Filing by Rule 497(e) of the 1933 Act
File No. 33-85332
May 1, 1999
[INTEGRITY MUTUAL FUNDS LOGO]
INTEGRITY FUND OF FUNDS, INC.
PROSPECTUS
_______________________________________________________________________________
This prospectus is intended to provide important information to help you
evaluate whether the Integrity Fund of Funds, Inc. may be right for you. Please
read it carefully before investing and keep it for future reference. To learn
more about how the Integrity Mutual Funds can help you achieve your financial
goals, call us at (800) 276-1262.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation
to the contrary is a criminal offense.
_______________________________________________________________________________
Table of Contents
Page
The Fund 3
Integrity Fund of Funds, Inc. 3
Fund Summary 3
How the Fund Has Performed 4
What are the Fund's Expenses? 5
Fund Management 6
Principal Investment Strategies 7
Non-Principal Investment Strategies 9
Other Fund Policies 9
Portfolio Transactions 10
Principal Risk Factors 10
Other Risk Factors 12
How To Purchase Shares 12
Systematic Investing - The Monthomatic Investment Plan 13
Special Services 14
General Information Regarding Distribution 14
How To Sell Shares 15
Systematic Withdrawal 16
Distributions and Taxes 16
Net Asset Value 17
Fund Service Providers 18
Shareholder Inquiries 18
Financial Highlights 19
2
INTEGRITY FUND OF FUNDS, INC.
FUND SUMMARY
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation and growth of income. Current
income is a secondary objective of the Fund.
PRINCIPAL STRATEGIES: HOW THE FUND PURSUES ITS OBJECTIVE
The Fund invests primarily in a diversified group of other registered open-end
investment companies which, in turn, invest principally in equity securities.
We seek underlying funds we believe will advance the objective of the Fund. In
selecting underlying funds, we consider the underlying fund's objectives,
policies, performance, and management as well as their overall operations
(such as size, fees and expenses, and services). We invest in approximately 15
to 50 underlying funds. We normally invest in underlying funds that are
classified as growth, aggressive growth, or growth-income funds. The Fund
generally focuses on underlying funds which primarily invest in companies with
market capitalization over $500 million. The Fund generally invests in
seasoned underlying funds that have had favorable performance returns compared
to other similar funds and market indexes.
The Fund may also invest in stock index futures and options on stock index
futures for hedging purposes.
PRINCIPAL RISKS: WHAT ARE THE RISKS OF INVESTING IN THE FUND?
The assets of the Fund are invested in other investment companies, so the
investment performance and risk of the Fund is directly related to the
investment performance and risks of the underlying funds held. The risks of
the underlying funds include market risk, interest rate risk, income risk, and
credit risk. The ability of the Fund to meet its investment objective is
directly related to the ability of the underlying funds held to meet their
objectives as well as the allocation among those underlying funds. There can
be no assurance that the investment objective of the Fund or any underlying
fund will be achieved.
The Fund and the underlying funds have transactional and operating expenses.
An investor in the Fund will therefore bear not only his or her proportionate
share of the Fund's expenses, but also the similar expenses of the funds in
which the Fund invests.
The value of the underlying funds' investments, and thus the net asset value
("NAV") of both the underlying funds' and the Fund's shares, will fluctuate
in response to changes in market and economic conditions, as well as the
financial condition and prospects of issuers in which the underlying funds
invest.
Because the Fund uses hedging strategies, the Fund also bears the risk that the
price movements of the futures and options will not correlate with the price
movements of the portfolio securities being hedged.
An investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. As with any mutual fund investment, loss of money is a risk of
investing.
IS THIS FUND RIGHT FOR YOU?
The Fund may be a suitable investment for you if you are seeking:
* Long-term growth potential and income growth;
* The convenience of a diversified portfolio of mutual funds in a single
investment.
You should not invest in this Fund if you are:
* Unwilling to accept share price fluctuations;
* Investing to meet short-term financial goals.
3
HOW THE FUND HAS PERFORMED
The chart and table below provide some indication of the risk of investing
in the Fund by showing performance changes year to year and how average annual
returns over one-year and the life of the Fund compare with those of a broad
measure of market performance. Past performance is not an indication of future
performance.
ANNUAL TOTAL RETURNS (AS OF 12/31 EACH YEAR)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1995 1996 1997 1998
25.20% 13.84% 14.65% 12.17%
</TABLE>
For the periods shown, the highest and lowest quarterly returns were 16.93%
and -13.87%, respectively for the quarters ending 12/31/98 and 9/30/98. The
bar chart and highest/lowest quarterly returns do not reflect sales charges,
which would reduce returns, while the average annual return table does.
Average Annual Total Returns
for the Periods Ending December 31, 1998
1 Year Inception(1)
______________________________________________
Fund 10.67% 16.14%
S&P 500 (2) 26.67% 28.01%
(1) The inception period is from January 3, 1995 to December 31, 1998.
(2) The S&P 500 returns assume reinvestment of dividends, but do not include
any brokerage commissions, sales charges, or other fees.
4
WHAT ARE THE FUND'S EXPENSES?
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
______________________________
SHAREHOLDER FEES (1),(2) (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases NONE
Maximum Deferred Sales Charge (Load)
(as a percentage of lesser of purchase price or redemption
proceeds) 1.50%(3)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends NONE
Redemption Fees NONE
Exchange Fee NONE
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
Management Fees(4) 0.90%
12b-1 Fees NONE
Other Expenses
Administrative Expenses 0.47%
Service Fees(5) 0.25%
Total Other Expenses 0.72%
Total Annual Fund _____
Operating Expenses(3),(6) 1.62%
(1) Authorized brokers and other firms may charge additional fees to effect
shareholder transactions. Please see their materials for details.
(2) An investor will not only bear the cost of any deferred sales charge (load)
of the Fund, but also his or her proportionate share of sales charges
(loads) of the funds in which the Fund invests.
(3) Shares redeemed within five years of purchase are subject to a contingent
deferred sales charge ("CDSC") of 1.5%. Purchases of $1 million or more
are subject to a reduced CDSC if redeemed within 1 year of purchase. See
"How to Purchase Shares."
(4) An investor will bear not only his or her proportionate share of the Fund's
transactional and operating expenses but also similar expenses of the funds
in which the Fund invests. Generally, the operating expenses of the
underlying funds have ranged from 0.50% to 1.50% of average net assets.
(5) The Fund pays dealers fees up to 0.25% of the Fund's net assets for
personal service to shareholders and/or maintenance of shareholder
accounts.
(6) The investment adviser has voluntarily agreed to waive fees through April
30, 2000 in order to prevent Total Operating Expenses (excluding extra-
ordinary expenses) from exceeding 1.60% of the average daily net asset
value of Fund shares. After fee waivers and expense reimbursements, the
Fund's total annual operating expenses was 1.60% for the fiscal year ended
December 31, 1998.
5
EXAMPLE:
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.
This example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that
the Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions your costs would be:
1 year 3 years 5 years 10 years
________________________________________
$ 310 $ 660 $ 1,030 $ 1,920
You would pay the following expenses if you did not redeem your shares:
1 year 3 years 5 years 10 years
________________________________________
$ 160 $ 510 $ 880 $ 1,920
FUND MANAGEMENT
The overall management of the business and affairs of the Fund is the respon-
sibility of the Fund's Board of Directors. ND Money Management, Inc. ("ND
Management"), 1 North Main, Minot, North Dakota 58703, is the investment
adviser to the Fund. ND Management has been advising mutual funds since 1989
and is currently investment adviser to four funds with assets under management
of approximately $168 million. ND Management was also the investment
adviser to the ND Insured Income Fund, Inc. from 1991 to 1998. ND Manage-
ment is responsible for the selection and ongoing monitoring of the securities
in the Fund's portfolio, and, at its own expense, provides all necessary
administrative services, office space, equipment, and clerical services for
managing the Fund's investments and effecting its portfolio transactions. ND
Management also pays the salaries and fees of all officers and directors of the
Fund who are affiliated persons of ND Management.
Monte L. Avery, portfolio manager, is primarily responsible for the day-to-day
management of the Fund's portfolio under the supervision and direction of
Robert E. Walstad, president of the Fund. Mr. Avery has been portfolio manager
since January 1996. Mr. Avery started in the securities business with Paine-
Webber in 1981 as a retail broker transferring to Dean Witter in 1982. In
1988, Mr. Avery joined Bremer Bank, N.A. (Minot, North Dakota) to help start
their Invest Center. Mr. Avery returned to Dean Witter in 1993 until he joined
ND Holdings, Inc. ("ND Holdings") in 1995. Since that time, Mr. Avery has
been a co-portfolio manager of the following funds: ND Tax-Free Fund,
Inc., South Dakota Tax-Free Fund, Inc., and Montana Tax Free-Fund, Inc. Mr.
Walstad is also president of these funds and has supervised and directed the
management of the portfolios of these funds since they commenced operations.
Mr. Walstad started in the securities business with PaineWebber as a retail
broker in 1972. In 1977, he became branch manager with Dean Witter Reynolds
and spent ten years in that capacity. In 1987, Mr. Walstad founded ND
Holdings. The Fund's Investment Adviser and Underwriter are wholly-owned
subsidiaries of ND Holdings.
6
For providing management services, ND Management is paid an annual fund manage-
ment fee by the Fund of 0.90% of the Fund's average daily net assets, payable
monthly.
For the most recent fiscal year, the Fund paid to ND Management, after expense
reimbursements, management fees of 0.90% of average net assets.
The Fund pays for its own operating expenses such as custodial, transfer agent,
accounting, and legal fees; brokerage fees and commissions, if any; costs
attributable to investor services; insurance premiums; interest; organizational
expenses; taxes; and extraordinary expenses. The Fund also pays dealers fees
up to 0.25% of the Fund's net assets for personal service to shareholders
and/or the maintenance of shareholder accounts. See the Statement of
Additional Information for an additional discussion of Fund expenses.
You should note that because the Fund invests in other funds, you pay not only
the transactional expenses (such as a deferred sales charge) and a pro rata
share of the operating expenses of the Fund, you will also pay a portion of
similar expenses of the underlying funds. An investor in the Fund therefore
will indirectly pay higher expenses than if the underlying fund shares were
owned directly. You may also receive taxable capital gains distributions to a
greater extent than if the underlying funds were owned directly.
PRINCIPAL INVESTMENT STRATEGIES
SECURITIES THE FUND INVESTS IN
The Fund's investment objective may not be changed without shareholder
approval. For a detailed discussion of the Fund's fundamental investment
policies, see the Statement of Additional Information.
INVESTMENT COMPANIES
Under normal circumstances, the Fund invests at least 80% of its assets in
shares of registered open-end investment companies ("underlying funds"). The
Fund will normally invest in approximately fifteen to fifty underlying funds
and may invest up to 25% of its total assets in any one underlying fund. The
Fund will generally invest in underlying funds that invest primarily in common
stock and which seek long-term capital appreciation and growth of income with
current income of secondary importance. The Fund normally invests in underly-
ing funds that are classified as growth, aggressive growth, or growth-income
funds.
The Fund generally focuses in underlying funds which primarily invest in
companies with a market capitalization of over $500 million. The underlying
funds may also have a portion of their assets invested in fixed-income securi-
ties. These underlying funds typically invest primarily in investment grade
quality securities with respect to their assets allocated to fixed-income
securities.
The Fund generally invests in seasoned underlying funds. Accordingly, the Fund
normally invests in underlying funds with at least a five year operating
history and at least $300 million assets under management. The above policies
may be changed without shareholder approval.
7
The Fund will not purchase shares of closed-end investment companies or in
investment companies which are not registered with the Securities and Exchange
Commission. The Fund intends to invest only in underlying funds which qualify
for treatment as a regulated investment company ("RIC") under the Internal
Revenue Code. If an underlying fund fails to qualify as a RIC, it may be
subject to federal income tax. Although there is no assurance an underlying
fund will qualify as a RIC, the Fund will promptly dispose of any shares in
its portfolio which have been issued by a fund which has failed to qualify
as a RIC.
HOW WE SELECT INVESTMENTS
ND Management selects underlying funds based primarily upon its assessment of
the underlying fund's potential to advance the Fund's objective. ND Management
evaluates underlying funds based on their investment objectives, policies and
techniques, past performance, and management. ND Management will also consider
the fund's operations including: the fund's size, reputation, management
style, fees and expenses, portfolio composition and liquidity, and shareholder
services. In selecting funds, ND Management looks for funds that have had
favorable performance returns compared to similar funds or market indexes. ND
Management will compare the underlying fund's performance record over the past
3, 5, or 10 years (if available), against that of other funds and market
measurements.
RISK MANAGEMENT
HEDGING STRATEGIES
The Fund may also engage in various investment strategies designed to hedge
against changes in market conditions using stock index futures contracts and
options on stock index futures contracts. The Fund may enter into futures
contracts for the purchase or sale of stock indexes or purchase and sell
options on these futures contracts. The Fund uses these investment strategies
to hedge against changes in the values of securities the Fund owns or expects
to purchase and not for speculation. The Fund will not enter into such trans-
actions if the sum of the initial margin deposits and premiums paid for
unexpired options exceed 5% of the Fund's total assets. The ability of the
Fund to benefit from options and futures is largely dependent on ND Manage-
ment's ability to use these strategies successfully. If ND Management's
judgment about the general direction of markets is wrong, the overall perfor-
mance of the Fund will be poorer than if no such futures and options had been
used. In addition, the Fund's ability effectively to hedge all or a portion
of its portfolio through transactions in futures and options depends on the
degree to which price movements in the futures and options correlate with the
price movements in the Fund's portfolio. Consequently, if the price of the
futures and options moves more or less than the price of the security that is
subject to the hedge, the Fund will experience a gain or loss that will not be
completely offset by movements in the price of the security. The Fund could
lose money on futures transactions or an option can expire worthless. Losses
(or gains) involving futures can sometimes be substantial in part because a
relatively small price movement in a futures contract may result in an im-
mediate and substantial loss (or gain) for a fund. Use of options may also
(i) result in losses to the Fund, (ii) force the purchase or sale of portfolio
securities at inopportune times or for prices higher than or lower than current
market values, (iii) limit the amount of appreciation the Fund can realize on
its investments, (iv) increase the cost of holding a security and reduce the
returns on securities, or (v) cause the Fund to hold a security it might
otherwise sell.
8
TEMPORARY INVESTMENT STRATEGIES
The Fund may, from time to time, take temporary defensive positions that are
inconsistent with the Fund's principal investment strategies in attempting to
respond to adverse market, economic, political, or other conditions.
The Fund may therefore hold cash or may invest in money market mutual funds and
in short-term obligations including U.S. government securities (including U.S.
Treasury bills), commercial paper, certificates of deposit, and bankers'
acceptances as a temporary defensive measure. During these periods, the Fund
may not be able to achieve its investment objective. For more detailed infor-
mation on eligible short-term investments, see the Statement of Additional
Information.
NON-PRINCIPAL INVESTMENT STRATEGIES
As a non-principal investment strategy, the Fund may also invest in underlying
funds which invest primarily in long or short-term fixed-income securities that
are investment grade quality. We will invest in bond funds if we believe they
offer a potential for capital appreciation.
OTHER FUND POLICIES
Although the Fund invests primarily in shares of underlying funds, the Fund may
hold cash or may invest in money market mutual funds and in short-term obliga-
tions including U.S. government securities (including U.S. Treasury bills),
commercial paper, certificates of deposit, and bankers' acceptances to accumu-
late cash for investment and redemptions. Cash held for investments or
redemptions may not exceed 35% of the Fund's total assets.
The Fund and its affiliated persons will not purchase more than 3% of the total
outstanding shares of another fund in accordance with federal securities laws.
Because of this restriction, the Fund may have to forego certain investment
opportunities. In addition, the Fund may not invest more than 15% of its net
assets in illiquid securities.
The Fund may acquire shares of underlying funds that impose sales loads or
12b-1 distribution or service fees. The underlying funds, however, may offer
shareholder programs which reduce the sales loads such as quantity discounts,
rights of accumulation, or letters of intent. To the extent available, the
Fund will use these arrangements to reduce any sales load the Fund pays.
Because of these available discounts, the Fund in most cases will not pay a
sales charge of more than 1% of the public offering price (1.01% of the net
amount invested).
9
PORTFOLIO TRANSACTIONS
The Investment Adviser may consider a number of factors in determining which
brokers to use for the Fund's portfolio transactions. These factors include
research services, reasonableness of commissions, quality of services, and ex-
ecution and sale of Fund shares. When the Fund purchases the shares of under-
lying funds subject to a front-end sales load, the Investment Adviser
anticipates that the Fund's Underwriter, ND Capital, Inc. ("ND Capital") will
execute a substantial portion of these portfolio transactions. When ND Capital
acts as the dealer on these purchases, it may receive a dealer reallowance, up
to a maximum 1% of the public offering price. ND Capital will not be designated
as dealer if the dealer reallowance exceeds 1% of the public offering price.
ND Capital may also receive 12b-1 distribution and service fees from underlying
funds when assisting the Fund in purchasing shares of the underlying funds. In
addition, ND Capital may receive brokerage commissions on portfolio transac-
tions of underlying funds held in the Fund's portfolio.
PRINCIPAL RISK FACTORS
Risk is inherent in all investing. Investing in the Fund involves risk,
including the risk that you may receive little or no return on your investment
or that you may even lose part or all of your investment. Before you invest,
you should consider the following risks:
MARKET RISK: the risk that a particular stock, an industry, or stocks in
general may fall in value.
FUND RISK: the Fund's investment performance and risk is directly related to
the investment performance and risks of the underlying funds. The ability of
the Fund to achieve its investment objective is therefore dependent on a number
of factors, including the skills of the adviser of the underlying funds to
invest to meet the objectives of the underlying fund, to effectively respond to
changes in market conditions, and to maintain sufficient liquidity to meet
redemptions. The Fund is independent from any of the underlying funds and has
little voice in the management and investment practices of the underlying
funds.
INTEREST RATE RISK: to the extent the Fund invests in underlying funds that
invest in debt securities, the Fund is subject to interest rate risk. Interest
rate risk is the risk that the value of the Fund's portfolio will decline
because of rising market interest rates (bond prices move in the opposite
direction of interest rates). The longer the average maturity (duration) of
an underlying bond fund's portfolio, the greater its interest rate risk.
INCOME RISK: to the extent the Fund invests in underlying funds that invest in
debt securities, the Fund is subject to income risk. Income risk is the risk
that the income from the Fund's portfolio will decline because of falling
market interest rates. This can result when the underlying bond fund invests
the proceeds from the new share sales, or from matured or called bonds, at
market interest rates that are below the portfolio's current earnings rate.
10
CREDIT RISK: to the extent the Fund invests in underlying funds that invest in
debt securities, the Fund is subject to credit risk. Credit risk is the risk
that an issuer of a bond is unable to meet its obligation to make interest and
principal payments due to changing market conditions. Generally, lower rated
bonds provide higher current income but are considered to carry greater credit
risk than higher rated bonds. Underlying funds may invest in investment grade
and non-investment grade bonds (i.e., junk bonds). Year 2000 issues may affect
the ability of issuers to meet their payment obligations to their bond
holders, and may adversely affect their credit ratings.
LIQUIDITY: under federal securities laws, an underlying fund is not obligated
to redeem any securities in an amount exceeding 1% of its total outstanding
securities during any period of less than 30 days. The Fund therefore may not
be able to liquidate more than 1% of an underlying fund's securities when
desired.
INFLATION RISK: the risk that the value of assets or income from investments
will be less in the future as inflation decreases the value of money. As
inflation increases, the value of the Fund's assets can decline as can the
value of the Fund's distributions.
OTHER CONSIDERATIONS: the underlying funds have their own investment
objectives, policies, practices, and techniques, any one or all of which may
subject their assets to varying degrees of risk. Principal and certain non-
principal risks have been discussed in this prospectus. Additional non-
principal risks of certain of the practices of the underlying funds are
described further in the Statement of Additional Information. The Fund is
independent from any of the underlying funds and has little influence in
the investment practices of the underlying funds. If the Fund disagrees with
these practices, the Fund may have to liquidate its shares in the underlying
fund, which can entail further losses. In addition, the investment advisers
of the underlying funds may also simultaneously pursue inconsistent investment
strategies. For example, one underlying fund may be purchasing shares of the
same issuer that another underlying fund is selling. Under these circum-
stances, the Fund's indirect expenses would increase without any corresponding
investment benefit.
YEAR 2000 DISCLOSURE
ND Management and the Fund's service providers each rely on computer systems to
manage the Fund's investments, process transactions, and provide account
maintenance. Because of the way computers historically have stored dates, some
of these systems currently may not be able to correctly process activity
occurring in the year 2000. ND Management is working with the Fund's service
providers to adapt their systems to address this "Year 2000" issue. ND Manage-
ment and the Fund expects, but there can be no absolute assurance, that the
necessary work will be completed on a timely basis. Similar to the Fund, the
underlying funds and their service providers also rely on computer systems and
we are unable to predict what impact the Year 2000 problem will have on any
of the underlying funds.
11
OTHER RISK FACTORS
FOREIGN INVESTMENT RISK: to the extent the Fund invests in underlying funds
that invest in foreign securities, the Fund is subject to foreign investment
risk. Securities issued by foreign companies or governments present risks be-
yond those of securities of U.S. issuers. Such risks include political or
economic instability, changes in foreign currency exchange rates, and less
publicly available information. Prices of foreign securities also may be
more volatile and they may be less liquid than U.S. stocks.
HOW TO PURCHASE SHARES
You can buy shares at the offering price, which is the net asset value per
share without any up-front sales charge so that the full amount of your
purchase is invested in the Fund. If you sell your shares within five years
of purchase, you will have to pay a contingent deferred sales charge (CDSC) of
1.5% based on either your purchase price or what you sell your shares for,
whichever amount is lower. You do not pay a CDSC on any shares you purchase
by reinvesting dividends and capital gains. When you redeem shares subject
to a CDSC, the Fund will first redeem any shares that are not subject to a CDSC
or that represent an increase in the value of your Fund account due to
capital appreciation, and then redeem the shares you have owned in the order
purchased. When you redeem shares subject to a CDSC, the CDSC is deducted from
your redemption proceeds and paid to ND Capital. Purchases of $1 million
or more are subject to a reduced CDSC of 1% if shares are redeemed within 12
months of purchase.
Fund shares are also available for individual retirement accounts (IRAs),
401(k) Plans, and other retirement plans. See the Statement of Additional
Information or call (800) 276-1262 for additional information.
CDSC WAIVERS
The Funds may sell shares without a CDSC to:
* directors, officers, employees (including retirees) of the Fund, ND
Holdings, ND Management, and ND Capital for themselves or certain members
of their family;
* trusts, pension, profit-sharing, or other plans for the benefit of
directors, officers, employees (including retirees) of the Fund, ND
Holdings, ND Management, and ND Capital and certain members of their
families;
* authorized broker-dealers and financial institutions and certain employees
(including their spouses and children) of such dealers and institutions;
and
* any broker-dealer, financial institution, or other qualified firm which
does not receive commissions for selling shares to its clients.
Please refer to the Statement of Additional Information for detailed
eligibility requirements. Additional information is available by calling
(800) 276-1262.
12
MINIMUM INVESTMENTS AND SHARE PRICE
You may open an account with $1,000 ($100 for the Monthomatic Investment Plan
and $250 for an Individual Retirement Account) and make additional investments
at any time with as little as $50. The Fund may change these minimum initial
investments at any time. You may purchase shares from ND Capital or from
investment dealers who have sales agreements with ND Capital. If you do not
have a dealer, call (800) 276-1262 and ND Capital can refer you to one.
The price you pay for shares will depend on how and when the Fund receives your
order. You will receive the share price next determined after the Fund has
received your order. If you place your order by contacting the Fund directly,
your order must be received by the Fund prior to close of trading of the New
York Stock Exchange (normally 3:00 p.m. Minot, North Dakota time) for you to
receive that day's price. However, if you place your order through a dealer
prior to the close of trading of the New York Stock Exchange and the Fund
receives such order prior to the close of business of the Fund (normally
5:00 p.m. Minot, North Dakota time), you will receive that day's price.
Dealers are obligated to transmit orders promptly. See "Net Asset Value"
for a discussion of how shares are priced.
SYSTEMATIC INVESTING - THE MONTHOMATIC INVESTMENT PLAN
Once you have established a Fund account, systematic investing allows you to
make regular investments through automatic deductions from your bank account
(simply complete the appropriate section of the account application form) or
call ND Resources, Inc. ("ND Resources") at (800) 601-5593 for appropriate
forms.
With the Monthomatic Investment Plan, you can make regular investments of $50
or more per month by authorizing us to draw either checks or debits on your
bank account. Such account must have check or draft writing privileges. You
can stop the withdrawals at any time by sending a written notice to ND
Resources, the Fund's transfer agent, at P.O. Box 759, Minot, ND 58702. The
termination will become effective within 7 days after the transfer agent has
received the request. The Fund may terminate or modify this privilege at any
time and may immediately terminate a shareholder's monthomatic plan if any
item is unpaid by the shareholder's financial institution. There is no charge
for this plan.
13
SPECIAL SERVICES
To help make your investing with us easy and efficient, we offer you the
following services at no extra cost.
EXCHANGING SHARES
You may exchange Fund shares into an identically registered account at any time
for shares of any mutual fund advised and underwritten by ND Capital or Ranson
Capital Corporation or ND Management at net asset value. If the shares of the
original fund are subject to a CDSC, the CDSC and the holding period of your
original investment will be carried forward into the fund in which you are ex-
changing and applied in the event you redeem any or all of your shares in this
fund. If you paid a front-end sales charge on the shares being exchanged, you
will not pay a CDSC in the event you redeem any or all of your shares. Your
exchange must meet the minimum purchase requirements of the fund into which you
are exchanging and be available in your state. Because an exchange is treated
for tax purposes as a concurrent sale and purchase, and any gain may be subject
to tax, you should consult your tax adviser about the tax consequences of any
contemplated exchange.
The exchange privilege is not intended to allow you to use the Fund for short-
term trading. Because excessive exchanges may interfere with portfolio
management, raise Fund operating expenses, or otherwise have an adverse effect
on other shareholders, the Fund reserves the right to revise or suspend the
exchange privilege on 60 days' written notice, limit the amount or number of
exchanges, or reject any exchange. For additional information on how to exer-
cise the exchange privilege, call ND Resources at (800) 601-5593.
REINSTATEMENT PRIVILEGE
If you redeem Fund shares, you may reinstate all or part of your redemption
proceeds without incurring any additional charges. If you paid a CDSC, we
will refund your CDSC as additional shares in proportion to the reinstatement
amount of your redemption proceeds. Your holding period will also be rein-
stated. An investor exercising this privilege a year or more after redemption
must complete a new account application and provide proof that the investor was
a shareholder of the Fund. If you redeemed shares in a retirement account,
please review the plan document you received when you opened your account for
rules and limitations if you are repurchasing shares in the same retirement
account. The Fund may modify or terminate this privilege at any time.
GENERAL INFORMATION REGARDING DISTRIBUTION
ND Capital is the Fund's principal underwriter and is responsible for all
sales and promotional activities. For its services, ND Capital receives any
CDSC paid upon redemption of Fund shares. ND Capital pays sales commissions
to dealers and its salesmen who sell Fund shares. In addition, the Fund pays
dealers fees (in an amount not to exceed 0.25% of net assets) for personal
service to shareholders and/or the maintenance of shareholder accounts. For
additional information regarding compensation to the underwriter, see
"Portfolio Transactions".
14
HOW TO SELL SHARES
You may sell (redeem) your shares on any day the New York Stock Exchange is
open. The New York Stock Exchange is closed on weekends, national holidays,
and Good Friday. You will receive the share price next determined after the
Fund has received your properly completed redemption request as described
below. Your redemption request must be received before the close of trading
for you to receive that day's price. While the Fund does not charge a redemp-
tion fee, you may be assessed a CDSC, if applicable.
You can sell your shares at any time by sending a written request to the Fund,
c/o ND Resources, P.O. Box 759, Minot, ND 58702. To properly complete your
redemption request, your request must include the following information:
* The Fund's name;
* Your name and account number;
* The dollar or share amount you wish to redeem;
* The signature of each owner exactly as it appears on the account;
* The name of the person to whom you want your redemption proceeds paid (if
other than to the shareholder of record);
* The address where you want your redemption proceeds sent (if other than
the address of record);
* Any certificates you have for the shares (signed certificate or a duly
endorsed stock power); and
* Any required signature guarantees.
We will normally mail your check the next business day, but in no event more
than seven days after we receive your request. If you purchased your shares by
check, your redemption proceeds will not be mailed until your check has cleared
which may take up to 15 days from the date of purchase. Guaranteed
signatures are required if you are redeeming more than $50,000, you want the
check payable to someone other than the shareholder of record, or you
want the check sent to another address. Signature guarantees must be obtained
from a commercial bank, trust company, savings and loan association, or
brokerage firm. A notary public cannot provide a signature guarantee.
You should note that the Fund reserves the right to liquidate your account
(other than an IRA) upon 60 days' written notice if the value of your account
falls below $1,000 for any reason other than a fluctuation in the market value
of the Fund shares. The Fund also reserves the right to redeem in-kind
(that is to pay redemption requests in cash and portfolio securities or wholly
in portfolio securities).
15
The Fund may also suspend the right of redemption under the following unusual
circumstances:
* when the New York Stock Exchange is closed (other than weekends and
holidays) or trading is restricted;
* when an emergency exists, making disposal of portfolio securities or the
valuation of net assets not reasonably practicable; or
* during any period when the Securities and Exchange Commission has by order
permitted a suspension of redemption for the protection of interest
holders.
SYSTEMATIC WITHDRAWAL
If the value of your Fund account is at least $5,000, you may request to have
$50 or more withdrawn automatically from your account, subject to any applic-
able CDSC. You may elect to receive payments monthly, quarterly, semiannually,
or annually. If payments exceed reinvested dividends and distributions, an
investor's shares will be reduced and eventually depleted. You must complete
the appropriate section of the account application to participate in the Fund's
systematic withdrawal plan. A shareholder who participates in the Monthomatic
Investment Plan is ineligible to participate in the Plan.
DISTRIBUTIONS AND TAXES
The Fund pays dividends and any capital gains at least once a year. The Fund
will automatically reinvest your dividends in additional Fund shares unless you
request your dividends to be paid to you in cash.
The Fund will send a check to investors electing to receive dividends in cash.
You may have your distribution check paid to a third party or sent to an
address other than your address of record (although a signature guarantee will
be required). For further information, contact ND Resources at (800) 601-5593.
TAXES AND TAX REPORTING
The Fund intends to make distributions that may be taxed as ordinary income or
capital gains (which may be taxable at different rates depending on the length
of time the Fund holds its assets). Distributions of net capital gain
distributions received by the Fund from underlying funds as well as net long-
term capital gains realized by the Fund are generally taxable as long-term
capital gains. Dividends from income (including dividends and net short-term
capital gains received from the underlying funds) as well as short-term capital
gains realized by the Fund are generally taxable as ordinary income. The tax
you pay on a given capital gains distribution depends generally on how long
the Fund has held the portfolio securities it sold. It does not depend on how
long you have owned your Fund shares.
Early in each year, you will receive a statement detailing the amount and
nature of all dividends and capital gains that you were paid during the prior
year. The tax status of your dividends is not affected by whether you reinvest
your dividends or receive them in cash. The sale of shares in your account may
produce a gain or loss and is a taxable event.
16
Tax laws are subject to change, so we urge you to consult your tax adviser
about your particular tax situation and how it might be affected by current tax
law.
Please note that if you do not furnish us with your correct Social Security
number or employer identification number, federal law requires us to withhold
federal income tax from your distributions and redemption proceeds at a rate
of 31%.
BUYING OR SELLING SHARES CLOSE TO A RECORD DATE
Buying Fund shares shortly before the record date for a taxable dividend is
commonly known as "buying the dividend". The entire dividend may be taxable to
you even though a portion of the dividend effectively represents a return of
your purchase price.
NET ASSET VALUE
The price you pay for your shares is based on the Fund's net asset value per
share which is determined as of the close of trading (normally 3:00 p.m. Minot,
North Dakota time) on each day the New York Stock Exchange is open for
business. Net asset value is calculated by calculating the total value of the
Fund's assets, including interest or dividends accrued but not yet collected,
less all liabilities, and dividing by the total number of shares outstanding.
The result, rounded to the nearest cent, is the net asset value per share. All
valuations are subject to review by the Fund's Board of Directors or its
delegate.
The Fund's assets consist primarily of shares of the underlying funds which are
valued at their respective net asset values. The underlying funds value
securities in their portfolios for which market quotations are readily avail-
able at their current market value (generally the last reported sale price) and
all other securities and assets at fair value pursuant to methods established
in good faith by their boards of directors. Money market funds with portfolio
securities that mature in one year or less may use the amortized cost or penny-
rounding methods to value their securities. Securities having 60 days or less
remaining to maturity generally are valued at their amortized cost, which
approximates market value. Other assets of the Fund are valued at their
current market value if market quotations are readily available and, if not
available, at fair value pursuant to methods established in good faith by the
Board of Directors.
17
FUND SERVICE PROVIDERS
The custodian of the assets of the Fund is First Western Bank & Trust, 900
South Broadway, Minot, North Dakota 58701. ND Resources, a wholly-owned
subsidiary of ND Holdings, is the Fund's transfer agent. As transfer agent,
ND Resources performs bookkeeping, data processing, accounting and other admin-
istrative services for the operation of the Fund, and the maintenance of share-
holder accounts.
SHAREHOLDER INQUIRIES
All inquiries regarding the Fund should be directed to ND Capital at 1 North
Main, Minot, ND 58703 or call (800) 276-1262.
All inquiries regarding account information should be directed to ND Resources
at P.O. Box 759, Minot, ND 58702 or call (800) 601-5593.
18
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
recent past performance. Certain information reflects financial results for a
single Fund share. The total returns in the table represent the rate that an
investor would have earned on an investment in the Fund (assuming reinvestment
of all dividends and distributions). This information has been audited by
Brady, Martz & Associates, P.C., whose report, along with the Fund's financial
statements are included in the Fund's Statement of Additional Information.
Further information about the Fund's performance is contained in the Fund's
latest annual shareholder report. You may obtain a free copy of the Fund's
latest annual shareholder report and Statement of Additional Information upon
request from the Fund.
INTEGRITY FUND OF FUNDS, INC.
<TABLE>
<CAPTION>
For the Year For the Year For the Year For the Year
Ended Ended Ended Ended
December 31, December 31, December 31, December 31,
1998 1997 1996 1995
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.27 $ 12.53 $ 11.76 $ 10.00
---------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) $ (.03) $ .21 $ .10 $ .22
Net realized and unrealized
gain (loss) on investment
and futures transactions 1.64 1.63 1.53 2.30
---------------------------------------------------------------------------------------
Total Income From Investment
Operations $ 1.61 $ 1.84 $ 1.63 $ 2.52
---------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
From net investment income $ .00 $ (.21) $ (.10) $ (.22)
Distributions from net realized gain (.66) (.89) (.76) (.54)
---------------------------------------------------------------------------------------
Total Distributions $ (.66) $ (1.10) $ (.86) $ (.76)
---------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 14.22 $ 13.27 $ 12.53 $ 11.76
========================================================================================
TOTAL RETURN 12.17%(A) 14.65%(A) 13.84%(A) 25.20%(A)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $20,058 $17,444 $ 11,406 $ 4,362
Ratio of net expenses
(after expense assumption) to
average net assets 1.62% 1.62%(B) 1.63%(B) 1.59%(B)
Ratio of net investment income
to average net assets (.36)% 1.73% .98% 4.00%
Portfolio turnover rate 32.28% 31.99% 50.11% 15.30%
</TABLE>
(A) Excludes contingent deferred sales charge of 1.5%.
(B) During the periods indicated above, ND Holdings, Inc. assumed expenses of
$24,114, $39,760, and $40,714. If the expenses had not been assumed, the
annualized ratio of total expenses to average net assets would have been
1.78%, 2.08% and 3.60%, respectively.
19
INTEGRITY FUND OF FUNDS, INC.
1 North Main * Minot, North Dakota 58703 * (701) 852-5292
P.O. Box 759 * Minot, North Dakota 58702
(800) 276-1262 * Marketing * Fax (701) 838-4902
(800) 601-5593 * Transfer Agent * Fax (701) 852-2548
INVESTMENT ADVISER
ND Money Management, Inc.
1 North Main
Minot, ND 58703
PRINCIPAL UNDERWRITER
ND Capital, Inc.
1 North Main
Minot, ND 58703
CUSTODIAN
First Western Bank & Trust
900 South Broadway
Minot, ND 58701
TRANSFER AGENT
ND Resources, Inc.
1 North Main, Minot, ND 58703
P.O. Box 759, Minot, ND 58702
INDEPENDENT ACCOUNTANT
Brady, Martz & Associates, P.C.
24 West Central Avenue
Minot, ND 58701
LEGAL COUNSEL
Chapman and Cutler
111 West Monroe Street
Chicago, IL 60603
20
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21
INTEGRITY MUTUAL FUNDS
Integrity Fund of Funds, Inc.
Several additional sources of information are available to you. The Statement
of Additional Information (SAI), incorporated by reference into this pros-
pectus, contains detailed information on the Fund's policies and operation.
Annual and semiannual reports contain management's discussion
of market conditions, investment strategies, and performance results as of the
Fund's latest semiannual or annual fiscal year end. Call ND Capital at
(800) 276-1262 to request a free copy of any of these materials.
You may also obtain this and other Fund information directly from the
Securities and Exchange Commission (SEC). The SEC may charge a copying fee for
this information. Visit the SEC on-line at http://www.sec.gov or in person at
the SEC's Public Reference Room in Washington, D.C. Call the SEC at
(800) SEC-0330 for room hours and operation. You may also request Fund infor-
mation by writing to the SEC's Public Reference Section, Washington, D.C.
20549.
Integrity Mutual Funds
1 North Main
Minot, North Dakota 58703
(800) 276-1262
File No. 811-8824
22
