|
Previous: PRUDENTIAL BALANCED FUND, 497, 1999-07-27 |
Next: SAKS INC, 8-K, 1999-07-27 |
Idaho Tax-Exempt Fund
May 31, 1999 Report
Fellow Shareowners:
For the twelve-month period ending May 31, 1999 the Idaho Tax Exempt Fund provided a total return of 4.04%. The current 30-day yield on your Fund is 4.0%, tax-free, slightly lower than 4.20% of one year ago. This is the equivalent of 7.0% of taxable income for top-bracket Idaho taxpayers. Fund assets have grown 33% to $6.7 million in one year.
An important aspect of the Idaho Fund is how well it has performed during periods of rising interest rates, such as experienced in the last six months. Back when interest rates increased in 1994, some US Treasury bonds lost as much as 30% of their value yet the decline of the Idaho Fund was just 5%. Similarly, over the last six months, the Idaho Fund again outperformed comparable US Treasuries. A rise in domestic inflation forced the yield of intermediate-maturity US Treasuries up more than one percent since last November. The yield on intermediate-term Idaho paper has risen only one quarter of one percent. For calendar 1999 through May 31st, the returns on intermediate and long US Treasuries range from -1.5%; to -8%. For the same period, the Fund's total return was -0 .5%.
This superior performance is partly the result of an unexpectedly strong year for the Idaho state economy. Despite weakness in agriculture, threats to Idaho's high technology businesses, and the pressures of rising interest rates, the Idaho economy continues healthy. This economic strength helps the traditionally high creditworthiness of Idaho bond issuers and greater wealth for investment in Idaho municipal bonds.
Looking ahead, the dynamics that have produced high growth/low inflation appear firmly entrenched. In addition, the US Treasury's cash flow surplus may mean less upward pressure on interest rates due to reduced US government borrowing. US rates have now risen from record lows to more normal levels. This means reduced price risk and the possibility of greater returns in the bond market. We feel this is a good time to buy bonds, and anticipate another year of positive total returns for the Idaho Tax Exempt Fund.
As always, your 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 invite you to again review the many advantages of the Idaho Tax-Exempt Fund, including income free from state and federal income taxes, a high-quality diversified bond portfolio, and daily supervision by professional managers. This could be a good time to reposition financial assets from the high-priced stock markets to core investment holdings.
Nicholas Kaiser, | Phelps McIlvaine, |
President |
Vice President, Portfolio Manager |
July 15, 1999
Performance data quoted in this report represents past performance and is no guarantee of future performance. The investment return and principal value of investments in the Fund fluctuate daily, and an investor's shares when redeemed may be worth more or less than the original cost. |
Average Annual Returns (as of 6/30/1999) |
||
1 Year
|
5 Years
|
10 Years
|
|
1.70%
|
5.44%
|
5.91%
|
Page 1
IDAHO TAX-EXEMPT FUND
|
May 31, 1999 Semi-Annual Report
|
|
Investments
|
Rating
|
Issuer
|
Coupon/Maturity
|
Face Amount
|
Market Value
|
Airport Parking (1.8%) | ||||
AAA |
Boise City Airport Rev COP |
5.40% due 8/1/2011 |
$115,000
|
$119,198
|
Electric Power (2.6%) | ||||
AAA |
Idaho Falls |
|||
Electric Revenue |
6.75% due 4/1/2019 |
160,000
|
175,328
|
|
General Obligations (52.4%) | ||||
AA- | Ada & Canyon Counties | |||
JSD #2 Meridian | 5.50% due 7/30/2011 |
175,000
|
187,740
|
|
" | 5.50% due 7/30/2015 |
100,000
|
104,820
|
|
AAA | Adams County GO | 5.00% due 8/1/2014 |
110,000
|
109,593
|
A+ |
Bannock County GO Jail |
5.05% due 9/1/2012 |
95,000
|
96,292
|
A+ |
Bannock County SD #25 | 4.80% due 8/01/2008 |
90,000
|
91,287
|
" |
4.90% due 8/1/2009 |
90,000
|
91,386
|
|
" |
5.25% due 8/1/2016 |
110,000
|
110,957
|
|
AA- |
Boise City GO Revenue |
5.10% due 2/1/2011 |
110,000
|
112,299
|
AAA |
Boise City GO ISD |
5.50% due 7/30/2011 |
95,000
|
98,876
|
AA- |
" | 5.50% due 7/30/2016 |
150,000
|
153,990
|
A |
Boise County SD #73 |
5.15% due 7/31/2010 |
125,000
|
127,847
|
AAA | Canyon County SD #131 Nampa | 5.50% due 7/30/2013 |
50,000 |
52,655
|
AAA |
Canyon County SD #132 | 5.40% due 7/30/2011 |
100,000
|
103,850
|
" | 5.40% due 7/30/2012 |
100,000
|
103,250
|
|
A |
Canyon County SD #135 Notus 1994 |
6.00% due 8/1/2007 |
50,000
|
51,407
|
AAA |
Cassia, Twin Falls JSD #151 | 5.10% due 8/1/2009 |
90,000
|
92,952
|
" |
5.375% due 8/1/2013 |
85,000
|
87,270
|
|
" |
5.375% due 8/1/2015 |
75,000
|
76,207
|
|
AAA |
Elmore County SD #193 |
4.75% due 7/31/2007 |
250,000
|
253,375
|
AAA |
Gem & Boise Counties | |||
JSD #221 Emmetsville |
4.40% due 8/1/2011 |
100,000
|
96,700
|
|
" |
4.50% due 8/1/2012 |
75,000
|
72,367
|
|
AAA | Gooding County | |||
SD #232 Wendell | 6.00% due 8/1/2008 |
55,000
|
57,401
|
|
Kootenai County SD #273 |
4.85% due 7/30/2013 |
200,000
|
197,780
|
|
" | 5.00% due 7/30/2016 |
70,000
|
68,765
|
|
AAA | Kuna Sch/Comm Library Dist | 4.90% due 8/1/2013 |
75,000
|
73,162
|
AAA | Madison County SD #321 | 5.60% due 2/1/2010 |
150,000
|
156,420
|
AAA | Payette County SD #373 | 4.45% due 7/31/2009 |
250,000
|
245,575
|
AAA | Payette County SD #373 | 4.45% due 7/31/2009 |
250,000
|
245,575
|
AA | Payette County SD #372 |
6.50% due 7/31/2008 |
80,000
|
87,712
|
" |
6.75% due 7/31/2009 |
155,000
|
171,570
|
|
" | 6.75% due 7/31/2010 |
100,000
|
110,690
|
|
AAA | Teton County SD #401 | 5.50% due 8/1/2012 |
75,000
|
77,010
|
SUB-TOTAL |
3,435,000
|
3,521,205
|
||
Housing (5.8%) | ||||
AA | Idaho Housing Authority | |||
Single Fam Mortgage, B-1 | 6.85% due 7/1/2012 |
95,000
|
96,871
|
|
AA+ | Idaho Housing Authority | |||
Refunding Ser A | 6.15% due 7/1/2024 |
150,000
|
153,375
|
|
AA+ | Idaho Housing Authority | |||
Single Fam Mort Mezz-E-1 | 6.60% due 7/1/2011 |
90,000
|
91,472
|
|
AA | Idaho Housing Authority | |||
Single Fam Mort Rev Ser B1 | 8.125% due 7/1/2019 |
5,000
|
4,986
|
|
" | 8.00% due 1/1/2020 |
15,000
|
15,104
|
|
AA | Idaho Housing Authority | |||
Single Fam Mort SR Ser C1 | 7.70% due 7/1/2017 |
30,000
|
30,490
|
|
SUB-TOTAL |
385,000
|
392,298
|
Page 2
IDAHO TAX-EXEMPT FUND
|
May 31, 1999 Semi-Annual Report
|
|
Investments,continued
|
Rating
|
Issuer
|
Coupon/Maturity
|
Face Amount
|
Market Value
|
Irrigation (0.8%) | ||||
AA |
Boise Kuna Irrigation District |
6.00% due 7/1/2008 |
50,000
|
52,102
|
Medical/Hospitals (4.5%) | ||||
A | Idaho Health Facility Authority | |||
Hospital Revenue - Elks Rehab | 5.125% due 7/15/2013 |
300,000
|
299,850
|
|
Real Estate (3.0%) | ||||
AAA | Idaho St Bldg Authority Ser C | 5.70% due 9/1/2007 |
100,000
|
106,070
|
AAA | Idaho State Building Authority | 5.00% due 9/1/2021 |
100,000
|
96,400
|
SUB-TOTAL |
200,000
|
202,470
|
||
Roads (2.7%) | ||||
A | Payette L.I.D. #89-1 | 7.60% due 5/1/2005 |
30,000
|
30,051
|
A | Post Falls, Kootenai County | 7.40% due 4/15/2000 |
15,000
|
14,899
|
L.I.D. #91-1 | 7.60% due 4/15/2001 |
15,000
|
14,934
|
|
" | 7.75% due 4/15/2002 |
20,000
|
19,940
|
|
" | 7.95% due 4/15/2003 |
20,000
|
19,971
|
|
" | 7.95% due 4/15/2004 |
20,000
|
20,001
|
|
L.I.D. #91-4 | 7.95% due 4/15/2005 |
20,000
|
19,978
|
|
L.I.D. #91-4 | 7.95% due 4/15/2006 |
20,000
|
19,996
|
|
L.I.D. #91-4 | 7.95% due 4/15/2007 |
20,000
|
19,996
|
|
SUB-TOTAL |
180,000
|
179,766
|
||
State Education (11.4%) | ||||
AAA | Boise State University | |||
Student Univ. & Housing | 5.10% due 4/1/2014 |
300,000
|
301,950
|
|
AAA | Idaho State University | |||
Student Fee Revenue | 4.90% due 4/1/2017 |
150,000
|
145,860
|
|
Student Fee Rev - Elmwood | 5.25% due 4/1/2014 |
120,000
|
123,180
|
|
AAA | University of Idaho | |||
Student Fee Revenue | 5.60% due 4/1/2015 |
185,000
|
191,752
|
|
SUB-TOTAL |
755,000
|
762,742
|
||
Sewer (2.2%) | ||||
A | Troy, Sewer Revenue | 7.10% due 2/1/2000 |
10,000
|
10,075
|
" | 7.30% due 2/1/2001 |
10,000
|
10,073
|
|
" | 7.40% due 2/1/2002 |
10,000
|
10,081
|
|
" | 7.50% due 2/1/2003 |
10,000
|
10,086
|
|
" | 7.60% due 2/1/2004 |
10,000
|
10,093
|
|
" | 7.70% due 2/1/2005 |
15,000
|
15,149
|
|
" | 7.80% due 2/1/2006 |
15,000
|
15,159
|
|
" | 7.90% due 2/1/2007 |
15,000
|
15,165
|
|
" | 8.00% due 2/1/2008 |
15,000
|
15,167
|
|
" | 8.00% due 2/1/2009 |
20,000
|
20,230
|
|
" | 8.00% due 2/1/2010 |
20,000
|
20,233
|
|
SUB-TOTAL |
150,000
|
151,511
|
||
Water Supply (9.9%) | ||||
A- | American Falls Reservoir | 7.25% due 5/1/2004 |
70,000
|
73,650
|
Ref. Series A | 7.625% due 5/1/2021 |
150,000
|
158,730
|
|
AAA | Coeur d'Alene Water Rev. | 5.00% due 6/1/2006 |
100,000
|
103,380
|
A | McCall Water Rev., Ser 1994 | 6.25% due 9/1/2008 |
200,000
|
215,634
|
A | McCall Water Revenue | 6.375% due 9/1/2014 |
70,000
|
75,249
|
A | Ucon Water & Sewer Rev. Ref. | 7.75% due 12/1/2002 |
35,000
|
35,340
|
SUB-TOTAL |
625,000
|
661,983
|
||
Total Investments (97.1%) | Cost = $6,403,899 |
$6,355,000
|
$6,518,453
|
|
Other Assets (net of liabilities) (2.9%) |
191,720 |
|||
Total Net Assets (100%) |
$6,710,173
|
|||
* These bond ratings reflect the adviser's current rating of each bond, as determined using criteria similar to Standard & Poor's and Moody's ratings. |
Page 3
IDAHO TAX-EXEMPT FUND
|
May 31, 1999 Semi-Annual Report
|
|
Financial Highlights
|
Selected data per share of capital stock outstanding throughout the period:
May
|
For Year Ended November 30
|
||||||
1999
|
1998
|
1997
|
1996
|
1995
|
1994
|
||
Net asset value at beginning of year | |||||||
Income from Investment Operations |
$5.36
|
$5.28
|
$5.25
|
$5.28
|
$4.76
|
$5.23
|
|
Net Investment Income |
0.12
|
0.23
|
0.26
|
0.27
|
0.26
|
0.27
|
|
Net gains or losses on securities (both realized & unrealized) |
(0.13)
|
0.12
|
0.03
|
(0.03)
|
0.52
|
(0.46)
|
|
Total From Investment Opernations |
(0.01)
|
0.35
|
0.29
|
0.24
|
0.78
|
(0.19)
|
|
Less Distributions | |||||||
Dividends (from net investment income) |
(0.12)
|
(0.23)
|
(0.26)
|
(0.27)
|
(0.26)
|
(0.27)
|
|
Distributions (from capital gains) |
0.00
|
(0.04)
|
0.00
|
0.00
|
0.00
|
(0.01)
|
|
Total Distributions |
(0.12)
|
(0.27)
|
(0.26)
|
(0.27)
|
(0.26)
|
(0.28)
|
|
Net asset value at end of year |
$5.23
|
$5.36
|
$5.28
|
$5.25
|
$5.28
|
$4.76
|
|
Total Return |
(0.28)%
|
7.28%
|
5.69%
|
4.66%
|
16.68%
|
$4.76
|
|
Ratios/Supplemental data | |||||||
Net assets ($000), end of period |
$6,710
|
$6,264
|
$5,255
|
$5,064
|
$5,220
|
$6,841
|
|
Ratio of expenses to average net assets |
0.40%
|
0.76%
|
0.80%
|
0.79%
|
0.75%
|
0.75%
|
|
Ratio of net investment income to average net assets |
2.14%
|
4.69%
|
4.99%
|
5.10%
|
5.07%
|
5.28%
|
|
Portfolio turnover rate |
4%
|
23%
|
20%
|
10%
|
28%
|
36%
|
|
For each of the above years, all or a portion of the expenses were waived. If these costs had not been waived, the resulting increase to expenses per share in each of the above periods would be $.00, $.00, $.01, $.01, $.016, and $.007, respectively. The increase to the ratio of expenses to average daily net assets would be .00%, .08%, .16%, .27%, .26%, and .14%, respectively. |
(The accompanying notes are an integral part of these financial statements)
Page 4
IDAHO TAX-EXEMPT FUND
|
May 31, 1999 Semi-Annual Report
|
|
Statement of Assets
and Liabilities
|
As of May 31, 1999 | ||||
Assets |
||||
Bond investments (cost $6,403,899) |
$6,518,453
|
|||
Cash |
82,805
|
|||
Interest receivable |
106,853
|
|||
Insurance Reserve Premium |
2,473
|
|||
Total Assets |
$6,710,584
|
|||
Liabilities |
||||
Other Liabilities |
411
|
|||
Total Liabilities |
411
|
|||
Net Assets |
$6,710,173
|
|||
Fund shares outstanding |
1,281,456 |
|||
Analysis of Net Assets |
||||
Paid in capital (unlimited shares authorized, without par value) |
$6,594,007
|
|||
Accumulated net realized gain (loss) on investments |
1,566
|
|||
Unrealized net appreciation on investments |
114,600
|
|||
Net Assets applicable to Fund shares outstanding |
$6,710,173
|
|||
Net Asset Value, Offering and Redemption price per share |
$5.23
|
Statement of Operations
|
For the semi-annual period ended May 31, 1999 | ||||
Investment income |
|
|
||
Interest income |
$171,774
|
|||
Amortization of bond premiums |
(3,140)
|
|||
Accretion |
433
|
|||
Miscellaneous income |
25
|
|||
Gross investment income |
$169,092
|
|||
Expenses |
|
|
||
Investment adviser |
15,944
|
|||
Professional fees |
4,624
|
|||
Printing and postage |
1,645
|
|||
Shareholder Service Fees |
2,015
|
|||
Other expenses |
1,457
|
|||
Filing and registration fees |
515
|
|||
Total gross expenses |
26,200
|
|||
Less advisory fee waived |
(395)
|
|||
Net expenses |
25,805
|
|||
Net investment income |
143,287
|
|||
Net realized gain on investments |
|
|
||
Proceeds from sales |
208,480
|
|||
Less cost of securities sold based on identified cost |
207,264
|
|||
Realized net gain |
1,216
|
|||
Unrealized gain on investments |
|
|
||
End of period |
114,600
|
|||
Beggining of period |
267,836
|
|||
Increase in unrealized gain (loss) for the period |
(153,236)
|
|||
Net realized and unrealized gain (loss) on investments |
(152,020)
|
|||
Net decrease in net assets resulting from operations |
|
$(8,733)
|
(The accompanying notes are an integral part of these financial statements)
Page 5
IDAHO TAX-EXEMPT FUND
|
May 31, 1999 Semi-Annual Report
|
|
Statement of Changes
in Net Assets
|
Six months ended May 31, 1999 |
Year Ended Nov. 30, 1998
|
||
INCREASE IN NET ASSETS | |||
From Operations |
|||
Net investment income |
$143,287
|
$271,306
|
|
Net realized gain on investments |
1,216
|
74,592
|
|
Net increase (decrease) in unrealized appreciation |
(153,236)
|
59,710
|
|
Net increase in net assets from operations |
(8,733)
|
405,608
|
|
Dividends to Shareoweners from | |||
Net investment income |
(141,621)
|
(270,610)
|
|
Capital gains distributions |
0
|
(52,202)
|
|
(141,621)
|
(322,812)
|
||
Fund Share Transactions | |||
Proceeds from sales of shares |
835,413
|
1,495,612
|
|
Value of shares issued in reinvestment of dividends |
112,483
|
247,973
|
|
947,896
|
1,743,585
|
||
Cost of shares redeemed |
(351, 088)
|
(817,660)
|
|
Net increase in net assets from share transactions |
596,808
|
925,925
|
|
Total increase in net assets |
446,454
|
1,008,721
|
|
NET ASSETS | |||
Beginning of period |
6,263,719
|
5,254,998
|
|
End of period |
$6,710,173
|
$6,263,719
|
|
Shares of the Fund Sold and Redeemed | |||
Number of shares sold |
156,895
|
280,787
|
|
Number of shares issued in reinvestment of dividends |
21,163
|
46,374
|
|
178,058
|
327,161
|
||
Number of shares redeemed |
(66,000)
|
(153,071)
|
|
Net increase in Number of Shares Outstanding |
112,058
|
174,090
|
(The accompanying notes are an integral part of these financial statements)
Page 6
Notes to Financial Statements
Note 1-Organization
Saturna Investment Trust, (the "Trust") was established under Washington State Law as a Business Trust on February 20, 1987. The Trust is registered as a no-load, open-end series investment company under the Investment Company Act of 1940, as amended. Four portfolios have been created to date in addition to Idaho Tax-Exempt Fund (the "Fund"). The other four portfolios distribute through a separate prospectus and the results of those funds are contained in a separate report.
Note 2Significant Accounting Policies
The following is a summary of the significant accounting policies followed by the Fund.
Investments:
Fixed-income securities for which there are no publicly available market quotations are valued using matrices based on maturity, quality, yield and similar factors, which are compared periodically to multiple dealer bids and adjusted by the adviser under policies established by the Trustees.
The cost of securities is the same for accounting and Federal income tax purposes. Securities transactions are recorded on trade date. Realized gains and losses are recorded on the identified cost basis.
Income and Expenses:
Interest income is reduced by the amortization of bond premiums, on a constant yield-to-maturity basis from purchase date to maturity or call, as appropriate.
Interest income is increased by accretion only for bonds underwritten as original issue discounts. Market discounts are recorded as realized gains upon disposition.
Expenses incurred by the Trust on behalf of the Fund (e.g., professional fees) are allocated to the Fund and the other Funds of the Trust on the basis of relative daily average net assets. The Adviser has agreed to certain limits on expenses, as described below.
Income taxes:
The Fund has elected to be taxed as a regulated investment company under the Internal Revenue Code and distribute substantially all of its taxable net investment income and realized net gains on investments. Therefore, no provision for Federal income taxes is required. Further, the Fund intends to meet IRS requirements for tax-free income dividends, and requirements of the Idaho Department of Revenue for income dividends free of Idaho state income tax.
Dividends and distributions to shareowners:
Dividends and distributions to shareowners are recorded on the ex-dividend date. Dividends are paid daily and distributed on the last business day of each month. Shareowners electing to reinvest dividends and distributions purchase additional shares at the net asset value on the distribution date.
Note 3Transactions with Affiliated Persons
Under a contract approved by shareowners on October 12, 1990, Saturna Capital Corporation provides investment advisory services and certain other administrative and distribution services to conduct the Fund's business. For such services, the Fund pays an annual fee equal to .50% of average daily net assets. For the six months ended May 31, 1999, the Fund incurred advisory fee expenses of $15,944.
Saturna Capital has volunteered to reimburse the Fund to the extent that total expenses of the Fund, (excluding interest, brokerage commissions and taxes) exceeds .80% through March 31, 2000. Accordingly, for the six months ended May 31, 1999, Saturna Capital waived $395 of the advisory fee.
In accordance with the Fund's agreement with its custodian, National City Bank of Indiana, for the six months ended May 31, 1999, custodian fees incurred by the Fund, amounted to $1,041.
The Trust acts as a distributor of its own shares, except in those states in which Investors National Corporation (a subsidiary of Saturna Capital Corporation) is itself registered as a broker-dealer and acts as distributor without compensation. Saturna Capital Corporation acts as shareowner servicing agent for the Fund, for a monthly fee plus certain expenses. For the six months ended May 31, 1999, the Fund paid such a fee of $2,015.
One trustee is also a director and officer of Saturna Capital Corporation. The unaffiliated trustees receive a fee of $100 per meeting attended, and in the period ending May 31, 1999, such fees totalled $800.
Note 4Investments
At May 31, 1999, the net unrealized appreciation of investments for the Fund of $114,600 comprised gross unrealized gains of $158,795 and gross unrealized losses of ($44,195).
During the six months ended May 31, 1999, the Fund purchased $775,842 of securities and sold/matured $208,480 of securities.
Page 7
1-800/SATURNA
(800/728-8762)
This report is issued for the information of the shareoweners of the Fund. It is not authorized for distribution to prospective investors unless it is accompanied or preceded by an effective prospectus relating to the securities of the Fund. Idaho Tax-Exempt Fund is a series of Saturna Investment Trust
|
(graphic omitted)
A Portfolio of Saturna Investment Trust
SEMI-ANNUAL REPORT
May 31, 1999
|