UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM N-30B-2

SHAREHOLDER NEWSLETTER

Investment Company Act
file number 811-6027

KAVILCO INCORPORATED
(Exact name of registrant as specified in charter)

600 UNIVERSITY STREET, SUITE 3010
SEATTLE, WASHINGTON 98101-1129
(Address of Principal executive offices) (Zip Code)

(206) 624-6166
Registrant's telephone number, including area code

Date of fiscal year end: December 31

Date of reporting period: March 23, 2006



KAVILCO INCORPORATED NEWSLETTER
MARCH 2006

DIVIDEND DECLARATION
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I am pleased to announce that on March 10, 2006, the Board of Directors declared
a  cash dividend of $13.00 per share. This dividend will be paid to shareholders
of  record  as  of  March 13, 2006. The dividend is payable on March  23,  2006.
Enclosed is payment or information reflecting the number of shares you own.

This  dividend  represents undistributed earnings from  2005.  As  you  know,  a
Registered  Investment  Company (RIC) must distribute  at  least  90%  of  their
earnings  to  avoid  being  subject  to a  40%  Federal  Income  Tax  rate.  For
shareholders with 100 shares your dividend is $1,300. If Kavilco was not  a  RIC
and had to pay income tax, your dividend after tax would be $780. Therefore, you
receive  an additional $520 because Kavilco does not have to pay Federal  Income
Tax.  This  is  another  testimony  to the  advantages  of  being  a  registered
investment company.

For an expanded discussion, see the Portfolio section in this newsletter.

CASHING YOUR CHECK
- -------------------
PLEASE  - give your bank a few days notice before you cash your dividend  check.
Banks do not keep that much cash on hand on any given day and they need to  make
special arrangements. This applies to all banks throughout the United States.

CHIEF SON-I-HAT'S WHALE HOUSE & TOTEM PARK
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Kavilco has re-applied for grant funds from the 2006 National Park Service (NPS)
Tribal  Preservation Program. We were turned down in 2004, but with the help  of
the   Kasaan  Haida  Heritage  Foundation,  we  fine-tuned  the  original  grant
application  based  on  recommendations and  suggestions  from  the  2004  grant
reviewers.

If  we  are  successful, we will use the grant funds to determine  the  cost  to
repair and restore the Whale House and totems by hiring MRV Architects to survey
the  site and determine the magnitude of necessary repairs and restoration.  MRV
Architects  would then create measured drawings of the building  and  site,  and
submit  a proposal to rehabilitate, restore and reconstruct the structure  based
on their findings. Once the cost to restore the Whale House and totems is known,
Kavilco will then seek additional grants, donations and funding to implement the
restoration.

We chose MRV Architects, a Juneau, Alaska firm, based on their experience in the
restoration  of  Alaska Native clan houses and totems. Furthermore,  the  firm's
founder,  Linn A. Forrest, prepared the original construction drawings  for  the
Whale  House in 1938 when he worked for the U.S. Forest Service. Copies  of  the
drawings are in the firm's archives.
The NPS will make their determination in May 2006.

Special thanks to Jeane Breinig, Laird A. Jones and Deanna Kaulay for their help
in the application process.

PORTFOLIO
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The  following  is an abbreviated discussion on the economy and  portfolio  that
took place at our March 10 and 11, 2006 Board Meeting.

A  shift seems to be taking place within the economy. So far, during the current
economic  expansion, which began in 2001, the consumer has  led  the  way.  This
explains  the healthy increases in both home sales and housing prices in  recent
years.  Now,  the mild uptick in mortgage rates, the unchecked  rise  in  energy
prices  and the unrelenting climb in home prices are starting to have an  effect
on  this pivotal market. Accordingly, we anticipate an economic slowdown in  the
second half of the year.

How  does  this  economic projection play out in the overall management  of  our
portfolio? Let's consider bonds first, because the interest on these investments
is  the  lion's  share  of  our  earnings. Then I will  conclude  with  a  brief
discussion on stocks.

We have a very curious phenomenon occurring in the bond market. Normally, short-
term  interest  rates  are  lower than long-term rates  because  there  is  more
fundamental risk in the long term (an investment could become worthless  because
of a bond default, or lack of purchasing power because inflation erodes interest
income).  However,  we  now  have a situation where short-term  bond  investment
yields  more  than longer-dated bonds. This is called an "inversion  of  yields"
(inverted  yield curve). The classic explanation for the inversion is  that  the
bond  market is discounting an economic slowdown. We know that global  investors
are major buyers of U.S. bonds because we have the highest interest rates in the
industrialized world. Thus, the argument continues-is an inverted yield curve  a
sign of a coming economic slowdown, or is there just too much money out there?

Although  interest rates are higher than they were last year at this time,  they
are  still  substantially below our big dividend years of the  latter  90's  and
early  part  of this decade. In an attempt to improve our return, we  are  still
pursuing the speculative strategy of actively trading long-dated Treasury  bonds
for capital gains purposes. Last year we had over $92 million of security trades
for  an  unprecedented portfolio turnover rate of 131.3%. We do  not  anticipate
having to go to such extremes this year.

The  stock market appears to be in the late stages of a bull market (or the  end
of a correction in a bear market) and the early stages (or resumption) of a bear
market.  We  subscribe to Lowry's Reports, which is a stock service  founded  in
1938  that  provides  an analytical approach to trends in  the  New  York  Stock
Exchange  with  a  way  of visualizing the basic forces of  supply  vs.  demand.
According to "Lowry's Market Trend Analysis," early August 2005 was an important
turning  point for the broad market. The Buying Power Index had peaked  in  mid-
July,  began  to  drop sharply in early August and has been trending  down  ever
since. What this means is that it confirms weakening investor demand for stocks.

On  the  other side of the ledger, ideally the desire to sell should dry  up  on
rallies.  That  was the case from the March 2003 market low until  early  August
2005.  But,  since  that time, Selling Pressure has been expanding  on  a  trend
basis, showing that investors have been selling into every rally. As a matter of
fact,  Selling Pressure has continued to rise, approaching its highest level  in
more  than  two  years,  as  initial  profit taking  appears  to  evolving  into
purposeful liquidation.

We  feel that this is not the time to diversify our stock portfolio, or at least
until the aforementioned buying power/selling pressure reverses course. Instead,
we  are  confining our investments in the energy and utility sectors, which  are
leading the broad market.

VISIT KAVILCO'S WEBSITE
- -----------------------
Visit  Kavilco's  website (www.kavilco.com). You can find out  when  the  Annual
Meeting  is  scheduled. Click on "Joint Project" and see recent  photographs  of
Chief  Son-I-Hat's Whale House and Totem Park. Click on "Shareholder Information
/Affidavits  & Forms" and print out Direct Deposit forms, Gifting forms,  Change
of  Address  forms  and Voluntary IRS Withholding forms.  You  must  have  Adobe
Acrobat  6.0 version or better to view and/or print the forms. You can  download
Adobe Acrobat for free.

We  hope  you  enjoy  your tour of our website and we welcome  any  comments  or
suggestions you might have.

WHAT'S NEW
- ----------
The Kasaan Haida Heritage Foundation now has its own website: KasaanHaida.org.

Click  on "Projects/Gasaaan Xaadas Guusuu" and listen to our Haida elders speak!
KHHF's Fall 2005 newsletter is there too, complete with photos.

DIRECT DEPOSIT
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Receive your Kavilco dividends faster with Direct Deposit!

* Your money is credited to your bank account on the distribution date.

* Access your money the same day by check, ATM or debit card.

* Eliminate the risk of lost or stolen checks.

* Eliminate delays caused by relying on the mail.

* No cost to sign up or receive Direct Deposit.

Request  an  "Authorization  for Direct Deposit of Dividends"  form  by  calling
Kavilco toll free at 1-800-786-9574, or visit our website and print the form. Go
to  "Shareholder  Information/Affidavits & Forms." The completed  form  MUST  be
returned  to  Kavilco no later than October 1, 2006 for the Fall dividend.  That
means Kavilco needs to have the form in their business office by that date.

Kavilco's  custodial bank will charge a $35.00 handling fee if a Direct  Deposit
is  ever  rejected,  and  Kavilco will pass that  fee  on  to  the  shareholder.
Therefore,  it is important that you notify Kavilco IN WRITING if there  is  any
change to your account.

IN MEMORIUM
- -----------
Catherine N. Kerstetter

Catherine  Nelsie Kerstetter, age 91, died in Renton, Washington on  January  9,
2006.  She was born to Louis and Anna (Frank) Jones in Kasaan on April 9,  1914.
She was Haida, Raven-Brown Bear, Taas `Laanaas (Sand Beach People) clan.

She  received her education from the territorial school in Kasaan and  graduated
from Sheldon Jackson School in Sitka in1934.

Her first marriage was to the late Joe Johnson of Angoon, Alaska, son of Sam and
Minnie Johnson.

She  later married James Kerstetter. They lived in Ketchikan and worked  at  the
Model Cleaners, the present location of SharJo's restaurant. James retired  from
the  U.S.  Army,  and while serving in the National Guard, the couple  lived  in
Anchorage,  Wrangell, and Ketchikan. They then moved to Washington, settling  in
Federal Way.

She  was  preceded  in  death by her parents; husband;  and  siblings,  Raymond,
George, Henry, Leah, Melinda and Louise.

She   is  survived  by  her  children,  Robert  (wife  Roberta)  Kerstetter   of
Fayetteville, North Carolina and Linda (husband William) White of West Richland,
Washington; grandchildren, Peter and Christopher Kerstetter, and William (Chips)
and James White; two great-grandchildren; sister Julia (husband Perry) Coburn of
Kasaan; brother Willard (wife Mary) Jones of Ketchikan; many nieces and nephews;
and her very special friend, Kay Marshall.

She  loved  to  share  her  homemade jams, jellies, and handiwork,  mainly  with
family. She was also a great resource person to linguists in the Haida language,
as well as the history of Kasaan to the Kasaan Haida Heritage Foundation.

Funeral  services were held at the Bonney-Watson Washington Memorial on  January
13, 2006, in SeaTac, Washington.

Shirley McAllister

Longtime  Ketchikan resident Shirley McAllister, 70, died January 26,  2006,  in
Ketchikan. She was born Shirley Norene Riffe in Olympia, Washington on July  29,
1935,  and  graduated from Morton High School. She moved to  Ketchikan  in  1956
where  she  worked as a waitress at the Stedman, the Blue Fox, and  other  local
restaurants. She later worked at the Laborer's Union office.

She  met James Spencer and they married in 1960. They purchased the Union  Rooms
Hotel  and  settled into running the hotel, working at the Laborers  Union,  and
raising her two children, Kelly and Melody. After Jim's passing in 1976, she met
Ivan McAllister and they married in 1982.

The  Laborers Union closed after 17 years, and Shirley and her family  moved  to
Saxman,  where she enjoyed gardening and family life while continuing to oversee
the  management of her hotel. She retired from the hotel business when she  sold
the Union Rooms in 2001.

Shirley was a member of the Pioneers of Alaska and the Sons of Norway. She  also
enjoyed fishing, boating, and visiting and vacationing with her friends.
She  was  preceded in death by her parents, John Ballard and Fay  Evelyn  Riffe;
sister, Joan Bowen; and husband, Ivan McAllister.

She  is  survived by brother and sister-in-law, John and Nancy Riffe of Bullhead
City,  Arizona;  son  and  daughter-in-law, Kelly Spencer  and  Angel  Williams;
daughter,  Melody  McAllister;  stepson, Ivan  McAllister  II;  grandsons,  John
McAllister  Jr., Kelly Spencer, Keenan Spencer; granddaughter, Kyrie Spencer  of
Ketchikan; step-granddaughters, Tammy McAllister of Gilbert, Arizona, and  Tracy
McAllister, of Chehalis, WA; and good friend, Johanna Close of Ketchikan.

A  memorial service was held at the Salvation Army on Stedman Street on February
4, 2006. The family suggests any donations be made to the Salvation Army Gateway
Corps.

HAW' AA TO GENEROUS KHHF DONORS
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Kasaan  Haida  Heritage Foundation (KHHF) says thank you  to  all  the  generous
Kavilco shareholders and their invited guests to the Kavilco annual dinner where
KHHF held its yearly fundraising raffle. A special thank you to Diane and George
Demmert  for  opening their home and assisting the "basket making  team"-Eleanor
Hadden,  Laird  Jones, Jeane Breinig, Ramona Hamar and Louis  Jones.  The  group
filled six baskets raffled for grand prizes, and 11 baskets that were raffled at
the  "Chinese Auction," along with items for door prizes, the silent auction and
the  regular bid auction. Thanks to all our donors who helped make the raffle  a
success.

Valborg Braz
Caroline Hendrixson
Julie Coburn
Willard & Mary Jones
Eleanor Hadden
Laird Jones
Ramona Hamar
Annette Thompson
Erma Lawrence
Nettie Ralph
Jeane Breinig
Louis & Paige Jones
Diane Demmert
Opal Olsen
Jordan Lachler (Sealaska Heritage Institute)

Thank you to Kris and Sara Hadden for helping sell and collect tickets during
the event. A detailed list of donations and prizewinners will be in the 2006
Fall Kasaan Haida Heritage Newsletter. Due to the active bidding by generous
dinner attendees, KHHF was able to raise over $2,000. KHHF will contribute over
$4,000 to the Whale House Restoration project proposal Kavilco submitted to the
National Parks Service.

Please feel free to call me at 907-542-2214 or toll-free at our Seattle office
1-800-786-9574.

Sincerely,
/s/Louis A. Thompson
President/CEO