defendants in the suit, shall bear the fees and
expenses of any additional counsel retained by them. If the Fund does not
elect to assume the defense of any suit, it will reimburse the Distributor,
officers or Trustees or controlling person or persons, defendant or defendants
in the suit, for the reasonable fees and expenses of any counsel retained by
them. The Fund agrees to notify the Distributor promptly of the commencement
of any litigation or proceedings against it or any of its officers or Trustees
in connection with the issuance or sale of any of the Shares.
The Distributor also covenants and agrees that it will indemnify and hold
harmless the Fund and each of its Trustees and officers and each person, if
any, who controls the Fund within the meaning of Section 15 of the 1933 Act,
against any loss, liability, damages, claim or expense (including the
reasonable cost of investigating or defending any alleged loss, liability,
damages, claim or expense and reasonable counsel fees incurred in connection
therewith) arising by reason of any person acquiring any Shares, based upon
the 1933 Act or any other stature or common law, alleging any wrongful act
of the Distributor or any of its employees or alleging that the registration
statement, Prospectus, shareholder reports or other information filed or made
public by the Fund (as from time to time amended), included an untrue statement
of a material fact or omitted to state a material fact required to be stated
or necessary in order to make the statements not misleading, insofar as the
statement or omission was made in reliance upon, and in conformity with
information furnished to the Fund by or on behalf of the Distributor. In no
case (i) is the indemnity of the Distributor in favor of the Fund or any
person indemnified to be deemed to protect the Fund or any person against
any liability to which the Fund or such person would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement, or (ii) is the Distributor
to be liable under its indemnity agreement contained in this paragraph
with respect to any claim made against the Fund or any person indemnified
unless the Fund or person, as the case may be, shall have notified the
Distributor in writing of the claim within a reasonable time after the
summons or other first written notification giving information of the nature
of the claim shall have been served upon the Fund or person (or after the
Fund or such person shall have received notice of service on any designated
agent). However, failure to notify the Distributor of any claim shall not
relieve the Distributor from any liability which it may have to the Fund or
any person against whom the action is brought otherwise than on account of
its indemnity agreement contained in this paragraph. In the case of any
notice to the Distributor, it shall be entitled to participate, at its own
expense, in the defense or, if it so elects, to assume the defense of any
suit brought to enforce the claim, but if the Distributor elects to assume
the defense, the defense shall be conducted by counsel chosen by it and
satisfactory to the Fund, to its officers and Trustees and to any controlling
person or persons, defendant or defendants in the suit. In the event that
the Distributor elects to assume the defense of any suit and retain counsel,
the Fund or controlling persons, defendant or defendants in the suit, shall
bear the fees and expense of any additional counsel retained by it. If the
Distributor does not elect to assume the defense of any suit, it will
reimburse the Fund, officers and Trustees or controlling person or persons,
defendant or defendants in the suit, for the reasonable fees and expenses
of any counsel retained by it. The Distributor agrees to notify the Fund
promptly of the commencement of any litigation or proceedings against it
in connection with the issue and sale of any of the Shares.
9. CONTINUATION, AMENDMENT OR TERMINATION OF THE AGREEMENT. This
Agreement shall become effective on the Effective Date (it having been
approved prior to such date by a majority of the Fund's Board of Trustees
including a majority of the Disinterested Trustees, as defined below) and
shall remain in full force until the second anniversary of the Effective
Date unless sooner terminated as provided herein. This Agreement shall
continue in force from year to year hereafter so long as such continuance
is approved in the manner required by the Investment Company Act of 1940
(a) this Agreement shall immediately terminate in the event of its assignment;
and (b) this Agreement may be terminated by the Distributor or the Fund on
ninety (90) days' written notice. Upon termination of this Agreement, the
obligations of the parties hereunder shall cease and terminate as of the
date of such termination, except for any obligation to respond for a breach
of this Agreement committed prior to such termination.
This Agreement may be amended at any time by mutual consent of the
parties, provided that such consent on the part of the Fund shall have
been approved (i) by the Trustees of the Fund, and (ii) by vote of a majority
of the Disinterested Trustees cast in person at a meeting called for the
purpose of voting on such amendment.
For the purpose of this section, the term "assignment" shall have
the meaning defined in the Investment Company Act of 1940, as amended.
10. NOTICE. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid, to the other party at any office
of such party or ast such other address as such party shall have designated
in writing.
11. LIMITATION OF LIABILITY. The parties hereto are expressly put on
notice of the Fund's Agreement and Declaration of Trust dated August 10,
1990 and all amendments thereto, all of which are on file with the Secretary
of The Commonwealth of Massachusetts, and the limitation of shareholder
and Trustee liability contained therein. This agreement has been executed
by and on behalf of the Fund by its representatives as such representatives
and not individually, and the obligations of the Fund hereunder are not
binding upon any of the Trustees, officers or shareholders of the Fund
individually but are binding upon only the assets and property of the Fund.
With respect to any claim by the Distributor for recovery of that portion
of the Distribution Fee (or any other liability of the Fund arising hereunder)
allocated to a particular portfolio, if there is more than one, whether in
accordance with the express terms hereof or otherwise, the Distributor shall
have recourse solely against the assets of that portfolio to satisfy such
claim and shall have no recourse against the assets of any other portfolio
for such purpose.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be executed on their behalf on the day and year first above written.
Ranson Managed Portfolios
By: /s/Robert E. Walstad
----------------------
RANSON CAPITAL CORPORATION
By: /s/Robert E. Walstad
----------------------
Exhibit
Number Exhibit
------ -------
(e)(2) Dealer Agreement.
Exhibit (e)(2)
RANSON CAPITAL CORPORATION
DEALER AGREEMENT
Gentlemen:
As dealer for our own account, we offer to sell to you shares of open-end
investment companies (the "Funds") for which we are the investment adviser and
the principal underwriter as defined in the Investment Company Act of 1940, as
amended, and from which we have the right to purchase shares.
1. In all sales of shares of the Fund to the public you shall act as
dealer for your own account, and in no transaction shall you have any
authority to act as agent for the Fund or for us.
2. Orders received from you will be accepted by us only at the public
offering price applicable to each order, except for transactions at net asset
value in accordance with the current Fund Prospectus. The minimum dollar
purchase of shares of the Fund by any person shall be the applicable minimum
amount described in the then current Fund Prospectus, and no order for less
than such amount will be accepted hereunder. The public offering price shall
be the net asset value per share plus a sales charge, expressed as a percentage
of the applicable public offering price, as determined and effective as of
the time specified in the then current Fund Prospectus. The procedures
relating to the handling of orders and payment therefor shall be subject to
additional instructions which we shall forward from time to time to you.
All orders are subject to acceptance or rejection by us in our sole discretion.
3. As of the date of the Agreement, the sales charge applicable to any
sale of Fund shares by you and the dealer concession applicable to any offer
from you for the purchase of Fund shares accepted by us shall be the
percentage of the applicable public offering price set forth in the then
current Fund Prospectus. The discounts or other concessions to which you
may be entitled in connection with sales to your customers pursuant to any
special features of a Fund (such as cumulative discounts, letter of intent,
etc. the terms of which shall be as described in the applicable Fund Prospectus
and related forms) shall be in accordance with the terms of such features.
With respect to certain Funds for which such fees are available as provided
in the applicable Fund Prospectus, you will receive a fee at the rate
specified in such Fund Prospectus in consideration of providing administrative
and shareholder services.
4. You agree to purchase shares only from us or from your customers.
If you purchase shares from us, you agree that all such purchases shall be
made only: (a) to cover orders already received by you from your customers or
(b) for your own bona fide investment. If you purchase shares from your
customers, you agree to pay such customers not less than the applicable
repurchase price as established by the current Fund Prospectus. We, in turn,
agree that we will not purchase any securities from the fund except for the
purpose of covering purchase orders which we have already received or for
bona fide investment.
5. You shall sell shares only: (a) to customers at the applicable
public offering price, and (b) to us as agent for the Fund at the repurchase
price. In such a sale to us, you may act either as principal for your own
account or as agent for your customer. If you act as principal for your own
account in purchasing shares for resale to us, you agree to pay your
customer not less than the price which you receive from us. If you act as
agent for your customer in selling shares to us, you agree not to charge
your customer more than a fair commission for handling the transaction.
6. You shall not withhold placing with us orders received from your
customers so as to profit yourself as a result of such withholding: e.g., by
a change in the net asset value from that used in determining the public
offering price to your customers.
7. We will not accept from you any conditional orders for shares, except
at a definite specified price.
8. If any shares sold to you under the terms of the Agreement are
repurchased by the Fund or by us as agent for the Fund, or are tendered for
redemption, within seven business days after the date of our confirmation of
the original purchase by you, it is agreed that you shall forfeit your right
to any dealer concession received by you on such shares. We will notify you
of any such repurchase or redemption within ten business days from the date on
which the repurchase or redemption order in proper form is delivered to us or
to the Fund, and you shall forthwith refund to us the full concession allowed
to you on such a sale. We agree, in the event of any such repurchase or
redemption, to refund to the Fund our share of the concession allowed to us
and upon receipt from you of the refund of the concession allowed to you, to
pay such refund forthwith to the Fund.
9. Payment for Fund shares by you shall be made on or before the
settlement date specified in our confirmation, at the office of the Fund's
transfer agent, ND Resources, Inc., PO Box 759, Minot, ND 58702-0759, and
by check payable to the order of the Fund, which reserves the right to delay
issuance or transfer of shares until such check has cleared. If such a
payment is not received by us, we reserve the right, without notice, forthwith
either to cancel the sale, or, at our option, to sell the shares ordered back
to the Fund, and in either case, we may hold you responsible for any loss,
including loss of profit, suffered by us or by the Fund resulting from your
failure to make payment as aforesaid.
10. Certificates for shares sold to you shall be issued only if
specifically requested. If no Open Account registration of transfer
instructions are received by the Fund's transfer agent within 20 days
after payment by you for shares sold to you, an Open Account for such shares
will be established in your name. You agree to hold harmless and indemnify
us, the transfer agent, and the Fund for any loss or expenses resulting from
such Open Account registration of such shares.
11. No person is authorized to make any representations concerning
shares of the Fund except those contained in then the current Fund Prospectus
and in sales literature issued by us supplemental to such Prospectus. In
purchasing shares from us, you shall rely solely on the representations
contained in such Prospectus and in such sales literature. We will furnish
additional copies of the current Prospectus and such sales literature and
other releases and information issued by us in reasonable quantities upon
request.
12. The Fund reserves the right in its discretion and we reserve the
right in our discretion, upon notice, to suspend sales or withdraw the
offering of shares entirely, to change the concession or any other amounts
payable hereunder. We reserve the right, upon notice, to amend, modify, change
or cancel this Agreement.
13. This Agreement shall replace any prior agreement with respect to this
Fund between us and is conditioned upon your representation and warranty that
you are a member of the National Association of Security Dealers, Inc. You
and we agree to abide by the Rules and Regulations of the National Association
of Securities Dealer, Inc. including Rule 26 of its Rules of Fair Practice
and all applicable state and Federal laws, rules and regulations. You will
only offer shares of the Fund for sale in states in which they may be
lawfully offered for sale. References herein to a "Fund Prospectus" shall
mean the prospectus and statement of additional information of a Fund as
from time to time in effect. Any changes, modifications, or additions
reflected in any such Fund Prospectus shall be effective on the date of
such Fund Prospectus (or supplement thereto) unless specified otherwise.
14. All communications to us should be sent to the above address.
Any notice to you shall be duly given if mailed or telegraphed to you at
the address specified by you below. This Agreement shall be effective when
accepted by you below and shall be construed under the laws of the State
of Kansas.
RANSON CAPITAL CORPORATION
By: /s/Richard Olson
Accepted:
__________________________________________
(Dealer's Name)
__________________________________________
(Street Address)
__________________________________________
(City) (State) (Zip)
By: ______________________________________
(Authorized Signature of Dealer)
__________________________________________
(Name and Title of Authorized Person)
Exhibit
Number Exhibit
------ -------
(i)(1)(a) Opinion and Consent of Chapman and Cutler for The
Kansas Municipal Fund dated November 14, 1990.
Exhibit (i)(1)(a)
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
November 14, 1990
Ranson Managed Portfolios
120 South Market Street
Suite 450
Wichita, Kansas 67202
Re: Ranson Managed Portfolios
-------------------------
Gentlemen:
We have served as counsel for Ranson Managed Portfolios, (the "Fund")
which proposes to offer and sell shares of its The Kansas Municipal Fund series
(the "Shares") in the manner and on the terms set forth in its Registration
Statement filed with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended, and the Securities Act of 1933,
as amended.
In connection therewith, we have examined such pertinent records and
documents and matters of law as we have deemed necessary in order to enable
us to express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. The Fund is a duly organized and validly existing Trust pursuant
to its Agreement and Declaration of Trust dated August 10, 1990.
2. The shares of the Fund which are currently being registered by the
Registration Statement referred to above may be legally and validly issued from
time to time in accordance with the Agreement and Declaration of Trust
and subject to compliance with the Securities Act of 1933, as amended, the
Investment Company Act of 1940, as amended, and applicable state laws
regulation the sale of securities and the receipt by the Fund of a purchase
price of not less than the net asset value per share and such shares, when so
sold, will be legally issued and outstanding, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 33-36324) relating to the Shares referred to
above, to the use of our name and to the reference to our firm and said
Registration Statement and in the related Prospects.
Respectfully submitted,
CHAPMAN AND CUTLER
Exhibit
Number Exhibit
------ -------
(i)(1)(b) Opinion and Consent of Chapman and Cutler for The
Kansas Insured Intermediate Fund dated November 12, 1992.
Exhibit (i)(1)(b)
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
November 12, 1992
Ranson Managed Portfolios
120 South Market Street
Suite 450
Wichita, Kansas 67202
Re: Ranson Managed Portfolios
-------------------------
Gentlemen:
We have served as counsel for Ranson Managed Portfolios, (the "Fund")
which proposes to offer and sell shares of its The Kansas Municipal Fund-
Limited Maturity series (the "Shares") in the manner and on the terms set
forth in its Registration Statement filed with the Securities and
Exchange Commission under the Investment Company Act of 1940, as amended, and
the Securities Act of 1933, as amended.
In connection therewith, we have examined such pertinent records and
documents and matters of law as we have deemed necessary in order to enable
us to express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. The Fund is a duly organized and validly existing Trust pursuant
to its Agreement and Declaration of Trust dated August 10, 1990.
2. The shares of the Fund which are currently being registered by the
Registration Statement referred to above may be legally and validly issued from
time to time in accordance with the Agreement and Declaration of Trust,
and subject to compliance with the Securities Act of 1933, as amended, the
Investment Company Act of 1940, as amended, and applicable state laws
regulating the sale of securities and the receipt by the Fund of a purchase
price of not less than the net asset value per share and such shares, when so
sold, will be legally issued and outstanding, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 33-36324) relating to the Shares referred to
above, to the use of our name and to the reference to our firm and said
Registration Statement and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
Exhibit
Number Exhibit
------ -------
(i)(1)(c) Opinion and Consent of Chapman and Cutler for The
Nebraska Municipal Fund dated November 16, 1993.
Exhibit (i)(1)(c)
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
November 16, 1993
Ranson Managed Portfolios
120 South Market Street
Suite 450
Wichita, Kansas 67202
Re: Ranson Managed Portfolios
-------------------------
Gentlemen:
We have served as counsel for Ranson Managed Portfolios, (the "Fund")
which proposes to offer and sell shares of its The Nebraska Municipal Fund
series (the "Shares") in the manner and on the terms set forth in its
Registration Statement filed with the Securities and Exchange Commission
under the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended.
In connection therewith, we have examined such pertinent records and
documents and matters of law as we have deemed necessary in order to enable
us to express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. The Fund is a duly organized and validly existing Trust pursuant
to its Agreement and Declaration of Trust dated August 10, 1990.
2. The shares of the Fund which are currently being registered by the
Registration Statement referred to above may be legally and validly issued from
time to time in accordance with the Agreement and Declaration of Trust
and subject to compliance with the Securities Act of 1933, as amended, the
Investment Company Act of 1940, as amended, and applicable state laws
regulating the sale of securities and the receipt by the Fund of a purchase
price of not less than the net asset value per share and such shares, when so
sold, will be legally issued and outstanding, fully paid and non-assessable
except that, as set forth in the Registration Statement, shareholders of the
Fund may in certain circumstances be held personally liable for its
obligations.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 33-36324) relating to the Shares referred to
above, to the use of our name and to the reference to our firm and said
Registration Statement and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
Exhibit
Number Exhibit
------ -------
(i)(1)(e) Opinion and Consent of Chapman and Cutler for
dated November 29, 1999 for all series.
Exhibit (i)(1)(e)
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
November 29, 1999
Ranson Managed Portfolios
1 North Main
Minot, North Dakota 58703
Re: Ranson Managed Portfolios
Gentlemen:
We have served as counsel for the Ranson Managed Portfolios (the "Fund"),
which proposes to offer and sell shares of beneficial interest of series of
the Fund designated The Kansas Municipal Fund, The Kansas Insured Intermediate
Fund, The Nebraska Municipal Fund and The Oklahoma Municipal Fund
(collectively, the "Shares") in the manner and on the terms set forth in its
Post-Effective Amendment No. 43 (the "Amendment") to its Registration
Statement to be filed on or about November 29, 1999 with the Securities and
Exchange Commission under the Investment Company Act of 1940, as amended, and
the Securities Act of 1933, as amended.
In connection therewith, we have examined such pertinent records and
documents and matters of law as we have deemed necessary in order to enable us
to express the opinions hereinafter set forth, including the Fund's
Declaration of Trust, Bylaws, Registration Statement, actions of the Fund's
Board of Trustees at its organizational meeting and a certificate executed by
an appropriate officer of the Fund certifying and attaching copies of the
Fund's Declaration of Trust, Bylaws, and certain actions of the Board of
Trustees of the Fund authorizing the issuance of Shares.
In such examination, we have assumed the genuineness of all signatures,
the conformity to the originals of all of the documents reviewed by us as
copies, the authenticity and completeness of all original documents reviewed
by us in original or copy form and the legal competence of each individual
executing any document.
Based upon the foregoing, we are of the opinion that:
The Shares of the Fund which are currently being registered by the
Amendment referred to above may be legally and validly issued from time to time
in accordance with the Fund's Declaration of Trust dated August 10, 1990, the
Fund's Bylaws; and subject to compliance with the Securities Act of 1933, as
amended, the Investment Company Act of 1940, as amended, and applicable state
Ranson Managed Portfolios
November 29, 1999
Page 2
laws regulating the sale of securities and the receipt by the Fund of a
purchase price of not less than the net asset value per share and such Shares,
when so sold, will be legally issued and outstanding, fully paid and non-
assessable, except that as set forth in the Amendment, shareholders of the
Fund may under certain circumstances be held personally liable for its
obligations.
We hereby consent to the filing of this opinion as an exhibit to the
Amendment (File No. 33-6153) relating to the Shares referred to above, to the
use of our name and to the reference to our firm in said Amendment.
Respectfully submitted,
/S/ CHAPMAN AND CUTLER
-----------------------
CHAPMAN AND CUTLER
Exhibit
Number Exhibit
------ -------
(j) Consent of Independent Public Accountants.
Exhibit (j)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
[LETTERHEAD OF BRADY MARTZ]
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-effective Amendment No. 43 to the
registration statement on Form N-1A (the "Registration Statement") of our
report dated September 10, 1999, relating to the financial statements and
selected per share data and ratios of Ranson Managed Portfolios (the "Trust")
consisting of The Kansas Municipal Fund, The Kansas Insured Intermediate Fund,
The Nebraska Municipal Fund and The Oklahoma Municipal Fund (the "Funds"), which
appears in such Statement of Additional Information and to the incorporation by
reference of our report into the Prospectus which constitutes part of the
Registration Statement. We also consent to the reference to us under the
heading "Accountant and Report to Shareholders" in such Statement of Additional
Information and to the reference to us under the heading "Financial Highlights"
in the Prospectus and on the back cover of the Prospectus.
/s/Brady, Martz
- -----------------------------
BRADY, MARTZ & ASSOCIATES, P.C.
Minot, North Dakota
November 2, 1999
Exhibit
Number Exhibit
------ -------
(l) Subscription Agreement with Ranson.
Exhibit (l)
THE KANSAS MUNICIPAL FUND
SUBSCRIPTION AGREEMENT
AND
INVESTMENT LETTER
1. SHARE SUBSCRIPTION. The undersigned agrees to purchase from Ranson
Managed Portfolios (the "Fund") the number of shares of the Fund's The Kansas
Municipal Trust series, no par value per share (the "Shares"), set forth
above its signature, on the terms and conditions set forth herein and in the
Preliminary Prospectus ("Preliminary Prospectus") described below, and hereby
tenders the amount of the price required to purchase these shares at a price
of $11.49 per share.
The undersigned understands that the Fund filed a registration statement
with the Securities and Exchange Commission (No.33-36324) on Form N-lA, which
contains the Preliminary Prospectus which describes the Fund and the Shares.
By its signature hereto, the undersigned hereby acknowledges receipt of a copy
of the Preliminary Prospectus.
The undersigned recognizes that the Fund will be not fully operational
until such time as it commences the public offering of its shares.
Accordingly, a number of features of the Fund described in the Preliminary
Prospectus, including, without limitation, the declaration and payment of
dividends, and redemption of shares upon request of shareholders, are not, in
fact, in existence at the present time and will not be instituted until the
Fund's registration under the Securities Act of 1933 is made effective.
2. REGISTRATION AND WARRANTIES. The undersigned hereby represents and
warrants as follows:
(a) It is aware that no Federal or state agency has made any findings
or determination as to the fairness for investment, nor any
recommendation or endorsement, of the Shares;
(b) It has such knowledge and experience of financial and business
matters as will enable it to utilize the information made
available to it in connection with the offering of the Shares,
to evaluate the merits and risks of the prospective investment and
to make an informed investment decision;
(c) It recognizes that the Fund has only recently been organized and
has no financial or operating history and, further, that
investment in the Fund involves certain risks, and it has taken
full cognizance of and understands all of the risks related to the
purchase of the Shares, and it acknowledges that it has suitable
financial resources and anticipated income to bear the economic
risk of such an investment;
(d) It is purchasing the Shares for its own account, for investment,
and not with any intention of redemption, distribution, or resale
of the Shares, either in whole or in part;
(e) It will not sell the Shares purchased by it without registration of
the Shares under the Securities Act of 1933 or exemption therefrom;
(f) This Agreement and the Preliminary Prospectus and such material
documents relating to the Fund as it has requested have been
provided to it by the Fund and have been reviewed carefully by it;
(g) It has also had the opportunity to ask questions of, and receive
answers from, the Fund concerning the Fund and the terms of the
offering.
3. The undersigned recognizes that the Fund reserves the unrestricted
right to reject or limit any subscription and to close the offer at any time.
IN WITNESS WHEREOF, the undersigned has executed this instrument this 13th day
of November, 1990.
Number of shares: 8,704; Subscription price $11.49 per share for an aggregate
price of $100,008.96.
RANSON CAPITAL CORPORATION
RANSON & COMPANY, INC.
By: /s/John A. Ranson
Its President
2
Exhibit
Number Exhibit
------ -------
(m)(l)(a) Shareholder Services Plan for The Kansas Municipal Fund.
Exhibit (m)(l)(a)
RANSON MANAGED PORTFOLIOS- THE KANSAS MUNICIPAL FUND
SHAREHOLDER SERVICES PLAN
INTRODUCTION: It has been proposed that Ranson Managed Portfolios -
The Kansas Municipal Fund (the "Fund") make periodic payments to Ranson
Capital Corporation (the "Distributor") which payments could be used by the
Distributor to make payments to certain broker-dealers, banks, savings and
loan institutions and their affiliates, including their affiliated broker-
dealers, which provide certain administrative and shareholder services to the
Fund and its shareholders, and/or for the distribution, as the Securities and
Exchange Commission construes such term (collectively "Service fees") under
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "Act")
and that the Fund pay certain "blue sky" fees and expenses. If these proposals
are to be implemented, the Act and Rule 12b-1 require that a written plan
describing all material aspects of the proposed financing of distribution,
administration and shareholder services be adopted by the Fund. The term
"Fund" as used in the Plan shall refer to either Ranson Managed Portfolios
or The Kansas Municipal Fund as the context may require.
The Board of Trustees of the Fund (the "Trustees"), in considering whether
the Fund should implement a written plan, has requested and evaluated such
information as it deemed necessary to make an informed determination as to
whether a written plan should be implemented and has considered such pertinent
factors as it deemed necessary to form the basis for a decision to use assets
of the Fund for such purposes. In voting to approve the implementation of this
written plan (the "Plan") and the execution of the Distribution and Services
Agreement between the Fund and the Distributor which further sets forth the
provisions of the Plan as well as other matters, the Trustees have concluded,
in the exercise of their reasonable business judgment and in light of their
respective fiduciary duties, that there is a reasonable likelihood that the
Plan will benefit the Fund and its shareholders.
THE PLAN: The material aspects of the Plan are as follows
1. The Fund will pay an annual fee to the Distributor (the "Distributor's
Fee") of .25% times the average of the net asset value of the Fund.
The Distributor may pay a fee on a quarterly basis (the "Servicing
Fee") to broker-dealers, including the Distributor and affiliates of
the adviser of the Fund, banks and savings and loan institutions and
their affiliates and associated broker-dealers that have entered into
Service Agreements with the Distributor ("Service Organizations") of
annual amounts of up to 0.25% of the average net asset value of all
shares of the Fund owned by shareholders with whom the Service
Organization has a servicing relationship (the "Accounts"), provided
that no such payment of a Servicing Fee with respect to an Account
shall be made until the Service Organization has been servicing such
Account for more than a year (the "Eligible Accounts"). The
Distributor's Fee shall be calculated and paid monthly and the
Servicing Fee shall be calculated quarterly and paid on the twenty-
fifth day of the month next succeeding such calculation all in the
manner set forth below. To the extent the Servicing Fee is not paid
to Service Organizations out of the Distributor's Fee, the Distributor
may use such fee for its expenses of distribution of Fund shares.
2. The amount which the Fund will pay the Distributor for the
Distributor's Fee in any calendar month shall be calculated by
multiplying 1/12th of 0.25% times the average of the net asset value
of the Fund on each day during the month.
3. The amount which the Distributor may pay the Service Organizations in
any calendar quarter shall be calculated by multiplying 1/4th of the
percentage set forth in the Service Agreement with each Service
Organization (up to a maximum of 0.25%) times the average net asset
value of the Eligible Accounts with respect to such Service
Organization during such quarter.
4. Any payment to a Service Organization by the Distributor is subject
to compliance by the Service Organization with the terms of the Dealer
Agreement or the Bank or Bank Affiliate Correspondent Relationship
Agreement.
5. For the purposes of determining the maximum amounts payable or
reimbursable by the Fund or the Distributor under this Plan the net
asset value of the Fund shall be computed in the manner specified in
the Fund's Agreement and Declaration of Trust, Prospectus and
Statement of Additional Information as currently in effect.
6. In addition to other expenses payable by the Fund, the Fund will
pay the expenses and fees of qualifying and maintaining
qualification of Shares of the Fund for sale under the securities
laws of the various states after the initial qualification of the
Shares.
7. The Trustees shall be provided by the Distributor, at least
quarterly, with a written report of all amounts expended pursuant to
the Plan stating the purposes for which such amounts were expended.
8. This Plan shall become effective on the date set forth below (it
having been approved on such date by the holder of all the
outstanding shares of the Fund and by a majority of its Board of
Trustees, including a majority of the Trustees who are not "interested
parties" (as defined in the Act) of the Fund and have no direct or
indirect financial interest in the operation of the Plan or in any
agreements entered into in connection with the Plan (such Trustees
being herein referred to as the "Disinterested Trustees") in the
manner required by Rule 12b-1) and shall continue in effect until the
first meeting of the shareholders of the Fund held following the
effective date of the Fund's Registration Statement under the
Securities Act of 1933, and, if its renewal is approved at that
meeting by a majority of the Fund's outstanding voting securities in
the manner required by Rule 12b-1, shall continue in effect thereafter
only so long as its continuance has been specifically approved at
least annually by the Trustees, including the Disinterested Trustees,
in the manner required by Rule 12b-1.
9. The Plan may be amended at any time by the Board of Trustees provided
that (a) any amendment to increase materially the costs which the Fund
may bear for distribution pursuant to the Plan shall be effective only
upon approval by a vote of a majority of the outstanding voting
securities of the Fund, and (b) any material amendments of the terms
of the Plan shall become effective only upon approval by the Trustees
(including the Disinterested Trustees) in the manner required by
Rule 12b-1.
10. The Plan is terminable without penalty at any time by (a) vote of a
majority of the Disinterested Trustees, or (b) vote of a majority of
the outstanding voting securities of the Fund.
Dated: October 9, 1990.
----------------
Exhibit
Number Exhibit
------ -------
(m)(l)(b) Shareholder Services Plan for The Nebraska Municipal Fund.
Exhibit (m)(l)(b)
RANSON MANAGED PORTFOLIOS- THE NEBRASKA MUNICIPAL FUND
SHAREHOLDER SERVICES PLAN
INTRODUCTION: It has been proposed that Ranson Managed Portfolios -
The Nebraska Municipal Fund (the "Fund") make periodic payments to Ranson
Capital Corporation (the "Distributor") which payments could be used by the
Distributor to make payments to certain broker-dealers, banks, savings and
loan institutions and their affiliates, including their affiliated broker-
dealers, which provide certain administrative and shareholder services to the
Fund and its shareholders, and/or for the distribution, as the Securities and
Exchange Commission construes such term (collectively "Service fees") under
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "Act")
and that the Fund pay certain "blue sky" fees and expenses. If these proposals
are to be implemented, the Act and Rule 12b-1 require that a written plan
describing all material aspects of the proposed financing of distribution,
administration and shareholder services be adopted by the Fund. The term
"Fund" as used in the Plan shall refer to either Ranson Managed Portfolios
or The Nebraska Municipal Fund as the context may require.
The Board of Trustees of the Fund (the "Trustees"), in considering whether
the Fund should implement a written plan, has requested and evaluated such
information as it deemed necessary to make an informed determination as to
whether a written plan should be implemented and has considered such pertinent
factors as it deemed necessary to form the basis for a decision to use assets
of the Fund for such purposes. In voting to approve the implementation of this
written plan (the "Plan") and the execution of the Distribution and Services
Agreement between the Fund and the Distributor which further sets forth the
provisions of the Plan as well as other matters, the Trustees have concluded,
in the exercise of their reasonable business judgment and in light of their
respective fiduciary duties, that there is a reasonable likelihood that the
Plan will benefit the Fund and its shareholders.
THE PLAN: The material aspects of the Plan are as follows
1. The Fund will pay an annual fee to the Distributor (the "Distributor's
Fee") of .25% times the average of the net asset value of the Fund.
The Distributor may pay a fee on a quarterly basis (the "Servicing
Fee") to broker-dealers, including the Distributor and affiliates of
the adviser of the Fund, banks and savings and loan institutions and
their affiliates and associated broker-dealers that have entered into
Service Agreements with the Distributor ("Service Organizations") of
annual amounts of up to 0.25% of the average net asset value of all
shares of the Fund owned by shareholders with whom the Service
Organization has a servicing relationship (the "Accounts"), provided
that no such payment of a Servicing Fee with respect to an Account
shall be made until the Service Organization has been servicing such
Account for more than a year (the "Eligible Accounts"). The
Distributor's Fee shall be calculated and paid monthly and the
Servicing Fee shall be calculated quarterly and paid on the twenty-
fifth day of the month next succeeding such calculation all in the
manner set forth below. To the extent the Servicing Fee is not paid
to Service Organizations out of the Distributor's Fee, the Distributor
may use such fee for its expenses of distribution of Fund shares.
2. The amount which the Fund will pay the Distributor for the
Distributor's Fee in any calendar month shall be calculated by
multiplying 1/12th of 0.25% times the average of the net asset value
of the Fund on each day during the month.
3. The amount which the Distributor may pay the Service Organizations in
any calendar quarter shall be calculated by multiplying 1/4th of the
percentage set forth in the Service Agreement with each Service
Organization (up to a maximum of 0.25%) times the average net asset
value of the Eligible Accounts with respect to such Service
Organization during such quarter.
4. Any payment to a Service Organization by the Distributor is subject
to compliance by the Service Organization with the terms of the Dealer
Agreement or the Bank or Bank Affiliate Correspondent Relationship
Agreement.
5. For the purposes of determining the maximum amounts payable or
reimbursable by the Fund or the Distributor under this Plan the net
asset value of the Fund shall be computed in the manner specified in
the Fund's Agreement and Declaration of Trust, Prospectus and
Statement of Additional Information as currently in effect.
6. In addition to other expenses payable by the Fund, the Fund will
pay the expenses and fees of qualifying and maintaining
qualification of Shares of the Fund for sale under the securities
laws of the various states after the initial qualification of the
Shares.
7. The Trustees shall be provided by the Distributor, at least
quarterly, with a written report of all amounts expended pursuant to
the Plan stating the purposes for which such amounts were expended.
8. This Plan shall become effective on the date set forth below (it
having been approved on such date by the holder of all the
outstanding shares of the Fund and by a majority of its Board of
Trustees, including a majority of the Trustees who are not "interested
parties" (as defined in the Act) of the Fund and have no direct or
indirect financial interest in the operation of the Plan or in any
agreements entered into in connection with the Plan (such Trustees
being herein referred to as the "Disinterested Trustees") in the
manner required by Rule 12b-1) and shall continue in effect until the
first meeting of the shareholders of the Fund held following the
effective date of the Fund's Registration Statement under the
Securities Act of 1933, and, if its renewal is approved at that
meeting by a majority of the Fund's outstanding voting securities in
the manner required by Rule 12b-1, shall continue in effect thereafter
only so long as its continuance has been specifically approved at
least annually by the Trustees, including the Disinterested Trustees,
in the manner required by Rule 12b-1.
9. The Plan may be amended at any time by the Board of Trustees provided
that (a) any amendment to increase materially the costs which the Fund
may bear for distribution pursuant to the Plan shall be effective only
upon approval by a vote of a majority of the outstanding voting
securities of the Fund, and (b) any material amendments of the terms
of the Plan shall become effective only upon approval by the Trustees
(including the Disinterested Trustees) in the manner required by
Rule 12b-1.
10. The Plan is terminable without penalty at any time by (a) vote of a
majority of the Disinterested Trustees, or (b) vote of a majority of
the outstanding voting securities of the Fund.
Dated: November 12, 1993.
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Exhibit
Number Exhibit
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(m)(l)(c) Shareholder Services Plan for The Oklahoma Municipal Fund.
Exhibit (m)(l)(c)
RANSON MANAGED PORTFOLIOS- THE OKLAHOMA MUNICIPAL FUND
SHAREHOLDER SERVICES PLAN
INTRODUCTION: It has been proposed that Ranson Managed Portfolios -
The Oklahoma Municipal Fund (the "Fund") make periodic payments to Ranson
Capital Corporation (the "Distributor") which payments could be used by the
Distributor to make payments to certain broker-dealers, banks, savings and
loan institutions and their affiliates, including their affiliated broker-
dealers, which provide certain administrative and shareholder services to the
Fund and its shareholders, and/or for the distribution, as the Securities and
Exchange Commission construes such term (collectively "Service fees") under
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "Act")
and that the Fund pay certain "blue sky" fees and expenses. If these proposals
are to be implemented, the Act and Rule 12b-1 require that a written plan
describing all material aspects of the proposed financing of distribution,
administration and shareholder services be adopted by the Fund. The term
"Fund" as used in the Plan shall refer to either Ranson Managed Portfolios
or The Oklahoma Municipal Fund as the context may require.
The Board of Trustees of the Fund (the "Trustees"), in considering whether
the Fund should implement a written plan, has requested and evaluated such
information as it deemed necessary to make an informed determination as to
whether a written plan should be implemented and has considered such pertinent
factors as it deemed necessary to form the basis for a decision to use assets
of the Fund for such purposes. In voting to approve the implementation of this
written plan (the "Plan") and the execution of the Distribution and Services
Agreement between the Fund and the Distributor which further sets forth the
provisions of the Plan as well as other matters, the Trustees have concluded,
in the exercise of their reasonable business judgment and in light of their
respective fiduciary duties, that there is a reasonable likelihood that the
Plan will benefit the Fund and its shareholders.
THE PLAN: The material aspects of the Plan are as follows
1. The Fund will pay an annual fee to the Distributor (the "Distributor's
Fee") of .25% times the average of the net asset value of the Fund.
The Distributor may pay a fee on a quarterly basis (the "Servicing
Fee") to broker-dealers, including the Distributor and affiliates of
the adviser of the Fund, banks and savings and loan institutions and
their affiliates and associated broker-dealers that have entered into
Service Agreements with the Distributor ("Service Organizations") of
annual amounts of up to 0.25% of the average net asset value of all
shares of the Fund owned by shareholders with whom the Service
Organization has a servicing relationship (the "Accounts"), provided
that no such payment of a Servicing Fee with respect to an Account
shall be made until the Service Organization has been servicing such
Account for more than a year (the "Eligible Accounts"). The
Distributor's Fee shall be calculated and paid monthly and the
Servicing Fee shall be calculated quarterly and paid on the twenty-
fifth day of the month next succeeding such calculation all in the
manner set forth below. To the extent the Servicing Fee is not paid
to Service Organizations out of the Distributor's Fee, the Distributor
may use such fee for its expenses of distribution of Fund shares.
2. The amount which the Fund will pay the Distributor for the
Distributor's Fee in any calendar month shall be calculated by
multiplying 1/12th of 0.25% times the average of the net asset value
of the Fund on each day during the month.
3. The amount which the Distributor may pay the Service Organizations in
any calendar quarter shall be calculated by multiplying 1/4th of the
percentage set forth in the Service Agreement with each Service
Organization (up to a maximum of 0.25%) times the average net asset
value of the Eligible Accounts with respect to such Service
Organization during such quarter.
4. Any payment to a Service Organization by the Distributor is subject
to compliance by the Service Organization with the terms of the Dealer
Agreement or the Bank or Bank Affiliate Correspondent Relationship
Agreement.
5. For the purposes of determining the maximum amounts payable or
reimbursable by the Fund or the Distributor under this Plan the net
asset value of the Fund shall be computed in the manner specified in
the Fund's Agreement and Declaration of Trust, Prospectus and
Statement of Additional Information as currently in effect.
6. In addition to other expenses payable by the Fund, the Fund will
pay the expenses and fees of qualifying and maintaining
qualification of Shares of the Fund for sale under the securities
laws of the various states after the initial qualification of the
Shares.
7. The Trustees shall be provided by the Distributor, at least
quarterly, with a written report of all amounts expended pursuant to
the Plan stating the purposes for which such amounts were expended.
8. This Plan shall become effective on the date set forth below (it
having been approved on such date by the holder of all the
outstanding shares of the Fund and by a majority of its Board of
Trustees, including a majority of the Trustees who are not "interested
parties" (as defined in the Act) of the Fund and have no direct or
indirect financial interest in the operation of the Plan or in any
agreements entered into in connection with the Plan (such Trustees
being herein referred to as the "Disinterested Trustees") in the
manner required by Rule 12b-1) and shall continue in effect until the
first meeting of the shareholders of the Fund held following the
effective date of the Fund's Registration Statement under the
Securities Act of 1933, and, if its renewal is approved at that
meeting by a majority of the Fund's outstanding voting securities in
the manner required by Rule 12b-1, shall continue in effect thereafter
only so long as its continuance has been specifically approved at
least annually by the Trustees, including the Disinterested Trustees,
in the manner required by Rule 12b-1.
9. The Plan may be amended at any time by the Board of Trustees provided
that (a) any amendment to increase materially the costs which the Fund
may bear for distribution pursuant to the Plan shall be effective only
upon approval by a vote of a majority of the outstanding voting
securities of the Fund, and (b) any material amendments of the terms
of the Plan shall become effective only upon approval by the Trustees
(including the Disinterested Trustees) in the manner required by
Rule 12b-1.
10. The Plan is terminable without penalty at any time by (a) vote of a
majority of the Disinterested Trustees, or (b) vote of a majority of
the outstanding voting securities of the Fund.
Dated: ________________.
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