File No. 33-13247
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 17
and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
POST-EFFECTIVE AMENDMENT NO. 17
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
Pandora Larner, Secretary
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) [ ] on _______ pursuant to paragraph (b) [X] 60
days after filing pursuant to paragraph (a)(1) [ ] on _________ pursuant to
paragraph (a)(1) [ ] 75 days after filing pursuant to paragraph (a)(2) [ ] 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.
EXPLANATORY NOTE
----------------
This Post-Effective Amendment is the annual update to Saturna Investment
Trust's Registration Statement. It includes financial information updated for
the fiscal year ended November 30, 1998. There are no material changes
requiring disclosure update. This Amendment is filed under rule 485(a)
because this Registration Statement is updated to comply with the 1998
amendments to Form N-1A. An effective date of March 29, 1999, allowing the
normal 60 days under 485(a)(1), is projected. A graphical PDF version of this
filing is available at http://www.saturna.com/red.
--------------------------
<PAGE>
CROSS REFERENCE SHEET
FORM N-1A
Item
- ----
FOR SEXTANT MUTUAL FUNDS
PART A PROSPECTUS
- ------- ----------
1. (a) Front Cover Page COVER PAGE (when folded,
(b) Back Cover Page constitutes both front and back)
2. Risk/Return Summary A QUICK LOOK AT SEXTANT MUTUAL FUNDS
3. Fee Table FEES AND EXPENSES
4. (A) Investment Objectives INVESTMENT OBJECTIVES
(b) Principal Investment Strategies INVESTMENT STRATEGIES
(c) Risks RISKS
5. Management's Discussion of Performance Not applicable (in Annual
Report)
6. (a) Management INVESTMENT ADVISER
(b) Capital Structure Not applicable (no restrictions)
7. Shareowner information
(a) Pricing of Fund Shares PRICING OF FUND SHARES
(b) Purchase of Fund Shares HOW TO BUY SHARES
(c) Redemption of Funds Shares HOW TO REDEEM SHARES
(d) Dividends and distributions DIVIDENDS
(e) Tax Consequences TAX INFORMATION
8. Distribution arrangements INVESTMENT ADVISER
9. Financial Highlights Information FINANCIAL HIGHLIGHTS
PART B STATEMENT OF ADDITIONAL INFORMATION
- ---- - --------------------------------------
10. Cover Page & Table of Contents Cover Page
TABLE OF CONTENTS
11. Trust History HISTORY OF THE FUNDS
12. Fund Descriptions, Investments and Risks FUND DESCRIPTIONS,
INVESTMENTS AND RISKS
13. Management of the Trust MANAGEMENT OF THE FUNDS
14. Control Persons and Principal PRINCIPAL HOLDERS OF
Holders of Securities SECURITIES
15. Investment Advisory and Other INVESTMENT ADVISORY
Services AND OTHER SERVICES
16. Brokerage Allocation and Other BROKERAGE ALLOCATION
Practices
<PAGE>
17. Capital Stock and Other Securities CAPITAL STOCK
18. Purchase, Redemptions and Pricing PURCHASE, REDEMPTION AND
of Securities Being Offered PRICING OF SHARES
19. Taxation of the Trust TAXATION OF THE FUNDS
20. Underwriters Not applicable
21. Calculations of Performance Data CALCULATION OF PERFORMANCE DATA
22. Financial Statements FINANCIAL STATEMENTS
<PAGE>
<PAGE>
Item
FOR IDAHO TAX-EXEMPT FUND
PART A PROSPECTUS
- ------- ----------
1. (a) Front Cover Page COVER PAGE (when folded,
(b) Back Cover Page constitutes both front and back)
2. Risk/Return Summary A QUICK LOOK AT IDAHO TAX-EXEMPT FUND
3. Fee Table FEES AND EXPENSES
4. (A) Investment Objectives INVESTMENT OBJECTIVES
(b) Principal Investment Strategies INVESTMENT STRATEGIES
(c) Risks RISKS
5. Management's Discussion of Performance Not applicable (in Annual
Report)
6. (a) Management INVESTMENT ADVISER
(b) Capital Structure Not applicable (no restrictions)
7. Shareowner information
(a) Pricing of Fund Shares PRICING OF FUND SHARES
(b) Purchase of Fund Shares HOW TO BUY SHARES
(c) Redemption of Funds Shares HOW TO REDEEM SHARES
(d) Dividends and distributions DIVIDENDS
(e) Tax Consequences TAX INFORMATION
8. Distribution arrangements INVESTMENT ADVISER
9. Financial Highlights Information FINANCIAL HIGHLIGHTS
PART B STATEMENT OF ADDITIONAL INFORMATION
- ---- - --------------------------------------
10. Cover Page & Table of Contents Cover Page
TABLE OF CONTENTS
11. Trust History FUND HISTORY
12. Fund Descriptions, Investments and Risks FUND DESCRIPTIONS,
INVESTMENTS AND RISKS
13. Management of the Trust MANAGEMENT OF THE FUND
14. Control Persons and Principal PRINCIPAL HOLDERS OF
Holders of Securities SECURITIES
15. Investment Advisory and Other INVESTMENT ADVISORY
Services AND OTHER SERVICES
16. Brokerage Allocation and Other BROKERAGE ALLOCATION
Practices
17. Capital Stock and Other Securities CAPITAL STOCK
<PAGE>
18. Purchase, Redemptions and Pricing PURCHASE, REDEMPTION AND
of Securities Being Offered PRICING OF SHARES
19. Taxation of the Trust TAXATION OF THE FUND
20. Underwriters Not applicable
21. Calculations of Performance Data CALCULATION OF PERFORMANCE DATA
22. Financial Statements FINANCIAL STATEMENTS
<PAGE>
- ------
PART C
- ---- -
23. Exhibits EXHIBITS
24. Control Persons PERSONS CONTROLLED BY OR UNDER
COMMON CONTROL WITH REGISTRANT
25. Indemnification INDEMNIFICATION
26. Business and other Connections BUSINESS AND OTHER
CONNECTIONS
OF INVESTMENT ADVISER
27. Principal Underwriters PRINCIPAL UNDERWRITERS
28. Records LOCATION OF ACCOUNTS
AND RECORDS
29. Management Services MANAGEMENT SERVICES
30. Undertakings UNDERTAKINGS
<PAGE>
PART A
PROSPECTUS
<PAGE>
Saturna Investment Trust offers four no-load Sextant mutual funds:
SEXTANT GROWTH FUND
SEXTANT INTERNATIONAL FUND
SEXTANT SHORT-TERM BOND FUND
SEXTANT BOND INCOME FUND
Additional information about each Fund's in-vestments and operations is
available in the Funds' annual and semi-annual shareowner reports. The Funds'
annual report includes a discussion of the market conditions and in-vestment
strategies that significantly affected each Fund's performance during its last
fiscal year. A Statement of Additional Information contains more details, and is
incorporated in this Prospectus by reference.
These documents and other information are available upon request, without
charge, from:
(Graphic Omitted)
Saturna Capital
1300 N. State Street
Bellingham, Washington 98225
http://www.saturna.com
E-mail: [email protected]
800-SATURNA
[800-728-8762]
Information about the Funds (including the SAI) can be reviewed and copied at
the SEC's Public Reference Room in Washington DC (call 800-SEC-0330 for
information). Reports and other information about the Funds are also available
at the SEC's website (http://www.sec.gov) and copies may be
------------------
obtained, upon payment of a duplicating fee, by writing the Public Reference
Section of the SEC, Washington DC 20549-6009. Saturna Investment Trust's
Investment Company Act file number is 811-05071.
GROWTH FUND
INTERNATIONAL FUND
SHORT-TERM BOND FUND
BOND INCOME FUND
(Graphic Omitted)
Sextant Mutual Funds
NO-LOAD,
NO SALES CHARGE,
NO 12B-1
THE SECURITIES AND EXCHANGE COMMIS-SION OR ANY STATE SECURITIES AUTHORITY HAS
NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPEC-TUS
IS TRUTHFUL OR COMPLETE. ANY REPRE-SENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
PROSPECTUS
March 29, 1999
<PAGE>
1
Risk/Return Summary of the Sextant Mutual Funds
STOCKS:
GROWTH FUND - long-term capital growth INTERNATIONAL FUND - long-term capital
growth
BONDS:
SHORT-TERM BOND FUND - capital preservation and current income
BOND INCOME FUND- current income
PRINCIPAL INVESTMENT STRATEGIES GROWTH FUND primarily
invests in common stocks of U.S. companies. The INTERNATIONAL FUND, in contrast,
invests primarily in foreign common stocks. The Funds diversify their
investments across industries and companies, and generally follow a value
investment style. The Funds favor companies with low
price/earnings multiples,low price to cash flow, and higher dividend
yields.
The GROWTH FUND may invest in securities of smaller or newer
companies as well as those of well-seasoned companies of any size. The
INTERNATIONAL FUND diversifies its investments among many countries, favoring
those with mature markets (such as Europe and Canada). It currently limits its
investments to those securities of foreign issuers that trade and settle in the
U.S. (such as American Depository Receipts). These two Funds are not designed
for investors seeking current income, and do not ordinarily invest in debt
securities (bonds).
SHORT-TERM BOND FUND invests primarily in marketable short-term debt securities.
Under normal circumstances the Fund's dollar-weighted average maturity does not
exceed three years. SEXTANT BOND INCOME FUND invests primarily in marketable
debt securities. The Fund's current policy is to maintain a dollar-
weighted average maturity of ten years or more.
Both Funds invest at least 65% of assets in bonds
rated within the three highest grades (AAA, AA or A); and may not invest in a
security rated at time of purchase below the fourth highest grade (BBB).
PRINCIPAL RISKS OF INVESTING IN THE FUNDS The value of Fund shares rise and fall
as the value of the stocks and bonds in which the Fund invests goes up and down.
Only consider investing in a Sextant Fund if you are willing to accept the risk
that you may lose money. Fund share prices, yields, and total returns will
change with the fluctuations in the securities markets as well as the fortunes
of the industries and companies in which the Funds' invest.
The GROWTH Fund may invest in smaller companies, which
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.
The International Fund
involves risks and opportunities not typically associated with investing in U.S.
securities. These include fluctuations in currency exchange rates, less public
information about securities, less governmental market supervision, and lack of
uniform financial, social and political standards.
The risks inherent in the SHORT-TERM BOND and BOND INCOME Funds depend primarily
on the terms and quality of the obligations in each Fund's portfolio, as well as
on bond market conditions. When interest rates rise, bond prices fall. When
interest rates fall, bond prices go up. Bonds with longer maturities usually
are more sensitive to interest rate changesthan bonds with shorter maturities.
Both Funds entail credit risk, which is the
<PAGE>
possibility that a bond will not
be able to pay interest or principal when due. If the credit quality of a bond
is perceived to decline, investors will demand a higher yield, which means
a lower price, on that bond to compensate for the higher level of risk.
VARIABILITY OF RETURNS
These bar charts and tables provide an indication of the risks of investing in
the Funds by showing changes in Fund performance from year to year and by
showing how each Fund's average annual returns compare to those of broad-based
market indices.
(Graph Omitted)
Sextant Growth Fund Calendar Year Percentage Returns
1991 23%
1992 -1%
1993 9%
1994 -11%
1995 29%
1996 8%
1997 26%
1998 14%
Note: Highest return for a quarter was +27.4% (quarter ending December 31,
1998)
Lowest return for a quarter was -9.4% (quarter ending December 31,
1997)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Average Annual Total Returns Since 12/31/90 (inception)
(for the periods ending December 31, 1998) Past 1 year Past 5 years
------------ -------------
SEXTANT GROWTH FUND 14.7% 12.6% 11.7%
------------ ------------- --------------------------
S & P 500 * 28.6% 24.0% 20.7%
------------ ------------- --------------------------
<FN>
* The S & P 500 is the Standard & Poor's Composite Index of 500 stocks, an
unmanaged index of common stock prices.
</FN>
- -----
</TABLE>
(Graph Omitted)
Sextant International Fund Calendar Year Percentage Returns
1996 16%
1997 15%
1998 6%
Note: Highest return for a quarter was +24.5% (quarter ending December 31,
1998)
Lowest return for a quarter was -24.6% (quarter ending September
30, 1997)
2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Average Annual Total Returns Since Sept. 1995 (inception)
(for the periods ending December 31, 1998) Past 1 year
------------
SEXTANT INTERNATIONAL FUND 6.2% 12.3%
- ------------------------------------------ ------------ ----------------------------
AMEX International Index * 7.7% 17.0%
------------ ----------------------------
<FN>
* The AMEX International Index is a capitalization-weighted index of 50 American
Depository Receipts.
</FN>
- -----
</TABLE>
(Graph Omitted)
Sextant Short-Term Bond Fund Calendar Year Percentage Returns
1996 3%
1997 6%
1998 6%
Note: Highest return for a quarter was +3.2% (quarter ending September 30,
1998)
Lowest return for a quarter was -0.4% (quarter ending March 29,
1996)
<TABLE>
<CAPTION>
<S> <C> <C>
Average Annual Total Returns Since Sept. 1995 (inception)
(for the periods ending December 31, 1998) Past 1 year
------------
SEXTANT SHORT-TERM BOND FUND 6.2% 5.7%
------------ ----------------------------
Salomon Gov./Corp 1-3 Index * 7.0% 6.6%
------------ ----------------------------
<FN>
*The Salomon Smith Barney Government-sponsored/Corporate Bonds (1-3 year maturities)
------------------------------------------------------------------------------------
Index, is an unmanaged index of investment-grade short-term bond prices.
------------------------------------------------------------------------
</FN>
</TABLE>
(Graph Omitted)
Sextant Bond Income Fund Calendar Year Percentage Returns
1994 -6%
1995 16%
1996 -
1997 12%
1998 9%
Note: Highest return for a quarter was +7.7% (quarter ending March 31, 1995)
Lowest return for a quarter was -6.1% (quarter ending March 29,
1996)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Average Annual Total Returns Since March 1, 1993 (inception)
(for the periods ending December 31, 1998) Past 1 year Past 5 years
------------ -------------
SEXTANT BOND INCOME FUND 9.1% 6.0% 6.0%
------------ ------------- -------------------------------
Salomon BIG Index * 8.7% 7.3% 7.3%
------------ ------------- -------------------------------
<FN>
* The Salomon Broad Investment-Grade Bond Index is an unmanaged index of
investment-grade, medium and long term bond prices.
</FN>
- -----
</TABLE>
3
<PAGE>
How a Fund has performed in the past is not necessarily an indication of how the
Fund will perform in the future.
INVESTMENT RESULTS
Shareowners receive a financial report showing the investment returns,
portfolios, income and expenses of each Fund every six months. Investors may
obtain current share prices daily by calling 888-732-6262,
on electronic quotation systems, or by accessing the
Internet at www.saturna.com.
---------------
FEES AND EXPENSES
This table describes the fees and expenses that Fund shareowners may pay. There
are no shareowner fees (fees paid directly from an investment). The Funds impose
no sales charge (load) on purchases or reinvested dividends, no distribution
fees, or any deferred sales charge (load) upon redemption. There are no exchange
fees, redemption fees, or account fees. There are no fees charged to retirement
plan accounts. The following table illus-trates operating expenses of the Funds
for the fiscal year ending November 30, 1998.
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
INTER- SHORT-TERM BOND
GROWTH NATIONAL BOND INCOME
------ -------- ---- ------
Management Fees 0.38% 0.76% 0.61% 0.61%
Distribution (12b-1) Fees NONE NONE NONE NONE
Other Expenses 0.28% 0.40% 0.31% 0.30%
----- ----- ----- -----
Total Annual Fund Operating Expenses 0.66% 1.16% 0.92% 0.91%
Fee Waiver -0.32% -0.61%
----- -----
Net Expenses 0.60% 0.30%
Through 3/31/2000, Bond fund management fees are waived
when assets less than $2 million and expenses are capped at 0.60%
EXPENSES EXAMPLE
The example below is intended to help investors compare the cost of investing in
a Sextant Fund with the cost of investing in other mutual funds.
The example assumes an investor invests $10,000 in a Fund for the years
indicated and then redeems at the end of those years. The example also assumes
that the investment has a 5% net return each year and that the Fund's operating
expenses remain the same. Although actual costs may be higher or lower, based on
these assumptions an investor's cumulative expenses would be:
INTER- SHORT-TERM BOND
GROWTH NATIONAL BOND INCOME
------ -------- ---- ------
1 year total-- $70 $123 $97 $96
3 years total-- $220 $388 $307 $304
5 years total-- $385 $681 $539 $533
10 years total-- $877 $1550 $1226 $1213
4
<PAGE>
INVESTMENT OBJECTIVES
Growth Fund seeks long-term capital appreciation.
International Fund seeks long- term capital appreciation.
Short-Term Bond Fund seeks capital preservation and current income.
Bond Income Fund seeks current income.
The Sextant Funds provide basic elements to build a low-expense, balanced
investment program.
INVESTMENT STRATEGIES
Growth Fund invests in a diversified portfolio of U.S. common stocks, securities
convertible into common stocks, and preferred stocks. It may invest in
securities of smaller or newer companies as well as well-seasoned companies of
any size.
International Fund invests in a diversified portfolio of foreign
common stocks and other equity-type securities (such as securities convertible
into common stock and preferred stocks). The Fund diversifies its investments
geographically and by type of securities based on the adviser's evaluation of
economic, market, and political trends outside the U.S. It limits investments to
those securities of foreign issuers that trade and settle in the U.S., such as
American Depository Receipts (ADRs).
These two STOCK funds emphasize a value approach to investing. The manager
looks for securities it believe offer favorable possibilities for capital
appreciation over the next one to four years. In selecting securities, the
manager considers factors such as growth in revenues and earnings, relative
price to earnings and price to book value ratios, industry position and outlook
and its assessment of management. The funds seek tax-efficiency for their
shareowners and reduced trading expenses by limiting portfolio trading.
These Funds may take temporary defensive positions that are
inconsistent with the Fund's principal common stock investment
strategies to protect principal in adverse market conditions,
but which could reduce returns if stock prices are increasing. Taking a
temporary defensive position may keep a Fund from obtaining its investment
objective.
Short-Term Bond Fund invests at least 65% of its assets in marketable
short-term debt securities.
Its dollar-weighted average effective maturity normally does not exceed three
years.
Bond Income Fund invests at least 65% of its assets in marketable
debt securities. Its dollar-weighted average effective maturity normally
exceeds ten years.
These two BOND funds normally invest in:
- - Corporate bonds, meaning marketable debt securities payable in U.S. dollars,
5
<PAGE>
rated within the four highest grades assigned by Moody's Investors Service, Inc.
(Aaa, Aa, A, or Baa) or by Standard & Poor's Corporation (AAA, AA, A or BBB); -
U.S. Government securities; - High quality commercial paper; and - Bank
obligations, including repurchase agreements of banks, having total assets in
excess of $1 billion.
RISKS
Growth Fund Smaller, high growth companies involve higher investment risks
in that the 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.
International Fund 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 investments.
Short-Term Bond Fund
Bond Income Fund The risks inherent in the BOND funds
depend primarily on the terms and quality of the obligations in each Fund's
portfolio, as well as on market conditions. Interest rate fluctuations affect a
Fund's net asset value, but not the income received by the Fund from its
portfolio securities. Because prices and yields on debt securities vary over
time, the Fund's yield also varies. Because of its longer average portfolio
maturity, the Bond Income Fund may decline substantially should interest rates
increase.
Both Funds entail credit risk which is the possibility that a bond will not be
able to pay interest or principal when due. If the credit quality of a bond is
perceived to decline, investors will demand a higher yield, which means a lower
price, on that bond to compensate for the higher level of risk.
INVESTMENT ADVISER Saturna Capital Corporation, 1300 N. State Street,
Bellingham, Washington 98225 is the Investment Adviser and Administrator for the
Funds. Saturna Capital's wholly owned subsidiary, Investors National
Corporation, is a discount brokerage firm and acts as distribu-tor for the Funds
without compen-sation. Founded in 1989, Saturna Capital Corporation is also the
adviser to Amana Mutual Funds Trust and to private accounts. Saturna has
approximately $61 million in assets under management.
Each Fund pays the Adviser an Investment Advisory and Administrative Services
Fee. The Fee covers compensation for portfolio management as well as certain
administrative services such as portfolio accounting and reporting, and
shareholder servicing. The base portion of the Fee is 0.60% of average net
assets of each Fund per annum, payable monthly. This base Fee is subject to
adjustment up or down depending on the investment performance of each Fund
relative to a specified Morningstar index.
For each month GROWTH FUND's or INTERNATIONAL FUND's total investment return for
the one year period through that month outperforms or underperforms an index for
that period by 1% or more but less than 2%,
6
<PAGE>
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%.
For each month BOND INCOME FUND's or SHORT-TERM BOND FUND's total investment
return for the one year period through that month outperforms or underperforms
an 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%.
These Morningstar mutual fund Category averages are the indexes used for
comparison purposes: SEXTANT GROWTH FUND Domestic Growth Funds SEXTANT
INTERNATIONAL FUND Foreign Stock Funds SEXTANT SHORT-TERM BOND FUND Short-Term
Bond Funds SEXTANT BOND INCOME FUND Long-Term Bond Funds
For the fiscal year ended November 30, 1998, the aggregate advisory fee paid
(after performance adjustments and fee waivers) was 0.38%, 0.76%, 0.17%, and
0.00% of average net assets for Growth, International, Short-Term Bond, and Bond
Income Funds, respectively.
Nicholas Kaiser, president of Saturna Capital Corporation since 1989, is the
primary manager of the Growth and International Funds. Phelps McIlvaine, vice
president of Saturna Capital since 1994, is the manager of Bond Income and
Short-Term Bond Funds, and also manages Idaho Tax-Exempt Fund, another series of
the Trust.
PRICING OF FUND SHARES
Each Fund computes its price per share each
business day by dividing the value of all of its securities and other
assets, less liabilities, by the number of shares outstanding. The Funds
compute their daily prices at the close of trading on the
New York Stock Exchange (generally 4 p.m. New York time) using market prices.
The Funds' shares are
not priced on the days when New York Stock Exchange trading is closed (weekends
and national holidays). The price applicable to purchases or redemptions of
shares of each Fund is the price next computed after receipt of a purchase or
redemption order.
HOW TO BUY SHARES
You may open an account and purchase shares
by sending a completed application with a check for $1,000 or more ($25 under a
group or retirement plan) to the Fund of your choice. The Funds do not accept
ini-tial orders unaccom-pa-nied by payment. The price you receive is the net
asset value next determined after receipt of a purchase order. There are no
sales charges or loads. Shareowners may purchase additional shares at any time
in minimum amounts of $25. Once an account is open, pur-chases can be made by
check, by electronic funds transfer, or by wire.
Shareowners may authorize the use of electronic funds transfer (via
the Automated Clearing House system ("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. To use ACH to purchase
or redeem shares, simply call Saturna Capital. Investors also may wire money to
purchase shares, though the wiring bank typically charges a fee for this
service.
7
<PAGE>
Each time shares are purchased or redeemed, a confirmation is mailed
showing the details of the transaction as well as the current number and value
of shares held. Share bal-ances are computed in full and fractional shares,
expressed to three decimal places. The Funds offer several optional plans and
services, including a prototype defined contribution plan and free Individual
Retirement Accounts. Other plans offered by the Funds include an automatic
investment plan, a systematic withdrawal plan, and the right to exchange
your shares without charge for any other no-load mutual fund for which Saturna
Capital is the investment adviser. Materials describing these plans and
applications may be obtained from Saturna Capital.
HOW TO REDEEM SHARES
Shareowners may redeem all or part of their investment on any business day of
the Funds. The Funds pay redemptions in US dol-lars, and the amount per share
received is the price next determined after receipt of a re-demption request.
The amount re-ceived depends on the value of the in-vestments of that Fund at
that day and may be more or less than the cost of the shares being redeemed.
There are no fees or charges on redemptions.
The Funds normally pay for shares redeemed within three days after a proper
instruction is received. To allow time for clearing,payment for
redemption of investments made by check or ACH may be restricted for up to
14 calendar days.
There are several methods you may choose to redeem shares.
WRITTEN REQUEST
Write: Sextant Mutual Funds
Box N
Bellingham WA 98227-0596
Or Fax: 360 / 734-0755
You may redeem shares by a written request and choose one of the follow-ing
options for the proceeds:
Redemption check (no mini-mum) sent to registered owner(s). Redemption
check (no mini-mum) sent as directed if the signa-ture(s) are
guaranteed. If pro-ceeds are to be sent to other than the registered
owner(s) at the last ad-dress, the signa-tures on the request must be
guaran-teed by a national bank or trust com-pany or by a member of a
national se-curities ex-change.
Federal funds wire. The pro-ceeds ($5000 minimum) may be wired to any
bank designated in the re-quest if the signa-ture(s) are guar-an-teed as
explained above.
TELEPHONE REQUEST
Call: 800 / 728-8762 or 360 / 734-9900
You may redeem shares by a tele-phone request and choose one of the following
options for the proceeds: - Redemption check (no minimum) sent to registered
owner(s). - ACH transfer ($100 minimum) with proceeds transferred to your bank
account as designated by the ACH authorization on your application. The
transfer agent must receive the ACH authorization at least two weeks before
ACH transfer can be used. - Exchange (in at least the minimum established by
the Fund being purchased) for shares of any other Fund for which Saturna Capital
is adviser. If the exchange is your initial in-vestment into this Fund, the new
account will automatically have the same registration as your original
account. 2002 Federal funds wire. Proceeds ($5000 min-imum) may be wired only
to the bank previously designated, or as directed in a prior written
instruction with signatures guaranteed, as explained above.
8
<PAGE>
For telephone requests the Funds will en-deavor to confirm that instructions are
genuine and may be liable for losses if they do not. The caller must provide -
the name of the per-son making the request, - the name and address of the
regis-tered owner(s), - the account number, - the amount to be withdrawn, and -
the method for payment of the pro-ceeds. The Funds also may require a form of
personal identification. The Funds will not be responsible for the re-sults of
transactions they rea-sonably be-lieve genuine.
CHECK WRITING
Shareowners may also redeem by writing checks for amounts of $500 or more. Upon
request, a Fund provides a small book of blank checks for a $10 fee, which may
then be used to write checks to any payee. Checks are re-deemed at the price
next de-termined after re-ceipt by the transfer agent. To use this feature,
request the Check Writing Privi-lege on the Application.
DIVIDENDS
Each Fund intends to distribute its net investment in-come and net realized
capital gains, if any, to its shareowners. Distributions from capital gains are
paid at the end of November. Growth and International Funds pay income dividends
at the end of November. Short-Term Bond and Bond Income funds pay income
dividends daily, which are reinvested or distributed monthly. As a result
of their investment strategies, Short-Term Bond and Bond Income funds expect
their dividends will consist primarily of ordinary income.
Both dividends and capital gains dis-tri-bu-tions are automatically rein-vested
in addi-tional full and fractional shares of the Fund owned. At your option, you
may receive dividends or capital gain distri-butions in cash. You are notified
of each divi-dend and capital gains distribu-tion when paid.
TAX INFORMATION
Any redemption, including exchanges and checks written by shareowners,
constitutes a sale for federal income tax purposes, and in-vestors may realize a
capital gain or loss on the re-demp-tion.
At the end of each calendar year, shareown-ers re-ceive a complete annual
state-ment, which should be retained for tax record keeping. Saturna Capital
keeps each account's entire investment transaction his-tory, and helps
shareowners maintain the tax records needed to determine reportable capital
gains and losses as well as dividend income.
Each January, the transfer agent reports to each shareowner (consolidated by
taxpayer ID) and to the IRS the amount of each redemption transaction and the
amount of dividends and capital gains distributions. Dividend amounts represent
the proportionate share the shareowner is to report on a tax return for the
year. Capital gains may be taxed at different rates, depending on the length of
time the Fund held its investments. Fund dividends, whether paid in cash or
invested in additional shares of the Fund, may be subject to income taxes.
To avoid being subject to a 31% federal withholding tax on dividends and
distributions, you must furnish your correct Social Security or Tax
Identification Number.
Shareowners who are not US tax-payers may be subject to a 30% withholding tax
under US provisions applicable to foreign investors, unless a reduced rate or
exemption is provided under a tax treaty. Capital gain distributions paid by
the Funds are not subject to foreign withholding.
9
<PAGE>
FINANCIAL HIGHLIGHTS
These tables are to help you understand each Fund's financial performance. The
top section reflects financial results for a single Fund share. The total
returns represent the rate that an investor earned (or lost) on an investment in
each Fund, assuming reinvestment of all dividends and distributions and without
regard to income taxes. Tait Weller & Baker, independent auditors for the Funds,
examined this information. Their report and each Fund's financial statements are
in the Funds' annual report (available upon request from Saturna Capital).
GROWTH FUND
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ended
Nov. 30, Nov. 30, Nov.30, Nov.30, Nov.30,
<S> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994
-------- -------- ------- ------- -------
NET ASSET VALUE AT BEGINNING OF PERIOD $ 9.58 $ 7.92 $ 7.42 $ 5.82 $ 6.38
-------- -------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.02 0.01 - (0.03) (0.03)
Net gains or losses on securities
(both realized and unrealized) (0.11) 2.41 0.50 1.82 (0.53)
-------- -------- ------- ------- -------
Total from investment operations (0.07) 2.40 0.50 1.79 (0.56)
LESS DISTRIBUTIONS
Dividends (from net investment income) (0.02) (0.01) - - -
Distributions (from capital gains) (0.18) (0.73) - (0.19) -
-------- -------- ------- ------- -------
Total distributions (0.22) (0.74) - (0.19) -
-------- -------- ------- ------- -------
NET ASSET VALUE AT END OF PERIOD $ 9.29 $ 9.58 $ 7.92 $ 7.42 $ 5.82
======== ======== ======= ======= =======
TOTAL RETURN (0.97)% 30.30% 6.74% 30.76% 8.78%
Ratios / Supplemental Data
- --------------------------------------------
Net assets ($000), end of period $ 2,139 $ 2,188 $1,616 $1,137 $1,010
Ratio of expenses to average net assets 0.66% 1.04% 0.95% 1.63% 1.50%
Ratio of net investment income to
average net assets 0.19% (0.12)% 0.01% 0.45% 0.43%
Portfolio turnover rate 37% 25% 32% 40% 12%
<FN>
For 1996 and 1995 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 these years would be $.01,and $.01,respectively.
The increase to the ratio of expenses to average net assets would have been
18%,and .21%, respectively.
* Data prior to September 28, 1995 may not be meaningful, as the fund operated with
different investment objectives and fee arrangements.
</FN>
.
</TABLE>
INTERNATIONAL FUND
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Year Ended Year Ended Year Ended Sept. 28, '95
(inception) to
Nov. 30,1998 Nov. 30,1997 Nov. 30,1996 Nov. 30,1995
-------------- -------------- -------------- ----------------
NET ASSET VALUE AT BEGINNING OF PERIOD $6.61 $5.87 $4.99 $5.00
------ ----- ----- -----
Income from investment operations
Net investment income 0.03 0.06 0.03 (0.02)
Net gains or losses on securities
(both realized and unrealized) 0.21 0.74 0.88 0.01
-------------- -------------- -------------- ----------------
Total from investment operations 0.24 0.80 0.91 (0.01)
Less distributions
Dividends (from net investment income) (0.04) (0.06) (0.03) 0.00
Distributions (from capital gains) 0.00 0.00 0.00 0.00
-------------- -------------- -------------- ----------------
Total distributions (0.04) (0.06) (0.03) 0.00
-------------- -------------- -------------- ----------------
NET ASSET VALUE AT END OF PERIOD $ 6.81 $ 6.61 $ 5.87 $ 4.99
============== ============== ============== ================
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
TOTAL RETURN 3.57% 13.58% 18.16% (0.20)%
Ratios/supplemental data
Net assets ($000), end of period $ 881 $ 881 $ 695 $ 328
Ratio of gross expenses to average net assets 1.16% 1.51% 1.80% 0.49%
Ratio of net investment income to average net assets 0.54% 0.93% 0.60% 0.38%
Portfolio turnover rate 20% 9% 11% 12%
<FN>
For the year ended Nov. '96 and the period ended Nov. '95, 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 these periods would have been $.03 and $.01, respectively. The increase to the ratio of expenses to
average net assets would be .50% and .21 %, respectively.
</FN>
</TABLE>
SHORT-TERM BOND FUND
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Year Ended Year Ended Year Ended Sept. 28, '95
(inception) to
Nov. 30,1998 Nov. 30,1997 Nov. 30,1996
Nov. 30,1995
----------------
NET ASSET VALUE AT BEGINNING OF PERIOD $ 4.99 $5.00 $5.03 $5.00
---------------- ------ ------ ------
Income from investment operations
Net investment income 0.27 0.27 0.25 0.03
Net gains or losses on securities
(both realized and unrealized) 0.05 (0.01) (0.03) 0.03
-------------- -------------- -------------- ----------------
Total from investment operations 0.32 0.26 0.22 0.06
Less distributions
Dividends (from net investment income) (0.27) (0.27) (0.25) (0.03)
Distributions (from capital gains) 0.00 0.00 0.00 0.00
-------------- -------------- -------------- ----------------
Total distributions (0.27) (0.27) (0.25) (0.03)
-------------- -------------- -------------- ----------------
NET ASSET VALUE AT END OF PERIOD $ 5.04 $ 4.99 $ 5.00 $ 5.03
============== ============== ============== ================
TOTAL RETURN 6.67% 5.45% 4.85% 1.05%
Ratios/supplemental data
Net assets ($000), end of period $ 1,908 $ 2,508 $ 2,016 $ 878
Ratio of gross expenses to average net assets 0.48% 0.60% 0.85% 0.23%
Ratio of net investment income to average net assets 5.57% 5.58% 6.30% 0.68%
Portfolio turnover rate 71% 47% 100% 0%
<FN>
For the above periods, all or a portion of the operating expenses were waived.
If costs had not been waived, the resulting increase to expenses per share in
each period would have been $ .02, $.02, $.02 and $.007. The increase to the
ratio of expenses to average net assets would be .44%, .40%, .52% and .16%,
respectively.
</FN>
</TABLE>
11
<PAGE>
BOND INCOME FUND
<TABLE>
<CAPTION>
YearEnded YearEnded YearEnded YearEnded YearEnded
Nov. 30, Nov. 30, Nov.30, Nov.30, Nov.30,
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 4.83 $ 4.76 $ 4.91 $ 4.39 $ 5.03
------- ------- ------- ------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.30 0.30 0.30 0.24 0.25
Net gains or losses on securities
(both realized and unrealized) 0.17 0.07 (0.12) 0.52 (0.64)
------- ------- ------- ------- --------
Total from investment operations 0.47 0.37 0.18 0.76 (0.39)
LESS DISTRIBUTIONS
Dividends (from net investment income)
Non-taxable - - - (0.24) (0.25)
Taxable (0.30) (0.30) (0.30)
Distributions (from capital gains) - - (0.03) - -
------- ------- ------- ------- --------
Total distributions (0.30) (0.30) (0.33) (0.24) (0.25)
------- ------- ------- ------- --------
NET ASSET VALUE AT END OF PERIOD $ 5.00 $ 4.83 $ 4.76 $ 4.91 $ 4.39
======= ======= ======= ======= ========
TOTAL RETURN 10.04% 8.24% 4.04% 17.69% (8.24)%
Ratios/supplemental data
- ----------------------------------------
Net assets ($000), end of period $1,345 $1,092 $1,201 $1,096 $ 1,456
Ratio of expenses to average net assets 0.30% 0.47% 0.63% 0.54% 0.41%
Ratio of net investment income
to average net assets 6.24% 6.85% 5.96% 5.15% 5.48%
Portfolio turnover rate 0% 51% 75% 77% 74%
<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, $.03, $.03, $0.22, and
$0.13, respectively. The increase to the ratio of expenses to average monthly
net assets would be .61%, .63%, .70%, .60%, and .51% respectively.
*
Data prior to September 28, 1995 may not be meaningful, as the fund operated with
different
investment objectives and fee arrangements.
</FN>
</TABLE>
12
<PAGE>
(Graphic Omitted)
INVESTMENT APPLICATION for
Sextant GROWTH FUND
Sextant INTERNATIONAL FUND
Sextant BOND INCOME FUND
Sextant SHORT-TERM BOND FUND
Mail application and check to: For assistance, call:
SEXTANT MUTUAL FUNDS 800/SATURNA or 360/734-9900
Box N, Bellingham WA 98227-0596 FAX 360/734-0755
ACCOUNT TYPE AND NAME (select one)
Individual
First Middle Initial Last
Social Security Number Date of Birth
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)
Gifts to Minor as Custodian for
Name of Custodian Name of Minor
Uniform Gifts to Minors Act
under the Uniform Transfers
State to Minors Act Minor's Soc. Sec. No. Minor's
Birthdate
Other
Indicate name of corporation, other organization or fiduciary capacity. Tax
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 U.S. Resident Alien Non-Resident Alien
Country
INITIAL INVESTMENT $
Make check payable to the Fund being purchased (minimum $1000).
<PAGE>
<PAGE>
E-MAIL
Transaction confirmations and shareowner reports may be sent to my personal
e-mail address: In addition to paper mailings Instead to paper mailings (save
paper & postage)
TELEPHONE REDEMPTION PRIVILEGES
You automatically have telephone redemption by check and telephone exchange
privileges unless you strike this line. Each Fund endeavors 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. The Fund
also provides written confirmation of transactions.)
ACH TELEPHONE TRANSFER PRIVILEGE
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.
AUTOMATIC INVESTMENT PLAN
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.
CHECK WRITING PRIVILEGE ($500 per check minimum) ($10 checkbook charge) I (We)
hereby request the Custodian to honor checks drawn by me (us) on my
(our) account subject to acceptance by the Funds, 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.
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.
Date Signature of Individual (or Custodian)
Date Signature of Joint Registrant, if any
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
SATURNA INVESTMENT TRUST
SEXTANT GROWTH FUND
SEXTANT INTERNATIONAL FUND
SEXTANT SHORT-TERM BOND FUND
SEXTANT BOND INCOME FUND
1300 N. State Street
Bellingham, Washington 98225
360-734-9900
800-SATURNA
STATEMENT OF ADDITIONAL INFORMATION
March 29, 1999
This Statement of Additional Information is not a Prospectus. It merely
furnishes additional information concerning the Sextant Growth Fund, the Sextant
International Fund, the Sextant Short-Term Bond Fund, and the Sextant Bond Fund
that is not included in the Prospectus. It should be read in conjunction with
the Prospectus. You may obtain a Prospectus dated March 29, 1999 and shareowner
Annual and Semi-Annual reports without charge by writing to the address shown
above, calling toll-free to 800/728-8762, and on the Internet at
http://www.saturna.com/sextant. <PAGE>
TABLE OF CONTENTS
Page
History of the Funds 2
Fund Descriptions, Investments and Risks 3
Management of the Funds 7
Principal Holders of Securities 9
Investment Advisory and Other Services 11
Brokerage Allocation 13
Capital Stock 13
Purchase, Redemption and Pricing of Shares 14
Taxation of the Funds 14
Calculation of Performance Data 15
Financial Statements 16
HISTORY OF THE FUNDS
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 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 (commenced operation Dec. 30, 1990, known as
Northwest Growth Fund until September 28, 1995, when the investment objective
of only Northwest stocks was changed),
Sextant International Fund (commenced operation September 28, 1995),
Sextant Short-Term Bond Fund (commenced operation September 28, 1995),
and
Sextant Bond Income Fund (commenced operation March 2, 1993, known as
Washington Tax-Exempt Fund until September 28, 1995, when the investment
objective of only Washington State municipal bonds was changed). The fifth Fund,
Idaho Tax-Exempt Fund, is offered through a separate Prospectus and Statement of
Additional Information.
<PAGE>
FUND DESCRIPTIONS, INVESTMENTS AND RISKS
CLASSIFICATION
Saturna Investors Trust is a "series trust" that presently offers four Sextant
"open-end diversi-fied man-agement in-vest-ment com-panies" to investors.
INVESTMENT STRATEGIES AND RISKS
The Prospectus describes the principal investment strategies and risks of those
strategies. This section is provided for the purpose of expanding on investment
strategies and risks not thoroughly covered in the Prospectus.
Investing in securities entails both mar-ket risk and risk of price variation in
individ-ual securities. This is true even for debt securities issued by the U.S.
Government. By diversifying its invest-ments, each Fund may reduce the risk
associated with owning one or a few indi-vi-du-al securi-ties. There is no
assurance that any Fund will achieve its investment objectives.
SEXTANT GROWTH FUND seeks long-term growth 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.
Growth 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 Risks in Foreign Securities, below.)
SEXTANT INTERNATIONAL FUND invests 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.
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 countries of operation 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).
As a matter of policy (that can be changed by the Board of Trustees), the Fund
limits its investments to those securities of foreign issuers that are traded
and settled in the U.S. These include American Depository Receipts ("ADRs") that
represent underlying shares of foreign issuers. (ADRs are receipts typically
issued by an American bank evidencing ownership of the underlying foreign
securities.) Positions in these securities are valued in U.S.
<PAGE>
dollars, not in the currency of 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.
The Fund may invest in securities denominated in various currencies.
Accordingly, a change in the value of such currency against the U.S. dollar
results in a corresponding change in the U.S. dollar value of the Fund's assets
denominated in that currency. Such changes 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
rises. 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 shareowners. A
shareowner 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.
Risks 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.
SEXTANT SHORT-TERM BOND FUND invests primarily in marketable short-term debt
securities. Under normal circumstances, the Fund's dollar-weighted average
maturity does not exceed three years.
SEXTANT BOND INCOME 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.
The risks and investment returns offered in these Bond Funds depend primarily on
the terms and quality of the obligations in each Fund's portfolio, as well as on
market conditions. Interest rate fluctuations affect a Fund's net asset value,
but not the income received by the Fund from its portfolio securities. However,
because prices and yields on debt securities vary over time, no specific yield
on shares of a Fund can be assured.
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
<PAGE>
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 the Bond Funds invests at least 65% of
the value of its total assets (taken at market value at the time of investment)
in "bonds," meaning:
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).
U.S. Government Securities;
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
Bank obligations, including repurchase agreementsof 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.
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 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
<PAGE>
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.
FUND POLICIES
The in-vestment ob-jec-tives of each Fund are described in the Prospectus and
cannot be changed without approval by vote of a majority of the out-standing
shares of that Fund.
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 con-tractual restric-tions on resale or are otherwise not readily
marketable); nor invest in oil, gas or other min-eral 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
in-vest in securities so as to not comply with Subchapter M of the Internal
Revenue 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
invest-ment companies, and (ii) other securities, except that with respect to
any one issuer in an amount more than 5% of ei-ther Fund's total assets, and no
more than 10% of the Fund's voting securities of any one is-suer. In addition,
the Funds shall not purchase real estate; real estate limited partnerships
(excepting master limited partnerships that are pub-licly traded on a na-tional
security ex-change or NASDAQ's National Market System); com-modities 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 un-der-writer except that they may pur-chase securities
directly from the issuer for investment purposes. Also, no Fund 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 com-pany for the pur-pose of management or exercising
control. No Fund 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 pur-chase securities of any issuer in excess of 5% of the Fund's
total assets or pur-chase more than 10% of the outstanding voting securities of
any is-suer; or concentrate its in-vestments 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 to-gether have a record of less than three years
continuous operation. No Fund purchases securities if it has outstanding
borrowings exceeding 5% of its net assets. No Fund's invest-ments 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 ex-ceed 2% of the
value of the Fund's net assets, may be warrants that are not listed on the New
York or American Stock Exchange. Warrants acquired in units or at-tached 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 does 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
<PAGE>
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 exceeded 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 ap-proval of the holders of the majority of the
outstanding shares of the respective Fund. Objectives and poli-cies 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 Funds as an open-end management company and the
sub-classification of each of the Funds as a diversified company; and (3) the
policies listed here under "Investment Restrictions." TEMPORARY DEFENSIVE
POSITION When the Adviser considers a temporary defensive investment position
advisable, any Sextant Fund may invest without limitation in high-quality
corporate debt obligations or U.S. government obligations or hold cash or cash
equivalents. PORTFOLIO TURNOVER The Funds places no restrictions on portfolio
turnover and Funds will buy or sell invest-ments according to the Adviser's
appraisal of the factors affecting the market and the economy. The Adviser does
not anticipate significant variation to the portfolio turnover rates experienced
in the past.
MANAGEMENT OF THE FUNDS
BOARD OF TRUSTEES
A Board of five Trustees manages the Funds: Nicholas Kaiser, John E. Love,
John S. Moore, Gary A. Goldfogel, and A. Herbert Ershig. The Trustees
establish policies, as well as review and approve contracts and their
continuance. The Trustees also elect the officers, de-termine the amount of
any dividend or capital gain distribution and serve on any committees of the
Trust.
<PAGE>
MANAGEMENT INFORMATION
The Trustees and officers are:
<TABLE>
<CAPTION>
<S> <C> <C>
(1) (2) (3)
- ------------------------ ----------------------------
Name, Address, and Age Position(s) Held with Trust Principal Occupation(s)
During Past 5 years
A. Herbert Ershig Trustee President (now retired),
22 Shorewood Drive
Bellingham, WA 98225
Age: 60
- ------------------------
Ershigs, Inc. (industrial
fabrication)
Gary A. Goldfogel, M.D. Trustee Medical Examiner (pathologist)
1500 N. State Street
Bellingham WA 98225
Age: 40
- ------------------------
Owner, Avocet Environmental
Testing (laboratory)
--------------------------------
Nicholas Kaiser, MBA* President and Trustee President, Saturna Capital
1300 N. State Street
Bellingham, WA 98225
Age: 52
Corporation (the Trust's
investment adviser)
President, Investors National
Corporation (the Trust's
distributor)
John E. Love Trustee Owner, J.E. Love Co.,
1002 Spokane Street
Garfield WA 99130
Age: 66
- ------------------------
(agricultural equipment
manufacturer)
John S. Moore, Ph.D. Trustee Professor (now retired),
346 Bayside Road
Bellingham WA 98225
Age: 66
- ------------------------
College of Business and
Economics, Western
Washington University
Phelps S. McIlvaine Vice President Vice President, Saturna Capital
1300 N. State Street
Bellingham WA 98225
Age: 45
Corporation (the Trust's
investment adviser)
Treasurer, Investors National
Corporation (the Trust's
distributor)
Pandora Larner Secretary Secretary; Saturna Capital
1300 N. State Street
Bellingham WA 98225
Age: 51
- ------------------------
Corporation (the Trust's
investment adviser) [since
1996]
Doncaster Sales (direct
marketing) [1993-1995]
Teresa K. Anderson, MBA Treasurer Director of Funds and
1300 N. State Street
Bellingham WA 98225
Age: 30
- ------------------------
Operations, Saturna Capital
Corporation (the Trust's
investment adviser)
--------------------------------
</TABLE>
* Mr. Kaiser is an "interested person" of the Trust as de-fined in the
Investment Company Act of 1940.
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
<PAGE>
been
established at this time. An Audit Committee, consist-ing of the disinterested
directors, meets to select the independent accountant and review all audit
reports. There is no separate nominating committee. COMPENSATION The Trust pays
disinterested trustees $100 per meeting attended and reimbursement of travel
ex-penses (pro-rata to each Fund of the Trust). Mr. Kaiser receives no
compensation from the Trust, nor are the other officers of the Trust paid for
their duties with the Trust.
Pension or Total
Aggregate Retirement Compensation
Name of Compensa- Benefits Accrued Estimated Annual From Trust
Person; tion from As Part of Trust Benefits Upon and Fund
Complex
Position Trust Expenses Retirement Paid to Trustees
- -------- ----- -------- ---------- ----------------
A. HERBERT ERSHIG $400 $0 $0 $400
Trustee
GARY A. GOLDFOGEL 400 0 0 400
Trustee
JOHN E. LOVE 400 0 0 400
Trustee
JOHN S. MOORE, 400 0 0 400
Trustee
NICHOLAS F. KAISER, 0 0 0 0
Trustee
PRINCIPAL HOLDERS OF SECURITIES
As of January 15, 1999, the principal holders of record (those with more than 5%
of the outstanding shares) of securities of each Sextant Fund were:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name and Address Shares Percentage
---------------------------------- ------ -----------
GROWTH FUND Nicholas F. Kaiser IRA 19,209 8.71%
1300 N. State Street
Bellingham WA 98225
Sutherland Enterprises Ltd 12,885 5.84%
714 Earl Grey Crescent S.W.
Calgary, Alberta
INTERNATIONAL FUND Nicholas F. Kaiser IRA 23,943 19.38%
1300 N. State Street
Bellingham WA 98225
Mar-Jac Poultry, Inc. 7,595 6.14%
P. O. Box 1017
Gainesville GA 30503
Normal H. Bell, MD 7,215 5.84%
1 Johnson Road
Charleston SC 29407
<PAGE>
Northwest Eye Clinic Trust 7,065 5.72%
FBO Frederick Kaiser MD
3015 Squalicum Parkway
Bellingham WA 98225
SHORT-TERM BOND FUND Robert L. Foote 63,833 16.42%
PO Box 1157
Bellingham WA 98225
International Education Trust 50,955 13.10%
750 A Miller Drive SE
Leesburg VA 20176
Investors National Corporation 41,858 10.76%
1300 N. State Street
Bellingham WA 98225
Robert J. Nicholl IRA 41,524 10.68%
833 Sudden Valley
Bellingham WA 98226
Michael McRory Profit Sharing Plan 28,096 7.22%
3400 Squalicum Parkway
Bellingham WA 98225
Laura Kurtz-Harvie 19,944 5.13%
318 Bayside Road
Bellingham WA 98225
BOND INCOME FUND Nicholas F. Kaiser 44,038 17.06%
Markell F. Kaiser JTWROS
1300 N. State Street
Bellingham WA 98225
Luzenia B. Redpath 36,908 14.30%
500 Fieldston Road
Bellingham WA 98225
Loie E. Haggen 21,600 8.37%
521 Fieldston Road
Bellingham WA 98225
David K. Heaps IRA 19,931 7.72%
PO Box 1977
Bellingham WA 98225
Frederick M. Graham 15,903 6.16%
Mary J. Graham JTWROS
8647 W Sierra Pinta Drive
Peoria AZ 85382
Bayside Pathology Profit Sharing 65,869 5.10%
1500 N. State Street
Bellingham WA 98225
Carol Lingow Guardian 13,153 5.09%
FBO Robert C. Schmidt
South 4518 Woodward
Spokane WA 99206
</TABLE>
<PAGE>
As of January 15, 1999, officers and Trustees (plus affiliated family members
and entities), as a group, own the following shares of the Funds <TABLE>
<CAPTION>
<S> <C> <C>
Shares Owned Percentage of Outstanding
------------ --------------------------
GROWTH FUND 39,806 18.1%
INTERNATIONAL FUND 42,240 34.2%
SHORT-TERM BOND FUND 76,309 19.6%
BOND INCOME FUND 73,459 28.4%
</TABLE>
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER AND ADMINISTRATOR
Saturna Capital Corporation, 1300 N. State Street, Bellingham, Washington 98225
is the Investment Adviser and Administrator (the "Adviser") for the Funds.
Saturna Capital is also the Funds' shareowner servicing agent. Mr. Nicholas
Kaiser, by his ownership of the majority of its voting stock, is the controlling
person of the Adviser. Mr. Kaiser is also a Trustee and President of Saturna
Investment Trust, and the principal portfolio manager of both the Growth Fund
and the International Fund. ADVISORY FEE 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.
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%.
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%.
11
<PAGE>
Total return investment performance as calculated and published by
Morningstar, Inc. for selected groups of mutual funds is used as the index for
comparison purposes. The comparative Morningstar categories used are:
1989 Sextant Growth Fund: "DOMESTIC GROWTH FUNDS"
1990 Sextant International Fund: "FOREIGN STOCK FUNDS"
1991 Sextant Bond Income Fund: "LONG-TERM BOND FUNDS"
1992 Sextant Short-Term Bond Fund: "SHORT-TERM BOND FUNDS"
The Adviser has voluntarily undertaken to limit expenses of Short-Term Bond Fund
and Bond Income Fund to 0.60% through March 31, 2000 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 each of the last three fiscal years, the advisory fees (after performance
adjustments and expense limitations) each Fund paid Saturna Capital were:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1996 1997 1998
------ ------- ------
Sextant Growth Fund $7,540 $11,819 $8,933
Sextant International Fund 3,148 7,537 7,060
Sextant Short-Term Bond Fund 7,208 4,636 3,327
Sextant Bond Income Fund 0 0 0
</TABLE>
SHAREOWNER SERVICES
Under the Advisory agreement, Saturna Capital also provides services as the
transfer agent and dividend-paying agent for the Funds. 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 Funds, responds to
shareowners' questions or correspondence. Further, the transfer agent regularly
furnishes the Funds with current shareowner lists and information necessary to
keep the shares in balance with the Funds' records. The transfer agent performs
the mailing of all financial statements, notices and prospectuses to
shareowners. The transfer agent maintains records of contributions,
disbursements and assets as required for IRAs and other qualified retirement
accounts. These transfer agent services are included in the Base Fee. CUSTODIAN
National City Bank, Indiana, of Indianapolis, National City Center,
Indianapolis, Indiana 46255 is the custodian of the Funds. As custodian for the
Funds, the bank holds in custody all securities and cash, settles for all
securities trans-actions, receives money from sale of shares and on order of the
Funds pays the autho-rized expenses of the Funds. When investors redeem Fund
shares, the pro-ceeds are paid to the shareowner from an account at the
custodian bank. INDEPENDENT ACCOUNTANTS Tait, Weller and Baker, 8 Penn Center
Plaza, Suite 800, Philadelphia, PA 19103-2108 are the indepen-dent accountants
for the Funds. The accountants conduct an annual audit of the Funds as of
November 30 each year, prepare the tax returns of the Funds and as-sist the
Adviser in any accounting matters throughout the year. PRINCIPAL UNDERWRITER The
Adviser's wholly-owned subsidiary, Investors National Corporation, 1300 N. State
Street, Bellingham WA 98225 is a discount brokerage firm and acts as
distribu-tor for the Funds without compen-sation. Mr. Nicholas Kaiser, an
affiliated person of the Funds, is President of Investors National Corporation.
<PAGE>
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 make allocation of brokerage to any broker in return
for research or services and for selling shares of any fund of Saturna
Investment Trust. Brokers may provide research or statistical material to the
Adviser, but this information is only supple-mental 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 Funds or any other ac-count serviced by the
Adviser. Research services provided by brokers through which the Funds effect
securities transactions may be used by the Funds' investment adviser in
servicing all of its accounts and not all of these services may be used by the
adviser in connection with the Funds.
The primary consideration in effecting securities transactions for the Funds is
to obtain the best price and execution which in the judgment of the Adviser is
at-tainable at the time and which would bring the best net overall economic
result to a 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 commis-sions at a rate in excess of the amount another broker
would have charged if it de-termines in good faith that the overall net economic
result is favorable to the Fund, and is not required to execute trades in
"over-the-counter" securities with primary market-makers if similar terms are
available elsewhere. 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.
Brokerage is almost entirely directed to Investors National Corporation, a
wholly owned subsidiary of the adviser, which engages in a discount brokerage
business. Consideration is given by the Funds to the unpaid services of
Investors National Corporation as the Funds' principal underwriter. The Trustees
review brokerage activity in detail at each regular meeting. Meetings are held
on a quarterly schedule. For each of the last three fiscal years, the
commissions each Fund paid Investors National were:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
% of 1998 aggregate % of 1998 aggregate dollar
1996 1997 1998
------ ------ ------
brokerage amount of transactions involving
commissions paid the payment of commissions
Investors National through Investors National
Sextant Growth Fund $2,536 $1,967 $2,727 100% 100%
Sextant International Fund 1,562 872 1,434 100% 100%
Sextant Short-Term Bond Fund 98 0 0 0 0
Sextant Bond Income Fund 49 0 0 0 0
</TABLE>
CAPITAL STOCK
Each Fund of Saturna Investment Trust is divided into shares of benefi-cial
inter-est. The shares of each sep-arate Fund of the Trust have equal voting
rights. All shares are fully paid, non-assessable, transferable and with rights
of redemp-tion, and are not subject to preemptive rights. The Trust is not
required to hold annual shareowner meetings. However, special meetings may be
called for such pur-poses as electing or remov-ing 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 distribu-tions for each Fund shall be dis-tributed to
shareown-ers in proportion to the number of shares owned.
<PAGE>
PURCHASE, REDEMPTION AND PRICING OF SHARES
See How to Buy Shares, How to Redeem Shares and Pricing of Fund Shares in the
Prospectus for an explanation about the ways to purchase or redeem shares. Both
purchases and redemptions are made at net asset value per share.
In addition to normal purchases or redemptions, the shares of the Funds may be
exchanged for shares of other funds of Saturna Investment Trust. Exchanges 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.
Price (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 daily price 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, Martin Luther King Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas. See the balance sheet
in the Annual Report or Semi-Annual Report for a specimen sheet showing how the
Funds calculate net asset value, which is the price used for both purchase and
redemption of shares. TAXATION OF THE FUNDS Saturna Investment Trust is
organized as a "series" investment company. Each Fund of the Trust is a separate
eco-nomic 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 credi-tors and shareowners of each Fund are limited to the assets of that
fund for recovery of charges, expenses and liabilities. Each Fund of the Trust
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 Fund 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 they
have since inception, with the provisions of the Internal Revenue Code
applicable to regulated investment companies (Subchapter M), which relieve
mutual funds of federal income taxes on the amounts so distributed.
At November 30, 1998, Sextant International Fund had capital loss carryforwards
of $8,694 which expire in 2004, Sextant Bond Income Fund had capital loss
carryforwards of $74,575 which expire in 2004 and Sextant Short-Term Bond Fund
had capital loss carryforwards of $7,602 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.
If shareowners do not furnish the transfer agent with a valid Social Security or
Tax Identification Number and in certain other circumstances, the transfer agent
is required to with-hold 31% of income. Dividends and capital gains
distributions to shareowners who are nonresident aliens may be subject to a 30%
United States foreign with-holding tax under the existing provisions of the code
applicable to foreign individu-als and entities unless a reduced rate of
withholding or a withholding exemption is provided under applicable treaty law.
If the IRS determines that a Fund 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.
<PAGE>
CALCULATION OF PERFORMANCE DATA
Average annual Total Return and Current Yield information may be useful to
in-vestors in reviewing a 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
distribu-tions. The performance for any given past period is not an indication
of future rates of return or yield on its shares. The figures regarding
multi-year total return reflect the operations of Sextant Growth Fund and
Sextant Bond Income Funds using their different investment objectives prior to
September 1995.
For each of the following periods ended November 30, 1998, the average annual
compounded Total Returns of each Fund were:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1 year 5 years 10 years Commencement
------- -------- -------- -------------
Sextant Growth Fund -.97% 10.44% NA 10.02%
Sextant International Fund 3.57% NA NA 10.85%
Sextant Short-Term Bond Fund 6.68% NA NA 5.68%
Sextant Bond Income Fund 10.08% 6.01% NA 5.92%
</TABLE>
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 accord-ing to the following formula:
P (l + T)n = ERV
WhereP = 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
Current Yield is computed by dividing the net investment income, as defined by
- ------- -----
the Securities and Exchange Commission, over a rolling 30 day period for which
the yield is presented by the average number of shares eligible to receive
dividends for the period over the maximum offering price per share on the last
day of the period, and annualize the results. The formula used is:
Yield = 2[( a-b/cd +1)6 -1]
Where a = dividends accrued during the period b = expenses accrued for the
period (net of reimbursements) c = the average daily number of shares
outstanding during the period that were entitled to receive dividends d = the
price per share on the last day of the period
The cur-rent yield on the Sextant Growth Fund, the Sextant International Fund,
Sextant Short-Term Bond Fund, and the Sextant Bond Income Fund, for the 30 day
period ending November 30, 1998 was 0.6%, 0.2%, 5.6%, and 6.1%, respectively.
15
<PAGE>
FINANCIAL STATEMENTS
The most recent audited annual report accompanies this Statement of Additional
Information.
There is incorporated into this Registration Statement the following financial
information in the Annual Report to shareowners for the fiscal year ended
November 30, 1998. Filed as Exhibit A hereto:
Report of Tait, Weller & Baker, Independent Accountants. Statement of Assets and
Liabilities as of November 30, 1998. Statement of Operations - Year ended
November 30, 1998. Statements of Changes in Net Assets - years ended November
30, 1998, and 1997.
Investments - as of November 30, 1998.
Notes to Financial Statements.
<PAGE>
SATURNA INVESTMENT TRUST OFFERS
IDAHO TAX-EXEMPT FUND
Additional information about in-vestments and operations is available in the
Fund's annual and semi-annual shareowner reports. The annual report includes a
discussion of the market conditions and in-vestment strategies that
significantly affected the Fund's performance during its last fiscal year. A
Statement of Additional Information contains more details, and is incorporated
in this Prospectus by reference.
These documents and other information are available upon request, without
charge, upon request, and shareowners may make inquiries, from:
(Graphic Omitted)
1300 N. State Street
Bellingham, Washington 98225
http://www.saturna.com
E-mail: [email protected]
800-SATURNA
[800-728-8762]
Information about the Fund (including the SAI) can be reviewed and copied at the
SEC's Public Reference Room in Washington DC (call 800-SEC-0330 for
information). Reports and other information about the Fund are also available at
the SEC's website (http://www.sec.gov) and copies may be obtained, upon
------------------
payment of a duplicating fee, by writing the Public Reference Section of the
SEC, Washington DC 20549-6009. Saturna Investment Trust's Investment Company
Act file number is 811-05071.
I D A H O
-------------
T A X - E X E M P T F U N D
(Graphic Omitted)
No-Load,
No Sales Charge,
No 12b-1
THE SECURITIES AND EXCHANGE COMMIS-SION OR ANY STATE SECURITIES AUTHORITY HAS
NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPEC-TUS
IS TRUTHFUL OR COMPLETE. ANY REPRE-SENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
PROSPECTUS
March 29, 1999
<PAGE>
Risk/Return Summary of Idaho Tax-Exempt Fund
FUND INVESTMENT GOALS
IDAHO TAX-EXEMPT FUND seeks to provide income free from federal income, federal
alternative mini-mum and Idaho state income taxes, with a sec-ondary objective
of capital preservation.
PRINCIPAL INVESTMENT STRATEGIES
IDAHO TAX-EXEMPT FUND invests in debt securities issued by political
subdivisions of the State of Idaho. These municipal bonds, notes and commerial
paper may be in various forms, including general obligation bonds, revenue
bonds, mortgage bonds, certificates of participation, local improvement district
bonds, and refunding bonds.
At time of purchase, a nond must be rated "A" or equivalent by a national bond
rating agency. The Fund may also invest in non-rated nonds if they are of
equivalent quality in the opinion of the adviser. Factors included in bond
evaluations include such information as the bond district's financial position,
population size, employment trends, economic activity and diversification. The
portfolio's dollar-weighted average effective maturity is expected to range
between 6 and 15 years.
PRINCIPAL RISKS OF INVESTING IN THE FUND The value of Fund shares rise
and fall as the value of the bonds in which the Fund invests goes up and down.
The risks inherent in the Fund depend primar-ily on the terms and quality of the
obligations in its portfolio, as well as on market conditions. When
interest rates rise, bond prices fall. When interest rates fall, bond prices
go up. Bonds with longer maturities usually are more senwsitive to interest
rate changes than bonds with shorter maturities.
The Fund entails credit risk, which is the possibility that a bond will not be
able to pay interest or principal when due. If the credit quality of a bond is
perceived to decline, investors will demand a higher yield, which means a
lower price on that bond to compensate for the higher level of risk.
Fund investments are susceptible to factors adversely affecting Idaho. If a
security held by the Fund defaults on payment of interest or principal, the
Fund's income, ability to preserve capital, and liquidity would all be
adversely affected.
The Fund is vulnerable to income tax rate changes, either at the Idaho or
federal level, since part of municipal securities' value is derived from the
recipient's ability to exclude interest payments from taxation.
VARIABILITY OF RETURNS
These bar charts and tables provide an indication of the risks of investing in
the Fund by showing changes in Fund performance from year to year and by showing
how the Fund's average annual returns compare to a broad-based market index.
1
<PAGE>
(Graph Omitted)
Idaho Tax-Exempt Fund Calendar Year Percentage Returns
1989 8%
1990 5%
1991 8%
1992 6%
1993 8%
1994 -3%
1995 15%
1996 3%
1997 7%
1998 6%
Note: Highest return for a quartr was +7.3% (quarter ending March 31, 1995)
Lowest return for a quarter was -2.0% (quarter ending March 31, 1994)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Average Annual Total Returns
((for the periods ending December 31, 1998) Past 1 year Past 5 years Past 10 years
------------ ------------- --------------
IDAHO TAX-EXEMPT FUND 6.0% 5.6% 6.7%
------------ ------------- --------------
Lehman Municipal Composite * 6.5% 6.2% 8.2%
- ------------------------------------------- ------------ ------------- --------------
<FN>
* The Lehman Municipal Composite Index is a widely recognized, unmanaged index
of municipal bond prices.
</FN>
</TABLE>
How a Fund has performed in the past is not necessarily an indication of how the
Fund will perform in the future.
INVESTMENT RESULTS
Shareowners receive a financial re-port showing the investment returns,
portfolios, income and expenses every six months. Investors may obtain
current share prices daily by calling 888/732-6262, on electronic
quotation systems, or by accessing the Internet at www.saturna.com.
---------------
2
<PAGE>
FEES AND EXPENSES
This table describes the fees and expenses that Fund shareowners may pay. There
are no shareowner fees (fees paid directly from an investment). The Fund imposes
no sales charge (load) on purchases or reinvested dividends, no distribution
fees, or any deferred sales charge (load) upon redemption. There are no exchange
fees, redemption fees, or account fees. The following table illus-trates
operating expenses of the Fund for the fiscal year ending November 30, 1998.
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
Management Fees 0.47%
Distribution (12b-1) Fees NONE
Other Expenses 0.36%
-----
Total Annual Fund Operating Expenses 0.83%
Fee Waiver -0.03%
-----
Net Expenses 0.80%
Through 3/31/2000, fund management fees are waived to cap expenses at
0.80%
EXPENSES EXAMPLE
The example below is intended to help investors compare the cost of investing in
Idaho Tax-Exempt Fund with the cost of investing in other mutual funds. The
example assumes an investor invests $10,000 in a Fund for the years indicated
and then redeems at the end of those years. The example also assumes that the
investment has a 5% net return each year and that the Fund's operating expenses
remain the same. Although actual costs may be higher or lower, based on these
assumptions an investor's cumulative expenses would be:
1 year total -- $88
3 years total -- $227
5 years total -- $486
10 years total -- $1105
<PAGE>
INVESTMENT OBJECTIVES
IDAHO TAX-EX-EMPT FUND seeks to provide income dividends free from Federal
income, Federal alternative mini-mum and Idaho state income taxes. Preservation
of capital is a sec-ondary objective.
INVESTMENT STRATEGIES
The Fund's fundamental policy is to in-vest at least 80% of net as-sets in
se-curi-ties gen-erating in-come exempt from Fed-eral in-come tax, in-clud-ing
the alternative minimum tax. Under normal mar-ket condi-tions, at least 65% of
total assets are in-vested in debt se-curities generating in-come exempt from
Idaho income tax.
The Fund requires that at time of purchase a bond be rated at least "A" or
equivalent by a national bond rat-ing 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 Ad-viser.
Up to 60% of total assets of the Fund can be in-vested in non-rated bonds. The
Ad-viser will purchase only those non-rated bonds that it believes are liquid
and can be sold at the value given for net asset value purposes.
Investors can ex-pect the protfolio's dollar-weithed average effective
maturity*
to range between 6 and 15 years. Usually, shorter maturity bonds provide
lower current yields, while a matu-rity beyond 15 years implies great-er
cur-rent yield but increased risk to capital from interest rate in-creases.
During uncertain market or economic condi-tions, the Idaho Tax-Exempt Fund may
adopt a temporary, defensive posi-tion. While de-fensive investments may not
achieve the primary objective of tax-free in-come, they do assist the
sec-ondary ob-jective of capital preser-vation.
*The sum of the market value of each bond times its number of years to
anticipated maturity, divided by the portfolio's total market value.
RISKS
The risks inherent in the Fund depend primar-ily on the terms and quality of the
obligations in its portfolio, as well as on market conditions. Interest rate
fluctuations affect the Fund's net asset value, but not the income received by
the Fund from its portfolio securities. Because prices and yields on debt
securities vary over time, the Fund's yield also varies.
Because the Fund is "non-diversified" and invests primarily in Idaho municipal
securities, its in-vestments are sus-ceptible to fac-tors adversely affecting
Idaho. These factors include economic and financial trends, as well as political
conditions in Idaho and its political subdivisions.
The Fund entails credit risk, which is the possibility that a bond will not be
able to pay interest or principal when due. If the credit quality of a bond is
perceived to decline, investors will demand a higher yield, which means a lower
price, on that bond to compensate for the higher level of risk. If a security
held by the Fund defaults on payment of interest or principal, the Fund's
income, ability to preserve capital and liquidity would all be adversely
affected.
The Fund is vulnerable to tax rate changes, either at the Idaho or Federal
level, since part of municipal securities' value is derived from the recipient's
ability to exclude interest payments from taxation. Should this exclusion be
re-duced, the market for municipal securities, and consequently the Fund's share
value, may be adversely affected.
INVESTMENT ADVISER
Saturna Capital Corporation, 1300 N. State Street, Bellingham, Washington 98225
is the Investment Adviser and Administrator for the Fund. Saturna Capital's
wholly owned subsidiary, Investors National Corporation, is a discount brokerage
firm and acts as distribu-tor for the Fund without compen-sation. Founded in
1989, Saturna Capital Corporation is also the adviser to Amana Mutual Funds
Trust, the Sextant Mutual Funds and to private accounts. Saturna has
approximately $61 million in assets under management.
4
<PAGE>
The Fund pays a monthly advisory fee at the annual rate of 0.50% of the aver-age
daily net assets up to $250 mil-lion, 0.40% of assets be-tween $250 mil-lion and
$1 billion, and 0.30% of assets in ex-cess of $1 billion. For the fiscal year
ended November 30, 1998, the aggregate advisory fee paid (after a partial fee
waiver) was 0.44% of average net assets.
Phelps McIlvaine, vice president of Saturna Capital since 1994, is the primary
manager of the Idaho Tax-Exempt Fund. He also manages the Sextant Short-Term
Bond Fund and the Sextant Bond Income Fund, other series of the Trust.
PRICING OF FUND SHARES
The Fund computes its net asset value per share each business day by di-vid-ing
(i) the value of all of its securities and other as-sets, less liabili-ties, by
(ii) the num-ber of shares out-standing. The Fund computes its daily price at
the close of trading on the New York Stock Ex-change (generally 4PM Eastern
time)using market prices. The Fund's shares are
not priced on any cus-tom-ary national busi-ness holiday that security markets
are closed. The net asset value appli-ca-ble to purchases or redemption's of
shares of the Fund is the net asset value next computed after receipt of a
purchase or re-demption order.
Since daily bid prices are not available for many municipal bond issues, the
Fund val-ues securi-ties using matrices of municipal bond yields for various
ma-turities and qual-i-ties. Prices are ad-justed for factors unique to each
bond. To verify its knowledge of market fac-tors, the adviser periodically
obtains appraisals from independent sources.
HOW TO BUY SHARES You may open
account and purchase shares by sending a completed application with a check for
$1,000 or more to the Fund. The Fund does not ac-cept ini-tial orders
unaccom-pa-nied by payment. The price you receive is the net asset value next
determined after receipt of a purchase order. There are no sales charges or
loads.
Shareowners may purchase additional shares at any time in minimum amounts
of $25. Once an account is open, pur-chases can be made by check, by electronic
funds transfer, or by wire.
Shareowners may autho-rize the use of electronic funds transfer (via the
Automated Clearing House systerm ["ACH"]) to pur-chase or redeem shares by
completing the
appropriate section of the applica-tion. The autho-rization must be received at
least two weeks before ACH can be used. To use ACH to pur-chase or redeem
shares, simply call Saturna Capital. Investors also may wire money to purchase
shares, though the wiring bank typi-cally charges a fee for this service.
Each
time shares are purchased or redeemed, a confirmation is mailed showing the
details of the transaction as well as the current number and value of shares
held. Share bal-ances are computed in full and frac-tional shares, expressed to
three decimal places. At the end of each calendar year, you receive a complete
annual statement, which you should retain for tax purposes and a complete
histori-cal record of all trans-ac-tions. Optional plans offered by the Fund
include: (1) an auto-matic investment plan, (2) a sys-tem-atic with-drawal plan
to provide regular pay-ments to you, and (3) the right to ex-change your shares
without charge for any other no-load mutual fund for which Saturna Capital is
the in-vest-ment ad-viser. Ma-terials describ-ing these plans and applica-tions
may be obtained from the Ad-viser.
HOW TO REDEEM SHARES Shareowners may redeem
all or part of their investment on any business day of the Fund. The amount per
share received is the price next determined after receipt of a re-demption
request. The amount re-ceived depends on the value of the in-vestments of the
Fund at that day and may be more or less than the cost of the shares being
redeemed.
The Fund normally pays for shares redeemed within three days after a proper
instruction is re-ceived. To
5
<PAGE>
allow time for clearing, payment for re-demption of
in-vestments made by check or ACH may be re-stricted for up to 14 calendar days.
There are several methods you may choose to redeem shares.
WRITTEN REQUEST
Write: Idaho Tax-Exempt Fund
Box N
Bellingham WA 98227-0596
Or Fax: 360 / 734-0755
You may redeem shares by a written request and choose one of the follow-ing
options for the proceeds:
Redemption check (no mini-mum) sent to registered owner(s).
Redemption check (no mini-mum) sent as directed if the signa-ture(s) are
guaranteed. If pro-ceeds
are to be sent to other than the regis-tered owner(s) at the last ad-dress,
the signa-tures on the request must be guaran-teed by a national bank or trust
com-pany or by a member of a national se-curities ex-change.
Federal funds wire. The pro-ceeds ($5000 minimum) may be wired to any
bank designated in the re-quest if the signa-ture(s) are guar-an-teed as
explained above.
TELEPHONE REQUEST
Call: 800 / 728-8762 or
360 / 734-9900
You may redeem shares by a tele-phone request and choose one of the following
options for the proceeds:
Redemption check (no mini-mum) sent to registered owner(s).
ACH transfer ($100 minimum) with proceeds trans-ferred to your bank
ac-count as desig-nated by the ACH au-thorization on your applica-tion. The
transfer agent must receive the ACH authori-za-tion at least two weeks before
ACH transfer can be used.
Exchange (in at least the mini-mum estab-lished by the Fund being
purchased) for shares of any other Fund for which Saturna Capital is adviser. If
the ex-change is your initial in-vestment into this Fund, the new ac-count will
au-tomatically have the same registration as your original ac-count.
Federal funds wire. Proceeds ($5000 min-imum) may be wired only to the bank
previously designated, or as di-rected in a prior written instruc-tion with
signatures guar-anteed, as explained above.
For telephone requests the Fund will en-deavor to confirm that instructions are
genuine and may be liable for losses if they do not. The caller must provide
the name of the per-son making the request, the name and address of the
regis-tered owner(s), the account number, the amount to be withdrawn, and
the method for payment of the pro-ceeds.
The Fund also may require a form of personal identification. The Fund will not
be responsible for the re-sults of transactions they rea-sonably be-lieve
genuine. CHECK WRITING Shareowners may also redeem by writing checks for amounts
of $500 or more. Upon request, the Fund provides a small book of blank checks
for a $10 fee, which may then be used to write checks to any payee. Checks are
re-deemed at the price next de-termined after re-ceipt by the transfer agent. To
use this feature, request the Check Writing Privi-lege on the Application.
DIVIDENDS The Fund intends to distribute its net investment in-come and net
realized capital gains, if any, to its shareowners. The Fund accounts for its
distributions as either taxable capital gains (origi-nat-ing from net realized
gains on portfolio transactions), or taxable income (originat-ing from
dividends, taxable interest and certain other types of gains) or tax-exempt
income (originating from interest on municipal bonds). Income dividends are paid
daily and reinvested or dis-tributed monthly. Distributions from capital gains
are paid at the end of November.
Both dividends and capital gains dis-tri-bu-tions are automatically rein-vested
in addi-tional full and fractional shares of the Fund owned. At your option, you
may receive dividends or capital gain distri-butions in cash. You are notified
of each divi-dend and capital gains distribu-tion when paid.
6
<PAGE>
TAX INFORMATION
Any redemption, including exchanges and checks written by shareowners,
constitutes a sale for federal income tax purposes, and in-vestors may realize a
capital gain or loss on the re-demp-tion.
Each January, the transfer agent reports to each shareowner (consolidated by
taxpayer ID) and to the IRS the amount of each redemp-tion transaction and the
amount of taxable income divi-dends and capital gains distributions. Dividend
amounts represent the pro-portionate share the shareowner is to report on a tax
return for the year. Capital gains may be taxed at differ-ent rates, depending
on the length of time the Fund held its investments. The Fund expects
that its distributions will consist primarily of tax-exempt income dividends,
but it may invest a portion of its assets in securities that generate income
dividends that are not exempt from federal or Idaho income tax. Income
dividends exempt from federal tax may be subject to state and local taxes. Any
captial gains distributed by the Fund may be taxable. Fund distributions,
whether paid in cash or invested in additional shares of the Fund, may be
subject to income taxes.
FINANCIAL HIGHLIGHTS
This table is to help you understand the Fund's financial performance. The top
section reflects financial results for a single Fund share. The total returns
represent the rate that an investor earned (or lost) on an investment in the
Fund, assuming reinvestment of all dividends and distributions and without
regard to income taxes. Tait Weller & Baker, independent auditors for the Funds,
examined this information. Their report and the Fund's financial statements are
in the Fund's annual report (available upon request from Saturna Capital).
<TABLE>
<CAPTION>
Year ended November 30
----------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994
------- ------- ------- ------- --------
NET ASSET VALUE AT BEGINNING OF YEAR $ 5.28 $ 5.25 $ 5.28 $ 4.76 $ 5.23
------- ------- ------- ------- --------
Income from investment operations
Net investment income 0.25 0.26 0.27 0.26 0.27
Net gains or losses on securities (both realized & unrealized) 0.12 0.03 (0.03) 0.52 (0.46)
------- ------- ------- ------- --------
Total from investment operations 0.37 0.29 0.24 0.78 (0.19)
Less distributions
Dividends (from net investment income) (0.25) (0.26) (0.27) (0.26) (0.27)
Distributions (from capital gains) (0.04) 0.00 0.00 0.00 (0.01)
------- ------- ------- ------- --------
Total distributions (0.29) (0.26) (0.27) (0.26) (0.28)
NET ASSET VALUE AT END OF YEAR $ 5.36 $ 5.28 $ 5.25 $ 5.28 $ 4.76
======= ======= ======= ======= ========
TOTAL RETURN 7.27% 5.69% 4.66% 16.68% (3.76)%
Ratios / Supplemental Data
- --------------------------------------------------------------
Net assets ($000), end of year $6,264 $5,255 $5,064 $5,220 $ 6,841
Ratio of expenses to average net assets 0.76% 0.80% 0.79% 0.75% 0.75%
Ratio of net investment income to average net assets 4.69% 4.99% 5.10% 5.07% 5.28%
Portfolio turnover rate 23% 20% 10% 28% 36%
<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 the ratio of expenses
to average net assets would be .07%, .16%, .27%, .26%, and .14%,
respectively.
</FN>
</TABLE>
7
<PAGE>
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 N, Bellingham WA 98227-0596 FAX 360/734-0755
ACCOUNT TYPE AND NAME (select one)
Individual
First Middle Initial Last
Social Security Number Date of Birth
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.)
Gifts to Minor as Custodian for
Name of Custodian Name of Minor
Uniform Gifts to Minors Act
under the Uniform Transfers
State to Minors Act Minor's Soc. Sec. No. Minor's
Birthdate
Other
Indicate name of corporation, other organization or fiduciary capacity. Tax
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 U.S. Resident Alien Non-Resident Alien
Country
INITIAL INVESTMENT $
Make check payable to Idaho Tax-Exempt Fund (minimum $1000).
<PAGE>
<PAGE>
E-MAIL
Transaction confirmations and shareowner reports may be sent to my personal
e-mail address: In addition to paper mailings Instead to paper mailings (save
paper & postage)
TELEPHONE REDEMPTION PRIVILEGES
You automatically have telephone redemption by check and telephone exchange
privileges unless you strike this line. The Fund endeavors 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. The Fund
also provides written confirmation of transactions.)
ACH TELEPHONE TRANSFER PRIVILEGE
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.
AUTOMATIC INVESTMENT PLAN
Invest $ _______ into the 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.
CHECK WRITING PRIVILEGE ($500 per check minimum) ($10 checkbook charge) I (We)
hereby request the Custodian to honor checks drawn by me (us) on my
(our) account subject to acceptance by the Fund, with payment to be made by
redeeming sufficient shares in my (our) account. None of the custodian bank,
Saturna Capital Corporation, nor the Idaho Tax-Exempt 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.
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 Fund
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 Fund.
Date Signature of Individual (or Custodian)
Date Signature of Joint Registrant, if any
<PAGE>
PLEASE SAVE THIS QUICK GUIDE TO
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 prior to the market closing time, 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. Every quarter-end we mail
a statement showing all transactions for the
year. Monthly consolidated statements are available for an extra fee.
DIVIDENDS AND PRICES
The Fund declares dividends daily and pays them monthly. Fund prices are
recorded daily at 888 / 732-6262 and on the Internet at www.saturna.com.
FOR MORE INFORMATION
You may consult the applicable pages of this prospectus for additional details
on the Fund and its shareholder services. Please call 800 / SATURNA
(800/728-8762) with any questions.
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
SATURNA INVESTMENT TRUST
IDAHO TAX-EXEMPT FUND
1300 N. State Street
Bellingham, Washington 98225
360 / 734-9900
800 / SATURNA
STATEMENT OF ADDITIONAL INFORMATION
March 29, 1999
This Statement of Additional Information is not a Prospectus. It merely
furnishes additional information concerning the Idaho Tax-Exempt Fund that is
not included in the Prospectus. It should be read in conjunction with the
Prospectus. You may obtain a Prospectus dated March 29, 1999 and shareowner
Annual and Semi-Annual reports without charge by writing to the address shown
above, calling toll-free to 800/728-8762, and on the Internet at
http://www.saturna.com/idaho.
<PAGE>
TABLE OF CONTENTS
Page
History of the Fund 3
Fund Descriptions, Investments and Risks 3
Management of the Fund 8
Principal Holders of Securities 10
Investment Advisory and Other Services 10
Brokerage Allocation 11
Capital Stock 12
Purchase, Redemption and Pricing of Shares 12
Taxation of the Fund 12
Calculation of Performance Data 13
Financial Statements 14
2
<PAGE>
HISTORY OF THE FUND
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 Trust has five separate Funds, one of which is offered through this
Prospectus and Statement of Additional Information: Idaho Tax-Exempt Fund
(commenced operation September 4, 1987). The other four Sextant Funds are
offered through a separate Prospectus and Statement of Additional Information.
FUND DESCRIPTIONS, INVESTMENTS AND RISKS
CLASSIFICATION
Saturna Investors Trust is a "series trust" that presently offers the Idaho
Tax-Exempt Fund "open-end diversi-fied man-agement in-vest-ment company" to
investors. INVESTMENT STRATEGIES AND RISKS The Prospectus describes the
principal investment strategies and risks of those strategies. This section is
provided for the purpose of expanding on investment strategies and risks not
thoroughly covered in the Prospectus.
The Fund invests primarily in Idaho municipal bonds. The Fund is
"non-diversi-fied." This means that with re-spect to at least 75% of total
assets, greater than 5% may be in-vested in the securities of any one is-suer.
The balance of the Fund may be in-vested in other se-curities if not more than
25% of total as-sets are in-vested in the securities of any one is-suer, or two
or more issuers en-gaged in the same or simi-lar 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 in-vestments in
investment companies generally. It is anticipated that shares of such
invest-ment 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.
NON-RATED BONDS. Adviser believes 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 is-sued
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 war-ranted 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.
3
<PAGE>
Occasionally, the financial insti-tution 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. The Adviser anticipates
that investment in non-rated Bonds will occur only when the Adviser 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 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 a day at or near the value given for computing net
asset value.
The Adviser believes 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 Adviser may consider such evaluations and valuation
services pro-vided 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
securi-ties 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.
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 recog-nized 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 computa-tion 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
4
<PAGE>
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 pay-ment 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 is:
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 commer-cial paper is, in most cases, backed by letters of
credit, lending agreements, note repur-chase agreements, or other credit
facility agreements offered by banks and other institu-tions.
Municipal notes and commercial paper obligations are usually issued in the
following cir-cumstances: (a) When borrowing is in anticipation of long-term
financing, the paper is gen-erally 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
se-cured by income and revenues derived by the city from the project and from
the sale of the rev-enue 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 from 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. The full
faith and credit of the taxing districts back TANs. The State of Idaho is also
autho-rized 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 obliga-tion 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 fis-cal 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 out-standing 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 lo-cal 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
5
<PAGE>
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 pro-jects including, but not limited to, electric, gas, water and
- ------
sewer systems, highways, bridges, and tunnels, airport facilities, colleges
- ----
and universities, hospitals, and health, conven-tion, 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. The revenues of the
- --
particular utility or system secure them. 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 hous-ing 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 dis-tricts, irrigation districts and cities. The
property must be specially benefited by the im-provements constructed out of the
proceeds of the bonds, generally within a local improve-ment 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 from 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 antic-ipate 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 is-suer
may have a corresponding right to prepay the principal amount prior to maturity.
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.
6
<PAGE>
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.
FUND POLICIES
Investment objectives and certain policies of the Fund may not be changed
without the prior ap-proval of the holders of the majority of the outstanding
shares of the Fund. Objectives and poli-cies 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."
Investment Restrictions
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 con-tractual restric-tions on resale or are
otherwise not readily marketable); nor invest in oil, gas or other min-eral
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 in-vest in securities so as to not comply with Subchapter M of
the Internal Revenue 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 invest-ment companies, and (ii) other securities, except that with
respect to any one issuer in an amount more than 5% of ei-ther Fund's total
assets, and no more than 10% of the Fund's voting securities of any one is-suer.
In addition, the Fund shall not purchase real estate; real estate limited
partnerships; com-modities 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 un-der-writer except
that they may pur-chase securities directly from the issuer for investment
purposes. Also, the Fund shall not purchase or retain securities of any issuer
if the officers or trustees of the Fund or its Adviser own more than one-half of
one percent of the securities of such issuer; invest in any com-pany for the
pur-pose of management or exercising control. The Fund shall not pur-chase
securities of any issuer in excess of 5% of the Fund's total assets or pur-chase
more than 10% of the outstanding voting securities of any is-suer; or
concentrate its in-vestments 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 to-gether have a record of less than three years continuous operation.
TEMPORARY DEFENSIVE POSITION During uncertain market or economic condi-tions,
the Idaho Tax-Exempt Fund may adopt a temporary, defensive position and invest
more than 20% of assets in cash or equivalents, govern-ment se-cu-ri-ties,
unaffiliated money-market mutual funds, and other debt securities having an "A"
rating or better. While such de-fensive investments may not contribute to the
primary objective of tax-free income, they do assist the secondary objective of
capital preservation. PORTFOLIO TURNOVER The Funds places no restrictions on
portfolio turnover and Funds will buy or sell invest-ments according to the
Adviser's appraisal of the factors affecting the market and the economy. The
Adviser does not anticipate significant variation to the relatively low
portfolio turnover rates experienced in the past.
7
<PAGE>
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
A Board of five Trustees manages the Fund: Nicholas Kaiser, John E. Love, John
S. Moore, Gary A. Goldfogel, and A. Herbert Ershig. The Trustees establish
policies, as well as review and approve contracts and their continuance. The
Trustees also elect the officers, de-termine the amount of any dividend or
capital gain distribution and serve on any committees of the Trust.
8
<PAGE>
MANAGEMENT INFORMATION The Trustees and officers are:
<TABLE>
<CAPTION>
<S> <C> <C>
(1) (2) (3)
- ------------------------ ----------------------------
Name, Address, and Age Position(s) Held with Trust Principal Occupation(s)
During Past 5 years
A. Herbert Ershig Trustee President (now retired),
22 Shorewood Drive
Bellingham, WA 98225
Age: 60
- ------------------------
Ershigs, Inc. (industrial
fabrication)
Gary A. Goldfogel, M.D. Trustee Medical Examiner (pathologist)
1500 N. State Street
Bellingham WA 98225
Age: 40
- ------------------------
Owner, Avocet Environmental
Testing (laboratory)
--------------------------------
Nicholas Kaiser, MBA* President and Trustee President, Saturna Capital
1300 N. State Street
Bellingham, WA 98225
Age: 52
Corporation (the Trust's
investment adviser)
President, Investors National
Corporation (the Trust's
distributor)
John E. Love Trustee Owner, J.E. Love Co.,
1002 Spokane Street
Garfield WA 99130
Age: 66
- ------------------------
(agricultural equipment
manufacturer)
John S. Moore, Ph.D. Trustee Professor (now retired),
346 Bayside Road
Bellingham WA 98225
Age: 66
- ------------------------
College of Business and
Economics, Western
Washington University
Phelps S. McIlvaine Vice President Vice President, Saturna Capital
1300 N. State Street
Bellingham WA 98225
Age: 45
Corporation (the Trust's
investment adviser)
Treasurer, Investors National
Corporation (the Trust's
distributor)
Pandora Larner Secretary Secretary; Saturna Capital
1300 N. State Street
Bellingham WA 98225
Age: 51
- ------------------------
Corporation (the Trust's
investment adviser) [since
1996]
Doncaster Sales (direct
marketing) [1993-1995]
Teresa K. Anderson, MBA Treasurer Director of Funds and
1300 N. State Street
Bellingham WA 98225
Age: 30
- ------------------------
Operations, Saturna Capital
Corporation (the Trust's
investment adviser)
--------------------------------
</TABLE>
* Mr. Kaiser is an "interested person" of the Trust as de-fined in the
Investment Company Act of 1940.
person" of the Trust as de-fined in the Investment Company Act of 1940.
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
9
<PAGE>
been established at this time. An Audit Committee, consist-ing of the
disinterested directors, meets to select the independent accountant and review
all audit reports. There is no separate nominating committee.
COMPENSATION
The Trust pays disinterested trustees $100 per meeting attended and
reimbursement of travel ex-penses (pro-rata to each Fund of the Trust). Mr.
Kaiser receives no compensation from the Trust, nor are the other officers of
the Trust paid for their duties with the Trust.
Pension or Total
Aggregate Retirement Compensation
Name of Compensa- Benefits Accrued Estimated Annual From Trust
Person; tion from As Part of Trust Benefits Upon and Fund
Complex
Position Trust Expenses Retirement Paid to Trustees
- -------- ----- -------- ---------- ----------------
A. HERBERT ERSHIG $400 $0 $0 $400
Trustee
GARY A. GOLDFOGEL 400 0 0 400
Trustee
JOHN E. LOVE 400 0 0 400
Trustee
JOHN S. MOORE, 400 0 0 400
Trustee
NICHOLAS F. KAISER, 0 0 0 0
Trustee
PRINCIPAL HOLDERS OF SECURITIES
As of January 15, 1999, the only shareowner with more than 5% of the Idaho
Tax-Exempt Fund was Robert L. Foote (PO Box 1157, Bellingham WA 98225), with
145,907 shares (12.29% of the shares outstanding). Mr. Foote is the father of a
director of the Fund's Adviser. As of January 15, 1999, officers and Trustees
(plus affiliated family members and entities), as a group, own 1,369 shares of
Idaho Tax-Exempt Fund (0.12%).
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER AND ADMINISTRATOR
Saturna Capital Corporation, 1300 N. State Street, Bellingham, Washington
98225 is the Investment Adviser and Administrator (the "Adviser") for the
Fund. Saturna Capital is also the Fund's shareowner servicing agent. Mr.
Nicholas Kaiser, by his ownership of the majority of its voting stock, is the
controlling person of the Adviser. Mr. Kaiser is also a Trustee and President
of Saturna Investment Trust.
ADVISORY FEE
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 be-tween $250 million and $1 billion, and 0.30% of assets in
10
<PAGE>
excess of $1 billion. Through March 31, 2000, 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.
For each of the fiscal years ended November 30, 1996, 1997, and 1998,
respectively, the advisory fees (after expense limitations) the Fund paid
Saturna Capital were $12,617, $17,140, and $24,552, respectively.
SHAREOWNER SERVICES
Under the Advisory agreement, Saturna Capital also provides services as the
transfer agent and dividend-paying agent for the Funds. 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 Funds, responds to
shareowners' questions or correspondence. Further, the transfer agent regularly
furnishes the Funds with current shareowner lists and information necessary to
keep the shares in balance with the Funds' records. The transfer agent performs
the mailing of financial statements, notices and prospectuses to shareowners.
For each of the fiscal years ended November 30, 1996, 1997, and 1998,
respectively, the shareowner servicing fees (after expense limitations) the Fund
paid Saturna Capital were $4,232, $4,050, and $4,059, respectively.
CUSTODIAN
National City Bank, Indiana, of Indianapolis, National City Center,
Indianapolis, Indiana 46255 is the custodian of the Funds. As custodian for the
Fund, the bank holds in custody all securities and cash, settles for all
securities trans-actions, receives money from sale of shares and on order of the
Fund pays the autho-rized expenses of the Fund. When investors redeem Fund
shares, the pro-ceeds are paid to the shareowner from an account at the
custodian bank. INDEPENDENT ACCOUNTANTS Tait, Weller and Baker, 8 Penn Center
Plaza, Suite 800, Philadelphia, PA 19103-2108 are the indepen-dent accountants
for the Fund. The accountants conduct an annual audit of the Fund as of November
30 each year, prepare the tax returns of the Fund and as-sist the Adviser in any
accounting matters throughout the year. PRINCIPAL UNDERWRITER The Adviser's
wholly-owned subsidiary, Investors National Corporation, 1300 N. State Street,
Bellingham WA 98225 is a discount brokerage firm and acts as distribu-tor for
the Fund without compen-sation. Mr. Nicholas Kaiser, an affiliated person of the
Fund, is President of Investors National Corporation.
BROKERAGE ALLOCATION
For fiscal years 1998, 1997, and 1996, Idaho Tax-Exempt Fund paid no brokerage
commissions.
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 make allocation of 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
supple-mental 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 ac-count serviced by the Adviser. Research services provided by
brokers through whom the Fund effects securities transactions may be used by
11
<PAGE>
the Fund's investment adviser in servicing all of its accounts and not all of
these services may be used by the adviser in connection with the Fund.
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
at-tainable 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 commis-sions at a rate in excess of the amount
another broker would have charged if it de-termines in good faith that the
overall net economic result is favorable to the Fund, and is not required to
execute trades in "over-the-counter" securities with primary market-makers if
similar terms are available elsewhere. 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.
CAPITAL STOCK
Each Fund of Saturna Investment Trust is divided into shares of benefi-cial
inter-est. The shares of each separate Fund of the Trust have equal voting
rights. All shares are fully paid, non-assessable, transferable and with rights
of redemp-tion, and are not subject to preemptive rights. The Trust is not
required to hold annual shareowner meetings. However, special meetings may be
called for such pur-poses as electing or remov-ing Trustees, changing
fundamental policies, or voting on approval of an advisory contract. On issues
relating solely to Idaho Tax-Exempt Fund, only the shareowners of Idaho
Tax-Exempt Fund are entitled to vote. All dividends and distribu-tions for the
Fund shall be dis-tributed to shareown-ers in proportion to the number of shares
owned.
PURCHASE, REDEMPTION AND PRICING OF SHARES
See How to Buy Shares, How to Redeem Shares and Pricing of Fund Shares in the
Prospectus for an explanation about the ways to purchase or redeem shares. Both
purchases and redemptions are made at net asset value per share.
In addition to normal purchases or redemptions, the shares of the Fund may be
exchanged for shares of other funds of Saturna Investment Trust. Exchanges 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.
Price (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 daily price 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, Martin Luther King Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas. See the balance sheet
in the Annual Report or Semi-Annual Report for a specimen sheet showing how the
Fund calculates net asset value, which is the price used for both purchase and
redemption of shares.
TAXATION OF THE FUND
Saturna Investment Trust is organized as a "series" investment company. As one
of the funds in the Trust, Idaho Tax-Exempt Fund is a separate eco-nomic entity
with separate assets and liabilities and separate income streams. The
shareowners of the Fund may look only to the Fund for income, capital gain or
loss, redemption, liquidation, or
12
<PAGE>
termination. The Fund has separate arrangements with the Adviser. Assets of the
Fund are segregated. The credi-tors and shareowners of the Fund are limited to
the assets of the Fund for recovery of charges, expenses and liabilities. The
Fund conducts separate voting on issues relating solely to the Fund, except as
required by the Investment Company Act. The tax status and tax consequences to
shareowners of the Fund differ, depending upon the investment objectives,
operations, income, gain or loss, and distributions from the Fund.
The 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 (Subchapter M), which relieve mutual funds of
federal income taxes on the amounts so distributed.
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.
If shareowners do not furnish the transfer agent with a valid Social Security or
Tax Identification Number and in certain other circumstances, the transfer agent
is required to with-hold 31% of taxable income dividends. If the IRS determines
that the Fund 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.
CALCULATION OF PERFORMANCE DATA
Average annual Total Return and Current Yield information may be useful to
in-vestors in reviewing a 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
distribu-tions. The performance for any given past period is not an indication
of future rates of return or yield on its shares.
For the 1-year, 5-year and 10-year periods ended November 30, 1998, the average
annual compounded Total Returns of the Fund were 7.28%, 5.91%, and 6.71%,
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 accord-ing to the following formula:
P (l + T)n = ERV
WhereP = 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
13
<PAGE>
Current Yield is computed by dividing the net investment income, as defined by
- ------- -----
the Securities and Exchange Commission, over a rolling 30 day period for which
the yield is presented by the average number of shares eligible to receive
dividends for the period over the maximum offering price per share on the last
day of the period, and annualize the results. The formula used is:
Yield = 2[( a-b/cd +1)6 -1]
Where a = dividends accrued during the period b = expenses accrued for the
period (net of reimbursements) c = the average daily number of shares
outstanding during the period that were entitled to receive dividends d = the
price per share on the last day of the period
The cur-rent yield on the Idaho Tax-Exempt Fund, for the 30 day period ending
November 30, 1998 was 4.0%.
FINANCIAL STATEMENTS
The most recent audited annual report accompanies this Statement of Additional
Information.
There is incorporated into this Registration Statement the following financial
information in the Annual Report to shareowners for the fiscal year ended
November 30, 1998, Filed as Exhibit A hereto:
Report of Tait, Weller & Baker, Independent Accountants. Statement of Assets and
Liabilities as of November 30, 1998. Statement of Operations - Year ended
November 30, 1998. Statements of Changes in Net Assets - years ended November
30, 1998, and 1997.
Investments - as of November 30, 1998.
Notes to Financial Statements.
14
<PAGE>
PART C
OTHER INFORMATION
<PAGE>
EXHIBITS
Exhibits included with this filing:
Items marked with an asterisk (*) are incorporated by reference from exhibits
previously filed with the Registration Statement for Amana Mutual Funds Trust
and amendments thereto.
(a) Articles of Incorporation
*(1) 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.
*(2) 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.
*(3) 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.
*(4) Articles of Amendment to the Declaration of Trust of Saturna
Investment Trust, as adopted by vote of the shareholders on September 28,
1995. Filed as Exhibit No. 1-4 to Amendment No. 14 to Form N-1A dated March
29, 1996.
(b) By-laws.
*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.
(c) Instruments Defining Rights of Security Holders. Included in (a) and
(b).
(d) Investment Advisory Contracts
*(1) 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.
Filed as Exhibit No. 5-1 to Amendment No. 14 to Form N-1A dated March 29,
1996.
*(2) 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 No. 5-2 to Amendment No. 14 to Form N-1A dated March 29,
1996.
*(3) 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 No. 5-3 to Amendment No. 14 to Form N-1A dated March 29,
1996.
*(4) 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
a
<PAGE>
and shareholders on September 28, 1995. Filed as Exhibit No. 5-4 to Amendment
No. 14 to Form N-1A dated March 29, 1996.
(e) Underwriting Contracts. Not applicable.
(f) Bonus or Profit Sharing Contracts. Not applicable.
(g)* Custodian Agreements
Form of Custodian Agreement for each series of the Trust, between the Trust
and National City Bank, Indiana. Filed as Exhibit No. 8-1 to Amendment No. 14
to Form N-1A dated March 29, 1996.
(h)* Other Material Contracts
*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.
(i) Legal opinions.
Opinion of Counsel dated January 26, 19989 (see Documents)
(j) Other opinions.
(1) Accountant's Consents dated January 26, 1999 (see Documents)
(2) Copies of Powers of Attorney of Trustees of Saturna Investment Trust
(see Documents).
(k) Omitted Financial Statements. Not applicable.
(l)* Initial Capital Agreements. Not applicable.
(m) Rule 12(b)-1 Plan. Not applicable.
(n) A Financial Data Schedule meeting the requirements of rule 483 is
attached.
(o) Rule 18f-3 Plan. Not applicable.
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.
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
b
<PAGE>
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.
BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER The answer to this item is
fully disclosed in Part A and Part B of the Form N-1A.
PRINCIPAL UNDERWRITERS
The broker-dealer subsidiary of the Adviser, Investors National Corporation,
acts where efficient for the Trust as "distributor," without fee or compensation
of any kind, under authority of a resolution by the Trustees. The Trust has no
formal underwriters as the shares technically are sold directly by the Trust
without a sales charge.
Officers and employees of Investors National Corporation receive no compensation
(salary or commissions) from Investors National Corporation. The only
compensation paid employees of Investors National Corporation or of Saturna
Capital Corporation is salary, with an annual bonus primarily dependent upon the
overall financial success of Saturna Capital Corporation.
LOCATION OF ACCOUNTS AND RECORDS
With the exception of those records maintained by the Custodian, National City
Bank, Indiana, 101 W. Washington Street, Indianapolis, Indiana, 46255, all
records of the Trust are physically in the possession of the Trust and
maintained at the offices of Saturna Capital Corporation, 1300 N. State Street,
Bellingham, Washington 98225.
c
<PAGE>
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.
d
<PAGE>
(Graphic Omitted)
Sextant
Mutual Funds
Fellow Shareowners:
Its been a good year for some markets, but others failed to keep up. For the 12
months ended November 30, 1998, large capitalization stocks as found in the Dow
Jones Industrials (+16.5%) and the S&P 500 (+21.7%) were up. But medium and
smaller company stocks, exemplified by the Russell 2000 (-7.5%) were down.
Domestic growth mutual funds averaged +7.85%.Its been a good year for some
markets, but others failed to keep up. For the 12 months ended November 30,
1998, large capitalization stocks as found in the Dow Jones Industrials (+16.5%)
and the S&P 500 (+21.7%) were up. But medium and smaller company stocks,
exemplified by the Russell 2000 (-7.5%) were down. Domestic growth mutual funds
averaged +7.85%. Growth and momentum investors did well, but longer-term value
investors suffered. The 1998 stock market ignored value investors - those who
focus on earnings and assets (like Saturna Capital) rather than momentum and
psychology. Our quality focus brought excellent results to our bond funds, but
our equity funds' emphasis on the financial, cyclical, technology, and service
sectors brought sub-par returns.Growth and momentum investors did well, but
longer-term value investors suffered. The 1998 stock market ignored value
investors - those who focus on earnings and assets (like Saturna Capital) rather
than momentum and psychology. Our quality focus brought excellent results to our
bond funds, but our equity funds' emphasis on the financial, cyclical,
technology, and service sectors brought sub-par returns. 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. The four Funds pay
increased or decreased monthly advisory fees depending on relative performance
over the prior 12 months. For the fiscal year ended November 30, 1998,
comparative total returns and percentile category rankings (1 is best) are: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. The
four Funds pay increased or decreased monthly advisory fees depending on
relative performance over the prior 12 months. For the fiscal year ended
November 30, 1998, comparative total returns and percentile category rankings (1
is best) are:
Sextant Fund Total Return vs. Morningstar Total Return
------------- ------------- --------------- ------------
RankSextant Fund Total Return vs. Morningstar Total Return
--------------- ------------- --------------- ------------
Rank
--
Short-Term Bond 6.67% Short-Term Bonds 6.54% 25Short-Term
Bond 6.67% Short-Term Bonds 6.54% 25
Bond Income 10.04% Long-Term Bonds 7.46% 20Bond Income
10.04% Long-Term Bonds 7.46% 20
Growth (0.97)% Domestic Growth 7.85% 82Growth (0.97)%
Domestic Growth 7.85% 82
International 3.57% Foreign Stock 9.56% 84International 3.57% Foreign Stock
9.56% 84 For the year, the high-quality Sextant bond funds both outperformed
their peers. There is an anchor role for bonds in most portfolios, especially if
we begin to experience deflation. With its 2 to 3 year portfolio maturity,
Short-Term Bond Fund is a great alternative to money-market funds for investing
your cash reserves. Bond Income Fund's long (13 year) average portfolio maturity
boosted its total return in a year of falling interest rates.For the year, the
high-quality Sextant bond funds both outperformed their peers. There is an
anchor role for bonds in most portfolios, especially if we begin to experience
deflation. With its 2 to 3 year portfolio maturity, Short-Term Bond Fund is a
great alternative to money-market funds for investing your cash reserves. Bond
Income Fund's long (13 year) average portfolio maturity boosted its total return
in a year of falling interest rates. Our value approach to investing hurt the
Growth Fund. For 1997, the Fund provided a total return of 30.3% (almost 10%
above the average Morningstar domestic growth fund) but the 1998 total return of
- -0.97% (over 8% below the comparable Morningstar average).Our value approach to
investing hurt the Growth Fund. For 1997, the Fund provided a total return of
30.3% (almost 10% above the average Morningstar domestic growth fund) but the
1998 total return of -0.97% (over 8% below the comparable Morningstar average).
We created Sextant International Fund to invest in non-US equities, believing it
unwise to <PAGE>
insulate oneself from foreign events and opportunities. With 1998 illustrating
the risks in foreign investing, the Fund still provided a +3.57% return. Sextant
International confines its investments to stocks easily traded in the US, such
as ADR's. Little of the portfolio was subject to the Asian financial meltdown,
and our emphasis continues on European and Canadian issues.We created Sextant
International Fund to invest in non-US equities, believing it unwise to insulate
oneself from foreign events and opportunities. With 1998 illustrating the risks
in foreign investing, the Fund still provided a +3.57% return. Sextant
International confines its investments to stocks easily traded in the US, such
as ADR's. Little of the portfolio was subject to the Asian financial meltdown,
and our emphasis continues on European and Canadian issues. Further information
on each Fund is found in the following sections of this report. Our portfolio
managers welcome your comments and suggestions. The entire staff works to
minimize operating expenses. In the footnotes, you will notice another unusual
feature of the Sextant funds: on average, 23% of each Sextant Fund is owned by
the trustees, officers, and their immediate families. We invite you to invest
your money with ours.Further information on each Fund is found in the following
sections of this report. Our portfolio managers welcome your comments and
suggestions. The entire staff works to minimize operating expenses. In the
footnotes, you will notice another unusual feature of the Sextant funds: on
average, 23% of each Sextant Fund is owned by the trustees, officers, and their
immediate families. We invite you to invest your money with ours.
RESPECTFULLY,
RESPECTFULLY,
NICHOLAS KAISER, PRESIDENT PHELPS MCILVAINE, VICE PRESIDENT
(Manager, Sextant Growth; (Manager, Sextant Bond Income;
Sextant International ) Sextant Short-Term Bond)
(Graphic Omitted)
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees
Saturna Investment Trust
We have audited the accompanying statement of assets and liabilities of the
Sextant Short-Term Bond Fund, Sextant Bond Income Fund, Sextant Growth Fund and
Sextant International Fund, each a series of the Saturna Investment Trust,
including the schedules of investments as of November 30, 1998, and the related
statements of operations for the year then ended and changes in net assets and
the financial highlights for each of the two years then ended. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits. The financial
statements and financial highlights presented for the year ended November 30,
1996 and prior were audited by other auditors whose report dated December 18,
1996, expressed an unqualified opinion on those statements. We conducted our
audits in accordance with generally accepted auditing standards. Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of November 30, 1998, by correspondence with
the custodian. Our audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion. In our opinion the 1998 financial statements
and financial highlights referred to above present fairly, in all material
respects, the financial position of Sextant Short-Term Bond Fund, Sextant Bond
Income Fund, Sextant Growth Fund and Sextant International Fund, as of November
30, 1998, the results of their operations for the year then ended, and the
changes in their net assets and their financial highlights for eqach of the two
years in the period then ended, in conformity with generally accepted accounting
principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
December 11, 1998
<PAGE>
1998 ANNUAL REPORT
November 30, 1998
(Graphic Omitted)
SEXTANT SHORT-TERM BOND FUND
(GRAPHIC OMITTED)
INVESTMENTSINVESTMENTS
(GRAPHIC OMITTED)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Rating Issuer Coupon/Maturity Face Amount Market Value
- ------ ----------------------------------------- ------------------- ------------ -------------
Aerospace - Aircraft (4.4%)
A McDonnell Douglas/Boeing Capital 9.25% 4/1/2002 75,000 83,145
Banking (12.5%)
A+ Bank of America 9.375% 3/1/2001 50,000 53,615
A- Bankers Trust-NY 9.50% 6/14/2000 75,000 78,083
A Harris Bank Corp 9.375% 6/1/2001 100,000 107,560
------------ -------------
SUB-TOTAL 225,000 239,258
Finance (17.1%)
A- Aristar 6.75% 8/15/2001 95,000 97,005
A Deluxe Corp 8.55% 2/15/2001 50,000 52,840
BBB+ Finovia Capital Corp. 5.98 2/27/2001 75,000 74,610
A Travellers Property & Casualty 6.75% 4/15/2001 100,000 101,520
------------ -------------
SUB-TOTAL 320,000 325,975
Food (2.8%)
A- Coca Cola Enterprises 7.875% 2/1/2002 50,000 52,850
Oil & Gas (7.9%)
AA+ Amoco Canada 7.25% 12/1/2002 70,000 74,144
A- Fina Oil & Chemical 6.875% 7/15/2001 75,000 76,710
------------ -------------
SUB-TOTAL 145,000 150,854
Investment Finance (8.1%)
AA- Merrill Lynch & Co. 6.00% 1/15/2001 100,000 100,790
A+ Morgan Stanley 9.375% 6/15/2001 50,000 53,535
------------ -------------
SUB-TOTAL 150,000 154,325
Machinery (3.8%)
A- Ingersol Rand 6.75% 11/19/2001 70,000 71,561
Medical - Health Maintenance Org. (3.7%)
A- Aetna Services 6.38% 8/15/2001 70,000 71,211
Paper & Paper Products (5.2%)
A Westvaco Corporation 9.65% 3/1/2002 90,000 99,585
Retailing (5.6%)
A J.C. Penny & Co. 9.05% 3/1/2001 100,000 106,400
Telecommunications (9.3%)
A Northern Telecom 8.75% 6/12/2001 100,000 107,790
BBB Worldcom Inc. 6.125% 8/1/2001 70,000 70,721
------------ -------------
SUB-TOTAL 170,000 178,511
Tobacco (4.0%)
A Phillip Morris 9.25% 2/15/2000 75,000 77,542
U.S. Government (5.2%)
AAA U.S. Treasury Note 6.25% 10/31/2001 95,000 99,141
Total Investments (89.6%) (Cost = $1,720,539) $ 1,635,000 $ 1,710,358
============ -------------
Other Assets (net of liabilities) (10.4%) 197,641
-------------
Total Net Assets (100%) $ 1,907,999
=============
<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 3
<PAGE>
SEXTANT SHORT-TERM BOND FUND
(Graphic Omitted)
1998 ANNUAL REPORT
(Graphic Omitted)
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
As of November 30, 1998
<S> <C> <C>
ASSETS - -
Bond investments (cost $1,720,539) $1,710,358 -
Cash 160,607 -
Interest receivable 39,154 -
----------
Total Assets - $1,910,119
-----------
LIABILITIES - -
Other Liabilities 2,120 -
----------
Total Liabilities - 2,120
-----------
NET ASSETS - $1,907,999
===========
- -
-----------
Fund shares outstanding - 378,847
ANALYSIS OF NET ASSETS
Paid in capital (unlimited shares authorized, without par value) - $1,904,492
Accumulated net realized gain (loss) on investments - (8,649)
Unrealized net appreciation on investments - 12,156
-----------
Net Assets applicable to Fund shares outstanding - $1,907,999
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE - $ 5.04
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Year Ended November 30, 1998
<S> <C> <C>
INVESTMENT INCOME - -
Interest income $ 143,870 -
Amortization of bond premiums (23,419) -
Accretion 48 -
-----------
Gross investment income - $120,499
EXPENSES
Investment adviser and administration fee 12,132 -
Professional fees 3,435 -
Filing and registration fees 908 -
Printing and postage 1,202 -
Other expenses 716 -
-----------
Total gross expenses 18,393 -
--------
Less advisory fee waived (8,805) -
-----------
Net expenses - 9,588
--------
Net investment income - 110,911
--------
NET REALIZED GAIN ON INVESTMENTS
Proceeds from sales 2,075,227 -
Less cost of securities sold based on identified cost 2,061,072 -
-----------
Realized net gain - 14,155
--------
UNREALIZED GAIN ON INVESTMENTS
End of period 12,156 -
Beginning of period 5,463 -
-----------
Increase in unrealized gain for the period - 6,693
--------
Net realized and unrealized gain on investments - 20,848
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS - $131,759
========
</TABLE>
(The accompanying notes are an integral part of these financial statements)
Page 4
<PAGE>
1998 ANNUAL REPORT
(Graphic Omitted)
SEXTANT SHORT-TERM BOND FUND
(Graphic Omitted)
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year ended Year ended
Nov. 30, 1998 Nov. 30, 1997
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS - -
FROM OPERATIONS: - -
Net investment Income $ 110,911 $ 121,445
Net realized gain (loss) on investments 14,155 (1,405)
Net increase in unrealized appreciation 6,693 1,028
------------ -----------
Net increase in net assets from operations 131,759 121,068
------------ -----------
DIVIDENDS TO SHAREOWNERS FROM:
Net investment income (111,184) (121,530)
Capital gains distributions - -
------------ -----------
(111,184) (121,530)
------------ -----------
FUND SHARE TRANSACTIONS:
Proceeds from sales of shares 1,685,010 1,321,409
Value of shares issued in reinvestment of dividends 107,840 120,427
------------ -----------
1,792,850 1,441,836
Cost of shares redeemed (2,413,714) (949,884)
------------ -----------
Net increase (decrease) in net assets
from share transactions (620,864) 491,952
------------ -----------
Total increase (decrease) in net assets (600,289) 491,490
NET ASSETS
Beginning of period 2,508,288 2,016,798
------------ -----------
End of period $ 1,907,999 $2,508,288
============ ===========
Shares of the Fund Sold and Redeemed
Number of shares sold 335,801 265,939
Number of shares issued in reinvestment of dividends 21,460 24,218
------------ -----------
357,261 290,157
Number of shares redeemed (480,944) (190,967)
------------ -----------
Net Increase (decrease) in
Number of Shares Outstanding (123,683) 99,190
============ ===========
</TABLE>
(The accompanying notes are an integral part of these financial statements)
Page 5
<PAGE>
SEXTANT SHORT-TERM BOND FUND
(GRAPHIC OMITTED)
1998 ANNUAL REPORT
(GRAPHIC OMITTED)SEXTANT BOND INCOME FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected data per share of capital stock outstanding throughout the period:
Sept. 28. '95
For the year ended November 30, (inception) to
-------------------------------
1998 1997 1996 Nov. 30 '95*
---- ---- ---- ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 4.99 $ 5.00 $ 5.03 $ 5.00
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.27 0.27 0.25 0.03
Net gains or losses on securities
(both realized and unrealized) 0.05 (0.01) (0.03) 0.03
------- ------- ------- -------
Total from investment operations 0.32 0.26 0.22 0.06
LESS DISTRIBUTIONS
Dividends (from net investment income) (0.27) (0.27) (0.25) (0.03)
Distributions (from capital gains) - - - -
------- ------- ------- -------
Total distributions (0.27) (0.27) (0.25) (0.03)
------- ------- ------- -------
NET ASSET VALUE AT END OF PERIOD $ 5.04 $ 4.99 $ 5.00 $ 5.03
======= ======= ======= =======
TOTAL RETURN 6.67% 5.45% 4.85% 1.05%
Ratios / Supplemental Data
- -----------------------------------------------------
Net assets ($000), end of period $1,908 $2,508 $2,016 $ 878
Ratio of expenses to average net assets 0.48% 0.60% 0.85% 0.23%
Ratio of net investment income to average net assets 5.57% 5.58% 6.30% 0.68%
Portfolio turnover rate 71% 47% 100% 0%
<FN>
For the above periods, all or a portion of the operating expenses were waived.
If costs had not been waived, the resulting increase to expenses per share in
each period would have been $ .02, $.02, $.02 and $.007. The increase to the
ratio of expenses to average monthly net assets would be .44%, .40%, .52% and
.16%, respectively.
* not annualized
</FN>
</TABLE>
(The accompanying notes are an integral part of these financial statements)
DISCUSSION OF FUND PERFORMANCE
(UNAUDITED)
Fiscal Year 1998
For the fiscal year ended November 30, 1998, the Sextant Short-Term Bond Fund
returned 6.67% to its shareowners. Reflecting its capital stability investment
objective, the Fund's price moved in a narrow range (about 3%) from high to low.
For the fiscal year, the Fund ranked in the top 25% of 216 funds in the
Morningstar "Short-Term Bond" category. Factors Affecting Past Performance For
the first eight months of 1998, short-term rates interest rates and Federal
Reserve policy were stable. The yield curve became virtually flat. In the third
quarter however, the stock market fell precipitously and short-term note prices
rose in a brief but pronounced flight to quality. Russia's default and the
failure of a major hedge fund caused a credit crunch. There was a sudden
de-leveraging of risk in the bond market. Credit spreads in the short end of the
bond market doubled. As part of the effort to restore liquidity to the bond
market and restore confidence to the slumping stock market, the Federal Reserve
Bank lowered overnight Federal Funds rates seventy-five basis points. During the
upheaval of the third quarter, the wisdom of keeping a large percentage of the
portfolio in high-grade liquid corporate paper, US Governments and bullet US
Agency paper was never clearer. We will continue to follow this strategy in
1999.
Page 6
<PAGE>
Looking Forward
In 1999, we expect short-term interest rates to continue downward and world
economies to slow further. Deflation is now prevalent in many countries. The
yield curve will maintain its current steeper shape. Many economies remain
financially troubled, and more are succumbing to recession. Another flight to
quality and widening of credit spreads is a distinct possibility. Management Fee
Calculations The Sextant Short-Term Bond Fund calculates part of its management
fee based on a comparison of the Fund's return to the average return of the
Morningstar category Short-Term Bond. This is defined as portfolios that "focus
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." As the 12-month return of the Fund was within 1% of the
category average, no adjustment to the basic 0.60% management fee was made for
the month of December 1998. Comparison to Index Comparison of any fund to an
index must be made bearing in mind that the Index is unmanaged, and
expense-free. The graph below compares $10,000 invested in the Fund at its
inception, compared to a similar amount invested in The Salomon Brothers
Gov/Corp Investment Grade Bond Index for maturities between one and three years.
The graph shows that a $10,000 investment made on September 1995 would have
risen to $11,919 in the Fund and $12,250 in the Index. Past performance is not
indicative of future results.
Sextant Short-Term Bond Fund vs. Salomon Gov/Corp 1-3 yr.
(Graph Omitted)
Page 7
<PAGE>
SEXTANT BOND INCOME FUNDSEXTANT BOND INCOME FUND
INVESTMENTSINVESTMENTS
November 30, 1998
(Graphic Omitted)
1998 ANNUAL REPORT
(Graphic Omitted)
INVESTMENTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
RATING ISSUER COUPON/MATURITY FACE AMOUNT MARKET VALUE
- ------ ---------------------------------------- ------------------- ------------ -------------
BANKING (15.9%)
A- Chase Manhatten 7.125% 6/15/2009 $ 50,000 $ 54,565
A Citicorp 7.25% 10/15/2011 50,000 55,335
A- Comerica Bank 7.125% 12/1/2013 50,000 51,901
AA- Norwest Financial 6.85% 7/15/2009 50,000 52,695
------------ -------------
SUB-TOTAL 200,000 214,496
BEVERAGES (4.1%)
A- Seagram Co. 8.35% 1/15/2022 50,000 54,620
BUILDING (3.7%)
A+ Lowes 7.00% 10/15/2023 50,000 50,095
COMPUTER (2.2%)
BBB Dell Computer 6.55% 4/15/2008 30,000 29,512
ELECTRIC UTILITIES (11.7%)
A+ Alabama Power 7.75% 2/1/2023 50,000 51,665
BBB Commonwealth Edison 7.50% 7/1/2013 50,000 54,530
A+ Southern California Edison 6.90% 10/1/2018 50,000 50,650
------------ -------------
SUB-TOTAL 150,000 156,845
ELECTRONICS (4.0%)
BBB+ Phillips Electronics 7.25% 8/15/2013 50,000 53,605
FOOD (3.6%)
BBB- Nabisco Holdings 7.55% 6/15/2015 50,000 48,355
INSURANCE (4.1%)
A Allstate 7.50% 6/15/2013 50,000 55,580
INVESTMENT FINANCE (11.5%)
A Bear Sterns 7.00% 3/1/2007 50,000 52,640
A Morgan Stanley Dean Witter 6.75% 10/15/2013 50,000 50,965
BBB Paine Webber Group 7.625% 2/15/2014 50,000 50,785
------------ -------------
SUB-TOTAL 150,000 154,390
OIL & GAS (3.7%)
A Texaco Capital 8.625% 6/30/2010 40,000 50,164
PAPER PRODUCTS (3.9%)
BBB- Georgia Pacific 7.70% 6/15/2015 50,000 52,420
RETAILING (7.6%)
A Gap 6.90% 9/15/2007 50,000 52,287
BBB+ Rite Aid 6.875% 8/15/2013 50,000 50,315
------------ -------------
SUB-TOTAL 100,000 102,602
TELECOMMUNICATIONS (7.9%)
A+ GTE 6.90% 11/01/2008 50,000 54,295
BBB WorldCom 6.40% 8/15/2005 50,000 51,526
------------ -------------
SUB-TOTAL 100,000 105,821
U.S. GOVERNMENT AGENCY (13.3%)
AAA Federal Home Loan Bank 6.53% due 7/23/2007 165,000 178,596
TOTAL INVESTMENTS (97.2%) Cost = $1,263,057 $ 1,235,000 1,307,101
============ -------------
Other Assets (net of liabilities) (2.8%) 37,605
-------------
TOTAL NET ASSETS (100%) $ 1,344,706
=============
<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 8
<PAGE>
(Graphic Omitted)
1998 Annual Report
(Graphic Omitted)
Sextant Bond Income Fund
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected data per share of capital stock outstanding
throughout the year:* Year ended November 30,
-----------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 4.83 $ 4.76 $ 4.91 $ 4.39 $ 5.03
------- ------- ------- ------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.30 0.30 0.30 0.24 0.25
Net gains or losses on securities
(both realized and unrealized) 0.17 0.07 (0.12) 0.52 (0.64)
------- ------- ------- ------- --------
Total from investment operations 0.47 0.37 0.18 0.76 (0.39)
LESS DISTRIBUTIONS
Dividends (from net investment income)
Non-taxable - - - (0.24) (0.25)
Taxable (0.30) (0.30) (0.30)
Distributions (from capital gains) - - (0.03) - -
------- ------- ------- ------- --------
Total distributions (0.30) (0.30) (0.33) (0.24) (0.25)
------- ------- ------- ------- --------
NET ASSET VALUE AT END OF PERIOD $ 5.00 $ 4.83 $ 4.76 $ 4.91 $ 4.39
======= ======= ======= ======= ========
TOTAL RETURN 10.04% 8.24% 4.04% 17.69% (8.24)%
Ratios/supplemental data
- ----------------------------------------
Net assets ($000), end of period $1,345 $1,092 $1,201 $1,096 $ 1,456
Ratio of expenses to average net assets 0.30% 0.47% 0.63% 0.54% 0.41%
Ratio of net investment income
to average net assets 6.24% 6.85% 5.96% 5.15% 5.48%
Portfolio turnover rate 0% 51% 75% 77% 74%
<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, $.03, $.03, $0.22, and
$0.13, respectively. The increase to the ratio of expenses to average monthly
net assets would be .61%, .63%, .70%, .60%, and .51% respectively.
*
Data prior to September 28, 1995 may not be meaningful, as the fund operated with
different
investment objectives and fee arrangements.
</FN>
</TABLE>
(The accompanying notes are an integral part of these financial statements)
Page 9
<PAGE>
(Graphic Omitted)
Sextant Bond Income Fund
(Graphic Omitted)
1998 Annual Report
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
As of November 30, 1998
<S> <C> <C> <C> <C>
ASSETS - -
Bond investments (cost $1,260,787) $1,307,101 -
Cash 8,912 -
Interest receivable 27,665 -
Insurance deposit 1,221 -
----------
Total Assets - $1,344,899
-----------
LIABILITIES
Other Liabilities 193 -
----------
Total Liabilities - 193
-----------
NET ASSETS - $1,344,706
===========
Fund shares outstanding - 269,033
ANALYSIS OF NET ASSETS
Paid in capital (unlimited shares authorized, without par value) - $1,372,967
Accumulated net realized gain (loss) on investments - (74,575)
Unrealized net appreciation on investments - 46,314
-----------
Net Assets applicable to Fund shares outstanding - $1,344,706
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE - $ 5.00
===========
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the year ended November 30, 1998
<S> <C> <C>
INVESTMENT INCOME - -
Interest income $84,323 -
Amortization of bond premiums (1,807) -
Accretion 62 -
--------
Gross investment income $ 82,578
EXPENSES
Investment adviser and administration fee 7,691 -
Professional fees 2,220 -
Filing and registration fees 961 -
Printing and postage 794 -
Other expenses (163) -
--------
Total gross expenses 11,503 -
-------- --------
Less advisory fee waived (7,691) -
--------
Net expenses - 3,812
--------
Net investment income - 78,766
--------
NET REALIZED GAIN ON INVESTMENTS
Proceeds from sales - -
Less cost of securities sold based on identified cost - -
--------
Realized net gain (loss) - -
--------
UNREALIZED GAIN (LOSS) ON INVESTMENTS
End of period 46,314 -
Beginning of period 3,969 -
--------
Increase in unrealized gain for the period - 42,345
--------
Net realized and unrealized gain (loss) on investments - 42,345
--------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS - $121,111
</TABLE>
Page 10
<PAGE>
SEXTANT BOND INCOME FUNDSEXTANT BOND INCOME FUND
(Graphic Omitted)
1998 Annual Report
(Graphic Omitted)
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year ended Year ended
Nov. 30, 1998 Nov. 30, 1997
------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS - -
FROM OPERATIONS: - -
Net investment income $ 78,766 $ 73,291
Net realized gain (loss) on investments - (11,717)
Net increase in unrealized appreciation 42,345 26,604
----------- -----------
Net increase in net assets from operations 121,111 88,178
----------- -----------
DIVIDENDS TO SHAREOWNERS FROM:
Net investment income (78,767) (73,332)
Capital gains distributions - -
----------- -----------
(78,767) (73,332)
----------- -----------
FUND SHARE TRANSACTIONS:
Proceeds from sales of shares 331,514 65,272
Value of shares issued in reinvestment of dividends 76,908 71,910
----------- -----------
408,422 137,182
Cost of shares redeemed (198,299) (260,712)
----------- -----------
Net increase in net assets from share transactions 210,123 (123,530)
----------- -----------
Total increase (decrease) in net assets 252,468 (108,684)
NET ASSETS
Beginning of period 1,092,239 1,200,923
----------- -----------
End of period $1,344,706 $1,092,239
=========== ===========
Shares of the fund sold and redeemed
Number of shares sold 66,905 14,054
Number of shares issued in reinvestment of dividends 15,499 15,448
----------- -----------
82,404 29,502
Number of shares redeemed (39,719) (55,536)
----------- -----------
Net increase (decrease) in number of shares outstanding 42,685 (26,034)
=========== ===========
</TABLE>
Page 11
<PAGE>
Sextant Bond Income Fund
(Graphic Omitted)
1998 Annual Report
(Graphic Omitted)
DISCUSSION OF FUND PERFORMANCE
(UNAUDITED)
Fiscal Year 1998
For the fiscal year ending November 30, 1998, the Sextant Bond Income Fund
returned 10.04% to its shareowners, with the net asset value (NAV) rising to
$5.00 from $4.83. Reflecting its conservative investment philosophy, the Fund's
NAV moved in a relatively narrow range ($4.79 to $5.21, or about 9%) from high
to low. For the fiscal year, the Fund ranked in the top 20% of the 83 funds in
the Morningstar "Long Term Bond" category. The majority of the Fund's
performance came from its long portfolio maturity. The average maturity of the
portfolio is now 13.2 years, reduced from 14.9 years at the end of 1997. Factors
Affecting Past Performance In early 1998, interest rates gradually fell with
only modest volatility. Credit spreads continued to narrow as investors sought
higher yields from both lower quality issues and moving out the yield curve. We
believed that these strategies were flawed. Investors were not adequately
compensated for assuming either the extra credit or maturity risk. We moved in
the opposite direction in both cases. We modestly shortened the average maturity
of our portfolio and increased the average credit quality. Starting in July, the
stock market fell and bond prices rose. While uncommon recently, this inverse
relationship was the normal before 1982. Then, at summer's end, a credit crunch
developed due to Russia's default and the failure of a major hedge fund. There
was a sudden de-leveraging of risk in the bond market. Credit spreads doubled,
even tripled. The relative calm of the first half vanished. Fortunately, the
intervention of central banks and several large investment firms restored
liquidity to the market. The Federal Reserve lowered short-term rates
seventy-five basis points in three quick steps. During the upheaval of the third
quarter, the wisdom of keeping the portfolio in liquid, high-grade corporate
paper, US Governments and bullet US Agency paper was never clearer. We will
continue to follow this strategy in 1999. Looking Forward In 1999, we expect
interest rates to continue downward and world economies to slow further. With
the euro a reality and higher Japanese rates, the dollar will weaken. Excess
cash, manufacturing capacity and low commodity prices will defeat inflation.
Deflation is now prevalent in many countries. Short-term rates should fall under
4.%. The yield curve will maintain its current steeper shape. We expect the
range of long rates to slide further. The Asian financial crisis is not today's
front-page news, but the problems persist. Many economies remain financially
troubled, and more are succumbing to recession. If the problems of the recent
past flare up again another flight to quality and widening of credit spreads is
a distinct possibility. As world capital seeks honest and open markets, where
information flows easily and is relatively complete and accurate, investments in
quality corporate bonds will continue to provide solid returns and security.
Page 12
<PAGE>
1998 Annual Report
(Graphic Omitted)
Sextant Bond Income Fund
(Graphic Omitted)
Management Fee Calculations
The Sextant Bond Income Fund calculates its management fee based on a comparison
of the Fund's return to the return of Morningstar's "Long Term Bond" category.
This category consists of mutual fund portfolios that "focus on corporate and
other investment grade issues with an average duration of more than six years or
an effective average maturity of more than ten years." Because the Fund's
12-month return outperformed this index by more than 2% at November 30, 1998,
the Fund would pay the maximum bonus 0.20% (annualized) performance fee for the
month of December 1998. No management fee was actually paid, since the advisor
has waived the entire fee until assets exceed $2 million. Comparison to Index
Comparison of any fund to an index must be made bearing in mind that the index
is unmanaged, and expense-free. Conversely, the fund 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 October 1993 would have risen to $13,923 in the Fund and $15,019 in
the Index. The September 1995 changes in this Fund's 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
(Graph Omitted)
Page 13
<PAGE>
(Graphic Omitted)
SEXTANT GROWTH FUND
1998 ANNUAL REPORT
(Graphic Omitted)
November 30, 1998
SEXTANT GROWTH FUND
INVESTMENTS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Issue Quantity Cost Market Value
- --------------------------------- -------- -------- -------------
Common Stocks (78.9%)
BANKING (17.3%)
Washington Mutual Savings Bank 4,500 $ 44,124 $ 174,375
KeyCorp 6,360 94,957 195,172
-------- -------------
SUB-TOTAL 139,081 369,548
CONSTRUCTION (3.4%)
Building Materials Holding Corp* 4,000 44,171 49,250
Butler Manufacturing 1,000 31,071 23,250
-------- -------------
SUB-TOTAL 75,242 72,500
COMPUTERS (12.5%)
Adobe Systems 1,200 50,490 53,700
Apple Computer* 1,200 39,606 38,325
3Com* 1,225 29,726 47,392
Netscape Communications* 1,200 26,920 44,400
Oracle* 1,800 37,879 61,650
Phoenix Technologies Ltd.* 3,062 29,149 21,434
-------- -------------
SUB-TOTAL 213,770 266,901
ELECTRONICS (2.3%)
FLIR Systems* 2,500 27,611 48,125
INVESTMENTS (12.0%)
Schwab, Charles 4,537 9,117 255,773
MACHINERY (2.3%)
Regal Beloit 2,000 52,106 50,000
MEDICAL (9.3%)
Affymetrix* 1,000 26,862 25,000
Genentech* 1,000 37,225 70,062
Immunex Corp* 700 48,438 64,488
Ligand Pharmaceuticals* 4,000 49,132 39,750
-------- -------------
SUB-TOTAL 161,657 199,300
METAL ORES (2.0%)
Cyprus Amax Minerals 3,800 76,218 43,225
OIL & GAS PRODUCTION (3.9%)
Atlantic Richfield 900 51,620 59,850
Noble Drilling* 2,000 14,212 23,125
-------- -------------
SUB-TOTAL 65,832 82,975
RETAIL (7.5%)
Albertson's 1,200 26,255 68,475
Meyer (Fred)* 1,000 46,461 51,000
Saks* 1,500 43,683 41,250
-------- -------------
SUB-TOTAL 116,399 160,725
TRANSPORTATION (6.4%)
Airborne Freight 2,500 27,082 66,719
Halter Marine Group* 5,834 54,239 40,109
Trinity Industries 800 22,658 30,950
-------- -------------
SUB-TOTAL 103,979 137,778
</TABLE>
INVESTMENTS
(The accompanying notes are an integral part of these financial statements)
Page 14
<PAGE>
1998 Annual Report
(GRAPHIC OMITTED)
SEXTANT GROWTH FUND
(Graphic Omitted)SEXTANT GROWTH FUND
INVESTMENTS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Issue Quantity Cost Market Value
- ---------------------------------------- -------- ---------- -------------
Preferred Stocks (1.7%)
Washington Water Power, Pref.W 2,000 37,079 37,250
Government Bonds (11.6%)
US Treasury Bill 02/18/99 250,000 247,377 247,555
---------- -------------
Total Investments (92.2%) $1,325,468 $ 1,971,654
========== =============
Other Assets (net of liabilities) (7.8%) 167,782
-------------
TOTAL NET ASSETS (100.0%) $ 2,139,436
* non-income producing
</TABLE>
FINANCIAL HIGHLIGHTS
SEXTANT GROWTH FUND
FINANCIAL HIGHLIGHTS
(Graphic Omitted)
<TABLE>
<CAPTION>
Selected data per share of capital stock outstanding throughout the year:*
For Year Ended November 30,
---------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994
-------- -------- ------- ------- -------
NET ASSET VALUE AT BEGINNING OF PERIOD $ 9.58 $ 7.92 $ 7.42 $ 5.82 $ 6.38
-------- -------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.02 0.01 - (0.03) (0.03)
Net gains or losses on securities
(both realized and unrealized) (0.11) 2.41 0.50 1.82 (0.53)
-------- -------- ------- ------- -------
Total from investment operations (0.07) 2.40 0.50 1.79 (0.56)
LESS DISTRIBUTIONS
Dividends (from net investment income) (0.02) (0.01) - - -
Distributions (from capital gains) (0.18) (0.73) - (0.19) -
-------- -------- ------- ------- -------
Total distributions (0.22) (0.74) - (0.19) -
-------- -------- ------- ------- -------
NET ASSET VALUE AT END OF PERIOD $ 9.29 $ 9.58 $ 7.92 $ 7.42 $ 5.82
======== ======== ======= ======= =======
TOTAL RETURN (0.97)% 30.30% 6.74% 30.76% 8.78%
Ratios / Supplemental Data
- --------------------------------------------
Net assets ($000), end of period $ 2,139 $ 2,188 $1,616 $1,137 $1,010
Ratio of expenses to average net assets 0.66% 1.04% 0.95% 1.63% 1.50%
Ratio of net investment income to
average net assets 0.19% (0.12)% 0.01% 0.45% 0.43%
Portfolio turnover rate 37% 25% 32% 40% 12%
<FN>
For 1996 and 1995 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
these
years
would be
$.00,
and
$.01,
respectively.
The
increase
to
the
ratio
of
expenses
to
average
net
assets
would
have
been
.00%,
and
.18%,
respectively.
* Data prior to September 28, 1995 may not be meaningful, as the fund operated with
different investment
objectives and fee arrangements
</FN>
.
</TABLE>
(The accompanying notes are an integral part of these financial statements)
Page 15
<PAGE>
SEXTANT GROWTH FUND
(Graphic Omitted)
1998 Annual Report
(GRAPHIC OMITTED)SEXTANT GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
As of November 30, 1998
<S> <C> <C>
ASSETS - -
Investments (cost $1,325,468) $1,971,654 -
Cash 166,527 -
Interest receivable 2,236 -
Insurance reserve premium 1,214 -
----------
Total Assets - $2,141,631
-----------
LIABILITIES
Other Liabilities 2,195 -
----------
Total Liabilities - 2,195
-----------
NET ASSETS - $2,139,436
===========
Fund shares outstanding - 230,106
ANALYSIS OF NET ASSETS
Paid in capital (unlimited shares authorized, without par value) - 1,493,340
Undistributed net investment income - (13,220)
Accumulated net realized gain (loss) on investments - (90)
Unrealized net appreciation on investments - 646,186
-----------
Net Assets applicable to Fund shares outstanding - $2,139,436
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE - $ 9.29
===========
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the year ended November 30, 1998
<S> <C> <C>
INVESTMENT INCOME - -
Dividend income $ 17,959 -
---------
Gross investment income - $ 17,959
EXPENSES
Investment adviser and administration fee 8,933 -
Professional fees 3,883 -
Filing and registration fees 1,330 -
Printing and postage 1,429 -
Other expenses (1,581) -
---------
Total gross expenses - 13,994
----------
Net investment income - 3,965
--------- ----------
NET REALIZED GAIN ON INVESTMENTS
Proceeds from sales 666,621 -
Less cost of securities sold based on identified cost 626,530 -
---------
Realized net gain 40,091
----------
UNREALIZED GAIN ON INVESTMENTS
End of period 646,186 -
Beginning of period 714,030 -
--------- ----------
Decrease in unrealized gain for the period - (67,844)
--------- ----------
Net realized and unrealized gain (loss) on investments - (27,753)
--------- ----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS - ($23,788)
==========
</TABLE>
(The accompanying notes are an integral part of these financial statements)
Page 16
<PAGE>
(GRAPHIC OMITTED)
SEXTANT GROWTH FUND
1998 ANNUAL REPORT
(Graphic Omitted)
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year ended Year ended
Nov. 30, 1998 Nov. 30, 1997
-------------- --------------
<S> <C> <C>
INCREASE IN NET ASSETS - -
FROM OPERATIONS: - -
Net investment income (loss) $ 3,965 $ (2,493)
Net realized gain (loss) on investments 40,091 171,838
Net increase (decrease) in unrealized appreciation (67,844) 315,222
----------- -----------
Net increase in net assets from operations (23,788) 484,567
----------- -----------
DIVIDENDS TO SHAREOWNERS FROM:
Net investment income (4,281) (1,105)
Capital gains distributions (40,111) (162,378)
----------- -----------
(44,392) (163,483)
----------- -----------
FUND SHARE TRANSACTIONS:
Proceeds from sales of shares 295,175 407,623
Value of shares issued in reinvestment of dividends 44,024 161,233
----------- -----------
339,199 568,856
Cost of shares redeemed (319,950) (317,129)
----------- -----------
Net increase in net assets from share transactions 19,249 251,727
----------- -----------
Total increase (decrease) in net assets (48,931) 572,811
NET ASSETS
Beginning of period 2,188,367 1,615,556
----------- -----------
End of period $2,139,436 $2,188,367
=========== ===========
Shares of the fund sold and redeemed
Number of shares sold 30,923 45,282
Number of shares issued in reinvestment of dividends 4,739 16,830
----------- -----------
35,662 62,112
Number of shares redeemed (33,801) (37,742)
----------- -----------
Net increase in number of shares outstanding 1,861 24,370
=========== ===========
</TABLE>
SEXTANT GROWTH FUND
(The accompanying notes are an integral part of these financial statements)
Page 17
<PAGE>
(GRAPHIC OMITTED)
SEXTANT GROWTH FUND
1998 ANNUAL REPORT
(Graphic Omitted)SEXTANT GROWTH FUND
DISCUSSION OF FUND PERFORMANCE
(UNAUDITED)
The Year 1998
For the fiscal year ending November 30, 1998, the Sextant Growth Fund declined
almost 1%. This was a sharp disappointment in comparison to 1997, when total
return was over 30%. Total assets remained almost constant at $2.1 million. But,
showing the volatility of the stock markets, the Fund jumped up 12% from
November 30 to Christmas. Factors Affecting Past Performance The Fund seeks
long-term growth through investment in common stocks of U.S. companies. It
follows a value investment approach, favoring companies with good fundamentals
and low price/earnings ratios. This year's market essentially split in two, with
big companies, especially those in technology-related businesses, soaring and
most everything else failing to keep pace. We were against the tide with our
cyclicals, and mid-sized and smaller companies. Although it hurt short-term
results, we avoided the high-flying, Vegas-like Internet stocks where entry is
easy and earnings hard to spot. During the year we kept as much as 25% of the
Fund's assets in cash, a beneficial strategy during the July to September
sell-off. Looking Forward Stocks ultimately reflect their underlying business
values. After their strong performance in 1998, we feel many large-cap stocks
are now overvalued. Growth of the U.S. economy is slowing, even while interest
rate cuts are proping it up. As low-priced imports from devalued foreign
economies flood our markets, the evil voices of protectionism are rising. A
sharp decline, like that of this year's third quarter, won't be as easy to stem.
Now that much of the general public is day-trading, a major drop in market
wealth will clearly restrict consumer spending and bring on deflation.
Management Fee Calculations The Sextant Growth Fund calculates part of its
management fee based on a comparison of the Fund's return to the average return
in Morningstar's Domestic Growth category. At November 30, 1998, the one-year
return for this category average was 7.8%. Because the Fund's 12-month return
underperformed this average by more than 4% at November 30, 1998, the Fund paid
the maximum penalty 0.30% (annualized) performance fee for the month of December
1998. For the fiscal year, the subpar investment performance was muted for
shareowners as the Fund's total expense ratio dropped to 0.66% from 1.04% the
prior year.
Page 18
<PAGE>
(GRAPHIC OMITTED)
1998 Annual Report
(GRAPHIC OMITTED)
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. Comparison of
any fund to an index must be made bearing in mind that the index is unmanaged,
and expense-free. Conversely, the fund 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 Standard & Poor's 500 Index. The graph shows that
the investment at the Fund's inception would have risen to $21,306 in the Fund
and $43,732 in the Index. The changes in this Fund's investment objectives and
policies during the life of the Fund limit the usefulness of this comparison.
Past performance is not indicative of future results.
SEXTANT GROWTH FUND VS. S&P 500 INDEX
(GRAPH OMITTED)
PAGE 19
<PAGE>
SEXTANT INTERNATIONAL FUND
(Graphic Omitted)
1998 Annual Report
(GRAPHIC OMITTED)
NOVEMBER 30, 1998
INVESTMENTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ISSUE Quantity Cost Market Value Country
- -------------------------------------- -------- ------- ------------- --------------
BANKING AND FINANCIAL (20%)
Australia & New Zealand Bank ADR 500 $10,875 $ 16,531 Australia
Aegon NV ADR 612 11,513 64,872 Netherlands
Banco Bilbao Vizcaya ADS 1,800 7,752 28,350 Spain
AXA S.A. ADS 300 16,116 19,238 France
ING Groep N.V. ADS 406 18,258 22,888 Netherlands
Toronto Dominion Bank 700 18,159 23,450 Canada
------- -------------
SUB-TOTAL 82,673 175,329
BUILDING MATERIALS (4.8%)
C R H plc ADR 1,500 15,661 23,719 Ireland
Hanson plc ADR 500 12,090 18,563 United Kingdom
------- -------------
SUB-TOTAL 27,751 42,282
CHEMICALS (2.9%)
Phone Poulenc SA ADR 508 15,859 25,400 France
COMPUTERS (6.2%)
Business Objects SA ADS* 2,000 19,570 38,000 France
Dassault Systems SA ADR 400 13,875 16,200 France
------- -------------
SUB-TOTAL 33,445 54,200
CONSUMER PRODUCTS (3.6%)
Gucci Group NV 200 10,925 9,000 Italy
Coca Cola FEMSA S.A. ADR 1,500 9,750 22,312 Mexico
------- -------------
SUB-TOTAL 20,675 31,312
COUNTRY FUNDS (5.5%)
Asia Pacific Fund 3,000 20,752 20,250 Asia
Austria Fund 1,000 7,923 10,562 Austria
Irish Investment Fund 900 10,237 17,212 Ireland
------- -------------
SUB-TOTAL 38,912 48,024
ELECTRICAL EQUIPMENT (3.1%)
ABB AB ADR 100 10,000 10,600 Sweden
Lernout & Houspie Speech Products NV* 400 16,457 16,200 Belgium
------- -------------
SUB-TOTAL 26,457 26,800
MEDICAL-DRUGS (5.8%)
Glaxo Wellcome plc ADR 400 9,800 25,400 United Kingdom
Novo-Nordisk A/S ADR 450 14,702 25,988 Denmark
------- -------------
SUB-TOTAL 24,502 51,388
METALS & MINING (3.2%)
Potash Corp of Saskatchewan 300 21,164 18,506 Canada
Rio Tinto plc ADS 200 11,375 9,600 United Kingdom
------- -------------
SUB-TOTAL 32,539 28,106
OIL & GAS PRODUCTION (6.8%)
Petroleum Geo-Services A/S* 1,000 10,979 14,063 Norway
Total S.A. ADR 307 8,812 18,765 France
YPF SA ADS 900 21,274 26,606 Argentina
------- -------------
SUB-TOTAL 41,065 59,434
</TABLE>
(The accompanying notes are an integral part of these financial statements)
Page 20
<PAGE>
(GRAPHIC OMITTED)
1998 Annual Report
SEXTANT INTERNATIONAL FUND
(Graphic Omitted)
SEXTANT INTERNATIONAL FUND
INVESTMENTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ISSUE Quantity Cost Market Value Country
- -------------------------------------------------- -------- -------- -------------- --------------
PAPER PRODUCTS (1.3%)
Fletcher Challenge Forests ADR 2,024 15,778 7,716 New Zealand
Fletcher Challenge Paper ADR 600 12,623 3,825 New Zealand
-------- --------------
SUB-TOTAL 28,401 11,541
PHOTOGRAPHIC EQUIPMENT (4.3%)
Canon ADR 1,000 23,426 22,187 Japan
Fuji Photo Film ADR 400 10,050 15,150 Japan
-------- --------------
SUB-TOTAL 33,476 37,337
REAL ESTATE (2.7%)
Intrawest 1,500 26,218 24,094 Canada
TELECOMMUNICATIONS (18.5%)
BCE Inc 900 15,830 32,006 Canada
British Sky Broadcasting ADS 300 11,063 15,281 United Kingdom
Cable & Wireless plc ADS 600 13,021 22,650 Hong Kong
Embratel Participacoes ADR* 300 6,933 4,800 Brazil
Gilat Satellite Networks Ltd* 300 12,353 15,263 Israel
PT Indosat ADR 1,000 20,952 14,000 Indonesia
Tele Celular Sul Partcipacoes S.A. ADR* 30 693 683 Brazil
Tele Centro Oeste Celular Participacoes S.A. ADR* 100 2,311 475 Brazil
Tele Centro Sul Participacoes S.A. ADR* 60 1,387 3,424 Brazil
Telefonica de Espana ADS ADR 250 10,250 34,844 Spain
Tele Leste Celular Participacoes S.A. ADR* 6 139 251 Brazil
Telemig Celular Participacoes S.A. ADR* 15 347 463 Brazil
Tele Nordeste Celular Participacoes S.A. ADR* 15 347 394 Brazil
Tele Norte Celular Participacoes S.A. ADR* 6 139 246 Brazil
Tele Norte Leste Participacoes S.A. ADR* 300 6,933 5,100 Brazil
Telesp Celular Participacoes S.A. ADR* 120 5,546 3,150 Brazil
Telesp Participacoes S.A. ADR* 300 6,933 8,025 Brazil
Tele Sudeste Celular Participacoes S.A. ADR* 60 1,387 1,620 Brazil
-------- --------------
SUB-TOTAL 116,564 162,675
TRANSPORTATION (8.6%)
British Airways ADS 150 10,931 10,444 United Kingdom
Daimler-Chrysler AG 251 16,406 23,013 Germany
Desc SA ADR 700 19,649 13,213 Mexico
KLM Royal Dutch Airlines 1,017 35,548 28,730 Netherlands
-------- --------------
SUB-TOTAL 82,534 75,400
UTILITIES-ELECTRIC (2.1%)
Enersis S.A. ADR 800 19,414 18,700 Chile
UTILITIES-GAS (1.7%)
Transport de Gas del Sur SA ADR 1,500 18,807 15,000 Argentina
--------
TOTAL INVESTMENTS (101%) $669,292 887,022
========
Other Assets (net of liabilities) (-1%) (6,272)
--------------
TOTAL NET ASSETS (100%) $ 880,750
==============
<FN>
* Non-income producing
</FN>
</TABLE>
INVESTMENTS
(The accompanying notes are an integral part of these financial statements)
Page 21
<PAGE>
(GRAPHIC OMITTED) SEXTANT INTERNATIONAL FUND
SEXTANT INTERNATIONAL FUND
(Graphic Omitted)
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
As of November 30, 1998
<S> <C> <C>
ASSETS - -
Common stock investments (cost $669,292) $887,022 -
Cash (5,048) -
Dividends receivable 470 -
---------
Total Assets - $882,444
--------
LIABILITIES
Payable to affiliate 1,694 -
---------
Total Liabilities - 1,694
--------
NET ASSETS - $880,750
========
Fund Shares Outstanding - 129,464
ANALYSIS OF NET ASSETS
Paid in capital (unlimited shares authorized, without par value) 671,714 -
Accumulated net realized gain (loss) on investments (8,694) -
Unrealized net appreciation on investments 217,730 -
---------
Net Assets applicable to Fund shares outstanding - $880,750
========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE - $ 6.81
========
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Year ended November 30, 1998
<S> <C> <C>
INVESTMENT INCOME - -
Dividends (net of foreign tax) $ 15,740 -
--------
Net investment income - $15,740
EXPENSES
Investment adviser and administration fee 7,060 -
Professional fees 1,716 -
Filing and registration fees 900 -
Printing and postage 700 -
Other expenses 345 -
--------
Total gross expenses - 10,721
-------
Net investment income - 5,019
-------
NET REALIZED GAIN (LOSS) ON INVESTMENTS
Proceeds from sales 172,047 -
Less cost of securities sold based on identified cost 166,888 -
-------- -------
Realized net gain (loss) - 5,159
UNREALIZED GAIN (LOSS) ON INVESTMENTS
End of period 217,730 -
Beginning of period 189,878 -
-------- -------
Increase in unrealized gain for the period - 27,852
-------
Net realized and unrealized gain on investments - 33,011
-------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS - $38,030
=======
</TABLE>
(The accompanying notes are an integral part of these financial statements)
PAGE 22
<PAGE>
(Graphic Omitted)
1998 Annual Report
(GRAPHIC OMITTED)
SEXTANT INTERNATIONAL FUND
STATEMENT OF CHANGES IN NET ASSETS
Year ended Year ended
Nov 30, 1998 Nov 30, 1997
------------ ------------
INCREASE (DECREASE) IN NET ASSETS - -
FROM OPERATIONS: - -
Net investment Income $5,019 $7,829
Net realized gain (loss) on investments 5,159 (7,500)
Net increase in unrealized appreciation 27,852 93,292
------- -------
Net increase in net assets from operations 38,030 93,621
------- -------
DIVIDENDS TO SHAREOWNERS FROM:
Net investment income (5,174) (7,831)
Capital gains distributions - -
-- --
(5,174) (7,831)
-------- --------
FUND SHARE TRANSACTIONS:
Proceeds from sales of shares 355,656 274,408
Value of shares issued in reinvestment of dividends 5,129
------
7,831
-
360,785 282,239
Cost of shares redeemed (394,045) (182,369)
---------- ----------
Net increase (decrease) in net assets from share transactions
(33,260) 99,870
--- -------
Total increase (decrease) in net assets (404) 185,660
NET ASSETS
Beginning of period 881,154 695,494
-------- --------
End of period $880,750 $881,154
========= =========
Shares of the Fund sold and redeemed
Number of shares sold 50,080 41,860
Number of shares issued in reinvestment of dividends 753 1,184
---- ------
50,833 43,044
Number of shares redeemed (54,754) (28,196)
--------- ---------
Net increase (decrease) in number of shares outstanding (3,921)
========
14,848
==
(The accompanying notes are an integral part of these financial statements)
Page 23
<PAGE>
SEXTANT INTERNATIONAL FUNDSEXTANT INTERNATIONAL FUND
(GRAPHIC OMITTED)
1998 ANNUAL REPORT
(Graphic Omitted)
FINANCIAL HIGHLIGHTSFINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Selected data per share of capital stock outstanding throughout the period:
Sept. 28, '95
For the Year Ended November 30, (Inception) to
-------------------------------
1998 1997 1996 Nov. 30, '95*
---- ---- ---- -------------
<S> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 6.61 $ 5.87 $ 4.99 $ 5.00
------- ------- ------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03 0.06 0.03 (0.02)
Net gains or losses on securities (both realized and unrealized) 0.21 0.74 0.88 0.01
------- ------- ------- --------
Total from investment operations 0.24 0.80 0.91 (0.01)
LESS DISTRIBUTIONS
Dividends (from net investment income) (0.04) (0.06) (0.03) -
Distributions (from capital gains) - - - -
------- ------- ------- --------
Total distributions (0.04) (0.06) (0.03) -
------- ------- ------- --------
NET ASSET VALUE AT END OF PERIOD $ 6.81 $ 6.61 $ 5.87 $ 4.99
======= ======= ======= ========
TOTAL RETURN 3.57% 13.58% 18.16% (0.20)%
Ratios/supplemental data
- ----------------------------------------------------------------------
Net assets ($000), end of period $ 881 $ 881 $ 695 $ 328
Ratio of expenses to average net assets 1.16% 1.51% 1.80% 0.49%
Ratio of net investment income to average net assets 0.54% 0.93% 0.60% 0.38%
Portfolio turnover rate 20% 9% 11% 12%
<FN>
For the year ended Nov. '96 and the period ended Nov. '95, 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 these
periods 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)
DISCUSSION OF FUND PERFORMANCE
(UNAUDITED)
FINANCIAL HIGHLIGHTS
Fiscal Year 1998
For the fiscal year ended November 30, 1998, the Sextant International Fund
returned 3.57% to its shareowners. Total assets ended unchanged from the year
before, and the Fund remains small. The objective of the Fund is to provide
long-term growth through investment in foreign stocks. Factors Affecting Past
Performance Investing in foreign securities includes risks not present in
domestic securities. During 1998, foreign markets suffered from defaults,
illiquidity and uncertainty - yet many showed gains after 1997 disasters. Our
portfolio was heavily weighted in financial issues, which suffered in a credit
cruch. Commodity prices mostly declined, which hurt our resource-based
securities. Looking Forward The Sextant International Fund is broadly invested
in growing companies headquartered outside the United States. Foreign companies
were generally less aggressive at cutting expenses and
Page 24
<PAGE>
(GRAPHIC OMITTED)
1998 ANNUAL REPORT
SEXTANT INTERNATIONAL FUND
(Graphic Omitted)
focusing their operations on shareowner value than US companies in the 1990's,
but this is changing. We expect that our portfolio securities will continue to
show growth and the Fund will continue to perform well. Management Fee
Calculations The Sextant International Fund calculates part of its management
fee based on a comparison of the Fund's return to the average return of the
Morningstar fund category Foreign Stock. At November 30, 1998, the one-year
return for this category average was 9.6%. Because the Fund's 12-month return
underperformed this average by more than 4% at November 30, 1998, the Fund paid
the maximum penalty 0.30% (annualized) performance fee for the month of December
1998. For the fiscal year, the sub-par investment returns were muted for
shareowners as the Fund's total expense ratio dropped to 0.54% from 0.93% the
prior year. Comparison to Index Comparison of any fund to an index must be made
bearing in mind that the Index is unmanaged, and expense-free. The graph below
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 worldwide
companies, and reflects the types of securities in which Sextant International
Fund invests. The graph shows that a $10,000 investment made on September 1995
would have risen to $13,871 in the Fund and $13,856 in the Index. Past
performance is not indicative of future results.
Sextant International Fund vs. AMEX International Index
(Graph Omitted)
Page 25
<PAGE>
Notes to Financial Statements
(GRAPHIC OMITTED)
1998 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 invest-ment 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 sig-nificant accounting policies followed by
the Funds.
INVESTMENTS:
Securities traded on a national ex-change 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 quo-tations are
valued using a matrix based on maturity, quality, yield and similar factors,
which are compared periodically to multiple dealer bids and ad-justed by the
adviser under policies established by the Trustees. The cost of securities is
the same for accounting and federal income tax purposes. Securities
trans-actions 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 con-stant
yield-to-maturity basis from pur-chase date to maturity. Interest income is
increased by accretion only for bonds underwritten as original issue discounts.
Market dis-counts are recorded as realized gains upon disposition. Cash
dividends from equity secu-rities are recorded as income on the ex-div-idend
date. Expenses incurred by the Trust on be-half 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 ex-penses, as described
below.
INCOME TAXES:
The Funds have elected to be taxed as regulated investment companies under the
Internal Revenue Code and distribute sub-stantially all of their taxable net
invest-ment income and realized net gains on in-vest-ments. Thus, no provision
for Federal income taxes is required.
DIVIDENDS AND DISTRIBUTIONS TO SHAREOWNERS:
Dividends and distributions to share-owners are recorded on the ex-dividend
date. For the Bond Income and Short-Term Bond, div-idends 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 pur-chase 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 ad-vi-sory services and certain other
adminis-tra-tive and distribution services to conduct Trust busi-ness, including
shareholder servicing and transfer agency
Page 26
<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"). The Adviser has voluntarily undertaken to
limit expenses of Bond Income and Short-Term Bond to 0.60% through March 31,
1999 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, 1998, Bond Income and Short-Term Bond incurred advisory
expenses of $7,691 and $12,132, respectively. Growth and International incurred
advisory expenses of $8,933 and $7,060, respectively. In accordance with the
expense waiver, for the year ended November 30, 1998, Saturna Capital waived all
of the Bond Income advisory fee and $8,805 of that of Short-Term Bond. In
accordance with the Funds' custodian agreements with National City Bank, for the
year ended November 30, 1998, custodian fees for Bond Income, Short-Term Bond,
Growth, and International, were $475, $2,145, $2,210, and $2,748, respectively.
The custodian waived its fees for earnings credits. One trustee, who also serves
as the president of the Trust, is a di-rector and president of the Adviser. The
four unaffiliated trustees receive $100 per Board or committee meeting attended.
On December 8, 1998, the trustees, officers and their immediate families as a
group owned 25.7%, 18.7%, 17.3% and 32.6% 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 sub-si-diary of Saturna Capital Corporation) is itself
registered as a broker-dealer and acts as dis-tributor without compensation.
Investors National Corporation is the primary stockbroker used to effect
portfolio transactions for Growth and International, and paid $2,727 and $1,431,
respectively in commissions at deep-discount rates during the year ended
November 30, 1998.
Note 4 -Federal Income Taxes
At November 30, 1998, International had capital loss carryforwards of $8,694
which expire in 2004, Bond Income had capital loss carryforwards of $74,575
which expire in 2004 and Short-Term Bond had capital loss carryforwards of
$7,602 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, 1998, the net unrealized gain on investments for Bond Income,
Short-Term Bond, Growth and International were $46,314, $12,156, $646,186, and
$217,730, which consist of unrealized gains of $48,875, $13,476, $725,905, and
$278,489, and unrealized losses of $2,561, $1,320, $79,719, and $60,759,
respectively.
During the year ended November 30, 1998, Bond Income pur-chased $252,062 of
securities and sold no securities. Comparable figures for Short-Term Bond are
$1,370,491 purchased $2,075,227 sold; for Growth $650,078 and $666,621; and for
International, $194,372 and $172,047. Included in the above amounts for
Short-Term Bond are purchases of $240,278 and sales of $650,488 of U.S.
Government securities.
Page 27
<PAGE>
Sextant Mutual Funds
(GRAPHIC OMITTED)
Saturna Capital
(GRAPHIC OMITTED)
MUTUAL FUNDSMUTUAL FUNDS
1300 No. State Street
Bellingham WA 98225-4730
800/SATURNA
(800/728-8762)
WWW.SATURNA.COM
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 a series of Saturna Investment Trust.
SHORT-TERM BOND SHORT-TERM BOND
(GRAPHIC OMITTED)
BOND INCOMEBOND INCOME
(GRAPHIC OMITTED)
GROWTHGROWTH
(GRAPHIC OMITTED)
INTERNATIONALINTERNATIONAL
(GRAPHIC OMITTED)
Annual Report
November 30, 1998
<PAGE>
ITE
(Graphic Omitted)
IDAHO TAX-EXEMPT FUND
NOVEMBER 30, 1998 REPORT
MORNINGSTAR MUTUAL FUNDS HAS AWARDED ITS HIGHEST "FIVE-STAR" RATING TO IDAHO
TAX-EXEMPT FUND AS OF NOVEMBER 30, 1998. THE MORNINGSTAR RATING IS A WIDELY
RESPECTED MEASURE OF RISK-ADJUSTED PERFORMANCE.* THE FUND'S MANAGERS ARE PROUD
OF THIS ACCOMPLISHMENT AND WORK HARD TO CONTINUE THESE EXCELLENT RESULTS.
Fellow Shareowners:
For the twelve month period ending November 30, 1998, our Idaho Tax-Exempt Fund
provided shareholders with a total return of 7.28%. The current 30-day yield on
your Fund is 4.00%, tax-free. This is the equivalent of 7.20% of taxable income
to top-bracket Idaho taxpayers.
For the first eight months of 1998, municipal interest rates fell slightly and
Federal Reserve Bank policy remained stable. In the third quarter however, the
stock market fell precipitously and a large hedge fund collapsed. Taxable bond
rates fell dramatically in a brief but pronounced flight to quality. As a
result, the yield on intermediate term municipal bonds rose to 85% and in some
cases 100% of the yield of taxable issues. This presents a rare opportunity to
invest in tax-free municipals at yields nearly equal to the yields on fully
taxable issues. This situation persists to this day. The Federal Reserve Bank
has subsequently restored liquidity to the bond market and restored confidence
to the slumping stock market by lowering overnight Federal Funds rates
seventy-five basis points.
For the next twelve months, we expect the economies of US and Idaho to slow.
This should give the Federal Reserve the opportunity to lower short-term rates
further to 4.00%. We will continue to gradually increase the credit quality of
the fund and keep the average maturity in the seven to nine year area of the
curve.
As always, our staff and 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. We appreciate your investing with us.
NICHOLAS KAISER, PHELPS MCILVAINE,
PRESIDENT VICE PRESIDENT, PORTFOLIO MANAGER
December 23, 1998
- ------------------
*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.
Page 1
<PAGE>
(Graphic Omitted)
IDAHO TAX-EXEMPT FUND November 30,
1998 Annual Report
November 30, 1998 Investments
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
RATING Issuer Coupon/Maturity Face Amount Market Value
- --------------------------- --------------------------------- -------------------- ------------ -------------
AIRPORT PARKING (1.9%)
AAA Boise City ID Airport Revenue COP 5.40% due 8/1/2011 $ 115,000 $ 121,290
ELECTRIC POWER (2.8%)
AAA Idaho Falls Electric Revenue 6.75% due 4/1/2019 160,000 178,358
GENERAL OBLIGATIONS (48.9%)
AA Ada & Canyon Counties ID
JSD #2 Meridian 5.50% due 7/30/2011 175,000 187,653
AAA Adams County ID GO 5.00% due 8/1/2014 110,000 114,575
A+ Bannock County ID GO Jail 5.05% due 9/1/2012 95,000 100,025
A Bannock County ID SD #25 4.90% due 8/1/2009 90,000 94,095
" 5.25% due 8/1/2016 110,000 113,960
AAA Boise City ID GO ISD 5.50% due 7/30/2011 95,000 100,966
AA- " 5.50% due 7/30/2016 150,000 157,830
A Boise County ID SD #73 5.15% due 7/31/2010 125,000 130,688
AAA Canyon County ID SD #132 5.40% due 7/30/2011 100,000 106,200
" 5.40% due 7/30/2012 100,000 105,630
A Canyon County ID SD #135 Notus 6.00% due 8/1/2007 50,000 52,068
Series 1994
AAA Cassia, Twin Falls ID JSD #151 5.10% due 8/1/2009 90,000 95,346
" 5.375% due 8/1/2013 85,000 89,743
" 5.375% due 8/1/2015 75,000 78,653
AAA Elmore County ID SD #193 4.75% due 7/31/2007 250,000 258,850
AAA Gooding County ID SD #232 Wendell 6.00% due 8/1/2008 55,000 58,265
AAA Kootenai County ID SD #273 4.85% due 7/31/2013 200,000 204,760
" 5.00% due 7/30/2016 70,000 71,015
AAA Kuna ID Sch/Comm Library Dist. 4.9% due 8/1/2013 75,000 77,438
AAA Madison County ID SD #321 5.60% due 2/1/2010 150,000 157,950
AA Payette County ID SD #372 6.50% due 7/31/2008 80,000 89,016
Payette County ID SD #372 6.75% due 7/31/2009 155,000 173,879
Payette County ID SD #372 6.75% due 7/31/2010 100,000 112,180
AAA Payette County ID SD #373 4.45% due 7/31/2009 250,000 254,200
AAA Teton County ID SD #401 GO 5.50% due 8/1/2012 75,000 79,553
------------ -------------
SUB-TOTAL 2,910,000 3,064,538
HOUSING (6.8%)
AA Idaho Housing Authority
Single Fam Mortgage, B-1 6.85% due 7/1/2012 100,000 104,621
AA Idaho Housing Authority
Refunding Series A 6.15% due 7/1/2024 150,000 157,056
AA Idaho Housing Authority
Single Fam Mort Mezz-E-1 6.60% due 7/1/2011 95,000 99,580
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 20,000 20,867
AA Idaho Housing Authority
Single Fam Mort SR Series C1 7.70% due 7/1/2017 35,000 36,122
------------ -------------
SUB-TOTAL 405,000 423,468
IRRIGATION (0.9%)
AA Boise Kuna Irr. Dist. 6.00% due 7/1/2008 50,000 52,965
MEDICAL/HOSPITALS (4.9%)
Idaho Health Facility Auth.
A Hospital Rev - Elks Rehab 5.125% due 7/15/2013 300,000 305,670
</TABLE>
(The accompanying notes are an integral part of these financial statements)
Page 2
<PAGE>
(Graphic Omitted)
IDAHO TAX-EXEMPT FUND November 30,
1998 Annual Report
November 30, 1998 Investments
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
RATING Issuer Coupon/Maturity Face Amount Market Value
AAA Idaho State Bldg Authority Series C 5.70% due 9/1/2007 $ 100,000 $ 107,870
AAA Idaho State Building Authority 5.00% due 9/1/2021 100,000 100,200
------------ -------------
200,000 208,070
ROADS (3.1%)
A Payette L.I.D. #89-1 7.60% due 5/1/2005 30,000 30,412
A Post Falls, Kootenai County 7.20% due 4/15/1999 15,000 15,074
L.I.D. #91-1 7.40% due 4/15/2000 15,000 15,043
" 7.60% due 4/15/2001 15,000 15,045
" 7.75% due 4/15/2002 20,000 20,058
" 7.95% due 4/15/2003 20,000 20,063
" 7.95% due 4/15/2004 20,000 20,075
L.I.D. #91-4 7.95% due 4/15/2005 20,000 20,058
L.I.D. #91-4 7.95% due 4/15/2006 20,000 20,065
L.I.D. #91-4 7.95% due 4/15/2007 20,000 20,063
------------ -------------
SUB-TOTAL 195,000 195,956
STATE EDUCATION (13.4%)
AAA Boise State University
Student Univ. & Housing Sys. 5.10% due 4/1/2014 300,000 309,330
AAA Idaho State University
Student Fee Revenue 4.90% due 4/1/2017 275,000 275,468
AAA University of Idaho
Student Fee Revenue 5.60% due 4/1/2015 185,000 196,933
A- University of Idaho Fee Revenue 6.85% due 4/1/2016 50,000 54,585
------------ -------------
SUB-TOTAL 810,000 836,316
SEWER (2.6%)
A Troy ID, Sewer Revenue 7.10% due 2/1/1999 10,000 10,025
" 7.20% due 2/1/2000 10,000 10,227
" 7.30% due 2/1/2001 10,000 10,222
" 7.40% due 2/1/2002 10,000 10,237
" 7.50% due 2/1/2003 10,000 10,246
" 7.60% due 2/1/2004 10,000 10,257
" 7.70% due 2/1/2005 15,000 15,402
" 7.80% due 2/1/2006 15,000 15,419
" 7.90% due 2/1/2007 15,000 15,429
" 8.00% due 2/1/2008 15,000 15,434
" 8.00% due 2/1/2009 20,000 20,590
" 8.00% due 2/1/2010 20,000 20,594
------------ -------------
SUB-TOTAL 160,000 164,082
WATER SUPPLY (9.1%)
A- American Falls ID Reservoir 7.25% due 5/1/2004 70,000 75,104
Refunding Series A 7.625% due 5/1/2021 150,000 160,421
A McCall Water Rev., Series 1994 6.25% due 9/1/2008 200,000 221,622
A McCall Water Revenue 6.375% due 9/1/2014 70,000 76,976
A Ucon Water & Sewer Rev. Refunding 7.75% due 12/1/2002 35,000 35,982
------------ -------------
SUB-TOTAL 525,000 570,105
TOTAL INVESTMENTS (97.7%) Cost = $5,852,982 $ 5,830,000 $ 6,120,818
==================== ------------
Other Assets (net of liabilities) (2.3%) 142,901
------------
TOTAL NET ASSETS (100%) $ 6,263,719
<FN>
*These unaudited bond ratings reflect the adviser's current rating of each bond,
as determined using Standard & Poor's and Moody's ratings.
</FN>
</TABLE>
(The accompanying notes are an integral part of these financial statements)
Page 3
<PAGE>
IDAHO TAX-EXEMPT FUND November 30, 1998 Annual Report
Financial Highlights
Selected data per share of capital stock outstanding throughout the year.
<TABLE>
<CAPTION>
Year ended November 30
----------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994
------- ------- ------- ------- --------
NET ASSET VALUE AT BEGINNING OF YEAR $ 5.28 $ 5.25 $ 5.28 $ 4.76 $ 5.23
------- ------- ------- ------- --------
Income from investment operations
Net investment income 0.25 0.26 0.27 0.26 0.27
Net gains or losses on securities (both realized & unrealized) 0.12 0.03 (0.03) 0.52 (0.46)
------- ------- ------- ------- --------
Total from investment operations 0.37 0.29 0.24 0.78 (0.19)
Less distributions
Dividends (from net investment income) (0.25) (0.26) (0.27) (0.26) (0.27)
Distributions (from capital gains) (0.04) 0.00 0.00 0.00 (0.01)
------- ------- ------- ------- --------
Total distributions (0.29) (0.26) (0.27) (0.26) (0.28)
NET ASSET VALUE AT END OF YEAR $ 5.36 $ 5.28 $ 5.25 $ 5.28 $ 4.76
======= ======= ======= ======= ========
TOTAL RETURN 7.27% 5.69% 4.66% 16.68% (3.76)%
Ratios / Supplemental Data
- --------------------------------------------------------------
Net assets ($000), end of year $6,264 $5,255 $5,064 $5,220 $ 6,841
Ratio of expenses to average net assets 0.76% 0.80% 0.79% 0.75% 0.75%
Ratio of net investment income to average net assets 4.69% 4.99% 5.10% 5.07% 5.28%
Portfolio turnover rate 23% 20% 10% 28% 36%
<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 the ratio of expenses
to average net assets would be .07%, .16%, .27%, .26%, and .14%,
respectively.
</FN>
</TABLE>
(The accompanying notes are an integral part of these financial statements)
Page 4
<PAGE>
November 30, 1998 Annual Report IDAHO TAX-EXEMPT FUND
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
As of November 30, 1998
<S> <C>
ASSETS
Bond investments (cost $5,852,982) $6,120,818
Cash 41,703
Interest receivable 104,912
Insurance reserve premium 2,473
----------
Total Assets 6,269,906
LIABILITIES
Other Liabilities 6,187
----------
Total Liabilities 6,187
----------
NET ASSETS $6,263,719
==========
Fund shares outstanding 1,169,397
ANALYSIS OF NET ASSETS
Paid in capital (unlimited shares authorized, without par value)
$5,995,055 Undistributed net investment income 478 Accumulated net
realized gain (loss) on investments 350 Unrealized net appreciation on
investments 267,836
----------
Net Assets applicable to Fund shares outstanding $6,263,719
==========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $ 5.36
==========
</TABLE>
Statement of Operations
<TABLE>
<CAPTION>
For the year ended November 30, 1998
<S> <C> <C>
INVESTMENT INCOME
Interest income $ 322,951
Amortization of bond premiums (9,554)
Accretion 1,644
Miscellaneous income 60
-----------
Gross investment income $315,101
EXPENSES
Investment adviser and administration fee 28,953
Professional fees 9,446
Shareholder servicing 4,059
Printing and postage 3,369
Other expenses 1,185
Filing and registration fees 1,184
-----------
Total gross expenses 48,196
Less advisory fee waived (4,401)
-----------
Net expenses 43,795
--------
Net investment income 271,306
--------
NET REALIZED GAIN ON INVESTMENTS
Proceeds from sales 1,280,938
Less cost of securities sold based on identified cost 1,206,346
-----------
Realized net gain 74,592
--------
UNREALIZED GAIN ON INVESTMENTS
End of period 267,836
Beginning of period 208,126
-----------
Increase in unrealized gain for the period 59,710
--------
Net realized and unrealized gain on investments 134,302
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $405,608
========
</TABLE>
(The accompanying notes are an integral part of these financial statements)
Page 5
<PAGE>
IDAHO TAX-EXEMPT FUND November 30, 1998 Annual Report
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year ended Year ended
Nov. 30, 1998 Nov. 30, 1997
------------- --------------
<S> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS:
Net investment income $ 271,306 $ 253,087
Net realized gain on investments 74,592 47,467
Net increase in unrealized appreciation 59,710 (17,678)
Net increase in net assets from operations 405,608 282,876
DIVIDENDS TO SHAREOWNERS FROM:
Net investment income (270,610) (253,388)
Capital gains distributions (52,202) -
(322,812) (253,388)
FUND SHARE TRANSACTIONS:
Proceeds from sales of shares 1,495,612 661,445
Value of shares issued in reinvestment of dividends 247,973 190,941
1,743,585 852,386
Cost of shares redeemed (817,660) (691,110)
Net Increase in net assets from share transactions 925,925 161,276
Total increase in net assets 1,008,721 190,764
NET ASSETS
Beginning of period 5,254,998 5,064,234
End of period $6,263,719 $5,254,998
Shares of the Fund sold and redeemed
Number of shares sold 280,787 126,666
Number of shares issued in reinvestment of dividends 46,374 36,545
327,161 163,211
Number of shares redeemed (153,071) (132,545)
Net Increase in Number of Shares Outstanding 174,090 30,666
</TABLE>
(The accompanying notes are an integral part of these financial statements)
Page 6
<PAGE>
DISSCUSSION of FUND PERFORMANCE
(unaudited)
For the twelve-month period ending November 30, 1998, Idaho Tax Exempt Fund
returned shareholders +7.27%, our best year since 1995. On November 30, 1998 the
thirty-day SEC yield for the Fund was 4.00%.
In 1998, the troubles were not in municipal bonds. The Russian debt default, the
failure of a huge hedge fund and the third-quarter plunge in equity prices
produced a sudden and severe flight to quality. There was de-leveraging of risk
in the bond market, and the yield on municipal bonds was suddenly equal to the
yield on US Treasury bonds. An investor could buy a municipal bond with the same
yield as a US Treasury bond and capture the tax exemption for free. The Federal
Reserve Bank quickly moved to restore liquidity and confidence by lowering the
Federal Funds rate. Today, municipal securities remain exceptionally inexpensive
relative to other fixed-income securities. In 1999, we expect municipal
securities spreads to return to normal levels. This means the municipal sector
should outperform other fixed income sectors on a relative basis. We also expect
low domestic inflation and lower short-term interest rates. However, long-term
rates will have difficulty falling much from their currently low levels. For
1999, we forecast most of the Fund's return will come from income and spread
compression instead of price appreciation.
The primary objective of the Fund is income exempt from federal and Idaho
personal income taxes. As the yield advantage and supply of lower-rated paper
continues to dwindle, we have continued to increase the average credit quality
of the Fund. Only 14% of the portfolio is invested in non-rated paper, down from
19% at the beginning of the year.
The secondary objective of the Fund is capital preservation. The average
maturity of the Fund is the most important factor affecting principal values in
the portfolio. The effective average maturity of the Fund is now 7.46 years,
slightly greater than at the beginning of the year. We remain optimistic that
interest rates can move lower in 1998, but we do not believe that extending
beyond the intermediate sector of the yield curve represents the best
risk/return balance for the Fund. The average maturity of the portfolio will
remain between six and nine years.
Idaho's economy took blows from the Asian Crisis in 1998. A slowdown in
commercial construction, lower wood product output, weak farm prices and
declining immigration put dampers on the state's economy. Still, Idaho surprised
economists with a better year than forecast. Semiconductor chip prices rebounded
in the fall, jobs increased at a 2.9% annual rate and housing starts came in
9.8% above 1997. Idaho's economic expansion has actually lasted longer than the
amazing national expansion - eleven years compared to eight. Its economic
strengths will allow the Gem State to remain a formidable competitor in the
national and world economy.
Idaho's high state income taxes create a substantial appetite among residents
for tax-exempt bonds. Idaho municipal bonds benefit from an imbalance between
the number of buyers and the number of issues sold within the state. This
imbalance is especially important in weak markets, when Idaho bonds normally
outperform issues from other states. Idaho's record of repaying municipal debt
remains in unblemished condition and this also adds to investors' appetites.
Page 7
<PAGE>
Though the Fund does not try to "beat" the Lehman Brothers Index or any other
specific index, the Fund's returns, considering the lower price fluctuation,
compares well to that of the Index for the fiscal year, as shown in the
accompanying chart.
The Line graph below compares the Idaho Tax Exempt Fund's performance to the
performance of the Lehman Brothers Composite 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. The Fund also stands ready to
buy and sell its own securities to shareholders on a daily basis, as well as
providing a wide range of services to them. Additionally, few investors are able
to invest in an exact index portfolio because of the large amount of securities
required to model such an index.
Were the Fund to target the index as an objective, the Fund might take greater
risk by extending the average maturity of its portfolio to take advantage of the
greater price fluctuation (for better or worse) available in such a portfolio.
However, maintaining the stability of capital is an objective of the portfolio,
and we believe the Fund has performed well considering its investment
restrictions.
The graph shows that $10,000 invested in the Idaho Tax Exempt Fund at the end of
September 1987 would have grown to $20,444 at the end of November 1998. If the
$10,000 could have been invested in the Lehman Brothers Composite Municipal Bond
Index at the end of September 1987, it would have grown to $25,283.
Idaho Tax Exempt Fund vs Lehman Composite Municipal Index
(Graph omitted)
Page 8
<PAGE>
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
invest-ment 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 sig-nificant accounting policies followed by
the Fund.
INVESTMENTS:
Fixed-income securities for which there are no publicly available market
quo-tations are valued using matrices based on maturity, quality, industry,
yield, call features and similar factors, which are compared periodically to
multiple dealer bids and ad-justed by the adviser under policies established by
the Trustees.
The cost of securities is the same for accounting and Federal income tax
purposes. Securities trans-actions 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 con-stant
yield basis from pur-chase date to maturity or expected call date, whichever is
earlier.
Interest income is increased by accretion only for bonds underwritten as
original issue discounts. Market dis-counts are recorded as realized gains upon
disposition.
Expenses incurred by the Trust on be-half 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
ex-penses, as described below.
INCOME TAXES:
The Fund has elected to be taxed as a regulated investment company under the
Internal Revenue Code and distribute sub-stantially all of its taxable net
invest-ment income and realized net gains on in-vest-ments. Therefore, no
provision for Federal income taxes is required. Further, the Fund intends to
meet IRS requirements for tax-free income divi-dends, 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 share-owners are recorded on the ex-dividend
date. Div-idends are paid daily and distrib-
Page 9
<PAGE>
uted on the last business day of each month. Shareowners electing to reinvest
dividends and distributions pur-chase additional shares at the net asset value
on the payable date.
Note 3--TRANSACTIONS WITH AFFILIATED PERSONS
Under a contract approved by shareowners on October 12, 1990, Saturna Capital
Corporation provides investment ad-vi-sory services and certain other
adminis-tra-tive and distribution services to conduct the Fund's busi-ness. For
such services, the Fund pays an annual fee equal to .50% of av-erage daily net
assets. For the year ended November 30, 1998, the Fund incurred advisory fee
expenses of $28,953.
Saturna Capital has volunteered to reimburse the Fund to the extent that total
expenses of the Fund (excluding interest, brokerage commis-sions and taxes)
exceeds .80% through March 31, 1999. Accordingly, for the year ended November
30, 1998, Saturna Capital waived $4,401 of the advisory fee.
In accordance with the Fund's agreement with its custodian bank, National City
Bank of Indiana, for the year ended November 30, 1998, custodian fees incurred
by the Fund amounted to $1,677.
One trustee and shareowner also serves as president of the Trust and is a
di-rector and president of Saturna Capital Corporation.
The Trust acts as a distributor of its own shares, except in those states in
which Investors National Corporation (a sub-si-diary of Saturna Capital
Corporation) is itself registered as a broker-dealer, where it acts as
dis-tributor 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, 1998, the Fund paid
such a fee of $4,059.
Unaffiliated trustees receive a fee of $100 per meeting attended, allocated
pro-rata to the five Funds of Saturna Investment Trust. On November 30, 1998,
the trustees, officers and their immediate families as a group owned 0.1% of the
outstanding shares of the Fund.
Note 4--INVESTMENTS
At November 30, 1998, the net unreal-ized appreciation of investments for the
Fund of $267,836 com-prised gross unrealized gains of $270,701 and gross
unrealized losses of $2,865.
During the year ended November 30, 1998, the Fund pur-chased $2,179,676 of
securities and sold/matured $1,280,938 of securities.
Page 10
<PAGE>
REPORT of
INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees
Idaho Tax-Exempt Fund
We have audited the accompanying statement of assets and liabilities of the
Idaho Tax-Exempt Fund, a series of shares of the Saturna Investment Trust,
including the schedules of investments as of November 30, 1998, and the related
statements of operations and changes in net assets and the financial highlights
for the year then ended. These financial statements and financial highlights are
the responsibility of the Trust's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits. The financial statements and financial highlights presented for the year
ended November 30, 1996 and prior were audited by other auditors whose report
dated December 16, 1996, expressed an unqualified opinion on those statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1998, by correspondence with the custodian. Our audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion. In our
opinion the 1998 financial statements and financial highlights referred to above
present fairly, in all material respects, the financial position of Idaho
Tax-Exempt Fund as of November 30, 1998, the results of its operations, the
changes in net assets and the financial highlights for the year then ended, in
conformity with generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 8, 1999
Page 11
<PAGE>
Saturna Capital
Mutual Funds
http:/www.saturna.com
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.
Tax-Exempt Fund
A Portfolio of Saturna Investment Trust
(Graphic Omitted)
ANNUAL REPORT
November 30, 1998
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Trust has duly caused this registration
statement to be duly signed on its behalf by the undersigned, duly authorized,
in the City of Bellingham, State of Washington, on the 26th day of January,
1999.
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 has been signed below by the
following persons in the capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/s/ Nicholas F. Kaiser President; Trustee January 26, 1999
- -------------------------
Nicholas F. Kaiser (Principal Executive Officer)
/s/ Teresa K. Anderson Treasurer January 26, 1999
- -------------------------
Teresa K. Anderson (Principal Financial Officer)
**A. Herbert Ershig All other Trustees January 26, 1999
** Gary Goldfogel
** John E. Love
** John S. Moore
** By /s/ Nicholas F. Kaiser
-------------------------
Nicholas F. Kaiser, Attorney-in-fact
e
Sommer & Barnard
Attorneys at Law- PC
January 26, 1999
Saturna Investment Trust
C/O Saturna Capital
1300 North State Street
Bellingham, Washington 98225-4730
Re: Amendment to Form N-1A
Gentlemen:
In accordance with the registration of an indefinite number of units
("Units") registered by Saturna Investment Trust (the "Trust") for its Funds, we
have been asked to provide the opinion of counsel required to be filed as an
exhibit to the Trust's registration statement on Form N-1A (the "Registration
Statement"). In rendering this opinion, we have examined such documents
(including the audited financial statements of the Funds as of November 30,
1998), records and questions of law as we deemed it necessary to examine for the
purpose of this opinion. Based on that examination and investigation, it is our
opinion that the Units will be, upon issuance, validly issued, fully paid and
not liable to further assessments.
We consent to the filing of this letter as an exhibit to Post Effective
Amendment No. 17 to the Registration Statement.
Very truly yours,
SOMMER & BARNARD, PC
/s/Sommer & Barnard, PC
f
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm in the Registration Statement, (Form
N-1A), and related Statement of Additional Information of the Saturna Investment
Trust and to the inclusion of our report dated December 11, 1998 to the
Shareholders and Board of Trustees of the Sextant Short-Term Bond Fund, Sextant
Bond Income Fund, Sextant Growth Fund and Sextant International Fund, each a
series of the Saturna Investment Trust.
TAIT, WELLER & BAKER
PHILADELPHIA, PENNSYLVANIA
JANUARY 28, 1999
g
<PAGE>
<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
<CAPTION>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-START> DEC-01-1997
<PERIOD-END> NOV-30-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 1325468
<INVESTMENTS-AT-VALUE> 1971654
<RECEIVABLES> 2236
<ASSETS-OTHER> 167741
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2141631
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2195
<TOTAL-LIABILITIES> 2195
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1493340
<SHARES-COMMON-STOCK> 230106
<SHARES-COMMON-PRIOR> 228245
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (90)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 646186
<NET-ASSETS> 2139436
<DIVIDEND-INCOME> 17959
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 13994
<NET-INVESTMENT-INCOME> 3,965
<REALIZED-GAINS-CURRENT> 40091
<APPREC-INCREASE-CURRENT> (67844)
<NET-CHANGE-FROM-OPS> (23788)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4281
<DISTRIBUTIONS-OF-GAINS> 40111
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 30923
<NUMBER-OF-SHARES-REDEEMED> 33,801
<SHARES-REINVESTED> 4739
<NET-CHANGE-IN-ASSETS> (48,931)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8933
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 13994
<AVERAGE-NET-ASSETS> 2111190
<PER-SHARE-NAV-BEGIN> 9.58
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> (0.11)
<PER-SHARE-DIVIDEND> 0.02
<PER-SHARE-DISTRIBUTIONS> 0.18
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.29
<EXPENSE-RATIO> 0.66
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<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> 2
<NAME> SEXTANT BOND INCOME FUND
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<CAPTION>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-START> DEC-01-1997
<PERIOD-END> NOV-30-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 1260787
<INVESTMENTS-AT-VALUE> 1307101
<RECEIVABLES> 27665
<ASSETS-OTHER> 10133
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1344899
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 193
<TOTAL-LIABILITIES> 193
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1372967
<SHARES-COMMON-STOCK> 269033
<SHARES-COMMON-PRIOR> 226348
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (74575)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 46314
<NET-ASSETS> 1344706
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 84323
<OTHER-INCOME> (1745)
<EXPENSES-NET> 3812
<NET-INVESTMENT-INCOME> 78766
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 42345
<NET-CHANGE-FROM-OPS> 121111
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 78766
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 66905
<NUMBER-OF-SHARES-REDEEMED> 39719
<SHARES-REINVESTED> 15499
<NET-CHANGE-IN-ASSETS> 252467
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7691
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11503
<AVERAGE-NET-ASSETS> 1263232
<PER-SHARE-NAV-BEGIN> 5
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 5
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<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> 3
<NAME> SEXTANT INTERNATIONAL FUND
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<CAPTION>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-START> DEC-01-1997
<PERIOD-END> NOV-30-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 669,282
<INVESTMENTS-AT-VALUE> 887,022
<RECEIVABLES> 470
<ASSETS-OTHER> (5,048)
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 882,444
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,694
<TOTAL-LIABILITIES> 1,694
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 671,714
<SHARES-COMMON-STOCK> 129,464
<SHARES-COMMON-PRIOR> 133,385
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (8,694)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 217,730
<NET-ASSETS> 880,750
<DIVIDEND-INCOME> 15,740
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 10,721
<NET-INVESTMENT-INCOME> 5,019
<REALIZED-GAINS-CURRENT> 5,159
<APPREC-INCREASE-CURRENT> 27,852
<NET-CHANGE-FROM-OPS> 38,030
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,174
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 50,080
<NUMBER-OF-SHARES-REDEEMED> 54,754
<SHARES-REINVESTED> 753
<NET-CHANGE-IN-ASSETS> (404)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,060
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 10,721
<AVERAGE-NET-ASSETS> 924,672
<PER-SHARE-NAV-BEGIN> 6.61
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 0.21
<PER-SHARE-DIVIDEND> 0.04
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 6.81
<EXPENSE-RATIO> 1.16
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<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> 4
<NAME> SEXTANT SHORT TERM BOND FUND
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<CAPTION>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-START> DEC-01-1997
<PERIOD-END> NOV-30-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 1698202
<INVESTMENTS-AT-VALUE> 1710358
<RECEIVABLES> 39154
<ASSETS-OTHER> 160607
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1910119
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2120
<TOTAL-LIABILITIES> 2120
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1904492
<SHARES-COMMON-STOCK> 378847
<SHARES-COMMON-PRIOR> 502530
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (8649)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12156
<NET-ASSETS> 1907999
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 143870
<OTHER-INCOME> (23371)
<EXPENSES-NET> 9588
<NET-INVESTMENT-INCOME> 110911
<REALIZED-GAINS-CURRENT> 14155
<APPREC-INCREASE-CURRENT> 6693
<NET-CHANGE-FROM-OPS> 131759
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (111184)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 335801
<NUMBER-OF-SHARES-REDEEMED> 480944
<SHARES-REINVESTED> (21460)
<NET-CHANGE-IN-ASSETS> (600289)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 12132
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 18393
<AVERAGE-NET-ASSETS> 1992166
<PER-SHARE-NAV-BEGIN> 5
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 5
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<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> 0000811860
<NAME> SATURNA INVESTMENT TRUST
<SERIES>
<NUMBER> 5
<NAME> IDAHO TAX EXEMPT FUND
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<CAPTION>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-START> DEC-01-1997
<PERIOD-END> NOV-30-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 5852982
<INVESTMENTS-AT-VALUE> 6120818
<RECEIVABLES> 104912
<ASSETS-OTHER> 44176
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6269906
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6187
<TOTAL-LIABILITIES> 6187
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5995055
<SHARES-COMMON-STOCK> 1169397
<SHARES-COMMON-PRIOR> 995307
<ACCUMULATED-NII-CURRENT> 478
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 350
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 267836
<NET-ASSETS> 6263719
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 322951
<OTHER-INCOME> (7850)
<EXPENSES-NET> 43795
<NET-INVESTMENT-INCOME> 271306
<REALIZED-GAINS-CURRENT> 74592
<APPREC-INCREASE-CURRENT> 59710
<NET-CHANGE-FROM-OPS> 405608
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 270610
<DISTRIBUTIONS-OF-GAINS> 52202
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 280787
<NUMBER-OF-SHARES-REDEEMED> 153071
<SHARES-REINVESTED> 46374
<NET-CHANGE-IN-ASSETS> 1008721
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 28953
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 48196
<AVERAGE-NET-ASSETS> 5790000
<PER-SHARE-NAV-BEGIN> 5
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 5
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
