File No.  33-13247
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                   FORM N-1A

                         REGISTRATION STATEMENT UNDER
                          THE SECURITIES ACT OF 1933
                        POST-EFFECTIVE AMENDMENT NO. 17
                                      and
                         REGISTRATION STATEMENT UNDER
                      THE INVESTMENT COMPANY ACT OF 1940
                        POST-EFFECTIVE AMENDMENT NO. 17

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

                            1300 North State Street
                       Bellingham, Washington 98225-4730
                   (Address of Principal Executive Offices)

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

                           Pandora Larner, Secretary
                            1300 North State Street
                       Bellingham, Washington 98225-4730
                    (Name and Address of Agent for Service)


It is proposed  that this filing will become  effective:  [ ]  Immediately  upon
filing pursuant to paragraph (b) [ ] on _______ pursuant to paragraph (b) [X] 60
days after  filing  pursuant to paragraph  (a)(1) [ ] on  _________  pursuant to
paragraph  (a)(1) [ ] 75 days after filing  pursuant to paragraph  (a)(2) [ ] on
_______ pursuant to paragraph (a)(2) of rule 485

If appropriate, check the following box:
[    ]     this post-effective amendment designates a new effective date for a
previously  filed  post-effective  amendment.

                               EXPLANATORY NOTE
                               ----------------
This  Post-Effective  Amendment  is  the  annual  update to Saturna Investment
Trust's Registration Statement.  It includes financial information updated for
the  fiscal  year  ended  November  30,  1998.   There are no material changes
requiring  disclosure  update.    This  Amendment  is  filed under rule 485(a)
because  this  Registration  Statement  is  updated  to  comply  with the 1998
amendments  to  Form  N-1A.  An effective date of March 29, 1999, allowing the
normal 60 days under  485(a)(1),  is projected.  A graphical PDF version of this
filing is available at http://www.saturna.com/red.
                           --------------------------

<PAGE>

                             CROSS REFERENCE SHEET
                                   FORM N-1A

Item
----

FOR  SEXTANT  MUTUAL  FUNDS

PART  A                                                 PROSPECTUS
-------                                         ----------


1.  (a)  Front  Cover  Page                   COVER  PAGE  (when  folded,
    (b)  Back  Cover  Page                  constitutes  both  front  and  back)

2.  Risk/Return  Summary           A  QUICK  LOOK  AT  SEXTANT  MUTUAL  FUNDS

3.  Fee  Table                                  FEES  AND  EXPENSES

4.    (A)  Investment  Objectives               INVESTMENT  OBJECTIVES
      (b)  Principal  Investment  Strategies   INVESTMENT  STRATEGIES
      (c)  Risks          RISKS

5.  Management's  Discussion  of  Performance  Not applicable (in Annual
                                                                      Report)

6.    (a)  Management                                   INVESTMENT  ADVISER
      (b)  Capital  Structure               Not  applicable  (no  restrictions)

7.  Shareowner  information
    (a)  Pricing  of  Fund  Shares           PRICING  OF  FUND  SHARES
    (b)  Purchase  of  Fund  Shares          HOW  TO  BUY  SHARES
    (c)  Redemption  of  Funds  Shares       HOW  TO  REDEEM  SHARES
      (d)  Dividends  and  distributions     DIVIDENDS
    (e)  Tax  Consequences                       TAX  INFORMATION

8.  Distribution  arrangements               INVESTMENT  ADVISER

9.  Financial  Highlights  Information        FINANCIAL  HIGHLIGHTS

PART  B                               STATEMENT  OF  ADDITIONAL  INFORMATION
----  -                               --------------------------------------


10.  Cover  Page  &  Table  of  Contents          Cover  Page
     TABLE  OF  CONTENTS

11.  Trust  History                                HISTORY  OF  THE  FUNDS

12.  Fund  Descriptions,  Investments  and  Risks  FUND  DESCRIPTIONS,
                              INVESTMENTS AND RISKS

13.  Management  of  the  Trust                     MANAGEMENT  OF  THE  FUNDS

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

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

16.  Brokerage  Allocation  and  Other              BROKERAGE  ALLOCATION
     Practices

<PAGE>

17.  Capital  Stock  and  Other  Securities          CAPITAL  STOCK

18.  Purchase,  Redemptions  and  Pricing          PURCHASE,  REDEMPTION  AND
     of  Securities  Being  Offered                PRICING  OF  SHARES

19.  Taxation  of  the  Trust                      TAXATION  OF  THE  FUNDS

20.  Underwriters                                   Not  applicable

21.  Calculations  of  Performance  Data        CALCULATION OF PERFORMANCE DATA

22.  Financial  Statements                        FINANCIAL  STATEMENTS

<PAGE>

<PAGE>
Item

FOR  IDAHO  TAX-EXEMPT  FUND

PART  A                            PROSPECTUS
-------                            ----------


1.  (a)  Front  Cover  Page          COVER  PAGE  (when  folded,
     (b)  Back  Cover  Page          constitutes  both  front  and  back)

2.  Risk/Return  Summary          A  QUICK  LOOK  AT  IDAHO  TAX-EXEMPT  FUND

3.  Fee  Table                       FEES  AND  EXPENSES

4.    (A)  Investment  Objectives    INVESTMENT  OBJECTIVES
      (b)  Principal  Investment  Strategies          INVESTMENT  STRATEGIES
      (c)  Risks                     RISKS

5.  Management's  Discussion  of  Performance        Not applicable (in Annual
                                                                      Report)

6.    (a)  Management                INVESTMENT  ADVISER
      (b)  Capital  Structure          Not  applicable  (no  restrictions)

7.  Shareowner  information
    (a)  Pricing  of  Fund  Shares          PRICING  OF  FUND  SHARES
    (b)  Purchase  of  Fund  Shares          HOW  TO  BUY  SHARES
    (c)  Redemption  of  Funds  Shares          HOW  TO  REDEEM  SHARES
    (d)  Dividends  and  distributions          DIVIDENDS
    (e)  Tax  Consequences                  TAX  INFORMATION

8.  Distribution  arrangements              INVESTMENT  ADVISER

9.  Financial  Highlights  Information       FINANCIAL  HIGHLIGHTS

PART  B          STATEMENT  OF  ADDITIONAL  INFORMATION
----  -          --------------------------------------


10.  Cover  Page  &  Table  of  Contents          Cover  Page
     TABLE  OF  CONTENTS

11.  Trust  History                                        FUND  HISTORY

12.  Fund  Descriptions,  Investments  and  Risks          FUND  DESCRIPTIONS,
          INVESTMENTS  AND  RISKS

13.  Management  of  the  Trust                       MANAGEMENT  OF  THE  FUND

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

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

16.  Brokerage  Allocation  and  Other                 BROKERAGE  ALLOCATION
     Practices

17.  Capital  Stock  and  Other  Securities               CAPITAL  STOCK

<PAGE>

18.  Purchase,  Redemptions  and  Pricing          PURCHASE,  REDEMPTION  AND
     of  Securities  Being  Offered                  PRICING  OF  SHARES

19.  Taxation  of  the  Trust                        TAXATION  OF  THE  FUND

20.  Underwriters                                       Not  applicable

21.  Calculations  of  Performance  Data       CALCULATION OF PERFORMANCE DATA

22.  Financial  Statements          FINANCIAL  STATEMENTS

<PAGE>

------
PART  C
----  -

23.  Exhibits                                                         EXHIBITS

24.    Control  Persons                         PERSONS CONTROLLED BY OR UNDER
                         COMMON CONTROL WITH REGISTRANT

25.    Indemnification                                         INDEMNIFICATION

26.  Business  and  other  Connections                      BUSINESS AND OTHER
                                                                   CONNECTIONS
                              OF INVESTMENT ADVISER

27.    Principal  Underwriters                          PRINCIPAL UNDERWRITERS

28.    Records                                            LOCATION OF ACCOUNTS
                                                                  AND  RECORDS

29.    Management  Services                                MANAGEMENT SERVICES

30.    Undertakings                                               UNDERTAKINGS

<PAGE>













                                    PART A





                                  PROSPECTUS





<PAGE>

Saturna Investment Trust offers four no-load Sextant mutual funds:

     SEXTANT  GROWTH  FUND
     SEXTANT  INTERNATIONAL  FUND
     SEXTANT  SHORT-TERM  BOND  FUND
     SEXTANT  BOND  INCOME  FUND

Additional   information  about  each  Fund's  in-vestments  and  operations  is
available in the Funds' annual and semi-annual  shareowner  reports.  The Funds'
annual report  includes a discussion of the market  conditions  and  in-vestment
strategies that  significantly  affected each Fund's performance during its last
fiscal year. A Statement of Additional Information contains more details, and is
incorporated in this Prospectus by reference.

These  documents  and other  information  are available  upon  request,  without
charge, from:

                               (Graphic Omitted)
                                Saturna Capital
                             1300 N. State Street
                         Bellingham, Washington 98225

                            http://www.saturna.com
                          E-mail: sextant@saturna.com

                                  800-SATURNA
                                [800-728-8762]

Information  about the Funds  (including  the SAI) can be reviewed and copied at
the  SEC's  Public  Reference  Room in  Washington  DC  (call  800-SEC-0330  for
information).  Reports and other  information about the Funds are also available
at the SEC's website (http://www.sec.gov) and copies may be
                                     ------------------
obtained,  upon  payment of a duplicating fee, by writing the Public Reference
Section  of  the  SEC,  Washington  DC 20549-6009.  Saturna Investment Trust's
Investment Company Act file number is 811-05071.


                                                                   GROWTH FUND
                                                            INTERNATIONAL FUND
                                                          SHORT-TERM BOND FUND
                                                              BOND INCOME FUND
                               (Graphic Omitted)
                             Sextant Mutual Funds




                                   NO-LOAD,
                               NO SALES CHARGE,
                                   NO 12B-1

THE SECURITIES AND EXCHANGE  COMMIS-SION OR ANY STATE  SECURITIES  AUTHORITY HAS
NOT APPROVED OR DISAPPROVED  THESE  SECURITIES OR DETERMINED IF THIS PROSPEC-TUS
IS TRUTHFUL  OR  COMPLETE.  ANY  REPRE-SENTATION  TO THE  CONTRARY IS A CRIMINAL
OFFENSE.

                                  PROSPECTUS
                                March 29, 1999
<PAGE>
1


                   A QUICK LOOK AT THE SEXTANT MUTUAL FUNDS
                             FUND INVESTMENT GOALS
                                       7
STOCKS:
GROWTH FUND - long-term  capital growth  INTERNATIONAL  FUND - long-term capital
growth

BONDS:


SHORT-TERM BOND FUND - capital  preservation and current income  SHORT-TERM BOND
FUND - current  incomePRINCIPAL  INVESTMENT  STRATEGIES  GROWTH  FUND  primarily
invests in common stocks of U.S. companies. The INTERNATIONAL FUND, in contrast,
invests   primarily  in  foreign  common  stocks.   The  Funds  diversify  their
investments  across  industries  and  companies,  and  generally  follow a value
investment  style.  The GROWTH FUND may invest in securities of smaller or newer
companies  as  well  as  those  of  well-seasoned  companies  of any  size.  The
INTERNATIONAL  FUND diversifies its investments  among many countries,  favoring
those with mature markets (such as Europe and Canada).  It currently  limits its
investments to those  securities of foreign issuers that trade and settle in the
U.S. (such as American  Depository  Receipts).  These two Funds are not designed
for investors  seeking  current  income,  and do not  ordinarily  invest in debt
securities (bonds).

SHORT-TERM BOND FUND invests primarily in marketable short-term debt securities.
Under normal circumstances the Fund's dollar-weighted  average maturity does not
exceed three years.  SEXTANT  BOND INCOME FUND invests  primarily in  marketable
long-term  debt  securities.  Both Funds  invest at least 65% of assets in bonds
rated within the three  highest  grades (AAA,  AA or A); and may not invest in a
security  rated at time of  purchase  below  the  fourth  highest  grade  (BBB).
PRINCIPAL RISKS OF INVESTING IN THE FUNDS The value of Fund shares rise and fall
as the value of the stocks and bonds in which the Fund invests goes up and down.
Only consider  investing in a Sextant Fund if you are willing to accept the risk
that you may lose money.  Fund share  prices,  yields,  and total  returns  will
change with the  fluctuations in the securities  markets as well as the fortunes
of the industries and companies in which the Funds' invest.

Both  GROWTH and  INTERNATIONAL  Funds may invest in  smaller  companies,  which
involve higher  investment  risks in that they often have limited product lines,
markets and resources,  or their  securities may trade less  frequently and have
greater price fluctuation than those of larger  companies.  These factors may be
particularly  applicable  in foreign  markets.  Investing in foreign  securities
involves risks and opportunities not typically associated with investing in U.S.
securities.  These include  fluctuations in currency exchange rates, less public
information about securities, less governmental market supervision,  and lack of
uniform financial and political standards.

The risks inherent in the SHORT-TERM BOND and BOND INCOME Funds depend primarily
on the terms and quality of the obligations in each Fund's portfolio, as well as
on bond market conditions.  Interest rate fluctuations affect a Fund's net asset
value,  but not the income  received by the Fund from its portfolio  securities.
Because  prices and yields on debt  securities  vary over time, the Fund's yield
also varies. The longer-term  obligations in the Bond Income Fund mean its price
will vary more than the price of the Short-Term Bond Fund.

<PAGE>
VARIABILITY  OF  RETURNS
These bar charts and tables provide an indication of the risks of investing in
the  Funds  by  showing  changes  in Fund performance from year to year and by
showing how each Fund's average annual returns compare to those of broad-based
market  indices.
(Graph  Omitted)
Sextant  Growth  Fund  Calendar  Year  Percentage  Returns
1991          23%
1992          -1%
1993          9%
1994          -11%
1995          29%
1996          8%
1997          26%
1998          14%

Note:    Highest  return for a quarter was +27.4% (quarter ending December 31,
1998)
           Lowest  return for a quarter was -9.4% (quarter ending December 31,
1997)
<TABLE>

<CAPTION>



<S>                                         <C>           <C>            <C>


Average Annual Total Returns                                             Since 12/31/90 (inception)
(for the periods ending December 31, 1998)  Past 1 year   Past 5 years
                                            ------------  -------------
SEXTANT GROWTH FUND                                14.7%          12.6%                       11.7%
                                            ------------  -------------  --------------------------
S & P 500 *                                        28.6%          24.0%                       20.7%
                                            ------------  -------------  --------------------------
<FN>

* The S & P 500 is the Standard & Poor's Composite Index of 500 stocks, a widely
recognized, unmanaged index of common stock prices.

</FN>
-----

</TABLE>


(Graph  Omitted)
Sextant  International  Fund  Calendar  Year  Percentage  Returns
1996          16%
1997          15%
1998          6%
Note:    Highest  return for a quarter was +24.5% (quarter ending December 31,
1998)
           Lowest  return  for  a quarter was -24.6% (quarter ending September
30,  1997)

<TABLE>

<CAPTION>



<S>                                         <C>           <C>


Average Annual Total Returns                              Since Sept. 1995 (inception)
(for the periods ending December 31, 1998)  Past 1 year
                                            ------------
SEXTANT INTERNATIONAL FUND                          6.2%                         12.3%
------------------------------------------  ------------  ----------------------------
AMEX International Index *                          7.7%                         17.0%
                                            ------------  ----------------------------
<FN>

* The AMEX International Index is a capitalization-weighted index of 50 American
Depository Receipts.

</FN>
-----

</TABLE>


2

<PAGE>

(Graph  Omitted)
Sextant  Short-Term  Bond  Fund  Calendar  Year  Percentage  Returns
1996          3%
1997          6%
1998          6%
Note:    Highest  return for a quarter was +3.2% (quarter ending September 30,
1998)
           Lowest  return  for  a  quarter was -0.4% (quarter ending March 29,
1996)

<TABLE>

<CAPTION>



<S>                                         <C>           <C>


Average Annual Total Returns                              Since Sept. 1995 (inception)
(for the periods ending December 31, 1998)  Past 1 year
                                            ------------
SEXTANT SHORT-TERM BOND FUND                        6.2%                          5.7%
                                            ------------  ----------------------------
Salomon Gov./Corp 1-3 Index *                       7.0%                          6.6%
                                            ------------  ----------------------------
<FN>

  *The Salomon Smith Barney Government-sponsored/Corporate Bonds (1-3 year maturities)
  ------------------------------------------------------------------------------------
       Index, is an unmanaged index of investment-grade short-term bond prices.
       ------------------------------------------------------------------------
</FN>


</TABLE>


(Graph  Omitted)
Sextant  Bond  Income  Fund  Calendar  Year  Percentage  Returns
1994          -6%
1995          16%
1996          -
1997          12%
1998          9%
Note:   Highest return for a quarter was +7.7% (quarter ending March 31, 1995)
           Lowest  return  for  a  quarter was -6.1% (quarter ending March 29,
1996)



<TABLE>

<CAPTION>



<S>                                         <C>           <C>            <C>


Average Annual Total Returns                                             Since March 1, 1993 (inception)
(for the periods ending December 31, 1998)  Past 1 year   Past 5 years
                                            ------------  -------------
SEXTANT BOND INCOME FUND                            9.1%           6.0%                             6.0%
                                            ------------  -------------  -------------------------------
Salomon BIG Index *                                 8.7%           7.3%                             7.3%
                                            ------------  -------------  -------------------------------
<FN>

* The  Salomon  Broad  Investment-Grade  Bond  Index  is an  unmanaged  index of
investment-grade bond prices.


</FN>
-----

</TABLE>



3

<PAGE>
How a Fund has performed in the past is not necessarily an indication of how the
Fund will perform in the future.
INVESTMENT  RESULTS
Shareowners  receive  a  financial  re-port  showing  the  investment returns,
portfolios,  income and expenses of each Fund every six months.  Investors may
obtain current share prices daily by calling  888-732-6262,  or by accessing the
Internet at www.saturna.com.
              ---------------

FEES  AND  EXPENSES

This table describes the fees and expenses that Fund  shareowners may pay. There
are no shareowner fees (fees paid directly from an investment). The Funds impose
no sales charge (load) on purchases or  reinvested  dividends,  no  distribution
fees, or any deferred sales charge (load) upon redemption. There are no exchange
fees,  redemption fees, or account fees. There are no fees charged to retirement
plan accounts.  The following table illus-trates operating expenses of the Funds
for the fiscal year ending November 30, 1998.
                        ANNUAL FUND OPERATING EXPENSES
                 (expenses that are deducted from Fund assets)

          INTER-          SHORT-TERM          BOND
      GROWTH          NATIONAL          BOND          INCOME
      ------          --------          ----          ------
Management  Fees          0.38%          0.76%          0.61%          0.61%
Distribution  (12b-1)  Fees          NONE          NONE          NONE     NONE
Other  Expenses          0.28%          0.40%          0.31%          0.30%
                         -----          -----          -----          -----
Total  Annual  Fund Operating Expenses     0.66%     1.16%     0.92%     0.91%
Fee  Waiver                              -0.44%          -0.61%
                                          -----           -----
Net  Expenses                              0.48%          0.30%
        Management fees waived when fund assets less than $2 million and total
expenses  capped  at  0.60%
EXPENSES  EXAMPLE

The example below is intended to help investors compare the cost of investing in
a Sextant Fund with the cost of investing in other mutual funds.

The  example  assumes  an  investor  invests  $10,000  in a Fund  for the  years
indicated  and then redeems at the end of those years.  The example also assumes
that the investment has a 5% net return each year and that the Fund's  operating
expenses remain the same. Although actual costs may be higher or lower, based on
these assumptions an investor's cumulative expenses would be:
                                            INTER-        SHORT-TERM     BOND
                            GROWTH          NATIONAL      BOND          INCOME
                            ------          --------      ----          ------
     1  year  total--         $70           $123          $97           $96
     3  years  total--        $220          $388          $307          $304
     5  years  total--        $385          $681          $539          $533
     10  years  total--       $877          $1550         $1226         $1213

4
<PAGE>          
     INVESTMENT  OBJECTIVES
Growth  Fund          seeks  long-term  capital  appreciation.
International  Fund          seeks  long-  term  capital  appreciation.
Short-Term  Bond  Fund          seeks capital preservation and current income.
Bond  Income  Fund          seeks  current  income.
     The Sextant Funds provide basic elements to build a  low-expense,  balanced
investment program.

     INVESTMENT  STRATEGIES
Growth Fund invests in a diversified portfolio of U.S. common stocks, securities
convertible  into  common  stocks,  and  preferred  stocks.  It  may  invest  in
securities of smaller or newer companies as well as  well-seasoned  companies of
any size.  International  Fund  invests in a  diversified  portfolio  of foreign
common stocks and other equity-type  securities (such as securities  convertible
into common stock and preferred  stocks).  The Fund  diversifies its investments
geographically  and by type of securities  based on the adviser's  evaluation of
economic, market, and political trends outside the U.S. It limits investments to
those  securities of foreign  issuers that trade and settle in the U.S., such as
American Depository Receipts (ADRs).
     These two STOCK funds  emphasize a value  approach to investing.  They seek
tax-efficiency  for their  shareowners and reduced trading  expenses by limiting
portfolio  trading.  They  may  take  temporary  defensive  positions  that  are
inconsistent  with the Fund's principal  common stock  investment  strategies to
protect principal in adverse market  conditions,  but which could reduce returns
if stock prices are increasing.

Short-Term Bond Fund invests primarily in marketable short-term debt securities.
Its  dollar-weighted  average effective  maturity normally does not exceed three
years.  Bond  Income  Fund  invests  primarily  in  marketable   long-term  debt
securities.  Its dollar-weighted average effective maturity normally exceeds ten
years.
     These two BOND funds normally invest in:
- Corporate bonds,  meaning  marketable debt securities payable in U.S. dollars,
rated within the four highest grades assigned by Moody's Investors Service, Inc.
(Aaa, Aa, A, or Baa) or by Standard & Poor's  Corporation (AAA, AA, A or BBB); -
U.S.  Government  securities;  -  High  quality  commercial  paper;  and -  Bank
obligations,  including  repurchase  agreements of banks, having total assets in
excess of $1 billion.

     RISKS
Growth Fund     Smaller, high growth companies involve higher investment risks
in  that  they

<PAGE>

often have limited product lines, markets and resources, or their securities may
trade less  frequently and have greater price  fluctuation  than those of larger
companies.  International  Fund  Investing in foreign  securities or instruments
involves risks and opportunities not typically associated with investing in U.S.
securities.  These include fluctuations in exchange rates of foreign currencies;
less public information with respect to issuers of securities; less governmental
supervision  of  exchanges,   issuers,  brokers;  lack  of  uniform  accounting,
auditing,  and financial  reporting  standards.  There is also a risk of adverse
political,  social or  diplomatic  developments  that could affect  investments.
Short-Term  Bond Fund Bond  Income  Fund The risks  inherent  in the BOND  funds
depend  primarily  on the terms and  quality of the  obligations  in each Fund's
portfolio, as well as on market conditions.  Interest rate fluctuations affect a
Fund's  net  asset  value,  but not the  income  received  by the Fund  from its
portfolio  securities.  Because prices and yields on debt  securities  vary over
time,  the Fund's yield also  varies.  Because of its longer  average  portfolio
maturity,  the Bond Income Fund may decline  substantially should interest rates
increase.  INVESTMENT ADVISER Saturna Capital Corporation, 1300 N. State Street,
Bellingham, Washington 98225 is the Investment Adviser and Administrator for the
Funds.   Saturna   Capital's  wholly  owned   subsidiary,   Investors   National
Corporation, is a discount brokerage firm and acts as distribu-tor for the Funds
without compen-sation.  Founded in 1989, Saturna Capital Corporation is also the
adviser  to Amana  Mutual  Funds  Trust and to  private  accounts.  Saturna  has
approximately $61 million in assets under management.

Each Fund pays the Adviser an Investment  Advisory and  Administrative  Services
Fee. The Fee covers  compensation  for  portfolio  management as well as certain
administrative  services  such  as  portfolio  accounting  and  reporting,   and
shareholder  servicing.  The base  portion  of the Fee is 0.60% of  average  net
assets of each Fund per  annum,  payable  monthly.  This base Fee is  subject to
adjustment  up or down  depending  on the  investment  performance  of each Fund
relative to a specified Morningstar index.

For each month GROWTH FUND's or INTERNATIONAL FUND's total investment return for
the one year period through that month outperforms or underperforms an index for
that  period  by 1% or more but  less  than 2%,  the  base Fee is  increased  or
decreased by the annual rate of .10% of the Fund's  average daily net assets for
the preceding year. If the outperformance or  underperformance is 2% or more but
less  than 4%,  then  the  adjustment  is at the  annual  rate of  .20%.  If the
outperformance or underperformance is 4% or more, the adjustment is at an annual
rate of .30%.

For each month BOND INCOME  FUND's or  SHORT-TERM  BOND FUND's total  investment
return for the one year period through that month  outperforms or  underperforms
an  index  for that  period  by 1% or more  but  less  than 2%,  the Base Fee is
increased or decreased  by the annual rate of .10% of the Fund's  average  daily
net assets for the preceding year. If the outperformance or  underperformance is
2% or more, then the adjustment is at the annual rate of .20%.

These  Morningstar  mutual  fund  Category  averages  are the  indexes  used for
comparison   purposes:   SEXTANT  GROWTH  FUND  Domestic  Growth  Funds  SEXTANT
INTERNATIONAL  FUND Foreign Stock Funds SEXTANT  SHORT-TERM BOND FUND Short-Term
Bond Funds SEXTANT BOND INCOME FUND Long-Term Bond Funds

6

<PAGE>

For the fiscal year ended  November 30, 1998,  the  aggregate  advisory fee paid
(after  performance  adjustments and fee waivers) was 0.38%,  0.76%,  0.17%, and
0.00% of average net assets for Growth, International, Short-Term Bond, and Bond
Income Funds, respectively.

Nicholas  Kaiser,  president of Saturna Capital  Corporation  since 1989, is the
primary manager of the Growth and International  Funds.  Phelps McIlvaine,  vice
president  of Saturna  Capital  since  1994,  is the  manager of Bond Income and
Short-Term Bond Funds, and also manages Idaho Tax-Exempt Fund, another series of
the Trust.  PRICING OF FUND SHARES Each Fund  computes  its price per share each
business  day by  di-vid-ing  the  value  of all of its  se-curities  and  other
as-sets,  less liabili-ties,  by the num-ber of shares  out-standing.  The Funds
compute their daily prices using market prices as of the close of trading on the
New York Stock Exchange  (generally 4 p.m. New York time). The Funds' shares are
not priced on the days when New York Stock Exchange  trading is closed (weekends
and national  holidays).  The price  appli-ca-ble to purchases or redemptions of
shares of each Fund is the price next  com-puted  after receipt of a purchase or
re-demption order. HOW TO BUY SHARES You may open an account and purchase shares
by sending a completed  application with a check for $1,000 or more ($25 under a
group or retirement  plan) to the Fund of your choice.  The Funds do not ac-cept
ini-tial  orders  unaccom-pa-nied  by payment.  The price you receive is the net
asset value next  determined  after  receipt of a purchase  order.  There are no
sales charges or loads.  Shareowners may purchase  additional shares at any time
in minimum  amounts of $25. Once an account is open,  pur-chases  can be made by
check, by electronic funds transfer, or by wire.  Shareowners may autho-rize the
use of the  Auto-mated  Clearing  House ("ACH") to pur-chase or redeem shares by
completing the appropriate section of the applica-tion.  The autho-rization must
be received at least two weeks  before ACH can be used.  To use ACH to pur-chase
or redeem shares, simply call Saturna Capital.  Investors also may wire money to
purchase  shares,  though  the  wiring  bank  typi-cally  charges a fee for this
service.  Each time shares are purchased or redeemed,  a confirmation  is mailed
showing the details of the  transaction  as well as the current number and value
of shares held.  Share  bal-ances are computed in full and  frac-tional  shares,
expressed to three decimal places.  The Funds offer several  op-tional plans and
services,  including a prototype  defined  contribution plan and free Individual
Retirement  Accounts.  Other plans  offered by the Funds  in-clude an auto-matic
investment  plan, a  sys-tem-atic  with-drawal  plan, and the right to ex-change
your shares  without  charge for any other no-load mutual fund for which Saturna
Capital is the  in-vestment  ad-viser.  Ma-terials  describ-ing  these plans and
applica-tions  may be  obtained  from  Saturna  Capital.  HOW TO  REDEEM  SHARES
Shareowners  may redeem all or part of their  investment  on any business day of
the Funds.  The Funds pay  redemptions in US dol-lars,  and the amount per share
received is the price next  determined  after receipt of a re-demption  request.
The amount  re-ceived  depends on the value of the  in-vestments of that Fund at
that day and may be more or less than the cost of the shares being redeemed.

7

<PAGE>

The Funds  normally  pay for shares  redeemed  within  three days after a proper
instruction   is  re-ceived.   To  allow  time  for  clearing,   re-demption  of
in-vestments made by check or ACH may be re-stricted for up to 14 calendar days.
There are several methods you may choose to redeem shares.
                WRITTEN  REQUEST
Write:          Sextant  Mutual  Funds
                Box  N
                Bellingham  WA  98227-0596

Or  Fax:          360  /  734-0755

You may redeem  shares by a written  request  and  choose one of the  follow-ing
options for the proceeds:
         Redemption check (no mini-mum) sent to registered owner(s).  Redemption
         check  (no  mini-mum)  sent  as  directed  if  the   signa-ture(s)  are
         guaranteed.  If pro-ceeds  are to be sent to other than the  registered
         owner(s) at the last ad-dress,  the  signa-tures on the request must be
         guaran-teed  by a national  bank or trust  com-pany or by a member of a
         national se-curities ex-change.
       Federal  funds wire.  The pro-ceeds  ($5000  minimum) may be wired to any
bank  designated  in the  re-quest  if the  signa-ture(s)  are  guar-an-teed  as
explained above.
     TELEPHONE  REQUEST
Call:          800  /  728-8762  or
     360  /  734-9900

You may redeem  shares by a tele-phone  request and choose one of the  following
options for the proceeds:  - Redemption  check (no mini-mum)  sent to registered
owner(s). - ACH transfer ($100 minimum) with proceeds  trans-ferred to your bank
ac-count as  desig-nated by the ACH  au-thorization  on your  applica-tion.  The
transfer  agent must receive the ACH  authori-za-tion  at least two weeks before
ACH transfer can be used. - Exchange (in at least the mini-mum  estab-lished  by
the Fund being purchased) for shares of any other Fund for which Saturna Capital
is adviser. If the ex-change is your initial in-vestment into this Fund, the new
ac-count  will  au-tomatically  have  the  same  registration  as your  original
ac-count.  2002 Federal funds wire.  Proceeds ($5000 min-imum) may be wired only
to  the  bank  previously  designated,  or  as  di-rected  in  a  prior  written
instruc-tion with signatures guar-anteed, as explained above.

For telephone requests the Funds will en-deavor to confirm that instructions are
genuine and may be liable for losses if they do not.  The caller must  provide -
the name of the  per-son  making  the  request,  - the name and  address  of the
regis-tered owner(s), - the account number, - the amount to be withdrawn,  and -
the method for  payment of the  pro-ceeds.  The Funds also may require a form of
personal  identification.  The Funds will not be responsible for the re-sults of
transactions they rea-sonably be-lieve genuine.
     CHECK  WRITING
Shareowners  may also redeem by writing checks for amounts of $500 or more. Upon
request,  a Fund provides a small book of blank checks for a $10 fee,  which may
then be used to write  checks to any payee.  Checks are  re-deemed  at the price
next  de-termined  after  re-ceipt by the transfer  agent.  To use this feature,
request the Check Writing Privi-lege on the Application.

8

<PAGE>

DIVIDENDS
Each Fund  intends to  distribute  its net  investment  in-come and net realized
capital gains, if any, to its shareowners.  Distributions from capital gains are
paid at the end of November. Growth and International Funds pay income dividends
at the end of  November.  Short-Term  Bond  and Bond  Income  funds  pay  income
dividends daily, which are reinvested or dis-tributed monthly.

Both dividends and capital gains dis-tri-bu-tions are automatically  rein-vested
in addi-tional full and fractional shares of the Fund owned. At your option, you
may receive  dividends or capital gain  distri-butions in cash. You are notified
of each divi-dend and capital gains distribu-tion when paid.
TAX  INFORMATION
Any  redemption,   including   exchanges  and  checks  written  by  shareowners,
constitutes a sale for federal income tax purposes, and in-vestors may realize a
capital gain or loss on the re-demp-tion.

At the end of each  calendar  year,  shareown-ers  re-ceive  a  complete  annual
state-ment,  which should be retained for tax record  keeping.  Saturna  Capital
keeps  each  account's  entire  investment   transaction  his-tory,   and  helps
shareowners  maintain  the tax records  needed to determine  reportable  capital
gains and losses as well as dividend income.

Each January,  the transfer agent reports to each  shareowner  (consolidated  by
taxpayer ID) and to the IRS the amount of each  redemp-tion  transaction and the
amount of divi-dends and capital gains distributions. Dividend amounts represent
the  pro-portionate  share the  shareowner  is to report on a tax return for the
year. Capital gains may be taxed at differ-ent rates, depending on the length of
time the Fund held its investments. Fund distribu-tions, whether paid in cash or
invested  in  addi-tional  shares of the Fund,  may be subject to income  taxes.
Capital gains and dividends may also be subject to state and local taxes.

To avoid being  subject to a 31%  fed-eral  with-holding  tax on  dividends  and
distri-bu-tions,   you  must  furnish  your  cor-rect  Social  Security  or  Tax
Identification Number.

Share-owners who are not US tax-payers may be subject to a 30% with-hold-ing tax
un-der US provisions  applicable to foreign investors,  unless a reduced rate or
ex-emption is pro-vided under a tax treaty.  Capital gain distribu-tions paid by
the Funds are not subject to for-eign with-holding.
9

<PAGE>
FINANCIAL  HIGHLIGHTS
These tables are to help you understand each Fund's financial  performance.  The
top section  reflects  financial  results  for a single  Fund  share.  The total
returns represent the rate that an investor earned (or lost) on an investment in
each Fund, assuming  reinvestment of all dividends and distributions and without
regard to income taxes. Tait Weller & Baker, independent auditors for the Funds,
examined this information. Their report and each Fund's financial statements are
in the Funds' annual report (available upon request from Saturna Capital).
                                  GROWTH FUND
<TABLE>

<CAPTION>
                                            Year Ended  Year Ended  Year Ended Year Ended Year Ended
                                              Nov. 30,   Nov. 30,      Nov.30,    Nov.30,    Nov.30,


<S>                                           <C>       <C>       <C>      <C>      <C>

                                                 1998      1997     1996     1995     1994
                                              --------  --------  -------  -------  -------
NET ASSET VALUE AT BEGINNING OF PERIOD        $  9.58   $  7.92   $ 7.42   $ 5.82   $ 6.38
                                              --------  --------  -------  -------  -------
      INCOME FROM INVESTMENT OPERATIONS
      Net investment income                      0.02      0.01        -    (0.03)   (0.03)
      Net gains or losses on securities
(both realized and unrealized)                  (0.11)     2.41     0.50     1.82    (0.53)
                                              --------  --------  -------  -------  -------
Total from investment operations                (0.07)     2.40     0.50     1.79    (0.56)
      LESS DISTRIBUTIONS
      Dividends (from net investment income)    (0.02)    (0.01)       -        -        -
      Distributions (from capital gains)        (0.18)    (0.73)       -    (0.19)       -
                                              --------  --------  -------  -------  -------
Total distributions                             (0.22)    (0.74)       -    (0.19)       -
                                              --------  --------  -------  -------  -------
NET ASSET VALUE AT END OF PERIOD              $  9.29   $  9.58   $ 7.92   $ 7.42   $ 5.82
                                              ========  ========  =======  =======  =======
TOTAL RETURN                                   (0.97)%    30.30%    6.74%   30.76%    8.78%
Ratios / Supplemental Data
--------------------------------------------
Net assets ($000), end of period              $ 2,139   $ 2,188   $1,616   $1,137   $1,010
Ratio of expenses to average net assets          0.66%     1.04%    0.95%    1.63%    1.50%
Ratio of net investment income to
      average net assets                         0.19%   (0.12)%    0.01%    0.45%    0.43%
Portfolio turnover rate                            37%       25%      32%      40%      12%
<FN>

  For 1996 and 1995 all or a portion of the operating expenses were waived.  If these costs
had  not  been  waived,
       the                                                             
                                                                        resulting
                                                                        increase
                                                                        to
                                                                        expenses
                                                                        per
                                                                        share in
                                                                        each  of
                                                                        these
                                                                        years
                                                                        would be
                                                                        $.00,
                                                                        and
                                                                        $.01,
                                                                        respectively.
The                                                                          
                                                                              increase
                                                                              to
                                                                              the
                                                                              ratio
                                                                              of
                                                                              expenses
                                                                              to
                                                                              average
                                                                              net
                                                                              assets
                                                                              would
                                                                              have
                                                                              been
                                                                              .00%,
                                                                              and
                                                                              .18%,
                                                                              respectively.
*  Data  prior  to  September  28,  1995  may  not be meaningful, as the fund operated with
different  investment
                                                            objectives and fee arrangements
</FN>
                                                                                          .
</TABLE>




                              INTERNATIONAL FUND
<TABLE>

<CAPTION>



<S>                                      <C>             <C>             <C>             <C>

                                         Year Ended      Year Ended      Year Ended      Sept. 28, '95
                                                                                          (inception) to

                                         Nov. 30,1998    Nov. 30,1997    Nov. 30,1996    Nov. 30,1995
                                         --------------  --------------  --------------  ----------------
NET ASSET VALUE AT BEGINNING OF PERIOD           $6.61           $5.87            $4.99            $5.00
                                                 ------          -----            -----            -----
Income from investment operations
Net investment income                             0.03            0.06            0.03             (0.02)
Net gains or losses on securities
(both realized and unrealized)                    0.21            0.74            0.88              0.01
                                         --------------  --------------  --------------  ----------------
Total from investment operations                  0.24            0.80            0.91             (0.01)
Less distributions
Dividends (from net investment income)           (0.04)          (0.06)          (0.03)             0.00
Distributions (from capital gains)                0.00            0.00            0.00              0.00
                                         --------------  --------------  --------------  ----------------
Total distributions                              (0.04)          (0.06)          (0.03)             0.00
                                         --------------  --------------  --------------  ----------------
NET ASSET VALUE AT END OF PERIOD         $        6.81   $        6.61   $        5.87   $          4.99
                                         ==============  ==============  ==============  ================
</TABLE>


10
<PAGE>
<TABLE>

<CAPTION>



<S>                                                   <C>     <C>      <C>      <C>
TOTAL RETURN                                           3.57%   13.58%   18.16%   (0.20)%
Ratios/supplemental data
Net assets ($000), end of period                       $ 881   $  881   $  695   $   328
Ratio of gross expenses to average net assets          1.16%     1.51%   1.80%     0.49%
Ratio of net investment income to average net assets   0.54%     0.93%   0.60%     0.38%
Portfolio turnover rate                                  20%       9%      11%       12%
<FN>

 For  the  year ended Nov. '96 and the period ended Nov. '95, all or a portion of the operating expenses were
waived.      If  costs  had not been have waived and directly assumed, the resulting increase to expenses per
share in these periods would have been $.03 and $.01, respectively.  The increase to the ratio of expenses to
average  net  assets  would  be  .50%  and  .21  %,  respectively.
</FN>
</TABLE>



                             SHORT-TERM BOND FUND
<TABLE>

<CAPTION>



<S>                                                    <C>             <C>             <C>             <C>               <C>

                                                       Year Ended      Year Ended      Year Ended      Sept. 28, '95
                                                                                                        (inception) to

                                                       Nov. 30,1998    Nov. 30,1997    Nov. 30,1996
                                                                                                       Nov. 30,1995
                                                                                                       ----------------
NET ASSET VALUE AT BEGINNING OF PERIOD               $          4.99           $5.00           $5.03             $5.00
                                                     ----------------         ------          ------             ------
Income from investment operations
Net investment income                                           0.27            0.27            0.25              0.03
Net gains or losses on securities
(both realized and unrealized)                                  0.05           (0.01)          (0.03)             0.03
                                                       --------------  --------------  --------------  ----------------
Total from investment operations                                0.32            0.26            0.22              0.06
Less distributions
Dividends (from net investment income)                         (0.27)          (0.27)          (0.25)            (0.03)
Distributions (from capital gains)                              0.00            0.00            0.00              0.00
                                                       --------------  --------------  --------------  ----------------
Total distributions                                            (0.27)          (0.27)          (0.25)            (0.03)
                                                       --------------  --------------  --------------  ----------------
NET ASSET VALUE AT END OF PERIOD                       $        5.04   $        4.99   $        5.00   $          5.03
                                                       ==============  ==============  ==============  ================
TOTAL RETURN                                                    6.67%           5.45%           4.85%             1.05%
Ratios/supplemental data
Net assets ($000), end of period                       $       1,908   $       2,508   $       2,016   $           878
Ratio of gross expenses to average net assets                  0.48%           0.60%            0.85%             0.23%
Ratio of net investment income to average net assets           5.57%           5.58%            6.30%             0.68%
Portfolio turnover rate                                          71%             47%             100%                0%

<FN>

 For the above periods,  all or a portion of the operating expenses were waived.
If costs had not been waived,  the  resulting  increase to expenses per share in
each period  would have been $ .02,  $.02,  $.02 and $.007.  The increase to the
ratio of  expenses  to average net assets  would be .44%,  .40%,  .52% and .16%,
respectively.
</FN>
</TABLE>



11
<PAGE>

                               BOND INCOME FUND


<TABLE>

<CAPTION>
                YearEnded YearEnded YearEnded YearEnded YearEnded
                    Nov. 30, Nov. 30, Nov.30, Nov.30, Nov.30,
                                            1998     1997     1996     1995     1994
                                            ----     ----     ----     ----     ----


<S>                                       <C>      <C>      <C>      <C>      <C>

NET ASSET VALUE AT BEGINNING OF PERIOD    $ 4.83   $ 4.76   $ 4.91   $ 4.39   $  5.03
                                          -------  -------  -------  -------  --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income                       0.30     0.30     0.30     0.24      0.25
Net gains or losses on securities
(both realized and unrealized)              0.17     0.07    (0.12)    0.52     (0.64)
                                          -------  -------  -------  -------  --------
Total from investment operations            0.47     0.37     0.18     0.76     (0.39)
LESS DISTRIBUTIONS
Dividends (from net investment income)
Non-taxable                                    -        -        -    (0.24)    (0.25)
Taxable                                    (0.30)   (0.30)   (0.30)
Distributions (from capital gains)             -        -    (0.03)       -         -
                                          -------  -------  -------  -------  --------
Total distributions                        (0.30)   (0.30)   (0.33)   (0.24)    (0.25)
                                          -------  -------  -------  -------  --------
NET ASSET VALUE AT END OF PERIOD          $ 5.00   $ 4.83   $ 4.76   $ 4.91   $  4.39
                                          =======  =======  =======  =======  ========
TOTAL RETURN                               10.04%    8.24%    4.04%   17.69%   (8.24)%
Ratios/supplemental data
----------------------------------------
Net assets ($000), end of period          $1,345   $1,092   $1,201   $1,096   $ 1,456
Ratio of expenses to average net assets     0.30%    0.47%    0.63%    0.54%     0.41%
Ratio of net investment income
to average net assets                       6.24%    6.85%    5.96%    5.15%     5.48%
Portfolio turnover rate                        0%      51%      75%      77%       74%
<FN>

  For each of the above periods, all or a portion of the operating expenses were
waived. If these costs had not been waived, the resulting  increases to expenses
per share in each of the above periods would be $.03,  $.03,  $.03,  $0.22,  and
$0.13,  respectively.  The increase to the ratio of expenses to average  monthly
net assets would be .61%, .63%, .70%, .60%, and .51% respectively.
                                                                                     *
Data  prior  to  September  28,  1995 may not be meaningful, as the fund operated with
different
investment  objectives  and  fee  arrangements.
</FN>
</TABLE>



12

<PAGE>


     (Graphic  Omitted)

INVESTMENT  APPLICATION  for
Sextant  GROWTH  FUND
  Sextant  INTERNATIONAL  FUND
  Sextant  BOND  INCOME  FUND
  Sextant  SHORT-TERM  BOND  FUND

Mail  application  and check to:                         For assistance, call:
     SEXTANT  MUTUAL  FUNDS                      800/SATURNA  or  360/734-9900
     Box  N,  Bellingham  WA  98227-0596                      FAX 360/734-0755

ACCOUNT  TYPE  AND  NAME  (select  one)
 Individual
               First                    Middle  Initial                   Last

Social  Security  Number                                         Date of Birth

  Joint  with
               First                    Middle  Initial                   Last

Joint  Owner's  Social  Security  Number
 (Joint accounts are presumed to be "Joint Tenancy with Right of Survivorship"
unless  otherwise  indicated)

  Gifts  to  Minor                                        as  Custodian  for
               Name  of  Custodian                               Name of Minor
                  Uniform  Gifts  to  Minors  Act
      under  the                          Uniform  Transfers
     State          to  Minors  Act          Minor's Soc. Sec. No.     Minor's
Birthdate

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


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

MAILING
ADDRESS          Street                                      Apt., Suite, Etc.


          City                                    State                    ZIP

TELEPHONE    (          )                                        (          )
             -          -                                        -          -
     Daytime          Home

CITIZENSHIP           U.S.        Resident Alien            Non-Resident Alien
                                             Country
INITIAL  INVESTMENT    $
Make  check  payable  to  the  Fund  being  purchased  (minimum  $1000).
<PAGE>

<PAGE>
E-MAIL
Transaction  confirmations  and  shareowner  reports  may be sent to my personal
e-mail  address:  In addition to paper mailings  Instead to paper mailings (save
paper & postage)

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

ACH  TELEPHONE  TRANSFER  PRIVILEGE
To transfer  funds by ACH at no charge to or from my (our) bank account,  I (we)
authorize  electronic fund transfers through the Automated  Clearing House (ACH)
for my (our) bank account designated. Please attach a voided check.

AUTOMATIC  INVESTMENT  PLAN
  Invest $ _______  into this  Fund on the  _____  day of each  month  (the 15th
unless another date is chosen) by ACH transfer from my (our) bank account.  This
plan may be canceled at any time. Please attach a voided check.

CHECK WRITING  PRIVILEGE ($500 per check minimum) ($10 checkbook  charge) I (We)
   hereby request the Custodian to honor checks drawn by me (us) on my
(our) account  subject to  acceptance  by the Funds,  with payment to be made by
redeeming  sufficient  shares in my (our) account.  None of the custodian  bank,
Saturna  Capital  Corporation,  nor any  Sextant  Mutual  Fund  shall  incur any
liability to me (us) for honoring such checks,  for redeeming shares to pay such
checks, or for returning checks which are not accepted.
 Single  Signature  Authority  --  Joint  Accounts  only:    (CHECKS FOR JOINT
 --------------------------------------------------------
ACCOUNTS REQUIRE BOTH SIGNATURES UNLESS THIS BOX IS MARKED TO AUTHORIZE CHECKS
 ------
WITH A SINGLE  SIGNATURE).  By our  signatures  below,  we agree to permit check
redemptions  upon the single  signature of a joint owner.  The  signature of one
joint  owner is on behalf of himself  and as  attorney in fact on behalf of each
other  joint owner by  appointment.  We hereby  agree with each other,  with the
Funds and with  Saturna  Capital  Corporation  that all moneys now or  hereafter
invested in our account  are and shall be owned as Joint  Tenants  with Right of
Survivorship, and not as Tenants in Common.

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



    Date                                Signature of Individual (or Custodian)


    Date                                 Signature of Joint Registrant, if any

<PAGE>




                                    PART B



                      STATEMENT OF ADDITIONAL INFORMATION


<PAGE>






                           SATURNA INVESTMENT TRUST

                              SEXTANT GROWTH FUND
                          SEXTANT INTERNATIONAL FUND
                         SEXTANT SHORT-TERM BOND FUND
                           SEXTANT BOND INCOME FUND

                             1300 N. State Street
                         Bellingham, Washington 98225

                                 360-734-9900
                                  800-SATURNA


                      STATEMENT OF ADDITIONAL INFORMATION
                                March 29, 1999


This  Statement  of  Additional  Information  is  not a  Prospectus.  It  merely
furnishes additional information concerning the Sextant Growth Fund, the Sextant
International  Fund, the Sextant Short-Term Bond Fund, and the Sextant Bond Fund
that is not included in the  Prospectus.  It should be read in conjunction  with
the Prospectus.  You may obtain a Prospectus dated March 29, 1999 and shareowner
Annual and  Semi-Annual  reports  without charge by writing to the address shown
above,   calling   toll-free   to   800/728-8762,   and  on  the   Internet   at
http://www.saturna.com/sextant. <PAGE>


TABLE  OF  CONTENTS
     Page

History  of  the  Funds          2
Fund  Descriptions,  Investments  and  Risks          3
Management  of  the  Funds          7
Principal  Holders  of  Securities          9
Investment  Advisory  and  Other  Services          11
Brokerage  Allocation          13
Capital  Stock          13
Purchase,  Redemption  and  Pricing  of  Shares          14
Taxation  of  the  Funds          14
Calculation  of  Performance  Data          15
Financial  Statements          16

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

The Trust has five  separate  Funds,  four of which are  offered as the  Sextant
Funds through this Prospectus and Statement of Additional Information:
     Sextant  Growth  Fund  (commenced  operation  Dec.  30,  1990,  known  as
Northwest  Growth Fund until September 28, 1995, when the investment objective
of  only  Northwest  stocks  was  changed),
     Sextant  International  Fund  (commenced  operation  September 28, 1995),
     Sextant  Short-Term  Bond  Fund (commenced operation September 28, 1995),
and
     Sextant  Bond  Income Fund  (commenced  operation  March 2, 1993,  known as
Washington  Tax-Exempt  Fund  until  September  28,  1995,  when the  investment
objective of only Washington State municipal bonds was changed). The fifth Fund,
Idaho Tax-Exempt Fund, is offered through a separate Prospectus and Statement of
Additional Information.
<PAGE>
FUND  DESCRIPTIONS,  INVESTMENTS  AND  RISKS
CLASSIFICATION
Saturna  Investors Trust is a "series trust" that presently  offers four Sextant
"open-end diversi-fied man-agement in-vest-ment com-panies" to investors.
INVESTMENT  STRATEGIES  AND  RISKS
The Prospectus describes the principal investment  strategies and risks of those
strategies.  This section is provided for the purpose of expanding on investment
strategies and risks not thoroughly covered in the Prospectus.

Investing in securities entails both mar-ket risk and risk of price variation in
individ-ual securities. This is true even for debt securities issued by the U.S.
Government.  By  diversifying  its  invest-ments,  each Fund may reduce the risk
associated  with  owning  one or a few  indi-vi-du-al  securi-ties.  There is no
assurance that any Fund will achieve its investment objectives.

SEXTANT  GROWTH FUND seeks  long-term  growth by  investing  primarily in common
stocks and securities  convertible into common stocks and preferred stocks,  but
may also  invest in other  securities  that are suited to the Fund's  investment
objectives. The Fund ordinarily does not invest in straight-debt securities.

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

SEXTANT  INTERNATIONAL  FUND invests at least 65% of its total assets  (taken at
market  value  at time of  investment)  in  foreign  securities  (securities  of
non-U.S.  issuers).  The Fund ordinarily invests in securities of at least three
countries outside the U.S.

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

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

As a matter of policy (that can be changed by the Board of  Trustees),  the Fund
limits its  investments to those  securities of foreign  issuers that are traded
and settled in the U.S. These include American Depository Receipts ("ADRs") that
represent  underlying  shares of foreign issuers.  (ADRs are receipts  typically
issued by an  American  bank  evidencing  ownership  of the  underlying  foreign
securities.) Positions in these securities are valued in U.S.

<PAGE>

dollars,  not in the currency of the underlying  security into which they may be
converted.  The Fund may invest in both "sponsored" and "unsponsored" ADRs. In a
sponsored  ADR,  the issuer  typically  pays some or all of the  expenses of the
depository and agrees to provide its regular  shareholder  communications to ADR
holders.  An  unsponsored  ADR is  created  independently  of the  issuer of the
underlying  security.  Unsponsored ADR holders generally pay the expenses of the
depository  and do not have an  undertaking  from the  issuer of the  underlying
security to furnish shareholder communications.

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

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

Risks  in  Foreign  Securities

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

SEXTANT  SHORT-TERM  BOND FUND invests  primarily in marketable  short-term debt
securities.  Under  normal  circumstances,  the Fund's  dollar-weighted  average
maturity does not exceed three years.

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

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

The  "effective  maturity" of a debt  instrument is the weighted  average period
over which the Adviser  expects the  principal  to be paid.  It differs from the
stated  maturity  in  that  it  estimates  the  effect  of  expected   principal
prepayments and call provisions. With respect to mortgage backed securities such
as GNMA securities,  the effective  maturity is likely to be substantially  less
than the stated maturity of the mortgages in the underlying

<PAGE>

pools. With respect to obligations with call provisions,  the effective maturity
is  typically  the next  call  date on which the  obligation  reasonably  may be
expected  to  be  called.  Securities  without  prepayment  or  call  provisions
generally  have an effective  maturity  equal to their stated  maturity.  During
periods of rising  interest  rates,  the effective  maturity of mortgage  backed
securities  and callable  obligations  may increase  substantially  because they
become less  likely to be  prepaid,  which may result in greater net asset value
fluctuation.

Under normal market  conditions,  each of the Bond Funds invests at least 65% of
the value of its total assets (taken at market value at the time of  investment)
in "bonds," meaning:
     Marketable  straight-debt  securities of domestic issuers, and of foreign
issuers  payable  in  U.S.  dollars,  rated at the time of purchase within the
three  highest  grades assigned by Moody's Investors Service, Inc. ("Moody's")
(Aaa,  Aa  or  A)  or by Standard & Poor's Corporation ("S&P") (AAA, AA or A).
     U.S.  Government  Securities;
     Commercial  paper  rated  Prime-1  by  Moody's  or A-1 by  S&P at  time  of
purchase,  or,  if  unrated,  issued or  guaranteed  by a  corporation  with any
outstanding debt rated Aa or better by Moody's or AA or better by S&P; and
     Bank obligations,  including  repurchase  agreementsof  banks, having total
assets in excess of $1 billion.

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

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

Among the  Government  Securities  the Funds may  purchase  are those  issued by
Government  National Mortgage  Association  ("GNMA"),  Federal National Mortgage
Association  ("FNMA") and other agencies.  Securities such as these represent an
interest in a pool of mortgages insured in whole or in part by other agencies or
the U.S. Treasury,  depending on the terms of the issue. These issues may or may
not represent the guarantee of the U.S. Treasury.

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

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

Medium grade (Baa or BBB) debt  securities are  obligations of issuers with less
capacity to pay  interest  and repay  principal  than those  rated more  highly.
Investment in these debt securities  involves somewhat greater  investment risk,
including the possibility of issuer default or bankruptcy.  An economic downturn
could adversely affect the

<PAGE>

value of  outstanding  bonds and the ability of issuers to repay  principal  and
interest.  During a period of adverse  economic  changes,  including a period of
rising  interest  rates,  issuers of such  bonds may  experience  difficulty  in
servicing their principal and interest payment obligations.

Some issuers of debt securities  choose not to have their  securities rated by a
rating service. The Funds may invest in unrated securities that in the adviser's
opinion are  comparable to securities  having at least a medium grade rating and
are suitable for investment by the Funds.
FUND  POLICIES
The  in-vestment  ob-jec-tives  of each Fund are described in the Prospectus and
cannot be changed  without  approval by vote of a majority  of the  out-standing
shares of that Fund.

Investment  Restrictions

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

No Fund shall  pur-chase  securities of any issuer in excess of 5% of the Fund's
total assets or pur-chase more than 10% of the outstanding  voting securities of
any is-suer;  or concentrate its in-vestments in a single industry beyond 25% of
the total  value of the  Fund;  or  invest  more  than 10% of its  assets in the
securities  of issuers  which  to-gether  have a record of less than three years
continuous  operation.  No  Fund  purchases  securities  if it  has  outstanding
borrowings  exceeding 5% of its net assets. No Fund's  invest-ments in warrants,
valued  at the  lower of cost or  market,  shall  exceed  5% of the value of the
Fund's net assets.  Included  within that  amount,  but not to ex-ceed 2% of the
value of the Fund's net assets,  may be warrants  that are not listed on the New
York or American  Stock  Exchange.  Warrants  acquired in units or  at-tached to
securities may be deemed to be without  value.  Notwithstanding  the above,  the
Funds may purchase securities  pursuant to the exercise of subscription  rights,
provided  that such  purchase  does not  result in the  Fund's  ceasing  to be a
diversified  investment company.  Japanese and European corporations  frequently
issue  additional  capital stock by means of  subscription  rights  offerings to
existing  shareholders  at a price  substantially  below the market price of the
shares. The failure to exercise such rights would result in a Funds' interest in
the issuing company being diluted. The market for such

<PAGE>

rights is not well  developed in all cases and,  accordingly,  the Funds may not
always  realize the full value on the sale of rights.  The exception  applies in
cases where the limits set forth in the investment  restrictions would otherwise
be exceeded by exercising rights or would have already been exceeded as a result
of fluctuations in the market value of the Funds' portfolio  securities with the
result that the Fund would be forced to sell  securities at a time when it might
not otherwise have done so, or to forego exercising the rights.

Investment  objectives  and  certain  policies  of each of the  Funds may not be
changed  without  the prior  ap-proval  of the  holders of the  majority  of the
outstanding  shares of the respective  Fund.  Objectives and poli-cies which are
considered  fundamental  and  subject to change  only by prior  approval  of the
shareowners include:  (1) the primary and any secondary  investment  objectives;
(2) the  classification of the Funds as an open-end  management  company and the
sub-classification  of each of the Funds as a diversified  company;  and (3) the
policies  listed  here  under  "Investment  Restrictions."  TEMPORARY  DEFENSIVE
POSITION When the Adviser considers a temporary  defensive  investment  position
advisable,  any  Sextant  Fund may invest  without  limitation  in  high-quality
corporate debt obligations or U.S.  government  obligations or hold cash or cash
equivalents.  PORTFOLIO  TURNOVER The Funds places no  restrictions on portfolio
turnover  and Funds will buy or sell  invest-ments  according  to the  Adviser's
appraisal of the factors affecting the market and the economy.  The Adviser does
not anticipate significant variation to the portfolio turnover rates experienced
in the past.

MANAGEMENT  OF  THE  FUNDS
BOARD  OF  TRUSTEES
A  Board  of  five  Trustees manages the Funds: Nicholas Kaiser, John E. Love,
John  S.  Moore,  Gary  A.  Goldfogel,  and  A.  Herbert Ershig.  The Trustees
establish  policies,  as  well  as  review  and  approve  contracts  and their
continuance.    The Trustees also elect the officers, de-termine the amount of
any  dividend  or capital gain distribution and serve on any committees of the
Trust.
<PAGE>
MANAGEMENT  INFORMATION
The  Trustees  and  officers  are:

<TABLE>

<CAPTION>



<S>                       <C>                           <C>


(1)                                                (2)                               (3)
------------------------  ----------------------------
Name, Address, and Age    Position(s) Held with Trust   Principal Occupation(s)

                               During Past 5 years

A. Herbert Ershig         Trustee                       President (now retired),
22 Shorewood Drive
Bellingham, WA 98225
Age:  60
------------------------
                                                        Ershigs, Inc. (industrial

                                  fabrication)
Gary A. Goldfogel, M.D.   Trustee                       Medical Examiner (pathologist)
1500 N. State Street
Bellingham WA 98225
Age: 40
------------------------
                                                        Owner, Avocet Environmental

                              Testing (laboratory)
                                                        --------------------------------
Nicholas Kaiser, MBA*     President and Trustee         President, Saturna Capital
1300 N. State Street
Bellingham, WA 98225
Age: 52


                                                        Corporation (the Trust's

                               investment adviser)
                                                        President, Investors National
                                                        Corporation (the Trust's
                                                        distributor)

John E. Love              Trustee                       Owner, J.E. Love Co.,
1002 Spokane Street
Garfield WA 99130
Age: 66
------------------------
                                                        (agricultural equipment

                                  manufacturer)
John S. Moore, Ph.D.      Trustee                       Professor (now retired),
346 Bayside Road
Bellingham WA 98225
Age: 66
------------------------
                                                        College of Business and

                               Economics, Western
                              Washington University
Phelps S. McIlvaine       Vice President                Vice President, Saturna Capital
1300 N. State Street
Bellingham WA 98225
Age: 45


                                                        Corporation (the Trust's

                               investment adviser)
                                                        Treasurer, Investors National
                                                        Corporation (the Trust's
                                                        distributor)
Pandora Larner            Secretary                     Secretary; Saturna Capital
1300 N. State Street
Bellingham WA 98225
Age: 51
------------------------
                                                        Corporation (the Trust's

                                                        investment adviser) [since
                                                                                  1996]
                                                        Doncaster Sales (direct
                                                        marketing) [1993-1995]
Teresa K. Anderson, MBA   Treasurer                     Director of Funds and
1300 N. State Street
Bellingham WA 98225
Age: 30
------------------------
                                                        Operations, Saturna Capital

                                                        Corporation (the Trust's
                                                        investment adviser)
                                                        --------------------------------

</TABLE>


*  Mr.  Kaiser  is  an  "interested  person"  of  the Trust as de-fined in the
Investment  Company  Act  of  1940.

The Board has  authority to establish an Executive  Committee  with the power to
act on behalf of the Board  between  meetings  and to exercise all powers of the
Trustees in the management of the Trust. No Executive  Committee has
 <PAGE> 
been
established at this time. An Audit Committee,  consist-ing of the  disinterested
directors,  meets to select  the  independent  accountant  and  review all audit
reports. There is no separate nominating committee.  COMPENSATION The Trust pays
disinterested  trustees $100 per meeting  attended and  reimbursement  of travel
ex-penses  (pro-rata  to  each  Fund  of the  Trust).  Mr.  Kaiser  receives  no
compensation  from the Trust,  nor are the other  officers of the Trust paid for
their duties with the Trust.
          Pension  or                    Total
     Aggregate          Retirement                    Compensation
Name of     Compensa-     Benefits Accrued     Estimated Annual     From Trust
Person;          tion from     As Part of Trust     Benefits Upon     and Fund
Complex
Position          Trust          Expenses      Retirement     Paid to Trustees
--------          -----          --------      ----------     ----------------
A.  HERBERT  ERSHIG       $400          $0          $0          $400
Trustee

GARY  A.  GOLDFOGEL          400          0            0          400
Trustee

JOHN  E.  LOVE          400          0          0          400
Trustee

JOHN  S.  MOORE,          400          0          0          400
Trustee

NICHOLAS  F.  KAISER,          0          0            0          0
Trustee

PRINCIPAL  HOLDERS  OF  SECURITIES
As of January 15, 1999, the principal holders of record (those with more than 5%
of the outstanding shares) of securities of each Sextant Fund were:
<TABLE>

<CAPTION>



<S>                   <C>                                 <C>     <C>

                      Name and Address                    Shares  Percentage
                      ----------------------------------  ------  -----------

GROWTH FUND           Nicholas F. Kaiser IRA              19,209        8.71%
                                    1300 N. State Street
                      Bellingham WA 98225
                      Sutherland Enterprises Ltd          12,885        5.84%
                      714 Earl Grey Crescent S.W.
                      Calgary, Alberta

INTERNATIONAL FUND    Nicholas F. Kaiser IRA              23,943       19.38%
                                    1300 N. State Street
                      Bellingham WA 98225
                      Mar-Jac Poultry, Inc.                7,595        6.14%
                      P. O. Box 1017
                      Gainesville GA 30503
                      Normal H. Bell, MD                   7,215        5.84%
                                          1 Johnson Road
                      Charleston SC 29407
<PAGE>
                      Northwest Eye Clinic Trust           7,065        5.72%
                      FBO Frederick Kaiser MD
                      3015 Squalicum Parkway
                      Bellingham WA 98225

SHORT-TERM BOND FUND  Robert L. Foote                     63,833       16.42%
                      PO Box 1157
                      Bellingham WA 98225
                      International Education Trust       50,955       13.10%
                      750 A Miller Drive SE
                      Leesburg VA 20176
                      Investors National Corporation      41,858       10.76%
                                    1300 N. State Street
                      Bellingham WA 98225
                      Robert J. Nicholl IRA               41,524       10.68%
                                       833 Sudden Valley
                      Bellingham WA 98226
                      Michael McRory Profit Sharing Plan  28,096        7.22%
                      3400 Squalicum Parkway
                      Bellingham WA 98225
                      Laura Kurtz-Harvie                  19,944        5.13%
                                        318 Bayside Road
                      Bellingham WA 98225

BOND INCOME FUND      Nicholas F. Kaiser                  44,038       17.06%
                      Markell F. Kaiser JTWROS
                                    1300 N. State Street
                      Bellingham WA 98225
                      Luzenia B. Redpath                  36,908       14.30%
                                      500 Fieldston Road
                      Bellingham WA 98225
                      Loie E. Haggen                      21,600        8.37%
                                      521 Fieldston Road
                      Bellingham WA 98225
                      David K. Heaps IRA                  19,931        7.72%
                      PO Box 1977
                      Bellingham WA 98225
                      Frederick M. Graham                 15,903        6.16%
                      Mary J. Graham JTWROS
                      8647 W Sierra Pinta Drive
                      Peoria AZ 85382
                      Bayside Pathology Profit Sharing    65,869        5.10%
                                    1500 N. State Street
                      Bellingham WA 98225
                      Carol Lingow Guardian               13,153        5.09%
                      FBO Robert C. Schmidt
                      South 4518 Woodward
                      Spokane WA 99206
</TABLE>


<PAGE>

As of January 15, 1999,  officers and Trustees (plus  affiliated  family members
and entities), as a group, own the following shares of the Funds <TABLE>

<CAPTION>



<S>                   <C>           <C>

                      Shares Owned  Percentage of Outstanding
                      ------------  --------------------------
GROWTH FUND                 39,806                       18.1%
INTERNATIONAL FUND          42,240                       34.2%
SHORT-TERM BOND FUND        76,309                       19.6%
BOND INCOME FUND            73,459                       28.4%

</TABLE>


INVESTMENT  ADVISORY  AND  OTHER  SERVICES
INVESTMENT  ADVISER  AND  ADMINISTRATOR
Saturna Capital Corporation, 1300 N. State Street, Bellingham,  Washington 98225
is the  Investment  Adviser and  Administrator  (the  "Adviser")  for the Funds.
Saturna  Capital is also the Funds'  shareowner  servicing  agent.  Mr. Nicholas
Kaiser, by his ownership of the majority of its voting stock, is the controlling
person of the  Adviser.  Mr.  Kaiser is also a Trustee and  President of Saturna
Investment  Trust, and the principal  portfolio  manager of both the Growth Fund
and the International  Fund. ADVISORY FEE Each of the Sextant Funds monthly pays
the Adviser an Advisory and  Administrative  Services Fee (the "Base Fee").  The
Base Fee covers certain  administrative  services such as portfolio  accounting,
shareholder and financial reporting,  shareholder  servicing and transfer agency
services. The Base Fee is also compensation for portfolio management, advice and
recommendations  on securities to be  purchased,  held or sold.  The Base Fee is
computed at the annual  rate of 0.60% of average  daily net assets of each Fund,
and is paid monthly.  The Base Fee is subject to adjustment up or down depending
on the investment performance of the Fund.

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

Performance  Adjustment  for  Sextant  Bond Income Fund and Sextant Short-Term
Bond  Fund:
     For each month in which  either of these  Funds'  total  investment  return
(change in net asset value plus all  distributions  reinvested) for the one year
period  through that month  outperforms or  underperforms  the total return of a
specified  index for that period by 1% or more but less than 2%, the Base Fee is
increased or decreased  by the annual rate of .10% of the Fund's  average  daily
net assets for the preceding year.
     If  the  outperformance  or  underperformance  is  2%  or  more,  then  the
adjustment is at the annual rate of .20%.
11
<PAGE>
Total  return  investment  performance  as  calculated  and  published  by
Morningstar, Inc. for selected groups of mutual funds is used as the index for
comparison  purposes.    The  comparative  Morningstar  categories  used  are:
1989          Sextant  Growth  Fund:    "DOMESTIC  GROWTH  FUNDS"
1990          Sextant  International  Fund:    "FOREIGN  STOCK  FUNDS"
1991          Sextant  Bond  Income  Fund:    "LONG-TERM  BOND  FUNDS"
1992          Sextant  Short-Term  Bond  Fund:    "SHORT-TERM  BOND  FUNDS"

The Adviser has voluntarily undertaken to limit expenses of Short-Term Bond Fund
and Bond Income Fund to 0.60% through  March 31, 2000 and waives its  investment
advisory and  administrative  fee as to either Fund completely so long as assets
of that Fund are less than $2 million.

For each of the last three fiscal years,  the advisory  fees (after  performance
adjustments and expense limitations) each Fund paid Saturna Capital were:
<TABLE>

<CAPTION>



<S>                           <C>     <C>      <C>

                                1996     1997    1998
                              ------  -------  ------
Sextant Growth Fund           $7,540  $11,819  $8,933
Sextant International Fund     3,148    7,537   7,060
Sextant Short-Term Bond Fund   7,208    4,636   3,327
Sextant Bond Income Fund           0        0       0
</TABLE>


SHAREOWNER  SERVICES
Under the Advisory  agreement,  Saturna  Capital also  provides  services as the
transfer  agent and  dividend-paying  agent for the Funds.  As  transfer  agent,
Saturna  furnishes to each  shareowner a statement  after each  transaction,  an
historical statement at the end of each year showing all transactions during the
year, and Form 1099 tax forms. Saturna also, on behalf of the Funds, responds to
shareowners' questions or correspondence.  Further, the transfer agent regularly
furnishes the Funds with current  shareowner lists and information  necessary to
keep the shares in balance with the Funds' records.  The transfer agent performs
the  mailing  of  all  financial   statements,   notices  and   prospectuses  to
shareowners.   The   transfer   agent   maintains   records  of   contributions,
disbursements  and assets as required  for IRAs and other  qualified  retirement
accounts.  These transfer agent services are included in the Base Fee. CUSTODIAN
National   City  Bank,   Indiana,   of   Indianapolis,   National  City  Center,
Indianapolis,  Indiana 46255 is the custodian of the Funds. As custodian for the
Funds,  the bank holds in  custody  all  securities  and cash,  settles  for all
securities trans-actions, receives money from sale of shares and on order of the
Funds pays the  autho-rized  expenses of the Funds.  When investors  redeem Fund
shares,  the  pro-ceeds  are  paid  to the  shareowner  from an  account  at the
custodian bank.  INDEPENDENT  ACCOUNTANTS  Tait, Weller and Baker, 8 Penn Center
Plaza, Suite 800, Philadelphia,  PA 19103-2108 are the indepen-dent  accountants
for the  Funds.  The  accountants  conduct  an  annual  audit of the Funds as of
November  30 each year,  prepare  the tax  returns of the Funds and  as-sist the
Adviser in any accounting matters throughout the year. PRINCIPAL UNDERWRITER The
Adviser's wholly-owned subsidiary, Investors National Corporation, 1300 N. State
Street,   Bellingham  WA  98225  is  a  discount  brokerage  firm  and  acts  as
distribu-tor  for the Funds  without  compen-sation.  Mr.  Nicholas  Kaiser,  an
affiliated person of the Funds, is President of Investors National Corporation.

<PAGE>
BROKERAGE  ALLOCATION
The  placing  of  purchase  and  sale  orders  as  well  as the  negotiation  of
commissions  is  performed  by the  Adviser  and is  reviewed  by the  Board  of
Trustees.  The Adviser may make  allocation of brokerage to any broker in return
for  research  or  services  and for  selling  shares  of any  fund  of  Saturna
Investment  Trust.  Brokers may provide research or statistical  material to the
Adviser,  but this  information is only  supple-mental to the research and other
statistics and material  accumulated  and  maintained  through the Adviser's own
efforts. Any such supplemental information may or may not be of value or used in
making investment  decisions for the Funds or any other ac-count serviced by the
Adviser.  Research  services  provided by brokers through which the Funds effect
securities  transactions  may  be  used  by the  Funds'  investment  adviser  in
servicing  all of its accounts and not all of these  services may be used by the
adviser in connection with the Funds.

The primary consideration in effecting securities  transactions for the Funds is
to obtain the best price and  execution  which in the judgment of the Adviser is
at-tainable  at the time and which  would  bring the best net  overall  economic
result to a Fund. Factors taken into account in the selection of brokers include
the price of the security,  commissions paid on the transaction,  the efficiency
and cooperation with which the transaction is effected, the expediency of making
settlement and the financial  strength and stability of the broker.  The Adviser
may  negotiate  commis-sions  at a rate in excess of the amount  another  broker
would have charged if it de-termines in good faith that the overall net economic
result is  favorable  to the Fund,  and is not  required  to  execute  trades in
"over-the-counter"  securities with primary  market-makers  if similar terms are
available  elsewhere.  The Adviser evaluates  whether brokerage  commissions are
reasonable  based  upon  available   information  about  the  general  level  of
commissions paid by similar mutual funds for comparable services.

Brokerage is almost  entirely  directed to  Investors  National  Corporation,  a
wholly owned  subsidiary of the adviser,  which engages in a discount  brokerage
business.  Consideration  is  given  by the  Funds  to the  unpaid  services  of
Investors National Corporation as the Funds' principal underwriter. The Trustees
review brokerage  activity in detail at each regular meeting.  Meetings are held
on a  quarterly  schedule.  For  each  of  the  last  three  fiscal  years,  the
commissions each Fund paid Investors National were:

<TABLE>

<CAPTION>



<S>                           <C>     <C>     <C>     <C>                   <C>

                                                      % of 1998 aggregate   % of 1998 aggregate dollar

                                1996    1997    1998
                              ------  ------  ------
                                                      brokerage             amount of transactions involving
                                                      commissions paid      the payment of commissions
                                                      Investors National    through Investors National
Sextant Growth Fund           $2,536  $1,967  $2,727                  100%                               100%
Sextant International Fund     1,562     872   1,434                  100%                               100%
Sextant Short-Term Bond Fund      98       0       0                    0                                  0
Sextant Bond Income Fund          49       0       0                    0                                  0
</TABLE>


CAPITAL  STOCK
Each Fund of Saturna  Investment  Trust is divided  into  shares of  benefi-cial
inter-est.  The shares of each  sep-arate  Fund of the Trust  have equal  voting
rights. All shares are fully paid, non-assessable,  transferable and with rights
of  redemp-tion,  and are not  subject to  preemptive  rights.  The Trust is not
required to hold annual shareowner  meetings.  However,  special meetings may be
called  for  such  pur-poses  as  electing  or  remov-ing   Trustees,   changing
fundamental  policies,  or voting on approval of an advisory contract. On issues
relating solely to a single Fund, only the shareowners of that Fund are entitled
to vote. All dividends and distribu-tions for each Fund shall be dis-tributed to
shareown-ers in proportion to the number of shares owned.
<PAGE>

PURCHASE,  REDEMPTION  AND  PRICING  OF  SHARES
See How to Buy  Shares,  How to Redeem  Shares and Pricing of Fund Shares in the
Prospectus for an explanation about the ways to purchase or redeem shares.  Both
purchases and redemptions are made at net asset value per share.

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

Price (net asset  value) per share is  determined  by dividing  the value of all
securities  and  other  assets,  less  liabilities,  by  the  number  of  shares
outstanding.  The  daily  price is  determined  for each Fund as of the close of
trading on the New York Stock Exchange  (generally 4 p.m. New York time) on each
day the Exchange is open for trading.  The Exchange is generally  closed on: New
Year's Day, Martin Luther King Day, President's Day, Good Friday,  Memorial Day,
Independence Day, Labor Day,  Thanksgiving and Christmas.  See the balance sheet
in the Annual Report or Semi-Annual  Report for a specimen sheet showing how the
Funds  calculate net asset value,  which is the price used for both purchase and
redemption  of  shares.  TAXATION  OF THE  FUNDS  Saturna  Investment  Trust  is
organized as a "series" investment company. Each Fund of the Trust is a separate
eco-nomic  entity with  separate  assets and  liabilities  and  separate  income
streams.  The  shareowners  of each separate Fund may look only to that fund for
income, capital gain or loss, redemption, liquidation, or termination. Each Fund
has separate arrangements with the Adviser.  Assets of each Fund are segregated.
The  credi-tors  and  shareowners of each Fund are limited to the assets of that
fund for recovery of charges,  expenses and liabilities.  Each Fund of the Trust
conducts  separate  voting on issues  relating  solely to that  fund,  except as
required by the Investment  Company Act. The tax status and tax  consequences to
shareowners  of each Fund  differ,  depending  upon the  investment  objectives,
operations, income, gain or loss, and distributions from each Fund.

Each Fund intends to  distribute  to  shareowners  substantially  all of its net
investment income and net realized capital gains, if any, and to comply, as they
have  since  inception,  with  the  provisions  of  the  Internal  Revenue  Code
applicable  to regulated  investment  companies  (Subchapter  M), which  relieve
mutual funds of federal income taxes on the amounts so distributed.

At November 30, 1998, Sextant  International Fund had capital loss carryforwards
of $8,694  which  expire in 2004,  Sextant  Bond Income  Fund had  capital  loss
carryforwards  of $74,575 which expire in 2004 and Sextant  Short-Term Bond Fund
had  capital  loss  carryforwards  of $7,602  which  expire in 2004,  subject to
regulation.  Prior to their expiration,  such loss  carryforwards may be used to
offset future net capital gains realized for federal income tax purposes.

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

<PAGE>
CALCULATION  OF  PERFORMANCE  DATA
Average  annual  Total  Return and Current  Yield  information  may be useful to
in-vestors in reviewing a Fund's performance. However, certain factors should be
taken into account before using the  information as a basis for comparison  with
alternative   investments.   No   adjustment   is  made  for  taxes  payable  on
distribu-tions.  The  performance for any given past period is not an indication
of  future  rates of  return  or  yield on its  shares.  The  figures  regarding
multi-year  total  return  reflect  the  operations  of Sextant  Growth Fund and
Sextant Bond Income Funds using their different  investment  objectives prior to
September 1995.

For each of the following  periods ended  November 30, 1998,  the average annual
compounded Total Returns of each Fund were:
<TABLE>

<CAPTION>



<S>                           <C>      <C>       <C>       <C>

                              1 year   5 years   10 years  Commencement
                              -------  --------  --------  -------------
Sextant Growth Fund             -.97%    10.44%  NA               10.02%
Sextant International Fund      3.57%  NA        NA               10.85%
Sextant Short-Term Bond Fund    6.68%  NA        NA                5.68%
Sextant Bond Income Fund       10.08%     6.01%  NA                5.92%

</TABLE>



Average  annual Total Return  quotations  for various  periods  illustrated  are
computed by finding the average annual compounded rate of return over the period
quoted that would equate the initial  amount  invested to the ending  redeemable
value accord-ing to the following formula:
P  (l  +  T)n  =  ERV

WhereP = a  hypothetical  initial  Payment  of $1,000 T = average  annual  Total
     return n = number  of years  ERV = Ending  Redeemable  Value of the  $1,000
     payment
          made  at  the  beginning  of  the  period.

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

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

Current Yield is computed by dividing the net investment income, as defined by
------- -----
the Securities and Exchange  Commission,  over a rolling 30 day period for which
the yield is  presented  by the  average  number of shares  eligible  to receive
dividends for the period over the maximum  offering  price per share on the last
day of the period, and annualize the results. The formula used is:

Yield  =  2[(  a-b/cd  +1)6  -1]
Where a =  dividends  accrued  during the period b =  expenses  accrued  for the
period  (net  of  reimbursements)  c  =  the  average  daily  number  of  shares
outstanding  during the period that were  entitled to receive  dividends d = the
price per share on the last day of the period

The cur-rent yield on the Sextant Growth Fund, the Sextant  International  Fund,
Sextant  Short-Term  Bond Fund, and the Sextant Bond Income Fund, for the 30 day
period ending November 30, 1998 was 0.6%, 0.2%, 5.6%, and 6.1%, respectively.

15
<PAGE>
FINANCIAL  STATEMENTS
The most recent audited annual report  accompanies  this Statement of Additional
Information.

There is incorporated into this Registration  Statement the following  financial
information  in the  Annual  Report to  shareowners  for the  fiscal  year ended
November 30, 1998. Filed as Exhibit A hereto:

Report of Tait, Weller & Baker, Independent Accountants. Statement of Assets and
Liabilities  as of November  30,  1998.  Statement  of  Operations  - Year ended
November 30, 1998.  Statements  of Changes in Net Assets - years ended  November
30, 1998, and 1997.
Investments  -  as  of  November  30,  1998.
Notes  to  Financial  Statements.


<PAGE>

                        SATURNA INVESTMENT TRUST OFFERS
                             IDAHO TAX-EXEMPT FUND

Additional  information  about  in-vestments  and operations is available in the
Fund's annual and semi-annual  shareowner reports.  The annual report includes a
discussion  of  the  market   conditions   and   in-vestment   strategies   that
significantly  affected  the Fund's  performance  during its last fiscal year. A
Statement of Additional  Information  contains more details, and is incorporated
in this Prospectus by reference.

These  documents  and other  information  are available  upon  request,  without
charge, from:
                               (Graphic Omitted)
                             1300 N. State Street
                         Bellingham, Washington 98225

                            http://www.saturna.com
                           E-mail: idaho@saturna.com

                                  800-SATURNA
                                [800-728-8762]









Information about the Fund (including the SAI) can be reviewed and copied at the
SEC's  Public   Reference   Room  in  Washington  DC  (call   800-SEC-0330   for
information). Reports and other information about the Fund are also available at
the SEC's website (http://www.sec.gov) and copies may be obtained, upon
                          ------------------
payment  of  a duplicating fee, by writing the Public Reference Section of the
SEC,  Washington DC 20549-6009.  Saturna Investment Trust's Investment Company
Act file number is 811-05071.



                                 I  D  A  H  O
                                 -------------
                        T A X - E X E M P T    F U N D


(Graphic  Omitted)

        No-Load,
                    No  Sales  Charge,
                                          No  12b-1


THE SECURITIES AND EXCHANGE  COMMIS-SION OR ANY STATE  SECURITIES  AUTHORITY HAS
NOT APPROVED OR DISAPPROVED  THESE  SECURITIES OR DETERMINED IF THIS PROSPEC-TUS
IS TRUTHFUL  OR  COMPLETE.  ANY  REPRE-SENTATION  TO THE  CONTRARY IS A CRIMINAL
OFFENSE.

                                  PROSPECTUS
                                March 29, 1999

<PAGE>
1

                     A QUICK LOOK AT IDAHO TAX-EXEMPT FUND
                             FUND INVESTMENT GOALS
                                       3
IDAHO TAX-EXEMPT FUND seeks to provide income free from federal income,  federal
alternative  mini-mum and Idaho state income taxes, with a sec-ondary  objective
of capital  preservation.PRINCIPAL  INVESTMENT  STRATEGIES IDAHO TAX-EXEMPT FUND
invests in debt  securities  issued by  political  subdivisions  of the State of
Idaho.  PRINCIPAL  RISKS OF  INVESTING IN THE FUND The value of Fund shares rise
and fall as the value of the bonds in which the Fund  invests  goes up and down.
The risks inherent in the Fund depend primar-ily on the terms and quality of the
obligations in its  portfolio,  as well as on market  conditions.  Interest rate
fluctuations affect the Fund's net asset value and current yield.

Fund in-vestments are sus-ceptible to fac-tors  adversely  affecting Idaho. If a
security  held by the Fund  defaults on payment of interest  or  principal,  the
Fund's  in-come,  ability to pre-serve  capital,  and  liq-uid-ity  would all be
ad-versely af-fected.

The Fund is  vulnerable  to  income  tax rate  changes,  either  at the Idaho or
federal  level,  since part of municipal  securities'  value is derived from the
recipient's ability to exclude interest payments from taxation.
VARIABILITY  OF  RETURNS
These bar charts and tables  provide an  indication of the risks of investing in
the Fund by showing changes in Fund performance from year to year and by showing
how the Fund's average annual returns compare to a broad-based market index.
                                (Graph Omitted)
Idaho  Tax-Exempt  Fund  Calendar  Year  Percentage  Returns
1989          8%
1990          5%
1991          8%
1992          6%
1993          8%
1994          -3%
1995          15%
1996          3%
1997          7%
1998          6%
Note:    Highest return for a quartr was +7.3% (quarter ending March 31, 1995)
Lowest  return  for  a  quarter  was  -2.0%  (quarter  ending  March 31, 1994)
1
<PAGE>

<TABLE>

<CAPTION>




<S>                                          <C>           <C>            <C>


Average Annual Total Returns
((for the periods ending December 31, 1998)  Past 1 year   Past 5 years   Past 10 years
                                             ------------  -------------  --------------
IDAHO TAX-EXEMPT FUND                                6.0%           5.6%            6.7%
                                             ------------  -------------  --------------
Lehman Municipal Composite *                         6.5%           6.2%            8.2%
-------------------------------------------  ------------  -------------  --------------

<FN>

* The Lehman Municipal  Composite Index is a widely recognized,  unmanaged index
of municipal bond prices.
</FN>
</TABLE>



How a Fund has performed in the past is not necessarily an indication of how the
Fund will perform in the future.
INVESTMENT  RESULTS
Shareowners  receive  a  financial  re-port  showing  the  investment returns,
portfolios,  income  and  expenses  every  six  months.   Investors may obtain
current  share  prices  daily  by  calling  888/732-6262,  or by accessing the
Internet  at  www.saturna.com.
              ---------------

10

FEES  AND  EXPENSES

This table describes the fees and expenses that Fund  shareowners may pay. There
are no shareowner fees (fees paid directly from an investment). The Fund imposes
no sales charge (load) on purchases or  reinvested  dividends,  no  distribution
fees, or any deferred sales charge (load) upon redemption. There are no exchange
fees,  redemption  fees,  or account  fees.  The  following  table  illus-trates
operating expenses of the Fund for the fiscal year ending November 30, 1998.

                        ANNUAL FUND OPERATING EXPENSES
                 (expenses that are deducted from Fund assets)

Management  Fees          0.38%
Distribution  (12b-1)  Fees          NONE
Other  Expenses          0.28%
                         -----
Total  Annual  Fund  Operating  Expenses          0.83%
Fee  Waiver          -0.07%
                      -----
Net  Expenses          0.76%
 Total  expenses  capped  at  0.80%
EXPENSES  EXAMPLE

The example below is intended to help investors compare the cost of investing in
Idaho  Tax-Exempt  Fund with the cost of investing in other  mutual  funds.  The
example  assumes an investor  invests  $10,000 in a Fund for the years indicated
and then  redeems at the end of those  years.  The example also assumes that the
investment has a 5% net return each year and that the Fund's operating  expenses
remain the same.  Although  actual costs may be higher or lower,  based on these
assumptions an investor's cumulative expenses would be:

     1  year  total    --          $70
     3  years  total    --          $220
     5  years  total    --          $385
     10  years  total    --          $1226

2
<PAGE>
INVESTMENT  OBJECTIVES
IDAHO  TAX-EX-EMPT  FUND seeks to provide  income  dividends  free from  Federal
income, Federal alternative mini-mum and Idaho state income taxes.  Preservation
of capital is a sec-ondary objective.


INVESTMENT  STRATEGIES
The  Fund's  fundamental  policy is to  in-vest  at least 80% of net  as-sets in
se-curi-ties  gen-erating in-come exempt from Fed-eral in-come tax,  in-clud-ing
the alternative minimum tax. Under normal mar-ket  condi-tions,  at least 65% of
total assets are in-vested in debt  se-curities  generating  in-come exempt from
Idaho income tax.

The Fund  requires  that at time of  purchase  a bond be  rated at least  "A" or
equivalent  by a national  bond rat-ing  agency  (Standard  and Poor's,  Moody's
Investor's  Services,  or  equivalent),  or, if  non-rated,  to be of equivalent
quality in the opinion of the Ad-viser.

Up to 60% of total assets of the Fund can be in-vested in non-rated  bonds.  The
Ad-viser will purchase  only those  non-rated  bonds that it believes are liquid
and can be sold at the value given for net asset value purposes.

Investors can ex-pect the weighted average port-folio  maturity to range between
6 and 15 years.  Usually,  shorter  maturity bonds provide lower current yields,
while a matu-rity beyond 15 years implies great-er  cur-rent yield but increased
risk to capital from interest rate in-creases.

During uncertain market or economic  condi-tions,  the Idaho Tax-Exempt Fund may
adopt a temporary,  defensive  posi-tion.  While de-fensive  investments may not
contribute  to the primary  objective  of tax-free  in-come,  they do assist the
sec-ondary ob-jective of capital preser-vation.

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

Fund in-vestments are sus-ceptible to fac-tors  adversely  affecting Idaho. If a
security  held by the Fund  defaults on payment of interest  or  principal,  the
Fund's  in-come,  ability to pre-serve  capital,  and  liq-uid-ity  would all be
ad-versely af-fected.

The Fund is  vulnerable  to tax rate  changes,  either at the  Idaho or  Federal
level, since part of municipal securities' value is derived from the recipient's
ability to exclude  interest  payments from  taxation.  Should this exclusion be
re-duced, the market for municipal securities, and consequently the Fund's share
value, may be adversely affected.

INVESTMENT  ADVISER
Saturna Capital Corporation, 1300 N. State Street, Bellingham,  Washington 98225
is the Investment  Adviser and  Administrator  for the Fund.  Saturna  Capital's
wholly owned subsidiary, Investors National Corporation, is a discount brokerage
firm and acts as  distribu-tor  for the Fund without  compen-sation.  Founded in
1989,  Saturna  Capital  Corporation  is also the adviser to Amana  Mutual Funds
Trust,  the  Sextant  Mutual  Funds  and  to  private   accounts.   Saturna  has
approximately $61 million in assets under management.

The Fund pays a monthly advisory fee at the annual rate of 0.50% of the aver-age
daily net assets up to $250 mil-lion, 0.40% of assets be-tween $250 mil-lion and
$1 billion,  and 0.30% of assets in ex-cess of $1  billion.  For the fiscal year
ended  November 30, 1998,  the aggregate  advisory fee paid (after a partial fee
waiver) was 0.43% of average net assets.

Phelps  McIlvaine,  vice president of Saturna Capital since 1994, is the primary
manager of the Idaho  Tax-Exempt  Fund.  He also manages the Sextant  Short-Term
Bond Fund and the Sextant Bond Income Fund, other series of the Trust.

3
<PAGE>

PRICING  OF  FUND  SHARES
The Fund  computes its net asset value per share each business day by di-vid-ing
(i) the value of all of its securities and other as-sets, less liabili-ties,  by
(ii) the num-ber of shares out-standing.  The Fund computes its net as-set value
as of the close of trading on the New York Stock Ex-change (generally 4 p.m. New
York time) on each day the Ex-change is open for trading.  The Fund's shares are
not priced on any cus-tom-ary  national  busi-ness holiday that security markets
are closed.  The net asset value  appli-ca-ble  to purchases or  redemption's of
shares of the Fund is the net asset  value  next  computed  after  receipt  of a
purchase or re-demption order.

Since daily bid prices are not available  for many  municipal  bond issues,  the
Fund val-ues  securi-ties  using  matrices of municipal  bond yields for various
ma-turities  and  qual-i-ties.  Prices are ad-justed for factors  unique to each
bond.  To verify its  knowledge  of market  fac-tors,  the adviser  periodically
obtains  appraisals  from  independent  sources.  HOW TO BUY SHARES You may open
account and purchase shares by sending a completed  application with a check for
$1,000  or  more  to the  Fund.  The  Fund  does  not  ac-cept  ini-tial  orders
unaccom-pa-nied  by  payment.  The price you receive is the net asset value next
determined  after  receipt of a purchase  order.  There are no sales  charges or
loads. Shareowners may purchase additional shares at any time in minimum amounts
of $25. Once an account is open,  pur-chases can be made by check, by electronic
funds transfer, or by wire. Shareowners may autho-rize the use of the Auto-mated
Clearing  House  ("ACH")  to  pur-chase  or  redeem  shares  by  completing  the
appropriate section of the applica-tion.  The autho-rization must be received at
least  two  weeks  before  ACH can be used.  To use ACH to  pur-chase  or redeem
shares,  simply call Saturna Capital.  Investors also may wire money to purchase
shares,  though the wiring bank typi-cally charges a fee for this service.  Each
time shares are  purchased or redeemed,  a  confirmation  is mailed  showing the
details of the  transaction  as well as the  current  number and value of shares
held. Share bal-ances are computed in full and frac-tional shares,  expressed to
three decimal  places.  At the end of each calendar year, you receive a complete
annual  statement,  which you  should  retain  for tax  purposes  and a complete
histori-cal  record of all  trans-ac-tions.  Optional  plans offered by the Fund
include: (1) an auto-matic investment plan, (2) a sys-tem-atic  with-drawal plan
to provide regular  pay-ments to you, and (3) the right to ex-change your shares
without  charge for any other no-load  mutual fund for which Saturna  Capital is
the in-vest-ment ad-viser.  Ma-terials describ-ing these plans and applica-tions
may be obtained from the Ad-viser.  HOW TO REDEEM SHARES  Shareowners may redeem
all or part of their  investment on any business day of the Fund. The amount per
share  received  is the price next  determined  after  receipt of a  re-demption
request.  The amount  re-ceived  depends on the value of the in-vestments of the
Fund at that  day and may be more or less  than  the  cost of the  shares  being
redeemed.

The Fund  normally  pays for shares  redeemed  within  three days after a proper
instruction   is  re-ceived.   To  allow  time  for  clearing,   re-demption  of
in-vestments made by check or ACH may be re-stricted for up to 14 calendar days.
There are several methods you may choose to redeem shares.
WRITTEN  REQUEST
Write:          Idaho  Tax-Exempt  Fund
          Box  N
          Bellingham  WA  98227-0596

Or  Fax:          360  /  734-0755

You may redeem  shares by a written  request  and  choose one of the  follow-ing
options for the proceeds:
     Redemption  check  (no  mini-mum)  sent  to  registered  owner(s).
     Redemption  check (no mini-mum) sent as directed if the signa-ture(s) are
guaranteed.  If  pro-ceeds

4
<PAGE>

     are to be sent to other than the regis-tered owner(s) at the last ad-dress,
the  signa-tures  on the request must be guaran-teed by a national bank or trust
com-pany or by a member of a national se-curities ex-change.
     Federal  funds  wire.   The pro-ceeds ($5000 minimum) may be wired to any
bank  designated  in  the  re-quest  if  the signa-ture(s) are guar-an-teed as
explained  above.
TELEPHONE  REQUEST
Call:          800  /  728-8762  or
     360  /  734-9900

You may redeem  shares by a tele-phone  request and choose one of the  following
options for the proceeds:
     Redemption  check  (no  mini-mum)  sent  to  registered  owner(s).
     ACH  transfer  ($100  minimum)  with  proceeds  trans-ferred to your bank
ac-count as  desig-nated by the ACH  au-thorization  on your  applica-tion.  The
transfer  agent must receive the ACH  authori-za-tion  at least two weeks before
ACH transfer can be used.
     Exchange  (in  at  least  the  mini-mum  estab-lished  by  the  Fund  being
purchased) for shares of any other Fund for which Saturna Capital is adviser. If
the ex-change is your initial  in-vestment into this Fund, the new ac-count will
au-tomatically have the same registration as your original ac-count.
     Federal funds wire. Proceeds ($5000 min-imum) may be wired only to the bank
previously  designated,  or as di-rected in a prior  written  instruc-tion  with
signatures guar-anteed, as explained above.

For telephone  requests the Fund will en-deavor to confirm that instructions are
genuine and may be liable for losses if they do not. The caller must provide
     the name of the  per-son  making the  request,  the name and address of the
     regis-tered owner(s),  the account number, the amount to be withdrawn,  and
     the method for payment of the pro-ceeds.
The Fund also may require a form of personal  identification.  The Fund will not
be  responsible  for the  re-sults of  transactions  they  rea-sonably  be-lieve
genuine. CHECK WRITING Shareowners may also redeem by writing checks for amounts
of $500 or more.  Upon  request,  the Fund provides a small book of blank checks
for a $10 fee,  which may then be used to write checks to any payee.  Checks are
re-deemed at the price next de-termined after re-ceipt by the transfer agent. To
use this  feature,  request the Check  Writing  Privi-lege  on the  Application.
DIVIDENDS  The Fund intends to  distribute  its net  investment  in-come and net
realized  capital gains, if any, to its  shareowners.  The Fund accounts for its
distributions as either taxable capital gains  (origi-nat-ing  from net realized
gains  on  portfolio   transactions),   or  taxable  income  (originat-ing  from
dividends,  taxable  interest  and certain  other types of gains) or  tax-exempt
income (originating from interest on municipal bonds). Income dividends are paid
daily and reinvested or dis-tributed  monthly.  Distributions from capital gains
are paid at the end of November.

Both dividends and capital gains dis-tri-bu-tions are automatically  rein-vested
in addi-tional full and fractional shares of the Fund owned. At your option, you
may receive  dividends or capital gain  distri-butions in cash. You are notified
of each divi-dend and capital gains distribu-tion when paid.
TAX  INFORMATION
Any  redemption,   including   exchanges  and  checks  written  by  shareowners,
constitutes a sale for federal income tax purposes, and in-vestors may realize a
capital gain or loss on the re-demp-tion.

At the end of each  calendar  year,  shareown-ers  re-ceive  a  complete  annual
state-ment,  which should be retained for tax record  keeping.  Saturna  Capital
keeps  each  account's  entire  investment   transaction  his-tory,   and  helps
shareowners  maintain  the tax records  needed to determine  reportable  capital
gains and losses as well as dividend income. 5 <PAGE>

Each January,  the transfer agent reports to each  shareowner  (consolidated  by
taxpayer ID) and to the IRS the amount of each  redemp-tion  transaction and the
amount of taxable income  divi-dends and capital gains  distributions.  Dividend
amounts represent the pro-portionate  share the shareowner is to report on a tax
return for the year.  Capital gains may be taxed at differ-ent rates,  depending
on the  length  of time the  Fund  held its  investments.  Fund  distribu-tions,
whether  paid in cash or  invested  in  addi-tional  shares of the Fund,  may be
subject to income  taxes.  Capital  gains and  dividends  may also be subject to
state and local taxes.

To avoid being  subject to a 31%  fed-eral  with-holding  tax on  dividends  and
distri-bu-tions,   you  must  furnish  your  cor-rect  Social  Security  or  Tax
Identification Number.


FINANCIAL  HIGHLIGHTS

This table is to help you understand the Fund's financial  performance.  The top
section  reflects  financial  results for a single Fund share. The total returns
represent  the rate that an investor  earned (or lost) on an  investment  in the
Fund,  assuming  reinvestment  of all  dividends and  distributions  and without
regard to income taxes. Tait Weller & Baker, independent auditors for the Funds,
examined this information.  Their report and the Fund's financial statements are
in the Fund's  annual  report  (available  upon request  from Saturna  Capital).
<TABLE>

<CAPTION>

                             Year ended November 30
                                                     ----------------------


<S>                                                             <C>      <C>      <C>      <C>      <C>

                                                                  1998     1997     1996     1995      1994
                                                                -------  -------  -------  -------  --------
NET ASSET VALUE AT BEGINNING OF YEAR                            $ 5.28   $ 5.25   $ 5.28   $ 4.76   $  5.23
                                                                -------  -------  -------  -------  --------
Income from investment operations
Net investment income                                             0.25     0.26     0.27     0.26      0.27
Net gains or losses on securities (both realized & unrealized)    0.12     0.03    (0.03)    0.52     (0.46)
                                                                -------  -------  -------  -------  --------
Total from investment operations                                  0.37     0.29     0.24     0.78     (0.19)
Less distributions
Dividends (from net investment income)                           (0.25)   (0.26)   (0.27)   (0.26)    (0.27)
Distributions (from capital gains)                               (0.04)    0.00     0.00     0.00     (0.01)
                                                                -------  -------  -------  -------  --------
Total distributions                                              (0.29)   (0.26)   (0.27)   (0.26)    (0.28)
NET ASSET VALUE AT END OF YEAR                                  $ 5.36   $ 5.28   $ 5.25   $ 5.28   $  4.76
                                                                =======  =======  =======  =======  ========
TOTAL RETURN                                                      7.27%    5.69%    4.66%   16.68%   (3.76)%
Ratios / Supplemental Data
--------------------------------------------------------------
Net assets ($000), end of year                                  $6,264   $5,255   $5,064   $5,220   $ 6,841
Ratio of expenses to average net assets                           0.76%    0.80%    0.79%    0.75%     0.75%
Ratio of net investment income to average net assets              4.69%    4.99%    5.10%    5.07%     5.28%
Portfolio turnover rate                                             23%      20%      10%      28%       36%

<FN>

  For each of the above years, all or a portion of the expenses were waived.  If
these costs had not been waived, the resulting increase to the ratio of expenses
to average net assets would be .07%, .16%, .27%, .26%, and .14%,
                                                                                               respectively.
</FN>
</TABLE>



6
<PAGE>



                             IDAHO TAX-EXEMPT FUND
                            INVESTMENT APPLICATION
Mail  application  and check to:                         For assistance, call:
     IDAHO  TAX-EXEMPT  FUND                     800/SATURNA  or  360/734-9900
     Box  N,  Bellingham  WA  98227-0596                      FAX 360/734-0755

ACCOUNT  TYPE  AND  NAME  (select  one)
 Individual
               First                         Middle Initial               Last

Social  Security  Number                                         Date of Birth

  Joint  with
               First                         Middle Initial               Last

Joint  Owner's  Social  Security  Number
                 (Joint accounts are presumed to be "Joint Tenancy with Right of
Survivorship" unless otherwise indicated.)

  Gifts  to  Minor                                        as  Custodian  for
     Name  of  Custodian          Name  of  Minor
                  Uniform  Gifts  to  Minors  Act
      under  the                          Uniform  Transfers
     State          to  Minors  Act          Minor's Soc. Sec. No.     Minor's
Birthdate

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


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

MAILING
ADDRESS          Street                                      Apt., Suite, Etc.


          City                                    State                    ZIP

TELEPHONE    (          )                                        (          )
             -          -                                        -          -
     Daytime          Home

CITIZENSHIP           U.S.        Resident Alien            Non-Resident Alien
                                             Country
INITIAL  INVESTMENT    $
Make  check  payable  to  Idaho  Tax-Exempt  Fund  (minimum  $1000).
<PAGE>

<PAGE>
E-MAIL
Transaction  confirmations  and  shareowner  reports  may be sent to my personal
e-mail  address:  In addition to paper mailings  Instead to paper mailings (save
paper & postage)

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

ACH  TELEPHONE  TRANSFER  PRIVILEGE
To transfer  funds by ACH at no charge to or from my (our) bank account,  I (we)
authorize  electronic fund transfers through the Automated  Clearing House (ACH)
for my (our) bank account designated. Please attach a voided check.

AUTOMATIC  INVESTMENT  PLAN
  Invest $ _______ into the Fund on the _____ day of each month (the 15th unless
another date is chosen) by ACH transfer  from my (our) bank  account.  This plan
may be canceled at any time. Please attach a voided check.

CHECK WRITING  PRIVILEGE ($500 per check minimum) ($10 checkbook  charge) I (We)
   hereby request the Custodian to honor checks drawn by me (us) on my
(our)  account  subject to  acceptance  by the Fund,  with payment to be made by
redeeming  sufficient  shares in my (our) account.  None of the custodian  bank,
Saturna  Capital  Corporation,  nor the Idaho  Tax-Exempt  Fund shall  incur any
liability to me (us) for honoring such checks,  for redeeming shares to pay such
checks, or for returning checks which are not accepted.
 Single  Signature  Authority  --  Joint  Accounts  only:    (CHECKS FOR JOINT
 --------------------------------------------------------
ACCOUNTS REQUIRE BOTH SIGNATURES UNLESS THIS BOX IS MARKED TO AUTHORIZE CHECKS
 ------
WITH A SINGLE  SIGNATURE).  By our  signatures  below,  we agree to permit check
redemptions  upon the single  signature of a joint owner.  The  signature of one
joint  owner is on behalf of himself  and as  attorney in fact on behalf of each
other joint owner by appointment. We hereby agree with each other, with the Fund
and with Saturna Capital  Corporation that all moneys now or hereafter  invested
in our  account  are  and  shall  be  owned  as  Joint  Tenants  with  Right  of
Survivorship, and not as Tenants in Common.

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



    Date                                Signature of Individual (or Custodian)


    Date                                 Signature of Joint Registrant, if any

<PAGE>
                        PLEASE SAVE THIS QUICK GUIDE TO

                             IDAHO TAX-EXEMPT FUND

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

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

REDEMPTIONS
You may sell your  shares  any time.  As with  purchases,  you may  choose  from
several methods - including telephone,  written instructions,  and checkwriting.
You will be paid the market  price for your  shares on the day we  receive  your
instructions,  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.  Fund  prices  are
recorded daily at 888 / 732-6262 and on the Internet at www.saturna.com.

FOR  MORE  INFORMATION
You may consult the applicable  pages of this prospectus for additional  details
on  the  Fund  and  its  shareholder   services.   Please  call  800  /  SATURNA
(800/728-8762) with any questions.

<PAGE>







                                    PART B



                      STATEMENT OF ADDITIONAL INFORMATION





<PAGE>


                           SATURNA INVESTMENT TRUST

                             IDAHO TAX-EXEMPT FUND


                             1300 N. State Street
                         Bellingham, Washington 98225

                                360 / 734-9900
                                 800 / SATURNA



                      STATEMENT OF ADDITIONAL INFORMATION
                                March 29, 1999

This  Statement  of  Additional  Information  is  not a  Prospectus.  It  merely
furnishes  additional  information  concerning the Idaho Tax-Exempt Fund that is
not  included  in the  Prospectus.  It  should be read in  conjunction  with the
Prospectus.  You may obtain a  Prospectus  dated March 29,  1999 and  shareowner
Annual and  Semi-Annual  reports  without charge by writing to the address shown
above,   calling   toll-free   to   800/728-8762,   and  on  the   Internet   at
http://www.saturna.com/idaho.

<PAGE>

TABLE  OF  CONTENTS
     Page

History  of  the  Fund          3
Fund  Descriptions,  Investments  and  Risks          3
Management  of  the  Fund          8
Principal  Holders  of  Securities          10
Investment  Advisory  and  Other  Services          10
Brokerage  Allocation          11
Capital  Stock          12
Purchase,  Redemption  and  Pricing  of  Shares          12
Taxation  of  the  Fund          12
Calculation  of  Performance  Data          13
Financial  Statements          14


2
<PAGE>
HISTORY  OF  THE  FUND
Saturna  Investment  Trust (the "Trust") is a business trust formed  pursuant to
RCW 23.90 of the laws of the  State of  Washington  to  operate  as an  open-end
management  company.  When formed on February 20, 1987,  the name was  Northwest
Investors  Tax-Exempt  Business Trust. The Trust's name was changed to Northwest
Investors  Trust on October 12, 1990.  Most  recently,  in  connection  with the
formation  of the  Sextant  Funds,  the  Trust's  name was  changed  to  Saturna
Investment Trust on September 28, 1995.

The  Trust  has  five  separate  Funds,  one of which is  offered  through  this
Prospectus  and  Statement of  Additional  Information:  Idaho  Tax-Exempt  Fund
(commenced  operation  September  4,  1987).  The other four  Sextant  Funds are
offered through a separate Prospectus and Statement of Additional Information.

FUND  DESCRIPTIONS,  INVESTMENTS  AND  RISKS
CLASSIFICATION
Saturna  Investors  Trust is a "series  trust" that  presently  offers the Idaho
Tax-Exempt  Fund "open-end  diversi-fied  man-agement  in-vest-ment  company" to
investors.   INVESTMENT  STRATEGIES  AND  RISKS  The  Prospectus  describes  the
principal investment  strategies and risks of those strategies.  This section is
provided  for the purpose of expanding on  investment  strategies  and risks not
thoroughly covered in the Prospectus.

The  Fund   invests   primarily   in  Idaho   municipal   bonds.   The  Fund  is
"non-diversi-fied."  This  means  that  with  re-spect  to at least 75% of total
assets,  greater than 5% may be in-vested in the  securities of any one is-suer.
The balance of the Fund may be in-vested in other  se-curities  if not more than
25% of total as-sets are in-vested in the securities of any one is-suer,  or two
or more issuers en-gaged in the same or simi-lar trade or business.

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

NON-RATED BONDS. Adviser believes that many of the debt securities issued by the
State of Idaho or the  political  subdivisions,  agencies  or  instrumentalities
thereunder  are  small  issues in total  dollars,  and are  typically  issued by
smaller communities or instrumentalities to obtain capital. Because of the small
size of  such  issues,  the  expense  of  obtaining  a  rating  for the  is-sued
obligation (the "Bond") is typically not undertaken. Without a rating, investors
must rely solely on their own analysis and investigation to determine investment
risk and worth of such Bonds.  Since the cost of such analysis and investigation
is typically not considered war-ranted due to the size of such issues, despite a
higher return typically available from such non-rated Bonds, issues of non-rated
Bonds  generally do not have a trading  market  consisting of as many dealers as
comparable rated issuers.

3
<PAGE>

Occasionally,  the financial  insti-tution  lending the funds to a  municipality
receives the Bond and holds it until  maturity.  As a result,  although  trading
markets exist for non-rated Bonds, generally the number of dealers participating
in the market are fewer than that which  exists for rated  Bonds.  Although  all
rated and  non-rated  Bonds are traded on the basis of  dealers'  perception  of
credit-worthiness,  a non-rated  Bond having greater  recognition  among dealers
will have a market  consisting  of a greater  number  of  dealers  than will the
market for a Bond not having as great a  recognition.  The  Adviser  anticipates
that investment in non-rated Bonds will occur only when the Adviser believes the
credit  of the  issuer  of such  non-rated  Bonds  is such so as to  warrant  an
investment without unreasonable risk to the preservation of capital and which is
sufficiently  recognized  among  the  market  dealers  so  as to  provide  ready
marketability of the investment.  In the opinion of the Adviser,  such non-rated
Bonds will be comparable to rated Bonds having an "A" rating.  Experience of the
Adviser  indicates that investments in certain good quality  non-rated Bonds are
liquid and can be sold within a day at or near the value given for computing net
asset value.

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

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

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

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

In  evaluating  Bonds,  the Adviser  analyzes the extent of  investment  risk by
policies that include:
     (1) The extent of  unemployment  within  the  assessment  district  for the
issuer of a Bond and the extent to which this may affect  repayment  of the Bond
at maturity;  (2) The extent to which the real  property  within the  assessment
district  is owned by a small  number of persons or  entities  and the  relative
economic  strength of such persons or entities which may affect repayment of the
Bond at maturity;
     (3) The financial position of the political subdivision, including, but not
limited to, the extent of its existing indebtedness.

These limitations and policies are considered primarily at the time of purchase.
The sale of a Bond is not  mandated  in the  event  of a  subsequent  change  in
circumstances.  Indeed,  Bonds are commonly held until  maturity,  when the Bond
will be redeemed  for its full face value,  assuming no  defaults.  Nonetheless,
both rated

4
<PAGE>

and non-rated Bonds may be sold prior to maturity for various purposes,  such as
a desire for greater liquidity or to preserve capital.

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

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

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

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

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

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

General  obligation  bonds  ("GO Bonds") are those obligations of an issuer to
--------------------------
which  the full faith and credit of the municipality is pledged.  The proceeds
--
from  GO  Bonds  are  used  for  a wide variety of public uses, including, but

5
<PAGE>

not limited to,  public  facilities  such as the  structure  or  improvement  of
schools,  highways,  and roads,  water and sewer  systems,  and facilities for a
variety of public purposes.  A GO Bond is paid from ad valorem property taxes or
from other tax sources.  Many types of obligations may be general obligations of
a municipality  whether or not they are incurred  through the issuance of bonds.
GO Bonds may be incurred in the form of a registered warrant,  conditional sales
contract, or other instrument in which an unconditional and unlimited promise to
pay from ad valorem taxes is made.

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

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

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

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

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

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

6
<PAGE>


Because the Fund  concentrates  its  investments  in a single state,  there is a
greater risk of fluctuation in the values of its portfolio  securities than with
mutual funds the investments of which are more geographically diverse. Investors
should carefully consider the investment risks of such concentration. The Fund's
share prices can be affected by political and economic  developments  within and
by the financial  condition of the State of Idaho,  its public  authorities  and
political subdivisions.
FUND  POLICIES
Investment  objectives  and  certain  policies  of the Fund  may not be  changed
without the prior  ap-proval of the holders of the  majority of the  outstanding
shares of the Fund.  Objectives and poli-cies  which are considered  fundamental
and subject to change only by prior approval of the shareowners include: (1) the
primary and secondary investment  objectives;  (2) the 80% of net assets minimum
investment in tax-exempt income  securities;  (3) the classification of the Fund
as an open-end  management company and the  sub-classification  of the Fund as a
non-diversified   company;   and  (4)  the  policies  listed  under  "Investment
Restrictions."

Investment  Restrictions

The Fund shall not purchase  securities  on margin or sell  securities  short or
purchase or write put or call options;  purchase "restricted  securities" (those
which  are  subject  to legal or  con-tractual  restric-tions  on  resale or are
otherwise  not readily  marketable);  nor invest in oil,  gas or other  min-eral
exploration leases and programs. The Fund shall not make loans to others, except
for the purchase of debt securities, or entering into repurchase agreements. The
Fund shall not in-vest in  securities  so as to not comply with  Subchapter M of
the Internal Revenue Code, in that generally at the close of each quarter of the
tax year,  at least 50% of the value of each Fund's total assets is  represented
by (i) cash and cash  items,  government  securities,  and  securities  of other
regulated  invest-ment  companies,  and (ii) other securities,  except that with
respect to any one  issuer in an amount  more than 5% of  ei-ther  Fund's  total
assets, and no more than 10% of the Fund's voting securities of any one is-suer.
In  addition,  the Fund shall not  purchase  real  estate;  real estate  limited
partnerships;  com-modities  or commodity  contracts;  issue senior  securities;
provided,  however,  that a fund may borrow money for extraordinary or emergency
purposes  and then only if after such  borrowing  there is asset  coverage of at
least 300% for all such borrowings; nor act as a securities un-der-writer except
that they may  pur-chase  securities  directly  from the issuer  for  investment
purposes.  Also, the Fund shall not purchase or retain  securities of any issuer
if the officers or trustees of the Fund or its Adviser own more than one-half of
one percent of the  securities  of such  issuer;  invest in any com-pany for the
pur-pose of  management  or  exercising  control.  The Fund shall not  pur-chase
securities of any issuer in excess of 5% of the Fund's total assets or pur-chase
more  than  10%  of  the  outstanding  voting  securities  of  any  is-suer;  or
concentrate its  in-vestments in a single industry beyond 25% of the total value
of the Fund; or invest more than 10% of its assets in the  securities of issuers
which  to-gether  have a record of less than three years  continuous  operation.
TEMPORARY  DEFENSIVE  POSITION During uncertain market or economic  condi-tions,
the Idaho Tax-Exempt Fund may adopt a temporary,  defensive  position and invest
more  than 20% of  assets  in cash or  equivalents,  govern-ment  se-cu-ri-ties,
unaffiliated  money-market mutual funds, and other debt securities having an "A"
rating or better.  While such  de-fensive  investments may not contribute to the
primary objective of tax-free income,  they do assist the secondary objective of
capital  preservation.  PORTFOLIO  TURNOVER The Funds places no  restrictions on
portfolio  turnover  and Funds will buy or sell  invest-ments  according  to the
Adviser's  appraisal of the factors  affecting  the market and the economy.  The
Adviser  does  not  anticipate  significant  variation  to  the  relatively  low
portfolio turnover rates experienced in the past.

7
<PAGE>

MANAGEMENT  OF  THE  FUND
BOARD  OF  TRUSTEES
A Board of five Trustees manages the Fund: Nicholas Kaiser, John E. Love, John
S.  Moore,  Gary  A. Goldfogel, and A. Herbert Ershig.  The Trustees establish
policies,  as well as review and approve contracts and their continuance.  The
Trustees  also  elect  the  officers, de-termine the amount of any dividend or
capital  gain  distribution  and  serve  on  any  committees  of  the  Trust.

8
<PAGE>

MANAGEMENT INFORMATION The Trustees and officers are:
<TABLE>

<CAPTION>



<S>                       <C>                           <C>


(1)                                                (2)                               (3)
------------------------  ----------------------------
Name, Address, and Age    Position(s) Held with Trust   Principal Occupation(s)

                               During Past 5 years

A. Herbert Ershig         Trustee                       President (now retired),
22 Shorewood Drive
Bellingham, WA 98225
Age:  60
------------------------
                                                        Ershigs, Inc. (industrial

                                  fabrication)
Gary A. Goldfogel, M.D.   Trustee                       Medical Examiner (pathologist)
1500 N. State Street
Bellingham WA 98225
Age: 40
------------------------
                                                        Owner, Avocet Environmental

                              Testing (laboratory)
                                                        --------------------------------
Nicholas Kaiser, MBA*     President and Trustee         President, Saturna Capital
1300 N. State Street
Bellingham, WA 98225
Age: 52


                                                        Corporation (the Trust's

                               investment adviser)
                                                        President, Investors National
                                                        Corporation (the Trust's
                                                        distributor)

John E. Love              Trustee                       Owner, J.E. Love Co.,
1002 Spokane Street
Garfield WA 99130
Age: 66
------------------------
                                                        (agricultural equipment

                                  manufacturer)
John S. Moore, Ph.D.      Trustee                       Professor (now retired),
346 Bayside Road
Bellingham WA 98225
Age: 66
------------------------
                                                        College of Business and

                               Economics, Western
                              Washington University
Phelps S. McIlvaine       Vice President                Vice President, Saturna Capital
1300 N. State Street
Bellingham WA 98225
Age: 45


                                                        Corporation (the Trust's

                               investment adviser)
                                                        Treasurer, Investors National
                                                        Corporation (the Trust's
                                                        distributor)
Pandora Larner            Secretary                     Secretary; Saturna Capital
1300 N. State Street
Bellingham WA 98225
Age: 51
------------------------
                                                        Corporation (the Trust's

                                                        investment adviser) [since
                                                                                  1996]
                                                        Doncaster Sales (direct
                                                        marketing) [1993-1995]
Teresa K. Anderson, MBA   Treasurer                     Director of Funds and
1300 N. State Street
Bellingham WA 98225
Age: 30
------------------------
                                                        Operations, Saturna Capital

                                                        Corporation (the Trust's
                                                        investment adviser)
                                                        --------------------------------

</TABLE>


*  Mr.  Kaiser  is  an  "interested  person"  of  the Trust as de-fined in the
Investment  Company  Act  of  1940.
person"  of  the  Trust  as  de-fined  in  the Investment Company Act of 1940.

The  Board has authority to establish an Executive Committee with the power to
act  on behalf of the Board between meetings and to exercise all powers of the
Trustees  in  the  management  of  the  Trust.    No  Executive  Committee has

9
<PAGE>

 been  established  at  this  time.  An  Audit  Committee,  consist-ing  of  the
disinterested  directors,  meets to select the independent accountant and review
all audit reports. There is no separate nominating committee.
COMPENSATION
The  Trust  pays   disinterested   trustees   $100  per  meeting   attended  and
reimbursement  of travel  ex-penses  (pro-rata  to each Fund of the Trust).  Mr.
Kaiser  receives no compensation  from the Trust,  nor are the other officers of
the Trust paid for their duties with the Trust.
          Pension  or                    Total
     Aggregate          Retirement                    Compensation
Name of     Compensa-     Benefits Accrued     Estimated Annual     From Trust
Person;          tion from     As Part of Trust     Benefits Upon     and Fund
Complex
Position          Trust          Expenses      Retirement     Paid to Trustees
--------          -----          --------      ----------     ----------------
A.  HERBERT  ERSHIG          $400          $0          $0          $400
Trustee

GARY  A.  GOLDFOGEL          400          0            0          400
Trustee

JOHN  E.  LOVE          400          0          0          400
Trustee

JOHN  S.  MOORE,          400          0          0          400
Trustee

NICHOLAS  F.  KAISER,          0          0            0          0
Trustee

PRINCIPAL  HOLDERS  OF  SECURITIES
As of  January  15,  1999,  the only  shareowner  with more than 5% of the Idaho
Tax-Exempt  Fund was Robert L. Foote (PO Box 1157,  Bellingham  WA 98225),  with
145,907 shares (12.29% of the shares outstanding).  Mr. Foote is the father of a
director of the Fund's  Adviser.  As of January 15, 1999,  officers and Trustees
(plus affiliated  family members and entities),  as a group, own 1,369 shares of
Idaho Tax-Exempt Fund (0.12%).

INVESTMENT  ADVISORY  AND  OTHER  SERVICES
INVESTMENT  ADVISER  AND  ADMINISTRATOR
Saturna  Capital  Corporation,  1300  N.  State Street, Bellingham, Washington
98225  is  the  Investment  Adviser  and Administrator (the "Adviser") for the
Fund.    Saturna  Capital  is also the Fund's shareowner servicing agent.  Mr.
Nicholas  Kaiser, by his ownership of the majority of its voting stock, is the
controlling person of the Adviser.  Mr. Kaiser is also a Trustee and President
of  Saturna  Investment  Trust.
ADVISORY  FEE
The  Fund  is  obligated to pay Saturna Capital monthly an advisory fee at the
annual rate of 0.50% of the average daily net assets up to $250 million, 0.40%
of  assets  be-tween  $250  million  and  $1  billion,  and 0.30% of assets in

10
<PAGE>

excess of $1 billion.  Through March 31, 2000, Saturna is voluntarily  obligated
to reimburse  the Fund monthly if  non-extraordinary  expenses  exceed an annual
rate of 0.80% of average daily net asset value.

For  each  of the  fiscal  years  ended  November  30,  1996,  1997,  and  1998,
respectively,  the  advisory  fees  (after  expense  limitations)  the Fund paid
Saturna Capital were $12,617, $17,140, and $24,552, respectively.
SHAREOWNER  SERVICES
Under the Advisory  agreement,  Saturna  Capital also  provides  services as the
transfer  agent and  dividend-paying  agent for the Funds.  As  transfer  agent,
Saturna  furnishes to each  shareowner a statement  after each  transaction,  an
historical statement at the end of each year showing all transactions during the
year, and Form 1099 tax forms. Saturna also, on behalf of the Funds, responds to
shareowners' questions or correspondence.  Further, the transfer agent regularly
furnishes the Funds with current  shareowner lists and information  necessary to
keep the shares in balance with the Funds' records.  The transfer agent performs
the mailing of financial statements, notices and prospectuses to shareowners.

For  each  of the  fiscal  years  ended  November  30,  1996,  1997,  and  1998,
respectively, the shareowner servicing fees (after expense limitations) the Fund
paid Saturna Capital were $4,232, $4,050, and $4,059, respectively.
CUSTODIAN
National   City  Bank,   Indiana,   of   Indianapolis,   National  City  Center,
Indianapolis,  Indiana 46255 is the custodian of the Funds. As custodian for the
Fund,  the bank  holds in  custody  all  securities  and cash,  settles  for all
securities trans-actions, receives money from sale of shares and on order of the
Fund pays the  autho-rized  expenses  of the Fund.  When  investors  redeem Fund
shares,  the  pro-ceeds  are  paid  to the  shareowner  from an  account  at the
custodian bank.  INDEPENDENT  ACCOUNTANTS  Tait, Weller and Baker, 8 Penn Center
Plaza, Suite 800, Philadelphia,  PA 19103-2108 are the indepen-dent  accountants
for the Fund. The accountants conduct an annual audit of the Fund as of November
30 each year, prepare the tax returns of the Fund and as-sist the Adviser in any
accounting  matters  throughout the year.  PRINCIPAL  UNDERWRITER  The Adviser's
wholly-owned subsidiary,  Investors National Corporation,  1300 N. State Street,
Bellingham WA 98225 is a discount  brokerage firm and acts as  distribu-tor  for
the Fund without compen-sation. Mr. Nicholas Kaiser, an affiliated person of the
Fund, is President of Investors National Corporation.

BROKERAGE  ALLOCATION
For fiscal years 1998,  1997, and 1996,  Idaho Tax-Exempt Fund paid no brokerage
commissions.

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

11
<PAGE>

the Fund's  investment  adviser in servicing  all of its accounts and not all of
these services may be used by the adviser in connection with the Fund.

The primary  consideration in effecting securities  transactions for the Fund is
to obtain the best price and  execution  which in the judgment of the Adviser is
at-tainable  at the time and which  would  bring the best net  overall  economic
result to the Fund.  Factors  taken  into  account in the  selection  of brokers
include the price of the  security,  commissions  paid on the  transaction,  the
efficiency  and  cooperation  with  which  the  transaction  is  effected,   the
expediency of making settlement and the financial  strength and stability of the
broker. The Adviser may negotiate commis-sions at a rate in excess of the amount
another  broker  would  have  charged if it  de-termines  in good faith that the
overall net economic  result is  favorable  to the Fund,  and is not required to
execute trades in  "over-the-counter"  securities with primary  market-makers if
similar terms are available  elsewhere.  The Adviser evaluates whether brokerage
commissions are reasonable  based upon available  information  about the general
level of commissions paid by similar mutual funds for comparable services.

CAPITAL  STOCK
Each Fund of Saturna  Investment  Trust is divided  into  shares of  benefi-cial
inter-est.  The shares of each  separate  Fund of the Trust  have  equal  voting
rights. All shares are fully paid, non-assessable,  transferable and with rights
of  redemp-tion,  and are not  subject to  preemptive  rights.  The Trust is not
required to hold annual shareowner  meetings.  However,  special meetings may be
called  for  such  pur-poses  as  electing  or  remov-ing   Trustees,   changing
fundamental  policies,  or voting on approval of an advisory contract. On issues
relating  solely  to  Idaho  Tax-Exempt  Fund,  only  the  shareowners  of Idaho
Tax-Exempt Fund are entitled to vote. All dividends and  distribu-tions  for the
Fund shall be dis-tributed to shareown-ers in proportion to the number of shares
owned.

PURCHASE,  REDEMPTION  AND  PRICING  OF  SHARES
See How to Buy  Shares,  How to Redeem  Shares and Pricing of Fund Shares in the
Prospectus for an explanation about the ways to purchase or redeem shares.  Both
purchases and redemptions are made at net asset value per share.

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

Price (net asset  value) per share is  determined  by dividing  the value of all
securities  and  other  assets,  less  liabilities,  by  the  number  of  shares
outstanding.  The  daily  price is  determined  for each Fund as of the close of
trading on the New York Stock Exchange  (generally 4 p.m. New York time) on each
day the Exchange is open for trading.  The Exchange is generally  closed on: New
Year's Day, Martin Luther King Day, President's Day, Good Friday,  Memorial Day,
Independence Day, Labor Day,  Thanksgiving and Christmas.  See the balance sheet
in the Annual Report or Semi-Annual  Report for a specimen sheet showing how the
Fund  calculates net asset value,  which is the price used for both purchase and
redemption of shares.

TAXATION  OF  THE  FUND
Saturna Investment Trust is organized as a "series"  investment  company. As one
of the funds in the Trust,  Idaho Tax-Exempt Fund is a separate eco-nomic entity
with  separate  assets  and   liabilities  and  separate  income  streams.   The
shareowners  of the Fund may look only to the Fund for income,  capital  gain or
loss, redemption, liquidation, or

12
<PAGE>

termination.  The Fund has separate arrangements with the Adviser. Assets of the
Fund are  segregated.  The credi-tors and shareowners of the Fund are limited to
the assets of the Fund for recovery of charges,  expenses and  liabilities.  The
Fund conducts  separate voting on issues relating solely to the Fund,  except as
required by the Investment  Company Act. The tax status and tax  consequences to
shareowners  of the  Fund  differ,  depending  upon the  investment  objectives,
operations, income, gain or loss, and distributions from the Fund.

The Fund  intends to  distribute  to  shareowners  substantially  all of its net
investment  income and net realized capital gains, if any, and to comply,  as it
has since inception, with the provisions of the Internal Revenue Code applicable
to regulated investment companies  (Subchapter M), which relieve mutual funds of
federal income taxes on the amounts so distributed.

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

If shareowners do not furnish the transfer agent with a valid Social Security or
Tax Identification Number and in certain other circumstances, the transfer agent
is required to with-hold 31% of taxable income dividends.  If the IRS determines
that the Fund  should  be  fined or  penalized  for  inaccurate  or  missing  or
otherwise inadequate reporting of a Tax Identification Number, the amount of the
IRS fee or penalty will be directly assessed to the shareowner account involved.

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

For the 1-year,  5-year and 10-year periods ended November 30, 1998, the average
annual  compounded  Total  Returns  of the Fund were  7.28%,  5.91%,  and 6.71%,
respectively.

Average  annual Total Return  quotations  for various  periods  illustrated  are
computed by finding the average annual compounded rate of return over the period
quoted that would equate the initial  amount  invested to the ending  redeemable
value accord-ing to the following formula:
P  (l  +  T)n  =  ERV

WhereP = a  hypothetical  initial  Payment  of $1,000 T = average  annual  Total
     return n = number  of years  ERV = Ending  Redeemable  Value of the  $1,000
     payment
          made  at  the  beginning  of  the  period.

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

T  =  (  ERV/P)1/n  -  1
13
<PAGE>

Current Yield is computed by dividing the net investment income, as defined by
------- -----
the Securities and Exchange  Commission,  over a rolling 30 day period for which
the yield is  presented  by the  average  number of shares  eligible  to receive
dividends for the period over the maximum  offering  price per share on the last
day of the period, and annualize the results. The formula used is:

Yield  =  2[(  a-b/cd  +1)6  -1]
Where a =  dividends  accrued  during the period b =  expenses  accrued  for the
period  (net  of  reimbursements)  c  =  the  average  daily  number  of  shares
outstanding  during the period that were  entitled to receive  dividends d = the
price per share on the last day of the period

The cur-rent  yield on the Idaho  Tax-Exempt  Fund, for the 30 day period ending
November 30, 1998 was 4.0%.

FINANCIAL  STATEMENTS
The most recent audited annual report  accompanies  this Statement of Additional
Information.

There is incorporated into this Registration  Statement the following  financial
information  in the  Annual  Report to  shareowners  for the  fiscal  year ended
November 30, 1998, Filed as Exhibit A hereto:

Report of Tait, Weller & Baker, Independent Accountants. Statement of Assets and
Liabilities  as of November  30,  1998.  Statement  of  Operations  - Year ended
November 30, 1998.  Statements  of Changes in Net Assets - years ended  November
30, 1998, and 1997.
Investments  -  as  of  November  30,  1998.
Notes  to  Financial  Statements.

     14
<PAGE>






                                    PART C



                               OTHER INFORMATION
<PAGE>
EXHIBITS
Exhibits included with this filing:

Items marked with an asterisk (*) are  incorporated  by reference  from exhibits
previously  filed with the  Registration  Statement for Amana Mutual Funds Trust
and amendments thereto.

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

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

     *(3)  Articles  of  Amendment  to  the  Declaration of Trust of Northwest
Investors Trust, as adopted by resolution of the Board of Trustees on July 10,
1995. Incorporated by Reference.  Filed as Exhibit No. 1-3 to Amendment No. 13
to  Form  N-1A  dated  July  11,  1995.

     *(4)  Articles  of  Amendment  to  the  Declaration  of  Trust of Saturna
Investment  Trust,  as  adopted  by  vote of the shareholders on September 28,
1995.  Filed  as  Exhibit No. 1-4 to Amendment No. 14 to Form N-1A dated March
29,  1996.

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

(c)      Instruments Defining Rights of Security Holders.  Included in (a) and
(b).

(d)          Investment  Advisory  Contracts
     *(1)  Investment  Advisory  and Administrative Services Agreement for the
series  Sextant International Fund of Saturna Investment Trust, as approved by
the Board of Trustees on July 10, 1995 and shareholders on September 28, 1995.
Filed  as  Exhibit  No.  5-1  to Amendment No. 14 to Form N-1A dated March 29,
1996.

     *(2)  Investment  Advisory  and Administrative Services Agreement for the
series  Sextant  Growth  Fund  of Saturna Investment Trust, as approved by the
Board  of  Trustees  on  July 10, 1995 and shareholders on September 28, 1995.
Filed  as  Exhibit  No.  5-2  to Amendment No. 14 to Form N-1A dated March 29,
1996.

     *(3)  Investment  Advisory  and Administrative Services Agreement for the
series  Sextant  Bond  Income Fund of Saturna Investment Trust, as approved by
the Board of Trustees on July 10, 1995 and shareholders on September 28, 1995.
Filed  as  Exhibit  No.  5-3  to Amendment No. 14 to Form N-1A dated March 29,
1996.

     *(4)  Investment  Advisory  and Administrative Services Agreement for the
series  Sextant  Short-Term Bond Fund of Saturna Investment Trust, as approved
by  the  Board  of  Trustees  on  July  10,  1995

a
<PAGE>

and  shareholders on September 28, 1995. Filed as Exhibit No. 5-4 to Amendment
No.  14  to  Form  N-1A  dated  March  29,  1996.

 (e)          Underwriting  Contracts.    Not  applicable.

(f)          Bonus  or  Profit  Sharing  Contracts.      Not  applicable.

(g)*          Custodian  Agreements
Form  of  Custodian  Agreement for each series of the Trust, between the Trust
and National City Bank, Indiana.  Filed as Exhibit No. 8-1 to Amendment No. 14
to  Form  N-1A  dated  March  29,  1996.

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

(i)          Legal  opinions.
     Opinion  of  Counsel  dated  January  26,  19989  (see  Documents)

(j)          Other  opinions.
     (1)  Accountant's  Consents  dated  January  26,  1999  (see  Documents)

     (2)  Copies of Powers of Attorney of Trustees of Saturna Investment Trust
(see  Documents).

(k)          Omitted  Financial  Statements.    Not  applicable.

(l)*          Initial  Capital  Agreements.    Not  applicable.

(m)          Rule  12(b)-1  Plan.    Not  applicable.

(n)          A Financial Data Schedule meeting the requirements of rule 483 is
attached.

(o)          Rule  18f-3  Plan.      Not  applicable.

PERSONS  CONTROLLED  BY OR UNDER  COMMON  CONTROL WITH  REGISTRANT  No person or
persons are directly or indirectly  controlled  by or under common  control with
the Registrant.

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

In the  performance  of  his  duties  as  Trustee,  each  Trustee  shall  not be
personally  liable to the Trust or its shareowners for any monetary  damages for
any breach of duty as a Trustee, provided that this limitation shall not

b
<PAGE>


be construed as limiting the  liability of the Trustee for (l) any breach of the
Trustee's duty of loyalty to the Trust or its shareowners, (2) acts or omissions
not in good faith or which involve  intentional  misconduct or knowing violation
of law, (3) for the unlawful  payment of dividends or redemption  of shares,  or
(4) for any  transaction  from which the Trustee  derives an  improper  personal
benefit.

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

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

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

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

BUSINESS AND OTHER CONNECTIONS OF INVESTMENT  ADVISER The answer to this item is
fully disclosed in Part A and Part B of the Form N-1A.

PRINCIPAL  UNDERWRITERS
The broker-dealer  subsidiary of the Adviser,  Investors  National  Corporation,
acts where efficient for the Trust as "distributor," without fee or compensation
of any kind,  under authority of a resolution by the Trustees.  The Trust has no
formal  underwriters  as the shares  technically  are sold directly by the Trust
without a sales charge.

Officers and employees of Investors National Corporation receive no compensation
(salary  or  commissions)  from  Investors   National   Corporation.   The  only
compensation  paid  employees of Investors  National  Corporation  or of Saturna
Capital Corporation is salary, with an annual bonus primarily dependent upon the
overall financial success of Saturna Capital Corporation.

LOCATION  OF  ACCOUNTS  AND  RECORDS
With the exception of those records  maintained by the Custodian,  National City
Bank,  Indiana,  101 W. Washington  Street,  Indianapolis,  Indiana,  46255, all
records  of the  Trust  are  physically  in the  possession  of  the  Trust  and
maintained at the offices of Saturna Capital Corporation,  1300 N. State Street,
Bellingham, Washington 98225.


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

d
<PAGE>