Integrity Managed Portfolios N-CSR Certified annual shareholder report (management investment company)

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			811-06153
			Integrity 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			Brent Wheeler, Mutual Fund Chief Compliance Officer Kevin Flagstad, Investment Adviser Chief Compliance Officer
			1 Main Street North
			Minot, ND 58703
Registrant’s telephone number, including area code				(701) 852-5292
Date of fiscal year end		July 31
Date of reporting period		July 31, 2006
Item 1)	Reports to Stockholders.

Dear Shareholder: 

Enclosed is the report of operations of the Kansas Municipal Fund (the “Fund”) for the year ended July 31, 2006.  The Fund’s portfolio and related financial statements are presented within for your review. 

As we end the period, the Federal Reserve under new chairman Ben Bernanke has raised the Federal Funds rate for the seventeenth time to 5.25% from a four-decade low of 1% in June 2004.  Longer-term yields have risen as the 10-year Treasury bond yield ended the period at 4.99% after beginning the period at 4.28%. 

Rising concerns over the U.S. core consumer index’s 3.8% annualized growth through May has the Fed officials talking tough.  The Fed puts great emphasis in keeping inflation expectations under control, at the same time it is important for central banks to be forward looking and not base their policy decisions on lagging economic indicators. 

The strength of the U.S. economy during the last couple of years, together with rising commodity prices has created some cyclical inflationary pressures as evidenced by gold’s rise to over $700 per ounce and crude oil’s rise to over $75 per barrel.  The key question is whether the recent rise in inflation is temporary or one that will require more hikes in the Fed Funds rate. 

On the other side of the ledger the U.S. housing market continues to cool off.  Sales of single-family existing homes have declined nine out of the past twelve months. 

During the past few years, rising home prices permitted consumers to borrow against the increasing equity in their homes.  As a result, consumers were able to spend in excess of their income growth and the savings rate turned negative.  Now that the housing market is slowing, consumer spending is likely to be more restrained.  U.S. consumer spending makes up two-thirds of the economy. 

The slowdown in the housing markets also appears to be affecting some commodity prices.  In particular, lumber prices have declined in the past few months and copper prices are no longer rising at a rapid rate. This shows that the slowdown in the housing market could dampen inflationary pressures and allow the Fed to eventually stop raising interest rates. 

The Kansas Municipal Fund began the period at $10.57 per share and ended the period at $10.62 per share for a total return of 4.39%*.  This compares to the Lehman Brothers Municipal Bond Index return of 2.55% for the period. 

The Fund’s favorable overall performance can be attributed to its defensive portfolio. 

Given our concerns that the Federal Reserve would tighten throughout the period, we structured the Fund defensively to help mitigate the effects of rising rates.  Rather than committing a portion of the Fund’s assets to low-yielding bonds, the Fund maintained an emphasis on premium priced, higher coupon issues like Stormont Vail, 5.80% coupon; Lawrence Memorial Hospital, 5.75% coupon; and Wichita Housing, 5.70% coupon.  In rising rate environments these types of issues have typically held their value better than lower coupon issues such as University of Kansas, 4.00% coupon; Wichita General Obligation, 4.00% coupon; and Wichita Public Building, 4.00% coupon.  Also, contributing to the Fund’s overall performance was a defensive hedge using U.S. treasury futures; this strategy stabilizes net asset values in periods of rising rates. 

An important part of the Fund’s strategy includes searching the primary and secondary markets for high quality, double tax-exempt issues.  Credit quality for the period was as follows: AAA 66.6%, AA 17.0%, A 12.3% and BBB 4.1%. 

Income exempt from federal and Kansas state income taxes with preservation of capital remain the primary objectives of the Fund. 

If you would like more frequent updates, visit our website at www.integrityfunds.com for daily prices along with pertinent Fund information. 

Sincerely, 

The Portfolio Management Team     

The views expressed are those of Monte Avery, Chief Portfolio Strategist with Integrity Mutual Funds. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or any Integrity Mutual Fund. 

*Performance does not include applicable front-end or contingent deferred sales charges, which would have reduced the performance. 

Performance data quoted above is historical.  Past performance is no guarantee of future results.  Current performance may be higher or lower than the performance data quoted.  The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost.  You can obtain performance data current to the most recent month end (available within seven business days of the most recent month end) by calling 1-800-276-1262. 

You should consider the Fund's investment objectives, risks, and charges and expenses carefully before investing.  For this and other important information, please obtain a Fund prospectus at no cost from your financial adviser and read it carefully before investing. 

Bond prices and, therefore, the value of bond funds decline as interest rates rise.  Because the Fund invests in securities of a single state, the Fund is more susceptible to factors adversely impacting the respective state securities more so than a municipal bond fund that does not concentrate its securities in a single state.

July 31, 2006 (Unaudited) 

PROXY VOTING ON FUND PORTFOLIO SECURITIES

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-276-1262.  A report on "Form N-PX" of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available through Integrity's website at www.integrityfunds.com.  This information is also available from the EDGAR database on the SEC's website at www.sec.gov. 

QUARTERLY PORTFOLIO SCHEDULE

The Fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the Fund's second and fourth fiscal quarters on the Form N-CSR(S).  The annual and semi-annual reports are filed electronically with the SEC and are delivered to the Fund shareholders.  The Fund also files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q.  The Fund's Forms N-Q and N-CSR(S) are available on the SEC's website at www.sec.gov.  The Fund's Forms N-Q and N-CSR(S) may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C., and the information on the operation of the Public Reference Room may be obtained by calling 1-202-942-8090.  You may also access this information from Integrity's website at www.integrityfunds.com. 

Terms & Definitions  July 31, 2006 (Unaudited) 

Appreciation

The 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

The 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

The 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.

July 31, 2006 (Unaudited) 

COMPOSITION 

PORTFOLIO QUALITY RATINGS

(Based on Total Long-Term Investments) 

AAA	66.6%
AA	17.0%
A	12.3%
BBB	4.1%

 

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 Integrity Money Management, Inc. (“Integrity Money Management” or “Adviser”), the Fund’s investment adviser. 

These percentages are subject to change. 

PORTFOLIO MARKET SECTORS

(As a % of Net Assets) 

HC – Health Care	25.1%
S – School	16.8%
H – Housing	13.3%
O – Other	12.2%
G – Government	10.7%
W – Water/Sewer	10.6%
T – Transportation	6.4%
U – Utilities	4.9%

 

Market sectors are breakdowns of the Fund’s portfolio holdings into specific investment classes. 

These percentages are subject to change.

July 31, 2006 (Unaudited) 

DISCLOSURE OF FUND EXPENSES 

The Example below is intended to describe the fees and expenses borne by shareholders and the impact of those costs on your investment. 

EXAMPLE

As a shareholder of the fund, you incur two types of costs:  (1) transaction costs, including sales charges (loads), redemption fees and exchange fees; and (2) ongoing costs, including management fees, distribution (12b-1) fees and other Fund expenses.  This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.  The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 31, 2006 to July 31, 2006. 

The example illustrates the Fund’s costs in two ways: 

Actual expenses

The section in the table under the heading “Actual” provides information about actual account values and actual expenses.  You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid over the period.  Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the appropriate column for your share class, in the column entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. 

Hypothetical example for comparison purposes

The section in the table under the heading “Hypothetical (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.  The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.  You may use this information to compare the ongoing costs of investing in the Fund and other funds.  To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.  

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees or exchange fees.  Therefore, the section in the table under the heading “Hypothetical (5% return before expenses)” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.  In addition, if these transactional costs were included, your costs would have been higher. 

	Beginning Account Value 01/31/06	Ending Account Value 07/31/06	Expenses Paid During Period*
Actual
Class A	$1,000.00	$1,016.19	$5.32
Hypothetical (5% return before expenses)
Class A	$1,000.00	$1,019.38	$5.33

* Expenses are equal to the annualized expense ratio of 1.06%, multiplied by the average account value over the period, multiplied by 180/362 days.  The Fund’s ending account value on the first line in the table is based on its actual total return 1.62% for the six-month period of January 31, 2006 to July 31, 2006. 

July 31, 2006 (Unaudited) 

AVERAGE ANNUAL TOTAL RETURNS 

	For periods ending July 31, 2006
					Since Inception (November 15, 1990)
Kansas Municipal Fund	1 year	3 year	5 year	10 year
Without sales charge	4.39%	2.09%	1.79%	3.23%	4.62%
With sales charge (4.25%)	(0.06)%	0.61%	0.91%	2.78%	4.34%

 

					Since Inception (November 15, 1990)
Lehman Brothers Municipal Bond Index	1 year	3 year	5 year	10 year
	2.55%	4.89%	4.99%	5.82%	6.62%

 

Putting Performance into Perspective

Performance data quoted above is historical.  Past performance is no guarantee of future results.  Current performance may be higher or lower than the performance data quoted.  The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost.  You can obtain performance data current to the most recent month end (available within seven business days of the most recent month end) by calling 1-800-276-1262. 

You should consider the Fund's investment objectives, risks, and charges and expenses carefully before investing.  For this and other important information, please obtain a Fund prospectus at no cost from your financial adviser and read it carefully before investing. 

The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions and redemption of Fund shares. 

July 31, 2006 (Unaudited) 

COMPARATIVE INDEX 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 Fund w/o Sales Charge	Kansas Municipal Fund w/ Max Sales Charge	Lehman Brothers Municipal Bond Index
7/31/1996	$10,000	$9,574	$10,000
1997	$10,756	$10,298	$11,027
1998	$11,052	$10,581	$11,687
1999	$11,433	$10,946	$12,024
2000	$11,626	$11,131	$12,542
2001	$12,571	$12,036	$13,808
2002	$13,009	$12,455	$14,735
2003	$12,911	$12,362	$15,264
2004	$13,133	$12,573	$16,147
2005	$13,161	$12,600	$17,174
2006	$13,738	$13,153	$17,613

 

Putting Performance into Perspective

Performance data quoted above is historical.  Past performance is no guarantee of future results.  Current performance may be higher or lower than the performance data quoted.  The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost.  You can obtain performance data current to the most recent month end (available within seven business days of the most recent month end) by calling 1-800-276-1262. 

You should consider the Fund's investment objectives, risks, and charges and expenses carefully before investing.  For this and other important information, please obtain a Fund prospectus at no cost from your financial adviser and read it carefully before investing. 

The graph does not reflect the deduction of taxes that a shareholder would pay on Fund distributions and redemptions of Fund shares. 

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 re turns include reinvested dividends.

July 31, 2006 (Unaudited) 

MANAGEMENT OF THE FUND 

The Board of Integrity 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 six series of Integrity Managed Portfolios and the seven 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.  Two of the remaining three Trustees and/or 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. 

Effective January 6, 2006, Independent Trustee Lynn Aas retired from the Board of Trustees and Jerry Stai was subsequently nominated and elected to the Board of Trustees to fill the vacancy. Mr. Aas’ retirement also created a vacancy on the Audit Committee and the Governance Nominating Committee that Mr. Stai will occupy. 

INDEPENDENT TRUSTEES

NAME, ADDRESS AND AGE	POSITION(S) HELD WITH REGISTRANT	TERM AND LENGTH SERVED	PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS	NUMBER OF PORTFOLIOS OVERSEEN IN THE FUND COMPLEX1	OTHER DIRECTORSHIPS HELD OUTSIDE THE FUND COMPLEX
Jerry M. Stai 1 N. Main St. Minot, ND 58703 53	Trustee	Since January 2006	Faculty, Embry-Riddle University (August 2000 to September 2005); Faculty, Park University (August 2005 to December 2005); Non-Profit Specialist, Bremer Bank (since July 2005); Faculty, Minot State University (since August 2000); Director, ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., Integrity Fund of Funds, Inc., (since January 2006); Trustee, The Integrity Funds (since January 2006).	16	Marycrest Franciscan Development, Inc.
Orlin W. Backes 15 2nd Ave SW Ste 305 Minot, ND  58701 71	Trustee	Since January 1996	Attorney, McGee, Hankla, Backes & Dobrovolny, P.C.; Director, South Dakota Tax-Free Fund, Inc. (until June 2004), Integrity Small-Cap Fund of Funds, Inc. (until June 2003), ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc.; Trustee, The Integrity Funds (since May 2003); and Director, First Western Bank & Trust.	16	Director, First Western Bank & Trust
R. James Maxson Town & Country Center 1015 S Broadway Ste 15 Minot, ND  58701 58	Trustee	Since January 1999	Attorney, Maxson Law Office (since November 2002), Attorney, McGee, Hankla, Backes & Dobrovolny, P.C. (April 2000 to November 2002); Director, South Dakota Tax-Free Fund, Inc. (until June 2004), Integrity Small-Cap Fund of Funds, Inc. (until June 2003), ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc., and Trustee, The Integrity Funds (since May 2003).	16	None

¹The Fund Complex consists of the three funds in the Integrity family of funds, the six series of Integrity Managed Portfolios, and the seven series of The Integrity Funds. 

Trustees and officers of the Fund serve until their resignation, removal or retirement. 

The Statement of Additional Information contains more information about the Fund’s Trustees and is available without charge upon request, by calling Integrity Funds Distributor, Inc. at 1(800) 276-1262.

July 31, 2006 (Unaudited) 

The Interested Trustees 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 other directorships, if any, held outside the Fund Complex, are shown below. 

INTERESTED TRUSTEES AND EXECUTIVE OFFICERS

NAME, ADDRESS AND AGE	POSITION(S) HELD WITH REGISTRANT	TERM AND LENGTH SERVED	PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS	NUMBER OF PORTFOLIOS OVERSEEN IN THE FUND COMPLEX1	OTHER DIRECTORSHIPS HELD OUTSIDE THE FUND COMPLEX
Robert E. Walstad2 1 N. Main St. Minot, ND  58703 61	Trustee, Chairman, President	Since January 1996	Director (since September 1987), President (September 1987 to October 2001 and September 2002 to May 2003), Integrity Mutual Funds, Inc.; Director, President and Treasurer, Integrity Money Management, Inc., ND Capital, Inc. (until September 2004), Integrity Fund Services, Inc.; Director, President (since inception) and Treasurer (until May 2004), South Dakota Tax-Free Fund, Inc. (until June 2004), Integrity Small-Cap Fund of Funds, Inc. (until June 2003), ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., Integrity Fund of Funds, Inc.; Trustee, Chairman and President (since May 2003) and Treasurer (May 2003 to May 2004), The Integrity Funds; Director, President and Treasurer (until August 2003), Integrity Funds Distributor, Inc.; Director (October 1999 to June 2003), President (October 1999 to October 2001), Magic Internet Services, Inc.; Director (May 2000 to June 2003), President (May 2000 to November 2001) (October 2002 to June 2003), ARM Securities Corporation; and Director, CEO, Chairman (since January 2002), President (September 2002 to December 2004), Capital Financial Services, Inc.	16	Director, Capital Financial Services, Inc.
Peter A. Quist2 1 N. Main St. Minot, ND  58703 71	Vice President, Secretary	Since January 1996	Attorney; Director and Vice President, Integrity Mutual Funds, Inc.; Director, Vice President and Secretary, Integrity Money management, Inc., ND Capital, Inc. (until September 2004), Integrity Fund Services, Inc., South Dakota Tax-Free Fund, Inc. (until June 2004), Integrity Small-Cap Fund of Funds, Inc. (until June 2003), ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc., Integrity Funds Distributor, Inc.; Vice President and Secretary, the Integrity Funds (since May 2003); and Director, ARM Securities Corporation (May 2000 to June 2003).	3	None
Laura K. Anderson 1 N. Main St. Minot, ND  58703 32	Treasurer	Since October 2005	Fund Accountant (until May 2004), Fund Accounting Supervisor (May 2004 to October 2005), Fund Accounting Manager, Integrity Fund Services, Inc.; Treasurer (since October 2005), The Integrity Funds, ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc.	N/A	None
Brent M. Wheeler 1 N. Main St. Minot, ND 58703 35	Mutual Fund Chief Compliance Officer	Since October 2005	Fund Accounting Manager (May 1998 to October 2005), Integrity Fund Services, Inc.; Treasurer (May 2004 to October 2005), Mutual Fund Compliance Officer (since October 2005), The Integrity Funds, ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc.	N/A	Minot State University Alumni Association

 

¹The Fund Complex consists of the three funds in the Integrity family of funds, the six series of Integrity Managed Portfolios, and the seven series of The Integrity Funds. 

²Trustees and/or 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. 

Trustees and officers of the Fund serve until their resignation, removal or retirement. 

The Statement of Additional Information contains more information about the Fund’s Trustees and is available without charge upon request, by calling Integrity Funds Distributor, Inc. at 1(800) 276-1262. 

Schedule of Investments  July 31, 2006 

Name of Issuer Percentages represent the market value of each investment category to total net assets	Rating (Unaudited) Moody's/S&P	Coupon Rate	Maturity		Principal Amount		Market Value
KANSAS MUNICIPAL BONDS (96.6%)
Burlington, KS PCR (Gas & Elec.)  MBIA	Aaa/AAA	5.300%	06/01/31	$	1,000,000	$	1,071,000
Burlington, KS PCR (Gas & Elec.)  MBIA	Aaa/AAA	4.850	06/01/31		500,000		507,450
Butler Cty., KS Public Bldg.  MBIA	Aaa/NR	5.550	10/01/21		300,000		322,398
Coffeyville, KS Pub. Bldg. (Coffeyville Medl. Center) Rev. AMBAC	Aaa/AAA	5.000	08/01/22		250,000		257,795
Cowley Cty, KS USD #465 (Winfield)  MBIA	Aaa/AAA	5.250	10/01/14		390,000		419,168
Dodge, KS School District #443  FGIC	Aaa/NR	5.000	09/01/11		1,000,000		1,060,840
Douglas Cty., KS Sales Tax Ref. AMBAC	Aaa/NR	5.000	08/01/19		1,000,000		1,046,790
Hutchinson, KS Community College	NR/A-	5.000	10/01/25		350,000		357,868
Hutchinson, KS Community College	NR/A-	5.250	10/01/30		300,000		313,734
Hutchinson, KS Community College	NR/A-	5.250	10/01/33		450,000		469,665
#Johnson Cty., KS USD #229 (Blue Valley) G.O.	Aa-1/AA	5.000	10/01/18		2,600,000		2,727,218
Johnson Cty., KS USD #231 Gardner-Edgerton FGIC	Aaa/AAA	5.000	10/01/24		1,135,000		1,186,835
Johnson Cty., KS USD #232 (De Soto)	Aaa/NR	5.250	09/01/23		500,000		539,235
Kansas City, KS Mrtge. Rev. GNMA	Aaa/NR	5.900	11/01/27		335,000		339,228
*Kansas City, KS Util. Syst. Ref. & Impvt. AMBAC	Aaa/AAA	6.300	09/01/16		580,000		587,540
*KS Devl. Finance Auth. (Dept. Admin. 7th & Harrison PJ) AMBAC	Aaa/AAA	5.750	12/01/27		2,250,000		2,402,257
KS Devl. Finance Auth. (Dept. of Admin. Capitol Restoration) Lease Rev. FSA	Aaa/AAA	5.375	10/01/20		370,000		393,221
KS Devl. Finance Auth. (Juvenile Justice) Rev. MBIA	Aaa/AAA	5.250	05/01/13		570,000		602,581
KS Devl. Finance Auth. (Sec. 8) Rev. Ref. MBIA	Aaa/AAA	6.400	01/01/24		255,000		255,000
*KS Devl. Finance Auth. (Water Pollution Control) Rev.	Aaa/AAA	5.250	05/01/11		1,370,000		1,411,854
*KS Devl. Finance Auth. (Water Pollution Control) Rev.	Aaa/AAA	5.250	05/01/11		630,000		646,367
KS Devl. Finance Auth. (KS St. Projects) Rev. MBIA	Aaa/AAA	5.000	10/01/17		250,000		260,335
KS Devl. Finance Auth. (Water Pollution Control) Rev.	Aaa/AAA	5.250	11/01/22		1,000,000		1,072,840
KS Devl. Finance Auth. (Water Pollution Control)	Aaa/AAA	5.000	11/01/23		1,000,000		1,050,240
KS Devl. Finance Auth	Aaa/AAA	5.000	05/01/26		1,335,000		1,402,791
KS Devl. Finance Auth. (Board of Regents, Univ. of KS) XL Capital	Aaa/NR	4.000	04/01/16		500,000		493,655
KS Devl. Finance Auth. (Dept. Admin.)  FGIG	Aaa/AAA	5.000	11/01/25		250,000		262,785
*KS Devl. Finance Auth. (Park Apts.) Multifamily Hsg. Rev.	NR/AAA	6.000	12/01/21		1,975,000		1,991,867
KS Devl. Finance Auth. (Stormont Vail) Hlth. Care Rev. MBIA	Aaa/AAA	5.800	11/15/21		430,000		435,311
KS Devl. Finance Auth. (Sisters of Charity) Hlth. Rev.	Aa/AA	6.125	12/01/20		1,000,000		1,077,190
KS Devl. Finance Auth. (Stormont Vail) Hlth. Care Rev. MBIA	Aaa/AAA	5.375	11/15/24		1,500,000		1,604,325
KS Devl. Finance Auth. (Stormont Vail) Hlth. Care Rev. MBIA	Aaa/AAA	5.800	11/15/16		455,000		458,413
KS Devl. Finance Auth. (Hays Medical Center)	A/NR	5.000	11/15/22		500,000		510,110
KS Turnpike Auth. Rev.  FSA	Aaa/AAA	5.250	09/01/21		500,000		537,825
KS Turnpike Auth. Rev.  FSA	Aaa/AAA	5.000	09/01/24		530,000		550,347
KS Turnpike Auth. Rev.  FSA	Aaa/AAA	5.000	09/01/25		750,000		783,405
Lawrence, KS (Unlimited Tax) Refunding G.O.	Aa/NR	5.375	09/01/20		500,000		533,650
Lawrence, KS (Memorial Hospital) Rev.  ASGUA	NR/AA	5.750	07/01/24		1,000,000		1,045,960
Lawrence, KS (Memorial Hospital) Rev.	Aa-3/NR	5.125	07/01/26		500,000		513,180
Lawrence, KS (Memorial Hospital) Rev.	A-3/NR	5.125	07/01/36		500,000		509,765
Neosho County, KS (Sales Tax Rev.)  MBIA	Aaa/AAA	5.000	08/15/08		290,000		294,669
Newton, KS (Newton) Hosp. Rev.	NR/BBB-	5.700	11/15/18		1,000,000		1,014,920
Newton, KS (Newton) Hosp. Rev. ACA	NR/A	5.750	11/15/24		500,000		510,265
Olathe, KS (Medl. Ctr.) Hlth. Facs. Rev.	Aaa/AAA	5.500	09/01/25		235,000		249,774
Olathe, KS (Medl. Ctr.) Hlth. Facs. Rev. AMBAC	Aaa/AAA	5.500	09/01/30		500,000		531,720
#Olathe, KS Multifamily Hsg. (Bristol Pointe) Rev. Ref. FNMA	NR/AAA	5.700	11/01/27		2,210,000		2,238,398
Pratt, KS Elec. Util. Syst. Rev. Ref. & Impvt. AMBAC	Aaa/AAA	6.600	11/01/07		440,000		451,145
Scott Cty, KS USD #466  FGIC	Aaa/AAA	5.250	09/01/17		900,000		970,029
Sedgwick Cty., KS (Catholic Care Center, Inc.) Hlth. Care Rev.	NR/A	5.800	11/15/26		1,000,000		1,054,980
Shawnee Cty., KS G.O.  FSA	Aaa/NR	5.000	09/01/16		655,000		696,344
Topeka, KS G.O.  XLCA	Aaa/NR	5.000	08/15/21		400,000		416,356
Topeka Public Bldg. Comm. (10th & Jackson Prj.) MBIA	Aaa/AAA	5.625	06/01/26		1,435,000		1,518,919
Topeka Public Bldg. Comm. (10th & Jackson Prj.) MBIA	Aaa/AAA	5.625	06/01/31		1,200,000		1,278,096
University of Kansas Hosp. Auth. AMBAC	Aaa/AAA	5.700	09/01/20		830,000		877,260
*University of Kansas Hosp. Auth. AMBAC	Aaa/AAA	5.550	09/01/26		1,355,000		1,430,392
Wamego, KS PCR (Kansas Gas & Electric Project) MBIA	Aaa/AAA	5.300	06/01/31		750,000		797,610
Washburn Univ. (Living Learning Ctr.) Bldg. Rev. AMBAC	Aaa/NR	5.000	07/01/19		955,000		999,589
Wichita, KS G.O. (Series 772) FGIC	Aaa/AAA	4.100	09/01/14		405,000		408,054
Wichita, KS G.O. (Series 772)	Aa/AA	4.500	09/01/17		565,000		573,520
*Wichita, KS G.O. (Series 772)	Aa/AA	4.500	09/01/18		125,000		126,371
Wichita, KS (Via Christi Health System) Rev.	NR/A+	6.250	11/15/24		1,500,000		1,606,140
Wichita, KS (Via Christi Health System) Rev.	NR/A+	5.625	11/15/31		1,100,000		1,167,529
Wichita, KS Multifamily Hsg. (Broadmoor Chelsea) Rev. FNMA	NR/AAA	5.650	07/01/16		990,000		1,003,692
#Wichita, KS Multifamily Hsg. (Broadmoor Chelsea) Rev. FNMA	NR/AAA	5.700	07/01/22		2,000,000		2,024,060
Wichita, KS Public Building Commission (State Office Prj.) Rev. AMBAC	Aaa/AAA	4.000	10/01/14		750,000		745,388
Wichita, KS Water & Sewer Util. Rev.  FGIC	Aaa/AAA	5.250	10/01/18		1,465,000		1,560,840
Wichita, KS Water & Sewer Util. Rev.  FGIC	Aaa/AAA	5.000	10/01/28		500,000		518,725
TOTAL KANSAS MUNICIPAL BONDS (COST: $55,322,762)						$	57,076,823
SHORT-TERM SECURITIES (4.2%)					Shares
Wells Fargo Advantage National Tax-Free Money Market					2,044,000	$	2,044,000
Goldman Sachs Financial Square Tax-Free Money Market					462,146		462,146
TOTAL SHORT-TERM SECURITIES (COST: $2,506,146)						$	2,506,146
TOTAL INVESTMENTS IN SECURITIES (COST: $57,828,908)						$	59,582,969
OTHER ASSETS LESS LIABILITIES							(489,690)
NET ASSETS						$	59,093,279

 

* Indicates bonds are segregated by the custodian to cover when-issued or delayed-delivery purchases.

As of July 31, 2006, the Fund had two when-issued purchases:

500,000 of Lawrence, KS (Memorial Hospital) Rev.; 5.125%; 07/01/2026

500,000 of Lawrence, KS (Memorial Hospital) Rev.; 5.125%; 07/01/2036 

# Indicates bonds are segregated by the custodian to cover initial margin requirements. 

Non-rated (NR) securities in the Fund were investment grade when purchased. 

The accompanying notes are an integral part of these financial statements. 

Financial Statements  July 31, 2006 

Statement of Assets and Liabilities  July 31, 2006

ASSETS
	Investment in securities, at value (cost: $57,828,908)		$	59,582,969
	Cash			19,800
	Accrued interest receivable			765,976
	Accrued dividends receivable			2,153
	Prepaid expenses			6,911
		Total Assets	$	60,377,809
LIABILITIES
	Dividends payable		$	188,173
	Payable to affiliates			51,167
	Accrued expenses			15,830
	Security purchases payable			1,019,360
	Payable for fund shares redeemed			10,000
		Total Liabilities	$	1,284,530
NET ASSETS			$	59,093,279
Net assets are represented by:
	Paid-in capital		$	66,647,484
	Accumulated undistributed net realized gain (loss) on investments and futures			(9,308,427)
	Accumulated undistributed net investment income			161
	Unrealized appreciation (depreciation) on investments			1,754,061
		Total amount representing net assets applicable to 5,565,714 outstanding shares of no par common stock (unlimited shares authorized)	$	59,093,279
Net asset value per share			$	10.62
Public offering price (based on sales charge of 4.25%)			$	11.09

The accompanying notes are an integral part of these financial statements.

Financial Statements  July 31, 2006 

Statement of Operations  For the year ended July 31, 2006

INVESTMENT INCOME
	Interest		$	2,991,380
	Dividends			50,719
		Total Investment Income	$	3,042,099
EXPENSES
	Investment advisory fees		$	313,910
	Distribution (12b-1) fees			156,955
	Administrative service fees			62,782
	Transfer agent fees			75,818
	Accounting service fees			54,193
	Custodian fees			7,617
	Professional fees			21,590
	Trustees fees			4,751
	Insurance expense			2,393
	Reports to shareholders			5,392
	Audit fees			8,097
	Legal fees			9,333
	Other fees			1,306
		Total Expenses	$	724,137
	Less expenses waived or absorbed by the Fund’s manager			(79,585)
		Total Net Expenses	$	644,552
NET INVESTMENT INCOME			$	2,397,547
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES
	Net realized gain (loss) from:
	Investment transactions		$	(538,259)
	Futures transactions			1,422,094
	Net change in unrealized appreciation (depreciation) of:
	Investments			(182,425)
	Futures			(437,774)
		Net Realized And Unrealized Gain (Loss) On Investments And Futures	$	263,636
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS			$	2,661,183

The accompanying notes are an integral part of these financial statements.

Financial Statements  July 31, 2006 

Statement of Changes in Net Assets

For the year ended July 31, 2006 and the year ended July 29, 2005

				For the Year Ended July 31, 2006		For The Year Ended July 29, 2005
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
	Net investment income		$	2,397,547	$	2,595,045
	Net realized gain (loss) on investment and futures transactions			883,835		(4,307,652)
	Net change in unrealized appreciation (depreciation) on investments and futures			(620,199)		1,879,486
		Net Increase (Decrease) in Net Assets Resulting From Operations	$	2,661,183	$	166,879
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
	Dividends from net investment income ($.41 and $.38 per share, respectively)		$	(2,397,386)	$	(2,594,731)
	Distributions from net realized gain on investment and futures transactions ($.00 and $.00 per share, respectively)			0		0
		Total Dividends and Distributions	$	(2,397,386)	$	(2,594,731)
CAPITAL SHARE TRANSACTIONS
	Proceeds from sale of shares		$	1,495,672	$	1,823,022
	Proceeds from reinvested dividends			1,509,351		1,647,118
	Cost of shares redeemed			(11,645,304)		(12,050,827)
		Net Increase (Decrease) in Net Assets Resulting From Capital Share Transactions	$	(8,640,281)	$	(8,580,687)
TOTAL INCREASE (DECREASE) IN NET ASSETS			$	(8,376,484)	$	(11,008,539)
NET ASSETS, BEGINNING OF PERIOD				67,469,763		78,478,302
NET ASSETS, END OF PERIOD			$	59,093,279	$	67,469,763
Undistributed Net Investment Income			$	161	$	843

 

The accompanying notes are an integral part of these financial statements. 

Notes to Financial Statements  July 31, 2006 

Note 1.  ORGANIZATION

Business operations - The Kansas Municipal Fund (the “Fund”) is an investment portfolio of Integrity 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 six portfolios are offered.  Integrity 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 state income tax as is consistent with preservation of capital.  The Fund will see k 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 Integrity Money Management.  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 se curity 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. 

When-issued securities - The Fund may purchase securities on a when-issued basis.  Payment and delivery may take place after the customary settlement period for that security.  The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated.  The value of the securities purchased on a when-issued basis are identified as such in the Fund’s Schedule of Investments.  With respect to purchase commitments, the Fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment.  Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract’s terms, or if the issuer does not issue the securities due to political, economic, or other factors. 

Contingent Deferred Sales Charge (“CDSC”) – In the case of investments of $1 million or more, a 1.00% CDSC may be assessed on shares redeemed within 12 months of purchase (excluding shares purchased with reinvested dividends and/or distributions). 

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.  Distributions during year ended July 31, 2006, were characterized as tax-exempt for tax purposes. 

		July 31, 2006		July 29, 2005
Tax-exempt Income	$	2,397,386	$	2,594,731
Ordinary Income		0		0
Long-term Capital Gains		0		0
Total	$	2,397,386	$	2,594,731

 

As of July 31, 2006, the components of accumulated earnings/(deficit) on a tax basis were as follows: 

Undistributed Ordinary Income	Undistributed Long-Term Capital Gains	Accumulated Earnings	Accumulated Capital and Other Losses	Unrealized Appreciation/ (Depreciation)	Total Accumulated Earnings/(Deficit)
$0	$0	$0	($8,982,250)	$1,754,222	($7,228,028)

 

The Fund has unexpired capital loss carryforwards for tax purposes as of July 31, 2006, totaling $8,982,250 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
2008	$	531,392
2009	$	568,023
2010	$	1,444,860
2011	$	1,970,032
2012	$	1,398,834
2013	$	2,680,174
2014	$	388,935

 

For the year ended July 31, 2006, the Fund made $1,671,432 in permanent reclassifications to reflect tax character.  Reclassifications to paid-in capital relate primarily to expiring capital loss carryforwards. 

Net capital losses incurred after October 31, and within the tax year are deemed to arise on the first business day of the Fund’s next taxable year.  For the year ended July 31, 2006, the Fund deferred to August 1, 2006, post October capital losses, post October currency losses and post October passive foreign investment company losses of $326,177. 

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. 

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 apprecia tion (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, 2006, there were unlimited shares of no par authorized; 5,565,714 and 6,380,549 shares were outstanding at July 31, 2006, and July 29, 2005, respectively. 

Transactions in capital shares were as follows:

	Shares
	For The Year Ended July 31, 2006	For The Year Ended July 29, 2005
Shares sold	140,843	168,753
Shares issued on reinvestment of dividends	142,220	152,906
Shares redeemed	(1,097,898)	(1,118,987)
Net increase (decrease)	(814,835)	(797,328)

 

Note 4.  INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES

Integrity Money Management, the Fund’s investment adviser; Integrity Funds Distributor, the Fund’s underwriter; and Integrity Fund Services, the Fund’s transfer, accounting, and administrative services agent, are subsidiaries of Integrity Mutual Funds, Inc., the Fund’s sponsor. 

The Fund has engaged Integrity Money Management 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 $234,325 of investment advisory fees after partial waiver for the year ended July 31, 2006.  The Fund has a payable to Integrity Money Management of $20,018 at July 31, 2006, for investment advisory fees.  Certain officers and trustees of the Fund are also officers and directors of the investment adviser.  

Under the terms of the advisory agreement, the investment adviser has agreed to pay all the expenses of the Fund (excluding taxes and brokerage fees and commissions, if any) that exceed 1.25% of the Fund’s average daily net assets on an annual basis up to the amount of the investment adviser and management fee.  The investment adviser and underwriter may also voluntarily waive fees or reimburse expenses not required under the advisory or other contracts from time to time.  Accordingly, after fee waivers and expense reimbursements, the Fund’s actual total annual operating expenses were 1.03% for the year ended July 31, 2006. 

Principal Underwriter and Shareholder Services

Integrity Funds Distributor serves as the principal underwriter for the Fund.  The Fund has adopted a distribution plan for each class of shares as allowed by Rule 12b-1 of the 1940 Act.  Distribution plans permit the Fund to reimburse its principal underwriter for costs related to selling shares of the Fund and for various other services.  These costs, which consist primarily of commissions and service fees to broker-dealers who sell shares of the Fund, are paid by shareholders through expenses called “Distribution Plan expenses.”  The Fund currently pays an annual distribution fee of up to 0.25% of the average daily net assets of the class.  Distribution Plan expenses are calculated daily and paid monthly.  The Fund has recognized $156,955 of distribution fees for the year ended July 31, 2006.  The Fund has a payable to Integrity Funds Distributor of $12,321 at July 31, 2006 for distribution fe es. 

Integrity Fund Services 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 $25 million, and 0.10% of the Fund’s net assets in excess of $50 million, with a minimum of $1,500 per month plus reimbursement of out-of-pocket expenses.  An additional fee with a minimum $500 per month is charged for each additional share class.  The Fund has recognized $75,818 of transfer agency fees and expenses for the year ended July 31, 2006.  The Fund has a payable to Integrity Fund Services of $6,012 at July 31, 2006 for transfer agency fees.  Integrity Fund Services 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, together with reimbursement of out-of-pocket expenses.  An additional minimum fee of $500 per month is charged by Integrity Fund Services for each additional share class.  The Fund has recognized $54,193 of accounting service fees for the year ended July 31, 2006.  The Fund has a payable to Integrity Fund Services of $4,388 at July 31, 2006 for accounting service fees.  Integrity Fund Services also acts as administrator for the Fund.  The Fund pays to Integrity Fund Services a monthly fee calculated at the rate of 0.10% of average daily net assets with a minimum of $1,500 per month plus out-of-pocket expenses.  An additional minimum fee of $500 per month is charged by Integrity Fund Services for each additional share class.  The Fund has recognized $62,782 of administrative service fees for the year ended July 31, 2006.&nbs p; The Fund has a payable to Integrity Fund Services of $4,928 at July 31, 2006 for administrative service fees. 

Note 5.  INVESTMENT SECURITY TRANSACTIONS

The cost of purchases and proceeds from sales of investment securities (excluding short-term securities) aggregated $7,378,340 and $13,478,959, respectively, for the year ended July 31, 2006. 

Note 6.  INVESTMENT IN SECURITIES

At July 31, 2006, the aggregate cost of securities for federal income tax purposes was substantially the same for financial reporting purposes at $57,828,908.  The net unrealized appreciation of investments for financial reporting purposes based on the cost was $1,754,061, which is comprised of $1,855,223 aggregate gross unrealized appreciation and $101,162 aggregate gross unrealized depreciation.  Differences between financial reporting-basis and tax-basis unrealized appreciation/depreciation are due to differing treatment of market discount.

Financial Highlights July 31, 2006

Selected per share data and ratios for the periods indicated 

				For The Year Ended July 31, 2006		For The Year Ended July 29, 2005		For The Year Ended July 30, 2004		For The Year Ended July 31, 2003		For The Year Ended July 31, 2002
NET ASSET VALUE, BEGINNING OF PERIOD			$	10.57	$	10.93	$	11.19	$	11.78	$	11.92
Income from Investment Operations:
	Net investment income		$	.41	$	.38	$	.45	$	.51	$	.55
	Net realized and unrealized gain (loss) on investment and futures transactions			.05		(.36)		(.26)		(.59)		(.14)
		Total Income (Loss) From Investment Operations	$	.46	$	.02	$	.19	$	(.08)	$	.41
Less Distributions:
	Dividends from net investment income		$	(.41)	$	(.38)	$	(.45)	$	(.51)	$	(.55)
	Distributions from net capital gains			.00		.00		.00		.00		.00
		Total Distributions	$	(.41)	$	(.38)	$	(.45)	$	(.51)	$	(.55)
NET ASSET VALUE, END OF PERIOD			$	10.62	$	10.57	$	10.93	$	11.19	$	11.78
Total Return				4.39%(A)		0.22%(A)		1.71%(A)		(0.75%)(A)		3.48%(A)
RATIOS/SUPPLEMENTAL DATA:
	Net assets, end of period (in thousands)		$	59,093	$	67,470	$	78,478	$	88,850	$	98,992
	Ratio of net expenses (after expense assumption) to average net assets			1.03%(B)		0.97%(B)		0.95%(B)		0.95%(B)		0.95%(B)
	Ratio of net investment income to average net assets			3.82%		3.56%		4.05%		4.39%		4.61%
	Portfolio turnover rate			12.31%		44.85%		17.29%		23.78%		5.74%

 

(A) Excludes maximum sales charge of 4.25%.

(B) During the periods indicated above, Integrity Mutual Funds, Inc. or Integrity Money Management assumed/waived expenses of $79,585, $130,764, $127,695, $52,479, and $22,656, respectively.  If the expenses had not been assumed/waived, the annualized ratios of total expenses to average net assets would have been 1.15%, 1.15%, 1.10%, 1.01%, and 0.97%, respectively. 

Total return represents the rate that an investor would have earned or lost on an investment in the Fund assuming reinvestment of all dividends and distributions.

The accompanying notes are an integral part of these financial statements.

Tax Information For The Year Ended July 31, 2006 (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 of Record	Payment Date		From Net Investment Income	From Net Realized Short-Term Gains	From Net Realized Long-Term Gains
August 31, 2005	August 31, 2005	$	.034902	-	-
September 30, 2005	September 30, 2005	$	.034118	-	-
October 31, 2005	October 31, 2005	$	.033700	-	-
November 30, 2005	November 30, 2005	$	.033958	-	-
December 30, 2005	December 30, 2005	$	.034569	-	-
January 31, 2006	January 31, 2006	$	.034372	-	-
February 28, 2006	February 28, 2006	$	.033560	-	-
March 31, 2006	March 31, 2006	$	.033088	-	-
April 28, 2006	April 28, 2006	$	.031301	-	-
May 31, 2006	May 31, 2006	$	.035720	-	-
June 30, 2006	June 30, 2006	$	.033582	-	-
July 31, 2006	July 31, 2006	$	.033638	-	-

 

Shareholders should consult their tax advisors.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  

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 Integrity Managed Portfolios), including the schedule of investments as of July 31, 2006,  the related statement of operations for the year then ended, the statement of changes in net assets for the years ended July 31, 2006 and July 29, 2005, and the financial highlights for the year ended July 31, 2006 and each of the four years in the period ended July 29, 2005.  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 the standards of the Public Company Accounting Oversight Board (United States). 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, 2006 by correspondence with the custodian and brokers. 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 audits provide 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 Integrity Managed Portfolios as of July 31, 2006, the results of its operations for the year then ended, the changes in its net assets for the 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 8, 2006

Dear Shareholder: 

Enclosed is the report of the Kansas Insured Intermediate Fund (the “Fund”) for the year ended July 31, 2006.  The Fund’s portfolio and related financial statements are presented within for your review. 

As we end the period, the Federal Reserve under new chairman Ben Bernanke has raised the Federal Funds rate for the seventeenth time to 5.25% from a four-decade low of 1% in June 2004.  Longer-term yields have risen as the 10-year Treasury bond yield ended the period at 4.99% after beginning the period at 4.28%. 

Rising concerns over the U.S. core consumer index’s 3.8% annualized growth through May has the Fed officials talking tough.  The Fed puts great emphasis in keeping inflation expectations under control, at the same time it is important for central banks to be forward looking and not base their policy decisions on lagging economic indicators. 

The strength of the U.S. economy during the last couple of years, together with rising commodity prices has created some cyclical inflationary pressures as evidenced by gold’s rise to over $700 per ounce and crude oil’s rise to over $75 per barrel.  The key question is whether the recent rise in inflation is temporary or one that will require more hikes in the Fed Funds rate. 

On the other side of the ledger the U.S. housing market continues to cool off.  Sales of single-family existing homes have declined nine out of the past twelve months. 

During the past few years, rising home prices permitted consumers to borrow against the increasing equity in their homes.  As a result, consumers were able to spend in excess of their income growth and the savings rate turned negative.  Now that the housing market is slowing, consumer spending is likely to be more restrained.  U.S. consumer spending makes up two-thirds of the economy. 

The slowdown in the housing markets also appears to be affecting some commodity prices.  In particular, lumber prices have declined in the past few months and copper prices are no longer rising at a rapid rate. This shows that the slowdown in the housing market could dampen inflationary pressures and allow the Fed to eventually stop raising interest rates. 

The Kansas Insured Intermediate Fund began the period at $10.94 per share and ended the period at $10.95 per share for a total return of 4.06%*.  This compares to the Lehman Brothers Municipal Seven-Year Maturity Bond Index return of 2.15% for the period. 

The Fund’s favorable overall performance can be attributed to its defensive portfolio. 

Given our concerns that the Federal Reserve would tighten throughout the period, we structured the Fund defensively to help mitigate the effects of rising rates.  Rather than committing a portion of the Fund’s assets to low-yielding bonds, the Fund maintained an emphasis on premium priced, higher coupon issues like Dodge City Schools, 5.75% coupon and Hays Medical Center, 5.50% coupon.  In rising rate environments these types of issues have typically held their value better than lower coupon issues such as Morton County Schools, 4.00% coupon.  Also, contributing to the Fund’s overall performance was a defensive hedge using U.S. treasury futures; this strategy stabilizes net asset values in periods of rising rates. 

An important part of the Fund’s strategy includes searching the primary and secondary markets for high quality, double tax-exempt issues.  Credit quality for the period was as follows: AAA 100%. 

Income exempt from federal and Kansas state income taxes with preservation of capital remain the primary objectives of the Fund. 

If you would like more frequent updates, visit our website at www.integrityfunds.com for daily prices along with pertinent fund information. 

Sincerely, 

The Portfolio Management Team 

The views expressed are those of Monte Avery, Chief Portfolio Strategist with Integrity Mutual Funds. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or any Integrity Mutual Fund. 

*Performance does not include applicable front-end or contingent deferred sales charges, which would have reduced the performance.

Performance data quoted above is historical.  Past performance is no guarantee of future results.  Current performance may be higher or lower than the performance data quoted.  The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost.  You can obtain performance data current to the most recent month end (available within seven business days of the most recent month end) by calling 1-800-276-1262. 

You should consider the Fund's investment objectives, risks, and charges and expenses carefully before investing.  For this and other important information, please obtain a Fund prospectus at no cost from your financial adviser and read it carefully before investing. 

Bond prices and, therefore, the value of bond funds decline as interest rates rise.  Because the Fund invests in securities of a single state, the Fund is more susceptible to factors adversely impacting the respective state securities more so than a municipal bond fund that does not concentrate its securities in a single state.

July 31, 2006 (Unaudited) 

PROXY VOTING ON FUND PORTFOLIO SECURITIES

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-276-1262.  A report on "Form N-PX" of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available through Integrity's website at www.integrityfunds.com.  This information is also available from the EDGAR database on the Securities and Exchange Commission’s (“SEC's”) website at www.sec.gov. 

QUARTERLY PORTFOLIO SCHEDULE

The Fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the Fund's second and fourth fiscal quarters on the Form N-CSR(S).  The annual and semi-annual reports are filed electronically with the SEC and are delivered to the Fund shareholders.  The Fund also files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q.  The Fund's Forms N-Q and N-CSR(S) are available on the SEC's website at www.sec.gov.  The Fund's Forms N-Q and N-CSR(S) may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C., and the information on the operation of the Public Reference Room may be obtained by calling 1-202-942-8090.  You may also access this information from Integrity's website at www.integrityfunds.com.

Terms & Definitions  July 31, 2006 (Unaudited) 

Appreciation

The 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

The 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

The 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.

July 31, 2006 (Unaudited) 

COMPOSITION 

PORTFOLIO QUALITY RATINGS

(Based on Total Long-Term Investments) 

AAA 100%

 

Quality ratings reflect the financial strength of the issuer.  They are assigned by independent rating services such as Moody’s Investors Services and Standard & Poor’s.  Non-rated bonds have been determined to be of appropriate quality for the portfolio by Integrity Money Management, Inc. (“Integrity Money Management” or “Adviser”), the investment adviser. 

These percentages are subject to change. 

PORTFOLIO MARKET SECTORS

(As a % of Net Assets) 

HC-Health Care	26.3%
H-Housing	23.6%
S-School	22.3%
W/S-Water/Sewer	9.5%
U-Utilities	6.2%
T-Transportation	4.6%
O-Other	4.3%
G-Government	3.2%

 

Market sectors are breakdowns of the Fund’s portfolio holdings into specific investment classes. 

These percentages are subject to change.

July 31, 2006 (Unaudited) 

DISCLOSURE OF FUND EXPENSES 

The Example below is intended to describe the fees and expenses borne by shareholders and the impact of those costs on your investment. 

EXAMPLE

As a shareholder of the fund, you incur two types of costs:  (1) transaction costs, including sales charges (loads), redemption fees and exchange fees; and (2) ongoing costs, including management fees, distribution (12b-1) fees and other fund expenses.  This Example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds.  The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 31, 2006, to July 31, 2006. 

The example illustrates the Fund's costs in two ways: 

Actual expenses

The section in the table under the heading “Actual” provides information about actual account values and actual expenses.  You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid over the period.  Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the appropriate column for your share class, in the column entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. 

Hypothetical example for comparison purposes

The section in the table under the heading “Hypothetical (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.  The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.  You may use this information to compare the ongoing costs of investing in the Fund and other funds.  To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. 

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees or exchange fees.  Therefore, the section in the table under the heading “Hypothetical (5% return before expenses)” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.  In addition, if these transactional costs were included, your costs would have been higher. 

	Beginning Account Value 01/31/06	Ending Account Value 07/31/06	Expenses Paid During Period*
Actual
Class A	$1,000.00	$1,026.40	$3.80
Hypothetical (5% return before expenses)
Class A	$1,000.00	$1,020.91	$3.79

* Expenses are equal to the annualized expense ratio of 0.75%, multiplied by the average account value over the period, multiplied by 180/361 days.  The Fund’s ending account value on the first line in the table is based on its actual total return of 2.64% for the six-month period of January 31, 2006, to July 31, 2006.

July 31, 2006 (Unaudited) 

AVERAGE ANNUAL TOTAL RETURNS 

	For periods ending July 31, 2006
					Since Inception (November 23, 1992)
Kansas Insured Intermediate Fund	1 year	3 Year	5 year	10 year
Without sales charge	4.06%	1.86%	2.19%	3.13%	3.90%
With sales charge (2.75%)	1.20%	0.91%	1.61%	2.85%	3.69%

 

Lehman Brothers Municipal Seven-Year Maturity Bond Index	1 year	3 Year	5 year	10 year	Since Inception (November 23, 1992)
	2.15%	3.55%	4.32%	2.13%	5.48%

 

Putting Performance into Perspective

Performance data quoted above is historical.  Past performance is no guarantee of future results.  Current performance may be higher or lower than the performance data quoted.  The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost.  You can obtain performance data current to the most recent month end (available within seven business days of the most recent month end) by calling 1-800-276-1262. 

You should consider the Fund's investment objectives, risks, and charges and expenses carefully before investing.  For this and other important information, please obtain a Fund prospectus at no cost from your financial adviser and read it carefully before investing. 

The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions and redemption of Fund shares. 

July 31, 2006 (Unaudited) 

COMPARATIVE INDEX GRAPH 

Comparison of change in value of a $10,000 investment in the Kansas Insured Intermediate Fund and the Lehman Brothers Municipal Seven-Year Maturity Bond Index 

	Kansas Insured Intermediate Fund w/o Sales Charge	Kansas Insured Intermediate Fund w/ Max Sales Charge	Lehman Brothers Municipal Seven-Year Maturity Bond Index
7/31/1996	$10,000	$9,729	$10,000
1997	$10,476	$10,191	$10,864
1998	$10,807	$10,514	$11,435
1999	$11,208	$10,903	$11,810
2000	$11,449	$11,138	$12,353
2001	$12,220	$11,888	$13,487
2002	$12,723	$12,377	$14,448
2003	$13,883	$12,534	$15,005
2004	$12,181	$12,823	$15,687
2005	$13,083	$12,728	$16,308
2006	$13,614	$13,245	$16,642

 

Putting Performance into Perspective

Performance data quoted above is historical.  Past performance is no guarantee of future results.  Current performance may be higher or lower than the performance data quoted.  The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost.  You can obtain performance data current to the most recent month end (available within seven business days of the most recent month end) by calling 1-800-276-1262. 

You should consider the Fund's investment objectives, risks, and charges and expenses carefully before investing.  For this and other important information, please obtain a Fund prospectus at no cost from your financial adviser and read it carefully before investing. 

The graph does not reflect the deduction of taxes that a shareholder would pay on Fund distributions and redemptions of Fund shares. 

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 re turns include reinvested dividends.

July 31, 2006 (Unaudited) 

MANAGEMENT OF THE FUND 

The Board of Integrity 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 six series of Integrity Managed Portfolios and the seven 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.  Two of the remaining three Trustees and/or 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. 

Effective January 6, 2006, Independent Trustee Lynn Aas retired from the Board of Trustees and Jerry Stai was subsequently nominated and elected to the Board of Trustees to fill the vacancy. Mr. Aas’ retirement also created a vacancy on the Audit Committee and the Governance Nominating Committee that Mr. Stai will occupy. 

INDEPENDENT TRUSTEES

NAME, ADDRESS AND AGE	POSITION(S) HELD WITH REGISTRANT	TERM AND LENGTH SERVED	PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS	NUMBER OF PORTFOLIOS OVERSEEN IN THE FUND COMPLEX1	OTHER DIRECTORSHIPS HELD OUTSIDE THE FUND COMPLEX
Jerry M. Stai 1 N. Main St. Minot, ND 58703 53	Trustee	Since January 2006	Faculty, Embry-Riddle University (August 2000 to September 2005); Faculty, Park University (August 2005 to December 2005); Non-Profit Specialist, Bremer Bank (since July 2005); Faculty, Minot State University (since August 2000); Director, ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., Integrity Fund of Funds, Inc., (since January 2006); Trustee, The Integrity Funds (since January 2006).	16	Marycrest Franciscan Development, Inc.
Orlin W. Backes 15 2nd Ave SW Ste 305 Minot, ND  58701 71	Trustee	Since January 1996	Attorney, McGee, Hankla, Backes & Dobrovolny, P.C.; Director, South Dakota Tax-Free Fund, Inc. (until June 2004), Integrity Small-Cap Fund of Funds, Inc. (until June 2003), ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc.; Trustee, The Integrity Funds (since May 2003); and Director, First Western Bank & Trust.	16	Director, First Western Bank & Trust
R. James Maxson Town & Country Center 1015 S Broadway Ste 15 Minot, ND  58701 58	Trustee	Since January 1999	Attorney, Maxson Law Office (since November 2002), Attorney, McGee, Hankla, Backes & Dobrovolny, P.C. (April 2000 to November 2002); Director, South Dakota Tax-Free Fund, Inc. (until June 2004), Integrity Small-Cap Fund of Funds, Inc. (until June 2003), ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc., and Trustee, The Integrity Funds (since May 2003).	16	None

¹The Fund Complex consists of the three funds in the Integrity family of funds, the six series of Integrity Managed Portfolios, and the seven series of The Integrity Funds. 

Trustees and officers of the Fund serve until their resignation, removal or retirement. 

The Statement of Additional Information contains more information about the Fund’s Trustees and is available without charge upon request, by calling Integrity Funds Distributor, Inc. at 1(800) 276-1262.

July 31, 2006 (Unaudited) 

The Interested Trustees 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 other directorships, if any, held outside the Fund Complex, are shown below.

INTERESTED TRUSTEES AND EXECUTIVE OFFICERS

NAME, ADDRESS AND AGE	POSITION(S) HELD WITH REGISTRANT	TERM AND LENGTH SERVED	PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS	NUMBER OF PORTFOLIOS OVERSEEN IN THE FUND COMPLEX1	OTHER DIRECTORSHIPS HELD OUTSIDE THE FUND COMPLEX
Robert E. Walstad2 1 N. Main St. Minot, ND  58703 61	Trustee, Chairman, President	Since January 1996	Director (since September 1987), President (September 1987 to October 2001 and September 2002 to May 2003), Integrity Mutual Funds, Inc.; Director, President and Treasurer, Integrity Money Management, Inc., ND Capital, Inc. (until September 2004), Integrity Fund Services, Inc.; Director, President (since inception) and Treasurer (until May 2004), South Dakota Tax-Free Fund, Inc. (until June 2004), Integrity Small-Cap Fund of Funds, Inc. (until June 2003), ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., Integrity Fund of Funds, Inc.; Trustee, Chairman and President (since May 2003) and Treasurer (May 2003 to May 2004), The Integrity Funds; Director, President and Treasurer (until August 2003), Integrity Funds Distributor, Inc.; Director (October 1999 to June 2003), President (October 1999 to October 2001), Magic Internet Services, Inc.; Director (May 2000 to June 2003), President (May 2000 to November 2001) (October 2002 to June 2003), ARM Securitie s Corporation; and Director, CEO, Chairman (since January 2002), President (September 2002 to December 2004), Capital Financial Services, Inc.	16	Director, Capital Financial Services, Inc.
Peter A. Quist2 1 N. Main St. Minot, ND  58703 71	Vice President, Secretary	Since January 1996	Attorney; Director and Vice President, Integrity Mutual Funds, Inc.; Director, Vice President and Secretary, Integrity Money management, Inc., ND Capital, Inc. (until September 2004), Integrity Fund Services, Inc., South Dakota Tax-Free Fund, Inc. (until June 2004), Integrity Small-Cap Fund of Funds, Inc. (until June 2003), ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc., Integrity Funds Distributor, Inc.; Vice President and Secretary, the Integrity Funds (since May 2003); and Director, ARM Securities Corporation (May 2000 to June 2003).	3	None
Laura K. Anderson 1 N. Main St. Minot, ND  58703 32	Treasurer	Since October 2005	Fund Accountant (until May 2004), Fund Accounting Supervisor (May 2004 to October 2005), Fund Accounting Manager, Integrity Fund Services, Inc.; Treasurer (since October 2005), The Integrity Funds, ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc.	N/A	None
Brent M. Wheeler 1 N. Main St. Minot, ND 58703 35	Mutual Fund Chief Compliance Officer	Since October 2005	Fund Accounting Manager (May 1998 to October 2005), Integrity Fund Services, Inc.; Treasurer (May 2004 to October 2005), Mutual Fund Compliance Officer (since October 2005), The Integrity Funds, ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc.	N/A	Minot State University Alumni Association

 

¹The Fund Complex consists of the three funds in the Integrity family of funds, the six series of Integrity Managed Portfolios, and the seven series of The Integrity Funds. 

²Trustees and/or 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. 

Trustees and officers of the Fund serve until their resignation, removal or retirement. 

The Statement of Additional Information contains more information about the Fund’s Trustees and is available without charge upon request, by calling Integrity Funds Distributor, Inc. at 1(800) 276-1262. 

Schedule of Investments  July 31, 2006

Name of Issuer Percentages represent the market value of each investment category to total net assets	Rating (Unaudited) Moody's/S&P	Coupon Rate	Maturity		Principal Amount		Market Value
KANSAS MUNICIPAL BONDS (95.7%)
Butler Cty., KS (Circle) USD #375 FSA	Aaa/NR	5.000%	09/01/13	$	250,000	$	260,215
#Chisholm Creek Util. Auth. (Bel Aire & Park City, KS Pj.) MBIA	Aaa/NR	5.250	09/01/16		770,000		832,301
Dodge, KS USD #443 Unltd. General Obligation FSA	Aaa/AAA	5.750	09/01/13		100,000		106,138
Johnson Cty., KS Community College Student Commons & Parking AMBAC	Aaa/AAA	5.000	11/15/19		235,000		246,670
Johnson Cty., KS USD #232 (Desoto)  MBIA	Aaa/NR	5.000	03/01/15		250,000		267,918
Johnson Cty., KS USD #232  FSA	Aaa/NR	5.000	09/01/15		100,000		106,895
KS Devl. Finance Auth. (Dept. Admin. 7th & Harrison PJ) AMBAC	Aaa/AAA	5.500	12/01/13		375,000		396,004
KS Devl. Finance Auth. (Wichita Univ.) AMBAC	Aaa/AAA	5.900	04/01/15		305,000		322,077
KS Devl. Finance Auth. (KS St. Projects) Rev. MBIA	Aaa/AAA	5.000	10/01/17		250,000		260,335
KS Devl. Finance Auth. (Park Apts.) Multifamily Hsg.Rev. FNMA	NR/AAA	5.700	12/01/09		325,000		328,601
#KS Devl. Finance Auth. (Stormont Vail) Hlth. Care Rev. MBIA	Aaa/AAA	5.700	11/15/08		450,000		455,418
KS Devl. Finance Auth. (Hays Medl. Ctr.) Rev. MBIA	Aaa/NR	5.200	11/15/08		375,000		381,705
KS Devl. Finance Auth. (Hays Medl. Ctr.) Rev. MBIA	Aaa/NR	5.300	11/15/09		375,000		381,510
KS Devl. Finance Auth. (Hays Medl. Ctr.) Rev. 5.500%          11/15/17 MBIA	Aaa/NR	5.500	11/15/17		100,000		102,250
*KS Devl. Finance Auth. (Stormont Vail) Hlth. Care Rev. MBIA	Aaa/AAA	5.750	11/15/12		845,000		908,113
Kingman Cty., KS USD #331 FGIC	Aaa/AAA	5.500	10/01/12		250,000		267,080
*Mission, KS Multifamily Hsg. (Lamar Place) Rev. FNMA	NR/AAA	5.000	10/01/14		605,000		610,403
Mission, KS Multifamily Hsg. (Lamar Place) Rev. FNMA	NR/AAA	5.180	10/01/23		445,000		447,229
Morton Cnty, KS USD# 217 FSA	Aaa/AAA	4.000	09/01/10		100,000		100,099
Neosho County, KS (Sales Tax Rev.)  MBIA	Aaa/AAA	5.000	08/15/08		300,000		304,830
Olathe, KS Multifamily Hsg. (Bristol Pointe) Rev. Ref. FNMA	NR/AAA	5.250	11/01/12		485,000		493,604
Saline Cty., KS USD #305 (Salina) G.O. Ref. FSA	Aaa/NR	5.500	09/01/15		190,000		203,382
Shawnee Cty., KS USD #437 (Auburn-Washburn) G.O. Ref. FSA	Aaa/NR	5.000	09/01/14		485,000		507,635
Shawnee, KS Multifamily Hsg. (Thomasbrooks Apts.) Rev. FNMA COL.	NR/AAA	5.250	10/01/14		225,000		227,887
*University of Kansas Hosp. Auth. AMBAC	Aaa/AAA	5.500	09/01/15		1,000,000		1,042,580
Washburn Univ. (Living Learning Ctr.) Bldg. Rev. AMBAC	Aaa/AAA	5.350	07/01/11		105,000		109,251
Wellington, KS Utility Rev. AMBAC	Aaa/AAA	5.000	05/01/12		250,000		254,655
#Wichita, KS Multifamily Hsg. (Broadmoor Chelsea) Rev. FNMA	NR/AAA	5.375	07/01/10		375,000		378,997
*Wichita, KS Multifamily Hsg. (Cimarron Apartments) FNMA	Aa/AAA	5.250	10/01/12		435,000		441,438
Wichita, KS Water & Sewer Util. Rev. FGIC	Aaa/AAA	5.250	10/01/14		325,000		349,307
#Wyandotte Cty, Kansas City, KS Gov't. Util. Syst. Rev. MBIA	Aaa/AAA	5.125	09/01/13		500,000		520,835
Wyandotte Cty., KS USD #500 G.O.  FSA	Aaa/AAA	5.250	09/01/13		250,000		271,292
TOTAL KANSAS MUNICIPAL BONDS (COST:  $11,604,839)						$	11,886,654
SHORT-TERM SECURITIES (3.2%)					Shares
Wells Fargo Advantage National Tax-Free Money Market					391,452	$	391,452
TOTAL SHORT-TERM SECURITIES (COST:  $391,452)						$	391,452
TOTAL INVESTMENTS IN SECURITIES (COST:  $11,996,291)						$	12,278,106
OTHER ASSETS LESS LIABILITIES							140,588
NET ASSETS						$	12,418,694

 

* 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.

Non-rated (NR) securities in the Fund were investment grade when purchased. 

The accompanying notes are an integral part of these financial statements.

Financial Statements  July 31, 2006 

Statement of Assets and Liabilities  July 31, 2006

ASSETS
	Investment in securities, at value (cost:  $11,996,291)			$	12,278,106
	Cash				809
	Accrued interest receivable				190,636
	Accrued dividends receivable				861
	Prepaid expenses				1,976
	Receivable from manager				210
		Total Assets		$	12,472,598
LIABILITIES
	Dividends payable			$	41,166
	Payable to affiliates				5,855
	Accrued expenses				6,883
		Total Liabilities		$	53,904
NET ASSETS				$	12,418,694
Net assets are represented by:
	Paid-in capital			$	13,528,802
	Accumulated undistributed net realized gain (loss) on investments and futures				(1,391,923)
	Unrealized appreciation (depreciation) on investments				281,815
			Total amount representing net assets applicable to 1,134,356 outstanding shares of no par common stock (unlimited shares authorized)	$	12,418,694
Net asset value per share				$	10.95
Public offering price (based on sales charge of 2.75%)				$	11.26

 

The accompanying notes are an integral part of these financial statements.

Financial Statements  July 31, 2006

Statement of Operations  For the year ended July 31, 2006

INVESTMENT INCOME
	Interest				$	594,502
	Dividends					10,087
			Total Investment Income		$	604,589
EXPENSES
	Investment advisory fees				$	65,298
	Administrative service fees					18,050
	Transfer agent fees					19,986
	Accounting service fees					30,596
	Custodian fees					2,752
	Transfer agent out-of-pockets					835
	Professional fees					7,566
	Trustees fees					2,179
	Reports to shareholders					2,167
	Registration and filing fees					1,319
	Insurance expense					227
	Legal fees					985
	Audit expense					8,282
			Total Expenses		$	160,242
	Less expenses waived or absorbed by the Fund’s manager					(62,295)
			Total Net Expenses		$	97,947
NET INVESTMENT INCOME					$	506,642
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES
	Net realized gain (loss) from:
		Investment transactions			$	26,889
		Futures transactions				360,132
	Net change in unrealized appreciation (depreciation) of:
		Investments				(290,249)
		Futures				(95,514)
				Net Realized And Unrealized Gain (Loss) On Investments And Futures	$	1,258
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS					$	507,900

 

The accompanying notes are an integral part of these financial statements.

Financial Statements  July 31, 2006 

Statement of Changes in Net Assets

For the year ended July 31, 2006, and the year ended July 29, 2005

				For The Year Ended July 31, 2006		For The Year Ended July 29, 2005
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
	Net investment income		$	506,642	$	599,720
	Net realized gain (loss) on investment and futures transactions			387,021		(899,793)
	Net change in unrealized appreciation (depreciation) on investments and futures			(385,763)		180,986
		Net Increase (Decrease) in Net Assets Resulting From Operations	$	507,900	$	(119,087)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
	Dividends from net investment income ($.43 and $.42 per share, respectively)		$	(506,639)	$	(599,718)
	Distributions from net realized gain on investment and futures transactions ($.00 and $.00 per share, respectively)			0		0
		Total Dividends and Distributions	$	(506,639)	$	(599,718)
CAPITAL SHARE TRANSACTIONS
	Proceeds from sale of shares		$	680,818	$	1,323,793
	Proceeds from reinvested dividends			305,774		352,495
	Cost of shares redeemed			(3,049,064)		(3,460,076)
		Net Increase (Decrease) in Net Assets Resulting From Capital Share Transactions	$	(2,062,472)	$	(1,783,788)
TOTAL INCREASE (DECREASE) IN NET ASSETS			$	(2,061,211)	$	(2,502,593)
NET ASSETS, BEGINNING OF PERIOD				14,479,905		16,982,498
NET ASSETS, END OF PERIOD			$	12,418,694	$	14,479,905
Undistributed Net Investment Income			$	0	$	0

 

The accompanying notes are an integral part of these financial statements.

Notes to Financial Statements  July 31, 2006 

Note 1.  ORGANIZATION

Business operations - Kansas Insured Intermediate Fund (the “Fund”) is an investment portfolio of Integrity 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 six portfolios are offered.  Integrity 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 state 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 Integrity Money Management.  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 s ecurity 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. 

When-issued securities – The Fund may purchase securities on a when-issued basis.  Payment and delivery may take place after the customary settlement period for that security.  The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated.  The value of the securities purchased on a when-issued basis are identified as such in the Fund’s Schedule of Investments.  With respect to purchase commitments, the Fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment.  Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract’s terms, or if the issuer does not issue the securities due to political, economic, or other factors. 

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.  Distributions during the year ended July 31, 2006, were characterized as tax-exempt for tax purposes. 

The tax character of distributions paid was as follows: 

			July 31, 2006		July 29, 2005
Tax-exempt Income		$	506,639	$	599,718
Ordinary Income			0		0
Long-term Capital Gains			0		0
	Total	$	506,639	$	599,718

 

As of July 31, 2006, the components of accumulated earnings/(deficit) on a tax basis were as follows: 

Undistributed Ordinary Income	Undistributed Long-Term Capital Gains	Accumulated Earnings	Accumulated Capital and Other Losses	Unrealized Appreciation/ (Depreciation)	Total Accumulated Earnings/(Deficit)
$0	$0	$0	($1,391,923)	$281,815	($1,110,108)

 

The Fund has unexpired capital loss carryforwards for tax purposes as of July 31, 2006, totaling $1,391,923, 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
2007	$	27,100
2008	$	49,698
2009	$	78,788
2010	$	178,976
2011	$	209,757
2012	$	303,542
2013	$	544,062

 

For the year ended July 31, 2006, the Fund made $36,266 in permanent reclassifications to reflect tax character.  Reclassifications to paid-in capital relate primarily to expiring capital loss carryforwards. 

Net capital losses incurred after October 31, and within the tax year are deemed to arise on the first business day of the Fund’s next taxable year.  For the year ended July 31, 2006, the Fund deferred to August 1, 2006 post October capital losses, post October currency losses and post October passive foreign investment company losses of $0. 

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. 

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 appreci ation (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, 2006, there were unlimited shares of no par authorized; 1,134,356 and 1,323,367 shares were outstanding at July 31, 2006, and July 29, 2005, respectively. 

Transactions in capital shares were as follows:

	Shares
	For The Year Ended July 31, 2006	For The Year Ended July 29, 2005
Shares sold	62,142	117,576
Shares issued on reinvestment of dividends	27,989	31,410
Shares redeemed	(279,142)	(309,665)
Net increase (decrease)	(189,011)	(160,679)

 

Note 4.  INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES

Integrity Money Management, the Fund’s investment adviser; Integrity Funds Distributor, the Fund’s underwriter; and Integrity Fund Services, the Fund’s transfer, accounting, and administrative services agent, are subsidiaries of Integrity Mutual Funds, Inc., the Fund’s sponsor. 

The Fund has engaged Integrity Money Management 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 $4,718 of investment advisory fees after partial waiver for the year ended July 31, 2006.  The Fund has a payable to Integrity Money Management of $0 at July 31, 2006 for investment advisory fees.  Certain officers and trustees of the Fund are also officers and directors of the investment adviser. 

Under the terms of the advisory agreement, the investment adviser has agreed to pay the expenses of the Fund (excluding taxes and brokerage fees and commissions, if any) that exceed 0.75% of the Fund’s average daily net assets on an annual basis.  The investment adviser may also voluntarily waive fees or reimburse expenses not required under the advisory contract from time to time.  Accordingly, after fee waivers and expense reimbursements, the Fund’s actual total annual operating expenses were 0.75% for the year ended July 31, 2006. 

Integrity Fund Services 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 $25 million, and 0.10% of the Fund’s net assets in excess of $50 million, with a minimum of $1,500 per month plus reimbursement of out-of-pocket expenses.  An additional fee with a minimum of $500 per month is charged for each additional share class.  The Fund has recognized $19,986 of transfer agency fees and expenses for the year ended July 31, 2006.  The Fund has a payable to Integrity Fund Services of $1,596 at July 31, 2006 for transfer agency fees.  Integrity Fund Services 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 avera ge 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, together with reimbursement of out-of-pocket expenses.  An additional minimum fee of $500 per month is charged by Integrity Fund Services for each additional share class.  The Fund has recognized $30,596 of accounting service fees for the year ended July 31, 2006.  The Fund has a payable to Integrity Fund Services of $2,518 at July 31, 2006 for accounting service fees.  Integrity Fund Services also acts as administrator for the Fund.  The Fund pays to Integrity Fund Services a monthly fee calculated at the rate of 0.10% of average daily net assets with a minimum of $1,500 per month plus out-of-pocket expenses.  An additional minimum fee of $500 per month is charged by Integrity Fund Services for each additional share class.  The Fund has recognized $18,050 of administrative service fees for the year ended July 31, 2006.& nbsp; The Fund has a payable to Integrity Fund Services of $1,500 at July 31, 2006 for administrative service fees. 

Note 5.  INVESTMENT SECURITY TRANSACTIONS

The cost of purchases and proceeds from the sales of investment securities (excluding short-term securities) aggregated $513,826 and $2,240,437, respectively, for the year ended July 31, 2006. 

Note 6.  INVESTMENT IN SECURITIES

At July 31, 2006, the aggregate cost of securities for federal income tax purposes was substantially the same for financial reporting purposes at $11,996,291.  The net unrealized appreciation of investments for financial reporting purposes based on the cost was $281,815, which is comprised of $290,227 aggregate gross unrealized appreciation and $8,412 aggregate gross unrealized depreciation.  Differences between financial reporting-basis and tax-basis unrealized appreciation/depreciation are due to differing treatment of market discount.

Financial Highlights

Selected per share data and ratios for the period indicated 

					For The Year Ended July 31, 2006		For The Year Ended July 29, 2005		For The Year Ended July 30, 2004		For The Year Ended July 31, 2003		For The Year Ended July 31, 2002
NET ASSET VALUE, BEGINNING OF PERIOD				$	10.94	$	11.44	$	11.60	$	11.91	$	11.93
Income from Investment Operations:
		Net investment income		$	.43	$	.42	$	.43	$	.46	$	.50
		Net realized and unrealized gain (loss) on investment and futures transactions			.01		(.50)		(.16)		(.31)		(.02)
			Total Income (Loss) From Investment Operations	$	.44	$	(.08)	$	.27	$	.15	$	.48
Less Distributions:
	Dividends from net investment income			$	(.43)	$	(.42)	$	(.43)	$	(.46)	$	(.50)
	Distributions from net capital gains				.00		.00		.00		.00		.00
			Total Distributions	$	(.43)	$	(.42)	$	(.43)	$	(.46)	$	(.50)
NET ASSET VALUE, END OF PERIOD				$	10.95	$	10.94	$	11.44	$	11.60	$	11.91
Total Return					4.06%(A)		(0.75%)(A)		2.31%(A)		1.26%(A)		4.12%(A)
RATIOS/SUPPLEMENTAL DATA:
	Net assets, end of period (in thousands)			$	12,419	$	14,480	$	16,982	$	18,477	$	18,633
	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%		3.71%		3.67%		3.89%		4.20%
	Portfolio turnover rate				4.15%		1.81%		4.39%		26.23%		9.04%

 

(A) Excludes maximum sales charge of 2.75%.

(B) During the periods indicated above, Integrity Mutual Funds, Inc. or Integrity Money Management assumed/waived expenses of $62,295, $57,567, $58,289, $36,281, and $30,501, respectively.  If the expenses had not been assumed/waived, the annualized ratios of total expenses to average net assets would have been 1.23%, 1.10%, 1.08%, 0.94%, and 0.91%, respectively. 

Total return represents the rate that an investor would have earned or lost on an investment in the Fund assuming reinvestment of all dividends and distributions. 

The accompanying notes are an integral part of these financial statements.

Tax Information For The Year Ended July 31, 2006 (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 of Record	Payment Date		From Net Investment Income	From Net Realized Short-Term Gains	From Net Realized Long-Term Gains
August 31, 2005	August 31, 2005	$	.035692	-	-
September 30, 2005	September 30, 2005	$	.034419	-	-
October 31, 2005	October 31, 2005	$	.034792	-	-
November 30, 2005	November 30, 2005	$	.035486	-	-
December 30, 2005	December 30, 2005	$	.035133	-	-
January 31, 2006	January 31, 2006	$	.034988	-	-
February 28, 2006	February 28, 2006	$	.035183	-	-
March 31, 2006	March 31, 2006	$	.035505	-	-
April 28, 2006	April 28, 2006	$	.033559	-	-
May 31, 2006	May 31, 2006	$	.038694	-	-
June 30, 2006	June 30, 2006	$	.036264	-	-
July 31, 2006	July 31, 2006	$	.036257	-	-

 

Shareholders should consult their tax advisors.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  

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 Integrity Managed Portfolios), including the schedule of investments as of July 31, 2006,  the related statement of operations for the year then ended, the statement of changes in net assets for the years ended July 31, 2006 and July 29, 2005, and the financial highlights for the year ended July 31, 2006 and each of the four years in the period ended July 29, 2005.  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 the standards of the Public Company Accounting Oversight Board (United States). 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, 2006 by correspondence with the custodian and brokers. 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 audits provide 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 Integrity Managed Portfolios as of July 31, 2006, the results of its operations for the year then ended, the changes in its net assets for the 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 8, 2006

Dear Shareholder: 

Enclosed is the report of the Maine Municipal Fund (the “Fund”) for the year ended July 31, 2006.  The Fund’s portfolio and related financial statements are presented within for your review. 

As we end the period, the Federal Reserve under new chairman Ben Bernanke has raised the Federal Funds rate for the seventeenth time to 5.25% from a four-decade low of 1% in June 2004.  Longer-term yields have risen as the 10-year Treasury bond yield ended the period at 4.99% after beginning the period at 4.28%. 

Rising concerns over the U.S. core consumer index’s 3.8% annualized growth through May has the Fed officials talking tough.  The Fed puts great emphasis in keeping inflation expectations under control, at the same time it is important for central banks to be forward looking and not base their policy decisions on lagging economic indicators. 

The strength of the U.S. economy during the last couple of years, together with rising commodity prices has created some cyclical inflationary pressures as evidenced by gold’s rise to over $700 per ounce and crude oil’s rise to over $75 per barrel.  The key question is whether the recent rise in inflation is temporary or one that will require more hikes in the Fed Funds rate. 

On the other side of the ledger, the U.S. housing market continues to cool off.  Sales of single-family existing homes have declined nine out of the past twelve months. 

During the past few years, rising home prices permitted consumers to borrow against the increasing equity in their homes.  As a result, consumers were able to spend in excess of their income growth and the savings rate turned negative.  Now that the housing market is slowing, consumer spending is likely to be more restrained.  U.S. consumer spending makes up two-thirds of the economy. 

The slowdown in the housing markets also appears to be affecting some commodity prices.  In particular, lumber prices have declined in the past few months and copper prices are no longer rising at a rapid rate. This shows that the slowdown in the housing market could dampen inflationary pressures and allow the Fed to eventually stop raising interest rates. 

The Maine Municipal Fund began the period at $10.45 per share and ended the period at $10.52 per share for a total return of 4.12%*.  This compares to the Lehman Brothers Municipal Bond Index return of 2.55% for the period. 

The Fund’s favorable overall performance can be attributed to its defensive portfolio. 

Given our concerns that the Federal Reserve would tighten throughout the period, we structured the Fund defensively to help mitigate the effects of rising rates.  Rather than committing a portion of the Fund’s assets to low-yielding bonds, the Fund maintained an emphasis on premium priced, higher coupon issues like Maine Health & Higher Education, 5.55% coupon, Maine Municipal Bond Bank, 5.62% coupon and Maine Turnpike, 5.75% coupon.  In rising rate environments these types of issues have typically held their value better than lower coupon issues such as Scarborough General Obligation, 4.00% coupon and University of Maine, 4.25% coupon.  Also, contributing to the Fund’s overall performance was a defensive hedge using U.S. treasury futures; this strategy stabilizes net asset values in periods of rising rates. 

An important part of the Fund’s strategy includes searching the primary and secondary markets for high quality, double tax-exempt issues.  Credit quality for the period was as follows, AAA 78.0%, AA 18.9%, A 2.5% and BBB 0.6%. 

Income exempt from federal and Maine state income taxes with preservation of capital remain the primary objectives of the Fund. 

If you would like more frequent updates, visit our website at www.integrityfunds.com for daily prices along with pertinent Fund information. 

Sincerely, 

The Portfolio Management Team 

The views expressed are those of Monte Avery, Chief Portfolio Strategist with Integrity Mutual Funds. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or any Integrity Mutual Fund. 

*Performance does not include applicable front-end or contingent deferred sales charges, which would have reduced the performance. 

Performance data quoted above is historical.  Past performance is no guarantee of future results.  Current performance may be higher or lower than the performance data quoted.  The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost.  You can obtain performance data current to the most recent month end (available within seven business days of the most recent month end) by calling 1-800-276-1262. 

You should consider the Fund's investment objectives, risks, and charges and expenses carefully before investing.  For this and other important information, please obtain a Fund prospectus at no cost from your financial adviser and read it carefully before investing. 

Bond prices and, therefore, the value of bond funds decline as interest rates rise.  Because the Fund invests in securities of a single state, the Fund is more susceptible to factors adversely impacting the respective state securities than a municipal bond fund that does not concentrate its securities in a single state.

July 31, 2006 (Unaudited) 

PROXY VOTING ON FUND PORTFOLIO SECURITIES

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-276-1262.  A report on "Form N-PX" of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available through Integrity's website at www.integrityfunds.com.  This information is also available from the EDGAR database on the Securities and Exchange Commission’s (“SEC's”) website at www.sec.gov. 

QUARTERLY PORTFOLIO SCHEDULE

The Fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the Fund's second and fourth fiscal quarters on the Form N-CSR(S).  The annual and semi-annual reports are filed electronically with the SEC and are delivered to the Fund shareholders.  The Fund also files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q.  The Fund's Forms N-Q and N-CSR(S) are available on the SEC's website at www.sec.gov.  The Fund's Forms N-Q and N-CSR(S) may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C., and the information on the operation of the Public Reference Room may be obtained by calling 1-202-942-8090.  You may also access this information from Integrity's website at www.integrityfunds.com.

Terms & Definitions July 31, 2006 (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.

July 31, 2006 (Unaudited) 

COMPOSITION 

PORTFOLIO QUALITY RATINGS

(Based on Total Long-Term Investments) 

AAA	78.0%
AA	18.9%
A	2.5%
BBB	0.6%

 

Quality ratings reflect the financial strength of the issuer.  They are assigned by independent rating services such as Moody’s Investors Services and Standard & Poor’s.  Non-rated bonds have been determined to be of appropriate quality for the portfolio by Integrity Money Management, Inc. (“Integrity Money Management” or “Adviser”), the investment adviser. 

These percentages are subject to change. 

PORTFOLIO MARKET SECTORS

(As a % of Net Assets) 

T-Transportation	32.5%
I-Industrial	19.4%
G-Government	19.0%
HC-Health Care	8.7%
S-School	7.4%
O-Other	5.8%
U-Utilities	3.9%
W/S-Water/Sewer	3.3%

 

Market sectors are breakdowns of the Fund’s portfolio holdings into specific investment classes. 

These percentages are subject to change.

July 31, 2006 (Unaudited) 

DISCLOSURE OF FUND EXPENSES 

The Example below is intended to describe the fees and expenses borne by shareholders and the impact of those costs on your investment. 

EXAMPLE

As a shareholder of the Fund, you incur two types of costs:  (1) transaction costs, including sales charges (loads), redemption fees and exchange fees; and (2) ongoing costs, including management fees, distribution (12b-1) fees and other Fund expenses.  This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.  The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 31, 2006 to July 31, 2006. 

The example illustrates the Fund’s costs in two ways: 

Actual expenses

The section in the table under the heading “Actual” provides information about actual account values and actual expenses.  You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid over the period.  Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the appropriate column for your share class, in the column entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. 

Hypothetical example for comparison purposes

The section in the table under the heading “Hypothetical (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.  The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.  You may use this information to compare the ongoing costs of investing in the Fund and other funds.  To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.  

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees or exchange fees.  Therefore, the section in the table under the heading “Hypothetical (5% return before expenses)” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.  In addition, if these transactional costs were included, your costs would have been higher. 

	Beginning Account Value 01/31/06	Ending Account Value 07/31/06	Expenses Paid During Period*
Actual
Class A	$1,000.00	$1,034.00	$5.36
Hypothetical (5% return before expenses)
Class A	$1,000.00	$1,019.38	$5.33

* Expenses are equal to the annualized expense ratio of 1.06%, multiplied by the average account value over the period, multiplied by 180/362 days.  The Fund’s ending account value on the first line in the table is based on its actual total return of 3.40% for the six-month period of January 31, 2006 to July 31, 2006.

July 31, 2006 (Unaudited) 

AVERAGE ANNUAL TOTAL RETURNS 

	For periods ending July 31, 2006
					Since Inception (December 5, 1991)
Maine Municipal Fund	1 year	3 year	5 year	10 year
Without sales charge	4.12%	2.42%	2.92%	4.17%	5.02%
With sales charge (4.25%)	(0.27%)	0.95%	2.04%	3.71%	4.71%

 

					Since Inception (December 5, 1991)
Lehman Brothers Municipal Bond Index	1 year	3 year	5 year	10 year
	2.55%	4.89%	4.99%	5.82%	6.33%

 

Putting Performance into Perspective

Performance data quoted above is historical.  Past performance is no guarantee of future results.  Current performance may be higher or lower than the performance data quoted.  The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost.  You can obtain performance data current to the most recent month end (available within seven business days of the most recent month end) by calling 1-800-276-1262. 

You should consider the Fund's investment objectives, risks, and charges and expenses carefully before investing.  For this and other important information, please obtain a Fund prospectus at no cost from your financial adviser and read it carefully before investing.

The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions and redemption of Fund shares. 

The Fund's performance prior to December 19, 2003, was achieved while the Fund was managed by another investment adviser, who used different investment strategies and techniques, which may produce different investment results than those achieved by the current investment adviser.  Forum Investment Advisors, LLC, served as investment adviser to the Fund until December 19, 2003.

July 31, 2006 (Unaudited) 

COMPARATIVE INDEX GRAPH 

Comparison of change in value of a $10,000 investment in the Maine Municipal Fund and the Lehman Brothers Municipal Bond Index 

	Maine Municipal Fund w/o Sales Charge	Maine Municipal Fund w/ Max Sales Charge	Lehman Brothers Municipal Bond Index
7/31/1996	$10,000	$9,571	$10,000
1997	$10,798	$10,335	$11,027
1998	$11,321	$10,835	$11,687
1999	$11,623	$11,125	$12,024
2000	$12,067	$11,549	$12,542
2001	$13,024	$12,465	$13,808
2002	$13,697	$13,110	$14,735
2003	$14,002	$13,402	$15,264
2004	$14,555	$13,932	$16,147
2005	$14,448	$13,829	$17,174
2006	$15,043	$14,398	$17,613

 

Putting Performance into Perspective

Performance data quoted above is historical.  Past performance is no guarantee of future results.  Current performance may be higher or lower than the performance data quoted.  The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost.  You can obtain performance data current to the most recent month end (available within seven business days of the most recent month end) by calling 1-800-276-1262. 

You should consider the Fund's investment objectives, risks, and charges and expenses carefully before investing.  For this and other important information, please obtain a Fund prospectus at no cost from your financial adviser and read it carefully before investing. 

The graph does not reflect the deduction of taxes that a shareholder would pay on Fund distributions and redemptions of Fund shares. 

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 Maine 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 re turns include reinvested dividends. 

July 31, 2006 (Unaudited) 

MANAGEMENT OF THE FUND 

The Board of Integrity 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 six series of Integrity Managed Portfolios and the seven 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.  Two of the remaining three Trustees and/or 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. 

Effective January 6, 2006, Independent Trustee Lynn Aas retired from the Board of Trustees and Jerry Stai was subsequently nominated and elected to the Board of Trustees to fill the vacancy. Mr. Aas’ retirement also created a vacancy on the Audit Committee and the Governance Nominating Committee that Mr. Stai will occupy. 

INDEPENDENT TRUSTEES

NAME, ADDRESS AND AGE	POSITION(S) HELD WITH REGISTRANT	TERM AND LENGTH SERVED	PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS	NUMBER OF PORTFOLIOS OVERSEEN IN THE FUND COMPLEX1	OTHER DIRECTORSHIPS HELD OUTSIDE THE FUND COMPLEX
Jerry M. Stai 1 N. Main St. Minot, ND 58703 53	Trustee	Since January 2006	Faculty, Embry-Riddle University (August 2000 to September 2005); Faculty, Park University (August 2005 to December 2005); Non-Profit Specialist, Bremer Bank (since July 2005); Faculty, Minot State University (since August 2000); Director, ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., Integrity Fund of Funds, Inc., (since January 2006); Trustee, The Integrity Funds (since January 2006).	16	Marycrest Franciscan Development, Inc.
Orlin W. Backes 15 2nd Ave SW Ste 305 Minot, ND  58701 71	Trustee	Since January 1996	Attorney, McGee, Hankla, Backes & Dobrovolny, P.C.; Director, South Dakota Tax-Free Fund, Inc. (until June 2004), Integrity Small-Cap Fund of Funds, Inc. (until June 2003), ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc.; Trustee, The Integrity Funds (since May 2003); and Director, First Western Bank & Trust.	16	Director, First Western Bank & Trust
R. James Maxson Town & Country Center 1015 S Broadway Ste 15 Minot, ND  58701 58	Trustee	Since January 1999	Attorney, Maxson Law Office (since November 2002), Attorney, McGee, Hankla, Backes & Dobrovolny, P.C. (April 2000 to November 2002); Director, South Dakota Tax-Free Fund, Inc. (until June 2004), Integrity Small-Cap Fund of Funds, Inc. (until June 2003), ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc., and Trustee, The Integrity Funds (since May 2003).	16	None

¹The Fund Complex consists of the three funds in the Integrity family of funds, the six series of Integrity Managed Portfolios, and the seven series of The Integrity Funds. 

Trustees and officers of the Fund serve until their resignation, removal or retirement. 

The Statement of Additional Information contains more information about the Fund’s Trustees and is available without charge upon request, by calling Integrity Funds Distributor, Inc. at 1(800) 276-1262.

July 31, 2006 (Unaudited) 

The Interested Trustees 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 other directorships, if any, held outside the Fund Complex, are shown below. 

INTERESTED TRUSTEES AND EXECUTIVE OFFICERS

NAME, ADDRESS AND AGE	POSITION(S) HELD WITH REGISTRANT	TERM AND LENGTH SERVED	PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS	NUMBER OF PORTFOLIOS OVERSEEN IN THE FUND COMPLEX1	OTHER DIRECTORSHIPS HELD OUTSIDE THE FUND COMPLEX
Robert E. Walstad2 1 N. Main St. Minot, ND  58703 61	Trustee, Chairman, President	Since January 1996	Director (since September 1987), President (September 1987 to October 2001 and September 2002 to May 2003), Integrity Mutual Funds, Inc.; Director, President and Treasurer, Integrity Money Management, Inc., ND Capital, Inc. (until September 2004), Integrity Fund Services, Inc.; Director, President (since inception) and Treasurer (until May 2004), South Dakota Tax-Free Fund, Inc. (until June 2004), Integrity Small-Cap Fund of Funds, Inc. (until June 2003), ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., Integrity Fund of Funds, Inc.; Trustee, Chairman and President (since May 2003) and Treasurer (May 2003 to May 2004), The Integrity Funds; Director, President and Treasurer (until August 2003), Integrity Funds Distributor, Inc.; Director (October 1999 to June 2003), President (October 1999 to October 2001), Magic Internet Services, Inc.; Director (May 2000 to June 2003), President (May 2000 to November 2001) (October 2002 to June 2003), ARM Securiti es Corporation; and Director, CEO, Chairman (since January 2002), President (September 2002 to December 2004), Capital Financial Services, Inc.	16	Director, Capital Financial Services, Inc.
Peter A. Quist2 1 N. Main St. Minot, ND  58703 71	Vice President, Secretary	Since January 1996	Attorney; Director and Vice President, Integrity Mutual Funds, Inc.; Director, Vice President and Secretary, Integrity Money management, Inc., ND Capital, Inc. (until September 2004), Integrity Fund Services, Inc., South Dakota Tax-Free Fund, Inc. (until June 2004), Integrity Small-Cap Fund of Funds, Inc. (until June 2003), ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc., Integrity Funds Distributor, Inc.; Vice President and Secretary, the Integrity Funds (since May 2003); and Director, ARM Securities Corporation (May 2000 to June 2003).	3	None
Laura K. Anderson 1 N. Main St. Minot, ND  58703 32	Treasurer	Since October 2005	Fund Accountant (until May 2004), Fund Accounting Supervisor (May 2004 to October 2005), Fund Accounting Manager, Integrity Fund Services, Inc.; Treasurer (since October 2005), The Integrity Funds, ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc.	N/A	None
Brent M. Wheeler 1 N. Main St. Minot, ND 58703 35	Mutual Fund Chief Compliance Officer	Since October 2005	Fund Accounting Manager (May 1998 to October 2005), Integrity Fund Services, Inc.; Treasurer (May 2004 to October 2005), Mutual Fund Compliance Officer (since October 2005), The Integrity Funds, ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc.	N/A	Minot State University Alumni Association

 

¹The Fund Complex consists of the three funds in the Integrity family of funds, the six series of Integrity Managed Portfolios, and the seven series of The Integrity Funds. 

²Trustees and/or 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. 

Trustees and officers of the Fund serve until their resignation, removal or retirement. 

The Statement of Additional Information contains more information about the Fund’s Trustees and is available without charge upon request, by calling Integrity Funds Distributor, Inc. at 1(800) 276-1262.

Schedule of Investments July 31, 2006 

Name of Issuer Percentages represent the market value of each investment category to total net assets	Rating (Unaudited) Moody's/S&P	Coupon Rate	Maturity		Principal Amount		Market Value
MAINE MUNICIPAL BONDS (71.3%)
Bar Harbor, ME	A-1/NR	6.450%	06/01/09	$	75,000	$	80,568
Bath, ME	A/NR	7.400	12/01/06		15,000		15,305
Bath, ME	A/NR	7.450	12/01/07		30,000		31,453
Bath, ME	A/NR	7.500	12/01/08		20,000		21,711
Bath, ME  MBIA	Aaa/AAA	5.625	03/01/09		25,000		25,500
Brewer, ME	A/A	4.600	11/01/17		210,000		218,408
Bucksport, ME	NR/A-	7.150	04/01/07		25,000		25,718
Ellsworth, ME	A/NR	7.200	07/01/08		25,000		26,551
Freeport, ME	Aa-3/AA	7.250	09/01/10		20,000		22,609
Gorham, ME Unlimited Tax G.O.  MBIA	Aaa/NR	4.200	02/01/22		155,000		153,346
Gorham, ME Unlimited Tax G.O.  MBIA	Aaa/NR	4.300	02/01/23		155,000		154,726
Gorham, ME Unlimited Tax G.O.  MBIA	Aaa/NR	4.350	02/01/24		155,000		155,188
Houlton, ME Water District  MBIA	Aaa/NR	4.600	05/01/14		100,000		101,557
Kennebec, ME Regl. Dev.	Baa-1/NR	5.500	08/01/14		75,000		79,740
#Kennebec, ME Water District  FSA	Aaa/NR	5.125	12/01/21		500,000		514,355
Kittery, ME	A/AA	5.200	01/01/09		25,000		25,845
Lewiston, Maine G.O.  FSA	Aaa/NR	5.000	04/01/22		500,000		520,795
Lewiston, Maine G.O.  FSA	Aaa/NR	5.000	04/01/24		250,000		262,192
Maine Finance Auth. Rev. (Electric Rate Stabilization) FSA	Aaa/AAA	4.500	07/01/08		25,000		25,362
Maine Governmental Facs. Auth Lease  MBIA	Aaa/AAA	5.375	10/01/16		250,000		268,883
Maine Governmental Facs. Lease Rev FSA	Aaa/AAA	5.750	10/01/07		250,000		255,945
Maine Health & Higher Educ. Auth. (Maine Maritime Academy) MBIA	Aaa/NR	5.000	07/01/25		340,000		356,269
Maine Health & Higher Educ. Facs. Auth.	Aaa/A+	6.000	10/01/13		195,000		217,706
Maine Health & Higher Educ. Facs. Auth. (Bates College) FSA	Aaa/AAA	5.250	07/01/11		25,000		25,586
*Maine Health & Higher Educ. Facs. Auth. (Blue Hill Mem. Hosp) FSA	Aaa/AAA	5.250	07/01/10		550,000		565,186
Maine Health & Higher Educ. Facs. Auth. (Univ. New England & Cedars Nur.) FSA	Aaa/AAA	5.550	07/01/08		150,000		150,000
Maine Health & Higher Educ. Facs. Auth. FSA	Aaa/AAA	5.600	07/01/07		175,000		176,363
Maine Health & Higher Educ. Facs. Auth. Rev. AMBAC	Aaa/AAA	7.300	05/01/14		5,000		5,013
#Maine Health & Higher Educ. Facs. Auth. Rev. FSA	Aaa/AAA	5.300	07/01/07		130,000		130,325
Maine Municipal Bond Bank  MBIA	Aaa/AAA	4.200	11/01/06		260,000		261,604
*Maine Municipal Bond Bank  MBIA	Aaa/AAA	5.625	11/01/16		1,000,000		1,075,660
Maine Municipal Bond Bank (Sewer & Water) Rev.	Aaa/AAA	4.900	11/01/24		100,000		103,826
Maine State (Highway)	Aa-3/AA-	5.000	06/15/11		200,000		210,540
Maine State Turnpike Auth.  MBIA	Aaa/AAA	4.625	07/01/10		100,000		101,758
Maine State Turnpike Auth.  MBIA	Aaa/AAA	5.250	07/01/10		75,000		78,383
Maine State Turnpike Auth. Rev.  FGIC	Aaa/AAA	5.300	07/01/12		100,000		103,381
*Maine State Turnpike Auth. Rev. FGIC	Aaa/AAA	5.750	07/01/28		750,000		823,800
Portland, ME	Aa-1/AA	5.000	09/01/13		60,000		63,464
#Portland, ME	Aa-1/AA	5.300	06/01/13		790,000		802,972
Portland, ME Airport Rev.  FSA	Aaa/AAA	5.000	07/01/32		500,000		517,105
Scarborough, ME G.O.  MBIA	Aaa/AAA	4.400	11/01/31		250,000		241,290
Scarborough, ME G.O.  MBIA	Aaa/AAA	4.400	11/01/32		480,000		463,114
#Skowhegan, ME Pollution Ctl. Rev. (Scott Paper Co. Prj.)	Aa/AA-	5.900	11/01/13		1,465,000		1,465,000
South Portland, ME	Aa-1/NR	5.800	09/01/08		150,000		156,554
South Portland, ME	Aa-1/NR	5.800	09/01/11		40,000		43,944
University of Maine System Rev.  AMBAC	Aaa/AAA	4.500	03/01/07		50,000		50,667
University of Maine System Rev.  AMBAC	Aaa/AAA	5.000	03/01/24		100,000		104,075
University of Maine System Rev. MBIA	Aaa/AAA	4.250	03/01/25		200,000		190,648
Westbrook, ME  MBIA	Aaa/AAA	4.600	06/01/07		240,000		243,240
Westbrook, ME G.O.  FGIC	Aaa/AAA	4.250	10/15/20		180,000		179,372
Windham, ME General Obligation  AMBAC	Aaa/AAA	4.000	11/01/14		415,000		415,618
Winslow, ME (Crowe Rope Inds.)  MBIA	Aaa/AAA	5.500	03/01/07		130,000		132,375
Winthrop, ME	A-3/NR	5.300	08/01/06		25,000		25,000
Winthrop, ME	A-3/NR	5.400	08/01/07		25,000		25,423
Yarmouth, ME	Aa-3/AA-	5.000	11/15/19		500,000		526,515
Yarmouth, ME  AMBAC	Aaa/NR	5.250	11/15/09		250,000		261,578
York, ME G.O.	NR/AA	4.000	09/01/10		75,000		76,153
TOTAL MAINE MUNICIPAL BONDS						$	13,355,264
GUAM MUNICIPAL BONDS (0.1%)
Guam Hsg. Corp. Single Family Mtg.	NR/AAA	5.750	09/01/2031		10,000		10,897
TOTAL GUAM MUNICIPAL BONDS						$	10,897
PUERTO RICO MUNICIPAL BONDS (21.5%)
Puerto Rico Commonwealth Highway and Trans. Rev. MBIA	Aaa/AAA	5.500	07/01/2036		750,000		833,077
Puerto Rico Public Finance Corp. Commonwealth Appropriations AMBAC	Aaa/AAA	5.375	06/01/2018		1,960,000		2,183,185
*University of Puerto Rico Univ. Revs. MBIA	Aaa/AAA	5.500	06/01/2015		1,000,000		1,007,500
TOTAL PUERTO RICO MUNICIPAL BONDS						$	4,023,762
VIRGIN ISLANDS MUNICIPAL BONDS (3.0%)
Virgin Islands Hsg. Finance Auth. Single Family Rev. GNMA COLL	NR/AAA	6.000	03/01/2007		35,000		35,196
Virgin Islands Water & Power Auth. Elec. Syst. Rev. ACA/MBIA	Aaa/AAA	5.300	07/01/2021		500,000		520,690
TOTAL VIRGIN ISLANDS MUNICIPAL BONDS						$	555,886
TOTAL MUNICIPAL BONDS (COST: $17,470,424)						$	17,945,809
SHORT-TERM SECURITIES (3.4%)					Shares
Wells Fargo Advantage National Tax-Free Money Market					627,000	$	627,000
Goldman Sachs Financial Square Tax-Free Money Market					17,711		17,711
TOTAL SHORT-TERM SECURITIES (COST: $644,711)						$	644,711
TOTAL INVESTMENTS IN SECURITIES (COST: $18,115,135)						$	18,590,520
OTHER ASSETS LESS LIABILITIES							137,650
NET ASSETS						$	18,728,170

 

*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. 

Non-rated (NR) securities in the Fund were investment grade when purchased. 

The accompanying notes are an integral part of these financial statements. 

Financial Statements July 31, 2006 

Statement of Assets and Liabilities July 31, 2006

ASSETS
	Investment in securities, at value (cost: $18,115,135)		$	18,590,520
	Receivable for fund shares sold			38,000
	Accrued interest receivable			185,880
	Accrued dividends receivable			1,329
	Prepaid expenses			3,976
		Total Assets	$	18,819,705
LIABILITIES
	Disbursements in excess of demand deposit cash		$	9,841
	Dividends payable			54,068
	Payable to affiliates			15,045
	Accrued expenses			12,581
		Total Liabilities	$	91,535
NET ASSETS			$	18,728,170
Net assets are represented by:
	Paid-in capital		$	18,968,000
	Accumulated undistributed net realized gain (loss) on investments and futures			(729,402)
	Accumulated undistributed net investment income			14,187
	Unrealized appreciation (depreciation) on investments			475,385
		Total amount representing net assets applicable to 1,780,772 outstanding shares of no par common stock (unlimited shares authorized)	$	18,728,170
Net asset value per share			$	10.52
Public offering price (based on sales charge of 4.25%)			$	10.99

 The accompanying notes are an integral part of these financial statements.

Statement of Operations For the year ended July 31, 2006 

INVESTMENT INCOME
	Interest		$	916,295
	Dividends			20,224
		Total Investment Income	$	936,519
EXPENSES
	Investment advisory fees		$	106,386
	Distribution (12b-1) fees			53,193
	Administrative service fees			21,277
	Transfer agent fees			30,669
	Transfer agent out-of-pockets			857
	Accounting service fees			34,705
	Reports to shareholders			2,014
	Custodian fees			3,279
	Professional fees			12,583
	Trustees fees			2,609
	Registration and filing fees			1,785
	Insurance expense			871
	Legal fees			1,119
	Audit fees			5,177
		Total Expenses	$	276,524
	Less expenses waived or absorbed by the Fund’s manager			(58,447)
		Total Net Expenses	$	218,077
NET INVESTMENT INCOME			$	718,442
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES
	Net realized gain (loss) from:
	Investment transactions		$	(21,446)
	Futures transactions			654,851
	Net change in unrealized appreciation (depreciation) of:
	Investments			(330,569)
	Futures			(216,897)
		Net Realized and Unrealized Gain (Loss) On Investments and Futures	$	85,939
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS			$	804,381

 

The accompanying notes are an integral part of these financial statements.

Financial Statements July 31, 2006 

Statement of Changes in Net Assets

For the year ended July 31, 2006, and the year ended July 29, 2005 

				For The Year Ended July 31, 2006		For the Year Ended July 29, 2005
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
	Net investment income		$	718,442	$	937,213
	Net realized gain (loss) on investment and futures transactions			633,405		(1,778,890)
	Net change in unrealized appreciation (depreciation) on investments and futures			(547,466)		648,836
		Net Increase (Decrease) in Net Assets Resulting From Operations	$	804,381	$	(192,841)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
	Dividends from net investment income ($.35 and $.35 per share, respectively)		$	(712,764)	$	(931,874)
	Distributions from net realized gain on investment and futures transactions ($.00 and $.22 per share, respectively)			0		(603,548)
		Total Dividends and Distributions	$	(712,764)	$	(1,535,422)
CAPITAL SHARE TRANSACTIONS
	Proceeds from sale of shares		$	783,051	$	1,802,597
	Proceeds from reinvested dividends			407,076		891,500
	Cost of shares redeemed			(7,528,806)		(7,673,523)
		Net Increase (Decrease) in Net Assets Resulting From Capital Share Transactions	$	(6,338,679)	$	(4,979,426)
TOTAL INCREASE (DECREASE) IN NET ASSETS			$	(6,247,062)	$	(6,707,689)
NET ASSETS, BEGINNING OF PERIOD				24,975,232		31,682,921
NET ASSETS, END OF PERIOD			$	18,728,170	$	24,975,232
Undistributed Net Investment Income			$	14,187	$	8,509

 

The accompanying notes are an integral part of these financial statements.

Notes to Financial Statements July 31, 2006 

Note 1.  ORGANIZATION

Business operations - The Maine Municipal Fund (the “Fund”) is an investment portfolio of Integrity 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 six portfolios are offered.  Integrity Managed Portfolios is an unincorporated business trust organized under Massachusetts law on August 10, 1990.  The investment objective of the Fund is to provide its shareholders with as high a level of current income exempt from both federal and Maine state income tax as is consistent with preservation of capital.  The Fund will seek to achieve this objective by investing primarily in a portfolio of Maine municipal securities.  

On December 19, 2003, the Maine Municipal Fund became a series of Integrity Managed Portfolios.  Prior to this the Fund was part of the Forum Funds and was named the Maine TaxSaver Bond Fund.  The Maine TaxSaver Bond Fund commenced operations on December 5, 1991.  The Forum Funds is a Delaware business trust that is registered as an open-end management investment company under the Investment Company Act of 1940, as amended. 

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 Integrity Money Management.  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. 

When-issued securities – The Fund may purchase securities on a when-issued basis.  Payment and delivery may take place after the customary settlement period for that security.  The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated.  The value of the securities purchased on a when-issued basis are identified as such in the Fund’s Schedule of Investments.  With respect to purchase commitments, the Fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment.  Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract’s terms, or if the issuer does not issue the securities due to political, economic, or other factors. 

Contingent Deferred Sales Charge (“CDSC”) – In the case of investments of $1 million or more, a 1.00% CDSC may be assessed on shares redeemed within 12 months of purchase (excluding shares purchased with reinvested dividends and/or distributions). 

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.  

The tax character of distributions paid was as follows:

			July 31, 2006		July 29, 2005
Tax-exempt Income		$	712,764	$	931,874
Ordinary Income			0		166,154
Long-term Capital Gains			0		437,394
	Total	$	712,764	$	1,535,422

 

As of July 31, 2006, the components of accumulated earnings/(deficit) on a tax basis were as follows: 

Undistributed Ordinary Income	Undistributed Long-Term Capital Gains	Accumulated Earnings	Accumulated Capital and Other Losses	Unrealized Appreciation/ (Depreciation)	Total Accumulated Earnings/(Deficit)
$0	$0	$0	($729,402)	$489,572	($239,830)

 

The Fund has unexpired capital loss carryforwards for tax purposes as of July 31, 2006, totaling $729,402 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
2013	$	729,402

 

For the year ended July 31, 2006, the Fund made no permanent reclassifications to reflect tax character.  Reclassifications to paid-in capital relate primarily to expiring capital loss carryforwards. 

Net capital losses incurred after October 31, and within the tax year are deemed to arise on the first business day of the Fund’s next taxable year.  For the year ended July 31, 2006, the Fund deferred to August 1, 2006, post October capital losses, post October currency losses and post October passive foreign investment company losses of $0. 

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. 

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 apprec iation (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, 2006, there were unlimited shares of no par authorized; 1,780,772 and 2,390,215 shares were outstanding at July 31, 2006, and July 29, 2005, respectively.

Transactions in capital shares were as follows: 

	Shares
	For The Year Ended July 31, 2006	For The Year Ended July 29, 2005
Shares sold	75,280	164,667
Shares issued on reinvestment of dividends	39,039	82,708
Shares redeemed	(723,762)	(712,403)
Net increase (decrease)	(609,443)	(465,028)

 

Note 4.  INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES

Integrity Money Management, the Fund’s investment adviser; Integrity Funds Distributor, the Fund’s underwriter; and Integrity Fund Services, the Fund’s transfer, accounting and administrative services agent, are subsidiaries of Integrity Mutual Funds, Inc.

The Fund has engaged Integrity Money Management 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 $47,940 of investment advisory fees after partial waiver for the year ended July 31, 2006.  The Fund has a payable to Integrity Money Management of $3,773 at July 31, 2006 for investment advisory fees.  Certain officers and trustees of the Fund are also officers and directors of the investment adviser. 

Under the terms of the advisory agreement, the investment adviser has agreed to pay all the expenses of the Fund (excluding taxes and brokerage fees and commissions, if any) that exceed 1.25% of the Fund’s average daily net assets on an annual basis up to the amount of the management and investment advisory fee payable by the Fund to the adviser.  Accordingly, after fee waivers and expense reimbursements, the Fund’s actual total annual operating expenses were 1.02% for the year ended July 31, 2006. 

Principal Underwriter and Shareholder Services

Integrity Funds Distributor serves as the principal underwriter for the Fund.  The Fund has adopted a distribution plan for each class of shares as allowed by Rule 12b-1 of the 1940 Act.  Distribution plans permit the Fund to reimburse its principal underwriter for costs related to selling shares of the Fund and for various other services.  These costs, which consist primarily of commissions and service fees to broker-dealers who sell shares of the Fund, are paid by shareholders through expenses called “Distribution Plan expenses.”  The Fund currently pays an annual distribution fee of up to 0.25% of the average daily net assets of the class.  Distribution Plan expenses are calculated daily and paid monthly.  The Fund has recognized $53,193 of distribution fees for the year ended July 31, 2006.  The Fund has a payable to Integrity Funds Distributor of $3,891 at July 31, 2006 for distribution fe es. 

Integrity Fund Services provides shareholder services for a fee that varies according to the size of the Fund and is reimbursed for out-of-pocket expenses.  An additional fee with a minimum $500 per month is charged for each additional share class.  The Fund has recognized $30,669 of transfer agency fees and expenses for the year ended July 31, 2006.  The Fund has a payable to Integrity Fund Services of $2,274 at July 31, 2006 for transfer agency fees.  Integrity Fund Services 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, together with reimbursement of out-of-pocket expenses.  An additional minimum fee of $500 per month is charged by Integrity Fund Services for each additional share class.  The Fund has recognized $34,705 of accounting service fees for the year ended July 31, 2006.  The Fund has a payable to Integrity Fund Services of $2,778 at July 31, 2006 for accounting service fees.  Integrity Fund Services also acts as administrator for the Fund.  The Fund pays to Integrity Fund Services a monthly fee calculated at the rate of 0.10% of average daily net assets with a minimum of $1,500 per month plus out-of-pocket expenses.  An additional minimum fee of $500 per month is charged by Integrity Fund Services for each additional share class.  The Fund has recognized $21,277 of administrative service fees for the year ended July 31, 2006.  The Fund has a payable to Integrity Fund Services of $1,557 at July 31, 2006 for administrative service fees. 

Note 5.  INVESTMENT SECURITY TRANSACTIONS

The cost of purchases and proceeds from sales of investment securities (excluding short-term securities) aggregated $320,281 and $4,908,014, respectively, for the year ended July 31, 2006. 

Note 6.  INVESTMENT IN SECURITIES

At July 31, 2006, the aggregate cost of securities for federal income tax purposes was substantially the same for financial reporting purposes at $18,115,135.  The net unrealized appreciation of investments for financial reporting purposes based on the cost was $475,385, which is comprised of $566,854 aggregate gross unrealized appreciation and $91,469 aggregate gross unrealized depreciation.  Differences between financial reporting-basis and tax-basis unrealized appreciation/depreciation are due to differing treatment of market discount. 

Financial Highlights 

Selected per share data and ratios for the period indicated

				For The Year Ended July 31, 2006		For The Year Ended July 29, 2005		For The Four Month Period Ended July 30, 2004		For The Year Ended March 31, 2004		For The Year Ended March 31, 2003		For The Year Ended March 31, 2002
NET ASSET VALUE, BEGINNING OF PERIOD			$	10.45	$	11.10	$	11.19	$	11.35	$	10.97	$	11.06
Income from Investment Operations:
	Net investment income		$	.35	$	.35	$	.13	$	.39	$	.39	$	.42
	Net realized and unrealized gain (loss) on investment and futures transactions			.07		(.43)		(.09)		(.10)		.38		(.09)
		Total Income (Loss) From Investment Operations	$	.42	$	(.08)	$	.04	$	.29	$	.77	$	.33
Less Distributions:
	Dividends from net investment income		$	(.35)	$	(.35)	$	(.13)	$	(.39)	$	(.39)	$	(.42)
	Distributions from net capital gains			.00		(.22)		.00		(.06)		.00		.00
		Total Distributions	$	(.35)	$	(.57)	$	(.13)	$	(.45)	$	(.39)	$	(.42)
NET ASSET VALUE, END OF PERIOD			$	10.52	$	10.45	$	11.10	$	11.19	$	11.35	$	10.97
Total Return				4.12%(A)		(0.74%)(A)		1.23%(A)(C)		2.56%(A)		7.16%(A)		3.06%(A)
RATIOS/SUPPLEMENTAL DATA:
	Net assets, end of period (in thousands)		$	18,728	$	24,975	$	31,683	$	33,270	$	37,847	$	38,033
	Ratio of net expenses (after expense assumption) to average net assets			1.02%(B)		0.97%(B)		0.95%(B)(C)		0.95%(B)		0.95%(B)		0.95%(B)
	Ratio of net investment income to average net assets			3.35%		3.24%		3.49%(C)		3.44%		3.49%		3.82%
	Portfolio turnover rate			1.60%		4.87%		1.92%		34.40%		26.00%		13.00%

 

(A) Excludes maximum sales charge of 4.25%.

(B) During the periods since March 31, 2004, Integrity Mutual Funds, Inc. assumed/waived expenses of $58,447, $86,089 and $29,051.  If the expenses had not been assumed/waived, the annualized ratio of total expenses to average net assets would have been 1.30%, 1.27% and 1.22%.  For the period 4/1/2003 through 12/19/2003, Forum Administrative Services assumed/waived expenses of $64,658.  For the period from 12/20/2003 through 3/31/2004, Integrity Money Management assumed/waived expenses of $22,736.  If the expenses had not been assumed/waived, the annualized ratio of total expenses to average net assets for the year would have been 1.20%.  In prior years, Forum Administrative Services, Forum Investment Advisors, Forum Shareholder Services, and Forum Accounting Services assumed/waived expenses of $104,969 (2003) and $133,718 (2002).  If the expenses had not been assumed/waived, the annualized ratio of total expen ses to average net assets would have been 1.22% and 1.32%, respectively.

(C) Ratio is annualized. 

Total return represents the rate that an investor would have earned or lost on an investment in the Fund assuming reinvestment of all dividends and distributions. 

The accompanying notes are an integral part of these financial statements.

Tax Information For The Year Ended July 31, 2006 (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 of Record	Payment Date		From Net Investment Income	From Net Realized Short-Term Gains	From Net Realized Long-Term Gains
August 31, 2005	August 31, 2005	$	0.029635	-	-
September 30, 2005	September 30, 2005	$	0.029071	-	-
October 31, 2005	October 31, 2005	$	0.025750	-	-
November 30, 2005	November 30, 2005	$	0.027670	-	-
December 30, 2005	December 30, 2005	$	0.030055	-	-
January 31, 2006	January 31, 2006	$	0.029739	-	-
February 28, 2006	February 28, 2006	$	0.029698	-	-
March 31, 2006	March 31, 2006	$	0.029618	-	-
April 28, 2006	April 28, 2006	$	0.027790	-	-
May 31, 2006	May 31, 2006	$	0.032214	-	-
June 30, 2006	June 30, 2006	$	0.030228	-	-
July 31, 2006	July 31, 2006	$	0.030352	-	-

 

Shareholders should consult their tax advisors.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 

To the Shareholders and Board of Trustees of Maine Municipal Fund 

We have audited the accompanying statement of assets and liabilities of the Maine Municipal Fund (one of the portfolios constituting the Integrity Managed Portfolios), including the schedule of investments as of July 31, 2006, the related statement of operations for the year then ended, the statement of changes in net assets for the years ended July 31, 2006 and July 29, 2005, and the financial highlights for the years ended July 31, 2006 and July 29, 2005, the four month period ended July 30, 2004, and the year ended March 31, 2004. 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. The financial highlights for the years ended March 31, 2003, and 2002 were audited by other auditors whose report dated May 16, 2003 expressed an unqualified opinion on the respective highlights. 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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, 2006 by correspondence with the custodian and brokers. 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 audits provide 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 Maine Municipal Fund of the Integrity Managed Portfolios as of July 31, 2006, the results of its operations for the year then ended, the changes in its net assets for the years ended July 31, 2006 and July 29, 2005, and the financial highlights for the years ended July 31, 2006 and July 29, 2005, the four month period ended July 30, 2004, and the year ended March 31, 2004, in conformity with accounting principles generally accepted in the United States of America. 

BRADY, MARTZ & ASSOCIATES, P.C.

Minot, North Dakota USA

September 8, 2006

Dear Shareholder:

 

Enclosed is the report of the operations of the Nebraska Municipal Fund (the “Fund”) for the year ended July 31, 2006.  The Fund’s portfolio and related financial statements are presented within for your review. 

As we end the period, the Federal Reserve under new chairman Ben Bernanke has raised the Federal Funds rate for the seventeenth time to 5.25% from a four-decade low of 1% in June 2004.  Longer-term yields have risen as the 10-year Treasury bond yield ended the period at 4.99% after beginning the period at 4.28%. 

Rising concerns over the U.S. core consumer index’s 3.8% annualized growth through May has the Fed officials talking tough.  The Fed puts great emphasis in keeping inflation expectations under control, at the same time it is important for central banks to be forward looking and not base their policy decisions on lagging economic indicators. 

The strength of the U.S. economy during the last couple of years, together with rising commodity prices has created some cyclical inflationary pressures as evidenced by gold’s rise to over $700 per ounce and crude oil’s rise to over $75 per barrel.  The key question is whether the recent rise in inflation is temporary or one that will require more hikes in the Fed Funds rate. 

On the other side of the ledger, the U.S. housing market continues to cool off.  Sales of single-family existing homes have declined nine out of the past twelve months. 

During the past few years, rising home prices permitted consumers to borrow against the increasing equity in their homes.  As a result, consumers were able to spend in excess of their income growth and the savings rate turned negative.  Now that the housing market is slowing, consumer spending is likely to be more restrained.  U.S. consumer spending makes up two-thirds of the economy. 

The slowdown in the housing markets also appears to be affecting some commodity prices.  In particular, lumber prices have declined in the past few months and copper prices are no longer rising at a rapid rate. This shows that the slowdown in the housing market could dampen inflationary pressures and allow the Fed to eventually stop raising interest rates. 

The Nebraska Municipal Fund began the period at $10.11 per share and ended the period at $10.20 per share for a total return of 4.90%*.  This compares to the Lehman Brothers Municipal Bond Index return of 2.55% for the period. 

The Fund’s favorable overall performance can be attributed to its defensive portfolio. 

Given our concerns that the Federal Reserve would tighten throughout the period, we structured the Fund defensively to help mitigate the effects of rising rates.  Rather than committing a portion of the Fund’s assets to low-yielding bonds, the Fund maintained an emphasis on premium priced, higher coupon issues like Lancaster County Public Building, 5.80% coupon; Nebraska Student Loan, 5.87% coupon; and Platte County Hospital, 6.15% coupon.  In rising rate environments these types of issues have typically held their value better than lower coupon issues such as Douglas County Public Building, 4.00% coupon and Metropolitan Community College, 4.50% coupon.  Also, contributing to the Fund’s overall performance was a defensive hedge using U.S. treasury futures; this strategy stabilizes net asset values in periods of rising rates. 

An important part of the Fund’s strategy includes searching the primary and secondary markets for high quality, double tax-exempt issues.  Credit quality for the period was as follows, AAA 56.4%, AA 34.6%, A 2.3%, BBB 2.4% and NR 4.3%. 

Income exempt from federal and Nebraska state income taxes with preservation of capital remain the primary objectives of the Fund. 

If you would like more frequent updates, visit our website at www.integrityfunds.com for daily prices along with pertinent Fund information. 

Sincerely, 

The Portfolio Management Team 

The views expressed are those of Monte Avery, Chief Portfolio Strategist with Integrity Mutual Funds.  The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or any Integrity Mutual Fund. 

*Performance does not include applicable front-end or contingent deferred sales charges, which would have reduced the performance. 

Performance data quoted above is historical.  Past performance is no guarantee of future results.  Current performance may be higher or lower than the performance data quoted.  The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost.  You can obtain performance data current to the most recent month end (available within seven business days of the most recent month end) by calling 1-800-276-1262. 

You should consider the Fund's investment objectives, risks, and charges and expenses carefully before investing.  For this and other important information, please obtain a Fund prospectus at no cost from your financial adviser and read it carefully before investing. 

Bond prices and, therefore, the value of bond funds decline as interest rates rise.  Because the Fund invests in securities of a single state, the Fund is more susceptible to factors adversely impacting the respective state securities than a municipal bond fund that does not concentrate its securities in a single state.

July 31, 2006 (Unaudited) 

PROXY VOTING ON FUND PORTFOLIO SECURITIES

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-276-1262.  A report on "Form N-PX" of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available through Integrity's website at www.integrityfunds.com.  This information is also available from the EDGAR database on the Securities and Exchange Commission’s (“SEC's”) website at www.sec.gov. 

QUARTERLY PORTFOLIO SCHEDULE

The Fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the Fund's second and fourth fiscal quarters on the Form N-CSR(S).  The annual and semi-annual reports are filed electronically with the SEC and are delivered to the Fund shareholders.  The Fund also files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q.  The Fund's Forms N-Q and N-CSR(S) are available on the SEC's website at www.sec.gov.  The Fund's Forms N-Q and N-CSR(S) may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C., and the information on the operation of the Public Reference Room may be obtained by calling 1-202-942-8090.  You may also access this information from Integrity's website at www.integrityfunds.com.

Terms & Definitions  July 31, 2006 (Unaudited)

Appreciation

The 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

The 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

The 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.

July 31, 2006 (Unaudited) 

COMPOSITION 

PORTFOLIO QUALITY RATINGS

(Based on Total Long-Term Investments) 

AAA	56.4%
AA	34.6%
A	2.3%
BBB	2.4%
NR	4.3%

 

Quality ratings reflect the financial strength of the issuer.  They are assigned by independent rating services such as Moody’s Investors Services and Standard & Poor’s.  Non-rated bonds have been determined to be of appropriate quality for the portfolio by Integrity Money Management, Inc. (“Integrity Money Management” or “Adviser”), the investment adviser. 

These percentages are subject to change. 

PORTFOLIO MARKET SECTORS

(As a % of Net Assets) 

S – School	31.0%
HC – Health Care	20.7%
U – Utilities	14.6%
O – Other	12.3%
I – Industrial	7.6%
T – Transportation	5.9%
W/S – Water/Sewer	4.2%
H – Housing	3.7%

 

Market sectors are breakdowns of the Fund’s portfolio holdings into specific investment classes. 

These percentages are subject to change.

July 31, 2006 (Unaudited) 

DISCLOSURE OF FUND EXPENSES 

The Example below is intended to describe the fees and expenses borne by shareholders and the impact of those costs on your investment. 

EXAMPLE

As a shareholder of the Fund, you incur two types of costs:  (1) transaction costs, including sales charges (loads), redemption fees and exchange fees; and (2) ongoing costs, including management fees, distribution (12b-1) fees and other fund expenses.  This Example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds.  The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 31, 2006 to July 31, 2006. 

The example illustrates the Fund’s costs in two ways: 

Actual expenses

The section in the table under the heading “Actual” provides information about actual account values and actual expenses.  You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid over the period.  Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the appropriate column for your share class, in the column entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. 

Hypothetical example for comparison purposes

The section in the table under the heading “Hypothetical (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.  The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.  You may use this information to compare the ongoing costs of investing in the Fund and other funds.  To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.  

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees or exchange fees.  Therefore, the section in the table under the heading “Hypothetical (5% return before expenses)” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.  In addition, if these transactional costs were included, your costs would have been higher. 

	Beginning Account Value 01/31/06	Ending Account Value 07/31/06	Expenses Paid During Period*
Actual
Class A	$1,000.00	$1,029.66	$5.36
Hypothetical (5% return before expenses)
Class A	$1,000.00	$1,019.38	$5.33

* Expenses are equal to the annualized expense ratio of 1.06%, multiplied by the average account value over the period, multiplied by 180/362 days.  The Fund’s ending account value on the first line in the table is based on its actual total return of 2.97% for the six-month period of January 31, 2006 to July 31, 2006.

July 31, 2006 (Unaudited) 

AVERAGE ANNUAL TOTAL RETURNS 

	For periods ending July 31, 2006
					Since Inception (November 17, 1993)
Nebraska Municipal Fund	1 year	3 year	5 year	10 year
Without sales charge	4.90%	2.74%	2.28%	3.88%	3.86%
With sales charge (4.25%)	0.43%	1.27%	1.40%	3.42%	3.51%

 

					Since Inception (November 17, 1993)
Lehman Brothers Municipal Bond Index	1 year	3 year	5 year	10 year
	2.55%	4.89%	4.99%	5.82%	5.62%

 

Putting Performance into Perspective

Performance data quoted above is historical.  Past performance is no guarantee of future results.  Current performance may be higher or lower than the performance data quoted.  The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost.  You can obtain performance data current to the most recent month end (available within seven business days of the most recent month end) by calling 1-800-276-1262. 

You should consider the Fund's investment objectives, risks, and charges and expenses carefully before investing.  For this and other important information, please obtain a fund prospectus at no cost from your financial adviser and read it carefully before investing. 

The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions and redemptions of Fund shares. 

July 31, 2006 (Unaudited) 

COMPARATIVE INDEX GRAPH 

Comparison of change in value of a $10,000 investment in the Nebraska Municipal Fund and the Lehman Brothers Municipal Bond Index 

	Nebraska Municipal Fund w/o Sales Charge	Nebraska Municipal Fund w/ Max Sales Charge	Lehman Brothers Municipal Bond Index
7/31/1996	$10,000	$9,574	$10,000
1997	$10,757	$10,298	$11,027
1998	$11,182	$10,705	$11,687
1999	$11,609	$11,114	$12,024
2000	$11,875	$11,368	$12,542
2001	$13,064	$12,507	$13,808
2002	$13,595	$13,015	$14,735
2003	$13,485	$12,910	$15,264
2004	$13,969	$13,373	$16,147
2005	$13,943	$13,348	$17,174
2006	$14,626	$14,002	$17,613

 

Putting Performance into Perspective

Performance data quoted above is historical.  Past performance is no guarantee of future results.  Current performance may be higher or lower than the performance data quoted.  The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost.  You can obtain performance data current to the most recent month end (available within seven business days of the most recent month end) by calling 1-800-276-1262. 

You should consider the Fund's investment objectives, risks, and charges and expenses carefully before investing.  For this and other important information, please obtain a Fund prospectus at no cost from your financial adviser and read it carefully before investing. 

The graph does not reflect the deduction of taxes that a shareholder would pay on Fund distributions and redemptions of Fund shares. 

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 benchmar k returns include reinvested dividends. 

July 31, 2006 (Unaudited) 

MANAGEMENT OF THE FUND 

The Board of Integrity 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 six series of Integrity Managed Portfolios and the seven 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.  Two of the remaining three Trustees and/or 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. 

Effective January 6, 2006, Independent Trustee Lynn Aas retired from the Board of Trustees and Jerry Stai was subsequently nominated and elected to the Board of Trustees to fill the vacancy. Mr. Aas’ retirement also created a vacancy on the Audit Committee and the Governance Nominating Committee that Mr. Stai will occupy. 

INDEPENDENT TRUSTEES

NAME, ADDRESS AND AGE	POSITION(S) HELD WITH REGISTRANT	TERM AND LENGTH SERVED	PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS	NUMBER OF PORTFOLIOS OVERSEEN IN THE FUND COMPLEX1	OTHER DIRECTORSHIPS HELD OUTSIDE THE FUND COMPLEX
Jerry M. Stai 1 N. Main St. Minot, ND 58703 53	Trustee	Since January 2006	Faculty, Embry-Riddle University (August 2000 to September 2005); Faculty, Park University (August 2005 to December 2005); Non-Profit Specialist, Bremer Bank (since July 2005); Faculty, Minot State University (since August 2000); Director, ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., Integrity Fund of Funds, Inc., (since January 2006); Trustee, The Integrity Funds (since January 2006).	16	Marycrest Franciscan Development, Inc.
Orlin W. Backes 15 2nd Ave SW Ste 305 Minot, ND  58701 71	Trustee	Since January 1996	Attorney, McGee, Hankla, Backes & Dobrovolny, P.C.; Director, South Dakota Tax-Free Fund, Inc. (until June 2004), Integrity Small-Cap Fund of Funds, Inc. (until June 2003), ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc.; Trustee, The Integrity Funds (since May 2003); and Director, First Western Bank & Trust.	16	Director, First Western Bank & Trust
R. James Maxson Town & Country Center 1015 S Broadway Ste 15 Minot, ND  58701 58	Trustee	Since January 1999	Attorney, Maxson Law Office (since November 2002), Attorney, McGee, Hankla, Backes & Dobrovolny, P.C. (April 2000 to November 2002); Director, South Dakota Tax-Free Fund, Inc. (until June 2004), Integrity Small-Cap Fund of Funds, Inc. (until June 2003), ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc., and Trustee, The Integrity Funds (since May 2003).	16	None

¹The Fund Complex consists of the three funds in the Integrity family of funds, the six series of Integrity Managed Portfolios, and the seven series of The Integrity Funds. 

Trustees and officers of the Fund serve until their resignation, removal or retirement. 

The Statement of Additional Information contains more information about the Fund’s Trustees and is available without charge upon request, by calling Integrity Funds Distributor, Inc. at 1(800) 276-1262. 

July 31, 2006 (Unaudited) 

The Interested Trustees 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 other directorships, if any, held outside the Fund Complex, are shown below. 

INTERESTED TRUSTEES AND EXECUTIVE OFFICERS

NAME, ADDRESS AND AGE	POSITION(S) HELD WITH REGISTRANT	TERM AND LENGTH SERVED	PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS	NUMBER OF PORTFOLIOS OVERSEEN IN THE FUND COMPLEX1	OTHER DIRECTORSHIPS HELD OUTSIDE THE FUND COMPLEX
Robert E. Walstad2 1 N. Main St. Minot, ND  58703 61	Trustee, Chairman, President	Since January 1996	Director (since September 1987), President (September 1987 to October 2001 and September 2002 to May 2003), Integrity Mutual Funds, Inc.; Director, President and Treasurer, Integrity Money Management, Inc., ND Capital, Inc. (until September 2004), Integrity Fund Services, Inc.; Director, President (since inception) and Treasurer (until May 2004), South Dakota Tax-Free Fund, Inc. (until June 2004), Integrity Small-Cap Fund of Funds, Inc. (until June 2003), ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., Integrity Fund of Funds, Inc.; Trustee, Chairman and President (since May 2003) and Treasurer (May 2003 to May 2004), The Integrity Funds; Director, President and Treasurer (until August 2003), Integrity Funds Distributor, Inc.; Director (October 1999 to June 2003), President (October 1999 to October 2001), Magic Internet Services, Inc.; Director (May 2000 to June 2003), President (May 2000 to November 2001) (October 2002 to June 2003), ARM Securit ies Corporation; and Director, CEO, Chairman (since January 2002), President (September 2002 to December 2004), Capital Financial Services, Inc.	16	Director, Capital Financial Services, Inc.
Peter A. Quist2 1 N. Main St. Minot, ND  58703 71	Vice President, Secretary	Since January 1996	Attorney; Director and Vice President, Integrity Mutual Funds, Inc.; Director, Vice President and Secretary, Integrity Money management, Inc., ND Capital, Inc. (until September 2004), Integrity Fund Services, Inc., South Dakota Tax-Free Fund, Inc. (until June 2004), Integrity Small-Cap Fund of Funds, Inc. (until June 2003), ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc., Integrity Funds Distributor, Inc.; Vice President and Secretary, the Integrity Funds (since May 2003); and Director, ARM Securities Corporation (May 2000 to June 2003).	3	None
Laura K. Anderson 1 N. Main St. Minot, ND  58703 32	Treasurer	Since October 2005	Fund Accountant (until May 2004), Fund Accounting Supervisor (May 2004 to October 2005), Fund Accounting Manager, Integrity Fund Services, Inc.; Treasurer (since October 2005), The Integrity Funds, ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc.	N/A	None
Brent M. Wheeler 1 N. Main St. Minot, ND 58703 35	Mutual Fund Chief Compliance Officer	Since October 2005	Fund Accounting Manager (May 1998 to October 2005), Integrity Fund Services, Inc.; Treasurer (May 2004 to October 2005), Mutual Fund Compliance Officer (since October 2005), The Integrity Funds, ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc.	N/A	Minot State University Alumni Association

 

¹The Fund Complex consists of the three funds in the Integrity family of funds, the six series of Integrity Managed Portfolios, and the seven series of The Integrity Funds. 

²Trustees and/or 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. 

Trustees and officers of the Fund serve until their resignation, removal or retirement. 

The Statement of Additional Information contains more information about the Fund’s Trustees and is available without charge upon request, by calling Integrity Funds Distributor, Inc. at 1(800) 276-1262. 

Schedule of Investments  July 31, 2006 

Name of Issuer Percentages represent the market value of each investment category to total net assets	Rating (Unaudited) Moody’s/S&P	Coupon Rate	Maturity		Principal Amount		Market Value
NEBRASKA MUNICIPAL BONDS (93.8%)
Adams Cty., NE Hosp. Auth. #001 (Mary Lanning Memorial Hosp.) ASGUA	NR/AA	5.300%	12/15/2018	$	250,000	$	253,840
Dawson Cty., NE SID #001 (IBP, Inc. Proj.) Ref. G.O.	Ba-1/BBB	5.650	02/01/2022		700,000		700,000
Dawson Cty., NE School Dist. #20 (Gothenburg) G.O. FSA	Aaa/AAA	4.500	12/15/2025		405,000		403,809
*Dodge Cty., NE SD #001 (Fremont Public Schools) FSA	Aaa/NR	5.500	12/15/2020		1,000,000		1,076,650
Douglas Cty., NE G.O.	Aa/AA+	4.750	12/01/2025		250,000		255,393
Douglas Cty., NE Hosp. Auth. #001 (Alegent Hlth - Immanuel Med. Ctr.) Rev. AMBAC	Aaa/AAA	5.250	09/01/2021		250,000		257,870
Douglas Cty., NE (Catholic Health Corp.) Rev. MBIA	Aaa/AAA	5.500	11/15/2021		340,000		346,569
Douglas Cty., NE Hosp. Auth. #002 (Nebraska Medical Center)	A-1/NR	5.000	11/15/2016		250,000		260,718
Douglas Cty., NE (Catholic Health Corp.) Rev. MBIA	Aaa/AAA	5.375	11/15/2015		45,000		45,675
Douglas Cty., NE (Catholic Health Corp.) Rev. MBIA	Aaa/AAA	5.375	11/15/2015		230,000		233,450
Douglas Cty., NE SID #392 (Cinnamon Creek) G.O.	NR/NR	5.750	08/15/2017		200,000		200,000
Douglas Cty., NE SID #397 (Linden Estates II)	NR/NR	5.600	07/15/2018		265,000		265,000
Douglas Cty., NE SID #397 (Linden Estates II)	NR/NR	5.600	07/15/2019		280,000		280,000
Douglas Cty., NE SID #397 (Linden Estates II)	NR/NR	5.600	04/01/2023		500,000		501,250
#Douglas Cty., NE SD #010 (Elkhorn Public Schools)  G.O. FSA	Aaa/AAA	5.500	12/15/2020		750,000		750,000
Douglas Cty., NE SD #010 (Elkhorn Public Schools)	NR/A+	5.050	12/15/2022		150,000		151,409
Fremont, NE Combined Utilities Rev. MBIA	Aaa/AAA	5.000	10/15/2021		500,000		518,450
Hall Cnty, NE Sch Dist #2 Grand Island FSA	Aaa/AAA	5.000	12/15/2023		500,000		525,710
Kearney Cty., NE Highway Allocation Fund AMBAC	Aaa/NR	5.350	06/15/2021		100,000		100,465
#Lancaster Cty., NE (Bryan Memorial Hospital) Rev. MBIA	Aaa/AAA	5.375	06/01/2019		1,400,000		1,440,474
Lancaster Cty., NE School Dist. #1 (Lincoln Public Schools)	Aa/AA+	5.250	01/15/2021		500,000		529,275
Lancaster Cty., NE School Dist. #1 (Lincoln Public Schools) G.O.	Aa/AA+	5.250	01/15/2022		500,000		530,785
Lancaster Cty, NE School District #0160 (Norris Schools) G.O. FSA	Aaa/NR	5.000	12/15/2025		250,000		258,085
Lincoln Cty., NE School Dist. #55 (Sutherland Public Schools) FSA	Aaa/NR	5.000	12/15/2020		225,000		228,699
Lincoln/Lancaster Cty., NE Public Bldg. Community Rev.	Aa-1/AA+	5.800	10/15/2018		475,000		486,875
#Lincoln/Lancaster Cty., NE Public Bldg. Community Rev.	Aa-1/AA+	5.875	10/15/2023		850,000		871,250
Lincoln, NE Elec. Syst. Rev.	Aa/AA	5.000	09/01/2021		1,000,000		1,037,690
Lincoln, NE Water Rev.	Aa/AA-	5.000	08/15/2022		575,000		599,466
Madison Cty., NE Hosp. Auth. #001 (Faith Regl. Hlth. Svcs.) Rev. ASGUA	NR/AA	5.350	07/01/2018		250,000		256,563
Metropolitan Community College South Omaha Bldg. Proj. AMBAC	Aaa/AAA	4.500	03/01/2026		1,000,000		1,000,570
NE Hgr. Educ. Loan Program Senior Subord. Term MBIA	Aaa/AAA	6.250	06/01/2018		800,000		816,216
NE Hgr. Educ. Loan Program Junior Subord. Rev. MBIA	Aaa/AAA	6.400	06/01/2013		220,000		223,084
NE Hgr. Educ. Loan Program Junior Subord. Term MBIA	Aaa/AAA	6.450	06/01/2018		400,000		408,020
*NE Hgr. Educ. Loan Program Student Loan MBIA	Aaa/AAA	5.875	06/01/2014		985,000		991,235
NE Hgr. Educ. Loan Program B Rev. MBIA	Aaa/AAA	6.000	06/01/2028		100,000		102,197
NE Educ. Finance Auth. (Wesleyan Univ.) Rev. Radian Insured	NR/AA	5.500	04/01/2027		1,000,000		1,062,980
NE Invmt. Finance Auth. (Catholic Hlth. Initiatives) Rev.	Aa/AA	5.125	12/01/2017		200,000		204,442
NE Invmt. Finance Auth. Single Family Hsg. Rev. FHA/GNMA	NR/AAA	6.500	09/01/2018		20,000		20,077
NE Invmt. Finance Auth. Single Family Hsg. Rev. FNMA/GNMA	NR/AAA	6.400	09/01/2026		25,000		25,080
NE Invmt. Finance Auth. Single Family Hsg. Rev. GNMA/FNMA	NR/AAA	6.250	09/01/2028		25,000		25,567
NE Invmt. Finance Auth. Single Family Hsg. Rev. GNMA	NR/AAA	6.200	09/01/2017		60,000		60,770
NE Invmt. Finance Auth. Single Family Hsg. Rev. GNMA	NR/AAA	6.250	03/01/2021		65,000		66,200
*NE Invmt. Finance Auth. Single Family Hsg. Rev.	NR/AAA	6.300	09/01/2028		255,000		259,205
NE Invmt. Finance Auth. (Childrens Healthcare Svcs.) Facs. Rev.	Aaa/AAA	5.500	08/15/2017		410,000		430,295
#NE Invmt. Finance Auth. (Childrens Healthcare Svcs.) Rev. AMBAC	Aaa/AAA	5.500	08/15/2027		1,000,000		1,049,670
NE Invmt. Finance Auth. Multifamily Hsg. Rev. FNMA	NR/AAA	6.200	06/01/2028		495,000		507,108
NE Invmt. Finance Auth. (Waterbrook) Multifamily Rev.	Aaa/AAA	5.600	04/01/2007		165,000		166,501
NE Invmt. Finance Auth. (Great Plains Regional Medical Center) ASGUA	NR/AA	5.450	11/15/2017		400,000		411,060
NE Invmt. Finance Auth. (Great Plains Regional Medical Center) Rev. Asset Guaranty	NR/AA	5.450	11/15/2022		750,000		794,842
Omaha-Douglas Public Building Commission	Aa/AA+	4.000	05/01/2020		1,000,000		946,860
Omaha, NE Various Purpose	Aaa/AAA	5.000	05/01/2022		250,000		261,315
Omaha, NE Public Power Dist. Elec. Syst. Rev.	Aa/AA	5.200	02/01/2022		500,000		524,205
Omaha, NE Public Power Dist. Elec. Syst. Rev.	NR/AA	6.000	02/01/2015		330,000		366,729
Omaha, NE Public Power Electric Rev.	Aa/AA	5.000	02/01/2034		1,000,000		1,042,240
Omaha, NE Public Power Dist. Elec. Syst. Rev.	Aa/NR	6.200	02/01/2017		650,000		744,874
Omaha, NE (Riverfront Project) Special Obligation	Aa/AA	5.500	02/01/2029		1,000,000		1,092,020
Omaha, NE Public Power Dist. (Electric Rev)  AMBAC	Aaa/AAA	4.750	02/01/2025		250,000		256,677
Platte Cty., NE G.O.  FSA	Aaa/AAA	4.750	12/15/2014		500,000		507,175
Platte Cty., NE Hosp. Auth. No. 1 (Columbus Community Hospital Proj.) Hosp. Rev.	NR/AA	5.650	05/01/2012		100,000		105,013
Platte Cty., NE Hosp. Auth. No. 1 (Columbus Community Hospital Proj.) Hosp. Rev.	NR/AA	6.150	05/01/2030		250,000		271,107
Sarpy Cty., NE School Dist. #046  FSA	Aaa/AAA	5.000	12/15/2022		200,000		203,550
Saunders Cty, NE G.O.  FSA	Aaa/AAA	5.000	11/01/2030		250,000		259,840
Univ. of NE (U. of NE - Lincoln Student Fees) Rev.	Aa/AA-	5.125	07/01/2032		250,000		261,265
TOTAL NEBRASKA MUNICIPAL BONDS (COST: $27,970,769)						$	28,833,409
SHORT-TERM SECURITIES (5.8%)					Shares
Wells Fargo Advantage National Tax-Free Money Market					1,054,000	$	1,054,000
Goldman Sachs Financial Square Tax-Free Money Market					713,816		713,816
TOTAL SHORT-TERM SECURITIES (COST: $1,767,816)						$	1,767,816
TOTAL INVESTMENTS IN SECURITIES (COST: $29,738,585)						$	30,601,225
OTHER ASSETS LESS LIABILITIES							141,084
NET ASSETS						$	30,742,309

 

* 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. 

Non-rated (NR) securities in the Fund were investment grade when purchased. 

The accompanying notes are an integral part of these financial statements. 

Financial Statements  July 31, 2006 

Statement of Assets and Liabilities  July 31, 2006 

ASSETS
	Investment in securities, at value (cost: $29,738,585)		$	30,601,225
	Accrued interest receivable			399,958
	Accrued dividends receivable			4,700
	Prepaid expenses			3,782
		Total Assets	$	31,009,665
LIABILITIES
	Dividends payable		$	100,441
	Payable to affiliates			24,723
	Accrued expenses			9,533
	Payable for fund shares redeemed			45,252
	Disbursements in excess of demand deposit cash			87,407
		Total Liabilities	$	267,356
NET ASSETS			$	30,742,309
Net assets are represented by:
	Paid-in capital		$	33,163,829
	Accumulated undistributed net realized gain (loss) on investments and futures			(3,311,947)
	Accumulated undistributed net investment income			27,787
	Unrealized appreciation (depreciation) on investments			862,640
		Total amount representing net assets applicable to 3,013,698 outstanding shares of no par common stock (unlimited shares authorized)	$	30,742,309
Net asset value per share			$	10.20
Public offering price (based on sales charge of 4.25%)			$	10.65

The accompanying notes are an integral part of these financial statements.

Financial Statements  July 31, 2006

Statement of Operations  For the year ended July 31, 2006 

INVESTMENT INCOME
	Interest		$	1,516,118
	Dividends			52,834
		Total Investment Income	$	1,568,952
EXPENSES
	Investment advisory fees		$	159,054
	Distribution (12b-1) fees			79,527
	Administrative service fees			31,811
	Transfer agent fees			43,014
	Accounting service fees			39,972
	Transfer agent out-of-pockets			2,170
	Reports to shareholders			3,568
	Custodian fees			5,837
	Professional fees			12,091
	Trustees fees			3,145
	Registration and filing fees			1,358
	Insurance expense			1,047
	Legal fees			3,243
	Audit fees			7,261
		Total Expenses	$	393,098
	Less expenses waived or absorbed by the Fund’s manager			(66,312)
		Total Net Expenses	$	326,786
NET INVESTMENT INCOME			$	1,242,166
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES
	Net realized gain (loss) from:
	Investment transactions		$	50,267
	Futures transactions			837,345
	Net change in unrealized appreciation (depreciation) of:
	Investments			(489,584)
	Futures			(119,852)
		Net Realized And Unrealized Gain (Loss) On Investments And Futures	$	278,176
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS			$	1,520,342

 

The accompanying notes are an integral part of these financial statements.

Financial Statements  July 31, 2006

Statement of Changes in Net Assets
For the year ended July 31, 2006 and the year ended July 29, 2005

				For The Year Ended July 31, 2006		For The Year Ended July 29, 2005
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
	Net investment income		$	1,242,166	$	1,386,203
	Net realized gain (loss) on investment and futures transactions			887,612		(1,642,888)
	Net change in unrealized appreciation (depreciation) on investments and futures			(609,436)		188,034
		Net Increase (Decrease) in Net Assets Resulting From Operations	$	1,520,342	$	(68,651)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
	Dividends from net investment income ($.40 and $.42 per share, respectively)		$	(1,238,147)	$	(1,382,244)
	Distributions from net realized gain on investment and futures transactions ($.00 and $.00 per share, respectively)			0		0
		Total Dividends and Distributions	$	(1,238,147)	$	(1,382,244)
CAPITAL SHARE TRANSACTIONS
	Proceeds from sale of shares		$	1,505,567	$	2,743,184
	Proceeds from reinvested dividends			826,643		925,582
	Cost of shares redeemed			(4,359,905)		(4,411,711)
		Net Increase (Decrease) in Net Assets Resulting From Capital Share Transactions	$	(2,027,695)	$	(742,945)
TOTAL INCREASE (DECREASE) IN NET ASSETS			$	(1,745,500)	$	(2,193,840)
NET ASSETS, BEGINNING OF PERIOD				32,487,809		34,681,649
NET ASSETS, END OF PERIOD			$	30,742,309	$	32,487,809
Undistributed Net Investment Income			$	27,787	$	24,899

 

The accompanying notes are an integral part of these financial statements.

Notes to Financial Statements  July 31, 2006 

Note 1.  ORGANIZATION

Business operations - The Nebraska Municipal Fund (the “Fund”) is an investment portfolio of Integrity 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 six portfolios are offered.  IntegrityManaged 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 state 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 Integrity Money Management.  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. 

When-issued securities – The Fund may purchase securities on a when-issued basis.  Payment and delivery may take place after the customary settlement period for that security.  The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated.  The values of the securities purchased on a when-issued basis are identified as such in the Fund’s Schedule of Investments.  With respect to purchase commitments, the Fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment.  Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract’s terms, or if the issuer does not issue the securities due to political, economic, or other factors. 

Contingent Deferred Sales Charge (“CDSC”) – In the case of investments of $1 million or more, a 1.00% CDSC may be assessed on shares redeemed within 12 months of purchase (excluding shares purchased with reinvested dividends and/or distributions). 

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.  Distributions during the year ended July 31, 2006, were characterized as tax-exempt for tax purposes. 

The tax character of distributions paid was as follows: 

		July 31, 2006		July 29, 2005
Tax-exempt Income	$	1,238,147	$	1,382,244
Ordinary Income		0		0
Long-term Capital Gains		0		0
Total	$	1,238,147	$	1,382,244

 

As of July 31, 2006, the components of accumulated earnings/(deficit) on a tax basis were as follows: 

Undistributed Ordinary Income	Undistributed Long-Term Capital Gains	Accumulated Earnings	Accumulated Capital and Other Losses	Unrealized Appreciation/ (Depreciation)	Total Accumulated Earnings/(Deficit)
$0	$0	$0	($3,311,947)	$890,427	($2,421,520)

 

The Fund has unexpired capital loss carryforwards for tax purposes as of July 31, 2006, totaling $3,311,947, 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
2008	$	144,610
2009	$	158,911
2010	$	591,993
2011	$	713,949
2012	$	579,276
2013	$	1,123,208

 

For the year ended July 31, 2006, the Fund made no permanent reclassifications to reflect tax character.  Reclassifications to paid-in capital relate primarily to expiring capital loss carryforwards. 

Net capital losses incurred after October 31, and within the tax year are deemed to arise on the first business day of the Fund’s next taxable year.  For the year ended July 31, 2006, the Fund deferred to August 1, 2006, post October capital losses, post October currency losses and post October passive foreign investment company losses of $0. 

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. 

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 appre ciation (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, 2006, there were unlimited shares of no par authorized; 3,013,698 and 3,213,649 shares were outstanding at July 31, 2006, and July 29, 2005, respectively. 

Transactions in capital shares were as follows: 

	Shares
	For The Year Ended July 31, 2006	For The Year Ended July 29, 2005
Shares sold	148,688	265,240
Shares issued on reinvestment of dividends	81,633	89,771
Shares redeemed	(430,272)	(429,088)
Net increase (decrease)	(199,951)	(74,077)

 

Note 4.  INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES

Integrity Money Management, the Fund’s investment adviser; Integrity Funds Distributor, the Fund’s underwriter; and Integrity Fund Services, the Fund’s transfer, accounting, and administrative services agent, are subsidiaries of Integrity Mutual Funds, Inc., the Fund’s sponsor. 

The Fund has engaged Integrity Money Management 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 $92,742 of investment advisory fees after partial waiver for the year ended July 31, 2006.  The Fund has a payable to Integrity Money Management of $8,456 at July 31, 2006 for investment advisory fees.  Certain officers and trustees of the Fund are also officers and directors of the investment adviser. 

Under the terms of the advisory contract, the investment adviser has agreed to pay the expenses of the Fund (excluding taxes and brokerage fees and commissions, if any) that exceed 1.25% of the Fund’s average daily net assets on an annual basis up to the amount of the investment advisory and management fee.  The investment adviser and underwriter may also voluntarily waive fees or reimburse expenses not required by the advisory or other agreements from time to time.  Accordingly, after fee waivers and expense reimbursements, the Fund’s actual total annual operating expenses were 1.03% for the year ended July 31, 2006. 

Principal Underwriter and Shareholder Services

Integrity Funds Distributor serves as the principal underwriter for the Fund.  The Fund has adopted a distribution plan for each class of shares as allowed by Rule 12b-1 of the 1940 Act.  Distribution plans permit the Fund to reimburse its principal underwriter for costs related to selling shares of the Fund and for various other services.  These costs, which consist primarily of commissions and service fees to broker-dealers who sell shares of the Fund, are paid by shareholders through expenses called “Distribution Plan expenses.”  The Fund currently pays an annual distribution fee of up to 0.25% of the average daily net assets of the class.  Distribution Plan expenses are calculated daily and paid monthly.  The Fund has recognized $79,527 of distribution fees for the year ended July 31, 2006.  The Fund has a payable to Integrity Funds Distributor of $6,427 at July 31, 2006 for distribution f ees.

Integrity Fund Services 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 $25 million, and 0.10% of the Fund’s net assets in excess of $50 million, with a minimum of $1,500 per month plus reimbursement of out-of-pocket expenses.  An additional fee with a minimum of $500 per month is charged for each additional share class.  The Fund has recognized $43,014 of transfer agency fees and expenses for the year ended July 31, 2006.  The Fund has a payable to Integrity Fund Services of $3,494 at July 31, 2006 for transfer agency fees.  Integrity Fund Services 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 ave rage 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, together with reimbursement of out-of-pocket expenses.  An additional minimum fee of $500 per month is charged by Integrity Fund Services for each additional share class.  The Fund has recognized $39,972 of accounting service fees for the year ended July 31, 2006.  The Fund has a payable to Integrity Fund Services of $3,285 at July 31, 2006 for accounting service fees.  Integrity Fund Services also acts as administrator for the Fund.  The Fund pays to Integrity Fund Services a monthly fee calculated at the rate of 0.10% of average daily net assets with a minimum of $1,500 per month plus out-of-pocket expenses.  An additional minimum fee of $500 per month is charged by Integrity Fund Services for each additional share class.  The Fund has recognized $31,811 of administrative service fees for the year ended July 31, 2006 .  The Fund has a payable to Integrity Fund Services of $2,571 at July 31, 2006 for administrative service fees. 

Note 5.  INVESTMENT SECURITY TRANSACTIONS

The cost of purchases and proceeds from the sales of investment securities (excluding short-term securities) aggregated $4,298,553 and $5,991,200, respectively, for the year ended July 31, 2006. 

Note 6.  INVESTMENT IN SECURITIES

At July 31, 2006, the aggregate cost of securities for federal income tax purposes was substantially the same for financial reporting purposes at $29,738,585.  The net unrealized appreciation of investments for financial reporting purposes based on the cost was $862,640, which is comprised of $917,969 aggregate gross unrealized appreciation and $55,329 aggregate gross unrealized depreciation.  Differences between financial reporting-basis and tax-basis unrealized appreciation/depreciation are due to differing treatment of market discount. 

Financial Highlights July 31, 2006

Selected per share data and ratios for the period indicated 

				For The Year Ended July 31, 2006		For The Year Ended July 29, 2005		For The Year Ended July 30, 2004		For The Year Ended July 31, 2003		For The Year Ended July 31, 2002
NET ASSET VALUE, BEGINNING OF PERIOD			$	10.11	$	10.55	$	10.62	$	11.17	$	11.23
Income from Investment Operations:
	Net investment income		$	.40	$	.42	$	.45	$	.47	$	.51
	Net realized and unrealized gain (loss) on investment and futures transactions			.09		(.44)		(.07)		(.55)		(.06)
		Total Income (Loss) From Investment Operations	$	.49	$	(.02)	$	.38	$	(.08)	$	.45
Less Distributions:
	Dividends from net investment income		$	(.40)	$	(.42)	$	(.45)	$	(.47)	$	(.51)
	Distributions from net capital gains			.00		.00		.00		.00		.00
		Total Distributions	$	(.40)	$	(.42)	$	(.45)	$	(.47)	$	(.51)
NET ASSET VALUE, END OF PERIOD			$	10.20	$	10.11	$	10.55	$	10.62	$	11.17
Total Return				4.90%(A)		(0.18)%(A)		3.59%(A)		(0.81)%(A)		4.06%(A)
RATIOS/SUPPLEMENTAL DATA:
	Net assets, end of period (in thousands)		$	30,742	$	32,488	$	34,682	$	36,718	$	37,273
	Ratio of net expenses (after expense assumption) to average net assets			1.03%(B)		0.98%(B)		0.95%(B)		0.92%(B)		0.82%(B)
	Ratio of net investment income to average net assets			3.89%		4.07%		4.18%		4.24%		4.52%
	Portfolio turnover rate			14.63%		4.36%		8.95%		9.48%		13.08%

 

(A) Excludes maximum sales charge of 4.25%.

(B) During the periods indicated above, Integrity Mutual Funds, Inc. or Integrity Money Management assumed/waived expenses of $66,312, $84,449, $93,640, $62,679, and $99,292, respectively.  If the expenses had not been assumed/waived, the annualized ratios of total expenses to average net assets would have been 1.24%, 1.22%, 1.21%, 1.08%, and 1.08%, respectively. 

Total return represents the rate that an investor would have earned or lost on an investment in the Fund assuming reinvestment of all dividends and distributions. 

The accompanying notes are an integral part of these financial statements.

Tax Information For The Year Ended July 31, 2006 (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 of Record	Payment Date		From Net Investment Income	From Net Realized Short-Term Gains	From Net Realized Long-Term Gains
August 31, 2005	August 31, 2005	$	.035173	-	-
September 30, 2005	September 30, 2005	$	.032515	-	-
October 31, 2005	October 31, 2005	$	.032634	-	-
November 30, 2005	November 30, 2005	$	.033171	-	-
December 30, 2005	December 30, 2005	$	.032076	-	-
January 31, 2006	January 31, 2006	$	.032774	-	-
February 28, 2006	February 28, 2006	$	.032933	-	-
March 31, 2006	March 31, 2006	$	.032371	-	-
April 28, 2006	April 28, 2006	$	.030571	-	-
May 31, 2006	May 31, 2006	$	.035245	-	-
June 30, 2006	June 30, 2006	$	.033070	-	-
July 31, 2006	July 31, 2006	$	.033083	-	-

 

Shareholders should consult their tax advisors.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  

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 the Integrity Managed Portfolios), including the schedule of investments as of July 31, 2006,  the related statement of operations for the year then ended, the statement of changes in net assets for the years ended July 31, 2006 and July 29, 2005, and the financial highlights for the year ended July 31, 2006 and each of the four years in the period ended July 29, 2005.  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 the standards of the Public Company Accounting Oversight Board (United States). 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, 2006 by correspondence with the custodian and brokers. 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 audits provide 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 Integrity Managed Portfolios as of July 31, 2006, the results of its operations for the year then ended, the changes in its net assets for the 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 8, 2006

Dear Shareholder: 

Enclosed is the report of the New Hampshire Municipal Fund (the “Fund”) for the year ended July 31, 2006.  The Fund’s portfolio and related financial statements are presented within for your review. 

As we end the period, the Federal Reserve under new chairman Ben Bernanke has raised the Federal Funds rate for the seventeenth time to 5.25% from a four-decade low of 1% in June 2004.  Longer-term yields have risen as the 10-year Treasury bond yield ended the period at 4.99% after beginning the period at 4.28%. 

Rising concerns over the U.S. core consumer index’s 3.8% annualized growth through May has the Fed officials talking tough.  The Fed puts great emphasis in keeping inflation expectations under control, at the same time it is important for central banks to be forward looking and not base their policy decisions on lagging economic indicators. 

The strength of the U.S. economy during the last couple of years, together with rising commodity prices has created some cyclical inflationary pressures as evidenced by gold’s rise to over $700 per ounce and crude oil’s rise to over $75 per barrel.  The key question is whether the recent rise in inflation is temporary or one that will require more hikes in the Fed Funds rate. 

On the other side of the ledger, the U.S. housing market continues to cool off.  Sales of single-family existing homes have declined nine out of the past twelve months. 

During the past few years, rising home prices permitted consumers to borrow against the increasing equity in their homes.  As a result, consumers were able to spend in excess of their income growth and the savings rate turned negative.  Now that the housing market is slowing, consumer spending is likely to be more restrained.  U.S. consumer spending makes up two-thirds of the economy. 

The slowdown in the housing markets also appears to be affecting some commodity prices.  In particular, lumber prices have declined in the past few months and copper prices are no longer rising at a rapid rate. This shows that the slowdown in the housing market could dampen inflationary pressures and allow the Fed to eventually stop raising interest rates. 

The New Hampshire Municipal Fund began the period at $10.20 per share and ended the period at $10.25 per share, for a total return of 3.76%*.  This compares to the Lehman Brothers Municipal Bond Index return of 2.55% for the period. 

The Fund’s favorable overall performance can be attributed to its defensive portfolio. 

Given our concerns that the Federal Reserve would tighten throughout the period, we structured the Fund defensively to help mitigate the effects of rising rates.  Rather than committing a portion of the Fund’s assets to low-yielding bonds, the Fund maintained an emphasis on premium priced, higher coupon issues like Exeter Sewer, 6.25% coupon; New Hampshire Turnpike, 6.75% coupon; and Oyster River Schools, 5.85% coupon.  In rising rate environments these types of issues have typically held their value better than lower coupon issues such as Hampton General Obligation, 4.00% coupon and Nashua General Obligation, 4.00% coupon.  Also, contributing to the Fund’s overall performance was a defensive hedge using U.S. treasury futures; this strategy stabilizes net asset values in periods of rising rates. 

An important part of the Fund’s strategy includes searching the primary and secondary markets for high quality, federally tax-exempt issues.  Credit quality for the period was as follows: AAA 71.7%, AA 18.9% and A 9.4%. 

Income exempt from federal income taxes and New Hampshire state interest and dividend taxes with preservation of capital remain the primary objectives of the Fund. 

If you would like more frequent updates, visit our website at www.integrityfunds.com for daily prices along with pertinent Fund information. 

Sincerely, 

The Portfolio Management Team 

The views expressed are those of Monte Avery, Chief Portfolio Strategist with Integrity Mutual Funds. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or any Integrity Mutual Fund. 

*Performance does not include applicable front-end or contingent deferred sales charges, which would have reduced the performance. 

Performance data quoted above is historical.  Past performance is no guarantee of future results.  Current performance may be higher or lower than the performance data quoted.  The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost.  You can obtain performance data current to the most recent month end (available within seven business days of the most recent month end) by calling 1-800-276-1262. 

You should consider the Fund's investment objectives, risks, and charges and expenses carefully before investing.  For this and other important information, please obtain a Fund prospectus at no cost from your financial adviser and read it carefully before investing. 

Bond prices and, therefore, the value of bond funds decline as interest rates rise.  Because the Fund invests in securities of a single state, the Fund is more susceptible to factors adversely impacting the respective state securities than a municipal bond fund that does not concentrate its securities in a single state.

July 31, 2006 (Unaudited) 

PROXY VOTING ON FUND PORTFOLIO SECURITIES

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-276-1262.  A report on "Form N-PX" of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available through Integrity's website at www.integrityfunds.com.  This information is also available from the EDGAR database on the Securities and Exchange Commission’s (“SEC's”) website at www.sec.gov. 

QUARTERLY PORTFOLIO SCHEDULE

The Fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the Fund's second and fourth fiscal quarters on the Form N-CSR(S).  The annual and semi-annual reports are filed electronically with the SEC and are delivered to the Fund shareholders.  The Fund also files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q.  The Fund's Forms N-Q and N-CSR(S) are available on the SEC's website at www.sec.gov.  The Fund's Forms N-Q and N-CSR(S) may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C., and the information on the operation of the Public Reference Room may be obtained by calling 1-202-942-8090.  You may also access this information from Integrity's website at www.integrityfunds.com.

Terms & Definitions  July 31, 2006 (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.

July 31, 2006 (Unaudited) 

COMPOSITION 

PORTFOLIO QUALITY RATINGS

(Based on Total Long-Term Investments) 

AAA	71.7%
AA	18.9%
A	9.4%

Quality ratings reflect the financial strength of the issuer.  They are assigned by independent rating services such as Moody’s Investors Services and Standard & Poor’s.  Non-rated bonds have been determined to be of appropriate quality for the portfolio by Integrity Money Management, Inc. (“Integrity Money Management” or “Adviser”), the investment adviser. 

These percentages are subject to change. 

PORTFOLIO MARKET SECTORS

(As a % of Net Assets) 

T - Transportation	31.0%
S - School	21.1%
HC - Health Care	16.0%
I - Industrial	14.7%
GO - General Obligation	10.3%
O - Other	6.9%

Market sectors are breakdowns of the Fund’s portfolio holdings into specific investment classes. 

These percentages are subject to change.

July 31, 2006 (Unaudited) 

DISCLOSURE OF FUND EXPENSES 

The Example below is intended to describe the fees and expenses borne by shareholders and the impact of those costs on your investment. 

EXAMPLE

As a shareholder of the Fund, you incur two types of costs:  (1) transaction costs, including sales charges (loads), redemption fees and exchange fees; and (2) ongoing costs, including management fees, distribution (12b-1) fees and other fund expenses.  This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.  The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 31, 2006 to July 31, 2006. 

The example illustrates the Fund’s costs in two ways: 

Actual expenses

The section in the table under the heading “Actual” provides information about actual account values and actual expenses.  You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid over the period.  Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the appropriate column for your share class, in the column entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. 

Hypothetical example for comparison purposes

The section in the table under the heading “Hypothetical (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.  The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.  You may use this information to compare the ongoing costs of investing in the Fund and other funds.  To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.  

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees or exchange fees.  Therefore, the section in the table under the heading “Hypothetical (5% return before expenses)” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.  In addition, if these transactional costs were included, your costs would have been higher. 

	Beginning Account Value 01/31/06	Ending Account Value 07/31/06	Expenses Paid During Period*
Actual
Class A	$1,000.00	$1,024.90	$5.34
Hypothetical (5% return before expenses)
Class A	$1,000.00	$1,019.38	$5.33

* Expenses are equal to the annualized expense ratio of 1.06%, multiplied by the average account value over the period, multiplied by 180/362 days.  The Fund’s ending account value on the first line in the table is based on its actual total return of 2.49% for the six-month period of January 31, 2006 to July 31, 2006.

July 31, 2006 (Unaudited) 

AVERAGE ANNUAL TOTAL RETURNS 

	For periods ending July 31, 2006
					Since Inception (December 31, 1992)
New Hampshire Municipal Fund	1 year	3 year	5 year	10 year
Without sales charge	3.76%	2.19%	2.82%	4.12%	4.59%
With sales charge (4.25%)	(0.63%)	0.73%	1.92%	3.67%	4.26%

 

					Since Inception (December 31, 1992)
Lehman Brothers Municipal Bond Index	1 year	3 year	5 year	10 year
	2.55%	4.89%	4.99%	5.82%	6.02%

Putting Performance into Perspective

Performance data quoted above is historical.  Past performance is no guarantee of future results.  Current performance may be higher or lower than the performance data quoted.  The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost.  You can obtain performance data current to the most recent month end (available within seven business days of the most recent month end) by calling 1-800-276-1262. 

You should consider the Fund's investment objectives, risks, and charges and expenses carefully before investing.  For this and other important information, please obtain a Fund prospectus at no cost from your financial adviser and read it carefully before investing. 

The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions and redemption of Fund shares. 

The Fund's performance prior to December 19, 2003, was achieved while the Fund was managed by another investment adviser, who used different investment strategies and techniques, which may produce different investment results than those achieved by the current investment adviser.  Forum Investment Advisors, LLC, served as investment adviser to the Fund until December 19, 2003.

July 31, 2006 (Unaudited) 

COMPARATIVE INDEX GRAPH 

Comparison of change in value of a $10,000 investment in the New Hampshire Municipal Fund and the Lehman Brothers Municipal Bond Index 

	New Hampshire Municipal Fund w/o Sales Charge	New Hampshire Municipal Fund w/ Max Sales Charge	Lehman Brothers Municipal Bond Index
7/31/1996	$10,000	$9,573	$10,000
1997	$10,847	$10,384	$11,027
1998	$11,421	$10,933	$11,687
1999	$11,726	$11,226	$12,024
2000	$12,142	$11,623	$12,542
2001	$13,035	$12,478	$13,808
2002	$13,715	$13,129	$14,735
2003	$14,036	$13,437	$15,264
2004	$14,701	$14,073	$16,147
2005	$14,436	$13,819	$17,174
2006	$14,978	$14,338	$17,613

Putting Performance into Perspective

Performance data quoted above is historical.  Past performance is no guarantee of future results.  Current performance may be higher or lower than the performance data quoted.  The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost.  You can obtain performance data current to the most recent month end (available within seven business days of the most recent month end) by calling 1-800-276-1262. 

You should consider the Fund's investment objectives, risks, and charges and expenses carefully before investing.  For this and other important information, please obtain a Fund prospectus at no cost from your financial adviser and read it carefully before investing. 

The graph does not reflect the deduction of taxes that a shareholder would pay on Fund distributions and redemptions of Fund shares. 

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 New Hampshire 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 be nchmark returns include reinvested dividends. 

July 31, 2006 (Unaudited) 

MANAGEMENT OF THE FUND 

The Board of Integrity 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 six series of Integrity Managed Portfolios and the seven 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.  Two of the remaining three Trustees and/or 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. 

Effective January 6, 2006, Independent Trustee Lynn Aas retired from the Board of Trustees and Jerry Stai was subsequently nominated and elected to the Board of Trustees to fill the vacancy. Mr. Aas’ retirement also created a vacancy on the Audit Committee and the Governance Nominating Committee that Mr. Stai will occupy. 

INDEPENDENT TRUSTEES

NAME, ADDRESS AND AGE	POSITION(S) HELD WITH REGISTRANT	TERM AND LENGTH SERVED	PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS	NUMBER OF PORTFOLIOS OVERSEEN IN THE FUND COMPLEX1	OTHER DIRECTORSHIPS HELD OUTSIDE THE FUND COMPLEX
Jerry M. Stai 1 N. Main St. Minot, ND 58703 53	Trustee	Since January 2006	Faculty, Embry-Riddle University (August 2000 to September 2005); Faculty, Park University (August 2005 to December 2005); Non-Profit Specialist, Bremer Bank (since July 2005); Faculty, Minot State University (since August 2000); Director, ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., Integrity Fund of Funds, Inc., (since January 2006); Trustee, The Integrity Funds (since January 2006).	16	Marycrest Franciscan Development, Inc.
Orlin W. Backes 15 2nd Ave SW Ste 305 Minot, ND  58701 71	Trustee	Since January 1996	Attorney, McGee, Hankla, Backes & Dobrovolny, P.C.; Director, South Dakota Tax-Free Fund, Inc. (until June 2004), Integrity Small-Cap Fund of Funds, Inc. (until June 2003), ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc.; Trustee, The Integrity Funds (since May 2003); and Director, First Western Bank & Trust.	16	Director, First Western Bank & Trust
R. James Maxson Town & Country Center 1015 S Broadway Ste 15 Minot, ND  58701 58	Trustee	Since January 1999	Attorney, Maxson Law Office (since November 2002), Attorney, McGee, Hankla, Backes & Dobrovolny, P.C. (April 2000 to November 2002); Director, South Dakota Tax-Free Fund, Inc. (until June 2004), Integrity Small-Cap Fund of Funds, Inc. (until June 2003), ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc., and Trustee, The Integrity Funds (since May 2003).	16	None

¹The Fund Complex consists of the three funds in the Integrity family of funds, the six series of Integrity Managed Portfolios, and the seven series of The Integrity Funds. 

Trustees and officers of the Fund serve until their resignation, removal or retirement. 

The Statement of Additional Information contains more information about the Fund’s Trustees and is available without charge upon request, by calling Integrity Funds Distributor, Inc. at 1(800) 276-1262.

July 31, 2006 (Unaudited) 

The Interested Trustees 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 other directorships, if any, held outside the Fund Complex, are shown below. 

INTERESTED TRUSTEES AND EXECUTIVE OFFICERS

NAME, ADDRESS AND AGE	POSITION(S) HELD WITH REGISTRANT	TERM AND LENGTH SERVED	PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS	NUMBER OF PORTFOLIOS OVERSEEN IN THE FUND COMPLEX1	OTHER DIRECTORSHIPS HELD OUTSIDE THE FUND COMPLEX
Robert E. Walstad2 1 N. Main St. Minot, ND  58703 61	Trustee, Chairman, President	Since January 1996	Director (since September 1987), President (September 1987 to October 2001 and September 2002 to May 2003), Integrity Mutual Funds, Inc.; Director, President and Treasurer, Integrity Money Management, Inc., ND Capital, Inc. (until September 2004), Integrity Fund Services, Inc.; Director, President (since inception) and Treasurer (until May 2004), South Dakota Tax-Free Fund, Inc. (until June 2004), Integrity Small-Cap Fund of Funds, Inc. (until June 2003), ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., Integrity Fund of Funds, Inc.; Trustee, Chairman and President (since May 2003) and Treasurer (May 2003 to May 2004), The Integrity Funds; Director, President and Treasurer (until August 2003), Integrity Funds Distributor, Inc.; Director (October 1999 to June 2003), President (October 1999 to October 2001), Magic Internet Services, Inc.; Director (May 2000 to June 2003), President (May 2000 to November 2001) (October 2002 to June 2003), ARM Securi ties Corporation; and Director, CEO, Chairman (since January 2002), President (September 2002 to December 2004), Capital Financial Services, Inc.	16	Director, Capital Financial Services, Inc.
Peter A. Quist2 1 N. Main St. Minot, ND  58703 71	Vice President, Secretary	Since January 1996	Attorney; Director and Vice President, Integrity Mutual Funds, Inc.; Director, Vice President and Secretary, Integrity Money management, Inc., ND Capital, Inc. (until September 2004), Integrity Fund Services, Inc., South Dakota Tax-Free Fund, Inc. (until June 2004), Integrity Small-Cap Fund of Funds, Inc. (until June 2003), ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc., Integrity Funds Distributor, Inc.; Vice President and Secretary, the Integrity Funds (since May 2003); and Director, ARM Securities Corporation (May 2000 to June 2003).	3	None
Laura K. Anderson 1 N. Main St. Minot, ND  58703 32	Treasurer	Since October 2005	Fund Accountant (until May 2004), Fund Accounting Supervisor (May 2004 to October 2005), Fund Accounting Manager, Integrity Fund Services, Inc.; Treasurer (since October 2005), The Integrity Funds, ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc.	N/A	None
Brent M. Wheeler 1 N. Main St. Minot, ND 58703 35	Mutual Fund Chief Compliance Officer	Since October 2005	Fund Accounting Manager (May 1998 to October 2005), Integrity Fund Services, Inc.; Treasurer (May 2004 to October 2005), Mutual Fund Compliance Officer (since October 2005), The Integrity Funds, ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc.	N/A	Minot State University Alumni Association

¹The Fund Complex consists of the three funds in the Integrity family of funds, the six series of Integrity Managed Portfolios, and the seven series of The Integrity Funds. 

²Trustees and/or 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. 

Trustees and officers of the Fund serve until their resignation, removal or retirement. 

The Statement of Additional Information contains more information about the Fund’s Trustees and is available without charge upon request, by calling Integrity Funds Distributor, Inc. at 1(800) 276-1262. 

Schedule of Investments July 31, 2006 

Name of Issuer Percentages represent the market value of each investment category to total net assets	Rating (Unaudited) Moody’s/S&P	Coupon Rate	Maturity		Principal Amount			Market Value
NEW HAMPSHIRE MUNICIPAL BONDS (95.5%)
#Belknap Cnty., NH G.O. MBIA	Aaa/AAA	5.200%	06/15/2013	$		225,000	$	233,010
Colebrook, NH School District MBIA	Aaa/NR	4.000	07/15/2008			60,000		60,364
Concord, NH G.O.	Aa/AA	4.600	10/15/2014			100,000		103,851
Derry, NH FSA	Aaa/NR	4.800	02/01/2018			115,000		119,219
Exeter, NH G.O.	A-1/NR	6.250	01/15/2007			140,000		140,350
Exeter, NH G.O.	A-1/NR	5.300	06/15/2008			25,000		25,656
Franlin, NH G.O. MBIA	Aaa/AAA	5.200	10/01/2007			50,000		50,000
Gorham, NH G.O. FSA	Aaa/NR	4.850	04/01/2014			65,000		66,938
#Hampton, NH G.O. XLCA	Aaa/NR	4.000	12/15/2020			300,000		286,302
Hillsborough, NH G.O. XLCA	Aaa/AAA	4.000	11/01/2020			100,000		96,873
Hillsborough, NH G.O. XLCA	Aaa/AAA	4.000	11/01/2021			100,000		96,042
Hudson, NH G.O.	Aa-3/NR	5.250	03/15/2028			110,000		113,198
Hudson, NH School District Lot B	Aa-3/NR	7.300	12/15/2006			25,000		25,537
Hudson, NH School District Lot B	Aa-3/NR	7.300	12/15/2008			20,000		21,621
Keene, NH G.O.	A-1/NR	5.150	10/15/2011			45,000		46,513
#Manchester, NH Airport Rev. MBIA	Aaa/AAA	5.000	01/01/2009			225,000		227,887
*Manchester, NH Public Improvement	Aa/NR	5.500	06/01/2019			200,000		215,266
*Manchester, NH School Facs. Rev. MBIA	Aaa/AAA	5.250	06/01/2009			250,000		261,313
Nashua, NH G.O. MBIA	Aaa/AAA	4.000	03/15/2017			100,000		97,365
Nashua, NH GO	Aa/AA+	5.250	09/15/2017			100,000		106,141
New Hampshire Hgr. Educ. & Hlth. Facs. (Concord Hospital) AMBAC	Aaa/AAA	5.400	10/01/2006			50,000		50,317
New Hampshire Hgr. Educ. & Hlth. Facs. (Dartmouth College) Rev.	Aaa/AAA	5.700	06/01/2027			100,000		104,440
*New Hampshire Hgr. Educ. & Hlth. Facs. (Dartmouth College) Rev.	Aaa/AAA	5.125	06/01/2028			285,000		293,125
#New Hampshire Hgr. Educ. & Hlth. Facs. (Wentworth-Douglas) MBIA	Aaa/AAA	5.400	01/01/2007			175,000		175,000
New Hampshire Hlth. & Educ. Facs. Auth. (Exeter)	A/A+	5.100	10/01/2010			100,000		103,420
New Hampshire Hlth. & Educ. Facs. Auth. (Exeter)	A/A+	5.200	10/01/2011			60,000		62,572
New Hampshire Hlth. & Educ. Facs. Auth. (Exeter)	A/A+	5.500	10/01/2015			120,000		126,900
New Hampshire Hlth. & Educ. Facs. Auth. (Exeter)	A/A+	5.625	10/01/2016			20,000		21,516
#New Hampshire Hlth. & Educ. Facs. Auth. (Univ. Sys. of NH) AMBAC	Aaa/AAA	5.500	07/01/2013			190,000		206,027
New Hampshire Hlth. & Educ. Facs. Auth. (Univ. Sys. of NH) AMBAC	Aaa/AAA	5.500	07/01/2013			95,000		102,304
New Hampshire Muni Bond Bank FSA	Aaa/AAA	4.400	08/15/2016			100,000		100,952
New Hampshire Muni Bond Bank (Pinkerton Academy) AMBAC	Aaa/AAA	5.250	06/01/2007			5,000		5,000
*New Hampshire State Capital Improvement G.O.	Aa/AA	5.000	04/15/2013			250,000		263,990
New Hampshire State Hsg. Finance Auth.	Aa/NR	6.000	07/01/2008			25,000		25,046
*New Hampshire State Turnpike Sys. Rev.	Aaa/AAA	6.750	11/01/2011			175,000		180,980
Oyster River, NH Coop School District Lot A	Aa/NR	5.750	06/15/2007			50,000		50,330
Oyster River, NH Coop School District Lot A	Aa/NR	5.850	06/15/2008			100,000		100,514
Portsmouth, NH G.O. MBIA	Aaa/AAA	4.000	08/01/2017			100,000		98,597
Portsmouth, NH G.O. MBIA	Aaa/AAA	4.000	08/01/2019			100,000		95,592
*Rochester NH G.O. MBIA	Aaa/NR	4.750	07/15/2020			300,000		312,168
#Stratham, NH School District AMBAC	Aaa/AAA	5.100	01/15/2008			200,000		203,290
TOTAL NEW HAMPSHIRE MUNICIPAL BONDS							$	5,075,526
GUAM MUNICIPAL BONDS (0.2%)
Guam Hsg. Corp. Single Family Mtg.	NR/AAA	5.750	09/01/2031			10,000		10,897
TOTAL GUAM MUNICIPAL BONDS							$	10,897
TOTAL MUNICIPAL BONDS (COST: $5,100,381)							$	5,086,423
SHORT-TERM SECURITIES (4.6%)						Shares
Wells Fargo Advantage National Tax-Free Money Market						161,000	$	161,000
Goldman Sachs Financial Square Tax-Free Money Market						81,777		81,777
TOTAL SHORT-TERM SECURITIES (COST: $242,777)							$	242,777
TOTAL INVESTMENTS IN SECURITIES (COST: $5,343,158)							$	5,329,200
OTHER ASSETS LESS LIABILITIES								(12,557)
NET ASSETS							$	5,316,643

* 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. 

Non-rated (NR) securities in the Fund were investment grade when purchased. 

The accompanying notes are an integral part of these financial statements.

Financial Statements July 31, 2006 

Statement of Assets and Liabilities July 31, 2006

ASSETS
Investment in securities, at value (cost: $5,343,158)	$	5,329,200
Accrued interest receivable		50,427
Accrued dividends receivable		638
Receivable from manager		3,461
Prepaid expenses		1,231
Total Assets	$	5,384,957
LIABILITIES
Dividends payable	$	14,319
Payable to affiliates		7,041
Accrued expenses		6,401
Payable for fund shares redeemed		40,553
Total Liabilities	$	68,314
NET ASSETS	$	5,316,643
Net assets are represented by:
Paid-in capital	$	5,483,342
Accumulated undistributed net realized gain (loss) on investments and futures		(154,165)
Accumulated undistributed net investment income		1,424
Unrealized appreciation (depreciation) on investments		(13,958)
Total amount representing net assets applicable to 518,796 outstanding shares of no par common stock (unlimited shares authorized)	$	5,316,643
Net asset value per share	$	10.25
Public offering price (based on sales charge of 4.25%)	$	10.70

 

The accompanying notes are an integral part of these financial statements.

Financial Statements  July 31, 2006 

Statement of Operations For the year ended July 31, 2006

INVESTMENT INCOME
	Interest		$	237,343
	Dividends			7,294
		Total Investment Income	$	244,637
EXPENSES
	Investment advisory fees		$	28,949
	Distribution (12b-1) fees			14,473
	Transfer agent fees			18,050
	Administrative service fees			18,050
	Accounting service fees			26,961
	Custodian fees			2,150
	Professional fees			6,875
	Trustees fees			1,795
	Reports to shareholders			1,959
	Legal fees			1,809
	Audit fees			7,487
	Other fees			170
		Total Expenses	$	128,728
	Less expenses waived or absorbed by the Fund’s manager			(69,311)
		Total Net Expenses	$	59,417
NET INVESTMENT INCOME			$	185,220
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES
	Net realized gain (loss) from:
	Investment transactions		$	22,307
	Futures transactions			173,102
	Net change in unrealized appreciation (depreciation) of:
	Investments			(115,282)
	Futures			(57,706)
		Net Realized and Unrealized Gain (Loss) On Investments and Futures	$	22,421
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS			$	207,641

The accompanying notes are an integral part of these financial statements.

Financial Statements July 31, 2006 

Statement of Changes in Net Assets

For the year ended July 31, 2006 and the year ended July 29, 2005 

				For The Year Ended July 31, 2006		For The Year Ended July 29, 2005
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
	Net investment income		$	185,220	$	244,363
	Net realized gain (loss) on investment and futures transactions			195,409		(390,784)
	Net change in unrealized appreciation (depreciation) on investments and futures			(172,988)		(2,058)
		Net Increase (Decrease) in Net Assets Resulting From Operations	$	207,641	$	(148,479)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
	Dividends from net investment income ($.33 and $.33 per share, respectively)		$	(184,875)	$	(244,007)
	Distributions from net realized gain on investment and futures transactions ($.00 and $.10 per share)			0		(72,597)
		Total Dividends and Distributions	$	(184,875)	$	(316,604)
CAPITAL SHARE TRANSACTIONS
	Proceeds from sale of shares		$	298,121	$	936,462
	Proceeds from reinvested dividends			105,044		205,304
	Cost of shares redeemed			(1,472,571)		(2,275,130)
		Net Increase (Decrease) in Net Assets Resulting From Capital Share Transactions	$	(1,069,406)	$	(1,133,364)
TOTAL INCREASE (DECREASE) IN NET ASSETS			$	(1,046,640)	$	(1,598,447)
NET ASSETS, BEGINNING OF PERIOD				6,363,283		7,961,730
NET ASSETS, END OF PERIOD			$	5,316,643	$	6,363,283
Undistributed Net Investment Income			$	1,424	$	1,078

 

The accompanying notes are an integral part of these financial statements.

Notes to Financial Statements July 31, 2006 

Note 1.  ORGANIZATION

Business operations – The New Hampshire Municipal Fund (the “Fund”) is an investment portfolio of Integrity 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 six portfolios are offered.  Integrity Managed Portfolios is an unincorporated business trust organized under Massachusetts law on August 10, 1990.  The investment objective of the Fund is to provide its shareholders with as high a level of current income exempt from both federal and New Hampshire state interest and dividend tax as is consistent with preservation of capital.  The Fund will seek to achieve this objective by investing primarily in a portfolio of New Hampshire municipal securities.  

On December 19, 2003, the New Hampshire Municipal Fund became a series of the Integrity Managed Portfolios.  Prior to this the Fund was part of the Forum Funds and was named the New Hampshire TaxSaver Bond Fund.  The New Hampshire TaxSaver Bond Fund commenced operations on December 31, 1992.  The Forum Funds is a Delaware business trust that is registered as an open-end management investment company under the Investment Company Act of 1940, as amended. 

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 Integrity Money Management.  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 r ecords 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. 

When-issued securities – The Fund may purchase securities on a when-issued basis.  Payment and delivery may take place after the customary settlement period for that security.  The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated.  The value of the securities purchased on a when-issued basis are identified as such in the Fund’s Schedule of Investments.  With respect to purchase commitments, the Fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment.  Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract’s terms, or if the issuer does not issue the securities due to political, economic, or other factors. 

Contingent Deferred Sales Charge (“CDSC”) – In the case of investments of $1 million or more, a 1.00% CDSC may be assessed on shares redeemed within 12 months of purchase (excluding shares purchased with reinvested dividends and/or distributions). 

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.   

The tax character of distributions paid was as follows: 

		July 31, 2006		July 29, 2005
Tax-exempt Income	$	184,875	$	244,007
Ordinary Income		0		0
Long-term Capital Gains		0		72,597
Total	$	184,875	$	316,604

 

As of July 31, 2006, the components of accumulated earnings/(deficit) on a tax basis was as follows: 

Undistributed Ordinary Income	Undistributed Long-Term Capital Gains	Accumulated Earnings	Accumulated Capital and Other Losses	Unrealized Appreciation/ (Depreciation)	Total Accumulated Earnings/(Deficit)
$0	$0	$0	($154,165)	($12,534)	($166,699)

The Fund has unexpired capital loss carryforwards for tax purposes as of July 31, 2006, totaling $154,165, 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
2013	$154,165

For the year ended July 31, 2006, the Fund made no permanent reclassifications to reflect tax character.  Reclassifications to paid-in capital relate primarily to expiring capital loss carryforwards. 

Net capital losses incurred after October 31, and within the tax year are deemed to arise on the first business day of the Fund’s next taxable year.  For the year ended July 31, 2006, the Fund deferred to August 1, 2006 post October capital losses, post October currency losses and post October passive foreign investment company losses of $0. 

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. 

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 appr eciation (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, 2006, there were unlimited shares of no par authorized; 518,796 and 623,932 shares were outstanding at July 31, 2006, and July 29, 2005, respectively. 

Transactions in capital shares were as follows: 

	Shares
	For The Year Ended July 31, 2006	For The Year Ended July 29, 2005
Shares sold	29,452	89,280
Shares issued on reinvestment of dividends	10,337	19,557
Shares redeemed	(144,925)	(221,039)
Net increase (decrease)	(105,136)	(112,202)

 

Note 4.  INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES

Integrity Money Management, the Fund’s investment adviser; Integrity Funds Distributor, the Fund’s underwriter; and Integrity Fund Services, the Fund’s transfer, accounting, and administrative services agent, are subsidiaries of Integrity Mutual Funds, Inc. 

The Fund has engaged Integrity Money Management 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.  All investment advisory fees were waived for the year ended July 31, 2006.  Certain officers and trustees of the Fund are also officers and directors of the investment adviser. 

Under the terms of the advisory agreement, the investment adviser has agreed to pay all the expenses of the Fund (excluding taxes and brokerage fees and commissions, if any) that exceed 1.25% of the Fund’s average daily net assets on an annual basis up to the amount of the management and investment advisory fee payable by the Fund to the adviser.  Accordingly, after fee waivers and expense reimbursements, the Fund’s total annual operating expenses were 1.03% for the year ended July 31, 2006. 

Principal Underwriter and Shareholder Services

Integrity Funds Distributor serves as the principal underwriter for the Fund.  The Fund has adopted a distribution plan for each class of shares as allowed by Rule 12b-1 of the 1940 Act.  Distribution plans permit the Fund to reimburse its principal underwriter for costs related to selling shares of the Fund and for various other services.  These costs, which consist primarily of commissions and service fees to broker-dealers who sell shares of the Fund, are paid by shareholders through expenses called “Distribution Plan expenses.”  The Fund currently pays an annual distribution fee of up to 0.25% of the average daily net assets of the class.  Distribution Plan expenses are calculated daily and paid monthly.  The Fund has recognized $14,473 of distribution fees for the year ended July 31, 2006.  The Fund has a payable to Integrity Funds Distributor of $1,120 at July 31, 2006 for distribution fees. 

Integrity Fund Services provides shareholder services for a fee that varies according to the size of the Fund and is reimbursed for out-of-pocket expenses.  An additional fee with a minimum of $500 per month is charged for each additional share class.  The Fund has recognized $18,050 of transfer agent fees and expenses for the year ended July 31, 2006.  The Fund has a payable to Integrity Fund Services of $1,500 at July 31, 2006 for transfer agent fees.  Integrity Fund Services 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, together with reimbursement of out-of-pocket expenses.  An additional minimum fee of $500 per month is charged by Integrity Fund Services for each additional share class.  The Fund has recognized $26,961 of accounting service fees for the year ended July 31, 2006.  The Fund has a payable to Integrity Fund Services of $2,224 at July 31, 2006 for accounting service fees.  Integrity Fund Services also acts as administrator for the Fund.  The Fund pays to Integrity Fund Services a monthly fee calculated at the rate of 0.10% of average daily net assets with a minimum of $1,500 per month plus out-of-pocket expenses.  An additional minimum fee of $500 per month is charged by Integrity Fund Services for each additional share class.  The Fund has recognized $18,050 of administrative service fees for the year ended July 31, 2006.  The Fund has a payable to Integrity Fund Services of $1,500 at July 31, 2006 for administrative service fees. 

Note 5.  INVESTMENT SECURITY TRANSACTIONS

The cost of purchases and proceeds from sales of investment securities (excluding short-term securities) aggregated $439,479 and $1,255,749, respectively, for the year ended July 31, 2006. 

Note 6.  INVESTMENT IN SECURITIES

At July 31, 2006, the aggregate cost of securities for federal income tax purposes was substantially the same for financial reporting purposes at $5,343,158.  The net unrealized depreciation of investments for financial reporting purposes based on the cost was $13,958, which is comprised of $53,578 aggregate gross unrealized appreciation and $67,536 aggregate gross unrealized depreciation.  Differences between financial reporting-basis and tax-basis unrealized appreciation/depreciation are due to differing treatment of market discount.

Financial Highlights  July 31, 2006 

Selected per share data and ratios for the period indicated 

				For The Year Ended July 31, 2006		For The Year Ended July 29, 2005		For The Four Month Period Ended July 30, 2004		For The Year Ended March 31, 2004		For The Year Ended March 31, 2003		For The Year Ended March 31, 2002
NET ASSET VALUE, BEGINNING OF PERIOD			$	10.20	$	10.82	$	10.73	$	10.88	$	10.65	$	10.74
Income from Investment Operations:
	Net investment income		$	.33	$	.33	$	.11	$	.37	$	.40	$	.42
	Net realized and unrealized gain (loss) on investment and futures transactions			.05		(.52)		.09		(.15)		.30		(.09)
		Total Income (Loss) From Investment Operations	$	.38	$	(.19)	$	.20	$	.22	$	.70	$	.33
Less Distributions:
	Dividends from net investment income		$	(.33)	$	(.33)	$	(.11)	$	(.37)	$	(.40)	$	(.42)
	Distributions from net capital gains			.00		(.10)		.00		.00		(.07)		.00
		Total Distributions	$	(.33)	$	(.43)	$	(.11)	$	(.37)	$	(.47)	$	(.42)
NET ASSET VALUE, END OF PERIOD			$	10.25	$	10.20	$	10.82	$	10.73	$	10.88	$	10.65
Total Return				3.76%(A)		(1.81%)(A)		5.69%(A)(C)		2.06%(A)		6.65%(A)		3.11%(A)
RATIOS/SUPPLEMENTAL DATA:
	Net assets, end of period (in thousands)		$	5,317	$	6,363	$	7,962	$	8,175	$	10,198	$	11,843
	Ratio of net expenses (after expense assumption) to average net assets			1.03%(B)		0.98%(B)		0.95%(B)(C)		0.95%(B)		0.95%(B)		0.95%(B)
	Ratio of net investment income to average net assets			3.19%		3.14%		3.12%(C)		3.44%		3.71%		3.88%
	Portfolio turnover rate			8.10%		17.94%		10.02%		41.53%		20.00%		21.00%

 

(A) Excludes maximum sales charge of 4.25%.

(B) During the periods since March 31, 2004, Integrity Money Management assumed/waived expenses of $69,311, $64,102 and $23,856, respectively.  If the expenses had not been assumed/waived, the annualized ratio of total expenses to average net assets would have been 2.22%, 1.80% and 1.84%, respectively.  For the period 4/1/03 through 12/19/03, Forum Administrative Services and Forum Investment Advisors assumed/waived expenses of $62,210.  For the period from 12/20/03 through 3/31/04, Integrity Money Management assumed/waived expenses of $21,859.  If the expenses had not been assumed/waived, the annualized ratio of total expenses to average net assets for the year would have been 1.86%.  In prior years, Forum Administrative Services, Forum Investment Advisors, Forum Shareholder Services, and Forum Accounting Services assumed/waived expenses of $106,577 (2003) and $112,886 (2002).  If the expenses had not been a ssumed/waived, the annualized ratio of total expenses to average net assets would have been 2.03% and 1.86%, respectively.

(C) Ratio is annualized. 

Total return represents the rate that an investor would have earned or lost on an investment in the Fund assuming reinvestment of all dividends and distributions. 

The accompanying notes are an integral part of these financial statements.

Tax Information For The Year Ended July 31, 2006 (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 of Record	Payment Date		From Net Investment Income	From Net Realized Short-Term Gains	From Net Realized Long-Term Gains
August 31, 2005	August 31, 2005	$	0.028370	-	-
September 30, 2005	September 30, 2005	$	0.027373	-	-
October 31, 2005	October 31, 2005	$	0.027747	-	-
November 30, 2005	November 30, 2005	$	0.027882	-	-
December 30, 2005	December 30, 2005	$	0.027167	-	-
January 31, 2006	January 31, 2006	$	0.025639	-	-
February 28, 2006	February 28, 2006	$	0.027096	-	-
March 31, 2006	March 31, 2006	$	0.026706	-	-
April 28, 2006	April 28, 2006	$	0.024706	-	-
May 31, 2006	May 31, 2006	$	0.028530	-	-
June 30, 2006	June 30, 2006	$	0.027154	-	-
July 31, 2006	July 31, 2006	$	0.027252	-	-

 

Shareholders should consult their tax advisors.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 

To the Shareholders and Board of Trustees of New Hampshire Municipal Fund 

We have audited the accompanying statement of assets and liabilities of the New Hampshire Municipal Fund (one of the portfolios constituting the Integrity Managed Portfolios), including the schedule of investments as of July 31, 2006, the related statement of operations for the year then ended, the statement of changes in net assets for the years ended July 31, 2006 and July 29, 2005, and the financial highlights for the years ended July 31, 2006 and July 29, 2005, the four month period ended July 30, 2004, and the year ended March 31, 2004. 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. The financial highlights for the years ended March 31, 2003, and 2002 were audited by other auditors whose report dated May 16, 2003 expressed an unqualified opinion on the r espective highlights.  

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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, 2006 by correspondence with the custodian and brokers. 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 audits provide 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 New Hampshire Municipal Fund of the Integrity Managed Portfolios as of July 31, 2006, the results of its operations for the year then ended, the changes in its net assets for the years ended July 31, 2006 and July 29, 2005, and the financial highlights for the years ended July 31, 2006 and July 29, 2005, the four month period ended July 30, 2004, and the year ended March 31, 2004, in conformity with accounting principles generally accepted in the United States of America. 

BRADY, MARTZ & ASSOCIATES, P.C.
Minot, North Dakota USA
September 8, 2006

Dear Shareholder: 

Enclosed is the report of the operations of the Oklahoma Municipal Fund (the “Fund”) for the year ended July 31, 2006.  The Fund’s portfolio and related financial statements are presented within for your review. 

As we end the period, the Federal Reserve under new chairman Ben Bernanke has raised the Federal Funds rate for the seventeenth time to 5.25% from a four-decade low of 1% in June 2004.  Longer-term yields have risen as the 10-year Treasury bond yield ended the period at 4.99% after beginning the period at 4.28%. 

Rising concerns over the U.S. core consumer index’s 3.8% annualized growth through May has the Fed officials talking tough.  The Fed puts great emphasis in keeping inflation expectations under control, at the same time it is important for central banks to be forward looking and not base their policy decisions on lagging economic indicators. 

The strength of the U.S. economy during the last couple of years, together with rising commodity prices has created some cyclical inflationary pressures as evidenced by gold’s rise to over $700 per ounce and crude oil’s rise to over $75 per barrel.  The key question is whether the recent rise in inflation is temporary or one that will require more hikes in the Fed Funds rate. 

On the other side of the ledger the U.S. housing market continues to cool off.  Sales of single-family existing homes have declined nine out of the past twelve months. 

During the past few years, rising home prices permitted consumers to borrow against the increasing equity in their homes.  As a result, consumers were able to spend in excess of their income growth and the savings rate turned negative.  Now that the housing market is slowing, consumer spending is likely to be more restrained.  U.S. consumer spending makes up two-thirds of the economy. 

The slowdown in the housing markets also appears to be affecting some commodity prices. In particular, lumber prices have declined in the past few months and copper prices are no longer rising at a rapid rate. This shows that the slowdown in the housing market could dampen inflationary pressures and allow the Fed to eventually stop raising interest rates. 

The Oklahoma Municipal Fund began the period at $11.00 per share and ended the period at $11.08 per share for a total return of 4.39%*.  This compares to the Lehman Brothers Municipal Bond Index return of 2.55% for the period. 

The Fund’s favorable overall performance can be attributed to its defensive portfolio. 

Given our concerns that the Federal Reserve would tighten throughout the period, we structured the Fund defensively to help mitigate the effects of rising rates.  Rather than committing a portion of the Fund’s assets to low-yielding bonds, the Fund maintained an emphasis on premium priced, higher coupon issues like Grand River Dam, 5.87% coupon; Southern Nazarene University, 6.00% coupon; and Oklahoma Turnpike, 5.25% coupon.  In rising rate environments these types of issues have typically held their value better than lower coupon issues such as Oklahoma City General Obligation, 4.25% coupon and Tulsa General Obligation, 4.50% coupon.  Also, contributing to the Fund’s overall performance was a defensive hedge using U.S. treasury futures; this strategy stabilizes net asset values in periods of rising rates. 

An important part of the Fund’s strategy includes searching the primary and secondary markets for high quality, double tax-exempt issues.  Credit quality for the period was as follows: AAA 78.1%, AA 10.3%, A 7.4% and BBB 4.2% 

Income exempt from federal and Oklahoma state income taxes with preservation of capital remain the primary objectives of the Fund. 

If you would like more frequent updates, visit our website at www.integrityfunds.com for daily prices along with pertinent Fund information. 

Sincerely, 

The Portfolio Management Team 

The views expressed are those of Monte Avery, Chief Portfolio Strategist with Integrity Mutual Funds.  The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or any Integrity Mutual Fund. 

*Performance does not include applicable front-end or contingent deferred sales charges, which would have reduced the performance. 

Performance data quoted above is historical.  Past performance is no guarantee of future results.  Current performance may be higher or lower than the performance data quoted.  The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost.  You can obtain performance data current to the most recent month end (available within seven business days of the most recent month end) by calling 1-800-276-1262. 

You should consider the Fund's investment objectives, risks, and charges and expenses carefully before investing.  For this and other important information, please obtain a Fund prospectus at no cost from your financial adviser and read it carefully before investing. 

Bond prices and, therefore, the value of bond funds decline as interest rates rise.  Because the Fund invests in securities of a single state, the Fund is more susceptible to factors adversely impacting the respective state securities more so than a municipal bond fund that does not concentrate its securities in a single state.

July 31, 2006 (Unaudited) 

PROXY VOTING ON FUND PORTFOLIO SECURITIES

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-276-1262.  A report on "Form N-PX" of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available through Integrity's website at www.integrityfunds.com.  This information is also available from the EDGAR database on the Securities and Exchange Commission’s (“SEC's”) website at www.sec.gov. 

QUARTERLY PORTFOLIO SCHEDULE

The Fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the Fund's second and fourth fiscal quarters on the Form N-CSR(S).  The annual and semi-annual reports are filed electronically with the SEC and are delivered to the Fund shareholders.  The Fund also files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q.  The Fund's Forms N-Q and N-CSR(S) are available on the SEC's website at www.sec.gov.  The Fund's Forms N-Q and N-CSR(S) may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C., and the information on the operation of the Public Reference Room may be obtained by calling 1-202-942-8090.  You may also access this information from Integrity's website at www.integrityfunds.com.

Terms & Definitions  July 31, 2006 (Unaudited)

Appreciation

The 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

The 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

The 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.

July 31, 2006 (Unaudited) 

COMPOSITION 

PORTFOLIO QUALITY RATINGS

(Based on Total Long-Term Investments) 

AAA	78.1%
AA	10.3%
A	7.4%
BBB	4.2%

 

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 Integrity Money Management, Inc. (“Integrity Money Management” or “Adviser”), the investment adviser. 

These percentages are subject to change. 

PORTFOLIO MARKET SECTORS

(As a % of Net Assets) 

S-School	35.2%
T-Transportation	18.7%
U-Utilities	17.0%
O-Other	10.5%
HC-Health Care	6.9%
W/S-Water/Sewer	6.2%
G-Government	5.5%

 

Market sectors are breakdowns of the Fund’s portfolio holdings into specific investment classes. 

These percentages are subject to change.

July 31, 2006 (Unaudited) 

DISCLOSURE OF FUND EXPENSES 

The Example below is intended to describe the fees and expenses borne by shareholders and the impact of those costs on your investment. 

EXAMPLE

As a shareholder of the fund, you incur two types of costs:  (1) transaction costs, including sales charges (loads), redemption fees and exchange fees; and (2) ongoing costs, including management fees, distribution (12b-1) fees and other fund expenses.  This Example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds.  The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 31, 2006 to July 31, 2006. 

The example illustrates the Fund’s costs in two ways:  

Actual expenses

The section in the table under the heading “Actual” provides information about actual account values and actual expenses.  You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid over the period.  Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the appropriate column for your share class, in the column entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. 

Hypothetical example for comparison purposes

The section in the table under the heading “Hypothetical (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.  The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.  You may use this information to compare the ongoing costs of investing in the Fund and other funds.  To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.  

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees or exchange fees.  Therefore, the section in the table under the heading “Hypothetical (5% return before expenses)” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.  In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 01/31/06	Ending Account Value 07/31/06	Expenses Paid During Period*
Actual
Class A	$1,000.00	$1,029.82	$5.36
Hypothetical (5% return before expenses)
Class A	$1,000.00	$1,019.38	$5.33

* Expenses are equal to the annualized expense ratio of 1.06%, multiplied by the average account value over the period, multiplied by 180/362 days.  The Fund’s ending account value on the first line in the table is based on its actual total return of 2.98% for the six-month period of January 31, 2006 to July 31, 2006.

July 31, 2006 (Unaudited) 

AVERAGE ANNUAL TOTAL RETURNS 

	For periods ending July 31, 2006
					Since Inception (September 25, 1996)
Oklahoma Municipal Fund	1 year	3 year	5 year	10 year
Without sales charge	4.39%	3.69%	3.35%	N/A	4.25%
With sales charge (4.25%)	(0.06)%	2.21%	2.45%	N/A	3.80%

 

					Since Inception (September 25, 1996)
Lehman Brothers Municipal Bond Index	1 year	3 year	5 year	10 year
	2.55%	4.89%	4.99%	N/A	5.92%

 

Putting Performance into Perspective

Performance data quoted above is historical.  Past performance is no guarantee of future results.  Current performance may be higher or lower than the performance data quoted.  The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost.  You can obtain performance data current to the most recent month end (available within seven business days of the most recent month end) by calling 1-800-276-1262. 

You should consider the Fund's investment objectives, risks, and charges and expenses carefully before investing.  For this and other important information, please obtain a Fund prospectus at no cost from your financial adviser and read it carefully before investing. 

The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions and redemption of Fund shares.

July 31, 2006 (Unaudited) 

COMPARATIVE INDEX GRAPH 

Comparison of change in value of a $10,000 investment in the Oklahoma Municipal Fund and the Lehman Brothers Municipal Bond Index

	Oklahoma Municipal Fund w/o Sales Charge	Oklahoma Municipal Fund w/ Max Sales Charge	Lehman Brothers Municipal Bond Index
09/25/1996	$10,000	$  9,575	$10,000
1997	$10,779	$10,321	$11,029
1998	$11,186	$10,711	$11,689
1999	$11,662	$11,166	$12,026
2000	$11,648	$11,153	$12,545
2001	$12,787	$12,243	$13,811
2002	$13,484	$12,911	$14,737
2003	$13,522	$12,947	$15,267
2004	$14,017	$13,422	$16,150
2005	$14,440	$13,827	$17,178
2006	$15,074	$14,434	$17,617

 

Putting Performance into Perspective

Performance data quoted above is historical.  Past performance is no guarantee of future results.  Current performance may be higher or lower than the performance data quoted.  The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than the original cost.  You can obtain performance data current to the most recent month end (available within seven business days of the most recent month end) by calling 1-800-276-1262. 

You should consider the Fund's investment objectives, risks, and charges and expenses carefully before investing.  For this and other important information, please obtain a Fund prospectus at no cost from your financial adviser and read it carefully before investing. 

The graph does not reflect the deduction of taxes that a shareholder would pay on Fund distributions and redemptions of Fund shares. 

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 benchm ark returns include reinvested dividends.

July 31, 2006 (Unaudited) 

MANAGEMENT OF THE FUND 

The Board of Integrity 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 six series of Integrity Managed Portfolios and the seven 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.  Two of the remaining three Trustees and/or 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. 

Effective January 6, 2006, Independent Trustee Lynn Aas retired from the Board of Trustees and Jerry Stai was subsequently nominated and elected to the Board of Trustees to fill the vacancy. Mr. Aas’ retirement also created a vacancy on the Audit Committee and the Governance Nominating Committee that Mr. Stai will occupy. 

INDEPENDENT TRUSTEES

NAME, ADDRESS AND AGE	POSITION(S) HELD WITH REGISTRANT	TERM AND LENGTH SERVED	PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS	NUMBER OF PORTFOLIOS OVERSEEN IN THE FUND COMPLEX1	OTHER DIRECTORSHIPS HELD OUTSIDE THE FUND COMPLEX
Jerry M. Stai 1 N. Main St. Minot, ND 58703 53	Trustee	Since January 2006	Faculty, Embry-Riddle University (August 2000 to September 2005); Faculty, Park University (August 2005 to December 2005); Non-Profit Specialist, Bremer Bank (since July 2005); Faculty, Minot State University (since August 2000); Director, ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., Integrity Fund of Funds, Inc., (since January 2006); Trustee, The Integrity Funds (since January 2006).	16	Marycrest Franciscan Development, Inc.
Orlin W. Backes 15 2nd Ave SW Ste 305 Minot, ND  58701 71	Trustee	Since January 1996	Attorney, McGee, Hankla, Backes & Dobrovolny, P.C.; Director, South Dakota Tax-Free Fund, Inc. (until June 2004), Integrity Small-Cap Fund of Funds, Inc. (until June 2003), ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc.; Trustee, The Integrity Funds (since May 2003); and Director, First Western Bank & Trust.	16	Director, First Western Bank & Trust
R. James Maxson Town & Country Center 1015 S Broadway Ste 15 Minot, ND  58701 58	Trustee	Since January 1999	Attorney, Maxson Law Office (since November 2002), Attorney, McGee, Hankla, Backes & Dobrovolny, P.C. (April 2000 to November 2002); Director, South Dakota Tax-Free Fund, Inc. (until June 2004), Integrity Small-Cap Fund of Funds, Inc. (until June 2003), ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc., and Trustee, The Integrity Funds (since May 2003).	16	None

¹The Fund Complex consists of the three funds in the Integrity family of funds, the six series of Integrity Managed Portfolios, and the seven series of The Integrity Funds. 

Trustees and officers of the Fund serve until their resignation, removal or retirement. 

The Statement of Additional Information contains more information about the Fund’s Trustees and is available without charge upon request, by calling Integrity Funds Distributor, Inc. at 1(800) 276-1262. 

July 31, 2006 (Unaudited) 

The Interested Trustees 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 other directorships, if any, held outside the Fund Complex, are shown below. 

INTERESTED TRUSTEES AND EXECUTIVE OFFICERS

NAME, ADDRESS AND AGE	POSITION(S) HELD WITH REGISTRANT	TERM AND LENGTH SERVED	PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS	NUMBER OF PORTFOLIOS OVERSEEN IN THE FUND COMPLEX1	OTHER DIRECTORSHIPS HELD OUTSIDE THE FUND COMPLEX
Robert E. Walstad2 1 N. Main St. Minot, ND  58703 61	Trustee, Chairman, President	Since January 1996	Director (since September 1987), President (September 1987 to October 2001 and September 2002 to May 2003), Integrity Mutual Funds, Inc.; Director, President and Treasurer, Integrity Money Management, Inc., ND Capital, Inc. (until September 2004), Integrity Fund Services, Inc.; Director, President (since inception) and Treasurer (until May 2004), South Dakota Tax-Free Fund, Inc. (until June 2004), Integrity Small-Cap Fund of Funds, Inc. (until June 2003), ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., Integrity Fund of Funds, Inc.; Trustee, Chairman and President (since May 2003) and Treasurer (May 2003 to May 2004), The Integrity Funds; Director, President and Treasurer (until August 2003), Integrity Funds Distributor, Inc.; Director (October 1999 to June 2003), President (October 1999 to October 2001), Magic Internet Services, Inc.; Director (May 2000 to June 2003), President (May 2000 to November 2001) (October 2002 to June 2003), ARM Secur ities Corporation; and Director, CEO, Chairman (since January 2002), President (September 2002 to December 2004), Capital Financial Services, Inc.	16	Director, Capital Financial Services, Inc.
Peter A. Quist2 1 N. Main St. Minot, ND  58703 71	Vice President, Secretary	Since January 1996	Attorney; Director and Vice President, Integrity Mutual Funds, Inc.; Director, Vice President and Secretary, Integrity Money management, Inc., ND Capital, Inc. (until September 2004), Integrity Fund Services, Inc., South Dakota Tax-Free Fund, Inc. (until June 2004), Integrity Small-Cap Fund of Funds, Inc. (until June 2003), ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc., Integrity Funds Distributor, Inc.; Vice President and Secretary, the Integrity Funds (since May 2003); and Director, ARM Securities Corporation (May 2000 to June 2003).	3	None
Laura K. Anderson 1 N. Main St. Minot, ND  58703 32	Treasurer	Since October 2005	Fund Accountant (until May 2004), Fund Accounting Supervisor (May 2004 to October 2005), Fund Accounting Manager, Integrity Fund Services, Inc.; Treasurer (since October 2005), The Integrity Funds, ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc.	N/A	None
Brent M. Wheeler 1 N. Main St. Minot, ND 58703 35	Mutual Fund Chief Compliance Officer	Since October 2005	Fund Accounting Manager (May 1998 to October 2005), Integrity Fund Services, Inc.; Treasurer (May 2004 to October 2005), Mutual Fund Compliance Officer (since October 2005), The Integrity Funds, ND Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and Integrity Fund of Funds, Inc.	N/A	Minot State University Alumni Association

 

¹The Fund Complex consists of the three funds in the Integrity family of funds, the six series of Integrity Managed Portfolios, and the seven series of The Integrity Funds. 

²Trustees and/or 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. 

Trustees and officers of the Fund serve until their resignation, removal or retirement. 

The Statement of Additional Information contains more information about the Fund’s Trustees and is available without charge upon request, by calling Integrity Funds Distributor, Inc. at 1(800) 276-1262.

Schedule of Investments  July 31, 2006 

Name of Issuer Percentages represent the market value of each investment category to total net assets	Rating (Unaudited) Moody's/S&P	Coupon Rate	Maturity		Principal Amount		Market Value
OKLAHOMA MUNICIPAL BONDS (96.5%)
Alva, OK Hosp. Auth. (Sales Tax Rev) Radian (Xcel)	Aa-3/AA	5.250%	06/01/25	$	250,000	$	260,868
Claremore Public Works Auth. Capital Improvement Rev. FSA	Aaa/AAA	5.250	06/01/27		500,000		538,086
Claremore, OK Student Hsg. Rev. (Rogers University) ACA	NR/A	5.750	09/01/34		500,000		520,615
Drumright, OK Utility Sys. Rev. Assured Guaranty Ins.	NR/AAA	4.750	02/01/36		950,000		966,692
Durant, OK Community Fac. Auth. Sales Tax Rev. XLCA	Aaa/AAA	5.500	11/01/19		500,000		548,010
Edmond Economic Dev. Auth., OK Student Housing Rev.	Baa-3/NR	5.375	12/01/19		200,000		198,699
#Edmond Economic Dev. Auth., OK Student Housing Rev.	Baa-3/NR	5.500	12/01/28		865,000		856,506
Edmond Public Works Auth.  AMBAC	Aaa/AAA	4.850	01/01/24		155,000		159,444
Edmond Public Works Auth.  AMBAC	Aaa/AAA	4.750	07/01/24		250,000		253,970
Edmond Public Works Sales Tax & Utility Rev. AMBAC	Aaa/AAA	4.750	07/01/23		200,000		204,258
Garfield Cty., Criminal Justice Auth. (Enid, OK) Rev. MBIA	Aaa/NR	4.500	04/01/18		250,000		253,308
Grand River Dam Auth., OK Rev.  MBIA	Aaa/AAA	5.875	06/01/07		160,000		163,630
Grand River Dam Auth., OK  FSA	Aaa/AAA	5.000	06/01/12		500,000		530,690
*Grand River Dam Auth., OK Rev. AMBAC	Aaa/AAA	6.250	06/01/11		210,000		231,290
Grand River Dam Auth., OK Rev. Ref. AMBAC	Aaa/AAA	5.500	06/01/13		700,000		768,614
Jackson Cty, OK Sales Tax Rev. AMBAC	Aaa/AAA	5.000	10/01/22		500,000		518,255
Jenks Aquarium Auth. Rev.  MBIA	Aaa/AAA	5.250	07/01/29		500,000		537,755
Jenks, OK General Obligation  FSA	Aaa/AAA	4.200	02/01/14		400,000		402,300
Jenks, OK General Obligation  FSA	Aaa/AAA	5.000	02/01/25		250,000		269,343
Mannford Public Works Auth.	NR/BBB+	6.000	04/01/27		300,000		323,520
Mannford Public Works Auth.	NR/BBB+	5.900	04/01/32		250,000		266,383
McAlester, OK Public Works Auth.  FSA	Aaa/NR	5.100	02/01/30		100,000		104,558
Midwest City, OK Capital Impvt.  MBIA	Aaa/AAA	5.375	09/01/24		500,000		538,086
Norman, OK (Regl. Hospital) Auth.  Asset Guaranty	Aa-3/AA	5.250	09/01/16		180,000		188,690
OK Agric. & Mech. Colleges (OK St. Univ.) Athletic Facs. AMBAC	Aaa/NR	5.000	08/01/24		300,000		304,995
OK Agric. & Mech. Colleges Utility Rev. Sys. FGIC	Aaa/AAA	4.000	07/01/08		185,000		185,779
*OK Board of Regents (Oklahoma City Community College) Student Rev. AMBAC	Aaa/AAA	5.550	07/01/22		750,000		794,805
OK Board of Regents (Univ. of Central OK) AMBAC	Aaa/AAA	5.600	08/01/20		150,000		163,731
OK Board of Regents (Univ. of Central OK) AMBAC	Aaa/AAA	5.700	08/01/25		390,000		423,727
OK Board of Regents (University of Oklahoma) Athletic Fac. Rev. MBIA	Aaa/NR	5.250	06/01/26		550,000		578,490
OK Capital Impvt. Auth. (Dept. of Mental Health-Substance Abuse) MBIA	Aaa/AAA	4.000	07/01/10		250,000		252,220
OK Capital Impvt. Auth. (Higher Ed. Project)  AMBAC	Aaa/AAA	5.000	07/01/24		250,000		261,220
OK Capital Impvt. Auth. (Higher Ed. Projs.) Rev. AMBAC	Aaa/AAA	5.000	07/01/22		500,000		525,310
OK Capital Impvt. Auth. (Higher Ed. Projs.) Rev. AMBAC	Aaa/AAA	5.000	07/01/30		2,000,000		2,104,480
OK Capital Impvt. Auth. (OK St. Bureau of Investigation) FSA	Aaa/AAA	4.375	07/01/22		100,000		98,819
OK Capital Impvt. Auth. (OK St. Bureau of Investigation) FSA	Aaa/AAA	4.375	07/01/23		100,000		98,457
OK Capital Impvt. Auth. (OK St. Bureau of Investigation) FSA	Aaa/AAA	4.500	07/01/24		200,000		199,076
OK Capital Impvt. Auth. (State Highway) Rev. MBIA	Aaa/AAA	5.000	06/01/14		250,000		266,250
OK Capital Impvt. Auth. (Supreme Court Proj.)  CIFG	Aaa/AAA	4.500	07/01/24		500,000		495,875
OK Capital Impvt. Auth. (Supreme Court Proj.)  CIFG	Aaa/AAA	4.500	07/01/26		500,000		493,815
OK Colleges Board of Regents (NE State Univ. Ctr.) Rev. FSA	Aaa/AAA	5.100	03/01/16		140,000		143,431
OK Colleges Board of Regents (NE State Univ. Ctr.) Rev. FSA	Aaa/AAA	5.150	03/01/21		100,000		102,315
OK Devl. Finance Auth. (Comanche County Hosp.)	NR/BBB-	5.625	07/01/09		105,000		108,113
OK Devl. Finance Auth. (DHS Lease Rev.) Series 2000A MBIA	Aaa/NR	5.600	03/01/15		280,000		290,181
OK Devl. Finance Auth. (Integris Baptist Medical Center) AMBAC	Aaa/AAA	5.600	06/01/20		250,000		267,020
OK Devl. Finance Auth. (Langston Univ. Stadium)	NR/AA	5.000	07/01/27		250,000		262,065
OK Devl. Finance Auth. (Lease Rev.) Law Enforcement MBIA	Aaa/AAA	5.100	06/01/27		120,000		125,615
OK Devl. Finance Auth. (OK State Syst. Higher Ed.) AMBAC	Aaa/AAA	4.900	12/01/22		200,000		206,358
*OK Devl. Finance Auth. (Oklahoma City Univ.) Rev. Ref. AMBAC	Aaa/AAA	5.125	06/01/17		555,000		573,293
OK Devl. Finance Auth. (Seminole State College)	NR/AA	5.125	12/01/27		150,000		159,142
OK Devl. Finance Auth. (Southern Nazarene Univ.) Rev.	NR/NR	5.750	03/01/13		400,000		417,364
#OK Devl. Finance Auth. (Southern Nazarene Univ.) Rev.	NR/NR	6.000	03/01/18		600,000		628,416
OK Devl. Finance Auth. (St. Ann's Retirement Village) Rev. MBIA	Aaa/NR	5.000	12/01/28		500,000		515,425
OK Devl. Finance Auth. (St. John Health Syst.) MBIA	Aaa/AAA	5.750	02/15/25		200,000		210,384
OK Devl. Finance Auth. (St. John Health Syst.) Rev. Ref.	Aa-3/AA	5.750	02/15/25		500,000		525,960
OK Devl. Finance Auth. (St. John Health Syst.) Rev. Ref.	Aa-3/AA	6.000	02/15/29		400,000		428,544
OK Devl. Finance Auth. OK Dept. of Corrections (McLoud Fac.) FGIC	Aaa/AAA	4.600	04/01/22		250,000		251,560
OK Devl. Finance Auth. OK Dept. of Corrections (McLoud Fac.) FGIC	Aaa/AAA	4.650	04/01/23		250,000		252,297
OK Devl. Finance Auth. OK State Higher Ed (Master Lease) FSA	Aaa/AAA	4.500	06/01/26		250,000		248,360
OK Housing Finance Agency Single Family Homeownership	Aaa/NR	5.250	09/01/21		140,000		141,361
*OK Housing Finance Agency Single Family Homeownership GNMA	Aaa/NR	5.375	03/01/20		80,000		81,165
OK Housing Finance Agency Single Family Homeownership GNMA/FNMA	Aaa/NR	5.850	09/01/20		50,000		50,586
#OK State G.O. (OK Building Commission) FGIC	Aaa/AAA	5.000	07/15/18		1,600,000		1,685,936
*OK State Indl. Finance Auth. G.O.	Aa-3/NR	6.050	02/01/15		285,000		289,680
OK State Municipal Power Auth. Rev. MBIA	Aaa/AAA	5.750	01/01/24		2,230,000		2,458,976
OK State Student Loan Auth.	A/NR	6.350	09/01/25		280,000		301,831
*OK State Student Loan Auth.	Aaa/AAA	5.625	06/01/31		685,000		725,607
OK State Student Loan Auth.  MBIA	Aaa/AAA	5.300	12/01/32		450,000		470,061
OK State Turnpike Auth.  FGIC	Aaa/AAA	5.500	01/01/07		300,000		304,524
OK State Turnpike Auth.  FGIC	Aaa/AAA	5.000	01/01/23		165,000		171,169
OK State Turnpike Auth.  FGIC	Aaa/AAA	5.250	01/01/12		225,000		231,448
OK State Turnpike Auth. Rev. FGIC	Aaa/AAA	5.250	01/01/28		430,000		443,622
OK State Turnpike Auth. Rev. FGIC	Aaa/AAA	5.000	01/01/28		120,000		122,615
OK State Turnpike Auth. Rev. MBIA-IBC	Aaa/AAA	4.750	01/01/24		140,000		142,448
OK State Water (Loan Program) Rev.	NR/NR	5.400	09/01/15		105,000		107,546
*OK State Water (Loan Program) Rev.	NR/AAA	5.100	09/01/16		415,000		427,711
OK State Water Resources Board Rev.	NR/NR	5.050	10/01/22		200,000		211,146
OK State Water Resources Board Rev.	NR/NR	5.125	10/01/27		500,000		529,180
OK State Water Resources Board Rev.	NR/AAA	4.625	10/01/18		435,000		441,451
OK State Water Resources Loan Rev.	NR/AAA	5.100	10/01/27		500,000		531,685
OK Transportation Auth. Turnpike Sys. Rev. AMBAC	Aaa/AAA	5.000	01/01/21		100,000		104,015
Oklahoma City, OK  MBIA	Aaa/AAA	4.250	03/01/22		360,000		352,912
Oklahoma City, OK Public Auth. (OKC Fairgrounds Fac.) FGIC	Aaa/AAA	5.500	10/01/19		250,000		274,858
Oklahoma City, OK Water Utility Trust (Water & Sewer) Rev. FGIC	Aaa/AAA	5.000	07/01/29		425,000		445,349
#Okmulgee Public Works Auth. Capital Improvement Rev. MBIA	Aaa/AAA	5.125	08/01/30		750,000		787,800
Okmulgee Public Works Auth. Capital Improvement Rev. MBIA	Aaa/AAA	4.800	10/01/27		500,000		517,520
Rural Enterprises, OK Inc. Okmulgee Student Housing Proj. Series A ALA	NR/A	5.625	12/01/20		140,000		147,151
Rural Enterprises, OK Inc. OK Govt. Fin. (Cleveland Cty. Hlth.) MBIA	Aaa/NR	5.000	11/01/21		250,000		258,980
Rural Enterprises, OK Inc. Okmulgee Student Housing Proj. ACA	NR/A	5.750	12/01/30		250,000		261,055
Rural Enterprises, OK Inc. Okmulgee Student Housing Proj. Series A ACA	NR/A	5.700	12/01/25		220,000		230,635
Rural Enterprises, OK Inc. Student Hsg. (Connors College) ACA	NR/A	5.550	11/01/21		250,000		262,677
Rural Enterprises, OK Inc. Student Hsg. (Connors College) ACA	NR/A	5.650	11/01/31		375,000		391,912
Rural Enterprises, OK Inc. USAOF Student Housing ACA	NR/A	5.550	11/01/21		250,000		262,677
Rural Enterprises, OK Inc. USAOF Student Housing ACA	NR/A	5.650	11/01/31		250,000		261,275
Sapulpa Municipal Authority Utility Rev. FSA	Aaa/AAA	5.125	01/01/32		250,000		261,904
Texas Cty., OK Dev. Auth. (OPSU Student Hsg.) ACA	NR/A	5.250	11/01/23		250,000		258,390
Tulsa Cty, OK Indl. Auth. Recreation Facs.	NR/AA-	4.700	09/01/24		500,000		503,970
Tulsa, OK General Obligation	Aa/AA	4.500	03/01/23		700,000		699,356
Tulsa, OK General Obligation	Aa/AA	4.500	03/01/26		1,035,000		1,032,930
University of OK Board of Regents (Multi Facs.) Rev. MBIA	Aaa/NR	4.750	06/01/29		250,000		255,426
University of OK Board of Regents (Research Fac.) Rev.	Aaa/NR	4.800	03/01/28		670,000		691,426
University of OK Board of Regents Student Hsg. Rev. FGIC	Aaa/NR	5.000	11/01/27		1,000,000		1,048,910
University of OK Student Hsg. (Cameron Univ.) Rev. AMBAC	Aaa/AAA	5.500	07/01/23		250,000		271,415
TOTAL OKLAHOMA MUNICIPAL BONDS (COST: $41,040,890)						$	42,018,753
SHORT-TERM SECURITIES (3.8%)					Shares
Wells Fargo Advantage National Tax-Free Money Market					1,486,000	$	1,486,000
Goldman Sachs Financial Square Tax-Free Money Market					176,386		176,386
TOTAL SHORT-TERM SECURITIES (COST: $1,662,386)						$	1,662,386
TOTAL INVESTMENTS IN SECURITIES (COST: $42,703,276)						$	43,681,139
OTHER ASSETS LESS LIABILITIES							(118,109)
NET ASSETS						$	43,563,030

 

* Indicates bonds are segregated by the custodian to cover when-issued or delayed delivery purchases.

As of July 31, 2006, the Fund has three when-issued purchases:

100,000 of OK Capital Impvt. Auth. (OK St. Bureau of Investigation); 4.375%; 07/01/22

100,000 of OK Capital Impvt. Auth. (OK St. Bureau of Investigation); 4.375%; 07/01/23

200,000 of OK Capital Impvt. Auth. (OK St. Bureau of Investigation); 4.500%; 07/01/24 

# Indicates bonds are segregated by the custodian to cover initial margin requirements. 

Non-rated (NR) securities in the Fund were investment grade when purchased. 

The accompanying notes are an integral part of these financial statements.

Financial Statements  July 31, 2006 

Statement of Assets and Liabilities  July 31, 2006 

ASSETS
	Investment in securities, at value (cost: $42,703,276)		$	43,681,139
	Accrued interest receivable			499,185
	Accrued dividends receivable			3,648
	Prepaid expenses			5,071
		Total Assets	$	44,189,043
LIABILITIES
	Dividends payable		$	127,748
	Payable to affiliates			35,513
	Accrued expenses			9,539
	Payable for fund shares redeemed			56,928
	Security purchases payable			396,285
		Total Liabilities	$	626,013
NET ASSETS			$	43,563,030
Net assets are represented by:
	Paid-in capital		$	45,065,331
	Accumulated undistributed net realized gain (loss) on investments and futures			(2,482,648)
	Accumulated undistributed net investment income			2,484
	Unrealized appreciation (depreciation) on investments			977,863
		Total amount representing net assets applicable to 3,932,533 outstanding shares of no par common stock (unlimited shares authorized)	$	43,563,030
Net asset value per share			$	11.08
Public offering price (based on sales charge of 4.25%)			$	11.57

 

The accompanying notes are an integral part of these financial statements. 

Financial Statements  July 31, 2006

Statement of Operations  For the year ended July 31, 2006 

INVESTMENT INCOME
	Interest		$	1,714,024
	Dividends			34,667
		Total Investment Income	$	1,748,691
EXPENSES
	Investment advisory fees		$	190,746
	Distribution (12b-1) fees			95,373
	Transfer agent fees			49,986
	Administrative service fees			38,149
	Accounting service fees			43,141
	Custodian fees			5,503
	Registration and filing fees			1,450
	Transfer agent out-of-pocket expense			651
	Trustees fees			3,451
	Reports to shareholders			3,932
	Professional fees			13,390
	Insurance expense			1,192
	Audit fees			5,523
	Legal fees			1,399
		Total Expenses	$	453,886
	Less expenses waived or absorbed by the Fund’s manager			(60,854)
		Total Net Expenses	$	393,032
NET INVESTMENT INCOME			$	1,355,659
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES
	Net realized gain (loss) from:
	Investment transactions		$	(9,094)
	Futures transactions			798,747
	Net change in unrealized appreciation (depreciation) of:
	Investments			(342,707)
	Futures			(133,681)
		Net Realized And Unrealized Gain (Loss) On Investments And Futures	$	313,265
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS			$	1,668,924

 

The accompanying notes are an integral part of these financial statements.

Financial Statements  July 31, 2006 

Statement of Changes in Net Assets

For the year ended July 31, 2006, and the year ended July 29, 2005

				For The Year Ended July 31, 2006		For The Year Ended July 29, 2005
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
	Net investment income		$	1,355,659	$	1,295,748
	Net realized gain (loss) on investment and futures transactions			789,653		(1,576,249)
	Net change in unrealized appreciation (depreciation) on investments and futures			(476,388)		1,333,493
		Net Increase (Decrease) in Net Assets Resulting From Operations	$	1,668,924	$	1,052,992
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
	Dividends from net investment income ($.39 and $.40 per share, respectively)		$	(1,354,904)	$	(1,295,062)
	Distributions from net realized gain on investment and futures transactions ($.00 and $.00 per share, respectively)			0		0
		Total Dividends and Distributions	$	(1,354,904)	$	(1,295,062)
CAPITAL SHARE TRANSACTIONS
	Proceeds from sale of shares		$	15,763,169	$	3,748,580
	Proceeds from reinvested dividends			576,842		617,406
	Cost of shares redeemed			(7,978,446)		(4,708,343)
		Net Increase (Decrease) in Net Assets Resulting From Capital Share Transactions	$	8,361,565	$	(342,357)
TOTAL INCREASE (DECREASE) IN NET ASSETS			$	8,675,585	$	(584,427)
NET ASSETS, BEGINNING OF PERIOD				34,887,445		35,471,872
NET ASSETS, END OF PERIOD			$	43,563,030	$	34,887,445
Undistributed Net Investment Income			$	2,484	$	1,731

 

The accompanying notes are an integral part of these financial statements.

Notes to Financial Statements  July 31, 2006 

Note 1.  ORGANIZATION

Business operations - Oklahoma Municipal Fund (the “Fund”) is an investment portfolio of Integrity 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 six portfolios are offered.  Integrity 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 state 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 Integrity Money Management.  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 sec urity 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. 

Repurchase agreements – In connection with transactions in repurchase agreements, it is the Fund’s policy that its custodian take possession of the underlying collateral securities, the fair value of which exceeds the principal amount of the repurchase transaction, including accrued interest, at all times.  If the seller defaults, and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited. 

When-issued securities – The Fund may purchase securities on a when-issued basis.  Payment and delivery may take place after the customary settlement period for that security.  The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated.  The value of the securities purchased on a when-issued basis are identified as such in the Fund’s Schedule of Investments.  With respect to purchase commitments, the Fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment.  Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract’s terms, or if the issuer does not issue the securities due to political, economic, or other factors.

Contingent Deferred Sales Charge (“CDSC”) – In the case of investments of $1 million or more, a 1.00% CDSC may be assessed on shares redeemed within 12 months of purchase (excluding shares purchased with reinvested dividends and/or distributions). 

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.  Distributions during the year ended July 31, 2006, were characterized as tax-exempt for tax purposes. 

The tax character of distributions paid was as follows: 

			July 31, 2006		July 29, 2005
Tax-exempt Income		$	1,354,904	$	1,295,062
Ordinary Income			0		0
Long-term Capital Gains			0		0
	Total	$	1,354,904	$	1,295,062

 

As of July 31, 2006, the components of accumulated earnings/(deficit) on a tax basis were as follows: 

Undistributed Ordinary Income	Undistributed Long-Term Capital Gains	Accumulated Earnings	Accumulated Capital and Other Losses	Unrealized Appreciation/ (Depreciation)	Total Accumulated Earnings/(Deficit)
$0	$0	$0	($2,482,648)	$980,347	($1,502,301)

 

The Fund has unexpired capital loss carryforwards for tax purposes as of July 31, 2006, totaling $2,482,648, 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
2010	$	375,368
2011	$	412,304
2012	$	547,833
2013	$	1,147,143

 

For the year ended July 31, 2006, the Fund made no permanent reclassifications to reflect tax character.  Reclassifications to paid-in capital relate primarily to expiring capital loss carryforwards. 

Net capital losses incurred after October 31, and within the tax year are deemed to arise on the first business day of the Funds’ next taxable year.  For the year ended July 31, 2006, the Fund deferred to August 1, 2006 post October capital losses, post October currency losses and post October passive foreign investment company losses of $0. 

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.  

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 app reciation (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, 2006, there were unlimited shares of no par authorized; 3,932,533 and 3,172,765 shares were outstanding at July 31, 2006, and July 29, 2005, respectively. 

Transactions in capital shares were as follows: 

	Shares
	For The Year Ended July 31, 2006	For The Year Ended July 29, 2005
Shares sold	1,433,102	338,746
Shares issued on reinvestment of dividends	52,488	55,833
Shares redeemed	(725,822)	(425,961)
Net increase (decrease)	759,768	(31,382)

Note 4.  INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES

Integrity Money Management, the Fund’s investment adviser; Integrity Funds Distributor, the Fund’s underwriter; and Integrity Fund Services, the Fund’s transfer, accounting, and administrative services agent, are subsidiaries of Integrity Mutual Funds, Inc., the Fund’s sponsor. 

The Fund has engaged Integrity Money Management 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 $129,892 of investment advisory fees after partial waiver for the year ended July 31, 2006.  The Fund has a payable to Integrity Money Management of $14,281 at July 31, 2006 for investment advisory fees.  Certain officers and trustees of the Fund are also officers and directors of the investment adviser. 

Under the terms of the advisory agreement, the investment adviser has agreed to pay all expenses of the Fund (excluding taxes and brokerage fees and commissions, if any) that exceed 1.25% of the Fund’s average daily net assets on an annual basis up to the amount of the investment advisory and management fee.  The investment adviser and underwriter may also voluntarily waive fees or reimburse expenses not required under the advisory or other contracts from time to time.  Accordingly, after fee waivers and expense reimbursements, the Fund’s total annual operating expenses were 1.03% for the year ended July 31, 2006. 

Principal Underwriter and Shareholder Services

Integrity Funds Distributor serves as the principal underwriter for the Fund.  The Fund has adopted a distribution plan for each class of shares as allowed by Rule 12b-1 of the 1940 Act.  Distribution plans permit the Fund to reimburse its principal underwriter for costs related to selling shares of the Fund and for various other services.  These costs, which consist primarily of commissions and service fees to broker-dealers who sell shares of the Fund, are paid by shareholders through expenses called “Distribution Plan expenses.”  The Fund currently pays an annual distribution fee of up to 0.25% of the average daily net assets of the class.  Distribution Plan expenses are calculated daily and paid monthly.  The Fund has recognized $95,373 of distribution fees for the year ended July 31, 2006.  The Fund has a payable to Integrity Funds Distributor of $9,036 at July 31, 2006 for distribution fees. 

Integrity Fund Services 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 $25 million, and 0.10% of the Fund’s net assets in excess of $50 million, with a minimum of $1,500 per month plus reimbursement of out-of-pocket expenses.  An additional fee with a minimum of $500 per month is charged for each additional share class.  The Fund has recognized $49,986 of transfer agent fees and expenses for the year ended July 31, 2006.  The Fund has a payable to Integrity Fund Services of $4,642 at July 31, 2006 for transfer agent fees.  Integrity Fund Services 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 av erage 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, together with reimbursement of out-of-pocket expenses.  An additional minimum fee of $500 per month is charged by Integrity Fund Services for each additional share class.  The Fund has recognized $43,141 of accounting service fees for the year ended July 31, 2006.  The Fund has a payable to Integrity Fund Services of $3,807 at July 31, 2006 for accounting service fees.  Integrity Fund Services also acts as administrator for the Fund.  The Fund pays to Integrity Fund Services a monthly fee calculated at the rate of 0.10% of average daily net assets with a minimum of $1,500 per month plus out-of-pocket expenses.  An additional minimum fee of $500 per month is charged by Integrity Fund Services for each additional share class.  The Fund has recognized $38,149 of administrative service fees for the year ended July 31, 200 6.  The Fund has a payable to Integrity Fund Services of $3,614 at July 31, 2006 for administrative service fees. 

Note 5.  INVESTMENT SECURITY TRANSACTIONS

The cost of purchases and proceeds from the sales of investment securities (excluding short-term securities) aggregated $10,839,040 and $1,684,411, respectively, for the year ended July 31, 2006. 

Note 6.  INVESTMENT IN SECURITIES

At July 31, 2006, the aggregate cost of securities for federal income tax purposes was substantially the same for financial reporting purposes at $42,703,276.  The net unrealized appreciation of investments for financial reporting purposes based on the cost was $977,863, which is comprised of $1,158,825 aggregate gross unrealized appreciation and $180,962 aggregate gross unrealized depreciation.  Differences between financial reporting-basis and tax-basis unrealized appreciation/depreciation are due to differing treatment of market discount. 

Financial Highlights July 31, 2006 

Selected per share data and ratios for the period indicated 

					For The Year Ended July 31, 2006		For The Year Ended July 29, 2005		For The Year Ended July 30, 2004		For The Year Ended July 31, 2003		For The Year Ended July 31, 2002
NET ASSET VALUE, BEGINNING OF PERIOD				$	11.00	$	11.07	$	11.09	$	11.54	$	11.47
Income from Investment Operations:
		Net investment income		$	.39	$	.40	$	.42	$	.49	$	.55
		Net realized and unrealized gain (loss) on investment and futures transactions			.08		(.07)		(.02)		(.45)		.07
			Total Income (Loss) From Investment  Operations	$	.47	$	.33	$	.40	$	.04	$	.62
Less Distributions:
		Dividends from net investment income		$	(.39)	$	(.40)	$	(.42)	$	(.49)	$	(.55)
		Distributions from net capital gains			.00		.00		.00		.00		.00
			Total Distributions	$	(.39)	$	(.40)	$	(.42)	$	(.49)	$	(.55)
	NET ASSET VALUE, END OF PERIOD			$	11.08	$	11.00	$	11.07	$	11.09	$	11.54
	Total Return				4.39%(A)		3.02%(A)		3.67%(A)		0.28%(A)		5.46%(A)
	RATIOS/SUPPLEMENTAL DATA:
		Net assets, end of period (in thousands)		$	43,563	$	34,887	$	35,472	$	31,799	$	21,995
		Ratio of net expenses (after expense assumption) to average net assets			1.03%(B)		0.98%(B)		0.93%(B)		0.65%(B)		0.51%(B)
		Ratio of net investment income to average net assets			3.55%		3.60%		3.77%		4.21%		4.69%
		Portfolio turnover rate			4.65%		8.69%		10.70%		9.39%		15.77%

 

(A) Excludes maximum sales charge of 4.25%.

(B) During the periods indicated above, Integrity Mutual Funds, Inc. or Integrity Money Management assumed/waived expenses of $60,854, $81,636, $87,525, $124,432, and $137,514, respectively.  If the expenses had not been assumed/waived, the annualized ratio of total expenses to average net assets would have been 1.19%, 1.20%, 1.19%, 1.11%, and 1.19%, respectively. 

Total return represents the rate that an investor would have earned or lost on an investment in the Fund assuming reinvestment of all dividends and distributions. 

The accompanying notes are an integral part of these financial statements.

Tax Information For The Year Ended July 31, 2006 (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 of Record	Payment Date		From Net Investment Income	From Net Realized Short-Term Gains	From Net Realized Long-Term Gains
August 31, 2005	August 31, 2005	$	.034181	-	-
September 30, 2005	September 30, 2005	$	.033206	-	-
October 31, 2005	October 31, 2005	$	.033109	-	-
November 30, 2005	November 30, 2005	$	.033780	-	-
December 30, 2005	December 30, 2005	$	.033663	-	-
January 31, 2006	January 31, 2006	$	.031507	-	-
February 28, 2006	February 28, 2006	$	.031623	-	-
March 31, 2006	March 31, 2006	$	.031907	-	-
April 28, 2006	April 28, 2006	$	.030624	-	-
May 31, 2006	May 31, 2006	$	.034750	-	-
June 30, 2006	June 30, 2006	$	.032690	-	-
July 31, 2006	July 31, 2006	$	.032451	-	-

 

Shareholders should consult their tax advisors.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  

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 Integrity Managed Portfolios), including the schedule of investments as of July 31, 2006,  the related statement of operations for the year then ended, the statement of changes in net assets for the years ended July 31, 2006 and July 29, 2005, and the financial highlights for the year ended July 31, 2006 and each of the four years in the period ended July 29, 2005.  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 the standards of the Public Company Accounting Oversight Board (United States). 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, 2006 by correspondence with the custodian and brokers. 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 audits provide 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 Integrity Managed Portfolios as of July 31, 2006, the results of its operations for the year then ended, the changes in its net assets for the 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 8, 2006

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 (the “Code”).
		(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 Code has been amended to remove references to the functions of the corporation and apply specifically to the Funds.
		(d)	The registrant did not grant any waivers, including implicit waivers, from any provisions of the Code to the PFO and PEO during the period covered by this report.
		(e)	Not applicable.
		(f)	See Item 12(a) regarding the filing of the Code of Ethics for the Principal Executive and Principal Financial Officers of the Integrity Funds and Integrity Mutual Funds, Inc.
Item 3)		Audit Committee Financial Expert.
		The Trust’s Board of Trustees has determined that Jerry Stai is an audit committee financial expert, as defined in paragraph (a)(2) of Item 3 of Form N-CSR. Mr. Stai is independent for purposes of Item 3 of Form N-CSR.
Item 4)		Principal Accountant Fees and Services.
		(a)	Audit fees include the amounts related to the 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.
				Audit Fees
				2006		$38,600
				2005		$37,400
		(b)	Audit-related fees are fees principally paid for professional services rendered for due diligence and technical accounting consulting and research.
				Audit-Related Fees
				2006		$4,800
				2005		$4,200
		(c)	Tax fees include amounts related to the preparation and review of the registrant’s tax returns.
				Tax Fees
				2006		$6,600
				2005		$6,600
		(d)	All Other Fees.
					None.
		(e)	(1)		The registrant’s audit committee has adopted policies and procedures that require the audit committee to pre-approve all audit and non-audit services provided to the registrant by the principal accountant.
			(2)		0% of the services described in paragraphs (b) through (d) of item 4 were not pre-approved by the audit committee. All of the services described in paragraphs (b) through (d) of item 4 were approved by the audit committee.
		(f)	All services performed on the engagement to audit the registrant’s financial statements for the most recent fiscal year end were performed by the principal accountant’s full-time permanent employees.
		(g)	None.
		(h)	The registrant’s independent auditor did not provide any non-audit services to the registrant’s investment adviser or any entity controlling, controlled by or controlled with the registrant’s investment adviser that provides ongoing services to the registrant.
Item 5)		Audit Committee of Listed Registrants.
			Not applicable.
Item 6)		Schedule of Investments.
			The Schedule of Investments is included in Item 1 of this Form N-CSR.
Item 7)		Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
			Not applicable.
Item 8)		Portfolio Managers of Closed-End Management Investment Companies.
			Not Applicable.
Item 9)		Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
			Not Applicable.
Item 10)		Submissions of Matters to a Vote of Security Holders.
			There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of directors in the last fiscal half-year.
Item 11)		Controls and Procedures.
		(a)	Based on their evaluation of the registrant’s disclosure controls and procedures as of a date within 90 days of the filing date of this Form N-CSRS (the “Report”), the registrant’s principal executive officer and principal financial officer believe that the disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effectively designed to ensure that information required to be disclosed by the registrant in the Report is recorded, processed, summarized and reported by the filing date, including ensuring that information required to be disclosed in the Report is accumulated and communicated to the registrant’s principal executive officer and principal financial officer who are making certifications in the Report, as appropriate, to allow timely decisions regarding required disclosure.
		(b)	There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the registrant's most recent fiscal half-year that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.
Item 12)		Exhibits.
		(a)	(1)		The registrant’s Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached hereto.
			(2)		Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 is filed and attached hereto.
		(b)	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is filed and attached hereto.
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.
By:	/s/Robert E. Walstad
	Robert E. Walstad
	President, Integrity Managed Portfolios
Date:	September 26, 2006
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.
By:	/s/Robert E. Walstad
	Robert E. Walstad
	President, Integrity Managed Portfolios
Date:	September 26, 2006
By:	/s/Laura K. Anderson
	Laura K. Anderson
	Treasurer, Integrity Managed Portfolios
Date:	September 26, 2006

CERTIFICATION
I, Robert E. Walstad, certify that:
1.		I have reviewed this report on Form N-CSR of Integrity Managed Portfolios;
2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4.		The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
		(a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
		(b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals;
		(c)		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation;
		(d)		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.		The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
		(a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to affect the registrant’s ability to record, process, summarize, and report financial information; and
		(b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
				Date:		September 26, 2006
				/s/Robert E. Walstad
				Robert E. Walstad
				President, Integrity Managed Portfolios
CERTIFICATION
I, Laura K. Anderson, certify that:
1.	I have reviewed this report on Form N-CSR of Integrity Managed Portfolios;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
	(a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals;
	(c)		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation;
	(d)		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	(a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to affect the registrant’s ability to record, process, summarize, and report financial information; and
	(b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
			Date:		September 26, 2006
			/s/Laura K. Anderson
			Laura K. Anderson
			Treasurer, Integrity Managed Portfolios

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Name of Issuer:				Integrity Managed Portfolios
In connection with the Report on Form N-CSR of the above-named issuer that is accompanied by this certification, the undersigned hereby certifies, to his knowledge, that:
	1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
	2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the issuer.
Date:			September 26, 2006
			/s/Robert E. Walstad
			Robert E. Walstad
			President, Integrity Managed Portfolios
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Name of Issuer:				Integrity Managed Portfolios
In connection with the Report on Form N-CSR of the above-named issuer that is accompanied by this certification, the undersigned hereby certifies, to her knowledge, that:
	1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
	2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the issuer.
Date:			September 26, 2006
			/s/Laura K. Anderson
			Laura K. Anderson
			Treasurer, Integrity Managed Portfolios