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 -------- 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 ------- 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