<PAGE>
DEAR SHAREHOLDER:
We are pleased to enclose the semi-annual report on the operations of Integrity
Fund of Funds, Inc. for the period from inception through June 30, 1995. The
Fund's portfolio and related financial statements are presented within for your
review.
The stock market, as measured by many averages and indices, turned in marked
growth during the period. Factors leading to rising stock prices included
Federal Reserve action, nominal inflation, reasonable economic growth and
leadership from the bond market.
Integrity Fund of Funds participated in the growth as the shares increased from
$10.00 to $11.42. Management has invested in a number of established growth,
growth-income, and aggressive growth funds after careful analysis and review.
Long-term capital appreciation and growth of income will continue as the primary
objectives, as the fund monitors the mutual fund industry for opportunities.
We invite your personal calls and visits.
Sincerely,
Robert E. Walstad
President
<PAGE>
SCHEDULE OF INVESTMENTS June 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
NAME OF ISSUER
Percentages represent the market value
of each investment category to total
net assets QUANTITY MARKET VALUE
-----------------------------------------------------------------
<S> <C> <C>
MUTUAL FUNDS (95.61%)
Berger One Hundred Fund 3,062 $ 52,761
Dodge & Cox Stock Fund 1,426 90,399
Fidelity Value Fund 490 22,199
Founders Growth Fund 11,065 157,234
INVESCO Dynamics Fund 2,806 34,154
Mutual Qualified Fund 4,981 151,081
Mutual Beacon Fund 5,017 176,350
Neuberger & Berman Guardian Fund 7,255 161,008
New York Venture Fund A 16,117 223,392
SAFECO Equity Fund 9,907 150,590
Scudder Growth & Income Fund 3,282 60,828
Twentieth Century Ultra Investors Fund 2,183 52,502
Vanguard\PRIMECAP Fund 4,829 120,505
Vanguard Index 500 Fund 2,916 149,203
---------------
TOTAL MUTUAL FUNDS (COST: $1,475,000) $1,602,206
SHORT-TERM SECURITIES (2.26%)
Federated Money Market Trust #092
(COST: $37,810) 37,810
---------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$1,512,810) $1,640,016
===============
</TABLE>
<PAGE>
FINANCIAL STATEMENTS June 30, 1995
STATEMENT OF ASSETS AND LIABILITIES June 30, 1995 (Unaudited)
-------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments in securities, at
value (cost: $1,512,810) $ 1,640,016
Security sales receivable 27,331
Accrued dividends receivable 1,459
Receivable for fund shares sold 9,011
Deferred organization costs 28,942
------------
Total Assets $ 1,706,759
------------
LIABILITIES
Accrued expenses $ 30,918
------------
Total Liabilities $ 30,918
------------
NET ASSETS $ 1,675,841
============
Net asset value per share, 146,711
shares outstanding $ 11.42
============
STATEMENT OF OPERATIONS for the six months ended June 30, 1995 (Unaudited)
-------------------------------------------------------------------------
INVESTMENT INCOME
Dividends and short-term gains $ 6,892
------------
Total Investment Income $ 6,892
------------
EXPENSES
Management fees $ 3,654
Custodian fees 240
Transfer agent fees 758
Service Fees 1,015
Printing and postage 14,575
License, fees, and registrations 8,341
Amortization of organization costs 3,383
------------
Total expenses $ 31,966
Less expenses waived or absorbed
by the Fund's manager 25,469
------------
Total Net Expenses $ 6,497
------------
NET INVESTMENT INCOME (LOSS) $ 395
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on
investment transactions $ 617
Net change in unrealized
appreciation (depreciation) of
investments 127,206
------------
Net realized and unrealized
gain (loss) on investments $ 127,823
------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 128,218
============
</TABLE>
<PAGE>
FINANCIAL STATEMENTS June 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS for the six months ended June 30, 1995 (Unaudited)
-------------------------------------------------
For the Six Months
ended June 30, 1995
(Unaudited)
-------------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income (loss) $ 395
Net realized gain (loss) on investments 617
Net unrealized appreciation (depreciation) on investments 127,206
-------------
Net Increase (Decrease) in Net Assets Resulting From
Operations $ 128,218
-------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sale of shares $ 1,553,296
Cost of shares redeemed (5,673)
-------------
Net Increase (Decrease) in Net Assets Resulting From
Capital Share Transactions $ 1,547,623
-------------
TOTAL INCREASE IN NET ASSETS $ 1,675,841
NET ASSETS, BEGINNING OF PERIOD $ 0
-------------
NET ASSETS, END OF PERIOD $ 1,675,841
=============
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS June 30, 1995 (Unaudited)
Note 1. ORGANIZATION
Integrity Fund of Funds, Inc. (the Fund) is registered under the
Investment Company Act of 1940 as a diversified, open-end management
investment company. The Fund incorporated under the laws of the State
of North Dakota on June 1, 1994 and commenced operations on January 3,
1995.
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT SECURITY VALUATION -- Investments in securities for which
market quotations are readily available are valued at the last reported
sales price or net asset value at the close of each business day.
Securities for which market quotations are not readily available are
valued at fair value as determined in good faith by the portfolio
management team. The Fund follows industry practice and records
security transactions on the trade date.
DEFERRED ORGANIZATION COSTS -- Costs incurred in connection with the
initial registration and public offering of the shares of the Fund
amounted to $32,325. These costs have been paid by ND Holdings, Inc.
(the Fund's sponsor) and may be reimbursed by the Fund. Repayment of
these costs are currently being waived by the Fund's sponsor. These
costs are being amortized over a five year period. If the Manager
redeems any or all of its shares in the Fund representing initial
capital prior to the end of the 60-month amortization period, the
manager will reimburse the Fund for the unamortized balance in the same
proportion as the number of shares redeemed bear to the number of
initial shares outstanding at the time of redemption.
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, including any net realized gain on investments, to
its shareholders. Therefore, no provision for income taxes is required.
DISTRIBUTIONS TO SHAREHOLDERS-- The Fund will distribute dividends from
net investment income and any net realized capital gains at least
annually. Dividends and distributions are reinvested in additional
shares of the Fund at net asset value or payable in cash.
DIVIDEND INCOME -- Dividend income is recognized on the ex-dividend
date.
<PAGE>
Note 3. SHARE TRANSACTIONS
As of June 30, 1995, there were 1,000,000,000 shares of $.0001 par
value authorized; 146,711 shares were outstanding.
Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
Shares Amount
------ ------
For the six months ended For the six months ended
June 30, 1995 June 30, 1995
---------------------------------------------------
<S> <C> <C>
Shares sold 148,638 $1,553,296
Shares redeemed (1,927) (5,673)
---------------------------------------------------
Net increase 146,711 $1,547,623
===================================================
</TABLE>
Note 4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
ND Money Management, Inc., the Fund's investment adviser, ND Capital,
Inc., the Fund's underwriter, and ND Resources, Inc., the Fund's
transfer agent, are subsidiaries of ND Holdings, Inc., the Fund's
sponsor. As of June 30, 1995, ND Capital, Inc., owns 10,000 shares of
the Fund.
The Fund has engaged ND Money Management, Inc., 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 0.90%
of the Fund's average daily net assets. The Fund has recognized $3,654
of investment advisory and management fees for the period ended June
30, 1995. The Fund has a payable to ND Money Management, Inc. of $1,095
at June 30, 1995 for management fees. Certain officers and directors of
the Fund are also officers and directors of the investment adviser.
ND Capital, Inc. is the Fund's principal underwriter. The Fund pays ND
Capital service fees computed at an annual rate of 0.25% of the Fund's
average daily net assets. Capital, in turn, pays dealers service fees
for personal service to shareholders and/or the maintenance of
shareholder accounts. The Fund has recognized $1,015 of service fees
for the period ended June 30, 1995. The Fund has a payable to ND
Capital, Inc. of $304 at June 30, 1995 for service fees. Certain
officers and directors of the Fund are also officers and directors of
the underwriter.
Note 5. INVESTMENT SECURITY TRANSACTIONS
The cost of purchases and proceeds from the sales of investment
securities (excluding short-term securities) aggregated $1,500,000 and
$27,331, respectively, for the period ended June 30, 1995.
Note 6. INVESTMENT IN SECURITIES
At June 30, 1995, the aggregate cost of securities for federal income
tax purposes was $1,512,810, and the net unrealized appreciation of
investments based on the cost was $127,206, which is comprised of
$127,206 aggregate gross unrealized appreciation and $0 aggregate gross
unrealized depreciation.
<PAGE>
Note 7. MATTERS SUBMITTED TO A VOTE OF SHAREHOLDERS
A special meeting of the shareholders of Integrity Fund of Funds, Inc.
was held on March 31, 1995. A quorum was declared present and voting for
the election of directors occurred with the following results:
<TABLE>
<CAPTION>
Votes Cast To Votes Cast To
Votes Cast Withhold All Withhold An
Nominee For Nominees Nominees Individual Nominee Abstentions
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lynn W. Aas 31,825.827 0 0 99.108
Orlin W. Backes 31,825.827 0 0 99.108
Arthur A. Link 31,825.827 0 0 99.108
Peter A. Quist 31,825.827 0 0 99.108
Robert E. Walstad 31,825.827 0 0 99.108
</TABLE>
In addition, Brady, Martz & Associates P.C. was ratified as the Fund's
independent public accountant with 31,825.827 votes cast for, 0 votes
cast against, and 99.108 abstentions.
<PAGE>
FINANCIAL HIGHLIGHTS Selected per share data and ratios for the period indicated
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six Months
Ended June 30, 1995
(Unaudited)
-------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
-------------------
Income from Investment Operations:
Net investment income (loss) $ .03
Net realized and unrealized gain (loss) 1.39
on investments
-------------------
Total From Investment Operations $ 1.42
-------------------
Less Distributions:
From net investment income $ 0
From net realized gain on $ 0
investments
-------------------
Total Distributions $ 0
-------------------
NET ASSET VALUE, END OF PERIOD $11.42
===================
Total Return 28.40% (A)(C)
Ratios/Supplemental Data:
Net assets, end of period (in $1,676
thousands)
Ratio of net expenses (after
expense assumption) to average 1.60% (A)(B)
net assets
Ratio of net investment income to .10% (A)
average net assets
Portfolio turnover rate 3.59%
</TABLE>
(A) Ratio was annualized.
(B) During the period ended June 30, 1995, ND Holdings, Inc. assumed expenses
of $25,469. If the expenses had not been assumed, the annualized ratio of
total expenses to average net assets would have been 7.87%.
(C) Excludes contingent deferred sales charge of 1.5%.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 1512810
<INVESTMENTS-AT-VALUE> 1640016
<RECEIVABLES> 37801
<ASSETS-OTHER> 28942
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1706759
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 30918
<TOTAL-LIABILITIES> 30918
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 146711
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 395
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 617
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 127206
<NET-ASSETS> 1675841
<DIVIDEND-INCOME> 4561
<INTEREST-INCOME> 0
<OTHER-INCOME> 2331
<EXPENSES-NET> 6497
<NET-INVESTMENT-INCOME> 395
<REALIZED-GAINS-CURRENT> 617
<APPREC-INCREASE-CURRENT> 127206
<NET-CHANGE-FROM-OPS> 128218
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 148638
<NUMBER-OF-SHARES-REDEEMED> 1927
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1675841
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3654
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 31966
<AVERAGE-NET-ASSETS> 812537
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 1.39
<PER-SHARE-DIVIDEND> .00
<PER-SHARE-DISTRIBUTIONS> .00
<RETURNS-OF-CAPITAL> .00
<PER-SHARE-NAV-END> 11.42
<EXPENSE-RATIO> 1.60<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1> Ratio of net expenses to average net assets, annualized.
</FN>
</TABLE>
