Form N-CSR INTEGRITY FUNDS For: Jul 31

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, 2022

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, 2022

*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, 2022 (“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 500”) return -4.64%. The S&P 500 tumbled over 20% in just the first six months of 2022, marking the worst first half in over 50 years. Growth stocks sold off the hardest as the Federal Reserve began raising interest rates to combat 40-year-high inflation. Investors also had to digest that the U.S. economy shrank for a second quarter in a row. Typically, two quarters of negative growth for the economy is considered a recession. Ongoing geopolitical conflicts throughout the period, such as Russia’s invasion of Ukraine, also weighed on investors. All of these factors have contributed to increasing fears of global economic slowdown. While equity markets did rise near the end of the period, we have yet to see if stocks have made a bottom in this bear market.

Per the U.S. Bureau of Labor Statistics, the period began with an unemployment rate of 5.4% and ended the period at 3.5%, matching the low just before the COVID pandemic started. The unemployment rate spiked to 14.8% in April 2020 due to COVID lockdowns, but has been steadily declining since then.

The Federal Reserve’s Federal Open Market Committee began raising interest rates in an attempt to slow inflation. They voted to raise the federal funds rate by 0.25% at the March meeting, 0.50% at the May meeting, and 0.75% at both the June and July meetings. As of the end of the period, the target range for the federal funds rate stood at 2.25% to 2.50%, with market participants expecting further rate increases.

During the period, the Energy sector was the stand-out best performer. Oil prices were already climbing due to tight supply and demand when the Russia and Ukraine conflict intensified. With Russia being one of the world’s largest oil producers, this conflict caused the price of oil to jump to highs not seen in years. A number of sectors had negative returns for the period. After a long trend upwards, growth stocks were hit harder than most. Rising interest rates generally have a more negative impact on growth stocks. The Communication Services, Consumer Discretionary, and Information Technology sectors were some of the worst performing. Value stocks came back in favor after lagging the market for years as investors sought relative safety.

The Fund’s total returns for Class A, C, and I shares were 11.41%*, 10.54%*, and 11.68%*, respectively, for the year ended July 31, 2022 while the S&P 500 returned -4.64%. The Fund is in the Morningstar Large Value category which returned -0.07% over the same time period. The Fund outperformed its Morningstar category and the S&P 500. The Fund’s outperformance relative to the S&P 500 was primarily driven by an overweight allocation to Energy, stock selection in Healthcare, and stock selection in Communication Services. Detracting from relative performance was stock selection in Utilities.

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 the Team believes 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.

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

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

Average Annual Total Returns for the periods ended July 31, 2022

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 1.44%, 2.19%, and 1.19% 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 November 29, 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 November 29, 2022 with the approval of the Fund’s Board of Trustees.

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, (the “Fund”) for the year ended July 31, 2022 (“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 500”) return -4.64%. The S&P 500 tumbled over 20% in just the first six months of 2022, marking the worst first half in over 50 years. Growth stocks sold off the hardest as the Federal Reserve began raising interest rates to combat 40-year-high inflation. Investors also had to digest that the U.S. economy shrank for a second quarter in row. Typically, two quarters of negative growth for the economy is considered a recession. Ongoing geopolitical conflicts throughout the period, such as Russia’s invasion of Ukraine, also weighed on investors. All of these factors have contributed to increasing fears of global economic slowdown. While equity markets did rise near the end of the period, we have yet to see if stocks have made a bottom in this bear market.

Per the U.S. Bureau of Labor Statistics, the period began with an unemployment rate of 5.4% and ended the period at 3.5%, matching the low just before the COVID pandemic started. The unemployment rate spiked to 14.8% in April 2020 due to COVID lockdowns, but has been steadily declining since then.

The Federal Reserve’s Federal Open Market Committee began raising interest rates in an attempt to slow inflation. They voted to raise the federal funds rate by 0.25% at the March meeting, 0.50% at the May meeting, and 0.75% at both the June and July meetings. As of the end of the period, the target range for the federal funds rate stood at 2.25% to 2.50%, with market participants expecting further rate increases.

During the period, the Energy sector was the stand-out best performer. Oil prices were already climbing due to tight supply and demand when the Russia and Ukraine conflict intensified. With Russia being one of the world’s largest oil producers, this conflict caused the price of oil to jump to highs not seen in years. A number of sectors had negative returns for the period. After a long trend upwards, growth stocks were hit harder than most. Rising interest rates generally have a more negative impact on growth stocks. The Communication Services, Consumer Discretionary, and Information Technology sectors were some of the worst performing. Value stocks came back in favor after lagging the market for years as investors sought relative safety.

The Fund’s total returns for Class A, C, and I shares were -8.37%*, -9.05%*, and -8.12%*, respectively, for the year ended July 31, 2022 while the S&P 500 returned -4.64%. The Fund is in the Morningstar Large Blend category which returned -6.36% over the same time period. The Fund underperformed its Morningstar category and the S&P 500. The Fund’s underperformance relative to the S&P 500 was primarily driven by an underweight allocation to Energy and stock selection in Consumer Discretionary and Financials. Aiding relative performance was stock selection in Healthcare.

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.

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, 2022

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%, 2.55%, and 1.54% 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%, 1.99%, 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, 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 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, 2022 with the approval of the Fund’s Board of Trustees.

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 the Integrity High Income Fund (the “High Income Fund” or the “Fund”) for the year ended July 31, 2022. The Fund’s portfolio and related financial statements are presented within for your review.

Market Environment

During August and September 2021, the market continued its sideways move with spreads modestly tighter while yields had begun to increase. October and November were the first back-to-back negative return months for the high yield market since February and March 2020. Despite being negative in October, there was no real driver to returns until Fed rhetoric became more hawkish in November, which was followed by the outbreak of the Omicron variant which sent returns materially lower, spreads wider and yields higher. This move was reversed in December as the short-lived weakness was seen as a buying opportunity, and high yield finished the year with a +5.3% return as spreads completely absorbed the increase in interest rates. January was the worst return month of the first quarter 2022 and the high yield market sold off as the US Treasury rates quickly began rising and spreads widened by more than 50bps. During February and March, despite Russia’s invasion of Ukraine, high yield spreads actually tightened modestly, mostly moving sideways, as yields climbed higher. Despite being the tenth worst return quarter in history, BBs led the declines given rate volatility was more significant than spread volatility. Once first quarter 2022 earnings began rolling through, inflation and supply chain rhetoric drove investor sentiment despite an otherwise impressive first quarter. The sell-off to end the month resulted in April’s return of -3.6%, and this weakness continued into May before a somewhat surprising late month rally that led to the only positive return month this year. The first 10 days of June experienced a similar reprieve, and while spreads widened modestly, new issue activity resumed, and the market felt orderly. Following the higher-than-expected inflation print and the subsequent hawkish rate hike from the Fed, however, the high yield market finished June down more than 6%, capping off the historically bad start to the year with one of the worst single-month returns on record. July then marked a stark reversal in which the market returned over 6%, reversing the pain from the first half of the year despite no distinct catalyst within risk assets.

The high yield market decreased -7.73% for the trailing twelve-month period ending July 31^st (as measured by the ICE BofA US High Yield Constrained Index, HUC0) as spreads widened 153 bps to 500 bps as yields increased 4.03% to 7.74%. Despite the significant widening earlier in the year, spreads and yields are 94 bps tighter and 1.21% lower than they were at the end of June. Higher quality outperformed for the trailing 12-month period, particularly during the second quarter and subsequent rally in July 2022; BB’s returned -7.16%, single-Bs -7.12%, and CCCs -12.19%. Energy, transportation and insurance were the best performing sectors over the last twelve months while banking, retail and healthcare underperformed.

Year-to-date, gross issuance of $72.9bn and net of $38.5bn compares to $330.9bn and $111.8bn through the first 7 months in 2021 and $483.0bn and $192.3bn for the full year. Following the record issuance in 2020 and 2021, only 6% of the high yield market matures by the end of 2023, so issuers have not been forced to issue bonds in 2022. Entering the year, M&A activity was expected to drive issuance, but given the volatility, M&A activity has been muted relative to expectations. The first half of 2022 experienced a record six-month outflow of -$45.0bn before July posted a $4bn inflow. Full year 2021 mutual fund outflows of -$13.6bn compare to 2020’s record inflows of $44.8bn.

2021 marked the lowest annual default volume since 2007 with just $4.1bn of defaults. Year-to-date, six companies have defaulted totaling $11.2bn. The trailing 12-month par weighted default rate hit its all-time low in April, 0.23%, and has since risen to 0.76%, remaining well below the long- term average of 3.5%. With a -7.73% return for the trailing twelve-month period ended July 31, 2022, high yield (HUC0) outperformed all other major fixed income asset classes except for 5-year Treasuries (GA05), -7.46%. Underperforming asset classes included U.S. Aggregate (D0A0), -9.26%, high-grade credit (C0A0), -12.35%, and emerging markets (EMCB), -15.32%.

Portfolio Performance and Positioning

For the trailing twelve-month period ended July 31, 2022, the Integrity High Income Fund returned -6.14% (A Class Shares, net of fees), -6.82% (C Class Shares, net of fees) and -6.04% (I Class Shares, net of fees) compared to its benchmark, the Bloomberg Barclays U.S. High Yield Index, which returned -8.02%. The Fund’s A Class Shares outperformed the benchmark for the twelve-month period as a result of security selection in the independent energy, cable satellite and chemicals sectors. The largest contributions to performance resulted from relative weightings in Chord Energy, Reichhold Industries, VICI Properties, VEON Ltd. and Ligado Networks.

Alternatively, relative performance was hindered by our security selection in the pharmaceuticals sector in addition to our underweights to both the aerospace/defense and refining sectors. Specifically, relative weightings in Bausch Health Companies, MYT Holdings, Intelsat SA, iHeartmedia and TransDigm Group detracted from performance in the period.

Compared to the benchmark on July 31, 2022, the Fund was overweight in the cable satellite, healthcare and consumer products sectors due to our view of the relative value opportunities within those sectors. The Fund was underweight in the finance companies, aerospace/defense and P&C sectors because we have not found these sectors attractive due to challenging fundamental outlooks or rich valuations. Relative to the benchmark on July 31, 2022, the Fund’s yield, spread and duration were all lower than those of the benchmark.

Market Outlook

It is important to remember that the high yield market entered this period of stress from a position of strength. Issuer fundamentals peaked in late 2021 and remain in good shape currently, lowly levered with coverage ratios at all-time highs, revenue and EBITDA growth, although margin pressures have certainly impacted the income statement and will continue to do so. With only 6% of the high yield market maturing by the end of 2023, high yield issuers have the luxury of patience regarding the capital markets. Limited distressed debt points to a low default environment for the remainder of 2022, and the higher credit quality market should keep a lid on spreads in the event we enter a recession. Following July’s strong performance, the market now screens fair to other asset classes, but is pricing in a lower probability of recession, believing the Fed may be able to execute a soft landing.

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

Sincerely,

Robert L. Cook                                                                                      Thomas G. Hauser

Managing Director                                                                                Managing Director

J.P. Morgan Investment Management, Inc.                                     J.P. Morgan Investment Management, Inc.

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.

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, 2022

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 1.38% 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, 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 0.99%, 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, 2022 with the approval of the Fund’s Board of Trustees.

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 the Integrity Mid-North American Resources Fund (the “Fund”) for the year ended July 31, 2022 (“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 500”) return -4.64%. The S&P 500 tumbled over 20% in just the first six months of 2022, marking the worst first half in over 50 years. Growth stocks sold off the hardest as the Federal Reserve began raising interest rates to combat 40-year-high inflation. Investors also had to digest that the U.S. economy shrank for a second quarter in row. Typically, two quarters of negative growth for the economy is considered a recession. Ongoing geopolitical conflicts throughout the period, such as Russia’s invasion of Ukraine, also weighed on investors. All of these factors have contributed to increasing fears of global economic slowdown. While equity markets did rise near the end of the period, we have yet to see if stocks have made a bottom in this bear market.

Per the U.S. Bureau of Labor Statistics, the period began with an unemployment rate of 5.4% and ended the period at 3.5%, matching the low just before the COVID pandemic started. The unemployment rate spiked to 14.8% in April 2020 due to COVID lockdowns, but has been steadily declining since then.

The Federal Reserve’s Federal Open Market Committee began raising interest rates in an attempt to slow inflation. They voted to raise the federal funds rate by 0.25% at the March meeting, 0.50% at the May meeting, and 0.75% at both the June and July meetings. As of the end of the period, the target range for the federal funds rate stood at 2.25% to 2.50%, with market participants expecting further rate increases.

During the period, the Energy sector was the stand-out best performer. A number of sectors had negative returns for the period. After a long trend upwards, growth stocks were hit harder than most. Rising interest rates generally have a more negative impact on growth stocks. The Communication Services, Consumer Discretionary, and Information Technology sectors were some of the worst performing. Value stocks came back in favor after lagging the market for years as investors sought relative safety.

Energy Review

Crude oil and energy equities started off the third quarter of 2021 weak in what appeared to be a brief period of consolidation. Energy equities made a big move in September by trading up nearly 10%.Weaker than expected global supply and rising demand caused higher crude oil and natural gas prices, this was the main culprit behind the big move in energy equities. Higher commodity prices have further enhanced the energy sector’s ability to return cash to shareholders. Over the quarter, we saw continued commitment to capital discipline as well as further adoption of ESG principles within the energy sector. Renewable energy was the worst performing group within the portfolio, driven by continued supply disruptions and higher rates.

For the third quarter of 2021, the Fund (Class A shares) fell -1.68% compared to a loss of -1.46% for the S&P 1500 Energy Index and a loss of -1.98% for the Morningstar Equity Energy category. WTI crude oil increased 5.84% to end the quarter at $75.03 and Brent crude oil increased 8.21% to end the quarter at $78.31.

Crude oil and energy equities continued to rally after a strong September. Crude Oil traded up over 10% (QTD) by the end of October but gave up all of those gains and then some by the end of November. The Omicron variant and concerns over economic shutdowns threatened crude oil demand. Over the month of December, crude oil traded up nearly 15% as fears over the Omicron variant waned. Energy equities largely followed suit, but didn’t see a recovery until the December 20^th trough. Energy equities traded up over 5% from the low set in December. Catalysts continued to build for the energy sector as demand remained resilient, despite Omicron fears. Additionally, incremental OPEC barrels being added on a monthly basis were being absorbed by consumers.

For the fourth quarter of 2021, the Fund (Class A shares) returned 3.80% compared to a gain of 7.00% for the S&P 1500 Energy Index and a gain of 2.17% for the Morningstar Equity Energy category. WTI crude oil increased 2.20% to end the quarter at $75.21 and Brent crude oil increased 2.26% to end the quarter at $77.78.

The energy sector entered 2022 with strong momentum fueled by a magnitude of tailwinds, but the main story of the first quarter of 2022 will be the Russian invasion of Ukraine. Leading up to the invasion, crude oil traded up over 20%, only to accelerate post-invasion to trade at one point over $130/barrel. Lockdowns within China over a resurgence of COVID and an announced coordinated release of Strategic Petroleum Reserves caused oil to back off of its highs to end the quarter slightly above $100/barrel. Outside of China, demand for crude oil was fundamentally strong. The supply side is the driving force for crude oil as underinvestment is not allowing supply to keep pace with demand. Additionally, sanctions on Russia could equate to barrels not reaching the market. This has not been the case as of yet, but self-sanctions should become more impactful in the second quarter of 2022 and beyond. Activity levels rose dramatically over the first quarter, but capital discipline at the producer level remained intact. Oilfield service was the leading sector over the first quarter as pricing power began to improve.

For the first quarter of 2022, the Fund (Class A shares) returned 24.35% compared to a gain of 39.10% for the S&P 1500 Energy Index, and a gain of 32.93% for the Morningstar Equity Energy category. WTI crude oil increased 35.62% to end the quarter at $100.28 and Brent crude oil increased 37.07% to end the quarter at $104.71.

Both crude oil and energy equities continued to march higher over the majority of the second quarter and both asset classes hit a wall on June 8^th. Rising COVID-19 concerns in China and recessionary fears caused panic and crude oil and energy equities traded down more than 20% from their June 8^th highs. There was a fight brewing between the energy’s physical market and the financial market and the financial market won during the commodity pullback over the second quarter. The amount of crude oil traded each day is twenty times the physical market. To put that into perspective, around 100 million barrels of crude oil are consumed per day, however, 2 billion barrels are traded per day. It is easy to see how the financial markets can push crude oil in a direction that doesn’t align with the global inventories and supply and demand imbalances. Financial markets will continue to dictate shorter-term fluctuations, but the physical market will dictate long-term prices. Energy markets tightened over the second half of 2021 as crude oil demand recovered from COVID-19 pandemic more quickly than anticipated and growth in supply lagged. While we recognize that high energy prices and rising interest rates have the potential to push the global economy into a recession, we don’t believe it will translate into materially lower energy prices given the structural supply deficits.

For the second quarter of 2022, the Fund (Class A shares) returned -9.47% compared to a loss of -5.86% for the S&P 1500 Energy Index, and a loss of -10.05% for the Morningstar Equity Energy category. WTI crude oil increased 11.23% to end the quarter at $105.76 and Brent crude oil increased 9.66% to end the quarter at $109.03.

In the month of July, WTI crude prices fell 3.51% to close the month at $96.75. The Fund gained 10.70% in July, 0.52% ahead of the S&P 1500 Energy Index and 1.15% ahead of the Morningstar Equity Energy category.

The Fund’s total returns for Class A, C, and I shares were 37.38%*, 36.90%*, and 38.17%*, respectively, for the year ended July 31, 2022, compared to returns of 66.32%, -4.74%, and 47.65% for the S&P 1500 Energy Index, the S&P 1500 Index, and the Morningstar Equity Energy Category, respectively. Detracting from the Fund’s performance relative to its Morningstar category was overweight allocation to renewable energy and selection within oilfield service. Aiding relative performance was selection within exploration & production.

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.

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, 2022

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 1.50%, 2.00%, and 1.00% 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, 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 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, 2022 with the approval of the Fund’s Board of Trustees.

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 the Integrity Short Term Government Fund (the “Fund”) for the year ended July 31, 2022. The Fund’s portfolio and related financial statements are presented within for your review.

Market Environment

During the period, the market experienced a sharp spike in Treasury yields across the entire yield curve. Strong inflation momentum along with concerns that the Federal Reserve has been behind the curve were key drivers of the interest rate changes. The Treasury yield curve flattened significantly between the 2-year and 10-year maturities, with the 2-year Treasury yield higher by 2.70% and the 10-year yield higher by 1.43%, reflecting the market’s dramatic repricing of swift monetary policy normalization by the Fed. As a result, the Bloomberg U.S. Aggregate Bond Index, a broad market fixed income measure, declined -9.12% over the 12 months ending July 31, 2022.

With the emergence of the new COVID variant Omicron at the end of November and its potential impact on the sustainability of economic growth and monetary policy, the Federal Reserve signaled on its December 2021 dot plot that it intended to hike only 3 times in 2022. The market at that time focused mainly on the pace of balance sheet runoff. By the end of March, not only did the Federal Reserve increase the Fed Funds rates by 25bps for the first time since the pandemic began, the March dot plot indicated that the Fed intended to hike 7 times in 2022 to bring the Fed Funds rates to 2.75% by year end.

By June, for the first time since 1994, the Fed raised the policy rate by 75 basis points. Fed Chair Powell subsequently acknowledged that there’s certainly a possibility of a recession given the central bank’s commitment to regain control over inflation by raising policy rates. Treasuries rallied into quarter end amid rising concerns that economic growth will slow given the aggressive Fed hike schedule. Spreads of Agency MBS and corporate credit securities widened significantly year to date, as both sectors underperformed similar duration Treasuries.

The Fed policy pivot is unsurprising given the inflation surge. Inflation is currently a global phenomenon. Notwithstanding the US Q1 GDP contraction of -1.6%, the May US consumer price index (CPI) increased by 8.6% year over year, and in addition showed a broadening trend across the underlying components. As the Fed’s policy stance grew increasingly hawkish throughout this year, there is a clear shift of emphasis within its dual mandate from full employment to price stability. In turn, the June University of Michigan’s gauge of consumer sentiment recorded its lowest reading on record dating back to 1972. The market is currently pricing in a higher risk of economic recession and subsequent reversal of Fed policy (i.e., rate cuts) by early mid-2023.

Portfolio Performance and Positioning

The Fund’s total returns for Class I and A shares were -4.18% and -4.51%, respectively, for the twelve month period ended July 31, 2022, compared to a return of -3.13% for the Bloomberg U.S. Government 1-3 Year Index. The Fund’s performance was driven mainly by the spread widening of the overall fixed income market, offset by the relatively stable cash flow and high interest income of our Agency MBS portfolio.

In our view, interest rate volatility-adjusted valuations on Agency MBS have approached levels reached during previous Fed quantitative tightening cycles. As interest rates stabilize, we see upside for Agency MBS returns. At these levels, Agency MBS yields are attractive relative to similar duration corporate credit and can cushion further potential interest rate increases. Given the very flat yield curve, we prefer short/intermediate maturity securitized products such as Agency MBS. Historically, the Treasury yield curve steepens with longer maturity yields increasing more (or decreasing less) relative to shorter maturity yields as the Fed approaches the end of a hiking cycle. This technical dynamic further supports shorter duration fixed income securities such as Agency MBS.

We continue to look for stable bonds that provide predictable cashflows at attractive spreads relative to the rest of the Agency MBS market. The portfolio is titled towards Agency MBS originated prior to the pandemic (i.e., “seasoned” MBS) and 15-year loan term securities seeking to mitigate the risk of duration extension in the context of much higher level of overall interest rates. Notably, refinancing volume has dropped sharply given the higher mortgage rates. In addition, we believe Agency Commercial Mortgage-Backed Securities offer good relative value given the bullet cash flow structure of underlying mortgage loans.

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.

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, 2022

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, 2022 was 1.18% and 0.93% for Class A and Class 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, 2022 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 November 29, 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 November 29, 2022 with the approval of the Fund’s Board of Trustees.

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.