SATURNA INVESTMENT TRUST OFFERS IDAHO TAX-EXEMPT FUND, A NO-LOAD MUTUAL FUND.
IDAHO TAX-EXEMPT FUND seeks income exempt from federal and Idaho income taxes by
investing in a portfolio of Idaho municipal securities. The secondary objective
is to preserve capital.
A Statement of Additional Information dated March 29 , 1996 has been filed with
the Securities and Exchange Commission and is incorporated by reference into
this Prospectus. You may obtain a free copy by writing or calling:
SATURNA CAPITAL
1300 N. STATE STREET
BELLINGHAM, WA 98225
800/ SATURNA [800/ 728-8762]
E-MAIL: [email protected]
This Prospectus contains information you should read before investing in the
Funds. Please read it carefully and keep it for future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES AUTHORITY NOR HAS THE COMMISSION OR
ANY STATE AUTHORITY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Outline of Idaho omitted
FROM
SATURNA CAPITAL
MUTUAL FUNDS
NO-LOAD,
NO SALES CHARGE,
NO 12B-1
PROSPECTUS
March 29, 1996
<PAGE>
2
EXPENSES
The Fund imposes no sales load on purchases or reinvested dividends, no "12b-1"
fees, nor any deferred sales load upon redemption. There are no redemption fees
or exchange fees. The following table illustrates operating expenses of the Fund
for the fiscal year ended November 30, 1995.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<S> <C>
Management and Administrative Fees (after 0.32%
waiver)
12b-1 Expenses NONE
Other Expenses 0.43%
Total Fund Operating Expenses 0.75%*
For Example:
The Fund estimates paying 1 year -- $8
these expenses on a $1,000 3 years-- $25
investment, assuming 5% 5 years-- $44
annual return: 10 years-- $100
<FN>
*The Adviser voluntarily limited operating expenses of the Fund at
0.75% annually through November 30, 1995 and to .80% through March
31, 1997. This limit, first adopted in October 1990, has been
extended through March 31, 1997. Without the limitation, the
management and administrative fee would have been 0.50% and
operating expenses of the Fund would have been 1.01%. The example
assumes a continuation of this expense cap for the 3, 5 and 10 year
periods.
</FN>
</TABLE>
The preceding information is intended to help you in understanding the various
(both direct and indirect) expenses that an investor will bear. This table
should not be considered a representation of past or future expenses and actual
expenses are likely to be more or less than those shown. See FINANCIAL
HIGHLIGHTS and INVESTMENT ADVISER for more details.
<PAGE>
FINANCIAL HIGHLIGHTS
[GRAPHIC OMITTED]
Selected data for a share of IDAHO TAX-EXEMPT FUND beneficial interest
outstanding throughout each period. The following schedule for each of the six
years ended November 30, 1995 has been audited by Price Waterhouse, LLP
independent accountants, whose report thereon is included in the Annual Report
to Shareowners, which is incorporated by reference into the Statement of
Additional Information. The data for each of the two years in the period ended
November 30, 1989 and for the period September 4, 1987 (commencement of
operations) through November 30, 1987 were audited by other independent
accountants whose report dated January 19, 1990 expressed an unqualified opinion
on those data. This schedule should be read with the other financial statements
and notes thereto included in the Trust's Annual Report which also includes
Management's Discussion of the Fund's performance. The Trust's Annual Report is
available without charge from the Trust.
<TABLE>
<CAPTION>
Commencement of
operations)
NOVEMBER 30 to Nov.
-------- -------- -------- -------- -------- --------------------------
1995 1994 1993 1992 1991 1990 1989 1988 30 '87
--- ---- ---- ---- ---- ---- ---- ---- ----
NET ASSET VALUE
AT BEGINNING
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OF PERIOD $4.76 $5.23 $5.16 $5.10 $5.03 $5.07 $4.98 $5.03 $5.00
INCOME FROM INVESTMENT
OPERATIONS
Net investment
income 0.26 0.27 0.25 0.28 0.30 0.33 0.35 0.35 0.02
Net gains or losses on
securities (both
realized and unrealized) 0.52 (0.46) 0.12 0.09 0.07 (0.04) 0.09 (0.05) 0.02
----- ------ ----- ----- ----- ------ ----- ------ ----
Total From
Investment Operations 0.78 (0.19) 0.37 0.37 0.37 0.29 0.44 0.30 0.04
LESS DISTRIBUTIONS
Dividends(from net
investment income) $(0.26) $(0.27)$(0.25) $(0.285) $(0.30) $(0.33)$(0.35) $(0.35) $(0.01)
Distributions (from capital
gains 0.00 (0.01) (0.05) (0.025) 0.00 0.00 0.00 0.00 0.00
----- ------ ------ ------- ----- ----- ----- ----- ----
Total Distributions (0.26) (0.28) (0.30) (0.31) (0.30) (0.33) (0.35) (0.35) (0.01)
NET ASSET VALUE
AT END OF PERIOD $5.28 $4.76 $5.23 $5.16 $5.10 $5.03 $5.07 $4.98 $5.03
====== ====== ====== ====== ====== ====== ====== ====== ====== ==
TOTAL RETURN 16.68% (3.76)% 7.35% 7.49% 7.63% 5.94% 9.17% 6.45% 3.20%
RATIOS /
SUPPLEMENTAL DATA
Net assets 000),
end of period $5,220 $6,841 $7,367 $5,808 $3,803 $2,540 $ 808 $335 $29
Ratio of expenses
to average net assets* 0.75% 0.75% 0.75% 0.75% 0.75% 0.97% 0.90% 0.28% 0.11%
Ratio of net
investment income
to average net assets* 5.07% 5.28% 4.79% 5.64% 6.08% 6.74% 6.51% 6.58% 0.56%
Portfolio turnover rate 28% 36% 31% 17% 15% 17% 13% 100% 0%
* Not Annualized
<FN>
For each of the above years, all or a portion of the expenses were waived. If
these costs had not been waived, the resulting increase to expenses per share in
each of the above periods would be $.016, $.007, $.009, $.008, $.02, $.02, $.05,
$.10, $.19, and $.01, respectively. The increase to the ratio of expenses to
average monthly net assets would be .26%, .14%, .18%, .17%, .54%, 1.01%, 1.25%,
2.24% and .11%, respectively.
Note: Fund shareowners approved a new investment contract and adviser October
12, 1990.
</FN>
</TABLE>
<PAGE>
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8
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ABOUT THE TRUST
IDAHO TAX-EXEMPT FUND is intended to provide investors the opportunity to
receive income exempt from both federal and Idaho income tax. Preservation of
capital is a secondary objective of the Fund. The Fund is "no-load," meaning
that there are no sales or redemption charges, nor does the Fund have so-called
"12b-1" charges.
Mutual funds enable you to invest as you might do for yourself in you had the
time, experience and resources to research and diversify your own investments.
Mutual funds do so by selling their own shares to the public and investing those
proceeds in a portfolio of securities. The value of the funds' own shares
fluctuates as the value of their portfolio of securities changes over time.
You may purchase shares of Idaho Tax-Exempt Fund directly from the Fund without
any sales charge or "load." Because no charges are deducted from your
investment, the entire amount you pay for shares is invested in the Fund.
INVESTMENT OBJECTIVES AND POLICIES
The IDAHO TAX-EXEMPT FUND is designed to provide monthly dividends free from
federal income, federal alternative minimum and any state income taxes. The Fund
does have a secondary objective of attempting to preserve capital.
The Fund's fundamental policy is to invest at least 80% of net assets in
securities generating income exempt from federal income tax, including the
alternative minimum tax. Also, under normal market conditions, at least 65% of
total assets are invested in debt securities generating income exempt from Idaho
income tax.
The Fund is "non-diversified," meaning that it does not invest in a wide range
of investments, but limits its investments to a certain type--debt securities
issued by political subdivisions of the State of Idaho. The Fund does invest in
a broad portfolio of such securities and makes available to investors the
benefits of being diversified and limiting the risk associated with investing in
only a few securities. The Fund is intended primarily for residents of Idaho who
may benefit from its policy of investing in securities exempt from both Idaho
state and federal income taxes. Idaho presently imposes a state income tax
graduated to 8.2% of taxable income over $20,000 (single) or $40,000 (joint
return).
INVESTMENT POLICIES AND RISK CONSIDERATIONS
Investing in securities entails both market risk and risk of price variation in
individual securities. There can be no guarantee that the investment objectives
of the Fund will be realized.
The risks inherent in the Fund depend primarily on the terms and quality of the
obligations in its portfolio, as well as on market conditions. Interest rate
fluctuations will affect the Fund's net asset value, but not the income received
by the Fund from its portfolio securities. Because yields on debt securities
available for purchase by the Fund vary over time, the Fund's yield will also
vary.
Because the Fund is "nondiversified"* and invests primarily in municipal
securities of a single state, its investments are more susceptible to factors
adversely affecting that state. These factors include economic and financial
trends, as well as political conditions in Idaho and its political subdivisions.
Note that if any issuer of securities held by the Fund is unable to meet its
financial obligations, the income derived therefrom, the ability to preserve
capital, and the Fund's liquidity would all be adversely affected.
The Fund is also vulnerable to a change in tax rate, either at the state or
federal level inasmuch as the value of municipal securities is derived in
significant part from the ability of the recipient of interest payments to
exclude such payments from taxation. Should this exclusion be reduced in whole
or in part, the maket for municipal securities, and consequently the Fund's
share value, may be adversely affected.
Among Idaho's leading industries are agriculture, forest products, tourism and
electronic/computer equipment. Locally-oriented industries include retail trade,
finance, insurance, real estate, transportation, communications, utilities,
government and construction. A more complete discussion of these factors is
available in the Statement of Additional Information.
The Fund does not purchase high-yield ("junk") bonds. The Fund requires that at
time of purchase a bond be rated at least "A" or equivalent by a national bond
rating agency (Standard and Poor's, Moody's Investor's Services, or equivalent),
or, if non-rated, to be of equivalent quality in the opinion of the Adviser. The
Fund requires notes to be rated at least MIG-2 by Moody's or SP-2 by Standard &
Poor's, or if non-rated, to be of equivalent quality in the opinion of the
Adviser. The Fund requires commercial paper to be rated at least Prime-2 by
Moody's or A-2 by Standard & Poor's, or, if non-rated, to be of equivalent
quality in the opinion of the Adviser.
Up to 60% of total assets of the Fund can be invested in non-rated bonds. Note
that bonds issued by the State of Idaho and its municipalities are often smaller
issues in total dollars, typically being issued by relatively small Idaho
communities to finance local government projects. Because of the smaller size,
the expense of obtaining a rating for the issuer is typically not undertaken. By
investing in non-rated bonds, the Adviser believes it can often obtain higher
yields without a material sacrifice in quality.
Although both rated and non-rated bonds are traded among dealers based on the
creditworthiness of the issuer, generally, rated bonds have greater market
recognition and the market has more dealers than does the market for non-rated
bonds. The Adviser will purchase only those non-rated bonds that it believes are
liquid and can be sold at about the value given for net asset value purposes.
The Fund occasionally may purchase an entire issue of a small municipal
security, resulting in a higher yield to the Fund as well as the elimination of
certain underwriting expenses to the municipality.
Investors can expect the weighted average portfolio maturity to range between 6
and 15 years. Usually, shorter maturity bonds provide lower current yields,
while a maturity beyond 15 years generally implies greater current yield but
significantly increased risk to capital from interest rate increases.
The Fund may purchase municipal obligations on a delayed-delivery or when-issued
basis (I.E., securities may be purchased with settlement taking place in the
future, often a month or more). The Fund only makes commitments to purchase such
obligations with the intention of acquiring the securities. Obligations
purchased on a when-issued basis involve the risk that the yields available in
the market when delivery takes place may be higher than those obtained in the
transaction itself, with the result that the market value of the securities may
be lower at settlement, just as if the securities had actually been held in the
Fund's portfolio. Conversely, should rates decrease, the value will be higher by
a similar amount.+
During uncertain market or economic conditions, the Idaho Tax-Exempt Fund may
adopt a temporary, defensive position and invest more than 20% of assets in cash
or equivalents, government securities, unaffiliated money-market mutual funds,
and other debt securities having an "A" rating or better. While such defensive
investments may not contribute to the primary objective of tax-free income, they
do assist the secondary objective of capital preservation.
The Fund's investment objectives cannot be changed without shareowner approval.
Except as explained above, all of the policies in this section can be changed by
a majority of the Board of Trustees. The Fund has adopted certain other
restrictions, as outlined in the STATEMENT OF ADDITIONAL INFORMATION.
INVESTMENT RESULTS
You will receive a financial report showing the investments, income and expenses
of your Fund every six months. You may obtain current share values any time by
calling 800-SATURNA (800/728-8762).
PERFORMANCE DATA
The Fund may advertise or publish current yield and average annual total return
in advertisements or in information furnished to publications and to investors.
In any comparison of the Fund's return with that of alternative investments, you
should consider differences between the Fund and the alternative investment, the
periods and methods used in calculation of the returns, and the effect of taxes
on the investments. Of course, past results are not necessarily indicative of
future performance.
You may compute current yield by (i) dividing net investment income over the
rolling 30 day period for which the yield is being computed by the average
number of shares eligible to receive dividends for the period and (ii) dividing
that figure by the Fund's net asset value per share on the last day of the
period, and then (iii) annualizing the results.
The Fund also may quote a taxable equivalent yield, which is the equivalent
amount an investor must earn before deducting federal and any applicable state
income taxes (at rates stated in the quotation), to equal the Fund's 30-day
current yield.
To compute the Fund's average annual total return for any specified period (i)
assume an investment of $1,000 made at net asset value on the first day of the
period and that all dividends paid during the period are reinvested in
additional shares at net asset value and then (ii) divide the ending balance
(I.E., the number of shares now held multiplied by the ending net asset value)
by the beginning balance. For a more complete description of the method of
computation, see the STATEMENT OF ADDITIONAL INFORMATION.
CAPITAL STOCK; DIVIDENDS
Saturna Investment Trust, an open-end "series trust" was organized as a
Washington Business Trust on February 20, 1987. The Trust is an open-end "series
trust" that now offers five separate Funds: The Fund and the four Sextant Funds
(the Sextant Funds offer a range of investments intended to be the basic
elements of an investment program and are offered through a separate prospectus
available from the Adviser.) The Trust (formerly known as Northwest Investors
Trust) began commenced operations on September 4, 1987. The Fund's current
investment advisory agreement became effective on its approval by shareowners on
October 12, 1990.
The Fund is divided into shares of beneficial interest, with equal voting
rights. All shares are fully paid, non-assessable, transferable, have rights of
redemption, and are not subject to preemptive rights. The Trust is not required
to hold annual shareowner meetings, but special meetings may be called for such
purposes as electing or removing Trustees, changing fundamental policies, or
voting on approval of an advisory contract. On issues relating solely to a
single Fund, only the shareowners of that Fund are entitled to vote.
All dividends and distributions are distributed pro rata to shareowners in
proportion to the number of shares of the Fund owned.
The Fund intends to distribute substantially all its net investment income and
net realized capital gains, if any, to its shareowners. The Fund pays dividends
from investment income daily and reinvests or distributes them monthly.
Dividends from capital gains, if any, are declared and paid at the end of
November.
Both dividends and capital gains distributions are automatically reinvested in
additional full and fractional shares of the Fund, unless you have elected to
receive either or both in cash.
The Fund intends to qualify as a regulated investment company under the Internal
Revenue Code and to distribute substantially all net income and realized net
gains on investments. The Fund is then relieved of paying federal income taxes
on amounts it distributes.
At year-end, the Fund's transfer agent reports to you and to the IRS the amount
of each redemption you made during the year, as well as the amount of taxable
dividends and capital gain distributed to you. The Fund accounts for its
distributions as either taxable capital gains (originating from net realized
gains on portfolio transactions), or taxable income (originating from dividends,
taxable interest and certain other types of gains) or tax-exempt income
(originating from interest on municipal bonds). Fund distributions may be
subject to state and local taxes.
To avoid being subject to a 31% federal withholding tax on taxable dividends and
distributions, you must furnish the transfer agent your correct Social Security
or Tax Identification Number in the space on the application.
NET ASSET VALUE
The Fund computes its net asset value per share each business day by dividing
(i) the value of all of its securities and other assets, less liabilities, by
(ii) the number of shares outstanding. The Fund computes its net asset value as
of the close of trading on the New York Stock Exchange (generally 4 p.m. New
York time) on each day the Exchange is open for trading. The Fund's shares are
not priced on any customary national business holiday that securities markets
are closed. The net asset value applicable to purchases or redemption's of
shares of the Fund is the net asset value next computed after receipt of a
purchase or redemption order.
Since daily bid prices are not available for many municipal bond issues, the
Fund values securities using a matrix of municipal bond yields for various
maturities and qualities. Prices are adjusted for factors unique to each bond.
To verify its knowledge of market factors, the adviser periodically obtains
appraisals from independent sources.
HOW TO BUY SHARES
You may open an account and purchase shares by sending a completed Application
with a check for $1,000 (U.S. only) or more ($25 under a group plan) to the
Fund. The Fund does not accept initial orders unaccompanied by payment nor by
telephone. The price you receive is the net asset value (see "Net Asset Value")
next determined after receipt of a purchase order. There are no sales charges or
loads.
You may purchase additional shares at any time in minimum amounts of $25. Once
your account is open, purchases can be made by check, by electronic funds
transfer, or by wire.
You may authorize the use of the Automated Clearing House ("ACH") to purchase or
redeem shares by completing the appropriate section of the application. The
authorization must be received at least two weeks before ACH can be used. ACH is
a system for electronic funds transfer. To use ACH to purchase or redeem shares,
simply call the transfer agent.
You also may wire money to purchase shares, though typically your wiring bank
will charge you a fee for this service. Call the transfer agent for the
information you will need BEFORE requesting your bank to wire funds.
Each time you purchase or redeem shares, you receive a statement showing the
details of the transaction as well as the current number and value of shares you
hold. Share balances are computed in full and fractional shares, expressed to
three decimal places. You don't have to worry about safekeeping of certificates
because they are not issued.
At the end of each calendar year, you will receive a complete annual statement,
which you should retain for tax purposes and a complete historical record of all
transactions.
The Fund offers several optional plans and services. Materials describing these
plans and applications may be obtained from the Adviser or the transfer agent.
Other plans offered by the Fund include: (1) an automatic investment plan, (2) a
systematic withdrawal plan to provide regular payments to you, and (3) the right
to exchange your shares without charge for any other no-load mutual fund for
which Saturna Capital is the investment adviser.
HOW TO REDEEM SHARES
You may redeem your shares on any business day of the Fund. The Fund pays
redemptions in U.S. dollars, and the amount you receive is the net asset value
per share next determined after receipt of your redemption request. The amount
received will depend on the value of the investments in the Fund at the time of
your redemption, and the amount you receive may be more or less than the cost of
the shares you are redeeming. A redemption constitutes a sale for federal income
tax purposes, and you may realize a capital gain or loss on the redemption.
The Fund normally pays for shares redeemed or exchanged within three days after
a proper instruction is received. To allow time for clearing, redemption of
investments made by check may be restricted for up to ten calendar days.
There are several methods you may choose to redeem shares.
WRITTEN REQUEST
Write: Idaho Tax-exempt Fund
Box 2838
Bellingham WA 98227-2838
Fax: 360/734-0755
You may redeem shares by a written request and choose one of the following
options for the proceeds:
(A) Redemption check (no minimum) sent to registered owner(s).
(B) Redemption check (no minimum) sent as directed if the signature(s) are
guaranteed. If proceeds are to be sent to other than the registered owner(s) at
the last address, the signatures on the request must be guaranteed by a national
bank or trust company or by a member of a national securities exchange.
(C) Federal funds wire. The proceeds ($5000 minimum) may be wired to any bank
designated in the request if the signature(s) are guaranteed as explained above.
TELEPHONE REQUEST
Call: 800-728-8762 or
360-734-9900
You may redeem shares by a telephone request and choose one of the following
options for the proceeds:
(A) Redemption check (no minimum) sent to registered owner(s).
(B) ACH transfer ($100 minimum) with proceeds transferred to your bank account
as designated by the ACH authorization on your application. The ACH
authorization must be received by the transfer agent at least two weeks before
ACH transfer can be used.
(C) Exchange ($25 minimum) for shares of any other Fund for which Saturna
Capital is adviser. If the exchange is your initial investment into this Fund,
the new account will automatically have the same registration as your original
account. Of course, shares must be authorized and registered for purchase in
your state before an exchange may be made. Exchanging shares may have tax
consequences, because an exchange is considered a closing capital transaction
for tax purposes.
(D) Federal funds wire. Proceeds ($5000 minimum) may be wired only to the bank
previously designated, or as directed in a prior written instruction with
signatures guaranteed, as explained above.
For telephone requests the Fund will endeavor to confirm that instructions are
genuine and may be liable for losses if it does not. The caller must provide (1)
the name of the person making the request, (2) the name and address of the
registered owner(s), (3) the account number, (4) the amount to be withdrawn, and
(5) the method for payment of the proceeds. The Fund also may require a form of
personal identification, and provide written confirmation of transactions. The
Fund will not be responsible for the results of transactions it reasonably
believes genuine.
CHECK WRITING
You may also redeem shares in your account by drawing checks on your account for
amounts of $500 or more.
The Fund will provide you a small book of blank checks for a $7 fee, which may
be payable to any payee. Checks are redeemed at the net asset value next
determined after receipt by the transfer agent. If you wish to use this feature,
you should request the Check Writing Privilege on the Application at the time
you open an account. Note that, as with any redemption, each check is a closing
capital transaction for tax reporting purposes.
TRUST MANAGEMENT
Saturna Investment Trust is managed by a Board of five
Trustees: Gary A. Goldfogel, John E. Love, John S. Moore,
Nicholas F. Kaiser and James D. Winship. The Trustees
establish policies, as well as review and approve contracts
and their continuance. The Trustees also elect the officers,
determine the amount of any dividend or capital gain
distribution and serve on any committees of the Trust. For
other information concerning the officers and Trustees, see
the STATEMENT OF ADDITIONAL INFORMATION.
INVESTMENT ADVISER
Saturna Capital Corporation, 1300 N. State Street, Bellingham,
Wash. 98225 (the "Adviser") is the Investment Adviser to the
Trust. The Adviser is a Washington State corporation formed in
July 1989. Shareholders owning more than 10% of the common
stock are: Nicholas F. Kaiser, Phelps S. McIlvaine, James D.
Winship, and Brian A. Anderson. The directors of the Adviser
are Nicholas Kaiser (President), James D. Winship (Vice
President and Secretary), Phelps S. McIlvaine (Vice
President), Brian A. Anderson (Vice President) and Markell F.
Kaiser (Treasurer).
The Fund pays a monthly advisory fee at the annual rate of 0.50% of the average
daily net assets up to $250 million, 0.40% of assets between $250 million and $1
billion, and 0.30% of assets in excess of $1 billion. Through March 31, 1997,
the Adviser has voluntarily waived its fee and reimburses the Fund as necessary
to limit total Fund expenses to 0.80% of average annual net assets. A waiver may
have the effect of subsidizing the yield for the period it is in effect.
Under the Fund's investment advisory agreement the Fund pays its own taxes,
brokerage commissions (if any), trustees' fees, legal and accounting fees,
insurance, transfer agent, registrar and dividend disbursing agent fees,
expenses incurred in complying with state and federal laws regulating the issue
and sale of its shares, and mailing and printing costs for prospectuses, reports
and notices to shareowners. The Adviser furnishes office space, facilities and
equipment, personnel and clerical and bookkeeping services required to conduct
the business of the Fund.
Saturna Capital Corporation acts as investment adviser to six other investment
companies, the four Sextant Funds: Growth ($1 Million), International ($1
million), Bond Income ($1 Million) and Short-Term Bond ($2 million), as well as
Amana Income Fund, which has assets of approximately $12 million and Amana
Growth Fund, with approximately $3 million in assets.
Each of the Sextant Funds pays the Adviser an Investment Advisory and
Administrative Services Fee computed at the annual rate of 0.60% of average net
assets of each Fund and paid monthly. Each Fund's Fee is subject to an
adjustment (up to a maximum adjustment of 0.30% in two of the Funds) that is
determined by that Fund's total return performance relative to a specified
index. The advisory fee for both of the Amana Funds is .95%.
Saturna also manages individual advisory accounts. The Adviser's wholly-owned
subsidiary, Investors National Corporation, is a discount brokerage firm and
acts as distributor for the Funds without compensation. The Adviser is permitted
to place brokerage transactions through the affiliate, and the Adviser may
allocate brokerage to any broker in return for research or services and for
selling shares of any Fund.
Phelps McIlvaine, primary manager of the Fund, entered the investment business
in 1976 and managed bond hedge funds from 1987 to 1993. He also manages two of
the Sextant Funds (Bond Income and Short-term Bond).
The manager of the Fund and other investment personnel are permitted to engage
in securities transactions for their own accounts but only in accordance with a
code of ethics that, among other things, requires advance approval of all trades
and disclosure of all holdings. It also prohibits a number of transactions , and
contains other provisions.
Saturna Capital Corporation acts as transfer agent, maintaining all share owner
records.
<PAGE>
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<PAGE>
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IDAHO TAX-EXEMPT FUND
INVESTMENT APPLICATION
Mail application and check to: For assistance,call:
IDAHO TAX-EXEMPT FUND (800) SATURNA
Box 2838, Bellingham WA 98227-2838 FAX (360) 734-0755
ACCOUNT TYPE AND NAME
q Individual
First Middle Initial Last
Social Security Number Date of Birth___________
q Joint with
First Middle Initial Last
Joint Owner's Social Security Number
(Joint accounts are presumed to be "Joint Tenancy with Right of
Survivorship" unless otherwise indicated)
q Gifts to Minor AS CUSTODIAN FOR
Name of Custodian Name of Minor
qUNIFORM GIFTS TO MINORS ACT
UNDER THE qUNIFORM TRANSFERS / /
State TO MINORS ACT Minor's S. S. No. Minor's Birthdate
q Other
Indicate name of corporation, other organization or fiducTax capacity.
Identification Number
If a trust, include name(s) of trustees and date of trust instruments.
Name(s) of person(s) authorized to transact business for the above
entity.
MAILING
ADDRESS Street Apt., Suite, Etc.
City State ZIP
TELEPHONE ( ) ( )
---------------------- -------
Daytime Home
INITIAL INVESTMENT $
(Minimum $1000) Make check payable to Idaho Tax-Exempt Fund.
<PAGE>
TELEPHONE REDEMPTION PRIVILEGES
You automatically have telephone redemption by check and telephone exchange
privileges unless you strike this line. The Fund will endeavor to confirm that
instructions are genuine and it may be liable for losses if it does not.
(Procedures may include requiring a form of personal identification, and
providing written confirmation of transactions.)
ACH TELEPHONE TRANSFER PRIVILEGE
q To transfer funds by ACH at no charge to or from my
(our) bank account, I (we) authorize electronic fund transfers through the
Automated Clearing House (ACH) for my (our) bank account designated.
PLEASE ATTACH A VOIDED CHECK OR DEPOSIT SLIP.
AUTOMATIC INVESTMENT PLAN
q Invest $ _______ into this Fund on the _____ day
of each month (the 15th unless another date is chosen) by ACH transfer
from my (our) bank account. This plan may be canceled at any time. PLEASE
ATTACH A VOIDED CHECK OR DEPOSIT SLIP.
CHECK WRITING PRIVILEGE ($500 per check minimum) ($7 checkbook charge) q I
(We)hereby request the Custodian to honor
checks drawn by me (us) on my (our) account subject to acceptance by the
Trust, with payment to be made by redeeming sufficient shares in my (our)
account. None of the custodian bank, Saturna Capital Corporation, nor
Saturna Investment Trust shall incur any liability to me (us) for honoring
such checks, for redeeming shares to pay such checks, or for returning
checks which are not accepted.
qSingle Signature Authority -- Joint Accounts Only: (CHECKS
FOR JOINT ACCOUNTS REQUIRE BOTH SIGNATURES UNLESS THIS BOX IS MARKED TO
AUTHORIZE CHECKS WITH A SINGLE SIGNATURE). By our signatures below, we
agree to permit check redemptions upon the single signature of a joint
owner. The signature of one joint owner is on behalf of himself and as
attorney in fact on behalf of each other joint owner by appointment. We
hereby agree with each other, with the Trust and with Saturna Capital
Corporation that all moneys now or hereafter invested in our account are
and shall be owned as Joint Tenants with Right of Survivorship, and not as
Tenants in Common.
The undersigned warrants(s) that I (we) have full authority to make this
Application, am (are) of legal age, and have received and read a current
Prospectus and agree to be bound by its terms. Unless this sentence is struck, I
(we) certify, under penalties of perjury, that I (we) am not subject to backup
withholding under the provisions of section 3406(a)(1)(C) of the Internal
Revenue Code. This application is not effective until it is received and
accepted by the Trust.
Date Signature of Individual (or Custodian)
Date Signature of Joint Registrant, if any
[GRAPHIC OMITTED]
NO-LOAD MUTUAL FUNDS
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PLEASE SAVE THIS QUICK GUIDE TO
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IDAHO TAX-EXEMPT FUND
ACCOUNTS
Open your account by sending a completed Application to the Fund. For
convenience, you may have your account consolidated with others of your
household or other group. We will appoint a representative to whom you may
refer all questions regarding your account(s). Extra forms will be sent
for certain accounts.
INVESTMENTS
Initial investments are $1,000 or more and must be accompanied by an
Application. Additional investments may be made for $25 or more at any
time. There are no sales commissions or other charges.
REDEMPTIONS
You may sell your shares any time. As with purchases, you may choose from
several methods including telephone, written instructions, and
checkwriting. You will be paid the market price for your shares on the day
we receive your instructions, and there are no redemption fees or charges.
If we receive your redemption request by one p.m. Pacific time, your check
is normally mailed to you the same day.
STATEMENTS
On the date of each transaction, you are mailed a confirmation, showing
the details of the transaction and your account balance. At year-end and
at selected points during the year we mail a statement showing all
transactions for the period. Monthly consolidated statements are available
for an extra fee.
DIVIDENDS AND PRICES
The Fund declares dividends daily and pays them monthly. The Fund's price
is available by calling the Fund at 800-SATURNA.
FOR MORE INFORMATION
Please consult the applicable pages of this Prospectus for additional
details on the Fund and its shareholder services. You may also call
1-800-SATURNA (1-800-728-8762) with any questions.
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* Please refer to the Statement of Additional Information for a more extensive
discussion of the meaning and implications of the Fund's being nondiversified.
+ Municipal securities purchased on a delayed-delivery or when-issued basis are
regarded as "senior securities" for purposes of the Investment Company Act. A
segregated account is established on the date a Fund enters an agreement,
containing cash, U.S. government securities, or other high-grade debt securities
in an amount equal to the purchase price due on the settlement date.
