UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-09277
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VIKING MUTUAL FUNDS
-------------------
(Exact name of registrant as specified in charter)
116 1st St SW Suite C, MINOT, ND 58701
(Address of principal executive offices) (Zip code)
Shannon D. Radke, 116 1st St SW Suite C, 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: 06/30/06
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ITEM 1. REPORTS TO STOCKHOLDERS.
SHAREHOLDER LETTER
Dear Fellow Shareholder:
It is a pleasure to bring you the Viking Mutual Funds Semi-Annual Report for
the six months ended June 30, 2006.
The Federal Reserve raised rates again as the first half of 2006 came to a
close and Wall Street cheered as some saw hints
of a less aggressive central bank. Fed policy makers boosted their target
for the Federal Funds rate to 5.25% June 29, in
an effort to curb inflation. The quarter percentage point hike was the
Feds 17th straight rate increase since June 2004.
The Funds rate, which was at a 46 year low of 1% at the start of the
campaign, is now at the highest level in more than
five years. Many investors have been worried that in an effort to ward off
inflation, the Fed would raise rates too much
and choke off economic growth and corporate profits. 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 Feds
statement accompanying the rate hike, however,
contained some softer language and triggered a surge in stocks. The extent
and timing of any additional firming that may
be needed to address these inflation risks will depend on the evolution of
the outlook for both inflation and economic
growth, as implied by incoming information, the central bank said in its
statement. That replaced the line from its May
statement that said, The committee judges that some further policy firming
may yet be needed. The statement suggested that
an end to the central banks two year old rate hiking campaign may be in
sight. Although the economy rebounded from its
Hurricane Katrina related pause during Q4 2005, with GDP expanding at an
upwardly revised 5.6% in Q1 2006, the fastest pace
in three years, we leave the second quarter with evidence of a slower pace
to economic activity and a growing consensus
that the Fed is just about done. While growth is moderating, consumer
spending should continue to be supported, albeit at
a lower rate than recent periods, by low unemployment and rising personal
income. Business investment is likely to remain
robust, given high profit margins and strong balance sheets. The
geopolitical backdrop, however, is not about to turn
bright and cheery anytime soon and may continue to nag investor sentiment.
Equity markets around the world posted strong gains in the quarter ended
March 31, 2006. The economy picked up pace from
the weak performance in the Katrina depressed fourth quarter of 2005. The
strength of equity prices was surprising,
however, in the face of continued Fed tightening. For the quarter, the S&P
500 rose 4.21% while small-cap stocks
outperformed their large-cap brethren. The second quarter began with fresh
evidence in the GDP report that the economy was
expanding briskly and a solemn view that the Fed was not done tightening.
In contrast, the second quarter ended with
evidence of a slower pace to economic activity and a growing consensus that
the Fed is just about done. The major indexes
closed out the quarter on a mixed note. The Dow Industrials gained 0.4%,
the Nasdaq lost 7.20% and the S&P 500 lost 1.9%.
The Nasdaq and the S&P both broke strings of four straight quarterly gains,
while the Dow extended its winning streak to
four quarters. For the first half of the year, the Dow is up 4%, while the
S&P 500 is up 1.8% and the Nasdaq is down 1.5%.
The fixed income markets declined in the first quarter as the U.S. economy
bounced back from Hurricane Katrina with strong
growth and the Fed continued tightening. Bonds took a further turn for the
worse in the second quarter as the bond
vigilantes sold bonds and pushed rates higher as their fear of accelerating
inflation was exacerbated by the strong Q1 GDP
report. The markets were also buffeted by remarks of the new Fed Chairman.
His communication approach has not been
impressive as he seemingly waffled back and forth on inflation and further
rate hikes during several public appearances.
The markets are never comfortable with the winds of uncertainty and right
out of the gate he fanned those winds.
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 0.04% (at net
asset value with distributions reinvested) for
the six months ended June 30, 2006.
The fixed income markets declined in the first quarter as the U.S. economy
rebounded from its Hurricane Katrina related
pause with strong growth and the Fed continued tightening. As a result, the
Funds share price declined slightly in the
first quarter. Bonds took a further turn for the worse in the second
quarter as the bond vigilantes sold bonds and pushed
rates higher as their fear of accelerating inflation was exacerbated by the
strong Q1 GDP report. This sent the Funds
share price down moderately for the second quarter. The markets were also
buffeted by remarks of the new Fed Chairman.
Mr. Bernankes communication approach has not been impressive as he
seemingly waffled back and forth on inflation and
further rate hikes during several public appearances. The markets are never
comfortable with the winds of uncertainty, and
right out of the gate he fanned those winds.
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, 2006 (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
July 29, 2005 $12,682 $13,278 $14,284
August 31, 2005 $12,749 $13,348 $14,428
September 30, 2005 $12,750 $13,349 $14,332
October 31, 2005 $12,678 $13,274 $14,244
November 30, 2005 $12,718 $13,315 $14,313
December 30, 2005 $12,797 $13,398 $14,436
January 31, 2006 $12,865 $13,469 $14,475
February 28, 2006 $12,889 $13,495 $14,572
March 31, 2006 $12,842 $13,446 $14,471
April 30, 2006 $12,816 $13,419 $14,467
May 31, 2006 $12,914 $13,521 $14,532
June 30, 2006 $12,801 $13,402 $14,477
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 08/03/99-06/30/06. 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
investments 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, 2006 One-Year Three-Year Five Year (Est. 8/3/99)
- - ----------------------------------------------------------------------------
Excluding Sales Charge 0.35% 2.37% 4.52% 4.33%
Including Sales Charge -3.44% 0.79% 3.56% 3.65%
Returns reflect reinvestment of distributions and the effect of the front-
end sales charge, as applicable. The current
maximum sales charge is 3.75%, while the maximum sales charge prior to
04/30/05 was 4.50%. Therefore, the total returns,
for the three year, five year and lifetime would have been higher had the
current maximum sales charge been in effect for
those 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 0.05% (at
net asset value with distributions reinvested)
for the six months ended June 30, 2006.
The fixed income markets declined in the first quarter as the U.S. economy
rebounded from its Hurricane Katrina related
pause with strong growth and the Fed continued tightening. As a result, the
Funds share price declined slightly in the
first quarter. Bonds took a further turn for the worse in the second
quarter as the bond vigilantes sold bonds and pushed
rates higher as their fear of accelerating inflation was exacerbated by the
strong Q1 GDP report. This sent the Funds
share price down moderately for the second quarter. The markets were also
buffeted by remarks of the new Fed Chairman.
Mr. Bernankes communication approach has not been impressive as he
seemingly waffled back and forth on inflation and
further rate hikes during several public appearances. The markets are never
comfortable with the winds of uncertainty, and
right out of the gate he fanned those winds.
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, 2006 (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
July 29, 2005 $12,816 $13,418 $14,284
August 31, 2005 $12,895 $13,501 $14,428
September 30, 2005 $12,884 $13,489 $14,332
October 31, 2005 $12,824 $13,427 $14,244
November 30, 2005 $12,851 $13,455 $14,313
December 30, 2005 $12,929 $13,537 $14,436
January 31, 2006 $13,009 $13,621 $14,475
February 28, 2006 $13,025 $13,638 $14,572
March 31, 2006 $12,991 $13,602 $14,471
April 30, 2006 $12,939 $13,547 $14,467
May 31, 2006 $13,038 $13,651 $14,532
June 30, 2006 $12,938 $13,546 $14,477
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 08/03/99-06/30/06. 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
investments 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, 2006 One-Year Three-Year Five Year (Est. 8/3/99)
- - ----------------------------------------------------------------------------
Excluding Sales Charge 0.18% 2.33% 4.43% 4.49%
Including Sales Charge -3.56% 0.77% 3.48% 3.80%
Returns reflect reinvestment of distributions and the effect of the front-end
sales charge, as applicable. The current
maximum sales charge is 3.75%, while the maximum sales charge prior to 04/30/05
was 4.50%. Therefore, the total returns,
for the three year, five year, and lifetime 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: William E. Dodge, President and CEO, Fox Asset Management, LLC
Shannon D. Radke, President
Viking Large-Cap Value Fund provided a total return of 5.15% (at net asset
value) for the six months ended June 30, 2006.
Equity markets around the world posted strong gains in the quarter ended March
31, 2006. The dollar was relatively stable
and the economy clearly picked-up pace from the weak performance in the Katrina
depressed fourth quarter of 2005. The
strength of equity prices was surprising in the face of continued Fed
tightening. The total return of the broad market, as
measured by the S&P 500 rose 4.21% in the quarter, the strongest since the
first quarter of 2001, and the Russell 1000
Value benchmark was even stronger, rising 5.93%. The Fund rose 4.47% during
the first quarter. Leading the list of top
performers was International Rectifier Corp, a supplier of electronic parts.
Two other technology names, Hewlett Packard
and Honeywell, also rose sharply in the quarter. Other leaders are a diverse
group that includes Amerisource Bergen Corp.,
Walt Disney Co., Merrill Lynch & Co., and Rio Tinto PLC ADR. Underperformers
included Intel, which is restructuring to
meet the demands of a dynamic marketplace and facing what we believe is short-
term competitive pressures. Utility stocks
were also weak, led by Dominion Resources and American Electric Power.
The second quarter began with fresh evidence in the GDP report that the economy
was expanding briskly and a solemn view
that the Fed was not done tightening. In contrast, we left the second quarter
with evidence of a slower pace to economic
activity and a growing consensus that the Fed is just about done tightening.
Although the Fund posted a positive return of
0.7%, the second quarter was generally unkind to financial assets with the S&P
500 and the Russell 1000 both off roughly
2%. Wheres the problem? Well, its about economic growth, continued Fed
tightening, creeping inflationary pressures, and
an expanding geopolitical problem. The markets were also buffeted by remarks
of new Fed Chairman Bernanke. His
communications approach has not been impressive as he seemingly waffled back
and forth on inflation and further rate hikes
during several public appearances. The markets are never comfortable with the
winds of uncertainty, and right out of the
gate he fanned those winds.
As bottom up, fundamentally-driven stock pickers, we do not try to predict
broader stock market performance. That stated,
we believe that a solid economic backdrop of low unemployment, rising wages,
strong corporate balance sheets, robust
profitability and reasonable equity valuations are all supportive of a rising
stock market. As always, we remain steadfast
in our commitment to finding higher quality companies, with strong balance
sheets and cash flow, selling at discount
valuations. 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, 2006 (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
July 29, 2005 $11,490 $12,122 $13,327
August 31, 2005 $11,393 $12,019 $13,269
September 30, 2005 $11,490 $12,122 $13,455
October 31, 2005 $10,963 $11,566 $13,114
November 30, 2005 $11,373 $11,999 $13,543
December 30, 2005 $11,456 $12,086 $13,626
January 31, 2006 $11,771 $12,418 $14,155
February 28, 2006 $11,810 $12,460 $14,241
March 31, 2006 $11,968 $12,626 $14,434
April 30, 2006 $12,283 $12,958 $14,801
May 31, 2006 $12,046 $12,709 $14,427
June 30, 2006 $12,046 $12,709 $14,519
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 08/03/99-06/30/06. 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, 2006 One-Year Three-Year Five Year (Est. 8/3/99)
- - ----------------------------------------------------------------------------
Excluding Sales Charge 7.86% 11.86% 2.47% 3.53%
Including Sales Charge 2.23% 9.88% 1.36% 2.73%
Returns reflect reinvestment of distributions and the effect of a 5.25%
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 total return of 7.47% (at net asset
value) for the six months ended June 30, 2006.
Equity markets around the world posted strong gains in the quarter ended March
31, 2006. Small-Cap stocks continued their
impressive performance during the quarter, with the Russell 2000 Index surging
nearly 14%. The small-cap indexs strong
advance was led by lower quality stocks, as companies at the lower end of the
quality spectrum (specifically, those ranked
C and D by S&P) outperformed the Russell 2000 Index by a wide margin. Foxs
long-standing focus on investing in higher
quality, financially sound companies typically lags in lower quality advances,
and this was again the case during the
period. Nonetheless, the Fund advanced 9% for the quarter. Our underweight in
the underperforming financial services
sector contributed to relative performance. Stock selection in producer
durables, which continue to benefit from strong
industrial demand also contributed to performance. Detracting from performance
during the quarter included our overweight
in the underperforming auto and transportation sector, as well as stock
selection in the energy-related and technology
sectors.
Small-cap stocks ended lower along with most major domestic market indices in
the second quarter of 2006, as the Russell
2000 index declined 5%, and the Russell 2000 Value Index declined 2.7%. While
small-cap stocks could not escape the global
market weakness during the period, they continued their six plus year streak of
out performance relative to their larger-
cap brethren. Our long standing strategy of investing in higher quality
financially sound companies was rewarded during
the quarter as the Fund declined only 1.4%. Our underweighting in the
technology sector and overweighting in the autos and
transportation sector contributed to favorable relative performance. Stock
selection in the consumer discretionary sector,
as well as our long standing underweight (and adverse stock selection) in
financials, detracted from performance during the
quarter. We have begun to reexamine our underweight in financial services,
reflecting our view that the Fed is nearing the
end of its two year campaign to raise interest rates.
As bottom up, fundamentally driven stock pickers, we do not try to predict
broader stock market performance. That stated,
we believe that a solid economic backdrop of low unemployment, rising wages,
strong corporate balance sheets, robust
profitability and reasonable equity valuations are all supportive of a rising
stock market. As always, we remain steadfast
in our commitment to finding higher quality companies, with strong balance
sheets and cash flow, selling at discount
valuations. 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, 2006 (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
July 29, 2005 $14,484 $15,280 $18,190
August 31, 2005 $14,503 $15,300 $17,773
September 30, 2005 $14,551 $15,351 $17,743
October 31, 2005 $14,214 $14,995 $17,298
November 30, 2005 $14,628 $15,433 $17,999
December 30, 2005 $14,666 $15,261 $17,861
January 31, 2006 $15,516 $16,370 $19,338
February 28, 2006 $15,203 $16,039 $19,337
March 31, 2006 $15,769 $16,636 $20,274
April 30, 2006 $15,931 $16,807 $20,328
May 31, 2006 $15,213 $16,050 $19,486
June 30, 2006 $15,547 $16,402 $19,725
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 05/03/01-06/30/06. 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, 2006 One-Year Three-Year Five Year (Est. 5/3/01)
- --------------------------------------------------------------------------------
Excluding Sales Charge 10.96% 16.51% 9.90% 10.06%
Including Sales Charge 5.10% 14.45% 8.72% 8.92%
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
Schedule of Investments
June 30, 2006
Viking Tax-Free Fund for Montana
PRINCIPAL MARKET
AMOUNT VALUE
MUNICIPAL BONDS 99.9%
General Obligations 16.8%
Bozeman MT Ser A 4.95% 07/01/20 170,000 $174,898
Broadwater Cnty MT Sch Dist No. 1 Townsend (AMBAC) 5.1% 07/01/18 250,000 260,978
Cascade Cnty MT High Sch A Great Falls 3.15% 07/01/06 100,000 100,000
Misoula Cnty MT Ref (XLCA) 3.75% 07/01/14 250,000 241,968
MT St Long Range Building Pg-Ser G 4.00% 08/01/13 250,000 248,382
MT St Long Range Building Pg - Ser G 4.00% 08/01/16 250,000 245,163
MT St Water Pollution Ctl 5.60% 07/15/20 100,000 105,464
Puerto Rico Mun Fin Agy Ser A (FSA) 5.50% 08/01/23 250,000 263,920
Ravalli Cnty MT Sch Dist No. 003 Hamilton (FSA) 4.00% 07/01/16 80,000 78,103
Ravalli Cnty MT Sch Dist No. 003 Hamilton (FSA) 4.65% 07/01/09 105,000 106,940
Yellowstone & Carbon Cntys Elem Sch Dist (MBIA) 4.25% 07/01/24 200,000 193,172
---------
2,018,988
---------
Continuing Care Revenue Bonds 2.0%
MT Fac Fin Auth Marias Med Ctr 3.80% 01/01/10 175,000 173,138
MT St Hlth Facs Auth Rev Hillcrest Sr Ctr 6.90% 06/01/15 30,000 33,365
MT St Hlth Facs Auth Rev Hillcrest Sr Ctr 7.25% 06/01/25 35,000 39,327
---------
245,830
---------
Higher Education Revenue Bonds 11.5%
MT St Hgher Ed Stud Assist Corp Rev Ser B 6.40% 12/01/32 415,000 436,829
MT St Brd Regents (MSU) Rev Facs Imp-E (AMBAC) 5.00% 11/15/21 80,000 80,439
MT Brd Regents (U of M) Hgher Ed Rev Ser F (MBIA) 5.75% 05/15/24 150,000 160,137
Puerto Rico Tour Edl Med & Env Facs Mendez Univ 5.375% 02/01/19 75,000 76,308
*Univ of MT Revs Facs Acq & Imp Ser C (MBIA) 5.00% 11/15/17 140,000 143,884
Univ of MT Revs Higher Ed Facs Imp Ser D (MBIA) 5.375% 05/15/15 75,000 79,512
Univ of MT Revs Higher Ed Facs Imp Ser D (MBIA) 5.375% 05/15/19 370,000 400,177
---------
1,377,286
---------
Hospital Revenue Bonds 23.1%
MT Hlth Fac Fin Auth Rev Mstr Ln Program Comm Med Ctr 5.20% 12/01/21 145,000 150,578
MT Fac Fin Auth Rev Bozeman Deaconess 4.125% 06/01/18 200,000 191,350
MT Fac Fin Auth Providence Serv (MBIA) 4.60% 12/01/18 150,000 149,572
MT Fac Fin Auth Providence Serv (MBIA) 5.00% 12/01/18 500,000 515,575
MT Fac Fin Auth Providence Serv (MBIA) 4.80% 12/01/20 200,000 200,694
*MT Hlth Fac Auth Sisters Chrty Leavenworth (MBIA) 5.125% 12/01/18 200,000 206,968
MT Hlth Fac Auth Sisters Chrty Leavenworth (MBIA) 5.00% 12/01/24 515,000 521,427
MT St Hlth Fac Auth Rev Comm Med Ctr 6.375% 06/01/18 370,000 372,590
*MT St Hlth Fac Auth Rev Kalispell Med Ctr (AMBAC) 5.00% 07/01/16 450,000 465,588
---------
2,774,342
---------
Housing Revenue Bonds 14.4%
*MT St Brd Hsg Sngle Fam Mtg Ser A-2 5.75% 06/01/30 70,000 69,928
*MT St Brd Hsg Sngle Fam Ser A-2 5.50% 12/01/20 85,000 84,079
*MT St Brd Hsg Sngle Fam Ser A-2 5.60% 12/01/23 70,000 69,280
MT St Brd Hsg Sngle Fam Ser A-2 5.20% 12/01/22 120,000 119,329
MT St Brd Hsg Sngle Fam Ser B-2 4.85% 12/01/15 110,000 109,188
MT St Brd Hsg Sngle Fam Mtg Ser B-2 5.55% 06/01/33 175,000 175,691
MT St Brd Hsg Sngle Fam Prog Ser B 4.55% 12/01/11 370,000 369,652
MT St Brd Hsg Sngle Fam Mtg Ser A 4.30% 06/01/12 250,000 250,018
MT St Brd Hsg Sngle Fam Mtg Ser A 4.30% 12/01/12 480,000 478,733
---------
1,725,898
---------
Psychiatric and Substance Abuse Hospital Bonds 9.7%
MT Fac Fin Auth Developmental Ctr Prog 4.50% 06/01/16 250,000 248,018
MT Fac Fin Auth Developmental Ctr Prog 4.75% 06/01/19 170,000 169,148
MT Fac Fin Auth Childrens Home 4.55% 01/01/17 250,000 244,573
MT St Hlth Fac Auth Hlth Care Rev State Hosp (AMBAC) 5.00% 06/01/22 500,000 509,010
---------
1,170,749
---------
Transportation Revenue Bonds 5.1%
MT St Dept Trans Rev Grant Antic Hwy 93 (MBIA) 5.00% 06/01/20 100,000 105,940
MT St Dept Trans Rev Grant Antic Hwy 93 (MBIA) 4.00% 06/01/14 250,000 251,183
Puerto Rico Hwy & Trans Auth Rev Ser G (FGIC) 5.25% 07/01/20 250,000 271,665
---------
628,788
---------
Utility Revenue Bonds 7.7%
Forsyth MT Poll Ctl Rev Ref Puget Sound Energy (AMBAC) 5.00% 03/01/31 190,000 193,004
Forsyth MT Poll Ctl Rev Northwestern Corp (AMBAC) 4.65% 08/01/23 750,000 731,430
---------
924,434
---------
Water Revenue Bonds 0.8%
Great Falls MT Wtr Sys Rev Ref Ser A (AMBAC) 3.85% 08/01/08 100,000 100,239
---------
100,239
---------
Other Revenue Bonds 11.7%
MT St Brd Invt Refunded 1996 Pay Tax (MBIA) 6.875% 06/01/20 105,000 110,251
MT St Brd Invt Refunded 1996 Pay Tax (MBIA) 6.875% 06/01/20 105,000 110,017
Puerto Rico Childrens Trust Fund Tobacco Settlement Rev 6.00% 07/01/26 195,000 209,898
Puerto Rico Comwlth Inf Fin Auth Ser A (AMBAC) 5.25% 07/01/10 100,000 103,557
Puerto Rico Mun Fin Agy Ser A (FSA) 5.25% 08/01/21 200,000 210,722
MT Fac Fin Auth Prerelease Ctr Rev (XLCA) 5.25% 10/01/20 300,000 316,089
---------
1,060,534
----------
Total Municipal Bonds (cost $12,099,726) 12,010,738
SHORT-TERM INVESMENTS 2.1%
Federated Municipal Obligations Fund #852 191,000 191,000
Franklin Double Tax-Free Income Fund 4,941 57,756
----------
Total Short-Term Investments (cost: $248,892) 248,756
---------
TOTAL MARKET VALUE OF SECURITIES OWNED 102.0% (COST $12,349,618) 12,259,494
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES (2.0)% (234,909)
-----------
NET ASSETS APPLICABLE TO 1,220,378 SHARES (0.001 PAR VALUE) OUTSTANDING - 100.0% $12,024,585
===========
*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
XLCA Insured by XL Capital Assurance
VIKING MUTUAL FUNDS
Schedule of Investments
June 30, 2006
Viking Tax-Free Fund for North Dakota
PRINCIPAL MARKET
AMOUNT VALUE
MUNICIPAL BONDS 99.5%
General Obligations 27.7%
*Bismarck ND Ref & Imp - Ser L 4.00% 06/01/07 75,000 $74,391
Bismarck ND Ref & Imp - Ser P 2.90% 05/01/12 100,000 94,156
Bismarck ND Ref & Impt Ser T 4.45% 05/01/21 100,000 97,279
Bismarck ND Pub Sch Dist No 1 (FGIC) 4.50% 05/01/16 10,000 9,740
*Fargo ND Ref & Imp - Ser B (FGIC) 5.125% 05/01/17 60,000 61,070
Fargo ND Ref & Impt Ser D (MBIA) 5.00% 05/01/28 200,000 202,072
Hillsboro ND Pub Sch Dist No. 9 (FSA) 4.85% 06/01/19 50,000 50,698
*Jamestown ND Pub Sch Dist No. 011 (FGIC) 4.60% 05/01/15 50,000 49,779
*Mandan ND Ref & Imp - Ser B (MBIA) 5.00% 05/01/16 70,000 70,171
Mandan ND Ref Impt Ser C (AMBAC) 4.00% 05/01/18 150,000 143,140
Puerto Rico Commonwealth (MBIA) 5.375% 07/01/25 50,000 50,868
Wahpeton ND Pub Sch Dist No 37 (FSA) 4.10% 05/01/15 100,000 96,221
*West Fargo ND Ref & Imp 5.00% 05/01/18 250,000 255,605
West Fargo ND Ref & Impt Ser D (MBIA) 4.25% 05/01/20 150,000 142,770
West Fargo ND Ref & Impt (MBIA) 4.10% 05/01/17 100,000 97,145
West Fargo ND Pub Sch Dist No. 006 (FGIC) 5.00% 05/01/14 50,000 52,105
Valley City ND (CIFG) 4.50% 06/01/24 80,000 77,617
---------
1,624,827
---------
Building Authority Revenue Bonds 7.6%
Fargo ND Bldg Auth Lease Rev Ser A 5.00% 05/01/20 50,000 50,835
GF Cnty ND Bldg Auth Rev 5.00% 12/01/20 200,000 201,218
ND St Bldg Auth Lease Rev Ser A (MBIA) 5.00% 12/01/17 50,000 51,044
ND St Bldg Auth Lease Rev Ser A (MBIA) 5.00% 12/01/16 50,000 51,371
ND St Bldg Auth Lease Rev Ser A (MBIA) 5.20% 12/01/19 90,000 92,587
---------
447,055
---------
Education Revenue Bonds 7.4%
Fargo ND School District Bldg Auth Rev (MBIA) 5.50% 05/01/14 50,000 51,761
Minot Pub School District No 1 Bldg Auth 4.80% 05/01/23 290,000 288,330
West Fargo Pub School District Bldg Auth Lease Rev 4.20% 05/01/17 100,000 97,137
---------
437,228
---------
Higher Education Revenue Bonds 16.7%
ND St Brd Hgher Ed Student Svcs Facs MSU 5.00% 08/01/18 175,000 171,694
ND St Brd Hgher Ed Student Svcs Facs Rev MSU 5.50% 08/01/23 125,000 125,264
ND St Brd Hgher Ed Rev Hsg & Aux Facs UND (FGIC) 4.375% 04/01/26 100,000 94,886
ND St Brd Hgher Ed Rev Hsg & Aux Facs UND (FSA) 5.00% 04/01/21 150,000 152,784
ND St Brd Hgher Ed Rev Hsg & Aux Facs NSDU (FGIC) 4.00% 04/01/15 150,000 146,681
ND St Brd Hgher Ed Rev Hsg & Aux BSC 4.75% 05/01/19 100,000 98,110
ND St Brd Hgher Ed Rev Hsg & Aux Facs NDSU (AMBAC) 4.25% 04/01/23 100,000 95,157
NDSU Rev Ser 2006A (AMBAC) 4.75% 04/01/29 75,000 73,291
Puerto Rico Tour Edl Med & Env Facs Mendez Univ 5.375% 02/01/19 25,000 25,436
---------
983,303
---------
Hospital Revenue Bonds 8.7%
Fargo ND Hlth Sys Rev Meritcare Ser A (MBIA) 5.375% 06/01/27 100,000 103,178
Fargo ND Hlth Sys Rev Meritcare Obl (AMBAC) 5.125% 06/01/27 75,000 74,701
Fargo ND Hlth Sys Rev Meritcare Obl (FSA) 5.375% 06/01/15 65,000 68,103
Fargo ND Hlth Sys Rev Meritcare Obl (AMBAC) 4.125% 06/01/11 150,000 150,492
Fargo ND Hlth Sys Rev Meritcare Obl (AMBAC) 5.00% 06/01/22 45,000 44,627
Grand Forks ND Hlth Care Altru Hlth Obl Group (MBIA) 5.60% 08/15/17 20,000 20,558
Grand Forks ND Hlth Care Altru Hlth Obl Group 7.125% 08/15/24 20,000 21,762
Ward Cnty ND Hlth Care Facs Rev Trinity Obl Group - B 6.00% 07/01/10 25,000 25,613
---------
509,034
---------
Housing Revenue Bonds 11.2%
Fargo ND Multifam Rev Ref Hsg Trollwood Village 6.90% 09/01/13 25,000 25,253
ND St Hsg Fin Agy Rev Home Mtg Prog C 4.90% 07/01/15 150,000 149,816
ND St Hsg Fin Agy Rev Hsg Fin Pg 4.60% 01/01/15 160,000 157,906
ND St Hsg Fin Agy Rev Hsg Fin Home MTG Fin-C 4.45% 07/01/16 200,000 193,046
ND St Hsg Fin Agy Hsg Fin Home MTG-C-RMK 6.10% 07/01/28 5,000 5,000
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 A 5.25% 07/01/18 50,000 49,793
*ND St Hsg Fin Agy Rev Hsg Fin Pg Home Mtg A 5.55% 07/01/22 75,000 74,785
---------
660,599
---------
Transportation Revenue Bonds 2.7%
Guam Intl Arpt Auth Ser C (MBIA) 5.375% 10/01/17 150,000 156,438
---------
156,438
---------
Water Revenue Bonds 6.0%
Minot ND Wtr & Swr Util Resv Rev Ser A (XLCA) 4.20% 10/01/21 50,000 46,648
ND St Water Comm Rev Water Dev & Mgmt Prg Ser A (MBIA) 5.50% 08/01/10 50,000 52,843
ND St Water Comm Rev Water dev & Mgmt Prog (MBIA) 5.00% 08/01/25 100,000 102,775
South Central Reg Water Dist Burleigh Cnty Rev 5.00% 10/01/23 150,000 149,598
---------
351,864
---------
Other Revenue Bonds 11.5%
*Grand Forks ND Sales Tax Rev Dike Imp (AMBAC) 4.50% 09/01/10 50,000 50,963
Grand Forks ND Sales Tax Rev Dike Imp (AMBAC) 5.00% 09/01/17 145,000 150,680
Grand Forks Sales Tax Rev Alerus Project (MBIA) 5.00% 12/15/21 115,000 118,735
ND Pub Fin Auth Cap Fin Prog Ser A 5.00% 06/01/31 100,000 99,290
ND St Muni Bond Bank Cap Fing Prog 6.00% 06/01/21 25,000 26,312
ND St Muni Bond Bank St Revolv Fund Prog - Ser A 4.90% 10/01/18 50,000 50,817
Puerto Rico Childrens Trust Fund Tobacco Settlement Rev 6.00% 07/01/26 15,000 16,146
Puerto Rico Pub Fin Corp Ser A (MBIA) 5.375% 08/01/24 150,000 159,644
---------
672,587
---------
Total Municipal Bonds (cost $5,908,741) 5,842,935
SHORT-TERM INVESMENTS 0.4%
Federated Municipal Obligations Fund #852 26,000 26,000
----------
Total Short-Term Investments (cost: $26,000) 26,000
---------
TOTAL MARKET VALUE OF SECURITIES OWNED 99.9% (COST $5,934,741) 5,868,935
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES 0.1% 4,865
----------
NET ASSETS APPLICABLE TO 590,324 SHARES (0.001 PAR VALUE) OUTSTANDING - 100.00% $5,873,800
==========
*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
CIFG Insured by CIFG Company
XLCA Insured by XL Capital Assurance
VIKING MUTUAL FUNDS
Schedule of Investments
June 30, 2006
Viking Large-Cap Value Fund
SHARES VALUE
Common Stocks 91.7%
Basic Materials 19.0%
ALCOA 2,500 $80,900
Anadarko Petroleum 1,200 57,228
Apache 800 54,600
BP Amoco Plc ADR 1,000 69,610
Bunge Limited 1,400 70,350
Dow Chemical 1,000 39,030
Chevron Texaco 1,600 99,296
Conoco Phillips 1,800 117,954
Exxon Mobil 1,700 104,295
Rio Tinto Plc ADR 300 62,913
--------
756,176
--------
Conglomerates 3.7%
Honeywell 1,900 76,570
ITT Industries 1,400 69,300
--------
145,870
--------
Consumer Goods 7.2%
Dean Foods* 1,900 70,661
Johnson Controls 700 57,554
Kimberly-Clark 1,900 117,230
Sealed Air 800 41,664
--------
287,109
--------
Financial Services 23.7%
American International Group 1,400 82,670
Bank of America 2,600 125,060
BB&T 800 33,272
Citigroup 2,800 135,100
Hartford Financial Services Group 1,100 93,060
Marsch & Mclennan 1,300 34,957
Merrill Lynch 800 55,648
Morgan Stanley 1,100 69,531
National City 2,100 75,999
Sun Trust Bank 800 61,008
U.S. Bancorp 2,400 74,112
Wachovia 700 37,856
Washington Mutual 1,400 63,812
--------
942,085
--------
Healthcare 6.4%
Health Management Associates 2,300 45,333
Merck 2,900 105,647
Pfizer, Inc 2,400 56,328
Triad Hospital* 1,200 47,496
--------
254,804
--------
Industrial Goods 3.6%
Ingersoll-Rand 1,900 81,282
Masco Corporation 2,100 62,244
--------
143,526
--------
Services 14.7%
Amerisource Bergen 1,000 41,920
BJs Wholesale 2,000 56,700
Canadian Pacific 700 35,798
CSX 1,500 105,660
CVS Corp. 2,700 82,890
Disney 2,800 84,000
Union Pacific 1,100 102,256
Wal-Mart 1,600 77,072
--------
586,296
--------
Technology 7.2%
Hewlett-Packard 2,300 72,864
Intel 2,900 55,100
Microsoft 1,300 30,290
Nokia 3,000 60,780
Verizon Communications 2,000 66,980
--------
286,014
--------
Utilities 6.2%
American Electric Power 2,700 92,475
Dominion resources 1,100 82,269
Public Service Enterprise Group 1,100 72,732
--------
247,476
--------
Total Common Stocks (Cost $2,902,027) 3,649,356
SHORT-TERM INVESTMENTS 8.2%
Federated Prime Value Obligations #853 185,000 185,000
Federated Treasury Cash Reserves #125 139,000 139,000
----------
Total Short-Term Investments (cost: $324,000) 324,000
----------
TOTAL MARKET VALUE OF SECURITIES OWNED 99.9% (COST $3,226,027) 3,973,356
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES 0.1% 4,990
----------
NET ASSETS APPLICABLE TO 325,063 SHARES ($0.001 PAR VALUE)
OUTSTANDING 100.0% $3,978,346
==========
*Non-income producing investments.
The accompanying notes are an integral part of these financial statements.
VIKING MUTUAL FUNDS
Schedule of Investments
June 30, 2006
Viking Small-Cap Value Fund
SHARES VALUE
Common Stocks 90.0%
Basic Materials 11.8%
Grey Wolf, Inc.* 7,900 $60,830
Maverick Tube* 1,000 63,190
Newfield Exploration 1,200 58,728
Remington Oil & Gas* 1,000 43,970
Cinmarex Energy* 1,200 51,600
N S Group 600 33,048
LoneStar Technologies 600 32,412
Pioneer Drilling 1,800 27,792
--------
371,570
--------
Conglomerates 1.7%
Telefex 1,000 54,020
--------
54,020
--------
Consumer Goods 15.3%
AO Smith 1,300 60,268
AptarGroup 1,900 94,259
Borg Warner Automotive 1,200 78,120
Church & Dwight 2,550 92,871
Clarcor 1,600 47,664
RC 2 Corp* 1,600 61,856
Tupperware 2,200 43,318
--------
478,356
--------
Financial 11.9%
Protective Life 1,900 88,578
Scottish Re Group 2,700 45,036
IPC Holdings 1,500 36,990
First Midwest Bancorp 800 29,664
Highland Hospitality 2,400 33,792
Provident Bankshares 900 32,751
Senior Housing Properties Trust 1,700 30,447
Sunstone Hotel Investors 1,600 46,496
Umpqua Holdings 1,100 28,215
--------
371,969
--------
Healthcare 8.9%
Chattem* 900 27,333
Conmed* 2,500 51,750
PolyMedica 1,400 50,344
Prestige Brands Holdings* 4,900 48,853
Aspreva Pharmaceuticals 1,000 27,140
West Pharmaceutical Services 2,000 72,560
--------
277,980
--------
Industrial Groups 11.1%
Albany International 2,300 97,497
Belden CDT 2,900 95,845
Granite Construction 700 31,689
K&F Industries Holdings 1,800 31,914
RPM 5,100 91,800
--------
348,745
--------
Services 19.3%
Arkansas Best 1,800 90,378
Applebees 1,900 36,518
BJs Wholesale 2,300 65,205
CBRL 700 23,744
Claires Stores 2,500 63,775
Landrys Seafood Restaurants 1,500 48,675
Bristow Group 1,400 50,400
Labor Ready Inc. 1,200 27,180
Stage Stores 1,000 33,000
Owens & Minor 2,300 65,780
OMI Corp 1,800 38,970
Performance Food Group* 700 21,266
Supervalue 500 15,350
YRC Worldwide* 600 25,266
--------
605,507
--------
Technology 5.2%
Bel Fuse, Inc. 1,800 59,058
InPhonic* 7,300 42,924
Technitrol 2,600 60,190
--------
162,172
--------
Utilities 4.8%
Piedmont Natural Gas 3,500 85,050
Questar 800 64,392
--------
149,442
--------
Total Common Stocks (Cost $2,304,407) 2,819,761
SHORT-TERM INVESTMENTS 13.8%
Federated Prime Value Obligations Fund #853 146,000 146,000
Federated Treasury Cash Reserves #125 146,000 146,000
First Western Collective Asset 139,216 139,216
----------
Total Short-Term Investments (Cost $431,216) 431,216
TOTAL MARKET VALUE OF SECURITIES OWNED 103.8% (COST $2,735,623) 3,250,977
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES (3.8)% (118,787)
----------
NET ASSETS APPLICABLE TO 203,550 SHARES ($0.001 PAR VALUE)
OUTSTANDING 100.0% $3,132,190
==========
*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, 2006
Tax-Free Fund Tax-Free Fund Large-Cap Small-Cap
for Montana for North Dakota Value Fund Value Fund
ASSETS:
Investments in securities:
Cost $12,349,618 $5,934,741 $3,226,027 $2,735,623
------------------------------------------------------------------------------------
Value 12,259,494 5,868,935 3,973,356 3,250,977
Cash 6,963 2,038 4,660 4,009
Receivable for fund shares sold 88 0 0 0
Prepaid assets 605 320 1,141 979
Security sales receivable 0 55,000 0 0
Interest & dividends receivable 122,933 71,793 6,492 5,007
Other Receivables 389 0 72 52
------------------------------------------------------------------------------------
Total assets 12,390,472 5,998,086 3,985,721 3,261,024
------------------------------------------------------------------------------------
LIABILITIES:
Security purchases payable 317,487 100,000 0 121,819
Payable for shares redeemed 0 0 0 0
Distributions payable 38,268 18,935 0 0
Other accounts payable and
accrued expenses 10,132 5,351 7,375 7,015
------------------------------------------------------------------------------------
Total liabilities 365,887 124,286 7,375 128,834
------------------------------------------------------------------------------------
NET ASSETS 12,024,585 5,873,800 3,978,346 3,132,190
------------------------------------------------------------------------------------
COMPONENTS OF NET ASSETS AT June 30, 2006
Capital shares, $0.001 par value,
unlimited shares authorized 12,234,375 6,013,131 3,304,290 2,503,855
Net unrealized appreciation
(depreciation) (90,124) (65,806) 747,329 515,354
Accumulated net realized gain
(loss) on investments (119,666) (73,525) (94,807) 113,959
Undistributed net investment
income (loss) 0 0 21,534 (978)
------------------------------------------------------------------------------------
NET ASSETS $12,024,585 $5,873,800 $3,978,346 $3,132,190
------------------------------------------------------------------------------------
NET ASSET VALUE AND
OFFERING PRICE PER SHARE
Net assets, at value $12,024,585 $5,873,800 $3,978,346 $3,132,190
Shares outstanding 1,220,378 590,324 325,063 203,550
Net asset value per share $9.85 $9.95 $12.24 $15.39
Maximum offering price per share
(net asset value per share divided
by 96.25%, 96.25%, 94.75% and
94.75%, respectively) $10.23 $10.34 $12.92 $16.24
------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
VIKING MUTUAL FUNDS
Financial Statements
Statements of Operations (Unaudited)
For the six months ended June 30, 2006
Tax-Free Fund Tax-Free Fund Large-Cap Small-Cap
for Montana for North Dakota Value Fund Value Fund
-------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $268,785 $136,591 $ 0 $ 0
Dividends 4,126 3,253 47,319 23,438
-------------------------------------------------------------------------------------
Total investment income 272,911 139,844 47,319 23,438
-------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 30,385 15,664 13,370 14,797
Administrative fees 6,077 3,149 1,910 1,480
Distribution fees 15,192 7,827 7,640 5,919
Transfer agent fees 1,908 1,090 2,315 2,349
Accounting fees 3,038 1,575 955 740
Professional fees 4,261 4,232 4,208 4,150
Insurance 1,564 770 419 277
Trustee fees 672 666 683 674
Registration fees 504 74 333 352
Custodian fees 1,737 1,736 1,741 1,736
Other 59 41 216 122
-------------------------------------------------------------------------------------
Total expenses 65,397 36,824 33,790 32,596
-------------------------------------------------------------------------------------
Less expenses waived or
reimbursed (29,542) (18,819) (8,005) (8,180)
------------------------------------------------------------------------------------
Net expenses 35,855 18,005 25,785 24,416
-------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 237,056 121,839 21,534 (978)
-------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss)
on investments (25,804) (29,025) 42,552 113,959
Net change in unrealized
appreciation (depreciation)
of investments (199,998) (90,861) 122,308 91,552
-------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS (225,802) (119,886) 164,860 205,511
-------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS $11,254 $1,953 $186,394 $204,533
-------------------------------------------------------------------------------------
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, 2006
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) $237,056 $121,839 $21,534 $(978)
Net realized gain (loss)
on investments (25,804) (29,025) 42,552 113,959
Net change in unrealized
appreciation (depreciation)
of investments (199,998) (90,861) 122,308 91,552
-------------------------------------------------------------------------------------
Net increase (decrease) in
net assets resulting
from operations 11,254 1,953 186,394 204,533
-------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (237,056) (121,839) 0 0
Net realized gains 0 0 0 0
-------------------------------------------------------------------------------------
Total distributions to
shareholders (237,056) (121,839) 0 0
-------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 733,172 379,193 279,752 386,711
Proceeds from reinvestment
of distributions 176,246 71,459 26,175 119,026
Cost of shares repurchased (1,067,413) (997,492) (149,617) (87,147)
-------------------------------------------------------------------------------------
Increase in net assets
derived from capital share
transactions (157,995) (546,840) 156,310 418,590
-------------------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS $(383,797) $(666,726) $342,704 $623,123
-------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period $12,408,382 $6,540,526 $3,635,642 $2,509,067
-------------------------------------------------------------------------------------
End of period $12,024,585 $5,873,800 $3,978,346 $3,132,190
-------------------------------------------------------------------------------------
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, 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) $467,045 $235,781 $26,376 $(4,465)
Net realized gain (loss)
on investments (50,681) (16,197) 208,512 117,983
Net change in unrealized
appreciation (depreciation)
of investments (176,258) (75,800) (12,615) (23,903)
-------------------------------------------------------------------------------------
Net increase (decrease) in
net assets resulting
from operations 240,106 143,784 222,273 89,615
-------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (467,045) (235,781) (26,376) 0
Net realized gains 0 0 0 (119,340)
-------------------------------------------------------------------------------------
Total distributions to
shareholders (467,045) (235,781) (26,376) (119,340)
-------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 2,390,572 712,016 880,163 982,915
Proceeds from reinvestment
of distributions 307,649 141,849 13,522 29,579
Cost of shares repurchased (2,268,804) (307,612) (542,077) (188,253)
-------------------------------------------------------------------------------------
Increase in net assets
derived from capital share
transactions 429,417 546,253 351,608 824,241
-------------------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS $202,478 $454,256 $547,505 $794,516
-------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period $12,205,904 $6,086,270 $3,088,137 $1,714,551
-------------------------------------------------------------------------------------
End of period $12,408,382 $6,540,526 $3,635,642 $2,509,067
-------------------------------------------------------------------------------------
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
01/01/06- 01/01/05- 01/01/04- 01/01/03- 01/01/02- 01/01/01-
06/30/06 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01
(Unaudited)
--------------------------------------------------------------------------
Net asset value, beginning of period $10.04 $10.22 $10.20 $10.18 $9.74 $9.82
--------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 0.20 0.38 0.38 0.42 0.46 0.51
Net realized and unrealized gain
(loss) on investments (0.19) (0.18) 0.02 0.02 0.48 (0.08)
--------------------------------------------------------------------------
Total from investment operations 0.01 0.20 0.40 0.44 0.94 0.43
--------------------------------------------------------------------------
Less distributions from:
Net investment income (0.20) (0.38) (0.38) (0.42) (0.46) (0.51)
Net realized gains 0.00 0.00 0.00 0.00 (0.04) 0.00
--------------------------------------------------------------------------
Total distributions (0.20) (0.38) (0.38) (0.42) (0.50) (0.51)
--------------------------------------------------------------------------
Net asset value, end of period $9.85 $10.04 $10.22 $10.20 $10.18 $9.74
--------------------------------------------------------------------------
Total return1 0.04% 1.96% 4.05% 4.45% 9.90% 4.48%
--------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000's) $12,025 $12,408 $12,206 $12,634 $8,513 $3,549
Ratio of net expenses to average net assets 0.59% 0.55%2, 0.41%2 0.31%2 0.15%2 0.06%2
Ratio of net investment income to
average net assets 3.90% 3.71% 3.78% 4.13% 4.58% 5.06%
Portfolio turnover rate 8.33% 24.59% 26.55% 24.72% 40.09% 6.14%
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 $29,542, $65,270, $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 1.08%, 1.06%, 1.06%,
1.09%,
1.30%, and 1.60% 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
01/01/06- 01/01/05- 01/01/04- 01/01/03- 01/01/02- 01/01/01-
06/30/06 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01
(Unaudited)
-----------------------------------------------------------------------------
Net asset value, beginning of period $10.14 $10.29 $10.29 $10.25 $9.76 $9.95
-----------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 0.20 0.38 0.38 0.42 0.47 0.51
Net realized and unrealized gain
(loss) on investments (0.19) (0.15) 0.00 0.04 0.49 (0.19)
-----------------------------------------------------------------------------
Total from investment operations 0.01 0.23 0.38 0.46 0.96 0.32
-----------------------------------------------------------------------------
Less distributions from:
Net investment income (0.20) (0.38) (0.38) (0.42) (0.47) (0.51)
Net realized gains 0.00 0.00 0.00 0.00 0.00 0.00
-----------------------------------------------------------------------------
Total distributions (0.20) (0.38) (0.38) (0.42) (0.47) (0.51)
-----------------------------------------------------------------------------
Net asset value, end of period $9.95 $10.14 $10.29 $10.29 $10.25 $9.76
-----------------------------------------------------------------------------
Total return1 0.05% 2.24% 3.76% 4.60% 10.07% 3.26%
Ratios/supplemental data:
Net assets, end of period (000's) $5,874 $6,541 $6,086 $4,781 $2,059 $1,614
Ratio of net expenses to average net assets 0.57%2,3 0.52%2 0.44%2 0.36%2 0.22%2 0.11%2
Ratio of net investment income to
average net assets 3.86%3 3.70% 3.68% 4.06% 4.73% 4.85%
Portfolio turnover rate 19.42% 17.61% 22.36% 7.49% 27.95% 3.83%
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 $18,819, $41,214, $40,375, $32,710, $30,993, and $16,352.
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%, 1.16%, 1.18%, 1.32%, 1.90% and 2.57% 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
01/01/06- 01/01/05- 01/01/04- 01/01/03- 01/01/02- 01/01/01-
06/30/06 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01
(Unaudited)
--------------------------------------------------------------------------
Net asset value, beginning of period $11.64 $10.88 $10.06 $8.20 $10.74 $11.08
--------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 0.07 0.08 0.05 0.06 0.06 0.04
Net realized and unrealized gain
(loss) on investments 0.53 0.76 0.82 1.86 (2.54) (0.34)
-------------------------------------------------------------------------
Total from investment operations 0.60 0.84 0.87 1.92 (2.48) (0.30)
-------------------------------------------------------------------------
Less distributions from:
Net investment income 0.00 (0.08) (0.05) (0.06) (0.06) (0.04)
Net realized gains 0.00 0.00 0.00 0.00 0.00 0.00
---------------------------------------------------------------------------
Total distributions 0.00 (0.08) (0.05) (0.06) (0.06) (0.04)
---------------------------------------------------------------------------
Net asset value, end of period $12.24 $11.64 $10.88 $10.06 $8.20 $10.74
---------------------------------------------------------------------------
Total return1 5.15% 7.76% 8.63% 23.42% (23.08)% (2.73)%
Ratios/supplemental data:
Net assets, end of period (000's) $3,978 $3,636 $3,088 $2,745 $1,962 $2,143
Ratio of net expenses to average net assets 1.35%2,3 1.34%2 1.34%2 1.35%2 1.35%2 1.35%2
Ratio of net investment income to
average net assets 1.12%3 0.81% 0.47% 0.73% 0.71% 0.37%
Portfolio turnover rate 6.15% 37.51% 25.70% 26.75% 36.52% 27.59%
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 $8,005, $15,575, $14,372, $15,021, $20,422, and $15,184.
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
1.76%, 1.82%, 1.84%, 2.02%, 2.34% and 2.10% 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
01/01/06- 01/01/05- 01/01/04- 01/01/03- 01/01/02- 05/03/011-
06/30/06 12/30/05 12/31/04 12/31/03 12/31/02 12/31/01
-----------------------------------------------------------------------------
Net asset value, beginning of period $14.32 $14.40 $12.43 $9.35 $10.26 $10.00
-----------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) 0.00 (0.03) (0.06) (0.03) (0.03) 0.00
Net realized and unrealized gain
(loss) on investments 1.07 0.63 2.22 3.11 (0.88) 0.26
---------------------------------------------------------------------------
Total from investment operations 1.07 0.60 2.16 3.08 (0.91) 0.26
---------------------------------------------------------------------------
Less distributions from:
Net investment income 0.00 0.00 0.00 0.00 0.00 0.00
Net realized gains 0.00 (0.68) (0.25) 0.00 0.00 0.00
---------------------------------------------------------------------------
Total distributions 0.00 (0.68) (0.25) 0.00 0.00 0.00
---------------------------------------------------------------------------
Net asset value, end of period $15.39 $14.32 $14.40 $12.43 $9.35 $10.26
---------------------------------------------------------------------------
Total return2 7.47% 4.18% 17.86% 32.94% (8.87)% 2.60%
Ratios/supplemental data:
Net assets, end of period (000's) $3,132 $2,509 $1,715 $1,250 $604 $321
Ratio of net expenses to average net assets 1.65%3,4 1.65%3 1.65%3 1.65%3 1.65%3 1.59%3,4
Ratio of net investment income to average
net assets (0.07%)4 (0.21)% (0.46)% (0.37)%4 (0.41)% (0.28)%4
Portfolio turnover rate 15.72% 21.93% 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 $8,180, $15,661, $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 2.21%, 2.39%, 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, 2006
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. The matrix
system gives consideration to the following: yields or prices of municipal
bonds of comparable quality, type of issue, coupon, maturity, rating, and
indications as to value from dealers and general market conditions.
Because the market value of municipal securities can only be established by
Agreement between parties in a sales transaction, and because of uncertainty
inherent in the valuation process, the fair values as determined may differ
from the value that would have been used had a ready market for the
securities existed.
Federal Income Taxes The Funds intend to qualify for treatment as a regulated
investment company under Subchapter M of the Internal Revenue Code, and the
funds intend to distribute investment company net taxable income and net
capital gains to shareholders. Therefore, no federal tax provision is
recorded.
Premiums and Discounts Premiums and discounts on municipal securities are
amortized for financial reporting purposes.
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 months ended
June 30, 2006 and year ended December 31, 2005 were as follows:
Tax-Free Fund for Tax-Free Fund for Large-Cap Small-Cap
Montana North Dakota Value Fund Value Fund
----------------------------------------------------------------------------------
2006 2005 2006 2005 2006 2005 2006 2005
----------------------------------------------------------------------------------
Distributions paid from:
Tax-exempt income $237,056 $467,045 $121,839 $235,781 $0 $0 $0 $0
Ordinary income $0 $0 $0 $0 $0 $26,376 $0 $0
Long-term capital gain $0 $0 $0 $0 $0 $0 $0 $119,340
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 01/01/06 from 01/01/06 from 01/01/06 from 01/01/06
through 06/30/06 through 06/30/06 through 06/30/06 through 06/30/06
---------------------------------------------------------------------------
Shares sold 204,502 62,581 29,246 31,485
Shares issued in reinvestment
of distributions 17,653 7,073 2,248 8,312
Shares redeemed (237,969) (124,085) (18,682) (11,488)
---------------------------------------------------------------------------
Net Increase (Decrease) (15,814) (54,431) 12,812 28,309
---------------------------------------------------------------------------
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 Funds daily net
assets and 1.00% to the Small-Cap Funds daily net assets. The Tax-Free
Fund
for Montana recognized $26,840 of investment advisory fees after a partial
waiver for the six months ended June 30, 2006. On June 30, 2006,
the Tax-Free Fund for Montana had a payable to VFM for investment advisory
fees of $4,370. The Tax-Free Fund for North Dakota recognized $10,362 of
investment advisory fees after a partial waiver for the six months ended
June 30, 2006. On June 30, 2006, the Tax-Free Fund for North Dakota
had a payable to VFM for investment advisory fees of $1,663. The Large-Cap
Fund recognized $13,370 of investment advisory fees
for the six months ended June 30, 2006. On June 30, 2006, the
Large-Cap Fund had a payable to VFM for investment advisory fees of $2,238.
The Small-Cap Fund recognized $14,797 of investment advisory fees for the
six months
ended June 30, 2006. On June 30, 2006, the
Small-Cap Fund had a payable to VFM for investment advisory fees
of $2,487. 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
Funds
daily net assets of up to $100 million and 0.35% to the Large-Cap Funds
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 Funds daily net assets until the net assets reach $5 million and
0.60% to the Small-Cap Funds 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. For the six months ended June 30, 2006 the
Tax-Free Fund for North Dakota recognized $82 for transfer-agent services.
After the
Fee waivers, no other fees for administrative services, portfolio accounting
And transfer agent services were recognized by the Funds. On June 30,
2006 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 $59, $41, $216 and $122, 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, 2006, the Tax-Free Fund for Montana
recognized
$304, the Tax-Free Fund for North Dakota recognized $42, Large-Cap Value
Fund recognized $4,815 and Small-Cap Value Fund
recognized $2,308 of 12b-1 fees after a partial waiver. On June 30, 2006,
the Large-Cap
Fund and Small-Cap Fund had payables to VFD for 12b-1 fees of $846 and $364,
respectively.
For the six months ending June 30, 2006, the net amounts of sales charges
deducted from the proceeds of sale of capital shares which were retained
by VFD as principal underwriter were $4,881, $24, $1,452 and $1,397
for the Tax-Free Fund for Montana, Tax-Free Fund for North Dakota, Large-Cap
Fund and Small-Cap Fund, respectively. On June 30, 2006 the Tax-Free Fund
for Montana, Tax-Free for North Dakota, Large-Cap Fund and Small-Cap Fund
had
payables to VFD for underwriting fees of $2,207, $1, $377, and $193,
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.
Certain officers and trustees of the Funds are also officers and governors
of VFM and VFD.
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, 2005, 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 $93,862, $44,499 and $137,360 respectively,
which may be carried over to offset future capital gains. Such losses start
to expire in 2008.
At June 30, 2006, 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 $12,349,618 $5,934,741 $3,226,027 $2,735,623
------------------------------------------------------------------------------------
Unrealized appreciation 78,836 28,685 823,439 592,185
Unrealized depreciation (169,960) (94,491) (76,110) (76,831)
------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) $(90,124) $(65,806) $747,329 $515,354
------------------------------------------------------------------------------------
7. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the
six months ended June 30, 2006 were as follows:
Tax-Free Fund Tax-Free Fund Large-Cap Small-Cap
for Montana for North Dakota Value Fund Value Fund
------------------------------------------------------------------------------------
Purchases $1,263,843 $1,225,358 $244,269 $652,280
Sales $1,011,895 $1,784,003 $235,505 $463,881
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
Miscellaneous Information (Unaudited)
June 30, 2006
Board Approval of Investment Advisory Agreement
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 Agreement.
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 advisor; (2) the performance of the Funds and
the advisor; (3) the financial capability of
the advisor; (4) the compliance history of the advisor; (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 advisor; (8) the extent of any economies of scale; and (9) the existence
of any collateral benefits realized by the
advisor 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 Funds have lower expense
structures than most of 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 lower expense structure than most
of 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 average of the
other funds; (4) a comparison of the management fees charged by the Advisor
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 Advisor had historically been, and continued to be,
satisfactory to the Trustees; (7) the Trustees
discussed the fact that the advisor 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 advisory clients; (8) the
Trustees discussed the profitability issues
regarding the Advisor and felt comfortable with the direction of the Advisor
and its prospects for future profitability.
In reviewing the Sub-Advisory Agreements, the Trustees considered the sub-
advisory fees compared to the level of sub-
advisory fees paid by other 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 other funds and separately
managed accounts; (4) the investment performance of Fox has lagged somewhat
but appears to be improving during the last
year and year-to-date, with regard to the Large-Cap Value Fund; (5) the
Trustees are satisfied 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, 2006
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 transaction 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 01/01/06 Value 06/30/06 Period1 01/01/06-06/30/06
Viking Tax-Free Fund for Montana
Actual $1,000.00 $1,000.40 $3.00
Hypothetical (5% return before expenses) $1,000.00 $1,022.31 $3.03
Viking Tax-Free Fund for North Dakota
Actual $1,000.00 $1,000.50 $2.90 2
Hypothetical (5% return before expenses) $1,000.00 $1,021.85 $2.94 2
Viking Large-Cap Value Fund
Actual $1,000.00 $1,051.50 $6.87
Hypothetical (5% return before expenses) $1,000.00 $1,018.01 $6.78
Viking Small-Cap Value Fund
Actual $1,000.00 $1,074.70 $8.61
Hypothetical (5% return before expenses) $1,000.00 $1,016.39 $8.40
1Expenses are equal to the annualized expense ratio for each Fund (Viking
Tax-Free Fund for Montana: 0.59%; Viking Tax-Free Fund for North Dakota:
0.57%; 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 North Dakota have increased since the
Fund's most recent fiscal half-year. Had the current expense ratio of the
Fund, 0.61%, been in place throughout the entire most recent fiscal half-year,
the Actual "Expenses Paid During Period" would have been $3.05 and the
Hypothetical "Expenses Paid During Period" would have been $3.09.
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, without charge, and
upon request, by calling 1-800-933-8413 and on the SECs website at
http://www.sec.gov.
Quarterly Portfolio Schedule
The Funds 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 are available on the SEC's website at http://www.sec.gov.
The Funds' Form N-Q may be reviewed and copied at the SEC's Public Reference
Room in Washington, DC and information on the operation of the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
VIKING MUTUAL FUNDS
Trustee Information (Unaudited)
June 30, 2006
NAME AND PRINCIPAL OCCUPATION(S)
ADDRESS AGE POSITION(S) HELD DURING PAST 5 YEARS
- -----------------------------------------------------------------------------------------------------------------------
Shirley R. Martz 81 Trustee Retired CPA (1989-pres.); Trustee, Viking
116 1st St SW Suite C Mutual Funds (1999-pres.); Principal
Minot, ND 58701 shareholder and employee of Brady, Martz
& Associates and its predecessor (1948-
1989).
Shannon D. Radke 39 Trustee President, Viking Fund Management, LLC
116 1st St SW Suite C 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 69 Trustee Retired; Trustee, Viking Mutual Funds
116 1st St SW Suite C (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 40 Trustee General Manager, Holiday Inn Riverside
116 1st St SW Suite C (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
116 1st St SW Suite C
Minot, ND 58701
BOARD OF TRUSTEES
Shirley R. Martz
Shannon D. Radke
Mike Timm
Peter C. Zimmerman
INVESTMENT MANAGER
Viking Fund Management, LLC
116 1st St SW Suite C
Minot, ND 58701
SUB-ADVISOR
(For Viking Large-Cap Value Fund)
(For Viking Small-Cap Value Fund)
Fox Asset Management, LLC
331 Newman Springs Road Suite 122
Red Bank, NJ 07701
DISTRIBUTOR
Viking Fund Distributors, LLC
116 1st St SW Suite C
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.
Not applicable to semi-annual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable to semi-annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable to semi-annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable to the registrant.
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 to the registrant.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to the registrant.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable to the registrant.
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) Internal Controls. The registrant has modified its internal controls
over financial reporting, including additional separation of responsibilities
between accounting and reconciliation and between accounting and authorized
signatory functions.
ITEM 12. EXHIBITS.
(a)(1) Not applicable to semi-annual reports.
(a)(2) The certifications of principal executive officer and principal
financial
officer as required by Rule 30a-2(a) under the Investment Company Act
of
1940 are filed and attached as an exhibit.
(a)(3) Not applicable to the registrant.
(b) The certifications of principal executive officer and principal
financial
officer as required by Rule 30a-2(b) under the Investment Company Act
of
1940 and Section 906 of the Sarbanes-Oxley Act of 2002 are filed and
attached
as an exhibit.
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:
EXHIBIT INDEX
(a)(2) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2(a) under the Investment Company Act
of 1940.
(b) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2(b) under the Investment Company Act
of
1940. Certification of principal executive officer and principal
financial officer as required by Section 906 of the Sarbanes-Oxley
Act of 2002.