(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
