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 811-09277
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VIKING MUTUAL FUNDS
-------------------
(Exact name of registrant as specified in charter)
1400 14TH AVE. SW, MINOT, ND 58701
(Address of principal executive offices) (Zip code)
DOUGLAS P. MILLER, 1400 14TH AVE. SW, MINOT, ND 58701
-----------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (701) 852-1264
--------------
Date of fiscal year end: 12/31
----
Date of reporting period: 06/30/05
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ITEM 1. REPORTS TO STOCKHOLDERS.
SHAREHOLDER LETTER
Dear Fellow Shareholder:
It is a pleasure to bring you the Viking Mutual Funds Semi-Annual Report
for the six months ended June 30, 2005.
Although energy prices have risen further in the first half of 2005, the
economic expansion remains firm and labor market conditions continue to
improve gradually. The Federal Reserve, keeping a watchful eye on the impact
of surging oil prices, raised the Fed Funds rate by another quarter-point on
June 30 to 3.25 percent. It marked the ninth increase in the interest that
banks charge each other on overnight loans and left this benchmark rate at
its highest level since August 2001. When the Fed started its credit
tightening campaign a year ago, the Funds rate had been at a 46-year low of
one percent. In its announcement of the decision, the Fed retained a pledge
it has been making for the past year to move rates up "at a pace that is
likely to be measured," a phrase that has been read by financial markets
as signaling continued quarter-point moves in the future. The Fed said that
pressures on inflation "have stayed elevated" but repeated a belief it has
made in past statements that "longer-term inflation expectations remain well
contained." That phrase is seen by markets as a signal that the Fed feels
no need to accelerate its rate hikes. Federal Reserve Chairman Alan
reenspan, testifying to Congress recently, described the economy as staying
on a "reasonably firm footing" with inflation under control. Put simply,
here is how Fed rate hikes directly affect consumer spending. Most consumer
credit rates and adjustable mortgage rates are tied to the Prime rate. This
rate moves in lock step with the Fed Funds rate. As Prime increases, more
money is taken from the consumer in the form of higher interest rates and
therefore is not available for the purchase of goods and services. Since
consumer spending makes up roughly two-thirds of our economy, when spending
slows, the economy slows causing the Fed to pause and eventually begin cutting
rates again to stimulate the economy lest it should fall into recession.
The Fed's short-term rate increases normally produce an increase in long-term
rates. However, that hasn't occurred during this cycle of increases.
Treasury's benchmark 10-year bond was at 4.8 percent a year ago and now is
around 4 percent. Although the Fed controls short-term borrowing rates,
longer-term rates move up and down on expectations of future economic growth
and inflation concerns and are controlled by market participants. The decline
in long-term rates has kept mortgage rates at historic lows this year and has
been a major contributor in the red-hot housing market. Sales of both new and
existing homes are expected to hit record highs for a fifth straight year.
Some economists have begun to worry that a speculative bubble is developing in
housing that will eventually burst like the stock market bubble did at the
beginning of this decade. While Greenspan has talked about "froth" in local
markets he has discounted concerns that a national housing bubble is
developing.
Following the strong rally of last year's fourth quarter and the abnormally
high returns posted in 2003 and 2004, surging energy prices and rising
interest rates took a toll on investors, as equities sagged in general in
the first quarter of 2005. The Dow Jones Industrial Average slid 2.6
percent, the broader S&P 500 Index also lost 2.6 percent for the quarter,
while the tech-laden Nasdaq ended its worst first quarter performance in
four years booking a loss of 8.1 percent. Stocks finished a turbulent
second quarter with mixed results, as crude oil futures fluctuated widely
and as concerns about inflation and a possible economic slowdown roiled the
markets. For the second quarter, the Dow lost 2.2 percent, while the S&P
gained 0.9 percent and the Nasdaq climbed 2.9%. For the year, however,
stocks remained lower with the Dow down 4.7 percent, the S&P off 1.7
percent and the Nasdaq has dropped 5.5 percent.
The fixed income markets, like the equity markets, took a decided turn
for the worse in the first quarter of 2005, as the Fed hiked the Fed
Funds rate twice, each by 25 basis points. The US economy continued to
show strong, above-trend growth in the first quarter. The labor market
was healthy, commodity prices showed strong gains and housing data
remained robust. The fixed income markets rebounded from negative
performance of the prior quarter and provided strong returns in the
second quarter. Despite the consistent "measured" pace of Fed Funds
rate hikes by the Federal Reserve, longer rates declined and the yield
curve continued to flatten. Bullish bondholders were comforted by the
Fed's rate actions, believing modestly higher short-term interest rates will
muffle inflation gains. As a result, the yield curve, which plots the range
of returns from shortest to longest maturity, is at its flattest in several
years. That is, short-term bonds have been falling in price and gaining in
yield amid expectations that the Fed will continue to lift its interest-rate
target. At the same time, longer maturities have gained in price and fallen
in yield because of expectations the Fed's rate hikes will limit economic
expansion and contain inflation.
In this type of market environment, it continues to be highly important to
seek the help of a professional when investing. Making the right decisions
in these markets can be very difficult and an experienced investment
professional can address your concerns about the market and provide the
guidance needed to help you diversify your investments and stay focused on
the long term.
Fund reports containing a discussion of individual Fund performance as well
as the Funds' portfolios and financial statements are presented within for
your review.
We thank you for your confidence in Viking Mutual Funds. Our interests are
closely aligned with those of our shareholders because our money is invested
alongside their own. As always we will do our best to make sure your
experience as a shareholder is a rewarding one.
Sincerely,
/s/Shannon D. Radke
Shannon D. Radke
President
Viking Mutual Funds
VIKING TAX-FREE FUND FOR MONTANA
By: Shannon D. Radke
President/Portfolio Manager
Viking Tax-Free Fund for Montana provided a total return of 1.64% (at net
asset value with distributions reinvested) for the six months
ended June 30, 2005.
The fixed income markets, like the equity markets, took a decided turn for
the worse in the first quarter of 2005, as the Fed hiked the Fed Funds rate
twice, each by 25 basis points. The US economy continued to show strong,
above-trend growth in the first quarter. The labor market was healthy,
commodity prices showed strong gains and housing data remained robust.
As a result, the Fund's share price declined in the first quarter. The
fixed income markets rebounded from negative performance of the prior
quarter and provided strong returns in the second quarter as the Fund's
share price rebounded as well. Despite the consistent "measured" pace of
Fed Funds rate hikes by the Federal Reserve, longer rates declined and the
yield curve continued to flatten. Bullish bondholders were comforted by
the Fed's rate actions, believing modestly higher short-term interest rates
will muffle inflation gains. As a result, the yield curve, which plots the
range of returns from shortest to longest maturity, is at its flattest in
several years. That is, short-term bonds have been falling in price and
gaining in yield amid expectations that the Fed will continue to lift its
interest-rate target. At the same time, longer maturities have gained in
price and fallen in yield because of expectations the Fed's rate hikes will
limit economic expansion and contain inflation.
Despite the continued scarcity of Montana municipal bonds throughout the
period, the Fund was able to obtain an adequate supply of high quality
bonds of various maturities. Average credit quality remained a lofty AA+.
Going forward, we remain committed to our non-interest rate anticipatory
style of investing. Rather than betting on the direction of rates, we will
continue to seek out the best value among high quality issues of varying
maturities. The highest level of current income that is exempt from federal
and Montana income taxes and is consistent with preservation of capital
remains the investment objective of the Fund.
VIKING TAX-FREE FUND FOR MONTANA
Growth of a $10,000 Investment
August 3, 1999 through June 30, 2005 (Unaudited)
Comparison of Change in Value of a $10,000 Investment in Viking
Tax-Free Fund for Montana vs. the Lehman Brother Municipal Bond Index
[Comparative index graph]
Viking Tax-Free Fund Viking Tax-Free Fund Lehman Brothers
for Montana for Montana Municipal Bond
with max sales charge without max sales charge Index
---------------------------------------------------------------------
August 3, 1999 $ 9,550 $10,000 $10,000
October 31, 1999 $ 9,196 $ 9,628 $ 9,817
December 31, 1999 $ 9,125 $ 9,554 $ 9,846
February 28, 2000 $ 9,185 $ 9,617 $ 9,918
April 30, 2000 $ 9,405 $ 9,847 $10,075
June 30, 2000 $ 9,468 $ 9,913 $10,288
August 31, 2000 $ 9,748 $10,206 $10,592
October 31, 2000 $ 9,796 $10,257 $10,652
December 31, 2000 $10,058 $10,531 $10,998
February 28, 2001 $10,185 $10,664 $11,142
April 30, 2001 $10,103 $10,578 $11,121
June 30, 2001 $10,263 $10,745 $11,317
August 31, 2001 $10,672 $11,173 $11,674
October 31, 2001 $10,719 $11,223 $11,772
December 31, 2001 $10,509 $11,002 $11,563
February 28, 2002 $10,785 $11,292 $11,905
April 30, 2002 $10,821 $11,330 $11,899
June 28, 2002 $10,981 $11,498 $12,099
August 31, 2002 $11,276 $11,806 $12,402
October 31, 2002 $11,329 $11,862 $12,463
December 31, 2002 $11,549 $12,092 $12,673
February 28, 2003 $11,710 $12,260 $12,818
April 30, 2003 $11,750 $12,303 $12,910
June 30, 2003 $11,934 $12,495 $13,155
July 31, 2003 $11,490 $12,030 $12,695
August 31, 2003 $11,575 $12,119 $12,790
September 30, 2003 $11,908 $12,468 $13,166
October 31, 2003 $11,832 $12,388 $13,100
November 30, 2003 $11,950 $12,511 $13,237
December 31, 2003 $12,063 $12,630 $13,347
January 31, 2004 $12,136 $12,706 $13,423
February 29, 2004 $12,313 $12,892 $13,625
March 31, 2004 $12,274 $12,850 $13,578
April 30, 2004 $12,001 $12,565 $13,256
May 31, 2004 $11,941 $12,503 $13,208
June 30, 2004 $12,006 $12,570 $13,256
July 31, 2004 $12,165 $12,737 $13,429
August 31, 2004 $12,374 $12,956 $13,698
September 30, 2004 $12,436 $13,020 $13,771
October 31, 2004 $12,484 $13,071 $13,889
November 30, 2004 $12,414 $12,997 $13,775
December 31, 2004 $12,551 $13,141 $13,943
January 31, 2005 $12,601 $13,194 $14,074
February 28, 2005 $12,587 $13,179 $14,027
March 31, 2005 $12,443 $13,028 $13,939
April 30, 2005 $12,604 $13,196 $14,160
May 31, 2005 $12,693 $13,290 $14,260
June 30, 2005 $12,757 $13,356 $14,349
The chart assumes $10,000 invested on August 3, 1999 and includes the
effect of a 4.50% front-end sales charge, as applicable and the
reinvestment of all dividends and capital gains. It is intended to
give you an ideal of how your fund performed compared to the index over
the period 08/03/99-06/30/05. It is important to understand the
differences between your fund and an index. An index measures the
performance of a hypothetical portfolio. A market index such as the
Lehman Brothers Municipal Bond Index is not managed and incurs no sales
charges, expenses or fees. If you could buy all the securities that
make up a market index, you would incur expenses that would affect your
investment's return. Returns shown do not reflect the deduction of the
taxes that a shareholder would pay on fund distributions or redemption of
fund shares. Past performance does not guarantee future
results.
Average Annual Total Returns Lifetime
Through June 30, 2005 One-Year Three-Year Five Year (Est. 8/3/99)
- - ----------------------------------------------------------------------------
Excluding Sales Charge 5.93% 5.12% 6.14% 5.01%
Including Sales Charge 1.16% 3.72% 5.17% 4.20%
Returns reflect reinvestment of distributions and the effect of a 4.50%
front-end sales charge, as applicable. The current maximum sales charge is
3.75%. Therefore, the total returns would have been higher had the current
maximum sales charge been in effect for the stated periods. Return and
share values will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Returns shown do not reflect the deduction
of the taxes that a shareholder would pay on fund distributions or redemption
of fund shares. Past performance is not a guarantee of future results.
VIKING TAX-FREE FUND FOR NORTH DAKOTA
By: Shannon D. Radke
President/Portfolio Manager
Viking Tax-Free Fund for North Dakota provided a total return of 2.13% (at net
asset value with distributions reinvested) for the six months ended June 30,
2005.
The fixed income markets, like the equity markets, took a decided turn for
the worse in the first quarter of 2005, as the Fed hiked the Fed Funds rate
twice, each by 25 basis points. The US economy continued to show strong,
above-trend growth in the first quarter. The labor market was healthy,
commodity prices showed strong gains and housing data remained robust. As a
result, as bonds declined so did the Fund's share price. The fixed income
markets rebounded from negative performance of the first quarter and provided
strong returns in the second quarter as the Fund's share price rebounded as
well. Despite the consistent "measured" pace of Fed Funds rate hikes by the
Federal Reserve, longer rates declined and the yield curve continued to
flatten. Bullish bondholders were comforted by the Fed's rate actions,
believing modestly higher short-term interest rates will muffle inflation
gains. As a result, the yield curve, which plots the range of returns from
shortest to longest maturity, is at its flattest in several years. That is,
short-term bonds have been falling in price and gaining in yield amid
expectations that the Fed will continue to lift its interest-rate target. At
the same time, longer maturities have gained in price and fallen in yield
because of expectations the Fed's rate hikes will limit economic expansion and
contain inflation.
Despite the continued scarcity of North Dakota municipal bonds throughout the
period, the Fund was able to obtain an adequate supply of high quality bonds
of various maturities. Average credit quality remained a lofty AA+. Going
forward, we remain committed to our non-interest rate anticipatory style of
investing. Rather than betting on the direction of rates, we will continue
to seek out the best value among high quality issues of varying maturities.
The highest level of current income that is exempt from federal and North
Dakota income taxes and is consistent with preservation of capital remains
the investment objective of the Fund.
VIKING TAX-FREE FUND FOR NORTH DAKOTA
Growth of a $10,000 Investment
August 3, 1999 through June 30, 2005 (Unaudited)
Comparison of Change in Value of a $10,000 Investment in Viking
Tax-Free Fund for North Dakota vs. the Lehman Brother Municipal Bond
Index
[Comparative index graph]
Viking Tax-Free Fund Viking Tax-Free Fund Lehman Brothers
for North Dakota for North Dakota Municipal Bond
with max sales charge without max sales charge Index
---------------------------------------------------------------------
August 3, 1999 $ 9,550 $10,000 $10,000
October 31, 1999 $ 9,163 $ 9,594 $ 9,817
December 31, 1999 $ 9,211 $ 9,644 $ 9,846
February 28, 2000 $ 9,227 $ 9,660 $ 9,918
April 30, 2000 $ 9,422 $ 9,864 $10,075
June 30, 2000 $ 9,533 $ 9,981 $10,288
August 31, 2000 $ 9,833 $10,295 $10,592
October 31, 2000 $ 9,965 $10,434 $10,652
December 31, 2000 $10,252 $10,734 $10,998
February 28, 2001 $10,412 $10,901 $11,142
April 30, 2001 $10,303 $10,795 $11,121
June 30, 2001 $10,419 $10,909 $11,317
August 31, 2001 $10,809 $11,317 $11,674
October 31, 2001 $10,825 $11,334 $11,772
December 31, 2001 $10,586 $11,084 $11,563
February 28, 2002 $10,910 $11,423 $11,905
April 30, 2002 $10,934 $11,448 $11,899
June 28, 2002 $11,108 $11,630 $12,099
August 31, 2002 $11,409 $11,945 $12,402
October 31, 2002 $11,452 $11,990 $12,463
December 31, 2002 $11,652 $12,200 $12,673
February 28, 2003 $11,815 $12,369 $12,818
April 30, 2003 $11,868 $12,426 $12,910
June 30, 2003 $12,074 $12,641 $13,155
July 31, 2003 $11,652 $12,196 $12,695
August 31, 2003 $11,761 $12,314 $12,790
September 30, 2003 $12,046 $12,612 $13,166
October 31, 2003 $11,982 $12,545 $13,100
November 30, 2003 $12,087 $12,656 $13,237
December 31, 2003 $12,188 $12,761 $13,347
January 31, 2004 $12,284 $12,862 $13,423
February 29, 2004 $12,450 $13,035 $13,625
March 31, 2004 $12,386 $12,968 $13,578
April 30, 2004 $12,100 $12,668 $13,256
May 31, 2004 $12,026 $12,591 $13,208
June 30, 2004 $12,077 $12,645 $13,256
July 31, 2004 $12,214 $12,788 $13,429
August 31, 2004 $12,435 $13,019 $13,698
September 30, 2004 $12,495 $13,082 $13,771
October 31, 2004 $12,568 $13,158 $13,889
November 30, 2004 $12,497 $13,084 $13,775
December 31, 2004 $12,646 $13,240 $13,943
January 31, 2005 $12,721 $13,319 $14,074
February 28, 2005 $12,719 $13,316 $14,027
March 31, 2005 $12,576 $13,167 $13,939
April 30, 2005 $12,761 $13,360 $14,160
May 31, 2005 $12,864 $13,469 $14,260
June 30, 2005 $12,915 $13,522 $14,349
The chart assumes $10,000 invested on August 3, 1999 and includes the
effect of a 4.50% front-end sales charge, as applicable and the
reinvestment of all dividends and capital gains. It is intended to
give you an ideal of how your fund performed compared to the index over
the period 08/03/99-06/30/05. It is important to understand the
differences between your fund and an index. An index measures the
performance of a hypothetical portfolio. A market index such as the
Lehman Brothers Municipal Bond Index is not managed and incurs no sales
charges, expenses or fees. If you could buy all the securities that
make up a market index, you would incur expenses that would affect your
investment's return. Returns shown do not reflect the deduction of the
taxes that a shareholder would pay on fund distributions or redemption of
fund shares. Past performance does not guarantee future
results.
Average Annual Total Returns Lifetime
Through June 30, 2005 One-Year Three-Year Five Year (Est. 8/3/99)
- - ----------------------------------------------------------------------------
Excluding Sales Charge 6.94% 5.15% 6.26% 5.23%
Including Sales Charge 2.14% 3.55% 5.28% 4.48%
Returns reflect reinvestment of distributions and the effect of a 4.50%
front-end sales charge, as applicable. The current maximum sales charge is
3.75%. Therefore, the total returns would have been higher had the current
maximum sales charge been in effect for the stated periods. Return and
share values will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Returns shown do not reflect the deduction
of the taxes that a shareholder would pay on fund distributions or redemption
of fund shares. Past performance is not a guarantee of future results.
VIKING LARGE-CAP VALUE FUND
By: George C. Pierides, Senior Managing Director, Fox Asset Management, LLC
Shannon D. Radke, President
Viking Large-Cap Value Fund provided a return of 5.06% (at net asset value)
for the six months ended June 30, 2005.
Stocks worked their way lower in the first quarter of 2005, pressured by
surging oil prices and rising interest rates. The economy continued to
perform satisfactorily in the face of higher energy and capital costs,
although we remain concerned that growth may not be as robust as the consensus
expectation. While energy accounts for a lesser portion of GDP than was the
case during the oil crises of the 1970's, a continued rise in energy prices
should almost certainly retard growth, particularly as it pertains to
consumption spending. Continued increases in the cost of money would further
serve to dampen economic growth and adversely impact stock valuations.
Although corporations are cash-rich following three years of economic growth
and productivity gains, we also are concerned that higher energy costs and
interest rates may begin to weigh on the tiring consumer segment, which
accounts for more than two-thirds of the domestic economy. Despite losses
for the major indices during the first quarter, the Fund posted positive
results. Our overall emphasis on high quality names served us well. Our
healthcare holdings performed well in the quarter as investors moved toward
the companies with more stable earnings prospects. Also, our consumer
staples stocks appreciated nicely this quarter. Additionally, our
substantial underweight of the financial services sector, which we have
long maintained, worked well as the Fed's interest rate moves began to
negatively affect shares in this sector. Finally, the overweight energy
position rebounded impressively from the weakness seen last quarter.
Stocks finished a turbulent second quarter with mixed results, as crude
oil futures fluctuated widely and as concerns about inflation and a possible
economic slowdown roiled the markets. Signs that the economy may be cooling
from its rapid pace of recent years buoyed investor hopes that the Fed may
ease off the brakes earlier than expected, leading many investors to bid
financial shares higher. Yet, Greenspan & Co. indicated that it would continue
to hike rates to keep a lid on inflation, nudging the Fed funds rate to 3.25%
on June 30th. This latest action flattened the yield curve even further, thus
squeezing banks' net interest margins, especially those of less diversified
institutions that depend more heavily on this basic source of income. It
appears that while inflation is fairly well contained, bond market investors
may be concerned about a future slowdown or recession, caused, perhaps, by
climbing energy prices and/or real estate speculation. For the second quarter
the Dow had a small loss. The S&P 500 and Nasdaq posted small gains as did
the Fund. Healthcare continued to perform well, but weakness in certain of
our cyclical names and our underweight to the financial services sector proved
to be a drag on results.
Through the first half of the year, we have outperformed the Russell 1000
Value benchmark and the broader market indices by a wide margin as investors
continue to migrate to the higher quality, more conservative companies on
which the Fund focuses.
Long-term total return and capital preservation remains the investment
objective of the Fund.
VIKING LARGE-CAP VALUE FUND
Growth of a $10,000 Investment
August 3, 1999 through June 30, 2005 (Unaudited)
Comparison of Change in Value of a $10,000 Investment in Viking
Large-Cap Value Fund vs. the Russell 1000 Value Index
[Comparative index graph]
Viking Large-Cap Viking Large-Cap Russell 1000
Value Fund Value Fund Value Index
with max sales charge without max sales charge
---------------------------------------------------------------------
August 3, 1999 $ 9,475 $10,000 $10,000
October 31, 1999 $ 9,147 $ 9,650 $ 9,875
December 31, 1999 $ 9,406 $ 9,924 $ 9,845
February 28, 2000 $ 8,057 $ 8,500 $ 8,816
April 30, 2000 $ 9,292 $ 9,803 $ 9,777
June 30, 2000 $ 9,245 $ 9,753 $ 9,428
August 31, 2000 $ 9,957 $10,505 $10,078
October 31, 2000 $10,252 $10,816 $10,420
December 31, 2000 $10,598 $11,181 $10,535
February 28, 2001 $10,483 $11,059 $10,282
April 30, 2001 $11,018 $11,624 $10,405
June 30, 2001 $10,665 $11,251 $10,403
August 31, 2001 $10,368 $10,938 $ 9,965
October 31, 2001 $ 9,431 $ 9,949 $ 9,184
December 31, 2001 $10,308 $10,875 $ 9,947
February 28, 2002 $10,298 $10,865 $ 9,886
April 30, 2002 $10,471 $11,047 $ 9,998
June 28, 2002 $ 9,588 $10,115 $ 9,472
July 31, 2002 $ 8,571 $ 9,042 $ 8,591
August 31, 2002 $ 8,542 $ 9,012 $ 8,656
September 30, 2002 $ 7,486 $ 7,898 $ 7,693
October 31, 2002 $ 7,697 $ 8,121 $ 8,263
November 30, 2002 $ 8,302 $ 8,759 $ 8,784
December 31, 2002 $ 7,929 $ 8,365 $ 8,403
January 31, 2003 $ 7,668 $ 8,090 $ 8,199
February 28, 2003 $ 7,417 $ 7,825 $ 7,980
March 31, 2003 $ 7,349 $ 7,753 $ 7,994
April 30, 2003 $ 7,890 $ 8,324 $ 8,697
May 31, 2003 $ 8,413 $ 8,875 $ 9,259
June 30, 2003 $ 8,606 $ 9,079 $ 9,375
July 31, 2003 $ 8,606 $ 9,079 $ 9,514
August 31, 2003 $ 8,828 $ 9,314 $ 9,663
September 30, 2003 $ 8,645 $ 9,120 $ 9,568
October 31, 2003 $ 9,138 $ 9,640 $10,154
November 30, 2003 $ 9,351 $ 9,865 $10,291
December 31, 2003 $ 9,786 $10,324 $10,926
January 31, 2004 $ 9,806 $10,345 $11,118
February 29, 2004 $10,049 $10,601 $11,356
March 31, 2004 $ 9,883 $10,427 $11,257
April 30, 2004 $ 9,845 $10,386 $10,982
May 31, 2004 $ 9,932 $10,478 $11,094
June 30, 2004 $10,175 $10,735 $11,356
July 31, 2004 $ 9,786 $10,324 $11,196
August 31, 2004 $ 9,757 $10,294 $11,355
September 30, 2004 $ 9,874 $10,417 $11,531
October 31, 2004 $ 9,971 $10,519 $11,723
November 30, 2004 $10,428 $11,002 $12,316
December 31, 2004 $10,631 $11,215 $12,728
January 31, 2005 $10,523 $11,102 $12.502
February 28, 2005 $11,061 $11,669 $12,921
March 31, 2005 $11,041 $11,648 $12,739
April 30, 2005 $10,738 $11,329 $12,510
May 31, 2005 $11,031 $11,638 $12,812
June 30, 2005 $11,168 $11,782 $12,952
The chart assumes $10,000 invested on August 3, 1999 and includes the
effect of a 5.25% front-end sales charge, as applicable and the
reinvestment of all dividends and capital gains. It is intended to
give you an ideal of how your fund performed compared to the index over
the period 08/03/99-06/30/05. It is important to understand the
differences between your fund and an index. An index measures the
performance of a hypothetical portfolio. A market index such as the
Russell 1000 Value Index is not managed and incurs no sales
charges, expenses or fees. If you could buy all the securities that
make up a market index, you would incur expenses that would affect your
investment's return. Returns shown do not reflect the deduction of the
taxes that a shareholder would pay on fund distributions or redemption of
fund shares. Past performance does not guarantee future
results.
Average Annual Total Returns Lifetime
Through June 30, 2005 One-Year Three-Year Five Year (Est. 8/3/99)
- - ----------------------------------------------------------------------------
Excluding Sales Charge 9.76% 5.22% 3.85% 2.81%
Including Sales Charge 3.99% 3.35 2.74% 1.88%
Returns reflect reinvestment of distributions and the effect of a 4.50%
front-end sales charge, as applicable. Return and share values will
fluctuate so that shares, when redeemed, may be worth more or less than
their original cost. Returns shown do not reflect the deduction of the
taxes that a shareholder would pay on fund distributions or redemption of
fund shares. Past performance is not a guarantee of future
results.
VIKING SMALL-CAP VALUE FUND
By: George C. Pierides, Senior Managing Director, Fox Asset Management, LLC
Shannon D. Radke, President
Viking Small-Cap Value Fund provided a return of 0.90% (at net asset value)
for the six months ended June 30, 2005.
Stocks worked their way lower in the first quarter of 2005, pressured by
surging oil prices and rising interest rates. The economy continued to
perform satisfactorily in the face of higher energy and capital costs,
although we remain concerned that growth may not be as robust as the
consensus expectation. While energy accounts for a lesser portion of GDP
than was the case during the oil crises of the 1970's, a continued rise in
energy prices should almost certainly retard growth, particularly as it
pertains to consumption spending. Continued increases in the cost of money
would further serve to dampen economic growth and adversely impact stock
valuations. Although corporations are cash-rich following three years of
economic growth and productivity gains, we also are concerned that higher
energy costs and interest rates may begin to weigh on the tiring consumer
segment, which accounts for more than two-thirds of the domestic economy.
Small-cap stocks succumbed to the same pressures that affected the major
stock-market indices in the first quarter with the Russell 2000 Value Index
declining 4.0%. Although those pressures were too much for the Fund to
overcome fully, our exposure to energy and underweight to financial services
and technology stocks aided results with the Fund posting a smaller loss.
Stocks finished a turbulent second quarter with mixed results, as crude oil
futures fluctuated widely and as concerns about inflation and a possible
economic slowdown roiled the markets. Signs that the economy may be cooling
from its rapid pace of recent years buoyed investor hopes that the Fed may
ease off the brakes earlier than expected, leading many investors to bid
financial shares higher. Yet, Greenspan & Co. indicated that it would
continue to hike rates to keep a lid on inflation, nudging the Fed funds rate
to 3.25% on June 30th. This latest action flattened the yield curve even
further, thus squeezing banks' net interest margins, especially those of
less diversified institutions that depend more heavily on this basic source
of income. It appears that while inflation is fairly well contained,
bond market investors may be concerned about a future slowdown or recession,
caused, perhaps, by climbing energy prices and/or real estate speculation.
For the second quarter the Dow had a small loss. The S&P 500 and Nasdaq
posted small gains. Small-cap stocks rebounded in the second quarter with
the Russell 2000 Value Index gaining 5.1%. The Fund lagged the strong small-
cap market, following its outperformance in the down market of the first
quarter. Weakness in certain of our cyclical names and our underweight to
the financial services sector proved to be a drag on results.
We continue to seek higher-quality companies whose earnings are not as
affected by economic slowdowns as are those whose earnings are far more
sensitive to changes in economic activity. Indeed, consistent earnings growth
is one of several markers of higher-quality companies, in our view. And it
is such companies that dominate our portfolio through all phases of economic
and stock market cycles but which take on greater importance in such an
environment.
Long-term total return and capital preservation remains the investment
objective of the Fund.
VIKING SMALL-CAP VALUE FUND
Growth of a $10,000 Investment
May 3, 1999 through June 30, 2005 (Unaudited)
Comparison of Change in Value of a $10,000 Investment in Viking
Small-Cap Value Fund vs. the Russell 2000 Value Index
[Comparative index graph]
Viking Small-Cap Viking Small-Cap Russell 2000
Value Fund Value Fund Value Index
with max sales charge without max sales charge
---------------------------------------------------------------------
May 3, 2001 $ 9,475 $10,000 $10,000
June 30, 2001 $ 9,697 $10,230 $10,665
July 31, 2001 $ 9,421 $ 9,940 $10,426
August 31, 2001 $ 9,299 $ 9,810 $10,390
September 30, 2001 $ 8,227 $ 8,680 $ 9,243
October 31, 2001 $ 8,682 $ 9,160 $ 9,484
November 30, 2001 $ 9,204 $ 9,710 $10,166
December 31, 2001 $ 9,725 $10,260 $10,788
January 31, 2002 $ 9,839 $10,380 $10,932
February 28, 2002 $ 9,754 $10,290 $10,998
March 31, 2002 $10,597 $11,180 $11,821
April 30, 2002 $10,891 $11,490 $12,238
May 31, 2002 $10,768 $11,360 $11,833
June 28, 2002 $10,332 $10,900 $11,571
July 31, 2002 $ 8,910 $ 9,400 $ 9,852
August 31, 2002 $ 8,986 $ 9,480 $ 9,808
September 30, 2002 $ 8,569 $ 9,040 $ 9,108
October 31, 2002 $ 8,682 $ 9,160 $ 9,245
November 30, 2002 $ 9,137 $ 9,640 $ 9,982
December 31, 2002 $ 8,863 $ 9,350 $ 9,556
January 31, 2003 $ 8,474 $ 8,940 $ 9,287
February 28, 2003 $ 8,483 $ 8,950 $ 8,975
March 31, 2003 $ 8,626 $ 9,100 $ 9,070
April 30, 2003 $ 9,156 $ 9,660 $ 9,932
May 31, 2003 $ 9,668 $10,200 $10,946
June 30, 2003 $ 9,829 $10,370 $11,132
July 31, 2003 $10,218 $10,780 $11,687
August 31, 2003 $10,692 $11,280 $12,131
September 30, 2003 $10,502 $11,080 $11,991
October 31, 2003 $11,175 $11,790 $12,969
November 30, 2003 $11,555 $12,190 $13,467
December 31, 2003 $11,782 $12,430 $13,954
January 31, 2004 $11,839 $12,490 $14,437
February 29, 2004 $12,028 $12,690 $14,716
March 31, 2004 $12,047 $12,710 $14,920
April 30, 2004 $11,848 $12,500 $14,148
May 31, 2004 $11,924 $12,580 $14,319
June 30, 2004 $12,645 $13,340 $15,046
July 31, 2004 $12,237 $12,910 $14,354
August 31, 2004 $12,265 $12,940 $14,495
September 30, 2004 $12,664 $13,360 $15,069
October 31, 2004 $12,758 $13,460 $15,303
November 30, 2004 $13,602 $14,350 $16,661
December 31, 2004 $13,886 $14,649 $17,058
January 31, 2005 $13,394 $14,131 $16,398
February 28, 2005 $13,857 $14,619 $16,724
March 31, 2005 $13,674 $14,426 $16,380
April 30, 2005 $13,066 $13,785 $15,535
May 31, 2005 $13,799 $14,558 $16,482
June 30, 2005 $14,011 $14,782 $17,211
The chart assumes $10,000 invested on May 3, 2001 and includes the
effect of a 5.25% front-end sales charge, as applicable and the
reinvestment of all dividends and capital gains. It is intended to
give you an ideal of how your fund performed compared to the index over
the period 05/03/01-06/30/05. It is important to understand the
differences between your fund and an index. An index measures the
performance of a hypothetical portfolio. A market index such as the
Russell 2000 Value Index is not managed and incurs no sales
charges, expenses or fees. If you could buy all the securities that
make up a market index, you would incur expenses that would affect your
investment's return. Returns shown do not reflect the deduction of the
taxes that a shareholder would pay on fund distributions or redemption of
fund shares. Past performance does not guarantee future
results.
Average Annual Total Returns Lifetime
Through June 30, 2005 One-Year Three-Year (Est. 5/3/01)
- - ----------------------------------------------------------------------
Excluding Sales Charge 10.81% 10.69% 9.83%
Including Sales Charge 4.98% 8.73% 8.43%
Returns reflect reinvestment of distributions and the effect of a 4.50%
front-end sales charge, as applicable. Return and share values will
fluctuate so that shares, when redeemed, may be worth more or less than
their original cost. Returns shown do not reflect the deduction of the
taxes that a shareholder would pay on fund distributions or redemption of
fund shares. Past performance is not a guarantee of future
results.
VIKING MUTUAL FUNDS
Statement of Investments (Unaudited)
June 30, 2005
Viking Tax-Free Fund for Montana
PRINCIPAL MARKET
AMOUNT VALUE
MUNICIPAL BONDS 95.0%
General Obligations 19.3%
Bozeman MT Ser A 4.95% 07/01/20 170,000 $181,586
Butte Silver Bow MT City & Cnty (AMBAC) 4.75% 07/01/11 210,000 229,601
Cascade Cnty MT High Sch A Great Falls 2.85% 07/01/05 225,000 225,000
Cascade Cnty MT High Sch A Great Falls 3.15% 07/01/06 100,000 100,475
Flathead Cnty MT Sch Dist No. 6 Columbia Falls 5.65% 07/01/19 75,000 82,398
Kalispell MT (MBIA) 4.625% 07/01/05 130,000 130,000
Misoula MT Ser A (FSA) 3.00% 07/01/09 250,000 253,755
MT St Long Range Building Pg-Ser G 4.00% 08/01/13 250,000 259,435
MT St Long Range Building Pg - Ser G 4.00% 08/01/16 250,000 257,155
MT St Water Pollution Ctl 5.60% 07/15/20 100,000 110,144
Puerto Rico Mun Fin Agy Ser A (FSA) 5.50% 08/01/23 250,000 271,255
Ravalli Cnty MT Sch Dist No. 003 Hamilton (FSA) 4.00% 07/01/16 80,000 82,123
Ravalli Cnty MT Sch Dist No. 003 Hamilton (FSA) 4.65% 07/01/09 105,000 110,325
Yellowstone & Carbon Cntys Elem Sch Dist (MBIA) 4.25% 07/01/24 200,000 202,764
---------
2,496,016
---------
Continuing Care Revenue Bonds 1.9%
MT Fac Fin Auth Marias Med Ctr 3.80% 01/01/10 175,000 175,585
MT St Hlth Facs Auth Rev Hillcrest Sr Ctr 6.90% 06/01/15 30,000 31,257
MT St Hlth Facs Auth Rev Hillcrest Sr Ctr 7.25% 06/01/25 35,000 36,817
---------
243,659
---------
Higher Education Revenue Bonds 13.6%
MT St Hgher Ed Stud Assist Corp Rev Ser B 6.40% 12/01/32 415,000 443,701
MT St Brd Regents (MSU) Rev Facs Imp-E (AMBAC) 5.00% 11/15/21 80,000 85,010
MT Brd Regents (U of M) Hgher Ed Rev Ser F (MBIA) 5.75% 05/15/24 150,000 169,806
Puerto Rico Tour Edl Med & Env Facs Mendez Univ 5.375% 02/01/19 75,000 79,358
*Univ of MT Revs Facs Acq & Imp Ser C (MBIA) 5.00% 11/15/17 140,000 143,587
Univ of MT Revs Higher Ed Facs Imp Ser D (MBIA) 5.375% 05/15/15 75,000 79,788
Univ of MT Revs Higher Ed Facs Imp Ser D (MBIA) 5.375% 05/15/19 370,000 423,332
Univ Puerto Rico Revs Ser O (MBIA) 5.75% 06/01/17 300,000 335,634
---------
1,760,216
---------
Hospital Revenue Bonds 21.7%
MT Hlth Fac Fin Auth Rev Mstr Ln Program Comm Med Ctr 5.20% 12/01/21 145,000 151,647
MT Fac Fin Auth Providence Serv (MBIA) 4.60% 12/01/18 150,000 159,810
MT Fac Fin Auth Providence Serv (MBIA) 5.00% 12/01/18 500,000 535,000
MT Fac Fin Auth Providence Serv (MBIA) 4.80% 12/01/20 200,000 214,758
*MT Hlth Fac Auth Sisters Chrty Leavenworth (MBIA) 5.125% 12/01/18 200,000 214,860
MT Hlth Fac Auth Sisters Chrty Leavenworth (MBIA) 5.00% 12/01/24 515,000 537,588
MT St Hlth Fac Auth Rev Comm Med Ctr 6.375% 06/01/18 370,000 383,020
MT St Hlth Fac Auth Rev Holy Rosary Pre-Ref (MBIA) 5.25% 07/01/20 130,000 130,000
*MT St Hlth Fac Auth Rev Kalispell Med Ctr (AMBAC) 5.00% 07/01/16 450,000 478,525
---------
2,805,208
---------
Housing Revenue Bonds 14.4%
*MT St Brd Hsg Sngle Fam Mtg Ser A-2 5.75% 06/01/30 80,000 80,208
*MT St Brd Hsg Sngle Fam Ser A-2 5.50% 12/01/20 95,000 95,439
*MT St Brd Hsg Sngle Fam Ser A-2 5.60% 12/01/23 75,000 75,413
MT St Brd Hsg Sngle Fam Ser A-2 5.20% 12/01/22 130,000 134,261
MT St Brd Hsg Sngle Fam Ser B-2 4.85% 12/01/15 135,000 138,957
MT St Brd Hsg Sngle Fam Prog Ser C 3.95% 06/01/11 190,000 194,505
MT St Brd Hsg Sngle Fam Prog Ser B 4.55% 12/01/11 400,000 415,724
MT St Brd Hsg Sngle Fam Mtg Ser A 4.30% 06/01/12 250,000 254,002
MT St Brd Hsg Sngle Fam Mtg Ser A 4.30% 12/01/12 480,000 488,688
---------
1,608,883
---------
Psychiatric and Substance Abuse Hospital Bonds 9.4%
MT Fac Fin Auth Developmental Ctr Prog 4.50% 06/01/16 250,000 257,785
MT Fac Fin Auth Developmental Ctr Prog 4.75% 06/01/19 170,000 178,262
MT Fac Fin Auth Childrens Home 4.55% 01/01/17 250,000 254,323
MT St Hlth Fac Auth Hlth Care Rev State Hosp (AMBAC) 5.00% 06/01/22 500,000 526,870
---------
1,217,240
---------
Transportation Revenue Bonds 4.1%
MT St Dept Trans Rev Grant Antic Hwy 93 (MBIA) 4.00% 06/01/14 250,000 257,288
Puerto Rico Hwy & Trans Auth Rev Ser G (FGIC) 5.25% 07/01/20 250,000 275,525
---------
532,813
---------
Water Revenue Bonds 0.8%
Great Falls MT Wtr Sys Rev Ref Ser A (AMBAC) 3.85% 08/01/08 100,000 102,968
---------
102,968
---------
Other Revenue Bonds 9.8%
MT St Brd Invt Refunded 1996 Pay Tax (MBIA) 6.875% 06/01/20 105,000 115,446
MT St Brd Invt Refunded 1996 Pay Tax (MBIA) 6.875% 06/01/20 105,000 115,406
Puerto Rico Childrens Trust Fund Tobacco Settlement Rev 6.00% 07/01/26 195,000 221,413
Puerto Rico Comwlth Aqueduct & Swr Auth Rev (MBIA) 5.00% 07/01/19 125,000 130,377
Puerto Rico Comwlth Infra Fing Auth Ser A (AMBAC) 5.00% 07/01/21 250,000 265,133
Puerto Rico Comwlth Inf Fin Auth Ser A (AMBAC) 5.25% 07/01/10 100,000 107,493
Puerto Rico Pub Fin Corp Ser A (MBIA) 5.50% 08/01/17 275,000 310,621
---------
1,265,889
----------
Total Municipal Bonds (cost $11,996,221) 12,301,206
SHORT-TERM INVESMENTS 2.0%
Federated Municipal Obligations Fund #852 100,000 100,000
Franklin Double Tax-Free Income Fund 12,323 149,350
----------
Total Short-Term Investments (cost: $248,725) 249,350
---------
TOTAL MARKET VALUE OF SECURITIES OWNED 97.0% (COST $12,244,946) 12,550,556
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES 3.0% 393,457
-----------
NET ASSETS APPLICABLE TO 1,269,248 SHARES (0.001 PAR VALUE) OUTSTANDING - 100.0% $12,944,013
===========
*Indicates bonds are segregated by the custodian to cover when-issued or
delayed-delivery purchases.
The accompanying notes are an integral part of these financial statements.
Summary of Abbreviations:
AMBAC Insured by the AMBAC Indemnity Corporation
FGIC Insured by the Financial Guaranty Insurance Company
FSA Insured by Financial Security Assurance
MBIA Insured by the Municipal Bond Insurance Association
VIKING MUTUAL FUNDS
Statement of Investments (Unaudited)
June 30, 2005
Viking Tax-Free Fund for North Dakota
PRINCIPAL MARKET
AMOUNT VALUE
MUNICIPAL BONDS 98.0%
General Obligations 23.7%
*Bismarck ND Ref & Imp - Ser L 4.00% 06/01/07 75,000 $75,105
Bismarck ND Ref & Imp - Ser P 2.90% 05/01/12 100,000 97,608
Bismarck ND Pub Sch Dist No 1 (FGIC) 4.50% 05/01/16 55,000 56,655
*Fargo ND Ref & Imp - Ser B (FGIC) 5.125% 05/01/17 60,000 63,137
Fargo ND Ref & Impt Ser D (MBIA) 5.00% 05/01/28 200,000 209,980
Hillsboro ND Pub Sch Dist No. 9 (FSA) 4.85% 06/01/19 50,000 51,672
*Jamestown ND Pub Sch Dist No. 011 (FGIC) 4.60% 05/01/15 50,000 52,191
*Mandan ND Ref & Imp - Ser B (MBIA) 5.00% 05/01/16 70,000 71,669
Mandan ND Ref Impt Ser C (AMBAC) 4.00% 05/01/18 150,000 153,052
Puerto Rico Commonwealth (MBIA) 5.375% 07/01/25 50,000 52,472
Wahpeton ND Pub Sch Dist No 37 (FSA) 4.10% 05/01/15 100,000 101,547
*West Fargo ND Ref & Imp 5.00% 05/01/08 250,000 264,757
West Fargo ND Ref & Impt (AMBAC) 4.00% 05/01/15 200,000 205,550
West Fargo ND Pub Sch Dist No. 006 (FGIC) 5.00% 05/01/14 50,000 54,039
---------
1,509,434
---------
Building Authority Revenue Bonds 5.7%
Fargo ND Bldg Auth Lease Rev Ser A 5.00% 05/01/20 50,000 52,948
ND St Bldg Auth Lease Rev Ser A (MBIA) 5.00% 12/01/17 50,000 53,233
ND St Bldg Auth Lease Rev Ser A (MBIA) 5.00% 12/01/16 50,000 53,634
ND St Bldg Auth Lease Rev Ser A (MBIA) 5.20% 12/01/19 90,000 96,695
ND St Bldg Auth Lease Rev Ser C (AMBAC) 4.20% 08/15/13 100,000 103,979
---------
360,489
---------
Education Revenue Bonds 6.5%
Fargo ND School District Bldg Auth Rev (MBIA) 5.50% 05/01/14 50,000 53,847
Minot Pub School District No 1 Bldg Auth 4.80% 05/01/23 250,000 257,867
West Fargo Pub School District Bldg Auth Lease Rev 4.20% 05/01/17 100,000 101,189
---------
412,903
---------
Higher Education Revenue Bonds 14.7%
Fargo ND Lease Rev NDSU Lease Oblig Ser-A (AMBAC) 3.50% 05/01/09 60,000 60,503
ND St Brd Hgher Ed Rev Hsg & Aux Facs UND (FGIC) 5.00% 04/01/18 250,000 268,558
ND St Brd Hgher Ed Rev Hsg & Aux Facs UND (FGIC) 4.375% 04/01/26 100,000 101,476
ND St Brd Hgher Ed Rev Hsg & Aux Facs NSDU (FGIC) 4.00% 04/01/15 150,000 154,118
ND St Brd Hgher Ed Rev Hsg & Aux BSC 4.75% 05/01/19 100,000 99,972
Puerto Rico Tour Edl Med & Env Facs Mendez Univ 5.375% 02/01/19 25,000 26,453
Univ Puerto Rico Revs Ser O (MBIA) 5.75% 06/01/17 200,000 223,756
---------
934,836
---------
Hospital Revenue Bonds 12.8%
Burleigh Cnty ND Hlth Care MedCenter One (MBIA) 5.25% 05/01/12 325,000 344,636
Fargo ND Hlth Sys Rev Meritcare Ser A (MBIA) 5.375% 06/01/27 100,000 105,418
Fargo ND Hlth Sys Rev Meritcare Obl (FSA) 5.375% 06/01/15 65,000 69,909
Fargo ND Hlth Sys Rev Meritcare Obl (AMBAC) 4.125% 06/01/11 150,000 156,489
Fargo ND Hlth Sys Rev Meritcare Obl (AMBAC) 5.00% 06/01/22 45,000 46,792
Grand Forks ND Hlth Care Altru Hlth Obl Group (MBIA) 5.60% 08/15/17 20,000 21,116
Grand Forks ND Hlth Care Altru Hlth Obl Group 7.125% 08/15/24 20,000 21,883
Valley City ND Rev Ref Lutheran Hlth Ser A-5 (MBIA) 4.20% 01/01/06 25,000 25,110
Ward Cnty ND Hlth Care Facs Rev Trinity Obl Group - B 6.00% 07/01/10 25,000 26,275
---------
817,628
---------
Housing Revenue Bonds 13.6%
Fargo ND Multifam Rev Ref Hsg Trollwood Village 6.90% 09/01/13 25,000 25,473
ND St Hsg Fin Agy Home Mtg Ser B 3.50% 07/01/10 295,000 296,767
ND St Hsg Fin Agy Rev Home Mtg Prog C 4.90% 07/01/15 150,000 156,317
ND St Hsg Fin Agy Rev Hsg Fin Home Mtg-C-RMK 6.10% 01/01/15 200,000 203,052
ND St Hsg Fin Agy Hsg Fin Home MTG-C-RMK 6.10% 07/01/28 10,000 10,000
ND St Hsg Fin Agy Rev Hsg Fin Pg Home Mtg B 5.85% 07/01/28 5,000 5,000
ND St Hsg Fin Agy Rev Hsg Fin Pg Home Mtg D 5.05% 01/01/06 10,000 10,015
ND St Hsg Fin Agy Rev Hsg Fin Pg Home Mtg A 5.25% 07/01/18 70,000 60,123
*ND St Hsg Fin Agy Rev Hsg Fin Pg Home Mtg A 5.55% 07/01/22 95,000 96,711
---------
863,458
---------
Transportation Revenue Bonds 2.5%
Guam Intl Arpt Auth Ser C (MBIA) 5.375% 10/01/17 150,000 164,127
---------
164,127
---------
Water Revenue Bonds 5.6%
ND St Water Comm Rev Water Dev & Mgmt Prg Ser A (MBIA) 5.50% 08/01/10 50,000 56,229
ND St Water Comm Rev Ref Prog Ser A (MBIA) 4.00% 08/01/13 150,000 148,688
South Central Reg Water Dist Burleigh Cnty Rev 5.00% 10/01/23 150,000 147,906
---------
359,145
---------
Other Revenue Bonds 12.9%
Grand Forks ND Sales Tax Rev Aurora Project Ser A (MBIA) 5.625% 12/15/29 185,000 195,634
*Grand Forks ND Sales Tax Rev Dike Imp (AMBAC) 4.50% 09/01/10 50,000 52,829
Grand Forks ND Sales Tax Rev Dike Imp (AMBAC) 5.00% 09/01/17 145,000 155,805
Grand Forks ND Sales Tax Rev (MBIA) 3.50% 12/15/10 150,000 152,514
ND St Muni Bond Bank Cap Fing Prog 6.00% 06/01/21 25,000 26,181
ND St Muni Bond Bank St Revolv Fund Prog - Ser A 4.90% 10/01/18 50,000 52,216
Puerto Rico Childrens Trust Fund Tobacco Settlement Rev 6.00% 07/01/26 15,000 17,032
Puerto Rico Pub Fin Corp Ser A (MBIA) 5.375% 08/01/24 150,000 167,680
---------
819,891
---------
Total Municipal Bonds (cost $6,110,348) 6,241,911
SHORT-TERM INVESMENTS 1.0%
Federated Municipal Obligations Fund #852 66,000 66,000
----------
Total Short-Term Investments (cost: $66,000) 66,000
---------
TOTAL MARKET VALUE OF SECURITIES OWNED 99.0% (COST $6,176,348) 6,307,911
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES 1.0% 60,056
----------
NET ASSETS APPLICABLE TO 616,985 SHARES (0.001 PAR VALUE) OUTSTANDING - 100.00% $6,367,967
==========
*Indicates bonds are segregated by the custodian to cover when-issued or
delayed-delivery purchases.
The accompanying notes are an integral part of these financial statements.
Summary of Abbreviations:
AMBAC Insured by the AMBAC Indemnity Corporation
FGIC Insured by the Financial Guaranty Insurance Company
FSA Insured by Financial Security Assurance
MBIA Insured by the Municipal Bond Insurance Association
VIKING MUTUAL FUNDS
Statement of Investments (Unaudited)
June 30, 2005
Viking Large-Cap Value Fund
SHARES VALUE
Common Stocks 88.9%
Appliance & Tool 2.0%
Whirlpool 900 $63,099
--------
63,099
--------
Banks/Financial Services 12.9%
Bank of America 1,400 63,854
Citigroup 2,300 106,329
JP Morgan Chase 800 28,256
Merrill Lynch 600 33,006
Morgan Stanley 1,000 52,470
National City 1,000 34,120
U.S. Bancorp 1,600 46,720
Washington Mutual 1,200 48,828
--------
413,583
--------
Building Materials 2.7%
Masco Corporation 2,700 85,752
--------
85,752
--------
Chemical 1.0%
Dow Chemical 700 31,171
--------
31,171
--------
Computer/Communications Related 5.2%
Hewlett-Packard 3,000 70,530
International Rectifier* 2,000 95,440
--------
165,970
--------
Drug 5.2%
Merck 2,000 61,600
Phizer 3,800 104,804
--------
166,404
--------
Drug Distribution 4.3%
Amerisource Bergen 500 34,575
CVS Corp. 3,600 104,652
--------
139,227
--------
Energy 13.5%
Anadarko Petroleum 1,000 82,150
Apache 1,300 83,980
ChevronTexaco 1,600 89,472
ConocoPhillips 2,000 114,980
Exxon Mobil 1,100 63,217
--------
433,799
--------
Entertainment 1.6%
Disney 2,100 52,878
--------
52,878
--------
Food 3.5%
Dean Foods* 1,900 66,956
Sara Lee 2,300 45,563
--------
112,519
--------
Household Products 2.5%
Kimberly-Clark 1,300 81,367
--------
81,367
--------
Industrial Products 2.4%
Ingersoll-Rand 1,100 78,485
--------
78,485
--------
Insurance 5.0%
Hartford Financial Services Group 800 59,824
MBIA, Inc. 700 41,517
Partnerre Ltd. 900 57,978
--------
159,319
--------
Medical Services / Supplies 3.8%
Health Management Associates 2,100 54,978
Triad Hospital* 1,200 65,568
--------
120,546
--------
Metals 3.0%
ALCOA 2,800 73,164
Rio Tinto Plc ADR 200 24,384
--------
97,548
--------
Multi-Industry 3.0%
Honeywell 800 29,304
ITT Industries 700 68,341
--------
97,645
--------
Packaging 2.7%
Sealed Air* 1,700 84,643
--------
84,643
--------
Retail 1.6%
BJ's Wholesale* 1,600 51,984
--------
51,984
--------
Telecommunications 1.7%
Verizon Communications 1,600 55,280
--------
55,280
--------
Transportation 4.2%
Canadian Pacific 900 31,059
Union Pacific 1,600 103,680
--------
134,739
--------
Utilities 7.1%
American Electric Power 1,800 66,366
Dominion Resources 1,300 95,407
Public Service Enterprise Group 1,100 66,902
--------
228,675
--------
Total Common Stocks (Cost $2,241,137) 2,854,633
SHORT-TERM INVESTMENTS 9.2%
Federated Prime Value Obligations #853 140,000 140,000
Federated Treasury Cash Reserves #125 156,000 156,000
----------
Total Short-Term Investments (cost: $296,000) 296,000
----------
TOTAL MARKET VALUE OF SECURITIES OWNED 98.1% (COST $2,537,137) 3,150,633
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES 1.9% 60,983
----------
NET ASSETS APPLICABLE TO 280,966 SHARES ($0.001 PAR VALUE)
OUTSTANDING 100.0% $3,211,616
==========
*Non-income producing investments.
The accompanying notes are an integral part of these financial statements.
VIKING MUTUAL FUNDS
Statement of Investments (Unaudited)
June 30, 2005
Viking Small-Cap Value Fund
SHARES VALUE
Common Stocks 89.5%
Auto Related 2.6%
Borg Warner 1,000 $53,670
--------
53,670
--------
Basic Materials 5.2%
Albany International 2,000 64,220
Maverick Tube 1,500 44,700
--------
108,920
--------
Cement 2.4%
Lafarge 800 49,952
--------
49,952
--------
Chemical 3.0%
RPM 3,400 62,084
--------
62,084
--------
Computer/Communications Related 2.0%
International Rectifier* 900 42,948
--------
42,948
--------
Construction/Engineering 1.6%
Granite Construction 1,200 33,720
--------
33,720
--------
Drug Distribution 2.1%
Par Pharmaceutical Companies* 1,400 44,534
--------
44,534
--------
Electrical Equipment 3.0%
Belden CDT 3,000 63,600
--------
63,600
--------
Electronics 3.5%
Bel Fuse Cl. B 1,400 42,784
Technitrol 2,100 29,673
--------
72,457
--------
Energy 14.0%
Cimarex Energy 600 23,346
Newfield Exploration* 1,600 63,824
Piedmont Natural Gas 3,000 72,060
Questar 1,300 85,670
Spinnaker Explorations* 1,400 49,686
--------
294,586
--------
Food Processing 2.0%
Performance Food Group* 1,400 42,294
--------
42,294
--------
Food Wholesalers/Retailers 0.8%
SuperValue 500 16,305
--------
16,305
--------
Household Products 4.8%
Church & Dwight 1,950 70,590
Libbey 1,900 30,039
--------
100,629
--------
Industrial Products 6.6%
AO Smith 2,100 56,091
CLARCOR 400 11,700
Teleflex 1,200 71,244
--------
139,035
--------
Insurance 4.9%
Protective Life 1,400 59,108
Scottish RE Group Ltd 1,800 43,632
--------
102,740
--------
Medical Services/Supplies 8.9%
Conmed* 1,700 52,309
Mentor 500 20,740
Owens & Minor 900 29,115
Polymedica 1,500 53,490
West Pharm. Services 1,100 30,855
--------
186,509
--------
Packaging 3.4%
Aptar Group 1,400 71,120
--------
71,120
--------
Restaurant 6.9%
Applebee's International 1,500 39,735
CBRL Group 1,600 62,176
Landry's Seafood Restaurants 1,000 30,090
Outback Steakhouse 400 18,096
--------
150,097
--------
Retail 4.2%
BJ's Wholesale* 1,300 42,237
Claire's Stores 1,900 45,695
--------
87,932
--------
Toy 2.1%
RC2 Corp.* 1,200 45,084
--------
45,084
--------
Transportation 5.2%
Arkansas Best 2,000 63,620
Yellow Roadway* 900 45,720
--------
109,340
--------
Total Common Stocks (Cost $1,423,455) 1,877,556
SHORT-TERM INVESTMENTS 14.2%
Federated Prime Value Obligations Fund #853 101,000 101,000
Federated Treasury Cash Reserves #125 100,000 100,000
First Western Collective Asset 98,000 98,000
----------
Total Short-Term Investments (Cost $299,000) 299,000
TOTAL MARKET VALUE OF SECURITIES OWNED 103.7% (COST $1,722,455) 2,176,556
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES (1.6)% (78,429)
----------
NET ASSETS APPLICABLE TO 144,396 SHARES ($0.001 PAR VALUE)
OUTSTANDING 100.0% $2,098,127
==========
*Non-income producing investments.
The accompanying notes are an integral part of these financial statements.
VIKING MUTUAL FUNDS
Financial Statements
Statements of Assets and Liabilities (Unaudited)
June 30, 2005
Tax-Free Fund Tax-Free Fund Large-Cap Small-Cap
for Montana for North Dakota Value Fund Value Fund
ASSETS:
Investments in securities:
Cost $12,244,946 $6,176,348 $2,537,137 $1,722,455
------------------------------------------------------------------------------------
Value 12,550,556 6,307,911 3,150,633 2,176,556
Cash 1,714 17,429 25,471 47,526
Receivable for fund shares sold 313,013 0 0 0
Prepaid assets 845 326 743 606
Security sales receivable 0 0 34,517 0
Interest & dividends receivable 134,480 65,926 6,667 1,856
------------------------------------------------------------------------------------
Total assets 13,000,608 6,391,592 3,218,031 2,226,544
------------------------------------------------------------------------------------
LIABILITIES:
Security purchases payable 0 0 0 122,550
Distributions payable 37,977 18,793 0 0
Other accounts payable and
accrued expenses 18,618 4,832 6,415 5,867
------------------------------------------------------------------------------------
Total liabilities 56,595 23,625 6,415 128,417
------------------------------------------------------------------------------------
NET ASSETS 12,944,013 6,367,967 3,211,616 2,098,127
------------------------------------------------------------------------------------
COMPONENTS OF NET ASSETS AT JUNE 30, 2005
Capital shares, $0.001 par value,
unlimited shares authorized 12,719,783 6,276,640 2,781,931 1,628,308
Net unrealized appreciation
(depreciation) 305,610 131,563 613,496 454,101
Accumulated net realized gain
(loss) on investments (81,380) (40,236) (194,051) 18,099
Undistributed net investment
income (loss) 0 0 0 (2,381)
------------------------------------------------------------------------------------
NET ASSETS $12,944,013 $6,367,967 $3,211,616 $2,098,127
------------------------------------------------------------------------------------
NET ASSET VALUE AND
OFFERING PRICE PER SHARE
Net assets, at value $12,944,013 $6,367,967 $3,211,616 $2,098,127
Shares outstanding 1,269,248 616,985 280,966 144,396
Net asset value per share $10.20 $10.32 $11.43 $14.53
Maximum offering price per share
(net asset value per share divided
by 96.25%, 96.25%, 94.75% and
94.75%, respectively) $10.60 $10.72 $12.06 $15.34
------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
VIKING MUTUAL FUNDS
Financial Statements
Statements of Operations
For the six months ended June 30, 2005
Tax-Free Fund Tax-Free Fund Large-Cap Small-Cap
for Montana for North Dakota Value Fund Value Fund
-------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $254,940 $128,429 $ 0 $ 0
Dividends 2,350 1,138 29,783 12,299
-------------------------------------------------------------------------------------
Total investment income 257,290 129,567 29,783 12,299
-------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 30,786 15,552 10,134 8,897
Administrative fees 6,157 3,111 1,448 890
Distribution fees 15,316 7,776 5,791 3,559
Transfer agent fees 1,587 856 1,697 1,326
Accounting fees 3,079 1,555 724 496
Professional fees 4,177 4,233 4,190 4,136
Insurance 1,618 737 376 199
Trustee fees 699 696 705 705
Registration fees 501 63 317 338
Custodian fees 1,840 1,837 1,677 1,677
Other 53 39 167 80
-------------------------------------------------------------------------------------
Total expenses 65,813 36,455 27,226 22,303
-------------------------------------------------------------------------------------
Less expenses waived or
reimbursed (33,567) (20,386) (7,683) (7,623)
------------------------------------------------------------------------------------
Net expenses 32,246 16,069 19,543 14,680
-------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 225,044 113,498 10,240 (2,381)
-------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss)
on investments (38,199) (11,934) 151,822 16,742
Net change in unrealized
appreciation (depreciation)
of investments 19,478 30,708 (24,141) 6,395
-------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS (18,721) 18,774 127,681 23,137
-------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS $206,323 $132,272 $137,921 $20,756
-------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
VIKING MUTUAL FUNDS
Financial Statements
Statements of Changes in Net Assets (Unaudited)
For the six months ended June 30, 2005
Tax-Free Fund Tax-Free Fund Large-Cap Small-Cap
for Montana for North Dakota Value Fund Value Fund
-------------------------------------------------------------------------------------
INCREASE (DECREASE) IN
NET ASSETS FROM
OPERATIONS:
Net investment income (loss) $225,044 $113,498 $10,240 $(2,381)
Net realized gain (loss)
on investments (38,199) (11,934) 151,822 16,742
Net change in unrealized
appreciation (depreciation)
of investments 19,478 30,706 (24,141) 6,395
-------------------------------------------------------------------------------------
Net increase (decrease) in
net assets resulting
from operations 206,323 132,272 137,921 20,756
-------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (225,044) (113,498) 0 0
Net realized gains 0 0 0 0
-------------------------------------------------------------------------------------
Total distributions to
shareholders (225,044) (113,498) 0 0
-------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 1,425,722 331,154 424,519 466,619
Proceeds from reinvestment
of distributions 147,815 72,325 13,522 29,578
Cost of shares repurchased (816,707) (140,556) (452,483) (133,377)
-------------------------------------------------------------------------------------
Increase in net assets
derived from capital share
transactions 756,830 262,923 (14,442) 362,820
-------------------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS $738,109 $281,697 $123,479 $383,576
-------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period $12,205,904 $6,086,270 $3,088,137 $1,714,551
-------------------------------------------------------------------------------------
End of period $12,944,013 $6,367,967 $3,211,616 $2,098,127
-------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
VIKING MUTUAL FUNDS
Financial Statements
Statements of Changes in Net Assets
For the twelve months ended December 31, 2004
Tax-Free Fund Tax-Free Fund Large-Cap Small-Cap
for Montana for North Dakota Value Fund Value Fund
-------------------------------------------------------------------------------------
INCREASE (DECREASE) IN
NET ASSETS FROM
OPERATIONS:
Net investment income (loss) $467,382 $201,952 $13,634 $(6,774)
Net realized gain (loss)
on investments 354 (10,980) (5,153) 38,977
Net change in unrealized
appreciation (depreciation)
of investments 10,976 8,266 234,632 222,381
-------------------------------------------------------------------------------------
Net increase (decrease) in
net assets resulting
from operations 478,712 199,238 243,113 254,584
-------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (467,382) (201,952) (13,634) -
Net realized gains - - - (29,579)
-------------------------------------------------------------------------------------
Total distributions to
shareholders (467,382) (201,952) (13,634) (29,579)
-------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 1,832,422 1,980,510 340,357 403,263
Proceeds from reinvestment
of distributions 328,201 129,141 16,147 -
Cost of shares repurchased (2,600,299) (802,095) (242,465) (163,353)
-------------------------------------------------------------------------------------
Increase in net assets
derived from capital share
transactions (439,676) 1,307,556 114,039 239,910
-------------------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS $(428,346) $1,304,842 $343,518 $464,915
-------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period $12,634,250 $4,781,428 $2,744,619 $1,249,636
-------------------------------------------------------------------------------------
End of period $12,205,904 $6,086,270 $3,088,137 $1,714,551
-------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
VIKING MUTUAL FUNDS
Financial Highlights
Viking Tax-Free Fund for Montana
Selected data for each share of the Fund outstanding throughout each period
were as follows:
For the Period
01/01/05- 01/01/04- 01/01/03- 01/01/02- 01/01/01- 01/01/00-
06/30/05 12/31/04 12/31/03 12/31/02 12/31/01 12/31/00
--------------------------------------------------------------------------
Net asset value, beginning of period $10.22 $10.20 $10.18 $9.74 $9.82 $9.41
--------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 0.19 0.38 0.42 0.46 0.51 0.52
Net realized and unrealized gain
(loss) on investments (0.02) 0.02 0.02 0.48 (0.08) 0.41
--------------------------------------------------------------------------
Total from investment operations 0.17 0.40 0.44 0.94 0.43 0.93
--------------------------------------------------------------------------
Less distributions from:
Net investment income (0.19) (0.38) (0.42) (0.46) (0.51) (0.52)
Net realized gains 0.00 0.00 0.00 (0.04) 0.00 0.00
--------------------------------------------------------------------------
Total distributions (0.19) (0.38) (0.42) (0.50) (0.51) (0.52)
--------------------------------------------------------------------------
Net asset value, end of period $10.20 $10.22 $10.20 $10.18 $9.74 $9.82
--------------------------------------------------------------------------
Total return1 1.44% 4.05% 4.45% 9.90% 4.48% 10.23%
--------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000's) $12,944 $12,206 $12,634 $8,513 $3,549 $1,131
Ratio of net expenses to average net assets 0.52%2,3 0.41%2 0.31%2 0.15%2 0.06%2 0.01%2
Ratio of net investment income to
average net assets 3.62%3 3.78% 4.13% 4.58% 5.06% 5.13%
Portfolio turnover rate 16.54% 26.55% 24.72% 40.09% 6.14% 21.12%
1Total return assumes reinvestment of distributions at net asset value, does
not reflect the impact of a sales charge and is not annualized.
2Viking Fund Management, LLC, the Fund's investment manager, has contractually
agreed to waive its fees or reimburse the Fund for its expenses through August
1, 2009 so that the Fund's total operating expenses during this period will not
exceed 0.85% of its average net assets on an annual basis. For the periods
indicated above, Viking Fund Management, LLC waived fees and reimbursed expenses
totaling $33,567, $80,645, $81,954, $67,712, $30,300 and $17,505. If the fees
had not been waived or expenses had not been reimbursed, the annualized ratio
of total expenses to average net assets would have been 1.06%, 1.06%, 1.09%,
1.30%, 1.60% and 4.79% respectively.
3Annualized
The accompanying notes are an integral part of these financial statements.
VIKING MUTUAL FUNDS
Financial Highlights
Viking Tax-Free Fund for North Dakota
Selected data for each share of the Fund outstanding throughout each period
were as follows:
For the Period
01/01/05- 01/01/04- 01/01/03- 01/01/02- 01/01/01- 01/01/00-
06/30/05 12/31/04 12/31/03 12/31/02 12/31/01 12/31/00
--------------------------------------------------------------------------
Net asset value, beginning of period $10.29 $10.29 $10.25 $9.76 $9.95 $9.47
--------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 0.19 0.38 0.42 0.47 0.51 0.55
Net realized and unrealized gain
(loss) on investments 0.03 0.00 0.04 0.49 (0.19) 0.48
--------------------------------------------------------------------------
Total from investment operations 0.22 0.38 0.46 0.96 0.32 1.03
--------------------------------------------------------------------------
Less distributions from:
Net investment income (0.19) (0.38) (0.42) (0.47) (0.51) (0.55)
Net realized gains 0.00 0.00 0.00 0.00 0.00 0.00
--------------------------------------------------------------------------
Total distributions (0.19) (0.38) (0.42) (0.47) (0.51) (0.55)
--------------------------------------------------------------------------
Net asset value, end of period $10.32 $10.29 $10.29 $10.25 $9.76 $9.95
--------------------------------------------------------------------------
Total return1 2.13% 3.76% 4.60% 10.07% 3.26% 11.30%
Ratios/supplemental data:
Net assets, end of period (000's) $6,368 $6,086 $4,781 $2,059 $1,614 $327
Ratio of net expenses to average net assets 0.52%2,3 0.44%2 0.36%2 0.22%2 0.11%2 0.05%2
Ratio of net investment income to
average net assets 3.64%3 3.68% 4.06% 4.73% 4.85% 5.73%
Portfolio turnover rate 11.52% 22.36% 7.49% 27.95% 3.83% 16.16%
1Total return assumes reinvestment of distributions at net asset value, does
not reflect the impact of a sales charge and is not annualized.
2Viking Fund Management, LLC, the Fund's investment manager, has contractually
agreed to waive its fees or reimburse the Fund for its expenses through August
1, 2009 so that the Fund's total operating expenses during this period will not
exceed 0.85% of its average net assets on an annual basis. For the periods
indicated above, Viking Fund Management, LLC waived fees and reimbursed
expenses totaling $20,386, $40,375, $32,710, $30,993, $16,352 and $15,441.
If the fees had not been waived or expenses had not been reimbursed, the
annualized ratio of total expenses to average net assets would have been
1.17%, 1.18%, 1.32%, 1.90%, 2.57% and 7.10% respectively.
3Annualized.
The accompanying notes are an integral part of these financial statements.
VIKING MUTUAL FUNDS
Financial Highlights
Viking Large-Cap Value Fund
Selected data for each share of the Fund outstanding throughout each period
were as follows:
For the Period
01/01/05- 01/01/04- 01/01/03- 01/01/02- 01/01/01- 01/01/00-
06/30/05 12/31/04 12/31/03 12/31/02 12/31/01 12/31/00
--------------------------------------------------------------------------
Net asset value, beginning of period $10.88 $10.06 $8.20 $10.74 $11.08 $9.90
--------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 0.04 0.05 0.06 0.06 0.04 0.07
Net realized and unrealized gain
(loss) on investments 0.51 0.82 1.86 (2.54) (0.34) 1.18
--------------------------------------------------------------------------
Total from investment operations 0.55 0.87 1.92 (2.48) (0.30) 1.25
--------------------------------------------------------------------------
Less distributions from:
Net investment income 0.00 (0.05) (0.06) (0.06) (0.04) (0.07)
Net realized gains 0.00 0.00 0.00 0.00 0.00 0.00
--------------------------------------------------------------------------
Total distributions 0.00 (0.05) (0.06) (0.06) (0.04) (0.07)
--------------------------------------------------------------------------
Net asset value, end of period $11.43 $10.88 $10.06 $8.20 $10.74 $11.08
--------------------------------------------------------------------------
Total return1 5.06% 8.63% 23.42% (23.08)% (2.73)% 12.67%
Ratios/supplemental data:
Net assets, end of period (000's) $3,212 $3,088 $2,745 $1,962 $2,143 $1,367
Ratio of net expenses to average net assets 1.32%2,3 1.34%2 1.35%2 1.35%2 1.35%2 1.35%2
Ratio of net investment income to
average net assets 0.69%3 0.47% 0.73% 0.71% 0.37% 0.90%
Portfolio turnover rate 8.91% 25.70% 26.75% 36.52% 27.59% 48.97%
1Total return assumes reinvestment of distributions at net asset value, does
not reflect the impact of a sales charge and is not annualized.
2Viking Fund Management, LLC, the Fund's investment manager, has contractually
agreed to waive its fees or reimburse the Fund for its expenses through August
1, 2009 so that the Fund's total operating expenses during this period will not
exceed 1.35% of its average net assets on an annual basis. For the periods
indicated above, Viking Fund Management, LLC waived fees and reimbursed
expenses totaling $7,683, $14,372, $15,021, $20,422, $15,184 and $17,512.
If the fees had not been waived or expenses had not been reimbursed, the
annualized ratio of total expenses to average net assets would have been
1.84%, 1.84%, 2.02%, 2.34%, 2.10% and 3.07% respectively.
3Annualized.
The accompanying notes are an integral part of these financial statements.
VIKING MUTUAL FUNDS
Financial Highlights
Viking Small-Cap Value Fund
Selected data for each share of the Fund outstanding throughout the period
was as follows:
For the Period
01/01/05- 01/01/04- 01/01/03- 01/01/02- 05/03/011-
06/30/05 12/31/04 12/31/03 12/31/02 12/31/01
---------------------------------------------------------------
Net asset value, beginning of period $14.40 $12.43 $9.35 $10.26 $10.00
--------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (0.02) (0.06) (0.03) (0.03) 0.00
Net realized and unrealized gain
(loss) on investments 0.15 2.22 3.11 (0.88) 0.26
--------------------------------------------------
Total from investment operations 0.13 2.16 3.08 (0.91) 0.26
--------------------------------------------------
Less distributions from:
Net investment income 0.00 0.00 0.00 0.00 0.00
Net realized gains 0.00 (0.25) 0.00 0.00 0.00
--------------------------------------------------
Total distributions 0.00 (0.25) 0.00 0.00 0.00
--------------------------------------------------
Net asset value, end of period $14.53 $14.40 $12.43 $9.35 $10.26
--------------------------------------------------
Total return2 0.90% 17.86% 32.94% (8.87)% 2.60%
Ratios/supplemental data:
Net assets, end of period (000's) $2,098 $1,715 $1,250 $604 $321
Ratio of net expenses to average net assets 1.62%3,4 1.65%3 1.65%3 1.65%3 1.59%3,4
Ratio of net investment income to average
net assets (0.26)% (0.46)% (0.37)%4 (0.41)% (0.28)%4
Portfolio turnover rate 5.28% 15.39% 14.77% 16.24% 1.81%
1Commencement of operations.
2Total return assumes reinvestment of distributions at net asset value, does
not reflect the impact of a sales charge and is not annualized.
3Viking Fund Management, LLC, the Fund's investment manager, has contractually
agreed to waive its fees or reimburse the Fund for its expenses through August
1, 2009 so that the Fund's total operating expenses during this period will not
exceed 1.65% of its average net assets on an annual basis. For the periods
indicated above, Viking Fund Management, LLC waived fees and reimbursed expenses
totaling $22,303$7,623, $14,316,$12,883, $17,392 and $6,593. If the fees had
not been waived or expenses had not been reimbursed, the annualized ratio of
total expenses to average net assets would have been 2.46%, 2.63%, 3.16%,
5.24% and 5.67% respectively.
4Annualized.
The accompanying notes are an integral part of these financial statements.
VIKING MUTUAL FUNDS
Notes to Financial Statements (Unaudited)
June 30, 2005
1. ORGANIZATION
Viking Mutual Funds (the "Company") is registered under the Investment Company
Act of 1940 as a non-diversified, open-end management investment company,
consisting of four series (the "Funds").
The Viking Tax-Free Fund for Montana and Viking Tax-Free Fund for North Dakota
(each a "Tax-Free Fund"), each a non-diversified Fund, seek the highest level
of current income that is exempt from both federal and state income taxes and
is consistent with preservation of capital. The Viking Large-Cap Value Fund
("Large-Cap") and Viking Small-Cap Value Fund ("Small-Cap"), each a
diversified Fund, seek long-term total return and capital preservation.
2. SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies are in accordance with accounting
principles generally accepted in the United States of America and are
consistently followed by the Funds.
Security Valuation Securities listed or traded on a recognized national
exchange or NASDAQ are valued at the last reported sales price. Securities
for which market quotations are not readily available (which will constitute
a majority of the securities held by the Tax-Free Funds) are valued using a
matrix system at fair value as determined by management in
accordance with procedures established by the Board of Trustees.
Premiums and Discounts On January 1, 2001, the Tax-Free
Funds adopted the provisions of the American Institute of Certified Public
Accountants' revised Audit and Accounting Guide Audits of Investment
Companies (the guide). The guide requires all premiums and discounts on debt
securities to be amortized. Prior to January 1, 2001, the Tax-Free Funds
recognized market discount at time of disposition as gain or loss. Upon
adoption, the Tax-Free Funds reviewed their investment portfolios and
determined the impact of this accounting change to be insignificant. The
Tax-Free Funds have therefore not made a cumulative effect adjustment to its
financial statements. This accounting change had no effect on the Fund's
net assets or total returns. Bonds acquired at a market discount after
January 1, 2001 are being amortized in accordance with provisions of the
audit guide.
Security Transactions, Investment Income, Expenses and Distributions
Security transactions are accounted for on trade date. Realized gains
and losses on security transactions are determined on the identified cost
basis. Interest income and estimated expenses are accrued daily. Dividend
income is recognized on the ex-dividend date. Premiums and discounts on
municipal securities are amortized to interest income using the constant
yield method over the estimated lives of the respective securities. The
Tax-Free Funds declare dividends from net investment income daily and pay
such dividends monthly. The Large-Cap Fund and the Small-Cap Fund will
declare and pay dividends from net investment income at least annually.
Capital gains, if any, are distributed annually. 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 treatment for market discount, capital loss carryforwards and
losses due to wash sales and futures transactions.
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. Common expenses incurred by the Company are
allocated among the Funds based on the ratio of net assets of each Fund
to the combined net assets. Other expenses are charged to each Fund on
a specific identification basis.
Use of Estimates The preparation of financial statements in accordance
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities 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.
3. DISTRIBUTIONS TO SHAREHOLDERS
The tax character of distributions paid during the six monhts ended
June 30, 2005 and the year ended December 31, 2004 were as follows:
Tax-Free Fund for Tax-Free Fund for Large-Cap Small-Cap
Montana North Dakota Value Fund Value Fund
------------------------------------------------------------------------------
2005 2004 2005 2004 2005 2004 2005 2004
------------------------------------------------------------------------------
Distributions paid from:
Tax-exempt income $225,044 $467,382 $113,498 $201,952 $0 $0 $0 $0
Ordinary income $0 $0 $0 $0 $0 $13,634 $0 $0
Long-term capital gain $0 $0 $0 $0 $0 $0 $0 $29,579
4. CAPITAL STOCK
Transactions in capital shares were as follows:
Tax-Free Fund Tax-Free Fund Large-Cap Small-Cap
for Montana for North Dakota Value Fund Value Fund
-------------------------------------------------------------------------
For the Period For the Period For the Period For the Period
from 01/01/05 from 01/01/05 from 01/01/05 from 01/01/05
through 06/30/05 through 06/30/05 through 06/30/05 through 06/30/05
--------------------------------------------------------------------------
Shares sold 241,558 55,829 41,468 35,402
Shares issued in reinvestment
of distributions 14,542 7,046 1,243 2,054
Shares redeemed (181,529) (37,374) (45,692) (12,139)
--------------------------------------------------------------------------
Net Increase (Decrease) 74,571 25,501 (2,979) 25,317
--------------------------------------------------------------------------
5. INVESTMENT MANAGEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
The Funds have retained Viking Fund Management, LLC ("VFM") to provide the
Funds with investment advice and portfolio management. As compensation for
the advisory services furnished to the Funds, the Funds pay VFM monthly
compensation calculated daily by applying the annual rates of 0.50% to the
Tax-Free Funds daily net assets, 0.70% to the Large-Cap Fund's daily net
assets and 1.00% to the Small-Cap Fund's daily net assets. The Tax-Free Fund
for Montana recognized $23,357 of investment advisory fees after a partial
waiver for the six months ended June 30, 2005. On June 30, 2005,
the Tax-Free Fund for Montana had a payable to VFM for investment advisory
fees of $4,053. The Tax-Free Fund for North Dakota recognized $8,463 of
investment advisory fees after a partial waiver for the six months ended
June 30, 2005. On June 30, 2005, the Tax-Free Fund for North Dakota
had a payable to VFM for investment advisory fees of $1,317. The Large-Cap
Fund recognized $10,134 of investment advisory fees after a partial waiver
for the six months ended June 30, 2005. On June 30, 2005, the
Large-Cap Fund had a payable to VFM for investment advisory fees of $1,792.
The Small-Cap Fund recognized $7,493 of investment advisory fees after a
partial waiver for the six months ended June 30, 2005. On June
30, 2005, the Small-Cap Fund had a payable to VFM for investment advisory fees
of $1,792. Under a sub-advisory agreement between Fox Asset Management, LLC
(the "sub-adviser") and VFM, the sub-adviser provides the Large-Cap Fund and
the Small-Cap Fund with investment advice and portfolio management subject
to the overall supervision of VFM. As compensation for its services
provided to the Large-Cap Fund, VFM pays the sub-adviser monthly compensation
calculated daily by applying the annual rate of 0.40% to the Large-Cap Fund's
daily net assets of up to $100 million and 0.35% to the Large-Cap Fund's
daily net assets in excess of $100 million. As compensation for its
services provided to the Small-Cap fund, VFM pays the sub-adviser monthly
compensation calculated daily by applying the annual rate of 0.40% to the
Small-Cap Fund's daily net assets until the net assets reach $5 million and
0.60% to the Small-Cap Fund's daily net assets when the net assets surpass
$5 million.
The Funds have also entered into an agreement with VFM to provide
administrative services, portfolio accounting and transfer agent
services to each of the Funds for a fee at an annual rate of 0.15%
of daily net assets, plus a per account charge and reimbursement of
certain direct expenses. On June 30, 2005, the Tax-Free Fund for
Montana, Tax-Free Fund for North Dakota, Large-Cap Fund and Small-Cap
Fund had payables to VFM for transfer agent out-of-pocket expenses of
$53, $20, $90 and $45, respectively.
The Funds have a distribution plan, sometimes known as a Rule 12b-1 plan,
that allows the Tax-Free Funds to pay distribution and service fees of up
to 0.25% of average daily net assets per year and the Large-Cap Fund and
the Small-Cap Fund to pay distribution and service fees of up to 0.40% of
average daily net assets per year to Viking Fund Distributors, LLC ("VFD")
for distributing each Fund's shares and for servicing shareholder accounts.
For the six months ended June 30, 2005, Large-Cap Value Fund recognized
$1,978 of 12b-1 fees after a partial waiver. On June 30, 2005, the Large-Cap
Fund had a payable to VFD for 12b-1 fees of $384. Tax-Free Fund for Montana,
Tax-Free Fund for North Dakota and Small-Cap Value Fund recognized no 12b-1
fees after the fee waiver.
For the six months ending June 30, 2005, the net amounts of sales charges
deducted from the proceeds of sale of capital shares which were retained
by VFD as principal underwriter were $5,563, $1,170, $1,749 and $1,667
for the Tax-Free Fund for Montana, Tax-Free Fund for North Dakota, Large-Cap
Fund and Small-Cap Fund, respectively. On June 30, 2005 the Large-Cap Fund
and Small-Cap Fund had payables to VFD for underwriting fees of $119 and $119,
respectively.
VFM has contractually agreed to waive its fees or reimburse the Funds
for their expenses through August 1, 2009 so that the Tax-Free Fund's
total operating expenses during this period will not exceed 0.85% of
average net assets on an annual basis, the Large-Cap Fund's total operating
expenses during this period will not exceed 1.35% of average net assets on
an annual basis and the Small-Cap Fund's total operating expenses during this
period will not exceed 1.65% of average net assets on an annual basis.
6. INCOME TAXES
No provision has been made for income taxes because each Fund's policy is
to qualify as a regulated investment company under the Internal Revenue
Code and to distribute substantially all of its taxable income. At December
31, 2004, the Funds' most recently completed year end, Tax-Free Fund for
Montana, Tax-Free Fund for North Dakota and Large-Cap Value Fund had
capital losses of $43,181, $28,302 and $345,872 respectively,
which may be carried over to offset future capital gains. Such losses start
to expire in 2008.
At June 30, 2005, the net unrealized appreciation based on the cost of
investments for federal income tax purposes was as follows:
Tax-Free Fund Tax-Free Fund Large-Cap Small-Cap
for Montana for North Dakota Value Fund Value Fund
------------------------------------------------------------------------------------
Investments at cost $12,244,946 $6,176,348 $2,537,137 $1,722,455
------------------------------------------------------------------------------------
Unrealized appreciation 318,599 139,214 665,539 487,804
Unrealized depreciation (11,989) (7,651) (52,043) (33,703)
------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) $305,610 $131,563 $613,496 $454,101
------------------------------------------------------------------------------------
7. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the
six months ended June 30, 2005 were as follows:
Tax-Free Fund Tax-Free Fund Large-Cap Small-Cap
for Montana for North Dakota Value Fund Value Fund
-----------------------------------------------------------------------------------
Purchases $2,368,342 $1,064,189 $263,694 $382,844
Sales $2,057,631 $718,529 $549,027 $95,667
8. CREDIT AND MARKET RISK
The Tax-Free Funds concentrate their investments in securities mainly issued
by each specific state's municipalities. The value of these investments may
be adversely affected by new legislation within the state, regional or local
economic conditions, and differing levels of supply and demand for municipal
bonds. Many municipalities insure repayment for their obligations. Although
bond insurance reduces the risk of loss due to default by an issuer, such
bonds remain subject to the risk that market value may fluctuate for other
reasons and there is no assurance that the insurance company will meet its
obligations. These securities have been identified in the Statement of
Investments.
VIKING MUTUAL FUNDS
ADVISORY CONTRACT APPROVAL DISCUSSION
(Unaudited)
In connection with each annual approval, the Board of Trustees is provided
with information to assist it in evaluating whether to approve the
continuance of the Agreements.
In considering whether to approve the Investment Management Agreement, the
Board, including the Independent Trustees, considered a number of factors
they believed to be relevant. These factors included the following: (1) the
resources, experience and expertise of the adviser; (2) the performance of
the Funds and the adviser; (3) the financial capability of the adviser; (4)
the compliance history of the adviser; (5) the performance of the funds in
comparison to similarly managed funds; (6) the amount of the contractual
advisory fee in comparison to similarly managed funds; (7) the profitability
of the adviser; (8) the extent of any economies of scale; and (9) the e
xistence of any collateral benefits realized by the adviser and by the Funds.
On the basis of the information provided to the Trustees for their review,
the following conclusions were reached: (1) a comparison of the net operating
expenses for the Viking Tax-Free Fund for Montana and for the Viking Tax-Free
Fund for North Dakota to other funds of similar objective and size reflected
that the Viking Tax-Free Fund's have similar expense structures to the other
funds; (2) a comparison of the net operating expense for the Viking Large-Cap
Value Fund to other funds of similar objective and size reflect that the
Large-Cap Value Fund has a similar expense structure to the other funds; (3)
a comparison of the net operating expense for the Viking Small-Cap Value Fund
to other funds of similar objective and size reflect that the Small-Cap
Value Fund has a similar expense structure to the other funds; (4) a
comparison of the management fees charged by the Adviser seemed reasonable
to the Trustees when compared to similar funds in objective and size; (5)
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;
(6) the overall nature and quality of the services provided by the Adviser
had historically been, and continued to be, satisfactory to the Trustees;
(7) the Trustees discussed the fact that the Adviser does not benefit from
economies of scale due to its relationship to the Funds as the Viking Funds
are relatively small and are its only clients; (8) the Trustees discussed
the profitability issues regarding the Adviser and felt comfortable with
the direction of the Adviser and its prospects for future profitability.
In reviewing the Sub-Advisory Agreements, the Trustees considered the
proposed sub-advisory fees compared to the level of sub-advisory fees
paid by other similar funds, past performance and the nature and quality
of the services provided. On the basis of the information provided for
their review, the Trustees reached the following conclusions: (1) the
Trustees felt the overall nature and quality of services of Fox Asset
Management, LLC ("Fox") are satisfactory; (2) Fox has a good long-term
track record in managing value accounts; (3) the sub-advisory fees paid to
Fox are fair and reasonable in light of the sub-advisory services expected
to be provided and the comparability of the sub-advisory fees paid by
comparable mutual funds and separately managed accounts; (4) the investment
performance of Fox has lagged the last couple of years but appears to be
improving during the last year and year-to-date; (5) the Trustees are
atisfied with Fox regarding its staffing and capabilities to manage the
Value funds, including the retention of personnel with significant
portfolio management experience.
VIKING MUTUAL FUNDS
Miscellaneous Information (Unaudited)
June 30, 2005
Your Fund's Expenses
As a Fund shareholder, you can incur two types of costs:
? Transaction costs, including sales charges (loads) on Fund purchases; and
? Ongoing Fund costs, including management fees, distribution and service
(12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs,
sometimes referred to as operating expenses.
The following table shows ongoing costs of investing in each Fund and can help
you understand these costs and compare them with those of other mutual
funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The first line (Actual) for each Fund listed in the table below provides
actual account values and expenses. The "Ending Account Value" is derived
from each Fund's actual return, which includes the effect of Fund expenses.
You can estimate the expenses you paid during the period, by following these
steps. Of course, your account value and expenses will differ from those
in this illustration:
1. Divide your account value by $1,000.
If an account had an $8,600 value, then $8,600 ? $1,000 = 8.6.
2. Multiply the result by the number under the heading "Expenses Paid During
Period" for the Fund(s) you own shares in.
If Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50.
In this illustration, the estimated expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Information in the second line (Hypothetical) for each Fund in the table can
help you compare ongoing costs of investing in the Fund(s) you own with those
of other mutual funds. This information may not be used to estimate the
actual ending account balance or expenses you paid during the period. The
hypothetical "Ending Account Value" is based on the actual expense ratio for
each Fund and an assumed 5% annual rate of return before expenses, which
does not represent each Fund's actual return. The figure under the heading
"Expenses Paid During Period" shows the hypothetical expenses your account
would have incurred under this scenario. You can compare this figure with
the 5% hypothetical examples that appear in shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing
costs and do not reflect any transaction costs, such as sales charges.
Therefore, the second line for each Fund is useful in comparing ongoing costs
only, and will not help you compare total costs of owning different funds.
In addition, if transactions costs were included, your total costs would
have been higher. Please refer to the Fund prospectus for additional
information on operating expenses.
Beginning Account Ending Account Expenses Paid During
Value 01/01/05 Value 06/30/05 Period1 01/01/05-06/30/05
Viking Tax-Free Fund for Montana
Actual $1,000.00 $1,016.37 $2.602
Hypothetical (5% return before expenses) $1,000.00 $1,022.22 $2.612
Viking Tax-Free Fund for North Dakota
Actual $1,000.00 $1,021.26 $2.61
Hypothetical (5% return before expenses) $1,000.00 $1,022.22 $2.61
Viking Large-Cap Value Fund
Actual $1,000.00 $1,050.56 $6.86
Hypothetical (5% return before expenses) $1,000.00 $1,018.10 $6.76
Viking Small-Cap Value Fund
Actual $1,000.00 $1,009.03 $8.22
Hypothetical (5% return before expenses) $1,000.00 $1,016.61 $8.25
1Expenses are equal to the annualized expense ratio for each Fund (Viking
Tax-Free Fund for Montana: 0.52%; Viking Tax-Free Fund for North Dakota:
0.52%; Viking Large-Cap Value Fund: 1.35%; and Viking Small-Cap Value Fund:
1.65%), multiplied by the average account value over the period, multiplied
by 181/365 to reflect the one-half year period.
2Expenses for the Viking Tax-Free Fund for Montana have increased since the
Fund's most recent fiscal half-year. Had the current expense ratio of the
Fund, 0.55%, been in place throughout the entire most recent fiscal half-year,
the Actual "Expenses Paid During Period" would have been $2.75 and the
Hypothetical "Expenses Paid During Period" would have been $2.76.
Proxy Voting on 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 is
available, without charge and upon request, by calling 1-800-933-8413. 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 from the
EDGAR database on the SEC's Internet site at http://www.sec.gov.
Quarterly Portfolio Schedule
The Funds provide a complete schedule of portfolio holdings in its semi-
annual and annual reports within 60 days of the end of the Funds' second and
fourth fiscal quarters on the Form N-CSR(S). The semi-annual and annual
reports are filed electronically with the SEC and are delivered to the
shareholders of the Funds. The Funds also file their 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 http://www.sec.gov. The Funds' Form N-Q and N-CSR(S)
may be reviewed and copied at the SEC's Public Reference Room in Washington,
DC and the information on the operation of the Public Reference Room in may
be obtained by calling 1-800-SEC-0330.
VIKING MUTUAL FUNDS
Trustee Information (Unaudited)
June 30, 2005
NAME AND PRINCIPAL OCCUPATION(S)
ADDRESS AGE POSITION(S) HELD DURING PAST 5 YEARS
- -----------------------------------------------------------------------------------------------------------------------
Shirley R. Martz 80 Trustee Retired CPA (1989-pres.); Trustee, Viking
1400 14th Ave. SW Mutual Funds (1999-pres.); Principal
Minot, ND 58701 shareholder and employee of Brady, Martz
& Associates and its predecessor (1948-
1989).
Douglas P. Miller 31 Trustee Secretary and Treasurer, Viking Fund
1400 14th Ave. SW Vice-President Management, LLC (1998-pres.); Secretary
Minot, ND 58701 Secretary and Treasurer, Viking Fund Distributors,
LLC (1999-pres.); Trustee, Vice-President
and Secretary, Viking Mutual Funds (1999
-pres.
Shannon D. Radke 38 Trustee President, Viking Fund Management, LLC
1400 14th Ave. SW President (1998- pres.); President, Viking Fund
Minot, ND 58701 Treasurer Distributors, LLC (1999-pres.); Trustee,
President and Treasurer, Viking Mutual
Funds (1999-pres.).
Mike Timm 68 Trustee Retired; Trustee, Viking Mutual Funds
1400 14th Ave. SW (1999-pres.); President and General
Minot, ND 58701 Manager, Timm Moving and Storage (1959-
2000); State Representative, North Dakota
House of Representatives (1973-pres.);
Speaker of the North Dakota House of
Representatives (1997).
Peter C. Zimmerman 39 Trustee General Manager, Holiday Inn Riverside
1400 14th Ave. SW (1995-pres.); Trustee, Viking Mutual
Minot, ND 58701 Funds (2004-pres.)
The SAI has additional information about the Trustees and is available
at (800) 933-8413 without charge upon request.
VIKING MUTUAL FUNDS
1400 14th Avenue SW
Minot, ND 58701
BOARD OF TRUSTEES
Shirley R. Martz
Douglas P. Miller
Shannon D. Radke
Mike Timm
Peter C. Zimmerman
INVESTMENT MANAGER
Viking Fund Management, LLC
1400 14th Avenue SW
Minot, ND 58701
SUB-ADVISOR
(For Viking Large-Cap Value Fund)
(For Viking Small-Cap Value Fund)
Fox Asset Management, LLC
44 Sycamore Avenue
Little Silver, NJ 07739
DISTRIBUTOR
Viking Fund Distributors, LLC
1400 14th Avenue SW
Minot, ND 58701
CUSTODIAN
First Western Bank & Trust
900 South Broadway
Minot, ND 58701
TRANSFER AGENT
Viking Fund Management, LLC
P.O. Box 500
Minot, ND 58702
INDEPENDENT AUDITORS
Brady, Martz & Associates, P.C.
201 East Broadway, Suite 200
Bismarck, ND 58501
Shareholder Services
1-800-933-8413
When used with prospective investors, this report must be preceded by
a current Viking Mutual Funds prospectus. The prospectus sets forth details
about charges, expenses, investment objectives and operating policies of each
of the Funds. You should read the prospectus carefully before you invest.
To obtain a prospectus, contact your investment professional or Viking Mutual
Funds.
ITEM 2. CODE OF ETHICS.
Viking Mutual Funds has adopted a code of ethics, as defined in Item 2 of
Form N-CSR, that applies to the President and Treasurer. No substantive
amendments were approved or waivers were granted to this code of ethics
during the registrant's most recent fiscal half-year.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable at this time. This item is applicable to annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(a) Audit Fees
Not applicable at this time. This item is applicable to annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable at this time. This item is applicable to annual reports.
ITEM 6. SCHEDULE OF INVESTMENTS
Included as part of report to shareholders under Item 1.
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
Not applicable
ITEM 11. CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures. The Principal Executive and
Financial Officers concluded that the Registrant's Disclosure Controls
and Procedures are effective based on their evaluation of the Disclosure
Controls and Procedures as of a date within 90 days of the filing date of this
report.
(b) There was no change in the internal controls over financial reporting
(as defined in Rule 30a-3(d) under the Act) of Viking Mutual Funds that
occurred during the second fiscal quarter of the period covered by this
report that has materially affected or is reasonably likely to materially
affect, its internal controls over financial reporting.
ITEM 12. EXHIBITS
(a)(1) The registrant's code of ethics filed pursuant to Item 2 of the
N-CSR is filed with the registrant's annual N-CSR.
(b)(1) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2 under the Investment Company Act of
1940. Certification of principal executive officer as required by
Section 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURES
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
Principal Executive Officer
Date: 08/26/2005
By: /s/ DOUGLAS P. MILLER
------------------------------
Douglas P. Miller
Principal Financial Officer
Date: 08/26/2005