-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PnxUTaWs4FFxjCriuOZ6oKMC2Uo8ntpp9mF3+YHXlPnvEJMXtEKuBFBNdDm7BH/n JXKmMaIwH/uBSFNux+TFZw== 0000866841-99-000007.txt : 19990312 0000866841-99-000007.hdr.sgml : 19990312 ACCESSION NUMBER: 0000866841-99-000007 CONFORMED SUBMISSION TYPE: N-14 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19990311 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RANSON MANAGED PORTFOLIOS CENTRAL INDEX KEY: 0000866841 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 481084551 STATE OF INCORPORATION: KS FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: N-14 SEC ACT: SEC FILE NUMBER: 333-74241 FILM NUMBER: 99563248 BUSINESS ADDRESS: STREET 1: 1 NORTH MAIN CITY: MINOT STATE: ND ZIP: 58703 BUSINESS PHONE: 7018525292 MAIL ADDRESS: STREET 1: 1 NORTH MAIN CITY: MINOT STATE: ND ZIP: 58703 N-14 1 As filed with the Securities and Exchange Commission on March 11, 1999 Registration No.________________ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N14 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/ PRE-EFFECTIVE AMENDMENT NO. / / POST-EFFECTIVE AMENDMENT NO. / / Ranson Managed Portfolios (Exact Name of Registrant as Specified in Charter) 1 North Main Minot, North Dakota 58703 (Address of Principal Executive Offices) (701) 852-5292 (Registrant's Telephone Number) -------------------------- ------------------------ ------------------------ Robert E. Walstad Mark J. Kneedy Donald F. Burt ND Holdings, Inc. Chapman and Cutler Cline, Williams, Wright, 1 North Main 111 West Monroe Street Johnson & Oldfather Minot, ND 58703 Chicago, IL 60603 1900 U.S. Bank Building (Name and Address of Agent (with a copy to 233 South 13th Street for Service) the above) Lincoln, NE 68508-2095 (with a copy to the above) - -------------------------- ------------------------ -------------------------- As soon as practicable after the Registration Statement becomes effective. (Approximate Date of Proposed Public Offering) The Registrant has previously filed a declaration registering an indefinite number of shares of beneficial interest, without par value, pursuant to Rule 24f-2 under the Investment Company Act of 1940. Accordingly, no filing fee is payable herewith. The Registrant's Rule 24f-2 notice for the year ended July 31, 1998 was filed on September 9, 1998. It is proposed that this will become effective on April 12, 1999, pursuant to Rule 488. April ___, 1999 Dear Shareholder: The Directors of Lancaster Nebraska Tax-Free Fund ("Lancaster Fund") endorse a proposal for the reorganization of Lancaster Fund into Nebraska Municipal Fund ("NMF"). NMF invests its assets nearly the same way as Lancaster Fund. I ask you to vote in favor of this important proposal affecting your investment in Lancaster Fund. You are welcome to join us at the Lancaster Fund Special Shareholder Meeting, but most shareholders vote by filling out and returning the enclosed proxy card. If the proposal passes, you will become a shareholder of NMF. NMF will issue shares equal in value to the Lancaster Fund shares you own. You will not pay a sales charge. You should not have adverse federal income tax consequences. The Directors of Lancaster Fund ask you to approve the reorganization. They believe the reorganization will benefit you by making it easier for the combined fund to attract and retain investors. The Directors reviewed several factors, including the capabilities of NMF's adviser, administrator and distributor. If the NMF distributor successfully markets NMF's shares, NMF's assets should increase and NMF's per share expenses could decrease. We cannot guarantee these results, of course. The enclosed combined Proxy Statement/Prospectus contains detailed information about the proposed reorganization and the reasons for it. The enclosed proxy card is a ballot. It tells us how to vote on your behalf. If you complete and sign the proxy, we'll vote it exactly as you tell us. If you simply sign the proxy card, we'll vote it according to the Directors' recommendation. Please carefully review the Proxy Statement/Prospectus, fill out your proxy card, and return it to us. A self-addressed, postage-paid envelope is enclosed for your convenience. It is important that you vote and that we receive your voting instructions no later than April ___, 1999. NOTE: If you hold shares in more than one account in Lancaster Fund we may send you multiple proxy packages. You must return ALL proxy cards you receive. We have provided postage-paid return envelopes for each. If you have any questions, please call SMITH HAYES Financial Services Corporation at (402) 476-3000 or 1-800-279-7437. Sincerely, Thomas C. Smith, President Lancaster Nebraska Tax-Free Fund, a portfolio of SMITH HAYES Trust, Inc. NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL ___, 1999 TO THE SHAREHOLDERS OF LANCASTER NEBRASKA TAX-FREE FUND: You are cordially invited to attend the Special Meeting of Shareholders of Lancaster Nebraska Tax-Free Fund (the "Lancaster Fund"). The Meeting will be held at 200 Centre Terrace, 1225 "L" Street, Lincoln, Nebraska 68508, on April ___, 1999, at 10:00 a.m. The purposes of the Meeting are: 1. To consider and vote on a proposed Agreement and Plan of Reorganization providing for o the transfer of all the assets of Lancaster Fund in exchange for shares of The Nebraska Municipal Fund ("NMF") o the assumption by NMF of all of the liabilities of the Lancaster Fund o the distribution of shares of NMF to the shareholders of Lancaster Fund in complete liquidation of Lancaster Fund 2. To act upon any other matters that may properly come before the Meeting or any adjournment thereof. The Board of Directors has fixed the close of business on _________, _____________, 1999, as the record date for determination of shareholders entitled to notice of, and to vote at, the Special Shareholders Meeting. As of the record date, there were _______________ shares of Lancaster Fund outstanding and eligible to vote at the Special Shareholders Meeting. A list of such shareholders will be maintained at the offices of SMITH HAYES Financial Services Corporation, 1225 "L" Street, Lincoln, Nebraska 68508, during the ten day period preceding the Special Shareholders Meeting. Please read the Proxy Statement/Prospectus carefully before telling us, through your proxy card, how you wish your shares to be voted. The Board of Directors of Lancaster Fund unanimously recommends a vote in favor of the proposal. WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD AND PROMPTLY RETURN IT IN THE ENVELOPE PROVIDED. No postage is required. Prompt return of your proxy card will be appreciated. Your vote is important no matter how many shares you own. Lincoln, Nebraska BY ORDER OF THE BOARD OF DIRECTORS April ___, 1999 Colleen Avery, Secretary PROXY STATEMENT/PROSPECTUS RELATING TO THE ACQUISITION OF LANCASTER NEBRASKA TAX-FREE FUND 200 CENTRE TERRACE, 1225 "L" STREET LINCOLN, NEBRASKA 68508 TELEPHONE 1-800-279-7437 BY AND IN EXCHANGE FOR SHARES OF THE NEBRASKA MUNICIPAL FUND 1 NORTH MAIN MINOT, NORTH DAKOTA 58703 TELEPHONE 1-800-276-1262 The Board of Directors of Lancaster Nebraska Tax-Free Fund ("Lancaster Fund") approved a plan to reorganize Lancaster Fund into The Nebraska Municipal Fund ("NMF"). Shareholder approval is needed to proceed with that transaction (called the "Reorganization"). A shareholder meeting (the "Special Meeting") will be held on April _____, 1999. If you owned Lancaster Fund shares on ______________, 1999, you are entitled to vote at the Special Meeting. We are sending you this Proxy Statement/Prospectus, Notice of Special Meeting and form of Proxy on or about ______________, 1999. You should use them in deciding whether to approve the Reorganization at the Special Meeting. This document describes the proposed Reorganization in which: o All of the assets and liabilities of Lancaster Fund will be acquired by NMF in exchange for shares of NMF o Those NMF shares will be distributed to shareholders of Lancaster Fund o Lancaster Fund will be terminated As a result, you will hold shares of NMF equal in value to the Lancaster Fund shares you held just before completion of the Reorganization. Lawyers for Lancaster Fund will issue a tax opinion stating that the Reorganization will not cause you to recognize a gain or loss for federal income tax purposes. NMF's investment objectives, policies and restrictions are nearly the same as those of Lancaster Fund. The risks of investing in both Funds are also nearly the same. We have compared the investment objectives and policies of Lancaster Fund and NMF below under "Proposal: Agreement and Plan of Reorganization--Investment Objectives, Policies and Restrictions." Lancaster Fund is a portfolio of SMITH HAYES Trust, Inc., a Minnesota corporation which does business under the name Lancaster Funds. NMF is a portfolio of Ranson Managed Portfolios, a Massachusetts business trust. Lancaster Fund and NMF each are non-diversified series of registered open-end management investment companies. Ranson Capital Corporation is the investment adviser for NMF. CONLEY SMITH, Inc. is the investment adviser for Lancaster Fund. This Proxy Statement/Prospectus gives you the basic information you need to vote on the proposed Reorganization. You should read it and keep it for future reference. Much of the information is required under rules of the Securities and Exchange Commission ("SEC") and some of it is technical in nature. If there is anything you do not understand, please contact Lancaster Fund at our toll-free number, 1-800-279-2437. You should return your proxy and any correspondence to Lancaster Funds, 200 Centre Terrace, 1225 "L" Street, Lincoln, Nebraska 68508. The following documents are on file with the SEC and are deemed to be legally part of this document: o a Statement of Additional Information also dated ____________, 1999 and relating to this Proxy Statement/Prospectus o the Prospectus and Statement of Additional Information of NMF dated November 28, 1998 o the Annual Report of NMF dated July 31, 1998 o the Semi-Annual Report of NMF dated January 31, 1999 o the Prospectus and Statement of Additional Information of Lancaster Fund, dated September 29, 1998 o Annual Financial Statement of Lancaster Fund dated June 30, 1998 o the Semi-Annual Financial Statement of Lancaster Fund dated December 31, 1998 Copies of these documents are available upon request and without charge by calling 1-800-279-7437. The NMF Prospectus, Annual Report and Semi-Annual Report, as well as the Lancaster Fund Prospectus, Annual Financial Statement and Semi-Annual Financial Statement, are included in your package. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities, or determined if this Proxy Statement/Prospectus is truthful or complete. Any representation to the contrary is a criminal offense. This Proxy Statement/Prospectus is dated April ___, 1999. 2 SYNOPSIS Who is Asking for My Vote? The Board of Directors of Lancaster Fund is soliciting your proxy for use at the Special Meeting of Shareholders of Lancaster Fund to be held on April ___, 1999. The purpose of the Special Meeting is to vote on the proposed Reorganization. How Do Your Fund's Directors Recommend That You Vote On The Proposal? The Directors recommend that you vote FOR the proposed Reorganization, in which the assets and liabilities of Lancaster Fund will be transferred to NMF in exchange for shares of NMF with an equal value. Who is Eligible to Vote? If you owned Lancaster Fund shares of record at the close of business on _____________________, 1999, you are entitled to vote at the Special Meeting. On _____________________, 1999, there were ______________ shares of Lancaster Fund outstanding. You have one vote for each share you own. Fractional shares are voted proportionately. If you vote, sign and return a proxy, we'll vote your shares exactly as you instruct us. If you've sent us a proxy, you can revoke it: o by mail (addressed to the Lancaster Fund's Secretary at 200 Centre Terrace, 1225 "L" Street, Lincoln, Nebraska 68508) o in person at the meeting, by executing a subsequent proxy, or by submitting a notice of revocation to the Lancaster Fund If you sign your proxy, but don't fill in a vote, your shares will be voted in accordance with the Directors' recommendations. If any other business is brought before the meeting, your shares will be voted at the Directors' discretion 3 What is Being Proposed? The Directors of your Fund are recommending that you approve the Reorganization of Lancaster Fund into NMF. An Agreement and Plan of Reorganization provides for the transfer of all of the assets and liabilities of Lancaster Fund to NMF in exchange for shares of NMF. Upon completion of the Reorganization: o You will be a shareholder of NMF, which has nearly the same investment objectives, policies and restrictions, fees and purchase and redemption procedures as Lancaster Fund o You will own the same dollar amount of NMF shares as you previously owned in Lancaster Fund o You should experience no federal income tax consequences o Lancaster Fund will cease its operations and dissolve All of Lancaster Fund's expenses related to this Proxy Statement/ Prospectus and the Reorganization will be paid by SMITH HAYES Financial Services Corporation ("SMITH HAYES"), the Distributor of Lancaster Fund. NMF's expenses will be paid by its investment adviser. RISK FACTORS We believe that owning shares of NMF will not involve any unique or special risks compared to owning shares of Lancaster Fund. However, we can't guarantee that NMF will achieve its investment objective. Like Lancaster Fund, NMF can experience: o Yield variations, because interest rates change o Risks from concentrating investments in Nebraska municipal securities, including: o not diversifying investments o possibly not being able to sell portfolio securities (lack of liquidity) o investing in unrated securities o inadequate supply of securities from new issues or in the trading market As with any mutual fund investment, there is a risk of losing the money you have invested. For more detailed information, see "Special Considerations Regarding the Fund" in the Lancaster Fund September 29, 1998 Prospectus and "Highlights of the Fund and Prospectus Summary--Risk Factors" in the NMF November 28, 1998 Prospectus. 4 PROPOSAL: AGREEMENT AND PLAN OF REORGANIZATION General Information The Board of Directors of Lancaster Fund has unanimously approved a proposed Agreement and Plan of Reorganization (the "Plan"). Lancaster Fund shareholders now must vote on whether to proceed with the Plan. If the Plan is approved, NMF will purchase all of the assets of Lancaster Fund in exchange for shares of NMF and the assumption by NMF of the liabilities of Lancaster Fund (the "Reorganization"). The proposed transaction will take place about May 3, 1999 (the "Exchange Date"). Lancaster Fund will value its assets as of 3:00 p.m. Central Time on the business day before the Exchange Date. NMF will issue shares equal in value to the Lancaster Fund shares then outstanding. The shares of NMF will be distributed pro rata to shareholders of Lancaster Fund and Lancaster Fund will be terminated. Because this is a summary, it does not contain all the information that may be important to you. You should read this entire document and its exhibits, before you decide how to vote. A copy of the Plan is attached as Exhibit A. All shares of Lancaster Fund and NMF are in uncertificated book-entry form. The exchange of shares will take place automatically on the Exchange Date. You will not need to submit transmittal forms or other documents. Shareholder Services and Privileges You will enjoy all the same services and privileges as other shareholders of NMF. You will also have the opportunity to exchange into portfolios with a wide variety of investment objectives and policies, which Lancaster Fund presently does not offer. Purchase and redemption procedures for NMF are similar to those of Lancaster Fund. Investment Objectives, Policies and Restrictions NMF has nearly the same investment objectives, policies and restrictions as Lancaster Fund. Thus, the risks of investing in NMF should also be nearly the same. Consider the following summary:
NMF Lancaster Fund o Investment Objective o Provide shareholders as o Provide shareholders a high level high a level of current income of income exempt from federal exempt from federal and Nebraska and Nebraska income tax while seeking income tax as is consistent with preservation of capital the preservation of capital consistent with prudent investing o Strategies, o Invest to produce a higher o Invest 95% of total assets in Techniques, Policies return than investing solely investment grade securities in the highest rated Nebraska municipal securities o Invest in securities which do o Invest no more than 5% of not present a significant assets in below investment risk of loss of principal grade "junk bonds" o Invest at least 80% of assets o Invest at least 80% of assets in Nebraska municipal in Nebraska municipal securities under normal securities under normal circumstances circumstances o Invest up to 100% of assets in o Invest up to 100% of assets in taxable fixed income taxable fixed income securities securities or cash during or cash during abnormal market abnormal market conditions conditions o Invest in financial futures o Invest in financial futures contracts or options for contracts or options for hedging purposes hedging purposes
This is only a summary. The NMF Prospectus dated November 28, 1998, and the Lancaster Fund Prospectus dated September 29, 1998, both included in your package, contain a detailed description of the investment objectives, policies and restrictions of NMF and Lancaster Fund. Background and Reasons for the Proposed Reorganization 5 The Board of Directors of Lancaster Fund, including all of the Directors who are not "interested persons" as defined by the Investment Company Act of 1940 (the "Disinterested Directors"), unanimously concluded that the Reorganization will be in your best interests, and that your interest in Lancaster Fund will not be diluted as a result of the Reorganization. The Lancaster Fund Directors have submitted the Reorganization for approval by the Lancaster Fund shareholders at the Special Meeting on April ___, 1999. The Reorganization will be implemented if a majority of the outstanding shares of Lancaster Fund vote in favor of it. The Directors of Lancaster Fund approved the Reorganization because they believe it will benefit shareholders of Lancaster Fund. The Directors considered a number of factors in reaching their decision. Some of these factors are: o Ranson Capital Corporation (the "NMF Manager") will manage the investments of NMF in nearly the same manner as CONLEY SMITH, Inc. ("CSI") has managed the assets of Lancaster Fund o the capabilities and resources of the other service providers of NMF in the areas of marketing, investment and shareholder services o the expenses and advisory fees applicable to Lancaster Fund before the Reorganization and the estimated expense ratios of NMF after the Reorganization o the terms and conditions of the Plan and whether the proposed Reorganization will dilute Lancaster Fund shareholder interests o the anticipated economies of scale which may be realized (although not presently determined) through the Reorganization o the assumption by SMITH HAYES of the Lancaster Fund costs estimated to be incurred to complete the Reorganization o the future growth prospects of NMF The Directors of Lancaster Fund reviewed information provided by the NMF Manager concerning the impact of the Reorganization. The Directors also conferred with representatives of NMF, SMITH HAYES, and CSI, and held discussions with counsel. The Directors determined that the following results are likely, though not guaranteed: o NMF will have a greater ability to attract and retain investors than would Lancaster Fund alone o Combining the net assets of Lancaster Fund with the assets of NMF should reduce total operating expenses, on a per share basis, by allowing some costs, such as accounting, legal and printing expenses, to be spread over a larger asset base 6 o Consolidating Lancaster Fund and NMF should eliminate duplication of services and expenses and promote more efficient and cost-effective operations in the future The Directors of Lancaster Fund also considered certain possible disadvantages of the Reorganization. NMF has slightly higher total operating expenses than Lancaster Fund, and NMF total annual returns, on average, have been somewhat less than those of Lancaster Fund. See "Expense Summary" and "Comparative Performance Information" below. The Directors believe that combining Lancaster Fund's assets with NMF's assets, thereby creating a fund nearly three times the present size of Lancaster Fund, is more prudent than continuing to operate the smaller Fund. Prior to approving the Plan, the Directors of Lancaster Fund were advised by SMITH HAYES that it will receive a fee from the parent of the NMF Manager. In return, SMITH HAYES will assist in completing the Reorganization by: o transferring assets and shareholder records o filing final tax returns o preparing the other documents related to the dissolution of Lancaster Fund The fee is equal to 3% of the net assets of Lancaster Fund transferred to NMF in the Reorganization, subject to reduction to reflect share redemptions by former Lancaster Fund shareholders within two years. SMITH HAYES and the NMF Manager have advised the Directors they believe payment of such a fee is a common practice and that the amount of the fee is reasonable under the circumstances. Expense Summary The purpose of the following tables is to inform you of the various costs and expenses you will bear, directly or indirectly, as a shareholder of NMF, and to compare those costs and expenses with the costs and expenses you bore as a shareholder of Lancaster Fund during the past fiscal year. 7 Shareholder Transaction Expenses Lancaster Nebraska Nebraska Municipal Fund Tax-Free Fund ------------- ------------- Maximum Sales Load Imposed on Purchases 4.25% 3.90% (as a % of offering price) Annual Fund Operating Expenses Lancaster Nebraska Nebraska Municipal Fund Tax-Free Fund ------------- ------------- (After Fee Waivers) Management Fees 0.20% 0.275% Rule 12b-l Fees 0.25% 0.25% Other Expenses 0.40% 0.155% ----- ------ 0.85% 0.68% EXAMPLE You would pay the following expenses after fee waivers on a $1,000 investment, assuming a 5% annual return. Lancaster Nebraska Nebraska Municipal Fund* Tax-Free Fund ------------- ------------- 1 Year $51 $46 3 Years $65 $60 5 Years $81 $75 10 Years $127 $120 * The calculation presumes expenses for the current year at the projected rate of 0.85% for NMF after partial fee waivers by the NMF Manager. These expense estimates assume a voluntary waiver by the Manager of a portion of its fees not required by the NMF Management and Investment Advisory Agreement. This practice may be discontinued at any time by the NMF Manager. 8 NMF's Management fees, Rule 12b-1 Fees, Other Expenses and Total Fund Operating Expenses for the current fiscal year would be 0.50%, 0.25%, 0.36% and 1.11%, respectively, before fee waivers. These costs and expenses should not be considered a representation of past or future expenses, and the actual expenses incurred by the NMF and the degree of expense reimbursement and fee waivers, if any, may be greater or less in the future. Long-term shareholders may pay more than the economic equivalent of the maximum front-end sales charge permitted by the National Association of Securities Dealers, Inc. Federal Income Tax Consequences Cline, Williams, Wright, Johnson & Oldfather has given a legal opinion to Lancaster Fund and NMF to the effect that for Federal income tax purposes: o transferring all the assets and liabilities of Lancaster Fund to NMF in exchange for shares of NMF and distributing these NMF shares to shareholders of Lancaster Fund will constitute a "reorganization" under Section 368(a)(1)(C) of the Internal Revenue Code of 1986, as amended (the "Code") o under Sections 361(a), 361(c)(1) and 357(a) of the Code, no gain or loss will be recognized by Lancaster Fund as a result of the Reorganization o under Section 354(a)(1) of the Code, you will recognize no gain or loss because of the distribution to you of shares of NMF o under Section 358(a)(1) of the Code, the basis of the NMF shares you receive will be the same as the basis of your Lancaster Funds shares immediately before the Exchange Date o under Section 362(b) of the Code, the basis to NMF of the assets of Lancaster Fund received will be the same as the basis of the assets in the hands of Lancaster Fund immediately before the Reorganization o under Section 1223(1) of the Code, your holding period for your shares of NMF will include the period you held your shares of Lancaster Fund, if your shares of Lancaster Fund were held as a capital asset o under Section 1223(2) of the Code, the holding period for NMF with respect to the assets received in the Reorganization will include the period for which such assets were held by Lancaster Fund 9 Neither Lancaster Fund nor NMF has sought a tax ruling from the Internal Revenue Service ("IRS"). The opinion of counsel is not binding on the IRS, and IRS could take a contrary position. You should consult your own adviser concerning the potential tax consequences to you, including state and local income tax consequences. Both NMF and Lancaster Fund comply with Subchapter M of the Code and, as a result, do not pay any corporate level federal or state income tax. Shares and Shareholder Rights NMF is a series of Ranson Managed Portfolios ("Ranson Fund"), a business trust organized under Massachusetts law. Ranson Fund's Charter permits its Trustees to issue an unlimited number of shares, without par value, from each series that is designated by the Board of Trustees. Each share of a series: o represents an equal proportionate interest in the assets and liabilities of that series o is entitled to dividends and distributions out of the income belonging to the series as declared by the Trustees o has no cumulative voting rights or preemptive rights o in case of a liquidation, subject to the rights of creditors, is entitled to receive a proportionate distribution out of the net assets belonging to that series Under certain conditions, shareholders of a Massachusetts business trust could be deemed to have the same type of personal liability for the obligations of Ranson Fund as does a partner of a partnership. The Charter disclaims liability on the part of Ranson Fund shareholders and provides that Ranson Fund will assume the defense on behalf of its shareholders. Thus, the risk of Ranson Fund shareholder liability is slight and limited to a circumstance where a series itself is unable to meet its obligations. Ranson Fund legally is not required to, and does not intend to, hold annual shareholders' meetings. Ranson Fund shareholders will vote on: o the election or removal of Trustees if a meeting is called for that purpose o any contract required to be approved by the Investment Company Act of 1940, as amended (the "1940 Act") o any termination or reorganization of Ranson Fund or any series of Ranson Fund to the extent provided in the Charter o any amendment of the Charter (other than amendments designating new series, or making certain other technical changes) 10 Meetings of shareholders may be called by shareholders holding at least 25% (or 10% if the purpose of the meeting is to determine if a Trustee is to be removed from office) of the shares then outstanding. Shareholders will receive assistance from Ranson Fund in communicating with other shareholders about a proposed removal of a Trustee. Lancaster Fund is a series of SMITH HAYES Trust, Inc., a Minnesota corporation. For a detailed description of the characteristics of the shares of Lancaster Fund and the rights of its shareholders, see "General Information" in the September 29, 1998 Prospectus of Lancaster Fund. There are no significant differences in the rights of shareholders of Lancaster Fund and NMF. Capitalization The following table shows the capitalization of Lancaster Fund and NMF as of January 29, 1999 and the pro forma capitalization of the combined NMF-Lancaster Fund when the Reorganization is completed: (In thousands, except net asset value per share) Net Asset Total Net Shares Value Assets Outstanding Per Share ------------ --------------- -------------- (as of January 29, 1999) Lancaster Fund $12,077 1,194 $10.11 NMF $27,382 2,409 $11.37 Pro forma combined $39,459 3,470 $11.37 The foregoing table assumes that all relevant Reorganization transactions occurred on January 29, 1999. Comparative Performance Information 11 The chart below shows each Fund's annual returns for the past five years. The table shows the average annual returns of each Fund and its market benchmark for the 1-, 5-year and inception periods ending December 31, 1998. This information is intended to help you assess the risk of investing in each Fund by showing how each Fund's total return has varied from year to year and by comparing each Fund's performance to the most commonly used index for its market segment. Of course, past performance is no guarantee of future results. Nebraska Municipal Fund - Calendar Year Annual Returns The annual returns shown below are calculated on investment without a sales charge. If a sales charge had been paid, the returns would have been less than those shown. [GRAPHIC OMITTED] 1994 (5.92%) 1995 17.02% 1996 2.48% 1997 6.37% 1998 5.15% During the 5-year period described above in the bar chart, NMF's highest quarterly return was 7.74% for the quarter ended March 31, 1995, and its lowest quarterly return was (4.95%) for the quarter ended March 31, 1994. Lancaster Nebraska Tax-Free Fund - Calendar Year Annual Returns The annual returns shown below are calculated on investment without a sales charge. If a sales charge had been paid, the returns would have been less than those shown. [GRAPHIC OMITTED] 1994 (6.38%) 1995 17.60% 1996 2.46% 1997 6.05% 1998 5.96% During the 5-year period described above in the bar chart, Lancaster Fund's highest quarterly return was 7.47% for the quarter ended March 31, 1995, and its lowest quarterly return was (4.93%) for the quarter ended March 31, 1994. Inception Inception 1 Year 5 Year (7/12/93) (11/17/93) - ------------------------------ --------- --------- ------------- -------------- Lancaster Fund 5.96% 4.86% 5.13% N.A. NMF 5.15% 4.77% N.A. 4.90% Lehman Brothers 6.48% 6.23% 6.59% 6.42% Municipal Bond Index 12 THE NEBRASKA MUNICIPAL FUND General. The Nebraska Municipal Fund is a series of Ranson Managed Portfolios ("Ranson Fund"), an unincorporated business trust organized in November 1990. Ranson Fund is an open-end non-diversified management investment company. The accompanying NMF Prospectus dated November 28, 1998 contains a general discussion of NMF. For the convenience of Lancaster Fund shareholders, cross-references to that Prospectus are set forth below. Certain Expenses and Financial Information. The NMF Prospectus includes information on per-share income and capital changes under the heading "Condensed Financial Information." For a discussion of NMF's expenses, see "Proposal: Agreement and Plan of Reorganization--Expense Summary" above and "Fee and Expense Table" in the NMF Prospectus. Investment Objectives and Policies. For a discussion of NMF's investment objectives and policies, see "Highlights of the Fund and Prospectus Summary" and "Investment Objectives and Policies" in the NMF Prospectus. Trustees and Officers. The Board of Trustees exercises overall responsibility for management of NMF. The Trustees are elected by the shareholders of all the series of Ranson Fund. There are currently four Trustees, one of whom is an "interested person" within the meaning of that term under the 1940 Act. The Trustees elect the officers to supervise actively its day-to-day operations. The names of the Trustees and officers of Ranson Managed Portfolios, their addresses, and principal occupations during the past five years are as follows: 13
Name, Address Position(s) Held Principal Occupation(s) and Age with Ranson Fund During Past 5 Years ------- ---------------- ------------------- Lynn W. Aas Trustee Retired; Attorney; 904 NW 27th Director, ND Holdings, Minot, ND 58703 Inc., ND Tax-Free Fund, 77 Inc., ND Insured Income Fund, Inc., Montana Tax-Free Fund, Inc., South Dakota Tax-Free Fund, Inc., Integrity Fund of Funds, Inc., and Integrity Small-Cap Fund of Funds, Inc.; Director, First Western Bank & Trust Orlin W. Backes Trustee Attorney; Director, ND 15 2nd Avenue SW Tax-Free Fund, Inc., ND Suite 305 Insured Income Fund, Inc., Minot, ND 58703 Montana Tax-Free Fund, 63 Inc., South Dakota Tax-Free Fund, Inc., Integrity Fund of Funds, Inc., and Integrity Small-Cap Fund of Funds, Inc.; Director, First Western Bank & Trust R. James Maxson Trustee Attorney; Director, ND Tax- 116 9th Street SE Free Fund, Inc., Montana Minot, ND 58703 Tax-Free Fund, Inc., South 52 Dakota Tax-Free Fund, Inc., Integrity Fund of Funds, Inc., and Integrity Small-Cap Fund of Funds, Inc. * Peter A. Quist Vice President Director and Vice 1 North Main and Secretary President, ND Holdings, Minot, ND 58703 Inc.; Director, Vice 64 President and Secretary, ND Money Management, Inc., ND Capital, Inc., ND Resources, Inc., ND Tax-Free Fund, Inc., ND Insured Income Fund, Inc., Montana Tax-Free Fund, Inc., South Dakota Tax-Free Fund, Inc., Integrity Fund of Funds, Inc., Integrity Small-Cap Fund of Funds, Inc., The Ranson Company, Inc., and Ranson Capital Corporation * Robert E. Walstad Trustee, Chairman, President and Director and President, ND 1 North Main Treasurer Holdings, Inc.; Director, Minot, ND 58703 President and Treasurer, 54 ND Money Management, Inc., ND Capital, Inc., ND Resources, Inc., ND Tax-Free Fund, Inc., ND Insured Income Fund, Inc., Montana Tax-Free Fund, Inc., South Dakota Tax-Free Fund, Inc., Integrity Fund of Funds, Inc., and Integrity Small-Cap Fund of Funds, Inc.; Director, President, CEO, and Treasurer, The Ranson Company, Inc., and Ranson Capital Corporation
* "Interested Person" of Ranson Fund as that term is defined in the Investment Company Act of 1940 Investment Adviser and Administrator. For a discussion of the NMF Manager, the services performed by it and its fees, see "Fund Management" in the NMF Prospectus. Distributor. For a discussion of Ranson Capital Corporation's activities as the NMF distributor, the services performed by it and its fees, see "The Distributor" in the NMF Prospectus. Shares. For a discussion of voting rights of shares of NMF, see "Description of Shares and Rights" in the NMF Prospectus and "Shares and Shareholder Rights" above. Purchase and Redemption of Shares. For a discussion concerning purchase procedures, pricing and redemption of shares of NMF, see "Net Asset Value", "Purchase of Shares" and "Redemption of Shares" in the NMF Prospectus. 14 Dividends, Distributions and Tax Matters. For a discussion of NMF's policies with respect to dividends and distributions, see "Dividends and Taxes" in the NMF Prospectus. Exchange Privileges. For a discussion of a NMF shareholder's right to exchange shares for shares of another Ranson Fund series, see "Purchase of Shares - Exchange Privilege" in the NMF Prospectus. Legal Proceedings. NMF is not presently involved in any important legal proceedings. Shareholder Inquiries. Shareholder inquiries relating to NMF or other Ranson Fund series may be addressed by writing to Ranson Capital Corporation, 1 North Main, Minot, North Dakota 58703, or by calling toll free 1-800-276-1262. Management Discussion of Fund Performance. Management discussion of fund performance is located in the NMF Annual Report dated July 31, 1998, and the NMF Semi-Annual Report dated January 31, 1999. Both of these reports are included in your package. Both are deemed to be legally a part of this document. LANCASTER NEBRASKA TAX-FREE FUND General. Lancaster Fund is a non-diversified series of SMITH HAYES Trust, Inc., a Minnesota corporation organized in 1988 which operates as an open-end management investment company. The accompanying Lancaster Fund Prospectus dated September 28, 1998 contains a general discussion of Lancaster Fund. For the convenience of shareholders, certain cross-references to that Prospectus are set forth below. Certain Expenses and Financial Information. The Lancaster Fund Prospectus contains information on per-share income and capital changes, under the heading "Financial Highlights." For a discussion of the Lancaster Fund's expenses, see "Proposal: Agreement and Plan of Reorganization--Expense Summary" above and "Expenses" in the Lancaster Fund Prospectus. Investment Objectives and Policies. For a discussion of the Lancaster Fund's investment objectives and policies, see "Investment Objectives and Policies," "Municipal Securities" and "Investment Practices" in the Lancaster Fund Prospectus. Directors and Officers. The Board of Directors exercises overall responsibility for management of Lancaster Fund. The Directors are elected by all shareholders of SMITH HAYES Trust, Inc. The Directors elect the officers to supervise actively the day-to-day operations. 15 The names of the Directors and officers, their addresses, and principal occupations during the past five years are as follows:
Name, Address Position(s) Principal Occupation and Age Held with Fund Last Five Years - ----------------------------------------------------------------------------------------------- * Thomas C. Smith Chairman, President, Chairman, CONLEY SMITH, Inc., 200 Centre Terrace Chief Executive Officer, Omaha, Nebraska; Chairman and 1225 "L" Street Treasurer President, SMITH HAYES Lincoln, NE 68508 Financial Services Corporation, 53 Lincoln, Nebraska; Vice President, Lancaster Administrative Services, Inc., Lincoln, Nebraska; Chairman and President, Consolidated Investment Corporation, Lincoln, Nebraska; Vice President and Director, Concorde Management and Development, Inc., Lincoln, Nebraska; Chairman, SMITH HAYES Advisers, Inc., Lincoln, Nebraska Thomas D. Potter Director President and Chief Executive 1800 Memorial Drive Officer, Lincoln, Mutual Life Lincoln, NE 68508 Insurance Company, Lincoln, 58 Nebraska; December 1987-Current Dale C. Tinstman Director Financial and Investment Suite 200 Consultant; Chairman of 1201 "O" Street University of Nebraska Lincoln, NE 68508 Foundation; Director and 79 Consultant of IBP, Inc. (meat packing and agribusiness), Dakota City, Nebraska Charles W. Hoskins Director Self-Employed Financial Advisor, 63208 Sheridan Court Lincoln, Nebraska; Retired Lincoln, NE 68506 Partner of Deloitte & Touche 62 LLP, Lincoln, Nebraska * John H. Conley Director President, CONLEY SMITH, Inc., 444 Regency Parkway Omaha, Nebraska; Chairman, Omaha, NE Lancaster Administrative 68114-3779 Services, Inc., Lincoln, 45 Nebraska; President and Director Conley Investment Counsel, Omaha, Nebraska, December 1986-April 1995. Colleen Avery Secretary Vice President, Lancaster 200 Centre Terrace Administrative Services, Inc., 1225 "L" Street Lincoln, Nebraska; March Lincoln NE 68508 1996-Present; Investment 37 Operations coordinator, Security Mutual Life Insurance Company, Lincoln, Nebraska; June 1984-March 1996. * Interested director as defined under the Investment Company Act of 1940 by virtue of affiliation with CONLEY SMITH, Inc.
Investment Adviser. For a discussion of CSI, the services performed by it and its fees, see "Management" in the Lancaster Fund Prospectus. Administrator. For a discussion of Lancaster Administrative Services, Inc. and its fees and services, see "Management" in the Lancaster Fund Prospectus. Distributor. For a discussion of SMITH HAYES Financial Services Corporation's activities as distributor, see "Distribution of Fund Shares" in the Lancaster Fund Prospectus. Shares. For a discussion of the significant attributes of Lancaster Fund shares, see "General Information" in the Lancaster Fund Prospectus. Purchase and Redemption of Shares. For a discussion concerning purchase procedures, pricing and redemption of shares of Lancaster Fund, see "Distribution of Fund Shares", "Valuation of Shares" and "Redemption of Shares" in the Lancaster Fund Prospectus. 16 Dividends, Distributions and Tax Matters. For a discussion of Lancaster Fund's policies with respect to dividends and distributions, see "Dividends and Taxes" in the Lancaster Fund Prospectus. Exchange Privileges. Lancaster Fund does not offer any exchange rights. Legal Proceedings. Lancaster Fund is not presently involved in any important legal proceedings. Shareholder Inquiries. Shareholder inquiries relating to Lancaster Fund may be addressed by writing to SMITH HAYES Financial Services Corporation, 200 Centre Terrace, 1225 "L" Street, Lincoln, Nebraska 68508, or calling toll-free 1-800-279-7437. Management Discussion of Fund Performance. Management's discussion of the performance of Lancaster Fund is located in the Annual Financial Report of Lancaster Fund, dated June 30, 1998 and the Semi-Annual Financial Report dated December 31, 1998. Both of these reports are included in your package. Both are deemed to be legally part of this document. INFORMATION ABOUT VOTING MATTERS General Information You received this document as part of the solicitation of proxies by the Board of Directors of Lancaster Fund for use at the Special Meeting of Shareholders to be held on April ___, 1999 (the "Special Meeting"). The Board of Directors will solicit proxies primarily by mail. The officers of Lancaster Fund may also solicit proxies by telephone, facsimile transmission or personal interview. At the close of business on _______________, 1999, the record date for the meeting, there were ______________ shares of Lancaster Fund outstanding and entitled to vote. You are entitled to one vote for each Lancaster Fund share you own and a fractional vote for each fractional share you own. If you fill out, sign and return the proxy in time for the Special Meeting, your shares will be voted exactly as you tell us. If you only sign and return the proxy, your shares will be voted FOR the Reorganization proposal and at the direction of the Board of Directors on any other matters that are brought up at the Special Meeting. Even if you have sent us your proxy, you may revoke it at any time before it is voted by 17 o submitting a written notice of revocation o submitting a subsequently executed proxy o attending the meeting and electing to vote in person Your written revocation or subsequent proxy should be mailed or delivered to: Lancaster Fund, c/o Secretary, 200 Centre Terrace, 1225 "L" Street, Lincoln, Nebraska 68508. Shareholder and Board Approval If a majority of outstanding shares of Lancaster Fund vote for the Agreement and Plan of Reorganization it can be implemented. Under Minnesota law, abstentions are disregarded in determining the "votes cast" on an issue. Broker "non-votes" (i.e., proxies from brokers or nominees indicating they have not received instructions from the owner of the shares) are considered abstentions. NMF shareholders will not vote on the approval of the Plan because their approval is not necessary for the completion of the Reorganization. On the Record Date, all of the officers and Directors of Lancaster Fund beneficially owned, individually and as a group, less than 1% of the shares of Lancaster Fund. As of the record date, the following were believed to be the only persons who owned of record or beneficially 5% or more of the outstanding shares of Lancaster Fund: Name and Address Shares Owned Ownership Percentage --------------------- ---------------- -------------------- Firlin & Co. 114,268.339 9.43% c/o National Bank of Commerce Box 82408 Lincoln, NE 68501 Virgil Eihusen 111,815.711 9.22% 550 B Road Grand Island, NE 68801 On the Record Date, all of the officers and Trustees of NMF beneficially owned, individually and as a group, less than 1% of NMF's shares. No person was known to own 5% or more of NMF's shares on that date. 18 Quorum If a quorum is not present at the Special Meeting, or if a quorum is present at the Special Meeting but there are not enough favorable votes to approve the Reorganization, the persons named as proxies may propose adjourning the Special Meeting to permit more solicitation of proxies. The Special Meeting can be adjourned by affirmative vote of a majority of shares represented at the meeting in person or by proxy. If a quorum is present, the persons named as proxies will vote those proxies which they are entitled to vote FOR the Reorganization in favor of such adjournment, and will vote those proxies required to be voted AGAINST the Reorganization against any adjournment. A quorum exists if the holders of more than 50% of the aggregate outstanding shares entitled to vote at the Special Meeting are present in person or by proxy. If you send us a proxy marked with an abstention, your shares will be considered to be present at the Meeting for the purpose of determining the existence of a quorum. INFORMATION FILED WITH THE SECURITIES AND EXCHANGE COMMISSION This combined Proxy Statement/Prospectus and the related Statement of Additional Information do not contain all of the information set forth in the registration statements and the exhibits which NMF and Lancaster Fund have filed with the SEC under the Securities Act of 1933 and the 1940 Act. The SEC file number for the Lancaster Fund Prospectus and the related Statement of Additional Information which are legally deemed a part of this document is Registration No. 033-19894. The SEC file number for the NMF Prospectus and related Statement of Additional Information which are legally deemed a part of this document is Registration No. 033-36324. NMF and Lancaster Fund file annual, quarterly and special reports and other information with the SEC. They can be inspected and copied at the public reference facilities of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such filings may also be available at the following SEC regional offices: Northwestern Atrium, 500 West Madison Street, Suite 1400, Chicago, IL 60661-2511; 7 World Trade Center, Suite 1300, New York, NY 10048 and 73 Tremont Street, Suite 600, Boston, MA 02108-3912. Copies of such materials can also be obtained by mail from the Public Reference Branch, Office of Consumer Affairs and Information Services, SEC, Washington, D.C. 20549, at prescribed rates. 19 OTHER BUSINESS The Lancaster Fund Board of Directors knows of no other business to be brought before the Special Meeting. However, if any other matters come before the Special Meeting, proxies which do not contain contrary instructions will be voted on such matters as the Board of Directors recommends. LEGAL MATTERS Certain legal matters concerning the issuance of shares in the Reorganization will be passed upon for NMF by Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603. Certain tax matters will be passed upon for Lancaster Fund by Cline, Williams, Wright, Johnson & Oldfather, 1900 U.S. Bank Building, 233 South 13th Street, Lincoln, Nebraska 68508. SHAREHOLDER INQUIRIES Shareholder inquiries may be addressed to Lancaster Fund in writing at the address on the cover page of this combined Proxy Statement/Prospectus or by telephoning 1-800-279-7437. * * * SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. 20 EXHIBIT A AGREEMENT AND PLAN OF REORGANIZATION THIS AGREEMENT made as of the 10th day of March 1999, is made by and between SMITH HAYES Trust, Inc., a Minnesota corporation ("Trust") and Ranson Managed Portfolios, a Massachusetts business trust ("Ranson"). W I T N E S S E T H: WHEREAS, the Board of Directors of Trust, and the Board of Trustees of Ranson, each an open-end management investment company, deem it advisable that Ranson acquire that certain portfolio (the "Acquired Fund" hereinafter identified) of Trust in exchange for the assumption by Ranson of all of the liabilities of the Acquired Fund and the issuance of shares of Ranson which are thereafter to be distributed by Trust in complete liquidation and termination of the Acquired Fund and in exchange for all of the outstanding shares of the Acquired Fund, with the intent that the transactions described herein shall qualify as a tax-free reorganization under Section 368(a)(1)(C) of the Internal Revenue Code of 1986 (the "Reorganization"); and WHEREAS, the portfolio of Trust to be acquired pursuant to this Agreement is Lancaster Nebraska Tax-Free Fund (the "Acquired Fund"); NOW THEREFORE, in consideration of the mutual promises herein contained, each of the parties hereto represents and warrants to, and agrees with the other party as follows: 1. Ranson hereby represents, warrants and covenants to Trust that: (1) Ranson is a business trust with transferable shares duly organized and validly existing under the laws of Massachusetts, and has full power to own its properties and assets and to carry on its business as such business is now being conducted. (2) Ranson's statement of assets and liabilities as of July 31, 1998, and the related statements of operations and changes in net assets for the fiscal year ended July 31, 1998, all as audited by Brady, Martz & Associates, P.C., have been prepared in accordance with generally accepted accounting principles applied on a consistent basis. Such statement of assets and liabilities fairly presents the financial position and net assets of Ranson as of such date and such statements of operations and changes in net assets fairly present the results of its operations for the period covered thereby. Since July 31, 1998 there has been no material adverse change in the financial position, net assets or results of operations of Ranson; (3) There are no claims, actions, suits or proceedings pending or, to its knowledge, threatened against or affecting Ranson or its properties or business or its right to issue and sell shares, or which would prevent or hinder consummation of the transactions contemplated hereby, and it is not charged with or, to Ranson's knowledge, threatened with any charge or investigation of, any violation of any provision of any federal, state or local law or any administrative ruling or regulation relating to any aspect of its business or the issuance or sale of its shares; (4) Ranson is not a party to or subject to any judgment or decree or order entered in any suit or proceeding brought by any governmental agency or by any other person enjoining it in respect of, or the effect of which is to prohibit, any business practice or the acquisition of any property or the conduct of business by it or the issuance or sale of its shares in any area; (5) Ranson has filed all tax returns required to be filed, has no liability for any unpaid taxes and has made a proper election to be treated as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986 (the "Code") for each of its taxable years. Ranson has not committed any action or failed to perform any necessary action that would render invalid its election to be treated as a regulated investment company for any of its taxable years; (6) The authorization, execution and delivery of this Agreement on behalf of Ranson does not, and the consummation of the transactions contemplated hereby will not violate, or conflict with any provision of Ranson's Declaration of Trust or By-Laws, or any provision of, or result in the acceleration of any obligation under, any mortgage, lien, lease, agreement, instrument, order, arbitration award, judgment or decree to which it is party or by which it or any of its assets is bound, or violate or conflict with any other material contractual or statutory restriction of any kind or character to which it is subject; (1) 2 (7) This Agreement has been duly authorized, executed, and delivered by Ranson and constitutes a valid and binding agreement of Ranson and all governmental and other approvals required for Ranson to carry out the transactions contemplated hereunder have been or on or prior to the Closing Date (as herein defined) will have been obtained. Ranson will comply with all applicable laws and regulations in carrying out the transactions contemplated hereunder, including, without limitation, the Investment Company Act of 1940, as amended (the "1940 Act"); (8) Ranson is registered under the 1940 Act as an open-end diversified management investment company. Ranson is currently in compliance with the 1940 Act and the rules of the Securities and Exchange Commission (the "Commission") promulgated thereunder in all material respects. (9) On the Closing Date, Ranson will own its assets free and clear of all liens, claims, charges, options and encumbrances; (10) On the Closing Date, the shares of The Nebraska Municipal Fund (the "Acquiring Fund") to be delivered to Trust hereunder shall have been registered under the Securities Act of 1933, as amended (the "1933 Act") and duly authorized, and, when issued and delivered pursuant to this Agreement, will be validly issued, fully paid and nonassessable; and Ranson will comply with all applicable laws in connection with the issuance of such shares and shall not be subject to a stop-order of the Commission in connection therewith; and (11) On the Closing Date, the shares of the Acquiring Fund to be delivered to Trust hereunder shall have been registered with the appropriate securities administrator or agency of each state under whose securities law such registration is required. 2. Trust hereby represents, warrants and covenants to Ranson that: (1) Trust is a corporation, with transferable shares, duly organized and validly existing under the laws of the State of Minnesota, and has full power to own its properties and assets and to carry on its business as such business is now being conducted. 3 (2) The statement of assets and liabilities as of June 30, 1998, and the related statements of operations and changes in net assets for the fiscal year ended June 30, 1998 of the Acquired Fund, all as audited by Deloitte & Touche LLP, have been prepared in accordance with generally accepted accounting principles applied on a consistent basis. Such statement of assets and liabilities fairly presents the financial position and net assets of the Acquired Fund as of such date and the statements of operations and changes in net assets fairly present the results of its operations for the period covered thereby. Since June 30, 1998 there has been no material adverse change in the financial position, net assets or results of operations of the Acquired Fund. All books, records and accounts of the Acquired Fund have been maintained in accordance with applicable legal requirements and generally accepted accounting principles applicable to investment companies; (3) There are no claims, actions, suits or proceedings pending or, to its knowledge, threatened against or affecting Trust or its properties or business or its right to issue and sell shares, or which would prevent or hinder consummation of the transactions contemplated hereby, and it is not charged with or, to Trust's knowledge, threatened with any charge or investigation of, any violation of any provision of any federal, state or local law or any administrative ruling or regulation relating to any aspect of its business which would prohibit or restrict its ability to perform this Agreement; (4) Trust is not a party to or subject to any judgment or decree or order entered in any suit or proceeding brought by any governmental agency or by any other person enjoining it in respect of, or the effect of which is to prohibit, any business practice or the acquisition of any property or the conduct of business by it or the issuance or sale of its shares in any area; (5) Trust has filed all tax returns required to be filed, has no liability for any unpaid taxes and has made a proper election to be treated as a regulated investment company under Subchapter M of the Code for each of its taxable years. Trust has not committed any action or failed to perform any necessary action that would render invalid its election to be treated as a regulated investment company for any of its taxable years; 4 (6) The authorization, execution and delivery of this Agreement on behalf of Trust does not, and the consummation of the transactions contemplated hereby, subject to the approval of shareholders of the Acquired Fund as referred to in paragraph 11, will not violate, or conflict with any provision of Trust's Articles of Incorporation or By-Laws, or any provision of, or result in the acceleration of any obligation under, any mortgage, lien, lease, agreement, instrument, order, arbitration award, judgment or decree to which it is a party or by which it or any of its assets is bound, or violate or conflict with any other material contractual or statutory restriction of any kind or character to which it is subject; (7) This Agreement has been duly authorized, executed, and delivered by Trust and constitutes a valid and binding agreement of Trust and all governmental and other approvals required for Trust to carry out the transactions contemplated hereunder have been or on or prior to the Closing Date (as herein defined) will have been obtained; (8) On the Closing Date, Trust and the Acquired Fund each will own its assets free and clear of all liens, claims, charges, options and encumbrances and, except for the various agreements listed in Part C of Trust's current Form N-1A Registration Statement under the 1933 Act and 1940 Act, there will be no material contracts or agreements (other than this Agreement) outstanding to which Trust is a party or to which it is subject; (9) On the Closing Date, subject to the approval of shareholders of the Acquired Fund as referred to in paragraph 11, Trust will have full right, power and authority to sell, assign and deliver the assets to be sold, assigned, transferred and delivered to Ranson hereunder, and upon delivery and payment for such assets, Ranson will acquire good and marketable title thereto free and clear of all liens, claims, charges, options and encumbrances; 5 (10) Trust will declare to shareholders of record of the Acquired Fund immediately prior to the Closing Date a dividend or dividends which, together with all previous such dividends, shall have the effect of distributing to the shareholders all of the investment company taxable income of the Acquired Fund (computed without regard to any deduction for dividends paid) and all of the net realized capital gains, if any, through the close of business on the business day immediately preceding the Closing Date; and (11) Trust will, from time to time, as and when requested by Ranson, execute and deliver or cause to be executed and delivered, all such assignments and other instruments, and will take and cause to be taken such further action, as Ranson may deem necessary or desirable in order to vest in and confirm to Ranson, title to and possession of all the assets of the Acquired Fund to be sold, assigned, transferred and delivered hereunder and otherwise to carry out the intent and purpose of this Agreement. 3. Based on the respective representations and warranties, subject to the terms and conditions contained herein, Trust agrees to transfer to Ranson and Ranson agrees to acquire from Trust, all the assets of the Acquired Fund on the Closing Date and to assume from Trust all of the liabilities of the Acquired Fund in exchange for the issuance of the number of shares of the Acquiring Fund provided in Section 4 which will be subsequently distributed pro rata to the shareholders of the Acquired Fund in complete liquidation and termination of the Acquired Fund and in exchange for all of the outstanding shares of the Acquired Fund, as provided in Section 6. Trust shall not issue, sell or transfer any shares of the Acquired Fund after the Closing Date, and only Acquired Fund redemption requests received by Trust in proper form prior to the Closing Date shall be fulfilled by Trust. Acquired Fund Redemption requests received by Trust thereafter shall be treated as requests for redemption of those shares of the Acquiring Fund allocable to the shareholder in question as provided in Section 6 of this Agreement. 4. The manner of exchanging the net assets of the Acquired Fund for shares of the Acquiring Fund shall be as follows: (1) On the Closing Date, Ranson will issue to Trust that number of full and fractional shares of the Acquiring Fund, taken at their net asset value, having an aggregate net asset value equal to the aggregate value of the net assets of Trust that are allocable to the Acquired Fund; 6 (2) The aggregate value of the net assets of the Acquired Fund and the Acquiring Fund (after payment of the dividend referred to in Section 2(j) hereof) shall be determined in accordance with the then current Prospectus of Ranson as of 3:00 p.m. Central Time on the business day immediately preceding the Closing Date, unless the parties agree to determine such values as of another date (the "Valuation Date"). 5. The closing of the transaction contemplated in this Agreement (the "Closing") shall be held at the offices of Trust, 200 Centre Terrace, Lincoln, Nebraska 68508 (or at such other place as the parties hereto may agree) at 9:00 a.m. Lincoln Time on Monday, May 3, 1999, or on such earlier or later date as the parties hereto may mutually agree. The date on which the Closing is to be held as provided in this Agreement shall be known as the "Closing Date". In the event that on the proposed Valuation Date or Closing Date(a) the New York Stock Exchange is closed for other than customary week-end and holiday closings or (b) trading on said Exchange is restricted or (c) an emergency exists as a result of which it is not reasonably practicable for either Ranson or Trust to fairly determine the value of their respective assets, the Closing shall be postponed until the first business day after the day on which trading shall have been fully resumed. 6. As soon as practicable after the Closing Date, Trust shall (a) distribute on a pro rata basis to each shareholder of record of the Acquired Fund at the close of business on the Valuation Date the shares of the Acquiring Fund received by Trust at the Closing in exchange for each such shareholder's shares of the Acquired Fund and (b) liquidate and dissolve the Acquired Fund in accordance with applicable law and its Articles of Incorporation. For purposes of the distribution of shares of the Acquiring Fund to shareholders of the Acquired Fund, Ranson shall credit on the books of the Acquiring Fund an appropriate number of shares thereof to the account of each shareholder of the Acquired Fund. No certificates will be issued for shares of the Acquiring Fund. After the Closing Date and until surrendered, each outstanding certificate which, prior to the Closing Date, represented shares of the Acquired Fund, shall be deemed for all purposes of Ranson's Declaration of Trust and By-Laws to evidence the appropriate number of shares of the Acquiring Fund to be credited on the books of Ranson in respect of such shares of the Acquired Fund as provided above. 7 7. Subsequent to the execution of this Agreement and prior to the Closing Date, Trust shall deliver to Ranson a list setting forth the assets to be assigned, delivered and transferred by the Acquired Fund to Ranson, including the securities then owned by the Acquired Fund and the respective federal income tax basis (on an identified cost basis) thereof, and the liabilities to be assumed by Ranson pursuant to this Agreement. 8. All portfolio securities of the Acquired Fund shall be delivered by Trust's custodian on the Closing Date to Ranson or its custodian, either endorsed in proper form for transfer in such condition as to constitute good delivery thereof in accordance with the practice of brokers or, if such securities are held in a securities depository within the meaning of Rule 17f-4 under the 1940 Act, transferred to an account in the name of Ranson or its custodian with said depository. All cash to be delivered pursuant to this Agreement shall be wire transferred from Trust's account at its custodian to Ranson's account at its custodian. If on the Closing Date Trust is unable to make good delivery pursuant to this Section 8 to Ranson's custodian of any of Trust's portfolio securities because such securities have not yet been delivered to Trust's custodian by its broker or by the transfer agent for such securities, then the delivery requirement of this Section 8 with respect to such securities shall be waived, and Trust shall deliver to Ranson's custodian on or by said Closing Date with respect to said undelivered securities executed copies of an agreement of assignment in a form satisfactory to Ranson, and a due bill or due bills in form and substance satisfactory to the custodian, together with such other documents including brokers' confirmations, as may be reasonably required by Ranson. 9. The obligations of Ranson under this Agreement shall be subject to receipt by Ranson on or prior to the Closing Date of: (1) Copies of the resolutions adopted by the Board of Directors of Trust and the shareholders of the Acquired Fund authorizing the execution and performance of this Agreement by Trust and the transactions contemplated hereunder, certified by the Secretary or Assistant Secretary of Trust; (2) A certificate of the Secretary or Assistant Secretary of Trust as to the signatures and incumbency of its officers who executed this Agreement on behalf of Trust and any other documents delivered in connection with the transactions contemplated thereby on behalf of Trust; 8 (3) A certificate of an appropriate officer of Trust as to the fulfillment of all agreements and conditions on its part to be fulfilled hereunder at or prior to the Closing Date and to the effect that the representations and warranties of Trust are true and correct in all material respects at and as of the Closing Date as if made at and as of such date; (4) Such other documents as Ranson may reasonably request to show fulfillment of the purposes and conditions of this Agreement; and (5) An opinion of Cline, Williams, Wright, Johnson & Oldfather in form reasonably satisfactory to Ranson and dated as of the Closing Date of the Reorganization, substantially to the effect that (i) Trust is a Minnesota corporation duly organized and validly existing under the laws of the State of Minnesota; (ii) the outstanding shares of the Acquired Fund are duly authorized and are validly issued, fully paid and non-assessable; (iii) this Agreement has been duly authorized, executed and delivered by Trust, and represents a legal, valid and binding contract enforceable in accordance with its terms, subject as to enforcement to bankruptcy, insolvency, reorganization, moratorium or other similar laws of general application relating to or affecting creditors' rights generally and to the application of general principles of equity; and (iv) the execution and delivery of this Agreement did not, and the consummation of the transactions contemplated by this Agreement will not, violate the Articles of Incorporation or Bylaws of Trust or any material contract known to such counsel to which Trust is a party or by which it is bound; (v) no consent, approval, authorization or order of any court or governmental authority is required for the consummation by the Acquired Fund of the transactions contemplated by this Agreement, except such as have been obtained under the 1933 Act, the 1940 Act, the rules and regulations under those Acts and such as may be required by state securities laws or such as may be required subsequent to the Closing of the Reorganization. 10. The obligations of Trust under this Agreement shall be subject to receipt by Trust on or prior to the Closing Date of: (1) Copies of the resolutions adopted by the Board of Trustees of Ranson authorizing the execution and performance of this Agreement and the transactions contemplated hereunder, certified by the Secretary or Assistant Secretary of Ranson; (1) 9 (2) A certificate of the Secretary or Assistant Secretary of Ranson as to the signatures and incumbency of its officers who executed this Agreement on behalf of Ranson and any other documents delivered in connection with the transactions contemplated thereby on behalf of Ranson; (3) A certificate of an appropriate officer of Ranson as to the fulfillment of all agreements and conditions on its part to be fulfilled hereunder at or prior to the Closing Date and to the effect that the representations and warranties of Ranson are true and correct in all material respects at and as of the Closing Date as if made at and as of such date; (4) Such other documents as Trust may reasonably request to show fulfillment of the purposes and conditions of this Agreement; 10 (5) An opinion of Chapman & Cutler in form reasonably satisfactory to Trust and dated as of the Closing Date of the Reorganization, substantially to the effect that (i) Ranson is a business trust duly established and validly existing under the laws of the State of Massachusetts; (ii)the shares of the Acquiring Fund to be delivered to Trust as provided for by this Agreement are duly authorized and upon delivery will be validly issued, fully paid and non-assessable by Ranson; (iii) this Agreement has been duly authorized, executed and delivered by Ranson, and represents a legal, valid and binding contract, enforceable in accordance with its terms, subject as to enforcement to bankruptcy, insolvency, reorganization, moratorium or other similar laws of general application relating to or affecting creditors' rights generally and to the application of general principles of equity; (iv) the execution and delivery of this Agreement did not, and the consummation of the transactions contemplated by this Agreement will not, violate the Declaration of Trust or By-Laws of Ranson or any material contract known to such counsel to which Ranson is a party or by which it is bound and (v) no consent, approval, authorization or order of any court or governmental authority is required for the consummation by Ranson of the transactions contemplated by this Agreement, except such as have been obtained under the 1933 Act, the 1940 Act, the rules and regulations under those Acts and such as may be required by state securities laws or such as may be required subsequent to the Closing of the Reorganization. (6) An opinion of Cline, Williams, Wright, Johnson & Oldfather addressed to Ranson and Trust in form reasonably satisfactory to them, and dated as of the Closing Date of the Reorganization, substantially to the effect that, for federal income tax purposes (i) the transfer by the Acquired Fund of all of its assets to the Acquiring Fund in exchange for shares of the Acquiring Fund, and the distribution of such shares to the shareholders of the Acquired Fund, as provided in this Agreement, will constitute a reorganization within the meaning of Section 368(a)(1)(C) of the Code; (ii) no income, gain or loss will be recognized by the Acquired Fund as a result of such transactions; (iii) no income, gain or loss will be recognized by the Acquiring Fund as a result of such transactions; (iv) no income, gain or loss will be recognized by the shareholders of the Acquired Fund on the distribution to them by the Acquired Fund of shares of the Acquiring Fund in exchange for their shares of the Acquired Fund (but shareholders of the Acquired Fund subject to taxation will recognize income upon receipt of any net investment income or net capital gains of the Acquired Fund which are distributed by the Acquired Fund prior to the Closing Date of the Reorganization); (v) the tax basis of the Acquiring Fund shares received by each shareholder of the Acquired Fund will be the same as the tax basis of the shareholder's Acquired Fund shares exchanged therefor; (vi) the tax basis of the Acquired Fund assets received by the Acquiring Fund will be the same as the basis of such Fund's assets in the hands of the Acquired Fund immediately prior to the transactions; (vii) a shareholder's holding period for Acquiring Fund shares will be determined by including the period for which the shareholder held the shares of the Acquired Fund exchanged therefor, provided that the shareholder held such shares of the Acquired Fund as a capital asset at the Closing of the Reorganization; (viii) the holding period of the Acquiring Fund with respect to the Acquired Fund assets will include the period for which such assets were held by the Acquired Fund provided that the Acquired Fund held such assets as capital assets; and (ix) the Acquiring Fund will succeed to and take into account the earnings and profits, or deficit in earnings and profits, of the Acquired Fund as of the Closing of the Reorganization. (1) 11 11. The obligations of the parties under this Agreement shall be subject to: (1) Any required approval, at a meeting duly called for the purpose, of the holders of the outstanding shares of the Acquired Fund, of this Agreement and the transactions contemplated hereunder. (2) The right to abandon and terminate this Agreement, if either Trust or Ranson believes that the consummation of the transactions contemplated hereunder would not be in the best interests of its shareholders. 12. Each party will pay its own out-of-pocket fees and expenses incurred in connection with the transactions contemplated under this Agreement, including, but not limited to, accountants' fees, legal fees, registration fees, filing fees, printing expenses, transfer taxes (if any) and the fees of banks, custodians and transfer agents. 13. This Agreement may be amended by an instrument executed by the duly authorized officers of Trust and Ranson at any time, except that after approval by the shareholders of the Acquired Fund, no amendment may be made with respect to the Agreement which, in the opinion of the Board of Directors of Trust, materially adversely affects the interests of the shareholders of Trust. At any time Trust or Ranson may by written instrument signed by it (i) waive any inaccuracies in the representations and warranties made to it contained herein and (ii) waive compliance with any of the covenants or conditions made for its benefit contained herein. 14. In addition to the right to terminate this Agreement described in paragraph 11, this Agreement may be terminated and the plan described in the Agreement abandoned at any time prior to the Closing Date, whether before or after action thereon by the shareholders of the Acquired Fund and notwithstanding favorable action by such shareholders, by mutual consent of the Board of Directors of Trust and the Board of Trustees of Ranson. This Agreement may also be terminated by action of the Board of Directors of Trust or the Board of Trustees of Ranson, if: 12 (1) The plan described in this Agreement shall not have become effective by June 1, 1999 (hereinafter called the "Final Date") unless such Final Date shall have been changed by mutual agreement; or (2) Either Trust or Ranson shall, at the Final Date, have failed to comply with any of its agreements contained herein; or (3) Prior to the Final Date any one or more of the conditions to the obligations of Trust or Ranson contained in this Agreement shall not be fulfilled to the reasonable satisfaction of Trust and its counsel or Ranson and its counsel or it shall become evident to Trust or Ranson that any of such conditions are incapable of being fulfilled. 15. This Agreement shall bind and inure to the benefit of the parties hereto and is not intended to confer upon any other person any rights or remedies hereunder. 16. The parties hereto represent and warrant that they have not employed any broker, finder or intermediary in connection with this transaction who might be entitled to a finder's fee or other similar fee or commission. 17. All prior or contemporaneous agreements and representations are hereby merged into this Agreement, which constitutes the entire contract between the parties hereto. 18. This Agreement shall be governed by and construed in accordance with the laws of the State of Nebraska. 19. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more of the counterparts has been signed by all parties hereto. 13 20. Trust shall indemnify, defend and hold harmless Ranson, its officers, trustees, employees and agents against all losses, claims, demands, liabilities and expenses, including reasonable legal and other expenses incurred in defending claims or liabilities, whether or not resulting in any liability to Ranson, its officers, trustees, employees or agents, arising out of or based on (i) any breach by Trust of any of its representations, warranties, covenants or agreements set forth in this Agreement, or (ii) any untrue statement or alleged untrue statement of a material fact provided by Trust and contained in any proxy statement for Trust, as filed with the Commission or any amendment or supplement thereto, or any notification prepared by or on behalf of Trust and filed with any state regulatory agency, or in any information provided by Trust included in any proxy statement or registration statement filed by Ranson with the Securities and Exchange Commission or any amendment or supplement thereto; or which shall arise out of or be based upon any omission or alleged omission to state therein a material fact required to be stated in any such proxy statement, registration statement or application necessary to make the statements therein not misleading. This indemnity provision shall survive the termination of this Agreement. 21. Ranson shall indemnify, defend and hold harmless Trust, its officers, directors, employees and agents against all losses, claims, demands, liabilities and expenses, including reasonable legal and other expenses incurred in defending claims or liabilities, whether or not resulting in any liability to Trust, its officers, directors, employees or agents, arising out of or based on (i) any breach by Ranson of any of its representations, warranties, covenants or agreements set forth in this Agreement, or (ii) any untrue statement or alleged untrue statement of a material fact contained in any registration statement on Form N-1A or Form N-14 for Ranson, as filed with the Commission or any amendment or supplement thereto, or any notification prepared by or on behalf of Ranson and submitted to any state regulatory agency regarding the sale of shares of Ranson under the securities laws thereof; or which shall arise out of or be based upon any omission or alleged omission to state therein a material fact required to be stated in any such registration statement or application necessary to make the statements therein not misleading; provided, however, Ranson shall not be required to indemnify Trust, its officers, directors, employees and agents against any loss, claim, demand, liability or expense arising out of any information provided by Trust included in any registration statement filed by Ranson with the Commission or any amendment or supplement thereto. This indemnity provision shall survive the termination of this Agreement. 22. The execution of this Agreement has been authorized by the Board of Directors of Trust and by the Board of Trustees of Ranson. 14 The Declaration of Trust for Ranson Managed Portfolios, a copy of which, together with all amendments thereto, is on file in the Office of the Secretary of the Commonwealth of Massachusetts, provides (i) that the name Ranson Managed Portfolios refers to the trustees under the Declaration of Trust collectively as trustees and not as individuals or personally, (ii) that no shareholder shall be subject to any personal liability whatsoever to any person in connection with trust property or the acts, obligations or affairs of the trust, and (iii) that no trustee, officer, employee or agent of the trust shall be subject to any personal liability whatsoever to any person, other than to the trust or its shareholders, in connection with trust property or the affairs of the trust, save only that arising from bad faith, willful misfeasance, gross negligence or reckless disregard of his duties with respect to such person; and all such persons shall look solely to the trust property for satisfaction of claims of any nature arising in connection with the affairs of the trust. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and attested by their officers thereunto duly authorized, as of the date first written above. RANSON MANAGED PORTFOLIOS Attest By: By: Title: Secretary Title: President SMITH HAYES TRUST, INC. Attest By: By: Title: Secretary Title: President 15 TABLE OF CONTENTS SYNOPSIS...................................................................... RISK FACTORS.................................................................. PROPOSAL: AGREEMENT AND PLAN OF REORGANIZATION................................ THE NEBRASKA MUNICIPAL FUND................................................... LANCASTER NEBRASKA TAX-FREE FUND.............................................. INFORMATION ABOUT VOTING MATTERS.............................................. INFORMATION FILED WITH THE SECURITIES AND EXCHANGE COMMISSION..................................................... OTHER BUSINESS................................................................ LEGAL MATTERS................................................................. SHAREHOLDER INQUIRIES......................................................... EXHIBIT A--AGREEMENT AND PLAN OF REORGANIZATION............................... ---------------------------------------- You should rely only on the information contained in this document or information to which we have referred you. We have not authorized anyone to give you information that is different. RANSON MANAGED PORTFOLIOS THE NEBRASKA MUNICIPAL FUND Statement of Additional Information General Information This Statement of Additional Information contains or incorporates information which may be of interest to investors but which is not included in the combined Proxy Statement/Prospectus (the "Prospectus") dated April ___, 1999, relating to the reorganization involving Lancaster Tax-Free Fund (the "Lancaster Fund"), a series of the SMITH HAYES Trust, Inc. and the Nebraska Municipal Fund ("NMF"), a series of Ranson Managed Portfolios. The Statement of Additional Information for Lancaster Fund dated September 29, 1998 and the Statement of Additional Information for NMF dated November 28, 1998 have been filed with the Securities and Exchange Commission and are deemed to be legally a part of this document. This Statement is not a Prospectus and is authorized for distribution only when it accompanies or follows delivery of the Prospectus. This Statement of Additional Information should be read in conjunction with the Prospectus. A copy of the April ___, 1999 Proxy Statement/Prospectus may be obtained, without charge, by writing Lancaster Fund, 200 Centre Terrace, 1225 "L" Street, Lincoln, Nebraska 68508 or by calling 1-800-279-7437. The date of this Statement of Additional Information is April ___, 1999. Table of Contents General Information...........................................................1 Pro Forma Financial Statements................................................2 1 The Nebraska Municipal Fund and Lancaster Nebraska Tax-Free Fund Proforma Combining Financial Statements (Unaudited) The accompanying proforma statements give effect to the proposed transfer of all assets of Lancaster Nebraska Tax-Free Fund to The Nebraska Municipal Fund in exchange for the assumption by NMF of all of the liabilities of Lancaster Fund and for a number of NMF's shares equal in value to the value of the net assets of Lancaster Fund. Under generally accepted accounting principles, the historical cost of investment securities will be carried forward to the surviving entity and the results of operations of Lancaster Fund for pre-combining periods will not be restated. The unaudited proforma combining statements should be read in conjunction with the separate financial statements of NMF and Lancaster Fund incorporated by reference in this Statement of Additional Information. 2
THE NEBRASKA MUNICIPAL FUND and LANCASTER FUNDS NEBRASKA TAX-FREE FUND Proforma Schedule of Investments (Unaudited) January 29, 1999 PROFORMA SUPPLEMENTAL COMPILED HISTORICAL BALANCES INFORMATION -------------------------------- -------- Lancaster Funds The Nebraska Nebraska Description Coupon Maturity Principal Tax-Free Fund Municipal Fund Combined - ------------------------------------------------------------------------------------------------------------------------- ---------- College 0.8% Chadron State College, NE Student Fees & Facs. Rev. Ref. 5.700 7/1/11 $300,000 $ - $ 304,974 $304,974 Education 10.7% Lancaster Cty., NE School District 4.150 10/26/00 235,000 235,000 235,000 NE Educ. Finance Auth. (Creighton Univ.) Rev. AMBAC 5.950 1/1/11 300,000 - 332,853 332,853 NE Educ. Finance Auth. (Midland Lutheran College) Rev. G.O. of Univ 6.250 6/15/15 300,000 207,600 105,113 312,713 NE Educ. Finance Auth. Concordia College 5.900 12/15/15 100,000 104,506 104,506 NE Educ. Finance Auth. Revenue Bonds-1994 6.750 6/1/14 100,000 113,096 113,096 NE Hgr. Educ. Loan Program Junior Subord. 6.400 6/1/13 300,000 335,559 335,559 NE Hgr. Educ. Loan Program Junior Subord. Term MBIA 6.450 6/1/18 400,000 - 441,640 441,640 NE Hgr. Educ. Loan Program Senior Subord. Term MBIA 6.250 6/1/18 800,000 - 864,472 864,472 NE Hgr. Educ. Loan Program Student Loan MBIA 5.875 6/1/14 1,350,000 - 1,431,608 1,431,608 --------- --------- --------- --------- 3,885,000 995,760 3,175,686 4,171,446 --------- --------- --------- --------- Electric 3.1% Hastings, NE Elec. Rev. 6.300 1/1/19 370,000 - 409,020 409,020 Lincoln, NE Elec. Syst. Rev. 5.750 9/1/16 750,000 - 801,285 801,285 --------- --------- --------- --------- 1,120,000 - 1,210,305 1,210,305 --------- --------- --------- --------- Eletric/Water/Sewer 0.3% Hastings, NE Combined Utility 6.875 10/15/14 100,000 102,486 - 102,486 --------- --------- --------- --------- General Obligation 15.1% Boyd Cty., NE School District #38 5.850 6/15/13 50,000 51,701 - 51,701 Cuming Cty., NE School Dist. #020 (Bancraft-Rosalie) 5.750 12/15/17 100,000 - 102,615 102,615 Dawson Cty., NE SID #1 (IBP, Inc. Proj.) Ref. G.O. 5.650 2/1/22 700,000 430,505 315,597 746,102 Douglas Cty. 6.250 5/15/09 100,000 103,573 - 103,573 Douglas Cty. NE School District #10 6.400 12/15/08 150,000 154,732 - 154,732 Douglas Cty. School-Elkhorn 6.600 12/15/10 100,000 102,827 - 102,827 Douglas Cty. School-Elkhorn 6.750 12/15/14 100,000 102,956 - 102,956 Douglas Cty., NE SID #240 (LeBea) Ref. G.O. 5.900 10/15/16 100,000 - 105,622 105,622 Douglas Cty., NE SID #295 G.O. 6.500 6/1/17 800,000 - 820,656 820,656 Douglas Cty., NE SID #363 (Hillsborough) G.O. 5.850 9/15/17 100,000 - 102,240 102,240 Douglas Cty., NE SID #392 (Cinnamon Creek) G.O. 5.750 8/15/17 200,000 - 204,366 204,366 Douglas Cty., NE SID #396 (First National Business Park) 5.750 9/1/17 100,000 - 102,277 102,277 Gage Cty., NE (Beatrice) School Dist. #15 G.O. AMBAC 5.900 12/15/16 850,000 - 916,062 916,062 Hemingford, NE G.O. 5.600 2/15/12 115,000 - 116,511 116,511 Kearney Cty., NE School Dist. #503 (Minden) G.O. 6.150 12/15/12 100,000 - 103,652 103,652 Keith Cty., NE -Ogallala 6.300 11/15/09 100,000 102,327 - 102,327 Lincoln/Lancaster Cty., NE Public Bldg. 6.200 10/15/11 100,000 106,949 - 106,949 North Platte NE SER 1995 6.200 3/15/15 100,000 103,292 - 103,292 Omaha, NE Various Purpose 6.250 12/1/14 250,000 - 281,568 281,568 Omaha, NE Various Purpose 6.250 12/1/12 250,000 - 282,545 282,545 Papillion, NE G.O. 6.150 7/1/12 105,000 - 109,102 109,102 Sarpy Cty., NE SID #142 (Fair Meadows) Ref. G.O. 5.850 8/15/17 100,000 - 103,214 103,214 Sarpy Cty., NE SID #52 (Prairie Corners) G.O. 6.000 10/1/17 300,000 - 308,304 308,304 Sarpy Cty., NE SID #86 (Willow Springs) G.O. 6.250 1/15/17 100,000 - 103,579 103,579 Saunders Cty., NE G.O. 6.350 7/1/14 175,000 177,211 - 177,211 Washington Cty., NE School Dist. #1 G.O. 5.800 7/15/11 100,000 - 104,329 104,329 Washington Cty., NE School Dist. #1 G.O. 5.900 7/15/15 135,000 - 141,496 141,496 Western NE Community College 6.550 10/15/13 150,000 161,322 - 161,322 --------- --------- --------- --------- 5,630,000 1,597,396 4,323,735 5,921,131 --------- --------- --------- --------- Health 0.9% Douglas Cty., NE (Cath. Hlth. Corp.) Rev. MBIA 5.500 11/15/21 340,000 - 363,283 363,283 --------- --------- --------- --------- Health Care 2.7% NE Invmt. Finance Auth.(Children Healthcare Svcs.) Rev. AMBAC 5.500 8/15/27 1,000,000 - 1,064,800 1,064,800 --------- --------- --------- --------- Hospital 9.9% Adams Cty., NE Hosp. Auth. #1 (Mary Lanning Memorial Hosp.) ASGUA 5.300 12/15/18 250,000 - 261,455 261,455 Douglas Cty. Hospital 5.000 12/15/17 250,000 252,903 - 252,903 Douglas Cty. NE Hospital-Beatrice 6.000 11/15/15 125,000 137,396 - 137,396 THE NEBRASKA MUNICIPAL FUND and LANCASTER FUNDS NEBRASKA TAX-FREE FUND Proforma Schedule of Investments (continued) (Unaudited) January 29, 1999 SUPPLEMENTAL COMPILED HISTORICAL BALANCES INFORMATION -------------------------------- -------------- Lancaster Funds The Nebraska Nebraska Description Coupon Maturity Principal Tax-Free Fund Municipal Fund Combined - ------------------------------------------------------------------------------------------------------------------------- --------- Douglas Cty. NE Hospital-Bergen Mercy 5.850 11/15/03 100,000 108,488 - 108,488 Douglas Cty. NE Hospital-Bergen Mercy 6.250 11/15/22 100,000 108,253 - 108,253 Douglas Cty. NE Hospital-DOUG CITY 5.100 7/1/04 150,000 157,412 - 157,412 Douglas Cty., NE Hosp. Auth #2 (Bethphage Project) Rev. 5.400 2/1/13 120,000 - 122,843 122,843 Douglas Cty., NE Hospital (Alegent Hlth.) Auth.#001 Rev. AMBAC 5.250 9/1/21 250,000 - 258,795 258,795 Gage Cty., NE Hospital Authority #1 6.400 10/1/07 100,000 114,295 - 114,295 Gage Cty., NE Hospital Authority #1 6.750 10/1/14 200,000 233,140 - 233,140 Kearney Cty., NE Hospital 5.900 6/1/07 100,000 100,895 - 100,895 Lancaster Cty., NE (Bryan Memorial Hospital) Rev. MBIA 5.375 6/1/19 750,000 - 782,888 782,888 Lancaster Cty., NE (Lincoln Medl. Educ. Foundn.) Rev. 5.700 2/1/11 100,000 - 104,967 104,967 Lancaster Cty., NE Hospital Authority 6.250 5/15/12 200,000 221,776 - 221,776 Lancaster Cty., NE(Lincoln Medl. Educ. Foundn.) Rev. 5.800 2/1/12 175,000 - 184,067 184,067 Madison Cty. Hospital 5.350 7/1/18 250,000 260,500 - 260,500 NE Invmt. Finance Auth. Catholic Health Initiative 5.125 12/1/17 200,000 205,388 - 205,388 Scotts Bluff Cty., NE Hosp. Auth. #1 (Regl West Medl. Ctr.) 5.250 11/15/28 250,000 - 252,310 252,310 --------- --------- --------- --------- 3,670,000 1,900,445 1,967,324 3,867,769 --------- --------- --------- --------- Housing 6.1% NE Invmt. Finance Auth. 1994 SER D-1 7.300 9/1/26 425,000 425,000 - 425,000 NE Invmt. Finance Auth. 4.65% 7/1/08 4.650 7/1/08 100,000 102,344 - 102,344 NE Invmt. Finance Auth. 4.75% 7/1/09 4.750 7/1/09 100,000 102,583 - 102,583 NE Invmt. Finance Auth. 4.85% 7/01/10 4.850 7/1/10 100,000 102,700 - 102,700 NE Invmt. Finance Auth. 4.95% 7/1/11 4.950 7/1/11 100,000 102,848 - 102,848 NE Invmt. Finance Auth. Education Fund Bldg. 7.000 11/1/09 70,000 70,000 - 70,000 NE Invmt. Finance Auth. Hospital Revenue- NE Methodist 6.550 3/1/99 200,000 200,588 - 200,588 NE Invmt. Finance Auth. MF Waterbrook 5.600 4/1/07 210,000 210,000 - 210,000 NE Invmt. Finance Auth. SFHR 1994 SER A-1 6.300 3/1/17 185,000 185,000 - 185,000 NE Invmt. Finance Auth. SFHR 1995 SER A 6.150 3/1/09 100,000 100,000 - 100,000 NE Invmt. Finance Auth. SFHR 1995 SER A 6.200 9/1/10 100,000 100,000 - 100,000 NE Invmt. Finance Auth. SFHR 1995 SER B 6.400 9/1/26 250,000 250,000 - 250,000 NE Invmt. Finance Auth. SFHR 1996 SER A 5.950 3/1/27 100,000 100,000 - 100,000 NE Invmt. Finance Auth. SFHR 1996 SER E 6.250 9/1/28 230,000 230,000 - 230,000 NE Invmt. Finance Auth. SFHR 1997 SER A 5.850 9/1/17 100,000 100,000 - 100,000 --------- --------- --------- --------- 2,370,000 2,381,063 - 2,381,063 --------- --------- --------- --------- Lease 2.1% Omaha, NE Parking Facs. Corp. (Omaha Park 4\5) Lease Rev. 5.700 9/15/15 750,000 - 821,115 821,115 --------- --------- --------- --------- Medical Center 1.9% NE Invmt. Finance Auth. (Great Plains Regl. Medl. Ctr.) ASSET GUAR 5.450 11/15/17 400,000 - 417,664 417,664 NE Invmt. Finance Auth. (Great Plains Regl. Medl. Ctr.) Rev. ASGUA 6.500 5/15/14 300,000 168,617 167,141 335,757 --------- --------- --------- --------- 700,000 168,617 584,805 753,421 --------- --------- --------- --------- Multi Family 6.5% NE Invmt. Finance Auth. (Muirfield Greens) Multifamily Rev. FHA 6.850 12/1/25 525,000 - 562,548 562,548 NE Invmt. Finance Auth. (Muirfield Greens) Multifamily Rev. FHA 6.800 12/1/15 365,000 - 388,156 388,156 NE Invmt. Finance Auth. Multifamily Hsg. Rev. FNMA 6.200 6/1/28 495,000 - 520,220 520,220 NE Invmt. Finance Auth. Multifamily Hsg. Rev. GNMA 6.100 6/1/29 500,000 - 526,420 526,420 NE Invmt. Finance Auth. Multifamily Hsg. Rev. GNMA 6.000 6/1/17 500,000 - 528,390 528,390 --------- --------- --------- --------- 2,385,000 - 2,525,734 2,525,734 --------- --------- --------- --------- Power 6.8% McCook PPO 6.750 12/15/09 100,000 103,105 - 103,105 Municipal Energy 6.000 4/1/17 200,000 215,520 - 215,520 NE Public Power Dist. Power Supply Syst. Rev. 5.750 1/1/20 250,000 - 273,433 273,433 NE Public Power Dist. Power Supply Syst. Rev. 6.125 1/1/15 390,000 - 431,001 431,001 NE Public Power Dist. Power Supply Syst. Rev. MBIA 5.000 1/1/28 500,000 - 501,425 501,425 Omaha, NE Public Power Dist. Elec. Syst. Rev. 6.000 2/1/15 330,000 - 373,471 373,471 Omaha, NE Public Power Dist. Elec. Syst. Rev. 6.200 2/1/17 650,000 - 749,021 749,021 --------- --------- --------- --------- 2,420,000 318,625 2,328,350 2,646,975 --------- --------- --------- --------- THE NEBRASKA MUNICIPAL FUND and LANCASTER FUNDS NEBRASKA TAX-FREE FUND Proforma Schedule of Investments (continued) (Unaudited) January 29, 1999 PROFORMA COMPILED HISTORICAL BALANCES INFORMATION ------------------------------ ----------- Lancaster Funds The Nebraska Nebraska Description Coupon Maturity Principal Tax-Free Fund Municipal Fund Combined - ------------------------------------------------------------------------------------------------------------------------- ------- Public 3.7% Lincoln/Lancaster Cty., NE Public Bldg. Community Rev. 5.875 10/15/23 850,000 - 937,304 937,304 Lincoln/Lancaster Cty., NE Public Bldg. Community Tax Lease Rental 5.800 10/15/18 475,000 - 524,239 524,239 --------- --------- --------- --------- 1,325,000 - 1,461,542 1,461,542 --------- --------- --------- --------- Real Estate Development 2.2% Northeast NE Juvenile Auth. 1st Mrtge. Rev. 6.375 6/1/17 770,000 555,078 292,180 847,258 --------- --------- --------- --------- Revenue 7.8% District Energy Corp. 5.500 7/1/13 150,000 154,755 - 154,755 Douglas Cty. Hospital 5.375 11/15/15 275,000 291,808 - 291,808 Douglas Cty. Hospital 5.000 12/1/17 150,000 151,424 - 151,424 Lincoln Parking Revenue 6.150 8/15/11 100,000 106,396 - 106,396 Lincoln/Lancaster Cty., NE Public Bldg. 5.000 10/15/99 50,000 50,692 - 50,692 Lincoln/Lancaster Cty., NE Public Bldg. 6.100 8/15/09 250,000 265,688 - 265,688 NE Educ. Finance Auth. 5.55% 5.550 6/15/18 500,000 532,884 - 532,884 NE Public Gas Agency 6.250 4/1/05 200,000 215,268 - 215,268 NE Public Gas Agency 5.650 4/1/06 200,000 213,728 - 213,728 NE Public Power District 5% 5.000 7/1/04 325,000 346,613 - 346,613 NE Public Power District 6.25% 6.250 1/1/02 150,000 163,895 - 163,895 NE Public Power District Revenue 5% 5.000 1/1/28 200,000 199,800 - 199,800 Omaha Public Power District 4.300 2/1/00 100,000 101,158 - 101,158 Omaha River Development 4.500 12/1/07 250,000 252,697 - 252,697 --------- --------- --------- --------- 2,900,000 3,046,803 - 3,046,803 --------- --------- --------- --------- School District 1.1% Otoe Cty., NE School Dist. #111 (Nebraska City) Ref. AMBAC 5.800 11/15/14 400,000 - 419,440 419,440 --------- --------- --------- --------- Sewer 2.2% Grand Island, NE Sewer Syst. Rev. 6.000 4/1/14 550,000 327,324 272,200 599,524 York, NE Sewer Syst. Rev. 5.850 6/1/12 140,000 - 147,784 147,784 York, NE Sewer Syst. Rev. 6.000 6/1/17 100,000 - 102,913 102,913 --------- --------- --------- --------- 790,000 327,324 522,897 850,221 --------- --------- --------- --------- Single Family 8.8% NE Invmt. Finance Auth. Single Family Hsg. Rev. 6.600 9/1/20 695,000 - 742,976 742,976 NE Invmt. Finance Auth. Single Family Hsg. Rev. 6.300 9/1/28 1,105,000 - 1,189,776 1,189,776 NE Invmt. Finance Auth. Single Family Hsg. Rev. 5.850 9/1/28 470,000 - 491,291 491,291 NE Invmt. Finance Auth. Single Family Hsg. Rev. FHA/GNMA 6.500 9/1/18 400,000 - 426,860 426,860 NE Invmt. Finance Auth. Single Family Hsg. Rev. GNMA 6.250 3/1/21 300,000 - 321,843 321,843 NE Invmt. Finance Auth. Single Family Hsg. Rev. GNMA 6.200 9/1/17 250,000 - 267,068 267,068 --------- --------- --------- --------- 3,220,000 - 3,439,813 3,439,813 --------- --------- --------- --------- Solid Waste 1.6% Northeast NE Solid Waste Facs. Rev. MBIA 5.900 5/15/15 600,000 - 627,876 627,876 --------- --------- --------- --------- Stadium 1.3% Omaha, NE (Rosenblatt Stadium) Facs. Rev. 5.000 11/1/18 500,000 - 505,595 505,595 --------- --------- --------- --------- Student Loan 0.3% NE Student Loan Program B Rev. MBIA 6.000 6/1/28 100,000 - 104,030 104,030 --------- --------- --------- --------- Utilities 2.1% Kearney Cty., NE Combined Util. Rev. 6.100 6/1/14 800,000 209,020 629,268 838,288 --------- --------- --------- --------- TOTAL NEBRASKA MUNICIPAL BONDS ( COST $35,971,693) 11,602,617.30 26,672,751.50 38,275,368.80 Short-term Securities 2.2% Federated Inter Municipal Trust #78 - 150,696 150,696 Federated Tax-Free Fund #73 513,293 199,174 712,467 --------- ---------- --------- 513,293 349,870 863,163 --------- ---------- --------- TOTAL (COST $36,829,856) 100% $ 12,1$5,910 27,022,622 39,138,532 ============= ========== ========== The accompanying notes are an integral part of this schedule.
THE NEBRASKA MUNICIPAL FUND AND LANCASTER FUNDS NEBRASKA TAX FREE FUND PORTFOLIOS Pro Forma Combining Statement of Assets and Liabilities January 29, 1999 (Unaudited) Compiled Historical Balances Proforma Supplemental Information Lancaster Funds The Nebraska Nebraska Tax Municipal Fund Free Fund Combined Adjustments Pro Forma Effect ------------------------------------------------------ --------------- Assets: Investments: Long-term investments in securities (See schedule of investments)$27,022,622 $12,115,911 $39,138,533 $ - $ 39,138,533 Deferred organization costs 2,462 - 2,462 - 2,462 Prepaid Expense - 3,317 3,317 - 3,317 Variation margin on futures 68,750 - 68,750 - 68,750 Receivables: Fund shares sold 30,000 - - - - Dividends and interest 384,835 166,162 550,997 - 550,997 ------------------------------------------------------ --------------- Total Assets $27,508,669 $12,285,390 $39,794,059 $ - $ 39,794,059 ====================================================== =============== Liabilities: Payables: Security purchases payable $ - $ 200,661 $200,661 $ - $ 200,661 Dividends payable 105,471 105,471 22,830 (a) 128,301 Bank Overdraft 4,267 4,267 - 4,267 Fund shares redeemed -69 69 - 69 Accrued expenses 16,586 7,816 24,402 (22,830)(b) 1,572 ------------------------------------------------------ --------------- Total liabilities $126,324 $208,546 $334,870 $ - $ 334,870 ------------------------------------------------------ --------------- Net Assets: Capital stock $ - $ 1,194 - $1,194 $ (1,194)(f) $ - Capital in excess of par 27,166,716 11,909,535 39,076,251 1,194 (f) 39,077,445 Undistributed net income 25,999 25,999 - 25,999 Undistributed net realized gains (losses) on investments (1,522,653) (407,804) (1,930,457) - (1,930,457) Net unrealized appreciation (depreciation) on investments 1,760,757 547,919 2,308,676 - 2,308,676 Unrealized depreciation on futures (22,475) (22,475) - (22,475) ------------------------------------------------------ --------------- Total net assets $27,382,345 $12,076,843 $39,459,188 $ - $ 39,459,188 ------------------------------------------------------ --------------- Total Liabilities and Net Assets $27,508,669 $12,285,389 $39,794,058 $ - $39,794,058 ====================================================== =============== Net asset value and redemption price per share $11.37 $10.11 $11.37 ============================ =============== Maximum offering prices per share $11.87 $10.52 $11.87 ============================ =============== Shares outstanding Conversion Reconciliation Adjustments ProsForma Shares --------------- Net assets $27,382,345 $12,076,843 $ 39,459,188 Shares authorized Unlimited 40,000,000 Unlimited Shares issued and outstanding 2,408,753 1,194,019 (132,307)(c) 3,470,465 ---------------------------- --------------- Net asset value and redemption price $11.37 $10.11 $11.37 ============================ =============== The accompanying notes to the combining proforma financial statements are an integral part of these financial statements.
THE NEBRASKA MUNICIPAL FUND AND LANCASTER FUNDS NEBRASKA TAX FREE FUND PORTFOLIOS Pro Forma Combining Statement of Operations for the Six Months Ended January 29, 1999 (Unaudited) Compiled Historical Balances Proforma Supplemental Information ------------------------------ ---------------------------------- Lancaster Fund The Nebraska Nebraska Tax Municipal Fund Free Fund Combined Adjustments Pro Forma Effect -------------- ------------ -------- ------------- --------------- Investment Income: Interest $733,274 $333,173 $1,066,447 $ - $ 1,066,447 Dividends 6,080 - 6,080.00 - 6,080 ------------------------------------------------- ------------- Total investment income $739,354 $333,173 $1,072,527 $ - $ 1,072,527 ------------------------------------------------- ------------- Expenses: Investment advisory fees $45,731 $9,190 $54,921 $ 3,025 (d) $57,946 Trustee's Fees 1,363 600 1,963 - (d) 1,963 Distribution fees - 15,313 15,313 (15,313) (d) - Custodian fees 2,003 2,948 4,951 (2,037) (d) 2,914 Transfer agent fees & Acctg Service Fees 39,451 7,657 47,108 11,887 (d) 58,995 Professional fees 2,572 2,817 5,389 (1,647) (e) 3,742 Printing and postage 1,214 1,977 3,191 (1,425) (e) 1,766 License fees, and registration 1,046 497 1,543 (497) (e) 1,046 Amortization of organization costs 1,868 - 1,868 - 1,868 ------------------------------------------------- ------------- Total expenses $95,248 $40,998 $136,246 ($6,007) (a) $130,239 Net investment income $ 644,106 $ 292,174 $ 936,280 $ 6,007 $ 942,287 ------------------------------------------------- ------------- Net realized gain(loss) on Investment Transactions $53,685 $3,921 $57,606 $ - $ 57,606 Futures Transactions (66,701) - (66,701) - (66,701) Net unrealized appreciation (depreciation) on Investments 609,945 167,283 777,228 - 777,228 Futures (22,475) - (22,475) - (22,475) Net realized and unrealized gain(loss) on Investments and Futures 574,454 171,204 745,658 - 745,658 ------------------------------------------------- ------------- Net increase in net assets resulting from operations $ 1,218,560 $ 463,378 $ 1,681,938 $ 6,007 $ 1,687,945 ================================================= ============= The accompanying notes to the combining proforma financial statements are an integral part of these financial statements.
THE NEBRASKA MUNICIPAL FUND AND LANCASTER FUNDS NEBRASKA TAX FREE FUND PORTFOLIOS Pro Forma Combining Statement of Operations for the Year Ended July 31, 1998 (Unaudited) Compiled Historical Balances Proforma Supplemental Information ------------------------------- ------------------------------------ Lancaster Fund The Nebraska Nebraska Tax Municipal Fund Free Fund Combined Adjustments Pro Forma Effect -------------- ------------ -------- ------------- --------------- Investment Income: Interest $1,535,604 $604,940 $2,140,544 $ - $ 2,140,544 Dividends 15,665 - 15,665 - 15,665 ---------------------------------------------------- ------------- Total investment income $1,551,269 $604,940 $2,156,209 $ - $ 2,156,209 ---------------------------------------------------- ------------- Expenses: Investment advisory fees $80,205 $16,430 $96,635 $ 5,214 (d) $101,849 Distribution fees 28,851 27,369 56,220 (15,928) (d) 40,292 Custodian fees 3,619 4,184 7,803 (2,749) (d) 5,054 Transfer agent and accounting service fees 84,871 13,691 98,562 3,624 (d) 102,186 Trustee fees 2,762 366 3,128 729 (d) 3,857 Professional fees 7,555 6,189 13,744 (3,193) (e) 10,551 Printing and postage 2,514 3,930 6,444 (2,933) (e) 3,511 License fees, and registration 6,413 1,587 8,000 (1,587) (e) 6,413 Amortization of organization costs 5,481 - 5,481 - 5,481 ---------------------------------------------------- ------------- Total expenses $222,271 $73,746 $296,017 ($16,823) $279,194 Less expenses waived or absorbed by the Fund's manager 51,233 - 51,233 - 51,233 ---------------------------------------------------- ------------- ---------------------------------------------------- ------------- Net expenses $171,038 $73,746 $244,784 $ (16,823) (a) $227,961 ---------------------------------------------------- ------------- Net investment income $1,380,231 $531,194 $1,911,425 $ 16,823 $ 1,928,248 ---------------------------------------------------- ------------- Net realized gain(loss) on Investment Transactions $131,901 $4,623 $136,524 $ - $ 136,524 Futures Transactions (515,806) - (515,806) - (515,806) Net unrealized appreciation (depreciation) on Investments 47,086 15,352 62,438 - 62,438 Futures 2,792 - 2,792 - 2,792 ---------------------------------------------------- ------------- Net realized and unrealized gain(loss) on Investments and Futures $ (334,027) $ 19,976 $ (314,051) $ - $ (314,051) ---------------------------------------------------- ------------- Net increase in net assets resulting from operations $1,046,204 $551,170 $1,597,374 $ 16,823 $ 1,614,197 ==================================================== ============= The accompanying notes to the combining proforma financial statements are an integral part of these financial statements.
NEBRASKA MUNICIPAL FUND AND LANCASTER FUNDS NEBRASKA TAX-FREE FUND Notes to Pro Forma Combining Financial Statements Year Ended July 31, 1998 and Six-Months Ended January 29, 1999 (Unaudited) Summary of Pro Forma Financial Statements and Assumptions The Reorganization to which the forgoing pro forma financial statements relate involves the transfer of all assets and liabilities of the Lancaster Funds Nebraska Tax-Free Fund to The Nebraska Municipal Fund, in exchange for shares of the Nebraska Municipal Fund, and the pro rata distribution, on the closing date, of such shares of The Nebraska Municipal Fund to the shareholders of the Lancaster Funds Nebraska Tax-Free fund as provided in the plan. The Funds will not be responsible for any of the expenses associated with the Reorganization. Such expenses will be borne by SMITH HAYES Financial Services Corporation, the distributor of the Lancaster Funds Nebraska Tax-Free Fund and Ranson Capital Corporation, the adviser for The Nebraska Municipal Fund. The foregoing unaudited pro forma financial statements consist of: (i) Pro Forma Combining Statements of Assets and Liabilities as of January 29, 1999, assuming the Reorganization had been consummated on that date (ii) Pro Forma Combining Statement of Operations for the year ended July 31, 1998 and the six months ended January 29, 1999, giving effect to the Reorganization as if it had been consummated on August 1, 1997; and (iii) Pro Forma Combining Schedule of Investments as of January 29, 1999 assuming the Reorganization had been consummated on that date. Because of the similarities in the investment objectives and policies of the Lancaster Funds Nebraska Tax-Free Fund and The Nebraska Municipal Fund, and the fact that all of the portfolio securities of the Lancaster Funds Nebraska Tax-Free fund are eligible for investment by the Nebraska Municipal Fund, it is not anticipated that any securities held by either Fund will be sold before or after the Reorganization, other than in the ordinary course of business. Accordingly, the presentation of the Pro Forma Combining Schedule of Investments assumes that the investment manager will not sell any of the securities in connection with the Reorganization. Therefore, no adjustment column is presented. The pro forma adjustments to the foregoing pro forma combining financial statements consist of: (a) Assumes the reduction in pro forma net expenses is distributed to the shareholders of the Combined Fund. (b) Reflects the adjustments made to pro forma net expenses as shown on the Pro Forma Combining Statement of Operations and described in notes (d) and (e) below. (c) In the Reorganization, The Nebraska Municipal Fund will issue a number of its shares equal to the amount obtained by dividing the total net asset value of the Lancaster Funds Nebraska Tax-Free Fund by the net asset value per share of The Nebraska Municipal Fund. These newly issued Nebraska Municipal Fund shares will then be distributed to the Lancaster Funds Nebraska Tax-Free fund shareholders in exchange for the then outstanding Lancaster Funds Nebraska Tax-Free fund shares which will be canceled. As a consequence, a share reconciliation representing the difference between the number of The Nebraska Municipal Fund shares to be issued in the Reorganization and the number of Lancaster Funds Nebraska Tax-Free Fund shares given up in the Reorganization is shown. The share reconciliation represents a decrease in the number of outstanding shares of the Combined Fund because of net asset value per share of The Nebraska Municipal Fund is higher than that of the Lancaster Funds Nebraska Tax-Free Fund. (d) The adjustments to the investment advisory fee, distribution fee, custodian fee, transfer agent fee, and the accounting service fee reflect the increase (decrease) in expenses assuming the Combined Fund operated under The Nebraska Municipal Fund's fee structure for the entire year ended July 31, 1998 and six months ended January 29, 1999. (e) Reductions in professional, printing and postage, trustees' fees, license, registration, and other fees reflect the elimination of duplicative costs. (f) Represents adjustment to par value for conversion to The Nebraska Municipal Fund's no par stock. FORM N14 PART C OTHER INFORMATION Item 15.Indemnification The following is a summary of the rights of indemnification set forth in the Agreement and Declaration of Trust of Registrant (see Exhibit 1.1). Article VIII of the Agreement and Declaration of Trust of Registrant provides generally that any person who is or has been a trustee or officer of Registrant (including persons who serve at the request of Registrant as directors, trustees or officers of another organization and including persons who served as officers and directors of the Registrant) shall be indemnified by Registrant to the fullest extent permitted by law against liabilities and expenses reasonably incurred by such person in connection with any claim, suit or proceeding in which such person becomes involved as a party or otherwise by virtue of being or having been such a trustee, director or officer and against amounts incurred in settlement thereof. It is further provided in such Agreement and Declaration of Trust that no indemnification shall be provided in the event that it is determined that such person was engaged in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office or that such person did not act in good faith in the reasonable belief that his action was in the best interests of Registrant. In the event of a settlement or other disposition not involving a final determination of the foregoing matters by a court or other body, no indemnification shall be provided unless such determination is made by a vote of a majority of the "disinterested" trustees acting on the matter or a written opinion of independent legal counsel. The right to indemnification as so provided may be insured against by policies maintained by the Registrant and shall continue as to any person who has ceased to be a trustee or officer of Registrant. Expenses of preparation and presentation of a defense by a person claiming indemnification may be advanced by Registrant provided generally that such person undertakes to repay any such advances if it is ultimately determined that he is not entitled to indemnification and provided that either such undertaking is secured by appropriate security or a majority of the "disinterested" trustees acting on the matter or independent legal counsel in a written opinion determines that there is reason to believe that such person ultimately will be found entitled to indemnification. The Agreement and Declaration of Trust provides further that in the event that any shareholder or former shareholder shall be found to be personally liable solely by reason of his being a shareholder and not because of acts or omissions of such person, such shareholder shall be entitled out of assets of the Registrant to be indemnified against all loss and expense arising from such liability (provided there is no liability to reimburse any shareholder for taxes paid by reason of such shareholder's ownership of shares or for losses suffered by reason of any changes in value of any of Registrant's assets). The Agreement and Declaration of Trust (Article IV, Section 2(o)) provides specifically that the trustees have the power to purchase and pay for insurance out of assets of Registrant as they deem necessary or appropriate for the conduct of its business including policies insuring shareholders, trustees, officers, employees, agents, investment managers, principal underwriters or independent contracts or Registrant against claims or liabilities arising by reason of such persons holding or having held any such office or position with Registrant or by reason of any action alleged to have been taken or omitted by such person in such office or position including any action taken or omitted that may be determined to constitute negligence whether or not the Registrant would have the power to indemnify such person against such liability. The provisions with respect to indemnification in the Agreement and Declaration of Trust of Registrant do not affect any rights of indemnification that persons other than those specifically covered may have whether under contract or otherwise under law. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to trustees, officers, and controlling persons of the Registrant pursuant to the provisions of Registrant's Agreement and Declaration of Trust, or otherwise, Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liability (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer or controlling person of Registrant in the successful defense of any action, suit or proceeding) as asserted by such trustee, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. Item 16. Exhibits 1.1. Agreement and Declaration of Trust dated August 10, 1990 (incorporated by reference to Form N1-A [File No. 3336324] filed on behalf of Ranson Managed Portfolios -- The Kansas Municipal Fund). 2.1. By-Laws (incorporated by reference to Form N1-A [File No. 3336324] filed on behalf of Ranson Managed Portfolios -- The Kansas Municipal Fund). 3.1. Not applicable. 4.1. Agreement and Plan of Reorganization: See Exhibit A to Part A of this Registration Statement. 5.1. Not applicable. 6.1. Management and Investment Advisory Agreement between Registrant and Ranson Capital Corporation.1 7.1. Distribution and Services Agreement between Registrant and Ranson Capital Corporation.1 7.2. Form of Dealer's Agreement.1 8.1 Not Applicable. 9.1. Custodian Agreement between Registrant and First Western Bank & Trust (incorporated by reference to Form N-1A [File No. 33-36324] filed on behalf of Ranson Managed Portfolios -- The Oklahoma Municipal Fund). 10.1.Form of Accounting and Administrative Services Agreements between Registrant and ND Resources, Inc. (incorporated by reference to Form N1-A [File No. 33-36324] filed on behalf of Ranson Managed Portfolios -- The Oklahoma Municipal Fund). 10.2.Shareholder Services Plan between the Ranson Fund and Ranson Capital Corporation.1 11.1. Form of Opinion and Consent of Chapman and Cutler. 12.1.Tax Opinion Relating to Reorganization and Consent of Cline, Williams, Wright, Johnson & Oldfather. 13.1 Not Applicable. 14.1. Consent of Brady, Martz & Associates, P.C. 14.2. Consent of Deloitte & Touche LLP. 15.1. Not applicable. 16.1. Not applicable. 17.1. Form of Proxy. Item 17. Undertakings (1) The Registrant agrees that prior to any public reoffering of the securities registered through the use of a prospectus which is a part of this registration statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) of the Securities Act of 1933, the reoffering prospectus will contain the information called for by the applicable registration form for the reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. (2) The Registrant agrees that every prospectus that is filed under paragraph (1) above will be filed as a part of an amendment to the registration statement and will not be used until the amendment is effective, and that in determining any liability under the Securities Act of 1933, each post-effective amendment shall be deemed to be a new registration statement for the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering of them. - -------- 1 Previously filed as part of Registrant's Registration Statement on Form N-1A [File No. 33-36324], Post-Effective Amendment No. 11 and incorporated by reference herein. SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940 the Registrant certifies that it has duly caused this Registration Statement to be signed on its behalf by the undersigned duly authorized in the City of Minot, in the State of North Dakota on the 8th day of March, 1999. RANSON MANAGED PORTFOLIOS By: /s/ Robert E. Walstad, President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on the 8th day of March, 1999: SIGNATURES TITLE Trustee, Chairman of the Board, President and /s/ Treasurer (Principal Executive Officer and Robert E. Walstad Principal Accounting Officer) /s/ Trustee Lynn W. Aas /s/ Trustee Robert E. Walstad Attorney-in-fact /s/ Trustee R. James Maxson EXHIBIT INDEX 11.1 Form of Opinion and Consent of Chapman and Cutler 12.1 Tax Opinion Relating to the Reorganization and Consent of Cline, Williams, Wright, Johnson & Oldfather. 14.1 Consent of Brady, Martz & Associates, P.C. 14.2 Consent of Deloitte & Touche LLP. 17.1 Form of Proxy. EX-99.11.1 2 EXHIBIT 11.1 __________________, 1999 Ranson Managed Portfolios North Main Minot, North Dakota 58703 Re: Ranson Managed Portfolios Gentlemen: This opinion is being furnished in connection with the registration of shares of beneficial interest ("Shares") of the Nebraska Municipal Fund (the "Ranson Fund"), a series of the Ranson Managed Portfolios ("Ranson"), a Massachusetts business trust, pursuant to a Registration Statement on Form N 14 (the "Registration Statement") under the Securities Act of 1933, as amended, to be filed by Ranson with the Securities and Exchange Commission. We understand that the Shares of the Ranson Fund to which the Registration Statement relates will be issued in exchange for all the assets and stated liabilities of the Lancaster Nebraska Tax Free Fund, a series of the Smith Hayes Trust, Inc., pursuant to an Agreement and Plan of Reorganization dated _____________, 1999 (the "Reorganization Agreement"), all as described in the Registration Statement. In connection therewith, we have examined such documents, corporate records, instruments and matters of law as we have deemed necessary or appropriate for the purpose of rendering the opinions expressed herein, and are familiar with the corporate proceedings taken by Ranson in connection with the Registration Statement. In rendering such opinions, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, and the conformity to original documents of all documents submitted to us as certified or photostatic copies. Based upon and subject to the foregoing, after having given due regard to such issues of law as we deem relevant and assuming that: 1. the Registration Statement remains effective, and the Proxy Statement/ Prospectus which is a part thereof and your Proxy Statement/Prospectus delivery procedures with respect thereto fulfill all the requirements of the Securities Act of 1933 and the Investment Company Act of 1940 throughout all periods relevant to this opinion; 2. all offers and issuances of Shares of the Ranson Fund registered under the Registration Statement are conducted in a manner complying with the terms of the Reorganization Agreement and the Registration Statement; and 3. all offers and issuances of Shares of the Ranson Fund registered under the Registration Statement are conducted in compliance with the securities laws of the states having jurisdiction thereof; 1 we are of the opinion that the Shares of the Ranson Fund covered by the Registration Statement will be, when issued, legally and validly issued, fully paid and non-assessable (except for the potential liability of shareholders described in the Ranson Fund's prospectus dated November 28, 1998 under the caption "Description of Shares and Rights"). We hereby consent to the filing of this opinion as an exhibit to the Registration Statement relating to the Shares referred to above, to the use of our name and to the reference to our firm in said Registration Statement. Respectfully submitted, CHAPMAN AND CUTLER 2 EX-99.12.1 3 EXHIBIT 12.1 March 10, 1999 Board of Directors SMITH HAYES Trust, Inc. Board of Trustees Ranson Managed Portfolios RE: Plan of Reorganization for Combining the SMITH HAYES Trust, Inc., Lancaster Nebraska Tax-Free Fund (the "Transferor Fund") into the Ranson Managed Portfolios Nebraska Municipal Fund (the" Surviving Fund") Dear Sirs: We have been asked to give our opinion relating to the above-described transaction (the "Reorganization"), as to certain Federal income tax consequences of consummating the transactions contemplated in the Agreement and Plan of Reorganization (the "Plan"). Background SMITH HAYES Trust, Inc., d/b/a Lancaster Funds ("Lancaster") is a Minnesota corporation consisting of multiple investment portfolios, including the Transferor Fund identified above. Ranson Managed Portfolios ("Ranson") is a Massachusetts business trust consisting of multiple investment portfolios, including the Surviving Fund identified above. The Transferor Fund and the Surviving Fund are sometimes referred to herein collectively as "Funds." Lancaster and Ranson each is registered under the Investment Company Act of 1940, as amended, as an open-end investment company of the management type. It is proposed that all the assets and liabilities of the Transferor Fund be transferred to the Surviving Fund. As consideration for such transfer, the Surviving Fund is issuing to the Transferor Fund a number of full and fractional shares of common stock in the Surviving Fund equal to the net asset value of the shares outstanding of the Transferor Fund at the Effective Time of the Reorganization. 1 Immediately after the transfer, the Surviving Fund shares issued to the Transferor Fund are to be distributed to the shareholders of the Transferor Fund in liquidation of the Transferor Fund, and the Transferor Fund is to cease operations. Each Transferor Fund shareholder is receiving shares of the Surviving Fund in proportion to the shareholding in the Transferor Fund immediately before the Reorganization. The outstanding shares of the Transferor Fund are to be canceled, and the Transferor Fund is to be terminated. Assumptions For purposes of this opinion, we have made several assumptions: First, that each of the Funds qualified as a "regulated investment company" under Part I of Subchapter M of Subtitle A, Chapter 1, of the Internal Revenue Code of 1986, as amended (the "Code") and also met the diversification requirements of Codess.368(a)(2)(E)(ii), for its most recently ended fiscal year and will continue to so qualify for its current fiscal year; Second, that the Surviving Fund is acquiring at least 90% of the fair market value of the net assets and at least 70% of the fair market value of the gross assets held by the Transferor Fund immediately prior to the transaction, treating any assets used to make other than regular and normal distributions or redemptions as unacquired assets; Third, that the shareholders of the Transferor Fund have no plan or intention to dispose of a number of shares of the Surviving Fund received by them as a result of the transaction which would result in their owning in the aggregate shares of the Surviving Fund having a fair market value that is less than 50% of the fair market value of the Transferor Fund's shares outstanding immediately before the transaction (including any of the Transferor Fund's shares redeemed in anticipation of the transaction); Fourth, that the Surviving Fund has no plan or intention to reacquire any of its shares issued in the transaction, except for redemptions in the ordinary course of business as a regulated investment company; Fifth, that the Surviving Fund has no plan or intention to sell or otherwise to dispose of any of the assets of the Transferor Fund acquired in the transaction, except for dispositions made in the ordinary course of business; Sixth, that the liabilities of the Transferor Fund assumed by the Surviving Fund and the liabilities to which the transferred assets of the Transferor Fund are subject were incurred by the Transferor Fund in the ordinary course of business; 2 Seventh, that the transaction serves a business purpose or purposes of the Funds and that following the transaction the Surviving Fund will continue the historic business of the Transferor Fund or use a significant portion of the Transferor Fund's historic business assets in a business; Eighth, that there is no intercorporate indebtedness existing between the Surviving Fund and the Transferor Fund that was issued, acquired or will be settled at a discount; Ninth, that the Surviving Fund does not own, directly or indirectly, nor has it owned during the past five years, directly or indirectly, any stock of the Transferor Fund; Tenth, that the Transferor Fund is not under the jurisdiction of a court in a case under Title 11 of the United States Code or a receivership, foreclosure or similar proceeding in any Federal or State court; and Eleventh, that the Plan substantially in the form included as an exhibit to the registration statement of the Surviving Fund, on Form N-14 under the Securities Act of 1933 (the "Registration Statement") has been or will be duly authorized by the Surviving Fund. The opinions set forth below are subject to the approval of the Plan by the shareholders of the Transferor Fund, to the proper submission and filing of appropriate documents with the appropriate government agencies and to the satisfaction of the terms and conditions set forth in the Plan. Conclusions Based upon the Code, applicable Treasury Department regulations in effect as of the date hereof, current published administrative positions of the Internal Revenue Service contained in revenue rulings and procedures, and judicial decisions, and upon the information, representations and assumptions contained herein and in the documents provided to us by you, it is our opinion for Federal income tax purposes that: (i) the transfer of all of the assets and liabilities of the Transferor Fund to the Surviving Fund in exchange for shares of the Surviving Fund and distribution to shareholders of the Transferor Fund of the shares of the Surviving Fund so received, as described in the Plan, will constitute a reorganization within the meaning of Code section 368(a)(1)(C); (ii) in accordance with sections 361(a), 361(c)(1) and 357(a) of the Code, no gain or loss will be recognized by the Transferor Fund as a result of such transaction; (iii)in accordance with section 1032(a) of the Code, no gain or loss will be recognized by the Surviving Fund as a result of such transaction; 3 (iv) in accordance with section 354(a)(1) of the Code, no gain or loss will be recognized by the shareholders of the Transferor Fund on the distribution to them by the Transferor Fund of shares of the Surviving Fund in exchange for their shares of the Transferor Fund; (v) in accordance with section 358(a)(1) of the Code, the basis of the Surviving Fund's shares received by a shareholder of the Transferor Fund will be the same as the basis of the shareholder's Transferor Fund shares immediately before the transaction; (vi) in accordance with section 362(b) of the Code, the basis to the Surviving Fund of the assets of the Transferor Fund received pursuant to the transaction will be the same as the basis of those assets in the hands of the Transferor Fund immediately before the transactions; (vii)in accordance with section 1223(1) of the Code, a shareholder's holding period for Surviving Fund shares will be determined by including the period for which the shareholder held Transferor Fund shares exchanged therefor, provided that the shareholder held such Transferor Fund shares as a capital asset; and (viii) in accordance with section 1223(2) of the Code, the Surviving Fund's holding period with respect to any asset acquired from the Transferor Fund will include the period for which such asset was held by the Transferor Fund. We express no opinion relating to any Federal income tax matter except on the basis of the documents and assumptions described above. In issuing our opinion, we have relied solely upon existing provisions of the Code, existing and proposed regulations thereunder, and current administrative rulings and court decisions. Such laws, regulations, administrative rulings and court decisions are subject to change at any time. Any such change could affect the validity of the opinion set forth above. We express no opinion on any state or local tax issues. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the references to our firm under the caption "Proposal - Agreement and Plan of Reorganization - Federal Income Tax Consequences" in the Proxy Statement/Prospectus constituting a part of the Registration Statement. Very truly yours, /s/ CLINE, WILLIAMS, WRIGHT, JOHNSON & OLDFATHER 4 EX-99.14.1 4 EXHIBIT 14.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Trustees of The Nebraska Municipal Fund As independent public accountants for the Fund, we hereby consent to the use of our report and all references to our Firm included in or made a part of this Registration Statement. BRADY, MARTZ & ASSOCIATES, P.C. Minot, North Dakota March 5, 1999 Lincoln, Nebraska March 8, 1999 EX-99.14.2 5 EXHIBIT 14.2 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of SMITH HAYES Trust, Inc. d/b/a Lancaster Funds Nebraska Tax-Free Fund on Form N-14 of our report dated July 24, 1998 appearing in the Annual Report dated June 30, 1998. DELOITTE & TOUCHE LLP Lincoln, Nebraska March 8, 1999 EX-99.17.1 6 EXHIBIT 17.1 PROXY FOR SPECIAL MEETING OF SHAREHOLDERS OF LANCASTER NEBRASKA TAX-FREE FUND April ____, 1999 The undersigned hereby appoints Thomas C. Smith and Colleen Avery, and each of them, proxies for the undersigned, with full power of substitution to represent the undersigned and to vote all the shares of Lancaster Nebraska Tax-Free Fund (the "Lancaster Fund") of SMITH HAYES Trust, Inc., which the undersigned is entitled to vote at the Special Meeting of Shareholders of the Lancaster Fund to be held on April ____, 1999 and at any adjournment thereof. o Proposal to approve or disapprove a reorganization of the Lancaster Fund providing for (i) the transfer of substantially all of the assets and liabilities of the Lancaster Fund to The Nebraska Municipal Fund ("NMF"), a separate series of Ranson Managed Portfolios, in exchange for shares of NMF (the "NMF Shares") of equivalent value, (ii) the pro rate distribution of those NMF Shares to the shareholders of the Lancaster Fund in full redemption of those shareholders' shares in the Lancaster Fund, and (iii) the immediate liquidation and termination of the Lancaster Fund, all as described in the accompanying Combined Proxy Statement/Prospectus. [ ] FOR [ ] AGAINST [ ] ABSTAIN And, in their discretion, to transact any other business that may lawfully come before the meeting or any adjournment(s) thereof. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE VOTED AS YOU DIRECT ON THIS FORM. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE PROPOSAL. Dated: _____________________________, 1999 ------------------------------------------------------ Signature of Shareholder ------------------------------------------------------ Signature of Shareholder When shares are registered jointly in the names of two or more persons. ALL must sign. Signature(s) must correspond exactly with the name(s) shown. Please, sign, date and return promptly in the enclosed envelope. -----END PRIVACY-ENHANCED MESSAGE-----