U.S. SECURITIES AND EXCHANGE COMMISSION
                         Washington, DC 20549

                             FORM 10-KSB

  [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                        EXCHANGE ACT OF 1934
             For the fiscal year ended December 31, 2001
                                 OR
[  ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
                        EXCHANGE ACT OF 1934

       For the transition period from ____________ to ____________

                    Commission File No.:  0-25958

ND HOLDINGS, INC.
(exact name of Registrant as specified in its charter)

North Dakota                                     45-0404061
(State or other jurisdiction of                (IRS Employer
incorporation or organization               Identification Number)

1 North Main
Minot, North Dakota 58703
(Address of principal executive offices)

Registrant's telephone number, including area code:  (701) 852-5292

Securities registered pursuant to Section 12(d) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  Common
Stock, no par value

Check whether the issuer:  (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
YES [X]    NO [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.  [  ]

The issuer's revenues for the year ended December 31, 2001 were $8,167,724.

On February 15, 2002, there were 6,694,740 shares of the Registrant's common
stock outstanding.

Aggregate market value of voting stock held by nonaffiliates of the registrant
as of February 15, 2002: $4,936,444.

Documents Incorporated by Reference

Portions of the Company's definitive Proxy Statement for the Annual Meeting of
Shareholders to be held on May 31, 2002 are incorporated by reference in
certain sections of Part III.

Transitional Small Business Disclosure Format:    YES  _____    NO __X__


                                   PART I

Item 1.  Description of Business

DEVELOPMENT OF BUSINESS

ND Holdings, Inc. ("the Company") is a holding company primarily engaged,
through various subsidiaries, in providing investment management, distribution,
shareholder services, fund accounting and other related administrative services
to the open-end investment companies known as "Integrity Mutual Funds" and
"Ranson Managed Portfolios," hereinafter collectively referred to as "the
Funds."  Integrity Mutual Funds currently consists of five (5) open-end
investment companies including ND Tax-Free Fund, Inc.("ND Tax-Free Fund"),
Montana Tax-Free Fund, Inc.("Montana Tax-Free Fund"), South Dakota Tax-Free
Fund, Inc. ("South Dakota Tax-Free Fund"), Integrity Fund of Funds, Inc.
("Integrity Fund of Funds") and Integrity Small-Cap Fund of Funds, Inc.
("Integrity Small-Cap Fund of Funds").  Ranson Managed Portfolios consists
of one open-end investment company containing four (4) separate portfolios
including The Kansas Municipal Fund, The Kansas Insured Intermediate Fund,
The Nebraska Municipal Fund, and The Oklahoma Municipal Fund. Sales of Fund
shares are marketed principally in Montana, Kansas, Oklahoma, North Dakota,
Nebraska and South Dakota.  The Company also sells mutual funds and insurance
products through another wholly-owned subsidiary, ARM Securities Corporation
("ARM Securities"), and prospectively through Capital Financial Services, Inc.
("CFS"), which the Company acquired in January of 2002.  The Company has also
become involved as an internet provider with a majority ownership in Magic
Internet Services, Inc. ("Magic Internet"). The Company continues to review
acquisition opportunities in other industries involving management services and
information processing.

As of December 31, 2001, total assets under management/service in the Funds was
approximately $318.3 million, compared to approximately $336.9 million as of
December 31, 2000 and approximately $364.1 million as of December 31, 1999.

The Company has been engaged in the financial services business since 1987. The
Company was incorporated September 22, 1987 as a North Dakota corporation by
Robert E. Walstad, Chief Executive Officer of the Company.  The Company's
offices are at 1 North Main Street, Minot, North Dakota 58703.  As of December
31, 2001, the Company had 36 full-time employees and 7 part-time employees,
consisting of officers, investment management, securities distribution,
shareholder services, data processing, law, accounting and clerical support
staff.

On January 5, 1996, the Company consummated the acquisition (the "Ranson
Acquisition") of substantially all of the assets and liabilities of The Ranson
Company, Inc., a corporation organized under the laws of the state of Kansas
and based in Wichita, Kansas.  The Ranson Company, Inc. provided investment
management and related services to the Ranson Managed Portfolios through its
subsidiary, Ranson Capital Corporation ("Ranson"), a registered investment
advisor and registered broker-dealer.  Ranson Managed Portfolios is an open-
end investment company registered with the Securities and Exchange Commission
(the "SEC").  At the time of the Ranson Acquisition, Ranson Managed Portfolios
consisted of three funds:  The Kansas Municipal Fund, The Kansas Insured
Intermediate Fund and The Nebraska Municipal Fund, totaling approximately
$184 million in assets under management.  Subsequent to the Ranson Acquisition,
the Company has managed Ranson Managed Portfolios on a unified basis with its
other business.  The purchase price paid at the closing of the Ranson
Acquisition was $6.2 million and was funded through a combination of existing
cash on hand and bank debt in the amount of approximately $1.5 million. The
bank debt was paid in full as of March 1998.

On December 6, 1996, the Company acquired the accounts of the Heartland
Nebraska Tax-Free Fund for cash and merged them into the Ranson Managed
Portfolios, The Nebraska Municipal Fund, through an exchange of shares. The
Heartland Portfolio was $10,299,543 in size at the time of the transaction.

On May 21, 1999, the Company acquired the accounts of the Lancaster Nebraska
Tax-Free Fund for cash and merged them into the Ranson Managed Portfolios, The
Nebraska Municipal Fund, through an exchange of shares. The Lancaster Portfolio
was $12,877,367 in size at the time of the transaction.

On October 1, 1999, the Company acquired for cash and common stock 51% control
of Magic Internet Services, Inc.  Magic Internet operates as an internet
service provider to individuals and businesses in the local calling area.

On May 25, 2000, the Company acquired for cash, ARM Securities Corporation, a
broker-dealer engaged primarily in the sale of mutual funds and insurance
products. The broker-dealer supports approximately 60 registered
representatives operating as independent contractors with 23 representatives in
a single office in Fresno, CA and the remainder in scattered locations in
Minnesota, Iowa and South Dakota.

On September 14, 2001, the Company acquired for common stock, North Dakota
Investment Advisors, Inc., a registered investment advisor authorized to
provide investment advisory services in the state of North Dakota for a fee.

On January 15, 2002, the Company acquired all the assets of Capital Financial
Services, Inc., a full-service brokerage firm based in Madison, Wisconsin.  The
broker-dealer specializes in providing investment products and services to
independent investment representatives, financial planners, and investment
advisors and currently supports approximately 90 investment representatives and
investment advisors.

THE COMPANY'S SUBSIDIARIES

The Company derives most of its income from two lines of business, one being
the providing of investment management, distribution, shareholder services,
accounting and related services to the Funds and other clients. The other
provides order processing, regulatory oversight, concession processing, and
other related services to registered securities representatives transacting
securities business for their clients. As a result, the Company is economically
dependent on the Funds, the representatives and others for substantially all of
its revenue and income. These businesses are conducted through the wholly-owned
subsidiary companies described below. Revenues generated by the subsidiaries
supporting activities surrounding the Funds are derived primarily from fees
based on the level of assets under management. Revenues generated by the
support of securities sales are derived primarily through a sharing of sales
concessions paid by the products being sold to clients. Other business
opportunities have been considered.

ND Money  Management, Inc.

ND Money Management, Inc. ("ND Money Management") is registered as an
investment advisor with the SEC under the Investment Advisers Act of 1940
(the "Advisers Act").  ND Money Management provides investment advisory
services under investment advisory agreements with ND Tax-Free Fund, Montana
Tax-Free Fund, South Dakota Tax-Free Fund, Integrity Fund of Funds, and
Integrity Small-Cap Fund of Funds.  As of December 31, 2001, ND Money
Management managed approximately $135.1 million, representing approximately
42% of the Company's total assets under management/service.

ND Capital, Inc.

ND Capital, Inc. ("ND Capital") is registered with the SEC as a broker-dealer
and is a member of the National Association of Securities Dealers, Inc. (the
"NASD") and serves as principal underwriter and distributor for ND Tax-Free
Fund, Montana Tax-Free Fund, South Dakota Tax-Free Fund, and Integrity Small-
Cap Fund of Funds.  ND Capital earns Rule 12b-1 fees pursuant to Rule 12b-1
plans adopted by each such Fund and contingent deferred sales charges ("CDSCs")
from shareholders of such Funds if they redeem their shares within 5 years
after their purchase.  ND Capital began as principal underwriter for Investors
Research Fund of Santa Barbara, California on December 1, 1998.  ND Capital
earned underwriting fees in connection with sale of such Investors Research
Fund shares effected by ND Capital's sales representatives and the
underwriter's portion of front-end sales load ("FESLs") in connection with
sales of such shares effected by other broker-dealers.  ND Capital earned Rule
12b-1 fees pursuant to Rule 12b-1 plans adopted by Investors Research Fund.
On December 31, 1999, ND Capital terminated the underwriting agreement with
Investors Research Fund due to significant changes in the Fund's structure. As
principal underwriter for Integrity Fund of Funds, ND Capital earns CDSCs from
shareholders of the Fund if they redeem their shares within 5 years after their
purchase.  ND Capital also earns commission revenue in connection with sales of
shares of outside mutual funds and in connection with effecting other
securities transactions.

Ranson Capital Corporation

Ranson Capital Corporation ("Ranson") is registered with the SEC as an
investment advisor and a broker-dealer.  It is also a member of the NASD.
Ranson provides investment advisory services to the Ranson Managed Portfolios
under an investment advisory agreement.  As of December 31, 2001, Ranson
managed approximately $183.2 million in assets, representing approximately 58%
of the Company's total assets under management/service.  Ranson also serves as
principal underwriter for the Ranson Managed Portfolios and earns Rule 12b-1
fees pursuant to Rule 12b-1 plans adopted by certain of the Ranson Managed
Portfolios and the underwriter's portion of FESLs in connection with sales of
shares of the Ranson Managed Portfolios effected by other broker-dealers.

ND Resources, Inc.

ND Resources, Inc. ("ND Resources") is registered with the SEC as a transfer
agent under the Securities Exchange Act of 1934.  ND Resources provides
shareholder recordkeeping services and acts as transfer agent and dividend-
paying agent for the Funds.  ND Resources also provides business management
services, including fund accounting, compliance and other related
administrative activities for the Funds.  ND Resources is compensated for
providing these services under agreements with each Fund, and is reimbursed
for out-of-pocket expenses. ND Resources has provided services to one other
fund group. As of February 16, 2001, that relationship was terminated due to
a reorganization of the fund group.

Magic Internet Services, Inc.

Magic Internet Services, Inc. ("Magic Internet") operates as an internet
service provider to individuals and businesses in the local calling area.
Magic Internet provides subscribers with full support including servicing
hardware and technical support for software problems. Magic Internet also
provides DSL, wireless, satellite, and website building and hosting services.

ARM Securities Corporation

ARM Securities Corporation ("ARM Securities") is registered with the SEC as a
broker-dealer and is registered with the NASD. Acquired from ARM Financial
Group, Inc., a Louisville, Kentucky corporation in May of 2000, the broker-
dealer offers mutual funds and insurance products to the public through
approximately 60 registered representatives. ARM Securities earns commission
revenue in connection with sales of these products and also 12b-1 fees paid
by the distributors of these products.

Integrity Investment Advisors, Inc.

Integrity Investment Advisors, Inc. ("Integrity Investment Advisors") is
registered with the SEC and the state of North Dakota as a registered
investment advisor. Acquired in September of 2001, Integrity Investment
Advisors is authorized to provide investment advisory services to individuals
or other entities. The registered investment advisor earns fee revenue in
connection with providing these services.


Capital Financial Services, Inc.

On January 15, 2002 the Company acquired all the assets of Capital Financial
Services, Inc. ("CFS"), a full-service brokerage firm based in Madison,
Wisconsin. CFS is registered with the SEC as an investment advisor and broker-
dealer and also with the NASD as a broker-dealer. The broker-dealer and
investment advisor specializes in providing investment products and services
to independent investment representatives, financial planners, and investment
advisors and currently supports approximately 90 investment representatives
and investment advisors.

DESCRIPTION OF BUSINESS

Investment Advisory Services

ND Money Management and Ranson act as the investment advisor to the Integrity
Mutual Funds and Ranson Managed Portfolios, respectively, pursuant to
investment advisory agreements with such Funds.  ND Money Management and
Ranson generally supervise and implement the Funds' investment activities,
including deciding which securities to buy and sell. They also decide which
broker-dealers through, or with which, to effect Fund securities transactions.

Generally, each Fund pays ND Money Management or Ranson an investment advisory
fee payable monthly based on the Fund's net assets.  Annual investment advisory
fees under the various investment advisory agreements are 0.50% of assets under
management in the case of Ranson Managed Portfolios, 0.90% of assets under
management in the case of Integrity Fund of Funds and Integrity Small-Cap Fund
of Funds and 0.60% of assets under management for the remaining Funds managed
by ND Money Management. Investment advisory fees are generally voluntarily
waived or reduced, and other Fund expenses may be absorbed by the investment
advisor for a period of time to ensure that the Funds have competitive fee
structures.

The investment advisory agreements pursuant to which ND Money Management and
Ranson provide investment advisory services continue in effect for successive
annual periods as long as such continuance is approved annually by (a) either
(i) a majority vote cast in person at a meeting of the relevant Fund's Board of
Directors or Trustees called for that purpose, or (ii) a vote of the holders
of a majority of the relevant Fund's outstanding voting securities, and (b) a
majority of the relevant Fund's directors or trustees who are not parties to
the investment advisory agreement or interested persons of the Funds or the
Company within the meaning of the Advisers Act.

Either party may terminate the investment advisory agreement without penalty
after specified written notice.  Each investment advisory  agreement also
automatically terminates in the event of its "assignment" as defined in the
Advisers Act. The termination of one or more investment advisory agreements
between ND Money Management or Ranson and the Funds would have a material
adverse impact on the Company.  To date, no such investment advisory agreements
have been terminated.

Investment advisory fees constituted 20% of the Company's consolidated
revenues in 2001.

Transfer Agency, Dividend Disbursement and Administrative Services

Transfer agency, dividend disbursement and other shareholder administrative
services are provided to the Funds and other clients by ND Resources.  ND
Resources receives fees from the Funds and others for providing such services.
As of December 31, 2001 such fees ranged from 0.09% to 0.16% per annum of
assets under management/service, depending on the size of the Fund.  In
addition, ND Resources provides accounting services to the Funds for which it
charges a base fee and an asset based charge ranging from 0.01% to 0.05% per
annum of assets under management/service depending on the size of the Fund.
Transfer agency, dividend disbursement, and administrative services fees
constituted 9% of the Company's consolidated revenues in 2001.



Distribution of Fund Shares

ND Capital acts as the principal underwriter and distributor of shares of ND
Tax-Free Fund, Montana Tax-Free Fund, South Dakota Tax-Free Fund, Integrity
Fund of Funds, and Integrity Small-Cap Fund of Funds pursuant to distribution
agreements with such Funds.  Pursuant to distribution agreements, Ranson acts
as the principal underwriter and distributor of shares of the Ranson Managed
Portfolios.  The distribution agreements generally provide that ND Capital and
Ranson shall distribute Fund shares and pay the expenses thereof.  Fund shares
are sold primarily by broker-dealers with whom ND Capital and Ranson have
entered into dealer sales agreements.  ND Capital also sells a limited  number
of Fund shares directly to investors.  The Company markets its Funds primarily
to the residents of the rural states in which the Company's Funds invest in
local bond issues.

Shares of Ranson Managed Portfolios are sold subject to FESLs ranging from
maximums of 2.75% (with respect to Kansas Insured Intermediate Fund) to 4.25%
(with respect to each of the other Ranson Managed Portfolios) of the public
offering price.  The applicable FESL is reduced as the amount invested
increases and is waived for certain categories of investors.  ND Capital or
Ranson (as applicable) earns the underwriter's portion of the FESL in
connection with sales of such Funds' shares effected by other broker-dealers.

Shares of ND Tax-Free Fund, Montana Tax-Free Fund, and South Dakota Tax-Free
Fund purchased as Class A shares, which were introduced in January 2000, are
subject to a maximum FESL of 4.25% of the public offering price. Shares of ND
Tax-Free Fund, Montana Tax-Free Fund, South Dakota Tax-Free Fund, Integrity
Fund of Funds, and Integrity Small-Cap Fund of Funds purchased as Class B
shares are not subject to a FESL at the time of purchase but are subject to a
maximum CDSC of 4%, with respect to all of such Funds (except for Integrity
Fund of Funds and Integrity Small-Cap Fund of Funds) and 1.5%, with respect to
Integrity Fund of Funds and Integrity Small-Cap Fund of Funds, of the amount
redeemed if shares are redeemed within 5 years after their purchase.  The CDSC
is not imposed on shares redeemed after such 5 year period.  The CDSC imposed
by ND Tax-Free Fund, Montana Tax-Free Fund and South Dakota Tax-Free Fund
ranges in steps from 4% during the first 2 years to 1% during the 5th year
after the purchase date.  The entire CDSC is earned by ND Capital in connection
with redemptions subject to the CDSC.

Shares subject to the CDSC (Class B shares) would automatically convert to
Class A shares (and would no longer be subject to the higher Rule 12b-1 fees)
approximately 8 years after the date on which such Class B shares were
purchased. The conversion would be made based on the relative net asset values
of Class A and Class B shares, without imposing any load, fee or other charge.
The fact that the new shares earn a lower 12b-1 fee could have an adverse
effect on revenues.

Each of the Funds (other than Kansas Insured Intermediate Fund and Integrity
Fund of Funds) has adopted a Rule 12b-1 plan pursuant to which ND Capital or
Ranson (as applicable) earns Rule 12b-1 fees in connection with its
distribution of Fund shares.  Rule 12b-1 fees are .25% per annum of the Fund's
average net assets (with respect to the applicable Ranson Managed Portfolios),
and .75% per annum of the Fund's average net assets (with respect to ND Tax-
Free Fund, Montana Tax-Free Fund, South Dakota Tax-Free Fund and Integrity
Small-Cap Fund of Funds.). ND Capital previously through 2000 waived Rule
12b-1 fees for ND Tax-Free Fund, Montana Tax-Free Fund and South Dakota Tax-
Free Fund in excess of .50% per annum.  ND Capital and Ranson (as applicable)
currently pay other broker-dealers 12b-1 shareholder servicing fees of between
..10% and .20% per annum on shareholder accounts of such broker-dealers.  ND
Capital retains Rule 12b-1 fees in excess of such amounts.

The 12b-1 Plans are established for an initial term of one year.  Thereafter,
they must be approved annually by the Board of Directors or trustees, including
a majority of the disinterested directors or trustees of each Fund.  Each Plan
is subject to termination at any time by a majority of the Fund's disinterested
directors or trustees or by the Fund's shareholders.

FESL, CDSC and Rule 12b-1 plan revenues constituted 14% of the Company's
consolidated revenues in 2001.
Brokerage Commissions

ARM Securities' primary source of revenue is commission revenue in connection
with sales of shares of mutual funds and insurance products.

ND Capital and Ranson also earn commission revenue in connection with sales of
shares of outside mutual funds and when acting as a broker in effecting other
securities transactions. Commission revenues constituted 49% of the Company's
consolidated revenues in 2001.

Internet Revenues

Magic Internet operates as an internet service provider to individuals and
businesses in the local calling area. Magic Internet provides subscribers with
full support including servicing hardware and technical support for software
problems. Magic Internet also provides DSL, wireless, satellite, and website
building and hosting services. Internet revenues constituted 8% of the
Company's consolidated revenues in 2001.

REGULATION

Virtually all aspects of the Company's businesses are subject to various
complex and extensive federal and state laws and regulations.  Regulated areas
include, but are not limited to, the effecting of securities transactions, the
financial condition of the Company's subsidiaries, recordkeeping and reporting
procedures, relationships with clients, and experience and training
requirements for certain employees.  The Company's subsidiaries are registered
with various federal and state government agencies, including the Securities
and Exchange Commission (the "SEC"), as well as the National Association of
Securities Dealers (the "NASD"), a self-regulatory industry organization.

ND Capital, Ranson and ARM Securities are registered broker-dealers, subject to
extensive regulation by the SEC, the NASD and state agencies in those states in
which ND Capital, Ranson and ARM Securities conduct business.  As broker-
dealers, ND Capital, Ranson and ARM Securities are subject to the Uniform Net
Capital Rule promulgated by the SEC under the Securities Exchange Act of 1934.
This rule requires that a broker-dealer must maintain certain minimum net
capital and that its aggregate indebtedness may not exceed specified
limitations.  ND Money Management and Ranson are registered with the SEC as
investment advisors under the Investment Advisers Act of 1940 and are subject
to regulation thereunder and certain state laws.  The Funds are also subject
to extensive regulation under the Investment Company Act of 1940 and, along
with ND Money Management, ND Capital, Ranson and ARM Securities, are subject
to periodic examinations by the SEC and NASD.

Federal and state laws and regulations, and the rules of the NASD, grant broad
powers to such regulatory agencies and organizations.  These include the power
to limit, restrict or prevent the Company from carrying on its business if it
fails to comply with such laws, regulations and rules.  Other possible
sanctions that may be imposed include the suspension of individual employees,
restrictions on the Company expanding its business or paying cash dividends,
the revocation of the investment advisor, broker dealer or transfer agent
registrations, expulsions, censures and/or fines.

Following routine books and records examinations by the SEC in 1997, ND Money
Management, Ranson, and the Funds received deficiency letters from the SEC
staff that outlined various compliance issues. ND Money Management, Ranson, and
the Funds responded to the letters and have implemented additional procedures
designed to ensure future compliance with applicable laws and regulations. In
late 1999, ND Money Management, Ranson, and the Funds were notified that the
Central Regional Office of the SEC had commenced a formal investigation
regarding the few remaining issues raised in the aforementioned letters.
Recently, following further document production and correspondence with the
SEC, ND Money Management, Ranson, and the Funds have been notified that the SEC
has completed their investigation. ND Money Management, Ranson, and
the Funds are now in the process of reaching a suitable resolution with the
SEC. The Company has incurred and anticipates that it will continue to incur
additional legal and other expenses in the future to ensure compliance. The
extent of such expenses, however, is not presently determinable.

To the extent that existing or future regulations affecting the sale of Fund
shares or their investment strategies cause or contribute to reduced sales of
Fund shares or impair the investment performance of the Funds, the Company's
aggregate assets under management and its revenues might be adversely affected.

Since 1993, the NASD rules have limited the amount of aggregate sales charges
which may be paid in connection with the purchase and holding of investment
company shares sold through broker-dealers.  The effect of the rule might be to
limit the amount of fees that could be paid pursuant to a Fund's 12b-1 Plan in
a situation where a Fund has no, or limited, new sales for a prolonged period
of time.

The officers, directors and employees of the Company may from time to time own
securities that are also owned by one or more of the Funds.  The Company's
internal policies with respect to individual investments by employees,
including officers and directors who are employed by the Company, require
prior clearance and reporting of some transactions and restrict certain
transactions so as to reduce the possibility of conflicts of interest.

COMPETITION

The financial services industry is highly competitive.  Industry sources
indicate that there are approximately 8,000 open-end investment companies of
varying sizes, investment objectives and policies which offer their  shares to
the investing public in the United States.  Since its inception, the Company
has competed with numerous larger, more established mutual fund management
organizations.  The Company is also in competition with the financial services
and investment alternatives offered by stock brokerage firms, insurance
companies, banks, savings and loans associations  and other financial
institutions, as well as investment advisory firms.  The Company sells Fund
shares principally through third party broker-dealers.  The Company competes
for the services of such third party broker-dealers with other sponsors of
mutual funds who generally have substantially greater resources than the
Company.  Banks in particular have increased, and continue to increase, their
sponsorship of proprietary mutual funds distributed through third party
distributors.  Many broker-dealer firms also sponsor their own proprietary
mutual funds which may limit the Company's ability to secure the distribution
services of such broker-dealer firms.  In seeking to sell Fund shares, the
Company also competes with increasing numbers of mutual funds which sell their
shares without the imposition of sales loads.  No-load mutual funds are
attractive to investors because they do not have to pay sales charges on the
purchase or redemption of such mutual funds' shares. This competition may place
pressure on the Company to reduce the FESLs and CDSCs charged upon the sale or
redemption of Fund shares.  However, reduced sales loads would make the sale of
Fund shares less attractive to the broker-dealers upon whom the Company depends
for the distribution of Fund shares. In the alternative, the Company might
itself be required to pay additional fees, expenses, commissions or charges in
connection with the distribution of Fund shares which could have a material
adverse effect on the Company's earnings.

The Company also participates in two other highly competitive related sectors
of the financial services industry, retail brokerage and investment advisory
services. The Company competes directly with full-service stock brokerage
firms, registered investment advisors, banks, regional broker-dealers and other
independent broker-dealers. Each of these competitors offer to the public many
of the same investment products and services offered by the Company. Further,
other broker-dealers providing the same services heavily recruit the
representatives and advisors transacting business through the Company. This
competition forces the Company to maintain high levels of support services and
commission payouts for these representatives and advisors. These high levels of
services and payouts could have a material adverse effect on the Company's
earnings.



OTHER MATTERS

The Company's board of directors has approved an employee stock ownership plan
("ESOP") whereby up to 800,000 shares of the Company's stock would be granted.
The ESOP was effective January 1, 1999. Refer to Employee Benefit Plans in
Note 10 of the Audited Statements. In March of 2001, the Company loaned the
ESOP $100,000 to purchase future shares for distribution by the ESOP.

ITEM 2    DESCRIPTION OF PROPERTY

The Company operates all of its business, except ARM Securities, out of its
location at 1 North Main, Minot, North Dakota in which it occupies
approximately 14,200 square feet of office space in a 28,000 square foot
building with an adjacent 100'x140' parking lot. The Company had leased the
office space until December 31, 1998 when it purchased the office building for
$700,000. As of December 31, 2001 the Company owed $474,375 on the 5 year loan.
The Company also leases two locations, 1,110 square feet at One South
Minnesota, New Ulm, Minnesota and 5,292 square feet at 1550 East Shaw Avenue,
Suite 120, Fresno, California for the ARM Securities broker-dealer operations.


ITEM 3    LEGAL PROCEEDINGS

None.

ITEM 4    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth
quarter ended December 31, 2001.


                               PART II

ITEM 5    MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Information About the Company's Common Stock

The Company's Common Stock is traded on the OTC Bulletin Board under the symbol
NDHI.  The Company's stock began trading on the OTC Bulletin Board on
November 7, 1997.  On December 31, 2001, the closing price of the Company's
Common Stock on the OTC Bulletin Board was $.89 per share. At February 15,
2002, there were approximately 787 shareholders of record. In addition, the
Company estimates that there are approximately 359 beneficial shareholders
whose shares are held in street name and 428 registered shareholders.


The following table sets forth the high and low bid prices for the Company's
Common Stock provided by The NASDAQ Stock Market, Inc.

<TABLE>
<CAPTION>
                                             2001                  2000
                                          Fiscal Year          Fiscal Year
                                      -------------------------------------
        Quarter                         High        Low        High       Low
        ---------------------------------------------------------------------
        <S>                              <C>         <C>         <C>       <C>
        First Quarter                   1.188      .656        .812      .438
        Second Quarter                   .930      .625        .938      .594
        Third Quarter                    .920      .770        .938      .656
        Fourth Quarter                   .960      .700        .875      .512
</TABLE>

The quotations reflect interdealer prices, without retail mark-up, mark-down or
commission, and may not represent actual transactions.  The Company has not
paid a dividend with respect to its Common Stock nor does the Company
anticipate paying dividends in the foreseeable future.

ITEM 6    MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

GENERAL
ND Holdings derives the majority of its revenues and net income from providing
investment management, distribution, shareholder services, accounting and
related services to the Funds and others.  ARM Securities provides another
substantial portion of revenue through its sales of mutual fund, variable
insurance products and fixed insurance products.  The majority of the Company's
assets under management consist of single-state municipal bond funds for the
states of North Dakota, South Dakota, Montana, Kansas, Nebraska, and Oklahoma.

ND Holdings, Inc. is a holding company which operates in three business
segments, 1) as an investment advisor, distributor and provider of
administrative service to sponsored and non-proprietary mutual funds, 2) as an
internet service provider for Minot and surrounding areas and 3) as a broker-
dealer. Refer to Segment Information in Note 12 of the Audited Statements.



ASSETS UNDER MANAGEMENT/SERVICE
By Investment Objective
In Millions

<TABLE>
<CAPTION>
As of December 31,                           2001      2000      1999
----------------------------------------------------------------------
<S>                                           <C>       <C>       <C>
FIXED-INCOME
Tax-Free                                   $ 303.0   $ 301.0   $ 319.2
Taxable (Corporate/Government)                 0.0       0.0       0.0
----------------------------------------------------------------------

TOTAL FIXED-INCOME                         $ 303.0   $ 301.0   $ 319.2
----------------------------------------------------------------------

EQUITY
Fund of Funds                              $  15.3   $  19.6   $  22.1
----------------------------------------------------------------------

TOTAL SPONSORED MUTUAL FUNDS               $ 318.3   $ 320.6   $ 341.3
----------------------------------------------------------------------
Investors Research Fund                    $   0.0   $  16.3   $  22.8
----------------------------------------------------------------------
TOTAL ASSETS UNDER MANAGEMENT/SERVICE      $ 318.3   $ 336.9   $ 364.1
======================================================================
</TABLE>

A substantial portion of the Company's revenues depend upon the amount of
assets under its management/service.  Assets under management/service can be
affected by the addition of new funds to the group, the acquisition of another
investment management company, purchases and redemptions of mutual fund shares
and investment performance, which may depend on general market conditions.
Assets under the Company's management/service decreased by $18.6 million (5.5%)
in 2001 and decreased by $27.2 million (7.5%) in 2000.  Fixed income assets
increased by 0.7% in 2001 compared to the 2000 decrease of 5.7%.  Fixed income
assets account for 95.2% of the total assets under management/service in 2001
and 89.3% in 2000.  Equity assets decreased by 21.9% in 2001 compared to the
2000 decrease of 11.3%. Equity assets account for 4.8% of total assets under
management/service in 2001 and 5.8% in 2000.  Investors Research Fund
represents 0.0% of total assets under management/service in 2001 and 4.8% in
2000.


RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, amounts included in
the Consolidated Statements of Operations of ND Holdings, Inc. and the
percentage change in those amounts from period to period.

<TABLE>
<CAPTION>
                                                                                       Variance  Variance
                                                                                        2001 to   2000 to
                                        2001              2000               1999         2000      1999
                                     ----------------------------------------------------------------------
<S>                                     <C>               <C>                 <C>           <C>      <C>
OPERATING REVENUES
   Fee income                        $ 2,970,581        $ 3,144,428         $ 3,610,959     (5.5)%  (12.9)%
   Commissions                         4,554,559          3,515,600             991,063     29.6%   254.7%
   Internet revenues                     642,584            668,980             159,037     (3.9)%  320.6%
                                     ----------------------------------------------------------------------
        Total revenue                $ 8,167,724        $ 7,329,008         $ 4,761,059     11.4%    53.9%
                                     ----------------------------------------------------------------------

OPERATING EXPENSES
   Compensation and benefits         $ 1,833,715        $ 1,464,483         $ 1,159,985     25.2%    26.3%
   Commission Expense                  3,583,310          2,796,545             817,055     28.1%   242.3%
   General and administration          1,751,487          1,592,669           1,120,331     10.0%    42.2%
   Sales commissions amortized           613,738            587,740             599,263      4.4%    (1.9)%
   Depreciation and amortization         578,534            601,824             477,967     (3.9)%   25.9%
                                     ----------------------------------------------------------------------
        Total operating expenses     $ 8,360,784        $ 7,043,261         $ 4,174,601     18.7%    68.7%
                                     ----------------------------------------------------------------------

OPERATING INCOME (LOSS)              $  (193,060)       $   285,747         $   586,458   (167.6)%  (51.3)%
                                     ----------------------------------------------------------------------

OPERATING INCOME (EXPENSES)
   Interest and other income         $   164,641        $   206,888         $   127,983    (20.4)%   61.7%
   Interest expense                     (317,924)          (251,068)           (192,862)    26.6%    30.2%
                                     ----------------------------------------------------------------------
         Net other income(expense)   $  (153,283)       $   (44,180)        $   (64,879)   246.9%   (31.9)%

INCOME (LOSS) BEFORE INCOME
TAX BENEFIT (EXPENSE)                $  (346,343)       $   241,567         $   521,579   (243.4)%  (53.7)%

INCOME TAX BENEFIT (EXPENSE)              20,148           (232,830)           (326,833)  (108.7)%  (28.8)%
                                     ----------------------------------------------------------------------

NET INCOME (LOSS) BEFORE MINORITY
INTEREST AND CUMULATIVE EFFECT
OF AN ACCOUNTING CHANGE              $  (326,195)       $     8,737         $   194,746 (3,833.5)%  (95.5)%

MINORITY INTEREST, NET OF TAX             26,367             31,667              11,329    (16.7)%  179.5%

CUMULATIVE EFFECT OF AN ACCOUNTING
CHANGE, NET OF TAX                             0                  0            (373,455)
                                     ----------------------------------------------------------------------

NET INCOME (LOSS) AFTER MINORITY
INTEREST AND CUMULATIVE EFFECT
OF AN ACCOUNTING CHANGE              $  (299,828)       $    40,404         $  (167,380)  (842.1)%  124.1%
                                     ======================================================================
Earnings (Loss) per share                   (.05)               .01                (.02)
</TABLE>

OPERATING REVENUES

Total operating revenues for 2001 were $8.2 million, an increase of 11.4% from
$7.3 million for 2000. The increase in commission revenues is primarily
attributable to a full year of commissions in 2001 from ARM Securities, which
was acquired effective May 1, 2000.

Total operating revenues for 2000 were $7.3 million, an increase of 53.9% from
$4.8 million for 1999. The increase in operating revenues is primarily
attributable to the commission revenues of $3.0 million from ARM Securities,
which was acquired effective May 1, 2000.

Fee income for 2001 was $3.0 million a 5.5% decrease from $3.1 million for
2000. The decrease in fee income is due to the decrease in assets under
management/service and to a lesser extent from the reduction in fees charged
to Class A shares converted from Class B shares. Beginning January 2000, ND
Tax-Free Fund, Inc., Montana Tax-Free Fund, Inc., and South Dakota Tax-Free
Fund, Inc. issued another class of shares, Class A shares with FESLs. These
shares are subject to a maximum front-end sales load of 4.25% scaled down to
..75% minimum as the investment amount increases. Shares subject to the CDSC
(Class B shares) automatically convert to Class A shares (and would no longer
be subject to the higher Rule 12b-1 fees) approximately 8 years after the date
on which such Class B shares were purchased. The conversion would be made based
on the relative net asset values of Class A and Class B shares, without
imposing any load, fee or other charge. This trend will continue as more
Class B shares are converted to Class A shares. Fee income for 2000 was
$3.1 million, a 12.9% decrease from $3.6 million for 1999.

Commission income includes ARM Securities commissions and 12b-1 fees associated
with the sale of mutual funds and insurance products, ND Capital and Ranson
underwriting fees associated with sales of the FESL funds, commissions earned
by registered representatives of ND Capital, and commissions earned by ND
Capital acting as agent to the Funds for the purchase of certain investment
securities.  Commission income for December 31, 2001 was $4.6 million, a 29.6%
increase over the $3.5 million for 2000. Commission income earned by ARM
Securities, which was acquired effective May 1, 2000, was up 27.8% from 2000
due primarily to a full year of commissions earned in 2001.  Commission income
earned by ND Capital and Ranson Capital was up 40.0% for 2001 compared to
2000. This increase is related to an increase in sales in the municipal bond
funds and an increase in commissions earned by ND Capital. 2000 commission
income was a 254.7% increase over 1999 due to the acquisition of ARM Securities
in May of 2000.

Internet revenues decreased 3.9% for 2001 compared to 2000 due to a decreased
customer base. Revenues increased 320.6% for 2000 compared to 1999.  On
October 1, 1999, the Company formed a corporation called Magic Internet
Services, Inc. At the same time, the newly formed subsidiary of the Company
acquired all the assets of Magic Internet Services (a North Dakota
partnership). The corporation provides internet services to several businesses
as well as the general public for a fee. The acquisition of Magic Internet
allows for additional revenues, provides another source for internet service
in case of disruption of service (redundancy), assists in providing information
over the internet and provides a potential new delivery system of mutual fund
shares.

OPERATING EXPENSES

Total operating expenses increased 18.7% for 2001 compared to 2000. Total
operating expenses increased 68.7% for 2000 compared to 1999.  The variances
relate to several of the major expense categories as described in the
paragraphs that follow.

Compensation and benefits increased 25.2% in 2001 compared to 2000.
Compensation and benefits related to ARM Securities made up 59.0% of the
increase, due primarily to a full year of expenses recorded in 2001. The
balance of the compensation and benefits increase relates to budgeted
compensation and benefit increase, and the recruitment of two key employees to
grow ARM Securities.

Compensation and benefits increased 26.3% in 2000 compared to 1999.
Compensation and benefits related to the ARM Securities acquisition are 72.1%
of the increase. The balance of the increase relates to Magic Internet
Services, acquired October 1, 1999, having a complete year of expense.

Commission expense for December 31, 2001 was a 28.1% increase over 2000.
Commission expense for December 31, 2000 was a 242.3% increase over 1999. The
commission expense increases for 2001 and 2000 are directly related to the
increase in commission income.

General and administrative expense for 2001 increased 10.0% over 2000. This is
due primarily to a full year of expenses recorded in 2001 for ARM Securities,
which was acquired in May of 2000. Total general and administrative expenses
for 2000 increased 42.2% compared to 1999. Expenses related to the ARM
Securities acquisition made up 36.3% of the increase, with the balance
relating to Magic Internet Services, acquired October 1, 1999, having a
complete year of expense.

Sales commissions paid to brokers and dealers in connection with the sale of
shares of the Funds sold without a FESL are capitalized and amortized on a
straight line basis over a period not exceeding eight years, which approximates
the period of time during which deferred sales commissions are expected to be
recovered from distribution plan payments received from various Funds and
management's estimate of the average life of investors' accounts in the
Integrity Mutual Funds. Contingent deferred sales charges ("CDSC")
received by the Company are recorded as a reduction of unamortized deferred
sales commissions.  Amortization of deferred sales commissions increased 4.4%
in 2001 and decreased 1.9% in 2000. The 2001 increase is related to an
accounting estimate change in 2001 that changed the maximum amortization
period for sales commissions sold without a FESL from nine years to eight
years. The 2000 decrease is related to a reduction of new sales charges to
amortize for 2000.

Depreciation and amortization decreased 3.9% in 2001 and increased 25.9% in
2000. The decrease for 2001 is the result of certain assets being fully
depreciated in 2000 and 2001. The 2000 increase is due to the ARM Securities
acquisition and is also the result of management's commitment to technology and
systems to better serve its funds.

OTHER INCOME (EXPENSES)

2001 interest and other income decreased 20.4% from 2000 due to decreased
interest income earned from cash on hand.

2000 interest and other income increased 61.7% over 1999 due to increased
interest earned from cash on hand and the ARM Securities acquisition.

Interest expense for 2001 is a 26.6% increase over 2000 due to interest owed
on Subordinate Debentures sold July 2000 through April 2001.

Interest expense for 2000 is a 30.2% increase over 1999 due to interest owed
on Corporate Notes sold April through November 1999 and Subordinate Debentures
sold July through December 2000.

INCOME TAX (EXPENSE) BENEFIT

The Company's effective tax rate differs from the U.S. Statutory rate primarily
due to nondeductible amortization expenses incurred as a result of the Ranson
acquisition. The Company's effective tax rates for 2001, 2000 and 1999 were 0%,
96% and 63% respectively. The effective rate will continue to reflect the
nondeductible amortization associated with the investment adviser's agreement
acquired in the Ranson acquisition.

Effective for 1998, the Company is expensing deferred sales commissions as
incurred for income tax purposes. For 2001, they are amortized over five years
for tax purposes. The Company will continue to capitalize and amortize the
commissions for financial reporting purposes. The effect of the change will
create timing differences between when the commissions are deducted for income
tax purposes and expensed as amortization for financial reporting purposes.
Deferred tax assets or deferred tax liabilities will result from these timing
differences.


FINANCIAL CONDITION

On December 31, 2001, the Company's assets aggregated $11.2 million, an
decrease of 12.1% from $12.8 million in 2000, due to a decrease in cash and
cash equivalents, securities available-for-sale, accounts receivable, and
property and equipment. Stockholders equity decreased to $6.9 million on
December 31, 2001 compared to $8.4 million on December 31, 2000, primarily the
result of the net loss of $299,828, the purchase of $999,934 of the company
stock through a tender offer purchase, and the repurchase of $221,472 of the
company stock through a stock buyback program.

Cash provided by operating activities was $620,361 in 2001, a 47.9% decrease
from $1,189,867 in 2000. During the year ended December 31, 2001, the Company
used net cash of $114,063 for investing activities. $9,315 was related to the
purchases of ARM Securities and Integrity Investment Advisors, $50,554 for the
remodeling of the second floor of the building for additional office space,
and $74,947 for the purchase of equipment, offset by cash received for the
redemption of an investment in Class A shares of the Montana Tax-Free Fund.
Net cash flow used by financing activities during the year was $1,271,772 the
net effect of $120,000 in proceeds received from a subordinated debenture
offering, offset by $81,296 for repayment of debt, $97,093 net cash loaned to
the ESOP, and $1,251,997 for the net purchase of the Company's common stock,
pursuant to a program approved by its Board of Directors in November 1997 to
repurchase up to $2,000,000 of its common stock from time to time in the open
market and also through a tender offer purchase.

On December 31, 2000, the Company's assets aggregated $12.8 million, an
increase of 5.6% from $12.1 million in 1999, due to an increase in cash and
cash equivalents, cash segregated for the exclusive benefit of customers,
securities available-for-sale, accounts receivable, prepaids and property and
equipment. Stockholders equity was relatively unchanged from December 31, 2000
compared to December 31, 1999.

Cash provided by operating activities was $1,189,867 in 2000, an 18.8% decrease
from $1,465,030 in 1999. During the year ended December 31, 2000, the Company
used net cash of $785,496 for investing activities. $364,761 was for the
purchase of ARM Securities, $232,605 for remodeling of the second floor of the
building for Magic Internet, $132,820 for purchases of equipment, and $55,310
for investment in Class A shares of the Montana Tax-Free Fund and the South
Dakota Tax-Free Fund and investment in Integrity Small-Cap Fund of Funds. Net
cash flow provided by financing activities during the year was $261,047, the
net effect of $525,000 in proceeds received from a subordinate debenture
offering and $100,890 in proceeds received from repayment of an ESOP
receivable, less $223,488 for repayment of debt and $141,355 for the purchase
of the Company's common stock, pursuant to a program approved by its Board of
Directors in November 1997 to repurchase up to $2,000,000 of its Common Stock
from time to time in the open market.


LIQUIDITY AND CAPITAL RESOURCES

On December 31, 2001, the Company's liquid assets totaled $1,963,239, including
$1,834,683 of cash and cash equivalents, as compared to $2,744,999 of which
$2,600,157 represented cash and cash equivalents, on December 31, 2000. On
January 29, 2001 the Company paid out $999,934 for 799,947 shares of the
Company's common stock, pursuant to its self tender offer that commenced on
December 21, 2000.

On December 31, 2000, the Company's liquid assets totaled $2,744,999, including
$2,600,157 of cash and cash equivalents, as compared to $2,034,739 of which
$1,934,739 represented cash and cash equivalents, on December 31, 1999.

Although the Company has historically relied upon sales of its Common Stock
and debt instruments for liquidity and growth, management believes that the
Company's existing liquid assets, together with the expected continuing cash
flow from operations will provide the Company with sufficient resources to meet
its cash requirements during the next twelve months.  Management expects that
the principal needs for cash will be to advance sales commissions on Funds
subject to CDSCs, acquire additional investment management firms, repurchase
shares of the Company's Common Stock and service debt. The Company is required
under the terms of its debentures, which mature September 1, 2002, to make
semi-annual interest payments of approximately $47,000 in March and September.
The Company also is required under the terms of its corporate notes, which
mature June 30, 2004, to make annual interest payments of approximately
$96,200 in July.  In addition, the Company is required under the terms of its
subordinate debentures, which mature June 30, 2005, to make semi-annual
interest payments of approximately $38,700 in January and July.


FORWARD-LOOKING STATEMENTS

When used herein, in future filings by the Company with the Securities and
Exchange Commission, in the Company's press releases and in other Company
authorized written or oral statements, the words and phrases "can be",
"expects," "anticipates," "may affect," "may depend," "believes," "estimates"
or similar expressions are intended to identify "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
The Company cautions readers not to place undue reliance on any such forward-
looking statements, which speak only as of the date made.  Such statements are
subject to certain risks and uncertainties, including those set forth in this
"Forward-Looking Statements" section, that could cause actual results for
future periods to differ materially from those presently anticipated or
projected.  The Company does not undertake and specifically disclaims any
obligation to update any forward-looking statement to reflect events or
circumstances after the date of such statements.

The Company derives substantially all of its revenues from two sources,
commission revenue earned in connection with sales of shares of mutual funds,
variable insurance products and fixed insurance products, and fees relating to
the management of, and provision of services to, the Funds and other clients.
The fees earned by the Company are generally calculated as a percentage of
assets under management/service.  If the Company's assets under management/
service decline, or do not grow in accordance with the Company's plans, fee
revenues and earnings would be materially adversely affected.  Assets under
management/service may decline because redemptions of Fund shares exceed sales
of Fund shares, or because of a decline in the market value of securities held
by the Funds, or a combination of both.

In seeking to sell Fund shares, and market its other services, the Company
operates in the highly competitive financial services industry.  The Company
competes with approximately 8,000 open-end investment companies which offer
their shares to the investing public in the United States.  In addition, the
Company also competes with the financial services and other investment
alternatives offered by stock brokerage and investment banking firms, insurance
companies, banks, savings and loan associations and other financial
institutions, as well as investment advisory firms.  Most of these competitors
have substantially greater resources than the Company.  The Company sells Fund
shares principally through third party broker-dealers.  The Company competes
for the services of such third party broker-dealers with other sponsors of
mutual funds who generally have substantially greater resources than the
Company.  Banks in particular have increased, and continue to increase, their
sponsorship of proprietary mutual funds distributed through third party
distributors.  Many broker-dealer firms also sponsor their own proprietary
mutual funds which may limit the Company's ability to secure the distribution
services of such broker-dealer firms.  In seeking to sell Fund shares, the
Company also competes with increasing numbers of mutual funds which sell their
shares without the imposition of sales loads.  No-load mutual funds are
attractive to investors because they do not have to pay sales charges on the
purchase or redemption of such mutual funds' shares.  This competition may
place pressure on the Company to reduce the FESLs and CDSCs charged upon the
sale or redemption of Fund shares.  However, reduced sales loads would make
the sale of Fund shares less attractive to the broker-dealers upon whom the
Company depends for the distribution of Fund shares.  In the alternative, the
Company might itself be required to pay additional fees, expenses, commissions
or charges in connection with the distribution of Fund shares which could have
a materially adverse effect on the Company's earnings.  The ability of the
Company to sell Fund shares may also be affected by general economic conditions
including, amongst other factors, changes in interest rates and the inflation
rate. Interest and inflation rate changes may particularly impact the flow of
money into mutual funds which invest in fixed-income securities. Each of the
Funds except Integrity Fund of Funds and Integrity Small-Cap Fund of Funds
invests substantially all of its assets in fixed-income securities.

General economic conditions, including interest and inflation rate changes, may
also adversely affect the market value of the securities held by the Funds,
thus negatively impacting the value of assets under management, and hence the
fees earned by the Company.  The fact that the investments of each Fund (except
Integrity Fund of Funds and Integrity Small-Cap Fund of Funds) are
geographically concentrated within a single state makes the market value of
such investments particularly vulnerable to economic conditions within such
state.  In addition, the states in which the investments of the Funds as a
group are concentrated are themselves concentrated in certain regions of the
United States.  The Company's fee revenues may therefore be adversely affected
by economic conditions within such regions.

Sales of Fund shares with FESLs provide current distribution revenue to the
Company in the form of the Company's share of the FESLs and distribution
revenue over time in the form of 12b-1 payments.  Sales of Fund shares with
CDSCs provide distribution revenue over time in the form of 12b-1 payments
and, if shares are redeemed within 5 years, CDSCs.  However, the Company pays
commissions on sales of Fund shares with CDSCs, reflects such commissions as
a deferred expense on its balance sheet and amortizes such commissions over a
period of up to eight years, thereby recognizing distribution expenses.
Therefore, to the extent that sales of Fund shares with CDSCs increases over
time relative to sales of shares with FESLs, current distribution expenses
may increase relative to current distribution revenues in certain periods,
which would negatively impact the Company's earnings in such periods.  In
addition, the Company may need to find additional sources of funding if
existing cash flow and debt facilities are insufficient to fund commissions
payable to selling broker-dealers on CDSC shares.




ITEM 7    FINANCIAL STATEMENTS










                   ND HOLDINGS, INC. AND SUBSIDIARIES

                          MINOT, NORTH DAKOTA











                  CONSOLIDATED FINANCIAL STATEMENTS

                              AS OF

                   DECEMBER 31, 2001, 2000 AND 1999

                               AND

                    INDEPENDENT AUDITOR'S REPORT






                ND HOLDINGS, INC. AND SUBSIDIARIES
                        TABLE OF CONTENTS



                                                                      Pages

INDEPENDENT AUDITOR'S REPORT                                            1


CONSOLIDATED FINANCIAL STATEMENTS

  Consolidated Balance Sheets                                          2-3

  Consolidated Statements of Operations                                 4

  Consolidated Statements of Stockholders' Equity                       5

  Consolidated Statements of Cash Flows                                6-7

  Notes to Consolidated Financial Statements                           8-18


ADDITIONAL INFORMATION

  Independent Auditor's Report on Additional Information               19

  Selected Financial Data                                              20

  Quarterly Results of Consolidated Operations (Unaudited)             21









                       INDEPENDENT AUDITOR'S REPORT




To the Stockholders and Directors of
ND Holdings, Inc. and Subsidiaries
Minot, North Dakota 58701

We have audited the accompanying consolidated balance sheets of ND Holdings,
Inc. and Subsidiaries (a North Dakota Corporation) as of December 31, 2001 and
2000 and the related consolidated statements of operations, stockholders'
equity and cash flows for the years ended December 31, 2001, 2000 and 1999.
These consolidated financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America.  Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation.  We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of ND
Holdings, Inc. and Subsidiaries as of December 31, 2001 and 2000, and the
consolidated results of their operations and their cash flows for the years
ended December 31, 2001, 2000 and 1999 in conformity with accounting principles
generally accepted in the United States of America.




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

February 26, 2002








                                  1


                   ND HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED BALANCE SHEETS
                      DECEMBER 31, 2001 AND 2000



                               ASSETS

<TABLE>
<CAPTION>
                                                            2001                2000
                                                            ----                ----
<S>                                                         <C>                 <C>
CURRENT ASSETS
  Cash and cash equivalents                           $  1,834,683         $  2,600,157
  Cash segregated for the exclusive
    benefit of customers                                   298,536              215,570
  Securities available-for-sale                            128,556              144,842
  Accounts receivable                                      509,490              584,822
  Prepaids                                                 111,678               72,468
                                                      ------------         ------------
  Total current assets                                $  2,882,943         $  3,617,859
                                                      ------------         ------------
PROPERTY AND EQUIPMENT                                $  2,049,236         $  2,055,612
  Less accumulated depreciation                            607,597              597,185
                                                      ------------         ------------
  Net property and equipment                          $  1,441,639         $  1,458,427
                                                      ------------         ------------
OTHER ASSETS
  Deferred sales commissions                          $  1,459,536         $  1,887,684
  Covenant not to compete (net of accumulated
    amortization of $122,624 for 2001 and
    of $368,124 for 2000)                                   95,376              149,876
  Investment adviser's agreements (net of
    accumulated amortization of $1,754,816 for
    2001 and $1,449,689 for 2000)                        4,350,657            4,660,772
  Other                                                    984,641              978,741
                                                      ------------         ------------
  Total other assets                                  $  6,890,210         $  7,677,073
                                                      ------------         ------------
TOTAL ASSETS                                          $ 11,214,792         $ 12,753,359
                                                      ============         ============
</TABLE>





                                 2

                   CONSOLIDATED BALANCE SHEETS (CONTINUED)


                    LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                                            2001              2000
                                                            ----              ----
<S>                                                         <C>               <C>
CURRENT LIABILITIES
  Service fees payable                                $     89,525      $     87,087
  Accounts payable                                          65,836            36,375
  Other current liabilities                                464,756           476,804
  Deferred tax liability                                   273,434           318,582
  Current portion of long-term debt                        952,773            89,948
                                                      ------------      ------------
  Total current liabilities                           $  1,846,324      $  1,008,796
                                                      ------------      -------------
LONG-TERM LIABILITIES
  Note payable                                        $    474,375      $    560,661
  Subordinate debentures                                   645,000           525,000
  Debentures                                               940,000           940,000
  Corporate notes                                          962,000           962,000
  Less current portion shown above                        (952,773)          (89,948)
                                                      ------------      ------------
  Total long-term liabilities                         $  2,068,602      $  2,897,713
                                                      ------------      ------------
TOTAL LIABILITIES                                     $	  3,914,926      $  3,906,509
                                                      ------------      ------------
MINORITY INTEREST IN SUBSIDIARY                       $    411,029      $    437,396
                                                      ------------      ------------
STOCKHOLDERS' EQUITY
  Common stock - 20,000,000 shares
    authorized, no par value; 6,462,240 and
    7,444,687 shares issued and
    outstanding, respectively                         $  8,588,793      $  9,716,956
  Receivable - unearned ESOP shares                        (97,093)                0
  Accumulated deficit                                   (1,596,862)       (1,297,034)
  Accumulated other comprehensive income (loss)             (6,001)          (10,468)
                                                      ------------      ------------
  Total stockholders' equity                          $  6,888,837      $  8,409,454
                                                      ------------      ------------
TOTAL LIABILITIES AND
  STOCKHOLDERS' EQUITY                                $ 11,214,792      $ 12,753,359
                                                      ============      ============
</TABLE>




         THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
                 CONSOLIDATED FINANCIAL STATEMENTS

                                    3


                   ND HOLDINGS, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF OPERATIONS
             FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

<TABLE>
<CAPTION>
                                                      2001         2000        1999
                                                      ----         ----        ----
<S>                                                   <C>          <C>         <C>
REVENUES
  Fee income                                     $ 2,970,581  $ 3,144,428  $	 3,610,959
  Commissions                                      4,554,559    3,515,600      991,063
  Internet revenues                                  642,584      668,980      159,037
                                                 -----------  -----------  -----------
  Total revenue                                  $ 8,167,724  $ 7,329,008  $ 4,761,059
                                                 -----------  -----------  -----------
OPERATING EXPENSES
  Compensation and benefits                      $ 1,833,715  $ 1,464,483  $ 	1,159,985
  General and administrative expenses              1,751,487    1,592,669    1,120,331
  Commission expense                               3,583,310    2,796,545      817,055
  Sales commissions amortized                        613,738      587,740      599,263
  Depreciation and amortization                      578,534      601,824      477,967
                                                 -----------  -----------  -----------
  Total operating expenses                       $ 8,360,784  $ 7,043,261  $ 4,174,601
                                                 -----------  -----------  -----------
OPERATING INCOME (LOSS)                          $  (193,060) $   285,747  $   586,458
                                                 -----------  -----------  ----------
OTHER INCOME (EXPENSES)
  Interest and other income                      $   164,641  $   206,888  $   127,983
  Interest expense                                  (317,924)    (251,068)    (192,862)
                                                 -----------  -----------  -----------
  Net other expense                              $  (153,283) $   (44,180) $   (64,879)
                                                 -----------  -----------  -----------
INCOME (LOSS) BEFORE INCOME
  TAX EXPENSE                                    $  (346,343) $   241,567  $   521,579

INCOME TAX BENEFIT (EXPENSE)                          20,148     (232,830)    (326,833)
                                                 -----------  -----------  -----------
INCOME (LOSS) BEFORE MINORITY
  INTEREST AND CUMULATIVE EFFECT
  OF AN ACCOUNTING CHANGE                        $  (326,195) $     8,737  $   194,746

Minority interest, net of income taxes                26,367       31,667       11,329
Cumulative effect of an
  accounting change, net of income taxes                   0            0     (373,455)
                                                 -----------  -----------  -----------
NET INCOME (LOSS) AFTER
  MINORITY INTEREST AND
  CUMULATIVE EFFECT OF AN
  ACCOUNTING CHANGE                              $  (299,828) $    40,404  $  (167,380)
                                                 ===========  ===========  ===========
EARNINGS (LOSS) PER COMMON SHARE:
  Basic                                          $      (.05) $       .01  $      (.02)
  Diluted                                        $      (.05) $       .01  $      (.02)

SHARES USED IN COMPUTING
  EARNINGS (LOSS) PER COMMON SHARE:
  Basic                                             6,469,025    7,507,145    7,571,062
  Diluted                                           6,469,025    7,507,145    7,571,062
</TABLE>


           THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
                   CONSOLIDATED FINANCIAL STATEMENTS




                                     4

                     ND HOLDINGS, INC. AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
            FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                                            Accumulated
                                Number of      Common                             From          Other
                                 Common         Stock          Accumulated        ESOP      Comprehensive
                                 Shares        Amount            Deficit       Receivable       Income          Total
                                ---------      ------          -----------     ----------   --------------      -----
<S>                               <C>            <C>              <C>              <C>           <C>             <C>
BALANCE
  JANUARY 1, 1999               7,951,187   $	  10,253,246    $	  (1,170,058)    $        0     $         0     $  9,083,188

  Net loss                              0               0         (167,380)             0               0         (167,380)
  Change in unrealized gain
    (loss) on securities
    available-for-sale                  0               0                0              0               0                0
                                                                                                              ------------
  Comprehensive loss                                                                                          $   (167,380)
                                                                                                              ------------
  Common stock issued             358,000         262,498                0              0               0          262,498

  Purchase of common stock        694,000)       (657,435)               0              0               0         (657,435)

  Receivable - unearned
    ESOP shares                         0               0                0       (100,890)              0         (100,890)
                                ------------------------------------------------------------------------------------------
BALANCE,
  DECEMBER 31, 1999             7,615,187   $   	9,858,309     $ (1,337,438)    $ (100,890)     $        0     $  8,419,981

  Net income                            0               0           40,404              0               0           40,404
  Change in unrealized gain
    (loss) on securities
    available-for-sale                  0               0                0              0         (10,468)         (10,468)
                                                                                                              ------------
  Comprehensive income                                                                                        $     29,936
                                                                                                              ------------
  Purchase of common stock       (170,500)       (141,353)               0              0               0         (141,353)
  Repayments from ESOP                  0               0                0        100,890               0          100,890
                                ------------------------------------------------------------------------------------------
BALANCE,
  DECEMBER 31, 2000             7,444,687   $   	9,716,956     $ (1,297,034)    $        0      $  (10,468)    $  8,409,454

  Net loss                              0               0         (299,828)             0               0         (299,828)
  Change in unrealized gain
    (loss) on securities
    available-for-sale                  0               0                0              0           4,467            4,467
                                                                                                              ------------
  Comprehensive income (loss)                                                                                 $   (295,361)
                                                                                                              ------------
  Common stock issued             100,000         123,834                0              0               0          123,834
  Purchase of common stock     (1,082,447)     	(1,251,997)               0              0               0       (1,251,997)
  Receivable - unearned
    ESOP shares                         0               0                0       (100,000)              0         (100,000)
  Repayments from ESOP                  0               0                0          2,907               0            2,907
                                ------------------------------------------------------------------------------------------
BALANCE,
 DECEMBER 31, 2001              6,462,240   $   	8,588,793      $(1,596,862)    $  (97,093)     $   (6,001)   $   6,888,837
</TABLE>



          THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
                  CONSOLIDATED FINANCIAL STATEMENTS



                                    5

                    ND HOLDINGS, INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
             FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999




<TABLE>
<CAPTION>
                                                             2001          2000          1999
                                                             ----          ----          ----
<S>                                                          <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income (loss)                                  $   (299,828)   $    40,404   $   (167,380)
  Adjustments to reconcile net income (loss) to
    net cash provided by operating activities:
     Depreciation and amortization                        578,534        601,824        477,967
     Sales commissions amortized/charged off              613,738        587,740      1,177,911
     ESOP contribution                                          0              0         61,608
     Consulting expense                                    28,270              0              0
     Minority interest                                    (26,367)       (31,667)       (11,329)
     Loss on sale of assets                                   (28)             0              0
  Effects on operating cash flows due to changes in:
     Cash segregated for customers                        (82,966)      (215,570)             0
     Accounts receivable                                   75,332       (234,556)        13,450
     Prepaids                                             (39,210)       (26,342)         2,681
     Deferred sales commissions capitalized              (185,589)        25,192       (349,894)
     Deferred tax                                         (45,148)       232,830         85,890
     Other assets                                         (16,227)       (17,127)       (48,881)
     Service fees payable                                   2,439        (18,861)         6,703
     Accounts payable                                      29,461        (11,546)        39,265
     Other liabilities                                    (12,050)       257,546        177,039
                                                  ---------------   ------------   ------------
  Net cash provided by operating activities       $       620,361   $  	1,189,867   $  1,465,030
                                                  ---------------   ------------   ------------
CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of property and equipment              $      (125,501)  $   (365,425)  $   (172,091)
  Purchase of available-for-sale securities                (1,730)       (55,310)             0
  Proceeds from sale of
    available-for-sale securities                          22,483              0          1,000
  Business acquisitions (net of cash acquired)             (9,315)      (364,761)      (494,533)
                                                  ---------------   ------------   ------------
  Net cash used by investing activities           $      (114,063)  $   (785,496)  $   (665,624)
                                                  ---------------   ------------   ------------
</TABLE>




                                      6


CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

<TABLE>
<CAPTION>
                                                       2001             2000            1999
<S>                                                    <C>               <C>             <C>
CASH FLOWS FROM FINANCING ACTIVITIES
  Reduction of short term debt                  $          0    $    	(200,000)    $          0
  Redemption of common stock                      (1,251,997)        (141,355)        (657,435)
  Issuance of common stock                            38,614                0                0
  Subordinate debentures issued                      120,000          525,000                0
  Increase in notes payable                                0                0          500,000
  Reduction of notes payable                         (81,296)         (13,488)        (681,411)
  Redemption of investment certificates                    0                0          (30,000)
  Redemption of debentures                                 0          (10,000)               0
  ESOP loan                                         (100,000)               0                0
  Corporate notes issued                                   0                0          962,000
  Repayments from ESOP                                 2,907          100,890                0
                                                ------------    -------------    -------------
  Net cash provided (used) by financing
    activities                                  $	  1,271,772)   $     261,047    $      93,154
                                                ------------    -------------    -------------
NET INCREASE (DECREASE) IN CASH AND CASH
  EQUIVALENTS                                   $   (765,474)   $     665,418    $     892,560

CASH AND CASH EQUIVALENTS
  AT BEGINNING OF YEAR                             2,600,157        1,934,739        1,042,179
                                               -------------    -------------    -------------
CASH AND CASH EQUIVALENTS
  AT END OF YEAR                               $   1,834,683    $   	2,600,157    $   1,934,739
                                               =============    =============    =============
SUPPLEMENTARY DISCLOSURE OF
 CASH FLOW INFORMATION
  Cash paid during the year for:
    Interest                                   $     307,534    $     	217,273    $    151,872


SUPPLEMENTAL SCHEDULE OF NONCASH
  INVESTING AND FINANCING ACTIVITIES
  Change in unrealized gain (loss) on
    securities available-for-sale              $       4,467    $     (10,468)   $          0
  Business acquisitions with debt and stock    $      56,950    $           0    $    455,369
  Shares transferred to ESOP                   $           0    $           0    $    100,890
  Minority interest in property and equipment
    and other assets                           $           0    $           0    $    480,392
  Shares exchanged for services                $      28,270    $           0    $          0
  Reduction of investment advisory agreement
    and notes payable                          $       4,988           38,899    $          0
</TABLE>



            THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
                      CONSOLIDATED FINANCIAL STATEMENTS





                                      7

                     ND HOLDINGS, INC. AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      DECEMBER 31, 2001, 2000 AND 1999

NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

         The nature of operations and significant accounting policies of ND
         Holdings, Inc. and Subsidiaries are presented to assist in
         understanding the Company's consolidated financial statements.

         NATURE OF OPERATIONS - ND Holdings, Inc. and Subsidiaries (the
         Company) was established in September 1987 as a North Dakota
         corporation.  The Company derives its revenue primarily from
         investment advisory, asset management, underwriting, and transfer
         agent services to sponsored mutual funds, and commissions earned as
         distributor for various mutual funds and insurance products.
         Headquartered in Minot, North Dakota, the Company is marketing its
         services throughout the Midwestern United States and California.

         PRINCIPLES OF CONSOLIDATION - The consolidated financial statements
         include the accounts of ND Holdings, Inc. and its wholly-owned
         subsidiaries, ND Money Management, Inc., ND Capital, Inc., ND
         Resources, Inc., Ranson Capital Corporation, ARM Securities
         Corporation, Integrity Investment Advisors, Inc., and its majority
         owned subsidiary Magic Internet Services, Inc.  All significant
         intercompany transactions and balances have been eliminated in the
         accompanying consolidated financial statements.

         CONCENTRATIONS - The Company derives its revenue primarily from
         investment advisory and administrative services provided to sponsored
         mutual funds, a majority of which are state-specific municipal bond
         funds as well as revenues derived from retail brokerage activities.
         Company revenues are largely dependent on the total value and
         composition of assets under management, which include state-specific
         municipal bonds, as well as the sales activity of registered brokers
         operating as independent contractors.  Accordingly, fluctuations in
         financial markets and the composition of assets under management
         impact revenues and results of operations.

         USE OF ESTIMATES - The preparation of consolidated 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 consolidated financial statements and the reported amounts
         of revenues and expenses during the reporting period.  Actual results
         could differ from those estimates.

         REVENUE RECOGNITION - Investment advisory fees, transfer agent fees
         and service fees are recorded as revenues as the related services are
         provided by the Company  to sponsored mutual funds. Commission income
         is also received for the sale of investments in other mutual funds and
         for variable annuities. Internet fees are recorded as revenues as the
         related services are provided.

         CASH AND CASH EQUIVALENTS - The Company's policy is to record all
         liquid investments with original maturities of three months or less as
         cash equivalents.  Liquid investments with maturities greater than
         three months are recorded as investments.

         INVESTMENTS - Investment securities that are held for short-term
         resale are classified as trading securities and carried at fair value.
         All other marketable securities are classified as available-for-sale
         and are carried at fair value.  Realized and unrealized gains and
         losses on trading securities are included in net income.  Unrealized
         gains and losses on securities available-for-sale are recognized as
         direct increases or decreases in stockholders' equity.  Cost of
         securities sold is recognized using the specific identification
         method.

                                    8

NOTE 1 - (CONTINUED)
         Property and equipment is stated at cost less accumulated depreciation
         computed on straight-line and accelerated methods over estimated
         useful lives as follows:

                         Equipment               5-7 years
                         Building                40 years

         DEFERRED SALES COMMISSIONS - Sales commissions paid to brokers and
         dealers in connection with the sale of shares of the sponsored mutual
         funds sold without  a front-end sales charge(B shares), are
         capitalized and amortized on a straight line basis over a period not
         exceeding eight years, which approximates the period of time during
         which deferred sales commissions are expected to be recovered from
         distribution plan payments received from various sponsored mutual
         funds and potential contingent deferred sales charges received from
         shareholders of the various sponsored mutual funds.  Contingent
         deferred sales charges received by the Company are recorded as a
         reduction of unamortized deferred sales commissions. In accordance
         with Statement of Position 98-5, the commissions paid for the sale of
         Integrity Fund of Funds, Inc.'s shares since July 1998, have been
         expensed as incurred.  In 1999, the remaining unamortized cost of the
         Integrity Fund of Funds, Inc. capitalized prior to July 1998, was
         charged off as a cumulative effect adjustment for a change in an
         accounting principle.  The contingent deferred sales charges received
         since this date from early redemption's from Integrity Fund of Funds,
         Inc. have been recorded as revenue.  Effective January 1, 2001 the
         Company is amortizing sales commissions over 5 years for tax purposes.

         Advertising - Costs of advertising and promotion of sponsored mutual
         funds are expensed as incurred.

         Earnings per common share - Basic earnings per common share was
         computed using the weighted average number of shares outstanding of
         6,469,025 in 2001, 7,507,145 in 2000 and 7,571,062 in 1999.  Diluted
         earnings per common share is computed using the weighted average
         number of shares outstanding adjusted for share equivalents arising
         from unexercised stock warrants and stock options.  The weighted
         average shares outstanding used in computing diluted earnings per
         common share was 6,469,025 in 2001, 7,507,145 in 2000 and 7,571,062
         in 1999.

         Covenant not to compete is carried on the books at cost less
         accumulated amortization computed using the straight-line method over
         the life of the covenant, which is four years.

         Investment adviser's agreements are amortized using the straight-line
         method over a period of twenty years.  The Company has evaluated
         potential impairments on the basis of the expected future operating
         cash flows to be derived from these intangible assets in relation to
         the Company's carrying value and has determined that there is no
         impairment.

         INCOME TAXES - The Company files a consolidated income tax return with
         its wholly-owned subsidiaries.  The amount of deferred tax benefit or
         expense is recognized as of the date of the consolidated financial
         statements, utilizing currently enacted tax laws and rates.  Deferred
         tax benefits are recognized in the financial statements for the
         changes in deferred tax assets between years.

         RECLASSIFICATION - Certain amounts from 2000 and 1999 have been
         reclassified to conform with the 2001 presentation.






                                   9

NOTE 2 - CASH AND CASH EQUIVALENTS

         Cash and cash equivalents at December 31, 2001 and 2000 consist of
         the following:
<TABLE>
<CAPTION>
                                                     Current
                                          Current  	  Interest              Amount
                                         Maturity      Rate        2001            2000
                                         --------    -------       ----            ----
<S>                                        <C>         <C>         <C>             <C>
         Cash in checking                 Demand        -     $    42,871    $     17,975
         Dean Witter Money
           Market Accounts                Demand       1.69%    2,090,348       2,797,752
         Less cash segregated for
           the exclusive benefit
           of customers                                          (298,536)       (215,570)
                                                              -----------    ------------
                                                              $ 	1,834,683    $  2,600,157
                                                              ===========    ============
</TABLE>

NOTE 3 - INVESTMENTS IN AND TRANSACTIONS WITH SPONSORED MUTUAL FUNDS

         The Company's investments in sponsored mutual funds held as available-
         for-sale at December 31, 2001 and 2000:
<TABLE>
<CAPTION>
                                                          Gross
                                      Aggregate         Unrealized      Aggregate Fair
                                        Cost          Holding Losses        Value
                                     -----------      --------------    --------------
<S>                                     <C>               <C>                 <C>
         2001 - Mutual Funds         $   134,557       $   (6,001)        $   128,556
                                     ===========       ==========         ===========
         2000 - Mutual Funds         $   155,310       $  (10,468)        $   144,842
                                     ===========       ==========         ===========
</TABLE>

         Dividends earned on the Company's investments in sponsored mutual
         funds aggregated $1,730 in 2001, $8,310 in 2000 and $0 in 1999.

         The Company provides services to the Integrity Mutual Funds and Ranson
         Managed Portfolios which had aggregate net assets under management at
         December 31, 2001 of approximately $318 million.  All services
         rendered by the Company are provided under contracts that definitively
         set forth the services to be provided and the fees to be charged.  The
         majority of these contracts are subject to periodic review and
         approval by each of the fund's Board of Directors, Trustees and
         Shareholders.  Revenues derived from services rendered to the
         sponsored mutual funds were $2,963,300 in 2001, $3,088,928 in 2000
         and $3,511,983 in 1999.

         Accounts receivable from the sponsored mutual funds aggregated
         $255,000 and $258,000 at December 31, 2001 and 2000, respectively.


NOTE 4 - PROPERTY AND EQUIPMENT

         Property and equipment at December 31 consists of:

<TABLE>
<CAPTION>
                                                                 2001            2000
<S>                                                              <C>             <C>
                    Office furniture and equipment          $    826,692    $    890,930
                    Building and land                          1,222,544       1,164,682
                                                            ------------    ------------
                                                            $  2,049,236    $  2,055,612
                    Accumulated depreciation and
                      Amortization                               607,597         597,185
                                                            ------------    ------------
                                                            $  1,441,639    $  1,458,427
                                                            ============    ============
</TABLE>

         Depreciation expense totaled $142,317,  $175,332 and $142,455 in
        2001, 2000 and 1999, respectively.




                                   10

NOTE 5 - BUSINESS ACQUISITIONS

         PURCHASE COMBINATIONS - On September 14, 2001, the Company acquired
         all the assets of North Dakota Investment Advisors, Inc. in exchange
         for 67,000 shares of the Company's common stock.  The consolidated
         financial statements include the operating results of the business
         from the date of acquisition.  Pro forma results of operations have
         not been presented because the effects of this acquisition were not
         significant to operations.

         On May 25, 2000, the company acquired all the assets of ARM Securities
         Corporation (ARM).  The purchase price was $896,000, of which $566,000
         was for cash, and the remaining $330,000 was for goodwill which is
         being amortized on a straight line basis over 20 years.  The
         consolidated financial statements include the operating results of the
         business from May 1, 2000.

         The following unaudited pro forma summary presents the consolidated
         results of operations of the Company as if the business combination
         had occurred on January 1, 1999.

<TABLE>
<CAPTION>
                                          (Unaudited)             (Unaudited)
                                          Year Ended              Year Ended
                                       December 31, 2000       December 31, 1999
<S>                                           <C>                      <C>
         Revenues                       $   8,621,103          $   9,105,920
         Net income (loss)                     20,443               (180,687)
         Income (loss)
           per share                              .00                   (.02)
</TABLE>

         The above amounts are based upon certain assumptions and estimates
         which the Company believes are reasonable.  The pro forma results do
         not necessarily represent results which would have occurred if the
         business combination had taken place at the date indicated or what
         the results of operations may be in any future period.

         October 1, 1999, the Company formed a corporation called Magic
         Internet Services, Inc.  At the same time, the newly formed subsidiary
         of the Company acquired all the assets of Magic Internet Services (a
         North Dakota partnership).  The purchase price was $980,392, of which
         $260,000 was allocated to equipment, $218,000 was for a covenant not
         to compete, which is being amortized over 4 years, and the remaining
         balance of $502,392 was for goodwill, which is being amortized over
         15 years.  The purchase price was funded by issuing a 49% ownership
         of the newly formed subsidiary to the partners of the acquired
         partnership (hereinafter referred to as the Minority Interest).  The
         parent received 51% of the stock of the newly formed corporation for
         its $500,000 payment to the partners of Magic Internet Services.  The
         $500,000 consisted of $400,000 cash and 100,000 shares of ND Holdings,
         Inc. stock at $1 share price.  The consolidated financial statements
         include the operating results of the business from the date of
         acquisition.  Pro forma results of operations have not been presented
         because the effects of this acquisition were not significant to
         operations.

         OTHER ACQUISITIONS - In May, 1999, the Company acquired the rights to
         the investment advisors agreement to manage the "Lancaster Nebraska
         Fund".  The costs associated with this acquisition totaling $404,202,
         are amortized using the straight-line method over a period of 20
         years.








                                  11

NOTE 6 - LONG-TERM DEBT

         Long-term debt at December 31, 2001 and 2000 was as follows:
<TABLE>
<CAPTION>
                                                    Current
                                         Rate       Portion         2001        2000
                                        -----       -------         ----        ----
<S>                                      <C>         <C>            <C>         <C>
         Long-term debt:
           Smith Hayes Financial
             Services                    0.00%   $         0     $        0  $   77,810
           Debentures                   10.00%       940,000        940,000     940,000
           Corporate notes              10.00%             0        962,000     962,000
           First Western Bank            7.75%        12,773        474,375     482,851
           Subordinate debentures       12.00%             0        645,000     525,000
                                                 -----------     ----------  ----------
           Totals                                $   952,773     $3,021,375  $2,987,661
                                                 ===========     ==========  ==========
</TABLE>

         A summary of the terms of the current long-term debt agreements
         follow:


         Smith Hayes Financial Services -  As part of the acquisition of the
         investment advisors agreement of the Lancaster Nebraska Funds (See
         Note 5) the Company was allowed to hold back a portion of the total
         purchase price.  This is to provide relief to the Company in the event
         there is a reduction of fund investors' assets which were acquired.
         This liability was reduced proportionately for the investors who
         liquidate their shares in the fund prior to May 2001.  At that date,
         the remaining liability was paid in full.


         DEBENTURES - The Company approved a $1 million intra-state debenture
         offering limiting the sale in North Dakota to North Dakota residents
         only.  The debentures do not represent ownership in the Company.  As
         of December 31, 2001, $940,000 in debentures are outstanding.  The
         debentures carry an interest rate of 10% per annum, payable semi-
         annually, and mature September 1, 2002.  The Company can call the
         debentures at 2% over par.


         CORPORATE NOTES - The Company had an intra-state offering of corporate
         notes limiting the sale to North Dakota residents only.  The notes do
         not represent ownership of the Company.  As of December 31, 2001,
         $962,000 in notes are outstanding.  The notes carry an interest rate
         of 10% per annum, payable annually, and mature  June 30, 2004.  The
         Company can call the notes at par anytime after January 1, 2001.


         FIRST WESTERN BANK - In June of 1999, the Company converted its
         outstanding balance of $500,000 borrowed on its bank line-of-credit
         to long-term debt.  The debt carries an interest rate of 7.75%, with
         monthly payments of $4,105.  On July 1, 2004, the remaining balance
         will be due in full.


         SUBORDINATE DEBENTURES - The company approved a $1 million intra-state
         subordinated debenture offering limiting the sale in North Dakota to
         North Dakota residents only.  The subordinated debentures do not
         represent ownership in the Company.  As of December 31, 2001,
         $645,000 in subordinate debentures are outstanding.  The subordinate
         debentures carry an interest rate of 12% per annum, payable semi-
         annually, and mature June 30, 2005.  The company can call the
         subordinate debentures at par anytime after July 1, 2001.







                                   12

NOTE 6 - (CONTINUED)
         The aggregate amount of required future payments on the above long-
         term debt at December 31, 2001, is as follows:


              Year ending December 31,
                     2002                    $     952,773
                     2003                           13,999
                     2004                        1,409,603
                     2005                          645,000
                                             -------------
                     Total due               $   3,021,375
                                             =============

NOTE 7 - INCOME TAXES

         The current and deferred portions of the income tax (benefit) expense
         included in the statements of operations as determined in accordance
         with FASB Statement No.  109, Accounting for Income Taxes, are as
         follows:

<TABLE>
<CAPTION>
                                                    2001           2000          1999
                                                    ----           ----          ----
<S>                                                 <C>            <C>           <C>
          Current income taxes
            Federal                             $         0   $        0   $        0
            State                                         0            0            0

          Deferred income
            Taxes                                   (20,148)     232,830      326,833
                                                -----------   ----------   ----------
                                                $   (20,148)  $  232,830   $  326,833
                                                ===========   ==========   ==========
</TABLE>

         Deferred income taxes reflect the impact of temporary differences
         between the amount of assets and liabilities recognized for financial
         reporting purposes and such amounts recognized for tax purposes,
         measured by applying currently enacted tax rates. Such taxes relate
         principally to the recording of sales commissions paid to brokers and
         dealers, and the benefits associated with the Company's net operating
         loss carry forwards.  The  treatment of sales commissions for tax and
         financial purposes is explained fully in Note 1.  As a result of this
         treatment of sales commissions, a deferred tax liability has been
         created as well as a deferred tax benefit from the net operating loss
         for tax purposes.  For financial statement presentation, they have
         been netted as a current deferred tax benefit or liability.  The net
         operating loss carry forward of approximately $1,200,000 may be used
         to offset taxable income through the year 2016.





                                    13


         A reconciliation of the difference between the expected income tax
         expense (benefit) is computed at the U.S. Statutory income tax rate of
         35% and the Company's income tax expense is shown in the following
         table:

<TABLE>
<CAPTION>
                                                  2001              2000             1999
                                                  ----              ----             ----
<S>                                                <C>              <C>              <C>
         Federal taxes (benefit)
           at statutory rates                 $  (113,000)      $   111,000      $   200,000

         State taxes (benefit),
           net of federal tax effect              (18,000)           17,500           31,500

         Taxes on nondeductible amort-
           ization at federal
           statutory rates                         95,000           106,000           95,000

         Net tax benefit on cumulative effect
           of accounting change, and on
           minority interest                            0                 0        (237,000)

         Other                                     15,852            (1,670)            333
                                              -----------       -----------      ----------
         Actual tax (benefit) expense         $   (20,148)      $   232,830      $   89,833
                                              ===========       ===========      ==========
</TABLE>

         Included in "other" are amounts separately allocated to stockholders'
         equity to recognize the related tax effect of the change in net
         unrealized gain or loss on securities available for sale and the ESOP
         plan activity for the years ended December 31, 2001, 2000 and 1999.
         In each of these years the amounts were insignificant.

NOTE 8 - STOCK WARRANTS, STOCK SPLITS, AND STOCK OPTIONS

         The Company has authorized 1,050,000 perpetual warrants to certain
         organizers, directors, officers, employees and shareholders of the
         Company.  All warrants were issued between 1987 and 1990 and were
         accounted for in accordance with the provisions of Accounting
         Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued
         to Employees.  No compensation expense was recorded for these warrants
         as the exercise price exceeded the market price of the stock at the
         date of issue.  The Company plans to continue to apply APB Opinion
         No. 25 in accounting for its warrants.  In the event additional
         warrants are issued, appropriate results will be disclosed in
         accordance with the provisions of Statement of Financial Accounting
         Standard, No.  123.  These warrants, at the date of issue, allowed for
         the purchase of shares of stock at $2.00 per share.  The exercise
         price of the warrants will be adjusted to reflect stock splits of 11
         for 10 in 1990 and 1989.  1,000 warrants were exercised in 1997
         leaving an outstanding balance of 1,049,000 warrants as of December
         31, 2001.

         The Company has entered into employment agreements with several key
         employees of the company during 2001. As part of these employment
         agreements, on October 1, 2001, 400,000 options were granted with a
         strike price of $.85. These options become fully vested upon the
         granting date and have a perpetual life. The number of shares
         authorized for granting of options under these employment agreements
         is limited only by continued employment and the ability to reach
         established performance goals.




                                   14

NOTE 8 - (CONTINUED)
         Information with respect to the stock option activity under the
         Company's employment agreements for the year ended December 31, 2001
         is as follows:

<TABLE>
<CAPTION>
                                                                      2001
                                                                Weighted Average
                                               Options           Exercise Price
                                               -------           ---------------
<S>                                              <C>                   <C>
         Outstanding, beginning of year              0           $         .00
         Granted                               400,000                     .85
         Forfeited                                   0                     .00
         Exercised                                   0                     .00
                                               -------           -------------
         Outstanding, end of year              400,000           $         .85
                                               -------           -------------
         Exercisable at year end               400,000
                                               -------
</TABLE>

         All options granted in 2001 were at a strike price of $.85.

         The warrants and options outstanding at year end were excluded from
         the computation of diluted EPS because the exercise price was greater
         than the average market price of the company's common stock.

NOTE 9 - EMPLOYEE BENEFIT PLANS

         The Company sponsors a 401(K) plan for all its employees.  This plan
         is solely funded by employee elective deferrals.  The only expenses of
         the plan paid for by the Company are the trustees fees, which were
         insignificant in 2001, 2000 and 1999.

         The Company established an employee stock ownership plan ("ESOP")
         effective January 1, 1999.  Pursuant to the ESOP, each year the
         Company will determine the amount to contribute to the plan.
         Contributions are made at the discretion of the Board of Directors.
         To be eligible to participate in the plan, an employee must have
         completed one year of service and have attained age 21.

         During 2001, the ESOP purchased 104,000 shares of the Company's common
         stock, at a weighted average price of $.96 per share.  The purchase
         was funded with a loan of $100,000 from the Company, which is
         collateralized by the unallocated Company shares owned by the ESOP.
         The loan will be repaid primarily from contributions by the company.
         The outstanding principal balance of the loan as of December 31, 2001
         was $97,000 and the interest rate is 7% over a 15 year life.  All
         previous loans to the ESOP have been paid in full and shares purchased
         by those loans have been allocated to employees.

         The shares owned by the ESOP are held by a third party trustee and
         released for allocation to participants as repayments of the loan are
         made.  The number of shares released for allocation in any year is
         based upon the ratio of current year principal and interest payments
         to the total current year and projected future year's principal and
         interest payments.  Shares of common stock are allocated to each
         employee based on the relationship of their total compensation to
         the total compensation of all participants.

         At December 31, 2001 and 2000, cumulative allocated shares remaining
         in the trust were 258,000 and 68,000 respectively, and unallocated
         shares were 104,000 and 190,000 respectively, of which 4,648 and
         190,000 respectively, were committed-to-be allocated.  Total ESOP
         contribution expense recognized was $33,958, $25,427 and $138,608 for
         the years ended December 31, 2001, 2000, and 1999 respectively.






                                  15

NOTE 10 -NET CAPITAL REQUIREMENTS

         The Company's broker-dealer subsidiaries (ND Capital, Inc., Ranson
         Capital Corporation and ARM Securities Corporation) are member firms
         of the National Association of Securities Dealers, Inc. and are
         registered with the Securities and Exchange Commission (SEC) as
         broker-dealers.  Under the Uniform Net Capital Rule (Rule 15c3-1
         under the Securities Exchange Act of 1934), the subsidiaries are
         required to maintain a minimum net capital and a ratio of aggregate
         indebtedness to net capital, as defined, of not more than 15 to 1.
         At December 31, 2001, these subsidiaries had net capital of $162,581,
         $179,528 and $641,951; minimum net capital requirements of $25,000,
         $5,000, and $29,801; excess net capital of $137,581, $174,528 and
         $612,150 and ratios of aggregate indebtedness to net capital of
         .15 to 1, .40 to 1 and .70 to 1, respectively.  The subsidiaries are
         exempt from the reserve requirements of Rule 15c3-3.

NOTE 11 -OPERATING SEGMENTS

         ND Holdings and Subsidiaries, Inc., organizes its business units into
         three reportable segments: mutual fund services, internet services,
         and broker-dealer services. The mutual fund services segment acts as
         investment adviser, distributor and provider of administrative service
         to sponsored and nonproprietary mutual funds. The internet services
         segment provides internet service for the Minot and surrounding area.
         The broker-dealer segment distributes shares of nonproprietary mutual
         funds, and insurance products.

         The company's reportable segments are strategic business units that
         offer different products and services. They are managed separately
         because each business requires different technology and marketing
         strategies. Most of the businesses were acquired as a unit, and the
         management at the time of the acquisition was retained.  The
         accounting policies are the same as those described in the summary
         of significant accounting policies.

         As of, and for the year ended, December 31, 2001

<TABLE>
<CAPTION>
                               Mutual Fund      Internet   Broker-Dealer
                                Services        Services       Services          Total
                               -----------      --------   ---------------       -----
<S>                               <C>              <C>           <C>              <C>
Revenue from
  external customers           $  3,666,483   $   642,584    $  3,858,657    $ 8,167,724
Intersegment revenues                 1,800         2,773               0          4,573
Interest revenue                        121             0               0            121
Interest expense                    317,857            67               0        317,924
Depreciation and
  Amortization                      426,302       151,688             544        578,534
Segment profit (loss)              (345,550)      (27,444)         73,166       (299,828)
Segment assets                   10,162,935       840,988       1,272,972     12,276,895
Expenditure for
  segment assets                     76,556        30,123          18,822        125,501
</TABLE>


RECONCILIATION OF SEGMENT INFORMATION

<TABLE>
<CAPTION>
<S>                                                            <C>
REVENUES
Total revenues for reportable segments                   $     8,172,297
Elimination of intersegment revenues                              (4,573)
                                                         ---------------
    Consolidated total revenue                           $     8,167,724
                                                         ===============
PROFIT
Total reportable segment profit                          $      (299,828)
                                                         ===============
ASSETS
Total assets for reportable segments                     $   12,276,895
Elimination of intercompany  receivables                     (1,062,103)
                                                         --------------
    Consolidated Assets                                  $   11,214,792
                                                         ==============
</TABLE>

                                   16

NOTE 12 -COMMITMENTS AND CONTINGENCIES

         The company entered into leases for office space as a result of
         purchasing ARM Securities Corporation (Note 5) in Minnesota and
         California.  The monthly lease payments are $900 and $7,409,
         respectively.  The leases will expire March 31, 2003 and January 31,
         2004, respectively.   Total rent expense for the two leases was
         $99,708 and $59,725 for the years ended December 31, 2001 and 2000,
         respectively.

         The company has several leases for various office equipment that
         expire over the next several years through 2005.  The total rent
         expense for these leases was $33,000, $22,000, and $11,500 for
         December 31, 2001, 2000, and 1999 respectively.

         The following is a schedule by years of future minimum rental
         payments on operating leases as of December 31, 2001.

              Years ending December 31,
                      2002                                 $   128,588
                      2003                                     106,570
                      2004                                      19,814
                      2005                                       1,464
                                                           -----------
	                      Total minimum future rentals         $   256,436
                                                           ===========

NOTE 13 -SUBSEQUENT EVENTS

         On January 15, 2002, the Company acquired all the assets of Capital
         Financial Services, Inc. ("CFS"), a full-service brokerage firm
         based in Madison, Wisconsin. CFS is registered with the SEC as an
         investment advisor and broker-dealer and also with the NASD as a
         broker-dealer. The purchase consideration was composed of $ 1,140,000
         in cash, 750,000 shares of Company stock to be issued in 3 annual
         installments beginning at the date of purchase, a $250,000 convertible
         debenture to be issued one year from the purchase date, as well as
         250,000 options to purchase common stock of the Company. CFS
         specializes in providing investment products and services to
         independent investment representatives, financial planners, and
         investment advisors and currently supports approximately 90 investment
         representatives and investment advisors.

NOTE 14 -NEW PRONOUNCEMENTS

         Effective January 1, 2002, the Company will adopt Statements of
         Financial Accounting Standards (SFAS) No. 141 - Business Combinations,
         and No. 142 - Goodwill and Other Intangible Assets.  Under SFAS
         No.141, the Company  will use the purchase method to account for
         all future business combinations, beginning with the January 15, 2002
         acquisition of Capital Financial Services, Inc. as described in
         Note 13.  The effect on future financial statements can not be
         determined at this time.

         Under SFAS 142, the Company will no longer amortize its goodwill,
         investment advisory agreements and other intangibles over their
         estimated useful life.  Rather, they will be subject to at least an
         annual assessment for impairment by applying a fair value based test.
         Amortization pertaining to the above assets was approximately
         $435,000, $425,000, and $335,000 in 2001, 2000, and 1999 respectively.
         Effects of the impairment of these assets on future financial
         statements can not be determined at this time.




                                   17








                           ADDITIONAL INFORMATION














                                     18
      INDEPENDENT AUDITOR'S REPORT ON ADDITIONAL INFORMATION






To the Stockholders and Directors of
ND Holdings, Inc. and Subsidiaries
Minot, North Dakota


Our report on our audit of the basic consolidated financial statements of
ND Holdings, Inc. and Subsidiaries for the years ended December 31, 2001,
2000 and 1999, appears on page 1.  Those audits were made for the purpose of
forming an opinion on such consolidated financial statements taken as a whole.
The information on pages 20 and 21, related  to the 2001, 2000 and 1999
consolidated financial statements, is presented for purposes of additional
analysis and is not a required part of the basic consolidated financial
statements.  Such information, except for that portion marked "unaudited",
on which we express no opinion, has been subjected to the auditing procedures
applied in the audits of the basic consolidated financial statements, and, in
our opinion, the information is fairly stated in all material respects in
relation to the basic consolidated financial statements for the years ended
December 31, 2001, 2000 and 1999, taken as a whole.

We also have previously audited, in accordance with auditing standards
generally accepted in the United States of America, the consolidated balance
sheets of ND Holdings, Inc. and Subsidiaries as of December 31, 1998 and 1997,
and the related consolidated statements of operations, stockholders' equity,
and cash flows for each of the two years in the period ended December 31, 1998,
none of which is presented herein, and we expressed unqualified opinions on
those consolidated financial statements.  In our opinion, the information on
page 20 relating to the 1998 and 1997 consolidated financial statements is
fairly stated in all material respects in relation to the basic consolidated
financial statements from which it has been derived.




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


February 26, 2002






                                   19

                      ND HOLDINGS, INC. AND SUBSIDIARIES
                           SELECTED FINANCIAL DATA
               FOR THE YEARS ENDED DECEMBER 31, AS INDICATED







<TABLE>
<CAPTION>
                                                                                        1997
                                                                                      (Restated)
                                    2001        2000         1999          1998          (a)(b)
                                    ----        ----         ----          ----        ---------
<S>                                 <C>         <C>          <C>           <C>            <C>
Operating revenue             $  8,167,724  $  7,329,008  $  	4,761,059  $  4,438,908  $  4,590,716

Income (loss) from
  Operations                  $   (193,060) $    285,747  $    	586,458  $    683,443  $    738,890

Income tax (expense) benefit  $     20,148  $   (232,830) $   (326,833) $   (405,240) $   (415,042)

Earnings (loss) per share     $       (.05) $        .01  $       (.02) $        .03  $        .03

Total assets                  $ 11,214,792  $ 	12,753,359  $ 	12,072,973  $ 	10,891,060  $ 10,306,160

Long-term obligations         $  3,021,375  $  	2,987,661  $  	2,525,047  $  	1,307,750  $	  1,113,070

Shareholders' equity          $  6,888,837  $	  8,409,454  $  	8,419,984  $  	9,083,188  $  	9,038,682

Dividends paid                $          0  $          0  $          0  $          0  $          0


<FN>
(a)  The 1997 statement of operations has been restated to reflect the
     Company's current practice of recording commission income and commission
     expense separately.  Prior to 1998 these amounts were reported as net
     commission income.  The 1997 commission income and general and
     administrative expenses have been increased by approximately $544,000
     so as to conform with the subsequent years' presentation.

(b)  During the audit of the 1998 financial statements, an error was discovered
     that resulted in an understatement of reported liabilities and overstated
     net income as of December 31, 1995.  All balances affected by this
    $25,000 error have been restated.
</FN
</TABLE>



                                    20



                      ND HOLDINGS, INC. AND SUBSIDIARIES
            QUARTERLY RESULTS OF CONSOLIDATED OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
                                                   QUARTER ENDED
                                                   -------------
                              3-31-01         6-30-01         9-30-01         12-31-01
                              -------         -------         -------         --------
<S>                            <C>              <C>             <C>             <C>
Revenues                   $  	2,149,123    $  	2,043,524    $  	1,971,967    $  	2,003,110
Operating income                 (2,954)        (41,532)        (36,079)       (112,495)
Other income (expense)          (31,204)        (25,854)        (44,516)        (51,709)
Income tax expense
  (benefit)                     (16,301)         (2,852)          3,713          35,588
Net income (loss)               (46,905)        (65,764)        (67,886)       (119,273)

Per Share(1)
  Operating income                (0.00)          (0.01)          (0.01)          (0.02)
  Other income (expense)          (0.00)          (0.00)          (0.01)          (0.01)
  Income tax expense              (0.00)          (0.00)           0.00            0.01

                                                   QUARTER ENDED
                                                   -------------
                              3-31-00         6-30-00         9-30-00         12-31-00
                              -------         -------         -------         --------
<S>                            <C>              <C>             <C>             <C>
Revenues                   $  1,084,761    $  2,004,073    $  	2,158,754    $  2,081,420
Operating income                 63,444          94,913          78,905          48,485
Other income (expense)          (15,969)         (2,640)        (13,026)        (12,545)
Income tax expense              (60,347)        (52,794)        (69,194)        (50,495)
Net income (loss)                (1,810)         37,428           9,037          (4,251)

Per Share(1)
  Operating income                 0.01            0.02            0.01            0.01
  Other income (expense)          (0.00)          (0.00)          (0.00)          (0.00)
  Income tax expense              (0.01)          (0.01)          (0.01)          (0.01)

                                                   QUARTER ENDED
                                                   -------------
                              3-31-99         6-30-99         9-30-99         12-31-99
                              -------         -------         -------         --------
<S>                            <C>              <C>             <C>             <C>
Revenues                   $  1,152,721    $  	1,151,101    $	  1,329,665    $  	1,127,572
Operating income                162,173         173,170         269,825         (18,710)
Other income (expense)           (5,644)        (15,646)        (21,641)        (21,948)
Income tax expense              (89,660)        (91,166)       (126,108)        (19,899)
Cumulative effect of an
  accounting change            (373,455)              0               0               0
Net income (loss)              (306,586)         66,358         122,076         (49,228)

Per Share(1)
  Operating income                  .02             .02             .03             .00
  Other income (expense)            .00             .00             .00             .00
  Income tax expense               (.01)           (.01)           	(.02)            .00
  Cumulative effect of an
    accounting change              (.05)            .00             .00             .00

<FN>
(1) The Company adopted FAS 128 in 1997.  For calculating per share amounts,
basic and diluted earnings per common share are not materially different.

The above financial information is unaudited.  In the opinion of management,
all adjustments (which are of a normal recurring nature) have been included
for a fair presentation.
</FN>
</TABLE>



                                   21


ITEM 8    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

None.


                               Part II

ITEM 9    DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Incorporated herein by reference is the information under the heading
"Directors and Executive Officers", in the Registrant's Proxy Statement
to be filed on or about April 15, 2002.


ITEM 10    EXECUTIVE COMPENSATION

Incorporated herein by reference is the information appearing in the
Registrant's Proxy Statement which the Registrant anticipates filing on or
about April 15, 2002 under the headings "Directors and Executive Officers."

ITEM 11    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

Incorporated herein by reference is the information appearing under the heading
"Security Ownership of Principal Shareholders and Management", in the
Registrant's Proxy Statement which the Registrant anticipates filing on or
about April 15, 2002.

ITEM 12    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Incorporated herein by reference is the information appearing under the
heading "Directors and Executive Officers", in the Registrant's Proxy
Statement which the Registrant anticipates filing on or about April 15, 2002.


ITEM 13    EXHIBITS AND REPORTS ON FORM 8-K

(a)      The following exhibits are filed herewith or incorporated herein by
         reference as set forth below:

         3.1    Articles of Incorporation of the Company (incorporated by
                reference to Exhibit 3.1 contained in the Company's
                Registration Statement on Form S-1, as amended (File No. 33-
                96824), filed with the Commission on September 12, 1995).

         3.2    Bylaws of the Company (incorporated by reference to Exhibit
                3.2 contained in the Company's Registration Statement on Form
                S-1, as amended (File No. 33-96824), filed with the Commission
                on September 12, 1995).

         4.1    Specimen form of Common Stock Certificate (incorporated by
                reference to Exhibit 4.1 contained in the Company's
                Registration Statement on Form S-1, as amended (File
                No.33-96824), filed with the Commission on September 12, 1995).

         4.2    Instruments defining rights of holders of securities: See
                Exhibit 3.1

         10.1   Management Advisory Contract - ND Tax-Free Fund, Inc.
                (incorporated by reference to Exhibit 10.1 contained in the
                Registration Statement on Form N-1A, as amended on Post-
                Effective Amendment 11 (File No. 33-63306), filed with the
                Commission on February 28, 1997).

         10.2   Management Advisory Contract - Montana Tax-Free Fund, Inc.
                (incorporated by reference to Exhibit 10.2 contained in the
                Registration Statement on Form N-1A, as amended on Post-
                Effective Amendment 6 (File No. 33-63306), filed with the
                Commission on February 28, 1997).

         10.3   Management Advisory Contract - South Dakota Tax-Free Fund,
                Inc. (incorporated by reference to Exhibit 10.3 contained in
                the Registration Statement on Form N-1A, as amended on Post-
                Effective Amendment 5 (File No. 33-63306), filed with the
                Commission on February 28, 1997).

         10.4   Management Advisory Contract - Integrity Fund of Funds, Inc.
                (incorporated by reference to Exhibit 10.4 contained in the
                Registration Statement on Form N-1A, as amended on Post-
                Effective Amendment 4 (File No. 33-85332), filed with the
                Commission on February 28, 1997).

         10.5   Transfer Agency Agreement - ND Tax-Free Fund, Inc.
                (incorporated by reference to Exhibit 10.5 contained in the
                Registration Statement on Form N-1A, as amended on Post-
                Effective Amendment 11 (File No. 33-63306), filed with the
                Commission on February 28, 1997).

         10.6   Transfer Agency Agreement - Montana Tax-Free Fund, Inc.
                (incorporated by reference to Exhibit 10.6 contained in the
                Registration Statement on Form N-1A, as amended on Post-
                Effective Amendment 6 (File No. 33-63306), filed with the
                Commission on February 28, 1997).

         10.7   Transfer Agency Agreement - South Dakota Tax-Free Fund, Inc.
                (incorporated by reference to Exhibit 10.7 contained in the
                Registration Statement on Form N-1A, as amended on Post-
                Effective Amendment 5 (File No. 33-63306), filed with the
                Commission on February 28, 1997).

         10.8   Transfer Agency Agreement - Integrity Fund of Funds, Inc.
                (incorporated by reference to Exhibit 10.8 contained in the
                Registration Statement on Form N-1A, as amended on Post-
                Effective Amendment 4 (File No. 33-85332), filed with the
                Commission on February 28, 1997).

         10.9  Distribution Agreement - ND Tax-Free Fund, Inc.
                (incorporated by reference to Exhibit 10.9 contained in the
                Registration Statement on Form N-1A, as amended on Post-
                Effective Amendment 11 (File No. 33-63306), filed with the
                Commission on February 28, 1997).

         10.10  Distribution Agreement - Montana Tax-Free Fund, Inc.
                (incorporated by reference to Exhibit 10.10 contained in the
                Registration Statement on Form N-1A, as amended on Post-
                Effective Amendment 6 (File No. 33-63306), filed with the
                Commission on February 28, 1997).

         10.11  Distribution Agreement - South Dakota Tax-Free Fund, Inc.
                (incorporated by reference to Exhibit 10.11 contained in the
                Registration Statement on Form N-1A, as amended on Post-
                Effective Amendment 5 (File No. 33-63306), filed with the
                Commission on February 28, 1997).

         10.12  Distribution Agreement - Integrity Fund of Funds, Inc.
                (incorporated by reference to Exhibit 10.12 contained in the
                Registration Statement on Form N-1A, as amended on Post-
                Effective Amendment 4 (File No. 33-85332), filed with the
                Commission on February 28, 1997).

         10.13  Stock Purchase Agreement - ND Holdings, Inc. and
                Shareholders of Ranson Company, Inc. (incorporated by
                reference to Exhibit 10.13 contained in the Company's
                Registration Statement on Form S-1, as amended
                (File No. 33-96824), filed with the Commission on September
                12, 1995).

         10.14  Transfer Agency Agreement - Ranson Managed Portfolios
                (incorporated by reference in the Company's form 10KSB/A
                as amended(Commission File No. 0-25958), filed with the
                Commission on May 20, 1998).

         10.15  Transfer Agent Agreement - Investors Research Fund
                (incorporated by reference to Exhibit 10.15 contained in the
                Company's Registration Statement Form N-1A as amended
                (File No. 2-14675) filed with the Commission on January 22
                1999).

         10.16  Distribution Agreement - Investors Research Fund
                (incorporated by reference to Exhibit 10.16 contained in the
                Company's Registration Statement Form N-1A as amended
                (File No. 2-14675) filed with the Commission on January 22
                1999).

         10.17  Accounting Services Agreement - Investors Research Fund
                (incorporated by reference to Exhibit 10.17 contained in the
                Company's Registration Statement Form N-1A as amended
                (File No. 2-14675) filed with the Commission on January 22
                1999).

         10.18  Management and Investment Advisory Agreement - Ranson Managed
                Portfolios (incorporated by reference to Exhibit 10.18 contained
                in the Portfolios' Registration Statement on Form N-1A, as
                amended on Post-Effective Amendment 43 (File No. 33-36324),
                filed with the Commission on November 30, 1999).

         10.19  Distribution and Services Agreement - Ranson Managed
                Portfolios (incorporated by reference to Exhibit 10.19 contained
                in the Portfolios' Registration Statement on Form N-1A, as
                amended on Post-Effective Amendment 43 (File No. 33-36324),
                filed with the Commission on November 30, 1999).

         10.20  Management Advisory Contract - Integrity Small-Cap Fund of
                Funds, Inc. (incorporated by reference to Exhibit 10.20
                contained in the Registration Statement on Form N-1A,
                (File No. 333-64917), filed with the Commission on
                September 30, 1998).

         10.21  Transfer Agency Agreement - Integrity Small-Cap Fund of Funds,
                Inc. (incorporated by reference to Exhibit 10.21 contained in
                the Registration Statement on Form N-1A (File No. 333-64917),
                filed with the Commission on September 30, 1998).

         10.22  Distribution Agreement - Integrity Small-Cap Fund of Funds,
                Inc. (incorporated by reference to Exhibit 10.22 contained in
                the Registration Statement on Form N-1A, as amended on Post-
                Effective Amendment 3 (File No. 333-64917), filed with the
                Commission on June 14, 2000).

         21.1   Subsidiaries of the Company: (incorporated by reference to
                Exhibit 21.1 contained in the Company's Registration Statement
                on Form S-1 as amended (File No. 33-96824), filed with the
                Commission on December 7, 1995).



 (b)      Reports on Form 8-K.

          None


SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized on this 30th day of March.

                                                   ND HOLDINGS, INC.


Date:  March 25, 2002                              By /s/ Robert E. Walstad
                                                   ------------------------
                                                   Robert E. Walstad
                                                   Chief Executive Officer
                                                   and Director (Acting
                                                   Chief Financial Officer)

     In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

Date: March 25, 2002                               By /s/ Robert E. Walstad
                                                   ------------------------
                                                   Robert E. Walstad
                                                   Chief Executive Officer
                                                   and Director (Principal
                                                   Executive Officer)
                                                  (Acting Chief Financial
                                                      Officer)

Date: March 25, 2002                               By /s/ Richard D. Olson
                                                   ------------------------
                                                   Richard D. Olson
                                                   President and Director

Date: March 25, 2002                               By /s/ Peter A. Quist
                                                   ------------------------
                                                   Peter A. Quist
                                                   Vice President and Director

Date: March 25, 2002                               By /s/ Vance A. Castleman
                                                   ------------------------
                                                   Vance A. Castleman
                                                   Director

Date: March 25, 2002                               By /s/ Myron D. Thompson
                                                   ------------------------
                                                   Myron D. Thompson
                                                   Director

Date: March 25, 2002                               By /s/ Richard H. Walstad
                                                   ------------------------
                                                   Richard H. Walstad
                                                   Director