INVESTMENT ADVISORY
                      and ADMINISTRATIVE SERVICES AGREEMENT
                                     for the
                          SEXTANT SHORT-TERM BOND FUND
                                     of the
                            SATURNA INVESTMENT TRUST

THIS  AGREEMENT,  executed  this ___th day of , 1995,  between  Saturna  Capital
Corporation,  a Washington  State  corporation  (the  "Adviser") and the Saturna
Investment Trust, a series open--end management  investment company organized as
a business trust under the laws of the State of Washington and presently  having
a  portfolio  named the Sextant  Short-Term  Bond Fund,  (the  "Fund") to be and
become  effective  as  provided  in Section 1,  Article V,  between  the parties
hereto,

                                WITNESSETH, THAT:

The parties hereto enter into the following Articles of Agreement:

ARTICLE I: INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES

Section  1.  Investment  Advisory  Services.  During  the  continuance  of  this
Agreement, the Adviser shall supervise the investment management of the cash and
securities of the Fund, and in that connection,  to the extent  required,  shall
furnish to the Fund advice and  recommendations  on  securities to be purchased,
held or sold and the portion of the assets to remain  uninvested,  all according
to the investment  objectives,  powers and restrictions  imposed by law or other
governing document or writing binding upon the Fund.  Section 2.  Administrative
Services.  During the  continuance  of this  Agreement:  (a) The  Adviser  shall
furnish  the  Fund  office  space,  office  facilities  and  equipment,  related
utilities,  telephone service, stationery and supplies,  typesetting,  personnel
(including executive officers) and clerical and bookkeeping services as required
to fulfill its  obligation  as Adviser for the Fund.  The Adviser  shall pay the
compensation of its executives and employees,  whether an officer or employee of
the Fund, for all services  rendered by them for the Fund as required to fulfill
its  obligation as Adviser,  and shall  furnish such office  space,  facilities,
supplies and services as agreed  above.  The Adviser shall also pay on behalf of
the Fund trade association membership and meeting expenses, and the preparation,
printing,  qualification  and offering  (but not  administration  on behalf of a
participant or participating entity) of any prototype retirement plan offered by
the Fund to shareholders on the  recommendation of the Adviser.  (b) The Adviser
shall act as fund accountant, and prepare daily reports of Fund net asset values
as well as all other financial  statements and reports.  With the consent of the
Trustees,  the Adviser at its expense may  delegate  fund  accounting  duties to
another qualified party. The Fund accountant shall furnish the Trustees,  at any
regularly  scheduled  meeting or at such times as the Trustees  may  request,  a
report on all
         matters  pertaining  to the services of the Adviser,  including but not
         limited  to, a list of the  securities  in the  Fund  and a  record  of
         brokerage commissions paid.

(c).     The  Adviser  shall  act as  transfer  agent,  registrar  and  dividend
         disbursing  agent for the Fund,  pursuant to a form of Transfer  Agency
         Agreement attached hereto as Exhibit A, and made a part hereof.

Section 3.  Affiliated  Broker.  Subject to review by the Trustees,  the Adviser
shall place all orders for the purchase and sale of securities of the Fund.  The
Adviser or a subsidiary  of the Adviser is permitted to act as a broker (but not
a dealer or underwriter) in securities traded by the Fund,  subject to review by
the Trustees and all pertinent regulations and limitations. No such orders shall
be placed in contravention of the Investment Company Act of 1940.

Section 4. Fund  Expenses.  The Fund shall pay or provide for the payment of its
expenses  not assumed by the Adviser as above  provided,  which  expenses  shall
include,   without   limitation,   taxes,   interest,   brokerage   commissions,
compensation and expenses of Trustees,  legal and auditing  expenses,  insurance
premiums,  custodian  fees, the expense of issuing Fund shares under the federal
securities  laws and the  regulatory  authorities of the various states in which
the Fund is  authorized  to offer its  shares,  and the  expense  of  preparing,
printing and mailing  financial  reports,  investment  newsletters,  notices and
prospectuses for its existing shareholders.

ARTICLE III:  FEES FOR SERVICES OF THE ADVISER

Section  1.  Investment  Advisory  and  Administrative  Services  Fee.  As  full
compensation  for all services  rendered and to be rendered and expenses assumed
by  the  Adviser  as  set  forth  in  Article  II   "Investment   Advisory   and
Administrative  Services"  hereof,  the Fund shall pay to the  Adviser a monthly
Investment  Advisory  and  Administrative  Services  Fee (the "Base Fee") at the
annual rate of 0.60% of average daily net assets of the Fund.  Average daily net
asset value in a period shall be  determined  by dividing  the  aggregate of the
Fund's net assets on each  calendar  day by the number of  calendar  days in the
period.

Section 2.  Performance  Adjustment.  The Base Fee shall be subject to a maximum
increase or decrease at the annual rate of 0.20% of the Fund's average daily net
assets,  according to the relative  total return  investment  performance of the
Fund  (the  "Performance  Adjustment").  The  Performance  Adjustment  shall  be
computed as follows:

                  a) Following the end of each month the net  investment  return
                  realized by shareowners in the Fund for the entire  just-ended
                  twelve  month  period  (that is, the change in Net Asset Value
                  per share adjusted for dividends and other  distributions,  or
                  "Total Return") of the Fund for the twelve month period ending
                  that month  ("Calculation  Year") shall be  calculated  to the
                  nearest  one  hundredth  of one  percent  as set  forth in the
                  Fund's Registration Statement on Form N-1A.

                  b) The Fund's Total Return for the  Calculation  Year shall be
                  compared to the average  total return of all  Corporate  "Bond
                  Funds-High Quality" mutual funds, as selected,  calculated and
                  reported by Morningstar Inc. (or, if this index is unavailable
                  or becomes  inappropriate  for this measurement for any reason
                  in the  opinion of the Fund's  Board,  then  another  index as
                  shall be chosen by the Fund's Board) (the "Benchmark").

                  c) If the Fund's Total Return outperforms or underperforms the
                  Benchmark's  Total Return (rounded to the nearest tenth of one
                  percent  [0.1%])  for the  Calculation  Year by 1% or more but
                  less than 2%,  then the Base Fee for the month just  completed
                  shall be  increased or  decreased  by 0.10%  (annual  rate) of
                  average   Calculation   Year   daily  net   assets,   and  the
                  performance-adjusted  total Fee for the month  shall be at the
                  annual rate of either 0.70% or 0.50% of average net assets.

d) If the Fund's Total Return outperforms or underperforms the Benchmark's Total
Return  (rounded to the nearest tenth of one percent [0.1%]) for the Calculation
Year by 2% or more,  then the Base Fee for the  month  just  completed  shall be
increased or decreased by 0.20% (annual rate) of average  Calculation Year daily
net assets, and the performance-adjusted total Fee for the month shall be at the
annual rate of either  0.80% or 0.40% of average net assets.  e) No  Performance
Adjustment shall be made until the Fund acquires twelve full months of operating
history.  The  Fund  shall  accrue  daily  to pay its  Investment  Advisory  and
Administrative
Services  Fee fee at the Base Fee  annual  rate of 0.60%.  The net Fee (Base Fee
plus or minus the  Performance  Adjustment)  due to the  Adviser  for a calendar
month  shall be paid  when  practicable  after  these  calculations.  Due to the
relatively small size of monthly-computed  Performance  Adjustments,  no accrual
shall be required.

Section  3.  Reimbursement  and  Waiver.  The  Adviser  may,  from time to time,
voluntarily  waive its fees or reimburse the Fund for expenses above a specified
percentage  of average daily net assets.  The Adviser  retains the ability to be
repaid by the Fund for voluntary  expense  reimbursements  if Fund expenses fall
below the limit before the end of the Fund's  fiscal year.  If any fee waiver or
reimbursement  is to be made,  it shall be paid  monthly and may vary by Fund of
the Trust.

Section 4.  Termination.  In the event of the  termination of this Agreement the
fee for the month in which  terminated  shall be that proportion of the rate for
the whole month as the number of calendar days during which this Agreement is in
effect during the month bears to the number of days in the whole month  computed
on the average daily net asset value of the portfolio during such period.

ARTICLE IV:  DISTRIBUTION

Section 1. The Fund. The Fund shall offer shares without commission  ("load") or
other sales expense. The Adviser's  subsidiary,  Investors National Corporation,
shall act as the Fund's distributor without compensation, and register where and
when  appropriate.  The Fund shall bear the expense of qualifying itself and any
necessary  personnel  to sell the  Fund.  As the  expense  to the Fund is deemed
warranted by the  Trustees,  the Adviser  shall cause the Fund to be  registered
under the various state "blue-sky" requirements.

Section 2. The Adviser.  The Adviser or any subsidiary of the Adviser may engage
in any lawful activities  designed to help Fund  distribution,  and pay for such
activities  out of any part of its  resources,  including  those fees  described
under  Article  III.  The  Adviser  shall  pay any  expenses  for  printing  and
distributing extra prospectuses used in connection with sales and for preparing,
printing and distributing  sales literature.  The Adviser shall pay the salaries
of  persons  used in the  distribution  of the Fund,  furnish  office  space and
facilities  for  such  distribution  activity,  and pay for all  other  expenses
associated with distribution of the Fund.

ARTICLE V: TERM AND TERMINATION OF AGREEMENT

Section  1. Term of  Agreement.  This  Agreement  shall  become  effective  when
approved by the holders of a majority of the outstanding shares of the Fund, and
shall  continue  in effect for a two year period  unless  sooner  terminated  as
hereinafter provided, and thereafter shall continue from year to year so long as
the terms of this Agreement and the renewal and continuance thereof are approved
at  least  annually  by  action  of  the  Trustees  or a  majority  vote  of the
outstanding  shares  the Fund,  but in  either  event it must be  approved  by a
majority of the  Trustees,  who are not  "interested  persons" as defined in the
Investment Company Act of 1940, casting their vote in person at a meeting called
for voting on such approval.

Section 2.  Termination  of Agreement.  This  Agreement may be terminated at any
time without  liability to either party by notice in writing  given by the party
desiring to terminate to the other not less than sixty (60) days before the date
specified, for termination. The Fund may take such action either by the Trustees
or by the  affirmative  vote of the  holders  of a majority  of the  outstanding
shares of the Fund.

Section 3. No Assignment. This Agreement may not be assigned by either party and
shall  terminate  automatically  upon  assignment  (as  defined  in the  federal
Investment Company Act of 1940).

Section 4. Amendment. This Agreement may be amended only with the approving vote
of the holders of a majority of the outstanding  shares of the Fund. The vote of
a majority of the outstanding  shares of the Fund means the vote, at any meeting
of the  Fund's  shareholders,  of (1)  67% or  more  of the  shares  present  or
represented  by proxy,  at such meeting,  if the holders of more than 50% of the
outstanding  shares are present or represented by proxy, or (2) more than 50% of
the outstanding shares, whichever is less.

Section 4. Use of Adviser's  Name. The Adviser grants the Fund a  non-exclusive,
terminable  license and  permission to use the name "Saturna" in its name during
the term of this Agreement.

ARTICLE VI.  GENERAL

This  instrument is executed by the Trustees and officers of Saturna  Investment
Trust in such  capacities for the Sextant  Short-Term Bond Fund portfolio of the
Trust.  By the  execution  hereof all parties  agree that,  except to the extent
limited by the provisions of the federal Investment Company Act of 1940, for the
payment of any claim or the  performance of any  obligations  hereunder,  resort
shall be had solely to the assets and  property of the Fund and no  shareholder,
Trustee, officer, employee or agent of the Fund or the Trust shall be personally
liable  therefore.  Reference  is made to Articles of Trust dated  February  20,
1987,  which have been filed with the  Washington  Secretary of State,  Olympia,
Washington. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on behalf of each of them by their duly authorized officers the date
and  year  first  above  written.   SATURNA  INVESTMENT  TRUST  SATURNA  CAPITAL
CORPORATION By ________________________ By ________________________  Nicholas F.
Kaiser, Pres. Nicholas Kaiser, Pres.
ATTEST:


    ------------------------                 -------------------------
         Secretary                                                     Secretary



<PAGE>



Transfer Agent Agreement

Page 1

                                    Exhibit A
                                       to
                               INVESTMENT ADVISORY
                      and ADMINISTRATIVE SERVICES AGREEMENT
                                     for the
                          SEXTANT SHORT-TERM BOND FUND
                                     of the
                            SATURNA INVESTMENT TRUST


                            TRANSFER AGENT AGREEMENT

THIS  AGREEMENT,  executed this ___th day of __________  1995,  between  Saturna
Capital  Corporation,  a Washington  State  corporation  (the "Adviser") and the
Saturna  Investment  Trust, a series  open--end  management  investment  company
organized  as a business  trust under the laws of the State of  Washington  (the
"Trust") and  presently  having a portfolio  named the Sextant  Short-Term  Bond
Fund,  (the  "Fund") is made  pursuant to and in  consideration  of that certain
Investment  Advisory and  Administrative  Services Agreement between the Adviser
and the Trust on behalf of the Fund, dated  ______________,  1995 (the "Advisory
Agreement").

WITNESSETH THAT:

WHEREAS, pursuant to the terms of the Advisory  Agreement the Adviser has agreed
     to act as Transfer,  Redemption and Dividend  Disbursing Agent for the Fund
     and also has agreed to act for the Fund in other  respects  as  hereinafter
     stated; and

WHEREAS, the Fund will appoint a bank, or other qualified entity,  acceptable to
     the Adviser as primary  Custodian of the securities,  cash and other assets
     of the Fund,  hereinafter  referred to as the Custodian  Bank, and may with
     the agreement of the Adviser appoint one or more subcustodians;

NOW, THEREFORE,  in consideration of the promises and mutual covenants contained
     herein, the parties hereto,  intending to be legally bound, do hereby agree
     as follows:

Section 1. The Fund  hereby  appoints  the Adviser as its  Transfer,  Registrar,
Redemption Agent and Dividend  Disbursing  Agent (the "Transfer  Agent") and the
Transfer Agent accepts such  appointments  and agrees to act in such  capacities
upon the terms set forth in this Agreement.

The  Transfer  Agent  agrees  to  comply  with all  relevant  provisions  of the
Investment  Company Act of 1940 (the "Act"),  the Internal  Revenue Code,  other
applicable laws and all applicable rules and regulations thereunder.

If the Fund is a series  company for  purposes of Rule 18f-2 under the Act,  the
term  "Fund"  as used in this  Agreement  shall be  deemed to refer to each such
series as a  separate  portfolio  unless  the  context  otherwise  requires.  In
performing its functions hereunder, the Transfer Agent shall in all cases comply
with the  procedures  and  conditions  set  forth  in the  Fund's  then  current
Prospectus and Statement of Additional  Information  ("SAI"), as provided to the
Transfer  Agent by the Fund.  To the extent  that the  Prospectus  and SAI cover
procedures and duties of the Transfer  Agent,  agreement as to such matters must
have  been  reached  between  the  Transfer  Agent  and the  Fund  prior  to the
effectiveness of the Prospectus.

Section 2. The Fund currently has no Share  Certificates  outstanding,  and does
not intend for the issue of Share  Certificates  in the future.  Should the Fund
wish to issue  Certificates in the future, it can do so only with the consent of
the  Transfer  Agent.   All  language  in  this  agreement   relating  to  Share
Certificates,  such as the following paragraph,  will be of no effect until such
time as it is mutually agreed that Share Certificates shall be issued.

The Fund shall furnish to the Transfer Agent a sufficient  supply of blank Share
Certificates  and from time to time will renew such  supply  upon the request of
the Transfer Agent. Such blank Share Certificates shall be signed manually or by
facsimile signatures of officers of the Fund authorized by law or the by-laws of
the Fund to sign Share Certificates and, if required, shall bear the Fund's seal
or facsimile thereof.

Section 3. The Transfer Agent shall make original issues of Shares in accordance
with  Sections  13 and 14 below and with the  Fund's  then  currently  effective
Prospectus  upon being  furnished  with (i) a certified  copy of a resolution of
Directors of the Fund  authorizing  such issue and (ii) necessary  funds for the
payment of any original  issue tax  applicable  to such  additional  Shares.  If
requested,  a  copy  of the  opinion  of  counsel  as to the  validity  of  such
additional  Shares  shall be  furnished  to the  Transfer  Agent upon the Fund's
filing of its Rule 24f-2 Notice under the Act with the  Securities  and Exchange
Commission.

Section  4.  Transfers  of  Shares  shall  be  registered  and,  subject  to the
provisions of Section 10, new Share  Certificates  issued by the Transfer  Agent
upon surrender of outstanding Share Certificates,  if any, (i) in form deemed by
the Transfer Agent to be properly endorsed for transfer, (ii) with all necessary
endorsers'  signatures  guaranteed  by a member  firm of a  national  securities
exchange,  the NASD,  or a commercial  bank,  except when the  requirement  of a
signature  guarantee  is waived  in  accordance  with the  Fund's  then  current
Prospectus or SAI or when  otherwise  authorized by the Fund pursuant to Written
Instructions  (as  defined  in  Section  34  below),  accompanied  by (iii) such
assurances as the Transfer Agent shall deem necessary or appropriate to evidence
the  genuineness  and  effectiveness  of each  necessary  endorsement,  and (iv)
satisfactory  evidence of compliance  with all  applicable  laws relating to the
payment or collection of taxes.  The Transfer Agent shall retain all shareholder
applications and shall compare the signature(s) on written  redemption  requests
with the signature on the  shareholder  applications  as may be necessary in the
opinion of the Transfer Agent,  provided that the Transfer Agent shall be liable
for any loss due to forgery or improper signature of any kind resulting from the
gross  negligence  of the  Transfer  Agent in  making  or  failing  to make such
comparison.  The Transfer  Agent shall take such  reasonable  measures as may be
agreed upon from time to time between the Fund and the Transfer  Agent to enable
the Fund to identify  proposed  transfers  which, if effected,  appear likely to
cause the Fund to fall within the  definitions of a personal  holding company as
defined in the Internal  Revenue Code and shall not make such  transfer  without
the prior written approval of the Fund and its counsel.

Section 5. When mail is used for  delivery of Share  Certificates  the  Transfer
Agent shall forward Share Certificates in  "non-negotiable"  form by first-class
mail, and Share  Certificates in "negotiable"  form by registered  mail,  return
receipt  requested,  all mail  deliveries  to be covered while in transit to the
addressee by insurance arranged for by the Transfer Agent.

Section 6. In  registering  transfers of Shares the Transfer Agent may rely upon
the  Uniform  Commercial  Code or any other  statutes  which in the  opinion  of
counsel  protect  the  Transfer  Agent  and the Fund in not  requiring  complete
documentation,  (subject to compliance  with  procedures set forth in the Fund's
then current  Prospectus and/or SAI), in registering  transfer with inquiry into
adverse claims,  in delaying  registration  for purposes of such inquiry,  or in
refusing  registration  where in its  judgment an adverse  claim  requires  such
refusal.

Section 7. The Transfer Agent may issue new Share Certificates in place of Share
Certificates  represented to have been lost, destroyed or stolen, upon receiving
indemnity  satisfactory  to the  Transfer  Agent  and the Fund and may issue new
Share  Certificates  in exchange  for, and upon  surrender of,  mutilated  Share
Certificates.

Section 8. In case any  officer of the Fund who shall have  signed  manually  or
whose facsimile  signature  shall have been affixed to blank Share  Certificates
shall  die,   resign  or  be  removed  prior  to  the  issuance  of  such  Share
Certificates,  the Transfer Agent may issue or register such Share  Certificates
as the Share Certificates of the Fund notwithstanding such death, resignation or
removal until  otherwise  directed by the Fund; and the Fund shall file promptly
with the  Transfer  Agent such  approval,  adoption  or  ratification  as may be
required by law.

Section 9. The  Transfer  Agent will  maintain  mutual fund  account  records in
which, among other details,  it will note the issuance,  transfer and redemption
of Shares,  whether  certificated or not. Whenever a Shareholder deposits Shares
represented by Share Certificates in an account, the Transfer Agent upon receipt
of the Share  Certificates  registered in the name of the Shareholder (or if not
so  registered,   in  proper  form  for  transfer),   shall  cancel  such  Share
Certificates and make  appropriate  entries in its stock transfer  records.  The
Transfer  Agent  will keep  account  records,  part of which  shall be the stock
transfer  records,  in which it will note the names and registered  addresses of
Shareholders  and the number of Shares and fractions  owned by them,  whether or
not Share Certificates are outstanding.

Section 10. The Transfer  Agent shall issue Share  Certificates  for Shares only
upon receipt of a written  request from a Shareholder.  In all other cases,  the
Transfer  Agent shall dispense with the issuance and  countersignature  of Share
Certificates  whenever  Shares are  purchased.  The Transfer Agent shall process
purchase and redemption transactions by making appropriate entires in the Fund's
account records.

Section 11. The Transfer  Agent shall,  in addition to the duties and  functions
above-mentioned,  perform the usual  duties and  functions  of a stock  Transfer
Agent for a corporation.  It shall  countersign for issuance Share  Certificates
representing   original  issue  treasury  Shares  as  directed  by  the  Written
Instructions of the Fund and shall transfer Share Certificates registered in the
name of Shareholders  from one  Shareholder to another in the usual manner.  The
Transfer Agent may rely conclusively and act without further  investigation upon
any list, instruction, certification,  authorization, Share Certificate or other
instrument  or paper  reasonably  believed by it in good faith to be genuine and
unaltered,  and  to  have  been  signed,  countersigned,  or  executed  by  duly
authorized  person or persons,  or upon the  instructions of any duly authorized
officer  of the  Fund,  or upon the  advice of  counsel  for the Fund or for the
Transfer Agent. The Transfer Agent may record any transfer of Share Certificates
which is reasonably believed by it in good faith to have been duly authorized or
may refuse to record any  transfer  of Share  Certificates  if in good faith the
Transfer  Agent deems such refusal  necessary to avoid any liability on the part
of either the Fund or the Transfer Agent;  provided,  however, that the Transfer
Agent shall promptly  notify the Fund of any such refusal to record any transfer
and shall act in accordance  with the Fund's Written  Instructions,  if any. The
Fund agrees to indemnify and hold  harmless the Transfer  Agent from and against
any and all losses, costs, claims, and liability which it may suffer or incur by
reason of so relying or acting or refusing to act.

Section  12. In case of any  request or demand for the  inspection  of the share
records of the Fund, the Transfer Agent shall endeavor to notify the Fund and to
secure instructions as to permitting or refusing such inspection.  However,  the
Transfer  Agent may  (after  giving  written  notice to the Fund)  exhibit  such
records to any person in any case where it is advised by its counsel that it may
be held liable for failure so to do, unless  indemnified  against such liability
by the Fund.

                               ISSUANCE OF SHARES

Section 13. For the  purposes of this  Section,  the Fund hereby  instructs  the
Transfer Agent to consider  Shareholder  payments as available for investment in
accordance with the policies and procedures set forth in the Fund's then current
Prospectus and SAI. Immediately after the time or times and on each day on which
the Fund's then  Current  Prospectus  or SAI states that its net asset value per
share shall be determined,  the Transfer Agent shall obtain from the Fund or its
designated  agent a quotation of the net asset value per share  determined as of
such time on such day. The Transfer  Agent reserves the right to charge the Fund
its reasonable costs of making corrections to shareholder records if it is later
determined that the Fund supplied an inaccurate net asset value.

The Transfer  Agent shall,  on the same  business day on which any order for the
purchase of Shares is received and  utilizing the net asset value per share next
determined after the receipt of such order,  determine the amount to be invested
and the number of Shares and fractional Shares (rounded to three decimal places)
to  be  purchased.   The  Transfer  Agent  shall  thereupon  as  agent  for  the
Shareholders  place a  purchase  order  with the Fund for the  proper  number of
Shares and fractional Shares to be purchased and confirm such number to the Fund
in writing.  The Transfer Agent shall total the amount  available for investment
in Shares at the net asset value  determined by the Fund or its designated agent
at each Fund pricing time.

The Transfer  Agent shall pay over to the Custodian  Bank the net asset value of
Shares  and  fractional  Shares  purchased   immediately  upon  receipt  of  the
consideration  therefor.  In the  event  that any  check or other  order for the
payment of money is returned  unpaid for any reason,  the  Transfer  Agent shall
give prompt  notification  to the Fund of the non-payment of said check and take
such action as the Fund may authorize by Written Instructions.

Any profit on the liquidation of unpaid shares accrues to the Fund. In the event
of loss upon the liquidation of unpaid shares the Transfer Agent will charge the
purchaser's  account for the amount of such loss. If the balance in such account
is insufficient to cover the loss the Transfer Agent will assist the Fund in the
Fund's efforts to recover any such losses from the purchaser.

Section 14. The  Transfer  Agent,  in making the  calculations  provided  for in
Section 13, shall rely on its record of available  investment  funds. The proper
number of Shares and  fractional  Shares shall then be issued daily and credited
by the Transfer Agent to the shareholder accounts. The Transfer Agent shall mail
to each  Shareholder a confirmation  of each purchase (if provided for under the
provisions  of the  Shareholder's  account) no later than the next business day,
with copies to interested parties if requested.  Such confirmations  shall among
other details show the prior Share balance,  the new Share  balance,  the dollar
value,  the Shares for which Stock  Certificates  are  outstanding (if any), the
amount invested and the price paid for the newly-purchased Shares.

The Transfer Agent shall provide the Fund with the total number of shares issued
by the  Fund  each  day.  In the  case  any  issue of  shares  would  result  in
overissuance, the Transfer Agent shall notify the Fund.

                                   REDEMPTIONS

Section 15. The Transfer Agent shall process all requests from  Shareholders  to
redeem Shares and determine the number of Shares required to be redeemed to make
monthly  payments,  automatic  payments or the like and advise the Fund,  on the
same business day that the request for  redemption  was  received,  of the total
number of Shares and fractional  Shares  (rounded to three decimal places) to be
redeemed. Notwithstanding the foregoing, if a redemption request is for a dollar
value of Shares in excess of the dollar value of Shares in the specified account
or is not in accordance with the requirements of the Prospectus  and/or SAI, the
Transfer  Agent shall not effect such  redemption in whole or in part, and shall
immediately  advise both the Fund and the Shareholder of such  discrepancy.  The
Fund or its  designated  agent  shall  then  quote  to the  Transfer  Agent  the
applicable net asset value;  whereupon the Transfer Agent shall furnish the Fund
with an appropriate  confirmation  of the redemption and process the redemption,
at the net asset value per share next  computed  after  receipt of the order for
redemption, by filing with the Custodian an appropriate statement and making the
proper  distribution  and  application of the redemption  proceeds in accordance
with  the  Fund's   Prospectus  or  SAI.  The  stock  registry  books  recording
outstanding  Shares  and the  individual  account  of the  Shareholder  shall be
properly  debited.  If provided for under the  provisions  of the  shareholder's
account,  the Transfer Agent shall mail to each  Shareholder a  confirmation  of
each  redemption  no later than the next business day, with copies to interested
persons if requested. Such confirmation shall among other details show the prior
Share balance,  the new Share balance and total dollar value thereof, the Shares
for which stock  certificates  are outstanding (if any), the amount redeemed and
the price received for the redeemed Shares.

Section 16. The proceeds of redemption  shall be remitted by the Transfer Agent,
in each case by draft or other  instrument  drawn against funds held by the Fund
in the Custodian  Bank, in accordance  with the Fund's then currently  effective
Prospectus or SAI as follows:

     a. By check  drawn to the  order of and  mailed to the  Shareholder  at the
     address  of  record  not  later  than the  third  business  day  after  the
     redemption request is received.

     b. By wire to a designated bank or broker upon telephone  request,  without
     signature  guarantee,  if such redemption procedure has been elected by the
     Shareholder.

c. In accordance with the order of the Shareholder in the case of redemptions by
check or use of a debit card. d. To a person other than the Shareholder or to an
address other than the
     Shareholder's  registered  address  only if  instructions  are  received in
     writing with signature guaranteed.  Planholders transfering to another Plan
     custodian do not require  written  signature  guarantees but do require the
     written acceptance of the new custodian.

e. By other  procedures  commonly  followed by mutual funds and mutually  agreed
upon by the Fund and the Transfer  Agent.  Any change in the designated  bank or
brokerage account or registered address
will  be  accepted  by the  Transfer  Agent  only  if  made  in  writing  by the
Shareholder,  with signature guaranteed,  unless a different procedure is agreed
to in writing by the Fund and the Transfer Agent.

If required by the Fund's then current  Prospectus or SAI, the request and stock
certificates, if any, for Shares being redeemed, must have the owner's signature
guaranteed by a domestic  commercial bank or trust company or a member firm of a
national  securities  exchange or the NASD. If Share  Certificates have not been
issued to the redeeming  Shareholder,  the signature of the  Shareholder  on the
redemption  request must be similarly  guaranteed.  If the Fund  authorizes  the
Transfer  Agent by Written  Instructions  to waive the  signature  guarantee  in
certain  instances,  the Fund hereby provides the Transfer Agent, its successors
and assigns, the same protections the Transfer Agent would normally receive from
a signature guarantee requirement.

The Transfer  Agent shall retain all cancelled  certificates  for  redemption or
transfer  for a period of three  years,  during  which  time it shall be able to
produce said certificates upon appropriate notice from the Fund.

For the  purposes of  redemption  of Shares  which have been  purchased by check
within 15 business days of a receipt of the redemption  request for such shares,
the Fund shall  provide the  Transfer  Agent,  from time to time,  with  Written
Instructions  concerning the time within which such requests may be honored. The
Transfer Agent has no responsibility to determine if any investment payment will
be reversed for any reason and is not  responsible in any way for the failure of
any investment to be collected.

The  authority  of the  Transfer  Agent to perform  its  responsibilities  under
Section  15 and 16 shall be  suspended  upon the  Transfer  Agent's  receipt  of
notification  of the  suspension  of the  determination  of the Fund's net asset
value.

                                    DIVIDENDS

Section  17.  Upon the  declaration  of each  dividend  and each  capital  gains
distribution  by the Board of Directors  of the Fund,  the Fund shall notify the
Transfer  Agent by Written  Instructions  of the date of such  declaration,  the
amount payable per share,  the sources from which such dividend or  distribution
is made,  and,  unless  such  dividend  is a regular  daily or monthly  dividend
payable by a money  market or other fund,  the record date for  determining  the
Shareholders  entitled to payment.  The ex-date and payment date shall always be
the next  determination  of net asset value after the record date.  The Transfer
Agent  shall  withhold  such  sums  as  may be  required  to be  withheld  under
applicable income tax laws, rules and regulations.

Section 18. Upon the payment date of a dividend or distribution  declared by the
Fund's Board of Directors, the Fund will cause the Custodian Bank to transfer to
the disbursement account maintained by the Custodian in the name of the Fund the
total  amount  of such  dividends  or  distributions  payable  in cash to  those
Shareholders  electing to receive such  dividends or  distributions  in cash. On
payment date, the Transfer Agent shall prepare a check in the appropriate amount
and mail it not later than the third business day after the payment date to such
Shareholder at his address of record or to such other address as the Shareholder
may have designated.

With  regard  to  Shareholders   not  electing  to  receive  such  dividends  or
distributions  in cash,  the  Transfer  Agent will  automatically  reinvest  all
dividends and other such  distributions  in  additional  shares at the net asset
value  per  share on  payment  date.  When  provided  by the  provisions  of the
Shareholder's account, the Transfer Agent will promptly mail to each shareholder
at his  address of record or such  other  address  as the  Shareholder  may have
designated a statement showing the number of full and fractional shares (rounded
to three decimal  places)  currently  owned by the Shareholder and the net asset
value of the shares so credited to the Shareholder's account.

The Transfer  Agent's  dividend  statement meets the requirements of the Act and
Rule  l9a-1  thereunder  for  notification  as  to  the  source(s)  of  dividend
payment(s).  Where further  notification detail is required,  the Transfer Agent
shall prepare and distribute the information necessary as directed by the Fund.

                               GENERAL PROVISIONS

Section 19. The Transfer Agent shall provide to the Fund's investors equity fund
account  confirmations with each transaction,  money fund account  confirmations
with each  transaction or monthly (as desired by the investor),  investor choice
of  monthly  transfer  agency  consolidated   statements  or  monthly  brokerage
consolidated statements,  as well as all services available now or in the future
to the  shareowners of mutual funds serviced by the Transfer  Agent, on the same
terms and  conditions.  The Transfer  Agent shall provide  account  confirmation
statements  as at  December  31 of each year  which  include  a  listing  of all
transactions in the account during the calendar year then ended, plus income tax
reporting information.

The  Transfer  Agent  will not use its  position  to solicit  business  from the
shareholders of the Fund.

Section 20. The Transfer  Agent shall report daily the sales and  redemptions in
each state in a manner suitable for state "blue-sky"  reporting by the Fund. The
Transfer Agent has no further  responsibility  as to  controlling  sales of Fund
Shares or maintaining the various registrations  required under state "blue sky"
laws and  regulations.  If the Fund  notifies the Transfer  Agent,  the Transfer
Agent  will  stop  Shares  from  being  sold  in all  states  where  the  Fund's
registration  is  not  current.  Maintaining  current  registration  information
on-line is the responsibility of the Fund.

Section 21 The Transfer Agent shall  maintain  records (which may be part of the
stock transfer records) in connection with the issuance and redemption of Shares
and the administration of the Plans and dividend reinvestments, in which will be
noted the  transactions  effected for each  Shareholder and the number of Shares
and fractional  Shares (rounded to three decimal places) owned by each for which
no Share  Certificates  are  outstanding.  The  Transfer  Agent shall create and
maintain all  necessary  records in  accordance  with good  custodial  practice,
including,  but not limited, to records required by Section 31(a) of the Act and
Section 17(A) of the  Securities  and Exchange Act of 1934, as amended,  and the
rules and regulations promulgated thereunder.  The Transfer Agent agrees to make
available  upon  request and to preserve for the periods  prescribed  in Section
31(a) under the Act and Section  17(A) of the  Securities  and  Exchange  Act of
1934, as amended, and the rules and regulations thereunder, any records relating
to services  provided  under this Agreement or maintained by it on behalf of the
Fund. All such records shall be the property of the Fund.

The  Transfer  Agent  shall  also  maintain  the  following   records  for  each
Shareholder's  account:  name, address, and tax identification number; number of
Shares held and specific form of holding, including numbers and denominations of
certificates,  if any;  historical  information  regarding  the  account of each
Shareholder, including dividends paid, distributions made and date and price for
all  transactions  in a  Shareholder's  account;  any stop or restraining  order
placed  against  a  Shareholder's  account;  any  dividend  reinvestment  order,
dividend   address  and   correspondence   relating  to  the  maintenance  of  a
Shareholder's  account;  all  tax  and  withholding  information  relating  to a
Shareholder's  account;  information  with  respect  to  withholding  on foreign
accounts.

The Transfer  Agent shall maintain  records for all accounts  opened by entities
assigned  an  institution  number  ("institution")  so that where  required  the
aggregate  average  daily  value  of all  of an  institution's  accounts  can be
determined  and a  record  of such  values  maintained,  and so  that  duplicate
statements for the accounts can be prepared and sent to each institution.

The Transfer  Agent  represents  and warrants  that the various  procedures  and
systems  which it has  implemented  with  regard to  safeguarding  from loss and
damage  attributable  to fire,  theft,  or any other  cause of the Fund's  blank
checks,  blank  share  certificates,  records  and other  data and the  Transfer
Agent's records,  data,  equipment,  facilities,  and other property used in the
performance of its obligations hereunder are adequate and that it will make such
changes therein from time to time as are required for the secure  performance of
its obligations hereunder.

Section 22 The Transfer  Agent shall  maintain  such records as shall enable the
Fund to fulfil in a timely fashion the filing  requirements  of Form N-SAR or of
any successor  monthly,  quarterly or annual report required by the Act or rules
and  regulations  thereunder to be filed by the Fund.  All such records shall be
the property of the Fund.

Section 23 The Transfer Agent shall cooperate with the Fund's independent public
accountants  and shall  take all  reasonable  action in the  performance  of its
obligations  under this  Agreement to assure that the necessary  information  is
made  available  to  such  accountants  for the  expression  of  their  opinion,
including  but not  limited to the  opinion  included  in the  Fund's  annual or
semi-annual reports on Form N-SAR, or of any successor annual report required by
the Act or rules thereunder to be filed by the Fund.

Section 24. In addition to the services as Transfer Agent and  Administrator  as
above set forth,  the Transfer Agent will perform other services for the Fund as
agreed from time to time,  including but not limited to,  preparation  of filing
with the Internal  Revenue Service and mailing to Shareholders  such Federal Tax
Information  Forms as are  required  to be so  prepared,  filed  and  mailed  by
applicable laws,  rules and  regulations,  mailing periodic reports of the Fund,
preparation of Shareholder  lists as necessary,  and mailing  initial notices of
Shareholders' meetings, proxies and proxy statements.

The  Transfer  Agent  shall  answer  telephone  calls  and  correspondence  from
Shareholders relating to their share accounts.  The Transfer Agent shall respond
to all  inquiries  from  Shareholders  relating to the  administration  of their
accounts  within one (l)  business  day with  respect to  answers  delivered  by
telephone and within three (3) business  days with respect to answers  delivered
in writing.  Copies of all correspondence from Shareholders involving complaints
about the management of the Fund, the services  provided by or for the Fund, the
Transfer Agent or others, or concerning complaints relating to the Fund shall be
sent  immediately to the Fund.  Summaries of any similar  matters  conveyed by a
Shareholder by telephone shall be prepared by the Transfer Agent and sent to the
Fund within three (3) business days.

Telephone  calls and  correspondence  on other  matters  will be referred to the
Fund.

The Transfer Agent shall keep records of Shareholder substantive telephone calls
and correspondence and replies thereto, and of the lapse of time between receipt
of such  substantive  telephone  calls  and  correspondence  and the  making  of
replies.

Section 25. Nothing  contained in this Agreement is intended to or shall require
the Transfer Agent in any capacity  hereunder to perform any functions or duties
on any day identified in the Prospectus  and/or SAI on which the Fund is closed.
Functions  or duties  normally  scheduled  to be performed on such days shall be
performed  on, and as of, the next  business day on which the Transfer  Agent is
open, except when the Transfer Agent is closed to observe a legal emergency when
the Fund is open and the Fund has  received  purchases or  redemption  requests,
such purchases and redemptions shall be priced and executed "as of" such date on
the business day next following such day.

Section 26. Pursuant to the terms of the Advisory Agreement,  the Transfer Agent
shall receive no additional  compensation for its services hereunder;  provided,
however,  that the Fund shall  reimburse the Transfer Agent for expenses such as
costs  of  forms,  statements,  envelopes,  postage,  shipping,  telephone,  and
statement microfiche copies. Telephone costs will be passed to the Fund at cost.
All such payments and reimbursements shall be charged to and paid by the Fund on
a monthly basis. It is understood that the Fund may, in the future, undertake to
perform  certain of the  services  herein  contemplated  to be  performed by the
Transfer  Agent,  such as  maintaining  the  facility for  Shareholders  to make
telephone purchases, redemptions and transfers of Shares. To the extent, if any,
the Fund  undertakes  such duties,  the Transfer Agent shall be relieved of such
obligation.

Section  27.  The  Transfer  Agent in acting  for  Planholders,  or in any other
capacity set forth in this  Agreement,  shall not be  personally  liable for any
taxes,  assessments,  or governmental charges which may be levied or assessed on
any  basis  whatsoever  in  connection  with the  administration  of the  Plans,
excepting  only for taxes  assessed  against the Transfer Agent in its corporate
capacity arising out of its compensation hereunder.

Section 28.  Neither the Transfer  Agent,  nor any of its  directors,  officers,
stockholders,  agents or employees  shall have any  liability  hereunder for any
error of  judgment,  mistake  of law or any  loss  arising  out of any  error of
judgment, mistake of law or any act or omission in the performance of its duties
hereunder,  except for those  resulting from willful  misfeasance,  bad faith or
gross  negligence on the part of the Transfer  Agent in the  performance  of its
duties or from  reckless  disregard  of its  duties  hereunder.  The Fund  shall
indemnify  the Transfer  Agent and hold it harmless from any and against any and
all actions, suits and claims, whether groundless or otherwise, arising directly
or indirectly out of or in connection with its performance  under this Agreement
including but not limited to its performance as Transfer Agent and Administrator
of Plans and from and  against  any and all  losses,  damages,  costs,  charges,
counsel fees, payments,  expenses and liabilities incurred by the Transfer Agent
in connection with any such action,  suit, or claim, except such as shall result
from its own grossly  negligent act,  omission or willful  misconduct or that of
its officers,  agents or employees.  The Fund shall not be required to indemnify
the Transfer Agent against any expenses or liabilities  arising out of a default
judgment,  a  confession  of judgment or a  settlement  entered into without the
prior  written  consent of the Fund.  The Transfer  Agent shall not be under any
obligation to prosecute or to defend any action, suit or claim arising out of or
in connection  with its  performance  under this Agreement as Transfer Agent and
Administrator of Plans, which, in the opinion of its counsel,  may involve it in
expense  or  liability.  At its  option  the Fund may and  upon  request  of the
Transfer Agent the Fund shall assume the entire defense of any action,  suit, or
claim subject to the foregoing indemnity. The Transfer Agent shall give the Fund
notice, and reasonable  opportunity to defend, any such action,  suit, or claim,
in the name of the Fund or the  Transfer  Agent or both.  In the  event the Fund
assumes the defense,  the Transfer Agent shall be responsible  for its own legal
fees and expenses from the date the Fund so assumes the defense, except for such
fees and expenses incurred at the request of the Fund. The Fund and the Transfer
Agent shall cooperate fully in the defense of any action, suit or claim.

The Transfer Agent at its expense will make  corrections  and adjustments as may
be required,  where the  Transfer  Agent,  its  officers,  agents,  employees or
delegates are the cause of any error made in rendering the services described in
this agreement, without limitation.

Without limitation of the foregoing:

     (a) The  Transfer  Agent  may rely upon and shall not be liable to the Fund
     for the advice of the Fund,  counsel  (who may be  counsel  for the Fund or
     counsel for the Transfer Agent) and upon statements of accountants, brokers
     and other persons  believed by it in good faith to be expert in the matters
     about which they are consulted and for any actions taken in good faith upon
     such statements.

     (b) The Transfer Agent shall not be liable for any action  reasonably taken
     in good faith reliance upon any Written  Instructions  or certified copy of
     any  resolution of the Board of Directors of the Fund,  provided,  however,
     that  upon  receipt  of  a  Written  Instruction   countermanding  a  prior
     Instruction  which has been  fully  executed  by the  Transfer  Agent,  the
     Transfer  Agent shall  attempt to honor to the extent then  possible,  such
     later  Instructions  and rely upon the  genuineness of any such document or
     correspondence  reasonably  believed  in good  faith to have  been  validly
     executed.

     (c) The  Transfer  Agent may rely and shall be protected in acting upon any
     signature,  instruction,  request,  letter  of  transmittal,   certificate,
     opinion of counsel, statement,  instrument, report, notice, consent, order,
     or other paper or document  reasonably  believed by it to be genuine and to
     have been signed or  presented  by the  Shareholder,  Fund or other  proper
     party or parties.

Section  29. The Fund shall  promptly  cause to be turned  over to the  Transfer
Agent (i) an  accurate  list of  Shareholders  of the Fund  showing  the  proper
registered  address  and  number of Shares  owned and  whether  such  shares are
represented by  outstanding  Share  Certificates  or by  non-certificated  share
accounts,  (ii) all records relating to Plans,  including original  applications
signed  by the  Planholders  and  original  plan  accounts  recording  payments,
contributions,  deductions,  reinvestments,  withdrawals and  liquidations,  and
(iii)  all  shareholder  records,   files,  and  other  materials  necessary  or
appropriate  for proper  performance  of the  functions  assumed by the Transfer
Agent under this Agreement (hereinafter called "Materials").  The Fund agrees to
indemnify and hold the Transfer Agent,  its successors and assigns,  harmless of
and from any and all expenses,  damages,  claims, suits,  liabilities,  actions,
demand and losses of third  parties  arising  out of or in  connection  with any
error, omission, inaccuracy or other deficiency of such Materials, or out of the
failure of the Fund to provide any portion of such  Materials  or to provide any
information needed by the Transfer Agent to perform knowledgeably its functions.
The Fund agrees to pay  reasonable  compensation  to the Transfer Agent to cover
the Transfer Agent's expenses in correcting any such error, omission, inaccuracy
or other deficiency of the Materials.

Section  30. The  Transfer  Agent shall at all times act in good faith and shall
use its best efforts to insure the accuracy of all services performed under this
Agreement and shall be liable for and shall indemnify and hold the Fund harmless
from and against any and all actions,  suits and claims,  whether  groundless or
otherwise,  and from and against any and all losses,  damages,  costs,  charges,
counsel  fees,  payments,  expenses  and  liabilities  incurred by the Fund,  in
connection  with any such action,  suit or claim arising  directly or indirectly
out of or in  connection  with  errors  caused  by the  Transfer  Agent's  gross
negligence,  bad faith or willful misconduct or that of its agents or employees.
The  Transfer  Agent  shall not be required to  indemnify  the Fund  against any
expenses or  liabilities  arising out of a default  judgment,  a  confession  of
judgment or a settlement  entered into without the prior written  consent of the
Transfer  Agent.  The Fund shall not be under any  obligation  to  prosecute  or
defend any action,  suit or claim arising  directly or  indirectly  out of or in
connection  with errors  caused by the Transfer  Agent's gross  negligence,  bad
faith or willful  misconduct or that of its  employees or agents  which,  in the
opinion of its  counsel,  may involve it in expense or  liability.  The Transfer
Agent may at its option and, upon request of the Fund the Transfer  Agent shall,
assume the entire defense of any action,  suit or claim subject to the foregoing
indemnity.  The Fund shall give the  Transfer  Agent  notice of, and  reasonable
opportunity to defend, any such action, suit or claim in the name of the Fund or
the Transfer Agent or both. In the event the Transfer Agent assumes the defense,
the Fund shall be responsible  for its own legal fees and expenses from the date
the Fund so assumes the  defense,  except for such fees and  expenses  which are
incurred at the request of the Transfer  Agent.  The Transfer Agent and the Fund
agree to cooperate fully in the defense of any such action, suit or claim.

Section 31 The Transfer Agent acknowledges and agrees that all books and records
maintained for the Fund in any capacity under this Agreement are the property of
the Fund and may be inspected by the Fund at any reasonable time.

The Transfer Agent agrees to regard and preserve as confidential all records and
other  information  relative to the Fund, and will not without written authority
of the Fund disclose to others, during the term of this Agreement or thereafter,
any such records or other information.

In the event of termination of this Agreement for any reason, the Transfer Agent
agrees to provide the Fund with complete and accurate  records and to assist the
Fund in the orderly  transfer of accounts  and  records.  Without  limiting  the
generality of the foregoing,  the Transfer Agent agrees upon termination of this
Agreement:

     (a) to deliver to the Fund computer tapes  containing  the Fund's  accounts
     and records in machine  readable form together with such record layouts and
     additional  information  as may be  necessary to enable the Fund to utilize
     the information therein;

(b) to  cooperate  with  the  Fund  and  any  successor  transfer  agent  in the
interpretation of the Fund's accounts and records; and

     (c) to reimburse  the Fund its  reasonable  costs arising out of any error,
     omission, inaccuracy or other deficiency in the Fund's accounts and records
     which  occurred  during  the term of this  Agreement  which  arise from the
     negligence  or other error of the Transfer  Agent as long as claim for such
     reimbursement is made within 90 days of termination.

Section 32. The Transfer Agent shall maintain a standard  Stockbroker's  Blanket
bond on all its employees,  providing fidelity insurance as required by rules of
the National  Association  of Securities  Dealers.  All employees at the time of
employment will have  fingerprints  made and checked by the FBI under procedures
established as standard for stockbrokerage employees by the NASD, as well as for
transfer agency employees by the SEC.

Section 33. The practices and  procedures of the Transfer Agent and the Fund set
forth in the Agreement, or any other terms or conditions of this Agreement,  may
be  altered  or  modified  from  time to time as may be  mutually  agreed by the
parties to this  Agreement.  In special  cases the  parties  hereto may adopt in
writing  such   procedures  as  may  be  appropriate  or  practical   under  the
circumstances, and the Transfer Agent may conclusively rely on the determination
of the Fund that any special  procedure which has been approved by the Fund does
not conflict with or violate any requirements of its Articles of  Incorporation,
By-Laws or Prospectus,  or any rule, regulation or requirement of any regulatory
body.

Section 34. The Fund shall file with the Transfer Agent a certified copy of each
resolution  of its Board of  Directors  authorizing  the  execution  of  Written
Instructions  or the  transmittal  of  Oral  Instructions,  as  provided  in the
Custodian Agreement.

The following  additional terms, for purposes of this Agreement or any amendment
or  supplement  thereto,  shall have the meanings  herein  specified  unless the
context otherwise requires:

Plan:The term Plan shall  include  such  investment  plan,  dividends or capital
     gains  reinvestment  plans,  systematic  withdrawal plans or other types of
     plans set forth in the then  currently  effective  prospectus  of the Fund,
     including any qualified retirement plan which is a Shareholder of the Fund,
     in form acceptable to the Transfer  Agent,  which the Fund may from time to
     time  adopt and make  available  to its  Shareholders,  including  plans or
     accounts by individuals or corporations.  All Planholders are Shareholders,
     who use a specific plan or service not used by all Shareholders as a whole.

Administrator:  The term Administrator of a Plan means the Transfer Agent solely
     in its capacity as agent for the performance of those retirement plan tasks
     which can be  performed  on a group or mass basis by the  Transfer  Agent's
     systems.  It does not include certain corporate  retirement plan tasks that
     are often performed on an individual  basis, such as preparing Summary Plan
     Descriptions and/or preparing IRS Form 5500.

Section 35. This  Agreement  may be amended from time to time by a  supplemental
agreement executed by the Fund and the Transfer Agent.

Section  36 Either  the Fund or the  Transfer  Agent  may give 60 days'  written
notice to the other of the  termination of this Agreement,  such  termination to
take  effect  at the  time  specified  in the  notice;  provided,  however,  the
obligations set forth in Sections 28, 30, 31, 38 and 39 and, for the fiscal year
of the Fund in which termination occurs,  Sections 22 and 23, shall survive such
termination, unless satisfied.

Section 37. Any notice or other  communication  required by or  permitted  to be
given in  connection  with  this  Agreement  shall be in  writing,  and shall be
delivered  in  person  or sent by first  class  mail,  postage  prepaid,  to the
respective parties as follows:

If to the Fund:
         Sextant Short-Term Bond Fund
         Attn: Secretary
         1300 N. State Streeet
         Bellingham WA 98225

If to the Transfer Agent:
         Saturna Capital Corporation
         PO Box 2838
         Bellingham, Washington 98227-2838

Section 38 The  Transfer  Agent and the Fund each  represent  and warrant to the
other as to itself that all actions  required by their  respective  directors or
shareholders  has been taken to  authorize  the  execution  and delivery of this
Agreement and the  consummation of the  transactions  contemplated  hereby;  the
execution and delivery of this Agreement and  consummation  of the  transactions
contemplated  hereby do not contravene any provision of their respective charter
or by-laws or of any laws,  regulations  or orders of any  government  or agency
thereof to which it is subject; do not constitute the violation or breach of any
agreement or  understanding  to which it is a party or by which it is bound; and
upon its execution and delivery, this Agreement shall be binding and enforceable
against it in accordance with its terms.

Section 39. The Transfer Agent may from time to time,  with the written  consent
of the Fund,  delegate some or all of its duties hereunder to others,  who shall
perform such functions as the agent of the Transfer Agent. To the extent of such
delegation,  the term "the Transfer  Agent" in this Agreement shall be deemed to
refer to both the Transfer  Agent and to its  designee or to either of them,  as
the context may indicate. In each provision of this Agreement fixing or limiting
the  liabilities or the  delegations of the Transfer Agent, or providing for the
liability  indemnification  or protection of the Transfer  Agent,  the term "the
Transfer Agent" shall include the Transfer Agent's designee.  The Transfer Agent
shall not be relieved of any  liabilities  or obligation  under the Agreement in
connection with such delegation of duties, shall be responsible to supervise and
assure that any such designee  properly performs the duties delegated to it, and
shall be responsible  for the performance of the designee as though the Transfer
Agent had, itself, performed the duties so delegated.

Section 40. This Agreement may be executed in two or more counterparts,  each of
which when so executed shall be deemed to be an original,  but such counterparts
shall together constitute but one and the same instrument.

Section 41. This Agreement shall extend to and shall be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by the Fund without the written consent of the
Transfer Agent or by the Transfer Agent without the written consent of the Fund,
authorized or approved by a resolution of its Board of Directors.

Section 42 This  Agreement  constitutes  the full and complete  agreement of the
parties  hereto with respect to the subject  matter  hereof and  supersedes  all
prior agreements or understandings between the parties.

Section 43 Whenever  pronouns are used herein,  they shall be interpreted in the
neuter, masculine, feminine, singular or plural as the context may require.

Section 44. Except where specific time limits are herein  provided,  no delay on
the part of any party hereto in exercising  any power or right  hereunder  shall
operate as a waiver  thereof;  nor shall any single or partial  exercise  of any
power or right  hereunder  preclude  other or  further  exercise  thereof or the
exercise of any other power or right. No waiver shall be enforceable against any
party hereto unless in writing,  signed by the party against whom such waiver is
claimed, and shall be limited solely to the one event.

Section 45. This  Agreement  shall be governed by, and  construed in  accordance
with, the internal laws of the State of Washington, without giving effect to the
principles of conflicts of law.

IN WITNESS  WHEREOF,  the parties hereto have caused this Agreement to be signed
by their respective duly authorized  officers and their corporate seals hereunto
duly affixed and attested, as of the day and year first above written.

SATURNA INVESTMENT TRUST


  By_______________________                 Attest______________________


SATURNA CAPITAL CORPORATION


By_________________________         Attest_______________________





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Basic Services

*Opening new accounts.
*Processing all payments.
*Issuing and canceling certificates.
*Processing partial and complete redemptions.
*Regular and legal transfers of accounts.
*Mailing shareholder reports. *Processing dividends and distributions, including
withholding   obligations.   *Postage,   except  that  for  statements  and  all
shareholder communications.  *Paper used to render reports to the Fund. The cost
of shareholder forms, envelopes, etc. will be billed to the Fund at the Transfer
Agent's cost. *Confirmation of all transactions as provided by the terms of each
shareholder's  account.  *Retirement  account reporting.  Account Maintenance 1.
Maintaining  shareholder  records  of  certificates  and  whole  and  fractional
unissued  shares.  2.  Changing  shareholders'  addresses.  3. Daily  reports on
numbers of shares, accounts. 4. Addressing and tabulating annual proxy cards. 5.
Supplying stockholder lists as necessary.  6. Preparation of shareholder Federal
Tax Information Forms,  including those required of a Retirement Plan Custodian.
7. Replying to shareholder  telephone calls and  correspondence  other than that
for Fund performance, Fund information, or Fund related inquiries.