File No. 33-13247
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT X
OF 1933
POST-EFFECTIVE AMENDMENT NO. 14
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY X
ACT OF 1940
POST-EFFECTIVE AMENDMENT NO. 14
SATURNA INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
1300 North State Street
Bellingham, Washington 98225-4730
(Address of Principal Executive Offices)
Registrant's Telephone Number - (360) 734-9900
James D. Winship
1300 North State Street
Bellingham, Washington 98225-4730
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
______ Immediately upon filing pursuant to paragraph (b) of rule 485
___X__ on March 29, 1996 pursuant to paragraph (b) of Rule 485
______ 60 days after filing pursuant to paragraph(a)(1) of Rule 485
______ on _______pursuant to paragraph (a)(1) of rule 485
______ 75 days after filing pursuant to paragraph (a)(2) of Rule 485
___ _ on pursuant to paragraph (a)(2) of rule 485
If appropriate, check the following box:
____this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The above issuer has registered an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2 of the Investment Company Act of
1940. No filing fee is due because of reliance on Rule 24f-2. The Notice
required by such Rule for the fiscal year ended November 30, 1995 was filed on
January 25, 1996.
<PAGE>
CROSS REFERENCE SHEET
PART A PROSPECTUS CAPTIONS
1. Cover Page About the Trust;Expenses
2. Synopsis Expenses
3. Condensed Financial Information Expenses; Financial Highlights
4. General Description of Registrant About the Trust,Investment Objectives
and Policies; Investment Policies
and Risk Considerations
5. Management of the Fund Trust Management,Investment Adviser
6. Capital Stock and Other Securities Capital Stock; Dividends
7. Purchase of Securities Being Offered Net Asset Value, How to Buy Shares
8. Redemption or Repurchase How to Redeem Shares
9. Pending Legal Proceedings Not Applicable
STATEMENT OF ADDITIONAL
PART B INFORMATION CAPTIONS
10. Cover Page Cover Page
11. Table of Contents TABLE OF CONTENTS
12. General Information and History General Information and History
<PAGE>
13. Investment Objectives & Policies INVESTMENT OBJECTIVES AND POLICIES;
PORTFOLIO TURNOVER;INVESTMENT
CONSIDERATIONS
14. Management of the Registrant MANAGEMENT OF THE TRUST
15. Control Persons and Principal PRINCIPAL HOLDERS OF
Holders of Securities SECURITIES
16. Investment Advisory and Other INVESTMENT ADVISORY
Services AND OTHER SERVICES
17. Brokerage Allocation and Other BROKERAGE ALLOCATION
Practices PORTFOLIO TURNOVER
18. Capital Stock and Other Securities Not Applicable
19. Purchase, Redemptions and Pricing PURCHASE, REDEMPTION AND
of Securities Being Offered PRICING OF SECURITIES BEING OFFERED
20. Tax Status TAX STATUS
21. Underwriters Not Applicable
22. Calculations of Performance Data PERFORMANCE DATA
23. Financial Statements FINANCIAL STATEMENTS
<PAGE>
PART A
PROSPECTUS
<PAGE>
SATURNA INVESTMENT TRUST OFFERS FOUR NO-LOAD SEXTANT FUNDS:
SEXTANT GROWTH FUND seeks long-term growth through investment in U.S. common
stocks SEXTANT INTERNATIONAL FUND seeks long-term growth through investment in
foreign stocks SEXTANT SHORT-TERM BOND FUND seeks capital stability and a high
level of current income by investing in short-term debt securities SEXTANT
BOND INCOME FUND seeks a high level of current income by investing in
long-term debt securities
A Statement of Additional Information dated March 29, 1995 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.
FROM
Saturna Capital
MUTUAL FUNDS
NO-LOAD,
NO SALES CHARGE,
NO 12B-1
PROSPECTUS
March 29, 1996
<PAGE>
EXPENSES
The Sextant Funds impose 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 each Funds' estimated operating expenses.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Sextant Intern- Sextant
Sextant Bond ational Short-Term
Growth .....Income Fund(4) Bond
Fund(2)....Fund(3) Fund(5)
<S> <C> <C> <C> <C> <C>
Management Fees (after waiver)(1)(6) 0.64%) 0.00% 0.09% 0.00%
12b-1 Expenses ..................... NONE None NONE NONE
Other Expenses ....................... 0.99 0.54% 0.40% 0.23%
Total Fund Operating ..................1.63% 0.54% 0.49% 0.23%
Expenses(6)
</TABLE>
<TABLE>
FOR EXAMPLE:
<S> <C> <C> <C> <C>
Each Fund estimate paying 1 year $17 $6 $5 $ 2
these expenses on a 3 years $55 $19 $16 $13
assuming a 5% 10 years $219 $74 $265 $30
net annual return
<FN>
(1) Each Sextant Fund pays an Investment Advisory and Administrative Services
Fee of 0.60% annually. This base fee is then subject to a plus or minus
performance adjustment of up to 0.20% (Sextant Bond Income and Sextant
Short-Term Bond) or 0.30% (Sextant Growth and Sextant International). The
table reflects the maximum fees, which may be subject to fee waivers.
(2) Prior to September 28, 1995, Sextant Growth Fund operated as Northwest
Growth Fund with different fee arrangements and investment objectives. Total
Operating Expenses were 1.84% but voluntary fee waivers (Note 6) reduced
expenses to 1.63%.
(3) Prior to September 28, 1995, Sextant Bond Income Fund operated as Washington
Tax-Exempt Fund with different fee arrangements and investment objectives.
Total Operating Expenses were 1.16% but voluntary fee waivers (Note 6) reduced
expenses to 0.54%.
(4) The Sextant International Fund began operations on September 28, 1995.
Expense figures based on its short operating history may not be indicative of
future results. Total Operating Expenses were 0.70% but voluntary fee waivers
(Note 6) reduced expenses to 0.49%.
(5) The Sextant Short-Term Bond Fund began operations on September 28, 1995.
Expense figures based on its short operating histor may not be indicative of
future results. Total Operating Expenses were 0.28% but voluntary fee waivers
(Note 6) reduced expenses to 0.23%.
(6) The Adviser voluntarily waives its Management Fees to limit the expenses of
the Sextant Bond Funds to 0.60% annually through March 31, 1997 and to waive its
management fee when assets are less than $2 million. The Funds' custodian also
waives a portion of its fees for all four Funds. Without these limitations,
Management Fees of the Bond Funds might be as high as 0.80%, and Total Operating
Expenses 1.20%. The example assumes a continuation of this expense limit 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>
1
FINANCIAL HIGHLIGHTS
The following schedules set forth selected data for a share of beneficial
interest of each of the SEXTANT FUNDS as set forth below. The following
schedules have been audited by Price Waterhouse LLP, independent accountants,
whose report thereon is included in the Annual Report to Shareowners (available
without charge from the Trust), which is incorporated by reference into the
Statement of Additional Information. These schedules 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.
<PAGE>
[GRAPHIC OMITTED]
SEXTANT BOND INCOME FUND
Selected data for a share of SEXTANT BOND INCOME FUND beneficial interest
outstanding from March 1, 1993 (commencement of operations) through November 30,
1995.
<TABLE>
<CAPTION>
Period
Year Year March 1,
Ended Ended 1993 to
November November November
30, 1995 30, 1994 30, 1993
-------- -------- --------
<S> <C> <C> <C>
Net asset value at beginning of period $4.39 $5.03 $5.00
Income From Investment Operations
Net Investment Income 0.24 0.25 0.16
Net gains or losses on securities (both realized
and unrealized) 0.52 (0.64) 0.04
---- ------ ----
Total From Investment Operations 0.76 (0.39) 0.20
Less Distributions
Dividends (from net investment income)
Non-taxable (0.236) (0.25) (0.167)
Taxable (0.004) n/a n/a
Distributions (from capital gains) 0.00 0.00 (0.003)
---- ---- ------
Total Distributions (0.24) (0.25) (0.17)
Net asset Value at end of period $4.91 $4.39 $5.03
===== ===== =====
Total Return 17.69% (8.24)% 4.86%
- ------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets (000), End of Period $1,096 $1,456 $1,662
Ratio of Expenses to Average Net Assets+ 0.54% .41% .35%*
Ratio of Net Investment Income to Average Net Assets+5.15% 5.48% 3.28%*
Portfolio Turnover Rate 77% 74% 36%*
*Not annualized
</TABLE>
+For each of the above periods, all or a portion of the operating expenses were
waived. If these costs had not been waived, the resulting increases to expenses
per share in each of the above periods would be $.03, $0.22, and $0.13,
respectively. The increase to the ratio of expenses to average monthly net
assets would be .60%, .51% and .26%, respectively.
<PAGE>
[GRAPHIC OMITTED]
SEXTANT GROWTH FUND
Selected data for a share of SEXTANT GROWTH FUND (previously Northwest Growth
Fund). 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 thennual Report to Shareowners. 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
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990 1989 1988 Nov.30 '87
---- ---- ---- ---- ---- ---- ---- ---- ------
Net asset value
at beginning
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
of period $5.82 $6.38 $5.93 $5.55 $4.93 $4.88 $4.88 $4.96 $5.00
Income From
InvestmentOperations
Net Investment Income (0.03) (0.03) 0.01 0.01 0.04 0.27 0.28 0.30 0.06
Net gains orlosses on
securities(both
realized and unrealized) 1.82 (0.53) 0.45 0.38 0.60 0.01 0.00 (0.08) (0.04)
---- ----- ---- ---- ---- ---- ---- ----- -----
Total From Investment
Operations 1.79 (0.56) 0.46 0.39 0.64 0.28 0.28 0.22 0.02
LessDistributions
Dividends(from net
investment income) 0.00 0.00 (0.01) (0.01) (0.02) (0.23) (0.28) (0.30) (0.06)
Distributions from
capital gains) (0.19) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
----- ---- ---- ---- ---- ---- ---- ---- ----
Total Distributions (0.19) 0.00 (0.01) (0.01) (0.02) (0.23) (0.28) (0.30) (0.06)
Net asset value
at end of period $7.42 $5.82 $6.38 $5.93 $5.55 $4.93 $4.88 $4.88 $4.96
===== ===== ===== ===== ===== ===== ===== ===== =====
Total Return 30.76% (8.78)% 7.76% 7.01% 11.79% 7.37% 5.22% 5.12% 2.17%
Ratios/Supplemental Data
Net assets $000),
end of period $1,137 $1,010 $1,425 $1,321 $947 $53 $1,356 $1,365 $315
Ratio of expenses
to ave. netassets* 1.63% 1.50% 1.40% 1.60% 1.93% 1.06% 0.89% 0.25% .06%*
Ratio of net
investment income
to Ave. net assets* (0.45)% (0.43)% 0.15% 0.17% 0.60% 5.25% 5.60% 5.86% .85%*
Portfolio turnover rate 40% 12% 25% 46% 16% 29% 19% 20% 0%
Average commission $.0572
rate paid
<FN>
*For 1995 and for each of the above years prior to 1992,all or a portion of the operating 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 $.01, $.05, .$.05,$.10, $.16 and $.02, respectively. The increase to the ratio of expenses
to average net assets would have been 0.21%, 0.76%, 1.02%,1.28%,2.02%, and 0.17%.
*not annualized
</FN>
</TABLE>
[GRAPHIC OMITTED] Fund shareowners agreed to change the investment objectives on
September 28, 1995, and had previously done so on October 12, 1990.
Consequently, data in this table are unlikely to be indicative of future
operations of the Fund.
<PAGE>
[GRAPHIC OMITTED]
SEXTANT SHORT-TERM BOND FUND
Selected data for a share of SEXTANT SHORT-TERM BOND FUND beneficial interest
outstanding from September 28, 1995 (commencement of operations) through
November 30, 1995.
<TABLE>
<CAPTION>
September 28,
1995 (Inception)
to November
30, 1995
--------
<S> <C>
Net asset value at beginning of period $5.00
Income From Investment Operations
Net Investment Income 0.03
Net gains or losses on securities (both realized
and unrealized) 0.03
Total From Investment Operations 0.06
Less Distributions
Dividends (from net investment income) ($0.03)
Distributions (from capital gains) 0.00
----
Total Distributions (0.03)
Net asset Value at end of period $5.03
=====
Total Return 1.05%
RATIOS/SUPPLEMENTAL DATA
Net Assets ($000), End of Period $878
Ratio of Expenses to Average Net Assets (not annualized)+ .23%
Ratio of Net Investment Income to Average Net Assets+ 0.68%
Portfolio Turnover Rate 0%
</TABLE>
+For the above period, all or a portion of the operating expenses were waived.
If costs had not been waived, the resulting increases to expenses per share in
the period would have been $.007. The increase to the ratio of expenses to
average monthly net assets would be .16%.
================================================================================
[GRAPHIC OMITTED]
SEXTANT INTERNATIONAL FUND
Selected data for a share of SEXTANT INTERNATIONAL FUND beneficial interest
outstanding from September 28, 1995 (commencement of operations) through
November 30, 1995.
<TABLE>
<CAPTION>
September 28,
1995 (Inception)
to November
30, 1995
--- ----
<S> <C>
Net asset value at beginning of period $5.00
Income From Investment Operations
Net Investment Income (0.02)
Net gains or losses on securities (both realized
and unrealized) 0.01
Total From Investment Operations (0.01)
-----
Less Distributions
Dividends (from net investment income) 0.00
Distributions (from capital gains) 0.00
----
Total Distributions 0.00
Net asset Value at end of period $4.99
=====
Total Return (0.20)%
RATIOS/SUPPLEMENTAL DATA
Net Assets ($000), End of Period $328
Ratio of Expenses to Average Net Assets (not annualized)+ 0.49%
Ratio of Net Investment Income to Average Net Assets+ (0.38)%
Portfolio Turnover Rate 12%
Average Commission rate Paid $0.0192
</TABLE>
+For the above period, all or a portion of the operating expenses were waived.
If costs had not been waived, the resulting increase to expenses per share in
the period would have been $.01. The increase to the ratio of expenses to
average monthly net assets would be .21%.
<PAGE>
===========================================================
ABOUT THE TRUST
===========================================================
The Sextant Funds are intended to provide investors the basic elements of a
balanced investment program. The Funds are "no-load" funds, meaning that there
are no sales or redemption charges, nor do the Funds have so-called "12b-1"
charges.
The SEXTANT GROWTH FUND and SEXTANT INTERNATIONAL FUND seek long-term growth.
GROWTH FUND pursues its objective through investment in common stocks and other
equity-type securities, principally of U.S. issuers. The INTERNATIONAL FUND, by
contrast, invests primarily in a diversified portfolio of foreign common stocks
and other equity-type securities.
SEXTANT SHORT-TERM BOND FUND and SEXTANT BOND INCOME FUND both seek a high level
of current income. SHORT-TERM BOND FUND also attempts to preserve capital and
does so by investing primarily in short-term debt securities. BOND INCOME FUND,
on the other hand, invests primarily in long-term debt securities, which have
the potential for greater income but the risk of greater price fluctuation.
Mutual funds enable you to invest as you might do for yourself if 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 securities fluctuates over time.
You may purchase shares of the Sextant Funds directly from the Funds 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 you choose.
INVESTMENT OBJECTIVES AND POLICIES
SEXTANT GROWTH FUND seeks long-term capital appreciation. The Fund invests
primarily in a diversified portfolio of U.S. common stocks, securities
convertible into common stocks, and preferred stocks, but may invest in other
securities that are suited for the Fund's investment objective. Although income
is considered when making an investment , the Fund is not designed for investors
seeking income. The Fund ordinarily will not invest in straight debt securities.
The Fund may invest in securities of smaller or newer companies as well as those
of well-seasoned companies of any size, and to a limited extent in foreign
companies. The policy of investing for long-term capital appreciation cannot be
changed without shareholder approval.
SEXTANT INTERNATIONAL FUND'S objective is to seek long-term capital appreciation
by investing primarily in a diversified portfolio of foreign diversified
portfolio of foreign common stocks and other equity-type securities (E.G.,
securities convertible into common stock and preferred stocks). Under normal
market conditions, the Fund will invest at least 65% of its total assets (taken
at market value) in foreign securities (securities of non-U.S. issuers.) The
Fund ordinarily invests in securities of at least three countries outside the
U.S. Although income is considered, the Fund is not designed for investors
seeking income. The Fund ordinarily will not invest in straight debt securities.
The Fund diversifies its investments among several countries and does not
concentrate in any particular industry. The Fund varies its investments
geographically and by type of securities in which it invests based on the
adviser's evaluation of economic, market, and political trends throughout the
world. The adviser considers the relative political and economic stability of a
company's home and operating countries in evaluating the potential rewards and
risks of an investment opportunity. The Fund may invest in securities traded in
mature markets (such as Canada and the United Kingdom) in less developed markets
(for example, Chile and Mexico), and in emerging markets (for example Peru).
Investments in foreign securities, especially those in less developed and
emerging markets present additional risk. (See "Investment Policies and Risk
Considerations.")
Although the Fund may invest throughout the world outside the U.S. as a matter
of operating policy (that can be changed by the Board of Trustees), the Fund
presently limits its investments to those securities of foreign issuers that are
traded and settled in the U.S. or to American Depository Receipts ("ADR's") that
represent underlying shares of foreign issuers.*
The Fund's policy of seeking long-term capital appreciation by investing
primarily in a diversified portfolio of foreign securities cannot be changed
without shareholder approval.
The objective of SEXTANT SHORT-TERM BOND FUND is to provide a high level of
current income, consistent with the preservation of capital. The Fund invests
primarily in marketable short-term debt securities. Under normal circumstances
the Fund's dollar-weighted average maturity will not exceed three years.
Short-Term Bond Fund is appropriate for investors who seek yields that are
typically higher than are usually available from money market instruments with
relatively stable prices and shorter maturities, but who also want less price
fluctuation than is likely from a longer term fund, such as the Bond Income
Fund, which also may be expected to reflect a higher yield. In contrast to money
market funds, Short-Term Bond Fund does not seek to maintain a fixed net asset
value, and an investor may receive more or less than the price paid for his
shares at redemption.
SEXTANT BOND INCOME FUND has the objective of providing a high level of current
income. The Fund invests primarily in marketable long-term debt securities. As
an operating policy that may be changed by the Board of Trustees, under normal
market conditions the Fund maintains a dollar-weighted average effective
maturity in excess of ten years.+
Bond Income Fund is intended for investors who seek a higher level of income
than is generally available from a shorter-term fund, yet who can accept greater
levels of interest rate and other risks associated with investment in
longer-term securities
Under normal market conditions, each of Sextant Short-Term Bond Fund and Sextant
Bond Income Fund will invest at least 65% of the value of its total assets
(taken at market value at the time of investment) in "bonds", meaning:
(1) Marketable debt securities payable in U.S. dollars, rated
within the three highest grades assigned by Moody's Investors
Service, Inc. ("Moody's") (Aaa, Aa or A) or by Standard & Poor's
Corporation ("S&P") (AAA, AA or A);
(2) U.S. Government Securities;
(3) High quality commercial paper; and
(4) Bank obligations, including repurchase agreementsss. of banks, having total
assets in excess of $1 billion.
These Funds may not invest in a security rated at time of purchase below the
fourth highest grade assigned by Moody's (Baa) or S&P (BBB). These securities
are considered medium grade, and represent obligations of issuers with less
capacity to pay interest and repay principal than those rated more highly.
Investment in these debt securities involves somewhat greater investment risk,
including the possibility of issuer default or bankruptcy. An economic downturn
could adversely affect the value of outstanding bonds and the ability of issuers
to repay principal and interest. During a period of adverse economic changes,
including a period of rising interest rates, issuers of such bonds may
experience difficulty in servicing their principal and interest payment
obligations.
Should a security's rating fall below the minimum qualifying it for purchase by
the Fund, the Adviser will not be required to dispose of it, but will consider
that factor in connection with deciding whether to continue to hold it for the
Fund's portfolio.
Short-Term Bond Fund's policy of seeking a high level of current income,
consistent with the preservation of capital cannot be changed without
shareholder approval.
Similarly, the policy of Bond Income Fund's policy of pursuing a high level of
current income cannot be changed without shareholder approval.
INVESTMENT POLICIES AND RISK CONSIDERATIONS
Investing in securities entails both market risk and risk of price variation in
individual securities. By diversifying its investments, a Fund reduces the risk
of owning one or a few individual securities. There can be no guarantee that the
investment objectives of any Fund will be realized.
SEXTANT SHORT-TERM BOND FUND AND SEXTANT BOND INCOME FUND
The risks inherent in the Short-Term Bond Fund and Bond Income Fund depend
primarily on the terms and quality of the obligations in each Fund's portfolio,
as well as on market conditions. Interest rate fluctuations will affect a Fund's
net asset value, but not the income received by the Fund from its portfolio
securities. However, because yields on debt securities available for purchase by
a Fund vary over time, the Fund's yield will also vary.
SEXTANT GROWTH FUND AND SEXTANT INTERNATIONAL FUND
Both of these Funds may invest in smaller companies. Smaller companies involve
higher investment risks in that they often have limited product lines, markets
and resources, or their securities may trade less frequently and have greater
price fluctuation than those of larger companies. THESE FACTORS MAY BE
PARTICULARLY APPLICABLE IN SMALLER OR EMERGING FOREIGN MARKETS.
INVESTMENT IN FOREIGN SECURITIES
You should understand and carefully consider the risks involved in foreign
investing. Investing in foreign securities or instruments involves risks and
opportunities not typically associated with investing in U.S. securities. These
include fluctuations in exchange rates of foreign currencies; less public
information with respect to issuers of securities; less governmental supervision
of exchanges, issuers, brokers; lack of uniform accounting, auditing, and
financial reporting standards. There is also a risk of adverse political, social
or diplomatic developments that could affect investment in these nations. Refer
to the STATEMENT OF ADDITIONAL INFORMATION available from the Fund at no charge
for a more complete discussion of the risks of foreign investments.
ALL FUNDS
Under normal market conditions, the Funds expect to be invested in accordance
with their objectives, but under unusual circumstances any of the Sextant Funds
may adopt a temporary defensive position and invest without limitation in
high-quality debt obligations, U.S. government debt obligations or cash
equivalents.
All of the Sextant Funds are diversified. No Fund will invest more than 5% of
total assets in the securities of any one issuer, nor more than 25% of its
assets in any particular industry (other than U.S. Government securities.)
Except as explained above, all of the policies outlined in this section can be
changed by a majority of the Board of Trustees. The Funds have also adopted
certain restrictions for each Fund, 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 the adviser at 800-SATURNA (800/728-8762).
PERFORMANCE DATA
The Funds 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 a Fund's return with that of alternative investments, you
should consider differences between the Fund and the alternative investment, and
the periods and methods used in calculation of the returns. 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.
To compute average annual total return of a Fund 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 four Sextant Funds and Idaho
Tax-Exempt (a fund investing in municipal securities in the State of Idaho, and
offered through a separate prospectus). The Trust was formerly known as
Northwest Investors Trust, and began operations on September 4, 1987. The
current investment advisory agreements of the Sextant Funds became effective in
connection with changes in their objectives approved at a shareholder meeting on
September 28, 1995.
Each Fund is divided into shares of beneficial interest, with equal voting
rights. All shares are fully paid, non-assessable, transferable and 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 for each Fund are distributed pro rata to
shareowners in proportion to the number of shares owned.
Each Fund intends to distribute substantially all its net investment income and
net realized capital gains, if any, to its shareowners. The Growth Fund and
International Fund expect to pay a dividend from net investment income annually,
at the end of November. The bond funds declare dividends from investment income
daily and pay dividends 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 that pays them, unless a
shareholder has elected to receive either or both in cash.
The Funds intend to qualify as regulated investment companies under the Internal
Revenue Code and to distribute substantially all net income and realized net
gains on investments. A 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 I.R.S. the
amount of each redemption you made during the year, as well as the amount of
dividends and capital gain distributed to you. Each 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). Fund distributions may be
subject to state and local taxes.
To avoid being subject to a 31% federal withholding tax on dividends and
distributions, you must furnish the transfer agent your correct Social Security
or Tax Identification Number.
Shareowners who are not U.S. taxpayers may be subject to a 30% withholding tax
under U.S. provisions applicable to foreign investors, unless a reduced rate or
exemption is provided under a tax treaty. However, capital gain distributions
paid by the Funds are not subject to foreign withholding.
NET ASSET VALUE
Each 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 Funds compute their net asset values
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 Funds' shares are
not priced on any customary national business holiday that securities markets
are closed. The net asset value applicable to purchases or redemptions of shares
of each Fund is the net asset value next computed after receipt of a purchase or
redemption order.
The Funds use the price carried by the composite tape of all national exchanges
after 4 p.m. New York time to determine the value of stocks in their portfolios.
Securities traded on a national exchange or the national over-the-counter market
system are valued at the last sale price or, in the absence of any sale on that
date, the closing bid price. Other securities traded in the over-the-counter
market are valued at the last bid price. Securities for which there are no
readily available market quotations and other assets are valued at their fair
value as determined in good faith by the Board of Trustees.
Because daily bid prices are not available for many bond issues, the Funds use a
matrix of bond yields for various maturities and qualities. Prices are adjusted
for factors unique to each bond that are known to the adviser, such as
marketability and odd-lot discounts. 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 or retirement
plan) to the Fund of your choice. The Trust 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
(minimum wire purchase $500), 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 will 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.
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 Sextant Funds offer several optional plans and services, including a
prototype defined contribution plan and Individual Retirement Accounts.
Materials describing these plans and applications may be obtained from the
Adviser or the transfer agent.
Other plans offered by the Funds 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.
The Funds may be appropriate for a wide range of investors, including
corporations, partnerships, associations and other organizations. Accounts may
be established by trusts and fiduciaries. You also may make investments as
custodian for minor children under the Uniform Gifts [or Transfers] to Minors
Act of your state of residence.
HOW TO REDEEM SHARES
You may redeem your shares on any business day of the Funds. The Funds pay
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 that 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 Funds normally pay 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: Sextant Funds
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 Funds will endeavor to confirm that instructions are
genuine and may be liable for losses if they do 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 Funds also may require a form of
personal identification, and provide written confirmation of transactions. The
Funds will not be responsible for the results of transactions they reasonably
believe genuine.
CHECK WRITING
You may also redeem shares in your account by drawing checks on your account for
amounts of $500 or more.
The Funds 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 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).
Saturna Capital Corporation acts as investment adviser to three other investment
companies: Idaho Tax-Exempt Fund (another series of the Trust, offered through
another prospectus) with assets of approximately $5 million; Amana Income Fund,
which has assets of approximately $12 million and Amana Growth Fund, with
approximately $3 million in assets. The advisory fee for Idaho Tax-Exempt Fund
is .50% annually and both of the Amana Funds have an advisory and administration
fee of .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.
Each of the Sextant Funds pays the Adviser an Investment Advisory
and Administrative Services Fee (the Base "Fee.")
The Base Fee covers compensation for portfolio management, advice and
recommendations on securities to be purchased, held or sold. The Base Fee is
also compensation for certain administrative services such as portfolio
accounting, shareholder and financial reporting, shareholder servicing and
transfer agency services. The Base Fee is 0.60% of average net assets of the
Fund per annum, and is payable monthly. However, the Base Fee is subject to
adjustment up or down depending on the investment performance of the Fund
relative to a specified index (the "Performance Adjustment").
For each month in which either Bond Income Fund's or Short-Term Bond Fund's
total investment return (change in net asset value plus all distributions
reinvested) for the one year period through that month outperforms or
underperforms the total return of a specified index for that period by 1% or
more but less than 2%, the Base Fee is increased or decreased by the annual rate
of .10% of the Fund's average daily net assets for the preceding year. If the
outperformance or underperformance is 2% or more, then the adjustment is at the
annual rate of .20%.
For each month in which either Growth Fund or International Fund's total
investment return (change in net asset value plus all distributions reinvested)
for the one year period through that month outperforms or underperforms the
total return of a specified index for that period by 1% or more but less than
2%, the Base Fee is increased or decreased by the annual rate of .10% of the
Fund's average daily net assets for the preceding year. If the outperformance or
underperformance is 2% or more but less than 4%, then the adjustment is at the
annual rate of .20%. If the outperformance or underperformance is 4% or more,
the adjustment is at an annual rate of .30%.
No performance adjustment is applicable during the first year any Agreement is
in place.
Selected total return investment performance as published by Morningstar, Inc.
will be used as the index for comparison purposes. Each Fund and the Morningstar
group to be used are:
Sextant Growth Fund:
"GROWTH FUNDS"
Sextant International Fund: "FOREIGN STOCK FUNDS"
Sextant Bond Income Fund: "CORPORATE BOND FUNDS-HIGH QUALITY"
Sextant Short-Term Bond Fund: "CORPORATE BOND FUNDS-HIGH
QUALITY"
If a particular index is no longer available or becomes unavailable or
inappropriate, in the opinion of the Board, it may select another.
Each Fund pays its own taxes, brokerage commissions, trustees' fees, legal and
accounting fees, insurance, 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, and certain
other expenses.
The Adviser furnishes office space, facilities and equipment, personnel and
clerical and bookkeeping services to conduct the business of the Funds, as well
as other expenses.
The Adviser's subsidiary, Investors National Corporation ("INC"), is a
broker-dealer engaged in a general brokerage business and conducts all its
transactions on an agency basis for "deep discount" commissions. Most stock
brokerage for the Trust is conducted through INC. The Adviser may allocate
brokerage to any broker in return for research or services and for selling
shares of any Fund.
The Adviser voluntarily limits expenses of Bond Income Fund and Short-Term Bond
Fund to 0.60% through March 31, 1997. The Adviser waives all its fee as to
either of these Funds so long as assets of that Fund are less than $2 million. A
waiver has the effect of subsidizing the yield for the period it is in effect.
Nicholas Kaiser, primary manager of the Growth and International Funds, has
managed mutual funds since 1976. Phelps McIlvaine, manager of Bond Income and
Short-Term Bond Funds, entered the investment business in 1976 and managed bond
hedge funds from 1987 to 1993. He managed the predecessor to Bond Income Fund
from 1994, and manages Idaho Tax-Exempt Fund, another series of the Trust.
Managers of the Funds and other investment personnel are permitted to engage in
securities transactions for their own accounts in accordance with a code of
ethics that requires advance approval of all trades and disclosure of all
holdings. It also contains other provisions.
<PAGE>
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[GRAPHIC OMITTED]
INVESTMENT APPLICATION for
q Sextant GROWTH FUND
q Sextant INTERNATIONAL FUND
q Sextant BOND INCOME FUND
q Sextant SHORT-TERM BOND FUND
Mail application and check to: For assistance, call:
SATURNA INVESTMENT TRUST (800) SATURNA or (360)
734-9900
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
q UNIFORM GIFTS TO MINORS ACT
UNDER THE q UNIFORM TRANSFERS /
State TO MINORS ACT Minor's Soc. Sec. No. Minor's Birthdate
q Other
Indicate name of corporation, other organization or fiducTax
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
CITIZENSHIP q U.S. q Resident Alien q Non-Resident Alien
Country
INITIAL INVESTMENT $
(Minimum $1000) Make check payable to the Fund being purchased.
<PAGE>
TELEPHONE REDEMPTION PRIVILEGES
You automatically have telephone redemption by check and telephone exchange
privileges unless you strike this line. Each 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 any Sextant Mutual Fund
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.
q Single 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 Funds 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
<PAGE>
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PLEASE SAVE THIS QUICK GUIDE TO
THE SEXTANT MUTUAL FUNDS
ACCOUNTS
Open your account by sending a completed Application to the Trust,
indicating your Fund selection. 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, such as IRA's.
INVESTMENTS
Initial investments are $1,000 or more ($25 under a group or retirement
plan), 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
Sextant Bond Income Fund and Sextant Short-Term Bond Fund declare
dividends daily and pay them monthly. Sextant Growth Fund and Sextant
International Fund pay dividends at the end of November. The Funds' prices
are available by calling the Funds at 800-SATURNA.
FREE RETIREMENT PLANS
We offer a defined contribution Profit-Sharing / Money Purchase plan and
an Individual Retirement Account. There are no extra fees or charges for
these plans.
FOR MORE INFORMATION
Please consult the applicable pages of this Prospectus for additional
details on the Sextant Funds and their shareholder services. You may also
call 1-800-SATURNA (1-800-728-8762) with any questions.
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
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1
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SATURNA INVESTMENT TRUST
SEXTANT GROWTH FUND
SEXTANT BOND INCOME FUND
SEXTANT INTERNATIONAL FUND
SEXTANT SHORT-TERM BOND FUND
1300 State Street
Bellingham, Washington 98225
360-734-9900
800-SATURNA
STATEMENT OF ADDITIONAL INFORMATION
March 29, 1996
The Sextant Funds are series of Saturna Investment Trust (the "Trust"). Each
series of the Trust represents shares of beneficial interest in a separate
portfolio of securities and other assets, with its own objectives and policies.
This Statement of Additional Information is not a Prospectus. It merely
furnishes additional information that should be read in conjunction with the
Funds' prospectus dated March 29, 1996 The Funds' prospectuses may be obtained
free of charge by telephoning the numbers above or writing the Funds at the
address shown above.
<PAGE>
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TABLE OF CONTENTS
Page
General Information and History...........................2
Investment Objectives and Policies........................3
Investment Considerations.................................7
Portfolio Turnover........................................9
Performance Data ........................................10
Management of the Trust..................................12
Principal Holders of Securities..........................15
Investment Advisory and Other Services...................16
Brokerage Allocation.....................................19
Purchase, Redemption and Pricing of Securities Being
Offered 20
Tax Status...............................................20
Financial Statements.....................................21
<PAGE>
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GENERAL INFORMATION AND HISTORY
Saturna Investment Trust (the "Trust") is a business trust formed pursuant to
RCW 23.90 of the laws of the State of Washington to operate as an open-end
management company. When formed on February 20, 1987, the name was Northwest
Investors Tax-Exempt Business Trust. The Trust's name was changed to Northwest
Investors Trust on October 12, 1990. Most recently, in connection with the
formation of the Sextant Funds, the Trust's name was changed to Saturna
Investment Trust on September 28, 1995.
The Declaration of Trust permits the trustees to issue an unlimited number of
full and fractional shares in any Fund of the Trust. The Trust may establish
additional Funds in the future by approval of the Trustees. All shares will have
no par value and when issued will be fully paid and non-assessable and will have
no preemptive, conversion, or sinking fund rights.
The Trust has five separate Funds, four of which are offered as the Sextant
Funds through this Prospectus and Statement of Additional Information: Sextant
Growth Fund (formerly known as Northwest Growth Fund), Sextant Bond Income Fund
(formerly known as Washington Tax-Exempt Fund), Sextant International Fund, and
Sextant Short-Term Bond Fund. The remaining Fund, Idaho Tax-Exempt Fund
(initially known as the Idaho Extended Maturity Tax-Exempt Fund) is offered
through a separate Prospectus and Statement of Additional Information.
INVESTMENT OBJECTIVES AND POLICIES
This section is provided only for the purpose of expanding or outlining certain
policies and restrictions not thoroughly covered in the Prospectus.
SEXTANT GROWTH FUND seeks long-term growth. The Fund invests in common stocks
and other equity-type securities. Although income is considered when an
investment is considered, the Fund is not designed for investors seeking income.
The Fund pursues its objective by investing primarily in common stocks and
securities convertible into common stocks and preferred stocks, but may also
invest in other securities that are suited to the Fund's investment objectives.
The Fund ordinarily does not invest in straight-debt securities.
The Fund may invest in securities of smaller or newer companies as well as those
of well-seasoned companies of any size. Smaller companies involve higher
investment risks in that they often have limited product lines, markets and
resources, or their securities may trade less frequently and have greater price
fluctuation than those of larger companies. Although the Fund invests
principally in securities of U.S. issuers, it may invest up to 5% of its total
assets (valued at the time of investment) in foreign securities, including
foreign government obligations and foreign equity and debt securities that are
traded in the U.S. (See the discussion of international investing under "Sextant
International Fund" and "Investment Considerations" below.)
Under normal market conditions, the Fund expects to be substantially fully
invested in the types of securities described in the preceding paragraphs.
However, to the extent that investments meeting the Fund's criteria for
investment are not available or when the Adviser considers a temporary defensive
investment position advisable, the Fund may invest without limitation in
high-quality corporate debt obligations or U.S. government obligations or hold
cash or cash equivalents.
SEXTANT INTERNATIONAL FUND'S objective is long term growth by investing
primarily in a diversified portfolio of foreign common stocks and other
equity-type securities (e.g. securities convertible into common stocks and
preferred stocks.) The Fund ordinarily does not invest in straight-debt
securities. Under normal market conditions, the Fund will invest at least 65% of
its total assets (taken at market value at time of investment) in foreign
securities (securities of non-U.S. issuers.) The Fund ordinarily invests in
securities of at least three countries outside the U.S. However, to the extent
that investments meeting the Fund's criteria for investment are not available or
when the Adviser considers a temporary defensive investment position advisable,
the Fund may invest without limitation in high-quality debt obligations or U.S.
government obligations or hold cash or cash equivalents.
Although income is considered in the selection of securities, the Fund is not
designed for investors whose primary investment objective is income. The Fund
pursues its objective by investing primarily in common stocks and securities
convertible into common stocks, but may also invest in other securities that are
suited to the Fund's investment objectives, including preferred stocks and debt
securities.
The Fund may invest in securities of smaller or newer companies as well as those
of well-seasoned companies of any size. Smaller companies involve higher
investment risks in that they often have limited product lines, markets and
resources, or their securities may trade less frequently and have greater price
fluctuation than those of larger companies. These factors may be particularly
applicable in smaller or emerging foreign markets.
The Fund diversifies its investments among several countries and does not
concentrate in any particular industry. The Fund varies its investments
geographically and by type of securities in which it invests based on the
adviser's evaluation of economic, market, and political trends throughout the
world. The adviser considers the relative political and economic stability of a
company's home country in evaluating the potential rewards and risks of an
investment opportunity. The Fund may invest in securities traded in mature
markets (such as Canada, Japan and the United Kingdom), in less developed
markets (for example, Mexico), and in emerging markets (for example, Peru).
Investments in foreign securities, especially those in less developed and
emerging markets present additional risk. (See "Investment Considerations.")
Although the Fund may invest throughout the world outside the U.S. and determine
that it is in the best interest of the Fund and shareholders to keep assets in
those countries in which the Fund is investing, as a matter of operating policy
(that can be changed by the Board of Trustees), the Fund presently limits its
investments to those securities of foreign issuers that are traded and settled
in the U.S. or to American Depository Receipts ("ADR's") that represent
underlying shares of foreign issuers. (ADRs are receipts typically issued by an
American bank or trust company evidencing ownership of the underlying
securities.) Positions in these securities are generally valued in U.S. dollars,
they are not necessarily denominated in the same currency as the underlying
security into which they may be converted. The Fund may invest in both
"sponsored" and "unsponsored" ADRs. In a sponsored ADR, the issuer typically
pays some or all of the expenses of the depository and agrees to provide its
regular shareholder communications to ADR holders. An unsponsored ADR is created
independently of the issuer of the underlying security. Unsponsored ADR holders
generally pay the expenses of the depository and do not have an undertaking from
the issuer of the underlying security to furnish shareholder communications.
(See also "Investment Considerations" below.)
The Fund may invest in securities denominated in various currencies.
Accordingly, a change in the value of such currency against the U.S. dollar will
result in a corresponding change in the U.S. dollar value of the Fund's assets
denominated in that currency. Such changes will also affect the Fund's income.
Generally, when a given currency appreciates against the dollar (that is, the
dollar weakens) the value of the Fund's securities denominated in that currency
will rise. When a given currency depreciates against the dollar (that is, the
dollar strengthens) the value of the Fund's securities denominated in that
currency would be expected to decline.
The dividends and interest payable on certain of the Fund's foreign portfolio
securities may be subject to foreign withholding taxes, thereby reducing the net
amount of income available for distribution to the Fund's shareholders. A
shareholder otherwise subject to U.S. federal income taxes may, subject to
various limitations, be entitled to claim a credit or deduction for U.S. federal
income tax purposes for his or her proportionate share of such foreign taxes
paid by the Fund.
SEXTANT SHORT-TERM BOND FUND seeks capital stability and a high level of current
income. The Fund pursues this objective by investing primarily in marketable
short-term debt securities. Under normal circumstances, the Fund's
dollar-weighted average maturity will not exceed three years.
SEXTANT BOND INCOME FUND seeks high current income. The Fund pursues this
objective by investing primarily in marketable long-term debt securities. As an
operating policy that may be changed by the Board of Trustees, under normal
market conditions the Fund maintains a dollar-weighted average effective
maturity in excess of ten years.
The risks and investment returns offered in these Funds depend primarily on the
terms and quality of the obligations in that Fund's portfolio, as well as on
market conditions. Interest rate fluctuations will affect a Fund's net asset
value, but not the income received by the Fund from its portfolio securities.
However, because yields on debt securities available for purchase by a Fund vary
over time, no specific yield on shares of a Fund can be assured.
Short-Term Bond Fund is appropriate for investors who seek yields that are
typically higher than are usually available from money market instruments. By
limiting itself to shorter maturities, Short-Term Bond Fund should provide less
net asset fluctuation than shareholders might expect from a longer-term bond
fund, such as Bond Income Fund.
Bond Income Fund is intended for investors who seek a higher level of income
than is generally available from a shorter-term fund, yet who can accept greater
levels of interest rate and other risks associated with investment in
longer-term securities.
The "effective maturity" of a debt instrument is the weighted average period
over which the Adviser expects the principal to be paid. It differs from the
stated maturity in that it estimates the effect of expected principal
prepayments and call provisions. With respect to mortgage backed securities such
as GNMA securities, the effective maturity is likely to be substantially less
than the stated maturity of the mortgages in the underlying pools. With respect
to obligations with call provisions, the effective maturity is typically the
next call date on which the obligation reasonably may be expected to be called.
Securities without prepayment or call provisions generally have an effective
maturity equal to their stated maturity. During periods of rising interest
rates, the effective maturity of mortgage backed securities and callable
obligations may increase substantially because they become less likely to be
prepaid, which may result in greater net asset value fluctuation.
Under normal market conditions, each of Sextant Short-Term Bond Fund and Sextant
Bond Income Fund will invest at least 65% of the value of its total assets
(taken at market value at the time of investment) in "bonds," meaning:
(1) Marketable straight-debt securities of domestic issuers, and of
foreign issuers payable in U.S. dollars, rated at the time of
purchase within the three highest grades assigned by Moody's
Investors Service, Inc. ("Moody's") (Aaa, Aa or A) or by Standard &
Poor's Corporation ("S&P") (AAA, AA or A)*
(2) U.S. Government Securities;
(3) Commercial paper rated Prime-1 by Moody's or A-1 by S&P at time of
purchase, or, if unrated, issued or guaranteed by a corporation with
any outstanding debt rated Aa or better by Moody's or AA or better
by S&P; and
(4) Bank obligations, including repurchase agreements+ of banks, having
total assets in excess of $1 billion.
These Funds may also invest in other debt securities (including those
convertible into, or carrying warrants to purchase, common stocks or other
equity interests, and privately placed debt securities). However, the Funds may
not invest in a security rated at time of purchase below the fourth highest
grade assigned by Moody's (Baa) or S&P (BBB). Debt rated Baa or BBB is
considered "medium grade," though still generally accepted as investment grade.
(See "Appendix" for more information regarding ratings of debt securities.)
U.S. Government Securities include: (i) bills, notes, bonds and other debt
securities, differing as to maturity and rates of interest, that are issued by
and are direct obligations of the U.S. Treasury; and (ii) other securities that
are issued or guaranteed as to principal and interest by the U.S. Government or
by its agencies or instrumentalities. U.S. Government Securities are generally
accepted as being among the safest debt securities with respect to the timely
payment of principal and interest (but not any premium paid on their purchase),
but generally bear a lower rate of interest than corporate debt securities.
However, they are subject to market risk like other debt securities, and the
Funds' shares will fluctuate in value.
Among the Government Securities the Funds may purchase are those issued by
Government National Mortgage Association ("GNMA"), Federal National Mortgage
Association ("FNMA") and other agencies. Securities such as these represent an
interest in a pool of mortgages insured in whole or in part by other agencies or
the U.S. Treasury, depending on the terms of the issue. These issues may or
may not represent the guarantee of the U.S. Treasury.
These "mortgage-backed" debt securities are entitled to interest and principal
payments on mortgages in the pool as they are paid. During periods of declining
interest rates there is an increased likelihood that these mortgages will be
prepaid, resulting in a loss of the benefit of holding the instrument to full
term, and loss of any premium the Fund may have paid to buy the security.
The Funds may also invest in floating rate instruments which provide for
periodic adjustments in coupon interest rates that are automatically reset based
on changes in amount and direction of specified market interest rates. To the
extent such instruments are subject to lifetime or periodic interest rate caps
or floors, such instruments may experience greater price volatility than debt
instruments without such features.
Medium grade (Baa or BBB) debt securities are obligations of issuers with less
capacity to pay interest and repay principal than those rated more highly.
Investment in these debt securities involves somewhat greater investment risk,
including the possibility of issuer default or bankruptcy. An economic downturn
could adversely affect the value of outstanding bonds and the ability of issuers
to repay principal and interest. During a period of adverse economic changes,
including a period of rising interest rates, issuers of such bonds may
experience difficulty in servicing their principal and interest payment
obligations.
Some issuers of debt securities choose not to have their securities rated by a
rating service. The Funds may invest in unrated securities that in the adviser's
opinion are comparable to securities having at least a medium grade rating and
are suitable for investment by the Funds.
INVESTMENT CONSIDERATIONS
Investing in securities entails both market risk and risk of price variation in
individual securities. THIS IS TRUE EVEN FOR DEBT SECURITIES ISSUED BY THE U.S.
GOVERNMENT. By diversifying its investments, each Fund may reduce the risk
associated with owning one or a few individual securities. However, there is no
assurance that any Fund will achieve its investment objectives.
The Growth Fund and the International Fund may invest in securities of smaller
or newer companies as well as those of well-seasoned companies of any size.
Smaller companies involve higher investment risks in that they often have
limited product lines, markets and resources, or their securities may trade less
frequently and have greater price fluctuation than those of larger companies.
These factors may be particularly applicable in smaller or emerging foreign
markets.
INVESTMENT IN FOREIGN SECURITIES
Investors should understand and carefully consider the risks involved in foreign
investing. Investing in foreign securities or instruments involves risks and
opportunities not typically associated with investing in U.S. securities. These
include: fluctuations in exchange rates of foreign currencies; possible
imposition of exchange control regulation or currency restrictions that would
prevent cash from being brought back to the U.S.; less public information with
respect to issuers of securities; less governmental supervision of exchanges,
issuers, brokers; lack of uniform accounting, auditing, and financial reporting
standards; lack of uniform trading practices; less liquidity or greater price
volatility in foreign markets; possible imposition of foreign taxes; or less
advantageous legal, operational, and financial protections applicable to foreign
custodial arrangements. There is also a risk of expropriation or confiscatory
taxation, seizure or nationalization of foreign bank deposits or other assets,
establishment of exchange controls, adoption of foreign government restrictions,
or adverse political, social or diplomatic developments that could affect
investment in these nations.
SHORT-TERM BOND FUND AND BOND INCOME FUND
Many factors may cause the value of a shareholder's investment in the Fund to
fluctuate in value. The value of each Fund's portfolio will normally fluctuate
inversely with changes in market interest rates. Generally, when market interest
rates rise the price of bonds held in the Funds will fall; when rates fall, the
price of such bonds will generally rise. In addition, there is a risk that the
issuer of a bond or other security will fail to make timely payments of
principal and interest.
The risks inherent in these Funds depend primarily on the terms and quality of
the obligations in that Fund's portfolio, as well as on market conditions.
Interest rate fluctuations will affect a Fund's net asset value, but not the
income received by the Fund from its portfolio securities. However, because
yields on debt securities available for purchase by a Fund vary over time, no
specific yield on shares of a Fund can be assured.
INVESTMENT RESTRICTIONS. In addition to the restrictions stated in the
Prospectus, the Funds shall not purchase securities on margin or sell securities
short or purchase or write put or call options; purchase "restricted securities"
(those which are subject to legal or contractual restrictions on resale or are
otherwise not readily marketable); nor invest in oil, gas or other mineral
exploration leases and programs. The Funds shall not make loans to others,
except for the purchase of debt securities, or entering into repurchase
agreements. The Funds shall not invest in securities so as to not comply with
Subchapter M of the Code, in that generally at the close of each quarter of the
tax year, at least 50% of the value of each Fund's total assets is represented
by (i) cash and cash items, government securities, and securities of other
regulated investment companies, and (ii) other securities, except that with
respect to any one issuer in an amount more than 5% of either Fund's total
assets, and no more than 10% of the Fund's voting securities of any one issuer.
In addition, the Funds shall not purchase real estate; real estate limited
partnerships (excepting master limited partnerships that are publicly traded on
a national security exchange or NASDAQ's National Market System); commodities or
commodity contracts; issue senior securities; provided, however, that a fund may
borrow money for extraordinary or emergency purposes and then only if after such
borrowing there is asset coverage of at least 300% for all such borrowings; nor
act as a securities underwriter except that they may purchase securities
directly from the issuer for investment purposes. Also, no Fund of the Trust
shall purchase or retain securities of any issuer if the officers or trustees of
the Trust or its adviser own more than one-half of one percent of the securities
of such issuer; invest in any company for the purpose of management or
exercising control. No Fund of the Trust shall invest in the securities of other
open-end investment companies, except in connection with a merger,
consolidation, acquisition, or reorganization or by purchase in the open market
where no commission or profit to a sponsor or dealer results from the purchase
other than the customary broker's commission.
No Fund shall purchase securities of any issuer in excess of 5% of the Fund's
total assets or purchase more than 10% of the outstanding voting securities of
any issuer; or concentrate its investments in a single industry beyond 25% of
the total value of the Fund; or invest more than 10% of its assets in the
securities of issuers which together have a record of less than three years
continuous operation. No Fund will purchase securities if it has outstanding
borrowings exceeding 5% of its net assets. No Fund's investments in warrants,
valued at the lower of cost or market, shall exceed 5% of the value of the
Fund's net assets. Included within that amount, but not to exceed 2% of the
value of the Fund's net assets, may be warrants which are not listed on the New
York or American Stock Exchange. Warrants acquired in units or attached to
securities may be deemed to be without value.
Notwithstanding the above, the Funds may purchase securities pursuant to the
exercise of subscription rights, provided that such purchase will not result in
the Fund's ceasing to be a diversified investment company. Japanese and European
corporations frequently issue additional capital stock by means of subscription
rights offerings to existing shareholders at a price substantially below the
market price of the shares. The failure to exercise such rights would result in
a Funds' interest in the issuing company being diluted. The market for such
rights is not well developed in all cases and, accordingly, the Funds may not
always realize the full value on the sale of rights. The exception applies in
cases where the limits set forth in the investment restrictions would otherwise
be exceed by exercising rights or would have already been exceeded as a result
of fluctuations in the market value of the Funds' portfolio securities with the
result that the Fund would be forced to sell securities at a time when it might
not otherwise have done so, or to forego exercising the rights.
Investment objectives and certain policies of each of the Funds may not be
changed without the prior approval of the holders of the majority of the
outstanding shares of the respective Fund. Objectives and policies which are
considered fundamental and subject to change only by prior approval of the
shareowners include: (1) the primary and any secondary investment objectives;
(2) the classification of the Trust as an open-end management company and the
sub-classification of each of the Funds as a diversified company; and (3) the
policies listed under "Investment Restrictions."
PORTFOLIO TURNOVER
The Funds have no restrictions on portfolio turnover and buy or sell investments
according to the Adviser's assessment of the market and the economy. The figures
regarding turnover in the following paragraph's reflect the operations of
certain Funds under their previous objectives. The portfolio turnover for these
Funds under their present policies is not expected to be materially different,
however.
The portfolio turnover rate of the Sextant Growth Fund (previously Northwest
Growth Fund) for the fiscal years ended November 30, 1995, 1994, and 1993, was
40%, 12%, and 25%, respectively.
The portfolio turnover rate of the Sextant Bond Income Fund (previously
Washington Tax-Exempt Fund) for the fiscal years ended November 30, 1995 and
1994 and for the period March 1, 1993 (commencement of operations) to November
30, 1993 was 77%, 74% and 36% (not annualized).
Portfolio turnover for Sextant Short-Term Bond Fund and Sextant International
Fund for the period September 28, 1995 (inception) through November 30, 1995 was
0% and 12%, respectively.
PERFORMANCE DATA
The figures regarding yield and total return in the following paragraphs reflect
the operations of certain Funds under their previous objectives. Consequently,
no inference as to future performance of the Sextant Growth Fund or Sextant Bond
Income Fund should be drawn nor is any such implication intended.
Certain factors should be taken into account before using Total Return and
Current Yield information as a basis for comparison with alternative
investments. No adjustment is made for taxes payable on distributions. The
performance for any given past period is not an indication of future rates of
return or yield on its shares.
The Sextant Growth Fund's total return for the one year period ended November
30, 1995 was 30.76%. Average annual total return from April 1, 1987 (inception
of the Northwest Growth Fund) through November 30, 1995 was 7.49%. Performance
figures for the Northwest Growth Fund for the period prior to October 12, 1990,
reflect the Fund's investment objective at that time of tax-free income and
capital preservation.
The total return of the Sextant Bond Income Fund (formerly Washington Tax-Exempt
Fund) for the one year period ended November 30, 1995 was 17.69%. Average annual
total return for the period March 1, 1993 (commencement of operations) through
November 30, 1995, was 4.30%.
The total return of the Sextant Short-Term Bond Fund and Sextant International
Fund for the period September 28, 1995 (inception) through November 30, 1995 was
1.05% and (0.20)%, respectively.
Average annual Total Return quotations for various periods illustrated are
computed by finding the average annual compounded rate of return over the period
quoted that would equate the initial amount invested to the ending redeemable
value according to the following formula:
P (1 + T)n = ERV
Where
P = a hypothetical initial Payment of $1,000 T = average annual
Total return n = Number of years ERV =Ending Redeemable Value of the
$1,000 payment
made at the beginning of the period.
To solve for average Total Return, the formula is as follows:
T = (ERV/P) 1/n - 1
The Funds utilize the following procedures in determining yield. The yield
calculation is based on a 30 day period and is computed by the following formula
using the compounded semi-annual APR:
Nominal Yield = [ [ [ ( (a-b) / ( c*d ) ) + 1 ] -1 ] /30 ] * 360
Compounded Semi-Annual APR = [ [ 1 + [ Nominal Yield / 2 ] ] 2 ] - 1
Where: a = dividends and interest earned during the period; b = expenses accrued
for the period (net of reimbursement); c = the average daily number of shares
outstanding during the period that were entitled to receive dividends; and d =
the maximum offering price per share (equivalent to Net Asset Value for no-load
funds) on the last day of the period.
The figures regarding yield and total return in this paragraphs reflect, at
least in part, the operations of Sextant Bond Income Fund under its previous
objectives. Consequently, no inference as to future performance of Sextant Bond
Income Fund should be drawn nor is any such implication intended. The yield on
Sextant Bond Income Fund for the 30-day period ended November 30, 1995 was 4.8%.
In advertising and sales literature, a Fund may compare its performance with
that of other mutual funds, indexes or averages of other mutual funds, indexes
or data, and other competing investment and deposit products. The composition of
these indexes or averages differs from that of the Funds. Comparison of a Fund
to an alternative investment should be made with consideration of the
differences in features and expected performance of the investments.
All of the indexes and averages noted below will be obtained from the indicated
sources or reporting services, which the Trust believes to be generally
accurate. A Fund may also note its mention or recognition in other newspapers,
magazines or media from time to time. However, the Trust assumes no
responsibility for the accuracy of such data. Among the newspapers and magazines
that might mention the Trust or the Funds are:
Barron's Money
Business Week Mutual Fund Letter
Changing Times Morningstar
Consumer Reports New York Times
Consumer Digest Pensions and Investment
Financial World USA Today
Forbes US News and World Report
Fortune Wall Street Journal
Investors Daily
The Funds may also compare themselves to the Consumer Price Index, a widely
recognized measure of inflation, and to other indexes and averages such as:
Dow Jones Industrials New York stock Exchange Composite
Standard & Poor's 500 Stock Index
Index American Stock Exchange Composite
Standard & Poor's 400 Index
Industrials NASDAQ Composite
Wilshire 5000 NASDAQ Industrials
Russell 2000 Lipper General Equity Fund Average
Lipper Capital Appreciation Lipper Equity Funds Average
Fund Average Lipper Growth Fund Index
Lipper Growth Funds Average Lipper Growth & Income Fund
Lipper Small Company Growth Average
Fund Average Lipper Balanced Fund Average
Lipper Equity Income Fund Lipper Growth & Income Fund Index
Average Lipper Equity Income Fund Index
Lipper Capital Appreciation Lipper Balanced Fund Index
Fund Index Ibbotson Common Stocks Index
Lipper Growth Fund Index
Lipper Small Company Growth
Fund Index
Morningstar Mutual Fund
Indices
The indexes and averages are measures of performance of stocks and mutual funds
that are classified, calculated and published by these independent services. The
Funds may also use comparative performance as computed in a ranking by these or
other independent services.
A Fund may also cite its rating or other mention by Morningstar or another
entity. Morningstar's ratings are based on risk-adjusted total return
performance, as computed by Morningstar by subtracting a Fund's risk score as
computed by Morningstar, from the fund's total return score. This numerical
score is then translated into rating categories.
MANAGEMENT OF THE TRUST
Information concerning Trustees and Officers of the Trust and their principal
occupations for the past five years is shown below:
GARY A. GOLDFOGEL, M.D., Trustee
1500 N. State Street, Bellingham, WA 98225.
Pathologist and Medical Dir., Whatcom Pathology Lab. Whatcom County;
Medical Examiner, Whatcom County
NICHOLAS KAISER, M.B.A., C.F.A. - President and Trustee *
1300 N. State Street, Bellingham, WA 98225.
President of Saturna Capital Corporation, since July 1989.
President of Unified Management Corporation, Indianapolis IN, investment
advisers and brokers, from 1976 through June 1989.
JOHN E. LOVE, Trustee
Box 188, Garfield, Washington 99130
Owner, J.E. Love Co., international agricultural equipment manufacturer,
Garfield, WA
Director, Bank of Whitman, Colfax, Wash.
Rear Admiral, U.S. Navy, Retired.
JOHN S. MOORE, Trustee
College of Business and Economics, Western Washington University,
Bellingham, WA 98225-9077
Professor of Business Administration
JAMES D. WINSHIP, J.D., M.B.A.- Trustee and Secretary*
1300 N. State Street, Bellingham, WA 98225.
Vice President and Secretary, Saturna Capital Corporation, October 1991 to
present.
Editor-at-large, FUND DIRECTIONS industry newsletter, December 1991 to
present.
Executive Vice-President and member of the management committee, Stein Roe
& Farnham Incorp., Chicago IL, investment adviser, and head of its
mutual fund division, prior to October 1991.
PHELPS S. MCILVAINE - Vice President
1300 N. State Street, Bellingham, WA 98225.
Vice President and Director Saturna Capital Corporation, January 1994 to
present.
Bond ArbitrageTrader, Hickey Financial, Chicago Illinois 1987-1994
MEREDITH L. ROSS - M.B.A., Treasurer
1300 N. State Street, Bellingham, WA 98225.
Assistant Treasurer, Saturna Capital Corporation, September 1989 to
present.
* Nicholas Kaiser and James Winship are each an "interested person" of the Trust
as defined in the Investment Company Act of 1940.
Beginning January 1, 1996, the Trust pays disinterested trustees $100 per
meeting attended and reimbursement of travel expenses (pro-rata to each Fund).
Neither Mr. Winship nor Mr. Kaiser receives compensation from the Trust, nor are
the other officers of the Trust paid for their duties with the Trust. Prior to
that time all Trustees served without compensation, as set forth below.
<PAGE>
<TABLE>
<CAPTION>
Pension or Total
Aggregate Retirement Compensation
Name of Compensa- Benefits Accrued Estimated Annual From Registrant
Person; tion From As Part of Fund Benefits Upon and Fund Complex
Position Registrant Expenses Retirement Paid to Directors
<S> <C> <C> <C> <C>
GARY GOLDFOGEL, $0 $0 $0 $0
Trustee
JOHN E. LOVE, 0 0 0 0
Trustee
JOHN S. MOORE, 0 0 0 0
Trustee
NICHOLAS F. KAISER 0 0 0 0
Trustee
JAMES D. WINSHIP 0 0 0 0
Trustee
</TABLE>
The Board has authority to establish an Executive Committee with the power to
act on behalf of the Board between meetings and to exercise all powers of the
Trustees in the management of the Trust. No Executive Committee has been
established at this time. An Audit Committee, consisting of the disinterested
directors, meets to select the independent accountant and review all audit
reports. There is no separate nominating committee.
As of February 6, 1996 officers, trustees and their families as a group, own the
following shares of the Funds
Percent of
Fund Shares Owned Outstanding
Sextant Short-Term Bond 65,625 16%
Sextant Bond Income Fund 69,682 29%
Sextant Growth Fund 24,964 14%
Sextant International Fund 41,624 44%
<PAGE>
PRINCIPAL HOLDERS OF SECURITIES
As of February 6, 1996 the only shareholders of Sextant Short-Term Bond Fund
owning 5% or more were as follows:
Name Shares Percentage
SAFA Trust, Inc.
c/o Omar Oshraf 200,363 48%
Nicholas F. Kaiser
Markell F. Kaiser, Jt. Ten. 50,863 12%
Henry D. Klein 30,054 7.23%
Investors National Corporation 25,294 6%
As of February 6, 1996 the only shareowner with 5% or more of sextant Bond
Income Fund were as follows:
Name Shares Percentage
Nicholas F. Kaiser
Markell F. Kaiser, Jt. Ten. 42,495 17%
Carol Lingow, Guardian
FBO Robert C. Schmidt 25,757 11%
Saturna Capital Corporation 21,199 9%
Luzenia B. Redpath 19,617 8%
Loie E. Haggen 15,977 7%
Kust Enterprises Inc. Pension and
Profit Sharing Plan 15,211 6%
Frederick M. Graham
Mary J. Graham, Jt. Ten. 13,135 5%
Northwest Radiologists, Inc. PS
401(k) FBO Donald C. Barnett 12,897 5%
As of February 6, 1996 the only shareowners with 5% or more of Sextant Growth
Fund were:
Name Shares Percentage
Northwest Radiologists Inc. PS
401(k) Plan FBO Donald C. Barnett 18,437 10%
Nicholas F. Kaiser IRA Rollover 17,448 10%
Michael R. McRory 9,151 5%
As of February 6, 1996 the only shareowners with 5% or more of Sextant Growth
Fund were:
Name Shares Percentage
Nicholas F. Kaiser IRA Rollover 23,509 25%
Northweest Radiologists Inc PS
401(k) Plan FBO Donald C. Barnett 15,927 17%
Northwest Eye Clinic Employee Pension
Trust #13 6,937 7%
Ralph H. Rinne
Eleanor W. Rinne Jt. Ten. 5,181 5%
James D. Winship Special Account 5,076 5%
Markell F. Kaiser, IRA Rollover 5,000 5%
Markell F. Kaiser CUST 5,000 5%
INVESTMENT ADVISORY AND OTHER SERVICES
Each of the Sextant Funds monthly pays the Adviser an Advisory and
Administrative Services Fee (the "Base Fee").
The Base Fee covers certain administrative services such as portfolio
accounting, shareholder and financial reporting, shareholder servicing and
transfer agency services. The Base Fee is also compensation for portfolio
management, advice and recommendations on securities to be purchased, held or
sold. The Base Fee is computed at the annual rate of 0.60% of average daily net
assets of each Fund, and is paid monthly. The Base Fee is subject to adjustment
up or down depending on the investment performance of the Fund relative to a
specified index (the "Performance Adjustment.")
"PERFORMANCE ADJUSTMENT" FOR SEXTANT BOND INCOME FUND AND SEXTANT SHORT-TERM
BOND FUND
For each month in which either of these Funds' total investment return (change
in net asset value plus all distributions reinvested) for the one year period
through that month outperforms or underperforms the total return of a specified
index for that period by 1% or more but less than 2%, the Base Fee is increased
or decreased by the annual rate of .10% of the Fund's average daily net assets
for the preceding year. If the outperformance or underperformance is 2% or more,
then the adjustment is at the annual rate of .20%.
No performance adjustment is applicable during the first year the Agreement is
in place.
PERFORMANCE ADJUSTMENT FOR SEXTANT GROWTH FUND AND SEXTANT INTERNATIONAL FUND
For each month in which either of these Fund's total investment return (change
in net asset value plus all distributions reinvested) for the one year period
through that month outperforms or underperforms the total return of a specified
index for that period by 1% or more but less than 2%, the Base Fee is increased
or decreased by the annual rate of .10% of the Fund's average daily net assets
for the preceding year. If the outperformance or underperformance is 2% or more
but less than 4%, then the adjustment is at the annual rate of .20%. If the
outperformance or underperformance is 4% or more, the adjustment is at an annual
rate of .30%.
No Performance Adjustment is payable during the first year the Agreement is in
place.
Total return investment performance as calculated and published by Morningstar,
Inc. for selected groups of mutual funds will be used as the index for
comparison purposes. Each Fund and the comparative Morningstar group to be used
are:
Sextant Growth Fund: "GROWTH FUNDS"
Sextant International Fund: "FOREIGN STOCK FUNDS"
Sextant Bond Income Fund: "CORPORATE BOND FUNDS-HIGH QUALITY"
Sextant Short-Term Bond Fund: "CORPORATE BOND FUNDS-HIGH QUALITY"
In the event that a particular index is no longer available or otherwise becomes
unavailable or inappropriate, in the opinion of the Board of Trustees, the Board
may select another to replace it.
The Adviser has also voluntarily undertaken to limit expenses of Bond Income
Fund and Short-Term Bond Fund to 0.60% through March 31, 1997. A waiver may have
the effect of subsidizing the yield for the period it is in effect.
Each Fund pays its own taxes, brokerage commissions, trustees' fees, legal and
accounting fees, insurance, 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,
as well as transfer agency and certain other expenses.
For no additional charges, the Adviser provides services as the transfer agent,
registrar and dividend-paying agent for each Fund. As transfer agent, Saturna
furnishes to each shareowner a statement after each transaction, an historical
statement at the end of each year showing all transactions during the year, and
Form 1099 tax forms. Saturna also, on behalf of the Trust, responds to
shareowners' questions or correspondence. Further, the transfer agent regularly
furnishes each Fund with current shareowner lists and information necessary to
keep the shares in balance with the Trust's records. The mailing of all
financial statements, notices and prospectuses to shareowners is performed by
the transfer agent. The transfer agent maintains records of contributions,
disbursements and assets as required for IRAs and other qualified retirement
accounts. Each Fund reimburses Saturna for any out-of-pocket expense for forms
and mailing costs used in performing its functions.
The laws and regulations of various states set expense limitations for mutual
funds as a condition for registration to offer and sell shares in that state.
Usually, the expense limitation requires reimbursement if, and to the extent
that, the aggregate operating expenses including the advisory fee but generally
excluding interest, taxes, brokerage commissions and extraordinary expenses, are
in excess of a specified percentage of the average net assets of a Fund for its
fiscal year. The only state the adviser believes maintains an expense limitation
is California, which limits aggregate annual expenses (with exceptions) to 2.5%
of the first $30 million of average net assets, 2% of the next $70 million and
1.5% of the remaining average net assets.
National City Bank, Indianapolis, Indiana 46255 is the custodian of the Funds'
securities and other assets. As custodian, the bank holds in custody all
securities and cash, settles for all securities transactions, receives money
from sale of shares and on order of each Fund pays the authorized expenses of
the Fund. When Fund shares are redeemed by investors, the proceeds are paid to
the shareowner by check drawn on the custodian bank.
Price Waterhouse, LLP 1001 Fourth Avenue Plaza, Seattle, Washington 98154 serves
as the independent accountants for the Trust. The independent accountants
conduct the annual audit of the Trust as of November 30 and prepare the tax
returns of each Fund.
PRIOR TO SEPTEMBER 28, 1995, UNDER THE ADVISORY CONTRACTS THEN IN EFFECT,
SEXTANT GROWTH FUND AND SEXTANT BOND INCOME FUND WERE OBLIGATED TO PAY SATURNA
CAPITAL FEES UNDER MANAGEMENT CONTRACTS THAT ARE NO LONGER IN EFFECT.
Under the former contracts, Northwest Growth Fund, predecessor to Sextant Growth
Fund paid Saturna Capital monthly an advisory fee at the rate of 0.75% of
average daily net asset value annually. Similarly, Washington Tax-Exempt Fund,
predecessor to Sextant Bond Income Fund was obligated to pay Saturna Capital
monthly an 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. Under the former contracts, the
Adviser received a separate fee as compensation for services as transfer agent
and dividend disbursement agent. Each Fund paid Saturna an annual fee of $1.10
per month per shareowner account (plus $.30 per month for Funds paying dividends
more frequently than once per quarter). Each Fund reimbursed Saturna for any
out-of-pocket expense for forms and mailing costs used in performing its
functions. For the fiscal year ended November 30, 1995, Sextant Growth Fund,
(formerly Northwest Growth Fund paid transfer agent fees of $1,272, and Sextant
Bond Income Fund (formerly Washington Tax-Exempt Fund) paid $842.
For fiscal 1995, Sextant Growth Fund paid investment adviser and administration
fees of $7,255, a portion of which was paid under the new contract approved by
shareholders effective September 28, 1995. For fiscal 1994, under the former
contracts Sextant Growth Fund paid $9,318 in administrative and advisory fees,
and no waiver or reimbursement was required. For fiscal 1993, that Fund paid
$10,504 in administrative and advisory fees, and no waiver or reimbursement was
required.
For fiscal 1995, Sextant Bond Income Fund paid investment adviser and
administration fees of $5,838, all of which was waived under the adviser's
voluntary expense reimbursements. For fiscal 1994, under the former contracts
Sextant Bond Income Fund paid $8,394 in administrative and advisory fees of
which Saturna Capital waived or reimbursed $8,046. For the period March 1, 1993
(commencement of operations) through November 30, 1993, that Fund was obligated
to pay $5,809, of which $4,184 was reimbursed or waived by the adviser.
For the period September 28, 1995 (inception) through November 30, 1995, Sextant
Short-Term Bond Fund and Sextant international Fund paid investment adviser and
administration fees of $605 (all of which was reimbursed under voluntary expense
limitations) and $296, respectively.
BROKERAGE ALLOCATION
The placing of purchase and sale orders as well as the negotiation of
commissions is performed by the Adviser and is reviewed by the Board of
Trustees. The Adviser may allocate brokerage to any broker in return for
research or services and for selling shares of any Fund. Brokers may provide
research or statistical material to the Adviser, but this information is only
supplemental to the research and other statistics and material accumulated and
maintained through the Adviser's own efforts. Any such supplemental information
may or may not be of value or used in making investment decisions for the Trust
or any other account serviced by the Adviser.
The primary consideration in effecting securities transactions for each Fund is
to obtain the best price and execution which in the judgment of the Adviser is
attainable at the time and which would bring the best net overall economic
result to the Fund. Factors taken into account in the selection of brokers
include the price of the security, commissions paid on the transaction, the
efficiency and cooperation with which the transaction is effected, the
expediency of making settlement and the financial strength and stability of the
broker. The Adviser may negotiate commissions at a rate in excess of the amount
another broker would have charged if it determines in good faith that the
overall net economic result is favorable to the Fund. The Adviser evaluates
whether brokerage commissions are reasonable based upon available information
about the general level of commissions paid by similar mutual funds for
comparable services.
The Adviser's subsidiary, Investors National Corporation, is qualified as a
broker-dealer to engage in a general brokerage business. Investors National
Corporation conducts all its transactions on an agency basis for established
"deep discount" commissions; it does not make markets, "deal," or maintain
inventories of securities. It is expected that most stock brokerage for the
Trust will be conducted through Investors National Corporation, and the Board of
Trustees has given permission for the Adviser to so direct. For brokerage
conducted through an affiliate of the Adviser, the Trustees have adopted
procedures reasonably designed to ensure that such brokerage fees are reasonable
and fair compared to remuneration received by other brokers in comparable
transactions. The Trustees are provided detailed quarterly monitoring reports
and review the procedures at least annually.
For fiscal years 1995 and 1994, Sextant Growth Fund paid $3,188 and $1,514 in
brokerage commissions to Investors National Corporation. For the period
September 28, 1995 (inception) to November 30, 1995, Sextant International Fund
paid $267 in commissions to Investors National Corporation. This represented
100% of the Fund's commissions and aggregate brokerage transactions for each of
these years. Similarly, for fiscal years 1995 and1994 Sextant Bond Income Fund
paid no brokerage commissions. Similarly, for the period September 28, 1995
(inception) through November 30, 1995, Sextant Short-Term Bond Fund paid no
commissions.
PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING
OFFERED
See HOW TO BUY SHARES, HOW TO REDEEM SHARES and NET ASSET VALUE in the
Prospectus for an explanation about the ways to purchase or redeem shares.
In addition to normal purchases or redemptions, the shares of each Fund may be
exchanged for shares of other Funds of Saturna Investment Trust. Exchange will
be made at no charge upon written request or by telephone if the shareowner has
previously authorized telephone privileges on the application. A gain or loss
for federal tax purposes will be realized upon redemption of any shares for the
purposes of an exchange as described above.
Net asset value per share is determined by dividing the value of all securities
and other assets, less liabilities, by the number of shares outstanding. The net
asset value is determined for each Fund 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 Exchange is generally closed on: New Year's Day,
Washington's Birthday/President's Day, Good Friday, Memorial Day, Independence
Day (observance), Labor Day, Thanksgiving Day and Christmas Holiday.
TAX STATUS
Saturna Investment Trust is organized as a "series" investment company. At
present only the Funds and Idaho Tax-Exempt Fund are offered, but the Trust may
create in the future additional funds with different investment objectives. Each
Fund is a separate economic entity with separate assets and liabilities and
separate income streams. The shareowners of each separate Fund may look only to
that Fund for income, capital gain or loss, redemption, liquidation, or
termination. Each Fund has separate arrangements with the Adviser. Assets of
each Fund are segregated. The creditors and shareowners of each Fund are limited
to the assets of that Fund for recovery of charges, expenses and liabilities.
Each Fund conducts separate voting on issues relating solely to that Fund,
except as required by the Investment Company Act. The tax status and tax
consequences to shareowners of each separate Fund will differ, depending upon
the investment objectives, operations, income, gain or loss, and distributions
from each Fund.
Each Fund intends to distribute to shareowners substantially all of its net
investment income and net realized capital gains, if any, and to comply, as it
has since inception, with the provisions of the Internal Revenue Code applicable
to regulated investment companies, which relieve the Funds of federal income
taxes on the amounts so distributed. For Sextant Growth Fund and Sextant
International Fund, dividends from net investment income and distribution of any
capital gains are made at the end of the fiscal year in November. The Sextant
Bond Income Fund and Sextant Short-Term Bond Fund pay dividends from net
investment income daily, which are reinvested as distributed at each month-end.
Distribution of any net realized capital gains is made at the end of the fiscal
year in November.
The amount of investment income and capital gains, if any, which will be
available for distribution by a Fund in the future cannot be predicted due to
continually changing economic conditions and market prices.
Dividends and distributions from capital gains are normally reinvested in
additional full and fractional shares of the Fund. The shares purchased with
dividends or capital gains distributions may be redeemed using any of the
methods for redemption of shares.
Distributions and dividends may be subject to federal, state and local taxes.
Shareowners will be taxed whether the shares automatically purchased with
dividends and distributions are left in the Fund or are paid to the shareowner.
Shortly after the end of each calendar year shareowners are mailed a Form
1099-DIV advising of the dividends paid the shareowner for the year.
If you do not furnish the transfer agent with a valid Social Security or Tax
Identification Number and in certain other circumstances, we are required to
withhold 31% of dividend income. Income dividends to shareowners who are
nonresident aliens may be subject to a 30% United States withholding tax under
the existing provisions of the code applicable to foreign individuals and
entities unless a reduced rate of withholding or a withholding exemption is
provided under applicable treaty law. If the IRS determines that the Trust
should be fined or penalized for inaccurate or missing or otherwise inadequate
reporting of a Tax Identification Number, the amount of the IRS fee or penalty
will be directly assessed to the shareowner account involved.
FINANCIAL STATEMENTS
The most recent audited annual report accompanies this Statement of Additional
Information. The financial statements and selected per share data and ratios
dated November 30, 1995, together with the report of independent accountants
dated December 15, 1995, are considered a part of the Statement of Additional
Information and are incorporated by reference.
<PAGE>
APPENDIX-BOND RATINGS
GENERAL. Moody's and S&P's ratings represent their opinions as to quality of the
bonds which they undertake (for a fee) to rate. Such ratings are not intended to
be an absolute standard of quality. A rating is not a recommendation to buy,
sell or hold a bond because it does not take into account market value or
suitability for a particular investment purpose. Ratings may vary from service
to service, and may be changed, withdrawn or suspended without notice for a
variety of reasons.
BOND RATINGS
MOODY'S INVESTORS SERVICES, INC., describes its ratings for debt securities as
follows:
AAA Bonds which are rated AAA are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a
large, or exceptionally stable margin, and principal is secure.
Although the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA Bonds rated AA are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa bonds or
fluctuation of protective elements may be of greater amplitude or
there may be other elements present which may make the long-term
risks appear somewhat larger than in Aaa bonds.
A Bonds rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
BAA Bonds rated Baa are considered as medium grade obligations; I.E.,
they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
STANDARD & POOR'S describes its rating for debt securities as follows:
AAA Debt rated AAA has the highest rating. Capacity to pay interest and
to repay principal is extremely strong.
AA Debt rated AA has a very strong capacity to pay interest and to
repay principal, and differs from the higher rated issues only in
small degree.
A Debt rated A has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to the adverse
effect of changes and circumstances in economic conditions than debt
in higher rated categories.
BBB Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than for debt
in higher rated categories.
COMMERCIAL PAPER RATINGS
MOODY'S INVESTORS SERVICES, INC. employs the following designations, all
investment grade
PRIME-1 Highest quality
PRIME-2 Higher quality
PRIME-3 High Quality
If an issuer represents that its commercial paper is supported by the credit of
another entity or entities, Moody's evaluates the financial strength of that
affiliated entity as one factor in the total rating assessment.
STANDARD & POOR'S describes its rating and their meanings as follows:
A Issues assigned this highest rating are regarded as having the
greatest capacity for timely payment. Issues in this category are
further refined with the designations 1, 2, and 3 to indicate the
relative degree of safety.
AA This designation indicates that the degree of safety regarding
timely payment is very strong. Those issues determined to possess
overwhelming safety characteristics will be denoted with a plus (+)
sign.
<PAGE>
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1
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CROSS REFERENCE SHEET
PART A PROSPECTUS CAPTIONS
1. Cover Page About the Trust;Expenses
2. Synopsis Expenses
3. Condensed Financial Information Expenses; Financial Highlights
4. General Description of Registrant About the Trust,Investment Objectives
and Policies; InvestmentPolicies
and Risk Considerations
5. Management of the Fund Trust Management,Investment Adviser
6. Capital Stock and Other Securities Capital Stock; Dividends
7. Purchase of Securities Being Offered Net Asset Value, How to Buy Shares
8. Redemption or Repurchase How to Redeem Shares
9. Pending Legal Proceedings Not Applicable
PART B INFORMATION CAPTIONS
10. Cover Page Cover Page
11. Table of Contents TABLE OF CONTENTS
12. General Information and History General Information and History
13. Investment Objectives & Policies INVESTMENT OBJECTIVES AND POLICIES;
PORTFOLIO TURNOVER; INVESTMENT
CONSIDERATIONS
14. Management of the Registrant MANAGEMENT OF THE TRUST
15. Control Persons and Principal PRINCIPAL HOLDERS OF SECURITIES
Holders of Securities
16. Investment Advisory and Other INVESTMENT ADVISORY
Services AND OTHER SERVICES
17. Brokerage Allocation and Other BROKERAGE ALLOCATION
Practices PORTFOLIO TURNOVER
18. Capital Stock and Other Securities Not Applicable
19. Purchase, Redemptions and Pricing PURCHASE, REDEMPTION AND
of Securities Being Offered PRICING OF SECURITIES
BEING OFFERED
20. Tax Status TAX STATUS
21. Underwriters Not Applicable
22. Calculations of Performance Data PERFORMANCE DATA
23. Financial Statements FINANCIAL STATEMENTS
<PAGE>
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1
=====================================================================
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 , 1995 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.
[GRAPHIC OMITTED]
FROM
[GRAPHIC OMITTED]
MUTUAL FUNDS
NO-LOAD,
NO SALES CHARGE,
NO 12B-1
PROSPECTUS
March 29, 1996
<PAGE>
=====================================================================
12
=====================================================================
1
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>
Sept.4 '87
(Commence-
ment of Op-
----------------------------------------------------------- erations) to
1995 1994 1993 1992 1991 1990 1989 1988 Nov. 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 InvestmentOperations 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 netassets 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>
===========================================================
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.
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IDAHO TAX-EXEMPT FUND
INVESTMENT APPLICATION
Mail application and check to: For assistance, call:
IDAHO TAX-EXEMPT FUND (800) SATURNA or
(360) 734-9900
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
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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PART B
STATEMENT OF ADDITIONAL INFORMATION
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1
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SATURNA INVESTMENT TRUST
IDAHO TAX-EXEMPT FUND
1300 State Street
Bellingham, Washington 98225
360-734-9900
800-SATURNA
STATEMENT OF ADDITIONAL INFORMATION
March 29, 1996
Idaho Tax-Exempt Fund (the "Fund") is a series of Saturna Investment Trust (the
"Trust"). The Fund is a series of the Trust and represents shares of beneficial
interest in a separate portfolio of securities and other assets, with its own
objectives and policies. This Statement of Additional Information is not a
Prospectus. It merely furnishes additional information that should be read in
conjunction with the Fund's prospectus dated March 29, 1996. The Fund's
prospectus may be obtained free of charge by telephoning the numbers above or
writing the Fund at the address shown above.
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TABLE OF CONTENTS
Page
General Information and History...........................3
Investment Objectives and Policies........................3
Investment Considerations.................................8
Portfolio Turnover.......................................11
Performance Data ........................................11
Management of the Trust..................................13
Principal Holders of Securities..........................15
Investment Advisory and Other Services...................15
Brokerage Allocation.....................................16
Purchase, Redemption and Pricing of Securities Being
Offered 17
Tax Status...............................................17
Financial Statements.....................................19
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GENERAL INFORMATION AND HISTORY
Saturna Investment Trust (the "Trust") is a business trust formed pursuant to
RCW 23.90 of the laws of the State of Washington to operate as an open-end
management company. When formed on February 20, 1987, the name was Northwest
Investors Tax-Exempt Business Trust. The Trust's name was changed to Northwest
Investors Trust on October 12, 1990. Most recently, in connection with the
formation of a new series of funds and reorganization and realignment of certain
existing series, the Trust's name was changed to Saturna Investment Trust on
September 28, 1995.
The Declaration of Trust permits the trustees to issue an unlimited number of
full and fractional shares in any Fund of the Trust. The Trust may establish
additional Funds in the future by approval of the Trustees. All shares will have
no par value and when issued will be fully paid and non-assessable and will have
no preemptive, conversion, or sinking fund rights.
The Trust has five separate Funds, the Fund (initially known as the Idaho
Extended Maturity Tax-Exempt Fund) and four others which are offered through a
separate Prospectus and Statement of Additional Information: Sextant Growth Fund
(formerly known as Northwest Growth Fund), Sextant Bond Income Fund (formerly
known as Washington Tax-Exempt Fund), Sextant International Fund, and Sextant
Short-Term Bond Fund.
INVESTMENT OBJECTIVES AND POLICIES
This section is provided only for the purpose of expanding or outlining certain
policies and restrictions not thoroughly covered in the Prospectus.
The primary investment objective of the Fund is to obtain a return of income
from debt securities issued by or on behalf of the State of Idaho or any
political subdivision, agency, or instrumentality thereunder, the income from
which is exempt from both federal and Idaho State income taxes, and the federal
alternative minimum tax. The secondary objective is to preserve the Fund's
capital.
To achieve its objectives, the Fund invests primarily in Idaho bonds. Financial
conditions and the diversification requirements of Subchapter M of the Internal
Revenue Code of 1986 (the "Code") may require investment in cash and other
securities from time to time, the income from which may be taxable. Such
investments will only exceed 20% of the Fund's net assets on a temporary basis,
such as significant adverse economic, political or other circumstances that
require immediate action to avoid losses.
The Fund is "non-diversified." This means that with respect to at least 75% of
total assets, greater than 5% may be invested in the securities of any one
issuer. However, the Fund is required to meet Internal Revenue Code requirements
that at the end of each quarter at least 50% of total assets is represented by
(a) cash or equivalents, (b) U. S. government securities, (c) securities of
other regulated investment companies, and (d) other securities, if, as to any
one issuer, the value of such issuer's securities does not exceed 5% of the
Fund's total assets and such issuer's securities held by the Fund represent not
more than 10% of the outstanding voting securities of such issuer. The balance
of the Fund may be invested in other securities if not more than 25% of total
assets are invested in the securities of any one issuer, or two or more issuers
engaged in the same or similar trade or business.
The Adviser may direct investments in other tax-exempt investment companies
which do not concentrate their investments in Idaho Bonds, but nevertheless
yield income which is exempt from both federal income and alternative minimum
taxation. Such income may be taxable at the state level. It is the policy of the
Fund not to devote more than 5% of its total assets to any one investment
company, nor to devote greater than 10% of its total assets to investments in
investment companies generally. It is anticipated that shares of such investment
companies may be obtained by an affiliated broker/dealer, Investors National
Corporation (the "Distributor"), which has agreed to act as agent for the Fund
and not charge a commission or receive any compensation on purchases of
securities made on behalf of the Fund. The purchase of securities of other
investment companies may result in the Fund's shareowners paying investment
advisory fees twice on the same assets.
Investment objectives and certain policies of the Fund may not be changed
without the prior approval of the holders of the majority of the outstanding
shares of the Fund. Objectives and policies which are considered fundamental and
subject to change only by prior approval of the shareowners include: (1) the
primary and secondary investment objectives; (2) the 80% of net assets minimum
investment in tax-exempt income securities; (3) the classification of the Fund
as an open-end management company and the sub-classification of the Fund as a
non-diversified company; and (4) the policies listed under "Investment
Restrictions." However, the mix of investments between (1) cash and cash items;
(2) government securities; (3) securities of other investment companies; (4)
securities in rated and non-rated bonds; (5) short and long maturities, and the
length of time investment positions are held; and (6) other debt securities, are
considered management decisions and may be altered without prior shareowner
approval. Management has delegated to an affiliate, Saturna Capital Corporation
(the "Adviser"), management the Fund's investments.
NON-RATED BONDS. Management and the Adviser believe that many of the debt
securities issued by the State of Idaho or the political subdivisions, agencies
or instrumentalities thereunder are small issues in total dollars, and are
typically issued by smaller communities or instrumentalities to obtain capital.
Because of the small size of such issues, the expense of obtaining a rating for
the issued obligation (the "Bond") is typically not undertaken. Without a
rating, investors must rely solely on their own analysis and investigation to
determine investment risk and worth of such Bonds. Since the cost of such
analysis and investigation is typically not considered warranted due to the size
of such issues, despite a higher return typically available from such non-rated
Bonds, issues of non-rated Bonds generally do not have a trading market
consisting of as many dealers as comparable rated issuers. Occasionally, the
financial institution lending the funds to a municipality receives the Bond and
holds it until maturity. As a result, although trading markets exist for
non-rated Bonds, generally the number of dealers participating in the market are
fewer than that which exists for rated Bonds. Although all rated and non-rated
Bonds are traded on the basis of dealers' perception of credit-worthiness, a
non-rated Bond having greater recognition among dealers will have a market
consisting of a greater number of dealers than will the market for a Bond not
having as great a recognition. Management anticipates that investment in
non-rated Bonds will occur only when the Adviser to the Fund believes the credit
of the issuer of such non-rated Bonds is such so as to warrant an investment
without unreasonable risk to the preservation of capital and which is
sufficiently recognized among the market dealers so as to provide ready
marketability of the investment. In the opinion of Management and the Adviser,
such non-rated Bonds will be comparable to rated Bonds having an "A" rating.
Experience of the Adviser indicates that investments in certain good quality
non-rated Bonds are liquid and can be sold within seven days at or near the
value given for computing net asset value.
Management and the Adviser believe that there exist both rated and non-rated
Bonds that constitute good investments that will promote the investment
objectives of the Fund. Purchases of Bonds on behalf of the Fund may be made
directly from the issuer. Some purchases are by sealed bid with the entire issue
being awarded to the lowest interest rate that is bid. Most issuers are willing
to negotiate a rate directly with the managing underwriter and/or purchaser. In
this instance, the Adviser will deal in good faith to arrive at a competitive
rate.
In contemplating the rate at which to bid a Bond, the Adviser may consider the
opinions and evaluations of independent broker/dealers specializing in Idaho
municipal bonds. Such brokers may also be requested to render their opinions as
to the value of the Fund's investment securities portfolio, including rated and
non-rated Bonds. The Fund and Adviser may consider such evaluations and
valuation services provided by such independent brokers in determining where it
effects transactions in investment securities and the amount of commissions to
be paid such broker.
INVESTMENTS. The Fund invests at least 40% of total assets in municipal
securities rated "A" or better by Moody's Investors Service, Inc. ("Moody's") or
Standard and Poor's ("S&P"). The Fund invests more heavily in rated Bonds for
various purposes, including (a) diversification or greater liquidity, (b) when
the difference in returns between rated and non-rated Bonds is not material, or
(c) when interest rates are expected to increase. SEE THE "APPENDIX" FOR A
DESCRIPTION OF BOND RATINGS.
Under normal market conditions the Fund may invest up to 60% of total assets in
non-rated Bonds only when the Adviser believes the credit of the issuer warrants
an investment without unreasonable risk to the preservation of capital and the
Bonds are sufficiently recognized among the market dealers so as to provide the
ready marketability of the investment. The Fund employs the services of
independent broker/dealers specializing in municipal bonds to assist the Adviser
in both (1) determining the purchase price of rated and non-rated Bonds and (2)
valuing the rated and non-rated Bonds for net asset value computation purposes.
In evaluating Bonds, the Adviser analyzes the extent of investment risk by
policies that include:
(1)The extent of unemployment within the assessment district for the issuer of
a Bond and the extent to which this may affect repayment of the Bond at
maturity;
(2)The extent to which the real property within the assessment district is
owned by a small number of persons or entities and the relative economic
strength of such persons or entities which may affect repayment of the Bond
at maturity;
(3)The financial position of the political subdivision, including, but not
limited to, the extent of its existing indebtedness.
These limitations and policies are considered primarily at the time of purchase.
The sale of a Bond is not mandated in the event of a subsequent change in
circumstances. Indeed, Bonds are commonly held until maturity, when the Bond
will be redeemed for its full face value, assuming no defaults. Nonetheless,
both rated and non-rated Bonds may be sold prior to maturity for various
purposes, such as a desire for greater liquidity or to preserve capital.
The Fund invests predominantly in municipal obligations issued by the State of
Idaho or any political subdivision, agency or instrumentality thereof
("Municipality"). These municipal obligations generally include Municipal bonds,
Municipal notes, Municipal commercial paper, and any other obligation from which
the payment of interest, in the opinion of the bond issuer's counsel, is exempt
from Federal and Idaho State income tax. A general description of these
investments are:
Municipal bonds are debt obligations issued to obtain funds for various public
purposes such as construction of public facilities (e.g., airports, highways,
bridges, and schools). Maturities of municipal bonds at the time of issuance
may range from one year to 30 years or more.
Municipal notes are short-term obligations of municipalities, generally with a
maturity ranging from six months to three years. The principal types of notes
include tax, bond, and revenue anticipation notes and project notes.
Municipal commercial paper refers to short-term obligations of municipalities,
which may be issued at a discount. Such paper is likely to be issued to meet
seasonal working capital needs of the Municipality or interim construction
financing. Municipal commercial paper is, in most cases, backed by letters of
credit, lending agreements, note repurchase agreements, or other credit
facility agreements offered by banks and other institutions.
Municipal notes and commercial paper obligations are usually issued in the
following circumstances: (a) When borrowing is in anticipation of long-term
financing, the paper is generally referred to as bond anticipation notes
("BAN"). Cities are authorized to issue revenue bond anticipation notes. The
maturity date cannot exceed five years from the date of issue. Payment can be
extended for not more than three years from their maturity date. BANs are
secured by income and revenues derived by the city from the project and from the
sale of the revenue bonds in anticipation of which the notes are issued. (b)
Borrowings to level temporary shortfalls in revenue occasioned by irregular
receipts of taxes are generally referred to as tax anticipation notes ("TAN").
Taxing districts, including counties, any political subdivision of the state,
any municipal corporation, school districts, any quasi-municipal corporation or
any other public corporation authorized to levy taxes, are authorized to borrow
money and issue a TAN. The TANs must mature no longer than one year form the
date of issue and are issued in anticipation of collection of taxes in the
current fiscal year. The taxing district is limited to an amount equal to 75% of
the taxes levied in the current fiscal year and not yet collected. TANs are
backed by the full faith and credit of the taxing districts. The State of Idaho
is also authorized to issue a TAN in anticipation of income or revenue from
taxes, but is forbidden by its constitution to engage in deficit spending or
long-term borrowing. The term of the obligation is the shorter of 12 months or
to the end of the fiscal year. Likewise, the borrowed amount cannot exceed 75%
of the income or revenue from taxes which the State tax commission or other tax
collection agency certifies is reasonably anticipated to be collected during the
current fiscal year.
Municipal bonds include debt obligations issued to obtain funds for various
public purposes, including the construction of public facilities. Municipal
bonds may be used to refund outstanding obligations, to obtain funds for general
operating expenses, or for lending public or private institutions funds for the
construction of educational facilities, hospitals, or housing, or for other
public purposes. The two principal classifications of municipal bonds are
general obligation and limited obligation (or revenue) bonds. Limited project
bonds are known as local improvement district ("LID") bonds.
General obligation bonds ("GO Bonds") are those obligations of an issuer to
which the full faith and credit of the municipality is pledged. The proceeds
from GO Bonds are used for a wide variety of public uses, including, but not
limited to, public facilities such as the structure or improvement of
schools, highways, and roads, water and sewer systems, and facilities for a
variety of public purposes. A GO Bond is paid from ad valorem property taxes
or from other tax sources. Many types of obligations may be general
obligations of a municipality whether or not they are incurred through the
issuance of bonds. GO Bonds may be incurred in the form of a registered
warrant, conditional sales contract, or other instrument in which an
unconditional and unlimited promise to pay from ad valorem taxes is made.
Revenue bonds may be issued to fund a wide variety of revenue-producing capital
projects including, but not limited to, electric, gas, water and sewer
systems, highways, bridges, and tunnels, airport facilities, colleges and
universities, hospitals, and health, convention, recreational, and housing
facilities. Although the principal security of these bonds varies, generally,
revenue bonds are payable from a debt service reserve fund, the cash for
which is derived from the operation of the particular utility or enterprise.
Revenue bonds are not general obligations. They are secured by the revenues
of the particular utility or system. They can be issued by agencies of a
state and can also be issued by political subdivisions including counties,
cities, towns, water districts, sewer districts, irrigation districts, port
districts, and housing authorities.
The Fund will invest in revenue bonds with a coverage factor between net revenue
to the annual debt service of a minimum of 1 to 1.25. Only issues that have a
debt service reserve fund balance equal to the average annual debt service will
be purchased.
Local Improvement District ("LID") bonds are secured by assessments levied
against the properties benefited by the improvements constructed with the
proceeds of the bonds. This type of financing is available to counties, water
and/or sewer districts, highway districts, irrigation districts and cities.
The property must be specially benefited by the improvements constructed out
of the proceeds of the bonds, generally within a local improvement district.
Private Activity Bonds, including Industrial Development Bonds ("IDB"), are
commonly issued by public authorities but generally are not secured by any
taxing power. Rather, they are secured by the revenues derived from the lease
or rental payments received by the industrial user, and the credit quality of
such Municipal Bonds is usually directly related to the credit standing of
the user of the facilities. Since 1986 there have been substantial
limitations on new issues of municipal bonds to finance privately operated
facilities. To the extent such municipal bonds would generate income that
might be taxed under federal alternative minimum tax provisions, the Fund
does not invest in Private Activity bonds. The Fund does not anticipate that
greater than 5% of the Fund's total assets will be invested in Private
Activity Bonds.
The Fund may purchase certain variable or floating rate obligations in which the
interest rate is adjusted at predesignated periodic intervals (variable rate) or
when there is a change in the market rate of interest on which the interest rate
payable on the obligation is based (floating rate). Variable or floating rate
obligations may include a demand feature that entitles the purchaser to demand
prepayment of the principal amount prior to stated maturity. Also, the issuer
may have a corresponding right to prepay the principal amount prior to maturity.
INVESTMENT CONSIDERATIONS
Investing in securities entails both market risk and risk of price variation in
individual securities. THIS IS TRUE EVEN FOR DEBT SECURITIES ISSUED BY THE U.S.
GOVERNMENT. By diversifying its investments, the Fund may reduce the risk
associated with owning one or a few individual securities. However, there is no
assurance that the Fund will achieve its investment objectives.
Many factors may cause the value of a shareholder's investment in the Fund to
fluctuate in value. The value of the Fund's portfolio will normally fluctuate
inversely with changes in market interest rates. Generally, when market interest
rates rise the price of municipal bonds held in the Fund will fall; when rates
fall, the price of such bonds will generally rise. In addition, there is a risk
that the issuer of a municipal bond or other security will fail to make timely
payments of principal and interest. Interest rate fluctuations will affect the
Fund's net asset value, but not the income received by the Fund from its
portfolio securities. However, because yields on debt securities available for
purchase by the Fund vary over time, no specific yield on shares of the Fund can
be assured.
Because the Fund concentrates its investments in a single state, there is a
greater risk of fluctuation in the values of its portfolio securities than with
mutual funds the investments of which are more geographically diverse. Investors
should carefully consider the investment risks of such concentration. The Fund's
share prices can be affected by political and economic developments within and
by the financial condition of the State of Idaho, its public authorities and
political subdivisions. The following information may be relevant in considering
an investment in the Fund, but is not intended to provide all information
relevant to such an investment. Discussions concerning the financial health of
the State government might not be relevant to municipal obligations issued by a
political subdivision. In addition, general economic conditions may or may not
affect issuers of the obligations of the State.
Idaho is located in the Northwestern portion of the United States, bordered by
Washington, Oregon, Nevada, Utah, Wyoming, Montana and Canada. Idaho consists of
approximately 84,000 square miles of varied terrain. The terrain and access to
outdoor activities such as boating, fishing, hunting and skiing, make tourism
and recreation a major, growing industry in the State.
Although located in the arid West, Idaho has significant water resources,
including 26,000 miles of rivers and streams and more than 2,000 natural lakes.
The drop in elevation of rivers like the Snake permit hydropower production,
allowing the State some of the lowest electricity rates in the nation.
The State has a broadly based economy, ranging from mining and timber resources
to agricultural lands which are irrigated by a series of man-made reservoirs and
irrigation systems. More than four million acres are irrigated in the Snake
River Basin.
Traditionally, Idaho has been an agricultural State. Livestock, beef, dairy
cattle and sheep are important to the economy, while the major food crops
include potatoes, wheat, barley, sugar beets, seed crops and fruit. Major
manufacturing industries include food processing, forest products, phosphate
processing, computer components and electronics. Mining also has been important
in the development of the State with phosphate rock, silver, lead, zinc and
molybdenum among the resources mined. Mining activity is dependent on the market
prices of products and over the past few years with depressed prices, mining
activity has been declining, and may not improve.
In the past, the State's economy has often behaved counter to national economic
trends. In spite of the national difficulties in the 1970's, the State enjoyed
economic growth for most years in the decade. The State's economy experienced
weaker than average economic performance during the first half of the 1980's.
Idaho's economy turned up in 1988, and has continued above the national rates.
Much of the State's economic behavior is explained in terms of Idaho's changing
mix of industries and markets. In recent years, non-agricultural employment has
grown more rapidly, with Idaho's electronics and machinery industry, service
sector, tourism, and government sectors among leading areas. Mining has been
particularly weak, with forest products, food processing and chemical products
sectors among the weaker sectors. The shift from industries dependent on natural
resources should make the State less sensitive to events in international and
national markets.
Idaho has benefited from recent population exodus from California. The shift has
helped make the state among the fastest growing economies in the nation. However
impressive this may sound, it is important to bear in mind that Idaho has a
relatively small population and percentages are easily changed by the influx of
relatively few people. Also, such immigration brings a demand for increased
infrastructure and the financing to fund it. Any such increase in infrastructure
would require that economic growth be maintained to support it, and if growth is
not maintained economic problems could develop.
The State operates under an annual budget system that coincides with the
July-June fiscal year. The State Division of Financial Management in the
Governor's office, in connection with the Governor prepares the proposed budget
for the ensuing year and the Governor submits this budget to the Legislature.
The State must operate on a balanced budget, in accordance with revenue
projections. Following the legislative process, appropriation bills for each
department or agency are submitted to the House and Senate for approval and then
sent to the Governor for signature. The Governor has "line-item veto" power. The
appropriations constitute the limit for each department or agency for
expenditures.
The State may not incur long-term debt, and, consequently, the funding for
projects requiring such debt is done through cities, instrumentalities, agencies
and political subdivisions of the State.
The State derives its revenues substantially from three sources: personal and
corporate income taxes, sales taxes and motor fuel taxes, of which the income
taxes provide approximately half. The balance of State revenue came from a
variety of minor taxes.
INVESTMENT RESTRICTIONS. In addition to the restrictions stated in the
Prospectus, the Fund shall not purchase securities on margin or sell securities
short or purchase or write put or call options; purchase "restricted securities"
(those which are subject to legal or contractual restrictions on resale or are
otherwise not readily marketable); nor invest in oil, gas or other mineral
exploration leases and programs. The Fund shall not make loans to others, except
for the purchase of debt securities, or entering into repurchase agreements. The
Fund shall not invest in securities so as to not comply with Subchapter M of the
Code, in that generally at the close of each quarter of the tax year, at least
50% of the value of the Fund's total assets is represented by (i) cash and cash
items, government securities, and securities of other regulated investment
companies, and (ii) other securities, except that with respect to any one issuer
in an amount more than 5% of the Fund's total assets, and no more than 10% of
the Fund's voting securities of any one issuer. In addition, the Fund shall not
purchase real estate; real estate limited partnerships (excepting master limited
partnerships that are publicly traded on a national security exchange or
NASDAQ's National Market System); commodities or commodity contracts; issue
senior securities; provided, however, that a fund may borrow money for
extraordinary or emergency purposes and then only if after such borrowing there
is asset coverage of at least 300% for all such borrowings; nor act as a
securities underwriter except that they may purchase securities directly from
the issuer for investment purposes. No Fund will purchase securities if it has
outstanding borrowings exceeding 5% of its net assets Also, the Fund shall not
purchase or retain securities of any issuer if the officers or trustees of the
Trust or its adviser own more than one-half of one percent of the securities of
such issuer; invest in any company for the purpose of management or exercising
control. The Fund shall not invest in the securities of other investment
companies, except by purchase where no commission or profit results.
<PAGE>
PORTFOLIO TURNOVER
The Fund places no restrictions on portfolio turnover and will buy or sell
investments according to the Adviser's appraisal of the factors affecting the
market and the economy.
The portfolio turnover rate of the Fund for the fiscal years ended November 30,
1995, 1994, and 1993 was 28%, 36%, and 31%, respectively.
PERFORMANCE DATA
Average annual Total Return and Current Yield information may be useful to
investors in reviewing the Fund's performance. However, certain factors should
be taken into account before using the information as a basis for comparison
with alternative investments. No adjustment is made for taxes payable on
distributions. The performance for any given past period is not an indication of
future rates of return or yield on its shares.
The Fund's total return for the one year ended November 30, 1995 was 16.68%
Average annual total return for the three year period through November 30, 1995
was 6.43%, for the five year period then ended 6.88% and for the period from
October 30, 1987 (inception of the Fund) through November 30, 1994, 6.95%.
Average annual Total Return quotations for various periods illustrated are
computed by finding the average annual compounded rate of return over the period
quoted that would equate the initial amount invested to the ending redeemable
value according to the following formula:
P (1 + T)n = ERV
Where
P = a hypothetical initial Payment of $1,000 T = average annual
Total return n = Number of years ERV =Ending Redeemable Value of the
$1,000 payment
made at the beginning of the period.
To solve for average Total Return, the formula is as follows:
T = (ERV/P) 1/n - 1
The Fund intends to advertise the tax exempt and/or taxable equivalent yield to
investors.
(a)The advertised tax-exempt yield will be the dollar weighted average yield
to maturity or call. In determining whether each security in the portfolio
will use yield to maturity or yield to call, the lesser of the two will be
selected.
(b)In determining the advertised taxable equivalent yield the effective tax
rate will first be calculated and so stated. It may include federal income
tax, state income tax, and federal alternative minimum tax as clearly
defined in the ad. The advertised tax exempt portion of the standardized
yield will then be divided by the inverse of the stated effective tax rate
and increased by any taxable yield to determine the taxable equivalent
yield.
The Fund utilizes the following procedures in determining yield. The yield
calculation is based on a 30 day period and is computed by the following formula
using the compounded semi-annual APR:
Nominal Yield = [ [ [ ( (a-b) / ( c*d ) ) + 1 ] -1 ] /30 ] * 360
Compounded Semi-Annual APR = [ [ 1 + [ Nominal Yield / 2 ] ] 2 ] - 1
Where: a = dividends and interest earned during the period; b = expenses accrued
for the period (net of reimbursement); c = the average daily number of shares
outstanding during the period that were entitled to receive dividends; and d =
the maximum offering price per share (equivalent to Net Asset Value for no-load
funds) on the last day of the period.
The Fund's tax-exempt yield for the 30-day period ended November 30, 1995 was
4.6%. The equivalent after-tax yield was 8.29% for Idaho residents with taxable
incomes of $265,000, based on a 1995 combined effective federal and Idaho tax
rate of 44.5%.
In advertising and sales literature, the Fund may compare its performance with
that of other mutual funds, indexes or averages of other mutual funds, indexes
or data, and other competing investment and deposit products. The composition of
these indexes or averages differs from that of the Fund. Comparison of the Fund
to an alternative investment should be made with consideration of the
differences in features and expected performance of the investments.
All of the indexes and averages noted below will be obtained from the indicated
sources or reporting services, which the Trust believes to be generally
accurate. The Fund may also note its mention or recognition in other newspapers,
magazines or media from time to time. However, the Fund assumes no
responsibility for the accuracy of such data. Among the newspapers and magazines
that might mention the Funds are:
Barron's Money
Business Week Mutual Fund Letter
Changing Times Morningstar
Consumer Reports New York Times
Consumer Digest Pensions and Investment
Financial World USA Today
Forbes US News and World Report
Fortune Wall Street Journal
Investors Daily
The Fund may also compare itself to the Consumer Price Index, a widely
recognized measure of inflation, and to other indexes and averages such as:
Dow Jones Industrials New York stock Exchange Composite
Standard & Poor's 500 Stock Index
Index American Stock Exchange Composite
Standard &oor's 400 Index
Industrials NASDAQ Composite
Wilshire 5000 NASDAQ Industrials
Russell 2000 Lipper General Equity Fund Average
Lipper Capital Appreciation Lipper Equity Funds Average
` Fund Average Lipper Growth Fund Index
Lipper Growth Funds Average Lipper Growth & Income Fund
Lipper Small Company Growth Average Fund Average
Lipper Balanced Fund Average
Lipper Equity Income Fund Lipper Growth & Income Fund Index
Average Lipper Equity Income Fund Index
Lipper Capital Appreciation Lipper Balanced Fund Index
Fund Index Ibbotson Common Stocks Index
Lipper Growth Fund Index
Lipper Small Company Growth Fund Index
Morningstar Mutual Fund Indices
The indexes and averages are measures of performance of stocks and mutual funds
that are classified, calculated and published by these independent services. The
Fund may also use comparative performance as computed in a ranking by these or
other independent services.
A Fund may also cite its rating or other mention by Morningstar or another
entity. Morningstar's ratings are based on risk-adjusted total return
performance, as computed by Morningstar by subtracting the Fund's risk score as
computed by Morningstar, from the fund's total return score. This numerical
score is then translated into rating categories.
MANAGEMENT OF THE TRUST
Information concerning Trustees and Officers of the Trust and their principal
occupations for the past five years is shown below:
GARY A. GOLDFOGEL, M.D., Trustee
1500 N. State Street, Bellingham, WA 98225.
Pathologist and Medical Dir., Whatcom Pathology Lab. Whatcom County;
Medical Examiner, Whatcom County
NICHOLAS KAISER, M.B.A., C.F.A. - President and Trustee *
1300 N. State Street, Bellingham, WA 98225.
President of Saturna Capital Corporation, since July 1989.
President of Unified Management Corporation, Indianapolis IN, investment
advisers and brokers, from 1976 through June 1989.
JOHN E. LOVE, Trustee
Box 188, Garfield, Washington 99130
Owner, J.E. Love Co.,international agricultural equipment manufacturer,
Garfield, WA
Director, Bank of Whitman, Colfax, Wash.
Rear Admiral, U.S. Navy, Retired.
JOHN S. MOORE, Trustee
College of Business and Economics, Western Washington University,
Bellingham, WA 98225-9077
Professor of Business Administration
JAMES D. WINSHIP, J.D., M.B.A.- Trustee and Secretary*
1300 N. State Street, Bellingham, WA 98225.
Vice President and Secretary, Saturna Capital Corporation, October 1991 to
present.
Editor-at-large, FUND DIRECTIONS industry newsletter, December 1991 to
present.
Executive Vice-President and member of the management committee, Stein Roe
& Farnham Incorp., Chicago IL, investment adviser, and head of its
mutual fund division, prior to October 1991.
MEREDITH L. ROSS - M.B.A., Treasurer
1300 N. State Street, Bellingham, WA 98225.
Assistant Treasurer, Saturna Capital Corporation, September 1989 to
present.
* Nicholas Kaiser and James Winship are each an "interested person" of the Trust
as defined in the Investment Company Act of 1940.
Beginning January 1, 1996, the Trust pays disinterested trustees $100 per
meeting attended and reimbursement of travel expenses (pro-rata to each Fund).
Neither Mr. Winship nor Mr. Kaiser receives compensation from the Trust, nor are
the other officers of the Trust paid for their duties with the Trust. Prior to
that time all Trustees served without compensation, as set forth below.
<TABLE>
Pension or Total
Aggregate Retirement Compensation
Name of Compensa- Benefits Accrued Estimated Annual From Registrant
Person; tion From As Part of Fund Benefits Upon and Fund Complex
Position Registrant Expenses Retirement Paid to Directors
<S> <C> <C> <C> <C>
GARY A. GOLDFOGEL $0 $0 $0 $0
Trustee
JOHN E. LOVE, 0 0 0 0
Trustee
JOHN S. MOORE, 0 0 0 0
Trustee
NICHOLAS F. KAISER 0 0 0 0
Trustee
JAMES D. WINSHIP 0 0 0 0
Trustee
</TABLE>
The Board has authority to establish an Executive Committee with the power to
act on behalf of the Board between meetings and to exercise all powers of the
Trustees in the management of the Trust. No Executive Committee has been
established at this time. An Audit Committee, consisting of the disinterested
directors, meets to select the independent accountant and review all audit
reports.
As of February 6, 1996, officers, trustees and their families as a group owned
no shares of the Fund.
PRINCIPAL HOLDERS OF SECURITIES
As of February 6, 1999, the only person know to own more than 5% of the Fund was
Grange Mutual Fire Ins General Fund that owned 50113 shares or 5.16% of the
shares.
INVESTMENT ADVISORY AND OTHER SERVICES
The Fund is obligated to pay Saturna Capital monthly an 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, Saturna is voluntarily obligated to
reimburse the Fund monthly if non-extraordinary expenses exceed an annual rate
of 0.80% of average daily net asset value, subject to cancellation by the
adviser on 30 days' notice.
The Fund pays its own taxes, brokerage commissions (if any), trustees' fees,
legal and accounting fees, insurance premiums, custodian, 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, at its own expense and without additional cost to the Fund,
furnishes office space, office facilities and equipment, personnel (including
executive officers) and clerical and bookkeeping services required to conduct
the business of the Fund.
The laws and regulations of various states set expense limitations for mutual
funds as a condition for registration to offer and sell shares in that state.
Usually, the expense limitation requires reimbursement if, and to the extent
that, the aggregate operating expenses including the advisory fee but generally
excluding interest, taxes, brokerage commissions and extraordinary expenses, are
in excess of a specified percentage of the average net assets of a Fund for its
fiscal year. The only state the adviser believes maintains an expense limitation
is California, which limits aggregate annual expenses (with exceptions) to 2.5%
of the first $30 million of average net assets, 2% of the next $70 million and
1.5% of the remaining average net assets.
Saturna Capital Corporation provides services as the transfer agent and
dividend-paying agent for each Fund. As transfer agent, Saturna furnishes to
each shareowner a statement after each transaction, an historical statement at
the end of each year showing all transactions during the year, and Form 1099 tax
forms. Saturna also, on behalf of the Trust, responds to shareowners' questions
or correspondence. Further, the transfer agent regularly furnishes each Fund
with current shareowner lists and information necessary to keep the shares in
balance with the Trust's records. The mailing of all financial statements,
notices and prospectuses to shareowners is performed by the transfer agent.
As compensation for services as transfer agent and dividend disbursement agent,
the Fund pays Saturna an annual fee of $1.10 per month per shareowner account,
which the Trustees have determined is no more than the cost of performing such
services. The Fund reimburses Saturna for any out-of-pocket expense for forms
and mailing costs used in performing its functions. For the fiscal year ended
November 30, 1995, The Fund paid transfer agent fees of $5,205.
For the fiscal year ended November 30, 1995, the Fund paid $30,862 in investment
adviser and administration fees, of which the adviser reimbursed $14,048. For
the fiscal year ending November 30, 1994, the Fund was required to pay $36,251,
of which Saturna Capital waived $10,190. For fiscal year 1993, the the
comparable figures were $32,394 and $11,689.
National City Bank, Indianapolis, Indiana 46255 is the custodian of the Fund's
securities and other assets. As custodian, the bank holds in custody all
securities and cash, settles for all securities transactions, receives money
from sale of shares and on order of the Fund pays the authorized expenses of the
Fund. When Fund shares are redeemed by investors, the proceeds are paid to the
shareowner by check drawn on the custodian bank.
Price Waterhouse, LLP 1001 Fourth Avenue Plaza, Seattle, Washington 98154 serves
as the independent accountants for the Trust. The independent accountants
conduct the annual audit of the Trust as of November 30 and prepare the tax
returns of each Fund.
BROKERAGE ALLOCATION
For fiscal years 1995, 1994, and 1993, Idaho Tax-Exempt Fund paid no brokerage
commissions.
BROKERAGE POLICIES
The placing of purchase and sale orders as well as the negotiation of
commissions, if any, is performed by the Adviser and is reviewed by the Board of
Trustees. The Adviser may allocate brokerage to any broker in return for
research or services and for selling shares of the Fund. Brokers may provide
research or statistical material to the Adviser, but this information is only
supplemental to the research and other statistics and material accumulated and
maintained through the Adviser's own efforts. Any such supplemental information
may or may not be of value or used in making investment decisions for the Fund
or any other account serviced by the Adviser.
The primary consideration in effecting securities transactions for the Fund is
to obtain the best price and execution which in the judgment of the Adviser is
attainable at the time and which would bring the best net overall economic
result to the Fund. Factors taken into account in the selection of brokers
include the price of the security, commissions paid on the transaction, the
efficiency and cooperation with which the transaction is effected, the
expediency of making settlement and the financial strength and stability of the
broker. The Adviser may negotiate commissions at a rate in excess of the amount
another broker would have charged if it determines in good faith that the
overall net economic result is favorable to the Fund. The Adviser evaluates
whether brokerage commissions are reasonable based upon available information
about the general level of commissions paid by similar mutual funds for
comparable services.
The Adviser's subsidiary, Investors National Corporation, is qualified as a
broker-dealer to engage in a general brokerage business. Investors National
Corporation conducts all its transactions on an agency basis for established
"deep discount" commissions; it does not make markets, "deal," or maintain
inventories of securities. For brokerage conducted through an affiliate of the
Adviser, the Trustees have adopted procedures reasonably designed to ensure that
any brokerage fees are reasonable and fair compared to remuneration received by
other brokers in comparable transactions. The Trustees are provided detailed
quarterly monitoring reports and review the procedures at least annually.
PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED
See HOW TO BUY SHARES, HOW TO REDEEM SHARES and NET ASSET VALUE in the
Prospectus for an explanation about the ways to purchase or redeem shares.
In addition to normal purchases or redemptions, the shares of each Fund may be
exchanged for shares of other Funds of Saturna Investment Trust when additional
Funds are offered. Exchange will be made at no charge upon written request or by
telephone if the shareowner has previously authorized telephone privileges on
the application. A gain or loss for federal tax purposes will be realized upon
redemption of any shares for the purposes of an exchange as described above.
Net asset value per share is determined by dividing the value of all securities
and other assets, less liabilities, by the number of shares outstanding. The net
asset value is determined for each Fund 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 Exchange is generally closed on: New Year's Day,
Washington's Birthday/President's Day, Good Friday, Memorial Day, Independence
Day (observance), Labor Day, Thanksgiving Day and Christmas Holiday.
TAX STATUS
Saturna Investment Trust is organized as a "series" investment company. At
present only the Fund and the Sextant Funds are offered, but the Trust may
create in the future additional Funds with different investment objectives. Each
Fund is a separate economic entity with separate assets and liabilities and
separate income streams. The shareowners of each separate Fund may look only to
that Fund for income, capital gain or loss, redemption, liquidation, or
termination. Each Fund has separate arrangements with the Adviser. Assets of
each Fund are segregated. The creditors and shareowners of each Fund are limited
to the assets of that Fund for recovery of charges, expenses and liabilities.
Each Fund conducts separate voting on issues relating solely to that Fund,
except as required by the Investment Company Act. The tax status and tax
consequences to shareowners of each separate Fund will differ, depending upon
the investment objectives, operations, income, gain or loss, and distributions
from each Fund.
Each Fund intends to distribute to shareowners substantially all of its net
investment income and net realized capital gains, if any, and to comply, as it
has since inception, with the provisions of the Internal Revenue Code applicable
to regulated investment companies, which relieve the Funds of federal income
taxes on the amounts so distributed. The Fund declares dividends from net
investment tax-exempt income daily, payable at each month-end. Net investment
taxable income, if any, is declared as a dividend only at month-end.
Distribution of any capital gains is made at the end of the fiscal year in
November.
The amount of investment income and capital gains, if any, which will be
available for distribution by a Fund of the Trust in the future cannot be
predicted due to continually changing economic conditions and market prices.
Dividends and distributions from capital gains are normally reinvested in
additional full and fractional shares of the Fund. The shares purchased with
dividends or capital gains distributions may be redeemed using any of the
methods for redemption of shares.
Distributions and dividends may be subject to federal, state and local taxes.
Shareowners will be taxed whether the shares automatically purchased with
dividends and distributions are left in the Fund or are redeemed by the
shareowner.
Interest received upon the obligations of the State of Idaho or political
subdivisions thereof are exempt from income tax in the State of Idaho. An Idaho
Income Tax ruling provides a pass-through of the tax-exempt character of
interest received by a regulated investment company, such as the Idaho
Tax-Exempt Fund, upon distribution to shareholders.
Shortly after the end of each calendar year shareowners are mailed a Form
1099-DIV advising of the dividends paid the shareowner for the year.
If you do not furnish the transfer agent with a valid Social Security or Tax
Identification Number and in certain other circumstances, we are required to
withhold 31% of income from your account. Dividends distributions to shareowners
who are nonresident aliens may be subject to a 30% United States withholding tax
under the existing provisions of the code applicable to foreign individuals and
entities unless a reduced rate of withholding or a withholding exemption is
provided under applicable treaty law. If the IRS determines that the Trust
should be fined or penalized for inaccurate or missing or otherwise inadequate
reporting of a Tax Identification Number, the amount of the IRS fee or penalty
will be directly assessed to the shareowner account involved.
FINANCIAL STATEMENTS
The most recent audited annual report accompanies this Statement of Additional
Information. The financial statements and selected per share data and ratios
dated November 30, 1995, together with the report of independent accountants
dated December 15, 1995, are considered a part of the Statement of Additional
Information and are incorporated by reference.
<PAGE>
APPENDIX-BOND RATINGS
GENERAL. Moody's and S&P's ratings represent their opinions as to quality of the
municipal bonds which they undertake (for a fee) to rate. Such ratings are not
intended to be an absolute standard of quality. Consequently, a municipal bond
with the same maturity, coupon, and ratings may have different yields while
municipal bonds having the same maturity and coupon, but with different ratings,
may have the same yield.
BOND RATINGS
MOODY'S INVESTORS SERVICES, INC., describes its ratings for debt
securities as follows:
AAA Bonds which are rated AAA are judged to be of the best quality.
They carry the smallest degree of investment risk and are
generally referred to as "gilt edge." Interest payments are
protected by a large, or exceptionally stable margin, and
principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
AA Bonds which are rated AA are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are
generally known as high-grade bonds. They are rated lower than
the best bonds because margins of protection may not be as large
as in the Aaa securities or fluctuation of protective elements may
be of greater amplitude, or there may be other elements present
which may make the long-term risks appear somewhat larger than the
Aaa securities.
A Bonds which are rated A possess many favorable investment
attributes and are being considered as upper medium-grade
obligations. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future.
STANDARD & POOR'S describes its rating for debt securities as follows:
AAA Bonds which are rated AAA have the highest rating assigned by
Standard & Poor's. Capacity to repay interest and to pay principal
is extremely strong.
AA Bonds which are rated AA have a very strong capacity to pay
interest and to repay principal, and differ from the higher rated
issues only in small degree.
A Bonds which are rated A have a strong capacity to pay interest and
repay principal, although they are somewhat more susceptible to
the adverse effect of changes and circumstances in economic
conditions than bonds in higher rated categories.
NOTES
MOODY'S INVESTORS SERVICES, INC.,describes its ratings for municipal notes as
follows
MIG-1 The MIG-1 designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity
support, or demonstrated broad-based access to the market for
refinancing.
MIG-2 The MIG-2 designation denotes high quality, with margins for
protection ample though not as large as that for MIG-1.
STANDARD & POOR'S describes its rating for municipal notes as follows:
SP-1 The SP-1 rating denotes a very strong or strong capacity to pay
principal and interest. Those issues determined to possess
overwhelming safety characteristics will be given a plus (+)
designation.
SP-2 The SP-2 rating denotes a satisfactory capacity to pay principal
and interest.
COMMERCIAL PAPER
MOODY'S INVESTORS SERVICES, INC., describes its ratings for commercial paper as
follows
PRIME-1 Issuers rated PRIME-1, or related supporting institutions, have a
superior capacity for repayment of short-term promissory
obligations. Prime-1 repayment capacity will normally be evidenced
by the following characteristics: (i) Leading market positions in
well-established industries.
(ii)High rates of return on funds employed
(iiiConservative capitalization structures with moderate reliance
on debt and a ample asset protection. (iv) Broad margins in
earnings, coverage of fixed financial charges, and high internal
cash generation. (v) Well-established access to a range of
financial markets and assured sources of alternate liquidity.
PRIME-2 Issuers rated PRIME-2, or related supporting institutions, have a
strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the
characteristics cited above, but to a lesser degree. Earning
trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample
alternate liquidity is maintained.
STANDARD & POOR'S describes its rating for commercial paper as follows:
A-1 The A-1 designation indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess
overwhelming safety characteristics are denoted with a plus (+)
designation.
A-2 The A-2 designation indicates capacity for timely payment is
satisfactory. However, the relative degree of safety is not as
high as for issues designated A-1.
Under normal market conditions, the Fund does not anticipate investing in
Moody's rated bonds below A or Moody's rated notes below MIG 2 or Moody's rated
commercial paper below Prime-2. Similarly, the Fund does not anticipate
investing in S&P rated bonds below A or S&P rated notes below SP-2 or S&P rated
commercial paper below A-2.
<PAGE>
=====================================================================
=====================================================================
PART C
OTHER INFORMATION
<PAGE>
=====================================================================
1
=====================================================================
Financial Statements and Exhibits
(a) Financial Statements
There is incorporated into Part B of this Registration Statement the
following financial information in the Annual Report to shareowners for the
fiscal year ended November 30, 1995:
Report of Price Waterhouse LLP, Independent Accountants.
For each portfolio of the Fund:
Statement of Assets and Liabilities as of November 30, 1995. Statement
of Operations - Year ended November 30, 1995. Statement of Changes in
Net Assets - years ended November30, 1994 and November 30, 1995.
Investments - November 30, 1995.
Financial Highlights
Notes to Financial Statements
Also incorporated by reference is the Discussion of Fund
Performance (Unaudited) for each Fund of the Trust
A copy of each of the Annual Reports for the Trust are included as Exhibits
1-A and 1-B
Included in Part C:
Consent of Independent Accountants.
(b) Exhibits included with this filing:ss.
(1) *(a) Agreement and Declaration of Trust of Northwest Investors
Tax-Exempt Business Trust, filed February 20, 1987 with
Secretary of State of Washington. Incorporated by Reference.
Filed as Exhibit No. 1 to initial filing of Form N-1A in
1987. File No. 33-13247.
*(b) Articles of Amendment to the Declaration of Trust of
Northwest Investors Trust, as adopted by resolution of the
Board of Trustees on November 24, 1992, filed with the
Secretary of State of Washington December 1, 1992.
Incorporated by Reference. Filed as Exhibit No. 1(b) to
Amendment No. 8 to Form N-1A dated December 21, 1992.
*(c) Articles of Amendment to the Declaration of Trust of
Northwest Investors Trust, as adopted by resolution of the
Board of Trustees on July 10, 1995. Incorporated by
Reference. Filed as Exhibit No. 1-3 to Amendment No. 13 to
Form N-1A dated July 11, 1995.
(d) Articles of Amendment to the Declaration of Trust of
Saturna Investment Trust, as adopted by vote of the
shareholders on September 28, 1995. Attached as Exhibit No.1-4.
(2)* Bylaws of Northwest Investors Trust, adopted by the Board of
Trustees, July 21, 1992. Incorporated by Reference. Filed as
Exhibit No. 2 to Amendment No. 8 to Form N-1A dated December 21, 1992.
(3) Not applicable.
(4) Not applicable.
(5) (a) Investment Advisory and Administrative Services Agreement for the
series Sextant International Fund of Saturna Investment Trust, as
approved by the Board of Trustees on July 10, 1995 and shareholders on
September 28, 1995. (Exhibit 5-1)
(b) Investment Advisory and Administrative Services Agreement for the
series Sextant Growth Fund of Saturna Investment Trust, as approved by
the Board of Trustees on July 10, 1995 and shareholders on September 28,
1995. (Filed as Exhibit 5-2)
(c) Investment Advisory and Administrative Services Agreement for the
series Sextant Bond Income Fund of Saturna Investment Trust, as approved
by the Board of Trustees on July 10, 1995 and shareholders on September
28, 1995. (Filed as Exhibit 5-3)
(d) Investment Advisory and Administrative Services Agreement for the
series Sextant Short-Term Bond Fund of Saturna Investment Trust, as
approved by the Board of Trustees on July 10, 1995 and shareholders on
September 28, 1995. (Filed as Exhibit 5-4)
(6) Not applicable.
(7) Not applicable.
(8) Form of Custodian Agreement for each series of the Trust, between the
Trust and National City Bank, Indiana. (Filed as Exhibit 8-1).
(9)* Transfer Agent Agreement for the Northwest Investors Trust
between the Trust and Saturna Capital Corporation, dated
October 12. Filed as Exhibit C to Proxy Statement dated
September 21, 1990. File No. 33-13247.
(10) *(a) Opinion of Counsel dated 1987. Incorporated by
Reference. Filed as Exhibit to initial filing of Form N-1A in
1987. File No. 33-13247.
*(b) Opinion for Washington Tax-Exempt series. Incorporated by
Reference. Filed as Exhibit No. 10-2 to Amendment No. 8 to
Form N-1A dated December 21, 1992.
*(c) Opinion of Counsel of Barnes & Thornburg. Filed as
Exhibit 10-3 to Amendment No. 13 to Form N-1A dated July 11, 1995
(11) (a) Consent of Price Waterhouse LLP, Independent Auditors.
Filed as Exhibit 11-1.
(b) Copies of Powers of Attorney of Trustees of Saturna Investment Trust
attached as Exhibit 11-2.
(12) Not applicable.
(13) Not applicable.
(14)* (a) Prototype Paired Defined Contribution Money Purchase
Pension and Profit Sharing Plan. Filed as Exhibit No. 14-1 to
Amendment No. 7 to for N-1A in 1992. File No. 33-13247.
(b) Defined Contribution Trust, Filed as Exhibit No. 14-2 to
Amendment No. 7 to for N-1A in 1992. File No. 33-13247.
(c) Money Purchase Pension Adoption Agreement, Filed as
Exhibit No. 14-3 to Amendment No. 7 to for N-1A in 1992.
File No. 33-13247.
(d) Profit Sharing Adoption Agreement, Filed as Exhibit No.
14-4 to Amendment No. 7 to for N-1A in 1992. File No.33-13247.
(15) Not applicable.
(16) Computation of Performance.
The Average Annual Total Return since the inception of the Idaho
Tax-Exempt Fund through November 30, 1995 is computed to be 6.95%, for
Sextant Growth Fund 7.49% and Sextant Bond Income Fund 4.30%.
Persons Controlled by or Under Common Control with Registrant
No person or persons are directly or indirectly controlled by or under common
control with the Registrant.
<PAGE>
Number of Holders of Securities
As of January 31, 1996 the following information is furnished for Saturna
Investment Trust:
(1) (2)
Title of Class Number of Record Holders
Shares 34- Sextant Bond Income Fund
27 Sextant Short-Term Bond Fund
126 -Sextant Growth Fund
28-Sextant International Fund
223- Idaho Tax-Exempt Fund
Indemnification
There is no provision for indemnification of the officers and trustees of the
Trust except as provided the Agreement and Declaration of Trust of Saturna
Investment Trust, which provisions are set forth below. The provisions of
Article IV, Section 1 and Article XI of Trust of the Registrant previously filed
as Exhibit 1 to this Registration Statement are incorporated herein by
reference.
In the performance of his duties as Trustee, each Trustee shall not be
personally liable to the Trust or its shareowners for any monetary damages
for any breach of duty as a Trustee, provided that this limitation shall not
be construed as limiting the liability of the Trustee for (l) any breach of
the Trustee's duty of loyalty to the Trust or its shareowners, (2) acts or
omissions not in good faith or which involve intentional misconduct or
knowing violation of law, (3) for the unlawful payment of dividends or
redemption of shares, or (4) for any transaction from which the Trustee
derives an improper personal benefit.
The Trustees, officers, employees and agents of the Trust are indemnified by
the Trust for the fines, judgments and costs of suit, with respect to actions
brought against them in their capacity as agents of the Trust or against them
on behalf of the Trust. However, no Trustee or officer will be protected from
liability for acts of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
The Trust may purchase and maintain insurance on behalf of any current or
past Trustee, officer, agent or employee against any liability asserted
against such person or incurred by him by reason of such capacity or status,
provided, that no such insurance may be maintained if such would indemnify
such person for willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
The Trustees, officers and agents of the Trust have no power to bind any past
or present shareowner to any Fund of the Trust solely by reason that the
shareowner is an owner of the beneficial interest in any Fund. Each such
shareowner shall be entitled to indemnification from the Trust for any
recovery against him solely by reason of his capacity and status as a
shareowner.
The Trustees may provide in agreements of the Trust provisions setting forth,
to the extent considered necessary, the limitations of liabilities of the
Trust to the assets of shareowners, officers, agents and employees of the
Trust. The Investment Advisory Agreement, Distribution Agreement, Custodian
Agreement and Transfer Agent agreement of the Trust contain such a provision.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to Directors, officers and controlling person of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such Director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
Business and Other Connections of Investment Adviser
The answer to this item is disclosed in Part A and Part B of the Form N-1A under
"Management of the Trust."
Principal Underwriters
Investors National Corporation, 1300 N. State Street, Bellingham, Washington
98225, a wholly-owned subsidiary of Saturna Capital Corporation, acts as
distributor for the Funds without compensation. The primary business of
Investors National Corporation is retail discount brokerage. As of February 6,
1996, Investors National Corporation owned 25,294.367 shares of Sextant
Short-Term Bond Fund, and 1,853.337 shares of Sextant Bond Income Fund.
The following table sets forth information with respect to each director and
executive officer of Investors National Corporation.
Name and Principal Positions and Offices Positions and Offices
Business Address with distributor with registrant
Nicholas Kaiser Director & President President,
Trustee
1300 State St.
Bellingham WA 98225
James D. Winship Secretary Secretary, Trustee
1300 State St.
Bellingham WA 98225
Meredith L. Ross Director & Treasurer Treasurer
1300 State St.
Bellingham WA 98225
Location of Accounts and Records
With the exception of those records maintained by the Custodian bank, all
records of the Trust are physically in the possession of the Trust and
maintained at the offices of Saturna Capital Corporation, 1300 State Street,
Bellingham, Washington 98225.
Management Services
There are no management-related contracts in which service is provided to the
Trust other than those discussed in Parts A and B of this Form N-1A.
Undertakings
The Fund hereby undertakes pursuant to Section 16(c) of the 1940 Act, that, in
the event of shareholder application pursuant to such Section, it will assist
such shareholders as set forth in such Section.
The Fund hereby undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Fund's latest annual report to shareholders, upon
request and without charge.
<PAGE>
=====================================================================
SIGNATURES
=====================================================================
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant has duly caused this Amendment to
Registration Statement to be duly signed on its behalf by the undersigned
thereunto duly authorized in the City of Bellingham, State of Washington, on the
14th day of March, 1996. Registrant further represents that this Amendment is
filed solely for one or more of the purposes specified in paragraph (b)(1) of
Rule 485 and that the Amendment meets applicable conditions set forth therein.
SATURNA INVESTMENT TRUST
By /s/ Nicholas F. Kaiser
Nicholas F. Kaiser, President
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this Amendment to Registration Statement has
been signed below by the following persons in the capacities and on the date
indicated.
Signature Title Date
/s/ Nicholas F. Kaiser President March 14, 1996
Nicholas F. Kaiser (principal Executive
Officer); Trustee
/s/ Meredith L. Ross Treasurer March 14, 1996
Meredith L. Ross (principal Financial
Officer)
** Gary Goldfogel All other Trustees March 14, 1996
** John E. Love
** John S. Moore
** James D. Winship
** By/s/ Nicholas F. Kaiser
Nicholas F. Kaiser, President,
Attorney-in-fact
- --------
* ADRs are receipts typically issued by an American bank or trust company
evidencing ownership of the underlying securities. Positions in these securities
are generally valued in U.S. dollars, and not necessarily denominated in the
same currency as the underlying security into which they may be converted.
+ The "effective maturity" of a debt instrument is the weighted average period
over which the Adviser expects the principal to be paid. It differs from the
stated maturity in that it estimates the effect of expected principal
prepayments and call provisions.
ss. A repurchase agreement involves the sale of securities to the Fund, with the
concurrent agreement of the seller to repurchase the securities at the same
price plus an amount equal to an agreed-upon interest rate, within a specifed
time. In the event of a bankruptcy or other default of a seller of a repurchase
agreement, the Fund could experience both delays in liquidating the underlying
securities and losses.
* Please refer to the Appendix for a discussion of ratings.
+ A repurchase agreement involves the sale of securities to the Fund, with the
concurrent agreement of the seller to repurchase the securities at the same
price plus an amount equal to an agreed-upon interest rate, within a specified
time. In the event of a bankruptcy or other default of a seller of a repurchase
agreement, the Fund could experience both delays in liquidating the underlying
securities and losses.
* 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.
ss. Items marked with an asterisk (*) are incorporated by reference from
exhibits previously filed.
Sextant Mutual Funds
Graphic of Sextant omitted
November 30, 1995
Fellow Shareowners::
Where do we go from here? Our last letter was very optimistic about the
potential returns from financial assets for the remainder of the century.
Throughout fiscal 1995 we were correct and our positive outlook remains
As shown in the financial statements in this annual report, the two Sextant
Funds that were in existence for all of the fiscal year ended November 30
sported strong returns:
Nov. 30, 1994
Fund to Nov. 30, 1995
---- ----------------
Sextant Growth +30.76%
Sextant Bond Income +17.69%
Sextant International and Sextant Short-Term Bond Funds both began operations on
September 28. As detailed later in this report, both Funds have insignificant
figures to report for the short period of their existence.
Why do we remain optimistic? We continue to see slow growth and flat interest
rates. Politically, the climate is still favorable though not as bullish as last
fall: lower taxes and higher speed limits. The debate has shifted from
increasing government expenditures to whether, where and how much to cut.
Technological change is exploding, lowering costs and greatly increasing
productivity. We believe that we are entering a new industrial age, driven by
the information technologies in which America excels. As such a scenario
develops, we should be the beneficiaries of an important long-term trend from
which American investors are uniquely positioned to benefit. Watch this space.
Internationalization of business both spurs and is spurred by the information
revolution that daily seems to pick up speed. We believe that investors should
look overseas for at least a portion of their portfolio, as it is no longer
possible to insulate oneself from events abroad. Similarly, a successful company
no longer can operate in one national market. We created Sextant International
Fund to focus on non-U.S. equity opportunities
The Sextant bond funds will remain conservative in approach. There is a role for
bonds in most portfolios, as an anchor for a diversified portfolio. Both Bond
Income Fund and Short-Term Bond Fund will continue their quality focus.
Short-term Bond Fund remains a great alternate or complement to a money fund as
a place for temporary cash reserves.
We employ no leverage, purchase no derivatives or employ any other
risk-enhancing techniques.
The Sextant Funds are designed to address your investment needs. All employ our
unique "fulcrum" fee structure that stresses low cost to you and only rewards us
for superior investment results. We invite you to call or write for a free
information kit and to read it carefully before investing. Our portfolio
managers welcome your comments and suggestions. Only with your help can we be
certain that we are meeting your investment needs--our primary objective.
As always, we appreciate your investing with us, and welcome your comments and
suggestions
Respectfully
Nicholas Kaiser, President Phelps McIlvaine, Vice President
(Manager, Sextant Growth; (Manager, Sextant Bond Income;
Sextant International ) Sextant Short-Term Bond)
REPORT of INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareowners
of Saturna Investment Trust
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Sextant Short-Term Bond Fund,
Sextant Bond Income Fund (formerly Washington Tax-Exempt Fund), Sextant Growth
Fund (formerly Northwest Growth Fund) and Sextant International Fund, four of
the series of Saturna Investment Trust, (formerly Northwest Investors Trust,)
hereafter referred to as the "Trust" at November 30, 1995, the results of their
operations, the changes in their net assets, and the financial highlights, for
the periods indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Trust's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at November 30, 1995 by correspondence with the
custodian and a broker, provide a reasonable basis for the opinion expressed
above. The financial statements of the Trust 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 statements.
/s/ Price Waterhouse
Seattle, Washington
December 15, 1995
<TABLE>
SHORT-TERM BOND FUND
Investments
November 30, 1995
Rating* Issuer Coupon/Maturity Face Amount Market Value
- ----------------------------------------------------------------------------------------------------------------
U.S. Government Obligations (71.1%)
<S> <C> <C> <C> <C>
U.S. Treasury Note 8.00% 1/15/97 $120,000 $123,300
U.S. Treasury Note 6.00% 8/31/97 100,000 100,953
U.S. Treasury Note 7.875% 4/15/98 180,000 189,675
U.S. Treasury Note 7.00% 4/15/99 100,000 104,578
U.S. Treasury Note 7.125% 9/30/99 100,000 105,469
-------- -------
600,000 623,975
Corporate Obligations (27.0%)
A GMAC 5.95% 12/28/98 40,000 39,813
A+ Consolidated Nat. Gas 5.875% 10/1/98 40,000 39,940
AA- Association Corp. N.A. 6.125% 2/1/98 35,000 35,175
A+ CSX Transportation 7.05% 3/15/98 40,000 40,705
AA Central Illinois P.S. 5.875% 5/1/97 40,000 39,920
A- Chase Manhattan 9.05% 2/1/02 40,000 41,277
------- ------
235,000 236,830
Total Investments (98.1%) $835,000 860,805
======== =======
Other Assets (net of liabilities) (1.9%) 16,927
---- ------
Total Net Assets (100%) $877,732
========
</TABLE>
*Ratings are the lesser of S&P or Moody's
<TABLE>
Financial Highlights
Selected data per share of capital stock outstanding throughout the period
Sept. 28. '95
(incep-
tion) to Nov. 30
'95
<S> <C>
Net asset value at beginning of period $5.00
Income From Investment Operations
Net Investment Income 0.03
Net gains or losses on securities
(both realized and unrealized) 0.03
Total From Investment Operations 0.06
Less Distributions
Dividends (from net investment income) ($0.03)
Distributions (from capital gains) 0.00
----
Total Distributions (0.03)
Net asset value at end of period $5.03
0.01
Total Return 1.05%
Ratios / Supplemental Data
Net assets ($000), end of period $878
Ratio of expenses to average net assets (not annualized)+ 0.23%
Ratio of net investment income to
Average net assets (not annualized)+ 0.68%
Portfolio turnover rate 0%
<FN>
+ For the above period, all or a portion of the operating expenses were
waived. If costs had not been waived, the resulting increase to expenses
per share in the period would have been $.007. The increase to the ratio of
expenses to average monthly net assets would be .16%.
(The accompanying notes are an integral part of these financial statements)
</FN>
</TABLE>
<TABLE>
Statement of Assets and Liabilities
As of November 30, 1995
Assets
Investments, at value
<S> <C> <C>
Bonds (cost $857,068) $
860,805
Cash
5,064
Interest receivable
12,494
------
Total Assets
878,363
-------
Liabilities
Payable to affiliate
631
---
Total Liabilities
631
---
Net Assets $877,732
========
Fund shares outstanding
174,606
Analysis of Net Assets
Paid in capital (unlimited shares authorized, without par) $873,995
Undistributed net investment income (loss)
-
Accumulated net realized gain (loss) on investments
-
Unrealized net appreciation on investments
3,737
-----
Net Assets applicable to Fund shares $ 877,732
=========
Net Asset Value per share $5.03
</TABLE>
<TABLE>
Statement of Operations
Period ended November 30, 1995
Investment income
<S> <C>
Interest income $7,011
Amortization of bond premiums
(1,251)
------
Gross investment income $5,760
Expenses
Investment adviser and administration
fee 605
Professional fees
850
Printing and postage
40
Filing and
registration fees 500
Other expenses
441
---
Total gross expenses
2,436
Less earnings
credits (391)
Less advisory fee waived
(605)
----
Net expenses
1,440
-----
Net investment income
4,320
-----
Net realized gain (loss) on investments
Proceeds from sales
-
Less cost of securities sold based on identified cost
-
Realized net gain
-
Unrealized gain (loss) on investments
End of period 3,737
Beginning of period -
Increase in unrealized gain for the
period 3,737
-----
Net realized and unrealized gain on investments 3,737
Net increase in net assets resulting from operations $8507
=====
</TABLE>
The accompanying notes are an integral part of these financial statements)
<TABLE>
Statement of Changes in Net Assets
Period
Sept. 28,
1995
(Inception)
to Nov. 30,
1995
INCREASE (DECREASE) IN NET ASSETS
Operations:
<S> <C>
Net investment income $ 4,320
Net realized gain (loss) on investments -
Net increase in unrealized appreciation 3,737
-----
Net increase in net assets from operations 8,057
-----
Dividends to Shareowners From:
Net investment income (4,320)
------
Capital gains distributions -
Fund Share Transactions:
Proceeds from sales of shares 892,239
Value of shares issued in reinvestment of dividends 4,321
-----
896,560
Cost of shares redeemed (22,565)
-------
Net increase in net assets from share transactions 873,995
-------
Total increase in net assets 877,732
Net Assets
Beginning of period -
End of period $ 877,732
==========
Shares of the Fund Sold and Redeemed
Number of shares sold 178,249
Number of shares issued in reinvestment of dividends 862
Number of shares redeemed (4,505)
------
Net Increase in Number of Shares Outstanding 174,606
=======
</TABLE>
(The accompanying notes are an integral part of these financial statements)
<TABLE>
BOND INCOME FUND
Investments
November 30, 1995
Rating* Issuer Coupon/Maturity Face Amount Market Value
- ----------------------------------------------------------------------------------------------------------
U.S. FEDERAL OBLIGATIONS
U.S. Government Obligations (9.5%)
<S> <C> <C> <C>
U.S. Treasury Bond 8.125% due 8/15/2019 $85,000 $104,284
WASHINGTON STATE MUNICIPAL OBLIGATIONS
General Obligation (14.2%)
AAA Aberdeen 5.80% due 12/1/2012 50,000 51,121
AAA Marysville 5.875% due 12/1/2012 25,000 25,479
A+ Seattle Met. Municipality 5.625% due 1/1/2012 40,000 39,621
AAA Stevens Co. Ltd Tax G.O. 5.5% due 12/1/2009 40,000 39,314
------- ------
SUB-TOTAL 155,000 155,535
General Obligation (6.2)%
AAA Eastern Wash. Univ. Rev. 6.25% due 10/1/2012 25,000 25,948
AAA Univ. Wash. Jr. Lien
Hsg and Din. Rev. 6.125% due 12/1/2012 40,000 42,157
------- ------
SUB-TOTAL 65,000 68,105
Health Care (3.6%)
AAA Wash. St. Healthcare Fac. Rev. Ref.
Dominican Health Serv. Spokane 5.75% due 6/1/2020 40,000 38,900
Schools (9.2%)
A+ King County #408 Auburn 6.25% due 12/1/2006 40,000 43,050
AA- King County #415 Kent 6.00% due 12/1/2008 40,000 42,044
A Skagit County #317 Conway 5.90% due 12/1/2007 15,000 15,749
------- ------
SUB-TOTAL 95,000 100,843
State Education (4.6%)
AAA Washington Higher Education
Fac. Auth. Rev. (Seattle U.) 5.70% due 11/1/2010 50,000 50,610
Transportation (4.6%)
A Port of Tacoma
Series A Ltd. G.O. 6.00% due 6/1/2011 50,000 50,806
Utility -Electric Power (13.6%)
A Lewis County P.U.D #1
Elec. Rev. 6.10% due 6/1/2004 40,000 42,785
A Mason County P.U.D. #3
Elec. Rev. 6.30% due 1/1/2010 50,000 52,975
AAA Tacoma Elec. Sys. Rev. 6.25% due 1/1/2011 50,000 52,542
------- ------
SUB-TOTAL 140,000 148,302
Utility -Water Supply (4.1%)
AAA Asotin County P.U.D. #1 5.50% due 3/1/2009 20,000 20,066
A Spokane County Water Dist.
#3 Rev. Ref. 5.90% due 1/1/2014 25,000 25,040
------- ------
SUB-TOTAL 45,000 45,106
CORPORATE OBLIGATIONS (27.1%)
A- Aetna Life & Casualty 7.25% due 8/15/2023 50,000 49,219
A- Alabama Power 7.75% due 2/1/2023 50,000 51,859
A- Comerica Bank 7.125% due 12/1/2013 50,000 50,308
A-2 Corning Glass 8.875% due 3/15/2016 40,000 48,520
A-1 Loews Corp. 7.00% due 10/15/2023 50,000 47,469
AA- US West Communications 7.20% due 11/10/2026 50,000 49,922
------- ------
290,000 297,297
-------- -------
Total Investments (96.7%) $1,015,000 $1,059,788
===========
Other Assets (net of liabilities) (3.3%) 36,036
------
Total Net Assets (100%) $1,095,824
==========
<FN>
*These unaudited bond ratings reflect the adviser's current rating of each bond,
as determined using Standard & Poors and Moody's ratings. All issues are rated
"A" or better by S&P or Moody's.
</FN>
</TABLE>
<TABLE>
Financial Highlights
Selected data per share of capital stock outstanding throughout the period:
Period
Year Year 3/1/93
ended ended (In-
November November ception)
to
30, 1995 30, 1994 11/30/93
<S> <C> <C> <C>
Net asset value at beginning of period $4.39 $5.03 $5.00
Income from investment operations
Net investment income
0.24 0.25 0.16
Net gains or losses on securities
(both realized and unrealized)
0.52 (0.64) 0.04
----- ------ ----
Total From Investment Operations
0.76 (0.39) 0.20
Less distributions
Dividends (from net investment income)
Non-taxable
(0.236) (0.25) (0.167)
Taxable n/a n/a
(0.004)
Distributions (from capital gains) 0.00 0.00 (0.003)
----- ----- -------
Total Distributions
(0.24) (0.25) (0.17)
Net asset value at end of period $4.91 $4.39 $5.03
Total return 17.69% (8.24)% 4.86%
Ratios/supplemental data
Net assets ($000), end of period $ 1,096 $ 1,456 $ 1,662
Ratio of expenses to average net assets (not 0.54% 0.41% 0.35%
annualized)+
Ratio of net investment income to average net assets (not 5.15% 5.48% 3.28%
annualized)+
Portfolio turnover rate 77% 74% 36%
<FN>
+ For each of the above periods, all or a portion of the operating
expenses were waived. If these costs had not been waived, the resulting
increases to expenses per share in each of the above periods would be
$.03, $0.22 and $0.13, respectively. The increase to the ratio of
expenses to average monthly net assets would be .60%, .51% and .26%,
respectively.
</FN>
</TABLE>
<TABLE>
Statement of Assets and Liabilities
As of November 30, 1995
Assets
Investments, at value
<S> <C>
Bonds (cost $1,047,157) 1,059,788
Cash
12,298
Interest receivable
22,895
Insurance deposit
400
---
Total Assets
1,095,381
---------
Liabilities
Payable to affiliate
(443)
----
Total Liabilities
(443)
----
Net Assets $1,095,824
==========
Fund shares outstanding
223,204
Analysis of Net Assets
Paid in capital (unlimited shares authorized, without par)
1,153,661
Undistributed net investment loss
(251)
Accumulated net realized gain (loss) on investments
(70,217)
Unrealized net appreciation on investments
12,631
------
Net Assets applicable to Fund shares
outstanding $1,095,824
==========
Net Asset Value per share $4.91
</TABLE>
<TABLE>
Statement of Operations
Year ended November 30, 1995
Investment income
Tax-free interest
<S> <C>
income $63,693
Taxable interest
income 978
Amortization of bond premiums
(1,119)
Accretion
63
--
Gross investment income $
63,615
Expenses
Investment adviser and administration fee
5,838
Professional fees
1,658
Shareowner servicing
842
Printing and postage
1,005
Insurance
1,508
Custodial fees
841
Filing and
registration fees 503
Other expenses
564
---
Total gross expenses
12,759
Less earnings
credits (841)
Less advisory fee waived
(5,838)
------
Net expenses
6,080
-----
Net investment income
57,535
------
Net realized gain (loss) on investments
Proceeds from sales
1,309,408
Less cost of securities sold based on identified cost
(1,324,518)
----------
Realized net
(loss) (15,110)
-------
Unrealized gain (loss) on investments
End of period
12,631
Beginning of period
(158,053)
--------
Increase in unrealized gain for the period
170,684
-------
Net realized and unrealized gain on investments
155,574
-------
Net increase in net assets resulting from operations $213,109
========
</TABLE>
The accompanying notes are an integral part of these financial statements)
<TABLE>
Statement of Changes in Net Assets
Year ended Year ended
Nov. 30, 1995 Nov. 30, 1994
INCREASE (DECREASE) IN NET ASSETS
Operations:
<S> <C> <C>
Net investment income 57,535 87,317
Net realized gain (loss) on investments
(15,110) (55,107)
Net increase (decrease) in unrealized appreciation
170,684 (171,284)
-------- ---------
Net increase (decrease) in net assets from operations
213,109 (139,074)
-------- ---------
Dividends to Shareowners From:
Net investment income
(57,308) (87,796)
-------- --------
Capital gains distributions
- -
-- -
Fund Share Transactions:
Proceeds from sales of shares
623,415 840,168
Value of shares issued in reinvestment of dividends
52,937 73,082
------- ------
676,352 913,250
Cost of shares redeemed (1,192,060)
(893,178)
Net increase (decrease) in net assets from share transactions
(515,708) 20,072
--------- ------
Total decrease in net assets
(359,907) (206,798)
NET ASSETS
Beginning of period
1,455,731 1,662,529
End of period $ 1,095,824 $ 1,455,731
= ============= = ==============
(Including undistributed net investment income of
($251) at Nov. 30,1995 and ($478) for Nov. 30,1994)
Shares of the Fund Sold and Redeemed
Number of shares sold
165,574 167,886
Number of shares issued in reinvestment of dividends
11,132 15,358
Number of shares redeemed
(285,218) (182,274)
-------- --------
Net Increase (Decrease) in Number of Shares Outstanding
(108,512) 970
======== ===
</TABLE>
(The accompanying notes are an integral part of these financial statements)
DISCUSSION of FUND PERFORMANCE
(unaudited)
Fiscal Year 1995
During its latest fiscal year, through November 30, 1995, the Sextant Bond
Income Fund returned 17.69% to its shareholders. Its net asset value rose from
$4.39 to $4.91 during this period.
The Fund's shareholders voted in September to change the objective of the Fund
from a Washington State tax-exempt bond fund to its current objective of taxable
income. Therefore, the Fund's fiscal 1995 performance is a combination of the
Fund's operation under both objectives. Previous performance was under its prior
single state tax-exempt fund objective.
Factors Affecting Past Performance
The Fund's share value rose strongly throughout the year, under the influence of
a rising bond market. However, earlier in the year, as a result of the market's
concern over the possibility of a flat or flatter income tax, the performance of
the municipal bond market was restrained compared to taxables.
An additional factor involved in the Fund's earlier performance was that the
Fund was created in anticipation of a Washington State income tax. The
anticipation of such a tax raised bond prices early in the Fund's life, but
created an extra drag on performance as that premuium dissipated when it became
clear such a tax would not be passed.
During its operation as a municipal fund, as a matter of policy, the Fund
restricted its portfolio maturity to the intermediate 5-to-15 year range. These
bonds have lower coupons (interest payments) than do those of longer maturities.
This factor, and the fact that the Fund was started in an environment of low and
declining interest rates, left the Fund with a portfolio of lower coupon issues
that fell in price more quickly in a rising interest rate environment than might
have been expected in a portfolio with higher coupons.
These factors mean that in comparisons of its performance the Fund will be at a
disadvantage when compared to an index of taxable bonds, or funds, none of which
were subject to such considerations.
Looking Forward
After September 28, when the Fund's new objective was in place, the Fund began
to sell its portfolio of municipal securities, being mindful of market and tax
considerations. As the fiscal year ended, the Fund still held some tax-exempt
securities, with a rally in the municipal market making them relatively more
atractive to hold.
Perhaps the most important factors influencing its performance relative to an
index of bonds or other funds will be the Fund's emphasis on quality and a
tendency to avoid the very longest bonds in the market. These factors may limit
the Fund's price fluctuations compared to broad unmanaged bond market indexes.
Comparison to Index Comparison of any fund to an index must be made bearing in
mind that the index is unmanaged, and expense-free. On the other hand the fund
likely will (1) be actively managed, (2) have an objective other than mirroring
the index, such as limiting risk, (3) bear transaction and other costs, (4)
stand ready to buy and sell its securities to shareholders on a daily basis, and
(5) provide a wide range of services.
The graph below compares $10,000 invested in the Fund at its inception, compared
to a similar amount invested in The Salomon Brothers Broad Investment-Grade Bond
Index. The graph shows that the investment at the beginning of March, 1993 would
have risen to $11,228 in the Fund and $12,032 in the Index. The relatively short
history of the Fund, and the change its policy limit the usefulness of this
comparison. Past performance is not indicative of future results.
Fund Index
Feb-93 $10,000 $10,000
Nov-93 $10,397 $10,534
Nov-94 $9,540 $10,214
Nov-95 $1,128 $12,032
graphic depiction omitted
<TABLE>
GROWTH FUND
Investments
Number Market
Issue of Shares Cost Value
- --------------------------------------------------------------------------------------------------
Common Stocks
Banking (7.7%)
<S> <C> <C> <C>
Washington Mutual Savings Bank 3,000 $44,124 $84,750
Northwest Saving Bank 100 2,539 2,525
------ -----
46,663 87,275
Construction (5.4%)
BMC West* 2,250 27,453 27,844
Butler Manufacturing 1,000 31,071 34,500
------- ------
58,524 62,344
Medical/Healthcare (9.9%)
Cardinal Health 500 26,135 27,000
Genentech* 1,000 37,225 51,125
Humana 1,300 30,300 34,612
------- ------
93,660 112,737
Chemicals (2.4%)
Lawter International 2,500 27,298 27,188
Computers (6.4%)
Apple Computer 1,000 28,067 38,125
Microsoft* 400 14,897 34,850
------- ------
42,964 72,975
Electronics (7.4%)
FLIR Systems 3,700 39,669 48,100
Merix 1,000 31,822 36,250
------- ------
71,491 84,350
Financial (13.2%)
Franklin Resources 800 13,562 42,300
McDonald & Co. 2,000 34,347 35,000
Schwab, Charles 3,025 9,117 73,356
------ ------
57,026 150,656
Steel (6.1%)
Geneva Steel 4,000 28,667 29,000
Nucor 800 38,380 39,900
------- ------
67,047 68,900
Oil & Gas Production (4.8%)
Atlantic Richfield 300 34,125 32,512
Noble Drilling 3,000 21,322 21,750
------- ------
55,447 54,262
Paper & Products (6.3%)
Boise Cascade 1,900 44,586 70,775
Pollution Control (3.4%)
Ionics 900 36,864 38,925
Retail (6.7%)
Nordstrom 1,000 37,703 39,250
Albertson's 1,200 26,255 36,900
------- ------
63,958 76,150
Transportation (11.3%)
Airborne Freight 1,000 25,784 28,125
Fritz Companies* 2,000 29,069 77,500
Mesa Airlines 2,500 25,423 22,656
------- ------
80,276 128,281
Total Investments (91.0%) $745,804 $1,034,818
===== ======== ==========
Other Assets (net of liabilities) (9.0%) 102,185
---- -------
Total Net Assets (100%) $1,137,003
==== ==========
(The accompanying notes are an integral part of these financial statements)
</TABLE>
<TABLE>
Financial Highlights
Selected data per share of capital stock outstanding throughout the period:
Sept. 4,
'87
(commence-
ment of
op-
For Year Ended erations)
November 30, to
------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 Nov. 30
---- ---- ---- ---- ---- ---- ---- ---- -------
'87
Net asset value at beginning
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
of period $5.82 $6.38 $5.93 $5.55 $4.93 $4.88 $4.88 $4.96 $5.00
Income From Investment
Operations
Net Investment Income (0.03) (0.03) 0.01 0.01 0.04 0.27 0.28 0.30 0.06
Net gains or losses on
securities
(both realized and 1.82 (0.53) 0.45 0.38 0.60 0.01 0.00 (0.08) (0.04)
----- ------ ----- ----- ----- ----- ----- ------ ------
unrealized)
Total From Investment Operations 1.79 (0.56) 0.46 0.39 0.64 0.28 0.28 0.22 0.02
Less Distributions
Dividends (from net
investment
income) 0.00 0.00 (0.01) (0.01) (0.02) (0.23) (0.28) (0.30) (0.06)
Distributions (from capital (0.19) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
------ ----- ----- ----- ----- ----- ----- ----- ----
gains)
Total Distributions (0.19) 0.00 (0.01) (0.01) (0.02) (0.23) (0.28) (0.30) (0.06)
Net asset value at end
of period $7.42 $5.82 $6.38 $5.93 $5.55 $4.93 $4.88 $4.88 $4.96
Total Return 30.76% (8.78)% 7.76% 7.01% 11.79% 7.37% 5.22% 5.12% 2.17%
Ratios / Supplemental Data
Net assets ($000), end of period $1,137 $1,010 $1,425 $1,321 $947 $53 $1,356 $1,365 $315
Ratio of expenses to ave. net
assets+ 1.63% 1.50% 1.40% 1.60% 1.93% 1.06% 0.89% 0.25% .06%*
Ratio of net investment income
to
ave. net assets+ (0.45)% (0.43)% 0.15% 0.17% 0.60% 5.25% 5.60% 5.86% .85%*
Portfolio turnover rate 40% 12% 25% 46% 16% 29% 19% 20% 0%
Average commission rate paid $.0572
<FN>
+ For 1995 and for each of the above years prior to 1992, all or a portion of
the operating 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 $.01, $.05, .$.05, $.10, $.16 and
$.02, respectively. The increase to the ratio of expenses to average net assets would have been 0.21%,
0.76%, 1.02%, 1.28%,
2.02%, and 0.17%.
*not annualized
</FN>
</TABLE>
(The accompanying notes are an integral part of these financial statements)
<TABLE>
Statement of Assets and Liabilities
As of November 30, 1995
Assets
Investments, at value
<S> <C> <C>
Common stocks (cost $745,804) $1,034,818
Cash
109,186
Dividends receivable
608
Insurance deposit
1,214
-----
Total Assets
1,145,826
---------
Liabilities
Payable to affiliate:
8,823
-----
Total Liabilities
8,823
-----
Net Assets $
1,137,003
Fund shares outstanding
153,216
Analysis of Net Assets
Paid in capital (unlimited shares authorized, without par)
861,250
Undistributed net investment income (loss)
(9,420)
Accumulated net realized gain (loss) on investments
(3,841)
Unrealized net appreciation on investments
289,014
-------
Net Assets applicable to Fund shares $
outstanding 1,137,003
=========
Net Asset Value per share $7.42
</TABLE>
<TABLE>
Statement of Operations
Year ended November 30, 1995
Investment income
<S> <C>
Dividends $11,685
-------
Gross investment income $
11,685
Expenses
Investment adviser and administration fee
7,255
Professional fees
3,325
Shareowner servicing
1,272
Printing and postage
959
Filing and
registration fees 1,500
Insurance
1,330
Custodial fees
2,110
Other expenses
430
---
Total gross expenses
18,181
Less earnings
credits (2,110) 16,071
------- ------
Net expenses
16,071
------
Net investment
(loss) (4,386)
------
Net realized gain (loss) on investments
Proceeds from sales
591,258
Less cost of securities sold based on identified
cost 536,534
-------
Realized net gain
54,724
------
Unrealized gain (loss) on investments
End of period
289,014
Beginning of period
74,829
------
Increase in unrealized gain for the period
214,185
-------
Net realized and unrealized gain on
investments 268,909
-------
Net increase in net assets resulting from operations $264,523
========
</TABLE>
(The accompanying notes are an integral part of these financial statements)
<TABLE>
Statement of Changes in Net Assets
Year ended Year ended
Nov. 30, 1995 Nov. 30, 1994
INCREASE (DECREASE) IN NET ASSETS
Operations:
<S> <C>
Net investment loss $ $
(4,386) (5,263)
Net realized gain (loss) on investments
54,724 (4,125)
Net increase (decrease) in unrealized appreciation
214,185 (83,179)
-------- --------
Net increase (decrease) in net assets from operations
264,523 (92,567)
-------- --------
Dividends to Shareowners From:
Net investment income
- -
-- -
Capital gains distributions
(28,392) -
-------- -
Fund Share Transactions:
Proceeds from sales of shares
306,751 192,628
Value of shares issued in reinvestment of dividends
28,060 -
------- -
334,811 192,628
Cost of shares redeemed
(444,025) (513,818)
-------- --------
Net decrease in net assets from share transactions
(109,214) (321,190)
-------- --------
Total increase (decrease) in net assets
126,917 (413,757)
NET ASSETS
Beginning of period
1,010,086 1,423,843
--------- ---------
End of period
1,137,003 1,010,086
========= =========
(Including undistributed net investment income of
($9,420) for Nov. 30,1995 and $(5,034) for Nov. 30,1994)
Shares of the Fund Sold and Redeemed
Number of shares sold
43,111 30,663
Number of shares issued in reinvestment of dividends
3,782 -
Number of shares redeemed
(67,343) (80,295)
-------- --------
Net Decrease in Number of Shares Outstanding
(20,450) (49,632)
======= =======
</TABLE>
(The accompanying notes are an integral part of these financial statements)
DISCUSSION of FUND PERFORMANCE
(unaudited)
Fiscal Year 1995
During the year ended November 30, 1995, the Fund's total return to its
shareholders was +30.76%. The Fund's net asset value per share rose to $7.42
from $5.82, with a 19(cent) capital gain dividend paid at fiscal year end.
Factors Affecting Performance
In September, 1995, the Fund's shareholders voted to broaden its objective from
that of investing primarily in growth type securities of companies linked only
to the Northwest. Following the change, the Fund may now seek investments
wherever in the U.S. it finds them appropriate, and is no longer limited to the
Northwest. Additionally, the new advisory contract resulted in lower expenses to
shareholders.
The Fund began operations as a growth stock fund in December 1990 (prior to that
time it had been invested in short-term Idaho municipal bonds, and the
performance during that period is not relevant). For the first year of
operations, Northwest stocks and the national stock markets grew in close
proximity. However, during 1992 the recession that had earlier cycled through
other parts of the nation spread to the Northwest, and stocks of this region
considerably underperformed the national averages. This phenomenon lasted into
the mid-90's, at which time the change in policy was recommended by the Fund's
adviser.
Coincidentally with the decision to change the Fund's policy, the market for
companies in which the Fund invested more heavily as a result of its geographic
limitations began to perform considerably better. The Fund has maintained
significant investment in technology oriented investments, and these stocks were
among the market leaders for much of the year 1995.
Looking Forward
Although the Fund is free to invest outside the Northwest region, the Fund's
change in policy is not expected to result in great change in the character of
the Fund.
Comparison to Index
The line graph compares Sextant Growth Fund's performance to that of a
broad-based stock market index, the Standard & Poor's 500 Index. To be
comparable, the S&P 500 Index data includes reinvested income. Comparison of any
fund to an index must be made bearing in mind that the index is unmanaged, and
expense-free. On the other hand the fund likely will (1) be actively managed,
(2) have an objective other than mirroring the index, such as limiting risk, (3)
bear transaction and other costs, (4) stand ready to buy and sell its securities
to shareholders on a daily basis, and (5) provide a wide range of services.
The graph shows that $10,000 invested in Sextant Growth Fund at the end of
December 1990 (when it was Northwest Growth Fund) would have grown to $15,469 at
the end of November 1995. If $10,000 could have been invested in the S&P 500
Index at the end of December 1990, that would grown to $21,526. Past performance
is not indicative of future results. Date Sextant Growth S&P 500 Index
Dec-90 10000 10000
Nov-91 11246 11917
Nov-92 12035 14115
Nov-93 12969 15579
Nov-94 11830 15741
Nov-95 15469 21526
(GRAPHIC OMITTED)
<TABLE>
INTERNATIONAL FUND
Investments
November 30, 1995
Number Market
Issue of Shares Cost Value
- ---------------------------------------------------------------------------------------------------------------
Common Stocks
Automotive Mfg. (3.2%)
<S> <C> <C> <C>
Volvo AB ADS 500 $11,686 $10,500
Banking and Financial (7.2%)
Aus.& New Zea. Bk. ADR 500 10,875 11,125
Aegon NV ADR 300 11,513 12,300
------- ------
22,388 23,425
Computers (2.2%)
Scitex Corp. Ltd. 500 9,250 7,188
Consumer Products (3.1%)
Coca Cola FEMSA S.A. ADR 500 9,750 10,250
Closed End Country Funds (15.4%)
Austria Fund 1,000 7,923 8,000
Chile Fund 500 11,313 12,125
Irish Investment Fund 900 10,238 10,800
Malaysia Fund 600 9,750 10,275
Singapore Fund 700 9,538 9,362
------ -----
48,762 50,562
Electrical Equipment (8.5%)
ASEA AB ADS 100 10,000 9,650
Electrolux AB ADR 200 8,800 8,600
NEC Corp ADR 150 10,219 9,619
------- -----
29,019 27,869
Medical-Drugs (6.1%)
Glaxo Wellcome plc ADR 400 9,800 10,700
Novo-Nordisk A/S ADR 300 9,712 9,300
------ -----
19,512 20,000
Natural Resource Production (9.6%)
Barrick Gold 400 9,600 10,550
RTZ Corp PLC ADS 200 11,375 11,700
Total S.A. ADR 300 8,812 9,262
------ -----
29,787 31,512
Paper Products (2.7%)
Aracruz Cellulose S.A. ADR 1,000 9,876 9,000
Photographic Equipment (5.7%)
Canon, Inc. ADR 100 8,687 8,863
Fuji Photo Film ADR 200 10,050 9,900
------- -----
18,737 18,763
Telecommunications (12.9%)
BCE Inc 300 9,922 10,050
British Sky Broadcasting ADS 300 11,063 12,000
Telecom Corp New Zealand ADS 150 10,050 10,050
Telefonica de Espana ADS 250 10,250 10,375
------- ------
41,285 42,475
Transportation (9.2%)
British Airways 150 10,931 10,556
Canadian Pacific Ltd. 500 8,164 9,125
KLM Royal Dutch Airlines 300 10,650 10,350
------- ------
29,745 30,031
------- ------
Utilities-Electric (6.1%)
Enersis S.A. ADR 400 10,100 10,250
Korea Electric Power ADR 400 9,500 9,750
------ -----
19,600 20,000
------- ------
Total Investments (91.9%) $299,397 $301,575
=========
Other Assets (net of liabilities) (8.1%) 26,563
------
Total Net Assets (100%) $328,138
========
</TABLE>
(The accompanying notes are an integral part of these financial statements)
<TABLE>
Financial Highlights
Selected data per share of capital stock outstanding throughout the period:
Sept. 28,
'95
(Inception)
to
Nov. 30,
'95
<S> <C>
Net asset value at beginning of period $5.00
Income from investment operations
Net investment income (0.02)
Net gains or losses on securities (both realized and 0.01
----
unrealized)
Total from investment operations (0.01)
Less distributions
Dividends (from net investment income) 0.00
Distributions (from capital gains) 0.00
Total distributions 0.00
Net asset value at end of period $4.99
Total return (0.20)%
Ratios/supplemental data
Net assets ($000), end of period $328
Ratio of expenses to average net assets (not annualized) 0.49%
Ratio of net investment income to
Average net assets (not annualized) (0.38)%
Portfolio turnover rate (not annualized) 12%
Average commission rate paid $0.0192
<FN>
For the above period, all or a portion of the operating expenses were waived.
If costs had
not been have waived and directly assumed, the resulting increase to
expenses per share in the period would have been $.01. The increase to the
ratio of expenses to average monthly net assets would be .21%.
(The accompanying notes are an integral part of these financial statements)
</FN>
</TABLE>
<TABLE>
Statement of Assets and Liabilities
As of November 30, 1995
Assets
Investments, at value
<S> <C>
Common stocks (cost $299,397) $301,575
Cash 26,757
Dividends receivable 295
---
Total Assets 328,627
Liabilities
Payable to affiliate 489
---
Total Liabilities 489
---
Net assets $ 328,138
=========
Fund Shares Outstanding 65,795
Paid in capital (unlimited shares authorized, without par) 328,284
Undistributed net investment income (loss) (1,140)
Accumulated net realized gain (loss) on investments (1,184)
Unrealized net appreciation on investments 2,178
Net Assets applicable to Fund shares
outstanding $328,138
========
Net Asset Value per Share $ 4.99
</TABLE>
(The accompanying notes are an integral part of these financial statements)
<TABLE>
Statement of Operations
Period ended November 30, 1995
Investment income
<S> <C>
Dividends $ 332
--------
Gross investment income $ 332
Expenses
Investment adviser and administration fee 296
Professional fees 550
Printing and postage 40
Filing and registration fees 500
Custodial fees 636
Other expenses 86
--
Total gross expenses 2,108
Less earnings credits (636)
----
Net expenses 1,472
-----
Net investment income (1,140)
------
Net realized gain (loss) on investments
Proceeds from sales 30,542
Less cost of securities sold based on identified
cost 31,726
Realized net loss (1,184)
------
Unrealized gain (loss) on investments
End of period 2,178
Beginning of period -
Increase in unrealized gain for the period 2,178
-----
Net realized and unrealized gain on
investments 994
---
Net decrease in net assets resulting from operations $(146)
=====
</TABLE>
<TABLE>
Statement of Changes in Net Assets
Period Sept.
28,
1995 (inception)
to
Nov. 30, 1995
INCREASE (DECREASE) IN NET ASSETS
Operations:
<S> <C>
Net investment loss $ (1,140)
Net realized gain (loss) on investments (1,184)
Net increase (decrease) in unrealized appreciation 2,178
---------
Net increase (decrease) in net assets from operations (146)
----
Dividends to Shareowners From:
Net investment income ---------
Capital gains distributions ---------
Fund Share Transactions:
Proceeds from sales of shares 328,284
Value of shares issued in reinvestment of dividends ---------
328,284
Cost of shares redeemed
---------
Net increase in net assets from share transactions 328,284
-------
Total increase in net assets 328,138
NET ASSETS
Beginning of period
---------
End of period $ 328,138
=========
(Including undistributed net investment income of
($1,140) for Nov. 30,1995)
Shares of the Fund sold and redeemed
Number of shares sold 65,795
Number of shares issued in reinvestment of dividends ---------
Number of shares redeemed ---------
Net Increase in Number of Shares Outstanding 65,795
======
</TABLE>
(The accompanying notes are an integral part of these financial statements)
Notes to Financial Statements
Note 1-Organization
Saturna Investment Trust (the "Trust") (formerly Northwest Investors Trust) was
established under Washington State Law as a Business Trust on February 20, 1987.
The Trust is registered as a no-load, open-end series investment company under
the Investment Company Act of 1940, as amended. Five portfolio series have been
created to date: Sextant Short-Term Bond Fund, Sextant Bond Income Fund, Sextant
Growth Fund, and Sextant International Fund (the "Funds") and Idaho Tax-Exempt
Fund, distributed through a separate prospectus and the results of which are
contained in a separate report.
Note 2--Significant Accounting Policies
The following is a summary of the significant accounting policies followed by
the Funds.
Investments:
Securities traded on a national exchange or the national over-the-counter market
system are valued at the last sale price or, in the absence of any sale on that
date, the closing bid price. Other securities traded in the over-the-counter
market are valued at the last bid price. Fixed-income securities for which there
are no publicly available market quotations are valued using a matrix based on
maturity, quality, yield and similar factors, which are compared periodically to
multiple dealer bids and adjusted by the adviser under policies established by
the Trustees.
The cost of securities is the same for accounting and Federal income tax
purposes. Securities transactions are recorded on trade date. Realized gains and
losses are recorded on the identified cost basis.
Income and Expenses:
Interest income is reduced by the amortization of bond premiums, on a constant
yield-to-maturity basis from purchase date to maturity. Interest income is
increased by accretion only for bonds underwritten as original issue discounts.
Market discounts are recorded as realized gains upon disposition. Cash dividends
from equity securities are recorded as income on the ex-dividend date.
Expenses incurred by the Trust on behalf of the Funds (e.g., professional fees)
are allocated to the Funds on the basis of relative daily average net assets.
The Adviser has agreed to certain limits on expenses, as described below.
Income taxes:
The Funds have elected to be taxed as regulated investment companies under the
Internal Revenue Code and distribute substantially all of their taxable net
investment income and realized net gains on investments. Therefore, no provision
for Federal income taxes is required.
Dividends and distributions to shareowners:
Dividends and distributions to shareowners are recorded on the ex-dividend date.
For the Sextant Short-Term Bond Fund and Sextant Bond Income Fund, dividends are
paid daily and distributed on the last business day of each month. For the
Sextant Growth Fund and Sextant International Fund, dividends are payable at the
end of each November. Shareowners electing to reinvest dividends and
distributions purchase additional shares at the net asset value on the payable
date.
Note 3--Transactions with Affiliated Persons
Under a contract approved by shareowners on September 28, 1995, ("Contract")
Saturna Capital Corporation provides investment advisory services and certain
other administrative and distribution services to conduct Trust business,
including shareholder servicing and transfer agency services. Each of the Funds
pays the Adviser an Investment Advisory and Administrative Services Fee (the
"Base Fee.") of .60% of average net assets per annum, payable monthly. The Base
Fee is subject to adjustment up or down depending on the investment performance
of the Fund relative to a specified index (the "Performance Adjustment"). No
performance adjustment is applicable during the first year any Agreement is in
place. The Adviser has voluntarily undertaken to limit expenses of Sextant Bond
Income Fund and Sextant Short-Term Bond Fund to 0.80% through March 31, 1997 and
waives its investment advisory and administrative fee as to either fund
completely so long as assets of that Fund are less than $2 million.
For the year ended November 30, 1995, Sextant Bond Income Fund and Sextant
Growth Fund incurred advisory expenses of $5,838 and $7,255, respectively, which
include expenses incurred under the advisory contract in effect prior to
September 28, 1995. Sextant International incurred advisory expenses of $296,
and Sextant Short-Term Bond Fund incurred advisory expenses of $605, each
incurring no such expenses under the agreement in effect prior to September 28,
1995.
In accordance with the expense waiver noted above, for the year ended November
30, 1995, Saturna Capital waived $605 of the Sextant Short-Term Bond Fund
advisory fee and $5,838 of that of Sextant Bond Income Fund.
Prior to adoption of the Contract, Saturna provided shareholder servicing under
a separate agreement pursuant to which Sextant Growth Fund and Sextant Bond
Income Fund paid $1,272 and $842, respectively during the fiscal year ended
November 30, 1995.
In accordance with the Funds' agreement with their custodian bank, National City
Bank, for the year ended November 30 1995, custodian fees incurred by Sextant
Short Term Bond Fund, Sextant Bond Income Fund, Sextant Growth Fund, and Sextant
International Fund, and subsequently waived, amounted to $391, $841, $2110, and
$636, respectively.
One trustee, who also serves as the president of the Trust, is a director and
president of the Adviser. Another is vice president and director of the Adviser.
All trustees have served to date without compensation; beginning January 1,
1996, the unaffiliated trustees will begin to receive $100 per Board or
committee meeting attended. On November 30, 1995, the trustees, officers and
their immediate families as a group owned 56%, 31%, 16% and 59% of the
outstanding shares of Sextant Short-term Bond Fund, Sextant Bond Income Fund,
Sextant Growth Fund and Sextant International Fund, respectively.
The Trust acts as a distributor of its own shares, except in those states in
which Investors National Corporation (a subsidiary of Saturna Capital
Corporation) is itself registered as a broker-dealer and acts as distributor
without compensation. Investors National Corporation is the primary stockbroker
used to effect portfolio transactions for Sextant Growth Fund and Sextant
International Fund, and paid $3,188 and $266, respectively in commissions at
deep-discount rates during the year ended November 30, 1995.
Note 4--Federal Income Taxes
At November 30, 1995, Sextant International Fund had capital loss carryforwards
of $1,184 which expire in 2003 and Sextant Bond Income Fund had capital loss
carryforwards of $70,216 which expire in 2002 and 2003, subject to regulation.
Prior to their expiration, such loss carryforwards may be used to offset future
net capital gains realized for Federal income tax purposes.
Note 5--Investments
At November 30, 1995, the net unrealized appreciation of investments for Sextant
Bond Income Fund of $12,631 comprised net unrealized gains of $14,398 and
unrealized losses of $1,767. Additionally, the net unrealized appreciation of
investments for Sextant Growth Fund, Sextant Short-Term Bond Fund and Sextant
International Fund were $289,014, $3,737, and $2,178, which consist of gains of
$293,516, $4,584, and $8,864 and unrealized losses of $4,502, $847, and $6,686
respectively.
During the year ended November 30, 1995, Sextant Short Term Bond Fund purchased
$858,319 of securities and sold/matured none. Comparable figures for Bond Income
Fund are $822,908 and $1,309,408; for Growth Fund $371,870 and $591,258; and for
International Fund, $331,123 and $30,542. Included in the above amounts for
Sextant Short-Term Bond Fund and Sextant Bond Income Fund are purchases of
$620,575 and $102,717 and sales of $0 and $0 of U.S. Government securities,
respectively.
SEXTANT MUTUAL FUNDS (GRAPHIC)
(GRAPHIC)
Short-Term Bond
Bond Income
Growth
International
SATURNA CAPITAL
Mutual Funds
1300 No. State Street
Bellingham WA 98225-4730
1-800/SATURNA
(800/728-8762)
ANNUAL REPORT
November 30, 1995
This report is issued for the information of the shareowners of the Funds. It is
not authorized for distribution to prospective investors unless it is
accompanied or preceded by an effective prospectus relating to the securities of
the Trust. The Sextant Funds are series of Saturna Investment Trust
Idaho Tax-Exempt Fund Annual Report
We are greatly pleased to inform you that Morningstar Mutual Funds has awarded
your Fund its coveted five-star rating as of November 30, 1995. The Morningstar
rating is a widely respected measure of risk-adjusted performance.* We are proud
of this accomplishment and work hard to continue the Fund's to performance.
November 30, 1995
Fellow Shareowners:
Where do we go from here? Our last letter was very optimistic about the
potential returns from financial assets for the remainder of the century.
Throughout fiscal 1995 we were correct and our positive outlook remains. In the
fiscal year just ended, your Fund brought you a total return of 16.68%. At
November 30, the 30-day yield on your Fund was 4.6%, tax-free.
Politically, the climate is still favorable though not as bullish as last fall:
lower taxes and higher speed limits. The debate has shifted from increasing
government expenditures to whether, where and how much to cut. For bond
investors, we continue to believe this trend means slow growth and low interest
rates.
During 1995, concerns over the possibility of a flat (or at least flatter) tax
structure put some pressure on bond prices by increasing the return that holders
of municipal bonds demanded. This phenomenon produced an opportunity for buying
quality bonds cheaply. We capitalized on that opportunity when we could.
The Fund remains conservative in approach, positioned to serve as an anchor in
your investment portfolio. We employ no leverage, purchase no derivatives or
employ any other risk-enhancing techniques.
Our staff and portfolio managers always welcome your comments and suggestions.
Only with your help can we be certain that we are meeting your investment
needs--our primary objective. We appreciate your investing with us.
With best wishes for the New Year,
Nicholas Kaiser, Phelps McIlvaine,
President Vice President, Portfolio Manager
- ------------------
*Morningstar's proprietary ratings reflect historical risk-adjusted performance.
The ratings are subject to change each month, and are calculated from a fund's 3
and 5-year average annual returns with sales charge adjustments (if any) and a
risk factor that reflects performance relative to three month Treasury bill
returns. Ten per cent of the funds in a Morningstar investment category receive
five stars. From time to time the adviser has waived all or a portion of fees or
expenses, resulting in higher returns.
Naturally, past performance may not indicate future results.
<TABLE>
Investments
November 30, 1995
Rating Issuer Coupon/Maturity Face Amount Market Value
- -------------------------------------------------------------------------------------------------------------
----
General Obligation (2.0)%
<S> <C> <C> <C>
A Bannock County Jail Bond 6.00% due 9/1/2012 $100,000 $105,966
Housing (11.6%)
AA Idaho Housing Authority
Single Fam Mortgage, B-1 6.85% due 7/1/2012 110,000 114,695
AA Idaho Housing Authority
Refunding Ser A 6.15% due 7/1/2024 250,000 257,950
AA Idaho Housing Authority
Single Fam Mort Mezz-E-1 6.60% due 7/1/2011 125,000 131,718
AA Idaho Housing Authority
Single Fam Mort Rev Ser B1 8.125% due 7/1/2019 5,000 5,222
8.00% due 1/1/2020 30,000 31,519
AA Idaho Housing Authority
Single Fam Mort SR Ser C1 7.70% due 7/1/2017 60,000 62,791
------- ------
SUB-TOTAL 580,000 603,895
Irrigation (5.1%)
AA Boise Kuna Irr. Dist. 6.00% due 7/1/2008 250,000 265,838
Medical/Hospitals (3.6%)
A Idaho Health Facility
St. Alphonsus Med. Ctr. 6.25% due 12/1/2012 175,000 184,216
Real Estate (6.3%)
A Idaho Falls
Redevel. Agency Rev. 8.05% due10/1/2006 100,000 112,549
8.125% due 10/1/2008 100,000 112,940
AAA Idaho Bldg. Authority
Rev. Ref. Ser C 5.70% due 9/1/2007 100,000 104,905
-------- -------
SUB-TOTAL 300,000 330,394
Roads (7.5%)
A Payette L.I.D. 7.60% due 5/1/2005 30,000 30,593
A Post Falls, Kootenai County 6.50% due 4/15/1996 10,000 9,963
L.I.D. #91-1 6.75% due 4/15/1997 10,000 9,976
7.00% due 4/15/1998 10,000 9,982
7.20% due 4/15/1999 15,000 14,982
7.40% due 4/15/2000 15,000 14,996
7.60% due 4/15/2001 15,000 15,002
7.75% due 4/15/2002 20,000 20,008
7.95% due 4/15/2003 20,000 20,018
7.95% due 4/15/2004 20,000 20,018
7.95% due 4/15/2005 20,000 20,018
7.95% due 4/15/2006 20,000 20,016
7.95% due 4/15/2007 20,000 20,015
A Post Falls L.I.D. #91-4 4.75% due 9/1/1999 30,000 29,942
5.00% due 9/1/2000 30,000 30,092
5.20% due 9/1/2001 35,000 35,223
5.40% due 9/1/2002 35,000 35,077
5.60% due 9/1/2003 35,000 35,084
------- ------
SUB-TOTAL 390,000 391,005
School (GO's) (28.6%)
AA Ada and Canyon Counties 6.65% due1/30/2011 100,000 109,566
Joint School Dist #2 Meridian 7.375% due 7/30/2000 100,000 111,947
AAA Bonneville/Bingham Counties 5.40% due 7/30/2008 150,000 153,558
Jt Schl Dist #93 Ref Ser A 5.50% due 7/30/2010 100,000 102,178
A Bonneville County
School Dist #91 7.00% due 8/1/2008 155,000 167,216
A Canyon County 5.90% due 8/1/2005 50,000 52,355
School Dist. #135 6.00% due 8/1/2006 50,000 53,131
6.00% due 8/1/2007 50,000 52,783
AAA Gooding Co.(Wendell)
School Dist. #232 6.00% due 8/1/2008 55,000 58,289
AAA Kootenai County
School Dist #273 6.00% due 8/1/2012 100,000 106,041
AAA Madison County
School Dist. #321 5.60% due 2/1/2010 150,000 155,496
AA Payette County 6.50% due 7/31/2008 80,000 86,514
School Dist. #372 6.75% due 7/31/2009 155,000 173,017
6.75% due 7/31/2010 100,000 111,128
-------- -------
SUB-TOTAL 1,395,000 1,493,219
State Education (14.2%)
AAA Boise St. Univ. 6.20% due 4/1/2010 200,000 215,580
Fee Revenue 6.30% due 4/1/2014 100,000 108,367
A Idaho State University
Student Fee 6.40% due 4/1/2014 250,000 268,191
AAA University of Idaho
Student Fee Rev. 7.70% due 4/1/2010 85,000 91,922
A University of Idaho
Revenue 6.85% due 4/1/2016 50,000 55,547
------- ------
SUB-TOTAL 685,000 739,607
Utility-Electric Power (1.9%)
AAA Idaho Falls
Elec. Rev. 6.75% due 4/1/2019 100,000 103,205
Utility-Sewer (5.0%)
A Hayden Lake L.I.D. #1 6.00% due 9/1/2004 60,000 59,991
A Troy Sewer Rev.
6.80% due 2/1/1996 10,000 9,995
6.90% due 2/1/1997 10,000 10,121
7.00% due 2/1/1998 10,000 10,256
7.10% due 2/1/1999 10,000 10,449
7.20% due 2/1/2000 10,000 10,541
7.30% due 2/1/2001 10,000 10,593
7.40% due 2/1/2002 10,000 10,672
7.50% due 2/1/2003 10,000 10,659
7.60% due 2/1/2004 10,000 10,676
7.70% due 2/1/2005 15,000 16,076
7.80% due 2/1/2006 15,000 16,016
7.90% due 2/1/2007 15,000 16,019
Troy Sewer Rev. cont'd. 8.00% due 2/1/2008 15,000 15,948
8.00% due 2/1/2009 20,000 21,416
8.00% due 2/1/2010 20,000 21,408
------- ------
SUB-TOTAL 250,000 260,836
Utility-Water Supply (10.9%)
A- American Falls Res. 7.25% due 5/1/2004 70,000 78,379
Ref. Series A 7.625% due 5/1/2021 150,000 169,303
A McCall Water Rev., Ser 1994 6.25% due 9/1/2008 200,000 210,249
A McCall Water Revenue 6.375% due 9/1/2014 70,000 73,380
A Ucon Water & Sewer Rev. Ref. 7.75% due 12/1/2002 35,000 39,009
------- ------
SUB-TOTAL 525,000 570,320
-------- -------
Total Investments (96.7%) $ 4,750,000 $5,048,501
==============
Other Assets (net of liabilities) (3.3%) 171,813
-------
Total Net Assets (100%) $ 5,220,314
</TABLE>
These unaudited bond ratings reflect the adviser's current rating of each bond,
as determined using Standard & Poor's and Moody's ratings.
<TABLE>
Financial Highlights
Selected data per share of capital stock outstanding throughout the period:
Sept. 4,
'87
(commence-
ment of
op-
For Year Ended erations)
November 30 to
----------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 Nov. 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 0.00 (0.01) (0.05) (0.025) 0.00 0.00 0.00 0.00 0.00
----- ------ ------ ------- ----- ----- ----- ----- ----
gains)
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 $ $ $ $ $ $ $ $
5.28 4.76 5.23 5.16 5.10 5.03 5.07 4.98 $
5.03
of period
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. (The accompanying notes are an integral part of
these financial statements)
</FN>
</TABLE>
<TABLE>
Statement of Assets and Liabilities
As of November 30, 1995
Assets
Investments, at value
<S> <C>
Municipal Bonds (cost $4,797,276) $5,048,501
Cash 78,340
Interest receivable 97,090
Insurance deposit 800
---
Total Assets $5,224,731
----------
Liabilities
Payable to affiliate 4,417
-----
Total Liabilities 4,417
-----
Net Assets 5,220,314
---------
Fund shares outstanding 988,761
Analysis of Net Assets
Paid in capital (unlimited shares authorized, no par value) 5,033,109
Undistributed net investment income (loss) (26)
Accumulated net realized gain (loss) on investments (63,994)
Unrealized net appreciation on investments 251,225
-------
Net Assets applicable to Fund shares $5,220,314
==========
Net Asset Value per share $ 5.28
</TABLE>
<TABLE>
Statement of Operations
Year ended November 30, 1995
Investment income
<S> <C>
Interest income $ 368,984
Amortization of bond premiums (12,119)
Accretion 1,154
Miscellaneous 221
---
Gross investment income $358,240
Expenses
Investment adviser and administration fee 30,862
Professional fees 13,612
Shareowner servicing 5,205
Printing and postage 4,954
Filing and registration fees 2,155
Other expenses 5,618
-----
Total gross expenses 62,406
Less earnings credits (2,041)
Less advisory fee waived (14,048)
-------
Net expenses 46,317
------
Net investment income 311,923
-------
Net realized gain (loss) on investments
Proceeds from sales 3,446,364
Less cost of securities sold based on identified
cost 3,510,768
---------
Realized net loss (64,404)
-------
Unrealized gain (loss) on investments
End of period 251,225
Beginning of period (500,262)
--------
Increase in unrealized gain for the period ` 751,487
-------
Net realized and unrealized gain on investments 687,083
-----------
Net increase in net assets resulting from operations $999,006
========
(The accompanying notes are an integral part of these financial statements)
</TABLE>
<TABLE>
Statement of Changes in Net Assets
INCREASE (DECREASE) IN NET ASSETS Year ended Year ended
Nov. 30, 1995 Nov. 30, 1994
Operations:
<S> <C> <C>
Net investment income $ 311,923 $
381,688
Net realized (loss) gain on investments (64,404) 19,224
Net increase (decrease) in unrealized appreciation 751,487 (692,425)
------- --------
Net increase (decrease) in net assets 999,006 (291,513)
Dividends to Shareowners From:
Net investment income (311,941) (383,476)
-------- --------
Capital gains distributions -- (20,015)
-------
Fund Share Transactions:
Proceeds from sales of shares 793,990 2,393,405
Value of shares issued in reinvestment of dividends 226,992 287,510
------- -------
1,020,982 2,680,915
Cost of shares redeemed (3,329,049) (2,512,371)
- ------------------------------------------------------------------------------ ----------- ----------- ------------
Net increase (decrease) in net assets from share transactions (2,308,067) 168,544
----------- ------------
Total increase (decrease) in net assets (1,621,002) (526,460)
Net Assets
Beginning of period 6,841,316 7,367,776
--------- ---------
End of Period $ 5,220,314 $ 6,841,316
============================================================================== =========== ===========
(Including undistributed net investment income of
($26) for Nov. 30,1995 and ($8) for Nov. 30,1994)
Shares of the Fund Sold and Redeemed
Number of shares sold 225,327 466,823
Number of shares issued in reinvestment of dividends 44,240 57,107
Number of shares redeemed (717,954) (495,726)
-------- --------
Net Increase (Decrease) in Number of Shares Outstanding (448,387) 28,204
======== ======
</TABLE>
(The accompanying notes are an integral part of these financial statements)
DISCUSSION of FUND PERFORMANCE
(unaudited)
For the twelve-month period ending November 30, 1995, Idaho Tax-Exempt Fund
returned shareholders 16.68%. At November 30, the 30-day yield on the
Fund was 4.6% and the share price had risen to $5.28 from $4.76 at the
beginning of the fiscal year.
Although the bond market enjoyed a substantial recovery from the bear market of
fiscal 1994, concerns about a possible flat (or flatter) federal income tax
meant the municipal bond market maintained a fairly high level of interest rates
relative to taxable securities. While this high relative yield presented an
opportunity to buyers of municipal bonds generally, it did restrain somewhat the
rally in price experienced by some issues in the marketplace.
The primary objective of the Fund is income exempt from federal and Idaho
personal income taxes, with the secondary objective of capital preservation.
Although Idaho has a relatively high personal income tax, the fact that its per
capita outstanding municipal debt is only one-third the national average and
that it has a high income tax means Idaho debt is relatively dear in the market
because of the excess of demand over supply. These factors reduce the yield on
Idaho bonds compared to similar issues of other states, but also contribute to
relative stability of principal.
The Fund's secondary policy of preservation of capital drives it to maintain a
moderate portfolio maturity in the intermediate 5-to-15 year range. While the
Fund's policies limit price risk normally associated with longer maturities,
when compared to a general bond index, such as the Lehman Municipal Index, or
funds with policies more like the Index, the Fund typically will experience both
less price decline and appreciation than the Index. Though the Fund does not try
to "beat" the Lehman or any other specific index, the Fund's returns,
considering lower price fluctuation, compared favorably to that of the Index for
the fiscal year, as shown in the accompanying chart.
The line graph below compares Idaho Tax-Exempt Fund's performance to the Lehman
Brothers Municipal Bond Index, a broad-based municipal bond market index. To be
comparable, the Municipal Index data includes reinvested income (as computed by
Lehman Brothers Fixed Income Research). Note that this graph compares an
unmanaged, expense-free index to an actively managed fund that has transaction
and other costs and stands ready to buy and sell its securities to shareholders
on a daily basis, as well as providing s a wide range of services to them.
Additionally, it should be noted that few if any investors are able to invest in
such a portfolio because of the large amount of securities involved to model
such a portfolio.
Were the Fund to target the Index as an objective, the Fund might take greater
risk in a longer term maturity in its portfolio to take advantage of the
fluctuation--for better or for worse--available in such a portfolio. However,
maintaining the stability of capital is an objective of the Fund, so we believe
the Fund has performed well within expectations.
The graph shows that $10,000 invested in Idaho Tax-Exempt Fund at the end of
September 1987 would have grown to $17,225 at the end of November 1995. If
$10,000 could have been invested in the Lehman Brothers Municipal Bond Index at
the end of September 1987, that would have grown to $20,678.
Date The Fund Lehman Index
Sep-87 $10,000 $10,000
11/30/88 10679 11391
11/30/89 11658 12644
11/30/90 12351 13620
11/29/91 13294 15019
11/30/92 14290 16525
11/30/93 15341 18356
11/30/94 14763 17392
11/30/95 17225 20678
(Graph omitted)
NOTES TO FINANCIAL STATEMENTS
Note 1-Organization
Saturna Investment Trust, (formerly Northwest Investors Trust) Trust (the
"Trust") was established under Washington State Law as a Business Trust on
February 20, 1987. The Trust is registered as a no-load, open-end series
investment company under the Investment Company Act of 1940, as amended. Four
portfolios have been created to date in addition to Idaho Tax-Exempt Fund (the
"Fund.") The other four portfolios distribute through a separate prospectus and
the results of those funds are contained in a separate report.
Note 2--Significant Accounting
Policies
The following is a summary of the significant accounting policies followed by
the Fund.
Investments:
Fixed-income securities for which there are no publicly available market
quotations are valued using a matrix based on maturity, quality, yield and
similar factors, which are compared periodically to multiple dealer bids and
adjusted by the adviser under policies established by the Trustees.
The cost of securities is the same for accounting and Federal income tax
purposes. Securities transactions are recorded on trade date. Realized gains and
losses are recorded on the identified cost basis.
Income and Expenses:
Interest income is reduced by the amortization of bond premiums, on a constant
yield-to-maturity basis from purchase date to maturity.
Interest income is increased by accretion only for bonds underwritten as
original issue discounts. Market discounts are recorded as realized gains upon
disposition.
Expenses incurred by the Trust on behalf of the Fund (e.g., professional fees)
are allocated to the Fund and the other Funds of the Trust on the basis of
relative daily average net assets. The Adviser has agreed to certain limits on
expenses, as described below.
Income taxes:
The Fund has elected to be taxed as a regulated investment company under the
Internal Revenue Code and distribute substantially all of its taxable net
investment income and realized net gains on investments. Therefore, no provision
for Federal income taxes is required. Further, the Fund intends to meet IRS
requirements for tax-free income dividends, and requirements of the Idaho
Department of Revenue for income dividends free of Idaho state income tax.
Dividends and distributions to shareowners:
Dividends and distributions to shareowners are recorded on the ex-dividend date.
Dividends are paid daily and distributed on the last business day of each month.
Shareowners electing to reinvest dividends and distributions purchase additional
shares at the net asset value on the payable date.
Note 3--Transactions with Affiliated Persons
Under a contract approved by share-owners on October 12, 1990, Saturna Capital
Corporation provides investment advisory services and certain other
administrative and distribution services to conduct the Fund's business. For
such services, the Fund pays an annual fee equal to .50% of average daily net
assets. For the year ended November 30, 1995, the Fund incurred advisory fee
expenses of $30,862.
Saturna Capital has volunteered to reimburse the Fund to the extent that total
expenses of the Fund, (excluding interest, brokerage commissions and taxes)
exceeds 0.75% through November 30, 1995 and .80% througn March 31, 1997.
Accordingly, for the year ended November 30, 1995, Saturna Capital waived
$14,048 of the advisory fee.
In accordance with the Fund's agreement with its custodian bank, National City
Bank, for the year ended November 30, 1995, custodian fees incurred by the Fund,
amounted to $2,041.
Two trustees, who also serve as officers of the Trust, are directors and
officers of Saturna Capital Corporation.
The Trust acts as a distributor of its own shares, except in those states in
which Investors National Corporation (a subsidiary of Saturna Capital
Corporation) is itself registered as a broker-dealer and acts as distributor
without compensation. Saturna Capital Corporation acts as shareowner servicing
(transfer) agent for the Fund, for a monthly fee plus certain expenses. For the
fiscal year ended November 30, 1995, the Fund paid such a fee of $5,205.
All trustees have served to date without compensation; however, effective
January 1, 1996 the unaffiliated trustees will begin to receive a fee of $100
per meeting attended each. On November 30, 1995, the trustees, officers and
their immediate families as a group owned none of the outstanding shares of the
Fund.
Note 4--Federal Income Taxes
At November 30, 1995, theFund had capital loss carryforwards of $64,404 which
expire in 2003. Prior to their expiration, such loss carryforwards may be used
to offset future net capital gains realized for Federal income tax purposes.
Note 5--Investments
At November 30, 1995, the net unrealized appreciation of investments for the
Fund of $251,225 comprised gross unrealized gains of $259,531 and gross
unrealized losses of $8,306.
During the year ended November 30, 1995, the Fund purchased $1,643,866 of
securities and sold/matured $3,446,364 of securities.
REPORT of
INDEPENDENT ACCOUNTANTS
To the Board of Trustees
and Shareowners of
Saturna Investment Trust
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Idaho Tax-Exempt Fund, a series
of Saturna Investment Trust, (formerly Northwest Investors Trust; hereafter
referred to as the "Trust") at November 30, 1995, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the six years
in the period then ended, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Trust's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at November 30, 1995 by correspondence with the
custodian and a broker, provide a reasonable basis for the opinion expressed
above. The financial statements of the Trust 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 statements.
Seattle, Washington
December 15, 1995
Idaho Tax-Exempt Fund,
A Portfolio of Saturna Investment Trust
Saturna Capital
Mutual Funds
1-800/SATURNA
(800/728-8762)
This report is issued for the information of the shareowners of the Fund. It is
not authorized for distribution to prospective investors unless it is
accompanied or preceded by an effective prospectus relating to the securities of
the Fund. Idaho Tax-Exempt Fund is a series of Saturna
Investment Trust.
(GRAPHIC OF IDAHO MAP OMITTED)
ANNUAL REPORT
November 30, 1995
{AMENDMENT TO DECLARATION OF TRUST. EXHIBIT 1-4]
State of Washington Secretary of State
1, Ralph Munro, Secretary of State of the State of Washington and custodian of
its seal, hereby certify that AMENDMENT TO DECLARATION OF TRUST
of SATURNA INVESTMENT TRUST a Washington Massachusetts Trust was/were filed for
record in this office on the date indicated below.
U B I Number: 601 009 092
Date: October 2, 1995 Given under my hand and the seal of the State of
Washington, at Olympia, the State Capitol. /s/ Ralph Munro, Secretary of State
2-384477-2
<PAGE>
FILED
STATE OF WASHINGTON
OCT 0 2 1b5
RALPH MUNRO
SECRETARY OF STATE
ARTICLES OF AMENDMENT
Pursuant to RCW 23.90.040, the following Articles of Amendment to the
Declaration of Trust are herewith submitted for filing.
ARTICLE 1. The name of record of the Business Trust is:
SATURNA INVESTMENT TRUST
ARTICLE 2 The amendment(s) to the Declaration of Trust as adopted is (are) as
follows:
The investment policies and restrictions of the series of the Trust WASHINGTON
TAX-EXEMPT FUND are revised as set forth in Exhibit I and the name of such
series is changed to SEXTANT BOND INCOME FUND.
ARTICLE 3: The date of adoption of the amendment(s) was:
September 28, 1995
ARTICLE 4: The amendment(s) was (were) adopted by initial proposal and
resolution of the Board of Trustees followed with approval by majority vote of
the shareholders of the series entitled to vote thereon.
The outstanding shares of Washington Tax-Exempt Fund as of August 29,1995
(record date) were 190,004.237. The shares voting in favor were 115,009.485 and
the shares voting against were 5,143.805.
The resolution was passed by the required majority vote.
ARTICLE 5 The amendment(s) to the Declaration of Trust as adopted is (are) as
follows:
The investment policies and restrictions of the series of the Trust NORTHWEST
GROWTH FUND are revised as set forth in Exhibit II and the name of such series
is changed to SEXTANT GROWTH FUND.
ARTICLE 6: The date of adoption of the amendment(s) was:
September 28, 1995 ARTICLE 7:
The amendment(s) was (were) adopted by initial proposal and resolution of the
Board of Trustees followed with approval by majority vote of the shareholders of
the series entitled to vote thereon.
The outstanding shares of Northwest Growth Fund as of August 29, 1995 (record
date) were 131,055.262. The shares voting in favor were 84,989.275 and the
shares voting against were 1,805.566.
The resolution was passed by the required majority vote.
I certify that I am an officer of the above named Trust and am authorized to
execute these Articles of Amendment on behalf of the Trust.
DAMSEL) this 28th day of September,1995.
/s/ James D. Winship
Saturna Investment Trust
EXHIBIT 1
To Articles of Amendment of
Saturna Investment Trust
The objective of Sextant Bond Income Fund is "high current income." As an
operating policy that may be changed by the Board of Trustees, under normal
market conditions the Fund expects to maintain a dollar-weighted average
effective maturity in excess of ten years. Similarly, also as an operating
policy, the Fund expects that under normal market conditions, the Fund will
invest at least 65% of the value of its total assets (taken at market value at
the time of investment) in:
(1) Marketable straight-debt securities of domestic issuers, and of foreign
issuers payable in U.S. dollars, rated at the time of purchase within the three
highest grades assigned by Moody's Investors Service, Inc. ("Moody's") (Aaa, Aa
or A) or by Standard & Poor's Corporation ("S&P") (AAA, AA or A);
(2) U.S. Government Securities;
(3) Commercial paper rated Prime-1 by Moody's or A-1 by S&P at time of purchase,
or, if unrated, issued or guaranteed by a corporation with any outstanding debt
rated Aa or better by Moody's or AA or better by S&P; and
(4) Bank obligations, including repurchase agreements of banks, having total
assets in excess of $1 billion.
The Fund may also invest in other debt securities (including those convertible
into, or carrying warrants to purchase, common stocks or other equity interests,
and privately placed debt securities). However, the Fund may not invest in a
security rated at time of purchase below the fourth highest grade assigned by
Moody's (Baa) or S&P (BBB).
U.S. Government Securities include: (i) bills, notes, bonds and other debt
securities, differing as to maturity and rates of interest, that are issued by
and are direct obligations of the U.S. Treasury; and (ii) other securities that
are issued or guaranteed as to principal and interest by the U.S. Government or
by its agencies or instrumentalities.
The Fund may also invest in floating rate instruments which provide for periodic
adjustments in coupon interest rates that are automatically reset based on
changes in amount and direction of specified market interest rates. The Fund may
invest in unrated securities that in the adviser's opinion are comparable to
securities having at least a medium grade rating and are suitable for investment
by the Fund.
EXHIBIT II
To Articles of Amendment of
Saturna Investment Trust
The objective of Sextant Growl Fund is "long-term growth." The Fund invests in
common stocks and other equity-type securities. The Fund will pursue its
objective by investing primarily in common stocks and securities convertible
into common stocks, but may also invest in other securities that are suited to
the Fund's investment objectives, including preferred stocks and debt
securities.
The Fund may invest in securities of smaller or newer companies as well as those
of well-seasoned companies of any size. Although the Fund will invest
principally in securities of U.S. issuers, it may invest up to 5% of its total
assets (valued at the time of investment) in foreign securities, including
foreign government obligations and foreign equity and debt securities that are
traded in the U.S.
Under normal market conditions, the Fund expects to be substantially fully
invested in the types of securities described in the preceding paragraphs.
However, to the extent that investments meeting the Fund's criteria for
investment are not available or when the Adviser considers a temporary defensive
investment position advisable, the Fund may invest without limitation in
high-quality corporate debt obligations or U.S. government obligations or hold
cash or cash equivalents.
INVESTMENT ADVISORY
and ADMINISTRATIVE SERVICES AGREEMENT
for the
SEXTANT INTERNATIONAL FUND
of the
SATURNA INVESTMENT TRUST
THIS AGREEMENT, executed this ___th day of , 1995, between Saturna Capital
Corporation, a Washington State corporation (the "Adviser") and the Saturna
Investment Trust, a series open--end management investment company organized as
a business trust under the laws of the State of Washington and presently having
a portfolio named the Sextant International Fund, (the "Fund") to be and become
effective as provided in Section 1, Article V, between the parties hereto,
WITNESSETH, THAT:
The parties hereto enter into the following Articles of Agreement:
ARTICLE I: INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES
Section 1. Investment Advisory Services. During the continuance of this
Agreement, the Adviser shall supervise the investment management of the cash and
securities of the Fund, and in that connection, to the extent required, shall
furnish to the Fund advice and recommendations on securities to be purchased,
held or sold and the portion of the assets to remain uninvested, all according
to the investment objectives, powers and restrictions imposed by law or other
governing document or writing binding upon the Fund.
Section 2. Administrative Services. During the continuance of this Agreement:
(a) The Adviser shall furnish the Fund office space, office facilities and
equipment, related utilities, telephone service, stationery and supplies,
typesetting, personnel (including executive officers) and clerical and
bookkeeping services as required to fulfill its obligation as Adviser for the
Fund. The Adviser shall pay the compensation of its executives and employees,
whether an officer or employee of the Fund, for all services rendered by them
for the Fund as required to fulfill its obligation as Adviser, and shall furnish
such office space, facilities, supplies and services as agreed above. The
Adviser shall also pay on behalf of the Fund trade association membership and
meeting expenses, and the preparation, printing, qualification and offering (but
not administration on behalf of a participant or participating entity) of any
prototype retirement plan offered by the Fund to shareholders on the
recommendation of the Adviser.
(b) The Adviser shall act as fund accountant, and prepare daily reports of
Fund net asset values as well as all other financial statements and
reports. With the consent of the Trustees, the Adviser at its expense
may delegate fund accounting duties to another qualified party. The
Fund accountant shall furnish the Trustees, at any regularly scheduled
meeting or at such times as the Trustees may request, a report on all
matters pertaining to the services of the Adviser, including but not
limited to, a list of the securities in the Fund and a record of
brokerage commissions paid.
(c). The Adviser shall act as transfer agent, registrar and dividend
disbursing agent for the Fund, pursuant to a form of Transfer Agency
Agreement attached hereto as Exhibit A, and made a part hereof.
Section 3. Affiliated Broker. Subject to review by the Trustees, the Adviser
shall place all orders for the purchase and sale of securities of the Fund. The
Adviser or a subsidiary of the Adviser is permitted to act as a broker (but not
a dealer or underwriter) in securities traded by the Fund, subject to review by
the Trustees and all pertinent regulations and limitations. No such orders shall
be placed in contravention of the Investment Company Act of 1940.
Section 4. Fund Expenses. The Fund shall pay or provide for the payment of its
expenses not assumed by the Adviser as above provided, which expenses shall
include, without limitation, taxes, interest, brokerage commissions,
compensation and expenses of Trustees, legal and auditing expenses, insurance
premiums, custodian fees, the expense of issuing Fund shares under the federal
securities laws and the regulatory authorities of the various states in which
the Fund is authorized to offer its shares, and the expense of preparing,
printing and mailing financial reports, investment newsletters, notices and
prospectuses for its existing shareholders.
ARTICLE III: FEES FOR SERVICES OF THE ADVISER
Section 1. Investment Advisory and Administrative Services Fee. As full
compensation for all services rendered and to be rendered and expenses assumed
by the Adviser as set forth in Article II "Investment Advisory and
Administrative Services" hereof, the Fund shall pay to the Adviser a monthly
Investment Advisory and Administrative Services Fee (the "Base Fee") at the
annual rate of 0.60% of average daily net assets of the Fund. Average daily net
asset value in a period shall be determined by dividing the aggregate of the
Fund's net assets on each calendar day by the number of calendar days in the
period.
Section 2. Performance Adjustment. The Base Fee shall be subject to a maximum
increase or decrease at the annual rate of 0.30% of the Fund's average daily net
assets, according to the relative total return investment performance of the
Fund (the "Performance Adjustment"). The Performance Adjustment shall be
computed as follows:
a) Following the end of each month the net investment return
realized by shareowners in the Fund for the entire just-ended
twelve month period (that is, the change in Net Asset Value
per share adjusted for dividends and other distributions, or
"Total Return") of the Fund for the twelve month period ending
that month ("Calculation Year") shall be calculated to the
nearest one hundredth of one percent as set forth in the
Fund's Registration Statement on Form N-1A.
b) The Fund's Total Return for the Calculation Year shall be
compared to the average total return of all Growth Objective
mutual funds, as selected, calculated and reported by
Morningstar Inc. (or, if this index is unavailable or becomes
inappropriate for this measurement for any reason in the
opinion of the Fund's Board, then another index as shall be
chosen by the Fund's Board) (the "Benchmark").
c) If the Fund's Total Return outperforms or underperforms the
Benchmark's Total Return (rounded to the nearest tenth of one
percent [0.1%]) for the Calculation Year by 1% or more but
less than 2%, then the Base Fee for the month just completed
shall be increased or decreased by 0.10% (annual rate) of
average Calculation Year daily net assets, and the
performance-adjusted total Fee for the month shall be at the
annual rate of either 0.70% or 0.50% of average net assets.
d) If the Fund's Total Return outperforms or underperforms the
Benchmark's Total Return (rounded to the nearest tenth of one
percent [0.1%]) for the Calculation Year by 2% or more but
less than 4%, then the Base Fee for the month just completed
shall be increased or decreased by 0.20% (annual rate) of
average Calculation Year daily net assets, and the
performance-adjusted total Fee for the month shall be at the
annual rate of either 0.80% or 0.40% of average net assets.
e) If the Fund's Total Return outperforms or underperforms the
Benchmark's Total Return (rounded to the nearest tenth of one
percent [0.1%]) for the Calculation Year by more than 4% or
more, then the Base Fee for the month just completed shall be
increased or decreased by 0.30% (annual rate) of average
Calculation Year daily net assets, and the
performance-adjusted total Fee for the month shall be at the
annual rate of either 0.90% or 0.30% of average net assets.
f) No Performance Adjustment shall be made until the Fund acquires twelve
full months of operating history.
The Fund shall accrue daily to pay its Investment Advisory and Administrative
Services Fee fee at the Base Fee annual rate of 0.60%. The net Fee (Base Fee
plus or minus the Performance Adjustment) due to the Adviser for a calendar
month shall be paid when practicable after these calculations. Due to the
relatively small size of monthly-computed Performance Adjustments, no accrual
shall be required.
Section 3. Reimbursement and Waiver. The Adviser may, from time to time,
voluntarily waive its fees or reimburse the Fund for expenses above a specified
percentage of average daily net assets. The Adviser retains the ability to be
repaid by the Fund for voluntary expense reimbursements if Fund expenses fall
below the limit before the end of the Fund's fiscal year. If any fee waiver or
reimbursement is to be made, it shall be paid monthly and may vary by Fund of
the Trust.
Section 4. Termination. In the event of the termination of this Agreement the
fee for the month in which terminated shall be that proportion of the rate for
the whole month as the number of calendar days during which this Agreement is in
effect during the month bears to the number of days in the whole month computed
on the average daily net asset value of the portfolio during such period.
ARTICLE IV: DISTRIBUTION
Section 1. The Fund. The Fund shall offer shares without commission ("load") or
other sales expense. The Adviser's subsidiary, Investors National Corporation,
shall act as the Fund's distributor without compensation, and register where and
when appropriate. The Fund shall bear the expense of qualifying itself and any
necessary personnel to sell the Fund. As the expense to the Fund is deemed
warranted by the Trustees, the Adviser shall cause the Fund to be registered
under the various state "blue-sky" requirements.
Section 2. The Adviser. The Adviser or any subsidiary of the Adviser may engage
in any lawful activities designed to help Fund distribution, and pay for such
activities out of any part of its resources, including those fees described
under Article III. The Adviser shall pay any expenses for printing and
distributing extra prospectuses used in connection with sales and for preparing,
printing and distributing sales literature. The Adviser shall pay the salaries
of persons used in the distribution of the Fund, furnish office space and
facilities for such distribution activity, and pay for all other expenses
associated with distribution of the Fund.
ARTICLE V: TERM AND TERMINATION OF AGREEMENT
Section 1. Term of Agreement. This Agreement shall become effective when
approved by the holders of a majority of the outstanding shares of the Fund, and
shall continue in effect for a two year period unless sooner terminated as
hereinafter provided, and thereafter shall continue from year to year so long as
the terms of this Agreement and the renewal and continuance thereof are approved
at least annually by action of the Trustees or a majority vote of the
outstanding shares the Fund, but in either event it must be approved by a
majority of the Trustees, who are not "interested persons" as defined in the
Investment Company Act of 1940, casting their vote in person at a meeting called
for voting on such approval.
Section 2. Termination of Agreement. This Agreement may be terminated at any
time without liability to either party by notice in writing given by the party
desiring to terminate to the other not less than sixty (60) days before the date
specified, for termination. The Fund may take such action either by the Trustees
or by the affirmative vote of the holders of a majority of the outstanding
shares of the Fund.
Section 3. No Assignment. This Agreement may not be assigned by either party and
shall terminate automatically upon assignment (as defined in the federal
Investment Company Act of 1940).
Section 4. Amendment. This Agreement may be amended only with the approving vote
of the holders of a majority of the outstanding shares of the Fund. The vote of
a majority of the outstanding shares of the Fund means the vote, at any meeting
of the Fund's shareholders, of (1) 67% or more of the shares present or
represented by proxy, at such meeting, if the holders of more than 50% of the
outstanding shares are present or represented by proxy, or (2) more than 50% of
the outstanding shares, whichever is less.
Section 4. Use of Adviser's Name. The Adviser grants the Fund a non-exclusive,
terminable license and permission to use the name "Saturna" in its name during
the term of this Agreement.
ARTICLE VI. GENERAL
This instrument is executed by the Trustees and officers of Saturna Investment
Trust in such capacities for the Sextant International Fund portfolio of the
Trust. By the execution hereof all parties agree that, except to the extent
limited by the provisions of the federal Investment Company Act of 1940, for the
payment of any claim or the performance of any obligations hereunder, resort
shall be had solely to the assets and property of the Fund and no shareholder,
Trustee, officer, employee or agent of the Fund or the Trust shall be personally
liable therefore. Reference is made to Articles of Trust dated February 20,
1987, which have been filed with the Washington Secretary of State, Olympia,
Washington.
IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be executed on behalf of each
of them by their duly authorized officers the date and year first above written.
SATURNA INVESTMENT TRUST SATURNA CAPITAL CORPORATION
By ________________________ By ________________________ Nicholas F. Kaiser,
Pres. Nicholas Kaiser, Pres. ATTEST:
------------------------ -------------------------
Secretary Secretary
<PAGE>
Transfer Agent Agreement
Page 1
Exhibit A
to
INVESTMENT ADVISORY
and ADMINISTRATIVE SERVICES AGREEMENT
for the
SEXTANT INTERNATIONAL FUND
of the
SATURNA INVESTMENT TRUST
TRANSFER AGENT AGREEMENT
THIS AGREEMENT, executed this ___th day of __________ 1995, between Saturna
Capital Corporation, a Washington State corporation (the "Adviser") and the
Saturna Investment Trust, a series open--end management investment company
organized as a business trust under the laws of the State of Washington (the
"Trust") and presently having a portfolio named the Sextant International Fund,
(the "Fund") is made pursuant to and in consideration of that certain Investment
Advisory and Administrative Services Agreement between the Adviser and the Trust
on behalf of the Fund, dated ______________, 1995 (the "Advisory Agreement").
WITNESSETH THAT:
WHEREAS, pursuant to the terms of the Advisory Agreement the Adviser has agreed
to act as Transfer, Redemption and Dividend Disbursing Agent for the Fund
and also has agreed to act for the Fund in other respects as hereinafter
stated; and
WHEREAS, the Fund will appoint a bank, or other qualified entity, acceptable to
the Adviser as primary Custodian of the securities, cash and other assets
of the Fund, hereinafter referred to as the Custodian Bank, and may with
the agreement of the Adviser appoint one or more subcustodians;
NOW, THEREFORE, in consideration of the promises and mutual covenants contained
herein, the parties hereto, intending to be legally bound, do hereby agree
as follows:
Section 1. The Fund hereby appoints the Adviser as its Transfer, Registrar,
Redemption Agent and Dividend Disbursing Agent (the "Transfer Agent") and the
Transfer Agent accepts such appointments and agrees to act in such capacities
upon the terms set forth in this Agreement.
The Transfer Agent agrees to comply with all relevant provisions of the
Investment Company Act of 1940 (the "Act"), the Internal Revenue Code, other
applicable laws and all applicable rules and regulations thereunder.
If the Fund is a series company for purposes of Rule 18f-2 under the Act, the
term "Fund" as used in this Agreement shall be deemed to refer to each such
series as a separate portfolio unless the context otherwise requires. In
performing its functions hereunder, the Transfer Agent shall in all cases comply
with the procedures and conditions set forth in the Fund's then current
Prospectus and Statement of Additional Information ("SAI"), as provided to the
Transfer Agent by the Fund. To the extent that the Prospectus and SAI cover
procedures and duties of the Transfer Agent, agreement as to such matters must
have been reached between the Transfer Agent and the Fund prior to the
effectiveness of the Prospectus.
Section 2. The Fund currently has no Share Certificates outstanding, and does
not intend for the issue of Share Certificates in the future. Should the Fund
wish to issue Certificates in the future, it can do so only with the consent of
the Transfer Agent. All language in this agreement relating to Share
Certificates, such as the following paragraph, will be of no effect until such
time as it is mutually agreed that Share Certificates shall be issued.
The Fund shall furnish to the Transfer Agent a sufficient supply of blank Share
Certificates and from time to time will renew such supply upon the request of
the Transfer Agent. Such blank Share Certificates shall be signed manually or by
facsimile signatures of officers of the Fund authorized by law or the by-laws of
the Fund to sign Share Certificates and, if required, shall bear the Fund's seal
or facsimile thereof.
Section 3. The Transfer Agent shall make original issues of Shares in accordance
with Sections 13 and 14 below and with the Fund's then currently effective
Prospectus upon being furnished with (i) a certified copy of a resolution of
Directors of the Fund authorizing such issue and (ii) necessary funds for the
payment of any original issue tax applicable to such additional Shares. If
requested, a copy of the opinion of counsel as to the validity of such
additional Shares shall be furnished to the Transfer Agent upon the Fund's
filing of its Rule 24f-2 Notice under the Act with the Securities and Exchange
Commission.
Section 4. Transfers of Shares shall be registered and, subject to the
provisions of Section 10, new Share Certificates issued by the Transfer Agent
upon surrender of outstanding Share Certificates, if any, (i) in form deemed by
the Transfer Agent to be properly endorsed for transfer, (ii) with all necessary
endorsers' signatures guaranteed by a member firm of a national securities
exchange, the NASD, or a commercial bank, except when the requirement of a
signature guarantee is waived in accordance with the Fund's then current
Prospectus or SAI or when otherwise authorized by the Fund pursuant to Written
Instructions (as defined in Section 34 below), accompanied by (iii) such
assurances as the Transfer Agent shall deem necessary or appropriate to evidence
the genuineness and effectiveness of each necessary endorsement, and (iv)
satisfactory evidence of compliance with all applicable laws relating to the
payment or collection of taxes. The Transfer Agent shall retain all shareholder
applications and shall compare the signature(s) on written redemption requests
with the signature on the shareholder applications as may be necessary in the
opinion of the Transfer Agent, provided that the Transfer Agent shall be liable
for any loss due to forgery or improper signature of any kind resulting from the
gross negligence of the Transfer Agent in making or failing to make such
comparison. The Transfer Agent shall take such reasonable measures as may be
agreed upon from time to time between the Fund and the Transfer Agent to enable
the Fund to identify proposed transfers which, if effected, appear likely to
cause the Fund to fall within the definitions of a personal holding company as
defined in the Internal Revenue Code and shall not make such transfer without
the prior written approval of the Fund and its counsel.
Section 5. When mail is used for delivery of Share Certificates the Transfer
Agent shall forward Share Certificates in "non-negotiable" form by first-class
mail, and Share Certificates in "negotiable" form by registered mail, return
receipt requested, all mail deliveries to be covered while in transit to the
addressee by insurance arranged for by the Transfer Agent.
Section 6. In registering transfers of Shares the Transfer Agent may rely upon
the Uniform Commercial Code or any other statutes which in the opinion of
counsel protect the Transfer Agent and the Fund in not requiring complete
documentation, (subject to compliance with procedures set forth in the Fund's
then current Prospectus and/or SAI), in registering transfer with inquiry into
adverse claims, in delaying registration for purposes of such inquiry, or in
refusing registration where in its judgment an adverse claim requires such
refusal.
Section 7. The Transfer Agent may issue new Share Certificates in place of Share
Certificates represented to have been lost, destroyed or stolen, upon receiving
indemnity satisfactory to the Transfer Agent and the Fund and may issue new
Share Certificates in exchange for, and upon surrender of, mutilated Share
Certificates.
Section 8. In case any officer of the Fund who shall have signed manually or
whose facsimile signature shall have been affixed to blank Share Certificates
shall die, resign or be removed prior to the issuance of such Share
Certificates, the Transfer Agent may issue or register such Share Certificates
as the Share Certificates of the Fund notwithstanding such death, resignation or
removal until otherwise directed by the Fund; and the Fund shall file promptly
with the Transfer Agent such approval, adoption or ratification as may be
required by law.
Section 9. The Transfer Agent will maintain mutual fund account records in
which, among other details, it will note the issuance, transfer and redemption
of Shares, whether certificated or not. Whenever a Shareholder deposits Shares
represented by Share Certificates in an account, the Transfer Agent upon receipt
of the Share Certificates registered in the name of the Shareholder (or if not
so registered, in proper form for transfer), shall cancel such Share
Certificates and make appropriate entries in its stock transfer records. The
Transfer Agent will keep account records, part of which shall be the stock
transfer records, in which it will note the names and registered addresses of
Shareholders and the number of Shares and fractions owned by them, whether or
not Share Certificates are outstanding.
Section 10. The Transfer Agent shall issue Share Certificates for Shares only
upon receipt of a written request from a Shareholder. In all other cases, the
Transfer Agent shall dispense with the issuance and countersignature of Share
Certificates whenever Shares are purchased. The Transfer Agent shall process
purchase and redemption transactions by making appropriate entires in the Fund's
account records.
Section 11. The Transfer Agent shall, in addition to the duties and functions
above-mentioned, perform the usual duties and functions of a stock Transfer
Agent for a corporation. It shall countersign for issuance Share Certificates
representing original issue treasury Shares as directed by the Written
Instructions of the Fund and shall transfer Share Certificates registered in the
name of Shareholders from one Shareholder to another in the usual manner. The
Transfer Agent may rely conclusively and act without further investigation upon
any list, instruction, certification, authorization, Share Certificate or other
instrument or paper reasonably believed by it in good faith to be genuine and
unaltered, and to have been signed, countersigned, or executed by duly
authorized person or persons, or upon the instructions of any duly authorized
officer of the Fund, or upon the advice of counsel for the Fund or for the
Transfer Agent. The Transfer Agent may record any transfer of Share Certificates
which is reasonably believed by it in good faith to have been duly authorized or
may refuse to record any transfer of Share Certificates if in good faith the
Transfer Agent deems such refusal necessary to avoid any liability on the part
of either the Fund or the Transfer Agent; provided, however, that the Transfer
Agent shall promptly notify the Fund of any such refusal to record any transfer
and shall act in accordance with the Fund's Written Instructions, if any. The
Fund agrees to indemnify and hold harmless the Transfer Agent from and against
any and all losses, costs, claims, and liability which it may suffer or incur by
reason of so relying or acting or refusing to act.
Section 12. In case of any request or demand for the inspection of the share
records of the Fund, the Transfer Agent shall endeavor to notify the Fund and to
secure instructions as to permitting or refusing such inspection. However, the
Transfer Agent may (after giving written notice to the Fund) exhibit such
records to any person in any case where it is advised by its counsel that it may
be held liable for failure so to do, unless indemnified against such liability
by the Fund.
ISSUANCE OF SHARES
Section 13. For the purposes of this Section, the Fund hereby instructs the
Transfer Agent to consider Shareholder payments as available for investment in
accordance with the policies and procedures set forth in the Fund's then current
Prospectus and SAI. Immediately after the time or times and on each day on which
the Fund's then Current Prospectus or SAI states that its net asset value per
share shall be determined, the Transfer Agent shall obtain from the Fund or its
designated agent a quotation of the net asset value per share determined as of
such time on such day. The Transfer Agent reserves the right to charge the Fund
its reasonable costs of making corrections to shareholder records if it is later
determined that the Fund supplied an inaccurate net asset value.
The Transfer Agent shall, on the same business day on which any order for the
purchase of Shares is received and utilizing the net asset value per share next
determined after the receipt of such order, determine the amount to be invested
and the number of Shares and fractional Shares (rounded to three decimal places)
to be purchased. The Transfer Agent shall thereupon as agent for the
Shareholders place a purchase order with the Fund for the proper number of
Shares and fractional Shares to be purchased and confirm such number to the Fund
in writing. The Transfer Agent shall total the amount available for investment
in Shares at the net asset value determined by the Fund or its designated agent
at each Fund pricing time.
The Transfer Agent shall pay over to the Custodian Bank the net asset value of
Shares and fractional Shares purchased immediately upon receipt of the
consideration therefor. In the event that any check or other order for the
payment of money is returned unpaid for any reason, the Transfer Agent shall
give prompt notification to the Fund of the non-payment of said check and take
such action as the Fund may authorize by Written Instructions.
Any profit on the liquidation of unpaid shares accrues to the Fund. In the event
of loss upon the liquidation of unpaid shares the Transfer Agent will charge the
purchaser's account for the amount of such loss. If the balance in such account
is insufficient to cover the loss the Transfer Agent will assist the Fund in the
Fund's efforts to recover any such losses from the purchaser.
Section 14. The Transfer Agent, in making the calculations provided for in
Section 13, shall rely on its record of available investment funds. The proper
number of Shares and fractional Shares shall then be issued daily and credited
by the Transfer Agent to the shareholder accounts. The Transfer Agent shall mail
to each Shareholder a confirmation of each purchase (if provided for under the
provisions of the Shareholder's account) no later than the next business day,
with copies to interested parties if requested. Such confirmations shall among
other details show the prior Share balance, the new Share balance, the dollar
value, the Shares for which Stock Certificates are outstanding (if any), the
amount invested and the price paid for the newly-purchased Shares.
The Transfer Agent shall provide the Fund with the total number of shares issued
by the Fund each day. In the case any issue of shares would result in
overissuance, the Transfer Agent shall notify the Fund.
REDEMPTIONS
Section 15. The Transfer Agent shall process all requests from Shareholders to
redeem Shares and determine the number of Shares required to be redeemed to make
monthly payments, automatic payments or the like and advise the Fund, on the
same business day that the request for redemption was received, of the total
number of Shares and fractional Shares (rounded to three decimal places) to be
redeemed. Notwithstanding the foregoing, if a redemption request is for a dollar
value of Shares in excess of the dollar value of Shares in the specified account
or is not in accordance with the requirements of the Prospectus and/or SAI, the
Transfer Agent shall not effect such redemption in whole or in part, and shall
immediately advise both the Fund and the Shareholder of such discrepancy. The
Fund or its designated agent shall then quote to the Transfer Agent the
applicable net asset value; whereupon the Transfer Agent shall furnish the Fund
with an appropriate confirmation of the redemption and process the redemption,
at the net asset value per share next computed after receipt of the order for
redemption, by filing with the Custodian an appropriate statement and making the
proper distribution and application of the redemption proceeds in accordance
with the Fund's Prospectus or SAI. The stock registry books recording
outstanding Shares and the individual account of the Shareholder shall be
properly debited. If provided for under the provisions of the shareholder's
account, the Transfer Agent shall mail to each Shareholder a confirmation of
each redemption no later than the next business day, with copies to interested
persons if requested. Such confirmation shall among other details show the prior
Share balance, the new Share balance and total dollar value thereof, the Shares
for which stock certificates are outstanding (if any), the amount redeemed and
the price received for the redeemed Shares.
Section 16. The proceeds of redemption shall be remitted by the Transfer Agent,
in each case by draft or other instrument drawn against funds held by the Fund
in the Custodian Bank, in accordance with the Fund's then currently effective
Prospectus or SAI as follows:
a. By check drawn to the order of and mailed to the Shareholder at the
address of record not later than the third business day after the
redemption request is received.
b. By wire to a designated bank or broker upon telephone request, without
signature guarantee, if such redemption procedure has been elected by the
Shareholder.
c. In accordance with the order of the Shareholder in the case of redemptions by
check or use of a debit card.
d. To a person other than the Shareholder or to an address other than the
Shareholder's registered address only if instructions are received in
writing with signature guaranteed. Planholders transfering to another Plan
custodian do not require written signature guarantees but do require the
written acceptance of the new custodian.
e. By other procedures commonly followed by mutual funds and mutually agreed
upon by the Fund and the Transfer Agent.
Any change in the designated bank or brokerage account or registered address
will be accepted by the Transfer Agent only if made in writing by the
Shareholder, with signature guaranteed, unless a different procedure is agreed
to in writing by the Fund and the Transfer Agent.
If required by the Fund's then current Prospectus or SAI, the request and stock
certificates, if any, for Shares being redeemed, must have the owner's signature
guaranteed by a domestic commercial bank or trust company or a member firm of a
national securities exchange or the NASD. If Share Certificates have not been
issued to the redeeming Shareholder, the signature of the Shareholder on the
redemption request must be similarly guaranteed. If the Fund authorizes the
Transfer Agent by Written Instructions to waive the signature guarantee in
certain instances, the Fund hereby provides the Transfer Agent, its successors
and assigns, the same protections the Transfer Agent would normally receive from
a signature guarantee requirement.
The Transfer Agent shall retain all cancelled certificates for redemption or
transfer for a period of three years, during which time it shall be able to
produce said certificates upon appropriate notice from the Fund.
For the purposes of redemption of Shares which have been purchased by check
within 15 business days of a receipt of the redemption request for such shares,
the Fund shall provide the Transfer Agent, from time to time, with Written
Instructions concerning the time within which such requests may be honored. The
Transfer Agent has no responsibility to determine if any investment payment will
be reversed for any reason and is not responsible in any way for the failure of
any investment to be collected.
The authority of the Transfer Agent to perform its responsibilities under
Section 15 and 16 shall be suspended upon the Transfer Agent's receipt of
notification of the suspension of the determination of the Fund's net asset
value.
DIVIDENDS
Section 17. Upon the declaration of each dividend and each capital gains
distribution by the Board of Directors of the Fund, the Fund shall notify the
Transfer Agent by Written Instructions of the date of such declaration, the
amount payable per share, the sources from which such dividend or distribution
is made, and, unless such dividend is a regular daily or monthly dividend
payable by a money market or other fund, the record date for determining the
Shareholders entitled to payment. The ex-date and payment date shall always be
the next determination of net asset value after the record date. The Transfer
Agent shall withhold such sums as may be required to be withheld under
applicable income tax laws, rules and regulations.
Section 18. Upon the payment date of a dividend or distribution declared by the
Fund's Board of Directors, the Fund will cause the Custodian Bank to transfer to
the disbursement account maintained by the Custodian in the name of the Fund the
total amount of such dividends or distributions payable in cash to those
Shareholders electing to receive such dividends or distributions in cash. On
payment date, the Transfer Agent shall prepare a check in the appropriate amount
and mail it not later than the third business day after the payment date to such
Shareholder at his address of record or to such other address as the Shareholder
may have designated.
With regard to Shareholders not electing to receive such dividends or
distributions in cash, the Transfer Agent will automatically reinvest all
dividends and other such distributions in additional shares at the net asset
value per share on payment date. When provided by the provisions of the
Shareholder's account, the Transfer Agent will promptly mail to each shareholder
at his address of record or such other address as the Shareholder may have
designated a statement showing the number of full and fractional shares (rounded
to three decimal places) currently owned by the Shareholder and the net asset
value of the shares so credited to the Shareholder's account.
The Transfer Agent's dividend statement meets the requirements of the Act and
Rule l9a-1 thereunder for notification as to the source(s) of dividend
payment(s). Where further notification detail is required, the Transfer Agent
shall prepare and distribute the information necessary as directed by the Fund.
GENERAL PROVISIONS
Section 19. The Transfer Agent shall provide to the Fund's investors equity fund
account confirmations with each transaction, money fund account confirmations
with each transaction or monthly (as desired by the investor), investor choice
of monthly transfer agency consolidated statements or monthly brokerage
consolidated statements, as well as all services available now or in the future
to the shareowners of mutual funds serviced by the Transfer Agent, on the same
terms and conditions. The Transfer Agent shall provide account confirmation
statements as at December 31 of each year which include a listing of all
transactions in the account during the calendar year then ended, plus income tax
reporting information.
The Transfer Agent will not use its position to solicit business from the
shareholders of the Fund.
Section 20. The Transfer Agent shall report daily the sales and redemptions in
each state in a manner suitable for state "blue-sky" reporting by the Fund. The
Transfer Agent has no further responsibility as to controlling sales of Fund
Shares or maintaining the various registrations required under state "blue sky"
laws and regulations. If the Fund notifies the Transfer Agent, the Transfer
Agent will stop Shares from being sold in all states where the Fund's
registration is not current. Maintaining current registration information
on-line is the responsibility of the Fund.
Section 21 The Transfer Agent shall maintain records (which may be part of the
stock transfer records) in connection with the issuance and redemption of Shares
and the administration of the Plans and dividend reinvestments, in which will be
noted the transactions effected for each Shareholder and the number of Shares
and fractional Shares (rounded to three decimal places) owned by each for which
no Share Certificates are outstanding. The Transfer Agent shall create and
maintain all necessary records in accordance with good custodial practice,
including, but not limited, to records required by Section 31(a) of the Act and
Section 17(A) of the Securities and Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder. The Transfer Agent agrees to make
available upon request and to preserve for the periods prescribed in Section
31(a) under the Act and Section 17(A) of the Securities and Exchange Act of
1934, as amended, and the rules and regulations thereunder, any records relating
to services provided under this Agreement or maintained by it on behalf of the
Fund. All such records shall be the property of the Fund.
The Transfer Agent shall also maintain the following records for each
Shareholder's account: name, address, and tax identification number; number of
Shares held and specific form of holding, including numbers and denominations of
certificates, if any; historical information regarding the account of each
Shareholder, including dividends paid, distributions made and date and price for
all transactions in a Shareholder's account; any stop or restraining order
placed against a Shareholder's account; any dividend reinvestment order,
dividend address and correspondence relating to the maintenance of a
Shareholder's account; all tax and withholding information relating to a
Shareholder's account; information with respect to withholding on foreign
accounts.
The Transfer Agent shall maintain records for all accounts opened by entities
assigned an institution number ("institution") so that where required the
aggregate average daily value of all of an institution's accounts can be
determined and a record of such values maintained, and so that duplicate
statements for the accounts can be prepared and sent to each institution.
The Transfer Agent represents and warrants that the various procedures and
systems which it has implemented with regard to safeguarding from loss and
damage attributable to fire, theft, or any other cause of the Fund's blank
checks, blank share certificates, records and other data and the Transfer
Agent's records, data, equipment, facilities, and other property used in the
performance of its obligations hereunder are adequate and that it will make such
changes therein from time to time as are required for the secure performance of
its obligations hereunder.
Section 22 The Transfer Agent shall maintain such records as shall enable the
Fund to fulfil in a timely fashion the filing requirements of Form N-SAR or of
any successor monthly, quarterly or annual report required by the Act or rules
and regulations thereunder to be filed by the Fund. All such records shall be
the property of the Fund.
Section 23 The Transfer Agent shall cooperate with the Fund's independent public
accountants and shall take all reasonable action in the performance of its
obligations under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their opinion,
including but not limited to the opinion included in the Fund's annual or
semi-annual reports on Form N-SAR, or of any successor annual report required by
the Act or rules thereunder to be filed by the Fund.
Section 24. In addition to the services as Transfer Agent and Administrator as
above set forth, the Transfer Agent will perform other services for the Fund as
agreed from time to time, including but not limited to, preparation of filing
with the Internal Revenue Service and mailing to Shareholders such Federal Tax
Information Forms as are required to be so prepared, filed and mailed by
applicable laws, rules and regulations, mailing periodic reports of the Fund,
preparation of Shareholder lists as necessary, and mailing initial notices of
Shareholders' meetings, proxies and proxy statements.
The Transfer Agent shall answer telephone calls and correspondence from
Shareholders relating to their share accounts. The Transfer Agent shall respond
to all inquiries from Shareholders relating to the administration of their
accounts within one (l) business day with respect to answers delivered by
telephone and within three (3) business days with respect to answers delivered
in writing. Copies of all correspondence from Shareholders involving complaints
about the management of the Fund, the services provided by or for the Fund, the
Transfer Agent or others, or concerning complaints relating to the Fund shall be
sent immediately to the Fund. Summaries of any similar matters conveyed by a
Shareholder by telephone shall be prepared by the Transfer Agent and sent to the
Fund within three (3) business days.
Telephone calls and correspondence on other matters will be referred to the
Fund.
The Transfer Agent shall keep records of Shareholder substantive telephone calls
and correspondence and replies thereto, and of the lapse of time between receipt
of such substantive telephone calls and correspondence and the making of
replies.
Section 25. Nothing contained in this Agreement is intended to or shall require
the Transfer Agent in any capacity hereunder to perform any functions or duties
on any day identified in the Prospectus and/or SAI on which the Fund is closed.
Functions or duties normally scheduled to be performed on such days shall be
performed on, and as of, the next business day on which the Transfer Agent is
open, except when the Transfer Agent is closed to observe a legal emergency when
the Fund is open and the Fund has received purchases or redemption requests,
such purchases and redemptions shall be priced and executed "as of" such date on
the business day next following such day.
Section 26. Pursuant to the terms of the Advisory Agreement, the Transfer Agent
shall receive no additional compensation for its services hereunder; provided,
however, that the Fund shall reimburse the Transfer Agent for expenses such as
costs of forms, statements, envelopes, postage, shipping, telephone, and
statement microfiche copies. Telephone costs will be passed to the Fund at cost.
All such payments and reimbursements shall be charged to and paid by the Fund on
a monthly basis. It is understood that the Fund may, in the future, undertake to
perform certain of the services herein contemplated to be performed by the
Transfer Agent, such as maintaining the facility for Shareholders to make
telephone purchases, redemptions and transfers of Shares. To the extent, if any,
the Fund undertakes such duties, the Transfer Agent shall be relieved of such
obligation.
Section 27. The Transfer Agent in acting for Planholders, or in any other
capacity set forth in this Agreement, shall not be personally liable for any
taxes, assessments, or governmental charges which may be levied or assessed on
any basis whatsoever in connection with the administration of the Plans,
excepting only for taxes assessed against the Transfer Agent in its corporate
capacity arising out of its compensation hereunder.
Section 28. Neither the Transfer Agent, nor any of its directors, officers,
stockholders, agents or employees shall have any liability hereunder for any
error of judgment, mistake of law or any loss arising out of any error of
judgment, mistake of law or any act or omission in the performance of its duties
hereunder, except for those resulting from willful misfeasance, bad faith or
gross negligence on the part of the Transfer Agent in the performance of its
duties or from reckless disregard of its duties hereunder. The Fund shall
indemnify the Transfer Agent and hold it harmless from any and against any and
all actions, suits and claims, whether groundless or otherwise, arising directly
or indirectly out of or in connection with its performance under this Agreement
including but not limited to its performance as Transfer Agent and Administrator
of Plans and from and against any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liabilities incurred by the Transfer Agent
in connection with any such action, suit, or claim, except such as shall result
from its own grossly negligent act, omission or willful misconduct or that of
its officers, agents or employees. The Fund shall not be required to indemnify
the Transfer Agent against any expenses or liabilities arising out of a default
judgment, a confession of judgment or a settlement entered into without the
prior written consent of the Fund. The Transfer Agent shall not be under any
obligation to prosecute or to defend any action, suit or claim arising out of or
in connection with its performance under this Agreement as Transfer Agent and
Administrator of Plans, which, in the opinion of its counsel, may involve it in
expense or liability. At its option the Fund may and upon request of the
Transfer Agent the Fund shall assume the entire defense of any action, suit, or
claim subject to the foregoing indemnity. The Transfer Agent shall give the Fund
notice, and reasonable opportunity to defend, any such action, suit, or claim,
in the name of the Fund or the Transfer Agent or both. In the event the Fund
assumes the defense, the Transfer Agent shall be responsible for its own legal
fees and expenses from the date the Fund so assumes the defense, except for such
fees and expenses incurred at the request of the Fund. The Fund and the Transfer
Agent shall cooperate fully in the defense of any action, suit or claim.
The Transfer Agent at its expense will make corrections and adjustments as may
be required, where the Transfer Agent, its officers, agents, employees or
delegates are the cause of any error made in rendering the services described in
this agreement, without limitation.
Without limitation of the foregoing:
(a) The Transfer Agent may rely upon and shall not be liable to the Fund
for the advice of the Fund, counsel (who may be counsel for the Fund or
counsel for the Transfer Agent) and upon statements of accountants, brokers
and other persons believed by it in good faith to be expert in the matters
about which they are consulted and for any actions taken in good faith upon
such statements.
(b) The Transfer Agent shall not be liable for any action reasonably taken
in good faith reliance upon any Written Instructions or certified copy of
any resolution of the Board of Directors of the Fund, provided, however,
that upon receipt of a Written Instruction countermanding a prior
Instruction which has been fully executed by the Transfer Agent, the
Transfer Agent shall attempt to honor to the extent then possible, such
later Instructions and rely upon the genuineness of any such document or
correspondence reasonably believed in good faith to have been validly
executed.
(c) The Transfer Agent may rely and shall be protected in acting upon any
signature, instruction, request, letter of transmittal, certificate,
opinion of counsel, statement, instrument, report, notice, consent, order,
or other paper or document reasonably believed by it to be genuine and to
have been signed or presented by the Shareholder, Fund or other proper
party or parties.
Section 29. The Fund shall promptly cause to be turned over to the Transfer
Agent (i) an accurate list of Shareholders of the Fund showing the proper
registered address and number of Shares owned and whether such shares are
represented by outstanding Share Certificates or by non-certificated share
accounts, (ii) all records relating to Plans, including original applications
signed by the Planholders and original plan accounts recording payments,
contributions, deductions, reinvestments, withdrawals and liquidations, and
(iii) all shareholder records, files, and other materials necessary or
appropriate for proper performance of the functions assumed by the Transfer
Agent under this Agreement (hereinafter called "Materials"). The Fund agrees to
indemnify and hold the Transfer Agent, its successors and assigns, harmless of
and from any and all expenses, damages, claims, suits, liabilities, actions,
demand and losses of third parties arising out of or in connection with any
error, omission, inaccuracy or other deficiency of such Materials, or out of the
failure of the Fund to provide any portion of such Materials or to provide any
information needed by the Transfer Agent to perform knowledgeably its functions.
The Fund agrees to pay reasonable compensation to the Transfer Agent to cover
the Transfer Agent's expenses in correcting any such error, omission, inaccuracy
or other deficiency of the Materials.
Section 30. The Transfer Agent shall at all times act in good faith and shall
use its best efforts to insure the accuracy of all services performed under this
Agreement and shall be liable for and shall indemnify and hold the Fund harmless
from and against any and all actions, suits and claims, whether groundless or
otherwise, and from and against any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liabilities incurred by the Fund, in
connection with any such action, suit or claim arising directly or indirectly
out of or in connection with errors caused by the Transfer Agent's gross
negligence, bad faith or willful misconduct or that of its agents or employees.
The Transfer Agent shall not be required to indemnify the Fund against any
expenses or liabilities arising out of a default judgment, a confession of
judgment or a settlement entered into without the prior written consent of the
Transfer Agent. The Fund shall not be under any obligation to prosecute or
defend any action, suit or claim arising directly or indirectly out of or in
connection with errors caused by the Transfer Agent's gross negligence, bad
faith or willful misconduct or that of its employees or agents which, in the
opinion of its counsel, may involve it in expense or liability. The Transfer
Agent may at its option and, upon request of the Fund the Transfer Agent shall,
assume the entire defense of any action, suit or claim subject to the foregoing
indemnity. The Fund shall give the Transfer Agent notice of, and reasonable
opportunity to defend, any such action, suit or claim in the name of the Fund or
the Transfer Agent or both. In the event the Transfer Agent assumes the defense,
the Fund shall be responsible for its own legal fees and expenses from the date
the Fund so assumes the defense, except for such fees and expenses which are
incurred at the request of the Transfer Agent. The Transfer Agent and the Fund
agree to cooperate fully in the defense of any such action, suit or claim.
Section 31 The Transfer Agent acknowledges and agrees that all books and records
maintained for the Fund in any capacity under this Agreement are the property of
the Fund and may be inspected by the Fund at any reasonable time.
The Transfer Agent agrees to regard and preserve as confidential all records and
other information relative to the Fund, and will not without written authority
of the Fund disclose to others, during the term of this Agreement or thereafter,
any such records or other information.
In the event of termination of this Agreement for any reason, the Transfer Agent
agrees to provide the Fund with complete and accurate records and to assist the
Fund in the orderly transfer of accounts and records. Without limiting the
generality of the foregoing, the Transfer Agent agrees upon termination of this
Agreement:
(a) to deliver to the Fund computer tapes containing the Fund's accounts
and records in machine readable form together with such record layouts and
additional information as may be necessary to enable the Fund to utilize
the information therein;
(b) to cooperate with the Fund and any successor transfer agent in the
interpretation of the Fund's accounts and records; and
(c) to reimburse the Fund its reasonable costs arising out of any error,
omission, inaccuracy or other deficiency in the Fund's accounts and records
which occurred during the term of this Agreement which arise from the
negligence or other error of the Transfer Agent as long as claim for such
reimbursement is made within 90 days of termination.
Section 32. The Transfer Agent shall maintain a standard Stockbroker's Blanket
bond on all its employees, providing fidelity insurance as required by rules of
the National Association of Securities Dealers. All employees at the time of
employment will have fingerprints made and checked by the FBI under procedures
established as standard for stockbrokerage employees by the NASD, as well as for
transfer agency employees by the SEC.
Section 33. The practices and procedures of the Transfer Agent and the Fund set
forth in the Agreement, or any other terms or conditions of this Agreement, may
be altered or modified from time to time as may be mutually agreed by the
parties to this Agreement. In special cases the parties hereto may adopt in
writing such procedures as may be appropriate or practical under the
circumstances, and the Transfer Agent may conclusively rely on the determination
of the Fund that any special procedure which has been approved by the Fund does
not conflict with or violate any requirements of its Articles of Incorporation,
By-Laws or Prospectus, or any rule, regulation or requirement of any regulatory
body.
Section 34. The Fund shall file with the Transfer Agent a certified copy of each
resolution of its Board of Directors authorizing the execution of Written
Instructions or the transmittal of Oral Instructions, as provided in the
Custodian Agreement.
The following additional terms, for purposes of this Agreement or any amendment
or supplement thereto, shall have the meanings herein specified unless the
context otherwise requires:
Plan:The term Plan shall include such investment plan, dividends or capital
gains reinvestment plans, systematic withdrawal plans or other types of
plans set forth in the then currently effective prospectus of the Fund,
including any qualified retirement plan which is a Shareholder of the Fund,
in form acceptable to the Transfer Agent, which the Fund may from time to
time adopt and make available to its Shareholders, including plans or
accounts by individuals or corporations. All Planholders are Shareholders,
who use a specific plan or service not used by all Shareholders as a whole.
Administrator: The term Administrator of a Plan means the Transfer Agent solely
in its capacity as agent for the performance of those retirement plan tasks
which can be performed on a group or mass basis by the Transfer Agent's
systems. It does not include certain corporate retirement plan tasks that
are often performed on an individual basis, such as preparing Summary Plan
Descriptions and/or preparing IRS Form 5500.
Section 35. This Agreement may be amended from time to time by a supplemental
agreement executed by the Fund and the Transfer Agent.
Section 36 Either the Fund or the Transfer Agent may give 60 days' written
notice to the other of the termination of this Agreement, such termination to
take effect at the time specified in the notice; provided, however, the
obligations set forth in Sections 28, 30, 31, 38 and 39 and, for the fiscal year
of the Fund in which termination occurs, Sections 22 and 23, shall survive such
termination, unless satisfied.
Section 37. Any notice or other communication required by or permitted to be
given in connection with this Agreement shall be in writing, and shall be
delivered in person or sent by first class mail, postage prepaid, to the
respective parties as follows:
If to the Fund:
Sextant International Fund
Attn: Secretary
1300 N. State Streeet
Bellingham WA 98225
If to the Transfer Agent:
Saturna Capital Corporation
PO Box 2838
Bellingham, Washington 98227-2838
Section 38 The Transfer Agent and the Fund each represent and warrant to the
other as to itself that all actions required by their respective directors or
shareholders has been taken to authorize the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby; the
execution and delivery of this Agreement and consummation of the transactions
contemplated hereby do not contravene any provision of their respective charter
or by-laws or of any laws, regulations or orders of any government or agency
thereof to which it is subject; do not constitute the violation or breach of any
agreement or understanding to which it is a party or by which it is bound; and
upon its execution and delivery, this Agreement shall be binding and enforceable
against it in accordance with its terms.
Section 39. The Transfer Agent may from time to time, with the written consent
of the Fund, delegate some or all of its duties hereunder to others, who shall
perform such functions as the agent of the Transfer Agent. To the extent of such
delegation, the term "the Transfer Agent" in this Agreement shall be deemed to
refer to both the Transfer Agent and to its designee or to either of them, as
the context may indicate. In each provision of this Agreement fixing or limiting
the liabilities or the delegations of the Transfer Agent, or providing for the
liability indemnification or protection of the Transfer Agent, the term "the
Transfer Agent" shall include the Transfer Agent's designee. The Transfer Agent
shall not be relieved of any liabilities or obligation under the Agreement in
connection with such delegation of duties, shall be responsible to supervise and
assure that any such designee properly performs the duties delegated to it, and
shall be responsible for the performance of the designee as though the Transfer
Agent had, itself, performed the duties so delegated.
Section 40. This Agreement may be executed in two or more counterparts, each of
which when so executed shall be deemed to be an original, but such counterparts
shall together constitute but one and the same instrument.
Section 41. This Agreement shall extend to and shall be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by the Fund without the written consent of the
Transfer Agent or by the Transfer Agent without the written consent of the Fund,
authorized or approved by a resolution of its Board of Directors.
Section 42 This Agreement constitutes the full and complete agreement of the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements or understandings between the parties.
Section 43 Whenever pronouns are used herein, they shall be interpreted in the
neuter, masculine, feminine, singular or plural as the context may require.
Section 44. Except where specific time limits are herein provided, no delay on
the part of any party hereto in exercising any power or right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
power or right hereunder preclude other or further exercise thereof or the
exercise of any other power or right. No waiver shall be enforceable against any
party hereto unless in writing, signed by the party against whom such waiver is
claimed, and shall be limited solely to the one event.
Section 45. This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of Washington, without giving effect to the
principles of conflicts of law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their respective duly authorized officers and their corporate seals hereunto
duly affixed and attested, as of the day and year first above written.
SATURNA INVESTMENT TRUST
By_______________________ Attest______________________
SATURNA CAPITAL CORPORATION
By_________________________ Attest_______________________
<PAGE>
Basic Services
*Opening new accounts. *Processing all payments. *Issuing and canceling
certificates. *Processing partial and complete redemptions. *Regular and legal
transfers of accounts. *Mailing shareholder reports. *Processing dividends and
distributions, including withholding obligations. *Postage, except that for
statements and all shareholder communications. *Paper used to render reports to
the Fund. The cost of shareholder forms, envelopes, etc. will be billed to the
Fund at the Transfer Agent's cost. *Confirmation of all transactions as provided
by the terms of each shareholder's account. *Retirement account reporting.
Account Maintenance 1. Maintaining shareholder records of certificates and whole
and fractional unissued shares. 2. Changing shareholders' addresses. 3. Daily
reports on numbers of shares, accounts. 4. Addressing and tabulating annual
proxy cards. 5. Supplying stockholder lists as necessary. 6. Preparation of
shareholder Federal Tax Information Forms, including those required of a
Retirement Plan Custodian. 7. Replying to shareholder telephone calls and
correspondence other than that for Fund performance, Fund information, or Fund
related inquiries.
INVESTMENT ADVISORY
and ADMINISTRATIVE SERVICES AGREEMENT
for the
SEXTANT GROWTH FUND
of the
SATURNA INVESTMENT TRUST
THIS AGREEMENT, executed this ___th day of , 1995, between Saturna Capital
Corporation, a Washington State corporation (the "Adviser") and the Saturna
Investment Trust, a series open--end management investment company organized as
a business trust under the laws of the State of Washington and presently having
a portfolio named the Sextant Growth Fund, (the "Fund") to be and become
effective as provided in Section 1, Article V, between the parties hereto,
WITNESSETH, THAT:
The parties hereto enter into the following Articles of Agreement:
ARTICLE I: INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES
Section 1. Investment Advisory Services. During the continuance of this
Agreement, the Adviser shall supervise the investment management of the cash and
securities of the Fund, and in that connection, to the extent required, shall
furnish to the Fund advice and recommendations on securities to be purchased,
held or sold and the portion of the assets to remain uninvested, all according
to the investment objectives, powers and restrictions imposed by law or other
governing document or writing binding upon the Fund.
Section 2. Administrative Services. During the continuance of this Agreement:
(a) The Adviser shall furnish the Fund office space, office facilities and
equipment, related utilities, telephone service, stationery and supplies,
typesetting, personnel (including executive officers) and clerical and
bookkeeping services as required to fulfill its obligation as Adviser for the
Fund. The Adviser shall pay the compensation of its executives and employees,
whether an officer or employee of the Fund, for all services rendered by them
for the Fund as required to fulfill its obligation as Adviser, and shall furnish
such office space, facilities, supplies and services as agreed above. The
Adviser shall also pay on behalf of the Fund trade association membership and
meeting expenses, and the preparation, printing, qualification and offering (but
not administration on behalf of a participant or participating entity) of any
prototype retirement plan offered by the Fund to shareholders on the
recommendation of the Adviser.
(b) The Adviser shall act as fund accountant, and prepare daily reports of
Fund net asset values as well as all other financial statements and
reports. With the consent of the Trustees, the Adviser at its expense
may delegate fund accounting duties to another qualified party. The
Fund accountant shall furnish the Trustees, at any regularly scheduled
meeting or at such times as the Trustees may request, a report on all
matters pertaining to the services of the Adviser, including but not
limited to, a list of the securities in the Fund and a record of
brokerage commissions paid.
(c). The Adviser shall act as transfer agent, registrar and dividend
disbursing agent for the Fund, pursuant to a form of Transfer Agency
Agreement attached hereto as Exhibit A, and made a part hereof.
Section 3. Affiliated Broker. Subject to review by the Trustees, the Adviser
shall place all orders for the purchase and sale of securities of the Fund. The
Adviser or a subsidiary of the Adviser is permitted to act as a broker (but not
a dealer or underwriter) in securities traded by the Fund, subject to review by
the Trustees and all pertinent regulations and limitations. No such orders shall
be placed in contravention of the Investment Company Act of 1940.
Section 4. Fund Expenses. The Fund shall pay or provide for the payment of its
expenses not assumed by the Adviser as above provided, which expenses shall
include, without limitation, taxes, interest, brokerage commissions,
compensation and expenses of Trustees, legal and auditing expenses, insurance
premiums, custodian fees, the expense of issuing Fund shares under the federal
securities laws and the regulatory authorities of the various states in which
the Fund is authorized to offer its shares, and the expense of preparing,
printing and mailing financial reports, investment newsletters, notices and
prospectuses for its existing shareholders.
ARTICLE III: FEES FOR SERVICES OF THE ADVISER
Section 1. Investment Advisory and Administrative Services Fee. As full
compensation for all services rendered and to be rendered and expenses assumed
by the Adviser as set forth in Article II "Investment Advisory and
Administrative Services" hereof, the Fund shall pay to the Adviser a monthly
Investment Advisory and Administrative Services Fee (the "Base Fee") at the
annual rate of 0.60% of average daily net assets of the Fund. Average daily net
asset value in a period shall be determined by dividing the aggregate of the
Fund's net assets on each calendar day by the number of calendar days in the
period.
Section 2. Performance Adjustment. The Base Fee shall be subject to a maximum
increase or decrease at the annual rate of 0.30% of the Fund's average daily net
assets, according to the relative total return investment performance of the
Fund (the "Performance Adjustment"). The Performance Adjustment shall be
computed as follows:
a) Following the end of each month the net investment return
realized by shareowners in the Fund for the entire just-ended
twelve month period (that is, the change in Net Asset Value
per share adjusted for dividends and other distributions, or
"Total Return") of the Fund for the twelve month period ending
that month ("Calculation Year") shall be calculated to the
nearest one hundredth of one percent as set forth in the
Fund's Registration Statement on Form N-1A.
b) The Fund's Total Return for the Calculation Year shall be
compared to the average total return of all Growth Objective
mutual funds, as selected, calculated and reported by
Morningstar Inc. (or, if this index is unavailable or becomes
inappropriate for this measurement for any reason in the
opinion of the Fund's Board, then another index as shall be
chosen by the Fund's Board) (the "Benchmark").
c) If the Fund's Total Return outperforms or underperforms the
Benchmark's Total Return (rounded to the nearest tenth of one
percent [0.1%]) for the Calculation Year by 1% or more but
less than 2%, then the Base Fee for the month just completed
shall be increased or decreased by 0.10% (annual rate) of
average Calculation Year daily net assets, and the
performance-adjusted total Fee for the month shall be at the
annual rate of either 0.70% or 0.50% of average net assets.
d) If the Fund's Total Return outperforms or underperforms the
Benchmark's Total Return (rounded to the nearest tenth of one
percent [0.1%]) for the Calculation Year by 2% or more but
less than 4%, then the Base Fee for the month just completed
shall be increased or decreased by 0.20% (annual rate) of
average Calculation Year daily net assets, and the
performance-adjusted total Fee for the month shall be at the
annual rate of either 0.80% or 0.40% of average net assets.
e) If the Fund's Total Return outperforms or underperforms the
Benchmark's Total Return (rounded to the nearest tenth of one
percent [0.1%]) for the Calculation Year by more than 4% or
more, then the Base Fee for the month just completed shall be
increased or decreased by 0.30% (annual rate) of average
Calculation Year daily net assets, and the
performance-adjusted total Fee for the month shall be at the
annual rate of either 0.90% or 0.30% of average net assets.
f) No Performance Adjustment shall be made until the Fund acquires twelve full
months of operating history.
The Fund shall accrue daily to pay its Investment Advisory and Administrative
Services Fee fee at the Base Fee annual rate of 0.60%. The net Fee (Base Fee
plus or minus the Performance Adjustment) due to the Adviser for a calendar
month shall be paid when practicable after these calculations. Due to the
relatively small size of monthly-computed Performance Adjustments, no accrual
shall be required.
Section 3. Reimbursement and Waiver. The Adviser may, from time to time,
voluntarily waive its fees or reimburse the Fund for expenses above a specified
percentage of average daily net assets. The Adviser retains the ability to be
repaid by the Fund for voluntary expense reimbursements if Fund expenses fall
below the limit before the end of the Fund's fiscal year. If any fee waiver or
reimbursement is to be made, it shall be paid monthly and may vary by Fund of
the Trust.
Section 4. Termination. In the event of the termination of this Agreement the
fee for the month in which terminated shall be that proportion of the rate for
the whole month as the number of calendar days during which this Agreement is in
effect during the month bears to the number of days in the whole month computed
on the average daily net asset value of the portfolio during such period.
ARTICLE IV: DISTRIBUTION
Section 1. The Fund. The Fund shall offer shares without commission ("load") or
other sales expense. The Adviser's subsidiary, Investors National Corporation,
shall act as the Fund's distributor without compensation, and register where and
when appropriate. The Fund shall bear the expense of qualifying itself and any
necessary personnel to sell the Fund. As the expense to the Fund is deemed
warranted by the Trustees, the Adviser shall cause the Fund to be registered
under the various state "blue-sky" requirements.
Section 2. The Adviser. The Adviser or any subsidiary of the Adviser may engage
in any lawful activities designed to help Fund distribution, and pay for such
activities out of any part of its resources, including those fees described
under Article III. The Adviser shall pay any expenses for printing and
distributing extra prospectuses used in connection with sales and for preparing,
printing and distributing sales literature. The Adviser shall pay the salaries
of persons used in the distribution of the Fund, furnish office space and
facilities for such distribution activity, and pay for all other expenses
associated with distribution of the Fund.
ARTICLE V: TERM AND TERMINATION OF AGREEMENT
Section 1. Term of Agreement. This Agreement shall become effective when
approved by the holders of a majority of the outstanding shares of the Fund, and
shall continue in effect for a two year period unless sooner terminated as
hereinafter provided, and thereafter shall continue from year to year so long as
the terms of this Agreement and the renewal and continuance thereof are approved
at least annually by action of the Trustees or a majority vote of the
outstanding shares the Fund, but in either event it must be approved by a
majority of the Trustees, who are not "interested persons" as defined in the
Investment Company Act of 1940, casting their vote in person at a meeting called
for voting on such approval.
Section 2. Termination of Agreement. This Agreement may be terminated at any
time without liability to either party by notice in writing given by the party
desiring to terminate to the other not less than sixty (60) days before the date
specified, for termination. The Fund may take such action either by the Trustees
or by the affirmative vote of the holders of a majority of the outstanding
shares of the Fund.
Section 3. No Assignment. This Agreement may not be assigned by either party and
shall terminate automatically upon assignment (as defined in the federal
Investment Company Act of 1940).
Section 4. Amendment. This Agreement may be amended only with the approving vote
of the holders of a majority of the outstanding shares of the Fund. The vote of
a majority of the outstanding shares of the Fund means the vote, at any meeting
of the Fund's shareholders, of (1) 67% or more of the shares present or
represented by proxy, at such meeting, if the holders of more than 50% of the
outstanding shares are present or represented by proxy, or (2) more than 50% of
the outstanding shares, whichever is less.
Section 4. Use of Adviser's Name. The Adviser grants the Fund a non-exclusive,
terminable license and permission to use the name "Saturna" in its name during
the term of this Agreement.
ARTICLE VI. GENERAL
This instrument is executed by the Trustees and officers of Saturna Investment
Trust in such capacities for the Sextant Growth Fund portfolio of the Trust. By
the execution hereof all parties agree that, except to the extent limited by the
provisions of the federal Investment Company Act of 1940, for the payment of any
claim or the performance of any obligations hereunder, resort shall be had
solely to the assets and property of the Fund and no shareholder, Trustee,
officer, employee or agent of the Fund or the Trust shall be personally liable
therefore. Reference is made to Articles of Trust dated February 20, 1987, which
have been filed with the Washington Secretary of State, Olympia, Washington.
IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be executed on behalf of each
of them by their duly authorized officers the date and year first above written.
SATURNA INVESTMENT TRUST SATURNA CAPITAL CORPORATION By ________________________
By ________________________ Nicholas F. Kaiser, Pres. Nicholas Kaiser, Pres.
ATTEST: ------------------------ ------------------------- Secretary Secretary
<PAGE>
Transfer Agent Agreement
Page 1
Exhibit A
to
INVESTMENT ADVISORY
and ADMINISTRATIVE SERVICES AGREEMENT
for the
SEXTANT GROWTH FUND
of the
SATURNA INVESTMENT TRUST
TRANSFER AGENT AGREEMENT
THIS AGREEMENT, executed this ___th day of __________ 1995, between Saturna
Capital Corporation, a Washington State corporation (the "Adviser") and the
Saturna Investment Trust, a series open--end management investment company
organized as a business trust under the laws of the State of Washington (the
"Trust") and presently having a portfolio named the Sextant Growth Fund, (the
"Fund") is made pursuant to and in consideration of that certain Investment
Advisory and Administrative Services Agreement between the Adviser and the Trust
on behalf of the Fund, dated ______________, 1995 (the "Advisory Agreement").
WITNESSETH THAT:
WHEREAS, pursuant to the terms of the Advisory Agreement the Adviser has agreed
to act as Transfer, Redemption and Dividend Disbursing Agent for the Fund
and also has agreed to act for the Fund in other respects as hereinafter
stated; and
WHEREAS, the Fund will appoint a bank, or other qualified entity, acceptable to
the Adviser as primary Custodian of the securities, cash and other assets
of the Fund, hereinafter referred to as the Custodian Bank, and may with
the agreement of the Adviser appoint one or more subcustodians;
NOW, THEREFORE, in consideration of the promises and mutual covenants contained
herein, the parties hereto, intending to be legally bound, do hereby agree
as follows:
Section 1. The Fund hereby appoints the Adviser as its Transfer, Registrar,
Redemption Agent and Dividend Disbursing Agent (the "Transfer Agent") and the
Transfer Agent accepts such appointments and agrees to act in such capacities
upon the terms set forth in this Agreement.
The Transfer Agent agrees to comply with all relevant provisions of the
Investment Company Act of 1940 (the "Act"), the Internal Revenue Code, other
applicable laws and all applicable rules and regulations thereunder.
If the Fund is a series company for purposes of Rule 18f-2 under the Act, the
term "Fund" as used in this Agreement shall be deemed to refer to each such
series as a separate portfolio unless the context otherwise requires. In
performing its functions hereunder, the Transfer Agent shall in all cases comply
with the procedures and conditions set forth in the Fund's then current
Prospectus and Statement of Additional Information ("SAI"), as provided to the
Transfer Agent by the Fund. To the extent that the Prospectus and SAI cover
procedures and duties of the Transfer Agent, agreement as to such matters must
have been reached between the Transfer Agent and the Fund prior to the
effectiveness of the Prospectus.
Section 2. The Fund currently has no Share Certificates outstanding, and does
not intend for the issue of Share Certificates in the future. Should the Fund
wish to issue Certificates in the future, it can do so only with the consent of
the Transfer Agent. All language in this agreement relating to Share
Certificates, such as the following paragraph, will be of no effect until such
time as it is mutually agreed that Share Certificates shall be issued.
The Fund shall furnish to the Transfer Agent a sufficient supply of blank Share
Certificates and from time to time will renew such supply upon the request of
the Transfer Agent. Such blank Share Certificates shall be signed manually or by
facsimile signatures of officers of the Fund authorized by law or the by-laws of
the Fund to sign Share Certificates and, if required, shall bear the Fund's seal
or facsimile thereof.
Section 3. The Transfer Agent shall make original issues of Shares in accordance
with Sections 13 and 14 below and with the Fund's then currently effective
Prospectus upon being furnished with (i) a certified copy of a resolution of
Directors of the Fund authorizing such issue and (ii) necessary funds for the
payment of any original issue tax applicable to such additional Shares. If
requested, a copy of the opinion of counsel as to the validity of such
additional Shares shall be furnished to the Transfer Agent upon the Fund's
filing of its Rule 24f-2 Notice under the Act with the Securities and Exchange
Commission.
Section 4. Transfers of Shares shall be registered and, subject to the
provisions of Section 10, new Share Certificates issued by the Transfer Agent
upon surrender of outstanding Share Certificates, if any, (i) in form deemed by
the Transfer Agent to be properly endorsed for transfer, (ii) with all necessary
endorsers' signatures guaranteed by a member firm of a national securities
exchange, the NASD, or a commercial bank, except when the requirement of a
signature guarantee is waived in accordance with the Fund's then current
Prospectus or SAI or when otherwise authorized by the Fund pursuant to Written
Instructions (as defined in Section 34 below), accompanied by (iii) such
assurances as the Transfer Agent shall deem necessary or appropriate to evidence
the genuineness and effectiveness of each necessary endorsement, and (iv)
satisfactory evidence of compliance with all applicable laws relating to the
payment or collection of taxes. The Transfer Agent shall retain all shareholder
applications and shall compare the signature(s) on written redemption requests
with the signature on the shareholder applications as may be necessary in the
opinion of the Transfer Agent, provided that the Transfer Agent shall be liable
for any loss due to forgery or improper signature of any kind resulting from the
negligence of the Transfer Agent in making or failing to make such comparison.
The Transfer Agent shall take such reasonable measures as may be agreed upon
from time to time between the Fund and the Transfer Agent to enable the Fund to
identify proposed transfers which, if effected, appear likely to cause the Fund
to fall within the definitions of a personal holding company as defined in the
Internal Revenue Code and shall not make such transfer without the prior written
approval of the Fund and its counsel.
Section 5. When mail is used for delivery of Share Certificates the Transfer
Agent shall forward Share Certificates in "non-negotiable" form by first-class
mail, and Share Certificates in "negotiable" form by registered mail, return
receipt requested, all mail deliveries to be covered while in transit to the
addressee by insurance arranged for by the Transfer Agent.
Section 6. In registering transfers of Shares the Transfer Agent may rely upon
the Uniform Commercial Code or any other statutes which in the opinion of
counsel protect the Transfer Agent and the Fund in not requiring complete
documentation, (subject to compliance with procedures set forth in the Fund's
then current Prospectus and/or SAI), in registering transfer with inquiry into
adverse claims, in delaying registration for purposes of such inquiry, or in
refusing registration where in its judgment an adverse claim requires such
refusal.
Section 7. The Transfer Agent may issue new Share Certificates in place of Share
Certificates represented to have been lost, destroyed or stolen, upon receiving
indemnity satisfactory to the Transfer Agent and the Fund and may issue new
Share Certificates in exchange for, and upon surrender of, mutilated Share
Certificates.
Section 8. In case any officer of the Fund who shall have signed manually or
whose facsimile signature shall have been affixed to blank Share Certificates
shall die, resign or be removed prior to the issuance of such Share
Certificates, the Transfer Agent may issue or register such Share Certificates
as the Share Certificates of the Fund notwithstanding such death, resignation or
removal until otherwise directed by the Fund; and the Fund shall file promptly
with the Transfer Agent such approval, adoption or ratification as may be
required by law.
Section 9. The Transfer Agent will maintain mutual fund account records in
which, among other details, it will note the issuance, transfer and redemption
of Shares, whether certificated or not. Whenever a Shareholder deposits Shares
represented by Share Certificates in an account, the Transfer Agent upon receipt
of the Share Certificates registered in the name of the Shareholder (or if not
so registered, in proper form for transfer), shall cancel such Share
Certificates and make appropriate entries in its stock transfer records. The
Transfer Agent will keep account records, part of which shall be the stock
transfer records, in which it will note the names and registered addresses of
Shareholders and the number of Shares and fractions owned by them, whether or
not Share Certificates are outstanding.
Section 10. The Transfer Agent shall issue Share Certificates for Shares only
upon receipt of a written request from a Shareholder. In all other cases, the
Transfer Agent shall dispense with the issuance and countersignature of Share
Certificates whenever Shares are purchased. The Transfer Agent shall process
purchase and redemption transactions by making appropriate entires in the Fund's
account records.
Section 11. The Transfer Agent shall, in addition to the duties and functions
above-mentioned, perform the usual duties and functions of a stock Transfer
Agent for a corporation. It shall countersign for issuance Share Certificates
representing original issue treasury Shares as directed by the Written
Instructions of the Fund and shall transfer Share Certificates registered in the
name of Shareholders from one Shareholder to another in the usual manner. The
Transfer Agent may rely conclusively and act without further investigation upon
any list, instruction, certification, authorization, Share Certificate or other
instrument or paper reasonably believed by it in good faith to be genuine and
unaltered, and to have been signed, countersigned, or executed by duly
authorized person or persons, or upon the instructions of any duly authorized
officer of the Fund, or upon the advice of counsel for the Fund or for the
Transfer Agent. The Transfer Agent may record any transfer of Share Certificates
which is reasonably believed by it in good faith to have been duly authorized or
may refuse to record any transfer of Share Certificates if in good faith the
Transfer Agent deems such refusal necessary to avoid any liability on the part
of either the Fund or the Transfer Agent; provided, however, that the Transfer
Agent shall promptly notify the Fund of any such refusal to record any transfer
and shall act in accordance with the Fund's Written Instructions, if any. The
Fund agrees to indemnify and hold harmless the Transfer Agent from and against
any and all losses, costs, claims, and liability which it may suffer or incur by
reason of so relying or acting or refusing to act.
Section 12. In case of any request or demand for the inspection of the share
records of the Fund, the Transfer Agent shall endeavor to notify the Fund and to
secure instructions as to permitting or refusing such inspection. However, the
Transfer Agent may (after giving written notice to the Fund) exhibit such
records to any person in any case where it is advised by its counsel that it may
be held liable for failure so to do, unless indemnified against such liability
by the Fund.
ISSUANCE OF SHARES
Section 13. For the purposes of this Section, the Fund hereby instructs the
Transfer Agent to consider Shareholder payments as available for investment in
accordance with the policies and procedures set forth in the Fund's then current
Prospectus and SAI. Immediately after the time or times and on each day on which
the Fund's then Current Prospectus or SAI states that its net asset value per
share shall be determined, the Transfer Agent shall obtain from the Fund or its
designated agent a quotation of the net asset value per share determined as of
such time on such day. The Transfer Agent reserves the right to charge the Fund
its reasonable costs of making corrections to shareholder records if it is later
determined that the Fund supplied an inaccurate net asset value.
The Transfer Agent shall, on the same business day on which any order for the
purchase of Shares is received and utilizing the net asset value per share next
determined after the receipt of such order, determine the amount to be invested
and the number of Shares and fractional Shares (rounded to three decimal places)
to be purchased. The Transfer Agent shall thereupon as agent for the
Shareholders place a purchase order with the Fund for the proper number of
Shares and fractional Shares to be purchased and confirm such number to the Fund
in writing. The Transfer Agent shall total the amount available for investment
in Shares at the net asset value determined by the Fund or its designated agent
at each Fund pricing time.
The Transfer Agent shall pay over to the Custodian Bank the net asset value of
Shares and fractional Shares purchased immediately upon receipt of the
consideration therefor. In the event that any check or other order for the
payment of money is returned unpaid for any reason, the Transfer Agent shall
give prompt notification to the Fund of the non-payment of said check and take
such action as the Fund may authorize by Written Instructions.
Any profit on the liquidation of unpaid shares accrues to the Fund. In the event
of loss upon the liquidation of unpaid shares the Transfer Agent will charge the
purchaser's account for the amount of such loss. If the balance in such account
is insufficient to cover the loss the Transfer Agent will assist the Fund in the
Fund's efforts to recover any such losses from the purchaser.
Section 14. The Transfer Agent, in making the calculations provided for in
Section 13, shall rely on its record of available investment funds. The proper
number of Shares and fractional Shares shall then be issued daily and credited
by the Transfer Agent to the shareholder accounts. The Transfer Agent shall mail
to each Shareholder a confirmation of each purchase (if provided for under the
provisions of the Shareholder's account) no later than the next business day,
with copies to interested parties if requested. Such confirmations shall among
other details show the prior Share balance, the new Share balance, the dollar
value, the Shares for which Stock Certificates are outstanding (if any), the
amount invested and the price paid for the newly-purchased Shares.
The Transfer Agent shall provide the Fund with the total number of shares issued
by the Fund each day. In the case any issue of shares would result in
overissuance, the Transfer Agent shall notify the Fund.
REDEMPTIONS
Section 15. The Transfer Agent shall process all requests from Shareholders to
redeem Shares and determine the number of Shares required to be redeemed to make
monthly payments, automatic payments or the like and advise the Fund, on the
same business day that the request for redemption was received, of the total
number of Shares and fractional Shares (rounded to three decimal places) to be
redeemed. Notwithstanding the foregoing, if a redemption request is for a dollar
value of Shares in excess of the dollar value of Shares in the specified account
or is not in accordance with the requirements of the Prospectus and/or SAI, the
Transfer Agent shall not effect such redemption in whole or in part, and shall
immediately advise both the Fund and the Shareholder of such discrepancy. The
Fund or its designated agent shall then quote to the Transfer Agent the
applicable net asset value; whereupon the Transfer Agent shall furnish the Fund
with an appropriate confirmation of the redemption and process the redemption,
at the net asset value per share next computed after receipt of the order for
redemption, by filing with the Custodian an appropriate statement and making the
proper distribution and application of the redemption proceeds in accordance
with the Fund's Prospectus or SAI. The stock registry books recording
outstanding Shares and the individual account of the Shareholder shall be
properly debited. If provided for under the provisions of the shareholder's
account, the Transfer Agent shall mail to each Shareholder a confirmation of
each redemption no later than the next business day, with copies to interested
persons if requested. Such confirmation shall among other details show the prior
Share balance, the new Share balance and total dollar value thereof, the Shares
for which stock certificates are outstanding (if any), the amount redeemed and
the price received for the redeemed Shares.
Section 16. The proceeds of redemption shall be remitted by the Transfer Agent,
in each case by draft or other instrument drawn against funds held by the Fund
in the Custodian Bank, in accordance with the Fund's then currently effective
Prospectus or SAI as follows:
a. By check drawn to the order of and mailed to the Shareholder at the
address of record not later than the third business day after the
redemption request is received.
b. By wire to a designated bank or broker upon telephone request, without
signature guarantee, if such redemption procedure has been elected by the
Shareholder.
c. In accordance with the order of the Shareholder in the case of redemptions by
check or use of a debit card.
d. To a person other than the Shareholder or to an address other than the
Shareholder's registered address only if instructions are received in
writing with signature guaranteed. Planholders transfering to another Plan
custodian do not require written signature guarantees but do require the
written acceptance of the new custodian.
e. By other procedures commonly followed by mutual funds and mutually agreed
upon by the Fund and the Transfer Agent.
Any change in the designated bank or brokerage account or registered address
will be accepted by the Transfer Agent only if made in writing by the
Shareholder, with signature guaranteed, unless a different procedure is agreed
to in writing by the Fund and the Transfer Agent.
If required by the Fund's then current Prospectus or SAI, the request and stock
certificates, if any, for Shares being redeemed, must have the owner's signature
guaranteed by a domestic commercial bank or trust company or a member firm of a
national securities exchange or the NASD. If Share Certificates have not been
issued to the redeeming Shareholder, the signature of the Shareholder on the
redemption request must be similarly guaranteed. If the Fund authorizes the
Transfer Agent by Written Instructions to waive the signature guarantee in
certain instances, the Fund hereby provides the Transfer Agent, its successors
and assigns, the same protections the Transfer Agent would normally receive from
a signature guarantee requirement.
The Transfer Agent shall retain all cancelled certificates for redemption or
transfer for a period of three years, during which time it shall be able to
produce said certificates upon appropriate notice from the Fund.
For the purposes of redemption of Shares which have been purchased by check
within 15 business days of a receipt of the redemption request for such shares,
the Fund shall provide the Transfer Agent, from time to time, with Written
Instructions concerning the time within which such requests may be honored. The
Transfer Agent has no responsibility to determine if any investment payment will
be reversed for any reason and is not responsible in any way for the failure of
any investment to be collected.
The authority of the Transfer Agent to perform its responsibilities under
Section 15 and 16 shall be suspended upon the Transfer Agent's receipt of
notification of the suspension of the determination of the Fund's net asset
value.
DIVIDENDS
Section 17. Upon the declaration of each dividend and each capital gains
distribution by the Board of Directors of the Fund, the Fund shall notify the
Transfer Agent by Written Instructions of the date of such declaration, the
amount payable per share, the sources from which such dividend or distribution
is made, and, unless such dividend is a regular daily or monthly dividend
payable by a money market or other fund, the record date for determining the
Shareholders entitled to payment. The ex-date and payment date shall always be
the next determination of net asset value after the record date. The Transfer
Agent shall withhold such sums as may be required to be withheld under
applicable income tax laws, rules and regulations.
Section 18. Upon the payment date of a dividend or distribution declared by the
Fund's Board of Directors, the Fund will cause the Custodian Bank to transfer to
the disbursement account maintained by the Custodian in the name of the Fund the
total amount of such dividends or distributions payable in cash to those
Shareholders electing to receive such dividends or distributions in cash. On
payment date, the Transfer Agent shall prepare a check in the appropriate amount
and mail it not later than the third business day after the payment date to such
Shareholder at his address of record or to such other address as the Shareholder
may have designated.
With regard to Shareholders not electing to receive such dividends or
distributions in cash, the Transfer Agent will automatically reinvest all
dividends and other such distributions in additional shares at the net asset
value per share on payment date. When provided by the provisions of the
Shareholder's account, the Transfer Agent will promptly mail to each shareholder
at his address of record or such other address as the Shareholder may have
designated a statement showing the number of full and fractional shares (rounded
to three decimal places) currently owned by the Shareholder and the net asset
value of the shares so credited to the Shareholder's account.
The Transfer Agent's dividend statement meets the requirements of the Act and
Rule l9a-1 thereunder for notification as to the source(s) of dividend
payment(s). Where further notification detail is required, the Transfer Agent
shall prepare and distribute the information necessary as directed by the Fund.
GENERAL PROVISIONS
Section 19. The Transfer Agent shall provide to the Fund's investors equity fund
account confirmations with each transaction, money fund account confirmations
with each transaction or monthly (as desired by the investor), investor choice
of monthly transfer agency consolidated statements or monthly brokerage
consolidated statements, as well as all services available now or in the future
to the shareowners of mutual funds serviced by the Transfer Agent, on the same
terms and conditions. The Transfer Agent shall provide account confirmation
statements as at December 31 of each year which include a listing of all
transactions in the account during the calendar year then ended, plus income tax
reporting information.
The Transfer Agent will not use its position to solicit business from the
shareholders of the Fund.
Section 20. The Transfer Agent shall report daily the sales and redemptions in
each state in a manner suitable for state "blue-sky" reporting by the Fund. The
Transfer Agent has no further responsibility as to controlling sales of Fund
Shares or maintaining the various registrations required under state "blue sky"
laws and regulations. If the Fund notifies the Transfer Agent, the Transfer
Agent will stop Shares from being sold in all states where the Fund's
registration is not current. Maintaining current registration information
on-line is the responsibility of the Fund.
Section 21 The Transfer Agent shall maintain records (which may be part of the
stock transfer records) in connection with the issuance and redemption of Shares
and the administration of the Plans and dividend reinvestments, in which will be
noted the transactions effected for each Shareholder and the number of Shares
and fractional Shares (rounded to three decimal places) owned by each for which
no Share Certificates are outstanding. The Transfer Agent shall create and
maintain all necessary records in accordance with good custodial practice,
including, but not limited, to records required by Section 31(a) of the Act and
Section 17(A) of the Securities and Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder. The Transfer Agent agrees to make
available upon request and to preserve for the periods prescribed in Section
31(a) under the Act and Section 17(A) of the Securities and Exchange Act of
1934, as amended, and the rules and regulations thereunder, any records relating
to services provided under this Agreement or maintained by it on behalf of the
Fund. All such records shall be the property of the Fund.
The Transfer Agent shall also maintain the following records for each
Shareholder's account: name, address, and tax identification number; number of
Shares held and specific form of holding, including numbers and denominations of
certificates, if any; historical information regarding the account of each
Shareholder, including dividends paid, distributions made and date and price for
all transactions in a Shareholder's account; any stop or restraining order
placed against a Shareholder's account; any dividend reinvestment order,
dividend address and correspondence relating to the maintenance of a
Shareholder's account; all tax and withholding information relating to a
Shareholder's account; information with respect to withholding on foreign
accounts.
The Transfer Agent shall maintain records for all accounts opened by entities
assigned an institution number ("institution") so that where required the
aggregate average daily value of all of an institution's accounts can be
determined and a record of such values maintained, and so that duplicate
statements for the accounts can be prepared and sent to each institution.
The Transfer Agent represents and warrants that the various procedures and
systems which it has implemented with regard to safeguarding from loss and
damage attributable to fire, theft, or any other cause of the Fund's blank
checks, blank share certificates, records and other data and the Transfer
Agent's records, data, equipment, facilities, and other property used in the
performance of its obligations hereunder are adequate and that it will make such
changes therein from time to time as are required for the secure performance of
its obligations hereunder.
Section 22 The Transfer Agent shall maintain such records as shall enable the
Fund to fulfil in a timely fashion the filing requirements of Form N-SAR or of
any successor monthly, quarterly or annual report required by the Act or rules
and regulations thereunder to be filed by the Fund. All such records shall be
the property of the Fund.
Section 23 The Transfer Agent shall cooperate with the Fund's independent public
accountants and shall take all reasonable action in the performance of its
obligations under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their opinion,
including but not limited to the opinion included in the Fund's annual or
semi-annual reports on Form N-SAR, or of any successor annual report required by
the Act or rules thereunder to be filed by the Fund.
Section 24. In addition to the services as Transfer Agent and Administrator as
above set forth, the Transfer Agent will perform other services for the Fund as
agreed from time to time, including but not limited to, preparation of filing
with the Internal Revenue Service and mailing to Shareholders such Federal Tax
Information Forms as are required to be so prepared, filed and mailed by
applicable laws, rules and regulations, mailing periodic reports of the Fund,
preparation of Shareholder lists as necessary, and mailing initial notices of
Shareholders' meetings, proxies and proxy statements.
The Transfer Agent shall answer telephone calls and correspondence from
Shareholders relating to their share accounts. The Transfer Agent shall respond
to all inquiries from Shareholders relating to the administration of their
accounts within one (l) business day with respect to answers delivered by
telephone and within three (3) business days with respect to answers delivered
in writing. Copies of all correspondence from Shareholders involving complaints
about the management of the Fund, the services provided by or for the Fund, the
Transfer Agent or others, or concerning complaints relating to the Fund shall be
sent immediately to the Fund. Summaries of any similar matters conveyed by a
Shareholder by telephone shall be prepared by the Transfer Agent and sent to the
Fund within three (3) business days.
Telephone calls and correspondence on other matters will be referred to the
Fund.
The Transfer Agent shall keep records of Shareholder substantive telephone calls
and correspondence and replies thereto, and of the lapse of time between receipt
of such substantive telephone calls and correspondence and the making of
replies.
Section 25. Nothing contained in this Agreement is intended to or shall require
the Transfer Agent in any capacity hereunder to perform any functions or duties
on any day identified in the Prospectus and/or SAI on which the Fund is closed.
Functions or duties normally scheduled to be performed on such days shall be
performed on, and as of, the next business day on which the Transfer Agent is
open, except when the Transfer Agent is closed to observe a legal emergency when
the Fund is open and the Fund has received purchases or redemption requests,
such purchases and redemptions shall be priced and executed "as of" such date on
the business day next following such day.
Section 26. Pursuant to the terms of the Advisory Agreement, the Transfer Agent
shall receive no additional compensation for its services hereunder; provided,
however, that the Fund shall reimburse the Transfer Agent for expenses such as
costs of forms, statements, envelopes, postage, shipping, telephone, and
statement microfiche copies. Telephone costs will be passed to the Fund at cost.
All such payments and reimbursements shall be charged to and paid by the Fund on
a monthly basis. It is understood that the Fund may, in the future, undertake to
perform certain of the services herein contemplated to be performed by the
Transfer Agent, such as maintaining the facility for Shareholders to make
telephone purchases, redemptions and transfers of Shares. To the extent, if any,
the Fund undertakes such duties, the Transfer Agent shall be relieved of such
obligation.
Section 27. The Transfer Agent in acting for Planholders, or in any other
capacity set forth in this Agreement, shall not be personally liable for any
taxes, assessments, or governmental charges which may be levied or assessed on
any basis whatsoever in connection with the administration of the Plans,
excepting only for taxes assessed against the Transfer Agent in its corporate
capacity arising out of its compensation hereunder.
Section 28. The Transfer Agent shall not be liable hereunder for any
non-negligent action taken in good faith and reasonably believed to be within
the powers conferred upon it by this Agreement. The Fund shall indemnify the
Transfer Agent and hold it harmless from any and against any and all actions,
suits and claims, whether groundless or otherwise, arising directly or
indirectly out of or in connection with its performance under this Agreement
including but not limited to its performance as Transfer Agent and Administrator
of Plans and from and against any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liabilities incurred by the Transfer Agent
in connection with any such action, suit, or claim, except such as shall result
from its own negligent act, omission or willful misconduct or that of its
officers, agents or employees. The Fund shall not be required to indemnify the
Transfer Agent against any expenses or liabilities arising out of a default
judgment, a confession of judgment or a settlement entered into without the
prior written consent of the Fund. The Transfer Agent shall not be under any
obligation to prosecute or to defend any action, suit or claim arising out of or
in connection with its performance under this Agreement as Transfer Agent and
Administrator of Plans, which, in the opinion of its counsel, may involve it in
expense or liability. At its option the Fund may and upon request of the
Transfer Agent the Fund shall assume the entire defense of any action, suit, or
claim subject to the foregoing indemnity. The Transfer Agent shall give the Fund
notice, and reasonable opportunity to defend, any such action, suit, or claim,
in the name of the Fund or the Transfer Agent or both. In the event the Fund
assumes the defense, the Transfer Agent shall be responsible for its own legal
fees and expenses from the date the Fund so assumes the defense, except for such
fees and expenses incurred at the request of the Fund. The Fund and the Transfer
Agent shall cooperate fully in the defense of any action, suit or claim.
The Transfer Agent at its expense will make corrections and adjustments as may
be required, where the Transfer Agent, its officers, agents, employees or
delegates are the cause of any error made in rendering the services described in
this agreement, without limitation.
Without limitation of the foregoing:
(a) The Transfer Agent may rely upon and shall not be liable to the Fund
for the advice of the Fund, counsel (who may be counsel for the Fund or
counsel for the Transfer Agent) and upon statements of accountants, brokers
and other persons believed by it in good faith to be expert in the matters
about which they are consulted and for any actions taken in good faith upon
such statements.
(b) The Transfer Agent shall not be liable for any action reasonably taken
in good faith reliance upon any Written Instructions or certified copy of
any resolution of the Board of Directors of the Fund, provided, however,
that upon receipt of a Written Instruction countermanding a prior
Instruction which has been fully executed by the Transfer Agent, the
Transfer Agent shall attempt to honor to the extent then possible, such
later Instructions and rely upon the genuineness of any such document or
correspondence reasonably believed in good faith to have been validly
executed.
(c) The Transfer Agent may rely and shall be protected in acting upon any
signature, instruction, request, letter of transmittal, certificate,
opinion of counsel, statement, instrument, report, notice, consent, order,
or other paper or document reasonably believed by it to be genuine and to
have been signed or presented by the Shareholder, Fund or other proper
party or parties.
Section 29. The Fund shall promptly cause to be turned over to the Transfer
Agent (i) an accurate list of Shareholders of the Fund showing the proper
registered address and number of Shares owned and whether such shares are
represented by outstanding Share Certificates or by non-certificated share
accounts, (ii) all records relating to Plans, including original applications
signed by the Planholders and original plan accounts recording payments,
contributions, deductions, reinvestments, withdrawals and liquidations, and
(iii) all shareholder records, files, and other materials necessary or
appropriate for proper performance of the functions assumed by the Transfer
Agent under this Agreement (hereinafter called "Materials"). The Fund agrees to
indemnify and hold the Transfer Agent, its successors and assigns, harmless of
and from any and all expenses, damages, claims, suits, liabilities, actions,
demand and losses of third parties arising out of or in connection with any
error, omission, inaccuracy or other deficiency of such Materials, or out of the
failure of the Fund to provide any portion of such Materials or to provide any
information needed by the Transfer Agent to perform knowledgeably its functions.
The Fund agrees to pay reasonable compensation to the Transfer Agent to cover
the Transfer Agent's expenses in correcting any such error, omission, inaccuracy
or other deficiency of the Materials.
Section 30. The Transfer Agent shall at all times act in good faith and shall
use its best efforts to insure the accuracy of all services performed under this
Agreement and shall be liable for and shall indemnify and hold the Fund harmless
from and against any and all actions, suits and claims, whether groundless or
otherwise, and from and against any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liabilities incurred by the Fund, in
connection with any such action, suit or claim arising directly or indirectly
out of or in connection with errors caused by the Transfer Agent's negligence,
bad faith or willful misconduct or that of its agents or employees. The Transfer
Agent shall not be required to indemnify the Fund against any expenses or
liabilities arising out of a default judgment, a confession of judgment or a
settlement entered into without the prior written consent of the Transfer Agent.
The Fund shall not be under any obligation to prosecute or defend any action,
suit or claim arising directly or indirectly out of or in connection with errors
caused by the Transfer Agent's negligence, bad faith or willful misconduct or
that of its employees or agents which, in the opinion of its counsel, may
involve it in expense or liability. The Transfer Agent may at its option and,
upon request of the Fund the Transfer Agent shall, assume the entire defense of
any action, suit or claim subject to the foregoing indemnity. The Fund shall
give the Transfer Agent notice of, and reasonable opportunity to defend, any
such action, suit or claim in the name of the Fund or the Transfer Agent or
both. In the event the Transfer Agent assumes the defense, the Fund shall be
responsible for its own legal fees and expenses from the date the Fund so
assumes the defense, except for such fees and expenses which are incurred at the
request of the Transfer Agent. The Transfer Agent and the Fund agree to
cooperate fully in the defense of any such action, suit or claim.
Section 31 The Transfer Agent acknowledges and agrees that all books and records
maintained for the Fund in any capacity under this Agreement are the property of
the Fund and may be inspected by the Fund at any reasonable time.
The Transfer Agent agrees to regard and preserve as confidential all records and
other information relative to the Fund, and will not without written authority
of the Fund disclose to others, during the term of this Agreement or thereafter,
any such records or other information.
In the event of termination of this Agreement for any reason, the Transfer Agent
agrees to provide the Fund with complete and accurate records and to assist the
Fund in the orderly transfer of accounts and records. Without limiting the
generality of the foregoing, the Transfer Agent agrees upon termination of this
Agreement:
(a) to deliver to the Fund computer tapes containing the Fund's accounts
and records in machine readable form together with such record layouts and
additional information as may be necessary to enable the Fund to utilize
the information therein;
(b) to cooperate with the Fund and any successor transfer agent in the
interpretation of the Fund's accounts and records; and
(c) to reimburse the Fund its reasonable costs arising out of any error,
omission, inaccuracy or other deficiency in the Fund's accounts and records
which occurred during the term of this Agreement which arise from the
negligence or other error of the Transfer Agent as long as claim for such
reimbursement is made within 90 days of termination.
Section 32. The Transfer Agent shall maintain a standard Stockbroker's Blanket
bond on all its employees, providing fidelity insurance as required by rules of
the National Association of Securities Dealers. All employees at the time of
employment will have fingerprints made and checked by the FBI under procedures
established as standard for stockbrokerage employees by the NASD, as well as for
transfer agency employees by the SEC.
Section 33. The practices and procedures of the Transfer Agent and the Fund set
forth in the Agreement, or any other terms or conditions of this Agreement, may
be altered or modified from time to time as may be mutually agreed by the
parties to this Agreement. In special cases the parties hereto may adopt in
writing such procedures as may be appropriate or practical under the
circumstances, and the Transfer Agent may conclusively rely on the determination
of the Fund that any special procedure which has been approved by the Fund does
not conflict with or violate any requirements of its Articles of Incorporation,
By-Laws or Prospectus, or any rule, regulation or requirement of any regulatory
body.
Section 34. The Fund shall file with the Transfer Agent a certified copy of each
resolution of its Board of Directors authorizing the execution of Written
Instructions or the transmittal of Oral Instructions, as provided in the
Custodian Agreement.
The following additional terms, for purposes of this Agreement or any amendment
or supplement thereto, shall have the meanings herein specified unless the
context otherwise requires:
Plan:The term Plan shall include such investment plan, dividends or capital
gains reinvestment plans, systematic withdrawal plans or other types of
plans set forth in the then currently effective prospectus of the Fund,
including any qualified retirement plan which is a Shareholder of the Fund,
in form acceptable to the Transfer Agent, which the Fund may from time to
time adopt and make available to its Shareholders, including plans or
accounts by individuals or corporations. All Planholders are Shareholders,
who use a specific plan or service not used by all Shareholders as a whole.
Administrator: The term Administrator of a Plan means the Transfer Agent solely
in its capacity as agent for the performance of those retirement plan tasks
which can be performed on a group or mass basis by the Transfer Agent's
systems. It does not include certain corporate retirement plan tasks that
are often performed on an individual basis, such as preparing Summary Plan
Descriptions and/or preparing IRS Form 5500.
Section 35. This Agreement may be amended from time to time by a supplemental
agreement executed by the Fund and the Transfer Agent.
Section 36 Either the Fund or the Transfer Agent may give 60 days' written
notice to the other of the termination of this Agreement, such termination to
take effect at the time specified in the notice; provided, however, the
obligations set forth in Sections 28, 30, 31, 38 and 39 and, for the fiscal year
of the Fund in which termination occurs, Sections 22 and 23, shall survive such
termination, unless satisfied.
Section 37. Any notice or other communication required by or permitted to be
given in connection with this Agreement shall be in writing, and shall be
delivered in person or sent by first class mail, postage prepaid, to the
respective parties as follows:
If to the Fund:
Sextant Growth Fund
Attn: Secretary
1300 N. State Streeet
Bellingham WA 98225
If to the Transfer Agent:
Saturna Capital Corporation
PO Box 2838
Bellingham, Washington 98227-2838
Section 38 The Transfer Agent and the Fund each represent and warrant to the
other as to itself that all actions required by their respective directors or
shareholders has been taken to authorize the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby; the
execution and delivery of this Agreement and consummation of the transactions
contemplated hereby do not contravene any provision of their respective charter
or by-laws or of any laws, regulations or orders of any government or agency
thereof to which it is subject; do not constitute the violation or breach of any
agreement or understanding to which it is a party or by which it is bound; and
upon its execution and delivery, this Agreement shall be binding and enforceable
against it in accordance with its terms.
Section 39. The Transfer Agent may from time to time, with the written consent
of the Fund, delegate some or all of its duties hereunder to others, who shall
perform such functions as the agent of the Transfer Agent. To the extent of such
delegation, the term "the Transfer Agent" in this Agreement shall be deemed to
refer to both the Transfer Agent and to its designee or to either of them, as
the context may indicate. In each provision of this Agreement fixing or limiting
the liabilities or the delegations of the Transfer Agent, or providing for the
liability indemnification or protection of the Transfer Agent, the term "the
Transfer Agent" shall include the Transfer Agent's designee. The Transfer Agent
shall not be relieved of any liabilities or obligation under the Agreement in
connection with such delegation of duties, shall be responsible to supervise and
assure that any such designee properly performs the duties delegated to it, and
shall be responsible for the performance of the designee as though the Transfer
Agent had, itself, performed the duties so delegated.
Section 40. This Agreement may be executed in two or more counterparts, each of
which when so executed shall be deemed to be an original, but such counterparts
shall together constitute but one and the same instrument.
Section 41. This Agreement shall extend to and shall be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by the Fund without the written consent of the
Transfer Agent or by the Transfer Agent without the written consent of the Fund,
authorized or approved by a resolution of its Board of Directors.
Section 42 This Agreement constitutes the full and complete agreement of the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements or understandings between the parties.
Section 43 Whenever pronouns are used herein, they shall be interpreted in the
neuter, masculine, feminine, singular or plural as the context may require.
Section 44. Except where specific time limits are herein provided, no delay on
the part of any party hereto in exercising any power or right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
power or right hereunder preclude other or further exercise thereof or the
exercise of any other power or right. No waiver shall be enforceable against any
party hereto unless in writing, signed by the party against whom such waiver is
claimed, and shall be limited solely to the one event.
Section 45. This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of Washington, without giving effect to the
principles of conflicts of law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their respective duly authorized officers and their corporate seals hereunto
duly affixed and attested, as of the day and year first above written.
SATURNA INVESTMENT TRUST
By_______________________ Attest______________________
SATURNA CAPITAL CORPORATION
By_________________________ Attest_______________________
<PAGE>
Basic Services
*Opening new accounts.
*Processing all payments.
*Issuing and canceling certificates.
*Processing partial and complete redemptions.
*Regular and legal transfers of accounts.
*Mailing shareholder reports. *Processing dividends and distributions, including
withholding obligations. *Postage, except that for statements and all
shareholder communications. *Paper used to render reports to the Fund. The cost
of shareholder forms, envelopes, etc. will be billed to the Fund at the Transfer
Agent's cost. *Confirmation of all transactions as provided by the terms of each
shareholder's account. *Retirement account reporting. Account Maintenance 1.
Maintaining shareholder records of certificates and whole and fractional
unissued shares. 2. Changing shareholders' addresses. 3. Daily reports on
numbers of shares, accounts. 4. Addressing and tabulating annual proxy cards. 5.
Supplying stockholder lists as necessary. 6. Preparation of shareholder Federal
Tax Information Forms, including those required of a Retirement Plan Custodian.
7. Replying to shareholder telephone calls and correspondence other than that
for Fund performance, Fund information, or Fund related inquiries.
INVESTMENT ADVISORY
and ADMINISTRATIVE SERVICES AGREEMENT
for the
SEXTANT BOND INCOME FUND
of the
SATURNA INVESTMENT TRUST
THIS AGREEMENT, executed this ___th day of , 1995, between Saturna Capital
Corporation, a Washington State corporation (the "Adviser") and the Saturna
Investment Trust, a series open--end management investment company organized as
a business trust under the laws of the State of Washington and presently having
a portfolio named the Sextant Bond Income Fund, (the "Fund") to be and become
effective as provided in Section 1, Article V, between the parties hereto,
WITNESSETH, THAT:
The parties hereto enter into the following Articles of Agreement:
ARTICLE I: INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES
Section 1. Investment Advisory Services. During the continuance of this
Agreement, the Adviser shall supervise the investment management of the cash and
securities of the Fund, and in that connection, to the extent required, shall
furnish to the Fund advice and recommendations on securities to be purchased,
held or sold and the portion of the assets to remain uninvested, all according
to the investment objectives, powers and restrictions imposed by law or other
governing document or writing binding upon the Fund.
Section 2. Administrative Services. During the continuance of this Agreement:
(a) The Adviser shall furnish the Fund office space, office facilities and
equipment, related utilities, telephone service, stationery and supplies,
typesetting, personnel (including executive officers) and clerical and
bookkeeping services as required to fulfill its obligation as Adviser for the
Fund. The Adviser shall pay the compensation of its executives and employees,
whether an officer or employee of the Fund, for all services rendered by them
for the Fund as required to fulfill its obligation as Adviser, and shall furnish
such office space, facilities, supplies and services as agreed above. The
Adviser shall also pay on behalf of the Fund trade association membership and
meeting expenses, and the preparation, printing, qualification and offering (but
not administration on behalf of a participant or participating entity) of any
prototype retirement plan offered by the Fund to shareholders on the
recommendation of the Adviser. (b) The Adviser shall act as fund accountant, and
prepare daily reports of Fund net asset values as well as all other financial
statements and reports. With the consent of the Trustees, the Adviser at its
expense may delegate fund accounting duties to another qualified party. The Fund
accountant shall furnish the Trustees, at any regularly scheduled meeting or at
such times as the Trustees may request, a report on all matters pertaining to
the services of the Adviser, including but not limited to, a list of the
securities in the Fund and a record of brokerage commissions paid.
(c). The Adviser shall act as transfer agent, registrar and dividend
disbursing agent for the Fund, pursuant to a form of Transfer Agency
Agreement attached hereto as Exhibit A, and made a part hereof.
Section 3. Affiliated Broker. Subject to review by the Trustees, the Adviser
shall place all orders for the purchase and sale of securities of the Fund. The
Adviser or a subsidiary of the Adviser is permitted to act as a broker (but not
a dealer or underwriter) in securities traded by the Fund, subject to review by
the Trustees and all pertinent regulations and limitations. No such orders shall
be placed in contravention of the Investment Company Act of 1940.
Section 4. Fund Expenses. The Fund shall pay or provide for the payment of its
expenses not assumed by the Adviser as above provided, which expenses shall
include, without limitation, taxes, interest, brokerage commissions,
compensation and expenses of Trustees, legal and auditing expenses, insurance
premiums, custodian fees, the expense of issuing Fund shares under the federal
securities laws and the regulatory authorities of the various states in which
the Fund is authorized to offer its shares, and the expense of preparing,
printing and mailing financial reports, investment newsletters, notices and
prospectuses for its existing shareholders.
ARTICLE III: FEES FOR SERVICES OF THE ADVISER
Section 1. Investment Advisory and Administrative Services Fee. As full
compensation for all services rendered and to be rendered and expenses assumed
by the Adviser as set forth in Article II "Investment Advisory and
Administrative Services" hereof, the Fund shall pay to the Adviser a monthly
Investment Advisory and Administrative Services Fee (the "Base Fee") at the
annual rate of 0.60% of average daily net assets of the Fund. Average daily net
asset value in a period shall be determined by dividing the aggregate of the
Fund's net assets on each calendar day by the number of calendar days in the
period.
Section 2. Performance Adjustment. The Base Fee shall be subject to a maximum
increase or decrease at the annual rate of 0.20% of the Fund's average daily net
assets, according to the relative total return investment performance of the
Fund (the "Performance Adjustment"). The Performance Adjustment shall be
computed as follows:
a) Following the end of each month the net investment return
realized by shareowners in the Fund for the entire just-ended
twelve month period (that is, the change in Net Asset Value
per share adjusted for dividends and other distributions, or
"Total Return") of the Fund for the twelve month period ending
that month ("Calculation Year") shall be calculated to the
nearest one hundredth of one percent as set forth in the
Fund's Registration Statement on Form N-1A.
b) The Fund's Total Return for the Calculation Year shall be
compared to the average total return of all Corporate "Bond
Funds-High Quality" mutual funds, as selected, calculated and
reported by Morningstar Inc. (or, if this index is unavailable
or becomes inappropriate for this measurement for any reason
in the opinion of the Fund's Board, then another index as
shall be chosen by the Fund's Board) (the "Benchmark").
c) If the Fund's Total Return outperforms or underperforms the
Benchmark's Total Return (rounded to the nearest tenth of one
percent [0.1%]) for the Calculation Year by 1% or more but
less than 2%, then the Base Fee for the month just completed
shall be increased or decreased by 0.10% (annual rate) of
average Calculation Year daily net assets, and the
performance-adjusted total Fee for the month shall be at the
annual rate of either 0.70% or 0.50% of average net assets.
d) If the Fund's Total Return outperforms or underperforms the
Benchmark's Total Return (rounded to the nearest tenth of one
percent [0.1%]) for the Calculation Year by 2% or more, then
the Base Fee for the month just completed shall be increased
or decreased by 0.20% (annual rate) of average Calculation
Year daily net assets, and the performance-adjusted total Fee
for the month shall be at the annual rate of either 0.80% or
0.40% of average net assets.
e) No Performance Adjustment shall be made until the Fund acquires twelve full
months of operating history.
The Fund shall accrue daily to pay its Investment Advisory and Administrative
Services Fee fee at the Base Fee annual rate of 0.60%. The net Fee (Base Fee
plus or minus the Performance Adjustment) due to the Adviser for a calendar
month shall be paid when practicable after these calculations. Due to the
relatively small size of monthly-computed Performance Adjustments, no accrual
shall be required.
Section 3. Reimbursement and Waiver. The Adviser may, from time to time,
voluntarily waive its fees or reimburse the Fund for expenses above a specified
percentage of average daily net assets. The Adviser retains the ability to be
repaid by the Fund for voluntary expense reimbursements if Fund expenses fall
below the limit before the end of the Fund's fiscal year. If any fee waiver or
reimbursement is to be made, it shall be paid monthly and may vary by Fund of
the Trust.
Section 4. Termination. In the event of the termination of this Agreement the
fee for the month in which terminated shall be that proportion of the rate for
the whole month as the number of calendar days during which this Agreement is in
effect during the month bears to the number of days in the whole month computed
on the average daily net asset value of the portfolio during such period.
ARTICLE IV: DISTRIBUTION
Section 1. The Fund. The Fund shall offer shares without commission ("load") or
other sales expense. The Adviser's subsidiary, Investors National Corporation,
shall act as the Fund's distributor without compensation, and register where and
when appropriate. The Fund shall bear the expense of qualifying itself and any
necessary personnel to sell the Fund. As the expense to the Fund is deemed
warranted by the Trustees, the Adviser shall cause the Fund to be registered
under the various state "blue-sky" requirements.
Section 2. The Adviser. The Adviser or any subsidiary of the Adviser may engage
in any lawful activities designed to help Fund distribution, and pay for such
activities out of any part of its resources, including those fees described
under Article III. The Adviser shall pay any expenses for printing and
distributing extra prospectuses used in connection with sales and for preparing,
printing and distributing sales literature. The Adviser shall pay the salaries
of persons used in the distribution of the Fund, furnish office space and
facilities for such distribution activity, and pay for all other expenses
associated with distribution of the Fund.
ARTICLE V: TERM AND TERMINATION OF AGREEMENT
Section 1. Term of Agreement. This Agreement shall become effective when
approved by the holders of a majority of the outstanding shares of the Fund, and
shall continue in effect for a two year period unless sooner terminated as
hereinafter provided, and thereafter shall continue from year to year so long as
the terms of this Agreement and the renewal and continuance thereof are approved
at least annually by action of the Trustees or a majority vote of the
outstanding shares the Fund, but in either event it must be approved by a
majority of the Trustees, who are not "interested persons" as defined in the
Investment Company Act of 1940, casting their vote in person at a meeting called
for voting on such approval.
Section 2. Termination of Agreement. This Agreement may be terminated at any
time without liability to either party by notice in writing given by the party
desiring to terminate to the other not less than sixty (60) days before the date
specified, for termination. The Fund may take such action either by the Trustees
or by the affirmative vote of the holders of a majority of the outstanding
shares of the Fund.
Section 3. No Assignment. This Agreement may not be assigned by either party and
shall terminate automatically upon assignment (as defined in the federal
Investment Company Act of 1940).
Section 4. Amendment. This Agreement may be amended only with the approving vote
of the holders of a majority of the outstanding shares of the Fund. The vote of
a majority of the outstanding shares of the Fund means the vote, at any meeting
of the Fund's shareholders, of (1) 67% or more of the shares present or
represented by proxy, at such meeting, if the holders of more than 50% of the
outstanding shares are present or represented by proxy, or (2) more than 50% of
the outstanding shares, whichever is less.
Section 4. Use of Adviser's Name. The Adviser grants the Fund a non-exclusive,
terminable license and permission to use the name "Saturna" in its name during
the term of this Agreement.
ARTICLE VI. GENERAL
This instrument is executed by the Trustees and officers of Saturna Investment
Trust in such capacities for the Sextant Bond Income Fund portfolio of the
Trust. By the execution hereof all parties agree that, except to the extent
limited by the provisions of the federal Investment Company Act of 1940, for the
payment of any claim or the performance of any obligations hereunder, resort
shall be had solely to the assets and property of the Fund and no shareholder,
Trustee, officer, employee or agent of the Fund or the Trust shall be personally
liable therefore. Reference is made to Articles of Trust dated February 20,
1987, which have been filed with the Washington Secretary of State, Olympia,
Washington.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on behalf of each of them by their duly authorized officers the date and year
first above written. SATURNA INVESTMENT TRUST SATURNA CAPITAL CORPORATION By
________________________ By ________________________ Nicholas F. Kaiser, Pres.
Nicholas Kaiser, Pres. ATTEST: ------------------------
- ------------------------- Secretary Secretary
<PAGE>
Transfer Agent Agreement
Page 1
Exhibit A
to
INVESTMENT ADVISORY
and ADMINISTRATIVE SERVICES AGREEMENT
for the
SEXTANT BOND INCOME FUND
of the
SATURNA INVESTMENT TRUST
TRANSFER AGENT AGREEMENT
THIS AGREEMENT, executed this ___th day of __________ 1995, between Saturna
Capital Corporation, a Washington State corporation (the "Adviser") and the
Saturna Investment Trust, a series open--end management investment company
organized as a business trust under the laws of the State of Washington (the
"Trust") and presently having a portfolio named the Sextant Bond Income Fund,
(the "Fund") is made pursuant to and in consideration of that certain Investment
Advisory and Administrative Services Agreement between the Adviser and the Trust
on behalf of the Fund, dated ______________, 1995 (the "Advisory Agreement").
WITNESSETH THAT:
WHEREAS, pursuant to the terms of the Advisory Agreement the Adviser has agreed
to act as Transfer, Redemption and Dividend Disbursing Agent for the Fund
and also has agreed to act for the Fund in other respects as hereinafter
stated; and
WHEREAS, the Fund will appoint a bank, or other qualified entity, acceptable to
the Adviser as primary Custodian of the securities, cash and other assets
of the Fund, hereinafter referred to as the Custodian Bank, and may with
the agreement of the Adviser appoint one or more subcustodians;
NOW, THEREFORE, in consideration of the promises and mutual covenants contained
herein, the parties hereto, intending to be legally bound, do hereby agree
as follows:
Section 1. The Fund hereby appoints the Adviser as its Transfer, Registrar,
Redemption Agent and Dividend Disbursing Agent (the "Transfer Agent") and the
Transfer Agent accepts such appointments and agrees to act in such capacities
upon the terms set forth in this Agreement.
The Transfer Agent agrees to comply with all relevant provisions of the
Investment Company Act of 1940 (the "Act"), the Internal Revenue Code, other
applicable laws and all applicable rules and regulations thereunder.
If the Fund is a series company for purposes of Rule 18f-2 under the Act, the
term "Fund" as used in this Agreement shall be deemed to refer to each such
series as a separate portfolio unless the context otherwise requires. In
performing its functions hereunder, the Transfer Agent shall in all cases comply
with the procedures and conditions set forth in the Fund's then current
Prospectus and Statement of Additional Information ("SAI"), as provided to the
Transfer Agent by the Fund. To the extent that the Prospectus and SAI cover
procedures and duties of the Transfer Agent, agreement as to such matters must
have been reached between the Transfer Agent and the Fund prior to the
effectiveness of the Prospectus.
Section 2. The Fund currently has no Share Certificates outstanding, and does
not intend for the issue of Share Certificates in the future. Should the Fund
wish to issue Certificates in the future, it can do so only with the consent of
the Transfer Agent. All language in this agreement relating to Share
Certificates, such as the following paragraph, will be of no effect until such
time as it is mutually agreed that Share Certificates shall be issued.
The Fund shall furnish to the Transfer Agent a sufficient supply of blank Share
Certificates and from time to time will renew such supply upon the request of
the Transfer Agent. Such blank Share Certificates shall be signed manually or by
facsimile signatures of officers of the Fund authorized by law or the by-laws of
the Fund to sign Share Certificates and, if required, shall bear the Fund's seal
or facsimile thereof.
Section 3. The Transfer Agent shall make original issues of Shares in accordance
with Sections 13 and 14 below and with the Fund's then currently effective
Prospectus upon being furnished with (i) a certified copy of a resolution of
Directors of the Fund authorizing such issue and (ii) necessary funds for the
payment of any original issue tax applicable to such additional Shares. If
requested, a copy of the opinion of counsel as to the validity of such
additional Shares shall be furnished to the Transfer Agent upon the Fund's
filing of its Rule 24f-2 Notice under the Act with the Securities and Exchange
Commission.
Section 4. Transfers of Shares shall be registered and, subject to the
provisions of Section 10, new Share Certificates issued by the Transfer Agent
upon surrender of outstanding Share Certificates, if any, (i) in form deemed by
the Transfer Agent to be properly endorsed for transfer, (ii) with all necessary
endorsers' signatures guaranteed by a member firm of a national securities
exchange, the NASD, or a commercial bank, except when the requirement of a
signature guarantee is waived in accordance with the Fund's then current
Prospectus or SAI or when otherwise authorized by the Fund pursuant to Written
Instructions (as defined in Section 34 below), accompanied by (iii) such
assurances as the Transfer Agent shall deem necessary or appropriate to evidence
the genuineness and effectiveness of each necessary endorsement, and (iv)
satisfactory evidence of compliance with all applicable laws relating to the
payment or collection of taxes. The Transfer Agent shall retain all shareholder
applications and shall compare the signature(s) on written redemption requests
with the signature on the shareholder applications as may be necessary in the
opinion of the Transfer Agent, provided that the Transfer Agent shall be liable
for any loss due to forgery or improper signature of any kind resulting from the
negligence of the Transfer Agent in making or failing to make such comparison.
The Transfer Agent shall take such reasonable measures as may be agreed upon
from time to time between the Fund and the Transfer Agent to enable the Fund to
identify proposed transfers which, if effected, appear likely to cause the Fund
to fall within the definitions of a personal holding company as defined in the
Internal Revenue Code and shall not make such transfer without the prior written
approval of the Fund and its counsel.
Section 5. When mail is used for delivery of Share Certificates the Transfer
Agent shall forward Share Certificates in "non-negotiable" form by first-class
mail, and Share Certificates in "negotiable" form by registered mail, return
receipt requested, all mail deliveries to be covered while in transit to the
addressee by insurance arranged for by the Transfer Agent.
Section 6. In registering transfers of Shares the Transfer Agent may rely upon
the Uniform Commercial Code or any other statutes which in the opinion of
counsel protect the Transfer Agent and the Fund in not requiring complete
documentation, (subject to compliance with procedures set forth in the Fund's
then current Prospectus and/or SAI), in registering transfer with inquiry into
adverse claims, in delaying registration for purposes of such inquiry, or in
refusing registration where in its judgment an adverse claim requires such
refusal.
Section 7. The Transfer Agent may issue new Share Certificates in place of Share
Certificates represented to have been lost, destroyed or stolen, upon receiving
indemnity satisfactory to the Transfer Agent and the Fund and may issue new
Share Certificates in exchange for, and upon surrender of, mutilated Share
Certificates.
Section 8. In case any officer of the Fund who shall have signed manually or
whose facsimile signature shall have been affixed to blank Share Certificates
shall die, resign or be removed prior to the issuance of such Share
Certificates, the Transfer Agent may issue or register such Share Certificates
as the Share Certificates of the Fund notwithstanding such death, resignation or
removal until otherwise directed by the Fund; and the Fund shall file promptly
with the Transfer Agent such approval, adoption or ratification as may be
required by law.
Section 9. The Transfer Agent will maintain mutual fund account records in
which, among other details, it will note the issuance, transfer and redemption
of Shares, whether certificated or not. Whenever a Shareholder deposits Shares
represented by Share Certificates in an account, the Transfer Agent upon receipt
of the Share Certificates registered in the name of the Shareholder (or if not
so registered, in proper form for transfer), shall cancel such Share
Certificates and make appropriate entries in its stock transfer records. The
Transfer Agent will keep account records, part of which shall be the stock
transfer records, in which it will note the names and registered addresses of
Shareholders and the number of Shares and fractions owned by them, whether or
not Share Certificates are outstanding.
Section 10. The Transfer Agent shall issue Share Certificates for Shares only
upon receipt of a written request from a Shareholder. In all other cases, the
Transfer Agent shall dispense with the issuance and countersignature of Share
Certificates whenever Shares are purchased. The Transfer Agent shall process
purchase and redemption transactions by making appropriate entires in the Fund's
account records.
Section 11. The Transfer Agent shall, in addition to the duties and functions
above-mentioned, perform the usual duties and functions of a stock Transfer
Agent for a corporation. It shall countersign for issuance Share Certificates
representing original issue treasury Shares as directed by the Written
Instructions of the Fund and shall transfer Share Certificates registered in the
name of Shareholders from one Shareholder to another in the usual manner. The
Transfer Agent may rely conclusively and act without further investigation upon
any list, instruction, certification, authorization, Share Certificate or other
instrument or paper reasonably believed by it in good faith to be genuine and
unaltered, and to have been signed, countersigned, or executed by duly
authorized person or persons, or upon the instructions of any duly authorized
officer of the Fund, or upon the advice of counsel for the Fund or for the
Transfer Agent. The Transfer Agent may record any transfer of Share Certificates
which is reasonably believed by it in good faith to have been duly authorized or
may refuse to record any transfer of Share Certificates if in good faith the
Transfer Agent deems such refusal necessary to avoid any liability on the part
of either the Fund or the Transfer Agent; provided, however, that the Transfer
Agent shall promptly notify the Fund of any such refusal to record any transfer
and shall act in accordance with the Fund's Written Instructions, if any. The
Fund agrees to indemnify and hold harmless the Transfer Agent from and against
any and all losses, costs, claims, and liability which it may suffer or incur by
reason of so relying or acting or refusing to act.
Section 12. In case of any request or demand for the inspection of the share
records of the Fund, the Transfer Agent shall endeavor to notify the Fund and to
secure instructions as to permitting or refusing such inspection. However, the
Transfer Agent may (after giving written notice to the Fund) exhibit such
records to any person in any case where it is advised by its counsel that it may
be held liable for failure so to do, unless indemnified against such liability
by the Fund.
ISSUANCE OF SHARES
Section 13. For the purposes of this Section, the Fund hereby instructs the
Transfer Agent to consider Shareholder payments as available for investment in
accordance with the policies and procedures set forth in the Fund's then current
Prospectus and SAI. Immediately after the time or times and on each day on which
the Fund's then Current Prospectus or SAI states that its net asset value per
share shall be determined, the Transfer Agent shall obtain from the Fund or its
designated agent a quotation of the net asset value per share determined as of
such time on such day. The Transfer Agent reserves the right to charge the Fund
its reasonable costs of making corrections to shareholder records if it is later
determined that the Fund supplied an inaccurate net asset value.
The Transfer Agent shall, on the same business day on which any order for the
purchase of Shares is received and utilizing the net asset value per share next
determined after the receipt of such order, determine the amount to be invested
and the number of Shares and fractional Shares (rounded to three decimal places)
to be purchased. The Transfer Agent shall thereupon as agent for the
Shareholders place a purchase order with the Fund for the proper number of
Shares and fractional Shares to be purchased and confirm such number to the Fund
in writing. The Transfer Agent shall total the amount available for investment
in Shares at the net asset value determined by the Fund or its designated agent
at each Fund pricing time.
The Transfer Agent shall pay over to the Custodian Bank the net asset value of
Shares and fractional Shares purchased immediately upon receipt of the
consideration therefor. In the event that any check or other order for the
payment of money is returned unpaid for any reason, the Transfer Agent shall
give prompt notification to the Fund of the non-payment of said check and take
such action as the Fund may authorize by Written Instructions.
Any profit on the liquidation of unpaid shares accrues to the Fund. In the event
of loss upon the liquidation of unpaid shares the Transfer Agent will charge the
purchaser's account for the amount of such loss. If the balance in such account
is insufficient to cover the loss the Transfer Agent will assist the Fund in the
Fund's efforts to recover any such losses from the purchaser.
Section 14. The Transfer Agent, in making the calculations provided for in
Section 13, shall rely on its record of available investment funds. The proper
number of Shares and fractional Shares shall then be issued daily and credited
by the Transfer Agent to the shareholder accounts. The Transfer Agent shall mail
to each Shareholder a confirmation of each purchase (if provided for under the
provisions of the Shareholder's account) no later than the next business day,
with copies to interested parties if requested. Such confirmations shall among
other details show the prior Share balance, the new Share balance, the dollar
value, the Shares for which Stock Certificates are outstanding (if any), the
amount invested and the price paid for the newly-purchased Shares.
The Transfer Agent shall provide the Fund with the total number of shares issued
by the Fund each day. In the case any issue of shares would result in
overissuance, the Transfer Agent shall notify the Fund.
REDEMPTIONS
Section 15. The Transfer Agent shall process all requests from Shareholders to
redeem Shares and determine the number of Shares required to be redeemed to make
monthly payments, automatic payments or the like and advise the Fund, on the
same business day that the request for redemption was received, of the total
number of Shares and fractional Shares (rounded to three decimal places) to be
redeemed. Notwithstanding the foregoing, if a redemption request is for a dollar
value of Shares in excess of the dollar value of Shares in the specified account
or is not in accordance with the requirements of the Prospectus and/or SAI, the
Transfer Agent shall not effect such redemption in whole or in part, and shall
immediately advise both the Fund and the Shareholder of such discrepancy. The
Fund or its designated agent shall then quote to the Transfer Agent the
applicable net asset value; whereupon the Transfer Agent shall furnish the Fund
with an appropriate confirmation of the redemption and process the redemption,
at the net asset value per share next computed after receipt of the order for
redemption, by filing with the Custodian an appropriate statement and making the
proper distribution and application of the redemption proceeds in accordance
with the Fund's Prospectus or SAI. The stock registry books recording
outstanding Shares and the individual account of the Shareholder shall be
properly debited. If provided for under the provisions of the shareholder's
account, the Transfer Agent shall mail to each Shareholder a confirmation of
each redemption no later than the next business day, with copies to interested
persons if requested. Such confirmation shall among other details show the prior
Share balance, the new Share balance and total dollar value thereof, the Shares
for which stock certificates are outstanding (if any), the amount redeemed and
the price received for the redeemed Shares.
Section 16. The proceeds of redemption shall be remitted by the Transfer Agent,
in each case by draft or other instrument drawn against funds held by the Fund
in the Custodian Bank, in accordance with the Fund's then currently effective
Prospectus or SAI as follows:
a. By check drawn to the order of and mailed to the Shareholder at the
address of record not later than the third business day after the
redemption request is received. b. By wire to a designated bank or broker upon
telephone request, without signature guarantee, if such redemption procedure has
been elected by the Shareholder. c. In accordance with the order of the
Shareholder in the case of redemptions by check or use of a debit card. d. To a
person other than the Shareholder or to an address other than the Shareholder's
registered address only if instructions are received in writing with signature
guaranteed. Planholders transfering to another Plan custodian do not require
written signature guarantees but do require the written acceptance of the new
custodian.
e. By other procedures commonly followed by mutual funds and mutually agreed
upon by the Fund and the Transfer Agent.
Any change in the designated bank or brokerage account or registered address
will be accepted by the Transfer Agent only if made in writing by the
Shareholder, with signature guaranteed, unless a different procedure is agreed
to in writing by the Fund and the Transfer Agent.
If required by the Fund's then current Prospectus or SAI, the request and stock
certificates, if any, for Shares being redeemed, must have the owner's signature
guaranteed by a domestic commercial bank or trust company or a member firm of a
national securities exchange or the NASD. If Share Certificates have not been
issued to the redeeming Shareholder, the signature of the Shareholder on the
redemption request must be similarly guaranteed. If the Fund authorizes the
Transfer Agent by Written Instructions to waive the signature guarantee in
certain instances, the Fund hereby provides the Transfer Agent, its successors
and assigns, the same protections the Transfer Agent would normally receive from
a signature guarantee requirement.
The Transfer Agent shall retain all cancelled certificates for redemption or
transfer for a period of three years, during which time it shall be able to
produce said certificates upon appropriate notice from the Fund.
For the purposes of redemption of Shares which have been purchased by check
within 15 business days of a receipt of the redemption request for such shares,
the Fund shall provide the Transfer Agent, from time to time, with Written
Instructions concerning the time within which such requests may be honored. The
Transfer Agent has no responsibility to determine if any investment payment will
be reversed for any reason and is not responsible in any way for the failure of
any investment to be collected.
The authority of the Transfer Agent to perform its responsibilities under
Section 15 and 16 shall be suspended upon the Transfer Agent's receipt of
notification of the suspension of the determination of the Fund's net asset
value.
DIVIDENDS
Section 17. Upon the declaration of each dividend and each capital gains
distribution by the Board of Directors of the Fund, the Fund shall notify the
Transfer Agent by Written Instructions of the date of such declaration, the
amount payable per share, the sources from which such dividend or distribution
is made, and, unless such dividend is a regular daily or monthly dividend
payable by a money market or other fund, the record date for determining the
Shareholders entitled to payment. The ex-date and payment date shall always be
the next determination of net asset value after the record date. The Transfer
Agent shall withhold such sums as may be required to be withheld under
applicable income tax laws, rules and regulations.
Section 18. Upon the payment date of a dividend or distribution declared by the
Fund's Board of Directors, the Fund will cause the Custodian Bank to transfer to
the disbursement account maintained by the Custodian in the name of the Fund the
total amount of such dividends or distributions payable in cash to those
Shareholders electing to receive such dividends or distributions in cash. On
payment date, the Transfer Agent shall prepare a check in the appropriate amount
and mail it not later than the third business day after the payment date to such
Shareholder at his address of record or to such other address as the Shareholder
may have designated.
With regard to Shareholders not electing to receive such dividends or
distributions in cash, the Transfer Agent will automatically reinvest all
dividends and other such distributions in additional shares at the net asset
value per share on payment date. When provided by the provisions of the
Shareholder's account, the Transfer Agent will promptly mail to each shareholder
at his address of record or such other address as the Shareholder may have
designated a statement showing the number of full and fractional shares (rounded
to three decimal places) currently owned by the Shareholder and the net asset
value of the shares so credited to the Shareholder's account.
The Transfer Agent's dividend statement meets the requirements of the Act and
Rule l9a-1 thereunder for notification as to the source(s) of dividend
payment(s). Where further notification detail is required, the Transfer Agent
shall prepare and distribute the information necessary as directed by the Fund.
GENERAL PROVISIONS
Section 19. The Transfer Agent shall provide to the Fund's investors equity fund
account confirmations with each transaction, money fund account confirmations
with each transaction or monthly (as desired by the investor), investor choice
of monthly transfer agency consolidated statements or monthly brokerage
consolidated statements, as well as all services available now or in the future
to the shareowners of mutual funds serviced by the Transfer Agent, on the same
terms and conditions. The Transfer Agent shall provide account confirmation
statements as at December 31 of each year which include a listing of all
transactions in the account during the calendar year then ended, plus income tax
reporting information.
The Transfer Agent will not use its position to solicit business from the
shareholders of the Fund.
Section 20. The Transfer Agent shall report daily the sales and redemptions in
each state in a manner suitable for state "blue-sky" reporting by the Fund. The
Transfer Agent has no further responsibility as to controlling sales of Fund
Shares or maintaining the various registrations required under state "blue sky"
laws and regulations. If the Fund notifies the Transfer Agent, the Transfer
Agent will stop Shares from being sold in all states where the Fund's
registration is not current. Maintaining current registration information
on-line is the responsibility of the Fund.
Section 21 The Transfer Agent shall maintain records (which may be part of the
stock transfer records) in connection with the issuance and redemption of Shares
and the administration of the Plans and dividend reinvestments, in which will be
noted the transactions effected for each Shareholder and the number of Shares
and fractional Shares (rounded to three decimal places) owned by each for which
no Share Certificates are outstanding. The Transfer Agent shall create and
maintain all necessary records in accordance with good custodial practice,
including, but not limited, to records required by Section 31(a) of the Act and
Section 17(A) of the Securities and Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder. The Transfer Agent agrees to make
available upon request and to preserve for the periods prescribed in Section
31(a) under the Act and Section 17(A) of the Securities and Exchange Act of
1934, as amended, and the rules and regulations thereunder, any records relating
to services provided under this Agreement or maintained by it on behalf of the
Fund. All such records shall be the property of the Fund.
The Transfer Agent shall also maintain the following records for each
Shareholder's account: name, address, and tax identification number; number of
Shares held and specific form of holding, including numbers and denominations of
certificates, if any; historical information regarding the account of each
Shareholder, including dividends paid, distributions made and date and price for
all transactions in a Shareholder's account; any stop or restraining order
placed against a Shareholder's account; any dividend reinvestment order,
dividend address and correspondence relating to the maintenance of a
Shareholder's account; all tax and withholding information relating to a
Shareholder's account; information with respect to withholding on foreign
accounts.
The Transfer Agent shall maintain records for all accounts opened by entities
assigned an institution number ("institution") so that where required the
aggregate average daily value of all of an institution's accounts can be
determined and a record of such values maintained, and so that duplicate
statements for the accounts can be prepared and sent to each institution.
The Transfer Agent represents and warrants that the various procedures and
systems which it has implemented with regard to safeguarding from loss and
damage attributable to fire, theft, or any other cause of the Fund's blank
checks, blank share certificates, records and other data and the Transfer
Agent's records, data, equipment, facilities, and other property used in the
performance of its obligations hereunder are adequate and that it will make such
changes therein from time to time as are required for the secure performance of
its obligations hereunder.
Section 22 The Transfer Agent shall maintain such records as shall enable the
Fund to fulfil in a timely fashion the filing requirements of Form N-SAR or of
any successor monthly, quarterly or annual report required by the Act or rules
and regulations thereunder to be filed by the Fund. All such records shall be
the property of the Fund.
Section 23 The Transfer Agent shall cooperate with the Fund's independent public
accountants and shall take all reasonable action in the performance of its
obligations under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their opinion,
including but not limited to the opinion included in the Fund's annual or
semi-annual reports on Form N-SAR, or of any successor annual report required by
the Act or rules thereunder to be filed by the Fund.
Section 24. In addition to the services as Transfer Agent and Administrator as
above set forth, the Transfer Agent will perform other services for the Fund as
agreed from time to time, including but not limited to, preparation of filing
with the Internal Revenue Service and mailing to Shareholders such Federal Tax
Information Forms as are required to be so prepared, filed and mailed by
applicable laws, rules and regulations, mailing periodic reports of the Fund,
preparation of Shareholder lists as necessary, and mailing initial notices of
Shareholders' meetings, proxies and proxy statements.
The Transfer Agent shall answer telephone calls and correspondence from
Shareholders relating to their share accounts. The Transfer Agent shall respond
to all inquiries from Shareholders relating to the administration of their
accounts within one (l) business day with respect to answers delivered by
telephone and within three (3) business days with respect to answers delivered
in writing. Copies of all correspondence from Shareholders involving complaints
about the management of the Fund, the services provided by or for the Fund, the
Transfer Agent or others, or concerning complaints relating to the Fund shall be
sent immediately to the Fund. Summaries of any similar matters conveyed by a
Shareholder by telephone shall be prepared by the Transfer Agent and sent to the
Fund within three (3) business days.
Telephone calls and correspondence on other matters will be referred to the
Fund.
The Transfer Agent shall keep records of Shareholder substantive telephone calls
and correspondence and replies thereto, and of the lapse of time between receipt
of such substantive telephone calls and correspondence and the making of
replies.
Section 25. Nothing contained in this Agreement is intended to or shall require
the Transfer Agent in any capacity hereunder to perform any functions or duties
on any day identified in the Prospectus and/or SAI on which the Fund is closed.
Functions or duties normally scheduled to be performed on such days shall be
performed on, and as of, the next business day on which the Transfer Agent is
open, except when the Transfer Agent is closed to observe a legal emergency when
the Fund is open and the Fund has received purchases or redemption requests,
such purchases and redemptions shall be priced and executed "as of" such date on
the business day next following such day.
Section 26. Pursuant to the terms of the Advisory Agreement, the Transfer Agent
shall receive no additional compensation for its services hereunder; provided,
however, that the Fund shall reimburse the Transfer Agent for expenses such as
costs of forms, statements, envelopes, postage, shipping, telephone, and
statement microfiche copies. Telephone costs will be passed to the Fund at cost.
All such payments and reimbursements shall be charged to and paid by the Fund on
a monthly basis. It is understood that the Fund may, in the future, undertake to
perform certain of the services herein contemplated to be performed by the
Transfer Agent, such as maintaining the facility for Shareholders to make
telephone purchases, redemptions and transfers of Shares. To the extent, if any,
the Fund undertakes such duties, the Transfer Agent shall be relieved of such
obligation.
Section 27. The Transfer Agent in acting for Planholders, or in any other
capacity set forth in this Agreement, shall not be personally liable for any
taxes, assessments, or governmental charges which may be levied or assessed on
any basis whatsoever in connection with the administration of the Plans,
excepting only for taxes assessed against the Transfer Agent in its corporate
capacity arising out of its compensation hereunder.
Section 28. The Transfer Agent shall not be liable hereunder for any
non-negligent action taken in good faith and reasonably believed to be within
the powers conferred upon it by this Agreement. The Fund shall indemnify the
Transfer Agent and hold it harmless from any and against any and all actions,
suits and claims, whether groundless or otherwise, arising directly or
indirectly out of or in connection with its performance under this Agreement
including but not limited to its performance as Transfer Agent and Administrator
of Plans and from and against any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liabilities incurred by the Transfer Agent
in connection with any such action, suit, or claim, except such as shall result
from its own negligent act, omission or willful misconduct or that of its
officers, agents or employees. The Fund shall not be required to indemnify the
Transfer Agent against any expenses or liabilities arising out of a default
judgment, a confession of judgment or a settlement entered into without the
prior written consent of the Fund. The Transfer Agent shall not be under any
obligation to prosecute or to defend any action, suit or claim arising out of or
in connection with its performance under this Agreement as Transfer Agent and
Administrator of Plans, which, in the opinion of its counsel, may involve it in
expense or liability. At its option the Fund may and upon request of the
Transfer Agent the Fund shall assume the entire defense of any action, suit, or
claim subject to the foregoing indemnity. The Transfer Agent shall give the Fund
notice, and reasonable opportunity to defend, any such action, suit, or claim,
in the name of the Fund or the Transfer Agent or both. In the event the Fund
assumes the defense, the Transfer Agent shall be responsible for its own legal
fees and expenses from the date the Fund so assumes the defense, except for such
fees and expenses incurred at the request of the Fund. The Fund and the Transfer
Agent shall cooperate fully in the defense of any action, suit or claim.
The Transfer Agent at its expense will make corrections and adjustments as may
be required, where the Transfer Agent, its officers, agents, employees or
delegates are the cause of any error made in rendering the services described in
this agreement, without limitation.
Without limitation of the foregoing:
(a) The Transfer Agent may rely upon and shall not be liable to the Fund
for the advice of the Fund, counsel (who may be counsel for the Fund or
counsel for the Transfer Agent) and upon statements of accountants, brokers
and other persons believed by it in good faith to be expert in the matters
about which they are consulted and for any actions taken in good faith upon
such statements.
(b) The Transfer Agent shall not be liable for any action reasonably taken
in good faith reliance upon any Written Instructions or certified copy of
any resolution of the Board of Directors of the Fund, provided, however,
that upon receipt of a Written Instruction countermanding a prior
Instruction which has been fully executed by the Transfer Agent, the
Transfer Agent shall attempt to honor to the extent then possible, such
later Instructions and rely upon the genuineness of any such document or
correspondence reasonably believed in good faith to have been validly
executed.
(c) The Transfer Agent may rely and shall be protected in acting upon any
signature, instruction, request, letter of transmittal, certificate,
opinion of counsel, statement, instrument, report, notice, consent, order,
or other paper or document reasonably believed by it to be genuine and to
have been signed or presented by the Shareholder, Fund or other proper
party or parties.
Section 29. The Fund shall promptly cause to be turned over to the Transfer
Agent (i) an accurate list of Shareholders of the Fund showing the proper
registered address and number of Shares owned and whether such shares are
represented by outstanding Share Certificates or by non-certificated share
accounts, (ii) all records relating to Plans, including original applications
signed by the Planholders and original plan accounts recording payments,
contributions, deductions, reinvestments, withdrawals and liquidations, and
(iii) all shareholder records, files, and other materials necessary or
appropriate for proper performance of the functions assumed by the Transfer
Agent under this Agreement (hereinafter called "Materials"). The Fund agrees to
indemnify and hold the Transfer Agent, its successors and assigns, harmless of
and from any and all expenses, damages, claims, suits, liabilities, actions,
demand and losses of third parties arising out of or in connection with any
error, omission, inaccuracy or other deficiency of such Materials, or out of the
failure of the Fund to provide any portion of such Materials or to provide any
information needed by the Transfer Agent to perform knowledgeably its functions.
The Fund agrees to pay reasonable compensation to the Transfer Agent to cover
the Transfer Agent's expenses in correcting any such error, omission, inaccuracy
or other deficiency of the Materials.
Section 30. The Transfer Agent shall at all times act in good faith and shall
use its best efforts to insure the accuracy of all services performed under this
Agreement and shall be liable for and shall indemnify and hold the Fund harmless
from and against any and all actions, suits and claims, whether groundless or
otherwise, and from and against any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liabilities incurred by the Fund, in
connection with any such action, suit or claim arising directly or indirectly
out of or in connection with errors caused by the Transfer Agent's negligence,
bad faith or willful misconduct or that of its agents or employees. The Transfer
Agent shall not be required to indemnify the Fund against any expenses or
liabilities arising out of a default judgment, a confession of judgment or a
settlement entered into without the prior written consent of the Transfer Agent.
The Fund shall not be under any obligation to prosecute or defend any action,
suit or claim arising directly or indirectly out of or in connection with errors
caused by the Transfer Agent's negligence, bad faith or willful misconduct or
that of its employees or agents which, in the opinion of its counsel, may
involve it in expense or liability. The Transfer Agent may at its option and,
upon request of the Fund the Transfer Agent shall, assume the entire defense of
any action, suit or claim subject to the foregoing indemnity. The Fund shall
give the Transfer Agent notice of, and reasonable opportunity to defend, any
such action, suit or claim in the name of the Fund or the Transfer Agent or
both. In the event the Transfer Agent assumes the defense, the Fund shall be
responsible for its own legal fees and expenses from the date the Fund so
assumes the defense, except for such fees and expenses which are incurred at the
request of the Transfer Agent. The Transfer Agent and the Fund agree to
cooperate fully in the defense of any such action, suit or claim.
Section 31 The Transfer Agent acknowledges and agrees that all books and records
maintained for the Fund in any capacity under this Agreement are the property of
the Fund and may be inspected by the Fund at any reasonable time.
The Transfer Agent agrees to regard and preserve as confidential all records and
other information relative to the Fund, and will not without written authority
of the Fund disclose to others, during the term of this Agreement or thereafter,
any such records or other information.
In the event of termination of this Agreement for any reason, the Transfer Agent
agrees to provide the Fund with complete and accurate records and to assist the
Fund in the orderly transfer of accounts and records. Without limiting the
generality of the foregoing, the Transfer Agent agrees upon termination of this
Agreement: (a) to deliver to the Fund computer tapes containing the Fund's
accounts and records in machine readable form together with such record layouts
and additional information as may be necessary to enable the Fund to utilize the
information therein; (b) to cooperate with the Fund and any successor transfer
agent in the interpretation of the Fund's accounts and records; and (c) to
reimburse the Fund its reasonable costs arising out of any error,
omission, inaccuracy or other deficiency in the Fund's accounts and records
which occurred during the term of this Agreement which arise from the
negligence or other error of the Transfer Agent as long as claim for such
reimbursement is made within 90 days of termination.
Section 32. The Transfer Agent shall maintain a standard Stockbroker's Blanket
bond on all its employees, providing fidelity insurance as required by rules of
the National Association of Securities Dealers. All employees at the time of
employment will have fingerprints made and checked by the FBI under procedures
established as standard for stockbrokerage employees by the NASD, as well as for
transfer agency employees by the SEC.
Section 33. The practices and procedures of the Transfer Agent and the Fund set
forth in the Agreement, or any other terms or conditions of this Agreement, may
be altered or modified from time to time as may be mutually agreed by the
parties to this Agreement. In special cases the parties hereto may adopt in
writing such procedures as may be appropriate or practical under the
circumstances, and the Transfer Agent may conclusively rely on the determination
of the Fund that any special procedure which has been approved by the Fund does
not conflict with or violate any requirements of its Articles of Incorporation,
By-Laws or Prospectus, or any rule, regulation or requirement of any regulatory
body.
Section 34. The Fund shall file with the Transfer Agent a certified copy of each
resolution of its Board of Directors authorizing the execution of Written
Instructions or the transmittal of Oral Instructions, as provided in the
Custodian Agreement.
The following additional terms, for purposes of this Agreement or any amendment
or supplement thereto, shall have the meanings herein specified unless the
context otherwise requires:
Plan:The term Plan shall include such investment plan, dividends or capital
gains reinvestment plans, systematic withdrawal plans or other types of
plans set forth in the then currently effective prospectus of the Fund,
including any qualified retirement plan which is a Shareholder of the Fund,
in form acceptable to the Transfer Agent, which the Fund may from time to
time adopt and make available to its Shareholders, including plans or
accounts by individuals or corporations. All Planholders are Shareholders,
who use a specific plan or service not used by all Shareholders as a whole.
Administrator: The term Administrator of a Plan means the Transfer Agent solely
in its capacity as agent for the performance of those retirement plan tasks
which can be performed on a group or mass basis by the Transfer Agent's
systems. It does not include certain corporate retirement plan tasks that
are often performed on an individual basis, such as preparing Summary Plan
Descriptions and/or preparing IRS Form 5500.
Section 35. This Agreement may be amended from time to time by a supplemental
agreement executed by the Fund and the Transfer Agent.
Section 36 Either the Fund or the Transfer Agent may give 60 days' written
notice to the other of the termination of this Agreement, such termination to
take effect at the time specified in the notice; provided, however, the
obligations set forth in Sections 28, 30, 31, 38 and 39 and, for the fiscal year
of the Fund in which termination occurs, Sections 22 and 23, shall survive such
termination, unless satisfied.
Section 37. Any notice or other communication required by or permitted to be
given in connection with this Agreement shall be in writing, and shall be
delivered in person or sent by first class mail, postage prepaid, to the
respective parties as follows:
If to the Fund:
Sextant Bond Income Fund
Attn: Secretary
1300 N. State Streeet
Bellingham WA 98225
If to the Transfer Agent:
Saturna Capital Corporation
PO Box 2838
Bellingham, Washington 98227-2838
Section 38 The Transfer Agent and the Fund each represent and warrant to the
other as to itself that all actions required by their respective directors or
shareholders has been taken to authorize the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby; the
execution and delivery of this Agreement and consummation of the transactions
contemplated hereby do not contravene any provision of their respective charter
or by-laws or of any laws, regulations or orders of any government or agency
thereof to which it is subject; do not constitute the violation or breach of any
agreement or understanding to which it is a party or by which it is bound; and
upon its execution and delivery, this Agreement shall be binding and enforceable
against it in accordance with its terms.
Section 39. The Transfer Agent may from time to time, with the written consent
of the Fund, delegate some or all of its duties hereunder to others, who shall
perform such functions as the agent of the Transfer Agent. To the extent of such
delegation, the term "the Transfer Agent" in this Agreement shall be deemed to
refer to both the Transfer Agent and to its designee or to either of them, as
the context may indicate. In each provision of this Agreement fixing or limiting
the liabilities or the delegations of the Transfer Agent, or providing for the
liability indemnification or protection of the Transfer Agent, the term "the
Transfer Agent" shall include the Transfer Agent's designee. The Transfer Agent
shall not be relieved of any liabilities or obligation under the Agreement in
connection with such delegation of duties, shall be responsible to supervise and
assure that any such designee properly performs the duties delegated to it, and
shall be responsible for the performance of the designee as though the Transfer
Agent had, itself, performed the duties so delegated.
Section 40. This Agreement may be executed in two or more counterparts, each of
which when so executed shall be deemed to be an original, but such counterparts
shall together constitute but one and the same instrument.
Section 41. This Agreement shall extend to and shall be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by the Fund without the written consent of the
Transfer Agent or by the Transfer Agent without the written consent of the Fund,
authorized or approved by a resolution of its Board of Directors.
Section 42 This Agreement constitutes the full and complete agreement of the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements or understandings between the parties.
Section 43 Whenever pronouns are used herein, they shall be interpreted in the
neuter, masculine, feminine, singular or plural as the context may require.
Section 44. Except where specific time limits are herein provided, no delay on
the part of any party hereto in exercising any power or right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
power or right hereunder preclude other or further exercise thereof or the
exercise of any other power or right. No waiver shall be enforceable against any
party hereto unless in writing, signed by the party against whom such waiver is
claimed, and shall be limited solely to the one event.
Section 45. This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of Washington, without giving effect to the
principles of conflicts of law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their respective duly authorized officers and their corporate seals hereunto
duly affixed and attested, as of the day and year first above written.
SATURNA INVESTMENT TRUST
By_______________________ Attest______________________
SATURNA CAPITAL CORPORATION
By_________________________ Attest_______________________
<PAGE>
Basic Services
*Opening new accounts.
*Processing all payments.
*Issuing and canceling certificates.
*Processing partial and complete redemptions.
*Regular and legal transfers of accounts.
*Mailing shareholder reports. *Processing dividends and distributions, including
withholding obligations. *Postage, except that for statements and all
shareholder communications. *Paper used to render reports to the Fund. The cost
of shareholder forms, envelopes, etc. will be billed to the Fund at the Transfer
Agent's cost. *Confirmation of all transactions as provided by the terms of each
shareholder's account. *Retirement account reporting. Account Maintenance 1.
Maintaining shareholder records of certificates and whole and fractional
unissued shares. 2. Changing shareholders' addresses. 3. Daily reports on
numbers of shares, accounts. 4. Addressing and tabulating annual proxy cards. 5.
Supplying stockholder lists as necessary. 6. Preparation of shareholder Federal
Tax Information Forms, including those required of a Retirement Plan Custodian.
7. Replying to shareholder telephone calls and correspondence other than that
INVESTMENT ADVISORY
and ADMINISTRATIVE SERVICES AGREEMENT
for the
SEXTANT SHORT-TERM BOND FUND
of the
SATURNA INVESTMENT TRUST
THIS AGREEMENT, executed this ___th day of , 1995, between Saturna Capital
Corporation, a Washington State corporation (the "Adviser") and the Saturna
Investment Trust, a series open--end management investment company organized as
a business trust under the laws of the State of Washington and presently having
a portfolio named the Sextant Short-Term Bond Fund, (the "Fund") to be and
become effective as provided in Section 1, Article V, between the parties
hereto,
WITNESSETH, THAT:
The parties hereto enter into the following Articles of Agreement:
ARTICLE I: INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES
Section 1. Investment Advisory Services. During the continuance of this
Agreement, the Adviser shall supervise the investment management of the cash and
securities of the Fund, and in that connection, to the extent required, shall
furnish to the Fund advice and recommendations on securities to be purchased,
held or sold and the portion of the assets to remain uninvested, all according
to the investment objectives, powers and restrictions imposed by law or other
governing document or writing binding upon the Fund. Section 2. Administrative
Services. During the continuance of this Agreement: (a) The Adviser shall
furnish the Fund office space, office facilities and equipment, related
utilities, telephone service, stationery and supplies, typesetting, personnel
(including executive officers) and clerical and bookkeeping services as required
to fulfill its obligation as Adviser for the Fund. The Adviser shall pay the
compensation of its executives and employees, whether an officer or employee of
the Fund, for all services rendered by them for the Fund as required to fulfill
its obligation as Adviser, and shall furnish such office space, facilities,
supplies and services as agreed above. The Adviser shall also pay on behalf of
the Fund trade association membership and meeting expenses, and the preparation,
printing, qualification and offering (but not administration on behalf of a
participant or participating entity) of any prototype retirement plan offered by
the Fund to shareholders on the recommendation of the Adviser. (b) The Adviser
shall act as fund accountant, and prepare daily reports of Fund net asset values
as well as all other financial statements and reports. With the consent of the
Trustees, the Adviser at its expense may delegate fund accounting duties to
another qualified party. The Fund accountant shall furnish the Trustees, at any
regularly scheduled meeting or at such times as the Trustees may request, a
report on all
matters pertaining to the services of the Adviser, including but not
limited to, a list of the securities in the Fund and a record of
brokerage commissions paid.
(c). The Adviser shall act as transfer agent, registrar and dividend
disbursing agent for the Fund, pursuant to a form of Transfer Agency
Agreement attached hereto as Exhibit A, and made a part hereof.
Section 3. Affiliated Broker. Subject to review by the Trustees, the Adviser
shall place all orders for the purchase and sale of securities of the Fund. The
Adviser or a subsidiary of the Adviser is permitted to act as a broker (but not
a dealer or underwriter) in securities traded by the Fund, subject to review by
the Trustees and all pertinent regulations and limitations. No such orders shall
be placed in contravention of the Investment Company Act of 1940.
Section 4. Fund Expenses. The Fund shall pay or provide for the payment of its
expenses not assumed by the Adviser as above provided, which expenses shall
include, without limitation, taxes, interest, brokerage commissions,
compensation and expenses of Trustees, legal and auditing expenses, insurance
premiums, custodian fees, the expense of issuing Fund shares under the federal
securities laws and the regulatory authorities of the various states in which
the Fund is authorized to offer its shares, and the expense of preparing,
printing and mailing financial reports, investment newsletters, notices and
prospectuses for its existing shareholders.
ARTICLE III: FEES FOR SERVICES OF THE ADVISER
Section 1. Investment Advisory and Administrative Services Fee. As full
compensation for all services rendered and to be rendered and expenses assumed
by the Adviser as set forth in Article II "Investment Advisory and
Administrative Services" hereof, the Fund shall pay to the Adviser a monthly
Investment Advisory and Administrative Services Fee (the "Base Fee") at the
annual rate of 0.60% of average daily net assets of the Fund. Average daily net
asset value in a period shall be determined by dividing the aggregate of the
Fund's net assets on each calendar day by the number of calendar days in the
period.
Section 2. Performance Adjustment. The Base Fee shall be subject to a maximum
increase or decrease at the annual rate of 0.20% of the Fund's average daily net
assets, according to the relative total return investment performance of the
Fund (the "Performance Adjustment"). The Performance Adjustment shall be
computed as follows:
a) Following the end of each month the net investment return
realized by shareowners in the Fund for the entire just-ended
twelve month period (that is, the change in Net Asset Value
per share adjusted for dividends and other distributions, or
"Total Return") of the Fund for the twelve month period ending
that month ("Calculation Year") shall be calculated to the
nearest one hundredth of one percent as set forth in the
Fund's Registration Statement on Form N-1A.
b) The Fund's Total Return for the Calculation Year shall be
compared to the average total return of all Corporate "Bond
Funds-High Quality" mutual funds, as selected, calculated and
reported by Morningstar Inc. (or, if this index is unavailable
or becomes inappropriate for this measurement for any reason
in the opinion of the Fund's Board, then another index as
shall be chosen by the Fund's Board) (the "Benchmark").
c) If the Fund's Total Return outperforms or underperforms the
Benchmark's Total Return (rounded to the nearest tenth of one
percent [0.1%]) for the Calculation Year by 1% or more but
less than 2%, then the Base Fee for the month just completed
shall be increased or decreased by 0.10% (annual rate) of
average Calculation Year daily net assets, and the
performance-adjusted total Fee for the month shall be at the
annual rate of either 0.70% or 0.50% of average net assets.
d) If the Fund's Total Return outperforms or underperforms the Benchmark's Total
Return (rounded to the nearest tenth of one percent [0.1%]) for the Calculation
Year by 2% or more, then the Base Fee for the month just completed shall be
increased or decreased by 0.20% (annual rate) of average Calculation Year daily
net assets, and the performance-adjusted total Fee for the month shall be at the
annual rate of either 0.80% or 0.40% of average net assets. e) No Performance
Adjustment shall be made until the Fund acquires twelve full months of operating
history. The Fund shall accrue daily to pay its Investment Advisory and
Administrative
Services Fee fee at the Base Fee annual rate of 0.60%. The net Fee (Base Fee
plus or minus the Performance Adjustment) due to the Adviser for a calendar
month shall be paid when practicable after these calculations. Due to the
relatively small size of monthly-computed Performance Adjustments, no accrual
shall be required.
Section 3. Reimbursement and Waiver. The Adviser may, from time to time,
voluntarily waive its fees or reimburse the Fund for expenses above a specified
percentage of average daily net assets. The Adviser retains the ability to be
repaid by the Fund for voluntary expense reimbursements if Fund expenses fall
below the limit before the end of the Fund's fiscal year. If any fee waiver or
reimbursement is to be made, it shall be paid monthly and may vary by Fund of
the Trust.
Section 4. Termination. In the event of the termination of this Agreement the
fee for the month in which terminated shall be that proportion of the rate for
the whole month as the number of calendar days during which this Agreement is in
effect during the month bears to the number of days in the whole month computed
on the average daily net asset value of the portfolio during such period.
ARTICLE IV: DISTRIBUTION
Section 1. The Fund. The Fund shall offer shares without commission ("load") or
other sales expense. The Adviser's subsidiary, Investors National Corporation,
shall act as the Fund's distributor without compensation, and register where and
when appropriate. The Fund shall bear the expense of qualifying itself and any
necessary personnel to sell the Fund. As the expense to the Fund is deemed
warranted by the Trustees, the Adviser shall cause the Fund to be registered
under the various state "blue-sky" requirements.
Section 2. The Adviser. The Adviser or any subsidiary of the Adviser may engage
in any lawful activities designed to help Fund distribution, and pay for such
activities out of any part of its resources, including those fees described
under Article III. The Adviser shall pay any expenses for printing and
distributing extra prospectuses used in connection with sales and for preparing,
printing and distributing sales literature. The Adviser shall pay the salaries
of persons used in the distribution of the Fund, furnish office space and
facilities for such distribution activity, and pay for all other expenses
associated with distribution of the Fund.
ARTICLE V: TERM AND TERMINATION OF AGREEMENT
Section 1. Term of Agreement. This Agreement shall become effective when
approved by the holders of a majority of the outstanding shares of the Fund, and
shall continue in effect for a two year period unless sooner terminated as
hereinafter provided, and thereafter shall continue from year to year so long as
the terms of this Agreement and the renewal and continuance thereof are approved
at least annually by action of the Trustees or a majority vote of the
outstanding shares the Fund, but in either event it must be approved by a
majority of the Trustees, who are not "interested persons" as defined in the
Investment Company Act of 1940, casting their vote in person at a meeting called
for voting on such approval.
Section 2. Termination of Agreement. This Agreement may be terminated at any
time without liability to either party by notice in writing given by the party
desiring to terminate to the other not less than sixty (60) days before the date
specified, for termination. The Fund may take such action either by the Trustees
or by the affirmative vote of the holders of a majority of the outstanding
shares of the Fund.
Section 3. No Assignment. This Agreement may not be assigned by either party and
shall terminate automatically upon assignment (as defined in the federal
Investment Company Act of 1940).
Section 4. Amendment. This Agreement may be amended only with the approving vote
of the holders of a majority of the outstanding shares of the Fund. The vote of
a majority of the outstanding shares of the Fund means the vote, at any meeting
of the Fund's shareholders, of (1) 67% or more of the shares present or
represented by proxy, at such meeting, if the holders of more than 50% of the
outstanding shares are present or represented by proxy, or (2) more than 50% of
the outstanding shares, whichever is less.
Section 4. Use of Adviser's Name. The Adviser grants the Fund a non-exclusive,
terminable license and permission to use the name "Saturna" in its name during
the term of this Agreement.
ARTICLE VI. GENERAL
This instrument is executed by the Trustees and officers of Saturna Investment
Trust in such capacities for the Sextant Short-Term Bond Fund portfolio of the
Trust. By the execution hereof all parties agree that, except to the extent
limited by the provisions of the federal Investment Company Act of 1940, for the
payment of any claim or the performance of any obligations hereunder, resort
shall be had solely to the assets and property of the Fund and no shareholder,
Trustee, officer, employee or agent of the Fund or the Trust shall be personally
liable therefore. Reference is made to Articles of Trust dated February 20,
1987, which have been filed with the Washington Secretary of State, Olympia,
Washington. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on behalf of each of them by their duly authorized officers the date
and year first above written. SATURNA INVESTMENT TRUST SATURNA CAPITAL
CORPORATION By ________________________ By ________________________ Nicholas F.
Kaiser, Pres. Nicholas Kaiser, Pres.
ATTEST:
------------------------ -------------------------
Secretary Secretary
<PAGE>
Transfer Agent Agreement
Page 1
Exhibit A
to
INVESTMENT ADVISORY
and ADMINISTRATIVE SERVICES AGREEMENT
for the
SEXTANT SHORT-TERM BOND FUND
of the
SATURNA INVESTMENT TRUST
TRANSFER AGENT AGREEMENT
THIS AGREEMENT, executed this ___th day of __________ 1995, between Saturna
Capital Corporation, a Washington State corporation (the "Adviser") and the
Saturna Investment Trust, a series open--end management investment company
organized as a business trust under the laws of the State of Washington (the
"Trust") and presently having a portfolio named the Sextant Short-Term Bond
Fund, (the "Fund") is made pursuant to and in consideration of that certain
Investment Advisory and Administrative Services Agreement between the Adviser
and the Trust on behalf of the Fund, dated ______________, 1995 (the "Advisory
Agreement").
WITNESSETH THAT:
WHEREAS, pursuant to the terms of the Advisory Agreement the Adviser has agreed
to act as Transfer, Redemption and Dividend Disbursing Agent for the Fund
and also has agreed to act for the Fund in other respects as hereinafter
stated; and
WHEREAS, the Fund will appoint a bank, or other qualified entity, acceptable to
the Adviser as primary Custodian of the securities, cash and other assets
of the Fund, hereinafter referred to as the Custodian Bank, and may with
the agreement of the Adviser appoint one or more subcustodians;
NOW, THEREFORE, in consideration of the promises and mutual covenants contained
herein, the parties hereto, intending to be legally bound, do hereby agree
as follows:
Section 1. The Fund hereby appoints the Adviser as its Transfer, Registrar,
Redemption Agent and Dividend Disbursing Agent (the "Transfer Agent") and the
Transfer Agent accepts such appointments and agrees to act in such capacities
upon the terms set forth in this Agreement.
The Transfer Agent agrees to comply with all relevant provisions of the
Investment Company Act of 1940 (the "Act"), the Internal Revenue Code, other
applicable laws and all applicable rules and regulations thereunder.
If the Fund is a series company for purposes of Rule 18f-2 under the Act, the
term "Fund" as used in this Agreement shall be deemed to refer to each such
series as a separate portfolio unless the context otherwise requires. In
performing its functions hereunder, the Transfer Agent shall in all cases comply
with the procedures and conditions set forth in the Fund's then current
Prospectus and Statement of Additional Information ("SAI"), as provided to the
Transfer Agent by the Fund. To the extent that the Prospectus and SAI cover
procedures and duties of the Transfer Agent, agreement as to such matters must
have been reached between the Transfer Agent and the Fund prior to the
effectiveness of the Prospectus.
Section 2. The Fund currently has no Share Certificates outstanding, and does
not intend for the issue of Share Certificates in the future. Should the Fund
wish to issue Certificates in the future, it can do so only with the consent of
the Transfer Agent. All language in this agreement relating to Share
Certificates, such as the following paragraph, will be of no effect until such
time as it is mutually agreed that Share Certificates shall be issued.
The Fund shall furnish to the Transfer Agent a sufficient supply of blank Share
Certificates and from time to time will renew such supply upon the request of
the Transfer Agent. Such blank Share Certificates shall be signed manually or by
facsimile signatures of officers of the Fund authorized by law or the by-laws of
the Fund to sign Share Certificates and, if required, shall bear the Fund's seal
or facsimile thereof.
Section 3. The Transfer Agent shall make original issues of Shares in accordance
with Sections 13 and 14 below and with the Fund's then currently effective
Prospectus upon being furnished with (i) a certified copy of a resolution of
Directors of the Fund authorizing such issue and (ii) necessary funds for the
payment of any original issue tax applicable to such additional Shares. If
requested, a copy of the opinion of counsel as to the validity of such
additional Shares shall be furnished to the Transfer Agent upon the Fund's
filing of its Rule 24f-2 Notice under the Act with the Securities and Exchange
Commission.
Section 4. Transfers of Shares shall be registered and, subject to the
provisions of Section 10, new Share Certificates issued by the Transfer Agent
upon surrender of outstanding Share Certificates, if any, (i) in form deemed by
the Transfer Agent to be properly endorsed for transfer, (ii) with all necessary
endorsers' signatures guaranteed by a member firm of a national securities
exchange, the NASD, or a commercial bank, except when the requirement of a
signature guarantee is waived in accordance with the Fund's then current
Prospectus or SAI or when otherwise authorized by the Fund pursuant to Written
Instructions (as defined in Section 34 below), accompanied by (iii) such
assurances as the Transfer Agent shall deem necessary or appropriate to evidence
the genuineness and effectiveness of each necessary endorsement, and (iv)
satisfactory evidence of compliance with all applicable laws relating to the
payment or collection of taxes. The Transfer Agent shall retain all shareholder
applications and shall compare the signature(s) on written redemption requests
with the signature on the shareholder applications as may be necessary in the
opinion of the Transfer Agent, provided that the Transfer Agent shall be liable
for any loss due to forgery or improper signature of any kind resulting from the
gross negligence of the Transfer Agent in making or failing to make such
comparison. The Transfer Agent shall take such reasonable measures as may be
agreed upon from time to time between the Fund and the Transfer Agent to enable
the Fund to identify proposed transfers which, if effected, appear likely to
cause the Fund to fall within the definitions of a personal holding company as
defined in the Internal Revenue Code and shall not make such transfer without
the prior written approval of the Fund and its counsel.
Section 5. When mail is used for delivery of Share Certificates the Transfer
Agent shall forward Share Certificates in "non-negotiable" form by first-class
mail, and Share Certificates in "negotiable" form by registered mail, return
receipt requested, all mail deliveries to be covered while in transit to the
addressee by insurance arranged for by the Transfer Agent.
Section 6. In registering transfers of Shares the Transfer Agent may rely upon
the Uniform Commercial Code or any other statutes which in the opinion of
counsel protect the Transfer Agent and the Fund in not requiring complete
documentation, (subject to compliance with procedures set forth in the Fund's
then current Prospectus and/or SAI), in registering transfer with inquiry into
adverse claims, in delaying registration for purposes of such inquiry, or in
refusing registration where in its judgment an adverse claim requires such
refusal.
Section 7. The Transfer Agent may issue new Share Certificates in place of Share
Certificates represented to have been lost, destroyed or stolen, upon receiving
indemnity satisfactory to the Transfer Agent and the Fund and may issue new
Share Certificates in exchange for, and upon surrender of, mutilated Share
Certificates.
Section 8. In case any officer of the Fund who shall have signed manually or
whose facsimile signature shall have been affixed to blank Share Certificates
shall die, resign or be removed prior to the issuance of such Share
Certificates, the Transfer Agent may issue or register such Share Certificates
as the Share Certificates of the Fund notwithstanding such death, resignation or
removal until otherwise directed by the Fund; and the Fund shall file promptly
with the Transfer Agent such approval, adoption or ratification as may be
required by law.
Section 9. The Transfer Agent will maintain mutual fund account records in
which, among other details, it will note the issuance, transfer and redemption
of Shares, whether certificated or not. Whenever a Shareholder deposits Shares
represented by Share Certificates in an account, the Transfer Agent upon receipt
of the Share Certificates registered in the name of the Shareholder (or if not
so registered, in proper form for transfer), shall cancel such Share
Certificates and make appropriate entries in its stock transfer records. The
Transfer Agent will keep account records, part of which shall be the stock
transfer records, in which it will note the names and registered addresses of
Shareholders and the number of Shares and fractions owned by them, whether or
not Share Certificates are outstanding.
Section 10. The Transfer Agent shall issue Share Certificates for Shares only
upon receipt of a written request from a Shareholder. In all other cases, the
Transfer Agent shall dispense with the issuance and countersignature of Share
Certificates whenever Shares are purchased. The Transfer Agent shall process
purchase and redemption transactions by making appropriate entires in the Fund's
account records.
Section 11. The Transfer Agent shall, in addition to the duties and functions
above-mentioned, perform the usual duties and functions of a stock Transfer
Agent for a corporation. It shall countersign for issuance Share Certificates
representing original issue treasury Shares as directed by the Written
Instructions of the Fund and shall transfer Share Certificates registered in the
name of Shareholders from one Shareholder to another in the usual manner. The
Transfer Agent may rely conclusively and act without further investigation upon
any list, instruction, certification, authorization, Share Certificate or other
instrument or paper reasonably believed by it in good faith to be genuine and
unaltered, and to have been signed, countersigned, or executed by duly
authorized person or persons, or upon the instructions of any duly authorized
officer of the Fund, or upon the advice of counsel for the Fund or for the
Transfer Agent. The Transfer Agent may record any transfer of Share Certificates
which is reasonably believed by it in good faith to have been duly authorized or
may refuse to record any transfer of Share Certificates if in good faith the
Transfer Agent deems such refusal necessary to avoid any liability on the part
of either the Fund or the Transfer Agent; provided, however, that the Transfer
Agent shall promptly notify the Fund of any such refusal to record any transfer
and shall act in accordance with the Fund's Written Instructions, if any. The
Fund agrees to indemnify and hold harmless the Transfer Agent from and against
any and all losses, costs, claims, and liability which it may suffer or incur by
reason of so relying or acting or refusing to act.
Section 12. In case of any request or demand for the inspection of the share
records of the Fund, the Transfer Agent shall endeavor to notify the Fund and to
secure instructions as to permitting or refusing such inspection. However, the
Transfer Agent may (after giving written notice to the Fund) exhibit such
records to any person in any case where it is advised by its counsel that it may
be held liable for failure so to do, unless indemnified against such liability
by the Fund.
ISSUANCE OF SHARES
Section 13. For the purposes of this Section, the Fund hereby instructs the
Transfer Agent to consider Shareholder payments as available for investment in
accordance with the policies and procedures set forth in the Fund's then current
Prospectus and SAI. Immediately after the time or times and on each day on which
the Fund's then Current Prospectus or SAI states that its net asset value per
share shall be determined, the Transfer Agent shall obtain from the Fund or its
designated agent a quotation of the net asset value per share determined as of
such time on such day. The Transfer Agent reserves the right to charge the Fund
its reasonable costs of making corrections to shareholder records if it is later
determined that the Fund supplied an inaccurate net asset value.
The Transfer Agent shall, on the same business day on which any order for the
purchase of Shares is received and utilizing the net asset value per share next
determined after the receipt of such order, determine the amount to be invested
and the number of Shares and fractional Shares (rounded to three decimal places)
to be purchased. The Transfer Agent shall thereupon as agent for the
Shareholders place a purchase order with the Fund for the proper number of
Shares and fractional Shares to be purchased and confirm such number to the Fund
in writing. The Transfer Agent shall total the amount available for investment
in Shares at the net asset value determined by the Fund or its designated agent
at each Fund pricing time.
The Transfer Agent shall pay over to the Custodian Bank the net asset value of
Shares and fractional Shares purchased immediately upon receipt of the
consideration therefor. In the event that any check or other order for the
payment of money is returned unpaid for any reason, the Transfer Agent shall
give prompt notification to the Fund of the non-payment of said check and take
such action as the Fund may authorize by Written Instructions.
Any profit on the liquidation of unpaid shares accrues to the Fund. In the event
of loss upon the liquidation of unpaid shares the Transfer Agent will charge the
purchaser's account for the amount of such loss. If the balance in such account
is insufficient to cover the loss the Transfer Agent will assist the Fund in the
Fund's efforts to recover any such losses from the purchaser.
Section 14. The Transfer Agent, in making the calculations provided for in
Section 13, shall rely on its record of available investment funds. The proper
number of Shares and fractional Shares shall then be issued daily and credited
by the Transfer Agent to the shareholder accounts. The Transfer Agent shall mail
to each Shareholder a confirmation of each purchase (if provided for under the
provisions of the Shareholder's account) no later than the next business day,
with copies to interested parties if requested. Such confirmations shall among
other details show the prior Share balance, the new Share balance, the dollar
value, the Shares for which Stock Certificates are outstanding (if any), the
amount invested and the price paid for the newly-purchased Shares.
The Transfer Agent shall provide the Fund with the total number of shares issued
by the Fund each day. In the case any issue of shares would result in
overissuance, the Transfer Agent shall notify the Fund.
REDEMPTIONS
Section 15. The Transfer Agent shall process all requests from Shareholders to
redeem Shares and determine the number of Shares required to be redeemed to make
monthly payments, automatic payments or the like and advise the Fund, on the
same business day that the request for redemption was received, of the total
number of Shares and fractional Shares (rounded to three decimal places) to be
redeemed. Notwithstanding the foregoing, if a redemption request is for a dollar
value of Shares in excess of the dollar value of Shares in the specified account
or is not in accordance with the requirements of the Prospectus and/or SAI, the
Transfer Agent shall not effect such redemption in whole or in part, and shall
immediately advise both the Fund and the Shareholder of such discrepancy. The
Fund or its designated agent shall then quote to the Transfer Agent the
applicable net asset value; whereupon the Transfer Agent shall furnish the Fund
with an appropriate confirmation of the redemption and process the redemption,
at the net asset value per share next computed after receipt of the order for
redemption, by filing with the Custodian an appropriate statement and making the
proper distribution and application of the redemption proceeds in accordance
with the Fund's Prospectus or SAI. The stock registry books recording
outstanding Shares and the individual account of the Shareholder shall be
properly debited. If provided for under the provisions of the shareholder's
account, the Transfer Agent shall mail to each Shareholder a confirmation of
each redemption no later than the next business day, with copies to interested
persons if requested. Such confirmation shall among other details show the prior
Share balance, the new Share balance and total dollar value thereof, the Shares
for which stock certificates are outstanding (if any), the amount redeemed and
the price received for the redeemed Shares.
Section 16. The proceeds of redemption shall be remitted by the Transfer Agent,
in each case by draft or other instrument drawn against funds held by the Fund
in the Custodian Bank, in accordance with the Fund's then currently effective
Prospectus or SAI as follows:
a. By check drawn to the order of and mailed to the Shareholder at the
address of record not later than the third business day after the
redemption request is received.
b. By wire to a designated bank or broker upon telephone request, without
signature guarantee, if such redemption procedure has been elected by the
Shareholder.
c. In accordance with the order of the Shareholder in the case of redemptions by
check or use of a debit card. d. To a person other than the Shareholder or to an
address other than the
Shareholder's registered address only if instructions are received in
writing with signature guaranteed. Planholders transfering to another Plan
custodian do not require written signature guarantees but do require the
written acceptance of the new custodian.
e. By other procedures commonly followed by mutual funds and mutually agreed
upon by the Fund and the Transfer Agent. Any change in the designated bank or
brokerage account or registered address
will be accepted by the Transfer Agent only if made in writing by the
Shareholder, with signature guaranteed, unless a different procedure is agreed
to in writing by the Fund and the Transfer Agent.
If required by the Fund's then current Prospectus or SAI, the request and stock
certificates, if any, for Shares being redeemed, must have the owner's signature
guaranteed by a domestic commercial bank or trust company or a member firm of a
national securities exchange or the NASD. If Share Certificates have not been
issued to the redeeming Shareholder, the signature of the Shareholder on the
redemption request must be similarly guaranteed. If the Fund authorizes the
Transfer Agent by Written Instructions to waive the signature guarantee in
certain instances, the Fund hereby provides the Transfer Agent, its successors
and assigns, the same protections the Transfer Agent would normally receive from
a signature guarantee requirement.
The Transfer Agent shall retain all cancelled certificates for redemption or
transfer for a period of three years, during which time it shall be able to
produce said certificates upon appropriate notice from the Fund.
For the purposes of redemption of Shares which have been purchased by check
within 15 business days of a receipt of the redemption request for such shares,
the Fund shall provide the Transfer Agent, from time to time, with Written
Instructions concerning the time within which such requests may be honored. The
Transfer Agent has no responsibility to determine if any investment payment will
be reversed for any reason and is not responsible in any way for the failure of
any investment to be collected.
The authority of the Transfer Agent to perform its responsibilities under
Section 15 and 16 shall be suspended upon the Transfer Agent's receipt of
notification of the suspension of the determination of the Fund's net asset
value.
DIVIDENDS
Section 17. Upon the declaration of each dividend and each capital gains
distribution by the Board of Directors of the Fund, the Fund shall notify the
Transfer Agent by Written Instructions of the date of such declaration, the
amount payable per share, the sources from which such dividend or distribution
is made, and, unless such dividend is a regular daily or monthly dividend
payable by a money market or other fund, the record date for determining the
Shareholders entitled to payment. The ex-date and payment date shall always be
the next determination of net asset value after the record date. The Transfer
Agent shall withhold such sums as may be required to be withheld under
applicable income tax laws, rules and regulations.
Section 18. Upon the payment date of a dividend or distribution declared by the
Fund's Board of Directors, the Fund will cause the Custodian Bank to transfer to
the disbursement account maintained by the Custodian in the name of the Fund the
total amount of such dividends or distributions payable in cash to those
Shareholders electing to receive such dividends or distributions in cash. On
payment date, the Transfer Agent shall prepare a check in the appropriate amount
and mail it not later than the third business day after the payment date to such
Shareholder at his address of record or to such other address as the Shareholder
may have designated.
With regard to Shareholders not electing to receive such dividends or
distributions in cash, the Transfer Agent will automatically reinvest all
dividends and other such distributions in additional shares at the net asset
value per share on payment date. When provided by the provisions of the
Shareholder's account, the Transfer Agent will promptly mail to each shareholder
at his address of record or such other address as the Shareholder may have
designated a statement showing the number of full and fractional shares (rounded
to three decimal places) currently owned by the Shareholder and the net asset
value of the shares so credited to the Shareholder's account.
The Transfer Agent's dividend statement meets the requirements of the Act and
Rule l9a-1 thereunder for notification as to the source(s) of dividend
payment(s). Where further notification detail is required, the Transfer Agent
shall prepare and distribute the information necessary as directed by the Fund.
GENERAL PROVISIONS
Section 19. The Transfer Agent shall provide to the Fund's investors equity fund
account confirmations with each transaction, money fund account confirmations
with each transaction or monthly (as desired by the investor), investor choice
of monthly transfer agency consolidated statements or monthly brokerage
consolidated statements, as well as all services available now or in the future
to the shareowners of mutual funds serviced by the Transfer Agent, on the same
terms and conditions. The Transfer Agent shall provide account confirmation
statements as at December 31 of each year which include a listing of all
transactions in the account during the calendar year then ended, plus income tax
reporting information.
The Transfer Agent will not use its position to solicit business from the
shareholders of the Fund.
Section 20. The Transfer Agent shall report daily the sales and redemptions in
each state in a manner suitable for state "blue-sky" reporting by the Fund. The
Transfer Agent has no further responsibility as to controlling sales of Fund
Shares or maintaining the various registrations required under state "blue sky"
laws and regulations. If the Fund notifies the Transfer Agent, the Transfer
Agent will stop Shares from being sold in all states where the Fund's
registration is not current. Maintaining current registration information
on-line is the responsibility of the Fund.
Section 21 The Transfer Agent shall maintain records (which may be part of the
stock transfer records) in connection with the issuance and redemption of Shares
and the administration of the Plans and dividend reinvestments, in which will be
noted the transactions effected for each Shareholder and the number of Shares
and fractional Shares (rounded to three decimal places) owned by each for which
no Share Certificates are outstanding. The Transfer Agent shall create and
maintain all necessary records in accordance with good custodial practice,
including, but not limited, to records required by Section 31(a) of the Act and
Section 17(A) of the Securities and Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder. The Transfer Agent agrees to make
available upon request and to preserve for the periods prescribed in Section
31(a) under the Act and Section 17(A) of the Securities and Exchange Act of
1934, as amended, and the rules and regulations thereunder, any records relating
to services provided under this Agreement or maintained by it on behalf of the
Fund. All such records shall be the property of the Fund.
The Transfer Agent shall also maintain the following records for each
Shareholder's account: name, address, and tax identification number; number of
Shares held and specific form of holding, including numbers and denominations of
certificates, if any; historical information regarding the account of each
Shareholder, including dividends paid, distributions made and date and price for
all transactions in a Shareholder's account; any stop or restraining order
placed against a Shareholder's account; any dividend reinvestment order,
dividend address and correspondence relating to the maintenance of a
Shareholder's account; all tax and withholding information relating to a
Shareholder's account; information with respect to withholding on foreign
accounts.
The Transfer Agent shall maintain records for all accounts opened by entities
assigned an institution number ("institution") so that where required the
aggregate average daily value of all of an institution's accounts can be
determined and a record of such values maintained, and so that duplicate
statements for the accounts can be prepared and sent to each institution.
The Transfer Agent represents and warrants that the various procedures and
systems which it has implemented with regard to safeguarding from loss and
damage attributable to fire, theft, or any other cause of the Fund's blank
checks, blank share certificates, records and other data and the Transfer
Agent's records, data, equipment, facilities, and other property used in the
performance of its obligations hereunder are adequate and that it will make such
changes therein from time to time as are required for the secure performance of
its obligations hereunder.
Section 22 The Transfer Agent shall maintain such records as shall enable the
Fund to fulfil in a timely fashion the filing requirements of Form N-SAR or of
any successor monthly, quarterly or annual report required by the Act or rules
and regulations thereunder to be filed by the Fund. All such records shall be
the property of the Fund.
Section 23 The Transfer Agent shall cooperate with the Fund's independent public
accountants and shall take all reasonable action in the performance of its
obligations under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their opinion,
including but not limited to the opinion included in the Fund's annual or
semi-annual reports on Form N-SAR, or of any successor annual report required by
the Act or rules thereunder to be filed by the Fund.
Section 24. In addition to the services as Transfer Agent and Administrator as
above set forth, the Transfer Agent will perform other services for the Fund as
agreed from time to time, including but not limited to, preparation of filing
with the Internal Revenue Service and mailing to Shareholders such Federal Tax
Information Forms as are required to be so prepared, filed and mailed by
applicable laws, rules and regulations, mailing periodic reports of the Fund,
preparation of Shareholder lists as necessary, and mailing initial notices of
Shareholders' meetings, proxies and proxy statements.
The Transfer Agent shall answer telephone calls and correspondence from
Shareholders relating to their share accounts. The Transfer Agent shall respond
to all inquiries from Shareholders relating to the administration of their
accounts within one (l) business day with respect to answers delivered by
telephone and within three (3) business days with respect to answers delivered
in writing. Copies of all correspondence from Shareholders involving complaints
about the management of the Fund, the services provided by or for the Fund, the
Transfer Agent or others, or concerning complaints relating to the Fund shall be
sent immediately to the Fund. Summaries of any similar matters conveyed by a
Shareholder by telephone shall be prepared by the Transfer Agent and sent to the
Fund within three (3) business days.
Telephone calls and correspondence on other matters will be referred to the
Fund.
The Transfer Agent shall keep records of Shareholder substantive telephone calls
and correspondence and replies thereto, and of the lapse of time between receipt
of such substantive telephone calls and correspondence and the making of
replies.
Section 25. Nothing contained in this Agreement is intended to or shall require
the Transfer Agent in any capacity hereunder to perform any functions or duties
on any day identified in the Prospectus and/or SAI on which the Fund is closed.
Functions or duties normally scheduled to be performed on such days shall be
performed on, and as of, the next business day on which the Transfer Agent is
open, except when the Transfer Agent is closed to observe a legal emergency when
the Fund is open and the Fund has received purchases or redemption requests,
such purchases and redemptions shall be priced and executed "as of" such date on
the business day next following such day.
Section 26. Pursuant to the terms of the Advisory Agreement, the Transfer Agent
shall receive no additional compensation for its services hereunder; provided,
however, that the Fund shall reimburse the Transfer Agent for expenses such as
costs of forms, statements, envelopes, postage, shipping, telephone, and
statement microfiche copies. Telephone costs will be passed to the Fund at cost.
All such payments and reimbursements shall be charged to and paid by the Fund on
a monthly basis. It is understood that the Fund may, in the future, undertake to
perform certain of the services herein contemplated to be performed by the
Transfer Agent, such as maintaining the facility for Shareholders to make
telephone purchases, redemptions and transfers of Shares. To the extent, if any,
the Fund undertakes such duties, the Transfer Agent shall be relieved of such
obligation.
Section 27. The Transfer Agent in acting for Planholders, or in any other
capacity set forth in this Agreement, shall not be personally liable for any
taxes, assessments, or governmental charges which may be levied or assessed on
any basis whatsoever in connection with the administration of the Plans,
excepting only for taxes assessed against the Transfer Agent in its corporate
capacity arising out of its compensation hereunder.
Section 28. Neither the Transfer Agent, nor any of its directors, officers,
stockholders, agents or employees shall have any liability hereunder for any
error of judgment, mistake of law or any loss arising out of any error of
judgment, mistake of law or any act or omission in the performance of its duties
hereunder, except for those resulting from willful misfeasance, bad faith or
gross negligence on the part of the Transfer Agent in the performance of its
duties or from reckless disregard of its duties hereunder. The Fund shall
indemnify the Transfer Agent and hold it harmless from any and against any and
all actions, suits and claims, whether groundless or otherwise, arising directly
or indirectly out of or in connection with its performance under this Agreement
including but not limited to its performance as Transfer Agent and Administrator
of Plans and from and against any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liabilities incurred by the Transfer Agent
in connection with any such action, suit, or claim, except such as shall result
from its own grossly negligent act, omission or willful misconduct or that of
its officers, agents or employees. The Fund shall not be required to indemnify
the Transfer Agent against any expenses or liabilities arising out of a default
judgment, a confession of judgment or a settlement entered into without the
prior written consent of the Fund. The Transfer Agent shall not be under any
obligation to prosecute or to defend any action, suit or claim arising out of or
in connection with its performance under this Agreement as Transfer Agent and
Administrator of Plans, which, in the opinion of its counsel, may involve it in
expense or liability. At its option the Fund may and upon request of the
Transfer Agent the Fund shall assume the entire defense of any action, suit, or
claim subject to the foregoing indemnity. The Transfer Agent shall give the Fund
notice, and reasonable opportunity to defend, any such action, suit, or claim,
in the name of the Fund or the Transfer Agent or both. In the event the Fund
assumes the defense, the Transfer Agent shall be responsible for its own legal
fees and expenses from the date the Fund so assumes the defense, except for such
fees and expenses incurred at the request of the Fund. The Fund and the Transfer
Agent shall cooperate fully in the defense of any action, suit or claim.
The Transfer Agent at its expense will make corrections and adjustments as may
be required, where the Transfer Agent, its officers, agents, employees or
delegates are the cause of any error made in rendering the services described in
this agreement, without limitation.
Without limitation of the foregoing:
(a) The Transfer Agent may rely upon and shall not be liable to the Fund
for the advice of the Fund, counsel (who may be counsel for the Fund or
counsel for the Transfer Agent) and upon statements of accountants, brokers
and other persons believed by it in good faith to be expert in the matters
about which they are consulted and for any actions taken in good faith upon
such statements.
(b) The Transfer Agent shall not be liable for any action reasonably taken
in good faith reliance upon any Written Instructions or certified copy of
any resolution of the Board of Directors of the Fund, provided, however,
that upon receipt of a Written Instruction countermanding a prior
Instruction which has been fully executed by the Transfer Agent, the
Transfer Agent shall attempt to honor to the extent then possible, such
later Instructions and rely upon the genuineness of any such document or
correspondence reasonably believed in good faith to have been validly
executed.
(c) The Transfer Agent may rely and shall be protected in acting upon any
signature, instruction, request, letter of transmittal, certificate,
opinion of counsel, statement, instrument, report, notice, consent, order,
or other paper or document reasonably believed by it to be genuine and to
have been signed or presented by the Shareholder, Fund or other proper
party or parties.
Section 29. The Fund shall promptly cause to be turned over to the Transfer
Agent (i) an accurate list of Shareholders of the Fund showing the proper
registered address and number of Shares owned and whether such shares are
represented by outstanding Share Certificates or by non-certificated share
accounts, (ii) all records relating to Plans, including original applications
signed by the Planholders and original plan accounts recording payments,
contributions, deductions, reinvestments, withdrawals and liquidations, and
(iii) all shareholder records, files, and other materials necessary or
appropriate for proper performance of the functions assumed by the Transfer
Agent under this Agreement (hereinafter called "Materials"). The Fund agrees to
indemnify and hold the Transfer Agent, its successors and assigns, harmless of
and from any and all expenses, damages, claims, suits, liabilities, actions,
demand and losses of third parties arising out of or in connection with any
error, omission, inaccuracy or other deficiency of such Materials, or out of the
failure of the Fund to provide any portion of such Materials or to provide any
information needed by the Transfer Agent to perform knowledgeably its functions.
The Fund agrees to pay reasonable compensation to the Transfer Agent to cover
the Transfer Agent's expenses in correcting any such error, omission, inaccuracy
or other deficiency of the Materials.
Section 30. The Transfer Agent shall at all times act in good faith and shall
use its best efforts to insure the accuracy of all services performed under this
Agreement and shall be liable for and shall indemnify and hold the Fund harmless
from and against any and all actions, suits and claims, whether groundless or
otherwise, and from and against any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liabilities incurred by the Fund, in
connection with any such action, suit or claim arising directly or indirectly
out of or in connection with errors caused by the Transfer Agent's gross
negligence, bad faith or willful misconduct or that of its agents or employees.
The Transfer Agent shall not be required to indemnify the Fund against any
expenses or liabilities arising out of a default judgment, a confession of
judgment or a settlement entered into without the prior written consent of the
Transfer Agent. The Fund shall not be under any obligation to prosecute or
defend any action, suit or claim arising directly or indirectly out of or in
connection with errors caused by the Transfer Agent's gross negligence, bad
faith or willful misconduct or that of its employees or agents which, in the
opinion of its counsel, may involve it in expense or liability. The Transfer
Agent may at its option and, upon request of the Fund the Transfer Agent shall,
assume the entire defense of any action, suit or claim subject to the foregoing
indemnity. The Fund shall give the Transfer Agent notice of, and reasonable
opportunity to defend, any such action, suit or claim in the name of the Fund or
the Transfer Agent or both. In the event the Transfer Agent assumes the defense,
the Fund shall be responsible for its own legal fees and expenses from the date
the Fund so assumes the defense, except for such fees and expenses which are
incurred at the request of the Transfer Agent. The Transfer Agent and the Fund
agree to cooperate fully in the defense of any such action, suit or claim.
Section 31 The Transfer Agent acknowledges and agrees that all books and records
maintained for the Fund in any capacity under this Agreement are the property of
the Fund and may be inspected by the Fund at any reasonable time.
The Transfer Agent agrees to regard and preserve as confidential all records and
other information relative to the Fund, and will not without written authority
of the Fund disclose to others, during the term of this Agreement or thereafter,
any such records or other information.
In the event of termination of this Agreement for any reason, the Transfer Agent
agrees to provide the Fund with complete and accurate records and to assist the
Fund in the orderly transfer of accounts and records. Without limiting the
generality of the foregoing, the Transfer Agent agrees upon termination of this
Agreement:
(a) to deliver to the Fund computer tapes containing the Fund's accounts
and records in machine readable form together with such record layouts and
additional information as may be necessary to enable the Fund to utilize
the information therein;
(b) to cooperate with the Fund and any successor transfer agent in the
interpretation of the Fund's accounts and records; and
(c) to reimburse the Fund its reasonable costs arising out of any error,
omission, inaccuracy or other deficiency in the Fund's accounts and records
which occurred during the term of this Agreement which arise from the
negligence or other error of the Transfer Agent as long as claim for such
reimbursement is made within 90 days of termination.
Section 32. The Transfer Agent shall maintain a standard Stockbroker's Blanket
bond on all its employees, providing fidelity insurance as required by rules of
the National Association of Securities Dealers. All employees at the time of
employment will have fingerprints made and checked by the FBI under procedures
established as standard for stockbrokerage employees by the NASD, as well as for
transfer agency employees by the SEC.
Section 33. The practices and procedures of the Transfer Agent and the Fund set
forth in the Agreement, or any other terms or conditions of this Agreement, may
be altered or modified from time to time as may be mutually agreed by the
parties to this Agreement. In special cases the parties hereto may adopt in
writing such procedures as may be appropriate or practical under the
circumstances, and the Transfer Agent may conclusively rely on the determination
of the Fund that any special procedure which has been approved by the Fund does
not conflict with or violate any requirements of its Articles of Incorporation,
By-Laws or Prospectus, or any rule, regulation or requirement of any regulatory
body.
Section 34. The Fund shall file with the Transfer Agent a certified copy of each
resolution of its Board of Directors authorizing the execution of Written
Instructions or the transmittal of Oral Instructions, as provided in the
Custodian Agreement.
The following additional terms, for purposes of this Agreement or any amendment
or supplement thereto, shall have the meanings herein specified unless the
context otherwise requires:
Plan:The term Plan shall include such investment plan, dividends or capital
gains reinvestment plans, systematic withdrawal plans or other types of
plans set forth in the then currently effective prospectus of the Fund,
including any qualified retirement plan which is a Shareholder of the Fund,
in form acceptable to the Transfer Agent, which the Fund may from time to
time adopt and make available to its Shareholders, including plans or
accounts by individuals or corporations. All Planholders are Shareholders,
who use a specific plan or service not used by all Shareholders as a whole.
Administrator: The term Administrator of a Plan means the Transfer Agent solely
in its capacity as agent for the performance of those retirement plan tasks
which can be performed on a group or mass basis by the Transfer Agent's
systems. It does not include certain corporate retirement plan tasks that
are often performed on an individual basis, such as preparing Summary Plan
Descriptions and/or preparing IRS Form 5500.
Section 35. This Agreement may be amended from time to time by a supplemental
agreement executed by the Fund and the Transfer Agent.
Section 36 Either the Fund or the Transfer Agent may give 60 days' written
notice to the other of the termination of this Agreement, such termination to
take effect at the time specified in the notice; provided, however, the
obligations set forth in Sections 28, 30, 31, 38 and 39 and, for the fiscal year
of the Fund in which termination occurs, Sections 22 and 23, shall survive such
termination, unless satisfied.
Section 37. Any notice or other communication required by or permitted to be
given in connection with this Agreement shall be in writing, and shall be
delivered in person or sent by first class mail, postage prepaid, to the
respective parties as follows:
If to the Fund:
Sextant Short-Term Bond Fund
Attn: Secretary
1300 N. State Streeet
Bellingham WA 98225
If to the Transfer Agent:
Saturna Capital Corporation
PO Box 2838
Bellingham, Washington 98227-2838
Section 38 The Transfer Agent and the Fund each represent and warrant to the
other as to itself that all actions required by their respective directors or
shareholders has been taken to authorize the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby; the
execution and delivery of this Agreement and consummation of the transactions
contemplated hereby do not contravene any provision of their respective charter
or by-laws or of any laws, regulations or orders of any government or agency
thereof to which it is subject; do not constitute the violation or breach of any
agreement or understanding to which it is a party or by which it is bound; and
upon its execution and delivery, this Agreement shall be binding and enforceable
against it in accordance with its terms.
Section 39. The Transfer Agent may from time to time, with the written consent
of the Fund, delegate some or all of its duties hereunder to others, who shall
perform such functions as the agent of the Transfer Agent. To the extent of such
delegation, the term "the Transfer Agent" in this Agreement shall be deemed to
refer to both the Transfer Agent and to its designee or to either of them, as
the context may indicate. In each provision of this Agreement fixing or limiting
the liabilities or the delegations of the Transfer Agent, or providing for the
liability indemnification or protection of the Transfer Agent, the term "the
Transfer Agent" shall include the Transfer Agent's designee. The Transfer Agent
shall not be relieved of any liabilities or obligation under the Agreement in
connection with such delegation of duties, shall be responsible to supervise and
assure that any such designee properly performs the duties delegated to it, and
shall be responsible for the performance of the designee as though the Transfer
Agent had, itself, performed the duties so delegated.
Section 40. This Agreement may be executed in two or more counterparts, each of
which when so executed shall be deemed to be an original, but such counterparts
shall together constitute but one and the same instrument.
Section 41. This Agreement shall extend to and shall be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by the Fund without the written consent of the
Transfer Agent or by the Transfer Agent without the written consent of the Fund,
authorized or approved by a resolution of its Board of Directors.
Section 42 This Agreement constitutes the full and complete agreement of the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements or understandings between the parties.
Section 43 Whenever pronouns are used herein, they shall be interpreted in the
neuter, masculine, feminine, singular or plural as the context may require.
Section 44. Except where specific time limits are herein provided, no delay on
the part of any party hereto in exercising any power or right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
power or right hereunder preclude other or further exercise thereof or the
exercise of any other power or right. No waiver shall be enforceable against any
party hereto unless in writing, signed by the party against whom such waiver is
claimed, and shall be limited solely to the one event.
Section 45. This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of Washington, without giving effect to the
principles of conflicts of law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their respective duly authorized officers and their corporate seals hereunto
duly affixed and attested, as of the day and year first above written.
SATURNA INVESTMENT TRUST
By_______________________ Attest______________________
SATURNA CAPITAL CORPORATION
By_________________________ Attest_______________________
<PAGE>
Basic Services
*Opening new accounts.
*Processing all payments.
*Issuing and canceling certificates.
*Processing partial and complete redemptions.
*Regular and legal transfers of accounts.
*Mailing shareholder reports. *Processing dividends and distributions, including
withholding obligations. *Postage, except that for statements and all
shareholder communications. *Paper used to render reports to the Fund. The cost
of shareholder forms, envelopes, etc. will be billed to the Fund at the Transfer
Agent's cost. *Confirmation of all transactions as provided by the terms of each
shareholder's account. *Retirement account reporting. Account Maintenance 1.
Maintaining shareholder records of certificates and whole and fractional
unissued shares. 2. Changing shareholders' addresses. 3. Daily reports on
numbers of shares, accounts. 4. Addressing and tabulating annual proxy cards. 5.
Supplying stockholder lists as necessary. 6. Preparation of shareholder Federal
Tax Information Forms, including those required of a Retirement Plan Custodian.
7. Replying to shareholder telephone calls and correspondence other than that
for Fund performance, Fund information, or Fund related inquiries.
CUSTODIAN AGREEMENT
SATURNA INVESTMENT TRUST
SEXTANT SHORT-TERM BOND FUND
This CUSTODIAN AGREEMENT, effective September 28,1995, between the Sextant
Short-Term Bond Fund of Saturna Investment Trust, one of the separate Funds of
the Trust, organized under the Washington State Business Trust Act, (hereinafter
called the "Fund"), and National City Bank, Indiana (hereinafter called the
"Custodian"),
WITNESSETH:
WHEREAS, the Fund desires that its securities and cash shall be hereafter held
and administered by the Custodian pursuant to the terms of this Agreement:
NOW, THEREFORE, in consideration of the mutual agreements herein made, the Fund
and the Custodian agree as follows:
Section 1. Definitions
The word "Securities" as used herein includes stocks, units, options, notes,
mortgages or other obligations and any certificates, receipts, warrants or other
instruments representing rights to receive, purchase, or subscribe for the same,
or evidencing or representing any other rights or interests therein, or in any
property or assets.
The words "Officers' Certificate" shall mean a request or direction or
certification in writing signed in the name of the Fund by any two of the
Chairman of the Executive Committee, the President, a Vice President, the
Secretary and the Treasurer of the Trust on behalf of the Fund, or any other
persons duly authorized to sign by the Board of Trustees or the Executive
Committee of the Trust.
The term "Book-Entry System" shall mean the Federal Reserve / Treasury
book-entry system for the United States and federal agency Securities, its
successor or successors and its nominee or nominees, and the term "Depository"
shall mean a Depository Trust Company ("DTC") a clearing agency registered with
the Securities and Exchange Commission, its successor or successors and its
nominee or nominees, provided the Custodian has received a certified copy of a
resolution of the Trust's Board of Trustees specifically approving deposits in
the Book-Entry System or DTC, as the case may be. The term "Depository" shall
further mean and include any other registered clearing agent, successor or
successors and its nominee or nominees, specifically identified in a certified
copy of a resolution of the Trust's Board of Trustees approving deposits therein
by the Custodian.
Section 2. Names, Titles and Signatures of Trust's Officers
A. The Secretary of the Trust will certify to the Custodian the names and
signatures of those persons authorized to sign the Officers' Certificates
described in Section 1 hereof, and the names of the members of the Board of
Trustees and the Executive Committee thereof, together with any changes which
may occur from time to time.
B. Authorized Oral Instructions - Appropriate certifications will be provided to
the Custodian for any oral instructions. The Custodian shall have no
responsibility for the adequacy or accuracy of such instructions received from
the Fund and shall incur no liability for, and shall be entitled to rely upon,
any such instructions which the Custodian believes in good faith are given by an
Authorized Representative.
Section 3. Receipt and Disbursement of Money
A. The Custodian shall open and maintain a separate account or accounts in the
name of the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Agreement. The Custodian shall hold in such
account or accounts, subject to the provisions hereof, all cash received by it
from or for the account of the Fund. The Custodian shall make payments of cash
to, or for the account of the Fund from such cash only (a) for the purchase of
Securities for the Fund upon the delivery of such Securities to the Custodian,
registered in the name of the Fund or the nominee of the Custodian referred to
in Section 9 or in proper form for transfer, (b) for the purchase or redemption
of Shares of the Fund upon delivery thereof to the Custodian, (c) for the
payment of interest, dividends, taxes, management or supervisory fees or
operating expenses (including, without limitation thereto, fees for legal,
accounting and auditing services), (d) for payments in connection with the
conversion, exchange or surrender of Securities to the Custodian, or (e) for
other proper trust purposes. Before making any such payment, the Custodian shall
receive (and may rely upon) an Officers' Certificate requesting such payment and
stating that it is for a purpose permitted under the terms of items (a), (b),
(c) or (d) of this subsection A, and also, in respect of item (e), upon receipt
of an Officers' Certificate and a certified copy of the resolution of the Board
of Trustees or of the Executive Committee of the Trust signed by an Officer of
the Trust and certified by its Secretary or an Assistant Secretary, specifying
the amount of such payment, setting forth the purpose for which payment is to be
made, declaring such purpose to be a proper Trust purpose, and naming the person
or persons to whom such payment is to be made.
B. The Custodian is hereby authorized to endorse and collect all checks, drafts
or other orders for the payment of money received by the Custodian for the
account of the Fund.
Section 4. Receipt of Securities
The Custodian, or its sub-custodian as provided in Section 9, shall provide that
all Securities received by it for the account of the Fund shall be held in a
separate account and physically separated at all times from those of any other
person. All such Securities are to be held or disposed by the Custodian, or its
sub-custodians for and subject at all times to the instructions of the Fund
pursuant to the terms of this Agreement. The Custodian, or its sub-custodians,
shall have no power or authority to assign, hypothecate, pledge, or otherwise
dispose of any such Securities and investments, except pursuant to the direction
of the Fund and only for the account of the Fund as set forth in Section 5 of
this Agreement.
Section 5. Transfer, Exchange, Registration, Redelivery,
etc. of Securities
The Custodian shall have sole power to release or deliver Securities of the Fund
held by it pursuant to this Agreement.
A. All Securities held for the Fund, which are issued or issuable only in bearer
form, except such Securities as are held in the Book-Entry System, shall be held
by the Custodian in that form; all other Securities held for the Fund may be
registered in the name of the Fund, in the name of any duly appointed registered
nominee of the Custodian, as the Custodian may from time to time determine, or
in the name of the Book-Entry System or a Depository or their successor or
successors, or their nominee or nominees. The Fund agrees to furnish to the
Custodian appropriate instruments to enable the Custodian to hold or deliver in
proper form for transfer, or to register in the name of its registered nominee
or in the name of the Book-Entry System or a Depository any Securities which it
may hold for the account of the Fund. The Custodian shall hold all such
Securities which are not held in the Book-Entry System or in a Depository in a
separate account in the name of the Fund, physically segregated at all times
from those of any other person or persons.
B. The Fund shall instruct the Custodian from time to time in its sole
discretion, by means of an Officers' Certificate signed in the name of the Fund
by two Officers in accordance with the provisions of Section 1, as to the manner
in which and in what amounts such Securities and moneys are to be deposited on
behalf of the Fund in the Book-Entry System or a Depository, as each term is
defined in Section l; provided, however, that prior to the deposit of Securities
or moneys of the Fund in either the Book-Entry System or a Depository, including
a deposit in connection with the settlement of a purchase or sale, or a delivery
of loan collateral, the Custodian shall have received a certified copy of a
resolution of the Trust's Board of Trustees for the Fund specifically approving
such deposits by the Custodian on behalf of the Fund in the Book-Entry System or
a Depository as the case may be. Securities and moneys of the Fund deposited in
either the Book-Entry System or a Depository, as the case may be, will be
represented in accounts which include only assets held by the Custodian for its
customers, (including but not limited to) accounts in which the Custodian acts
in a fiduciary or representative capacity.
C. Unless otherwise instructed to the contrary by an Officers' Certificate
signed in the name of the Fund by any two Officers, the Custodian by itself, or
through the use of the Book-Entry System or a Depository with respect to
Securities therein deposited, shall with respect to all Securities held for the
Fund in accordance with this Agreement:
(l) Collect all income due or payable;
(2) Present for payment and collect the amount payable upon all
Securities which may mature or be called, redeemed, or retired, or
otherwise become payable;
(3) Surrender Securities in temporary form for definitive Securities;
(4) Execute, as Custodian, any necessary declarations or certificates
of ownership under the Federal Tax Laws or the laws or regulations of any
other taxing authority now or hereafter in effect;
(5) Hold directly, or through the Book-Entry System or a Depository
with respect to Securities therein deposited, for the account of the Fund
all stock dividends, rights and similar Securities issued with respect to
any Securities held by the Custodian hereunder.
(D) Upon receipt of an Officers' Certificate signed in the name of the Fund by
any two Officers as defined in Section 1, and not otherwise, the Custodian
shall:
(l) Execute and deliver to such persons as may be designated in such
certificate, proxies, consents, authorizations, and any other instruments
whereby the authority of the Fund as owner of any Securities may be
exercised;
(2) Deliver any Securities held for the Fund in exchange for other
Securities or cash issued or paid in connection with the liquidation,
reorganization, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
(3) Deliver any Securities held for the Fund to any protective
committee, reorganization committee or other person in connection with the
reorganization, refinancing, merger, consolidation, recapitalization or
sale of assets of any corporation, and receive and hold under the terms of
this Agreement, such certificates of deposit, interim receipts or other
instruments or documents as may be issued to it to evidence such delivery;
(4) Make such transfers or exchanges of the assets of the Fund, and
take such other steps, as shall be stated in said certificate to be for the
purpose of effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of the Fund.
Section 6. Voting and Other Action
The Custodian shall promptly notify the Fund of any calls for redemption,
mergers, tenders, consolidations, reorganizations, recapitalizations, or similar
proceedings affecting domestic Securities held in the Account, provided notice
of such proceedings appears in standard New York financial publications or a
service to which the Custodian subscribes. The Custodian shall not be liable for
late presentation of such items when the Fund has failed to timely instruct the
Custodian in writing.
Neither the Custodian nor any nominee of the Custodian shall vote any of the
Securities held hereunder by or for the account of the Fund, except in
accordance with the instructions contained in an Officers' Certificate. The
Custodian shall promptly deliver, or cause to be executed and delivered, to the
Fund all notices, proxies and proxy soliciting materials with relation to such
securities, such proxies to be executed by the registered holder of such
Securities (if registered otherwise than in the name of the Fund), but without
indicating the manner in which such proxies are to be voted.
Section 7. Sale and Redemption of Capital Stock of the Fund A. Whenever the Fund
shall sell any Shares of beneficial interest in the Fund, it shall cause to be
delivered to the Custodian all moneys received for such sales. B. Upon receipt
of such moneys, the Custodian shall credit such moneys to the account of the
Fund.
C. Upon the issuance of any of the Shares of beneficial interest of the Fund in
accordance with the foregoing provisions of this Section, the Custodian shall
pay, out of the money held for the account of the Fund, all original issue or
other taxes required to be paid by the Fund in connection with such issuance,
specifying the amount to be paid.
D. Whenever the Fund shall hereafter redeem any Shares of beneficial interest in
the Fund, it shall furnish to the Custodian an Officers' Certificate signed in
the name of the Fund by any two Officers of the Trust, stating:
(a) The name of the investor redeeming; and
(b) The amount to be paid for the Shares redeemed.
E. Upon receipt from the Transfer Agent of an advice setting forth the number of
Shares received by the Transfer Agent for redemption and that such Shares are
valid and good form for redemption, the Custodian shall make payment out of the
moneys held for the account of the Fund, either to the Transfer Agent or to such
other persons as may be specified by the Transfer Agent of the total amount
specified in the certificate issued pursuant to the foregoing subsection D of
this Section.
Section 8. Concerning Custodian
A. The Custodian shall be paid promptly upon receipt of an invoice from the
Custodian for its services pursuant to this Agreement such compensation as may
from time to time be agreed upon between the two parties.
B. The Custodian shall not be liable for any action taken in good faith upon any
certificate herein described or a certified copy of any resolution of the Board
of Trustees of the Trust or of the Executive Committee, and may rely on the
genuiness of any such document which it may in good faith believe to have been
validly executed.
C. The Fund agrees to indemnify and hold harmless the Custodian and its nominee
from all taxes, charges, expenses, assessments, claims and liabilities
(including counsel fees) incurred or assessed against it or its nominee in
connection with the performance of this Agreement, except such as may arise from
its or its nominee's failure to act due to its gross negligence or willful
misconduct. The Custodian is authorized to charge any account of the Fund for
such items. In the event of any advance of cash for any purpose made by the
Custodian resulting from orders or instructions of the Fund, or in the event
that the Custodian or its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the performance
of this Agreement, except such as may arise from its or its nominee's failure to
act due to its gross negligence or willful misconduct, any property at any time
held for the account of the Fund shall be security therefor.
Upon the failure of the Fund to cure any overdraft amounts, the Custodian may
immediately and without notice foreclose the foregoing lien and security
interest.
D. The Custodian may appoint one or more banking institutions as Depository or
Depositories or as Sub-Custodians, including, but not limited to banking
institutions located in foreign countries, of Securities and moneys at any time
owned by the Fund, upon terms and conditions approved in written instructions
from two Officers of the Trust for the Fund. Such appointment may include, but
is not limited to, the deposit of all or any portion of the Securities or moneys
of the Fund with DTC or Book-Entry System.
E. The Custodian shall provide the Fund with any report obtained by the
Custodian on the system of internal accounting control of the Book-Entry System
or a Depository and with such reports on its own systems of internal accounting
control as the Fund may reasonably request from time to time.
Section 9. Reports by Custodian
A. Promptly after each purchase of Securities by the Fund, the Fund shall
deliver to the Custodian, with respect to each purchase of Securities, an
Officers' Certificate signed in the name of the Fund by any two Officers as
defined in Section 1, specifying with respect to each such purchase: (a) the
name of the issuer and the title of the Securities, (b) the number of shares or
the principal amount purchased and accrued interest, if any, (c) the date of
purchase and settlement, (d) the purchase price per share, (e) the total amount
payable upon such purchase, (f) the name of the person from whom or the broker
through whom the purchase was made, (g) whether such purchase is to be settled
through the Book-Entry System or a Depository, and (h) whether the Securities
purchase are to be deposited in the Book-Entry System or a Depository. The
Custodian shall upon receipt of the Securities purchased by or for the Fund pay
out of the moneys held for the account of the Fund, the total amount payable
upon such purchase, provided that the same conforms to the total amount payable
as set forth in such certificate.
B. Promptly after each sale of Securities by the Fund, the Fund shall deliver to
the Custodian, with respect to each sale of Securities, a certificate signed in
the name of the Fund by any two Officers as defined in Section 1, specifying
with respect to each such sale: (a) the name of the issuer and the title of the
Security, (b) the number of shares or principal amount sold, and the accrued
interest, if any, (c) the date of sale, (d) the sale price per share, (e) the
total amount payable to the Fund upon such sale, (f) the name of the person to
whom or the broker through whom the sale was made, and (g) whether such sale is
to be settled through the Book-Entry System or a Depository. The Custodian shall
deliver the Securities upon receipt of the total amount payable to the Fund upon
such sale, provided that the same conforms to the total amount payable as set
forth in such certificate. Subject to the foregoing, the Custodian may accept
payment in such form as shall be satisfactory to it, and may deliver Securities
and arrange for payment in accordance with the customs prevailing among dealers
in Securities.
C. The Custodian shall deliver to the Fund promptly after the close of business
on each day safekeeping receipts for all transactions for the account of the
Fund during said day; and it shall, at least monthly and from time to time,
render a detailed statement of the Securities and moneys held for the Fund under
this Agreement. The Custodian shall forward to the Fund confirmation of any
purchase or sale of Securities.
Section 10. Termination or Assignment
A. This Agreement may be terminated by the Fund, or by the Custodian, on sixty
days' notice, given in writing and sent by registered mail to the Custodian or
to the Fund, as the case may be. In the event such notice is given by the Fund,
it shall be accompanied by a copy of a resolution of the Board of Trustees of
Saturna Investment Trust, certified by the Secretary or any Assistant Secretary,
electing to terminate this Agreement and designating a successor custodian or
custodians, each of which shall be a bank or trust company having not less than
$1,000,000 aggregate capital surplus and undivided profits. In the event such
notice is given by the Custodian, the Fund shall, on or before the termination
date, deliver to the Custodian a copy of a resolution of the Board of the Trust,
certified by the Secretary or any Assistant Secretary, designating a successor
custodian or custodians. In the absence of such designation by the Fund, the
Custodian may designate a successor custodian which shall be a bank or trust
company having not less than $2,000,000 aggregate capital, surplus, and
undivided profits. If the Fund fails to designate a successor custodian, the
Fund shall upon the date specified in the notice of termination of this
Agreement and upon the delivery by the Custodian of all securities and moneys
then owned by the Fund be deemed to be its own custodian and the Custodian shall
thereby be relieved of all duties and responsibilities pursuant to this
Agreement.
B. This Agreement may not be assigned by the Custodian without the consent of
the Fund, authorized or approved by a resolution of the Board of Trustees of the
Trust for the Fund.
Section 11. Custodian Power of Attorney
The Custodian is authorized and empowered in the name of and on behalf of the
Fund to execute any certificates of ownership or other instruments which are or
may hereafter be required by any regulations of the United States or any state
or political subdivision thereof, so that the Custodian may fulfill its
obligations hereunder as required in connection with any Securities.
Section 12. Amendments
The parties may make amendments to the Agreement from time to time, provided
that any such amendment shall be reduced to writing and shall be executed as an
addendum to this Agreement in the same manner as this Agreement has been
executed.
Section 13. Successors and Assigns
This Agreement shall be binding upon and shall inure to the benefit of the
successors and assigns of the respective parties hereto.
Section 14. Completeness
This Agreement along with a copy of the fee schedule constitutes the full and
complete agreement between the Custodian and Fund, and no other understanding or
agreement, whether written or oral, shall bind either of the parties hereto.
Section 15. Governing Law
This Agreement shall be governed by the applicable laws of the State of Indiana.
Section 16. Notices
It shall be sufficient service of any notice, request, authorization, complaint,
demand or other paper required under this Agreement to be given or filed with
the Custodian or Fund if the same shall be duly mailed by first class mail with
postage prepaid addressed as follows:
(a) If to the Custodian:
National City Bank, Indiana
Investment Operations, Suite 435E
Attention: Donna Weir
101 W. Washington Street
Indianapolis, Indiana 46255
FAX Number: (317) 267-7658
(b) If to the Fund:
Saturna Investment Trust
Sextant Short-Term Bond Fund
P.O. Box 2969
Bellingham, Washington 98227-2969
FAX Number: (360) 734-0755
SATURNA INVESTMENT TRUST SEXTANT SHORT-TERM BOND FUND By: Nicholas Kaiser,
President ATTEST
By: James Winship, Secretary
NATIONAL CITY BANK, INDIANA
By: Christopher N. Daily
ATTEST
Donna Weir
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 14 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated December 15, 1995, relating to the financial
statements and selected per share data and ratios (incorporated under the
heading to the financial statements and selected per share data and ratios
(Incorporated under the heading "Financial Highlights") appearing in the
November 30, 1995 Annual Report to Shareowners of The Saturna Investment Trust,
which is also incorporated by reference into the Registration Statement. We also
consent to the references to us under the heading "Financial Highlights" in the
Prospectus and under the headings "Investment Advisory and Other Services" and
"Financial Statements" in the Statement of Additional Information.
Price Waterhouse LLP
/s/ Price Waterhouse LLP
Seattle, Washington
March 15, 1996
SATURNA INVESTMENT TRUST
POWER OF ATTORNEY
The undersigned Trustees of Saturna Investment Trust, a Massachusetts Business
Trust organized under the laws of the State of Washington, proposing to file
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended, one or more amendments to the Registration Statement on Form N-1A and
related Amendments to the Registration Statement of the Trust under the
Investment Company Act of 1940 ("Amendments") do hereby separately and severally
appoint and constitute Nicholas F. Kaiser, whose signature appears below:
/s/ Nicholas F. Kaiser
Nicholas F. Kaiser
his true and lawful attorney for him and in his name, place and stead to sign in
the capacity of a Trustee of the Trust such Amendments and any and all
additional amendments thereto, and to file such amendments and all instruments
necessary or incidental thereto with the Securities and Exchange Commission
under such 1933 and 1940 Acts.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal this 5th
day of October 1995.
/s/ Gary A. Goldfogel /s/ John E. Love
Gary A. Goldfogel John E. Love
/s/John S. Moore /s/James D. Winship
John S. Moore James D. Winship
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF THE FUND AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<CIK> 811860
<NAME> Saturna Investment Trust
<SERIES>
<NUMBER> 1
<NAME> Sextant Growth Fund
<MULTIPLIER> 1
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> Nov-30-1995
<PERIOD-START> Dec-01-1994
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<INVESTMENTS-AT-COST> 745804
<INVESTMENTS-AT-VALUE> 1034818
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<SHARES-COMMON-STOCK> 153,216
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<ACCUMULATED-NET-GAINS> (3841)
<OVERDISTRIBUTION-GAINS> 0
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<DIVIDEND-INCOME> 11685
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<APPREC-INCREASE-CURRENT> 214185
<NET-CHANGE-FROM-OPS> 264523
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<DISTRIBUTIONS-OF-GAINS> (28392)
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<PER-SHARE-NII> (0.03)
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</TABLE>
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
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REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<CIK> 811860
<NAME> Saturna Investment Trust
<SERIES>
<NUMBER> 5
<NAME> Idaho Tax Exempt Fund
<MULTIPLIER> 1
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Nov-30-1995
<PERIOD-START> Dec-01-1994
<PERIOD-END> Nov-30-1995
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 4,797,276
<INVESTMENTS-AT-VALUE> 5,048,501
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<PER-SHARE-NAV-BEGIN> 4.76
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<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
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REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<CIK> 811860
<NAME> Saturna Investment Trust
<SERIES>
<NUMBER> 2
<NAME> Sextant Bond Income Fund
<MULTIPLIER> 1
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> Year
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
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</LEGEND>
<CIK> 811860
<NAME> Saturna Investment Trust
<SERIES>
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<S> <C>
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</LEGEND>
<CIK> 811860
<NAME> Saturna Investment Trust
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<S> <C>
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</TABLE>
