SEXTANT MUTUAL FUNDS
November 30, 1996
Fellow Shareowners:
After the strong gains of 1995, the 1996 markets should have been weak. Interest
rates rose during the first nine months, and corporate earnings growth is
slowing. Yet for the 12 months ending November 30, 1996 , the S&P 500 Index
jumped 27.9%, the NASDAQ Composite Index climbed 22.4%, and the Salomon Bros.
Broad Investment-Grade Bond Index provided a 6.0% total return.
Our caution, based on historical patterns, was misplaced for most of 1996.
Tremendous inflows of individual and institutional retirement money drove all
market sectors up, as the public focuses on long-term investing to build their
retirement funds. While a sharp July correction showed the market's
vulnerability, the rebound through a startlingly-strong November proves the
faith investors have in equities to deliver superior total returns. An estimated
$208 billion poured into stock mutual funds in the first 11 months of 1996, 60%
above the previous full-year record in 1993. The 1996 stock market favored
momentum investing, rather than Saturna Capital's more value-oriented style.
The no-load Sextant Funds are designed to address a broad spectrum of investment
needs. All stress low operating expenses and employ a "fulcrum" advisory fee
structure that rewards or penalizes Saturna Capital for investment results.
Beginning with the September month-end, the four Funds are paying increased or
decreased monthly advisory fees depending on relative performance over the prior
12 months. For the fiscal year ended November 30, 1996, comparative total
returns are:
Sextant Fund Total Return vs. Morningstar
Short-Term Bond 4.85% Short-Term Bonds
Bond Income 4.04% Long-Term Bonds
Growth 6.74% Domestic Growth
International 18.16% Foreign Stock
For the year, the high-quality Sextant bond funds slightly underperformed their
Morningstar peer categories. There is an anchor role for bonds in most
portfolios. With a 6.3% income yield for the year, Short-Term Bond Fund is a
great alternate to money-market funds as a place for investing your cash
reserves.
Unfortunately, our conservative approach to stock-picking meant the Growth Fund
significantly underperformed the Morningstar Domestic Growth category. As
long-term investors, we know that current investing fads will pass, and remain
<PAGE>
convinced that our strategies will provide good results over time. Meanwhile,
when the Growth Fund is underperforming, Saturna Capital automatically slashes
its advisory fee to help improve Fund total returns.
Our experience is that investors should look outside the U.S. for a material
portion of their portfolio, being unwise to insulate oneself from foreign events
and opportunities. We created Sextant International Fund to invest in non-U.S.
equities, and are pleased that the 18.16% return earned by the Fund in its first
year outdistanced the Foreign Stock category and earns Saturna Capital a modest
bonus for above-average performance.
Further information on each Fund's performance is found in the Management
Discussion sections of this report. 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.
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, Sextant Growth Fund and Sextant International Fund,
four of the series of Saturna Investment Trust, hereafter referred to as the
"Trust" at November 30, 1996, 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, 1996 by correspondence with the custodian and a broker, and the
application of alternative auditing procedures where confirmations were not
received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUS /S/LLB
Seattle, Washington
December 18, 1996
<PAGE>
<TABLE>
<CAPTION>
(GRAPHIC OMITTED)
1996 Annual Report SEXTANT SHORT-TERM BOND FUND
- - --------------------------------------------------
INVESTMENTS
November 30, 1996
RATING* ISSUER COUPON/MATURITY FACE AMOUNT MARKET VALUE
- - --------------------------------------------------------------------------------
APPLIANCES (5.5%)
<S> <C> <C> <C>
A- Whirlpool 9.5% 6/15/2000 $ 100,000 $ 110,412
BANKING (15.%)
A- Bankers Trust-NY 9.5% 6/14/2000 75,000 82,366
A- Chase Manhattan 9.05% 2/1/2002 40,000 39,775
BBB+ First Interstate Bank 8.625% 4/1/1999 75,000 78,984
AA- Norwest Financial 6.23% 9/1/1998 100,000 100,424
---------- ----------
290,000 301,549
CONSUMER FINANCE (7.2%)
AA- Associates Corp NA 8.35% 12/22/1998 100,000 104,414
A- GMAC 5.95% 12/28/1998 40,000 39,987
---------- ----------
140,000 144,401
ELECTRIC UTILITY (10.3%)
A Pacific Gas & Electric 6.75% 12/01/2000 100,000 100,656
A- Public Service
Enterprise Group 8.75% 7/1/1999 100,000 106,231
---------- ----------
200,000 206,887
FOOD (4.%)
BBB+ Supervalue 7.25% 7/15/1999 80,000 81,612
GAS DISTRIBUTION (5.9%)
A+ Consolidated Natural Gas 5.875% 10/1/1998 120,000 118,877
INVESTMENT FINANCE (11.3%)
BBB+ Finovia Capital 5.98% 2/27/2001 75,000 73,940
BBB Salomon Inc. 6.70% 12/1/1998 100,000 100,968
A- Smith Barney Holding 7.98% 3/1/2000 50,000 52,562
---------- ----------
225,000 227,470
PHOTOGRAPHY (4.7%)
A Eastman Kodak Corp. 7.25% 4/15/1997 95,000 95,301
RETAILING (8.9%)
BBB Limited 8.875% 8/15/1999 75,000 78,867
BBB+ Dayton Hudson 7.50% 3/1/1999 100,000 102,362
---------- ----------
175,000 181,229
TOABACCO (4.0%)
A Phillip Morris 9.75% 02/15/00 75,000 80,883
TRANSPORTATION (2%)
A+ CSX Transportation 7.05% 3/15/98 40,000 40,420
U.S. GOVERNMENT (17.6%)
AAA U.S. Treasury Note 7.00% 4/15/99 150,000 154,453
AAA Federal Farm Credit Bank 6.32% 4/1/99 200,000 200,328
---------- ----------
350,000 354,781
TOTAL INVESTMENTS (96.4%) (Cost = $1,939,387) $1,890,000 $1,943,822
========== ----------
Other Assets (net of liabilities) (3.6%) 72,976
----------
Total Net Assets (100%) $2,016,798
==========
<FN>
*Ratings are the lesser of S&P or Moody's (unaudited)
</FN>
</TABLE>
(The accompanying notes are an integral part of these financial statements.)
<PAGE>
<TABLE>
<CAPTION>
(GRAPHIC OMITTED)
SEXTANT SHORT-TERM BOND FUND 1996 ANNUAL REPORT
- - ---------------------------------------------------
STATEMNT OF ASSETS AND LIABILITIES
As of November 30, 1996
ASSETS
<S> <C>
Bond investments (cost $1,939,387) $ 1,943,822
Cash 37,528
Interest receivable 38,334
--------------
Total Assets 2,019,684
--------------
LIABILITIES
Payable to affiliate 2,886
--------------
Total Liabilities 2,886
--------------
NET ASSETS $2,016,798
==============
Fund shares outstanding 403,341
ANALYSIS OF NET ASSETS
Paid in capital (unlimited shares authorized, without par) $2,033,467
Undistributed net investment income (loss) 22
Accumulated net realized gain (loss) on investments (21,126)
Unrealized net appreciation on investments 4,435
--------------
Net Assets applicable to Fund shares outstanding $2,016,798
==============
NET ASSET VALUE PER SHARE $5.00
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For year ended November 30, 1996
INVESTMENT INCOME
<S> <C> <C>
Interest income $ 180,119
Amortization of bond premiums (29,263)
Accretion 111
Miscellaneous 20
------------
Gross investment income $ 150,987
EXPENSES
Investment adviser and administration fee 15,583
Professional fees 6,649
Custodian Fees 2,635
Filing and registration fees 2,149
Printing and postage 1,276
Other expenses 673
------------
Total gross expenses 28,965
Less earnings credits (2,635)
Less advisory fee waived (8,375)
------------
Net expenses 17,955
-----------
Net investment income 133,032
-----------
NET REALIZED GAIN (LOSS) ON INVESTMENTS
Proceeds from sales 2,490,566
Less cost of securities sold based on
identified cost 2,511,692
------------
Realized net gain (loss) (21,126)
-----------
UNREALIZED GAIN (LOSS) ON INVESTMENTS
End of period 4,435
Beginning of period 3,737
------------
Increase in unrealized gain for the period 698
-----------
Net realized and unrealized gain on investments (20,428)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $112,604
===========
</TABLE>
(The accompanying notes are an integral part of these financial statements)
<PAGE>
<TABLE>
<CAPTION>
(GRAPHIC OF SEXTANT AND ANCHOR OMITTED)
1996 ANNUAL REPORT SEXTANT SHORT-TERM BOND FUND
- - -----------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Year ended Year ended
Nov. 29, 1996 Nov. 30, 1995
-------------- -------------
INCREASE IN NET ASSETS
<S> <C> <C>
OPERATION:
Net investment Income $ 133,032 $ 4,320
Net realized gain (loss) on investments (21,126) -
Net increase in unrealized appreciation 698 3,737
---------- ---------
Net increase in net assets from operations 112,604 8,057
---------- ---------
DIVIDENDS TO SHAREOWNERS FROM:
Net investment income (133,010) (4,320)
---------- ---------
Capital gains distributions - -
---------- ---------
FUND SHARE TRANSACTIONS:
Proceeds from sales of shares 3,700,165 892,239
Value of shares issued in reinvestment of
dividends 129,365 4,321
---------- ---------
3,829,530 896,560
Cost of shares redeemed (2,670,058) (22,565)
---------- ---------
Net Increase in net assets from share
transactions 1,159,472 873,995
---------- ---------
Total increase in net assets 1,139,066 877,732
NET ASSETS
Beginning of period 877,732 -
---------- ---------
End of period $2,016,798 $877,732
========== =========
Shares of the Fund Sold and Redeemed
Number of shares sold 740,752 178,249
Number of shares issued in reinvestment of
dividends 26,037 862
Number of shares redeemed (538,054) (4,505)
---------- ---------
Net Increase in Number of Shares Outstanding 228,735 174,606
========== =========
</TABLE>
(The accompanying notes are an integral part of these financial statements)
<PAGE>
<TABLE>
<CAPTION>
(GRAPHIC OMITTED)
SEXTANT SHORT-TERM BOND FUND 1996 ANNUAL REPORT
- - ---------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected data per share of capital stock outstanding throughout the period:
For the year Sept. 28. '95 (incep-
ended Nov. 30, '96 tion) to Nov. 30 '95*
------------------ ---------------------
<S> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $5.03 $5.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.25 0.03
Net gains or losses on securities
(both realized and unrealized) (0.03) 0.03
------ ------
Total From Investment Operations 0.22 0.06
LESS DISTRIBUTIONS
Dividends (from net investment income) ($0.25) ($0.03)
Distributions (from capital gains) 0.00 0.00
------ ------
Total Distributions (0.25) (0.03)
NET ASSET VALUE AT END OF PERIOD $5.00 $5.03
TOTAL RETURN 4.85% 1.05%
RATIOS / SUPPLEMENTAL DATA
Net assets ($000), end of period $2,016 $878
Ratio of expenses to average net assets+ 0.85% 0.23%
Ratio of net investment income to average
net assets+ 6.30% 0.68%
Portfolio turnover rate 100% 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 $.02 and $.007. The increase to the ratio of expenses
to average monthly net assets would be .52% and .16%, respectively.
* not annualized
</FN>
</TABLE>
(The accompanying notes are an integral part of these financial statements)
(Graphic omitted)
DISCUSSION OF FUND PERFORMANCE
(UNAUDITED)
FISCAL YEAR 1996
During its first full fiscal year, the Sextant Short-Term Bond Fund provided a
total return of 4.85%. Net asset value fell to $5.00 on November 30,1996 from
$5.03. Current income averaged 6.30% of average net assets, substantially higher
than money market mutual funds. Total assets grew 130%. The objective of the
Fund is to provide a high level of current income consistent with the
preservation of capital. The Fund NAV moved within a narrow range, $5.08 to
$4.91, during the year. The Fund has performed well, within its investment
guidelines.
FACTORS AFFECTING PERFORMANCE
Inflation in the United States remained at relatively low levels throughout the
year. On 11/29/96 short rates (under one year), were 20 to 35 basis points lower
than a year earlier, reflecting the 0.25% easing to 5.25% in January by the
Federal Reserve Bank. However, rates beyond one year were 20 to 25 basis points
higher than one year earlier reflecting the continued economic expansion. The
average effective maturity of the Fund remained close to two and one half years
throughout the fiscal year. The NAV was therefore slightly lower at year end.
The Sextant Short-Term Bond Fund invested a large percentage of the portfolio in
high grade corporate paper and the balance in U.S. Government Agency or Treasury
paper. Yield spreads to Corporates and Agencies were narrow at the start of the
period and narrowed further over the year. The Fund added yield to the portfolio
by investing in high coupon, callable paper. Also the Fund invested in the
corporate debt of major retailers and credit card companies when those areas of
the market
<PAGE>
(GRAPHIC OF SEXTANT AND ANCHOR OMITTED)
1996 ANNUAL REPORT SEXTANT SHORT-TERM BOND FUND
- - ----------------------------------------------------------
were cheap.
LOOKING FORWARD
Short term interest rates are heavily influenced by the monetary policies of
the Federal Reserve Bank. At this point, the Federal Reserve has been able to
maintain an even keel policy due to the unusually balanced nature of the
current economic expansion. Should the expansion falter, short-term rates
can be expected to move lower. Credit spreads will have difficulty narrowing
further. Both of these factors will be positive influences for the Sextant
Short-Term Bond Fund.
PERFORMANCE FEE COMPUTATION
The Sextant Short Term Bond Fund has calculated its performance fee on a
comparison of the Fund's 12-month return to the return of the Morningstar High
Quality Corporate Bond Index. On 10/31/96, Morningstar changed their method of
rating Mutual Funds. The new comparable Category for the Sextant Short Term Bond
Fund is "Short-Term Bond". This is defined as a portfolio that "focuses on
corporate and other investment grade issues with an average duration of more
than one year or an effective average maturity of more than one year but less
than four years."
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 following graph compares $10,000 invested in the Fund
at its inception, compared to a similar amount invested in the Salomon
Brothers 2-year Treasury Benchmark. The graph shows that the investment at
9/30/95 would have risen to $10,592 in the Fund and $10,745 in the Index. The
relatively short history of the Fund limit the usefulness of this comparison.
Past performance is not indicative of future results.
SEXTANT SHORT-TERM BOND FUND VS. SALOMON 2-YR TREASURY
Average Annual Returns
- - ----------------------
One Year 4.85%
Since Inception 5.06%
Date Short-Term Bond Fund Salomon 2-yr Treasury
Sept-95 $10,000 $10,000
Nov-96 $10,592 $10,745
(Graph Omitted)
<PAGE>
<TABLE>
<CAPTION>
(GRAPHIC OMITTED)
SEXTANT BOND INCOME FUND 1996 ANNUAL REPORT
- - --------------------------------------------
INVESTMENTS
November 30, 1996
Rating* Issuer Coupon/Maturity Face Amount Market Value
- - --------------------------------------------------------------------------------
AUTOMOTIVE (4.3%)
<S> <C> <C> <C>
A- General Motors 8.125% 4/15/2016 $ 50,000 $ 51,866
BANKING (4.1%)
A- Comerica Bank 7.125% 12/1/2013 50,000 48,584
BEVERAGES (4.7%)
A- Seagram Co. Ltd 8.35% 1/15/2022 50,000 55,859
BUILDING (7.8%)
A+ Lowes Corp 7.00% 10/15/2023 50,000 46,953
A- Corning Glass 8.875% 3/15/2016 40,000 46,250
--------- ---------
90,000 93,203
ELECTRIC UTILITIES (20.6%)
A+ Alabama Power 7.75% 2/1/2023 50,000 50,625
BBB Commonwealth Edison 7.50% 7/1/2013 50,000 51,428
BBB New Orleans Public Service 8.00% 3/1/2023 50,000 50,584
A Southern California Edison 6.90% 10/1/2018 50,000 47,967
BBB Texas Utilities 8.50% 8/1/2024 45,000 47,286
--------- ---------
245,000 247,890
ELECTRONICS (4.0%)
BBB+ Phillips Electronics 7.25% 8/15/2013 50,000 48,753
FOOD (4.2%)
BBB Nabisco Holdings 7.55% 6/15/2015 50,000 50,563
INVESTMENT FINANCE (12.2%)
A Dean Witter Discover 6.75% 10/15/2013 50,000 47,764
A+ Morgan Stanley Group 7.50% 2/1/2024 50,000 49,234
BBB+ Paine Webber Group 7.625% 2/15/2014 50,000 49,953
--------- ---------
150,000 146,951
PAPER PRODUCTS (4.3%)
BBB- Georgia Pacific 7.70% 6/15/2015 50,000 51,453
RETAILING (4.0%)
BBB+ Rite Aid Corporation 6.875% 8/15/2013 50,000 48,266
TELECOMMUNICATIONS (4.1%)
A+ US West Communications 7.20% 11/10/2026 50,000 48,594
U.S. GOVERNMENT OBLIGATIONS (19.2%)
AAA U.S. Treasury Bond 7.50% 11/15/2016 100,000 111,578
AAA U.S. Treasury Bond 8.125% 8/15/2019 100,000 119,203
--------- ---------
200,000 230,781
TOTAL INVESTMENTS (93.5%) Cost = $1,145,398 $1,085,000 1,122,763
============ ---------
Other Assets (net of liabilities) (6.5%) 78,160
---------
Total Net Assets (100%) $1,200,923
==========
<FN>
*Ratings are the lesser of S&P or Moody's (unaudited)
</FN>
</TABLE>
(The accompanying notes are an integral part of these financial statements)
<PAGE>
<TABLE>
<CAPTION>
(GRAPHIC OMITTED)
1996 ANNUAL REPORT SEXTANT BOND INCOME FUND
- - ----------------------------------------------
FINANCIAL HIGHLIGHTS
Selected data per share of capital stock outstanding throughout the period:
Period
3/1/93 (In-
Year ended Nov.30, ception)to
-------------------
<S> <C> <C> <C> <C>
1996 1995 1994 11/30/93*
---- ---- ---- ---------
NET ASSET VALUE AT BEGINNING OF PERIOD $4.91 $4.39 $5.03 $5.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.30 0.24 0.25 0.16
Net gains or losses on securities
(both realized and unrealized) (0.12) 0.52 (0.64) 0.04
----- ----- ----- -----
Total From Investment Operations 0.18 0.76 (0.39) 0.20
LESS DISTRIBUTIONS
Dividends (from net investment income)
Non-taxable - (0.236) (0.25) (0.167)
Taxable (0.30) (0.004)
Distributions (from capital gains) (0.03) 0.00 0.00 (0.003)
----- ----- ----- -----
Total Distributions (0.33) (0.24) (0.25) (0.17)
NET ASSET VALUE AT END OF PERIOD $4.76 $4.91 $4.39 $5.03
TOTAL RETURN 4.04% 17.69% (8.24)% 4.86%
RATIOS/SUPPLEMENTAL DATA
Net assets ($000), end of period $1,201 $1,096 $1,456 $1,662
Ratio of expenses to average net assets+ 0.63% 0.54% 0.41% 0.35%
Ratio of net investment income to
average net assets + 5.96% 5.15% 5.48% 3.28%
Portfolio turnover rate 75% 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,
$0.13,and $.03 respectively. The increase to the ratio of expenses to
average monthly net assets would be .70%, .60%, .51%, and 26%, respectively.
* not annualized
</FN>
</TABLE>
(The accompanying notes are an integral part of these financial statements)
<PAGE>
<TABLE>
<CAPTION>
(GRAPHIC OMITTED)
SEXTANT BOND INCOME FUND 1996 ANNUAL REPORT
- - -----------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
As of November 30, 1996
ASSETS
<S> <C>
Bond investments (cost $1,145,398) $1,122,763
Cash 56,564
Interest receivable 21,646
Insurance deposit 400
------------
Total Assets 1,201,373
------------
LIABILITIES
Payable to affiliate 450
------------
Total Liabilities 450
------------
NET ASSETS $1,200,923
============
Fund shares outstanding 252,383
ANALYSIS OF NET ASSETS
Paid in capital (unlimited shares authorized,
without par) 1,294,714
Undistributed net investment loss (1,057)
Accumulated net realized gain (loss) on
investments (70,099)
Unrealized net depreciation on
investments (22,635)
------------
Net Assets applicable to Fund shares $1,200,923
============
NET ASSET VALUE PER SHARE $4.76
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the year ended November 30, 1996
INVESTMENT INCOME
<S> <C> <C>
Interest income 80,065
Amortization of bond premiums (1,964)
Accretion 55
-----------
Gross investment income $78,156
EXPENSES
Investment adviser and administration fee 6,640
Professional fees 3,055
Printing and postage 1,449
Filing and registration fees 1,255
Other expenses 856
Custodial fees 739
-----------
Total gross expenses 13,994
Less earnings credits (739)
Less advisory fee waived (6,640)
-----------
Net expenses 6,615
----------
Net investment income 71,541
----------
NET REALIZED GAIN ON INVESTMENTS
Proceeds from sales 808,214
Less cost of securities sold based on
identified cost 800,856
----------
Realized net gain (loss) 7,358
----------
UNREALIZED GAIN (LOSS) ON INVESTMENTS
End of period (22,635)
Beginning of period 12,631
----------
Increase in unrealized gain for the period (35,266)
----------
Net realized and unrealized gain on
investments (27,908)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $43,633
===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
(GRAPHIC OF SEXTANT AND SAILBOAT OMITTED)
1996 ANNUAL REPORT SEXTANT BOND INCOME FUND
- - ------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Year ended Year ended
Nov. 30, 1996 Nov. 30,1995
------------- ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 71,541 $ 57,535
Net realized gain (loss) on investments 7,358 (15,110)
Net increase (decrease) in unrealized appreciation (35,266) 170,684
----------- ----------
Net increase (decrease) in net assets from operations 43,633 213,109
----------- ----------
DIVIDENDS TO SHAREOWNERS FROM:
Net investment income (72,347) (57,308)
----------- ----------
Capital gains distributions (7,240 -
----------- ----------
FUND SHARE TRANSACTIONS:
Proceeds from sales of shares 303,624 623,415
Value of shares issued in reinvestment of dividends 77,813 52,937
----------- ----------
381,437 676,352
Cost of shares redeemed (240,384) (1,192,060)
----------- ----------
Net increase (decrease) in net assets from
share transactions 141,053 (515,708)
----------- ----------
Total increase (decrease) in net assets 105,099 (359,907)
NET ASSETS
Beginning of period 1,095,824 1,455,731
----------- ----------
End of period $1,200,923 $1,095,824
=========== ===========
(Including undistributed net investment income of
($1,057) at Nov. 30,1996 and ($251) for Nov. 30,1995)
Shares of the Fund Sold and Redeemed
Number of shares sold 65,268 165,574
Number of shares issued in reinvestment
of dividends 16,726 11,132
Number of shares redeemed (52,815) (285,218)
----------- -----------
Net Increase (Decrease) in Number of Shares Outstanding 29,179 (108,512)
=========== ===========
</TABLE>
<PAGE>
(GRAPHIC OMITTED)
SEXTANT BOND INCOME FUND 1996 ANNUAL REPORT
- - ------------------------------------------------
DISCUSSION OF FUND PERFORMANCE
(UNAUDITED)
FISCAL YEAR 1996
In the fiscal year ending November 29,1996, the Sextant Bond Income Fund
returned 4.04% to its shareholders. Its net asset value fell to $4.76 from $4.91
during the fiscal year. Total assets increased 10%. The Fund's performance in
fiscal 1996 was based on its portfolio restrictions: taxable investment grade
debt with an average effective portfolio maturity of at least ten years. Since
the change in investment objective on 9/28/95, the average effective portfolio
maturity has remained close to 20 years. The longer the average maturity of the
Fund, the greater will be the expected price appreciation or depreciation. For
the three month period ending 11/30/96, rates have fallen substantially. And for
the period, Sextant Bond Income Fund ranked in the top 1% of Morningstar
Long-Term Bond Funds for performance. The Fund is intended to be used in
conjunction with the Sextant Short Term Bond Fund. By allocating assets between
the two Funds, an investor can create the average maturity of his own design.
FACTORS AFFECTING PERFORMANCE
The most important factors affecting the performance of this Fund are the
exceptionally long effective average maturity of the portfolio and the direction
of long term rates. Of the 234 Funds grouped in the Morningstar Long Term Bond
Category, only five have an average portfolio maturity over fourteen years.
Under the Morningstar rating system, the Sextant Fund rating will reflect the
higher risks associated with such a longer average maturity. For the year, long
term interest rates rose slightly from 11/30/95 to 11/29/96. This explains the
lower NAV in the Fund. Also, lower rated corporate bonds (BBB- and below)
outperformed higher grade paper (BBB+ and above) as investment managers sought
yield despite narrowing spreads. This narrowing favored investors using lower
credit quality bonds. The Sextant Bond Income Fund invested primarily in high
grade corporate paper and U.S. Treasury issues.
LOOKING FORWARD
Inflation has remained at historically low levels all year. With the modest rate
of expansion and high level of competition in the economy no acceleration is
expected in 1997. The overall direction of interest rates has been relatively
flat over the last four years with long rates moving between 8% to 6%. On two
occasions long rates have slipped below 6% temporarily. In 1997 rates can move
below 6% again. With so little additional yield available in lower rated paper,
it will be difficult for the lower rated paper to perform as well as higher
quality paper. A move to lower rates and a preference for high quality paper are
both very favorable for the Sextant Bond Income Fund.
<PAGE>
PERFORMANCE FEE COMPUTATION
The Sextant Bond Income Fund originally calculated its performance fee based on
a comparison of the Fund's 12-month return to the return of the Morningstar High
Quality Corporate Bond Index. On 10/31/96, Morningstar changed their method of
rating Mutual Funds. The new Category for the Sextant Bond Income Fund is
Morningstar Long-Term Bond. As indicated above, the performance comparison
between the Sextant Bond Income Fund and this index will be heavily influenced
by the movement of interest rates.
COMPARISON OF 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 $11,682 in the Fund and $12,752 in
the Index. The relatively short history of the Fund, and the change in
investment policy, limit the usefulness of this comparison. Past performance is
not indicative of future results.
SEXTANT BOND INCOME FUND VS. SALOMON BROS BROAD INVESTMENT
GRADE BOND INDEX
Average Annual Returns
- - ----------------------
One Year
4.04%
Since Inception
Date Bond Income Fund Salomon BIG Index
Feb-93 $10,000 $10,000
Nov-93 $10,397 $10,534
Nov-94 $9,540 $10,214
Nov-95 $11,228 $12,032
Nov-96 $11,682 $12,752
(Graph Omitted)
<PAGE>
<TABLE>
<CAPTION>
(GRAPHIC OMITTED)
SEXTANT GROWTH FUND 1996 ANNUAL REPORT
- - --------------------------------------------
INVESTMENTS
NUMBER MARKET
ISSUE OF SHARES COST VALUE
- - --------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS
BANKING (8.0%)
Washington Mutual Savings Bank 3,000 $ 44,124 $130,500
CONSTRUCTION (5.3%)
BMC West* 4,500 54,533 53,437
Butler Manufacturing 1,000 31,071 31,875
--------- --------
85,604 85,312
COMPUTERS (13.1%)
Adobe Systems 1,200 50,490 47,400
Hewlett-Packard 800 42,650 43,100
Microsoft* 400 14,897 62,750
Oracle 1,200 37,879 58,800
--------- --------
145,916 212,050
ELECTRONICS (9.6%)
FLIR Systems 2,500 27,611 34,063
Gasonix International 3,000 31,631 32,250
Merix 1,000 31,822 16,250
Micron Technology 1,000 32,312 33,125
Motorola 700 40,511 38,763
--------- --------
163,887 154,451
INVESTMENTS (13.0%)
Franklin Resources 800 13,562 57,200
McDonald & Co. 2,000 34,347 61,000
Schwab, Charles 3,025 9,117 91,506
-------- --------
57,026 209,706
MEDICAL (8.9%)
Genentech* 1,000 37,225 54,125
Ligand Pharmaceuticals 4,000 49,132 48,250
Rotech Medical 2,400 33,976 40,800
-------- --------
120,333 143,175
METAL ORES (3.4%)
Cyprus Amax Minerals 2,200 54,541 54,450
OIL & GAS PRODUCTION (7.4%)
Atlantic Richfield 450 51,620 62,606
Noble Drilling 3,000 21,322 57,750
-------- --------
72,942 120,356
PAPER & PRODUCTS (1.1%)
Boise Cascade 600 15,409 18,600
POLLUTION CONTROL (2.7%)
Ionics 900 36,864 43,425
RETAIL (5.3%)
Nordstrom 1,000 37,703 43,500
Albertson's 1,200 26,255 41,850
--------- --------
63,958 85,350
</TABLE>
(The accompanying notes are an integral part of these financial statements)
<PAGE>
<TABLE>
<CAPTION>
(GRAPHIC OMITTED)
1996 ANNUAL REPORT SEXTANT GROWTH FUND
- - ---------------------------------------------
INVESTMENTS, CONTINUED
NUMBER MARKET
ISSUE OF SHARES COST VALUE
- - --------------------------------------------------------------------------------
<S> <C> <C> <C>
STEEL (1.7%)
Schnitzer Steel Industries 1.000 $ 29.500 $ 27,375
TRANSPORTATION (11.2%)
Airborne Freight 3,000 69,116 64,500
Fritz Companies* 4,000 51,640 60,500
Trinity Industries 1,600 55,282 55,200
---------- ----------
176,038 180,200
TOTAL INVESTMENTS (90.7%) 52,475 $1,066,142 $1,464,950
=========== ===========
Other Assets (net of liabilities) (9.3%) 150,606
---------
Total Net Assets (100%) $1,615,556
===========
<FN>
*non-income producing
</FN>
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected data per share of capital stock
outstanding throughout the period: Sept.4, '87
(commencement of
For Year Ended November 30, operations) to
------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 Nov.30'87
---- ---- ---- ---- ---- ---- ---- ---- ---- ---------
OPERATIONS
Net Investment Income 0.00 (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
unrealized 0.50 1.82 (0.53) 0.45 0.38 0.60 0.01 0.00 (0.08) (0.04)
----- ----- ------ ----- ----- ----- ----- ----- ------ ------
Total From Investment Operations 0.50 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 0.00 (0.01)(0.01) (0.02)(0.23)(0.28) (0.30) (0.06)
Distributions (from
capital gains) 0.00 (0.19) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total Distributions 0.00 (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 $7.92 $7.42 $5.82 $6.38 $5.93 $5.55 $4.93 $4.88 $4.88 $4.96
TOTAL RETURN 6.74% 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 $1,616 $1,137 $1,010 $1,425 $1,321 $947 $53 $1,356 $1,365 $315
Ratio of expenses to average
net assets+ 0.95% 1.63% 1.50% 1.40% 1.60% 1.93% 1.06% 0.89% 0.25% .06%*
Ratio of net investment income
to average net assets+ 0.01% (0.45)(0.43)% 0.15% 0.17% 0.60% 5.25% 5.60% 5.86% .85%*
Portfolio turnover rate 32% 40% 12% 25% 46% 16% 29% 19% 20% 0%
Average commission rate paid $.0458 $.0572
<FN>
+ For 1996, 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, $.01, $.05, .$.05, $.10, $.16, and $.02,
respectively. The increase to the ratio of expenses to average net assets
would have been 0.18%, 0.21%, 0.76%, 1.02%, 1.28%,
2.02%, and 0.17%, respectively. *not annualized
</FN>
</TABLE>
(GRAPHIC OMITTED)
(The accompanying notes are an integral part of these financial statements)
<PAGE>
<TABLE>
<CAPTION>
(GRAPHIC OMITTED)
SEXTANT GROWTH FUND 1996 ANNUAL REPORT
- - --------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
As of November 30, 1996
ASSETS
<S> <C>
Common stock investments (cost $1,066,142) $1,464,950
Cash 319,386
Receivable for Security Sales 64,905
Dividends receivable 1,044
Insurance deposit 1,214
-----------
Total Assets 1,851,499
-----------
LIABILITIES
Payable for Security Purchases 229,367
Payable to affiliate: 6,576
-----------
Total Liabilities 235,943
-----------
NET ASSETS $1,615,556
=============
Fund shares outstanding 203,875
ANALYSIS OF NET ASSETS
Paid in capital (unlimited shares authorized,
without par) 1,235,582
Undistributed net investment income (loss) (9,305)
Accumulated net realized gain on investments (9,529)
Unrealized net appreciation on investments 398,808
-----------
Net Assets applicable to Fund shares
outstanding $1,615,556
===========
NET ASSET VALUE PER SHARE $7.92
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For year ended November 30, 1996
INVESTMENT INCOME
<S> <C> <C>
Dividends $11,896
---------
Gross investment income $11,896
EXPENSES
Investment adviser and administration fe 7,540
Custodial fees 2,271
Professional fees 1,720
Printing and postage 1,134
Filing and registration fees 792
Other expenses 595
---------
Total gross expenses 14,052
---------
Less earnings credits (2,271)
---------
Net expenses 11,781
---------
Net investment income $115
---------
NET REALIZED GAIN (LOSS) ON INVESTMENTS
Proceeds from sales 371,082
Less cost of securities sold based on
identified cost 376,770
----------
Realized net gain (5,688)
---------
UNREALIZED GAIN ON INVESTMENTS
End of period 398,808
Beginning of period 289,014
----------
Increase in unrealized gain for the period 109,794
---------
Net realized and unrealized gain on
investments 104,106
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $104,221
=============
</TABLE>
(The accompanying notes are an integral part of these financial statements)
<PAGE>
<TABLE>
<CAPTION>
(GRAPHIC OMITTED)
1996 ANNUAL REPORT SEXTANT GROWTH FUND
- - -----------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Year ended Year ended
Nov. 29, 1996 Nov. 30, 1995
------------- -------------
INCREASE IN NET ASSETS
<S> <C> <C>
OPERATIONS:
Net investment Income $ 115 $ (4,386)
Net realized gain (loss) on investments (5,688) 54,724
Net increase in unrealized appreciation 109,794 214,185
----------- -----------
Net increase in net assets from operations 104,221 264,523
----------- -----------
DIVIDENDS TO SHAREOWNERS FROM:
Net investment income - -
----------- -----------
Capital gains distributions - (28,392)
----------- -----------
FUND SHARE TRANSACTIONS:
Proceeds from sales of shares 676,224 306,751
Value of shares issued in reinvestment of dividends - 28,060
----------- -----------
676,224 334,811
Cost of shares redeemed (301,892) (444,025)
----------- -----------
Net Increase in net assets from share transactions 374,332 (109,214)
----------- -----------
Total increase in net assets 478,553 126,917
NET ASSETS
Beginning of period 1,137,003 1,010,086
----------- -----------
End of period $1,615,556 $1,137,003
=========== ===========
(Including undistributed net investment income
of ($9,305) for Nov. 30, 1996 and ($9,420)
for Nov. 30,1995)
Shares of the Fund Sold and Redeemed
Number of shares sold 90,055 43,111
Number of shares issued in reinvestment of dividends - 3,782
Number of shares redeemed (39,396) (67,343)
----------- ------------
Net Increase (Decrease) in Number of Shares Outstanding 50,659 (20,450)
=========== ============
</TABLE>
(The accompanying notes are an integral part of these financial statements)
<PAGE>
(GRAPHIC OMITTED)
SEXTANT GROWTH FUND 1996 ANNUAL REPORT
- - --------------------------------------------
DISCUSSION OF FUND PERFORMANCE
(UNAUDITED)
FISCAL YEAR 1996
During the year ended November 30, 1996, the Fund's total return to its
shareholders was +6.74%. The Fund's net asset value per share rose to $7.92 from
$7.42. Total assets increased 42% to $1.6 million.
FACTORS AFFECTING PERFORMANCE
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). In September, 1995, the Fund's
shareholders voted to broaden its objective from that of investing primarily in
growth companies linked only to the Northwest. Following the change, the Fund
seeks long-term growth through investment in common stocks of companies with
major operations in the United States. Additionally, the new advisory contract
resulted in lower expenses to shareholders. The Sextant Growth Fund follows an
value investment approach, favoring medium-sized companies with good businesses
and future prospects. However, the stock market for the last year tended to
favor larger companies and those with rapid earnings momentum, and often
disregarded fundamental investment values. As a result, the Fund under-performed
most market indices.
LOOKING FORWARD
The Fund will continue to favor solid companies, especially in the technology,
financial and cyclical areas. With a steady economy, these sectors are expected
to perform well. For the portfolio`s securities, both the Price/Earnings and
Price/Book ratios are under those of similar funds while an above-average 24%
five-year earnings growth rate indicates a good probability of long-term price
appreciation.
PERFORMANCE FEE COMPUTATION
The Sextant Growth Fund has calculated its performance fee on a comparison of
the Fund's 12-month return to the return of the Morningstar Growth Stock Index.
On 10/31/96, Morningstar changed their method of rating Mutual Funds. The new
comparable Category for the Sextant Growth Fund is "Domestic Growth." This index
is well matched to the characteristics of the Sextant Growth Fund. At November
30, 1996, the one-year return for this index was 20.24%. As the Fund
underperformed the Morningstar benchmark by more than 4%, the Fund paid a
lowered 0.30% (annualized) advisory fee for the month of December 1996.
Adjustments to the basic 0.60% advisory fee are made in a similar manner each
month.
<PAGE>
(GRAPHIC OMITTED)
1996 ANNUAL REPORT SEXTANT GROWTH 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
following graph compares $10,000 invested in the Fund at its inception, compared
to a similar amount invested in Standard & Poor's 500 Index. The graph shows
that the investment at inception would have risen to $16,511 in the Fund and
$27,520 in the Index. The changes in investment objective during the life of the
Fund limit the usefulness of this comparison. And fortunately, past performance
is not indicative of future results.
SEXTANT GROWTH FUND VS. S&P 500 INDEX
Average Annual Returns
- - ----------------------
One Year 6.74%
Five Years 7.98%
Since Inception 7.41%
Date Sextant Growth S&P 500 Index
Dec-90 $10,000 $10,000
Nov-96 $16,511 $27,520
(Graph omitted)
<PAGE>
<TABLE>
<CAPTION>
(GRAPHIC OMITTED)
SEXTANT INTERNATIONAL FUND 1996 ANNUAL REPORT
- - ---------------------------------------------------
NUMBER MARKET
ISSUE OF SHARES COST VALUE COUNTRY
- - --------------------------------------------------------------------------------
COMMON STOCKS
<S> <C> <C> <C> <C>
BANKING AND FINANCIAL (15.9%)
Australia & New Zealand Bank ADR 500 10,875 16,313 Australia
Aegon NV ADR 300 11,513 16,875 Netherlands
Banco Bilbao Vizcaya ADS 400 15,505 20,200 Spain
Banco de A. Edwards ADS 500 10,907 9,250 Chile
Banco Latinoamericano de Export S. 200 9,325 9,775 Panama
Hutchison Whampoa ADR 500 17,826 19,375 Hong Kong
Toronto Dominion Bank 700 18,159 18,637 Canada
------- -------
94,110 110,425
BUILDING MATERIALS (3.2%)
C R H plc ADR 300 15,661 15,525 Ireland
Hanson plc ADR 1,000 7,865 6,750 United Kingdom
------ ------
23,526 22,275
CHEMICALS (2.3%)
Phone Poulenc SA ADR 500 15,859 16,187 France
COMPUTERS (2.4%)
Olicom A/S 900 16,246 16,425 Denmark
CONSUMER PRODUCTS (4.8%)
Gucci Group NV 200 10,925 14,675 Italy
Coca Cola FEMSA S.A. ADR 500 9,750 13,688 Mexico
Imperial Tobacco Group plc ADS 250 3,417 3,094 United Kingdom
Swedish Match ADS 50 1,895 1,650 Sweden
------ ------
25,987 33,107
CLOSED END COUNTRY FUNDS (8.8%)
Austria Fund 1,000 7,923 9,125 Austria
New Germany Fund 1,000 12,417 14,500 Germany
Irish Investment Fund 900 10,238 12,712 Ireland
Malaysia Fund 600 9,750 11,925 Malaysia
Singapore Fund 1,000 13,777 12,875 Singapore
------- -------
54,105 61,137
ELECTRICAL EQUIPMENT (3.4%)
ABB AB ADR 100 10,000 11,488 Sweden
Electrolux AB ADR 200 8,800 11,800 Sweden
------ -------
18,800 23,288
MEDICAL-DRUGS (4.9%)
Glaxo Wellcome plc ADR 400 9,800 13,150 United Kingdom
Novo-Nordisk A/S ADR 450 14,702 20,756 Denmark
------- -------
24,502 33,906
METALS & MINING (7.5%)
Barrick Gold 400 9,600 12,000 Canada
Broken Hill Proprietary ADR 400 11,700 11,850 Australia
Potash Corp of Saskatchewan 200 14,675 15,075 Canada
RTZ Corp PLC ADS 200 11,375 13,525 United Kingdom
------- -------
47,350 52,450
</TABLE>
(The accompanying notes are an integral part of these financial statements)
<PAGE>
<TABLE>
<CAPTION>
(GRAPHIC OMITTED)
1996 ANNUAL REPORT SEXTANT INTERNATIONAL FUND
- - -------------------------------------------------
INVESTMENTS, CONTINUED
NUMBER MARKET
ISSUE OF SHARES COST VALUE COUNTRY
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OIL & GAS PRODUCTION (7.7%)
Numac Energy 2,000 8,853 8,625 Canada
Petroleum Geo-Services A/S 500 10,979 18,750 Norway
Total S.A. ADR 307 8,812 12,395 France
YPF SA ADS 600 12,344 13,950 Argentina
------- -------
40,988 53,720
PAPER PRODUCTS (2.8%)
Abitibi-Price 800 11,847 11,800 Canada
Aracruz Cellulose S.A. ADR 1,000 9,875 7,750 Brazil
------ ------
21,722 19,550
PHOTOGRAPHIC EQUIPMENT (3.3%)
Canon ADR 100 8,687 10,575 Japan
Fuji Photo Film ADR 400 10,050 12,600 Japan
------- -------
18,737 23,175
TELECOMMUNICATIONS (16.2%)
BCE Inc 450 15,830 22,556 Canada
British Sky Broadcasting ADS 300 11,063 15,675 United Kingdom
Cable & Wireless plc ADS 600 13,021 14,475 Hong Kong
PT Indosat ADR 300 10,584 8,287 Indonesia
Telebras ADS 300 15,051 22,725 Brazil
Telecom Corp New Zealand ADS 150 10,050 12,619 New Zealand
Telefonica de Espana ADS 250 10,250 16,500 Spain
------- -------
85,849 112,837
TRANSPORTATION (5.2%)
British Airways 150 10,931 14,888 United Kingdom
Canadian Pacific Ltd. 500 8,164 13,750 Canada
KLM Royal Dutch Airlines 300 10,650 7,838 Nethderlands
------- ------
29,745 36,476
UTILITIES-ELECTRIC (2.7%)
Enersis S.A. ADR 400 10,100 11,950 Chile
Korea Electric Power ADR 400 9,500 7,050 Korea
------ ------
19,600 19,000
UTILITIES-GAS (2.7%)
Transport de Gas del Sur SA ADR 1,500 18,808 18,562 Argentina
TOTAL INVESTMENTS (93.8%) $555,935 $652,520
========= ========
Other Assets (net of liabilities) (6.2%) 42,974
------
Total Net Assets (100%) $695,494
========
</TABLE>
(The accompanying notes are an integral part of these financial statements)
<PAGE>
<TABLE>
<CAPTION>
(GRAPHIC OMITTED)
SEXTANT INTERNATIONAL FUND 1996 ANNUAL REPORT
- - ----------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
As of November 30, 1996
ASSETS
<S> <C>
Common stock investments (cost $555,934) $652,520
Cash 44,566
Dividends receivable 507
--------
Total Assets 697,593
LIABILITIES
Payable to affiliate 2,099
--------
Total Liabilities 2,099
--------
NET ASSETS $695,494
========
Fund Shares Outstanding 118,537
ANALYSIS OF NET ASSETS
Paid in capital (unlimited shares authorized, without par) 606,399
Undistributed net investment income (loss) (1,138)
Accumulated net realized gain (loss) on investments (6,353)
Unrealized net appreciation on investments 96,586
--------
Net Assets applicable to Fund shares outstanding $695,494
========
NET ASSET VALUE PER SHARE $5.87
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year Ended November 30, 1996
INVESTMENT INCOME
<S> <C> <C>
Dividends $12,196
Miscellaneous Income 9
------------
Gross investment income $12,205
EXPENSES
Investment adviser and administration fee 3,148
Custodial fees 2,521
Professional fees 1,696
Foreign taxes paid 1,593
Filing and registration fees 1,493
Other expenses 619
Printing and postage 586
------------
Total gross expenses 11,656
Less earnings credits (2,521)
Net expenses 9,135
-----------
Net investment income 3,070
-----------
NET REALIZED GAIN (LOSS) ON INVESTMENTS
Proceeds from sales 46,327
Less cost of securities sold based on identified cost 51,496
------------
Realized net loss (5,169)
-----------
UNREALIZED GAIN ON INVESTMENTS
End of period 96,586
Beginning of period 2,178
------------
Increase in unrealized gain for the period 94,408
-----------
Net realized and unrealized gain on investments 89,239
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $92,309
===========
</TABLE>
(The accompanying notes are an integral part of these financial statements)
<PAGE>
<TABLE>
<CAPTION>
(GRAPHIC OF SEXTANT AND ICON OMITTED)
1996 ANNUAL REPORT SEXTANT INTERNATIONAL FUND
- - ----------------------------------------------------
STATEMENT OF CHANGES IN NET ASSET
Period Sept. 28,
Year Ended 1995(inception)to
Nov 29 1996 Nov. 30, 1995
------------ --------------
INCREASE IN NET ASSETS
OPERATIONS:
<S> <C> <C>
Net investment Income $ 3,070 $ (1,140)
Net realized gain (loss) on investments (5,169) (1,184)
Net increase in unrealized appreciation 94,408 2,178
---------- ----------
Net increase(decrease) in net assets from operations 92,309 (146)
---------- ----------
DIVIDENDS TO SHAREOWNERS FROM:
Net investment income (3,068) -
Capital gains distributions - -
----------- ----------
FUND SHARE TRANSACTIONS:
Proceeds from sales of shares 440,062 328,284
Value of shares issued in reinvestment of dividends 3,068 -
----------- ----------
443,130 328,284
Cost of shares redeemed (165,015) -
----------- ----------
Net increase in net assets from share transactions 278,115 328,284
----------- ----------
Total increase in net assets 367,356 328,138
NET ASSETS
Beginning of period 328,138 -
----------- ----------
End of period $695,494 $328,138
=========== ==========
(Including undistributed net investment income of
($1,138) for Nov. 30,1996)
Shares of the Fund sold and redeemed
Number of shares sold 83,056 65,795
Number of shares issued in reinvestment of dividends 523 -
Number of shares redeemed (30,837) -
----------- ----------
Net Increase in Number of Shares Outstanding 52,742 65,795
=========== ==========
</TABLE>
(The accompanying notes are an integral part of these financial statements)
<PAGE>
<TABLE>
<CAPTION>
(GRAPHIC OMITTED)
SEXTANT INTERNATIONAL FUND 1996 ANNUAL REPORT
- - ----------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected data per share of capital stock outstanding throughout the period:
Sept. 28,'95
Year Ended (Inception) to
Nov. 30, '96 Nov. 30, '95*
------------ -------------
<S> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $4.99 $5.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03 (0.02)
Net gains or losses on securities
(both realized and unrealized) 0.88 0.01
---- ----
Total from investment operations 0.91 (0.01)
LESS DISTRIBUTIONS
Dividends (from net investment income) (0.03) 0.00
Distributions (from capital gains) 0.00 0.00
---- ----
Total distributions (0.03) 0.00
NET ASSET VALUE AT END OF PERIOD $5.87 $4.99
TOTAL RETURN 18.16% (0.20)%
RATIOS/SUPPLEMENTAL DATA
Net assets ($000), end of period $695 $328
Ratio of expenses to average net assets+ 1.80% 0.49%
Ratio of net investment income to average net assets+ 0.60% (0.38)%
Portfolio turnover rate 11% 12%
Average commission rate paid $0.0827 $0.0192
<FN>
+ For the above periods, 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 $.03 and $.01,
respectively. The increase to the ratio of expenses to average monthly net
assets would be .50% and .21 %, respectively.
* not annualized
</FN>
</TABLE>
(The accompanying notes are an integral part of these financial statements)
(GRAPHIC OMITTED)
DISCUSSION OF FUND PERFORMANCE
(UNAUDITED)
During its first full fiscal year, the Sextant International Fund provided a
total return of 18.16%. Net asset value per share rose to $5.87 on November 30,
1996 from $4.99 one year earlier. An income dividend of $.03 per share was paid
on November 29, 1996. Total assets increased 112%. The objective of the Fund is
to provide long-term growth through investment in foreign stocks. The Fund
performed well during its first full year, exceeding the 14.99% on the
comparable Morningstar Foreign Stock Index.
FACTORS AFFECTING PERFORMANCE
Investing in foreign securities includes exchange rate risks not present in
domestic securities. While almost all stock markets performed well in 1996, the
U.S. dollar generally strengthened in relation to its major trading partners,
thus reducing the returns on foreign investments.
LOOKING FORWARD
The Sextant International Fund is broadly invested in growth companies outside
the United
<PAGE>
(GRAPHIC OF SEXTANT AND ICON OMITTED)
1996 ANNUAL REPORT SEXTANT INTERNATIONAL FUND
- - -------------------------------------------------
States. While foreign economies slowed in relation to the U.S. in 1996, we
expect that most of our portfolio securities will continue to show outstanding
growth in future years and the Fund will continue to perform well.
PERFORMANCE FEE COMPUTATION
The International Fund calculates its performance fee on a comparison of the
Fund's 12-month return to the return of the Morningstar Foreign Stock Index.
Because the Fund`s 12-month return outperformed this index by more than 2% and
less than 4% at November 30, 1996, the Fund paid a bonus 0.20% (annualized)
performance fee for the month of December 1996. Adjustments to the basic 0.60%
advisory fee are made in a similar manner each month.
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 following graph compares $10,000 invested in the Fund at
its inception, compared to a similar amount invested in the AMEX International
Index. This capitalization-weighted index averages 50 American Depository
Receipts (ADRs) of large world-wide companies, and reflects the types of
securities in which Sextant International Fund invests. The graph shows that the
investment of $10,000 at 9/30/95 would have risen to $11,792 in the Fund and
$12,046 in the Index. The relatively short history of the Fund limits the
usefulness of this comparison. Past performance is not indicative of future
results.
SEXTANT INTERNATIONAL FUND VS. AMEX INTERNATIONAL INDEX
Average Annual Returns
- - ----------------------
One Year 18.16%
Since Inception 15,09%
Date International Fund AMEX Int'l Index
Sept-95 $10,000 $10,000
Nov-96 $11,792 $12,046
(GRAPH OMITTED)
<PAGE>
(GRAPHIC OMITTED)
NOTES TO FINANCIAL STATEMENTS
1996 ANNUAL REPORT
- - -----------------------------------------------
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 Bond Income Fund ("Bond Income"), Sextant Short-Term
Bond Fund ("Short-Term Bond"), Sextant Growth Fund ("Growth"), and Sextant
International Fund ("International") (collectively, 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. Thus, 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 Bond Income and Short-Term Bond, dividends are paid daily and
distributed on the last business day of each month. For the Growth and
International, 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, Saturna Capital
Corporation provides investment advisory services and certain other
administrative and distribution services to conduct Trust business, including
shareholder servicing and transfer agency
<PAGE>
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 Bond Income and Short-Term Bond
to 0.60% 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, 1996,
Bond Income and Short-Term Bond incurred advisory expenses of $6,640 and
$15,583, respectively. Growth and International incurred advisory expenses of
$7,540 and $3,148, respectively. In accordance with the expense waiver, for the
year ended November 30, 1996, Saturna Capital waived all of the Bond Income
advisory fee and $8,375 of that of Short-Term Bond. In accordance with the
Funds' custodian agreements with National City Bank, for the year ended November
30, 1996, custodian fees for Bond Income, Short-Term Bond, Growth, and
International, were $739, $2,635, $2,271, and $2,521, respectively. The
custodian waived its fees for earnings credits, as represented in the Statements
of Operations. One trustee, who also serves as the president of the Trust, is a
director and president of the Adviser. The unaffiliated trustees receive $100
per Board or committee meeting attended. On November 30, 1996, the trustees,
officers and their immediate families as a group owned 26%, 8%, 13% and 26% of
the outstanding shares of Bond Income, Short-Term Bond, Growth and
International, 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 Growth and International,
and paid $2,536 and $1,562, respectively in commissions at deep-discount rates
during the year ended November 30, 1996.
Note 4 -Federal Income Taxes
At November 30, 1996, International had capital loss carryforwards of $6,353
which expire in 2004, Bond Income had capital loss carryforwards of $62,858
which expire in 2003 and Short-Term Bond had capital loss carryforwards of
$21,125 which expire in 2004, 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, 1996, the net unrealized appreciation of investments for
Short-Term Bond, Growth and International were $4,435, $398,808, and $96,586,
which consist of unrealized gains of $8,898, $429,314, and $111,338 and
unrealized losses of $4,463, $30,508, and $14,752, respectively. Additionally,
the net unrealized loss on investments for Bond Income of $22,635 comprised
unrealized gains of $7,747 and unrealized losses of $30,382. During the year
ended November 30, 1996, Bond Income purchased $901,724 of securities and
sold/matured $802,093. Comparable figures for Short-Term Bond are $3,623,163 and
$2,533,225; for Growth $697,108 and $376,770; and for International, $315,108
and $51,496. Included in the above amounts for Bond Income and Short-Term Bond
are purchases of $240,906 and $619,792 and sales of $104,008 and $1,083,918 of
U.S. Government securities, respectively.
<PAGE>
SEXTANT
MUTUAL FUNDS (GRAPHIC OMITTED)
(GRAPHIC OMITTED) SHORT-TERM BOND
(GRAPHIC OMITTED) BOND INCOME
(GRAPHIC OMITTED) GROWTH
(GRAPHIC OMITTED) INTERNATIONAL
( GRAPHIC OMITTED) SATURNA CAPITAL
MUTUAL FUNDS
1300 No. State Street
Bellingham WA 98225-4730
800/SATURNA
(800/728-8762)
www.saturna.com
ANNUAL REPORT
NOVEMBER 30, 1996
This report is issued for the information of the shareowners of the Funds. It is
not for the distribution to propective investors unless it is accompanied or
preceded by an effective prospectus relating to the securities of the Trust. The
Sextant Funds are series ofSaturna Investment Trust.
