Navigating Today's Volatile Markets

 

Sextant Growth Fund

 

Sextant Core Fund
(SCORX)

Investor
Z

(SSGFX)
(SGZFX)

Sextant Short-Term Bond Fund
(STBFX)

Sextant International Fund

Sextant Bond Income Fund
(SBIFX)

Investor
Z

(SSIFX)
(SIFZX)

Sextant Global High Income Fund
(SGHIX)

Sextant Mutual Funds

Prospectus

March 28, 2018

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

25

Purchase and Sale of Fund Shares Through Financial Intermediaries

27

Distributions

27

Frequent Trading Policy

27

Tax Consequences

28

Distribution Arrangements

29

Financial Highlights

31

2


Sextant Growth Fund

SSGFX/SSIFX

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)

0.30%

0.30%

Distribution (12b-1) Fees

0.25%

None

Other Expenses

0.21%

0.21%

Total Annual Fund Operating Expenses

0.76%

0.51%

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

$78

$243

$422

$942

Z Shares

$52

$164

$285

$640

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 18.33% 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. The Fund also tends to favor growth stocks, which tend to trade based on future earnings expectations, and may be more volatile than slower-growing value stocks, especially when market expectations are not met.

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 2008

-20.39%

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, 2017

 

1 Year

5 Year

10 Year

Investor Shares

SSGFX

Return before taxes

22.36%

11.97%

6.27%

Return after taxes on distributions

20.86%

10.33%

5.47%

Return after taxes on distributions and sale of Fund shares

13.59%

9.55%

5.07%

Z Shares

SGZFX

Z Shares began operations on June 2, 2017 and do not yet have returns to report.

S&P 500 Index
(reflects no deduction for fees, expenses or taxes)

21.83%

15.80%

8.49%

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 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 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. Tyler Howard MBA, CFA®, an investment 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 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)

0.54%

0.54%

Distribution (12b-1) Fees

0.25%

None

Other Expenses

0.25%

0.25%

Total Annual Fund Operating Expenses

1.04%

0.79%

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

$106

$331

$574

$1,271

Z Shares

$81

$252

$439

$978

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 1.82% 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: The risks of investing in foreign securities typically are greater in less developed or emerging countries.

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, 2017

 

1 Year

5 Year

10 Year

Investor Shares

SSIFX

Return before taxes

25.46%

5.61%

2.69%

Return after taxes on distributions

23.15%

4.93%

2.31%

Return after taxes on distributions and sale of Fund shares

15.93%

4.64%

2.12%

Z Shares

SIFZX

Z Shares began operations on June 2, 2017 and do not yet have returns to report.

MSCI EAFE Index
(reflects no deduction for fees, expenses or taxes)

25.62%

8.39%

2.42%

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 taxed at special rates.

7


Sextant International Fund

SSIFX/SIFZX

Investment Adviser

Saturna Capital Corporation is the Fund's investment adviser.

Portfolio Managers

Mr. Nicholas 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 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 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)

0.36%

Other Expenses

0.37%

Total Annual Fund Operating Expenses

0.73%

Restated to reflect the ending of the Distribution (12b-1) Fees effective June 2, 2017, as approved by the Board of Trustees on March 14, 2017.

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

$75

$233

$406

$906

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 34.46% 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 Baa 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

Q4 2008

-9.23%

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, 2017

 

1 Year

5 Year

10 Year

Return before taxes

14.58%

6.09%

4.12%

Return after taxes on distributions

14.29%

5.44%

3.61%

Return after taxes on distributions and sale of Fund shares

8.61%

4.56%

3.03%

Dow Jones Moderate Portfolio Index (reflects no deduction for fees, expenses or taxes)

15.15%

8.11%

5.75%

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 taxed at special rates.

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 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 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)

0.50%

Other Expenses

0.38%

Total Annual Fund Operating Expenses

0.88%

Fee Waiver and Expense Reimbursement

0.28%

Total Annual Fund Operating Expenses after Fee Waiver and Expense Reimbursement

0.60%

Restated to reflect the ending of the Distribution (12b-1) Fees effective June 2, 2017, as approved by the Board of Trustees on March 14, 2017.

The adviser has committed through March 31, 2019, 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

$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 31.28% of the average value of its portfolio.

Principal Investment Strategies

The Fund invests at least 80% of its 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 (Baa).

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.

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

Q3 2008

-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, 2017

 

1 Year

5 Year

10 Year

Return before taxes

0.49%

0.84%

1.86%

Return after taxes on distributions

-0.06%

0.34%

1.16%

Return after taxes on distributions and sale of Fund shares

-0.06%

0.40%

1.11%

Citi Government/Corporate 1-3 Index (reflects no deduction for fees, expenses or taxes)

0.80%

0.80%

1.83%

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 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 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 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 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)

0.44%

Other Expenses

0.42%

Total Annual Fund Operating Expenses

0.86%

Fee Waiver and Expense Reimbursement

0.21%

Total Annual Fund Operating Expenses after Fee Waiver and Expense Reimbursement

0.65%

Restated to reflect the ending of the Distribution (12b-1) Fees effective June 2, 2017, as approved by the Board of Trustees on March 14, 2017.

The adviser has committed through March 31, 2019, 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 3.57% 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 (Baa).

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, 2017

 

1 Year

5 Year

10 Year

Return before taxes

5.13%

2.31%

4.17%

Return after taxes on distributions

3.75%

0.95%

2.76%

Return after taxes on distributions and sale of Fund shares

2.88%

1.06%

2.44%

Citi Broad Investment Grade Index (reflects no deduction for fees, expenses or taxes)

3.60%

2.09%

4.07%

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 taxed at special rates.

Investment Adviser

Saturna Capital Corporation is the Fund's investment adviser.

Portfolio Managers

Mr. Phelps 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 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 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)

0.66%

Other Expenses

0.40%

Total Annual Fund Operating Expenses

1.06%

Fee Waiver and Expense Reimbursement

0.31%

Total Annual Fund Operating Expenses after Fee Waiver and Expense Reimbursement

0.75%

Restated to reflect the ending of the Distribution (12b-1) Fees effective June 2, 2017, as approved by the Board of Trustees on March 14, 2017.

The adviser has committed through March 31, 2019, 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

$108

$337

$585

$1,294

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 8.33% 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: The risks of investing in foreign securities typically are greater in less developed or emerging countries.

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, 2017

 

1 Year

5 Year

Life of Fund
(Since 3/30/2012)

Return before taxes

15.44%

6.11%

5.74%

Return after taxes on distributions

14.43%

4.74%

4.47%

Return after taxes on distributions and sale of Fund shares

9.04%

4.05%

3.82%

S&P Global 1200 Index (reflects no deduction for fees, expenses or taxes)

23.84%

12.15%

11.33%

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 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 Fegley CFA®, a portfolio manager and investment tactician 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 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 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., Moody's Investors Service: Aaa, Aa, A, or Baa); 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 Baa 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 (Baa).

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 (Baa).

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.

22


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: The risks of investing in foreign securities typically are greater in less developed or emerging countries.

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.

23


Operational Risk

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, 2017, included in the Funds' Annual Report, is 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 Inernational 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 (the "Adviser"). Founded in 1989, Saturna Capital Corporation has approximately $3.7 billion in assets under management (as of December 31, 2017). It is also the adviser to other funds of the Saturna Investment Trust, the Amana Mutual Funds Trust, and to separately managed accounts. A 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 Kaiser MBA, CFA®, portfolio manager of Sextant International Fund, is chairman, director, and 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 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

24


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 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 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®, equity portfolio manager of Sextant Core Fund, joined Saturna Capital in 2016. 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 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. 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.

Mr. Tyler Howard MBA, CFA®, deputy portfolio manager of Sextant Growth Fund, joined Saturna Capital in 2012 as an investment analyst. From 2006 to 2012, Mr. Howard was a research associate and consultant at Carmel Capital Management.

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, 2017, the aggregate advisory fee paid (after performance adjustments and fee waivers) was 0.30%, 0.54%, 0.36%, 0.22%, 0.23%, and 0.35% 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, 2017.

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

25


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).

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.

To allow time for clearing of funds used to purchase shares being redeemed, payment for redemptions of new investments may be restricted for up to 14 calendar days (until the purchase check clears).

26


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.

Telephone request

Call: 800-728-8762 or 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 have up to seven days to pay proceeds to shareowners who redeem shares, however they normally send redemption proceeds within one day. 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 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

Shareowners may elect to convert Sextant Growth and Sextant International Investor Shares into Z Shares of the same Fund. Any conversion will occur at the next available net asset values of the share classes.

27


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 are normally eligible for the "qualified dividend income" tax rate.

An exchange of the 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 federal 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 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 Internal Revenue Service 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 continue 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.

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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:

2017

2016

2015

2014

2013

Net asset value at beginning of year

$22.52

$24.03

$26.36

$23.92

$20.35

Income from investment operations

    Net investment income

0.15A

0.11

0.03

0.02

0.12

    Net gains (losses) on securities (both realized and unrealized)

4.93

(0.88)

(0.25)

3.88

5.86

Total from investment operations

5.08

(0.77)

(0.22)

3.90

5.98

Less distributions

    Dividends (from net investment income)

(0.09)

(0.02)

(0.04)

(0.01)

(0.13)

    Distributions (from capital gains)

-

(0.72)

(2.07)

(1.45)

(2.28)

Total distributions

(0.09)

(0.74)

(2.11)

(1.46)

(2.41)

 

Net asset value at end of year

$27.51

$22.52

$24.03

$26.36

$23.92

 

Total return

22.64%

(3.22%)

(0.87%)

16.29%

29.39%

 

Ratios / supplemental data

Net assets ($000), end of year

$5,962

$34,561

$55,867

$45,863

$36,574

Ratio of expenses to average net assets

    Before custodian fee credits

0.76%

0.76%

0.90%

1.05%

0.94%

    After custodian fee credits

0.76%

0.76%

0.90%

1.05%

0.94%

Ratio of net investment income after custodian fee credits to average net assets

0.60%

0.39%

0.13%

0.07%

0.59%

Portfolio turnover rate

18%

25%

68%

23%

29%

 

Z Shares (SGZFX)

Period ended

Selected data per share of outstanding capital stock throughout each period:

November 30, 2017B

Net asset value at beginning of period

$25.54

Income from investment operations

    Net investment income

0.16A

    Net gains on securities (both realized & unrealized)

1.82

Total from investment operations

1.98

Less distributions

    Dividends (from net investment income)

(0.02)

Total distributions

(0.02)

 

Net asset value at end of period

$27.50

 

Total return

7.73%C

 

Ratios / supplemental data

Net assets ($000), end of period

$32,017

Ratio of expenses to average net assets

    Before custodian fee credits

0.51%D

    After custodian fee credits

0.51%D

Ratio of net investment income after custodian fee credits to average net assets

0.89%D

Portfolio turnover rate

18%C

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

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Sextant International Fund: Financial Highlights

Investor Shares (SSIFX)

For year ended November 30,

Selected data per share of outstanding capital stock throughout each year:

2017

2016

2015

2014

2013

Net asset value at beginning of year

$14.37

$14.35

$15.47

$15.80

$14.85

Income from investment operations

    Net investment income

0.16A

0.22

0.25

0.65

0.32

    Net gains (losses) on securities (both realized and unrealized)

3.65

(0.15)

(1.11)

(0.35)

0.97

Total from investment operations

3.81

0.07

(0.86)

0.30

1.29

Less distributions

    Dividends (from net investment income)

(0.20)

(0.05)

(0.25)

(0.63)

(0.34)

    Distributions (from return of capital)

-

-

(0.01)

-

-

Total distributions

(0.20)

(0.05)

(0.26)

(0.63)

(0.34)

    Paid-in capital from early redemption fees

n/a

n/a

n/a

n/a

0.00B

 

Net asset value at end of year

$17.98

$14.37

$14.35

$15.47

$15.80

 

Total return

26.76%

0.49%

(5.58)%

1.88%

8.67%

 

Ratios / supplemental data

Net assets ($000), end of year

$46,321

$62,412

$78,296

$103,450

$148,016

Ratio of expenses to average net assets

    Before custodian fee credits

1.04%

1.00%

1.05%

0.80%

0.66%

    After custodian fee credits

1.04%

1.00%

1.04%

0.79%

0.66%

Ratio of net investment income after custodian fee credits to average net assets

1.00%

1.36%

1.49%

3.58%

1.69%

Portfolio turnover rate

2%

0%

0%

3%

7%

 

Z Shares (SIFZX)

Period ended

Selected data per share of outstanding capital stock throughout each period:

November 30, 2017C

Net asset value at beginning of period

$16.55

Income from investment operations

    Net investment income

0.13A

    Net gains on securities (both realized & unrealized)

1.41

Total from investment operations

1.54

Less distributions

    Dividends (from net investment income)

(0.09)

Total distributions

(0.09)

 

Net asset value at end of period

$18.00

 

Total return

9.32%D

 

Ratios / supplemental data

Net assets ($000), end of period

$21,031

Ratio of expenses to average net assets

    Before custodian fee credits

0.79%E

    After custodian fee credits

0.78%E

Ratio of net investment income after custodian fee credits to average net assets

0.53%E

Portfolio turnover rate

2%D

A Calculated using average shares outstanding
B Amount is less than $0.01
COperations commenced on June 2, 2017
D Not annualized
E Annualized

33


Sextant Core Fund (SCORX)

Financial Highlights

For year ended November 30,

Selected data per share of outstanding capital stock throughout each year:

2017

2016

2015

2014

2013

Net asset value at beginning of year

$11.45

$11.25

$12.43

$11.78

$10.81

Income from investment operations

    Net investment income

0.16

0.18

0.18

0.21

0.20

    Net gains (losses) on securities (both realized and unrealized)

1.55

0.02

(0.72)

0.78

0.98

Total from investment operations

1.71

0.20

(0.54)

0.99

1.18

Less distributions

    Dividends (from net investment income)

(0.17)

-

(0.18)

(0.21)

(0.21)

    Distributions (from capital gains)

-

-

(0.46)

(0.13)

-

Total distributions

(0.17)

-

(0.64)

(0.34)

(0.21)

 

Net asset value at end of year

$12.99

$11.45

$11.25

$12.43

$11.78

 

Total return

15.15%

1.78%

(4.38)%

8.41%

10.96%

 

Ratios / supplemental data

Net assets ($000), end of year

$12,980

$8,563

$8,435

$8,656

$6,960

Ratio of expenses to average net assets

    Before custodian fee credits

0.84%

1.05%

1.02%

1.17%

1.01%

    After custodian fee credits

0.83%

1.04%

1.01%

1.16%

1.01%

Ratio of net investment income after custodian fee credits to average net assets

1.52%

1.52%

1.44%

1.88%

1.68%

Portfolio turnover rate

34%

39%

24%

14%

29%

 

 

Sextant Short-Term Bond Fund (STBFX)

Financial Highlights

For year ended November 30,

Selected data per share of outstanding capital stock throughout each year:

2017

2016

2015

2014

2013

Net asset value at beginning of year

$5.02

$5.02

$5.04

$5.05

$5.07

Income from investment operations

    Net investment income

0.06

0.05

0.05

0.06

0.06

    Net gains (losses) on securities (both realized and unrealized)

(0.02)

0.00A

(0.02)

(0.01)

(0.02)

Total from investment operations

0.04

0.05

0.03

0.05

0.04

Less distributions

    Dividends (from net investment income)

(0.06)

(0.05)

(0.05)

(0.06)

(0.06)

Total distributions

(0.06)

(0.05)

(0.05)

(0.06)

(0.06)

 

Net asset value at end of year

$5.00

$5.02

$5.02

$5.04

$5.05

 

Total return

0.87%

1.06%

0.67%

0.94%

0.82%

 

Ratios / supplemental data

Net assets ($000), end of year

$10,705

$10,326

$7,488

$7,674

$7,307

Ratio of expenses to average net assets

    Before fee waivers and custodian fee credits

1.01%

1.15%

1.21%

1.29%

1.14%

    After fee waivers

0.68%

0.76%

0.76%

0.76%

0.76%

    After fee waivers and custodian fee credits

0.68%

0.75%

0.75%

0.75%

0.75%

Ratio of net investment income after fee waivers and custodian fee credits to average net assets

1.26%

1.05%

1.06%

1.14%

1.20%

Portfolio turnover rate

31%

11%

13%

14%

50%

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:

2017

2016

2015

2014

2013

Net asset value at beginning of year

$5.07

$5.07

$5.26

$5.05

$5.41

Income from investment operations

    Net investment income

0.16

0.15

0.17

0.16

0.17

    Net gains (losses) on securities (both realized and unrealized)

0.07

0.00A

(0.19)

0.21

(0.36)

Total from investment operations

0.23

0.15

(0.02)

0.37

(0.19)

Less distributions

    Dividends (from net investment income)

(0.16)

(0.15)

(0.17)

(0.16)

(0.17)

Total distributions

(0.16)

(0.15)

(0.17)

(0.16)

(0.17)

 

Net asset value at end of year

$5.14

$5.07

$5.07

$5.26

$5.05

 

Total return

4.51%

2.91%

(0.47)%

7.40%

(3.59)%

 

Ratios / supplemental data

Net assets ($000), end of year

$9,496

$9,703

$7,998

$7,967

$7,117

Ratio of expenses to average net assets

    Before fee waivers and custodian fee credits

0.98%

1.01%

1.03%

1.27%

1.12%

    After fee waivers

0.78%

0.89%

0.90%

0.91%

0.90%

    After fee waivers and custodian fee credits

0.78%

0.88%

0.90%

0.90%

0.89%

Ratio of net investment income after fee waivers and custodian fee credits to average net assets

3.05%

2.85%

3.21%

3.07%

3.23%

Portfolio turnover rate

4%

11%

4%

13%

8%

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:

2017

2016

2015

2014

2013

Net asset value at beginning of year

$10.11

$8.89

$10.57

$10.51

$9.90

Income from investment operations

    Net investment income

0.35

0.45

0.52

0.48

0.37

    Net gains (losses) on securities (both realized and unrealized)

1.11

0.77

(1.68)

0.07

0.63

Total from investment operations

1.46

1.22

(1.16)

0.55

1.00

Less distributions

    Dividends (from net investment income)

(0.45)

-

(0.52)

(0.49)

(0.39)

Total distributions

(0.45)

-

(0.52)

(0.49)

(0.39)

 

Net asset value at end of year

$11.12

$10.11

$8.89

$10.57

$10.51

 

Total return

15.01%

13.72%

(11.01)%

5.27%

10.06%

 

Ratios / supplemental data

Net assets ($000), end of year

$9,373

$7,570

$6,952

$7,707

$6,388

Ratio of expenses to average net assets

    Before fee waivers

1.18%

1.17%

1.06%

1.41%

1.25%

    After fee waivers

0.83%

0.91%

0.90%

0.91%

0.91%

    After fee waivers and custodian fee credits

0.82%

0.90%

0.89%

0.90%

0.90%

Ratio of net investment income after fee waivers and custodian fee credits to average net assets

3.34%

4.78%

4.87%

4.75%

3.87%

Portfolio turnover rate

8%

26%

40%

11%

23%

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 November 30, 2017

Sextant Mutual Funds

Annual Report     November 30, 2017

Short-Term Bond

STBFX

 

Bond Income

SBIFX

 

Core

SCORX

 

Global High Income

SGHIX

 

Growth

SSGFX

Investor Shares

SGZFX

Z Shares

 

International

SSIFX

Investor Shares

SIFZX

Z Shares


Average Annual Total Returns as of December 31, 2017

1 Year

3 Year

5 Year

10 Year

15 Year

Expense Ratio¹

Gross

Net

 

Sextant Short-Term Bond Fund (STBFX)

0.49%

1.01%

0.84%

1.86%

2.26%

0.90%

0.60%

Citi USBIG Govt/Corp 1-3 Year Index

0.80%

0.89%

0.80%

1.83%

2.35%

n/a

 
 

Sextant Bond Income Fund (SBIFX)

5.13%

2.49%

2.31%

4.17%

3.97%

0.76%

0.65%

Citi US Broad Investment-Grade Bond Index

3.60%

2.26%

2.09%

4.07%

4.23%

n/a

 
 

Sextant Core Fund (SCORX)

14.58%

4.57%

6.09%

4.12%

n/a

0.80%

Dow Jones Moderate US Portfolio Index

15.15%

7.00%

8.11%

5.75%

8.20%

n/a

 
 

Sextant Global High Income Fund (SGHIX)

15.44%

6.28%

6.11%

n/a

n/a

0.92%

0.75%

S&P Global 1200 Index

23.84%

10.17%

12.15%

5.67%

9.52%

n/a

 
 

Sextant Growth Fund Investor Shares (SSGFX)

22.36%

6.02%

11.97%

6.27%

9.32%

0.76%

Sextant Growth Fund Z Shares (SGZFX)

n/a

n/a

n/a

n/a

n/a

0.51%

S&P 500 Index

21.83%

11.42%

15.80%

8.49%

9.92%

n/a

 
 

Sextant International Fund Investor Shares (SSIFX)

25.46%

8.08%

5.61%

2.69%

9.32%

1.00%

Sextant International Fund Z Shares (SIFZX)

n/a

n/a

n/a

n/a

n/a

0.75%

MSCI EAFE Index

25.62%

8.31%

8.39%

2.42%

8.59%

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 and consequently do not have standardized returns to report.

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 June 2, 2017, and incorporate results for the fiscal year ended November 30, 2016. 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 Citi USBIG Govt/Corp Index 1-3 Year is a broad-based index of shorter-term investment grade US government and corporate bond prices. The Citi 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, 2017 Annual Report

Fellow Shareowners:

Equity markets rose again for the year ended November 30, 2017. Total return for the S&P 500 Index was 22.87% and the Dow Jones Moderate US Portfolio Index gained 14.97%. Foreign markets performed as well, with the MSCI EAFE Index up 27.86% and the S&P Global 1200 Index up 24.95%. Fixed-income markets were more subdued, with the Citi USBIG Bond Index rising 3.24% and the shorter-term Citi USBIG Govenment/Corporate 1-3 Year Index rising 0.83%.

The Sexant Funds performed respectably compared to these indices, which do not have expenses. For the period ended November 30, 2017, Sextant Growth Fund Investor Shares gained 22.64%, Sextant International Fund Investor Shares gained 26.76%, Sextant Core Fund gained 15.15%, Sextant Global High Income Fund gained 15.01%, Sextant Bond Income Fund gained 4.51%, and Sextant Short-Term Bond Fund gained 0.87%.

To reduce expenses, the Board of Trustees ended the 12b-1 fee for the six Sextant Funds, creating the new Z class shares with no 12b-1 fee for Sextant Growth and Sextant International. Saturna Capital helped by paying to cap expenses, putting the annualized expense ratios of the six no-12b-1 fee Sextant Fund share classes in a range of 0.63% to 0.83%. Investors showed enthusiasm for the Funds' attractive features, including their fulcrum-fee adjusted, low-expense structures, professional active management, no-fee account transactions, and integration with low-cost IRA and 401(k) plans. Overall assets were up 12% to $147.8 million.

Government Reforms Power Markets

Culminating with federal tax reforms enacted at the end of December, markets in 2017 were boosted by numerous reforms favorable to the economy. New business investment and corporate hiring are strong to meet demand aided by quick depreciation and lower taxes. Unemployment is at "full employment" levels, and both compensation and consumer spending are rising. Corporate profits are up dramatically, with increased dividends and stock buyback programs pushing up stock prices. Among trade efforts to increase US exports, a decline in the price of the US currency is a big help.

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, four received the top "5 Globes" rating, reflecting Saturna Capital's emphasis on sustainability when making portfolio investment decisions. Investors are cautioned, however, that more than 100 vendors offer "sustainable" investments data, and that no single global measurement prevails. See page 5 for the details.

Going Forward

2018 brings a new tax regime, less government regulation, more money for defense, and a push to restore US infrastructure. All these factors boost business growth, and the best course of action for most is to remain fully invested. Tax and government reforms normally lead to higher stock prices as the future benefits of lower taxes are reflected in valuations. Companies are updating earnings guidance, and the increases can be surprisingly large. Companies that used international tax minimization strategies are revealing their bills for deemed repatriation, which can also be large – and provide new cash for Treasury spending. Some, such as Apple, had fully reserved for the potential taxation of their overseas earnings and will enjoy hefty write-backs. Most companies, however, have not. The tax bills sting but are unlikely to affect share prices significantly.

Following three rate increases in 2017, we expect additional Federal Reserve hikes this year only if inflation returns – in spite of the lower costs of the internet economy. We believe interest rates that reward savers to be a positive development and are not concerned that expected increases will choke off economic activity.

Central bank actions may be governed by whether domestic governments are able to expand infrastructure expenditures. That US infrastructure is in dire straits is not in doubt. But an expansive tax bill, the limitations on state and local government spending, and the economy virtually at "full employment," mean large-scale borrowing for infrastructure is unlikely. After a year of a bizarre presidency and wild partisanship, Congress is learning its way again. Remember that infrastructure investment decisions are mostly made in 50 state capitals, not Washington, D.C.

As the Great Contest of political and economic systems between the United States and China continues around sideshows like North Korea

November 30, 2017 Annual Report 3

and Iran, we expect stimulus from an increase in defense spending. What that means for the deficit, inflation, interest rate hikes, the value of the US dollar, and the stock market remains to be seen, but we feel confident in saying that the potential for an economic downturn does not present a significant risk in 2018. Beware, however, as complacency has not been so high since 2006.

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)

Tyler Howard MBA, CFA®

Sextant Growth Fund
Deputy Portfolio Manager

 

(photo omitted)

Christopher Paul MBA, CFA®

Sextant Core Fund
Portfolio Manager

 

4 November 30, 2017 Annual Report

Morningstar Sustainability Ratings™

(unaudited)

As of November 30, 2017

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

10th percentile among 463 Short-Term Bond Funds

10th percentile among 549 Foreign Large Blend Funds

 
 

Sextant Core Fund

Sextant Growth Fund

SCORX

Ø Ø Ø Ø Ø

Investor Shares (SSGFX)

Ø Ø Ø Ø Ø

1st percentile among 719 Allocation 50%-70% Equity Funds

Z Shares (SGZFX)

Ø Ø Ø Ø Ø

 

10th percentile among 1,226 Large Growth Funds

Sextant Global High Income Fund

 

SGHIX

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.

41st percentile among 400 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").

© 2017 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, 2017. 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 score s 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 99%
Sextant Core Fund 79%
Sextant Short-Term Bond Fund 56%
Sextant Growth Fund 99%
Sextant Global High Income Fund 67%

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.

November 30, 2017 Annual Report 5

 

Average Annual Total Returns as of November 30, 2017

1 Year

3 Year

5 Year

10 Year

15 Year

Expense Ratio1

Gross

Net

 

Sextant Short-Term Bond Fund (STBFX)

0.87%

0.86%

0.87%

1.88%

2.40%

0.90%

0.60%

Citi USBIG Govt/Corp 1-3 Year Index

0.83%

0.79%

0.81%

1.85%

2.42%

n/a

 
 

Sextant Bond Income Fund (SBIFX)

4.51%

2.29%

2.08%

4.06%

4.14%

0.76%

0.65%

Citi US Broad Investment-Grade Bond Index

3.24%

2.11%

1.98%

4.04%

4.34%

n/a

 
 

Sextant Core Fund (SCORX)

15.15%

3.87%

6.16%

3.99%

n/a

0.80%

Dow Jones Moderate US Portfolio Index

14.97%

6.42%

8.18%

5.58%

8.00%

n/a

 
 

Sextant Global High Income Fund (SGHIX)

15.01%

5.26%

6.16%

n/a

n/a

0.92%

0.75%

S&P Global 1200 Index

24.95%

9.00%

12.33%

5.43%

9.12%

n/a

 
 

Sextant Growth Fund Investor Shares (SSGFX)

22.64%

5.56%

12.10%

6.22%

8.91%

0.76%

Sextant Growth Fund Z Shares (SGZFX)

n/a

n/a

n/a

n/a

n/a

0.51%

S&P 500 Index

22.87%

10.88%

15.73%

8.29%

9.39%

n/a

 
 

Sextant International Fund Investor Shares (SSIFX)

26.76%

6.35%

5.89%

2.43%

8.78%

1.00%

Sextant International Fund Z Shares (SIFZX)

n/a

n/a

n/a

n/a

n/a

0.75%

MSCI EAFE Index

27.86%

6.45%

8.72%

2.02%

8.23%

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 June 2, 2017, and incorporate results for the fiscal year ended November 30, 2016. Ratios presented in this table differ from the expense ratios shown elsewhere in this report as they represent different periods.

6 November 30, 2017 Annual Report

Sextant Short-Term Bond Fund

Performance Summary (unaudited)

Average Annual Total Returns as of November 30, 2017

 

1 Year

5 Year

10 Year

Expense Ratio¹

Sextant Short-Term Bond Fund

0.87%

0.87%

1.88%

0.90%

Citi USBIG Govt/Corp 1-3 Year Index

0.83%

0.81%

1.85%

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, 2007, to an identical amount invested in the Citi 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 $12,044 versus $12,014 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 June 2, 2017, and incorporates results for the fiscal year ended November 30, 2016, 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

23.7%

Sextant Short-Term Bond Fund Portfolio Diversification

United States Treasury Note (2.50% due 08/15/2023)

4.7%

Health Care

17.1%

McCormick & Co. (2.70% due 08/15/2022)

4.7%

Consumer Discretionary

14.1%

Gilead Sciences (2.55% due 09/01/2020)

3.8%

Financials

8.2%

Adobe Systems (4.75% due 02/01/2020)

3.7%

Technology

8.0%

Abbott Laboratories (4.125% due 05/27/2020)

3.7%

Materials

7.8%

Snap-On (6.70% due 03/01/2019)

3.4%

Consumer Staples

4.7%

Alibaba Holding Group (3.125% due 11/28/2021)

3.3%

Industrials

4.3%

Teva Pharmaceutical (3.65% due 11/10/2021)

3.1%

Utilities

2.8%

BHP Billiton Fin USA (6.50% due 4/01/2019)

3.1%

Energy

2.7%

 

Other assets (net of liabilities)

6.6%

 

November 30, 2017 Annual Report 7

Sextant Short-Term Bond Fund

Discussion of Fund Performance (unaudited)

(photo omitted)

Fiscal Year 2017

For the fiscal year ended November 30, 2017, the Sextant Short-Term Bond Fund returned 0.87%, which was lower than the 1.80% average return of its Morningstar category peer group. For the five years ended November 30, the Fund provided a 0.87% annualized total return versus 1.12% for its Morningstar category peer group. During the year, the Fund's share price declined slightly from $5.02 to $5.00. Net investment income rose from 1.05% to 1.26%. Fund shares outstanding rose 4%, and Fund assets rose 3.78%. The Fund's 30-day yield was 1.46%, and its unsubsidized 30-day yield was 0.97%. Reflecting Saturna Capital's voluntary subsidies to cap operating expenses, the Fund's effective expense ratio declined to 0.68% from 0.75%.

Factors Affecting Past Performance

The US Federal Reserve Bank, relying on improving economic growth, raised the federal funds rate from 0.50% to 1.25%, putting downward pressure on short-term note prices all year. However, inflation expectations softened. Together these two forces produced substantially flatter fixed income yield curves. For example, two-year US Treasury notes rose 0.67% in yield while the 30-year US Treasury yield declined -0.19%. Federal Reserve Board vacancies have slowed major policy revisions. The resulting glacial pace of US monetary policy continued to depress volatility and option-adjusted spreads. Improving earnings supported a further narrowing of credit spreads, pushing them near record lows.

Looking Forward

US Federal Reserve will cautiously move the fed funds rate higher. The US Treasury will issue a record amount of short-term bills and notes to finance the expanding federal deficit. These forces will continue to flatten the yield curve. The fed funds rate can increase to about 2.75% before the yield curve inverts. At that point, a flat yield curve will give the Fed good reason to pause, given the negative effects of an inverted curve can take years to manifest. Assuming the yield curve keeps its current shape, with fed funds rate at 2.75%, the 30-yr bond yield would be about 4.20%.

The invigorating effects of the 2017 Tax Cuts and Jobs Act will have to overcome the depressing effects of greater debt-funded deficits, the higher overall cost of leverage, weak demographics, and tighter monetary policy. New limits on mortgage and home equity loan interest deductions may temper prices in an overheated housing market. Limits on the deductibility of interest paid by corporations will raise the cost of corporate mergers, debt-funded equity buyback programs, and leverage in general. The higher after-tax cost of debt may curb business activity and inflation.

Consumers have drawn down their savings rate and increased borrowing, limiting their ability to drive the economy forward next year. High public and private sector debt levels and quantitative tightening will dampen inflation expectations, moderate economic growth, and weigh on long-term yields. The extraordinarily high public and private debt service costs are simply not sustainable at substantially higher rates.

The European Central Bank will eventually throttle back its stimulus. However, with Brexit negotiations underway, the ECB must be especially cautious not to unnerve Europe's investors during the tightening process. China firmed rates to protect the exchange value of the yuan and reduce the level of corporate debt without slowing growth too much. Even Japan is showing signs of altering its single-minded adherence to zero interest rate targeting. With the possibility that central banks in the US, Europe, Japan, and China will tighten monetary policy simultaneously, interest rates in 2018 have the potential to be more volatile and upwardly mobile than over the last five years.

There is no denying the new optimism spreading across the business community. Boosted by the lower US corporate tax rates, expectations for higher growth and inflation are palatable. The long-term downtrend in bond yields may have reached a plateau. But it is critical to make the distinction between the normalization (rise) of policy-driven hyperlow US interest rates and the birth of a bear market in bonds created by a major cyclical turning point in inflation expectations. The former is more likely than the latter. Without a lasting change in inflation expectations, any trend toward significantly higher yields remains a remote possibility. It is important to remember the weakened policy arsenal of central banks should a recession develop in G-7 member economies. A recession could send global yields back to historic lows.

Without a real change in inflation expectations, yields can still "normalize" without establishing a cyclical trend toward substantially higher yields. In the event of an increase in bond yields, the diversification value of bonds will improve. Higher bond yields have the potential to draw funds back to fixed income securities from dividend-paying common stocks, reversing a dynamic induced by global central bank policies. A year from now, even if long-term yields are a full percentage point higher, the global yield famine will continue. The higher yields rise, the greater the value of diversification provided by fixed income securities.

About 20% of the Short-Term Bond Fund's portfolio will mature within the next year and nearly 40% within the next two years, providing the Fund ample opportunity to reinvest as yields rise. The Fund has gradually increased credit quality over the last two years. The dollar-weighted average maturity remains slightly less than two years.

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 0.87% was less than 1% percent below the Morningstar™ category average of 1.75% at month-end November 30, 2017. Therefore, the basic annual management fee of 0.50% remained unchanged for the month of December 2017. Note that the management fee is partially waived due to the adviser's voluntary cap on total Fund expenses.

8 November 30, 2017 Annual Report

Sextant Short-Term Bond Fund

Schedule of Investments

As of November 30, 2017

Corporate Bonds – 69.7%

Coupon / Maturity

Face Amount

Market Value

Percentage of Assets

 

Consumer Discretionary

 
 

    Alibaba Holding Group

3.125% due 11/28/2021

$350,000

$355,363

3.3%

    Cintas No. 2

6.125% due 12/01/2017

270,000

270,000

2.5%

    Ford Motor Credit

3.157% due 8/4/2020

250,000

253,733

2.4%

    International Game Technology

7.50% due 06/15/2019

250,000

265,937

2.5%

    Snap-On

6.70% due 03/01/2019

350,000

368,770

3.4%

 
 

1,470,000

1,513,803

14.1%

 

Consumer Staples

 
 

    McCormick & Co.

2.70% due 08/15/2022

500,000

499,222

4.7%

 
 

500,000

499,222

4.7%

 

Energy

 
 

    Statoil

5.25% due 04/15/2019

274,000

285,516

2.7%

 
 

274,000

285,516

2.7%

 

Financials

 
 

    Berkshire Hathaway Finance

2.00% due 08/15/2018

300,000

300,451

2.8%

    Camden Property Trust

4.625% due 6/15/2021

275,000

291,801

2.7%

    Jefferies Group

8.50% due 07/15/2019

265,000

289,841

2.7%

 
 

840,000

882,093

8.2%

 

Health Care

 
 

    Abbott Laboratories

4.125% due 05/27/2020

375,000

390,884

3.7%

    AbbVie

2.50% due 05/14/2020

250,000

250,738

2.3%

    Astrazeneca

2.375% due 11/16/2020

155,000

154,821

1.4%

    Celgene

2.25% due 8/15/2021

300,000

294,444

2.8%

    Gilead Sciences

2.55% due 09/01/2020

400,000

403,673

3.8%

    Teva Pharmaceutical

3.65% due 11/10/2021

350,000

333,833

3.1%

 
 

1,830,000

1,828,393

17.1%

 

Industrials

 
 

    Emerson Electric

4.875% due 10/15/19

310,000

324,978

3.0%

    Union Pacific

7.875% due 01/15/2019

127,000

134,834

1.3%

 
 

437,000

459,812

4.3%

 

Materials

 
 

    BHP Billiton Fin USA

6.50% due 4/01/2019

315,000

333,636

3.1%

    Potash

3.25% due 12/01/2017

250,000

250,000

2.4%

    Sherwin Williams

1.35% due 12/15/2017

250,000

249,976

2.3%

 
 

815,000

833,612

7.8%

 

Continued on next page.

The accompanying notes are an integral part of these financial statements.

November 30, 2017 Annual Report 9

Sextant Short-Term Bond Fund

Schedule of Investments

As of November 30, 2017

Corporate Bonds – 69.7%

Coupon / Maturity

Face Amount

Market Value

Percentage of Assets

 

Technology

 
 

    Adobe Systems

4.75% due 02/01/2020

$379,000

$399,773

3.7%

    Oracle

5.75% due 04/15/2018

250,000

253,666

2.4%

    Xilinx

2.125% due 03/15/2019

200,000

199,496

1.9%

 
 

829,000

852,935

8.0%

 

Utilities

 
 

    LaClede Gas

2.00% due 08/15/2018

300,000

300,432

2.8%

 
 

300,000

300,432

2.8%

 

Total Corporate Bonds

 

$7,295,000

$7,455,818

69.7%

 

Government Bonds – 23.7%

Coupon / Maturity

Face Amount

Market Value

Percentage of Assets

 

United States Treasury Notes

 
 

    United States Treasury Note

2.75% due 12/31/2017

$142,000

$142,181

1.3%

    United States Treasury Note

2.625% due 01/31/2018

141,000

141,318

1.3%

    United States Treasury Note

2.25% due 07/31/2018

300,000

301,371

2.8%

    United States Treasury Note

2.75% due 02/15/2019

200,000

202,422

1.9%

    United States Treasury Note

2.00% due 09/30/2020

300,000

300,867

2.8%

    United States Treasury Note

3.625% due 02/15/2021

900,000

946,758

8.9%

    United States Treasury Note

2.50% due 08/15/2023

500,000

507,559

4.7%

 
 

2,483,000

2,542,476

23.7%

 

Total investments

(Cost = $10,087,098)

$9,778,000

9,998,294

93.4%

Other assets (net of liabilities)

   

706,360

6.6%

Total net assets

   

$10,704,654

100.0%

 

Bond Quality Diversification

(unaudited)

% of Total Net Assets

 

Rated "Aaa"

23.7%

Sextant Short-Term Bond Fund Bond Quality Diversification

Rated "Aa2"

2.8%

Rated "Aa3"

2.7%

Rated "A1"

8.5%

Rated "A2"

6.4%

Rated "A3"

20.4%

Rated "Baa1"

2.4%

Rated "Baa2"

12.2%

Rated "Baa3"

11.8%

Rated "Ba2"

2.5%

Other assets (net of liabilities)

6.6%

Credit ratings are determined by Moody's Investors Service, a Nationally Recognized Statistical Rating Organization. If Moody's does not rate a particular security, that security is categorized as not rated.

The accompanying notes are an integral part of these financial statements.

10 November 30, 2017 Annual Report

Sextant Short-Term Bond Fund

Statement of Assets and Liabilities

As of November 30, 2017

 

Assets

    Investments in securities, at value
    (Cost $10,087,098)

$9,998,294

    Cash

608,344

    Interest receivable

99,491

    Prepaid expenses

6,104

    Receivable for Fund shares sold

509

        Total assets

10,712,742

Liabilities

    Accrued audit expenses

4,181

    Accrued retirement plan custodial fees

3,366

    Accrued Chief Compliance Officer expenses

413

    Accrued advisory fees

99

    Distributions payable

29

        Total liabilities

8,088

Net Assets

$10,704,654

 

Analysis of net assets

    Paid-in capital (unlimited shares authorized, without par value)

$10,787,670

    Undistributed net investment income

1,165

    Accumulated net realized gain

4,623

    Unrealized net depreciation on investments

(88,804)

Net assets applicable to Fund shares outstanding

$10,704,654

 

Fund shares outstanding

2,140,641

 

Net asset value, offering, and redemption price per share

$5.00

 

Statement of Operations

As of November 30, 2017

 

Investment income

    Interest income

$206,150

        Total investment income

206,150

Expenses

    Investment adviser fees

53,174

    Filing and registration fees

17,387

    Distribution fees

13,165

    Audit fees

7,264

    Printing and postage

4,349

    Retirement plan custodial fees

3,545

    Chief Compliance Officer expenses

2,666

    Trustee fees

1,982

    Other expenses

1,499

    Legal fees

1,484

    Custodian fees

497

        Total gross expenses

107,012

    Less adviser fees waived

(34,259)

    Less custodian fee credits

(497)

        Net expenses

72,256

Net investment income

$133,894

 
 

Net realized gain from investments

$4,623

Net increase in unrealized depreciation on investments

(55,176)

Net loss on investments

$(50,553)

 

Net increase in net assets resulting from operations

$83,341

The accompanying notes are an integral part of these financial statements.

November 30, 2017 Annual Report 11

Sextant Short-Term Bond Fund

Statements of Changes in Net Assets

Year ended Nov. 30, 2017

Year ended Nov. 30, 2016

Increase in net assets from operations

From operations

    Net investment income

$133,894

$84,145

    Net realized gain on investments

4,623

6,043

    Net increase in unrealized depreciation

(55,176)

(14,623)

            Net increase in net assets

83,341

75,565

Distributions to shareowners from

    Net investment income

(133,903)

(84,169)

            Total distributions

(133,903)

(84,169)

Capital share transactions

    Proceeds from sales of shares

1,652,337

4,019,356

    Value of shares issued in reinvestment of dividends

133,340

83,674

    Cost of shares redeemed

(1,356,859)

(1,256,339)

            Total capital share transactions

428,818

2,846,691

Total increase in net assets

378,256

2,838,087

 

Net assets

Beginning of year

10,326,398

7,488,311

End of year

10,704,654

10,326,398

 

Undistributed net investment income

$1,165

$1,174

 

Shares of the Fund sold and redeemed

    Number of shares sold

328,488

796,015

    Number of shares issued in reinvestment of dividends

26,511

16,602

    Number of shares redeemed

(269,774)

(249,169)

Net increase in number of shares outstanding

85,225

563,448

 

Financial Highlights

For year ended November 30,

Selected data per share of outstanding capital stock throughout each year:

2017

2016

2015

2014

2013

Net asset value at beginning of year

$5.02

$5.02

$5.04

$5.05

$5.07

Income from investment operations

    Net investment income

0.06

0.05

0.05

0.06

0.06

    Net gains (losses) on securities (both realized and unrealized)

(0.02)

0.00A

(0.02)

(0.01)

(0.02)

Total from investment operations

0.04

0.05

0.03

0.05

0.04

Less distributions

    Dividends (from net investment income)

(0.06)

(0.05)

(0.05)

(0.06)

(0.06)

Total distributions

(0.06)

(0.05)

(0.05)

(0.06)

(0.06)

 

Net asset value at end of year

$5.00

$5.02

$5.02

$5.04

$5.05

 

Total return

0.87%

1.06%

0.67%

0.94%

0.82%

 

Ratios / supplemental data

Net assets ($000), end of year

$10,705

$10,326

$7,488

$7,674

$7,307

Ratio of expenses to average net assets

    Before fee waivers and custodian fee credits

1.01%

1.15%

1.21%

1.29%

1.14%

    After fee waivers

0.68%

0.76%

0.76%

0.76%

0.76%

    After fee waivers and custodian fee credits

0.68%

0.75%

0.75%

0.75%

0.75%

Ratio of net investment income after fee waivers and custodian fee credits to average net assets

1.26%

1.05%

1.06%

1.14%

1.20%

Portfolio turnover rate

31%

11%

13%

14%

50%

A Amount is less than $0.01

The accompanying notes are an integral part of these financial statements.

12 November 30, 2017 Annual Report

Sextant Bond Income Fund

Performance Summary (unaudited)

Average Annual Total Returns as of November 30, 2017

 

1 Year

5 Year

10 Year

Expense Ratio¹

Sextant Bond Income Fund

4.51%

2.08%

4.06%

0.76%

Citi US Broad Investment-Grade Bond Index

3.24%

1.98%

4.04%

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, 2007, to an identical amount invested in the Citi 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 $14,892 versus $14,862 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 June 2, 2017, and incorporates results for the fiscal year ended November 30, 2016, 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 Bond (5.375% due 02/15/2031)

5.60%

Municipal Bonds

19.9%

Sextant Bond Income Fund Portfolio Diversification

Apple (4.50% due 02/23/2036)

4.20%

Government Bonds

14.5%

Intel (4.00% due 12/15/2032)

4.10%

Health Care

12.6%

Microsoft (4.20% due 11/03/2035)

4.00%

Technology

12.3%

Cincinnati Financial (6.92% due 05/15/2028)

3.40%

Financials

8.7%

United States Treasury Bond (6.125% due 08/15/2029)

3.20%

Energy

7.3%

Statoil ASA (Norsk Hydro Yankee) (7.15% due 01/15/2029)

3.20%

Utilities

6.9%

Puget Sound Energy (7.02% due 12/01/2027)

3.20%

Industrials

4.4%

Becton Dickinson (6.70% due 08/01/2028)

3.10%

Consumer Staples

2.8%

Merck & Co. (Schering) (6.50% due 12/01/2033)

3.00%

Consumer Discretionary

2.6%

 

Materials

0.6%

Other assets (net of liabilities)

7.4%

 

November 30, 2017 Annual Report 13

Sextant Bond Income Fund

Discussion of Fund Performance (unaudited)

(photo omitted)

Fiscal Year 2017

For the fiscal year ended November 30, 2017, the Sextant Bond Income Fund returned 4.51%, which was lower than the 9.03% average return of its Morningstar category peer group. For the five years ended November 30, the Fund provided a 2.08% annualized total return versus 4.15% for its Morningstar category peer group. During the year, the Fund's share price rose from $5.07 to $5.14, and net investment income rose from 2.85% to 3.05%. Fund shares outstanding declined -3.6%. Fund assets declined -2.1%. The Fund's 30-day yield was 2.39%, and its unsubsidized 30-day yield was 2.28%. Reflecting Saturna Capital's voluntary subsidies to cap operating expenses, the Fund's effective expense ratio declined to 0.78% from 0.88%.

Factors Affecting Past Performance

The rising federal funds rate (from 0.75% to 1.25%) and a shrinking Federal Reserve balance sheet (quantitative tightening) put downward pressure on inflation expectations and produced substantially flatter fixed income yield curves. For example, five-year US Treasury notes rose 0.31% in yield while the 30-year US Treasury yield declined -0.19%. Federal Reserve Board vacancies slowed major policy revisions. The resulting glacial pace of US monetary policy continued to depress volatility and option adjusted spreads. Improving earnings supported a further narrowing of credit spreads, pushing them near record lows.

Looking Forward

The US Federal Reserve will cautiously move the federal funds rate higher. The US Treasury will issue a record amount of short-term bills and notes to finance the expanding federal deficit. These forces will continue to flatten the yield curve. The fed funds rate can increase to about 2.75% before the yield curve inverts. At that point, a flat yield curve will give the Fed good reason to pause, given the negative effects of an inverted curve can take years to manifest. Assuming the yield curve keeps its current shape, with fed funds rate at 2.75%, the 30-yr bond yield would be about 4.20%.

The invigorating growth effects of the new US tax law will have to overcome the depressing effects of massive debt-funded deficits, the higher overall cost of leverage, weak demographics, and tighter monetary policy. New limits on mortgage and home equity loan interest deductions may temper US home prices in an overheated housing market. Limits on the deductibility of interest paid by corporations will raise the cost of corporate mergers, debt-funded equity buybacks, and leverage in general. The higher after-tax cost of debt may curb business activity and inflation.

Consumers have drawn down their savings rate and increased borrowing, limiting their ability to drive the economy forward next year. High public and private sector debt levels and quantitative tightening will dampen inflation expectations, moderate economic growth, and weigh on long-term yields. The extraordinarily high public and private debt service costs are simply not sustainable at substantially higher rates.

The European Central Bank will eventually throttle back its stimulus. However, with Brexit negotiations underway, the ECB must be especially cautious not to unnerve Europe's investors during the tightening process. China firmed rates to protect the exchange value of the yuan and reduce the level of corporate debt without slowing growth too much. Even Japan is showing signs of altering its single-minded adherence to zero interest rate targeting. With the possibility that central banks in the US, Europe, Japan, and China will tighten monetary policy simultaneously, interest rates in 2018 have the potential to be more volatile and upwardly mobile than over the last five years.

There is no denying the new optimism spreading across the business community. Boosted by the lower US corporate tax rates, expectations for higher growth and inflation are palatable. The long-term downtrend in bond yields may have reached a plateau. But it is critical to make the distinction between the normalization (rise) of policy-driven, hyperlow US interest rates and the birth of a bear market in bonds created by a major cyclical turning point in inflation expectations. The former is more likely than the latter. Without a lasting change in inflation expectations, any trend toward significantly higher yields remains a remote possibility. It is important to remember the weakened policy arsenal of central banks should a recession develop in G-7 member economies. A recession could send global yields back to historic lows.

Without a real change in inflation expectations, yields can still "normalize" without establishing a cyclical trend toward substantially higher yields. In the event of an increase in bond yields, the diversification value of bonds will improve. Higher bond yields have the potential to draw funds back to fixed income securities from dividend-paying common stocks, reversing a dynamic induced by global central bank policies. A year from now, even if long-term yields are a full percentage point higher, the global yield famine will continue. The higher yields rise, the greater the value of diversification provided by fixed income securities.

The Bond Income Fund has gradually increased credit quality over the last two years. The Fund will maintain a dollar-weighted average maturity close to its policy minimum of 10 years.

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 4.51% was more than 2% below the Morningstar™ category average of 9.03% at month-end November 30, 2017. Therefore, the basic annual management fee of 0.50% was decreased by 0.20% to 0.30% for the month of December 2017. Note that the management fee is partially waived due to the adviser's voluntary cap on total Fund expenses.

14 November 30, 2017 Annual Report

Sextant Bond Income Fund

Schedule of Investments

As of November 30, 2017

Corporate Bonds – 58.2%

Coupon / Maturity

Face Amount

Market Value

Percentage of Assets

 

Consumer Discretionary

 
 

    VF

6.00% due 10/15/2033

$200,000

$244,411

2.6%

 
 

200,000

244,411

2.6%

 

Consumer Staples

 
 

    Unilever Capital

5.90% due 11/15/2032

200,000

260,488

2.8%

 
 

200,000

260,488

2.8%

 

Energy

 
 

    Baker Hughes

6.875% due 01/15/2029

100,000

123,082

1.3%

    Canadian Natural Resources

6.45% due 06/30/2033

225,000

271,329

2.8%

    Statoil ASA (Norsk Hydro Yankee)

7.15% due 01/15/2029

224,000

300,508

3.2%

 
 

549,000

694,919

7.3%

 

Financials

 
 

    Affiliated Managers Group

3.50% due 08/01/2025

250,000

251,040

2.6%

    Cincinnati Financial

6.92% due 05/15/2028

250,000

323,127

3.4%

    UBS AG Stamford CT

7.75% due 09/01/2026

200,000

254,345

2.7%

 
 

700,000

828,512

8.7%

 

Health Care

 
 

    Becton Dickinson

6.70% due 08/01/2028

240,000

290,327

3.1%

    Johnson and Johnson

4.95% due 05/15/2033

226,000

272,246

2.9%

    Merck & Co. (Schering)

6.50% due 12/01/2033

215,000

287,951

3.0%

    Pharmacia

6.50% due 12/01/2018

100,000

104,376

1.1%

    Teva Pharmaceutical

3.65% due 11/10/2021

250,000

238,452

2.5%

 
 

1,031,000

1,193,352

12.6%

 

Industrials

 
 

    Boeing

6.125% due 02/15/2033

215,000

284,326

3.0%

    Deere & Co.

8.10% due 05/15/2030

95,000

136,997

1.4%

 
 

310,000

421,323

4.4%

 

Materials

 
 

    Air Products & Chemicals

8.75% due 04/15/2021

50,000

58,501

0.6%

 
 

50,000

58,501

0.6%

 

Continued on next page.

The accompanying notes are an integral part of these financial statements.

November 30, 2017 Annual Report 15

Sextant Bond Income Fund

Schedule of Investments

As of November 30, 2017

Corporate Bonds – 58.2%

Coupon / Maturity

Face Amount

Market Value

Percentage of Assets

 

Technology

 
 

    Apple

4.50% due 02/23/2036

$350,000

$396,899

4.2%

    Intel

4.00% due 12/15/2032

360,000

385,811

4.1%

    Microsoft

4.20% due 11/03/2035

350,000

384,375

4.0%

 
 

1,060,000

1,167,085

12.3%

 

Utilities

 
 

    Entergy Louisiana

5.40% due 11/01/2024

200,000

229,560

2.4%

    Florida Power & Light

5.95% due 10/01/2033

100,000

127,386

1.3%

    Puget Sound Energy

7.02% due 12/01/2027

237,000

299,888

3.2%

 
 

537,000

656,834

6.9%

 

Total Corporate Bonds

 

$4,637,000

$5,525,425

58.2%

 

Government Bonds – 14.5%

Coupon / Maturity

Face Amount

Market Value

Percentage of Assets

 

Foreign Government Bonds

 
 

    Quebec Canada Yankee

7.125% due 02/09/2024

$175,000

$216,497

2.3%

 
 

175,000

216,497

2.3%

 

United States Treasury Bonds

 
 

    United States Treasury Bond

5.25% due 02/15/2029

170,000

216,438

2.3%

    United States Treasury Bond

6.125% due 08/15/2029

225,000

308,689

3.2%

    United States Treasury Bond

6.25% due 05/15/2030

75,000

105,264

1.1%

    United States Treasury Bond

5.375% due 02/15/2031

400,000

530,094

5.6%

 
 

870,000

1,160,485

12.2%

 

Total Government Bonds

 

$1,045,000

$1,376,982

14.5%

 

Municipal Bonds – 19.9%

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

$265,890

2.8%

    Dell Rapids SCD 49-3

6.257% due 01/15/2030

200,000

217,018

2.3%

    Dupage Co. IL SCD #502

5.50% due 01/01/2026

150,000

154,273

1.6%

    Idaho Hsg. & Fin. GARVEE BAB A-2

5.379% due 07/15/2020

180,000

189,761

2.0%

    Milan Co. MI Area Schools

6.45% due 05/01/2024

150,000

158,167

1.7%

    San Marcos Texas ULTD GO BAB

6.028% due 08/15/2030

200,000

217,796

2.3%

    Springville UT GO BAB

5.30% due 05/01/2031

240,000

247,673

2.6%

 
 

1,370,000

1,450,578

15.3%

 

Continued on next page.

The accompanying notes are an integral part of these financial statements.

16 November 30, 2017 Annual Report

Sextant Bond Income Fund

Schedule of Investments

As of November 30, 2017

Municipal Bonds – 19.9%

Coupon / Maturity

Face Amount

Market Value

Percentage of Assets

   

Revenue

 
 

    Johnson Co. KS Bldg. Ls./Pr. REV. BAB

4.60% due 09/01/2026

$250,000

$259,988

2.7%

    Oklahoma City Fin. Auth. Ed. Lease Rev.

6.60% due 09/01/2022

160,000

182,850

1.9%

 
 

410,000

442,838

4.6%

 

Total Municipal Bonds

 

$1,780,000

$1,893,416

19.9%

         

Total investments

(Cost = $8,497,538)

$7,462,000

$8,795,823

92.6%

Other assets (net of liabilities)

   

700,008

7.4%

Total net assets

   

$9,495,831

100.0%

 

Bond Quality Diversification

(unaudited)

% of Total Net Assets

 

Rated "Aaa"

21.8%

Sextant Bond Income Fund Bond Quality Diversification

Rated "Aa1"

7.5%

Rated "Aa2"

6.4%

Rated "Aa3"

3.2%

Rated "A1"

11.0%

Rated "A2"

12.6%

Rated "A3"

9.9%

Rated "Baa2"

5.8%

Rated "Baa3"

5.3%

Not rated

9.1%

Other assets (net of liabilities)

7.4%

Credit ratings are determined by Moody's Investors Service, a Nationally Recognized Statistical Rating Organization. If Moody's does not rate a particular security, that security is categorized as not rated.

The accompanying notes are an integral part of these financial statements.

November 30, 2017 Annual Report 17

Sextant Bond Income Fund

Statement of Assets and Liabilities

As of November 30, 2017

 

Assets

    Investments in securities, at value
    (Cost $8,497,538)

$8,795,823

    Cash

597,405

    Interest receivable

107,020

    Prepaid expenses

5,893

    Receivable for Fund shares sold

4,130

    Insurance reserve premium

400

        Total assets

9,510,671

Liabilities

    Payable for Fund shares redeemed

6,005

    Accrued advisory fees

3,042

    Accrued audit expenses

2,853

    Accrued retirement plan custodial fees

2,529

    Accrued Chief Compliance Officer expenses

316

    Distributions payable

95

        Total liabilities

14,840

Net assets

$9,495,831

 

Analysis of net assets

    Paid-in capital (unlimited shares authorized, without par value)

$9,243,689

    Undistributed net investment income

24

    Accumulated net realized loss

(46,167)

    Unrealized net appreciation on investments

298,285

Net assets applicable to Fund shares outstanding

$9,495,831

 

Fund shares outstanding

1,846,281

 

Net asset value, offering, and redemption price per share

$5.14

 

Statement of Assets and Liabilities

As of November 30, 2017

 

Investment income

    Interest income

$356,823

        Total investment income

356,823

Expenses

    Investment adviser fees

41,226

    Filing and registration fees

16,745

    Distribution fees

11,601

    Audit fees

7,994

    Printing and postage

3,535

    Retirement plan custodial fees

2,685

    Chief Compliance Officer expenses

2,642

    Trustee fees

1,654

    Legal fees

1,527

    Other expenses

1,499

    Custodian fees

445

        Total gross expenses

91,553

    Less adviser fees waived

(18,414)

    Less custodian fee credits

(445)

        Net expenses

72,694

Net investment income

$284,129

 
 

Net realized loss from investments

$(18,437)

Net increase in unrealized appreciation on investments

163,741

Net gain on investments

$145,304

 

Net increase in net assets resulting from operations

$429,433

The accompanying notes are an integral part of these financial statements.

18 November 30, 2017 Annual Report

Sextant Bond Income Fund

Statements of Changes in Net Assets

Year ended Nov. 30, 2017

Year ended Nov. 30, 2016

Increase (decrease) in net assets from operations

From operations

    Net investment income

$284,129

$256,447

    Net realized loss on investments

(18,437)

(27,730)

    Net increase (decrease) in unrealized appreciation

163,741

(60,674)

            Net increase in net assets

429,433

168,043

Distributions to shareowners from

    Net investment income

(284,105)

(256,646)

            Total distributions

(284,105)

(256,646)

Capital share transactions

    Proceeds from sales of shares

1,428,332

2,893,733

    Value of shares issued in reinvestment of dividends

283,310

256,111

    Cost of shares redeemed

(2,064,477)

(1,355,942)

            Total capital share transactions

(352,835)

1,793,902

Total increase (decrease) in net assets

(207,507)

1,705,299

 

Net assets

Beginning of year

9,703,338

7,998,039

End of year

9,495,831

9,703,338

 

Undistributed net investment income

$24

$-

 

Shares of the Fund sold and redeemed

    Number of shares sold

279,298

549,472

    Number of shares issued in reinvestment of dividends

55,166

49,249

    Number of shares redeemed

(403,662)

(260,805)

Net increase (decrease) in number of shares outstanding

(69,198)

337,916

 

Financial Highlights

For year ended November 30,

Selected data per share of outstanding capital stock throughout each year:

2017

2016

2015

2014

2013

Net asset value at beginning of year

$5.07

$5.07

$5.26

$5.05

$5.41

Income from investment operations

    Net investment income

0.16

0.15

0.17

0.16

0.17

    Net gains (losses) on securities (both realized and unrealized)

0.07

0.00A

(0.19)

0.21

(0.36)

Total from investment operations

0.23

0.15

(0.02)

0.37

(0.19)

Less distributions

    Dividends (from net investment income)

(0.16)

(0.15)

(0.17)

(0.16)

(0.17)

Total distributions

(0.16)

(0.15)

(0.17)

(0.16)

(0.17)

 

Net asset value at end of year

$5.14

$5.07

$5.07

$5.26

$5.05

 

Total return

4.51%

2.91%

(0.47)%

7.40%

(3.59)%

 

Ratios / supplemental data

Net assets ($000), end of year

$9,496

$9,703

$7,998

$7,967

$7,117

Ratio of expenses to average net assets

    Before fee waivers and custodian fee credits

0.98%

1.01%

1.03%

1.27%

1.12%

    After fee waivers

0.78%

0.89%

0.90%

0.91%

0.90%

    After fee waivers and custodian fee credits

0.78%

0.88%

0.90%

0.90%

0.89%

Ratio of net investment income after fee waivers and custodian fee credits to average net assets

3.05%

2.85%

3.21%

3.07%

3.23%

Portfolio turnover rate

4%

11%

4%

13%

8%

A Amount is less than $0.01

The accompanying notes are an integral part of these financial statements.

November 30, 2017 Annual Report 19

Sextant Core Fund

Performance Summary (unaudited)

Average Annual Total Returns as of November 30, 2017

 

1 Year

5 Year

10 Year

Expense Ratio¹

Sextant Core Fund

15.15%

6.16%

3.99%

0.80%

Dow Jones Moderate US Portfolio Index

14.97%

8.18%

5.58%

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, 2007, 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 $14,791 versus $17,234 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 June 2, 2017, and incorporates results for the fiscal year ended November 30, 2016. 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

Communications

1.3%

3.9%

Consumer Discretionary

4.6%

2.8%

Consumer Staples

5.4%

n/a

Energy

3.6%

n/a

Financials

9.5%

5.2%

Government Bonds

n/a

12.6%

Health Care

6.0%

3.9%

Industrials

4.9%

1.7%

Materials

7.2%

0.8%

Municipal Bonds

n/a

4.3%

Technology

12.3%

2.4%

Utilities

1.5%

n/a

Total

56.3%

37.6%

 

Top 10 Holdings

% of Total Net Assets

US Treasury Note (1.50% 06/15/2020)

5.0%

US Treasury Note (2.75% 11/15/2023)

2.7%

Gilead Sciences (3.70% 04/01/2024)

2.0%

US Treasury Note (2.00% 11/30/2022)

1.9%

3M

1.8%

PNC Financial Services Group

1.7%

Legrand France SA Yankee (8.5% 2/15/2025)

1.7%

Qualcomm (3.25% 05/20/2027)

1.6%

Toronto-Dominion Bank

1.6%

US Treasury Note (2.125% 08/31/2020)

1.6%

 

Asset Allocation

% of Total Net Assets

 

Equity Securities

56.3%

Sextant Core Fund Asset Allocation

Fixed Income Securities

37.6%

Other assets (net of liabilities)

6.1%

 

 

20 November 30, 2017 Annual Report

Sextant Core Fund

Discussion of Fund Performance (unaudited)

(photos omitted)

Fiscal Year 2017

The Sextant Core Fund reported positive returns for each month of the fiscal year. During this period, the Fund outperformed its benchmark eight out of 12 months as the equity markets rallied and the credit markets declined. The fiscal year ended with the Fund producing a one-year return of 15.15%, outperforming the benchmark Dow Jones Moderate Portfolio Index return of 14.97% for the same period.

Reflecting Saturna Capital's voluntary subsidies to cap operating expenses, the Fund's effective expense ratio declined to 0.83% from 1.04%.

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 61.5%. During the year, the Fund increased its number of equity positions, reduced its average position size, and increased its average market capitalization. The largest sector allocation, Technology, contributed the most to portfolio performance as that sector led the market. Semiconductor positions, which started the year with attractive valuations, were notable contributors. Consumer Staples also contributed positively as activist shareholders in that sector called attention to untapped earnings potential. Positions in Energy initially detracted from annual performance but rebounded and contributed later in the year as energy prices rallied.

Fixed Income

The rising federal funds rate and shrinking Federal Reserve balance sheet (quantitative tightening) put upward pressure on short-term rates and downward pressure on inflation expectations, creating substantially flatter fixed income yield curves. This produced barely positive returns for short fixed income paper and solid single-digit returns for longer paper.

The invigorating effects of the 2017 Tax Cuts and Jobs Act will have to overcome the dampening effects of greater debt-funded deficits, the higher overall cost of leverage, weak demographics, and tighter monetary policy.

With the possibility that central banks in the US, Europe, Japan, and China will tighten monetary policy simultaneously, interest rates in 2018 have the potential to be more volatile and upwardly mobile than over the last five years.

The long-term downtrend in bond yields may have reached a plateau. But it is critical to make the distinction between the normalization (rise) of policy-driven hyperlow US interest rates and the birth of a bear market for bonds created by a major cyclical turning point in inflation expectations. It is important to remember the weakened policy arsenal of central banks should a recession develop in a G-7 member economies. A recession could send global yields back to historic lows. The higher yields rise, the greater is the value of diversification provided by fixed income securities.

Looking Forward

With regard to the equity portfolio of the Fund, we expect to modestly increase the number of positions and emphasize the Fund's value and income characteristics. In late summer of 2017, the Fund began to reduce exposure to the Technology and Consumer Staples sectors as valuations became less attractive, while reallocating that capital to positions in Financial Services and Industrials. The Fund's fiscal 2017 turnover of 34% will likely be replicated in 2018 as this plan is enacted.

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 15.15% was more than 1% but less than 2% above the Morningstar™ category average of 13.56% as of November 30, 2017. Therefore, the basic annual management fee of 0.50% was increased by 0.10% to 0.60% for the month of December 2017.

Bond Quality Diversification

(unaudited)

% of Total Net Assets

 

Rated "Aaa"

14.3%

Sextant Core Fund Bond Quality Diversification

Credit ratings are determined by Moody's Investors Service, a Nationally Recognized Statistical Rating Organization. If Moody's does not rate a particular security, that security is categorized as not rated.

Rated "Aa1"

1.7%

Rated "Aa2"

1.6%

Rated "Aa3"

0.9%

Rated "A1"

3.2%

Rated "A2"

2.0%

Rated "A3"

5.3%

Rated "Baa1"

1.6%

Rated "Baa2"

1.9%

Rated "Baa3"

1.6%

Rated "Ba3"

1.2%

Not rated

2.3%

Equity

56.3%

Other assets (net of liabilities)

6.1%

 

November 30, 2017 Annual Report 21

Sextant Core Fund

Schedule of Investments

As of November 30, 2017

Common Stocks – 56.3%

Number of Shares

Cost

Market Value

Country¹

Percentage of Assets

 

Communications

 
 

Internet Media

    Alphabet, Class A²

167

$130,853

$173,040

United States

1.3%

 
 

130,853

173,040

 

1.3%

 

Consumer Discretionary

 
 

Airlines

    Delta Air Lines

1,870

77,061

98,960

United States

0.8%

 

Apparel, Footwear & Accessory Design

    VF

2,300

125,359

167,808

United States

1.3%

 

Home & Office Product Wholesalers

    Fastenal

1,300

59,366

68,107

United States

0.5%

 

Home Products Stores

    Lowe's

1,350

74,017

112,550

United States

0.8%

 

Specialty Apparel Stores

    Ross Stores

1,990

130,074

151,300

United States

1.2%

 
 

465,877

598,725

 

4.6%

 

Consumer Staples

 
 

Agricultural Producers

    Ingredion

500

60,151

69,240

United States

0.6%

 

Beverages

    PepsiCo

1,250

90,758

145,650

United States

1.1%

 

Household Products

    Procter & Gamble

2,000

151,282

179,980

United States

1.4%

    Unilever ADR

1,850

58,335

104,488

United Kingdom

0.8%

 

209,617

284,468

 

2.2%

 

Packaged Food

    Nestle ADR

2,300

169,044

196,443

Switzerland

1.5%

 
 

529,570

695,801

 

5.4%

 

Energy

 
 

Exploration & Production

    CNOOC ADR

640

80,876

87,578

China

0.7%

    ConocoPhillips

2,240

114,404

113,971

United States

0.9%

 

195,280

201,549

 

1.6%

 

Integrated Oils

    Statoil ADR

6,500

113,335

130,520

Norway

1.0%

    Total ADR

2,332

125,487

131,875

France

1.0%

 

238,822

262,395

 

2.0%

 
 

434,102

463,944

 

3.6%

 

Continued on next page.

The accompanying notes are an integral part of these financial statements.

22 November 30, 2017 Annual Report

Sextant Core Fund

Schedule of Investments

As of November 30, 2017

Common Stocks – 56.3%

Number of Shares

Cost

Market Value

Country¹

Percentage of Assets

 

Financials

 
 

Banks

    Mitsubishi UFJ Financial ADR

21,450

$137,152

$152,939

Japan

1.2%

    PNC Bank

1,590

115,896

223,490

United States

1.7%

    Toronto-Dominion Bank

3,715

150,876

211,532

Canada

1.6%

 

403,924

587,961

 

4.5%

 

Consumer Finance

    Ally Financial

6,600

134,777

177,276

United States

1.4%

 

Diversified Banks

    Citigroup

470

34,728

35,485

United States

0.3%

    JP Morgan Chase

1,750

153,563

182,910

United States

1.4%

 

188,291

218,395

 

1.7%

 

Life Insurance

    MetLife

640

34,877

34,355

United States

0.3%

    Prudential Financial

320

35,705

37,069

United States

0.3%

 

70,582

71,424

 

0.6%

P&C Insurance

    Chubb

1,130

151,600

171,884

Switzerland

1.3%

 
 

949,174

1,226,940

 

9.5%

 

Health Care

 
 

Biotech

    Amgen

970

155,052

170,390

United States

1.3%

 

Large Pharma

    Johnson & Johnson

1,200

91,914

167,196

United States

1.3%

    Merck & Co

400

22,392

22,108

United States

0.1%

    Novo Nordisk ADR

2,000

18,098

103,540

Denmark

0.8%

    Pfizer

4,600

147,787

166,796

United States

1.3%

 

280,191

459,640

 

3.5%

 

Life Science Equipment

    Abbott Laboratories

2,700

97,631

152,199

United States

1.2%

 
 

532,874

782,229

 

6.0%

 

Industrials

 
 

Commercial & Residential Building Equipment & Systems

    Honeywell International

1,000

51,734

155,960

United States

1.2%

 

Electrical Power Equipment

    General Electric

2,000

48,418

36,580

United States

0.3%

 

Factory Automation Equipment

    Sensata Technologies Holding²

3,300

138,635

164,835

United States

1.3%

 

Flow Control Equipment

    Parker Hannifin

850

81,846

159,367

United States

1.2%

 

Continued on next page.

The accompanying notes are an integral part of these financial statements.

November 30, 2017 Annual Report 23

Sextant Core Fund

Schedule of Investments

As of November 30, 2017

Common Stocks – 56.3%

Number of Shares

Cost

Market Value

Country¹

Percentage of Assets

 

Industrials (continued)

 
 

Rail Freight

    Canadian National Railway

1,600

$40,238

$124,768

Canada

0.9%

 
 

360,871

641,510

 

4.9%

 

Materials

 
 

Agricultural Chemicals

    Monsanto

1,050

123,646

124,257

United States

1.0%

 

Basic & Diversified Chemicals

    Praxair

1,000

79,815

153,920

United States

1.2%

 

Containers & Packaging

    3M

975

83,159

237,062

United States

1.8%

 

Non-Wood Building Materials

    Carlisle

1,200

127,355

137,964

United States

1.1%

 

Specialty Chemicals

    PPG Industries

1,000

107,915

116,850

United States

0.9%

    RPM International

3,000

90,470

158,910

United States

1.2%

 

198,385

275,760

 

2.1%

 
 

612,360

928,963

 

7.2%

 

Technology

 
 

Application Software

    SAP ADR

1,500

125,571

170,025

Germany

1.3%

    Tencent Holdings ADR

2,100

67,036

107,468

China

0.8%

 

192,607

277,493

 

2.1%

 

Communications Equipment

    Apple

1,000

94,574

171,850

United States

1.3%

 

Computer Hardware & Storage

    HP

8,000

118,989

171,600

United States

1.3%

 

Infrastructure Software

    CA

5,100

160,585

168,657

United States

1.3%

    Oracle

2,000

74,000

98,120

United States

0.8%

 

234,585

266,777

 

2.1%

 

Semiconductor Devices

    Infineon Technologies ADR

5,275

99,909

146,038

Germany

1.1%

    Intel

3,100

109,565

139,004

United States

1.1%

    NXP Semiconductors²

900

89,118

102,051

Netherlands

0.8%

    Qualcomm

1,000

51,858

66,340

United States

0.5%

    Xilinx

1,700

68,620

118,167

United States

0.9%

 

419,070

571,600

 

4.4%

 

Semiconductor Manufacturing

    Taiwan Semiconductor ADR

3,500

37,159

$138,600

Taiwan

1.1%

 
 

1,096,984

1,597,920

 

12.3%

 

Continued on next page.

The accompanying notes are an integral part of these financial statements.

24 November 30, 2017 Annual Report

Sextant Core Fund

Schedule of Investments

As of November 30, 2017

Common Stocks – 56.3%

Number of Shares

Cost

Market Value

Country¹

Percentage of Assets

 

Utilities

 
 

Integrated Utilities

    NextEra Energy

1,250

$90,644

$197,550

United States

1.5%

 
 

90,644

197,550

 

1.5%

 

Total Common Stocks

 

$5,203,309

$7,306,622

 

56.3%

 

Corporate Bonds – 20.7%

Coupon / Maturity

Face Amount

Market Value

Percentage of Assets

 

Communications

 
 

    America Movil

5.00% due 03/30/2020

$100,000

$105,705

0.8%

    Bellsouth Capital Funding

7.875% due 02/15/2030

150,000

193,115

1.5%

    Vodafone

4.625% due 07/15/2018

200,000

203,281

1.6%

 
 

450,000

502,101

3.9%

 

Consumer Discretionary

 
 

    ADT

4.125% due 06/15/2023

150,000

151,593

1.2%

    Stanford University

4.013% due 05/01/2042

100,000

108,498

0.8%

    Walmart

1.95% due 12/15/2018

100,000

100,210

0.8%

 
 

350,000

360,301

2.8%

 

Financials

 
 

    Blackstone Holdings³

5.875% due 03/15/2021

100,000

110,004

0.8%

    General Electric Capital

5.35% due 04/15/2022

101,000

108,692

0.8%

    HSBC Holdings

4.25% due 03/14/2024

150,000

156,016

1.2%

    Jefferies Group

5.125% due 04/13/2018

200,000

202,256

1.6%

    PartnerRe Finance

5.50% due 06/01/2020

100,000

106,668

0.8%

 
 

651,000

683,636

5.2%

 

Health Care

 
 

    Becton Dickinson

3.125% due 11/08/2021

100,000

100,691

0.8%

    Celgene

2.875% due 8/15/2020

140,000

141,368

1.1%

    Gilead Sciences

3.70% due 04/01/2024

250,000

261,789

2.0%

 
 

490,000

503,848

3.9%

 

Industrials

 
 

    Legrand France Yankee

8.50% due 2/15/2025

170,000

221,043

1.7%

 
 

170,000

221,043

1.7%

 

Materials

 
 

    Air Products & Chemicals

4.375% due 08/21/2019

$100,000

$103,731

0.8%

 
 

100,000

103,731

0.8%

 

Continued on next page.

The accompanying notes are an integral part of these financial statements.

November 30, 2017 Annual Report 25

Sextant Core Fund

Schedule of Investments

As of November 30, 2017

Corporate Bonds – 20.7%

Coupon / Maturity

Face Amount

Market Value

Percentage of Assets

 

Technology

 
 

    Cisco Systems

2.90% due 03/04/2021

$100,000

$101,749

0.8%

    Qualcomm

3.25% due 05/20/2027

220,000

211,549

1.6%

 
 

320,000

313,298

2.4%

 

Total Corporate Bonds

 

$2,531,000

$2,687,958

20.7%

 

Government Bonds – 12.6%

Coupon / Maturity

Face Amount

Market Value

Percentage of Assets

 

United States Treasury Notes

 
 

    United States Treasury Note

1.50% due 06/15/2020

650,000

644,109

5.0%

    United States Treasury Note

2.125% due 08/31/2020

204,000

205,291

1.6%

    United States Treasury Note

2.00% due 11/30/2022

250,000

248,281

1.9%

    United States Treasury Note

1.625% due 04/30/2023

106,000

102,928

0.8%

    United States Treasury Note

2.75% due 11/15/2023

350,000

360,035

2.7%

    United States Treasury Note

2.00% due 05/31/2024

80,000

78,603

0.6%

 
 

$1,640,000

$1,639,247

12.6%

 

Total Government Bonds

 

$1,640,000

$1,639,247

12.6%

 

Municipal Bonds – 4.3%

Coupon / Maturity

Face Amount

Market Value

Percentage of Assets

 

General Obligation

 
 

    City of Phoenix AZ

5.269% due 07/01/2034

$100,000

$118,283

0.9%

    Lake Washington SCD #414 WA BAB

4.906% due 12/01/2027

100,000

107,154

0.9%

    Skagit SCD #1

4.613% due 12/01/2022

100,000

106,720

0.8%

 
 

300,000

332,157

2.6%

 

Revenue

 
 

    New York City Housing Dev. Corp

2.65% due 05/01/2021

100,000

100,486

0.8%

    Tacoma WA Elec. Sys. Revenue

5.966% due 01/01/2035

100,000

121,348

0.9%

 
 

200,000

221,834

1.7%

 

Total Municipal Bonds

 

$500,000

553,991

4.3%

 

Total investments

(Cost $10,084,114)

12,187,818

93.9%

Other assets (net of liabilities)

 

791,706

6.1%

Total net assets

 

$12,979,524

100.0%

¹ Country of domicile
² Non-income producing security
³ Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in public offering registered under the Securities Act of 1933. At November 30, 2017, the net value of these securities was $110,004 representing 0.8% of net assets.

ADR: American Depositary Receipt

The accompanying notes are an integral part of these financial statements.

26 November 30, 2017 Annual Report

Sextant Core Fund

Statement of Assets and Liabilities

As of November 30, 2017

 

Assets

    Investments in securities, at value
    (Cost $10,084,114)

$12,187,818

    Cash

723,051

    Dividends and interest receivable

68,089

    Receivable for fund shares sold

9,381

    Prepaid expenses

6,473

        Total assets

12,994,812

Liabilities

    Accrued audit expenses

6,375

    Accrued advisory fees

5,292

    Accrued retirement plan custodial fees

2,640

    Accrued Chief Compliance Officer expenses

433

    Accrued other expenses

377

    Accrued trustee fees

171

        Total liabilities

15,288

Net assets

$12,979,524

 

Analysis of net assets

    Paid-in capital (unlimited shares authorized, without par value)

$10,877,315

    Undistributed net investment income

166,943

    Accumulated net realized loss

(168,492)

    Unrealized net appreciation on investments

2,103,758

Net assets applicable to Fund shares outstanding

$12,979,524

 

Fund shares outstanding

999,215

 

Net asset value, offering, and redemption price per share

$12.99

 

Statement of Operations

Year ended November 30, 2017

 

Investment income

    Dividends (net of foreign tax of $12,017)

$150,592

    Interest income

109,226

        Total investment income

259,818

Expenses

    Investment adviser fees

39,680

    Filing and registration fees

17,850

    Distribution fees

12,497

    Audit fees

7,395

    Printing and postage

4,047

    Chief Compliance Officer expenses

2,833

    Retirement plan custodial fees

2,817

    Trustee fees

1,870

    Legal fees

1,531

    Other expenses

1,412

    Custodian fees

546

        Total gross expenses

92,478

    Less custodian fee credits

(546)

        Net expenses

91,932

Net investment income

$167,886

 
 

Net realized gain from investments and foreign currency

$48,407

Net increase in unrealized appreciation on investments

1,338,467

Net gain on investments

$1,386,874

 

Net increase in net assets resulting from operations

$1,554,760

The accompanying notes are an integral part of these financial statements.

November 30, 2017 Annual Report 27

Sextant Core Fund

Statements of Changes in Net Assets

Year ended Nov. 30, 2017

Year ended Nov. 30, 2016

Increase (decrease) in net assets from operations

From operations

    Net investment income

$167,886

$132,885

    Net realized gain (loss) on investments

48,407

(218,437)

    Net increase in unrealized appreciation

1,338,467

256,306

            Net increase in net assets

1,554,760

170,754

Distributions to shareowners from

    Net investment income

(132,290)

-

            Total distributions

(132,290)

-

Capital share transactions

    Proceeds from sales of shares

4,682,485

1,152,997

    Value of shares issued in reinvestment of dividends

132,290

-

    Cost of shares redeemed

(1,820,402)

(1,196,560)

            Total capital share transactions

2,994,373

(43,563)

Total increase in net assets

4,416,843

127,191

 

Net assets

Beginning of year

8,562,681

8,435,490

End of year

12,979,524

8,562,681

 

Undistributed net investment income

$166,943

$132,290

 

Shares of the Fund sold and redeemed

    Number of shares sold

387,379

102,497

    Number of shares issued in reinvestment of dividends

11,550

-

    Number of shares redeemed

(147,603)

(104,336)

Net increase (decrease) in number of shares outstanding

251,326

(1,839)

 

Financial Highlights

For year ended November 30,

Selected data per share of outstanding capital stock throughout each year:

2017

2016

2015

2014

2013

Net asset value at beginning of year

$11.45

$11.25

$12.43

$11.78

$10.81

Income from investment operations

    Net investment income

0.16

0.18

0.18

0.21

0.20

    Net gains (losses) on securities (both realized and unrealized)

1.55

0.02

(0.72)

0.78

0.98

Total from investment operations

1.71

0.20

(0.54)

0.99

1.18

Less distributions

    Dividends (from net investment income)

(0.17)

-

(0.18)

(0.21)

(0.21)

    Distributions (from capital gains)

-

-

(0.46)

(0.13)

-

Total distributions

(0.17)

-

(0.64)

(0.34)

(0.21)

 

Net asset value at end of year

$12.99

$11.45

$11.25

$12.43

$11.78

 

Total return

15.15%

1.78%

(4.38)%

8.41%

10.96%

 

Ratios / supplemental data

Net assets ($000), end of year

$12,980

$8,563

$8,435

$8,656

$6,960

Ratio of expenses to average net assets

    Before custodian fee credits

0.84%

1.05%

1.02%

1.17%

1.01%

    After custodian fee credits

0.83%

1.04%

1.01%

1.16%

1.01%

Ratio of net investment income after custodian fee credits to average net assets

1.52%

1.52%

1.44%

1.88%

1.68%

Portfolio turnover rate

34%

39%

24%

14%

29%

 

The accompanying notes are an integral part of these financial statements.

28 November 30, 2017 Annual Report

Sextant Global High Income Fund

Performance Summary (unaudited)

Average Annual Total Returns as of November 30, 2017

 

1 Year

5 Year

10 Year

Expense Ratio¹

Sextant Global High Income Fund²

15.01%

6.16%

n/a

0.92%

S&P Global 1200 Index

24.95%

12.33%

5.43%

n/a

Growth of $10,000

Sextant Global High 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 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 $13,587 versus $15,802 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 June 2, 2017, and incorporates results for the fiscal year ended November 30, 2016, 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

Communications

3.7%

5.0%

Consumer Discretionary

2.3%

4.8%

Consumer Staples

n/a

2.2%

Energy

11.5%

1.4%

Financials

4.6%

7.3%

Foreign Government Bonds

n/a

8.9%

Health Care

2.9%

n/a

Industrials

3.6%

2.5%

Materials

6.8%

2.8%

Revenue

n/a

2.8%

Technology

6.0%

3.0%

United States Treasury Bonds

n/a

7.1%

Utilities

n/a

1.3%

Total

41.4%

49.1%

 

Top 10 Holdings

% of Total Net Assets

United States Treasury Bond (6.125% due 11/15/2027)

7.1%

Mexico Bonos Desarrollo (6.50% due 06/10/2021)

4.8%

Microchip Technology

3.7%

Itau Unibanco Holding ADR, Class A

2.9%

T-Mobile (6.50% due 01/15/2026)

2.9%

Jefferies Group (5.125% due 01/20/2023)

2.9%

BHP Billiton ADR

2.6%

Royal Dutch Shell ADR, Class A

2.6%

Statoil ADR

2.6%

Burlington Northern Santa Fe (5.05% due 03/01/2041)

2.5%

 

Asset Allocation

% of Total Net Assets

 

Equity Securities

41.4%

Sextant Global High Income Fund Asset Allocation

Fixed Income Securities

49.1%

Other assets (net of liabilities)

9.5%

 

 

November 30, 2017 Annual Report 29

Sextant Global High Income Fund

Discussion of Fund Performance (unaudited)

Fiscal Year 2017

The Sextant Global High Income Fund completed fiscal year 2017 with a total return of 15.01%. The Fund distributed $0.45 income per share during the year. The ratio of net investment income to average net assets during the fiscal year was 3.34%. The 30-day SEC yield was 3.01% at November 30.

The Fund underperformed its S&P Global 1200 equity benchmark, which returned 24.59% amid a strong rally in world stock markets, but outperformed its fixed-income benchmark, the Bloomberg-Barclays Global High Yield Corporate Bond Index, which returned 11.73%. The Fund's Morningstar World Allocation peer group slightly outperformed with a 15.12% average return.

The Fund completed its fifth full year of operations in fiscal 2017.Reflecting Saturna Capital's voluntary subsidies to cap operating expenses, the Fund's effective expense ratio declined to 0.82% from 0.90%.

Factors Affecting Past Performance

For the first year since the Fund's inception, the US stock market lagged international market returns: the MSCI World ex-US index returned 26.68% compared to the 22.84% return for the MSCI US index. The Sextant Global High Income Fund's investment policies and investment restrictions lead the Fund to have a structural bias for non-US equities, so the outperformance of non-US stocks are of benefit to the Fund relative to other global equity and fixed-income funds. Moreover, our value investing orientation has led us to favor the stocks of non-US companies, as their valuations have been considerably more attractive than those of US stocks.

Looking Forward

Equities

Global equities staged a strong rally during the fiscal year. Non-US stocks, underpinned by improving economies, performed very well. Despite this advance, non-US stocks remain attractively valued, particularly in comparison with US stocks. The coming year will mark the 10th anniversary of the Global Financial Crisis. Despite hiccups in China and Latin America, and a very protracted recovery in Europe, the global economy as a whole has not experienced another recession over the 10-year period. While this expansion has been long by historical standards, it was also quite weak, which seems to have helped prevent the types of excesses that sow seeds for the next downturn. We think the recent synchronization of economic growth across the world will be a positive for stocks for at least the next year.

Fixed Income

The demons of deflation finally appear to have been vanquished. Still, despite full employment in the US and improving labor conditions elsewhere, signs of budding inflationary pressures remain muted. However, improved economic prospects have lifted real interest rates, and US bond yields are creeping higher, a negative for long-term bonds. We expect the Fed to continue "normalizing" short-term interest rates by raising them throughout the year, but the yield curve may continue to flatten with the long-end remaining stable unless stronger signs of wage pressure or other inflationary evidence begins to emerge.

With the assumption that Jerome Powell is confirmed by the Senate to replace Federal Reserve Chair Janet Yellen, the Fed leadership change creates some uncertainty as to the policy path, particularly if inflation picks up or signs of economic weakness emerge. We would not be surprised to see the Fed adopt a more dovish attitude toward higher levels of inflation, perhaps allowing some "catch-up" after years of inflation falling below the Fed's target. We therefore think some caution is warranted and favor investments with lower inflation risk.

Foreign Currencies

Our models of the foreign currency markets suggest most remain undervalued relative to the US dollar. Latin American currencies, including the Mexican peso, remain particularly attractive, as do the Canadian dollar and Nordic currencies. We also expect the Trump administration to remain biased in favor of a weaker dollar in support of US manufacturing and export competitiveness.

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 (15.01%) was less than one percent below the Morningstar™ category average (15.12%) at month-end November 30, 2017. Therefore, the basic annual management fee of 0.50% was unchanged for the month of December 2017. 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"

7.1%

Sextant Global High Income Fund Bond Quality Diversification

Credit ratings are determined by Moody's Investors Service, a Nationally Recognized Statistical Rating Organization. If Moody's does not rate a particular security, that security is categorized as not rated.

Rated "A3"

7.3%

Rated "Baa2"

8.2%

Rated "Baa3"

5.3%

Rated "Ba1"

4.1%

Rated "Ba2"

2.5%

Rated "Ba3"

4.5%

Rated "B1"

1.4%

Rated "B3"

3.7%

Rated "Caa3"

0.5%

Not rated

4.5%

Equity

41.4%

Other assets (net of liabilities)

9.5%

 

30 November 30, 2017 Annual Report

Sextant Global High Income Fund

Schedule of Investments

As of November 30, 2017

Common Stocks – 41.4%

Number of Shares

Cost

Market Value

Country¹

Percentage of Assets

 

Communications

 
 

Telecom Carriers

    Orange ADR

10,000

$147,658

$172,300

France

1.9%

    SK Telecom ADR

6,200

82,085

170,128

South Korea

1.8%

 
 

229,743

342,428

 

3.7%

 

Consumer Discretionary

 
 

Apparel, Footwear, & Accessory Design

    VF

3,000

163,483

218,880

United States

2.3%

 
 

163,483

218,880

 

2.3%

 

Energy

 
 

Exploration & Production

    CNOOC Limited ADR

1,700

260,828

232,628

China

2.5%

    Goodrich Petroleum2

138

-

1,456

United States

0.0%3

 

260,828

234,084

 

2.5%

 

Integrated Oils

    Royal Dutch Shell ADR, Class A

3,800

241,426

243,656

Netherlands

2.6%

    Statoil ADR

12,000

218,810

240,960

Norway

2.6%

    Total ADR

3,800

202,606

214,890

France

2.3%

 

662,842

699,506

 

7.5%

 

Oil & Gas Services & Equip

    National Oilwell Varco

4,200

139,818

140,910

United States

1.5%

 
 

1,063,488

1,074,500

 

11.5%

 

Financials

 
 

Banks

    Skandinaviska Enskilda Banken, Class A

13,000

136,631

155,190

Sweden

1.7%

 

Diversified Banks

    Itau Unibanco Holding ADR, Class A

22,000

207,301

276,100

Brazil

2.9%

 
 

343,932

431,290

 

4.6%

 

Health Care

 
 

Large Pharma

    GlaxoSmithKline ADR

3,100

143,250

108,686

United Kingdom

1.2%

    Novartis ADR

1,900

110,053

163,020

Switzerland

1.7%

 
 

253,303

271,706

 

2.9%

 

Industrials

 
 

Infrastructure Construction

    CCR

30,000

174,956

145,169

Brazil

1.5%

    Hopewell Highway Infrastructure

325,000

168,010

194,269

China

2.1%

 
 

342,966

339,438

 

3.6%

 

Continued on next page.

The accompanying notes are an integral part of these financial statements.

November 30, 2017 Annual Report 31

Sextant Global High Income Fund

Schedule of Investments

As of November 30, 2017

Common Stocks – 41.4%

Number of Shares

Cost

Market Value

Country¹

Percentage of Assets

 

Materials

 
 

Agricultural Chemicals

    Potash Corp of Saskatchewan

8,000

$221,690

$157,200

Canada

1.7%

 

Base Metals

    South 32 ADR

19,000

134,773

231,895

Australia

2.5%

 

Steel Raw Material Suppliers

    BHP Billiton ADR

6,000

207,424

249,300

Australia

2.6%

 
 

563,887

638,395

 

6.8%

 

Technology

 
 

Computer Hardware & Storage

    HP

10,000

151,598

214,500

United States

2.3%

 

Semiconductor Devices

    Microchip Technology

4,000

136,113

347,960

United States

3.7%

 
   

287,711

562,460

 

6.0%

 

Total Common Stock

 

$3,248,513

$3,879,097

 

41.4%

 

Corporate Bonds – 30.3%

Coupon / Maturity

Face Amount

Market Value

Country¹

Percentage of Assets

 

Communications

 
 

    Puget Sound Energy
(3 month LIBOR plus 2.53%)4

4.01063% due 06/01/2067

$200,000

$193,000

United States

2.1%

    T-Mobile

6.50% due 01/15/2026

250,000

273,438

United States

2.9%

 
 

450,000

466,438

 

5.0%

 

Consumer Discretionary

 
 

    ADT

4.125% due 06/15/2023

150,000

151,593

United States

1.6%

    GAP

5.95% due 04/12/2021

100,000

107,977

United States

1.2%

    Rent-A-Center

6.625% due 11/15/2020

200,000

189,000

United States

2.0%

 
 

450,000

448,570

 

4.8%

 

Consumer Staples

 
 

    Grupo Bimbo

4.875% due 06/27/2044

200,000

205,418

Mexico

2.2%

 
 

200,000

205,418

 

2.2%

 

Energy

 
 

    Petrobras International Finance

6.875% due 01/20/2040

50,000

50,813

Brazil

0.9%

    Petrobras International Finance

6.75% due 01/27/2041

80,000

80,300

Brazil

0.5%

 
 

130,000

131,113

 

1.4%

 

Continued on next page.

The accompanying notes are an integral part of these financial statements.

32 November 30, 2017 Annual Report

Sextant Global High Income Fund

Schedule of Investments

As of November 30, 2017

Corporate Bonds – 30.3%

Coupon / Maturity

Face Amount

Market Value

Country¹

Percentage of Assets

 

Financials

 
 

    Canadian Imperial Bank

3.42% due 01/26/2026

CAD 250,000

$198,568

Canada

2.1%

    Jefferies Group

5.125% due 01/20/2023

$250,000

270,887

United States

2.9%

    Royal Bank of Scotland

6.125% due 12/15/2022

200,000

220,220

United Kingdom

2.3%

 
 

689,675

 

7.3%

 

Industrials

 
 

    Burlington Northern Santa Fe

5.05% due 03/01/2041

200,000

236,459

United States

2.5%

 
 

200,000

236,459

 

2.5%

 

Materials

 
 

    Allegheny Technologies

7.875% due 08/15/2023

150,000

163,500

United States

1.7%

    AngloGold Ashanti Holdings

5.375% due 04/15/2020

100,000

104,614

South Africa

1.1%

 
 

250,000

268,114

 

2.8%

 

Technology

 
 

    Hewlett Packard

4.65% due 12/09/2021

100,000

106,778

United States

1.2%

    Nokia

5.375% due 05/15/2019

165,750

171,137

Finland

1.8%

 
 

265,750

277,915

 

3.0%

 

Utilities

 
 

    Iberdrola International5

5.75% due PERP6

EUR 100,000

120,596

Spain

1.3%

 
 

120,596

 

1.3%

 

Total Corporate Bonds

 

$2,844,298

 

30.3%

 

Government Bonds – 16.0%

Coupon / Maturity

Face Amount

Market Value

Country¹

Percentage of Assets

 

Foreign Government Bonds

 
 

    Colombia Republic

8.375% due 02/15/2027

$125,000

$153,750

Colombia

1.6%

    Federal Republic of Brazil

8.50% due 01/05/2024

BRL 750,000

233,538

Brazil

2.5%

    Mexico Bonos Desarrollo

6.50% due 06/10/2021

MXN 85,000

447,160

Mexico

4.8%

 
 

834,448

 

8.9%

 

United States Treasury Bonds

 
 

    United States Treasury Bond

6.125% due 11/15/2027

500,000

663,926

United States

7.1%

 
 

$500,000

663,926

 

7.1%

 

Total Government Bonds

$1,498,374

 

16.0%

 

Continued on next page.

The accompanying notes are an integral part of these financial statements.

November 30, 2017 Annual Report 33

Sextant Global High Income Fund

Schedule of Investments

As of November 30, 2017

Municipal Bonds – 2.8%

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

$104,515

United States

1.1%

    Colony TX NFM Sales Tax Revenue

7.25% due 10/01/2033

50,000

52,375

United States

0.6%

    Colony TX NFM Sales Tax Revenue

7.625% due 10/01/2042

50,000

55,768

United States

0.6%

    Puerto Rico Aqueduct & Sewer

5.00% due 07/01/2019

85,000

51,957

Puerto Rico

0.5%

 
 

$285,000

$264,615

 

2.8%

 

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 = $7,819,353)

 

8,486,384

 

90.5%

Other assets (net of liabilities)

   

886,530

 

9.5%

Total net assets

   

$9,372,914

 

100.0%

¹ Country of domicile
² Non-income producing
³ Less than 0.05%

4 Variable rate security. The interest rate represents the rate in effect at November 30, 2017, and resets periodically based on the parenthetically disclosed reference rate and spread.

5 Iberdrola International is a fixed to float bond and the interest rate shown represents the rate in effect at November 30, 2017. The bond has a fixed rate until February 2018 when the interest rate will update to EUSA5 plus 4.810% and will reset periodically.

6 Security is perpetual in nature and has no stated maturity

ADR: American Depositary Receipt

 

Countries

(unaudited)

Sextant Global High Income Fund Geographic Diversification

Other assets (net of liabilities) 9.5%

Weightings shown are a percentage of total net assets.

The accompanying notes are an integral part of these financial statements.

34 November 30, 2017 Annual Report

Sextant Global High Income Fund

Statement of Assets and Liabilities

As of November 30, 2017

 

Assets

    Investments in securities, at value
    (Cost $7,819,353)

$8,486,384

    Cash

777,849

    Dividends and interest receivable

114,607

    Prepaid expenses

5,434

    Receivable for Fund shares sold

2,412

        Total assets

9,386,686

Liabilities

    Accrued audit expenses

4,763

    Accrued advisory fees

3,405

    Accrued retirement plan custodial fees

1,373

    Accrued printing expenses

1,323

    Accrued trustee fees

1,166

    Accrued legal expenses

712

    Accrued other expenses

580

    Accrued Chief Compliance Officer expenses

368

    Distributions payable

62

    Payable for Fund shares redeemed

20

        Total liabilities

13,772

Net assets

$9,372,914

 

Analysis of net assets

    Paid-in capital (unlimited shares authorized, without par value)

$8,643,338

    Undistributed net investment income

253,596

    Accumulated net realized loss

(191,269)

    Unrealized net appreciation on investments

667,249

Net assets applicable to Fund shares outstanding

$9,372,914

 

Fund shares outstanding

842,528

 

Net asset value, offering and redemption price per share

$11.12

 

Statement of Operations

Year ended November 30, 2017

 

Investment income

    Interest income

$236,284

    Dividend Income (net of foreign tax of $19,049)

126,015

    Miscellaneous income

1,021

        Total investment income

363,320

Expenses

    Investment adviser fees

57,798

    Filing and registration fees

18,025

    Distribution fees

10,281

    Audit fees

5,795

    Printing and postage

2,908

    Chief Compliance Officer expenses

2,314

    Retirement plan custodial fees

1,512

    Trustee fees

1,318

    Legal fees

1,134

    Other expenses

1,085

    Custodian fees

588

        Total gross expenses

102,758

    Less adviser fees waived

(30,556)

    Less custodian fee credits

(588)

        Net expenses

71,614

Net investment income

$291,706

 
 

Net realized loss from investments and foreign currency

$(213,838)

Net increase in unrealized appreciation on investments

1,114,967

Net gain on investments

$901,129

 

Net increase in net assets resulting from operations

$1,192,835

The accompanying notes are an integral part of these financial statements.

November 30, 2017 Annual Report 35

Sextant Global High Income Fund

Statements of Changes in Net Assets

Year ended Nov. 30, 2017

Year ended Nov. 30, 2016

Increase (decrease) in net assets from operations

From operations

    Net investment income

$291,706

$340,246

    Net realized gain (loss) on investments

(213,838)

84,123

    Net increase in unrealized appreciation

1,114,967

508,465

            Net increase in net assets

1,192,835

932,834

Distributions to shareowners from

    Net investment income

(333,427)

-

            Total distributions

(333,427)

-

Capital share transactions

    Proceeds from sales of shares

1,542,148

1,013,284

    Value of shares issued in reinvestment of dividends

327,024

-

    Cost of shares redeemed

(925,562)

(1,327,881)

            Total capital share transactions

943,610

(314,597)

Total increase in net assets

1,803,018

618,237

 

Net assets

Beginning of year

7,569,896

6,951,659

End of year

9,372,914

7,569,896

 

Undistributed net investment income

$253,596

$337,964

 

Shares of the Fund sold and redeemed

    Number of shares sold

146,785

110,876

    Number of shares issued in reinvestment of dividends

33,379

-

    Number of shares redeemed

(86,129)

(144,490)

Net increase (decrease) in number of shares outstanding

94,035

(33,614)

 

Financial Highlights

For year ended November 30,

Selected data per share of outstanding capital stock throughout each year:

2017

2016

2015

2014

2013

Net asset value at beginning of year

$10.11

$8.89

$10.57

$10.51

$9.90

Income from investment operations

    Net investment income

0.35

0.45

0.52

0.48

0.37

    Net gains (losses) on securities (both realized and unrealized)

1.11

0.77

(1.68)

0.07

0.63

Total from investment operations

1.46

1.22

(1.16)

0.55

1.00

Less distributions

    Dividends (from net investment income)

(0.45)

-

(0.52)

(0.49)

(0.39)

Total distributions

(0.45)

-

(0.52)

(0.49)

(0.39)

 

Net asset value at end of year

$11.12

$10.11

$8.89

$10.57

$10.51

 

Total return

15.01%

13.72%

(11.01)%

5.27%

10.06%

 

Ratios / supplemental data

Net assets ($000), end of year

$9,373

$7,570

$6,952

$7,707

$6,388

Ratio of expenses to average net assets

    Before fee waivers

1.18%

1.17%

1.06%

1.41%

1.25%

    After fee waivers

0.83%

0.91%

0.90%

0.91%

0.91%

    After fee waivers and custodian fee credits

0.82%

0.90%

0.89%

0.90%

0.90%

Ratio of net investment income after fee waivers and custodian fee credits to average net assets

3.34%

4.78%

4.87%

4.75%

3.87%

Portfolio turnover rate

8%

26%

40%

11%

23%

The accompanying notes are an integral part of these financial statements.

36 November 30, 2017 Annual Report

Sextant Growth Fund

Performance Summary (unaudited)

Average Annual Total Returns as of November 30, 2017

 

1 Year

5 Year

10 Year

Expense Ratio¹

Sextant Growth Fund Investor Shares (SSGFX)

22.64%

12.10%

6.22%

0.76%

Sextant Growth Fund Z Shares (SGZFX)²

n/a

n/a

n/a

0.51%

S&P 500 Index

22.87%

15.73%

8.29%

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, 2007, 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 $18,292 versus $22,199 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 June 2, 2017, and incorporates results for the fiscal year ended November 30, 2016. 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, and consequently have no standardized returns to report.

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

 

Apple

6.5%

Internet Media

9.0%

Sextant Growth Fund Portfolio Diversification

Alphabet, Class A

5.5%

Consumer Finance

8.0%

Adobe Systems

5.3%

Communications Equipment

7.4%

Amazon.com

4.7%

Infrastructure Software

5.6%

Microsoft

4.2%

Application Software

5.3%

Stanley Black & Decker

4.2%

Biotech

4.8%

JP Morgan Chase

3.6%

E-Commerce Discretionary

4.7%

Mastercard, Class A

3.5%

Specialty Apparel Stores

4.4%

Facebook, Class A

3.5%

Home Improvement

4.2%

Ecolab

3.3%

Home Products Stores

4.0%

 

Apparel, Footwear & Acc Design

3.8%

Medical Devices

3.8%

Diversified Banks

3.6%

Other Commercial Services

3.3%

Life Science Equipment

3.1%

Restaurants

3.1%

Mass Merchants

3.0%

Specialty Chemicals

3.0%

Other industries <3%

13.2%

Other assets (net of liabilities)

2.7%

 

November 30, 2017 Annual Report 37

Sextant Growth Fund

Discussion of Fund Performance (unaudited)

Fiscal Year 2017

For the fiscal year ended November 30, 2017, the Sextant Growth Fund Investor Shares returned 22.64%, just behind the 22.87% gain for the S&P 500. New class Z Shares, without a 12b-1 fee expense, were introduced this year and 84.6% of the Fund now benefits from this lower expense option. this popular option. The Fund lagged other growth-oriented funds, as illustrated by its Morningstar US Large Growth category peer group returning an average of 27.69% over the same period.

Factors Affecting Past Performance

Weakness versus the category can be traced to insufficient Technology sector exposure, particularly within the semiconductor industry where chipmakers had a banner 2017. That said, stock selection within the sector was good. Adobe was the standout performer, followed by Facebook, Apple, Microsoft, and Alphabet (Google). Arguably, Amazon, which also had an excellent year, should be included in that group as well, rather than in Retail. Mastercard, which straddles Technology, Retail, and Finance, had another strong year. Smartphones have already displaced cameras, MP3 players, alarm clocks, and other gadgets. The next thing to be displaced will likely be your wallet, and cash will continue to decline as a means of payment.

Sectors other than Technology presented a mixed bag. Retail investments, such as Home Depot, Lowe's, and Ross Stores, performed well, although TJX took a breather in 2017. We believe the do-it-yourself home improvement stores are protected from Amazon by the nature of their product mix. Similarly, the "treasure hunting" nature of shopping at TJX and Ross Stores provides cover. We saw strong performances from Stanley Black & Decker, which should continue to benefit from accelerated home construction activity, and Abbott Labs, which we expect will reap the revenue and cost synergies of its St. Jude Medical and Alere acquisitions.

Among the detractors, jeweler Signet and athletic wear manufacturer Under Armour were two of the poorest performers and have been sold from the portfolio. Biotech firm Celgene declined on a management reset of earnings guidance toward the end of the year, but we believe its product pipeline remains attractive. Johnson Controls is in the midst of a major restructuring, and we look forward to the fruits of that exercise in 2018. Another company transforming its business is CVS. Already unique by including a prescription benefit manager with a retail operation, CVS is now adding health insurance to its stable. CVS is attempting to create a new model of delivering health care, and we are intrigued by the possibilities. We cut the positon in Alaska Airlines at the start of the year but should have sold it all. At this point we find the stock too cheap and the outlook for air travel too positive to abandon the position. Hasbro has a been a disappointment, affected by the bankruptcy of Toys"R"Us and talk of a potential merger with struggling Mattel. Nonetheless, we believe management has adopted the right strategy and the stock will recover. Juniper Networks' business is lumpy, and that affected its Q3 results and subsequent stock performance. We believe the longer-term outlook remains attractive. Finally, Priceline saw some impact on bookings from the hurricanes in Florida, Texas, and Puerto Rico. The company has the highest margins in the business and a strong international presence, where online booking penetration is lower than in the US.

Looking Forward

2018 brings a new tax regime, a new head of the Federal Reserve, and, potentially, a new push to restore US infrastructure. In the right combination, these could lead to another year of respectable stock market returns. Due to the Tax Cuts and Jobs Act of 2017 that became law in the final days of 2017, companies are starting to provide updated earnings guidance, and for domestically oriented firms, the increases can be surprisingly large. Other companies that have engaged in international tax minimization strategies are revealing their bills for deemed repatriation, which can also be large. Some, such as Apple, had fully reserved for the potential taxation of their overseas earnings and will enjoy hefty write-backs.

Perhaps the most consequential aspect of the new bill is the ability to write off 100% of capital expenditure within the year incurred. Several firms have already expressed their intention to accelerate capital spending, which will provide a solid boost to economic activity.

New Federal Reserve Chairman Powell's actions may be governed to an extent by whether Congress and the president are able to agree on an infrastructure program. That US infrastructure is in dire straits cannot be seriously argued, and it seems to us the odds of some sort of infrastructure package making its way through Congress are better than even.

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 22.64% was more than 2% below the Morningstar™ category average of 27.69% at month-end November 30, 2017. Therefore, the base annual management fee of 0.50% for the Fund as a whole was decreased by 0.20% for the month of December 2017.

 

38 November 30, 2017 Annual Report

Sextant Growth Fund

Schedule of Investments

As of November 30, 2017

Common Stock – 97.3%

Number of Shares

Cost

Market Value

Percentage of Assets

 

Communications

 
 

Internet Based Services

    Priceline.com¹

400

$761,890

$695,884

1.8%

 

Internet Media

    Alphabet, Class A¹

1,998

1,175,995

2,070,268

5.5%

    Facebook, Class A¹

7,537

417,851

1,335,405

3.5%

 

1,593,846

3,405,673

9.0%

 
 

2,355,736

4,101,557

10.8%

 

Consumer Discretionary

 
 

Airlines

    Alaska Air

9,822

319,729

679,388

1.8%

 

Apparel, Footwear & Accessory Design

    Nike, Class B

16,144

852,015

975,420

2.6%

    VF

6,500

419,684

474,240

1.2%

 

1,271,699

1,449,660

3.8%

 

E-Commerce Discretionary

    Amazon.com¹

1,529

278,191

1,799,251

4.7%

 

Home Improvement

    Stanley Black & Decker

9,284

842,437

1,574,845

4.2%

 

Home Products Stores

    Home Depot

6,264

724,382

1,126,392

3.0%

    Lowe's

4,700

103,389

391,839

1.0%

 

827,771

1,518,231

4.0%

 

Other Commercial Services

    Ecolab

9,230

1,049,561

1,254,542

3.3%

 

Restaurants

    Starbucks

20,376

889,152

1,178,140

3.1%

 

Specialty Apparel Stores

    Ross Stores

11,600

742,560

881,948

2.3%

    TJX Companies

10,589

649,955

799,999

2.1%

 

1,392,515

1,681,947

4.4%

 

Toys & Games

    Hasbro

7,000

693,749

651,140

1.7%

 
 

7,564,804

11,787,144

31.0%

 

Continued on next page.

The accompanying notes are an integral part of these financial statements.

November 30, 2017 Annual Report 39

Sextant Growth Fund

Schedule of Investments

As of November 30, 2017

Common Stock – 97.3%

Number of Shares

Cost

Market Value

Percentage of Assets

 

Consumer Staples

 
 

Agricultural Producers

    Ingredion

6,000

$714,442

$830,880

2.2%

 

Food & Drug Stores

    CVS Health

10,000

339,270

766,000

2.0%

 

Mass Merchants

    Costco Wholesale

6,243

784,598

1,151,397

3.0%

 
 

1,838,310

2,748,277

7.2%

 

Financials

 
 

Consumer Finance

    Ally Financial

34,000

777,141

913,240

2.4%

    FLEETCOR Technologies¹

4,361

626,335

793,135

2.1%

    Mastercard, Class A

8,914

806,925

1,341,290

3.5%

 

2,210,401

3,047,665

8.0%

 

Diversified Banks

    JP Morgan Chase

12,916

777,687

1,349,980

3.6%

 
 

2,988,088

4,397,645

11.6%

 

Health Care

 
 

Biotech

    Amgen

5,267

555,197

925,201

2.4%

    Celgene¹

9,000

919,669

907,470

2.4%

 

1,474,866

1,832,671

4.8%

 

Large Pharma

    Bristol-Myers Squibb

15,000

1,100,960

947,850

2.5%

 

Life Science Equipment

    Abbott Laboratories

20,799

646,854

1,172,440

3.1%

 

Medical Devices

    Edwards Lifesciences¹

8,200

810,953

961,040

2.6%

    Stryker

3,000

374,100

468,000

1.2%

 

1,185,053

1,429,040

3.8%

 
 

4,407,733

5,382,001

14.2%

 

Industrials

 
 

Commercial & Residential Building Equipment & Systems

    Johnson Controls International

11,800

485,396

444,152

1.2%

 
 

485,396

444,152

1.2%

 

Continued on next page.

The accompanying notes are an integral part of these financial statements.

40 November 30, 2017 Annual Report

Sextant Growth Fund

Schedule of Investments

As of November 30, 2017

Common Stock – 97.3%

Number of Shares

Cost

Market Value

Percentage of Assets

 

Materials

 
 

Specialty Chemicals

    RPM International

21,400

$ 882,637

$1,133,558

3.0%

 
 

882,637

1,133,558

3.0%

 

Technology

 
 

Application Software

    Adobe Systems¹

11,000

144,216

1,996,170

5.3%

 

Communications Equipment

    Apple

14,320

16,880

2,460,892

6.5%

    Juniper Networks

13,000

363,722

360,880

0.9%

 

380,602

2,821,772

7.4%

 

Infrastructure Software

    Microsoft

18,920

872,435

1,592,496

4.2%

    Oracle

11,250

553,450

551,925

1.4%

 

1,425,885

2,144,421

5.6%

 
 

1,950,703

6,962,363

18.3%

 

Total investments

$22,473,407

36,956,697

97.3%

Other assets (net of liabilities)

 

1,023,014

2.7%

Total net assets

 

$37,979,711

100.0%

¹ Non-income producing security

The accompanying notes are an integral part of these financial statements.

November 30, 2017 Annual Report 41

Sextant Growth Fund

Statement of Assets and Liabilities

As of November 30, 2017

 

Assets

    Investments in securities, at value
(Cost $22,473,407)

$36,956,697

    Cash

1,029,701

    Dividends receivable

40,764

    Prepaid expenses

11,344

    Receivable for Fund shares sold

9,402

    Insurance reserve premium

1,215

        Total assets

38,049,123

Liabilities

    Accrued audit fees

24,000

    Accrued advisory fees

9,275

    Payable for Fund shares redeemed

9,073

    Accrued retirement plan custodial fees

8,368

    Accrued trustee fees

6,199

    Accrued other expenses

4,195

    Accrued printing expenses

3,070

    Accrued postage expenses

2,697

    Accrued Chief Compliance Officer expenses

1,609

    Distributions payable

521

    Accrued distribution fee

405

        Total liabilities

69,412

Net assets

$37,979,711

 

Analysis of net assets

    Paid-in capital (unlimited shares authorized, without par value)

$21,421,831

    Undistributed net investment income

218,572

    Accumulated net realized gain

1,856,018

    Unrealized net appreciation on investments

14,483,290

Net assets applicable to Fund shares outstanding

$37,979,711

 

Net asset value per Investor Share

SSGFX

Net assets, at value

$5,962,418

Shares outstanding

216,771

Net asset value, offering and redemption price per share

$27.51

 

Net asset value per Z Share

SGZFX

Net assets, at value

$32,017,293

Shares outstanding

1,164,150

Net asset value, offering and redemption price per share

$27.50

 

Statement of Operations

Year ended November 30, 2017

 

Investment income

    Dividend income

$503,784

            Total investment income

503,784

Expenses

    Investment adviser fees

110,286

    Distribution fees – Investor Shares

61,335

    Audit fees

33,960

    Filing and registration fees

26,262

    Chief Compliance Officer expenses

12,189

    Retirement plan custodial fees

        Investor Shares

10

        Z Shares

8,588

    Trustee fees

8,468

    Printing and postage

5,930

    Legal fees

5,111

    Other expenses

4,927

    Custodian fees

1,737

            Total gross expenses

278,803

    Less custodian fee credits

(1,737)

            Net expenses

277,066

Net investment income

$226,718

 
 

Net realized gain from investments

$1,847,871

Net increase in unrealized appreciation on investments

5,405,733

Net gain on investments

$7,253,604

 

Net increase in net assets resulting from operations

$7,480,322

The accompanying notes are an integral part of these financial statements.

42 November 30, 2017 Annual Report

Sextant Growth Fund

Statements of Changes in Net Assets

Year ended Nov. 30, 2017A

Year ended Nov. 30, 2016

Increase (decrease) in net assets from operations

From operations

    Net investment income

$226,718

$155,405

    Net realized gain on investment

1,847,871

1,067,126

    Net increase (decrease) in unrealized appreciation

5,405,733

(3,333,190)

            Net increase (decrease) in net assets

7,480,322

(2,110,659)

Distributions to shareowners from

    Net investment income

        Investor Shares

(135,654)

(29,765)

        Z Shares

(18,029)

n/a

    Capital gains

        Investor Shares

-

(1,067,190)

        Z Shares

-

n/a

           Total distributions

(153,683)

(1,096,955)

Capital share transactions

    Proceeds from sales of shares

        Investor Shares

1,158,995

2,619,460

        Z Shares

30,622,742

n/a

    Value of shares issued in reinvestment of dividends

        Investor Shares

125,818

1,069,300

        Z Shares

17,509

n/a

    Cost of shares redeemed

        Investor Shares

(34,667,921)

(21,787,148)

        Z Shares

(1,165,207)

n/a

            Total capital share transactions

(3,908,064)

(18,098,388)

Total increase (decrease) in net assets

3,418,575

(21,306,002)

 

Net assets

Beginning of year

34,561,136

55,867,138

End of year

37,979,711

34,561,136

 

Undistributed net investment income

$218,572

$153,684

 

Shares of the Fund sold and redeemed

Investor Shares (SSGFX)

    Number of shares sold

48,292

116,377

    Number of shares issued in reinvestment of dividends and distributions

5,565

47,482

    Number of shares redeemed

(1,371,583)

(954,160)

Net decrease in number of shares outstanding

(1,317,726)

(790,301)

 

Z Shares (SGZFX)

    Number of shares sold

1,207,887

n/a

    Number of shares issued in reinvestment of dividends and distributions

637

n/a

    Number of shares redeemed

(44,374)

n/a

Net increase in number of shares outstanding

1,164,150

n/a

A Z Shares commenced operations June 2, 2017

The accompanying notes are an integral part of these financial statements.

November 30, 2017 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:

2017

2016

2015

2014

2013

Net asset value at beginning of year

$22.52

$24.03

$26.36

$23.92

$20.35

Income from investment operations

    Net investment income

0.15A

0.11

0.03

0.02

0.12

    Net gains (losses) on securities (both realized and unrealized)

4.93

(0.88)

(0.25)

3.88

5.86

Total from investment operations

5.08

(0.77)

(0.22)

3.90

5.98

Less distributions

    Dividends (from net investment income)

(0.09)

(0.02)

(0.04)

(0.01)

(0.13)

    Distributions (from capital gains)

-

(0.72)

(2.07)

(1.45)

(2.28)

Total distributions

(0.09)

(0.74)

(2.11)

(1.46)

(2.41)

 

Net asset value at end of year

$27.51

$22.52

$24.03

$26.36

$23.92

 

Total return

22.64%

(3.22%)

(0.87%)

16.29%

29.39%

 

Ratios / supplemental data

Net assets ($000), end of year

$5,962

$34,561

$55,867

$45,863

$36,574

Ratio of expenses to average net assets

    Before custodian fee credits

0.76%

0.76%

0.90%

1.05%

0.94%

    After custodian fee credits

0.76%

0.76%

0.90%

1.05%

0.94%

Ratio of net investment income after custodian fee credits to average net assets

0.60%

0.39%

0.13%

0.07%

0.59%

Portfolio turnover rate

18%

25%

68%

23%

29%

 

Z Shares (SGZFX)

Period ended

Selected data per share of outstanding capital stock throughout each period:

November 30, 2017B

Net asset value at beginning of period

$25.54

Income from investment operations

    Net investment income

0.16A

    Net gains on securities (both realized & unrealized)

1.82

Total from investment operations

1.98

Less distributions

    Dividends (from net investment income)

(0.02)

Total distributions

(0.02)

 

Net asset value at end of period

$27.50

 

Total return

7.73%C

 

Ratios / supplemental data

Net assets ($000), end of period

$32,017

Ratio of expenses to average net assets

    Before custodian fee credits

0.51%D

    After custodian fee credits

0.51%D

Ratio of net investment income after custodian fee credits to average net assets

0.89%D

Portfolio turnover rate

18%c

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

The accompanying notes are an integral part of these financial statements.

44 November 30, 2017 Annual Report

Sextant International Fund

Performance Summary (unaudited)

Average Annual Total Returns as of November 30, 2017

 

1 Year

5 Year

10 Year

Expense Ratio¹

Sextant International Fund Investor Shares (SSIFX)

26.76%

5.89%

2.43%

1.00%

Sextant International Fund Z Shares (SIFZX)²

n/a

n/a

n/a

0.75%

MSCI EAFE Index

27.86%

8.72%

2.02%

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, 2007, 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 $12,709 versus $12,221 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 June 2, 2017, and incorporates results for the fiscal year ended November 30, 2016. 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, and consequently have no standardized returns to report.

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

7.7%

Application Software

12.0%

Sextant International Fund Portfolio Diversification

ASML

6.7%

Banks

8.9%

BASF ADR

6.7%

Large Pharma

8.0%

NICE Systems ADR

6.5%

Information Services

7.7%

Copa Holdings, Class A

6.0%

Telecom Carriers

7.5%

Dassault Systemes ADR

5.5%

Basic & Diversified Chemicals

6.7%

Toronto-Dominion Bank

4.2%

Semiconductor Mfg

6.7%

Novartis ADR

4.2%

Airlines

6.0%

Unilever ADR

4.2%

Household Products

4.2%

Belmond, Class A

4.1%

E-Commerce Discretionary

4.1%

 

Lodging

4.1%

Beverages

4.0%

Integrated Oils

3.8%

Automobiles

3.7%

Other industries <3%

7.7%

Other assets (net of liabilities)

4.9%

 

November 30, 2017 Annual Report 45

Sextant International Fund

Discussion of Fund Performance (unaudited)

Fiscal Year 2017

For the fiscal year ended November 30, 2017, the Sextant International Fund Investor Shares returned 26.76%, while the Fund's benchmark, the MSCI EAFE Index, returned 27.86%. This year, the Fund introduced new class Z Shares, without a 12b-1 fee expense, and 31.2% of the Fund now benefits from this lower expense option.

The Investor Shares paid income dividends of 20.1¢ per share. The new Z Shares paid an income dividend of 9.2¢ per share. Total Fund assets increased by 8% in fiscal 2017.

Reflecting Saturna Capital's voluntary subsidies to cap operating expenses, the Fund's class Z Shares' annualized effective expense ratio declined to 0.63% from the 1.04% expense ratio of the Investor class shares.

Factors Affecting Past Performance

International investing, as represented by the MSCI EAFE Index, provided outstanding returns in 2017. Helped by the weak US currency, Sextant International Fund illustrated the results for actual investors. The Fund's best performers came from Technology and Consumer, sectors where the Fund was well represented. Because of the big rally, we only had a few stocks that declined.

We were overweight the Technology sector, and it was the biggest contributor to Fund returns. ASML continues to benefit from demand for its advanced memory and tools. Information services and solutions provider Wolters Kluwer, our largest position, provided a 30.63% return. And software developer NICE Systems continued the strong performance it has enjoyed for several years running.

Consumer issues also provided a solid return. Our long-term investment in Panamanian airline Copa provided a 54.21% return for the year. Another Latin favorite, MercadoLibre, sweetened our pot by jumping 74.83% through the fiscal year.

From a regional perspective, we are underrepresented in Asia, which performed well during the year. Any lost opportunity, however, was more than made up by our European investments, as well as the aforementioned Latin American stocks. UK-listed leisure company Belmond rebounded, while chemicals giant BASF drove our German returns. Two European pharma giants, Novartis and Novo Nordisk, also helped. Canadian stocks generally underperformed, but we see future profits in this resource-rich expanse to the north.

Looking Forward

While the United States quietly exits its drawn-out period of extraordinary monetary easing, European and Japanese central banks are only now moving to slow their money-creation activities. Europe is doing better and better, with contentious elections behind them, governments generally working, and economies improving. The real risk is China, where the markets are highly leveraged and growth is decelerating. Already the world's biggest exporter, China will find it difficult to find global demand for its goods as protectionist sentiment rises around the world.

Understanding global demographics is key to following economic activity and politics. Feeling threatened by immigration in 2016, both the US and the UK voters made poor choices. With a cadre of strong candidates, the US Republicans selected an unstable real estate developer to be their presidential candidate. In the UK, voters opted to leave the European Union. Economically, the US benefited, but the Brits will suffer for years. Protectionism, be it a taller border wall or a wider English channel, is back in style. We will look for better places to invest, where populations and consumption are growing. Countries like Japan, Italy, and Russia are generally not on our focus list.

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'sTM "Foreign Large Blend" category.

Sextant International Fund Investor Shares' 12-month return of 26.76% was less than 1% above the MorningstarTM category average of 25.95% at month-end November 30, 2017. Therefore, the basic annual management fee of 0.50% remained unchanged for the Fund as a whole for the month of December 2017.

46 November 30, 2017 Annual Report

Sextant International Fund

Schedule of Investments

As of November 30, 2017

Common Stocks – 95.1%

Number of Shares

Cost

Market Value

Country¹

Percentage of Assets

 

Communications

 
 

Telecom Carriers

    BCE

50,000

$1,164,294

$2,390,500

Canada

3.6%

    SK Telecom ADR

30,000

511,437

823,200

South Korea

1.2%

    Telus

50,000

710,476

1,848,000

Canada

2.7%

 
 

2,386,207

5,061,700

 

7.5%

 

Consumer Discretionary

 
 

Airlines

    Copa Holdings, Class A

30,000

1,766,222

4,025,700

Panama

6.0%

 

Automobiles

    Toyota Motor ADR

20,000

1,496,296

2,526,800

Japan

3.7%

 

E-Commerce Discretionary

    MercadoLibre

10,000

829,340

2,751,400

Argentina

4.1%

 

Lodging

    Belmond, Class A²

222,800

2,025,866

2,762,720

Bermuda

4.1%

 

Specialty Apparel Stores

    Industria de Diseno Textil

30,000

1,139,258

1,063,062

Spain

1.6%

 
 

7,256,982

13,129,682

 

19.5%

 

Consumer Staples

 
 

Beverages

    Fomento Economico Mexico ADR

30,000

1,614,722

2,699,100

Mexico

4.0%

 

Household Products

    Unilever ADR

50,000

1,315,509

2,824,000

United Kingdom

4.2%

 
 

2,930,231

5,523,100

 

8.2%

 

Energy

 
 

Integrated Oils

    Total ADS

45,435

2,559,596

2,569,349

France

3.8%

 
 

2,559,596

2,569,349

 

3.8%

 

Financials

 
 

Banks

    Australia & New Zealand Banking Group ADR

80,000

1,581,456

1,725,600

Australia

2.6%

    Toronto-Dominion Bank

50,000

1,250,872

2,847,000

Canada

4.2%

 

2,832,328

4,572,600

 

6.8%

 

Diversified Banks

    Mitsubishi UFJ Financial Group ADR

200,000

960,000

1,426,000

Japan

2.1%

 
 

3,792,328

5,998,600

 

8.9%

 

Continue to next page.

The accompanying notes are an integral part of these financial statements.

November 30, 2017 Annual Report 47

Sextant International Fund

Schedule of Investments

As of November 30, 2017

Common Stocks – 95.1%

Number of Shares

Cost

Market Value

Country¹

Percentage of Assets

 

Health Care

 
 

Health Care Supply Chain

    Sinopharm Group

250,000

$798,792

$987,098

China

1.5%

 

Large Pharma

    Novartis ADR

33,000

1,692,394

2,831,400

Switzerland

4.2%

    Novo Nordisk ADR

50,000

612,798

2,588,500

Denmark

3.8%

 

2,305,192

5,419,900

 

8.0%

 

Medical Equipment

    Koninklijke Philips ADR

21,905

814,100

848,600

Netherlands

1.3%

 

Specialty Pharma

    Shire ADR

10,000

359,660

1,487,500

Ireland

2.2%

 
 

4,277,744

8,743,098

 

13.0%

 

Materials

 
 

Agricultural Chemicals

    Potash Corp of Saskatchewan

39,000

914,639

766,350

Canada

1.1%

 

Basic & Diversified Chemicals

    BASF ADR

160,000

2,888,666

4,480,000

Germany

6.7%

 
 

3,803,305

5,246,350

 

7.8%

 

Technology

 
 

Application Software

    Dassault Systemes ADR

34,153

1,224,632

3,670,765

France

5.5%

    NICE Systems ADR

50,000

1,802,719

4,375,500

Israel

6.5%

 

3,027,351

8,046,265

 

12.0%

 

Information Services

    Wolters Kluwer

100,000

1,869,506

5,186,991

Netherlands

7.7%

 

Semiconductor Manufacturing

    ASML

25,800

899,795

4,528,416

Netherlands

6.7%

 
 

5,796,652

17,761,672

 

26.4%

 

Total investments

$32,803,045

64,033,551

 

95.1%

Other assets (net of liabilities)

 

3,318,779

 

4.9%

Total net assets

 

$67,352,330

 

100.0%

¹ Country of domicile
² Non-income producing security

ADR: American Depositary Receipt

The accompanying notes are an integral part of these financial statements.

48 November 30, 2017 Annual Report

 

Sextant International Fund

Schedule of Investments

As of November 30, 2017

 

Countries

(unaudited)

Sextant International Fund Geographic Diversification

Other assets (net of liabilities) 4.9%

Weightings shown are a percentage of total net assets.

The accompanying notes are an integral part of these financial statements.

November 30, 2017 Annual Report 49

Sextant International Fund

Statement of Assets and Liabilities

As of November 30, 2017

 

Assets

    Investments in securities, at value
    (Cost $32,803,045)

$64,033,551

    Cash

3,068,062

    Dividends receivable

436,989

    Receivable for Fund shares sold

17,752

    Prepaid expenses

12,026

        Total assets

67,568,380

Liabilities

    Payable for Fund shares redeemed

113,364

    Accrued audit expenses

41,250

    Accrued advisory fees

22,181

    Accrued other expenses

14,447

    Accrued trustee fees

7,772

    Distributions payable

5,984

    Accrued retirement plan custodial fees

5,826

    Accrued distribution fees

3,193

    Accrued Chief Compliance Officer expenses

2,033

        Total liabilities

216,050

Net assets

$67,352,330

 

Analysis of net assets

    Paid-in capital (unlimited shares authorized, without par value)

$30,840,979

    Undistributed net investment income

648,780

    Accumulated net realized gain

4,631,105

    Unrealized net appreciation on investments

31,231,466

Net assets applicable to Fund shares outstanding

$67,352,330

 

Net asset value per Investor Share

SSIFX

Net assets, at value

$46,321,236

Shares outstanding

2,575,639

Net asset value, offering and redemption price per share

$17.98

 

Net asset value per Z Share

SIFZX

Net assets, at value

$21,031,094

Shares outstanding

1,168,227

Net asset value, offering and redemption price per share

$18.00

 

Statement of Operations

Year ended November 30, 2017

 

Investment income

    Dividend income (net of foreign tax $226,324)

$1,292,243

    Miscellaneous income

50

            Total investment income

1,292,293

Expenses

    Investment adviser fees

359,891

    Distribution fees – Investor Shares

145,274

    Audit fees

49,291

    Chief Compliance Officer expenses

19,728

    Filing and registration fees

18,754

    Printing and postage

16,987

    Trustee fees

16,527

    Other expenses

8,156

    Legal fees

7,827

    Retirement plan custodial fees

 

        Investor Shares

506

        Z Shares

5,689

    Custodian fees

4,475

            Total gross expenses

653,105

    Less custodian fee credits

(4,475)

            Net expenses

648,630

Net investment income

$643,663

 
 

Net realized gain from investments and foreign currency

$4,772,164

Net increase in unrealized appreciation on investments

10,291,906

Net gain on investments

$15,064,070

 

Net increase in net assets resulting from operations

$15,707,733

The accompanying notes are an integral part of these financial statements.

50 November 30, 2017 Annual Report

Sextant International Fund

Statements of Changes in Net Assets

Year ended Nov. 30, 2017A

Year ended Nov. 30, 2016

Increase (decrease) in net assets from operations

From operations

    Net investment income

$643,663

$933,692

    Net realized gain on investment

4,772,164

1,711,395

    Net increase (decrease) in unrealized appreciation

10,291,906

(2,649,048)

            Net increase (decrease) in net assets

15,707,733

(3,961)

Distributions to shareowners from

    Net investment income

        Investor Shares

(760,785)

(216,548)

        Z Shares

(107,565)

n/a

            Total distributions

(868,350)

(216,548)

Capital share transactions

    Proceeds from sales of shares

        Investor Shares

4,101,960

5,375,482

        Z Shares

19,963,903

n/a

    Value of shares issued in reinvestment of dividends

        Investor Shares

747,511

212,577

        Z Shares

103,751

n/a

    Cost of shares redeemed

        Investor Shares

(33,922,144)

(21,250,952)

       Z Shares

(894,136)

n/a

            Total capital share transactions

(9,899,155)

(15,662,893)

Total increase (decrease) in net assets

4,940,228

(15,883,402)

 

Net assets

Beginning of year

62,412,102

78,295,504

End of year

67,352,330

62,412,102

 

Undistributed net investment income

$648,780

$868,348

 

Shares of the Fund sold and redeemed

Investor Shares (SSIFX)

   

    Number of shares sold

258,695

382,299

    Number of shares issued in reinvestment of dividends and distributions

49,204

14,793

    Number of shares redeemed

(2,076,632)

(1,507,490)

Net decrease in number of shares outstanding

(1,768,733)

(1,110,398)

 

Z Shares (SIFZX)

    Number of shares sold

1,213,641

n/a

    Number of shares issued in reinvestment of dividends and distributions

5,764

n/a

    Number of shares redeemed

(51,178)

n/a

Net increase in number of shares outstanding

1,168,227

n/a

A Z Shares commenced operations June 2, 2017

The accompanying notes are an integral part of these financial statements.

November 30, 2017 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:

2017

2016

2015

2014

2013

Net asset value at beginning of year

$14.37

$14.35

$15.47

$15.80

$14.85

Income from investment operations

    Net investment income

0.16A

0.22

0.25

0.65

0.32

    Net gains (losses) on securities (both realized and unrealized)

3.65

(0.15)

(1.11)

(0.35)

0.97

Total from investment operations

3.81

0.07

(0.86)

0.30

1.29

Less distributions

    Dividends (from net investment income)

(0.20)

(0.05)

(0.25)

(0.63)

(0.34)

    Distributions (from return of capital)

-

-

(0.01)

-

-

Total distributions

(0.20)

(0.05)

(0.26)

(0.63)

(0.34)

    Paid-in capital from early redemption fees

n/a

n/a

n/a

n/a

0.00B

 

Net asset value at end of year

$17.98

$14.37

$14.35

$15.47

$15.80

 

Total return

26.76%

0.49%

(5.58)%

1.88%

8.67%

 

Ratios / supplemental data

Net assets ($000), end of year

$46,321

$62,412

$78,296

$103,450

$148,016

Ratio of expenses to average net assets

    Before custodian fee credits

1.04%

1.00%

1.05%

0.80%

0.66%

    After custodian fee credits

1.04%

1.00%

1.04%

0.79%

0.66%

Ratio of net investment income after custodian fee credits to average net assets

1.00%

1.36%

1.49%

3.58%

1.69%

Portfolio turnover rate

2%

0%

0%

3%

7%

 

Z Shares (SIFZX)

Period ended

Selected data per share of outstanding capital stock throughout each period:

November 30, 2017C

Net asset value at beginning of period

$16.55

Income from investment operations

    Net investment income

0.13A

    Net gains on securities (both realized & unrealized)

1.41

Total from investment operations

1.54

Less distributions

    Dividends (from net investment income)

(0.09)

Total distributions

(0.09)

 

Net asset value at end of period

$18.00

 

Total return

9.32%D

 

Ratios / supplemental data

Net assets ($000), end of period

$21,031

Ratio of expenses to average net assets

    Before custodian fee credits

0.79%E

    After custodian fee credits

0.78%E

Ratio of net investment income after custodian fee credits to average net assets

0.53%E

Portfolio turnover rate

2%D

A Calculated using average shares outstanding
B Amount is less than $0.01
COperations commenced on June 2, 2017
D Not annualized
E Annualized

The accompanying notes are an integral part of these financial statements.

52 November 30, 2017 Annual Report

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.

November 30, 2017 Annual Report 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, 2017 Annual Report

Notes To Financial Statements (continued)

The following is a summary of the inputs used as of November 30, 2017, in valuing the Funds' investments carried at value:

Funds

Level 1

Level 2

Level 3

Total

Short-Term Bond

Corporate Bonds¹

$-

$7,455,818

$-

$7,455,818

Government Bonds¹

-

2,542,476

-

2,542,476

Total

$-

$9,998,294

$-

$9,998,294

 

Bond Income

Corporate Bonds¹

$-

$5,525,425

$-

$5,525,425

Government Bonds¹

-

1,376,982

-

1,376,982

Municipal Bonds¹

-

1,893,416

-

1,893,416

Total

$-

$8,795,823

$-

$8,795,823

 

Core

Common Stocks¹

$7,306,622

$-

$-

$7,306,622

Corporate Bonds¹

-

2,687,958

-

2,687,958

Government Bonds¹

-

1,639,247

-

1,639,247

Municipal Bonds¹

-

553,991

-

553,991

Total

$7,306,622

$4,881,196

$-

$12,187,818

 

Global High Income

Common Stocks

    Communications

$342,428

$-

$-

$342,428

    Consumer Discretionary

218,880

-

-

218,880

    Energy

1,074,500

-

-

1,074,500

    Financials

276,100

155,190

-

431,290

    Health Care

271,706

-

-

271,706

    Industrials

-

339,438

-

339,438

    Materials

638,395

-

-

638,395

    Technology

562,460

-

-

562,460

Total Common Stocks

3,384,469

494,628

-

3,879,097

Corporate Bonds¹

-

2,844,298

-

2,844,298

Government Bonds¹

-

1,498,374

-

1,498,374

Municipal Bonds¹

-

264,615

-

264,615

Warrants¹

-

-

-

-

Total

$3,384,469

$5,101,915

$-

$8,486,384

 

Growth

Common Stocks¹

$36,956,697

$-

$-

$36,956,697

Total

$36,956,697

$-

$-

$36,956,697

 

International

Common Stocks

    Communications

$5,061,700

$-

$-

$5,061,700

    Consumer Discretionary

12,066,620

1,063,062

-

13,129,682

    Consumer Staples

5,523,100

-

-

5,523,100

    Energy

2,569,349

-

-

2,569,349

    Financials

5,998,600

-

-

5,998,600

    Health Care

7,756,000

987,098

-

8,743,098

    Materials

5,246,350

-

-

5,246,350

    Technology

12,574,681

5,186,991

-

17,761,672

Total

$56,796,400

$7,237,151

$-

$64,033,551

During the period ended November 30, 2017, no Fund had transfers between Level 1, Level 2, or Level 3.

¹ See Schedule of Investments for industry breakout.

November 30, 2017 Annual Report 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 (2014 – 2016) or expected to be taken in the Funds' 2017 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, 2017, the reclassification of capital accounts were as follows:

 

Short-Term Bond

Bond Income

Undistributed net investment income

$-

$-

Accumulated gains (losses)

-

20,467

Paid-in capital

-

(20,467)

 

 

Core

Global
High Income

Undistributed net investment income

$(943)

$(42,647)

Accumulated gains (losses)

943

42,647

Paid-in capital

-

-

 

 

 

Growth

International

Undistributed net investment income

$(8,147)

$5,119

Accumulated gains (losses)

8,147

(5,119)

Paid-in capital

-

-

 

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 at the end of each November. 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.

56 November 30, 2017 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 from December 1, 2016 through June 1, 2017 of Sextant Short-Term Bond Fund to 0.75%, and Sextant Bond Income Fund and Sextant Global High Income Fund to 0.90%, and from June 2, 2017 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, 2017, the advisory fees incurred were as follows:

 

Adviser Fees

Adviser Fees Waived

Expense
Reimbursement

Short-Term Bond

$53,174

$34,259

$-

Bond Income

41,226

18,414

-

Core

39,680

-

-

Global High Income

57,798

30,556

-

Growth

110,286

-

-

International

359,891

-

-

In accordance with the expense limitation noted above, for the year ended November 30, 2017, 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, 2017, the Trust paid SBS the following amounts:

Distribution (12b-1) Fees

Short-Term Bond

$13,165

Bond Income

11,601

Core

12,497

Global High Income

10,281

Growth Investor Shares (SSGFX)

61,335

Growth Z Shares (SGZFX)

n/a

International Investor Shares (SSIFX)

145,274

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, 2017, the Funds incurred the following amounts:

Retirement plan custodial fees

Short-Term Bond

$3,545

Bond Income

2,685

Core

2,817

Global High Income

1,512

Growth Investor Shares (SSGFX)

10

Growth Z Shares (SGZFX)

8,588

International Investor Shares (SSIFX)

506

International Z Shares (SIFZX)

5,689

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, 2017, the Trust incurred compensation expenses of $32,000 which is included in $38,260 of total expenses for the independent Trustees. The Sextant Funds paid $31,819 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, 2017, the Funds paid the following compensation expenses for the Chief Compliance Officer:

Chief Compliance Officer

Short-Term Bond

$2,666

Bond Income

2,642

Core

2,833

Global High Income

2,314

Growth

12,189

International

19,728

On November 30, 2017, the trustees, officers, and their affiliates as a group owned 34.09%, 28.64%, 41.27%, 49.76%, 2.81%, 17.51%, 0.80%, and 23.08% 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.

November 30, 2017 Annual Report 57

Notes To Financial Statements (continued)

NOTE 4 – Distributions to Shareowners

The tax characteristics of distributions paid during the fiscal years ended November 30, 2017, and 2016, were as follows:

 

Year ended
Nov. 30, 2017

Year ended
Nov. 30, 2016

Short-Term Bond Fund

    Ordinary income

$133,903

$84,169

Bond Income Fund

    Ordinary income

284,105

256,646

Core Fund

    Ordinary income

132,290

-

Global High Income Fund

    Ordinary income

333,427

-

Growth Fund

    Ordinary income

153,683

29,765

    Long-term capital gain¹

-

1,067,190

International Fund

    Ordinary income

868,350

216,548

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, 2017 was as follows:

 

Short-Term Bond

Bond Income

Cost of investments

$10,087,098

$8,497,538

Gross tax unrealized appreciation

7,205

336,028

Gross tax unrealized depreciation

(96,009)

(37,743)

Net tax unrealized appreciation (depreciation)

(88,804)

298,285

 

 

Core

Global
High Income

Cost of investments

$10,084,114

$7,821,283

Gross tax unrealized appreciation

2,162,981

970,787

Gross tax unrealized depreciation

(59,277)

(305,686)

Net tax unrealized appreciation

2,103,704

665,101

 

 

 

Growth

International

Cost of investments

$22,473,407

$32,803,045

Gross tax unrealized appreciation

14,827,838

31,735,854

Gross tax unrealized depreciation

(344,548)

(505,348)

Net tax unrealized appreciation

14,483,290

31,230,506

 

As of November 30, 2017, components of distributable earnings on a tax basis were as follows:

Short-Term Bond

Undistributed ordinary income

$1,165

Accumulated capital gains

4,623

Tax accumulated earnings

5,788

Unrealized depreciation

(88,804)

Total accumulated earnings

(83,016)

 

Bond Income

Undistributed ordinary income

$24

Tax accumulated earnings

24

Accumulated capital losses

(46,167)

Unrealized appreciation

298,285

Total accumulated earnings

252,142

 

 

Core

Undistributed ordinary income

$166,943

Tax accumulated earnings

166,943

Accumulated capital losses

(168,492)

Unrealized appreciation

2,103,704

Other unrealized losses

54

Total accumulated earnings

2,102,209

 

 

Global High Income

Undistributed ordinary income

$253,596

Tax accumulated earnings

253,596

Accumulated capital losses

(189,339)

Unrealized appreciation

665,101

Other unrealized gains

218

Total accumulated earnings

729,576

 

 

Growth

Undistributed ordinary income

$296,741

Accumulated capital gains

1,777,849

Tax accumulated earnings

2,074,590

Unrealized appreciation

14,483,290

Total accumulated earnings

16,557,880

 

 

International

Undistributed ordinary income

$648,780

Accumulated capital gains

4,631,104

Tax accumulated earnings

5,279,884

Unrealized appreciation

31,230,506

Other unrealized gains

961

Total accumulated earnings

36,511,351

 

 

58 November 30, 2017 Annual Report

Notes To Financial Statements (continued)

As of November 30, 2017, the Funds had capital loss carryforwards as follows, subject to regulation.

 

Carryforward

Expiration

Bond Income

Long-term loss carryforward

$46,167

Unlimited

 

46,167

 
 

Core

Short-term loss carryforward

$88,781

Unlimited

Long-term loss carryforward

$79,711

Unlimited

 

168,492

 
 

Global High Income

Long-term loss carryforward

$189,339

Unlimited

 

189,339

 

NOTE 6 – Investments

Investment transactions other than short-term investments for the fiscal year ended November 30, 2017, were as follows:

 

Purchases

Sales

Short-Term Bond

$3,541,567

$3,138,880

Bond Income

316,687

681,413

Core

6,301,815

3,630,586

Global High Income

1,363,661

645,683

Growth

6,397,319

9,433,602

International

1,139,258

12,383,266

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, 2017, were as follows:

Custodian Fee Credits

Short-Term Bond

$497

Bond Income

445

Core

546

Global High Income

588

Growth

1,737

International

4,475

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 29, 2017, to all shareowners of record on December 28, 2017, as follows:

 

Dividend Income

Short-Term Capital Gain

Long-Term Capital Gain

Short-Term Bond

$0.00473

$-

$0.00217

Bond Income

0.01305

-

-

Core

0.17223

-

-

Global High Income

0.30418

-

-

Growth
(Investor Shares)

0.07174

0.05660

1.28660

Growth
(Z Shares)

0.16837

0.05660

1.28660

International
(Investor Shares)

0.17129

-

1.26780

International
(Z Shares)

0.18652

-

1.26780

Dividend income distributions paid by Short-Term Bond and Bond Income Funds were accrued daily.

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

November 30, 2017 Annual Report 59

Report of Independent Registered Public Accounting Firm

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

We have audited the accompanying statement of assets and liabilities of Sextant Short-Term Bond Fund, Sextant Bond Income Fund, Sextant Core Fund, Sextant Global High Income Fund, Sextant Growth Fund, and Sextant International Fund, each a series of Saturna Investment Trust (the "Trust"), including the schedules of investments, as of November 30, 2017, and 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 and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Trust is not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of November 30, 2017, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Sextant Short-Term Bond Fund, Sextant Bond Income Fund, Sextant Core Fund, Sextant Global High Income Fund, Sextant Growth Fund, and Sextant International Fund as of November 30, 2017, the results of their operations, the changes in their net assets and their financial highlights for the periods indicated above, in conformity with accounting principles generally accepted in the United States of America.

Philadelphia, Pennsylvania
January 29, 2018

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

60 November 30, 2017 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, 2017, to November 30, 2017).

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, 2017)

Ending Account Value
(November 30, 2017)

Expenses Paid
During Period¹

Annualized Expense Ratio

Short-Term Bond Fund

$1,000

$998.00

$3.04

0.61%

Hypothetical (5% return before expenses)

1,000

1,022.03

3.08

0.61%

Bond Income Fund

1,000

1,011.60

3.32

0.66%

Hypothetical (5% return before expenses)

1,000

1,021.77

3.33

0.66%

Core Fund

1,000

1,067.60

3.93

0.76%

Hypothetical (5% return before expenses)

1,000

1,021.27

3.84

0.76%

Global High Income Fund

1,000

1,058.60

3.85

0.75%

Hypothetical (5% return before expenses)

1,000

1,021.33

3.78

0.75%

Growth Fund Investor Shares

1,000

1,092.60

3.71

0.71%

Hypothetical (5% return before expenses)

1,000

1,021.52

3.58

0.71%

Growth Fund Z Shares

1,000

1,077.30

3.93

0.76%

Hypothetical (5% return before expenses)

1,000

1,021.01

3.82

0.76%

International Fund Investor Shares

1,000

1,104.20

4.63

0.88%

Hypothetical (5% return before expenses)

1,000

1,020.66

4.45

0.88%

International Fund Z Shares

1,000

1,093.20

3.28

0.63%

Hypothetical (5% return before expenses)

1,000

1,021.66

3.16

0.63%

¹ Expenses are equal to the annualized expense ratio indicated above (based on the most recent semi-annual period of June 1, 2017, through November 30, 2017), multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period).

November 30, 2017 Annual Report 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 (50)
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 (68)
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 (59)
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 (56)
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 (49)
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 (42)
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, 2017 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 (64)
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 (45)
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 (56)
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 (37)
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)

Nicholas F. Kaiser, MBA, CFA (71)
1300 N. State Street
Bellingham WA 98225

Secretary
(since 2017);
N/A

Chairman and Director,
Saturna Capital Corporation

Chairman, Director, and President, Saturna Trust Company

Former Director, Saturna Brokerage Services

Amana Mutual Funds Trust

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.

On November 30, 2017, the trustees, officers, and their affiliates as a group owned 34.09%, 28.64%, 41.27%, 49.76%, 2.81%, 17.51%, 0.80%, and 23.08% 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.

During the year ended November 30, 2017, 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, 2017, 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 $0.5 million

¹ Holds the same postion with Amana Mututal Funds Trust

November 30, 2017 Annual Report 63

Renewal of Investment Advisory Contract (unaudited)

During their meeting of September 16, 2017, the Trustees of Saturna Investment Trust discussed the continuance of the Investment Advisory and Administration Agreements between 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") and Saturna Capital Corporation ("Saturna"). In considering the renewal of the agreements with Saturna, the Trustees discussed the nature, extent, and quality of the services provided by Saturna 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'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'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's efforts to recruit and retain increasingly qualified, experienced, and specialized staff and improve the capital base on which Saturna operates, which the Trustees believe is important to the long-term success of the Funds. They appreciate Saturna'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-, and ten- year periods, all as of July 31, 2017. 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 at length each Fund's performance relative to the Fund's Morningstar category for the one-, three-, five- and ten-year periods ended July 31, 2017. The Trustees also considered each Fund's Morningstar performance rankings (one through five stars) for the one-, three-, five- and ten-year periods, ended as of July 31, 2017, 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-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-year period ended on July 31, 2017 exceeded the Morningstar category average and the Fund outperformed its benchmark during the same period. The Trustees noted that Sextant Growth Fund, Sextant Core Fund, Sextant Short-Term Bond Fund, and Sextant Bond Income Fund each had underperformed its respective Morningstar category average and benchmarks for the same ten-year period. – much of which has been the most extended bull market in history.

The Trustees considered the short- and medium-term performance of the Funds, noting that each Fund's average annual total return for the five-year period ended on July 31, 2017 was below the respective Morningstar category average for the same period. The Trustees noted that for the three-year period ended on July 31, 2017, Sextant Core Fund, Sextant Bond Income Fund, Sextant Global High Income Fund, and Sextant Growth Fund, each underperformed their respective Morningstar category average, while Sextant International Fund and Sextant Short-Term Bond 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 July 31, 2017, Sextant International Fund, Sextant Growth Fund, and Sextant Core Fund each underperformed their respective Morningstar category average, while Sextant Bond Income, Sextant Global High Income Fund, and Sextant Short-term Bond Fund each outperformed 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 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 to make additional resources available to assist in managing the Funds. The Trustees also considered Saturna's focus on improving investment performance without incurring materially higher levels of risk.

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 appreciate 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 has undertaken to maintain competitive levels of Fund operating expenses. They noted the significant sponsorship of the Funds

64 November 30, 2017 Annual Report

Renewal of Investment Advisory Contract (continued)(unaudited)

by Saturna evidenced, in part, by certain fees and expenses paid by Saturna out of its own resources (known as "revenue sharing") to unaffiliated intermediaries, as well as Saturna's initiatives to reduce its advisory fees. Recognizing that Saturna pays fees and expenses that are often borne by funds, the Trustees appreciated Saturna's efforts to help make the Funds more widely available and less expensive than would otherwise be the case without Saturna's efforts. The Trustees welcomed the substantial reductions in Fund expense ratios resulting from this year's efforts 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 that Saturna continues to operate the Funds, often times at considerable costs to itself.

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 in the last year 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 shareowner 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 the Funds to Saturna were, from an arm's-length bargaining perspective, reasonable and in the best interest of the Funds and their 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 renew 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 Corporation.

November 30, 2017 Annual Report 65

Except for this legend, this page has been left blank intentionally.

66 November 30, 2017 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.

November 30, 2017 Annual Report 67

 

 

(logo omitted)

Saturna Capital
1300 North 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, 2018

Sextant Mutual Funds

Semi-Annual Report May 31, 2018

Short-Term Bond

STBFX

 

Bond Income

SBIFX

 

Core

SCORX

 

Global High Income

SGHIX

 

Growth

SSGFX

Investor Shares

SGZFX

Z Shares

 

International

SSIFX

Investor Shares

SIFZX

Z Shares


Average Annual Total Returns as of June 30, 2018

1 Year

3 Year

5 Year

10 Year

15 Year

Expense Ratio¹

Gross

Net

 

Sextant Short-Term Bond Fund(STBFX)

-0.50%

0.60%

0.90%

1.68%

2.04%

0.88%

0.60%

FTSE USBIG Govt/Corp 1-3 Year Index

0.22%

0.69%

0.81%

1.62%

2.21%

n/a

 
 

Sextant Bond Income Fund (SBIFX)

-0.44%

1.94%

2.71%

3.93%

3.35%

0.86%

0.65%

FTSE US Broad Investment-Grade Bond Index

-0.45%

1.71%

2.26%

3.75%

3.84%

n/a

 
 

Sextant Core Fund (SCORX)

4.84%

4.32%

5.00%

4.56%

n/a

0.73%

Dow Jones Moderate US Portfolio Index

7.83%

6.57%

7.32%

6.39%

7.52%

n/a

 
 

Sextant Global High Income Fund (SGHIX)

7.32%

6.90%

6.16%

n/a

n/a

1.06%

0.75%

S&P Global 1200 Index

11.57%

9.29%

10.51%

6.85%

8.76%

n/a

 
 

Sextant Growth Fund Investor Shares (SSGFX)

17.24%

8.28%

11.58%

7.97%

8.99%

0.76%

Sextant Growth Fund Z Shares (SGZFX)

17.36%

n/a

n/a

n/a

n/a

0.51%

S&P 500 Index

14.37%

11.93%

13.41%

10.17%

9.30%

n/a

 
 

Sextant International Fund Investor Shares (SSIFX)

10.69%

6.00%

6.25%

2.96%

8.27%

1.04%

Sextant International Fund Z Shares (SIFZX)

11.02%

n/a

n/a

n/a

n/a

0.79%

MSCI EAFE Index

7.37%

5.41%

6.92%

3.33%

7.74%

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.

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 May 31, 2018 Semi-Annual Report

Fellow Shareowners:

Equity markets rose again for the six-months ended May 31, 2018, albeit in a more subdued manner. Total return for the S&P 500 Index was 3.16% and the Dow Jones Moderate US Portfolio Index gained 1.74%. Foreign markets performed similarly, with the MSCI EAFE Index up 0.42% and the S&P Global 1200 Index up 2.01%. Fixed-income markets were mixed, with the FTSE USBIG Bond Index falling -1.03% and the shorter-term FTSE USBIG Govenment/Corporate 1-3 Year Index rising just 0.12%.

The Sextant Funds performed respectably compared to these indices, which do not have expenses. For the period ended May 31, 2018, Sextant Growth Fund Investor Shares gained 6.65%, Sextant International Fund Investor Shares gained 1.39%, Sextant Core Fund returned -0.85%, Sextant Global High Income Fund gained 1.66%, Sextant Bond Income Fund fell -0.97%, and Sextant Short-Term Bond Fund returned -0.29%.

To reduce expenses, the Board of Trustees ended the 12b-1 fee for the six Sextant Funds, creating the new Z class shares with no 12b-1 fee for Sextant Growth and Sextant International. Saturna Capital helped by paying to cap expenses, putting the annualized expense ratios of the six no-12b-1 fee Sextant Fund share classes in a range of 0.60% to 0.94%. The Funds offer attractive features, including their fulcrum-fee adjusted, low-expense structures, professional active management, no-fee account transactions, and integration with low-cost IRA and 401(k) plans. Overall assets were down 3% to $144.1 million.

Markets rose with abandon during the last half of 2017, but the euphoria melted away as caution brought volatility and doubt. Emerging markets, led by China, suffered as the dollar surged and trade wars loomed. Oil and coal stocks, which we avoid, were the big winners following political failures in countries such as Venezuela, Brazil, and Iran. Central banks are cutting a decade of stimulus and low rates. In the US, lower taxes are stimulating vast investments, especially in technology, while the global supply chain is being rattled by trade revamps. The future, as always, is murky.

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 buoyant. Despite an unemployment rate that dipped below 4% for the first time since 2000, inflation remains subdued, while corporate profitability and consumer confidence are robust. Conditions over the past several years have contributed to a go-go mentality.

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.

Central bankers are reversing policy and understandably slowing the flow from their stimulus. An extraordinary era of low interest rates fueled upward moves in economies and markets. Central banks are now shifting toward raising rates and/or removing stimulus. We must be vigilant in the coming months for signs of a recession & a riskier period looms ahead.

May 31, 2018 Semi-Annual Report 3

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, three received the top "5 Globes" rating, reflecting Saturna Capital's emphasis on sustainability when making portfolio investment decisions. See page 5 for the details.

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 DrumlMBA, CFA®, CFP®

Setxant 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, 2018 Semi-Annual Report

Morningstar Sustainability Ratings™

(unaudited)

As of May 31, 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

7th percentile among 450 Short-Term Bond Funds

8th percentile among 345 Foreign Large Growth Funds

 
 

Sextant Core Fund

Sextant Growth Fund

SCORX

Ø Ø Ø Ø Ø

Investor Shares (SSGFX)

Ø Ø Ø

2nd percentile among 671 Allocation 50%-70% Equity Funds

Z Shares (SGZFX)

Ø Ø Ø

 

40th percentile among 1,269 Large Growth Funds

Sextant Global High Income Fund

 

SGHIX

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.

45th percentile among 383 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 May 31, 2017. 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 96%
Sextant Core Fund 75%
Sextant Short-Term Bond Fund 62%
Sextant Growth Fund 99%
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.

May 31, 2018 Semi-Annual Report 5

 

Average Annual Total Returns as of May 31, 2018

1 Year

3 Year

5 Year

10 Year

15 Year

Expense Ratio¹

Gross

Net

 

Sextant Short-Term Bond Fund (STBFX)

-0.49%

0.59%

0.81%

1.72%

2.06%

0.88%

0.60%

FTSE USBIG Govt/Corp 1-3 Year Index

0.16%

0.67%

0.78%

1.64%

2.23%

n/a

 
 

Sextant Bond Income Fund (SBIFX)

0.18%

1.70%

2.20%

4.05%

3.40%

0.86%

0.65%

FTSE US Broad Investment-Grade Bond Index

-0.40%

1.39%

1.99%

3.78%

3.84%

n/a

 
 

Sextant Core Fund (SCORX)

5.86%

3.69%

4.80%

4.04%

n/a

0.73%

Dow Jones Moderate US Portfolio Index

8.53%

6.16%

6.99%

5.82%

7.62%

n/a

 
 

Sextant Global High Income Fund (SGHIX)

7.62%

6.10%

5.65%

n/a

n/a

1.06%

0.75%

S&P Global 1200 Index

12.37%

8.46%

9.95%

5.96%

8.90%

n/a

 
 

Sextant Growth Fund Investor Shares (SSGFX)

16.57%

7.42%

11.05%

7.11%

9.10%

0.76%

Sextant Growth Fund Z Shares (SGZFX)

n/a

n/a

n/a

n/a

n/a

0.51%

S&P 500 Index

14.38%

10.94%

12.97%

9.13%

9.34%

n/a

 
 

Sextant International Fund Investor Shares (SSIFX)

11.95%

5.47%

5.54%

2.57%

8.56%

1.04%

Sextant International Fund Z Shares (SIFZX)

n/a

n/a

n/a

n/a

n/a

0.79%

MSCI EAFE Index

8.50%

4.82%

6.42%

2.57%

8.00%

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.

6 May 31, 2018 Semi-Annual Report

Sextant Short-Term Bond Fund

Performance Summary

Average Annual Total Returns as of May 31, 2018

 

1 Year

5 Year

10 Year

Expense Ratio¹

Sextant Short-Term Bond Fund

-0.49%

0.81%

1.72%

0.88%

FTSE USBIG Govt/Corp 1-3 Year Index²

0.16%

0.78%

1.64%

n/a

Growth of $10,000

Sextant Short-Term Bond Fund

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, 2007, 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 $11,859 versus $11,770 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.

² The FTSE USBIG Govt/Corp 1-3 Year Index was formally known as the Citi USBIG Govt/Corp 1-3 Year Index. The London Stock Exchange acquired Citigroup Index LLC in August 2017.

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)

9.1%

Government Bonds

21.7%

Sextant Short-Term Bond Fund Portfolio Diversification

United States Treasury Note (2.50% due 08/15/2023)

4.8%

Health Care

21.5%

McCormick & Co. (2.70% due 08/15/2022)

4.7%

Financials

19.1%

Gilead Sciences (2.55% due 09/01/2020)

3.9%

Technology

9.5%

Adobe Systems (4.75% due 02/01/2020)

3.8%

Consumer Discretionary

8.4%

3M (2.00% due 06/26/2022)

3.8%

Consumer Staples

4.7%

Abbott Laboratories (4.125% due 05/27/2020)

3.8%

Industrials

4.4%

Qualcomm (2.60% due 01/30/2023)

3.8%

Materials

3.2%

Juniper Networks (4.60% due 03/15/2021)

3.7%

Utilities

2.9%

AvalonBay Communities (6.10% due 03/15/2020)

3.5%

Other Assets (net of liabilities)

4.6%

 

May 31, 2018 Semi-Annual Report 7

Sextant Short-Term Bond Fund

Schedule of Investments

As of May 31, 2018

Corporate Bonds — 73.7%

Coupon / Maturity

Face Amount

Market Value

Percentage of Assets

 

Consumer Discretionary

 
 

    Alibaba Holding Group

3.125% due 11/28/2021

$350,000

$347,952

3.4%

    Ford Motor Credit

3.157% due 08/04/2020

250,000

249,060

2.5%

    International Game Technology

7.50% due 06/15/2019

250,000

258,437

2.5%

 
 

855,449

8.4%

 

Consumer Staples

 
 

    McCormick & Co.

2.70% due 08/15/2022

500,000

483,854

4.7%

 
 

483,854

4.7%

 

Financials

 
 

    AvalonBay Communities

6.10% due 03/15/2020

340,000

357,994

3.5%

    Berkshire Hathaway Finance

2.00% due 08/15/2018

300,000

299,754

2.9%

    Camden Property Trust

4.625% due 06/15/2021

275,000

285,142

2.8%

    Jefferies Group

8.50% due 07/15/2019

265,000

280,406

2.7%

    Paccar Financial

2.05% due 11/13/2020

350,000

343,284

3.4%

    Qualcomm

2.60% due 01/30/2023

400,000

382,746

3.8%

 
 

1,949,326

19.1%

 

Health Care

 
 

    Abbott Laboratories

4.125% due 05/27/2020

375,000

383,387

3.8%

    AbbVie

2.50% due 05/14/2020

250,000

247,813

2.4%

    Astrazeneca

2.375% due 01/16/2020

155,000

152,577

1.5%

    Celgene

2.25% due 08/15/2021

300,000

290,080

2.8%

    Gilead Sciences

2.55% due 09/01/2020

400,000

396,864

3.9%

    3M

2.00% due 06/26/2022

400,000

386,449

3.8%

    Teva Pharmaceutical

3.65% due 11/10/2021

350,000

333,467

3.3%

 
 

2,190,637

21.5%

 

Industrials

 
 

    Emerson Electric

4.875% due 10/15/2019

310,000

318,837

3.1%

    Union Pacific

7.875% due 01/15/2019

127,000

130,994

1.3%

 
 

449,831

4.4%

 

Materials

 
 

    BHP Billiton Fin USA

6.50% due 04/01/2019

315,000

324,772

3.2%

 
 

324,772

3.2%

 

Technology

 
 

    Adobe Systems

4.75% due 02/01/2020

379,000

390,936

3.8%

    Juniper Networks

4.60% due 03/15/2021

375,000

382,249

3.7%

    Xilinx

2.125% due 03/15/2019

200,000

199,337

2.0%

 
 

972,522

9.5%

 

Continued on next page.

The accompanying notes are an integral part of these financial statements.

8 May 31, 2018 Semi-Annual Report

Sextant Short-Term Bond Fund

Schedule of Investments

As of May 31, 2018

Corporate Bonds – 73.7%

Coupon / Maturity

Face Amount

Market Value

Percentage of Assets

 

Utilities

 
 

    LaClede Gas

2.00% due 08/15/2018

$300,000

$299,610

2.9%

 
 

299,610

2.9%

 

Total Corporate Bonds

 

$7,526,001

73.7%

 

Government Bonds – 21.7%

Coupon / Maturity

Face Amount

Market Value

Percentage of Assets

 

United States Treasury Notes

 
 

    United States Treasury Note

2.25% due 07/31/2018

$300,000

$300,211

2.9%

    United States Treasury Note

2.75% due 02/15/2019

200,000

200,742

2.0%

    United States Treasury Note

3.625% due 02/15/2021

900,000

926,121

9.1%

    United States Treasury Note

2.50% due 08/15/2023

500,000

495,508

4.8%

    United States Treasury Note

2.00% due 09/30/2020

300,000

296,813

2.9%

 
 

2,219,395

21.7%

 

Total investments

(Cost = $9,922,274)

 

9,745,396

95.4%

Other assets (net of liabilities)

   

465,097

4.6%

Total net assets

   

$10,210,493

100.0%

 

Bond Quality Diversification

% of Total Net Assets

 

Rated "AAA"

21.7%

Sextant Short-Term Bond Fund Bond Quality Diversification

Rated "AA"

2.9%

Rated "AA-"

3.8%

Rated "A+"

6.8%

Rated "A"

18.2%

Rated "A-"

7.9%

Rated "BBB+"

7.1%

Rated "BBB"

14.7%

Rated "BBB-"

2.7%

Rated "BB+"

2.5%

Rated "BB"

3.3%

Not rated

3.8%

Other assets (net of liabilities)

4.6%

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.

The accompanying notes are an integral part of these financial statements.

May 31, 2018 Semi-Annual Report 9

Sextant Short-Term Bond Fund

Statement of Assets and Liabilities

May 31, 2018

 

Assets

    Investments in securities, at value
    (Cost $9,922,274)

$9,745,396

    Cash

383,058

    Interest receivable

88,943

    Prepaid expenses

3,647

    Receivable for Fund shares sold

1,083

        Total assets

10,222,127

Liabilities

    Payable for Fund shares redeemed

7,491

    Accrued retirement plan custodial fees

1,532

    Accrued advisory fees

1,083

    Accrued audit expenses

627

    Accrued other expenses

574

    Accrued Chief Compliance Officer expenses

286

    Distributions payable

41

        Total liabilities

11,634

Net Assets

$10,210,493

 

Analysis of net assets

    Paid-in capital (unlimited shares authorized, without par value)

$10,397,045

    Undistributed net investment income

1,165

    Accumulated net realized loss

(10,839)

    Unrealized net depreciation on investments

(176,878)

Net assets applicable to Fund shares outstanding

$10,210,493

 

Fund shares outstanding

2,062,585

 

Net asset value, offering and redemption price per share

$4.95

 

Statement of Operations

Period ended May 31, 2018

 

Investment income

    Interest income

$99,494

        Total investment income

99,494

Expenses

    Investment adviser fees

22,004

    Filing and registration fees

11,925

    Audit fees

3,349

    Printing and postage

2,251

    Retirement plan custodial fees

1,696

    Trustee fees

1,403

    Chief Compliance Officer expenses

1,216

    Legal fees

759

    Other expenses

707

    Custodian fees

241

        Total gross expenses

45,551

    Less adviser fees waived

(14,519)

    Less custodian fee credits

(241)

        Net expenses

30,791

Net investment income

$68,703

 
 

Net realized loss from investments

$(10,839)

Net increase in unrealized depreciation on investments

(88,074)

Net loss on investments

$(98,913)

 

Net decrease in net assets resulting from operations

$(30,210)

The accompanying notes are an integral part of these financial statements.

10 May 31, 2018 Semi-Annual Report

Sextant Short-Term Bond Fund

Statements of Changes in Net Assets

Period ended May 31, 2018

Period ended Nov. 30, 2017

Increase (decrease) in net assets from operations

From operations

    Net investment income

$68,703

$133,894

    Net realized gain (loss) on investments

(10,839)

4,623

    Net increase in unrealized depreciation

(88,074)

(55,176)

        Net increase (decrease) in net assets

(30,210)

83,341

Distributions to shareowners from

    Net investment income

(68,703)

(133,903)

    Capital gains distribution

(4,623)

-

        Total distributions

(73,326)

(133,903)

Capital share transactions

    Proceeds from sales of shares

583,718

1,652,337

    Value of shares issued in reinvestment of dividends

72,768

133,340

    Cost of shares redeemed

(1,047,111)

(1,356,859)

        Total capital share transactions

(390,625)

428,818

Total increase (decrease) in net assets

(494,161)

378,256

 

Net assets

Beginning of period

10,704,654

10,326,398

End of period

10,210,493

10,704,654

 

Undistributed net investment income

$1,165

$1,165

 

Shares of the Fund sold and redeemed

    Number of shares sold

117,531

328,488

    Number of shares issued in reinvestment of dividends

14,672

26,511

    Number of shares redeemed

(210,259)

(269,774)

Net increase (decrease) in number of shares outstanding

(78,056)

85,225

 

Financial Highlights

For period ended

For year ended November 30,

Selected data per share of outstanding capital stock throughout each period:

May 31, 2018

2017

2016

2015

2014

2013

Net asset value at beginning of period

$5.00

$5.02

$5.02

$5.04

$5.05

$5.07

Income from investment operations

    Net investment income

0.03

0.06

0.05

0.05

0.06

0.06

    Net gains (losses) on securities (both realized and unrealized)

(0.05)

(0.02)

0.00A

(0.02)

(0.01)

(0.02)

Total from investment operations

(0.02)

0.04

0.05

0.03

0.05

0.04

Less distributions

    Dividends (from net investment income)

(0.03)

(0.06)

(0.05)

(0.05)

(0.06)

(0.06)

    Capital gains distribution

(0.00)A

-

-

-

-

-

Total distributions

(0.03)

(0.06)

(0.05)

(0.05)

(0.06)

(0.06)

 

Net asset value at end of period

$4.95

$5.00

$5.02

$5.02

$5.04

$5.05

 

Total returnB

(0.29)%

0.87%

1.06%

0.67%

0.94%

0.82%

 

Ratios / supplemental data

Net assets ($000), end of period

$10,210

$10,705

$10,326

$7,488

$7,674

$7,307

Ratio of expenses to average net assets

    Before fee waivers and custodian fee creditsC

0.89%

1.01%

1.15%

1.21%

1.29%

1.14%

    After fee waiversC

0.61%

0.68%

0.76%

0.76%

0.76%

0.76%

    After fee waivers and custodian fee creditsC

0.60%

0.68%

0.75%

0.75%

0.75%

0.75%

Ratio of net investment income after fee waivers and custodian fee credits to average net assetsC

1.34%

1.26%

1.05%

1.06%

1.14%

1.20%

Portfolio turnover rateB

19%

31%

11%

13%

14%

50%

AAmount is less than $0.01
B Not Annualized for periods less than one year.
C Annualized for periods less than one year.

The accompanying notes are an integral part of these financial statements.

Semi-Annual Report

May 31, 2018

11

Sextant Bond Income Fund

Performance Summary

Average Annual Total Returns as of May 31, 2018

 

1 Year

5 Year

10 Year

Expense Ratio¹

Sextant Bond Income Fund

0.18%

2.20%

4.05%

0.86%

FTSE US Broad Investment-Grade Bond Index

-0.40%

1.99%

3.78%

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. Convers