-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LD40uIuoeDONQDFSQUhaZfBZ2KbFuuS0ZbM7WC6CL8aH1Zfsy4KCV03fJmNA/lhp jDwMXjk9A4ral+D1xSPV1g== 0000944696-03-000145.txt : 20030926 0000944696-03-000145.hdr.sgml : 20030926 20030926160518 ACCESSION NUMBER: 0000944696-03-000145 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20030731 FILED AS OF DATE: 20030926 EFFECTIVENESS DATE: 20030926 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTEGRITY MANAGED PORTFOLIOS CENTRAL INDEX KEY: 0000866841 IRS NUMBER: 481084551 STATE OF INCORPORATION: KS FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-06153 FILM NUMBER: 03912682 BUSINESS ADDRESS: STREET 1: 1 NORTH MAIN CITY: MINOT STATE: ND ZIP: 58703 BUSINESS PHONE: 7018525292 MAIL ADDRESS: STREET 1: 1 NORTH MAIN CITY: MINOT STATE: ND ZIP: 58703 FORMER COMPANY: FORMER CONFORMED NAME: RANSON MANAGED PORTFOLIOS DATE OF NAME CHANGE: 19920703 N-CSR 1 ransonncsr92603.txt RANSON MANAGED PORTFOLIOS ANNUAL UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-6153 -------- Ranson Managed Portfolios ------------------------- (Exact name of registrant as specified in charter) Address of Registrant : 1 Main Street North ------------------- Minot, ND 58703 --------------- Name and address of agent for service : Brenda Sem ---------- 1 Main Street North ------------------- Minot, ND 58703 --------------- Registrant's telephone number, including area code: (701)852-5292 ------------- Date of fiscal year end: July 31, 2003 ------------- Date of reporting period: July 31, 2003 ------------- ITEM 1. REPORTS TO STOCKHOLDERS. The KANSAS MUNICIPAL FUND - ------------------------- DEAR SHAREHOLDER: Enclosed is the annual report of the operations for The Kansas Municipal Fund (the "Fund") for the year ended July 31, 2003. The Fund's portfolio and related financial statements are presented within for your review. There continues to be a powerful tug-of-war between massive policy reflation and the lingering after-effects of the various shocks that have hit the economy during the past three years, beginning with the burst of the tech bubble, followed by 9/11, corporate scandals, two wars and a spike in energy prices. Yet, the economy suffered its mildest recession on record in 2000/2001. The economy's performance in the face of so many adverse events reflects the effects of powerful monetary and fiscal stimulus as well as the economy's underlying resilience. There are few things one can be sure of regarding the economic and financial outlook. However, we are very confident that short-term rates will stay low for awhile. This underlines the Federal Reserve's determination to ensure a sustained expansion in the economy and to avert the threat of deflation. By keeping interest rates low for an extended period, the Federal Reserve will force-feed the economy and financial system with liquidity. This is certain to create many distortions, bubbles, and excesses. The danger will be when the time comes to begin to re-normalize rates. It is hard to see how the Federal Reserve can do this without causing turmoil in the markets. During the period the Fund utilized defensive positions 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 price as rates fell to forty-year lows in mid-June and stabilized share price as bonds plummeted in one of the worst sell-offs in bond market history through the end of July. The Federal Reserve is trying to encourage investors to buy long-term yields. Yet, they are targeting a stronger economy and increased inflation, two events that will ensure that longer-term rates purchased at current yields will become a losing proposition. Risk management is important in this market environment. An important part of the Fund's strategy includes searching the primary and secondary markets for high quality double exempt issues. Portfolio quality for the year ended July 31, 2003, were represented as follows: AAA 59.6%, AA 18.2%, A 4.8%, BBB 9.4%, and NR 8.0%. High quality current income exempt from federal and Kansas income tax remain the primary objectives of the Fund. Sincerely, The Portfolio Management Team TERMS & DEFINITIONS JULY 31, 2003 (UNAUDITED) - ---------------------------------------------- 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 59.6% AA 18.2% A 4.8% BBB 9.4% NR 8.0% Quality ratings reflect the financial strength of the issuer. They are assigned by independent rating services such as Moody's Investors Services and Standard & Poor's. Non-rated bonds have been determined to be of appropriate quality for the portfolio by Ranson Capital Corporation, the investment adviser. Portfolio Market Sectors - ------------------------ (as a % of Net Assets) [pie chart] H-Housing 23.7% HC-Health Care 20.6% U-Utilities 16.6% O-Other 9.3% G-Government 8.5% W/S-Water/Sewer 7.6% S-School 6.9% T-Transportation 6.8% COMPARATIVE INDEX GRAPH ----------------------- [line graph] Comparison of change in value of a $10,000 investment in The Kansas Municipal Fund and the Lehman Brothers Municipal Bond Index
Kansas Municipal Kansas Municipal 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 2003 $19,127 $18,314 $23,740
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING JULY 31, 2003 -------------------------------- Since Inception 1 year 5 year 10 year (November 15, 1990) - ----------------------------------------------------------------------------------------------------------- Without sales charge (0.75%) 3.16% 3.90% 5.23% With sales charge (4.25%) (4.96%) 2.27% 3.45% 4.87%
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 07-31-2003 NAV $11.19 Average Maturity 18.6 years Number of Issues 73 Total Net Assets $88,850,417 MANAGEMENT OF THE FUND 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, the four series of Ranson Managed Portfolios, and the two series of The Integrity Funds. 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 Retired; Attorney; Director, 8 None 904 NW 27th 1996 Integrity Mutual Funds, Minot, ND 58703 Inc. (May 1988 to August 82 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., and Integrity Small-Cap Fund of Funds, Inc. (since September 1998); Director, First Western Bank & Trust. Orlin W. Backes Trustee Since January Attorney, McGee, Hankla, Backes 10 Director, First 15 2nd Ave., 1996 & Dobrovolny, P.C.; Director, Western Bank & SW - Ste. 305 ND Tax-Free Fund, Inc. Trust Minot, ND 58701 (since April 1995), ND Insured 68 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 Trustee Since January Attorney, Maxson Law Office 10 None Town & Country 1999 (since November 2002); Attorney, Center, 1015 S. McGee, Hankla, Backes & Dobrovolny, Broadway Suite 15 P.C. (April 2000 to November Minot, ND 58701 2002); Attorney, Farhart, Lian 55 and Maxson, P.C. (March 1976 to March 2000); Director, 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), and Integrity Small-Cap Fund of Funds, Inc. (since January 1999). - -------------------------------
The Fund Complex consists of the four funds in the Integrity family of funds, the four series of Ranson Managed Portfolios, and the two series of The Integrity Funds. 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 Attorney; Director and Vice 4 Director, ARM 1 North Main and Secretary 1996 President, Integrity Mutual Securities Minot, ND 58703 Funds, Inc.; Director, Vice Corporation 69 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); Director, ARM Securities Corporation (since May 2000). **Robert E. Walstad Trustee, Chairman, Since January Director (since September 1987), 10 Director, ARM 1 North Main President, and 1996 President (September 1987 to Securities Minot, ND 58703 Treasurer October 2001) (since September Corporation; 58 2002), Integrity Mutual Funds, Director, Magic Inc.; Director, President and Internet Treasurer, ND Money Management, Services, Inc., ND Capital, Inc., ND Inc.; Director, Resources, Inc., ND Tax-Free Capital Fund, Inc., ND Insured Income Financial Fund, Inc. (November 1990 to Services, Inc. August 1999), Montana Tax-Free Fund, Inc., South Dakota Tax- Free Fund, Inc., Integrity Fund of Funds, Inc., and Integrity Small-Cap Fund of Funds, Inc.; Trustee, Chairman, President, and Treasurer, Ranson Managed Portfolios; 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.; Trustee, The Integrity Funds. - ---------------------------- * The Fund Complex consists of the four funds in the Integrity family of funds, the four series of Ranson Managed Portfolios, and the two series of The Integrity Funds. ** 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 Fund's 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 JULY 31, 2003 - -------------------------------------
NAME OF ISSUER Rating Percentages represent the market value of each (Unaudited) Coupon Principal Market investment category to total net assets Moody's/S&P Rate Maturity Amount Value - ----------------------------------------------------------------------------------------------------------------------------- KANSAS MUNICIPAL BONDS (94.6%) *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 10/01/21 300,000 312,996 Coffeyville, KS Pub. Bldg. (Coffeyville Medl. Center) Rev. AMBAC........................ Aaa/AAA 5.000 08/01/22 250,000 246,680 Dodge, KS School District #443 FGIC.......................... Aaa/NR 5.000 09/01/11 1,000,000 1,078,410 Douglas Cty., KS (Cottonwood Inc. Project) Indl. Rev. ....... NR/NR 6.400 07/01/10 375,000 393,881 *Douglas Cty., KS USD #497 (Lawrence) G.O. .................. Aa-3/NR 6.000 09/01/15 1,000,000 1,006,380 Johnson Cty., KS Single Family Mrtge. Rev. .................. Aa/NR 7.100 05/01/12 325,000 334,831 Johnson Cty., KS USD #229 (Blue Valley) G.O. ................ Aa-1/AA 5.000 10/01/18 2,600,000 2,641,080 Kansas City, KS Mrtge. Rev. GNMA............................. Aaa/NR 5.900 11/01/27 915,000 919,502 *Kansas City, KS Util. Syst. Ref. & Impvt. AMBAC............. Aaa/AAA 6.300 09/01/16 580,000 583,045 *Kansas City, KS Util. Syst. Ref. & Impvt. FGIC.............. Aaa/AAA 6.375 09/01/23 1,525,000 1,650,126 *Kansas City, KS Util. Syst. Ref. & Impvt. FGIC.............. Aaa/AAA 6.375 09/01/23 5,830,000 6,282,991 Kansas City/Leavenworth Cty./Lenexa, KS Mrtge. Rev. GNMA..... NR/AAA 7.850 11/01/10 85,000 85,425 *KS Devl. Finance Auth. (Dept. Admin. 7th & Harrison PJ) AMBAC.............................. Aaa/AAA 5.750 12/01/27 2,250,000 2,604,713 KS Devl. Finance Auth. (Dept. of Admin. Capitol Restoration) Lease Rev. FSA.................................. Aaa/AAA 5.375 10/01/20 370,000 383,265 KS Devl. Finance Auth. (Indian Ridge Apts.) ................. NR/NR 6.000 01/01/28 1,060,000 1,041,100 KS Devl. Finance Auth. (Juvenile Justice) Rev. MBIA.......... Aaa/AAA 5.250 05/01/13 570,000 609,284 #KS Devl. Finance Auth. (Martin Creek Place) Rev. FHA........ Aa/NR 6.600 08/01/34 1,900,000 1,919,000 KS Devl. Finance Auth. (Martin Creek Place) Rev. FHA......... Aa/NR 6.500 08/01/24 750,000 756,855 KS Devl. Finance Auth. (Oak Ridge Park Apt.) ................ NR/NR 6.500 02/01/18 1,825,000 1,855,843 KS Devl. Finance Auth. (Oak Ridge Park Apt.) ................ NR/NR 6.625 08/01/29 1,875,000 1,818,206 *KS Devl. Finance Auth. (Park Apts.) Multifamily Hsg. Rev.... NR/AAA 6.000 12/01/21 1,975,000 2,034,053 KS Devl. Finance Auth. (Sec. 8) Rev. Ref. MBIA............... Aaa/AAA 6.400 01/01/24 555,000 556,315 KS Devl. Finance Auth. (Sisters of Charity) Hlth. Rev. ...... Aa/AA 6.125 12/01/20 1,000,000 1,044,420 KS Devl. Finance Auth. (Stormont Vail) Hlth. Care Rev. MBIA......................................... Aaa/AAA 5.800 11/15/21 430,000 456,445 KS Devl. Finance Auth. (Stormont Vail) Hlth. Care Rev. MBIA......................................... Aaa/AAA 5.375 11/15/24 1,500,000 1,516,335 KS Devl. Finance Auth. (Stormont Vail) Hlth. Care Rev. MBIA......................................... Aaa/AAA 5.800 11/15/16 455,000 493,989 KS Devl. Finance Auth. (Water Fund) Rev. .................... Aa-1/AA+ 6.000 11/01/14 500,000 517,745 KS Devl. Finance Auth. (Water Pollution Control) ............ Aa-1/AA+ 5.000 11/01/23 1,000,000 999,980 KS Devl. Finance Auth. (Water Pollution Control) Rev. ....... Aa-1/AA+ 5.250 05/01/11 2,000,000 2,205,260 KS Devl. Finance Auth. (Water Pollution Control) Rev. ....... Aa-1/AA+ 5.250 11/01/22 1,000,000 1,021,560 KS Turnpike Auth. Rev. AMBAC................................. Aaa/AAA 2.000 09/01/03 1,820,000 1,823,822 KS Turnpike Auth. Rev. AMBAC................................. Aaa/AAA 4.000 09/01/15 500,000 480,245 KS Turnpike Auth. Rev. AMBAC................................. Aaa/AAA 4.000 09/01/16 500,000 474,445 KS Turnpike Auth. Rev. AMBAC................................. Aaa/AAA 4.000 09/01/17 1,000,000 941,480 KS Turnpike Auth. Rev. FSA................................... Aaa/AAA 5.000 09/01/24 530,000 528,553 KS Turnpike Auth. Rev. FSA................................... Aaa/AAA 5.000 09/01/25 750,000 747,157 Lawrence, KS (Memorial Hospital) Rev. ....................... Baa-1/NR 6.000 07/01/09 2,000,000 2,059,600 Lawrence, KS (Memorial Hospital) Rev. ....................... Baa-1/NR 6.200 07/01/14 1,200,000 1,167,564 Lawrence, KS (Memorial Hospital) Rev. ....................... Baa-1/NR 6.200 07/01/19 1,475,000 1,418,847 Lawrence, KS (Memorial Hospital) Rev. ASGUA.................. NR/AA 5.750 07/01/24 1,000,000 999,400 Lawrence, KS (Unlimited Tax) Refunding G.O. ................. Aa/NR 5.375 09/01/20 500,000 517,595 Newton, KS (Newton) Hosp. Rev. .............................. NR/BBB- 5.700 11/15/18 1,000,000 971,910 Newton, KS (Newton) Hosp. Rev. ACA........................... NR/A 5.750 11/15/24 500,000 488,055 Olathe, KS (Luth. Gd. Sam.) Ref. AMBAC....................... Aaa/AAA 6.000 05/01/19 900,000 956,745 Olathe, KS (Medl. Ctr.) Hlth. Facs. Rev. .................... Aaa/AAA 5.500 09/01/25 235,000 237,141 Olathe, KS (Medl. Ctr.) Hlth. Facs. Rev. AMBAC............... Aaa/AAA 5.500 09/01/30 500,000 509,545 Olathe, KS Multifamily Hsg. (Bristol Pointe) Rev. Ref. FNMA............................................... NR/AAA 5.700 11/01/27 2,210,000 2,221,116 Pratt, KS Elec. Util. Syst. Rev. Ref. & Impvt. AMBAC......... Aaa/AAA 6.600 11/01/07 1,000,000 1,159,750 Republic Cty., KS Sales Tax FGIC............................. Aaa/NR 5.000 06/01/15 260,000 271,053 Republic Cty., KS Sales Tax FGIC............................. Aaa/NR 5.000 06/01/16 275,000 284,578 Republic Cty., KS Sales Tax FGIC............................. Aaa/NR 5.000 06/01/17 290,000 293,451 Scott Cty, KS USD #466 FGIC.................................. Aaa/AAA 5.250 09/01/17 900,000 932,022 Sedgwick Cty., KS (Catholic Care Center, Inc.) Hlth. Care Rev. ............................................. NR/A 5.800 11/15/26 1,000,000 990,640 Topeka Public Bldg. Comm. (10th & Jackson Prj.) MBIA......... Aaa/AAA 5.625 06/01/26 1,435,000 1,500,823 Topeka Public Bldg. Comm. (10th & Jackson Prj.) MBIA......... Aaa/AAA 5.625 06/01/31 1,200,000 1,248,024 University of Kansas Hosp. Auth. AMBAC....................... Aaa/AAA 5.700 09/01/20 830,000 852,427 University of Kansas Hosp. Auth. AMBAC....................... Aaa/AAA 5.550 09/01/26 1,355,000 1,384,132 Washburn University, KS Rev. AMBAC........................... Aaa/NR 4.300 07/01/23 500,000 465,840 Wichita, KS (Via Christi Health System) Rev. ................ NR/A+ 6.250 11/15/24 1,500,000 1,557,735 Wichita, KS (Via Christi Health System) Rev. ................ NR/A+ 5.625 11/15/31 1,000,000 989,820 Wichita, KS Airport Auth. Facs. Rev. Ref. ASGUA.............. NR/AA 7.000 03/01/05 200,000 202,000 Wichita, KS G.O. (Series 772) ............................... Aa/AA 4.500 09/01/17 815,000 802,775 Wichita, KS G.O. (Series 772) ............................... Aa/AA 4.500 09/01/18 1,375,000 1,352,079 Wichita, KS Multifamily Hsg. (Brentwood Apts.) Rev. ......... NR/BBB 5.850 12/01/25 1,000,000 992,910 Wichita, KS Multifamily Hsg. (Broadmoor Chelsea) Rev. FNMA... NR/AAA 5.650 07/01/16 990,000 1,003,840 #Wichita, KS Multifamily Hsg. (Broadmoor Chelsea) Rev. FNMA................................ NR/AAA 5.700 07/01/22 2,000,000 1,998,320 Wichita, KS Multifamily Hsg. (Innes Station Apt. 5) Rev. ................................. NR/NR 6.250 03/01/28 1,750,000 1,602,265 Wichita, KS Multifamily Hsg. (Northpark II-A) Rev. GNMA...... Aaa/NR 6.125 08/20/28 1,900,000 1,902,679 Wichita, KS Public Building Commission (State Office Prj.) Rev. AMBAC............................... Aaa/AAA 4.000 10/01/14 1,000,000 977,260 Wichita, KS Public Building Commission Rev. ................. A/AA 5.500 08/01/14 215,000 215,000 Wichita, KS Water & Sewer Util. Rev. FGIC.................... Aaa/AAA 5.250 10/01/18 1,465,000 1,533,152 Wichita, KS Water & Sewer Util. Rev. FGIC.................... Aaa/AAA 5.000 10/01/28 500,000 497,740 ------------ TOTAL KANSAS MUNICIPAL BONDS (COST: $83,007,221) ............................................................... $ 84,034,850 ------------ SHORT-TERM SECURITIES (3.9%) Wells Fargo National Tax-Free Money Market.................................................................... $ 3,132,500 Goldman Sachs Financial Square Money Market................................................................... 299,013 ------------ TOTAL SHORT-TERM SECURITIES (COST: $3,431,513) ................................................................. $ 3,431,513 ------------ TOTAL INVESTMENTS IN SECURITIES (COST: $86,438,734) ............................................................ $ 87,466,363 OTHER ASSETS LESS LIABILITIES................................................................................... 1,384,054 ------------ NET ASSETS...................................................................................................... $ 88,850,417 ============ * 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 JULY 31, 2003 - ------------------------------------
Statement of Assets and Liabilities July 31, 2003 - ------------------------------------------------- ASSETS Investment in securities, at value (cost: $86,438,734) ........... $ 87,466,363 Accrued interest receivable....................................... 1,318,003 Accrued dividends receivable...................................... 2,859 Cash.............................................................. 426,772 Prepaid expenses.................................................. 14,259 Receivable for fund shares sold................................... 1,256 -------------- Total Assets................................................... $ 89,229,512 -------------- LIABILITIES Dividends payable................................................. $ 301,414 Accrued expenses.................................................. 75,581 Payable for fund shares redeemed.................................. 2,100 -------------- Total Liabilities.............................................. $ 379,095 -------------- NET ASSETS............................................................. $ 88,850,417 ============== NET ASSETS ARE REPRESENTED BY: Paid-in capital................................................... $ 96,229,849 Accumulated undistributed net realized gain (loss) on investments............................................. (8,407,061) Unrealized appreciation on investments............................ 1,027,629 -------------- Total amount representing net assets applicable to 7,941,182 outstanding shares of no par common stock (unlimited shares authorized) ......................... $ 88,850,417 -------------- Net asset value per share.............................................. $ 11.19 ==============
The accompanying notes are an integral part of these financial statements.
STATEMENT OF OPERATIONS For the year ended July 31, 2002 - -------------------------------- NVESTMENT INCOME Interest.......................................................... $ 4,980,145 Dividends......................................................... 31,920 -------------- Total Investment Income ...................................... $ 5,012,065 -------------- EXPENSES Investment advisory fees.......................................... $ 469,450 Service fees...................................................... 234,725 Transfer agent fees............................................... 100,141 Accounting service fees........................................... 66,050 Custodian fees.................................................... 16,665 Transfer agent out-of-pockets..................................... 15,087 Professional fees................................................. 9,100 Trustees fees..................................................... 7,545 Insurance expense................................................. 13,520 Reports to shareholders........................................... 7,150 Registration and filing fees...................................... 5,000 -------------- Total Expenses................................................ $ 944,433 Less expenses waived or absorbed by the Fund's manager............................................ (52,479) -------------- Total Net Expenses............................................ $ 891,954 -------------- NET INVESTMENT INCOME.................................................. $ 4,120,111 -------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES Net realized gain (loss) from: Investment transactions........................................... $ (207,385) Futures transactions.............................................. (1,761,576) Net change in unrealized appreciation (depreciation) of: Investments....................................................... (2,837,348) -------------- Net Realized And Unrealized Gain (Loss) On Investments And Futures...................................... $ (4,806,309) -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.............................................. $ (686,198) ==============
The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENTS JULY 31, 2003 - ----------------------------------
STATEMENT OF CHANGES IN NET ASSETS For the year ended July 31, 2003 and the year ended July 31, 2002 - ----------------------------------------------------------------- For The For The Year Ended Year Ended July 31, 2003 July 31, 2002 --------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income.................................................... $ 4,120,111 $ 4,837,040 Net realized gain (loss) on investment and futures transactions.......... (1,968,961) (1,446,244) Net change in unrealized appreciation (depreciation) on investments and futures ................................................. (2,837,348) 237,016 --------------------------------------- Net Increase (Decrease) in Net Assets Resulting From Operations....... $ (686,198) $ 3,627,812 --------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income ($.51 and $.55 per share, respectively) ........................................................... $ (4,119,390) $ (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.................................... $ (4,119,390) $ (4,836,558) --------------------------------------- CAPITAL SHARE TRANSACTIONS Proceeds from sale of shares............................................. $ 5,132,298 $ 6,265,327 Proceeds from reinvested dividends....................................... 2,616,300 3,048,915 Cost of shares redeemed.................................................. (13,084,279) (12,919,707) --------------------------------------- Net Increase (Decrease) in Net Assets Resulting From Capital Share Transactions..................................... $ (5,335,681) $ (3,605,465) --------------------------------------- TOTAL INCREASE (DECREASE) IN NET ASSETS....................................... $ (10,141,269) $ (4,814,211) NET ASSETS, BEGINNING OF PERIOD............................................... 98,991,686 103,805,897 --------------------------------------- NET ASSETS, END OF PERIOD..................................................... $ 88,850,417 $ 98,991,686 ========================================
The accompanying notes are an integral part of these financial statements. NOTES TO FINANCIAL STATEMENTS JULY 31, 2003 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 year ended July 31, 2003, 100% were exempt from federal income taxes. The Fund has unexpired capital loss carryforwards for tax purposes as of July 31, 2003 totaling $8,407,952, 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 ---- ------------------------ 2004 0 2005 2,222,213 2006 1,671,432 2007 0 2008 531,392 2009 568,023 2010 1,444,860 2011 1,970,032 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. 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 July 31, 2003, there were unlimited shares of no par authorized; 7,941,182 and 8,403,584 shares were outstanding at July 31, 2003 and July 31, 2002, respectively. Transactions in capital shares were as follows:
Shares ------ For The For The Year Ended Year Ended July 31, 2003 July 31, 2002 ---------------------------------- Shares sold...................................... 443,873 523,680 Shares issued on reinvestment of dividends....... 226,702 254,950 Shares redeemed.................................. (1,132,977) (1,085,610) ---------------------------------- Net increase (decrease) ......................... (462,402) (306,980) ==================================
NOTE 4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES Ranson Capital Corporation, the Fund's investment adviser and underwriter; Integrity Fund Services, 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., 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 $469,450 of investment advisory fees for the year ended July 31, 2003. The Fund has a payable to Ranson Capital Corporation of $37,640 at July 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 $182,246 of service fee expenses after partial waiver for the year ended July 31, 2003. The Fund has a payable to Ranson of $14,017 at July 31, 2003, for service fees. Integrity Fund Services, 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 $100,141 of transfer agency fees and expenses for the year ended July 31, 2003. The Fund has a payable to Integrity Fund Services, Inc. of $8,186 at July 31, 2003, for transfer agency fees. Integrity Fund Services, 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 $66,050 of accounting service fees for the year ended July 31, 2003. The Fund has a payable to Integrity Fund Services, Inc. of $5,428 at July 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 $21,454,262 and $30,264,371, respectively, for the year ended July 31, 2003. NOTE 6. INVESTMENT IN SECURITIES At July 31, 2003, the aggregate cost of securities for federal income tax purposes was substantially the same for financial reporting purposes at $86,438,734. The net unrealized appreciation of investments based on the cost was $1,027,629, which is comprised of $2,058,622 aggregate gross unrealized appreciation and $1,030,993 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 Year Ended Year Ended Year Ended Year Ended Year Ended July 31, 2003 July 31, 2002 July 31, 2001 July 31, 2000 July 30, 1999 ---------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD....... $ 11.78 $ 11.92 $ 11.58 $ 11.98 $ 12.15 ---------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income.................. $ .51 $ .55 $ .58 $ .59 $ .58 Net realized and unrealized gain (loss) on investment and futures transactions........................... (.59) (.14) .34 (.40) (.17) ---------------------------------------------------------------------------------- Total Income (Loss) From Investment Operations.............. $ (.08) $ .41 $ .92 $ .19 $ .41 ---------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income.. $ (.51) $ (.55) $ (.58) $ (.59) $ (.58) Distributions from net capital gains................................. .00 .00 .00 .00 .00 ---------------------------------------------------------------------------------- Total Distributions................ $ (.51) $ (.55) $ (.58) $ (.59) $ (.58) ---------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD............. $ 11.19 $ 11.78 $ 11.92 $ 11.58 $ 11.98 ================================================================================== TOTAL RETURN............................... (0.75%)(A) 3.48%(A) 8.13%(A) 1.69%(A) 3.44%(A) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ....................... $ 88,850 $ 98,992 $ 103,806 $ 103,555 $ 115,882 Ratio of net expenses (after expense assumption) to average net assets.................... 0.95%(B) 0.95%(B) 0.95%(B) 0.95%(B) 0.95%(B) Ratio of net investment income to average net assets.......... 4.39% 4.61% 4.94% 5.07% 4.80% Portfolio turnover rate............... 23.78% 5.74% 10.28% 8.21% 13.54% (A) Excludes maximum sales charge of 4.25%. (B) During the periods indicated above, Integrity Mutual Funds, Inc. or Ranson Capital Corporation assumed/waived expenses of $52,479, $22,656, $37,939, $38,581, and $23,429, respectively. If the expenses had not been assumed/ waived, the annualized ratios of total expenses to average net assets would have been 1.01%, 0.97%, 0.99%, 0.99%, and 0.97%, respectively.
The accompanying notes are an integral part of these financial statements. TAX INFORMATION --------------- FOR THE YEAR ENDED JULY 31, 2003 (UNAUDITED) We are required to advise you within 60 days of the Fund's fiscal year-end regarding the federal tax status of distributions received by shareholders during such fiscal year. The distributions made during the fiscal year by the Fund were earned from the following sources: DIVIDENDS AND DISTRIBUTIONS PER SHARE - -------------------------------------
To Shareholders From Net From Net Realized From Net Realized of Record Payment Date Investment Income Short-Term Gains Long-Term Gains - ----------------------------------------------------------------------------------------------------------------------- August 29, 2002 August 30, 2002 $ .046004 - - September 27, 2002 September 30, 2002 .044531 - - October 30, 2002 October 31, 2002 .042750 - - November 28, 2002 November 29, 2002 .040982 - - December 30, 2002 December 31, 2002 .043998 - - January 30, 2003 January 31, 2003 .043085 - - February 27, 2003 February 28, 2003 .042282 - - March 28, 2003 March 31, 2003 .042399 - - April 29, 2003 April 30, 2003 .041619 - - May 29, 2003 May 30, 2003 .040954 - - June 27, 2003 June 30, 2003 .038776 - - July 30, 2003 July 31, 2003 .037862 - -
SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISORS. INDEPENDENT AUDITOR'S REPORT ---------------------------- To the Shareholders and Board of Trustees of The Kansas Municipal Fund We have audited the accompanying statement of assets and liabilities of The Kansas Municipal Fund (one of the portfolios constituting the Ranson Managed Portfolios), including the schedule of investments as of July 31, 2003, the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of July 31, 2003, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Kansas Municipal Fund of the Ranson Managed Portfolios as of July 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. BRADY, MARTZ & ASSOCIATES, P.C. Minot, North Dakota USA September 5, 2003 THE KANSAS INSURED INTERMEDIATE FUND - ------------------------------------ Dear Shareholder: - ----------------- Enclosed is the annual report of the operations for The Kansas Insured Intermediate Fund (the "Fund") for the year ended July 31, 2003. The Fund's portfolio and related financial statements are presented within for your review. There continues to be a powerful tug-of-war between massive policy reflation and the lingering after-effects of the various shocks that have hit the economy during the past three years, beginning with the burst of the tech bubble, followed by 9/11, corporate scandals, two wars, and a spike in energy prices. Yet, the economy suffered its mildest recession on record in 2000/ 2001. The economy's performance in the face of so many adverse events reflects the effects of powerful monetary and fiscal stimulus as well as the economy's underlying resilience. There are few things one can be sure of regarding the economic and financial outlook. However, we are very confident that short-term rates will stay low for awhile. This underlines the Federal Reserve's determination to ensure a sustained expansion in the economy and to avert the threat of deflation. By keeping interest rates low for an extended period, the Federal Reserve will force-feed the economy and financial system with liquidity. This is certain to create many distortions, bubbles, and excesses. The danger will be when the time comes to begin to re-normalize rates. It is hard to see how the Federal Reserve can do this without causing turmoil in the markets. During the period the Fund utilized defensive positions 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 price as rates fell to forty-year lows in mid-June and stabilized share price as bonds plummeted in one of the worst sell-offs in bond market history through the end of July. The Federal Reserve is trying to encourage investors to buy long-term yields. Yet, they are targeting a stronger economy and increased inflation, two events that will ensure that longer-term rates purchased at current yields will become a losing proposition. Risk management is important in this market environment. An important part of the Fund's strategy includes searching the primary and secondary markets for high quality double exempt issues. Diversification remains an important strategy of the Fund as reflected in the 40 issues in the portfolio. Income exempt from Federal and Kansas income taxes with preservation of capital remain the primary objectives of the Fund. Sincerely, The Portfolio Management Team TERMS & DEFINITIONS JULY 31, 2003 (UNAUDITED) - ---------------------------------------------- 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 23.6% H-Housing 19.7% S-School 19.1% O-Other 9.9% W/S-Water/Sewer 9.8% G-Government 8.5% T-Transportation 5.1% U-Utilities 4.3% 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 2003 $15,880 $15,443 $18,712
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING JULY 31, 2003 -------------------------------- Since Inception 1 year 5 year 10 year (November 23, 1992) - ----------------------------------------------------------------------------------------------------------- Without sales charge 1.26% 3.58% 3.90% 4.42% With sales charge (2.75%) (1.52)% 3.00% 3.61% 4.15%
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 07-31-2003 NAV $11.60 Average Maturity 10.0 years Number of Issues 40 Total Net Assets $18,476,578 MANAGEMENT OF THE FUND 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, the four series of Ranson Managed Portfolios, and the two series of The Integrity Funds. 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 Retired; Attorney; Director, 8 None 904 NW 27th 1996 Integrity Mutual Funds, Inc. Minot, ND 58703 (formerly known as ND Holdings, 82 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., and Integrity Small-Cap Fund of Funds, Inc. (since September 1998); Director, First Western Bank & Trust. Orlin W. Backes Trustee Since January Attorney, McGee, Hankla, Backes 10 Director, First 15 2nd Ave., 1996 & Dobrovolny, P.C.; Director, Western Bank & SW - Ste. 305 ND Tax-Free Fund, Inc. Trust Minot, ND 58701 (since April 1995), ND Insured 68 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 Trustee Since January Attorney, Maxson Law Office 10 None Town & Country 1999 (since November 2002); Attorney, Center, 1015 S. McGee, Hankla, Backes & Dobrovolny, Broadway Suite 15 P.C. (April 2000 to November Minot, ND 58701 2002); Attorney, Farhart, Lian 55 and Maxson, P.C. (March 1976 to March 2000); Director, 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), and Integrity Small-Cap Fund of Funds, Inc. (since January 1999). - -------------------------------
The Fund Complex consists of the four funds in the Integrity family of funds, the four series of Ranson Managed Portfolios, and the two series of The Integrity Funds. 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 Attorney; Director and Vice 4 Director, ARM 1 North Main and Secretary 1996 President, Integrity Mutual Securities Minot, ND 58703 Funds, Inc.(formerly known as Corporation 69 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); Director, ARM Securities Corporation (since May 2000). **Robert E. Walstad Trustee, Chairman, Since January Director (since September 1987), 10 Director, ARM 1 North Main President, and 1996 President (September 1987 to Securities Minot, ND 58703 Treasurer October 2001) (since September Corporation; 58 2002), Integrity Mutual Funds, Director, Magic Inc.; Director, President and Internet Treasurer, Integrity Money Services, Management, Inc., ND Capital, Inc., Inc.; Director, ND Resources, Inc., ND Tax-Free Capital Fund, Inc., ND Insured Income Financial Fund, Inc. (November 1990 to Services, Inc. August 1999), Montana Tax-Free Fund, Inc., South Dakota Tax- Free Fund, Inc., Integrity Fund of Funds, Inc., and Integrity Small-Cap Fund of Funds, Inc.; Trustee, Chairman, President, and Treasurer, Ranson Managed Portfolios; 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.; Trustee, The Integrity Funds. - ---------------------------- * The Fund Complex consists of the four funds in the Integrity family of funds, the four series of Ranson Managed Portfolios, and the two series of The Integrity Funds. ** 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 Fund's 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 JULY 31, 2003 - -------------------------------------
NAME OF ISSUER Rating Percentages represent the market value of each (Unaudited) Coupon Principal Market investment category to total net assets Moody's/S&P Rate Maturity Amount Value - ----------------------------------------------------------------------------------------------------------------------------- KANSAS MUNICIPAL BONDS (92.9%) Butler Cty., KS (Circle) USD #375 FSA........................ Aaa/NR 5.000% 09/01/13 $ 500,000 $ 516,330 #Chisholm Creek Util. Auth. (Bel Aire & Park City, KS Pj.) MBIA...................................... Aaa/NR 5.250 09/01/16 770,000 798,744 Derby, KS Water System Rev AMBAC............................ Aaa/NR 4.250 10/01/14 135,000 133,666 Derby, KS Water System Rev AMBAC............................ Aaa/NR 4.400 10/01/15 185,000 182,571 Derby, KS Water System Rev AMBAC............................ Aaa/NR 4.500 10/01/16 195,000 192,586 Derby, KS Water System Rev AMBAC............................ Aaa/NR 4.750 10/01/17 155,000 155,409 Dodge, KS USD #443 Unltd. General Obligation FSA............. Aaa/AAA 5.750 09/01/13 100,000 113,968 Johnson Cty, KS Community College Student Commons & Parking AMBAC...................................... Aaa/AAA 5.000 11/15/19 235,000 238,285 Johnson Cty., KS USD #232 (Desoto) G.O. MBIA................. Aaa/AAA 5.200 09/01/10 480,000 522,562 Kansas City, KS (St. Margaret Hlth. Ctr.) AMBAC.............. Aaa/AAA 5.700 08/01/03 250,000 255,000 Kingman Cty., KS USD #331 FGIC............................... Aaa/AAA 5.500 10/01/12 250,000 282,427 KS Devl. Finance Auth (Wichita Univ.) AMBAC.................. Aaa/AAA 5.900 04/01/15 305,000 342,976 KS Devl. Finance Auth. (Dept. Admin. 7th & Harrison PJ) AMBAC..................................... Aaa/AAA 5.500 12/01/13 375,000 424,815 KS Devl. Finance Auth. (Hays Medl. Ctr.) Rev. MBIA........... Aaa/NR 5.200 11/15/08 375,000 410,831 KS Devl. Finance Auth. (Hays Medl. Ctr.) Rev. MBIA........... Aaa/NR 5.300 11/15/09 375,000 410,115 KS Devl. Finance Auth. (Park Apts.) Multifamily Hsg.Rev. FNMA.................................... NR/AAA 5.700 12/01/09 325,000 339,076 #KS Devl. Finance Auth. (Stormont Vail) Hlth. Care Rev. MBIA......................................... Aaa/AAA 5.700 11/15/08 450,000 493,915 KS Devl. Finance Auth. (Stormont Vail) Hlth. Care Rev. MBIA......................................... Aaa/AAA 5.600 11/15/07 100,000 110,578 *KS Devl. Finance Auth. (Stormont Vail) Hlth. Care Rev. MBIA......................................... Aaa/AAA 5.750 11/15/12 845,000 945,927 KS Devl. Finance Auth. Pooled Ref. Lease Rev. MBIA........... Aaa/AAA 5.500 10/01/05 250,000 261,810 KS State Turnpike Auth. Rev. FGIC............................ Aaa/AAA 5.450 09/01/10 200,000 210,854 #KS Turnpike Auth. Refunding Rev. AMBAC..................... Aaa/AAA 4.000 09/01/14 750,000 735,037 Larned, KS (Cath. Hlth. Corp.) Hlth. Facs. Rev. MBIA......... Aaa/AAA 5.400 11/15/04 155,000 164,055 *Mission, KS Multifamily Hsg. (Lamar Place) Rev. FNMA........ NR/AAA 5.000 10/01/14 605,000 609,840 Mission, KS Multifamily Hsg. (Lamar Place) Rev. FNMA......... NR/AAA 5.180 10/01/23 445,000 438,757 Olathe, KS (Medl. Ctr.) Hlth. Facs. Rev. AMBAC............... Aaa/AAA 5.125 09/01/12 500,000 496,885 Olathe, KS Multifamily Hsg. (Bristol Pointe) Rev. Ref. FNMA............................................... NR/AAA 5.250 11/01/12 485,000 497,096 Saline Cty., KS USD #305 (Salina) G.O. Ref. FSA.............. Aaa/NR 5.500 09/01/15 250,000 277,012 *Sedgwick Cty., KS USD #259 FSA............................. Aaa/AAA 4.375 10/01/15 600,000 599,628 Shawnee Cty., KS USD #437 (Auburn-Washburn) G.O. Ref. FSA................................................ Aaa/NR 5.000 09/01/14 485,000 516,370 Shawnee, KS Multifamily Hsg. (Thomasbrooks Apts.) Rev. FNMA COL. ......................... NR/AAA 5.250 10/01/14 500,000 502,260 *University of Kansas Hosp. Auth. AMBAC...................... Aaa/AAA 5.500 09/01/15 1,000,000 1,081,040 Washburn Univ. (Living Learning Ctr) Bld. Rev. AMBAC......... Aaa/AAA 5.350 07/01/11 105,000 114,547 Wellington, KS Utility Rev. AMBAC............................ Aaa/AAA 5.000 05/01/12 250,000 265,950 #Wichita, KS G.O. (Series 772) FGIC.......................... Aaa/AAA 4.100 09/01/14 1,155,000 1,141,775 #Wichita, KS Multifamily Hsg. (Broadmoor Chelsea) Rev. FNMA................................ NR/AAA 5.375 07/01/10 625,000 641,488 *Wichita, KS Multifamily Hsg. (Cimarron Apartments) FNMA............................................. Aa/AAA 5.250 10/01/12 590,000 603,889 Wichita, KS Public Building Commission (State Office Prj.) Rev. AMBAC............................... Aaa/AAA 4.000 10/01/14 250,000 244,315 Wichita, KS Water & Sewer Util. Rev. FGIC.................... Aaa/AAA 5.250 10/01/14 325,000 355,072 Wyandotte Cty, Kansas City, KS Gov't Util. Syst. Rev. ....... Aaa/AAA 5.125 09/01/13 500,000 529,610 ------------ TOTAL KANSAS MUNICIPAL BONDS (COST: $16,683,726) ................................................................$17,157,071 ------------ SHORT-TERM SECURITIES (6.8%) Wells Fargo National Tax-Free Money Market.......................................................................$ 630,000 Goldman Sachs Financial Square Money Market..................................................................... 630,000 ------------ TOTAL SHORT-TERM SECURITIES (COST: $1,260,000) ..................................................................$ 1,260,000 ------------ TOTAL INVESTMENTS IN SECURITIES (COST: $17,943,726) .............................................................$18,417,071 OTHER ASSETS LESS LIABILITIES.................................................................................... 59,507 ------------ NET ASSETS.......................................................................................................$18,476,578 ============ * 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 JULY 31, 2003 - ------------------------------------
Statement of Assets and Liabilities July 31, 2003 - ------------------------------------------------- ASSETS Investment in securities, at value (cost: $17,943,726) .......... $ 18,417,071 Accrued interest receivable...................................... 264,857 Accrued dividends receivable..................................... 475 Prepaid expenses................................................. 3,618 --------------- Total Assets.................................................. $ 18,686,021 --------------- LIABILITIES Dividends payable................................................ $ 51,718 Accrued expenses................................................. 11,280 Disbursements in excess of demand deposit cash................... 146,445 --------------- Total Liabilities............................................. $ 209,443 --------------- NET ASSETS............................................................ $ 18,476,578 =============== NET ASSETS ARE REPRESENTED BY: Paid-in capital.................................................. $ 19,084,700 Accumulated undistributed net realized gain (loss) on investments............................................. (1,081,467) Unrealized appreciation on investments........................... 473,345 --------------- Total amount representing net assets applicable to 1,592,377 outstanding shares of no par common stock (unlimited shares authorized) ........................ $ 18,476,578 =============== Net asset value per share............................................. $ 11.60 ===============
The accompanying notes are an integral part of these financial statements.
STATEMENT OF OPERATIONS For the year ended July 31, 2002 - -------------------------------- INVESTMENT INCOME Interest......................................................... $ 857,061 Dividends........................................................ 7,973 --------------- Total Investment Income...................................... $ 865,034 --------------- EXPENSES Investment advisory fees......................................... $ 93,194 Transfer agent fees.............................................. 26,971 Accounting service fees.......................................... 33,107 Custodian fees................................................... 5,533 Transfer agent out-of-pockets.................................... 2,036 Professional fees................................................ 6,601 Trustees fees.................................................... 2,710 Reports to shareholders.......................................... 2,182 Registration and filing fees..................................... 1,714 Insurance expense................................................ 2,024 --------------- Total Expenses................................................ $ 176,072 Less expenses waived or absorbed by the Fund's manager............................................ (36,281) --------------- Total Net Expenses............................................ $ 139,791 --------------- NET INVESTMENT INCOME................................................. $ 725,243 --------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES Net realized gain (loss) from: Investment transactions.......................................... $ 27,189 Futures transactions............................................. (236,653) Net change in unrealized appreciation (depreciation) of: Investments...................................................... (283,738) --------------- Net Realized And Unrealized Gain (Loss) On Investments And Futures..................................... $ (493,202) --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS............................................. $ 232,041 ===============
The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENTS JULY 31, 2003 - ----------------------------------
STATEMENT OF CHANGES IN NET ASSETS For the year ended July 31, 2003 and the year ended July 31, 2002 - ----------------------------------------------------------------- For The For The Year Ended Year Ended July 31, 2003 July 31, 2002 --------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income.................................................... $ 725,243 $ 819,059 Net realized gain (loss) on investment and futures transactions.......... (209,464) (179,745) Net change in unrealized appreciation (depreciation) on investments and futures............................................... (283,738) 146,684 --------------------------------------- Net Increase (Decrease) in Net Assets Resulting From Operations....... $ 232,041 $ 785,998 --------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income ($.46 and $.50 per share, respectively) .................................. $ (725,085) $ (818,741) Distributions from net realized gain on investment and futures transactions ($.00 and $.00 per share, respectively) .................... 0 0 -------------------------------------- Total Dividends and Distributions.................................... $ (725,085) $ (818,741) -------------------------------------- CAPITAL SHARE TRANSACTIONS Proceeds from sale of shares............................................. $ 1,984,432 $ 2,399,991 Proceeds from reinvested dividends....................................... 401,562 437,354 Cost of shares redeemed.................................................. (2,049,089) (2,899,908) -------------------------------------- Net Increase (Decrease) in Net Assets Resulting From Capital Share Transactions...................................... $ 336,905 $ (62,563) -------------------------------------- TOTAL INCREASE (DECREASE) IN NET ASSETS....................................... $ (156,139) $ (95,306) NET ASSETS, BEGINNING OF PERIOD............................................... 18,632,717 18,728,023 -------------------------------------- NET ASSETS, END OF PERIOD..................................................... $ 18,476,578 $18,632,717 ======================================
The accompanying notes are an integral part of these financial statements. NOTES TO FINANCIAL STATEMENTS JULY 31, 2003 - --------------------------------------------- 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 year ended July 31, 2003, 100% were exempt from federal income taxes. The Fund has unexpired capital loss carryforwards for tax purposes as of July 31, 2003 totaling $1,081,467, 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 ---- ------------------------ 2004 0 2005 411,602 2006 125,539 2007 27,107 2008 49,698 2009 78,788 2010 178,976 2011 209,757 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. 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 July 31, 2003, there were unlimited shares of no par authorized; 1,592,377 and 1,564,311 shares were outstanding at July 31, 2003 and July 31, 2002, respectively. Transactions in capital shares were as follows:
Shares ------ For The For The Year Ended Year Ended July 31, 2003 July 31, 2002 ---------------------------------- Shares sold...................................... 168,397 200,144 Shares issued on reinvestment of dividends....... 34,099 36,499 Shares redeemed.................................. (174,430) (242,482) ---------------------------------- Net increase (decrease) ......................... 28,066 (5,839) ==================================
NOTE 4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES Ranson Capital Corporation, the Fund's investment adviser and underwriter; Integrity Fund Services, 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., 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 $56,913 of investment advisory fees after partial waiver for the year ended July 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 $4,376 at July 31, 2003 for investment advisory fees. Integrity Fund Services, 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 $26,971 of transfer agency fees and expenses for the year ended July 31, 2003. The Fund has a payable to Integrity Fund Services, Inc. of $2,266 at July 31, 2003 for transfer agency fees. Integrity Fund Services, 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 $33,107 of accounting service fees for the year ended July 31, 2003. The Fund has a payable to Integrity Fund Services, Inc. of $2,780 at July 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 $4,954,824 and $4,693,978, respectively, for the year ended July 31, 2003. NOTE 6. INVESTMENT IN SECURITIES At July 31, 2003, the aggregate cost of securities for federal income tax purposes was substantially the same for financial reporting purposes at $17,943,726. The net unrealized appreciation of investments based on the cost was $473,345, which is comprised of $623,444 aggregate gross unrealized appreciation and $150,099 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 Year Ended Year Ended Year Ended Year Ended Year Ended July 31, 2003 July 31, 2002 July 31, 2001 July 31, 2000 July 30, 1999 ---------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD....... $ 11.91 $ 11.93 $ 11.69 $ 11.98 $ 12.07 ---------------------------------------------------------------------------------- Income from Investment Operations: Net investment income.................. $ .46 $ .50 $ .53 $ .54 $ .53 Net realized and unrealized gain (loss) on investment and futures transactions........................... (.31) (.02) .24 (.29) (.09) ---------------------------------------------------------------------------------- Total Income (Loss) From Investment Operations.............. $ .15 $ .48 $ .77 $ .25 $ .44 ---------------------------------------------------------------------------------- Less Distributions: Dividends from net investment income................................ $ (.46) $ (.50) $ (.53) $ (.54) $ (.53) Distributions from net capital gains.. .00 .00 .00 .00 .00 ---------------------------------------------------------------------------------- Total Distributions................ $ (.46) $ (.50) $ (.53) $ (.54) $ (.53) ---------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD............. $ 11.60 $ 11.91 $ 11.93 $ 11.69 $ 11.98 ================================================================================== Total Return............................... 1.26%(A) 4.12%(A) 6.73%(A) 2.15%(A) 3.70%(A) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ........................... $ 18,477 $ 18,633 $ 18,728 $ 19,028 $ 21,333 Ratio of net expenses (after expense assumption) to average net assets............................ 0.75%(B) 0.75%(B) 0.75%(B) 0.75%(B) 0.75%(B) Ratio of net investment income to average net assets.................... 3.89% 4.20% 4.49% 4.58% 4.39% Portfolio turnover rate............... 26.23% 9.04% 18.49% 11.07% 16.34% (A) Excludes maximum sales charge of 2.75%. (B) During the periods indicated above, Integrity Mutual Funds, Inc. or Ranson Capital Corporation assumed/waived expenses of $36,281, $30,501, $31,627, $30,414, and $29,229, respectively. If the expenses had not been assumed/waived, the annualized ratios of total expenses to average net assets would have been 0.94%, 0.91%, 0.92%, 0.90%, and 0.89%, respectively.
The accompanying notes are an integral part of these financial statements. TAX INFORMATION --------------- FOR THE YEAR ENDED JULY 31, 2003 (UNAUDITED) We are required to advise you within 60 days of the Fund's fiscal year-end regarding the federal tax status of distributions received by shareholders during such fiscal year. The distributions made during the fiscal year by the Fund were earned from the following sources: DIVIDENDS AND DISTRIBUTIONS PER SHARE - -------------------------------------
To Shareholders From Net From Net Realized From Net Realized of Record Payment Date Investment Income Short-Term Gains Long-Term Gains - ----------------------------------------------------------------------------------------------------------------------- August 29, 2002 August 30, 2002 $ .040160 - - September 27, 2002 September 30, 2002 .040924 - - October 30, 2002 October 31, 2002 .040488 - - November 28, 2002 November 29, 2002 .038116 - - December 30, 2002 December 31, 2002 .040997 - - January 30, 2003 January 31, 2003 .039433 - - February 27, 2003 February 28, 2003 .035677 - - March 28, 2003 March 31, 2003 .036958 - - April 29, 2003 April 30, 2003 .038436 - - May 29, 2003 May 30, 2003 .037277 - - June 27, 2003 June 30, 2003 .037095 - - July 30, 2003 July 31, 2003 .032522 - -
SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISORS. INDEPENDENT AUDITOR'S REPORT ---------------------------- To the Shareholders and Board of Trustees of The Kansas Insured Intermediate Fund We have audited the accompanying statement of assets and liabilities of The Kansas Insured Intermediate Fund (one of the portfolios constituting the Ranson Managed Portfolios), including the schedule of investments as of July 31, 2003, the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of July 31, 2003, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Kansas Insured Intermediate Fund of the Ranson Managed Portfolios as of July 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. BRADY, MARTZ & ASSOCIATES, P.C. Minot, North Dakota USA September 5, 2003 THE NEBRASKA MUNICIPAL FUND - --------------------------- DEAR SHAREHOLDER: Enclosed is the annual report of the operations for The Nebraska Municipal Fund (the "Fund") for the year ended July 31, 2003. The Fund's portfolio and related financial statements are presented within for your review. There continues to be a powerful tug-of-war between massive policy reflation and the lingering after-effects of the various shocks that have hit the economy during the past three years, beginning with the burst of the tech bubble, followed by 9/11, corporate scandals, two wars and a spike in energy prices. Yet, the economy suffered its mildest recession on record in 2000/2001. The economy's performance in the face of so many adverse events reflects the effects of powerful monetary and fiscal stimulus as well as the economy's underlying resilience. There are few things one can be sure of regarding the economic and financial outlook. However, we are very confident that short-term rates will stay low for awhile. This underlines the Federal Reserve's determination to ensure a sustained expansion in the economy and to avert the threat of deflation. By keeping interest rates low for an extended period, the Federal Reserve will force-feed the economy and financial system with liquidity. This is certain to create many distortions, bubbles, and excesses. The danger will be when the time comes to begin to re-normalize rates. It is hard to see how the Federal Reserve can do this without causing turmoil in the markets. During the period the Fund utilized defensive positions 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 price as rates fell to forty-year lows in mid-June and stabilized share price as bonds plummeted in one of the worst sell-offs in bond market history through the end of July. The Federal Reserve is trying to encourage investors to buy long-term yields. Yet, they are targeting a stronger economy and increased inflation, two events that will ensure that longer-term rates purchased at current yields will become a losing proposition. Risk management is important in this market environment. An important part of the Fund's strategy includes searching the primary and secondary markets for high quality double exempt issues. Portfolio quality for the year ended July 31, 2003, were represented as follows: AAA 63.1%, AA 22.0%, A 5.4%, BBB 1.9%, and NR 7.6%. Income exempt from Federal and Nebraska income taxes with preservation of capital remain the primary objectives of the Fund. Sincerely, The Portfolio Management Team TERMS & DEFINITIONS JULY 31, 2003 (UNAUDITED) - ----------------------------------------------- APPRECIATION Increase in value of an asset. AVERAGE ANNUAL TOTAL RETURN A standardized measurement of the return (yield and appreciation) earned by the fund on an annual basis, assuming all distributions are reinvested. COUPON RATE OR FACE RATE The rate of interest annually payable based on the face amount of the bond; expressed as a percentage. DEPRECIATION Decrease in value of an asset. LEHMAN BROTHERS MUNICIPAL BOND INDEX An unmanaged list of long-term, fixed-rate, investment-grade, tax-exempt bonds representative of the municipal bond market. The index does not take into account brokerage commissions or other costs, may include bonds different from those in the fund, and may pose different risks than the fund. MARKET VALUE Actual (or estimated) price at which a bond trades in the market place. MATURITY A measure of the term or life of a bond in years. When a bond "matures", the issuer repays the principal. NET ASSET VALUE (NAV) The value of all your fund's assets, minus any liabilities, divided by the number of outstanding shares, not including any initial sales charge. QUALITY RATINGS A designation assigned by independent rating companies to give a relative indication of a bond's credit worthiness. "AAA", "AA", "A" and "BBB" indicate investment grade securities. Ratings can range from a high of "AAA" to a low of "D". TOTAL RETURN Measures both the net investment income and any realized and unrealized appreciation or depreciation of the underlying investments in the fund's portfolio for the period, assuming the reinvestment of all dividends. It represents the aggregate percentage or dollar value change over the period. PERFORMANCE & COMPOSITION - ------------------------- Portfolio Quality Ratings - ------------------------- (based on Total Long-Term Investments) [pie chart] AAA 63.1% AA 22.0% A 5.4% BBB 1.9% NR 7.6% 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 35.6% HC-Health Care 18.2% H-Housing 14.7% O-Other 11.2% I-Industrial 7.4% U-Utilities 5.8% W/S-Water/Sewer 4.9% 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 2003 $14,929 $14,295 $17,364
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING JULY 31, 2003 -------------------------------- Since Inception 1 year 5 year 10 year (November 17, 1993) - ----------------------------------------------------------------------------------------------------------- Without sales charge (0.81)% 3.82% N/A 4.21% With sales charge (4.25%) (5.02)% 2.92% N/A 3.75%
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 07-31-2003 NAV $10.62 Average Maturity 17.5 years Number of Issues 78 Total Net Assets $36,717,607 MANAGEMENT OF THE FUND 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, the four series of Ranson Managed Portfolios, and the two series of The Integrity Funds. 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 Retired; Attorney; Director, 8 None 904 NW 27th 1996 Integrity Mutual Funds, Inc. Minot, ND 58703 (formerly known as ND Holdings, 82 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., and Integrity Small-Cap Fund of Funds, Inc. (since September 1998); Director, First Western Bank & Trust. Orlin W. Backes Trustee Since January Attorney, McGee, Hankla, Backes 10 Director, First 15 2nd Ave., 1996 & Dobrovolny, P.C.; Director, Western Bank & SW - Ste. 305 ND Tax-Free Fund, Inc. Trust Minot, ND 58701 (since April 1995), ND Insured 68 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 Trustee Since January Attorney, Maxson Law Office 10 None Town & Country 1999 (since November 2002); Attorney, Center, 1015 S. McGee, Hankla, Backes & Dobrovolny, Broadway Suite 15 P.C. (April 2000 to November Minot, ND 58701 2002); Attorney, Farhart, Lian 55 and Maxson, P.C. (March 1976 to March 2000); Director, 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), and Integrity Small-Cap Fund of Funds, Inc. (since January 1999). - -------------------------------
The Fund Complex consists of the four funds in the Integrity family of funds, the four series of Ranson Managed Portfolios, and the two series of The Integrity Funds. 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 Attorney; Director and Vice 4 Director, ARM 1 North Main and Secretary 1996 President, Integrity Mutual Securities Minot, ND 58703 Funds, Inc.(formerly known as Corporation 69 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); Director, ARM Securities Corporation (since May 2000). **Robert E. Walstad Trustee, Chairman, Since January Director (since September 1987), 10 Director, ARM 1 North Main President, and 1996 President (September 1987 to Securities Minot, ND 58703 Treasurer October 2001) (since September Corporation; 58 2002), Integrity Mutual Funds, Director, Magic Inc.; Director, President and Internet Treasurer, ND Money Management, Services, Inc., ND Capital, Inc., ND Inc.; Director, Resources, Inc., ND Tax-Free Capital Fund, Inc., ND Insured Income Financial Fund, Inc. (November 1990 to Services, Inc. August 1999), Montana Tax-Free Fund, Inc., South Dakota Tax- Free Fund, Inc., Integrity Fund of Funds, Inc., and Integrity Small-Cap Fund of Funds, Inc.; Trustee, Chairman, President, and Treasurer, Ranson Managed Portfolios; 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.; Trustee, The Integrity Funds. - ---------------------------- * The Fund Complex consists of the four funds in the Integrity family of funds, the four series of Ranson Managed Portfolios, and the two series of The Integrity Funds. ** 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 Fund's 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 JULY 31, 2003 - -------------------------------------
NAME OF ISSUER Rating Percentages represent the market value of each (Unaudited) Coupon Principal Market investment category to total net assets Moody's/S&P Rate Maturity Amount Value - ----------------------------------------------------------------------------------------------------------------------------- NEBRASKA MUNICIPAL BONDS (94.9%) Adams Cty., NE Hosp. Auth. #001 (Mary Lanning Memorial Hosp.) .................................... NR/AA 5.300% 12/15/18 $ 250,000 $ 248,732 Cass Cty, NE School Dist. #1 (Plotsmouth Schools) FSA....... NR/AAA 4.150 12/15/19 250,000 234,930 Cass Cty, NE School Dist. #056 (Conestoga Public Schools)... NR/NR 6.150 12/15/20 250,000 250,440 *Dakota Cty., NE SD #011 (South Sioux City Community Schools) .................................... Aaa/AAA 6.100 06/15/20 1,000,000 1,103,100 Dawson Cty., NE SID #001 (IBP, Inc. Proj.) Ref. G.O. ....... Baa-3/BBB 5.650 02/01/22 700,000 651,406 Dawson Cty., NE School Dist. #20 (Gothenburg) G.O. MBIA..... Aaa/AAA 5.350 12/15/26 500,000 505,535 *Dodge Cty., NE SD #001 (Fremont Public Schools) FSA........ Aaa/NR 5.500 12/15/20 1,000,000 1,038,770 Douglas Cty., NE Hosp. Auth. #001 (Alegent Hlth.) Rev. ..... Aaa/AAA 5.250 09/01/21 250,000 247,692 Douglas Cty., NE Hosp. Auth. #002 (Archbishop Bergan) Rev. ................................... Aaa/AAA 6.000 11/15/15 125,000 134,851 Douglas Cty., NE (Catholic Health Corp.) Rev. MBIA.......... Aaa/AAA 5.375 11/15/15 275,000 282,747 Douglas Cty., NE (Catholic Health Corp.) Rev. MBIA.......... Aaa/AAA 5.500 11/15/21 340,000 341,489 Douglas Cty., NE SID #392 (Cinnamon Creek) G.O. ............ NR/NR 5.750 08/15/17 200,000 201,000 Douglas Cty., NE SID #240 (LeBea) Ref. G.O. ................ NR/NR 5.900 10/15/16 100,000 101,360 Douglas Cty., NE SID #397 (Linden Estates II) .............. NR/NR 5.600 07/15/18 265,000 258,780 Douglas Cty., NE SID #397 (Linden Estates II) .............. NR/NR 5.600 07/15/19 280,000 273,305 Douglas Cty., NE SID #397 (Linden Estates II) .............. NR/NR 5.600 04/01/23 500,000 482,815 Douglas Cty., NE School Dist. #001 ........................ Aa/AAA 5.625 12/15/19 250,000 268,005 #Douglas Cty., NE School Dist. #010 (Elkhorn) G.O. FSA..... Aaa/AAA 5.500 12/15/20 750,000 779,955 Douglas Cty., NE SD #010 (Elkhorn Public Schools) .......... NR/A+ 5.050 12/15/22 150,000 146,192 Fremont, NE Combined Utilities Rev. MBIA.................... Aaa/AAA 5.000 10/15/21 500,000 502,910 Grand Island, NE Sewer Syst. Rev. .......................... A/NR 6.000 04/01/14 550,000 584,700 Kearney Cty., NE Highway Allocation Fund AMBAC.............. Aaa/NR 5.350 06/15/21 100,000 101,412 Lancaster Cty., NE (Lincoln Medl. Educ. Foundn.) Rev. ...... NR/NR 5.700 02/01/11 100,000 100,000 Lancaster Cty., NE (Lincoln Medl. Educ. Foundn.) Rev. ...... NR/NR 5.800 02/01/12 175,000 175,000 #Lancaster Cty., NE (Bryan Memorial Hospital) Rev. MBIA..... Aaa/AAA 5.375 06/01/19 1,400,000 1,418,382 Lancaster Cty., NE School Dist. #1 (Lincoln Public Schools) ................................... Aa/AAA 5.250 01/15/21 500,000 508,415 Lancaster Cty., NE School Dist. #1 (Lincoln Public Schools) G.O. .............................. Aa/AAA 5.250 01/15/22 500,000 512,935 #Lancaster Cty., NE School Dist. #145 (Waverly Public Schools) ................................... Aaa/AAA 5.500 12/01/20 1,240,000 1,286,835 Lincoln Cty., NE School Dist. #005 (Sutherland Public Schools) ................................ Aaa/NR 5.000 12/15/20 225,000 220,919 Lincoln/Lancaster Cty., NE Public Bldg. Community Rev ...... Aa/AA+ 5.800 10/15/18 475,000 533,700 #Lincoln/Lancaster Cty., NE Public Bldg. Community Rev. .... Aa/AA+ 5.875 10/15/23 850,000 896,656 Lincoln, NE Various Purpose GO. ........................... Aaa/AAA 4.125 06/15/23 500,000 459,470 Lincoln, NE Water Rev. ..................................... Aa/AA+ 5.000 08/15/22 575,000 573,557 Madison Cty., NE Hosp. Auth. #001 (Faith Regl. Hlth. Svcs.) Rev. ............................. NR/AA 5.350 07/01/18 250,000 248,628 NE Hgr. Educ. Loan Program Senior Subord. Term MBIA......... Aaa/AAA 6.250 06/01/18 800,000 865,576 NE Hgr. Educ. Loan Program Junior Subord. Rev. MBIA........ Aaa/AAA 6.400 06/01/13 300,000 327,321 NE Hgr. Educ. Loan Program Junior Subord. Term MBIA......... Aaa/AAA 6.450 06/01/18 400,000 434,044 *NE Hgr. Educ. Loan Program Student Loan MBIA............... Aaa/AAA 5.875 06/01/14 1,265,000 1,318,687 NE Hgr. Educ. Loan Program B Rev. MBIA...................... Aaa/AAA 6.000 06/01/28 100,000 98,701 NE Educ. Finance Auth. (Creighton Univ.) Rev. AMBAC......... Aaa/AAA 5.950 01/01/11 300,000 327,933 NE Educ. Finance Auth. (Midland Lutheran College) Rev. G.O. .................................................. NR/NR 5.550 06/15/18 500,000 474,670 NE Educ. Finance Auth. (Wesleyan Univ.) Rev. Radian Insured......................................... NR/AA 5.500 04/01/27 1,000,000 1,029,770 NE Invmt. Finance Auth. (Muirfield Greens) Multifamily Rev. FHA........................................ Aa/NR 6.800 12/01/15 295,000 301,050 NE Invmt. Finance Auth. (Muirfield Greens) Multifamily Rev. FHA........................................ Aa/NR 6.850 12/01/25 525,000 534,188 NE Invmt. Finance Auth. (Catholic Hlth. Initiatives) Rev.... Aa/AA 5.125 12/01/17 200,000 197,154 NE Invmt. Finance Auth. Single Family Hsg. Rev. Coll. ...... NR/AAA 6.300 03/01/17 75,000 76,412 *NE Invmt. Finance Auth. Single Family Hsg. Rev. ........... NR/AAA 6.600 09/01/20 285,000 291,042 NE Invmt. Finance Auth. Single Family Hsg. Rev. VA/FNMA..... NR/AAA 7.300 09/01/26 125,000 125,381 NE Invmt. Finance Auth. Single Family Hsg. Rev. FHA/GNMA.... NR/AAA 6.500 09/01/18 340,000 348,639 NE Invmt. Finance Auth. Single Family Hsg. Rev. FNMA/GNMA... NR/AAA 6.400 09/01/26 215,000 218,588 NE Invmt. Finance Auth. Single Family Hsg. Rev. GNMA/FNMA... NR/AAA 6.250 09/01/28 135,000 137,687 NE Invmt. Finance Auth. Single Family Hsg. Rev. GNMA........ NR/AAA 6.200 09/01/17 225,000 235,847 NE Invmt. Finance Auth. Single Family Hsg. Rev. GNMA........ NR/AAA 6.250 03/01/21 265,000 273,769 *NE Invmt. Finance Auth. Single Family Hsg. Rev. ........... NR/AAA 6.300 09/01/28 970,000 992,970 NE Invmt. Finance Auth. Single Family Hsg. Rev. GNMA/FNMA... NR/AAA 6.300 09/01/30 190,000 197,043 NE Invmt. Finance Auth. (Childrens Healthcare Svcs) Facs. Rev. ................................ Aaa/AAA 5.500 08/15/17 410,000 421,587 #NE Invmt. Finance Auth. (Childrens Healthcare Svcs.) Rev. ..................................... Aaa/AAA 5.500 08/15/27 1,000,000 1,010,640 NE Invmt. Finance Auth. Multifamily Hsg. Rev. FNMA.......... NR/AAA 6.200 06/01/28 495,000 501,692 NE Invmt. Finance Auth. Multifamily Hsg. Rev. GNMA.......... NR/AAA 6.000 06/01/17 450,000 461,304 NE Invmt. Finance Auth. Multifamily Hsg. Rev. GNMA.......... NR/AAA 6.100 06/01/29 500,000 510,040 NE Invmt. Finance Auth. (Waterbrook) Multifamily Rev. ...... Aaa/AAA 5.600 04/01/07 165,000 177,545 NE Invmt. Finance Auth. (Great Plains Regl. Medl. Ctr.) Rev. .............................. NR/AA 6.500 05/15/14 300,000 317,901 NE Invmt. Finance Auth. (Great Plains Regl. Medl. Ctr.) ASGUA..................................... NR/AA 5.450 11/15/17 400,000 402,200 Great Plains Regional Med. Cntr. North Platte Hosp. Rev. Asset Guaranty...................... NR/AA 5.450 11/15/22 750,000 757,080 Omaha, NE Various Purpose ................................. Aaa/AAA 5.000 05/01/22 250,000 251,870 Omaha, NE Parking Facs. Corp. (Omaha Park 4\5) Lease Rev. ................................ Aa-1/AA+ 5.700 09/15/15 750,000 810,143 Omaha, NE Public Power Dist. Elec. Syst. Rev. .............. Aa/AA 5.200 02/01/22 500,000 498,520 Omaha, NE Public Power Dist. Elec. Syst. Rev. .............. NR/AA 6.000 02/01/15 330,000 369,481 Omaha, NE Public Power Dist. Elec. Syst. Rev. .............. Aa/NR 6.200 02/01/17 650,000 759,616 Omaha, NE (Riverfront Project) Special Obligation .......... Aa/AA 5.500 02/01/29 1,000,000 1,040,300 Columbus Community Hospital Platte Cty, NE Asset Guaranty... NR/AA 5.650 05/01/12 100,000 108,965 Columbus Community Hospital Platte Cty, NE Asset Guaranty... NR/AA 6.150 05/01/30 250,000 262,680 Platte Cty., NE School Dist. #001 (Columbus) G.O. Bank Qualified......................................... A/NR 5.000 12/15/19 250,000 242,290 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 Sarpy Cty, NE School Dist. #046 FSA........................ Aaa/AAA 5.000 12/15/22 200,000 195,290 Univ. of NE Board of Regents Lincoln Parking ............... Aa/AA- 5.800 06/01/20 620,000 669,371 Univ. of NE (U. of NE - Lincoln Student Fees) Rev. ......... Aa/AA- 5.125 07/01/32 250,000 246,530 ------------ TOTAL NEBRASKA MUNICIPAL BONDS (COST: $33,813,190) ..............................................................$ 34,837,840 ------------ SHORT-TERM SECURITIES (2.0%) Wells Fargo National Tax-Free Money Market (COST: $721,907) ....................................................$ 721,907 ------------ TOTAL INVESTMENTS IN SECURITIES (COST: $34,535,097) .............................................................$ 35,559,747 OTHER ASSETS LESS LIABILITIES.................................................................................... 1,157,860 ------------ NET ASSETS.......................................................................................................$ 36,717,607 * 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 JULY 31, 2003 - ------------------------------------
Statement of Assets and Liabilities July 31, 2003 - ------------------------------------------------- ASSETS Investment in securities, at value (cost: $34,535,097) .......... $ 35,559,747 Cash............................................................. 179,176 Accrued interest receivable...................................... 504,205 Accrued dividends receivable..................................... 844 Receivable for security sales.................................... 901,974 Receivable for fund shares sold.................................. 90,233 Prepaid expenses................................................. 7,025 --------------- Total Assets.................................................. $ 37,243,204 --------------- LIABILITIES Dividends payable................................................ $ 132,096 Accrued expenses................................................. 35,273 Payable for security purchases................................... 247,065 Payable for fund shares redeemed................................. 111,163 --------------- Total Liabilities............................................. $ 525,597 --------------- NET ASSETS............................................................ $ 36,717,607 =============== NET ASSETS ARE REPRESENTED BY: Paid-in capital.................................................. $ 38,754,021 Accumulated undistributed net realized gain (loss) on investments...................................................... (3,061,064) Unrealized appreciation on investments........................... 1,024,650 --------------- Total amount representing net assets applicable to 3,458,937 outstanding shares of no par common stock (unlimited shares authorized) ........................ $ 36,717,607 =============== Net asset value per share............................................. $ 10.62 ===============
The accompanying notes are an integral part of these financial statements.
STATEMENT OF OPERATIONS For the year ended July 31, 2002 - -------------------------------- INVESTMENT INCOME Interest......................................................... $ 1,946,086 Dividends........................................................ 13,299 --------------- Total Investment Income...................................... $ 1,959,385 --------------- EXPENSES Investment advisory fees......................................... $ 190,066 Service fees..................................................... 95,033 Transfer agent fees.............................................. 49,473 Accounting service fees.......................................... 42,715 Custodian fees................................................... 7,721 Transfer agent out-of-pockets.................................... 4,385 Professional fees................................................ 6,800 Reports to shareholders.......................................... 3,801 Trustees fees.................................................... 3,952 Registration and filing fees..................................... 3,932 Insurance expense................................................ 3,621 --------------- Total Expenses............................................... $ 411,499 Less expenses waived or absorbed by the Fund's manager............................................ (62,679) --------------- Total Net Expenses.......................................... $ 348,820 --------------- NET INVESTMENT INCOME................................................. $ 1,610,565 --------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES Net realized gain (loss) from: Investment transactions.......................................... $ 81,742 Futures transactions............................................. (778,910) Net change in unrealized appreciation (depreciation) of: Investments...................................................... (1,230,391) --------------- Net Realized And Unrealized Gain (Loss) On Investments And Futures..................................... $ (1,927,559) --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS............................................. $ (316,994) ===============
The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENTS JULY 31, 2003 - ----------------------------------
STATEMENT OF CHANGES IN NET ASSETS For the year ended July 31, 2003 and the year ended July 31, 2002 - ----------------------------------------------------------------- For The For The Year Ended Year Ended July 31, 2003 July 31, 2002 ---------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income.................................................... $ 1,610,565 $ 1,727,525 Net realized gain (loss) on investment and futures transactions.......... (697,168) (596,119) Net change in unrealized appreciation (depreciation) on investments and futures............................................... (1,230,391) 410,380 ----------------------------------------- Net Increase (Decrease) in Net Assets Resulting From Operations....... $ (316,994) $ 1,541,786 ----------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income ($.47 and $.51 per share, respectively) ................................................ $ (1,606,903) $ (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..................................... $ (1,606,903) $ (1,724,430) ----------------------------------------- CAPITAL SHARE TRANSACTIONS Proceeds from sale of shares............................................. $ 6,195,967 $ 4,693,840 Proceeds from reinvested dividends....................................... 1,101,994 1,177,463 Cost of shares redeemed.................................................. (5,929,093) (6,973,707) ----------------------------------------- Net Increase (Decrease) in Net Assets Resulting From Capital Share Transactions....................................... $ 1,368,868 $ (1,102,404) ----------------------------------------- TOTAL INCREASE (DECREASE) IN NET ASSETS....................................... $ (555,029) $ (1,285,048) NET ASSETS, BEGINNING OF PERIOD............................................... 37,272,636 38,557,684 ----------------------------------------- NET ASSETS, END OF PERIOD..................................................... $ 36,717,607 $ 37,272,636 =========================================
The accompanying notes are an integral part of these financial statements. NOTES TO FINANCIAL STATEMENTS JULY 31, 2003 - -------------------------------------------- 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 year ended July 31, 2003, 100% were exempt from federal income taxes. The Fund has unexpired capital loss carryforwards for tax purposes as of July 31, 2003 totaling $3,080,475, 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 ---- ------------------------ 2004 415,126 2005 616,730 2006 383,905 2007 0 2008 199,861 2009 158,911 2010 591,993 2011 713,949 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. 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 July 31, 2003, there were unlimited shares of no par authorized; 3,458,937 and 3,336,190 shares were outstanding at July 31, 2003 and July 31, 2002, respectively. Transactions in capital shares were as follows:
Shares ------ For The For The Year Ended Year Ended July 31, 2003 July 31, 2002 ---------------------------------- Shares sold...................................... 564,203 416,460 Shares issued on reinvestment of dividends....... 100,043 104,347 Shares redeemed.................................. (541,499) (618,790) ---------------------------------- Net increase (decrease) ......................... 122,747 (97,983) ==================================
NOTE 4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES Ranson Capital Corporation, the Fund's investment adviser and underwriter; Integrity Fund Services, 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., 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 $190,066 of investment advisory fees for the year ended July 31, 2003. The Fund has a payable to Ranson Capital Corporation of $15,889 at July 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 $32,354 of service fee expenses after partial waiver for the year ended July 31, 2003. The Fund has a payable to Ranson of $3,583 at July 31, 2003, for service fees. Integrity Fund Services, 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 $49,473 of transfer agency fees for the year ended July 31, 2003. The Fund has a payable to Integrity Fund Services, Inc. of $4,192 at July 31, 2003, for transfer agency fees. Integrity Fund Services, 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 $42,715 of accounting service fees for the year ended July 31, 2003. The Fund has a payable to Integrity Fund Services, Inc. of $3,589 at July 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 $3,427,657 and $3,750,534, respectively, for the year ended July 31, 2003. NOTE 6. INVESTMENT IN SECURITIES At July 31, 2003, the aggregate cost of securities for federal income tax purposes was substantially the same for financial reporting purposes at $34,535,097. The net unrealized appreciation of investments based on the cost was $1,024,650, which is comprised of $1,252,505 aggregate gross unrealized appreciation and $227,855 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 Year Ended Year Ended Year Ended Year Ended Year Ended July 31, 2003 July 31, 2002 July 31, 2001 July 31, 2000 July 30, 1999 ---------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD....... $ 11.17 $ 11.23 $ 10.71 $ 11.01 $ 11.13 ---------------------------------------------------------------------------------- Income from Investment Operations: Net investment income................. $ .47 $ .51 $ .53 $ .54 $ .54 Net realized and unrealized gain (loss) on investment and futures transactions.......................... (.55) (.06) .52 (.30) (.12) ---------------------------------------------------------------------------------- Total Income (Loss) From Investment Operations......................... $ (.08) $ .45 $ 1.05 $ .24 $ .42 ---------------------------------------------------------------------------------- Less Distributions: Dividends from net investment income.. $ (.47) $ (.51) $ (.53) $ (.54) $ (.54) Distributions from net capital gains.. .00 .00 .00 .00 .00 ---------------------------------------------------------------------------------- Total Distributions................ $ (.47) $ (.51) $ (.53) $ (.54) $ (.54) NET ASSET VALUE, END OF PERIOD............. $ 10.62 $ 11.17 $ 11.23 $ 10.71 $ 11.01 Total Return............................... (0.81)%(A) 4.06%(A) 10.02%(A) 2.28%(A) 3.82%(A) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ....................... $ 36,718 $ 37,273 $ 38,558 $ 38,171 $ 41,943 Ratio of net expenses (after expense assumption) to average net assets..... 0.92%(B) 0.82%(B) 0.78%(B) 0.75%(B) 0.70%(B) Ratio of net investment income to average net assets.................... 4.24% 4.52% 4.82% 5.02% 4.83% Portfolio turnover rate............... 9.48% 13.08% 16.89% 11.42% 12.58% (A) Excludes maximum sales charge of 4.25%. (B) During the periods indicated above, Integrity Mutual Funds, Inc. or Ranson Capital Corporation assumed/waived expenses of $62,679, $99,292, $113,493, $124,718, and $119,949, 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%, and 1.10%, respectively.
The accompanying notes are an integral part of these financial statements. TAX INFORMATION --------------- FOR THE YEAR ENDED JULY 31, 2003 (UNAUDITED) We are required to advise you within 60 days of the Fund's fiscal year-end regarding the federal tax status of distributions received by shareholders during such fiscal year. The distributions made during the fiscal year by the Fund were earned from the following sources: DIVIDENDS AND DISTRIBUTIONS PER SHARE - -------------------------------------
To Shareholders From Net From Net Realized From Net Realized of Record Payment Date Investment Income Short-Term Gains Long-Term Gains - ----------------------------------------------------------------------------------------------------------------------- August 29, 2002 August 30, 2002 $ 0.041309 - - September 27, 2002 September 30, 2002 0.040192 - - October 30, 2002 October 31, 2002 0.039208 - - November 28, 2002 November 29, 2002 0.037950 - - December 30, 2002 December 31, 2002 0.041415 - - January 30, 2003 January 31, 2003 0.038431 - - February 27, 2003 February 28, 2003 0.039249 - - March 28, 2003 March 31, 2003 0.037521 - - April 29, 2003 April 30, 2003 0.037841 - - May 29, 2003 May 30, 2003 0.037553 - - June 27, 2003 June 30, 2003 0.037606 - - July 30, 2003 July 31, 2003 0.037615 - -
SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISORS. INDEPENDENT AUDITOR'S REPORT To the Shareholders and Board of Trustees of The Nebraska Municipal Fund We have audited the accompanying statement of assets and liabilities of The Nebraska Municipal Fund (one of the portfolios constituting Ranson Managed Portfolios), including the schedule of investments, as of July 31, 2003, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of July 31, 2003, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Nebraska Municipal Fund of the Ranson Managed Portfolios as of July 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period than ended, and financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. BRADY, MARTZ & ASSOCIATES, P.C. Minot, North Dakota USA September 5, 2003 THE OKLAHOMA MUNICIPAL FUND DEAR SHAREHOLDER: - ----------------- Enclosed is the annual report of the operations for The Oklahoma Municipal Fund (the "Fund") for the year ended July 31, 2003. The Fund's portfolio and related financial statements are presented within for your review. There continues to be a powerful tug-of-war between massive policy reflation and the lingering after-effects of the various shocks that have hit the economy during the past three years, beginning with the burst of the tech bubble, followed by 9/11, corporate scandals, two wars, and a spike in energy prices. Yet, the economy suffered its mildest recession on record in 2000/2001. The economy's performance in the face of so many adverse events reflects the effects of powerful monetary and fiscal stimulus as well as the economy's underlying resilience. There are few things one can be sure of regarding the economic and financial outlook. However, we are very confident that short-term rates will stay low for awhile. This underlines the Federal Reserve's determination to ensure a sustained expansion in the economy and to avert the threat of deflation. By keeping interest rates low for an extended period, the Federal Reserve will force-feed the economy and financial system with liquidity. This is certain to create many distortions, bubbles, and excesses. The danger will be when the time comes to begin to re-normalize rates. It is hard to see how the Federal Reserve can do this without causing turmoil in the markets. During the period the Fund utilized defensive positions 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 price as rates fell to forty-year lows in mid June and stabilized share price as bonds plummeted in one of the worst sell-offs in bond market history through the end of July. The Federal Reserve is trying to encourage investors to buy long-term yields. Yet, they are targeting a stronger economy and increased inflation, two events that will ensure that longer-term rates purchased at current yields will become a losing proposition. Risk management is important in this market environment. An important part of the Fund's strategy includes searching the primary and secondary markets for high quality double exempt issues. Portfolio quality for the year ended July 31, 2003 were represented as follows: AAA 63.4%, AA 14.8%, A 8.4%, BBB 5.0%, B- 3.0%, and NR 5.4%. High quality current income exempt from Federal and Oklahoma income tax remain the primary objectives of the Fund. Sincerely, The Portfolio Management Team TERMS & DEFINITIONS JULY 31, 2003 (UNAUDITED) - ----------------------------------------------- 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 63.4% AA 14.8% A 8.4% BBB 5.0% B1/B- 3.0% NR 5.4% 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 42.3% U-Utilities 12.5% HC-Health Care 9.9% G-Government 8.7% O-Other 8.4% W/S-Water/Sewer 7.2% T-Transportation 5.8% H-Housing 2.6% I-Industrial 2.6% 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 2003 $13,522 $12,947 $15,264
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING JULY 31, 2003 -------------------------------- Since Inception 1 year 5 year 10 year (September 25, 1996) - ----------------------------------------------------------------------------------------------------------- Without sales charge 0.28% 3.86% N/A 4.50% With sales charge (4.25%) (3.98)% 2.97% N/A 3.84%
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 07-31-2003 NAV $11.09 Average Maturity 19.5 years Number of Issues 85 Total Net Assets $31,798,793 MANAGEMENT OF THE FUND 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, the four series of Ranson Managed Portfolios, and the two series of The Integrity Funds. 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 Retired; Attorney; Director, 8 None 904 NW 27th 1996 Integrity Mutual Funds, Inc. Minot, ND 58703 (formerly known as ND Holdings, 82 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., and Integrity Small-Cap Fund of Funds, Inc. (since September 1998); Director, First Western Bank & Trust. Orlin W. Backes Trustee Since January Attorney, McGee, Hankla, Backes 10 Director, First 15 2nd Ave., 1996 & Dobrovolny, P.C.; Director, Western Bank & SW - Ste. 305 ND Tax-Free Fund, Inc. Trust Minot, ND 58701 (since April 1995), ND Insured 68 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 Trustee Since January Attorney, Maxson Law Office 10 None Town & Country 1999 (since November 2002); Attorney, Center, 1015 S. McGee, Hankla, Backes & Dobrovolny, Broadway Suite 15 P.C. (April 2000 to November Minot, ND 58701 2002); Attorney, Farhart, Lian 55 and Maxson, P.C. (March 1976 to March 2000); Director, 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), and Integrity Small-Cap Fund of Funds, Inc. (since January 1999). - -------------------------------
The Fund Complex consists of the four funds in the Integrity family of funds, the four series of Ranson Managed Portfolios, and the two series of The Integrity Funds. 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 Attorney; Director and Vice 4 Director, ARM 1 North Main and Secretary 1996 President, Integrity Mutual Securities Minot, ND 58703 Funds, Inc.(formerly known as Corporation 69 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); Director, ARM Securities Corporation (since May 2000). **Robert E. Walstad Trustee, Chairman, Since January Director (since September 1987), 10 Director, ARM 1 North Main President, and 1996 President (September 1987 to Securities Minot, ND 58703 Treasurer October 2001) (since September Corporation; 58 2002), Integrity Mutual Funds, Director, Magic Inc.; Director, President and Internet Treasurer, Integrity Money Services, Management, Inc., ND Capital, Inc., Inc.; Director, ND Resources, Inc., ND Tax-Free Capital Fund, Inc., ND Insured Income Financial Fund, Inc. (November 1990 to Services, Inc. August 1999), Montana Tax-Free Fund, Inc., South Dakota Tax- Free Fund, Inc., Integrity Fund of Funds, Inc., and Integrity Small-Cap Fund of Funds, Inc.; Trustee, Chairman, President, and Treasurer, Ranson Managed Portfolios; 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.; Trustee, The Integrity Funds. - ---------------------------- * The Fund Complex consists of the four funds in the Integrity family of funds, the four series of Ranson Managed Portfolios, and the two series of The Integrity Funds. ** 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 Fund's 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 JULY 31, 2003 - -------------------------------------
NAME OF ISSUER Rating Percentages represent the market value of each (Unaudited) Coupon Principal Market investment category to total net assets Moody's/S&P Rate Maturity Amount Value - ----------------------------------------------------------------------------------------------------------------------------- OKLAHOMA MUNICIPAL BONDS (97.5%) Broken Arrow, OK Unlimited GO FSA............................ Aaa/AAA 4.000% 08/01/18 $ 250,000 $ 237,762 Claremore, OK Student Hsg. Rev. (Rogers University) ACA...... NR/A 5.750 09/01/34 500,000 511,700 Edmond Economic Dev. Auth., OK Student Housing Rev. .........Baa-3/NR 5.375 12/01/19 100,000 93,769 #Edmond Economic Dev. Auth., OK Student Housing Rev. ........Baa-3/NR 5.500 12/01/28 865,000 784,529 Edmond Public Works Sales Tax & Utility Rev. AMBAC........... Aaa/AAA 4.750 07/01/23 200,000 196,224 Garfield Cty., Criminal Justice Auth. (Enid, OK) Rev. MBIA......................................... Aaa/NR 4.500 04/01/18 250,000 246,472 Grand River Dam Auth., OK FSA................................ Aaa/AAA 5.000 06/01/12 500,000 539,585 *Grand River Dam Auth., OK Rev. AMBAC........................ Aaa/AAA 6.250 06/01/11 210,000 246,288 Grand River Dam Auth., OK Rev. Ref. AMBAC.................... Aaa/AAA 5.500 06/01/13 700,000 782,894 Jackson Cty, OK Sales Tax Rev. AMBAC......................... Aaa/AAA 5.000 10/01/22 500,000 495,600 Mannford Public Works Auth. ................................. NR/BBB+ 6.000 04/01/27 300,000 303,861 Mannford Public Works Auth. ................................. NR/BBB+ 5.900 04/01/32 250,000 249,365 McAlester OK. Public Works Auth. FSA......................... Aaa/NR 5.100 02/01/30 100,000 99,785 Norman, OK (Regl. Hospital) Auth. Asset Guaranty............. NR/AA 5.250 09/01/16 180,000 181,103 OK Agric. & Mech. Colleges (OK St. Univ.) Athletic Facs. AMBAC......................................... Aaa/NR 5.000 08/01/24 300,000 296,253 *OK Board of Regents (Oklahoma City Community College) Student Rev. AMBAC.................................. Aaa/AAA 5.550 07/01/22 750,000 781,695 OK Board of Regents (Univ. of Central OK Parking) Rev. AMBAC....................................... Aaa/NR 4.125 06/01/23 250,000 227,705 OK Board of Regents (Univ. of Central OK) AMBAC.............. Aaa/AAA 5.600 08/01/20 150,000 158,806 OK Board of Regents (Univ. of Central OK) AMBAC.............. Aaa/AAA 5.700 08/01/25 390,000 410,374 OK Board of Regents (University of OK Athletic Fac.) Rev. MBIA..................................... Aaa/NR 5.250 06/01/26 500,000 503,520 OK Capital Impvt. Auth. (Dept. of Corrections) Rev. AMBAC.... Aaa/AAA 5.000 05/01/18 500,000 509,900 OK Capital Impvt. Auth. (State Fac.) Rev. MBIA............... Aaa/AAA 5.500 09/01/19 100,000 104,771 OK Capital Impvt. Auth. (State Highway) Rev. MBIA............ Aaa/AAA 5.000 06/01/14 250,000 267,237 OK Capital Impvt. Auth. (State Office Building) Rev. ........ A-1/NR 5.500 10/01/16 105,000 110,070 OK Colleges Brd. of Regents (East Central Univ.) AMBAC....... Aaa/NR 4.350 08/01/22 115,000 106,568 OK Colleges Brd. of Regents (East Central Univ.) AMBAC....... Aaa/NR 4.400 08/01/23 115,000 107,050 OK Colleges Brd. of Regents (East Central Univ.) AMBAC....... Aaa/NR 4.550 08/01/33 1,000,000 922,620 OK Colleges Brd. of Regents (NE State Univ. Ctr.) Rev. FSA... Aaa/AAA 5.100 03/01/16 140,000 143,968 OK Colleges Brd. of Regents (NE State Univ. Ctr.) Rev. FSA... Aaa/AAA 5.150 03/01/21 100,000 99,057 OK Devl. Finance Auth. (Central OK Univ.) ................... Aa-3/AA 5.300 12/01/18 100,000 102,000 OK Devl. Finance Auth. (Comanche County Hosp.) .............. NR/BBB- 5.625 07/01/09 105,000 106,689 OK Devl. Finance Auth. (DHS Lease Rev.) Series 2000A MBIA.... Aaa/NR 5.600 03/01/15 280,000 308,017 #OK Devl. Finance Auth. (Hillcrest Healthcare Syst.) Rev. Ref. ................................. B1/B- 5.625 08/15/19 1,000,000 730,000 OK Devl. Finance Auth. (Hillcrest Healthcare Syst.) Rev. Ref. ................................. B1/B- 5.625 08/15/29 295,000 206,500 OK Devl. Finance Auth. (Integris Baptist Medical Center) AMBAC........................................ Aaa/AAA 5.600 06/01/20 250,000 253,267 OK Devl. Finance Auth. (Langston Univ. Athletic Facs.) Rev. ........................................ NR/NR 5.250 12/01/23 500,000 481,655 OK Devl. Finance Auth. (Langston Univ. Stadium) ............. NR/AA 5.000 07/01/27 250,000 252,185 OK Devl. Finance Auth. (OK Dept. of Corrections McLoud Fac.) FGIC................................ Aaa/AAA 4.600 04/01/22 250,000 241,665 OK Devl. Finance Auth. (OK Dept. of Corrections McLoud Fac.) FGIC................................ Aaa/AAA 4.650 04/01/23 250,000 242,560 OK Devl. Finance Auth. (OK State Syst. Higher Ed.) AMBAC..... Aaa/AAA 4.900 12/01/22 200,000 197,932 *OK Devl. Finance Auth. (Oklahoma City Univ.) Rev. Ref. AMBAC.................................. Aaa/AAA 5.125 06/01/17 555,000 574,353 OK Devl. Finance Auth. (Seminole State College) ............. NR/AA 5.125 12/01/27 150,000 152,175 OK Devl. Finance Auth. (Southern Nazarene Univ.) Rev. ....... NR/NR 6.200 11/01/07 100,000 103,488 OK Devl. Finance Auth. (Southern Nazarene Univ.) Rev. ....... NR/NR 6.500 11/01/13 75,000 77,641 OK Devl. Finance Auth. (Southern Nazarene Univ.) Rev. ....... NR/NR 5.750 03/01/13 400,000 409,080 #OK Devl. Finance Auth. (Southern Nazarene Univ.) Rev. ...... NR/NR 6.000 03/01/18 600,000 604,548 OK Devl. Finance Auth. (St. Ann's Retirement Village) Rev. MBIA........................................... Aaa/NR 5.000 12/01/28 500,000 493,440 OK Devl. Finance Auth. (St. John Health Syst.) Rev. Ref. .... Aa-3/AA 5.750 02/15/25 500,000 512,600 OK Devl. Finance Auth. (St. John Health Syst.) Rev. Ref. .... Aa-3/AA 6.000 02/15/29 400,000 420,320 *OK Devl. Finance Auth. (Tulsa Vo Tech Dist. Prj.) Public Facs. Rev. AMBAC..................... Aaa/AAA 5.100 08/01/15 750,000 782,812 OK Housing Finance Agency Single Family Homeownership........ Aaa/NR 5.250 09/01/21 185,000 186,857 *OK Housing Finance Agency Single Family Homeownership GNMA.................................... Aaa/NR 5.375 03/01/20 485,000 496,669 OK Housing Finance Agency Single Family Homeownership GNMA/FNMA...................................... Aaa/NR 5.850 09/01/20 125,000 129,469 OK State G.O. (OK Building Commission) FGIC.................. Aaa/AAA 3.700 07/15/18 100,000 91,843 OK State G.O. (OK Building Commission) FGIC.................. Aaa/AAA 5.000 07/15/18 1,600,000 1,679,328 OK State Indl. Auth. Lease (OK Cnty. Parking Fac.) Rev. MBIA...................................... Aaa/AAA 4.350 07/01/19 190,000 182,826 OK State Indl. Auth. Lease (OK Cnty. Parking Fac.) Rev. MBIA................................ Aaa/AAA 4.400 07/01/20 200,000 192,276 OK State Indl. Finance Auth. G.O. ...........................Aa-3/NR 5.000 04/01/13 150,000 145,620 *OK State Indl. Finance Auth. G.O. ..........................Aa-3/NR 6.050 02/01/15 285,000 289,594 OK State Municipal Power Auth. Rev. MBIA..................... Aaa/AAA 5.750 01/01/24 1,155,000 1,312,092 *OK State Student Loan Auth. ................................ Aaa/AAA 5.625 06/01/31 685,000 683,849 OK State Turnpike Auth. FGIC................................. Aaa/AAA 5.250 01/01/12 225,000 245,538 OK State Water (Loan Program) Rev. .......................... NR/AA+ 6.250 10/01/12 125,000 128,678 OK State Water (Loan Program) Rev. .......................... NR/AA+ 5.400 09/01/15 105,000 111,643 *OK State Water (Loan Program) Rev. ......................... NR/AA+ 5.100 09/01/16 415,000 426,288 OK State Water Resources Board Rev. ......................... NR/AA+ 5.050 10/01/22 200,000 200,718 OK State Water Resources Board Rev. ......................... NR/AA+.......5.125 10/01/27 500,000 505,840 OK State Water Resources Board Rev. ......................... NR/AA+ 4.625 10/01/18 435,000 427,553 OK State Water Resources Loan Rev. .......................... NR/AA+ 5.100 10/01/27 500,000 499,940 OK Student Loan Auth. ....................................... A/NR 6.350 09/01/25 280,000 296,559 OK Student Loan Auth. MBIA................................... Aaa/AAA 5.300 12/01/32 450,000 441,499 #Okmulgee Public Works Auth. Capital Improvement Rev. MBIA........................................ Aaa/AAA 5.125 08/01/30 750,000 753,278 Okmulgee Public Works Auth. Capital Improvement Rev. MBIA.... Aaa/AAA 4.800 10/01/27 500,000 488,065 Rural Enterprises, OK Inc. OK Govt. Fin. (Cleveland Cty. Hlth.) MBIA.................................. Aaa/NR 5.000 11/01/21 250,000 248,718 Rural Enterprises, OK Inc. Okmulgee Student Housing Proj. ACA.................................... NR/A 5.750 12/01/30 250,000 256,218 Rural Enterprises, OK Inc. Okmulgee Student Housing Proj., Series A ALA.................................. NR/A 5.625 12/01/20 140,000 147,167 Rural Enterprises, OK Inc. Okmulgee Student Housing Proj., Series A ACA.......................... NR/A 5.700 12/01/25 220,000 226,554 Rural Enterprises, OK Inc. Student Hsg. (Connors College) ACA........................................ NR/A 5.650 11/01/31 100,000 101,779 Rural Enterprises, OK Inc. Student Hsg. (Connors College) ACA........................................ NR/A 5.550 11/01/21 250,000 261,413 Rural Enterprises, OK Inc. USAOF Student Housing ACA......... NR/A 5.550 11/01/21 250,000 259,608 Rural Enterprises, OK Inc. USAOF Student Housing ACA......... NR/A 5.650 11/01/31 250,000 254,448 Sapulpa Municipal Authority Utility Rev. FSA................. Aaa/AAA 5.125 01/01/32 250,000 251,018 Tulsa Cnty, Indl. Auth. Recreation Facs. .................... NR/AA 4.700 09/01/24 500,000 474,900 University of OK Board of Regents (Research Fac.) Rev. ...... Aaa/NR 4.800 03/01/28 670,000 650,114 University of OK Board of Regents Student Hsg. Rev. FGIC..... Aaa/NR 5.000 11/01/27 1,000,000 992,910 ----------- TOTAL OKLAHOMA MUNICIPAL BONDS (COST: $31,378,027) .............................................................$31,012,327 ----------- SHORT-TERM SECURITIES (5.3%) Wells Fargo National Tax-Free Money Market.......................................................................$ 1,120,000 Goldman Sachs Financial Square Money Market...................................................................... 574,659 ----------- TOTAL SHORT-TERM SECURITIES (COST: $1,694,659) ..................................................................$ 1,694,659 ----------- TOTAL INVESTMENTS IN SECURITIES (COST: $33,072,686) ............................................................$32,706,986 OTHER ASSETS LESS LIABILITIES.................................................................................... (908,193) ----------- NET ASSETS.......................................................................................................$31,798,793 =========== * 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 JULY 31, 2003 - ------------------------------------
Statement of Assets and Liabilities July 31, 2003 - ------------------------------------------------- ASSETS Investment in securities, at value (cost: $33,072,686)............. $ 32,706,986 Cash............................................................... 169,593 Accrued interest receivable........................................ 446,298 Accrued dividends receivable....................................... 1,144 Receivable for fund shares sold.................................... 62,630 Prepaid expenses................................................... 5,573 --------------- Total Assets.................................................... $ 33,392,224 --------------- LIABILITIES Security purchase payable.......................................... $ 1,462,183 Payable for fund shares redeemed................................... 12,667 Dividends payable.................................................. 96,763 Accrued expenses................................................... 21,818 --------------- Total Liabilities............................................... $ 1,593,431 --------------- NET ASSETS.............................................................. $ 31,798,793 =============== NET ASSETS ARE REPRESENTED BY: Paid-in capital.................................................... $ 33,260,409 Accumulated undistributed net realized gain (loss) on investments.............................................. (1,095,916) Unrealized depreciation on investments............................. (365,700) --------------- Total amount representing net assets applicable to 2,868,263 outstanding shares of no par common stock (unlimited shares authorized) .......................... $ 31,798,793 =============== Net asset value per share............................................... $ 11.09 ===============
The accompanying notes are an integral part of these financial statements.
STATEMENT OF OPERATIONS For the year ended July 31, 2002 - -------------------------------- INVESTMENT INCOME Interest........................................................... $ 1,280,119 Dividends.......................................................... 11,082 --------------- Total Investment Income........................................ $ 1,291,201 --------------- EXPENSES Investment advisory fees........................................... $ 132,841 Service fees....................................................... 66,420 Transfer agent fees................................................ 37,591 Accounting service fees............................................ 37,098 Custodian fees..................................................... 5,306 Registration and filing fees....................................... 2,228 Transfer agent out-of-pocket expenses.............................. 850 Trustees fees...................................................... 3,214 Reports to shareholders............................................ 1,962 Professional fees.................................................. 6,199 Insurance expense.................................................. 2,136 --------------- Total Expenses................................................. $ 295,845 Less expenses waived or absorbed by the Fund's manager.............................................. (124,432) --------------- Total Net Expenses............................................. $ 171,413 --------------- NET INVESTMENT INCOME................................................... $ 1,119,788 --------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES Net realized gain (loss) from: Investment transactions............................................ $ (74,795) Futures transactions............................................... (337,391) Net change in unrealized appreciation (depreciation) of: Investments........................................................ (814,038) --------------- Net Realized And Unrealized Gain (Loss) On Investments And Futures....................................... $ (1,226,224) --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS............................................... $ (106,436) ===============
The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENTS JULY 31, 2003 - ----------------------------------
STATEMENT OF CHANGES IN NET ASSETS For the year ended July 31, 2003 and the year ended July 31, 2002 - ----------------------------------------------------------------- For The For The Year Ended Year Ended July 31, 2003 July 31, 2002 ---------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income.................................................... $ 1,119,788 $ 963,547 Net realized gain (loss) on investment and futures transactions.......... (412,186) (414,418) Net change in unrealized appreciation (depreciation) on investments and futures ............................................................ (814,038) 495,278 Net Increase (Decrease) in Net Assets Resulting From Operations...... $ (106,436) $ 1,044,407 --------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income ($.49 and $.57 per share, respectively) ........................................................... $ (1,119,540) $ (963,432) Distributions from net realized gain on investment and futures transactions ($.00 and $.00 per share, respectively) ............ 0 0 --------------------------------------- Total Dividends and Distributions.................................... $ (1,119,540) $ (963,432) --------------------------------------- CAPITAL SHARE TRANSACTIONS Proceeds from sale of shares............................................. $ 13,613,884 $ 7,011,154 Proceeds from reinvested dividends....................................... 548,817 495,726 Cost of shares redeemed.................................................. (3,132,668) (3,723,814) -------------------------------------- Net Increase (Decrease) in Net Assets Resulting From Capital Share Transactions...................................... $ 11,030,033 $ 3,783,066 -------------------------------------- TOTAL INCREASE (DECREASE) IN NET ASSETS....................................... $ 9,804,057 $ 3,864,041 NET ASSETS, BEGINNING OF PERIOD............................................... 21,994,736 18,130,695 -------------------------------------- NET ASSETS, END OF PERIOD..................................................... $ 31,798,793 $ 21,994,736 ======================================
The accompanying notes are an integral part of these financial statements. NOTES TO FINANCIAL STATEMENTS JULY 31, 2003 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 20% 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 year ended July 31, 2003, 100% were exempt from federal income taxes. The Fund has unexpired capital loss carryforwards for tax purposes as of July 31, 2003 totaling $1,096,225, 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 ---- ------------------------ 2004 0 2005 0 2006 0 2007 0 2008 185,891 2009 83,784 2010 414,246 2011 412,304 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. 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 July 31, 2003, there were unlimited shares of no par authorized; on July 31, 2003 and July 31, 2002, there were 2,868,263 and 1,906,461 shares outstanding, respectively. Transactions in capital shares were as follows:
Shares ------ For The For The Year Ended Year Ended July 31, 2003 July 31, 2002 ---------------------------------- Shares sold...................................... 1,188,900 605,354 Shares issued on reinvestment of dividends....... 47,918 42,815 Shares redeemed.................................. (275,016) (322,234) ---------------------------------- Net increase (decrease) ......................... 961,802 325,935 ==================================
NOTE 4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES Ranson Capital Corporation, the Fund's investment adviser and underwriter; Integrity Fund Services, 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., 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 $74,829 of investment advisory fees after partial waiver for the year ended July 31, 2003. The Fund has a payable to Ranson Capital Corporation of $9,942 at July 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 year ended July 31, 2003. Integrity Fund Services, 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 $37,591 of transfer agent fees and expenses for the year ended July 31, 2003. The Fund has a payable to Integrity Fund Services, Inc. of $3,570 at July 31, 2003 for transfer agent fees. Integrity Fund Services, Inc. also acts as the Fund's accounting services agent for a monthly fee equal to the sum of a fixed fee of $2,000, and a variable fee equal to 0.05% of the Fund's average daily net assets on an annual basis for the Fund's first $50 million and at a lower rate on the average daily net assets in excess of $50 million. The Fund has recognized $37,098 of accounting service fees for the year ended July 31, 2003. The Fund has a payable to Integrity Fund Services, Inc. of $3,353 at July 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 $13,543,137 and $2,382,930, respectively, for the year ended July 31, 2003. NOTE 6. INVESTMENT IN SECURITIES At July 31, 2003, the aggregate cost of securities for federal income tax purposes was substantially the same for financial reporting purposes at $33,072,686. The net unrealized depreciation of investments based on the cost was $365,700, which is comprised of $489,694 aggregate gross unrealized appreciation and $855,394 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 Year Ended Year Ended Year Ended Year Ended Year Ended July 31, 2003 July 31, 2002 July 31, 2001 July 31, 2000 July 30, 1999 ---------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD....... $ 11.54 $ 11.47 $ 10.99 $ 11.61 $ 11.68 ---------------------------------------------------------------------------------- Income from Investment Operations: Net investment income................. $ .49 $ .55 $ .57 $ .57 $ .56 Net realized and unrealized gain (loss) on investment and futures transactions.......................... (.45) .07 .48 (.59) (.07) ---------------------------------------------------------------------------------- Total Income (Loss) From Investment Operations......................... $ .04 $ .62 $ 1.05 $ (.02) $ .49 ---------------------------------------------------------------------------------- Less Distributions: Dividends from net investment income.. $ (.49) $ (.55) $ (.57) $ (.57) $ (.56) Distributions from net capital gains.. .00 .00 .00 (.03) .00 ---------------------------------------------------------------------------------- Total Distributions................ $ (.49) $ (.55) $ (.57) $ (.60) $ (.56) ---------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD............. $ 11.09 $ 11.54 $ 11.47 $ 10.99 $ 11.61 ================================================================================== Total Return............................... 0.28%(A) 5.46%(A) 9.78%(A) (0.12%)(A) 4.25%(A) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ........................ $ 31,799 $ 21,995 $ 18,131 $ 15,862 $ 16,135 Ratio of net expenses (after expense assumption) to average net assets 0.65%(B) .51%(B) 0.43%(B) 0.44%(B) 0.36%(B) Ratio of net investment income to average net assets..................... 4.21% 4.69% 5.06% 5.08% 4.74% Portfolio turnover rate................ 9.39% 15.77% 12.24% 20.89% 32.09% (A) Excludes maximum sales charge of 4.25%. (B) During the periods indicated above, Integrity Mutual Funds, Inc. or Ranson Capital Corporation assumed/waived expenses of $124,432, $137,514, $133,456, $127,129, and $133,089, respectively. If the expenses had not been assumed/waived, the annualized ratio of total expenses to average net assets would have been 1.11%, 1.19%, 1.23%, 1.22%, and 1.23%, respectively.
The accompanying notes are an integral part of these financial statements. TAX INFORMATION --------------- FOR THE YEAR ENDED JULY 31, 2003 (UNAUDITED) We are required to advise you within 60 days of the Fund's fiscal year-end regarding the federal tax status of distributions received by shareholders during such fiscal year. The distributions made during the fiscal year by the Fund were earned from the following sources: DIVIDENDS AND DISTRIBUTIONS PER SHARE - -------------------------------------
To Shareholders From Net From Net Realized From Net Realized of Record Payment Date Investment Income Short-Term Gains Long-Term Gains - ----------------------------------------------------------------------------------------------------------------------- August 29, 2002 August 30, 2002 .043600 - - September 27, 2002 September 30, 2002 .041748 - - October 30, 2002 October 31, 2002 .041994 - - November 28, 2002 November 29, 2002 .040920 - - December 30, 2002 December 31, 2002 .043854 - - January 30, 2003 January 31, 2003 .041826 - - February 27, 2003 February 28, 2003 .041475 - - March 28, 2003 March 31, 2003 .039269 - - April 29, 2003 April 30, 2003 .040477 - - May 29, 2003 May 30, 2003 .038852 - - June 27, 2003 June 30, 2003 .038786 - - July 30, 2003 July 31, 2003 .034175 - -
SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISORS. INDEPENDENT AUDITOR'S REPORT ---------------------------- To the Shareholders and Board of Trustees of The Oklahoma Municipal Fund We have audited the accompanying statement of assets and liabilities of The Oklahoma Municipal Fund (one of the portfolios constituting the Ranson Managed Portfolios), including the schedule of investments as of July 31, 2003, the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of July 31, 2003, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Oklahoma Municipal Fund of the Ranson Managed Portfolios as of July 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. BRADY, MARTZ & ASSOCIATES, P.C. Minot, North Dakota USA September 5, 2003 ITEM 2. CODE OF ETHICS. (a) The registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. (b) For purposes of this Item, the term "code of ethics" means written standards that are reasonably designed to deter wrongdoing and to promote: (1) Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; (2) Full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to, the Commission and in other public communications made by the registrant; (3) Compliance with applicable governmental laws, rules, and regulations; (4) The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and (5) Accountability for adherence to the code. (c) The registrant must briefly describe the nature of any amendment, during the period covered by the report, to a provision of its code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics definition enumerated in paragraph (b) of this Item. The registrant must file a copy of any such amendment as an exhibit pursuant to Item 10(a), unless the registrant has elected to satisfy paragraph (f) of this Item by posting its code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by undertaking to provide its code of ethics to any person without charge, upon request, pursuant to paragraph (f)(3) of this Item. NOT APPLICABLE (d) If the registrant has, during the period covered by the report, granted a waiver, including an implicit waiver, from a provision of the code of ethics to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this Item, the registrant must briefly describe the nature of the waiver, the name of the person to whom the waiver was granted, and the date of the waiver. NOT APPLICABLE. (e) If the registrant intends to satisfy the disclosure requirement under paragraph (c) or (d) of this Item regarding an amendment to, or a waiver from, a provision of its code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions and that relates to any element of the code of ethics definition enumerated in paragraph (b) of this Item by posting such information on its Internet website, disclose the registrant's Internet address and such intention. NOT APPLICABLE. (f) The registrant must: (1) File with the Commission, pursuant to Item 10(a), a copy of its code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, as an exhibit to its annual report on this Form N-CSR; (2) Post the text of such code of ethics on its Internet website and disclose, in its most recent report on this Form N-CSR, its Internet address and the fact that it has posted such code of ethics on its Internet website; or (3) Undertake in its most recent report on this Form N-CSR to provide to any person without charge, upon request, a copy of such code of ethics and explain the manner in which such request may be made. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. (a) (1) Integrity Mutual Fund's board of directors has determined that there is one audit committee financial expert serving on its audit committee. (2) Lynn Aas is the audit committee financial expert and is considered "independent." In order to be considered "independent", a member of an audit committee may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee: (i) Accept directly or indirectly any consulting, advisory, or other compensatory fee from the issuer; or (ii) Be an "interested person" of the investment company as defined in Section 2(a)(19) of the Act (15 U.S.C. 80a-2(a)(19)). (3) If the registrant provides the disclosure required by paragraph (a)(1)(ii) of this Item, it must explain why it does not have an audit committee financial expert. NOT APPLICABLE. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) Disclose, under the caption Audit Fees, the aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. (b) Disclose, under the caption Audit-Related Fees, the aggregate fees billed for each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category. (c) Disclose, under the caption Tax Fees, the aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. Registrants shall describe the nature of the services comprising the fees disclosed under this category. (d) Disclose, under the caption All Other Fees, the aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than services reported in paragraphs (a) through (c) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category. (e) (1) Disclose the audit committee's pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. (2) Disclose the percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. (f) If greater than 50 percent, disclose the percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees. (g) Disclose the aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant. (h) Disclose whether the registrant's audit committee of the board of directors has considered whether the provision of non-audit services that were rendered to the registrant's investment adviser (not including any subadviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence. NOT REQUIRED UNTIL AFTER DECEMBER 15, 2003, FOR ANNUAL REPORTS. ITEMS 5. Not applicable ITEMS 6. Reserved ITEM 7. Not applicable ITEM 8. Reserved ITEM 9. CONTROLS AND PROCEDURES. (a) Disclosure Controls and Procedures. The Principal Executive and Financial Officers concluded that the Registrant's Disclosure Controls and Procedures are effective based on their evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report. (b) Internal Controls. There were no significant changes in Registrant's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. ITEM 10. EXHIBITS. Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. RANSON MANAGED PORTFOLIOS BY: /s/ Robert E. Walstad - ------------------------- ROBERT E. WALSTAD CHIEF EXECUTIVE OFFICER Date: September 26, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. RANSON MANAGED PORTFOLIOS BY: /s/ Robert E. Walstad - ------------------------- ROBERT E. WALSTAD CHIEF EXECUTIVE OFFICER Date: September 26, 2003 EX-99.CERT 3 ransoncert92603.txt CERTIFICATION CERTIFICATIONS I, Robert E. Walstad certify that: 1. I have reviewed this report on Form N-CSR of Ranson Managed Portfolios; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: September 26, 2003 /s/ Robert E. Walstad President ----------------- ---------------------------------------------- [Signature] [Title] EX-99.906 CERT 4 ranson90692603.txt 906 CERTIFICATION Exhibit EX-99.906 CERT ---------------------- CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Name of Issuer: Ranson Managed Portfolios In connection with the Report on Form N-CSR of the above-named issuer that is accompanied by this certification, the undersigned hereby certifies, to his knowledge, that: 1. The Report fully complies with the requirements of Section 13(a) or 15 (d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all materials respects, the financial condition and results of operations of the issuer. Date: September 26, 2003 ------------------ /s/ Robert E. Walstad - ----------------------- Robert E. Walstad Chief Executive Officer EX-99.CODE ETH 5 excodeethics92603.txt CODE OF ETHICS CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND PRINCIPAL FINANCIAL OFFICERS OF THE INTEGRITY MUTUAL FUNDS, INC., COMPLEX This Code of Ethics (the "Code") for Principal Executive and Principal Financial Officers has been adopted by each of the investment companies within the Integrity Mutual Funds, Inc. complex (collectively, "Funds", and each, "Company") to effectuate compliance with Section 406 under the Sarbanes-Oxley Act of 2002 and the rules adopted to implement Section 406. This Code applies to each Company's principal executive officer, principal financial officer, controller or persons deemed to be performing similar critical financial and accounting functions (the "Covered Officers"). PURPOSE OF THE CODE This Code sets forth standards and procedures that are reasonably designed to promote: Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; Full, fair, accurate, timely and understandable disclosure in reports and documents that a registrant files with, or submits to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Funds; Compliance with applicable laws and governmental rules and regulations; The prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and Accountability for adherence to the Code. In general, the principles that govern honest and ethical conduct, including the avoidance of conflicts of interest between personal and professional relationships, reflect, at the minimum: (1) the duty in performing any responsibilities as a Covered Officer, to place the interests of the Funds ahead of personal interests; (2) the fundamental standard that Covered Officers should not take inappropriate advantage of their positions; (3) the duty to assure that the Fund's financial reports to its shareholders are prepared honestly and accurately in accordance with applicable rules and regulations; and (4) the duties performed by the Covered Officer on behalf of the Funds are conducted in an honest and ethical manner. Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual and apparent conflicts of interest. ETHICAL HANDLING OF ACTUAL AND APPARENT CONFLICTS OF INTEREST A "conflict of interest" occurs when a Covered Officer's private interest interferes with the interests of the Funds. Certain conflicts of interest arise out of the relationships between Covered Officers and the Funds and already are subject to the conflict of interest provisions in the Investment Company Act of 1940 ("Investment Company Act") and the Investment Advisers Act of 1940 ("Investment Advisers Act"). This Code does not, and is not intended to, repeat or replace existing programs and procedures, and such conflicts fall outside of the parameters of this Code. Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between each Fund and the investment adviser of which the Covered Officers are also officers and/or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties, be involved in establishing procedures and implementing decisions that will have different effects on the adviser and the Funds. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Funds and the adviser and is consistent with the performance by the Covered Officers of their duties as officers of the Funds. If such duties are performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the Funds' Boards of Directors/Trustees ("Boards") that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes. PROHIBITED ACTIVITIES Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but keep in mind that these examples are not exhaustive. The foremost principle is that the personal interest of a Covered Officer should not be placed before the interest of the Funds or their shareholders. Each Covered Officer must: * Not use his personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Funds whereby the Covered Officer would benefit personally to the detriment of the Funds or their shareholders; * Not cause the Company to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit the Funds; * Not use material non-public knowledge of portfolio transactions made or contemplated for the Funds to trade personally or cause others to trade personally in contemplation of the market effect of such transactions; * Not intentionally cause a Fund to fail to comply with applicable laws, rules and regulations, including failure to comply with the requirement of full, fair, accurate, understandable and timely disclosure in reports and documents that a Fund files with, or submits to, the SEC and in public communications made by the Funds; * Not fail to acknowledge or certify compliance with this Code on an annual basis. There are some conflict of interest situations that should always be discussed with the Compliance Department or, under certain circumstances, the Board of Directors/Trustees if material. Examples of these include: * Service as a director on the board of any public company absent prior authorization by the Board; * The receipt of any gifts of more than de minimis value, generally gifts in excess of $100; * The receipt of any entertainment from any company with which the Funds have current or prospective business dealings unless such entertainment is business related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise a suggestion of unethical conduct; * Any ownership interest in, or employment relationship with, any of the Fund's service providers, other than its investment adviser, principal underwriter, administrator or any affiliated person thereof; * A direct or indirect financial interest in commissions paid by the Funds for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership. DISCLOSURE AND COMPLIANCE * Each Covered Officer must familiarize himself with the disclosure requirements generally applicable to the Funds; * Each Covered Officer must not knowingly misrepresent, or cause others to misrepresent, facts about the Funds to others, including to the Fund's directors/trustees and auditors, and to governmental regulators and self-regulatory organizations; * Each Covered Officer should, to the extent appropriate within his area of responsibility, consult with other officers and employees of the Funds and the adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with the SEC and in other public communications made by the Funds; and * It is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. REPORTING AND ACCOUNTABILITY Each Covered Officer must: * Upon adoption of the Code or upon becoming a Covered Officer, affirm in writing to the Board that he has received, read, understands and will adhere to this Code; * Annually affirm to the Board that he has received and read the Code and that he understands that he is subject to, and has complied with, the requirements of the Code; * Not retaliate against any other Covered Officer or any employee of the Funds or their affiliated persons for reports of potential violations that are made in good faith; and * Notify Compliance, who will then notify the Fund's Audit Committee or the Fund's legal counsel promptly if he knows of any violation of this Code or if a potential violation exists. Failure to do so is itself a violation of this Code. The Fund's Audit Committee (the "Committee") or in their discretion, the Fund's legal counsel, is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. Any approvals or waivers sought by the Principal Executive Officer will be considered by the Committee. In determining whether to waive any of the provisions of this Code, the Committee will consider whether the proposed waiver (1) is prohibited by the Code; (2) is consistent with honest and ethical conduct; and (3) will result in a conflict of interest between the Covered Officer's personal and professional obligations to the Funds. INVESTIGATING ACTUAL AND APPARENT CONFLICTS OF INTEREST The Funds will follow these procedures in investigating and enforcing the Code: * The Committee will take all appropriate action to investigate any potential violations reported to them; * If, after such investigation, the Committee believes that no violation has occurred, no further action is necessary; * Any matter that the Committee believes is a violation will be reported to the Board; * If the Board agrees that a violation has occurred, it will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer; * The Committee will be responsible for granting waivers, as appropriate; and * Any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. OTHER POLICIES AND PROCEDURES This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. While other policies or procedures of the Funds, the Funds' adviser, principal underwriter, or other service providers govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. AMENDMENTS At least annually, the Board of Directors/Trustees of each Fund will review the Code and determine whether any amendments are necessary or desirable. Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the Board, including a majority of independent directors. RECORD RETENTION AND CONFIDENTIALITY All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly to the extent permitted by applicable laws, rules and regulations. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the appropriate Board and its counsel. FOR INTERNAL USE ONLY The Code is intended solely for the internal use by the Funds and does not constitute an admission, by or on behalf of any Fund, as to any fact, circumstance, or legal conclusion. /s/ Rorbet E.Walstad ---------------- Chief Executive Officer Date: September 24, 2003 Exhibit A Persons covered by this Code of Ethics: Chief Executive Officer Chief Financial Officer Controller -----END PRIVACY-ENHANCED MESSAGE-----