N-CSR
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: 811-08824
Integrity Fund of Funds, Inc.
(Exact name of registrant as specified in charter)
1 Main Street North, Minot, ND | | 58703 |
(Address of principal offices) | | (Zip code) |
Brent Wheeler and/or Kevin Flagstad, PO Box 500, Minot, ND 58702
(Name and address of agent for service)
Registrant's telephone number, including area code: 701-852-5292
Date of fiscal year end: December 31
Date of reporting period: June 30, 2010
Item 1. REPORTS TO STOCKHOLDERS.
[Logo]
INTEGRITY FUND OF FUNDS, INC.
Semi-Annual Report
June 30, 2010
| |
Investment Adviser
Viking Fund Management, LLC
PO Box 500
Minot, ND 58702 | Principal Underwriter
Integrity Funds Distributor, LLC*
PO Box 500
Minot, ND 58702 |
Transfer Agent
Integrity Fund Services, LLC
PO Box 759
Minot, ND 58702 | Custodian
Wells Fargo Bank, N.A.
Trust & Custody Solutions
801 Nicollet Mall, Suite 700
Minneapolis, MN 55479 |
|
|
*The Fund is distributed through Integrity Funds Distributor, LLC. Member FINRA |
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Enclosed is the report of the operations for the Integrity Fund of Funds, Inc. (the "Fund") for the six months ended June 30, 2010. The Fund's portfolio and related financial statements are presented within for your review.
The past few months during the period have provided plenty of opportunities to feel alarmed: Still gloomy unemployment and housing market statistics, the flash crash and worries that Greece's woes could prove contagious added up to a pretty scary quarter. Falling U.S. and Chinese manufacturing activity survey figures released for June provided further evidence that the expansion in the world's major economic poles may be fading, while the dramatic bull flattening of yield curves in the major Western economies driven by declines in both real yields and inflation expectations over recent weeks also appears to be signaling a deterioration in the cyclical outlook for the global economy.
With all these seemingly extraordinary factors, the 15% peak-to-trough equity decline has not been particularly unusual. Most economic expansions in the post-war era have involved at least one interim correction of around 15%, lasting anywhere between one month and nine months. Indeed the long U.S. economic boom between 1961 and 1969 included two corrections of over 20% in the otherwise 9% annualized price uptrend, other economic expansions in the late 70s, 80s and 90s have experienced major market downdrafts as a result of inflation outbreaks or regional financial crises, only to see the economic recoveries endure and the market reverse.
In the U.S., the recovery in payroll employment so far may have been disappointing, but labor income trends are far better. The combination of a lengthening work week and an upward trend in average hourly earnings has pushed private sector wage and salary incomes up 4.2%. Given the strong balance sheets of non-financial companies, we expect business activity and profitability to continue to rise.
With everyone focused on the global financial crisis and taking the view of financial Armageddon, it may be more appropriate to be looking at what is happening on Main Street rather than Wall Street and Washington. At times like these, it is important to understand where the real economic power resides, and that is with the people.
With the Federal Reserve's zero interest rate policy, cash is little more than a tactical asset, and with $8.7 trillion sitting in money market, saving and time-deposits, equities remain attractive.
The Integrity Fund of Funds ended the period -8.75%* versus the Standard & Poor's 500 Index's return of -6.65%. A factor contributing to the underperformance was the portfolio's 12% weighting in Funds with World Stock exposure. The recent sovereign debt issues in Europe have foreign equities underperforming the relative index. Recent additions to the portfolio include The Sequoia Fund, with the American Funds Capital Income Builder Fund deleted. Current portfolio sector breakdowns are as follows: Large Value 28%, Large Blend 27%, Large Growth 22%, World Stock 12% and Natural Resources 11%.
We'd like to express our appreciation to you again for your trust in our management, and take this opportunity to wish you and your families a healthy and successful 2010. If you would like more frequent updates, please visit the Fund's website at www.integrityvikingfunds.com for daily prices along with pertinent Fund information.
Sincerely,
Monte Avery
Senior Portfolio Manager
The views expressed are those of Monte Avery, Senior Portfolio Manager with Viking Fund Management, LLC ("Viking Fund Management", "VFM", or the "Adviser"). 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, the markets generally, or any of the funds in the Integrity Viking family of funds.
*Performance does not include applicable front-end or contingent deferred sales charges, which would have reduced the performance. The total annual fund operating expense ratio (before expense waivers and reimbursements and including acquired fund fees and expenses) as of the most recent fiscal year-end was 3.45%. The net annual fund operating expense ratio (after expense waivers and reimbursements and excluding acquired fund fees and expenses) as of the most recent fiscal year-end was 1.65%.
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 800-276-1262.
You should consider the Fund's investment objectives, risks, 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.
Comparison of change in value of a $10,000 investment in the Fund and the S&P 500 Index
| Fund without CDSC | S&P 500 Index |
12/31/99 | $10,000 | $10,000 |
12/31/00 | $9,101 | $9,090 |
12/31/01 | $7,140 | $8,009 |
12/31/02 | $5,628 | $6,239 |
12/31/03 | $7,241 | $8,029 |
12/31/04 | $7,921 | $8,902 |
12/31/05 | $8,493 | $9,340 |
12/31/06 | $9,692 | $10,815 |
12/31/07 | $10,356 | $11,409 |
12/31/08 | $6,374 | $7,188 |
12/31/09 | $8,416 | $9,090 |
6/30/10 | $7,680 | $8,485 |
Average Annual Total Returns for the periods ending June 30, 2010
| 1 year | 3 year | 5 year | 10 year | Since Inception
(January 3, 1995) |
Without CDSC | 10.39% | (9.75%) | (0.42%) | (2.93%) | 3.39% |
With CDSC (3.00% maximum) | 7.39% | (10.66%) | (0.42%) | (2.93%) | 3.39% |
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 800-276-1262.
You should consider the Fund's investment objectives, risks, 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 and graph above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions and redemptions of Fund shares.
The graph does not reflect the deduction of the maximum CDSC. Had the CDSC been included, performance would have been lower.
The graph comparing the Fund's performance to a benchmark index provides you with a general sense of how the Fund performed. To put this information in context, it may be helpful to understand the special differences between the two. The 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 to match the index. If they could, transaction costs and other expenses would be incurred. All Fund and benchmark returns include reinvested dividends.
The results prior to August 1, 2009 were achieved while the Fund was managed by a different investment adviser that used different investment strategies and techniques, which may have produced different investment results than those achieved by the current investment adviser.
SCHEDULE OF INVESTMENTS June 30, 2010 (unaudited)
| Quantity | | Market Value |
| | | |
MUTUAL FUNDS (97.4%) | | | |
| | | |
American Capital World Growth & Income Fund Class A | 12,489 | $ | 366,923 |
Davis New York Venture Class A | 14,008 | | 401,319 |
Dodge & Cox Stock Fund Class N | 3,202 | | 281,475 |
Fairholme Fund Class N | 27,102 | | 821,193 |
Fidelity Contra Fund Class N | 5,383 | | 298,183 |
Fidelity Dividend Growth Fund Class N | 14,022 | | 308,895 |
American Growth Fund of America Class A | 18,172 | | 456,841 |
MFS Value Fund Class A | 30,277 | | 579,201 |
Mutual Beacon Fund Class A | 22,017 | | 236,908 |
T. Rowe Price Dividend Growth Fund Class N | 12,759 | | 240,765 |
T. Rowe Price Equity Income Fund Class N | 21,875 | | 429,196 |
T. Rowe Price New Era Fund Class N | 19,834 | | 743,975 |
Sequoia Fund Class N | 1,435 | | 164,074 |
Templeton World Fund Class A | 19,431 | | 238,617 |
Templeton Growth Fund Class A | 18,536 | | 273,780 |
Vanguard Capital Opportunity Fund Class N | 29,416 | | 783,938 |
Yacktman Fund Class N | 33,793 | | 492,027 |
| | | |
TOTAL MUTUAL FUNDS (COST: $8,854,381) | | $ | 7,117,310 |
| | | |
SHORT-TERM SECURITIES (0.3%) | Shares | | |
Wells Fargo Avantage Investment Money Market 0.214% (COST: $215,170) | 215,170 | $ | 215,170 |
| | | |
TOTAL INVESTMENTS IN SECURITIES (COST: $9,069,551) | | $ | 7,332,480 |
OTHER ASSETS LESS LIABILITIES | | | (24,044) |
| | | |
NET ASSETS | | $ | 7,308,436 |
The accompanying notes are an integral part of these financial statements.
Statement of Assets and Liabilities June 30, 2010 (unaudited)
ASSETS | | |
Investments in securities, at cost | $ | 9,069,551 |
| | |
Investments in securities, at value | $ | 7,332,480 |
Cash | | 542 |
Accrued dividends receivable | | 4,169 |
Accrued interest receivable | | 25 |
Prepaid expenses | | 3,429 |
Total assets | $ | 7,340,645 |
| | |
LIABILITIES | | |
Accrued expenses | $ | 8,193 |
Payable for Fund shares redeemed | | 13,580 |
Payable to affiliates | | 10,436 |
Total liabilities | $ | 32,209 |
| | |
NET ASSETS | $ | 7,308,436 |
| | |
NET ASSETS ARE REPRESENTED BY: | | |
Capital stock outstanding, $.0001 par value, 1,000,000,000 shares authorized | $ | 11,825,903 |
Accumulated undistributed net realized gain (loss) on investments | | (2,733,668) |
Accumulated undistributed net investment income (loss) | | (46,788) |
Unrealized appreciation (depreciation) on investments | | (1,737,071) |
| | |
NET ASSETS | $ | 7,308,376 |
| | |
Shares outstanding | | 693,426 |
Net asset value per share | | $10.54 |
The accompanying notes are an integral part of these financial statements.
Statement of Operations For the six months ended June 30, 2010 (unaudited)
INVESTMENT INCOME | | |
Interest | $ | 133 |
Dividends | | 22,632 |
Total investment income | $ | 22,765 |
| | |
EXPENSES | | |
Investment advisory fees | $ | 37,938 |
Service fees | | 10,538 |
Transfer agent fees | | 8,977 |
Accounting service fees | | 14,108 |
Administrative service fees | | 7,216 |
Professional fees | | 1,788 |
Reports to shareholders | | 1,193 |
License, fees, and registrations | | 3,124 |
Audit fees | | 4,250 |
Directors' fees | | 782 |
Transfer agent out-of-pockets | | 692 |
Custodian fees | | 1,451 |
Legal fees | | 1,214 |
Insurance expense | | 277 |
Total expenses | $ | 93,548 |
Less expenses waived or reimbursed | | (23,995) |
Total net expenses | $ | 69,553 |
| | |
NET INVESTMENT INCOME (LOSS) | $ | (46,788) |
| | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS | | |
Net realized gain (loss) from investment transactions | $ | (157,910) |
Net change in unrealized appreciation (depreciation) of investments | | (498,981) |
Net realized and unrealized gain (loss) on investments | $ | (656,891) |
| | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | (703,679) |
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
| | Six Months Ended
June 30, 2010* | | Year Ended
December 31, 2009 |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS | | | | |
Net investment income (loss) | $ | (46,788) | $ | 2,100 |
Net realized gain (loss) from investment transactions | | (157,910) | | (53,827) |
Net change in unrealized appreciation (depreciation) on investments | | (498,981) | | 2,145,232 |
Net increase (decrease) in net assets resulting from operations | $ | (703,679) | $ | 2,093,505 |
| | | | |
DISTRIBUTIONS TO SHAREHOLDERS FROM | | | | |
Net investment income | $ | 0 | $ | (2,100) |
Net realized gain on investments | | 0 | | 0 |
Return of capital | | 0 | | 0 |
Total distributions | $ | 0 | $ | (2,100) |
| | | | |
CAPITAL SHARE TRANSACTIONS | | | | |
Proceeds from sale of shares | $ | 539,834 | $ | 1,400,000 |
Proceeds from reinvested dividends | | 0 | | 2,027 |
Cost of shares redeemed | | (979,478) | | (1,112,776) |
Net increase (decrease) in net assets resulting from capital share transactions | $ | (439,644) | $ | 289,251 |
| | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | $ | (1,143,323) | $ | 2,380,656 |
NET ASSETS, BEGINNING OF PERIOD | $ | 8,451,759 | $ | 6,071,103 |
NET ASSETS, END OF PERIOD | $ | 7,308,436 | $ | 8,451,759 |
| | | | |
Undistributed net investment income | $ | 0 | $ | 0 |
*Unaudited.
The accompanying notes are an integral part of these financial statements.
NOTES TO FINANCIAL STATEMENTS (unaudited)
NOTE 1: Organization
The Fund is registered under the Investment Company Act of 1940 as an open-end management investment company.
The Fund's objective is long-term capital appreciation and growth of income. The Fund seeks to achieve this objective by investing primarily in other open-end investment companies which, in turn, invest principally in equity securities.
NOTE 2: Summary of Significant Accounting Policies
Codification—In June 2009, the Financial Accounting Standards Board ("FASB") established the FASB Accounting Standards Codification(TM) (the "Codification") as the single source of authoritative accounting principles recognized by the FASB in the preparation of financial statements in conformity with generally accepted accounting principles ("GAAP"). The Codification supersedes existing non-grandfathered, non-SEC accounting and reporting standards. The Codification did not change GAAP but rather organized it into a hierarchy where all guidance within the Codification carries an equal level of authority. The Codification became effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Codification did not have a material effect on the Fund's financial statements.
Investment security valuation—Investments in mutual funds are valued at the net asset value ("NAV") per share most recently determined and reported by the respective mutual fund. Integrity Fund Services, LLC ("Integrity Fund Services" or "IFS") obtains such quotations from a pricing service. If the pricing service fails to receive the NAV from the underlying mutual fund, a daily news source from the internet will be used as the pricing source, along with a telephone call to the underlying mutual fund. If the NAV is unreportable by the underlying fund group on the current day, IFS will wait until the next business morning to obtain the price from the underlying fund group and then price and verify the NAV for the Fund.
Contingent deferred sales charge—Shares purchased on or before April 30, 2007, may be subject to a 1.50% CDSC if redeemed within five years. Shares purchased after April 30, 2007, may be subject to a 3.00% CDSC if redeemed within three years of purchase.
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 substantially all of its net investment income and any net realized gain on investments to its shareholders; therefore, no provision for income taxes is required.
For all open tax years and all major taxing jurisdictions, management of the Fund has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. Open tax years are those that are open for examination by taxing authorities (i.e., generally the last four tax year ends and the interim tax period since then). Furthermore, management of the Funds is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Security Transactions, Investment Income, Expenses and Distributions—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. Interest income and estimated expenses are accrued daily. Dividend income is recognized on the ex-dividend date. The Fund will declare and pay dividends from net investment income and any net realized capital gains at least annually. Dividends and distributions are reinvested in additional shares of the Fund at net asset value or paid in cash. Capital gains, when available, are distributed at least annually. Distributions are recorded 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 capital loss carryforwards and losses due to wash sales.
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.
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: Fair Value Measurements
Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in three broad levels: Level 1 inputs are based on quoted prices in active markets for identical securities. Level 2 inputs are based on significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) Level 3 inputs are based on significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments.) The following is a summary of the inputs used to value the Fund's investments as of June 30, 2010:
| | Level 1 | | Level 2 | | Level 3 | | Total |
Short-Term Securities | $ | 215,170 | $ | 0 | $ | 0 | $ | 215,170 |
Mutual Funds | | 7,117,310 | | 0 | | 0 | | 7,117,310 |
Total | $ | 7,332,480 | $ | 0 | $ | 0 | $ | 7,332,480 |
NOTE 4: Investment Transactions
The cost of purchases and proceeds from the sales of investment securities (excluding short-term securities) aggregated $1,600,000 and $1,109,139, respectively, for the six months ended June 30, 2010.
NOTE 5: Capital Share Transactions
Transactions in capital shares were as follows:
| Year Ended
June 30, 2010 | Year Ended
December 31, 2009 |
Shares sold | 46,167 | 150,134 |
Shares issued on reinvestment of dividends | 0 | 174 |
Shares redeemed | (84,195) | (112,780) |
Net increase (decrease) | (38,028) | 37,528 |
Shares outstanding | 693,426 | 731,454 |
NOTE 6: Income Tax Information
At June 30, 2010, the aggregate cost of securities for federal income tax purposes was substantially the same for financial reporting purposes at $8,854,381. The net unrealized depreciation of investments based on the cost was $1,737,071, which is comprised of $115,995 aggregate gross unrealized appreciation and $1,853,066 aggregate gross unrealized depreciation. Differences between financial reporting-basis and tax-basis unrealized appreciation/(depreciation) are due to differing treatment of wash sales.
The tax character of distributions paid was as follows:
| Six Months Ended June 30, 2010 | Year Ended December 31, 2009 |
Tax-exempt income | $ | 0 | $ | 0 |
Ordinary income | | 0 | | 2,100 |
Long-term capital gains | | 0 | | 0 |
| Total | $ | 0 | $ | 2,100 |
| | | | | |
As of December 31, 2009, the components of accumulated earnings/(deficit) on a tax basis were as follows:
Undistributed Ordinary Income | Undistributed Long-Term Capital Gains | Undistributed Accumulated Earnings | Accumulated Capital and Other Losses | Unrealized Appreciation/ (Depreciation)* | Total Accumulated Earnings/(Deficit) |
$0 | $0 | $0 | ($2,575,758) | ($1,238,090) | ($3,813,848) |
*Any difference between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to timing differences associated with wash sales.
Capital loss carryforwards may be used to offset future capital gains. The capital loss carryforwards amounts will expire in each of the years ended December 31 as shown in the following table.
Year | Unexpired Capital Losses |
2010 | $ | 1,709,000 |
2011 | $ | 513,913 |
2016 | $ | 299,017 |
2017 | $ | 53,828 |
Total | $ | 2,575,758 |
For the year ended December 31, 2009, the Fund made $446,079 in permanent reclassifications to reflect tax character.
NOTE 7: Investment Advisory Fees and Other Transactions with Affiliates
Viking Fund Management, the Fund's investment adviser; Integrity Funds Distributor, LLC ("Integrity Funds Distributor" or "IFD"), the Fund's underwriter; and Integrity Fund Services, the Fund's transfer, accounting, and administrative services agent; are subsidiaries of Corridor Investors, LLC ("Corridor Investors" or "Corridor"), the Fund's sponsor.
VFM provides investment advisory and management services to the Fund. The Investment Advisory Agreement (the "Advisory Agreement") provides for fees to be computed at an annual rate of 0.90% of the Fund's average daily net assets. The Fund has recognized $37,938 advisory fees for the six months ended June 30, 2010. The Fund has a payable to VFM of $6,186 at June 30, 2010. VFM has contractually agreed to waive its management fee and to reimburse expenses, other than extraordinary or non-recurring expenses and acquired fund fees and expenses, until April 30, 2011, so that the net annual operating expenses of the Fund do not exceed 1.65%. After this date, the expense limitations may be terminated or revised. An expense limitation lowers expense ratios and increases returns to investors. Certain Officers of the Fund are also Officers and Governors of VFM.
IFD serves as the principal underwriter for the Fund. The Fund currently pays an annual service fee of up to 0.25% of the average daily net assets of the Fund. IFD, in turn, pays dealers service fees for personal service to shareholders and/or the maintenance of shareholder accounts. The Fund has recognized $10,538 of service fees for the six months ended June 30, 2010. The Fund has a payable to IFD of $1,718 at June 30, 2010 for service fees. Certain Officers of the Fund are also Officers and Governors of IFD.
IFS acts as the Fund's transfer agent for a variable fee equal to 0.20% 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 plus reimbursement of out-of-pocket expenses. The Fund has recognized $1,866 of transfer agency fees after partial waiver for the six months ended June 30, 2010. The Fund has a payable to IFS of $220 at June 30, 2010 for transfer agency fees. IFS also acts as the Fund's accounting services agent for a monthly fee equal to the sum of a fixed fee of $2,000 and a variable fee equal to 0.05% of the Fund's average daily net assets on an annual basis for the Fund's first $50 million and at a lower rate on the average daily net assets in excess of $50 million. The Fund has recognized $2,970 of accounting service fees after partial waiver for the six months ended June 30, 2010. The Fund has a payable to IFS of $397 at June 30, 2010 for accounting service fees. IFS also acts as the Fund's administrative services agent for a variable fee equal to 0.15% 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 plus out-of-pocket expenses. The Fund has recognized $1,470 of administrative service fees after partial waiver for the six months ended June 30, 2010. The Fund has a payable to IFS of $165 at June 30, 2010 for administrative service fees. Certain Officers of the Fund are also Officers and Governors of IFS.
Selected per share data and ratios for the periods indicated
| Six | | | | | |
| Months | Year | Year | Year | Year | Year |
| Ended | Ended | Ended | Ended | Ended | Ended |
| 6/30/10* | 12/31/09 | 12/31/08 | 12/31/07 | 12/29/06 | 12/30/05 |
NET ASSET VALUE, BEGINNING OF PERIOD | $ | 11.55 | $ | 8.75 | $ | 14.23 | $ | 13.35 | $ | 11.74 | $ | 10.95 |
| | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | |
Net investment income (loss) | $ | (0.07) | $ | 0.00 | $ | 0.00 | $ | 0.05 | $ | 0.05 | $ | (0.04) |
Net realized and unrealized gain (loss) on investments | | (0.94) | | 2.80 | | (5.47) | | 0.86 | | 1.61 | | 0.83 |
Total from investment operations | $ | (1.01) | $ | 2.80 | $ | (5.47) | $ | 0.91 | $ | 1.66 | $ | 0.79 |
| | | | | | | | | | | | |
Less Distributions: | | | | | | | | | | | | |
Dividends from net investment income | $ | 0.00 | $ | 0.00 | $ | (0.01) | $ | (0.03) | $ | (0.05) | $ | 0.00 |
Distributions from net realized gains | | 0.00 | | 0.00 | | 0.00 | | 0.00 | | 0.00 | | 0.00 |
Returns of capital | | 0.00 | | 0.00 | | 0.00 | | 0.00 | | 0.00 | | 0.00 |
Total distributions | $ | 0.00 | $ | 0.00 | $ | (0.01) | $ | (0.03) | $ | (0.05) | $ | 0.00 |
| | | | | | | | | | | | |
NET ASSET VALUE, END OF PERIOD | $ | 10.54 | $ | 11.55 | $ | 8.75 | $ | 14.23 | $ | 13.35 | $ | 11.74 |
| | | | | | | | | | | | |
Total Return1 | (17.49%)3 | 32.03% | (38.45%) | 6.85% | 14.12% | 7.21% |
| | | | | | | | | | | | |
RATIOS/SUPPLEMENTAL DATA | | | | | | | | | | | | |
Net assets, end of period (in thousands) | $7,308 | $8,452 | $6,071 | $13,483 | $9,890 | $6,029 |
Ratio of expenses to average net assets after waivers2 | 1.65%3 | 1.65% | 1.65% | 1.65% | 1.65% | 1.65% |
Ratio of expenses to average net assets before waivers | 2.22%3 | 2.67% | 2.33% | 2.10% | 2.51% | 2.63% |
Ratio of net investment income to average net assets | (1.11%)3 | 0.03% | (0.02%) | 0.34% | 0.51% | (0.33%) |
Portfolio turnover rate | 3.41% | 16.36% | 2.46% | 19.38% | 16.47% | 1.65% |
1 | Excludes any applicable CDSC. |
2 | This row reflects the impact, if any, of fee waivers or reimbursements by the then-current investment adviser and/or affiliated service providers. |
3 | Annualized. |
* Unaudited.
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.
EXPENSE EXAMPLE (unaudited)
As a shareholder of the Funds, 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 Funds 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 one-half year period shown below and held for the entire one-half year period.
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 account value of $8,600 divided by $1,000 equals 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 | Ending | Expenses | |
| Account | Account | Paid | Annualized |
| Value | Value | During | Expense |
| 12/31/09 | 6/30/10 | Period* | Ratio |
| | | | |
Actual | $1,000.00 | $912.55 | $7.89 | 1.65% |
Hypothetical (5% return before expenses) | $1,000.00 | $1,016.54 | $8.32 | 1.65% |
| | | | |
*Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by the number of days in the one-half year period, and divided by the total number of days in the fiscal year (to reflect the one-half year period).
PROXY VOTING OF 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 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 the Fund's website at www.integrityvikingfunds.com. The information is also available from the Electronic Data Gathering Analysis and Retrieval ("EDGAR") database on the website of the Securities and Exchange Commission ("SEC") at www.sec.gov.
QUARTERLY PORTFOLIO SCHEDULE
Within 60 days of the end of its second and fourth fiscal quarters, the Fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports on the Form N-CSR(S). These reports are filed electronically with the SEC and are delivered to the shareholders of the Fund. 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. Information on the operation of the Public Reference Room may be obtained by calling 202-551-8090. You may also access this information from the Fund's website at www.integrityvikingfunds.com.
SHAREHOLDER INQUIRIES AND MAILINGS
Direct inquiries regarding the Funds to: Integrity Funds Distributor, LLC
PO Box 500
Minot, ND 58702
Phone: 800-276-1262 | Direct inquiries regarding account information to: Integrity Fund Services, LLC
PO Box 759
Minot, ND 58702
Phone: 800-601-5593 |
To reduce its expenses, the Fund may mail only one copy of its prospectus and each annual and semi-annual report to those addresses shared by two or more accounts. If you wish to receive additional copies of these documents, please call Integrity Funds Distributor at 800-276-1262 or contact your financial institution. The Distributor will begin sending you individual copies 30 days after receiving your request.
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Equity Funds
Williston Basin/Mid-North America Stock Fund
Integrity Growth & Income Fund
Viking Large-Cap Value Fund
Viking Small-Cap Value Fund
Corporate Bond Fund
Integrity High Income Fund
Specialty Fund
Integrity Fund of Funds
State-Specific Tax-Exempt Bond Funds
Viking Tax-Free Fund for North Dakota
Viking Tax-Free Fund for Montana
Kansas Municipal Fund
Kansas Insured Intermediate Fund
Maine Municipal Fund
Nebraska Municipal Fund
New Hampshire Municipal Fund
Oklahoma Municipal Fund
Integrity Viking Funds are sold by prospectus only. An investor should consider the investment objectives, risks, and charges and expenses of the investment company carefully before investing. The prospectus contains this and other information about the investment company. You may obtain a prospectus at no cost from your financial adviser or at www.integrityvikingfunds.com. Please read the prospectus carefully before investing.
Item 2. CODE OF ETHICS.
The information required in this Item is only required in an annual report on Form N-CSR.
Item 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The information required in this Item is only required in an annual report on Form N-CSR.
Item 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The information required by this Item is only required in an annual report on Form N-CSR.
Item 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable
Item 6. INVESTMENTS.
The Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form.
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. SUBMISSION 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-CSR (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 filed pursuant to Item 2 of the N-CSR is filed with the registrant's annual N-CSR. |
| | | |
| | (2) | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 is filed and attached hereto. |
| | | |
| | (3) | Not applicable. |
| | |
| (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.
Integrity Fund of Funds, Inc.
By: /s/ Shannon D. Radke
Shannon D. Radke
President
August 30, 2010
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/ Shannon D. Radke
Shannon D. Radke
President
August 30, 2010
By: /s/ Adam Forthun
Adam Forthun
Treasurer
August 30, 2010
