Integrity Funds N-CSRCertified annual shareholder report (management investment company)

N-CSR

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-07322

The Integrity Funds

(Exact name of registrant as specified in charter)

Brent Wheeler and/or Kevin Flagstad, PO Box 500, Minot, ND 58702

(Name and address of agent for service)

Registrant’s telephone number, including area code: 701-852-5292

Date of fiscal year end: July 31^st

Date of reporting period: July 31, 2021

Item 1. REPORTS TO STOCKHOLDERS.

THE INTEGRITY FUNDS

Integrity Dividend Harvest Fund

Integrity ESG Growth & Income Fund*

Integrity High Income Fund

Integrity Mid-North American Resources Fund

Integrity Short Term Government Fund

Annual Report | July 31, 2021

*Formerly known as Integrity Growth & Income Fund

*The Funds are distributed through Integrity Funds Distributor, LLC. Member FINRA

IMPORTANT NOTE: Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Integrity Viking Funds’ (the “Funds”) annual and semi-annual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the shareholder reports from the Funds or from your financial intermediary, such as a broker-dealer or bank. Instead, shareholder reports will be available on the Funds’ website (https://www.integrityvikingfunds.com/Documents), and you will be notified by mail each time a report is posted and provided with a website link to access the report.

If you hold Fund shares through a financial intermediary and you already elected to receive shareholder reports electronically through your financial intermediary, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Funds electronically by notifying your financial intermediary.

You may elect to receive all future shareholder reports in paper free of charge. You can inform your financial intermediary that you wish to continue receiving paper copies of your shareholder reports, or if you are a direct investor, by calling the Funds at 800-601-5593. Your election to receive reports in paper will apply to all Funds you hold directly or through your financial intermediary, as applicable.

INTEGRITY DIVIDEND HARVEST FUND

Enclosed is the annual report for Integrity Dividend Harvest Fund (the “Fund”) for the year ended July 31, 2021 (“the period”). The Fund’s portfolio and related financial statements are presented within for your review.

The period saw the S&P 500 TR Index (“S&P”) return 36.20%. Recession fears, riots over social concerns, and trade war worries all seemed to have alleviated, at least in part, over the past year. However, the biggest economic concern from the prior year, the Coronavirus pandemic, was still gripping the nation and the rest of the world. A combination of an expedited vaccine rollout as well as the dovish fiscal and monetary response from the government, including stimulus checks sent straight to citizens and elevated bond buying from the Federal Reserve (the “Fed”), had a major impact on financial markets, leading to the outsized returns we saw over the past 12 months. As of the end of the period, a new variant of the Coronavirus was increasing in number of infections, leaving it a mystery when the pandemic will end and what moves will be necessary going forward.

Back in September 2019, the U.S. Bureau of Labor Statistics reported that the unemployment rate had dropped to a 50-year low of 3.5%. The rate remained low until the effects of the Coronavirus economic shutdown took hold, and the unemployment rate spiked to 14.7% in April 2020. The rate continued to steadily decline over the past year, ending the period at 5.4% as economies and businesses continued to re-open and move toward normalization.

The Fed’s Federal Open Market Committee dropped the target Federal Funds Rate to 0% on March 16th, 2020 as the full impact of the Coronavirus was coming to light. During the period, they kept the rate at 0% due to economic uncertainty associated with the Coronavirus pandemic. The Fed continued to buy bonds and expand their balance sheet. It appears that these monetary moves have had a positive impact on financial markets. Two questions currently on investors’ minds are when will the Fed start tapering bond purchases, and when will we see the first rate increase since last year’s drop to 0%.

During the period, the financial sector was the best performing sector, moving higher due to the economy reopening and anticipation of higher rates. Investors have been expecting higher rates to follow the higher inflation numbers that have been seen recently. Industrials was the next best performing sector, likely due to the economy reopening and anticipation regarding the large infrastructure bill currently being considered in Congress. The worst performing sectors were utilities and consumer staples as investors shied away from lower risk areas in search for higher returns. The possibility of finding higher rates elsewhere may have led income-oriented investors to move away from these sectors which are typically associated with dividend-paying stocks.

The Fund’s total returns for Class A, C, and I shares were 23.09%*, 22.19%*, and 23.38%*, respectively, for the year ended July 31, 2021 while the S&P gained 36.20%. The Fund is in the Morningstar Large Value category which returned 38.84% over the same time period. The Fund underperformed its Morningstar category and the S&P. The Fund’s underperformance relative to the S&P was primarily driven by stock selection in communication services and overweight allocations to the utilities and consumer staples sectors. In communication services, the Fund typically leans toward traditional telecommunication companies as opposed to the higher beta, low-to-no yield names like Facebook, Netflix, and Google. The Fund is typically overweight the utilities and consumer staples sectors as they generally offer lower beta and higher yield compared to the overall market. Aiding relative performance was an underweight allocation to consumer discretionary.

The Fund seeks to maximize total return by emphasizing high current income with long term appreciation as a secondary objective, consistent with preservation of capital. The Portfolio Management Team (“Team”) considers dividend yield, dividend growth rate, earnings growth, price-to-earnings multiples, and balance sheet strength. The Team emphasizes dividend yield in selecting stocks for the Fund because we believe that, over time, dividend income can contribute significantly to total return and is a more consistent source of investment return than appreciation.

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

Sincerely,

The Portfolio Management Team

The views expressed are those of The Portfolio Management Team of Viking Fund Management. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector, the markets generally, or any of the funds in the Integrity Viking family of funds.

*Performance does not include applicable front-end or contingent deferred sales charges, which would have reduced the performance. The total annual fund operating expense ratio (before expense waivers and reimbursements and including acquired fund fees and expenses) as of the most recent fiscal year-end was 1.48%, 2.23%, and 1.23% for Class A, C, and I, respectively. The net annual fund operating expense ratio (after expense waivers and reimbursements and excluding acquired fund fees and expenses) as of the most recent fiscal year-end was 0.95%, 1.70%, and 0.70% for Class A, C, and I, respectively. The Fund’s investment adviser has contractually agreed to waive fees and reimburse expenses through January 18, 2022 so that total annual fund operating expenses after fee waivers and expense reimbursements (excluding taxes, brokerage fees, commissions, extraordinary and non-recurring expenses, and acquired fund fees and expenses) do not exceed 0.95%, 1.70%, and 0.70% for Class A, C, and I, respectively. This expense limitation agreement may only be terminated or modified prior to January 18, 2022 with the approval of the Fund’s Board of Trustees.

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

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

INTEGRITY DIVIDEND HARVEST FUND

Average Annual Total Returns for the periods ended July 31, 2021

The total annual fund operating expense ratio (before expense waivers and reimbursements and including acquired fund fees and expenses) as of the most recent fiscal year-end was 1.48%, 2.23%, and 1.23% for Class A, C, and I, respectively. The net annual fund operating expense ratio (after expense waivers and reimbursements and excluding acquired fund fees and expenses) as of the most recent fiscal year-end was 0.95%, 1.70%, and 0.70% for Class A, C, and I, respectively. The Fund’s investment adviser has contractually agreed to waive fees and reimburse expenses through January 18, 2022 so that total annual fund operating expenses after fee waivers and expense reimbursements (excluding taxes, brokerage fees, commissions, extraordinary and non-recurring expenses, and acquired fund fees and expenses) do not exceed 0.95%, 1.70%, and 0.70% for Class A, C, and I, respectively. This expense limitation agreement may only be terminated or modified prior to January 18, 2022 with the approval of the Fund’s Board of Trustees.

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

The table and graph above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions and redemptions of Fund shares. The graph comparing the Fund’s performance to a benchmark index provides you with a general sense of how the Fund performed. To put this information in context, it may be helpful to understand the special differences between the two. The Fund’s total return for the period shown appears with and without sales charges and includes Fund expenses and management fees. A securities index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged; there are no expenses that affect the results. In addition, few investors could purchase all of the securities to match the index. If they could, transaction costs and other expenses would be incurred. All Fund and benchmark returns include reinvested dividends.

INTEGRITY ESG GROWTH & INCOME FUND

Enclosed is the annual report for Integrity ESG Growth & Income Fund, formally Integrity Growth & Income Fund, (the “Fund”) for the year ended July 31, 2021 (“the period”). The Fund’s portfolio and related financial statements are presented within for your review.

The period saw the S&P 500 TR Index (“S&P”) return 36.20%. Recession fears, riots over social concerns, and trade war worries all seemed to have alleviated, at least in part, over the past year. However, the biggest economic concern from the prior year, the Coronavirus pandemic, was still gripping the nation and the rest of the world. A combination of an expedited vaccine rollout as well as the dovish fiscal and monetary response from the government, including stimulus checks sent straight to citizens and elevated bond buying from the Federal Reserve (the “Fed”), had a major impact on financial markets, leading to the outsized returns we saw over the past 12 months. As of the end of the period, a new variant of the Coronavirus was increasing in number of infections, leaving it a mystery when the pandemic will end and what moves will be necessary going forward.

Back in September 2019, the U.S. Bureau of Labor Statistics reported that the unemployment rate had dropped to a 50-year low of 3.5%. The rate remained low until the effects of the Coronavirus economic shutdown took hold, and the unemployment rate spiked to 14.7% in April 2020. The rate continued to steadily decline over the past year, ending the period at 5.4% as economies and businesses continued to re-open and move toward normalization.

The Fed’s Federal Open Market Committee dropped the target Federal Funds Rate to 0% on March 16th, 2020 as the full impact of the Coronavirus was coming to light. During the period, they kept the rate at 0% due to economic uncertainty associated with the Coronavirus pandemic. The Fed continued to buy bonds and expand their balance sheet. It appears that these monetary moves have had a positive impact on financial markets. Two questions currently on investors’ minds are when will the Fed start tapering bond purchases, and when will we see the first rate increase since last year’s drop to 0%.

During the period, the financial sector was the best performing sector, moving higher due to the economy reopening and anticipation of higher rates. Investors have been expecting higher rates to follow the higher inflation numbers that have been seen recently. Industrials was the next best performing sector, likely due to the economy reopening and anticipation regarding the large infrastructure bill currently being considered in Congress. The worst performing sectors were utilities and consumer staples as investors shied away from lower risk areas in search for higher returns. The possibility of finding higher rates elsewhere may have led income-oriented investors to move away from these sectors which are typically associated with dividend-paying stocks.

The Fund’s total returns for Class A, C, and I shares were 34.11%*, 33.44%*, and 34.45%*, respectively, for the year ended July 31, 2021 while the S&P gained 36.20%. The Fund is in the Morningstar Large Blend category which returned 36.72% over the same time period. The Fund underperformed its Morningstar category and the S&P. The Fund’s underperformance relative to the S&P was primarily driven by stock selection in communication services, consumer staples, and materials. Aiding relative performance was stock selection in consumer discretionary and industrials.

The Fund is managed using a blended growth and income investment strategy. We seek to invest primarily in domestic common stocks, balancing investments between growth & dividend paying stocks, depending on where we see the best value. We also try to emphasize companies we believe offer both attractive investment opportunities and demonstrate a positive awareness of their impact on the society in which they operate.

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

Sincerely,

The Portfolio Management Team

The views expressed are those of The Portfolio Management Team of Viking Fund Management. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector, the markets generally, or any of the funds in the Integrity Viking family of funds.

*Performance does not include applicable front-end or contingent deferred sales charges, which would have reduced the performance. The total annual fund operating expense ratio (before expense waivers and reimbursements and including acquired fund fees and expenses) as of the most recent fiscal year-end was 1.80%, 2.20%, and 1.55% for Class A, C, and I, respectively. The net annual fund operating expense ratio (after expense waivers and reimbursements and excluding acquired fund fees and expenses) as of the most recent fiscal year-end was 1.24%, 1.85%, and .99% for Class A, C, and I, respectively. The Fund’s investment adviser has contractually agreed to waive fees and reimburse expenses through November 29, 2021 so that total annual fund operating expenses after fee waivers and expense reimbursements (excluding taxes, brokerage fees, commissions, extraordinary and non-recurring expenses, and acquired fund fees and expenses) do not exceed 1.24%, 1.99%, and .99% for Class A, C, and I, respectively. This expense limitation agreement may only be terminated or modified prior to November 29, 2021 with the approval of the Fund’s Board of Trustees.

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

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

INTEGRITY ESG GROWTH & INCOME FUND

Comparison of change in value of a $10,000 investment

Average Annual Total Returns for the periods ended July 31, 2021

The total annual fund operating expense ratio (before expense waivers and reimbursements and including acquired fund fees and expenses) as of the most recent fiscal year-end was 1.80%, 2.20%, and 1.55% for Class A, C, and I, respectively. The net annual fund operating expense ratio (after expense waivers and reimbursements and excluding acquired fund fees and expenses) as of the most recent fiscal year-end was 1.24%, 1.85%, and .99% for Class A, C, and I, respectively. The Fund’s investment adviser has contractually agreed to waive fees and reimburse expenses through November 29, 2021 so that total annual fund operating expenses after fee waivers and expense reimbursements (excluding taxes, brokerage fees, commissions, extraordinary and non-recurring expenses, and acquired fund fees and expenses) do not exceed 1.24%, 1.99%, and .99% for Class A, C, and I, respectively. This expense limitation agreement may only be terminated or modified prior to November 29, 2021 with the approval of the Fund’s Board of Trustees.

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

The table and graph above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions and redemptions of Fund shares. The graph comparing the Fund’s performance to a benchmark index provides you with a general sense of how the Fund performed. To put this information in context, it may be helpful to understand the special differences between the two. The Fund’s total return for the period shown appears with and without sales charges and includes Fund expenses and management fees. A securities index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged; there are no expenses that affect the results. In addition, few investors could purchase all of the securities to match the index. If they could, transaction costs and other expenses would be incurred. All Fund and benchmark returns include reinvested dividends. The results prior to August 1, 2009 were achieved while the Fund was managed by a different investment adviser. The current investment adviser may produce different investment results than those achieved by the previous investment adviser.

INTEGRITY HIGH INCOME FUND

Enclosed is the annual report for Integrity High Income Fund (the “High Income Fund” or the “Fund”) for the year ended July 31, 2021. The Fund’s portfolio and related financial statements are presented within for your review.

Market Environment

After the historic drawdown in the first quarter and the subsequent recovery in the second quarter, the high yield market moved sideways August through October. Issuance and flows remained elevated historically, but compared to adjacent months they were mostly benign and September was the first month since March where the market was down and the asset class experienced outflows. The combination of perceived gridlock following the US elections and the positive vaccine news in November led to the final rally of 2020. Sectors most exposed to COVID lockdowns and CCCs drastically outperformed as risk-on sentiment across risk assets drove markets higher.

The first six months of 2021 the market continued the theme from November and December as lower quality and COVID exposed sectors outperformed the broad market. The 10-Year US Treasury rate increased from 0.91% to 1.47% and the price of WTI rose from $49 to $73 as the reopening theme and strong macroeconomic growth driven by the successful distribution of the COVID vaccine. Gross issuance through the first seven months of the year is on pace to break 2020’s record issuance of $450bn, driven by refinancings although acquisition and general corporate financings have taken share during the summer months. During July the 10 year rate decreased and WTI weakened as the market resettled at new levels amid concerns of the delta variant; consequently higher quality and defensive sectors outperformed for the first time since October. High yield has seen mutual fund outflows every month in 2021 while leveraged loans have experienced inflows every month. The default rate has decreased by more than 500bps during the year and the default volume is off to the lowest start of a calendar year since 2011.

The high yield market increased +10.75% for the trailing twelve-month period ending July 31st (as measured by the ICE BofAML US High Yield Constrained Index, HUC0) as spreads tightened 176 bps to 347 bps while yields decreased 1.45% to 4.03%; spreads and yields are now 45 bps tighter and 0.23% lower than they were to begin 2021. Lower quality drastically outperformed higher quality with CCC’s returning +26.32%, single B’s +9.36% and BB’s +8.27%. Cyclical sectors, specifically transportation, energy and leisure led the contributors to performance while utilities, telecommunications and media sectors led the detractors.

Gross issuance ($450bn), mutual fund inflows (+$44bn) and fallen angels ($238bn) all set records in 2020 as a result of the pandemic and the stark recovery. Through July 31, 2021, gross issuance was $330bn, mutual fund flows were -$14bn and rising stars have outpaced fallen angels, although to muted degree relative to 2020. Refinancings continue to lead proceeds as low interest rates and strong investor demand for higher yields have kept the capital markets open. While default activity peaked during the second quarter of 2020, the default rate peaked in October at 6.34% before decreasing significantly to 1.10% by the end of July. The recovery rate has moderately normalized to 33%, albeit on lower default volumes.

With a +10.75% return during the trailing twelve-month period ending July 31st (HUC0), high yield outperformed all other major fixed income asset classes, specifically emerging markets (EMCB), +4.32%, high grade credit (C0A0), +1.68%, U.S. Aggregate (D0A0), -0.93%, and 5-year Treasuries (GA05), -1.18%.

Portfolio Performance and Positioning

For the trailing twelve-month period ended July 31, 2021, Integrity High Income Fund returned +10.62% (A Class Shares, net of fees), +9.78% (C Class Shares, net of fees) and +11.04% (I Class Shares, net of fees) compared to its benchmark, the Bloomberg Barclays U.S. High Yield Index, which returned +10.62%. The Fund’s A Class Shares performed in line with the benchmark for the twelve-month period, led by security selection in the independent, transportation services and automotive sectors. The largest contributors resulted from relative weightings in Hertz Global Holdings, MyTheresa, Oasis Petroleum, EP Energy and VICI Properties. Alternatively, detractions from security selection in the healthcare, consumer products and airlines sectors hindered performance for the twelve-month period. Specifically, weightings in Intelsat, Community Health Systems, Sprint Corporation, American Airlines and HCA Healthcare detracted from performance in the period.

Compared to the benchmark at July 31, the Fund was overweight in cable satellite, healthcare and pharmaceuticals due to our view of the relative value opportunities within those sectors. The Fund was underweight in food & beverage, finance companies and electric because we have not found these sectors attractive due to challenging fundamental outlooks or rich valuations. Relative to the benchmark at July 31, the Fund’s yield, spread and duration were all lower than those of the benchmark.

Market Outlook

After taking a slight reprieve in July high yield spreads are again near 350bps and yields are back above 4%, making the last few months a mostly sideways move with a positive duration return. Without a major catalyst to shock markets, high yield will likely remain in this spread range for the remainder of the year and the asset class should produce carry like returns, dependent on the move in underlying Treasury rates. The fundamental backdrop, which is arguably as good as it has ever been in high yield, coupled with strong supply and a continued search for yield among fixed income investors should keep the asset class in favor for the rest of the year. Potential lockdowns and unexpected Fed rhetoric are the two biggest risks to our base case, but we consider high yield valuations to be fair currently and that this low spread environment is sustainable.

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

Sincerely,

The views expressed are those of Robert L. Cook, Senior Portfolio Manager and Managing Director, and Thomas G. Hauser, Vice President, J.P. Morgan Investment Management, Inc. (“JPMIM”), sub-adviser to the Fund. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector, the markets generally, or any of the funds in the Integrity Viking family of funds.

*Performance does not include applicable front-end or contingent deferred sales charges, which would have reduced the performance. The total annual fund operating expense ratio (before expense waivers and reimbursements and including acquired fund fees and expenses) as of the most recent fiscal year-end was 1.63%, 2.38%, and 1.37% for Class A, C, and I, respectively. The net annual fund operating expense ratio (after expense waivers and reimbursements and excluding acquired fund fees and expenses) as of the most recent fiscal year-end was 0.99%, 1.74%, and 0.74% for Class A, C, and I, respectively. The Fund’s investment adviser has contractually agreed to waive fees and reimburse expenses through November 29, 2021 so that total annual fund operating expenses after fee waivers and expense reimbursements (excluding taxes, brokerage fees, commissions, extraordinary and non-recurring expenses, and acquired fund fees and expenses) do not exceed 0.99%, 1.74%, and 0.74% for Class A, C, and I, respectively. This expense limitation agreement may only be terminated or modified prior to November 29, 2021 with the approval of the Fund’s Board of Trustees.

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

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

INTEGRITY HIGH INCOME FUND

Comparison of change in value of a $10,000 investment

Average Annual Total Returns for the periods ended July 31, 2021

The total annual fund operating expense ratio (before expense waivers and reimbursements and including acquired fund fees and expenses) as of the most recent fiscal year-end was 1.63%, 2.38%, and 1.37% for Class A, C, and I, respectively. The net annual fund operating expense ratio (after expense waivers and reimbursements and excluding acquired fund fees and expenses) as of the most recent fiscal year-end was 0.99%, 1.74%, and 0.74% for Class A, C, and I, respectively. The Fund’s investment adviser has contractually agreed to waive fees and reimburse expenses through November 29, 2021 so that total annual fund operating expenses after fee waivers and expense reimbursements (excluding taxes, brokerage fees, commissions, extraordinary and non-recurring expenses, and acquired fund fees and expenses) do not exceed 0.99%, 1.74%, and 0.74% for Class A, C, and I, respectively. This expense limitation agreement may only be terminated or modified prior to November 29, 2021 with the approval of the Fund’s Board of Trustees.

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

The table and graph above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions and redemptions of Fund shares. The graph comparing the Fund’s performance to a benchmark index provides you with a general sense of how the Fund performed. To put this information in context, it may be helpful to understand the special differences between the two. The Fund’s total return for the period shown appears with and without sales charges and includes Fund expenses and management fees. A securities index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged; there are no expenses that affect the results. In addition, few investors could purchase all of the securities to match the index. If they could, transaction costs and other expenses would be incurred. All Fund and benchmark returns include reinvested dividends. The results prior to August 1, 2009 were achieved while the Fund was managed by a different investment adviser. The current investment adviser may produce different investment results than those achieved by the previous investment adviser.

INTEGRITY MID-NORTH AMERICAN RESOURCES FUND

Enclosed is the annual report for Integrity Mid-North American Resources Fund (the “Fund”) for the year ended July 31, 2021 (“the period”). The Fund’s portfolio and related financial statements are presented within for your review.

Market Review

The period saw the S&P 500 TR Index (“S&P”) return 36.20%. Recession fears, riots over social concerns, and trade war worries all seemed to have alleviated, at least in part, over the past year. However, the biggest economic concern from the prior year, the Coronavirus pandemic, was still gripping the nation and the rest of the world. A combination of an expedited vaccine rollout as well as the dovish fiscal and monetary response from the government, including stimulus checks sent straight to citizens and elevated bond buying from the Federal Reserve (the “Fed”), had a major impact on financial markets, leading to the outsized returns we saw over the past 12 months. As of the end of the period, a new variant of the Coronavirus was increasing in number of infections, leaving it a mystery when the pandemic will end and what moves will be necessary going forward.

Back in September 2019, the U.S. Bureau of Labor Statistics reported that the unemployment rate had dropped to a 50-year low of 3.5%. The rate remained low until the effects of the Coronavirus economic shutdown took hold, and the unemployment rate spiked to 14.7% in April 2020. The rate continued to steadily decline over the past year, ending the period at 5.4% as economies and businesses continued to re-open and move toward normalization.

The Fed’s Federal Open Market Committee dropped the target Federal Funds Rate to 0% on March 16th, 2020 as the full impact of the Coronavirus was coming to light. During the period, they kept the rate at 0% due to economic uncertainty associated with the Coronavirus pandemic. The Fed continued to buy bonds and expand their balance sheet. It appears that these monetary moves have had a positive impact on financial markets. Two questions currently on investors’ minds are when will the Fed start tapering bond purchases, and when will we see the first rate increase since last year’s drop to 0%.

During the period, the Financials sector was the best performing sector, moving higher due to the economy reopening and anticipation of higher rates. Investors have been expecting higher rates to follow the higher inflation numbers that have been seen recently. Industrials was the next best performing sector, likely due to the economy reopening and anticipation regarding the large infrastructure bill currently being considered in Congress. The worst performing sectors were Utilities and Consumer Staples as investors shied away from lower risk areas in search for higher returns. The possibility of finding higher rates elsewhere may have led income-oriented investors to move away from these sectors which are typically associated with dividend-paying stocks.

Energy Review

During the third quarter of 2020, crude oil and energy equities continued moving higher for the majority of the quarter. However, the month of September brought a spike in COVID-19 cases that caused both crude oil and energy equities to reverse course. Additionally, the looming Presidential election created further uncertainty for the energy sector. Over the quarter, crude oil made both higher and lower attempts, but it appeared to simply be consolidating around the $40/barrel level. Crude oil demand made a strong resurgence in the second quarter of 2020, but that demand has stalled in the 92-93 million barrels of oil per day during the third quarter of 2020. This lack of demand recovery translated into minimal growth in drilling and completion activity. Going forward, we will need to see a continuation of a demand recovery, compliance within OPEC, and capital discipline in order for oil prices to move higher and incentivize higher activity levels. Longer term, the drastic reduction in capital expenditures will create a more difficult environment for the energy industry to produce enough to offset conventional declines and a recovery in demand post-pandemic.

For the third quarter 2020, the Fund (Class A shares) returned -8.56% compared to a loss of 19.22% for the S&P 1500 Energy Composite and a loss of 11.21% for the Morningstar Equity Energy category. WTI crude oil increased 1.62% to end the quarter at $40.22 and Brent crude oil increased 1.29% to end the quarter at $42.30.

The fourth quarter 2020 started slow for the energy sector, but turned for the positive as two vaccine announcements led to a significant climb in oil and energy equities. Under a Biden administration with control of both the House and the Senate, regulations towards the energy sector will increase, as will increased support for renewable energy adoption. Towards the end of the fourth quarter, concerns of COVID-19 began to wane. The rollout of vaccines began in December with hopes of accelerated deliveries in the New Year. Upon reaching herd immunity, through both infections and vaccinations, we expect a violent ramp in oil demand followed by a return to more normalized consumption slightly below pre-pandemic levels. The demand recovery is critical for the energy sector, to allow OPEC to return barrels back to the market, to stabilize inventories and keep supply and demand balanced.

For the fourth quarter 2020, the Fund (Class A shares) returned 35.51% compared to a gain of 28.46% for the S&P 1500 Energy Composite and a gain of 37.01% for the Morningstar Equity Energy category. WTI crude oil increased 17.97% to end the quarter at $48.52 and Brent crude oil increased 19.19% to end the quarter at $51.80.

Crude oil and energy equities got off to a hot start in 2021 on the heels of a strong fourth quarter. The energy sector was the best performing sector over the first quarter of 2021, while crude oil appreciated by over 20%. The vaccine rollout and the reopening of the economy boosted oil demand. Additionally, OPEC elected to postpone production increases and Saudi Arabia further cut their oil production in an effort to stabilize inventories and support higher oil prices. Over the quarter, the physical oil market was tight and OECD inventories declined. During the fourth quarter 2020 earnings season, we heard positive remarks from oil producers remaining committed to capital discipline. Most companies elected to maintain their capital budgets, despite higher oil prices. This is encouraging for the longevity of the current bull cycle and should attract investors back into the energy sector. Strong free cash flow within the energy sector will allow many energy firms to return significant cash to shareholders through dividends and share repurchases; all while reducing debt on their balance sheets.

For the first quarter 2021, the Fund (Class A shares) returned 21.21% compared to a gain of 31.42% for the S&P 1500 Energy Composite and a gain of 24.74% for the Morningstar Equity Energy category. WTI crude oil increased 21.50% to end the quarter at $59.16 and Brent crude oil increased 21.45% to end the quarter at $62.74.

Crude oil and energy equities saw continued strength in the second quarter, with crude oil increasing by over 20% and the energy sector was again one of the top performing S&P sectors, trailing only real estate and information technology. Strong demand and tepid supply led to the increase in crude oil prices over the quarter. Demand is predominately coming from developed countries with greater access to the COVID-19 vaccine. We expect emerging countries to follow suit when vaccines are more readily available in those countries. Within the U.S., vehicle miles traveled is soaring and gasoline demand is approaching pre-pandemic levels. OPEC began to increase their crude oil production and will gradually continue increasing throughout the year and into 2022. Even with the increase in OPEC production, the market is tight and OECD crude oil inventories have fallen below the 5-year average. This bodes well for crude oil producers, which have remained committed to capital discipline and a moderate growth model. The increase in crude oil prices over the trailing 6 months should equate to a massive increase in free cash flow, which many exploration & production companies have committed to returning that cash to shareholders. Strong free cash flow and higher dividend yields will likely attract investors and provide further momentum for the energy sector.

For the second quarter 2021, the Fund (Class A shares) returned 7.37% compared to a gain of 11.97% for the S&P 1500 Energy Composite and a gain of 13.10% for the Morningstar Equity Energy category. WTI crude oil increased 25.18% to end the quarter at $73.47 and Brent crude oil increased 21.35% to end the quarter at $74.62

In the month of July, the Fund (Class A shares) returned -7.43% compared to a loss of -8.54% for the S&P 1500 Energy Composite and a loss of -9.91 % for the Morningstar Equity Energy category.

The Fund’s total returns for Class A, C, and I shares were 46.40%*, 45.65%*, and 47.12%*, respectively, for the year ended July 31, 2021, compared to returns of 53.73%, 46.53%, and 37.52% for the Morningstar Equity Energy category, the S&P Composite 1500 Energy Index, and the S&P Composite 1500 Index, respectively. Aiding relative performance was selection within oilfield service and an underweight allocation to integrated oil companies. Detracting from the Fund’s performance relative to the benchmark was overweight allocation to utilities.

If you would like more frequent updates, please visit the Fund’s website at www.integrityvikingfunds.com for daily prices along with pertinent Fund information.

Sincerely,

The Portfolio Management Team

The views expressed are those of The Portfolio Management Team of Viking Fund Management, LLC (“Viking Fund Management”, “VFM”, or the “Adviser”). The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector, the markets generally, or any of the funds in the Integrity Viking family of funds.

*Performance does not include applicable front-end or contingent deferred sales charges, which would have reduced the performance. The total annual fund operating expense ratio (before expense waivers and reimbursements and including acquired fund fees and expenses) as of the most recent fiscal year-end was 1.60%, 2.10%, and 1.08% for Class A, C, and I, respectively. The net annual fund operating expense ratio (after expense waivers and reimbursements and excluding acquired fund fees and expenses) as of the most recent fiscal year-end was 1.50%, 2.00%, and 1.00% for Class A, C, and I, respectively. The Fund’s investment adviser has contractually agreed to waive fees and reimburse expenses through November 29, 2021 so that total annual fund operating expenses after fee waivers and expense reimbursements (excluding taxes, brokerage fees, commissions, extraordinary and non-recurring expenses, and acquired fund fees and expenses) do not exceed 1.50%, 2.00%, and 1.00% for Class A, C, and I, respectively. This expense limitation agreement may only be terminated or modified prior to November 29, 2021 with the approval of the Fund’s Board of Trustees.

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

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

INTEGRITY MID-NORTH AMERICAN RESOURCES FUND

Comparison of change in value of a $10,000 investment

Average Annual Total Returns for the periods ended July 31, 2021

The total annual fund operating expense ratio (before expense waivers and reimbursements and including acquired fund fees and expenses) as of the most recent fiscal year-end was 1.60%, 2.10%, and 1.08% for Class A, C, and I, respectively. The net annual fund operating expense ratio (after expense waivers and reimbursements and excluding acquired fund fees and expenses) as of the most recent fiscal year-end was 1.50%, 2.00%, and 1.00% for Class A, C, and I, respectively. The Fund’s investment adviser has contractually agreed to waive fees and reimburse expenses through November 29, 2021 so that total annual fund operating expenses after fee waivers and expense reimbursements (excluding taxes, brokerage fees, commissions, extraordinary and non-recurring expenses, and acquired fund fees and expenses) do not exceed 1.50%, 2.00%, and 1.00% for Class A, C, and I, respectively. This expense limitation agreement may only be terminated or modified prior to November 29, 2021 with the approval of the Fund’s Board of Trustees.

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

The table and graph above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions and redemptions of Fund shares. The graph comparing the Fund’s performance to a benchmark index provides you with a general sense of how the Fund performed. To put this information in context, it may be helpful to understand the special differences between the two. The Fund’s total return for the period shown appears with and without sales charges and includes Fund expenses and management fees. A securities index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged; there are no expenses that affect the results. In addition, few investors could purchase all of the securities to match the index. If they could, transaction costs and other expenses would be incurred. All Fund and benchmark returns include reinvested dividends. The results prior to August 1, 2009 were achieved while the Fund was managed by a different investment adviser. The current investment adviser may produce different investment results than those achieved by the previous investment adviser. The Fund’s performance prior to November 10, 2008 was achieved under the previous investment strategy, which may have produced different results than the current investment strategy.

INTEGRITY SHORT TERM GOVERNMENT FUND

Enclosed is the annual report for Integrity Short Term Government Fund (the “Fund”) for the year ended July 31, 2021. The Fund’s portfolio and related financial statements are presented within for your review.

Market Environment

Longer-dated Treasury yields rose over the period as the U.S. economy began to reopen and recover (despite the continued and evolving spread of COVID-19), vaccines were rolled out, additional fiscal stimulus was passed, and there was clarity on presidential election. Specifically, the 10-year Treasury was at 0.53% at 8/1/20 vs. 1.24% at July 31, 2021. As a result, the Bloomberg Barclays U.S. Aggregate Bond Index, a broad market fixed income measure, declined -0.70% over the 12 months ending July 31st, 2021. Shorter-dated interest rates rose modestly, from very low levels, such that the ICE BofA 1-3 Year U.S. Treasury Index returned 0.14% during the period.

Consensus was that the 2nd quarter of 2021 would represent the peak of U.S. growth given the further loosening of activity restrictions due to increasing vaccination rates and unemployment benefits under the American Rescue Plan. That said, disappointing job reports (e.g., unemployment rates fell by 0.1% in Q2 versus 0.7% in Q1) created market uncertainty as to the true state of the labor market recovery. Even as May’s headline and core CPI surged to 5% and 3.8% year-over-year, respectively, markets saw the pattern as transitory and attributed the spike to a mix of supply chain bottlenecks and pent-up demand from re-opening. Against this background, the Fed’s economic forecasts on economic growth and the unemployment rate for 2022 and 2023 have not changed materially.

As a result, most investors were surprised by the hawkish tilt of the June FOMC policy stance. While the Fed continued to commit to buying securities “until substantial further progress has been made toward the Committee’s maximum employment and price stability goals”, participants saw higher uncertainty in their inflation outlook, and 13 of 18 participants saw upside risks to their PCE inflation projections and probably pushed some participants to pull forward their rate hike timing as insurance against the risk of higher inflation. Importantly, fiscal stimulus under the Biden administration’s American Rescue Plan and the bipartisan infrastructure package, could also exert near and long term inflationary pressures given the significant amount of liquidity injection targeted by these programs.

In July, with a weaker than expected GDP measure of 6.5% and market concerns around the economic impact of the spread of the COVID Delta variant, Treasury yields fell with 10-year yield reaching a year-to-date low of 1.19% during the month. At July Federal Open Market Committee meeting, Chair Powell noted that the labor market still has “a ways to go” and the overall economy “some way away from having had substantial further progress.” There was some discussion of bond purchase tapering during the meeting but nothing specific in terms of pace and composition. Importantly Chair Powell noted that there is “little support” for tapering Agency Mortgage-Backed Securities (“MBS”) purchases first.

The Fund’s total returns for Class A and I shares were 0.50%* and 0.75%*, respectively, for the twelve month period ended July 31, 2021, compared to a return of 0.14% for the ICE BofA 1-3 Year U.S. Treasury Index. The Fund’s outperformance was driven mainly by the careful selection of Agency MBS with relatively stable cash flow and higher yields than comparable Treasuries.

In our view, the timing of the Fed’s scaling back its securities purchase program will be the key determinant of fixed income performance in the near term. However, we believe there are a few mitigating factors to prevent a major risk-off move such as the Taper Tantrum in 2013. First and foremost, the June announcement reduced the risk that the Fed would fall behind the curve in curbing inflation. In addition, the Fed has pledged plenty of warning before an actual tapering would occur. Even if the Fed is to announce the tapering this fall, with tapering starting later this year at a similar pace as for the 2017-18 tapering cycle, the Fed would still have injected a trillion dollars next year. This is one reason why short term interest rates continue to hover around the zero lower bound.

As designed, the portfolio continues to focus on short duration AMBS. This short duration stance should benefit the Fund on a relative basis should interest rates continue to rise. In addition, Agency MBS currently provide a significant yield and income advantage in our view over similar high quality short duration alternatives. We continue to look for stable bonds that provide predictable cash flows at attractive spreads relative to the rest of the Agency MBS market. The portfolio is titled towards lower coupon and 15-year loan term securities seeking to mitigate the risk of prepayments in the context of low overall interest rates. Notably, refinancing volume has also dropped sharply given higher mortgage rates vs. the 1st quarter of 2021. In addition, we believe Agency Commercial Mortgage-Backed Securities offer good relative value given increased prepayment rates on single-family Agency MBS.

If you would like more frequent updates, please visit the Fund’s website at www.integrityvikingfunds.com for daily prices along with pertinent Fund information.

Sincerely,

The Portfolio Management Team

M.D. Sass Investors Services, Inc.

The views expressed are those of M.D. Sass Investor Services, Inc., sub-adviser to the Fund. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector, the markets generally, or any of the funds in the Integrity Viking family of funds.

*Performance does not include applicable front-end or contingent deferred sales charges, which would have reduced the performance. The total annual fund operating expense ratio (before expense waivers and reimbursements and including acquired fund fees and expenses) for the year ended July 31, 2021 was 1.17% and 0.93% for Class A and I, respectively. The net annual fund operating expense ratio (after expense waivers and reimbursements and excluding acquired fund fees and expenses) for the year ended July 31, 2021 was 0.80% and 0.55% for Class A and I, respectively. The Fund’s investment adviser has contractually agreed to waive fees and reimburse expenses through January 18, 2022 so that total annual fund operating expenses after fee waivers and expense reimbursements (excluding taxes, brokerage fees, commissions, extraordinary and non-recurring expenses, and acquired fund fees and expenses) do not exceed 0.80% and 0.55% for Class A and I, respectively. This expense limitation agreement may only be terminated or modified prior to January 18, 2022 with the approval of the Fund’s Board of Trustees.

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

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

INTEGRITY SHORT TERM GOVERNMENT FUND

Comparison of change in value of a $10,000 investment

Average Annual Total Returns for the periods ended July 31, 2021

The total annual fund operating expense ratio (before expense waivers and reimbursements and including acquired fund fees and expenses) for the year ended July 31, 2021 was 1.17% and 0.93% for Class A and I, respectively. The net annual fund operating expense ratio (after expense waivers and reimbursements and excluding acquired fund fees and expenses) for the year ended July 31, 2021 was 0.80% and 0.55% (annualized) for Class A and I, respectively. The Fund’s investment adviser has contractually agreed to waive fees and reimburse expenses through January 18, 2022 so that total annual fund operating expenses after fee waivers and expense reimbursements (excluding taxes, brokerage fees, commissions, extraordinary and non-recurring expenses, and acquired fund fees and expenses) do not exceed 0.80% and 0.55% for Class A and I, respectively. This expense limitation agreement may only be terminated or modified prior to January 18, 2022 with the approval of the Fund’s Board of Trustees.

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

The table and graph above do not reflect the deduction of taxes that a shareholder would pay on Fund distributions and redemptions of Fund shares. The graph comparing the Fund’s performance to a benchmark index provides you with a general sense of how the Fund performed. To put this information in context, it may be helpful to understand the special differences between the two. The Fund’s total return for the period shown appears with and without sales charges and includes Fund expenses and management fees. A securities index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged; there are no expenses that affect the results. In addition, few investors could purchase all of the securities to match the index. If they could, transaction costs and other expenses would be incurred. All Fund and benchmark returns include reinvested dividends.

INTEGRITY DIVIDEND HARVEST FUND

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

These percentages are based on net assets.

INTEGRITY ESG GROWTH & INCOME FUND

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

These percentages are based on net assets.

INTEGRITY HIGH INCOME FUND

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

These percentages are based on net assets.