Q2 2023

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In our 2022 year-end commentary we noted the remarkably consistent track record of stock market gains in every year that followed a midterm election dating back to World War II. We also noted the rare instances of the US stock market declining over two consecutive years. History was setting up 2023 to be a good year and, reviewing the first half of 2023 performance, the track record appears likely to remain intact. Year-to-date, the S&P 500 rose a healthy 16.89%, while the more Tech-heavy NASDAQ Composite Index soared 32.32%. Such figures, however, belie a darker picture just below the surface, as index performance was driven by a handful of mostly mega-cap stocks: Alphabet, Amazon, Apple, Meta (Facebook), Microsoft, Netflix, Tesla, and Nvidia. Together these stocks account for 30% of the S&P 500 Index's market capitalization, up from 22% at the start of the year. As a market capitalization-weighted index, larger capitalization stocks have a greater effect on index performance. To see the result, we need only compare the performance of the S&P 500 Index to the performance of the S&P 500 Equal Weight ETF as a proxy for an equal-weighted S&P 500 Index, as shown in Heavyweights Rule.

Heavyweights Rule

Following the March collapse of Silicon Valley Bank, Signature Bank, and Credit Suisse, the S&P Equal Weight ETF moved into negative territory, remaining lackluster until June 2023. Over the same period, the large-cap Tech stocks continued appreciating, receiving a boost in mid-May from Nvidia due to demand for Artificial Intelligence (AI) chips.

Cumulative Return of Market Weight S&P 500 and Equal Weight S&P 500: Sept 1999 - Jun 2001

While Nvidia's year-to-date 189.54% appreciation helped pull the benchmark higher, a reversal could shave points off the S&P 500 Index while other stocks appreciate. The six-month performance gap of 9.44% between market capitalization and equal-weighted indices registered over the first half of 2023 ranks as the third-widest gap over the past 25 years. The widest gap was 10.71% in March 2000 during the height of the dot-com bubble, a period that bears more than a passing resemblance to the current AI frenzy. That March 2000 spread was wiped out and reversed over the following 15 months, as the collapse in online stocks dragged the Index down and obscured the solid performance of stocks that had been neglected during the dot-com bubble. Whether history will rhyme remains to be seen, but a longer-term view shows that the two versions of the S&P 500 rarely deviate more than a few percentage points from each other on an annualized basis.


In early September of 1939, Germany invaded Poland, and Britain and France declared war on Germany. However, for eight months, there was minimal fighting; it wasn't until May 1940 when the German Panzerdivision rolled into the Low Countries and France that the war took off. The eight-month interregnum came to be known as "The Phoney War."1 Market observers could be forgiven for thinking the same of the yet-unrealized recession that was assumed to be an inevitable consequence of the Federal Reserve's aggressive rate tightening in the wake of high post-pandemic inflation. Economists are generally a sunny lot, rarely forecasting downturns in advance of their arrival. For 2023, however, consensus strongly favored a global recession.2 In the first half, European economies were certainly weak, while the removal of China's COVID-19 restrictions released a burst of activity that subsequently cooled to the point of spurring officials to take stimulative measures. Meanwhile, Japan demonstrated surprising strength, while the US economy soldiered on with first-quarter gross domestic product (GDP) growth of 2.0%, 339,000 new jobs in May, and an unemployment rate of 3.7.3 What now?

Just as May 1940 brought an end to the Phoney War, we cannot dismiss future economic contraction based on it not having arrived. Inflation remains elevated and earlier hopes of a Fed pivot have evaporated. Indeed, the Fed has indicated the possibility of two additional rate hikes by year-end, following the June pause. Higher-for-longer in terms of inflation and interest rates does not bode well for growth. And what of that genie of economic prognostication, the yield curve? While boasting an impressive record of predictive success, it provides little guidance regarding timing. A general rule of thumb looks for a recession to begin within a year of the curve inverting, although the lag has been as great as two years. Disconcertingly, the two-year and 10-year yield curves inverted for good almost exactly a year ago, while the Cleveland Fed currently estimates the probability of recession within one year at 79%.4

What this means for stock market returns remains anyone's guess, but so far, activity in 2023 indicates that bad economic news may be interpreted as good stock market news if investors believe lower rates are just around the bend. Valuations may prove problematic for the architects of this year's index gains, but most stocks performed meekly, as described above. It may be that investors have already discounted the risks of lower earnings for companies not involved in AI, creating an opportunity for the first-half wallflowers to move to the center of the dance floor.


Sextant Growth Fund

We consider the avoidance of behavioral influences – the eternal struggle between greed and fear – one of the advantages of our investment philosophy and approach, which features low turnover, long-term holdings, and concentration among a small number of stocks (33 as of the quarter ended June 30, 2023). Over the years, we believe our approach has served us well. There are times when exuberance, irrational or not, leaves us on the outside looking in as individual industries, or companies, drive index performance, leaving Sextant Growth Fund lagging if we lack exposure.

Given the Sextant Growth Fund's underexposure to most of the mega-cap highflyers, the Investor Shares of the Fund performed respectably. For the second quarter the Fund outperformed the Morningstar Large Growth category, gaining 11.15% versus 10.97%. A weak first quarter, however, meant that the Investor Shares lagged behind the Fund's Morningstar peer group, returning 21.45% versus 24.20%.

The Sextant Growth Fund benefited from having positions in several of the first half of 2023 market leaders, including Nvidia, which enjoyed eye-popping performance due to its exposure to Artificial Intelligence (AI) chip demand. In contrast, the 50% appreciation of Apple, the largest stock in the portfolio, seems pedestrian. AI enthusiasm was a factor for several of the top performers, including Amazon, which finally broke a downward trend that began in November 2021 and persisted until early 2023. As the world's largest cloud provider, Amazon will benefit from demand for AI servers. Microsoft is a major shareholder in OpenAI, which developed ChatGPT. Advanced Micro Devices has argued that its chips are just as good as Nvidia's for AI applications, Adobe sees myriad AI applications in its business, while Oracle has also embraced AI's potential to transform its business.

Enphase Energy has been the weakest performer year-to-date. However, we hold a small position in the company. We appreciate the longer-term attractiveness of alternative energy, especially solar; as opportunities arise, we will add to the position. Following solid outperformance in 2022, Elevance has been bogged down by rate concerns in its Medicare activities, but we believe the business remains solid. We sold the position in Horizon Therapeutics several months ago as the risk-reward had become skewed post-Amgen's bid for the company. That turned out to be a good decision, we believe, as the acquisition was subsequently challenged by the US government and the stock dropped. Nike has faced challenges clearing inventory, but we believe athleisure remains an attractive category and Nike to be the industry flagship. RPM International, which eroded returns by the greatest amount, performed strongly coming out of the pandemic, moving well ahead of its pre-pandemic level, which also raised valuations. Since late 2020, the shares have been directionless, trading at about $75-$100, allowing earnings to grow into the valuation. We believe the current combination of anticipated earnings growth and valuation positions the stock well for the future.

There have been two changes among the Top 10 Holdings since the end of the first quarter 2023. The strong appreciation of Oracle and Adobe brought them into the top 10, and Monster Beverage and Motorola Solutions exited. The latter two stocks both appreciated year-to-date but did not keep pace with the 40% gains among the former two stocks.

As of June 30, 2023

10 Largest Contributors Return Contribution
Microsoft 18.38% 1.80
Apple 17.79% 1.76
Amazon.com 26.21% 1.33
Alphabet, Class A 15.40% 0.94
Nvidia 52.31% 0.92
Oracle 28.71% 0.84
Adobe 26.89% 0.81
Lowe's 13.44% 0.53
Mastercard, Class A 8.39% 0.49
Johnson Controls 13.79% 0.33
10 Largest Detractors Return Contribution
Nike, Class B -9.72% -0.23
PayPal -12.52% -0.22
Corteva -4.72% -0.15
Texas Instruments -2.50% -0.07
Enphase Energy -20.67% -0.06
Elevance Health -3.07% -0.05
Qualcomm  -6.04% -0.05
Trimble 0.99% 0.01
Albemarle 1.10% 0.01
RPM International 3.38% 0.05
Top 10 Holdings Portfolio Weight
Apple  10.38%
Microsoft  9.99%
Alphabet, Class A  6.12%
Amazon.com  5.68%
Mastercard, Class A  5.66%
Lowe's  4.08%
Abbott Laboratories  3.66%
Adobe  3.51%
Oracle  3.37%
Costco Wholesale  3.05%

Sextant International

The Sextant International Fund Z Shares returned 1.43% in the second quarter of 2023, compared to a gain of 3.22% for the MSCI EAFE Index over the same period. Regarding sectors, Technology, Industrials, Financials, Consumer Discretionary, and Utilities led gains, while Communications and Real Estate lagged with moderate losses. Year-to-date, the Z Shares returned 13.18%, ahead of the benchmark return of 12.13%.

The top individual contributors during the quarter came from Information Technology (ASML Holding, Dassault Systemes, Accenture), and Industrials (Experian, Eaton). Detractors came from Consumer Discretionary (MercadoLibre), Materials (Nutrien, Rio Tinto), and Information Technology (NICE, STMicroelectronics). During the second quarter of 2023, cash and equivalents were reduced to 3.57% and deployed into select Consumer Staples, Health Care, Industrials, and Technology positions. The end of the second quarter coincided with the regional banking crisis, and in response, a higher-than-normal cash level was held at the time.

Year-to-date, risk assets have been struggling with the conundrum of stubbornly high inflation despite a clearly weakening economy. In a normal economic environment, softening growth tends to coincide with a cooldown in inflation and the labor markets. However, the current cycle has been far from plain vanilla – an unprecedented pandemic, lockdown of the economy, and record fiscal and monetary stimulus followed by an equally severe tightening cycle and subsequent banking crisis. It is no surprise that the traditional textbook economic cycle that many market strategists predicted has not played out.

From a broader perspective, in 2022, investor psychology was dominated by the fear of hyperinflation following the string of policy errors made by the Federal Reserve. As we enter the second half of 2023, inflation continues to be a clear and present danger. However, even the most hawkish pundits began to acknowledge that the risk of a 1970's era inflation crisis was dramatically reduced. Inflation has indeed decreased meaningfully, and leading indicators would suggest that headline consumer price index figures are headed even lower as the year progresses. In a world bombarded with additional reasons to be pessimistic on risk assets, a healthy dose of caution is warranted. However, it is also important to recognize that the worst-case scenario has effectively been neutralized.

Looking ahead toward the end of 2023 and beyond, we believe the economy will likely continue to experience a series of rolling recessions, recoveries, and expansions. Due to the unusual nature of how specific parts of the economy were shut off and turned back on in response to the pandemic, different sectors and industries experienced separate, independent mini-cycles. Some have already experienced major contractions and are now in the bottoming phase, while others are likely to roll over at some point during the next six to 12 months. This is why we believe the global economy may not experience a traditional recession in which a broad-based contraction occurs, but one that is generally more muted and perhaps extended over a longer period of time.

We believe active investment strategies that are appropriately positioned to capitalize on these independent, sector-level economic trajectories will likely be able to generate positive relative returns over the next several quarters.

As of June 30, 2023

10 Largest Contributors Return Contribution
Alcon 17.31% 0.51
Dassault Systemes ADR 8.70% 0.46
ASML Holding NY 6.78% 0.45
Nintendo 17.42% 0.38
Experian 17.94% 0.31
Accenture, Class A 8.39% 0.30
Eaton 17.96% 0.25
Linde 7.60% 0.24
Novartis ADR 9.68% 0.21
Novo Nordisk ADS 1.69% 0.17
10 Largest Detractors Return Contribution
MercadoLibre -10.13% -0.68
NICE Systems ADR -9.78% -0.59
Rio Tinto ADS -6.94% -0.27
Nutrien -19.32% -0.24
BioNTech ADR -13.36% -0.13
NIBE Industrier AB -16.09% -0.12
Barrick Gold -8.29% -0.11
BHP Group ADR -5.90% -0.10
Unicharm -7.75% -0.08
Givaudan -2.91% -0.06
Top 10 Holdings Portfolio Weight
Novo Nordisk ADS  7.86%
ASML Holding NY  6.31%
Wolters Kluwer  6.26%
MercadoLibre  5.77%
Dassault Systemes ADR  5.53%
NICE Systems ADR  5.01%
Accenture, Class A  3.73%
Sony ADS  3.58%
Linde  3.33%
Rio Tinto ADS  3.33%

Sextant Global High Income

The Sextant Global High Income Fund returned -0.59% in the second quarter of 2023, ending the period with $9.4 million. The Fund's equity benchmark, the S&P Global 1200 Index, returned 6.86% in the second quarter of 2023, while its fixed income benchmark, the Bloomberg Global High Yield Corporate Index, returned 1.73%. The Fund's Morningstar Global Allocation category peer group returned 1.64% for the same period.

The Federal Reserve slowed the pace of interest rate hikes and signaled that the end of the tightening cycle was in sight. With a potential recession so far held at bay, confidence is growing that the Fed can engineer a soft landing and businesses can lengthen their planning horizons.

The Sextant Global High Income Fund's performance in the quarter was buoyed by a 17.42% return from Nintendo, with popular games on the Technology company's Switch platform driving growth. Additional strong contributors included Novartis and Skandinaviska Enskilda Banken (SEB).

Detractors from the Global High Income Fund performance included Materials sector stocks South32 and Norsk Hydro. The Fund liquidated its holdings of Icahn Enterprises after a report emerged that suggested shenanigans with the way Carl Icahn borrowed against in-kind dividends of stock the company paid, to keep both its yield and share price artificially high.

With a soft landing in sight for the US economy, inflationary pressures continuing to ease, and optimism about continued growth in the Technology sector fueled by Artificial Intelligence (AI), the outlook has improved for the second half of 2023. The third year of a US presidential cycle also tends to be a benign period with little political action.

As of June 30, 2023

10 Largest Contributors Return Contribution
Nintendo 17.42% 0.36
Novartis ADR 9.68% 0.23
Skandinaviska Enskilda Banken, Class A 6.35% 0.18
Shell ADR 5.94% 0.14
Brazil (8.50% 01/05/24) 8.28% 0.13
Volkswagen AG 5.47% 0.12
Republic of Argentina (1.50% 07/09/46) 14.43% 0.11
Ford Motor (6.38% 02/01/29) 3.46% 0.08
MDC Holdings (3.85% 01/15/30) 3.81% 0.07
Groupo Bimbo (4.88% 06/27/44) 3.74% 0.07
10 Largest Detractors Return Contribution
South32 - ADR -14.62% -0.43
Icahn Enterprises -26.27% -0.42
Norsk Hydro ASA -13.22% -0.34
Telenor ASA -9.84% -0.24
BHP Biliton ADR  -5.90% -0.21
Southern Copper -4.72% -0.18
Virtu Financial, Class A -8.34% -0.13
SK Telecom ADR -4.88% -0.08
Verizon Communications -2.79% -0.06
CMCSA (4.65% 07/15/42) -1.76% -0.04
Top 10 Holdings Portfolio Weight
United States Treasury Note (2.00% 05/31/2024)   Bond  10.37%
US Treasury (0.125% 08/31/2023)   Bond  4.24%
Southern Copper  Equity  3.84%
BHP Biliton ADR   Equity  3.51%
Skandinaviska Enskilda Banken, Class A  Equity  2.95%
Cisco Systems  Equity  2.77%
Novartis ADS  Equity  2.70%
Bank of Montreal (3.300% 02/05/2024)   Bond  2.63%
Novartis Capital (3.4% 05/06/2024)   Bond  2.63%
Netflix (4.375% 11/15/2026)   Bond  2.61%

Sextant Core Fund

The Sextant Core Fund returned 2.71% in the second quarter of 2023 and 5.57% year-to-date. The Fund's benchmark, the Dow Jones Moderate Portfolio Index, returned 2.46% for the same period and 6.99% year-to-date. The Fund had a slow start to 2023, trailing the benchmark by 287 basis points (bps) for the month of January. The Fund continued to make up ground in April and May as fears of financial contagion gave way to expectations that interest rates would stay higher for longer. Some of these gains were given back amid the buoyant rally that took hold of the market in June. Still, we remain cautious that the Federal Reserve intends to keep rates high unless substantial progress is made on inflation. For such progress to happen rapidly, economic pain would be likely. Thus, the Fund ended the second quarter in a defensive posture, with 3.35% of the portfolio in cash and 17.92% in fixed-income securities with maturities of less than one year.


The Sextant Core Fund's mandate allocates a 60% weight in equity securities, with two-thirds being US-domiciled companies and one-third foreign-domiciled companies. The Fund generally holds equity positions in larger companies with strong balance sheets; the average market capitalization of positions held by the Fund was $204 billion with 21% total debt to market capitalization at quarter-end. The Fund's 55.65% equity allocation was comprised of 59 positions across 10 countries.

Macro trends that favored cyclical industries over defensives were the largest drivers of performance in the second quarter. Supporting this, companies from the Technology, Industrials, Energy, and Consumer Discretionary sectors were among the largest contributors. Materials, Health Care, Consumer Staples, and Utilities were common among the detractors to Core Fund performance. At quarter-end, the Technology sector had the largest weighting in the equity portion of the portfolio, followed by Industrials and Health Care.

Fixed Income

The Sextant Core Fund targets an allocation of 40% in investment-grade fixed-income securities including government and convertible bonds, money-market instruments, and cash. The actual allocation to cash and fixed income at the end of the quarter was 44.35%.

The second quarter of 2023 was marked by a mixture of improving stability in the bond market along with expectations the Fed would hold rates higher for longer. The MOVE Index, which measures bond market volatility, was 135.93 as of March 31, 2023, and had lowered to 110.64 as of June 30, 2023. The market gained confidence that issues with regional banks were contained. With this renewed confidence in the banking system, investors pushed out their expectations for rate cuts and yields on the 10-year US Treasury, which jumped 33 bps during the second quarter. This rise in long-term yields led the 2039 PacifiCorp bond, one of the longest-dated maturities held, to be the second largest detractor to overall Fund performance.

The battle between high interest rates and economic resilience will likely continue through the second half of 2023. Despite falling volatility across equity and bond markets, we acknowledge that instability is inherently unforeseeable and interest rates a notoriously blunt tool for guiding the economy. We remain on guard and committed to Sextant Core Fund's principles of favoring companies with robust balance sheets, strong cash generation, and modest valuations.

As of June 30, 2023

10 Largest Contributors Return Contribution
Oracle 28.71% 0.41
Eaton PLC 17.96% 0.31
Apple 17.79% 0.28
Johnson Controls International 13.79% 0.22
Parker Hannifin 16.57% 0.22
Microsoft 18.38% 0.21
Alphabet, Class A 15.40% 0.16
Lowe's 13.44% 0.15
Linde 7.60% 0.12
ConocoPhillips 5.59% 0.11
10 Largest Detractors Return Contribution
Newmont -12.12% -0.12
PacifiCorp (6% 01/15/39) -8.33% -0.11
Activision Blizzard -9.60% -0.08
General Mills -15.35% -0.08
Bristol-Myers Squibb -6.99% -0.08
Pfizer -9.12% -0.08
Barrick Gold -8.29% -0.08
Virtu Financial, Class A -8.34% -0.07
Duke Energy -6.02% -0.05
NextEra Energy -3.13% -0.05
Top 10 Holdings Portfolio Weight
United States Treasury Note (2.00% 05/31/2024)  Bond 5.05%
US Treasury Note (0.125% 08/31/2023)  Bond 4.31%
United States Treasury Bill (8/24/23)  Bond 3.59%
Novo Nordisk ADS  Equity 2.38%
United States Treasury Bond (6.25% 8/15/2023)  Bond 2.11%
Eaton Corp PLC Equity 1.94%
United States Treasury Note (1.125% 01/15/2025)  Bond 1.81%
Oracle Equity 1.78%
Apple Equity 1.78%
ConocoPhillips Equity 1.77%

Sextant Short-Term Bond Fund, Sextant Bond Income Fund

The Sextant Short-Term Bond Fund returned 0.07% for the second quarter of 2023 compared to its benchmark, the Bloomberg US Aggregate 1-3 Year Bond Index, which returned -0.36%.

The Sextant Bond Income Fund returned -1.09% for the second quarter of 2023. The FTSE USBIG Index returned -0.89% and the Bloomberg US Aggregate Index returned -0.84%.

One of the reasons that the Sextant Short-Term Bond Fund outperformed the benchmark was the Fund's overweight to short bonds and Treasury bills under one year relative to the Index. The top performing bonds were all inside of one year, led by Gilead Sciences, maturing in 2023, and Kinross Gold Corp, maturing in 2024. Longer bonds in the Short-Term Bond Fund saw performance that wasn't as strong. The lowest performer in the Fund for the quarter was the 2026 Johnson & Johnson position, followed by the 2027 Take-Two Interactive position. The Short-Term Bond Fund maintained an effective duration of 1.39 years, shorter than that of the Bloomberg US Aggregate 1-3 Year Index, which had an effective duration of 1.86 years.

The Bond Income Fund's effective duration of 7.91 years was longer than that of either of its benchmarks. The FTSE USBIG Index had an effective duration of 6.25 years and the Bloomberg US Aggregate Index had an effective duration of 6.31 years. Bonds outside of three years in the Bloomberg US Aggregate Index and the Bond Income Fund generally had negative performance in the second quarter of 2023. The main reason that the Fund trailed both benchmarks could be due to UBS, maturing in 2026, which returned -2.99% and had a 2.14% allocation in the Fund. The best performing bond in the portfolio was the State Street floating rate note, maturing in 2047, which returned 1.52%.

Fiscal Tightening and Economic Slowdown

For the first half of 2023, central banks around the world continued to tighten benchmark interest rates to quell inflationary pressures. While these measures have successfully slowed the acceleration of rising inflation, it remains high and resilient. Some central banks, such as those in Australia and Canada, made hopeful efforts to incorporate a policy pause, choosing to wait and see what would happen. Later, they had to scramble with a subsequent rate hike that surprised investors. With the Federal Reserve's decision to pause in June 2023, investors' attention will be front and center.

The byproduct of global central banks raising benchmark rates is a tightening of financial conditions and softening of economic outlook. This can be noted with the press wires continuing to capture downward revisions of economic growth forecasts for 2023; the International Monetary Fund (IMF) just announced another reduction in global gross domestic product (GDP) outlook. On April 11, 2023, the IMF revised their semi-annual global baseline forecast for growth to fall to 2.8% from 3.4% for 2023, with 2024 forecasted at 3.0%. Advanced economies are projected to experience the greatest weakness, with growth slowing down from 2.7% in 2022 to 1.3% in 2023.5

We continue to be on the lookout for potential risks, especially related to credit and persistent inflation. As corporate debt matures and issuers feel the strain of higher interest rates on their cost of capital, we will be vigilant for potential downgrades and credit spread widening. We anticipate taking advantage of some forthcoming opportunities, while maintaining a defensive position to weather a potential economic slowdown.

As of June 30, 2023

Sextant Short-Term Bond Fund
Top 10 Holdings Portfolio Weight
United States Treasury Note (2.50% 08/15/2023)  7.97%
United States Treasury Note (2.625% 12/31/2025)  5.38%
US Treasury Bill due 7/20/2023 5.16%
Gilead Sciences (2.5% 09/01/2023)  3.75%
US Treasury N/B (0.125% 08/31/2023)  3.73%
United States Treasury Note (2.875% 04/30/2025)  3.62%
Bank of America (3.50% 04/19/2026)  3.61%
Costco Wholesale (2.75% 5/18/24)  3.54%
Kinross Gold (5.95% 03/15/2024)  3.29%
Federal Home Loan Bank (3.375% 12/08/2023)  3.27%
Sextant Bond Income Fund
Top 10 Holdings Portfolio Weight
United States Treasury Bond (4.25% 05/15/2039)  8.34%
United States Treasury Bond (3.375% 11/15/2048)  5.24%
United States Treasury Bond (5.375% 02/15/2031)  4.54%
Apple (4.50% 02/23/2036)  3.69%
Microsoft (4.20% 11/03/2035)  3.59%
Intel (4.00% 12/15/2032)  3.50%
Home Depot (5.875% 12/16/2036)  3.38%
Burlington Northern Santa Fe (5.05% 03/01/2041)  3.16%
Praxair (Linde AG) (3.55% 11/07/2042)  2.94%
United Technologies (6.05% 06/01/2036)  2.78%

Performance Summary

As of June 30, 2023

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Average Annual Total Returns (before taxes) 1 Year 3 Year 5 Year 10 Year 15 Year Expense RatioA
Gross Net
Sextant Growth Fund Investor Shares (SSGFX) 20.80% 11.02% 13.27% 12.42% 9.71% 1.01%C
Sextant Growth Fund Z Shares (SGZFX)B 21.11% 11.28% 13.56% n/a n/a 0.77%C
S&P 500 Index 19.59% 14.60% 12.29% 12.85% 10.87% n/a
NASDAQ Composite Index 26.17% 11.98% 13.96% 16.26% 13.96% n/a
Morningstar "Large Growth" Category 22.89% 9.53% 11.37% 13.02% 10.74% n/a
Sextant International Fund Investor Shares (SSIFX) 18.10% 8.06% 7.86% 7.05% 4.57% 1.04%C
Sextant International Fund Z Shares (SIFZX)B 18.36% 8.29% 8.10% n/a n/a 0.80%C
MSCI EAFE Index 19.41% 9.48% 4.89% 5.90% 3.85% n/a
Morningstar "Foreign Large Growth" Category 15.91% 4.32% 4.54% 6.20% 4.19% n/a
Sextant Core Fund (SCORX) 8.97% 5.99% 6.46% 5.72% 5.19% 0.82%C
Dow Jones Moderate US Portfolio Index 8.00% 5.06% 4.56% 5.93% 5.78% n/a
Morningstar "Moderate Allocation" Category 8.56% 6.44% 5.68% 6.45% 6.18% n/a
Sextant Global High Income Fund (SGHIX)D 6.34% 4.44% 2.50% 4.31% n/a 0.85%C 0.75%E
S&P Global 1200 Index 18.60% 12.65% 9.54% 10.02% 7.74% n/a
Bloomberg Global High Yield Corporate Index 9.81% 1.81% 2.39% 3.66% 5.98% n/a
Morningstar "Global Allocation" Category 6.54% 5.94% 3.62% 4.43% 4.54% n/a
Sextant Short-Term Bond Fund (STBFX) 1.09% -1.04% 1.00% 0.95% 1.45% 0.88%C 0.60%E
Bloomberg US Aggregate 1-3 Year Index 0.52% -0.92% 1.07% 0.97% 1.51% n/a
Morningstar "Short-Term Bond" Category 1.42% -0.40% 1.28% 1.30% 2.01% n/a
Sextant Bond Income Fund (SBIFX) -1.82% -5.47% 0.15% 1.42% 2.65% 0.92%C 0.65%E
Bloomberg US Aggregate Index -0.94% -3.96% 0.77% 1.51% 2.72% n/a
FTSE US Broad Investment-Grade Bond Index -0.97% -4.03% 0.77% 1.51% 2.75% n/a
Morningstar "Long-Term Bond" Category -0.39% -6.24% 1.28% 3.21% 4.81% n/a

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Performance data quoted represents past performance, is before any taxes payable by shareowners, and is no guarantee of future results.  Current performance may be higher or lower than that stated herein.  Performance current to the most recent month-end is available by calling toll-free 1-800-728-8762 or visiting www.sextantfunds.com.  Average annual total returns are historical and include change in share value as well as reinvestment of dividends and capital gains, if any.  The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost.  Shares of a fund may only be offered for sale through the fund's prospectus or summary prospectus.

By regulation, expense ratios shown are as stated in the Funds' most recent prospectus or summary prospectus, dated March 31, 2023, and incorporate results from the fiscal year ended November 30, 2022. Higher expense ratios may indicate higher returns relative to a fund's benchmark.

Z Shares of Sextant Growth and Sextant International Funds began operations June 2, 2017.

CEffective March 31, 2023, the management fee paid to Saturna Capital Corporation, the Fund's adviser, for providing services to the Fund is 0.50% of average daily net assets of the Fund. Prior to this date, the management fee consisted of a base fee at an annual rate of 0.50% of the Fund's average net assets and a positive or negative performance adjustment of up to an annual rate of 0.20% (applied to the average assets at the end of each month), resulting in a total minimum fee of 0.30% and a total maximum fee of 0.70%.

D Sextant Global High Income Fund began operations March 30, 2012.

E The adviser has committed through March 31, 2024, to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's net operating expenses, excluding brokerage commissions, interest, taxes, and extraordinary expenses, do not exceed the net operating expense ratio of 0.75% for Sextant Global High Income Fund, 0.60% for Sextant Short-Term Bond Fund, and 0.65% for Sextant Bond Income Fund. This expense limitation agreement may be changed or terminated only with approval of the Board of Trustees.

The S&P 500 Index is an index comprised of 500 widely held common stocks considered to be representative of the US stock market in general.  The NASDAQ Composite Index measures the performance of more than 5,000 US and non-US companies traded "over the counter" through NASDAQ.  The MSCI EAFE Index is an international index focused on Europe, Australasia, and the Far EastThe MSCI ACWI Index, produced by Morgan Stanley Capital International, measures equity market performance throughout the world.  The S&P Global 1200 Index is a global stock market index covering nearly 70% of the world's equity markets.  The Bloomberg Global High Yield Corporate Bond Index is a rules-based, market value-weighted index engineered to measure the non-investment grade, fixed-rate, taxable, global corporate bond market.  The Dow Jones Moderate Portfolio Index is a broad-based index of stock and bond prices.  The Bloomberg US Aggregate 1-3 Year Index tracks bonds with 1-3 year maturities within the flagship Bloomberg US Aggregate Bond Index. The Bloomberg US Aggregate Bond Index is a broad-based, flagship benchmark that measures the investment-grade, US dollar-denominated, fixed-rate taxable bond market. The FTSE US Broad Investment-Grade Bond Index is a broad-based index of medium and long-term investment-grade bond prices. When available, Saturna uses total return components of indices mentioned.  Investors cannot invest directly in the indices.

A fund's 30-Day Yield, sometimes referred to as standardized yield, current yield, or SEC yield, is based on methods of computation prescribed in SEC Form N-1A.  Calculated by dividing the net investment income per share during the preceding 30 days by the net asset value per share on the last day of the period, the 30-Day Yield provides an estimate of a fund's investment income rate, but may not equal the actual income distribution rate.


Morningstar Ratings™

As of June 30, 2023

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Morningstar RatingsA Overall 1 Year 3 Year 5 Year 10 Year
Sextant Growth Fund — "Large Growth" Category
Investor Shares (SSGFX) ★ ★ ★ n/a ★ ★ ★ ★ ★ ★ ★ ★ ★ ★
      % Rank in Category n/a 66 43 24 65
Z Shares (SGZFX) ★ ★ ★ ★ n/a ★ ★ ★ ★ ★ ★ ★ ☆ ☆ ☆
      % Rank in Category n/a 64 41 21 63
      Number of Funds in Category 1,117 1,219 1,117 1,032 791
Sextant International Fund — "Foreign Large Growth" Category
Investor Shares (SSIFX) ★ ★ ★ ★ n/a ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★
      % Rank in Category n/a 33 10 8 25
Z Shares (SIFZX) ★ ★ ★ ★ ★ n/a ★ ★ ★ ★ ★ ★ ★ ★ ★ ☆ ☆ ☆ ☆
      % Rank in Category n/a 32 8 7 23
      Number of Funds in Category 407 447 407 351 238
Sextant Core Fund — "Moderate Allocation" Category
(SCORX) ★ ★ ★ n/a ★ ★ ★ ★ ★ ★ ★ ★ ★ ★
      % Rank in Category n/a 50 58 31 73
      Number of Funds in Category 679 739 679 647 484
Sextant Global High Income Fund — "Global Allocation" Category
(SGHIX) ★ ★ ★ n/a ★ ★ ★ ★ ★ ★ ★ ★ ★
      % Rank in Category n/a 60 71 77 56
      Number of Funds in Category 376 392 376 347 255
Sextant Short-Term Bond Fund — "Short-Term Bond" Category
(STBFX) ★ ★ n/a ★ ★ ★ ★ ★ ★
      % Rank in Category n/a 67 73 73 74
      Number of Funds in Category 525 576 525 477 347
Sextant Bond Income Fund — "Long-Term Bond" Category
(SBIFX) ★ ★ n/a ★ ★ ★ ★ ★ ★ ★
      % Rank in Category n/a 90 18 99 100
      Number of Funds in Category 32 35 32 30 25

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Performance data quoted herein represents past performance and does not guarantee future results.

© 2023 Morningstar®. All rights reserved.  Morningstar, Inc. is an independent fund performance monitor. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely.  Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

Morningstar Ratings ("Star Ratings") are as of June 30, 2023. The Morningstar Rating for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history.  Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes.  It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance (not including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance.  The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star.  The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics.  The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.

% Rank in Category is the fund's percentile rank for the specified time period relative to all funds that have the same Morningstar category.  The highest (or most favorable) percentile rank is 1 and the lowest (or least favorable) percentile rank is 100.  The top-performing fund in a category will always receive a rank of 1.  Percentile ranks within categories are most useful in those categories that have a large number of funds.

Unshaded stars indicate extended performance.  Extended performance is an estimate based on the performance of a fund's oldest share class, adjusted for fees.

The Sextant Growth and Sextant International Funds offer two share classes – Investor Shares and Z Shares, each of which has different expense structures.  



1 British spelling is generally used on both sides of the Atlantic, rather than the American "phony."

2 "Chief Economists Say Global Recession Likely In 2023, But Pressures On Food, Energy and Inflation May Be Peaking." World Economic Forum. January 16, 2023. https://www.weforum.org/press/2023/01/chief-economists-say-global-recession-likely-in-2023-but-cost-ofliving-crisis-close-to-peaking/

3 "The Employment Situation – June 2023." Bureau of Labor Statistics. July 7, 2023. https://www.bls.gov/news.release/pdf/empsit.pdf

4 "Yield Curve and Predicted GDP Growth." Federal Reserve Bank of Cleveland. June 2023. https://www.clevelandfed.org/en/indicators-and-data/yield-curve-and-predicted-gdp-growth

5 "A Rocky Recovery." International Monetary Fund. April 11, 2023. https://www.imf.org/en/Publications/WEO/Issues/2023/04/11/world-economic-outlook-april-2023


Important Disclaimers and Disclosure

This publication should not be considered investment, legal, accounting, or tax advice, or a representation that any investment or strategy is suitable or appropriate to a particular investor's circumstances or otherwise constitutes a personal recommendation to any investor. This material does not form an adequate basis for any investment decision by any reader and Saturna may not have taken any steps to ensure that the securities referred to in this publication are suitable for any particular investor. Saturna will not treat recipients as its customers by virtue of their reading or receiving the publication.

The information in this publication was obtained from sources Saturna believes to be reliable and accurate at the time of publication.

All material presented in this publication, unless specifically indicated otherwise, is under copyright to Saturna. No part of this publication may be altered in any way, copied, or distributed without the prior express written permission of Saturna.

Asset-weighted average debt to market capitalization:  This ratio represents the average debt to market capitalization of the portfolio. It is calculated by taking the debt to market capitalization for each company (its debt divided by its market capitalization), weighting these values (multiplying each by the company's percent share of total portfolio assets), and then totaling the weighted values.

Effective maturity and modified duration are measures of a fund's sensitivity to changes in interest rates and the markets. A fund's effective maturity is a dollar-weighted average length of time until principal payments must be paid. Longer maturities typically indicate greater sensitivity to interest rate changes than shorter maturities. Modified duration differs from effective maturity in that it accounts for interest payments in addition to the length of time until principal payments must be paid. Longer durations tend to indicate greater sensitivity to interest rate changes than shorter durations. Call options and other security-specific covenants may be used when calculating effective maturity and modified duration.

A Few Words About Risk

The Growth Fund 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.

The International Fund involves risks not typically associated with investing in US securities. These include fluctuations in currency exchange rates, less public information about securities, less governmental market supervision, and lack of uniform financial, social, and political standards.

The Core Fund involves the risks of both equity and debt investing, although it seeks to mitigate these risks by maintaining a widely diversified portfolio that includes domestic stocks, foreign stocks, short and long-term bonds, and money market instruments.

Investment in the Global High Income Fund entails the risks of both equity and debt securities, although it seeks to mitigate these risks through a widely diversified portfolio that includes foreign and domestic stocks and bonds. Issuers of high-yield securities are generally not as strong financially as those issuing higher quality securities. Investments in high-yield securities can be speculative in nature. High-yield bonds may have low or no ratings and may be considered "junk bonds."

The risks inherent in the Short-Term Bond and Bond Income Funds depend primarily on the terms and quality of the obligations in their portfolios, as well as on bond market conditions. When interest rates rise, bond prices fall. When interest rates fall, bond prices rise. Bonds with longer maturities (such as those held by the Bond Income Fund) usually are more sensitive to interest rate changes than bonds with shorter maturities (such as those held by the Short-Term Bond Fund). The Funds entail credit risk, which is the possibility that a bond will not be able to pay interest or principal when due. If the credit quality of a bond is perceived to decline, investors will demand a higher yield, which means a lower price on that bond to compensate for the higher level of risk.

About the Authors

Scott Klimo

Scott Klimo CFA®
Chief Investment Officer
Portfolio Manager, Sextant Growth Fund

Christopher Paul

Chris Paul MBA, CFA®
Senior Investment Analyst
Deputy Portfolio Manager, Sextant Growth Fund

Bryce Fegley

Bryce Fegley MS, CFA®, CIPM®
Senior Investment Analyst
Portfolio Manager, Sextant Core and
Global High Income Funds

Elizabeth Alm

Elizabeth Alm CFA®
Senior Investment Analyst
Portfolio Manager, Sextant Bond Income and
Sextant Short-Term Bond Funds

Levi Stewart Zurbrugg

Levi Zurbrugg MBA, CFA®, CPA®
Senior Investment Analyst
Portfolio Manager, Sextant Core Fund

Dan Kim, CFA

Dan Kim CFA®
Senior Investment Analyst
Portfolio Manager, Sextant International Fund