N-30D 1 ranson-30dsemiannual2003.txt RANSON MANAGED PORTFOLIOS THE KANSAS MUNICIPAL FUND ------------------------- DEAR SHAREHOLDER: Enclosed is the semi-annual report of the operations for The Kansas Municipal Fund (the "Fund") for the six months ended January 31, 2003. The Fund's portfolio and related financial statements are presented within for your review. Investors are going into the New Year facing many of the uncertainties that plagued them twelve months ago. Equities posted a third straight year of losses with the benchmark Standard & Poors 500 Index losing roughly 23 percent for 2002. The bond market began the year with a decline during the first quarter and then posted gains for the remainder of 2002. There is tremendous skepticism about the ability of the U.S. economy to sustain a recovery because consumers are seen as completely tapped out, and because an overabundance of capacity is expected to keep a lid on investment spending. Finally, we have escalating concerns about the geopolitical outlook. It is a safe bet that uncertainty about the 2003 outlook will be with us for some time. We expect the economy to recover, but it could be another choppy year with good quarters followed by soft ones. On the geopolitical front, Middle East tensions and fears against terrorism will likely last for years. Increased spending on the war on terrorism and a decline in tax revenue have widened the budget deficit, forcing the government to sell more debt to finance the shortfall. We continue to watch carefully as this deficit could reach record levels. Monetary reflation has provided powerful support to the economy. In November 2002, the Federal Reserve lowered its target level for the federal funds rate for the twelfth time in the past two years to 1.25%. During the period consumer spending remained relatively high. That and low mortgage rates were sources of strength for the economy. A stimulative monetary stance will be supported and the Administration is currently working on a new stimulus package that will involve tax cuts and increased spending. Relaxed monetary and fiscal policy both could result in renewed inflation and we are watchful for signs of change in the price indices. During the period the Fund utilized defensive positions at times designed to provide share price stability. U.S. Treasury futures were used to hedge a portion of the portfolio with the results being tempered share prices as bond yields fell to forty-year lows. The decline of the U.S. Dollar and the swing from surplus to deficit in the Federal budget are areas of concern. These measures will be key to bond performance over the coming months. Diversification remains an important strategy of the Fund as reflected on the ratings of the seventy-three issues in the portfolio. Portfolio quality for the six months ended were represented as follows: AAA 46.4%, AA+ 2.8%, AA 16.3%, AA- 2.0%, A+ 2.8%, A 4.1%, A- 6.4%, BBB+ 6.4%, BBB 1.4%, BBB- 1.1%, and NR 10.3%. Income exempt from Federal and Kansas income taxes with preservation of capital remain the primary objectives of the Fund. Sincerely, Monte L. Avery Robert E. Walstad Chief Portfolio Strategist President January 31, 2003 (Unaudited) ---------------------------- TERMS & DEFINITIONS ------------------- APPRECIATION Increase in value of an asset. AVERAGE ANNUAL TOTAL RETURN A standardized measurement of the return (yield and appreciation) earned by the fund on an annual basis, assuming all distributions are reinvested. COUPON RATE OR FACE RATE The rate of interest payable annually, based on the face amount of the bond; expressed as a percentage. DEPRECIATION Decrease in value of an asset. LEHMAN BROTHERS MUNICIPAL BOND INDEX An unmanaged list of long-term, fixed-rate, investment-grade, tax-exempt bonds representative of the municipal bond market. The index does not take into account brokerage commissions or other costs, may include bonds different from those in the fund, and may pose different risks than the fund. MARKET VALUE Actual (or estimated) price at which a bond trades in the market place. MATURITY A measure of the term or life of a bond in years. When a bond "matures," the issuer repays the principal. NET ASSET VALUE (NAV) The value of all your fund's assets, minus any liabilities, divided by the number of outstanding shares, not including any initial sales charge. QUALITY RATINGS A designation assigned by independent rating companies to give a relative indication of a bond's credit worthiness. "AAA," "AA," "A," and "BBB" indicate investment grade securities. Ratings can range from a high of "AAA" to a low of "D". TOTAL RETURN Measures both the net investment income and any realized and unrealized appreciation or depreciation of the underlying investments in the fund's portfolio for the period, assuming the reinvestment of all dividends. It represents the aggregate percentage or dollar value change over the period. PERFORMANCE & COMPOSITION ------------------------- Portfolio Quality Ratings ------------------------- (based on Total Long-Term Investments) [pie chart] AAA 46.4% AA 21.1% A 13.4% BBB 8.8% NR 10.3% Quality ratings reflect the financial strength of the issuer. They are assigned by independent rating services such as Moody's Investors Services and Standard & Poor's. Non-rated bonds have been determined to be of appropriate quality for the portfolio by Ranson Capital Corporation, the investment adviser. Portfolio Market Sectors ------------------------ (as a % of Net Assets) [pie chart] H-Housing 36.0% HC-Health Care 20.4% U-Utilities 16.1% G-Government 8.6% S-School 7.1% W/S-Water/Sewer 5.2% O-Other 4.5% I-Industrial 2.1% Market sectors are breakdowns of the Fund's portfolio holdings into specific investment classes. These percentages are subject to change. COMPARATIVE INDEX GRAPH ----------------------- [line graph] Comparison of change in value of a $10,000 investment in The Kansas Municipal Fund and the Lehman Brothers Municipal Bond Index
The Kansas Municipal The Kansas Municipal The Lehman Brothers Fund w/o sales charge Fund w/ max sales charge Municipal Bond Index ------------------------------------------------------------------------------------------------------ 11/15/90 $10,000 $ 9,575 $10,000 1991 $10,524 $10,077 $10,724 1992 $11,855 $11,351 $12,199 1993 $13,050 $12,495 $13,276 1994 $13,168 $12,609 $13,525 1995 $13,988 $13,394 $14,591 1996 $14,814 $14,184 $15,553 1997 $15,933 $15,256 $17,150 1998 $16,372 $15,676 $18,177 1999 $16,936 $16,216 $18,700 2000 $17,222 $16,490 $19,507 2001 $18,622 $17,831 $21,475 2002 $19,270 $18,451 $22,916 01/31/03 $19,156 $18,342 $23,638
Average Annual Total Returns For periods ending January 31, 2003 ----------------------------------- Since Inception 1 year 5 year 10 year (November 15, 1990) ---------------------------------------------------------------------------------------------------- Without sales charge (0.43)% 3.51% 4.58% 5.46% With sales charge (4.25%) (4.66)% 2.61% 4.13% 5.09% ----------------------------------------------------------------------------------------------------
PUTTING PERFORMANCE INTO PERSPECTIVE Returns are historical and are not a guarantee of future results. The graph comparing your Fund's performance to a benchmark index provides you with a general sense of how your Fund performed. To put this information in context, it may be helpful to understand the special differences between the two. The Lehman Brothers index is a national index representative of the national municipal bond market, whereas the Fund concentrates its investments in Kansas municipal bonds. Your Fund's total return for the periods shown appears with and without sales charges and includes Fund expenses and management fees. A securities index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged; there are no expenses that affect the results. In addition, few investors could purchase all of the securities necessary to match the index. And, if they could, they would incur transaction costs and other expenses. All Fund and benchmark returns include reinvested dividends. The Fund's share price, yields and total returns will vary, so that shares, when redeemed, may be worth more or less than their original cost. KEY STATISTICS -------------- 07-31-2002 NAV (share value) $11.78 01-31-2003 NAV $11.45 Average Maturity 19.1 years Number of Issues 73 Total Net Assets $93,134,453 MANAGEMENT OF THE FUNDS The Board of Ranson Managed Portfolios consists of four Trustees. These same individuals, unless otherwise noted, also serve as directors or trustees for all of the funds in the Integrity family of funds and the four series of Ranson Managed Portfolios. Three Trustees (75% of the total) have no affiliation or business connection with the Investment Adviser or any of its affiliates. These are the "independent" Trustees. The remaining Trustee and executive officers are "interested" by virtue of their affiliation with the Investment Adviser and its affiliates. The Independent Trustees of the Fund, their term of office and length of time served, their principal occupation(s) during the past five years, the number of portfolios overseen in the Fund Complex by each Independent Trustee and other directorships, if any, held outside the Fund Complex, are shown below.
INDEPENDENT TRUSTEES Number of Other Portfolios Directorships Name, Address Position(s) Held Term and Principal Occupation(s) Overseen In The Held Outside and Age with Registrant Length Served During Past 5 Years Fund Complex * The Fund Complex ----------------------------------------------------------------------------------------------------------------------------- Lynn W. Aas Trustee Since January 1996 Retired; Attorney; Director, 9 None 904 NW 27th Integrity Mutual Funds, Inc Minot, ND 58703 (formerly known as ND Holdings, 81 Inc.) (May 1988 to August 1994), ND Insured Income Fund, Inc. (December 1994 to August 1999), ND Tax-Free Fund, Inc. (since December 1994), Montana Tax-Free Fund, Inc. (since December 1994), South Dakota Tax-Free Fund, Inc. (since December 1994), Integrity Fund of Funds, Inc., Integrity Small-Cap Fund of Funds, Inc. (since September 1998); Director, First Western Bank & Trust. Orlin W. Backes Trustee Since January 1996 Attorney, McGee, Hankla, Backes 9 Director, First 15 2nd Ave., SW - & Dobrovolny, P.C.; Director, Western Bank & Ste. 305 ND Tax-Free Fund, Inc. Trust Minot, ND 58701 (since April 1995), ND 67 Insured Income Fund, Inc. (March 1995 to August 1999), Montana Tax-Free Fund, Inc. (since April 1995), South Dakota Tax-Free Fund, Inc. (since April 1995), Integrity Fund of Funds, Inc. (since April 1995), Integrity Small- Cap Fund of Funds, Inc. (since September 1998); Director, First Western Bank & Trust. R. James Maxson Town & Country Center Trustee Since January 1999 Attorney, Maxson Law Office 9 None 1015 S Bdwy, Suite 15 (since November 2002), Minot, ND 58701 Attorney, McGee, Hankla, 55 Backes & Dobrovolny, P.C. (April 2000 to November 2002); Attorney, Farhart, Lian and Maxson, P.C. (March 1976 to March 2000); ND Tax-Free Fund, Inc. (since January 1999), Montana Tax-Free Fund, Inc. (since January 1999), South Dakota Tax-Free Fund, Inc. (since January 1999), Integrity Fund of Funds, Inc. (since January 1999), Integrity Small-Cap Fund of Funds, Inc. (since January 1999). ---------------------- The Fund Complex consists of the five funds in the Integrity family of funds and the four series of Ranson Managed Portfolios. The Statement of Additional Information contains more information about the Fund's Trustees and is available without charge upon request by calling Ranson Capital Corporation at (800) 276-1262.
The Interested Trustee and executive officers of the Fund, their term of office and length of time served, their principal occupation(s) during the past five years, the number of portfolios overseen in the Fund Complex by each Interested Trustee and executive officer and other directorships, if any, held outside the Fund Complex, are shown below.
INTERESTED TRUSTEE AND EXECUTIVE OFFICERS Number of Other Portfolios Directorships Name, Address Position(s) Held Term and Principal Occupation(s) Overseen In The Held Outside and Age with Registrant Length Served During Past 5 Years Fund Complex * The Fund Complex ----------------------------------------------------------------------------------------------------------------------------- **Peter A. Quist Vice President Since January 1996 Attorney; Director and Vice 5 Director, ARM 1 North Main and Secretary President, Integrity Mutual Securities Minot, ND 58703 Funds, Inc. (formerly known as Corporation 68 ND Holdings, Inc.); Director, Vice President and Secretary, ND Money Management, Inc., ND Capital, Inc., ND Resources, Inc., ND Tax-Free Fund, Inc., ND Insured Income Fund, Inc. (November 1990 to August 1999), Montana Tax-Free Fund, Inc., South Dakota Tax-Free Fund, Inc. (since April 1995), Integrity Fund of Funds, Inc., Integrity Small-Cap Fund of Funds, Inc. (since September 1998), The Ranson Company, Inc. (January 1996 to February 1997), Ranson Capital Corporation (since January 1996), and Director, ARM Securities Corporation (since May 2000). **Robert E. Walstad Trustee, Since January 1996 Director (since September 1987), 9 Director, ARM 1 North Main Chairman, President (September 1987 to Securities Minot, ND 58703 President, October 2001) (since September 2002), Corporation; 58 and Treasurer Integrity Mutual Funds, Inc. Director, Magic (formerly known as ND Holdings, Internet Inc.); Director, President and Services, Treasurer, ND Money Management, Inc.; Director, Inc., ND Capital, Inc., ND Capital Financial Resources, Inc., ND Tax-Free Fund, Services, Inc. Inc., ND Insured Income Fund, Inc. (November 1990 to August 1999), Montana Tax-Free Fund, Inc., South Dakota Tax-Free Fund, Inc., Integrity Fund of Funds, Inc., Integrity Small-Cap Fund of Funds, Inc.; Trustee, Chairman, President, and Treasurer, Ranson Managed Portfolios; Director, President, CEO, and Treasurer, The Ranson Company, Inc. (January 1996 to February 1997), and Ranson Capital Corporation; Director (since October 1999), President (October 1999 to October 2001), Magic Internet Services, Inc.; Director (since May 2000), President (May 2000 to October 2001) (since September 2002), ARM Securities Corporation; Director, CEO, Chairman (since January 2002), President (since September 2002), Capital Financial Services, Inc. ----------------------- * The Fund Complex consists of the five funds in the Integrity family of funds and the four series of Ranson Managed Portfolios. ** Trustees and/or executive officers who are "interested persons" of the Funds as defined in the Investment Company Act of 1940. Messrs. Quist and Walstad are interested persons by virtue of being officers and directors of the Funds' Investment Adviser and Principal Underwriter.
The Statement of Additional Information contains more information about the Fund's Trustees and is available without charge upon request by calling Ranson Capital Corporation at (800) 276-1262. INDEPENDENT TRUSTEES [photo] [photo] [photo] LYNN W. AAS ORLIN W. BACKES R. JAMES MAXSON INTERESTED TRUSTEE AND EXECUTIVE OFFICERS [photo] [photo] PETER A. QUIST ROBERT E. WALSTAD SCHEDULE OF INVESTMENTS January 31, 2003 (Unaudited) ---------------------------------------------------
NAME OF ISSUER PERCENTAGES REPRESENT THE MARKET VALUE OF RATING COUPON PRINCIPAL MARKET EACH INVESTMENT CATEGORY TO TOTAL NET ASSETS MOODY'S/S&P RATE MATURITY AMOUNT VALUE ----------------------------------------------------------------------------------------------------------------------------- KANSAS MUNICIPAL BONDS (99.7%) *Burlington, KS (Gas & Elec.) Rev. Ref. MBIA.................. Aaa/AAA 7.000% 06/01/31 $ 4,915,000 $ 5,111,600 Butler Cty., KS Public Bldg. MBIA............................. Aaa/NR 5.550 10/01/21 300,000 326,139 Coffeyville, KS Pub. Bldg. (Coffeyville Medl. Center) Rev. ... NR/AAA 5.000 08/01/22 250,000 255,535 Dodge, KS School District #443 FGIC........................... Aaa/NR 5.000 09/01/11 1,000,000 1,086,710 Douglas Cty., KS (Cottonwood Inc. Project) Indl. Rev. ........ NR/NR 6.400 07/01/10 375,000 409,192 Douglas Cty., KS (Cottonwood Inc. Project) Indl. Rev. ........ NR/NR 6.500 07/01/14 750,000 785,287 *Douglas Cty., KS USD #497 (Lawrence) G.O. ................... Aa-3/NR 6.000 09/01/15 1,000,000 1,040,440 Garnett, KS (Garnett Hsg. Auth. Project) Rev. ................ NR/NR 5.900 10/01/18 500,000 504,870 Hiawatha, KS (WalMart Stores) Indl. Rev. Ref. ................ NR/AA 6.750 01/01/06 235,000 236,175 Hutchinson, KS Single Family Mrtge. Rev. Ref. ................ Aa-3/NR 8.875 12/01/12 590,000 605,476 Johnson Cty., KS USD #229 (Blue Valley) G.O. ................. Aa-1/AA 5.000 10/01/18 2,600,000 2,721,888 Johnson Cty., KS Single Family Mrtge. Rev. ................... Aa/NR 7.100 05/01/12 340,000 359,754 Kansas City, KS Mrtge. Rev. GNMA.............................. Aaa/NR 5.900 11/01/27 1,075,000 1,095,672 *Kansas City, KS Util. Syst. Ref. & Impvt. AMBAC.............. Aaa/AAA 6.300 09/01/16 580,000 581,914 *Kansas City, KS Util. Syst. Ref. & Impvt. FGIC............... Aaa/AAA 6.375 09/01/23 1,525,000 1,683,127 *Kansas City, KS Util. Syst. Ref. & Impvt. FGIC............... Aaa/AAA 6.375 09/01/23 5,830,000 6,397,317 Kansas City/Leavenworth Cty./Lenexa, KS Mrtge. Rev. .......... NR/AAA 7.850 11/01/10 135,000 135,675 KS Devl. Finance Auth. (Board of Regents) AMBAC............... Aaa/AAA 5.875 06/01/21 750,000 780,240 *KS Devl. Finance Auth. (Dept. Admin. 7th & Harrison PJ) ..... Aaa/AAA 5.750 12/01/27 2,250,000 2,464,155 KS Devl. Finance Auth. (Dept. of Admin. Capitol Restoration) Lease Rev. FSA................................... Aaa/AAA 5.375 10/01/20 370,000 395,408 KS Devl. Finance Auth. (Indian Ridge Apts.) .................. NR/NR 6.000 01/01/28 1,070,000 1,043,871 KS Devl. Finance Auth. (Lewis Field Stadium) Rev. ............ NR/NR 6.000 04/01/08 500,000 505,625 #KS Devl. Finance Auth. (Martin Creek Place) Rev. FHA......... Aa/NR 6.600 08/01/34 1,900,000 1,938,000 KS Devl. Finance Auth. (Martin Creek Place) Rev. FHA.......... Aa/NR 6.500 08/01/24 750,000 765,000 KS Devl. Finance Auth. (Oak Ridge Park Apt.) ................. NR/NR 6.500 02/01/18 1,865,000 1,909,909 KS Devl. Finance Auth. (Oak Ridge Park Apt.) ................. NR/NR 6.625 08/01/29 1,875,000 1,855,744 *KS Devl. Finance Auth. (Park Apts.) Multifamily Hsg. ........ NR/AAA 6.000 12/01/21 1,975,000 2,074,658 KS Devl. Finance Auth. (Sec. 8) Rev. Ref. MBIA................ Aaa/AAA 6.400 01/01/24 555,000 562,759 KS Devl. Finance Auth. (Sisters of Charity) Hlth. Rev. ....... Aa/AA 6.125 12/01/20 1,000,000 1,087,920 KS Devl. Finance Auth. (Stormont Vail) Hlth. Care Rev. ....... Aaa/AAA 5.800 11/15/21 430,000 459,550 KS Devl. Finance Auth. (Stormont Vail) Hlth. Care Rev. ....... Aaa/AAA 5.375 11/15/24 1,500,000 1,563,720 KS Devl. Finance Auth. (Stormont Vail) Hlth. Care Rev. ....... Aaa/AAA 5.800 11/15/16 455,000 495,122 KS Devl. Finance Auth. (Water Fund) Rev. ..................... Aa-1/AA+ 6.000 11/01/14 500,000 530,215 KS Devl. Finance Auth. (Water Pollution Control) Rev. ........ Aa-1/AA+ 5.250 05/01/11 2,000,000 2,226,480 KS Devl. Finance Auth. (Water Pollution Control) ............. Aa-1/AA+ 5.000 11/01/23 1,000,000 1,013,650 KS Devl. Finance Auth. (Water Pollution Control) Rev. ........ Aa-1/AA+ 5.250 11/01/22 1,000,000 1,039,370 KS Turnpike Auth. Rev. FSA.................................... Aaa/AAA 5.000 09/01/24 530,000 540,521 KS Turnpike Auth. Rev. FSA.................................... Aaa/AAA 5.000 09/01/25 750,000 763,695 Lawrence, KS (Memorial Hospital) Rev. ........................Baa-1/NR 6.000 07/01/09 2,000,000 2,075,960 Lawrence, KS (Memorial Hospital) Rev. ........................Baa-1/NR 6.200 07/01/14 1,200,000 1,261,488 Lawrence, KS (Memorial Hospital) Rev. ........................Baa-1/NR 6.200 07/01/19 1,475,000 1,529,929 Lawrence, KS (Memorial Hospital) Rev. ASGUA................... NR/AA 5.750 07/01/24 1,000,000 1,054,010 Lawrence, KS (unlimited tax) Refunding G.O. .................. Aa/NR 5.375 09/01/20 500,000 537,620 Lawrence, KS Multifamily Hsg. (Brandon Woods) Rev. ........... NR/A 6.625 04/01/12 2,000,000 2,027,560 *Lenexa, KS Multifamily Hsg. (Barrington Park) Rev. .......... NR/AA 6.450 02/01/18 2,500,000 2,550,000 Newton, KS (Newton) Hosp. Rev. ............................... NR/BBB- 5.700 11/15/18 1,000,000 1,000,590 Newton, KS (Newton) Hosp. Rev. ACA............................ NR/A 5.750 11/15/24 500,000 518,255 Olathe, KS (Luth. Gd. Sam.) Ref. AMBAC........................ Aaa/AAA 6.000 05/01/19 900,000 963,621 Olathe, KS (Medl. Ctr.) Hlth. Facs. Rev. ..................... Aaa/AAA 5.500 09/01/25 235,000 247,627 Olathe, KS (Medl. Ctr.) Hlth. Facs. Rev. AMBAC................ Aaa/AAA 5.500 09/01/30 500,000 530,350 Olathe, KS Multifamily Hsg. (Bristol Pointe) Rev. Ref. ....... NR/AAA 5.700 11/01/27 2,210,000 2,253,338 #Olathe, KS Multifamily Hsg. (Jefferson Place) Rev. Ref. ..... NR/A- 5.950 07/01/22 5,060,000 5,157,759 Olathe, KS Multifamily Hsg. (Jefferson Place) Rev. Ref. ...... NR/A- 6.100 07/01/22 785,000 803,636 Pratt, KS Elec. Util. Syst. Rev. Ref. & Impvt. AMBAC.......... Aaa/AAA 6.600 11/01/07 1,000,000 1,177,430 Riley Cty., KS (Colbert Hills Golf Project) .................. NR/NR 5.550 05/01/23 890,000 892,990 Scott Cty, KS USD #466 FGIC................................... Aaa/AAA 5.250 09/01/17 900,000 982,818 Sedgwick Cty., KS (Catholic Care Center, Inc.) Hlth. Care..... NR/A 5.800 11/15/26 1,000,000 1,028,590 Topeka Public Bldg. Comm. (10th & Jackson Prj.) MBIA.......... Aaa/AAA 5.625 06/01/26 1,435,000 1,528,820 Topeka Public Bldg. Comm. (10th & Jackson Prj.) MBIA.......... Aaa/AAA 5.625 06/01/31 1,200,000 1,279,188 University of Kansas Hosp. Auth. AMBAC........................ Aaa/AAA 5.700 09/01/20 830,000 904,625 University of Kansas Hosp. Auth. AMBAC........................ Aaa/AAA 5.550 09/01/26 1,355,000 1,416,802 Wichita, KS (Via Christi Health System) Rev. ................. NR/A+ 5.625 11/15/31 1,000,000 1,029,040 Wichita, KS (Via Christi Health System) Rev. ................. NR/A+ 6.250 11/15/24 1,500,000 1,619,580 Wichita, KS Airport Auth. Facs. Rev. Ref. ASGUA............... NR/AA 7.000 03/01/05 260,000 265,850 Wichita, KS G.O. (Series 772) ................................ Aa/AA 4.500 09/01/17 1,315,000 1,331,109 Wichita, KS G.O. (Series 772) ................................ Aa/AA 4.500 09/01/18 1,375,000 1,384,213 Wichita, KS Multifamily Hsg. (Brentwood Apts.) Rev. .......... NR/BBB 5.850 12/01/25 1,000,000 1,005,340 Wichita, KS Multifamily Hsg. (Broadmoor Chelsea) Rev. ........ NR/AAA 5.650 07/01/16 990,000 1,009,869 #Wichita, KS Multifamily Hsg. (Broadmoor Chelsea) Rev. ....... NR/AAA 5.700 07/01/22 2,000,000 2,041,820 Wichita, KS Multifamily Hsg. (Innes Station Apt. 5) Rev. ..... NR/NR 6.250 03/01/28 1,750,000 1,654,100 Wichita, KS Multifamily Hsg. (Northpark II-A) Rev. ........... Aaa/NR 6.125 08/20/28 1,900,000 1,990,421 Wichita, KS Public Building Commission Rev. .................. A/AA 5.500 08/01/14 215,000 219,683 Wichita, KS Single Family Mrtge. Rev. Ref. ................... A/NR 7.100 09/01/09 200,000 207,050 ------------ TOTAL KANSAS MUNICIPAL BONDS (COST: $89,694,210) ................................................................$ 92,833,464 ------------ SHORT-TERM SECURITIES (1.8%) Wells Fargo National Tax-Free Money Market (COST: $1,694,805) ...................................................$ 1,694,805 ------------ TOTAL INVESTMENTS IN SECURITIES (COST: $91,389,015) .............................................................$ 94,528,269 OTHER ASSETS LESS LIABILITIES.................................................................................... (1,393,816) ------------ NET ASSETS.......................................................................................................$ 93,134,453 ============ * Indicates bonds are segregated by the custodian to cover when-issued or delayed-delivery purchases. # Indicates bonds are segregated by the custodian to cover initial margin requirements. Footnote: Non-rated (NR) securities have been determined to be of investment grade quality by the Fund's Manager.
The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENTS January 31, 2003 (Unaudited) -------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES January 31, 2003 (Unaudited) ------------------------------------ ASSETS Investment in securities, at value (cost: $91,389,015) ............. $ 94,528,269 Variation margin on futures......................................... 362,500 Accrued interest receivable......................................... 1,399,827 Accrued dividends receivable........................................ 1,403 Cash................................................................ 57,196 Prepaid expenses.................................................... 13,528 Receivable for fund shares sold..................................... 21,046 -------------- Total Assets..................................................... $ 96,383,769 -------------- LIABILITIES Dividends payable................................................... $ 351,128 Accrued expenses.................................................... 74,522 Security purchases payable.......................................... 2,708,604 Payable for fund shares redeemed.................................... 115,062 -------------- Total Liabilities................................................ $ 3,249,316 -------------- NET ASSETS............................................................... $ 93,134,453 ============== NET ASSETS ARE REPRESENTED BY: Paid-in capital..................................................... $ 99,710,170 Accumulated undistributed net realized gain (loss) on investments... (8,296,901) Accumulated undistributed net realized gain (loss) on futures....... (1,033,192) Unrealized appreciation on investments.............................. 3,139,254 Unrealized depreciation on futures.................................. (384,878) -------------- Total amount representing net assets applicable to 8,133,666 outstanding shares of no par common stock (unlimited shares authorized) ............................. $ 93,134,453 ============== Net asset value per share................................................ $ 11.45 ==============
The accompanying notes are an integral part of these financial statements.
STATEMENT OF OPERATIONS For the six months ended January 31, 2003 (Unaudited) ----------------------------------------------------- INVESTMENT INCOME Interest............................................................ $ 2,592,294 Dividends........................................................... 20,398 -------------- Total Investment Income......................................... $ 2,612,692 -------------- EXPENSES Investment advisory fees............................................ $ 239,887 Service fees........................................................ 119,943 Transfer agent fees................................................. 50,535 Accounting service fees............................................. 33,216 Custodian fees...................................................... 7,999 Transfer agent out-of-pockets....................................... 6,447 Professional fees................................................... 4,550 Trustees fees....................................................... 3,385 Insurance expense................................................... 6,880 Reports to shareholders............................................. 3,575 Registration and filing fees........................................ 2,500 -------------- Total Expenses.................................................. $ 478,917 Less expenses waived or absorbed by the Fund's manager............. (23,132) -------------- Total Net Expenses.............................................. $ 455,785 -------------- NET INVESTMENT INCOME.................................................... $ 2,156,907 -------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES Net realized gain (loss) from: Investment transactions............................................. $ (574,793) Futures transactions................................................ (1,033,192) Net change in unrealized appreciation (depreciation) of: Investments......................................................... (725,723) Futures............................................................. (384,878) -------------- Net Realized And Unrealized Gain (Loss) On Investments And Futures......................................... $ (2,718,586) -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................................................ $ (561,679) ==============
The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENTS January 31, 2003 -------------------------------------
STATEMENT OF CHANGES IN NET ASSETS For the six months ended January 31, 2003 and the year ended July 31, 2002 -------------------------------------------------------------------------- For The Six Months Ended For The January 31, 2003 Year Ended (Unaudited) July 31, 2002 --------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income............................................. $ 2,156,907 $ 4,837,040 Net realized gain (loss) on investment and futures transactions... (1,607,985) (1,446,244) Net change in unrealized appreciation (depreciation) on investments and futures .......................................... (1,110,601) 237,016 -------------------------------------------------- Net Increase (Decrease) in Net Assets Resulting From Operations................................................ $ (561,679) $ 3,627,812 -------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income ($.26 and $.55 per share, respectively) .......................... $ (2,156,595) $ (4,836,558) Distributions from net realized gain on investment and futures transactions ($.00 and $.00 per share, respectively)...... 0 0 -------------------------------------------------- Total Dividends and Distributions.............................. $ (2,156,595) $ (4,836,558) -------------------------------------------------- CAPITAL SHARE TRANSACTIONS Proceeds from sale of shares...................................... $ 3,079,414 $ 6,265,327 Proceeds from reinvested dividends................................ 1,365,761 3,048,915 Cost of shares redeemed........................................... (7,584,134) (12,919,707) ------------------------------------------------- Net Increase (Decrease) in Net Assets Resulting From Capital Share Transactions................................ $ (3,138,959) $ (3,605,465) ------------------------------------------------- TOTAL INCREASE (DECREASE) IN NET ASSETS................................ $ (5,857,233) $ (4,814,211) NET ASSETS, BEGINNING OF PERIOD........................................ 98,991,686 103,805,897 ------------------------------------------------- NET ASSETS, END OF PERIOD.............................................. $ 93,134,453 $ 98,991,686 =================================================
The accompanying notes are an integral part of these financial statements. NOTES TO FINANCIAL STATEMENTS January 31, 2003 (Unaudited) ------------------------------------------------------------ Note 1. ORGANIZATION BUSINESS OPERATIONS - The Kansas Municipal Fund (the "Fund") is an investment portfolio of Ranson Managed Portfolios (the "Trust") registered under the Investment Company Act of 1940, as amended, as a non-diversified, open-end management investment company. The Trust may offer multiple portfolios; currently four portfolios are offered. Ranson Managed Portfolios is an unincorporated business trust organized under Massachusetts law on August 10, 1990. The Fund had no operations from that date to November 15, 1990, other than matters relating to organization and registration. On November 15, 1990, the Fund commenced its Public Offering of capital shares. The investment objective of the Fund is to provide its shareholders with as high a level of current income exempt from both federal and Kansas income tax as is consistent with preservation of capital. The Fund will seek to achieve this objective by investing primarily in a portfolio of Kansas municipal securities. Shares of the Fund are offered at net asset value plus a maximum sales charge of 4.25% of the offering price. Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES INVESTMENT SECURITY VALUATION - Securities for which quotations are not readily available (which will constitute a majority of the securities held by the Fund) are valued using a matrix system at fair value as determined by Ranson Capital Corporation ("Ranson"). The matrix system has been developed based on procedures approved by the Board of Trustees which include consideration of the following: yields or prices of municipal bonds of comparable quality, type of issue, coupon, maturity and rating, and indications as to value from dealers and general market conditions. Because the market value of securities can only be established by agreement between parties in a sales transaction, and because of the uncertainty inherent in the valuation process, the fair values as determined may differ from the values that would have been used had a ready market for the securities existed. The Fund follows industry practice and records security transactions on the trade date. The Fund concentrates its investments in a single state. This concentration may result in the Fund investing a relatively high percentage of its assets in a limited number of issuers. FEDERAL AND STATE INCOME TAXES - The Fund's policy is to comply with the requirements of the Internal Revenue Code that are applicable to regulated investment companies and to distribute all of its net investment income and any net realized gain on investments to its shareholders. Therefore, no provision for income taxes is required. Of the ordinary income distributions declared for the six months ended January 31, 2003, 100% were exempt from federal income taxes. The Fund has unexpired capital loss carryforwards for tax purposes as of January 31, 2003 totaling $7,721,519, which may be used to offset capital gains. The capital loss carryforward amounts will expire in each of the years ended July 31 as shown in the table below. Year Unexpired Capital Losses ---- ------------------------ 2003 1,283,599 2004 0 2005 2,222,213 2006 1,671,432 2007 0 2008 531,392 2009 568,023 2010 1,444,860 DISTRIBUTIONS TO SHAREHOLDERS - Dividends from net investment income, declared daily and paid monthly, are reinvested in additional shares of the Fund at net asset value or paid in cash. Capital gains, when available, are distributed at least annually. PREMIUMS AND DISCOUNTS - Premiums and discounts on municipal securities are amortized for financial reporting purposes. On August 1, 2001, the Fund adopted the provisions of the American Institute of Certified Public Accountants' revised Audit and Accounting Guide - Audits of Investment Companies (the guide). The guide requires all premiums and discounts on debt securities to be amortized. Prior to August 1, 2001, the Fund recognized market discount at time of disposition as gain or loss. Upon adoption, the Fund adjusted the cost of its debt securities, and corresponding unrealized gain/loss thereon, in the amount of the cumulative amortization that would have been recognized had amortization been in effect from the purchase date of each holding. The effect of this cumulative adjustment was $3,338 for the Fund. The Financial Highlights for prior periods have not been restated to reflect this change in presentation. This change had no effect on the Fund's net assets or total return. OTHER - Income and expenses are recorded on the accrual basis. Investment transactions are accounted for on the trade date. Realized gains and losses are reported on the identified cost basis. Distributions to shareholders are recorded by the Fund on the ex- dividend date. Income and capital gain distributions are determined in accordance with federal income tax regulations and may differ from net investment income and realized gains determined in accordance with accounting principles generally accepted in the United States of America. These differences are primarily due to differing treatment for market discount, capital loss carryforwards and losses due to wash sales and futures transactions. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid-in capital. Temporary book and tax basis differences will reverse in a subsequent period. FUTURES CONTRACTS - The Fund may purchase and sell financial futures contracts to hedge against changes in the values of tax-exempt municipal securities the Fund owns or expects to purchase. A futures contract is an agreement between two parties to buy or sell units of a particular index or a certain amount of U.S. government or municipal securities at a set price on a future date. Upon entering into a futures contract, the Fund is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirement of the futures exchange on which the contract is traded. Subsequent payments ("variation margin") are made or received by the Fund, dependent on the fluctuations in the value of the underlying index. Daily fluctuations in value are recorded for financial reporting purposes as unrealized gains or losses by the Fund. When entering into a closing transaction, the Fund will realize, for book purposes, a gain or loss equal to the difference between the value of the futures contracts sold and the futures contracts to buy. Unrealized appreciation (depreciation) related to open futures contracts is required to be treated as a realized gain (loss) for Federal income tax purposes. Securities held in collateralized accounts to cover initial margin requirements on open futures contracts are noted in the Schedule of Investments. The Statement of Assets and Liabilities reflects a receivable or payable for the daily mark to market for variation margin. Certain risks may arise upon entering into futures contracts. These risks may include changes in the value of the futures contracts that may not directly correlate with changes in the value of the underlying securities. At January 31, 2003, the Fund had outstanding futures contracts to sell debt securities as follows:
|-----------------------------------------------------------------------------------------------------------------------| | | | Number of | Valuation as | Unrealized Appreciation | | Contracts to Sell | Expiration Date | Futures Contracts | of January 31, 2003 | (Depreciation) | |----------------------|-------------------|----------------------|--------------------------|--------------------------| | | | | | | |U.S. Treasury Bonds | 03/2003 | 200 | $362,500 | ($384,878) | |-----------------------------------------------------------------------------------------------------------------------|
USE OF ESTIMATES - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Note 3. CAPITAL SHARE TRANSACTIONS As of January 31, 2003, there were unlimited shares of no par authorized; 8,133,666 and 8,403,584 shares were outstanding at January 31, 2003 and July 31, 2002, respectively. Transactions in capital shares were as follows:
Shares ------ For The Six Months Ended For The January 31, 2003 Year Ended (Unaudited) July 31, 2002 --------------------------------------------- Shares sold.................................. 264,099 523,680 Shares issued on reinvestment of dividends... 117,129 254,950 Shares redeemed.............................. (651,146) (1,085,610) --------------------------------------------- Net increase (decrease) ..................... (269,918) (306,980) =============================================
Note 4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES Ranson Capital Corporation, the Fund's investment adviser and underwriter; ND Resources, Inc., the Fund's transfer and accounting services agent; and ND Capital, Inc., the Fund's agent for the purchase of certain investment securities; are subsidiaries of Integrity Mutual Funds, Inc. (formerly known as ND Holdings, Inc.), the Fund's sponsor. The Fund has engaged Ranson Capital Corporation to provide investment advisory and management services to the Fund. The Investment Advisory Agreement provides for fees to be computed at an annual rate of 0.50% of the Fund's average daily net assets. The Fund has recognized $239,887 of investment advisory fees for the six months ended January 31, 2003. The Fund has a payable to Ranson Capital Corporation of $39,038 at January 31, 2003, for investment advisory fees. Certain officers and trustees of the Fund are also officers and directors of the investment adviser. The Fund pays an annual service fee to Ranson Capital Corporation (Ranson), its principal underwriter, for certain expenses incurred by Ranson in connection with the distribution of the Fund's shares. The annual fee paid to Ranson is calculated daily and paid monthly by the Fund at the annual rate of 0.25% of the average daily net assets of the Fund. The Fund has recognized $96,811 of service fee expenses after partial waiver for the six months ended January 31, 2003. The Fund has a payable to Ranson of $15,430 at January 31, 2003, for service fees. The Fund has engaged ND Capital, Inc. as agent for the purchase of certain investment securities. For the six months ended January 31, 2003, no commissions were earned by ND Capital, Inc. ND Resources, Inc. (the transfer agent) provides shareholder services for a monthly fee equal to an annual rate of 0.16% of the Fund's first $10 million of net assets, 0.13% of the Fund's net assets on the next $15 million, 0.11% of the Fund's net assets on the next $15 million, 0.10% of the Fund's net assets on the next $10 million, and 0.09% of the Fund's net assets in excess of $50 million. The Fund has recognized $50,535 of transfer agency fees and expenses for the six months ended January 31, 2003. The Fund has a payable to ND Resources, Inc. of $8,460 at January 31, 2003, for transfer agency fees. ND Resources, Inc. also acts as the Fund's accounting services agent for a monthly fee equal to the sum of a fixed fee of $2,000, and a variable fee equal to 0.05% of the Fund's average daily net assets on an annual basis for the Fund's first $50 million and at a lower rate on the average daily net assets in excess of $50 million. The Fund has recognized $33,216 of accounting service fees for the six months ended January 31, 2003. The Fund has a payable to ND Resources, Inc. of $5,568 at January 31, 2003, for accounting service fees. Note 5. INVESTMENT SECURITY TRANSACTIONS The cost of purchases and proceeds from sales of investment securities (excluding short-term securities) aggregated $12,363,987 and $14,181,140, respectively, for the six months ended January 31, 2003. Note 6. INVESTMENT IN SECURITIES At January 31, 2003, the aggregate cost of securities for federal income tax purposes was substantially the same for financial reporting purposes at $91,389,015. The net unrealized appreciation of investments based on the cost was $3,139,254, which is comprised of $3,404,742 aggregate gross unrealized appreciation and $265,488 aggregate gross unrealized depreciation. FINANCIAL HIGHLIGHTS -------------------- Selected per share data and ratios for the period indicated
For The For The For The For The For The For The Six Months Ended Year Ended Year Ended Year Ended Year Ended Year Ended January 31, 2003 July 31, July 31, July 31, July 30, July 31, (Unaudited) 2002 2001 2000 1999 1998 ------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD..... $ 11.78 $ 11.92 $ 11.58 $ 11.98 $ 12.15 $ 12.42 ------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income................ $ .26 $ .55 $ .58 $ .59 $ .58 $ .60 Net realized and unrealized gain (loss) on investment and futures transactions................. (.33) (.14) .34 (.40) (.17) (.27) ------------------------------------------------------------------------------------ Total Income (Loss) From Investment Operations............ $ (.07) $ .41 $ .92 $ .19 $ .41 $ .33 ------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income.............................. $ (.26) $ (.55) $ (.58) $ (.59) $ (.58) $ (.60) Distributions from net capital gains............................... .00 .00 .00 .00 .00 .00 ----------------------------------------------------------------------------------- Total Distributions.............. $ (.26) $ (.55) $ (.58) $ (.59) $ (.58) $ (.60) ----------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD........... $ 11.45 $ 11.78 $ 11.92 $ 11.58 $ 11.98 $ 12.15 =================================================================================== Total Return............................. (1.18)%(A)(C) 3.48%(A) 8.13%(A) 1.69%(A) 3.44%(A) 2.76%(A) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ......................... $ 93,134 $ 98,992 $103,806 $103,555 $115,882 $120,024 Ratio of net expenses (after expense assumption) to average net assets.................. 0.95%(B)(C) 0.95%(B) 0.95%(B) 0.95%(B) 0.95%(B) 0.95%(B) Ratio of net investment income to average net assets........ 4.50%(C) 4.61% 4.94% 5.07% 4.80% 4.93% Portfolio turnover rate............. 13.38% 5.74% 10.28% 8.21% 13.54% 26.68% (A) Excludes maximum sales charge of 4.25%. (B) During the periods indicated above, Integrity Mutual Funds, Inc. (formerly known as ND Holdings, Inc.) or Ranson Capital Corporation assumed/waived expenses of $23,132, $22,656, $37,939, $38,581, $23,429, and $3,901, respectively. If the expenses had not been assumed/waived, the annualized ratios of total expenses to average net assets would have been 1.00%, 0.97%, 0.99%, 0.99%, 0.97%, and 0.95%, respectively. (C) Ratio is annualized.
The accompanying notes are an integral part of these financial statements. THE KANSAS INSURED INTERMEDIATE FUND ------------------------------------ DEAR SHAREHOLDER: Enclosed is the semi-annual report of the operations for The Kansas Insured Intermediate Fund (the "Fund") for the six months ended January 31, 2003. The Fund's portfolio and related financial statements are presented within for your review. Investors are going into the New Year facing many of the uncertainties that plagued them twelve months ago. Equities posted a third straight year of losses with the benchmark Standard & Poors 500 Index losing roughly 23 percent for 2002. The bond market began the year with a decline during the first quarter and then posted gains for the remainder of 2002. There is tremendous skepticism about the ability of the U.S. economy to sustain a recovery because consumers are seen as completely tapped out, and because an overabundance of capacity is expected to keep a lid on investment spending. Finally, we have escalating concerns about the geopolitical outlook. It is a safe bet that uncertainty about the 2003 outlook will be with us for some time. We expect the economy to recover, but it could be another choppy year with good quarters followed by soft ones. On the geopolitical front, Middle East tensions and fears against terrorism will likely last for years. Increased spending on the war on terrorism and a decline in tax revenue have widened the budget deficit, forcing the government to sell more debt to finance the shortfall. We continue to watch carefully as this deficit could reach record levels. Monetary reflation has provided powerful support to the economy. In November 2002, the Federal Reserve lowered its target level for the federal funds rate for the twelfth time in the past two years to 1.25%. During the period consumer spending remained relatively high. That and low mortgage rates were sources of strength for the economy. A stimulative monetary stance will be supported and the Administration is currently working on a new stimulus package that will involve tax cuts and increased spending. Relaxed monetary and fiscal policy both could result in renewed inflation and we are watchful for signs of change in the price indices. During the period the Fund utilized defensive positions at times designed to provide share price stability. U.S. Treasury futures were used to hedge a portion of the portfolio with the results being tempered share prices as bond yields fell to forty-year lows. The decline of the U.S. Dollar and the swing from surplus to deficit in the Federal budget are areas of concern. These measures will be key to bond performance over the coming months. Diversification remains an important strategy of the Fund as reflected of the forty-eight issues in the portfolio. Income exempt from Federal and Kansas income taxes with preservation of capital remain the primary objectives of the Fund. Sincerely, Monte L. Avery Robert E. Walstad Chief Portfolio Strategist President January 31, 2003 (Unaudited) ---------------------------- TERMS & DEFINITIONS ------------------- APPRECIATION Increase in value of an asset. AVERAGE ANNUAL TOTAL RETURN A standardized measurement of the return (yield and appreciation) earned by the fund on an annual basis, assuming all distributions are reinvested. COUPON RATE OR FACE RATE The rate of interest payable annually, based on the face amount of the bond; expressed as a percentage. DEPRECIATION Decrease in value of an asset. LEHMAN BROTHERS MUNICIPAL BOND INDEX An unmanaged list of long-term, fixed-rate, investment-grade, tax-exempt bonds representative of the municipal bond market. The index does not take into account brokerage commissions or other costs, may include bonds different from those in the fund, and may pose different risks than the fund. MARKET VALUE Actual (or estimated) price at which a bond trades in the market place. MATURITY A measure of the term or life of a bond in years. When a bond "matures," the issuer repays the principal. NET ASSET VALUE (NAV) The value of all your fund's assets, minus any liabilities, divided by the number of outstanding shares, not including any initial sales charge. QUALITY RATINGS A designation assigned by independent rating companies to give a relative indication of a bond's credit worthiness. "AAA," "AA," "A," and "BBB" indicate investment grade securities. Ratings can range from a high of "AAA" to a low of "D". TOTAL RETURN Measures both the net investment income and any realized and unrealized appreciation or depreciation of the underlying investments in the fund's portfolio for the period, assuming the reinvestment of all dividends. It represents the aggregate percentage or dollar value change over the period. PERFORMANCE & COMPOSITION ------------------------- Portfolio Quality Ratings ------------------------- (based on Total Long-Term Investments) [pie chart] AAA 100% Quality ratings reflect the financial strength of the issuer. They are assigned by independent rating services such as Moody's Investors Services and Standard & Poor's. Non-rated bonds have been determined to be of appropriate quality for the portfolio by Ranson Capital Corporation, the investment adviser. Portfolio Market Sectors ------------------------ (as a % of Net Assets) [pie chart] HC-Health Care 29.6% H-Housing 25.4% S-School 23.2% W/S-Water/Sewer 8.5% G-Government 8.3% U-Utilities 4.3% O-Other 0.7% Market sectors are breakdowns of the Fund's portfolio holdings into specific investment classes. These percentages are subject to change. COMPARATIVE INDEX GRAPH ----------------------- [line graph] Comparison of change in value of $10,000 investment in The Kansas Insured Intermediate Fund and the Lehman Brothers Municipal Seven-Year Maturity Bond Index
The Kansas Insured The Kansas Insured Intermediate Fund Intermediate Fund Lehman Brothers Municipal w/o sales charge w/ max sales charge Seven-Year Maturity Bond Index -------------------------------------------------------------------------------------------------- 11/23/92 $10,000 $ 9,725 $10,000 1993 $10,829 $10,531 $10,694 1994 $11,025 $10,722 $10,982 1995 $11,656 $11,335 $11,868 1996 $12,326 $11,987 $12,471 1997 $12,912 $12,557 $13,548 1998 $13,321 $12,955 $14,260 1999 $13,815 $13,435 $14,729 2000 $14,112 $13,724 $15,405 2001 $15,062 $14,648 $16,819 2002 $15,682 $15,251 $18,018 01/31/03 $15,695 $15,264 $18,605
Average Annual Total Returns For periods ending January 31, 2003 ----------------------------------- Since Inception 1 year 5 year 10 year (November 23, 1992) ------------------------------------------------------------------------------------------------------ Without sales charge 1.24% 3.69% 4.44% 4.52% With sales charge (2.75%) (1.54)% 3.12% 4.15% 4.24% ------------------------------------------------------------------------------------------------------
PUTTING PERFORMANCE INTO PERSPECTIVE Returns are historical and are not a guarantee of future results. The graph comparing your Fund's performance to a benchmark index provides you with a general sense of how your Fund performed. To put this information in context, it may be helpful to understand the special differences between the two. The Lehman Brothers index is a national index representative of the national municipal bond market, whereas the Fund concentrates its investments in Kansas municipal bonds. Your Fund's total return for the period shown appears with and without sales charges and includes Fund expenses and management fees. A securities index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged; there are no expenses that affect the results. In addition, few investors could purchase all of the securities necessary to match the index. And, if they could, they would incur transaction costs and other expenses. All Fund and benchmark returns include reinvested dividends. The Fund's share price, yields and total returns will vary, so that shares, when redeemed, may be worth more or less than their original cost. KEY STATISTICS -------------- 07-31-2002 NAV (share value) $11.91 01-31-2003 NAV $11.68 Average Maturity 8.9 years Number of Issues 48 Total Net Assets $18,744,992 MANAGEMENT OF THE FUNDS The Board of Ranson Managed Portfolios consists of four Trustees. These same individuals, unless otherwise noted, also serve as directors or trustees for all of the funds in the Integrity family of funds and the four series of Ranson Managed Portfolios. Three Trustees (75% of the total) have no affiliation or business connection with the Investment Adviser or any of its affiliates. These are the "independent" Trustees. The remaining Trustee and executive officers are "interested" by virtue of their affiliation with the Investment Adviser and its affiliates. The Independent Trustees of the Fund, their term of office and length of time served, their principal occupation(s) during the past five years, the number of portfolios overseen in the Fund Complex by each Independent Trustee and other directorships, if any, held outside the Fund Complex, are shown below.
INDEPENDENT TRUSTEES Number of Other Portfolios Directorships Name, Address Position(s) Held Term and Principal Occupation(s) Overseen In The Held Outside and Age with Registrant Length Served During Past 5 Years Fund Complex * The Fund Complex ----------------------------------------------------------------------------------------------------------------------------- Lynn W. Aas Trustee Since January 1996 Retired; Attorney; Director, 9 None 904 NW 27th Integrity Mutual Funds, Inc Minot, ND 58703 (formerly known as ND Holdings, 81 Inc.) (May 1988 to August 1994), ND Insured Income Fund, Inc. (December 1994 to August 1999), ND Tax-Free Fund, Inc. (since December 1994), Montana Tax-Free Fund, Inc. (since December 1994), South Dakota Tax-Free Fund, Inc. (since December 1994), Integrity Fund of Funds, Inc., Integrity Small-Cap Fund of Funds, Inc. (since September 1998); Director, First Western Bank & Trust. Orlin W. Backes Trustee Since January 1996 Attorney, McGee, Hankla, Backes 9 Director, First 15 2nd Ave., SW - & Dobrovolny, P.C.; Director, Western Bank & Ste. 305 ND Tax-Free Fund, Inc. Trust Minot, ND 58701 (since April 1995), ND 67 Insured Income Fund, Inc. (March 1995 to August 1999), Montana Tax-Free Fund, Inc. (since April 1995), South Dakota Tax-Free Fund, Inc. (since April 1995), Integrity Fund of Funds, Inc. (since April 1995), Integrity Small- Cap Fund of Funds, Inc. (since September 1998); Director, First Western Bank & Trust. R. James Maxson Town & Country Center Trustee Since January 1999 Attorney, Maxson Law Office 9 None 1015 S Bdwy, Suite 15 (since November 2002), Minot, ND 58701 Attorney, McGee, Hankla, 55 Backes & Dobrovolny, P.C. (April 2000 to November 2002); Attorney, Farhart, Lian and Maxson, P.C. (March 1976 to March 2000); ND Tax-Free Fund, Inc. (since January 1999), Montana Tax-Free Fund, Inc. (since January 1999), South Dakota Tax-Free Fund, Inc. (since January 1999), Integrity Fund of Funds, Inc. (since January 1999), Integrity Small-Cap Fund of Funds, Inc. (since January 1999). ---------------------- The Fund Complex consists of the five funds in the Integrity family of funds and the four series of Ranson Managed Portfolios. The Statement of Additional Information contains more information about the Fund's Trustees and is available without charge upon request by calling Ranson Capital Corporation at (800) 276-1262.
The Interested Trustee and executive officers of the Fund, their term of office and length of time served, their principal occupation(s) during the past five years, the number of portfolios overseen in the Fund Complex by each Interested Trustee and executive officer and other directorships, if any, held outside the Fund Complex, are shown below.
INTERESTED TRUSTEE AND EXECUTIVE OFFICERS Number of Other Portfolios Directorships Name, Address Position(s) Held Term and Principal Occupation(s) Overseen In The Held Outside and Age with Registrant Length Served During Past 5 Years Fund Complex * The Fund Complex ----------------------------------------------------------------------------------------------------------------------------- **Peter A. Quist Vice President Since January 1996 Attorney; Director and Vice 5 Director, ARM 1 North Main and Secretary President, Integrity Mutual Securities Minot, ND 58703 Funds, Inc. (formerly known as Corporation 68 ND Holdings, Inc.); Director, Vice President and Secretary, ND Money Management, Inc., ND Capital, Inc., ND Resources, Inc., ND Tax-Free Fund, Inc., ND Insured Income Fund, Inc. (November 1990 to August 1999), Montana Tax-Free Fund, Inc., South Dakota Tax-Free Fund, Inc. (since April 1995), Integrity Fund of Funds, Inc., Integrity Small-Cap Fund of Funds, Inc. (since September 1998), The Ranson Company, Inc. (January 1996 to February 1997), Ranson Capital Corporation (since January 1996), and Director, ARM Securities Corporation (since May 2000). **Robert E. Walstad Trustee, Since January 1996 Director (since September 1987), 9 Director, ARM 1 North Main Chairman, President (September 1987 to Securities Minot, ND 58703 President, October 2001) (since September 2002), Corporation; 58 and Treasurer Integrity Mutual Funds, Inc. Director, Magic (formerly known as ND Holdings, Internet Inc.); Director, President and Services, Treasurer, ND Money Management, Inc.; Director, Inc., ND Capital, Inc., ND Capital Financial Resources, Inc., ND Tax-Free Fund, Services, Inc. Inc., ND Insured Income Fund, Inc. (November 1990 to August 1999), Montana Tax-Free Fund, Inc., South Dakota Tax-Free Fund, Inc., Integrity Fund of Funds, Inc., Integrity Small-Cap Fund of Funds, Inc.; Trustee, Chairman, President, and Treasurer, Ranson Managed Portfolios; Director, President, CEO, and Treasurer, The Ranson Company, Inc. (January 1996 to February 1997), and Ranson Capital Corporation; Director (since October 1999), President (October 1999 to October 2001), Magic Internet Services, Inc.; Director (since May 2000), President (May 2000 to October 2001) (since September 2002), ARM Securities Corporation; Director, CEO, Chairman (since January 2002), President (since September 2002), Capital Financial Services, Inc. ----------------------- * The Fund Complex consists of the five funds in the Integrity family of funds and the four series of Ranson Managed Portfolios. ** Trustees and/or executive officers who are "interested persons" of the Funds as defined in the Investment Company Act of 1940. Messrs. Quist and Walstad are interested persons by virtue of being officers and directors of the Funds' Investment Adviser and Principal Underwriter.
The Statement of Additional Information contains more information about the Fund's Trustees and is available without charge upon request by calling Ranson Capital Corporation at (800) 276-1262. INDEPENDENT TRUSTEES [photo] [photo] [photo] LYNN W. AAS ORLIN W. BACKES R. JAMES MAXSON INTERESTED TRUSTEE AND EXECUTIVE OFFICERS [photo] [photo] PETER A. QUIST ROBERT E. WALSTAD SCHEDULE OF INVESTMENTS January 31, 2003 (Unaudited) ---------------------------------------------------
NAME OF ISSUER PERCENTAGES REPRESENT THE MARKET VALUE OF RATING COUPON PRINCIPAL MARKET EACH INVESTMENT CATEGORY TO TOTAL NET ASSETS MOODY'S/S&P RATE MATURITY AMOUNT VALUE ----------------------------------------------------------------------------------------------------------------------------- KANSAS MUNICIPAL BONDS (103.7%) Butler Cty., KS (Circle) USD #375 FSA......................... Aaa/NR 5.000% 09/01/13 $ 500,000 $ 527,115 Chisholm Creek Util. Auth. (Bel Aire & Park City, KS Pj.) MBIA....................................... Aaa/NR 5.250 09/01/16 770,000 826,641 Derby, KS Water System Rev. AMBAC............................. Aaa/NR 4.400 10/01/15 185,000 184,630 Derby, KS Water System Rev. AMBAC............................. Aaa/NR 4.150 10/01/13 105,000 104,783 Derby, KS Water System Rev. AMBAC............................. Aaa/NR 4.250 10/01/14 135,000 134,702 Derby, KS Water System Rev. AMBAC............................. Aaa/NR 4.500 10/01/16 195,000 194,885 Derby, KS Water System Rev. AMBAC............................. Aaa/NR 4.750 10/01/17 155,000 154,988 Dodge, KS USD #443 Unltd. General Obligation FSA.............. Aaa/AAA 5.750 09/01/13 100,000 113,090 Johnson Cty., KS Community College Student Commons & Parking AMBAC....................................... Aaa/AAA 5.000 11/15/19 235,000 244,066 Johnson Cty., KS USD #232 (Desoto) G.O. MBIA.................. Aaa/AAA 5.200 09/01/10 480,000 527,371 Kansas City, KS (St. Margaret Hlth. Ctr.) AMBAC............... Aaa/AAA 5.700 08/01/03 250,000 255,000 Kansas City, KS Special Obligation Escrowed................... NR/AAA 6.000 02/15/03 50,000 50,112 Kingman Cty., KS USD #331 FGIC................................ Aaa/AAA 5.500 10/01/12 250,000 273,085 KS Devl. Finance Auth. (Wichita Univ.) AMBAC.................. Aaa/AAA 5.900 04/01/15 305,000 341,405 KS Devl. Finance Auth. (Dept. Admin. 7th & Harrison PJ) AMBAC............................................ Aaa/AAA 5.500 12/01/13 375,000 400,147 KS Devl. Finance Auth. (Hays Medl. Ctr.) Rev. MBIA............ Aaa/NR 5.200 11/15/08 375,000 414,754 KS Devl. Finance Auth. (Hays Medl. Ctr.) Rev. MBIA............ Aaa/NR 5.300 11/15/09 375,000 413,944 KS Devl. Finance Auth. (Park Apts.) Multifamily Hsg. Rev. FNMA.................................... NR/AAA 5.700 12/01/09 325,000 341,919 #KS Devl. Finance Auth. (Stormont Vail) Hlth. Care Rev. MBIA.......................................... Aaa/AAA 5.700 11/15/08 450,000 498,816 KS Devl. Finance Auth. (Stormont Vail) Hlth. Care Rev. MBIA... Aaa/AAA 5.600 11/15/07 100,000 111,792 KS Devl. Finance Auth. (Stormont Vail) Hlth. Care Rev. MBIA... Aaa/AAA 5.750 11/15/12 845,000 953,473 KS Devl. Finance Auth. Pooled Ref. Lease Rev. MBIA............ Aaa/AAA 5.500 10/01/05 250,000 265,182 KS State Turnpike Auth. Rev. FGIC............................. Aaa/AAA 5.450 09/01/10 200,000 213,572 Larned, KS (Cath. Hlth. Corp.) Hlth. Facs. Rev. MBIA.......... Aaa/AAA 5.400 11/15/04 155,000 166,538 Lenexa, KS Multifamily Hsg. (Barrington Park) Rev. ASGUA...... NR/AAA^ 6.050 02/01/06 350,000 357,000 *Lenexa, KS Multifamily Hsg. (Barrington Park) Rev. Ref. ASGUA............................................... NR/AAA^ 5.875 02/01/04 500,000 506,750 Lenexa, KS Multifamily Hsg. (Barrington Park) Rev. Ref. ASGUA............................................... NR/AAA^ 5.950 02/01/05 250,000 255,000 Mission, KS Multifamily Hsg. (Lamar Place) Rev. FNMA.......... NR/AAA 5.000 10/01/14 605,000 603,354 Mission, KS Multifamily Hsg. (Lamar Place) Rev. FNMA.......... NR/AAA 5.180 10/01/23 445,000 425,740 Olathe, KS (Evangelical Lutheran Good Samaritan Soc.) AMBAC... Aaa/AAA 5.500 05/01/03 110,000 111,436 Olathe, KS (Medl. Ctr.) Hlth. Facs. Rev. AMBAC................ Aaa/AAA 5.125 09/01/12 500,000 512,305 Olathe, KS Multifamily Hsg. (Bristol Pointe) Rev. Ref. FNMA... NR/AAA 5.250 11/01/12 485,000 493,473 Saline Cty., KS USD #305 (Salina) G.O. Ref. FSA............... Aaa/NR 5.500 09/01/15 250,000 270,705 Sedgwick Cty., KS USD #259 FSA................................ Aaa/AAA 4.375 10/01/15 600,000 610,752 Shawnee Cty., KS USD #437 (Auburn-Washburn) G.O. Ref. FSA..... Aaa/NR 5.000 09/01/14 485,000 513,227 *Shawnee Cty., KS USD #501 (Topeka) G.O. FGIC................. Aaa/AAA 5.550 02/01/07 820,000 820,000 Shawnee, KS Multifamily Hsg. (Thomasbrooks Apts.) Rev. FNMA COL. ............................................... NR/AAA 5.250 10/01/14 500,000 499,950 Topeka\Shawnee Cty., KS Public Library G.O. Refunding AMBAC... Aaa/NR 2.500 09/01/03 190,000 192,103 *University of Kansas Hosp. Auth. AMBAC....................... Aaa/AAA 5.500 09/01/15 1,000,000 1,063,170 Washburn Univ. (Living Learning Ctr) Bld. Rev. AMBAC.......... Aaa/AAA 5.350 07/01/11 105,000 115,496 Wellington, KS Utility Rev. AMBAC............................. Aaa/AAA 5.000 05/01/12 250,000 262,048 Wichita, KS (St. Francis Regl. Medl. Ctr.) Impvt. & Ref. MBIA............................................ Aaa/AAA 6.000 10/01/03 250,000 255,625 #Wichita, KS (St. Francis Regl. Medl. Ctr.) Impvt. & Ref. MBIA............................................ Aaa/AAA 6.100 10/01/04 775,000 786,873 Wichita, KS Airport Auth. Facs. Rev. Ref. ASGUA............... NR/AAA^ 7.000 03/01/05 85,000 86,913 Wichita, KS G.O. (Series 772) FGIC............................ Aaa/AAA 4.100 09/01/14 1,155,000 1,156,686 #Wichita, KS Multifamily Hsg. (Broadmoor Chelsea) Rev. FNMA... NR/AAA 5.375 07/01/10 625,000 645,475 *Wichita, KS Multifamily Hsg. (Cimarron Apartments) FNMA...... Aa/AAA 5.250 10/01/12 615,000 634,391 Wyandotte Cty, Kansas City, KS Gov't Util. Syst. Rev. MBIA.... Aaa/AAA 5.125 09/01/13 500,000 542,085 ----------- TOTAL KANSAS MUNICIPAL BONDS (COST: $18,815,899) .................................................................$19,432,567 ----------- SHORT-TERM SECURITIES (3.8%) Wells Fargo National Tax-Free Money Market........................................................................$ 651,000 Dreyfus Tax Exempt Cash Management #2............................................................................. 54,141 ----------- TOTAL SHORT-TERM SECURITIES (COST: $705,141) .....................................................................$ 705,141 ----------- TOTAL INVESTMENTS IN SECURITIES (COST: $19,521,040) ..............................................................$20,137,708 OTHER ASSETS LESS LIABILITIES..................................................................................... (1,392,716) ----------- NET ASSETS........................................................................................................$18,744,992 =========== * Indicates bonds are segregated by the custodian to cover when-issued or delayed-delivery purchases. # Indicates bonds are segregated by the custodian to cover initial margin requirements. ^ Indicates Duff & Phelps rating. Footnote: Non-rated (NR) securities have been determined to be of investment grade quality by the Fund's Manager.
The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENTS January 31, 2003 (Unaudited) -------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES January 31, 2003 (Unaudited) ------------------------------------ ASSETS Investment in securities, at value (cost: $19,521,040) ............ $ 20,137,708 Accrued interest receivable........................................ 320,169 Accrued dividends receivable....................................... 456 Cash............................................................... 1,815 Variation margin on futures........................................ 63,438 Prepaid expenses................................................... 5,675 ------------- Total Assets.................................................... $ 20,529,261 ------------- LIABILITIES Dividends payable.................................................. $ 62,969 Accrued expenses................................................... 10,481 Security purchases payable......................................... 1,710,819 ------------- Total Liabilities............................................... $ 1,784,269 ------------- NET ASSETS.............................................................. $ 18,744,992 ============= NET ASSETS ARE REPRESENTED BY: Paid-in capital.................................................... $ 19,461,401 Accumulated undistributed net realized gain (loss) on investments.. (1,100,000) Accumulated undistributed net realized gain (loss) on futures...... (164,630) Unrealized appreciation on investments............................. 616,668 Unrealized depreciation on futures................................. (68,447) ------------- Total amount representing net assets applicable to 1,605,347 outstanding shares of no par common stock (unlimited shares authorized) ............................ $ 18,744,992 ============= Net asset value per share............................................... $ 11.68 =============
The accompanying notes are an integral part of these financial statements.
STATEMENT OF OPERATIONS For the six months ended January 31, 2003 (Unaudited) ----------------------------------------------------- INVESTMENT INCOME Interest........................................................... $ 445,235 Dividends.......................................................... 5,585 ------------- Total Investment Income......................................... $ 450,820 ------------- EXPENSES Investment advisory fees........................................... $ 46,778 Transfer agent fees................................................ 13,388 Accounting service fees............................................ 16,454 Custodian fees..................................................... 2,358 Transfer agent out-of-pockets...................................... 548 Professional fees.................................................. 3,100 Trustees fees...................................................... 1,271 Reports to shareholders............................................ 1,091 Registration and filing fees....................................... 857 Insurance expense.................................................. 1,006 ------------- Total Expenses.................................................. $ 86,851 Less expenses waived or absorbed by the Fund's manager.............................................. (16,684) ------------- Total Net Expenses.............................................. $ 70,167 ------------- NET INVESTMENT INCOME................................................... $ 380,653 ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES Net realized gain (loss) from: Investment transactions............................................ $ 38 Futures transactions............................................... (164,630) Net change in unrealized appreciation (depreciation) of: Investments........................................................ (140,415) Futures............................................................ (68,447) ------------- Net Realized And Unrealized Gain (Loss) On Investments And Futures......................................... $ (373,454) ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS............................................... $ 7,199 =============
The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENTS January 31, 2003 -------------------------------------
STATEMENT OF CHANGES IN NET ASSETS For the six months ended January 31, 2003 and the year ended July 31, 2002 -------------------------------------------------------------------------- For The Six Months Ended For The January 31, 2003 Year Ended (Unaudited) July 31, 2002 --------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income............................................. $ 380,653 $ 819,059 Net realized gain (loss) on investment and futures transactions... (164,592) (179,745) Net change in unrealized appreciation (depreciation) on investments and futures........................................ (208,862) 146,684 --------------------------------------------------- Net Increase (Decrease) in Net Assets Resulting From Operations...................................... $ 7,199 $ 785,998 --------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income ($.24 and $.50 per share, respectively) .................................................... $ (380,495) $ (818,741) Distributions from net realized gain on investment and futures transactions ($.00 and $.00 per share, respectively) ..... 0 0 --------------------------------------------------- Total Dividends and Distributions.............................. $ (380,495) $ (818,741) --------------------------------------------------- CAPITAL SHARE TRANSACTIONS Proceeds from sale of shares...................................... $ 1,162,337 $ 2,399,991 Proceeds from reinvested dividends................................ 210,185 437,354 Cost of shares redeemed........................................... (886,951) (2,899,908) Net Increase (Decrease) in Net Assets Resulting From Capital Share Transactions................................ $ 485,571 $ (62,563) --------------------------------------------------- TOTAL INCREASE (DECREASE) IN NET ASSETS................................ $ 112,275 $ (95,306) NET ASSETS, BEGINNING OF PERIOD........................................ 18,632,717 18,728,023 --------------------------------------------------- NET ASSETS, END OF PERIOD.............................................. $ 18,744,992 $ 18,632,717 ===================================================
The accompanying notes are an integral part of these financial statements. NOTES TO FINANCIAL STATEMENTS January 31, 2003 (Unaudited) ----------------------------------------------------------- NOTE 1. ORGANIZATION BUSINESS OPERATIONS -The Kansas Insured Intermediate Fund (the "Fund") is an investment portfolio of Ranson Managed Portfolios (the "Trust") registered under the Investment Company Act of 1940, as amended, as a non-diversified, open-end management investment company. The Trust may offer multiple portfolios; currently four portfolios are offered. Ranson Managed Portfolios is an unincorporated business trust organized under Massachusetts law on August 10, 1990. The Fund had no operations from that date to November 23, 1992, other than matters relating to organization and registration. On November 23, 1992, the Fund commenced its Public Offering of capital shares. The investment objective of the Fund is to provide its shareholders with as high a level of current income exempt from both federal and Kansas income tax as is consistent with preservation of capital. The Fund will seek to achieve this objective by investing primarily in a portfolio of Kansas insured securities. Shares of the Fund are offered at net asset value plus a maximum sales charge of 2.75% of the offering price. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES INVESTMENT SECURITY VALUATION - Securities for which quotations are not readily available (which will constitute a majority of the securities held by the Fund) are valued using a matrix system at fair value as determined by Ranson Capital Corporation ("Ranson"). The matrix system has been developed based on procedures approved by the Board of Trustees which include consideration of the following: yields or prices of municipal bonds of comparable quality, type of issue, coupon, maturity and rating, and indications as to value from dealers and general market conditions. Because the market value of securities can only be established by agreement between parties in a sales transaction, and because of the uncertainty inherent in the valuation process, the fair values as determined may differ from the values that would have been used had a ready market for the securities existed. The Fund follows industry practice and records security transactions on the trade date. The Fund concentrates its investments in a single state. This concentration may result in the Fund investing a relatively high percentage of its assets in a limited number of issuers. FEDERAL AND STATE INCOME TAXES - The Fund's policy is to comply with the requirements of the Internal Revenue Code that are applicable to regulated investment companies and to distribute all of its net investment income and any net realized gain on investments to its shareholders. Therefore, no provision for income taxes is required. Of the ordinary income distributions declared for the six months ended January 31, 2003, 100% were exempt from federal income taxes. The Fund has unexpired capital loss carryforwards for tax purposes as of January 31, 2003 totaling $1,099,744, which may be used to offset capital gains. The capital loss carryforward amounts will expire in each of the years ended July 31 as shown in the table below. Year Unexpired Capital Losses ---- ------------------------ 2003 228,034 2004 0 2005 411,602 2006 125,539 2007 27,107 2008 49,698 2009 78,788 2010 178,976 DISTRIBUTIONS TO SHAREHOLDERS - Dividends from net investment income, declared daily and payable monthly, are reinvested in additional shares of the Fund at net asset value or paid in cash. Capital gains, when available, are distributed at least annually. PREMIUMS AND DISCOUNTS - Premiums and discounts on municipal securities are amortized for financial reporting purposes. On August 1, 2001, the Fund adopted the provisions of the American Institute of Certified Public Accountants' revised Audit and Accounting Guide - Audits of Investment Companies (the guide). The guide requires all premiums and discounts on debt securities to be amortized. Prior to August 1, 2001, the Fund recognized market discount at time of disposition as gain or loss. Upon adoption, the Fund adjusted the cost of its debt securities, and corresponding unrealized gain/loss thereon, in the amount of the cumulative amortization that would have been recognized had amortization been in effect from the purchase date of each holding. The effect of this cumulative adjustment was $1,769 for the Fund. The Financial Highlights for prior periods have not been restated to reflect this change in presentation. This change had no effect on the Fund's net assets or total return. OTHER - Income and expenses are recorded on the accrual basis. Investment transactions are accounted for on the trade date. Realized gains and losses are reported on the identified cost basis. Distributions to shareholders are recorded by the Fund on the ex- dividend date. Income and capital gain distributions are determined in accordance with federal income tax regulations and may differ from net investment income and realized gains determined in accordance with accounting principles generally accepted in the United States of America. These differences are primarily due to differing treatment for market discount, capital loss carryforwards and losses due to wash sales and futures transactions. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid-in capital. Temporary book and tax basis differences will reverse in a subsequent period. FUTURES CONTRACTS - The Fund may purchase and sell financial futures to hedge against changes in the values of tax-exempt municipal securities the Fund owns or expects to purchase. A futures contract is an agreement between two parties to buy or sell units of a particular index or a certain amount of U.S. government or municipal securities at a set price on a future date. Upon entering into a futures contract, the Fund is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirement of the futures exchange on which the contract is traded. Subsequent payments ("variation margin") are made or received by the Fund, dependent on the fluctuations in the value of the underlying index. Daily fluctuations in value are recorded for financial reporting purposes as unrealized gains or losses by the Fund. When entering into a closing transaction, the Fund will realize, for book purposes, a gain or loss equal to the difference between the value of the futures contracts sold and the futures contracts to buy. Unrealized appreciation (depreciation) related to open futures contracts is required to be treated as a realized gain (loss) for federal income tax purposes. Securities held in collateralized accounts to cover initial margin requirements on open futures contracts are noted in the Schedule of Investments. The Statement of Assets and Liabilities reflects a receivable or payable for the daily mark to market for variation margin. Certain risks may arise upon entering into futures contracts. These risks may include changes in the value of the futures contracts that may not directly correlate with changes in the value of the underlying securities. At January 31, 2003, the Fund had outstanding futures contracts to sell debt securities as follows:
|-----------------------------------------------------------------------------------------------------------------------| | | | Number of | Valuation as | Unrealized Appreciation | | Contracts to Sell | Expiration Date | Futures Contracts | of January 31, 2003 | (Depreciation) | |----------------------|-------------------|----------------------|--------------------------|--------------------------| | | | | | | |U.S. Treasury Bonds | 03/2003 | 35 | $63,438 | ($68,447) | |-----------------------------------------------------------------------------------------------------------------------|
USE OF ESTIMATES - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 3. CAPITAL SHARE TRANSACTIONS As of January 31, 2003, there were unlimited shares of no par authorized; 1,605,347 and 1,564,311 shares were outstanding at January 31, 2003 and July 31, 2002, respectively. Transactions in capital shares were as follows:
Shares ------ For The Six Months Ended For The January 31, 2003 Year Ended (Unaudited) July 31, 2002 --------------------------------------------- Shares sold.................................. 98,402 200,144 Shares issued on reinvestment of dividends... 17,785 36,499 Shares redeemed.............................. (75,151) (242,482) --------------------------------------------- Net increase (decrease) ..................... 41,036 (5,839) =============================================
NOTE 4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES Ranson Capital Corporation, the Fund's investment adviser and underwriter; ND Resources, Inc., the Fund's transfer and accounting services agent; and ND Capital, Inc., the Fund's agent for the purchase of certain investment securities; are subsidiaries of Integrity Mutual Funds, Inc. (formerly known as ND Holdings, Inc.), the Fund's sponsor. The Fund has engaged Ranson Capital Corporation to provide investment advisory and management services to the Fund. The Investment Advisory Agreement provides for fees to be computed at an annual rate of 0.50% of the Fund's average daily net assets. The Fund has recognized $30,094 of investment advisory fees after partial waiver for the six months ended January 31, 2003. Certain officers and trustees of the Fund are also officers and directors of the investment adviser. The Fund has a payable to Ranson Capital Corporation, Inc. of $5,178 at January 31, 2003 for investment advisory fees. The Fund has engaged ND Capital, Inc. as agent for the purchase of certain investment securities. For the six months ended January 31, 2003, no commissions were earned by ND Capital, Inc. ND Resources, Inc. (the transfer agent) provides shareholder services for a monthly fee equal to an annual rate of 0.16% of the Fund's first $10 million of net assets, 0.13% of the Fund's net assets on the next $15 million, 0.11% of the Fund's net assets on the next $15 million, 0.10% of the Fund's net assets on the next $10 million, and 0.09% of the Fund's net assets in excess of $50 million. The Fund has recognized $13,388 of transfer agency fees and expenses for the six months ended January 31, 2003. The Fund has a payable to ND Resources, Inc. of $2,255 at January 31, 2003 for transfer agency fees. ND Resources, Inc. also acts as the Fund's accounting services agent for a monthly fee equal to the sum of a fixed fee of $2,000 and a variable fee equal to 0.05% of the Fund's average daily net assets on an annual basis for the Fund's first $50 million and at a lower rate on the average daily net assets in excess of $50 million. The Fund has recognized $16,454 of accounting service fees for the six months ended January 31, 2003. The Fund has a payable to ND Resources, Inc. of $2,771 at January 31, 2003 for accounting service fees. NOTE 5. INVESTMENT SECURITY TRANSACTIONS The cost of purchases and proceeds from the sales of investment securities (excluding short-term securities) aggregated $3,533,134 and $1,130,000, respectively, for the six months ended January 31, 2003. NOTE 6. INVESTMENT IN SECURITIES At January 31, 2003, the aggregate cost of securities for federal income tax purposes was substantially the same for financial reporting purposes at $19,521,040. The net unrealized appreciation of investments based on the cost was $616,668, which is comprised of $659,913 aggregate gross unrealized appreciation and $43,245 aggregate gross unrealized depreciation. FINANCIAL HIGHLIGHTS -------------------- Selected per share data and ratios for the period indicated
For The For The For The For The For The For The Six Months Ended Year Ended Year Ended Year Ended Year Ended Year Ended January 31, 2003 July 31, July 31, July 31, July 30, July 31, (Unaudited) 2002 2001 2000 1999 1998 ------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD..... $ 11.91 $ 11.93 $ 11.69 $ 11.98 $ 12.07 $ 12.23 ------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income................ $ .24 $ .50 $ .53 $ .54 $ .53 $ .54 Net realized and unrealized gain (loss) on investment and futures transactions......................... (.23) (.02) .24 (.29) (.09) (.16) ------------------------------------------------------------------------------------ Total Income (Loss) From Investment Operations............ $ .01 $ .48 $ .77 $ .25 $ .44 $ .38 ------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income.............................. $ (.24) $ (.50) $ (.53) $ (.54) $ (.53) $ (.54) Distributions from net capital gains....................... .00 .00 .00 .00 .00 .00 ------------------------------------------------------------------------------------ Total Distributions.............. $ (.24) $ (.50) $ (.53) $ (.54) $ (.53) $ (.54) ------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD........... $ 11.68 $ 11.91 $ 11.93 $ 11.69 $ 11.98 $ 12.07 ==================================================================================== Total Return............................. 0.17%(A)(C) 4.12%(A) 6.73%(A) 2.15%(A) 3.70%(A) 3.17%(A) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ......................... $ 18,745 $ 18,633 $ 18,728 $ 19,028 $ 21,333 $ 20,585 Ratio of net expenses (after expense assumption) to average net assets.......................... 0.75%(B)(C) 0.75%(B) 0.75%(B) 0.75%(B) 0.75%(B) 0.75%(B) Ratio of net investment income to average net assets.................. 4.07%(C) 4.20% 4.49% 4.58% 4.39% 4.42% Portfolio turnover rate............. 6.32% 9.04% 18.49% 11.07% 16.34% 25.46% (A) Excludes maximum sales charge of 2.75%. (B) During the periods indicated above, Integrity Mutual Funds, Inc. (formerly known as ND Holdings, Inc.) or Ranson Capital Corporation assumed/waived expenses of $16,684, $30,501, $31,627, $30,414, $29,229, and $13,708, respectively. If the expenses had not been assumed/waived, the annualized ratios of total expenses to average net assets would have been 0.93%, 0.91%, 0.92%, 0.90%, 0.89%, and 0.82%, respectively. (C) Ratio is annualized.
The accompanying notes are an integral part of these financial statements. THE NEBRASKA MUNICIPAL FUND --------------------------- DEAR SHAREHOLDER: Enclosed is the semi-annual report of the operations for The Nebraska Municipal Fund (the "Fund") for the six months ended January 31, 2003. The Fund's portfolio and related financial statements are presented within for your review. Investors are going into the New Year facing many of the uncertainties that plagued them twelve months ago. Equities posted a third straight year of losses with the benchmark Standard & Poors 500 Index losing roughly 23 percent for 2002. The bond market began the year with a decline during the first quarter and then posted gains for the remainder of 2002. There is tremendous skepticism about the ability of the U.S. economy to sustain a recovery because consumers are seen as completely tapped out, and because an overabundance of capacity is expected to keep a lid on investment spending. Finally, we have escalating concerns about the geopolitical outlook. It is a safe bet that uncertainty about the 2003 outlook will be with us for some time. We expect the economy to recover, but it could be another choppy year with good quarters followed by soft ones. On the geopolitical front, Middle East tensions and fears against terrorism will likely last for years. Increased spending on the war on terrorism and a decline in tax revenue have widened the budget deficit, forcing the government to sell more debt to finance the shortfall. We continue to watch carefully as this deficit could reach record levels. Monetary reflation has provided powerful support to the economy. In November 2002, the Federal Reserve lowered its target level for the federal funds rate for the twelfth time in the past two years to 1.25%. During the period consumer spending remained relatively high. That and low mortgage rates were sources of strength for the economy. A stimulative monetary stance will be supported and the Administration is currently working on a new stimulus package that will involve tax cuts and increased spending. Relaxed monetary and fiscal policy both could result in renewed inflation and we are watchful for signs of change in the price indices. During the period the Fund utilized defensive positions at times designed to provide share price stability. U.S. Treasury futures were used to hedge a portion of the portfolio with the results being tempered share prices as bond yields fell to forty-year lows. The decline of the U.S. Dollar and the swing from surplus to deficit in the Federal budget are areas of concern. These measures will be key to bond performance over the coming months. Diversification remains an important strategy of the Fund as reflected by the ratings of the eighty issues in the portfolio. Portfolio quality for the six months ended were represented as follows: AAA 54.0%, AA+ 8.4%, AA 20.2%, A 4.7%, BBB+ 2.0%, and NR 10.7%. Income exempt from Federal and Nebraska income taxes with preservation of capital remain the primary objectives of the Fund. Sincerely, Monte L. Avery Robert E. Walstad Chief Portfolio Strategist President January 31, 2003 (Unaudited) ---------------------------- TERMS & DEFINITIONS ------------------- APPRECIATION Increase in value of an asset. AVERAGE ANNUAL TOTAL RETURN A standardized measurement of the return (yield and appreciation) earned by the fund on an annual basis, assuming all distributions are reinvested. COUPON RATE OR FACE RATE The rate of interest payable annually, based on the face amount of the bond; expressed as a percentage. DEPRECIATION Decrease in value of an asset. LEHMAN BROTHERS MUNICIPAL BOND INDEX An unmanaged list of long-term, fixed-rate, investment-grade, tax-exempt bonds representative of the municipal bond market. The index does not take into account brokerage commissions or other costs, may include bonds different from those in the fund, and may pose different risks than the fund. MARKET VALUE Actual (or estimated) price at which a bond trades in the market place. MATURITY A measure of the term or life of a bond in years. When a bond "matures," the issuer repays the principal. NET ASSET VALUE (NAV) The value of all your fund's assets, minus any liabilities, divided by the number of outstanding shares, not including any initial sales charge. QUALITY RATINGS A designation assigned by independent rating companies to give a relative indication of a bond's credit worthiness. "AAA," "AA," "A," and "BBB" indicate investment grade securities. Ratings can range from a high of "AAA" to a low of "D". TOTAL RETURN Measures both the net investment income and any realized and unrealized appreciation or depreciation of the underlying investments in the fund's portfolio for the period, assuming the reinvestment of all dividends. It represents the aggregate percentage or dollar value change over the period. PERFORMANCE & COMPOSITION ------------------------- Portfolio Quality Ratings ------------------------- (based on Total Long-Term Investments) [pie chart] AAA 54.0% AA 28.6% A 4.7% BBB 2.0% NR 10.7% Quality ratings reflect the financial strength of the issuer. They are assigned by independent rating services such as Moody's Investors Services and Standard & Poor's. Non-rated bonds have been determined to be of appropriate quality for the portfolio by Ranson Capital Corporation, the investment adviser. Portfolio Market Sectors ------------------------ (as a % of Net Assets) [pie chart] S-School 36.1% HC-Health Care 19.7% H-Housing 16.2% I-Industrial 8.2% O-Other 8.2% W/S-Water/Sewer 5.0% U-Utilities 4.4% C/L-COP/Lease 2.2% Market sectors are breakdowns of the Fund's portfolio holdings into specific investment classes. These percentages are subject to change. COMPARATIVE INDEX GRAPH ----------------------- [line graph] Comparison of change in value of a $10,000 investment in The Nebraska Municipal Fund and the Lehman Brothers Municipal Bond Index
The Nebraska Municipal The Nebraska Municipal The Lehman Brothers Fund w/o sales charge Fund w/ max sales charge Municipal Bond Index ------------------------------------------------------------------------------------------------------ 11/17/93 $10,000 $ 9,575 $10,000 1994 $ 9,773 $ 9,357 $ 9,892 1995 $10,471 $10,026 $10,672 1996 $11,071 $10,600 $11,376 1997 $11,909 $11,402 $12,544 1998 $12,380 $11,853 $13,295 1999 $12,853 $12,306 $13,677 2000 $13,146 $12,588 $14,268 2001 $14,463 $13,848 $15,707 2002 $15,051 $14,411 $16,761 01/31/03 $15,048 $14,408 $17,290
Average Annual Total Returns For periods ending January 31, 2003 ----------------------------------- Since Inception 1 year 5 year 10 year (November 17, 1993) ---------------------------------------------------------------------------------------------------- Without sales charge 0.79% 4.30% N/A 4.54% With sales charge (4.25%) (3.49%) 3.40% N/A 4.04% ----------------------------------------------------------------------------------------------------
PUTTING PERFORMANCE INTO PERSPECTIVE Returns are historical and are not a guarantee of future results. The graph comparing your Fund's performance to a benchmark index provides you with a general sense of how your Fund performed. To put this information in context, it may be helpful to understand the special differences between the two. The Lehman Brothers index is a national index representative of the national municipal bond market, whereas the Fund concentrates its investments in Nebraska municipal bonds. Your Fund's total return for the period shown appears with and without sales charges and includes Fund expenses and management fees. A securities index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged; there are no expenses that affect the results. In addition, few investors could purchase all of the securities necessary to match the index. And, if they could, they would incur transaction costs and other expenses. All Fund and benchmark returns include reinvested dividends. The Fund's share price, yields and total returns will vary, so that shares, when redeemed, may be worth more or less than their original cost. KEY STATISTICS -------------- 07-31-2002 NAV (share value) $11.17 01-31-2003 NAV $10.93 Average Maturity 17.7 years Number of Issues 80 Total Net Assets $37,423,335 MANAGEMENT OF THE FUNDS The Board of Ranson Managed Portfolios consists of four Trustees. These same individuals, unless otherwise noted, also serve as directors or trustees for all of the funds in the Integrity family of funds and the four series of Ranson Managed Portfolios. Three Trustees (75% of the total) have no affiliation or business connection with the Investment Adviser or any of its affiliates. These are the "independent" Trustees. The remaining Trustee and executive officers are "interested" by virtue of their affiliation with the Investment Adviser and its affiliates. The Independent Trustees of the Fund, their term of office and length of time served, their principal occupation(s) during the past five years, the number of portfolios overseen in the Fund Complex by each Independent Trustee and other directorships, if any, held outside the Fund Complex, are shown below.
INDEPENDENT TRUSTEES Number of Other Portfolios Directorships Name, Address Position(s) Held Term and Principal Occupation(s) Overseen In The Held Outside and Age with Registrant Length Served During Past 5 Years Fund Complex * The Fund Complex ----------------------------------------------------------------------------------------------------------------------------- Lynn W. Aas Trustee Since January 1996 Retired; Attorney; Director, 9 None 904 NW 27th Integrity Mutual Funds, Inc Minot, ND 58703 (formerly known as ND Holdings, 81 Inc.) (May 1988 to August 1994), ND Insured Income Fund, Inc. (December 1994 to August 1999), ND Tax-Free Fund, Inc. (since December 1994), Montana Tax-Free Fund, Inc. (since December 1994), South Dakota Tax-Free Fund, Inc. (since December 1994), Integrity Fund of Funds, Inc., Integrity Small-Cap Fund of Funds, Inc. (since September 1998); Director, First Western Bank & Trust. Orlin W. Backes Trustee Since January 1996 Attorney, McGee, Hankla, Backes 9 Director, First 15 2nd Ave., SW - & Dobrovolny, P.C.; Director, Western Bank & Ste. 305 ND Tax-Free Fund, Inc. Trust Minot, ND 58701 (since April 1995), ND 67 Insured Income Fund, Inc. (March 1995 to August 1999), Montana Tax-Free Fund, Inc. (since April 1995), South Dakota Tax-Free Fund, Inc. (since April 1995), Integrity Fund of Funds, Inc. (since April 1995), Integrity Small- Cap Fund of Funds, Inc. (since September 1998); Director, First Western Bank & Trust. R. James Maxson Town & Country Center Trustee Since January 1999 Attorney, Maxson Law Office 9 None 1015 S Bdwy, Suite 15 (since November 2002), Minot, ND 58701 Attorney, McGee, Hankla, 55 Backes & Dobrovolny, P.C. (April 2000 to November 2002); Attorney, Farhart, Lian and Maxson, P.C. (March 1976 to March 2000); ND Tax-Free Fund, Inc. (since January 1999), Montana Tax-Free Fund, Inc. (since January 1999), South Dakota Tax-Free Fund, Inc. (since January 1999), Integrity Fund of Funds, Inc. (since January 1999), Integrity Small-Cap Fund of Funds, Inc. (since January 1999). ---------------------- The Fund Complex consists of the five funds in the Integrity family of funds and the four series of Ranson Managed Portfolios. The Statement of Additional Information contains more information about the Fund's Trustees and is available without charge upon request by calling Ranson Capital Corporation at (800) 276-1262.
The Interested Trustee and executive officers of the Fund, their term of office and length of time served, their principal occupation(s) during the past five years, the number of portfolios overseen in the Fund Complex by each Interested Trustee and executive officer and other directorships, if any, held outside the Fund Complex, are shown below.
INTERESTED TRUSTEE AND EXECUTIVE OFFICERS Number of Other Portfolios Directorships Name, Address Position(s) Held Term and Principal Occupation(s) Overseen In The Held Outside and Age with Registrant Length Served During Past 5 Years Fund Complex * The Fund Complex ----------------------------------------------------------------------------------------------------------------------------- **Peter A. Quist Vice President Since January 1996 Attorney; Director and Vice 5 Director, ARM 1 North Main and Secretary President, Integrity Mutual Securities Minot, ND 58703 Funds, Inc. (formerly known as Corporation 68 ND Holdings, Inc.); Director, Vice President and Secretary, ND Money Management, Inc., ND Capital, Inc., ND Resources, Inc., ND Tax-Free Fund, Inc., ND Insured Income Fund, Inc. (November 1990 to August 1999), Montana Tax-Free Fund, Inc., South Dakota Tax-Free Fund, Inc. (since April 1995), Integrity Fund of Funds, Inc., Integrity Small-Cap Fund of Funds, Inc. (since September 1998), The Ranson Company, Inc. (January 1996 to February 1997), Ranson Capital Corporation (since January 1996), and Director, ARM Securities Corporation (since May 2000). **Robert E. Walstad Trustee, Since January 1996 Director (since September 1987), 9 Director, ARM 1 North Main Chairman, President (September 1987 to Securities Minot, ND 58703 President, October 2001) (since September 2002), Corporation; 58 and Treasurer Integrity Mutual Funds, Inc. Director, Magic (formerly known as ND Holdings, Internet Inc.); Director, President and Services, Treasurer, ND Money Management, Inc.; Director, Inc., ND Capital, Inc., ND Capital Financial Resources, Inc., ND Tax-Free Fund, Services, Inc. Inc., ND Insured Income Fund, Inc. (November 1990 to August 1999), Montana Tax-Free Fund, Inc., South Dakota Tax-Free Fund, Inc., Integrity Fund of Funds, Inc., Integrity Small-Cap Fund of Funds, Inc.; Trustee, Chairman, President, and Treasurer, Ranson Managed Portfolios; Director, President, CEO, and Treasurer, The Ranson Company, Inc. (January 1996 to February 1997), and Ranson Capital Corporation; Director (since October 1999), President (October 1999 to October 2001), Magic Internet Services, Inc.; Director (since May 2000), President (May 2000 to October 2001) (since September 2002), ARM Securities Corporation; Director, CEO, Chairman (since January 2002), President (since September 2002), Capital Financial Services, Inc. ----------------------- * The Fund Complex consists of the five funds in the Integrity family of funds and the four series of Ranson Managed Portfolios. ** Trustees and/or executive officers who are "interested persons" of the Funds as defined in the Investment Company Act of 1940. Messrs. Quist and Walstad are interested persons by virtue of being officers and directors of the Funds' Investment Adviser and Principal Underwriter.
The Statement of Additional Information contains more information about the Fund's Trustees and is available without charge upon request by calling Ranson Capital Corporation at (800) 276-1262. INDEPENDENT TRUSTEES [photo] [photo] [photo] LYNN W. AAS ORLIN W. BACKES R. JAMES MAXSON INTERESTED TRUSTEE AND EXECUTIVE OFFICERS [photo] [photo] PETER A. QUIST ROBERT E. WALSTAD SCHEDULE OF INVESTMENTS January 31, 2003 (Unaudited) ---------------------------------------------------
NAME OF ISSUER PERCENTAGES REPRESENT THE MARKET VALUE OF RATING COUPON PRINCIPAL MARKET EACH INVESTMENT CATEGORY TO TOTAL NET ASSETS MOODY'S/S&P RATE MATURITY AMOUNT VALUE ----------------------------------------------------------------------------------------------------------------------------- NEBRASKA MUNICIPAL BONDS (96.0%) Adams Cty., NE Hosp. Auth. #001 (Mary Lanning Memorial Hosp.) ASGUA......................................... NR/AA 5.300% 12/15/18 $ 250,000 $ 258,690 Cass Cty, NE School Dist. #056 (Conestoga Public Schools)..... NR/NR 6.150 12/15/20 250,000 269,602 Columbus Community Hospital Platte Cty, NE Asset Guaranty..... NR/AA 5.650 05/01/12 100,000 110,585 Columbus Community Hospital Platte Cty, NE Asset Guaranty..... NR/AA 6.150 05/01/30 250,000 274,915 *Dakota Cty., NE SD #011 (South Sioux City Community Schools) G.O. MBIA.................................. Aaa/AAA 6.100 06/15/20 1,000,000 1,079,060 Dawson Cty., NE School Dist. #20 (Gothenburg) G.O. MBIA....... Aaa/AAA 5.350 12/15/26 500,000 516,100 Dawson Cty., NE SID #001 (IBP, Inc. Proj.) Ref. G.O. .........Baa-3/BBB 5.650 02/01/22 700,000 705,684 *Dodge Cty., NE SD #001 (Fremont Public Schools) FSA.......... Aaa/NR 5.500 12/15/20 1,000,000 1,086,040 Douglas Cty., NE (Catholic Health Corp.) Rev. MBIA............ Aaa/AAA 5.375 11/15/15 275,000 293,180 Douglas Cty., NE (Catholic Health Corp.) Rev. MBIA............ Aaa/AAA 5.500 11/15/21 340,000 356,249 Douglas Cty., NE Hosp. Auth. #001 (Alegent Hlth.) Rev. AMBAC.. Aaa/AAA 5.250 09/01/21 250,000 252,892 Douglas Cty., NE Hosp. Auth. #002 (Archbishop Bergan) Rev. MBIA............................................. Aaa/AAA 6.000 11/15/15 125,000 136,850 Douglas Cty., NE Hosp. Auth. #002 (Bethphage Project) Rev..... NR/NR 5.400 02/01/13 120,000 121,570 Douglas Cty., NE School Dist. #001............................ Aa/AAA 5.625 12/15/19 250,000 270,890 Douglas Cty., NE School Dist. #010 (Elkhorn Public Schools)... NR/A+ 5.050 12/15/22 150,000 151,329 #Douglas Cty., NE School Dist. #010 (Elkhorn) G.O. FSA........ Aaa/AAA 5.500 12/15/20 750,000 805,155 Douglas Cty., NE School Dist. #066 (Westside Comm. Schools) G.O. .......................................... Aa-3/AA- 5.000 12/01/17 150,000 154,189 Douglas Cty., NE SID #240 (LeBea) Ref. G.O. .................. NR/NR 5.900 10/15/16 100,000 99,608 Douglas Cty., NE SID #392 (Cinnamon Creek) G.O. .............. NR/NR 5.750 08/15/17 200,000 201,000 Douglas Cty., NE SID #397 (Linden Estates II) ................ NR/NR 5.600 07/15/18 265,000 267,541 Douglas Cty., NE SID #397 (Linden Estates II) ................ NR/NR 5.600 07/15/19 280,000 282,190 Gage Cty., NE Hosp. Auth. #001 (Beatrice Comm. Hosp.) Rev. ... NR/NR 6.400 10/01/07 100,000 103,825 Gage Cty., NE Hosp. Auth. #001 (Beatrice Comm. Hosp.) Rev. ... NR/NR 6.750 10/01/14 200,000 207,272 Grand Island, NE Sewer Syst. Rev. ............................ A/NR 6.000 04/01/14 550,000 593,422 Great Plains Regional Med. Cntr. North Platte Hosp. Rev. Asset Guaranty..................................... NR/AA 5.450 11/15/22 750,000 784,515 Kearney Cty., NE Highway Allocation Fund AMBAC................ Aaa/NR 5.350 06/15/21 100,000 104,706 #Lancaster Cty., NE (Bryan Memorial Hospital) Rev. MBIA....... Aaa/AAA 5.375 06/01/19 1,400,000 1,475,628 Lancaster Cty., NE (Lincoln Medl. Educ. Foundn.) Rev. ........ NR/NR 5.700 02/01/11 100,000 101,211 Lancaster Cty., NE (Lincoln Medl. Educ. Foundn.) Rev. ........ NR/NR 5.800 02/01/12 175,000 176,584 Lancaster Cty., NE School Dist. #1 (Lincoln Public Schools)... Aa/AAA 5.250 01/15/21 500,000 527,515 Lancaster Cty., NE School Dist. #1 (Lincoln Public Schools) G.O. ................................ Aa/AAA 5.250 01/15/22 500,000 522,420 #Lancaster Cty., NE School Dist. #145 (Waverly Public Schools) AMBAC................................ Aaa/AAA 5.500 12/01/20 1,240,000 1,312,069 Lincoln Cty., NE School Dist. #005 (Sutherland Public Schools) FSA............................... Aaa/NR 5.000 12/15/20 225,000 230,920 Lincoln, NE Water Rev. ....................................... Aa/AA+ 5.000 08/15/22 575,000 588,777 Lincoln/Lancaster Cty., NE Public Bldg. Community Rev. ....... Aa/AA+ 5.800 10/15/18 475,000 521,754 #Lincoln/Lancaster Cty., NE Public Bldg. Community Rev. ...... Aa/AA+ 5.875 10/15/23 850,000 931,523 Madison Cty., NE Hosp. Auth. #001 (Faith Regl. Hlth. Svcs.) Rev. ASGUA................................. NR/AA 5.350 07/01/18 250,000 261,527 NE Educ. Finance Auth. (Concordia Teachers College) Rev. ..... NR/NR 5.900 12/15/15 100,000 100,500 NE Educ. Finance Auth. (Creighton Univ.) Rev. AMBAC........... Aaa/AAA 5.950 01/01/11 300,000 330,852 NE Educ. Finance Auth. (Midland Lutheran College) Rev. G.O. .. NR/NR 5.550 06/15/18 500,000 504,085 NE Educ. Finance Auth. (Wesleyan Univ.) Rev. Radian Insured... NR/AA 5.500 04/01/27 1,000,000 1,041,940 NE Hgr. Educ. Loan Program B Rev. MBIA........................ Aaa/AAA 6.000 06/01/28 100,000 105,962 NE Hgr. Educ. Loan Program Junior Subord. Rev. MBIA........... Aaa/AAA 6.400 06/01/13 300,000 328,980 NE Hgr. Educ. Loan Program Junior Subord. Term MBIA........... Aaa/AAA 6.450 06/01/18 400,000 460,156 NE Hgr. Educ. Loan Program Senior Subord. Term MBIA........... Aaa/AAA 6.250 06/01/18 800,000 904,272 *NE Hgr. Educ. Loan Program Student Loan MBIA................. Aaa/AAA 5.875 06/01/14 1,310,000 1,381,788 NE Invmt. Finance Auth. (Catholic Hlth. Initiatives) Rev. .... Aa/AA 5.125 12/01/17 200,000 205,646 NE Invmt. Finance Auth. (Childrens Healthcare Svcs) Facs. Rev. .................................. Aaa/AAA 5.500 08/15/17 410,000 442,181 #NE Invmt. Finance Auth. (Childrens Healthcare Svcs.) Rev. AMBAC.................................. Aaa/AAA 5.500 08/15/27 1,000,000 1,061,820 NE Invmt. Finance Auth. (Great Plains Regl. Medl. Ctr.) ASGUA............................................. NR/AA 5.450 11/15/17 400,000 424,928 NE Invmt. Finance Auth. (Great Plains Regl. Medl. Ctr.) Rev. ASGUA........................................ NR/AA 6.500 05/15/14 300,000 322,926 NE Invmt. Finance Auth. (Muirfield Greens) Multifamily Rev. FHA.......................................... Aa/NR 6.800 12/01/15 305,000 313,824 NE Invmt. Finance Auth. (Muirfield Greens) Multifamily Rev. FHA.......................................... Aa/NR 6.850 12/01/25 525,000 540,509 NE Invmt. Finance Auth. (Waterbrook) Multifamily Rev. ........ Aaa/AAA 5.600 04/01/07 165,000 175,938 NE Invmt. Finance Auth. Multifamily Hsg. Rev. FNMA............ NR/AAA 6.200 06/01/28 495,000 508,771 NE Invmt. Finance Auth. Multifamily Hsg. Rev. GNMA............ NR/AAA 6.000 06/01/17 460,000 479,918 NE Invmt. Finance Auth. Multifamily Hsg. Rev. GNMA............ NR/AAA 6.100 06/01/29 500,000 514,740 *NE Invmt. Finance Auth. Single Family Hsg. Rev. ............. NR/AAA 6.600 09/01/20 375,000 386,689 *NE Invmt. Finance Auth. Single Family Hsg. Rev. ............. NR/AAA 6.300 09/01/28 1,105,000 1,139,874 NE Invmt. Finance Auth. Single Family Hsg. Rev. Coll. ........ NR/AAA 6.300 03/01/17 100,000 102,752 NE Invmt. Finance Auth. Single Family Hsg. Rev. FHA/GNMA...... NR/AAA 6.500 09/01/18 400,000 413,192 NE Invmt. Finance Auth. Single Family Hsg. Rev. FHA/VA........ NR/AAA 6.150 03/01/09 100,000 103,519 NE Invmt. Finance Auth. Single Family Hsg. Rev. FNMA/GNMA..... NR/AAA 6.400 09/01/26 250,000 259,880 NE Invmt. Finance Auth. Single Family Hsg. Rev. GNMA.......... NR/AAA 6.200 09/01/17 250,000 264,110 NE Invmt. Finance Auth. Single Family Hsg. Rev. GNMA.......... NR/AAA 6.250 03/01/21 300,000 310,086 NE Invmt. Finance Auth. Single Family Hsg. Rev. GNMA/FNMA..... NR/AAA 6.250 09/01/28 155,000 160,329 NE Invmt. Finance Auth. Single Family Hsg. Rev. GNMA/FNMA..... NR/AAA 6.300 09/01/30 220,000 230,298 NE Invmt. Finance Auth. Single Family Hsg. Rev. VA/FNMA....... NR/AAA 7.300 09/01/26 155,000 160,468 Northeast NE Juvenile Svcs. (Detention) 1st Mrtge. Rev. ...... NR/NR 6.375 06/01/17 770,000 809,801 Omaha, NE (Riverfront Project) Special Obligation............. Aa/AA 5.500 02/01/29 1,000,000 1,075,850 Omaha, NE Parking Facs. Corp. (Omaha Park 4\5) Lease Rev. .... Aa-1/AA+ 5.700 09/15/15 750,000 812,048 Omaha, NE Public Power Dist. Elec. Syst. Rev. ................ Aa/AA 5.200 02/01/22 500,000 517,150 Omaha, NE Public Power Dist. Elec. Syst. Rev. ................ NR/AA 6.000 02/01/15 330,000 375,830 Omaha, NE Public Power Dist. Elec. Syst. Rev. ................ Aa/NR 6.200 02/01/17 650,000 769,821 Platte Cty., NE School Dist. #001 (Columbus) G.O. Bank Qualified........................................... A/NR 5.000 12/15/19 250,000 257,478 Sarpy Cty., NE School Dist. #046 FSA.......................... Aaa/AAA 5.000 12/15/22 200,000 202,074 Sarpy Cty., NE SID #052 (Prairie Corners) G.O. ............... NR/NR 6.000 10/01/17 240,000 241,200 Sarpy Cty., NE SID #142 (Fairview) G.O. Ref. ................. NR/NR 5.850 08/15/17 100,000 100,500 Saunders Cty., NE SD #039 (Wahoo Public Schools) ............. NR/NR 6.000 12/15/20 250,000 264,473 Univ. of NE Board of Regents Lincoln Parking.................. Aa-3/A- 5.800 06/01/20 620,000 690,717 ----------- TOTAL NEBRASKA MUNICIPAL BONDS (COST: $33,874,305) ...............................................................$35,934,862 ----------- SHORT-TERM SECURITIES (2.6%) Wells Fargo National Tax-Free Money Market (COST: $962,224) ......................................................$ 962,224 ----------- TOTAL INVESTMENTS IN SECURITIES (COST: $34,836,529) ..............................................................$36,897,086 OTHER ASSETS LESS LIABILITIES..................................................................................... 526,249 ----------- NET ASSETS........................................................................................................$37,423,335 =========== * Indicates bonds are segregated by the custodian to cover when-issued or delayed-delivery purchases. # Indicates bonds are segregated by the custodian to cover initial margin requirements. Footnote: Non-rated securities have been determined to be of investment grade quality by the Fund's Manager.
The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENTS January 31, 2003 (Unaudited) -------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES January 31, 2003 (Unaudited) ------------------------------------ ASSETS Investment in securities, at value (cost: $34,836,529) ............. $ 36,897,086 Accrued interest receivable......................................... 513,281 Variation margin on futures......................................... 172,188 Cash................................................................ 8,394 Receivable for fund shares sold..................................... 5,000 Accrued dividends receivable........................................ 682 Prepaid expenses.................................................... 6,273 ------------- Total Assets..................................................... $ 37,602,904 ------------- LIABILITIES Dividends payable................................................... $ 131,316 Accrued expenses.................................................... 28,253 Payable for fund shares redeemed.................................... 20,000 ------------- Total Liabilities................................................ $ 179,569 ------------- NET ASSETS............................................................... $ 37,423,335 ============= NET ASSETS ARE REPRESENTED BY: Paid-in capital..................................................... $ 38,669,873 Accumulated undistributed net realized gain (loss) on investments......................................................... (2,679,165) Accumulated undistributed net realized gain (loss) on futures............................................................. (448,082) Unrealized appreciation on investments.............................. 2,060,557 Unrealized depreciation on futures.................................. (179,848) ------------- Total amount representing net assets applicable to 3,423,205 outstanding shares of no par common stock (unlimited shares authorized) ............................. $ 37,423,335 ============= Net asset value per share................................................ $ 10.93 =============
The accompanying notes are an integral part of these financial statements.
STATEMENT OF OPERATIONS For the six months ended January 31, 2003 (Unaudited) ----------------------------------------------------- INVESTMENT INCOME Interest........................................................... $ 972,888 Dividends.......................................................... 6,986 ------------- Total Investment Income........................................ $ 979,874 ------------- EXPENSES Investment advisory fees........................................... $ 94,204 Service fees....................................................... 47,102 Transfer agent fees................................................ 24,339 Accounting service fees............................................ 21,124 Custodian fees..................................................... 4,160 Transfer agent out-of-pockets...................................... 2,192 Professional fees.................................................. 3,400 Reports to shareholders............................................ 1,901 Trustees fees...................................................... 1,780 Registration and filing fees....................................... 1,966 Insurance expense.................................................. 1,780 ------------- Total Expenses................................................. $ 203,948 Less expenses waived or absorbed by the Fund's manager.............................................. (36,164) ------------- Total Net Expenses............................................. $ 167,784 ------------- NET INVESTMENT INCOME................................................... $ 812,090 ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES Net realized gain (loss) from: Investment transactions............................................ $ 3,960 Futures transactions............................................... (448,082) Net change in unrealized appreciation (depreciation) of: Investments........................................................ (194,484) Futures............................................................ (179,848) ------------- Net Realized And Unrealized Gain (Loss) On Investments And Futures........................................ $ (818,454) ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS............................................... $ (6,364) =============
The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENTS January 31, 2003 -------------------------------------
STATEMENT OF CHANGES IN NET ASSETS For the six months ended January 31, 2003 and the year ended July 31, 2002 -------------------------------------------------------------------------- For The Six Months Ended For The January 31, 2003 Year Ended (Unaudited) July 31, 2002 --------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income............................................. $ 812,090 $ 1,727,525 Net realized gain (loss) on investment and futures transactions... (444,122) (596,119) Net change in unrealized appreciation (depreciation) on investments and futures........................................ (374,332) 410,380 --------------------------------------------------- Net Increase (Decrease) in Net Assets Resulting From Operations.............................................. $ (6,364) $ 1,541,786 --------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income ($.24 and $.53 per share, respectively) .......................... $ (810,278) $ (1,724,430) Distributions from net realized gain on investment and futures transactions ($.00 and $.00 per share, respectively) ................................ 0 0 --------------------------------------------------- Total Dividends and Distributions............................ $ (810,278) $ (1,724,430) --------------------------------------------------- CAPITAL SHARE TRANSACTIONS Proceeds from sale of shares...................................... $ 2,180,740 $ 4,693,840 Proceeds from reinvested dividends................................ 565,444 1,177,463 Cost of shares redeemed........................................... (1,778,843) (6,973,707) --------------------------------------------------- Net Increase (Decrease) in Net Assets Resulting From Capital Share Transactions.............................. $ 967,341 $ (1,102,404) --------------------------------------------------- TOTAL INCREASE (DECREASE) IN NET ASSETS................................ $ 150,699 $ (1,285,048) NET ASSETS, BEGINNING OF PERIOD........................................ 37,272,636 38,557,684 --------------------------------------------------- NET ASSETS, END OF PERIOD.............................................. $ 37,423,335 $ 37,272,636 ===================================================
The accompanying notes are an integral part of these financial statements. NOTES TO FINANCIAL STATEMENTS January 31, 2003 (Unaudited) ---------------------------------------------------------- NOTE 1. ORGANIZATION BUSINESS OPERATIONS - The Nebraska Municipal Fund (the "Fund") is an investment portfolio of Ranson Managed Portfolios (the "Trust") registered under the Investment Company Act of 1940, as amended, as a non-diversified, open-end management investment company. The Trust may offer multiple portfolios; currently four portfolios are offered. Ranson Managed Portfolios is an unincorporated business trust organized under Massachusetts law on August 10, 1990. The Fund had no operations from that date to November 17, 1993, other than matters relating to organization and registration. On November 17, 1993, the Fund commenced its Public Offering of capital shares. The investment objective of the Fund is to provide its shareholders with as high a level of current income exempt from both federal and Nebraska income taxes as is consistent with preservation of capital. The Fund will seek to achieve this objective by investing primarily in a portfolio of Nebraska municipal securities. Shares of the Fund are offered at net asset value plus a maximum sales charge of 4.25% of the offering price. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES INVESTMENT SECURITY VALUATION - Securities for which quotations are not readily available (which will constitute a majority of the securities held by the Fund) are valued using a matrix system at fair value as determined by Ranson Capital Corporation ("Ranson"). The matrix system has been developed based on procedures approved by the Board of Trustees which include consideration of the following: yields or prices of municipal bonds of comparable quality, type of issue, coupon, maturity and rating, and indications as to value from dealers and general market conditions. Because the market value of securities can only be established by agreement between parties in a sales transaction, and because of the uncertainty inherent in the valuation process, the fair values as determined may differ from the values that would have been used had a ready market for the securities existed. The Fund follows industry practice and records security transactions on the trade date. The Fund concentrates its investments in a single state. This concentration may result in the Fund investing a relatively high percentage of its assets in a limited number of issuers. FEDERAL AND STATE INCOME TAXES - The Fund's policy is to comply with the requirements of the Internal Revenue Code that are applicable to regulated investment companies and to distribute all of its net investment income and any net realized gain on investments to its shareholders. Therefore, no provision for income taxes is required. Of the ordinary income distributions declared for the six months ended January 31, 2003, 100% were exempt from federal income taxes. The Fund has unexpired capital loss carryforwards for tax purposes as of January 31, 2003 totaling $2,683,905, which may be used to offset capital gains. The capital loss carryforward amounts will expire in each of the years ended July 31 as shown in the table below. Year Unexpired Capital Losses ---- ------------------------ 2003 317,379 2004 415,126 2005 616,730 2006 383,905 2007 0 2008 199,861 2009 158,911 2010 591,993 DISTRIBUTIONS TO SHAREHOLDERS - Dividends from net investment income, declared daily and payable monthly, are reinvested in additional shares of the Fund at net asset value or paid in cash. Capital gains, when available, are distributed at least annually. PREMIUMS AND DISCOUNTS - Premiums and discounts on municipal securities are amortized for financial reporting purposes. On August 1, 2001, the Fund adopted the provisions of the American Institute of Certified Public Accountants' revised Audit and Accounting Guide - Audits of Investment Companies (the guide). The guide requires all premiums and discounts on debt securities to be amortized. Prior to August 1, 2001, the Fund recognized market discount at time of disposition as gain or loss. Upon adoption, the Fund adjusted the cost of its debt securities, and corresponding unrealized gain/loss thereon, in the amount of the cumulative amortization that would have been recognized had amortization been in effect from the purchase date of each holding. The effect of this cumulative adjustment was $14,098 for the Fund. The Financial Highlights for prior periods have not been restated to reflect this change in presentation. This change had no effect on the Fund's net assets or total return. OTHER - Income and expenses are recorded on the accrual basis. Investment transactions are accounted for on the trade date. Realized gains and losses are reported on the identified cost basis. Distributions to shareholders are recorded by the Fund on the ex- dividend date. Income and capital gain distributions are determined in accordance with federal income tax regulations and may differ from net investment income and realized gains determined in accordance with accounting principles generally accepted in the United States of America. These differences are primarily due to differing treatment for market discount, capital loss carryforwards and losses due to wash sales and futures transactions. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid-in capital. Temporary book and tax basis differences will reverse in a subsequent period. FUTURES CONTRACTS - The Fund may purchase and sell financial futures contracts to hedge against changes in the values of tax-exempt municipal securities the Fund owns or expects to purchase. A futures contract is an agreement between two parties to buy or sell units of a particular index or a certain amount of U.S. government or municipal securities at a set price on a future date. Upon entering into a futures contract, the Fund is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirement of the futures exchange on which the contract is traded. Subsequent payments ("variation margin") are made or received by the Fund, dependent on the fluctuations in the value of the underlying index. Daily fluctuations in value are recorded for financial reporting purposes as unrealized gains or losses by the Fund. When entering into a closing transaction, the Fund will realize, for book purposes, a gain or loss equal to the difference between the value of the futures contracts sold and the futures contracts to buy. Unrealized appreciation (depreciation) related to open futures contracts is required to be treated as a realized gain (loss) for Federal income tax purposes. Securities held in collateralized accounts to cover initial margin requirements on open futures contracts are noted in the Schedule of Investments. The Statement of Assets and Liabilities reflects a receivable or payable for the daily mark to market for variation margin. Certain risks may arise upon entering into futures contracts. These risks may include changes in the value of the futures contracts that may not directly correlate with changes in the value of the underlying securities. At January 31, 2003, the Fund had outstanding futures contracts to sell debt securities as follows:
|-----------------------------------------------------------------------------------------------------------------------| | | | Number of | Valuation as | Unrealized Appreciation | | Contracts to Sell | Expiration Date | Futures Contracts | of January 31, 2003 | (Depreciation) | |----------------------|-------------------|----------------------|--------------------------|--------------------------| | | | | | | |U.S. Treasury Bonds | 03/2003 | 95 | $172,188 | ($179,848) | |-----------------------------------------------------------------------------------------------------------------------|
USE OF ESTIMATES - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 3. CAPITAL SHARE TRANSACTIONS As of January 31, 2003, there were unlimited shares of no par authorized; 3,423,205 and 3,336,190 shares were outstanding at January 31, 2003 and July 31, 2002, respectively. Transactions in capital shares were as follows:
Shares ------ For The Six Months Ended For The January 31, 2003 Year Ended (Unaudited) July 31, 2002 --------------------------------------------- Shares sold.................................. 196,432 416,460 Shares issued on reinvestment of dividends... 50,907 104,347 Shares redeemed.............................. (160,324) (618,790) --------------------------------------------- Net increase (decrease) ..................... 87,015 (97,983) =============================================
NOTE 4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES Ranson Capital Corporation, the Fund's investment adviser and underwriter; ND Resources, Inc., the Fund's transfer and accounting services agent; and ND Capital, Inc., the Fund's agent for the purchase of certain investment securities; are subsidiaries of Integrity Mutual Funds, Inc. (formerly known as ND Holdings, Inc.), the Fund's sponsor. The Fund has engaged Ranson Capital Corporation to provide investment advisory and management services to the Fund. The Investment Advisory Agreement provides for fees to be computed at an annual rate of 0.50% of the Fund's average daily net assets. The Fund has recognized $94,204 of investment advisory fees for the six months ended January 31, 2003. The Fund has a payable to Ranson Capital Corporation of $15,630 at January 31, 2003, for investment advisory fees. Certain officers and trustees of the Fund are also officers and directors of the investment adviser. The Fund pays an annual service fee to Ranson Capital Corporation (Ranson), its principal underwriter, for certain expenses incurred by Ranson in connection with the distribution of the Fund's shares. The annual fee paid to Ranson is calculated daily and paid monthly by the Fund at the annual rate of 0.25% of the average daily net assets of the Fund. The Fund has recognized $10,938 of service fee expenses after partial waiver for the six months ended January 31, 2003. The Fund has a payable to Ranson of $2,204 at January 31, 2003, for service fees. The Fund has engaged ND Capital, Inc. as agent for the purchase of certain investment securities. For the six months ended January 31, 2003, no commissions were earned by ND Capital, Inc. ND Resources, Inc. (the transfer agent) provides shareholder services for a monthly fee equal to an annual rate of 0.16% of the Fund's first $10 million of net assets, 0.13% of the Fund's net assets on the next $15 million, 0.11% of the Fund's net assets on the next $15 million, 0.10% of the Fund's net assets on the next $10 million, and 0.09% of the Fund's net assets in excess of $50 million. The Fund has recognized $24,339 of transfer agency fees for the six months ended January 31, 2003. The Fund has a payable to ND Resources, Inc. of $4,108 at January 31, 2003, for transfer agency fees. ND Resources, Inc. also acts as the Fund's accounting services agent for a monthly fee equal to the sum of a fixed fee of $2,000, and a variable fee equal to 0.05% of the Fund's average daily net assets on an annual basis for the Fund's first $50 million and at a lower rate on the average daily net assets in excess of $50 million. The Fund has recognized $21,124 of accounting service fees for the six months ended January 31, 2003. The Fund has a payable to ND Resources, Inc. of $3,560 at January 31, 2003, for accounting service fees. NOTE 5. INVESTMENT SECURITY TRANSACTIONS The cost of purchases and proceeds from the sales of investment securities (excluding short-term securities) aggregated $1,153,467 and $1,339,000, respectively, for the six months ended January 31, 2003. NOTE 6. INVESTMENT IN SECURITIES At January 31, 2003, the aggregate cost of securities for federal income tax purposes was substantially the same for financial reporting purposes at $34,836,529. The net unrealized appreciation of investments based on the cost was $2,060,557, which is comprised of $2,062,300 aggregate gross unrealized appreciation and $1,743 aggregate gross unrealized depreciation. FINANCIAL HIGHLIGHTS -------------------- Selected per share data and ratios for the period indicated
For The For The For The For The For The For The Six Months Ended Year Ended Year Ended Year Ended Year Ended Year Ended January 31, 2003 July 31, July 31, July 31, July 30, July 31, (Unaudited) 2002 2001 2000 1999 1998 ------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD..... $ 11.17 $ 11.23 $ 10.71 $ 11.01 $ 11.13 $ 11.26 ------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income............... $ .24 $ .51 $ .53 $ .54 $ .54 $ .56 Net realized and unrealized gain (loss) on investment and futures transactions................ (.24) (.06) .52 (.30) (.12) (.13) ------------------------------------------------------------------------------------ Total Income (Loss) From Investment Operations............ $ .00 $ .45 $ 1.05 $ .24 $ .42 $ .43 ------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income................... $ (.24) $ (.51) $ (.53) $ (.54) $ (.54) $ (.56) Distributions from net capital gains....................... .00 .00 .00 .00 .00 .00 ------------------------------------------------------------------------------------ Total Distributions.............. $ (.24) $ (.51) $ (.53) $ (.54) $ (.54) $ (.56) ------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD........... $ 10.93 $ 11.17 $ 11.23 $ 10.71 $ 11.01 $ 11.13 ==================================================================================== Total Return............................. (0.04%)(A)(C) 4.06%(A) 10.02%(A) 2.28%(A) 3.82%(A) 3.95%(A) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ..................... $ 37,423 $ 37,273 $ 38,558 $ 38,171 $ 41,943 $ 26,318 Ratio of net expenses (after expense assumption) to average net assets.......................... 0.89%(B)(C) 0.82%(B) 0.78%(B) 0.75%(B) 0.70%(B) 0.63%(B) Ratio of net investment income to average net assets.................. 4.30%(C) 4.52% 4.82% 5.02% 4.83% 5.06% Portfolio turnover rate............. 3.19% 13.08% 16.89% 11.42% 12.58% 26.36% (A) Excludes maximum sales charge of 4.25%. (B) During the periods indicated above, Integrity Mutual Funds, Inc. (formerly known as ND Holdings, Inc.) or Ranson Capital Corporation assumed/waived expenses of $36,164, $99,292, $113,493, $124,718, $119,949, and $51,233, respectively. If the expenses had not been assumed/waived, the annualized ratios of total expenses to average net assets would have been 1.08%, 1.08%, 1.08%, 1.07%, 1.10%, and 0.81%, respectively. (C) Ratio is annualized.
The accompanying notes are an integral part of these financial statements. THE OKLAHOMA MUNICIPAL FUND --------------------------- DEAR SHAREHOLDER: Enclosed is the semi-annual report of the operations for The Oklahoma Municipal Fund (the "Fund") for the six months ended January 31, 2003. The Fund's portfolio and related financial statements are presented within for your review. Investors are going into the New Year facing many of the uncertainties that plagued them twelve months ago. Equities posted a third straight year of losses with the benchmark Standard & Poors 500 Index losing roughly 23 percent for 2002. The bond market began the year with a decline during the first quarter and then posted gains for the remainder of 2002. There is tremendous skepticism about the ability of the U.S. economy to sustain a recovery because consumers are seen as completely tapped out, and because an overabundance of capacity is expected to keep a lid on investment spending. Finally, we have escalating concerns about the geopolitical outlook. It is a safe bet that uncertainty about the 2003 outlook will be with us for some time. We expect the economy to recover, but it could be another choppy year with good quarters followed by soft ones. On the geopolitical front, Middle East tensions and fears against terrorism will likely last for years. Increased spending on the war on terrorism and a decline in tax revenue have widened the budget deficit, forcing the government to sell more debt to finance the shorfall. We continue to watch carefully as this deficit could reach record levels. Monetary reflation has provided powerful support to the economy. In November 2002, the Federal Reserve lowered its target level for the federal funds rate for the twelfth time in the past two years to 1.25%. During the period consumer spending remained relatively high. That and low mortgage rates were sources of strength for the economy. A stimulative monetary stance will be supported and the Administration is currently working on a new stimulus package that will involve tax cuts and increased spending. Relaxed monetary and fiscal policy both could result in renewed inflation and we are watchful for signs of change in the price indices. During the period the Fund utilized defensive positions at times designed to provide share price stability. U.S. Treasury futures were used to hedge a portion of the portfolio with the results being tempered share prices as bond yields fell to forty-year lows. The decline of the U.S. Dollar and the swing from surplus to deficit in the Federal budget are areas of concern. These measures will be key to bond performance over the coming months. Diversification remains an important strategy of the Fund as reflected on the ratings of the seventy-three issues in the portfolio. Portfolio quality for the six months ended were represented as follows: AAA 53.0%, AA 16.2%, AA- 1.2%, A 10.1%, BBB+ 2.0%, BBB 5.3%, BBB- 1.0%, NR 7.4%, and B- 3.8%. Income exempt from Federal and State income taxes with preservation of capital remain the primary objectives of the Fund. Sincerely, Monte L. Avery Robert E. Walstad Chief Portfolio Strategist President January 31, 2003 (Unaudited) ---------------------------- TERMS & DEFINITIONS ------------------- APPRECIATION Increase in value of an asset. AVERAGE ANNUAL TOTAL RETURN A standardized measurement of the return (yield and appreciation) earned by the fund on an annual basis, assuming all distributions are reinvested. COUPON RATE OR FACE RATE The rate of interest payable annually, based on the face amount of the bond; expressed as a percentage. DEPRECIATION Decrease in value of an asset. LEHMAN BROTHERS MUNICIPAL BOND INDEX An unmanaged list of long-term, fixed-rate, investment-grade, tax-exempt bonds representative of the municipal bond market. The index does not take into account brokerage commissions or other costs, may include bonds different from those in the fund, and may pose different risks than the fund. MARKET VALUE Actual (or estimated) price at which a bond trades in the market place. MATURITY A measure of the term or life of a bond in years. When a bond "matures," the issuer repays the principal. NET ASSET VALUE (NAV) The value of all your fund's assets, minus any liabilities, divided by the number of outstanding shares, not including any initial sales charge. QUALITY RATINGS A designation assigned by independent rating companies to give a relative indication of a bond's credit worthiness. "AAA," "AA," "A," and "BBB" indicate investment grade securities. Ratings can range from a high of "AAA" to a low of "D". TOTAL RETURN Measures both the net investment income and any realized and unrealized appreciation or depreciation of the underlying investments in the fund's portfolio for the period, assuming the reinvestment of all dividends. It represents the aggregate percentage or dollar value change over the period. PERFORMANCE & COMPOSITION ------------------------- Portfolio Quality Ratings ------------------------- (based on Total Long-Term Investments) [pie chart] AAA 53.0% AA 17.4% A 10.1% BBB 8.3% B1/B- 3.8% NR 7.4% Quality ratings reflect the financial strength of the issuer. They are assigned by independent rating services such as Moody's Investors Services and Standard & Poor's. Non-rated bonds have been determined to be of appropriate quality for the portfolio by Ranson Capital Corporation, the investment adviser. Portfolio Market Sectors ------------------------ (as a % of Net Assets) [pie chart] S-School 44.2% HC-Health Care 12.9% U-Utilities 10.6% W/S-Water/Sewer 7.2% O-Other 6.9% T-Transportation 6.1% G-Government 5.3% H-Housing 3.6% I-Industrial 3.2% Market sectors are breakdowns of the Fund's portfolio holdings into specific investment classes. These percentages are subject to change COMPARATIVE INDEX GRAPH ----------------------- [line graph] Comparison of change in value of a $10,000 investment in The Oklahoma Municipal Fund and the Lehman Brothers Municipal Bond Index
The Oklahoma Municipal The Oklahoma Municipal Lehman Brothers Fund w/o sales charge Fund w/ max sales charge Municipal Bond Index ------------------------------------------------------------------------------------------------------------ 09/25/1996 $10,000 $ 9,575 $10,000 1997 $10,779 $10,321 $11,027 1998 $11,186 $10,711 $11,687 1999 $11,662 $11,166 $12,024 2000 $11,648 $11,153 $12,542 2001 $12,787 $12,243 $13,808 2002 $13,484 $12,911 $14,735 01/31/03 $13,570 $12,994 $15,199
Average Annual Total Returns For periods ending January 31, 2003 ----------------------------------- Since Inception 1 year 5 year 10 year (September 25, 1996) ------------------------------------------------------------------------------------------------------ Without sales charge 2.31% 4.02% N/A 4.92% With sales charge (4.25%) (2.04)% 3.12% N/A 4.21% ------------------------------------------------------------------------------------------------------
PUTTING PERFORMANCE INTO PERSPECTIVE Returns are historical and are not a guarantee of future results. The graph comparing your Fund's performance to a benchmark index provides you with a general sense of how your Fund performed. To put this information in context, it may be helpful to understand the special differences between the two. The Lehman Brothers index is a national index representative of the national municipal bond market, whereas the Fund concentrates its investments in Oklahoma municipal bonds. Your Fund's total return for the period shown appears with and without sales charges and includes Fund expenses and management fees. A securities index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged; there are no expenses that affect the results. In addition, few investors could purchase all of the securities necessary to match the index. And, if they could, they would incur transaction costs and other expenses. All Fund and benchmark returns include reinvested dividends. The Fund's share price, yields, and total returns will vary, so that shares, when redeemed, may be worth more or less than their original cost. KEY STATISTICS -------------- 07-31-2002 NAV (share value) $11.54 01-31-2003 NAV $11.36 Average Maturity 19.9 years Number of Issues 73 Total Net Assets $26,438,032 MANAGEMENT OF THE FUNDS The Board of Ranson Managed Portfolios consists of four Trustees. These same individuals, unless otherwise noted, also serve as directors or trustees for all of the funds in the Integrity family of funds and the four series of Ranson Managed Portfolios. Three Trustees (75% of the total) have no affiliation or business connection with the Investment Adviser or any of its affiliates. These are the "independent" Trustees. The remaining Trustee and executive officers are "interested" by virtue of their affiliation with the Investment Adviser and its affiliates. The Independent Trustees of the Fund, their term of office and length of time served, their principal occupation(s) during the past five years, the number of portfolios overseen in the Fund Complex by each Independent Trustee and other directorships, if any, held outside the Fund Complex, are shown below.
INDEPENDENT TRUSTEES Number of Other Portfolios Directorships Name, Address Position(s) Held Term and Principal Occupation(s) Overseen In The Held Outside and Age with Registrant Length Served During Past 5 Years Fund Complex * The Fund Complex ----------------------------------------------------------------------------------------------------------------------------- Lynn W. Aas Trustee Since January 1996 Retired; Attorney; Director, 9 None 904 NW 27th Integrity Mutual Funds, Inc Minot, ND 58703 (formerly known as ND Holdings, 81 Inc.) (May 1988 to August 1994), ND Insured Income Fund, Inc. (December 1994 to August 1999), ND Tax-Free Fund, Inc. (since December 1994), Montana Tax-Free Fund, Inc. (since December 1994), South Dakota Tax-Free Fund, Inc. (since December 1994), Integrity Fund of Funds, Inc., Integrity Small-Cap Fund of Funds, Inc. (since September 1998); Director, First Western Bank & Trust. Orlin W. Backes Trustee Since January 1996 Attorney, McGee, Hankla, Backes 9 Director, First 15 2nd Ave., SW - & Dobrovolny, P.C.; Director, Western Bank & Ste. 305 ND Tax-Free Fund, Inc. Trust Minot, ND 58701 (since April 1995), ND 67 Insured Income Fund, Inc. (March 1995 to August 1999), Montana Tax-Free Fund, Inc. (since April 1995), South Dakota Tax-Free Fund, Inc. (since April 1995), Integrity Fund of Funds, Inc. (since April 1995), Integrity Small- Cap Fund of Funds, Inc. (since September 1998); Director, First Western Bank & Trust. R. James Maxson Town & Country Center Trustee Since January 1999 Attorney, Maxson Law Office 9 None 1015 S Bdwy, Suite 15 (since November 2002), Minot, ND 58701 Attorney, McGee, Hankla, 55 Backes & Dobrovolny, P.C. (April 2000 to November 2002); Attorney, Farhart, Lian and Maxson, P.C. (March 1976 to March 2000); ND Tax-Free Fund, Inc. (since January 1999), Montana Tax-Free Fund, Inc. (since January 1999), South Dakota Tax-Free Fund, Inc. (since January 1999), Integrity Fund of Funds, Inc. (since January 1999), Integrity Small-Cap Fund of Funds, Inc. (since January 1999). ---------------------- The Fund Complex consists of the five funds in the Integrity family of funds and the four series of Ranson Managed Portfolios. The Statement of Additional Information contains more information about the Fund's Trustees and is available without charge upon request by calling Ranson Capital Corporation at (800) 276-1262.
The Interested Trustee and executive officers of the Fund, their term of office and length of time served, their principal occupation(s) during the past five years, the number of portfolios overseen in the Fund Complex by each Interested Trustee and executive officer and other directorships, if any, held outside the Fund Complex, are shown below.
INTERESTED TRUSTEE AND EXECUTIVE OFFICERS Number of Other Portfolios Directorships Name, Address Position(s) Held Term and Principal Occupation(s) Overseen In The Held Outside and Age with Registrant Length Served During Past 5 Years Fund Complex * The Fund Complex ----------------------------------------------------------------------------------------------------------------------------- **Peter A. Quist Vice President Since January 1996 Attorney; Director and Vice 5 Director, ARM 1 North Main and Secretary President, Integrity Mutual Securities Minot, ND 58703 Funds, Inc. (formerly known as Corporation 68 ND Holdings, Inc.); Director, Vice President and Secretary, ND Money Management, Inc., ND Capital, Inc., ND Resources, Inc., ND Tax-Free Fund, Inc., ND Insured Income Fund, Inc. (November 1990 to August 1999), Montana Tax-Free Fund, Inc., South Dakota Tax-Free Fund, Inc. (since April 1995), Integrity Fund of Funds, Inc., Integrity Small-Cap Fund of Funds, Inc. (since September 1998), The Ranson Company, Inc. (January 1996 to February 1997), Ranson Capital Corporation (since January 1996), and Director, ARM Securities Corporation (since May 2000). **Robert E. Walstad Trustee, Since January 1996 Director (since September 1987), 9 Director, ARM 1 North Main Chairman, President (September 1987 to Securities Minot, ND 58703 President, October 2001) (since September 2002), Corporation; 58 and Treasurer Integrity Mutual Funds, Inc. Director, Magic (formerly known as ND Holdings, Internet Inc.); Director, President and Services, Treasurer, ND Money Management, Inc.; Director, Inc., ND Capital, Inc., ND Capital Financial Resources, Inc., ND Tax-Free Fund, Services, Inc. Inc., ND Insured Income Fund, Inc. (November 1990 to August 1999), Montana Tax-Free Fund, Inc., South Dakota Tax-Free Fund, Inc., Integrity Fund of Funds, Inc., Integrity Small-Cap Fund of Funds, Inc.; Trustee, Chairman, President, and Treasurer, Ranson Managed Portfolios; Director, President, CEO, and Treasurer, The Ranson Company, Inc. (January 1996 to February 1997), and Ranson Capital Corporation; Director (since October 1999), President (October 1999 to October 2001), Magic Internet Services, Inc.; Director (since May 2000), President (May 2000 to October 2001) (since September 2002), ARM Securities Corporation; Director, CEO, Chairman (since January 2002), President (since September 2002), Capital Financial Services, Inc. ----------------------- * The Fund Complex consists of the five funds in the Integrity family of funds and the four series of Ranson Managed Portfolios. ** Trustees and/or executive officers who are "interested persons" of the Funds as defined in the Investment Company Act of 1940. Messrs. Quist and Walstad are interested persons by virtue of being officers and directors of the Funds' Investment Adviser and Principal Underwriter.
The Statement of Additional Information contains more information about the Fund's Trustees and is available without charge upon request by calling Ranson Capital Corporation at (800) 276-1262. INDEPENDENT TRUSTEES [photo] [photo] [photo] LYNN W. AAS ORLIN W. BACKES R. JAMES MAXSON INTERESTED TRUSTEE AND EXECUTIVE OFFICERS [photo] [photo] PETER A. QUIST ROBERT E. WALSTAD SCHEDULE OF INVESTMENTS January 31, 2003 (Unaudited) ---------------------------------------------------
NAME OF ISSUER PERCENTAGES REPRESENT THE MARKET VALUE OF RATING COUPON PRINCIPAL MARKET EACH INVESTMENT CATEGORY TO TOTAL NET ASSETS MOODY'S/S&P RATE MATURITY AMOUNT VALUE ----------------------------------------------------------------------------------------------------------------------------- OKLAHOMA MUNICIPAL BONDS (96.9%) Claremore, OK Student Hsg. Rev. (Rogers University) ACA....... NR/A 5.750% 09/01/34 $ 500,000 $ 502,880 Eastern OK Board of Regents (State College) Student Facs. Rev. ........................................... NR/NR 6.100 06/01/17 150,000 158,880 Edmond Economic Dev. Auth., OK Student Housing Rev. ..........Baa-3/NR 5.375 12/01/19 100,000 94,366 #Edmond Economic Dev. Auth., OK Student Housing Rev. .........Baa-3/NR 5.500 12/01/28 865,000 795,108 Edmond Public Works Sales Tax & Utility Rev. AMBAC............ NR/AAA 4.750 07/01/23 200,000 200,020 Garfield Cty., Criminal Justice Auth. (Enid, OK) Rev. MBIA.... Aaa/NR 4.500 04/01/18 250,000 245,845 *Grand River Dam Auth., OK Rev. AMBAC......................... Aaa/AAA 6.250 06/01/11 210,000 249,180 Grand River Dam Auth., OK Rev. Ref. AMBAC..................... Aaa/AAA 5.500 06/01/13 700,000 794,017 Jackson Cty, OK Sales Tax Rev. AMBAC.......................... Aaa/AAA 5.000 10/01/22 500,000 505,385 Mannford Public Works Auth. .................................. NR/BBB+ 6.000 04/01/27 300,000 312,819 Mannford Public Works Auth. .................................. NR/BBB+ 5.900 04/01/32 250,000 257,807 Norman, OK (Regl. Hospital) Auth. Asset Guaranty............. NR/AA 5.250 09/01/16 180,000 187,911 OK Agric. & Mech. Colleges (OK St. Univ.) Athletic Facs. AMBAC.......................................... Aaa/NR 5.000 08/01/24 300,000 303,258 *OK Board of Regents (Oklahoma City Community College) Student Rev. AMBAC............................................ Aaa/AAA 5.550 07/01/22 750,000 799,065 OK Board of Regents (Univ. of Central Oklahoma) AMBAC......... Aaa/AAA 5.600 08/01/20 150,000 163,578 OK Board of Regents (Univ. of Central Oklahoma) AMBAC......... Aaa/AAA 5.700 08/01/25 390,000 428,154 OK Board of Regents (University of Oklahoma) Athletic Fac. Rev. MBIA....................................... Aaa/NR 5.250 06/01/26 500,000 516,355 OK Capital Impvt. Auth. (Dept. of Corrections) Rev. AMBAC..... Aaa/AAA 5.000 05/01/18 500,000 521,555 OK Capital Impvt. Auth. (State Fac.) Rev. MBIA................ Aaa/AAA 5.500 09/01/19 100,000 108,503 OK Capital Impvt. Auth. (State Office Building) Rev. ......... A-1/NR 5.500 10/01/16 105,000 114,407 OK Colleges Brd. of Regents (NE State Univ. Ctr.) Rev. FSA.... Aaa/AAA 5.100 03/01/16 140,000 147,839 OK Colleges Brd. of Regents (NE State Univ. Ctr.) Rev. FSA.... Aaa/AAA 5.150 03/01/21 100,000 103,189 OK Devl. Fin. Auth. (OK State Sys. Higher ED. AMBAC........... Aaa/AAA 4.900 12/01/22 200,000 200,826 OK Devl. Finance Auth. (Central OK Univ.) .................... Aa-3/AA 5.300 12/01/18 100,000 103,744 OK Devl. Finance Auth. (Comanche County Hosp.) ............... NR/BBB- 5.625 07/01/09 105,000 109,411 OK Devl. Finance Auth. (DHS Lease Rev.) Series 2000A MBIA..... Aaa/NR 5.600 03/01/15 280,000 302,308 #OK Devl. Finance Auth. (Hillcrest Healthcare Syst.) Rev. Ref. .................................................... B1/B- 5.625 08/15/19 1,000,000 760,000 OK Devl. Finance Auth. (Hillcrest Healthcare Syst.) Rev. Ref. .................................................... B1/B- 5.625 08/15/29 295,000 218,300 OK Devl. Finance Auth. (Integris Baptist Medical Center) AMBAC......................................... Aaa/AAA 5.600 06/01/20 250,000 272,552 OK Devl. Finance Auth. (Langston Univ. Athletic Facs.) Rev.... NR/NR 5.250 12/01/23 500,000 496,355 OK Devl. Finance Auth. (Langston Univ. Stadium) .............. NR/AA 5.000 07/01/27 250,000 252,970 *OK Devl. Finance Auth. (Oklahoma City Univ.) Rev. Ref. AMBAC............................................... Aaa/AAA 5.125 06/01/17 555,000 585,891 OK Devl. Finance Auth. (Seminole State College) .............. NR/AA 5.125 12/01/27 150,000 152,829 OK Devl. Finance Auth. (Southern Nazarene Univ.) Rev. ........ NR/NR 6.200 11/01/07 100,000 105,556 OK Devl. Finance Auth. (Southern Nazarene Univ.) Rev. ........ NR/NR 6.500 11/01/13 75,000 78,640 OK Devl. Finance Auth. (Southern Nazarene Univ.) Rev. ........ NR/NR 5.750 03/01/13 400,000 419,972 #OK Devl. Finance Auth. (Southern Nazarene Univ.) Rev. ....... NR/NR 6.000 03/01/18 600,000 636,348 OK Devl. Finance Auth. (St. Ann's Retirement Village) Rev. MBIA............................................ Aaa/NR 5.000 12/01/28 500,000 503,260 OK Devl. Finance Auth. (St. John Health Syst.) Rev. Ref. ..... Aa-3/AA 5.750 02/15/25 500,000 537,735 *OK Devl. Finance Auth. (Tulsa Vo Tech Dist. Prj.) Public Facs. Rev. AMBAC....................................... Aaa/AAA 5.100 08/01/15 750,000 786,420 OK Housing Finance Agency Single Family Homeownership ........ Aaa/NR 5.250 09/01/21 195,000 193,996 *OK Housing Finance Agency Single Family Homeownership GNMA... Aaa/NR 5.375 03/01/20 600,000 600,738 OK Housing Finance Agency Single Family Homeownership GNMA/FNMA....................................... Aaa/NR 5.850 09/01/20 145,000 151,107 OK State Indl. Finance Auth. G.O. ............................ Aa-3/NR 5.000 04/01/13 150,000 154,221 *OK State Indl. Finance Auth. G.O. ........................... Aa-3/NR 6.050 02/01/15 285,000 306,948 OK State Municipal Power Auth. Rev. MBIA...................... Aaa/AAA 5.750 01/01/24 640,000 731,494 *OK State Student Loan Auth. ................................. Aaa/AAA 5.625 06/01/31 600,000 620,502 OK State Turnpike Auth. FGIC................................. Aaa/AAA 5.250 01/01/12 225,000 252,137 OK State Unlimited Tax G.O. .................................. Aa-3/AA 5.200 07/15/16 460,000 479,407 OK State Unlimited Tax G.O. .................................. Aa-3/AA 5.200 07/15/18 145,000 152,714 OK State Water (Loan Program) Rev. ........................... NR/AA 6.250 10/01/12 125,000 128,729 OK State Water (Loan Program) Rev. ........................... NR/AA 5.400 09/01/15 105,000 113,341 *OK State Water (Loan Program) Rev. .......................... NR/AA 5.100 09/01/16 415,000 442,141 OK State Water Resources Board Rev. .......................... NR/AA 5.050 10/01/22 200,000 202,320 OK State Water Resources Board Rev. .......................... NR/AA 5.125 10/01/27 500,000 507,430 OK Student Loan Auth. MBIA................................... Aaa/AAA 5.300 12/01/32 450,000 450,796 Oklahoma Cnty., OK Indl. Auth. (Benevolent Association) ......Baa-3/NR 5.500 02/01/29 500,000 456,485 Oklahoma Cnty., OK Indl. Auth. (Benevolent Association) Ref. ............................................Baa-3/NR 6.150 01/01/11 100,000 104,633 Oklahoma State Water Resources Loan Rev. ..................... NR/AA 5.100 10/01/27 500,000 501,475 Oklahoma Student Loan Auth. .................................. A/NR 6.350 09/01/25 280,000 301,000 #Okmulgee Public Works Auth. Capital Improvement Rev. MBIA.... Aaa/AAA 5.125 08/01/30 750,000 762,045 Okmulgee Public Works Auth. Capital Improvement Rev. MBIA..... Aaa/AAA 4.800 10/01/27 500,000 489,425 Rural Enterprises, OK Inc. Okmulgee Student Housing Proj., Series A ALA........................................... NR/A 5.625 12/01/20 140,000 143,186 Rural Enterprises, OK Inc. Student Hsg. (Connors College) ACA......................................... NR/A 5.650 11/01/31 100,000 100,903 Rural Enterprises, OK Inc. OK Govt. Fin. (Cleveland Cty. Hlth.) MBIA................................... Aaa/NR 5.000 11/01/21 250,000 250,688 Rural Enterprises, OK Inc. Okmulgee Student Housing Proj. ACA............................................. NR/A 5.750 12/01/30 250,000 251,613 Rural Enterprises, OK Inc. Okmulgee Student Housing Proj., Series A ACA........................................... NR/A 5.700 12/01/25 220,000 222,605 Rural Enterprises, OK Inc. Student Hsg. (Connors College) ACA......................................... NR/A 5.550 11/01/21 250,000 251,715 Rural Enterprises, OK Inc. USAOF Student Housing ACA.......... NR/A 5.550 11/01/21 250,000 252,008 Rural Enterprises, OK Inc. USAOF Student Housing ACA.......... NR/A 5.650 11/01/31 250,000 248,363 Sapulpa Municipal Authority Utility Rev. FSA.................. Aaa/AAA 5.125 01/01/32 250,000 254,525 Tulsa Cnty, Indl. Auth. Recreation Facs. ..................... NR/AA 4.700 09/01/24 500,000 485,360 University of OK Board of Regents Student Hsg. Rev. FGIC...... Aaa/NR 5.000 11/01/27 1,000,000 1,011,290 ------------ TOTAL OKLAHOMA MUNICIPAL BONDS (COST: $25,232,510) .............................................................$ 25,608,578 ------------ SHORT-TERM SECURITIES (2.8%) Wells Fargo National Tax-Free Money Market.......................................................................$ 212,930 Dreyfus Tax-Exempt Cash Management No. 2......................................................................... 523,862 ------------ TOTAL SHORT-TERM SECURITIES (COST: $736,792) ....................................................................$ 736,792 ------------ TOTAL INVESTMENTS IN SECURITIES (COST: $25,969,302) ............................................................$ 26,345,370 OTHER ASSETS LESS LIABILITIES.................................................................................... 92,662 ------------ NET ASSETS.......................................................................................................$ 26,438,032 ============ * Indicates bonds are segregated by the custodian to cover when-issued or delayed delivery purchases. # Indicates bonds are segregated by the custodian to cover initial margin requirements. Footnote: Non-rated (NR) investments have been determined to be of investment grade quality by the Fund's Manager.
The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENTS January 31, 2003 (Unaudited) -------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES January 31, 2003 (Unaudited) ------------------------------------ ASSETS Investment in securities, at value (cost: $25,969,302) ............. $ 26,345,370 Accrued interest receivable......................................... 383,495 Accrued dividends receivable........................................ 749 Receivable for fund shares sold..................................... 147,578 Prepaid expenses.................................................... 3,463 Variation margin on futures......................................... 99,688 ------------ Total Assets..................................................... $ 26,980,343 ------------ LIABILITIES Payable for fund shares redeemed.................................... $ 14 Dividends payable................................................... 95,443 Disbursements in excess of demand deposit cash...................... 428,242 Accrued expenses.................................................... 18,612 ------------ Total Liabilities................................................ $ 542,311 ------------ NET ASSETS............................................................... $ 26,438,032 ============ NET ASSETS ARE REPRESENTED BY: Paid-in capital..................................................... $ 27,059,888 Accumulated undistributed net realized gain (loss) on investments... (643,081) Accumulated undistributed net realized gain (loss) on futures....... (250,720) Unrealized appreciation on investments.............................. 376,068 Unrealized depreciation on futures.................................. (104,123) ------------ Total amount representing net assets applicable to 2,326,789 outstanding shares of no par common stock (unlimited shares authorized) ............................. $ 26,438,032 ============ Net asset value per share................................................ $ 11.36 ============
The accompanying notes are an integral part of these financial statements.
STATEMENT OF OPERATIONS For the six months ended January 31, 2003 (Unaudited) ----------------------------------------------------- INVESTMENT INCOME Interest........................................................... $ 601,199 Dividends.......................................................... 5,963 ------------- Total Investment Income........................................ $ 607,162 ------------- EXPENSES Investment advisory fees........................................... $ 60,715 Service fees....................................................... 30,357 Transfer agent fees................................................ 17,381 Accounting service fees............................................ 17,859 Custodian fees..................................................... 2,653 Registration and filing fees....................................... 1,114 Transfer agent out-of-pocket expenses.............................. 425 Trustees fees...................................................... 1,401 Reports to shareholders............................................ 981 Professional fees.................................................. 3,100 Insurance expense.................................................. 1,033 ------------- Total Expenses................................................. $ 137,019 Less expenses waived or absorbed by the Fund's manager.............................................. (65,217) ------------- Total Net Expenses............................................. $ 71,802 ------------- NET INVESTMENT INCOME................................................... $ 535,360 ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES Net realized gain (loss) from: Investment transactions............................................ $ 40,838 Futures transactions............................................... (250,720) Net change in unrealized appreciation (depreciation) of: Investments........................................................ (72,270) Futures............................................................ (104,123) ------------- Net Realized And Unrealized Gain (Loss) On Investments And Futures ....................................... $ (386,275) ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS............................................... $ 149,085 =============
The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENTS January 31, 2003 -------------------------------------
STATEMENT OF CHANGES IN NET ASSETS For the six months ended January 31, 2003 and the year ended July 31, 2002 -------------------------------------------------------------------------- For The Six Months Ended For The January 31, 2003 Year Ended (Unaudited) July 31, 2002 --------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income............................................. $ 535,360 $ 963,547 Net realized gain (loss) on investment and futures transactions... (209,882) (414,418) Net change in unrealized appreciation (depreciation) on investments and futures........................................ (176,393) 495,278 --------------------------------------------------- Net Increase (Decrease) in Net Assets Resulting From Operations.............................................. $ 149,085 $ 1,044,407 --------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income ($.25 and $.57 per share, respectively) .......................... $ (535,300) $ (963,432) Distributions from net realized gain on investment and futures transactions ($.00 and $.00 per share, respectively)...... 0 0 -------------------------------------------------- Total Dividends and Distributions............................ $ (535,300) $ (963,432) -------------------------------------------------- CAPITAL SHARE TRANSACTIONS Proceeds from sale of shares...................................... $ 5,409,996 $ 7,011,154 Proceeds from reinvested dividends................................ 253,909 495,726 Cost of shares redeemed........................................... (834,394) (3,723,814) -------------------------------------------------- Net Increase (Decrease) in Net Assets Resulting From Capital Share Transactions.............................. $ 4,829,511 $ 3,783,066 -------------------------------------------------- TOTAL INCREASE (DECREASE) IN NET ASSETS................................ $ 4,443,296 $ 3,864,041 NET ASSETS, BEGINNING OF PERIOD........................................ 21,994,736 18,130,695 -------------------------------------------------- NET ASSETS, END OF PERIOD.............................................. $ 26,438,032 $ 21,994,736 ==================================================
The accompanying notes are an integral part of these financial statements. NOTES TO FINANCIAL STATEMENTS January 31, 2003(Unaudited) --------------------------------------------------------- Note 1. ORGANIZATION BUSINESS OPERATIONS - The Oklahoma Municipal Fund (the "Fund") is an investment portfolio of Ranson Managed Portfolios (the "Trust") registered under the Investment Company Act of 1940, as amended, as a non-diversified, open-end management investment company. The Trust may offer multiple portfolios; currently four portfolios are offered. Ranson Managed Portfolios is an unincorporated business trust organized under Massachusetts law on August 10, 1990. The Fund had no operations from that date to September 25, 1996, other than matters relating to organization and registration. On September 25, 1996, the Fund commenced its Public Offering of capital shares. The investment objective of the Fund is to provide its shareholders with as high a level of current income exempt from both federal income tax and, to a certain extent, Oklahoma income tax, as is consistent with preservation of capital. Up to 30% of the Fund's total assets may be invested in Oklahoma municipal securities which are subject to Oklahoma state income taxes. The Fund will seek to achieve this objective by investing primarily in a portfolio of Oklahoma municipal securities. Shares of the Fund are offered at net asset value plus a maximum sales charge of 4.25% of the offering price. Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES INVESTMENT SECURITY VALUATION - Securities for which quotations are not readily available (which will constitute a majority of the securities held by the Fund) are valued using a matrix system at fair value as determined by Ranson Capital Corporation ("Ranson"). The matrix system has been developed based on procedures approved by the Board of Trustees which include consideration of the following: yields or prices of municipal bonds of comparable quality, type of issue, coupon, maturity and rating, and indications as to value from dealers and general market conditions. Because the market value of securities can only be established by agreement between parties in a sales transaction, and because of the uncertainty inherent in the valuation process, the fair values as determined may differ from the values that would have been used had a ready market for the securities existed. The Fund follows industry practice and records security transactions on the trade date. The Fund concentrates its investments in a single state. This concentration may result in the Fund investing a relatively high percentage of its assets in a limited number of issuers. FEDERAL AND STATE INCOME TAXES - The Fund's policy is to comply with the requirements of the Internal Revenue Code that are applicable to regulated investment companies and to distribute all of its net investment income and any net realized gain on investments to its shareholders. Therefore, no provision for income taxes is required. Of the ordinary income distributions declared for the six months ended January 31, 2003, 100% were exempt from federal income taxes. The Fund has unexpired capital loss carryforwards for tax purposes as of January 31, 2003 totaling $683,921, which may be used to offset capital gains. The capital loss carryforward amounts will expire in each of the years ended July 31 as shown in the table below. Year Unexpired Capital Losses ---- ------------------------ 2003 0 2004 0 2005 0 2006 0 2007 0 2008 185,891 2009 83,784 2010 414,246 DISTRIBUTIONS TO SHAREHOLDERS - Dividends from net investment income, declared daily and payable monthly, are reinvested in additional shares of the Fund at net asset value or paid in cash. Capital gains, when available, are distributed at least annually. PREMIUMS AND DISCOUNTS - Premiums and discounts on municipal securities are amortized for financial reporting purposes. On August 1, 2001, the Fund adopted the provisions of the American Institute of Certified Public Accountants' revised Audit and Accounting Guide - Audits of Investment Companies (the guide). The guide requires all premiums and discounts on debt securities to be amortized. Prior to August 1, 2001, the Fund recognized market discount at time of disposition as gain or loss. Upon adoption, the Fund adjusted the cost of its debt securities, and corresponding unrealized gain/loss thereon, in the amount of the cumulative amortization that would have been recognized had amortization been in effect from the purchase date of each holding. The effect of this cumulative adjustment was $83 for the Fund. The Financial Highlights for prior periods have not been restated to reflect this change in presentation. This change had no effect on the Fund's net assets or total return. OTHER - Income and expenses are recorded on the accrual basis. Investment transactions are accounted for on the trade date. Realized gains and losses are reported on the identified cost basis. Distributions to shareholders are recorded by the Fund on the ex- dividend date. Income and capital gain distributions are determined in accordance with federal income tax regulations and may differ from net investment income and realized gains determined in accordance with accounting principles generally accepted in the United States of America. These differences are primarily due to differing treatment for market discount, capital loss carryforwards and losses due to wash sales and futures transactions. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid-in capital. Temporary book and tax basis differences will reverse in a subsequent period. FUTURES CONTRACTS - The Fund may purchase and sell financial futures contracts to hedge against changes in the values of tax-exempt municipal securities the Fund owns or expects to purchase. A futures contract is an agreement between two parties to buy or sell units of a particular index or a certain amount of U.S. Government or municipal securities at a set price on a future date. Upon entering into a futures contract, the Fund is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirement of the futures exchange on which the contract is traded. Subsequent payments ("variation margin") are made or received by the Fund, dependent on the fluctuations in the value of the underlying index. Daily fluctuations in value are recorded for financial reporting purposes as unrealized gains or losses by the Fund. When entering into a closing transaction, the Fund will realize, for book purposes, a gain or loss equal to the difference between the value of the futures contracts sold and the futures contracts to buy. Unrealized appreciation (depreciation) related to open futures contracts is required to be treated as realized gain (loss) for Federal income tax purposes. Securities held in collateralized accounts to cover initial margin requirements on open futures contracts are noted in the Schedule of Investments. The Statement of Assets and Liabilities reflects a receivable or payable for the daily mark to market for variation margin. Certain risks may arise upon entering into futures contracts. These risks may include changes in the value of the futures contracts that may not directly correlate with changes in the value of the underlying securities. At January 31, 2003, the Fund had outstanding futures contracts to sell debt securities as follows:
|-----------------------------------------------------------------------------------------------------------------------| | | | Number of | Valuation as | Unrealized Appreciation | | Contracts to Sell | Expiration Date | Futures Contracts | of January 31, 2003 | (Depreciation) | |----------------------|-------------------|----------------------|--------------------------|--------------------------| | | | | | | |U.S. Treasury Bonds | 03/2003 | 55 | $99,688 | ($104,123) | |-----------------------------------------------------------------------------------------------------------------------|
USE OF ESTIMATES - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Note 3. CAPITAL SHARE TRANSACTIONS As of January 31, 2003, there were unlimited shares of no par authorized; on January 31, 2003 and July 31, 2002, there were 2,326,789 and 1,906,461 shares outstanding, respectively. Transactions in capital shares were as follows:
Shares ------ For The Six Months Ended For The January 31, 2003 Year Ended (Unaudited) July 31, 2002 --------------------------------------------- Shares sold.................................. 471,109 605,354 Shares issued on reinvestment of dividends... 22,089 42,815 Shares redeemed.............................. (72,870) (322,234) --------------------------------------------- Net increase (decrease) ..................... 420,328 325,935 =============================================
Note 4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES Ranson Capital Corporation, the Fund's investment adviser and underwriter; ND Resources, Inc., the Fund's transfer and accounting services agent; and ND Capital, Inc., the Fund's agent for the purchase of certain investment securities; are subsidiaries of Integrity Mutual Funds, Inc. (formerly known as ND Holdings, Inc.), the Fund's sponsor. The Fund has engaged Ranson Capital Corporation to provide investment advisory and management services to the Fund. The Investment Advisory Agreement provides for fees computed at an annual rate of 0.50% of the Fund's average daily net assets. The Fund has recognized $25,854 of investment advisory fees after partial waiver for the six months ended January 31, 2003. The Fund has a payable to Ranson Capital Corporation of $5,268 at January 31, 2003 for investment advisory fees. Certain officers and trustees of the Fund are also officers and directors of the investment advisor. The Fund pays an annual service fee to Ranson Capital Corporation (Ranson), its principal underwriter, for certain expenses incurred by Ranson in connection with the distribution of the Fund's shares. The annual fee paid to Ranson under the Plan is calculated daily and paid monthly by the Fund at the annual rate of 0.25% of the average daily net assets of the Fund. Ranson has elected to waive all operation service fees for the six months ended January 31, 2003. The Fund has engaged ND Capital, Inc. as agent for the purchase of certain investment securities. For the six months ended January 31, 2003, no commissions were earned by ND Capital, Inc. ND Resources, Inc. (the transfer agent) provides shareholder services for a monthly fee equal to an annual rate of 0.16% of the Fund's first $10 million of net assets, 0.13% of the Fund's net assets on the next $15 million, 0.11% of the Fund's net assets on the next $15 million, 0.10% of the Fund's net assets on the next $10 million, and 0.09% of the Fund's net assets in excess of $50 million. The Fund has recognized $17,381 of transfer agent fees and expenses for the six months ended January 31, 2003. The Fund has a payable to ND Resources, Inc. of $3,022 at January 31, 2003 for transfer agent fees. ND Resources, Inc. also acts as the Fund's accounting services agent for a monthly fee equal to the sum of a fixed fee of $2,000, and a variable fee equal to 0.05% of the Fund's average daily net assets on an annual basis for the Fund's first $50 million and at a lower rate on the average daily net assets in excess of $50 million. The Fund has recognized $17,859 of accounting service fees for the six months ended January 31, 2003. The Fund has a payable to ND Resources, Inc. of $3,053 at January 31, 2003, for accounting service fees. Note 5. INVESTMENT SECURITY TRANSACTIONS The cost of purchases and proceeds from the sales of investment securities (excluding short-term securities) aggregated $5,875,482 and $993,080, respectively, for the six months ended January 31, 2003. Note 6. INVESTMENT IN SECURITIES At January 31, 2003, the aggregate cost of securities for federal income tax purposes was substantially the same for financial reporting purposes at $25,969,302. The net unrealized appreciation of investments based on the cost was $376,068, which is comprised of $828,227 aggregate gross unrealized appreciation and $452,159 aggregate gross unrealized depreciation. FINANCIAL HIGHLIGHTS -------------------- Selected per share data and ratios for the period indicated
For The For The For The For The For The For The Six Months Ended Year Ended Year Ended Year Ended Year Ended Year Ended January 31, 2003 July 31, July 31, July 31, July 30, July 31, (Unaudited) 2002 2001 2000 1999 1998 ------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD..... $ 11.54 $ 11.47 $ 10.99 $ 11.61 $ 11.68 $ 11.86 ------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income............... $ .25 $ .55 $ .57 $ .57 $ .56 $ .60 Net realized and unrealized gain (loss) on investment and futures transactions................ (.18) .07 .48 (.59) (.07) (.16) ------------------------------------------------------------------------------------ Total Income (Loss) From Investment Operations............ $ .07 $ .62 $ 1.05 $ (.02) $ .49 $ .44 ------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income.............................. $ (.25) $ (.55) $ (.57) $ (.57) $ (.56) $ (.60) Distributions from net capital gains............................... .00 .00 .00 (.03) .00 (.02) ------------------------------------------------------------------------------------ Total Distributions.............. $ (.25) $ (.55) $ (.57) $ (.60) $ (.56) $ (.62) ------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD........... $ 11.36 $ 11.54 $ 11.47 $ 10.99 $ 11.61 $ 11.68 ==================================================================================== Total Return............................. (1.28%)(A)(C) 5.46%(A) 9.78%(A) (0.12%)(A) 4.25%(A) 3.81%(A) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ..................... $ 26,438 $ 21,995 $ 18,131 $ 15,862 $ 16,135 $ 11,335 Ratio of net expenses (after expense assumption) to average net assets.......................... 0.59%(B)(C) 0.51%(B) 0.43%(B) 0.44%(B) 0.36%(B) 0.20%(B) Ratio of net investment income to average net assets.................. 4.40%(C) 4.69% 5.06% 5.08% 4.74% 5.08% Portfolio turnover rate ............ 4.28% 15.77% 12.24% 20.89% 32.09% 53.32% (A) Excludes maximum sales charge of 4.25%. (B) During the periods indicated above, Integrity Mutual Funds, Inc. (formerly known as ND Holdings, Inc.) or Ranson Capital Corporation assumed/waived expenses of $65,217, $137,514, $133,456, $127,129, $133,089, and $53,180, respectively. If the expenses had not been assumed/waived, the annualized ratio of total expenses to average net assets would have been 1.13%, 1.19%, 1.23%, 1.22%, 1.23%, and 1.14%, respectively. (C) Ratio is annualized.
The accompanying notes are an integral part of these financial statements.