SECURITIES AND EXCHANGE COMMISSION
                           Washington, DC 20549

FORM 10-KSB
for Annual Report Under Section 13
or 15(d) of the Securities Exchange Act of 1934

[X]      ANNUAL REPORT PURSUANT TO SECTION 12 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 [FEE REQUIRED]

         For the fiscal year ended December 31, 1998
OR
         TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 [FEE REQUIRED]

       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 58701
                  (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.  [X]

The issuer's revenues for the year ended December 31, 1998 were
$4,438,908.

On March 19, 1999, there were 7,772,617 shares of the Registrant's common
stock, outstanding.

Documents Incorporated by Reference

Portions of the Company's definitive Proxy Statement for the Annual Meeting
of Shareholders to be held on May 28, 1999 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 four (4) open-end investment companies including ND Tax-Free
Fund, Inc., Montana Tax-Free Fund, Inc., South Dakota Tax-Free Fund and
Integrity Fund of Funds, Inc.  Ranson Managed Portfolios consists of one open-
end investment company containing five (5) separate portfolios including The
Kansas Municipal Fund, The Kansas Insured Intermediate Fund, The Nebraska
Municipal Fund, The Oklahoma Municipal Fund and The Illinois Municipal Fund.
Sales of Fund shares are marketed principally in Montana, Kansas, Oklahoma,
North Dakota, Nebraska and South Dakota.  In addition, the Company has
commenced marketing of shareholder services, fund accounting and other admin-
istrative services offered by ND Resources, Inc. ("ND Resources") to fund
groups in the United States.  The Company has also become involved, on a
limited basis, in the commercial creation of internet web sites and has
reviewed acquisition opportunities in other industries involving management
services and information processing.

As of December 31, 1998, total assets under management and/or administration
in the Funds was approximately $374.6 million, compared to approximately $350
million as of December 31, 1997 and approximately $334 million as of December
31, 1996.

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, current President of the Company.  The Company's offices
are at 1 North Main Street, Minot, North Dakota 58703.  As of December 31,
1998, the Company had 24 full-time employees and 1 part-time employee,
consisting of officers, investment management, securities distribution, share-
holder 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.


THE COMPANY'S SUBSIDIARIES

The Company's principal line of business is providing investment management,
distribution, shareholder services, accounting and related services to
the Funds and other clients.  As a result, the Company is economically
dependent on the Funds and others for substantially all of its revenue and
income.  The business is conducted through the wholly-owned subsidiary
companies described below.  Revenues generated by the subsidiaries are
derived primarily from fees based on the level of assets under management.
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 and Integrity Fund of Funds.  As of
December 31, 1998, ND Money Management managed approximately $ 167.7 million,
representing approximately 45% 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").  As principal underwriter and distributor for ND Tax-Free Fund,
Montana Tax-Free Fund and South Dakota Tax-Free Fund.  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 earns underwriters fees in connec-
tion with sales of such Investors Research Fund shares effected by ND Capital's
sales representatives and the underwriter's portion of FESLs in connection with
sales of such shares effected by other broker-dealers.  ND Capital earns Rule
12b-1 fees pursuant to Rule 12b-1 plans adopted by Investors Research Fund.
As principal underwriter for Integrity Fund of Funds, ND Capital earns CDSCs
from shareholders of such Funds 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, 1998, Ranson 
managed approximately $182.6 million in assets, representing approximately
49% 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 record keeping services and acts as transfer agent and
dividend-paying agent for the Funds and Investors Research Fund.  ND Resources
also provides business management services, including fund accounting,
compliance and other related administrative activities for the Funds and
Investors Research Fund.  ND Resources is compensated for providing these
services under agreements with each Fund, and is reimbursed for out-of-pocket
expenses.

Over the last 24 months, ND Resources has been investing in technology,
systems and personnel to enable it to offer its services to outside fund
groups. ND Resources recently commenced marketing these services to other
fund groups in the United States and expects to continue to do so in 1999.
As of March 19, 1999, ND Resources was providing services to one outside fund
group.

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 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 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 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 37% of the Company's consolidated
revenues in 1998.

Transfer Agency, Dividend Disbursement and Administrative Services

Additional 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, 1998 such fees ranged from 0.09% per annum
of assets under management to 0.16% per annum of assets under management/ser-
vice, 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 manage-
ment/service depending on the size of the Fund.  Transfer agency, dividend
disbursement, and administrative services fees constituted 16% of the Company's
consolidated revenues in 1998.

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 Investors Research Fund 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 Capital 
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, South Dakota Tax-Free Fund
and Integrity Fund of Funds 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 1.5% with respect to Integrity 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.

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 distribu-
Tion 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), .35% per
annum (with respect to Investors Research Fund), .75% per annum of the Fund's
average net assets (with respect to Montana Tax-Free Fund and South Dakota Tax-
Free Fund), and .85% per annum of average net assets (with respect to ND Tax-
Free Fund).  ND Capital currently waives 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 Plans are established for an initial term of one year.  Thereafter, they
must be approved annually by the Board of Directors, including a majority of
the disinterested directors of each Fund.  Each Plan is subject to termination
at any time by a majority of the Fund's disinterested directors or by the
Fund's shareholders.

FESL, CDSC and Rule 12b-1 revenues constituted 24% of the Company's
consolidated revenues in 1998.

Brokerage Commissions

ND Capital and Ranson Capital also earn commission revenue in connection with
sales of shares of outside mutual funds and when acting as a broker in effect-
ing other securities transactions.

GENERAL FUND DESCRIPTION

Set forth in the table below is a description of each of the Funds
including its name, inception date and investment objective.
<TABLE>
<CAPTION>
Name of Fund                         Inception Date                     Investment Objective
---------------------------------------------------------------------------------------------------------------
<S>                                  <C>                 <C>
ND Tax-Free Fund                     January 3, 1989     Provide as high a level of current income exempt from
                                                         federal and North Dakota income taxes as is consistent
                                                         with the preservation of capital.

Montana Tax-Free Fund                August 12, 1993     Provide as high a level of current income exempt from
                                                         federal and Montana income taxes as is consistent
                                                         with the preservation of capital.

South Dakota Tax-Free Fund           April 5, 1994       Provide as high a level of current income exempt from
                                                         federal and South Dakota income taxes as is consistent
                                                         with the preservation of capital.

Integrity Fund of Funds              January 1, 1995     Provide long-term capital appreciation and growth of income.

Ranson Managed Portfolios            November 15, 1990   Provide as high a level of current income exempt from
The Kansas Municipal Fund                                federal and Kansas income taxes as is consistent
                                                         with the preservation of capital
          .
Ranson Managed Portfolios            November 23, 1992   Provide as high a level of current income exempt from
The Kansas Insured                                       federal and Kansas income taxes as is consistent
 Intermediate Fund                                       with the preservation of capital.
     
Ranson Managed Portfolios            November 17, 1993   Provide as high a level of current income exempt from
The Nebraska Municipal Fund                              federal and Nebraska income taxes as is consistent
                                                         with the preservation of capital.

Ranson Managed Portfolios            September 25, 1996  Provide as high a level of current income that is exempt 
The Oklahoma Municipal Fund                              from both federal income tax and, to the extent indicated,
                                                         Oklahoma income tax as is consistent with preservation
                                                         of capital.

Ranson Managed Portfolios            October 11, 1997    Provide as high a level of current income that is exempt 
The Illinois Municipal Fund                              from both federal income tax and, to the extent indicated,
                                                         Illinois income tax as is consistent with preservation
                                                         of capital.
</TABLE>
Recent Fund Developments

ND Insured Income Fund commenced operations on March 19, 1991.  As of
December 31, 1997, the Fund had $2.2 million in assets under management.
For the period from inception through January 31, 1997, ND Money Management
voluntarily agreed to waive investment advisory fees and/or absorb Fund
expenses so as to ensure that annual Fund expenses, including the investment
advisory fee, did not exceed certain levels.  Effective February 1, 1998,
the Company, the Fund's sponsor and parent company of ND Money Management,
the Fund's investment advisor, determined to no longer waive investment
advisory fees and/or absorb Fund expenses.  Shareholders of the Fund were
informed of this decision.  The Company completed a plan of liquidation
and closed the fund September 23, 1998.  This is expected to have a favorable,
though immaterial, effect on the net income of the Company as the Company will
no longer be absorbing expenses in excess of fee revenue collected from the
Fund.

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, record
-keeping 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 and Ranson are registered broker-dealers, subject to extensive
regulation by the SEC, the NASD and state agencies in those states in which
ND Capital and Ranson conduct business.  As broker-dealers, ND Capital and
Ranson 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, with ND Money Management and Ranson, are subject to
periodic examinations by the SEC.

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 comment letters from the SEC staff
that outlined various compliance issues.  ND Money Management, Ranson and the
Funds, responded to the SEC's comments and the issues have been resolved.  The
Company incurred, and anticipates that it will continue to incur, additional
legal and compliance costs in the future to ensure ongoing compliance with
applicable regulatory requirements, although the extent of such additional costs
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.

Item 2    Description of Property

The offices for the Company and each of its subsidiaries are located at
1 North Main, Minot, North Dakota in which it occupies approximately 10,000
square feet of office space in a 28,000 square foot building with an
adjacent 100' X 140' parking lot.  The company leased the office space until it
purchased the office building December 31, 1998 for $700,000.  Management
expects that the building will satisfy the company's growth needs for the fore-
seeable future.

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, 1998.


                               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, 1998, the closing price of the
Company's Common Stock on the OTC Bulletin Board was $.75 per share.
At March 19, 1999, there were approximately 735 shareholders of record.
In addition, the Company estimates that there are approximately 384
beneficial shareholders whose shares are held in street name and 551 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.


                                              Fiscal Year
                                          -------------------
        Quarter                           High            Low
        --------------------------------------------------------
        November 7 (Commencement of
          trading) - December 31, 1997    $ 2.50         $ 1.19   
        First Quarter 1998                  2.06           1.46   
        Second Quarter 1998                 1.75            .81   
        Third Quarter 1998                  1.25            .81   
        Fourth Quarter 1998                  .93            .50   

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 substantially all of its revenues and net income from
providing investment management, distribution, shareholder services,
accounting and related services to the Funds and others.  The majority of the
Company's assets under management consist of single-state municipal funds for
the states of North Dakota, South Dakota, Montana, Kansas, Nebraska, and
Oklahoma.

ASSETS UNDER MANAGEMENT/SERVICE
By Investment Objective
In Millions

As of December 31,                           1998      1997      1996
----------------------------------------------------------------------

FIXED-INCOME
Tax-Free                                   $ 330.2   $ 330.3   $ 320.1
Taxable (Corporate/Government)                 0.0       2.2       2.7
----------------------------------------------------------------------

TOTAL FIXED-INCOME                         $ 330.2   $ 332.5   $ 322.8
----------------------------------------------------------------------

EQUITY
Fund of Funds                              $  20.0   $  17.4   $  11.4
----------------------------------------------------------------------

TOTAL EQUITY                               $  20.4   $  17.4   $  11.4
----------------------------------------------------------------------

TOTAL SPONSORED MUTUAL FUNDS               $ 350.2   $ 349.9   $ 334.2
----------------------------------------------------------------------
Investors Research Fund                    $  24.4   $   0.0   $   0.0
----------------------------------------------------------------------
TOTAL ASSETS UNDER MANAGEMENT/SERVICE      $ 374.6   $ 349.9   $ 334.2
======================================================================

The Company's revenues depend primarily 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 grew by $24.7 million (7.1%) and $15.7
million (4.7%) in 1998 and 1997, respectively during these years.  Fixed income
assets decreased by 1% in 1998 compared to the 1997 increase of 3%.  Fixed
income assets account for 88.1% of the total assets under management in 1998
and 95.0% in 1997.  Equity assets grew 17.2% and 52.6% in 1998 and 1997,
respectively, and represented 5.4% and 5.0% of total assets under manage-
ment/service at the end of 1998 and 1997, respectively.  Investors Research
Fund represents 6.5% of total assets under management/service in 1998.

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>
                                                                                          Percent Increase
                                                                                             (Decrease)
                                                                                         ----------------
                                        1998              1997              1996           1998     1997
                  -----------------------------------------------------------------------------------------
<S>                                  <C>               <C>               <C>                 <C>      <C>
OPERATING REVENUES
   Fee income                          $   3,504,684     $   3,604,334     $   3,114,995      (3)%      16%
   Commissions                               934,224           986,382           302,619      (5)%     226%
                                        -------------------------------------------------------------------
   Total operating revenue             $   4,438,908     $   4,590,716     $   3,417,614      (3)%      34%
                                        -------------------------------------------------------------------
OPERATING EXPENSES
   Compensation and benefits           $     825,195     $     893,722     $     718,008     (8)%       24%
   General and administrative expenses     1,859,281         1,959,998         1,555,156     (5)%      26%
   Sales commissions amortized               630,603           546,675           464,050      15%       18%
   Depreciation and amortization             440,386           451,431           419,398     (2)%        8%
                                        -------------------------------------------------------------------
   Total operating expenses            $   3,755,465     $   3,851,826     $   3,156,612     (3)%       22%
                                        -------------------------------------------------------------------
OPERATING INCOME (LOSS)                $     683,443     $     738,890     $     261,002     (8)%      183%
                                        -------------------------------------------------------------------
OTHER INCOME (EXPENSES)
   Investment and other income         $      79,043     $      23,863     $     160,595      231%    (85)%
   Interest expense                         (104,527)         (118,311)         (161,197)    (12)%    (27)%
                                        -------------------------------------------------------------------
   Total other income(expense)         $     (25,484)    $     (94,448)    $        (602)    (73)%(15,589)%
                                        -------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME
   TAX (EXPENSE) BENEFIT               $     657,959     $     644,442     $     260,400       2%      147%

INCOME TAX (EXPENSE) BENEFIT
                                            (405,240)         (415,042)         (216,029)    (2)%       92%
                                        -------------------------------------------------------------------
NET INCOME (LOSS)                      $     252,719     $     229,400     $      44,371      10%      417%
                                        ===================================================================
NET INCOME (LOSS) PER SHARE            $        0.03     $        0.03     $        0.01       0%      200%
</TABLE>

Net income and earnings per share for 1998 remained relatively unchanged as
compared to 1997.  This is directly related to the unchanged amount of assets
under management/service from 1997.  Net income and earnings per share for 1997
increased by 417% and 200% over 1996 primarily due to the combined effect of
increased fee revenues as a result of the large increase in assets under
management following the Ranson Acquisition.

For the years 1997 and 1996, ND Money Management, ND Capital and Ranson waived
or reimbursed fund fees and expenses pursuant to voluntary fee waiver and
expense reimbursement arrangements.  The Company incurred and paid each fund's
expenses (with such expenses being reflected as expenses on the Company's
consolidated income statement).  Each fund's expenses were periodically paid
by the applicable fund in an amount equal to the fund's gross expenses net of
expenses voluntarily absorbed by the Company (with the net payments being
reflected as income on the Company's consolidated income statement).
Commencing in 1998, fund expenses were incurred and paid directly by the funds.
ND Money Management, Ranson and ND Capital fulfilled their voluntary waiver and
reimbursement arrangements through voluntary waivers of investment advisory
and/or Rule 12b-1 fees and reimbursement of expenses.  While these accounting
changes did not have any impact on the Company's consolidated net income, they
caused consolidated revenues and expenses to be higher than they otherwise
would have been in the absence of such accounting changes.  The amounts for the
accounting procedural change are $666,964 and $514,364, for 1997 and 1996
respectively.  Had these changes been adopted in 1996, operating revenues would
have been as follows:

                                  1998               1997             1996
Fee income                      $   3,504,684     $  2,937,370     $  2,600,631
Commissions                           934,224          986,382          302,619
                                 ----------------------------------------------
Total operating revenue         $   4,438,908     $  3,923,752     $  2,903,250


OPERATING REVENUES

Total operating revenues at December 31, 1998 were $4.4 million, an increase of
13% from $3.9 million at over December 31, 1997 after giving effect to the
procedural change.  Total operating revenues at December 31, 1997 were $3.9
million an increase of 35% from $2.9 million at December 31, 1996 after giving
effect to the procedural change.  Fee revenues increased 19% and 13%
respectively, in 1998 and 1997 after giving effect to the procedural change.
The increase in 1998 and 1997 resulted primarily from reduced fee waivers,
reductions in voluntary fee waivers and expense reimbursements and, to a lesser
extent from increased assets under management.  


Commission income includes underwriting fees associated with sales of the FESL
funds, commissions earned by registered representatives of ND Capital and
Ranson Capital, the Company's two broker-dealer subsidiaries, and commissions
earned by ND Capital acting as agent to the Funds for the purchase of certain
investment securities.  Commission income decreased 5% in 1998 while 1997
commission was a 226% increase over 1996.  The decrease for 1998 is due to a
slight decrease in commissions earned by ND Capital when acting as agent for
the purchaser or seller of a security.  The increase in 1997 was due to an
increase in underwriting fees from higher sales of the FESL Funds as well as
increases in commissions earned by ND Capital when acting as agent for the
purchaser or seller of a security.

OPERATING EXPENSES

Total operating expenses decreased 2.5% for 1998 compared to 1997 while 1997
operating expenses were an increase of 22% compared to 1996.  The variances
relate to several of the major expense categories as described in the para-
graphs that follow.

Compensation and benefits decreased 7.7% in 1998 compared to 1997 primarily
from having a nine-person management staff assume the responsibilities of the
Chief Operating Officer after his resignation.  1997 compensation and benefits
were a 22% increase compared to 1996 related to an increase in the number of
Fund marketing representatives in an effort to increase Fund growth, as well
as from an increase in employees in preparation of offering transfer agent and
accounting services to outside fund groups.

Total general and administrative expenses increased 44% and 24% in 1998 and
1997 respectively, after giving effect to the procedural change.  The 1998
increase of 44% compared to 1997 is primarily a result of additional legal and
accounting expenses related to a routine SEC examination.  Additional marketing
costs in an effort to increase Fund growth, and normal increases in operating
costs were additional factors.  The 24% increase in 1997 compared to 1996
occurred as a result of increased commission expense which directly relates to
the increase in commission revenue.

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 nine 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.  CDSCs
received by the Company are recorded as a reduction of unamortized deferred
sales commissions.  Amortization of deferred sales commissions increased 15%
in 1998 and 18% in 1997.  The increase in 1998 and 1997 is due to an increase
in capitalized sales commissions paid on Funds subject to CDSCs.  Effective
July 23, 1998, sales commission paid in connection with the sale of shares of
sponsored mutual funds which do not have both a 12b-1 plan and contingent
deferred sales charges (Integrity Fund of Funds only) are expensed as incurred.

Depreciation and amortization decreased 2% and increased 8% in 1998 and 1997,
respectively.  The decrease in 1998 is related to some assets being fully
depreciated in 1997.  The increase in 1997 was due to an increase in equipment
purchases as a result of management's commitment to technology and systems
to better service its funds and position itself to provide services
to potential outside fund clients.  A covenant not to compete, accounting for
$100,000 of annual amortization was fully amortized at December 31, 1998.

OTHER INCOME (EXPENSES)

Investment and other income increased in 1998 primarily due to a renters credit
and a tenant remodeling rebate received from the seller in connection with the
December 31 purchase of the building and to a smaller extent increases due to a
higher level of cash and cash equivalents.  Investment and other income
declined in 1997 due to a decline in interest income as a result of the sale
of investments in early 1996 to finance the Ranson Acquisition.

Cash flows of $1,086,908 from operating activities were used to pay off the
balance of the Company's $1,500,000 debt under the Loan.  As a result interest
expense decreased by $13,784 in 1998.  1997 cash flows of $585,654 from operat-
ing activities were used to reduce the original debt under the loan resulting
in a $42,886 decrease in interest expense.

Following routine books and records examinations by the SEC in 1997, ND Money
Management, Inc. (ND Money Management), Ranson Capital Corporation (Ranson
Capital), the company's portfolio management subsidiaries, and the Funds
received comment letters from the SEC staff that outlined various compliance
issues.  ND Money Management, Ranson Capital and the Funds, responded to the
SEC's comments June 1, 1998, and on September 3, 1998, the SEC's response was
one of advisory content only.  The Company's compliance department has put
procedures in place to ensure future compliance.  The Company has incurred and
anticipates that it will continue to incur, additional costs in the future to
ensure ongoing compliance with applicable regulatory requirements, although the
extent of such additional; costs is not presently determinable.

Description of the Year 2000 (Y2K) Problem

The Y2K problem refers to a flaw in the way dates have traditionally been
entered into computer systems.  Some computer systems and software have
accepted entry of two digit years with the expectation that the year "00"
refers to the year 1900, not the year 2000.  This prevents the computer from
properly recognizing dates after the year 1999.  Y2K compliance indicates that
procedures have been adopted to assure all dates entered, stored, calculated
and reported by computer systems are valid.

Company action addressing the Y2K problem

The information and data processing systems used by ND Holdings, Inc. and its
subsidiaries are managed and maintained by ND Resources, Inc.  ND Resources
has the responsibility to assure that data processing performed for its parent
company and subsidiaries, as well as data processing performed for and between
outside clients, will not be adversely affected by the Y2K problem.

ND Resources has completed an inventory and assessment of all systems
potentially affected by the Y2K problem.  Remediation and testing of individual
system components is scheduled to be completed by the second quarter of 1999.
Outside vendors have been identified and contacted regarding Y2K compliance.

Impact of the Y2K problem on the company

ND Holdings, Inc. does not anticipate a material impact on the company's
financial condition due to Y2K compliance issues.  The company's information
systems have been designed to be Y2K compliant.  Internal company staff and
resources are being utilized to address Y2K remediation and testing.  ND
Resources is in close contact with outside vendors and service providers, to
assure that a third party's failure to provide service does not disrupt
normal business operations.

Contingency planning

A formal contingency plan for failure to adequately address Y2K compliance
issues will be developed by ND Resources, Inc.  The scheduled completion time-
frame is second quarter or 1999.

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 1998, 1997
and 1996 were 62%, 64% and 83%, respectively.  The effective rate will
continue to reflect the nondeductible amortization associated with the
investment adviser's agreement acquired in the Ranson acquisition, which has a
remaining life of 17 years.  Amortization of the non-compete agreement was
complete at December 31, 1998.  Accordingly, the effective tax rate for 1999
and forward will potentially decrease because amortization of the non-compete
agreement was nondeductible for income tax purposes.

Effective for 1998, the Company is expensing deferred sales commissions as
incurred for income tax purposes.  The Company will continue to capitalize and
amortize the commissions for financial reporting purposes.  The effects of the
change will create timing differences between when the commissions are deducted
for income tax purposes and expenses as amortization for financial reporting
purposes.  Deferred tax assets or Deferred tax liabilities will result from
these timing differences.

FINANCIAL CONDITION

At December 31, 1998, the Company's assets aggregated $10.9 million, an
increase of 6% from $10.3 million in 1997, due to an increase in cash and cash
equivalents and property and equipment.  Stockholders' equity increased to
$9.1 million at December 31, 1998 compared to $9.0 million at the end of 1997,
primarily as a result of net income of $252,719.

Cash provided by operating activities increased to $1,086,908 in 1998, an
increase of $501,254 or 85.6% from $585,654 in 1997.  During the year ended
December 31, 1998, the Company used net cash of $734,128 for investing
activities for the purchase of the office building and office equipment.  Net
cash flow provided by financing activities during the year was $337,796,
primarily from proceeds from an intrastate debenture offering and to a lesser
extent $146,680 from net notes payable activity and reduction of outstanding
investment certificates.  During 1998, the Company also purchased $206,884 of
its 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

At December 31, 1998, the Company's liquid assets totaled $1,143,179,
including $1,042,179 of cash and cash equivalents, as compared to $452,932 of
which $351,603 represented cash and cash equivalents, at December 31, 1997.

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 and its borrowing capacity under its line
of credit, which at March 19, 1999 had $1,500,000 in available borrowings, 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.  In addition, the Company is required
under the terms of its debentures, which mature September 1, 2002, to make
annual interest payments of approximately $47,500 in March and September.

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 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.  If the Company's assets under management decline, or
do not grow in accordance with the Company's plans, fee revenues and earnings
would be materially adversely affected.  Assets under management 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 loans 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 material 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 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) 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.

The Company also operates in a heavily-regulated environment. Following routine
books and records examinations by the SEC in 1997, ND Money Management, Ranson
Capital, two of the Company's subsidiaries and the Funds received comment 
letters from the SEC staff that outlined various compliance issues.  ND Money 
Management, Ranson and the Funds, responded to the SEC's comments and the
issues have been resolved.  The Company incurred additional costs in order to
comply with existing regulatory requirements.  The need to comply with any
future regulatory requirements may place further regulatory burdens on the
Company and require the Company to incur additional costs.  These additional
costs may have a material adverse effect on the Company's earnings. 

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 nine 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, 1998, 1997 AND 1996

                                     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                5-6
  
  Consolidated Statements of Cash Flows                          7-8

  Notes to Consolidated Financial Statements                     9-17


ADDITIONAL INFORMATION

  Independent Auditor's Report on Additional Information         18

  Selected Financial Data                                        19

  Quarterly Results of Consolidated Operations (Unaudited)       20







                       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, 1998 and
1997 and the related consolidated statements of operations, stockholders'
equity and cash flows for the years ended December 31, 1998, 1997 and 1996.
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 generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial state-
ments 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 financial position of ND Holdings, Inc.
and Subsidiaries as of December 31, 1998 and 1997, and the results of their
operations and their cash flows for the years ended December 31, 1998, 1997
and 1996 in conformity with generally accepted accounting principles.




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

February 23, 1999

                                     -1-

                     ND HOLDINGS, INC. AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
                        DECEMBER 31, 1998 AND 1997



                                    ASSETS


                                                                     1997
                                                  1998            (Restated)
                                              ------------      ------------
CURRENT ASSETS
  Cash and cash equivalents                   $  1,042,179      $    351,603
  Securities available-for-sale                    101,000           101,329
  Accounts receivable
    - Fees from sponsored mutual funds             324,075           342,134
  Prepaids                                          48,808            27,825
  Deferred tax benefit                                 138           405,343
                                              ------------      ------------
  Total current assets                        $  1,516,200      $  1,228,234
                                              ------------      ------------
PROPERTY AND EQUIPMENT                        $  1,295,904      $    562,776
  Less accumulated depreciation                    284,606           239,337
                                              ------------      ------------
  Net property and equipment                  $  1,011,298      $    323,439
                                              ------------      ------------
OTHER ASSETS
  Deferred sales commissions                  $  3,328,634      $  3,341,858
  Covenant not to compete (net of accumulated
    amortization of $300,000 for 1998 
    and $200,000 for 1997)                               0           100,000
  Investment adviser's agreements (net of
    accumulated amortization of $841,585 for 
    1998 and $554,668 for 1997)                  4,896,754         5,183,671
  Other                                            138,174           128,958
                                              ------------      ------------
  Total other assets                          $  8,363,562      $  8,754,487
                                              ------------      ------------
TOTAL ASSETS                                  $ 10,891,060      $ 10,306,160
                                              ============      ============

                                     -2-







LIABILITIES AND STOCKHOLDERS' EQUITY


                                                                     1997
                                                  1998            (Restated)
                                              ------------      ------------
CURRENT LIABILITIES
  Service fees payable                        $     99,245      $    101,486
  Accounts payable                                   8,656            16,208
  Other current liabilities                         42,221            36,714
  Short-term borrowings                            350,000                 0
  Current portion of long-term debt                 57,750            78,192
                                              ------------      ------------
  Total current liabilities                   $    557,872      $    232,600
                                              ------------      ------------
LONG-TERM LIABILITIES
  Note payable                                $    327,750      $    455,970
  Investment certificates                           30,000           105,100
  Debentures                                       950,000           552,000
  Less current portion shown above                 (57,750)          (78,192)
                                              ------------      ------------
 Total long-term liabilities                  $  1,250,000      $  1,034,878
                                              ------------      ------------
TOTAL LIABILITIES                             $  1,807,872      $  1,267,478
                                              ------------      ------------
STOCKHOLDERS' EQUITY
  Common stock - 20,000,000 shares
    authorized, no par value; 7,951,187 and
    8,153,187 shares issued and
    outstanding, respectively                 $ 10,253,246      $ 10,460,130
  Accumulated deficit                           (1,170,058)       (1,422,777)
  Accumulated other comprehensive income                 0             1,329
                                              ------------      ------------
  Total stockholders' equity                  $  9,083,188      $  9,038,682
                                              ------------      ------------
TOTAL LIABILITIES AND
  STOCKHOLDERS' EQUITY                        $ 10,891,060      $ 10,306,160
                                              ============      ============








             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, 1998, 1997 AND 1996


<TABLE>
<CAPTION>
<S>                                         <C>              <C>              <C>

                                                             1997
                                            1998          (Restated)          1996
                                        -----------       -----------     -----------
REVENUES
  Fee income                            $ 3,504,684       $ 3,604,334     $ 3,114,995
  Commissions                               934,224           986,382         302,619
                                        -----------       -----------     -----------
  Total revenue                         $ 4,438,908       $ 4,590,716     $ 3,417,614
                                        -----------       -----------     -----------
OPERATING EXPENSES
  Compensation and benefits             $   825,195       $   893,722     $   718,008
  General and administrative expenses     1,859,281         1,959,998       1,555,156
  Sales commissions amortized               630,603           546,675         464,050
  Depreciation and amortization             440,386           451,431         419,398
                                        -----------       -----------     -----------
  Total operating expenses              $ 3,755,465       $ 3,851,826     $ 3,156,612
                                        -----------       -----------     -----------
OPERATING INCOME                        $   683,443       $   738,890     $   261,002
                                        -----------       -----------     -----------
OTHER INCOME (EXPENSES)
  Interest and other income             $    79,043       $    23,863     $   160,595
  Interest expense                         (104,527)         (118,311)       (161,197)
                                        -----------       -----------     -----------
  Net other expense                     $   (25,484)      $   (94,448)    $      (602)
                                        -----------       -----------     -----------
INCOME BEFORE INCOME
  TAX EXPENSE                           $   657,959       $   644,442     $   260,400

INCOME TAX EXPENSE                         (405,240)         (415,042)       (216,029)
                                        -----------       -----------     -----------
NET INCOME                              $   252,719       $   229,400     $    44,371
                                        ===========       ===========     ===========
EARNINGS PER COMMON SHARE:
  Basic                                 $       .03       $       .03     $       .01
  Diluted                               $       .03       $       .03     $       .01

SHARES USED IN COMPUTING
  EARNINGS PER COMMON SHARE:
  Basic                                   8,094,062         8,142,820       8,163,140
  Diluted                                 8,094,062         8,533,702       8,475,906
</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, 1998, 1997 AND 1996

<TABLE>
<CAPTION>
<S>                               <C>                <C>           <C>               <C>                   <C>
                                                                                     Accumulated
                                  Number of          Common                             Other
                                   Common            Stock         Accumulated      Comprehensive
                                   Shares            Amount          Deficit            Income             Total
                                -----------      ------------    ------------      -------------      ------------
BALANCE,
 JANUARY 1, 1996                  8,191,751      $ 10,760,074    $ (1,671,548)     $     21,900       $  9,110,426

  Prior period adjustment                 0                 0         (25,000)                0            (25,000)
                                 -----------      ------------    ------------      ------------       ------------
BALANCE AT JANUARY 1,
 1996, AS RESTATED                8,191,751      $ 10,760,074    $ (1,696,548)     $     21,900       $  9,085,426

  Comprehensive income
    Net income                            0                 0          44,371                 0             44,371
    Change in unrealized
      gain (loss) on securities
      available-for-sale                  0                 0               0           (21,900)           (21,900)
  Total comprehensive 
    Income                                                                                            $     22,471
 
  Purchase of common stock          (68,165)         (126,707)              0                 0           (126,707)
                                ------------      ------------    ------------      ------------       ------------
BALANCE,
 DECEMBER 31, 1996                8,123,586      $ 10,633,367    $ (1,652,177)     $          0       $  8,981,190

  Comprehensive income
    Net income                            0                 0         229,400                 0            229,400
    Change in unrealized gain
      (loss) on securities
      available-for-sale                  0                 0               0             1,329              1,329
                                                                                                       ------------
  Total comprehensive
    Income                                                                                            $    230,729

  Common stock issued                79,203           247,959               0                 0            247,959

  Purchase of common stock          (49,602)         (143,103)              0                 0           (143,103)

  Registration costs                      0          (278,093)              0                 0           (278,093)
                                ------------      ------------    ------------      ------------       ------------
BALANCE 
  DECEMBER 31, 1997               8,153,187      $ 10,460,130    $ (1,422,777)     $      1,329       $  9,038,682
                                ------------      ------------    ------------      ------------       ------------
</TABLE>
                                     -5-









                   ND HOLDINGS, INC. AND SUBSIDIARIES
          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (CONTINUED)
             FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996


<TABLE>
<CAPTION>
<S>                               <C>                <C>           <C>               <C>                   <C>
                                                                                     Accumulated
                                  Number of          Common                             Other
                                   Common            Stock         Accumulated      Comprehensive
                                   Shares            Amount          Deficit            Income             Total
                                -----------      ------------    ------------      -------------      ------------
BALANCE 
  DECEMBER 31, 1997               8,153,187      $ 10,460,130    $ (1,422,777)     $      1,329       $ 9,038,682

  Comprehensive income
    Net income                            0                 0         252,719                 0           252,719
    Change in unrealized gain
      (loss) on securities
      available-for-sale                  0                 0               0            (1,329)          (1,329)
                                                                                                       ------------
  Total comprehensive 
    Income                                                                                            $  251,390

  Purchase of common stock         (202,000)         (206,884)              0                 0         (206,884)
                                ------------      ------------    ------------      ------------       ------------
BALANCE 
  DECEMBER 31, 1998                7,951,187     $ 10,253,246    $ (1,170,058)     $          0      $ 9,083,188 
</TABLE>





















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

                                     -6-

                      ND HOLDINGS, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996



<TABLE>
<CAPTION>
<S>                                                  <C>              <C>              <C>
                                                     1998             1997             1996
                                                 -----------       -----------     -----------

CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                     $   252,719       $   229,400     $    44,371
  Adjustments to reconcile net income to
    net cash provided by operating activities:
     Depreciation and amortization                   440,386           451,431         419,398
     Sales commissions amortized                     630,603           546,675         464,050
     Net realized (gain) loss on securities 
       Available-for-sale                                  0                 0         (23,801)
     Loss (gain) on sale of equipment                                     (249)            230
     (Increase) decrease in:
       Accounts receivable                            18,059            (9,485)       (170,742)
       Prepaids                                      (20,983)           (5,170)        (22,655)
       Deferred sales commissions capitalized       (617,379)         (829,189)       (683,155)
       Deferred tax benefit                          405,205           397,799         239,258
       Other assets                                  (17,416)          (39,933)        (39,071)
     Increase (decrease) in:
      Service fees payable                            (2,241)           (7,070)        108,556
      Accounts payable                                (7,552)         (168,434)        120,573
      Other liabilities                                5,507            19,879          (9,156)
                                                 -----------       -----------     -----------
  Net cash provided by operating activities      $ 1,086,908       $   585,654     $   447,856
                                                 -----------       -----------     -----------
CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of property and equipment             $  (733,128)      $   (46,768)    $  (347,727)
  Proceeds from sale of equipment                          0               400             800
  Purchase of available-for-sale securities         (100,000)         (100,000)              0
  Proceeds from sale of
    available-for-sale securities                     99,000                 0         325,564
  Purchase of covenant not to compete                      0                 0        (300,000)
  Purchase of investment adviser's agreements              0            (4,030)     (5,705,220)
  Return of capital from limited partnership unit          0                 0             467
                                                 -----------       -----------     -----------
  Net cash used by investing activities          $  (734,128)      $  (150,398)    $(6,026,116)
                                                 -----------       -----------     -----------
</TABLE>
                                     -7-





              CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)




<TABLE>
<CAPTION>
<S>                                                  <C>              <C>              <C>
                                                     1998             1997             1996
                                                 -----------       -----------     -----------

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from issuing common stock
    (net of stock issue costs of  $0, 
     $27,371 and $0, respectively)                  $         0       $   247,959     $         0
  Redemption of common stock                           (206,884)         (143,103)       (126,707)
  Public registration costs                                   0           (36,429)       (159,921)
  Increase in notes payable                             650,000                 0       1,748,975
  Reduction of notes payable                           (428,220)         (741,992)       (576,013)
  Redemption of investment certificates                 (75,100)         (130,000)        (35,000)
  Debentures issued                                     398,000           552,000               0
                                                    -----------       -----------     -----------
  Net cash provided (used) by financing activities  $   337,796       $  (251,565)    $   851,334
                                                    -----------       -----------     -----------
NET INCREASE (DECREASE) IN CASH
 AND CASH EQUIVALENTS                               $   690,576       $   183,691     $(4,726,926)

CASH AND CASH EQUIVALENTS
 AT BEGINNING OF YEAR                                   351,603           167,912       4,894,838
                                                    -----------       -----------     -----------
CASH AND CASH EQUIVALENTS
  AT END OF YEAR                                    $ 1,042,179       $   351,603     $   167,912
                                                    ===========       ===========     ===========
SUPPLEMENTARY DISCLOSURE OF
 CASH FLOW INFORMATION
  Cash paid during the year for: 
    Interest                                        $    88,022       $   107,682     $   161,578
    Income taxes                                    $    20,800       $     8,876     $         0

SUPPLEMENTAL SCHEDULE OF NONCASH
  INVESTING ACTIVITIES
 Change in unrealized gain (loss) on
    securities available-for-sale                   $    (1,329)      $     1,329     $   (21,900)
</TABLE>










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

                                     -8-

                     ND HOLDINGS, INC. AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      DECEMBER 31, 1998, 1997 AND 1996



NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

The nature of operations and significant accounting policies of ND Holdings,
Inc. and Subsidiaries is 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.  The
Company and its wholly owned subsidiaries operate in one business segment,
that is as investment adviser and provider of administrative services to
sponsored and non-proprietory mutual funds.  Located in Minot, North Dakota,
the Company is marketing its services throughout the Midwestern United States.

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., and Ranson Capital
Corporation.  The acquired Ranson Capital Corporation's operations are included
from the acquisition date, January 6, 1996.  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.  Company revenues
are largely dependent on the total value and composition of assets under
management, which include state-specific municipal bonds.  Accordingly, fluctu-
ations 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 generally accepted accounting principles 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.

                                     -9-

NOTE 1 - (CONTINUED)

CASH AND EQUIVALENTS - The Company's policy is to record all liquid
investments with original maturities of three months or less as cash equiva-
lents.  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 market-
able 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 identifica-
tion method.

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 COMMISSION - 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, are capitalized and amortized on a straight line
basis over a period not exceeding nine 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 commis-
sions. Effective July 23, 1998, sales commission paid in connection with the
sale of shares of sponsored mutual funds which do not have both a 12b-1 plan
and contingent deferred sales charges are expensed as incurred.  Effective
January 1, 1998, the Company is expensing the current sales commissions for tax
purposes but is continuing to amortize them over a nine year period for
financial reporting.  All sales commissions incurred prior to January 1, 1998
are amortized for both methods. 

ADVERTISING - Costs of advertising and promotion of sponsored mutual funds are
expensed the first time that the advertising takes place.

EARNINGS PER COMMON SHARE - The Company adopted Statement of Financial
Accounting Standard No.  128 ("FAS 128"), Earnings Per Share in 1997.
Restating the prior years earnings per common share to conform to the pro-
visions of this statement resulted in no changes to previous amounts reported
as the number of outstanding shares used to calculate both basic and diluted
earnings per common share are substantially identical to those used in the
prior years.  Basic earnings per common share was computed using the weighted
average number of shares outstanding of 8,094,062 in 1998, 8,142,820 in 1997
and 8,163,140 in 1996.  Diluted earnings per common share is computed using
the weighted average number of shares outstanding adjusted for share equiva-
lents arising from unexercised stock warrants.  The weighted average shares
outstanding used in computing diluted earnings per common share was 8,094,062
in 1998, 8,533,702 in 1997 and 8,475,906 in 1996. 

                                     -10-

NOTE 1 -  (CONTINUED)

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 three 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.

PUBLIC REGISTRATION COSTS - The Company's costs for registration of its common
shares were capitalized until the initial public offering commenced.  During
1997, the costs were charged to the common stock account. 

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 1997 and 1996 have been reclassified to
conform with the 1998 presentation.

NOTE 2 -  CASH AND CASH EQUIVALENTS

Cash and cash equivalents at December 31, 1998 and 1997 consist of the
following:

                                  Current
                      Current     Interest                      Amount
                      Maturity      Rate                   1998           1997
                      --------    -------            ---------------------------
   Cash in checking    Demand        -               $     2,693     $    12,735
   Dean Witter Money
   Market Accounts     Demand      4.54 %              1,039,486         338,868
                                                     -----------     -----------
                                                     $ 1,042,179     $   351,603
                                                     ===========     ===========

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, 1998 include:

                                  Gross
                Aggregate       Unrealized      Aggregate Fair
   1998            Cost        Holding Gains         Value
   ----        ----------      -------------    --------------
   Bond funds   $ 101,000      $           0       $ 101,000

Dividends earned on the Company's investments in sponsored mutual funds
aggregated $0 in 1998, $537 in 1997 and $3,007 in 1996.  The Company recognized
a net gain of $0 in 1998, $0 in 1997 and $23,801 in 1996 from dispositions and
write-downs of fund investments, all of which are reported in the other income
(expenses) section of the consolidated statement of operations. 

                                     -11-

NOTE 3 -  (CONTINUED)

The Company provides services to the Integrity Mutual Funds family of funds
which had aggregate net assets under management at December 31, 1998 of approx-
imately $350 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 Share-
holders.  Revenues derived from services rendered to the sponsored mutual funds
were $3,504,684 in 1998, $3,604,334 in 1997, and $3,114,995 in 1996.

Accounts receivable from the sponsored mutual funds aggregated $324,075 and
$342,134 at December 31, 1998 and 1997, respectively.


NOTE 4 -  PROPERTY AND EQUIPMENT

Property and equipment at December 31 consists of:

                                            1998             1997
   Office furniture and equipment       $   400,706      $   369,471
   Leased equipment                           9,735            9,735
   Leasehold improvements                         0          183,570
   Building and land                        885,463                0
                                        -----------      -----------
                                        $ 1,295,904      $   562,776
   Accumulated depreciation and
    Amortization                            284,606          239,337
                                        -----------      -----------
                                        $ 1,011,298      $   323,439
                                        ===========      ===========

Depreciation expense totaled $45,269 and $60,437, and $50,161 in 1998, 1997,
and 1996, respectively.


NOTE 5 -  ACQUISITIONS

On January 5, 1996, the Company completed its acquisition of The Ranson
Company, Inc. and its subsidiary (Ranson Capital Corporation), an investment
adviser and distributor for Ranson Managed Portfolios.  The offices of The
Ranson Company, Inc. and its subsidiary have been closed and the operations
have been integrated into the Company's subsidiaries.  Because The Ranson
Company, Inc. was strictly a holding company for its subsidiary with no
material assets, liabilities, or operations, other than those involving its
investment in its subsidiary, it was dissolved in November, 1996 leaving its
subsidiary, Ranson Capital Corporation, wholly-owned by the Company.  The
acquisition was accounted for as a purchase in which the Company paid
$4,696,403 in cash and $1,500,000 from bank borrowings.  The operations and
financial position of The Ranson Company, Inc. and subsidiary were accounted
for in the consolidated financial statements of the Company beginning January
6, 1996.  The excess purchase price over the estimated fair value of the assets
was $5,565,646 of which $300,000 is for a covenant not to complete, being
amortized using the straight-line method over 3 years.  The remaining balance
represents the value of the investment adviser's agreement, and is being
amortized using the straight-line method over 20 years.  In addition, the
Company paid various other costs totaling $178,750 to complete the acquisition.
These costs are also being amortized using the straight-line method over 20
years.

                                     -12-

NOTE 5 -  (CONTINUED)

During December, 1996, the Company acquired the rights to the investment
adviser's agreement to manage the "Heartland Nebraska Tax Free Fund".  The
costs associated with this acquisition, totaling $293,943, are amortized using
the straight-line method over a period of twenty years.


NOTE 6 -  SHORT-TERM BORROWINGS

Short-term borrowings at December 31, 1998 and 1997, consisted of the
following:

                                                   1998         1997
                                                 ---------   ---------
   Note to Main Limited, interest at 0%
     and payable in full January 8, 1999         $ 350,000   $       0
                                                 =========   =========

NOTE 7 -  LONG-TERM DEBT

Long-term debt at December 31, 1998 and 1997 was as follows:

<TABLE>
<CAPTION>
<S>                               <C>      <C>             <C>           <C>
                                           Current
                                  Rate     Portion         1998          1997
                                 ------    --------     -----------   -----------
Long-term debt:
  Revolving loan                  9.50%    $      0     $         0   $   425,128
  Investment certificates        10.00%      30,000          30,000       105,100
  Capital lease obligations       7.11%       2,750           2,750         5,842
  Debentures                     10.00%           0         950,000       552,000
  Long-term note - First
     Western                      7.75%           0         300,000             0
  MADC                            0.00%      25,000          25,000        25,000
                                           --------     -----------   -----------
  Totals                                   $ 57,750     $ 1,307,750   $ 1,113,070
                                           ========     ===========   ===========
</TABLE>

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

REVOLVING LOAN - Effective January 5, 1996, the Company obtained a $1,500,000
loan from First Western Bank and Trust.  Interest was charged on outstanding
amounts at the prime rate plus 1% per year, payable monthly.  The principal was
paid in full March, 1998.

INVESTMENT CERTIFICATES - The Company had an intra-state offering of investment
certificates.  The certificates are debt obligations and do not represent
ownership in the Company.  The total offering was $500,000 of which only
$281,100 in certificates were issued.  As of December 31, 1998, $30,000 in
certificates are still outstanding.  The certificates bear interest at a rate
of 10% per annum, payable semi-annually, and mature 5 years from the date of
issuance.  The Company has the option of redeeming the certificates early, but
has no obligation to do so except in the case of death of the registered
holder.

                                     -13-

NOTE 7 -  (CONTINUED)

CAPITAL LEASE OBLIGATIONS - In October 1996, the Company entered into a capital
lease obligation for office equipment.  The term of the lease is for 3 years
with monthly payments of $284 at an interest rate of 7.11%.

DEBENTURES - The Company approved a $10 million intra-state debenture offering
limiting the sale in North Dakota to North Dakota residents only.  The deben-
tures do not represent ownership in the Company.  As of December 31, 1998,
$950,000 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 any time after September 1,
1999.

The Company also has a bank line-of-credit which provides for borrowings up to
$500,000.  Interest on advances is payable at maturity at the rate of 7.75%.
The line-of-credit is due on January 1, 2000.  The outstanding balance on this
line-of-credit as of December 31, 1998 was $300,000.

In May 1995, the Company received an interest free loan in the amount of
$25,000 from the Minot Area Development Corporation.  This loan has a maturity
date of February 15, 1999.

The aggregate amount of required future payments on the above long-term debt at
December 31, 1998, is as follows:

   Year ending December 31,
      1999                         $   103,049
      2000                             472,125
      2001                              95,000
      2002                           1,021,250
                                   -----------
      Total                        $ 1,691,424
      Less amount representing
        Interest                       383,674
                                   -----------
      Total due                    $ 1,307,750
                                   ===========

NOTE 8 -  INCOME TAXES

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

                                  1998          1997        1996
                                ---------    ---------     --------
   Current income taxes
     Federal                    $       0    $  12,605     $      0
     State                              0            0            0

   Deferred income
     Taxes                        405,240      402,437      216,029
                                ---------    ---------    ---------
                                $ 405,240    $ 415,042    $ 216,029
                                =========    =========    =========

                                     -14-

NOTE 8 -  (CONTINUED)

Deferred income taxes (benefits) reflect the impact of temporary differences
between the amount of assets and liabilities recognized for financial report-
ing 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.  Effective January 1, 1998,
the Company is expensing the current sales commissions for tax purposes but is
continuing to amortize them over a nine year period for financial reporting.
All sales commissions incurred prior to January 1, 1998 are amortized for both
methods.  As of December 31, 1998 and 1997, the Company had unamortized
deferred sales commissions for tax purposes of $2,753,593 and $3,341,858,
respectively.  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.  The net operating loss
carryforward of $516,000 may be used to offset taxable income through the
year 2011.

A reconciliation of the difference between the expected income tax expense 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:

                                             1998        1997       1996
                                          ---------   ---------   ---------
   Federal taxes at
    statutory rates                       $ 230,000   $ 225,555   $  91,140

   State taxes, net of
    federal tax effect                       43,000      42,320      16,100

   Taxes on nondeductible amort-
     ization at federal statutory rates     133,000     130,275     128,712

   Other                                       (760)     16,892     (19,923)
                                          ---------   ---------   ---------
   Actual tax expense                     $ 405,240   $ 415,042   $ 216,029
                                          =========   =========   =========

NOTE 9 -  STOCK WARRANTS AND SPLITS

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, Account-
ing 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 SFAS
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 as of
December 31, 1998.

                                     -15-


NOTE 10 -  EMPLOYEE RETIREMENT PLAN

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 1998, 1997,
and 1996.


NOTE 11 -  COMMITMENTS

The Company leased office space under a five year lease agreement which
commenced on June 1, 1996.  Lease payments were $3,000 per month for the
term of the lease.  The lease carried an option to renew for an additional
five years after expiration of the initial term.  In addition, a provision
of the lease allowed the Company to purchase the building, in which its offices
are located, at any time during the term of the lease.  On December 31, 1998,
the Company exercised this option and purchased the building for $700,000.
Rent expense for 1998 and 1997 was $29,445 and $36,000, respectively.


NOTE 12 - NET CAPITAL REQUIREMENTS

The Company's broker/dealer subsidiaries (ND Capital, Inc. and Ranson Capital
Corporation) are member firms of the National Association of Securities
Dealers, Inc. and are registered with the Securities and Exchange Commission
(SEC) as brokers/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, 1998, these
subsidiaries had net capital of $142,948 and $695,180; minimum net capital
requirements of $25,000 and $5,000; excess net capital of $117,948 and
$690,180; and ratios of aggregate indebtedness to net capital of .25 to 1
and .10 to 1, respectively.  Both subsidiaries are exempt from the reserve
requirements of Rule 15c3-3.


NOTE 13 -  ACCUMULATED OTHER COMPREHENSIVE INCOME

As of January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No.  130 - Reporting Comprehensive Income.  Accordingly, the Company
has restated the prior year's balance sheet and statement of retained earnings
to present comprehensive income and accumulated comprehensive income presented
in this report.  The following items are reported in other comprehensive
income as of December 31, 1998, 1997 and 1996:

                                              1998       1997     1996
                                            --------   -------  --------
   Unrealized gain (loss) in securities
     available-for-sale                     $ (1,329)  $ 1,329  $ 21,900
                                            ========   =======  ========

                                     -16-

NOTE 14 -  PRIOR PERIOD ADJUSTMENT

During the audit of the current year's financial statements, an error was
discovered that resulted in an understatement of reported liabilities and
overstated net income as of December 31, 1995.  The beginning stockholders'
equity as of January 1, 1996 has been adjusted to correct this error, as well,
the 1997 balance sheet reflects an increase in notes payable and a decrease in
stockholders' equity by $25,000.


NOTE 15 -  RESTATEMENT OF PRIOR YEARS

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
current year's presentation.  The 1996 statement of operations has not been
restated, as the amount is inconsequential.

                                     -17-






                           ADDITIONAL INFORMATION






              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, 1998, 1997 and
1996, 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 infor-
mation on pages 19 and 20 related  to the 1998, 1997 and 1996 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 infor-
mation is fairly stated in all material respects in relation to the basic
consolidated financial statements for the years ended December 31, 1998, 1997
and 1996, taken as a whole.

We also have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheets of ND Holdings, Inc. and
Subsidiaries as of December 31, 1995 and 1994, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of
the two years in the period ended December 31, 1995, none of which is presented
herein, and we expressed unqualified opinions on those consolidated financial
statements.  In our opinion, the information on page 19 relating to the 1995
and 1994 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



February 23, 1999

                                     -18-

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


<TABLE>
<CAPTION>
<S>                                  <C>               <C>           <C>               <C>               <C>
                                                       1997
                                                    (Restated)       1996              1995
                                     1998             (a)(b)     (Restated)(b)     (Restated)(b)         1994
                                ------------     ------------     ------------     ------------     ------------
Operating revenue               $  4,438,907     $  4,590,716     $  3,417,614     $  1,405,316     $  1,130,151

Income (loss) from
  Operations                    $    683,443     $    738,890     $    261,002    $   (709,182)    $    (546,288)

Income tax (expense) benefit    $   (405,240)    $   (415,042)    $   (216,029)   $    162,400     $     205,500

Earnings (loss) per share       $        .03     $        .03     $        .01    $       (.05)    $        (.04)

Total assets                    $ 10,891,060     $ 10,306,160     $ 10,724,285    $  9,470,586     $  9,231,998

Long-term obligations           $  1,357,750     $  1,113,070     $  1,433,062    $    295,100     $    281,100

Shareholders' equity            $  9,083,188     $  9,038,682     $  8,981,190    $  9,085,426     $  8,898,628

Dividends paid                  $          0     $          0     $          0    $          0     $          0
</TABLE>

(a)  See Note 15
(b)  See Note 14

                                     -19-

                    ND HOLDINGS, INC. AND SUBSIDIARIES
          QUARTERLY RESULTS OF CONSOLIDATED OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
<S>                           <C>           <C>           <C>          <C>
                                                 QUARTER ENDED
                           ----------------------------------------------------
                              3-31-98       6-30-98       9-30-98      12-31-98
                           -----------   -----------   -----------   -----------
Revenues                   $ 1,131,861   $ 1,076,591   $ 1,089,255   $ 1,141,201
Operating income               250,643        29,070       192,021       211,708
Other income (expense)         (18,459)      (12,654)      (13,940)       19,569
Income tax expense            (123,404)      (38,057)     (121,518)     (122,261)
Net income                     108,750       (21,609)       56,563       109,015

Per Share(1)
  Operating income                 .03           .00           .02           .03
  Other income (expense)           .00           .00           .00           .00
  Income tax expense              (.02)          .00          (.02)         (.02)
</TABLE>
<TABLE>
<CAPTION>
<S>                           <C>           <C>           <C>          <C>
                                        QUARTER ENDED (RESTATED)(2)
                              3-31-97       6-30-97       9-30-97      12-31-97
                           -----------   -----------   -----------   ----------
Revenues                   $ 1,031,130   $ 1,162,030   $ 1,175,242   $ 1,222,314
Operating income               178,937       114,449       205,130       240,374
Other income (expense)         (17,814)       (2,914)      (21,487)      (52,233)
Income tax expense            (104,988)      (82,737)     (108,016)     (119,301)
Net income                      56,135        28,798        75,627        68,840

Per Share(1)
  Operating income                 .02           .01           .02           .03
  Other income (expense)           .00           .00           .00          (.01)
  Income tax expense              (.01)         (.01)         (.01)         (.01)
</TABLE>
<TABLE>
<CAPTION>
<S>                           <C>           <C>           <C>          <C>
                                               QUARTER ENDED
                              3-31-96       6-30-96       9-30-96      12-31-96
                           -----------
Revenues                   $   870,413   $   715,404   $   819,153   $ 1,012,644
Operating income (loss)        115,719      (105,504)       28,645       222,142
Other income (expense)         (23,168)       27,538       (37,102)       32,130
Income tax (expense) benefit    92,551       (16,800)      (21,571)     (270,209)
Net income (loss)               32,851       (94,766)      (30,028)      136,314

Per Share(1)
  Operating income (loss)          .01          (.01)          .00           .03
  Other income (expense)           .00           .00           .00           .00
  Income tax (expense) benefit     .01           .00           .00          (.03)
</TABLE>

(1) The Company adopted FAS 128 in 1997.  All prior period earnings per common
share calculated under this provision are not materially different than amounts
previously reported.  In addition, basic and diluted earnings per common share
are not materially different.

(2) See Note 15.

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.
            

                                     -20-

Item 8    Changes In and Disagreements with Accountants on Accounting
and Financial Disclosure

None.


                               PART III

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 16, 1999


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 16, 1999 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 16, 1999.

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 16, 1999.

PART IV

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).

          5.0   Management and Investment Advisory Agreement - Ranson Managed
                Portfolios (incorporated by reference to Exhibit 5.0 contained
                in the Portfolios' Registration Statement on Form N-1A
                (File No. 33-36324), filed with the Commission on August 13,
                1990.

          5.1   Management and Investment Advisory Agreement - Ranson Managed
                Portfolios (incorporated by reference to Exhibit 5.0 contained
                in the Portfolios' Registration Statement on Form N-1A, as
                amended on Post-Effective Amendment 7 (File No. 33-36324),
                filed with the Commission on November 13, 1991.

          5.2   Management and Investment Advisory Agreement - Ranson Managed
                Portfolios (incorporated by reference to Exhibit 5.0 contained
                in the Portfolios' Registration Statement on Form N-1A, as
                amended on Post-Effective Amendment 11 (File No. 33-36324),
                filed with the Commission on November 27, 1993.

          6.0   Distribution and Services Agreement - Ranson Managed
                Portfolios (incorporated by reference to Exhibit 6.0 contained
                in the Portfolios' Registration Statement on Form N-1A, as
                amended on Post-Effective Amendment 2 (File No. 33-36324),
                filed with the Commission on November 13, 1991.

          6.1   Distribution and Services Agreement - Ranson Managed
                Portfolios (incorporated by reference to Exhibit 6.0 contained
                in the Portfolios' Registration Statement on Form N-1A, as
                amended on Post-Effective Amendment 7 (File No. 33-36324),
                filed with the Commission on November 29, 1993.

          6.2   Distribution and Services Agreement - Ranson Managed
                Portfolios (incorporated by reference to Exhibit 6.0 contained
                in the Portfolios' Registration Statement on Form N-1A, as
                amended on Post-Effective Amendment 7 (File No. 33-36324),
                filed with the Commission on November 27, 1993.

         10.1   Management Advisory Contract - ND Tax-Free Fund, Inc.
                (incorporated by reference to Exhibit 10.1 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)

         10.2   Management Advisory Contract - Montana Tax-Free Fund, Inc.
                (incorporated by reference to Exhibit 10.2 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)

         10.3   Management Advisory Contract - South Dakota Tax-Free Fund,
                Inc. (incorporated by reference to Exhibit 10.3 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)

         10.4   Management Advisory Contract - ND Insured Income Fund, Inc.
                (incorporated by reference to Exhibit 10.4 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)

         10.5   Management Advisory Contract - Integrity Fund of Funds, Inc.
                (incorporated by reference to Exhibit 10.5 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)

         10.6   Transfer Agency Agreement - ND Tax-Free Fund, Inc.
                (incorporated by reference to Exhibit 10.6 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)

         10.7   Transfer Agency Agreement - Montana Tax-Free Fund, Inc.
                (incorporated by reference to Exhibit 10.7 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)

         10.8   Transfer Agency Agreement - South Dakota Tax-Free Fund, Inc.
                (incorporated by reference to Exhibit 10.8 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)

         10.9   Transfer Agency Agreement - ND Insured Income Fund, Inc.
                (incorporated by reference to Exhibit 10.9 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)

         10.10  Transfer Agency Agreement - Integrity Fund of Funds, Inc.
                (incorporated by reference to Exhibit 10.10 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)

         10.11  Distribution Agreement - ND Tax-Free Fund, Inc.
                (incorporated by reference to Exhibit 10.11 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)

         10.12  Distribution Agreement - Montana Tax-Free Fund, Inc.
                (incorporated by reference to Exhibit 10.12 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)

         10.13  Distribution Agreement - South Dakota Tax-Free Fund, 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  Distribution Agreement - ND Insured Income Fund, Inc.
                (incorporated by reference to Exhibit 10.14 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)

         10.15  Distribution Agreement - Integrity Fund of Funds, Inc.
                (incorporated by reference to Exhibit 10.15 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)

         10.16  Stock Purchase Agreement - ND Holdings, Inc. and
                Shareholders of Ranson Company, Inc. (incorporated by
                reference to Exhibit 10.15 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)

         10.17  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)

         10.18  Transfer Agent Agreement - Investors Research Fund
                (incorporated by reference to Exhibit 10.18 contained in the
                Company's Registration Statement Form N-1A as amended
                (File No. 2-14675) filed with the Commission on January 22
                1999)

         10.19  Distribution Agreement - Investors Research Fund
                (incorporated by reference to Exhibit 10.19 contained in the
                Company's Registration Statement Form N-1A as amended
                (File No. 2-14675) filed with the Commission on January 22
                1999)

         10.20  Accounting Services Agreement - Investors Research Fund
                (incorporated by reference to Exhibit 10.20 contained in the
                Company's Registration Statement Form N-1A as amended
                (File No. 2-14675) filed with the Commission on January 22
                1999)

         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)

         27.1   Financial Data Schedule

 (b)      Reports on Form 8-K.

No reports were filed on Form 8-K during the fourth quarter of the Fiscal Year
ended December 31, 1998

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 26th day of March.

                                                ND HOLDINGS, INC.


Date:  March 26, 1999                              By /s/ Robert E. Walstad
                                                 ------------------------
                                                   Robert E. Walstad
                                                   Chief Executive Officer and
                                                   President 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 26, 1999                               By /s/ Robert E. Walstad
                                                 ------------------------
                                                   Robert E. Walstad
                                                   Chief Executive Officer,
                                                   President and Director
                                                  (Principal Executive Officer)
                                                  (Acting Chief Financial 
                                                      Officer)

Date: March 26, 1999                               By /s/ Peter A. Quist
                                                 ------------------------
                                                   Peter A. Quist
                                                   Vice President and Director

Date: March 26, 1999                               By /s/ Lyle E. Mclain
                                                   ------------------------
                                                   Lyle E. McLain
                                                   Director

Date: March 26, 1999                               By /s/ Vance A. Castleman
                                                   ------------------------
                                                   Vance A. Castleman
                                                   Director

Date: March 26, 1999                               By /s/ Myron D. Thompson
                                                   ------------------------
                                                   Myron D. Thompson
                                                   Director

Date: March 26, 1999                               By /s/ Richard H. Walstad
                                                   ------------------------
                                                   Richard H. Walstad
                                                   Director

Date: March 26, 1999                               By /s/ Daniel L. Feist
                                                   ------------------------
                                                   Daniel L. Feist
                                                   Director