SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-05071 or 33-13247
SATURNA INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
1300 N. State Street
Bellingham, Washington 98225-4730
(Address of Principal Executive Offices, including ZIP Code)
Nicholas F. Kaiser
1300 N. State Street
Bellingham, Washington 98225-4730
(Name and Address of Agent for Service)
Registrant’s Telephone Number- (360) 734-9900
Date of fiscal year end: November 30, 2004
Date of reporting period: May 31, 2004
N-CSRS Semi-Annual Report May 31, 2004
REPORT TO SHAREHOLDERS
Sextant
Mutual Funds
(Graphic Omitted)
Fellow Shareowners:
For the six months ended May 31, 2004, both stocks and bonds held steady. Bond investors can look for higher yields but little total return as interest rates climb slowly. Stock investors will see US corporate profits jump more than 20% in 2004, helped by low inflation, new employment, confident consumers, strong exports on a lower US dollar, and lower federal tax rates. Outside the U.S., the outlook is marginally improving. Big catastrophes are noticeably absent.
Prudent investors do well to remember that change is the only real constant. Recent choppy economic seas will again be soothed by the “invisible hand” of free economic markets. Change is the rationale for our four distinctly different Sextant funds, which allow investors to choose the variable returns of the domestic and international stock markets, long-term bonds, or the safety of short-term bonds.
For the last six months, the Sextant bond funds provided haven while interest rates increased. Now able to purchase greater yields, we expect to be increasing maturities and quality in these bond funds. Equities look poised for better relative returns, as their fundamentals improve. We are recommending a balance favoring stocks over bonds for the next year.
Our Sextant funds employ a “fulcrum” advisory fee structure that rewards or penalizes Saturna Capital for investment results. Unfortunately, relative performance of the Sextant funds over the last 12 months (the fulcrum fee measurement period) was generally below our Morningstar mutual fund benchmarks. For the six and twelve months ended May 31, 2004 comparative total returns are:
Sextant Fund | 6-month Total Return | 12-month Total Return | vs. Morningstar | 12-month Total Return |
Short-Term Bond | +0.33% | +0.55% | Short-Term Bonds | +0.26% |
Bond Income | +0.01% | -3.41% | Long-Term Bonds | -0.78% |
Growth | -1.86% | +14.54% | Domestic Growth | +19.49% |
International | +0.50% | +28.19% | Foreign Stock | +30.01% |
While our funds remain small, growing awareness of the Sextant Funds and their good long-term performance continue to attract investors. The year 2004 has been solid so far and we are looking forward to the second half. Thank you for investing your money with ours.
Respectfully,
Nicholas Kaiser, President | Phelps McIlvaine, Vice President |
(Manager, Sextant Growth; Sextant International) | (Manager, Sextant Bond Income; Sextant Short-Term Bond) |
July 19, 2004
2 | N-CSRS Semi-Annual Report May 31, 2004 |
INVESTMENTS | SEXTANT SHORT-TERM BOND FUND (graphic omitted) |
Rating* | Issuer | Coupon/Maturity | Face Amount | Market Value |
As of May 31, 2004 | ||||
Banking (10%) | ||||
A | Bankers Trust | 8.25% 5/1/2005 | $85,000 | $89,610 |
A+ | JP Morgan & Co. Inc. | 7.625 % 9/15/2004 | 80,000 | 80,781 |
A- | Washington Mutual Financial | 8.25% 6/15/2005 | 75,000 | 79,351 |
SUB-TOTAL | 240,000 | 249,742 | ||
Building Products (3%) | ||||
A- | Lowe's Companies | 7.50% 12/15/2005 | 70,000 | 74,955 |
Computer (2.9%) | ||||
AA- | Hewlett Packard | 7.15 % 6/15/2005 | 70,000 | 72,771 |
Cosmetics & Toiletries (4.1%) | ||||
A | Avon Products Inc. | 6.55% 8/1/2007 | 95,000 | 103,165 |
Finance & Insurance (18.9%) | ||||
A | Alliance Capital Mangement | 5.625% 8/15/2006 | 65,000 | 67,627 |
AAA | American General Insurance | 7.50% 8/11/2010 | 90,000 | 102,833 |
A+ | International Finance AIG | 5.75% 10/15/2006 | 95,000 | 99,905 |
A- | Lincoln National Insurance | 7.25% 5/15/2005 | 100,000 | 104,060 |
BBB+ | Sears Roebuck | 3.30% 6/15/2006 | 100,000 | 100,000 |
SUB-TOTAL | 450,000 | 474,425 | ||
Machinery (11%) | ||||
A | Deere | 6.55% 7/15/2004 | 90,000 | 90,122 |
A | Eaton | 6.95% 11/15/2004 | 85,000 | 86,810 |
A- | Rockwell Automation International | 6.15% 1/15/2008 | 95,000 | 99,976 |
SUB-TOTAL | 270,000 | 276,908 | ||
Medical Drugs (14.8%) | ||||
A | Amgen | 6.50% 12/1/2007 | 90,000 | 97,917 |
AAA | Bristol Myers Squibb | 4.75% 10/1/2006 | 90,000 | 92,123 |
AAA | Pfizer | 5.625% 2/1/2006 | 100,000 | 104,301 |
A- | Wyeth | 7.90% 2/15/2005 | 75,000 | 77,467 |
SUB-TOTAL | 355,000 | 371,808 |
N-CSRS Semi-Annual Report May 31, 2004 | 3 |
(graphic omitted)SEXTANT SHORT-TERM BOND FUND | INVESTMENTS |
Rating* | Issuer | Coupon/Maturity | Face Amount | Market Value | |
Oil & Gas (4.2%) | |||||
BBB+ | Union Oil of California | 7.20% 5/15/2005 | $100,000 | $104,171 | |
Publishing (1.9%) | |||||
A- | Tribune Company | 6.875% 11/1/2006 | 45,000 | 47,514 | |
Telecommunications (7.5%) | |||||
AA- | Southwestern Bell | 6.625% 7/15/2007 | 95,000 | 101,854 | |
A- | Verizon Wireless | 5.375% 12/15/2006 | 82,000 | 85,414 | |
SUB-TOTAL | 177,000 | 187,268 | |||
Utilities (11.8%) | |||||
AA- | Florida Power & Light | 6.875% 12/1/2005 | 95,000 | 100,191 | |
BBB | PSI Energy | 6.95% 12/1/2005 | 92,000 | 97,503 | |
A- | Sempra Energy | 7.85% 10/15/2007 | 90,000 | 99,797 | |
SUB-TOTAL | 277,000 | 297,491 | |||
Total Investments (90.1%) | (Cost = 2,240,716) | 2,149,000 | 2,260,218 | ||
Other Assets (net of liabilities) (9.9%) | 249,182 | ||||
Total Net Assets (100%) | $2,509,400 | ||||
*Ratings are the lesser of S&P or Moody's (unaudited) |
4 | N-CSRS Semi-Annual Report May 31, 2004 |
FINANCIAL HIGHLIGHTS | SEXTANT SHORT-TERM BOND FUND (Graphic Omitted) |
Selected data per share of capital stock outstanding throughout the period: | |||||||
For Year Ended November 30, | |||||||
Period ended | 2003 | 2002 | 2001 | 2000 | 1999 | ||
Net asset value at beginning of period | $5.09 | $5.07 | $5.10 | $4.95 | $4.92 | $5.04 | |
Income from investment operations | |||||||
Net Investment Income | 0.10 | 0.23 | 0.27 | 0.26 | 0.27 | 0.26 | |
Net gains or losses on securities (both realized and unrealized) | |||||||
(0.06) | 0.02 | (0.02) | 0.14 | 0.03 | (0.12) | ||
Total from investment operations | 0.04 | 0.25 | 0.25 | 0.40 | 0.30 | 0.14 | |
Less distributions | |||||||
Dividends (from net investment income) | (0.10) | (0.23) | (0.28) | (0.25) | (0.27) | (0.26) | |
Distributions (from capital gains) | - | - | - | - | - | - | |
Total distributions | (0.10) | (0.23) | (0.28) | (0.25) | (0.27) | (0.26) | |
Net asset value at end of period | $5.01 | $5.09 | $5.07 | $5.10 | $4.95 | $4.92 | |
Total Return | 0.33% | 5.00% | 4.90% | 8.37% | 6.20% | 2.88% | |
Ratios / Supplemental Data | |||||||
Net assets ($000), end of period | $2,509 | $2,259 | $2,177 | $2,189 | $2,555 | $1,795 | |
Ratio of expenses to average net assets* | 0.30% | 0.60% | 0.93% | 0.51% | 0.61% | 0.47% | |
Ratio of net investment income to average net assets* | 1.91% | 4.47% | 5.23% | 5.45% | 5.45% | 5.22% | |
Portfolio turnover rate | 7% | 22% | 28% | 28% | 12% | 21% | |
*For the above periods, all or a portion of the operating expenses were waived. If costs had not been waived, the resulting increase to the ratio of expenses to average monthly net accost would be .27%, .57%, .21%, .43%, .41%, and .57% respectively. |
STATEMENT OF ASSETS AND LIABILITIES |
As of May 31, 2004
Assets | |||||
Investments (Cost $2,240,716) | $2,260,218 | ||||
Cash | 206,658 | ||||
Interest Receivable | 40,178 | ||||
Total Assets | $2,507,054 | ||||
Liabilities | |||||
Other Liabilities | (2,346) | ||||
Total Liabilities | (2,346) | ||||
Net Assets | $2,509,400 | ||||
Fund Shares Outstanding | 501,049 | ||||
Analysis of Net Assets | |||||
Paid in Capital (unlimited shares authorized, without par value) | 2,519,423 | ||||
Accumulated net realized loss on investments | (29,524) | ||||
Unrealized net appreciation to Fund shares outstanding | 19,501 | ||||
Net Assets applicable to Fund shares outstanding | $2,509,400 | ||||
Net Asset Value, Offering and Redemption price per share | $5.01 |
(The accompanying notes are an integral part of these financial statements)
N-CSRS Semi-Annual Report May 31, 2004 | 5 |
(Graphic Omitted) SEXTANT SHORT-TERM BOND FUND | STATEMENT OF OPERATIONS |
For the Semi-Annual period ended May 31, 2004 | ||||
Investment Income | ||||
Interest income | $65,714 | |||
Amortization of bond premium | (14,203) | |||
Accretion of bond discounts | 1,195 | |||
Gross investment income | $52,706 | |||
Expenses | ||||
Investment advisor and administration fee | 7,716 | |||
Professional fees | 1,802 | |||
Filing and registration fees | 1,456 | |||
Custodian fees | 1,424 | |||
Insurance fees | 591 | |||
Printing and postage | 338 | |||
Meetings | 194 | |||
Other expenses | 119 | |||
Total gross expenses | 13,640 | |||
Less: Advisory fees waived | (5,444) | |||
Less: Custodian fees waived | (1,003) | |||
Net expenses | 7,193 | |||
Net investment income | 45,513 | |||
Net realized gain on investments | ||||
Proceeds from sales | - | |||
Less: cost of securities sold (based on identified cost) | - | |||
Realized net gain | - | |||
Unrealized gain on investments | ||||
End of period | 19,501 | |||
Beginning of period | 62,732 | |||
Decrease in unrealized gain for the period | (43,231) | |||
Net realized and unrealized loss on investments | (43,231) | |||
Net increase in net assets resulting from operations | $2,282 |
STATEMENT OF CHANGES IN NET ASSETS |
Period ended | Year ended | |||
May 31, 2004 | Nov. 30, 2003 | |||
INCREASE IN NET ASSETS | ||||
From Operations: | ||||
Net investment income | $45,513 | $101,861 | ||
Net realized gain on investments | - | 6,196 | ||
Net increase (decrease) in unrealized appreciation | (43,231) | (795) | ||
Net increase in net assets from operations | 2,282 | 107,262 | ||
Dividends to shareowners from: | ||||
Net investment income | (45,575) | (101,962) | ||
Capital gains distributions | - | - | ||
Total Distributions | (45,575) | (101,962) | ||
Fund share transactions | ||||
Proceeds from sales of shares | 582,683 | 551,793 | ||
Value of shares issued in reinvestment of dividends | 45,433 | 100,884 | ||
628,116 | 652,677 | |||
Cost of shares redeemed | (334,720) | (575,737) | ||
Net increase in net assets from share transactions | 293,396 | 76,940 | ||
Total increase in net assets | $250,103 | $82,240 | ||
NET ASSETS | ||||
Beginning of period | 2,259,297 | 2,177,057 | ||
End of period | $2,509,400 | $2,259,297 | ||
Shares of the fund sold and redeemed | ||||
Number of shares sold | 114,292 | 86,066 | ||
Number of shares issued in reinvestment of dividends | 8,954 | 23,087 | ||
123,246 | 109,153 | |||
Number of shares redeemed | (65,823) | (109,001) | ||
Net increase in number of shares outstanding | 57,423 | 152 |
(The accompanying notes are an integral part of these financial statements)
6 | N-CSRS Semi-Annual Report May 31, 2004 |
INVESTMENTS | SEXTANT BOND INCOME FUND (Graphic Omitted) |
Rating | Issuer | Coupon/Maturity | Face Amount | Market Value | |
As of May 31, 2004 | |||||
Automotive (3.7%) | |||||
BBB | Auto Zone Inc. | 7.125% 12/1/2013 | $95,000 | $91,557 | |
Banking (8.8%) | |||||
A+ | Chase Manhattan | 7.125% 6/15/2009 | 50,000 | 54,766 | |
A | Citicorp | 7.25% 10/15/2011 | 50,000 | 56,408 | |
A- | Comerica Bank | 7.125% 12/1/2013 | 50,000 | 53,425 | |
A+ | Norwest Financial | 6.85% 7/15/2009 | 50,000 | 55,107 | |
SUB-TOTAL | 200,000 | 219,706 | |||
Building Products (2.7%) | |||||
BBB+ | Masco | 7.125% 8/15/2013 | 60,000 | 66,272 | |
Chemicals (2.3%) | |||||
A- | Air Products & Chemicals | 8.75% 4/15/2021 | 50,000 | 58,055 | |
Diversified Financial Services (2.8%) | |||||
AAA | General Electric Capital | 8.125% 5/15/2012 | 60,000 | 70,086 | |
Electric Utilities (2.3%) | |||||
A- | Commonwealth Edison | 7.50% 7/1/2013 | 50,000 | 56,970 | |
Electronics (4.6%) | |||||
A- | Koninlijke Phillips Electronics | 7.25% 8/15/2013 | 50,000 | 56,260 | |
A- | Sempra Energy | 7.95% 3/1/2010 | 50,000 | 57,113 | |
SUB-TOTAL | 100,000 | 113,373 | |||
Food (7.7%) | |||||
BBB+ | Conagra | 7.875% 9/15/2010 | 50,000 | 57,243 | |
A+ | Hershey Foods | 6.95% 8/15/2012 | 50,000 | 55,052 | |
A- | HJ Heinz | 6.00% 3/15/2012 | 75,000 | 78,712 | |
SUB-TOTAL | 175,000 | 191,007 | |||
Insurance (9.4%) | |||||
A+ | Allstate | 7.50% 6/15/2013 | 50,000 | 55,275 | |
A+ | Progressive | 7.00% 10/1/2013 | 75,000 | 81,582 | |
A+ | XL Capital | 6.50% 1/15/2012 | 90,000 | 96,345 | |
SUB-TOTAL | 215,000 | 233,202 | |||
Investment Finance (7.9%) | |||||
A | Bear Stearns | 3.500% 6/27/2008 | 100,000 | 84,263 | |
AA- | Morgan Stanley Dean Witter | 6.75% 10/15/2013 | 50,000 | 53,909 | |
AA+ | Paine Webber Group | 7.625% 2/15/2014 | 50,000 | 56,882 | |
SUB-TOTAL | 200,000 | 195,054 | |||
N-CSRS Semi-Annual Report May 31, 2004 | 7 |
(Graphic Omitted) SEXTANT BOND INCOME FUND | INVESTMENTS |
Rating | Issuer | Coupon/Maturity | Face Amount | Market Value |
Machinery (5%) | |||||
A+ | Caterpillar Inc. | 9.375% 8/15/2011 | $40,000 | $49,758 | |
A+ | Dover | 6.25% 6/1/2008 | 70,000 | 74,931 | |
SUB-TOTAL | 110,000 | 124,689 | |||
Medical Supplies (1.8%) | |||||
A+ | Becton Dickinson | 7.15% 10/1/2009 | 40,000 | 44,633 | |
Oil & Gas (4.9%) | |||||
A | Baker Hughes | 6.00% 2/15/2009 | 70,000 | 74,355 | |
A+ | Texaco Capital | 8.625% 6/30/2010 | 40,000 | 47,850 | |
SUB-TOTAL | 110,000 | 122,205 | |||
Retailing (9.3%) | |||||
A | Dayton Hudson (Target Stores) | 10.00% 1/1/2011 | 50,000 | 63,551 | |
A | Lowe's Companies | 8.25% 6/1/2010 | 50,000 | 58,923 | |
A | May Department Stores Corp. | 8.00% 7/15/2012 | 50,000 | 57,245 | |
AA | Wal-Mart Stores | 7.25% 6/1/2013 | 45,000 | 51,218 | |
SUB-TOTAL | 195,000 | 230,937 | |||
Telecommunications (2.2%) | |||||
A+ | GTE | 6.90% 11/1/2008 | 50,000 | 54,508 | |
Transportation (5.5%) | |||||
A | Southwest Airlines | 6.50% 3/1/2012 | 75,000 | 78,023 | |
A- | US Freightways | 8.5% 4/25/2010 | 50,000 | 57,480 | |
SUB-TOTAL | 125,000 | 135,503 | |||
US Government (9.7%) | |||||
AAA | US Treasury Bond | 5.50% 2/15/2008 | 225,000 | 241,594 |
Total Investments (90.6%) | (Cost = 2,138,580) | 2,060,000 | 2,249,351 | ||
Other Assets (net of liabilities) (9.4%) | 233,774 | ||||
Total Net Assets (100%) | $2,483,125 |
*Ratings are the lesser of S&P or Moody's (unaudited)
8 | N-CSRS Semi-Annual Report May 31, 2004 |
FINANCIAL HIGHLIGHTS | SEXTANT BOND INCOME FUND (graphic omitted) |
Selected data per share of capital stock outstanding throughout the period: | |||||||
Period ended | For Year Ended November 30, | ||||||
May 31, 2004 | 2003 | 2002 | 2001 | 2000 | 1999 | ||
Net asset value at beginning of period | $5.07 | $4.97 | $4.81 | $4.56 | $4.59 | $5.00 | |
Income from investment operations | |||||||
Net investment income | 0.11 | 0.22 | 0.26 | 0.30 | 0.29 | 0.30 | |
Net gains or losses on securities (both realized and unrealized) | (0.11) | 0.10 | 0.16 | 0.25 | (0.03) | (0.41) | |
Total from investment operations | - | 0.32 | 0.42 | 0.55 | 0.26 | (0.11) | |
Less distributions | |||||||
Dividends (from net investment income) | (0.11) | (0.22) | (0.26) | (0.30) | (0.29) | (0.30) | |
Distributions (from capital gains) | - | - | - | - | - | - | |
Total distributions | (0.11) | (0.22) | (0.26) | (0.30) | (0.29) | (0.30) | |
Net asset value at end of period | $4.96 | $5.07 | $4.97 | $4.81 | $4.56 | $4.59 | |
Total return | 0.01% | 6.52% | 9.02% | 12.40% | 6.05% | (2.20)% | |
Ratios/supplemental data | |||||||
Net assets ($000), end of period | $2,483 | $2,272 | $2,105 | $1,965 | $1,505 | $885 | |
Ratio of expenses to average net assets* | 0.40% | 0.97% | 0.72% | 0.34% | 0.35% | 0.39% | |
Ratio of net investment income to average net assets* | 2.21% | 4.29% | 5.40% | 6.71% | 6.58% | 6.31% | |
Portfolio turnover rate | 0% | 0% | 29% | 30% | 0% | 20% | |
*For each of the above periods, all or a portion of the operating expenses were waived. If these costs had not been waived,the increase to the ratio of expenses to average monthly net assets would be .01%, .18%, .34%, .72%, .64%, and ..66%. |
STATEMENT OF ASSETS AND LIABILITIES |
As of May 31, 2004 | ||||
Assets | ||||
Bond investments (Cost $2,138,580) | $2,249,351 | |||
Cash | 190,468 | |||
Interest receivable | 39,544 | |||
Insurance reserve premium | 1,221 | |||
Total Assets | $2,480,584 | |||
Liabilities | ||||
Other Liabilities | (2,541) | |||
Total Liabilities | (2,541) | |||
Net Assets | $2,483,125 | |||
Fund Shares Outstanding | 500,796 | |||
Analysis of Net Assets | ||||
Paid in Capital (unlimited shares authorized, without par value) | 2,469,050 | |||
Accumulated net realized loss on investments | (96,696) | |||
Unrealized net appreciation to Fund shares outstanding | 110,771 | |||
Net Assets applicable to Fund shares outstanding | $2,483,125 | |||
Net Asset Value, Offering and Redemption price per share | $4.96 |
(The accompanying notes are an integral part of these financial statements)
N-CSRS Semi-Annual Report May 31, 2004 | 9 |
(graphic omitted) SEXTANT BOND INCOME FUND | STATEMENT OF OPERATIONS |
For the Semi-Annual period ended May 31, 2004 | ||||
Investment Income | ||||
Interest income | $68,894 | |||
Amortization of bond premiums | (5,988) | |||
Accretion of bond discounts | 116 | |||
Gross investment income | $63,022 | |||
Expenses | ||||
Investment advisor and administration fee | 4,681 | |||
Professional fees | 1,988 | |||
Filing and registration fees | 1,513 | |||
Insurance | 605 | |||
Custodian fees | 574 | |||
Printing and postage | 352 | |||
Other expenses | 328 | |||
Total gross expenses | 10,041 | |||
Less: Custodian fees waived | (323) | |||
Net expenses | 9,718 | |||
Net investment income | 53,304 | |||
Net realized gain on investments | ||||
Proceeds from sales | - | |||
Less: Cost of securities sold based on identified cost | - | |||
Realized net gain | - | |||
Unrealized gain on investments | ||||
End of period | 110,771 | |||
Beginning of period | 169,117 | |||
Decrease in unrealized gain for the period | (58,346) | |||
Net realized and unrealized loss on investments | (58,346) | |||
Net decrease in net assets resulting from operations | $(5,042) |
STATEMENT OF CHANGES IN NET ASSETS |
Period ended | Year ended | |||
INCREASE IN NET ASSETS | May 31, 2004 | Nov. 30, 2003 | ||
From Operations: | ||||
Net investment income | $53,304 | $97,023 | ||
Net realized gain on investments | - | - | ||
Net increase (decrease) in unrealized appreciation | (58,346) | 45,734 | ||
Net increase (decrease) in net assets from operations | (5,042) | 142,757 | ||
Dividends to shareowners from: | ||||
Net investment income | (53,467) | (97,200) | ||
Capital gains distributions | - | - | ||
Total Distributions | (53,467) | (97,200) | ||
Fund share transactions | ||||
Proceeds from sales of shares | 264,601 | 187,626 | ||
Value of shares issued in reinvestment of dividends | 50,931 | 91,934 | ||
315,532 | 279,560 | |||
Cost of shares redeemed | (46,021) | (158,167) | ||
Net increase in net assets from share transactions | 269,511 | 121,393 | ||
Total increase in net assets | $211,002 | $166,950 | ||
NET ASSETS | ||||
Beginning of period | 2,272,123 | 2,105,173 | ||
End of period | $2,483,125 | 2,272,123 | ||
Shares of the fund sold and redeemed | ||||
Number of shares sold | 51,804 | 36,687 | ||
Number of shares issued in reinvestment of dividends | 9,983 | 17,851 | ||
61,787 | 54,538 | |||
Number of shares redeemed | (9,173) | (30,137) | ||
Net increase in number of shares outstanding | 52,614 | 24,401 |
(The accompanying notes are an integral part of these financial statements)
10 | N-CSRS Semi-Annual Report May 31, 2004 |
INVESTMENTS | SEXTANT GROWTH FUND (graphic omitted) |
Issue | Number of Shares | Cost | Market Value |
As of May 31, 2004 | |||
Common Stocks (91.9%) | |||
Banking (9.9%) | |||
Convergys* | 4,000 | $76,250 | $58,600 |
Frontier Financial | 4,000 | 90,207 | 136,600 |
Washington Mutual | 6,750 | 44,124 | 294,907 |
SUB-TOTAL | 210,581 | 490,107 | |
Computers (17%) | |||
3Com* | 16,000 | 96,576 | 103,520 |
Adobe Systems | 4,800 | 50,490 | 214,224 |
Apple Computer* | 7,000 | 132,046 | 196,420 |
Earthlink* | 10,000 | 81,327 | 100,400 |
Intuit* | 3,000 | 131,758 | 117,780 |
Oracle* | 8,000 | 28,059 | 91,200 |
Phoenix Technologies Ltd.* | 3,062 | 29,148 | 20,087 |
SUB-TOTAL | 549,404 | 843,631 | |
Construction (6.7%) | |||
Lowe's Companies | 4,000 | 135,141 | 214,280 |
Weyerhaeuser | 2,000 | 93,867 | 121,220 |
SUB-TOTAL | 229,008 | 335,500 | |
Electronics (7.6%) | |||
Advamced Micro Devices* | 10,000 | 41,708 | 155,500 |
Agilent Technologies* | 4,000 | 108,894 | 102,880 |
Harman International Industries | 1,500 | 114,354 | 120,210 |
SUB-TOTAL | 264,956 | 378,590 | |
Food (4.1%) | |||
Performance Food Group* | 3,000 | 96,917 | 98,520 |
PepsiCo | 2,000 | 102,111 | 106,740 |
SUB-TOTAL | 199,028 | 205,260 | |
Hotels & Motels (1.8%) | |||
Westcoast Hospitality* | 15,000 | 111,772 | 87,000 |
Investments (4%) | |||
Schwab (Charles) | 20,415 | 9,117 | 200,067 |
Machinery (.8%) | |||
Regal-Beloit | 2,000 | 52,106 | 40,900 |
N-CSRS Semi-Annual Report May 31, 2004 | 11 |
(graphic omitted) SEXTANT GROWTH FUND | INVESTMENTS) |
Issue | Number of Shares | Cost | Market Value |
Medical (23.9%) | |||
Affymetrix* | 3,000 | $60,231 | $88,740 |
Amgen* | 2,640 | 34,598 | 144,408 |
Barr Laboratories* | 4,500 | 159,489 | 195,795 |
Bristol-Myers Squibb | 4,500 | 121,892 | 113,715 |
Caremark Rx* | 4,000 | 92,592 | 124,800 |
Ligand Pharmaceuticals* | 5,000 | 56,430 | 102,600 |
Lilly (Eli) | 2,000 | 165,241 | 147,200 |
Pharmaceutical Product Development* | 9,000 | 80,608 | 272,520 |
SUB-TOTAL | 771,081 | 1,189,778 | |
Metal Ores (3.1%) | |||
Alcoa | 2,000 | 73,106 | 62,600 |
Phelps Dodge | 1,330 | 76,218 | 90,267 |
SUB-TOTAL | 149,324 | 152,867 | |
Oil & Gas Production (2.1%) | |||
Noble* | 3,000 | 54,457 | 103,380 |
Publishing (2.2%) | |||
Wiley (John) & Sons, Class A | 3,400 | 74,233 | 108,120 |
Retail (2.2%) | |||
Bed Bath & Beyond* | 3,000 | 100,052 | 111,780 |
Telecommunications (2.1%) | |||
Sprint (FON Group) | 1,300 | 24,114 | 23,179 |
Trimble Navigation* | 3,000 | 66,325 | 81,060 |
SUB-TOTAL | 90,439 | 104,239 | |
Utility (4.4%) | |||
FPL Group | 2,200 | 134,107 | 140,338 |
IDACorp | 3,000 | 78,287 | 78,000 |
SUB-TOTAL | 212,394 | 218,338 | |
Total Investments (91.9%) | 3,077,952 | 4,569,557 | |
Other Assets (net of liabilities) (8.1%) | 403,782 | ||
Total Net Assets (100%) | $4,973,339 | ||
*Non-income producing |
12 | N-CSRS Semi-Annual Report May 31, 2004 |
FINANCIAL HIGHLIGHTS | SEXTANT GROWTH FUND (graphic omitted) |
Selected data per share of capital stock outstanding throughout the period: | ||||||||
Period ended | For Year Ended November 30, | |||||||
May 31, 2004 | 2003 | 2002 | 2001 | 2000 | 1999 | |||
Net asset value at beginning of period | $12.91 | $10.64 | $11.90 | $13.16 | $12.68 | $9.29 | ||
Income from investment operations | ||||||||
Net investment income | 0.01 | (0.04) | (0.05) | (0.02) | (0.07) | (0.06) | ||
Net gains or losses on securities | ||||||||
(both realized and unrealized) | (0.24) | 2.31 | (1.21) | (1.24) | 1.36 | 4.26 | ||
Total from investment operations | (0.23) | 2.27 | (1.26) | (1.26) | 1.29 | 4.20 | ||
Less distributions | ||||||||
Dividends (from net investment income) | - | - | - | - | - | (0.14) | ||
Distributions (from capital gains) | - | - | - | - | (0.81) | (0.67) | ||
Total distributions | - | - | - | - | (0.81) | (0.81) | ||
Net asset value at end of period | $12.68 | $12.91 | $10.64 | $11.90 | $13.16 | $12.68 | ||
Total Return | (1.86%) | 21.31% | (10.51)% | (9.57)% | 10.16% | 44.76% | ||
Ratios / Supplemental Data | ||||||||
Net assets ($000), end of period | $4,973 | $4,732 | $3,373 | $3,792 | $3,862 | $3,116 | ||
Ratio of expenses to average net assets* | 0.34% | 1.14% | 1.11% | 0.78% | 1.05% | 1.12% | ||
Ratio of net investment income to average net assets* | 0.04% | (0.40)% | (0.48)% | (0.18)% | (0.51)% | (0.50)% | ||
Portfolio turnover rate | 4% | 12% | 15% | 8% | 20% | 28% | ||
Brokerage Commissions as a percentage of | ||||||||
Average net assets | 0.04% | 0.05% | 0.07% | 0.04% | 0.08% | 0.09% | ||
Principal amount of transactions | 0.20% | 0.20% | 0.23% | 0.24% | 0.17% | 0.16% | ||
*For the above periods, all or a portion of the operating expenses were waived. If costs had not been waived, the resulting increase to the ratio of expenses to average monthly net accost would be .03%, .06%, .06%, .06%, .06%, and .09% respectively. |
STATEMENT OF ASSETS AND LIABILITIES |
As of May 31, 2004 | ||||
Assets | ||||
Investments (Cost $3,077,952) | $4,569,557 | |||
Cash | 398,254 | |||
Dividends receivable | 2,410 | |||
Insurance reserve premium | 1,214 | |||
Total Assets | $4,971,435 | |||
Liabilities | ||||
Other Liabilities | (1,904) | |||
Total Liabilities | (1,904) | |||
Net Assets | $4,973,339 | |||
Fund Shares Outstanding | 392,107 | |||
Analysis of Net Assets | ||||
Paid in Capital (unlimited shares authorized, without par value) | 3,489,756 | |||
Accumulated net realized loss on investments | (8,022) | |||
Unrealized net appreciation to Fund shares outstanding | 1,491,605 | |||
Net Assets applicable to Fund shares outstanding | $4,973,339 | |||
Net Asset Value, Offering and Redemption price per share | $12.68 |
(The accompanying notes are an integral part of these financial statements)
N-CSRS Semi-Annual Report May 31, 2004 | 13 |
(graphic omitted) SEXTANT GROWTH FUND | STATEMENT OF OPERATIONS |
For the Semi-Annual period ended May 31, 2004 | |||||
Investment Income | |||||
Dividend income | $18,837 | ||||
Miscellaneous income | 4 | ||||
Gross Investment Income | $18,841 | ||||
Expenses | |||||
Investment advisor and administration fee | 9,311 | ||||
Professional fees | 3,292 | ||||
Custodian fees | 1,884 | ||||
Filing and registration fees | 1,417 | ||||
Insurance | 1,227 | ||||
Printing and postage | 519 | ||||
Meetings | 329 | ||||
Other expenses | 191 | ||||
Total gross expenses | 18,170 | ||||
Less: Custodian fees waived | (1,261) | ||||
Net expenses | 16,909 | ||||
Net investment income | 1,932 | ||||
Net realized gain on investments | |||||
Proceeds from sales | 161,672 | ||||
Less: cost of securities sold based on identified cost | 138,315 | ||||
Realized net gain | 23,357 | ||||
Unrealized gain on investments | |||||
End of period | 1,491,605 | ||||
Beginning of period | 1,615,709 | ||||
Decrease in unrealized gain for the period | (124,104) | ||||
Net realized and unrealized loss on investments | (100,747) | ||||
Net decrease in net assets resulting from operations | $(98,815) |
STATEMENT OF CHANGES IN NET ASSETS |
Period ended | Year ended | |||
INCREASE IN NET ASSETS | May 31, 2004 | Nov. 30, 2003 | ||
From Operations: | ||||
Net investment income (loss) | $1,932 | $(15,357) | ||
Net realized gain on investments | 23,357 | 29,017 | ||
Net increase (decrease) in unrealized appreciation | (124,104) | 815,393 | ||
Net increase (decrease) in net assets from operations | (98,815) | 829,053 | ||
Dividends to shareowners from: | ||||
Net investment income | - | - | ||
Capital gains distributions | - | - | ||
Total Distributions | - | - | ||
Fund share transactions | ||||
Proceeds from sales of shares | 848,581 | 764,452 | ||
Value of shares issued in reinvestment of dividends | - | - | ||
848,581 | 764,452 | |||
Cost of shares redeemed | (508,503) | (234,506) | ||
Net increase in net assets from share transactions | 340,078 | 529,946 | ||
Total increase in net assets | $241,263 | $1,358,999 | ||
NET ASSETS | ||||
Beginning of period | 4,732,076 | 3,373,077 | ||
End of period | $4,973,339 | $4,732,076 | ||
Shares of the fund sold and redeemed | ||||
Number of shares sold | 64,941 | 70,509 | ||
Number of shares issued in reinvestment of dividends | - | - | ||
64,941 | 70,509 | |||
Number of shares redeemed | (39,239) | (21,038) | ||
Net increase in number of shares outstanding | 25,702 | 49,471 |
(The accompanying notes are an integral part of these financial statements)
14 | N-CSRS Semi-Annual Report May 31, 2004 |
INVESTMENTS | SEXTANT INTERNATIONAL FUND (Graphic Omitted) |
Issue | Number of Shares | Cost | Market Value | Country |
As of May 31, 2004 | ||||
Common Stocks (79.8%) | ||||
Aircraft (2.2%) | ||||
Embraer Aircraft ADR | 1,713 | $38,169 | $43,681 | Brazil |
Automotive (3.4%) | ||||
Nissan Motor ADR | 2,000 | 30,085 | 40,640 | Japan |
Desc ADR | 4,500 | 52,758 | 25,515 | Mexico |
SUB-TOTAL | 82,843 | 66,155 | ||
Banking and Financial (9.9%) | ||||
Aegon NV ADR | 2,239 | 19,736 | 27,025 | Netherlands |
AXA ADS | 3,000 | 59,784 | 61,800 | France |
Banco Bilbao Vizcaya ADS | 1,800 | 7,702 | 23,904 | Spain |
ING Groep ADS | 1,448 | 36,134 | 32,826 | Netherlands |
Toronto-Dominion Bank | 1,400 | 18,159 | 46,970 | Canada |
SUB-TOTAL | 141,515 | 192,525 | ||
Building Materials (5.5%) | ||||
CRH plc ADR | 2,000 | 23,075 | 42,660 | Ireland |
Hanson plc ADR | 1,100 | 33,055 | 41,965 | UK |
James Hardie Industries NV ADS | 1,000 | 25,560 | 21,690 | Netherlands |
SUB-TOTAL | 81,690 | 106,315 | ||
Computers (9.1%) | ||||
Business Objects ADS* | 6,000 | 19,570 | 131,640 | France |
Dassault Systems ADR | 1,000 | 28,380 | 45,750 | France |
SUB-TOTAL | 47,950 | 177,390 | ||
Consumer Products (3.8%) | ||||
Allied Domecq plc | 1,200 | 40,576 | 40,320 | UK |
Coca-Cola Femsa ADS | 1,500 | 9,750 | 32,760 | Mexico |
SUB-TOTAL | 50,326 | 73,080 | ||
Electronics (4.5%) | ||||
Epcos AG ADS | 2,500 | 57,307 | 50,525 | Germany |
Sony ADR | 1,000 | 47,517 | 36,940 | Japan |
SUB-TOTAL | 104,824 | 87,465 | ||
Hotels & Motels (1.4%) | ||||
Fairmont Hotels & Resorts | 1,100 | 24,385 | 27,071 | Canada |
Medical-Drugs (3.2%) | ||||
Glaxo SmithKline Wellcome plc ADR | 400 | 9,800 | 16,980 | UK |
Novartis AG ADR | 1,000 | 45,177 | 45,170 | Switzerland |
SUB-TOTAL | 54,977 | 62,150 | ||
Metals & Mining (4.7%) | ||||
Potash Corp. of Saskatchewan | 500 | 34,234 | 43,510 | Canada |
Rio Tinto plc ADS | 500 | 31,175 | 48,850 | UK |
SUB-TOTAL | 65,409 | 92,360 | ||
N-CSRS Semi-Annual Report May 31, 2004 | 15 |
(Graphic Omitted) SEXTANT INTERNATIONAL FUND | INVESTMENTS |
Issue | Number of Shares | Cost | Market Value | Country |
Oil & Gas Production (6.6%) | ||||
EnCana | 1,000 | $35,020 | $39,370 | Canada |
Repsol-YPF ADR | 2,000 | 43,592 | 42,320 | Spain |
Total Fina Elf ADR | 500 | 21,864 | 47,040 | France |
SUB-TOTAL | 100,476 | 128,730 | ||
Paper Products (3.2%) | ||||
Metso ADS | 2,100 | 22,802 | 25,851 | Finland |
UPM-Kymmene Oyj | 2,000 | 34,399 | 36,140 | Finland |
SUB-TOTAL | 57,201 | 61,991 | ||
Photographic Equipment (3.2%) | ||||
Canon ADR | 1,000 | 23,426 | 49,560 | Japan |
Fuji Photo Film ADR | 400 | 10,050 | 12,120 | Japan |
SUB-TOTAL | 33,476 | 61,680 |
Telecommunications (10.4%) | ||||
American Movil | 2,000 | 29,725 | 70,100 | Mexico |
BCE | 1,600 | 30,120 | 31,840 | Canada |
British Sky Broadcasting ADS* | 450 | 11,063 | 20,363 | UK |
PT Indosat ADR | 1,000 | 20,952 | 21,550 | Indonesia |
Telefonica ADS | 586 | 12,058 | 25,579 | Spain |
Telefonos de Mexico ADS | 1,000 | 35,170 | 33,640 | Mexico |
SUB-TOTAL | 139,088 | 203,072 | ||
Transportation (4.5%) | ||||
Canadian Pacific Ltd. | 1,200 | 20,338 | 26,868 | Canada |
Lan Chile ADS | 3,500 | 24,636 | 60,130 | Chile |
SUB-TOTAL | 44,974 | 86,998 | ||
Utilities-Electric (3.9%) | ||||
Enel ADR | 800 | 35,372 | 32,712 | Italy |
Enersis ADR | 4,000 | 37,125 | 24,760 | Chile |
Korea Electric Power ADS | 2,000 | 31,961 | 17,900 | Korea |
SUB-TOTAL | 104,458 | 75,372 | ||
Utilities-Gas (.3%) | ||||
Transport de Gas del Sur ADR | 1,500 | 18,807 | 6,060 | Argentina |
Total Investments (79.8%) | 1,190,568 | 1,552,095 | ||
Other Assets (net of liabilities) (20.2%) | 392,858 | |||
Total Net Assets (100%) | $1,944,953 | |||
* Non-income producing |
16 | N-CSRS Semi-Annual Report May 31, 2004 |
FINANCIAL HIGHLIGHTS | SEXTANT INTERNATIONAL FUND (graphic omitted) |
Selected data per share of capital stock outstanding throughout the period: | |||||||
For Year Ended November 30, | |||||||
Period ended | 2003 | 2002 | 2001 | 2000 | 1999 | ||
Net asset value at beginning of period | $8.05 | $6.07 | $7.24 | $8.52 | $8.32 | $6.81 | |
Income from investment operations | |||||||
Net investment income | 0.02 | 0.05 | 0.02 | 0.04 | 0.43 | 0.13 | |
Net gains or losses on securities (both realized and unrealized) | 0.02 | 1.97 | (1.16) | (1.30) | 0.20 | 1.57 | |
Total from investment operations | 0.04 | 2.02 | (1.14) | (1.26) | 0.63 | 1.70 | |
Less distributions | |||||||
Dividends (from net investment income) | - | (0.04) | (0.03) | (0.02) | (0.43) | (0.12) | |
Distributions (from capital gains) | - | - | - | - | - | (0.07) | |
Total distributions | - | (0.04) | (0.03) | (0.02) | (0.43) | (0.19) | |
Net asset value at end of period | $8.09 | $8.05 | $6.07 | $7.24 | $8.52 | $8.32 | |
Total return | 0.50% | 33.23% | (15.80)% | (14.80)% | 7.62% | 24.90% | |
Ratios/supplemental data | |||||||
Net assets ($000), end of period | $1,945 | $1,650 | $1,150 | $1,445 | $1,736 | $1,162 | |
Ratio of expenses to average net assets* | 0.51% | 1.10% | 1.17% | 1.17% | 1.20% | 0.72% | |
Ratio of net investment income to average net assets* | 0.25% | 0.75% | 0.20% | 0.34% | 4.74% | 1.74% | |
Portfolio turnover rate | 6% | 4% | 4% | 6% | 11% | 17% | |
Brokerage Commissions as a percentage of | |||||||
Average net assets | 0.03% | 0.10% | 0.03% | 0.06% | 0.11% | 0.11% | |
Principal amount of transactions | 0.21% | 0.45% | 0.37% | 0.40% | 0.26% | 0.34% | |
*For the above periods, all or a portion of the operating expenses were waived. If costs had not been waived, the resulting increase to the ratio of expenses to average monthly net accost would be .06%, .19%, .19%, .20%, .16%, and .26% respectively. |
STATEMENT OF ASSETS AND LIABILITIES |
As of May 31, 2004 | ||||
Assets | ||||
Investments (Cost $1,190,568) | $1,552,095 | |||
Cash | 389,020 | |||
Dividends Receivable | 3,114 | |||
Total Assets | $1,944,229 | |||
Liabilities | ||||
Other Liabilities | (724) | |||
Total Liabilities | (724) | |||
Net Assets | $1,944,953 | |||
Fund Shares Outstanding | 240,523 | |||
Analysis of Net Assets | ||||
Paid in Capital (unlimited shares authorized, without par value) | 1,736,607 | |||
Accumulated net realized loss on investments | (153,180) | |||
Unrealized net appreciation to Fund shares outstanding | 361,526 | |||
Net Assets applicable to Fund shares outstanding | $1,944,953 | |||
Net Asset Value, Offering and Redemption price per share | $8.09 |
(The accompanying notes are an integral part of these financial statements)
N-CSRS Semi-Annual Report May 31, 2004 | 17 |
(Graphic Omitted) SEXTANT INTERNATIONAL FUND | STATEMENT OF OPERATIONS |
For the Semi-Annual period ended May 31, 2004 | ||||
Investment Income | ||||
Dividend income (net Foreign Tax of $2,265) | $14,730 | |||
Miscellaneous income | 25 | |||
Gross investment income | $14,755 | |||
Expenses | ||||
Investment advisor and administration fee | 6,738 | |||
Custodian fees | 1,476 | |||
Filing and registration fees | 1,132 | |||
Professional fees | 1,068 | |||
Other expenses | 492 | |||
Printing and postage | 227 | |||
Total gross expenses | 11,133 | |||
Less: Custodian fees waived | (1,188) | |||
Net expenses | 9,945 | |||
Net investment income | 4,810 | |||
Net realized gain on investments | ||||
Proceeds from sales | 98,295 | |||
Less: cost of securities sold based on identified cost | 68,126 | |||
Realized net gain | 30,169 | |||
Unrealized gain on investments | ||||
End of period | 361,526 | |||
Beginning of period | 413,043 | |||
Decrease in unrealized gain for the period | (51,517) | |||
Net realized and unrealized loss on investments | (21,348) | |||
Net decrease in net assets resulting from operations | $(16,538) |
STATEMENT OF CHANGES IN NET ASSETS |
Period ended | Year ended | ||
May 31, 2004 | Nov. 30, 2003 | ||
INCREASE IN NET ASSETS | |||
From Operations: | |||
Net investment income | $4,810 | $9,508 | |
Net realized gain (loss) on investments | 30,169 | (30,670) | |
Net increase (decrease) in unrealized appreciation | (51,517) | 418,990 | |
Net increase (decrease) in net assets from operations | (16,538) | 397,828 | |
Dividends to shareowners from: | |||
Net investment income | - | (7,547) | |
Capital gains distributions | - | - | |
Total Distributions | - | (7,547) | |
Fund share transactions | |||
Proceeds from sales of shares | 635,380 | 222,528 | |
Value of shares issued in reinvestment of dividends | - | 7,529 | |
635,380 | 230,057 | ||
Cost of shares redeemed | (323,520) | (121,076) | |
Net increase in net assets from share transactions | 311,860 | 108,981 | |
Total increase in net assets | $295,322 | $499,262 | |
NET ASSETS | |||
Beginning of period | 1,649,631 | 1,150,369 | |
End of period | $1,944,953 | $1,649,631 | |
Shares of the fund sold and redeemed | |||
Number of shares sold | 73,487 | 32,286 | |
Number of shares issued in reinvestment of dividends | - | 935 | |
73,487 | 33,221 | ||
Number of shares redeemed | (37,917) | (17,938) | |
Net increase in number of shares outstanding | 35,570 | 15,283 |
(The accompanying notes are an integral part of these financial statements)
18 | N-CSRS Semi-Annual Report May 31, 2004 |
ADDITIONAL PERFORMANCE INFORMATION |
Average Annual Returns (as of 6/30/2004, per NASD requirement) | ||||
1 year | 5 years | 10 years | ||
(Graphic Omitted) | Sextant Growth Fund | 12.26% | 1.23% | 10.40% |
Sextant International Fund | 28.19% | 3.84% | 7.22%* | |
Sextant Short-Term Bond Fund | 0.52% | 5.25% | 5.26%* | |
Sextant Bond Income Fund | -2.95% | 6.98% | 6.57% |
| *Since inception, 9/28/95 |
Performance data quoted in this report represents past performance, is before any taxes that may be payable by investors, and is no guarantee of future performance. The investment return and principal value of investments in the Funds fluctuate daily, and an investor’s shares when redeemed may be worth more or less than the original cost. Morningstar, Inc. is an independent fund performance monitor. The average total return for a category is determined by Saturna Capital, utilizing the Morningstar database. Results are shown for twelve months in this report because of the Sextant Funds performance fee advisory structure.
NOTES TO FINANCIAL STATEMENTS |
Organization
Saturna Investment Trust (the “Trust”) was established under Washington State Law as a Business Trust on February 20, 1987. The Trust is registered as a no-load, open-end series investment company under the Investment Company Act of 1940, as amended. Five portfolio series have been created to date: Sextant Short-Term Bond Fund, Sextant Bond Income Fund, Sextant Growth Fund, and Sextant International Fund (the “Funds”), and Idaho Tax-Exempt Fund, distributed through a separate prospectus and the results of which are contained in a separate report.
Unaudited Information
The information in this interim report has not been subject to independent audit.
Significant Accounting Policies
The following is a summary of the significant accounting policies followed by the Funds.
Investments:
Securities traded on a national exchange or the national over-the-counter market system are valued at the last sale price or, in the absence of any sale on that date, the closing bid price. Other securities traded in the over-the-counter market are valued at the last bid price. Fixed-income securities for which there are no publicly available market quotations are valued using a matrix based on maturity, quality, yield and similar factors, which are compared periodically to multiple dealer bids and adjusted by the adviser under policies established by the Trustees.
The cost of securities is the same for accounting and Federal income tax purposes. Securities transactions are recorded on trade date. Realized gains and losses are recorded on the identified cost basis.
Income and Expenses:
Interest income is reduced by the amortization of bond premiums, on a constant yield-to-maturity basis from purchase date to maturity or call, as appropriate. Interest income is increased by accretion for bonds underwritten as original issue discounts and for bonds purchased at market discounts. Cash dividends from equity securities are recorded as income on the ex-dividend date.
Expenses incurred by the Trust on behalf of the Funds (e.g., professional fees) are allocated to the Funds and the other fund of the Trust on the basis of relative daily average net assets. The Adviser has agreed to certain limits on expenses, as described below.
Income taxes:
The Funds’ policy is to continue to comply with the requirements of the Internal Revenue Code that are applicable to regulated investment companies and to distribute all their income to shareowners. Therefore, no provision for Federal income taxes is required.
N-CSRS Semi-Annual May 2004 | 19 |
Dividends and distributions to shareowners:
Dividends and distributions to shareowners, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. For Short-Term Bond and Bond Income, dividends are paid daily and distributed on the last business day of each month. For Growth and International, dividends are payable at the end of each November. Shareowners electing to reinvest dividends and distributions purchase additional shares at the net asset value on the payable date.
Use of estimates:
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.
Transactions with Affiliated Persons
Under a contract approved by shareowners on September 28, 1995, Saturna Capital Corporation provides investment advisory services, plus certain administrative and shareowner services to the Funds. Each of the Funds pays the Adviser a base Investment Advisory and Administrative Services Fee of .60% of average net assets per annum, payable monthly. The base Advisory Fee is subject to adjustment up or down depending on the investment performance of the Fund relative to a specified Morningstar mutual fund category average. The Adviser has voluntarily undertaken to limit expenses of Sextant Short-Term Bond Fund to 0.60% through March 31, 2005 and waives its investment advisory and administrative fee as to either Sextant bond fund completely so long as assets of that Fund are less than $2 million.
For the six months ended May 31, 2004, Sextant Bond Income Fund and Sextant Growth Fund incurred advisory expenses of $4,681 and $9,311, respectively. Sextant International Fund incurred advisory expenses of $6,738 and Sextant Short-Term Bond Fund incurred advisory expenses of $7,716.
In accordance with the expense waiver noted above, for the six months ended May 31, 2004, Saturna Capital waived $5,444 of the Sextant Short-Term Bond Fund advisory fee.
Saturna Brokerage Services, Inc. (a broker-dealer subsidiary of Saturna Capital) acts as underwriter for the Trust, without compensation. The Funds’ custodian, National City Bank Indiana, waived its fees for earnings credits.
Saturna Brokerage Services, Inc. is the primary stockbroker used to effect portfolio transactions for Sextant Growth Fund and Sextant International Fund, and was paid $1,904 and $533, respectively in commissions at discount rates during the six months ended May 31, 2004.
One trustee is also a director and officer of Saturna Capital Corporation. The unaffiliated trustees receive a fee of $100 per meeting attended, and in the six months ending May 31, 2004, such fees totalled $800 for the Trust.
Dividends
As of May 31, 2004, the tax composition of dividends are as follows:
Short-Term Bond Income
Income | Income Per Share | Long-term Capital Gains | Long-term Capital Gains Per Share | |
5/31/04 | $45,575 | $0.10 | $ - | $ - |
11/30/03 | $101,962 | $0.23 | $ - | $ - |
Bond Income
Income | Income Per Share | Long-term Capital Gains | Long-term Capital Gains Per Share | |
5/31/04 | $53,467 | $0.11 | $ - | $ - |
11/30/03 | $97,200 | $0.22 | $ - | $ - |
Growth
Income | Income Per Share | Long-term Capital Gains | Long-term Capital Gains Per Share | |
5/31/04 | $0 | $ - | $ - | $ - |
11/30/03 | $0 | $ - | $ - | $ - |
International
Income | Income Per Share | Long-term Capital Gains | Long-term Capital Gains Per Share | |
5/31/04 | $0 | $0.10 | $ - | $ - |
11/30/03 | $7,547 | $0.037 | $ - | $ - |
Investments
At May 31,2004, the net unrealized gain on investments for Bond Income, Short-Term Bond, Growth and International were $110,771, $19,501, $1,491,605, and $361,526, which consist of unrealized gains of $127,685, $40,107, $1,658,294, and $508,288, and unrealized losses of $16,914, $20,606, $166,689, and $146,762, respectively.
During the six months ended May 31,2004, Bond Income purchased $191,143 of securities and sold/matured $0. Comparable figures for Short-Term Bond are $427,698 purchased and $160,000 sold/matured; for Growth $777,941 and $161,671; and for International, $156,261 and $98,295.
20 | N-CSRS Semi-Annual Report May 31, 2004 |
Web: http://www.saturna.com
(logo) Saturna Capital
1-800/SATURNA This report is issued for the information of the shareoweners of the Fund. It is not authorized for distribution to prospective investors unless it is accompanied or preceded by an effective prospectus relating to the securities of the Fund. Idaho Tax-Exempt Fund is a series of Saturna Investment Trust.
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N-CSRS Semi-Annual Report May 31, 2004 | 21 |
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22 | N-CSRS Semi-Annual Report May 31, 2004 |
REPORT TO SHAREHOLDERS
Idaho Tax-Exempt Fund
May 31, 2004 Report
Fellow Shareowners:
Idaho Tax Exempt Fund provided a total return of –1.32% for six months and -1.48% for twelve months ending May 31, 2004. Total Fund assets declined slightly to $7.4 from $7.5 million.
In the last six months, the economic stimulus produced by two federal tax cuts and accommodative central bank policy has finally produced solid domestic economic and employment growth. Central bankers and legislators have ended stimulus policies. The central bank has increased the Federal Funds rate for the first time in four years to 1.25%, the same level as in May 2003.
We thought shareholders would appreciate a perspective on Fund performance in past rising rate environments. During major rate climbs in 1994 and 1999, the yield of Bloomberg ten-year AAA General Obligations index rose 134 and 95 basis points respectively. This coincided with Fund returns of –3.27%, –3.44% respectively. In the last year, this Bloomberg index yield is up 83 basis points and Fund’s total return was –1.48%. Had we not kept the average maturity shorter than normal, total returns might have exceeded –3.00%.
We look forward to higher rates as an opportunity to buy higher yielding bonds and extend the dollar weighted average maturity of the Fund from the current 5.5 years towards a more normal 10 years over the next 24 months.
Idaho’s economy and population are growing again. While never really a serious threat, the pressure on Idaho municipal issuer’s credit quality has abated with the economic recovery. Idaho’s pro-business policies, tightly managed budget and conservative government give the State a strong competitive edge.
We invite you to review the advantages of the Idaho Tax-Exempt Fund, including low expenses, income free from Idaho and federal income taxes (including federal alternative minimum tax), a high-quality diversified bond portfolio and professional supervision. Please call us for details on how to check out your new on-line Internet account access. We welcome your suggestions. Only with your help can we be certain that we are meeting your investment needs — our primary objective.
Nicholas Kaiser, | Phelps McIlvaine, |
President | Vice President, Portfolio Manager |
July 15, 2004
Performance data quoted in this report represents past | Average Annual Total Returns | |||
performance and is no guarantee of future performance. The investment return and principal value of investments | One Year | 5 Years | 10 Years | |
in the Fund fluctuate daily, and an investor's shares when redeemed may be worth more or less than the original cost. | -0.91% | +4.97% | +5.47% | |
Performance data for years ended 6/30/2004. |
N-CSRS Semi-Annual Report May 31, 2004 | 23 |
INVESTMENTS | IDAHO TAX-EXEMPT FUND |
Rating* | Issuer | Coupon/Maturity | Face Amount | Market Value |
Airport Parking (2.9%) | ||||
AAA | Boise City Airport Revenue COP | 5.40% due 8/1/2011 | $215,000 | $217,163 |
Electric Power (2.1%) | ||||
AAA | Idaho Falls Electric Revenue | 6.75% due 4/1/2019 | 155,000 | 157,189 |
Financial Services (3.7%) | ||||
AAA | Boise City General Fund Revenue | 5.20% due 12/1/2017 | 160,000 | 167,408 |
AAA | " | 5.25% due 12/1/2018 | 100,000 | 104,576 |
SUB-TOTAL | 260,000 | 271,984 | ||
General Obligations (49.3%) | ||||
AA- | Ada & Canyon JSD #2 Meridian | 5.50% due 7/30/2011 | 175,000 | 192,598 |
AA- | " | 5.50% due 7/30/2015 | 100,000 | 110,271 |
AAA | Adams County GO | 5.00% due 8/1/2014 | 110,000 | 114,167 |
A+ | Bannock County GO Jail | 5.05% due 9/1/2012 | 95,000 | 98,066 |
A | Bannock County SD #25 Pocatello | 4.90% due 8/1/2009 | 90,000 | 94,502 |
AAA | " | 5.20% due 8/1/2014 | 100,000 | 105,049 |
A | " | 5.25% due 8/1/2016 | 110,000 | 115,080 |
AAA | Bingham County SCD #55 Blackfoot | 4.65% due 8/1/2017 | 285,000 | 288,501 |
AA- | Boise City ISD UTGO 1996 | 5.50% due 7/30/2016 | 150,000 | 157,575 |
AA | Boise City ISD-Ref Ada & Boise | 5.00% due 8/15/2014 | 100,000 | 107,066 |
A | Boise County SD #73 Horshoe Bend | 5.15% due 7/31/2010 | 125,000 | 131,109 |
AAA | Boundary County SCD 101 | 4.05% due 8/1/20115 | 200,000 | 194,988 |
AAA | " | 5.10% due 8/1/2022 | 130,000 | 134,804 |
AAA | Caldwell GO | 5.30% due 5/15/2014 | 150,000 | 160,462 |
AAA | Canyon County SD #132 | 5.40% due 7/30/2011 | 195,000 | 197,471 |
AAA | Canyon County SD #134 Middleton | 4.65% due 7/31/2016 | 170,000 | 173,644 |
A | Canyon County SD #135 Notus Series 1994 | 6.00% due 8/1/2007 | 50,000 | 49,875 |
AAA | Canyon County SCD #139 Valley View | 4.05% due 8/15/2016 | 80,000 | 76,572 |
AAA | Cassia, Twin Falls JSD #151 | 5.375% due 8/1/2013 | 85,000 | 89,391 |
AAA | " | 5.375% due 8/1/2015 | 75,000 | 78,815 |
AAA | Clark County SD #161 Dubois | 5.00% due 8/1/2015 | 270,000 | 281,352 |
AA | Idaho Housing & Finance Assoc. | 4.80% due 6/1/2017 | 100,000 | 102,886 |
AAA | Kootenai County SD #273 | 5.00% due 7/30/2016 | 70,000 | 70,736 |
AAA | Kuna Sch/Comm Library Dist. | 4.90% due 8/1/2013 | 75,000 | 78,037 |
AAA | Lemhi County GO | 4.20% due 8/1/2015 | 100,000 | 98,341 |
AAA | Meridian Free Library Dist. | 5.00% due 8/1/2015 | 200,000 | 206,121 |
AAA | Power & Cassia Cos. JSD #381 | 5.25% due 8/1/2012 | 60,000 | 64,489 |
AAA | Teton County SD #401 GO | 5.50% due 8/1/2012 | 75,000 | 79,207 |
SUB-TOTAL | 3,525,000 | 3,651,175 |
24 | N-CSRS Semi-Annual Report May 31, 2004 |
IDAHO TAX-EXEMPT FUND | INVESTMENTS |
Rating* | Issuer | Coupon/Maturity | Face Amount | Market Value |
Housing (3.2%) | ||||
AA | Idaho Housing Authority | |||
Single Fam Mortgage, B-1 | 6.85% due 7/1/2012 | $30,000 | $29,903 | |
AA | Idaho Housing Authority | |||
Refunding Series A | 6.15% due 7/1/2024 | 65,000 | 65,703 | |
AA+ | Idaho Housing Authority | |||
Single Fam Mort Mezz-E-1 | 6.60% due 7/1/2011 | 15,000 | 15,050 | |
AAA | Valley County Jail Project Ref. | 4.70% due 8/1/2014 | 125,000 | 128,549 |
SUB-TOTAL | 235,000 | 239,205 | ||
Medical/Hospitals (4%) | ||||
AAA | Idaho Health Facility Auth. | |||
Holy Cross | 5.25% due 12/1/2014 | 110,000 | 114,850 | |
AAA | Idaho Health Facility Auth. Corp. | |||
Holy Cross Sys Corp Rev | 5.00% due 12/1/2022 | 115,000 | 114,046 | |
AAA | Idaho Health Facility | |||
Holy Cross Rev Refunding | 5.25% due 12/1/2011 | 65,000 | 68,443 | |
SUB-TOTAL | 290,000 | 297,339 | ||
Real Estate (6.4%) | ||||
AAA | Boise City Urb Ren Agy Pk Rev & RA | 5.00% due 9/1/2012 | 65,000 | 68,463 |
AAA | Idaho State Building Association | 5.05% due 9/1/2018 | 95,000 | 98,275 |
AAA | Idaho State Building Authority | 5.00% due 9/1/2021 | 100,000 | 100,029 |
A | Jerome Urban Renewal District | 5.40% due 9/1/2013 | 200,000 | 205,272 |
SUB-TOTAL | 460,000 | 472,039 | ||
Roads (1.2%) | ||||
A | Payette L.I.D. #89-1 | 7.60 due 5/1/2005 | 30,000 | 30,085 |
A | Post Falls L.I.D. #91-4 | 7.95% due 4/15/2005 | 20,000 | 20,079 |
A | " | 7.95% due 4/15/2006 | 20,000 | 20,062 |
A | " | 7.95% due 4/15/2007 | 20,000 | 20,119 |
SUB-TOTAL | 90,000 | 90,345 | ||
State Education (12.1%) | ||||
AAA | Boise State University Rev-Ref | |||
Student Univ. & Housing Sys. | 5.10% due 4/1/2014 | 300,000 | 316,041 | |
AAA | Idaho State Building Authority | 4.00% due 9/1/2016 | 105,000 | 101,124 |
AAA | Idaho State University | |||
Student Fee Revenue | 4.90% due 4/1/2017 | 150,000 | 152,199 | |
AAA | University of Idaho | |||
Student Fee Revenue- Elmwood Apts. | 5.25% due 4/1/2014 | 120,000 | 128,628 | |
AAA | University of Idaho | |||
Student Fee Revenue | 5.60% due 4/1/2015 | 185,000 | 198,018 | |
SUB-TOTAL | 860,000 | 896,010 | ||
N-CSRS Semi-Annual Report May 31, 2004 | 25 |
Rating* | Issuer | Coupon/Maturity | Face Amount | Market Value |
Sewer (3.6%) | ||||
AAA | Moscow Sewer Revenue | 4.125% due 11/1/2018 | $165,000 | $170,499 |
A | Troy, Sewer Revenue | 7.70% due 2/1/2005 | 15,000 | 15,025 |
" | 7.80% due 2/1/2006 | 15,000 | 15,056 | |
" | 7.90% due 2/1/2007 | 15,000 | 15,088 | |
" | 8.00% due 2/1/2008 | 15,000 | 15,104 | |
" | 8.00% due 2/1/2009 | 20,000 | 20,146 | |
" | 8.00% due 2/1/2010 | 20,000 | 20,172 | |
SUB-TOTAL | 265,000 | 271,090 | ||
Urban Renewal (4.8%) | ||||
AAA | Boise City Urban Renewal | 5.875 due 8/15/2025 | 190,000 | 200,199 |
AA | Pocatello Development Authority | 5.15% due 3/1/2011 | 150,000 | 155,763 |
SUB-TOTAL | 340,000 | 352,198 | ||
Water Supply (4.8%) | ||||
AAA | Ketchum Water Revenue | 4.75% due 9/1/2013 | 60,000 | 61,426 |
AAA | McCall Water Rev., Series 1994 | 6.25% due 9/1/2008 | 200,000 | 216,214 |
AAA | McCall Water Revenue | 6.375% due 9/1/2014 | 70,000 | 74,558 |
SUB-TOTAL | 330,000 | 352,198 | ||
Total Investments (98.1%) | (Cost=7,115,600) | 7,025,000 | 7,271,699 | |
Other Assets (net of liabilities) (1.9%) | 137,232 | |||
Total Net Assets (100%) | $7,408,931 | |||
* These unaudited bond ratings reflect the adviser's current rating of each bond, as determined using Standard & Poor's and Moody's ratings. |
26 | N-CSRS Semi-Annual Report May 31, 2004 |
IDAHO TAX-EXEMPT FUND | FINANCIAL HIGHLIGHTS |
For Year ended November 30, | |||||||
Selected data per share of capital stock outstanding throughout the period: | Period ended | 2003 | 2002 | 2001 | 2000 | 1999 | |
Net asset value at beginning of period | |||||||
Income from investment operations | $5.46 | $5.37 | $5.28 | $5.13 | $5.01 | $5.36 | |
Net investment income | 0.10 | 0.21 | 0.22 | 0.22 | 0.23 | 0.24 | |
Net gains or losses on securities (both realized and unrealized) | (0.17) | 0.09 | 0.09 | 0.15 | 0.12 | (0.35) | |
Total From investment operations | (0.07) | 0.30 | 0.31 | 0.37 | 0.35 | (0.11) | |
Less Distributions | |||||||
Dividends (from net investment income) | (0.10) | (0.21) | (0.22) | (0.22) | (0.23) | (0.24) | |
Distributions (from capital gains) | - | - | - | - | - | - | |
Total Distributions | (0.10) | (0.21) | (0.22) | (0.22) | (0.23) | (0.24) | |
Net asset value at end of period | $5.29 | $5.46 | $5.37 | $5.28 | $5.13 | $5.01 | |
Total Return | (1.32)% | 5.40% | 5.98% | 7.40% | 7.28% | (2.18)% | |
Ratios/Supplemental data | |||||||
Net assets ($000), end of period | $7,409 | $7,692 | $6,943 | $6,650 | $5,628 | $6,151 | |
Ratio of expenses to average net assets* | 0.43% | 0.85% | 0.80% | 0.79% | 0.80% | 0.80% | |
Ratio of net investment income to average net assets | 1.84% | 3.78% | 4.14% | 4.21% | 4.69% | 4.55% | |
Portfolio turnover rate | 6% | 6% | 11% | 13% | 14% | 13% | |
*For each of the above periods, 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 .01%, .03, .08%, .11%, .14%, and .05%, respectively. |
STATEMENT OF ASSETS AND LIABILITIES |
As of May 31, 2004 | ||||
Assets | ||||
Bond investments (Cost $7,115,600) | $7,271,699 | |||
Cash | 25,465 | |||
Interest receivable | 111,188 | |||
Insurance reserve premium | 2,473 | |||
Total Assets | $7,410,825 | |||
Liabilities | ||||
Other Liabilities | 1,894 | |||
Total Liabilities | 1,894 | |||
Net Assets | $7,408,931 | |||
Fund Shares Outstanding | 1,399,735 | |||
Analysis of Net Assets | ||||
Paid in capital (unlimited shares authorized, without par value) | 7,275,446 | |||
Accumulated net realized loss | (22,614) | |||
Unrealized net appreciation on investments | 156,099 | |||
Net Assets applicable to Fund shares outstanding | $7,408,931 | |||
Net Asset Value, Offering and Redemption price per share | $5.29 |
(The accompanying notes are an integral part of these financial statements)
N-CSRS Semi-Annual Report May 31, 2004 | 27 |
STATEMENT OF OPERATIONS | IDAHO TAX-EXEMPT FUND |
For the period ended May 31, 2004 | |||
Investment income | |||
Interest income | $185,622 | ||
Amortization of bond premium | (10,140) | ||
Accretion | 442 | ||
Gross investment income | $175,924 | ||
Expenses | |||
Investment adviser and administration fee | 19,515 | ||
Professional fees | 5,951 | ||
Shareholder service fee | 2,144 | ||
Insurance | 2,024 | ||
Custodian fees | 1,256 | ||
Printing and postage | 1,210 | ||
Meetings | 955 | ||
Filing and registration fees | 474 | ||
Other expenses | 337 | ||
Total gross expenses | 33,866 | ||
Less: custodian fees waived | (801) | ||
Less: adviser fees waived | - | ||
Net expenses | 33,065 | ||
Net investment income | 142,859 | ||
Net realized loss on investments | |||
Proceeds from sales | 444,560 | ||
Less: cost of securities sold (based on identified cost) | 464,174 | ||
Realized net loss | (19,614) | ||
Unrealized gain on investments | |||
End of period | 156,099 | ||
Beginning of period | 370,360 | ||
Decrease in unrealized gain for the period | (214,261) | ||
Net realized and unrealized loss | (233,875) | ||
Net decrease in net assets resulting from operations | $(91,016) |
STATEMENT OF CHANGES IN NET ASSETS |
Period ended | Year ended | |
May 31, 2004 | Nov. 30, 2003 | |
INCREASE (DECREASE) IN NET ASSETS | ||
From Operations | ||
Net investment income | $142,859 | $276,090 |
Net realized gain (loss) on investments | (19,614) | 10,663 |
Net increase (decrease) in unealized appreciation | (214,261) | 94,455 |
Net increase (decrease) in net assets from operations | (91,016) | 381,208 |
Dividends to shareowners from | ||
Net investment income | (143,265) | (276,090) |
From fund share transactions | ||
Proceeds from sales of shares | 421,337 | 1,140,412 |
Value of shares issued in reinvestment of dividends | 113,567 | 216,574 |
534,904 | 1,356,986 | |
Cost of shares redeemed | (583,409) | (713,555) |
Net increase (decrease) in net assets from share transactions | (48,505) | 643,431 |
Total increase (decrease) in net assets | $(282,786) | $748,549 |
NET ASSETS | ||
Beginning of period | 7,691,717 | 6,943,168 |
End of period | $7,408,931 | $7,691,717 |
Shares of the fund sold and redeemed | ||
Number of shares sold | 77,333 | 209,181 |
Number of shares issued in reinvestment of dividends | 20,924 | 39,726 |
98,257 | 248,907 | |
Number of shares redeemed | (108,378) | (131,040) |
Net increase (decrease) in number of shares outstanding | (10,121) | 117,867 |
(The accompanying notes are an integral part of these financial statements)
28 | N-CSRS Semi-Annual Report May 31, 2004 |
IDAHO TAX-EXEMPT FUND | NOTES TO FINANCIAL STATEMENTS |
Organization Unaudited Information Significant Accounting Policies Investments: The cost of securities is the same for accounting and Federal income tax purposes. Securities transactions are recorded on trade date. Realized gains and losses are recorded on the identified cost basis. Income and Expenses: Interest income is increased by accretion for bonds underwritten as original issue discounts and for bonds purchased at market discounts. Income taxes: Dividends and distributions to shareowners: |
Transactions with Affiliated Persons Dividends Investments During the six months ended May 31, 2004, the Fund purchased $494,085 of securities and sold/matured $444,560 of securities. |
N-CSRS Semi-Annual Report May 31, 2004 | 29 |
Web: http://www.saturna.com
(logo) Saturna Capital
1-800/SATURNA
This report is issued for the information of the shareowners of the Fund. It is not authorized for distribution to prospective investors unless it is accompanied or preceded by an effective prospectus relating to the securities of the Fund. Idaho Tax-Exempt Fund is a series of Saturna Investment Trust
| (graphic omitted)I D A H O |
30 | N-CSRS Semi-Annual Report May 31, 2004 |
Submission of Matters to a Vote of Securities Holders
Not applicable.
Controls and Procedures
Internal control over financial reporting is under the supervision of the the principal executive and financial officers. On July 6, 2004, Mr. Nicholas Kaiser (President) and Mr. Christopher Fankhauser (Treasurer), reviewed the internal control procedures for Saturna Investment Trust and found them reasonable and adequate.
Exhibits
Exhibits included with this filing:
(a) Code of Ethics.
(b) Certifications.
(1) Nicholas Kaiser, President, Saturna Investment Trust
(2) Christopher Fankhauser, Treasurer, Saturna Investment Trust
N-CSRS Semi-Annual Report May 31, 2004 | 31 |
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SATURNA INVESTMENT TRUST
By:
/s/ Nicholas Kaiser
Nicholas Kaiser, President
Date: July 21, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By:
/s/ Nicholas Kaiser
Nicholas Kaiser, President
Date: July 21, 2004
By:
/s/ Christopher Fankhouser
Christopher Fankhouser, Treasurer
Date: July 21, 2004
32 | N-CSRS Semi-Annual Report May 31, 2004 |