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Sextant Growth Fund Summary Prospectus

Beginning on January 29, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Sextant Mutual Funds' annual and semi-annual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Funds' website (www.saturna.com/reports), and you will be notified by mail each time a report is posted and provided with a website link to access the report.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically anytime by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by calling 800-SATURNA (800-728-8762) or by sending an e-mail request to Sextant Mutual Funds at info@saturna.com.

Beginning on January 2, 2019, you may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800-SATURNA (800-728-8762) or send an e-mail request to Sextant Mutual Funds at info@saturna.com to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held in your account if you invest through your financial intermediary or all funds held with the fund complex if you invest directly with the Funds.

 

Sextant Growth Fund

Investor Shares: SSGFX
Z Shares: SGZFX

March 27, 2019

SUMMARY PROSPECTUS

Before you invest, you may want to review Sextant Growth Fund's prospectus, which contains more information about the Fund and its risks. You can find the Fund's prospectus and other information about the Fund, including the statement of additional information and most recent reports to shareowners, online at www.saturna.com/prospectus. You can also get this information at no cost by calling 1-800-728-8762 or by sending an email request to info@saturna.com. The Fund's prospectus and statement of additional information, both dated March 27, 2019, are incorporated by reference into this Summary Prospectus.


Sextant Growth Fund

SSGFX/SGZFX

Investment Objective

Long-term capital growth.

Fees and Expenses

This section describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

Shareowner Fees

None.

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
  Investor Shares Z Shares
Management Fees (vary with performance) 0.42% 0.42%
Distribution (12b-1) Fees 0.25% None
Other Expenses 0.25% 0.28%
Total Annual Fund Operating Expenses 0.92% 0.70%

Example

This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.

The Example assumes you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although actual costs may be higher or lower, based on these assumptions, your costs would be:

1 year 3 years 5 years 10 years
Investor Shares
$94 $293 $509 $1,131
Z Shares
$72 $224 $390 $871

When you buy shares through a financial intermediary, that intermediary may charge a transaction fee or commission which is not reflected in the expenses table or example. Purchases and redemptions of Fund shares will be made at the daily net asset value established by the Fund (before imposition of a commission).

Portfolio Turnover

The Fund may have transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 17.04% of the average value of its portfolio.

Principal Investment Strategies

The Fund seeks long-term capital growth by investing in common stocks of US companies. The Fund diversifies its investments across industries and companies. The Fund looks for companies with growing revenues and earnings, favoring companies trading for less than the adviser's assessment of intrinsic value, which typically means companies with low price/earning multiples, low price to cash flow, and higher dividend yields. The Fund principally invests in securities of companies with market capitalizations greater than $1 billion.

Principal Risks of Investing

Market risk: The value of the Fund's shares rises and falls as the market value of the securities in which the Fund invests goes up and down. The market value of securities will fluctuate, sometimes significantly and unpredictably, with stocks generally being more volatile than bonds. When you redeem your shares, they may be worth more or less than what you paid for them. Only consider investing in the Fund if you are willing to accept the risk that you may lose money.

Equity securities risk: Equity securities may experience significant volatility in response to economic or market conditions or adverse events that affect a particular industry, sector, or company. Larger companies may have slower rates of growth as compared to smaller, faster-growing companies. Smaller companies may have more limited financial resources, products, or services, and tend to be more sensitive to changing economic or market conditions.

Growth investing risk: The Fund may invest in growth stocks, which may be more volatile than slower-growing value stocks, especially when market expectations are not met.

Liquidity risk: Liquidity risk exists when particular investments are difficult to sell and may be more difficult to value. If the Fund is forced to sell these investments during unfavorable conditions to meet redemptions or for other cash needs, the Fund may lose money on its investments. As a result, the Fund may be unable to achieve its objective.


Sextant Growth Fund

SSGFX/SGZFX

Performance

Annual Total Return

The following bar chart presents the calendar year total returns of the Fund's Investor Shares before taxes. The bar chart provides an indication of the risks of investing in the Fund by showing changes in performance from year to year. A fund's past performance (before and after taxes) is not a guarantee of how a fund will perform in the future.

Performance data current to the most recent month-end and quarter-end are available on www.sextantfunds.com.

Sextant Growth Fund Annual Total Returns
Best Quarter Q1 2012 12.31%
Worst Quarter Q4 2018 -16.00%

Average Annual Total Returns

The table below presents the average annual returns for the Fund and provides an indication of the risks of investing in the Fund by showing how the Fund's average annual returns for 1, 5, and 10 years compare to those of a broad-based market index.

Periods ended December 31, 2018
  1 Year 5 Year 10 Year
Investor Shares SSGFX
Return before taxes 0.42% 6.28% 10.48%
Return after taxes on distributions -0.75% 4.94% 9.52%
Return after taxes on distributions and sale of Fund shares 0.23% 4.43% 9.04%
S&P 500 Index
(reflects no deduction for fees, expenses or taxes)
-4.38% 8.49% 13.11%
  1 Year Since Inception
June 2, 2017
Z Shares   SGZFX
Return before taxes 0.67% 5.66%

After-tax returns are calculated using the historical highest individual federal marginal income tax rates but do not reflect the impact of any state or local taxes. Actual after-tax returns depend on an investor's tax situation and likely differ from those shown. After-tax illustrations are not relevant to retirement plans, corporations, trusts, or other investors that are tax-deferred, tax-exempt, or taxed at special rates.


Sextant Growth Fund

SSGFX/SGZFX

Investment Adviser

Saturna Capital Corporation is the Fund's investment adviser.

Portfolio Managers

Mr. Scott F. Klimo CFA®, a portfolio manager and chief investment officer of Saturna Capital Corporation, is the person primarily responsible for the day-to-day management of the Fund, which he has managed since 2015. Mr. Christopher E. Paul MBA, CFA®, a portfolio manager and senior investment analyst of Saturna Capital Corporation, is the deputy portfolio manager, a role he assumed in 2018.

Purchase and Sale of Fund Shares

You may open an account and purchase shares by sending a completed application, a photocopy of a government-issued identity document, and a check made payable to the Sextant Growth Fund. Z Shares will be purchased by default if no share class is specified at the time of purchase.

The minimum initial investment for both Investor Shares and Z Shares is $1,000 (for tax-sheltered accounts, there is no minimum).

Shareowners may purchase additional shares at any time in minimum amounts of $25.

Shareowners may redeem shares on any business day by several methods:

Written request

Write:   Sextant Mutual Funds
            Box N
            Bellingham, WA 98227-0596

Or Fax: 360-734-0755

Telephone request

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

Online

Visit: www.sextantfunds.com

Tax Information

Any distributions you receive from the Fund may be taxed as ordinary income, qualified dividend income, or capital gains.

Financial Intermediary Compensation

If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary's website for more information.

 

Sextant Mutual Funds Prospectus March 27, 2019

Beginning on January 29, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Sextant Mutual Funds' annual and semi-annual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Funds' website (www.saturna.com/reports), and you will be notified by mail each time a report is posted and provided with a website link to access the report.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically anytime by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by calling 800-SATURNA (800-728-8762) or by sending an e-mail request to Sextant Mutual Funds at info@saturna.com.

Beginning on January 2, 2019, you may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800-SATURNA (800-728-8762) or send an e-mail request to Sextant Mutual Funds at info@saturna.com to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held in your account if you invest through your financial intermediary or all funds held with the fund complex if you invest directly with the Funds.

Sextant Growth Fund
Investor
Z
(SSGFX)
(SGZFX)
Sextant International Fund
Investor
Z
(SSIFX)
(SIFZX)
Sextant Core Fund
(SCORX)
Sextant Short-Term Bond Fund
(STBFX)
Sextant Bond Income Fund
(SBIFX)
Sextant Global High Income Fund
(SGHIX)

Sextant Mutual Funds

Prospectus

March 27, 2019

Please read this Prospectus and keep it for future reference. It is designed to provide important information and to help investors decide if the Funds' goals match their own.

Neither the Securities and Exchange Commission nor any state securities authority has approved or disapproved these securities or determined if this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The Sextant Funds are series of Saturna Investment Trust.


Table of Contents:

Sextant Growth Fund 3
Sextant International Fund 6
Sextant Core Fund 9
Sextant Short-Term Bond Fund 12
Sextant Bond Income Fund 15
Sextant Global High Income Fund 18
Investment Objectives 21
Principal Investment Strategies 21
Principal Risks 22
Investment Information 24
Investment Adviser 24
Fund Share Pricing 25
Purchase and Sale of Fund Shares 26
Purchase and Sale of Fund Shares Through Financial Intermediaries 28
Distributions 28
Frequent Trading Policy 28
Tax Consequences 29
Distribution Arrangements 29
Financial Highlights 31

2


Sextant Growth Fund

SSGFX/SGZFX

Investment Objective

Long-term capital growth.

Fees and Expenses

This section describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

Shareowner Fees

None.

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
  Investor Shares Z Shares
Management Fees (vary with performance) 0.42% 0.42%
Distribution (12b-1) Fees 0.25% None
Other Expenses 0.25% 0.28%
Total Annual Fund Operating Expenses 0.92% 0.70%

Example

This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.

The Example assumes you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although actual costs may be higher or lower, based on these assumptions, your costs would be:

1 year 3 years 5 years 10 years
Investor Shares
$94 $293 $509 $1,131
Z Shares
$72 $224 $390 $871

When you buy shares through a financial intermediary, that intermediary may charge a transaction fee or commission which is not reflected in the expenses table or example. Purchases and redemptions of Fund shares will be made at the daily net asset value established by the Fund (before imposition of a commission).

Portfolio Turnover

The Fund may have transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 17.04% of the average value of its portfolio.

Principal Investment Strategies

The Fund seeks long-term capital growth by investing in common stocks of US companies. The Fund diversifies its investments across industries and companies. The Fund looks for companies with growing revenues and earnings, favoring companies trading for less than the adviser's assessment of intrinsic value, which typically means companies with low price/earning multiples, low price to cash flow, and higher dividend yields. The Fund principally invests in securities of companies with market capitalizations greater than $1 billion.

Principal Risks of Investing

Market risk: The value of the Fund's shares rises and falls as the market value of the securities in which the Fund invests goes up and down. The market value of securities will fluctuate, sometimes significantly and unpredictably, with stocks generally being more volatile than bonds. When you redeem your shares, they may be worth more or less than what you paid for them. Only consider investing in the Fund if you are willing to accept the risk that you may lose money.

Equity securities risk: Equity securities may experience significant volatility in response to economic or market conditions or adverse events that affect a particular industry, sector, or company. Larger companies may have slower rates of growth as compared to smaller, faster-growing companies. Smaller companies may have more limited financial resources, products, or services, and tend to be more sensitive to changing economic or market conditions.

Growth investing risk: The Fund may invest in growth stocks, which may be more volatile than slower-growing value stocks, especially when market expectations are not met.

Liquidity risk: Liquidity risk exists when particular investments are difficult to sell and may be more difficult to value. If the Fund is forced to sell these investments during unfavorable conditions to meet redemptions or for other cash needs, the Fund may lose money on its investments. As a result, the Fund may be unable to achieve its objective.

3


Sextant Growth Fund

SSGFX/SGZFX

Performance

Annual Total Return

The following bar chart presents the calendar year total returns of the Fund's Investor Shares before taxes. The bar chart provides an indication of the risks of investing in the Fund by showing changes in performance from year to year. A fund's past performance (before and after taxes) is not a guarantee of how a fund will perform in the future.

Performance data current to the most recent month-end and quarter-end are available on www.sextantfunds.com.

Sextant Growth Fund Annual Total Returns
Best Quarter Q1 2012 12.31%
Worst Quarter Q4 2018 -16.00%

Average Annual Total Returns

The table below presents the average annual returns for the Fund and provides an indication of the risks of investing in the Fund by showing how the Fund's average annual returns for 1, 5, and 10 years compare to those of a broad-based market index.

Periods ended December 31, 2018
  1 Year 5 Year 10 Year
Investor Shares SSGFX
Return before taxes 0.42% 6.28% 10.48%
Return after taxes on distributions -0.75% 4.94% 9.52%
Return after taxes on distributions and sale of Fund shares 0.23% 4.43% 9.04%
S&P 500 Index
(reflects no deduction for fees, expenses or taxes)
-4.38% 8.49% 13.11%
  1 Year Since Inception
June 2, 2017
Z Shares   SGZFX
Return before taxes 0.67% 5.66%

After-tax returns are calculated using the historical highest individual federal marginal income tax rates but do not reflect the impact of any state or local taxes. Actual after-tax returns depend on an investor's tax situation and likely differ from those shown. After-tax illustrations are not relevant to retirement plans, corporations, trusts, or other investors that are tax-deferred, tax-exempt, or taxed at special rates.

4


Sextant Growth Fund

SSGFX/SGZFX

Investment Adviser

Saturna Capital Corporation is the Fund's investment adviser.

Portfolio Managers

Mr. Scott F. Klimo CFA®, a portfolio manager and chief investment officer of Saturna Capital Corporation, is the person primarily responsible for the day-to-day management of the Fund, which he has managed since 2015. Mr. Christopher E. Paul MBA, CFA®, a portfolio manager and senior investment analyst of Saturna Capital Corporation, is the deputy portfolio manager, a role he assumed in 2018.

Purchase and Sale of Fund Shares

You may open an account and purchase shares by sending a completed application, a photocopy of a government-issued identity document, and a check made payable to the Sextant Growth Fund. Z Shares will be purchased by default if no share class is specified at the time of purchase.

The minimum initial investment for both Investor Shares and Z Shares is $1,000 (for tax-sheltered accounts, there is no minimum).

Shareowners may purchase additional shares at any time in minimum amounts of $25.

Shareowners may redeem shares on any business day by several methods:

Written request

Write:   Sextant Mutual Funds
            Box N
            Bellingham, WA 98227-0596

Or Fax: 360-734-0755

Telephone request

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

Online

Visit: www.sextantfunds.com

Tax Information

Any distributions you receive from the Fund may be taxed as ordinary income, qualified dividend income, or capital gains.

Financial Intermediary Compensation

If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary's website for more information.

5


Sextant International Fund

SSIFX/SIFZX

Investment Objective

Long-term capital growth.

Fees and Expenses

This section describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

Shareowner Fees

None.

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
  Investor Shares Z Shares
Management Fees (vary with performance) 0.58% 0.58%
Distribution (12b-1) Fees 0.25% None
Other Expenses 0.22% 0.26%
Total Annual Fund Operating Expenses 1.05% 0.84%

Example

This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.

The Example assumes you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although actual costs may be higher or lower, based on these assumptions, your costs would be:

1 year 3 years 5 years 10 years
Investor Shares
$107 $334 $579 $1,283
Z Shares
$86 $268 $466 $1,037

When you buy shares through a financial intermediary, that intermediary may charge a transaction fee or commission which is not reflected in the expenses table or example. Purchases and redemptions of Fund shares will be made at the daily net asset value established by the Fund (before imposition of a commission).

Portfolio Turnover

The Fund may have transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 2.38% of the average value of its portfolio.

Principal Investment Strategies

The Fund diversifies its investments among many countries, predominantly those with mature markets (such as Europe and Canada). The Fund invests at least 65% of its net assets in companies with their headquarters, and at least half of their assets and earnings, outside the US. The Fund diversifies its investments across industries, companies, and countries. The Fund looks for companies with growing revenues and earnings, favoring companies trading for less than the adviser's assessment of intrinsic value, which typically means companies with low price/earning multiples, low price to cash flow, and higher dividend yields. The Fund principally invests in securities of companies with market capitalizations greater than $1 billion.

Principal Risks of Investing

Market risk: The value of the Fund's shares rises and falls as the market value of the securities in which the Fund invests goes up and down. The market value of securities will fluctuate, sometimes significantly and unpredictably, with stocks generally being more volatile than bonds. When you redeem your shares, they may be worth more or less than what you paid for them. Only consider investing in the Fund if you are willing to accept the risk that you may lose money.

Equity securities risk: Equity securities may experience significant volatility in response to economic or market conditions or adverse events that affect a particular industry, sector, or company. Larger companies may have slower rates of growth as compared to smaller, faster-growing companies. Smaller companies may have more limited financial resources, products, or services, and tend to be more sensitive to changing economic or market conditions.

6


Sextant International Fund

SSIFX/SIFZX

Foreign investing risk: Foreign investing involves risks not normally associated with US securities. These risks include fluctuations in currency exchange rates, less public information about securities, less governmental market supervision, and lack of uniform financial, social, and political standards. Foreign investing heightens the risk of confiscatory taxation, seizure or nationalization of assets, currency controls, or adverse political or social developments that affect investments.

Emerging markets risk: In emerging markets and less developed countries, the risks of investing in foreign securities can be magnified by less mature political systems and weaker corporate governance standards than typically found in the developed world.

Liquidity risk: Liquidity risk exists when particular investments are difficult to sell and may be more difficult to value. If the Fund is forced to sell these investments during unfavorable conditions to meet redemptions or for other cash needs, the Fund may lose money on its investments. As a result, the Fund may be unable to achieve its objective.

Performance

Annual Total Return

The following bar chart presents the calendar year total returns of the Fund Investor Shares before taxes. The bar chart provides an indication of the risks of investing in the Fund by showing changes in performance from year to year. A fund's past performance (before and after taxes) is not a guarantee of how a fund will perform in the future.

Performance data current to the most recent month-end and quarter-end are available on www.sextantfunds.com.

Sextant International Fund Annual Total Returns
Best Quarter Q3 2010 12.85%
Worst Quarter Q3 2011 -14.18%

Average Annual Total Returns

The table below presents the average annual returns for the Fund and provides an indication of the risks of investing in the Fund by showing how the Fund's average annual returns for 1, 5, and 10 years compare to those of a broad-based market index.

Periods ended December 31, 2018
  1 Year 5 Year 10 Year
Investor Shares SSIFX
Return before taxes -3.94% 3.26% 5.55%
Return after taxes on distributions -5.58% 2.31% 4.98%
Return after taxes on distributions and sale of Fund shares -3.18% 2.27% 4.71%
MSCI EAFE Index
(reflects no deduction for fees, expenses or taxes)
-13.36% 1.00% 6.81%
  1 Year Since Inception
June 2, 2017
Z Shares   SIFZX
Return before taxes -3.71% 4.22%

After-tax returns are calculated using the historical highest individual federal marginal income tax rates but do not reflect the impact of any state or local taxes. Actual after-tax returns depend on an investor's tax situation and likely differ from those shown. After-tax illustrations are not relevant to retirement plans, corporations, trusts, or other investors that are tax-deferred, tax-exempt, or taxed at special rates.

In loss periods, the average after-tax total return may be higher than average annual total return because of an assumed deduction of losses from other income.

7


Sextant International Fund

SSIFX/SIFZX

Investment Adviser

Saturna Capital Corporation is the Fund's investment adviser.

Portfolio Managers

Mr. Nicholas F. Kaiser MBA, CFA®, chairman of Saturna Capital Corporation, is the person primarily responsible for the day-to-day management of the Fund, which he has managed since 1995. Mr. Scott F. Klimo CFA®, a portfolio manager and chief investment officer of Saturna Capital Corporation, has been the deputy portfolio manager since 2014.

Purchase and Sale of Fund Shares

You may open an account and purchase shares by sending a completed application, a photocopy of a government-issued identity document, and a check made payable to the Sextant International Fund. Z Shares will be purchased by default if no share class is specified at the time of purchase.

The minimum initial investment for both Investor Shares and Z Shares is $1,000 (for tax-sheltered accounts, there is no minimum).

Shareowners may purchase additional shares at any time in minimum amounts of $25.

Shareowners may redeem shares on any business day by several methods:

Written request

Write:   Sextant Mutual Funds
            Box N
            Bellingham, WA 98227-0596

Or Fax: 360-734-0755

Telephone request

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

Online

Visit: www.sextantfunds.com

Tax Information

Any distributions you receive from the Fund may be taxed as ordinary income, qualified dividend income, or capital gains.

Financial Intermediary Compensation

If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary's website for more information.

8


Sextant Core Fund

SCORX

Investment Objective

Long-term appreciation and capital preservation.

Fees and Expenses

This section describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

Shareowner Fees

None.

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees (vary with performance) 0.51%
Other Expenses 0.37%
Total Annual Fund Operating Expenses 0.88%

Example

This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.

The Example assumes you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although actual costs may be higher or lower, based on these assumptions, your costs would be:

1 year 3 years 5 years 10 years
$90 $281 $488 $1,084

When you buy shares through a financial intermediary, that intermediary may charge a transaction fee or commission which is not reflected in the expenses table or example. Purchases and redemptions of Fund shares will be made at the daily net asset value established by the Fund (before imposition of a commission).

Portfolio Turnover

The Fund may have transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 30.01% of the average value of its portfolio.

Principal Investment Strategies

The Fund invests in a mix of equity and debt securities. It normally invests 40% of its assets in equity securities of US companies, 20% in foreign equity securities, and 40% in investment grade fixed income securities (those rated BBB or higher, including government and convertible bonds) including money market instruments and cash. When selecting equities, the Fund follows a value investment style and principally invests in income-producing securities of companies with market capitalizations greater than $5 billion.

Principal Risks of Investing

Market risk: The value of the Fund's shares rises and falls as the market value of the securities in which the Fund invests goes up and down. The market value of securities will fluctuate, sometimes significantly and unpredictably, with stocks generally being more volatile than bonds. When you redeem your shares, they may be worth more or less than what you paid for them. Only consider investing in the Fund if you are willing to accept the risk that you may lose money.

Equity securities risk: Equity securities may experience significant volatility in response to economic or market conditions or adverse events that affect a particular industry, sector, or company. Larger companies may have slower rates of growth as compared to smaller, faster-growing companies. Smaller companies may have more limited financial resources, products, or services, and tend to be more sensitive to changing economic or market conditions.

Interest rate risk: Investing in bonds includes the risk that as interest rates rise, bond prices will fall. Conversely, during periods of declining interest rates bond prices generally rise, but bond issuers may call or prepay the bond and reissue debt at lower interest rates. The longer a bond's maturity, the more sensitive the bond is to interest rate changes.

9


Sextant Core Fund

SCORX

Credit risk: Investing in bonds includes the risk that an issuer will not pay interest or principal when due, or the issuer may default altogether. If an issuer's credit quality is perceived to decline, the value and liquidity of the issuer's bonds may also decline.

Foreign investing risk: Foreign investing involves risks not normally associated with US securities. These risks include fluctuations in currency exchange rates, less public information about securities, less governmental market supervision, and lack of uniform financial, social, and political standards. Foreign investing heightens the risk of confiscatory taxation, seizure or nationalization of assets, currency controls, or adverse political or social developments that affect investments.

Liquidity risk: Liquidity risk exists when particular investments are difficult to sell and may be more difficult to value. If the Fund is forced to sell these investments during unfavorable conditions to meet redemptions or for other cash needs, the Fund may lose money on its investments. As a result, the Fund may be unable to achieve its objective.

Performance

Annual Total Return

The following bar chart presents the calendar year total returns of the Fund before taxes. The bar chart provides an indication of the risks of investing in the Fund by showing changes in performance from year to year. A fund's past performance (before and after taxes) is not a guarantee of how a fund will perform in the future.

Performance data current to the most recent month-end and quarter-end are available on www.sextantfunds.com.

Sextant Core Fund Annual Total Returns
Best Quarter Q2 2009 9.85%
Worst Quarter Q3 2011 -8.54%

Average Annual Total Returns

The table below presents the average annual returns for the Fund and provides an indication of the risks of investing in the Fund by showing how the Fund's average annual returns for 1, 5, and 10 years compare to those of a broad-based market index.

Periods ended December 31, 2018
  1 Year 5 Year 10 Year
Return before taxes -4.62% 2.91% 6.08%
Return after taxes on distributions -4.88% 2.33% 5.58%
Return after taxes on distributions and sale of Fund shares -3.47% 2.21% 5.45%
Dow Jones Moderate Portfolio Index
(reflects no deduction for fees, expenses or taxes)
-5.21% 4.11% 8.21%

After-tax returns are calculated using the historical highest individual federal marginal income tax rates but do not reflect the impact of any state or local taxes. Actual after-tax returns depend on an investor's tax situation and likely differ from those shown. After-tax illustrations are not relevant to retirement plans, corporations, trusts, or other investors that are tax-deferred, tax-exempt, or taxed at special rates.

In loss periods, the average after-tax total return may be higher than average annual total return because of an assumed deduction of losses from other income.

10


Sextant Core Fund

SCORX

Investment Adviser

Saturna Capital Corporation is the Fund's investment adviser.

Portfolio Managers

Mr. Christopher E. Paul MBA, CFA® and Mr. Phelps S. McIlvaine, both portfolio managers and investment analysts of Saturna Capital Corporation, are the persons jointly and primarily responsible for the day-to-day management of the Fund, which they have managed since 2016. Mr. Paul is responsbile for the equity portion of the portfolio. Mr. McIlvaine is responsible for the bond portion of the portfolio.

Purchase and Sale of Fund Shares

You may open an account and purchase shares by sending a completed application, a photocopy of a government-issued identity document, and a check made payable to the Sextant Core Fund.

The minimum initial investment is $1,000 (for tax-sheltered accounts, there is no minimum).

Shareowners may purchase additional shares at any time in minimum amounts of $25.

Shareowners may redeem shares on any business day by several methods:

Written request

Write:   Sextant Mutual Funds
            Box N
            Bellingham, WA 98227-0596

Or Fax: 360-734-0755

Telephone request

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

Online

Visit: www.sextantfunds.com

Tax Information

Any distributions you receive from the Fund may be taxed as ordinary income, qualified dividend income, or capital gains.

Financial Intermediary Compensation

If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary's website for more information.

11


Sextant Short-Term Bond Fund

STBFX

Investment Objective

Capital preservation and current income.

Fees and Expenses

This section describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

Shareowner Fees

None.

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees (vary with performance) 0.47%
Other Expenses 0.44%
Total Annual Fund Operating Expenses 0.91%
Fee Waiver and Expense Reimbursement 0.31%
Total Annual Fund Operating Expenses after Fee Waiver and Expense Reimbursement 0.60%

The adviser has committed through March 31, 2020, 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 0.60%. This expense limitation agreement may be changed or terminated only with approval of the Board of Trustees.

Example

This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.

The Example assumes you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although actual costs may be higher or lower, based on these assumptions, your costs would be:

1 year 3 years 5 years 10 years
$93 $290 $504 $1,120

When you buy shares through a financial intermediary, that intermediary may charge a transaction fee or commission which is not reflected in the expenses table or example. Purchases and redemptions of Fund shares will be made at the daily net asset value established by the Fund (before imposition of a commission).

Portfolio Turnover

The Fund may have transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 36.22% of the average value of its portfolio.

Principal Investment Strategies

The Fund invests at least 80% of its net assets in short-term bonds, including corporate and government bonds. Under normal circumstances, the Fund's dollar-weighted average maturity does not exceed three years. The Fund invests at least 65% of net assets in bonds rated within the three highest grades (AAA, AA, or A); and may not invest in a bond rated at the time of purchase below the fourth-highest grade (BBB).

Principal Risks of Investing

Market risk: The value of the Fund's shares rises and falls as the market value of the securities in which the Fund invests goes up and down. The market value of securities will fluctuate, sometimes significantly and unpredictably, with stocks generally being more volatile than bonds. When you redeem your shares, they may be worth more or less than what you paid for them. Only consider investing in the Fund if you are willing to accept the risk that you may lose money.

Interest rate risk: Investing in bonds includes the risk that as interest rates rise, bond prices will fall. Conversely, during periods of declining interest rates bond prices generally rise, but bond issuers may call or prepay the bond and reissue debt at lower interest rates. The longer a bond's maturity, the more sensitive the bond is to interest rate changes.

Credit risk: Investing in bonds includes the risk that an issuer will not pay interest or principal when due, or the issuer may default altogether. If an issuer's credit quality is perceived to decline, the value and liquidity of the issuer's bonds may also decline.

Liquidity risk: Liquidity risk exists when particular investments are difficult to sell and may be more difficult to value. If the Fund is forced to sell these investments during unfavorable conditions to meet redemptions or for other cash needs, the Fund may lose money on its investments. As a result, the Fund may be unable to achieve its objective.

12


Sextant Short-Term Bond Fund

STBFX

Performance

Annual Total Return

The following bar chart presents the calendar year total returns of the Fund before taxes. The bar chart provides an indication of the risks of investing in the Fund by showing changes in performance from year to year. A fund's past performance (before and after taxes) is not a guarantee of how a fund will perform in the future.

Performance data current to the most recent month-end and quarter-end are available on www.sextantfunds.com.

Sextant Short-Term Bond Fund Annual Total Returns
Best Quarter Q2 2009 2.79%
Worst Quarter Q2 2013 -0.90%

Average Annual Total Returns

The table below presents the average annual returns for the Fund and provides an indication of the risks of investing in the Fund by showing how the Fund's average annual returns for 1, 5, and 10 years compare to those of a broad-based market index.

Periods ended December 31, 2018
  1 Year 5 Year 10 Year
Return before taxes 1.08% 1.01% 1.78%
Return after taxes on distributions 0.47% 0.49% 1.15%
Return after taxes on distributions and sale of Fund shares 0.57% 0.53% 1.07%
FTSE USBIG Govt/Corp 1-3 Year Bond Index
(reflects no deduction for fees, expenses or taxes)
1.56% 0.98% 1.49%

After-tax returns are calculated using the historical highest individual federal marginal income tax rates but do not reflect the impact of any state or local taxes. Actual after-tax returns depend on an investor's tax situation and likely differ from those shown. After-tax illustrations are not relevant to retirement plans, corporations, trusts, or other investors that are tax-deferred, tax-exempt, or taxed at special rates.

In loss periods, the average after-tax total return may be higher than average annual total return because of an assumed deduction of losses from other income.

Investment Adviser

Saturna Capital Corporation is the Fund's investment adviser.

Portfolio Managers

Mr. Phelps S. McIlvaine, a vice president and portfolio manager of Saturna Capital Corporation, is the person primarily responsible for the day-to-day management of the Fund, which he has managed since 1995. Mr. Patrick T. Drum MBA, CFA®, a portfolio manager and fixed income analyst of Saturna Capital Corporation, is the deputy portfolio manager, a role he assumed in 2015.

Purchase and Sale of Fund Shares

You may open an account and purchase shares by sending a completed application, a photocopy of a government-issued identity document, and a check made payable to the Sextant Short-Term Bond Fund.

The minimum initial investment is $1,000 (for tax-sheltered accounts, there is no minimum).

Shareowners may purchase additional shares at any time in minimum amounts of $25.

Shareowners may redeem shares on any business day by several methods:

Written request

Write:   Sextant Mutual Funds
            Box N
            Bellingham, WA 98227-0596

Or Fax: 360-734-0755

Telephone request

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

Online

Visit: www.sextantfunds.com

13


Sextant Short-Term Bond Fund

STBFX

Tax Information

Any distributions you receive from the Fund may be taxed as ordinary income or capital gains.

Financial Intermediary Compensation

If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary's website for more information.

14


Sextant Bond Income Fund

SBIFX

Investment Objective

Current income.

Fees and Expenses

This section describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

Shareowner Fees

None.

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees (vary with performance) 0.41%
Other Expenses 0.43%
Total Annual Fund Operating Expenses 0.84%
Fee Waiver and Expense Reimbursement 0.19%
Total Annual Fund Operating Expenses after Fee Waiver and Expense Reimbursement 0.65%

The adviser has committed through March 31, 2020, 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 0.65%. This expense limitation agreement may be changed or terminated only with approval of the Board of Trustees.

Example

This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.

The Example assumes you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although actual costs may be higher or lower, based on these assumptions, your costs would be:

1 year 3 years 5 years 10 years
$88 $274 $477 $1,061

When you buy shares through a financial intermediary, that intermediary may charge a transaction fee or commission which is not reflected in the expenses table or example. Purchases and redemptions of Fund shares will be made at the daily net asset value established by the Fund (before imposition of a commission).

Portfolio Turnover

The Fund may have transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 0.00% of the average value of its portfolio.

Principal Investment Strategies

The Fund invests at least 80% of its net assets in bonds, including corporate and government bonds. Under normal circumstances, the Fund maintains a dollar-weighted average maturity of 10 years or more. The Fund invests at least 65% of net assets in bonds rated within the three highest grades (AAA, AA, or A) and may not invest in a bond rated at the time of purchase below the fourth highest grade (BBB).

Principal Risks of Investing

Market risk: The value of the Fund's shares rises and falls as the market value of the securities in which the Fund invests goes up and down. The market value of securities will fluctuate, sometimes significantly and unpredictably, with stocks generally being more volatile than bonds. When you redeem your shares, they may be worth more or less than what you paid for them. Only consider investing in the Fund if you are willing to accept the risk that you may lose money.

Interest rate risk: Investing in bonds includes the risk that as interest rates rise, bond prices will fall. Conversely, during periods of declining interest rates bond prices generally rise, but bond issuers may call or prepay the bond and reissue debt at lower interest rates. The longer a bond's maturity, the more sensitive the bond is to interest rate changes.

Credit risk: Investing in bonds includes the risk that an issuer will not pay interest or principal when due, or the issuer may default altogether. If an issuer's credit quality is perceived to decline, the value and liquidity of the issuer's bonds may also decline.

Liquidity risk: Liquidity risk exists when particular investments are difficult to sell and may be more difficult to value. If the Fund is forced to sell these investments during unfavorable conditions to meet redemptions or for other cash needs, the Fund may lose money on its investments. As a result, the Fund may be unable to achieve its objective.

15


Sextant Bond Income Fund

SBIFX

Performance

Annual Total Return

The following bar chart presents the calendar year total returns of the Fund before taxes. The bar chart provides an indication of the risks of investing in the Fund by showing changes in performance from year to year. A fund's past performance (before and after taxes) is not a guarantee of how a fund will perform in the future.

Performance data current to the most recent month-end and quarter-end are available on www.sextantfunds.com.

Sextant Bond Income Fund Annual Total Returns
Best Quarter Q3 2009 5.35%
Worst Quarter Q2 2013 -4.27%

Average Annual Total Returns

The table below presents the average annual returns for the Fund and provides an indication of the risks of investing in the Fund by showing how the Fund's average annual returns for 1, 5, and 10 years compare to those of a broad-based market index.

Periods ended December 31, 2018
  1 Year 5 Year 10 Year
Return before taxes -1.13% 2.95% 4.13%
Return after taxes on distributions -2.42% 1.60% 2.76%
Return after taxes on distributions and sale of Fund shares -1.42% 1.59% 2.59%
FTSE US Broad Investment-Grade Bond Index
(reflects no deduction for fees, expenses or taxes)
-0.01% 2.51% 3.36%

After-tax returns are calculated using the historical highest individual federal marginal income tax rates but do not reflect the impact of any state or local taxes. Actual after-tax returns depend on an investor's tax situation and likely differ from those shown. After-tax illustrations are not relevant to retirement plans, corporations, trusts, or other investors that are tax-deferred, tax-exempt, or taxed at special rates.

In loss periods, the average after-tax total return may be higher than average annual total return because of an assumed deduction of losses from other income.

Investment Adviser

Saturna Capital Corporation is the Fund's investment adviser.

Portfolio Managers

Mr. Phelps S. McIlvaine, a vice president and portfolio manager of Saturna Capital Corporation, is the person primarily responsible for the day-to-day management of the Fund, which he has managed since 1995. Mr. Patrick T. Drum MBA, CFA®, a portfolio manager and fixed income analyst of Saturna Capital Corporation, is the deputy portfolio manager, a role he assumed in 2015.

Purchase and Sale of Fund Shares

You may open an account and purchase shares by sending a completed application, a photocopy of a government-issued identity document, and a check made payable to the Sextant Bond Income Fund.

The minimum initial investment is $1,000 (for tax-sheltered accounts, there is no minimum).

Shareowners may purchase additional shares at any time in minimum amounts of $25.

Shareowners may redeem shares on any business day by several methods:

Written request

Write:   Sextant Mutual Funds
            Box N
            Bellingham, WA 98227-0596

Or Fax: 360-734-0755

Telephone request

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

Online

Visit: www.sextantfunds.com

16


Sextant Bond Income Fund

SBIFX

Tax Information

Any distributions you receive from the Fund may be taxed as ordinary income or capital gains.

Financial Intermediary Compensation

If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary's website for more information.

17


Sextant Global High Income Fund

SGHIX

Investment Objective

High income, with a secondary objective of capital preservation.

Fees and Expenses

This section describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

Shareowner Fees

None.

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees (vary with performance) 0.58%
Other Expenses 0.39%
Total Annual Fund Operating Expenses 0.97%
Fee Waiver and Expense Reimbursement 0.22%
Total Annual Fund Operating Expenses after Fee Waiver and Expense Reimbursement 0.75%

The adviser has committed through March 31, 2020, 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%. This expense limitation agreement may be changed or terminated only with approval of the Board of Trustees.

Example

This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.

The Example assumes you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although actual costs may be higher or lower, based on these assumptions, your costs would be:

1 year 3 years 5 years 10 years
$99 $309 $536 $1,190

When you buy shares through a financial intermediary, that intermediary may charge a transaction fee or commission which is not reflected in the expenses table or example. Purchases and redemptions of Fund shares will be made at the daily net asset value established by the Fund (before imposition of a commission).

Portfolio Turnover

The Fund may have transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 9.90% of the average value of its portfolio.

Principal Investment Strategies

The Fund invests at least 80% of its net assets in a globally diversified portfolio of income-producing debt and equity securities, including preferred stocks, depositary receipts, and high yield bonds ("junk bonds"). It applies a consistent, value-oriented approach to security selection, basing investment decisions on current income and expected total return, adjusted for risk. It adjusts allocations to individual securities to manage the portfolio's fundamental risks, such as industry, country, currency, inflation, interest rate, liquidity, and credit cycle risks. In addition, the Fund will attempt to capitalize on periodic stress in leveraged credit markets, which may result in more volatile current income in exchange for more attractive long-term, risk-adjusted total return consistent with its investment objective. When selecting equities, the Fund principally invests in income-producing securities of companies with market capitalizations greater than $5 billion.

Under normal circumstances, the Fund invests its assets as follows:

  • No more than 50% in common stocks
  • No more than 50% in securities of US issuers
  • No more than 50% in bonds rated A3 or higher
  • No more than 33% in securities of emerging market issuers

Principal Risks of Investing

Market risk: The value of the Fund's shares rises and falls as the market value of the securities in which the Fund invests goes up and down. The market value of securities will fluctuate, sometimes significantly and unpredictably, with stocks generally being more volatile than bonds. When you redeem your shares, they may be worth more or less than what you paid for them. Only consider investing in the Fund if you are willing to accept the risk that you may lose money.

18


Sextant Global High Income Fund

SGHIX

Equity securities risk: Equity securities may experience significant volatility in response to economic or market conditions or adverse events that affect a particular industry, sector, or company. Larger companies may have slower rates of growth as compared to smaller, faster-growing companies. Smaller companies may have more limited financial resources, products, or services, and tend to be more sensitive to changing economic or market conditions.

Interest rate risk: Investing in bonds includes the risk that as interest rates rise, bond prices will fall. Conversely, during periods of declining interest rates bond prices generally rise, but bond issuers may call or prepay the bond and reissue debt at lower interest rates. The longer a bond's maturity, the more sensitive the bond is to interest rate changes.

Credit risk: Investing in bonds includes the risk that an issuer will not pay interest or principal when due, or the issuer may default altogether. If an issuer's credit quality is perceived to decline, the value and liquidity of the issuer's bonds may also decline.

High yield risk: Investing in bonds that are unrated or rated below investment grade, which are known as "junk bonds" typically offer higher yields to compensate investors for increased credit risk. Issuers of high-yield securities generally are not as strong financially and are more vulnerable to changes that could affect their ability to make interest and principal payments. High-yield securities generally are more volatile and less liquid (harder to sell), which may make such securities more difficult to value.

Foreign investing risk: Foreign investing involves risks not normally associated with US securities. These risks include fluctuations in currency exchange rates, less public information about securities, less governmental market supervision, and lack of uniform financial, social, and political standards. Foreign investing heightens the risk of confiscatory taxation, seizure or nationalization of assets, currency controls, or adverse political or social developments that affect investments.

Emerging markets risk: In emerging markets and less developed countries, the risks of investing in foreign securities can be magnified by less mature political systems and weaker corporate governance standards than typically found in the developed world.

Liquidity risk: Liquidity risk exists when particular investments are difficult to sell and may be more difficult to value. If the Fund is forced to sell these investments during unfavorable conditions to meet redemptions or for other cash needs, the Fund may lose money on its investments. As a result, the Fund may be unable to achieve its objective.

Performance

Annual Total Return

The following bar chart presents the calendar year total returns of the Fund before taxes. The bar chart provides an indication of the risks of investing in the Fund by showing changes in performance from year to year. A fund's past performance (before and after taxes) is not a guarantee of how a fund will perform in the future.

Performance data current to the most recent month-end and quarter-end are available on www.sextantfunds.com.

Sextant Global High Income Fund Annual Total Returns

* For the period 3/30/2012 (the Fund's inception) through 12/31/2012, and not annualized.

Best Quarter Q3 2016 7.68%
Worst Quarter Q3 2015 -10.38%

Average Annual Total Returns

The table below presents the average annual returns for the Fund and provides an indication of the risks of investing in the Fund by showing how the Fund's average annual returns for 1 and 5 years and for the Life of the Fund compare to those of a broad-based market index.

Periods ended December 31, 2018
  1 Year 5 Year Life of Fund
Since 3/30/2012
Return before taxes -1.23% 4.11% 4.67%
Return after taxes on distributions -2.35% 2.73% 3.43%
Return after taxes on distributions and sale of Fund shares -1.25% 2.50% 3.14%
S&P Global 1200 Index
(reflects no deduction for fees, expenses or taxes)
-8.17% 5.29% 8.19%

After-tax returns are calculated using the historical highest individual federal marginal income tax rates but do not reflect the impact of any state or local taxes. Actual after-tax returns depend on an investor's tax situation and likely differ from those shown. After-tax illustrations are not relevant to retirement plans, corporations, trusts, or other investors that are tax-deferred, tax-exempt, or taxed at special rates.

19


Sextant Global High Income Fund

SGHIX

Investment Adviser

Saturna Capital Corporation is the Fund's investment adviser.

Portfolio Managers

Mr. Bryce R. Fegley CFA®, a portfolio manager and senior investment analyst of Saturna Capital Corporation, is the person primarily responsible for the day-to-day management of the Fund, which he has managed since 2012. Mr. Patrick T. Drum MBA, CFA®, a portfolio manager and fixed income analyst of Saturna Capital Corporation, is the deputy portfolio manager, a role he assumed in 2015.

Purchase and Sale of Fund Shares

You may open an account and purchase shares by sending a completed application, a photocopy of a government-issued identity document, and a check made payable to the Sextant Global High Income Fund.

The minimum initial investment is $1,000 (for tax-sheltered accounts, there is no minimum).

Shareowners may purchase additional shares at any time in minimum amounts of $25.

Shareowners may redeem shares on any business day by several methods:

Written request

Write:   Sextant Mutual Funds
            Box N
            Bellingham, WA 98227-0596

Or Fax: 360-734-0755

Telephone request

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

Online

Visit: www.sextantfunds.com

Tax Information

Any distributions you receive from the Fund may be taxed as ordinary income, qualified dividend income, or capital gains.

Financial Intermediary Compensation

If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary's website for more information.

20


Investment Objectives

The Growth Fund seeks long-term capital growth.

The International Fund seeks long-term capital growth.

The Core Fund seeks long-term appreciation and capital preservation.

The Short-Term Bond Fund seeks capital preservation and current income.

The Bond Income Fund seeks current income.

The Global High Income Fund seeks high income with a secondary objective of capital preservation.

There can be no guarantee that the investment objectives of a Fund will be realized. These investment objectives may only be changed with approval by vote of a majority of the outstanding shares of a Fund.

Principal Investment Strategies

The Sextant Funds provide basic elements to build a low-expense, balanced investment program. All Sextant Funds seek tax efficiency for their shareowners and reduced trading expenses through low portfolio turnover.

Sextant Growth, International, Core, and Global High Income Funds stock investments emphasize a value approach to investing. The adviser looks for securities it believes offer favorable possibilities for capital appreciation over the next one to four years. In selecting equities, the adviser considers factors such as growth in revenues and earnings, relative price-to-earnings and price to book value ratios, industry position and outlook, and its assessment of management.

Sextant Core, Short-Term Bond, Bond Income, and Global High Income Funds bond investments include:

  • Corporate bonds, meaning marketable bonds payable in US dollars, rated at the time of purchase within the four highest grades assigned by a national bond rating agency (e.g., Standard & Poor's: AAA, AA, A, or BBB); except Global High Income Fund, which may invest in higher-yielding, lower-rated bonds ("junk bonds");
  • Collateralized or securitized bonds, such as asset-backed securities, mortgage-backed securities, and commercial mortgage-backed securities;
  • Government and municipal securities;
  • High-quality commercial paper; and
  • Bank obligations, including repurchase agreements, of banks having total assets in excess of $1 billion.

Sextant Funds may, from time to time, take temporary defensive positions that are inconsistent with the Funds' principal investment strategies in attempting to respond to adverse market, economic, political, or other conditions. Temporary defensive positions that are inconsistent with a Fund's principal investment strategies may protect principal in adverse market conditions but could reduce returns if security prices are increasing. Taking a temporary defensive position may keep a Fund from attaining its investment objective.

Growth Fund

The Growth Fund seeks capital growth by investing in common stocks of US companies. The Fund diversifies its investments across industries and companies. The Fund looks for companies with growing revenues and earnings, favoring companies trading for less than the adviser's assessment of intrinsic value, which typically means companies with low price/earning multiples, low price to cash flow, and higher dividend yields. The Fund principally invests in securities of companies with market capitalizations greater than $1 billion.

International Fund

The International Fund invests in a diversified portfolio of foreign equities of companies with market capitalizations greater than $1 billion, including American Depository Receipts and American Depositary Shares for foreign stocks. The Fund diversifies its investments geographically and by type of securities based on the adviser's evaluation of economic, market, and political trends outside the US. The Fund ordinarily invests in securities of companies representing at least three countries outside the US.

Core Fund

The Core Fund invests in a mix of common stocks and other equity securities of companies with market capitalizations greater than $5 billion, plus bonds and other debt securities including short-term (money market) instruments. Under normal circumstances, the Core Fund invests approximately 40% of its net assets in equities of US companies, 20% in foreign equities, including American Depository Receipts and American Depositary Shares, and 40% in investment grade fixed income securities (those rated BBB or higher, including government and convertible bonds) including money market instruments and cash.

Short-Term Bond Fund

The Short-Term Bond Fund invests at least 80% of its net assets in short-term bonds, including corporate and government bonds, under normal circumstances. Its dollar-weighted average effective maturity (the sum of the market value of each bond multiplied by its number of years to anticipated maturity, divided by the portfolio's total market value) normally does not exceed three years. Because of the short maturities, it has limited credit risk and interest rate risk. The Fund invests at least 65% of net assets in bonds rated within the three highest grades (AAA, AA, or A); and may not invest in a bond rated at time of purchase below the fourth-highest grade (BBB).

Bond Income Fund

The Bond Income Fund invests at least 80% of its net assets in bonds, including corporate and government bonds, generating current

21


income under normal circumstances. Its dollar-weighted average effective maturity normally exceeds 10 years. Because of its longer average portfolio maturity, the Bond Income Fund may decline substantially should interest rates increase. It also has greater credit risk than the Short-Term Bond Fund. The Fund invests at least 65% of net assets in bonds rated within the three highest grades (AAA, AA, or A) and may not invest in a bond rated at time of purchase below the fourth highest grade (BBB).

Global High Income Fund

The Global High Income Fund invests at least 80% of its net assets in a globally diversified portfolio of income-producing debt and equity securities of companies with market capitalizations greater than $5 billion, including preferred stocks, depositary receipts, and high yield bonds ("junk bonds"). It applies a consistent, value-oriented approach to security selection, basing investment decisions on current income and expected total return, adjusted for risk. It adjusts allocations to individual securities to manage the portfolio's fundamental risks, such as industry, country, currency, inflation, interest rate, liquidity, and credit cycle risks. In addition, the Fund will attempt to capitalize on periodic stress in leveraged credit markets, which may result in more volatile current income in exchange for more attractive long-term, risk-adjusted total return consistent with its objective. The Fund normally includes securities from at least three countries outside the US.

Under normal circumstances, the Fund invests its assets as follows:

  • No more than 50% in common stocks
  • No more than 50% in securities of US issuers
  • No more than 50% in bonds rated A3 or higher
  • No more than 33% in securities of emerging market issuers

Principal Risks

As with any investment in a mutual fund, the value of a Fund's shares rises and falls as the market value of the securities in which the Fund invests goes up and down. When you redeem your shares, they may be worth more or less than what you paid for them. Before you invest in a Fund, you should carefully evaluate the Fund's investment risks in light of your investment goals. Only consider investing in a Fund if you are willing to accept the risk that you may lose money. An investment in a Fund held for longer periods over full market cycles typically provides the best potential for favorable investment returns. The Funds' principal investment strategies include the following principal investment risks.

Sextant Growth, Sextant International, Sextant Core, Sextant Short-Term Bond, Sextant Bond Income, Sextant Global High-Income Funds

Market risk: The market value of securities will fluctuate, sometimes significantly and unpredictably, with stocks generally being more volatile than bonds. The securities markets are also susceptible to data imprecision, technology malfunctions, operational errors, and similar factors that may adversely affect a single issuer, a group of issuers, an industry, or the market as a whole. A slow growing economy or a recessionary environment may adversely impact securities markets and prices of securities in which the Funds invest. Economies and financial markets throughout the world are becoming increasingly interconnected. As a result, events or conditions that impact the economies or securities markets may adversely impact the Funds even if they are not invested primarily in those economies or markets.

Liquidity risk: Liquidity risk exists when particular investments are difficult to sell and may be more difficult to value. If a Fund is forced to sell these investments during unfavorable conditions to meet redemptions or for other cash needs, a Fund may lose money on its investments. The risk of loss may increase depending on the size and frequency of redemptions and whether redemptions occur during market turmoil or declining prices. The Fund may be unable to sell its less liquid securities at its desired price. The purchase price and subsequent valuation of less liquid securities typically reflect a discount, which may be significant, from the market price of comparable securities for which a liquid market exists. Reduced liquidity may result from a drop in overall market trading volume, an inability to find a ready buyer, or legal restrictions on the securities' resale.

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Sextant Growth, Sextant International, Sextant Core, Sextant Global High Income Funds

Equity securities risk: Equity securities may experience significant volatility in response to economic or market conditions or adverse events that affect a particular industry, sector, or company. Larger companies may have slower rates of growth as compared to smaller, faster-growing companies. Smaller companies may have more limited financial resources, products, or services, and tend to be more sensitive to changing economic or market conditions. Growth stocks, which tend to trade based on future earnings expectations, may be more volatile than slower-growing value stocks, especially when market expectations are not met.

Growth investing risk: The Funds may invest in growth stocks, which may be more volatile than slower-growing value stocks. Growth stocks typically trade at higher multiples of current earnings than other stocks, which may lead to inflated prices. Growth stocks often are more sensitive to market fluctuations than other securities because their market prices are highly sensitive to future earnings expectations. At times when it appears that these expectations may not be met, growth stocks' prices typically fall and declines may be significant when a stock had been supported by significant investor speculation. During market cycles when growth investing is out of favor, selling growth stocks at desired prices may be more difficult.

Sextant Core, Sextant Short-Term Bond, Sextant Bond Income, Sextant Global High-Income Funds

Interest rate risk: Investing in bonds includes the risk that as interest rates rise, bond prices will fall. The longer a bond's maturity, the more sensitive the bond is to interest rate changes. A bond's sensitivity to interest rate changes often is measured by a bond's duration.

As levels of interest rates fluctuate, bonds with longer duration generally have larger price changes than bonds with shorter duration.

A wide variety of market factors can cause interest rates to rise, including central bank monetary policy, rising inflation, and changes in general economic conditions. Interest rates are currently extremely low, even negative, as government policies artificially inflate bond prices. Future changes in governments and their fiscal and monetary policies could lessen bond prices.

Call risk: Bonds with embedded callable options also contain an element of prepayment or call risk. When interest rates decline, issuers can retire their debt and reissue bonds at a lower interest rate. This hurts investors because yields available for reinvestment will have declined and upward price mobility on callable bonds is generally limited by the call price.

Credit risk: Investing in bonds includes the risk that an issuer will not pay interest or principal when due, or the issuer may default altogether. If an issuer's credit quality is perceived to decline, the value and liquidity of the issuer's bonds may also decline. The perceived credit of a bond issuer, and hence the price of its bonds, varies for many reasons, including profits of a business, the willingness of government units to pay their obligations, and unforeseen liabilities such as increased pension plan obligations resulting from low interest rate earnings assumptions.

Sextant International

Regional focus risk: The Fund may invest a significant portion of its assets in companies in a specific region subjecting the Fund to greater risks of adverse developments in that region and/or the surrounding regions than a fund that is more broadly diversified geographically. Political, social, or economic disruptions in the region, even in countries in which the Fund is not invested, may adversely affect the value of investments held by the Fund. This risk increases to the extent the Fund focuses on issuers in a limited number of countries in a region.

Sextant International, Sextant Core, Sextant Global High-Income Funds

Foreign investing risk: Foreign investing involves risks not normally associated with US securities. These risks include fluctuations in currency exchange rates, less public information about securities, less governmental market supervision, and lack of uniform financial, social, and political standards. Foreign investing heightens the risk of confiscatory taxation, seizure or nationalization of assets, currency controls, or adverse political or social developments that affect investments.

Sextant International, Sextant Global High-Income Fund

Emerging markets risk: In emerging markets and less developed countries, the risks of investing in foreign securities can be magnified by less mature political systems and weaker corporate governance standards than typically found in the developed world.

Sextant Global High-Income Fund

High yield risk: Investing in bonds that are unrated or rated below investment grade, which are known as "junk bonds," typically offer higher yields to compensate investors for increased credit risk. Issuers of high-yield securities generally are not as strong financially and are more vulnerable to economic and market changes that could affect their ability to make interest and principal payments as expected. High-yield securities generally are more volatile and less liquid (harder to sell), which may make such securities more difficult to value.

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Operational Risk (All Funds)

Cybersecurity risk: The risk of a cybersecurity incident arises as a result of an overall increase in deliberate attacks and the rapidly evolving nature of such attacks. Such an attack may seek to gain unauthorized access to electronic systems for purposes of obtaining nonpublic personally identifiable information or proprietary information or causing operational disruption. Saturna cannot control the cybersecurity systems of third party service providers or issuers and, therefore, a cybersecurity incident that impacts a company with which Saturna or the Funds do business may also impact Fund shareowners. While Saturna has established internal risk management measures designed to identify, protect against, detect, respond to, and recover from cybersecurity incidents, no program can guarantee that all threats and vulnerabilities have been eliminated. There currently is no insurance policy available to cover all of the potential risk of loss that may result from or is associated with a cyber attack. Unless specifically agreed by Saturna Capital separately or as may be required by law, Saturna and the Funds are neither guarantors against, nor obligors for, any damages resulting from a cyber-related incident.

Please refer to the Trust's Statement of Additional Information for further details about the risks of investing in the Funds.

Investment Information

Shareowners receive a Sextant Mutual Funds financial report showing the investment returns, portfolios, income, and expenses of each Fund every six months. The audited financial statements of each Fund for the year ended November 30, 2018, included in the Funds' Annual Report, are available upon request. Investors may obtain current share prices daily on financial information websites, by calling toll-free 1-800-728-8762, on electronic quotation systems, and at www.sextantfunds.com. The following symbols can be used to obtain quotations and other information:

Sextant Growth Fund
Investor Shares SSGFX   Z Shares SGZFX
 
Sextant International Fund
Investor Shares SSIFX   Z Shares SIFZX
 
Sextant Core Fund SCORX
 
Sextant Short-Term Bond Fund STBFX
 
Sextant Bond Income Fund SBIFX
 
Sextant Global High Income Fund SGHIX

This prospectus, financial reports, performance information, month-end portfolio holdings, proxy voting records, and other useful information are also available without charge at www.sextantfunds.com. Portfolio holdings are provided each month-end online (see the Statement of Additional Information for a description of portfolio disclosure policies).

Investment Adviser

Saturna Capital Corporation, 1300 N. State Street, Bellingham, Washington 98225 is Saturna Investment Trust's (the "Trust") investment adviser and administrator ("Saturna Capital" or the "adviser"). Founded in 1989, Saturna Capital has approximately $3.4 billion in assets under management (as of December 31, 2018). It is also the adviser to other funds of the Saturna Investment Trust, the Amana Mutual Funds Trust, and to separately managed accounts. Saturna Capital's wholly-owned subsidiary in Malaysia manages separate accounts and investment funds. Another wholly-owned subsidiary, Saturna Environmental Corporation, owns an environmental education camp.

Mr. Nicholas F. Kaiser MBA, CFA®, portfolio manager of Sextant International Fund, is chairman, director, and a controlling shareowner of Saturna Capital Corporation. Mr. Kaiser has managed equity mutual funds since 1976; he has managed equity portfolios for the adviser since founding the firm in 1989. He has been the manager of the Sextant International Fund since 1995. Mr. Kaiser is also the portfolio manager of the Amana Income and Amana Growth Funds, and deputy portfolio manager of the Saturna Sustainable Equity Fund.

Mr. Scott F. Klimo CFA®, portfolio manager of Sextant Growth Fund and deputy portfolio manager of Sextant International Fund, joined Saturna Capital in 2012 as director of research. Mr. Klimo is also Saturna's chief investment officer, the portfolio manager of the Amana Developing World Fund, and the deputy portfolio manager of the Amana Income and Amana Growth Funds. As Saturna Capital's chief investment officer, he oversees Saturna's portfolio management and investment analyst staff worldwide. From 2001 to 2011, he served as a senior investment analyst, research director, and portfolio manager at Avera Global Partners/Security Global Investors.

Mr. Phelps S. McIlvaine, portfolio manager of Sextant Short-Term Bond Fund and Sextant Bond Income Fund, and bond portfolio manager of Sextant Core Fund, has been a vice president and director of Saturna Capital since 1994. Mr. McIlvaine also manages the Idaho Tax-Exempt Fund, another fund of the Trust.

Mr. Bryce R. Fegley CFA®, portfolio manager of Sextant Global High Income Fund, joined Saturna Capital in 2001. Mr. Fegley is also the deputy portfolio manager of Saturna Sustainable Bond Fund. For Saturna Capital he has worked in brokerage, investment research, and its Malaysian investment advisory subsidiary.

Mr. Christopher E. Paul MBA, CFA®, deputy portfolio manager of Sextant Growth Fund and equity portfolio manager of Sextant Core Fund, joined Saturna Capital in 2016. From 2008 to 2015, Mr. Paul served as the Director of Research with Cannell Capital. Mr. Paul's experience includes research and management positions at asset management firms and investment banks, as well as finance and operations roles at technology companies.

Mr. Patrick T. Drum MBA, CFA®, CFP®, deputy portfolio manager of Sextant Short-Term Bond Fund, Sextant Bond Income Fund, and Sextant Global High Income Fund, joined Saturna Capital in 2014.

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He is also portfolio manager of Saturna Sustainable Bond Fund and Amana Participation Fund and deputy portfolio manager of Idaho Tax-Exempt Fund. From 2007 to 2014, Mr. Drum was a senior portfolio manager with UBS Financial Services specializing in the investment of non-US fixed income portfolios employing an ESG screening process.

See the Statement of Additional Information for a discussion of their compensation, other accounts managed, and ownership of the Sextant Funds. Portfolio managers may maintain substantial positions in the Saturna mutual funds and generally do not purchase individual securities for their own accounts.

Advisory Fee

Each of the Sextant Funds pays the adviser an Advisory and Administrative Services Fee (the "Base Fee"). The Base Fee is compensation for portfolio management, advice, and recommendations on securities to be purchased, held, or sold. The Base Fee also covers certain administrative services such as portfolio accounting, shareowner and financial reporting, shareowner servicing, and transfer agency services. The Base Fee is currently computed at the annual rate of 0.50% of average daily net assets of each Fund, paid monthly, and is subject to a maximum adjustment of up to 0.20%, up or down, depending on the investment performance of the Fund relative to its Morningstar-specified benchmark.

For each month in which any Fund's total investment return (change in net asset value plus all distributions reinvested) for the one year period through that month outperforms or underperforms the total return of a specified benchmark for that period by 1% or more but less than 2%, the Base Fee is increased or decreased by the annual rate of 0.10% based on the Fund's average net assets over the performance period (one year).

  • If the outperformance or underperformance is 2% or more then the adjustment is at the annual rate of 0.20%.

The Sextant Funds are assigned by Morningstar into appropriate categories, which are the benchmarks used for the performance fee computation:

Sextant Growth Large Growth
Sextant International Foreign Large Blend
Sextant Core Allocation – 50% to 70% Equity
Sextant Short-Term Bond Short-Term Bond
Sextant Bond Income Long-Term Bond
Sextant Global High Income World Allocation

For the fiscal year ended November 30, 2018, the aggregate advisory fee paid (after performance adjustments and fee waivers) was 0.42%, 0.58%, 0.51%, 0.16%, 0.22%, and 0.36% of average net assets for Growth, International, Core, Short-Term Bond, Bond Income, and Global High Income Funds, respectively.

A discussion regarding the basis for the Board of Trustees renewing the advisory contracts is available in the Funds' Annual Report for the fiscal year ended November 30, 2018.

Fund Share Pricing

Each Fund computes its daily share price (net asset value) using market prices as of the close of trading on the New York Stock Exchange (generally 4 p.m. Eastern time). Fund shares are not priced on the days when New York Stock Exchange trading is closed (typically weekends and US national holidays). Equity securities traded on a national securities exchange and over-the-counter securities are valued at the last reported sale price on the valuation day. Bonds and other fixed-income securities are valued at prices supplied by one or more independent pricing services, which generally reflect valuations provided by securities broker-dealers and analysis conducted by the independent pricing service. Securities for which there are no sales are valued at the latest bid price. Occasionally there may be days without a readily available market price for a security. These may happen when trading in a security is suspended, the market on which a security is principally traded closes early, or trading volume is insufficent to produce a reliable quoted or computed price. When this occurs, a fair value for such security is determined in good faith using fair value procedures approved by and administered under the supervision of the Board of Trustees. Using fair value to price a security may result in a value different from the security's most recent closing price and from the prices used by other mutual funds to calculate their share prices.

Foreign markets may close before the time as of which the share price is computed. Because of this, events occurring after the close of a foreign market and before the share price computation may have a material effect on foreign security prices. To account for this, the Funds use evaluations provided by an independent pricing service for bonds and foreign securities. Such evaluations are based on the foreign securities' most recent closing market prices as of 4 p.m. Eastern time and correlations with broad market indices, sector indices, equity index futures contracts, American Depositary Receipts, and other factors. Foreign securities may trade on weekends or other days when the Funds do not price their shares. As a result, the share price may change on days when you will not be able to purchase or redeem shares.

A Fund computes the share price of share classes by dividing the net assets attributable to each share class by the outstanding shares of that class. Each share class represents an interest in the same investment portfolio. Each share class is identical in all respects except that each class bears its own class expenses, and each class has exclusive voting rights. As a result of the differences in the expenses borne by each share class the share price will vary among a Fund's share classes.

Additional information about portfolio security valuation, including foreign securities, is contained in the Funds' Statement of Additional Information (SAI).

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Purchase and Sale of Fund Shares

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT: To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. What this means for you: When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. For most accounts, we will ask for a photocopy of your driver's license or other identifying documents.

You may open an account and purchase shares by sending a completed application, a photocopy of a government-issued identity document, and a check made payable to the Fund(s) of your choice. Certain account types may be opened online. The minimum initial investment for each Fund is $1,000. The Funds do not accept initial orders via telephone or unaccompanied by payment.

A broker-dealer or other financial intermediary that maintains an account with a Fund in the intermediary's name as nominee for the benefit of the intermediary's clients may aggregate client orders to meet the $1,000 initial minimum investment. In addition, shares of the Funds are available for purchase without any minimum initial investment by:

  • Qualified and non-qualified employer-sponsored retirement or benefit plans, including 401(k) plans, 457 plans, 403(b) plans, profit-sharing plans, and deferred compensation plans;
  • Qualified retirement or benefit plans, including IRA, ESA, and HSA plans serviced as trustee by Saturna Trust Company; and
  • Fee-based advisory programs (including mutual fund wrap programs) sponsored by financial intermediaries that provide bundled services for a fee.

The price applicable to purchases and redemptions of Fund shares is the price next computed after receipt of a purchase or redemption request in proper order. There are no sales charges or loads. The Funds may reject purchases for any reason, such as excessive trading. In addition, anti-money laundering regulations limit acceptance of third-party checks and money orders.

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

With prior authorization, orders can be entered at
www.sextantfunds.com.

Shareowners may authorize the purchase or redemption of shares via electronic funds transfer ("EFT") by completing the appropriate section of the application. To use EFT to purchase or redeem shares, simply call 800-728-8762 (800-SATURNA). Investors may also wire money to purchase shares, though the wiring bank typically charges a fee for this service. Please notify Saturna Capital when you are wiring money.

Each time shares are purchased or redeemed, a confirmation is sent showing the details of the transaction as well as the current number and value of shares held. Share balances are computed in full and fractional shares, expressed to three decimal places.

Shareowners may request a redemption of all or part of their investment on any business day of the Funds. The Funds pay redemption proceeds in US dollars, and the amount per share received is the price next determined after receipt of a redemption request in proper order. The amount received depends on the value of the investments of a Fund on that day and may be more or less than the cost of the shares being redeemed.

If you are redeeming shares that you recently purchased by check, the Funds may delay sending your redemption proceeds until your check has cleared. This may take up to 15 calendar days after your check is received. If you are redeeming shares that you have recently purchased by EFT, those shares may be subject to a 60-day waiting period during which such shares may only be redeemed by EFT to the same bank account from which the funds were initially withdrawn. Such shares may not be redeemed online during the 60-day waiting period.

There are several methods you may choose to redeem shares:

Written request

Write:   Sextant Mutual Funds
            Box N
            Bellingham, WA 98227-0596

Or Fax: 360-734-0755

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

  • Redemption check (no minimum)
  • Federal funds wire ($5,000 minimum)

Note: Signatures on written requests, such as payments directed to a third party, may need to be guaranteed by a national bank, trust company, or by a member of a national securities exchange.

Prevailing rates apply to federal funds wires and expedited courier service for redemption checks. Delivery times cannot be guaranteed by the Funds.

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Telephone request

Call: 1-800-728-8762 or 1-360-734-9900

Unless Saturna is notified in advance that you do not want this privilege, you may redeem shares by a telephone request and choose one of the following options for the proceeds:

  • Redemption check (no minimum) sent to registered owner(s) at the account address of record. Note: Redemption checks sent to other than registered owners may require a written request with a signature guarantee.
  • Electronic Funds Transfer ($100 minimum) with proceeds transferred to your bank account as designated by the EFT authorization on your application. The transfer agent must receive the EFT authorization at least two weeks before EFT transfer can be used.
  • Exchange (in at least the minimum initial amount established by the Fund being purchased) for shares of any other Fund for which Saturna Capital is adviser. If the exchange is your initial investment into this Fund, the new account will automatically have the same registration as your original account.

For telephone requests, the Funds will endeavor to confirm that instructions are genuine. The caller must provide:

  • the name of the person making the request,
  • the name and address of the registered owner(s),
  • the account number,
  • the amount to be redeemed, and
  • the method for remittance of the proceeds.

Online

Visit: www.sextantfunds.com

To initiate transactions online, shareowners must first complete an Online Access and E-Delivery form available on www.sextantfunds.com or by calling toll-free 1-800-728-8762. When accessing their account, users must provide the username and password, and possible security prompts.

As the transfer agent, Saturna may also require a form of personal identification. Neither the transfer agent nor the Funds will be responsible for the results of transactions they reasonably believe genuine.

The shares and/or uncashed checks of redemptions, dividends, or distributions may be transferred to your state of residence if no activity occurs within your account during an "inactivity period" specified in your state's laws. The shareowner's last known address of record determines which state has jurisdiction. Some states, such as Texas, allow shareowners to designate a representative to receive escheatment (transfer) notifications if their account is being transfered to a state government.

The Funds may restrain any account and suspend account services when: the Funds believe that there may exist a dispute between the registered or beneficial account owners; the Funds believe that a transaction may be fraudulent; in cases of abusive or threatening conduct or suspected illegal activity; or if the Funds are unable to verify the identity of the person(s) or entity opening an account or requesting a transaction.

The Funds normally send redemption proceeds within one day, however if the Funds reasonably believe that a cash redemption would negatively impact the operations of a Fund or that the shareowner may be engaged in market-timing or frequent trading, the Funds reserve the right delay payment of the redemption proceeds for up to seven calendar days. The Funds' investment team continually monitors portfolio liquidity and adjusts the Funds' cash levels based on market outlook, portfolio and investor transactions, and other relevant criteria. Unlike many mutual funds, the Sextant Funds do not maintain a bank line of credit that could be used to meet short-term liquidity needs. There can be no assurance that the Fund will be able to manage liquidity successfully in all market environments. Under stressed conditions, the Funds may not pay redemption proceeds in a timely fashion.

The Funds reserve the right to change the terms of purchasing shares and services offered.

Converting Shares

At no charge, you may convert one class of shares of a Fund directly to another class of shares of the same Fund, subject to the eligibility requirements and the fees and expenses of the share class of the Fund you convert into.

If you purchased shares directly from the Funds, you may initiate this process by contacting Saturna Capital. If you have purchased your shares through an intermediary, you should contact your intermediary to initiate this process. Your ability to conduct a share class conversion through an intermediary will depend on the share classes your intermediary makes available on the platform or program through which you own shares.

In addition, your intermediary may permit or require you to exchange your shares in a Fund into shares of a different class of the Fund if you elect to change the platform or program through which you own shares at the intermediary (e.g., advisory or retail brokerage), depending on the share classes your intermediary makes available on its platforms. The Fund share class you exchange into may have higher or lower fees than the share class you held. Contact your intermediary for more information.

Conversions will occur at the next available respective net asset values of the share classes. A conversion between share classes of a Fund is not normally a taxable event. You may only convert shares between accounts with identical registrations (i.e., the same names and addresses).

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Purchase and Sale of Fund Shares Through Financial Intermediaries

The Funds have authorized financial intermediaries (such as securities brokers or dealers, retirement plan recordkeepers, banks, and trust companies) to receive purchase, redemption, and exchange orders on behalf of the Funds. These authorized intermediaries may designate other intermediaries to receive such orders. A Fund will be deemed to have received a purchase, redemption, or exchange order when an authorized intermediary (or its designee) receives the transaction request in good order.

If you purchase shares through an intermediary, the transfer agent may not have your account information. If so, you must contact your intermediary to perform transactions. Investors should be aware that intermediaries might have policies different than the Funds' policies regarding purchases, redemptions, or exchanges and these may be in addition to or in place of the Funds' policies. For more information about these restrictions and policies, please contact your broker, retirement plan administrator, or other intermediary.

Distributions

The Funds intend to distribute their net investment income and net realized capital gains, if any, to their shareowners. Distributions from capital gains are paid annually, typically by the end of the year. Growth Fund, International Fund, Core Fund, and Global High Income Fund pay income dividends annually, typically by the end of the year. Short-Term Bond and Bond Income Funds declare income dividends daily, which are reinvested or distributed (paid) monthly. As a result of their investment strategies, Short-Term Bond and Bond Income Funds expect that their dividends will consist primarily of ordinary income.

Dividends paid by each Fund with two share classes are calculated in the same manner and at the same time.

Both dividends and capital gain distributions are paid in additional full and fractional shares of the Fund owned. At your option, you may receive dividends and/or capital gain distributions greater than $10 in cash. Dividends or capital gains in amounts less than $10 will be reinvested. If you do not indicate any choice on your application, your dividends will be reinvested. You are notified of each dividend and capital gain distribution at the end of the month when paid.

Returned dividend checks and dividend checks that remain uncashed for six months will be automatically reinvested into your account and invested in additional shares of the Fund owned; future dividends in such accounts will continue to be reinvested until the shareowner is located or the account is closed.

Frequent Trading Policy

The Funds are intended for long-term investment and do not permit rapid trading. The Funds' Board of Trustees has adopted a Frequent Trading Policy that attempts to identify and limit rapid trading. Rapid trading may lead to higher portfolio turnover, which may negatively affect performance or increase costs, thereby adversely affecting other shareowners.

To the extent reasonably practicable, the Funds monitor trading in their shares in an effort to identify trading patterns that appear to indicate frequent purchases and redemptions that might violate the Frequent Trading Policy. If the Funds believe that they have identified a pattern of such trading (whether directly through a Fund, indirectly through an intermediary, or otherwise), they may, in their sole discretion, temporarily or permanently bar future purchases of shares of the Funds (or any other fund managed by the adviser) by the account holder, or any accounts under common control (such as those advised by an investment manager or any other type of asset allocator).

In making such a judgment, factors considered may include the size of the trades, the frequency and pattern of trades, the methods used to communicate orders, and other factors considered relevant.

Although this process involves judgments that are inherently subjective, the Funds seek to make decisions that are consistent with the interests of the Funds' shareowners. The Funds reserve the right to refuse or revoke any purchase order for any reason a Fund believes to be contrary to the Frequent Trading Policy.

The Funds often receive orders through financial intermediaries who trade Fund shares through omnibus accounts (i.e., a single account in which the transactions of individual shareowners are combined). When possible, the Funds obtain contractual agreements with intermediaries to enforce the Funds' redemption policies, and rely on intermediaries to have reasonable procedures in place to detect and prevent excessive trading or market timing of Fund shares. The Funds cannot always identify all intermediaries, or detect or prevent trading that violates the Frequent Trading Policy through intermediaries or omnibus accounts. Some intermediaries trade shares of several Funds and cannot always enforce a particular Fund's policies.

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Tax Consequences

Dividends and capital gain distributions may be subject to income tax, whether they are paid in cash or reinvested in additional Fund shares, depending on the type of distribution, the type of your account, and your city, state, and country of tax residence. Income dividends paid by the Funds (other than Sextant Short-Term Bond and Sextant Bond Income) are normally eligible for the "qualified dividend income" tax rate.

An exchange of a Fund's shares for shares of another fund will be treated as a sale of the Fund's shares and any gain on the transaction may be subject to income tax.

Shareowners receive quarterly statements. The year-end statement should be retained for tax accounting. Saturna Capital Corporation keeps each account's entire investment transaction history and helps shareowners maintain the tax records needed to determine reportable capital gains and losses as well as dividend income.

Each February, the Funds' transfer agent reports to each shareowner (consolidated by US taxpayer identification number) and to the Internal Revenue Service ("IRS") the amount of each redemption transaction of the shareowner and the amount of dividends and capital gain distributions he or she received for the preceding calendar year. Capital gains a Fund distributes may be taxed at different rates, depending on the length of time a Fund held its investments on which the gains were realized.

Tax regulations require reporting cost basis information to you and the IRS on Form 1099-B. This information is reported using a cost basis method selected by you or, in the event no cost basis method was selected, our default method (FIFO — First In, First Out). Please note that the cost basis information reported to you may not always be the same as what you report on your tax return as different rules may apply. You should save your transaction records to make sure the information reported on your tax return is accurate.

To avoid being subject to federal backup withholding tax on dividends and other distributions, you must furnish your correct Social Security or other tax payer identification number when you open an account.

Distributions to shareowners who are not US taxpayers may be subject to withholding tax unless an applicable tax treaty provides for a reduced rate or exemption. Capital gain distributions paid by the Funds are not subject to foreign withholding.

The Funds place no formal restrictions on portfolio turnover and the investment adviser will buy or sell investments per its appraisal of the factors affecting each investment, such as its business, its industry, and the market. The Sextant International Fund historically has had low portfolio turnover, and its portfolio turnover is expected to be lower than that of comparable actively-managed equity funds. The portfolio manager seeks to minimize income taxes paid by taxable shareowners, which includes: (1) a "buy and hold" strategy with low portfolio turnover, (2) offsetting capital gains with losses, and (3) selling highest-cost tax-lots first. Thus, the Fund's portfolio investments may have a higher level of unrealized capital appreciation than if the Fund did not use these strategies. During periods of net redemptions of Fund shares or when market conditions warrant, the portfolio manager may sell these investments, generating a higher level of capital gain distributions than would occur if the Fund had not used these low-turnover strategies.

Distribution Arrangements

The Sextant Funds intend to comply with with the concept of Clean Shares as defined by the United States Securities and Exchange Commission. Clean Shares are characterized by a lack of any ongoing distribution expenses, sub-transfer agency, or recordkeeping fees, and that financial intermediaries transact shares solely on an agency basis. When you purchase Clean Shares through a financial intermediary, such as a broker-dealer or financial adviser, you may be charged a transaction fee or commission to purchase the shares.

Shares of the Sextant Core Fund, Sextant Short-Term Bond Fund, Sextant Bond Income Fund, Sextant Global High Income Fund, and Sextant Growth Fund Z Shares and Sextant International Fund Z Shares are Clean Shares. Sextant Growth Fund and Sextant International Fund also offer Investor Shares, which have different fees and expenses.

Sextant Growth Fund Investor Shares and Sextant International Fund Investor Shares have distribution plans under Rule 12b-1 that allow each Fund to pay distribution and other costs for the sale of Investor Shares and shareowner services. Under the plan, Investor Shares of Sextant Growth and International Funds pay 0.25% annually of their average daily net assets to the distributor, Saturna Brokerage Services, Inc., a wholly-owned subsidiary of Saturna Capital. Because these costs are paid out of Investor Share net assets on an ongoing basis, over time these costs will increase the cost of your investment and may cost you more than paying other types of sales charges.

Shares may be purchased and sold through intermediaries, such as broker-dealers, financial advisers, and retirement plan administrators, having agreements with the Funds. These intermediaries may require the adviser/distributor to the Funds to share revenues to compensate the intermediaries for their services. Any such payments could be characterized as "revenue sharing." An intermediary's receipt or expectation of receipt of revenue sharing payments could influence an intermediary's recommendation of the Funds. You should review your intermediary's compensation practices for that information. For more information, see the Funds' Statement of Additional Information.

29


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30


Financial Highlights

The tables on the following pages can help you understand each Fund's financial performance. The top section of each table reflects financial results for a single Fund share. The total returns represent the rate that an investor earned (or lost) on an investment in each Fund, assuming reinvestment of all dividends and distributions and without regard to income taxes. Tait, Weller & Baker LLP, the independent registered public accounting firm for the Funds, audited this information. Their report and each Fund's financial statements are in the Funds' annual report (available free upon request from the Funds at www.sextantfunds.com or by calling 800-728-8762).


Sextant Growth Fund: Financial Highlights

Investor Shares (SSGFX) For year ended November 30,
Selected data per share of outstanding capital stock throughout each year: 2018 2017 2016 2015 2014
Net asset value at beginning of year $27.51 $22.52 $24.03 $26.36 $23.92
Income from investment operations
Net investment income 0.07A 0.15A 0.11 0.03 0.02
Net gains (losses) on securities (both realized and unrealized) 2.53 4.93 (0.88) (0.25) 3.88
Total from investment operations 2.60 5.08 (0.77) (0.22) 3.90
Less distributions
Dividends (from net investment income) (0.07) (0.09) (0.02) (0.04) (0.01)
Distributions (from capital gains) (1.34) - (0.72) (2.07) (1.45)
Total distributions (1.41) (0.09) (0.74) (2.11) (1.46)
 
Net asset value at end of year $28.70 $27.51 $22.52 $24.03 $26.36
 
Total return 9.95% 22.64% (3.22)% (0.87)% 16.29%
 
Ratios / supplemental data
Net assets ($000), end of year $5,037 $5,962 $34,561 $55,867 $45,863
Ratio of expenses to average net assets
Before custodian fee credits 0.92% 0.76% 0.76% 0.90% 1.05%
After custodian fee credits 0.92% 0.76% 0.76% 0.90% 1.05%
Ratio of net investment income after custodian fee credits to average net assets 0.25% 0.60% 0.39% 0.13% 0.07%
Portfolio turnover rate 17% 18% 25% 68% 23%

 

Z Shares (SGZFX) Year ended Period ended
Selected data per share of outstanding capital stock throughout each period: November 30, 2018 November 30, 2017B
Net asset value at beginning of period $27.50 $25.54
Income from investment operations
Net investment income 0.13A 0.16A
Net gains on securities (both realized & unrealized) 2.53 1.82
Total from investment operations 2.66 1.98
Less distributions
Dividends (from net investment income) (0.17) (0.02)
Distributions (from capital gains) (1.34) -
Total distributions (1.51) (0.02)
 
Net asset value at end of period $28.65 $27.50
 
Total return 10.20% 7.73%C
 
Ratios / supplemental data
Net assets ($000), end of period $34,191 $32,017
Ratio of expenses to average net assets
Before custodian fee credits 0.70% 0.51%D
After custodian fee credits 0.70% 0.51%D
Ratio of net investment income after custodian fee credits to average net assets 0.47% 0.89%D
Portfolio turnover rate 17% 18%C

 

A Calculated using average shares outstanding
B Operations commenced on June 2, 2017
C Not annualized
D Annualized

32


Sextant International Fund: Financial Highlights

Investor Shares (SSIFX) For year ended November 30,
Selected data per share of outstanding capital stock throughout each year: 2018 2017 2016 2015 2014
Net asset value at beginning of year $17.98 $14.37 $14.35 $15.47 $15.80
Income from investment operations
Net investment income 0.15A 0.16A 0.22 0.25 0.65
Net gains (losses) on securities (both realized and unrealized) 0.14 3.65 (0.15) (1.11) (0.35)
Total from investment operations 0.29 3.81 0.07 (0.86) 0.30
Less distributions
Dividends (from net investment income) (0.17) (0.20) (0.05) (0.25) (0.63)
Distributions (from capital gains) (1.27)        
Distributions (from return of capital) - - - (0.01) -
Total distributions (1.44) (0.20) (0.05) (0.26) (0.63)
 
Net asset value at end of year $16.83 $17.98 $14.37 $14.35 $15.47
 
Total return 1.63% 26.76% 0.49% (5.58)% 1.88%
 
Ratios / supplemental data
Net assets ($000), end of year $41,688 $46,321 $62,412 $78,296 $103,450
Ratio of expenses to average net assets
Before custodian fee credits 1.05% 1.04% 1.00% 1.05% 0.80%
After custodian fee credits 1.04% 1.04% 1.00% 1.04% 0.79%
Ratio of net investment income after custodian fee credits to average net assets 0.89% 1.00% 1.36% 1.49% 3.58%
Portfolio turnover rate 2% 2% 0% 0% 3%

 

Z Shares (SIFZX) Year ended Period ended
Selected data per share of outstanding capital stock throughout each period: November 30, 2018 November 30, 2017B
Net asset value at beginning of period $18.00 $16.55
Income from investment operations
Net investment income 0.19A 0.13A
Net gains on securities (both realized & unrealized) 0.14 1.41
Total from investment operations 0.33 1.54
Less distributions
Dividends (from net investment income) (0.19) (0.09)
Distributions (from capital gains) (1.27) -
Total distributions (1.46) (0.09)
 
Net asset value at end of period $16.87 $18.00
 
Total return 1.83% 9.32%C
 
Ratios / supplemental data
Net assets ($000), end of period $20,692 $21,031
Ratio of expenses to average net assets
Before custodian fee credits 0.84% 0.79%D
After custodian fee credits 0.82% 0.78%D
Ratio of net investment income after custodian fee credits to average net assets 1.13% 0.53%D
Portfolio turnover rate 2% 2%C

 

A Calculated using average shares outstanding
BOperations commenced on June 2, 2017
C Not annualized
D Annualized

33


Sextant Core Fund (SCORX)

Financial Highlights For year ended November 30,
Selected data per share of outstanding capital stock throughout each year: 2018 2017 2016 2015 2014
Net asset value at beginning of year $12.99 $11.45 $11.25 $12.43 $11.78
Income from investment operations
Net investment income 0.18 0.16 0.18 0.18 0.21
Net gains (losses) on securities (both realized and unrealized) (0.16) 1.55 0.02 (0.72) 0.78
Total from investment operations 0.02 1.71 0.20 (0.54) 0.99
Less distributions
Dividends (from net investment income) (0.17) (0.17) - (0.18) (0.21)
Distributions (from capital gains) - - - (0.46) (0.13)
Total distributions (0.17) (0.17) - (0.64) (0.34)
 
Net asset value at end of year $12.84 $12.99 $11.45 $11.25 $12.43
 
Total return 0.16% 15.15% 1.78% (4.38)% 8.41%
 
Ratios / supplemental data
Net assets ($000), end of year $12,851 $12,980 $8,563 $8,435 $8,656
Ratio of expenses to average net assets
Before custodian fee credits 0.88% 0.84% 1.05% 1.02% 1.17%
After custodian fee credits 0.87% 0.83% 1.04% 1.01% 1.16%
Ratio of net investment income after custodian fee credits to average net assets 1.41% 1.52% 1.52% 1.44% 1.88%
Portfolio turnover rate 30% 34% 39% 24% 14%

Sextant Short-Term Bond Fund (STBFX)

Financial Highlights For year ended November 30,
Selected data per share of outstanding capital stock throughout each year: 2018 2017 2016 2015 2014
Net asset value at beginning of year $5.00 $5.02 $5.02 $5.04 $5.05
Income from investment operations
Net investment income 0.07 0.06 0.05 0.05 0.06
Net gains (losses) on securities (both realized and unrealized) (0.06) (0.02) 0.00A (0.02) (0.01)
Total from investment operations 0.01 0.04 0.05 0.03 0.05
Less distributions
Dividends (from net investment income) (0.07) (0.06) (0.05) (0.05) (0.06)
Capital gains distribution (0.00)A - - - -
Total distributions (0.07) (0.06) (0.05) (0.05) (0.06)
 
Net asset value at end of year $4.94 $5.00 $5.02 $5.02 $5.04
 
Total return 0.26% 0.87% 1.06% 0.67% 0.94%
 
Ratios / supplemental data
Net assets ($000), end of year $10,276 $10,705 $10,326 $7,488 $7,674
Ratio of expenses to average net assets
Before fee waivers and custodian fee credits 0.91% 1.01% 1.15% 1.21% 1.29%
After fee waivers 0.61% 0.68% 0.76% 0.76% 0.76%
After fee waivers and custodian fee credits 0.60% 0.68% 0.75% 0.75% 0.75%
Ratio of net investment income after fee waivers and custodian fee credits to average net assets 1.44% 1.26% 1.05% 1.06% 1.14%
Portfolio turnover rate 36% 31% 11% 13% 14%
A Amount is less than $0.01

34


Sextant Bond Income Fund (SBIFX)

Financial Highlights For year ended November 30,
Selected data per share of outstanding capital stock throughout each year: 2018 2017 2016 2015 2014
Net asset value at beginning of year $5.14 $5.07 $5.07 $5.26 $5.05
Income from investment operations
Net investment income 0.16 0.16 0.15 0.17 0.16
Net gains (losses) on securities (both realized and unrealized) (0.25) 0.07 0.00A (0.19) 0.21
Total from investment operations (0.09) 0.23 0.15 (0.02) 0.37
Less distributions
Dividends (from net investment income) (0.16) (0.16) (0.15) (0.17) (0.16)
Total distributions (0.16) (0.16) (0.15) (0.17) (0.16)
 
Net asset value at end of year $4.89 $5.14 $5.07 $5.07 $5.26
 
Total return (1.78)% 4.51% 2.91% (0.47)% 7.40%
 
Ratios / supplemental data
Net assets ($000), end of year $10,933 $9,496 $9,703 $7,998 $7,967
Ratio of expenses to average net assets
Before fee waivers and custodian fee credits 0.86% 0.98% 1.01% 1.03% 1.27%
After fee waivers 0.66% 0.78% 0.89% 0.90% 0.91%
After fee waivers and custodian fee credits 0.65% 0.78% 0.88% 0.90% 0.90%
Ratio of net investment income after fee waivers and custodian fee credits to average net assets 3.20% 3.05% 2.85% 3.21% 3.07%
Portfolio turnover rate 0% 4% 11% 4% 13%
A Amount is less than $0.01

Sextant Global High Income Fund (SGHIX)

Financial Highlights For year ended November 30,
Selected data per share of outstanding capital stock throughout each year: 2018 2017 2016 2015 2014
Net asset value at beginning of year $11.12 $10.11 $8.89 $10.57 $10.51
Income from investment operations
Net investment income 0.40 0.35 0.45 0.52 0.48
Net gains (losses) on securities (both realized and unrealized) (0.15) 1.11 0.77 (1.68) 0.07
Total from investment operations 0.25 1.46 1.22 (1.16) 0.55
Less distributions
Dividends (from net investment income) (0.30) (0.45) - (0.52) (0.49)
Total distributions (0.30) (0.45) - (0.52) (0.49)
 
Net asset value at end of year $11.07 $11.12 $10.11 $8.89 $10.57
 
Total return 2.31% 15.01% 13.72% (11.01)% 5.27%
 
Ratios / supplemental data
Net assets ($000), end of year $8,827 $9,373 $7,570 $6,952 $7,707
Ratio of expenses to average net assets
Before fee waivers 0.97% 1.18% 1.17% 1.06% 1.41%
After fee waivers 0.75% 0.83% 0.91% 0.90% 0.91%
After fee waivers and custodian fee credits 0.75% 0.82% 0.90% 0.89% 0.90%
Ratio of net investment income after fee waivers and custodian fee credits to average net assets 3.43% 3.34% 4.78% 4.87% 4.75%
Portfolio turnover rate 10% 8% 26% 40% 11%

35


 

Additional information about each Fund's investments is available in the Funds' annual and semi-annual shareowner reports. The Funds' annual report includes a discussion of the market conditions and investment strategies that significantly affected each Fund's performance during its last fiscal year. The Statement of Additional Information contains additional information and is incorporated in this Prospectus by reference. To request a free copy of the Statement of Additional Information, any reports or other information associated with the Sextant Funds, and to make shareowner inquiries, please contact us at:

Saturna Investment Trust – Sextant Mutual Funds
1300 N. State St., Bellingham, WA 98225
1-800-728-8762 [1-800-SATURNA]
www.sextantfunds.com

The Statement of Additional Information, the Annual and Semi-Annual Reports, this Prospectus, and other documents are available to download from our website, www.sextantfunds.com and/or from your financial intermediary.

Information about the Funds (including the SAI) can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. (call 202-551-8090 for information). Reports and other information about the Funds are also available on the SEC's EDGAR database (www.sec.gov), and copies may be obtained, upon payment of a duplicating fee, by writing the Public Reference Section of the SEC, Washington, D.C. 20549-1520 or sending email to publicinfo@sec.gov.

The Sextant Funds are series of Saturna Investment Trust.

(logo omitted)

Saturna Capital
1300 N. State Street
Bellingham, WA 98225
1-800-728-8762
www.saturna.com

Saturna Investment Trust's Investment Company Act file number is 811-05071.

Sextant Mutual Funds Annual Report Cover November 30, 2018

Sextant Mutual Funds

Annual Report November 30, 2018

Beginning on January 29, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Sextant Mutual Funds' annual and semi-annual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Funds' website (www.saturna.com/reports), and you will be notified by mail each time a report is posted and provided with a website link to access the report.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically anytime by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by calling 800-SATURNA (800-728-8762) or by sending an e-mail request to Sextant Mutual Funds at info@saturna.com.

Beginning on January 2, 2019, you may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800-SATURNA (800-728-8762) or send an e-mail request to Sextant Mutual Funds at info@saturna.com to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held in your account if you invest through your financial intermediary or all funds held with the fund complex if you invest directly with the Funds.


Average Annual Total Returns as of December 31, 2018 1 Year 3 Year 5 Year 10 Year 15 Year Expense Ratio¹
Gross Net
 
Sextant Short-Term Bond Fund (STBFX) 1.08% 1.01% 1.01% 1.78% 2.10% 0.88% 0.60%
FTSE USBIG Govt/Corp 1-3 Year Index 1.56% 1.20% 0.98% 1.49% 2.26% n/a
 
Sextant Bond Income Fund (SBIFX) -1.13% 2.60% 2.95% 4.13% 3.63% 0.86% 0.65%
FTSE US Broad Investment-Grade Bond Index -0.01% 2.07% 2.51% 3.36% 3.94% n/a
 
Sextant Core Fund (SCORX) -4.62% 4.43% 2.91% 6.08% n/a 0.73%
Dow Jones Moderate US Portfolio Index -5.21% 5.52% 4.11% 8.21% 6.10% n/a
 
Sextant Global High Income Fund (SGHIX) -1.23% 10.87% 4.11% n/a n/a 1.06% 0.75%
S&P Global 1200 Index -8.17% 7.38% 5.29% 10.28% 6.85% n/a
 
Sextant Growth Fund Investor Shares (SSGFX) 0.42% 6.94% 6.28% 10.48% 7.67% 0.76%
Sextant Growth Fund Z Shares (SGZFX) 0.67% n/a n/a n/a n/a 0.51%
S&P 500 Index -4.38% 9.25% 8.49% 13.11% 7.76% n/a
 
Sextant International Fund Investor Shares (SSIFX) -3.94% 8.88% 3.26% 5.55% 6.14% 1.04%
Sextant International Fund Z Shares (SIFZX) -3.71% n/a n/a n/a n/a 0.79%
MSCI EAFE Index -13.36% 3.38% 1.00% 6.81% 5.22% n/a
 

Performance data quoted above 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. Funds that invest in foreign securities may involve greater risk, including political and economic uncertainties of foreign countries as well as the risk of currency fluctuations.

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

A note about risk: Please see Notes to Financial Statements beginning on page 53 for a discussion of investment risks. For a more detailed discussion of the risks associated with each Fund, please see the Funds' prospectus or each Fund's summary prospectus.

A Fund's 30-Day Yield, sometimes referred to as "standardized yield" or "SEC yield," is expressed as an annual percentage rate using a method of calculation adopted by the Securities and Exchange Commission (SEC). The 30-Day Yield provides an estimate of a Fund's investment income rate, but may not equal the actual income distribution rate.

¹ By regulation, expense ratios shown in this table are as stated in the Funds' most recent prospectus, which is dated March 28, 2018, and incorporate results for the fiscal year ended November 30, 2017. Ratios presented in this table differ from the expense ratios shown elsewhere in this report as they represent different periods. Expense ratios presented for Sextant Short-Term Bond, Sextant Bond Income, Sextant Core, and Sextant Global High Income Funds are restated to reflect to reflect the ending of the Distribution (12b-1) Fees, as approved by the Board of Trustees on March 14, 2017. Also by regulation, the performance in this table represents the most recent quarter-end performance rather than performance through the Funds' most recent fiscal period.

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 MSCI EAFE Index is an international index focused on Europe, Australasia, and the Far East. The S&P Global 1200 Index is a global stock market index covering nearly 70% of the world's equity markets. The Dow Jones Moderate Portfolio Index is a broad-based index of stock and bond prices. The FTSE USBIG Govt/Corp Index 1-3 Year is a broad-based index of shorter-term investment grade US government and corporate bond prices. The FTSE US Broad Investment-Grade Bond Index is a broad-based index of medium and long-term investment grade bond prices. Investors cannot invest directly in the indices.

Please consider an investment's objectives, risks, charges, and expenses carefully before investing. To obtain this and other important information about the Sextant Funds in a prospectus or summary prospectus, ask your financial advisor, visit www.sextantfunds.com, or call toll-free 1-800-728-8762. Please read the prospectus or summary prospectus carefully before investing.

2 November 30, 2018 Annual Report

 

Fellow Shareowners:

Following buoyant performance in 2017, US equity markets registered mixed returns for the year ended November 30, 2018. Total return for the S&P 500 Index was 6.27%, while the Dow Jones Moderate US Portfolio Index slipped -0.28%. Foreign markets were decidedly less positive, with the MSCI EAFE Index down -7.48% and the S&P Global 1200 Index just nosing into positive territory with a return of 0.52%. Fixed-income markets were subdued, with the FTSE USBIG Bond Index falling -1.38% and the shorter-term FTSE USBIG Government/Corporate 1-3 Year Index gaining 0.86%.

The Sextant Funds performed respectably compared to these indices. For the year ended November 30, 2018, Sextant Growth Fund Investor Shares gained 9.95%, Sextant International Fund Investor Shares gained 1.63%, Sextant Core Fund gained 0.09%, Sextant Global High Income Fund gained 2.31%, Sextant Bond Income Fund declined -1.78%, and Sextant Short-Term Bond Fund gained 0.26%.

The annualized expense ratios of the six no-12b-1 fee Sextant Fund share classes range from 0.60% to 0.87%. Saturna Capital helped by paying to cap expenses for the Sextant Short-Term and Sextant Bond Income Funds. Overall assets were down 2.26% to $144.5 million.

Tax Reform Drives Earnings Higher

Tax reform initiated at the end of 2017 was a major contributor to earnings growth during the year, especially for domestically-oriented companies lacking the ability to warehouse profits overseas. While money did flow back into the United States, the ability to fully depreciate capital spending in the first year did not lead to a surge in fixed capital investment. Rather, capital was allocated more aggressively toward increased dividends and especially share buybacks. It is unsettling to note that despite the tax reduction, US corporate non-financial debt increased to a record as a percentage of GDP, despite sustained positive GDP expansion.

Morningstar Awards Sextant Top Sustainability Ratings

The Morningstar Sustainability Rating™ for funds gives investors around the world a way to compare fund portfolios based on a standardized measure of sustainability. These ratings are calculated using fund holdings data underpinned with company-level environmental, social, and governance (ESG) information from Sustainalytics, a leading provider of ESG research. Of the five Sextant funds Morningstar rated, two received the top "5 Globe" Sustainability Rating and one received a "4 Globe" above average rating, reflecting Saturna Capital's emphasis on sustainability when making portfolio investment decisions. Investors are cautioned, however, that more than 200 vendors offer "sustainable" investments data, and that no single global measurement prevails. See page 5 for the details.

Going Forward

The future is always uncertain but 2019's crystal ball appears cloudier than usual. As of writing, the US government has been shut for a number of weeks and no agreement appears in sight. With House control switching to the Democrats, we are likely to see little in the way of legislation and a surfeit of investigation. The political circus will only intensify with the next presidential election less than two years away, and candidates already announcing their intentions. This presents real uncertainty in a variety of areas, most importantly, trade policy. President Trump has threatened much higher tariffs on Chinese imports unless that country makes a variety of concessions. Stress in China's economy reduces their room to maneuver, but the government's tolerance for being dictated to is extremely limited. Even if some modification of trade, technology, and intellectual property protection in China is warranted (it is), political point scoring may prevent a unified stance in the US. Under such circumstances, a worst-case scenario – tariffs hiked to 25% – cannot be ruled out.

Despite these challenges, the US economy still appears to be performing well, with solid employment, recent wage increases, and a confident consumer. The chances of recession in 2019 appear low. At the same time, the stock market weakness in the fourth quarter has largely eliminated valuation as a concern.

Annual Report November 30, 2018 3

 

The looming issue of Brexit tops the international agenda, given the inability of the UK to craft an acceptable exit agreement. We are not willing to opine on the likelihood of a no-deal Brexit versus a second referendum or some other alternative, but the stalemate does nothing to improve the economic outlook for a shaky Europe. Economic activity has been rolling over in Germany and France, while Italy, which has demonstrated the weakest economic performance among major European countries for years, is now run by a populist government little concerned with financial rectitude. Japan has been performing better as of late, as some of the structural reforms introduced by Prime Minister Shinzo Abe gain traction. Japan's biggest challenge is demographics and, surprisingly, the government has made progress in improving female participation in the workforce and even allowing more immigration. Weakness in hard commodity prices has led to the Canadian and Australian dollars trading down against the greenback, but both now appear reasonably valued. Of the two, Australia is the more exposed to possible disruptions in China as a result of trade tensions with the United States.

Going forward, the Sextant Funds continue to offer investors a broad mix of investment vehicles: growth equities, international exposure, and a blended portfolio, plus global high income, short-term, and long-term fixed income options. This array of portfolios serves our investors in both bull and bear markets by seeking to provide steady, long-term growth with a focus on preservation of capital. Please review the following pages for more in-depth information about each Fund.

Respectfully,

(photo omitted)

Jane Carten,
President

(photo omitted)

Gary Goldfogel,
Independent Board Chairman

Sextant Funds Portfolio Management

(photo omitted) Nicholas Kaiser MBA, CFA®

Sextant International Fund
Portfolio Manager
  (photo omitted) Phelps McIlvaine

Sextant Short-Term Bond Fund
Sextant Bond Income Fund
Sextant Core Fund
Portfolio Manager
(photo omitted) Scott Klimo CFA®

Sextant Growth Fund
Portfolio Manager
Sextant International Fund
Deputy Portfolio Manager
(photo omitted) Bryce Fegley CFA®, CIPM®

Sextant Global High Income Fund
Portfolio Manager
(photo omitted) Patrick Drum MBA, CFA®, CFP®

Sextant Short-Term Bond Fund
Sextant Bond Income Fund
Sextant Global High Income Fund
Deputy Portfolio Manager
(photo omitted) Christopher Paul MBA, CFA®

Sextant Core Fund
Portfolio Manager

 

4 November 30, 2018 Annual Report

 

Morningstar Sustainability Ratings™

(unaudited) As of November 30, 2018

At Saturna Capital, we describe ourselves as value and values-based investors. We believe our approach improves the likelihood of achieving superior investment results over the long term. Our approach also leads to investment portfolios we can be proud of from the perspective of Environmental, Social, and Governance (ESG) issues. Morningstar recently partnered with leading ESG research firm Sustainalytics to develop the Morningstar Sustainability Rating™ – here are Sextant Funds' recent results:

Sextant International Fund   Sextant Short-Term Bond Fund
Investor Shares (SSIFX) Ø Ø Ø Ø Ø STBFX Ø Ø Ø Ø Ø
Z Shares (SIFZX) Ø Ø Ø Ø Ø 8th percentile among 473 Short-Term Bond Funds
5th percentile among 354 Foreign Large Blend Funds  
  Sextant Core Fund
Sextant Growth Fund SCORX Ø Ø Ø Ø Ø
Investor Shares (SSGFX) Ø Ø Ø Ø Ø 28th percentile among 697 Allocation 50%-70% Equity Funds
Z Shares (SGZFX) Ø Ø Ø Ø Ø  
37th percentile among 1,252 Large Growth Funds Sextant Global High Income Fund
  SGHIX Ø Ø Ø Ø Ø

The Morningstar Sustainability Rating™ gives investors across the globe a way to compare fund portfolios based on a standard measure of sustainability. The rating is a holdings-based calculation using company-level environmental, social, and governance (ESG) analytics from Sustainalytics.

73rd percentile among 392 World Allocation Funds

The Sextant Bond Income Fund has not yet received a Morningstar Sustainability Rating.

The Morningstar Sustainability Rating and the Morningstar Portfolio Sustainability Score are not based on fund performance and are not equivalent to the Morningstar Rating ("Star Rating").

© 2018 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 Sustainability Ratings and Portfolio Sustainability Scores are as of November 30, 2018. The Morningstar Sustainability Rating™ is intended to measure how well the issuing companies of the securities within a fund's portfolio are managing their environmental, social, and governance ("ESG") risks and opportunities relative to the fund's Morningstar category peers. The Morningstar Sustainability Rating calculation is a two-step process. First, each fund with at least 50% of assets covered by a company-level ESG score from Sustainalytics receives a Morningstar Portfolio Sustainability Score™. The Morningstar Portfolio Sustainability Score is an asset-weighted average of normalized company-level ESG scores with deductions made for controversial incidents by the issuing companies, such as environmental accidents, fraud, or discriminatory behavior. The Morningstar Sustainability Rating is then assigned to all scored funds within Morningstar Categories in which at least ten (10) funds receive a Portfolio Sustainability Score and is determined by each fund's rank within the following distribution: High (highest 10%), Above Average (next 22.5%), Average (next 35%), Below Average (next 22.5%), and Low (lowest 10%). The Morningstar Sustainability Rating is depicted by globe icons where High equals 5 globes and Low equals 1 globe. A Sustainability Rating is assigned to any fund that has more than half of its underlying assets rated by Sustainalytics and is within a Morningstar Category with at least 10 scored funds; therefore, the rating it is not limited to funds with explicit sustainable or responsible investment mandates. Morningstar updates its Sustainability Ratings monthly. Portfolios receive a Morningstar Portfolio Sustainability Score and Sustainability Rating one month and six business days after their reported as-of date based on the most recent portfolio. As part of the evaluation process, Morningstar uses Sustainalytics' ESG scores from the same month as the portfolio as-of date.

The Funds were rated on the following percentages of Assets Under Management:

Sextant International Fund 93%
Sextant Core Fund 70%
Sextant Short-Term Bond Fund 65%
Sextant Growth Fund 96%
Sextant Global High Income Fund 69%

The Funds' portfolios are actively managed and are subject to change, which may result in different Morningstar Sustainability Scores and Ratings.

% 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.

Annual Report November 30, 2018 5

 

Average Annual Total Returns as of November 30, 2018 1 Year 3 Year 5 Year 10 Year 15 Year Expense Ratio¹
Gross Net
 
Sextant Short-Term Bond Fund (STBFX) 0.26% 0.73% 0.76% 1.84% 2.08% 0.88% 0.60%
FTSE USBIG Govt/Corp 1-3 Year Index 0.86% 0.91% 0.82% 1.55% 2.25% n/a
 
Sextant Bond Income Fund (SBIFX) -1.78% 1.85% 2.46% 4.39% 3.58% 0.86% 0.65%
FTSE US Broad Investment-Grade Bond Index -1.38% 1.33% 2.03% 3.52% 3.88% n/a
 
Sextant Core Fund (SCORX) 0.16% 5.46% 3.99% 6.83% n/a 0.73%
Dow Jones Moderate US Portfolio Index -0.28% 6.51% 5.14% 9.11% 6.66% n/a
 
Sextant Global High Income Fund (SGHIX) 2.31% 10.19% 4.62% n/a n/a 1.06% 0.75%
S&P Global 1200 Index 0.52% 9.48% 7.29% 11.50% 7.81% n/a
 
Sextant Growth Fund Investor Shares (SSGFX) 9.95% 9.28% 8.51% 11.55% 8.20% 0.76%
Sextant Growth Fund Z Shares (SGZFX) 10.20% n/a n/a n/a n/a 0.51%
S&P 500 Index 6.27% 12.15% 11.11% 14.30% 8.81% n/a
 
Sextant International Fund Investor Shares (SSIFX) 1.63% 8.99% 4.48% 6.25% 6.83% 1.04%
Sextant International Fund Z Shares (SIFZX) 1.83% n/a n/a n/a n/a 0.79%
MSCI EAFE Index -7.48% 4.63% 2.31% 7.96% 6.09% n/a
 

Performance data quoted above 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. Funds that invest in foreign securities may involve greater risk, including political and economic uncertainties of foreign countries as well as the risk of currency fluctuations.

¹ By regulation, expense ratios shown in this table are as stated in the Funds' most recent prospectus, which is dated March 28, 2018, and incorporate results for the fiscal year ended November 30, 2017. Ratios presented in this table differ from the expense ratios shown elsewhere in this report as they represent different periods. Expense ratios presented for Sextant Short-Term Bond, Sextant Bond Income, Sextant Core, and Sextant Global High Income Funds are restated to reflect to reflect the ending of the Distribution (12b-1) Fees, as approved by the Board of Trustees on March 14, 2017.

6 November 30, 2018 Annual Report

 

Sextant Short-Term Bond Fund

Performance Summary (unaudited)
Average Annual Total Returns as of November 30, 2018
  1 Year 5 Year 10 Year Expense Ratio¹
Sextant Short-Term Bond Fund 0.26% 0.76% 1.84% 0.88%
FTSE USBIG Govt/Corp 1-3 Year Index 0.86% 0.82% 1.55% n/a

Growth of $10,000

Sextant Short-Term Bond Fund Growth of $10,000
Comparison of any mutual fund to a market index must be made bearing in mind that the index is expense-free. Conversely, the fund will (1) be actively managed; (2) have an objective other than mirroring the index, such as limiting risk; (3) bear transaction and other costs; (4) stand ready to buy and sell its securities to shareowners on a daily basis; and (5) provide a wide range of services. The graph compares $10,000 invested in the Fund on November 30, 2008, to an identical amount invested in the FTSE USBIG Govt/Corp 1-3 Year Index, a broad-based index of shorter-term investment grade US government and corporate bond prices. The graph shows that an investment in the Fund would have risen to $11,996 versus $11,660 in the index.

Past performance does not guarantee future results. The "Growth of $10,000" graph and "Average Annual Returns" performance table assume the reinvestment of dividends and capital gains. They do not reflect the deduction of taxes that a shareowner might pay on fund distributions or the redemption of fund shares.

¹ By regulation, the expense ratio shown in this table is as stated in the Fund's most recent prospectus which is dated March 28, 2018, and incorporates results for the fiscal year ended November 30, 2017, before fee waivers. The actual expense ratio, shown in the most recent prospectus after fee waivers was 0.60%. The ratio presented in this table differs from expense ratios shown elsewhere in this report as they represent different periods.

Fund Objective

The objectives of the Short-Term Bond Fund are capital preservation and current income.

Top 10 Holdings   Portfolio Diversification
% of Total Net Assets % of Total Net Assets  
United States Treasury Note (3.625% due 02/15/2021) 8.9% Government Bonds 18.5%
Sextant Short-Term Bond Fund Portfolio Diversification
United States Treasury Note (2.50% due 08/15/2023) 4.8% Technology 17.6%
McCormick & Co. (2.70% due 08/15/2022) 4.6% Health Care 13.8%
Honeywell International (4.25% due 03/01/2021) 4.5% Financials 12.1%
Gilead Sciences (2.55% due 09/01/2020) 3.8% Consumer Staples 10.4%
Burlington Northern Santa Fe (3.05% due 09/01/2022) 3.8% Industrials 11.6%
Adobe Systems (4.75% due 02/01/2020) 3.8% Materials 6.8%
3M (2.00% due 06/26/2022) 3.7% Consumer Discretionary 5.8%
Juniper Networks (4.60% due 03/15/2021) 3.7% Other Assets (net of liabilities) 3.4%
Qualcomm (2.60% due 01/30/2023) 3.7%  

 

Annual Report November 30, 2018 7

 

Sextant Short-Term Bond Fund

Discussion of Fund Performance (unaudited)

(photo omitted)

Fiscal Year 2018

For the fiscal year ended November 30, 2018, the Sextant Short-Term Bond Fund returned 0.26%, which was lower than the 0.63% average return of its Morningstar category peer group. For the five years ended November 30, the Fund provided a 0.76% annualized total return versus 1.14% for its Morningstar category peer group. During the year, the Fund's share price declined from $5.00 to $4.94. Net investment income rose from 1.25% to 1.43%. Fund shares outstanding declined -2.78%, and Fund assets declined -3.95%. The Fund's 30-day yield was 2.62%, and its unsubsidized 30-day yield was 2.45%. Reflecting Saturna Capital's voluntary subsidies to cap operating expenses, the Fund's effective expense ratio declined to 0.60% from 0.88%.

Factors Affecting Past Performance

Modest economic growth and moderate inflation in 2018 left the window open for the US Federal Reserve Bank to withdraw more of their experimental monetary policy. Their gradual policy reversal challenged investor complacency, drove bond yields higher, softened US asset prices, and provoked price volatility. Policy tightening has yet to induce a disorderly interest rate spike or liquidity shortfall. It has nonetheless left a significant footprint. Flatter yield curves, wider credit spreads, peaking equity, bond, commodity, and housing prices all imply the Fed's policy normalization may have arrived late in the economic cycle. Concern is rising that policy normalization may influence the business cycle's turning point.

In a reversal of a near decade long trend, in general, short-term bonds performed better that longer-term bonds, and high-rated investment grade credits returned more than low-rated high yield credits. These outcomes are also consistent with "risk-off" periods late in economic and credit cycles.

Looking Forward

We expect US and global inflation to remain modest. We consider any meaningful increase in US yields to be an opportunity to add duration and not an indicator of a climactic turning point in the rate cycle. Central banks will ration overabundant, artificially cheap credit further. The European Central bank may join the US Federal Reserve and withdraw their even more extraordinary policy stimulus in 2019. It is reasonable to expect 2018's market reactions to continue and broaden in 2019. Central banks are hypersensitive to the impact of their policy withdrawals on the health of the business cycle. They recognize they have a narrow passage to navigate. Their top priority remains avoiding deflation. They will halt normalization (tightening) at the first indication of a serious downturn in the US economic cycle.

We expect short-term rates to rise modestly and long-term rates to remain stable or fall within recent ranges. We also expect high-grade credit will perform as well as or better than lower grade credit for 2019. Municipal bonds will benefit from their recent credit improvement and limited forward supply. We expect fixed coupon cashflow structures for all maturities will provide the best reinvestment risk protection for the remainder of the new year.

Given the recent volatility of other major asset class prices, and the current opportunity to earn higher nominal and real yields in fixed income, 2019 may be a good opportunity to increase your allocation in high quality US bonds.

The Sextant Short-Term Bond Fund will hold its current above peer group credit profile for another year. The Fund will maintain its dollar-weighted average maturity as close to its three year maximum as practical for the coming year.

Management Fee Calculations

The Sextant Short-Term Bond Fund calculates the performance part of its management fee by comparing the Fund's return to the average return of Morningstar's™ Short-Term Bond category. The Fund's 12-month return of 0.26% was less than 1% percent below the Morningstar™ category average of 0.63% at month-end November 30, 2018. Therefore, the basic annual management fee of 0.50% remained unchanged for the month of December 2018. Note that the management fee is partially waived due to the adviser's voluntary cap on total Fund expenses.

8 November 30, 2018 Annual Report

 

Sextant Short-Term Bond Fund

Schedule of Investments As of November 30, 2018
Corporate Bonds – 78.1% Coupon / Maturity Face Amount Market Value Percentage of Assets
 
Consumer Discretionary  
 
Alibaba Holding Group 3.125% due 11/28/2021 $350,000 $345,139 3.4%
Ford Motor Credit 3.157% due 08/04/2020 250,000 244,123 2.4%
 
  589,262 5.8%
 
Consumer Staples  
 
Church & Dwight Co Inc 2.875% due 10/01/2022 260,000 254,055 2.5%
Estee Lauder 2.35% due 08/15/2022 350,000 336,544 3.3%
McCormick & Co. 2.70% due 08/15/2022 500,000 479,704 4.6%
 
  1,070,303 10.4%
 
Financials  
 
AvalonBay Communities 6.10% due 03/15/2020 340,000 351,740 3.4%
Camden Property Trust 4.625% due 06/15/2021 275,000 280,363 2.7%
Jefferies Group 8.50% due 07/15/2019 265,000 272,879 2.7%
Paccar Financial 2.05% due 11/13/2020 350,000 342,005 3.3%
 
  1,246,987 12.1%
 
Health Care  
 
AbbVie 2.50% due 05/14/2020 250,000 246,133 2.4%
Astrazeneca 2.375% due 01/16/2020 155,000 151,772 1.5%
Celgene 2.25% due 08/15/2021 300,000 287,816 2.8%
Gilead Sciences 2.55% due 09/01/2020 400,000 394,648 3.8%
Teva Pharmaceutical 3.65% due 11/10/2021 350,000 334,221 3.3%
 
  1,414,590 13.8%
 
Industrials  
 
Burlington Northern Santa Fe 3.05% due 09/01/2022 400,000 392,975 3.8%
CSX Corporation 4.25% due 06/01/2021 350,000 355,012 3.5%
Emerson Electric 4.875% due 10/15/2019 310,000 314,733 3.1%
Union Pacific 7.875% due 01/15/2019 127,000 127,692 1.2%
 
    1,190,412 11.6%
 
Materials  
 
3M 2.00% due 06/26/2022 400,000 383,237 3.7%
BHP Billiton Fin USA 6.50% due 04/01/2019 315,000 318,563 3.1%
 
  701,800 6.8%
 
Technology  
 
Adobe Systems 4.75% due 02/01/2020 $379,000 $385,354 $3.8%
 
Continued on next page.

 

The accompanying notes are an integral part of these financial statements. November 30, 2018 Annual Report 9

 

Sextant Short-Term Bond Fund

Schedule of Investments As of November 30, 2018
Corporate Bonds – 78.1% Coupon / Maturity Face Amount Market Value Percentage of Assets
 
Technology (continued)  
 
Honeywell International 4.25% due 03/01/2021 $450,000 $459,472 4.5%
Juniper Networks 4.60% due 03/15/2021 375,000 382,366 3.7%
Qualcomm 2.60% due 01/30/2023 400,000 380,475 3.7%
Xilinx 2.125% due 03/15/2019 200,000 199,398 1.9%
 
  1,807,065 17.6%
 
Total Corporate Bonds     $8,020,419 78.1%
 
Government Bonds – 18.5% Coupon / Maturity Face Amount Market Value Percentage of Assets
 
United States Treasury Notes  
 
United States Treasury Note 2.75% due 02/15/2019 $ 200,000 $200,144 1.9%
United States Treasury Note 3.625% due 02/15/2021 900,000 915,258 8.9%
United States Treasury Note 2.50% due 08/15/2023 500,000 492,031 4.8%
United States Treasury Note 2.00% due 09/30/2020 300,000 295,606 2.9%
 
  1,903,039 18.5%
 
Total investments (Cost = $10,122,733) 9,923,458 96.6%
Other assets (net of liabilities)   352,138 3.4%
Total net assets   $10,275,596 100.0%

 

Bond Quality Diversification (unaudited)
% of Total Net Assets  
Rated "AAA" 16.6%
Sextant Short-Term Bond Fund Bond Quality Diversification
Rated "AA-" 3.7%
Rated "A+" 17.5%
Rated "A" 18.3%
Rated "A-" 8.9%
Rated "BBB+" 13.0%
Rated "BBB" 10.7%
Rated "BBB-" 2.7%
Rated "BB" 3.3%
Not rated 1.9%
Other assets (net of liabilities) 3.4%
Credit ratings are the lesser of S&P Global Ratings or Moody's Investors Service. If neither S&P nor Moody's rate a particular security, that security is categorized as not rated (except for US Treasury securities and securities issued or backed by US agencies which inherit the credit rating for the US government). Ratings range from AAA (highest) to D (lowest). Bonds rated BBB or above are considered investment grade. Credit ratings BB and below are lower-rated securities (junk bonds). Ratings apply to the creditworthiness of the issuers of the underlying securities and not the Fund or its shares. Ratings may be subject to change.

 

10 November 30, 2018 Annual Report The accompanying notes are an integral part of these financial statements.

 

Sextant Short-Term Bond Fund

Statement of Assets and Liabilities
As of November 30, 2018
 
Assets
Investments in securities, at value
(Cost $10,122,733)
$9,923,458
Cash 265,617
Interest receivable 92,620
Prepaid expenses 8,942
Receivable for Fund shares sold 1,125
Total assets 10,291,762
Liabilities
Accrued audit expenses 4,382
Accrued retirement plan custodial fees 3,291
Accrued advisory fees 2,780
Accrued trustee expenses 2,587
Accrued printing expenses 1,650
Accrued other expenses 1,119
Accrued Chief Compliance Officer expenses 321
Distributions payable 36
Total liabilities 16,166
Net Assets $10,275,596
 
Analysis of net assets
Paid-in capital (unlimited shares authorized, without par value) $10,488,794
Total distributable earnings (213,198)
Net assets applicable to Fund shares outstanding $10,275,596
 
Fund shares outstanding 2,081,165
 
Net asset value, offering, and redemption price per share $4.94

 

Statement of Operations
Year ended November 30, 2018
 
Investment income
Interest income $208,808
Total investment income 208,808
Expenses
Investment adviser fees 47,622
Filing and registration fees 22,505
Audit fees 6,689
Printing and postage 3,981
Retirement plan custodial fees 3,455
Chief Compliance Officer expenses 2,596
Trustee fees 2,466
Legal fees 1,573
Other expenses 1,274
Custodian fees 481
Total gross expenses 92,642
Less adviser fees waived (30,628)
Less custodian fee credits (481)
Net expenses 61,533
Net investment income $147,275
 
 
Net realized loss from investments $(16,794)
Net increase in unrealized depreciation on investments (110,471)
Net loss on investments $(127,265)
 
Net increase in net assets resulting from operations $20,010

 

The accompanying notes are an integral part of these financial statements. November 30, 2018 Annual Report 11

 

Sextant Short-Term Bond Fund

Statements of Changes in Net Assets Year ended Nov. 30, 2018 Year ended Nov. 30, 2017
Increase (decrease) in net assets from operations
From operations
Net investment income $147,275 $133,894
Net realized gain (loss) on investment (16,794) 4,623
Net increase in unrealized depreciation (110,471) (55,176)
Net increase in net assets 20,010 83,341
 
Distributions to shareowners (150,192) (133,903)A
     
Capital share transactions
Proceeds from sales of shares 974,206 1,652,337
Value of shares issued in reinvestment of dividends 150,567 133,340
Cost of shares redeemed (1,423,649) (1,356,859)
Total capital share transactions (298,876) 428,818
Total increase (decrease) in net assets (429,058) 378,256
 
Net assets
Beginning of year 10,704,654 10,326,398
End of year $10,275,596 $10,704,654B
 
Shares of the Fund sold and redeemed
Number of shares sold 196,541 328,488
Number of shares issued in reinvestment of dividends 30,411 26,511
Number of shares redeemed (286,428) (269,774)
Net increase (decrease) in number of shares outstanding (59,476) 85,225

A Consists of net investment income distributions of $133,903.
B Includes accumulated net investment income of $1,165.

Financial Highlights For year ended November 30,
Selected data per share of outstanding capital stock throughout each year: 2018 2017 2016 2015 2014
Net asset value at beginning of year $5.00 $5.02 $5.02 $5.04 $5.05
Income from investment operations
Net investment income 0.07 0.06 0.05 0.05 0.06
Net gains (losses) on securities (both realized and unrealized) (0.06) (0.02) 0.00A (0.02) (0.01)
Total from investment operations 0.01 0.04 0.05 0.03 0.05
Less distributions
Dividends (from net investment income) (0.07) (0.06) (0.05) (0.05) (0.06)
Capital gains distribution (0.00)A - - - -
Total distributions (0.07) (0.06) (0.05) (0.05) (0.06)
 
Net asset value at end of year $4.94 $5.00 $5.02 $5.02 $5.04
 
Total return 0.26% 0.87% 1.06% 0.67% 0.94%
 
Ratios / supplemental data
Net assets ($000), end of year $10,276 $10,705 $10,326 $7,488 $7,674
Ratio of expenses to average net assets
Before fee waivers and custodian fee credits 0.91% 1.01% 1.15% 1.21% 1.29%
After fee waivers 0.61% 0.68% 0.76% 0.76% 0.76%
After fee waivers and custodian fee credits 0.60% 0.68% 0.75% 0.75% 0.75%
Ratio of net investment income after fee waivers and custodian fee credits to average net assets 1.44% 1.26% 1.05% 1.06% 1.14%
Portfolio turnover rate 36% 31% 11% 13% 14%
A Amount is less than $0.01

 

12 November 30, 2018 Annual Report The accompanying notes are an integral part of these financial statements.

 

Sextant Bond Income Fund

Performance Summary (unaudited)
Average Annual Total Returns as of November 30, 2018
  1 Year 5 Year 10 Year Expense Ratio¹
Sextant Bond Income Fund -1.78% 2.46% 4.39% 0.86%
FTSE US Broad Investment-Grade Bond Index -1.38% 2.03% 3.52% n/a

Growth of $10,000

Sextant Bond Income Fund Growth of $10,000
Comparison of any mutual fund to a market index must be made bearing in mind that the index is expense-free. Conversely, the fund will (1) be actively managed; (2) have an objective other than mirroring the index, such as limiting risk; (3) bear transaction and other costs; (4) stand ready to buy and sell its securities to shareowners on a daily basis; and (5) provide a wide range of services. The graph compares $10,000 invested in the Fund on November 30, 2008, to an identical amount invested in the FTSE US Broad Investment-Grade Bond Index, a broad-based index of medium and long-term investment grade bond prices. The graph shows that an investment in the Fund would have risen to $15,365 versus $14,142 in the index.

Past performance does not guarantee future results. The "Growth of $10,000" graph and "Average Annual Returns" performance table assume the reinvestment of dividends and capital gains. They do not reflect the deduction of taxes that a shareowner might pay on fund distributions or the redemption of fund shares.

¹ By regulation, the expense ratio shown in this table is as stated in the Fund's most recent prospectus which is dated March 28, 2018, and incorporates results for the fiscal year ended November 30, 2017, before fee waivers. The expense ratio shown in the most recent prospectus after fee waivers was 0.65%. The ratio presented in this table differs from expense ratios shown elsewhere in this report as they represent different periods.

Fund Objective

The objective of the Bond Income Fund is current income.

Top 10 Holdings   Portfolio Diversification
% of Total Net Assets % of Total Net Assets  
United States Treasury Note (3.625% due 02/15/2021) 9.7% Government Bonds 22.8%
Sextant Bond Income Fund Portfolio Diversification
United States Treasury Bond (5.375% due 02/15/2031) 4.5% Municipal Bonds 16.8%
Intel (4.00% due 12/15/2032) 3.3% Health Care 12.7%
Apple (4.50% due 02/23/2036) 3.3% Technology 9.8%
Microsoft (4.20% due 11/03/2035) 3.2% Financials 9.2%
Cincinnati Financial (6.92% due 05/15/2028) 2.7% Industrials 6.1%
United States Treasury Bond (6.125% due 08/15/2029) 2.6% Energy 6.0%
Puget Sound Energy (7.02% due 12/01/2027) 2.6% Utilities 5.7%
United Technologies Corp (6.05% due 06/01/2036) 2.6% Consumer Discretionary 4.7%
Lowe's (5.80% due 10/15/2036) 2.6% Consumer Staples 2.2%
  Materials 0.5%
Other assets (net of liabilities) 3.5%

 

Annual Report November 30, 2018 13

 

Sextant Bond Income Fund

Discussion of Fund Performance (unaudited)

(photo omitted)

Fiscal Year 2018

For the fiscal year ended November 30, 2018, the Sextant Bond Income Fund returned -1.78%, outperforming the -4.13% average return of its Morningstar Long-Term Bond category peer group. For the five years ended November 30, 2018, the Fund provided a 2.46% annualized total return versus 4.58% for its Morningstar category peer group. During the year, the Fund's share price declined from $5.14 to $4.89, and net investment income fell from 2.99% to 2.83%. Fund shares outstanding rose 21.10%. Fund assets rose 15.21%. The Fund's 30-day yield was 3.16%, and its unsubsidized 30-day yield was 3.02%. Reflecting Saturna Capital's voluntary subsidies to cap operating expenses, the Fund's effective expense ratio declined to 0.65% from 0.86%.

Factors Affecting Past Performance

Modest economic growth and moderate inflation in 2018 left the window open for the US Federal Reserve Bank to withdraw more of their experimental monetary policy. Their gradual policy reversal challenged investor complacency, drove bond yields higher, softened US asset prices, and provoked price volatility. Policy tightening has yet to induce a disorderly interest rate spike or liquidity shortfall. It has nonetheless left a significant footprint. Flatter yield curves, wider credit spreads, peaking equity, bond, commodity, and housing prices all imply the Fed's policy normalization may have arrived late in the economic cycle. Concern is rising that policy normalization may influence the business cycle's turning point.

In a reversal of a near decade long trend, in general, short-term bonds performed better that longer-term bonds, and high-rated investment grade credits returned more than low-rated high yield credits. These outcomes are also consistent with "risk-off" periods late in economic and credit cycles.

Looking Forward

We expect US and global inflation to remain modest. We consider any meaningful increase in US yields to be an opportunity to add duration, and not an indicator of a climactic turning point in the rate cycle. Central banks will ration overabundant, artificially cheap credit further. The European Central bank may join the US Federal Reserve and withdraw their even more extraordinary policy stimulus in 2019. It is reasonable to expect 2018's market reactions to continue and broaden in 2019. Central banks are hypersensitive to the impact of their policy withdrawals on the health of the business cycle. They recognize they have a narrow passage to navigate. Their top priority remains avoiding deflation. They will halt normalization (tightening) at the first indication of a serious downturn in the US economic cycle.

We expect short-term rates to rise modestly and long-term rates to remain stable or fall within recent ranges. We also expect high-grade credit will perform as well as or better than lower grade credit for 2019. Municipal bonds will benefit from their recent credit improvement and limited forward supply. We expect fixed coupon cashflow structures for all maturities will provide the best reinvestment risk protection for the remainder of the new year.

Given the recent volatility of other major asset class prices, and the current opportunity to earn higher nominal and real yields in fixed income, 2019 may be a good opportunity to increase your allocation to high quality US bonds.

The Sextant Bond Income Fund will extend dollar-weighted average maturity past its policy minimum of 10 years on any significant increase in long term yields. Credit spreads, while wider than a year ago, remain below fund targets for adding credit risk.

Management Fee Calculations

The Sextant Bond Income Fund calculates the performance part of its management fee by comparing the Fund's return to the return of Morningstar's™ Long-Term Bond category. The Fund's 12-month return of -1.78% was more than 2% above the Morningstar™ category average of -4.13% at month-end November 30, 2018. Therefore, the basic annual management fee of 0.50% was increased by 0.20% to 0.70% for the month of December 2018. Note that the management fee is partially waived due to the adviser's voluntary cap on total Fund expenses.

 

14 November 30, 2018 Annual Report

Sextant Bond Income Fund

Schedule of Investments As of November 30, 2018
Corporate Bonds – 56.9% Coupon / Maturity Face Amount Market Value Percentage of Assets
 
Consumer Discretionary  
 
Lowe's 5.80% due 10/15/2036 $250,000 $279,239 2.6%
VF 6.00% due 10/15/2033 200,000 230,989 2.1%
 
  510,228 4.7%
 
Consumer Staples  
 
Unilever Capital 5.90% due 11/15/2032 200,000 239,543 2.2%
 
  239,543 2.2%
 
Energy  
 
Baker Hughes 6.875% due 01/15/2029 100,000 121,115 1.1%
Canadian Natural Resources 6.45% due 06/30/2033 225,000 255,305 2.4%
Statoil 7.15% due 01/15/2029 224,000 276,802 2.5%
 
  653,222 6.0%
 
Financials  
 
Affiliated Managers Group 3.50% due 08/01/2025 250,000 239,376 2.2%
Bank Of New York Mellon MTN 3.30% due 08/23/2029 250,000 231,275 2.1%
Cincinnati Financial 6.92% due 05/15/2028 250,000 299,735 2.7%
UBS AG Stamford CT 7.75% due 09/01/2026 200,000 234,040 2.2%
 
  1,004,426 9.2%
 
Health Care  
 
Becton Dickinson 6.70% due 08/01/2028 240,000 267,821 2.4%
Johnson & Johnson 4.95% due 05/15/2033 226,000 249,187 2.3%
Medtronic Inc 4.375% due 03/15/2035 260,000 260,864 2.4%
Merck & Co. 6.50% due 12/01/2033 215,000 274,176 2.5%
Pharmacia 6.50% due 12/01/2018 100,000 100,000 0.9%
Teva Pharmaceutical 3.65% due 11/10/2021 250,000 238,729 2.2%
 
  1,390,777 12.7%
 
Industrials  
 
Boeing 6.125% due 02/15/2033 215,000 263,256 2.4%
Deere & Co. 8.10% due 05/15/2030 95,000 125,547 1.1%
United Technologies Corp 6.05% due 06/01/2036 250,000 281,437 2.6%
 
  670,240 6.1%
 
Materials  
 
Air Products & Chemicals 8.75% due 04/15/2021 50,000 54,885 0.5%
 
  54,885 0.5%
 
Continued on next page.

 

The accompanying notes are an integral part of these financial statements. November 30, 2018 Annual Report 15

 

Sextant Bond Income Fund

Schedule of Investments As of November 30, 2018
Corporate Bonds – 58.2% Coupon / Maturity Face Amount Market Value Percentage of Assets
 
Technology  
 
Apple 4.50% due 02/23/2036 $350,000 $362,116 3.3%
Intel 4.00% due 12/15/2032 360,000 362,208 3.3%
Microsoft 4.20% due 11/03/2035 350,000 353,897 3.2%
 
  1,078,221 9.8%
 
Utilities  
 
Entergy Louisiana 5.40% due 11/01/2024 200,000 218,000 2.0%
Florida Power & Light 5.95% due 10/01/2033 100,000 117,903 1.1%
Puget Sound Energy 7.02% due 12/01/2027 237,000 283,492 2.6%
 
  619,395 5.7%
 
Total Corporate Bonds     $6,220,937 56.9%
 
Government Bonds – 22.8% Coupon / Maturity Face Amount Market Value Percentage of Assets
 
Foreign Government Bonds  
 
Quebec Canada Yankee 7.125% due 02/09/2024 $175,000 $205,357 1.9%
 
  205,357 1.9%
 
United States Treasury Bonds  
 
United States Treasury Bond 5.25% due 02/15/2029 170,000 202,838 1.9%
United States Treasury Bond 6.25% due 05/15/2030 75,000 98,086 0.9%
United States Treasury Bond 6.125% due 08/15/2029 225,000 288,026 2.6%
United States Treasury Bond 5.375% due 02/15/2031 400,000 493,813 4.5%
 
  1,082,763 9.9%
 
United States Treasury Notes  
 
United States Treasury Note 3.625% due 02/15/2021 1,040,000 1,057,631 9.7%
United States Treasury Note 3.125% due 11/15/2041 145,000 141324 1.3%
 
  1,198,955 11.0%
 
Total Government Bonds     $2,487,075 22.8%
 
Continued on next page.

 

16 November 30, 2018 Annual Report The accompanying notes are an integral part of these financial statements.

 

Sextant Bond Income Fund

Schedule of Investments As of November 30, 2018
Municipal Bonds – 16.8% Coupon / Maturity Face Amount Market Value Percentage of Assets
 
General Obligation  
 
Blaine Co. ID SCD #61 Hailey 5.25% due 08/01/2020 $250,000 $258,640 2.4%
Dell Rapids SCD 49-3 6.257% due 01/15/2030 200,000 206,968 1.9%
Dupage Co. IL CCD #502 5.50% due 01/01/2026 150,000 150,249 1.4%
Idaho Hsg & Fin GARVEE BAB A-2 5.379% due 07/15/2020 180,000 184,716 1.7%
Milan Co. MI Area Schools 6.45% due 05/01/2024 150,000 152,194 1.4%
San Marcos Texas ULTD GO BAB 6.028% due 08/15/2030 200,000 209,528 1.9%
Springville UT GO BAB 5.30% due 05/01/2031 240,000 246,686 2.2%
 
  1,408,981 12.9%
 
Municipal Leases  
 
Johnson Co KS Bldg Ls/Pr RevBAB 4.60% due 09/01/2026 250,000 254,508 2.3%
Oklahoma City Fin Auth Ed Lease Rev 6.60% due 09/01/2022 160,000 178,168 1.6%
 
  432,676 3.9%
 
Total Municipal Bonds     $1,841,657 16.8%
 
Total investments (Cost = $10,731,435)   10,549,669 96.5%
Other assets (net of liabilities)     383,370 3.5%
Total net assets   $10,933,039 100.0%

 

Bond Quality Diversification (unaudited)
% of Total Net Assets  
Rated "AAA" 27.4%
Sextant Bond Income Fund Bond Quality Diversification
Rated "AA+" 6.0%
Rated "AA" 11.3%
Rated "AA-" 6.3%
Rated "A+" 5.5%
Rated "A" 14.9%
Rated "A-" 13.2%
Rated "BBB+" 7.3%
Rated "BBB" 2.4%
Rated"BB" 2.2%
Other assets (net of liabilities) 3.5%
Credit ratings are the lesser of S&P Global Ratings or Moody's Investors Service. If neither S&P nor Moody's rate a particular security, that security is categorized as not rated (except for US Treasury securities and securities issued or backed by US agencies which inherit the credit rating for the US government). Ratings range from AAA (highest) to D (lowest). Bonds rated BBB or above are considered investment grade. Credit ratings BB and below are lower-rated securities (junk bonds). Ratings apply to the creditworthiness of the issuers of the underlying securities and not the Fund or its shares. Ratings may be subject to change.

 

The accompanying notes are an integral part of these financial statements. November 30, 2018 Annual Report 17

 

Sextant Bond Income Fund

Statement of Assets and Liabilities
As of November 30, 2018
 
Assets
Investments in securities, at value
(Cost $10,731,435)
$10,549,669
Cash 258,813
Interest receivable 132,282
Prepaid expenses 8,259
Insurance reserve premium 400
Receivable for Fund shares sold 133
Total assets 10,949,556
Liabilities
Accrued audit expenses 3,850
Accrued other expenses 3,644
Accrued advisory fees 3,048
Accrued trustee expenses 2,828
Accrued retirement plan custodial fees 2,594
Accrued Chief Compliance Officer expenses 294
Distributions Payable 254
Payable for Fund shares redeemed 5
Total liabilities 16,517
Net assets $10,933,039
 
Analysis of net assets
Paid-in capital (unlimited shares authorized, without par value) $11,160,946
Total distributable earnings (227,907)
Net assets applicable to Fund shares outstanding $10,933,039
 
Fund shares outstanding 2,235,870
 
Net asset value, offering, and redemption price per share $4.89

 

Statement of Operations
Year ended November 30, 2018
 
Investment income
Interest income $372,938
Miscellaneous income 4
Total investment income 372,942
Expenses
Investment adviser fees 39,901
Filing and registration fees 20,746
Audit fees 6,746
Printing and postage 3,565
Retirement plan custodial fees 2,794
Trustee fees 2,550
Chief Compliance Officer expenses 2,389
Legal fees 1,413
Other expenses 1,200
Custodian fees 454
Total gross expenses 81,758
Less adviser fees waived (18,215)
Less custodian fee credits (454)
Net expenses 63,089
Net investment income $309,853
 
 
Net decrease in unrealized appreciation on investments $(480,051)
Net loss on investments $(480,051)
 
Net decrease in net assets resulting from operations $(170,198)

 

18 November 30, 2018 Annual Report The accompanying notes are an integral part of these financial statements.

 

Sextant Bond Income Fund

Statements of Changes in Net Assets Year ended Nov. 30, 2018 Year ended Nov. 30, 2017
Increase (decrease) in net assets from operations
From operations
Net investment income $309,853 $284,129
Net realized loss on investments - (18,437)
Net increase (decrease) in unrealized appreciation (480,051) 163,741
Net increase (decrease) in net assets (170,198) 429,433
 
Distributions to shareowners (309,851) (284,105)A
     
Capital share transactions
Proceeds from sales of shares 3,232,820 1,428,332
Value of shares issued in reinvestment of dividends 306,251 283,310
Cost of shares redeemed (1,621,814) (2,064,477)
Total capital share transactions 1,917,257 (352,835)
Total increase (decrease) in net assets 1,437,208 (207,507)
 
Net assets
Beginning of year 9,495,831 9,703,338
End of year $10,933,039 $9,495,831B
 
Shares of the Fund sold and redeemed
Number of shares sold 650,577 279,298
Number of shares issued in reinvestment of dividends 61,384 55,166
Number of shares redeemed (322,372) (403,662)
Net increase (decrease) in number of shares outstanding 389,589 (69,198)

A Consists of net investment income distributions of 284,105.
B Includes accumulated net investment income of $24.

Financial Highlights For year ended November 30,
Selected data per share of outstanding capital stock throughout each year: 2018 2017 2016 2015 2014
Net asset value at beginning of year $5.14 $5.07 $5.07 $5.26 $5.05
Income from investment operations
Net investment income 0.16 0.16 0.15 0.17 0.16
Net gains (losses) on securities (both realized and unrealized) (0.25) 0.07 0.00A (0.19) 0.21
Total from investment operations (0.09) 0.23 0.15 (0.02) 0.37
Less distributions
Dividends (from net investment income) (0.16) (0.16) (0.15) (0.17) (0.16)
Total distributions (0.16) (0.16) (0.15) (0.17) (0.16)
 
Net asset value at end of year $4.89 $5.14 $5.07 $5.07 $5.26
 
Total return (1.78)% 4.51% 2.91% (0.47)% 7.40%
 
Ratios / supplemental data
Net assets ($000), end of year $10,933 $9,496 $9,703 $7,998 $7,967
Ratio of expenses to average net assets
Before fee waivers and custodian fee credits 0.86% 0.98% 1.01% 1.03% 1.27%
After fee waivers 0.66% 0.78% 0.89% 0.90% 0.91%
After fee waivers and custodian fee credits 0.65% 0.78% 0.88% 0.90% 0.90%
Ratio of net investment income after fee waivers and custodian fee credits to average net assets 3.20% 3.05% 2.85% 3.21% 3.07%
Portfolio turnover rate 0% 4% 11% 4% 13%
A Amount is less than $0.01

 

The accompanying notes are an integral part of these financial statements. November 30, 2018 Annual Report 19

 

Sextant Core Fund

Performance Summary (unaudited)
Average Annual Total Returns as of November 30, 2018
  1 Year 5 Year 10 Year Expense Ratio¹
Sextant Core Fund 0.16% 3.99% 6.83% 0.73%
Dow Jones Moderate US Portfolio Index -0.28% 5.14% 9.11% n/a

Growth of $10,000

Sextant Core Fund Growth of $10,000
Comparison of any mutual fund to a market index must be made bearing in mind that the index is expense-free. Conversely, the fund will (1) be actively managed; (2) have an objective other than mirroring the index, such as limiting risk; (3) bear transaction and other costs; (4) stand ready to buy and sell its securities to shareowners on a daily basis; and (5) provide a wide range of services. The graph compares $10,000 invested in the Fund on November 30, 2008, to an identical amount invested in the Dow Jones Moderate US Portfolio Index, a broad-based index of stock and bond prices. The graph shows that an investment in the Fund would have risen to $19,358 versus $23,939 in the index.

Past performance does not guarantee future results. The "Growth of $10,000" graph and "Average Annual Returns" performance table assume the reinvestment of dividends and capital gains. They do not reflect the deduction of taxes that a shareowner might pay on fund distributions or the redemption of fund shares.

¹ By regulation, the expense ratio shown in this table is as stated in the Fund's most recent prospectus, which is dated March 28, 2018, and incorporates results for the fiscal year ended November 30, 2017. The ratio presented in this table differs from expense ratios shown elsewhere in this report as they represent different periods.

Fund Objective

The objectives of the Core Fund are long-term appreciation and capital preservation.

Portfolio Diversification
  % of Total Net Assets
Sectors Equity Fixed Income
Technology 12.9% 2.3%
Financials 9.7% 5.3%
Government Bonds n/a 13.9%
Health Care 9.6% 3.8%
Industrials 5.5% 3.3%
Materials 7.2% 0.8%
Consumer Discretionary 5.3% 1.6%
Communications 2.2% 2.1%
Energy 4.2% 0.0%
Municipal Bonds n/a 3.3%
Consumer Staples 2.8% n/a
Utilities 1.4% n/a
Total 60.8% 36.4%

 

Top 10 Holdings
% of Total Net Assets
US Treasury Bond (6.25% due 08/15/2023) 3.9%
United States Treasury Note (2.75% due 11/15/2023) 2.7%
Welltower Inc (4.25% due 04/15/2028) 2.6%
Gilead Sciences (3.70% due 04/01/2024) 1.9%
United States Treasury Note (2.00% due 11/30/2022) 1.9%
Johnson & Johnson 1.8%
Toronto-Dominion Bank 1.8%
PNC Financial Services Group 1.8%
Union Pacific Corp (3.375% due 02/01/2035) 1.7%
Legrand France Yankee (8.50% due 02/15/2025) 1.6%

 

Asset Allocation
% of Total Net Assets  
Equity Securities 60.8%
Sextant Core Fund Asset Allocation
Fixed Income Securities 36.4%
Other assets (net of liabilities) 2.8%
 

 

20 November 30, 2018 Annual Report

 

Sextant Core Fund

Discussion of Fund Performance (unaudited)

(photos omitted)

Fiscal Year 2018

For the fiscal year ended November 30, 2018, the Sextant Core Fund eked out a one-year return of 0.16%, outperforming the benchmark Dow Jones Moderate Portfolio Index return of -0.28% for the same period. The benchmark index peaked in January 2018 while the Fund peaked in September 2018, leading the fund to underperform the benchmark in the first half of the year and outperform in the second half of the year.

Factors Affecting Past Performance

Equities

The Sextant Core Fund's mandate specifies a 60% allocation to equity securities, with two-thirds being US-domiciled companies and one-third foreign-domiciled companies. The Fund's average equity allocation for the year was 61.7%. During the year, the Fund increased the number of equity positions, increased the average dividend yield, maintained the average position size, and increased the average market capitalization. The Energy, Consumer Discretionary, and Utilities sector were the largest contributors, offset by the Financial and Industrial sectors. The largest sector allocation, Technology, contributed modest performance for the year.

Fixed Income

Modest economic growth and moderate inflation in 2018 left the window open for the US Federal Reserve Bank to withdraw more of their experimental monetary policy. Their gradual policy reversal challenged investor complacency, drove bond yields higher, softened US asset prices, and provoked price volatility. Policy tightening has yet to induce a disorderly interest rate spike or liquidity shortfall. It has nonetheless left a significant footprint. Flatter yield curves, wider credit spreads, peaking equity, bond, commodity, and housing prices all imply the Fed's policy normalization may have arrived late in the economic cycle. Concern is rising that policy normalization may influence the business cycle's turning point.

In a reversal of a near decade long trend, in general, short-term bonds performed better that longer-term bonds, and high-rated investment grade credits returned more than low-rated high yield credits. These outcomes are also consistent with "risk-off" periods late in economic and credit cycles.

Looking Forward

With regard to the equity portfolio of the Fund, we expect to maintain the number of positions and emphasize the Fund's value and income characteristics. In the second half of 2018, the Fund reduced exposure to the overweight Technology sector as valuations became less attractive and reallocated that capital to the Healthcare sector. The recent equity market correction reset valuations and offers new quality candidates for inclusion. Consequently, the Fund's fiscal 2018 turnover of 30% will likely be replicated in 2019, as the fund seeks quality, attractively valued, income producing securities.

We expect US and global inflation to remain modest. We consider any meaningful increase in US yields to be an opportunity to add duration to the bond portion of the portfolio, and not an indicator of a climactic turning point in the rate cycle. Central banks will ration overabundant, artificially cheap credit further. The European Central bank may join the US Federal Reserve and withdraw their even more extraordinary policy stimulus in 2019. It is reasonable to expect 2018's market reactions to continue and broaden in 2019. Central banks are hypersensitive to the impact of their policy withdrawals on the health of the business cycle. They recognize they have a narrow passage to navigate. Their top priority remains avoiding deflation. They will halt normalization (tightening) at the first indication of a serious downturn in the US economic cycle.

Management Fee Calculations

The Sextant Core Fund calculates the performance part of its management fee by comparing the Fund's return to the return of Morningstar's™ Allocation – 50% to 70% Equity category. The Fund's 12-month return of 0.09% was less than 1% below the Morningstar™ category average of 0.12% as of November 30, 2018. Therefore, the basic annual management fee of 0.50% was charged for the month of December 2018.

Bond Quality Diversification (unaudited)
% of Total Net Assets  
Rated "AAA" 14.7%
Sextant Core Fund Bond Quality Diversification
Rated "AA+" 2.4%
Rated "AA" 1.7%
Rated "AA-" 0.7%
Rated "A" 2.7%
Rated "A-" 6.4%
Rated "BBB+" 5.6%
Rated "BBB" 2.2%
Equity 60.8%
Other assets (net of liabilities) 2.8%
Credit ratings are the lesser of S&P Global Ratings or Moody's Investors Service. If neither S&P nor Moody's rate a particular security, that security is categorized as not rated (except for US Treasury securities and securities issued or backed by US agencies which inherit the credit rating for the US government). Ratings range from AAA (highest) to D (lowest). Bonds rated BBB or above are considered investment grade. Credit ratings BB and below are lower-rated securities (junk bonds). Ratings apply to the creditworthiness of the issuers of the underlying securities and not the Fund or its shares. Ratings may be subject to change.

 

Annual Report November 30, 2018 21

 

Sextant Core Fund

Schedule of Investments As of November 30, 2018
Common Stocks – 60.8% Number of Shares Cost Market Value Country¹ Percentage of Assets
 
Communications  
 
Internet Media
Alphabet, Class A² 125 $97,463 $138,706 United States 1.1%
 
Telecom Carriers
BCE 3,300 140,233 141,504 Canada 1.1%
 
  237,696 280,210   2.2%
 
Consumer Discretionary  
 
Apparel, Footwear & Accessory Design
VF 1,600 94,417 130,064 United States 1.0%
 
Auto Parts
Garrett Motion² 4,100 47,582 47,150 United States 0.4%
 
Automobiles
Subaru ADR 7,000 79,659 77,525 Japan 0.6%
 
Home & Office Product Wholesalers
Fastenal 2,000 95,155 118,520 United States 0.9%
 
Home Products Stores
Lowe's 1,400 86,638 132,118 United States 1.0%
 
Specialty Apparel Stores
Ross Stores 1,990 130,074 174,324 United States 1.4%
 
  533,525 679,701   5.3%
 
Consumer Staples  
 
Beverages
PepsiCo 600 56,400 73,164 United States 0.6%
 
Household Products
Procter & Gamble 650 41,180 61,432 United States 0.5%
Unilever ADR 1,700 69,828 92,293 United Kingdom 0.7%
  111,008 153,725   1.2%
 
Packaged Food
Nestle ADR 1,500 108,874 127,830 Switzerland 1.0%
 
  276,282 354,719   2.8%
 
Energy  
 
Exploration & Production
CNOOC ADR 640 80,876 107,795 China 0.8%
ConocoPhillips 2,240 114,404 148,243 United States 1.2%
  195,280 256,038   2.0%
 
Integrated Oils
Equinor ADR 6,500 113,335 151,970 Norway 1.2%
Total ADR 2,332 125,487 129,683 France 1.0%
  238,822 281,653   2.2%
 
  434,102 537,691   4.2%
 
Continued on next page.

 

22 November 30, 2018 Annual Report The accompanying notes are an integral part of these financial statements.

 

Sextant Core Fund

Schedule of Investments As of November 30, 2018
Common Stocks – 60.8% Number of Shares Cost Market Value Country¹ Percentage of Assets
 
Financials  
 
Banks
PNC Financial Services Group 1,690 $129,314 $229,468 United States 1.8%
Toronto-Dominion Bank 4,165 175,741 230,325 Canada 1.8%
  305,055 459,793   3.6%
 
Consumer Finance
Ally Financial 7,100 147,875 189,428 United States 1.5%
 
Diversified Banks
Citigroup 1,900 138,144 123,101 United States 0.9%
JP Morgan Chase 1,850 164,688 205,701 United States 1.6%
Mitsubishi UFJ Financial ADR 21,450 137,152 116,688 Japan 0.9%
  439,984 445,490   3.4%
 
P&C Insurance
Chubb 1,130 151,600 151,126 Switzerland 1.2%
 
  1,044,514 1,245,837   9.7%
 
Health Care  
 
Biotech
Amgen 970 155,052 202,003 United States 1.6%
 
Large Pharma
Bristol-Myers Squibb 2,400 124,748 128,304 United States 1.0%
GlaxoSmithKline ADR 3,100 127,683 129,797 United Kingdom 1.0%
Johnson & Johnson 1,600 142,381 235,040 United States 1.8%
Novo Nordisk ADR 1,850 48,138 86,247 Denmark 0.7%
Pfizer 3,980 126,577 183,995 United States 1.4%
  569,527 763,383   5.9%
 
Life Science Equipment
Abbott Laboratories 2,700 97,630 199,935 United States 1.5%
 
Medical Equipment
Koninklijke Philips ADR 2,000 74,573 75,900 Netherlands 0.6%
 
  896,782 1,241,221   9.6%
 
Industrials  
 
Commercial & Residential Building Equipment & Systems
Honeywell International 1,000 49,533 146,750 United States 1.2%
Johnson Controls International 3,000 112,077 104,340 United States 0.8%
  161,610 251,090   2.0%
 
Factory Automation Equipment
Sensata Technologies Holding² 2,870 120,959 132,766 United States 1.0%
 
Flow Control Equipment
Parker Hannifin 1,150 130,395 197,846 United States 1.5%
 
Rail Freight
Canadian National Railway 1,400 34,680 120,148 Canada 1.0%
 
  447,644 701,850   5.5%
 
Continued on next page.

 

The accompanying notes are an integral part of these financial statements. November 30, 2018 Annual Report 23

 

Sextant Core Fund

Schedule of Investments As of November 30, 2018
Common Stocks – 60.8% Number of Shares Cost Market Value Country¹ Percentage of Assets
 
Materials  
 
Basic & Diversified Chemicals
Linde² 1,000 $79,815 $159,050 Ireland 1.2%
 
Containers & Packaging
3M 975 83,159 202,722 United States 1.6%
 
Non-Wood Building Materials
Carlisle 1,000 105,693 105,520 United States 0.8%
 
Specialty Chemicals
DowDuPont 2,400 156,401 138,840 United States 1.1%
PPG Industries 1,500 161,248 163,995 United States 1.3%
RPM International 2,400 67,251 158,280 United States 1.2%
  384,900 461,115   3.6%
 
  653,567 928,407   7.2%
 
Technology  
 
Application Software
SAP ADR 1,250 104,643 129,600 Germany 1.0%
Tencent Holdings ADR 2,100 67,036 84,168 China 0.7%
  171,679 213,768   1.7%
 
Communications Equipment
Apple 1,000 94,574 178,580 United States 1.4%
 
Computer Hardware & Storage
HP 3,300 49,083 75,900 United States 0.6%
 
Infrastructure Software
Oracle 3,100 124,402 151,156 United States 1.1%
 
IT Services
Amdocs Limited 2,400 163,554 155,784 United States 1.2%
 
Semiconductor Devices
Infineon Technologies ADR 5,275 99,910 111,830 Germany 0.9%
Intel 3,100 109,565 152,861 United States 1.2%
Microchip Technology 1,000 75,784 75,000 United States 0.6%
Micron Technology² 1,700 69,616 65,552 United States 0.5%
Qualcomm 2,200 127,347 128,172 United States 1.0%
Xilinx 1,700 68,620 157,216 United States 1.2%
  550,842 690,631   5.4%
 
Semiconductor Manufacturing
Applied Materials 1,800 68,930 67,104 United States 0.5%
Taiwan Semiconductor ADR 3,500 37,158 131,565 Taiwan 1.0%
  106,088 198,669   1.5%
 
  1,260,222 1,664,488   12.9%
 
Continued next page.

 

24 November 30, 2018 Annual Report The accompanying notes are an integral part of these financial statements.

 

Sextant Core Fund

Schedule of Investments As of November 30, 2018
Common Stocks – 60.8% Number of Shares Cost Market Value Country¹ Percentage of Assets
 
Utilities  
 
Integrated Utilities
NextEra Energy 1,000 72,153 181,710 United States 1.4%
 
  72,153 181,710   1.4%
 
Total Common Stocks   $5,856,487 $7,815,834   60.8%

 

Corporate Bonds – 19.2% Coupon / Maturity Face Amount Market Value Percentage of Assets
 
Communications  
 
America Movil 5.00% due 03/30/2020 $100,000 $101,479 0.7%
Bellsouth Capital Funding 7.875% due 02/15/2030 150,000 175,173 1.4%
 
  276,652 2.1%
 
Consumer Discretionary  
 
Stanford University 4.013% due 05/01/2042 100,000 99,912 0.8%
Walmart 1.95% due 12/15/2018 100,000 99,971 0.8%
 
  199,883 1.6%
 
Financials  
 
General Electric Capital 5.35% due 04/15/2022 101,000 95,708 0.8%
HSBC Holdings 4.25% due 03/14/2024 150,000 146,939 1.1%
PartnerRe Finance B 5.50% due 06/01/2020 100,000 102,074 0.8%
Welltower Inc 4.25% due 04/15/2028 350,000 339,457 2.6%
 
  684,178 5.3%
 
Health Care  
 
Becton Dickinson 3.125% due 11/08/2021 100,000 98,477 0.8%
Celgene 2.875% due 08/15/2020 140,000 138,235 1.1%
Gilead Sciences 3.70% due 04/01/2024 250,000 247,947 1.9%
 
  484,659 3.8%
 
Industrials  
 
Legrand France Yankee 8.50% due 02/15/2025 170,000 208,256 1.6%
Union Pacific Corp 3.375% due 02/01/2035 250,000 213,907 1.7%
 
  422,163 3.3%
 
Materials  
 
Air Products & Chemicals 4.375% due 08/21/2019 100,000 100,841 0.8%
 
  100,841 0.8%
 
Technology  
 
Cisco Systems 2.90% due 03/04/2021 100,000 99,397 0.7%
Qualcomm 3.25% due 05/20/2027 220,000 202,460 1.6%
 
  301,857 2.3%
 
Total Corporate Bonds     $2,470,233 19.2%

Continued on next page.

 

The accompanying notes are an integral part of these financial statements. November 30, 2018 Annual Report 25

 

Sextant Core Fund

Schedule of Investments As of November 30, 2018
Government Bonds – 13.9% Coupon / Maturity Face Amount Market Value Percentage of Assets
 
United States Treasury Bonds  
 
United States Treasury Bond 6.25% due 08/15/2023 $438,000 $502,930 3.9%
United States Treasury Bond 4.50% due 02/15/2036 137,000 162,147 1.3%
 
  665,077 5.2%
 
United States Treasury Notes  
 
United States Treasury Note 1.50% due 06/15/2020 150,000 147,053 1.1%
United States Treasury Note 2.75% due 11/15/2023 350,000 348,154 2.7%
United States Treasury Note 2.00% due 05/31/2024 80,000 76,412 0.6%
United States Treasury Note 2.125% due 08/31/2020 204,000 201,570 1.6%
United States Treasury Note 2.00% due 11/30/2022 250,000 241,992 1.9%
United States Treasury Note 1.625% due 04/30/2023 106,000 100,584 0.8%
 
  1,115,765 8.7%
 
Total Government Bonds     $1,780,842 13.9%
 
Municipal Bonds – 3.3% Coupon / Maturity Face Amount Market Value Percentage of Assets
 
General Obligation  
 
Lake Washington SD 414 WA BAB 4.906% due 12/01/2027 $100,000 $102,568 0.8%
Skagit SD #1 4.613% due 12/01/2022 100,000 102,762 0.8%
 
  205,330 1.6%
 
State Education  
 
New York City Housing Dev 2.65% due 05/01/2021 100,000 98,523 0.8%
 
  98,523 0.8%
 
Utility Networks  
 
Tacoma WA Elec Sys Revenue 5.966% due 01/01/2035 100,000 119,175 0.9%
 
  119,175 0.9%
 
Total Municipal Bonds     $423,028 3.3%
 
Total investments (Cost = $10,667,091) 12,489,937 97.2%
Other assets (net of liabilities)   361,358 2.8%
Total net assets   $12,851,295 100.0%
¹ Country of domicile
² Non-income producing security
ADR: American Depositary Receipt

 

26 November 30, 2018 Annual Report The accompanying notes are an integral part of these financial statements.

 

Sextant Core Fund

Statement of Assets and Liabilities
As of November 30, 2018
 
Assets
Investments in securities, at value
(Cost $10,667,091)
$12,489,937
Cash 312,355
Dividends and interest receivable 65,035
Prepaid expenses 11,191
Receivable for Fund shares sold 275
Total assets 12,878,793
Liabilities
Accrued trustee expenses 5,926
Accrued advisory fees 5,222
Accrued audit expenses 4,552
Accrued printing expenses 3,486
Accrued retirement plan custodial fees 2,838
Payable for fund shares redeemed 2,800
Accrued other expenses 1,280
Accrued postage expenses 983
Accrued Chief Compliance Officer expenses 411
Total liabilities 27,498
Net assets $12,851,295
 
Analysis of net assets
Paid-in capital (unlimited shares authorized, without par value) $10,876,508
Total distributable earnings 1,974,787
Net assets applicable to Fund shares outstanding $12,851,295
 
Fund shares outstanding 1,001,265
 
Net asset value, offering, and redemption price per share $12.84

 

Statement of Operations
Year ended November 30, 2018
 
Investment income
Dividends (net of foreign tax of $9,767) $158,584
Interest income 125,558
Total investment income 284,142
Expenses
Investment adviser fees 62,932
Filing and registration fees 23,947
Audit fees 6,810
Printing and postage 3,566
Retirement plan custodial fees 3,078
Chief Compliance Officer expenses 3,046
Trustee fees 2,539
Legal fees 1,453
Other expenses 1,335
Custodian fees 590
Total gross expenses 109,296
Less custodian fee credits (590)
Net expenses 108,706
Net investment income $175,436
 
 
Net realized gain from investments and foreign currency $145,000
Net decrease in unrealized appreciation on investments and foreign currency (280,915)
Net loss on investments $(135,915)
 
Net increase in net assets resulting from operations $39,521

 

The accompanying notes are an integral part of these financial statements. November 30, 2018 Annual Report 27

 

Sextant Core Fund

Statements of Changes in Net Assets Year ended Nov. 30, 2018 Year ended Nov. 30, 2017
Increase (decrease) in net assets from operations
From operations
Net investment income $175,436 $167,886
Net realized gain on investment 145,000 48,407
Net increase (decrease) in unrealized appreciation (280,915) 1,338,467
Net increase in net assets 39,521 1,554,760
 
Distributions to shareowners (166,943) (132,290)A
     
Capital share transactions
Proceeds from sales of shares 2,728,274 4,682,485
Value of shares issued in reinvestment of dividends 166,943 132,290
Cost of shares redeemed (2,896,024) (1,820,402)
Total capital share transactions (807) 2,994,373
Total increase (decrease) in net assets (128,229) 4,416,843
 
Net assets
Beginning of year 12,979,524 8,562,681
End of year $12,851,295 $12,979,524B
 
Shares of the Fund sold and redeemed
Number of shares sold 211,487 387,379
Number of shares issued in reinvestment of dividends 12,931 11,550
Number of shares redeemed (222,368) (147,603)
Net increase in number of shares outstanding 2,050 251,326

A Consists of net investment income distributions of $132,290.
B Includes accumulated net investment income of $166,943.

Financial Highlights For year ended November 30,
Selected data per share of outstanding capital stock throughout each year: 2018 2017 2016 2015 2014
Net asset value at beginning of year $12.99 $11.45 $11.25 $12.43 $11.78
Income from investment operations
Net investment income 0.18 0.16 0.18 0.18 0.21
Net gains (losses) on securities (both realized and unrealized) (0.16) 1.55 0.02 (0.72) 0.78
Total from investment operations 0.02 1.71 0.20 (0.54) 0.99
Less distributions
Dividends (from net investment income) (0.17) (0.17) - (0.18) (0.21)
Distributions (from capital gains) - - - (0.46) (0.13)
Total distributions (0.17) (0.17) - (0.64) (0.34)
 
Net asset value at end of year $12.84 $12.99 $11.45 $11.25 $12.43
 
Total return 0.16% 15.15% 1.78% (4.38)% 8.41%
 
Ratios / supplemental data
Net assets ($000), end of year $12,851 $12,980 $8,563 $8,435 $8,656
Ratio of expenses to average net assets
Before custodian fee credits 0.88% 0.84% 1.05% 1.02% 1.17%
After custodian fee credits 0.87% 0.83% 1.04% 1.01% 1.16%
Ratio of net investment income after custodian fee credits to average net assets 1.41% 1.52% 1.52% 1.44% 1.88%
Portfolio turnover rate 30% 34% 39% 24% 14%

 

28 November 30, 2018 Annual Report The accompanying notes are an integral part of these financial statements.

 

Sextant Global High Income Fund

Performance Summary (unaudited)
Average Annual Total Returns as of November 30, 2018
  1 Year 5 Year 10 Year Expense Ratio¹
Sextant Global High Income Fund² 2.31% 4.62% n/a 1.06%
S&P Global 1200 Index 0.52% 7.29% 11.50% n/a

Growth of $10,000

Sextant Global High Income Growth of $10,000
Comparison of any mutual fund to a market index must be made bearing in mind that the index is expense-free. Conversely, the fund will (1) be actively managed; (2) have an objective other than mirroring the index, such as limiting risk; (3) bear transaction and other costs; (4) stand ready to buy and sell its securities to shareowners on a daily basis; and (5) provide a wide range of services. The graph compares $10,000 invested in the Fund on March 30, 2012 (the Fund's inception), to an identical amount invested in the S&P Global 1200 Index, a global stock market index covering nearly 70% of the world's equity markets. The graph shows that an investment in the Fund would have risen to $13,901 versus $18,364 in the index.

Past performance does not guarantee future results. The "Growth of $10,000" graph and "Average Annual Returns" performance table assume the reinvestment of dividends and capital gains. They do not reflect the deduction of taxes that a shareowner might pay on fund distributions or the redemption of fund shares.

¹ By regulation, the expense ratio shown in this table is as stated in the Fund's most recent prospectus, which is dated March 28, 2018, and incorporates results for the fiscal year ended November 30, 2017, before fee waivers. The expense ratio shown in the most recent prospectus after fee waivers was 0.75%. The ratio presented in this table differs from expense ratios shown elsewhere in this report as they represent different periods.

² The Sextant Global High Income Fund began operations on March 30, 2012.

Fund Objective

The objective of the Global High Income Fund is high income, with a secondary objective of capital preservation.

Portfolio Diversification
  % of Total Net Assets
Sectors Equity Fixed Income
Government Bonds n/a 15.3%
Financials 5.0% 9.7%
Energy 13.0% 1.4%
Technology 8.4% 3.0%
Materials 7.3% 2.9%
Communications 4.8% 2.9%
Industrials 3.6% 2.4%
Consumer Discretionary n/a 5.0%
Health Care 3.4% n/a
Municipal Bonds n/a 3.3%
Consumer Staples n/a 2.0%
Total 45.5% 47.9%

 

Top 10 Holdings
% of Total Net Assets
United States Treasury Bond (6.125% due 11/15/2027) 7.0%
Mexico Bonos Desarrollo (6.50% due 06/10/2021) 4.5%
Itau Unibanco Holding ADR, Class A 3.5%
Microchip Technology 3.4%
CNOOC ADR 3.3%
Equinor ADR 3.2%
BHP Billiton 3.0%
T-Mobile (6.50% due 01/15/2026) 2.9%
Jefferies Group (5.125% due 01/20/2023) 2.9%
SK Telecom ADR 2.9%

 

Asset Allocation
% of Total Net Assets  
Equity Securities 45.5%
Sextant Global High Income Fund Asset Allocation
Fixed Income Securities 47.9%
Other assets (net of liabilities) 6.6%
 

 

Annual Report November 30, 2018 29

 

Sextant Global High Income Fund

Discussion of Fund Performance (unaudited)

(photo omitted)

Fiscal Year 2018

The Sextant Global High Income Fund completed fiscal year 2018 with a total return of 2.31%. The Fund paid a qualified income distribution of $0.149 and a regular income distribution of $0.243 on December 27, 2018. The ratio of net investment income to average net assets during the fiscal year was 3.34%. The 30-day SEC yield was 3.43% at fiscal year-end.

The Fund outperformed its equity benchmark, the S&P Global 1200, which returned 0.52%, as well as its fixed-income benchmark, the Bloomberg-Barclays Global High Yield Corporate Bond Index, which returned -1.85%; it also beat its Morningstar World Allocation peer group, which returned -3.38%.

Factors Affecting Past Performance

The previous fiscal year was marked by decades-low volatility in the US equity market, but with tax cuts in the rear-view mirror, President Trump's actions on trade, and sputtering growth in Europe and China, investors suddenly became less than sanguine in early 2018. Indeed, we calculate that annualized volatility of the S&P 500 daily returns increased from 6.8% in fiscal year 2017 to 14.9% in fiscal year 2018! In this choppy trading environment, the Fund's consistent security selection across global equity sectors helped to drive strong comparative performance, with the Fund's top six equity performers during the fiscal year coming from six different sectors. Our approach in stock selection emphasizes valuation-discipline and fundamental analysis, a focus on dividends, and contrarianism – looking for opportunities where others may not see them.

Looking Forward

Equities
While steadily rising markets can make investors happy, they also make it harder for investment managers to source compelling opportunities in which to deploy new funds or redeploy proceeds from investments that are more than fully valued. To that end, the recent increase in volatility, declines in broad equity markets, and pockets of more severe pessimism and distress have led us to a number of attractive opportunities for investment, and others we are exploring further.

Fixed Income
The yield curve flattened significantly throughout the fiscal year (the difference between long-term and short-term rates becoming narrower), and inverted yield curves in the past have correlated with recessions and falling equity markets. While inflation remains constrained, wage growth has picked up recently. Falling interest rates and equity market turmoil signal that, on balance, market participants are more worried about risks to growth than about rising inflation. The Federal Reserve has also sketched out a more aggressive path to raising interest rates than the markets appear to desire, which has added to market turmoil. We believe that the US economy remains on solid footing, but that the Fed will take a more cautious approach to raising rates in 2019 than it may have planned, to ensure that economic growth continues, and in case weakness abroad threatens to derail the global economy.

Foreign Currencies
With interest rates in other developed economies remaining low, while US interest rates were generally rising during the year, the US dollar continued to be strong against other currencies. So-called carry traders want to borrow in euro or yen and invest the money in US dollars to capture the rate differential, and that demand for dollars helps drive up the exchange rate. Nonetheless, these movements in exchange rates have left several emerging markets currencies (such as the Mexican peso and Brazilain real) as well as select developed market exchange rates (like the Swedish kroner and Canadian dollar) well below our assessment of fair value, based on purchasing power. We expect that, over time, these currencies will strengthen in comparison with the dollar.

Management Fee Calculations

The Sextant Global High Income Fund calculates the performance part of its management fee by comparing the Fund's return to the return of Morningstar's™ "World Allocation" category. The Fund's 12-month return (2.31%) was more than two percent above the Morningstar™ category average (-3.38%) at month-end November 30, 2018. Therefore, the basic annual management fee of 0.50% was increased by 0.20% to 0.70% for the month of December 2018. Note that significant portions of the Fund's expenses are waived due to the adviser's voluntary cap on total Fund expenses.

Bond Quality Diversification (unaudited)
% of Total Net Assets  
Rated "AAA" 7.0%
Sextant Global High Income Fund Bond Quality Diversification
Rated "AA" 1.2%
Rated "A+" 2.4%
Rated "A-" 4.5%
Rated "BBB" 7.6%
Rated "BBB-" 4.5%
Rated "BB+" 7.1%
Rated "BB" 4.5%
Rated "BB-" 3.0%
Rated "B" 1.8%
Not Rated 4.3%
Equity 45.5%
Other assets (net of liabilities) 6.6%
Credit ratings are the lesser of S&P Global Ratings or Moody's Investors Service. If neither S&P nor Moody's rate a particular security, that security is categorized as not rated (except for US Treasury securities and securities issued or backed by US agencies which inherit the credit rating for the US government). Ratings range from AAA (highest) to D (lowest). Bonds rated BBB or above are considered investment grade. Credit ratings BB and below are lower-rated securities (junk bonds). Ratings apply to the creditworthiness of the issuers of the underlying securities and not the Fund or its shares. Ratings may be subject to change.

 

30 November 30, 2018 Annual Report

 

Sextant Global High Income Fund

Schedule of Investments As of November 30, 2018
Common Stocks – 45.5% Number of Shares Cost Market Value Country¹ Percentage of Assets
 
Communications  
 
Telecom Carriers
Orange ADR 10,000 $147,658 $167,600 France 1.9%
SK Telecom ADR 9,000 149,322 255,330 South Korea 2.9%
 
  296,980 422,930   4.8%
 
Energy  
 
Exploration & Production
CNOOC Limited ADR 1,700 260,828 286,331 China 3.3%
Goodrich Petroleum² 138 - 1,990 United States 0.0%3
  260,828 288,321   3.3%
 
Integrated Oils
Equinor ADR 12,000 218,810 280,560 Norway 3.2%
Royal Dutch Shell ADR, Class A 3,800 241,426 229,520 Netherlands 2.6%
Total ADR 3,800 202,606 211,318 France 2.4%
  662,842 721,398   8.2%
 
Oil & Gas Services & Equip
National Oilwell Varco 4,200 139,818 134,862 United States 1.5%
 
  1,063,488 1,144,581   13.0%
 
Financials  
 
Banks
Skandinaviska Enskilda Banken, Class A 13,000 136,631 135,642 Sweden 1.5%
 
Diversified Banks
Itau Unibanco Holding ADR, Class A 33,000 207,301 307,890 Brazil 3.5%
 
  343,932 443,532   5.0%
 
Health Care  
 
Large Pharma
GlaxoSmithKline ADR 3,100 143,250 129,797 United Kingdom 1.4%
Novartis ADR 1,900 110,053 173,907 Switzerland 2.0%
 
  253,303 303,704   3.4%
 
Industrials  
 
Infrastructure Construction
CCR 45,000 130,047 151,164 Brazil 1.7%
Hopewell Highway Infrastructure 325,000 168,010 164,972 Hong Kong 1.9%
 
  298,057 316,136   3.6%
 
Continued on next page.

 

The accompanying notes are an integral part of these financial statements. November 30, 2018 Annual Report 31

 

Sextant Global High Income Fund

Schedule of Investments As of November 30, 2018
Common Stocks – 45.5% Number of Shares Cost Market Value Country¹ Percentage of Assets
 
Materials  
 
Agricultural Chemicals
Nutrien 3,200 $221,690 $164,992 Canada 1.9%
 
Base Metals
South 32 ADR 19,000 134,773 213,845 Australia 2.4%
 
Steel Raw Material Suppliers
BHP Billiton ADR 6,000 207,424 266,160 Australia 3.0%
 
  563,887 644,997   7.3%
 
Technology  
 
Infrastructure Software
Micro Focus International plc Spons 13,000 241,211 253,630 United States 2.9%
 
Semiconductor Devices
Microchip Technology 4,000 136,113 300,000 United States 3.4%
 
Semiconductor Devices
Applied Materials 5,000 180,911 186,400 United States 2.1%
 
  558,235 740,030   8.4%
 
Total Common Stock   $3,377,882 $4,015,910   45.5%

 

Corporate Bonds – 29.3% Coupon / Maturity Face Amount Market Value Country¹ Percentage of Assets
 
Communications  
 
T-Mobile 6.50% due 01/15/2026 $250,000 $259,375 United States 2.9%
 
  259,375   2.9%
 
Consumer Discretionary  
 
ADT 4.125% due 06/15/2023 150,000 139,875 United States 1.6%
GAP 5.95% due 04/12/2021 100,000 102,969 United States 1.2%
Rent-A-Center 6.625% due 11/15/2020 200,000 198,000 United States 2.2%
 
  440,844   5.0%
 
Consumer Staples  
 
Grupo Bimbo 4.875% due 06/27/2044 200,000 178,174 Mexico 2.0%
 
  178,174   2.0%
 
Energy  
 
Petrobras International Finance 6.875% due 01/20/2040 50,000 47,005 Brazil 0.5%
Petrobras International Finance 6.75% due 01/27/2041 80,000 74,500 Brazil 0.9%
 
  121,505   1.4%
 
Continued on next page.

 

32 November 30, 2018 Annual Report The accompanying notes are an integral part of these financial statements.

 

Sextant Global High Income Fund

Schedule of Investments As of November 30, 2018
Corporate Bonds – 29.3% Coupon / Maturity Face Amount Market Value Country¹ Percentage of Assets
 
Financials  
 
Canadian Imperial Bank 3.42% due 01/26/2026 CAD 250,000 $188,296 Canada 2.2%
Jefferies Group 5.125% due 01/20/2023 250,000 256,419 United States 2.9%
Lincoln National
(3 month LIBOR plus 2.04%)4
6.05% due 04/20/2067 250,000 206,250 United States 2.3%
Royal Bank of Scotland 6.125% due 12/15/2022 200,000 202,868 United Kingdom 2.3%
 
  853,833   9.7%
 
Industrials  
 
Burlington Northern Santa Fe 5.05% due 03/01/2041 200,000 211,693 United States 2.4%
 
  211,693   2.4%
 
Materials  
 
Allegheny Technologies 7.875% due 08/15/2023 150,000 156,375 United States 1.8%
AngloGold Ashanti Holdings 5.375% due 04/15/2020 100,000 100,906 South Africa 1.1%
 
  257,281   2.9%
 
Technology  
 
Hewlett Packard 4.65% due 12/09/2021 100,000 102,478 United States 1.1%
Nokia 5.375% due 05/15/2019 165,750 166,164 Finland 1.9%
 
  268,642   3.0%
 
Total Corporate Bonds   $2,591,347   29.3%

 

Government Bonds - 15.3% Coupon / Maturity Face Amount Market Value Country¹ Percentage of Assets
 
Foreign Government Bonds  
 
Colombia Republic 8.375% due 02/15/2027 $125,000 $139,564 Colombia 1.6%
Federal Republic of Brazil 8.50% due 01/05/2024 BRL 750,000 191,040 Brazil 2.2%
Mexico Bonos Desarrollo 6.50% due 06/10/2021 MXN 85,000 397,150 Mexico 4.5%
 
  727,754   8.3%
 
United States Treasury Bonds  
 
United States Treasury Bond 6.125% due 11/15/2027 500,000 621,699 United States 7.0%
 
  621,699   7.0%
 
Total Government Bonds $1,349,453   15.3%
 
Continued on next page.

 

The accompanying notes are an integral part of these financial statements. November 30, 2018 Annual Report 33

 

Sextant Global High Income Fund

Schedule of Investments As of November 30, 2018
Municipal Bonds – 3.3% Coupon / Maturity Face Amount Market Value Country¹ Percentage of Assets
 
Revenue  
 
Colony TX NFM Sales Tax Revenue 7.00% due 10/01/2027 $100,000 $102,184 United States 1.2%
Colony TX NFM Sales Tax Revenue 7.25% due 10/01/2033 50,000 51,092 United States 0.6%
Colony TX NFM Sales Tax Revenue 7.625% due 10/01/2042 50,000 53,624 United States 0.6%
 
  206,900   2.4%
 
Water Supply  
 
Puerto Rico Aqueduct & Sewer 5.00% due 07/01/2019 85,000 81,706 United States 0.9%
 
  81,706   0.09%
 
Total Municipal Bonds   288,606   3.3%
 
Warrants – 0.0% Number of Shares Cost Market Value Country¹ Percentage of Assets
 
Energy  
 
Exploration & Production
Goodrich Petroleum Warrants² 1,179 $- $- United States 0.0%
 
  $- $-   0.0%
 
Total investments (Cost = $7,845,294)   8,245,316   93.4%
Other assets (net of liabilities)     582,096   6.6%
Total net assets     $8,827,412   100.0%
¹ Country of domicile
² Non-income producing
3 Amount is less than 0.05%
4 Variable rate security. The interest rate represents the rate in effect at November 30, 2018 and resets periodically based on the parenthetically disclosed reference rate and spread.
ADR: American Depositary Receipt

 

Countries (unaudited)
 
Sextant Global High Income Fund Countries

Other assets (net of liabilities) 6.6%

Weightings shown are a percentage of total net assets.

 

34 November 30, 2018 Annual Report The accompanying notes are an integral part of these financial statements.

 

Sextant Global High Income Fund

Statement of Assets and Liabilities
As of November 30, 2018
 
Assets
Investments in securities, at value
(Cost $7,845,294)
$8,245,316
Cash 494,810
Dividends and interest receivable 95,909
Prepaid expenses 1,677
Total assets 8,837,712
Liabilities
Accrued advisory fees 3,717
Accrued audit expenses 3,609
Accrued retirement plan custodial fees 1,477
Accrued trustee expenses 695
Accrued printing expenses 463
Accrued other expenses 258
Accrued Chief Compliance Officer expenses 81
Total liabilities 10,300
Net assets $8,827,412
 
Analysis of net assets
Paid-in capital (unlimited shares authorized, without par value) $8,149,021
Total distributable earnings 678,391
Net assets applicable to Fund shares outstanding $8,827,412
 
Fund shares outstanding 797,725
 
Net asset value, offering and redemption price per share $11.07

 

Statement of Operations
Year ended November 30, 2018
 
Investment income
Interest income $224,118
Dividend Income (net of foreign tax of $21,145) 163,832
Miscellaneous income 31
Total investment income 387,981
Expenses
Investment adviser fees 54,274
Filing and registration fees 16,744
Audit fees 6,315
Printing and postage 3,613
Trustee fees 2,162
Chief Compliance Officer expenses 2,067
Retirement plan custodial fees 1,644
Legal fees 1,270
Other expenses 1,088
Custodian fees 656
Total gross expenses 89,833
Less adviser fees waived (19,889)
Less custodian fee credits (656)
Net expenses 69,288
Net investment income $318,693
 
 
Net realized gain from investments and foreign currency $151,626
Net decrease in unrealized appreciation on investments (267,907)
Net loss on investments $(116,281)
 
Net increase in net assets resulting from operations $202,412

 

The accompanying notes are an integral part of these financial statements. November 30, 2018 Annual Report 35

 

Sextant Global High Income Fund

Statements of Changes in Net Assets Year ended Nov. 30, 2018 Year ended Nov. 30, 2017
Increase (decrease) in net assets from operations
From operations
Net investment income $318,693 $291,706
Net realized gain (loss) on investment 151,626 (213,838)
Net increase (decrease) in unrealized appreciation (267,907) 1,114,967
Net increase in net assets 202,412 1,192,835
 
Distributions to shareowners (253,597) (333,427)A
     
Capital share transactions
Proceeds from sales of shares 564,016 1,542,148
Value of shares issued in reinvestment of dividends 249,322 327,024
Cost of shares redeemed (1,307,655) (925,562)
Total capital share transactions (494,317) 943,610
Total increase (decrease) in net assets (545,502) 1,803,018
 
Net assets
Beginning of year 9,372,914 7,569,896
End of year $8,827,412 $9,372,914B
 
Shares of the Fund sold and redeemed
Number of shares sold 50,613 146,785
Number of shares issued in reinvestment of dividends 22,707 33,379
Number of shares redeemed (118,123) (86,129)
Net increase (decrease) in number of shares outstanding (44,803) 94,035

A Consists of net investment income distributions of $333,427.
B Includes accumulated net investment income of $253,596.

Financial Highlights For year ended November 30,
Selected data per share of outstanding capital stock throughout each year: 2018 2017 2016 2015 2014
Net asset value at beginning of year $11.12 $10.11 $8.89 $10.57 $10.51
Income from investment operations
Net investment income 0.40 0.35 0.45 0.52 0.48
Net gains (losses) on securities (both realized and unrealized) (0.15) 1.11 0.77 (1.68) 0.07
Total from investment operations 0.25 1.46 1.22 (1.16) 0.55
Less distributions
Dividends (from net investment income) (0.30) (0.45) - (0.52) (0.49)
Total distributions (0.30) (0.45) - (0.52) (0.49)
 
Net asset value at end of year $11.07 $11.12 $10.11 $8.89 $10.57
 
Total return 2.31% 15.01% 13.72% (11.01)% 5.27%
 
Ratios / supplemental data
Net assets ($000), end of year $8,827 $9,373 $7,570 $6,952 $7,707
Ratio of expenses to average net assets
Before fee waivers 0.97% 1.18% 1.17% 1.06% 1.41%
After fee waivers 0.75% 0.83% 0.91% 0.90% 0.91%
After fee waivers and custodian fee credits 0.75% 0.82% 0.90% 0.89% 0.90%
Ratio of net investment income after fee waivers and custodian fee credits to average net assets 3.43% 3.34% 4.78% 4.87% 4.75%
Portfolio turnover rate 10% 8% 26% 40% 11%

 

36 November 30, 2018 Annual Report The accompanying notes are an integral part of these financial statements.

 

Sextant Growth Fund

Performance Summary (unaudited)
Average Annual Total Returns as of November 30, 2018
  1 Year 5 Year 10 Year Expense Ratio¹
Sextant Growth Fund Investor Shares (SSGFX) 9.95% 8.51% 11.55% 0.76%
Sextant Growth Fund Z Shares (SGZFX)² 10.20% n/a n/a 0.51%
S&P 500 Index 6.27% 11.11% 14.30% n/a

Growth of $10,000

Sextant Growth Fund Growth of $10,000
Comparison of any mutual fund to a market index must be made bearing in mind that the index is expense-free. Conversely, the fund will (1) be actively managed; (2) have an objective other than mirroring the index, such as limiting risk; (3) bear transaction and other costs; (4) stand ready to buy and sell its securities to shareowners on a daily basis; and (5) provide a wide range of services. The graph compares $10,000 invested in Investor Shares of the Fund on November 30, 2008, to an identical amount invested in the S&P 500 Index, an index comprised of 500 widely held common stocks considered to be representative of the US stock market in general. The graph shows that an investment in the Investor Shares of the Fund would have risen to $29,829 versus $38,109 in the index.

Past performance does not guarantee future results. The "Growth of $10,000" graph and "Average Annual Returns" performance table assume the reinvestment of dividends and capital gains. They do not reflect the deduction of taxes that a shareowner might pay on fund distributions or the redemption of fund shares.

¹ By regulation, the expense ratio shown in this table is as stated in the Fund's most recent prospectus, which is dated March 28, 2018, and incorporates results for the fiscal year ended November 30, 2017. The ratio presented in this table differs from expense ratios shown elsewhere in this report as they represent different periods.

² Sextant Growth Fund Z Shares (SGZFX) began operations June 2, 2017.

Fund Objective

The objective of the Growth Fund is long-term capital growth.

Top 10 Holdings   Portfolio Diversification
% of Total Net Assets % of Total Net Assets  
Amazon.com 6.6% Consumer Finance 11.7%
Sextant Growth Fund Portfolio Diversification
Apple 6.5% Infrastructure Software 6.8%
Adobe Systems 5.9% E-Commerce Discretionary 6.6%
Alphabet, Class A 5.7% Communications Equipment 6.5%
Microsoft 5.4% Application Software 5.9%
Mastercard, Class A 4.6% Internet Media 5.7%
Abbott Laboratories 3.9% Home Products Stores 5.0%
JP Morgan Chase 3.6% Specialty Chemicals 4.9%
RPM International 3.0% Specialty Apparel Stores 3.9%
Stanley Black & Decker 2.9% Life Science Equipment 3.9%
  Medical Devices 3.7%
Diversified Banks 3.6%
Biotech 3.4%
Industiries < 3% 25.8%
Other Assets (net of liabilities) 2.6%

 

Annual Report November 30, 2018 37

 

Sextant Growth Fund

Discussion of Fund Performance (unaudited)

(photo omitted)

Fiscal Year 2018

For the fiscal year ended November 30, 2018, the Sextant Growth Fund Investor Shares returned 9.95%, well ahead of the 6.27% gain for the S&P 500. New class Z Shares, without a 12b-1 fee expense, were introduced last year and 87.2% of the Fund now benefits from this lower expense option. The Fund also outperformed other growth-oriented funds, as illustrated by its Morningstar US Large Growth category peer group returning an average of 7.63% over the same period.

Factors Affecting Past Performance

Sextant Growth's performance improved over the past year as many of the largest positions in the Fund experienced solid price appreciation, while significant losses were largely avoided. The Fund's largest exposure is to technology and within that group Adobe, Microsoft, and Amazon all performed well. Apple, which has been a strong contributor in years past, appeared set to repeat before selling off sharply in October and November, wiping out nearly all of the gains up to that point. The Fund's relative performance was also assisted by the lack of exposure to semiconductors. In 2017, that was one of the main factors leading to underperformance, but the industry is cyclical and last year saw prices turn down for many of the largest players. Mastercard, which occasionally finds itself grouped in with the technology companies, had another strong year, and we continue to see a bright future for electronic payments.

In addition to technology, healthcare provided good returns for the Fund last year with Edwards Life Sciences, Amgen, and Abbott Laboratories among top contributors. Edwards has been expanding the patient population for its Transcatheter Aortic Replacement Valves (TAVR), and an overhang was removed in early 2019 when it reached a settlement with competitor Boston Scientific over patents. Abbott Laboratories benefited from its earlier acquisitions of Alere and St. Jude Medical, and has done an excellent job integrating the businesses. Amgen was a volatile stock over the course of the year but finished on a strong note due to an attractive valuation and dividend yield, as well as solid cash generation. Within the retail sector, Nike, TJX, and Ross continued to provide positive returns, while Lowe's and Home Depot were more challenged. Nike seems to have finally put its North American business back on track after an Adidas revival over the past couple of years, while TJX and Ross are both extremely well-managed and well-positioned businesses in apparel retail. We continue to like home improvement as an industry, even though both Lowe's and Home Depot were affected by the slowdown in the housing market and rising interest rates. We believe that renovation will make up for any slack in new building.

Among detractors, Stanley Black & Decker was among the largest. It was also affected by housing but even more by the tariffs set by the US government on China, since the majority of its products are made in that country. Facebook's various privacy travails weighed on its share price over the course of the year and we ultimately exited the position due to concerns over corporate governance. Celgene subtracted from returns as it had difficulty with trial failures and an inability to organize data in a manner acceptable to the FDA.

Looking Forward

The future is always uncertain, but 2019's crystal ball appears cloudier than usual. As of writing, the US government has been shut for a number of weeks and no agreement appears in sight. With House control switching to the Democrats, we are likely to see little in the way of legislation and a surfeit of investigation. The political circus will only intensify with the next presidential election less than two years away and candidates already announcing their intentions. This presents real uncertainty in a variety of areas, most importantly, trade policy. President Trump has threatened much higher tariffs on Chinese imports unless that country makes a variety of concessions. Stress in China's economy reduces their room to maneuver, but the government's tolerance for being dictated to is extremely limited. Even if some modification of trade, technology, and intellectual property protection in China is warranted (it is), political point scoring may prevent a unified stance in the US. Under such circumstances, a worst-case scenario – tariffs hiked to 25% - cannot be ruled out.

Despite these challenges, the US economy still appears to be performing well, with solid employment, recent wage increases, and a confident consumer. The chances of recession in 2019 appear low. At the same time, the stock market weakness in the fourth quarter has largely eliminated valuation as a concern.

Management Fee Calculations

The Sextant Growth Fund calculates the performance part of its management fee by comparing the Fund's return to the average return in Morningstar's "Large Growth" category.

Sextant Growth Fund Investor Shares' 12-month return of 9.95% was more than 2% above the Morningstar™ category average of 7.63% at month-end November 30, 2018. Therefore, the base annual management fee of 0.50% for the Fund as a whole was increased by 0.20% to 0.70% for the month of December 2018.

38 November 30, 2018 Annual Report

 

Sextant Growth Fund

Schedule of Investments As of November 30, 2018
Common Stock – 97.4% Number of Shares Cost Market Value Percentage of Assets
 
Communications  
 
Internet Based Services
Booking Holdings¹ 400 $761,890 $756,752 1.9%
 
Internet Media
Alphabet, Class A¹ 1,998 1,175,995 2,217,081 5.7%
 
  1,937,885 2,973,833 7.6%
 
Consumer Discretionary  
 
Airlines
Alaska Air 7,422 129,600 543,736 1.4%
 
Apparel, Footwear & Accessory Design
Nike, Class B 10,276 528,776 771,933 2.0%
 
E-Commerce Discretionary
Amazon.com¹ 1,529 278,191 2,584,270 6.6%
 
Home Improvement
Stanley Black & Decker 8,684 795,475 1,136,301 2.9%
 
Home Products Stores
Home Depot 6,264 724,382 1,129,525 2.9%
Lowe's 8,700 531,242 821,019 2.1%
  1,255,624 1,950,544 5.0%
 
Other Commercial Services
Ecolab 6,243 704,507 1,001,939 2.5%
 
Restaurants
Starbucks 14,674 610,056 979,049 2.5%
 
Specialty Apparel Stores
Ross Stores 11,600 742,560 1,016,160 2.6%
TJX Companies 11,078 330,472 541,160 1.3%
  1,073,032 1,557,320 3.9%
 
Toys & Games
Hasbro 3,500 343,856 318,500 0.8%
 
  5,719,117 10,843,592 27.6%
 
Consumer Staples  
 
Mass Merchants
Costco Wholesale 4,883 599,638 1,129,340 2.9%
 
  599,638 1,129,340 2.9%
 
Continued on next page.

 

The accompanying notes are an integral part of these financial statements. November 30, 2018 Annual Report 39

 

Sextant Growth Fund

Schedule of Investments As of November 30, 2018
Common Stock – 97.4% Number of Shares Cost Market Value Percentage of Assets
 
Financials  
 
Consumer Finance
Ally Financial 34,000 $777,141 $907,120 2.3%
FLEETCOR Technologies¹ 4,361 626,335 843,417 2.2%
Mastercard, Class A 8,914 806,925 1,792,338 4.6%
Worldpay, Class A¹ 12,000 1,004,896 1,029,720 2.6%
  3,215,297 4,572,595 11.7%
 
Diversified Banks
JP Morgan Chase 12,916 777,687 1,436,130 3.6%
 
  3,992,984 6,008,725 15.3%
 
Health Care  
 
Biotech
Amgen 4,002 347,413 833,417 2.1%
Celgene¹ 7,000 718,823 505,540 1.3%
  1,066,236 1,338,957 3.4%
 
Life Science Equipment
Abbott Laboratories 20,799 646,854 1,540,166 3.9%
 
Medical Devices
Edwards Lifesciences¹ 5,700 546,521 923,457 2.4%
Stryker 3,000 374,100 526,380 1.3%
  920,621 1,449,837 3.7%
 
  2,633,711 4,328,960 11.0%
 
Industrials  
 
Commercial & Residential Building Equipment & Systems
Honeywell International 5,000 753,256 733,750 1.9%
 
Electrical Components
TE Connectivity 10,000 945,476 769,300 2.0%
 
Factory Automation Equipment
Sensata Technologies Holding¹ 15,500 819,675 717,030 1.8%
 
Measurement Instruments
Trimble¹ 24,000 833,189 912,720 2.3%
 
  3,351,596 3,132,800 8.0%
 
Materials  
 
Specialty Chemicals
DowDuPont 12,500 856,069 723,125 1.9%
RPM International 18,000 737,644 1,187,100 3.0%
 
  1,593,713 1,910,225 4.9%
 
Continued on next page.

 

40 November 30, 2018 Annual Report The accompanying notes are an integral part of these financial statements.

 

Sextant Growth Fund

Schedule of Investments As of November 30, 2018
Common Stock – 97.4% Number of Shares Cost Market Value Percentage of Assets
 
Technology  
 
Application Software
Adobe Systems¹ 9,300 $92,094 $2,333,277 5.9%
 
Communications Equipment
Apple 14,320 16,880 2,557,266 6.5%
 
Infrastructure Software
Microsoft 18,920 872,435 2,098,039 5.4%
Oracle 11,300 550,082 550,988 1.4%
  1,422,517 2,649,027 6.8%
 
Semiconductor Devices
Qualcomm 6,000 405,540 349,560 0.9%
 
  1,937,031 7,889,130 20.1%
 
Total investments $21,765,675 38,216,605 97.4%
Other assets (net of liabilities)   1,011,268 2.6%
Total net assets   $39,227,873 100.0%
¹ Non-income producing security

 

The accompanying notes are an integral part of these financial statements. November 30, 2018 Annual Report 41

 

Sextant Growth Fund

Statement of Assets and Liabilities
As of November 30, 2018
 
Assets
Investments in securities, at value
(Cost $21,765,675)
$38,216,605
Cash 1,914,971
Dividends receivable 46,215
Prepaid expenses 11,437
Receivable for Fund shares sold 5,075
Insurance reserve premium 1,214
Total assets 40,195,517
Liabilities
Payable for Fund shares redeemed 903,476
Accrued audit expenses 20,159
Accrued advisory fees 16,252
Accrued trustee expenses 10,328
Accrued retirement plan custodial fees 8,178
Accrued other expenses 7,866
Accrued Chief Compliance Officer expenses 955
Distributions payable 430
Total liabilities 967,644
Net assets $39,227,873
 
Analysis of net assets
Paid-in capital (unlimited shares authorized, without par value) $20,961,640
Total distributable earnings 18,266,233
Net assets applicable to Fund shares outstanding $39,227,873
 
Net asset value per Investor Share SSGFX
Net assets, at value $5,037,076
Shares outstanding 175,533
Net asset value, offering and redemption price per share $28.70
 
Net asset value per Z Share SGZFX
Net assets, at value $34,190,797
Shares outstanding 1,193,354
Net asset value, offering and redemption price per share $28.65

 

Statement of Operations
Year ended November 30, 2018
 
Investment income
Dividend income $467,419
Miscellaneous income 52
Total investment income 467,471
Expenses
Investment adviser fees 169,651
Filing and registration fees 34,800
Audit fees 26,397
Distribution fees – Investor Shares 15,158
Chief Compliance Officer expenses 10,096
Printing and postage 8,936
Trustee fees 8,728
Retirement plan custodial fees
Investor Shares 11
Z Shares 8,079
Other expenses 5,554
Legal fees 4,794
Custodian fees 1,976
Total gross expenses 294,180
Less custodian fee credits (1,976)
Net expenses 292,204
Net investment income $175,267
 
 
Net realized gain from investments $1,640,036
Net increase in unrealized appreciation on investments 1,967,640
Net gain on investments $3,607,676
 
Net increase in net assets resulting from operations $3,782,943

 

42 November 30, 2018 Annual Report The accompanying notes are an integral part of these financial statements.

 

Sextant Growth Fund

Statements of Changes in Net Assets Year ended Nov. 30, 2018 Year ended Nov. 30, 2017A
Increase (decrease) in net assets from operations
From operations
Net investment income $175,267 $226,718
Net realized gain on investment 1,640,036 1,847,871
Net increase in unrealized appreciation 1,967,640 5,405,733
Net increase in net assets 3,782,943 7,480,322
Distributions to shareowners
Net distribution to shareholders – Investor Shares (294,960) (135,654)
Net distribution to shareholders – Z Shares (1,773,166) (18,029)
Total distributions (2,068,126) (153,683)B
Capital share transactions
Proceeds from sales of shares
Investor Shares 328,352 1,158,995
Z Shares 2,305,904 30,622,742
Value of shares issued in reinvestment of dividends
Investor Shares 294,403 125,818
Z Shares 1,721,116 17,509
Cost of shares redeemed
Investor Shares (1,820,640) (34,667,921)
Z Shares (3,295,790) (1,165,207)
Total capital share transactions (466,655) (3,908,064)
Total increase in net assets 1,248,162 3,418,575
 
Net assets
Beginning of year 37,979,711 34,561,136
End of year $39,227,873 $37,979,711C
 
Shares of the Fund sold and redeemed
Investor Shares (SSGFX)
Number of shares sold 11,092 48,292
Number of shares issued in reinvestment of dividends and distributions 11,215 5,565
Number of shares redeemed (63,545) (1,371,583)
Net decrease in number of shares outstanding (41,238) (1,317,726)
     
Z Shares (SGZFX)
Number of shares sold 82,395 1,207,887
Number of shares issued in reinvestment of dividends and distributions 65,817 637
Number of shares redeemed (119,008) (44,374)
Net increase in number of shares outstanding 29,204 1,164,150

A Z Shares commenced operations June 2, 2017.
B Consists of net investment income distributions of $135,654 and $18,029 for Investor Shares and Institutional Shares, respectively.
C Includes accumulated net investment income of $218,572.

 

The accompanying notes are an integral part of these financial statements. November 30, 2018 Annual Report 43

 

Sextant Growth Fund: Financial Highlights

Investor Shares (SSGFX) For year ended November 30,
Selected data per share of outstanding capital stock throughout each year: 2018 2017 2016 2015 2014
Net asset value at beginning of year $27.51 $22.52 $24.03 $26.36 $23.92
Income from investment operations
Net investment income 0.07A 0.15A 0.11 0.03 0.02
Net gains (losses) on securities (both realized and unrealized) 2.53 4.93 (0.88) (0.25) 3.88
Total from investment operations 2.60 5.08 (0.77) (0.22) 3.90
Less distributions
Dividends (from net investment income) (0.07) (0.09) (0.02) (0.04) (0.01)
Distributions (from capital gains) (1.34) - (0.72) (2.07) (1.45)
Total distributions (1.41) (0.09) (0.74) (2.11) (1.46)
 
Net asset value at end of year $28.70 $27.51 $22.52 $24.03 $26.36
 
Total return 9.95% 22.64% (3.22)% (0.87)% 16.29%
 
Ratios / supplemental data
Net assets ($000), end of year $5,037 $5,962 $34,561 $55,867 $45,863
Ratio of expenses to average net assets
Before custodian fee credits 0.92% 0.76% 0.76% 0.90% 1.05%
After custodian fee credits 0.92% 0.76% 0.76% 0.90% 1.05%
Ratio of net investment income after custodian fee credits to average net assets 0.25% 0.60% 0.39% 0.13% 0.07%
Portfolio turnover rate 17% 18% 25% 68% 23%

 

Z Shares (SGZFX) Year ended Period ended
Selected data per share of outstanding capital stock throughout each period: November 30, 2018 November 30, 2017B
Net asset value at beginning of period $27.50 $25.54
Income from investment operations
Net investment income 0.13A 0.16A
Net gains on securities (both realized & unrealized) 2.53 1.82
Total from investment operations 2.66 1.98
Less distributions
Dividends (from net investment income) (0.17) (0.02)
Distributions (from capital gains) (1.34) -
Total distributions (1.51) (0.02)
 
Net asset value at end of period $28.65 $27.50
 
Total return 10.20% 7.73%C
 
Ratios / supplemental data
Net assets ($000), end of period $34,191 $32,017
Ratio of expenses to average net assets
Before custodian fee credits 0.70% 0.51%D
After custodian fee credits 0.70% 0.51%D
Ratio of net investment income after custodian fee credits to average net assets 0.47% 0.89%D
Portfolio turnover rate 17% 18%C

A Calculated using average shares outstanding
B Operations commenced on June 2, 2017
C Not annualized
D Annualized

44 November 30, 2018 Annual Report The accompanying notes are an integral part of these financial statements.

 

Sextant International Fund

Performance Summary (unaudited)
Average Annual Total Returns as of November 30, 2018
  1 Year 5 Year 10 Year Expense Ratio¹
Sextant International Fund Investor Shares (SSIFX) 1.63% 4.48% 6.25% 1.04%
Sextant International Fund Z Shares (SIFZX)² 1.83% n/a n/a 0.79%
MSCI EAFE Index -7.48% 2.31% 7.96% n/a

Growth of $10,000

Sextant International Fund Growth of $10,000
Comparison of any mutual fund to a market index must be made bearing in mind that the index is unmanaged, and expense-free. Conversely, the fund will (1) be actively managed; (2) have an objective other than mirroring the index, such as limiting risk; (3) bear transaction and other costs; (4) stand ready to buy and sell its securities to shareowners on a daily basis; and (5) provide a wide range of services. The graph compares $10,000 invested in Investor Shares of the Fund on November 30, 2008, to an identical amount invested in the MSCI EAFE Index, an international index focused on Europe, Australasia, and the Far East. The graph shows that an investment in Investor Shares of the Fund would have risen to $18,336 versus $25,537 in the Index.

Past performance does not guarantee future results. The "Growth of $10,000" graph and "Average Annual Returns" performance table assume the reinvestment of dividends and capital gains. They do not reflect the deduction of taxes that a shareowner might pay on fund distributions or the redemption of fund shares.

¹ By regulation, the expense ratio shown in this table is as stated in the Fund's most recent prospectus, which is dated March 28, 2018, and incorporates results for the fiscal year ended November 30, 2017. The ratio presented in this table differs from expense ratios shown elsewhere in this report as they represent different periods.

² Sextant International Fund Z Shares (SIFZX) began operations June 2, 2017.

Fund Objective

The objective of the International Fund is long-term capital growth.

Top 10 Holdings   Portfolio Diversification
% of Total Net Assets % of Total Net Assets  
Wolters Kluwer 9.7% Application Software 14.0%
Sextant International Fund Portfolio Diversification
NICE Systems ADR 7.4% Information Services 9.7%
Dassault Systemes ADR 6.6% Large Pharma 8.6%
MercadoLibre 5.6% Banks 7.0%
ASML Holding NY 5.5% Telecom Carriers 6.3%
Belmond, Class A 5.0% E-Commerce Discretionary 5.6%
Novartis ADR 4.8% Semiconductor Manufacturing 5.5%
BASF ADR 4.7% Airlines 5.2%
Toronto-Dominion Bank 4.4% Lodging 5.0%
Unilever ADR 4.4% Basic & Diversified Chemicals 4.7%
  Household Products 4.4%
Beverages 4.2%
Integrated Oils 3.0%
Other industries < 2.5% 10.9%
Other assets (net of liabilities) 5.9%

 

Annual Report November 30, 2018 45

 

Sextant International Fund

Discussion of Fund Performance (unaudited)

Fiscal Year 2018

For the fiscal year ended November 30, 2018, the Sextant International Fund Investor Shares returned 1.63%, while the Fund's benchmark, the MSCI EAFE Index, returned -7.48%. Class Z Shares benefit from lower expenses without a 12b-1 fee, and now comprise 33.2% of the Fund.

The Investor Shares paid income dividends of 17¢ per share. The new Z Shares paid an income dividend of 19¢ per share. Total Fund assets decreased by 8% in fiscal 2018.

Reflecting Saturna Capital's voluntary subsidies to cap operating expenses, the Fund's class Z Shares' annualized effective expense ratio declined to 0.81% from the 1.03% expense ratio of the Investor class shares.

Factors Affecting Past Performance

After an outstanding 2017, international markets, as represented by the MSCI EAFE Index, swooned last year, dropping -7.48% in US dollar terms. In that environment, the Sextant International Fund performed admirably, gaining 1.63%. A variety of sectors contributed to Fund performance last year, led by the lodging industry and our investment in luxury hotel operator Belmond. In August, the company announced it was reviewing strategic alternatives, including a possible sale, which sent the shares soaring. Ultimately, a sale to French luxury house LVMH was arranged. From the media industry, Wolters Kluwer provided another year of strong positive results. Wolters supplies data and information to the medical, legal, accounting, and regulatory segments and has, for many years, benefitted from the print to digital transition. The next transition for the company will be the evolution from providing data to providing solutions. Wolters is the most gender diverse company in the portfolio, with a female CEO and a majority of women in the executive suite. Nice Systems, which provides commercial crime and fraud detection software, had a strong 2018 as multiple companies reported data breeches. Finally, French software firm Dassault continued its multi-year string of contributions despite a sell-off in the second half of the year.

In a year when major indices are down by significant percentages, every fund will have some losers. In the case of Sextant International, Panamanian-based airline Copa and German Chemical conglomerate BASF suffered for various reasons. Copa enjoyed good sales but was damaged by increasing costs and reduced profitability after a stellar 2017. BASF was affected by tariffs and a generally moribund economic environment in Europe, which still accounts for nearly half of sales. Borrowing short and lending long becomes less profitable as the yield curve compresses, accounting for the presence of Mitsubishi UFJ, Toronto-Dominion Bank, and Australia & New Zealand Banking Group among the detractors. Canadian telecom incumbent BCE didn't perform badly on its local exchange, but when translated into USD, the weakening Canadian dollar exacerbated losses.

The Sextant International Fund is concentrated with 26 securities. As a result, some of the positions have grown large. Fortunately, the largest positions tend to be those businesses in which we have the most confidence. The risk of confirmation bias exists in such situations but we see identifiable and sustainable competitive advantages in firms such as Wolters Kluwer, ASML Holdings, and Nice Systems.

Looking Forward

The looming issue of Brexit tops the international agenda, given the inability of the UK to craft an acceptable exit agreement. We are not willing to opine on the likelihood of a no-deal Brexit versus a second referendum or some other alternative, but the stalemate does nothing to improve the economic outlook for a shaky Europe. Economic activity has been rolling over in Germany and France, while Italy, which has demonstrated the weakest economic performance among major European countries for years, is now run by a populist government little concerned with financial rectitude. Japan has been performing better as of late, as some of the structural reforms introduced by Prime Minister Shinzo Abe start to gain traction. Japan's biggest challenge is demographics and, surprisingly, the government has made progress in improving female participation in the workforce and even allowing more open immigration. Weakness in hard commodity prices has led to the Canadian and Australian dollars trading down against the greenback, but both now appear reasonably valued. Of the two, Australia is the more exposed to possible disruptions in China as a result of trade tensions with the United States.

Management Fee Calculations

The Sextant International Fund calculates the performance part of its management fee by comparing the Fund's return to the average return of Morningstar's™ Foreign Large Blend category.

Sextant International Fund Investor Shares' 12-month return of 1.63% was more than 2% above the MorningstarTM category average of -7.88% at month-end November 30, 2018. Therefore, the basic annual management fee of 0.50% was increased by 0.20% to 0.70% for the Fund as a whole for the month of December 2018.

 

46 November 30, 2018 Annual Report

 

Sextant International Fund

Schedule of Investments As of November 30, 2018
Common Stocks – 94.1% Number of Shares Cost Market Value Country¹ Percentage of Assets
 
Communications  
 
Telecom Carriers
BCE 50,000 $1,164,294 $2,144,000 Canada 3.4%
Telus 50,000 710,476 1,795,000 Canada 2.9%
 
  1,874,770 3,939,000   6.3%
 
Consumer Discretionary  
 
Airlines
Air Canada² 32,000 573,924 699,098 Canada 1.1%
Copa Holdings, Class A 30,000 1,766,222 2,550,900 Panama 4.1%
  2,340,146 3,249,998   5.2%
 
Automobiles
Subaru ADR 25,000 362,500 276,875 Japan 0.5%
Toyota Motor ADR 10,000 748,148 1,214,800 Japan 1.9%
  1,110,648 1,491,675   2.4%
 
E-Commerce Discretionary
MercadoLibre 10,000 829,340 3,519,700 Argentina 5.6%
 
Lodging
Belmond, Class A² 169,800 1,459,090 3,090,360 Bermuda 5.0%
 
Specialty Apparel Stores
Industria de Diseno Textil 30,000 1,139,258 922,166 Spain 1.5%
 
  6,878,482 12,273,899   19.7%
 
Consumer Staples  
 
Beverages
Fomento Economico Mexico ADR 30,000 1,614,722 2,602,500 Mexico 4.2%
 
Household Products
Unilever ADR 50,000 1,315,509 2,714,500 United Kingdom 4.4%
 
  2,930,231 5,317,000   8.6%
 
Energy  
 
Integrated Oils
Total ADR 33,724 1,809,549 1,875,391 France 3.0%
 
  1,809,549 1,875,391   3.0%
 
Financials  
 
Banks
Australia & New Zealand Banking Group ADR 80,000 1,581,457 1,579,600 Australia 2.6%
Toronto-Dominion Bank 50,000 1,250,872 2,765,000 Canada 4.4%
  2,832,329 4,344,600   7.0%
 
Diversified Banks
Mitsubishi UFJ Financial Group ADR 200,000 960,000 1,088,000 Japan 1.7%
 
  3,792,329 5,432,600   8.7%
 
Continue on next page.

 

The accompanying notes are an integral part of these financial statements. November 30, 2018 Annual Report 47

 

Sextant International Fund

Schedule of Investments As of November 30, 2018
Common Stocks – 94.1% Number of Shares Cost Market Value Country¹ Percentage of Assets
 
Health Care  
 
Health Care Supply Chain
Sinopharm Group 250,000 $798,792 $1,233,188 China 2.0%
 
Large Pharma
Novartis ADR 33,000 1,692,394 3,020,490 Switzerland 4.8%
Novo Nordisk ADR 50,000 612,798 2,331,000 Denmark 3.8%
  2,305,192 5,351,490   8.6%
 
Medical Equipment
Koninklijke Philips ADR 21,905 814,100 831,295 Netherlands 1.3%
 
  3,918,084 7,415,973   11.9%
 
Materials  
 
Agricultural Chemicals
Nutrien 15,600 914,639 804,336 Canada 1.3%
 
Basic & Diversified Chemicals
BASF ADR 160,000 2,888,666 2,913,600 Germany 4.7%
 
Steel Raw Material Suppliers
Rio Tinto ADR 10,000 532,838 467,600 Australia 0.7%
 
  4,336,143 4,185,536   6.7%
 
Technology  
 
Application Software
Dassault Systemes ADR 34,153 1,224,632 4,112,533 France 6.6%
NICE Systems ADR 40,000 1,468,919 4,645,600 Israel 7.4%
  2,693,551 8,758,133   14.0%
 
Information Services
Wolters Kluwer 100,000 1,869,506 6,046,382 Netherlands 9.7%
 
Semiconductor Manufacturing
ASML 20,000 697,516 3,427,000 Netherlands 5.5%
 
  5,260,573 18,231,515   29.2%
 
Total investments   $30,800,161 58,670,914   94.1%
Other assets (net of liabilities)     3,708,854   5.9%
Total net assets     $62,379,768   100.0%
¹ Country of domicile
² Non-income producing security
ADR: American Depositary Receipt

 

48 November 30, 2018 Annual Report The accompanying notes are an integral part of these financial statements.

 

 

Sextant International Fund

Schedule of Investments As of November 30, 2018

 

Countries (unaudited)
 
Sextant International Fund Countries

Other assets (net of liabilities) 5.9%

Weightings shown are a percentage of total net assets.

 

The accompanying notes are an integral part of these financial statements. November 30, 2018 Annual Report 49

 

Sextant International Fund

Statement of Assets and Liabilities
As of November 30, 2018
 
Assets
Investments in securities, at value
(Cost $30,800,161)
$58,670,914
Cash 3,396,669
Dividends receivable 351,152
Receivable for security sales 44,084
Prepaid expenses 12,622
Total assets 62,475,441
Liabilities
Accrued audit expenses 30,740
Accrued advisory fees 25,283
Accrued trustee expenses 12,871
Accrued retirement plan custodial fees 5,699
Payable for Fund shares redeemed 5,049
Accrued printing expenses 4,522
Accrued postage expenses 4,093
Accrued distribution fee 3,085
Accrued other expenses 2,650
Accrued Chief Compliance Officer expenses 1,681
Total liabilities 95,673
Net assets $62,379,768
 
Analysis of net assets
Paid-in capital (unlimited shares authorized, without par value) $29,988,990
Total distributable earnings 32,390,778
Net assets applicable to Fund shares outstanding $62,379,768
 
Net asset value per Investor Share SSIFX
Net assets, at value 41,687,798
Shares outstanding 2,477,593
Net asset value, offering and redemption price per share $16.83
 
Net asset value per Z Share SIFZX
Net assets, at value $20,691,970
Shares outstanding 1,226,436
Net asset value, offering and redemption price per share $16.87

 

Statement of Operations
Year ended November 30, 2018
 
Investment income
Dividend income (net of foreign tax $221,973) $1,247,140
Miscellaneous income -
Total investment income 1,247,140
Expenses
Investment adviser fees 372,344
Distribution fees – Investor Shares 108,911
Audit fees 39,957
Filing and registration fees 35,512
Printing and postage 15,023
Trustee fees 14,892
Chief Compliance Officer expenses 14,252
Legal fees 9,111
Other expenses 7,145
Retirement plan custodial fees  
Investor Shares 6
Z Shares 6,376
Custodian fees 5,101
Total gross expenses 628,630
Less custodian fee credits (5,101)
Net expenses 623,529
Net investment income $623,611
 
 
Net realized gain from investments and foreign currency $3,896,894
Net decrease in unrealized appreciation on investments (3,361,106)
Net gain on investments $535,788
 
Net increase in net assets resulting from operations $1,159,399

 

50 November 30, 2018 Annual Report The accompanying notes are an integral part of these financial statements.

 

Sextant International Fund

Statements of Changes in Net Assets Year ended Nov. 30, 2018 Year ended Nov. 30, 2017A
Increase (decrease) in net assets from operations
From operations
Net investment income $623,611 $643,663
Net realized gain on investment 3,896,894 4,772,164
Net increase (decrease) in unrealized appreciation (3,361,106) 10,291,906
Net increase in net assets 1,159,399 15,707,733
Distributions to shareowners
Net distribution to shareholders – Investor Shares (3,595,584) (760,785)
Net distribution to shareholders – Z Shares (1,678,906) (107,565)
Total distributions (5,274,490) (868,350)B
Capital share transactions
Proceeds from sales of shares
Investor Shares 4,219,098 4,101,960
Z Shares 1,332,045 19,963,903
Value of shares issued in reinvestment of dividends
Investor Shares 3,545,645 747,511
Z Shares 1,619,175 103,751
Cost of shares redeemed
Investor Shares (9,575,271) (33,922,144)
Z Shares (1,998,163) (894,136)
Total capital share transactions (857,471) (9,899,155)
Total increase (decrease) in net assets (4,972,562) 4,940,228
 
Net assets
Beginning of year 67,352,330 62,412,102
End of year $62,379,768 $67,352,330C
 
Shares of the Fund sold and redeemed
Investor Shares (SSIFX)
Number of shares sold 247,089 258,695
Number of shares issued in reinvestment of dividends and distributions 211,176 49,204
Number of shares redeemed (556,311) (2,076,632)
Net decrease in number of shares outstanding (98,046) (1,768,733)
     
Z Shares (SIFZX)    
Number of shares sold 77,828 1,213,641
Number of shares issued in reinvestment of dividends and distributions 96,380 5,764
Number of shares redeemed (115,999) (51,178)
Net increase in number of shares outstanding 58,209 1,168,227

A Z Shares commenced operations June 2, 2017.
B Consists of net investment income distributions of $760,785 and $107,565 for Investor Shares and Institutional Shares, respectively.
C Includes accumulated net investment income of $648,780.

The accompanying notes are an integral part of these financial statements. November 30, 2018 Annual Report 51

 

Sextant International Fund: Financial Highlights

Investor Shares (SSIFX) For year ended November 30,
Selected data per share of outstanding capital stock throughout each year: 2018 2017 2016 2015 2014
Net asset value at beginning of year $17.98 $14.37 $14.35 $15.47 $15.80
Income from investment operations
Net investment income 0.15A 0.16A 0.22 0.25 0.65
Net gains (losses) on securities (both realized and unrealized) 0.14 3.65 (0.15) (1.11) (0.35)
Total from investment operations 0.29 3.81 0.07 (0.86) 0.30
Less distributions
Dividends (from net investment income) (0.17) (0.20) (0.05) (0.25) (0.63)
Distributions (from capital gains) (1.27)        
Distributions (from return of capital) - - - (0.01) -
Total distributions (1.44) (0.20) (0.05) (0.26) (0.63)
 
Net asset value at end of year $16.83 $17.98 $14.37 $14.35 $15.47
 
Total return 1.63% 26.76% 0.49% (5.58)% 1.88%
 
Ratios / supplemental data
Net assets ($000), end of year $41,688 $46,321 $62,412 $78,296 $103,450
Ratio of expenses to average net assets
Before custodian fee credits 1.05% 1.04% 1.00% 1.05% 0.80%
After custodian fee credits 1.04% 1.04% 1.00% 1.04% 0.79%
Ratio of net investment income after custodian fee credits to average net assets 0.89% 1.00% 1.36% 1.49% 3.58%
Portfolio turnover rate 2% 2% 0% 0% 3%

 

Z Shares (SIFZX) Year ended Period ended
Selected data per share of outstanding capital stock throughout each period: November 30, 2018 November 30, 2017B
Net asset value at beginning of period $18.00 $16.55
Income from investment operations
Net investment income 0.19A 0.13A
Net gains on securities (both realized & unrealized) 0.14 1.41
Total from investment operations 0.33 1.54
Less distributions
Dividends (from net investment income) (0.19) (0.09)
Distributions (from capital gains) (1.27) -
Total distributions (1.46) (0.09)
 
Net asset value at end of period $16.87 $18.00
 
Total return 1.83% 9.32%C
 
Ratios / supplemental data
Net assets ($000), end of period $20,692 $21,031
Ratio of expenses to average net assets
Before custodian fee credits 0.84% 0.79%D
After custodian fee credits 0.82% 0.78%D
Ratio of net investment income after custodian fee credits to average net assets 1.13% 0.53%D
Portfolio turnover rate 2% 2%C

A Calculated using average shares outstanding
BOperations commenced on June 2, 2017
C Not annualized
D Annualized

52 November 30, 2018 Annual Report The accompanying notes are an integral part of these financial statements.

 

Notes To Financial Statements

NOTE 1 – 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 an open-end, diversified management company under the Investment Company Act of 1940, as amended. Nine portfolio series have been created to date: Sextant Short-Term Bond Fund, Sextant Bond Income Fund, Sextant Core Fund, Sextant Global High Income Fund, Sextant Growth Fund, Sextant International Fund (each, a "Fund", and collectively, the "Funds"), Idaho Tax-Exempt Fund, Saturna Sustainable Equity Fund, and Saturna Sustainable Bond Fund. Idaho Tax-Exempt Fund, Saturna Sustainable Equity Fund, and Saturna Sustainable Bond Fund are offered through separate prospectuses, the results of which are contained in separate reports.

Sextant Growth Investor Shares (previously known as Idaho Limited Maturity Tax-Exempt Fund until October 12, 1990, then Northwest Growth Fund until September 28, 1995, when the investment objective of only Northwest stocks was changed) commenced operations as an equity fund on December 30, 1990. Sextant Growth Fund Z Shares began operations June 2, 2017. Sextant International Investor Shares began operations September 28, 1995 and Sextant International Fund Z Shares began operations on June 2, 2017. Sextant Short-Term Bond began operations September 28, 1995. Sextant Bond Income Fund (previously known as Washington Tax-Exempt Fund until September 28, 1995, when the investment objective of only Washington State Municipal Bonds was changed) began operations on March 1, 1993. Sextant Core Fund commenced operations March 30, 2007. Sextant Global High Income Fund commenced operations March 30, 2012.

Each Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 "Financial Services – Investment Companies".

Each class of shares of a Fund represents an interest in the same portfolio of investments of the Fund and has in all respects the same rights and obligations as each other class of the Fund, except that each class bears its own class expenses, and each class has exclusive voting rights. Each class of shares may be subject to different investment minimums and other conditions of eligibility as may be described in the prospectus for the particular class of shares, as from time to time in effect.

Income, realized and unrealized capital gains and losses, and expenses to be paid by a Fund and not allocated to a particular class as provided below, shall be allocated to each class on the basis of relative net assets. Expenses allocable to a specific class are expenses specifically incurred by or for such class including the following:

  • Distribution fees;
  • Retirement plan custodial fees; and
  • Any applicable service fees.

Net investment income dividends and capital gain distributions paid by the Fund on each class of its shares will be calculated in the same manner on the same day and at the same time.

Investment risks:
Growth, International, Core, Short-Term Bond, Bond Income, and Global High Income Funds: The value of each Fund's shares rises and falls as the value of the securities in which the Fund invests goes up and down. Fund share prices, yields, and total returns will change with market fluctuations as well as the fortunes of the countries, industries, and companies in which the Fund invests. The Funds do not use derivatives to hedge currency, interest rate, or credit risk.

Liquidity risk exists when particular investments are difficult to sell. If a Fund holds illiquid investments, its portfolio may be more difficult to value, especially in changing markets. Investments by a Fund in foreign securities and those that are thinly traded, such as lower quality issuers and smaller companies, tend to involve greater liquidity risk. If a Fund is forced to sell or unwind these investments to meet redemptions or for other cash needs, the Fund may suffer a penalty. Additionally, the market for certain investments may become illiquid under adverse market or economic conditions independent of any specific adverse changes in the conditions of a particular issuer. In such cases, the Fund, due to limitations on investments in illiquid securities and the difficulty in purchasing and selling such securities, may be unable to achieve its investment objective.

Growth and Core Funds: Smaller companies involve higher investment risks in that they often have limited product lines, markets, and resources, or their securities may trade less frequently and have greater price fluctuation than those of larger companies.

Growth stocks, which can be priced on future expectations rather than current results, may decline substantially when expectations are not met.

International, Core, Short-Term Bond, Bond Income, and Global High Income Funds: Foreign investing involves risks not normally associated with investing in US securities. These include fluctuations in currency exchange rates, less public information about securities, less governmental market supervision, and the lack of uniform financial, social, and political standards. Foreign investing heightens the risk of confiscatory taxation, seizure or nationalization of assets, currency controls, or adverse political or social developments that affect investments. The risks of investing in foreign securities are typically greater in less developed or emerging countries.

Core Fund: The Core Fund has the risks of growth stocks, foreign securities, credit, and interest rates – but these risks are mitigated by spreading its investments in both stocks and bonds, and by favoring income-producing securities and those of larger, more seasoned companies.

Short-Term Bond, Bond Income, Global High Income, and Core Funds: Bonds 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.

Interest rate fluctuations affect bond prices and a Fund's net asset value, but not the income received by the Fund from its portfolio securities. Because prices and yields on debt securities vary over time, a Fund's yield also varies. Bonds with embedded callable options also contain an element of prepayment risk. When interest rates decline, issuers can retire their debt and reissue bonds at a lower interest rate. This hurts investors because yields available for reinvestment will have declined and upward price mobility on callable bonds is generally limited by the call price.

Global High Income Fund: Issuers of high-yield securities are generally not as strong financially as those issuing higher quality securities. These issuers are more likely to encounter financial difficulties and are more vulnerable to changes in the relevant economy, such as a recession or a sustained period of rising interest rates, that could affect their ability to make interest, principal, and dividend payments as expected. The prices of high-yield securities generally fluctuate more than those of higher quality. High-yield securities are generally more illiquid (harder to sell) and harder to value.

The Funds may invest substantially in one or more sectors, which can increase volatility and exposure to issues specific to a particular sector or industry.

Annual Report November 30, 2018 53

 

Notes To Financial Statements (continued)

NOTE 2 – Significant Accounting Policies

The following is a summary of the significant accounting policies, in conformity with accounting principles generally accepted in the United States of America, which are consistently followed by the Funds in preparation of their financial statements.

Security valuation:
Investments in securities traded on a national securities exchange and over-the-counter securities for which sale prices are available are valued at that price. Securities for which there are no sales are valued at the latest bid price.

Debt securities are valued using bid-side valuations provided by an independent service. The service determines valuations using factors such as yields or prices of bonds of comparable quality, type of issue, coupon maturity, ratings, trading activity, and general market conditions.

Fixed-income debt instruments, such as commercial paper, bankers' acceptances and US Treasury Bills, with a maturity of 60 days or less are valued at amortized cost, which approximates market value. Any discount or premium is accreted or amortized on a straight-line basis until maturity.

Foreign markets may close before the time as of which the Funds' share prices are determined. Because of this, events occurring after the close and before the determination of the Funds' share prices may have a material effect on the values of some or all of the Funds' foreign securities. To account for this, the Funds may use outside pricing services for valuation of their non-US securities.

In cases in which there is not a readily available market price, a fair value for such security is determined in good faith by or under the direction of the Board of Trustees.

Security transactions are recorded on the trade date. Realized gains and losses on sales of securities are recorded on the identified cost basis.

Foreign currency:
Investment securities and other assets and liabilities denominated in foreign currencies are translated into US dollar amounts at the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are translated into US dollar amounts on the respective dates of such transactions.

The Funds do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.

Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Funds' books and the US dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at the fiscal period end, resulting from changes in exchange rates.

Share valuation:
The net asset value ("NAV") per share of each Fund is calculated by dividing the sum of the value of the securities held by each Fund, plus cash and other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding for each Fund, rounded to the nearest cent. The Funds' shares are not priced or traded on days the New York Stock Exchange is closed. The NAV is the offering and redemption price per share.

Fair value measurements:
Accounting Standards Codification (ASC) 820 establishes a three-tier framework for measuring fair value based on a hierarchy of inputs. The hierarchy distinguishes between market data obtained from independent sources (observable inputs) and the Funds' own market assumptions (unobservable inputs). These inputs are used in determining the value of the Funds' investments and are summarized below.

Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities that the Trust has the ability to access.

Level 2 — Observable inputs other than quoted prices in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates, and similar data.

Level 3 — Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Trust's own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.

The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

54 November 30, 2018 Annual Report

 

Notes To Financial Statements (continued)

The following is a summary of the inputs used as of November 30, 2018, in valuing the Funds' investments carried at value:

Funds Level 1 Level 2 Level 3 Total
Short-Term Bond
Corporate Bonds¹ $- $8,020,419 $- $8,020,419
Government Bonds¹ - 1,903,039 - 1,903,039
Total $- $9,923,458 $- $9,923,458
 
Bond Income
Corporate Bonds¹ $- $6,220,937 $- $6,220,937
Government Bonds¹ - 2,487,075 - 2,487,075
Municipal Bonds¹ - 1,841,657 - 1,841,657
Total $- $10,549,669 $- $10,549,669
 
Core
Common Stocks¹ $7,815,834 $- $- $7,815,834
Corporate Bonds¹ - 2,470,233 - 2,470,233
Government Bonds¹ - 1,780,842 - 1,780,842
Municipal Bonds¹ - 423,028 - 423,028
Total $7,815,834 $4,674,103 $- $12,489,937
 
Global High Income
Common Stocks
Communications $422,930 $- $- $422,930
Energy 1,144,581 - - 1,144,581
Financials 307,890 135,642 - 443,532
Health Care 303,704 - - 303,704
Industrials - 316,136 - 316,136
Materials 644,997 - - 644,997
Technology 740,030 - - 740,030
Total Common Stocks $3,564,132 $451,778 $- $4,015,910
Corporate Bonds¹ $- $2,591,347 $- $2,591,347
Government Bonds¹ $- $1,349,453 $- $1,349,453
Municipal Bonds¹ $- $288,606 $- $288,606
Warrants¹ $- $- $- $-
Total $3,564,132 $4,681,184 $- $8,245,316
 
Growth
Common Stocks¹ $38,216,605 $- $- $38,216,605
Total $38,216,605 $- $- $38,216,605
 
International
Common Stocks
Communications $3,939,000 $- $- $3,939,000
Consumer Discretionary 11,351,733 922,166 - 12,273,899
Consumer Staples 5,317,000 - - 5,317,000
Energy 1,875,391 - - 1,875,391
Financials 5,432,600 - - 5,432,600
Health Care 6,182,785 1,233,188 - 7,415,973
Materials 4,185,536 - - 4,185,536
Technology 12,185,133 6,046,382 - 18,231,515
Total $50,469,178 $8,201,736 $- $58,670,914

During the period ended November 30, 2018, no Fund had transfers between Level 1, Level 2, or Level 3.

¹ See Schedule of Investments for industry breakout.

 

Annual Report November 30, 2018 55

 

Notes To Financial Statements (continued)

Investment concentration:
The Funds may have deposits of cash with the custodian from time to time for one or more reasons. "Other assets (net of liabilities)" in the Funds' Schedules of Investments primarily represents cash on deposit with the custodian. Cash on deposit will vary widely over time. Accounting Standards Codification ("ASC") 825, "Financial Instruments," identifies these items as a concentration of credit risk. The risk is managed by careful financial analysis and review of the custodian's operations, resources, and protections available to the Trust. This process includes evaluation of other financial institutions providing investment company custody services.

Federal income taxes:
The Funds intend to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and to make the requisite distributions of income and capital gains to its shareowners sufficient to relieve it from all or substantially all federal income taxes. Therefore, no federal income tax provision is required.

The Funds recognize the tax benefits of uncertain tax positions only where the position is "more likely than not" to be sustained assuming examination by tax authorities. Management has analyzed the Funds' tax positions and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed for open tax years (2015 – 2017) or expected to be taken in the Funds' 2018 tax returns. The Funds identify their major tax jurisdictions as US federal and foreign jurisdictions where the Funds make significant investments; however, the Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.

Reclassification of capital accounts:
Accounting principles generally accepted in the United States of America require that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. As of November 30, 2018, the reclassification of capital accounts were as follows:

  Growth International
Distributable earnings $(6,464) $(5,482)
Paid-in capital $6,464 $5,482

These reclassifications were due to the treatment of foreign currencies, expiring capital loss carryforwards, and investments in real estate investment trusts (REITs) and partnerships.

Distributions to shareowners:
For the Sextant Short-Term Bond Fund and Sextant Bond Income Fund, dividends to shareowners from net investment income are paid daily and distributed on the last business day of each month. For the Sextant Core Fund, Sextant Global High Income Fund, Sextant Growth Fund, and Sextant International Fund, dividends to shareowners from net investment income are payable annually, typically by the end of the year. Distributions of capital gains, if any, are made at least annually, and as required to comply with federal excise tax requirements. Distributions to shareowners are determined in accordance with income tax regulations and are recorded on the ex-dividend date. Dividends are paid in shares of the Funds, at the net asset value on the payable date. Shareowners may elect to take distributions if they total $10 or more in cash.

Use of estimates:
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.

Foreign taxes:
Withholding taxes on foreign dividends are paid (a portion of which may be reclaimable) or provided for in accordance with the applicable country's tax rules and rates and are disclosed in the Statement of Operations. Withholding tax reclaims are filed in certain countries to recover a portion of the amounts previously withheld. The Funds record a reclaim receivable based on a number of factors, including a jurisdiction's legal obligation to pay reclaims as well as payment history and market convention.

Other:
Interest income is recognized on an accrual basis. Premiums on securities purchased are amortized, and discounts are accreted over the lives of the respective securities. Dividends from equity securities are recorded as income on the ex-dividend date.

Recent accounting pronouncements:
As of November 5, 2018, pursuant to the SEC Release #33-10532 "Disclosure Update and Simplification", funds are no longer required to disclose whether the distributions from earnings are either from net investment income or net realized capital gains. The presentation for the year ended November 30, 2017, has been adjusted for this change in the Statement of Changes in Net Assets.

In March 2017, FASB issued Accounting Standards Update No. 2017-08, "Receivables — Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities" ("ASU 2017-08"). ASU 2017-08 shortens the amortization period to the earliest call date for certain purchased callable debt securities held at a premium. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Management is currently evaluating the impact of applying this guidance.

In August 2018, FASB issued Accounting Standards Update No. 2018-13, "Fair Value Measurement (Topic 820: Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement" ("ASU 2018-13"). ASU 2018-13 eliminates the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the timing of transfers between levels of the fair value hierarchy and the valuation processes for Level 3 fair value measurements. ASU 2018-13 will require the need to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements and the changes in unrealized gains and losses for recurring Level 3 fair value measurements. ASU 2018-13 will also require that information is provided about the measurement uncertainty of Level 3 fair value measurements as of the reporting date. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, and allows for early adoption of either the entire standard or only the provisions that eliminate or modify the requirements. Management has elected to adopt early the provisions that eliminate the disclosure requirements. Management is still currently evaluating the impact of applying the rest of the guidance.

56 November 30, 2018 Annual Report

 

Notes To Financial Statements (continued)

NOTE 3 – Transactions with Affiliated Persons

Under contracts approved annually by the Trust's independent trustees, Saturna Capital Corporation provides investment advisory services and certain other administrative services required to conduct Trust business. Expenses incurred by the Trust on behalf of the Funds (e.g., legal fees) are allocated to the Funds on the basis of relative daily average net assets. For such services, each of the Funds pays the adviser a base Investment Advisory and Administrative Services Fee of 0.50% of average net assets per annum, payable monthly for each of the Funds. In addition, the adviser has agreed to certain limits on other expenses, as described below.

The base Advisory Fee is subject to adjustment up or down depending on the investment performance of the Fund relative to a specified index.

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

The adviser has voluntarily undertaken to limit expenses through March 31, 2018 of Sextant Short-Term Bond Fund to 0.60%, Sextant Bond Income Fund to 0.65%, and Sextant Global High Income to 0.75%. For the year ended November 30, 2018, the advisory fees incurred were as follows:

  Adviser Fees Adviser Fees Waived Expense
Reimbursement
Short-Term Bond $47,622 $(30,628) $-
Bond Income 39,901 (18,215) -
Core 62,932 - -
Global High Income 54,274 (19,889) -
Growth 169,651 - -
International $372,344 $- $-

In accordance with the expense limitation noted above, for the year ended November 30, 2018, Saturna Capital waived a portion of the advisory fees of the Sextant Short-Term Bond Fund, Sextant Bond Income Fund, and Sextant Global High Income Fund. The adviser cannot recoup previously waived fees.

Saturna Brokerage Services, Inc. ("SBS"), a discount brokerage and subsidiary of Saturna Capital Corporation, is registered as a broker-dealer and acts as distributor. On October 3, 2006, The Funds adopted a Distribution Plan in accordance with Rule 12b-1 under the 1940 Act. The plan provides that the Funds will pay a fee to SBS at an annual rate of 0.25% of the average net assets of the Funds. On June 2, 2017, 12b-1 fees were terminated for all Funds except Sextant Growth Investor Shares and Sextant International Investor Shares. During the fiscal year ended November 30, 2018, the Trust paid SBS the following amounts:

Distribution (12b-1) Fees
Short-Term Bond n/a
Bond Income n/a
Core n/a
Global High Income n/a
Growth Investor Shares (SSGFX) $15,158
Growth Z Shares (SGZFX) n/a
International Investor Shares (SSIFX) $108,911
International Z Shares (SIFZX) n/a

SBS is used to effect portfolio transactions for the Trust. SBS currently executes portfolio transactions without commission. Transactions effected through other brokers are subject to commissions payable to that broker.

Saturna Trust Company ("STC"), a subsidiary of Saturna Capital, acts as retirement plan custodian for Fund shareowners. Each Fund pays an annual fee of $10 per account for retirement plan services to Saturna Trust Company. For the year ended November 30, 2018, the Funds incurred the following amounts:

Retirement plan custodial fees
Short-Term Bond $3,455
Bond Income 2,794
Core 3,078
Global High Income 1,644
Growth Investor Shares (SSGFX) 11
Growth Z Shares (SGZFX) 8,079
International Investor Shares (SSIFX) 6
International Z Shares (SIFZX) 6,376

Mrs. Jane Carten serves as a trustee and president of the Trust. She is also a director and president of Saturna Capital and vice president of Saturna Trust Company. Mrs. Carten is not compensated by the Trust. For the year ended November 30, 2018, the Trust incurred compensation expenses of $33,000 which is included in $48,916 of total expenses for the independent Trustees. The Sextant Funds paid $38,096 of these total expenses.

The officers of the Trust are paid by Saturna Capital, not the Trust, except the Chief Compliance Officer, who may be partially compensated by the Trust. For the year ended November 30, 2018, the Funds paid the following compensation expenses for the Chief Compliance Officer:

Chief Compliance Officer
Short-Term Bond $2,596
Bond Income 2,389
Core 3,046
Global High Income 2,067
Growth 10,096
International 14,252

On November 30, 2018, the trustees, officers, and their affiliates as a group owned 35.75%, 26.97%, 41.27%, 58.52%, 0.04%, 18.50%, 0.00%, and 25.30% of the outstanding shares of Short-Term Bond Fund, Bond Income Fund, Core Fund, Global High Income Fund, Growth Fund Investor Shares, Growth Fund Z Shares, International Fund Investor Shares, and International Fund Z Shares, respectively.

Annual Report November 30, 2018 57

 

Notes To Financial Statements (continued)

NOTE 4 – Distributions to Shareowners

The tax characteristics of distributions paid during the fiscal years ended November 30, 2018, and 2017, were as follows:

  Year ended
Nov. 30, 2018
Year ended
Nov. 30, 2017
Short-Term Bond Fund
Ordinary income $145,570 $133,903
Long-term capital gain¹ 4,622 -
Bond Income Fund
Ordinary income 309,851 284,105
Core Fund
Ordinary income 166,943 132,290
Global High Income Fund
Ordinary income 253,597 333,427
Growth Fund
Ordinary income 290,653 153,683
Long-term capital gain¹ 1,777,473 -
International Fund
Ordinary income 643,299 868,350
Long-term capital gain¹ $4,631,191 $-

¹ Long-Term Capital Gain dividend designated at 20% rate pursuant to Section 852(b)(3) of the Internal Revenue Code.

NOTE 5 – Federal Income Taxes

The cost basis of investments for federal income tax purposes at November 30, 2018 was as follows:

  Short-Term Bond Bond Income
Cost of investments $10,122,733 $10,731,435
Gross tax unrealized appreciation - 124,373
Gross tax unrealized depreciation (199,275) (306,139)
Net tax unrealized appreciation (depreciation) $(199,275) $(181,766)

 

  Core Global
High Income
Cost of investments $10,667,091 $7,845,294
Gross tax unrealized appreciation 2,058,230 775,819
Gross tax unrealized depreciation (235,384) (375,797)
Net tax unrealized appreciation $1,822,846 $400,022

 

 

  Growth International
Cost of investments $21,765,675 $30,800,161
Gross tax unrealized appreciation 17,239,730 28,898,512
Gross tax unrealized depreciation (788,800) (1,027,759)
Net tax unrealized appreciation $16,450,930 $27,870,753

 

As of November 30, 2018, components of distributable earnings on a tax basis were as follows:

Short-Term Bond
Undistributed ordinary income $2,871
Tax accumulated earnings 2,871
Accumulated capital losses (16,794)
Unrealized depreciation (199,275)
Total accumulated earnings $(213,198)

 

Bond Income
Undistributed ordinary income $26
Tax accumulated earnings 26
Accumulated capital losses (46,167)
Unrealized depreciation (181,766)
Total accumulated earnings $(227,907)

 

 

Core
Undistributed ordinary income $175,481
Tax accumulated earnings 175,481
Accumulated capital losses (23,538)
Unrealized appreciation 1,822,846
Other unrealized losses (2)
Total accumulated earnings $1,974,787

 

 

Global High Income
Undistributed ordinary income $311,375
Tax accumulated earnings 311,375
Accumulated capital losses (32,326)
Unrealized appreciation 400,022
Other unrealized losses (680)
Total accumulated earnings $678,391

 

 

Growth
Undistributed ordinary income $175,267
Accumulated capital gains 1,640,036
Tax accumulated earnings 1,815,303
Unrealized appreciation 16,450,930
Total accumulated earnings $18,266,233

 

 

International
Undistributed ordinary income $621,093
Accumulated capital gains 3,899,325
Tax accumulated earnings 4,520,418
Unrealized appreciation 27,870,753
Other unrealized losses (393)
Total accumulated earnings $32,390,778

 

 

58 November 30, 2018 Annual Report

 

Notes To Financial Statements (continued)

As of November 30, 2018, the Funds had capital loss carryforwards as follows, subject to regulation.

  Carryforward Expiration
Short-Term Bond
Long-term loss carryforward $16,794 Unlimited
  $16,794  
 
Bond Income
Long-term loss carryforward $46,167 Unlimited
  $46,167  
 
Core
Short-term loss carryforward $23,538 Unlimited
  $23,538  
 
Global High Income
Short-term loss carryforward $3 Unlimited
Long-term loss carryforward $32,323 Unlimited
  $32,326  

NOTE 6 – Investments

Investment transactions other than short-term investments for the fiscal year ended November 30, 2018, were as follows:

  Purchases Sales
Short-Term Bond $3,687,809 $3,490,315
Bond Income 2,311,254 -
Core 4,037,466 3,563,983
Global High Income 847,843 946,236
Growth 6,667,959 9,015,719
International $1,469,262 $7,367,450

NOTE 7 – Custodian

Under agreements in place with the Trust's custodian, Bank of New York Mellon, custody fees are reduced by credits for cash balances. Such reductions for the fiscal year ended November 30, 2018, were as follows:

Custodian Fee Credits
Short-Term Bond $481
Bond Income 454
Core 590
Global High Income 656
Growth 1,976
International $5,101

NOTE 8 – Subsequent Events

In preparing these financial statements, the Funds have evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued.

The Funds declared the payment of a distribution to be paid on December 27, 2018, to all shareowners of record on December 26, 2018, as follows:

  Dividend Income Short-Term Capital Gain Long-Term Capital Gain
Short-Term Bond $- $- $-
Bond Income - - -
Core 0.17300 - -
Global High Income 0.39200 - -
Growth
(Investor Shares)
0.04300 - 1.23500
Growth
(Z Shares)
0.14700 - 1.23500
International
(Investor Shares)
0.15440 - 1.04320
International
(Z Shares)
$0.19300 $- $1.04320

On January 23, 2019, the Sextant Mutual Funds changed custodian banks from Bank of New York Mellon to UMB Bank.

There were no other events or transactions during the period that materially impacted the amounts or disclosures in the Funds' financial statements.

Annual Report November 30, 2018 59

 

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of
Saturna Investment Trust
and the Shareholders of Sextant Mutual Funds

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of the Sextant Short Term Bond Fund, Sextant Bond Income Fund, Sextant Core Fund, Sextant Global High Yield Fund, Sextant Growth Fund and Sextant International Fund (the "Funds"), each a series of Saturna Investment Trust, including the schedules of investments, as of November 30, 2018, the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Funds as of November 30, 2018, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended and their financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Funds' management. Our responsibility is to express an opinion on the Funds' financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Funds in accordance with the US federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We have served as the auditor of one or more of the funds in the Trust since 1997.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Funds internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of November 30, 2018 by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.

Philadelphia, Pennsylvania
January 25, 2019

/s/ Tait, Weller & Baker LLP
Tait, Weller & Baker LLP

60 November 30, 2018 Annual Report

 

Expenses

(unaudited)

All mutual funds have operating expenses. As a Sextant Fund shareowner, you incur ongoing costs, including management fees, distribution (or service) 12b-1 fees, and other fund expenses such as shareowner reports (such as this one). Operating expenses, which are deducted from a fund's gross earnings, directly reduce the investment return of a fund. Mutual funds (unlike other financial investments) only report their results after deduction of operating expenses.

With the Sextant Funds, unlike many other mutual funds, you do not incur sales charges (loads) on purchases, reinvested dividends, or other distributions. You do not incur redemption fees or exchange fees. You may incur fees related to extra services requested by you for your account, such as bank wires. The examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.

Examples

The following example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (June 1, 2018, to November 30, 2018).

Actual Expenses

The first line for each Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you have invested, to estimate the expenses you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. The Funds may charge for extra services (such as domestic bank wires, international bank wires, or overnight courier delivery of redemption checks) rendered on request, which you may need to estimate to determine your total expenses.

Hypothetical Example For Comparison Purposes

The second line provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio (based on the last six months) and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending balance or expenses you paid for the period. You may use this information to compare ongoing costs of investing in the Fund and other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareowner reports of other mutual funds. You may wish to add other fees that are not included in the expenses shown in the table, such as charges for extra services like bank wires.

Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees or exchange fees (note that the Sextant Funds do not charge any such transactional costs). Therefore, the "Hypothetical" line of each fund is useful in comparing ongoing costs only, and may not help you determine the relative total costs of owning different funds.

  Beginning Account Value
(June 1, 2018)
Ending Account Value
(November 30, 2018)
Expenses Paid During Period¹ Annualized Expense Ratio
Short-Term Bond Fund $1,000 $1,005.50 $3.02 0.60%
Hypothetical (5% return before expenses) 1,000 1,022.06 3.04 0.60%
Bond Income Fund 1,000 991.90 3.24 0.65%
Hypothetical (5% return before expenses) 1,000 1,021.81 3.29 0.65%
Core Fund 1,000 1,009.40 4.08 0.81%
Hypothetical (5% return before expenses) 1,000 1,021.00 4.11 0.81%
Global High Income Fund 1,000 1,006.40 3.76 0.75%
Hypothetical (5% return before expenses) 1,000 1,021.32 3.79 0.75%
Growth Fund Investor Shares 1,000 1,030.90 5.08 1.00%
Hypothetical (5% return before expenses) 1,000 1,020.07 5.05 1.00%
Growth Fund Z Shares 1,000 1,032.10 3.87 0.76%
Hypothetical (5% return before expenses) 1,000 1,021.26 3.85 0.76%
International Fund Investor Shares 1,000 1,002.40 5.47 1.09%
Hypothetical (5% return before expenses) 1,000 1,019.60 5.52 1.09%
International Fund Z Shares 1,000 1,003.60 4.12 0.82%
Hypothetical (5% return before expenses) $1,000 $1,020.96 $4.16 0.82%

¹ Expenses are equal to the annualized expense ratio indicated above (based on the most recent semi-annual period of June 1, 2018, through November 30, 2018), multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period).

Annual Report November 30, 2018 61

 

Trustees and Officers

(unaudited)

 

Name, Address, and Age Position(s) Held with Trust and Number of Saturna Fund Portfolios Overseen Principal occupation(s) during past 5 years, including Directorships Other Directorships held by Trustee
Independent Trustees
(photo omitted) Marina E. Adshade (51)
1300 N. State Street
Bellingham WA 98225
Independent Trustee (since 2017);
Nine
Professor of Economics, University of British Columbia, Vancouver and Simon Fraser University;

Author
None
(photo omitted) Ronald H. Fielding, MA, MBA, CFA (69)
1300 N. State Street
Bellingham WA 98225
Independent Trustee (since 2009);
Thirteen
Director, ICI Mutual Insurance Company Amana Mutual Funds Trust
(photo omitted) Gary A. Goldfogel, MD (60)
1300 N. State Street
Bellingham WA 98225
Chairman (since 2017);
Independent Trustee (since 1995);
Nine
Medical Examiner (pathologist)

Owner, Avocet Environmental Testing (laboratory)
None
(photo omitted) Jim V. McKinney (57)
1300 N. State Street
Bellingham WA 98225
Independent Trustee (since 2017);
Nine
Executive Director, Common Threads Northwest; President/CEO, Apple Mountain LLC, consulting and development; US Army Foreign Area Officer – Political/Military Advisor to US Army Central; Senior Defense Official, Defense Attaché, US Embassy Slovenia None
(photo omitted) Sarah E.D. Rothenbuhler (50)
1300 N. State Street
Bellingham WA 98225
Independent Trustee (since 2017);
Nine
CEO, Birch Equipment (industrial rentals and sales) None
Interested Trustee
(photo omitted) Jane K. Carten, MBA (43)
1300 N. State Street
Bellingham WA 98225
President, Trustee (since 2017);
Nine
President and Director,
Saturna Capital Corporation

Vice President and Director,
Saturna Trust Company

President,
Saturna Brokerage Services
None

 

 

 

62 November 30, 2018 Annual Report

 

Trustees and Officers

(continued) (unaudited)

 

Name, Address, and Age Position(s) Held with Trust and Number of Saturna Fund Portfolios Overseen Principal occupation(s) during past 5 years, including Directorships Other Directorships held by Trustee
Officers Who Are Not Trustees
(photo omitted) Phelps S. McIlvaine (65)
1300 N. State Street
Bellingham, WA 98225
Vice President (since 1994);
N/A
Vice President, Saturna Capital Corporation

Director, Vice President, and former Treasurer Saturna Brokerage Services
N/A
(photo omitted) Christopher R. Fankhauser (46)
1300 N. State Street
Bellingham, WA 98225
Treasurer¹ (since 2002);
N/A
Chief Operations Officer, Saturna Capital Corporation

Vice President and Chief Operations Officer, Saturna Brokerage Services

Director, Vice President, and Chief Operations Officer, Saturna Trust Company
N/A
(photo omitted) Michael E. Lewis (57)
1300 N. State Street
Bellingham, WA 98225
Chief Compliance Officer¹
(since 2012);
N/A
Chief Compliance Officer, Saturna Capital, Saturna Trust Company, and Affiliated Funds N/A
(photo omitted) Jacob A. Stewart (38)
1300 N. State Street
Bellingham, WA 98225
Anti-Money Laundering Officer¹
(since 2015);
N/A
Anti-Money Laundering Officer, Saturna Capital Corporation, Saturna Brokerage Services

Chief Compliance Officer, Saturna Brokerage Services

Bank Secrecy Act Officer, Saturna Trust Company
N/A
(photo omitted) Nicole Trudeau (39)
1300 N. State Street
Bellingham WA 98225
Secretary¹
(since 2018)
N/A
Chief Legal Officer,
Saturna Capital Corporation

Former:
Counsel, Simpson Thacher & Bartlett LLP;
Partner, Stradley Ronon Stevens & Young, LLP;
Partner, K&L Gates LLP
N/A

 

Term of Office: each Trustee serves for the lifetime of the Trust or until they die, resign, are removed, or not re-elected by the shareowners. Each officer serves a one-year term subject to annual reappointment by the Trustees.

The Trust's Statement of Additional Information, available without charge upon request by calling Saturna Capital at 1-800-728-8762 and on the Funds' website, www.sextantfunds.com, includes additional information about the Trustees.

During the year ended November 30, 2018, the Independent Trustess were each paid by the Trust: (1) $2,000 annual retainer plus $1,000 per board meeting attended (in person or by phone), plus reimbursement of travel expenses; (2) $250 for committee meetings; and (3) $250 per quarter for serving as chariman of the board or any committee.

Mrs. Carten is an Interested Trustee by reason of her positions with the Trust's adviser (Saturna Capital Corporation) and underwriter (Saturna Brokerage Services), and is the primary manager of the Saturna Sustainable Equity Fund portfolio. She is paid by Saturna Capital a salary, plus a bonus for each month the Saturna Sustainable Equity Fund portfolio earns a 4 or 5 star rating from Morningstar (see www.saturna.com). The officers are paid by Saturna Capital and not the Trust.

As of November 30, 2018, all Saturna Capital employees listed above as officers owned shares in one or more of the Saturna Investment Trust funds, with Mrs. Carten owning (directly or indirectly) over $0.7 million.

On November 30, 2018, the trustees, officers, and their affiliates as a group owned 35.75%, 26.97%, 41.27%, 58.52%, 0.04%, 18.50%, 0.00%, and 25.30% of the outstanding shares of Short-Term Bond Fund, Bond Income Fund, Core Fund, Global High Income Fund, Growth Fund Investor Shares, Growth Fund Z Shares, International Fund Investor Shares, and International Fund Z Shares, respectively. Saturna Capital Corporation is the Trust's adviser and Saturna Brokerage Services, Inc. is the Trust's distributor.

¹ Holds the same postion with Amana Mututal Funds Trust

Annual Report November 30, 2018 63

 

Renewal of Investment Advisory Contract

(unaudited)

The Trustees of the Trust, including those Trustees who are not "interested persons" (as that term is defined in the Investment Company Act of 1940 (the "1940 Act")) of the Trust or Saturna Capital (the "Independent Trustees"), at their June 19, 2018 meeting, considered new Investment Advisory and Administration Agreements (the "Agreements") with Saturna Capital on behalf of each of the Sextant Funds (Bond Income Fund, Global High Income Fund, Growth Fund, International Fund, Core Fund, and Short-Term Bond Fund) (the "Funds"), in light of the expected exercise by Mrs. Jane Carten, President and Chief Executive Officer of Saturna Capital, of her option to purchase the controlling voting interest in Saturna Capital (the "Option Purchase"), and Saturna Capital's presumed change of control as a result. The Trustees noted that the Option Purchase would be deemed to result in the "assignment" (as defined in the 1940 Act) and automatic termination of each Fund's advisory agreement with Saturna Capital, and that approval of the Agreements by the Trustees and the shareowners of each Fund was necessary to ensure the continuation of services to the Funds without interruption upon the Option Purchase. In deciding to approve the Agreements for each Fund in the context of the Option Purchase, the Trustees considered representations from Saturna Capital that (i) the change of control was not expected to result in any material changes to the nature, quality and extent of services provided to the Funds by Saturna Capital, including the continuity of the Funds' portfolio managers and other personnel responsible for the management operations of the Funds; (ii) the compensation payable to Saturna Capital under each new Agreement would not change and is the same as that under the corresponding current agreement; and (iii) Saturna Capital did not anticipate any material changes to its compliance program or code of ethics in connection with the change of control. The Trustees further considered that the Option Purchase was a positive development in that it would further secure succession planning for Saturna Capital. At a Special Meeting of Shareowners of the Trust held on September 24, 2018, shareowners of each Fund approved the Agreements. At their June 19, 2018 meeting, the Trustees determined to continue to conduct the annual contracts review process for the Sextant Funds on its regular schedule, notwithstanding the two-year initial term set forth in the Agreements that had been approved by shareowners.

During their meeting of September 25, 2018, the Trustees, including the Independent Trustees, discussed the continuance of the Agreements between each Fund and Saturna Capital. In considering the renewal of the Agreements, the Trustees discussed the nature, extent, and quality of the services provided by Saturna Capital to the Trust and each of the Funds. The Trustees considered that the Funds offer a full range of high-quality investor services. The Trustees discussed Saturna Capital's experience, ability, and commitment to quality service through performing internally such functions as shareowner servicing, administration, retirement plan and trust services, accounting, marketing, and distribution – all in addition to investment management.

The Trustees took into consideration Saturna Capital's continued avoidance of significant operational and compliance problems, plus its investments in infrastructure, information management systems, personnel, training, and investor education materials, all designed to provide high quality investor services and meet investor needs. They recognized Saturna Capital's efforts to recruit and retain qualified and experienced staff and improve the capital base on which Saturna Capital operates, which the Trustees believe is important to the long-term success of the Funds. They considered Saturna Capital's focus on investors and its efforts to avoid potential conflicts of interest.

The Trustees considered the investment performance of each Fund over time, including each Fund's average annual total returns relative to its benchmark for the one-, three-, five-, ten-, and fifteen-year periods, as applicable, all as of August 31, 2018. The Trustees also considered comparative information published by Morningstar Inc. ("Morningstar"), an independent data service provider that, among other things, ranks mutual fund performance within categories comprised of similarly managed funds. The Trustees considered and discussed each Fund's performance relative to the Fund's Morningstar category for the one-, three-, five-, ten-, and fifteen-year periods, as applicable, ended August 31, 2018. The Trustees also considered each Fund's Morningstar performance rankings (one through five stars) for the one-, three-, five- and ten-year periods, as applicable, ended as of August 31, 2018, and also noted the recent sustainability ratings assigned to some of the Funds by Morningstar. In addition, the Trustees also considered each Fund's performance ranking relative to the Fund's category selected by Lipper, Inc.

With respect to long-term (10- and 15-year) performance, the Trustees found that the investment performance of the Sextant International Fund, both in absolute numbers and relative to the Fund's Morningstar category remained strong. The Trustees noted that the Fund's average annual total return for the ten- and fifteen-year periods ended on August 31, 2018 was in line with the Morningstar category average and the Fund outperformed its benchmark during the same periods. The Trustees noted that the Sextant Growth Fund trailed its Morningstar category average and underperformed its benchmark for the same periods. The Trustees noted that Sextant Short-Term Bond Fund and Sextant Bond Income Fund each had underperformed its respective Morningstar category average and benchmark for the same ten- and fifteen-year periods, and Sextant Core Fund underperformed its Morningstar category average and benchmark for the ten-year period ended August 31, 2018.

The Trustees considered the short- and medium-term performance of the Funds, noting that Sextant International Fund and Sextant Global High Income Fund each outperformed its Morningstar category average for the five-year period ended August 31, 2018, while each of the other Funds trailed its Morningstar category average during the same period. The Trustees noted that for the three-year period ended on August 31, 2018, Sextant Bond Income

64 November 30, 2018 Annual Report

 

Renewal of Investment Advisory Contract

(continued) (unaudited)

Fund, Sextant Growth Fund and Sextant Short-Term Bond Fund each underperformed their respective Morningstar category average, while Sextant Global High Income Fund and Sextant International Fund each outperformed their respective Morningstar category average. The Trustees also considered the Funds' short-term performance, noting that for the one-year period ended on August 31, 2018, Sextant International Fund and Sextant Growth Fund each outperformed their respective Morningstar category average, while Sextant Core Fund, Sextant Bond Income, Sextant Global High Income Fund, and Sextant Short-term Bond Fund each underperformed their respective Morningstar category average.

The Trustees noted the risk-averse investment style and other factors, which can affect a Fund's performance relative to the Fund's broader Morningstar categories. The Trustees noted instances where a Fund had underperformed relative to its Morningstar category average during a period, but had outperformed the Fund's benchmark during the same period. The Trustees also noted certain differences between a Fund and the peer funds within the relevant Morningstar category, including differences in investment strategies and asset size. The Trustees found that Saturna Capital continued to manage the Funds in a manner that is designed to be risk-averse and attractive to long-term investors. The Trustees discussed and considered the efforts of Saturna Capital to make additional resources available to assist in managing the Funds. The Trustees also considered Saturna Capital's focus on improving investment performance without incurring materially higher levels of risk.

Recognizing the investment mandates of the Funds, the Trustees also considered the performance and expenses of each Fund as compared to a smaller group of funds with similar assets and investment objectives and strategies. The Trustees considered these comparative performance expense data, along with the comparative data published by Morningstar and each Fund's performance relative to its benchmark, to evaluate each Fund's performance over near-term and long-term time periods. The Trustees continued to recognize the fulcrum structure of the advisory fee, where the manager's compensation is directly related to the relative performance of each Fund.

The Trustees also reviewed the fees and expenses of the Funds and considered the components of each Fund's operating expenses. The Trustees noted the steps that Saturna Capital has undertaken to maintain competitive levels of Fund operating expenses. They noted the significant sponsorship of the Funds by Saturna Capital evidenced, in part, by certain fees and expenses paid by Saturna Capital out of its own resources (known as "revenue sharing") to unaffiliated intermediaries, as well as Saturna Capital's initiatives to reduce its advisory fees. Recognizing that Saturna Capital pays fees and expenses that are often borne by funds, the Trustees appreciated Saturna Capital's efforts to help make the Funds more widely available and less expensive than would otherwise be the case without Saturna Capital's efforts. The Trustees welcomed the reductions in Fund expense ratios resulting from the efforts in previous years to offer "clean shares" in each Fund, making them especially attractive to retirement plan investors.

The Trustees recognized that the Funds remain relatively small and there have not been opportunities to consider economies of scale. The Trustees noted Saturna Capital's commitment continue to operate the Funds and costs undertaken by Saturna Capital.

The Trustees reviewed Saturna's financial information and discussed the issue of Saturna's profitability as related to management and administration of the Trust. They discussed the reasonableness of Saturna's profitability, and lack thereof, as part of their evaluation of whether the advisory fees bear a reasonable relationship to the mix of services provided by Saturna, including the nature, extent, and quality of such services. The Trustees understood that Saturna had reduced its revenues from the Funds during previous years by agreeing to discontinue the 12b-1 expense entirely for four Sextant Funds, and partially for the other two Funds (Growth and International).

The Trustees considered and compared the fees charged by Saturna to other types of accounts, including non-mutual fund advisory clients. The Trustees noted the differences between the full range of services Saturna provides to the Funds, including investment advisory services, transfer agency services, and other services, as compared to the investment advisory services provided to the other advisory accounts.

The Trustees considered potential benefits to Saturna's other business lines from acting as investment adviser to the Funds, but also recognized that Saturna's other business lines benefit the Funds. The Trustees also noted that there were no soft dollar arrangements with respect to trading in the Funds' portfolios. The Trustees considered whether there are other potential benefits to Saturna in continuing to manage the Funds and the Trustees found that there were no material benefits other than Saturna's receipt of advisory fees and the fact that Saturna Brokerage Services, a wholly owned subsidiary of Saturna, receives distribution and shareholder services fees under Rule 12b-1, which it would not otherwise receive if Saturna did not serve as the investment manager for the Funds. The Trustees also noted that Saturna Brokerage Services voluntarily waives brokerage commissions for executing Fund portfolio transactions, resulting in lower transaction costs.

The Trustees concluded that the fees paid by each Fund to Saturna Capital were, from an arm's-length bargaining perspective, reasonable and in the best interest of the Fund and its shareowners in light of the services provided, comparative performance, expense and advisory fee information, costs of services provided, profits to be realized, and benefits derived or to be derived by Saturna from its relationship with the Funds. Following this discussion, the Trustees unanimously agreed to approve the Agreements of Sextant Bond Income Fund, Sextant Global High Income Fund, Sextant Growth Fund, Sextant International Fund, Sextant Core Fund, and Sextant Short-Term Bond Fund, with Saturna Capital.

Annual Report November 30, 2018 65

 

Results of Shareowner Meeting

On September 24, 2018, shareowners of the Saturna Investment Trust convened a Special Meeting. The meeting record date was July 27, 2018.

At the meeting, one proprosal to approve a proposed new advisory agreement was considered and approved. The following shares were voted at the meeting:

Sextant Short-Term Bond Fund
Outstanding Shares For Against Abstain
2,059,687 1,987,522 1,690 1,154

 

Sextant Bond Income Fund
Outstanding Shares For Against Abstain
2,005,244 1,836,200 562 42,111

 

 

Sextant Core Fund
Outstanding Shares For Against Abstain
980,423 860,973 0 21,230

 

 

Sextant Global High Income Fund
Outstanding Shares For Against Abstain
827,232 798,236 607 1,260

 

 

Sextant Growth Fund
Outstanding Shares For Against Abstain
1,415,718 1,145,564 7,687 24,502

 

 

Sextant International Fund
Outstanding Shares For Against Abstain
3,726,632 1,769,399 22,609 119,493

 

 

66 November 30, 2018 Annual Report

 

Availability of Portfolio Information

(1) The Sextant Funds file complete schedules of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q.

(2) The Funds' Forms N-Q are available on the SEC's website at www.sec.gov and at www.sextantfunds.com.

(3) The Funds' Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

(4) The Funds make a complete schedule of portfolio holdings after the end of each month available to investors at www.sextantfunds.com.

Householding Policy

To reduce expenses, we may mail only one copy of the Funds' prospectus, each annual and semi-annual report, and proxy statements when necessary, to those addresses shared by two or more accounts. If you wish to receive individual and/or more copies of these documents, please call us at 1-800-728-8762 or write to us at Saturna Capital/Sextant Mutual Funds, P.O. Box N, Bellingham, WA 98227. We will begin sending you individual copies 30 days after receiving your request.

If you are currently receiving multiple copies and wish to receive only one copy, please call us at 1-800-728-8762 or write to us at Saturna Capital/Sextant Mutual Funds, P.O. Box N, Bellingham, WA 98227. We will begin sending you a single copy with subsequent report mailings.

Availability of Proxy Voting Information

(1) A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available (a) without charge, upon request, by calling Saturna Capital at 1-800-728-8762; (b) on the Funds' website at www.sextantfunds.com; and (c) on the SEC's website at www.sec.gov.

(2) Information regarding how each Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available (a) without charge, upon request, by calling Saturna Capital at 1-800-728-8762; (b) on the Funds' website at www.sextantfunds.com; and (c) on the SEC's website at www.sec.gov.

Privacy Statement

At Saturna Capital and Saturna Investment Trust, we understand the importance of maintaining the privacy of your financial information. We want to assure you that we protect the confidentiality of any personal information that you share with us. In addition, we do not sell information about our current or former customers.

In the course of our relationship, we gather certain nonpublic information about you, including your name, address, investment choices, and account information. We do not disclose your information to unaffiliated third parties unless it is necessary to process a transaction; service your account; deliver your account statements, shareowner reports and other information; or as required by law. When we disclose information to unaffiliated third parties, we require a contract to restrict the companies' use of customer information and from sharing or using it for any purposes other than performing the services for which they were required.

We may share information within the Saturna Capital family of companies in the course of informing you about products or services that may address your investing needs.

We maintain our own technology resources to minimize the need for any third party services, and restrict access to information within Saturna. We maintain physical, electronic, and procedural safeguards to guard your personal information. If you have any questions or concerns about the security or privacy of your information, please call us at 1-800-728-8762.

Annual Report November 30, 2018 67

 

 
(photo omitted)

(logo omitted)
1300 N. State Street
Bellingham, WA 98225
www.saturna.com
1-800-728-8762

This report is issued for the information of the shareowners of the Funds. 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 Funds. The Sextant Funds are series of Saturna Investment Trust.

Saturna Brokerage Services, Distributor

♻ This report is printed on paper with a minimum of 30% post-consumer
fiber using soy-based inks. It is 100% recyclable.

 

 
Sextant Mutual Funds Semi-Annual Report May 31, 2019

 


 
                                                                 
                                                             Expense Ratio1  
                 

Average Annual Total Returns as of June 30, 2019

     YTD        1 Year        3 Year        5 Year        10 Year        15 Year        Gross        Net  
                 

Sextant Short-Term Bond Fund (STBFX)

     2.89%        4.33%        1.46%        1.35%        1.68%        2.30%        0.91%        0.60%  

FTSE USBIG Govt/Corp 1-3 Year Index

     2.69%        4.20%        1.57%        1.42%        1.55%        2.44%                 n/a  

Morningstar Short-Term Bond Category

     3.20%        4.19%        1.97%        1.60%        2.48%        2.60%                 n/a  
                 

Sextant Bond Income Fund (SBIFX)

     7.41%        8.74%        2.56%        3.22%        4.40%        4.14%        0.84%        0.65%  

FTSE US Broad Investment-Grade Bond Index

     6.14%        7.91%        2.33%        2.95%        3.83%        4.34%                 n/a  

Morningstar Long-Term Bond Category

     13.18%        13.09%        4.42%        5.38%        7.77%        6.56%                 n/a  
                 

Sextant Core Fund (SCORX)

     12.77%        9.77%        7.40%        4.15%        6.87%        n/a        0.88%           

Dow Jones Moderate US Portfolio Index

     12.03%        5.71%        7.96%        5.32%        8.71%        6.69%                 n/a  

Morningstar Allocation 50% to 70% Equity Category

     12.21%        5.73%        7.79%        5.04%        8.93%        6.20%                 n/a  
                 

Sextant Global High Income Fund (SGHIX)

     9.86%        8.60%        10.45%        4.24%        n/a        n/a        0.97%        0.75%  

S&P Global 1200 Index

     16.88%        6.96%        12.57%        7.27%        11.29%        7.71%                 n/a  

Morningstar World Allocation Category

     10.40%        3.05%        6.23%        2.72%        7.13%        5.98%                 n/a  
                 

Sextant Growth Fund Investor Shares (SSGFX)

     22.30%        14.77%        16.43%        9.28%        12.29%        9.15%        0.92%           
               

Sextant Growth Fund Z Shares (SGZFX)

     22.50%        15.13%        n/a        n/a        n/a        n/a        0.70%  

S&P 500 Index

     18.54%        10.42%        14.22%        10.72%        14.70%        8.75%                 n/a  

Morningstar Large Growth Category

     21.11%        10.02%        16.97%        11.33%        14.71%        9.07%                 n/a  
                 

Sextant International Fund Investor Shares (SSIFX)

     21.18%        17.88%        14.96%        6.00%        6.94%        7.67%        1.05%           
               

Sextant International Fund Z Shares (SIFZX)

     21.30%        18.14%        n/a        n/a        n/a        n/a        0.84%  

MSCI EAFE Index

     14.49%        1.60%        9.66%        2.74%        7.40%        5.84%                 n/a  

Morningstar Foreign Large Growth Category

     18.29%        2.25%        9.63%        4.09%        8.20%        6.18%                 n/a  
                                                                         

Performance data quoted above 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. Funds that invest in foreign securities may involve greater risk, including political and economic uncertainties of foreign countries as well as the risk of currency fluctuations.

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

A note about risk: Please see Notes to Financial Statements beginning on page 50 for a discussion of investment risks. For a more detailed discussion of the risks associated with each Fund, please see the Funds’ prospectus or each Fund’s summary prospectus.

A Fund’s 30-Day Yield, sometimes referred to as “standardized yield” or “SEC yield,” is expressed as an annual percentage rate using a method of calculation adopted by the Securities and Exchange Commission (SEC). The 30-Day Yield provides an estimate of a Fund’s investment income rate, but may not equal the actual income distribution rate.

 

1 

By regulation, expense ratios shown in this table are as stated in the Funds’ most recent prospectus, which is dated March 27, 2019, and incorporate results for the fiscal year ended November 30, 2018. Ratios presented in this table differ from the expense ratios shown elsewhere in this report as they represent different periods. Also by regulation, the performance in this table represents the most recent quarter-end performance rather than performance through the Funds’ most recent fiscal period.

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 MSCI EAFE Index is an international index focused on Europe, Australasia, and the Far East. The S&P Global 1200 Index is a global stock market index covering nearly 70% of the world’s equity markets. The Dow Jones Moderate Portfolio Index is a broad-based index of stock and bond prices. The FTSE USBIG Govt/Corp Index 1-3 Year is a broad-based index of shorter-term investment grade US government and corporate bond prices. The FTSE US Broad Investment-Grade Bond Index is a broad-based index of medium and long-term investment grade bond prices. Investors cannot invest directly in the indices.

 

 

Please consider an investment’s objectives, risks, charges, and expenses carefully before investing. To obtain this and other important information about the Sextant Funds in a prospectus or summary prospectus, ask your financial advisor, visit www.sextantfunds.com, or call toll-free 1-800-728-8762. Please read the prospectus or summary prospectus carefully before investing.

 

 

             
 
       
2                  May 31, 2019   Semi-Annual Report

 


 

Fellow Shareowners:

For the six-month period ended May 31, 2019, overall assets of the Sextant Funds were up 15.81% to $167.3 million. For the one-year period ended May 31, 2019, all of our equity and hybrid funds outperformed their respective Morningstar categories (see page 7 for more details).

Securities markets provided positive returns over the six months ended May 31, 2019, and the Sextant Funds performed respectably compared to their indices. For the period, Sextant Growth Fund Investor Shares gained 3.97%, outperforming the S&P 500 Index’s return of 0.74%. The Sextant International Fund Investor Shares gained 11.57%, well outperforming the MSCI EAFE Index’s return of 2.83%. Sextant Core Fund gained 3.25%, outperforming the Dow Jones Moderate US Portfolio Index’s return of 3.02%. The Sextant Global High Income Fund gained 2.93%, outperforming the S&P Global 1200 Index which returned 1.68%, but underperforming the Bloomberg Barclays Global High Yield Corporate Index which returned 5.03%. The Sextant Bond Income Fund was up 7.12%, outperforming the FTSE USBIG Bond Index’s gain of 6.79%. The Sextant Short-Term Bond Fund gained 2.91%, modestly outperforming the FTSE USBIG Government/Corporate 1-3 Year Index which gained 2.89%.

The annualized expense ratios of the six no-12b-1 fee Sextant Fund share classes range from 0.60% to 0.87%. Saturna Capital helped by paying to cap expenses for the Sextant Global High Income, Sextant Short-Term, and Sextant Bond Income Funds.

Strong 2019 Following Mixed 2018

Markets swung with abandon during the year, as euphoria melting to caution brought volatility and doubt. Emerging markets, led by China, suffered as the dollar surged and trade battles commenced. Wars were mostly fought with money, not arms. Global prices for carbon fuels (coal, oil, gas) are weak, as US shale production surges and demand softens. Lower taxes and interest rates are stimulating high employment, especially in technology, while the global supply chain is being rattled by trade revamps.

While it’s impossible to predict the future, we believe our portfolios are well-positioned for positive or negative economic developments given our focus on low debt, cash generative, high quality companies led by excellent management teams. Such characteristics can be defensive in the event of a downturn.

Morningstar Awards Sextant Top Sustainability Ratings

The Morningstar Sustainability Rating for funds gives investors around the world a way to compare fund portfolios based on a standardized measure of sustainability. These ratings are calculated using fund holdings data underpinned with company-level environmental, social, and governance (ESG) information from Sustainalytics, a leading provider of ESG research. Of the four Sextant funds Morningstar rated, Sextant International received the top “5 Globe” Sustainability Rating, while Sextant Growth, Sextant Core, and Sextant Short-Term Bond each received a “4 Globe” above average rating, reflecting Saturna Capital’s emphasis on sustainability when making portfolio investment decisions. Investors are cautioned, however, that more than 200 vendors offer “sustainable” investments data, and that no single global measurement prevails. See page 5 for the details.

At Saturna, we’ve developed a proprietary algorithm based on similar criteria. We believe this internal research further separates the companies we invest in from the fray. It seems to us (and is evidenced by the performance) that companies with long-view game plans serve all stakeholders, and especially long-term investors, better than their short-term, quarterly-return-obsessed competitors.

Going Forward

The 1960s and the 1990s were decades of nearly uninterrupted economic growth and the 2010s are now looking to stake their longevity claim. The last time the economy contracted for two consecutive quarters (the standard definition of a recession) was in the first two quarters of 2009, and current conditions appear

 

Sextant Icon

 

 

             
 
       
May 31, 2019        Semi-Annual Report              3

 


 

buoyant. Despite record low unemployment rates, inflation remains subdued, while corporate profitability and consumer confidence are robust.

At this point, the greatest risk to continued economic buoyancy appears to be trade friction, a development that could spin out of control or be contained rather easily with greater flexibility. Economic policies can and do change frequently.

An extraordinary era of low interest rates fueled upward moves in economies and markets. The US economy is in a “goldilocks” phase, with employment for those who want it, and little need for more government stimulus. We must be vigilant in the coming months for signs of a recession – we believe a riskier period looms ahead.

The Sextant Funds continue to offer investors a broad mix of investment vehicles: growth equities, international exposure, and a blended portfolio, plus global high-income, short-term, and long-term fixed-income options. This array of portfolios serves our investors in both bull and bear markets by seeking to provide steady, long-term growth with a focus on preservation of capital. Please review the following pages for more in-depth information about each Fund.

Respectfully,

(photo omitted)

Jane Carten,

President

(photo omitted)

Gary Goldfogel,

Independent Board Chairman

 

                     
     
    Sextant Funds Portfolio Management    
           
    (photo omitted)   

Nicholas Kaiser MBA, CFA®

 

Sextant International Fund

Portfolio Manager

     (photo omitted)   

Phelps McIlvaine

 

Sextant Short-Term Bond Fund

Sextant Bond Income Fund

Sextant Core Fund

Portfolio Manager

   
           
    (photo omitted)   

Scott Klimo CFA®

 

Sextant Growth Fund

Portfolio Manager

Sextant International Fund

Deputy Portfolio Manager

     (photo omitted)   

Bryce Fegley CFA®, CIPM®

 

Sextant Global High Income Fund

Portfolio Manager

   
           
    (photo omitted)   

Patrick Drum MBA, CFA®, CFP®

 

Sextant Short-Term Bond Fund

Sextant Bond Income Fund

Sextant Global High Income Fund

Deputy Portfolio Manager

     (photo omitted)   

Christopher Paul MBA, CFA®

 

Sextant Core Fund

Portfolio Manager

   

 

 

             
 
       
4                  May 31, 2019   Semi-Annual Report

 


 
         
Morningstar Sustainability Ratings       As of May 31, 2019

 

At Saturna Capital, we describe ourselves as value and values-based investors. We believe our approach improves the likelihood of achieving superior investment results over the long term. Our approach also leads to investment portfolios we can be proud of from the perspective of Environmental, Social, and Governance (ESG) issues. Morningstar partners with leading ESG research firm Sustainalytics to publish the Morningstar Sustainability Rating – here are Sextant Funds’ recent results:

 

                 
     

Sextant International Fund

      Sextant Short-Term Bond Fund
         

Investor Shares (SSIFX)

   ؠؠؠ Ø Ø       STBFX    ؠؠؠ Ø Ø
         

Z Shares (SIFZX)

   ؠؠؠ Ø Ø             
     
4th percentile among 398 Foreign Large Blend Funds       20th percentile among 481 Short-Term Bond Funds
     

Sextant Growth Fund

      Sextant Core Fund
         

Investor Shares (SSGFX)

   ؠؠؠ Ø Ø       SCORX    ؠؠؠ Ø Ø
         

Z Shares (SGZFX)

   ؠؠؠ Ø Ø             
     
20th percentile among 1,229 Large Growth Funds       19th percentile among 688 Allocation 50%-70% Equity Funds
     
       

The Sextant Bond Income and Sextant Global High Income Funds were not rated by Morningstar for the period.

 

The Morningstar Sustainability Rating gives investors across the globe a way to compare fund portfolios based on a standard measure of sustainability. The rating is a holdings-based calculation using company-level environmental, social, and governance (ESG) analytics from Sustainalytics.

The Morningstar Sustainability Rating and the Morningstar Portfolio Sustainability Score are not based on fund performance and are not equivalent to the Morningstar Rating (“Star Rating”).

© 2019 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 Sustainability Ratings and Portfolio Sustainability Scores are as of May 31, 2019. The Morningstar Sustainability Rating is intended to measure how well the issuing companies of the securities within a fund’s portfolio are managing their environmental, social, and governance (“ESG”) risks and opportunities relative to the fund’s Morningstar category peers. The Morningstar Sustainability Rating calculation is a two-step process. First, each fund with at least 50% of assets covered by a company-level ESG score from Sustainalytics receives a Morningstar Portfolio Sustainability Score. The Morningstar Portfolio Sustainability Score is an asset-weighted average of normalized company-level ESG scores with deductions made for controversial incidents by the issuing companies, such as environmental accidents, fraud, or discriminatory behavior. The Morningstar Sustainability Rating is then assigned to all scored funds within Morningstar Categories in which at least ten (10) funds receive a Portfolio Sustainability Score and is determined by each fund’s rank within the following distribution: High (highest 10%), Above Average (next 22.5%), Average (next 35%), Below Average (next 22.5%), and Low (lowest 10%). The Morningstar Sustainability Rating is depicted by globe icons where High equals 5 globes and Low equals 1 globe. A Sustainability Rating is assigned to any fund that has more than half of its underlying assets rated by Sustainalytics and is within a Morningstar Category with at least 10 scored funds; therefore, the rating it is not limited to funds with explicit sustainable or responsible investment mandates. Morningstar updates its Sustainability Ratings monthly. Portfolios receive a Morningstar Portfolio Sustainability Score and Sustainability Rating one month and six business days after their reported as-of date based on the most recent portfolio. As part of the evaluation process, Morningstar uses Sustainalytics’ ESG scores from the same month as the portfolio