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)
1 Main Street North, Minot, ND |
| 58703 |
(Address of principal offices) |
| (Zip code) |
Brent Wheeler and/or Kevin Flagstad, PO Box 500, Minot, ND 58702
(Name and address of agent for service)
Registrant’s telephone number, including area code: 701-852-5292
Date of fiscal year end: December 31st
Date of reporting period: December 30, 2016
Item 1. REPORTS TO STOCKHOLDERS.
{Logo}
THE INTEGRITY FUNDS
Integrity Dividend Harvest Fund
Integrity Energized Dividend Fund
Integrity Growth & Income Fund
Integrity High Income Fund
Williston Basin/Mid-North America Stock Fund
Annual Report
December 30, 2016
|
|
Investment Adviser | Principal Underwriter |
Transfer Agent | Custodian |
Independent Registered Public Accounting Firm
| |
| |
*The Funds are distributed through Integrity Funds Distributor, LLC. Member FINRA |
INTEGRITY DIVIDEND HARVEST FUND
DEAR SHAREHOLDERS
Enclosed is the report of the operations for the Integrity Dividend Harvest Fund (the “Dividend Harvest Fund” or “Fund”) for the year ended December 30, 2016. The Fund’s portfolio and related financial statements are presented within for your review.
Risk assets showed increased volatility in the first quarter following the Federal Reserve’s (Fed) decision to raise the federal funds rate in December 2015. Equities were likely hurt by the Fed’s anticipation of multiple rate hikes throughout the year. The Fed’s announcement was followed by a series of weak economic data points. The S&P 500 (S&P) had wide fluctuations and remained negative for all of January, ending about -5% for the month. February saw more of the same and equities remained volatile as investors reviewed corporate earnings that showed a fourth consecutive quarter of declining revenues. The Volatility Index (VIX) reached a 5-month high on February 11th, the same day the S&P touched its bottom for the year, down more than 10%. Investors flocked to safety, pushing down U.S. Treasury yields and bidding up large-cap equities over their small-cap counterparts. The S&P ended virtually unchanged for the month of February following a second half bounce. March proved to be more enjoyable for U.S. equity investors as volatility calmed down and prices slowly rose in anticipation that the Fed would come out with a more dovish stance at their next meeting. On March 16th, the Fed announced they had determined that overall economic conditions were not sufficiently improved to justify a further interest rate hike. The S&P continued to climb, returning almost 7% for the month and 1.35% for the quarter.
The second quarter started strong as the market continued its rally. The Fed hinted towards another rate hike in their April meeting, but investors placed a low probability of a hawkish June hike as economic data remained uninspiring. The S&P hovered in positive territory for most of April and ended with modest gains. The market continued its climb in May amid mixed economic data and global uncertainty. Soon after investors digested a weak first quarter U.S. GDP figure, the Bureau of Labor Statistics released their jobs report which came in well below expectations. Outside of the U.S., fears of the British leaving the European Union and worries of a slowing China were enough to lower the implied probability of a June rate hike to just 4%. Near the end of May, an upward revision to GDP and improvements in the Manufacturing and Service industries were enough to help the S&P finish up 1.80% for the month. June saw relatively low volatility until the end of the month when the UK voted on the Brexit. The Brexit vote took over headlines with most polls leaning toward Britain staying in the European Union. In a surprising result, the UK elected to leave the EU with 51.9% of the vote. U.S. markets reacted negatively, dropping over 3% the next day. However, economists generally believed the Brexit will not have a significant impact on the U.S. economy. After two down days, the S&P rallied the last three days of June, ending slightly positive for the month, up 2.46% for the quarter, and up 3.84% year-to-date.
U.S. equities continued their steady climb in the third quarter with subdued volatility. Investors seemed complacent with the market, even after Britain voted to leave the EU and oil prices slid towards $40 per barrel. As earnings season kicked off in July, it looked to be another quarter of year-over-year earnings declines. The silver lining was consensus estimates calling for a second-half return to growth. Despite the headwinds, the S&P climbed to all-time highs in July, ending up 3.69% for the month. August stood out in recent market history as the first month since 1995 that the S&P did not move up or down more than 1% on any single trading day. Earnings season wrapped up with earnings dropping 3.2% year-over-year, which was better than consensus estimates leading to a slightly positive return for the month. September saw an increase in volatility as investors waited for the September 21 Federal Open Market Committee (FOMC) meeting. Most experts agreed the Fed would not hike rates, but rising U.S. Treasury yields signaled investors did take the chance of a Fed rate hike in the near future seriously. The market rallied over 1% when the Fed statement was released indicating the federal funds target range remained unchanged. The FOMC noted that inflation remained below their 2% objective despite the labor market strengthening and growth of economic activity compared to the first half of the year. The S&P ended flat for the month, up 3.85% for the quarter, and up 7.84% year-to-date.
The fourth quarter started with a declining stock market, down -1.82% in October, but ended in positive territory following the U.S. presidential election in which Donald Trump unexpectedly won. Once the uncertainty of who would be president was over, the market focused on the winner’s goals and priorities. Trump campaigned on a message of decreased regulation, lower corporate taxes, job growth, domestic energy production, and infrastructure investment via fiscal policy. The market digested this message to mean faster GDP growth and higher inflation as both the S&P and Treasury yields accelerated upwards. The financial sector was the best performing sector over the fourth quarter as investors anticipated increased profitability with rising interest rates and less regulatory burden. Citing economic strength, the FOMC raised the target range for the federal funds rate on December 14 to ½ to ¾ percent, its first raise in a year. Market confidence continued to improve as the S&P ended up 3.82% for the quarter and 11.96% for the full year.
The energy sector performed best over the year with a return of 27.27% as the price of oil doubled from its first-quarter bottom. The telecommunication and financial sectors were also top performers with returns of 23.49% and 21.65%, respectively. Telecommunication performance was largely due to a flight to safety earlier in the year accompanied by having a high degree of domestic revenues as the dollar strengthened. Financial sector performance was aided by expectations of increased interest rates and domestic GDP growth. The healthcare sector stood out as the only sector with a negative return, down -2.48% for the year. Its performance was affected by headline attacks on high drug prices and the possibility of the Affordable Care Act being repealed by the new administration.
The Fund’s total returns for Class A and C were 20.94%* and 20.01%*, respectively, for the year ended December 30, 2016 while the S&P gained 11.96% and the Morningstar Large-Cap Value Category average was up 14.81%. The Fund significantly outperformed its Morningstar category and the S&P 500. Performance was driven by a mix of sector allocation and selection. In relation to the S&P, contributing positively was selection in energy, information technology, and healthcare and an underweight allocation in healthcare. Detracting from relative performance was an underweight allocation in information technology and an overweight allocation in consumer staples.
��
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, please visit the Fund’s website at 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 1.55%, 2.30%, and 1.31% 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 April 30, 2017 for Classes A and C and April 30, 2018 for Class I 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 April 30, 2017 for Classes A and C and April 30, 2018 for Class I 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
PERFORMANCE (unaudited)
Comparison of change in value of a $10,000 investment
| Integrity Dividend Harvest Fund Class A without sales charge | Integrity Dividend Harvest Fund Class A with maximum sales charge | S&P 500 TR Index |
5/1/12 | $10,000 | $9,497 | $10,000 |
12/31/12 | $10,286 | $9,769 | $10,310 |
12/31/13 | $12,743 | $12,102 | $13,649 |
12/31/14 | $14,198 | $13,484 | $15,518 |
12/31/15 | $14,357 | $13,635 | $15,733 |
12/30/16 | $17,363 | $16,489 | $17,614 |
Average Annual Total Returns for the periods ending December 30, 2016
| 1 year | 3 year | 5 year | 10 year | Since Inception* |
Class A Without sales charge | 20.94% | 10.85% | N/A | N/A | 12.55% |
Class A With sales charge (5.00%) | 14.92% | 8.99% | N/A | N/A | 11.31% |
Class C Without CDSC | 20.01% | N/A | N/A | N/A | 13.92% |
Class C With CDSC (1.00%) | 19.01% | N/A | N/A | N/A | 13.92% |
Class I | N/A | N/A | N/A | N/A | 4.67% |
| |||||
* May 1, 2012 for Class A; August 3, 2015 for Class C; August 1, 2016 for Class I |
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 1.55%, 2.30%, and 1.31% 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 April 30, 2017 for Classes A and C and April 30, 2018 for Class I 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 April 30, 2017 for Classes A and C and April 30, 2018 for Class I 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 ENERGIZED DIVIDEND FUND
DEAR SHAREHOLDERS:
Enclosed is the report of the operations for the Integrity Energized Dividend Fund (the “Energized Dividend Fund” or “Fund”) for the period May 2, 2016 (commencement of operations) through December 30, 2016. The Fund’s portfolio and related financial statements are presented within for your review.
Risk assets showed increased volatility in the first quarter following the Federal Reserve’s (Fed) decision to raise the federal funds rate in December 2015. Equities were likely hurt by the Fed’s anticipation of multiple rate hikes throughout the year. The Fed’s announcement was followed by a series of weak economic data points. The S&P 500 (S&P) had wide fluctuations and remained negative for all of January, ending about -5% for the month. February saw more of the same and equities remained volatile as investors reviewed corporate earnings that showed a fourth consecutive quarter of declining revenues. The Volatility Index (VIX) reached a 5-month high on February 11th, the same day the S&P touched its bottom for the year, down more than 10%. Investors flocked to safety, pushing down U.S. Treasury yields and bidding up large-cap equities over their small-cap counterparts. The S&P ended virtually unchanged for the month of February following a second half bounce. March proved to be more enjoyable for U.S. equity investors as volatility calmed down and prices slowly rose in anticipation that the Fed would come out with a more dovish stance at their next meeting. On March 16th, the Fed announced they had determined that overall economic conditions were not sufficiently improved to justify a further interest rate hike. The S&P continued to climb, returning almost 7% for the month and 1.35% for the quarter.
The second quarter started strong as the market continued its rally. The Fed hinted towards another rate hike in their April meeting, but investors placed a low probability of a hawkish June hike as economic data remained uninspiring. The S&P hovered in positive territory for most of April and ended with modest gains. The market continued its climb in May amid mixed economic data and global uncertainty. Soon after investors digested a weak first quarter U.S. GDP figure, the Bureau of Labor Statistics released their jobs report which came in well below expectations. Outside of the U.S., fears of the British leaving the European Union and worries of a slowing China were enough to lower the implied probability of a June rate hike to just 4%. Near the end of May, an upward revision to GDP and improvements in the Manufacturing and Service industries were enough to help the S&P finish up 1.80% for the month. June saw relatively low volatility until the end of the month when the UK voted on the Brexit. The Brexit vote took over headlines with most polls leaning toward Britain staying in the European Union. In a surprising result, the UK elected to leave the EU with 51.9% of the vote. U.S. markets reacted negatively, dropping over 3% the next day. However, economists generally believed the Brexit will not have a significant impact on the U.S. economy. After two down days, the S&P rallied the last three days of June, ending slightly positive for the month, up 2.46% for the quarter, and up 3.84% year-to-date.
U.S. equities continued their steady climb in the third quarter with subdued volatility. Investors seemed complacent with the market, even after Britain voted to leave the EU and oil prices slid towards $40 per barrel. As earnings season kicked off in July, it looked to be another quarter of year-over-year earnings declines. The silver lining was consensus estimates calling for a second-half return to growth. Despite the headwinds, the S&P climbed to all-time highs in July, ending up 3.69% for the month. August stood out in recent market history as the first month since 1995 that the S&P did not move up or down more than 1% on any single trading day. Earnings season wrapped up with earnings dropping 3.2% year-over-year, which was better than consensus estimates leading to a slightly positive return for the month. September saw an increase in volatility as investors waited for the September 21 Federal Open Market Committee (FOMC) meeting. Most experts agreed the Fed would not hike rates, but rising U.S. Treasury yields signaled investors did take the chance of a Fed rate hike in the near future seriously. The market rallied over 1% when the Fed statement was released indicating the federal funds target range remained unchanged. The FOMC noted that inflation remained below their 2% objective despite the labor market strengthening and growth of economic activity compared to the first half of the year. The S&P ended flat for the month, up 3.85% for the quarter, and up 7.84% year-to-date.
The fourth quarter started with a declining stock market, down -1.82% in October, but ended in positive territory following the U.S. presidential election in which Donald Trump unexpectedly won. Once the uncertainty of who would be president was over, the market focused on the winner’s goals and priorities. Trump campaigned on a message of decreased regulation, lower corporate taxes, job growth, domestic energy production, and infrastructure investment via fiscal policy. The market digested this message to mean faster GDP growth and higher inflation as both the S&P and Treasury yields accelerated upwards. The financial sector was the best performing sector over the fourth quarter as investors anticipated increased profitability with rising interest rates and less regulatory burden. Citing economic strength, the FOMC raised the target range for the federal funds rate on December 14 to ½ to ¾ percent, its first raise in a year. Market confidence continued to improve as the S&P ended up 3.82% for the quarter and 11.96% for the full year.
For the energy sector, the new year picked up right where 2015 finished: ugly. However, after February 11th, WTI crude prices rallied from $26/barrel to above $38/barrel at the end of the first quarter, which provided a much needed sentiment change for the industry. Crude oil and energy stocks found support stemming from multiple factors. First, non-OPEC production declines, led by the U.S., gained momentum. Second, a more dovish tone from the Fed led to U.S. dollar weakness. Third, Russia and key OPEC members agreed to meet in April for a discussion on a potential production freeze. Fourth, long only portfolio managers were still broadly underweight energy, which offered rotational inflow potential. Finally, global oil demand continued to grow at a steady pace. The International Energy Agency (IEA) and the U.S. Energy Information Administration (EIA) both called for greater than one million barrels of oil per day annual demand growth. Demand growth combined with accelerated non-OPEC production declines and reduced OPEC spare capacity equated to a tightened supply and demand picture for crude oil at the end of the first quarter.
The energy sector posted above average performance during the second quarter as the supply and demand balancing act came to fruition. The U.S. horizontal rig count increased 5 out of the last 6 weeks to 343 rigs at the end of the second quarter, an increase of 9% from the trough set in May. This increase displayed shale operator’s willingness to increase activity levels with crude prices near $50/barrel. U.S. crude oil production, however, was still on the decline. The Permian Basin in Texas and the SCOOP/STACK formations in Oklahoma offer the most potential for rig additions due to superior well economics at current strip prices and continued well efficiencies.
Oil prices rallied late in the third quarter as all 14 OPEC members agreed to a production ceiling. In September, OPEC produced 33.39 million barrels of oil per day (mb/d). The 14 members informally agreed to a production range of 32.5-33 mb/d. In addition, an announcement was made that formal discussions between OPEC nations would take place where production allocations to member countries would be negotiated. Saudi Arabia would likely bear the lion’s share of the implied 640,000 b/d production cut. Additionally, Russia agreed to freeze and potentially cut production contingent upon formalization of the OPEC agreement. The action from the cartel likely stemmed from growing fiscal pain from depressed oil revenues. United States production continued to fall during the third quarter, while domestic demand continued higher. This led to greater than expected draws on oil inventories during the quarter. Over the third quarter, nearly 100 rigs were added to the U.S. rig count, most of which were added to the Permian Basin and the SCOOP/STACK formations. The U.S. rig count ended the quarter at 522.
Oil prices faded early in the fourth quarter, but finished the year strong as the U.S. presidential election and the solidifying of the OPEC production cut served as significant tailwinds for the commodity. The OPEC agreement was made official November 30th with an effective date in January. Positive consumer confidence, along with the rise in crude prices lifted the energy sector during the quarter. Refiners were clear winners from the Republican victory as they stood to benefit from reduced regulations and lower renewable fuel standards. The U.S. rig count increased by 136. Over the second half of 2016, the U.S. rig count went up by over 50%. The rising rig count began to show its effect on production in December, as production rose over several consecutive weeks. We believe OPEC’s production cut has increased the World’s “call on Shale” and accelerated the next wave of capital spending domestically. Oilfield service companies should be the biggest short-term beneficiary of this cycle, while exploration & production companies stand to benefit the most over the full cycle.
In 2016, from Fund inception on May 2nd to year end, the Fund’s total return for Class A and C was 19.96%* and 19.30%*, respectively, compared to returns of 9.90% and 12.57% for the S&P Composite 1500 Index and the S&P Composite 1500 Energy Index, respectively. Rising crude prices throughout 2016 contributed to the energy sector’s relative outperformance versus the broader market. Key contributions to the Fund’s relative outperformance over the Morningstar category included stock selection within pipelines, an overweight allocation to pipelines, and stock selection within oilfield equipment & services and integrateds. Detracting from relative performance was selection within exploration & production and an overweight allocation to refiners.
If you would like more frequent updates, please visit the Fund’s website at 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 8.39%, 12.55%, and 5.54% 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 0.17%, 0.91%, and 0.00% for Class A, C, and I, respectively. The Fund’s investment adviser has contractually agreed to waive fees and reimburse expenses through April 30, 2017 for Classes A and C and April 30, 2018 for Class I 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 1.05%, 1.80%, and 0.80% for Class A, C, and I, respectively. This expense limitation agreement may only be terminated or modified prior to April 30, 2017 for Classes A and C and April 30, 2018 for Class I 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 ENERGIZED DIVIDEND FUND
PERFORMANCE (unaudited)
Comparison of change in value of a $10,000 investment
| Integrity Energized Dividend Fund Class A without sales charge | Integrity Energized Dividend Fund Class A with maximum sales charge | S&P Composite 1500 Energy TR Index | S&P Composite 1500 TR Index |
5/2/16 | $10,000 | $9,497 | $10,000 | $10,000 |
12/30/16 | $11,996 | $11,392 | $11,257 | $10,990 |
Average Annual Total Returns for the periods ending December 30, 2016
| 1 year | 3 year | 5 year | 10 year | Since Inception* |
Class A Without sales charge | N/A | N/A | N/A | N/A | 19.96% |
Class A With sales charge (5.00%) | N/A | N/A | N/A | N/A | 13.92% |
Class C Without CDSC | N/A | N/A | N/A | N/A | 19.30% |
Class C With CDSC (1.00%) | N/A | N/A | N/A | N/A | 18.30% |
Class I Without sales charge | N/A | N/A | N/A | N/A | 19.80% |
| |||||
* May 2, 2016 for Class A and C; August 1, 2016 for Class I |
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 8.39%, 12.55%, and 5.54% 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 0.17%, 0.91%, and 0.00% for Class A, C, and I, respectively. The Fund’s investment adviser has contractually agreed to waive fees and reimburse expenses through April 30, 2017 for Classes A and C and April 30, 2018 for Class I 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 1.05%, 1.80%, and 0.80% for Class A, C, and I, respectively. This expense limitation agreement may only be terminated or modified prior to April 30, 2017 for Classes A and C and April 30, 2018 for Class I 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 GROWTH & INCOME FUND
DEAR SHAREHOLDERS:
Enclosed is the report of the operations for the Integrity Growth & Income Fund (the “Growth & Income Fund” or “Fund”) for the year ended December 30, 2016. The Fund’s portfolio and related financial statements are presented within for your review.
Risk assets showed increased volatility in the first quarter following the Federal Reserve’s (Fed) decision to raise the federal funds rate in December 2015. Equities were likely hurt by the Fed’s anticipation of multiple rate hikes throughout the year. The Fed’s announcement was followed by a series of weak economic data points. The S&P 500 (S&P) had wide fluctuations and remained negative for all of January, ending about -5% for the month. February saw more of the same and equities remained volatile as investors reviewed corporate earnings that showed a fourth consecutive quarter of declining revenues. The Volatility Index (VIX) reached a 5-month high on February 11th, the same day the S&P touched its bottom for the year, down more than 10%. Investors flocked to safety, pushing down U.S. Treasury yields and bidding up large-cap equities over their small-cap counterparts. The S&P ended virtually unchanged for the month of February following a second half bounce. March proved to be more enjoyable for U.S. equity investors as volatility calmed down and prices slowly rose in anticipation that the Fed would come out with a more dovish stance at their next meeting. On March 16th, the Fed announced they had determined that overall economic conditions were not sufficiently improved to justify a further interest rate hike. The S&P continued to climb, returning almost 7% for the month and 1.35% for the quarter.
The second quarter started strong as the market continued its rally. The Fed hinted towards another rate hike in their April meeting, but investors placed a low probability of a hawkish June hike as economic data remained uninspiring. The S&P hovered in positive territory for most of April and ended with modest gains. The market continued its climb in May amid mixed economic data and global uncertainty. Soon after investors digested a weak first quarter U.S. GDP figure, the Bureau of Labor Statistics released their jobs report which came in well below expectations. Outside of the U.S., fears of the British leaving the European Union and worries of a slowing China were enough to lower the implied probability of a June rate hike to just 4%. Near the end of May, an upward revision to GDP and improvements in the Manufacturing and Service industries were enough to help the S&P finish up 1.80% for the month. June saw relatively low volatility until the end of the month when the UK voted on the Brexit. The Brexit vote took over headlines with most polls leaning toward Britain staying in the European Union. In a surprising result, the UK elected to leave the EU with 51.9% of the vote. U.S. markets reacted negatively, dropping over 3% the next day. However, economists generally believed the Brexit will not have a significant impact on the U.S. economy. After two down days, the S&P rallied the last three days of June, ending slightly positive for the month, up 2.46% for the quarter, and up 3.84% year-to-date.
U.S. equities continued their steady climb in the third quarter with subdued volatility. Investors seemed complacent with the market, even after Britain voted to leave the EU and oil prices slid towards $40 per barrel. As earnings season kicked off in July, it looked to be another quarter of year-over-year earnings declines. The silver lining was consensus estimates calling for a second-half return to growth. Despite the headwinds, the S&P climbed to all-time highs in July, ending up 3.69% for the month. August stood out in recent market history as the first month since 1995 that the S&P did not move up or down more than 1% on any single trading day. Earnings season wrapped up with earnings dropping 3.2% year-over-year, which was better than consensus estimates leading to a slightly positive return for the month. September saw an increase in volatility as investors waited for the September 21 Federal Open Market Committee (FOMC) meeting. Most experts agreed the Fed would not hike rates, but rising U.S. Treasury yields signaled investors did take the chance of a Fed rate hike in the near future seriously. The market rallied over 1% when the Fed statement was released indicating the federal funds target range remained unchanged. The FOMC noted that inflation remained below their 2% objective despite the labor market strengthening and growth of economic activity compared to the first half of the year. The S&P ended flat for the month, up 3.85% for the quarter, and up 7.84% year-to-date.
The fourth quarter started with a declining stock market, down -1.82% in October, but ended in positive territory following the U.S. presidential election in which Donald Trump unexpectedly won. Once the uncertainty of who would be president was over, the market focused on the winner’s goals and priorities. Trump campaigned on a message of decreased regulation, lower corporate taxes, job growth, domestic energy production, and infrastructure investment via fiscal policy. The market digested this message to mean faster GDP growth and higher inflation as both the S&P and Treasury yields accelerated upwards. The financial sector was the best performing sector over the fourth quarter as investors anticipated increased profitability with rising interest rates and less regulatory burden. Citing economic strength, the FOMC raised the target range for the federal funds rate on December 14 to ½ to ¾ percent, its first raise in a year. Market confidence continued to improve as the S&P ended up 3.82% for the quarter and 11.96% for the full year.
The energy sector performed best over the year with a return of 27.27% as the price of oil doubled from its first-quarter bottom. The telecommunication and financial sectors were also top performers with returns of 23.49% and 21.65%, respectively. Telecommunication performance was largely due to a flight to safety earlier in the year accompanied by having a high degree of domestic revenues as the dollar strengthened. Financial sector performance was aided by expectations of increased interest rates and domestic GDP growth. The healthcare sector stood out as the only sector with a negative return, down -2.48% for the year. Its performance was affected by headline attacks on high drug prices and the possibility of the Affordable Care Act being repealed by the new administration.
The Fund returned 9.81%* and 9.18%* for Class A and C, respectively, for the year ended December 30, 2016 while the S&P gained 11.96% and the Morningstar Large-Cap Blend Category average returned 10.37%. The Fund underperformed the S&P 500 and slightly underperformed its Morningstar category. Performance was driven primarily by stock selection. In relation to the S&P, detracting from relative performance was selection in financials, consumer staples, and consumer discretionary. Contributing positively was selection in healthcare and information technology.
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, please visit the Fund’s website at 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 1.92%, 2.68%, and 1.70% 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 1.25%, 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 April 30, 2017 for Classes A and C and April 30, 2018 for Class I 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 1.25%, 2.00%, and 1.00% for Class A, C, and I, respectively. This expense limitation agreement may only be terminated or modified prior to April 30, 2017 for Classes A and C and April 30, 2018 for Class I 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 GROWTH & INCOME FUND
PERFORMANCE (unaudited)
Comparison of change in value of a $10,000 investment
| Integrity Growth & Income Fund Class A without sales charge | Integrity Growth & Income Fund Class A with maximum sales charge | S&P 500 TR Index |
12/29/06 | $10,000 | $9,500 | $10,000 |
12/31/07 | $10,797 | $10,257 | $10,549 |
12/31/08 | $7,875 | $7,482 | $6,646 |
12/31/09 | $8,942 | $8,495 | $8,405 |
12/31/10 | $10,479 | $9,955 | $9,671 |
12/30/11 | $10,692 | $10,158 | $9,876 |
12/31/12 | $12,151 | $11,544 | $11,456 |
12/31/13 | $15,525 | $14,749 | $15,166 |
12/31/14 | $16,458 | $15,635 | $17,243 |
12/31/15 | $16,112 | $15,307 | $17,481 |
12/30/16 | $17,692 | $16,808 | $19,572 |
Average Annual Total Returns for the periods ending December 30, 2016
| 1 year | 3 year | 5 year | 10 year | Since Inception* |
Class A Without sales charge | 9.81% | 4.45% | 10.59% | 5.87% | 8.26% |
Class A With sales charge (5.00%) | 4.32% | 2.68% | 9.47% | 5.33% | 8.01% |
Class C Without CDSC | 9.18% | N/A | N/A | N/A | 0.89% |
Class C With CDSC (1.00%) | 8.18% | N/A | N/A | N/A | 0.89% |
Class I Without sales charge | N/A | N/A | N/A | N/A | 3.04% |
| |||||
* January 3, 1995 for Class A; August 3, 2015 for Class C; August 1, 2016 for Class I |
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 1.92%, 2.68%, and 1.70% 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 1.25%, 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 April 30, 2017 for Classes A and C and April 30, 2018 for Class I 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 1.25%, 2.00%, and 1.00% for Class A, C, and I, respectively. This expense limitation agreement may only be terminated or modified prior to April 30, 2017 for Classes A and C and April 30, 2018 for Class I 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
DEAR SHAREHOLDERS:
Enclosed is the report of the operations for the Integrity High Income Fund (the “High Income Fund” or “Fund”) for the year ended December 30, 2016. The Fund’s portfolio and related financial statements are presented within for your review.
Market Environment
2016 was the strongest year for high yield since 2009. Total returns were down 5.14% (as measured by the Bank of America Merrill Lynch US High Yield Master II Constrained Index) through February 11. However, as oil bounced and global growth concerns faded, high yield rallied for the remainder of the year and finished emphatically with a 17.49% return. Commodity market volatility continued to impact the broader high yield market throughout the year as did the build-up and results of both the Brexit referendum and U.S. general election. The surprising election results in November and resulting pro-growth policy expectations contributed to the most significant rate sell-off since the 2013 “taper tantrum.” The post-election, pro-growth narrative continued to drive markets into year-end as credit dramatically outperformed duration. The Federal Open Market Committee (“FOMC”) raised the federal funds rate target by 25 basis points (bps) and signaled multiple rate hikes in 2017, which also contributed to the continued rate sell-off.
Relative to the five-year Treasury, high yield generated nearly 1700 bps of excess return and dramatically outperformed all of the major asset classes for the year, emerging markets (EMCB), 9.56%; high-grade credit (C0A0), 5.96%; U.S. Aggregate (D0A0), 2.61%; and five-year Treasuries (GA05), 0.55%. High yield also outperformed the S&P 500, returning 11.95%, after lagging for the past four years. High yield spreads tightened dramatically, -274 bps for the 12-month period, closing at 421 bps. For the same period, yields dropped from 8.76% at December 31, 2015, to 6.13% at December 30, 2016.
Beta significantly outperformed for the year, with CCC’s returning 37.70%; Bs, 16.66%; and BBs, 13.44%. All sectors posted positive returns in 2016 with steel (48.31%), metals and mining (43.83%) and energy (38.44%) leading as the best performing sectors and health care (4.08%), banks (4.32%) and hotels (5.61%) trailing as the worst performing sectors. Periods of volatility resulted in a trail of performance dispersion among sectors on the year. Big and liquid names (as measured by the Barclays Very Liquid Index) underperformed slightly for the year, returning 16.65%, and trailed the broader high yield market by 84 bps.
High yield bond new issuance totaled $286 billion for 2016, down a modest 2% from last year’s tally. Issuers tended to be higher quality overall and refinancing purposes were the dominant use of proceeds, accounting for 58% of the activity this year. Despite periods of volatility, secondary market technicals were generally supportive, with $6.9 billion inflows reported for U.S. high yield mutual funds this year.
As expected, the trailing 12-month default rate moved higher in 2016 due in large part to activity within commodities, which accounted for over 80% of default activity in 2016. As the commodity backdrop steadily improved, however, overall default volume declined. As of December 30, the trailing 12-month default rate was 3.32%, up from 1.80% one year ago. Excluding energy and metals and mining, however, the default rate drops to 0.68%.
Portfolio Performance and Positioning
For the year, the Integrity High Income Fund returned 14.90% (A Class Shares, net of fees) and 14.02% (C Class Shares, net of fees) compared to its benchmark, the Barclays Capital U.S. Corporate High Yield Index, which returned 17.13%, and the Morningstar High Yield category quarterly return of 13.30%. The Fund underperformed its benchmark due to underweight positioning in metals and mining, and oil field services coupled with security selection within the transportation services sector. Specifically, relative weightings in Valeant Pharmaceuticals, Jack Cooper Enterprises, Teck Resources, Intelsat SA and Aspect Software hindered results this year. Alternatively, relative contributions from security selection in the telecommunications, independent energy and gaming sectors enhanced annual performance. The largest contributors came from relative weightings in SoftBank Corporation, Caesars Entertainment, Whiting Petroleum, EP Energy and Denbury Resources. Compared to the benchmark at year-end, the Fund was overweight in technology, gaming and telecommunications due to our view of the relative value opportunities within those sectors. The Fund was underweight in metals and mining, banking/financials and oil field services because we have not found these sectors attractive due to challenging fundamental outlooks or rich valuations. Relative to the benchmark at December 30, the Fund’s yield, spread and duration were all lower than those of the benchmark.
Market Outlook
U.S. growth is likely to improve from trend-like levels due to expectation of tax reform, less regulation and fiscal spending. We expect the majority of high yield issuers to maintain reasonable fundamentals as earnings growth has turned positive. We believe broader market high yield spreads are fair to slightly attractive relative to current and expected defaults, and we expect defaults to move lower in 2017 to 2-3%. However, commodity market volatility will continue to impact the broader high yield market performance. We expect episodes of volatility will persist as central bank policies develop, potential challenges to the euro continue, and post-election policy direction evolves. While retail fund flows have been volatile, heightened rate concerns post-election has made high yield a more attractive asset class and a net beneficiary of demand. We would expect credit to be a relative outperformer versus duration if the inflation and growth narrative continues to take hold of the financial markets. New issue supply has been better quality, while refinancing activity continues to be the largest use of proceeds. The quality of the calendar could deteriorate if risk asset demand increases and investor discipline deteriorates due to overly optimistic post-election growth expectations. High yield spreads have the ability to partially absorb a gradual, modest rise in rates and therefore we see potential for modest spread tightening in either a rising or stable rate environment. We believe our current portfolio positioning and our fundamental research; bottom-up oriented style should allow us to take advantage of market opportunities.
If you would like more frequent updates, please visit the Fund’s website at integrityvikingfunds.com for daily prices along with pertinent Fund information.
Sincerely,
Robert L. Cook Managing Director J.P. Morgan Investment Management, Inc. | Thomas G. Hauser Vice President 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. 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 1.72%, 2.47%, and 1.49% 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 1.15%, 1.90%, and 0.90% for Class A, C, and I, respectively. The Fund’s investment adviser has contractually agreed to waive fees and reimburse expenses through April 30, 2017 for Classes A and C and April 30, 2018 for Class I 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 1.15%, 1.90%, and 0.90% for Class A, C, and I, respectively. This expense limitation agreement may only be terminated or modified prior to April 30, 2017 for Classes A and C and April 30, 2018 for Class I 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
PERFORMANCE (unaudited)
Comparison of change in value of a $10,000 investment
| Integrity High Income Fund Class A without sales charge | Integrity High Income Fund Class A with maximum sales charge | Barclays Capital U.S. Corporate High Yield Bond Index |
12/29/06 | $10,000 | $9,577 | $10,000 |
12/31/07 | $8,993 | $8,613 | $10,188 |
12/31/08 | $5,913 | $5,664 | $7,524 |
12/31/09 | $9,199 | $8,811 | $11,903 |
12/31/10 | $10,432 | $9,991 | $13,702 |
12/30/11 | $10,887 | $10,427 | $14,385 |
12/31/12 | $12,435 | $11,909 | $16,659 |
12/31/13 | $13,221 | $12,663 | $17,902 |
12/31/14 | $13,464 | $12,895 | $18,343 |
12/31/15 | $12,867 | $12,323 | $17,524 |
12/30/16 | $14,784 | $14,159 | $20,527 |
Average Annual Total Returns for the periods ending December 30, 2016
| 1 year | 3 year | 5 year | 10 year | Since Inception* |
Class A Without sales charge | 14.90% | 3.79% | 6.31% | 3.98% | 5.33% |
Class A With sales charge (4.25%) | 10.05% | 2.28% | 5.39% | 3.54% | 4.97% |
Class C Without CDSC | 14.02% | 3.03% | 5.52% | 3.22% | 4.52% |
Class C With CDSC (1.00%) | 13.02% | 3.03% | 5.52% | 3.22% | 4.52% |
Class I Without sales charge | N/A | N/A | N/A | N/A | 3.93% |
| |||||
* April 30, 2004 for Class A and C; August 1, 2016 for Class I |
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 1.72%, 2.47%, and 1.49% 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 1.15%, 1.90%, and 0.90% for Class A, C, and I, respectively. The Fund’s investment adviser has contractually agreed to waive fees and reimburse expenses through April 30, 2017 for Classes A and C and April 30, 2018 for Class I 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 1.15%, 1.90%, and 0.90% for Class A, C, and I, respectively. This expense limitation agreement may only be terminated or modified prior to April 30, 2017 for Classes A and C and April 30, 2018 for Class I 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.
WILLISTON BASIN/MID-NORTH AMERICA STOCK FUND
DEAR SHAREHOLDERS:
Enclosed is the report of the operations for the Williston Basin/Mid-North America Stock Fund (the “WB/MNA Stock Fund” or “Fund”) for the year ended December 30, 2016. The Fund’s portfolio and related financial statements are presented within for your review.
Risk assets showed increased volatility in the first quarter following the Federal Reserve’s (Fed) decision to raise the federal funds rate in December 2015. Equities were likely hurt by the Fed’s anticipation of multiple rate hikes throughout the year. The Fed’s announcement was followed by a series of weak economic data points. The S&P 500 (S&P) had wide fluctuations and remained negative for all of January, ending about -5% for the month. February saw more of the same and equities remained volatile as investors reviewed corporate earnings that showed a fourth consecutive quarter of declining revenues. The Volatility Index (VIX) reached a 5-month high on February 11th, the same day the S&P touched its bottom for the year, down more than 10%. Investors flocked to safety, pushing down U.S. Treasury yields and bidding up large-cap equities over their small-cap counterparts. The S&P ended virtually unchanged for the month of February following a second half bounce. March proved to be more enjoyable for U.S. equity investors as volatility calmed down and prices slowly rose in anticipation that the Fed would come out with a more dovish stance at their next meeting. On March 16th, the Fed announced they had determined that overall economic conditions were not sufficiently improved to justify a further interest rate hike. The S&P continued to climb, returning almost 7% for the month and 1.35% for the quarter.
The second quarter started strong as the market continued its rally. The Fed hinted towards another rate hike in their April meeting, but investors placed a low probability of a hawkish June hike as economic data remained uninspiring. The S&P hovered in positive territory for most of April and ended with modest gains. The market continued its climb in May amid mixed economic data and global uncertainty. Soon after investors digested a weak first quarter U.S. GDP figure, the Bureau of Labor Statistics released their jobs report which came in well below expectations. Outside of the U.S., fears of the British leaving the European Union and worries of a slowing China were enough to lower the implied probability of a June rate hike to just 4%. Near the end of May, an upward revision to GDP and improvements in the Manufacturing and Service industries were enough to help the S&P finish up 1.80% for the month. June saw relatively low volatility until the end of the month when the UK voted on the Brexit. The Brexit vote took over headlines with most polls leaning toward Britain staying in the European Union. In a surprising result, the UK elected to leave the EU with 51.9% of the vote. U.S. markets reacted negatively, dropping over 3% the next day. However, economists generally believed the Brexit will not have a significant impact on the U.S. economy. After two down days, the S&P rallied the last three days of June, ending slightly positive for the month, up 2.46% for the quarter, and up 3.84% year-to-date.
U.S. equities continued their steady climb in the third quarter with subdued volatility. Investors seemed complacent with the market, even after Britain voted to leave the EU and oil prices slid towards $40 per barrel. As earnings season kicked off in July, it looked to be another quarter of year-over-year earnings declines. The silver lining was consensus estimates calling for a second-half return to growth. Despite the headwinds, the S&P climbed to all-time highs in July, ending up 3.69% for the month. August stood out in recent market history as the first month since 1995 that the S&P did not move up or down more than 1% on any single trading day. Earnings season wrapped up with earnings dropping 3.2% year-over-year, which was better than consensus estimates leading to a slightly positive return for the month. September saw an increase in volatility as investors waited for the September 21 Federal Open Market Committee (FOMC) meeting. Most experts agreed the Fed would not hike rates, but rising U.S. Treasury yields signaled investors did take the chance of a Fed rate hike in the near future seriously. The market rallied over 1% when the Fed statement was released indicating the federal funds target range remained unchanged. The FOMC noted that inflation remained below their 2% objective despite the labor market strengthening and growth of economic activity compared to the first half of the year. The S&P ended flat for the month, up 3.85% for the quarter, and up 7.84% year-to-date.
The fourth quarter started with a declining stock market, down -1.82% in October, but ended in positive territory following the U.S. presidential election in which Donald Trump unexpectedly won. Once the uncertainty of who would be president was over, the market focused on the winner’s goals and priorities. Trump campaigned on a message of decreased regulation, lower corporate taxes, job growth, domestic energy production, and infrastructure investment via fiscal policy. The market digested this message to mean faster GDP growth and higher inflation as both the S&P and Treasury yields accelerated upwards. The financial sector was the best performing sector over the fourth quarter as investors anticipated increased profitability with rising interest rates and less regulatory burden. Citing economic strength, the FOMC raised the target range for the federal funds rate on December 14 to ½ to ¾ percent, its first raise in a year. Market confidence continued to improve as the S&P ended up 3.82% for the quarter and 11.96% for the full year.
For the energy sector, the new year picked up right where 2015 finished: ugly. However, after February 11th, WTI crude prices rallied from $26/barrel to above $38/barrel at the end of the first quarter, which provided a much needed sentiment change for the industry. Crude oil and energy stocks found support stemming from multiple factors. First, non-OPEC production declines, led by the U.S., gained momentum. Second, a more dovish tone from the Fed led to U.S. dollar weakness. Third, Russia and key OPEC members agreed to meet in April for a discussion on a potential production freeze. Fourth, long only portfolio managers were still broadly underweight energy, which offered rotational inflow potential. Finally, global oil demand continued to grow at a steady pace. The International Energy Agency (IEA) and the U.S. Energy Information Administration (EIA) both called for greater than one million barrels of oil per day annual demand growth. Demand growth combined with accelerated non-OPEC production declines and reduced OPEC spare capacity equated to a tightened supply and demand picture for crude oil at the end of the first quarter.
The energy sector posted above average performance during the second quarter as the supply and demand balancing act came to fruition. The U.S. horizontal rig count increased 5 out of the last 6 weeks to 343 rigs at the end of the second quarter, an increase of 9% from the trough set in May. This increase displayed shale operator’s willingness to increase activity levels with crude prices near $50/barrel. U.S. crude oil production, however, was still on the decline. The Permian Basin in Texas and the SCOOP/STACK formations in Oklahoma offer the most potential for rig additions due to superior well economics at current strip prices and continued well efficiencies.
Oil prices rallied late in the third quarter as all 14 OPEC members agreed to a production ceiling. In September, OPEC produced 33.39 million barrels of oil per day (mb/d). The 14 members informally agreed to a production range of 32.5-33 mb/d. In addition, an announcement was made that formal discussions between OPEC nations would take place where production allocations to member countries would be negotiated. Saudi Arabia would likely bear the lion’s share of the implied 640,000 b/d production cut. Additionally, Russia agreed to freeze and potentially cut production contingent upon formalization of the OPEC agreement. The action from the cartel likely stemmed from growing fiscal pain from depressed oil revenues. United States production continued to fall during the third quarter, while domestic demand continued higher. This led to greater than expected draws on oil inventories during the quarter. Over the third quarter, nearly 100 rigs were added to the U.S. rig count, most of which were added to the Permian Basin and the SCOOP/STACK formations. The U.S. rig count ended the quarter at 522.
Oil prices faded early in the fourth quarter, but finished the year strong as the U.S. presidential election and the solidifying of the OPEC production cut served as significant tailwinds for the commodity. The OPEC agreement was made official November 30th with an effective date in January. Positive consumer confidence, along with the rise in crude prices lifted the energy sector during the quarter. Refiners were clear winners from the Republican victory as they stood to benefit from reduced regulations and lower renewable fuel standards. The U.S. rig count increased by 136. Over the second half of 2016, the U.S. rig count went up by over 50%. The rising rig count began to show its effect on production in December, as production rose over several consecutive weeks. We believe OPEC’s production cut has increased the World’s “call on Shale” and accelerated the next wave of capital spending domestically. Oilfield service companies should be the biggest short-term beneficiary of this cycle, while exploration & production companies stand to benefit the most over the full cycle.
In 2016, the Fund’s total return was 37.82%* and 36.98* for Class A and C, respectively, compared to returns of 13.03%, 27.31%, and 29.22% for the S&P Composite 1500 Index, the S&P Composite 1500 Energy Index, and the Morningstar Equity Energy Category, respectively. Rising crude prices throughout 2016 contributed to the energy sector’s relative outperformance versus the broader market. Key contributions to the Fund’s relative outperformance over the Morningstar category included selection within oilfield service & equipment and an overweight allocation in frac sand producers. Detracting from performance was selection within pipelines and an overweight allocation to chemicals.
If you would like more frequent updates, please visit the Fund’s website at 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 1.47%, 1.97%, and 0.97% 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 1.46%, 1.96%, and 0.97% for Class A, C, and I, respectively. The Fund’s investment adviser has contractually agreed to waive fees and reimburse expenses through April 30, 2017 for Classes A and C and April 30, 2018 for Class I 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 April 30, 2017 for Classes A and C and April 30, 2018 for Class I 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.
WILLISTON BASIN/MID-NORTH AMERICA STOCK FUND
PERFORMANCE (unaudited)
Comparison of change in value of a $10,000 investment
| WB/MNA Stock Fund Class A without sales charge | WB/MNA Stock Fund Class A with maximum sales charge | S&P Composite 1500 Energy TR Index | S&P Composite 1500 TR Index | Russell 3000 TR Index |
12/29/06 | $10,000 | $9,497 | $10,000 | $10,000 | $10,000 |
12/31/07 | $9,908 | $9,410 | $13,456 | $10,547 | $10,514 |
12/31/08 | $7,990 | $7,589 | $8,635 | $6,674 | $6,592 |
12/31/09 | $9,533 | $9,054 | $10,053 | $8,492 | $8,460 |
12/31/10 | $14,054 | $13,347 | $12,202 | $9,883 | $9,892 |
12/30/11 | $14,762 | $14,020 | $12,680 | $10,056 | $9,993 |
12/31/12 | $14,789 | $14,046 | $13,230 | $11,682 | $11,634 |
12/31/13 | $19,521 | $18,540 | $16,590 | $15,514 | $15,537 |
12/31/14 | $17,289 | $16,420 | $15,070 | $17,544 | $17,488 |
12/31/15 | $12,940 | $12,289 | $11,744 | $17,722 | $17,572 |
12/30/16 | $17,834 | $16,938 | $14,951 | $20,030 | $19,810 |
Average Annual Total Returns for the periods ending December 30, 2016
| 1 year | 3 year | 5 year | 10 year | Since Inception* |
Class A Without sales charge | 37.82% | -2.97% | 3.85% | 5.95% | 7.48% |
Class A With sales charge (5.00%) | 30.84% | -4.61% | 2.77% | 5.41% | 7.16% |
Class C Without CDSC | 36.98% | N/A | N/A | N/A | -6.83% |
Class C With CDSC (1.00%) | 35.98% | N/A | N/A | N/A | -6.83% |
Class I Without sales charge | N/A | N/A | N/A | N/A | 25.66% |
| |||||
* April 5, 1999 for Class A; May 1, 2014 for Class C; August 1, 2016 for Class I |
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 1.47%, 1.97%, and 0.97% 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 1.46%, 1.96%, and 0.97% for Class A, C, and I, respectively. The Fund’s investment adviser has contractually agreed to waive fees and reimburse expenses through April 30, 2017 for Classes A and C and April 30, 2018 for Class I 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 April 30, 2017 for Classes A and C and April 30, 2018 for Class I 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 DIVIDEND HARVEST FUND
PORTFOLIO MARKET SECTORS December 30, 2016 (unaudited)
Consumer Staples | 17.6% |
Financials | 15.2% |
Energy | 14.7% |
Information Technology | 9.8% |
Telecommunication Services | 8.9% |
Utilities | 8.0% |
Industrials | 7.5% |
Health Care | 7.1% |
Materials | 5.3% |
Consumer Discretionary | 4.6% |
Cash Equivalents and Other | 1.3% |
100.0% |
Market sectors are breakdowns of the Fund’s portfolio holdings into specific investment classes.
These percentages are based on net assets.
SCHEDULE OF INVESTMENTS December 30, 2016
Fair | |||||
Shares |
| Value | |||
COMMON STOCKS (98.7%) | |||||
| |||||
Consumer Discretionary (4.6%) | |||||
Cracker Barrel Old Country Store Inc | 5,000 | $ | 834,900 | ||
McDonalds Corp | 29,500 | 3,590,740 | |||
Target Corp | 18,000 |
| 1,300,140 | ||
| 5,725,780 | ||||
Consumer Staples (17.6%) | |||||
Altria Group Inc | 75,000 | 5,071,500 | |||
Coca-Cola Co/The | 90,000 | 3,731,400 | |||
Kimberly-Clark Corp | 31,000 | 3,537,720 | |||
PepsiCo Inc | 30,500 | 3,191,215 | |||
Philip Morris International | 30,000 | 2,744,700 | |||
Procter & Gamble Co/The | 41,000 |
| 3,447,280 | ||
| 21,723,815 | ||||
Energy (14.7%) | |||||
BP PLC - ADR | 78,000 | 2,915,640 | |||
Chevron Corp | 42,000 | 4,943,400 | |||
Enbridge Inc | 40,000 | 1,684,800 | |||
Exxon Mobil Corp | 23,000 | 2,075,980 | |||
Occidental Petroleum Corp | 33,000 | 2,350,590 | |||
ONEOK Inc | 28,000 | 1,607,480 | |||
TransCanada Corp | 58,000 |
| 2,618,700 | ||
| 18,196,590 | ||||
Financials (15.2%) | |||||
BB&T | 27,000 | 1,269,540 | |||
CME Group Inc | 23,000 | 2,653,050 | |||
Cincinnati Financial Corp | 27,000 | 2,045,250 | |||
Mercury General Corp | 49,000 | 2,950,290 | |||
Old Republic Intl Corp | 120,000 | 2,280,000 | |||
People's United Financial Inc | 104,000 | 2,013,440 | |||
Prudential Financial | 27,000 | 2,809,620 | |||
Wells Fargo & Company | 51,000 |
| 2,810,610 | ||
| 18,831,800 | ||||
Health Care (7.1%) | |||||
Amgen Inc | 7,000 | 1,023,470 | |||
Johnson & Johnson | 27,000 | 3,110,670 | |||
Merck & Co Inc | 38,000 | 2,237,060 | |||
Pfizer Inc | 74,000 |
| 2,403,520 | ||
| 8,774,720 | ||||
Industrials (7.5%) | |||||
Caterpillar Inc | 16,000 | 1,483,840 | |||
Emerson Electric Co | 34,000 | 1,895,500 | |||
Lockheed Martin Corp | 11,000 | 2,749,340 | |||
3M Co | 6,500 | 1,160,705 | |||
Waste Management | 27,000 |
| 1,914,570 | ||
| 9,203,955 | ||||
Information Technology (9.8%) | |||||
HP Inc | 120,000 | 1,780,800 | |||
International Business Machines | 18,000 | 2,987,820 | |||
KLA-Tencor Corp | 9,000 | 708,120 | |||
Maxim Integrated Products | 25,000 | 964,250 | |||
Microsoft Corp | 18,000 | 1,118,520 | |||
Qualcomm Inc | 39,300 | 2,562,360 | |||
Seagate Technology Plc | 51,000 |
| 1,946,670 | ||
| 12,068,540 | ||||
Materials (5.3%) | |||||
Compass Minerals International Inc | 15,000 | 1,175,250 | |||
Dow Chemical Co/The | 45,000 | 2,574,900 | |||
Lyondellbasell Indu Class A | 32,000 |
| 2,744,960 | ||
| 6,495,110 | ||||
Telecommunication Services (8.9%) | |||||
AT&T Inc | 141,000 | 5,996,730 | |||
Verizon Communications Inc | 85,000 | 4,537,300 | |||
Vodafone Group PLC-SP - ADR | 20,000 |
| 488,600 | ||
| 11,022,630 | ||||
Utilities (8.0%) | |||||
CenterPoint Energy Inc | 81,000 | 1,995,840 | |||
Consolidated Edison Inc | 23,000 | 1,694,640 | |||
MDU Resources Group Inc | 42,000 | 1,208,340 | |||
PPL Corp | 74,000 | 2,519,700 | |||
Southern Company | 51,000 |
| 2,508,690 | ||
| 9,927,210 | ||||
| |||||
TOTAL COMMON STOCKS (COST: $110,075,139) | $ | 121,970,150 | |||
| |||||
TOTAL INVESTMENTS IN SECURITIES | $ | 121,970,150 | |||
OTHER ASSETS LESS LIABILITIES (1.3%) |
| 1,601,776 | |||
| |||||
NET ASSETS (100.0%) | $ | 123,571,926 | |||
|
|
|
|
| |
ADR- | American Depositary Receipt | ||||
|
| ||||
|
| ||||
The accompanying notes are an integral part of these financial statements. | |||||
INTEGRITY ENERGIZED DIVIDEND FUND
PORTFOLIO MARKET SECTORS December 30, 2016 (unaudited)
Energy | 75.0% |
Utilities | 10.2% |
Materials | 10.0% |
Industrials | 4.5% |
Cash Equivalents and Other | 0.3% |
100.0% |
Market sectors are breakdowns of the Fund’s portfolio holdings into specific investment classes.
These percentages are based on net assets.
SCHEDULE OF INVESTMENTS December 30, 2016
Fair | |||||
Shares |
| Value | |||
COMMON STOCKS (99.7%) | |||||
| |||||
Energy (75.0%) | |||||
Alon USA Energy Inc | 5,100 | $ | 58,038 | ||
BP PLC - ADR | 4,900 | 183,162 | |||
Chevron Corp | 700 | 82,390 | |||
Exxon Mobil Corp | 450 | 40,617 | |||
Helmerich & Payne Inc | 600 | 46,440 | |||
HollyFrontier Corp | 1,600 | 52,416 | |||
Occidental Petroleum Corp | 1,100 | 78,353 | |||
ONEOK Inc | 1,500 | 86,115 | |||
Royal Dutch Shell PLC - ADR | 3,100 | 168,578 | |||
Semgroup Corp | 2,500 | 104,375 | |||
Spectra Energy Corp | 1,700 | 69,853 | |||
Statoil ASA - Spon ADR | 3,500 | 63,840 | |||
Total SA - ADR | 1,800 | 91,746 | |||
TransCanada Corp | 1,600 | 72,240 | |||
Valero Energy Corp | 1,200 | 81,984 | |||
| 1,280,147 | ||||
Industrials (4.5%) | |||||
Covanta Holding Corp | 4,900 |
| 76,440 | ||
| |||||
Materials (10.0%) | |||||
CF Industries Holdings Inc | 600 | 18,888 | |||
Dow Chemical Co/The | 1,300 | 74,386 | |||
Lyondellbasell Indu Class A | 900 | 77,202 | |||
| 170,476 | ||||
Utilities (10.2%) | |||||
CenterPoint Energy Inc | 2,800 | 68,992 | |||
Entergy Corp | 900 | 66,123 | |||
Southern Company | 800 | 39,352 | |||
| 174,467 | ||||
| |||||
TOTAL COMMON STOCKS (COST: $1,521,347) | $ | 1,701,530 | |||
| |||||
TOTAL INVESTMENTS IN SECURITIES (COST: $1,521,347) (99.7%) | $ | 1,701,530 | |||
OTHER ASSETS LESS LIABILITIES (0.3%) |
| 5,909 | |||
| |||||
NET ASSETS (100.0%) | $ | 1,707,439 | |||
ADR- | American Depositary Receipt | ||||
|
| ||||
|
| ||||
The accompanying notes are an integral part of these financial statements. | |||||
INTEGRITY GROWTH & INCOME FUND
PORTFOLIO MARKET SECTORS December 30, 2016 (unaudited)
Consumer Discretionary | 20.8% |
Financials | 13.7% |
Information Technology | 13.6% |
Health Care | 12.8% |
Industrials | 11.3% |
Energy | 7.5% |
Telecommunication Services | 7.4% |
Utilities | 6.6% |
Materials | 5.5% |
Cash Equivalents and Other | 0.8% |
100.0% |
Market sectors are breakdowns of the Fund’s portfolio holdings into specific investment classes.
These percentages are based on net assets.
SCHEDULE OF INVESTMENTS December 30, 2016
Fair | |||||
Shares |
| Value | |||
COMMON STOCKS (99.2%) | |||||
| |||||
Consumer Discretionary (20.8%) | |||||
Newell Brands Inc. | 11,500 | $ | 513,475 | ||
Walt Disney Company | 9,500 | 990,090 | |||
Lowe's Companies Inc | 10,200 | 725,424 | |||
*O'Reilly Automotive Inc | 1,500 | 417,615 | |||
Starbucks Corp | 17,000 | 943,840 | |||
Royal Caribbean Cruises LTD | 3,000 | 246,120 | |||
Coca-Cola Co/The | 10,000 | 414,600 | |||
Kimberly-Clark Corp | 7,500 | 855,900 | |||
PepsiCo Inc | 8,500 | 889,355 | |||
Procter & Gamble Co/The | 11,000 |
| 924,880 | ||
| 6,921,299 | ||||
Energy (7.5%) | |||||
Chevron Corp | 6,000 | 706,200 | |||
Kinder Morgan Inc | 29,000 | 600,590 | |||
Occidental Petroleum Corp | 10,200 | 726,546 | |||
Schlumberger Ltd | 5,500 |
| 461,725 | ||
| 2,495,061 | ||||
Financials (13.7%) | |||||
BlackRock Inc | 4,200 | 1,598,268 | |||
JP Morgan Chase & Co | 17,000 | 1,466,930 | |||
PNC Financial Services Group Inc | 4,000 | 467,840 | |||
US Bancorp | 20,000 |
| 1,027,400 | ||
| 4,560,438 | ||||
Health Care (12.8%) | |||||
Becton Dickinson & Co | 4,500 | 744,975 | |||
Johnson & Johnson | 5,000 | 576,050 | |||
Pfizer Inc | 39,000 | 1,266,720 | |||
Thermo Fisher Scientific Inc | 8,500 | 1,199,350 | |||
United Health Group Inc | 3,000 |
| 480,120 | ||
| 4,267,215 | ||||
|
|
|
|
| |
Industrials (11.3%) | |||||
Caterpillar Inc | 5,500 |
| 510,070 | ||
Covanta Holding Corp | 47,000 | 733,200 | |||
Deere & Co | 3,500 | 360,640 | |||
Honeywell International Inc | 3,400 | 393,890 | |||
3M Co | 3,000 | 535,710 | |||
Waste Management | 11,000 | 780,010 | |||
Ingersoll - Rand PLC | 6,000 |
| 450,240 | ||
| 3,763,760 | ||||
Information Technology (13.6%) | |||||
*Alphabet Inc - Class A | 1,400 | 1,109,430 | |||
Apple Inc | 3,000 | 347,460 | |||
HP Inc | 50,000 | 742,000 | |||
Intel Corp | 20,000 | 725,400 | |||
International Business Machines | 4,500 | 746,955 | |||
Qualcomm Inc | 7,000 | 456,400 | |||
Visa Inc | 5,500 |
| 429,110 | ||
| 4,556,755 | ||||
Materials (5.5%) | |||||
Dow Chemical Co/The | 15,000 | 858,300 | |||
Lyondellbasell Indu Class A | 11,500 |
| 986,470 | ||
| 1,844,770 | ||||
Telecommunication Services (7.4%) | |||||
AT&T Inc | 33,000 | 1,403,490 | |||
Verizon Communications Inc | 20,000 |
| 1,067,600 | ||
| 2,471,090 | ||||
Utilities (6.6%) | |||||
Allete Inc | 11,500 | 738,185 | |||
CenterPoint Energy Inc | 16,000 | 394,240 | |||
Entergy Corp | 4,000 | 293,880 | |||
Nextera Energy Inc | 6,500 |
| 776,490 | ||
| 2,202,795 | ||||
| |||||
TOTAL COMMON STOCKS (COST: $28,257,008) | $ | 33,083,183 | |||
| |||||
TOTAL INVESTMENTS IN SECURITIES | $ | 33,083,183 | |||
OTHER ASSETS LESS LIABILITIES (0.8%) |
| 259,378 | |||
| |||||
NET ASSETS (100.0%) | $ | 33,342,561 | |||
* | Non-income producing | ||||
|
| ||||
|
| ||||
The accompanying notes are an integral part of these financial statements. | |||||
INTEGRITY HIGH INCOME FUND
PORTFOLIO MARKET SECTORS December 30, 2016 (unaudited)
Consumer Discretionary | 26.6% |
Telecommunication Services | 11.2% |
Industrials | 10.7% |
Health Care | 10.3% |
Information Technology | 9.9% |
Energy | 8.1% |
Financials | 7.5% |
Cash Equivalents and Other | 6.3% |
Materials | 5.7% |
Consumer Staples | 2.5% |
Utilities | 1.2% |
100.0% |
Market sectors are breakdowns of the Fund’s portfolio holdings into specific investment classes.
These percentages are based on net assets.
SCHEDULE OF INVESTMENTS December 30, 2016
Principal | Fair | |||||
Amount |
| Value | ||||
CORPORATE BONDS (92.5%) | ||||||
Consumer Discretionary (26.6%) | ||||||
AMC Networks Inc 5.000% 4/1/24 | $ | 80,000 | $ | 80,400 | ||
AMC Entertainment Inc 5.750% 6/15/25 | 100,000 | 102,250 | ||||
AMC Entertainment Holdings - 144A 5.875% 11/15/26 | 15,000 | 15,337 | ||||
Allegion US Holdings Co 5.750% 10/1/21 | 30,000 | 31,350 | ||||
Altice SA - 144A 7.750% 5/15/22 | 200,000 | 213,500 | ||||
American Axle & MFG Inc 6.625% 10/15/22 | 80,000 | 82,496 | ||||
BC Mountain LLC - 144A 7.000% 2/1/21 | 30,000 | 26,850 | ||||
Boyd Gaming Corp - 144A 6.375% 4/1/26 | 30,000 | 32,310 | ||||
CBS Radio Inc 7.250% 11/1/24 | 15,000 | 15,750 | ||||
CCO Holdings LLC/Cap Corp - 144A 5.125% 5/1/23 | 45,000 | 46,350 | ||||
CCO Holdings LLC/Cap Corp - 144A 5.375% 5/1/25 | 40,000 | 41,200 | ||||
CCOH Safari LLC-144A 5.750% 2/15/26 | 85,000 | 87,975 | ||||
CCO Holdings LLC/Cap Corp - 144A 5.875% 4/1/24 | 260,000 | 277,550 | ||||
CCO Holdings LLC/Cap Corp - 144A 5.500% 5/1/26 | 60,000 | 61,200 | ||||
(4)(5)Caesars Entertainment 8.500% 2/15/20 | 152,456 | 159,317 | ||||
(4)(5)Caesars Operating Escrow 9.000% 2/15/20 | 314,738 | 325,754 | ||||
(4)(5)Caesars Entertainment 9.000% 2/15/20 | 34,425 | 35,715 | ||||
(1)Chinos Intermediate Holdings - 144A 8.500% 5/1/19 | 54,340 | 22,279 | ||||
Cinemark USA Inc 4.875% 6/1/23 | 85,000 | 86,063 | ||||
Claire's Stores Inc - 144A 9.000% 3/15/19 | 160,000 | 80,800 | ||||
iHeartCommunications Inc 9.000% 3/1/21 | 135,000 | 99,900 | ||||
Clear Channel Worldwide 7.625% 3/15/20 | 50,000 | 48,000 | ||||
Clear Channel Worldwide 7.625% 3/15/20 | 165,000 | 164,896 | ||||
Clear Channel Worldwide 6.500% 11/15/22 | 95,000 | 95,000 | ||||
*Clear Channel Worldwide 6.500% 11/15/22 | 330,000 | 337,425 | ||||
Cooper-Standard Automotive 5.625% 11/15/26 | 30,000 | 29,663 | ||||
Dana Financing Luxembourg Sarl 6.500% 6/1/26 | 5,000 | 5,225 | ||||
*Dana Holding Corp 6.000% 9/15/23 | 150,000 | 156,562 | ||||
Dana Holding Corp 5.500% 12/15/24 | 25,000 | 25,500 | ||||
Dish DBS Corp 6.750% 6/1/21 | 100,000 | 108,500 | ||||
*Dish DBS Corp 5.875% 7/15/22 | 145,000 | 152,612 | ||||
Dish DBS Corp 5.000% 3/15/23 | 175,000 | 174,125 | ||||
Dish DBS Corp 5.875% 11/15/24 | 205,000 | 210,944 | ||||
Dish DBS Corp 7.750% 7/1/26 | 25,000 | 28,187 | ||||
Tegna Inc - 144A 4.875% 9/15/21 | 15,000 | 15,263 | ||||
Tegna Inc - 144A 5.500% 9/15/24 | 50,000 | 50,500 | ||||
Gates Global LLC - 144A 6.000% 7/15/22 | 50,000 | 48,900 | ||||
General Motors Co 4.875% 10/2/23 | 135,000 | 141,516 | ||||
General Motors Finl Co 4.250% 5/15/23 | 35,000 | 35,420 | ||||
Goodyear Tire & Rubber Corp 8.750% 8/15/20 | 45,000 | 53,662 | ||||
Goodyear Tire & Rubber Corp 5.125% 11/15/23 | 35,000 | 36,050 | ||||
Goodyear Tire & Rubber Corp 5.000% 5/31/26 | 15,000 | 14,931 | ||||
HD Supply Inc CMT - 144A 5.250% 12/15/21 | 40,000 | 42,200 | ||||
HD Supply Inc - 144A 5.750% 4/15/24 | 55,000 | 58,063 | ||||
Hanesbrands Inc - 144A 4.625% 5/15/24 | 30,000 | 29,100 | ||||
(4)(5)Harrahs Operating Co Inc 11.250% 6/1/17 | 157,429 | 160,184 | ||||
Hilton Escrow LLC - 144A 4.250% 9/1/24 | 10,000 | 9,700 | ||||
Hilton Grand Vacations LLC - 144A 6.125% 12/1/24 | 15,000 | 15,581 | ||||
Hilton Worldwide Finance 5.625% 10/15/21 | 35,000 | 36,155 | ||||
Hughes Satellite Systems - 144A 6.625% 8/1/26 | 10,000 | 10,050 | ||||
iHeartCommunications Inc 10.625% 3/15/23 | 45,000 | 33,975 | ||||
International Game Tech - 144A 6.500% 2/15/25 | 200,000 | 214,500 | ||||
Interval Acquistion Corp 5.625% 4/15/23 | 70,000 | 71,400 | ||||
Inventiv Health Inc - 144A 9.000% 1/15/18 | 105,000 | 105,210 | ||||
Isle of Capri Casinos 5.875% 3/15/21 | 60,000 | 62,100 | ||||
Jack Ohio Financial LLC - 144A 6.750% 11/15/21 | 50,000 | 50,625 | ||||
L Brands Inc 6.750% 7/1/36 | 60,000 | 60,750 | ||||
Lear Corp 5.250% 1/15/25 | 65,000 | 68,331 | ||||
Live Nation Entertainment - 144A 4.875% 11/1/24 | 10,000 | 10,025 | ||||
LTF Merger Sub Inc - 144A 8.500% 6/15/23 | 80,000 | 82,800 | ||||
*MGM Resort Intl 7.750% 3/15/22 | 220,000 | 253,000 | ||||
MGM Resort Intl 6.750% 10/1/20 | 30,000 | 33,375 | ||||
*MGM Resorts Intl 5.250% 3/31/20 | 80,000 | 84,600 | ||||
MGM Resorts Intl 6.000% 3/15/23 | 90,000 | 97,200 | ||||
MGP Escrow Issuer/Co - 144A 5.625% 5/1/24 | 10,000 | 10,475 | ||||
MGM Growth LP/MGP Escrow - 144A 4.500% 9/1/26 | 30,000 | 28,800 | ||||
Neiman Marcus - 144A 8.000% 10/15/21 | 40,000 | 29,700 | ||||
(1)Neiman Marcus - 144A 8.750% 10/15/21 | 80,000 | 56,600 | ||||
Midcontinent Comm & Fin - 144A 6.875% 8/15/23 | 70,000 | 74,550 | ||||
Nexstar Broadcasting, Inc 6.875% 11/15/20 | 110,000 | 113,850 | ||||
Nexstar Broadcasting, Inc - 144A 6.125% 2/15/22 | 15,000 | 15,525 | ||||
Nielsen Finance LLC - 144A 5.000% 4/15/22 | 135,000 | 137,531 | ||||
Numericable -SFR - 144A 7.375% 5/1/26 | 200,000 | 205,000 | ||||
Omega US Sub LLC - 144A 8.750% 7/15/23 | 75,000 | 78,374 | ||||
BC/New Red Finance Inc - 144A 6.000% 4/1/22 | 100,000 | 104,500 | ||||
JC Penney Corp 6.375% 10/15/36 | 55,000 | 46,269 | ||||
Quebecor Media 5.750% 1/15/23 | 155,000 | 160,813 | ||||
RHP Hotel PPTY 5.000% 4/15/21 | 130,000 | 131,950 | ||||
RSI Home Products Inc - 144A 6.500% 3/15/23 | 100,000 | 104,500 | ||||
Radio Systems Corp - 144A 8.375% 11/1/19 | 115,000 | 119,887 | ||||
Regal Entertainment Grp 5.750% 6/15/23 | 10,000 | 10,209 | ||||
Regal Entertainment Grp 5.750% 3/15/22 | 55,000 | 57,613 | ||||
Sabre GLBL Inc - 144A 5.375% 4/15/23 | 65,000 | 66,300 | ||||
Sabre GLBL Inc - 144A 5.250% 11/15/23 | 40,000 | 41,075 | ||||
Sally Holdings 5.750% 6/1/22 | 30,000 | 31,163 | ||||
Sally Holdings/Sallys Cap 5.625% 12/1/25 | 30,000 | 31,200 | ||||
Service Corp Intl 7.500% 4/1/27 | 135,000 | 156,600 | ||||
Service Corp Intl 5.375% 5/15/24 | 15,000 | 15,637 | ||||
Sirius XM Radio INC - 144A 5.750% 8/1/21 | 25,000 | 26,031 | ||||
Sirius XM Radio INC - 144A 6.000% 7/15/24 | 50,000 | 52,250 | ||||
Sirius XM Radio INC - 144A 5.375% 4/15/25 | 150,000 | 149,250 | ||||
Sirius XM Radio INC - 144A 5.375% 7/15/26 | 40,000 | 39,100 | ||||
Six Flags Inc - 144A 4.875% 7/31/24 | 20,000 | 19,750 | ||||
Tempur Sealy Intl Inc 5.625% 10/15/23 | 65,000 | 67,112 | ||||
Tempur Pedic Internation 5.500% 6/15/26 | 40,000 | 40,200 | ||||
Tenneco Inc 5.000% 7/15/26 | 5,000 | 4,906 | ||||
Time Inc - 144A 5.750% 4/15/22 | 80,000 | 82,800 | ||||
(4)(5)UCI International LLC 8.625% 2/15/19 | 120,000 | 22,800 | ||||
Videotron Ltd - 144A 5.375% 6/15/24 | 35,000 | 35,918 | ||||
Vista Outdoor Inc 5.875% 10/1/23 | 70,000 | 73,281 | ||||
Wynn Las Vegas LLC/Corp - 144A 5.500% 3/1/25 | 150,000 | 148,800 | ||||
ZF NA Capital - 144A 4.750% 4/29/25 | 180,000 | 183,150 | ||||
Zayo Group LLC/Zayo Cap - 144A 6.375% 5/15/25 | 50,000 | 52,250 | ||||
Zayo Group LLC/Zayo Cap - 144A 6.000% 4/1/23 | 85,000 |
| 88,400 | |||
| 8,360,270 | |||||
Consumer Staples (2.5%) | ||||||
Advancepierre Food Holdings 5.500% 12/15/24 | 15,000 | 15,141 | ||||
Albertsons Cos LLC/Safew - 144A 6.625% 6/15/24 | 30,000 | 31,275 | ||||
Bumble Bee Acquisition - 144A 9.000% 12/15/17 | 118,000 | 116,525 | ||||
Central Garden & Pet Co. 6.125% 11/15/23 | 50,000 | 52,750 | ||||
HRG Group Inc 7.750% 1/15/22 | 50,000 | 52,125 | ||||
Post Holdings Inc - 144A 6.000% 12/15/22 | 15,000 | 15,656 | ||||
Post Holdings Inc - 144A 7.750% 3/15/24 | 75,000 | 83,250 | ||||
Post Holdings Inc - 144A 8.000% 7/15/25 | 45,000 | 50,400 | ||||
Reynolds Group 5.750% 10/15/20 | 145,000 | 149,531 | ||||
Reynolds GRP ISS/Reynold - 144A 7.000% 7/15/24 | 25,000 | 26,578 | ||||
Rite Aid Corp - 144A 6.125% 4/1/23 | 90,000 | 96,750 | ||||
Spectrum Brands Inc 6.625% 11/15/22 | 25,000 | 26,563 | ||||
Spectrum Brands Inc 5.750% 7/15/25 | 30,000 | 31,125 | ||||
Treehouse Foods Inc - 144A 6.000% 2/15/24 | 30,000 |
| 31,500 | |||
| 779,169 | |||||
Energy (7.9%) | ||||||
Alberta Energy Co LTD 8.125% 9/15/30 | 15,000 | 18,082 | ||||
Alberta Energy Co LTD 7.375% 11/1/31 | 5,000 | 5,762 | ||||
Alta Mesa Holdings/Finance S 7.875% 12/15/24 | 25,000 | 25,875 | ||||
Antero Resources Finance 6.000% 12/1/20 | 10,000 | 10,300 | ||||
Antero Resources Corp 5.375% 11/1/21 | 35,000 | 35,788 | ||||
Antero Resources Corp 5.125% 12/1/22 | 25,000 | 25,250 | ||||
Antero Resources Corp 5.625% 6/1/23 | 15,000 | 15,356 | ||||
Antero Midstream Part/FI - 144A 5.375% 9/15/24 | 30,000 | 30,300 | ||||
Blue Racer Mid LLC/Finan - 144A 6.125% 11/15/22 | 80,000 | 80,000 | ||||
Boardwalk Pipelines LP 5.950% 6/1/26 | 40,000 | 43,449 | ||||
Carrizo Oil & Gas Inc 6.250% 4/15/23 | 20,000 | 20,500 | ||||
Chesapeake Energy Corp 6.875% 11/15/20 | 15,000 | 15,000 | ||||
Chesapeake Energy Corp - 144A 8.000% 12/15/22 | 87,000 | 93,851 | ||||
Chesapeake Energy Corp - 144A 8.000% 1/15/25 | 55,000 | 56,100 | ||||
Chesapeake Midstream PT 6.125% 7/15/22 | 65,000 | 67,043 | ||||
Communications Sales & Leasing - 144A 7.125% 12/15/24 | 15,000 | 15,150 | ||||
CSI Compressco LP/Compre 7.250% 8/15/22 | 20,000 | 18,900 | ||||
Continental Resources 4.500% 4/15/23 | 80,000 | 78,400 | ||||
Crestwood Midstream Part 6.125% 3/1/22 | 10,000 | 10,250 | ||||
Crestwood Midstream Partners 6.250% 4/1/23 | 35,000 | 35,700 | ||||
Denbury Resources Inc - 144A 5.500% 5/1/22 | 60,000 | 52,350 | ||||
Denbury Resources Inc 4.625% 7/15/23 | 60,000 | 48,150 | ||||
EP Ener/Everest Acq Fin - 144A 8.000% 11/29/24 | 20,000 | 21,494 | ||||
Encana Corp 6.625% 8/15/37 | 50,000 | 53,913 | ||||
Enlink Midstream Partner 4.400% 4/1/24 | 50,000 | 49,679 | ||||
Gulfport Energy Corp - 144A 6.000% 10/15/24 | 15,000 | 15,263 | ||||
Halcon Resources Corp - 144A 8.625% 2/1/20 | 20,000 | 20,800 | ||||
Laredo Petroleum Inc 5.625% 1/15/22 | 35,000 | 35,263 | ||||
Meg Energy Corp - 144A 6.375% 1/30/23 | 75,000 | 66,750 | ||||
Meg Energy Corp - 144A 7.000% 3/31/24 | 110,000 | 99,550 | ||||
MPLX LP 5.500% 2/15/23 | 75,000 | 78,027 | ||||
MPLX LP 4.875% 12/1/24 | 30,000 | 30,891 | ||||
MPLX LP 4.875% 6/1/25 | 65,000 | 66,830 | ||||
Nabors Industries Inc 5.500% 1/15/23 | 15,000 | 15,619 | ||||
Newfield Exploration Co 5.750% 1/30/22 | 70,000 | 73,763 | ||||
Oasis Petroleum Inc 6.500% 11/1/21 | 30,000 | 30,563 | ||||
Oasis Petroleum Inc 6.875% 1/15/23 | 50,000 | 51,250 | ||||
Oasis Petroleum Inc - 144A 6.875% 3/15/22 | 70,000 | 71,750 | ||||
Encana Corp 7.200% 11/1/31 | 15,000 | 16,835 | ||||
Parsley Energy LLC/Finan - 144A 6.250% 6/1/24 | 15,000 | 15,785 | ||||
RSP Permian Inc 6.625% 10/1/22 | 25,000 | 26,438 | ||||
RSP Permian Inc - 144A 5.250% 1/15/25 | 15,000 | 15,075 | ||||
Range Resources Corp 4.875% 5/15/25 | 35,000 | 33,906 | ||||
Range Resources Corp - 144A 5.000% 3/15/23 | 15,000 | 14,850 | ||||
Regency Energy Partners 5.500% 4/15/23 | 50,000 | 51,625 | ||||
SM Energy Co 6.500% 1/1/23 | 15,000 | 15,244 | ||||
SM Energy Co 6.125% 11/15/22 | 20,000 | 20,250 | ||||
SM Energy Co 5.625% 6/1/25 | 30,000 | 28,950 | ||||
Sanchez Energy Corp 7.750% 6/15/21 | 20,000 | 20,350 | ||||
Sanchez Energy Corp 6.125% 1/15/23 | 25,000 | 23,750 | ||||
Southwestern Energy Co 4.100% 3/15/22 | 10,000 | 9,448 | ||||
Southwestern Energy Co 6.700% 1/23/25 | 50,000 | 51,125 | ||||
Targa Resources Partners 4.250% 11/15/23 | 10,000 | 9,563 | ||||
Targa Resources Partners - 144A 6.750% 3/15/24 | 65,000 | 69,713 | ||||
Targa Resources Partners - 144A 5.125% 2/1/25 | 15,000 | 14,888 | ||||
Tesoro Corp 5.875% 10/1/20 | 77,000 | 79,406 | ||||
Tesoro Corp 6.125% 10/15/21 | 35,000 | 36,750 | ||||
Tesoro Logistics LP/CORP 6.250% 10/15/22 | 25,000 | 26,500 | ||||
Tesoro Logistics LP/CORP 6.375% 5/1/24 | 25,000 | 26,750 | ||||
Tesoro Logistics LP/CORP 5.250% 1/15/25 | 25,000 | 25,531 | ||||
Weatherford International Ltd 9.875% 2/15/24 | 10,000 | 10,656 | ||||
Whiting Petroleum Corp 5.750% 3/15/21 | 45,000 | 44,813 | ||||
Whiting Petroleum Corp 6.250% 4/1/23 | 95,000 | 95,000 | ||||
WPX Energy Inc 6.000% 1/15/22 | 10,000 | 10,250 | ||||
WPX Energy Inc 5.250% 9/15/24 | 15,000 | 14,550 | ||||
WPX Energy Inc 8.250% 8/1/23 | 90,000 |
| 100,575 | |||
| 2,491,537 | |||||
Financials (7.5%) | ||||||
Adient Global Holdings - 144A 4.875% 8/15/26 | 40,000 | 39,200 | ||||
Ally Financial Inc 5.125% 9/30/24 | 25,000 | 25,438 | ||||
Ally Financial Inc 4.625% 3/30/25 | 130,000 | 128,050 | ||||
Ally Financial Inc 4.625% 5/19/22 | 45,000 | 45,506 | ||||
Ally Financial Inc 5.750% 11/20/25 | 40,000 | 39,900 | ||||
Ally Financial Inc 4.250% 4/15/21 | 145,000 | 146,359 | ||||
Argos Merger Sub Inc - 144A 7.125% 3/15/23 | 175,000 | 178,500 | ||||
Avaya Inc - 144A 7.000% 4/1/19 | 50,000 | 43,750 | ||||
(2)(3)Bank of America Corp 8.000% Perpetual Maturity | 170,000 | 174,675 | ||||
Cit Group Inc - 144A 5.500% 2/15/19 | 115,000 | 121,325 | ||||
Cit Group Inc 3.875% 2/19/19 | 95,000 | 97,019 | ||||
Citigroup Inc 5.800% 11/15/49 | 10,000 | 10,088 | ||||
Citigroup Inc 5.875% 12/29/49 | 5,000 | 5,050 | ||||
Communications Sales & Leasing - 144A 6.000% 4/15/23 | 30,000 | 30,975 | ||||
Communications Sales & Leasing - 144A 8.250% 10/15/23 | 105,000 | 111,300 | ||||
CoreCivic Inc 4.625% 5/1/23 | 113,000 | 111,305 | ||||
CoreCivic Inc 5.000% 10/15/22 | 25,000 | 24,938 | ||||
Diamond 1 Fin/Diamond 2 - 144A 5.450% 6/15/23 | 60,000 | 63,644 | ||||
Diamond 1 Fin/Diamond 2 - 144A 6.020% 6/15/26 | 75,000 | 81,247 | ||||
Diamond 1 Fin/Diamond 2 - 144A 5.875% 6/15/21 | 20,000 | 21,279 | ||||
ESH Hospitality Inc 5.250% 5/1/25 | 25,000 | 24,875 | ||||
Equinix Inc 5.875% 1/15/26 | 35,000 | 36,838 | ||||
Geo Group Inc 5.125% 4/1/23 | 20,000 | 19,200 | ||||
Geo Group Inc 5.875% 1/15/22 | 75,000 | 75,938 | ||||
GEO Group Inc 5.875% 10/15/24 | 10,000 | 9,863 | ||||
GEO Group Inc 6.000% 4/15/26 | 25,000 | 24,563 | ||||
Infinity Acq LLC/FI Corp - 144A 7.250% 8/1/22 | 60,000 | 50,550 | ||||
Intl Lease Fin Corp 6.250% 5/15/19 | 55,000 | 59,125 | ||||
*Intl Lease Fin Corp 5.875% 4/1/19 | 210,000 | 223,019 | ||||
Intl Lease Fin Corp 4.625% 4/15/21 | 10,000 | 10,363 | ||||
Inventive Grp Hldgs Inc - 144A 7.500% 10/1/24 | 50,000 | 52,370 | ||||
James Hardie Intl Fin - 144A 5.875% 2/15/23 | 20,000 | 20,700 | ||||
Nielsen Co Lux Sarl - 144A 5.500% 10/1/21 | 20,000 | 20,800 | ||||
Realogy Group/CO Issuer - 144A 5.250% 12/1/21 | 15,000 | 15,375 | ||||
UPCB Fin III LTD - 144A 5.375% 1/15/25 | 200,000 | 201,500 | ||||
WMG Acquisition Corp - 144A 5.625% 4/15/22 | 13,000 | 13,455 | ||||
WMG Acquisition Corp - 144A 4.875% 11/1/24 | 10,000 |
| 9,950 | |||
| 2,368,032 | |||||
Health Care (10.3%) | ||||||
Alere Inc 6.500% 6/15/20 | 25,000 | 24,625 | ||||
Alere Inc - 144A 6.375% 7/1/23 | 30,000 | 29,813 | ||||
Care Capital Properties - 144A 5.125% 8/15/26 | 40,000 | 38,965 | ||||
DJO Finco Inc/DJO Finance - 144A 8.125% 6/15/21 | 155,000 | 134,463 | ||||
Davita Inc 5.000% 5/1/25 | 70,000 | 68,863 | ||||
HCA Inc 5.250% 4/15/25 | 50,000 | 52,187 | ||||
*HCA Inc 5.375% 2/1/25 | 320,000 | 320,800 | ||||
HCA Inc 5.875% 2/15/26 | 140,000 | 144,200 | ||||
HCA Inc 5.250% 6/15/26 | 50,000 | 51,688 | ||||
*HCA Inc 7.500% 2/15/22 | 350,000 | 397,250 | ||||
Healthsouth Corp 5.750% 11/1/24 | 65,000 | 65,813 | ||||
Healthsouth Corp 5.750% 9/15/25 | 30,000 | 29,850 | ||||
Hill Rom Holding Inc - 144A 5.750% 9/1/23 | 60,000 | 61,950 | ||||
Hologic Inc - 144A 5.250% 7/15/22 | 80,000 | 84,200 | ||||
Kindred Healthcare Inc 8.750% 1/15/23 | 105,000 | 98,175 | ||||
Kinetics Concept/KCI USA - 144A 7.875% 2/15/21 | 35,000 | 37,974 | ||||
Kinetics Concept/KCI USA - 144A 9.625% 10/1/21 | 145,000 | 153,337 | ||||
Mallinckrodt Fin/SB - 144A 5.750% 8/1/22 | 25,000 | 24,063 | ||||
Mallinckrodt Fin/SB - 144A 5.500% 4/15/25 | 45,000 | 40,275 | ||||
Mallinckrodt Fin/SB - 144A 5.625% 10/15/23 | 30,000 | 27,974 | ||||
Tenet Healthcare Corp 6.000% 10/1/20 | 30,000 | 31,425 | ||||
Tenet Healthcare Corp 8.000% 8/1/20 | 130,000 | 128,388 | ||||
Tenet Healthcare Corp 4.500% 4/1/21 | 55,000 | 54,450 | ||||
Tenet Healthcare Corp 8.125% 4/1/22 | 275,000 | 259,463 | ||||
Tenet Healthcare Corp 6.750% 6/15/23 | 85,000 | 75,013 | ||||
Tenet Healthcare Corp - 144A 7.500% 1/1/22 | 15,000 | 15,638 | ||||
(2)(5) 21st Century Oncology - 144A 11.000% 5/1/23 | 65,406 | 44,476 | ||||
VRX Escrow Corp - 144A 5.875% 5/15/23 | 210,000 | 158,550 | ||||
VRX Escrow Corp - 144A 6.125% 4/15/25 | 140,000 | 105,175 | ||||
Valeant Pharmaceuticals - 144A 7.000% 10/1/20 | 25,000 | 21,547 | ||||
Valeant Pharmaceuticals - 144A 6.750% 8/15/21 | 90,000 | 74,700 | ||||
Valeant Pharmaceuticals - 144A 7.250% 7/15/22 | 150,000 | 122,625 | ||||
Valeant Pharmaceuticals - 144A 7.500% 7/15/21 | 295,000 |
| 250,013 | |||
| 3,227,928 | |||||
Industrials (10.7%) | ||||||
ACCO Brands Corp 6.750% 4/30/20 | 70,000 | 73,500 | ||||
ACCO Brands Corp - 144A 5.250% 12/15/24 | 30,000 | 30,206 | ||||
ADT Corp 3.500% 7/15/22 | 95,000 | 90,488 | ||||
AECOM - 144A 5.750% 10/15/22 | 20,000 | 21,140 | ||||
AECOM - 144A 5.875% 10/15/24 | 30,000 | 32,028 | ||||
Air Medical Merger Sub - 144A 6.375% 5/15/23 | 75,000 | 72,000 | ||||
Aircastle Ltd 5.000% 4/1/23 | 75,000 | 76,500 | ||||
Arconic Inc 5.900% 2/1/27 | 15,000 | 15,638 | ||||
Allegion Plc 5.875% 9/15/23 | 15,000 | 15,900 | ||||
Ashtead Capital Inc - 144A 6.500% 7/15/22 | 40,000 | 41,900 | ||||
Avis Budget Car Rental 5.500% 4/1/23 | 85,000 | 83,513 | ||||
Avis Budget Car/ Finance - 144A 5.125% 6/1/22 | 20,000 | 19,600 | ||||
Avis Budget Car/ Finance - 144A 6.375% 4/1/24 | 55,000 | 54,931 | ||||
Belden Inc - 144A 5.500% 9/1/22 | 105,000 | 108,150 | ||||
Bombardier Inc - 144A 7.500% 3/15/25 | 90,000 | 88,922 | ||||
CNH Industrial Capital 4.375% 11/6/20 | 35,000 | 35,919 | ||||
CNH Industrial Capital 4.875% 4/1/21 | 70,000 | 72,800 | ||||
Clean Harbors Inc 5.250% 8/1/20 | 80,000 | 81,900 | ||||
Clean Harbors Inc 5.125% 6/1/21 | 25,000 | 25,568 | ||||
Energizer Holdings Inc - 144A 5.500% 6/15/25 | 75,000 | 75,188 | ||||
FGI Operating Co LLC 7.875% 5/1/20 | 85,000 | 72,250 | ||||
General Cable Corp 5.750% 10/1/22 | 95,000 | 92,150 | ||||
Great Lakes Dredge & Dock 7.375% 2/1/19 | 105,000 | 103,950 | ||||
H&E Equipment Services 7.000% 9/1/22 | 90,000 | 94,725 | ||||
Hillman Group Inc - 144A 6.375% 7/15/22 | 85,000 | 79,900 | ||||
Hertz Corp 7.375% 1/15/21 | 85,000 | 85,213 | ||||
Hertz Corp 6.250% 10/15/22 | 160,000 | 150,000 | ||||
Hertz Corp - 144A 5.500% 10/15/24 | 40,000 | 34,950 | ||||
Herc Rentals Inc - 144A 7.500% 6/1/22 | 45,000 | 47,419 | ||||
Herc Rental Inc - 144A 7.750% 6/1/24 | 75,000 | 78,844 | ||||
Iron Mountain Inc 6.000% 8/15/23 | 75,000 | 79,687 | ||||
Jack Cooper Holdings Corp 9.250% 6/1/20 | 120,000 | 51,900 | ||||
Klx Inc - 144A 5.875% 12/1/22 | 85,000 | 87,550 | ||||
Kratos Defense & Sec 7.000% 5/15/19 | 75,000 | 72,563 | ||||
Manitowoc Foodservice 9.500% 2/15/24 | 25,000 | 28,813 | ||||
NXP BV/NXP Funding LLC - 144A 4.625% 6/1/23 | 200,000 | 210,000 | ||||
Oshkosh Corp 5.375% 3/1/22 | 45,000 | 46,800 | ||||
Oshkosh Corp 5.375% 3/1/25 | 20,000 | 20,400 | ||||
Renaissance Acquisition - 144A 6.875% 8/15/21 | 35,000 | 34,825 | ||||
SPX Flow Inc - 144A 5.625% 8/15/24 | 20,000 | 20,150 | ||||
SPX Flow Inc - 144A 5.875% 8/15/26 | 35,000 | 35,000 | ||||
Sensata Technologies - 144A 4.875% 10/15/23 | 65,000 | 66,463 | ||||
Terex Corp 6.500% 4/1/20 | 65,000 | 66,300 | ||||
Terex Corp 6.000% 5/15/21 | 140,000 | 143,150 | ||||
Transdigm Inc 6.500% 5/15/25 | 85,000 | 89,037 | ||||
Triumph Group Inc 4.875% 4/1/21 | 80,000 | 75,040 | ||||
*United Rentals North America Inc 6.125% 6/15/23 | 70,000 | 74,200 | ||||
UR Financing Escrow Corp 7.625% 4/15/22 | 31,000 | 32,627 | ||||
United Rentals North America Inc 5.875% 9/15/26 | 35,000 | 36,006 | ||||
United Rentals North America Inc 5.500% 5/15/27 | 40,000 | 39,700 | ||||
XPO Logistics Inc - 144A 6.500% 6/15/22 | 90,000 | 94,500 | ||||
XPO Logistics Inc - 144A 6.125% 9/1/23 | 20,000 |
| 20,900 | |||
| 3,380,803 | |||||
Information Technology (9.9%) | ||||||
ACI Worldwide Inc - 144A 6.375% 8/15/20 | 55,000 | 56,581 | ||||
Amkor Technologies Inc 6.625% 6/1/21 | 70,000 | 71,925 | ||||
Amkor Technologies Inc 6.375% 10/1/22 | 115,000 | 119,887 | ||||
Anixter Inc 5.500% 3/1/23 | 80,000 | 83,000 | ||||
Cogent Comm Finance Inc 5.625% 4/15/21 | 90,000 | 90,900 | ||||
Cogent Communications GR - 144A 5.375% 3/1/22 | 65,000 | 67,113 | ||||
Commscope Inc - 144A 5.500% 6/15/24 | 25,000 | 25,874 | ||||
Commscope Tech Finance - 144A 6.000% 6/15/25 | 125,000 | 132,500 | ||||
Entegris Inc - 144A 6.000% 4/1/22 | 100,000 | 104,000 | ||||
Equinix Inc 5.375% 1/1/22 | 20,000 | 21,000 | ||||
Equinix Inc 5.750% 1/1/25 | 10,000 | 10,450 | ||||
First Data Corp - 144A 5.375% 8/15/23 | 143,000 | 148,363 | ||||
First Data Corp - 144A 7.000% 12/1/23 | 32,000 | 34,080 | ||||
First Data Corporation-144A 5.750% 1/15/24 | 390,000 | 402,433 | ||||
Inception MRGR/Rackspace 8.625% 11/15/24 | 75,000 | 79,384 | ||||
Infor US Inc 6.500% 5/15/22 | 195,000 | 203,287 | ||||
(1)Infor Software Parent 7.125% 5/1/21 | 105,000 | 108,150 | ||||
Italics Merger Sub - 144A 7.125% 7/15/23 | 95,000 | 90,725 | ||||
MagnaChip Semiconductor 6.625% 7/15/21 | 95,000 | 82,175 | ||||
Micron Technology Inc - 144A 5.250% 1/15/24 | 115,000 | 114,425 | ||||
Micron Technology Inc - 144A 7.500% 9/15/23 | 35,000 | 38,763 | ||||
Microsemi Corp - 144A 9.125% 4/15/23 | 75,000 | 87,374 | ||||
Plantronics Inc - 144A 5.500% 5/31/23 | 40,000 | 40,400 | ||||
Project Homestake Merger - 144A 8.875% 3/1/23 | 100,000 | 105,500 | ||||
Sabine Pass Liquefaction 6.250% 3/15/22 | 100,000 | 109,500 | ||||
*Sabine Pass Liquefaction 5.750% 5/15/24 | 100,000 | 107,250 | ||||
Sabine Pass Liquefaction - 144A 5.875% 6/30/26 | 25,000 | 26,938 | ||||
Sinclair Television Group 6.125% 10/1/22 | 105,000 | 109,463 | ||||
Sinclair Television Group - 144A 5.625% 8/1/24 | 20,000 | 20,450 | ||||
Sinclair Television Group - 144A 5.125% 2/15/27 | 20,000 | 19,000 | ||||
Western Digital Corp - 144A 7.375% 4/1/23 | 65,000 | 71,500 | ||||
Western Digital Corp - 144A 10.500% 4/1/24 | 155,000 | 183,288 | ||||
*Zebra Technologies Corp - 144A 7.250% 10/15/22 | 140,000 |
| 152,250 | |||
| 3,117,928 | |||||
Materials (4.7%) | ||||||
(2)Ardagh Packaging Fin - 144A 3.652% 12/15/19 | 200,000 | 203,000 | ||||
Ashland Inc 4.750% 8/15/22 | 170,000 | 176,375 | ||||
Berry Plastics Corp 5.125% 7/15/23 | 10,000 | 10,175 | ||||
Berry Plastics Escrow 6.000% 10/15/22 | 20,000 | 21,150 | ||||
Boise Cascade - 144A 5.625% 9/1/24 | 15,000 | 14,887 | ||||
Chemours Co 6.625% 5/15/23 | 60,000 | 59,400 | ||||
Chemours Co 7.000% 5/15/25 | 20,000 | 19,700 | ||||
Cheniere Corp Christi Holdings LLC - 144A 5.875% 3/31/25 | 40,000 | 40,812 | ||||
FMG Resources Aug 2006- 144A 9.750% 3/1/22 | 35,000 | 40,602 | ||||
Freeport-McMoran Inc 3.875% 3/15/23 | 20,000 | 18,350 | ||||
Freeport-McMoran Inc 4.550% 11/14/24 | 10,000 | 9,375 | ||||
GCP Applied Technologies - 144A 9.500% 2/1/23 | 50,000 | 57,375 | ||||
WR Grace & Co-Conn - 144A 5.625% 10/1/24 | 10,000 | 10,500 | ||||
Hexion US Finance Corp 6.625% 4/15/20 | 175,000 | 154,874 | ||||
Hexion US Fin/Nova Scoti 8.875% 2/1/18 | 85,000 | 84,574 | ||||
Huntsman International LLC - 144A 5.125% 11/15/22 | 120,000 | 122,400 | ||||
Ineos Group Holdings SA - 144A 5.625% 8/1/24 | 200,000 | 198,500 | ||||
LSB Industries 7.750% 8/1/19 | 93,000 | 85,560 | ||||
(4)(5)Noranda Aluminium Acquistion 11.000% 06/01/19 | 40,000 | 0 | ||||
Novelis Inc - 144A 6.250% 8/15/24 | 25,000 | 26,500 | ||||
Novelis Inc - 144A 5.875% 9/30/26 | 30,000 | 30,300 | ||||
Scotts Miracle Gro Co - 144A 6.000% 10/15/23 | 55,000 | 58,162 | ||||
Scotts Miracle Gro Co - 144A 5.250% 12/15/26 | 20,000 | 20,000 | ||||
#(4)(5)Reichhold Industries Inc – 144A 9.000% 5/8/17 |
| 103,629 |
| 0 | ||
Valvoline Finco Two LLC - 144A 5.500% 7/15/24 | 5,000 | 5,175 | ||||
Versum Materials Inc 5.500% 9/30/24 | 25,000 |
| 25,562 | |||
| 1,493,308 | |||||
Telecommunication Services (11.2%) | ||||||
Centurylink Inc 5.800% 3/15/22 | 45,000 | 45,996 | ||||
Centurylink Inc 6.750% 12/1/23 | 100,000 | 102,250 | ||||
Centurylink Inc 5.625% 4/1/25 | 25,000 | 23,750 | ||||
Everest Acq LLC 9.375% 5/1/20 | 180,000 | 165,937 | ||||
Frontier Communications 6.875% 1/15/25 | 60,000 | 50,850 | ||||
Frontier Communications 10.500% 9/15/22 | 5,000 | 5,258 | ||||
Frontier Communications 11.000% 9/15/25 | 175,000 | 180,688 | ||||
GCI Inc 6.750% 6/1/21 | 60,000 | 61,500 | ||||
Intelsat Luxembourg Holdings 7.750% 6/1/21 | 14,000 | 4,585 | ||||
*Intelsat Jackson Holdings 7.250% 10/15/20 | 375,000 | 290,625 | ||||
Intelsat Jackson Holdings 7.250% 4/1/19 | 45,000 | 37,800 | ||||
Intelsat Jackson Holdings 7.500% 4/1/21 | 35,000 | 26,687 | ||||
Intelsat Jackson Holdings 5.500% 8/1/23 | 115,000 | 77,487 | ||||
Itelstat Connect Finance 12.500% 4/1/22 | 17,000 | 10,455 | ||||
Level 3 Financing Inc 5.375% 5/1/25 | 55,000 | 56,100 | ||||
Level 3 Financing Inc 5.375% 1/15/24 | 35,000 | 35,350 | ||||
Level 3 Communications 5.750% 12/1/22 | 55,000 | 56,512 | ||||
Neptune Finco Corp - 144A 10.875% 10/15/25 | 200,000 | 238,000 | ||||
Qwest Capital Funding 7.750% 2/15/31 | 60,000 | 54,600 | ||||
SBA Communications - 144A 4.875% 9/1/24 | 50,000 | 49,375 | ||||
Sprint Capital Corp 6.875% 11/15/28 | 30,000 | 29,625 | ||||
*Sprint Capital Corp 8.750% 3/15/32 | 385,000 | 423,500 | ||||
Sprint Capital Corp - 144A 9.000% 11/15/18 | 55,000 | 60,637 | ||||
Sprint Corp 7.250% 9/15/21 | 55,000 | 58,437 | ||||
*Sprint Corp 7.875% 9/15/23 | 545,000 | 581,787 | ||||
Sprint Corp 7.625% 2/15/25 | 50,000 | 52,562 | ||||
T-Mobile USA Inc 6.633% 4/28/21 | 90,000 | 93,937 | ||||
T-Mobile USA Inc 6.731% 4/28/22 | 190,000 | 198,550 | ||||
T-Mobile USA Inc 6.500% 1/15/26 | 40,000 | 43,250 | ||||
US Cellular Corp 6.700% 12/15/33 | 75,000 | 74,250 | ||||
*Windstream Corp 7.750% 10/1/21 | 165,000 | 169,620 | ||||
Windstream Corp 7.500% 4/1/23 | 15,000 | 14,438 | ||||
Windstream Services LLC 7.500% 6/1/22 | 115,000 | 112,700 | ||||
Windstream Services LLC 6.375% 8/1/23 | 40,000 |
| 35,700 | |||
| 3,522,798 | |||||
Utilities (1.2%) | ||||||
AES Corp 7.375% 7/1/21 | 50,000 | 55,695 | ||||
AES Corp 6.000% 5/15/26 | 20,000 | 20,300 | ||||
Amerigas Partners/Finance Corp 5.500% 5/20/25 | 40,000 | 40,400 | ||||
Dynegy Inc 7.375% 11/1/22 | 80,000 | 76,400 | ||||
Dynegy Inc 7.625% 11/1/24 | 75,000 | 69,187 | ||||
Dynegy Inc - 144A 8.000% 1/15/25 | 25,000 | 23,437 | ||||
NRG Energy Inc 7.875% 5/15/21 | 4,000 | 4,170 | ||||
NRG Energy Inc 6.250% 7/15/22 | 40,000 | 40,100 | ||||
NRG Energy Inc - 144A 6.625% 1/15/27 | 50,000 |
| 47,250 | |||
| 376,939 | |||||
| ||||||
TOTAL CORPORATE BONDS (COST: $29,144,558) | $ | 29,118,712 | ||||
| ||||||
TERM LOANS (0.6%) | ||||||
| ||||||
Material (0.6%) | ||||||
#(1)Reichhold Holdings International (Senior Secured Note) 15.000% 3/31/17 | 50,810 | $ | 50,810 | |||
#(1)Reichhold Holdings International (Senior Secured Note) 12.000% 3/31/17 | 94,337 | 94,337 | ||||
#Reichhold LLC 12.000% 3/31/17 | 35,000 |
| 35,000 | |||
|
| 180,147 | ||||
| ||||||
TOTAL LOANS (COST: $179,754) | $ | 180,147 | ||||
| ||||||
COMMON STOCKS (0.2%) | ||||||
Energy (0.2%) | Shares | |||||
Halcon Resources Corp (COST: $145,204) | 6,520 | $ | 60,897 | |||
| ||||||
PRIVATE EQUITY (0.4%) | ||||||
Materials (0.4%) | Shares | |||||
#(4)Reichhold Cayman (COST: $120,561) | 162 | $ | 106,758 | |||
|
|
|
|
| ||
WARRANTS (0.0%) |
|
|
|
| ||
Industrials (0.0%) |
| Units |
|
| ||
Jack Cooper Enterprises Inc (COST: $0) |
| 175 | $ | 0 | ||
| ||||||
TOTAL INVESTMENTS IN SECURITIES | $ | 29,446,514 | ||||
OTHER ASSETS LESS LIABILITIES (6.4%) |
| 1,998,376 | ||||
| ||||||
NET ASSETS (100.0%) | $ | 31,464,890 | ||||
(1) | Interest or dividend is paid-in-kind, when applicable. | |||||
|
| |||||
(2) | Variable rate security. The rates for these securities are as of December 30, 2016. | |||||
|
| |||||
(3) | This security has no contractual maturity date, is not redeemable and contractually pays an indefinite stream of interest. | |||||
|
| |||||
(4) | Non-income producing security. | |||||
|
| |||||
(5) | Issue is in default. | |||||
|
| |||||
144A - | Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities are deemed to be liquid under procedures approved by the Fund’s Board of Trustees and may normally be sold to qualified institutional buyers in transactions exempt from registration. Total market value of Rule 144A Securities amounts to $11,828,684, representing 37.6% of net assets as of December 30, 2016. | |||||
|
| |||||
* | Indicates bonds are segregated by the custodian to cover when-issued or delayed-delivery purchases. | |||||
|
| |||||
# | Illiquid security. See note 2. Total market value of illiquid securities amount to $286,905 representing 0.9% of net assets as of December 30, 2016. | |||||
|
| |||||
|
| |||||
The accompanying notes are an integral part of these financial statements. | ||||||
WILLISTON BASIN/MID-NORTH AMERICA STOCK FUND
PORTFOLIO MARKET SECTORS December 30, 2016 (unaudited)
Energy | 86.5% |
Utilities | 4.9% |
Cash Equivalents and Other | 4.0% |
Materials | 2.5% |
Industrials | 2.1% |
100.0% |
Market sectors are breakdowns of the Fund’s portfolio holdings into specific investment classes.
These percentages are based on net assets.
SCHEDULE OF INVESTMENTS December 30, 2016
Fair | |||||
Shares |
| Value | |||
| |||||
COMMON STOCKS (96.0%) | |||||
| |||||
Energy (86.5%) | |||||
Archrock Inc | 540,000 | $ | 7,128,000 | ||
Baker Hughes Inc | 530,000 | 34,434,100 | |||
*Callon Petroleum Co | 840,000 | 12,910,800 | |||
*Carrizo Oil & Gas Inc | 310,000 | 11,578,500 | |||
Cimarex Energy Co. | 100,000 | 13,590,000 | |||
*Concho Resources Inc | 100,000 | 13,260,000 | |||
*Continental Resources Inc | 255,000 | 13,142,700 | |||
Devon Energy Corp | 280,000 | 12,787,600 | |||
*Diamondback Energy | 130,000 | 13,137,800 | |||
Enbridge Inc | 310,000 | 13,057,200 | |||
*Exterran Corp | 125,000 | 2,987,500 | |||
Exxon Mobil Corp | 120,000 | 10,831,200 | |||
*Fairmount Santrol Holdings | 1,250,000 | 14,737,500 | |||
*Forum Energy Technologies Inc | 910,000 | 20,020,000 | |||
Halliburton Company | 540,000 | 29,208,600 | |||
*Helix Energy Solutions Group | 600,000 | 5,292,000 | |||
HollyFrontier Corp | 70,000 | 2,293,200 | |||
*Independence Contract Drilling Inc | 500,000 | 3,350,000 | |||
Kinder Morgan Inc | 1,260,000 | 26,094,600 | |||
National Oilwell Varco Inc | 150,000 | 5,616,000 | |||
*Oil States Intl Inc | 660,000 | 25,740,000 | |||
ONEOK Inc | 180,000 | 10,333,800 | |||
*PDC Energy Inc | 60,000 | 4,354,800 | |||
*Parsley Energy Inc | 670,000 | 23,610,800 | |||
Patterson-Uti Energy Inc | 420,000 | 11,306,400 | |||
Phillips 66 | 125,000 | 10,801,250 | |||
Pioneer Natural Resources | 110,000 | 19,807,700 | |||
RPC Inc | 1,220,000 | 24,168,200 | |||
*RSP Permian Inc | 290,000 |
| 12,939,800 | ||
Schlumberger Ltd | 70,000 | 5,876,500 | |||
Semgroup Corp | 370,000 | 15,447,500 | |||
Spectra Energy Corp | 470,000 | 19,312,300 | |||
Superior Energy Services | 1,290,000 | 21,775,200 | |||
Tesoro Corp | 175,000 | 15,303,750 | |||
*Tetra Technologies Inc | 380,000 | 1,907,600 | |||
TransCanada Corp | 300,000 | 13,545,000 | |||
US Silica Holdings Inc | 610,000 | 34,574,800 | |||
Valero Energy Corp | 160,000 | 10,931,200 | |||
*Whiting Petroleum Corp | 370,000 | 4,447,400 | |||
Williams Companies Inc | 500,000 | 15,570,000 | |||
*Weatherford International PL | 625,000 |
| 3,118,750 | ||
| 570,330,050 | ||||
Industrials (2.1%) | |||||
Canadian Pacific Railway LTD | 95,000 |
| 13,563,150 | ||
| |||||
Materials (2.5%) | |||||
Westlake Chemical Corp | 90,000 | 5,039,100 | |||
Lyondellbasell Indu Class A | 135,000 |
| 11,580,300 | ||
| 16,619,400 | ||||
Utilities (4.9%) | |||||
CenterPoint Energy Inc | 470,000 | 11,580,800 | |||
MDU Resources Group Inc | 420,000 | 12,083,400 | |||
OGE Energy Corp | 260,000 |
| 8,697,000 | ||
|
| 32,361,200 | |||
| |||||
TOTAL COMMON STOCKS (COST: $531,351,726) | $ | 632,873,800 | |||
| |||||
TOTAL INVESTMENTS IN SECURITIES | $ | 632,873,800 | |||
LIABILITIES IN EXCESS OF OTHER ASSETS (4.0%) |
| 26,555,092 | |||
| |||||
NET ASSETS (100.0%) | $ | 659,428,892 | |||
* | Non-income producing | ||||
|
| ||||
|
| ||||
The accompanying notes are an integral part of these financial statements. | |||||
FINANCIAL STATEMENTS
Statements of Assets and Liabilities | December 30, 2016 |
Dividend | Energized | Growth | |||||||||
Harvest | Dividend | & Income | |||||||||
Fund | Fund | Fund | |||||||||
ASSETS | |||||||||||
Investments in securities, at value | $ | 121,970,150 | $ | 1,701,530 | $ | 33,083,183 | |||||
Cash and cash equivalents |
|
| 2,493,986 |
|
| 6,129 |
|
| 256,994 | ||
Security sales receivable | 0 | 0 | 52,296 | ||||||||
Receivable for Fund shares sold | 1,123,568 | 0 | 7,617 | ||||||||
Accrued dividends receivable | 395,696 | 4,508 | 70,472 | ||||||||
Accrued interest receivable | 477 | 5 | 75 | ||||||||
Receivable from affiliate | 6,736 | 0 | 0 | ||||||||
Receivable from broker | 0 | 82 | 0 | ||||||||
Prepaid expenses | 38,573 | 0 | 10,930 | ||||||||
Total assets | $ | 126,029,186 | $ | 1,712,254 | $ | 33,481,567 | |||||
| |||||||||||
LIABILITIES | |||||||||||
Payable for securities purchased | $ | 1,970,431 | $ | 0 | $ | 94,095 | |||||
Payable for Fund shares redeemed | 234,727 | 2,971 | 1,719 | ||||||||
Dividends payable | 115,025 | 1,128 | 0 | ||||||||
Payable to affiliates | 126,088 | 716 | 37,073 | ||||||||
Accrued expenses | 10,989 | 0 | 6,119 | ||||||||
Total liabilities | $ | 2,457,260 | $ | 4,815 | $ | 139,006 | |||||
| |||||||||||
NET ASSETS | $ | 123,571,926 | $ | 1,707,439 | $ | 33,342,561 | |||||
| |||||||||||
NET ASSETS ARE REPRESENTED BY: | |||||||||||
Capital stock outstanding, $.001 par value, unlimited shares authorized | $ | 111,250,574 | $ | 1,518,716 | $ | 27,785,419 | |||||
Accumulated undistributed net realized gain (loss) on investments | 426,341 | 8,540 | 729,295 | ||||||||
Accumulated undistributed net investment income (loss) | 0 | 0 | 1,672 | ||||||||
Unrealized appreciation (depreciation) on investments | 11,895,011 | 180,183 | 4,826,175 | ||||||||
|
|
|
|
|
|
| |||||
NET ASSETS | $ | 123,571,926 | $ | 1,707,439 | $ | 33,342,561 | |||||
| |||||||||||
Net Assets - Class A | $ | 107,275,400 | $ | 1,197,885 | $ | 32,933,395 | |||||
Net Assets - Class C | $ | 10,392,398 | $ | 114,338 | $ | 181,604 | |||||
Net Assets - Class I | $ | 5,904,128 | $ | 395,216 | $ | 227,562 | |||||
Shares outstanding - Class A | 7,486,465 | 105,375 | 680,755 | ||||||||
Shares outstanding - Class C | 728,752 | 10,062 | 3,754 | ||||||||
Shares outstanding - Class I | 411,779 | 34,774 | 4,706 | ||||||||
Net asset value per share - Class A1 | $14.33 | $11.37 | $48.38 | ||||||||
Net asset value per share - Class C1 | $14.26 | $11.36 | $48.38 | ||||||||
Net asset value per share - Class I | $14.34 | $11.37 | $48.36 | ||||||||
Public offering price per share – Class A | $15.08 | $11.97 | $50.93 | ||||||||
|
| ||||||||||
1 | Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. | ||||||||||
|
| ||||||||||
|
| ||||||||||
The accompanying notes are an integral part of these financial statements. | |||||||||||
FINANCIAL STATEMENTS
Statements of Assets and Liabilities | December 30, 2016 |
High | WB/MNA | |||||||
Income | Stock | |||||||
Fund | Fund | |||||||
ASSETS | ||||||||
Investments in securities, at value | $ | 29,466,514 | $ | 632,873,800 | ||||
Cash and cash equivalents | 1,588,245 | 27,606,745 | ||||||
Security sales receivable | 0 | 4,290,750 | ||||||
Receivable for Fund shares sold | 6,681 | 672,857 | ||||||
Accrued dividends receivable | 271 | 326,045 | ||||||
Accrued interest receivable | 498,349 | 6,970 | ||||||
Receivable from affiliate | 0 | 3,126 | ||||||
Receivable from broker | 0 | 2,469 | ||||||
Prepaid expenses | 9,281 | 71,974 | ||||||
Total assets | $ | 31,569,341 | $ | 665,854,736 | ||||
| ||||||||
LIABILITIES | ||||||||
Payable for securities purchased | $ | 0 | $ | 3,725,039 | ||||
Payable for Fund shares redeemed | 42,977 | 1,656,847 | ||||||
Dividends payable | 26,225 | 0 | ||||||
Payable to affiliates | 30,795 | 929,217 | ||||||
Accrued expenses | 4,454 | 114,741 | ||||||
Total liabilities | $ | 104,451 | $ | 6,425,844 | ||||
| ||||||||
NET ASSETS | $ | 31,464,890 | $ | 659,428,892 | ||||
| ||||||||
NET ASSETS ARE REPRESENTED BY: | ||||||||
Capital stock outstanding, $.001 par value, unlimited shares authorized | $ | 48,337,408 | $ | 707,494,918 | ||||
Accumulated undistributed net realized gain (loss) on investments | (16,748,955) | (149,588,100) | ||||||
Unrealized appreciation (depreciation) on investments | (123,563) | 101,522,074 | ||||||
|
|
|
|
| ||||
NET ASSETS | $ | 31,464,890 | $ | 659,428,892 | ||||
| ||||||||
Net Assets - Class A | $ | 25,523,820 | $ | 592,629,138 | ||||
Net Assets - Class C | $ | 5,293,310 | $ | 51,908,916 | ||||
Net Assets - Class I | $ | 647,760 | $ | 14,890,838 | ||||
Shares outstanding - Class A | 3,332,384 | 100,007,262 | ||||||
Shares outstanding - Class C | 689,613 | 8,810,532 | ||||||
Shares outstanding - Class I | 84,624 | 2,516,058 | ||||||
Net asset value per share - Class A1 | $7.66 | $5.93 | ||||||
Net asset value per share - Class C1 | $7.68 | $5.89 | ||||||
Net asset value per share - Class I | $7.65 | $5.92 | ||||||
Public offering price per share – Class A | $8.00 | $6.24 | ||||||
|
| |||||||
1 | Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. | |||||||
|
| |||||||
|
| |||||||
The accompanying notes are an integral part of these financial statements. | ||||||||
FINANCIAL STATEMENTS
Statements of Operations | For the Year/Period ended December 30, 2016 | |||||||||||
| |||||||||||
Dividend | Energized | Growth | |||||||||
Harvest | Dividend | & Income | |||||||||
Fund | Fund^ | Fund | |||||||||
INVESTMENT INCOME | |||||||||||
Interest | $ | 3,996 | $ | 85 | $ | 2,553 | |||||
Dividends (net of foreign withholding taxes of $16,765, $2,158, and $0, respectively) | 3,291,171 | 49,405 | 901,462 | ||||||||
Total investment income | $ | 3,295,167 | $ | 49,490 | $ | 904,015 | |||||
| |||||||||||
EXPENSES | |||||||||||
Investment advisory fees | $ | 586,639 | $ | 6,724 | $ | 341,606 | |||||
Distribution (12b-1) fees - Class A | 183,141 | 1,798 | 84,745 | ||||||||
Distribution (12b-1) fees - Class C | 42,640 | 697 | 1,701 | ||||||||
Transfer agent fees | 149,277 | 8,084 | 69,972 | ||||||||
Administrative service fees | 150,472 | 29,994 | 88,792 | ||||||||
Professional fees | 14,839 | 3,481 | 8,938 | ||||||||
Reports to shareholders | 7,629 | 130 | 6,367 | ||||||||
License, fees, and registrations | 49,447 | 21,741 | 23,512 | ||||||||
Audit fees | 8,275 | 119 | 2,577 | ||||||||
Trustees’ fees | 7,573 | 14 | 3,478 | ||||||||
Transfer agent out-of-pockets | 18,343 | 674 | 14,716 | ||||||||
Custodian fees | 12,949 | 1,805 | 5,589 | ||||||||
Legal fees | 11,458 | 91 | 4,950 | ||||||||
Insurance expense | 1,285 | 40 | 1,007 | ||||||||
Total expenses | $ | 1,243,967 | $ | 75,392 | $ | 657,950 | |||||
Less expenses waived or reimbursed (See Note 7) |
| (468,921) |
| (73,505) |
| (230,104) | |||||
Total net expenses | $ | 775,046 | $ | 1,887 | $ | 427,846 | |||||
|
|
|
|
|
|
| |||||
NET INVESTMENT INCOME (LOSS) | $ | 2,520,121 | $ | 47,603 | $ | 476,169 | |||||
| |||||||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS | |||||||||||
Net realized gain (loss) from investment transactions | $ | 1,352,854 | $ | 47,021 | $ | 1,219,205 | |||||
Net change in unrealized appreciation (depreciation) of investments | 9,899,138 | 180,183 | 1,494,053 | ||||||||
Net realized and unrealized gain (loss) on investments | $ | 11,251,992 | $ | 227,204 | $ | 2,713,258 | |||||
| |||||||||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | 13,772,113 | $ | 274,807 | $ | 3,189,427 | |||||
|
| ||||||||||
^ | Commenced operations on May 2, 2016. | ||||||||||
|
| ||||||||||
|
| ||||||||||
The accompanying notes are an integral part of these financial statements. | |||||||||||
FINANCIAL STATEMENTS
Statements of Operations | For the Year ended December 30, 2016 | ||||||
| ||||||
High | WB/MNA | |||||
Income | Stock | |||||
Fund | Fund | |||||
INVESTMENT INCOME | ||||||
Interest | $ | 1,950,019 | $ | 81,135 | ||
Dividends (net of foreign withholding taxes of $0 and $147,375, respectively) | 2,509 | 9,386,215 | ||||
Total investment income | $ | 1,952,528 | $ | 9,467,350 | ||
| ||||||
EXPENSES | ||||||
Investment advisory fees | $ | 255,806 | $ | 2,907,132 | ||
Distribution (12b-1) fees - Class A | 61,400 | 2,667,150 | ||||
Distribution (12b-1) fees - Class C | 53,485 | 449,332 | ||||
Transfer agent fees | 49,589 | 940,623 | ||||
Administrative service fees | 83,100 | 816,821 | ||||
Professional fees | 8,339 | 123,786 | ||||
Reports to shareholders | 2,228 | 112,349 | ||||
License, fees, and registrations | 19,108 | 111,766 | ||||
Audit fees | 2,402 | 48,192 | ||||
Trustees’ fees | 3,034 | 57,751 | ||||
Transfer agent out-of-pockets | 5,726 | 323,025 | ||||
Custodian fees | 9,370 | 58,262 | ||||
Legal fees | 4,345 | 134,788 | ||||
Insurance expense | 957 | 20,913 | ||||
Total expenses | $ | 558,889 | $ | 8,771,890 | ||
Less expenses waived or reimbursed (See Note 7) |
| (172,996) |
| (83,091) | ||
Total net expenses | $ | 385,893 | $ | 8,688,799 | ||
|
|
|
|
| ||
NET INVESTMENT INCOME (LOSS) | $ | 1,566,635 | $ | 778,551 | ||
| ||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS | ||||||
Net realized gain (loss) from investment transactions | $ | (974,804) | $ | (77,646,904) | ||
Net change in unrealized appreciation (depreciation) of investments | 3,517,886 | 268,699,326 | ||||
Net realized and unrealized gain (loss) on investments | $ | 2,543,082 | $ | 191,052,422 | ||
| ||||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | 4,109,717 | $ | 191,830,973 | ||
| ||||||
| ||||||
The accompanying notes are an integral part of these financial statements. |
FINANCIAL STATEMENTS
Statements of Changes in Net Assets | For the Year/Period ended December 30, 2016 |
Dividend | Energized | Growth | |||||||||
Harvest | Dividend | & Income | |||||||||
Fund | Fund^ | Fund | |||||||||
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS | |||||||||||
Net investment income (loss) | $ | 2,520,121 | $ | 47,603 | $ | 476,169 | |||||
Net realized gain (loss) from investment transactions | 1,352,854 | 47,021 | 1,219,205 | ||||||||
Net change in unrealized appreciation (depreciation) of investments | 9,899,138 | 180,183 | 1,494,053 | ||||||||
Net increase (decrease) in net assets resulting from operations | $ | 13,772,113 | $ | 274,807 | $ | 3,189,427 | |||||
| |||||||||||
DISTRIBUTIONS TO SHAREHOLDERS FROM | |||||||||||
Net investment income - Class A | $ | (2,336,837) | $ | (36,917) | $ | (470,836) | |||||
Net investment income - Class C | (128,676) | (2,884) | (1,364) | ||||||||
Net investment income - Class I * | (54,608) | (7,802) | (3,691) | ||||||||
Net realized gain on investments - Class A | (380,656) | (27,095) | (271,638) | ||||||||
Net realized gain on investments - Class C | (35,986) | (2,637) | (1,505) | ||||||||
Net realized gain on investments - Class I * | (19,588) | (8,748) | (1,871) | ||||||||
Total distributions | $ | (2,956,351) | $ | (86,083) | $ | (750,905) | |||||
| |||||||||||
CAPITAL SHARE TRANSACTIONS | |||||||||||
Proceeds from sale of shares - Class A | $ | 71,646,123 | $ | 1,578,445 | $ | 3,181,552 | |||||
Proceeds from sale of shares - Class C | 9,708,184 | 100,000 | 72,717 | ||||||||
Proceeds from sale of shares - Class I* | 5,788,433 | 342,802 | 219,569 | ||||||||
Proceeds from reinvested dividends - Class A | 2,382,811 | 63,177 | 701,553 | ||||||||
Proceeds from reinvested dividends - Class C | 147,178 | 638 | 2,870 | ||||||||
Proceeds from reinvested dividends - Class I * | 66,540 | 16,551 | 5,562 | ||||||||
Cost of shares redeemed - Class A | (20,375,800) | (582,868) | (9,064,062) | ||||||||
Cost of shares redeemed - Class C | (641,667) | 0 | (72,452) | ||||||||
Cost of shares redeemed - Class I * | (82,344) | (30) | (15) | ||||||||
Net increase (decrease) in net assets resulting from capital share transactions | $ | 68,639,458 | $ | 1,518,715 | $ | (4,952,706) | |||||
| |||||||||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | $ | 79,455,220 | $ | 1,707,439 | $ | (2,514,184) | |||||
NET ASSETS, BEGINNING OF PERIOD | 44,116,706 | 0 | 35,856,745 | ||||||||
NET ASSETS, END OF PERIOD | $ | 123,571,926 | $ | 1,707,439 | $ | 33,342,561 | |||||
| |||||||||||
Accumulated undistributed net investment income | $ | 0 | $ | 0 | $ | 1,672 | |||||
|
| ||||||||||
* | All Funds began offering Class I shares August 1, 2016. | ||||||||||
|
| ||||||||||
^ | Commenced operations on May 2, 2016. | ||||||||||
|
| ||||||||||
|
| ||||||||||
The accompanying notes are an integral part of these financial statements. | |||||||||||
FINANCIAL STATEMENTS
Statements of Changes in Net Assets | For the Year ended December 30, 2016 | ||||||||
| ||||||||
High | WB/MNA | |||||||
Income | Stock | |||||||
Fund | Fund | |||||||
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS | ||||||||
Net investment income (loss) | $ | 1,566,635 | $ | 778,551 | ||||
Net realized gain (loss) from investment transactions | (974,804) | (77,646,904) | ||||||
Net change in unrealized appreciation (depreciation) of investments | 3,517,886 | 268,699,326 | ||||||
Net increase (decrease) in net assets resulting from operations | $ | 4,109,717 | $ | 191,830,973 | ||||
| ||||||||
DISTRIBUTIONS TO SHAREHOLDERS FROM | ||||||||
Net investment income - Class A | $ | (1,310,371) | $ | (715,220) | ||||
Net investment income - Class C | (245,630) | 0 | ||||||
Net investment income - Class I * | (10,634) | (63,331) | ||||||
Return of capital - Class A | 0 | (312,604) | ||||||
Return of capital - Class I * | 0 | (27,681) | ||||||
Total distributions | $ | (1,566,635) | $ | (1,118,836) | ||||
| ||||||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Proceeds from sale of shares - Class A | $ | 2,970,740 | $ | 84,107,881 | ||||
Proceeds from sale of shares - Class C | 332,568 | 9,718,011 | ||||||
Proceeds from sale of shares - Class I * | 644,408 | 14,157,242 | ||||||
Proceeds from reinvested dividends - Class A | 1,025,633 | 935,083 | ||||||
Proceeds from reinvested dividends - Class C | 183,595 | 0 | ||||||
Proceeds from reinvested dividends - Class I * | 9,848 | 90,390 | ||||||
Cost of shares redeemed - Class A | (4,895,807) | (157,289,805) | ||||||
Cost of shares redeemed - Class C | (1,342,341) | (10,920,586) | ||||||
Cost of shares redeemed - Class I * | (14,204) | (298,455) | ||||||
Net increase (decrease) in net assets resulting from capital share transactions | $ | (1,085,560) | $ | (59,500,239) | ||||
| ||||||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | $ | 1,457,522 | $ | 131,211,898 | ||||
NET ASSETS, BEGINNING OF PERIOD | 30,007,368 | 528,216,994 | ||||||
NET ASSETS, END OF PERIOD | $ | 31,464,890 | $ | 659,428,892 | ||||
| ||||||||
Accumulated undistributed net investment income | $ | 0 | $ | 0 | ||||
|
| |||||||
* | All Funds began offering Class I shares August 1, 2016. | |||||||
|
| |||||||
|
| |||||||
The accompanying notes are an integral part of these financial statements. | ||||||||
FINANCIAL STATEMENTS
Statements of Changes in Net Assets | For the year ended December 31, 2015
|
| Dividend |
| Growth |
| High |
| WB/MNA | ||||||
|
| Harvest |
| & Income |
| Income |
| Stock | ||||||
|
| Fund |
| Fund |
| Fund |
| Fund | ||||||
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS | ||||||||||||||
Net investment income (loss) | $ | 1,102,778 | $ | 275,603 | $ | 1,762,623 | $ | 3,591,416 | ||||||
Net realized gain (loss) from investment transactions | 163,368 | 639,055 | 58,153 | (58,462,647) | ||||||||||
Net change in unrealized appreciation (depreciation) of investments | (799,584) | (1,667,442) | (3,254,300) | (140,594,951) | ||||||||||
Net increase (decrease) in net assets resulting from operations | $ | 466,562 | $ | (752,784) | $ | (1,433,524) | $ | (195,466,182) | ||||||
| ||||||||||||||
DISTRIBUTIONS TO SHAREHOLDERS FROM | ||||||||||||||
Net investment income - Class A | $ | (1,097,016) | $ | (274,755) | $ | (1,420,267) | $ | (3,555,634) | ||||||
Net investment income - Class C | (5,762) | (771) | (342,356) | (112,776) | ||||||||||
Net realized gain on investments - | (597,578) | (490,684) | 0 | 0 | ||||||||||
Net realized gain on investments - | (9,182) | (1,807) | 0 | 0 | ||||||||||
Total distributions | $ | (1,709,538) | $ | (768,017) | $ | (1,762,623) | $ | (3,668,410) | ||||||
| ||||||||||||||
CAPITAL SHARE TRANSACTIONS | ||||||||||||||
Proceeds from sale of shares - Class A | $ | 20,579,265 | $ | 5,956,782 | $ | 3,989,935 | $ | 146,502,195 | ||||||
Proceeds from sale of shares - Class C ¹ | 705,583 | 181,607 | 335,840 | 29,744,926 | ||||||||||
Proceeds from reinvested dividends - Class A | 1,513,609 | 735,485 | 1,075,796 | 3,288,216 | ||||||||||
Proceeds from reinvested dividends - Class C1 | 14,725 | 2,578 | 232,224 | 106,539 | ||||||||||
Cost of shares redeemed - Class A | (7,084,424) | (5,676,193) | (6,379,603) | (231,787,338) | ||||||||||
Cost of shares redeemed - Class C1 | (14,050) | (9,935) | (3,614,397) | (8,819,045) | ||||||||||
Net increase (decrease) in net assets resulting from capital share transactions | $ | 15,714,708 | $ | 1,190,324 | $ | (4,360,205) | $ | (60,964,507) | ||||||
| ||||||||||||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | $ | 14,471,732 | $ | (330,477) | $ | (7,556,352) | $ | (260,099,099) | ||||||
NET ASSETS, BEGINNING OF PERIOD | 29,644,974 | 36,187,222 | 37,563,720 | 788,316,093 | ||||||||||
NET ASSETS, END OF PERIOD | $ | 44,116,706 | $ | 35,856,745 | $ | 30,007,368 | $ | 528,216,994 | ||||||
| ||||||||||||||
Accumulated undistributed net investment income | $ | 0 | $ | 1,394 | $ | 0 | $ | 0 | ||||||
|
| |||||||||||||
1 | Dividend Harvest Fund and Growth & Income Fund began offering Class C shares on August 3, 2015. | |||||||||||||
|
| |||||||||||||
|
| |||||||||||||
The accompanying notes are an integral part of these financial statements. | ||||||||||||||
NOTES TO FINANCIAL STATEMENTS (unaudited)
NOTE 1: Organization
The Integrity Funds (the “Trust”) was organized as a Delaware statutory trust on October 31, 1997 and commenced operations on October 31, 1997. The Trust is registered under the Investment Company Act of 1940 as an open-end management investment company, consisting of five series (the “Funds”).
Integrity Dividend Harvest Fund (the “Dividend Harvest Fund”), a non-diversified fund, seeks high current income with long term appreciation as a secondary objective. Integrity Energized Dividend Fund (the “Energized Dividend Fund”), a non-diversified fund, seeks long-term appreciation while providing high current income. Integrity Growth & Income Fund (the “Growth & Income Fund”), a diversified fund, seeks to provide long-term growth of capital with dividend income as a secondary objective. Integrity High Income Fund (the “High Income Fund”), a non-diversified fund, seeks a high level of current income with capital appreciation as a secondary objective. Williston Basin/Mid-North America Stock Fund (the “WB/MNA Stock Fund”), a diversified fund, seeks to provide long-term growth through capital appreciation.
Each Fund in the Trust currently offers Class A, C, and I shares. The Class A shares of Dividend Harvest Fund, Energized Dividend Fund, Growth & Income Fund, High Income Fund, and WB/MNA Stock Fund are sold with an initial sales charge of 5.00%, 5.00%, 5.00%, 4.25%, and 5.00%, respectively, and a distribution fee of up to 0.25% on an annual basis. Class C shares are sold without a sales charge and are subject to a distribution fee of up to 1.00% on an annual basis. Class I shares are sold without a sales charge or distribution fee. The three classes of shares represent interest in each Fund’s same portfolio of investments, have the same rights, and are generally identical in all respects except that each class bears its separate distribution and certain other class expenses and has exclusive voting rights with respect to any matter on which a separate vote of any class is required.
Each Fund is an investment company and, accordingly, follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 Financial Services – Investment Companies.
NOTE 2: Summary of Significant Accounting Policies
Investment security valuation—Securities for which market quotations are available are valued as follows: (a) Listed securities are valued at the closing price obtained from the respective primary exchange on which the security is listed or, if there were no sales on that day, at its last reported current bid price; (b) Unlisted securities are valued at the last current bid price obtained from the National Association of Securities Dealers’ Automated Quotation System. The Funds’ administrative services agent, Integrity Fund Services, LLC (“Integrity Fund Services” or “IFS”) obtains all of these prices from services that collect and disseminate such market prices. Prices provided by an independent pricing service may be determined without exclusive reliance on quoted prices and may take into account appropriate factors such as: institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. In the absence of an ascertainable market value, assets are valued at their fair value as determined by IFS using methods and procedures reviewed and approved by the Board of Trustees. Refer to Note 3 for further disclosures related to the inputs used to value the Funds’ investments. Shares of a registered investment company, including money market funds, that are not traded on an exchange are valued at the investment company’s net asset value per share.
When-issued securities—The Funds may purchase securities on a when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. The values of the securities purchased on a when-issued basis are identified as such in each Fund’s Schedule of Investments. With respect to purchase commitments, the Fund identifies securities as segregated in its custodial records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities, if the counterparty does not perform under the contract’s terms, or if the issuer does not issue the securities due to political, economic, or other factors.
Contingent deferred sales charge—Investments in Class A shares of $1 million or more may be subject to a 1.00% contingent deferred sales charge (“CDSC”) if redeemed within 24 months of purchase (excluding shares purchased with reinvested dividends and/or distributions). Investments in Class C shares (in any amount) may be subject to a 1.00% CDSC if redeemed within 12 months of purchase.
Federal and state income taxes—Each Fund is a separate taxpayer for federal income tax purposes. Each Fund’s policy is to comply with the requirements of the Internal Revenue Code that are applicable to regulated investment companies and to distribute substantially all of its net investment income and any net realized gain on investments to its shareholders; therefore, no provision for income taxes is required.
As of and during the year/period ended December 30, 2016, the Funds did not have a liability for any unrecognized tax benefits. The Funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statement of operations. During the year, the Funds did not incur any interest or penalties.
For all open tax years and all major taxing jurisdictions, management of the Funds has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. Open tax years are those that are open for examination by taxing authorities. Furthermore, management of the Funds is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Premiums and discounts—Premiums and discounts on debt securities are accreted and amortized using the effective yield method over the lives of the respective securities for financial statement purposes.
Security transactions, investment income, expenses and distributions—Income and expenses are recorded on the accrual basis. Investment transactions are accounted for on the trade date. Realized gains and losses are reported on the specific identification basis. Interest income and estimated expenses are accrued daily. Dividend income is recognized on the ex-dividend date. Withholding taxes on foreign dividends have been provided for in accordance with the Funds’ understanding of the applicable countries’ tax rules and regulations.
The Dividend Harvest Fund, Energized Dividend Fund, Growth & Income Fund, and WB/MNA Stock Fund will declare and pay dividends from net investment income at least annually. The High Income Fund declares dividends from net investment income daily and pays such dividends monthly. Dividends are reinvested in additional shares of the Funds at net asset value or paid in cash. Capital gains, when available, are distributed at least annually. Distributions to shareholders are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with federal income tax regulations and may differ from net investment income and realized gains determined in accordance with accounting principles generally accepted in the United States of America. These differences are primarily due to differing treatments for capital loss carryforwards and losses due to wash sales. In addition, other amounts have been reclassified within the composition of net assets to more appropriately conform financial accounting to tax basis treatment.
Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid-in capital. Temporary book and tax basis differences will reverse in a subsequent period.
Use of estimates—The financial statements have been prepared with accounting principles generally accepted in the United States of America (“GAAP”), which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Common expenses—Common expenses of the Trust are allocated among the Funds within the Trust based on relative net assets of each Fund or the nature of the services performed and the relative applicability to each Fund.
Multiple class allocations—The High Income Fund simultaneously uses the settled shares method to allocate income and fund-wide expenses and uses the relative net assets method to allocate gains and losses. Dividend Harvest Fund, Energized Dividend Fund, Growth & Income Fund, and WB/MNA Stock Fund use the relative net assets method to allocate income, fund-wide expenses, gains and losses. Class-specific expenses, distribution fees, and any other items that are specifically attributable to a particular class are charged directly to such class.
Illiquid securities—A security may be considered to be illiquid if it has a limited trading market. Securities are generally considered to be liquid if they can be sold or disposed of in the ordinary course of business within seven days at approximately the price at which the security is valued by the Funds. These securities are valued at fair value as described above. Each Fund intends to hold no more than 15% of its net assets in illiquid securities. As of December 30, 2016, the High Income Fund held the following illiquid securities:
Security | Shares | Dates Acquired | Cost Basis | Fair Value |
Reichhold Holdings International (Senior Secured Note) 15.000% 3/31/17 | 50,810 | 3/30/15 | 50,416 | 50,810 |
Reichhold Holdings International (Senior Secured Note) 12.000% 3/31/17 | 94,337 | 3/31/15 | 94,337 | 94,337 |
Reichhold LLC 12.000% 3/31/17 | 35,000 | 3/31/15 | 35,000 | 35,000 |
Reichhold Industries Inc – 144A 9.000% 5/8/17 | 103,629 | 5/8/12 | 0 | 0 |
Reichhold Cayman | 162 | 4/1/15 | 120,561 | 106,758 |
|
|
| Total | 286,905 |
Reporting period end date—For financial reporting purposes, the last day of the reporting period will be the last business day of the month.
Organizational expenses—All organizational and offering expenses of the Trust were borne by the Investment Advisor and are not subject to future recoupment. As a result, organizational and offering expenses are not reflected in the Statements of Assets and Liabilities.
NOTE 3: Fair Value Measurements
Various inputs are used in determining the value of the Funds' investments. These inputs are summarized in three broad levels: Level 1 inputs are based on quoted prices in active markets for identical securities. Level 2 inputs are based on significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). Level 3 inputs are based on significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of investments). The following is a summary of the inputs used to value the Funds’ investments as of December 30, 2016:
Dividend Harvest Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||
Common Stocks | $ | 121,970,150 | $ | 0 | $ | 0 | $ | 121,970,150 | ||||
Total | $ | 121,970,150 | $ | 0 | $ | 0 | $ | 121,970,150 | ||||
| ||||||||||||
Energized Dividend Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||
Common Stocks | $ | 1,701,530 | $ | 0 | $ | 0 |
| 1,701,530 | ||||
Total | $ | 1,701,530 | $ | 0 | $ | 0 | $ | 1,701,530 | ||||
| ||||||||||||
Growth & Income Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||
Common Stocks | $ | 33,083,183 | $ | 0 | $ | 0 | $ | 33,083,183 | ||||
Total | $ | 33,083,183 | $ | 0 | $ | 0 | $ | 33,083,183 | ||||
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
High Income Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||
Common Stocks | $ | 60,897 | $ | 0 | $ | 0 | $ | 60,897 | ||||
Private Equity | 0 | 0 | 106,758 | 106,758 | ||||||||
Corporate Bonds | 0 | 29,118,712 | 0 | 29,118,712 | ||||||||
Term Loans |
| 0 |
| 0 |
| 180,147 |
| 180,147 | ||||
Total | $ | 60,897 | $ | 29,118,712 | $ | 286,905 | $ | 29,466,514 | ||||
| ||||||||||||
WB/MNA Stock Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||
Common Stocks | $ | 632,873,800 | $ | 0 | $ | 0 | $ | 632,873,800 | ||||
Total | $ | 632,873,800 | $ | 0 | $ | 0 | $ | 632,873,800 |
Please refer to the Schedules of Investments for sector classification. There were no transfers into or out of Level 1 or Level 2 during the year ended December 30, 2016. The Funds consider transfers into or out of Level 1 and Level 2 as of the end of the reporting period. The Funds did not hold any derivative instruments at any time during the year ended December 30, 2016. The changes of the fair value of investments during the year ended December 30, 2016 , for which the Funds have used Level 3 inputs to determine the fair value are as follow:
Balance as | Amortization/ | Change in unrealized | Balance as | ||
High Income Fund | of 12/31/15 | Purchases | accretion | appreciation/depreciation | of 12/30/16 |
Term Loans | $171,287 | $8,860 | $1,407 | $(1,407) | $180,147 |
Private Equity | $88,938 | $0 | $0 | $17,820 | $106,758 |
| Valuation |
| Unobservable |
|
|
| Impact to Valuation | ||
Asset Class |
| Technique |
| Inputs |
| Multiple |
| From Input Increases | |
Term Loans |
| Market Approach |
| EBITDA Multiple |
| 7.8x |
| N/A* | |
Private Equity |
| Market Approach |
| EBITDA Multiple |
| 7.8x |
| Increase | |
|
| ||||||||
* | Due to the nature of the asset class, an increase to the input would not have a significant impact to valuation however, a decrease in the input could result in a decrease in fair value. | ||||||||
NOTE 4: Investment Transactions
Purchases and sales of investment securities (excluding short-term securities) for the year/period ended December 30, 2016, were as follows:
Dividend | Energized | Growth & | High | WB/MNA | ||||||
Harvest Fund | Dividend Fund | Income Fund | Income Fund | Stock Fund | ||||||
Purchases | $86,976,601 | $1,892,558 | $17,029,387 | $7,979,515 | $308,711,634 | |||||
Sales | $19,904,093 | $418,232 | $20,443,049 | $9,947,988 | $371,043,566 |
NOTE 5: Capital Share Transactions
Transactions in capital shares were as follows:
Year/Period Ended 12/30/16: | Dividend | Energized | Growth & | High | WB/MNA | ||||||
Harvest | Dividend | Income | Income | Stock | |||||||
Class A | Fund | Fund^ | Fund | Fund | Fund | ||||||
Shares sold | 5,262,672 | 155,113 | 69,369 | 400,852 | 17,719,326 | ||||||
Shares issued from reinvestments | 170,305 | 5,686 | 14,459 | 139,196 | 157,160 | ||||||
Shares redeemed | (1,496,270) | (55,424) | (194,834) | (668,318) | (31,657,888) | ||||||
Net increase (decrease) | 3,936,707 | 105,375 | (111,006) | (128,270) | (13,781,402) | ||||||
Class C | |||||||||||
Shares sold | 710,008 | 10,000 | 1,567 | 44,168 | 2,111,198 | ||||||
Shares issued from reinvestments | 10,453 | 62 | 59 | 24,895 | 0 | ||||||
Shares redeemed | (48,412) | 0 | (1,608) | (183,873) | (2,184,967) | ||||||
Net increase (decrease) | 672,049 | 10,062 | 18 | (114,810) | (73,769) | ||||||
| |||||||||||
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| |
Class I* |
|
|
|
|
|
|
|
|
|
| |
Shares sold | 412,967 | 33,313 | 4,591 | 85,189 | 2,552,259 | ||||||
Shares issued from reinvestments | 4,647 | 1,464 | 115 | 1,291 | 15,217 | ||||||
Shares redeemed | (5,835) | (3) | 0 | (1,856) | (51,418) | ||||||
Net increase (decrease) | 411,779 | 34,774 | 4,706 | 84,624 | 2,516,058 | ||||||
| |||||||||||
Year Ended 12/31/15: | Dividend | Energized | Growth & | High | WB/MNA | ||||||
Harvest | Dividend | Income | Income | Stock | |||||||
Class A | Fund | Fund | Fund | Fund | Fund | ||||||
Shares sold | 1,648,963 | 0 | 126,033 | 525,498 | 26,153,989 | ||||||
Shares issued from reinvestments | 122,949 | 0 | 16,065 | 141,965 | 755,945 | ||||||
Shares redeemed | (567,461) | 0 | (119,754) | (847,345) | (43,647,886) | ||||||
Net increase (decrease) | 1,204,451 | 0 | 22,344 | (179,882) | (16,737,952) | ||||||
| |||||||||||
Class C | |||||||||||
Shares sold | 56,645 | 0 | 3,896 | 44,060 | 5,296,345 | ||||||
Shares issued from reinvestments | 1,191 | 0 | 56 | 30,536 | 24,579 | ||||||
Shares redeemed | (1,133) | 0 | (216) | (472,877) | (1,754,121) | ||||||
Net increase (decrease) | 56,703 | 0 | 3,736 | (398,281) | 3,566,803 | ||||||
|
|
|
|
|
|
|
|
|
|
| |
^ | Commenced operations on May 2, 2016. | ||||||||||
|
| ||||||||||
* | All Funds began offering Class I shares on August 1, 2016. | ||||||||||
NOTE 6: Income Tax Information
At December 30, 2016, the unrealized appreciation (depreciation) based on the cost of investments for federal income tax purposes was as follows:
|
| Dividend |
| Energized |
| Growth & |
| High |
| WB/MNA | |
Investments at cost |
| $110,090,598 |
| $1,521,347 |
| $28,257,008 |
| $29,593,179 |
| $532,583,031 | |
Unrealized appreciation |
| 12,987,913 |
| 193,834 |
| 5,321,747 |
| 1,053,778 |
| 128,401,248 | |
Unrealized depreciation |
| (1,108,361) |
| (13,651) |
| (495,572) |
| (1,180,443) |
| (28,110,479) | |
Net unrealized appreciation (depreciation)* |
| $11,879,552 |
| $180,183 |
| $4,826,175 |
| ($126,665) |
| $100,290,769 | |
|
|
|
|
|
|
|
|
|
|
| |
* | Differences between financial reporting-basis and tax-basis unrealized appreciation/ (depreciation) are due to differing treatment of wash sales. | ||||||||||
The tax character of distributions paid was as follows:
Year Ended 12/30/16: |
| Dividend Harvest Fund |
| Energized Dividend Fund |
| Growth & Income Fund |
| High |
| WB/MNA Stock Fund | |
Ordinary Income |
| $2,956,351 |
| $86,083 |
| $475,891 |
| $1,566,635 |
| $778,551 | |
Capital Gain |
| 0 |
| 0 |
| 275,014 |
| 0 |
| 0 | |
Return of Capital |
| 0 |
| 0 |
| 0 |
| 0 |
| 340,285 | |
Total |
| $2,956,351 |
| $86,083 |
| $750,905 |
| $1,566,635 |
| $1,118,836 | |
|
|
|
|
|
|
|
|
|
|
| |
Year Ended 12/31/15: |
| Dividend Harvest Fund |
| Energized Dividend Fund |
| Growth & Income Fund |
| High Income Fund |
|
| WB/MNA Stock Fund |
Ordinary Income |
| $1,102,778 |
| $0 |
| $275,529 |
| $1,762,623 |
|
| $3,668,410 |
Capital Gain |
| 606,760 |
| 0 |
| 492,488 |
| 0 |
|
| 0 |
Total |
| $1,709,538 |
| $0 |
| $768,017 |
| $1,762,623 |
|
| $3,668,410 |
As of December 30, 2016, the components of accumulated earnings/(deficit) on a tax basis were as follows:
|
| Dividend |
| Energized |
| Growth & |
| High |
| WB/MNA | |
Undistributed ordinary |
| $441,800 |
| $8,540 |
| $1,672 |
| $0 |
| $0 | |
Undistributed capital gains |
| 0 |
| 0 |
| 729,295 |
| 0 |
| 0 | |
Accumulated capital and |
| 0 |
| 0 |
| 0 |
| (16,700,101) |
| (148,356,793) | |
Post-October losses deferred |
| 0 |
| 0 |
| 0 |
| (45,752) |
| 0 | |
Unrealized appreciation/ (depreciation)* |
| 11,879,552 |
| $180,183 |
| 4,826,175 |
| (126,665) |
| 100,290,769 | |
Total accumulated earnings/ (deficit) |
| $12,321,352 |
| $188,723 |
| $5,557,142 |
| ($16,872,518) |
| ($48,066,024) | |
|
|
|
|
|
|
|
|
|
|
| |
* | Differences between financial reporting-basis and tax-basis unrealized appreciation/ (depreciation) are due to differing treatment of wash sales. | ||||||||||
Net capital losses incurred after October 31 and within the tax year are deemed to arise on the first business day of the Funds’ next taxable year.
Under the Regulated Investment Company Modernization Act of 2010 (“Act”), funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010, for an unlimited period of time. The short-term and long-term character of such losses are retained rather than being treated as short-term as under previous law. Pre-enactment losses are eligible to be carried forward for a maximum period of eight years. Pursuant to the Act, post-enactment capital losses must be utilized before pre-enactment capital losses. As a result, pre-enactment capital loss carryforwards may be more likely to expire unused. The Funds’ capital loss carryforward amounts as of December 30, 2016, are as follows:
|
| High Income Fund |
| WB/MNA Stock Fund |
Expires in 2017 |
| 14,842,642 |
| 0 |
Expires in 2018 |
| 794,228 |
| 0 |
Non-expiring short-term losses |
| 0 |
| 66,986,239 |
Non-expiring long-term losses |
| 1,063,231 |
| 81,370,554 |
Total Capital Loss Carryforwards |
| $16,700,101 |
| $148,356,793 |
For the year ended December 30, 2016, the High Income Fund had expired capital loss carryforwards of $30,187,868, which was reclassified to paid in capital.
NOTE 7: Investment Advisory Fees and Other Transactions with Affiliates
Viking Fund Management (“VFM”), the Funds’ investment adviser; Integrity Funds Distributor, LLC (“Integrity Funds Distributor” or “IFD”), the Funds’ underwriter; and Integrity Fund Services, the Funds’ transfer, accounting, and administrative services agent; are subsidiaries of Corridor Investors, LLC (“Corridor Investors” or “Corridor”), the Funds’ sponsor. For Integrity High Income Fund, JPMIM is the sub-adviser. A Trustee of the Funds is also a Governor of Corridor.
VFM provides investment advisory and management services to the Funds. The Investment Advisory Agreement (the “Advisory Agreement”) provides for fees to be computed at an annual rate of each Fund’s average daily net assets. VFM has also contractually agreed to waive its management fee and to reimburse expenses, other than extraordinary or non-recurring expenses, taxes, brokerage fees, commissions and acquired fund fees and expenses, so that the net annual operating expenses do not exceed a certain rate. After April 30, 2017 for Classes A and C and April 30, 2018 for Class I, the expense limitations may be terminated or revised. For the period of January 1, 2016 through April 30, 2016, VFM contractually agreed to waive fees so that net annual operating expenses of WB/MNA Stock Fund do not exceed 1.45% for Class A shares and 1.95% for Class C shares.
|
|
| Contractual Waiver % | ||||
| Advisory Fee % |
| Class A |
| Class C |
| Class I |
Dividend Harvest Fund | 0.75% |
| 0.95% |
| 1.70% |
| 0.70% |
Energized Dividend Fund | 0.75% |
| 1.05% |
| 1.80% |
| 0.80% |
Growth & Income Fund | 1.00% |
| 1.25% |
| 2.00% |
| 1.00% |
High Income Fund | 0.85% |
| 1.15% |
| 1.90% |
| 0.90% |
WB/MNA Stock Fund | 0.50% |
| 1.50% |
| 2.00% |
| 1.00% |
VFM and affiliated service providers may also voluntarily waive fees or reimburse expenses not required under the advisory or other contracts from time to time. Accordingly, after voluntary and contractual fee waivers and reimbursements, the Energized Dividend Fund’s actual annualized total expenses were 0.17%, 0.91%, and 0.00% for Class A, C, and I, respectively, of average daily net assets. Additionally VFM waived other expenses in the amount of $28,094 for the Energized Dividend Fund. VFM and the affiliated service providers have agreed to voluntarily waive the affiliated service provider’s fees before voluntarily or contractually waiving VFM’s management fee. There are no recoupment provisions in place for waived/reimbursed fees. An expense limitation lowers expense ratios and increases returns to investors. VFM received payment of or credit for advisor related expenses used for the WB/MNS Stock Fund’s benefit. Certain Officers of the Funds are also Officers and Governors of VFM.
Year/Period Ended 12/30/16 | Payable 12/30/16 | |||||||
Advisory Fees* | Advisory Fees Waived | Advisory Fees* | ||||||
Dividend Harvest Fund | $ | 302,308 | $ | 284,331 | $ | 32,852 | ||
Energized Dividend Fund | $ | 0 | $ | 6,724 | $ | 0 | ||
Growth & Income Fund | $ | 198,206 | $ | 143,400 | $ | 15,161 | ||
High Income Fund | $ | 152,553 | $ | 103,253 | $ | 12,023 | ||
WB/MNA Stock Fund | $ | 2,875,278 | $ | 31,854 | $ | 278,780 | ||
| ||||||||
* | After waivers and reimbursements, if any. | |||||||
IFD serves as the principal underwriter and distributor for the Funds and receives sales charges deducted from Fund share sales proceeds and CDSC from applicable Fund share redemptions. Also, the Funds have adopted a distribution plan for each class of shares as allowed by Rule 12b-1 of the 1940 Act. Distribution plans permit the Funds to reimburse its principal underwriter for costs related to selling shares of the Funds and for various other services. These costs, which consist primarily of commissions and service fees to broker-dealers who sell shares of the Funds, are paid by shareholders through expenses called “Distribution Plan expenses.” The Funds currently pay an annual distribution fee and/or service fee of up to 0.25% (0.50% for WB/MNA Stock Fund) for Class A and 1.00% for Class C of the average daily net assets. Class I shares do not have a 12b-1 plan in place. Certain Officers of the Funds are also Officers and Governors of IFD.
Year/Period Ended 12/30/16 | Payable 12/30/16 | |||||||||||||||
Sales |
| Distribution | Sales |
| Distribution | |||||||||||
Charges | CDSC | Fees* | Charges | CDSC | Fees* | |||||||||||
Dividend Harvest Fund - A | $ | 1,291,888 | $ | 800 | $ | 145,116 | $ | 38,536 | $ | 0 | $ | 21,369 | ||||
Dividend Harvest Fund - C | $ | 0 | $ | 2,975 | $ | 41,263 | $ | 0 | $ | 794 | $ | 7,909 | ||||
Energized Dividend Fund - A | $ | 49,261 | $ | 0 | $ | 1,252 | $ | 180 | $ | 0 | $ | 253 | ||||
Energized Dividend Fund - C | $ | 0 | $ | 0 | $ | 634 | $ | 0 | $ | 0 | $ | 97 | ||||
Growth & Income Fund - A | $ | 39,127 | $ | 0 | $ | 65,193 | $ | 1,105 | $ | 0 | $ | 6,898 | ||||
Growth & Income Fund - C | $ | 0 | $ | 0 | $ | 1,606 | $ | 0 | $ | 0 | $ | 140 | ||||
High Income Fund - A | $ | 29,380 | $ | 0 | $ | 48,368 | $ | 485 | $ | 0 | $ | 5,240 | ||||
High Income Fund - C | $ | 0 | $ | 26 | $ | 50,615 | $ | 0 | $ | 0 | $ | 4,428 | ||||
WB/MNA Stock Fund - A | $ | 1,408,789 | $ | 0 | $ | 2,637,662 | $ | 33,895 | $ | 0 | $ | 251,925 | ||||
WB/MNA Stock Fund - C | $ | 0 | $ | 18,513 | $ | 446,968 | $ | 0 | $ | 180 | $ | 44,008 | ||||
|
|
| ||||||||||||||
* | After waivers and reimbursements for Dividend Harvest Fund, Energized Dividend Fund, Growth & Income Fund, High Income Fund and WB/MNA Stock Fund of $38,025, $546, $19,552, $13,032, and $29,488, respectively, for Class A shares and $1,377, $63, $95, $2,870, and $2,364, respectively, for Class C shares. | |||||||||||||||
IFS acts as the transfer agent for High Income Fund at a monthly variable fee equal to 0.14% through October 31, 2016 and 0.12% starting November 1, 2016 on the first $0 to $200 million and at a lower rate in excess of $200 million of the Fund’s average daily net assets on an annual basis and an additional fee of $500 per month for each additional share class plus reimbursement of out-of-pocket expenses and sub-transfer agent out-of-pocket expenses. IFS acts as the transfer agent for Dividend Harvest Fund, Energized Dividend Fund, Growth & Income Fund, and WB/MNA Stock Fund at a monthly variable fee equal to 0.18% on the first $0 to $200 million, 0.15% on the next $200 to $700 million and at a lower rate in excess of $700 million of the Funds’ average daily net assets on an annual basis plus reimbursement of out-of-pocket expenses and sub-transfer agent out-of-pocket expenses. Sub-transfer agent out-of-pocket expenses are included in the transfer agent fees below and in the transfer agent out-of-pocket balance on the Statements of Operations.
IFS also acts as the Funds’ administrative services agent for a monthly fee equal to the sum of a fixed fee of $2,000 and a variable fee equal to 0.14% on the first $0 to $200 million, 0.13% on the next $200 to $700 million and at a lower rate in excess of $700 million of the Funds’ average daily net assets on an annual basis plus reimbursement of out-of-pocket expenses and an additional fee of $1,000 per month for each additional share class. Certain Officers of the Funds are also Officers and Governors of IFS.
Year/Period Ended 12/30/16 | Payable 12/30/16 | |||||||||||||
Transfer | Transfer | Admin. | Admin. | Transfer | Admin. | |||||||||
Agency | Agency | Service | Service | Agency | Service | |||||||||
Fees* | Fees Waived | Fees* | Fees Waived | Fees* | Fees* | |||||||||
Dividend Harvest Fund | $ | 95,211 | $ | 72,409 | $ | 77,693 | $ | 72,779 |
| $ | 16,695 | $ | 7,933 | |
Energized Dividend Fund | $ | 674 | $ | 8,084 | $ | 0 | $ | 29,994 |
| $ | 0 | $ | 0 | |
Growth & Income Fund | $ | 55,185 | $ | 29,503 | $ | 51,238 | $ | 37,554 |
| $ | 9,474 | $ | 4,295 | |
High Income Fund | $ | 35,229 | $ | 20,086 | $ | 49,345 | $ | 33,755 |
| $ | 4,451 | $ | 4,168 | |
WB/MNA Stock Fund | $ | 1,253,255 | $ | 10,393 | $ | 807,829 | $ | 8,992 |
| $ | 242,280 | $ | 78,149 | |
| ||||||||||||||
* | After waivers and reimbursements, if any. | |||||||||||||
NOTE 8: Principal Risks
The High Income Fund may be invested in lower-rated debt securities that have a higher risk of default or loss of value since these securities may be sensitive to economic changes, political changes or adverse developments specific to the issuer.
The WB/MNA Stock Fund invests significantly in relatively few sectors, primarily the energy sector, and has more exposure to the price movement of this sector than funds that diversify their investments among many sectors.
NOTE 9: Subsequent Events
The Funds are required to recognize in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the Statements of Assets and Liabilities. For non-recognized subsequent events that must be disclosed to keep the financial statements from being misleading, the Funds are required to disclose the nature of the event as well as an estimate of its financial effect, or a statement that such an estimate cannot be made. Management has evaluated the impact of all subsequent events on the Funds through the issuance date of these financial statements and has noted no such events requiring accounting or disclosure.
INTEGRITY DIVIDEND HARVEST FUND CLASS A
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for the periods indicated
Period | |||||||||||||||
Year | Year | Year | Year | From | |||||||||||
Ended | Ended | Ended | Ended | 5/1/12^ to | |||||||||||
12/30/16 | 12/31/15 | 12/31/14 | 12/31/13 | 12/31/12 | |||||||||||
NET ASSET VALUE, BEGINNING OF PERIOD | $ | 12.23 | $ | 12.64 | $ | 12.05 | $ | 10.03 | $ | 10.00 | |||||
| |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||
Net investment income (loss) | $ | 0.39 | $ | 0.37 | $ | 0.36 | $ | 0.34 | $ | 0.22 | |||||
Net realized and unrealized gain (loss) on investments3 | 2.15 | (0.24) | 1.01 | 2.03 | 0.06 | ||||||||||
Total from investment operations |
| 2.54 | $ | 0.13 | $ | 1.37 | $ | 2.37 | $ | 0.28 | |||||
Less Distributions: | |||||||||||||||
Dividends from net investment income | $ | (0.39) | $ | (0.37) | $ | (0.36) | $ | (0.34) | $ | (0.22) | |||||
Distributions from net realized gains | (0.05) | (0.17) | (0.42) | (0.01) | (0.03) | ||||||||||
Total distributions | $ | (0.44) | $ | (0.54) | $ | (0.78) | $ | (0.35) | $ | (0.25) | |||||
| |||||||||||||||
NET ASSET VALUE, END OF PERIOD | $ | 14.33 | $ | 12.23 | $ | 12.64 | $ | 12.05 | $ | 10.03 | |||||
| |||||||||||||||
Total Return | 20.94% | 1.12% | 11.42% | 23.88% | 2.86%** | ||||||||||
| |||||||||||||||
RATIOS/SUPPLEMENTAL DATA | |||||||||||||||
Net assets, end of period (in thousands) | $107,275 | $43,425 | $29,645 | $19,581 | $6,589 | ||||||||||
Ratio of expenses to average net assets after waivers1,2 | 0.95% | 0.85% | 0.60% | 0.45% | 0.24%* | ||||||||||
Ratio of expenses to average net assets before waivers2 | 1.55% | 1.58% | 1.59% | 1.76% | 2.70%* | ||||||||||
Ratio of net investment income to average net assets1,2 | 3.26% | 3.18% | 2.98% | 3.29% | 4.19%* | ||||||||||
Portfolio turnover rate | 25.56% | 38.38% | 32.99% | 26.44% | 44.50%** | ||||||||||
|
| ||||||||||||||
* | Annualized. | ||||||||||||||
|
| ||||||||||||||
** | Not Annualized. | ||||||||||||||
|
| ||||||||||||||
1 | This row reflects the impact, if any, of fee waivers or reimbursements by the Adviser and/or affiliated service providers. | ||||||||||||||
|
| ||||||||||||||
2 | Average net assets was calculated using a 360-day period. | ||||||||||||||
|
| ||||||||||||||
3 | Realized and unrealized gains and loss per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not reconcile with the aggregate gains and losses in the statement of operations due to share transactions for the period. | ||||||||||||||
|
| ||||||||||||||
^ | Commencement of operations. | ||||||||||||||
| |||||||||||||||
| |||||||||||||||
Total return represents the rate that an investor would have earned or lost on an investment in the Fund assuming reinvestment of all dividends and distributions. | |||||||||||||||
| |||||||||||||||
The accompanying notes are an integral part of these financial statements. | |||||||||||||||
INTEGRITY DIVIDEND HARVEST FUND CLASS C
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for the periods indicated
Period | |||||||
Year | From | ||||||
Ended | 8/3/15^ to | ||||||
12/30/16 | 12/31/15 | ||||||
NET ASSET VALUE, BEGINNING OF PERIOD | $ | 12.20 | $ | 12.54 | |||
| |||||||
Income (loss) from investment operations: | |||||||
Net investment income (loss) | $ | 0.31 | $ | 0.18 | |||
Net realized and unrealized gain (loss) on investments3 | 2.11 | (0.17) | |||||
Total from investment operations | $ | 2.42 | $ | 0.01 | |||
| |||||||
Less Distributions: | |||||||
Dividends from net investment income | $ | (0.31) | $ | (0.18) | |||
Distributions from net realized gains | (0.05) | (0.17) | |||||
Total distributions | $ | (0.36) | $ | (0.35) | |||
| |||||||
NET ASSET VALUE, END OF PERIOD | $ | 14.26 | $ | 12.20 | |||
| |||||||
Total Return (excludes any applicable sales charge) | 20.01% | 0.14%** | |||||
| |||||||
RATIOS/SUPPLEMENTAL DATA | |||||||
Net assets, end of period (in thousands) | $10,392 | $692 | |||||
Ratio of expenses to average net assets after waivers1,2 | 1.70% | 1.70%* | |||||
Ratio of expenses to average net assets before waivers2 | 2.30% | 2.39%* | |||||
Ratio of net investment income to average net assets1,2 | 2.40% | 2.48%* | |||||
Portfolio turnover rate | 25.56% | 38.38%** | |||||
|
| ||||||
* | Annualized. | ||||||
|
| ||||||
** | Not Annualized. | ||||||
|
| ||||||
1 | This row reflects the impact, if any, of fee waivers or reimbursements by the Adviser and/or affiliated service providers. | ||||||
|
| ||||||
2 | Average net assets was calculated using a 360-day period. | ||||||
|
| ||||||
3 | Realized and unrealized gains and loss per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not reconcile with the aggregate gains and losses in the statement of operations due to share transactions for the period. | ||||||
|
| ||||||
^ | Commencement of operations. | ||||||
| |||||||
| |||||||
Total return represents the rate that an investor would have earned or lost on an investment in the Fund assuming reinvestment of all dividends and distributions. | |||||||
| |||||||
The accompanying notes are an integral part of these financial statements. | |||||||
INTEGRITY DIVIDEND HARVEST FUND CLASS I
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for the period indicated
Period | ||||
From | ||||
8/1/16^ to | ||||
12/30/16 | ||||
NET ASSET VALUE, BEGINNING OF PERIOD | $ | 13.96 | ||
| ||||
Income (loss) from investment operations: | ||||
Net investment income (loss) | $ | 0.22 | ||
Net realized and unrealized gain (loss) on investments3 | 0.43 | |||
Total from investment operations | $ | 0.65 | ||
| ||||
Less Distributions: | ||||
Dividends from net investment income | $ | (0.22) | ||
Distributions from net realized gains | (0.05) | |||
Total distributions | $ | (0.27) | ||
| ||||
NET ASSET VALUE, END OF PERIOD | $ | 14.34 | ||
| ||||
Total Return (excludes any applicable sales charge) | 4.67%** | |||
| ||||
RATIOS/SUPPLEMENTAL DATA | ||||
Net assets, end of period (in thousands) | $5,904 | |||
Ratio of expenses to average net assets after waivers1,2 | 0.70%* | |||
Ratio of expenses to average net assets before waivers2 | 1.31%* | |||
Ratio of net investment income to average net assets1,2 | 3.22%* | |||
Portfolio turnover rate | 25.56%** | |||
|
| |||
* | Annualized. | |||
|
| |||
** | Not Annualized. | |||
|
| |||
1 | This row reflects the impact, if any, of fee waivers or reimbursements by the Adviser and/or affiliated service providers. | |||
|
| |||
2 | Average net assets was calculated using a 360-day period. | |||
|
| |||
3 | Realized and unrealized gains and loss per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not reconcile with the aggregate gains and losses in the statement of operations due to share transactions for the period. | |||
|
| |||
^ | Commencement of operations. | |||
| ||||
| ||||
Total return represents the rate that an investor would have earned or lost on an investment in the Fund assuming reinvestment of all dividends and distributions. | ||||
| ||||
The accompanying notes are an integral part of these financial statements. | ||||
INTEGRITY ENERGIZED DIVIDEND FUND CLASS A
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for the period indicated
Period | ||||
From | ||||
5/2/16^ to | ||||
12/30/16 | ||||
NET ASSET VALUE, BEGINNING OF PERIOD | $ | 10.00 | ||
| ||||
Income (loss) from investment operations: | ||||
Net investment income (loss) | $ | 0.34 | ||
Net realized and unrealized gain (loss) on investments3 | 1.63 | |||
Total from investment operations | $ | 1.97 | ||
| ||||
Less Distributions: | ||||
Dividends from net investment income | $ | (0.34) | ||
Distributions from net realized gains | (0.26) | |||
Total distributions | $ | (0.60) | ||
| ||||
NET ASSET VALUE, END OF PERIOD | $ | 11.37 | ||
| ||||
Total Return (excludes any applicable sales charge) | 19.96%** | |||
| ||||
RATIOS/SUPPLEMENTAL DATA | ||||
Net assets, end of period (in thousands) | $1,198 | |||
Ratio of expenses to average net assets after waivers1,2 | 0.17%*4 | |||
Ratio of expenses to average net assets before waivers2 | 8.39%* | |||
Ratio of net investment income to average net assets1,2 | 5.13%*4 | |||
Portfolio turnover rate | 30.17%** | |||
|
| |||
* | Annualized. | |||
|
| |||
** | Not Annualized. | |||
|
| |||
1 | This row reflects the impact, if any, of fee waivers or reimbursements by the Adviser and/or affiliated service providers. | |||
|
| |||
2 | Average net assets was calculated using a 360-day period. | |||
|
| |||
3 | Realized and unrealized gains and loss per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not reconcile with the aggregate gains and losses in the statement of operations due to share transactions for the period. | |||
|
| |||
4 | The voluntary waiver amounted to 0.88% of average net assets. | |||
|
| |||
^ | Commencement of operations. | |||
| ||||
| ||||
Total return represents the rate that an investor would have earned or lost on an investment in the Fund assuming reinvestment of all dividends and distributions. | ||||
| ||||
The accompanying notes are an integral part of these financial statements. | ||||
INTEGRITY ENERGIZED DIVIDEND FUND CLASS C
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for the period indicated
Period | ||||
From | ||||
5/2/16^ to | ||||
12/30/16 | ||||
NET ASSET VALUE, BEGINNING OF PERIOD | $ | 10.00 | ||
| ||||
Income (loss) from investment operations: | ||||
Net investment income (loss) | $ | 0.29 | ||
Net realized and unrealized gain (loss) on investments3 | 1.62 | |||
Total from investment operations | $ | 1.91 | ||
| ||||
Less Distributions: | ||||
Dividends from net investment income | $ | (0.29) | ||
Distributions from net realized gains | (0.26) | |||
Total distributions | $ | (0.55) | ||
| ||||
NET ASSET VALUE, END OF PERIOD | $ | 11.36 | ||
| ||||
Total Return (excludes any applicable sales charge) | 19.30%** | |||
| ||||
RATIOS/SUPPLEMENTAL DATA | ||||
Net assets, end of period (in thousands) | $114 | |||
Ratio of expenses to average net assets after waivers1,2 | 0.91%*4 | |||
Ratio of expenses to average net assets before waivers2 | 12.55%* | |||
Ratio of net investment income to average net assets1,2 | 4.14%*4 | |||
Portfolio turnover rate | 30.17%** | |||
|
| |||
* | Annualized. | |||
|
| |||
** | Not Annualized. | |||
|
| |||
1 | This row reflects the impact, if any, of fee waivers or reimbursements by the Adviser and/or affiliated service providers. | |||
|
| |||
2 | Average net assets was calculated using a 360-day period. | |||
|
| |||
3 | Realized and unrealized gains and loss per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not reconcile with the aggregate gains and losses in the statement of operations due to share transactions for the period. | |||
|
| |||
4 | The voluntary waiver amounted to 0.89% of average net assets. | |||
|
| |||
^ | Commencement of operations. | |||
| ||||
| ||||
Total return represents the rate that an investor would have earned or lost on an investment in the Fund assuming reinvestment of all dividends and distributions. | ||||
| ||||
The accompanying notes are an integral part of these financial statements. | ||||
INTEGRITY ENERGIZED DIVIDEND FUND CLASS I
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for the period indicated
Period | ||||
From | ||||
8/1/16^ to | ||||
12/30/16 | ||||
NET ASSET VALUE, BEGINNING OF PERIOD | $ | 9.95 | ||
| ||||
Income (loss) from investment operations: | ||||
Net investment income (loss) | $ | 0.27 | ||
Net realized and unrealized gain (loss) on investments3 | 1.68 | |||
Total from investment operations | $ | 1.95 | ||
| ||||
Less Distributions: | ||||
Dividends from net investment income | $ | (0.27) | ||
Distributions from net realized gains | (0.26) | |||
Returns of capital | 0.00 | |||
Total distributions | $ | (0.53) | ||
| ||||
NET ASSET VALUE, END OF PERIOD | $ | 11.37 | ||
| ||||
Total Return (excludes any applicable sales charge) | 19.80%** | |||
| ||||
RATIOS/SUPPLEMENTAL DATA | ||||
Net assets, end of period (in thousands) | $395 | |||
Ratio of expenses to average net assets after waivers1,2 | 0.00%*4 | |||
Ratio of expenses to average net assets before waivers2 | 5.54%* | |||
Ratio of net investment income to average net assets1,2 | 6.90%*4 | |||
Portfolio turnover rate | 30.17%** | |||
|
| |||
* | Annualized. | |||
|
| |||
** | Not Annualized. | |||
|
| |||
1 | This row reflects the impact, if any, of fee waivers or reimbursements by the Adviser and/or affiliated service providers. | |||
|
| |||
2 | Average net assets was calculated using a 360-day period. | |||
|
| |||
3 | Realized and unrealized gains and loss per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not reconcile with the aggregate gains and losses in the statement of operations due to share transactions for the period. | |||
|
| |||
4 | The voluntary waiver amounted to 0.80% of average net assets. | |||
|
| |||
^ | Commencement of operations. | |||
| ||||
| ||||
Total return represents the rate that an investor would have earned or lost on an investment in the Fund assuming reinvestment of all dividends and distributions. | ||||
| ||||
The accompanying notes are an integral part of these financial statements. | ||||
INTEGRITY GROWTH & INCOME FUND CLASS A
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for the periods indicated
Year | Year | Year | Year | Year | ||||||||||||
Ended | Ended | Ended | Ended | Ended | ||||||||||||
12/30/16 | 12/31/15 | 12/31/14 | 12/31/13 | 12/31/12 | ||||||||||||
NET ASSET VALUE, BEGINNING OF PERIOD | $ | 45.07 | $ | 47.03 | $ | 49.05 | $ | 42.80 | $ | 37.67 | ||||||
| ||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||
Net investment income (loss) | $ | 0.71 | $ | 0.35 | $ | 0.32 | $ | 0.17 | $ | 0.01 | ||||||
Net realized and unrealized gain (loss) on investments3 | 3.72 | (1.33) | 2.71 | 11.67 | 5.13 | |||||||||||
Total from investment operations | $ | 4.43 | $ | (0.98) | $ | 3.03 | $ | 11.84 | $ | 5.14 | ||||||
| ||||||||||||||||
Less Distributions: | ||||||||||||||||
Dividends from net investment income | $ | (0.71) | $ | (0.35) | $ | (0.32) | $ | (0.18) | $ | (0.01) | ||||||
Distributions from net realized gains | (0.41) | (0.63) | (4.73) | (5.41) | 0.00 | |||||||||||
Total distributions | $ | (1.12) | $ | (0.98) | $ | (5.05) | $ | (5.59) | $ | (0.01) | ||||||
| ||||||||||||||||
NET ASSET VALUE, END OF PERIOD | $ | 48.38 | $ | 45.07 | $ | 47.03 | $ | 49.05 | $ | 42.80 | ||||||
Total Return | 9.81% | (2.10%) | 6.01% | 27.76% | 13.65% | |||||||||||
| ||||||||||||||||
RATIOS/SUPPLEMENTAL DATA | ||||||||||||||||
Net assets, end of period (in thousands) | $32,933 | $35,689 | $36,187 | $33,803 | $27,586 | |||||||||||
Ratio of expenses to average net assets after waivers1,2 | 1.25% | 1.25% | 1.25% | 1.36% | 1.60% | |||||||||||
Ratio of expenses to average net assets before waivers2 | 1.92% | 1.84% | 1.80% | 1.82% | 1.83% | |||||||||||
Ratio of net investment income (loss) to average net assets1,2 | 1.40% | 0.77% | 0.64% | 0.37% | 0.03% | |||||||||||
Portfolio turnover rate | 50.94% | 49.88% | 73.25% | 116.11% | 85.81% | |||||||||||
|
| |||||||||||||||
1 | This row reflects the impact, if any, of fee waivers or reimbursements by the Adviser and/or affiliated service providers. | |||||||||||||||
|
| |||||||||||||||
2 | Average net assets was calculated using a 360-day period. | |||||||||||||||
|
| |||||||||||||||
3 | Realized and unrealized gains and loss per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not reconcile with the aggregate gains and losses in the statement of operations due to share transactions for the period. | |||||||||||||||
| ||||||||||||||||
| ||||||||||||||||
Total return represents the rate that an investor would have earned or lost on an investment in the Fund assuming reinvestment of all dividends and distributions. | ||||||||||||||||
| ||||||||||||||||
The accompanying notes are an integral part of these financial statements. | ||||||||||||||||
INTEGRITY GROWTH & INCOME FUND CLASS C
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for the periods indicated
Period | |||||||
Year | From | ||||||
Ended | 8/3/15^ to | ||||||
12/30/16 | 12/31/15 | ||||||
NET ASSET VALUE, BEGINNING OF PERIOD | $ | 45.01 | $ | 49.50 | |||
| |||||||
Income (loss) from investment operations: | |||||||
Net investment income (loss) | $ | 0.37 | $ | 0.27 | |||
Net realized and unrealized gain (loss) on investments3 | 3.78 | (3.86) | |||||
Total from investment operations | $ | 4.15 | $ | (3.59) | |||
| |||||||
Less Distributions: | |||||||
Dividends from net investment income | $ | (0.37) | $ | (0.27) | |||
Distributions from net realized gains | (0.41) | (0.63) | |||||
Total distributions | $ | (0.78) | $ | (0.90) | |||
| |||||||
NET ASSET VALUE, END OF PERIOD | $ | 48.38 | $ | 45.01 | |||
| |||||||
Total Return (excludes any applicable sales charge) | 9.18% | (7.25%)** | |||||
| |||||||
RATIOS/SUPPLEMENTAL DATA | |||||||
Net assets, end of period (in thousands) | $182 | $168 | |||||
Ratio of expenses to average net assets after waivers1,2 | 2.00% | 2.00%* | |||||
Ratio of expenses to average net assets before waivers2 | 2.68% | 2.66%* | |||||
Ratio of net investment income (loss) to average net assets1,2 | 0.64% | (0.01%)* | |||||
Portfolio turnover rate | 50.94% | 49.88%** | |||||
|
| ||||||
* | Annualized. | ||||||
|
| ||||||
** | Not Annualized. | ||||||
|
| ||||||
1 | This row reflects the impact, if any, of fee waivers or reimbursements by the Adviser and/or affiliated service providers. | ||||||
|
| ||||||
2 | Average net assets was calculated using a 360-day period. | ||||||
|
| ||||||
3 | Realized and unrealized gains and loss per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not reconcile with the aggregate gains and losses in the statement of operations due to share transactions for the period. | ||||||
|
| ||||||
^ | Commencement of operations. | ||||||
| |||||||
| |||||||
Total return represents the rate that an investor would have earned or lost on an investment in the Fund assuming reinvestment of all dividends and distributions. | |||||||
| |||||||
The accompanying notes are an integral part of these financial statements. | |||||||
INTEGRITY GROWTH & INCOME FUND CLASS I
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for the period indicated
Period | ||||
From | ||||
8/1/16^ to | ||||
12/30/16 | ||||
NET ASSET VALUE, BEGINNING OF PERIOD | $ | 48.11 | ||
| ||||
Income (loss) from investment operations: | ||||
Net investment income (loss) | $ | 0.80 | ||
Net realized and unrealized gain (loss) on investments3 | 0.66 | |||
Total from investment operations | $ | 1.46 | ||
| ||||
Less Distributions: | ||||
Dividends from net investment income | $ | (0.80) | ||
Distributions from net realized gains | (0.41) | |||
Total distributions | $ | (1.21) | ||
| ||||
NET ASSET VALUE, END OF PERIOD | $ | 48.36 | ||
| ||||
Total Return (excludes any applicable sales charge) | 3.04%** | |||
| ||||
RATIOS/SUPPLEMENTAL DATA | ||||
Net assets, end of period (in thousands) | $228 | |||
Ratio of expenses to average net assets after waivers1,2 | 1.00%* | |||
Ratio of expenses to average net assets before waivers2 | 1.70%* | |||
Ratio of net investment income (loss) to average net assets1,2 | 1.50%* | |||
Portfolio turnover rate | 50.94%** | |||
|
| |||
* | Annualized. | |||
|
| |||
** | Not Annualized. | |||
|
| |||
1 | This row reflects the impact, if any, of fee waivers or reimbursements by the Adviser and/or affiliated service providers. | |||
|
| |||
2 | Average net assets was calculated using a 360-day period. | |||
|
| |||
3 | Realized and unrealized gains and loss per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not reconcile with the aggregate gains and losses in the statement of operations due to share transactions for the period. | |||
|
| |||
^ | Commencement of operations. | |||
| ||||
| ||||
Total return represents the rate that an investor would have earned or lost on an investment in the Fund assuming reinvestment of all dividends and distributions. | ||||
| ||||
The accompanying notes are an integral part of these financial statements. | ||||
INTEGRITY HIGH INCOME FUND CLASS A
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for the periods indicated
Year | Year | Year | Year | Year | ||||||||||||
Ended | Ended | Ended | Ended | Ended | ||||||||||||
12/30/16 | 12/31/15 | 12/31/14 | 12/31/13 | 12/31/12 | ||||||||||||
NET ASSET VALUE, BEGINNING OF PERIOD | $ | 7.03 | $ | 7.75 | $ | 8.02 | $ | 7.98 | $ | 7.44 | ||||||
| ||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||
Net investment income (loss) | $ | 0.39 | $ | 0.40 | $ | 0.42 | $ | 0.45 | $ | 0.49 | ||||||
Net realized and unrealized gain (loss) on investments3 | 0.63 | (0.72) | (0.27) | 0.04 | 0.54 | |||||||||||
Total from investment operations | $ | 1.02 | $ | (0.32) | $ | 0.15 | $ | 0.49 | $ | 1.03 | ||||||
| ||||||||||||||||
Less Distributions: | ||||||||||||||||
Dividends from net investment income | $ | (0.39) | $ | (0.40) | $ | (0.42) | $ | (0.45) | $ | (0.49) | ||||||
Total distributions | $ | (0.39) | $ | (0.40) | $ | (0.42) | $ | (0.45) | $ | (0.49) | ||||||
| ||||||||||||||||
NET ASSET VALUE, END OF PERIOD | $ | 7.66 | $ | 7.03 | $ | 7.75 | $ | 8.02 | $ | 7.98 | ||||||
| ||||||||||||||||
Total Return | 14.90% | (4.43%) | 1.84% | 6.32% | 14.22% | |||||||||||
| ||||||||||||||||
RATIOS/SUPPLEMENTAL DATA | ||||||||||||||||
Net assets, end of period (in thousands) | $25,524 | $24,338 | $28,221 | $28,045 | $29,286 | |||||||||||
Ratio of expenses to average net assets after waivers1,2 | 1.15% | 1.15% | 1.15% | 1.15% | 1.28% | |||||||||||
Ratio of expenses to average net assets before waivers2 | 1.72% | 1.66% | 1.63% | 1.65% | 1.66% | |||||||||||
Ratio of net investment income to average net assets1,2 | 5.34% | 5.20% | 5.25% | 5.64% | 6.32% | |||||||||||
Portfolio turnover rate | 27.61% | 40.85% | 34.86% | 36.30% | 39.98% | |||||||||||
|
| |||||||||||||||
1 | This row reflects the impact, if any, of fee waivers or reimbursements by the Adviser and/or affiliated service providers. | |||||||||||||||
|
| |||||||||||||||
2 | Average net assets was calculated using a 360-day period. | |||||||||||||||
|
| |||||||||||||||
3 | Realized and unrealized gains and loss per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not reconcile with the aggregate gains and losses in the statement of operations due to share transactions for the period. | |||||||||||||||
| ||||||||||||||||
| ||||||||||||||||
Total return represents the rate that an investor would have earned or lost on an investment in the Fund assuming reinvestment of all dividends and distributions. | ||||||||||||||||
| ||||||||||||||||
The accompanying notes are an integral part of these financial statements. | ||||||||||||||||
INTEGRITY HIGH INCOME FUND CLASS C
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for the periods indicated
Year | Year | Year | Year | Year | ||||||||||||
Ended | Ended | Ended | Ended | Ended | ||||||||||||
12/30/16 | 12/31/15 | 12/31/14 | 12/31/13 | 12/31/12 | ||||||||||||
NET ASSET VALUE, BEGINNING OF PERIOD | $ | 7.05 | $ | 7.77 | $ | 8.04 | $ | 8.00 | $ | 7.46 | ||||||
| ||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||
Net investment income (loss) | $ | 0.34 | $ | 0.34 | $ | 0.36 | $ | 0.39 | $ | 0.43 | ||||||
Net realized and unrealized gain (loss) on investments3 | 0.63 | (0.72) | (0.27) | 0.04 | 0.54 | |||||||||||
Total from investment operations | $ | 0.97 | $ | (0.38) | $ | 0.09 | $ | 0.43 | $ | 0.97 | ||||||
| ||||||||||||||||
Less Distributions: | ||||||||||||||||
Dividends from net investment income | $ | (0.34) | $ | (0.34) | $ | (0.36) | $ | (0.39) | $ | (0.43) | ||||||
Total distributions | $ | (0.34) | $ | (0.34) | $ | (0.36) | $ | (0.39) | $ | (0.43) | ||||||
| ||||||||||||||||
NET ASSET VALUE, END OF PERIOD | $ | 7.68 | $ | 7.05 | $ | 7.77 | $ | 8.04 | $ | 8.00 | ||||||
| ||||||||||||||||
Total Return | 14.02% | (5.12%) | 1.08% | 5.53% | 13.35% | |||||||||||
| ||||||||||||||||
RATIOS/SUPPLEMENTAL DATA | ||||||||||||||||
Net assets, end of period (in thousands) | $5,293 | $5,670 | $9,343 | $7,888 | $8,643 | |||||||||||
Ratio of expenses to average net assets after waivers1,2 | 1.90% | 1.90% | 1.90% | 1.90% | 2.06% | |||||||||||
Ratio of expenses to average net assets before waivers2 | 2.47% | 2.40% | 2.38% | 2.40% | 2.41% | |||||||||||
Ratio of net investment income to average net assets1,2 | 4.59% | 4.43% | 4.51% | 4.89% | 5.57% | |||||||||||
Portfolio turnover rate | 27.61% | 40.85% | 34.86% | 36.30% | 39.98% | |||||||||||
|
| |||||||||||||||
1 | This row reflects the impact, if any, of fee waivers or reimbursements by the Adviser and/or affiliated service providers. | |||||||||||||||
|
| |||||||||||||||
2 | Average net assets was calculated using a 360-day period. | |||||||||||||||
|
| |||||||||||||||
3 | Realized and unrealized gains and loss per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not reconcile with the aggregate gains and losses in the statement of operations due to share transactions for the period. | |||||||||||||||
| ||||||||||||||||
| ||||||||||||||||
Total return represents the rate that an investor would have earned or lost on an investment in the Fund assuming reinvestment of all dividends and distributions. | ||||||||||||||||
| ||||||||||||||||
The accompanying notes are an integral part of these financial statements. | ||||||||||||||||
INTEGRITY HIGH INCOME FUND CLASS I
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for the period indicated
Period | ||||
From | ||||
8/1/16^ to | ||||
12/30/16 | ||||
NET ASSET VALUE, BEGINNING OF PERIOD | $ | 7.52 | ||
| ||||
Income (loss) from investment operations: | ||||
Net investment income (loss) | $ | 0.16 | ||
Net realized and unrealized gain (loss) on investments3 | 0.13 | |||
Total from investment operations | $ | 0.29 | ||
| ||||
Less Distributions: | ||||
Dividends from net investment income | $ | (0.16) | ||
Total distributions | $ | (0.16) | ||
| ||||
NET ASSET VALUE, END OF PERIOD | $ | 7.65 | ||
| ||||
Total Return (excludes any applicable sales charge) | 3.93%** | |||
| ||||
RATIOS/SUPPLEMENTAL DATA | ||||
Net assets, end of period (in thousands) | $648 | |||
Ratio of expenses to average net assets after waivers1,2 | 0.90%* | |||
Ratio of expenses to average net assets before waivers2 | 1.49%* | |||
Ratio of net investment income (loss) to average net assets1,2 | 5.18%* | |||
Portfolio turnover rate | 27.61%** | |||
|
| |||
* | Annualized. | |||
|
| |||
** | Not Annualized. | |||
|
| |||
1 | This row reflects the impact, if any, of fee waivers or reimbursements by the Adviser and/or affiliated service providers. | |||
|
| |||
2 | Average net assets was calculated using a 360-day period. | |||
|
| |||
3 | Realized and unrealized gains and loss per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not reconcile with the aggregate gains and losses in the statement of operations due to share transactions for the period. | |||
|
| |||
^ | Commencement of operations. | |||
| ||||
| ||||
Total return represents the rate that an investor would have earned or lost on an investment in the Fund assuming reinvestment of all dividends and distributions. | ||||
| ||||
The accompanying notes are an integral part of these financial statements. | ||||
WILLISTON BASIN/MID-NORTH AMERICA STOCK FUND CLASS A
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for the periods indicated
Year | Year | Year | Year | Year | ||||||||||||
Ended | Ended | Ended | Ended | Ended | ||||||||||||
12/30/16 | 12/31/15 | 12/31/14 | 12/31/13 | 12/31/12 | ||||||||||||
NET ASSET VALUE, BEGINNING OF PERIOD | $ | 4.31 | $ | 5.80 | $ | 6.84 | $ | 5.43 | $ | 5.42 | ||||||
| ||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||
Net investment income (loss) | $ | 0.01 | $ | 0.03 | $ | 0.00 | $ | (0.01) | (0.02) | |||||||
Net realized and unrealized gain (loss) on investments3 | 1.62 | (1.49) | (0.78) | 1.75 | 0.03 | |||||||||||
Total from investment operations | $ | 1.63 | $ | (1.46) | $ | (0.78) | $ | 1.74 |
| 0.01 | ||||||
| ||||||||||||||||
Less Distributions: | ||||||||||||||||
Dividends from net investment income | $ | (0.01) | $ | (0.03) | $ | 0.00 | $ | 0.00 | 0.00 | |||||||
Distributions from net realized gains |
|
| 0.00 |
|
| 0.00 |
|
| (0.26) |
|
| (0.33) |
|
| 0.00 | |
Returns of capital | 0.004 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||
Total distributions | $ | (0.01) | $ | (0.03) | $ | (0.26) | $ | (0.33) |
| 0.00 | ||||||
| ||||||||||||||||
NET ASSET VALUE, END OF PERIOD | $ | 5.93 | $ | 4.31 | $ | 5.80 | $ | 6.84 |
| 5.43 | ||||||
|
|
|
|
|
|
|
|
|
|
| ||||||
Total Return (excludes any applicable sales charge) | 37.82% | (25.16%) | (11.43%) | 32.00% | 0.19% | |||||||||||
| ||||||||||||||||
RATIOS/SUPPLEMENTAL DATA | ||||||||||||||||
Net assets, end of period (in thousands) | $592,629 | $490,052 | $757,507 | $701,872 | $497,206 | |||||||||||
Ratio of expenses to average net assets after waivers1,2 | 1.46% | 1.44% | 1.39% | 1.41% | 1.42% | |||||||||||
Ratio of expenses to average net assets before waivers2 | 1.47% | 1.44% | 1.39% | 1.41% | 1.42% | |||||||||||
Ratio of net investment income (loss) to average net assets1,2 | 0.17% | 0.52% | (0.02%) | (0.26%) | (0.39%) | |||||||||||
Portfolio turnover rate | 55.17% | 63.76% | 67.68% | 85.63% | 77.33% | |||||||||||
|
| |||||||||||||||
1 | This row reflects the impact, if any, of fee waivers or reimbursements by the Adviser and/or affiliated service providers. | |||||||||||||||
|
| |||||||||||||||
2 | Average net assets was calculated using a 360-day period. | |||||||||||||||
|
| |||||||||||||||
3 | Realized and unrealized gains and loss per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not reconcile with the aggregate gains and losses in the statement of operations due to share transactions for the period. | |||||||||||||||
|
| |||||||||||||||
4 | Less than 0.005 per share. | |||||||||||||||
| ||||||||||||||||
| ||||||||||||||||
Total return represents the rate that an investor would have earned or lost on an investment in the Fund assuming reinvestment of all dividends and distributions. | ||||||||||||||||
| ||||||||||||||||
The accompanying notes are an integral part of these financial statements. | ||||||||||||||||
WILLISTON BASIN/MID-NORTH AMERICA STOCK FUND CLASS C
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for the periods indicated
Period | ||||||||||
Year | Year | From | ||||||||
Ended | Ended | 5/1/14^ to | ||||||||
12/30/16 | 12/31/15 | 12/31/14 | ||||||||
NET ASSET VALUE, BEGINNING OF PERIOD | $ | 4.30 | $ | 5.79 | $ | 7.45 | ||||
| ||||||||||
Income (loss) from investment operations: | ||||||||||
Net investment income (loss) | $ | (0.02) | $ | 0.01 | $ | (0.01) | ||||
Net realized and unrealized gain (loss) on investments3 | 1.61 | (1.49) | (1.39) | |||||||
Total from investment operations | $ | 1.59 | $ | (1.48) | $ | (1.40) | ||||
| ||||||||||
Less Distributions: | ||||||||||
Dividends from net investment income | $ | 0.00 | $ | (0.01) | $ | 0.00 | ||||
Distributions from net realized gains | 0.00 | 0.00 | (0.26) | |||||||
Total distributions | $ | 0.00 | $ | (0.01) | $ | (0.26) | ||||
| ||||||||||
NET ASSET VALUE, END OF PERIOD | $ | 5.89 | $ | 4.30 | $ | 5.79 | ||||
| ||||||||||
Total Return (excludes any applicable sales charge) | 36.98% | (25.52%) | (18.82%)** | |||||||
| ||||||||||
RATIOS/SUPPLEMENTAL DATA | ||||||||||
Net assets, end of period (in thousands) | $51,909 | $38,170 | $30,809 | |||||||
Ratio of expenses to average net assets after waivers1,2 | 1.96% | 1.94% | 1.89%* | |||||||
Ratio of expenses to average net assets before waivers2 | 1.97% | 1.94% | 1.89%* | |||||||
Ratio of net investment income (loss) to average net assets1,2 | (0.33%) | 0.03% | (0.52%)* | |||||||
Portfolio turnover rate | 55.17% | 63.76% | 67.68%** | |||||||
|
| |||||||||
* | Annualized. | |||||||||
|
| |||||||||
** | Not Annualized. | |||||||||
|
| |||||||||
1 | This row reflects the impact, if any, of fee waivers or reimbursements by the Adviser and/or affiliated service providers. | |||||||||
|
| |||||||||
2 | Average net assets was calculated using a 360-day period. | |||||||||
|
| |||||||||
3 | Realized and unrealized gains and loss per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not reconcile with the aggregate gains and losses in the statement of operations due to share transactions for the period. | |||||||||
|
| |||||||||
^ | Commencement of operations. | |||||||||
| ||||||||||
| ||||||||||
Total return represents the rate that an investor would have earned or lost on an investment in the Fund assuming reinvestment of all dividends and distributions. | ||||||||||
| ||||||||||
The accompanying notes are an integral part of these financial statements. | ||||||||||
WILLISTON BASIN/MID-NORTH AMERICA STOCK FUND CLASS I
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for the period indicated
Period | ||||
From | ||||
8/1/16^ to | ||||
12/30/16 | ||||
NET ASSET VALUE, BEGINNING OF PERIOD | $ | 4.74 | ||
| ||||
Income (loss) from investment operations: | ||||
Net investment income (loss) | $ | 0.03 | ||
Net realized and unrealized gain (loss) on investments ³ | 1.19 | |||
Total from investment operations | $ | 1.22 | ||
| ||||
Less Distributions: | ||||
Dividends from net investment income | $ | (0.03) | ||
Returns of capital | (0.01) | |||
Total distributions | $ | (0.04) | ||
| ||||
NET ASSET VALUE, END OF PERIOD | $ | 5.92 | ||
| ||||
Total Return (excludes any applicable sales charge) | 25.66%** | |||
| ||||
RATIOS/SUPPLEMENTAL DATA | ||||
Net assets, end of period (in thousands) | $14,891 | |||
Ratio of expenses to average net assets after waivers ¹ ² | 0.97%* | |||
Ratio of expenses to average net assets before waivers ² | 0.97%* | |||
Ratio of net investment income (loss) to average net assets ¹ ² | 0.67%* | |||
Portfolio turnover rate | 55.17%** | |||
|
| |||
* | Annualized. | |||
|
| |||
** | Not Annualized. | |||
|
| |||
1 | This row reflects the impact, if any, of fee waivers or reimbursements by the Adviser and/or affiliated service providers. | |||
|
| |||
2 | Average net assets was calculated using a 360-day period. | |||
|
| |||
3 | Realized and unrealized gains and loss per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not reconcile with the aggregate gains and losses in the statement of operations due to share transactions for the period. | |||
|
| |||
^ | Commencement of operations. | |||
| ||||
| ||||
Total return represents the rate that an investor would have earned or lost on an investment in the Fund assuming reinvestment of all dividends and distributions. | ||||
| ||||
The accompanying notes are an integral part of these financial statements. | ||||
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Trustees
Integrity Funds
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of The Integrity Funds, comprising Integrity Dividend Harvest Fund, Integrity Energized Dividend Fund, Integrity Growth & Income Fund, Integrity High Income Fund, and Williston Basin/Mid-North America Stock Fund (the “Funds”), as of December 30, 2016, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated in the period then ended for Integrity Dividend Harvest Fund, Integrity Growth & Income Fund, Integrity High Income Fund, and Williston Basin/Mid-North America Stock Fund, and the related statements of operations and changes in net assets, and the financial highlights for the period May 2, 2016 (commencement of operations) through December 30, 2016 for Integrity Energized Dividend Fund. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 30, 2016, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the Funds constituting The Integrity Funds as of December 30, 2016, the results of their operations, the changes in their net assets, and the financial highlights for each of the periods indicated above, in conformity with accounting principles generally accepted in the United States of America.
/s/ Cohen & Company, Ltd.
COHEN & COMPANY, LTD.
Cleveland, Ohio
February 28, 2017
EXPENSE EXAMPLE (unaudited)
As a shareholder of the Funds, you incur two types of costs: (1) transaction costs, including sales charges (loads), redemption fees and exchange fees; and (2) ongoing costs, including management fees, distribution (12b-1) fees and other Funds expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the one-half year period shown below and held for the entire one-half year period.
The section in the table under the heading “Actual” provides information about actual account values and actual expenses. You may use the information in these columns together with the amount you invested to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an account value of $8,600 divided by $1,000 equals 8.6), then multiply the result by the number in the appropriate column for your share class in the column entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
The section in the table under the heading “Hypothetical (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Funds’ actual returns. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the section in the table under the heading “Hypothetical (5% return before expenses)” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Expenses | |||
Account | Account | Paid | Annualized | ||
Value | Value | During | Expense | ||
| 6/30/16^ | 12/30/16 | Period* | Ratio | |
Integrity Dividend Harvest Fund | |||||
Actual - Class A | $1,000.00 | $1,033.91 | $4.83 | 0.95% | |
Actual - Class C | $1,000.00 | $1,032.59 | $8.64 | 1.70% | |
Actual - Class I | $1,000.00 | $1,046.70 | $2.96 | 0.70% | |
Hypothetical - Class A (5% return before expenses) | $1,000.00 | $1,020.32 | $4.80 | 0.95% | |
Hypothetical - Class C (5% return before expenses) | $1,000.00 | $1,016.57 | $8.57 | 1.70% | |
Hypothetical - Class I (5% return before expenses) | $1,000.00 | $1,017.79 | $2.92 | 0.70% | |
Integrity Energized Dividend Fund | |||||
Actual - Class A | $1,000.00 | $1,157.30 | $1.11 | 0.21% | |
Actual - Class C | $1,000.00 | $1,152.20 | $5.16 | 0.96% | |
Actual - Class I | $1,000.00 | $1,198.00 | $0.00 | 0.00% | |
Hypothetical - Class A (5% return before expenses) | $1,000.00 | $1,024.04 | $1.04 | 0.21% | |
Hypothetical - Class C (5% return before expenses) | $1,000.00 | $1,020.28 | $4.84 | 0.96% | |
Hypothetical - Class I (5% return before expenses) | $1,000.00 | $1,020.68 | $0.00 | 0.00% | |
Integrity Growth & Income Fund | |||||
Actual - Class A | $1,000.00 | $1,056.58 | $6.43 | 1.25% | |
Actual - Class C | $1,000.00 | $1,052.56 | $10.26 | 2.00% | |
Actual - Class I | $1,000.00 | $1,030.40 | $4.20 | 1.00% | |
Hypothetical - Class A (5% return before expenses) | $1,000.00 | $1,018.82 | $6.31 | 1.25% | |
Hypothetical - Class C (5% return before expenses) | $1,000.00 | $1,015.07 | $10.08 | 2.00% | |
Hypothetical - Class I (5% return before expenses) | $1,000.00 | $1,016.55 | $4.17 | 1.00% | |
Integrity High Income Fund | |||||
Actual - Class A | $1,000.00 | $1,065.58 | $5.94 | 1.15% | |
Actual - Class C | $1,000.00 | $1,061.52 | $9.79 | 1.90% | |
Actual - Class I | $1,000.00 | $1,039.28 | $3.80 | 0.90% | |
Hypothetical - Class A (5% return before expenses) | $1,000.00 | $1,019.32 | $5.81 | 1.15% | |
Hypothetical - Class C (5% return before expenses) | $1,000.00 | $1,015.57 | $9.57 | 1.90% | |
Hypothetical - Class I (5% return before expenses) | $1,000.00 | $1,016.96 | $3.76 | 0.90% | |
Williston Basin/Mid-North America Stock Fund | |||||
Actual - Class A | $1,000.00 | $1,200.05 | $8.04 | 1.46% | |
Actual - Class C | $1,000.00 | $1,197.15 | $10.77 | 1.96% | |
Actual - Class I | $1,000.00 | $1,256.65 | $4.52 | 0.97% | |
Hypothetical - Class A (5% return before expenses) | $1,000.00 | $1,017.76 | $7.37 | 1.46% | |
Hypothetical - Class C (5% return before expenses) | $1,000.00 | $1,015.26 | $9.88 | 1.96% | |
Hypothetical - Class I (5% return before expenses) | $1,000.00 | $1,016.68 | $4.04 | 0.97% | |
|
| ||||
* | Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied 183 days in the one-half year period, and divided by 366 days in the fiscal year (to reflect the one-half year period). | ||||
|
| ||||
^ | Beginning account value for Class I is as of 08/01/16 (inception date). | ||||
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT (unaudited)
Viking Fund Management, LLC (“Viking” or “Adviser”), the Fund’s investment adviser; Integrity Funds Distributor, LLC (“IFD”), the Fund’s underwriter; and Integrity Fund Services, LLC (“IFS”), the Fund’s transfer, accounting, and administrative services agent; are subsidiaries of Corridor Investors, LLC (“Corridor”), the Fund’s sponsor.
The approval and the continuation of a fund’s investment advisory and sub-advisory agreements must be specifically approved at least annually (1) by the vote of the trustees or by a vote of the shareholders of the fund, and (2) by the vote of a majority of the trustees who are not parties to the investment advisory agreement or “Interested Persons” of any party (“Independent Trustees”), cast in person at a meeting called for the purpose of voting on such approval. In preparation for the meeting, the Board requests and reviews a wide variety of materials provided by the Fund’s adviser. The Independent Trustees also received advice from their independent counsel on the issues to focus on during contract renewals. At a meeting held on October 31, 2016, the Board of Trustees, including a majority of the independent Trustees of the Fund, approved the Management and Investment Advisory Agreement (“Advisory Agreement”), between the Funds and Viking and the Sub-Advisory Agreement, between the Advisor and J.P. Morgan Investment Management Inc. (“JPMIM”).
The Trustees, including a majority of Trustees who are neither party to the Advisory or Sub-Advisory Agreements nor “interested persons” of any such party (as such term is defined for regulatory purposes), unanimously renewed the Advisory and Sub-Advisory Agreements. In determining whether it was appropriate to renew the Advisory and Sub-Advisory Agreements, the Trustees requested information, provided by the Investment Adviser and each Sub-Adviser that it believed to be reasonably necessary to reach its conclusion. In connection with the renewal of the Advisory and Sub-Advisory Agreements, the Board reviewed factors set out in judicial decisions and Securities Exchange Commission (“SEC”) directives relating to the renewal of advisory contracts, which include but are not limited to, the following:
|
|
|
| (a) | the nature and quality of services to be provided by the adviser to the fund; |
|
|
|
| (b) | the various personnel furnishing such services and their duties and qualifications; |
|
|
|
| (c) | the relevant fund’s investment performance as compared to standardized industry performance data; |
|
|
|
| (d) | the adviser’s costs and profitability of furnishing the investment management services to the fund; |
|
|
|
| (e) | the extent to which the adviser realizes economies of scale as the fund grows larger and the sharing thereof with the fund; |
|
|
|
| (f) | an analysis of the rates charged by other investment advisers of similar funds; |
|
|
|
| (g) | the expense ratios of the applicable fund as compared to data for comparable funds; and |
|
|
|
| (h) | information with respect to all benefits to the adviser associated with the fund, including an analysis of so-called “fallout” benefits or indirect profits to the adviser from its relationship to the funds. |
In evaluating the Adviser’s services and its fees, the Trustees reviewed information concerning the performance of each Fund, the recent financial statements of the Adviser and its parent, and the proposed advisory fee and other fund expenses compared to the level of advisory fees and expenses paid by other similar funds. In reviewing the Advisory Agreement with the foregoing Funds, the Trustees considered, among other things, the fees, the Fund’s past performance, the nature and quality of the services provided, the profitability of the Adviser and its parent (estimated costs and estimated profits from furnishing the proposed services to each Fund), and the expense waivers by the Adviser. The Trustees also considered any ancillary benefits to the Adviser and its affiliates for services provided to each Fund. In this regard, the Trustees noted that there were soft dollar arrangements involving the Adviser, but there were none involving the Sub-Advisor in the Funds that it manages. Also, the only benefits to affiliates were the fees earned for services provided. The Trustees did not identify any single factor discussed above as all-important or controlling. The Trustees also considered the Adviser’s commitment to contractually or voluntarily limit Fund expenses, the skills and capabilities of the Adviser, and the representations from the Adviser that the Funds’ portfolio managers will continue to manage the Funds’ in substantially the same way as it had been managed.
The following paragraphs summarize the material information and factors considered by the Board, including the Independent Trustees, as well as their conclusions relative to such factors in considering the approval of the Advisory Agreement:
Nature, extent and quality of services: The Investment Adviser currently provides services to eleven funds with investment strategies ranging from non-diversified sector funds to broad-based equity funds. The experience and expertise of the Investment Adviser is attributable to the long-term focus on managing investment companies and has the potential to enhance the Funds’ future performance. They have a strong culture of compliance and provide quality services. The overall nature and quality of the services provided by the Investment Adviser had historically been, and continues to be, adequate and appropriate.
Investment performance: Upon a review of the total return history and category rankings of each Fund, the Trustees deemed the performance of each Fund to be satisfactory. In addition, each of the Funds has been meeting its investment objective.
As of July 31, 2016, the risk for: (1) Integrity Growth & Income Fund was below average for the 3 and 10-year periods, and high for the 5-year period. (2) Williston Basin/Mid-North America Stock Fund was below average for the 3 and 10-year periods, and average for the 5-year period; (3) Integrity High Income Fund had average risk for the 3 and 5-year periods, and high risk for the 10-year time period; (4) Integrity Dividend Harvest Fund had a low risk rating for the 3-year period; (4) Integrity Energized Dividend Fund had no rating due to opening on May 2, 2016.
As of July 31, 2016, the Fund return rating for: (1) Integrity Growth & Income Fund was low for the 3 and 5-year periods, and below average for the 10-year period; (2) Williston Basin/Mid-North America Stock Fund was average for the 3-year period, above average for the 5-year period, and high for the 10-year period. (3) Integrity High Income Fund was below average for the 3 and 5-year time periods. It was low for the 10-year time period. (4) Integrity Dividend Harvest Fund had a high return rating for the 3-year period; (4) Integrity Energized Dividend Fund had no rating due to opening on May 2, 2016.
As of July 31, 2016, the Fund performance for: (1) Integrity Growth & Income Fund for the 1, 3, 5 and 10-year periods was below its index for its peer group. It was below its median classification for the 1, 3, 5, and 10-year periods; (2) Williston Basin/Mid-North America Stock Fund was below its index for the 1, 3, and 5-year periods. It was above its index for the 10-year period for its peer group. It was above its median classification in the 1, 3, 5, and 10-year periods for its peer group; (3) Integrity High Income Fund was below its index for the 1, 3, and 10-year periods. It was above its index for the 5-year period. It was above its median classification for the 1, 3, and 5-year periods and below its median for the 10-year period; (4) Integrity Dividend Harvest Fund was above its index for the 1 and 3-year periods. It was above its median classification for the 1 and 3-year periods; (4) Integrity Energized Dividend Fund had no performance information due to opening on May 2, 2016.
Profitability: In connection with its review of fees, the Board also considered the profitability of Viking for its advisory activities. In this regard, the Board reviewed information regarding the finances of Corridor and Viking. Based on the information provided, the Board concluded that the level of profitability was reasonable in light of the services provided.
Economies of scale: The Board discussed the benefits for the Funds as the Adviser could realize economies of scale as each of the Funds grow larger, but the size of the Funds has not reached an asset level to benefit from economies of scale. Discussion regarding Williston Basin/Mid-North America Stock Fund has occurred as it is the largest Fund. The advisory fees are structured appropriately based on the size of the Funds. The Adviser has indicated that a new advisory fee structure may be looked at if the Fund reaches an asset level where the Funds could benefit from economies of scale.
Analysis of the rates charged by other investment advisers of similar funds: A comparison of the management fees charged by the Adviser seemed reasonable to the Trustees when compared to similar funds in objective and size. The adviser is voluntarily waiving advisory fees to a certain degree due to the small size of certain Funds.
Expense ratios of the applicable fund as compared to data for comparable funds: (1) a comparison of the net operating expense for the Integrity High Income Fund to other funds of similar objective and size reflected that its net expense ratio of 1.15% for Class A shares and 1.90% for Class C shares was comparable to other funds of similar objective and size; (2) the net operating expense of 1.25% for Class A shares and 2.00% for Class C shares for the Integrity Growth & Income Fund is comparable to other funds of similar objective and size; (3) the net operating expense of 0.95% for Class A shares and 1.70% for Class C shares for the Integrity Dividend Harvest Fund is comparable to other funds of similar objective and size; (4) the net operating expense of 1.45% for Class A and 1.95% for Class A for the Williston Basin/Mid-North America Stock Fund is comparable to other funds of similar objective and size.
Information with respect to all benefits to the adviser associated with the fund, including an analysis of so-called “fallout” benefits or indirect profits to the adviser from its relationship to the funds: The Board noted that the Adviser does not realize material direct benefits from its relationship with the Fund. The Adviser participates in soft dollar arrangements from securities trading in Williston Basin Mid-North America Stock Fund.
In voting unanimously to renew the Advisory Agreement, the Trustees did not identify any single factor as being of paramount importance. The Trustees noted that their discussion in this regard was premised on numerous factors including the nature, quality and resources of Viking, the strategic plan involving the Funds, and the potential for increased distribution and growth of the Funds. They determined that, after considering all relevant factors, the adoption of the Advisory Agreements would be in the best interest of each of the Funds and its shareholders.
Sub-Advisory Agreement with JPMIM
In determining whether it was appropriate to renew the Sub-Advisory Agreement between the Investment Adviser and JPMIM with respect to the High Income Fund, the Trustees requested information from JPMIM that they believed to be reasonably necessary to reach their conclusion. The following paragraphs summarize the material information and factors considered by the Board, including the Independent Trustees, as well as their conclusions relative to such factors in considering the renewal of the Sub-Advisory Agreement:
Nature, extent and quality of services: In reviewing the Agreements, the Board considered the nature, quality and extent of services to be provided by JPMIM. In this regard, the Board considered the history and investment experience of JPMIM and reviewed the qualifications, background and responsibilities of its portfolio managers and certain other relevant personnel. The Board recognized that JPMIM has significant expertise in managing high yield corporate bond portfolios and its investment style. The Board also recognized the reputation and resources of JPMIM. In light of the information presented and the considerations made, the Board was satisfied that the nature, quality and extent of services provided to the Fund by JPMIM are satisfactory.
Analysis of the rates charged by other investment advisers of similar funds: The Board considered the sub-advisory fees paid to JPMIM fair and reasonable, in light of the investment sub-advisory services expected to be provided, the anticipated costs of these services and the comparability of the sub-advisory fees to fees paid by comparable mutual funds.
Information with respect to all benefits to the adviser associated with the fund, including an analysis of so-called “fallout” benefits or indirect profits to the adviser from its relationship to the funds: The Board noted, based on information presented by the Adviser, that the Sub-adviser does realize direct benefits from its relationship with the High Income Fund and does not participate in soft dollar arrangements from securities trading in the Fund.
In voting unanimously to renew the Sub-Advisory Agreement, the Trustees did not identify any single factor as being of paramount importance. The Trustees noted that their discussion in this regard was premised on numerous factors including the nature, quality and resources of JPMIM, the strategic plan involving Integrity High Income Fund, and the potential for increased distribution and growth of the Fund. Thus, the Trustees, including a majority of the Independent Trustees, determined that, after considering all relevant factors, the renewal of the Sub-Advisory Agreement would be in the best interest of the Integrity High Income Fund and its shareholders.
Potential Conflicts of Interest –Investment Adviser
Actual or apparent conflicts of interest may arise when a portfolio manager has day-to-day management responsibilities with respect to more than one fund or other account. More specifically, portfolio managers who manage multiple funds are presented with the following potential conflicts:
The management of multiple funds may result in a portfolio manager devoting unequal time and attention to the management of each fund. The management of multiple funds and accounts also may give rise to potential conflicts of interest if the funds and accounts have different objectives, benchmarks, time horizons, and fees as the portfolio manager must allocate his time and investment ideas across multiple funds and accounts.
|
|
|
| Ÿ | The appearance of a conflict of interest may arise where the Investment Adviser has an incentive, such as a performance-based management fee, which relates to the management of one fund but not all funds with respect to which a portfolio manager has day-to-day management responsibilities. The management of personal accounts may give rise to potential conflicts of interest; there is no assurance that the Funds' code of ethics will adequately address such conflicts. One of the portfolio manager's numerous responsibilities is to assist in the sale of Fund shares. The compensation of Shannon Radke, Monte Avery, Josh Larson, and Michael Morey (each of the “Portfolio Manager” of the Funds), is based on salary paid every other week. The Portfolio Managers are not compensated for client retention. In addition, Corridor sponsors a 401(K) plan for all its employees. This plan is funded by employee elective deferrals and a match up to 6% by Corridor of the employees gross pay. |
|
|
|
| Ÿ | With respect to securities transactions for the Funds, the Investment Adviser determines which broker to use to execute each order, consistent with the duty to seek best execution of the transaction. The portfolio manager may execute transactions for another fund or account that may adversely impact the value of securities held by the Funds. Securities selected for funds or accounts other than the Funds may outperform the securities selected for the Funds. |
|
|
|
| Ÿ | Although the Portfolio Manager generally does not trade securities in his own personal account, each of the Funds has adopted a code of ethics that, among other things, permits personal trading by employees under conditions where it has been determined that such trades would not adversely impact client accounts. Nevertheless, the management of personal accounts may give rise to potential conflicts of interest, and there is no assurance that these codes of ethics will adequately address such conflicts. |
|
|
|
| Ÿ | Shannon D. Radke is a Governor, President, and Chief Executive Officer of Corridor. He owns membership interests of approximately 9.8% in Corridor. He initially received membership interests, without a cash investment, in exchange for contributions to Corridor (including experience in the mutual fund industry and personal guaranties of bank financing) and, in addition, in exchange for his interest in Viking. Mr. Radke also purchased a portion of his membership interests in Corridor. Certain other current employees of Corridor own, in the aggregate, approximately 29%-30% of the total membership interests in Corridor, with those employees individually owning an interest of 0.01% to 2.02%. They initially received their membership interests in exchange for their experience and role in the operations of Corridor; some have since purchased a portion of their membership interests. |
The Investment Adviser and the Funds have adopted certain compliance procedures, which are designed to address these types of conflicts. However, there is no guarantee that such procedures will detect each and every situation in which a conflict arises.
Potential Conflicts of Interest –Investment Sub-Adviser for Integrity High Income Fund only
Actual or apparent conflicts of interest may arise when a portfolio manager has day-to-day management responsibilities with respect to more than one fund or other account. More specifically, portfolio managers who manage multiple funds are presented with the following potential conflicts:
|
|
|
| Ÿ | Similar Investment Companies Sub‑Advised by JPMIM |
|
| JPMIM acts as investment sub‑adviser to the following investment companies, each of which has an investment objective similar to that of the Fund: Managers High Yield Fund, a series of Managers Trust II; and High Yield Bond Fund, a series of SEI Institutional Investments Trust (SIIT); and High Yield Bond Fund, a series of SEI Institutional Managed Investments Trust (SIMT). The SIIT and SIMT funds are multi-managed and are also sub-advised by Ares Management LLC, Benefit Street Partners, L.L.C., and Brigade Capital Management. |
|
|
|
| Ÿ | With respect to securities transactions for the Fund, the sub-advisor determines which broker to use to execute each order, consistent with the duty to seek best execution of the transaction. The portfolio manager may execute transactions for another fund or account that may adversely impact the value of securities held by the Fund. Securities selected for funds or accounts other than the Fund may outperform the securities selected for the Fund. |
|
|
|
| Ÿ | The appearance of a conflict of interest may arise where the sub-adviser has an incentive, such as a performance-based management fee, which relates to the management of one fund but not all funds with respect to which a portfolio manager has day-to-day management responsibilities. The management of personal accounts may give rise to potential conflicts of interest; there is no assurance that the sub-advisers code of ethics will adequately address such conflicts. As compensation for sub-advisory services provided to the Fund under the Sub-Advisory Agreement, the Adviser is required to pay JPMIM a fee computed at an annual rate of 0.35% of the Fund’s average daily net assets. Since the dollar amount of the fee will increase as assets increase, JPMIM is expected to receive increased fees as the assets of the Fund increase. |
|
|
|
| Ÿ | JPMIM and/or its affiliates perform investment services, including rendering investment advice, to varied clients. JPMIM and/or its affiliates and its or their directors, officers, agents, and/or employees may render similar or differing investment advisory services to clients and may give advice or exercise investment responsibility and take such other action with respect to any of its other clients that differs from the advice given or the timing or nature of action taken with respect to another client or group of clients. It is JPMIM’s policy, to the extent practicable, to allocate, within its reasonable discretion, investment opportunities among clients over a period of time on a fair and equitable basis. One or more of JPMIM’s other client accounts may at any time hold, acquire, increase, decrease, dispose, or otherwise deal with positions in investments in which another client account may have an interest from time-to-time. |
|
|
|
| Ÿ | JPMIM and/or its affiliates, and any of its or their directors, partners, officers, agents or employees, may also buy, sell, or trade securities for their own accounts or the proprietary accounts of JPMIM and/or its affiliates, within their discretion, may make different investment decisions and other actions with respect to their own proprietary accounts than those made for client accounts, including the timing or nature of such investment decisions or actions. Further, JPMIM is not required to purchase or sell for any client account securities that it, and/or its affiliates, and any of its or their employees, principals, or agents may purchase or sell for their own accounts or the proprietary accounts of JPMIM and/or its affiliates or its clients. |
|
|
|
| Ÿ | Potential conflicts of interest may arise with both the aggregation and allocation of securities transactions and allocation of limited investment opportunities because of market factors or investment restrictions imposed upon JPMIM and its affiliates by law, regulation, contract or internal policies. Allocations of aggregated trades, particularly trade orders that were only partially completed due to limited availability and allocation of investment opportunities generally, could raise a potential conflict of interest, as JPMIM or its affiliates may have an incentive to allocate securities that are expected to increase in value to favored accounts. Initial public offerings, in particular, are frequently of very limited availability. JPMIM and its affiliates may be perceived as causing accounts it manages to participate in an offering to increase JPMIM’s or its affiliates’ overall allocation of securities in that offering. |
|
|
|
| Ÿ | A potential conflict of interest also may be perceived to arise if transactions in one account closely follow related transactions in a different account, such as when a purchase increases the value of securities previously purchased by another account, or when a sale in one account lowers the sale price received in a sale by a second account. If JPMIM or its affiliates manage accounts that engage in short sales of securities of the type in which the Fund invests, JPMIM or its affiliates could be seen as harming the performance of the Fund for the benefit of the accounts engaging in short sales if the short sales cause the market value of the securities to fall. |
|
|
|
| Ÿ | As an internal policy matter, JPMIM or its affiliates may from time to time maintain certain overall investment limitations on the securities positions or positions in other financial instruments that JPMIM or its affiliates will take on behalf of its clients due to, among other things, liquidity concerns and regulatory restrictions. Such policies may preclude the Fund from purchasing particular securities or financial instruments, even if such securities or financial instruments would otherwise meet the Fund’s objectives. |
The goal of JPMIM and its affiliates is to meet their fiduciary obligation with respect to all clients. JPMIM and its affiliates have policies and procedures designed to manage the conflicts. JPMIM and its affiliates monitor a variety of areas, including compliance with fund guidelines, review of allocation decisions and compliance with JPMIM’s Codes of Ethics and JP Morgan Chase & Co.’s Code of Conduct.
With respect to the allocation of investment opportunities, JPMIM and its affiliates also have certain policies designed to achieve fair and equitable allocation of investment opportunities among its clients over time. For example:
Orders received in the same security and within a reasonable time period from a market event (e.g., a change in a security rating) are continuously aggregated on the appropriate trading desk so that new orders are aggregated with current outstanding orders, consistent with JPMorgan’s duty of best execution for its clients. However, there are circumstances when it may be appropriate to execute the second order differently due to other constraints or investment objectives. Such exceptions often depend on the asset class. Examples of these exceptions, particularly in the fixed income area, are sales to meet redemption deadlines or orders related to less liquid assets.
If aggregated trades are fully executed, accounts participating in the trade will typically be allocated their pro rata share on an average price basis. Partially filled orders generally will be allocated among the participating accounts on a pro-rata average price basis, subject to certain limited exceptions. Use of average price for execution of aggregated trade orders is particularly true in the equity area. However, certain investment strategies, such as the use of derivatives, or asset classes, such as fixed income that use individual trade executions due to the nature of the strategy or supply of the security, may not be subject to average execution price policy and would receive the actual execution price of the transaction. Additionally, some accounts may be excluded from pro rata allocations. Accounts that would receive a de minimis allocation relative to their size may be excluded from the order. Another exception may occur when thin markets or price volatility require that an aggregated order be completed in multiple executions over several days. Deviations from pro rata allocations are documented by the business. JPMorgan attempts to mitigate any potential unfairness by basing non-pro-rata allocations traded through a single trading desk or system upon an objective predetermined criteria for the selection of investments and a disciplined process for allocating securities with similar duration, credit quality and liquidity in the good faith judgment of JPMorgan so that fair and equitable allocation will occur over time.
The Adviser and the Fund have adopted certain compliance procedures, which are designed to address these types of conflicts. However, there is no guarantee that such procedures will detect each and every situation in which a conflict arises.
Portfolio Manager Compensation
JPMIM’s portfolio managers participate in a competitive compensation program that is designed to attract, retain and motivate talented people and closely link the performance of investment professionals to client investment objectives. JPMIM manages compensation on a total compensation basis, the components being base salary fixed from year to year and a variable discretionary incentive award. Base salaries are reviewed annually and awarded based on individual performance and business results taking into account level and scope of position, experience and market competitiveness. The variable discretionary performance based incentive award consists of cash incentives and deferred compensation which includes mandatory notional investments (as described below) in selected mutual funds advised by JPMIM or its affiliates (“Mandatory Investment Plan”). These elements reflect individual performance and the performance of JPMIM’s business as a whole. Each portfolio manager’s performance is formally evaluated annually based on a variety of factors including the aggregate size and blended performance of the portfolios such portfolio manager manages, individual contribution relative to client risk and return objectives, and adherence with JPMIM’s compliance, risk and regulatory procedures. In evaluating each portfolio manager’s performance with respect to the mutual funds he or she manages, the pre-tax performance of the funds (or the portion of the funds managed by the portfolio manager) is compared to the appropriate market peer group and to the competitive indices JPMIM has identified for the investment strategy over one, three and five year periods (or such shorter time as the portfolio manager has managed the funds). Investment performance is generally more heavily weighted to the long-term.
Deferred compensation granted as part of an employee’s annual incentive compensation comprises from 0% to 60% of a portfolio manager’s total performance based incentive. As the level of incentive compensation increases, the percentage of compensation awarded in deferred incentives also increases. JPMIM’s portfolio managers are required to notionally invest a certain percentage of their deferred compensation (typically 20% to 50% depending on the level of compensation) into the selected funds they manage. The remaining portion of the non-cash incentive is elective and may be notionally invested in any of the other mutual funds available in the Mandatory Investment Plan or will take the form of a JPMorgan restricted stock unit award. When these awards vest over time, the portfolio manager receives cash equal to the market value of the notional investment in the selected mutual funds or shares of JPMorgan common stock.
BOARD OF TRUSTEES AND OFFICERS (unaudited)
The Board of Trustees (“Board”) of the Funds consists of four Trustees (the “Trustees”). These same individuals, unless otherwise noted, also serve as trustees for the five series of Integrity Managed Portfolios, and the two series of Viking Mutual Funds. Three Trustees are not “interested persons” (75% of the total) as defined under the 1940 Act (the “Independent Trustees”). The remaining Trustee is “interested” (the “Interested Trustees”) by virtue of his affiliation with Viking Fund Management, LLC and its affiliates.”
For the purposes of this section, the “Fund Complex” consists of the five series of Integrity Managed Portfolios, the five series of The Integrity Funds, and the two series of Viking Mutual Funds.
Each Trustee serves a Fund until its termination; or until the Trustee’s retirement, resignation, or death; or otherwise as specified in the Funds’ organizational documents. Each Officer serves an annual term. The tables that follow show information for each Trustee and Officer of the Funds.
INDEPENDENT TRUSTEES |
|
Name, Date of Birth, Date Service Began, and Number of Funds Overseen in Fund Complex | Principal Occupations for Past Five Years |
Wade A. Dokken | Principal occupation(s): Member, WealthVest Financial Partners (2009 to present); Co-President, WealthVest Marketing (2009 to present), Trustee: Integrity Managed Portfolios (2016 to present), The Integrity Funds (2016 to present), and Viking Mutual Funds (2016 to present) Other Directorships Held: Not Applicable |
R. James Maxson | Principal occupation(s): Attorney: Maxson Law Office P.C. (2002 to present); Director/Trustee: Integrity Fund of Funds, Inc. (1999 to 2012), Integrity Managed Portfolios (1999 to present), The Integrity Funds (2003 to present), and Viking Mutual Funds (2009 to present) Other Directorships Held: Peoples State Bank of Velva, St. Joseph’s Community Health Foundation and St. Joseph’s Foundation, Minot Community Land Trust |
Jerry M. Stai | Principal occupation(s): Minot State University (1999 to present); Non-Profit Specialist, Bremer Bank (2006 to 2014); Director/Trustee: Integrity Fund of Funds, Inc. (2006 to 2012), The Integrity Funds and Integrity Managed Portfolios (2006 to present), and Viking Mutual Funds (2009 to present) Other Directorships Held: Not Applicable |
The Statement of Additional Information (“SAI”) contains more information about the Funds’ Trustees and is available without charge upon request, by calling Integrity Funds Distributor at 800-276-1262.
INTERESTED TRUSTEE |
| |
Name, Position with Trust, Date of Birth, Date Service Began, and Number of Funds Overseen in Fund Complex | Principal Occupations for Past Five Years | |
Robert E. Walstad(1) | Principal occupation(s): Governor (2009 to present): Corridor Investors, LLC; Portfolio Manager (2010 to 2013): Viking Fund Management, LLC; Director and Chairman: Integrity Fund of Funds, Inc. (1994 to 2012); Trustee and Chairman: Integrity Managed Portfolios (1996 to present), The Integrity Funds (2003 to present), and Viking Mutual Funds (2009 to present)
Other Directorships Held: Governor: Mainstream Investors, LLC (2012) | |
|
| |
(1) | Trustee who is an “interested person” of the Funds as defined in the 1940 Act. Mr. Walstad is an interested person by virtue of being an Officer of the Funds and ownership in Corridor Investors, LLC the parent company of Viking Fund Management, Integrity Fund Services, and Integrity Fund Distributors. | |
|
| |
The SAI contains more information about the Funds’ Trustees and is available without charge upon request, by calling Integrity Funds Distributor at 800-276-1262. | ||
OTHER OFFICERS |
|
Name, Position with Trust, Date of Birth, and Date Service Began | Principal Occupations for Past Five Years |
Shannon D. Radke | Principal occupation(s): Governor, CEO, and President (2009 to present): Corridor Investors, LLC; Governor and President (1998 to present) and Senior Portfolio Manager (1999 to present): Viking Fund Management, LLC; Governor and President (2009 to present): Integrity Fund Services, LLC and Integrity Funds Distributor, LLC; President: Viking Mutual Funds (1999 to present), Integrity Fund of Funds, Inc. (2009 to 2012), The Integrity Funds (2009 to present), and Integrity Managed Portfolios (2009 to present) Other Directorships Held: Minot Chamber of Commerce |
Peter A. Quist | Principal occupation(s): Governor (2009 to present): Corridor Investors, LLC; Attorney (inactive); Vice President (1994 to 2012): Integrity Fund of Funds, Inc.; Vice President: Integrity Managed Portfolios (1996 to present); The Integrity Funds (2003 to present); and Viking Mutual Funds (2009 to present) Other Directorships Held: Not applicable |
Adam C. Forthun | Principal occupation(s): Fund Accounting Manager (2008 to present) and Chief Operating Officer (2013 to present): Integrity Fund Services, LLC; Treasurer: Integrity Fund of Funds, Inc. (2008 to 2012), Integrity Managed Portfolios and The Integrity Funds (2008 to present), and Viking Mutual Funds (2009 to present) Other Directorships Held: Not applicable |
Brent M. Wheeler MF CCO: October 2005 Secretary: October 2009 | Principal occupation(s): Mutual Fund Chief Compliance Officer: Integrity Fund of Funds, Inc. (2005 to 2012), Integrity Managed Portfolios and The Integrity Funds, (2005 to present), and Viking Mutual Funds (2009 to present); Secretary (2009 to 2012): Integrity Fund of Funds, Inc.; Secretary (2009 to present): Integrity Managed Portfolios, The Integrity Funds, and Viking Mutual Funds Other Directorships Held: Not applicable |
|
|
The SAI contains more information about the Funds’ Trustees and is available without charge upon request, by calling Integrity Funds Distributor at 800-276-1262. |
PRIVACY POLICY
Rev. 12/2010
|
| ||
FACTS | WHAT DOES INTEGRITY VIKING FUNDS DO WITH YOUR PERSONAL INFORMATION? | ||
|
| ||
|
| ||
|
| ||
Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. | ||
|
| ||
|
| ||
What? | The types of personal information we collect and share depend on the product or service you have with us. This information can include: | ||
| |||
| Ÿ | Social Security number, name, address | |
|
|
| |
| Ÿ | Account balance, transaction history, account transactions | |
|
|
| |
| Ÿ | Investment experience, wire transfer instructions | |
| |||
When you are no longer our customer, we continue to share your information as described in this notice. | |||
|
| ||
|
| ||
How? | All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons Integrity Viking Funds chooses to share; and whether you can limit this sharing. | ||
|
|
|
|
| ||
Reasons we can share your personal information | Does Integrity Viking Funds share? | Can you limit this sharing? | ||
|
|
| ||
|
|
| ||
For our everyday business purposes— | Yes | No | ||
|
| such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus | ||
|
|
|
|
|
|
|
|
|
|
For our marketing purposes— | Yes | No | ||
|
| to offer our products and services to you | ||
|
|
|
|
|
|
|
|
|
|
For joint marketing with other financial companies | No | We don’t share | ||
|
|
|
|
|
|
|
|
|
|
For our affiliates’ everyday business purposes— | Yes | No | ||
|
| information about your transactions and experiences |
|
|
|
|
|
|
|
|
|
| ||
For our affiliates’ everyday business purposes— | No | We don’t share | ||
|
| information about your creditworthiness |
|
|
|
|
| ||
|
|
| ||
For non-affiliates to market to you | No | We don’t share | ||
|
|
|
|
|
Questions? | Call 1-800-601-5593 or go to www.integrityvikingfunds.com |
|
|
PRIVACY POLICY (Continued)
Page 2 |
| |
Who we are | |
| |
|
|
Who is providing this notice? | Integrity Viking Funds (a family of investment companies) |
|
| |||
What we do | |||
| |||
|
| ||
How does Integrity Viking Funds protect my personal information? | To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We | ||
|
|
| |
| Ÿ | train employees on privacy, information security and protection of client information. | |
|
|
| |
| Ÿ | limit access to nonpublic personal information to those employees requiring such information in performing their job functions. | |
|
|
| |
|
| ||
How does Integrity Viking Funds collect my personal information? | We collect your personal information, for example, when you: | ||
|
|
| |
| Ÿ | open an account or seek financial or tax advice | |
|
|
| |
| Ÿ | provide account information or give us your contact information | |
|
|
| |
| Ÿ | make a wire transfer | |
|
|
| |
We also collect your personal information from other companies. | |||
| |||
|
| ||
Why can’t I limit all sharing? | Federal law gives you the right to limit only: | ||
|
|
| |
| Ÿ | sharing for affiliates’ everyday business purposes-information about your creditworthiness | |
|
|
| |
| Ÿ | affiliates from using your information to market to you | |
|
|
| |
| Ÿ | sharing for non-affiliates to market to you | |
|
|
| |
State laws and individual companies may give you additional rights to limit sharing. | |||
|
|
| |||
Definitions | |||
| |||
|
| ||
Affiliates | Companies related by common ownership or control. They can be financial and nonfinancial companies | ||
|
|
| |
| Ÿ | The Integrity Funds | |
|
|
| |
| Ÿ | Viking Mutual Funds | |
|
|
| |
| Ÿ | Integrity Managed Portfolios | |
|
|
| |
| Ÿ | Corridor Investors, LLC | |
|
|
| |
| Ÿ | Viking Fund Management, LLC | |
|
|
| |
| Ÿ | Integrity Funds Distributor, LLC | |
|
|
| |
| Ÿ | Integrity Fund Services, LLC | |
|
|
| |
|
| ||
Non-affiliates | Companies not related by common ownership or control. They can be financial and nonfinancial companies. | ||
| |||
Integrity Viking Funds does not share with non-affiliates so they can market to you. | |||
|
| ||
|
| ||
Joint marketing | A formal agreement between non-affiliated financial companies that together market financial products or services to you. | ||
| |||
Integrity Viking Funds doesn’t jointly market. | |||
|
|
Integrity Viking Funds includes:
|
|
|
| Ÿ | The Integrity Funds |
|
|
|
| Ÿ | Viking Mutual Funds |
|
|
|
| Ÿ | Integrity Managed Portfolios |
PROXY VOTING OF FUND PORTFOLIO SECURITIES
A description of the policies and procedures that the Funds use to determine how to vote proxies relating to securities held in the Funds’ portfolios are available, without charge and upon request, by calling 800-276-1262. A report on Form N-PX of how the Funds voted any such proxies during the most recent 12-month period ended June 30 is available through the Funds’ website at www.integrityvikingfunds.com. The information is also available from the Electronic Data Gathering Analysis and Retrieval (“EDGAR”) database on the website of the Securities and Exchange Commission (“SEC”) at www.sec.gov.
QUARTERLY PORTFOLIO SCHEDULE
Within 60 days of the end of their second and fourth fiscal quarters, the Funds provide a complete schedule of portfolio holdings in their semi-annual and annual reports on the Form N-CSR(S). These reports are filed electronically with the SEC and are delivered to the shareholders of the Funds. The Funds also files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q and N-CSR(S) are available on the SEC’s website at www.sec.gov. The Funds’ Forms N-Q and N-CSR(S) may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 202-551-8090. You may also access this information from the Funds’ website at www.integrityvikingfunds.com.
SHAREHOLDER INQUIRIES AND MAILINGS
Direct inquiries regarding the Funds to: Integrity Funds Distributor, LLC PO Box 500 Minot, ND 58702 Phone: 800-276-1262 | Direct inquiries regarding account information to: Integrity Fund Services, LLC PO Box 759 Minot, ND 58702 Phone: 800-601-5593 |
To reduce their expenses, the Funds may mail only one copy of their prospectus and each annual and semi-annual report to those addresses shared by two or more accounts. If you wish to receive additional copies of these documents, please call Integrity Funds Distributor at 800-276-1262 or contact your financial institution. Integrity Funds Distributor will begin sending you individual copies 30 days after receiving your request.
Integrity Viking Funds are sold by prospectus only. An investor should consider the investment objectives, risks, and charges and expenses of the investment company carefully before investing. The prospectus contains this and other information about the investment company. You may obtain a prospectus at no cost from your financial adviser or at www.integrityvikingfunds.com. Please read the prospectus carefully before investing.
{Logo}
Equity Funds
Integrity Dividend Harvest Fund
Integrity Energized Dividend Fund
Integrity Growth & Income Fund
Williston Basin/Mid-North America Stock Fund
Corporate Bond Fund
Integrity High Income Fund
State-Specific Tax-Exempt Bond Funds
Viking Tax-Free Fund for North Dakota
Viking Tax-Free Fund for Montana
Kansas Municipal Fund
Maine Municipal Fund
Nebraska Municipal Fund
New Hampshire Municipal Fund
Oklahoma Municipal Fund
Item 2. CODE OF ETHICS.
At the end of the period covered by this report, the registrant has adopted a code of ethics as defined in Item 2 of Form N-CSR that applies to the registrant’s principal executive officer and principal financial officer (herein referred to as the “Code”). There were no amendments to the Code during the period covered by this report. The registrant did not grant any waivers, including implicit waivers, from any provisions of the Code during the period of this report. The Code is available on the Integrity Viking Funds website at http://www.integrityvikingfunds.com. A copy of the Code is also available, without charge, upon request by calling 800-601-5593. The Code is filed herewith pursuant to Item 12(a)(1) as EX-99.CODE ETH.
Item 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Trustees has determined that Jerry Stai is an audit committee financial expert, as defined in Item 3 of Form N-CSR. Mr. Stai is “independent” for purposes of Item 3 of Form N-CSR.
Item 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
| (a) | Audit Fees: The aggregate fees billed for each of the last two fiscal years for professional services rendered by Cohen Fund Audit Services, Ltd. (“Cohen”), the principal accountant for the audit of the registrant’s annual financial statements, for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were $65,850 for the year ended December 30, 2016 and $46,100 for the year ended December 31, 2015. | ||
|
|
| ||
| (b) | Audit-Related Fees: The aggregate fees billed in each of the last two fiscal years for assurance and related services by Cohen that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item were $0 for the year ended December 30, 2016 and $0 for the year ended December 31, 2015. | ||
|
|
| ||
| (c) | Tax Fees: The aggregate fees billed in each of the last two fiscal years for professional services rendered by Cohen for tax compliance, tax advice, and tax planning were $12,500 for the year ended December 30, 2016 and $10,000 for the year ended December 31, 2015. Such services included review of excise distribution calculations (if applicable), preparation of the Trust’s federal, state, and excise tax returns, tax services related to mergers, and routine counseling. | ||
|
|
| ||
| (d) | All Other Fees: The aggregate fees billed in each of the last two fiscal years for products and services provided by Cohen, other than the services reported in paragraphs (a) through (c) of this Item: None. | ||
|
|
| ||
| (e) | (1) | Audit Committee Pre-Approval Policies and Procedures | |
|
|
|
| |
|
|
|
| The registrant’s audit committee has adopted policies and procedures that require the audit committee to pre-approve all audit and non-audit services provided to the registrant by the principal accountant. |
|
|
|
| |
|
| (2) | Percentage of services referred to in 4(b) through 4(d) that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X | |
|
|
|
| |
|
|
|
| 0% of the services described in paragraphs (b) through (d) of Item 4 were not pre-approved by the audit committee. |
|
|
| ||
| (f) | All services performed on the engagement to audit the registrant’s financial statements for the most recent fiscal year-end were performed by Cohen’s full-time permanent employees. | ||
|
|
| ||
| (g) | Non-Audit Fees: None. | ||
|
|
| ||
| (h) | Principal Accountant’s Independence: The registrant’s auditor did not provide any non-audit services to the registrant’s investment adviser or any entity controlling, controlled by, or controlled with the registrant’s investment adviser that provides ongoing services to the registrant. |
Item 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable
Item 6. INVESTMENTS.
The Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form.
Item 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable
Item 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable
Item 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable
Item 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of trustees in the last fiscal half-year.
Item 11. CONTROLS AND PROCEDURES.
| (a) | Based on their evaluation of the registrant’s disclosure controls and procedures as of a date within 90 days of the filing date of this Form N-CSR (the “Report”), the registrant’s principal executive officer and principal financial officer believe that the disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effectively designed to ensure that information required to be disclosed by the registrant in the Report is recorded, processed, summarized and reported by the filing date, including ensuring that information required to be disclosed in the Report is accumulated and communicated to the registrant’s principal executive officer and principal financial officer who are making certifications in the Report, as appropriate, to allow timely decisions regarding required disclosure. |
|
|
|
| (b) | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the registrant’s most recent fiscal half-year that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. |
Item 12. EXHIBITS.
| (a) | (1) | Code of ethics pursuant to Item 2 of Form N-CSR is filed and attached hereto as EX-99. CODE ETH. |
|
|
|
|
|
| (2) | A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2 under the 1940 Act (17 CFR 270.30a-2) is filed and attached hereto as EX-99. CERT. |
|
|
|
|
|
| (3) | Not applicable. |
|
|
| |
| (b) | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is filed and attached hereto. |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
The Integrity Funds
By: /s/ Shannon D. Radke
Shannon D. Radke
President
March 8, 2017
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: /s/ Shannon D. Radke
Shannon D. Radke
President
March 8, 2017
By: /s/ Adam Forthun
Adam Forthun
Treasurer
March 8, 2017