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Established in 1989, Saturna Capital Corporation is an investment adviser registered with the Securities and Exchange Commission (“SEC”). Our subsidiary Saturna Brokerage Services, Inc. (“SBS”) is a broker-dealer also registered with the SEC, and a member of the Financial Industry Regulatory Authority (“FINRA”). Our subsidiary Saturna Trust Company (“STC”) is regulated by the Nevada Financial Institutions Division. Operating together as “Saturna” or “our firm,” this is a summary of our relationship with our US retail clients or “you.” Our services to you are provided by our FINRA-licensed professionals. Mrs. Jane Carten is president and CEO of Saturna and with her immediate family owns over 80% of Saturna.
Brokerage and investment advisory services and fees differ, and it is important for retail investors to understand the differences. Free and simple tools are available to research firms and financial professionals at Investor.gov/CRS, which also provides educational materials about broker-dealers, investment advisers, and investing.
What investment services and advice can Saturna provide me?
Saturna offers advisory, retirement, and brokerage services to retail investors. Our services and advice are built around the fiduciary standard owed to clients as an investment adviser and its paramount duties of care and loyalty. Saturna provides extensive information and disclosures about its investment services at www.saturna.com or by calling 1-800-SATURNA.
Saturna serves as investment adviser and administrator for public mutual funds (the “Funds”) offering several distinct investment strategies: Amana Mutual Funds, Sextant Mutual Funds, Saturna Sustainable Funds, and the Idaho Tax-Exempt Fund. These proprietary Funds are supervised by independent trustees, and advised, administered, serviced by Saturna. Distributed by SBS, the Funds are available directly without charge from Saturna financial professionals and online, and from dozens of unaffiliated investment dealers (platforms). Please see each Fund’s Prospectus and other reports to shareowners for details. Although this summary refers to Saturna’s affiliated Funds, it should not be considered an offering document.
INVESTMENT MANAGEMENT ACCOUNTS
Separately, as an investment adviser, Saturna offers investment management accounts (“IMA”) to private retail investors such as individuals, trusts, and pooled investment funds. Detailed information relating to private retail investment management accounts is available in Saturna’s Form ADV Part 2.
As a trust company, Saturna sponsors a variety of IRS approved retirement plans, including Individual Retirement Accounts, Health Savings Accounts, Educational Savings Accounts, and employer plans such as 401(k)s. Plan participants generally invest in the Funds, unaffiliated mutual funds purchased directly, or self-directed brokerage accounts. Saturna’s financial professionals provide free advice about retirement, various plans, and investment options including our Funds to participants and employers. For details, see www.saturna.com
As a broker-dealer, Saturna provides trading, custody, and cash management services for both our advisory and client-directed accounts via Pershing LLC, a division of the Bank of New York. Accounts paying for advisory services do not pay brokerage commissions. Saturna does not make recommendations to client-directed brokerage accounts, which pay commissions on trades. For details, see www.saturna.com/sbs.
Both mutual funds and private accounts are managed by a qualified portfolio manager selected by Saturna’s president and responsible to you. It is the portfolio manager’s responsibility to review accounts and implement investment decisions that are consistent with the investment objectives of the account. The portfolio manager, often with a deputy, continuously reviews the appropriateness of portfolio holdings in light of the client account’s investment objectives, guidelines, restrictions and changes in market conditions. Each quarter, senior Saturna staff assesses each managed account as an additional check to ensure obligations to clients are being met. To help clients monitor their account, Saturna provides confirmations with transactions, monthly statements and on-line access. Saturna maintains its own legal and compliance staff, and is subject to various independent audits and regulatory procedures.
Saturna advises clients on a wide variety on investment plans and objectives. Although we offer advice regarding the Funds, our advice is not limited to proprietary products or a limited menu or types of investments. The scope of each client relationship is governed by a contract, which details the terms of the relationship, including Saturna’s acceptance of discretionary authority. You have the option of purchasing Saturna’s investment services through brokers or agents not affiliated with us.
SBS provides retail clients with execution services on a non-recommended basis and custody through a fully-disclosed relationship with Pershing, LLC. Under this model, you are the decision maker regarding the purchase or sale of investments.
What fees will I pay?
Saturna’s annual fee for IMAs is $2,500 plus 0.5% of the first $5 million and 0.4% on amounts over $5 million – with a minimum annual fee of $5,000. Investment fees for all Saturna’s plans, which include the management fee, are summarized in the table. These plans have various minimum asset requirements, and fees vary with the size of your account or Fund. Fees exclude charges for special services. We believe this fee structure is reasonable in light of the services provided and, as such, Saturna does not generally negotiate fees.
Fees are computed and deducted from investment management accounts after the end of each quarter, determined by your account’s value at the end of the quarter. Either party can cancel contracts at any time without penalty. The advisory agreement authorizes us to deduct advisory fees directly from your custodial account. When the agreement covers more than one related account, assets are combined when calculating the annual advisory fee rate.
There are no brokerage commissions for advisory accounts when securities are traded through SBS. When an advisory client selects SBS as their broker, the single asset-based advisory fee includes investment management, trading, and custody (“wrap fee”). For details, check Saturna’s Form ADV Part 2A – Appendix 1, Wrap Free Program brochure.
Saturna, when appropriate, will invest advisory client assets in our Funds, for which Saturna and SBS collect management and distribution fees. To mitigate this conflict of interest, we exclude investments in the Funds when computing advisory fees. Investments in non-affiliated mutual funds for which we receive a distribution fee or other payment are likewise excluded.
Our interests as brokers are not always the same as yours. We are paid both by you and, sometimes, by people who compensate us based on your investment choices. The commissions we charge to customers vary by type of service. SBS accounts are potentially subject to other fees, including: inactive account, transfer, reorganization, wire, late payment extension, dividend reinvestment, special custody, mutual fund exchanges, and safekeeping. Details available at www.saturna.com/sbs/commission-schedule.
You will pay fees and costs whether you make or lose money on your investments. Fees and costs will reduce any amount of money you make on your investments over time. Please make sure you understand what fees and costs you are paying.
What are our legal obligations to you when acting as your investment adviser? How else does Saturna make money and what conflicts of interest do we have?
We do not provide recommendations as your broker-dealer. When we act as your investment adviser, we have to act in your best interest and not put our interests ahead of yours. At the same time, the way we make money creates some conflicts with your interests.
Almost all Saturna’s revenue derives from providing investment advisory and related administrative services to our (a) 13 public US mutual funds and (b) 77 private US investment management accounts. Our revenues and thus potential profitability is driven by the amount of assets under management, the great majority of which comes from the Funds. You should understand and ask us about these conflicts because they can affect the services and investment advice we provide you. Here are some examples to help you understand what this means.
Proprietary Products: We recommend transactions to, and make investment decisions on behalf of, advisory clients based on investment considerations, including whether the investments are appropriate for the advisory client and are consistent with the account’s investment objectives, policies and restrictions. We have, and when in accordance with our fiduciary duty as an investment adviser will, buy or sell on behalf of clients or recommend to clients the purchase or sale of securities in which we or our financial professionals have a financial interest, including the Funds.
Side by Side Management: The portfolio management services we offer to retail advisory accounts are similar to those offered to other accounts. We manage a variety of pooled investment funds, including the Funds. In connection with the management of some of these accounts, we receive a performance-based fee; that is, a fee based on a share of capital gains or capital appreciation of account assets. To mitigate this potential conflict of interest, we have implemented policies and procedures designed to prevent the favoring of one account over another. We do not allow a portfolio manager to advise separate clients to both purchase and sell the same security on the same day. When we believe we can do so and achieve best execution, orders placed at the same time with the same instructions for advisory clients will be executed as a “bunched” order with each account receiving the same execution price. In the event of a partially filled “bunched” order, shares are allocated pro-rata over the accounts participating in the original order. When circumstances dictate, or when we believe that using multiple execution firms will minimize market impact, part or none of the order may be “bunched.” As a result, advisory clients could receive differing execution prices.
Affiliated Broker: When advisory clients select SBS as their broker, our single asset-based advisory fee includes investment management and brokerage services. In connection with the relationship, we can receive compensation from other sources. Clients can select other brokers or custodians, at their expense. SBS distributes the Funds and Saturna collects investment management and other fees from them. We can also receive distribution fees from non-affiliated mutual funds. When we elect to allocate a portion of your assets to a mutual fund, a share class without a distribution fee is selected whenever possible.
Personal Trading: At times our financial professionals will buy or sell securities that we have recommended to, or purchased or sold on behalf of, clients. To avoid conflicts of interests and to comply with our legal and regulatory obligations, Saturna’s Code of Ethics (“Code” available upon request or our website) places monitoring requirements and trading restrictions in accounts over which our financial professionals have a beneficial interest. Saturna’s portfolio managers are subject to more stringent requirements under the Code.
How do our financial professionals make money?
As fiduciaries, Saturna’s employees do not receive commissions or other incentives based on brokerage account activity or direct sales of any of its products. In addition to salary, our financial professionals are eligible for variable compensation including an annual bonus and profit sharing. Stock options are awarded, based on years of service. Variable compensation is impacted by the overall profitability of Saturna. Health and other employee benefits are provided based on written plans for all employees. Financial professionals that are shareowners receive dividends if declared and eventually participate in Saturna’s common stock value. Portfolio managers are eligible to receive bonuses based on the fee paid and performance of each account they manage. As such, portfolio managers could have an incentive to favor accounts for which they receive a bonus over accounts (perhaps with similar objectives) where they are not eligible for a performance bonus.
Do we or our financial professionals have legal or disciplinary history?
Yes. Neither Saturna nor our management personnel have been the subject of legal or regulatory findings, or are the subject of any pending proceedings, we believe are material to a client’s or prospective client’s evaluation of our advisory business or integrity. Visit Investor.gov/CRS for a free and simple search tool to research our firm and our financial professionals.
Ask your Financial Professional: As a financial professional, do you have any disciplinary history? For what type of conduct?
How to get additional information
You can find additional information on our mutual fund, investment advisory, retirement plan and brokerage services at www.saturna.com. To request up-to-date information, such as Saturna’s audited financial statements and a copy of this relationship summary, you can call 800-SATURNA (800-728-8762), send an e-mail request to email@example.com, or reach us through the mail at Saturna Capital, P.O. Box N, Bellingham, WA 98227.