Dear Shareholder:
We are pleased to enclose the semi-annual report of the operations of The Kansas
Municipal Fund for the six months ended January 29, 1999. The Fund's portfolio
and related financial statements are presented within for your review.
In 1998, the U.S. economy exhibited more strength than expected. While there
has been some weakening in factory orders reflective of foreign competition, the
housing market and domestic consumer sales have been strong. Much of this
strength can be contributed to the way computer technology has allowed
productivity to increase in the U.S.
In addition to new efficient technology, the U.S. is poised to benefit from free
international trade. The recent trade deficit has restrained U.S. growth, but
at the same time has kept inflation low. However, with the U.S. dollar
declining relative to Asian currencies and Europe improving, international trade
should become less of a drag on the U.S. economy. This, along with an already
robust domestic economy, should help the U.S. prosper.
The main story for municipal investors in 1998 was the increase in the ratio
between municipal and Treasury yields. At the beginning of the year,
municipals were yielding 87% as much as the 30-year Treasury bond. By year-end,
that ratio had climbed to 98%. As yields on the 30-year Treasury bond fell from
5.92% to 5.09%, municipal yields dropped from 5.15% to 5.00%. This abnormal
relationship does not appear to be a concern over possible tax law changes, but
results from foreign and domestic investor demand for U.S. Treasuries in times
of economic turmoil abroad. Restoring municipals and Treasuries to a more
normal relationship will likely result as the U.S. trade deficit puts downward
pressure on the dollar, thus weakening foreign support for Treasuries.
Municipal bonds remain ridiculously cheap (in terms of price) by historical
standards. Normally, buyers pay for the tax benefits of municipals by getting a
lower return. Today, however, investors are saving on taxes without giving up
return. Faced with a choice of paying taxes on investment income or not, what
would you do?
The Kansas Municipal Fund began the year at $12.15 and ended the six month
period at $12.22. The Kansas Municipal Fund, at times during the first six
months, utilized a defensive position in U.S. Treasury futures to minimize the
effects of strong economic growth. Share price was tempered as yields on U.S.
Treasuries dropped to record lows in the fall and stabilized share price as
yields rose in the latter part of the year. Stability of share price is the
primary objective of a defensive position.
The Fund continues to invest in high-grade Kansas double exempt bonds.
Diversification remains an important strategy for the Fund. Purchases
throughout the year in the primary and secondary markets include Newton
Healthcare, Sedgwick County School District #267, and Wyandotte County
International Speedway.
The investment objective of the Fund is to provide a high level of current
income exempt from both federal and Kansas income tax as is consistent with
preservation of capital.
Sincerely,
Monte L. Avery Robert E.Walstad
Chief Portfolio Strategist President
TERMS & DEFINITIONS
- -------------------
Appreciation
Increase in value of an asset.
Average Annual Total Return
A standardized measurement of the return (yield and appreciation) earned by
the fund on an annual basis, assuming all distributions are reinvested.
Coupon Rate or Face Rate
The rate of interest annually payable based on the face amount of the bond;
expressed as a percentage.
Depreciation
Decrease in value of an asset.
Lehman Brothers Municipal Bond Index
An unmanaged list of long-term, fixed-rate, investment-grade, tax-exempt
bonds representative of the municipal bond market. The index does not take
into account brokerage commissions or other costs, may include bonds
different from those in the fund, and may pose different risks than the fund.
Market Value
Actual (or estimated) price at which a bond trades in the market place.
Maturity
A measure of the term or life of a bond in years. When a bond "matures", the
issuer repays the principal.
Net Asset Value (NAV)
The value of all your fund's assets, minus any liabilities, divided by the
number of outstanding shares, not including any initial sales charge.
Quality Ratings
A designation assigned by independent rating companies to give a relative
indication of a bond's credit worthiness. "AAA", "AA", "A" and "BBB"
indicate investment grade securities. Ratings can range from a high of "AAA"
to a low of "D".
Total Return
Measures both the net investment income and any realized and unrealized
appreciation or depreciation of the underlying investments in the fund's
portfolio for the period, assuming the reinvestment of all dividends. It
represents the aggregate percentage or dollar value change over the period.
PERFORMANCE AND COMPOSITION
- ---------------------------
Portfolio Ratings
(based on Total Long-Term Investments)
- --------------------------------------
[pie chart]
AAA 41.8
AA 15.2
A 22.3
NR 12.4
BBB 8.3
Quality ratings reflect the financial strength of the issuer. They are assigned
by independent rating services such as Moody's Investors Services and Standard &
Poor's. Non-rated bonds have been determined to be of appropriate quality for
the portfolio by Ranson Capital Corporation, the investment adviser.
Portfolio Market Sectors
(as a % of Net Assets)
- ------------------------
[pie chart]
H-Housing 35.6
HC-Health Care 26.6
U-Utilities 14.7
GO-General Obligation 6.1
S-School 4.2
I-Industrial 4.0
O-Other 3.3
W/S-Water/Sewer 3.1
T-Transportation 2.4
Market sectors are breakdowns of the Fund's portfolio holdings into specific
investment classes.
COMPARATIVE INDEX GRAPH
- -----------------------
[line graph]
Comparison of change in value of a $10,000 investment in The
Kansas Municipal Fund and the Lehman Brothers Municipal Bond Index
Kansas Municipal Fund Kansas Municipal Fund Lehman Brother's
w/o sales charge w/ max sales charge Muni Bond Index
------------------------------------------------------------------
11/15/90 $10,000 $9,575 $10,000
1991 $10,524 $10,077 $10,723
1992 $11,855 $11,351 $12,198
1993 $13,050 $12,495 $13,276
1994 $13,168 $12,609 $13,525
1995 $13,988 $13,394 $14,592
1996 $14,814 $14,184 $15,553
1997 $15,933 $15,256 $17,150
1998 $16,372 $15,676 $18,177
1/29/1999 $16,863 $16,146 $19,025
Average Annual Total Returns
- ----------------------------
For periods ending January 29, 1999
Since Inception
1 year 5 year (November 15, 1990)
- -------------------------------------------------------------------------
Without sales charge 4.59% 4.08% 6.57%
With sales charge .15% 3.18% 6.01%
- -------------------------------------------------------------------------
Putting Performance into Perspective
The graph comparing your Fund's performance to a benchmark index provides you
with a general sense of how your Fund performed. To put this information in
context, it may be helpful to understand the special differences between the
two. The Lehman Brothers index is a national index representative of the
national municipal bond market whereas the Fund concentrates its investments in
Kansas municipal bonds. Your Fund's total return for the period shown appears
with and without sales charges and includes Fund expenses and management fees.
A securities index measures the performance of a theoretical portfolio. Unlike
a fund, the index is unmanaged; there are no expenses that affect the results.
In addition, few investors could purchase all of the securities necessary to
match the index. And, if they could, they would incur transaction costs and
other expenses. All Fund and benchmark returns include reinvested dividends.
Returns are historical and are not a guarantee of future results. The Fund's
share price, yields and total returns will vary, so that shares, when redeemed,
may be worth more or less than their original cost.
Key Statistics
- --------------
07-31-98 NAV(share value) $12.15
01-29-99 NAV $12.22
Average Maturity 21.0 years
Number of Issues 77
Total Net Assets $119,416,060
<TABLE>
<CAPTION>
Schedule of Investments January 29, 1999 (Unaudited)
- -----------------------------------------------------
Name of Issuer
Percentages represent the market value of each investment
category to total net assets
Rating Coupon Principal Market
Moody's/S&P Rate Maturity Amount Value
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
KANSAS MUNICIPAL BONDS (97.7%)
*Burlington, KS (Gas & Elec.) Rev. Ref. MBIA Aaa/AAA 7.000% 06/01/31 $ 4,000,000 $ 4,353,360
Cowley Cty., KS Community College C.O.P.'s A/NR 7.000 03/01/12 900,000 937,539
Douglas Cty., KS USD #497 (Lawrence) G.O. Aa-3/NR 6.000 09/01/15 1,000,000 1,092,470
Ford Cty., KS Single Family Mrtge. Rev. Ref. A-1/NR 7.900 08/01/10 370,000 399,171
Gardner, KS Elec. Util. Rev. NR/NR 7.000 11/01/09 1,000,000 1,076,690
Garnett, KS (Garnett Hsg. Auth. Project) Rev. NR/NR 5.900 10/01/18 500,000 513,080
Goddard, KS (IFR Syst., Inc.) Indl. Rev. Ref. & Impvt. NR/NR 6.250 05/01/12 500,000 538,380
Hiawatha, KS (WalMart Stores) Indl. Rev. Ref. NR/AA 6.750 01/01/06 490,000 510,443
Hutchinson, KS Single Family Mrtge. Rev. Ref. A/NR 8.875 12/01/12 1,800,000 1,943,892
Johnson Cty., KS Internal Impvt. & Ref. Aa-1/NR 6.125 09/01/12 2,410,000 2,603,426
Johnson Cty., KS Single Family Mrtge. Rev. A/NR 7.100 05/01/12 790,000 857,790
Johnson Cty., KS Water Dist. #1 Rev. Aa/AA+ 6.250 12/01/11 700,000 747,215
Johnson Cty., KS Water Dist. #1 Rev. Ref. Aa/AA+ 6.500 12/01/13 500,000 530,055
Kansas City, KS GNMA Mrtge. Rev. GNMA Aaa/NR 5.900 11/01/27 1,640,000 1,724,345
*Kansas City, KS Util. Syst. Ref. & Impvt. FGIC Aaa/AAA 6.375 09/01/23 7,750,000 8,770,830
*Kansas City, KS Util. Syst. Ref. & Impvt. AMBAC Aaa/AAA 6.300 09/01/16 2,000,000 2,160,720
Kansas City\Leavenworth Cty.\Lenexa, KS Mrtge. Rev. GNMA NR/AAA 7.850 11/01/10 490,000 507,150
KS Department of Transportation Highway Rev. Aa/AA+ 6.000 09/01/12 2,200,000 2,410,342
KS Devl. Fin. Auth. (Indian Ridge Apts.) NR/NR 6.000 01/01/28 1,150,000 1,170,458
KS Devl. Fin. Auth. (Jackson Co.) Hlth. Rev. Aa-3/NR 5.375 09/01/27 1,000,000 1,036,750
KS Devl. Fin. Auth. (Susan B. Allen Memorial Hosp.) ASGUA NR/AA 5.250 12/15/23 1,000,000 1,003,060
KS Devl. Finance Auth. (Board of Regents) AMBAC Aaa/AAA 5.875 06/01/21 750,000 815,385
KS Devl. Finance Auth. (Board of Regents) Rev. NR/NR 6.000 04/01/08 500,000 528,210
KS Devl. Finance Auth. (El Dorado/Larned) Rev. Ref. MBIA Aaa/AAA 6.000 02/01/12 2,000,000 2,116,740
KS Devl. Finance Auth. (Highway Patrol Training Facs.) Rev. NR/NR 6.300 12/01/05 450,000 476,536
KS Devl. Finance Auth. (Martin Creek Place) Rev. FHA Aa/NR 6.500 08/01/24 750,000 793,320
#KS Devl. Finance Auth. (Martin Creek Place) Rev. FHA Aa/NR 6.600 08/01/34 1,900,000 2,014,228
KS Devl. Finance Auth. (Oak Ridge Park Apt.) NR/NR 6.500 02/01/18 2,065,000 2,185,926
KS Devl. Finance Auth. (Oak Ridge Park Apt.) NR/NR 6.625 08/01/29 1,875,000 2,007,825
KS Devl. Finance Auth. (Sec. 8) Rev. Ref. MBIA Aaa/AAA 6.400 01/01/24 770,000 816,993
KS Devl. Finance Auth. (Stormont Vail) Hlth. Care Rev. MBIA Aaa/AAA 5.800 11/15/21 430,000 467,634
KS Devl. Finance Auth. (Stormont Vail) Hlth. Care Rev. MBIA Aaa/AAA 5.800 11/15/16 550,000 605,396
KS Devl. Finance Auth. (Stormont Vail) Hlth. Care Rev. MBIA Aaa/AAA 5.800 11/15/21 680,000 739,514
KS Devl. Finance Auth. Multifamily Hsg. Rev. NR/AAA 6.000 12/01/21 1,975,000 2,097,549
KS Devl. Finance Auth. Water Fund Rev. Aa-1/AA+ 6.000 11/01/14 500,000 552,930
KS Water Finance Auth. (Public Water Supply Dist #6) Rev. NR/NR 6.000 05/01/17 255,000 273,628
Lawrence, KS (Brandon Woods) Multifamily Hsg. Devl. Rev. Ref. NR/A 6.625 04/01/12 2,000,000 2,086,780
Lawrence, KS (Memorial Hospital) Rev. A-3/NR 6.000 07/01/09 2,000,000 2,171,260
Lawrence, KS (Memorial Hospital) Rev. A-3/NR 6.200 07/01/14 1,200,000 1,313,940
Lawrence, KS (Memorial Hospital) Rev. A-3/NR 6.200 07/01/19 1,725,000 1,867,968
Leavenworth Cty., KS (Lansing) USD #469 G.O. FSA Aaa/AAA 5.750 09/01/15 930,000 1,032,858
Leavenworth Cty., KS (Lansing) USD #469 G.O. FSA Aaa/AAA 5.750 09/01/14 875,000 967,566
Lenexa KS (Lakeview Village) Hlth. Care Facs. Rev. NR/BBB- 6.250 05/15/26 8,000,000 8,642,560
*Lenexa, KS (Barrington Park) Multifamily Hsg. Rev. ASGUA NR/AA 6.450 02/01/18 2,500,000 2,655,825
Newton, KS (Newton Healthcare) Hosp. Rev. NR/BBB- 5.700 11/15/18 1,000,000 1,039,350
Newton, KS (Newton Healthcare) Hosp. Rev. ACA NR/A 5.750 11/15/24 500,000 527,400
Olathe, KS (Bristol Pointe) Multifamily Hsg. Rev. Ref. FNMA NR/AAA 5.700 11/01/27 2,210,000 2,286,400
Olathe, KS (Jefferson Place) Multifamily Hsg. Rev. Ref. NR/A- 5.950 07/01/22 5,060,000 5,279,655
Olathe, KS (Jefferson Place) Multifamily Hsg. Rev. Ref. NR/A- 6.100 07/01/22 785,000 822,759
Olathe, KS Hlth. Care Ref. (Luth. Gd. Sam.) AMBAC Aaa/AAA 6.000 05/01/19 900,000 987,543
Olathe, KS Hlth. Care Ref. (Olathe Med. Ctr.) AMBAC Aaa/AAA 6.000 09/01/11 1,000,000 1,022,590
Olathe, KS Hlth. Care Ref. (Olathe Med. Ctr.) AMBAC Aaa/AAA 5.875 09/01/16 2,000,000 2,103,720
Pratt, KS Elec. Util. Syst. Rev. Ref. & Impvt. AMBAC Aaa/AAA 6.600 11/01/07 1,000,000 1,180,030
Riley Cty., KS (Colbert Hills Golf Project) NR/NR 5.550 05/01/23 2,590,000 2,651,797
Salina, KS Combined Water & Sewage Syst. Impvt. Rev. MBIA Aaa/AAA 6.250 10/01/12 500,000 521,170
Sedgwick Cty., KS USD #267 (Renwick) G.O. AMBAC Aaa/AAA 5.000 11/01/19 1,000,000 1,002,920
Seward Cty., KS G.O. AMBAC Aaa/AAA 6.000 08/15/13 750,000 805,260
Seward Cty., KS Single Family Mrtge. Rev. Ref. Aa-1/NR 8.000 05/01/11 290,000 311,008
Shawnee Cty., KS (Auburn-Washburn) USD #437 G.O. Ref. FGIC Aaa/AAA 6.600 09/01/09 500,000 542,950
Shawnee, KS Int. Impvt. G.O. Aa-3/NR 5.850 12/01/06 235,000 249,253
Wichita KS Multifamily Hsg. Rev. (Innes Station Apt. 5) NR/NR 6.250 03/01/28 1,750,000 1,765,750
Wichita, KS (Broadmoor Chelsea) Multifamily Hsg. Rev. FNMA NR/AAA 5.650 07/01/16 990,000 1,029,402
#Wichita, KS (Broadmoor Chelsea) Multifamily Hsg. Rev. FNMA NR/AAA 5.700 07/01/22 2,000,000 2,077,980
Wichita, KS (CSJ Hlth. Sys.) Rev. NR/A+ 7.000 11/15/08 640,000 697,594
Wichita, KS (CSJ Hlth. Sys.) Rev. NR/A+ 7.200 10/01/15 2,225,000 2,550,295
Wichita, KS (CSJ Hlth. Sys.) Rev. NR/A+ 7.000 11/15/18 2,350,000 2,554,967
Wichita, KS (St. Francis) Facs. Impvt. & Ref. MBIA Aaa/AAA 6.250 10/01/10 1,000,000 1,094,050
Wichita, KS Airport Auth. Facs. Rev. Ref. ASGUA NR/AA 7.000 03/01/05 440,000 486,803
Wichita, KS Hlth. Care (KS Masonic Home) Rev. NR/NR 6.375 12/01/22 1,275,000 1,318,108
Wichita, KS Multifamily Hsg. (Brentwood Apts.) Rev. NR/A 5.850 12/01/25 1,000,000 1,039,570
Wichita, KS Multifamily Hsg. (Cimarron Apts.) FNMA Aa/AAA 5.550 10/01/22 1,000,000 1,025,090
Wichita, KS Multifamily Hsg. (Northpark II-A) Rev. GNMA Aaa/NR 6.125 08/20/28 1,900,000 1,993,290
Wichita, KS Public Building Commission Rev. A/AA- 5.500 08/01/14 715,000 755,197
Wichita, KS Public Building Commission Rev. AMBAC Aaa/AAA 5.750 02/01/17 350,000 369,372
Wichita, KS Single Family Mrtge. Rev. Ref. A/NR 7.100 09/01/09 900,000 963,864
Wichita, KS Water & Sewer Util. Ref. & Impvt. FGIC Aaa/AAA 6.000 10/01/12 1,000,000 1,069,020
Wyandotte Cty, KS (KS Int'l. Speedway) Sales Tax Rev. MBIA Aaa/AAA 5.000 12/01/27 2,500,000 2,484,650
-----------
KANSAS MUNICIPAL BONDS (COST: $110,071,962) $116,726,544
-----------
SHORT-TERM SECURITIES (.9%)
Federated Tax-Free Fund 73 $ 591,970
Federated Intermediate Municipal Trust 78 503,724
-----------
TOTAL SHORT-TERM SECURITIES (COST: $1,091,970) $ 1,095,694
-----------
TOTAL INVESTMENTS IN SECURITIES (COST: $111,163,932) $117,822,238
OTHER ASSETS LESS LIABILITIES 1,593,822
-----------
NET ASSETS $119,416,060
===========
</TABLE>
* Indicates bonds are segregated by the custodian to cover when-issued or
delayed-delivery purchases.
# Indicates bonds are segregated by the custodian to cover initial margin
requirements
FOOTNOTE: Non-rated (NR) securities have been determined to be of investment
grade quality by the Fund's Manager.
The accompanying notes are an integral part of these financial statements.
Financial Statements January 29, 1999
Statement of Assets and Liabilities January 29, 1999 (Unaudited)
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
Assets
<S> <C>
Investment in securities, at value (cost: $111,163,932) $ 117,822,238
Variation margin on futures 584,807
Accrued dividends receivable 3,184
Accrued interest receivable 1,925,463
Prepaid expenses 9,732
Receivable for fund shares sold 9,207
--------------
Total Assets $ 120,354,631
--------------
Liabilities
Dividends payable $ 454,625
Accrued expenses 91,485
Payable for fund shares redeemed 80,104
Bank overdraft 312,357
--------------
Total Liabilities $ 938,571
--------------
Net Assets $ 119,416,060
==============
Net assets are represented by:
Paid-in capital $ 118,860,171
Accumulated undistributed net realized gain(loss) on investments (6,241,074)
Unrealized appreciation on futures 138,657
Unrealized appreciation on investments 6,658,306
--------------
Total amount representing net assets applicable to
9,773,166 outstanding shares of no par common
stock (unlimited shares authorized) $ 119,416,060
==============
Net asset value per share $ 12.22
==============
The accompanying notes are an integral part of these financial statements.
Statement of Operations For the six months ended January 29, 1999 (Unaudited)
- ------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 3,387,671
Dividend 19,279
--------------
Total Investment Income $ 3,406,950
--------------
EXPENSES
Investment advisory fees $ 296,456
Service fees 140,286
Custodian fees 8,871
Transfer agent fees 61,678
Accounting service fees 37,139
Transfer agent out of pockets 7,144
Professional fees 5,015
Trustees fees 3,495
Insurance 205
Reports to shareholders 2,937
Registration and filing fees 40
--------------
Total Expenses $ 563,266
--------------
NET INVESTMENT INCOME $ 2,843,684
--------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES
Net realized gain (loss) from:
Investment transactions $ 541,151
Futures transactions (844,188)
Net change in unrealized appreciation (depreciation) of:
Investments $ 804,701
Futures 138,657
--------------
Net Realized And Unrealized Gain (Loss)
On Investments and Futures $ 640,321
--------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 3,484,005
==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
Financial Statements January 29, 1999
Statement of Changes in Net Assets For the six months ended January 29, 1999
and the year ended July 31, 1998
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
For The Six
Months Ended For The
January 29, 1999 Year Ended
(Unaudited) July 31, 1998
----------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
<S> <C> <C>
Net investment income $ 2,843,684 $ 6,095,141
Net realized gain (loss) on investment and futures transactions (303,037) (1,671,434)
Net change in unrealized appreciation (depreciation) on investments and futures 943,358 (1,066,095)
-----------------------------------
Net Increase (Decrease) in Net Assets Resulting From Operations $ 3,484,005 $ 3,357,612
-----------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income ($.29 and $.60 per share,
respectively) $ (2,843,684) $ (6,095,141)
Distributions from net realized gain on investment transactions 0 0
-----------------------------------
Total Dividends and Distributions $ (2,843,684) $ (6,095,141)
-----------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sale of shares $ 4,322,700 $ 8,635,428
Proceeds from reinvested dividends 1,954,884 4,211,696
Cost of shares redeemed (7,525,580) (18,287,314)
----------------------------------
Net Increase (Decrease) in Net Assets Resulting
From Capital Share Transactions $ (1,247,996) $ (5,440,190)
----------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS $ (607,675) $ (8,177,719)
NET ASSETS, BEGINNING OF PERIOD 120,023,735 128,201,454
----------------------------------
NET ASSETS, END OF PERIOD $ 119,416,060 $ 120,023,735
==================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements January 29, 1999 (Unaudited)
Note 1. ORGANIZATION
Business Operations - The Kansas Municipal Fund (the "Fund") is an investment
portfolio of Ranson Managed Portfolios (the "Trust") registered under the
Investment Company Act of 1940, as amended, as a non-diversified, open-end
management investment company. The Trust may offer multiple portfolios;
currently five portfolios are offered. Ranson Managed Portfolios is an
unincorporated business trust organized under Massachusetts law on August 10,
1990. The Fund had no operations from that date to November 15, 1990, other
than matters relating to organization and registration. On November 15, 1990,
the Fund commenced its Public Offering of capital shares. The investment
objective of the Fund is to provide its shareholders with as high a level of
current income exempt from both federal and Kansas income tax as is consistent
with preservation of capital. The Fund will seek to achieve this objective by
investing primarily in a portfolio of Kansas municipal securities. Shares of
the Fund are offered at net asset value plus a maximum sales charge of 4.25% of
the offering price.
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investment security valuation - Securities for which quotations are not readily
available (which will constitute a majority of the securities held by the Fund)
are valued using a matrix system at fair value as determined by Ranson Capital
Corporation, ("Ranson"). The matrix system has been developed based on
procedures approved by the Board of Trustees which include consideration of the
following: yields or prices of municipal bonds of comparable quality, type
of issue, coupon, maturity and rating, and indications as to value from
dealers and general market conditions. Because the market value of securities
can only be established by agreement between parties in a sales transaction, and
because of the uncertainty inherent in the valuation process, the fair values as
determined may differ from the values that would have been used had a ready
market for the securities existed. The Fund follows industry practice and
records security transactions on the trade date.
The Fund concentrates its investments in a single state. This concentration may
result in the Fund investing a relatively high percentage of its assets in a
limited number of issuers.
Federal and state income taxes - The Fund's policy is to comply with the
requirements of the Internal Revenue Code that are applicable to regulated
investment companies, and to distribute all of its net investment income and
any net realized gain on investments, to its shareholders. Therefore, no
provision for income taxes is required. The Fund has available at January 29,
1999, a net capital loss carryforward totaling $5,951,996, which may be used to
offset capital gains realized during subsequent years through July 31, 2006.
Distributions to shareholders - Dividends from net investment income, declared
daily and paid monthly, are reinvested in additional shares of the Fund at net
asset value or paid in cash. Capital gains, when available, are distributed at
least annually.
Investment income - Dividend income is recognized on the ex-dividend date and
interest income is recognized daily on an accrual basis. Premiums and discounts
on securities purchased are amortized using the effective interest method over
the life of the respective securities, unless callable, in which case they are
amortized to the earliest call date.
Futures contracts - The Fund may purchase and sell financial futures contracts
to hedge against changes in the values of tax-exempt municipal securities the
Fund owns or expects to purchase.
A futures contract is an agreement between two parties to buy or sell units of a
particular index or a certain amount of U.S. Government or municipal securities
at a set price on a future date. Upon entering into a futures contract, the
Fund is required to deposit with a broker an amount of cash or securities equal
to the minimum "initial margin" requirement of the futures exchange on which the
contract is traded. Subsequent payments ("variation margin") are made or
received by the Fund, dependent on the fluctuations in the value of the
underlying index. Daily fluctuations in value are recorded for financial
reporting purposes as unrealized gains or losses by the Fund. When entering
into a closing transaction, the Fund will realize, for book purposes, a gain or
loss equal to the difference between the value of the futures contracts sold and
the futures contracts to buy. Unrealized appreciation (depreciation) related to
open futures contracts is required to be treated as realized gain (loss) for
Federal income tax purposes.
Securities held in collateralized accounts to cover initial margin requirements
on open futures contracts are noted in the Schedule of Investments. The
Statement of Assets and Liabilities reflects a receivable or payable for the
daily mark to market for variation margin.
Certain risks may arise upon entering into futures contracts. These risks may
include changes in the value of the futures contracts that may not directly
correlate with changes in the value of the underlying securities.
At January 29, 1999, the Fund had outstanding futures contracts to sell debt
securities as follows:
Number of Valuation Unrealized
Contracts Expiration Futures as of Appreciation
To Sell Date Contracts January 29, 1999 (Depreciation)
- -------------------------------------------------------------------------------
U.S. Treasury Notes 3/99 115 $584,807 $152,617
- --------------------------------------------------------------------------------
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Note 3. CAPITAL SHARE TRANSACTIONS
As of January 29, 1999, there were unlimited shares of no par authorized;
9,773,166 and 9,875,312 shares were outstanding at January 29, 1999
and July 31, 1998, respectively.
Transactions in capital shares were as follows:
Shares
--------------------------------
For The Six
Months Ended For The
January 29, 1999 Year Ended
(Unaudited) July 31, 1998
--------------------------------
Shares sold 355,091 706,375
Shares issued on reinvestment of dividends 160,698 344,664
Shares redeemed (617,935) (1,497,432)
--------------------------------
Net increase (decrease) (102,146) (446,393)
================================
Note 4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Ranson Capital Corporation, the Fund's investment adviser and underwriter, ND
Resources, Inc., the Fund's transfer and accounting services agent, and ND
Capital, Inc., the Fund's agent for the purchase of certain investment
securities, are subsidiaries of ND Holdings, Inc., the Fund's sponsor.
The Fund has engaged Ranson Capital Corporation to provide investment advisory
and management services to the Fund. The Investment Advisory Agreement provides
for fees to be computed at an annual rate of 0.50% of the Fund's average daily
net assets. The Fund has recognized $296,456 of investment advisory fees for
the six months ended January 29, 1999. The Fund has a payable to Ranson
Capital Corporation of $47,989 at January 29, 1999 for investment advisory
fees. Certain officers and trustees of the Fund are also officers and directors
of the investment adviser.
The Fund pays an annual service fee to Ranson Capital Corporation, (Ranson), its
principal underwriter, an annual fee for certain expenses incurred by Ranson in
connection with the distribution of the Fund's shares. The annual fee paid to
Ranson is calculated daily and paid monthly by the Fund at the annual rate of
0.25% of the average daily net assets of the Fund. The Fund has recognized
$140,286 of service fee expenses after partial waiver for the six months ended
January 29, 1999. The Fund has a payable to Ranson of $22,603 at January 29,
1999 for service fees. In addition, the Fund has engaged ND Capital, Inc. as
agent for the purchase of certain investment securities.
ND Resources, Inc., (the transfer agent), provides shareholder services for a
monthly fee equal to an annual rate of 0.16% of the Fund's first $10 million of
net assets, 0.13% of the Fund's net assets on the next $15 million, 0.11% of the
Fund's net assets on the next $15 million, 0.10% of the Fund's net assets on
the next $10 million, and 0.09% of the Fund's net assets in excess of $50
million. The Fund has recognized $61,678 of transfer agency fees and expenses
for the six months ended January 29, 1999. The Fund has a payable to ND
Resources, Inc. of $9,960 at January 29, 1999 for transfer agency fees. ND
Resources, Inc. also acts as the Fund's accounting services agent for a monthly
fee equal to the sum of a fixed fee of $2,000, and a variable fee equal to 0.05%
of the Fund's average daily net assets on an annual basis for the Fund's first
$50 million and at a lower rate on the average daily net assets in excess of
$50 million. The Fund has recognized $37,139 of accounting service fees for the
six months ended January 29, 1999. The Fund has a payable to ND Resources, Inc.
of $6,002 at January 29, 1999 for accounting service fees.
Note 5. INVESTMENT SECURITY TRANSACTIONS
The cost of purchases and proceeds from sales of investment securities
(excluding short-term securities) aggregated $10,065,346 and $11,958,818,
respectively, for the six months ended January 29, 1999.
Note 6. INVESTMENT IN SECURITIES
At January 29, 1999, the aggregate cost of securities for federal income tax
purposes was $111,163,932, and the net unrealized appreciation of investments
based on the cost was $6,658,306, which is comprised of $6,667,952 aggregate
gross unrealized appreciation and $9,646 aggregate gross unrealized
depreciation.
Financial Highlights Selected per share data and ratios for the period indicated
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the For the For the For the For the
Months Ended Year Ended Year Ended Year Ended Year Ended Year Ended
January 29, 1999 July 31, July 31, July 31, July 31, July 31,
(Unaudited) 1998 1997 1996 1995 1994
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.15 $ 12.42 $ 12.14 $ 12.07 $ 12.00 $ 12.67
-------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income $ .29 $ .60 $ .61 $ .69 $ .65 $ .66
Net realized and unrealized gain (loss)
on investment and futures transactions .07 (.27) .28 .07 .07 (.53)
------------------------------------------------------------------------------
Total From Investment Operations $ .36 $ .33 $ .89 $ .76 $ .72 $ .13
------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income $ (.29) $ (.60) $ (.61) $ (.69) $ (.65) $ (.66)
Distributions from net capital gains .00 .00 .00 .00 .00 (.14)
------------------------------------------------------------------------------
Total Distributions $ (.29) $ (.60) $ (.61) $ (.69) $ (.65) $ (.80)
------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.22 $ 12.15 $ 12.42 $ 12.14 $ 12.07 $ 12.00
==============================================================================
Total Return 6.00%(A)(C) 2.76%(A) 7.56%(A) 5.90%(A) 6.23%(A) 0.91%(A)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $ 119,416 $ 120,024 $ 128,201 $ 132,349 $ 130,091 $ 127,337
Ratio of net expenses (after expense
assumption) to average net assets 0.95%(C) 0.95%(B) 0.93%(B) 0.85%(B) 0.82%(B) 0.70%(B)
Ratio of net investment income to
average net assets 4.76%(C) 4.93% 5.02% 5.18% 5.46% 5.26%
Portfolio turnover rate 8.59% 26.68% 18.64% 20.14% 57.00% 55.00%
</TABLE>
(A) Excludes maximum sales charge of 4.25%.
(B) During the periods indicated above, ND Holdings, Inc. or Ranson Capital
Corporation assumed expenses of $3,901, $46,741, $212,056, $295,875, and
$419,129, respectively. If the expenses had not been assumed, the
annualized ratios of total expenses to average net assets would have been
0.95%, 0.97%, 1.01%, 1.06%, and 1.06%, respectively.
(C) Ratio is annualized.
The accompanying notes are an integral part of these financial statements.
Dear Shareholder,
We are pleased to enclose the semi-annual report of the operations of
The Kansas Insured Intermediate Fund, for the six months ended January
29, 1999. The Fund's portfolio and related financial statements are
presented within for your review.
In 1998, the U.S. economy exhibited more strength than expected. While
there has been some weakening in factory orders reflective of foreign
competition, the housing market and domestic consumer sales have been
strong. Much of this strength can be contributed to the way computer
technology has allowed productivity to increase in the U.S.
In addition to new efficient technology, the U.S. is poised to benefit
from free international trade. The recent trade deficit has restrained
U.S. growth, but at the same time has kept inflation low. However, with
the U.S. dollar declining relative to Asian currencies and Europe
improving, international trade should become less of a drag on the U.S.
economy. This, along with an already robust domestic economy, should
help the U.S. prosper.
The main story for municipal investors in 1998 was the increase in the
ratio between municipal and Treasury yields. At the beginning of the
year, municipals were yielding 87% as much as the 30-year Treasury bond.
By year-end, that ratio had climbed to 98%. As yields on the 30-year
Treasury bond fell from 5.92% to 5.09%, municipal yields dropped from
5.15% to 5.00%. This abnormal relationship does not appear to be a
concern over possible tax law changes, but results from foreign and
domestic investor demand for U.S. Treasuries in times of economic
turmoil abroad. Restoring municipals and Treasuries to a more normal
relationship will likely result as the U.S. trade deficit puts downward
pressure on the dollar, thus weakening foreign support for Treasuries.
Municipal bonds remain ridiculously cheap (in terms of price) by
historical standards. Normally, buyers pay for the tax benefits of
municipals by getting a lower return. Today, however, investors are
saving on taxes without giving up return. Faced with a choice of paying
taxes on investment income or not, what would you do?
The Kansas Insured Intermediate began the year at $12.07 and closed the
six month period at $12.18. The Kansas Insured Intermediate Fund, at
times during the first six months, utilized a defensive position in U.S.
Treasury futures to minimize the effects of strong economic growth.
Share price was tempered as yields on U.S. Treasuries dropped to record
lows in the fall and stabilized share price as yields rose in the latter
part of the year. Stability of share price is the primary objective of
a defensive position.
The Fund continues to invest in high-grade Insured Kansas tax-exempt
bonds. Diversification remains an important strategy for the Fund.
Purchases throughout the year in the primary and secondary markets
include Harvey County School District #373, Mission Kansas Multi-Family
Housing, and Wyandotte County International Speedway.
The investment objective of the Fund is to provide a high level of
current income exempt from both federal and Kansas income tax as is
consistent with preservation of capital.
Sincerely,
Monte L. Avery Robert E.Walstad
Chief Portfolio Strategist President
Terms & Definitions
Appreciation
Increase in value of an asset.
Average Annual Total Return
A standardized measurement of the return (yield and appreciation) earned by the
fund on an annual basis, assuming all distributions are reinvested.
Coupon Rate or Face Rate
The rate of interest annually payable based on the face amount of the bond;
expressed as a percentage.
Depreciation
Decrease in value of an asset.
Lehman Brothers Municipal Bond Index
An unmanaged list of long-term, fixed-rate, investment-grade, tax-exempt bonds
representative of the municipal bond market. The index does not take into
account brokerage commissions or other costs, may include bonds different from
those in the fund, and may pose different risks than the fund.
Market Value
Actual (or estimated) price at which a bond trades in the market place.
Maturity
A measure of the term or life of a bond in years. When a bond "matures", the
issuer repays the principal.
Net Asset Value (NAV)
The value of all your fund's assets, minus any liabilities, divided by the
number of outstanding shares, not including any initial sales charge.
Quality Ratings
A designation assigned by independent rating companies to give a relative
indication of a bond's credit worthiness. "AAA", "AA", and "A", and "BBB"
indicate investment grade securities. Ratings can range from a high of "AAA"
to a low of "D".
Total Return
Measures both the net investment income and any realized and unrealized
appreciation or depreciation of the underlying investments in the fund's
portfolio for the period, assuming the reinvestment of all dividends. It
represents the aggregate percentage or dollar value change over the period.
PERFORMANCE AND COMPOSITION
- ---------------------------
Portfolio Ratings
(based on Total Long-Term Investments)
- --------------------------------------
[pie chart]
AAA 93.8
AA 6.2
Quality ratings reflect the financial strength of the issuer. They are
assigned by independent rating services such as Moody's Investors Services
and Standard & Poor's. Non-rated bonds have been determined to be of
appropriate quality for the portfolio by Ranson Capital Corporation, the
investment advisor.
Portfolio Market Sectors
(as a % of Net Assets)
- ------------------------
[pie chart]
GO-General Obligation 31.1
H-Housing 26.1
HC-Health Care 23.6
W/S-Water/Sewer 6.3
O-Other 3.8
U-Utilities 2.7
I-Industrial 2.4
T-Transportation 1.5
C/L-COP/Lease 1.3
S-Schools 1.2
Market sectors are breakdowns of the Fund's portfolio holdings into specific
investment classes.
COMPARATIVE INDEX GRAPH
- -----------------------
[line graph]
<TABLE>
<CAPTION>
Comparison of change in value of $10,000 investment in
The Kansas Insured Intermediate Fund and the Lehman
Bros. Municipal 7 Year Maturity Bond Index
The Kansas Insured The Kansas Insured Lehman Bros. Municipal
Intermediate Fund Intermediate Fund 7 Year Maturity Bond Index
w/o sales charge w/ max sales charge
---------------------------------------------------------------------------
<S> <C> <C> <C>
11/23/1992 $10,000 $9,725 $10,000
1993 $10,829 $10,531 $10,694
1994 $11,025 $10,722 $10,981
1995 $11,656 $11,335 $11,869
1996 $12,326 $11,987 $12,470
1997 $12,912 $12,557 $13,548
1998 $13,321 $12,955 $14,273
1/29/1999 $13,738 $13,360 $14,985
</TABLE>
Average Annual Total Returns
For periods ending January 29, 1999
-----------------------------------
Since Inception
1 year 5 year (November 23, 1992)
------ ------ -------------------
Without sales charge 4.93% 3.66% 5.27%
With sales charge 2.04% 3.08% 4.79%
Putting Performance into Perspective
The graph comparing your Fund's performance to a benchmark index provides you
with a general sense of how your Fund performed. To put this information in
context, it may be helpful to understand the special differences between the
two. The Lehman Brothers' index is a national index representative of the
national municipal bond market whereas the Fund concentrates its investments
in Kansas municipal bonds. Your Fund's total return for the period shown
appears with and without sales charges and includes Fund expenses and
management fees. A securities index measures the performance of a theoretical
portfolio. Unlike a fund, the index is unmanaged; there are no expenses that
affect the results. In addition, few investors could purchase all of the
securities necessary to match the index. And, if they could, they would incur
transaction costs and other expenses. All Fund and benchmark returns include
reinvested dividends. Returns are historical and are not a guarantee of future
results. The Fund's share price, yields and total returns will vary, so that
shares, when redeemed, may be worth more or less than their original cost.
Key Statistics
- --------------
07-31-98 NAV(share value) $12.07
01-29-99 NAV $12.18
Average Maturity 9.9 years
Number of issues 46
Total Net Assets $21,053,191
<TABLE>
<CAPTION>
Schedule of Investments January 29, 1999 (Unaudited)
Name of Issuer
Percentages represent the Rating
Market value of each Moody's Coupon Principal Market
investment category to total net assets /S&P Rate Maturity Amount Value
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
KANSAS MUNICIPAL BONDS (96.1%)
Butler Cty., KS (Augusta) USD #402 G.O. AMBAC Aaa/AAA 5.400% 10/01/06 $200,000 $210,050
*Douglas Cty., KS USD #497 (Lawrence) G.O. FGIC Aaa/AAA 7.200 09/01/02 1,370,000 1,530,276
Harvey Cty., KS USD #373 (Newton) FSA Aaa/AAA 5.000 09/01/16 250,000 256,405
Johnson Cty., KS USD #232 (Desoto) G.O. MBIA Aaa/AAA 5.150 09/01/09 510,000 549,025
Johnson Cty., KS USD #232 (Desoto) G.O. MBIA Aaa/AAA 5.200 09/01/10 600,000 643,482
Johnson Cty., KS USD #233 (Olathe) G.O. AMBAC Aaa/AAA 6.150 03/01/07 300,000 322,629
Kansas City, KS (St. Margaret Hlth. Ctr.) AMBAC Aaa/AAA 5.700 08/01/03 250,000 268,158
Kansas City, KS Special Obligation Escrowed NR/AAA 6.000 02/15/03 200,000 215,920
KS Devl. Fin. Auth. (Hays Medl. Ctr.) Rev. MBIA Aaa/NR 5.300 11/15/09 375,000 406,500
KS Devl. Fin. Auth. (Hays Medl. Ctr.) Rev. MBIA Aaa/NR 5.200 11/15/08 375,000 403,530
#KS Devl. Fin. Auth. (Stormont Vail) Hlth. Care Rev. MBIA Aaa/AAA 5.700 11/15/08 450,000 493,511
KS Devl. Fin. Auth. (Stormont Vail) Hlth. Care Rev. MBIA Aaa/AAA 5.600 11/15/07 100,000 109,011
KS Devl. Fin. Auth. Multifamily (Park Apts.) Hsg. Rev. FNMA NR/AAA 5.700 12/01/09 325,000 338,042
KS Devl. Fin. Auth. Pooled Ref. Lease Rev. MBIA Aaa/AAA 5.500 10/01/05 250,000 270,070
KS State Turnpike Auth. Rev. FGIC Aaa/AAA 5.450 09/01/10 200,000 215,040
Larned, KS (Cath. Hlth. Corp.) Hlth. Facs. Rev. MBIA Aaa/AAA 5.400 11/15/04 155,000 166,134
Lenexa, KS (Barrington Park) Multifamily Hsg. Rev. ASGUA NR/AA 6.050 02/01/06 350,000 363,944
*Lenexa, KS (Barrington Park) Multifamily Hsg. Rev. ASGUA NR/AA 5.875 02/01/04 500,000 521,390
Lenexa, KS (Barrington Park) Multifamily Hsg. Rev. ASGUA NR/AA 5.950 02/01/05 250,000 260,340
McPherson Cty., KS (McPherson) USD #418 G.O. FSA Aaa/AAA 5.700 09/01/06 400,000 438,772
Mission, KS (Lamar Place) Multifamily Hsg. Rev. FNMA NR/AAA 5.000 10/01/14 605,000 607,983
Mission, KS (Lamar Place) Multifamily Hsg. Rev. FNMA NR/AAA 5.180 10/01/23 945,000 949,460
Olathe, KS (Bristol Pointe) MultiFamily Hsg. Rev. Ref. FNMA NR/AAA 5.250 11/01/12 485,000 497,508
Olathe, KS (Evang. Lutheran Good Samaritan Soc.) AMBAC Aaa/AAA 5.500 05/01/03 110,000 117,208
Olathe, KS (Evang. Lutheran Good Samaritan Soc.) AMBAC Aaa/AAA 5.400 05/01/02 150,000 157,424
Olathe, KS (Evang. Lutheran Good Samaritan Soc.) AMBAC Aaa/AAA 5.200 05/01/01 140,000 144,549
Olathe, KS (Medl. Ctr.) Hlth. Facs. Rev. AMBAC Aaa/AAA 5.125 09/01/12 500,000 519,245
Olathe, KS (Medl. Ctr.) Hlth. Facs. Rev. Ref. AMBAC Aaa/AAA 5.600 09/01/05 1,000,000 1,054,380
Sedgwick Cty., KS (Maize) USD #266 G.O. FSA Aaa/AAA 5.500 09/01/05 300,000 320,436
Sedgwick Cty., KS (Maize) USD #266 G.O. FSA Aaa/AAA 5.600 09/01/06 200,000 214,110
Sedgwick Cty., KS (Renwick) USD #267 G.O. AMBAC Aaa/AAA 6.000 11/01/07 570,000 636,171
Sedgwick Cty., KS (Renwick) USD #267 G.O. AMBAC Aaa/AAA 5.850 11/01/06 290,000 321,839
Sedgwick\Shawnee Cty., KS Single Family Mrtge. Rev. GNMA Aaa/NR 5.200 12/01/08 505,000 520,514
Shawnee Cty., KS (Shawnee Heights) USD #450 G.O. FSA Aaa/AAA 6.500 09/01/00 250,000 261,245
*Shawnee Cty., KS (Topeka) USD #501 G.O. FGIC Aaa/AAA 5.550 02/01/07 820,000 873,144
Wellington, KS Utility Rev. AMBAC Aaa/AAA 4.950 05/01/11 300,000 312,003
Wellington, KS Utility Rev. AMBAC NR/AAA 5.000 05/01/12 250,000 260,570
Wichita, KS (St. Francis Regl. Medl. Ctr.) Impvt. & Ref. MBIA Aaa/AAA 6.100 10/01/04 775,000 847,300
Wichita, KS (St. Francis Regl. Medl. Ctr.) Impvt. & Ref. MBIA Aaa/AAA 6.000 10/01/03 250,000 272,115
Wichita, KS Airport Auth. Facs. Rev. Ref. ASGUA NR/AA 7.000 03/01/05 100,000 110,637
#Wichita, KS Multi Hsg. (Broadmoor Chelsea) Rev. FNMA NR/AAA 5.375 07/01/10 625,000 647,100
*Wichita, KS Multifamily Hsg. (Cimarron Apartments) FNMA Aa/AAA 5.250 10/01/12 775,000 796,785
Wichita, KS Water & Sewer Util. Rev. Ref. FGIC Aaa/AAA 5.600 04/01/05 610,000 638,859
Wichita, KS Water & Sewer Util. Rev. Ref. FGIC Aaa/AAA 5.750 10/01/06 150,000 157,341
Wichita, KS Water & Sewer Util. Rev. FGIC Aaa/NR 5.000 07/01/11 500,000 523,020
Wyandotte Cty, KS (KS Int'l. Speedway) Sales Tax Rev. MBIA Aaa/AAA 5.000 12/01/27 500,000 496,930
-----------
TOTAL KANSAS MUNICIPAL BONDS (COST: $19,226,299) $20,240,104
-----------
SHORT-TERM SECURITIES (2.1%)
Federated Tax-Free Fund 73 $ 182,913
Federated Intermediate Municipal Trust 78 250,000
-----------
TOTAL SHORT-TERM SECURITIES (COST: $432,913) $ 432,913
-----------
TOTAL INVESTMENTS IN SECURITIES (COST: $19,659,212) $20,673,017
OTHER ASSETS LESS LIABILITIES 380,174
-----------
NET ASSETS $21,053,191
===========
</TABLE>
*Indicates bonds are segregated by the custodian to cover when-issued or
delayed-delivery purchases.
# Indicates bonds are segragated by the custodian to cover initial margin
requirements.
FOOTNOTE: Non-rated (NR) securities have been determined to be of investment
grade quality by the Funds Manager.
The accompanying notes are an integral part of these financial statements.
Financial Statements January 29, 1999
Statement of Assets and Liabilities January 29, 1999 (Unaudited)
- -----------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Assets
Investment in securities, at value (cost: $19,659,212) $20,673,017
Cash 17,847
Variation margin on futures 80,627
Accrued interest receivable 367,786
Prepaid expenses 1,689
Accrued dividends receivable 482
-----------
Total Assets $21,141,448
-----------
Liabilities
Dividends payable $ 74,930
Accrued expenses 13,327
-----------
Total Liabilities $ 88,257
-----------
Net Assets $21,053,191
-----------
Net assets are represented by:
Paid-in capital $20,955,405
Accumulated undistributed net realized gain(loss) on
Investments (933,832)
Unrealized appreciation on futures 17,813
Unrealized appreciation on investments 1,013,805
Total amount representing net assets applicable to
1,728,323 outstanding shares of no par common
stock (unlimited shares authorized) $21,053,191
===========
Net asset value per share $ 12.18
===========
The accompanying notes are an integral part of these financial statements.
Statement of Operations For the six months ended January 29, 1999 (Unaudited)
- ------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 523,041
Dividends 10,714
-----------
Total Investment Income $ 533,755
-----------
EXPENSES
Investment advisory fees $ 37,066
Custodian fees 1,560
Transfer agent fees 15,016
Accounting service fees 17,138
Transfer agent out of pockets 1,766
Professional fees 2,973
Trustees' fees 1,227
Reports to shareholders 1,027
Registration and filing fees 249
Insurance Expense 36
-----------
Total Expenses $ 78,058
-----------
NET INVESTMENT INCOME $ 455,697
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES
Net realized gain (loss) from:
Investment transactions $ 37,892
Futures transactions (130,904)
Net change in unrealized appreciation (depreciation) of:
Investment transactions $ 271,711
Futures transactions 17,813
-----------
Net Realized and Unrealized Gain (Loss) on Investments and Futures $ 196,512
-----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 652,209
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Financial Statements January 29, 1999
Statement of Changes in Net Assets
For the six months ended January 29, 1999 and the year ended July 31, 1998
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
For The Six Months Ended For The Year Ended
January 29, 1999 July 31, 1998
(Unaudited)
----------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
<S> <C> <C>
Net investment income $ 455,697 $ 993,262
Net realized gain (loss) on investment and futures transactions (93,012) (125,540)
Net change in unrealized appreciation (depreciation)
on investments and futures 289,524 (212,731)
----------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting From Operations $ 652,209 $ 654,991
----------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income ($.26 and $.54 per share,
Respectively) $ (455,697) $ (993,262)
Distributions from net realized gain on investment transactions 0 0
----------------------------------------------------
Total Dividends and Distributions $ (455,697) $ (993,262)
----------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sale of shares $ 765,794 $ 746,870
Proceeds from reinvested dividends 271,357 603,378
Cost of shares redeemed (765,313) (5,960,554)
----------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting
From Capital Share Transactions $ 271,838 $ (4,610,306)
----------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS $ 468,350 $ (4,948,577)
NET ASSETS, BEGINNING OF PERIOD 20,584,841 25,533,418
----------------------------------------------------
NET ASSETS, END OF PERIOD $ 21,053,191 $ 20,584,841
====================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements January 29, 1999 (Unaudited)
Note 1. ORGANIZATION
Business Operations -The Kansas Insured Intermediate Fund (the "Fund") is an
investment portfolio of Ranson Managed Portfolios (the "Trust") registered
under the Investment Company Act of 1940, as amended, as a non-diversified,
open-end management investment company. The Trust may offer multiple
portfolios; currently five portfolios are offered. Ranson Managed Portfolios
is an unincorporated business trust organized under Massachusetts law on August
10, 1990. The Fund had no operations from that date to November 23, 1992,
other than matters relating to organization and registration. On November
23, 1992, the Fund commenced its Public Offering of capital shares. The
investment objective of the Fund is to provide its shareholders with as high
a level of current income exempt from both federal and Kansas income tax as is
consistent with preservation of capital. The Fund will seek to achieve this
objective by investing primarily in a portfolio of Kansas insured securities.
Shares of the Fund are offered at net asset value plus a maximum sales charge
of 2.75% of the offering price.
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investment security valuation - Securities for which quotations are not readily
available (which will constitute a majority of the securities held by the
Fund) are valued using a matrix system at fair value as determined by Ranson
Capital Corporation, ("Ranson"). The matrix system has been developed based on
procedures approved by the Board of Trustees which include consideration of the
following: yields or prices of municipal bonds of comparable quality, type of
issue, coupon, maturity and rating, and indications as to value from dealers
and general market conditions. Because the market value of securities can only
be established by agreement between parties in a sales transaction, and because
of the uncertainty inherent in the valuation process, the fair values as
determined may differ from the values that would have been used had a ready
market for the securities existed. The Fund follows industry practice and
records security transactions on the trade date.
The Fund concentrates its investments in a single state. This concentration
may result in the Fund investing a relatively high percentage of its assets in
a limited number of issuers.
Deferred organization costs - Costs incurred by the Fund in connection with its
organization were amortized over a 60-month period on the straight-line basis.
The entire cost of $37,500 has been amortized as of January 29, 1999.
Federal and state income taxes - The Fund's policy is to comply with the
requirements of the Internal Revenue Code that are applicable to regulated
investment companies, and to distribute all of its net investment income and
any net realized gain on investments, to its shareholders. Therefore, no
provision for income taxes is required. The Fund has available at January 29,
1999, a net capital loss carryforward totaling $842,915, which may be used to
offset capital gains realized during subsequent years through July 31, 2006.
Distributions to shareholders - Dividends from net investment income, declared
daily and payable monthly, are reinvested in additional shares of the Fund at
net asset value or paid in cash. Capital gains, when available, are
distributed at least annually.
Investment income - Dividend income is recognized on the ex-dividend date and
interest income is recognized daily on an accrual basis. Premiums and
discounts on securities purchased are amortized using the effective interest
method over the life of the respective securities, unless callable, in which
case they are amortized to the earliest call date.
Futures contracts - The Fund may purchase and sell financial futures to hedge
against changes in the values of tax-exempt municipal securities the Fund owns
or expects to purchase.
A futures contract is an agreement between two parties to buy or sell units of
a particular index or a certain amount of U.S. Government or municipal
securities at a set price on a future date. Upon entering into a futures
contract, the Fund is required to deposit with a broker an amount of cash or
securities equal to the minimum "initial margin" requirement of the futures
exchange on which the contract is traded. Subsequent payments ("variation
margin") are made or received by the Fund, dependent on the fluctuations in the
value of the underlying index. Daily fluctuations in value are recorded for
financial reporting purposes as unrealized gains or losses by the Fund. When
entering into a closing transaction, the Fund will realize, for book purposes,
a gain or loss equal to the difference between the value of the futures
contracts sold and the futures contracts to buy. Unrealized appreciation
(depreciation) related to open futures contracts is required to be treated as
realized gain (loss) for Federal income tax purposes.
Securities held in collateralized accounts to cover initial margin requirements
on open futures contracts are noted in the Schedule of Investments. The
Statement of Assets and Liabilities reflects a receivable or payable for the
daily mark to market for variation margin.
Certain risks may arise upon entering into futures contracts. These risks may
include changes in the value of the futures contracts that may not directly
correlate with changes in the value of the underlying securities.
At January 29, 1999, the Fund had outstanding futures contracts to sell debt
securities as follows:
<TABLE>
Contracts Expiration Number of Valuation Unrealized
To Date Futures as of Appreciation
Sell Contracts January 29, 1999 (Depreciation)
- --------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
U.S. Treasury Notes 03/99 15 $80,627 $19,907
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Note 3. CAPITAL SHARE TRANSACTIONS
As of January 29, 1999, there were unlimited shares of no par authorized;
1,728,323 and 1,705,829 shares were outstanding at January 29, 1999 and
July 31, 1998, respectively.
Transactions in capital shares were as follows:
Shares
------
For The Six For The
Months Ended Year Ended
January 29, 1999 July 31, 1998
(Unaudited)
---------------- -------------
Shares sold 63,199 61,738
Shares issued on reinvestment
of dividends 22,408 49,895
Shares redeemed (63,113) (492,742)
---------------- -------------
Net increase (decrease) 22,494 (381,109)
================ =============
Note 4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Ranson Capital Corporation, the Fund's investment adviser and underwriter, and
ND Resources, Inc., the Fund's transfer and accounting services agent, and ND
Capital, Inc., the Fund's agent for the purchase of certain investment
securities, are subsidiaries of ND Holdings, Inc., the Fund's sponsor.
The Fund has engaged Ranson Capital Corporation, to provide investment advisory
and management services to the Fund. The Investment Advisory Agreement provides
for fees to be computed at an annual rate of 0.50% of the Fund's average daily
net assets. The Fund has recognized $37,066 of investment advisory fees after
partial waiver for the six months ended January 29, 1999. The Fund has a
payable to Ranson Capital Corporation of $6,088 at January 29, 1999, for
investment advisory fees. Certain officers and trustees of the Fund are also
officers and directors of the investment adviser.
The Fund has engaged ND Capital, Inc. as agent for the purchase of certain
investment securities. For the six months ended January 29, 1999, commissions
earned by ND Capital, Inc. totaled $625 and are included in the cost basis of
the securities acquired.
ND Resources, Inc., (the transfer agent), provides shareholder services for a
monthly fee equal to an annual rate of 0.16% of the Fund's first $10 million of
net assets, 0.13% of the Fund's net assets on the next $15 million, 0.11% of
the Fund's net assets on the next $15 million, 0.10% of the Fund's net assets
on the next $10 million, and 0.09% of the Fund's net assets in excess of $50
million. The Fund has recognized $15,016 of transfer agency fees and expenses
for the six months ended January 29, 1999. The Fund has a payable to ND
Resources, Inc. of $2,447 at January 29, 1999 for transfer agency fees. ND
Resources, Inc. also acts as the Fund's accounting services agent for a monthly
fee equal to the sum of a fixed fee of $2,000, and a variable fee equal to
0.05% of the Fund's average daily net assets on an annual basis for the Fund's
first $50 million and at a lower rate on the average daily net assets in excess
of $50 million. The Fund has recognized $17,138 of accounting service fees for
the six months ended January 29, 1999. The Fund has a payable to ND Resources,
Inc. of $2,785 at January 29, 1999 for accounting service fees.
Note 5. INVESTMENT SECURITY TRANSACTIONS
The cost of purchases and proceeds from the sales of investment securities
(excluding short-term securities) aggregated $2,796,380 and $2,586,827
respectively, for the six months ended January 29, 1999.
Note 6. INVESTMENT IN SECURITIES
At January 29, 1999, the aggregate cost of securities for federal income tax
purposes was $19,659,212, and the net unrealized appreciation of investments
based on the cost was $1,013,805, which is comprised of $1,013,805 aggregate
gross unrealized appreciation and $0 aggregate gross unrealized depreciation.
Financial Highlights Selected per share data and ratios for the period indicated
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For The For The For The For The For The For The
Six months Year Ended Year Ended Year Ended Year Ended Year Ended
Ended January July 31, July 31, July 31, July 31, July 31,
29, 1999 1998 1997 1996 1995 1994
(Unaudited)
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $12.07 $12.23 $12.19 $12.04 $11.92 $12.24
-----------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income $.26 $.54 $.53 $.53 $.54 $.52
Net realized and unrealized gain
(loss) on investment and futures
transactions .11 (.16) .04 .15 .12 (.30)
-----------------------------------------------------------------------------------
Total From Investment Operations $.37 $.38 $.57 $.68 $.66 $.22
-----------------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income $(.26) $(.54) $ (.53) $(.53) $ (.54) $(.52)
Distributions from net capital gains .00 .00 .00 .00 .00 (.02)
-----------------------------------------------------------------------------------
Total Distributions $(.26) $(.54) $(.53) $(.53) $(.54) $(.54)
-----------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $12.18 $12.07 $12.23 $12.19 $12.04 $11.92
-----------------------------------------------------------------------------------
Total Return 6.26%(A)(C) 3.17%(A) 4.76%(A) 5.75%(A) 5.72%(A) 1.81%(A)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $21,053 $20,585 $25,533 $30,564 $30,678 $31,216
Ratio of net expenses
(after expense assumption)
to average net assets 0.74%(C) 0.75%(B) 0.76%(B) 0.69%(B) 0.62% (B) 0.51%(B)
Ratio of net investment income
to average net assets 4.36%(C) 4.42% 4.33% 4.37% 4.57% 4.26%
Portfolio turnover rate 12.78% 25.46% 28.68% 19.96% 63.00% 56.00%
</TABLE>
(A) Excludes maximum sales charge of 2.75%.
(B) During the periods indicated above, ND Holdings, Inc. or Ranson Capital
Corporation assumed expenses of $13,708, $40,608, $71,943, $112,745, and
$136,079, respectively. If the expenses had not been assumed, the
annualized ratios of total expenses to average net assets would have been
0.82%, 0.90%, 0.92%, 0.98%, and 0.99%, respectively.
(C) Ratio was annualized.
The accompanying notes are an integral part of these financial statements.
Dear Shareholder:
We are pleased to enclose the semi-annual report of the operations of The
Nebraska Municipal Fund, for the six months ended January 29, 1999. The
Fund's portfolio and related financial statements are presented within for
your review.
In 1998, the U.S. economy exhibited more strength than expected. While there
has been some weakening in factory orders reflective of foreign competition,
the housing market and domestic consumer sales have been strong. Much of this
strength can be contributed to the way computer technology has allowed
productivity to increase in the U.S.
In addition to new efficient technology, the U.S. is poised to benefit from
free international trade. The recent trade deficit has restrained U.S.
growth, but at the same time has kept inflation low. However, with the U.S.
dollar declining relative to Asian currencies and Europe improving,
international trade should become less of a drag on the U.S. economy. This,
along with an already robust domestic economy, should help the U.S. prosper.
The main story for municipal investors in 1998 was the increase in the ratio
between municipal and Treasury yields. At the beginning of the year,
municipals were yielding 87% as much as the 30-year Treasury bond. By
year-end, that ratio had climbed to 98%. As yields on the 30-year Treasury
bond fell from 5.92% to 5.09%, municipal yields dropped from 5.15% to 5.00%.
This abnormal relationship does not appear to be a concern over possible tax
law changes, but results from foreign and domestic investor demand for U.S.
Treasuries in times of economic turmoil abroad. Restoring municipals and
Treasuries to a more normal relationship will likely result as the U.S. trade
deficit puts downward pressure on the dollar, thus weakening foreign support
for Treasuries.
Municipal bonds remain ridiculously cheap (in terms of price) by historical
standards. Normally, buyers pay for the tax benefits of municipals by getting
a lower return. Today, however, investors are saving on taxes without giving
up return. Faced with a choice of paying taxes on investment income or not,
what would you do?
The Nebraska Municipal Fund began the year at $11.13 and ended the six month
period at $11.37. The Nebraska Municipal Fund, at times during the first six
months, utilized a defensive position in U.S. Treasury futures to minimize the
effects of strong economic growth. Share price was tempered as yields on
U.S. Treasuries dropped to record lows in the fall and stabilized share price
as yields rose in the latter part of the year. Stability of share price is
the primary objective of a defensive position.
The Fund continues to invest in high-grade Nebraska tax-exempt bonds.
Diversification remains an important strategy for the Fund. Purchases
throughout the year in the primary and secondary markets include Douglas
County Hospital Authority, Nebraska Public Power, and Omaha Rosenblatt Stadium
Facility.
The investment objective of the Fund is to provide a high level of current
income exempt from both federal and Nebraska income tax as is consistent with
preservation of capital.
Sincerely,
Monte L. Avery Robert E.Walstad
Chief Portfolio Strategist President
Terms & Definitions
Appreciation
Increase in value of an asset.
Average Annual Total Return
A standardized measurement of the return (yield and appreciation)
earned by the fund on an annual basis, assuming all distributions
are reinvested.
Coupon Rate or Face Rate
The rate of interest annually payable based on the face amount of the
bond; expressed as a percentage.
Depreciation
Decrease in value of an asset.
Lehman Brothers Municipal Bond Index
An unmanaged list of long-term, fixed-rate, investment-grade,
tax-exempt bonds representative of the municipal bond market. The
index does not take into account brokerage commissions or other costs,
may include bonds different from those in the fund, and may pose
different risks than the fund.
Market Value
Actual (or estimated) price at which a bond trades in the market place.
Maturity
A measure of the term or life of a bond in years. When a bond "matures",
the issuer repays the principal.
Net Asset Value (NAV)
The value of all your fund's assets, minus any liabilities, divided by
the number of outstanding shares, not including any initial sales charge.
Quality Ratings
A designation assigned by independent rating companies to give a
relative indication of a bond's credit worthiness. "AAA", "AA", "A"
and "BBB" indicate investment grade securities. Ratings can range from
a high of "AAA" to a low of "D".
Total Return
Measures both the net investment income and any realized and
unrealized appreciation or depreciation of the underlying investments
in the fund's portfolio for the period, assuming the reinvestment of
all dividends. It represents the aggregate percentage or dollar value
change over the period.
PERFORMANCE AND COMPOSITION
- ----------------------------
Portfolio Ratings
(based on Total Long-Term Investments)
- --------------------------------------
[pie chart]
AAA 54.5
AA 23.8
A 8.0
BBB 0.4
NR 13.3
Quality ratings reflect the financial strength of the issuer. They are
assigned by independent rating services such as Moody's Investors Services
and Standard & Poor's. Non-rated bonds have been determined to be of
appropriate quality for the portfolio by Ranson Capital Corporation, the
investment adviser.
Portfolio Market Sectors
(as a % of Net Assets)
- -------------------------
[pie chart]
H-Housing 21.8
GO-General Obligation 15.8
U-Utilities 15.2
S-Schoo1 4.6
HC-Health Care 14.5
O-Other 8.0
I-Industrial 5.2
C/L-Cop/Lease 3.0
W/S-Water/Sewer 1.9
Market sectors are breakdowns of the Fund's portfolio holdings into specific
investment classes.
COMPARATIVE INDEX GRAPH
- ------------------------
[line graph]
Comparison of change in value of a $10,000 investment in The
Nebraska Municipal Fund and the Lehman Brothers Municipal Bond
Index
The Nebraska The Nebraska The Lehman
Municipal Fund Municipal Fund Brothers Muni
w/o sales charge w/ max sales charge Bond Index
- ----------------------------------------------------------------------
11/17/93 $10,000 $ 9,575 $10,000
1994 $ 9,773 $ 9,357 $ 9,892
1995 $10,471 $10,026 $10,673
1996 $11,071 $10,600 $11,376
1997 $11,909 $11,402 $12,544
1998 $12,380 $11,853 $13,295
01/29/99 $12,953 $12,402 $13,915
Average Annual Total Returns
- -----------------------------.
For periods ending January 29, 1999
Since Inception
1 year 5 year (Nov. 17, 1993)
Without sales charge 6.24% 4.64% 5.10%
With sales charge 1.72% 3.73% 4.22%
Putting Performance into Perspective
The graph comparing your Fund's performance to a benchmark index provides you
with a general sense of how your Fund performed. To put this information in
context, it may be helpful to understand the special differences between the
two. The Lehman Brothers index is a national index representative of the
national municipal bond market whereas the Fund concentrates its investments
in Nebraska municipal bonds. Your Fund's total return for the period shown
appears with and without sales charges and includes Fund expenses and
management fees. A securities index measures the performance of a theoretical
portfolio. Unlike a fund, the index is unmanaged; there are no expenses that
affect the results. In addition, few investors could purchase all of the
securities necessary to match the index. And, if they could, they would incur
transaction costs and other expenses. All Fund and benchmark returns include
reinvested dividends. Returns are historical and are not a guarantee of
future results. The Fund's share price, yields and total returns will vary,
so that shares, when redeemed, may be worth more or less than their original
cost.
Key Statistics
- ----------------.
07-31-98 NAV(share value) $11.13
01-29-99 NAV $11.37
Average Maturity 20.2 years
Number of Issues 65
Total Net Assets $27,382,345
<TABLE>
<CAPTION>
Schedule of Investments January 29, 1999 (Unaudited)
Name of Issuer
Percentages represent the market value of each investment
category to total net assets Rating Coupon Principal Market
Moody's/S&P Rate Maturity Amount Value
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
<C>
NEBRASKA MUNICIPAL BONDS (97.4%)
Adams Cty., NE Hosp. Auth. #1 (Mary Lanning Memorial Hosp.) NR/AA 5.300% 12/15/18 $ 250,000 $ 261,455
Chadron State College, NE Student Fees & Facs. Rev. Ref. NR/NR 5.700 07/01/11 300,000 304,974
Cuming Cty., NE School Dist. #020 (Bancraft-Rosalie) NR/NR 5.750 12/15/17 100,000 102,615
Dawson Cty., NE SID #1 (IBP, Inc. Proj.) Ref. G.O. A-3/A- 5.650 02/01/22 300,000 315,597
Douglas Cty., NE (Cath. Hlth. Corp.) Rev. MBIA Aaa/AAA 5.500 11/15/21 340,000 363,283
Douglas Cty., NE Hosp. Auth #2 (Bethphage Project) Rev. NR/NR 5.400 02/01/13 120,000 122,843
Douglas Cty., NE Hospital (Alegent Hlth.) Auth. #001 Rev. AMBAC Aaa/AAA 5.250 09/01/21 250,000 258,795
Douglas Cty., NE SID #240 (LeBea) Ref. G.O. NR/NR 5.900 10/15/16 100,000 105,622
Douglas Cty., NE SID #295 G.O. NR/NR 6.500 06/01/17 800,000 820,656
Douglas Cty., NE SID #363 (Hillsborough) G.O. NR/NR 5.850 09/15/17 100,000 102,240
Douglas Cty., NE SID #392 (Cinnamon Creek) G.O. NR/NR 5.750 08/15/17 200,000 204,366
Douglas Cty., NE SID #396 (First National Business Park) NR/NR 5.750 09/01/17 100,000 102,277
Gage Cty., NE (Beatrice) School Dist. #15 G.O. AMBAC Aaa/AAA 5.900 12/15/16 850,000 916,062
Grand Island, NE Sewer Syst. Rev. NR/A 6.000 04/01/14 250,000 272,200
Hastings, NE Elec. Rev. A/A 6.300 01/01/19 370,000 409,020
Hemingford, NE G.O. NR/NR 5.600 02/15/12 115,000 116,511
Kearney Cty., NE Combined Util. Rev. A-1/NR 6.100 06/01/14 600,000 629,268
Kearney Cty., NE School Dist. #503 (Minden) G.O. NR/NR 6.150 12/15/12 100,000 103,652
Lancaster Cty., NE (Bryan Memorial Hospital) Rev. MBIA Aaa/AAA 5.375 06/01/19 750,000 782,888
Lancaster Cty., NE (Lincoln Medl. Educ. Foundn.) Rev. NR/NR 5.700 02/01/11 100,000 104,96
Lancaster Cty., NE (Lincoln Medl. Educ. Foundn.) Rev. NR/NR 5.800 02/01/12 175,000 184,067
Lincoln, NE Elec. Syst. Rev. Aa/AA+ 5.750 09/01/16 750,000 801,285
Lincoln/Lancaster Cty., NE Public Bldg. Community Rev. Aa/AA+ 5.875 10/15/23 850,000 937,304
Lincoln/Lancaster Cty., NE Public Bldg. Community Tax Lease Aa/AA+ 5.800 10/15/18 475,000 524,239
NE Educ. Finance Auth. (Creighton Univ.) Rev. AMBAC Aaa/AAA 5.950 01/01/11 300,000 332,853
NE Educ. Finance Auth. (Midland Lutheran College) Rev. NR/NR 6.250 06/15/15 100,000 105,113
NE Hgr. Educ. Loan Program Junior Subord. Term MBIA Aaa/AAA 6.450 06/01/18 400,000 441,640
NE Hgr. Educ. Loan Program Senior Subord. Term MBIA Aaa/AAA 6.250 06/01/18 800,000 864,472
*NE Hgr. Educ. Loan Program Student Loan MBIA Aaa/AAA 5.875 06/01/14 1,350,000 1,431,608
NE Invmt. Finance Auth. (Great Plains Regl. Medl. Ctr.) Rev. NR/AA 5.450 11/15/17 400,000 417,664
NE Invmt. Finance Auth. (Great Plains Regl. Medl. Ctr.) Rev. NR/AAA 6.500 05/15/14 150,000 167,141
NE Invmt. Finance Auth. (Muirfield Greens) Multifamily Rev. FHA Aa/NR 6.800 12/01/15 365,000 388,156
NE Invmt. Finance Auth. (Muirfield Greens) Multifamily Rev. FHA Aa/NR 6.850 12/01/25 525,000 562,548
NE Invmt. Finance Auth. Multifamily Hsg. Rev. FNMA NR/AAA 6.200 06/01/28 495,000 520,220
NE Invmt. Finance Auth. Multifamily Hsg. Rev. GNMA NR/AAA 6.000 06/01/17 500,000 528,390
NE Invmt. Finance Auth. Multifamily Hsg. Rev. GNMA NR/AAA 6.100 06/01/29 500,000 526,420
*NE Invmt. Finance Auth. Single Family Hsg. Rev. NR/AAA 6.600 09/01/20 695,000 742,976
*NE Invmt. Finance Auth. Single Family Hsg. Rev. NR/AAA 6.300 09/01/28 1,105,000 1,189,776
NE Invmt. Finance Auth. Single Family Hsg. Rev. NR/AAA 5.850 09/01/28 470,000 491,291
NE Invmt. Finance Auth. Single Family Hsg. Rev. FHA/GNMA NR/AAA 6.500 09/01/18 400,000 426,860
NE Invmt. Finance Auth. Single Family Hsg. Rev. GNMA NR/AAA 6.200 09/01/17 250,000 267,068
NE Invmt. Finance Auth. Single Family Hsg. Rev. GNMA NR/AAA 6.250 03/01/21 300,000 321,843
#NE Invmt. Finance Auth.(Children Healthcare Svcs.) Rev. AMBAC Aaa/AAA 5.500 08/15/27 1,000,000 1,064,800
NE Public Power Dist. Power Supply Syst. Rev. Aaa/AAA 6.125 01/01/15 390,000 431,001
NE Public Power Dist. Power Supply Syst. Rev. Aaa/AAA 5.750 01/01/20 250,000 273,433
NE Public Power Dist. Power Supply Syst. Rev. MBIA Aaa/AAA 5.000 01/01/28 500,000 501,425
NE Student Loan Program B Rev. MBIA Aaa/AAA 6.000 06/01/28 100,000 104,030
Northeast NE Juvenile Auth. 1st Mrtge. Rev. NR/NR 6.375 06/01/17 280,000 292,180
Northeast NE Solid Waste Facs. Rev. MBIA Aaa/AAA 5.900 05/15/15 600,000 627,876
Omaha, NE (Rosenblatt Stadium) Facs. Rev. Aa-1/AA+ 5.000 11/01/18 500,000 505,595
Omaha, NE Parking Facs. Corp. (Omaha Park 4\5) Lease Rev. Aa-1/AA+ 5.700 09/15/15 750,000 821,115
Omaha, NE Public Power Dist. Elec. Syst. Rev. NR/AA 6.000 02/01/15 330,000 373,471
Omaha, NE Public Power Dist. Elec. Syst. Rev. Aa/NR 6.200 02/01/17 650,000 749,021
Omaha, NE Various Purpose Aaa/AAA 6.250 12/01/12 250,000 282,545
Omaha, NE Various Purpose Aaa/AAA 6.250 12/01/14 250,000 281,568
Otoe Cty., NE School Dist. #111 (Nebraska City) Ref. AMBAC Aaa/AAA 5.800 11/15/14 400,000 419,440
Papillion, NE G.O. NR/NR 6.150 07/01/12 105,000 109,102
Sarpy Cty., NE SID #142 (Fair Meadows) Ref. G.O. NR/NR 5.850 08/15/17 100,000 103,214
Sarpy Cty., NE SID #52 (Prairie Corners) G.O. NR/NR 6.000 10/01/17 300,000 308,304
Sarpy Cty., NE SID #86 (Willow Springs) G.O. NR/NR 6.250 01/15/17 100,000 103,579
Scotts Bluff Cty., NE Hosp. Auth. #1 (Regl West Medl. Ctr.) A-3/A- 5.250 11/15/28 250,000 252,310
Washington Cty., NE School Dist. #1 G.O. NR/A 5.800 07/15/11 100,000 104,329
Washington Cty., NE School Dist. #1 G.O. NR/A 5.900 07/15/15 135,000 141,496
York, NE Sewer Syst. Rev. NR/NR 5.850 06/01/12 140,000 147,784
York, NE Sewer Syst. Rev. NR/NR 6.000 06/01/17 100,000 102,913
-----------
TOTAL NEBRASKA MUNICIPAL BONDS (COST: $24,912,691) $ 26,672,752
------------
SHORT-TERM SECURITIES (1.3%)
Federated Tax-Free Fund 73 $ 199,174
Federated Intermediate Municipal Trust 78 150,696
-----------
TOTAL SHORT-TERM SECURITIES (COST: $349,174) $ 349,870
------------
TOTAL INVESTMENTS IN SECURITIES (COST: $25,261,865) $ 27,022,622
OTHER ASSETS LESS LIABILITIES 359,723
------------
NET ASSETS $ 27,382,345
============
</TABLE>
*Indicates bonds are segregated by the custodian to cover when-issued or
delayed-delivery purchases.
# Indicates bonds are segregated by the custodian to cover initial margin
requirements.
Footnote: Non-rated securities have been determined to be of investment
grade quality by the Fund's Manager.
The accompanying notes are an integral part of these financial statements.
Financial Statements January 29, 1999
Statement of Assets and Liabilities January 29, 1999 (Unaudited)
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Assets
Investment in securities, at value (Cost: $25,261,865) $ 27,022,622
Accrued interest receivable 383,913
Accrued dividends receivable 922
Receivable for fund shares sold 30,000
Prepaid expenses 2,462
Variation margin on futures 68,750
--------------
Total Assets $ 27,508,669
--------------
Liabilities
Dividends payable $ 105,471
Accrued expenses 16,586
Bank overdraft 4,267
--------------
Total Liabilities $ 126,324
--------------
Net Assets $ 27,382,345
==============
Net assets are represented by:
Paid-in capital $ 27,166,716
Accumulated undistributed net realized gain(loss) on
Investments (1,522,653)
Unrealized appreciation on futures (22,475)
Unrealized appreciation on investments 1,760,757
---------------
Total amount representing net assets applicable to
2,408,753 outstanding shares of no par common
stock (Unlimited shares authorized) $ 27,382,345
===============
Net asset value per share $ 11.37
===============
Statement of Operations for the six months ended January 29, 1999 (Unaudited)
- ------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 733,274
Dividends 6,080
--------------
Total Investment Income $ 739,354
--------------
EXPENSES
Investment advisory fees $ 45,731
Custodian fees 2,003
Transfer agent fees 18,671
Accounting service fees 18,593
Transfer agent out-of-pocket fees 2,187
Professional fees 2,572
Reports to shareholders 1,214
Trustees fees 1,363
Registration and filing fees 1,000
Amortization of organization costs 1,868
Insurance expense 46
--------------
Total Expenses $ 95,248
--------------
NET INVESTMENT INCOME $ 644,106
--------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FUTURES
Net realized gain (loss) from:
Investment transactions $ 53,685
Futures transactions (66,701)
Net change in unrealized appreciation (depreciation) of:
Investments 609,945
Futures (22,475)
---------------
Net Realized And Unrealized Gain (Loss) On
Investments And Futures $ 574,454
---------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 1,218,560
===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
Financial Statements January 29, 1999
Statement of Changes in Net Assets
For the six months January 29, 1999 and the year ended July 31, 1998
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
For The Six
Months Ended For The
Jan. 29, 1999 Year Ended
(Unaudited) Dec. 31, 1998
-----------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
<S> <C> <C>
Net investment income $ 644,106 $ 1,380,231
Net realized gain (loss) on investment and futures transactions (13,016) (383,905)
Net change in unrealized appreciation (depreciation) on
investments and futures 587,470 49,878
-------------------------------------------
Net Increase (Decrease) in Net Assets Resulting From Operations $ 1,218,560 $ 1,046,204
-------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income
($.27 and $.56 per share, respectively) $ (644,106) $ (1,380,231)
Distributions from net realized gain on
investment and futures transactions 0 0
-------------------------------------------
Total Dividends and Distributions $ (644,106) $ (1,380,231)
-------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sale of shares $ 1,409,304 $ 2,803,618
Proceeds from reinvested dividends 426,952 915,428
Cost of shares redeemed (1,346,743) (4,868,195)
-------------------------------------------
Net Increase (Decrease) in Net Assets Resulting
From Capital Share Transactions $ 489,513 $ (1,149,149)
-------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS $ 1,063,967 $ (1,483,176)
NET ASSETS, BEGINNING OF PERIOD $ 26,318,378 $ 27,801,554
-------------------------------------------
NET ASSETS, END OF PERIOD $ 27,382,345 $ 26,318,378
===========================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements January 29, 1999 (Unaudited)
Note 1. ORGANIZATION
Business Operations - The Nebraska Municipal Fund (the "Fund") is an
investment portfolio of Ranson Managed Portfolios (the "Trust") registered
under the Investment Company Act of 1940, as amended, as a non-diversified,
open-end management investment company. The Trust may offer multiple
portfolios; currently five portfolios are offered. Ranson Managed Portfolios
is an unincorporated business trust organized under Massachusetts law on
August 10, 1990. The Fund had no operations from that date to November 17,
1993, other than matters relating to organization and registration. On
November 17, 1993, the Fund commenced its Public Offering of capital shares.
The investment objective of the Fund is to provide its shareholders with as
high a level of current income exempt from both federal and Nebraska income
taxes as is consistent with preservation of capital. The Fund will seek to
achieve this objective by investing primarily in a portfolio of Nebraska
municipal securities. Shares of the Fund are offered at net asset value plus
a maximum sales charge of 4.25% of the offering price.
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investment security valuation - Securities for which quotations are not
readily available (which will constitute a majority of the securities held
by the Fund) are valued using a matrix system at fair value as determined
by Ranson Capital Corporation, ("Ranson"). The matrix system has been
developed based on procedures approved by the Board of Trustees which include
consideration of the following: yields or prices of municipal bonds of
comparable quality, type of issue, coupon, maturity and rating, and
indications as to value from dealers and general market conditions.
Because the market value of securities can only be established by
agreement between parties in a sales transaction, and because of the
uncertainty inherent in the valuation process, the fair values as determined
may differ from the values that would have been used had a ready market for
the securities existed. The Fund follows industry practice and records
security transactions on the trade date.
The Fund concentrates its investments in a single state. This concentration
may result in the Fund investing a relatively high percentage of its assets
in a limited number of issuers.
Deferred organization costs - Costs incurred by the Fund in connection with
its organization are being amortized over a 60-month period on the
straight-line basis beginning December 12, 1993. Organizational costs were
fully amortized at the end of the six month period January 29, 1999.
Accumulated amortization at January 29, 1999 totaled $27,054.
Federal and state income taxes - The Fund's policy is to comply with the
requirements of the Internal Revenue Code that are applicable to regulated
investment companies, and to distribute all of its net investment income and
any net realized gain on investments, to its shareholders. Therefore, no
provision for income taxes is required. The Fund has available at
January 29, 1999, a net capital loss carry forward totaling $1,512,429,
which may be used to offset capital gains realized during subsequent years
through July 31, 2006.
Distributions to shareholders - Dividends from net investment income,
declared daily and payable monthly, are reinvested in additional shares
of the Fund at net asset value or paid in cash. Capital gains, when
available, are distributed at least annually.
Investment income - Dividend income is recognized on the ex-dividend date
and interest income is recognized daily on an accrual basis. Premiums and
discounts on securities purchased are amortized using the effective
interest method over the life of the respective securities, unless callable,
in which case they are amortized to the earliest call date.
Futures contracts - The Fund may purchase and sell financial futures
contracts to hedge against changes in the values of tax-exempt municipal
securities the Fund owns or expects to purchase.
A futures contract is an agreement between two parties to buy or sell units
of a particular index or a certain amount of U.S. Government or municipal
securities at a set price on a future date. Upon entering into a futures
contract, the Fund is required to deposit with a broker an amount of cash or
securities equal to the minimum "initial margin" requirement of the
futures exchange on which the contract is traded. Subsequent payments
("variation margin") are made or received by the Fund, dependent on the
fluctuations in the value of the underlying index. Daily fluctuations in
value are recorded for financial reporting purposes as unrealized gains or
losses by the Fund. When entering into a closing transaction, the Fund will
realize, for book purposes, a gain or loss equal to the difference between
the value of the futures contracts sold and the futures contracts to buy.
Unrealized appreciation (depreciation) related to open futures contracts is
required to be treated as realized gain (loss) for Federal income tax purposes.
Securities held in collateralized accounts to cover initial margin
requirements on open futures contracts are noted in the Schedule of
Investments. The Statement of Assets and Liabilities reflects a
receivable or payable for the daily mark to market for variation margin.
Certain risks may arise upon entering into futures contracts. These risks
may include changes in the value of the futures contracts that may not
directly correlate with changes in the value of the underlying securities.
At January 29, 1999, the Fund had outstanding futures contracts to sell
debt securities as follows:
Number of Valuation Unrealized
Contracts Expiration Futures as of Appreciation
To Sell Date Contracts Jan. 29, 1999 (Depreciation)
- -----------------------------------------------------------------------------
U.S. Treasury Notes 3/99 50 $ 68,750 $ (19,683)
- ------------------------------------------------------------------------------
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Note 3. CAPITAL SHARE TRANSACTIONS
As of January 29, 1999, there were unlimited shares of no par authorized;
2,408,753 and 2,365,171 shares were outstanding at January 29, 1999 and
July 31, 1998, respectively.
Transactions in capital shares were as follows:
Shares
For The
Six Months Ended For The
January 29, 1999 Year Ended
(Unaudited) July 31, 1998
------------------------------------
Shares sold 125,213 251,824
Shares issued on reinvestment
of dividends 37,992 82,101
Shares redeemed (119,623) (436,786)
------------------------------------
Net increase (decrease) 43,582 (102,861)
====================================
Note 4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Ranson Capital Corporation, the Fund's investment adviser and underwriter,
ND Resources, Inc., the Fund's transfer and accounting services agent, and
ND Capital, Inc., the Fund's agent for the purchase of certain investment
securities, are subsidiaries of ND Holdings, Inc., the Fund's sponsor.
The Fund has engaged Ranson Capital Corporation to provide investment
advisory and management services to the Fund. The Investment Advisory
Agreement provides for fees to be computed at an annual rate of 0.50% of
the Fund's average daily net assets. The Fund has recognized $45,731 of
investment advisory fees after partial waiver for the six months ended
January 29, 1999. The Fund has a payable to Ranson Capital Corporation of
$7,504 at January 29, 1999 for investment advisory fees. Certain officers
and trustees of the Fund are also officers and directors of the investment
adviser.
The Fund pays an annual service fee to Ranson Capital Corporation (Ranson),
its principal underwriter, in connection with the distribution of the
Fund's shares. The annual fee paid to Ranson is calculated daily and paid
monthly by the Fund at the annual rate of 0.25% of the average daily net
assets of the Fund. Ranson has elected to waive all operation service fees
for the six months ended January 29, 1999.
ND Resources, Inc., (the transfer agent), provides shareholder services
for a monthly fee equal to an annual rate of 0.16% of the Fund's first
$10 million of net assets, 0.13% of the Fund's net assets on the next
$15 million, 0.11% of the Fund's net assets on the next $15 million, 0.10%
of the Fund's net assets on the next $10 million, and 0.09% of the
Fund's net assets in excess of $50 million. The Fund incurred $18,671
of transfer agency fees for the six months ended January 29, 1999. The
Fund has a payable to ND Resources, Inc. of $3,043 at January 29, 1999
for transfer agency fees. ND Resources, Inc. also acts as the Fund's
accounting services agent for a monthly fee equal to the sum of a fixed
fee of $2,000, and a variable fee equal to 0.05% of the Fund's average
daily net assets on an annual basis for the Fund's first $50 million
and at a lower rate on the average daily net assets in excess of $50
million. The Fund has incurred $18,593 of accounting service fees for
the six months ended January 29, 1999. The Fund has a payable to
ND Resources, Inc. of $3,023 at January 29, 1999 for accounting service
fees.
Note 5. INVESTMENT SECURITY TRANSACTIONS
The cost of purchases and proceeds from the sales of investment securities
(excluding short-term securities) aggregated $1,997,918 and $1,858,070
respectively, for the six months ended January 29, 1999.
Note 6. INVESTMENT IN SECURITIES
At January 29, 1999, the aggregate cost of securities for federal income
tax purposes was $25,261,865, and the net unrealized appreciation of
investments based on the cost was $1,760,757 which is comprised of
$1,760,757 aggregate gross unrealized appreciation and $0 aggregate gross
unrealized depreciation.
<TABLE>
<CAPTION>
Financial Highlights Selected per share data and ratios for the period indicated
- ---------------------------------------------------------------------------------
For The Period
For The Six For the For The For The For The Since Inception
Months Ended Year Ended Year Ended Year Ended Year Ended (Nov. 17, 1993)
Jan. 31, 1999 July 31,1998 July 31, 1997 July 31, 1996 July 31, 1995 Through July 1994
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 11.13 $ 11.26 $ 11.00 $ 10.95 $ 10.82 $ 11.49
-------------------------------------------------------------------------------------------
Income from Investment
Operations:
Net investment income $ .27 $ .56 $ .55 $ .57 $ .59 $ .45
Net realized and unrealized
gain (loss) on investment and
futures transactions .24 (.13) .26 .05 .13 (.67)
-------------------------------------------------------------------------------------------
Total From Investment
Operations $ .51 $ .43 $ .81 $ .62 $ .72 $ (.22)
------------------------------------------------------------------------------------------
Less Distributions:
Dividends from net
investment income $ (.27) $ (.56) $ (.55) $ (.57) $ (.59) $ (.45)
Distributions from net
capital gains .00 .00 .00 .00 .00 .00
--------------------------------------------------------------------------------------------
Total Distributions $ (.27) $ (.56) $ (.55) $ (.57) $ (.59) $ (.45)
-------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.37 $ 11.13 $ 11.26 $ 11.00 $ 10.95 $ 10.82
===========================================================================================
Total Return 9.24%(A)(B) 3.95%(A) 7.57%(A) 5.73%(A) 7.14%(A) (3.20)%(A)(B)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $27,382 $26,318 $27,802 $18,077 $14,445 $8,171
Ratio of net expenses
(after expense assumption)
to average net assets 0.70%(B) 0.63%(C) 0.71%(C) 0.62%(C) 0.35%(C) 0.19%(B)(C)
Ratio of net investment
income to average net assets 4.80%(B) 5.06% 5.03% 5.13% 5.63% 5.51%(B)
Portfolio turnover rate 7.06% 26.36% 42.84% 27.20% 140.00% 314.00%
</TABLE>
(A) Excludes maximum sales charge of 4.25%.
(B) Ratio was annualized.
(C) During the periods indicated above, ND Holdings, Inc. or Ranson Capital
Corporation assumed expenses of $51,233, $124,394, $129,053, $146,913
and $70,186, respectively. If the expenses had not been assumed, the
annualized ratios of total expenses to average net assets would have
been 0.81%, 1.22%, 1.38%, 1.66%, and 2.25%, respectively.
The accompanying notes are an integral part of these financial statements.
Dear Shareholder,
We are pleased to enclose the semi-annual report of the operations of The
Oklahoma Municipal Fund, for the six months ended January 29, 1999. The
Fund's portfolio and related financial statements are presented within for
your review.
In 1998, the U.S. economy exhibited more strength than expected. While there
has been some weakening in factory orders reflective of foreign competition,
the housing market and domestic consumer sales have been strong. Much of
this strength can be contributed to the way computer technology has allowed
productivity to increase in the U.S.
In addition to new efficient technology, the U.S. is poised to benefit from
free international trade. The recent trade deficit has restrained U.S.
growth, but at the same time has kept inflation low. However, with the U.S.
dollar declining relative to Asian currencies and Europe improving,
international trade should become less of a drag on the U.S. economy. This,
along with an already robust domestic economy, should help the U.S. prosper.
The main story for municipal investors in 1998 was the increase in
the ratio between municipal and Treasury yields. At the beginning of the year,
municipals were yielding 87% as much as the 30-year Treasury bond. By
year-end, that ratio had climbed to 98%. As yields on the 30-year Treasury
bond fell from 5.92% to 5.09%, municipal yields dropped from 5.15% to 5.00%.
This abnormal relationship does not appear to be a concern over possible tax
law changes, but results from foreign and domestic investor demand for U.S.
Treasuries in times of economic turmoil abroad. Restoring municipals and
Treasuries to a more normal relationship will likely result as the U.S. trade
deficit puts downward pressure on the dollar, thus weakening foreign support
for Treasuries.
Municipal bonds remain ridiculously cheap (in terms of price) by historical
standards. Normally, buyers pay for the tax benefits of municipals by getting
a lower return. Today, however, investors are saving on taxes without giving
up return. Faced with a choice of paying taxes on investment income or not,
what would you do?
The Oklahoma Municipal Fund began the year at $11.68 and ended the six month
period at $11.96. The Oklahoma Municipal Fund., at times during the first six
months, utilized a defensive position in U.S. Treasury futures to minimize the
effects of strong economic growth. Share price was tempered as yields on U.S.
Treasuries dropped to record lows in the fall and stabilized share price as
yields rose in the latter part of the year. Stability of share price is the
primary objective of a defensive position.
The Fund continues to invest in high-grade Oklahoma double exempt bonds.
Diversification remains an important strategy for the Fund. Purchases
throughout the year in the primary and secondary markets include Oklahoma
Housing Authority, Oklahoma State University, and Oklahoma State Industrial
Finance bonds.
The investment objective of the Fund is to provide a high level of current
income exempt from both federal income tax and, to the extent indicated in
the prospectus, Oklahoma income tax as is consistent with preservation of
capital.
Sincerely,
Monte L. Avery Robert E.Walstad
Chief Portfolio Strategist President
Terms & Definitions
Appreciation
Increase in value of an asset.
Average Annual Total Return
A standardized measurement of the return (yield and appreciation) earned by the
fund on an annual basis, assuming all distributions are reinvested.
Coupon Rate or Face Rate
The rate of interest annually payable based on the face amount of the bond;
expressed as a percentage.
Depreciation
Decrease in value of an asset.
Lehman Brothers Municipal Bond Index
An unmanaged list of long-term, fixed-rate, investment-grade, tax-exempt bonds
representative of the municipal bond market. The index does not take into
account brokerage commissions or other costs, may include bonds different from
those in the fund, and may pose different risks than the fund.
Market Value
Actual (or estimated) price at which a bond trades in the market place.
Maturity
A measure of the term or life of a bond in years. When a bond "matures", the
issuer repays the principal.
Net Asset Value (NAV)
The value of all your fund's assets, minus any liabilities, divided by the
number of outstanding shares, not including any initial sales charge.
Quality Ratings
A designation assigned by independent rating companies to give a relative
indication of a bond's credit worthiness. "AAA", "AA", "A", and "BBB" indicate
investment grade securities. Ratings can range from a high of "AAA" to a low
of "D".
Total Return
Measures both the net investment income and any realized and unrealized
appreciation or depreciation of the underlying investments in the fund's
portfolio for the period, assuming the reinvestment of all dividends.
It represents the aggregate percentage or dollar value change over the period.
PERFORMANCE AND COMPOSITION
- ---------------------------
Portfolio Ratings
(based on Total Long-Term Investments)
- --------------------------------------
[pie chart]
AAA 61.1
AA 15.4
A 4.6
BBB 7.6
NR 11.3
Quality ratings reflect the financial strength of the issuer. They are
assigned by independent rating services such as Moody's Investors Services and
Standard & Poor's. Non-rated bonds have been determined to be of appropriate
quality for the portfolio by Ranson Capital Corporation, the investment
advisor.
Portfolio Market Sectors
(as a % of Net Assets)
- ------------------------
[pie chart]
S-School 40.9
GO-General Obligation 11.5
HC-Health Care 11.4
U-Utilities 10.6
H-Housing 9.6
O-Other 6.5
W/S-Water/Sewer 3.7
I-Industrial 3.2
T-Transportation 2.6
Market sectors are breakdowns of the Fund's portfolio holdings into specific
investment classes.
COMPARATIVE INDEX GRAPH
- ------------------------
[line graph]
Comparison of change in value of a $10,000 investment in The
Oklahoma Municipal Fund and the Lehman Bros. Municipal Bond Index
The Oklahoma Municipal The Oklahoma Municipal Lehman Bros
Fund w/o sales charge Fund w/ max sales charge Muni Bond Index
- ------------------------------------------------------------------------------
09/25/96 $10,000 $ 9,575 $10,000
1997 $10,779 $10,321 $11,027
1998 $11,186 $10,711 $11,687
01/29/99 $11,725 $11,227 $12,233
Average Annual Total Returns
For periods ending January 29, 1999
Since Inception
1 year 5 year (September 25, 1996)
- -------------------------------------------------------------------------------
Without sales charge 5.23% NA 7.02%
With sales charge .76% NA 5.06%
- -------------------------------------------------------------------------------
Putting Performance into Perspective
The graph comparing your Fund's performance to a benchmark index provides you
with a general sense of how your Fund performed. To put this information in
context, it may be helpful to understand the special differences between the
two. The Lehman Brothers index is a national index representative of the
national municipal bond market whereas the Fund concentrates its investments in
Oklahoma municipal bonds. Your Fund's total return for the period shown
appears with and without sales charges and includes Fund expenses and
management fees. A securities index measures the performance of a theoretical
portfolio. Unlike a fund, the index is unmanaged; there are no expenses that
affect the results. In addition, few investors could purchase all of the
securities necessary to match the index. And, if they could, they would incur
transaction costs and other expenses. All Fund and benchmark returns include
reinvested dividends. Returns are historical and are not a guarantee of future
results. The Fund's share price, yields and total returns will vary, so that
shares, when redeemed, may be worth more or less than their original cost.
Key Statistics
07-31-98 NAV (share value) $11.68
01-29-99 NAV $11.96
Average Maturity 19.2 years
Number of Issues 55
Total Net Assets $16,204,307
<TABLE>
<CAPTION>
Schedule of Investments January 29,1999 (Unaudited)
Name of Issuer
Percentages represent the market valueof each investment
category to total net assets Rating Coupon Maturity Principal Market
Moody's/S&P Rate Amount Value
- -----------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
OKLAHOMA MUNICIPAL BONDS (96.6%)
Eastern OK Board of Regents (State College) Facs. Rev. NR/NR 6.100% 06/01/17 $150,000 $159,936
Edmond Economic Dev. Auth., OK. Student Housing Rev. Baa-3/NR 5.250 12/01/10 125,000 125,158
Edmond Economic Dev. Auth., OK. Student Housing Rev. Baa-3/NR 5.375 12/01/19 100,000 100,767
Edmond Economic Dev. Auth., OK. Student Housing Rev. Baa-3/NR 5.500 12/01/28 515,000 515,057
Grand River Dam Auth. Rev. Ref. A/A- 5.000 06/01/12 100,000 100,000
Grand River Dam Auth., OK Rev. AMBAC Aaa/AAA 5.500 06/01/09 75,000 83,522
*Grand River Dam Auth., OK Rev. AMBAC Aaa/AAA 6.250 06/01/11 210,000 248,720
Grand River Dam Auth., OK Rev. Ref. AMBAC Aaa/AAA 5.500 06/01/13 190,000 211,314
OK Agric. & Mech. Coll. (OK St. Univ.) Athl. Facs. AMBAC Aaa/NR 5.000 08/01/24 400,000 411,540
OK Agric. & Mech. Coll. (OK St. Univ.) Athl. Facs. AMBAC Aaa/NR 4.900 08/01/18 355,000 362,618
OK Agric. & Mech. Colleges (OK St. Univ.) Util. Syst. FGIC Aaa/AAA 5.000 07/01/13 600,000 622,530
OK Agric. & Mech. Colleges Facs. (Connors College) MBIA Aaa/AAA 4.650 06/01/18 250,000 243,645
OK Board of Regents Univ. of OK Mult. Facs. Rev. AMBAC Aaa/NR 4.900 05/01/17 590,000 605,021
OK Capital Impvt. Auth. (Dept. of Corrections) Rev. AMBAC Aaa/AAA 5.000 05/01/18 500,000 511,155
OK Capital Impvt. Auth. Rev. (State Office Building) A/NR 5.500 10/01/16 105,000 111,995
OK Colleges Brd. of Regents (NE State Univ. Ctr.) Rev. FSA Aaa/AAA 5.100 03/01/16 140,000 145,125
OK Colleges Brd. of Regents (NE State Univ. Ctr.) Rev. FSA Aaa/AAA 5.150 03/01/21 100,000 103,938
OK Devl. Finance Auth. (All Saints Cath. School) Rev. MBIA Aaa/NR 4.800 12/01/13 250,000 249,228
OK Devl. Finance Auth. (Central OK Univ.) Aa-3/NR 5.300 12/01/18 100,000 103,951
OK Devl. Finance Auth. (DHS Cty. Office Bldg.) Rev. A/NR 5.250 11/01/11 120,000 126,870
OK Devl. Finance Auth. (DHS Cty. Office Bldg.) Rev. A/NR 5.300 11/01/12 275,000 292,012
*OK Devl. Finance Auth. (OK City Univ.) Rev. Ref. AMBAC Aaa/AAA 5.125 06/01/17 545,000 561,454
OK Devl. Finance Auth. (Southern Nazarene Univ.) Rev. NR/NR 6.200 11/01/07 100,000 110,351
OK Devl. Finance Auth. (Southern Nazarene Univ.) Rev. NR/NR 6.500 11/01/13 75,000 83,415
OK Devl. Finance Auth. (Southern Nazarene Univ.) Rev. NR/NR 5.750 03/01/13 400,000 405,984
#OK Devl. Finance Auth. (Southern Nazarene Univ.) Rev. NR/NR 6.000 03/01/18 600,000 612,060
*OK Devl. Finance Auth. (Tulsa Vo Tech Dist. Proj. ) AMBAC Aaa/AAA 5.100 08/01/15 750,000 776,708
OK Devl. Finance Auth. Facs. (Univ. of OK-Norman) FSA Aaa/AAA 5.625 07/01/13 50,000 54,476
OK Devl. Finance Auth. Facs. (OK State Univ.) Rev. FSA Aaa/NR 5.000 07/01/18 225,000 231,876
OK Devl. Finance Auth. (ST. Ann's Retire Village) Rev. MBIA Aaa/NR 5.000 12/01/28 1,000,000 986,390
OK Housing Finance Agency Single Family GNMA Aaa/NR 5.375 03/01/20 800,000 814,672
OK Housing Finance Agency Single Family GNMA/FNMA Aaa/NR 5.150 09/01/20 750,000 750,555
OK State Indl. Finance Auth. G.O. Aa-3/NR 5.300 09/01/11 50,000 52,595
OK State Indl. Finance Auth. G.O. Aa-3/NR 5.400 09/01/12 50,000 52,828
OK State Indl. Finance Auth. G.O. Aa-3/NR 5.000 04/01/13 400,000 412,200
OK State Indl. Finance Auth. G.O. Aa-3/NR 4.700 01/01/12 220,000 219,133
OK State Indl. Finance Auth. G.O. Aa-3/NR 4.800 01/01/13 130,000 129,528
OK State Indl. Finance Auth. G.O. Aa-3/NR 5.000 01/01/14 245,000 246,629
OK State Municipal Power Auth. Rev. MBIA Aaa/AAA 5.875 01/01/12 200,000 230,246
OK State Municipal Power Auth. Rev. MBIA Aaa/AAA 5.750 01/01/24 290,000 332,662
OK State Student Loan Auth. A/NR 6.350 09/01/25 100,000 105,375
OK State Turnpike Auth. Rev. AMBAC Aaa/AAA 5.500 01/01/22 150,000 158,976
OK State Turnpike Auth. Rev. FGIC Aaa/AAA 5.000 01/01/14 250,000 260,575
OK State Unlimited Tax G.O. Aa-3/AA 5.200 07/15/16 350,000 365,215
OK State Unlimited Tax G.O. Aa-3/AA 5.200 07/15/18 145,000 150,813
OK State Unlimited Tax G.O. Aa-3/AA 5.100 07/15/13 90,000 94,593
OK State Water (Loan Program) Rev. NR/AA 6.250 10/01/12 50,000 55,101
OK State Water (Loan Program) Rev. NR/AA 5.400 09/01/15 105,000 112,753
*OK State Water (Loan Program) Rev. NR/AA 5.100 09/01/16 415,000 430,982
Oklahoma Cnty, OK Finance Auth. (Epworth Villa) Rev. Ref. NR/NR 6.500 04/01/15 200,000 206,248
Oklahoma Cnty, OK Finance Auth. (Epworth Villa) Rev. Ref. NR/NR 7.000 04/01/22 200,000 207,348
Oklahoma Cnty., OK Indl. Auth. (Benevolent Association) Ref. Baa-1/NR 6.150 01/01/11 100,000 108,529
Puerto Rico Commonwealth Unlimited G.O. MBIA Aaa/AAA 5.375 07/01/21 150,000 158,265
Puerto Rico Elec. Power Auth. Rev. MBIA Aaa/AAA 5.375 07/01/27 500,000 530,085
Shawnee, OK Hospital Auth. (Midamerica Hlth. Care) NR/BBB 6.125 10/01/14 325,000 352,177
------------
TOTAL OKLAHOMA MUNICIPAL BONDS (COST: $15,324,442) $ 15,794,896
------------
SHORT-TERM SECURITIES (5.8%)
Federated Tax-Free Fund 73 $ 575,826
Federated Intermediate Municipal Trust 78 367,218
------------
TOTAL SHORT-TERM SECURITIES (COST: $940,979) $ 943,044
------------
TOTAL INVESTMENTS IN SECURITIES (COST: $16,265,421) $ 16,737,940
OTHER ASSETS LESS LIABILITIES (393,633)
------------
NET ASSETS $ 16,344,307
============
</TABLE>
* Indicates bonds are segregated by the custodian to cover when-issued or
delayed delivery purchases.
# Indicates bonds are segregated by the custodian to cover initial margin
requirements.
Footnote: Non-rated (NR) investments have been determined to be of investment
grade quality by the Fund's Manager.
The accompanying notes are an integral part of these financial statements.
Financial Statements January 29, 1999
Statement of Assets and Liabilities January 29, 1999 (Unaudited)
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Assets
Investment in securities, at value (Cost: $16,265,421) $ 16,737,940
Accrued interest receivable 210,788
Accrued dividends receivable 1,155
Deferred organization costs 17,862
Variation margin on futures 34,375
Prepaid expenses 750
--------------
Total Assets $ 17,002,870
Liabilities
Payable for fund shares redeemed $ 592,984
Dividends payable 60,652
Accrued expenses 4,927
--------------
Total Liabilities $ 658,563
--------------
Net Assets $ 16,344,307
==============
Net assets are represented by:
Paid-in capital $ 15,977,590
Accumulated undistributed net realized gain(loss) on investments (94,565)
Unrealized appreciation on investments 472,519
Unrealized appreciation on futures (11,237)
--------------
Total amount representing net assets applicable to
1,367,070 outstanding shares of no par common
stock (unlimited shares authorized) $ 16,344,307
==============
Net asset value per share $ 11.96
==============
The accompanying notes are an integral part of these financial statements.
Statement of Operations For the six months ended January 29, 1999 (Unaudited)
- -----------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 341,619
Dividends 9,192
Total Investment Income $ 350,811
--------------
EXPENSES
Custodian fees $ 1,085
Registration and filing fees 924
Transfer agent fees 61
Accounting service fees 12,792
Transfer agent out-of-pocket expenses 2,040
Trustees fees 1,061
Reports to shareholders 736
Amortization of organizational costs 2,640
Professional fees 2,248
Insurance expense 14
--------------
Total Expenses $ 23,601
--------------
NET INVESTMENT INCOME $ 327,210
--------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES
Net realized gain (loss) on:
Investment transactions $ 15,734
Futures transactions (43,550)
Net change in unrealized appreciation (depreciation) of:
Investments 364,727
Futures (11,237)
--------------
Net Realized And Unrealized Gain (Loss) On
Investments And Futures $ 325,674
--------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 652,884
==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
Financial Statements January 29, 1999
Statement of Changes in Net Assets
For the six months ended January 29, 1999 and the Year ended July 31, 1998
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
For The Six
Months Ended For The
January 29, 1999 Year Ended
(Unaudited) July 31, 1998
----------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
<S> <C> <C>
Net investment income $ 327,210 $ 522,753
Net realized gain (loss) on investment and futures transactions (27,816) (68,145)
Net unrealized appreciation (depreciation) on
investments and futures 353,490 (30,903)
-------------------------------------------
Net Increase (Decrease) in Net Assets Resulting From Operations $ 652,884 $ 423,705
-------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income
($.28 and $.60 per share, respectively) $ (327,210) $ (522,753)
Distributions from net realized gain on investment
transactions ($.00 and $.02 per share, respectively) 0 (19,246)
-------------------------------------------
Total Dividends and Distributions $ (327,210) $ (541,999)
-------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sale of shares $ 5,533,441 $ 8,032,955
Proceeds from reinvested dividends 187,514 294,779
Cost of shares redeemed (1,037,558) (3,464,879)
------------------------------------------
Net Increase (Decrease) in Net Assets Resulting
From Capital Share Transactions $ 4,683,397 $ 4,862,855
------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS $ 5,007,071 $ 4,744,561
NET ASSETS, BEGINNING OF PERIOD $ 11,335,236 $ 6,590,675
------------------------------------------
NET ASSETS, END OF PERIOD $ 16,344,307 $ 11,335,236
==========================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements January 29, 1999 (Unaudited)
Note 1. ORGANIZATION
Business Operations - The Oklahoma Municipal Fund (the "Fund") is an investment
portfolio of Ranson Managed Portfolios (the "Trust") registered under the
Investment Company Act of 1940, as amended, as a non-diversified, open-end
management investment company. The Trust may offer multiple portfolios;
currently five portfolios are offered. Ranson Managed Portfolios is an
unincorporated business trust organized under Massachusetts law on August 10,
The Fund had no operations from that date to September 25, 1996, other
than matters relating to organization and registration. On September 25,
1996, the Fund commenced its Public Offering of capital shares. The investment
objective of the Fund is to provide its shareholders with as high a level of
current income exempt from both federal income tax and, to a certain extent,
Oklahoma income tax, as is consistent with preservation of capital. Up to 30%
of the Fund's total assets may be invested in Oklahoma municipal securities
which are subject to Oklahoma state income taxes. The Fund will seek to
achieve this objective by investing primarily in a portfolio of Oklahoma
municipal securities. Shares of the Fund are offered at net asset value plus
a maximum sales charge of 4.25% of the offering price.
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investment security valuation - Securities for which quotations are not readily
available (which will constitute a majority of the securities held by the Fund)
are valued using a matrix system at fair value as determined by Ranson Capital
Corporation, ("Ranson"). The matrix system has been developed based on
procedures approved by the Board of Trustees which include consideration of
the following: yields or prices of municipal bonds of comparable quality, type
of issue, coupon, maturity and rating, and indications as to value from dealers
and general market conditions. Because the market value of securities can
only be established by agreement between parties in a sales transaction,
and because of the uncertainty inherent in the valuation process, the fair
values as determined may differ from the values that would have been used had
a ready market for the securities existed. The Fund follows industry practice
and records security transactions on the trade date.
The Fund concentrates its investments in a single state. This concentration
may result in the Fund investing a relatively high percentage of its assets in
a limited number of issuers.
Deferred organization costs - Costs incurred by the Fund in connection with its
organization will be amortized over a 60-month period on the straight-line
basis beginning May 10, 1997. Accumulated amortization at January 29, 1999
totaled $8,688 leaving an unamortized balance of $17,862.
Federal and state income taxes - The Fund's policy is to comply with the
requirements of the Internal Revenue Code that are applicable to regulated
investment companies, and to distribute all of its net investment income and
any net realized gain on investments, to its shareholders. Therefore, no
provision for income taxes is required. The fund has available at January 29,
1999, a net capital loss carryforward totaling $68,145, which may be used to
offset capital gains realized during subsequent years through July 31, 2006.
Distributions to shareholders - Dividends from net investment income, declared
daily and payable monthly, are reinvested in additional shares of the Fund at
net asset value or paid in cash. Capital gains, when available, are
distributed at least annually.
Investment income - Dividend income is recognized on the ex-dividend date and
interest income is recognized daily on an accrual basis. Premiums and
discounts on securities purchased are amortized using the effective interest
method over the life of the respective securities, unless callable, in which
case they are amortized to the earliest call date.
Futures contracts - The Fund may purchase and sell financial futures contracts
to hedge against changes in the values of tax-exempt municipal securities the
Fund owns or expects to purchase.
A futures contract is an agreement between two parties to buy or sell units of
a particular index or a certain amount of U.S. Government or municipal
securities at a set price on a future date. Upon entering into a futures
contract, the Fund is required to deposit with a broker an amount of cash or
securities equal to the minimum "initial margin" requirement of the futures
exchange on which the contract is traded. Subsequent payments ("variation
margin") are made or received by the Fund, dependent on the fluctuations in
the value of the underlying index. Daily fluctuations in value are recorded
for financial reporting purposes as unrealized gains or losses by the Fund.
When entering into a closing transaction, the Fund will realize, for book
purposes, a gain or loss equal to the difference between the value of the
futures contracts sold and the futures contracts to buy. Unrealized
appreciation (depreciation) related to open futures contracts is required to
be treated as realized gain (loss) for Federal income tax purposes.
Securities held in collateralized accounts to cover initial margin requirements
on open futures contracts are noted in the Schedule of Investments. The
Statement of Assets and Liabilities reflects a receivable or payable for the
daily mark to market for variation margin.
Certain risks may arise upon entering into futures contracts. These risks may
include changes in the value of the futures contracts that may not directly
correlate with changes in the value of the underlying securities.
At January 29, 1999, the Fund had outstanding futures contracts to sell debt
securities as follows:
Number of Valuation Unrealized
Contracts Expiration Futures as of Appreciation
To Sell Date Contracts January 29, 1999 (Depreciation)
- -----------------------------------------------------------------------------
U.S. Treasury Notes 03/99 25 $34,375 ($9,841)
- -----------------------------------------------------------------------------
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Note 3. CAPITAL SHARE TRANSACTIONS
As of January 29, 1999, there were unlimited shares of no par authorized; on
January 29, 1999 and July 31, 1998 there were 1,367,070 and 970,625 shares
outstanding, respectively.
Transactions in capital shares were as follows:
Shares
For The Six
Months Ended For The
January 29, 1999 Year Ended
(Unaudited) July 31, 1998
------------------------------------
Shares sold 468,023 684,086
Shares issued on reinvestment
of dividends 15,866 25,084
Shares redeemed (87,444) (294,163)
----------------------------------
Net increase (decrease) 396,445 415,007
==================================
Note 4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Ranson Capital Corporation, the Fund's investment adviser and underwriter,
ND Resources, Inc., the Fund's transfer and accounting services agent, and
ND Capital, Inc., the Fund's agent for the purchase of certain investment
securities, are subsidiaries of ND Holdings, Inc., the Fund's sponsor.
The Fund has engaged Ranson Capital Corporation to provide investment advisory
and management services to the Fund. The Investment Advisory Agreement
provides for fees computed at an annual rate of 0.50% of the Fund's average
daily net assets. The Fund has waived all investment advisory fees for the six
months ended January 29, 1999. Certain officers and trustees of the Fund are
also officers and directors of the investment adviser.
The Fund pays an annual service fee to Ranson Capital Corporation (Ranson), its
principal underwriter, in connection with the distribution of the Fund's
shares. The annual fee paid to Ranson under the Plan is calculated daily and
paid monthly by the Fund at the annual rate of 0.25% of the average daily net
assets of the Fund. Ranson has elected to waive all operation service fees
for the six months ended January 29, 1999.
ND Resources, Inc., (the transfer agent), provides shareholder services for a
monthly fee equal to an annual rate of 0.16% of the Fund's first $10 million of
net assets, 0.13% of the Fund's net assets on the next $15 million, 0.11% of
the Fund's net assets on the next $15 million, 0.10% of the Fund's net assets
on the next $10 million, and 0.09% of the Fund's net assets in excess of $50
million. The Fund has recognized $61 of transfer agent fees and expenses after
partial waiver for the six months ended January 29, 1999. ND Resources, Inc.
also acts as the Fund's accounting services agent for a monthly fee equal to
the sum of a fixed fee of $2,000, and a variable fee equal to 0.05% of the
Fund's average daily net assets on an annual basis for the Fund's first
$50 million and at a lower rate on the average daily net assets in excess of
$50 million. The Fund has recognized $12,792 of accounting service fees after
partial waiver for the six months ended January 29, 1999. The Fund has a
payable to ND Resources, Inc. of $1,633 at January 29,1999 for accounting
service fees.
Note 5. INVESTMENT SECURITY TRANSACTIONS
The cost of purchases and proceeds from the sales of investment securities
(excluding short-term securities) aggregated $5,762,162 and $1,369,081
respectively, for the six months ended January 29, 1999.
Note 6. INVESTMENT IN SECURITIES
At January 29, 1999, the aggregate cost of securities for federal income tax
purposes was $16,265,421, and the net unrealized appreciation of investments
based on the cost was $472,519, which is comprised of $476,908 aggregate gross
unrealized appreciation and $4,389 aggregate gross unrealized depreciation.
<TABLE>
<CAPTION>
Financial Highlights Selected per share data and ratios for the period
indicated
- ------------------------------------------------------------------------------------------------------------------------
For the Six For The Period
Months Ended For The Since Inception
January 29, 1999 Year Ended (Sept. 25, 1996)
(Unaudited) July 31, 1998 Through 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 $ .28 $ .60 $ .50
Net realized and unrealized
gain (loss) on investment and
futures transactions .28 (.16) .37
--------------------------------------------------------------------
Total From Investment Operations $ .56 $ .44 $ .87
--------------------------------------------------------------------
Less Distributions:
Dividends from net investment income $ (.28) $ (.60) $ (.50)
Distributions from net capital gains .00 (.02) .00
--------------------------------------------------------------------
Total Distributions $ (.28) $ (.62) $ (.50)
---------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.96 $ 11.68 $ 11.86
====================================================================
Total Return 9.16%(A)(B) 3.81%(A) 7.79%(A)(B)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $ 16,344 $ 11,335 $ 6,591
Ratio of net expenses
(after expense assumption)
to average net assets .34%(B) 0.20%(C) 0.11%(C)
Ratio of net investment
income to average net assets 4.64%(B) 5.08% 3.70%
Portfolio turnover rate 10.04% 53.32% 63.70%
</TABLE>
(A) Excludes maximum sales charge of 4.25%.
(B) Ratio was annualized.
(C) During the year ended July 31, 1998 and the period ended July 31, 1997, ND
Holdings, Inc. or Ranson Capital Corporation assumed expenses of $53,180,
and $34,609, respectively. If the expenses had not been assumed, the
annualized ratio of total expenses to average net assets would have been
0.71% and 2.01%, respectively.
The accompanying notes are an integral part of these financial statements.
The Illinois Municipal Fund
Financial Statements January 29, 1999
Statement of Assets and Liabilities January 29, 1999 (Unaudited)
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash $ 924
Receivable from manager 178
Deferred organization costs 35,750
---------
Total Assets $ 36,852
---------
Liabilities
Organizational costs payable $ 35,750
Other Payables 123
---------
Total Liabilities $ 35,873
---------
Net Assets $ 979
=========
Net assets are represented by:
Paid-in capital $ 4,383
Accumulated undistributed net realized gain(loss) on investments (3,404)
---------
Total amount representing net assets applicable to
88.183 outstanding shares of no par common
stock (unlimited shares authorized) $ 979
=========
Net asset value per share $ 11.10
=========
The accompanying notes are an integral part of these financial statements.
Statement of Operations For the six months ended January 29, 1999 (Unaudited)
- ------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 0
Dividends 0
---------
Total Investment Income $ 0
---------
EXPENSES
Trustees fees $ 683
Professional fees 4
---------
Total Expenses $ 687
Less expenses waived or absorbed by the Fund's manager 687
---------
Total Net Expenses $ 0
---------
NET INVESTMENT INCOME $ 0
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on
investment transactions $ 0
---------
Net Realized And Unrealized Gain (Loss) On
Investments $ 0
---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 0
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Financial Statements January 29, 1999
Statement of Changes in Net Assets For the six month period ended
January 29,1999 and the period since inception (October 11, 1997) through
July 31, 1998
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six Months For the Period
Ended Since Inception
January 29, 1999 (October 11, 1997)
(Unaudited) Through July 31, 1998
--------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
<S> <C> <C>
Net investment income $ 0 $ 3,307
Net realized gain (loss) on investment transactions 0 (3,404)
Net unrealized appreciation (depreciation) on investments 0 0
--------------------------------------------
Net Increase (Decrease) in Net Assets Resulting From Operations $ 0 $ (97)
--------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income $ 0 $ (3,307)
Distributions from net realized gain on investment transactions 0 0
--------------------------------------------
Total Dividends and Distributions $ 0 $ (3,307)
--------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sale of shares $ 0 $ 138,297
Proceeds from reinvested dividends 0 229
Cost of shares redeemed 0 (134,143)
--------------------------------------------
Net Increase (Decrease) in Net Assets Resulting
From Capital Share Transactions $ 0 $ 4,383
--------------------------------------------
TOTAL INCREASE IN NET ASSETS $ 0 $ 979
NET ASSETS, BEGINNING OF PERIOD $ 979 $ 0
--------------------------------------------
NET ASSETS, END OF PERIOD $ 979 $ 979
============================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements January 29, 1999 (Unaudited)
Note 1. ORGANIZATION
Business Operations - The Illinois Municipal Fund (the "Fund") is an investment
portfolio of Ranson Managed Portfolios (the "Trust") registered under the
Investment Company Act of 1940, as amended, as a non-diversified, open-end
management investment company. The Trust may offer multiple portfolios;
currently five portfolios are offered. Ranson Managed Portfolios is an
unincorporated business trust organized under Massachusetts law on August 10,
1990. The Fund had no operations from that date to October 11, 1997, other than
matters relating to organization and registration. On October 11, 1997, the
Fund commenced its Public Offering of capital shares. The investment objective
of the Fund is to provide its shareholders with as high a level of current
income exempt from federal income tax and, to the extent indicated, Illinois
income tax as is consistent with preservation of capital. The Fund will seek to
achieve this objective by investing primarily in a portfolio of Illinois
municipal securities. Shares of the Fund are offered at net asset value plus a
maximum sales charge of 4.25% of the offering price.
As of May 1, 1998 the Fund ceased offering shares to the public. All shares
were redeemed except for 88.183 shares currently held by ND Holdings, the Fund's
sponsor. At the time of this report, the future of the Fund's operations has
not been determined.
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investment security valuation - Securities for which quotations are not readily
available (which will constitute a majority of the securities held by the Fund)
are valued using a matrix system at fair value as determined by Ranson Capital
Corporation, ("Ranson"). The matrix system has been developed based on
procedures approved by the Board of Trustees which include consideration of the
following: yields or prices of municipal bonds of comparable quality, type of
issue, coupon, maturity and rating, indications as to value from dealers and
general market conditions. Because the market value of securities can only be
established by agreement between parties in a sales transaction, and because of
the uncertainty inherent in the valuation process, the fair values as determined
may differ from the values that would have been used had a ready market for the
securities existed. The Fund follows industry practice and records security
transactions on the trade date.
The Fund concentrates its investments in a single state. This concentration may
result in the Fund investing a relatively high percentage of its assets in a
limited number of issuers.
Deferred organization costs - Costs incurred by the Fund in connection with its
organization will be amortized over a 60-month period on the straight-line
basis. As of January 29, 1999 no organizational costs have been amortized
leaving an unamortized balance of $35,750.
Federal and state income taxes - The Fund's policy is to comply with the
requirements of the Internal Revenue Code that are applicable to regulated
investment companies, and to distribute all of its net investment income and
any net realized gain on investments, to its shareholders. Therefore, no
provision for income taxes is required. The Fund has available at January 29,
1999, a net capital loss carryforward totaling $3,404, which may be used to
offset capital gains realized during subsequent years through July 31, 2006.
Distributions to shareholders - Dividends from net investment income, declared
daily and payable monthly, are reinvested in additional shares of the Fund at
net asset value or paid in cash. Capital gains, when available, are distributed
at least annually.
Investment income - Dividend income is recognized on the ex-dividend date and
interest income is recognized daily on an accrual basis. Premiums and discounts
on securities purchased are amortized using the effective interest method over
the life of the respective securities, unless callable, in which case they are
amortized to the earliest call date.
Futures contracts - The Fund may purchase and sell financial futures contracts
to hedge against changes in the values of tax-exempt municipal securities the
Fund owns or expects to purchase.
A futures contract is an agreement between two parties to buy or sell units of a
particular index or a certain amount of U.S. Government or municipal securities
at a set price on a future date. Upon entering into a futures contract, the
Fund is required to deposit with a broker an amount of cash or securities equal
to the minimum "initial margin" requirement of the futures exchange on which the
contract is traded. Subsequent payments ("variation margin") are made or
received by the Fund, dependent on the fluctuations in the value of the
underlying index. Daily fluctuations in value are recorded for financial
reporting purposes as unrealized gains or losses by the Fund. When entering
into a closing transaction, the Fund will realize, for book purposes, a gain or
loss equal to the difference between the value of the futures contracts sold and
the futures contracts to buy. Unrealized appreciation (depreciation) related to
open futures contracts is required to be treated as realized gain (loss) for
Federal income tax purposes.
Certain risks may arise upon entering into futures contracts. These risks may
include changes in the value of the futures contracts that may not directly
correlate with changes in the value of the underlying securities.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Note 3. CAPITAL SHARE TRANSACTIONS
As of July 31, 1998, there were unlimited shares of no par authorized; 88 shares
and 88 shares were outstanding as of January 29, 1999 and July 31, 1998,
respectively. Transactions in capital shares were as follows:
Shares
--------------------------------------
For the Six For the Period
Months Ended Since Inception
January 29, 1999 (October 11, 1997)
(Unaudited) Through July 31, 1998
--------------------------------------
Shares sold 0 11,876
Shares issued on reinvestment of dividends 0 19
Shares redeemed 0 (11,807)
--------------------------------------
Net increase 0 88
======================================
Note 4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Ranson Capital Corporation, the Fund's investment adviser and underwriter, ND
Resources, Inc., the Fund's transfer and accounting services agent, and ND
Capital, Inc., the Fund's agent for the purchase of certain investment
securities, are subsidiaries of ND Holdings, Inc., the Fund's sponsor.
The Fund has engaged Ranson Capital Corporation to provide investment advisory
and management services to the Fund. The Investment Advisory Agreement provides
for fees to be computed at an annual rate of 0.50% of the Fund's average daily
net assets. Capital has elected to waive all Investment advisory fees for the
six months ended January 29, 1999. Certain officers and trustees of the Fund
are also officers and directors of the investment adviser.
The Fund pays an annual service fee to Ranson Capital Corporation (Ranson), its
principal underwriter, in connection with the distribution of the Fund's shares.
The annual fee paid to Ranson is calculated daily and paid monthly by the Fund
at the annual rate of 0.25% of the average daily net assets of the Fund.
Capital has elected to waive all service fees for the six months ended January
29, 1999. In addition, the Fund has engaged ND Capital, Inc. as agent for the
purchase of certain investment securities.
ND Resources, Inc., (the transfer agent), provides shareholder services for a
monthly fee equal to an annual rate of 0.16% of the Fund's first $10 million of
net assets, 0.13% of the Fund's net assets on the next $15 million, 0.11% of the
Fund's net assets on the next $15 million, 0.10% of the Fund's net assets on
the next $10 million, and 0.09% of the Fund's net assets in excess of $50
million. ND Resources, Inc. also acts as the Fund's accounting services agent
for a monthly fee equal to the sum of a fixed fee of $2,000, and a variable fee
equal to 0.05% of the Fund's average daily net assets on an annual basis for the
Fund's first $50 million and at a lower rate on the average daily net assets in
excess of $50 million. ND Holdings, Inc. has assumed all transfer agent and
accounting service fees for the six months ended January 29, 1999.
Note 5. INVESTMENT SECURITY TRANSACTIONS
The cost of purchases and proceeds from the sales of investment securities
(excluding short-term securities) aggregated $0 and $0 respectively, for the
six months ended January 29, 1999.
Financial Highlights Selected per share data and ratios for the period indicated
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period
For the Six Months Since Inception
Ended January 29, 1999 (October 11, 1997)
(Unaudited) Through July 31, 1998
-------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.10 $ 11.49
-------------------------------------------------
Income from Investment Operations:
Net Investment Income $ .00 $ .29
Net realized and unrealized gain (loss)
on investments .00 (.39)
-------------------------------------------------
Total From Investment Operations $ .00 $ (.10)
-------------------------------------------------
Less Distributions:
Dividends from net investment income $ .00 $ (.29)
Distributions from net capital gains .00 .00
-------------------------------------------------
Total Distributions $ .00 $ (.29)
-------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.10 $ 11.10
==================================================
Total Return 0.00%(A)(B) (.52)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $ 1 $ 1
Ratio of net expenses (after expense assumption)
to average net assets 0.00%(B) 0.00%(B)(C)
Ratio of net investment income to average net assets 0.00%(B) 4.18%(B)
Portfolio turnover rate 0.00% 261.63%
</TABLE>
(A) Excludes maximum sales charge of 4.25%.
(B) Ratio was annualized.
(C) During the period ended July 31, 1997, ND Holdings, Inc. assumed expenses
of $26,588. If the expenses had not been assumed, the annualized ratio of
total expenses to average net assets would have been 33.60%.
The accompanying notes are an integral part of these financial statements.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000866841
<NAME> RANSON MANAGED PORTFOLIOS
<SERIES>
<NUMBER> 01
<NAME> THE KANSAS MUNICIPAL FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-30-1999
<PERIOD-END> JAN-29-1999
<INVESTMENTS-AT-COST> 111163932
<INVESTMENTS-AT-VALUE> 117822238
<RECEIVABLES> 1937854
<ASSETS-OTHER> 594539
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 120354631
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 938571
<TOTAL-LIABILITIES> 938571
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 118860171
<SHARES-COMMON-STOCK> 9773166
<SHARES-COMMON-PRIOR> 9875312
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (6241074)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6796963
<NET-ASSETS> 119416060
<DIVIDEND-INCOME> 19279
<INTEREST-INCOME> 3387671
<OTHER-INCOME> 0
<EXPENSES-NET> 563266
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