File No.  33-13247

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                            FORM N-1A

        REGISTRATION STATEMENT UNDER THE SECURITIES ACT X

                             OF 1933

                 POST-EFFECTIVE AMENDMENT NO. 14

      REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY X
                           ACT OF 1940

                POST-EFFECTIVE AMENDMENT NO. 14

                    SATURNA INVESTMENT TRUST
              (Exact Name of Registrant as Specified in Charter)

                     1300 North State Street
                Bellingham, Washington 98225-4730

                   (Address of Principal Executive Offices)

         Registrant's Telephone Number - (360) 734-9900

                        James D. Winship
                     1300 North State Street

                Bellingham, Washington 98225-4730
                   (Name and Address of Agent for Service)

It is proposed that this filing will become effective:  
______  Immediately upon filing  pursuant to paragraph  (b) of rule 485
 ___X__ on March 29, 1996 pursuant to paragraph  (b) of Rule 485 
______ 60 days after filing  pursuant to paragraph(a)(1) of Rule 485
______ on  _______pursuant  to  paragraph  (a)(1) of rule 485
______ 75 days after filing  pursuant to  paragraph  (a)(2) of Rule 485 
___ _ on      pursuant to paragraph (a)(2) of rule 485
If appropriate, check the following box:

____this  post-effective  amendment  designates  a  new  effective  date  for  a
previously filed post-effective amendment.

The above  issuer  has  registered  an  indefinite  number  of shares  under the
Securities Act of 1933 pursuant to Rule 24f-2 of the  Investment  Company Act of
1940.  No filing  fee is due  because  of  reliance  on Rule  24f-2.  The Notice
required by such Rule for the fiscal year ended  November  30, 1995 was filed on
January 25, 1996.


<PAGE>





                           CROSS REFERENCE SHEET

 PART A                                 PROSPECTUS CAPTIONS

1.  Cover Page                          About the Trust;Expenses

2.  Synopsis                            Expenses

3.  Condensed Financial Information    Expenses; Financial Highlights

4.  General Description of Registrant   About the Trust,Investment Objectives
                                             and Policies; Investment Policies
                                        and Risk Considerations

5.  Management of the Fund              Trust Management,Investment Adviser

6.  Capital Stock and Other Securities       Capital Stock;  Dividends

7.  Purchase of Securities Being Offered     Net Asset Value, How to Buy Shares

8.  Redemption or Repurchase            How to Redeem Shares

9.  Pending Legal Proceedings           Not Applicable

STATEMENT OF ADDITIONAL

PART B                                  INFORMATION CAPTIONS

10.  Cover Page                              Cover Page

11.  Table of Contents                       TABLE OF CONTENTS

12.  General Information and History         General Information and History


<PAGE>



13.  Investment Objectives & Policies        INVESTMENT OBJECTIVES AND POLICIES;
                                             PORTFOLIO TURNOVER;INVESTMENT
                                             CONSIDERATIONS

14.  Management of the Registrant            MANAGEMENT OF THE TRUST

15.  Control Persons and Principal           PRINCIPAL HOLDERS OF
            Holders of Securities            SECURITIES

16.  Investment Advisory and Other           INVESTMENT ADVISORY
          Services                           AND OTHER SERVICES

17.  Brokerage Allocation and Other          BROKERAGE ALLOCATION
           Practices                              PORTFOLIO TURNOVER

18.  Capital Stock and Other Securities      Not Applicable

19.  Purchase, Redemptions and Pricing       PURCHASE, REDEMPTION AND
          of Securities Being Offered        PRICING OF SECURITIES BEING OFFERED

20.  Tax Status                              TAX STATUS

21.  Underwriters                             Not Applicable

22.  Calculations of Performance Data        PERFORMANCE DATA

23.  Financial Statements                    FINANCIAL STATEMENTS


<PAGE>














                             PART A

                           PROSPECTUS


<PAGE>







SATURNA INVESTMENT TRUST OFFERS FOUR NO-LOAD SEXTANT FUNDS:

  SEXTANT GROWTH FUND seeks long-term  growth through  investment in U.S. common
  stocks SEXTANT INTERNATIONAL FUND seeks long-term growth through investment in
  foreign stocks SEXTANT SHORT-TERM BOND FUND seeks capital stability and a high
  level of current  income by investing in short-term  debt  securities  SEXTANT
  BOND  INCOME  FUND  seeks a high  level of  current  income  by  investing  in
  long-term debt securities

A Statement of Additional  Information  dated March 29, 1995 has been filed with
the Securities and Exchange  Commission  and is  incorporated  by reference into
this Prospectus. You may obtain a free copy by writing or calling:

                              SATURNA CAPITAL
                               1300 N. STATE STREET
                               BELLINGHAM, WA 98225

                           800/ SATURNA [800/ 728-8762]

                            E-MAIL: SEXTANT@SATURNA.COM

This Prospectus  contains  information  you should read before  investing in the
Funds. Please read it carefully and keep it for future reference.

THESE  SECURITIES  HAVE NOT BEEN APPROVED OR  DISAPPROVED  BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES  AUTHORITY NOR HAS THE COMMISSION OR
ANY STATE AUTHORITY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

                           

FROM

                                 Saturna Capital

                                  MUTUAL FUNDS

                                    NO-LOAD,
                                NO SALES CHARGE,

                                    NO 12B-1

                                   PROSPECTUS
                                 March 29, 1996


<PAGE>





EXPENSES

The Sextant Funds impose no sales load on purchases or reinvested dividends,  no
"12b-1"  fees,  nor any  deferred  sales  load  upon  redemption.  There  are no
redemption fees or exchange fees.


   
The following table illustrates each Funds' estimated operating expenses.
<TABLE>
    

<CAPTION>
   
                          ANNUAL FUND OPERATING EXPENSES
                          (as a percentage of average net assets)


                                                    Sextant Intern-  Sextant
                                          Sextant   Bond    ational  Short-Term
                                        Growth .....Income  Fund(4)  Bond
                                         Fund(2)....Fund(3)          Fund(5)
                                                                                                                           

<S>                                      <C>   <C> <C>      <C>       <C>  
  Management Fees (after waiver)(1)(6)   0.64%) 0.00%    0.09%     0.00%
  12b-1 Expenses .....................   NONE      None     NONE      NONE
  Other Expenses ....................... 0.99     0.54%     0.40%    0.23%
  Total Fund Operating ..................1.63%    0.54%     0.49%    0.23%
     Expenses(6)
</TABLE>
<TABLE>

   FOR EXAMPLE:

<S>                        <C>     <C>   <C>  <C>   
Each Fund estimate paying  1 year  $17   $6   $5 $ 2
these expenses on a        3 years $55  $19  $16 $13
assuming a 5%             10 years $219 $74 $265 $30
net annual return              


<FN>

(1) Each Sextant Fund pays an Investment  Advisory and  Administrative  Services
  Fee of  0.60%  annually.  This  base  fee is then  subject  to a plus or minus
  performance  adjustment  of up to  0.20%  (Sextant  Bond  Income  and  Sextant
  Short-Term  Bond) or 0.30%  (Sextant  Growth and Sextant  International).  The
  table reflects the maximum fees, which may be subject to fee waivers.

(2) Prior to  September  28,  1995,  Sextant  Growth Fund  operated as Northwest
  Growth Fund with different fee arrangements and investment  objectives.  Total
  Operating  Expenses  were 1.84% but  voluntary  fee  waivers  (Note 6) reduced
  expenses to 1.63%.

(3) Prior to September 28, 1995, Sextant Bond Income Fund operated as Washington
  Tax-Exempt  Fund with different fee  arrangements  and investment  objectives.
  Total Operating Expenses were 1.16% but voluntary fee waivers (Note 6) reduced
  expenses to 0.54%.

(4) The Sextant  International  Fund began  operations  on  September  28, 1995.
  Expense figures based on its short operating  history may not be indicative of
  future results.  Total Operating Expenses were 0.70% but voluntary fee waivers
  (Note 6) reduced expenses to 0.49%.

(5) The Sextant  Short-Term  Bond Fund began  operations  on September 28, 1995.
  Expense figures based on its short  operating  histor may not be indicative of
  future results.  Total Operating Expenses were 0.28% but voluntary fee waivers
  (Note 6) reduced expenses to 0.23%.

(6) The Adviser  voluntarily waives its Management Fees to limit the expenses of
the Sextant Bond Funds to 0.60% annually through March 31, 1997 and to waive its
management fee when assets are less than $2 million.  The Funds'  custodian also
waives a portion  of its fees for all four  Funds.  Without  these  limitations,
Management Fees of the Bond Funds might be as high as 0.80%, and Total Operating
Expenses 1.20%. The example assumes a continuation of this expense limit for the
3, 5 and 10 year periods.    
</FN>

</TABLE>

The preceding  information is intended to help you in understanding  the various
(both  direct and  indirect)  expenses  that an investor  will bear.  This table
should not be considered a representation  of past or future expenses and actual
expenses  are  likely  to be  more or  less  than  those  shown.  See  FINANCIAL
HIGHLIGHTS and INVESTMENT ADVISER for more details.


<PAGE>



                                  1

   
FINANCIAL HIGHLIGHTS


The  following  schedules  set  forth  selected  data for a share of  beneficial
interest  of each  of the  SEXTANT  FUNDS  as set  forth  below.  The  following
schedules have been audited by Price  Waterhouse LLP,  independent  accountants,
whose report thereon is included in the Annual Report to Shareowners  (available
without  charge from the Trust),  which is  incorporated  by reference  into the
Statement of Additional  Information.  These  schedules  should be read with the
other  financial  statements  and notes thereto  included in the Trust's  Annual
Report which also includes Management's Discussion of the Fund's performance.
    


<PAGE>





[GRAPHIC OMITTED]


   
SEXTANT BOND INCOME FUND

Selected  data for a share of  SEXTANT  BOND  INCOME  FUND  beneficial  interest
outstanding from March 1, 1993 (commencement of operations) through November 30,
1995.
    

<TABLE>
                                                                           
<CAPTION>
   
                                                                            Period
                                                      Year      Year       March 1,
                                                     Ended      Ended      1993 to
                                                  November     November    November
                                                  30, 1995    30, 1994     30, 1993
                                                  --------      --------     --------
<S>                                                 <C>          <C>         <C>  
Net asset value at beginning of period              $4.39        $5.03       $5.00
     Income From Investment Operations
     Net Investment Income                           0.24         0.25        0.16
     Net gains or losses on securities (both realized
          and unrealized)                            0.52       (0.64)        0.04
                                                     ----       ------        ----
Total From Investment Operations                     0.76       (0.39)        0.20
     Less Distributions
     Dividends (from net investment income)
          Non-taxable                             (0.236)       (0.25)     (0.167)
          Taxable                                 (0.004)          n/a         n/a
     Distributions (from capital gains)              0.00         0.00     (0.003)
                                                     ----         ----     ------
Total Distributions                                (0.24)       (0.25)      (0.17)
Net asset Value at end of period                    $4.91        $4.39       $5.03
                                                    =====        =====       =====
Total Return                                       17.69%      (8.24)%       4.86%
------------
RATIOS/SUPPLEMENTAL DATA
------------------------
Net Assets (000), End of Period                    $1,096       $1,456      $1,662
Ratio of Expenses to Average Net Assets+            0.54%         .41%       .35%*
Ratio of Net Investment Income to Average Net Assets+5.15%       5.48%      3.28%*
Portfolio Turnover Rate                               77%          74%        36%*
                                                                             *Not annualized
</TABLE>

+For each of the above periods,  all or a portion of the operating expenses were
waived. If these costs had not been waived, the resulting  increases to expenses
per  share  in each of the  above  periods  would  be $.03,  $0.22,  and  $0.13,
respectively.  The  increase  to the ratio of  expenses  to average  monthly net
assets would be .60%, .51% and .26%, respectively.
    


<PAGE>


[GRAPHIC OMITTED]

SEXTANT GROWTH FUND

   
Selected data for a share of SEXTANT GROWTH FUND  (previously  Northwest  Growth
Fund). The following  schedule for each of the six years ended November 30, 1995
has been audited by Price Waterhouse LLP, independent accountants,  whose report
thereon is included in thennual Report to Shareowners.  The data for each of the
two years in the period ended November 30, 1989 and for the period  September 4,
1987  (commencement  of  operations)  through  November 30, 1987 were audited by
other  independent  accountants whose report dated January 19, 1990 expressed an
unqualified opinion on those data 
<TABLE>
<CAPTION>
                           1995  1994     1993     1992     1991     1990     1989   1988  Nov.30 '87
                            ----  ----     ----     ----     ----     ----     ----   ----  ------ 
     Net asset value
at beginning
<S>                        <C>    <C>     <C>     <C>      <C>      <C>      <C>      <C>    <C>  
    of period              $5.82  $6.38   $5.93   $5.55    $4.93    $4.88    $4.88    $4.96  $5.00
   Income From
   InvestmentOperations
   Net Investment Income   (0.03) (0.03)    0.01    0.01   0.04    0.27    0.28   0.30       0.06
   
   Net gains orlosses on
   securities(both                          
   realized and unrealized) 1.82  (0.53)   0.45    0.38   0.60    0.01    0.00  (0.08)     (0.04)
                            ----  -----    ----    ----   ----    ----    ----  -----      ----- 
Total From  Investment                        
     Operations            1.79  (0.56)    0.46    0.39   0.64    0.28    0.28   0.22       0.02
   LessDistributions
   Dividends(from net
   investment income)      0.00   0.00  (0.01)  (0.01) (0.02)  (0.23)  (0.28)  (0.30)     (0.06)
   Distributions from     
     capital gains)       (0.19)  0.00    0.00    0.00   0.00    0.00    0.00   0.00       0.00 
                          -----   ----    ----    ----   ----    ----    ----   ----       ---- 
Total Distributions        (0.19)   0.00  (0.01)  (0.01) (0.02)  (0.23)  (0.28) (0.30)     (0.06)

Net asset value
  at end of period         $7.42  $5.82   $6.38   $5.93  $5.55   $4.93   $4.88  $4.88      $4.96
                           =====  =====   =====   =====  =====   =====   =====  =====      =====
Total Return               30.76% (8.78)%  7.76%   7.01% 11.79%   7.37%   5.22%  5.12%      2.17%
Ratios/Supplemental Data
Net assets $000),                        
  end of period          $1,137 $1,010  $1,425  $1,321   $947     $53  $1,356 $1,365       $315
Ratio of expenses
to ave. netassets*      1.63%    1.50%   1.40%   1.60%  1.93%   1.06%   0.89%  0.25%      .06%*
Ratio of net
investment income
  to Ave. net assets*   (0.45)% (0.43)%  0.15%   0.17%  0.60%   5.25%   5.60%  5.86%      .85%*
   
Portfolio turnover rate 40%    12%     25%     46%    16%     29%     19%    20%         0%

Average commission      $.0572
 rate paid
    

<FN>

   *For 1995 and for each of the above years prior to 1992,all or a portion of the operating expenses were waived, If
   these costs had not been waived, the resulting increase to expenses per share
   in each of the above periods would be $.01, $.05, .$.05,$.10, $.16 and  $.02, respectively. The increase to the ratio of expenses
   to average net assets would have been 0.21%, 0.76%, 1.02%,1.28%,2.02%, and 0.17%.
   *not annualized

</FN>

</TABLE>


   
[GRAPHIC OMITTED] Fund shareowners agreed to change the investment objectives on
  September  28,  1995,  and  had  previously  done  so  on  October  12,  1990.
  Consequently,  data in this  table are  unlikely  to be  indicative  of future
  operations of the Fund.
    


<PAGE>


[GRAPHIC OMITTED]

   
SEXTANT SHORT-TERM BOND FUND

Selected data for a share of SEXTANT  SHORT-TERM BOND FUND  beneficial  interest
outstanding  from  September  28,  1995  (commencement  of  operations)  through
November 30, 1995.
<TABLE>
<CAPTION>

                                                                 September 28,
                                                                 1995 (Inception)
                                                                       to November
                                                                       30, 1995
                                                                       --------
    

<S>                                                                       <C>  
   
Net asset value at beginning of period                                    $5.00
      Income From Investment Operations                                         
     Net Investment Income                                                  0.03
     Net gains or losses on securities (both realized
     and unrealized)                                                        0.03
Total From Investment Operations                                            0.06
     Less Distributions
      Dividends (from net investment income)                             ($0.03)
      Distributions (from capital gains)                                   0.00
                                                                           ----
Total Distributions                                                      (0.03)
Net asset Value at end of period                                         $5.03
                                                                         =====
                                                                     
                                                                        
Total Return                                                               1.05%
RATIOS/SUPPLEMENTAL DATA
Net Assets ($000), End of Period                                          $878
Ratio of Expenses to Average Net Assets (not annualized)+                 .23%
Ratio of Net Investment Income to Average Net Assets+                     0.68%
Portfolio Turnover Rate                                                     0%
</TABLE>
+For the above period,  all or a portion of the operating  expenses were waived.
If costs had not been waived,  the resulting  increases to expenses per share in
the period  would have been  $.007.  The  increase  to the ratio of  expenses to
average monthly net assets would be .16%.
    

================================================================================
[GRAPHIC OMITTED]

   
SEXTANT INTERNATIONAL FUND

Selected  data for a share of SEXTANT  INTERNATIONAL  FUND  beneficial  interest
outstanding  from  September  28,  1995  (commencement  of  operations)  through
November 30, 1995.
<TABLE>
    

<CAPTION>
   
                                                                 September 28,
                                                                1995 (Inception)
                                                                  to November
                                                                      30, 1995
                                                                      --- ----
    

<S>                                                                        <C>  
   
Net asset value at beginning of period                                     $5.00
      Income From Investment Operations                          
      Net Investment Income                                               (0.02)
      Net gains or losses on securities (both realized
     and unrealized)                                                        0.01
Total From Investment Operations                                           (0.01)
                                                                           ----- 

      Less Distributions
      Dividends (from net investment income)                               0.00
      Distributions (from capital gains)                                   0.00
                                                                           ----

Total Distributions                                                        0.00
Net asset Value at end of period                                           $4.99
                                                                           =====
                                                                          
Total Return                                                               (0.20)%
RATIOS/SUPPLEMENTAL DATA
Net Assets ($000), End of Period                                           $328
Ratio of Expenses to Average Net Assets (not annualized)+                 0.49%
Ratio of Net Investment Income to Average Net Assets+                    (0.38)%
Portfolio Turnover Rate                                                     12%
Average Commission rate Paid                                            $0.0192
</TABLE>

+For the above period,  all or a portion of the operating expenses were waived.
If costs had not been waived,  the  resulting  increase to expenses per share in
the period  would have been  $.01.  The  increase  to the ratio of  expenses  to
average monthly net assets would be .21%.
    

<PAGE>

===========================================================
ABOUT THE TRUST

===========================================================

The Sextant  Funds are  intended to provide  investors  the basic  elements of a
balanced investment program.  The Funds are "no-load" funds,  meaning that there
are no sales or  redemption  charges,  nor do the Funds have  so-called  "12b-1"
charges.

The SEXTANT GROWTH FUND and SEXTANT  INTERNATIONAL  FUND seek long-term  growth.
GROWTH FUND pursues its objective through  investment in common stocks and other
equity-type securities,  principally of U.S. issuers. The INTERNATIONAL FUND, by
contrast,  invests primarily in a diversified portfolio of foreign common stocks
and other equity-type securities.

SEXTANT SHORT-TERM BOND FUND and SEXTANT BOND INCOME FUND both seek a high level
of current income.  SHORT-TERM  BOND FUND also attempts to preserve  capital and
does so by investing primarily in short-term debt securities.  BOND INCOME FUND,
on the other hand,  invests  primarily in long-term debt securities,  which have
the potential for greater income but the risk of greater price fluctuation.

Mutual  funds  enable you to invest as you might do for  yourself if you had the
time,  experience and resources to research and diversify your own  investments.
Mutual funds do so by selling their own shares to the public and investing those
proceeds  in a  portfolio  of  securities.  The value of the  funds'  own shares
fluctuates as the value of their portfolio securities fluctuates over time.

You may purchase shares of the Sextant Funds directly from the Funds without any
sales charge or "load."  Because no charges are deducted  from your  investment,
the entire amount you pay for shares is invested in the Fund you choose.

INVESTMENT OBJECTIVES AND POLICIES

   
SEXTANT  GROWTH FUND seeks  long-term  capital  appreciation.  The Fund  invests
primarily  in  a  diversified  portfolio  of  U.S.  common  stocks,   securities
convertible into common stocks,  and preferred  stocks,  but may invest in other
securities that are suited for the Fund's investment objective.  Although income
is considered when making an investment , the Fund is not designed for investors
seeking income. The Fund ordinarily will not invest in straight debt securities.
The Fund may invest in securities of smaller or newer companies as well as those
of  well-seasoned  companies  of any size,  and to a limited  extent in  foreign
companies.  The policy of investing for long-term capital appreciation cannot be
changed without shareholder approval.
    

SEXTANT INTERNATIONAL FUND'S objective is to seek long-term capital appreciation
by  investing  primarily  in a  diversified  portfolio  of  foreign  diversified
portfolio  of foreign  common  stocks and other  equity-type  securities  (E.G.,
securities  convertible  into common stock and preferred  stocks).  Under normal
market conditions,  the Fund will invest at least 65% of its total assets (taken
at market value) in foreign  securities  (securities  of non-U.S.  issuers.) The
Fund ordinarily  invests in securities of at least three  countries  outside the
U.S.  Although  income is  considered,  the Fund is not designed  for  investors
seeking income. The Fund ordinarily will not invest in straight debt securities.

The Fund  diversifies  its  investments  among  several  countries  and does not
concentrate  in  any  particular  industry.  The  Fund  varies  its  investments
geographically  and by type of  securities  in  which  it  invests  based on the
adviser's  evaluation of economic,  market,  and political trends throughout the
world. The adviser considers the relative  political and economic stability of a
company's home and operating  countries in evaluating the potential  rewards and
risks of an investment opportunity.  The Fund may invest in securities traded in
mature markets (such as Canada and the United Kingdom) in less developed markets
(for example,  Chile and Mexico),  and in emerging  markets (for example  Peru).
Investments  in  foreign  securities,  especially  those in less  developed  and
emerging markets present  additional  risk. (See  "Investment  Policies and Risk
Considerations.")

Although the Fund may invest  throughout  the world outside the U.S. as a matter
of  operating  policy (that can be changed by the Board of  Trustees),  the Fund
presently limits its investments to those securities of foreign issuers that are
traded and settled in the U.S. or to American Depository Receipts ("ADR's") that
represent underlying shares of foreign issuers.*

The  Fund's  policy of  seeking  long-term  capital  appreciation  by  investing
primarily in a  diversified  portfolio of foreign  securities  cannot be changed
without shareholder approval.

The  objective  of  SEXTANT  SHORT-TERM  BOND FUND is to provide a high level of
current income,  consistent with the  preservation of capital.  The Fund invests
primarily in marketable  short-term debt securities.  Under normal circumstances
the Fund's dollar-weighted average maturity will not exceed three years.

Short-Term  Bond Fund is  appropriate  for  investors  who seek  yields that are
typically higher than are usually  available from money market  instruments with
relatively  stable prices and shorter  maturities,  but who also want less price
fluctuation  than is likely  from a longer  term fund,  such as the Bond  Income
Fund, which also may be expected to reflect a higher yield. In contrast to money
market funds,  Short-Term  Bond Fund does not seek to maintain a fixed net asset
value,  and an  investor  may  receive  more or less than the price paid for his
shares at redemption.

SEXTANT BOND INCOME FUND has the  objective of providing a high level of current
income. The Fund invests primarily in marketable  long-term debt securities.  As
an operating  policy that may be changed by the Board of Trustees,  under normal
market  conditions  the  Fund  maintains  a  dollar-weighted  average  effective
maturity in excess of ten years.+

Bond Income Fund is intended  for  investors  who seek a higher  level of income
than is generally available from a shorter-term fund, yet who can accept greater
levels  of  interest  rate  and  other  risks   associated  with  investment  in
longer-term securities

Under normal market conditions, each of Sextant Short-Term Bond Fund and Sextant
Bond  Income  Fund will  invest  at least  65% of the value of its total  assets
(taken at market value at the time of investment) in "bonds", meaning:

(1) Marketable debt securities payable in U.S. dollars, rated
within the three highest grades assigned by Moody's Investors
Service, Inc. ("Moody's") (Aaa, Aa or A) or by Standard & Poor's

Corporation ("S&P") (AAA, AA or A);

(2) U.S. Government Securities;

(3) High quality commercial paper; and

(4) Bank obligations,  including repurchase agreementsss. of banks, having total
assets in excess of $1 billion.

These  Funds may not invest in a security  rated at time of  purchase  below the
fourth  highest grade assigned by Moody's (Baa) or S&P (BBB).  These  securities
are  considered  medium grade,  and represent  obligations  of issuers with less
capacity to pay  interest  and repay  principal  than those  rated more  highly.
Investment in these debt securities  involves somewhat greater  investment risk,
including the possibility of issuer default or bankruptcy.  An economic downturn
could adversely affect the value of outstanding bonds and the ability of issuers
to repay principal and interest.  During a period of adverse  economic  changes,
including  a  period  of  rising  interest  rates,  issuers  of such  bonds  may
experience   difficulty  in  servicing  their  principal  and  interest  payment
obligations.

Should a security's rating fall below the minimum  qualifying it for purchase by
the Fund,  the Adviser will not be required to dispose of it, but will  consider
that factor in connection  with deciding  whether to continue to hold it for the
Fund's portfolio.

Short-Term  Bond  Fund's  policy of  seeking  a high  level of  current  income,
consistent   with  the   preservation  of  capital  cannot  be  changed  without
shareholder approval.

Similarly,  the policy of Bond Income  Fund's policy of pursuing a high level of
current income cannot be changed without shareholder approval.

INVESTMENT POLICIES AND RISK CONSIDERATIONS

Investing in securities  entails both market risk and risk of price variation in
individual securities. By diversifying its investments,  a Fund reduces the risk
of owning one or a few individual securities. There can be no guarantee that the
investment objectives of any Fund will be realized.

SEXTANT SHORT-TERM BOND FUND AND SEXTANT BOND INCOME FUND

The risks  inherent  in the  Short-Term  Bond Fund and Bond  Income  Fund depend
primarily on the terms and quality of the obligations in each Fund's  portfolio,
as well as on market conditions. Interest rate fluctuations will affect a Fund's
net asset  value,  but not the income  received  by the Fund from its  portfolio
securities. However, because yields on debt securities available for purchase by
a Fund vary over time, the Fund's yield will also vary.

SEXTANT GROWTH FUND AND SEXTANT  INTERNATIONAL FUND

Both of these Funds may invest in smaller  companies.  Smaller companies involve
higher  investment risks in that they often have limited product lines,  markets
and resources,  or their  securities may trade less  frequently and have greater
price  fluctuation  than  those  of  larger  companies.  THESE  FACTORS  MAY  BE
PARTICULARLY APPLICABLE IN SMALLER OR EMERGING FOREIGN MARKETS.

INVESTMENT IN FOREIGN SECURITIES

You should  understand  and  carefully  consider  the risks  involved in foreign
investing.  Investing in foreign  securities or  instruments  involves risks and
opportunities not typically associated with investing in U.S. securities.  These
include  fluctuations  in  exchange  rates of foreign  currencies;  less  public
information with respect to issuers of securities; less governmental supervision
of  exchanges,  issuers,  brokers;  lack of uniform  accounting,  auditing,  and
financial reporting standards. There is also a risk of adverse political, social
or diplomatic  developments that could affect investment in these nations. Refer
to the STATEMENT OF ADDITIONAL  INFORMATION available from the Fund at no charge
for a more complete discussion of the risks of foreign investments.

ALL FUNDS

Under normal  market  conditions,  the Funds expect to be invested in accordance
with their objectives,  but under unusual circumstances any of the Sextant Funds
may adopt a  temporary  defensive  position  and invest  without  limitation  in
high-quality  debt  obligations,   U.S.  government  debt  obligations  or  cash
equivalents.

All of the Sextant  Funds are  diversified.  No Fund will invest more than 5% of
total  assets  in the  securities  of any one  issuer,  nor more than 25% of its
assets in any particular industry (other than U.S. Government securities.)

Except as explained above,  all of the policies  outlined in this section can be
changed  by a majority  of the Board of  Trustees.  The Funds have also  adopted
certain  restrictions  for each Fund, as outlined in the STATEMENT OF ADDITIONAL
INFORMATION.

INVESTMENT RESULTS

You will receive a financial report showing the investments, income and expenses
of your Fund every six months.  You may obtain  current share values any time by
calling the adviser at 800-SATURNA (800/728-8762).

PERFORMANCE DATA

The Funds may advertise or publish current yield and average annual total return
in advertisements or in information  furnished to publications and to investors.
In any comparison of a Fund's return with that of alternative  investments,  you
should consider differences between the Fund and the alternative investment, and
the periods and methods  used in  calculation  of the returns.  Of course,  past
results are not necessarily indicative of future performance.

You may compute  current  yield by (i) dividing net  investment  income over the
rolling  30 day  period  for which the yield is being  computed  by the  average
number of shares eligible to receive  dividends for the period and (ii) dividing
that  figure  by the  Fund's  net  asset  value per share on the last day of the
period, and then (iii) annualizing the results.

To compute  average  annual total return of a Fund for any specified  period (i)
assume an  investment  of $1,000 made at net asset value on the first day of the
period  and  that all  dividends  paid  during  the  period  are  reinvested  in
additional  shares at net asset  value and then (ii)  divide the ending  balance
(I.E.,  the number of shares now held  multiplied by the ending net asset value)
by the  beginning  balance.  For a more  complete  description  of the method of
computation, see the STATEMENT OF ADDITIONAL INFORMATION.

CAPITAL STOCK; DIVIDENDS

Saturna  Investment  Trust,  an  open-end  "series  trust"  was  organized  as a
Washington Business Trust on February 20, 1987. The Trust is an open-end "series
trust" that now offers five  separate  Funds:  the four Sextant  Funds and Idaho
Tax-Exempt (a fund investing in municipal  securities in the State of Idaho, and
offered  through  a  separate  prospectus).  The  Trust  was  formerly  known as
Northwest  Investors  Trust,  and began  operations  on September  4, 1987.  The
current investment  advisory agreements of the Sextant Funds became effective in
connection with changes in their objectives approved at a shareholder meeting on
September 28, 1995.

Each Fund is divided  into  shares of  beneficial  interest,  with equal  voting
rights. All shares are fully paid, non-assessable,  transferable and have rights
of  redemption,  and are not  subject  to  preemptive  rights.  The Trust is not
required to hold annual shareowner meetings,  but special meetings may be called
for such  purposes  as  electing  or  removing  Trustees,  changing  fundamental
policies,  or voting on  approval of an advisory  contract.  On issues  relating
solely to a single Fund, only the shareowners of that Fund are entitled to vote.

All  dividends  and  distributions  for each  Fund are  distributed  pro rata to
shareowners in proportion to the number of shares owned.

Each Fund intends to distribute  substantially all its net investment income and
net realized  capital  gains,  if any, to its  shareowners.  The Growth Fund and
International Fund expect to pay a dividend from net investment income annually,
at the end of November.  The bond funds declare dividends from investment income
daily and pay  dividends  monthly.  Dividends  from capital  gains,  if any, are
declared and paid at the end of November.

Both dividends and capital gains  distributions are automatically  reinvested in
additional  full and  fractional  shares of the Fund that  pays  them,  unless a
shareholder has elected to receive either or both in cash.

The Funds intend to qualify as regulated investment companies under the Internal
Revenue  Code and to  distribute  substantially  all net income and realized net
gains on investments.  A Fund is then relieved of paying federal income taxes on
amounts it distributes.

At year-end,  the Fund's  transfer  agent  reports to you and to the I.R.S.  the
amount of each  redemption  you made  during the year,  as well as the amount of
dividends  and capital  gain  distributed  to you.  Each Fund  accounts  for its
distributions  as either taxable  capital gains  (originating  from net realized
gains on portfolio transactions), or taxable income (originating from dividends,
taxable interest and certain other types of gains).  Fund  distributions  may be
subject to state and local taxes.

   
To avoid  being  subject  to a 31%  federal  withholding  tax on  dividends  and
distributions,  you must furnish the transfer agent your correct Social Security
or Tax Identification Number.

Shareowners  who are not U.S.  taxpayers may be subject to a 30% withholding tax
under U.S. provisions applicable to foreign investors,  unless a reduced rate or
exemption is provided under a tax treaty.  However,  capital gain  distributions
paid by the Funds are not subject to foreign withholding.
    

NET ASSET VALUE

Each Fund  computes its net asset value per share each  business day by dividing
(i) the value of all of its securities and other assets,  less  liabilities,  by
(ii) the number of shares outstanding.  The Funds compute their net asset values
as of the close of trading on the New York Stock Exchange  (generally 4 p.m. New
York time) on each day the Exchange is open for trading.  The Funds'  shares are
not priced on any customary  national  business holiday that securities  markets
are closed. The net asset value applicable to purchases or redemptions of shares
of each Fund is the net asset value next computed after receipt of a purchase or
redemption order.

   
The Funds use the price carried by the composite tape of all national  exchanges
after 4 p.m. New York time to determine the value of stocks in their portfolios.
Securities traded on a national exchange or the national over-the-counter market
system are valued at the last sale price or, in the  absence of any sale on that
date, the closing bid price.  Other  securities  traded in the  over-the-counter
market  are  valued at the last bid  price.  Securities  for which  there are no
readily  available  market  quotations and other assets are valued at their fair
value as determined in good faith by the Board of Trustees.
    

Because daily bid prices are not available for many bond issues, the Funds use a
matrix of bond yields for various maturities and qualities.  Prices are adjusted
for  factors  unique  to each  bond  that  are  known  to the  adviser,  such as
marketability and odd-lot discounts.  To verify its knowledge of market factors,
the adviser periodically obtains appraisals from independent sources.

HOW TO BUY SHARES

You may open an account and purchase  shares by sending a completed  Application
with a check for $1,000  (U.S.  only) or more ($25  under a group or  retirement
plan) to the Fund of your  choice.  The Trust  does not  accept  initial  orders
unaccompanied  by payment  nor by  telephone.  The price you  receive is the net
asset value (see "Net Asset Value") next determined  after receipt of a purchase
order.

There are no sales charges or loads.

You may purchase  additional  shares at any time in minimum amounts of $25. Once
your  account  is open,  purchases  can be made by check,  by  electronic  funds
transfer, or by wire.

   
You may authorize the use of the Automated Clearing House ("ACH") to purchase or
redeem shares by completing  the  appropriate  section of the  application.  The
authorization must be received at least two weeks before ACH can be used. ACH is
a system for electronic funds transfer. To use ACH to purchase or redeem shares,
simply  call the  transfer  agent.  You also may wire money to  purchase  shares
(minimum wire purchase $500),  though typically your wiring bank will charge you
a fee for this service.  Call the transfer  agent for the  information  you will
need BEFORE requesting your bank to wire funds.
    

Each time you purchase or redeem  shares,  you will receive a statement  showing
the details of the transaction as well as the current number and value of shares
you hold. Share balances are computed in full and fractional  shares,  expressed
to three decimal places.

At the end of each calendar year, you will receive a complete annual  statement,
which you should retain for tax purposes and a complete historical record of all
transactions.

The  Sextant  Funds  offer  several  optional  plans and  services,  including a
prototype  defined   contribution  plan  and  Individual   Retirement  Accounts.
Materials  describing  these plans and  applications  may be  obtained  from the
Adviser or the transfer agent.

Other plans offered by the Funds include:  (1) an automatic investment plan, (2)
a systematic  withdrawal  plan to provide  regular  payments to you, and (3) the
right to exchange your shares  without  charge for any other no-load mutual fund
for which Saturna Capital is the investment adviser.

The  Funds  may  be  appropriate  for  a  wide  range  of  investors,  including
corporations,  partnerships,  associations and other organizations. Accounts may
be  established  by trusts and  fiduciaries.  You also may make  investments  as
custodian for minor  children  under the Uniform Gifts [or  Transfers] to Minors
Act of your state of residence.

HOW TO REDEEM SHARES

You may redeem  your  shares on any  business  day of the  Funds.  The Funds pay
redemptions in U.S.  dollars,  and the amount you receive is the net asset value
per share next determined after receipt of your redemption  request.  The amount
received will depend on the value of the investments in that Fund at the time of
your redemption, and the amount you receive may be more or less than the cost of
the shares you are redeeming. A redemption constitutes a sale for federal income
tax purposes, and you may realize a capital gain or loss on the redemption.

The Funds normally pay for shares redeemed or exchanged  within three days after
a proper  instruction  is received.  To allow time for  clearing,  redemption of
investments made by check may be restricted for up to ten calendar days.

There are several methods you may choose to redeem shares.

                           WRITTEN REQUEST

Write:  Sextant Funds
        Box 2838

        Bellingham WA 98227-2838
        Fax: 360-734-0755

You may redeem  shares by a written  request  and  choose  one of the  following
options for the proceeds:

(A) Redemption check (no minimum) sent to registered owner(s).

   
(B)  Redemption  check (no  minimum)  sent as directed if the  signature(s)  are
guaranteed.  If proceeds are to be sent to other than the registered owner(s) at
the last address, the signatures on the request must be guaranteed by a national
bank or trust company or by a member of a national securities exchange.

  (C) Federal funds wire. The proceeds  ($5000 minimum) may be wired to any bank
designated in the request if the signature(s) are guaranteed as explained above.
    

                          TELEPHONE REQUEST

Call:   800-728-8762 or
        360-734-9900

You may redeem  shares by a telephone  request  and choose one of the  following
options for the proceeds:

  (A) Redemption check (no minimum) sent to registered owner(s).

  (B) ACH transfer ($100 minimum) with proceeds transferred to your bank account
as  designated  by  the  ACH   authorization  on  your   application.   The  ACH
authorization  must be received by the transfer  agent at least two weeks before
ACH transfer can be used.

  (C)  Exchange  ($25  minimum)  for shares of any other Fund for which  Saturna
Capital is adviser.  If the exchange is your initial  investment into this Fund,
the new account will  automatically  have the same registration as your original
account.  Of course,  shares must be authorized  and  registered for purchase in
your  state  before an  exchange  may be made.  Exchanging  shares  may have tax
consequences,  because an exchange is considered a closing  capital  transaction
for tax purposes.

  (D) Federal funds wire. Proceeds ($5000 minimum) may be wired only to the bank
previously  designated,  or as  directed  in a prior  written  instruction  with
signatures guaranteed, as explained above.

For telephone  requests the Funds will endeavor to confirm that instructions are
genuine and may be liable for losses if they do not. The caller must provide (1)
the name of the  person  making  the  request,  (2) the name and  address of the
registered owner(s), (3) the account number, (4) the amount to be withdrawn, and
(5) the method for payment of the proceeds. The Funds also may require a form of
personal identification,  and provide written confirmation of transactions.  The
Funds will not be responsible  for the results of  transactions  they reasonably
believe genuine.

                            CHECK WRITING

You may also redeem shares in your account by drawing checks on your account for
amounts of $500 or more.

The Funds will provide you a small book of blank checks for a $7 fee,  which may
be  payable  to any  payee.  Checks  are  redeemed  at the net asset  value next
determined after receipt by the transfer agent. If you wish to use this feature,
you should  request the Check Writing  Privilege on the  Application at the time
you open an account. Note that, as with any redemption,  each check is a closing
capital transaction for tax reporting purposes.

TRUST MANAGEMENT

Saturna Investment Trust is managed by a Board of five Trustees:
Gary Goldfogel, John E. Love, John S. Moore, Nicholas F. Kaiser and
James D. Winship.  The Trustees establish policies, as well as
review and approve contracts and their continuance.  The Trustees
also elect the officers, determine the amount of any dividend or
capital gain distribution and serve on any committees of the
Trust.  For other information concerning the officers and Trustees,
see the STATEMENT OF ADDITIONAL INFORMATION.

INVESTMENT ADVISER

Saturna Capital Corporation, 1300 N. State Street, Bellingham,
Wash. 98225 (the "Adviser") is the Investment Adviser to the Trust.
The Adviser is a Washington State corporation formed in July 1989.
Shareholders owning more than 10% of the common stock are: Nicholas
F. Kaiser, Phelps S. McIlvaine, James D. Winship, and Brian A.
Anderson.  The directors of the Adviser are Nicholas Kaiser
(President), James D. Winship (Vice President and Secretary),
Phelps S. McIlvaine (Vice President), Brian A. Anderson (Vice
President) and Markell F. Kaiser (Treasurer).

Saturna Capital Corporation acts as investment adviser to three other investment
companies:  Idaho Tax-Exempt Fund (another series of the Trust,  offered through
another prospectus) with assets of approximately $5 million;  Amana Income Fund,
which has assets of  approximately  $12  million  and Amana  Growth  Fund,  with
approximately  $3 million in assets.  The advisory fee for Idaho Tax-Exempt Fund
is .50% annually and both of the Amana Funds have an advisory and administration
fee of .95%.  Saturna also manages individual  advisory accounts.  The Adviser's
wholly-owned subsidiary, Investors National Corporation, is a discount brokerage
firm and acts as distributor for the Funds without compensation.

Each of the Sextant Funds pays the Adviser an Investment Advisory
and Administrative Services Fee (the Base "Fee.")

The  Base  Fee  covers  compensation  for  portfolio   management,   advice  and
recommendations  on securities to be  purchased,  held or sold.  The Base Fee is
also  compensation  for  certain  administrative   services  such  as  portfolio
accounting,  shareholder  and  financial  reporting,  shareholder  servicing and
transfer  agency  services.  The Base Fee is 0.60% of average  net assets of the
Fund per annum,  and is  payable  monthly.  However,  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").

For each month in which  either Bond  Income  Fund's or  Short-Term  Bond Fund's
total  investment  return  (change  in net asset  value  plus all  distributions
reinvested)  for  the  one  year  period  through  that  month   outperforms  or
underperforms  the total  return of a  specified  index for that period by 1% or
more but less than 2%, the Base Fee is increased or decreased by the annual rate
of .10% of the Fund's  average daily net assets for the  preceding  year. If the
outperformance or  underperformance is 2% or more, then the adjustment is at the
annual rate of .20%.

For  each  month in which  either  Growth  Fund or  International  Fund's  total
investment return (change in net asset value plus all distributions  reinvested)
for the one year period  through that month  outperforms  or  underperforms  the
total  return of a  specified  index for that period by 1% or more but less than
2%, the Base Fee is  increased  or  decreased  by the annual rate of .10% of the
Fund's average daily net assets for the preceding year. If the outperformance or
underperformance  is 2% or more but less than 4%, then the  adjustment is at the
annual rate of .20%. If the  outperformance or  underperformance  is 4% or more,
the adjustment is at an annual rate of .30%.

No performance  adjustment is applicable  during the first year any Agreement is
in place.

Selected total return investment  performance as published by Morningstar,  Inc.
will be used as the index for comparison purposes. Each Fund and the Morningstar
group to be used are:

Sextant Growth Fund:

"GROWTH FUNDS"

Sextant  International Fund:           "FOREIGN STOCK FUNDS"

Sextant Bond Income Fund:   "CORPORATE BOND FUNDS-HIGH QUALITY"

Sextant Short-Term Bond Fund:   "CORPORATE BOND FUNDS-HIGH

QUALITY"

   
If a  particular  index  is  no  longer  available  or  becomes  unavailable  or
inappropriate, in the opinion of the Board, it may select another.

Each Fund pays its own taxes, brokerage  commissions,  trustees' fees, legal and
accounting  fees,  insurance,  expenses  incurred  in  complying  with state and
federal  laws  regulating  the issue and sale of its  shares,  and  mailing  and
printing costs for prospectuses, reports and notices to shareowners, and certain
other expenses.

The Adviser  furnishes  office space,  facilities and  equipment,  personnel and
clerical and bookkeeping  services to conduct the business of the Funds, as well
as other expenses.

The  Adviser's   subsidiary,   Investors  National  Corporation  ("INC"),  is  a
broker-dealer  engaged in a general  brokerage  business  and  conducts  all its
transactions  on an agency  basis for "deep  discount"  commissions.  Most stock
brokerage  for the Trust is  conducted  through  INC.  The Adviser may  allocate
brokerage  to any broker in return for  research  or  services  and for  selling
shares of any Fund.

The Adviser  voluntarily limits expenses of Bond Income Fund and Short-Term Bond
Fund to 0.60%  through  March 31,  1997.  The  Adviser  waives all its fee as to
either of these Funds so long as assets of that Fund are less than $2 million. A
waiver has the effect of subsidizing the yield for the period it is in effect.

Nicholas  Kaiser,  primary manager of the Growth and  International  Funds,  has
managed mutual funds since 1976.  Phelps  McIlvaine,  manager of Bond Income and
Short-Term Bond Funds,  entered the investment business in 1976 and managed bond
hedge funds from 1987 to 1993.  He managed the  predecessor  to Bond Income Fund
from 1994, and manages Idaho Tax-Exempt Fund, another series of the Trust.

Managers of the Funds and other investment  personnel are permitted to engage in
securities  transactions  for their own  accounts in  accordance  with a code of
ethics  that  requires  advance  approval  of all trades and  disclosure  of all
holdings. It also contains other provisions.
    


<PAGE>


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[GRAPHIC OMITTED]
    INVESTMENT APPLICATION for
    q Sextant GROWTH FUND
    q Sextant INTERNATIONAL FUND
    q  Sextant BOND INCOME FUND
    q  Sextant SHORT-TERM BOND FUND

Mail application and check to:                       For assistance, call:
   SATURNA INVESTMENT TRUST                   (800) SATURNA  or  (360)

734-9900

    Box 2838, Bellingham WA 98227-2838                     FAX (360) 734-0755

ACCOUNT TYPE AND NAME

  q Individual

     First                  Middle Initial               Last

  Social Security Number                        Date of Birth___________

  q  Joint with

            First                  Middle Initial               Last

    Joint Owner's Social Security Number

   (Joint accounts are presumed to be "Joint Tenancy with Right of Survivorship"
  unless otherwise indicated)

  q  Gifts to Minor                     AS CUSTODIAN FOR

                    Name of Custodian                            Name of Minor

                    q UNIFORM GIFTS TO MINORS ACT

        UNDER THE     q UNIFORM TRANSFERS                            /
      State       TO MINORS ACT Minor's Soc. Sec. No.    Minor's Birthdate

  q Other

        Indicate   name  of   corporation,   other   organization   or  fiducTax
         Identification  Number If a trust, include name(s) of trustees and date
         of trust instruments.

        Name(s) of  person(s)  authorized  to  transact  business  for the above
entity.

MAILING

ADDRESS   Street                                  Apt., Suite, Etc.

 City                               State                        ZIP

TELEPHONE  (  )                         (     )
           ----------------------       -------
              Daytime                             Home

CITIZENSHIP    q  U.S.     q   Resident Alien    q  Non-Resident Alien

                                                                  Country

INITIAL INVESTMENT  $

(Minimum $1000) Make check payable to the Fund being purchased.


<PAGE>


TELEPHONE REDEMPTION PRIVILEGES

  You automatically  have telephone  redemption by check and telephone  exchange
  privileges  unless you strike  this line.  Each Fund will  endeavor to confirm
  that  instructions are genuine and it may be liable for losses if it does not.
  (Procedures  may  include  requiring a form of  personal  identification,  and
  providing written confirmation of transactions.)

ACH TELEPHONE TRANSFER PRIVILEGE

     q To transfer funds by ACH at no charge to or from my

        (our) bank account,  I (we) authorize  electronic fund transfers through
        the Automated Clearing House (ACH) for my (our) bank account designated.
        PLEASE ATTACH A VOIDED CHECK OR DEPOSIT SLIP.

AUTOMATIC INVESTMENT PLAN

  q  Invest $ _______ into this Fund on the _____ day of each month
      (the 15th unless  another  date is chosen) by ACH  transfer  from my (our)
      bank  account.  This plan may be  canceled  at any time.  PLEASE  ATTACH A
      VOIDED CHECK OR DEPOSIT SLIP.

CHECK WRITING  PRIVILEGE  ($500 per check  minimum)  ($7  checkbook  charge) q I
  (We)hereby request the Custodian to honor checks drawn by me

      (us) on my (our) account subject to acceptance by the Trust,  with payment
      to be made by redeeming sufficient shares in my (our) account. None of the
      custodian bank, Saturna Capital  Corporation,  nor any Sextant Mutual Fund
      shall  incur  any  liability  to me (us) for  honoring  such  checks,  for
      redeeming shares to pay such checks, or for returning checks which are not
      accepted.

    q Single Signature Authority -- Joint Accounts Only:  (CHECKS FOR

      JOINT  ACCOUNTS  REQUIRE  BOTH  SIGNATURES  UNLESS  THIS BOX IS  MARKED TO
      AUTHORIZE  CHECKS WITH A SINGLE  SIGNATURE).  By our signatures  below, we
      agree to permit  check  redemptions  upon the single  signature of a joint
      owner.  The  signature  of one joint  owner is on behalf of himself and as
      attorney in fact on behalf of each other joint  owner by  appointment.  We
      hereby  agree with each  other,  with the Funds and with  Saturna  Capital
      Corporation  that all moneys now or hereafter  invested in our account are
      and shall be owned as Joint Tenants with Right of Survivorship, and not as
      Tenants in Common.

The  undersigned  warrants(s)  that I (we)  have  full  authority  to make  this
Application,  am (are) of  legal  age,  and  have  received  and read a  current
Prospectus and agree to be bound by its terms. Unless this sentence is struck, I
(we) certify,  under penalties of perjury,  that I (we) am not subject to backup
withholding  under the  provisions  of  section  3406(a)(1)(C)  of the  Internal
Revenue  Code.  This  application  is not  effective  until it is  received  and
accepted by the Trust.

    Date                            Signature of Individual (or Custodian)

    Date                            Signature of Joint Registrant, if any

                            [GRAPHIC OMITTED]

                                  NO-LOAD MUTUAL FUNDS


<PAGE>


=====================================================================

=====================================================================
                   PLEASE SAVE THIS QUICK GUIDE TO

                 THE SEXTANT MUTUAL FUNDS

ACCOUNTS

      Open  your  account  by  sending a  completed  Application  to the  Trust,
      indicating your Fund selection. For convenience, you may have your account
      consolidated with others of your household or other group. We will appoint
      a  representative  to whom you may  refer  all  questions  regarding  your
      account(s). Extra forms will be sent for certain accounts, such as IRA's.

INVESTMENTS

      Initial  investments  are $1,000 or more ($25 under a group or  retirement
      plan), and must be accompanied by an Application.  Additional  investments
      may be made for $25 or more at any time. There are no sales commissions or
      other charges.

REDEMPTIONS

      You may sell your shares any time. As with purchases,  you may choose from
      several   methods   including   telephone,   written   instructions,   and
      checkwriting. You will be paid the market price for your shares on the day
      we receive your instructions, and there are no redemption fees or charges.
      If we receive your redemption request by one p.m. Pacific time, your check
      is normally mailed to you the same day.

STATEMENTS

      On the date of each  transaction,  you are mailed a confirmation,  showing
      the details of the transaction and your account  balance.  At year-end and
      at  selected  points  during  the  year we mail a  statement  showing  all
      transactions for the period. Monthly consolidated statements are available
      for an extra fee.

DIVIDENDS AND PRICES

      Sextant  Bond  Income  Fund  and  Sextant  Short-Term  Bond  Fund  declare
      dividends  daily and pay them  monthly.  Sextant  Growth  Fund and Sextant
      International Fund pay dividends at the end of November. The Funds' prices
      are available by calling the Funds at 800-SATURNA.

FREE RETIREMENT PLANS

      We offer a defined  contribution  Profit-Sharing / Money Purchase plan and
      an Individual  Retirement Account.  There are no extra fees or charges for
      these plans.

FOR MORE INFORMATION

      Please  consult the  applicable  pages of this  Prospectus  for additional
      details on the Sextant Funds and their shareholder services.  You may also
      call 1-800-SATURNA (1-800-728-8762) with any questions.


<PAGE>









                               PART B

            STATEMENT OF ADDITIONAL INFORMATION


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                              1

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                 SATURNA INVESTMENT TRUST

                         SEXTANT GROWTH FUND
                      SEXTANT BOND INCOME FUND

                     SEXTANT INTERNATIONAL FUND
                    SEXTANT SHORT-TERM BOND FUND

                          1300 State Street
                    Bellingham, Washington 98225

                            360-734-9900

                             800-SATURNA

                 STATEMENT OF ADDITIONAL INFORMATION
                           March 29, 1996

The Sextant Funds are series of Saturna  Investment  Trust (the  "Trust").  Each
series of the Trust  represents  shares of  beneficial  interest  in a  separate
portfolio of securities and other assets,  with its own objectives and policies.
This  Statement  of  Additional  Information  is  not a  Prospectus.  It  merely
furnishes  additional  information  that should be read in conjunction  with the
Funds'  prospectus dated March 29, 1996 The Funds'  prospectuses may be obtained
free of charge by  telephoning  the  numbers  above or writing  the Funds at the
address shown above.


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                            TABLE OF CONTENTS

                                      Page

General Information and History...........................2
Investment Objectives and Policies........................3
Investment Considerations.................................7
Portfolio Turnover........................................9
Performance Data ........................................10
Management of the Trust..................................12
Principal Holders of Securities..........................15
Investment Advisory and Other Services...................16
Brokerage Allocation.....................................19
Purchase, Redemption and Pricing of Securities Being 
Offered                                                  20
Tax Status...............................................20
Financial Statements.....................................21



<PAGE>


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                   GENERAL INFORMATION AND HISTORY

Saturna  Investment  Trust (the "Trust") is a business trust formed  pursuant to
RCW 23.90 of the laws of the  State of  Washington  to  operate  as an  open-end
management  company.  When formed on February 20, 1987,  the name was  Northwest
Investors  Tax-Exempt  Business Trust. The Trust's name was changed to Northwest
Investors  Trust on October 12, 1990.  Most  recently,  in  connection  with the
formation  of the  Sextant  Funds,  the  Trust's  name was  changed  to  Saturna
Investment Trust on September 28, 1995.

The  Declaration  of Trust permits the trustees to issue an unlimited  number of
full and  fractional  shares in any Fund of the Trust.  The Trust may  establish
additional Funds in the future by approval of the Trustees. All shares will have
no par value and when issued will be fully paid and non-assessable and will have
no preemptive, conversion, or sinking fund rights.

The Trust has five  separate  Funds,  four of which are  offered as the  Sextant
Funds through this Prospectus and Statement of Additional  Information:  Sextant
Growth Fund (formerly known as Northwest Growth Fund),  Sextant Bond Income Fund
(formerly known as Washington  Tax-Exempt Fund), Sextant International Fund, and
Sextant  Short-Term  Bond  Fund.  The  remaining  Fund,  Idaho  Tax-Exempt  Fund
(initially  known as the Idaho  Extended  Maturity  Tax-Exempt  Fund) is offered
through a separate Prospectus and Statement of Additional Information.

                 INVESTMENT OBJECTIVES AND POLICIES

This section is provided only for the purpose of expanding or outlining  certain
policies and restrictions not thoroughly covered in the Prospectus.

SEXTANT GROWTH FUND seeks  long-term  growth.  The Fund invests in common stocks
and  other  equity-type  securities.  Although  income  is  considered  when  an
investment is considered, the Fund is not designed for investors seeking income.
The Fund  pursues its  objective by  investing  primarily  in common  stocks and
securities  convertible  into common stocks and preferred  stocks,  but may also
invest in other securities that are suited to the Fund's investment  objectives.
The Fund ordinarily does not invest in straight-debt securities.

The Fund may invest in securities of smaller or newer companies as well as those
of  well-seasoned  companies  of any  size.  Smaller  companies  involve  higher
investment  risks in that they often have  limited  product  lines,  markets and
resources,  or their securities may trade less frequently and have greater price
fluctuation  than  those  of  larger   companies.   Although  the  Fund  invests
principally in securities of U.S.  issuers,  it may invest up to 5% of its total
assets  (valued  at the time of  investment)  in foreign  securities,  including
foreign  government  obligations and foreign equity and debt securities that are
traded in the U.S. (See the discussion of international investing under "Sextant
International Fund" and "Investment Considerations" below.)

Under  normal  market  conditions,  the Fund expects to be  substantially  fully
invested  in the types of  securities  described  in the  preceding  paragraphs.
However,  to the  extent  that  investments  meeting  the  Fund's  criteria  for
investment are not available or when the Adviser considers a temporary defensive
investment  position  advisable,  the  Fund may  invest  without  limitation  in
high-quality  corporate debt obligations or U.S. government  obligations or hold
cash or cash equivalents.

SEXTANT  INTERNATIONAL  FUND'S  objective  is  long  term  growth  by  investing
primarily  in a  diversified  portfolio  of  foreign  common  stocks  and  other
equity-type  securities  (e.g.  securities  convertible  into common  stocks and
preferred  stocks.)  The  Fund  ordinarily  does  not  invest  in  straight-debt
securities. Under normal market conditions, the Fund will invest at least 65% of
its total  assets  (taken  at market  value at time of  investment)  in  foreign
securities  (securities  of non-U.S.  issuers.) The Fund  ordinarily  invests in
securities of at least three countries outside the U.S.  However,  to the extent
that investments meeting the Fund's criteria for investment are not available or
when the Adviser considers a temporary defensive  investment position advisable,
the Fund may invest without limitation in high-quality debt obligations or U.S.

government obligations or hold cash or cash equivalents.

Although  income is considered in the selection of  securities,  the Fund is not
designed for investors whose primary  investment  objective is income.  The Fund
pursues its  objective by investing  primarily in common  stocks and  securities
convertible into common stocks, but may also invest in other securities that are
suited to the Fund's investment objectives,  including preferred stocks and debt
securities.

The Fund may invest in securities of smaller or newer companies as well as those
of  well-seasoned  companies  of any  size.  Smaller  companies  involve  higher
investment  risks in that they often have  limited  product  lines,  markets and
resources,  or their securities may trade less frequently and have greater price
fluctuation  than those of larger  companies.  These factors may be particularly
applicable in smaller or emerging foreign markets.

The Fund  diversifies  its  investments  among  several  countries  and does not
concentrate  in  any  particular  industry.  The  Fund  varies  its  investments
geographically  and by type of  securities  in  which  it  invests  based on the
adviser's  evaluation of economic,  market,  and political trends throughout the
world. The adviser considers the relative  political and economic stability of a
company's  home  country in  evaluating  the  potential  rewards and risks of an
investment  opportunity.  The Fund may  invest  in  securities  traded in mature
markets  (such as  Canada,  Japan and the  United  Kingdom),  in less  developed
markets (for example,  Mexico),  and in emerging  markets (for  example,  Peru).
Investments  in  foreign  securities,  especially  those in less  developed  and
emerging markets present additional risk. (See "Investment Considerations.")

Although the Fund may invest throughout the world outside the U.S. and determine
that it is in the best interest of the Fund and  shareholders  to keep assets in
those countries in which the Fund is investing,  as a matter of operating policy
(that can be changed by the Board of Trustees),  the Fund  presently  limits its
investments to those  securities of foreign  issuers that are traded and settled
in  the  U.S.  or to  American  Depository  Receipts  ("ADR's")  that  represent
underlying shares of foreign issuers.  (ADRs are receipts typically issued by an
American  bank  or  trust  company   evidencing   ownership  of  the  underlying
securities.) Positions in these securities are generally valued in U.S. dollars,
they are not  necessarily  denominated  in the same  currency as the  underlying
security  into  which  they  may be  converted.  The  Fund  may  invest  in both
"sponsored"  and  "unsponsored"  ADRs. In a sponsored ADR, the issuer  typically
pays some or all of the  expenses  of the  depository  and agrees to provide its
regular shareholder communications to ADR holders. An unsponsored ADR is created
independently of the issuer of the underlying security.  Unsponsored ADR holders
generally pay the expenses of the depository and do not have an undertaking from
the issuer of the  underlying  security to furnish  shareholder  communications.
(See also "Investment Considerations" below.)

The  Fund  may  invest  in  securities   denominated   in  various   currencies.
Accordingly, a change in the value of such currency against the U.S. dollar will
result in a  corresponding  change in the U.S. dollar value of the Fund's assets
denominated in that  currency.  Such changes will also affect the Fund's income.
Generally,  when a given currency  appreciates  against the dollar (that is, the
dollar weakens) the value of the Fund's securities  denominated in that currency
will rise.  When a given currency  depreciates  against the dollar (that is, the
dollar  strengthens)  the value of the  Fund's  securities  denominated  in that
currency would be expected to decline.

The dividends and interest  payable on certain of the Fund's  foreign  portfolio
securities may be subject to foreign withholding taxes, thereby reducing the net
amount of income  available  for  distribution  to the  Fund's  shareholders.  A
shareholder  otherwise  subject to U.S.  federal  income  taxes may,  subject to
various limitations, be entitled to claim a credit or deduction for U.S. federal
income tax purposes  for his or her  proportionate  share of such foreign  taxes
paid by the Fund.

SEXTANT SHORT-TERM BOND FUND seeks capital stability and a high level of current
income.  The Fund pursues this  objective by investing  primarily in  marketable
short-term   debt   securities.   Under   normal   circumstances,   the   Fund's
dollar-weighted average maturity will not exceed three years.

SEXTANT  BOND INCOME  FUND seeks high  current  income.  The Fund  pursues  this
objective by investing primarily in marketable long-term debt securities.  As an
operating  policy  that may be changed by the Board of  Trustees,  under  normal
market  conditions  the  Fund  maintains  a  dollar-weighted  average  effective
maturity in excess of ten years.

The risks and investment  returns offered in these Funds depend primarily on the
terms and quality of the  obligations  in that Fund's  portfolio,  as well as on
market  conditions.  Interest rate  fluctuations  will affect a Fund's net asset
value,  but not the income  received by the Fund from its portfolio  securities.
However, because yields on debt securities available for purchase by a Fund vary
over time, no specific yield on shares of a Fund can be assured.

Short-Term  Bond Fund is  appropriate  for  investors  who seek  yields that are
typically higher than are usually  available from money market  instruments.  By
limiting itself to shorter maturities,  Short-Term Bond Fund should provide less
net asset  fluctuation  than  shareholders  might expect from a longer-term bond
fund, such as Bond Income Fund.

Bond Income Fund is intended  for  investors  who seek a higher  level of income
than is generally available from a shorter-term fund, yet who can accept greater
levels  of  interest  rate  and  other  risks   associated  with  investment  in
longer-term securities.

The  "effective  maturity" of a debt  instrument is the weighted  average period
over which the Adviser  expects the  principal  to be paid.  It differs from the
stated  maturity  in  that  it  estimates  the  effect  of  expected   principal
prepayments and call provisions. With respect to mortgage backed securities such
as GNMA securities,  the effective  maturity is likely to be substantially  less
than the stated maturity of the mortgages in the underlying  pools. With respect
to obligations  with call  provisions,  the effective  maturity is typically the
next call date on which the obligation  reasonably may be expected to be called.
Securities  without  prepayment or call  provisions  generally have an effective
maturity  equal to their  stated  maturity.  During  periods of rising  interest
rates,  the  effective  maturity  of mortgage  backed  securities  and  callable
obligations  may  increase  substantially  because they become less likely to be
prepaid, which may result in greater net asset value fluctuation.

Under normal market conditions, each of Sextant Short-Term Bond Fund and Sextant
Bond  Income  Fund will  invest  at least  65% of the value of its total  assets
(taken at market value at the time of investment) in "bonds," meaning:

      (1) Marketable  straight-debt  securities  of  domestic  issuers,  and of
          foreign  issuers  payable  in  U.S.  dollars,  rated  at the  time of
          purchase   within  the  three  highest  grades  assigned  by  Moody's
          Investors Service,  Inc.  ("Moody's") (Aaa, Aa or A) or by Standard &
          Poor's Corporation ("S&P") (AAA, AA or A)*

      (2)   U.S. Government Securities;

      (3)   Commercial  paper rated  Prime-1 by Moody's or A-1 by S&P at time of
            purchase, or, if unrated, issued or guaranteed by a corporation with
            any  outstanding  debt rated Aa or better by Moody's or AA or better
            by S&P; and

      (4)   Bank obligations,  including repurchase agreements+ of banks, having
            total assets in excess of $1 billion.

These  Funds  may  also  invest  in  other  debt  securities   (including  those
convertible  into,  or carrying  warrants to  purchase,  common  stocks or other
equity interests, and privately placed debt securities).  However, the Funds may
not  invest in a security  rated at time of  purchase  below the fourth  highest
grade  assigned  by  Moody's  (Baa)  or  S&P  (BBB).  Debt  rated  Baa or BBB is
considered  "medium grade," though still generally accepted as investment grade.
(See "Appendix" for more information regarding ratings of debt securities.)

U.S.  Government  Securities  include:  (i) bills,  notes,  bonds and other debt
securities,  differing as to maturity and rates of interest,  that are issued by
and are direct obligations of the U.S. Treasury;  and (ii) other securities that
are issued or guaranteed as to principal and interest by the U.S.  Government or
by its agencies or  instrumentalities.  U.S. Government Securities are generally
accepted as being among the safest debt  securities  with  respect to the timely
payment of principal and interest (but not any premium paid on their  purchase),
but generally  bear a lower rate of interest  than  corporate  debt  securities.
However,  they are  subject to market risk like other debt  securities,  and the
Funds' shares will fluctuate in value.

Among the  Government  Securities  the Funds may  purchase  are those  issued by
Government  National Mortgage  Association  ("GNMA"),  Federal National Mortgage
Association  ("FNMA") and other agencies.  Securities such as these represent an
interest in a pool of mortgages insured in whole or in part by other agencies or
the U.S. Treasury, depending on the terms of the issue. These issues may or

may not represent the guarantee of the U.S. Treasury.

These  "mortgage-backed"  debt securities are entitled to interest and principal
payments on mortgages in the pool as they are paid.  During periods of declining
interest  rates there is an increased  likelihood  that these  mortgages will be
prepaid,  resulting in a loss of the benefit of holding the  instrument  to full
term, and loss of any premium the Fund may have paid to buy the security.

The Funds  may also  invest in  floating  rate  instruments  which  provide  for
periodic adjustments in coupon interest rates that are automatically reset based
on changes in amount and direction of specified  market  interest  rates. To the
extent such  instruments are subject to lifetime or periodic  interest rate caps
or floors,  such  instruments may experience  greater price volatility than debt
instruments without such features.

Medium grade (Baa or BBB) debt  securities are  obligations of issuers with less
capacity to pay  interest  and repay  principal  than those  rated more  highly.
Investment in these debt securities  involves somewhat greater  investment risk,
including the possibility of issuer default or bankruptcy.  An economic downturn
could adversely affect the value of outstanding bonds and the ability of issuers
to repay principal and interest.  During a period of adverse  economic  changes,
including  a  period  of  rising  interest  rates,  issuers  of such  bonds  may
experience   difficulty  in  servicing  their  principal  and  interest  payment
obligations.

Some issuers of debt securities  choose not to have their  securities rated by a
rating service. The Funds may invest in unrated securities that in the adviser's
opinion are  comparable to securities  having at least a medium grade rating and
are suitable for investment by the Funds.

                      INVESTMENT CONSIDERATIONS

Investing in securities  entails both market risk and risk of price variation in
individual securities.  THIS IS TRUE EVEN FOR DEBT SECURITIES ISSUED BY THE U.S.
GOVERNMENT.  By  diversifying  its  investments,  each Fund may  reduce the risk
associated with owning one or a few individual securities.  However, there is no
assurance that any Fund will achieve its investment objectives.

The Growth Fund and the  International  Fund may invest in securities of smaller
or newer  companies  as well as those of  well-seasoned  companies  of any size.
Smaller  companies  involve  higher  investment  risks in that they  often  have
limited product lines, markets and resources, or their securities may trade less
frequently and have greater price  fluctuation  than those of larger  companies.
These  factors may be  particularly  applicable  in smaller or emerging  foreign
markets.

INVESTMENT IN FOREIGN SECURITIES

Investors should understand and carefully consider the risks involved in foreign
investing.  Investing in foreign  securities or  instruments  involves risks and
opportunities not typically associated with investing in U.S. securities.  These
include:  fluctuations  in  exchange  rates  of  foreign  currencies;   possible
imposition of exchange control  regulation or currency  restrictions  that would
prevent cash from being brought back to the U.S.; less public  information  with
respect to issuers of securities;  less  governmental  supervision of exchanges,
issuers, brokers; lack of uniform accounting,  auditing, and financial reporting
standards;  lack of uniform trading  practices;  less liquidity or greater price
volatility in foreign  markets;  possible  imposition of foreign taxes;  or less
advantageous legal, operational, and financial protections applicable to foreign
custodial  arrangements.  There is also a risk of  expropriation or confiscatory
taxation,  seizure or  nationalization of foreign bank deposits or other assets,
establishment of exchange controls, adoption of foreign government restrictions,
or adverse  political,  social or  diplomatic  developments  that  could  affect
investment in these nations.

SHORT-TERM BOND FUND AND BOND INCOME FUND

Many factors may cause the value of a  shareholder's  investment  in the Fund to
fluctuate in value. The value of each Fund's  portfolio will normally  fluctuate
inversely with changes in market interest rates. Generally, when market interest
rates rise the price of bonds held in the Funds will fall;  when rates fall, the
price of such bonds will generally  rise. In addition,  there is a risk that the
issuer  of a bond  or  other  security  will  fail to make  timely  payments  of
principal and interest.

The risks  inherent in these Funds depend  primarily on the terms and quality of
the  obligations  in that  Fund's  portfolio,  as well as on market  conditions.
Interest  rate  fluctuations  will affect a Fund's net asset value,  but not the
income  received by the Fund from its  portfolio  securities.  However,  because
yields on debt  securities  available  for purchase by a Fund vary over time, no
specific yield on shares of a Fund can be assured.

INVESTMENT  RESTRICTIONS.   In  addition  to  the  restrictions  stated  in  the
Prospectus, the Funds shall not purchase securities on margin or sell securities
short or purchase or write put or call options; purchase "restricted securities"
(those which are subject to legal or contractual  restrictions  on resale or are
otherwise  not  readily  marketable);  nor invest in oil,  gas or other  mineral
exploration  leases  and  programs.  The Funds  shall not make  loans to others,
except  for the  purchase  of  debt  securities,  or  entering  into  repurchase
agreements.  The Funds shall not invest in  securities  so as to not comply with
Subchapter M of the Code, in that  generally at the close of each quarter of the
tax year,  at least 50% of the value of each Fund's total assets is  represented
by (i) cash and cash  items,  government  securities,  and  securities  of other
regulated  investment  companies,  and (ii) other  securities,  except that with
respect  to any one  issuer in an amount  more  than 5% of either  Fund's  total
assets,  and no more than 10% of the Fund's voting securities of any one issuer.
In addition,  the Funds shall not  purchase  real  estate;  real estate  limited
partnerships  (excepting master limited partnerships that are publicly traded on
a national security exchange or NASDAQ's National Market System); commodities or
commodity contracts; issue senior securities; provided, however, that a fund may
borrow money for extraordinary or emergency purposes and then only if after such
borrowing there is asset coverage of at least 300% for all such borrowings;  nor
act as a  securities  underwriter  except  that  they  may  purchase  securities
directly  from the issuer for  investment  purposes.  Also, no Fund of the Trust
shall purchase or retain securities of any issuer if the officers or trustees of
the Trust or its adviser own more than one-half of one percent of the securities
of  such  issuer;  invest  in any  company  for the  purpose  of  management  or
exercising control. No Fund of the Trust shall invest in the securities of other
open-end   investment   companies,   except   in   connection   with  a  merger,
consolidation,  acquisition, or reorganization or by purchase in the open market
where no commission  or profit to a sponsor or dealer  results from the purchase
other than the customary broker's commission.

No Fund shall  purchase  securities  of any issuer in excess of 5% of the Fund's
total assets or purchase more than 10% of the outstanding  voting  securities of
any issuer;  or concentrate  its  investments in a single industry beyond 25% of
the total  value of the  Fund;  or  invest  more  than 10% of its  assets in the
securities  of issuers  which  together  have a record of less than three  years
continuous  operation.  No Fund will purchase  securities if it has  outstanding
borrowings  exceeding 5% of its net assets.  No Fund's  investments in warrants,
valued  at the  lower of cost or  market,  shall  exceed  5% of the value of the
Fund's net  assets.  Included  within that  amount,  but not to exceed 2% of the
value of the Fund's net assets,  may be warrants which are not listed on the New
York or  American  Stock  Exchange.  Warrants  acquired  in units or attached to
securities may be deemed to be without value.

Notwithstanding  the above,  the Funds may purchase  securities  pursuant to the
exercise of subscription rights,  provided that such purchase will not result in
the Fund's ceasing to be a diversified investment company. Japanese and European
corporations  frequently issue additional capital stock by means of subscription
rights  offerings to existing  shareholders at a price  substantially  below the
market price of the shares.  The failure to exercise such rights would result in
a Funds'  interest in the issuing  company  being  diluted.  The market for such
rights is not well  developed in all cases and,  accordingly,  the Funds may not
always  realize the full value on the sale of rights.  The exception  applies in
cases where the limits set forth in the investment  restrictions would otherwise
be exceed by  exercising  rights or would have already been exceeded as a result
of fluctuations in the market value of the Funds' portfolio  securities with the
result that the Fund would be forced to sell  securities at a time when it might
not otherwise have done so, or to forego exercising the rights.

Investment  objectives  and  certain  policies  of each of the  Funds may not be
changed  without  the prior  approval  of the  holders  of the  majority  of the
outstanding  shares of the  respective  Fund.  Objectives and policies which are
considered  fundamental  and  subject to change  only by prior  approval  of the
shareowners include:  (1) the primary and any secondary  investment  objectives;
(2) the  classification of the Trust as an open-end  management  company and the
sub-classification  of each of the Funds as a diversified  company;  and (3) the
policies listed under "Investment Restrictions."

                         PORTFOLIO TURNOVER

The Funds have no restrictions on portfolio turnover and buy or sell investments
according to the Adviser's assessment of the market and the economy. The figures
regarding  turnover  in the  following  paragraph's  reflect the  operations  of
certain Funds under their previous objectives.  The portfolio turnover for these
Funds under their present  policies is not expected to be materially  different,
however.

   
The portfolio  turnover rate of the Sextant  Growth Fund  (previously  Northwest
Growth Fund) for the fiscal years ended  November 30, 1995,  1994, and 1993, was
40%, 12%, and 25%, respectively.

The  portfolio  turnover  rate  of the  Sextant  Bond  Income  Fund  (previously
Washington  Tax-Exempt  Fund) for the fiscal  years ended  November 30, 1995 and
1994 and for the period March 1, 1993  (commencement  of operations) to November
30, 1993 was 77%, 74% and 36% (not annualized).

Portfolio  turnover for Sextant  Short-Term Bond Fund and Sextant  International
Fund for the period September 28, 1995 (inception) through November 30, 1995 was
0% and 12%, respectively.
    

                          PERFORMANCE DATA

The figures regarding yield and total return in the following paragraphs reflect
the operations of certain Funds under their previous  objectives.  Consequently,
no inference as to future performance of the Sextant Growth Fund or Sextant Bond
Income Fund should be drawn nor is any such implication intended.

Certain  factors  should be taken into  account  before  using Total  Return and
Current  Yield   information  as  a  basis  for  comparison   with   alternative
investments.  No  adjustment  is made for taxes  payable on  distributions.  The
performance  for any given past period is not an  indication  of future rates of
return or yield on its shares.

   
The Sextant  Growth  Fund's total return for the one year period ended  November
30, 1995 was 30.76%.  Average annual total return from April 1, 1987  (inception
of the Northwest Growth Fund) through  November 30, 1995 was 7.49%.  Performance
figures for the Northwest  Growth Fund for the period prior to October 12, 1990,
reflect the Fund's  investment  objective  at that time of  tax-free  income and
capital preservation.

The total return of the Sextant Bond Income Fund (formerly Washington Tax-Exempt
Fund) for the one year period ended November 30, 1995 was 17.69%. Average annual
total return for the period March 1, 1993  (commencement of operations)  through
November 30, 1995, was 4.30%.

The total return of the Sextant  Short-Term Bond Fund and Sextant  International
Fund for the period September 28, 1995 (inception) through November 30, 1995 was
1.05% and (0.20)%, respectively.
    

Average  annual Total Return  quotations  for various  periods  illustrated  are
computed by finding the average annual compounded rate of return over the period
quoted that would equate the initial  amount  invested to the ending  redeemable
value according to the following formula:

            P (1 + T)n   =   ERV

Where

            P = a  hypothetical  initial  Payment  of $1,000 T = average  annual
            Total return n = Number of years ERV =Ending Redeemable Value of the
            $1,000 payment

                  made at the beginning of the period.

To solve for average Total Return, the formula is as follows:

            T  =  (ERV/P) 1/n  - 1

The Funds  utilize the  following  procedures in  determining  yield.  The yield
calculation is based on a 30 day period and is computed by the following formula
using the compounded semi-annual APR:

      Nominal Yield = [ [ [ ( (a-b) / ( c*d ) ) + 1 ] -1 ] /30 ] * 360

      Compounded Semi-Annual APR = [ [ 1 + [ Nominal Yield / 2 ] ] 2  ] - 1

Where: a = dividends and interest earned during the period; b = expenses accrued
for the period (net of  reimbursement);  c = the average  daily number of shares
outstanding during the period that were entitled to receive  dividends;  and d =
the maximum offering price per share  (equivalent to Net Asset Value for no-load
funds) on the last day of the period.

   
The figures  regarding  yield and total return in this  paragraphs  reflect,  at
least in part,  the  operations  of Sextant  Bond Income Fund under its previous
objectives.  Consequently, no inference as to future performance of Sextant Bond
Income Fund should be drawn nor is any such implication  intended.  The yield on
Sextant Bond Income Fund for the 30-day period ended November 30, 1995 was 4.8%.
    

In advertising and sales  literature,  a Fund may compare its  performance  with
that of other mutual funds,  indexes or averages of other mutual funds,  indexes
or data, and other competing investment and deposit products. The composition of
these indexes or averages  differs from that of the Funds.  Comparison of a Fund
to  an  alternative   investment  should  be  made  with  consideration  of  the
differences in features and expected performance of the investments.

All of the indexes and averages  noted below will be obtained from the indicated
sources  or  reporting  services,  which  the  Trust  believes  to be  generally
accurate.  A Fund may also note its mention or recognition in other  newspapers,
magazines  or  media  from  time  to  time.   However,   the  Trust  assumes  no
responsibility for the accuracy of such data. Among the newspapers and magazines
that might mention the Trust or the Funds are:

                Barron's            Money
                Business Week       Mutual Fund Letter
                Changing Times      Morningstar
                Consumer Reports    New York Times
                Consumer Digest     Pensions and Investment
                Financial World     USA Today
                Forbes              US News and World Report
                Fortune             Wall Street Journal
                Investors Daily


The Funds may also  compare  themselves  to the Consumer  Price Index,  a widely
recognized measure of inflation, and to other indexes and averages such as:

      Dow Jones Industrials         New York stock Exchange  Composite
      Standard  & Poor's  500 Stock Index

         Index                      American Stock Exchange  Composite
      Standard    &   Poor's    400 Index

         Industrials                NASDAQ Composite
      Wilshire 5000                 NASDAQ Industrials
      Russell 2000                  Lipper General Equity Fund Average
      Lipper  Capital  Appreciation Lipper Equity Funds Average

         Fund Average               Lipper Growth Fund Index
      Lipper Growth Funds Average   Lipper   Growth  &   Income   Fund
      Lipper Small  Company  Growth Average

         Fund Average               Lipper Balanced Fund Average
      Lipper   Equity  Income  Fund Lipper Growth & Income Fund Index

         Average                    Lipper Equity Income Fund Index
      Lipper  Capital  Appreciation Lipper Balanced Fund Index

         Fund Index                 Ibbotson Common Stocks Index
      Lipper Growth Fund Index
      Lipper Small  Company  Growth

         Fund Index
      Morningstar    Mutual    Fund

         Indices

The indexes and averages are measures of  performance of stocks and mutual funds
that are classified, calculated and published by these independent services. The
Funds may also use comparative  performance as computed in a ranking by these or
other independent services.

A Fund may also cite its  rating or other  mention  by  Morningstar  or  another
entity.   Morningstar's   ratings  are  based  on  risk-adjusted   total  return
performance,  as computed by  Morningstar  by subtracting a Fund's risk score as
computed by  Morningstar,  from the fund's total return  score.  This  numerical
score is then translated into rating categories.

                       MANAGEMENT OF THE TRUST

Information  concerning  Trustees and Officers of the Trust and their  principal
occupations for the past five years is shown below:

GARY A. GOLDFOGEL, M.D., Trustee
1500 N. State Street, Bellingham, WA 98225.
Pathologist and Medical  Dir.,  Whatcom  Pathology  Lab.  Whatcom  County;
Medical Examiner, Whatcom County

NICHOLAS KAISER, M.B.A., C.F.A. - President and Trustee *
 1300 N. State Street, Bellingham, WA 98225.
President of Saturna Capital Corporation, since July 1989.
President of Unified Management Corporation,  Indianapolis IN, investment
advisers and brokers, from 1976 through June 1989.

JOHN E. LOVE, Trustee
Box 188, Garfield, Washington 99130
Owner, J.E. Love Co., international agricultural  equipment  manufacturer,
Garfield, WA
Director, Bank of Whitman, Colfax, Wash.
Rear Admiral, U.S. Navy, Retired.

JOHN S. MOORE, Trustee
 College of Business and Economics, Western Washington University,
 Bellingham, WA 98225-9077
Professor of Business Administration

JAMES D. WINSHIP, J.D., M.B.A.- Trustee and Secretary*
1300 N. State Street, Bellingham, WA 98225.
Vice President and Secretary, Saturna Capital Corporation, October 1991 to
present.
Editor-at-large,  FUND DIRECTIONS  industry  newsletter,  December 1991 to
present.
Executive Vice-President and member of the management committee, Stein Roe
& Farnham Incorp.,  Chicago IL, investment adviser,  and head of its
mutual fund division, prior to October 1991.

PHELPS S. MCILVAINE - Vice President
1300 N. State Street, Bellingham, WA 98225.
Vice President and Director Saturna Capital  Corporation,  January 1994 to
present.
Bond ArbitrageTrader, Hickey Financial, Chicago Illinois 1987-1994

MEREDITH L. ROSS - M.B.A., Treasurer
1300 N. State Street, Bellingham, WA 98225.
Assistant  Treasurer,  Saturna  Capital  Corporation,  September  1989  to
present.

* Nicholas Kaiser and James Winship are each an "interested person" of the Trust
as defined in the Investment Company Act of 1940.

   
Beginning  January  1,  1996,  the Trust pays  disinterested  trustees  $100 per
meeting attended and  reimbursement of travel expenses  (pro-rata to each Fund).
Neither Mr. Winship nor Mr. Kaiser receives compensation from the Trust, nor are
the other  officers of the Trust paid for their duties with the Trust.  Prior to
that time all Trustees served without compensation, as set forth below.
    


<PAGE>

<TABLE>
<CAPTION>

                                  Pension or                         Total
                     Aggregate    Retirement                         Compensation
Name of              Compensa-    Benefits Accrued Estimated Annual  From Registrant
Person;              tion From    As Part of Fund  Benefits Upon     and Fund Complex
Position             Registrant   Expenses         Retirement        Paid to Directors

<S>                          <C>        <C>          <C>                   <C>
GARY GOLDFOGEL,              $0         $0           $0                    $0
Trustee

JOHN E. LOVE,                0          0            0                      0
Trustee

JOHN S. MOORE,               0          0            0                      0
Trustee

NICHOLAS F. KAISER           0          0            0                       0
Trustee

JAMES D. WINSHIP             0          0            0                      0
Trustee
</TABLE>

The Board has  authority to establish an Executive  Committee  with the power to
act on behalf of the Board  between  meetings  and to exercise all powers of the
Trustees  in the  management  of the  Trust.  No  Executive  Committee  has been
established at this time. An Audit  Committee,  consisting of the  disinterested
directors,  meets to select  the  independent  accountant  and  review all audit
reports. There is no separate nominating committee.

As of February 6, 1996 officers, trustees and their families as a group, own the
following shares of the Funds

   
                                                  Percent of
          Fund                Shares Owned       Outstanding
        Sextant Short-Term Bond     65,625               16%
        Sextant Bond Income Fund    69,682               29%
        Sextant Growth Fund         24,964               14%
        Sextant International Fund  41,624               44%
    


<PAGE>


                   PRINCIPAL HOLDERS OF SECURITIES

   
As of February 6, 1996 the only  shareholders  of Sextant  Short-Term  Bond Fund
owning 5% or more were as follows:

      Name                                Shares              Percentage
      SAFA Trust, Inc.
      c/o Omar Oshraf                    200,363                     48%

      Nicholas F. Kaiser

      Markell F. Kaiser, Jt. Ten.         50,863                     12%

      Henry D. Klein                      30,054                   7.23%

      Investors National Corporation      25,294                      6%

As of  February  6, 1996 the only  shareowner  with 5% or more of  sextant  Bond
Income Fund were as follows:

      Name                                Shares              Percentage

      Nicholas F. Kaiser

      Markell F. Kaiser, Jt. Ten.       42,495                       17%

      Carol Lingow, Guardian

      FBO Robert C. Schmidt               25,757                     11%

      Saturna Capital Corporation         21,199                      9%

      Luzenia B. Redpath                  19,617                      8%

      Loie E. Haggen                      15,977                      7%

      Kust Enterprises Inc. Pension and

      Profit Sharing Plan                 15,211                      6%

      Frederick M. Graham

      Mary J. Graham, Jt. Ten.            13,135                      5%

      Northwest Radiologists, Inc. PS

      401(k) FBO Donald C. Barnett        12,897                      5%

As of February 6, 1996  the only shareowners with 5% or more of  Sextant Growth
Fund were:

      Name                                Shares              Percentage
      Northwest Radiologists Inc. PS
      401(k) Plan FBO Donald C. Barnett   18,437                     10%

      Nicholas F. Kaiser IRA Rollover     17,448                     10%

      Michael R. McRory                    9,151                      5%

As of February 6, 1996  the only shareowners with 5% or more of  Sextant Growth
Fund were:

      Name                                Shares              Percentage
      Nicholas F. Kaiser IRA Rollover     23,509                     25%

      Northweest Radiologists Inc PS

      401(k) Plan FBO Donald C. Barnett   15,927                     17%

      Northwest Eye Clinic Employee Pension

      Trust #13                            6,937                      7%

      Ralph H. Rinne

      Eleanor W. Rinne Jt. Ten.            5,181                      5%

      James D. Winship Special Account     5,076                      5%

      Markell F. Kaiser, IRA Rollover      5,000                      5%

      Markell F. Kaiser CUST               5,000                      5%

               INVESTMENT ADVISORY AND OTHER SERVICES
    

Each  of  the  Sextant   Funds   monthly   pays  the  Adviser  an  Advisory  and
Administrative Services Fee (the "Base Fee").

The  Base  Fee  covers  certain   administrative   services  such  as  portfolio
accounting,  shareholder  and  financial  reporting,  shareholder  servicing and
transfer  agency  services.  The Base  Fee is also  compensation  for  portfolio
management,  advice and  recommendations on securities to be purchased,  held or
sold.  The Base Fee is computed at the annual rate of 0.60% of average daily net
assets of each Fund, and is paid monthly.  The Base Fee is subject to adjustment
up or down  depending on the  investment  performance  of the Fund relative to a
specified index (the "Performance Adjustment.")

"PERFORMANCE ADJUSTMENT" FOR SEXTANT BOND INCOME FUND AND SEXTANT SHORT-TERM
BOND FUND

For each month in which either of these Funds' total  investment  return (change
in net asset value plus all  distributions  reinvested)  for the one year period
through that month  outperforms or underperforms the total return of a specified
index for that period by 1% or more but less than 2%, the Base Fee is  increased
or decreased by the annual rate of .10% of the Fund's  average  daily net assets
for the preceding year. If the outperformance or underperformance is 2% or more,
then the adjustment is at the annual rate of .20%.

No performance  adjustment is applicable  during the first year the Agreement is
in place.

PERFORMANCE ADJUSTMENT FOR SEXTANT GROWTH FUND AND SEXTANT INTERNATIONAL FUND

For each month in which either of these Fund's total  investment  return (change
in net asset value plus all  distributions  reinvested)  for the one year period
through that month  outperforms or underperforms the total return of a specified
index for that period by 1% or more but less than 2%, the Base Fee is  increased
or decreased by the annual rate of .10% of the Fund's  average  daily net assets
for the preceding year. If the outperformance or  underperformance is 2% or more
but less than 4%,  then the  adjustment  is at the annual  rate of .20%.  If the
outperformance or underperformance is 4% or more, the adjustment is at an annual
rate of .30%.

No  Performance  Adjustment is payable during the first year the Agreement is in
place.

Total return investment  performance as calculated and published by Morningstar,
Inc.  for  selected  groups  of  mutual  funds  will be used  as the  index  for
comparison purposes.  Each Fund and the comparative Morningstar group to be used
are:

Sextant Growth Fund:  "GROWTH FUNDS"

Sextant  International Fund: "FOREIGN STOCK FUNDS"

Sextant Bond Income Fund:   "CORPORATE BOND FUNDS-HIGH QUALITY"

Sextant Short-Term Bond Fund:   "CORPORATE BOND FUNDS-HIGH QUALITY"

In the event that a particular index is no longer available or otherwise becomes
unavailable or inappropriate, in the opinion of the Board of Trustees, the Board
may select another to replace it.

The Adviser has also  voluntarily  undertaken  to limit  expenses of Bond Income
Fund and Short-Term Bond Fund to 0.60% through March 31, 1997. A waiver may have
the effect of subsidizing the yield for the period it is in effect.

Each Fund pays its own taxes, brokerage  commissions,  trustees' fees, legal and
accounting  fees,  insurance,  expenses  incurred  in  complying  with state and
federal  laws  regulating  the issue and sale of its  shares,  and  mailing  and
printing costs for prospectuses, reports and notices to shareowners.

The Adviser  furnishes  office space,  facilities and  equipment,  personnel and
clerical and bookkeeping  services required to conduct the business of the Fund,
as well as transfer agency and certain other expenses.

For no additional charges,  the Adviser provides services as the transfer agent,
registrar and  dividend-paying  agent for each Fund. As transfer agent,  Saturna
furnishes to each shareowner a statement after each  transaction,  an historical
statement at the end of each year showing all transactions  during the year, and
Form  1099 tax  forms.  Saturna  also,  on  behalf  of the  Trust,  responds  to
shareowners' questions or correspondence.  Further, the transfer agent regularly
furnishes each Fund with current  shareowner lists and information  necessary to
keep the  shares  in  balance  with the  Trust's  records.  The  mailing  of all
financial  statements,  notices and  prospectuses to shareowners is performed by
the transfer  agent.  The transfer  agent  maintains  records of  contributions,
disbursements  and assets as required  for IRAs and other  qualified  retirement
accounts.  Each Fund reimburses Saturna for any out-of-pocket  expense for forms
and mailing costs used in performing its functions.

The laws and  regulations of various states set expense  limitations  for mutual
funds as a condition  for  registration  to offer and sell shares in that state.
Usually,  the expense  limitation  requires  reimbursement if, and to the extent
that, the aggregate  operating expenses including the advisory fee but generally
excluding interest, taxes, brokerage commissions and extraordinary expenses, are
in excess of a specified  percentage of the average net assets of a Fund for its
fiscal year. The only state the adviser believes maintains an expense limitation
is California,  which limits aggregate annual expenses (with exceptions) to 2.5%
of the first $30 million of average  net assets,  2% of the next $70 million and
1.5% of the remaining average net assets.

National City Bank,  Indianapolis,  Indiana 46255 is the custodian of the Funds'
securities  and other  assets.  As  custodian,  the bank  holds in  custody  all
securities  and cash,  settles for all securities  transactions,  receives money
from sale of shares and on order of each Fund pays the  authorized  expenses  of
the Fund.  When Fund shares are redeemed by investors,  the proceeds are paid to
the shareowner by check drawn on the custodian bank.

Price Waterhouse, LLP 1001 Fourth Avenue Plaza, Seattle, Washington 98154 serves
as the  independent  accountants  for the  Trust.  The  independent  accountants
conduct  the annual  audit of the Trust as of  November  30 and  prepare the tax
returns of each Fund.

PRIOR TO  SEPTEMBER  28,  1995,  UNDER THE  ADVISORY  CONTRACTS  THEN IN EFFECT,
SEXTANT  GROWTH FUND AND SEXTANT BOND INCOME FUND WERE  OBLIGATED TO PAY SATURNA
CAPITAL FEES UNDER MANAGEMENT CONTRACTS THAT ARE NO LONGER IN EFFECT.

Under the former contracts, Northwest Growth Fund, predecessor to Sextant Growth
Fund  paid  Saturna  Capital  monthly  an  advisory  fee at the rate of 0.75% of
average daily net asset value annually.  Similarly,  Washington Tax-Exempt Fund,
predecessor  to Sextant Bond Income Fund was  obligated  to pay Saturna  Capital
monthly an advisory  fee at the annual  rate of 0.50% of the  average  daily net
assets up to $250 million,  0.40% of assets between $250 million and $1 billion,
and 0.30% of assets in excess of $1  billion.  Under the former  contracts,  the
Adviser  received a separate fee as compensation  for services as transfer agent
and dividend  disbursement  agent. Each Fund paid Saturna an annual fee of $1.10
per month per shareowner account (plus $.30 per month for Funds paying dividends
more  frequently than once per quarter).  Each Fund  reimbursed  Saturna for any
out-of-pocket  expense  for forms  and  mailing  costs  used in  performing  its
functions.  For the fiscal year ended  November 30, 1995,  Sextant  Growth Fund,
(formerly  Northwest Growth Fund paid transfer agent fees of $1,272, and Sextant
Bond Income Fund (formerly Washington Tax-Exempt Fund) paid $842.

   
For fiscal 1995,  Sextant Growth Fund paid investment adviser and administration
fees of $7,255,  a portion of which was paid under the new contract  approved by
shareholders  effective  September 28, 1995.  For fiscal 1994,  under the former
contracts Sextant Growth Fund paid $9,318 in  administrative  and advisory fees,
and no waiver or  reimbursement  was required.  For fiscal 1993,  that Fund paid
$10,504 in administrative  and advisory fees, and no waiver or reimbursement was
required.

For  fiscal  1995,   Sextant  Bond  Income  Fund  paid  investment  adviser  and
administration  fees of  $5,838,  all of which was  waived  under the  adviser's
voluntary  expense  reimbursements.  For fiscal 1994, under the former contracts
Sextant  Bond Income Fund paid $8,394 in  administrative  and  advisory  fees of
which Saturna Capital waived or reimbursed  $8,046. For the period March 1, 1993
(commencement of operations)  through November 30, 1993, that Fund was obligated
to pay $5,809, of which $4,184 was reimbursed or waived by the adviser.

For the period September 28, 1995 (inception) through November 30, 1995, Sextant
Short-Term Bond Fund and Sextant  international Fund paid investment adviser and
administration fees of $605 (all of which was reimbursed under voluntary expense
limitations) and $296, respectively.
    

                        BROKERAGE ALLOCATION

The  placing  of  purchase  and  sale  orders  as  well  as the  negotiation  of
commissions  is  performed  by the  Adviser  and is  reviewed  by the  Board  of
Trustees.  The  Adviser  may  allocate  brokerage  to any  broker in return  for
research or services  and for  selling  shares of any Fund.  Brokers may provide
research or statistical  material to the Adviser,  but this  information is only
supplemental to the research and other  statistics and material  accumulated and
maintained through the Adviser's own efforts. Any such supplemental  information
may or may not be of value or used in making investment  decisions for the Trust
or any other account serviced by the Adviser.

The primary consideration in effecting securities  transactions for each Fund is
to obtain the best price and  execution  which in the judgment of the Adviser is
attainable  at the time and  which  would  bring the best net  overall  economic
result to the Fund.  Factors  taken  into  account in the  selection  of brokers
include the price of the  security,  commissions  paid on the  transaction,  the
efficiency  and  cooperation  with  which  the  transaction  is  effected,   the
expediency of making settlement and the financial  strength and stability of the
broker. The Adviser may negotiate  commissions at a rate in excess of the amount
another  broker  would  have  charged  if it  determines  in good faith that the
overall net  economic  result is favorable  to the Fund.  The Adviser  evaluates
whether  brokerage  commissions are reasonable based upon available  information
about  the  general  level of  commissions  paid by  similar  mutual  funds  for
comparable services.

The Adviser's  subsidiary,  Investors  National  Corporation,  is qualified as a
broker-dealer  to engage in a general  brokerage  business.  Investors  National
Corporation  conducts all its  transactions  on an agency basis for  established
"deep  discount"  commissions;  it does not make  markets,  "deal," or  maintain
inventories  of  securities.  It is expected  that most stock  brokerage for the
Trust will be conducted through Investors National Corporation, and the Board of
Trustees  has given  permission  for the  Adviser  to so direct.  For  brokerage
conducted  through an  affiliate  of the  Adviser,  the  Trustees  have  adopted
procedures reasonably designed to ensure that such brokerage fees are reasonable
and fair  compared  to  remuneration  received  by other  brokers in  comparable
transactions.  The Trustees are provided detailed  quarterly  monitoring reports
and review the procedures at least annually.

   
For fiscal  years 1995 and 1994,  Sextant  Growth Fund paid $3,188 and $1,514 in
brokerage  commissions  to  Investors  National  Corporation.   For  the  period
September 28, 1995 (inception) to November 30, 1995, Sextant  International Fund
paid $267 in commissions to Investors  National  Corporation.  This  represented
100% of the Fund's commissions and aggregate brokerage  transactions for each of
these years.  Similarly,  for fiscal years 1995 and1994 Sextant Bond Income Fund
paid no brokerage  commissions.  Similarly,  for the period  September  28, 1995
(inception)  through  November 30, 1995,  Sextant  Short-Term  Bond Fund paid no
commissions.
    

        PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING

                               OFFERED

See  HOW TO BUY  SHARES,  HOW TO  REDEEM  SHARES  and  NET  ASSET  VALUE  in the
Prospectus for an explanation about the ways to purchase or redeem shares.

In addition to normal  purchases or redemptions,  the shares of each Fund may be
exchanged for shares of other Funds of Saturna  Investment Trust.  Exchange will
be made at no charge upon written  request or by telephone if the shareowner has
previously  authorized telephone  privileges on the application.  A gain or loss
for federal tax purposes will be realized upon  redemption of any shares for the
purposes of an exchange as described above.

Net asset value per share is determined by dividing the value of all  securities
and other assets, less liabilities, by the number of shares outstanding. The net
asset  value is  determined  for each Fund as of the close of trading on the New
York Stock Exchange (generally 4 p.m. New York time) on each day the Exchange is
open for  trading.  The  Exchange  is  generally  closed  on:  New  Year's  Day,
Washington's  Birthday/President's  Day, Good Friday, Memorial Day, Independence
Day (observance), Labor Day, Thanksgiving Day and Christmas Holiday.

                             TAX STATUS

Saturna  Investment  Trust is organized  as a "series"  investment  company.  At
present only the Funds and Idaho Tax-Exempt Fund are offered,  but the Trust may
create in the future additional funds with different investment objectives. Each
Fund is a separate  economic  entity with separate  assets and  liabilities  and
separate income streams.  The shareowners of each separate Fund may look only to
that  Fund  for  income,  capital  gain or  loss,  redemption,  liquidation,  or
termination.  Each Fund has separate  arrangements  with the Adviser.  Assets of
each Fund are segregated. The creditors and shareowners of each Fund are limited
to the assets of that Fund for recovery of charges,  expenses  and  liabilities.
Each Fund  conducts  separate  voting on issues  relating  solely to that  Fund,
except as  required  by the  Investment  Company  Act.  The tax  status  and tax
consequences  to shareowners  of each separate Fund will differ,  depending upon
the investment objectives,  operations,  income, gain or loss, and distributions
from each Fund.

   
Each Fund intends to  distribute  to  shareowners  substantially  all of its net
investment  income and net realized capital gains, if any, and to comply,  as it
has since inception, with the provisions of the Internal Revenue Code applicable
to regulated  investment  companies,  which relieve the Funds of federal  income
taxes on the  amounts  so  distributed.  For  Sextant  Growth  Fund and  Sextant
International Fund, dividends from net investment income and distribution of any
capital  gains are made at the end of the fiscal year in  November.  The Sextant
Bond  Income  Fund and  Sextant  Short-Term  Bond  Fund pay  dividends  from net
investment income daily,  which are reinvested as distributed at each month-end.
Distribution of any net realized  capital gains is made at the end of the fiscal
year in November.
    

The  amount of  investment  income  and  capital  gains,  if any,  which will be
available  for  distribution  by a Fund in the future cannot be predicted due to
continually changing economic conditions and market prices.

Dividends  and  distributions  from  capital  gains are normally  reinvested  in
additional  full and fractional  shares of the Fund.  The shares  purchased with
dividends  or  capital  gains  distributions  may be  redeemed  using any of the
methods for redemption of shares.

Distributions  and dividends  may be subject to federal,  state and local taxes.
Shareowners  will be taxed  whether  the  shares  automatically  purchased  with
dividends and distributions are left in the Fund or are paid to the shareowner.

Shortly  after  the end of each  calendar  year  shareowners  are  mailed a Form
1099-DIV advising of the dividends paid the shareowner for the year.

If you do not furnish the  transfer  agent with a valid  Social  Security or Tax
Identification  Number and in certain  other  circumstances,  we are required to
withhold  31% of  dividend  income.  Income  dividends  to  shareowners  who are
nonresident  aliens may be subject to a 30% United States  withholding tax under
the  existing  provisions  of the code  applicable  to foreign  individuals  and
entities  unless a reduced rate of  withholding  or a  withholding  exemption is
provided  under  applicable  treaty  law. If the IRS  determines  that the Trust
should be fined or penalized for  inaccurate or missing or otherwise  inadequate
reporting of a Tax  Identification  Number, the amount of the IRS fee or penalty
will be directly assessed to the shareowner account involved.

   
                        FINANCIAL STATEMENTS

The most recent audited annual report  accompanies  this Statement of Additional
Information.  The  financial  statements  and selected per share data and ratios
dated  November 30, 1995,  together with the report of  independent  accountants
dated  December 15, 1995,  are  considered a part of the Statement of Additional
Information and are incorporated by reference.
    


<PAGE>


                        APPENDIX-BOND RATINGS

GENERAL. Moody's and S&P's ratings represent their opinions as to quality of the
bonds which they undertake (for a fee) to rate. Such ratings are not intended to
be an absolute  standard of quality.  A rating is not a  recommendation  to buy,
sell or hold a bond  because  it does  not take  into  account  market  value or
suitability for a particular  investment purpose.  Ratings may vary from service
to service,  and may be changed,  withdrawn  or suspended  without  notice for a
variety of reasons.

BOND RATINGS

MOODY'S INVESTORS SERVICES,  INC.,  describes its ratings for debt securities as
follows:

      AAA   Bonds which are rated AAA are judged to be of the best quality. They
            carry the  smallest  degree  of  investment  risk and are  generally
            referred to as "gilt edge."  Interest  payments  are  protected by a
            large,  or  exceptionally  stable  margin,  and principal is secure.
            Although the various protective  elements are likely to change, such
            changes  as can be  visualized  are  most  unlikely  to  impair  the
            fundamentally strong position of such issues.

      AA    Bonds  rated AA are judged to be of high  quality by all  standards.
            Together with the Aaa group,  they comprise what are generally known
            as  high-grade  bonds.  They are  rated  lower  than the best  bonds
            because margins of protection may not be as large as in Aaa bonds or
            fluctuation  of protective  elements may be of greater  amplitude or
            there may be other  elements  present  which may make the  long-term
            risks appear somewhat larger than in Aaa bonds.

      A     Bonds rated A possess many favorable  investment  attributes and are
            to be considered as upper medium grade  obligations.  Factors giving
            security to  principal  and interest are  considered  adequate,  but
            elements may be present which suggest a susceptibility to impairment
            sometime in the future.

      BAA   Bonds rated Baa are  considered as medium grade  obligations;  I.E.,
            they are  neither  highly  protected  nor poorly  secured.  Interest
            payments and principal  security appear adequate for the present but
            certain   protective   elements   may   be   lacking   or   may   be
            characteristically  unreliable  over any great length of time.  Such
            bonds lack outstanding  investment  characteristics and in fact have
            speculative characteristics as well.

STANDARD & POOR'S describes its rating for debt securities as follows:

      AAA   Debt rated AAA has the highest rating.  Capacity to pay interest and
            to repay principal is extremely strong.

      AA    Debt rated AA has a very  strong  capacity  to pay  interest  and to
            repay  principal,  and differs  from the higher rated issues only in
            small degree.

      A     Debt  rated  A has a  strong  capacity  to pay  interest  and  repay
            principal,  although it is somewhat more  susceptible to the adverse
            effect of changes and circumstances in economic conditions than debt
            in higher rated categories.

      BBB   Debt rated BBB is  regarded  as having an  adequate  capacity to pay
            interest and repay principal.  Whereas it normally exhibits adequate
            protection  parameters,  adverse  economic  conditions  or  changing
            circumstances  are more likely to lead to a weakened capacity to pay
            interest and repay principal for debt in this category than for debt
            in higher rated categories.

COMMERCIAL PAPER RATINGS

MOODY'S  INVESTORS  SERVICES,  INC.  employs  the  following  designations,  all
investment grade

                        PRIME-1     Highest quality
                        PRIME-2     Higher quality
                        PRIME-3     High Quality

If an issuer  represents that its commercial paper is supported by the credit of
another  entity or entities,  Moody's  evaluates the financial  strength of that
affiliated entity as one factor in the total rating assessment.

STANDARD & POOR'S describes its rating and their meanings as follows:

      A     Issues  assigned  this  highest  rating are  regarded  as having the
            greatest  capacity for timely  payment.  Issues in this category are
            further  refined with the  designations  1, 2, and 3 to indicate the
            relative degree of safety.

      AA    This  designation  indicates  that the  degree of  safety  regarding
            timely  payment is very strong.  Those issues  determined to possess
            overwhelming safety  characteristics will be denoted with a plus (+)
            sign.


<PAGE>


=====================================================================
1

=====================================================================
CROSS REFERENCE SHEET

 PART A                                 PROSPECTUS CAPTIONS

1.  Cover Page                          About the Trust;Expenses

2.  Synopsis                            Expenses

3.  Condensed Financial Information          Expenses; Financial Highlights

4.  General Description of Registrant      About the Trust,Investment Objectives
                                            and Policies; InvestmentPolicies 
                                             and Risk Considerations

5.  Management of the Fund              Trust Management,Investment Adviser

6.  Capital Stock and Other Securities       Capital Stock; Dividends

7.  Purchase of Securities Being Offered     Net Asset Value, How to Buy Shares

8.  Redemption or Repurchase             How to Redeem Shares

9.  Pending Legal Proceedings            Not Applicable

                                  
PART B                                  INFORMATION CAPTIONS

10.  Cover Page                          Cover Page

11.  Table of Contents                  TABLE OF CONTENTS

12.  General Information and History         General Information and History

13.  Investment Objectives & Policies        INVESTMENT OBJECTIVES AND POLICIES;
                                             PORTFOLIO TURNOVER; INVESTMENT
                                        CONSIDERATIONS

14.  Management of the Registrant       MANAGEMENT OF THE TRUST

15.  Control Persons and Principal      PRINCIPAL HOLDERS OF SECURITIES
Holders of Securities 
          
16.  Investment Advisory and Other           INVESTMENT ADVISORY
          Services                      AND OTHER SERVICES

17.  Brokerage Allocation and Other          BROKERAGE ALLOCATION
           Practices                         PORTFOLIO TURNOVER

18.  Capital Stock and Other Securities Not Applicable

19.  Purchase, Redemptions and Pricing  PURCHASE, REDEMPTION AND
          of Securities Being Offered        PRICING OF SECURITIES

BEING OFFERED

20.  Tax Status                              TAX STATUS

21.  Underwriters                       Not Applicable

22.  Calculations of Performance Data   PERFORMANCE DATA

23.  Financial Statements                    FINANCIAL STATEMENTS


<PAGE>


=====================================================================
1

=====================================================================

SATURNA INVESTMENT TRUST OFFERS IDAHO TAX-EXEMPT FUND, A

NO-LOAD MUTUAL FUND.

IDAHO TAX-EXEMPT FUND seeks income exempt from federal and Idaho income taxes by
investing in a portfolio of Idaho municipal securities.  The secondary objective
is to preserve capital.

A Statement of Additional  Information dated March 29 , 1995 has been filed with
the Securities and Exchange  Commission  and is  incorporated  by reference into
this Prospectus. You may obtain a free copy by writing or calling:

                           SATURNA CAPITAL
                               1300 N. STATE STREET
                               BELLINGHAM, WA 98225

                           800/ SATURNA [800/ 728-8762]

                            E-MAIL: IDAHO@SATURNA.COM

This Prospectus  contains  information  you should read before  investing in the
Funds. Please read it carefully and keep it for future reference.

THESE  SECURITIES  HAVE NOT BEEN APPROVED OR  DISAPPROVED  BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES  AUTHORITY NOR HAS THE COMMISSION OR
ANY STATE AUTHORITY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

[GRAPHIC OMITTED]

FROM

                          [GRAPHIC OMITTED]

                             MUTUAL FUNDS

                         NO-LOAD,
                     NO SALES CHARGE,

                          NO 12B-1

                  PROSPECTUS
                            March 29, 1996


<PAGE>


=====================================================================
12

=====================================================================
                                  1

   
EXPENSES

The Fund imposes no sales load on purchases or reinvested dividends,  no "12b-1"
fees, nor any deferred sales load upon redemption.  There are no redemption fees
or exchange fees. The following table illustrates operating expenses of the Fund
for the fiscal year ended November 30, 1995.
<TABLE>

                 <CAPTION>
 ANNUAL FUND OPERATING EXPENSES
               (as a percentage of average net assets)

<S>                                           <C>  
Management and Administrative Fees (after     0.32%
waiver)
12b-1 Expenses                                NONE
Other Expenses                                0.43%
Total Fund Operating Expenses                 0.75%*

For Example:

The Fund estimates paying        1 year --       $8
these expenses on a $1,000       3 years--       $25
investment, assuming 5%          5 years--       $44
annual return:                   10 years--      $100
<FN>

            *The Adviser  voluntarily  limited operating expenses of the Fund at
            0.75% annually  through  November 30, 1995 and to .80% through March
            31,  1997.  This  limit,  first  adopted in October  1990,  has been
            extended  through  March  31,  1997.  Without  the  limitation,  the
            management  and   administrative  fee  would  have  been  0.50%  and
            operating  expenses of the Fund would have been  1.01%.  The example
            assumes a continuation  of this expense cap for the 3, 5 and 10 year
            periods.
</FN>
</TABLE>

The preceding  information is intended to help you in understanding  the various
(both  direct and  indirect)  expenses  that an investor  will bear.  This table
should not be considered a representation  of past or future expenses and actual
expenses  are  likely  to be  more or  less  than  those  shown.  See  FINANCIAL
HIGHLIGHTS and INVESTMENT ADVISER for more details.


<PAGE>


FINANCIAL HIGHLIGHTS

[GRAPHIC OMITTED]

Selected  data  for  a  share  of  IDAHO  TAX-EXEMPT  FUND  beneficial  interest
outstanding  throughout each period.  The following schedule for each of the six
years  ended  November  30,  1995 has been  audited  by  Price  Waterhouse,  LLP
independent  accountants,  whose report thereon is included in the Annual Report
to  Shareowners,  which is  incorporated  by  reference  into the  Statement  of
Additional  Information.  The data for each of the two years in the period ended
November  30,  1989  and for the  period  September  4,  1987  (commencement  of
operations)  through  November  30,  1987  were  audited  by  other  independent
accountants whose report dated January 19, 1990 expressed an unqualified opinion
on those data. This schedule should be read with the other financial  statements
and notes  thereto  included in the Trust's  Annual  Report which also  includes
Management's Discussion of the Fund's performance.  The Trust's Annual Report is
available without charge from the Trust.
` <TABLE>
                                                                                             Sept.4 '87
                                                                                              (Commence-
                                                                                               ment of Op- 
                                  -----------------------------------------------------------  erations) to
                                  1995    1994    1993    1992    1991    1990    1989    1988 Nov. 30 '87
                                                                                                        
Net asset value at beginning
<S>                              <C>     <C>     <C>     <C>     <C>     <C>      <C>     <C>    <C>  
   of period                     $4.76   $5.23   $ 5.16  $ 5.10  $5.03   $5.07    4.98   $5.03  $5.00
   Income From Investment
   Operations
   Net investment income         0.26    0.27    0.25    0.28    0.30    0.33    0.35    0.35    0.02
   Net gains or losses on
   securities(both realized 
     and unrealized)            0.52   (0.46)   0.12    0.09    0.07   (0.04)   0.09   (0.05)     0.02 
                                ----   -----    ----    ----    ----   -----    ----   -----      ---- 
Total From InvestmentOperations 0.78  (0.19)    0.37    0.37    0.37    0.29    0.44    0.30      0.04
   Less Distributions
   Dividends (from net
   investment income)        $(0.26)  $(0.27)  $(0.25) $(0.285) $(0.30) $(0.33) $(0.35) $(0.35) $(0.01)
   Distributions (from 
     capital gains)            0.00   (0.01)  (0.05) (0.025)   0.00    0.00    0.00    0.00     0.00 
                               ----   -----   -----  ------    ----    ----    ----    ----     ---- 
 Total Distributions         (0.26)  (0.28)  (0.30)  (0.31)  (0.30)  (0.33)  (0.35)  (0.35)    (0.01)
Net asset value at end       
   of period                 $5.28  $4.76    $5.23    $5.16  $5.10    $5.03   $5.07   $4.98    $5.03
                                                                                                       
 Total Return                16.68% (3.76)%   7.35%   7.49%   7.63%   5.94%   9.17%   6.45%     3.20%
Ratios / Supplemental Data
Net assets ($000), end of    
     period                   $5,220 $6,841   $7,367  $5,808   $3,803 $2,540  $808    $335      $29
Ratio of expenses to average
   net assets*                0.75%   0.75%   0.75%   0.75%   0.75%   0.97%   0.90%   0.28%    0.11%
Ratio of net investment income
   to average net assets*      5.07%   5.28%   4.79%   5.64%   6.08%   6.74%   6.51%   6.58%    0.56%
Portfolio turnover rate        28%     36%     31%     17%     15%     17%     13%      100%      0%
               * Not Annualized
<FN>

For each of the above years,  all or a portion of the expenses  were waived.  If
these costs had not been waived,the  resulting increase to expenses per share in
each of the above periods would be $.016, $.007, $.009, $.008,$.02,  $.02, $.05,
$.10,  $.19,  and $.01,  respectively.  The increase to the ratio of expenses to
average monthly netassets would be .26%, .14%, .18%, .17%, .54%,  1.01%,  1.25%,
2.24% and .11%, respectively.

Note: Fund shareowners approved a new investment contract and adviser
    October 12, 1990.
</FN>
</TABLE>
    


<PAGE>


===========================================================
ABOUT THE TRUST

===========================================================

IDAHO  TAX-EXEMPT  FUND is  intended to provide  investors  the  opportunity  to
receive  income exempt from both federal and Idaho income tax.  Preservation  of
capital is a secondary  objective of the Fund.  The Fund is  "no-load,"  meaning
that there are no sales or redemption charges,  nor does the Fund have so-called
"12b-1" charges.

Mutual  funds  enable you to invest as you might do for  yourself in you had the
time,  experience and resources to research and diversify your own  investments.
Mutual funds do so by selling their own shares to the public and investing those
proceeds  in a  portfolio  of  securities.  The value of the  funds'  own shares
fluctuates as the value of their portfolio of securities changes over time.

You may purchase shares of Idaho  Tax-Exempt Fund directly from the Fund without
any  sales  charge  or  "load."  Because  no  charges  are  deducted  from  your
investment, the entire amount you pay for shares is invested in the Fund.

INVESTMENT OBJECTIVES AND POLICIES

The IDAHO  TAX-EXEMPT  FUND is designed to provide  monthly  dividends free from
federal income, federal alternative minimum and any state income taxes. The Fund
does have a secondary objective of attempting to preserve capital.

The  Fund's  fundamental  policy  is to  invest  at least  80% of net  assets in
securities  generating  income  exempt from federal  income tax,  including  the
alternative  minimum tax. Also, under normal market conditions,  at least 65% of
total assets are invested in debt securities generating income exempt from Idaho
income tax.

The Fund is  "non-diversified,"  meaning that it does not invest in a wide range
of investments,  but limits its investments to a certain  type--debt  securities
issued by political  subdivisions of the State of Idaho. The Fund does invest in
a broad  portfolio of such  securities  and makes  available  to  investors  the
benefits of being diversified and limiting the risk associated with investing in
only a few securities. The Fund is intended primarily for residents of Idaho who
may benefit from its policy of investing  in  securities  exempt from both Idaho
state and federal  income  taxes.  Idaho  presently  imposes a state  income tax
graduated  to 8.2% of taxable  income over  $20,000  (single) or $40,000  (joint
return).

INVESTMENT POLICIES AND RISK CONSIDERATIONS

Investing in securities  entails both market risk and risk of price variation in
individual securities.  There can be no guarantee that the investment objectives
of the Fund will be realized.

The risks inherent in the Fund depend  primarily on the terms and quality of the
obligations in its  portfolio,  as well as on market  conditions.  Interest rate
fluctuations will affect the Fund's net asset value, but not the income received
by the Fund from its portfolio  securities.  Because  yields on debt  securities
available  for  purchase by the Fund vary over time,  the Fund's yield will also
vary.

Because  the  Fund is  "nondiversified"*  and  invests  primarily  in  municipal
securities of a single state,  its investments  are more  susceptible to factors
adversely  affecting that state.  These factors  include  economic and financial
trends, as well as political conditions in Idaho and its political subdivisions.
Note  that if any  issuer of  securities  held by the Fund is unable to meet its
financial  obligations,  the income derived  therefrom,  the ability to preserve
capital, and the Fund's liquidity would all be adversely affected.

The Fund is also  vulnerable  to a change  in tax  rate,  either at the state or
federal  level  inasmuch  as the value of  municipal  securities  is  derived in
significant  part from the  ability of the  recipient  of  interest  payments to
exclude such payments from  taxation.  Should this exclusion be reduced in whole
or in part,  the maket for municipal  securities,  and  consequently  the Fund's
share value, may be adversely affected.

Among Idaho's leading industries are agriculture,  forest products,  tourism and
electronic/computer equipment. Locally-oriented industries include retail trade,
finance,  insurance,  real estate,  transportation,  communications,  utilities,
government  and  construction.  A more  complete  discussion of these factors is
available in the Statement of Additional Information.

The Fund does not purchase  high-yield ("junk") bonds. The Fund requires that at
time of purchase a bond be rated at least "A" or  equivalent  by a national bond
rating agency (Standard and Poor's, Moody's Investor's Services, or equivalent),
or, if non-rated, to be of equivalent quality in the opinion of the Adviser. The
Fund requires  notes to be rated at least MIG-2 by Moody's or SP-2 by Standard &
Poor's,  or if  non-rated,  to be of  equivalent  quality in the  opinion of the
Adviser.  The Fund  requires  commercial  paper to be rated at least  Prime-2 by
Moody's  or A-2 by  Standard & Poor's,  or, if  non-rated,  to be of  equivalent
quality in the opinion of the Adviser.

Up to 60% of total assets of the Fund can be invested in non-rated  bonds.  Note
that bonds issued by the State of Idaho and its municipalities are often smaller
issues in total  dollars,  typically  being  issued by  relatively  small  Idaho
communities to finance local government  projects.  Because of the smaller size,
the expense of obtaining a rating for the issuer is typically not undertaken. By
investing in non-rated  bonds,  the Adviser  believes it can often obtain higher
yields without a material sacrifice in quality.

Although  both rated and  non-rated  bonds are traded among dealers based on the
creditworthiness  of the  issuer,  generally,  rated bonds have  greater  market
recognition  and the market has more dealers than does the market for  non-rated
bonds. The Adviser will purchase only those non-rated bonds that it believes are
liquid and can be sold at about the value given for net asset value purposes.

The  Fund  occasionally  may  purchase  an  entire  issue  of a small  municipal
security,  resulting in a higher yield to the Fund as well as the elimination of
certain underwriting expenses to the municipality.

Investors can expect the weighted average portfolio  maturity to range between 6
and 15 years.  Usually,  shorter  maturity  bonds provide lower current  yields,
while a maturity  beyond 15 years  generally  implies  greater current yield but
significantly increased risk to capital from interest rate increases.

The Fund may purchase municipal obligations on a delayed-delivery or when-issued
basis (I.E.,  securities  may be purchased with  settlement  taking place in the
future, often a month or more). The Fund only makes commitments to purchase such
obligations  with  the  intention  of  acquiring  the  securities.   Obligations
purchased on a when-issued  basis involve the risk that the yields  available in
the market when  delivery  takes place may be higher than those  obtained in the
transaction  itself, with the result that the market value of the securities may
be lower at settlement,  just as if the securities had actually been held in the
Fund's portfolio. Conversely, should rates decrease, the value will be higher by
a similar amount.+

During  uncertain market or economic  conditions,  the Idaho Tax-Exempt Fund may
adopt a temporary, defensive position and invest more than 20% of assets in cash
or equivalents,  government securities,  unaffiliated money-market mutual funds,
and other debt securities  having an "A" rating or better.  While such defensive
investments may not contribute to the primary objective of tax-free income, they
do assist the secondary objective of capital preservation.

The Fund's investment objectives cannot be changed without shareowner approval.

Except as explained above, all of the policies in this section can be changed by
a  majority  of the  Board  of  Trustees.  The Fund has  adopted  certain  other
restrictions, as outlined in the STATEMENT OF ADDITIONAL INFORMATION.

INVESTMENT RESULTS

You will receive a financial report showing the investments, income and expenses
of your Fund every six months.  You may obtain  current share values any time by
calling 800-SATURNA (800/728-8762).

PERFORMANCE DATA

The Fund may advertise or publish  current yield and average annual total return
in advertisements or in information  furnished to publications and to investors.
In any comparison of the Fund's return with that of alternative investments, you
should consider differences between the Fund and the alternative investment, the
periods and methods used in calculation of the returns,  and the effect of taxes
on the investments.  Of course,  past results are not necessarily  indicative of
future performance.

You may compute  current  yield by (i) dividing net  investment  income over the
rolling  30 day  period  for which the yield is being  computed  by the  average
number of shares eligible to receive  dividends for the period and (ii) dividing
that  figure  by the  Fund's  net  asset  value per share on the last day of the
period, and then (iii) annualizing the results.

The Fund also may  quote a taxable  equivalent  yield,  which is the  equivalent
amount an investor must earn before  deducting  federal and any applicable state
income  taxes (at rates  stated in the  quotation),  to equal the Fund's  30-day
current yield.

To compute the Fund's average  annual total return for any specified  period (i)
assume an  investment  of $1,000 made at net asset value on the first day of the
period  and  that all  dividends  paid  during  the  period  are  reinvested  in
additional  shares at net asset  value and then (ii)  divide the ending  balance
(I.E.,  the number of shares now held  multiplied by the ending net asset value)
by the  beginning  balance.  For a more  complete  description  of the method of
computation, see the STATEMENT OF ADDITIONAL INFORMATION.

CAPITAL STOCK; DIVIDENDS

Saturna  Investment  Trust,  an  open-end  "series  trust"  was  organized  as a
Washington Business Trust on February 20, 1987. The Trust is an open-end "series
trust" that now offers five separate Funds:  The Fund and the four Sextant Funds
(the  Sextant  Funds  offer a range  of  investments  intended  to be the  basic
elements of an investment program and are offered through a separate  prospectus
available from the Adviser.) The Trust  (formerly  known as Northwest  Investors
Trust) began  commenced  operations  on September  4, 1987.  The Fund's  current
investment advisory agreement became effective on its approval by shareowners on
October 12, 1990.

The Fund is divided  into  shares of  beneficial  interest,  with  equal  voting
rights. All shares are fully paid, non-assessable,  transferable, have rights of
redemption,  and are not subject to preemptive rights. The Trust is not required
to hold annual shareowner meetings,  but special meetings may be called for such
purposes as electing or removing Trustees,  changing  fundamental  policies,  or
voting on approval  of an  advisory  contract.  On issues  relating  solely to a
single Fund, only the shareowners of that Fund are entitled to vote.

All dividends and  distributions  are  distributed  pro rata to  shareowners  in
proportion to the number of shares of the Fund owned.

The Fund intends to distribute  substantially  all its net investment income and
net realized capital gains, if any, to its shareowners.  The Fund pays dividends
from  investment  income  daily  and  reinvests  or  distributes  them  monthly.
Dividends  from  capital  gains,  if any,  are  declared  and paid at the end of
November.

Both dividends and capital gains  distributions are automatically  reinvested in
additional  full and fractional  shares of the Fund,  unless you have elected to
receive either or both in cash.

The Fund intends to qualify as a regulated investment company under the Internal
Revenue  Code and to  distribute  substantially  all net income and realized net
gains on  investments.  The Fund is then relieved of paying federal income taxes
on amounts it distributes.

At year-end,  the Fund's transfer agent reports to you and to the IRS the amount
of each  redemption  you made during the year,  as well as the amount of taxable
dividends  and  capital  gain  distributed  to you.  The Fund  accounts  for its
distributions  as either taxable  capital gains  (originating  from net realized
gains on portfolio transactions), or taxable income (originating from dividends,
taxable  interest  and  certain  other  types of  gains)  or  tax-exempt  income
(originating  from  interest on  municipal  bonds).  Fund  distributions  may be
subject to state and local taxes.

To avoid being subject to a 31% federal withholding tax on taxable dividends and
distributions,  you must furnish the transfer agent your correct Social Security
or Tax Identification Number in the space on the application.

NET ASSET VALUE

The Fund  computes  its net asset value per share each  business day by dividing
(i) the value of all of its securities and other assets,  less  liabilities,  by
(ii) the number of shares outstanding.  The Fund computes its net asset value as
of the close of trading on the New York Stock  Exchange  (generally  4 p.m.  New
York time) on each day the Exchange is open for trading.  The Fund's  shares are
not priced on any customary  national  business holiday that securities  markets
are closed.  The net asset value  applicable  to  purchases or  redemption's  of
shares of the Fund is the net asset  value  next  computed  after  receipt  of a
purchase or redemption order.

   
Since daily bid prices are not available  for many  municipal  bond issues,  the
Fund  values  securities  using a matrix of  municipal  bond  yields for various
maturities and  qualities.  Prices are adjusted for factors unique to each bond.
To verify its  knowledge of market  factors,  the adviser  periodically  obtains
appraisals from independent sources.
    

HOW TO BUY SHARES

   
You may open an account and purchase  shares by sending a completed  Application
with a check for  $1,000  (U.S.  only) or more ($25  under a group  plan) to the
Fund. The Fund does not accept initial  orders  unaccompanied  by payment nor by
telephone.  The price you receive is the net asset value (see "Net Asset Value")
next determined after receipt of a purchase order. There are no sales charges or
loads.

You may purchase  additional  shares at any time in minimum amounts of $25. Once
your  account  is open,  purchases  can be made by check,  by  electronic  funds
transfer, or by wire.

You may authorize the use of the Automated Clearing House ("ACH") to purchase or
redeem shares by completing  the  appropriate  section of the  application.  The
authorization must be received at least two weeks before ACH can be used. ACH is
a system for electronic funds transfer. To use ACH to purchase or redeem shares,
simply call the transfer agent.

You also may wire money to purchase  shares,  though  typically your wiring bank
will  charge  you a fee for  this  service.  Call  the  transfer  agent  for the
information you will need BEFORE requesting your bank to wire funds.
    

Each time you  purchase or redeem  shares,  you receive a statement  showing the
details of the transaction as well as the current number and value of shares you
hold.  Share balances are computed in full and fractional  shares,  expressed to
three decimal places.  You don't have to worry about safekeeping of certificates
because they are not issued.

At the end of each calendar year, you will receive a complete annual  statement,
which you should retain for tax purposes and a complete historical record of all
transactions.

The Fund offers several optional plans and services.  Materials describing these
plans and applications may be obtained from the Adviser or the transfer agent.

Other plans offered by the Fund include: (1) an automatic investment plan, (2) a
systematic withdrawal plan to provide regular payments to you, and (3) the right
to exchange your shares  without  charge for any other  no-load  mutual fund for
which Saturna Capital is the investment adviser.

HOW TO REDEEM SHARES

You may  redeem  your  shares on any  business  day of the  Fund.  The Fund pays
redemptions in U.S.  dollars,  and the amount you receive is the net asset value
per share next determined after receipt of your redemption  request.  The amount
received will depend on the value of the  investments in the Fund at the time of
your redemption, and the amount you receive may be more or less than the cost of
the shares you are redeeming. A redemption constitutes a sale for federal income
tax purposes, and you may realize a capital gain or loss on the redemption.

The Fund normally pays for shares redeemed or exchanged  within three days after
a proper  instruction  is received.  To allow time for  clearing,  redemption of
investments made by check may be restricted for up to ten calendar days.

There are several methods you may choose to redeem shares.

                           WRITTEN REQUEST

   
Write:  Idaho Tax-exempt Fund
        Box 2838
        Bellingham WA 98227-2838

Fax:    360/734-0755

You may redeem  shares by a written  request  and  choose  one of the  following
options for the proceeds:
    

(A) Redemption check (no minimum) sent to registered owner(s).

(B)  Redemption  check (no  minimum)  sent as directed if the  signature(s)  are
guaranteed.  If proceeds are to be sent to other than the registered owner(s) at
the last address, the signatures on the request must be guaranteed by a national
bank or trust company or by a member of a national securities exchange.

(C) Federal funds wire.  The proceeds  ($5000  minimum) may be wired to any bank
designated in the request if the signature(s) are guaranteed as explained above.

                          TELEPHONE REQUEST

Call:   800-728-8762 or
        360-734-9900

You may redeem  shares by a telephone  request  and choose one of the  following
options for the proceeds:

  (A) Redemption check (no minimum) sent to registered owner(s).

  (B) ACH transfer ($100 minimum) with proceeds transferred to your bank account
as  designated  by  the  ACH   authorization  on  your   application.   The  ACH
authorization  must be received by the transfer  agent at least two weeks before
ACH transfer can be used.

  (C)  Exchange  ($25  minimum)  for shares of any other Fund for which  Saturna
Capital is adviser.  If the exchange is your initial  investment into this Fund,
the new account will  automatically  have the same registration as your original
account.  Of course,  shares must be authorized  and  registered for purchase in
your  state  before an  exchange  may be made.  Exchanging  shares  may have tax
consequences,  because an exchange is considered a closing  capital  transaction
for tax purposes.

  (D) Federal funds wire. Proceeds ($5000 minimum) may be wired only to the bank
previously  designated,  or as  directed  in a prior  written  instruction  with
signatures guaranteed, as explained above.

For telephone  requests the Fund will endeavor to confirm that  instructions are
genuine and may be liable for losses if it does not. The caller must provide (1)
the name of the  person  making  the  request,  (2) the name and  address of the
registered owner(s), (3) the account number, (4) the amount to be withdrawn, and
(5) the method for payment of the proceeds.  The Fund also may require a form of
personal identification,  and provide written confirmation of transactions.  The
Fund will not be  responsible  for the  results of  transactions  it  reasonably
believes genuine.

                            CHECK WRITING

You may also redeem shares in your account by drawing checks on your account for
amounts of $500 or more.

The Fund will provide you a small book of blank  checks for a $7 fee,  which may
be  payable  to any  payee.  Checks  are  redeemed  at the net asset  value next
determined after receipt by the transfer agent. If you wish to use this feature,
you should  request the Check Writing  Privilege on the  Application at the time
you open an account. Note that, as with any redemption,  each check is a closing
capital transaction for tax reporting purposes.

TRUST MANAGEMENT

Saturna Investment Trust is managed by a Board of five Trustees:
Gary A. Goldfogel, John E. Love, John S. Moore, Nicholas F. Kaiser
and James D. Winship.  The Trustees establish policies, as well as
review and approve contracts and their continuance.  The Trustees
also elect the officers, determine the amount of any dividend or
capital gain distribution and serve on any committees of the Trust.
For other information concerning the officers and Trustees, see the
STATEMENT OF ADDITIONAL INFORMATION.

INVESTMENT ADVISER

Saturna Capital Corporation, 1300 N. State Street, Bellingham,
Wash. 98225 (the "Adviser") is the Investment Adviser to the Trust.
The Adviser is a Washington State corporation formed in July 1989.
Shareholders owning more than 10% of the common stock are: Nicholas
F. Kaiser, Phelps S. McIlvaine, James D. Winship, and Brian A.
Anderson. The directors of the Adviser are Nicholas Kaiser
(President), James D. Winship (Vice President and Secretary),
Phelps S. McIlvaine (Vice President), Brian A. Anderson (Vice
President) and Markell F. Kaiser (Treasurer).

The Fund pays a monthly  advisory fee at the annual rate of 0.50% of the average
daily net assets up to $250 million, 0.40% of assets between $250 million and $1
billion,  and 0.30% of assets in excess of $1 billion.  Through  March 31, 1997,
the Adviser has voluntarily  waived its fee and reimburses the Fund as necessary
to limit total Fund expenses to 0.80% of average annual net assets. A waiver may
have the effect of subsidizing the yield for the period it is in effect.

Under the  Fund's  investment  advisory  agreement  the Fund pays its own taxes,
brokerage  commissions  (if any),  trustees'  fees,  legal and accounting  fees,
insurance,  transfer  agent,  registrar  and  dividend  disbursing  agent  fees,
expenses  incurred in complying with state and federal laws regulating the issue
and sale of its shares, and mailing and printing costs for prospectuses, reports
and notices to shareowners.  The Adviser furnishes office space,  facilities and
equipment,  personnel and clerical and bookkeeping  services required to conduct
the business of the Fund.

Saturna Capital  Corporation acts as investment  adviser to six other investment
companies,  the four  Sextant  Funds:  Growth ($1  Million),  International  ($1
million),  Bond Income ($1 Million) and Short-Term Bond ($2 million), as well as
Amana  Income  Fund,  which has assets of  approximately  $12  million and Amana
Growth Fund, with approximately $3 million in assets.

Each  of  the  Sextant  Funds  pays  the  Adviser  an  Investment  Advisory  and
Administrative  Services Fee computed at the annual rate of 0.60% of average net
assets  of each  Fund  and  paid  monthly.  Each  Fund's  Fee is  subject  to an
adjustment  (up to a maximum  adjustment  of 0.30% in two of the Funds)  that is
determined  by that  Fund's  total  return  performance  relative to a specified
index. The advisory fee for both of the Amana Funds is .95%.

Saturna also manages individual  advisory accounts.  The Adviser's  wholly-owned
subsidiary,  Investors  National  Corporation,  is a discount brokerage firm and
acts as distributor for the Funds without compensation. The Adviser is permitted
to place  brokerage  transactions  through  the  affiliate,  and the Adviser may
allocate  brokerage  to any broker in return for  research or  services  and for
selling shares of any Fund.

Phelps McIlvaine,  primary manager of the Fund, entered the investment  business
in 1976 and managed  bond hedge funds from 1987 to 1993.  He also manages two of
the Sextant Funds (Bond Income and Short-term Bond).

The manager of the Fund and other  investment  personnel are permitted to engage
in securities  transactions for their own accounts but only in accordance with a
code of ethics that, among other things, requires advance approval of all trades
and disclosure of all holdings. It also prohibits a number of transactions , and
contains other provisions.

Saturna Capital Corporation acts as transfer agent,  maintaining all share owner
records.


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                          IDAHO TAX-EXEMPT FUND

                                 INVESTMENT APPLICATION

Mail application and check to:                         For assistance, call:
   IDAHO TAX-EXEMPT FUND                             (800) SATURNA  or
(360) 734-9900

    Box 2838, Bellingham WA 98227-2838                  FAX (360) 734-0755

ACCOUNT TYPE AND NAME

  q Individual

 First                  Middle Initial               Last

  Social Security Number                             Date of Birth___________

  q Joint with

   First                  Middle Initial               Last

    Joint Owner's Social Security Number

 (Joint accounts are presumed to be "Joint Tenancy with Right of Survivorship"
  unless otherwise indicated)

  q Gifts to Minor                      AS CUSTODIAN FOR

  Name of Custodian                            Name of Minor

                qUNIFORM GIFTS TO MINORS ACT

        UNDER THE     qUNIFORM TRANSFERS                      /              /
          State        TO MINORS ACT     Minor's S. S. No.    Minor's Birthdate

  q Other

        Indicate   name  of   corporation,   other   organization   or  fiducTax
         Identification  Number If a trust, include name(s) of trustees and date
         of trust instruments.

        Name(s) of  person(s)  authorized  to  transact  business  for the above
entity.

MAILING

ADDRESS   Street                                  Apt., Suite, Etc.

 City                               State                        ZIP

TELEPHONE  (  )                         (     )
           ----------------------       -------
              Daytime                             Home

INITIAL INVESTMENT  $

(Minimum  $1000)  Make check payable to Idaho Tax-Exempt Fund.


<PAGE>


TELEPHONE REDEMPTION PRIVILEGES

  You automatically  have telephone  redemption by check and telephone  exchange
  privileges unless you strike this line. The Fund will endeavor to confirm that
  instructions  are  genuine  and it may be  liable  for  losses if it does not.
  (Procedures  may  include  requiring a form of  personal  identification,  and
  providing written confirmation of transactions.)

ACH TELEPHONE TRANSFER PRIVILEGE

  q To transfer funds by ACH at no charge to or from my

      (our) bank account, I (we) authorize electronic fund transfers through the
      Automated  Clearing  House  (ACH) for my (our)  bank  account  designated.
      PLEASE ATTACH A VOIDED CHECK OR DEPOSIT SLIP.

AUTOMATIC INVESTMENT PLAN

  q Invest $ _______ into this Fund on the _____ day of

      each month (the 15th unless  another date is chosen) by ACH transfer  from
      my (our)  bank  account.  This plan may be  canceled  at any time.  PLEASE
      ATTACH A VOIDED CHECK OR DEPOSIT SLIP.

CHECK WRITING  PRIVILEGE  ($500 per check  minimum)  ($7  checkbook  charge) q I
  (We)hereby request the Custodian to honor checks

      drawn by me (us) on my (our)  account  subject to acceptance by the Trust,
      with  payment  to be made  by  redeeming  sufficient  shares  in my  (our)
      account.  None of the custodian  bank,  Saturna Capital  Corporation,  nor
      Saturna Investment Trust shall incur any liability to me (us) for honoring
      such checks,  for  redeeming  shares to pay such checks,  or for returning
      checks which are not accepted.

    qSingle Signature Authority -- Joint Accounts Only:  (CHECKS FOR

      JOINT  ACCOUNTS  REQUIRE  BOTH  SIGNATURES  UNLESS  THIS BOX IS  MARKED TO
      AUTHORIZE  CHECKS WITH A SINGLE  SIGNATURE).  By our signatures  below, we
      agree to permit  check  redemptions  upon the single  signature of a joint
      owner.  The  signature  of one joint  owner is on behalf of himself and as
      attorney in fact on behalf of each other joint  owner by  appointment.  We
      hereby  agree with each  other,  with the Trust and with  Saturna  Capital
      Corporation  that all moneys now or hereafter  invested in our account are
      and shall be owned as Joint Tenants with Right of Survivorship, and not as
      Tenants in Common.

The  undersigned  warrants(s)  that I (we)  have  full  authority  to make  this
Application,  am (are) of  legal  age,  and  have  received  and read a  current
Prospectus and agree to be bound by its terms. Unless this sentence is struck, I
(we) certify,  under penalties of perjury,  that I (we) am not subject to backup
withholding  under the  provisions  of  section  3406(a)(1)(C)  of the  Internal
Revenue  Code.  This  application  is not  effective  until it is  received  and
accepted by the Trust.

    Date                     Signature of Individual (or Custodian)

    Date                     Signature of Joint Registrant, if any

                            [GRAPHIC OMITTED]

                                  NO-LOAD MUTUAL FUNDS


<PAGE>


=====================================================================
                   PLEASE SAVE THIS QUICK GUIDE TO

=====================================================================

                   IDAHO TAX-EXEMPT FUND

ACCOUNTS

      Open your  account by sending a  completed  Application  to the Fund.  For
      convenience,  you may have your account  consolidated  with others of your
      household or other group. We will appoint a representative to whom you may
      refer all questions  regarding your  account(s).  Extra forms will be sent
      for certain accounts.

INVESTMENTS

      Initial  investments  are  $1,000  or more and must be  accompanied  by an
      Application.  Additional  investments  may be made  for $25 or more at any
      time. There are no sales commissions or other charges.

REDEMPTIONS

      You may sell your shares any time. As with purchases,  you may choose from
      several   methods   including   telephone,   written   instructions,   and
      checkwriting. You will be paid the market price for your shares on the day
      we receive your instructions, and there are no redemption fees or charges.
      If we receive your redemption request by one p.m. Pacific time, your check
      is normally mailed to you the same day.

STATEMENTS

      On the date of each  transaction,  you are mailed a confirmation,  showing
      the details of the transaction and your account  balance.  At year-end and
      at  selected  points  during  the  year we mail a  statement  showing  all
      transactions for the period. Monthly consolidated statements are available
      for an extra fee.

DIVIDENDS AND PRICES

      The Fund declares dividends daily and pays them monthly.  The Fund's price
      is available by calling the Fund at 800-SATURNA.

FOR MORE INFORMATION

      Please  consult the  applicable  pages of this  Prospectus  for additional
      details  on the  Fund and its  shareholder  services.  You may  also  call
      1-800-SATURNA (1-800-728-8762) with any questions.


<PAGE>


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                               PART B

            STATEMENT OF ADDITIONAL INFORMATION


<PAGE>


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                              1

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                 SATURNA INVESTMENT TRUST

                        IDAHO TAX-EXEMPT FUND

                          1300 State Street
                    Bellingham, Washington 98225

                            360-734-9900

                             800-SATURNA

                 STATEMENT OF ADDITIONAL INFORMATION
                           March 29, 1996

Idaho Tax-Exempt Fund (the "Fund") is a series of Saturna  Investment Trust (the
"Trust").  The Fund is a series of the Trust and represents shares of beneficial
interest in a separate  portfolio of securities  and other assets,  with its own
objectives  and  policies.  This  Statement of Additional  Information  is not a
Prospectus.  It merely furnishes  additional  information that should be read in
conjunction  with the  Fund's  prospectus  dated  March  29,  1996.  The  Fund's
prospectus  may be obtained free of charge by  telephoning  the numbers above or
writing the Fund at the address shown above.


<PAGE>


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                            TABLE OF CONTENTS

                                      Page

General Information and History...........................3
Investment Objectives and Policies........................3
Investment Considerations.................................8
Portfolio Turnover.......................................11
Performance Data ........................................11
Management of the Trust..................................13
Principal Holders of Securities..........................15
Investment Advisory and Other Services...................15
Brokerage Allocation.....................................16
Purchase, Redemption and Pricing of Securities Being 
Offered                                                  17
Tax Status...............................................17
Financial Statements.....................................19



<PAGE>


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                   GENERAL INFORMATION AND HISTORY

Saturna  Investment  Trust (the "Trust") is a business trust formed  pursuant to
RCW 23.90 of the laws of the  State of  Washington  to  operate  as an  open-end
management  company.  When formed on February 20, 1987,  the name was  Northwest
Investors  Tax-Exempt  Business Trust. The Trust's name was changed to Northwest
Investors  Trust on October 12, 1990.  Most  recently,  in  connection  with the
formation of a new series of funds and reorganization and realignment of certain
existing  series,  the Trust's name was changed to Saturna  Investment  Trust on
September 28, 1995.

The  Declaration  of Trust permits the trustees to issue an unlimited  number of
full and  fractional  shares in any Fund of the Trust.  The Trust may  establish
additional Funds in the future by approval of the Trustees. All shares will have
no par value and when issued will be fully paid and non-assessable and will have
no preemptive, conversion, or sinking fund rights.

The  Trust  has five  separate  Funds,  the Fund  (initially  known as the Idaho
Extended  Maturity  Tax-Exempt Fund) and four others which are offered through a
separate Prospectus and Statement of Additional Information: Sextant Growth Fund
(formerly  known as Northwest  Growth Fund),  Sextant Bond Income Fund (formerly
known as Washington  Tax-Exempt Fund),  Sextant  International Fund, and Sextant
Short-Term Bond Fund.

                 INVESTMENT OBJECTIVES AND POLICIES

This section is provided only for the purpose of expanding or outlining  certain
policies and restrictions not thoroughly covered in the Prospectus.

The  primary  investment  objective  of the Fund is to obtain a return of income
from  debt  securities  issued  by or on  behalf  of the  State  of Idaho or any
political subdivision,  agency, or instrumentality  thereunder,  the income from
which is exempt from both federal and Idaho State income taxes,  and the federal
alternative  minimum  tax.  The  secondary  objective  is to preserve the Fund's
capital.

To achieve its objectives,  the Fund invests primarily in Idaho bonds. Financial
conditions and the diversification  requirements of Subchapter M of the Internal
Revenue  Code of 1986 (the  "Code")  may  require  investment  in cash and other
securities  from  time to time,  the  income  from  which may be  taxable.  Such
investments  will only exceed 20% of the Fund's net assets on a temporary basis,
such as significant  adverse  economic,  political or other  circumstances  that
require immediate action to avoid losses.

The Fund is  "non-diversified."  This means that with respect to at least 75% of
total  assets,  greater  than 5% may be  invested in the  securities  of any one
issuer. However, the Fund is required to meet Internal Revenue Code requirements
that at the end of each quarter at least 50% of total assets is  represented  by
(a) cash or  equivalents,  (b) U. S.  government  securities,  (c) securities of
other regulated investment  companies,  and (d) other securities,  if, as to any
one  issuer,  the value of such  issuer's  securities  does not exceed 5% of the
Fund's total assets and such issuer's  securities held by the Fund represent not
more than 10% of the outstanding  voting securities of such issuer.  The balance
of the Fund may be  invested in other  securities  if not more than 25% of total
assets are invested in the securities of any one issuer,  or two or more issuers
engaged in the same or similar trade or business.

The Adviser may direct  investments  in other  tax-exempt  investment  companies
which do not  concentrate  their  investments in Idaho Bonds,  but  nevertheless
yield income which is exempt from both federal  income and  alternative  minimum
taxation. Such income may be taxable at the state level. It is the policy of the
Fund not to  devote  more  than 5% of its  total  assets  to any one  investment
company,  nor to devote  greater than 10% of its total assets to  investments in
investment companies generally. It is anticipated that shares of such investment
companies may be obtained by an  affiliated  broker/dealer,  Investors  National
Corporation (the  "Distributor"),  which has agreed to act as agent for the Fund
and not  charge a  commission  or  receive  any  compensation  on  purchases  of
securities  made on behalf of the Fund.  The  purchase  of  securities  of other
investment  companies  may result in the Fund's  shareowners  paying  investment
advisory fees twice on the same assets.

Investment  objectives  and  certain  policies  of the Fund  may not be  changed
without the prior  approval of the  holders of the  majority of the  outstanding
shares of the Fund. Objectives and policies which are considered fundamental and
subject to change only by prior  approval of the  shareowners  include:  (1) the
primary and secondary investment  objectives;  (2) the 80% of net assets minimum
investment in tax-exempt income  securities;  (3) the classification of the Fund
as an open-end  management company and the  sub-classification  of the Fund as a
non-diversified   company;   and  (4)  the  policies  listed  under  "Investment
Restrictions."  However, the mix of investments between (1) cash and cash items;
(2) government  securities;  (3) securities of other investment  companies;  (4)
securities in rated and non-rated bonds; (5) short and long maturities,  and the
length of time investment positions are held; and (6) other debt securities, are
considered  management  decisions and may be altered  without  prior  shareowner
approval.  Management has delegated to an affiliate, Saturna Capital Corporation
(the "Adviser"), management the Fund's investments.

NON-RATED  BONDS.  Management  and the  Adviser  believe  that  many of the debt
securities issued by the State of Idaho or the political subdivisions,  agencies
or  instrumentalities  thereunder  are small  issues in total  dollars,  and are
typically issued by smaller communities or  instrumentalities to obtain capital.
Because of the small size of such issues,  the expense of obtaining a rating for
the issued  obligation  (the  "Bond") is  typically  not  undertaken.  Without a
rating,  investors must rely solely on their own analysis and  investigation  to
determine  investment  risk and  worth  of such  Bonds.  Since  the cost of such
analysis and investigation is typically not considered warranted due to the size
of such issues,  despite a higher return typically available from such non-rated
Bonds,  issues  of  non-rated  Bonds  generally  do not  have a  trading  market
consisting of as many dealers as comparable  rated  issuers.  Occasionally,  the
financial  institution lending the funds to a municipality receives the Bond and
holds it until  maturity.  As a  result,  although  trading  markets  exist  for
non-rated Bonds, generally the number of dealers participating in the market are
fewer than that which exists for rated Bonds.  Although all rated and  non-rated
Bonds are traded on the basis of dealers'  perception  of  credit-worthiness,  a
non-rated  Bond having  greater  recognition  among  dealers  will have a market
consisting  of a greater  number of dealers  than will the market for a Bond not
having  as  great a  recognition.  Management  anticipates  that  investment  in
non-rated Bonds will occur only when the Adviser to the Fund believes the credit
of the issuer of such  non-rated  Bonds is such so as to  warrant an  investment
without   unreasonable  risk  to  the  preservation  of  capital  and  which  is
sufficiently  recognized  among  the  market  dealers  so  as to  provide  ready
marketability  of the investment.  In the opinion of Management and the Adviser,
such  non-rated  Bonds will be  comparable  to rated Bonds having an "A" rating.
Experience of the Adviser  indicates  that  investments  in certain good quality
non-rated  Bonds are  liquid  and can be sold  within  seven days at or near the
value given for computing net asset value.

Management  and the Adviser  believe  that there exist both rated and  non-rated
Bonds  that  constitute  good  investments  that  will  promote  the  investment
objectives  of the  Fund.  Purchases  of Bonds on behalf of the Fund may be made
directly from the issuer. Some purchases are by sealed bid with the entire issue
being awarded to the lowest  interest rate that is bid. Most issuers are willing
to negotiate a rate directly with the managing underwriter and/or purchaser.  In
this  instance,  the Adviser will deal in good faith to arrive at a  competitive
rate.

In  contemplating  the rate at which to bid a Bond, the Adviser may consider the
opinions and  evaluations of independent  broker/dealers  specializing  in Idaho
municipal bonds.  Such brokers may also be requested to render their opinions as
to the value of the Fund's investment securities portfolio,  including rated and
non-rated  Bonds.  The  Fund and  Adviser  may  consider  such  evaluations  and
valuation services provided by such independent  brokers in determining where it
effects  transactions in investment  securities and the amount of commissions to
be paid such broker.

INVESTMENTS.  The  Fund  invests  at  least  40% of total  assets  in  municipal
securities rated "A" or better by Moody's Investors Service, Inc. ("Moody's") or
Standard  and Poor's  ("S&P").  The Fund invests more heavily in rated Bonds for
various purposes,  including (a) diversification or greater liquidity,  (b) when
the difference in returns between rated and non-rated Bonds is not material,  or
(c) when  interest  rates are expected to  increase.  SEE THE  "APPENDIX"  FOR A
DESCRIPTION OF BOND RATINGS.

Under normal market  conditions the Fund may invest up to 60% of total assets in
non-rated Bonds only when the Adviser believes the credit of the issuer warrants
an investment  without  unreasonable risk to the preservation of capital and the
Bonds are sufficiently  recognized among the market dealers so as to provide the
ready  marketability  of the  investment.  The  Fund  employs  the  services  of
independent broker/dealers specializing in municipal bonds to assist the Adviser
in both (1)  determining the purchase price of rated and non-rated Bonds and (2)
valuing the rated and non-rated Bonds for net asset value computation purposes.

In  evaluating  Bonds,  the Adviser  analyzes the extent of  investment  risk by
policies that include:

(1)The extent of unemployment  within the assessment  district for the issuer of
   a Bond and the  extent  to which  this may  affect  repayment  of the Bond at
   maturity;

(2)The extent to which the real  property  within  the  assessment  district  is
   owned by a small  number of persons or  entities  and the  relative  economic
   strength of such persons or entities  which may affect  repayment of the Bond
   at maturity;

(3)The  financial  position of the  political  subdivision,  including,  but not
   limited to, the extent of its existing indebtedness.

These limitations and policies are considered primarily at the time of purchase.
The sale of a Bond is not  mandated  in the  event  of a  subsequent  change  in
circumstances.  Indeed,  Bonds are commonly held until  maturity,  when the Bond
will be redeemed  for its full face value,  assuming no  defaults.  Nonetheless,
both  rated  and  non-rated  Bonds may be sold  prior to  maturity  for  various
purposes, such as a desire for greater liquidity or to preserve capital.

The Fund invests  predominantly in municipal  obligations issued by the State of
Idaho  or  any  political   subdivision,   agency  or  instrumentality   thereof
("Municipality"). These municipal obligations generally include Municipal bonds,
Municipal notes, Municipal commercial paper, and any other obligation from which
the payment of interest,  in the opinion of the bond issuer's counsel, is exempt
from  Federal  and  Idaho  State  income  tax.  A general  description  of these
investments are:

Municipal bonds are debt  obligations  issued to obtain funds for various public
   purposes such as construction of public facilities (e.g., airports, highways,
   bridges, and schools).  Maturities of municipal bonds at the time of issuance
   may range from one year to 30 years or more.

Municipal notes are short-term  obligations of municipalities,  generally with a
   maturity ranging from six months to three years. The principal types of notes
   include tax, bond, and revenue anticipation notes and project notes.

Municipal commercial paper refers to short-term  obligations of  municipalities,
   which may be issued at a discount.  Such paper is likely to be issued to meet
   seasonal  working capital needs of the  Municipality or interim  construction
   financing. Municipal commercial paper is, in most cases, backed by letters of
   credit,  lending  agreements,  note  repurchase  agreements,  or other credit
   facility agreements offered by banks and other institutions.

Municipal  notes and  commercial  paper  obligations  are usually  issued in the
following  circumstances:  (a) When  borrowing is in  anticipation  of long-term
financing,  the  paper  is  generally  referred  to as bond  anticipation  notes
("BAN").  Cities are authorized to issue revenue bond  anticipation  notes.  The
maturity  date cannot  exceed five years from the date of issue.  Payment can be
extended  for not more than  three  years  from their  maturity  date.  BANs are
secured by income and revenues derived by the city from the project and from the
sale of the revenue  bonds in  anticipation  of which the notes are issued.  (b)
Borrowings  to level  temporary  shortfalls  in revenue  occasioned by irregular
receipts of taxes are generally  referred to as tax anticipation  notes ("TAN").
Taxing districts,  including counties,  any political  subdivision of the state,
any municipal corporation,  school districts, any quasi-municipal corporation or
any other public corporation  authorized to levy taxes, are authorized to borrow
money and issue a TAN.  The TANs  must  mature no longer  than one year form the
date of issue  and are  issued in  anticipation  of  collection  of taxes in the
current fiscal year. The taxing district is limited to an amount equal to 75% of
the taxes  levied in the  current  fiscal year and not yet  collected.  TANs are
backed by the full faith and credit of the taxing districts.  The State of Idaho
is also  authorized  to issue a TAN in  anticipation  of income or revenue  from
taxes,  but is forbidden by its  constitution  to engage in deficit  spending or
long-term  borrowing.  The term of the obligation is the shorter of 12 months or
to the end of the fiscal year.  Likewise,  the borrowed amount cannot exceed 75%
of the income or revenue from taxes which the State tax  commission or other tax
collection agency certifies is reasonably anticipated to be collected during the
current fiscal year.

Municipal  bonds  include  debt  obligations  issued to obtain funds for various
public  purposes,  including the  construction of public  facilities.  Municipal
bonds may be used to refund outstanding obligations, to obtain funds for general
operating expenses,  or for lending public or private institutions funds for the
construction  of educational  facilities,  hospitals,  or housing,  or for other
public  purposes.  The two  principal  classifications  of  municipal  bonds are
general  obligation and limited  obligation (or revenue) bonds.  Limited project
bonds are known as local improvement district ("LID") bonds.

General  obligation  bonds ("GO  Bonds") are those  obligations  of an issuer to
   which the full faith and credit of the municipality is pledged.  The proceeds
   from GO Bonds are used for a wide variety of public uses, including,  but not
   limited  to,  public  facilities  such as the  structure  or  improvement  of
   schools,  highways,  and roads, water and sewer systems, and facilities for a
   variety of public purposes.  A GO Bond is paid from ad valorem property taxes
   or  from  other  tax  sources.  Many  types  of  obligations  may be  general
   obligations  of a municipality  whether or not they are incurred  through the
   issuance  of bonds.  GO Bonds  may be  incurred  in the form of a  registered
   warrant,  conditional  sales  contract,  or  other  instrument  in  which  an
   unconditional and unlimited promise to pay from ad valorem taxes is made.

Revenue bonds may be issued to fund a wide variety of revenue-producing  capital
   projects  including,  but not  limited  to,  electric,  gas,  water and sewer
   systems,  highways,  bridges, and tunnels,  airport facilities,  colleges and
   universities,  hospitals, and health, convention,  recreational,  and housing
   facilities. Although the principal security of these bonds varies, generally,
   revenue  bonds are payable from a debt  service  reserve  fund,  the cash for
   which is derived from the operation of the particular  utility or enterprise.
   Revenue bonds are not general  obligations.  They are secured by the revenues
   of the  particular  utility or system.  They can be issued by  agencies  of a
   state and can also be issued by political  subdivisions  including  counties,
   cities, towns, water districts,  sewer districts,  irrigation districts, port
   districts, and housing authorities.

The Fund will invest in revenue bonds with a coverage factor between net revenue
to the annual  debt  service of a minimum of 1 to 1.25.  Only issues that have a
debt service  reserve fund balance equal to the average annual debt service will
be purchased.

Local  Improvement  District  ("LID")  bonds are secured by  assessments  levied
   against the properties  benefited by the  improvements  constructed  with the
   proceeds of the bonds. This type of financing is available to counties, water
   and/or sewer districts,  highway districts,  irrigation districts and cities.
   The property must be specially benefited by the improvements  constructed out
   of the proceeds of the bonds, generally within a local improvement district.

Private Activity Bonds,  including  Industrial  Development  Bonds ("IDB"),  are
   commonly  issued by public  authorities  but generally are not secured by any
   taxing power. Rather, they are secured by the revenues derived from the lease
   or rental payments received by the industrial user, and the credit quality of
   such Municipal  Bonds is usually  directly  related to the credit standing of
   the  user  of  the  facilities.   Since  1986  there  have  been  substantial
   limitations on new issues of municipal  bonds to finance  privately  operated
   facilities.  To the extent such municipal  bonds would  generate  income that
   might be taxed under federal  alternative  minimum tax  provisions,  the Fund
   does not invest in Private  Activity bonds. The Fund does not anticipate that
   greater  than 5% of the  Fund's  total  assets  will be  invested  in Private
   Activity Bonds.

The Fund may purchase certain variable or floating rate obligations in which the
interest rate is adjusted at predesignated periodic intervals (variable rate) or
when there is a change in the market rate of interest on which the interest rate
payable on the obligation is based  (floating  rate).  Variable or floating rate
obligations  may include a demand  feature that entitles the purchaser to demand
prepayment of the principal  amount prior to stated  maturity.  Also, the issuer
may have a corresponding right to prepay the principal amount prior to maturity.

                      INVESTMENT CONSIDERATIONS

Investing in securities  entails both market risk and risk of price variation in
individual securities.  THIS IS TRUE EVEN FOR DEBT SECURITIES ISSUED BY THE U.S.
GOVERNMENT.  By  diversifying  its  investments,  the Fund may  reduce  the risk
associated with owning one or a few individual securities.  However, there is no
assurance that the Fund will achieve its investment objectives.

Many factors may cause the value of a  shareholder's  investment  in the Fund to
fluctuate in value.  The value of the Fund's  portfolio will normally  fluctuate
inversely with changes in market interest rates. Generally, when market interest
rates rise the price of municipal  bonds held in the Fund will fall;  when rates
fall, the price of such bonds will generally rise. In addition,  there is a risk
that the issuer of a municipal  bond or other  security will fail to make timely
payments of principal and interest.  Interest rate  fluctuations will affect the
Fund's  net  asset  value,  but not the  income  received  by the Fund  from its
portfolio securities.  However,  because yields on debt securities available for
purchase by the Fund vary over time, no specific yield on shares of the Fund can
be assured.

Because the Fund  concentrates  its  investments  in a single state,  there is a
greater risk of fluctuation in the values of its portfolio  securities than with
mutual funds the investments of which are more geographically diverse. Investors
should carefully consider the investment risks of such concentration. The Fund's
share prices can be affected by political and economic  developments  within and
by the financial  condition of the State of Idaho,  its public  authorities  and
political subdivisions. The following information may be relevant in considering
an  investment  in the Fund,  but is not  intended  to provide  all  information
relevant to such an investment.  Discussions  concerning the financial health of
the State government might not be relevant to municipal  obligations issued by a
political subdivision.  In addition,  general economic conditions may or may not
affect issuers of the obligations of the State.

Idaho is located in the Northwestern  portion of the United States,  bordered by
Washington, Oregon, Nevada, Utah, Wyoming, Montana and Canada. Idaho consists of
approximately  84,000 square miles of varied terrain.  The terrain and access to
outdoor activities such as boating,  fishing,  hunting and skiing,  make tourism
and recreation a major, growing industry in the State.

Although  located  in the arid  West,  Idaho has  significant  water  resources,
including  26,000 miles of rivers and streams and more than 2,000 natural lakes.
The drop in  elevation of rivers like the Snake  permit  hydropower  production,
allowing the State some of the lowest electricity rates in the nation.

The State has a broadly based economy,  ranging from mining and timber resources
to agricultural lands which are irrigated by a series of man-made reservoirs and
irrigation  systems.  More than four  million  acres are  irrigated in the Snake
River Basin.

Traditionally,  Idaho has been an agricultural  State.  Livestock,  beef,  dairy
cattle  and sheep are  important  to the  economy,  while the major  food  crops
include  potatoes,  wheat,  barley,  sugar  beets,  seed crops and fruit.  Major
manufacturing  industries  include food processing,  forest products,  phosphate
processing,  computer components and electronics. Mining also has been important
in the  development of the State with phosphate  rock,  silver,  lead,  zinc and
molybdenum among the resources mined. Mining activity is dependent on the market
prices of products  and over the past few years with  depressed  prices,  mining
activity has been declining, and may not improve.

In the past, the State's economy has often behaved counter to national  economic
trends. In spite of the national  difficulties in the 1970's,  the State enjoyed
economic growth for most years in the decade.  The State's  economy  experienced
weaker than average  economic  performance  during the first half of the 1980's.
Idaho's economy turned up in 1988, and has continued above the national rates.

Much of the State's economic  behavior is explained in terms of Idaho's changing
mix of industries and markets. In recent years,  non-agricultural employment has
grown more rapidly,  with Idaho's  electronics and machinery  industry,  service
sector,  tourism,  and government  sectors among leading areas.  Mining has been
particularly  weak, with forest products,  food processing and chemical products
sectors among the weaker sectors. The shift from industries dependent on natural
resources  should make the State less sensitive to events in  international  and
national markets.

Idaho has benefited from recent population exodus from California. The shift has
helped make the state among the fastest growing economies in the nation. However
impressive  this may  sound,  it is  important  to bear in mind that Idaho has a
relatively  small population and percentages are easily changed by the influx of
relatively  few people.  Also,  such  immigration  brings a demand for increased
infrastructure and the financing to fund it. Any such increase in infrastructure
would require that economic growth be maintained to support it, and if growth is
not maintained economic problems could develop.

The State  operates  under an  annual  budget  system  that  coincides  with the
July-June  fiscal  year.  The State  Division  of  Financial  Management  in the
Governor's  office, in connection with the Governor prepares the proposed budget
for the ensuing  year and the Governor  submits this budget to the  Legislature.
The State  must  operate  on a  balanced  budget,  in  accordance  with  revenue
projections.  Following the legislative  process,  appropriation  bills for each
department or agency are submitted to the House and Senate for approval and then
sent to the Governor for signature. The Governor has "line-item veto" power. The
appropriations   constitute  the  limit  for  each   department  or  agency  for
expenditures.

The State may not incur  long-term  debt,  and,  consequently,  the  funding for
projects requiring such debt is done through cities, instrumentalities, agencies
and political subdivisions of the State.

The State derives its revenues  substantially  from three sources:  personal and
corporate  income taxes,  sales taxes and motor fuel taxes,  of which the income
taxes  provide  approximately  half.  The balance of State  revenue  came from a
variety of minor taxes.

INVESTMENT  RESTRICTIONS.   In  addition  to  the  restrictions  stated  in  the
Prospectus,  the Fund shall not purchase securities on margin or sell securities
short or purchase or write put or call options; purchase "restricted securities"
(those which are subject to legal or contractual  restrictions  on resale or are
otherwise  not  readily  marketable);  nor invest in oil,  gas or other  mineral
exploration leases and programs. The Fund shall not make loans to others, except
for the purchase of debt securities, or entering into repurchase agreements. The
Fund shall not invest in securities so as to not comply with Subchapter M of the
Code,  in that  generally at the close of each quarter of the tax year, at least
50% of the value of the Fund's total assets is  represented by (i) cash and cash
items,  government  securities,  and  securities of other  regulated  investment
companies, and (ii) other securities, except that with respect to any one issuer
in an amount more than 5% of the Fund's  total  assets,  and no more than 10% of
the Fund's voting securities of any one issuer. In addition,  the Fund shall not
purchase real estate; real estate limited partnerships (excepting master limited
partnerships  that are  publicly  traded  on a  national  security  exchange  or
NASDAQ's  National Market  System);  commodities or commodity  contracts;  issue
senior  securities;  provided,  however,  that  a  fund  may  borrow  money  for
extraordinary or emergency  purposes and then only if after such borrowing there
is asset  coverage  of at  least  300%  for all  such  borrowings;  nor act as a
securities  underwriter except that they may purchase  securities  directly from
the issuer for investment  purposes.  No Fund will purchase securities if it has
outstanding  borrowings  exceeding 5% of its net assets Also, the Fund shall not
purchase or retain  securities  of any issuer if the officers or trustees of the
Trust or its adviser own more than one-half of one percent of the  securities of
such issuer;  invest in any company for the purpose of  management or exercising
control.  The Fund  shall  not  invest  in the  securities  of other  investment
companies, except by purchase where no commission or profit results.


<PAGE>


                         PORTFOLIO TURNOVER

The Fund  places no  restrictions  on  portfolio  turnover  and will buy or sell
investments  according to the Adviser's  appraisal of the factors  affecting the
market and the economy.

   
The portfolio  turnover rate of the Fund for the fiscal years ended November 30,
1995, 1994, and 1993 was 28%, 36%, and 31%, respectively.

                          PERFORMANCE DATA

Average  annual  Total  Return and Current  Yield  information  may be useful to
investors in reviewing the Fund's performance.  However,  certain factors should
be taken into account  before using the  information  as a basis for  comparison
with  alternative  investments.  No  adjustment  is made for  taxes  payable  on
distributions. The performance for any given past period is not an indication of
future rates of return or yield on its shares.

The Fund's  total  return for the one year ended  November  30,  1995 was 16.68%
Average annual total return for the three year period through  November 30, 1995
was 6.43%,  for the five year  period  then ended  6.88% and for the period from
October 30, 1987 (inception of the Fund) through November 30, 1994, 6.95%.
    

Average  annual Total Return  quotations  for various  periods  illustrated  are
computed by finding the average annual compounded rate of return over the period
quoted that would equate the initial  amount  invested to the ending  redeemable
value according to the following formula:

            P (1 + T)n   =   ERV

Where

            P = a  hypothetical  initial  Payment  of $1,000 T = average  annual
            Total return n = Number of years ERV =Ending Redeemable Value of the
            $1,000 payment

                  made at the beginning of the period.

To solve for average Total Return, the formula is as follows:

            T  =  (ERV/P) 1/n  - 1

The Fund intends to advertise the tax exempt and/or taxable  equivalent yield to
investors.

   (a)The advertised  tax-exempt yield will be the dollar weighted average yield
      to maturity or call. In determining whether each security in the portfolio
      will use yield to maturity or yield to call, the lesser of the two will be
      selected.

   (b)In determining the advertised  taxable  equivalent yield the effective tax
      rate will first be calculated and so stated. It may include federal income
      tax,  state  income tax,  and federal  alternative  minimum tax as clearly
      defined in the ad. The advertised  tax exempt portion of the  standardized
      yield will then be divided by the inverse of the stated effective tax rate
      and  increased by any taxable  yield to determine  the taxable  equivalent
      yield.

The Fund  utilizes the  following  procedures in  determining  yield.  The yield
calculation is based on a 30 day period and is computed by the following formula
using the compounded semi-annual APR:

      Nominal Yield = [ [ [ ( (a-b) / ( c*d ) ) + 1 ] -1 ] /30 ] * 360

      Compounded Semi-Annual APR = [ [ 1 + [ Nominal Yield / 2 ] ] 2  ] - 1

Where: a = dividends and interest earned during the period; b = expenses accrued
for the period (net of  reimbursement);  c = the average  daily number of shares
outstanding during the period that were entitled to receive  dividends;  and d =
the maximum offering price per share  (equivalent to Net Asset Value for no-load
funds) on the last day of the period.

   
The Fund's  tax-exempt  yield for the 30-day period ended  November 30, 1995 was
4.6%. The equivalent  after-tax yield was 8.29% for Idaho residents with taxable
incomes of $265,000,  based on a 1995 combined  effective  federal and Idaho tax
rate of 44.5%.
    

In advertising and sales  literature,  the Fund may compare its performance with
that of other mutual funds,  indexes or averages of other mutual funds,  indexes
or data, and other competing investment and deposit products. The composition of
these indexes or averages differs from that of the Fund.  Comparison of the Fund
to  an  alternative   investment  should  be  made  with  consideration  of  the
differences in features and expected performance of the investments.

All of the indexes and averages  noted below will be obtained from the indicated
sources  or  reporting  services,  which  the  Trust  believes  to be  generally
accurate. The Fund may also note its mention or recognition in other newspapers,
magazines   or  media  from  time  to  time.   However,   the  Fund  assumes  no
responsibility for the accuracy of such data. Among the newspapers and magazines
that might mention the Funds are:

                Barron's            Money
                Business Week       Mutual Fund Letter
                Changing Times      Morningstar
                Consumer Reports    New York Times
                Consumer Digest     Pensions and Investment
                Financial World     USA Today
                Forbes              US News and World Report
                Fortune             Wall Street Journal
                Investors Daily


The  Fund  may  also  compare  itself  to the  Consumer  Price  Index,  a widely
recognized measure of inflation, and to other indexes and averages such as:

      Dow Jones Industrials         New York stock Exchange  Composite
      Standard  & Poor's            500 Stock Index

         Index                      American Stock Exchange  Composite
      Standard &oor's               400 Index

         Industrials                NASDAQ Composite
      Wilshire 5000                 NASDAQ Industrials
      Russell 2000                  Lipper General Equity Fund Average
      Lipper  Capital  Appreciation Lipper Equity Funds Average
`     Fund Average                  Lipper Growth Fund Index
      Lipper Growth Funds Average   Lipper   Growth  &   Income   Fund
      Lipper Small  Company  Growth Average Fund Average              
      Lipper Balanced Fund Average
      Lipper   Equity  Income  Fund Lipper Growth & Income Fund Index
          Average                    Lipper Equity Income Fund Index
      Lipper  Capital  Appreciation Lipper Balanced Fund Index
          Fund Index                 Ibbotson Common Stocks Index
      Lipper Growth Fund Index
      Lipper Small  Company  Growth    Fund Index
      Morningstar Mutual Fund Indices

The indexes and averages are measures of  performance of stocks and mutual funds
that are classified, calculated and published by these independent services. The
Fund may also use  comparative  performance as computed in a ranking by these or
other independent services.

A Fund may also cite its  rating or other  mention  by  Morningstar  or  another
entity.   Morningstar's   ratings  are  based  on  risk-adjusted   total  return
performance,  as computed by Morningstar by subtracting the Fund's risk score as
computed by  Morningstar,  from the fund's total return  score.  This  numerical
score is then translated into rating categories.

                       MANAGEMENT OF THE TRUST

Information  concerning  Trustees and Officers of the Trust and their  principal
occupations for the past five years is shown below:

GARY A. GOLDFOGEL, M.D., Trustee
1500 N. State Street, Bellingham, WA 98225.
Pathologist  and Medical  Dir., Whatcom  Pathology  Lab.  Whatcom  County;
Medical Examiner, Whatcom County

NICHOLAS KAISER, M.B.A., C.F.A. - President and Trustee *
1300 N. State Street, Bellingham, WA 98225.
President of Saturna Capital Corporation, since July 1989.
President of Unified  Management  Corporation,  Indianapolis IN, investment
advisers and brokers, from 1976 through June 1989.

JOHN E. LOVE, Trustee
Box 188, Garfield, Washington 99130
Owner, J.E. Love Co.,international  agricultural  equipment  manufacturer,
Garfield, WA
Director, Bank of Whitman, Colfax, Wash.
Rear Admiral, U.S. Navy, Retired.

JOHN S. MOORE, Trustee
College of Business and Economics, Western Washington University,
Bellingham, WA 98225-9077
Professor of Business Administration

JAMES D. WINSHIP, J.D., M.B.A.- Trustee and Secretary*
1300 N. State Street, Bellingham, WA 98225.
 Vice President and Secretary, Saturna Capital Corporation,  October 1991 to
 present.
Editor-at-large,  FUND DIRECTIONS  industry  newsletter,  December 1991 to
present.
Executive Vice-President and member of the management committee, Stein Roe
& Farnham Incorp.,  Chicago IL, investment adviser,  and head of its
 mutual fund division, prior to October 1991.

MEREDITH L. ROSS - M.B.A., Treasurer
1300 N. State Street, Bellingham, WA 98225.
Assistant  Treasurer,  Saturna  Capital  Corporation,   September  1989  to
 present.

* Nicholas Kaiser and James Winship are each an "interested person" of the Trust
as defined in the Investment Company Act of 1940.

   
Beginning  January  1,  1996,  the Trust pays  disinterested  trustees  $100 per
meeting attended and  reimbursement of travel expenses  (pro-rata to each Fund).
Neither Mr. Winship nor Mr. Kaiser receives compensation from the Trust, nor are
the other  officers of the Trust paid for their duties with the Trust.  Prior to
that time all Trustees served without compensation, as set forth below.
<TABLE>
    

                                   Pension or                         Total
                      Aggregate    Retirement                         Compensation
Name of               Compensa-    Benefits Accrued Estimated Annual  From Registrant
Person;               tion From    As Part of Fund  Benefits Upon     and Fund Complex
Position              Registrant   Expenses         Retirement        Paid to Directors

<S>                    <C>         <C>                 <C>                 <C>
GARY A. GOLDFOGEL      $0          $0                  $0                  $0
Trustee

JOHN E. LOVE,          0           0                      0               0
Trustee

JOHN S. MOORE,        0            0                     0                0
Trustee

NICHOLAS F. KAISER   0               0                  0                  0
Trustee

JAMES D. WINSHIP       0             0                  0                 0
Trustee
</TABLE>

The Board has  authority to establish an Executive  Committee  with the power to
act on behalf of the Board  between  meetings  and to exercise all powers of the
Trustees  in the  management  of the  Trust.  No  Executive  Committee  has been
established at this time. An Audit  Committee,  consisting of the  disinterested
directors,  meets to select  the  independent  accountant  and  review all audit
reports.

   
As of February 6, 1996,  officers,  trustees and their families as a group owned
no shares of the Fund.

                   PRINCIPAL HOLDERS OF SECURITIES

As of February 6, 1999, the only person know to own more than 5% of the Fund was
Grange  Mutual  Fire Ins General  Fund that owned  50113  shares or 5.16% of the
shares.
    

               INVESTMENT ADVISORY AND OTHER SERVICES

The Fund is  obligated  to pay Saturna  Capital  monthly an advisory  fee at the
annual rate of 0.50% of the average daily net assets up to $250  million,  0.40%
of assets between $250 million and $1 billion,  and 0.30% of assets in excess of
$1  billion.  Through  March 31,  1997,  Saturna  is  voluntarily  obligated  to
reimburse the Fund monthly if  non-extraordinary  expenses exceed an annual rate
of 0.80% of  average  daily net asset  value,  subject  to  cancellation  by the
adviser on 30 days' notice.

The Fund pays its own taxes,  brokerage  commissions  (if any),  trustees' fees,
legal and  accounting  fees,  insurance  premiums,  custodian,  transfer  agent,
registrar and dividend  disbursing  agent fees,  expenses  incurred in complying
with state and federal  laws  regulating  the issue and sale of its shares,  and
mailing and printing costs for prospectuses, reports and notices to shareowners.
The  Adviser,  at its own  expense  and  without  additional  cost to the  Fund,
furnishes office space,  office facilities and equipment,  personnel  (including
executive  officers) and clerical and bookkeeping  services  required to conduct
the business of the Fund.

The laws and  regulations of various states set expense  limitations  for mutual
funds as a condition  for  registration  to offer and sell shares in that state.
Usually,  the expense  limitation  requires  reimbursement if, and to the extent
that, the aggregate  operating expenses including the advisory fee but generally
excluding interest, taxes, brokerage commissions and extraordinary expenses, are
in excess of a specified  percentage of the average net assets of a Fund for its
fiscal year. The only state the adviser believes maintains an expense limitation
is California,  which limits aggregate annual expenses (with exceptions) to 2.5%
of the first $30 million of average  net assets,  2% of the next $70 million and
1.5% of the remaining average net assets.

   
Saturna  Capital  Corporation  provides  services  as  the  transfer  agent  and
dividend-paying  agent for each Fund. As transfer  agent,  Saturna  furnishes to
each shareowner a statement after each transaction,  an historical  statement at
the end of each year showing all transactions during the year, and Form 1099 tax
forms. Saturna also, on behalf of the Trust, responds to shareowners'  questions
or  correspondence.  Further,  the transfer agent regularly  furnishes each Fund
with current  shareowner  lists and information  necessary to keep the shares in
balance  with the  Trust's  records.  The mailing of all  financial  statements,
notices and prospectuses to shareowners is performed by the transfer agent.

As compensation for services as transfer agent and dividend  disbursement agent,
the Fund pays Saturna an annual fee of $1.10 per month per  shareowner  account,
which the Trustees have  determined is no more than the cost of performing  such
services.  The Fund reimburses  Saturna for any out-of-pocket  expense for forms
and mailing costs used in performing  its  functions.  For the fiscal year ended
November 30, 1995, The Fund paid transfer agent fees of $5,205.

For the fiscal year ended November 30, 1995, the Fund paid $30,862 in investment
adviser and administration  fees, of which the adviser reimbursed  $14,048.  For
the fiscal year ending  November 30, 1994, the Fund was required to pay $36,251,
of  which  Saturna  Capital  waived  $10,190.  For  fiscal  year  1993,  the the
comparable figures were $32,394 and $11,689.
    

National City Bank,  Indianapolis,  Indiana 46255 is the custodian of the Fund's
securities  and other  assets.  As  custodian,  the bank  holds in  custody  all
securities  and cash,  settles for all securities  transactions,  receives money
from sale of shares and on order of the Fund pays the authorized expenses of the
Fund.  When Fund shares are redeemed by investors,  the proceeds are paid to the
shareowner by check drawn on the custodian bank.

Price Waterhouse, LLP 1001 Fourth Avenue Plaza, Seattle, Washington 98154 serves
as the  independent  accountants  for the  Trust.  The  independent  accountants
conduct  the annual  audit of the Trust as of  November  30 and  prepare the tax
returns of each Fund.

   
                        BROKERAGE ALLOCATION

For fiscal years 1995,  1994, and 1993,  Idaho Tax-Exempt Fund paid no brokerage
commissions.
    

BROKERAGE POLICIES

The  placing  of  purchase  and  sale  orders  as  well  as the  negotiation  of
commissions, if any, is performed by the Adviser and is reviewed by the Board of
Trustees.  The  Adviser  may  allocate  brokerage  to any  broker in return  for
research or services  and for  selling  shares of the Fund.  Brokers may provide
research or statistical  material to the Adviser,  but this  information is only
supplemental to the research and other  statistics and material  accumulated and
maintained through the Adviser's own efforts. Any such supplemental  information
may or may not be of value or used in making  investment  decisions for the Fund
or any other account serviced by the Adviser.

The primary  consideration in effecting securities  transactions for the Fund is
to obtain the best price and  execution  which in the judgment of the Adviser is
attainable  at the time and  which  would  bring the best net  overall  economic
result to the Fund.  Factors  taken  into  account in the  selection  of brokers
include the price of the  security,  commissions  paid on the  transaction,  the
efficiency  and  cooperation  with  which  the  transaction  is  effected,   the
expediency of making settlement and the financial  strength and stability of the
broker. The Adviser may negotiate  commissions at a rate in excess of the amount
another  broker  would  have  charged  if it  determines  in good faith that the
overall net  economic  result is favorable  to the Fund.  The Adviser  evaluates
whether  brokerage  commissions are reasonable based upon available  information
about  the  general  level of  commissions  paid by  similar  mutual  funds  for
comparable services.

The Adviser's  subsidiary,  Investors  National  Corporation,  is qualified as a
broker-dealer  to engage in a general  brokerage  business.  Investors  National
Corporation  conducts all its  transactions  on an agency basis for  established
"deep  discount"  commissions;  it does not make  markets,  "deal," or  maintain
inventories of securities.  For brokerage  conducted through an affiliate of the
Adviser, the Trustees have adopted procedures reasonably designed to ensure that
any brokerage fees are reasonable and fair compared to remuneration  received by
other brokers in  comparable  transactions.  The Trustees are provided  detailed
quarterly monitoring reports and review the procedures at least annually.

    PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED

See  HOW TO BUY  SHARES,  HOW TO  REDEEM  SHARES  and  NET  ASSET  VALUE  in the
Prospectus for an explanation about the ways to purchase or redeem shares.

In addition to normal  purchases or redemptions,  the shares of each Fund may be
exchanged for shares of other Funds of Saturna  Investment Trust when additional
Funds are offered. Exchange will be made at no charge upon written request or by
telephone if the shareowner has previously  authorized  telephone  privileges on
the  application.  A gain or loss for federal tax purposes will be realized upon
redemption of any shares for the purposes of an exchange as described above.

Net asset value per share is determined by dividing the value of all  securities
and other assets, less liabilities, by the number of shares outstanding. The net
asset  value is  determined  for each Fund as of the close of trading on the New
York Stock Exchange (generally 4 p.m. New York time) on each day the Exchange is
open for  trading.  The  Exchange  is  generally  closed  on:  New  Year's  Day,
Washington's  Birthday/President's  Day, Good Friday, Memorial Day, Independence
Day (observance), Labor Day, Thanksgiving Day and Christmas Holiday.

                             TAX STATUS

Saturna  Investment  Trust is organized  as a "series"  investment  company.  At
present  only the Fund and the  Sextant  Funds  are  offered,  but the Trust may
create in the future additional Funds with different investment objectives. Each
Fund is a separate  economic  entity with separate  assets and  liabilities  and
separate income streams.  The shareowners of each separate Fund may look only to
that  Fund  for  income,  capital  gain or  loss,  redemption,  liquidation,  or
termination.  Each Fund has separate  arrangements  with the Adviser.  Assets of
each Fund are segregated. The creditors and shareowners of each Fund are limited
to the assets of that Fund for recovery of charges,  expenses  and  liabilities.
Each Fund  conducts  separate  voting on issues  relating  solely to that  Fund,
except as  required  by the  Investment  Company  Act.  The tax  status  and tax
consequences  to shareowners  of each separate Fund will differ,  depending upon
the investment objectives,  operations,  income, gain or loss, and distributions
from each Fund.

Each Fund intends to  distribute  to  shareowners  substantially  all of its net
investment  income and net realized capital gains, if any, and to comply,  as it
has since inception, with the provisions of the Internal Revenue Code applicable
to regulated  investment  companies,  which relieve the Funds of federal  income
taxes on the  amounts  so  distributed.  The Fund  declares  dividends  from net
investment  tax-exempt income daily,  payable at each month-end.  Net investment
taxable  income,   if  any,  is  declared  as  a  dividend  only  at  month-end.
Distribution  of any  capital  gains  is made at the end of the  fiscal  year in
November.

The  amount of  investment  income  and  capital  gains,  if any,  which will be
available  for  distribution  by a Fund of the  Trust in the  future  cannot  be
predicted due to continually changing economic conditions and market prices.

Dividends  and  distributions  from  capital  gains are normally  reinvested  in
additional  full and fractional  shares of the Fund.  The shares  purchased with
dividends  or  capital  gains  distributions  may be  redeemed  using any of the
methods for redemption of shares.

Distributions  and dividends  may be subject to federal,  state and local taxes.
Shareowners  will be taxed  whether  the  shares  automatically  purchased  with
dividends  and  distributions  are  left  in the  Fund  or are  redeemed  by the
shareowner.

Interest  received  upon the  obligations  of the  State  of Idaho or  political
subdivisions  thereof are exempt from income tax in the State of Idaho. An Idaho
Income Tax  ruling  provides  a  pass-through  of the  tax-exempt  character  of
interest  received  by  a  regulated  investment  company,  such  as  the  Idaho
Tax-Exempt Fund, upon distribution to shareholders.

Shortly  after  the end of each  calendar  year  shareowners  are  mailed a Form
1099-DIV advising of the dividends paid the shareowner for the year.

If you do not furnish the  transfer  agent with a valid  Social  Security or Tax
Identification  Number and in certain  other  circumstances,  we are required to
withhold 31% of income from your account. Dividends distributions to shareowners
who are nonresident aliens may be subject to a 30% United States withholding tax
under the existing  provisions of the code applicable to foreign individuals and
entities  unless a reduced rate of  withholding  or a  withholding  exemption is
provided  under  applicable  treaty  law. If the IRS  determines  that the Trust
should be fined or penalized for  inaccurate or missing or otherwise  inadequate
reporting of a Tax  Identification  Number, the amount of the IRS fee or penalty
will be directly assessed to the shareowner account involved.

   
                        FINANCIAL STATEMENTS

The most recent audited annual report  accompanies  this Statement of Additional
Information.  The  financial  statements  and selected per share data and ratios
dated  November 30, 1995,  together with the report of  independent  accountants
dated  December 15, 1995,  are  considered a part of the Statement of Additional
Information and are incorporated by reference.
    


<PAGE>


                        APPENDIX-BOND RATINGS

GENERAL. Moody's and S&P's ratings represent their opinions as to quality of the
municipal  bonds which they undertake (for a fee) to rate.  Such ratings are not
intended to be an absolute standard of quality.  Consequently,  a municipal bond
with the same  maturity,  coupon,  and ratings may have  different  yields while
municipal bonds having the same maturity and coupon, but with different ratings,
may have the same yield.

BOND RATINGS

MOODY'S       INVESTORS   SERVICES,   INC.,   describes  its  ratings  for  debt
              securities as follows:

  AAA     Bonds  which are rated  AAA are  judged to be of the best  quality.
          They  carry  the  smallest   degree  of  investment  risk  and  are
          generally  referred  to  as  "gilt  edge."  Interest  payments  are
          protected  by  a  large,  or  exceptionally   stable  margin,   and
          principal  is secure.  While the various  protective  elements  are
          likely  to  change,  such  changes  as can be  visualized  are most
          unlikely  to  impair  the  fundamentally  strong  position  of such
           issues.

      AA Bonds  which are rated AA are  judged to be of high  quality by all
          standards.  Together  with the Aaa group,  they  comprise  what are
         generally  known as  high-grade  bonds.  They are rated  lower than
         the best bonds because  margins of  protection  may not be as large
         as in the Aaa securities or fluctuation of protective  elements may
         be of greater  amplitude,  or there may be other  elements  present
         which may make the long-term  risks appear somewhat larger than the
         Aaa securities.

      A       Bonds  which  are  rated  A  possess  many  favorable   investment
              attributes  and  are  being   considered  as  upper   medium-grade
              obligations. Factors giving security to principal and interest are
              considered  adequate,  but elements may be present which suggest a
              susceptibility to impairment sometime in the future.

STANDARD & POOR'S describes its rating for debt securities as follows:

      AAA     Bonds  which are rated AAA have the  highest  rating  assigned  by
              Standard & Poor's. Capacity to repay interest and to pay principal
              is extremely strong.

      AA      Bonds  which  are  rated  AA have a very  strong  capacity  to pay
              interest and to repay principal,  and differ from the higher rated
              issues only in small degree.

      A       Bonds which are rated A have a strong capacity to pay interest and
              repay  principal,  although they are somewhat more  susceptible to
              the  adverse  effect of  changes  and  circumstances  in  economic
              conditions than bonds in higher rated categories.

NOTES

MOODY'S INVESTORS  SERVICES,  INC.,describes its ratings for municipal notes as
              follows

      MIG-1   The MIG-1  designation  denotes  best  quality.  There is  present
              strong  protection by established cash flows,  superior  liquidity
              support,  or  demonstrated  broad-based  access to the  market for
              refinancing.

       MIG-2  The MIG-2  designation  denotes  high  quality,  with  margins for
              protection ample though not as large as that for MIG-1.

STANDARD & POOR'S describes its rating for municipal notes as follows:

      SP-1    The SP-1 rating  denotes a very  strong or strong  capacity to pay
              principal  and  interest.   Those  issues  determined  to  possess
              overwhelming  safety  characteristics  will be  given  a plus  (+)
              designation.

      SP-2    The SP-2 rating denotes a  satisfactory  capacity to pay principal
              and interest.

COMMERCIAL PAPER

MOODY'S INVESTORS SERVICES,  INC., describes its ratings for commercial paper as
              follows

      PRIME-1 Issuers rated PRIME-1, or related supporting institutions,  have a
              superior   capacity  for   repayment  of   short-term   promissory
              obligations. Prime-1 repayment capacity will normally be evidenced
              by the following characteristics:  (i) Leading market positions in
              well-established industries.

              (ii)High rates of return on funds employed

              (iiiConservative  capitalization structures with moderate reliance
              on debt  and a ample  asset  protection.  (iv)  Broad  margins  in
              earnings,  coverage of fixed financial charges,  and high internal
              cash  generation.  (v)  Well-established  access  to  a  range  of
              financial markets and assured sources of alternate liquidity.

      PRIME-2 Issuers rated PRIME-2, or related supporting institutions,  have a
              strong   capacity   for   repayment   of   short-term   promissory
              obligations.  This  will  normally  be  evidenced  by  many of the
              characteristics  cited  above,  but to a  lesser  degree.  Earning
              trends and coverage ratios,  while sound,  will be more subject to
              variation.    Capitalization    characteristics,    while    still
              appropriate,  may be more affected by external  conditions.  Ample
              alternate liquidity is maintained.

STANDARD & POOR'S describes its rating for commercial paper as follows:

      A-1     The A-1 designation  indicates that the degree of safety regarding
              timely  payment  is strong.  Those  issues  determined  to possess
              overwhelming  safety  characteristics  are denoted with a plus (+)
              designation.

      A-2     The A-2  designation  indicates  capacity  for  timely  payment is
              satisfactory.  However,  the  relative  degree of safety is not as
              high as for issues designated A-1.

Under  normal  market  conditions,  the Fund does not  anticipate  investing  in
Moody's  rated bonds below A or Moody's rated notes below MIG 2 or Moody's rated
commercial  paper  below  Prime-2.  Similarly,  the  Fund  does  not  anticipate
investing  in S&P rated bonds below A or S&P rated notes below SP-2 or S&P rated
commercial paper below A-2.


<PAGE>


=====================================================================

=====================================================================





                                  PART C

                             OTHER INFORMATION


<PAGE>


=====================================================================
                              1

=====================================================================
Financial Statements and Exhibits

(a)  Financial Statements

    There  is  incorporated  into  Part B of  this  Registration  Statement  the
    following financial  information in the Annual Report to shareowners for the
    fiscal year ended November 30, 1995:

        Report of Price Waterhouse LLP, Independent Accountants.
        For each portfolio of the Fund:

          Statement of Assets and Liabilities as of November 30, 1995. Statement
          of Operations - Year ended November 30, 1995.  Statement of Changes in
          Net Assets - years ended November30, 1994 and November 30, 1995.
          Investments - November 30, 1995.
          Financial Highlights

        Notes to Financial Statements

        Also incorporated by reference is the Discussion of Fund
        Performance (Unaudited) for each Fund of the Trust
    
     A copy of each of the Annual Reports for the Trust are included as Exhibits
     1-A and 1-B

     Included in Part C:

        Consent of Independent Accountants.

(b)  Exhibits included with this filing:ss.

(1)    *(a) Agreement and Declaration of Trust of Northwest Investors
       Tax-Exempt Business Trust, filed February 20, 1987 with
       Secretary of State of Washington.  Incorporated by Reference.
       Filed as Exhibit No. 1 to initial filing of Form N-1A in
       1987.  File No. 33-13247.

       *(b) Articles of Amendment to the Declaration of Trust of
       Northwest Investors Trust, as adopted by resolution of the
       Board of Trustees on November 24, 1992, filed with the
       Secretary of State of Washington December 1, 1992.
       Incorporated by Reference.  Filed as Exhibit No. 1(b) to
       Amendment No. 8 to Form N-1A dated December 21, 1992.

       *(c) Articles of Amendment to the Declaration of Trust of
       Northwest Investors Trust, as adopted by resolution of the
       Board of Trustees on July 10, 1995. Incorporated by
       Reference.  Filed as Exhibit No. 1-3 to Amendment No. 13 to

       Form N-1A dated July 11, 1995.

       (d) Articles of Amendment to the Declaration of Trust of
       Saturna Investment Trust, as adopted by vote of the
       shareholders on September 28, 1995. Attached as Exhibit No.1-4.

(2)*   Bylaws of Northwest Investors Trust, adopted by the Board of
       Trustees, July 21, 1992. Incorporated by Reference.  Filed as
       Exhibit No. 2 to Amendment No. 8 to Form N-1A dated December 21, 1992.

(3)    Not applicable.

(4)    Not applicable.

(5)    (a) Investment  Advisory and  Administrative  Services  Agreement for the
       series  Sextant  International  Fund  of  Saturna  Investment  Trust,  as
       approved by the Board of Trustees  on July 10, 1995 and  shareholders  on
       September 28, 1995. (Exhibit 5-1)

       (b) Investment  Advisory and  Administrative  Services  Agreement for the
       series Sextant Growth Fund of Saturna  Investment  Trust,  as approved by
       the Board of Trustees on July 10, 1995 and  shareholders on September 28,
       1995. (Filed as Exhibit 5-2)

       (c) Investment  Advisory and  Administrative  Services  Agreement for the
       series Sextant Bond Income Fund of Saturna  Investment Trust, as approved
       by the Board of Trustees on July 10, 1995 and  shareholders  on September
       28, 1995. (Filed as Exhibit 5-3)

       (d) Investment  Advisory and  Administrative  Services  Agreement for the
       series  Sextant  Short-Term  Bond Fund of Saturna  Investment  Trust,  as
       approved by the Board of Trustees  on July 10, 1995 and  shareholders  on
       September 28, 1995. (Filed as Exhibit 5-4)

(6)    Not applicable.

(7)    Not applicable.

(8)    Form of  Custodian  Agreement  for each series of the Trust,  between the
       Trust and National City Bank, Indiana. (Filed as Exhibit 8-1).

(9)*   Transfer Agent Agreement for the Northwest Investors Trust
       between the Trust and Saturna Capital Corporation, dated
       October 12.  Filed as Exhibit C to Proxy Statement dated
       September 21, 1990.  File No. 33-13247.

(10)   *(a) Opinion of Counsel dated 1987.  Incorporated by
       Reference.  Filed as Exhibit to initial filing of Form N-1A in
        1987.  File No. 33-13247.

       *(b) Opinion for Washington Tax-Exempt series. Incorporated by
       Reference.  Filed as Exhibit No. 10-2 to Amendment No. 8 to
       Form N-1A dated December 21, 1992.

       *(c) Opinion of Counsel of Barnes & Thornburg. Filed as
       Exhibit 10-3 to Amendment No. 13 to Form N-1A dated July 11, 1995

(11)   (a) Consent of Price Waterhouse LLP, Independent Auditors.
       Filed as Exhibit 11-1.

       (b) Copies of Powers of Attorney of Trustees of Saturna  Investment Trust
       attached as Exhibit 11-2.

(12)   Not applicable.

(13)   Not applicable.

(14)*  (a) Prototype Paired Defined Contribution Money Purchase
       Pension and Profit Sharing Plan. Filed as Exhibit No. 14-1 to
       Amendment No. 7 to for N-1A in 1992. File No. 33-13247.

       (b) Defined Contribution Trust, Filed as Exhibit No. 14-2 to
       Amendment No. 7 to for N-1A in 1992. File No. 33-13247.

       (c) Money Purchase Pension Adoption Agreement, Filed as
       Exhibit No. 14-3 to Amendment No. 7 to for N-1A in 1992.

       File No. 33-13247.

       (d) Profit Sharing Adoption Agreement, Filed as Exhibit No.
       14-4 to Amendment No. 7 to for N-1A in 1992. File No.33-13247.

(15)   Not applicable.

(16)   Computation of Performance.

       The  Average  Annual  Total  Return  since  the  inception  of the  Idaho
       Tax-Exempt  Fund through  November 30, 1995 is computed to be 6.95%,  for
       Sextant Growth Fund 7.49% and Sextant Bond Income Fund 4.30%.

Persons Controlled by or Under Common Control with Registrant

No person or persons are directly or  indirectly  controlled  by or under common
control with the Registrant.


<PAGE>


Number of Holders of Securities

As of January  31,  1996 the  following  information  is  furnished  for Saturna
Investment Trust:

          (1)                      (2)
     Title of Class           Number of Record Holders

     Shares                   34- Sextant Bond Income Fund
                              27 Sextant Short-Term Bond Fund
                              126 -Sextant Growth Fund
                              28-Sextant International Fund
                              223- Idaho Tax-Exempt Fund

Indemnification

There is no provision  for  indemnification  of the officers and trustees of the
Trust  except as provided  the  Agreement  and  Declaration  of Trust of Saturna
Investment  Trust,  which  provisions  are set forth below.  The  provisions  of
Article IV, Section 1 and Article XI of Trust of the Registrant previously filed
as  Exhibit  1  to  this  Registration  Statement  are  incorporated  herein  by
reference.

   In the  performance  of his  duties as  Trustee,  each  Trustee  shall not be
   personally  liable to the Trust or its shareowners  for any monetary  damages
   for any breach of duty as a Trustee,  provided that this limitation shall not
   be construed  as limiting the  liability of the Trustee for (l) any breach of
   the Trustee's  duty of loyalty to the Trust or its  shareowners,  (2) acts or
   omissions  not in good  faith  or which  involve  intentional  misconduct  or
   knowing  violation  of law,  (3) for the  unlawful  payment of  dividends  or
   redemption  of shares,  or (4) for any  transaction  from  which the  Trustee
   derives an improper personal benefit.

   The Trustees,  officers, employees and agents of the Trust are indemnified by
   the Trust for the fines, judgments and costs of suit, with respect to actions
   brought against them in their capacity as agents of the Trust or against them
   on behalf of the Trust. However, no Trustee or officer will be protected from
   liability for acts of willful  misfeasance,  bad faith,  gross  negligence or
   reckless disregard of the duties involved in the conduct of his office.

   The Trust may  purchase  and  maintain  insurance on behalf of any current or
   past  Trustee,  officer,  agent or employee  against any  liability  asserted
   against such person or incurred by him by reason of such  capacity or status,
   provided,  that no such  insurance may be maintained if such would  indemnify
   such person for willful misfeasance,  bad faith, gross negligence or reckless
   disregard of the duties involved in the conduct of his office.

   The Trustees, officers and agents of the Trust have no power to bind any past
   or  present  shareowner  to any Fund of the Trust  solely by reason  that the
   shareowner  is an owner of the  beneficial  interest  in any Fund.  Each such
   shareowner  shall be  entitled  to  indemnification  from the  Trust  for any
   recovery  against  him  solely  by  reason of his  capacity  and  status as a
   shareowner.

   The Trustees may provide in agreements of the Trust provisions setting forth,
   to the extent  considered  necessary,  the  limitations of liabilities of the
   Trust to the assets of  shareowners,  officers,  agents and  employees of the
   Trust. The Investment Advisory Agreement,  Distribution Agreement,  Custodian
   Agreement and Transfer Agent agreement of the Trust contain such a provision.

   Insofar as indemnification  for liability arising under the Securities Act of
   1933 may be permitted to Directors,  officers and  controlling  person of the
   Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
   has  been  advised  that  in the  opinion  of  the  Securities  and  Exchange
   Commission such  indemnification is against public policy as expressed in the
   Act  and  is,  therefore,  unenforceable.  In  the  event  that a  claim  for
   indemnification  against  such  liabilities  (other  than the  payment by the
   Registrant of expenses incurred or paid by a Director, officer or controlling
   person of the  Registrant in the  successful  defense of any action,  suit or
   proceeding)  is asserted by such Director,  officer or controlling  person in
   connection with the securities being registered,  the Registrant will, unless
   in the  opinion of its  counsel  the matter has been  settled by  controlling
   precedent, submit to a court of appropriate jurisdiction the question whether
   such  indemnification  by it is against public policy as expressed in the Act
   and will be governed by the final adjudication of such issue.

Business and Other Connections of Investment Adviser

The answer to this item is disclosed in Part A and Part B of the Form N-1A under
"Management of the Trust."

Principal Underwriters

Investors National  Corporation,  1300 N. State Street,  Bellingham,  Washington
98225,  a  wholly-owned  subsidiary  of  Saturna  Capital  Corporation,  acts as
distributor  for  the  Funds  without  compensation.  The  primary  business  of
Investors National  Corporation is retail discount brokerage.  As of February 6,
1996,   Investors  National  Corporation  owned  25,294.367  shares  of  Sextant
Short-Term Bond Fund, and 1,853.337 shares of Sextant Bond Income Fund.

The  following  table sets forth  information  with respect to each director and
executive officer of Investors National Corporation.

Name and Principal       Positions and Offices    Positions and Offices
Business Address           with distributor        with registrant

Nicholas Kaiser             Director & President     President,
Trustee
1300 State St.
Bellingham WA 98225

James D. Winship              Secretary           Secretary, Trustee
1300 State St.
Bellingham WA 98225

Meredith L. Ross              Director & Treasurer     Treasurer
1300 State St.
Bellingham WA 98225

Location of Accounts and Records

With the  exception of those  records  maintained  by the  Custodian  bank,  all
records  of the  Trust  are  physically  in the  possession  of  the  Trust  and
maintained  at the offices of Saturna  Capital  Corporation,  1300 State Street,
Bellingham, Washington 98225.

Management Services

There are no  management-related  contracts in which  service is provided to the
Trust other than those discussed in Parts A and B of this Form N-1A.

Undertakings

The Fund hereby  undertakes  pursuant to Section 16(c) of the 1940 Act, that, in
the event of shareholder  application  pursuant to such Section,  it will assist
such shareholders as set forth in such Section.

The Fund  hereby  undertakes  to furnish  each  person to whom a  prospectus  is
delivered with a copy of the Fund's latest annual report to  shareholders,  upon
request and without charge.


<PAGE>


=====================================================================
                             SIGNATURES

=====================================================================

Pursuant to the  requirements  of the  Securities Act of 1933 and the Investment
Company  Act  of  1940  the   Registrant  has  duly  caused  this  Amendment  to
Registration  Statement  to be duly  signed  on its  behalf  by the  undersigned
thereunto duly authorized in the City of Bellingham, State of Washington, on the
14th day of March,  1996.  Registrant  further represents that this Amendment is
filed  solely for one or more of the purposes  specified in paragraph  (b)(1) of
Rule 485 and that the Amendment meets applicable conditions set forth therein.

                    SATURNA INVESTMENT TRUST
                     By   /s/ Nicholas F. Kaiser
                     Nicholas F. Kaiser, President

Pursuant  to the  requirements  of the  Securities  Act of  1933  and  the
Investment  Company Act of 1940,  this Amendment to  Registration  Statement has
been signed below by the  following  persons in the  capacities  and on the date
indicated.
      Signature         Title                    Date
/s/ Nicholas F. Kaiser   President           March 14, 1996
   Nicholas F. Kaiser  (principal Executive
                       Officer); Trustee

/s/ Meredith L. Ross    Treasurer            March 14, 1996
    Meredith L. Ross   (principal Financial
                         Officer)

** Gary Goldfogel      All other Trustees    March 14, 1996
** John E. Love
** John S. Moore
** James D. Winship

     **   By/s/ Nicholas F. Kaiser
               Nicholas F. Kaiser, President,
               Attorney-in-fact

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* ADRs are  receipts  typically  issued  by an  American  bank or trust  company
evidencing ownership of the underlying securities. Positions in these securities
are generally  valued in U.S.  dollars,  and not necessarily  denominated in the
same currency as the underlying security into which they may be converted.

+ The "effective  maturity" of a debt instrument is the weighted  average period
over which the Adviser  expects the  principal  to be paid.  It differs from the
stated  maturity  in  that  it  estimates  the  effect  of  expected   principal
prepayments and call provisions.

ss. A repurchase agreement involves the sale of securities to the Fund, with the
concurrent  agreement of the seller to  repurchase  the  securities  at the same
price plus an amount equal to an agreed-upon  interest  rate,  within a specifed
time.  In the event of a bankruptcy or other default of a seller of a repurchase
agreement,  the Fund could  experience both delays in liquidating the underlying
securities and losses.

* Please refer to the Appendix for a discussion of ratings.

+ A repurchase  agreement  involves the sale of securities to the Fund, with the
concurrent  agreement of the seller to  repurchase  the  securities  at the same
price plus an amount equal to an agreed-upon  interest rate,  within a specified
time.  In the event of a bankruptcy or other default of a seller of a repurchase
agreement,  the Fund could  experience both delays in liquidating the underlying
securities and losses.

* Please refer to the Statement of Additional  Information  for a more extensive
discussion of the meaning and implications of the Fund's being nondiversified.

+ Municipal  securities purchased on a delayed-delivery or when-issued basis are
regarded as "senior  securities"  for purposes of the Investment  Company Act. A
segregated  account  is  established  on the date a Fund  enters  an  agreement,
containing cash, U.S. government securities, or other high-grade debt securities
in an amount equal to the purchase price due on the settlement date.

ss.  Items  marked with an  asterisk  (*) are  incorporated  by  reference  from
exhibits previously filed.