Saturna Sustainable Bond FundAs of September 21, 2020
The Saturna Sustainable Bond Fund actively seeks issuers that demonstrate sustainable financial characteristics as well as a commitment to identifying and managing environmental, social, and governance-related risks.
- Targeted to investors seeking capital preservation and current income
- Investment-grade emphasis with the ability to invest across the credit spectrum, including high-yield
- Flexible selection of duration, currencies, and issuer types
- Globally diversified
- Screens exclude security issuers primarily engaged in higher ESG risk businesses; no alcohol, tobacco, pornography, weapons, gambling, or fossil fuel extraction
- Positive ESG factors considered include resource efficiency, community and labor relations, board composition, and business ethics
- Characteristics of financial sustainability include management strength, low debt, and strong balance sheets
Current income and capital preservation.
Principal Investment Strategies
Under normal conditions, the Fund invests at least 80% of its net assets in bonds of issuers located throughout the world (including emerging markets) that the Fund's adviser believes demonstrate sustainable characteristics. For purposes of this investment policy, the Fund's adviser considers issuers with sustainable characteristics to be those issuers that are generally larger, more established, consistently profitable, and financially strong, and with robust policies in the areas of the environment, social responsibility, and corporate governance ("ESG").
The Fund's adviser employs a sustainable rating system based on its own, as well as third-party, data to identify issuers believed to present low risks in ESG. The Fund's adviser also uses negative screening to exclude security issuers primarily engaged in higher ESG risk businesses such as alcohol, tobacco, pornography, weapons, gambling, and carbon-based fuels.
Under normal conditions, the Fund maintains a dollar-weighted average maturity of three years or more, invests at least 65% of its assets in bonds within the four highest grades (Aaa, Aa, A, or Baa) at the time of purchase, and may invest up to 35% in unrated and high-yield bonds ("junk bonds").
Portfolio Manager since 2015
Patrick T. Drum, Senior Investment Analyst and Saturna Sustainable Bond and Amana Participation Funds Portfolio Manager joined Saturna Capital in October 2014. He is a former adjunct professor of finance for the Sustainable MBA Program at the Bainbridge Graduate Institute (BGI) currently known as Presidio Graduate School. Mr. Drum holds a BA in economics from Western Washington University and an MBA from Seattle University Albers School of Business. He is a Chartered Financial Analyst (CFA) charterholder and a Certified Financial Planner®.
Prior to joining Saturna Capital, Mr. Drum led environmental, social, and governance (ESG) research and was director of fixed income portfolio management since 2007 with a private account group at UBS Institutional Consulting Services specializing in investment management for global conservation and national wildlife park endowments as well as sustainable-social screened client portfolios. He is a former Chair of the United Nation’s Principles for Investment (UNPRI) Fixed Income Outreach Subcommittee and a current member of the UNPRI's Bondholder Engagement Working Group (BEWG), an advisory committee working to elevate important ESG considerations and best practices among issuers and investors.
Mr. Drum's past experience also includes business valuation at Moss Adams and portfolio management at Washington Mutual Bank. He lives in Bellingham and is a proud father of two. He enjoys sea kayaking, hiking, and being part of the Pacific Northwest community. Mr. Drum is a member of the board of trustees to the Museum of Glass in Tacoma and a member of Rotary.Close
Deputy Portfolio Manager since 2019
Elizabeth Alm, Senior Investment Analyst, joined Saturna Capital in April of 2018. Originally from Connecticut, she graduated from New York University with degrees in Economics and Anthropology including field work completed in Luxor, Egypt.
Prior to joining Saturna, Ms. Alm spent 11 years at Wells Fargo Asset Management as a senior research analyst focusing on high yield municipal bonds. As part of her previous role, she also worked on the management of several municipal SMA strategies. Ms. Alm is a Chartered Financial Analyst® (CFA®) charterholder.
Outside of work she enjoys mountaineering, photography, and international travel.Close
Short Term Performance
|As of August 31, 2020||Ticker||3 Month||6 Month||YTD|
|Saturna Sustainable Bond||SEBFX||3.23%||3.40%||4.43%|
|FTSE World BIG Bond||4.03%||4.57%||6.82%|
|MSCI All Country World||15.44%||15.56%||5.12%|
Average Annual Total Returns
|Month-end, as of August 31, 2020||Ticker||1 Year||3 Year||5 Year||10 Year||Expense Ratio²||30-Day Yield¹|
|Saturna Sustainable Bond||SEBFX||4.65%||2.53%||3.09%||n/a||0.83%||1.72%|
|FTSE World BIG Bond||6.10%||4.12%||4.17%||2.69%||n/a||n/a|
|MSCI All Country World||17.12%||9.55%||10.79%||10.48%||n/a||n/a|
|Quarter-end, as of June 30, 2020||Ticker||1 Year||3 Year||5 Year||10 Year||Expense Ratio²||30-Day Yield¹|
|Saturna Sustainable Bond||SEBFX||3.47%||2.16%||2.57%||n/a||0.83%||1.79%|
|FTSE World BIG Bond||4.83%||4.01%||3.69%||2.85%||n/a||n/a|
|MSCI All Country World||2.64%||6.69%||7.03%||9.73%||n/a||n/a|
Performance data quoted represents past performance which is no guarantee of future results. 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. Current performance may be higher or lower than performance data quoted. Standardized returns current to the most recent month-end can be obtained by visiting our Month-end Returns Page or by calling toll free 1-800-728-8762. The Fund cannot guarantee that its investment objective will be met. Securities of the Fund are offered and sold only through the prospectus or summary prospectus.
¹ 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.
² Expense ratios shown are as stated in the Fund's most recent prospectus or summary prospectus dated March 27, 2020.
Growth of $10,000
This chart illustrates the performance of a hypothetical $10,000 invested at the beginning of the period and redeemed at the end of the period, and assumes reinvestment of all dividends and capital gains.
The FTSE WorldBIG Bond Index is a multi-asset, multi-currency benchmark, which provides a broad-based measure of the global fixed income markets. The MSCI All Country World Index covers approximately 85% of the global investable universe, with large- and mid-cap representation across 23 developed market and 23 emerging market countries. Investors cannot invest directly in the indices.
|Record Date||Ex, Pay and
The Saturna Sustainable Bond Fund intends to distribute its net investment income and net realized capital gains, if any, to its shareowners. The Fund pays income dividends daily, which are reinvested or distributed monthly. As a result of its investment strategy, the Fund expects that its dividends will consist primarily of ordinary income.
Distributions for the last two years are listed in the table above. For prior distributions, please contact a Saturna representative.
Regulations regarding distributions can be complex, and there are several methods for managing your tax liability. Please consult a tax advisor about your particular circumstances. You also may obtain helpful information by calling the Internal Revenue Service at 1-800-829-1040 or visiting www.irs.gov.
If applicable, distribution information will appear on Form 1099-DIV, typically sent in late January. For more information on tax documentation, please visit our Tax Documentation page.
The Fund pays per-share distributions to shareowners invested on the Record Date. On the Payable Date, the Fund's share price is reduced by the amount of its distribution.
Fees & Minimums
The following tables describe the fees and expenses mutual fund shareowners may pay. There are no shareowner fees (fees paid directly from an investment). The Fund imposes no sales charge (load) on purchases or reinvested dividends, or any deferred sales charge (load) upon redemption. There are no exchange fees or account fees. Investments in mutual funds are subject to ongoing expenses. Saturna endeavors to keep these fees low. We encourage you to compare the following fees with similar fees of other no-load mutual funds:
Shareowner Fees (fees paid directly from your investment)
|Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)|
|Total Annual Fund Operating Expenses||0.83%|
|Fee Waiver and Expense Reimbursement||0.18%|
|Total Annual Fund Operating Expenses after Fee Waiver and Expense Reimbursement||0.65%|
The investment adviser has committed through March 31, 2021, 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.
The minimum initial investment is $1,000 (for tax-sheltered accounts, there is no minimum).
Principal Risks of Investing in the Fund
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.
Investment strategy risk: The adviser believes that sustainable investing may mitigate security-specific risk, but the screens used in connection with sustainable investing reduces the investable universe, which limits opportunities and may increase the risk of loss during market declines. In addition, the Fund has a relatively limited operating history, having commenced investment operations in March 2015, and its limited performance history does not provide extensive information on how the Funds may perform in different 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.
Financials sector risk: Performance of companies in the financials sector may be materially impacted by many factors, including but not limited to, government regulations and intervention, economic conditions, credit rating downgrades, changes in interest rates and decreased liquidity in credit markets. Profitability of these companies is largely dependent on the availability and cost of capital and can fluctuate significantly when interest rates change. Credit losses resulting from financial difficulties of borrowers also can negatively impact the sector. The impact of more stringent capital requirements, or recent or future regulation in various countries on any individual financial company or of the financials sector as a whole cannot be predicted. The financials sector is also a target for cyber attacks and may experience technology malfunctions and disruptions.
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.