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
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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%
<FN>
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.
</FN>
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%
<FN.
Market sectors are breakdowns of the Fund's portfolio holdings into specific
investment classes.
These percentages are subject to change.
</FN>
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.
- ----------------------------
<FN>
* 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.
</FN>
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
============
<FN>
* 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.
</FN>
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%
<FN>
(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.
</FN>
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%
<FN>
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.
</FN>
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%
<FN>
Market sectors are breakdowns of the Fund's portfolio holdings into specific
investment classes.
These percentages are subject to change.
</FN>
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.
- ----------------------------
<FN>
* 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.
</FN>
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
============
<FN>
* 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.
</FN>
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%
<FN>
(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.
</FN>
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%
<FN>
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.
</FN>
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%
<FN>
Market sectors are breakdowns of the Fund's portfolio holdings into specific
investment classes.
These percentages are subject to change.
</FN>
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.
- ----------------------------
<FN>
* 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.
</FN>
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
<FN>
* 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.
</FN>
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%
<FN>
(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.
</FN>
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%
<FN>
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.
</FN>
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%
<FN>
Market sectors are breakdowns of the Fund's portfolio holdings into specific
investment classes.
These percentages are subject to change.
</FN>
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.
- ----------------------------
<FN>
* 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.
</FN>
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
===========
<FN>
* 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.
</FN>
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%
<FN>
(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.
</FN>
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